1/ Thread on variance. PoW mining is critical to Bitcoin network security. Mining, in turn, is subject to 3 major sources of variance, from (roughly) easiest to tame to hardest: i/ Finding blocks via SHA256 hashing ii/ Market demand (for BTC & transactions) iii/ Tech innovation
-
-
12/ Similar to how farmers use future contracts to insulate themselves from bad weather/harvest, miners can use future contracts to insulate themselves from price + tx volume variance.
Show this thread -
13/ There’s also potential for AI/deep learning applications. E.g.: an AI-driven prediction engine can help a miner decide when is the best time to increase or decrease hedging position w.r.t. price + tx volume.
Show this thread -
14/ For variance in innovation: Mining is inherently a high-risk business due to large CAPEX cost. Your hardware can go out of date before you can recoup the initial investment.
Show this thread -
15/ ASIC design is a subset of IC design, which has roughly followed Moore’s law for the last four decades. However, there are signs that Moore’s law is breaking down as we reach the limits of “miniaturization at atomic levels.”
Show this thread -
16/ It took us 2 1/2 years to go from 22nm to 14nm (April 2012-Sep2014). It took us almost another 3 years to go from 14nm to 10nm (Sep2014-April2017) - not without problems.
Show this thread -
17/ GMO is rumored to have started looking into 7nm ASICs. It'd be curious to see performance benchmarks in June, as this seems to be *well ahead* of the chip industry.https://twitter.com/coindesk/status/999578504550330369 …
Show this thread -
18/ Nevertheless, the trend is clear: we’re running into hard limits. a/ Practical limits of minimization. b/ Beyond these limits are other limits: energy efficiency limits, computational speed limits.
Show this thread -
19/ So what’s the best strategy for miners here? Absence of a major tech breakthrough, when we run into these limits, ASICs will likely become commoditized. In which case this variance will resolve itself out.
Show this thread -
20/ However, in the short to medium term, miners probably need large investments in chip design / manufacturing / supply chain to stay ahead of the curve.
Show this thread
End of conversation
New conversation -
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.

