As a continuation of the series of articles “The Underlying Logic of SAI”, I have previously established a framework of basic principles including theories of Computing and energy, Computing and energy parameters, Computing and energy theorems, wealth blocks, energy efficiency acceleration, etc. Based on this framework, this article will propose how we should judge computing and energy industry trends and find out a strategic development path. Also, part of it is my post-reading reflection on Mr. Huang Qifan’s new book “Structural Reform”.
I. Fundamental Aspects of China’s Computing Industry
1. Industry chain
a. Electricity: China is the world’s largest power generation country, with low power generation and transmission costs and relatively perfect infrastructure; 5%-8% of global annual power generation is used for computing, and this percentage is expected to increase to 15%-25% in 2030.
b. Infrastructure: China’s traditional data center load size is about 23 million kw, concentrated in user-rich areas, i.e., first- and second-tier cities and their surrounding areas, with a scale CAGR of 15%+, accounting for more than 30% of the global scale; China’s supercomputing data center load size is about 10 million kw, concentrated in energy-rich areas, i.e., thermal power and hydropower-rich areas such as northwest and southwest, dominated by the encryption supercomputing industry, with a scale CAGR of Growth rate of 30% +, accounting for more than 70% of the global scale.
c. Chip: subject to U.S. technology sanctions, SMIC and chip production-related industries are still in full catch-up, CPU and GPU class servers face technical barriers and development bottlenecks; ASIC chips and servers have a comprehensive advantage, the world’s top five ASIC supercomputing server manufacturers such as Bitmain are from China, the product market share of more than 95%, light Bitmain a Market share of more than 60%, and become TSMC’s global top six, Asia’s second largest customer, products continue to use the most advanced chip process with Apple, Samsung, Nvidia and so on.
d. Users: In the field of traditional computing, China has the largest number of Internet and mobile Internet users in the world, with huge population and traffic dividends in the early stage, and the current population and traffic dividends tend to be saturated but will still maintain huge scale advantages; in the field of supercomputing, AI supercomputing has scale dividends and huge development potential by taking advantage of China’s data base, and encryption supercomputing has huge development potential by taking advantage of China’s electricity, infrastructure and chips. In the field of supercomputing, AI supercomputing has the scale dividend and huge development potential by taking advantage of China’s data base, and crypto supercomputing has the advantages of electricity, infrastructure, and chips to become the center of serving global computing power demand.
2. Value chain
a. China’s traditional computing industry, which contributes about RMB 70 billion to the annual electricity bill, with total data center assets of more than RMB 1 trillion, and the scale of the radiated telecom and Internet industries of more than RMB 15 trillion.
b. China’s supercomputing industry, AI supercomputing is still in its initial stage, and several unicorn enterprises have been born; crypto supercomputing contributes about RMB 40 billion to the electricity bill annually and is growing rapidly, the total asset size of crypto supercomputing centers exceeds RMB 200 billion, and the scale of global crypto asset industry served exceeds RMB 5 trillion.
3. Supply chain
a. China’s traditional computing industry, the core output value areas including chip server and underlying operating system are monopolized and restricted by other countries, so it needs to invest heavily in independent research and development and spend at least 5-10 years to catch up; the infrastructure of computing industry including data center, telecommunication network and other core supply chain is well supported, users have large demand based on Internet, mobile Internet and telecommunication business, and the scale of data is large, so it has The basic advantages of rapid development.
b. In China’s supercomputing industry, AI supercomputing is yet to be observed in terms of core algorithms and commercial application scenarios; crypto supercomputing has a comprehensive leading edge, with crypto supercomputing servers and crypto supercomputing centers in a leading leading position in the world in terms of technology and scale, and the trading volume of crypto asset trading service platforms accounting for more than half of the global scale.
II. Traditional Computing Dominates the “Major Domestic Cycle”
1. vigorously promote the new infrastructure
Service computing infrastructure is the foundation of industrial Internet and digital economy. The service object of traditional infrastructure is the traditional economy and human’s daily life, while the new infrastructure service is based on big data, cloud computing, artificial intelligence, blockchain digital economy.
The supply-side structural reform proposed by the country is centered on the five major tasks of removing production capacity, removing inventory, removing leverage, reducing costs and replenishing short boards. The vigorous development of new infrastructure can realize the effective upgrading and utilization of backward and idle energy production capacity, and find a new power point and breakthrough point for local governments in the environment of real estate overdevelopment, while it can lay a high-quality foundation for further reducing the running cost of computing industry and digital economy.
2. Chip / algorithm to make up for the shortcomings
At present, China’s main shortcomings in the traditional computing industry in chip manufacturing and software operating systems, such as photolithography, windows, android & ios, etc. are monopolized by other countries, and the leading edge of hardware and software in the 5G industry is also suppressed by the global market and supply chain. Therefore, at the national and enterprise levels, we are already doing our best to increase research investment and support, and strive to break the “neck” technology one by one.
