Adam Targos, Vice President of Global Sales at MineBest, recorded this keynote for Mining Disrupt Covid Online 2020, held July 22–23, 2020, about two months after the May 2020 Bitcoin halving. The conference had met in person in Miami the year before; that summer it ran online. His subject was the future of mining after the halvings, and he used it to raise three issues: what a halving does to miner revenue, why mining hardware had stopped making large jumps, and how cheap electricity was pulling hashrate into a few places.
Bitcoin traded at $9,530 when the session was recorded. Today it trades at $82,535.
Who MineBest was in 2020
Targos described MineBest as an infrastructure company that builds large facilities to host its clients' miners. It was founded in late December 2017 and started out mining Ethereum before switching to Bitcoin and to hosting. By mid-2020 it ran four mining farms with 140 megawatts installed, three in Kazakhstan and one in China. On his slide: two 20-megawatt sites, a 50-megawatt site in Kazakhstan that he showed on video during the talk, and a 50-megawatt facility in China.
The company also hosted a larger number of miners through third-party hosting providers, he said. He told the audience MineBest was about to put a new strategy in place for the coming months and years, and closed by inviting them to its headquarters in Warsaw, Poland.
The halving and the revenue cycle
He started with the mechanics. The Bitcoin block reward halves every 210,000 blocks: it began at 50 BTC, fell to 25, then to 12.5, and since May 2020 has been 6.25 BTC per block. He put global hashrate at around 123 EH/s at the time. The cut, he said, lowered miners' revenue across the industry and brought hashrate down with it.
His point was that miners had been here before. On a logarithmic chart of hashrate and miner revenue he showed earlier periods when rewards dropped, held at a level for a while and then rose again, because mining profitability depends to a large extent on the Bitcoin price. He pointed to one stretch of around three years when miner revenue stayed below its earlier high before it climbed back.
He was careful about cause and effect. He did not say the halvings predicted the price; he said they had been a good starting point for rapid increases, and he cited the halvings of 2012 and 2016.
after each halving the tempo of the increase of the price was definitely bigger
Adam Targos · 5:09
Seven years without a new kind of machine
The second issue was hardware. Mining moved from CPUs to GPUs, then to FPGAs and then to ASICs, and each switch changed energy efficiency and hashrate by an order of magnitude. He dated CPU mining to 2009, GPUs to around 2010 and ASICs to 2013. By the time of the talk the industry had gone more than seven years without a new type of device.
we have just noticed the increase not more than 10, 15 or 20 percent among the new models
Adam Targos · 5:58
Would a new class of device arrive? Probably yes, he said, but no one knew when. He named the two figures buyers weigh when they invest in equipment: the price per terahash, and energy efficiency in joules per terahash. He expected changes in both.
Industrial mining and cheap power
Targos offered the next points as food for thought rather than conclusions. Satoshi Nakamoto's idea, he said, was that any individual could join the network, help secure it and confirm transactions. By 2020 mining had become industrial.
only the biggest entities the biggest companies support the whole network and they contribute to the biggest amount of hashrate
Adam Targos · 8:09
He asked whether that was good or bad and left the question with the audience. The challenge MineBest saw was geographic decentralization. Low-cost electricity had become the key factor in mining profitability, so mining paid in only a few places.
there are only few locations where the mining is really profitable where the lowest cost of electricity appears
Adam Targos · 8:38
That, he said, should be discussed among the market's leaders. He spoke of creating geopolitical balance while keeping mining profitable enough that new players have a reason to join, and said that protecting the network from a 51% attack should be of paramount importance for everyone entering the market.
Phones, payments and an electric car
Mining stayed the core business, and Targos said MineBest would keep developing large-scale facilities. Alongside it, the company was diversifying into products outside hosting.
MineBest develops the mobile and consumer electronics then we develop the crypto payment solutions
Adam Targos · 10:15
The first was a blockchain smartphone, the Smile S1, which ships with blockchain and crypto applications installed. On payments, MineBest was developing crypto debit and credit cards and wanted to build a chain of Bitcoin ATMs to make cryptocurrency easier to use. The third, which he called the company's most innovative project, was a luxury urban vehicle: an electric car for crowded city spaces. He said he would share details once the concept was developed.
an electric car devoted for crowded city spaces
Adam Targos · 12:51
He presented these as the company's new direction. He did not tie them to the hardware or decentralization points earlier in the talk, and the article does not either.
Watch the session
The keynote is short, with the Kazakhstan facility video in the middle. Targos signed off hoping to meet the audience in person at the next Mining Disrupt, or at MineBest's Warsaw headquarters.