Cao Jun from Spider Mine Pool is a guest at Hashpower Public School, analyzing the good time for Ethereum 2.0 mining

Ethereum ranks among the top 200 in the global asset market value ranking. With the upcoming launch of ETH2.0, a large amount of ETH will be locked. The time for hoarding coins has come, and mining is the right time! On November 12th, hosted by Anmaiyun & XnMatrix, and co-organized by Renren Mine ETH Community & Lieyun Finance and Economics, the 5th issue of "Computing Power" invited Cao Jun, the co-founder of Spider Mine Pool, to be a guest in the live broadcast room to interpret Ethereum for miners On the eve of the launch of Fang 2.0, the value and significance of configuring Ethereum computing power assets.

Guest profile: Cao Jun, partner of TOPS Digital Fund, co-founder of Spider Mine Pool.

The Renren Mine community has sorted out the content record. For the convenience of reading, it has been deleted and modified without changing the original intention of the sharer. For more details, please check the live playback.

Cao Jun:

Hello everyone, I am Cao Jun, the co-founder of Spider Mine Pool. I am very grateful for the invitation from Renren Mine and Lieyun Finance. Today, I will share with you a value of Ethereum investment and mining. We will start from several Let me give you some introductions.

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Ethereum applications are maturing and landing

First of all, let’s take a look at Ethereum. Ethereum has become famous as the second largest digital currency in the world, and the biggest difference between it and Bitcoin is that Ethereum has become a public chain with application value. The reason why the price has risen from the trough to the current price, and it has taken the lead in this year's very hot DeFi, has brought very rich returns to many miners and investors.

In fact, many friends who invest in the mining industry are very concerned about what impact the upgrade of Ethereum 2.0 will have on the entire Ethereum mining? Ethereum 2.0 is actually a major milestone event. It will affect the development trend of the entire blockchain to a certain extent, that is, its decentralized applications are beginning to mature, and there will be many opportunities for participation.

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The value and significance of Ethereum 2.0 to the digital currency world

We all know that the essence of mining investment is to obtain cheaper Ethereum. As far as mining is concerned, because POW and POS will eventually be mixed together, the mining mechanism of POW, within the next 4 to 5 years, we predict that it will still come to an end, that is to say, it will come to an end in the next few years. It is the best time period to obtain relatively low-priced Ethereum mining. If the future development space of Ethereum is conceivable, it is a very good time to invest in mining or computing power for Ethereum in the past two years. timing.

Ethereum 2.0 means that Ethereum has changed from a conceptual public chain to a practical application public chain. This change will actually trigger unlimited imagination. For example, in our current DeFi, in fact, decentralized finance will compete with traditional finance, that is to say, we can freely manage our own assets in decentralized finance and wallets, and we can use Ethereum as collateral , to obtain a higher annualized return as a liquidity provider. In the middle, a large amount of Ethereum will be locked and will enter the link of financial transactions, so that the scarcity of Ethereum and its applicability will be greatly improved, which is also the reason why Ethereum can increase in price or its value will be reduced. A reason for promotion.

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The dividends that Ethereum 2.0 will bring to miners

Ethereum mining is different from other mining currencies, because it is divided into two modules in Ethereum mining, one is the fixed explosion block, and the second is the bonus brought by the gas handling fee to the miners. In fact, when DeFi was very popular in the past three months at 789, we will have a lot of withdrawals and transactions. For example, we need to transfer Ethereum from the wallet to the decentralized network to mortgage and provide liquidity. , then the DeFi boom will touch a large amount of Ethereum, which will generate a large amount of transaction fees during the migration process, and the transaction fees will bring very rich returns to miners.

So that is to say, in the past three months of 789, the return of miners may be an increase of 30-50% in the past, which is equivalent to digging out about 5-6 miners in the past three months. In this way, miners get more returns for the same electricity cost and time period, which greatly reduces or avoids the risk of investment. Well, this is also a charm of Ethereum mining, and its transaction fees will make up for a lack of rising computing power.