3. Digital economy internal circulation
The double blow of the trade war and the epidemic has forced China to re-examine the international pattern to seek new power points, so the country has proposed a “domestic circulation-based”, of which the digital economy provides a huge support force for the domestic economic circulation. Including a large number of applications and services of the Internet and mobile Internet, effectively linking online and offline services, more efficient information transmission, product circulation, service support.
Therefore, in the next period, we still need to make every effort to promote the rapid development of the digital economy supported by new infrastructure and traditional computing industries, to promote the upgrading of the consumer Internet and industrial Internet, and to further reduce costs and increase efficiency for the domestic economic cycle.
III. Crypto-Supercomputing Plus “Domestic and International Double Loop”
1. New Infrastructure in Western Region
The traditional computing industry is mainly distributed in user-rich areas, so it is concentrated in and around first- and second-tier cities, which need to control energy consumption to alleviate power shortage and power costs. If these regions blindly catch up with the trend of “new infrastructure” and build a large number of traditional data centers, they will only face the serious problems of idle space, wasted resources and capital loss.
The crypto-supercomputing industry, with its low network and latency requirements and extreme sensitivity to energy costs, is well suited for vigorous development in energy-rich areas in the west, and the power consumption parks supported and promoted by local governments in the west in recent years are actively responding to the development trend of this market demand. The western region is rich in thermal power, hydropower, wind power and photovoltaic power resources, and there is a large amount of idle redundancy, which leads to huge pressure on peaking and consumption, and lengthens the return cycle of fixed investment. Vigorously promoting the development of encryption supercomputing industry in the energy-rich areas in the west not only realizes the full consumption and utilization of idle power resources, but also drives the de-backward production capacity and industrial transformation in remote and backward areas, realizes more local economic income with less initial investment than traditional computing, helps the western region to initially establish the infrastructure required for new infrastructure, and prepares for the full development of digital economy in the next step.
2. Computing power to serve the FTA
Traditional computing industry and digital economy mainly serve domestic market users and large domestic cycles, while the arithmetic demand of crypto-supercomputing industry is distributed and globalized, and China’s crypto-supercomputing industry dominates the world, so it can effectively use this advantage to develop arithmetic service trade.
At present, China’s service trade has huge shortcomings, one is that China has a large service trade deficit, and the deficit reached $292.2 billion in the total service trade import and export of $759.4 billion in 2018, ranking first in the world and accounting for 40% of the global service trade deficit; second, the structural efficiency is not good, and China’s service trade is mainly concentrated in labor-intensive industries, while knowledge-intensive industries, capital-intensive, resource-environment The service trade capacity of intensive industries is very weak, and they all show a large deficit.
If China’s leading edge and dominant position in crypto-supercomputing industry can be effectively utilized to drive the establishment of crypto-supercomputing centers and computing services FTAs in the western region to provide cost-effective crypto-supercomputing computing services to the world, it will produce very significant effects: 70-100 billion kWh of idle electricity will be consumed for the western region every year, adding 20-30 billion RMB to the electricity-related energy industry foreign exchange revenue; annual sales of arithmetic services to the world could reduce the service trade deficit by $25 billion, accounting for about 9% of the existing deficit; drive the digital transformation of backward production capacity and the overall economy in the western region, and pool global demand for arithmetic power to promote the rapid development of the domestic upstream ASIC and GPU server industries.
3. Offshore RMB settlement
Based on the globalization pattern of crypto asset arithmetic services and the leading edge of China’s crypto supercomputing industry, further attempts can be made to establish offshore RMB and crypto asset settlement systems in Hong Kong and Hainan to promote RMB internationalization and globalization of arithmetic service trade and attract global capital into China.
In early August 2019, the U.S. Treasury Department suddenly announced that China is a “manipulator of exchange rates”, which has never been done in the past 10 years, which shows the seriousness of this statement. In 2015, the U.S. introduced a bill that sets out punitive provisions for “exchange rate manipulators” around the world. Once a country is deemed a manipulator, the U.S. government can take ten disciplinary measures, including a series of sanctions and freezing measures in financing, credit, listing, trade, settlement, and assets. Among them, the eighth penalty clause points out that the use of the bitcoin system to help and stimulate the “exchange rate manipulation country” of enterprises and individuals to abscond with funds out of the country, for this article we argue to see, once it happens there will certainly be some domestic funds to find ways to flee the situation, but bitcoin is not the best choice, because the domestic bitcoin secondary market At the same time, in the existing world landscape, there will be more funds that are willing to enter China but are therefore hindered, as bitcoin trading has compliance channels in major developed countries and economies around the world, coupled with China’s arithmetic service advantage, which can help global funds enter China through crypto assets and crypto supercomputing services, the offshore RMB and crypto asset settlement system becomes This is especially important.
