New miners from Linzhi for Ethereum and Ethereum Classic are ready to enter the market

After a nine-month delay and $ 3.8 million investment, the Chinese mining company Linzhi is finally ready to release its first batch of new miners for Ethereum and Ethereum Classic.

The company announced the order of necessary components from the Taiwanese company TSMC, which will allow Linzhi to release about 200 ASIC miners for testing. These miners should show the company’s declared efficiency with the Ethash algorithm, which is used in Ethereum and Ethereum Classic. In case of successful testing, mass production will be launched.

On the Ethereum network, approximately 5 million ETH are mined each year (about $ 800 million at today’s prices). The Ethereum Classic network annually produces about 9 million ETC worth more than $ 60 million.

Linzhi was founded in February 2018 by Chen Ming, a former technical director at Canaan Creative, a mining company that manufactures Avalon bitcoin miners. In a comment to CoinDesk, Chen said his company was fully funded from his own funds ($ 3.8 million).

In September 2018, the company announced plans to release ASIC miners for Ethash. Target specifications for new miners were set at 1400 MH / s with an energy consumption of 1 kWh. In comparison, Nvidia’s GTX TitanV 8, which is currently one of Ethash’s most profitable GPUs, shows 656 MH / s with a power consumption of 2.1 kWh (according to F2pool).

With the current price of ether ($ 180) and network complexity, as well as the calculation of the cost of electricity of $ 0.04 per kWh, each GTX TitanV 8 will bring a daily profit of $ 7.35. If you mine ETC on the same GTX TitanV 8, which is traded at a cheaper price and has less mining difficulty compared to ether, then the daily profit will still be about $ 6.70.

Since the announcement of its plans, Linzhi has spent almost all of its capital on researching and developing a new ASIC miner (12 people worked on it), as well as on ordering the first batch of TSMC components. Earlier, the company announced plans to order the first batch back in December – the samples should be ready in April, and mass production would begin in June. Speaking about the delay, Chen said: “We underestimated the complexity of the development and the time it takes to build a team and ensure the performance of the company. We hope that we will be able to move further according to the schedule, according to which test samples will be released on 12/2019, and mass production will start on 02/2020 ”.

One of the possible risks for the company’s business is that the Ethereum community has previously voted for the activation of the so-called ProgPow algorithm, which should eliminate ASIC miners, although the activation time for this algorithm has not yet been determined (in the end, Ethereum developers want to switch from the Proof consensus algorithm -of-work to Proof-of-Stake, which will completely eliminate mining). When asked if Linzhi had any backup plan in case ProgPow is activated, Chen said the company relies more on the Ethereum Classic community, adding: “Our plan is to focus on ETC mining. It will be good if ETH remains as an option. There is still some uncertainty in the ethereum community about ProgPow. “At present, we do not see ETH as a potential market, so I don’t really care.”

Although Chen has not yet announced the price of ASIC miners (who plan to sell on pre-orders), he noted that he wants to provide a payback period of four months for individual miners with relatively small orders.

“This is our efforts and contribution to the idea of decentralization,” Chen said, adding: “Our sales will primarily be directed to geographic distribution with a small“ reverse discount ”on large orders – this means that customers will pay more for large orders” .

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