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Ethereum mining machine, mine selection

In terms of the choice of Ethereum mining machines, there are actually two main types now, one is the GPU integrated machine, and the second is the graphics card assembly machine. In terms of preservation rate, graphics card assembly machines have more long-term holding value, because it is not limited to a transaction among miners, we can circulate it to the PC market and the second-hand graphics card trading market, Therefore, the value retention rate of the graphics card assembly machine is better.

Graphics card machine may have a feature, that is, it does not shut down, so it is a mining machine that can continuously create value. Its own hedging space is sufficient. For the pressure of electricity bills, the tolerance is relatively high. .

After we buy a graphics card machine, of course we want to put it in a mine that is more stable and has more operating experience. These mines are basically distributed in Sichuan, Inner Mongolia, Xinjiang, and Qinghai. The stability of the network and the power supply are guaranteed. It is a very important key point to ensure the long-term stable operation of graphics card mining machines and the return of investors.

In the middle, how to achieve the greatest return on investment? In fact, in terms of investment, we must first consider some risks, so where are the risks? It is the right entry time and the right entry cost that are very important. In fact, there are many customers who can have different choices. Some customers will choose us to buy mining machines directly and then host the mine farm. Then this will involve a lot of operation and maintenance, machine repair, and mineral assessment and evaluation. question.

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The value and significance of configuring Ethereum computing power assets

How to maximize the return on investment, it may be more suitable to increase the position when the position is low. For example, on 312 this year, Ethereum also fell to tens of dollars, so this time may be the best time to enter the market, but many opportunities are hard to come by. Since the market is fluctuating, in fact, at a suitable cost, the method of exchanging time for space is a good investment cycle point. Therefore, entering the market at a low price, in our opinion, is a place where investment risks can be avoided. If some investment customers are more interested in the mining machine itself, they can actually use the method of rolling investment to continuously reinvest the profits in the mining machine and increase the number of mining machines, which in turn is a good way to avoid risks. .

Let’s talk about the value and significance of configuring Ethereum’s computing power assets. The essence of mining is different from speculation. You can see that the currency price has risen from tens of dollars to more than 400 dollars. Everyone will think that I am in the middle of one or two hundred I buy it in US dollars, and then I sell it at 400 US dollars, will I make more money than mining? It is actually two kinds of logic, that is, the mining market can accommodate a very large amount of funds, such as funds above 100 million, then if you talk about currency speculation, if you buy 100 million Ethereum in the secondary market , I estimate that the 8% increase is due to you.

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Lock computing power, hedging

Some investors who buy mining machines do not know much about mining finance. Today I will add that the most important thing in mining finance is hedging. It is actually different from speculating in coins. Mining investment buys hard assets, tangible assets, so you can avoid shrinking your assets and cashing out your assets to the greatest extent, because you are the principal invested, and we will all say how long the recovery cycle is. In fact, it describes a modern Cycle, if the currency price falls to $300 or $200 now, your investment will actually shrink significantly. That is, when the currency price is about 450 US dollars today, I lock in the computing power for the next 6 months, and I sell it in advance, which is called hedging in our industry.

In this case, no matter how the intermediate currency price falls in 6 months, your income will actually be locked at the price of 450 US dollars. In fact, hedging is a very safe financial means for miner investment.

Of course, the middle will also say what to do if the currency price rises? This is an essential consideration of investment, that is, as an investor of mining machines, in fact, what you want more is to make money safely and safely, rather than be like a gambler, I want to bet on its rise and fall. When a price really appears appropriate, maximizing the return on locking your assets is what miners and investors need to focus on.

Because there have been too many such mining disasters in the past, we should rethink one dimension, which is risk avoidance. The best way to avoid risk is to lock your computing power for hedging when it is high. Many investment friends have asked me specifically this year, saying where is the hedging space and risk factor for Ethereum mining?