We see that the crypto asset trading platforms managed and run by Chinese teams account for more than half of the global crypto asset trading volume, among which Huobi and OKEX have successfully borrowed the main body of Hong Kong listing and relocated their headquarters to Hainan Free Trade Zone, while Hong Kong is also preparing to launch digital asset trading license, which all lay the foundation for the trade of arithmetic services and offshore settlement of crypto assets.
4. Multi-dimensional response to the financial war
It should be noted that the above ten articles for “exchange rate manipulators” basically cover all the contents of the “financial war”, either not to fight, or to fight is these ten articles, we should deal with the “exchange rate war ” “financial war” “long-arm jurisdiction war” is nothing more than the above ten.
Therefore, accelerating the new infrastructure in the western region and establishing arithmetic power to serve the FTA and the settlement system of offshore RMB and crypto assets is a systemic strategic defense system. At present, the global crypto asset industry has exceeded $2 trillion and is expected to increase rapidly to $20-30 trillion in the next 3-5 years. Currently, there are national-level compliant crypto asset trading platforms and services platforms in the U.S., Japan, Singapore, and South Korea. Take the U.S. as an example, Coinbase is the largest crypto asset compliant exchange in the U.S., and its spot trading volume accounts for more than 20% of the world; Bakkt, as a key investment project of the Intercontinental Exchange Group (ICE), is gradually becoming the largest cryptocurrency derivatives compliant exchange in the world; the U.S. Grayscale Fund has accumulated more than $12 billion in bitcoin trusts under management and is growing rapidly; Fidelity Asset is fully engaged in the crypto-asset related industry; PayPal has launched the service of buying bitcoin for tens of millions of users and supports the transaction settlement of bitcoin and other crypto assets in 28 million global merchant systems.
The U.S. is doing its best to seize the secondary market for crypto assets, while China is uniquely positioned to dominate the primary market for crypto assets in terms of arithmetic. The arithmetic power is the security foundation and value foundation of crypto assets, and the strategic significance is becoming more and more apparent as the voice in the crypto arithmetic industry can be effectively transmitted to the secondary market of crypto assets.
The crypto supercomputing industry should become one of the multi-dimensional strategies to deal with the financial war, and at the same time do a good job of supply-side structural reform of the domestic financial system and properly promote the internationalization process of RMB, so that we can comprehensively deal with the future risks and grasp the opportunities in the new era.
5. The new global monetary landscape
The U.S. debt level has reached a record high, and it is foreseeable that the new U.S. government will have to continue to increase its lending efforts in order to cope with the continuously deteriorating epidemic and economic situation, and the dollar confidence crisis will become more and more serious.
The history of the development of global currency is still clearly visible, whether it is the first industrial revolution British coal industry and industrial strength to establish the global status of the British pound, or the second industrial revolution, World War II, oil trade to help the dollar firmly lock the major currency pattern of the world today, to become a truly global currency, there must be a strong enough credit and trading ecological support. Remember that the Japanese yen, the last to attempt internationalization, collapsed at the feet of the Plaza Accord and has not recovered since.
In order to finally achieve internationalization, we need to comprehensively promote cross-border settlement of RMB, actively carry out local currency swaps between countries, build an offshore trading market for RMB, promote the clearing and pricing of RMB bulk materials, strengthen the influence of RMB in countries along the “Belt and Road”, and accelerate the construction of a global network of commercial banks with RMB as the clearing currency. The Bretton Woods System
“The collapse of the Bretton Woods system has completely decoupled the U.S. dollar from gold, and it must rely on oil trade to maintain the dollar’s power of speech. While countries are taking the initiative to increase their gold reserves, they are actively looking for more “gold-like” value storage vehicles on the one hand, and are more eager to have a credible global monetary system with an “anchor” on the other hand, and no longer want to be a victim of hyper-inflationary dollar. Crypto assets, led by Bitcoin, are gradually becoming a strategic reserve for more countries due to their anti-inflation, decentralized, anonymous and secure characteristics. The dominance of the US in the secondary market of crypto assets stems from the fact that US companies and individuals are gradually aware of the potential risk of devaluation of holding US dollar assets and want to protect their assets in this way; on the other hand, US policymakers see the huge development potential of the crypto asset market and try to control the US dollar like oil in the settlement discourse of crypto asset transactions to further enhance the status of the US dollar.
