Bitcoin Miner Bitmain Caught Up In This Regulatory Crossfire

As a long-time crypto investor with a keen interest in the intricacies of semiconductor manufacturing and geopolitical tensions, I find this latest development between TSMC and Xiamen Sophgo to be quite intriguing. The potential implications for Bitmain, a company I’ve closely followed due to its significant role in the Bitcoin mining industry, are substantial.


According to reports, Taiwan Semiconductors Manufacturing Company (TSMC) temporarily stopped delivering chips to Xiamen Sophgo, a Chinese semiconductor company connected with the co-founder and chairman of Bitmain, Micree Zhan, due to an ongoing American probe into potential sanctions breaches concerning Huawei.

As per recent reports, TSMC halted chip shipments to Huawei earlier this month following the initiation of a probe by the U.S. Commerce Department over allegations that TSMC inadvertently provided chips to Huawei.

Since 2020, Huawei has faced U.S. sanctions due to national security worries, which limit their ability to utilize sophisticated technology.

TSMC Cuts Off Bitmain-Linked Firm Over Huawei Chip

TSMC (Taiwan Semiconductor Manufacturing Company) has temporarily stopped delivering chips to Sophgo, a Chinese AI company linked to Bitmain, following the discovery that one of its chips was found within a Huawei AI processing unit.

According to reports, Sophgo apparently arranged for chips similar to those utilized in the Huawei Ascend processor from TSMC.

This occurs under the limitations set to keep Huawei from obtaining that technology, in order to safeguard the security interests of the United States.

Breaking News

Taiwan’s TWSemiconductor cuts business ties with Bitmain’s CEO, Micree Zhan, following the investigation into Huawei sanctions. #Taiwan #Semiconductors #Bitmain #Huawei #CryptoNews #Blockchain #GlobalTrade #Sanctions

— Web3insights.io (@Web3insightsio) October 26, 2024

As an analyst, I’ve not received any official confirmation that Xiamen Sophgo directly provides chips to Huawei. However, the crux lies in understanding how this potential connection could influence Bitmain’s ongoing partnership with TSMC. Given that Bitmain is a private company situated in Beijing, China, which primarily focuses on designing Application-Specific Integrated Circuit (ASIC) chips specifically tailored for Bitcoin mining, it becomes crucial to assess the impact of any supplier changes on their operations and future dealings with TSMC.

It has been reported that the Commerce Department, along with TSMC, found a resemblance in the design of certain semiconductors manufactured by TSMC for Xiamen Sophgo and the chips used by Huawei in their AI-powered computing systems.

Sophgo Under Scrutiny After TSMC Halts Shipments

As an analyst, I can disclose that in the year 2019, I identified the establishment of Xiamen Sophgo. Notably, the semiconductor giant TSMC supplied our company with a substantial number of chips prior to their recent halts in supply. Delving into the Chinese corporate records, it was ascertained that I hold an indirect stake amounting to approximately 22% in Sophgo. Furthermore, I am also the proprietor of several subsidiaries linked to Sophgo, which possess domain registrations and email correspondences with a miner.

TechInsights’ dismantling analysis on Huawei’s recently launched AI chip, the HiSilicon Ascend 910B, revealed that it was manufactured by TSMC (Taiwan Semiconductor Manufacturing Company), whereas the previous version, the Ascend 910A, was fabricated domestically by SMIC (Semiconductor Manufacturing International Corporation) in China. After making this discovery, TechInsights informed TSMC of their findings.

Towards the beginning of October, the U.S. Commerce Department asked if TSMC manufactured AI or phone chips for Huawei. Later on, it became known that TSMC had ceased delivering products to an unnamed client, a move happening around the same time as the U.S. investigation.

As a researcher, I found myself delving into Bitmain’s journey in 2018 under Micree Zhan’s leadership, where we ventured into AI chip development as part of our strategic expansion in the chip sector. This move, however, posed challenges, as it contrasted with my co-founder, Jihan Wu’s vision, who advocated for maintaining our primary focus on developing Bitcoin ASICs.

Abandoning AI Chips After Internal Strife

Over time, numerous disputes and management challenges culminated into a power struggle within the corporation over the control of the mining operation. This conflict primarily involved Zhan and co-founder Jihan Wu, resulting in Zhan’s removal from his position in October 2019.

Interestingly, this incident unfolded as he was about to unveil his “third-generation AI chip,” the Sophgo BM1684, at a conference in Shenzhen. Despite the event, these chips are still advertised on Xiamen Sophgo’s official website today.

In the year 2021, they arrived at an agreement that enabled Zhan’s reinstatement as the chairman. Meanwhile, Wu parted ways with Bitmain to take on leadership positions at Bitdeer and Matrixport. Since then, the company has discontinued its direct participation in manufacturing AI chips.

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2024-10-26 20:56