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Rising computing power has limited impact on Ethereum miners

Let me add that in all mining, everyone is more concerned about the increase in the computing power of the entire network that will squeeze the miners' income. In fact, it is the same as the information that everyone cares about 2.0's POW mining. Pow mining will actually maintain a cycle of 3~5 years until the pos mechanism of Ethereum is particularly mature. Migration in the middle is voluntary, that is, migration from 1.0~2.0. There is enough time and space in the middle of this process Let everyone complete the return on investment.

The second is because Ethereum investment mining is very hot, so will the increase in the computing power of the entire network affect the income of miners and investors? This must be true, because the rising computing power means that it is yours. The income will drop, what is the biggest supplement in the middle? It is the gas fee part of the network transaction of Ethereum, which will supplement the income of miners. In July and August of this year, the reason why the computing power has risen, the currency price has risen, and the income is still rising is that the rewards for miners from network transaction fees have increased a lot. Inside, including the next few years, if decentralized finance and DeFi continue to be hot, then its income will be an effective guarantee for the income of miners.

In terms of how to evaluate your own income, the Bitcoin mining machine is evaluated according to the computing power per T. It will integrate the computing power difficulty of the entire network, the handling fee of the entire network and a cycle of bursting blocks. It is based on t. The computing power of Ethereum is far less than that of BTC, so it is calculated according to G.

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A good time to mine Ethereum

Everyone actually has a good expectation for Ethereum and Ethereum 2.0, and then thinks that Ethereum will lead the digital currency to another high point of investment value.

As investors in the mining industry, how can we better seize this wave of rising market and participate in the dividends. In fact, the most important thing is how we can obtain Ethereum with a relatively low cost. There are basically only two ways to obtain it. One is to wait for the currency price to go down when we buy it.

The second way is that we buy mining machines or computing power to mine Ethereum. In the next three to five years, the POW cycle is about to end. This is the last and best time to enter the market in our opinion. Because we may not have pow mining in another 5 years, which means that all the Ethereum in the market will have risen to maybe $800, maybe $1,000, you need to hold Ethereum or you When you are optimistic about Ethereum, you need to go to the secondary trading market to buy Ethereum at the market price, and the uncertainty of the investment return in the middle is very high. So, relatively speaking, it is actually a good time to start investing in cloud computing power and Ethereum mining machines to invest in getting more cheap Ethereum.

The Ethereum mining machine is different from the Bitcoin machine, because most of the Ethereum mining machines are an assembly machine of graphics cards. Now the mainstream graphics cards on the market are only 588, 1660s, 5700, and 5600. These graphics cards represent the current There are also assembly machines and GPU professional machines. GPU professional machines do not occupy a large enough market share. The Ethereum community is still very resistant to integrated machines. Ethereum It has entered the final mining cycle. We believe that the computing power in this area will not grow particularly fast, and it will not continue to grow like Bitcoin. We think it is not a cycle of continuous growth, so come to It is still a very good time to enter to invest in Ethereum mining during this period.

At this point in time, the price of Ethereum is going up, and the price of mining machines is also going up. In the long run, this is also a good time point. Well, these mining machines in Ethereum actually need a more stable operation and maintenance link, such as thermal power, everyone knows that thermal power basically does not stop power supply for 365 days, so its electricity cost is very high, some The venue may be as high as more than 40 cents, but because the shutdown currency price of the mining income of Ethereum will be relatively low, it hedges a risk of the shutdown currency price of many mining machines.

Our requirements for the operation and maintenance of the mine must hope that its network and power supply are continuous and long-term stable. In other words, if the mine you choose only uses electricity for 11 months a year, it is equivalent to It is said that your annual return on investment can only be measured in 11 months, and the actual return on investment per month is not ideal. Therefore, in terms of Ethereum mining, the requirements for the network and electricity consumption will be higher. For it The stability of the mine will be higher, and it is a better choice to choose a mine with experience and continuous supply of electricity and network.