Therefore, RMB should seize the opportunity of crypto-asset market development and make full use of crypto-supercomputing service trade and offshore trading platform of crypto-asset to promote the global trading and settlement of digital RMB and crypto-asset, so as to enhance the voice and influence. On the other hand, we will make full use of the characteristics of crypto assets as the “anchor of global currency”, anchor the legal digital currency with it in a suitable way to enhance its credibility, and strengthen cooperation with other countries to lead the new pattern of global currency.
6. New ecology of energy finance
The open and cooperative stance that our country has been adhering to will be conducive to our mutual benefit and progress with countries around the world, in which we will not only solve the difficulties and problems we encounter, but also provide quality solutions for countries to solve their problems within the scope of our ability. The current world situation is essentially a confrontation between the “one America” and the “pluralistic cooperation” system. All the problems we encounter will also be encountered by other countries that adhere to the concept of “pluralistic cooperation”, and our needs to develop digital economy, realize energy transformation and prevent financial risks will also be encountered by other countries.
The crypto-asset and crypto-supercomputing industries are developing rapidly in countries around the world, from Singapore, Myanmar, Bhutan and Malaysia in Southeast Asia, Kazakhstan and Kyrgyzstan in Central Asia, to the United States and Canada in North America and Norway and Iceland in Europe, and countries are seizing new opportunities in the primary and secondary markets of crypto-assets in different ways. In particular, the crypto-supercomputing industry is becoming an important strategic layout for countries to achieve energy industry transformation and financial security. From the energy perspective, countries with rich energy resources around the world are in a position and motivated to promote the development of crypto-supercomputing industry in their countries, which can not only change their current GDP over-dependence on the export of cheap energy resources, but also give full play to the advantage of abundant and cheap energy resources to realize higher energy resource premiums, and at the same time promote the realization of digital, technological and financial transformation of the energy industry and the strategic financial security purpose.
China’s advantages in the whole industrial chain, value chain and supply chain of crypto-supercomputing industry can help us achieve the dominant discourse in the global crypto-supercomputing industry on the one hand, and realize the purpose of domestic and international double circulation of crypto-supercomputing industry services; on the other hand, we can integrate our advantages in chip servers, infrastructure, computing power operation and maintenance, and computing power trading in the crypto-supercomputing industry to export overall solutions to the outside world and help On the other hand, we can integrate our advantages in crypto-supercomputing industry chip server, infrastructure, computing power operation and maintenance, and computing power trading, export overall solutions to help other countries to quickly establish crypto-supercomputing industry, and jointly promote the development of new global energy finance ecology on this basis.
IV. SAI Empowered Computing and energy Industry Evolution
1. Industrial Internet of computing power
SAI is a global Computing and energy operator based on chip energy technology, and is committed to effectively reducing the energy cost and computing power cost of computing industry and promoting the accelerated improvement of energy efficiency of computing and energy industry through the four-dimensional technology matrix of “chip waste heat utilization + clean power consumption + computing power to improve energy efficiency + new computing power chip”.
By reducing the four core costs of heat, electricity, algorithms and chips, we are becoming the “gas pedal” of the computing industry, cooperating with the upstream and downstream of the industry to establish a global computing industry Internet, and jointly provide users with more cost-effective computing services.
2. Electricity Industrial Internet
Electricity is one of the core costs of computing industry, SAI has high quality clean power consumption solutions and global power resources. Through technology linking the power users of computing and power resources, we help computing customers to obtain cheap power resources and also help power customers to realize cost reduction and efficiency increase.
On the one hand, we reduce the additional consumption of electricity and the overall PUE of the project through more efficient liquid cooling technology to achieve energy saving and consumption reduction; on the other hand, we also provide a better solution for clean power consumption and traditional power peaking, which no longer requires expensive energy storage equipment input or generates wasted resources as before. We establish a power industry Internet with clean power as the link, forming an effective supplement to the whole traditional power industry and optimizing the allocation of resources.
3. Heat Industry Internet
SAI’s creative chip waste heat utilization solution effectively utilizes the waste heat generated by the computing industry to provide heat services, uniquely and innovatively opening up a new path to reduce the cost of the heat industry. The general trend of the future is the comprehensive and rapid development of the computing industry, which inevitably generates the heat dissipation problem corresponding to the computing power. If all the heat generated by computing can be collected and utilized, it not only essentially solves the problem of large power consumption for heat dissipation, but also realizes the reuse of energy and promotes the energy saving and greening of the computing industry.
In the actual operation scenario, SAI is gradually establishing a heat industry Internet with computing waste heat as the link, completing the heat service with lower cost and higher value, effectively making up for the defects of the traditional heat industry with limited coverage and high comprehensive cost.
To sum up, SAI will always uphold the value of “energy efficiency acceleration, heat is like cold”, focus on the top strategic development direction of China’s energy calculation industry, and make every effort to create more value for users and the market!