From craze to frigid fever, bitcoin minings death game

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 From craze to frigid fever, bitcoin minings death game


Finance and economics reporter Wu Yang Ying Wei / Wen Song Wei / Editor The bitcoin mining industry is suffering a bear market crisis. After the frenzy of the price boom in the fourth quarter of 2017, the price of bitcoin has fallen steadily since early 2018, and the whole bitcoin mining industry has entered the freezing period. In March 2018 alone, bitcoin prices fell from less than $10 thousand to less than $7000. If the price of bitcoin falls below $8600, large mines will face a loss risk, as Morgan Stanley, the worlds leading investment bank, predicted in a April 2018 study. Retail miners and large mines suffered the most serious damage in this bear market. Morgan Stanley analyst CharlieChan and his team studied the mining costs of various types of bitcoin miners, measuring the breakeven points of retail miners, large mines and miners. The study found that miners are more resistant to the margin of bitcoin fall than large mines or retail miners, as long as the price of bitcoin is maintained at about 5000 dollars. The breakeven points for large and retail miners were $8600 and $10 thousand and 200, respectively. In March, the price of bitcoin had fallen through these two critical values. Bitcoin mining has formed a complete industrial chain upstream and downstream, which is composed of mine producers, multi-level distributors, mining pools and miners. Mine producers are at the core position, and all other aspects are building business models around the mine producers. You can think of the mining machine as a A share that can only be bought. The entire block chain industry is all around bitcoin transfer, the same is mine. A Canadian Chinese miner told the finance and economics reporter that the price of coins will drop, and the price of the mine will also drop soon. The low position hoarding the mining machine, the money price rises, the machine price rises, sells to make. The three core elements that decide whether or not to make profits in bitcoin mining are currency price, calculation power and electricity charges. When bitcoin prices can not be reversed into the downstream channel, the calculation of power and electricity becomes a factor affecting the survival of the mine. Who can win the overwhelming advantage in the competition between power and electricity will be more likely to survive in the cold winter and get rich when the next bull market comes. From 2009 to the birth of bitcoin, the whole network has increased by 30 billion times. The surge in computing power has nearly halved the profit of mining a single machine almost every two months. How to compete with the power of the whole network to dig up more bitcoins is a key arena in this death game. The price of money and machine prices fell down, and electricity price became the core factor of profit and loss. Electricity price difference between 1 cents to 2 cents, or even directly related to the survival of the mine. Mining machines are not worth the money, and the profit from mining will be close to the cost of electricity, which will be cheaper than electricity charges. If 5 or more electricity users must lose money to sell the machine, the electricity of 3 cents can be switched on. The founder of a mineral pool said. In addition to market volatility, bitcoin mining is facing another heavy winter. In January 2, 2018, the Internet financial risk special renovation work group issued a document, requiring local regulation and regulation to take comprehensive measures such as electricity price, land, tax and environmental protection to guide enterprises to withdraw from the mining industry in an orderly way. This industry is making money when it makes money, but the bear market has to go back, with a bear market losing 9 hundred million, and a bull market earning 1 billion can only spend 1 hundred million. The founder of the mining pool told the finance and economics reporter. Crazy miner At present, the whole industry in addition to research technology is the way to play in the capital market. Bitcoin prices continued to rise in September 2017, peaking in December, or nearly 500% in just three months. According to CoinMarketCap, the price of a bitcoin, from $4000 in September 2017, doubled to $8000 in November, and rose to a peak of $19 thousand and 500 in December. What followed is the craziness of the mining machine market. A Xinjiang mine owner told the finance and economics reporter that in July 2017 he bought a batch of mining machines at a price of 10 thousand yuan. After half a year, the old machine was bought for 30 thousand yuan in December. The profit of selling the mine this time is close to the profit earned by him for half a year. When the market is most fanatical, the price of the mine is one day, and the irrational behaviors in the market happen one after another. A mine owner revealed that some shareholders sold the machine in the morning, and saw the price rise in the afternoon and bought the machine back, even the machine had not been able to move. Shareholders and buyers after buying back the buy back, directly will rise the difference to the buyer to fight. The personage