The allure of profits created by mining crypto currencies is leading companies to transform consumer electronic devices into mining equipment. In May 2015, the startup company 21 Inc (the name is reference to 21 million Bitcoins) led an effort to incorporate its mining chips (BitSplit) into USB chargers, PCs, routers, game consoles, and phone chargers. And it proposed to ‘split’ the mining earnings 75 – 25 in favor of the consumer. In August, 2017, a Chinese appliance manufacturer called Midea Group sought to patent a method to mine Bitcoin using air conditioners, air humidifiers, and TVs.
Now, three days ago, Bitmain, the largest manufacturer of mining hardware in the world announced the release of two internet routers that can mine Dash and Siacoin: The Antrouter R3 Dash and R3 Sia. These crypto mining routers are a response to its competitor Canaan’s “AvalonMiner” – a smart TV that doubles as a Bitcoin mining device. It may seem obvious that the evolution of crypto technology would inevitably extend to all devices used in daily life. However, adoption of this market will depend on its utility, sustainability, and security.
Bitmain is the largest crypto and Blockchain Corporation in the world. It manufactures the Application Specific Integrated Circuits (ASIC) chips and motherboard with $10 billion in revenue in 2018. The company outperforms its competitor NVidia who manufactures GPUs. ASIC miners are energy efficient, dedicated, crypto currency mining hardware. Bitmain holds approximately 70 to 80% of the market for Bitcoin mining equipment. And that it controls 40% of the mining done through its Antpool. It also controls about 50% of the hashing power of the Bitcoin network.
The purpose of the new strategy is to sell consumers on the idea of passive income by owning a multi-purpose device. Bitcoin’s design allows for the use of multiple platforms to be used for mining; i.e., home computers, graphic cards, laptops, cell phones, etc. The premise is to capitalize on the capabilities of any smart device to serve a double role. It works by modifying an existing platform to sell/rent excess/idle computational power to mine crypto currencies. Mining does not affect the primary function of the devices. This is because most of the resources needed for mining would be used when the device is not in use. The devices will then upload the coins produced to an online account or store it into hardcoded wallets.
For example, the Canaan’s AvalonMiner TV will make for a seamless experience through a user friendly interface. The TV will offer voice command which will integrate with a digital interface connected to the company’s payment platform. The mined Bitcoin amount will be displayed in real time and the profits can be used to purchase subscription-based content. The appeal of a household device that can potentially pay itself and generate income is attractive. And it sounds like a better investment than one that only consumes electricity. However, the ROI has the final word.
In order for the idea to take hold it has to work; and that means it must be productive and profitable. Dedicated ASIC miners perform 4 to 16 trillions of hashes per second and cost approximately $489 to $3000, but they have a proven profit record. On the contrary, the AvalonMiner Smart TV processes approximately 2.8 million hashes per second at 100 W/T. Using this basic data and surmising a cost of $ .15 per Kilowatt hour, and a current Bitcoin price of ($6,300), the TV makes $.33 per day but cost $.36 in electricity. Instead of profits, this is an average loss of $8.86 a year . This may explain the lack of detailed information and price availability. And it supports the assumption that this device is more of a marketing gimmick than an actual new product. Other minor devices like USB chargers fare no better when their profitability is calculated.
In addition, assuming the devices do turn a profit, the earnings may be too small for a single device in a household. Therefore, a number of smart devices are a necessity to combine their profits and make it a viable alternative. In other words, it’s better to pool a network of connected smart devices than to have an individual device producing about 17 cents a day. And as if this is not enough of a challenge, there is security to contend with.
The pace of crypto technology is accelerating into every imaginable industry, and the hype created by crypto currencies is dominating every aspect of life. As smart devices become more efficient, they may actually prove to be profitable; however, this will also depend on the geographical costs of electricity. For now, the idea is visionary at best, but hopelessly overambitious as the technology is not there yet. Mining companies still have many challenges to overcome, not least establishing a relationship with the coins they mine.
In March 2018, Bitmain’s influence became challenged by Monero (XMR) who changed its algorithm to prevent the ASIC Antminer X3 from mining the coin. This fork or change in its code effectively rendered all X3s effectively useless and incapable to mine Monero. A future internet of things ecosystem is inevitable but it must be financially independent. Bitcoin mining will likely become a staple of future systems but not today, not without exerting unsustainable costs.