Only Companies with Strongest Engineering Teams Will Survive ‘Mining Arms Race’
Spondoolies CEO, Guy Corem, has a broad mix of professional experience that ranges from founding start-ups through working in the corporate world for Voltaire and as a software and firmware engineer at Intel.
“The mining game is an arms race.
- Guy Corem, Spondoolies-Tech CEO
Founded in 2013 by a group of Israeli high-tech veterans, and with the inventor of Bitcoin's Proof-of-Work system, Adam Back, serving as the company's Chief Cryptography Officer, Spondoolies-Tech “is all about cryptocurrency.” Named after the Spondylus shell that was used as Neolithic jewelry and also an early form of money, the company builds mining rigs from the bottom up for both private and commercial users.
Spondoolies-Tech CEO, Guy Corem, has a broad mix of professional experience in founding start-ups and has worked in the corporate world for Voltaire and as a software and firmware engineer at Intel. Guy's foremost expertise is in leading open source development teams in the areas of ASICs, drivers and firmware, all of which are essential to determining the success of Spondoolies-Tech.
Cointelegraph spoke to Corem to discuss what we can expect to see from the company in 2015, its ASIC development and where the mining industry is headed.
Cointelegraph: Could you give us some background about how, why and by whom Spondoolies was founded?
Guy Corem: Spondoolies-Tech was founded by myself and 4 additional engineers / entrepreneurs. It was the beginning of 2013 when I was watching the development of the mining industry.
At the time, I was working as a software architect at Intel and realized that with the right team of experts, we can take the mining industry to its next level of professionalism by developing miners as though we were developing new servers. We started raising funds on April and in August already begun working on the first generation units.
“The pace of development in the Bitcoin world is unlike any other industry.”
CT: How does working in the Bitcoin space compare to your experience at Intel?
GC: The pace of development in the Bitcoin world is unlike any other industry. Some basic steps that are taken in traditional development such as developing a test chip are completely skipped in the mining world as timing is even more critical for mining than it is in consumer goods.
CT: How has the Bitcoin price been impacting your operations? Have you seen a rise/ decline in demand?
GC: The price of bitcoin is only one of the parameters that determine the profitability of mining. Efficient units can continue to create a revenue stream for their owners even at low bitcoin price. What we have seen is a shift from home mining to hosting based mining. There has obviously been an impact on the price of mining equipment. In addition, the price decrease has also sparked an interesting to watch race for cheaper hosting services (i.e. cheaper electricity).
“What we have seen is a shift from home mining to hosting based mining.”
CT: Where is the mining industry headed in 2015 (and beyond) in your opinion?
GC: The mining game is an arms race. We have started with the first ASICs running on 130nm processes and are now according to some companies heading towards 16nm and 14nm processes. As the tapeout costs of these processes are extremely high, one unsuccessful tapeout could mean the end of the failing manufacturer.
At this point, it is safe to say that in a few months only the companies with the strongest engineering teams will survive. In this industry and with current costs one mistake is all it takes. We’ve seen several announcements regarding new investment in hardware manufacturers. The more experienced companies will thrive while the rest will soon face the harsh reality that makes up the mining industry. Even companies with deep pockets can only afford so many failed tapeouts.
CT: As mining operations scale, do you think cloudmining will eventually be the only viable option for individuals?
GC: In addition to all the benefits of economy of scale, large hosting facilities are usually located in low energy price regions. The harsh reality for home miners is that they are bound by the local power costs. This means that even if home miners were to cut every possible corner, their savings will still be limited by the power cost.
“[F]or the individual miner, cloud mining really is the simplest way to stay in the mining game and enjoy some of the advantages a large mine enjoys.”
The difference between the power price of a home miner and a hosting facility could be as high as a ten time factor. This means that for the individual miner, cloud mining really is the simplest way to stay in the mining game and enjoy some of the advantages a large mine enjoys.
CT: How have your scrypt ASIC and the Gen3 28nm ASIC development been going? What hardware developments are you excited about for 2015?
GC: We have abandoned our Scrypt effort early on and decided to focus on Bitcoin. We are very proud of the 3rd generation ASIC in development. We are implementing there a big engineering effort, which will yield an extremely efficient ASIC without the costs and risks involved in the newer processes. We’ve managed to produce a 2nd generation ASIC that outperformed its 20nm competition at a fraction of the cost and will do the same with our 3rd generation.
CT: Unlike other mining manufacturers, your clients have not experienced any shipping delays. How did you manage to keep everything on time in such a volatile industry?
GC: Delivering delays has been rampant in this industry and are a big source of loss for customers. As a customer oriented company, we did everything in our power to prevent any such delays. Our very talented COO, Mr. Kobi Levin, has jumped through hoops and really pulled all his resources to make this happen time and time again.
We did have a few cases where for reasons beyond us such as custom strikes we were a few days late but always made sure to compensate the customers who were affected by this.
CT: With over 120 merchants accepting Bitcoin and last year’s conference in Tel Aviv, do you have high hopes for Israel to become a Bitcoin hub in the Middle East, or even the world?
GC: Israel enjoys a combination of an innovative spirit and access to a lot of top notch technological talent. If our regulators will be wise enough to encourage the local Bitcoin ecosystem I believe we will see the Israeli Bitcoin community transform into a leader in the new financial world.
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