discloses, bit continent not only sells mine machine, also has its ore pool and mine field, but more than 95% of revenue comes from the sales income of mine. Although bit mainland claims to sell the mine only from official website, the multistage mine distributor appears as a result of the limited capacity of the mine and the shortage of the market. Financial reporters learned from more than one mine owner that the price of mine producers remained unchanged, and the fluctuations in the price of the mine began with the first class dealers. The first class mining dealers get the mine from the manufacturer, and quote the price per day according to the price of the coin. Each dealer in the rear will increase the price by 100 yuan -300 yuan in turn. Mine information is opaque, and many people share a piece of the middle link. So the actual number of dealers you purchase is not necessarily. Said the owner of the Canadian Chinese mining field. Shenzhen Huaqiang North is one of the places where mine distributors are gathered. Finance and economics reporter in Shenzhen Huaqiang North SEG electronic business city to a number of mineral distributors to understand that customers come to buy mining machines from a number of countries, in addition to China, including Russia, Serbia and other countries, these countries are relatively cheap, bitcoin mining flourishing. Mine dealers here often have warehouses in Shenzhen and Hongkong, while Shenzhen sells goods for domestic customers, while Hongkong sells shipments to overseas customers. Since the beginning of 2018, the bitcoin market has seen a large-scale downturn, and the mine has fallen from frenzy to cold in just half a year. Miners are most afraid of buying mines when the price of coins is high, and the price of the machines will drop if they buy the money. The price of machines has plunged and mining revenues have been reduced. Zhu Fa, co - founder of the coin mine pool, said. In January 17, 2018, bit mainland announced the limited sale of A3 mine. The factory price is set at 20 thousand and 800 yuan, and 6000 units at home and abroad are sold out in one hour. Due to insufficient supply, the price of A3 mine in Huaqiang North of Shenzhen at the end of January was the highest price of 45 thousand yuan. Affected by the decline in bitcoin prices, the mine has also slash its working miners. A mine owner, who has 50 thousand miners in Xinjiang, told the finance and economics reporter that he was cutting down the 90 sets of the 100 mining machines, reducing the 50 thousand mines to about 15 thousand and still continuing. This industry has no hedging tools and can be sold as soon as possible to control risks. A mine owner told the finance and economics reporter, many mining machine customers in the purchase of leverage, some only need to pay 30% to order the machine, magnified the income also magnified the risk. At present, the whole industry in addition to research technology is the way to play in the capital market. He said. The price of money is changing every day. Mining now is no use at all. It is to make money to gamble. The miner said. Force predicament Mine demand increased exponentially, but capacity did not increase exponentially. From 2017 to 2018, bitcoin prices experienced a leap of two times 4 times -5 times, and mine prices also jumped two times. But carefully studying the two stages, the impact of bitcoin on the price of mine is very different. For the first time, bitcoin prices rose from $1000 in February 2017 to $5000 in October, and the price of miners rose from 8000 yuan to 10 thousand yuan, or 25%. The second jump, bitcoin prices rose from $5000 in October 2017 to $19 thousand, while mine prices rose from 10 thousand yuan to 30 thousand yuan, or 200%. The difference between the two gains reached 8 times. The two bitcoin price rise has a great impact on the price of the mine. The exponential growth of the demand for mining machinery has led to a sharp rise in the computing power of the bitcoin network, but the second capacity has not kept pace. Zhu Fa, co-founder of the coin printing pool, told the financial reporter. Bitcoin is a competitive game based on power. As a bitcoin miner, if you want to dig up more bitcoins, it means that your mining machine needs to compete with the whole network. Based on block chain technology, bitcoin has a unique calculation rule: on average, a block is excavated every 10 minutes, and each block contains more than 12.5 bitcoins. In order to maintain the block rate, bitcoins will increase the computation difficulty once every 13 days. From 2009 to the birth of bitcoin, the whole network has increased by 30 billion times. A total of about 2000000 mining machines are assembled in dozens of mines and concentrated in bitcoin mining. The more power of the whole network, the less profit of a single mine, because the whole network of bitcoin output is fixed. The whole network can theoretically dig out 144 blocks a day, and the mining bonus of a block is 12.5BTC. The total output of bitcoin whole network mining is 1800BTC per day. In fact, there will be more mining output, which is between 2000BTC and 2200BTC. Your mining machine accounts for a fraction of the total power of the whole network, which means that you will share the corresponding