For mining machines, the one that is closest to the lowest shutdown currency price is definitely the best choice. These machines may be relatively expensive in the future, so in terms of mining machine selection, my personal suggestion is to buy expensive mining machines. The risk factor is much lower than buying cheap mining machines, why? Because its shutdown currency price is low, its power consumption cost is low, and its value preservation rate, which is what we call the residual value rate, will be higher.

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How to Maximize Returns

The first one is that we enter the market to hold Ethereum on dips, and the second one is to enter the market on dips to buy cloud computing power and mining machines for investment, and make rolling reinvestments in the middle. Monthly income, and then re-invest in mining machines and computing power, you can also get a greater return on investment within a period of time, such as within a year. In fact, the more computing power you hold, the more you resist The ability to take risks is stronger.

Our Ethereum mining fund has evaluated from September last year to September this year. In September last year, the mining machines we purchased were actually a high point. If we look at the same in September this year, our entire mining machine The depreciation loss is only 15%, that is, we purchased 1 million mining machines last year. If we sell them in the second-hand market this year, there will still be a residual value of 850,000. In terms of our production capacity in the middle of this year , made some rolling investments, and we've achieved a return of about 1.5 times.

For example, the machine we purchased last year for 1 million, now holds more than 2 million machines, and then the income generated in the process, we re-invested assets, plus the coins we retained in the process From the perspective of a high-level cash-out U, we still achieved a return of 1.5 times. Therefore, in Ethereum, it is more suitable for rolling investment, because the mining machine itself has a relatively strong ability to resist pressure and drop, and has a high residual value rate. In the long run, the computing power configuration of Ethereum is still very valuable.

This year, we may get an Ethereum, ranging from tens of dollars to more than 100 dollars. Looking at it in 3 to 5 years, if Ethereum returns to the price of more than 1,000 dollars, we may find that we have obtained It has a return space of more than 10 times, and it is a continuous production capacity, because the investment in mining is different from the secondary market for buying and selling transactions. Even if I get Ethereum at $100, I may get it when it is more than $400 I just sold it, I just enjoyed the room for the currency price to rise, but it has no sustainability.

We can only look at this market from the sidelines. The investment in mining machines is to continue to obtain low-cost Ethereum and low-cost coins. Then we can have a lot of room for imagination and operation with this low-cost currency. Can keep it, right? When the price of the currency returns to more than 1,000 US dollars, I will sell it to realize the maximum realization.

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Decentralized finance DeFi is the trend

Since last year, everyone has heard the concept of DeFi, but DeFi did not make many practitioners feel its charm. It was not until this year that decentralized financial DeFi suddenly set off a boom. It does bring high returns to many exchanges, including miners. DeFi decentralized finance has an impact on centralized finance. A large number of traders transfer Ethereum and some other currencies from their wallets to the Internet to realize this kind of investment in mortgage mining, which generates a lot of Such a large number of movements also generate a large amount of transaction fees, which is what we call gas fees.

For miners, it enjoys transaction returns in the process and gets more transaction fee returns. Well, the middle period, especially the 789 three-month period, is particularly obvious. The three-month mining production capacity has almost reached the previous five-month production capacity, and the three-month return basically achieves the previous five-month production capacity. Return on production capacity, so for miners, this is a very good profit cycle point.

From the perspective of the development trend of Ethereum, decentralized financial DeFi will be a trend, it is not a simple event, it is a trend, and it will only develop more and more intensely. We may now see that the popularity of DeFi has begun to cool down, because the market will always be like this, it is volatile, and after reaching a high point, it needs to go to the bottom again, and then seek some smooth transition , and then seek the next high point, then the intermediate miner only needs to invest in mining machines and computing power to wait for the next DeFi boom to obtain higher returns.

Well, that’s all for today’s sharing of Ethereum investment and mining. Thank you very much for watching, and once again thank Renren Mine and Lieyun Finance for their support.