proportion of the more than 2000 BTC outputs. Zhu Yin, co-founder of the coin printing pool, points out that the average power of the bitcoin network has increased by 8% every 12 days in the past year. At the beginning of 2017, the power of the whole network was 5EH/S. In early 2018, it turned 5 times to 25EH/S, which was equivalent to 4 times of mine competition. Biters S9 mine is 13.5TH/S, and today about 1000 mines can excavate 1 bitcoins. He calculated an account, in the ETH3000 yuan RMB price, the output of a single machine is 0.5 ETH, about 1500 yuan. The monthly electricity cost is about 800 yuan, and the monthly profit of each mining machine is 700 yuan to 800 yuan. According to the cost of 6000 yuan per machine, it will take 9 to 10 months to get back. And the surge in power will drag back for longer than a year. More than a years return time is dangerous for miners. On an average of about 1.5 years, the miners of the bit continent are introducing a new batch of new iterations. Under normal circumstances, miners sell their money and second-hand machines for half a year and put cash flow into the latest model miners. If the return time is too long, these old mining machines can not only be converted to cash, but also consume a large amount of electricity, and in the calculation of the competition, the profit is very small, which is equivalent to scrap iron. The time of single fighting has passed. Smart people invented the pool of Mines - a procedure that can combine decentralized personal computing into joint operation. When your personal power accounts for only 1/100000000 of the total network calculation force, when you connect to the pool, you and other peoples calculations are aggregated into 1/10 or more of the whole network, which gives the pool a chance to gain more mining gains through the strength of the calculation. After charging 3% to 5% service charge, the ore pool will be distributed to the miners again. In May 2011, the worlds first bitcoin pool Eligius was established. In 2012, it was known as the first year of the mine pond. In those years, the power of all the ore pools accounted for 50% of the global total. This means that the era of digging bitcoins by personal computers is over. After the ore pond, the single machine could not be excavated. Zhu Fa, co - founder of the coin mine pool, said. The essence of a mining machine is a collection of chips, not a complete computer. Its system, like a router, can only perform computational operations. Therefore, when ore mining is needed, the ore pool should be issued for the miner, and the inspection will be carried out after the completion of the mine. In order to attract more miners to join the gathering pool, the ore pool will design a more generous reward mechanism. A simple analogy is that if the mining is abstracted into a dice game, the game rules should have been awarded above 5, but many pools will be designed to be divided into a small portion as long as they are thrown above 3. This allows miners to join mines more enthusiastically than individuals. Incremental calculation, if the pool can be grasped, will soon rise. Zhu Fa, co - founder of the coin mine pool, said. He had been involved in the founding of BTC.COM. BTC.COM was launched in September 2016, and it is the internal pool business project of bit continent. Having seized the bull market dividend of the bitcoin market in 2017, BTC.COM ranked the worlds No. 1 ore pool from the top ten in 2016 to the end of 2017. With the growth of Chinese miners in the world, Chinas ore pool is also rising at the same time. Taking into account the speed of the network, miners will first choose their own pools, so the ore pool and miners are integrated. According to BTC.COMs real-time data, in April 2018, the top ten pools in China accounted for eight seats, accounting for 75% of the total net power of bitcoin. Among them, the two BTC.COM pools in the bit continent and the ant pond are firmly occupying first, second place. The ore pool solves the problem of a single miners lack of power, but it also raises concerns that, in theory, a 51% attack can be launched to control the whole bitcoin network as long as someone can grasp the power of 51% of the whole network. At present, BTC.COM, the No. 1 Mine pool, has occupied more than 30% of the total network power. How to balance the power of mine pool has become the next problem of bitcoin mining. Power game If a mining machine is not worth money, it will be cheaper than anyones electricity bill. Electricity price and machine price are the two core costs of bitcoin mining. Electricity price is the key to profit and loss when both the price of money and machine price fall. Electricity price difference between 1 cents to 2 cents, or even directly related to the survival of the mine. Personal miners often fail in mining infrastructure. A miner told the financial reporter, he set up more than 100 mines in the rural areas of Henan, and even did not connect the ground wire. At the very beginning, only 20 - 30 machines were running smoothly, but after increasing to 100 units, many mines often crashed due to the increase of static electricity. He came up with a way to remove static electricity: dig a hole in the yard, buy a scrap of triangular iron and throw it into a pit, and pour over a dozen packets of salt. Because there is no other power supply method, he can only use the city electricity, 0.76 yuan once, the total electricity cost of all mining machines in one month is more than 80 thousand, the profit of mining is 50 ETH, according to the current ETH4200 yuan RMB, the single month income is 210 thousand yuan, after deducting the cost of electricity cost, the profit is 130 thousand yuan. At the same time, the total cost of buying a mining machine is about 1 million yuan, which means that it will take nearly a year to recover the cost. The calculation will continue to decline, and his return time will be longer. This does not include the risk of falling currency prices. The yield curve of a mine is decreasing continuously. When the yield curve is equal to the electricity cost, the critical point of shutdown is reached. The general mine is sold for about half a year, half a year back, and a year and a half shut down. Only when your electricity bill is very cheap can you keep driving the mine. Zhu Fa said. Thirst for cheap electricity and professional infrastructure, bitcoin mining from individual miners gradually to large-scale mining development. The mine has special requirements: the noise is as high as 100 decibels, and it is not suitable for the mine to be placed in the city. At the same time, the electricity charges should not be too high, and all kinds of facilities such as voltage stabilizers should be equipped, so that retail investors can not do the work. They are only suitable for factories to dig. A Xinjiang mine owner told the finance and economics reporter. The mine is divided into two modes of self - owned and trusteeship. Since its own model needs to put a lot of cost into the mining machine, most of the mines are currently taking a trusteeship model - Property - like property services, the mines are looking for low electric field sites and trusteeship for customers. Mining income belongs to the customer, and the mining area only charges part of the management cost. Nevertheless, the initial investment in building a managed mine is not small. According to a Guizhou mine owner with 20 thousand positions, the cost of hosting the mine is 1000 yuan per seat. If a small and medium-sized mine with 10 thousand seats can save some cost, it will cost 7 million yuan. However, the earnings of the field trusteeship are also considerable. The general mine will charge a customer service fee of about 200 yuan a month. If the 10 thousand seats are full, they can be returned to the original site for about half a year. When bitcoin enters the bear market, whose electricity tariff is even cheaper, it determines whether the mine can survive the cold winter. The founder of a mineral pool revealed that the current use of electricity in the mining industry is two: 0.6 yuan to 0.7 yuan per degree for the normal industrial power supply, but the cost of electricity in many mines is only 0.3 yuan to 0.4 yuan / degree. There are many kinds of low cost power sources, some are irregular, such as a certain link did not pay the net fee, and there are some regions without national electricity. No electricity is needed in these places, so we can talk about a better price. Mainly thermal power, wind power also. In order to find cheap power, bitcoin mine Legion opened a nationwide search and relocation in the whole country for several years. A mine owner who started mining in 2014 told a reporter of Finance and economics that the first batch of mining people in China gathered in Shenzhen, when Shenzhen electricity was used, the price was close to 1 yuan / degree, and many bitcoin miners were migrant workers working in Shenzhen, and their hometown in Henan and Anhui. They then took the mine back to their hometown to begin large-scale mining, and ore mining and gathering sites were transferred to Pingdingshan, Maanshan and other places. In order to reduce electricity charges, many people use their electricity to dig their hands and feet while digging. Later, Pingdingshan and other places began to strictly control the stealing electricity, and the electricity tariff lost the advantage of low price. The miners began to transfer to Sichuan, where there were lots of hydropower. Sichuan is rich in hydroelectric power, and the electricity supply exceeds demand in the flood season. Some mines can even directly supply power for a small hydropower station. The lowest cost of electricity charges can reach 0.1 yuan - 0. 2 yuan / degree. But after entering the autumn and winter season, Sichuans electricity supply is unstable, and mining moves into the power plant, resulting in fierce competition, and electricity prices begin to rise. The mine Corps subsequently moved further from Sichuan to the northwest. At present, many mines have been transferred to Inner Mongolia and Xinjiang, mainly by firepower and wind power. At the same time, some of the more powerful mines have begun to move abroad, and the cheap electricity in Canada, Russia, Iceland and other countries have become the destination of the migration of Chinese mines. People who have stayed long enough in this field seem to be more like a repetition of history. The bear market in early 2018 made the bitcoin mining industry tremble in the cold winter. But some people who have stayed long enough in this field seem to be more like a repeat of history. There is a cycle in bitcoin world - some people who have experienced bitcoin bear market in 2014 tend to make the above judgement. At the end of March 2018, Zhao Dong, the operator of one of the largest bitcoin mines in China, publicly shared the judgment of the bitcoin cycle in the block chain community. He thinks that from November 2017 to now, the situation of bitcoins sharp rise and fall is very similar to that of 2013 when bitcoin rose to a historical high of 8000 yuan. Bitcoin is probably a cycle of four years, and mining is halved as a critical time. If we regard 2013 as the summer of bitcoin, then 2014 is autumn and 2015 is winter. I myself had frozen to death in the winter of 2015. Zhao Dong said. In 2016, he deduced that bitcoin was halved to open a new bull market, to be a big bull market in bitcoin by 2017, and another fall in 2018, and winter in 2019. CoinMarketCap data show that from 2014 to 2015, bitcoin entered the concussion channel, and the price has been hovering at 200 yuan to 300 dollars. It was not until 2016 that bitcoin began to enter the stage of upward shock, a new bull market opened. A large number of mining companies, miners and money makers have lost everything in this round of sharp rise and fall. Zhao Dongyi is one of them. In his community sharing, he mentioned that in 2014 he increased the total loss to nearly 150 million yuan by adding the lever to stir up the warehouse and set up the bitcoin mine. In 2015, the bitcoin fell to a minimum of 900 yuan, and Zhao Dong had to sell all the mining equipment in order to repay the mine raising debt, which was sold for less than 3 million yuan at the original price of 50 million yuan. In the most difficult time, he had only 100 thousand yuan, plus 60 million yuan debt. The cruel bear market has also become an opportunity for some people. When the cost of electricity is more than 0.5 yuan, the miners are eager to sell the mine. The miners who charge 0.3 yuan in electricity cost still fail to reach the critical value of shutdown. Some of the miners took advantage of the price of hundreds of dollars to buy a large number of low-priced mines, and dug until 2017, and became rich in the new bull market. At present, the worlds largest share of the market share of the pit market is also a survivor of bitcoins cold winter in 2014. A person close to the bit continent told the finance and economics reporter that the bitcoin fell sharply from 2013 to 2014, and the two thousand or three thousand yuan cost miner could only sell less than a few hundred yuan, if it was not sold. At the time, there were dozens of miner manufacturers, most of which were broken down by the gold chain when the currency price fell, or forced to cut down the R & D costs, and because the bit continent has always stressed cost control, it stands out in the bear market. In 2014, bit S3 launched models such as ants and S4. S3 mine sales are good, but affected by the downturn in the market, S4 mine sales situation is bleak, the companys losses are not small. Fortunately, due to better cost control, bit mainland still supports the development of new generation of mining machines in the low valley. In January 2015, bit continent launched a new generation of ant miner S5. Most of the competitors have been successful in the market because of the bear markets reduction in research and development. In an interview with business week, Jik Ke, co-founder of bit continent, said the company would prepare cash flow for bear market for three years. Bit continent relies on S5 mining machine to survive that round, bear market is the first opportunity to help it. Whats interesting is that even the even type of miners in bit China is losing money and the odd numbers are very successful. So then only S7, S9, S11, no S8. The bit continent is no more even after S4. The name, which is close to the bit continent, says. Since April 2018, the price of bitcoin has started to pick up, rising from around 7000 dollars to more than 9000 dollars. There are people in the digital money industry who judge that this is a sign of the return of bitcoin to the bull market, and some believe that the bear market will last a year or longer - different judgments will determine their different destiny. In any case, only those who foresee the cold winter and prepare for it early will see the possibility of the next bull market. The source of this article: editor in charge of Finance and economics magazine: Bai Xin _NT4464 Bit continent relies on S5 mining machine to survive that round, bear market is the first opportunity to help it. Whats interesting is that even the even type of miners in bit China is losing money and the odd numbers are very successful. So then only S7, S9, S11, no S8. The bit continent is no more even after S4. The name, which is close to the bit continent, says. Since April 2018, the price of bitcoin has started to pick up, rising from around 7000 dollars to more than 9000 dollars. There are people in the digital money industry who judge that this is a sign of the return of bitcoin to the bull market, and some believe that the bear market will last a year or longer - different judgments will determine their different destiny.