Biao Ge is undoubtedly one of the true believers in the Chinese bitcoin circle. Brother Biao’s name is Pan Zhibiao, and he is the founder of Coinin Mining Pool. At the beginning of this year, he predicted in an interview with "News" that Bitcoin should rise to $100,000 in no more than three years, but he himself "wouldn't sell it for many years."

This long-term confidence in Bitcoin comes from Biaoge's years of experience in the Bitcoin industry. Since entering the industry in 2014, Brother Biao has successively worked in BitFoundation and Bitmain. In 2018, he founded Coinin Mining Pool. On July 2, 2018, Biyin opened a BTC mining pool and became the world's largest BTC mining pool in just over a year. In addition, Poolin Mining Pool is also the world's leading comprehensive mining pool with ZEC and LTC computing power.

During his time at Bitmain, Brother Biao promoted the open source of the mining pool algorithm, which greatly promoted the improvement of Bitcoin mining efficiency. On March 22, 2018, a piece of code written by Brother Biao was thanked by the BTC core development team. It can be said to be "one of the Chinese closest to the Bitcoin core developer". After founding Biyin, while developing business, he also led Biyin to create influential activities such as "New Era Mining Summit" and "Biyin China Tour", and conducted Bitcoin evangelism throughout China.

On April 16th, Brother Biao came to Zhoulibo live broadcast room as a guest, and together with Yang Zhou, the founder and CEO of PayPal Finance, discussed the "darkness before dawn" before the Bitcoin halving. In this conversation, Brother Biao shared a lot of wonderful views on the Bitcoin halving market:

• We have to deploy our work and deploy our computing power according to the worst prediction.

• It would be an embarrassing thing if the mining industry becomes like the aviation industry in the end, with a huge amount of funds, and mining companies become airlines. But things are likely to go in this direction.

• Bitcoin is a living ecosystem that will upgrade our algorithm and software system according to the evolution of opportunities.

• Entrepreneurship in the entire blockchain industry is still a relatively small business threshold.

• The forked currency wants to step out of its own role and its own market, and it must be unique. So how long it can develop depends on these factors.

• The biggest potential competitor of the various privacy coins is Bitcoin. If Bitcoin can hide skills in technical design, or hide input and output—Bitcoin only needs to realize one of these two conditions, then the current privacy currency may be abandoned.

• If energy can be very cheap, like air and water, this will change too many things. We humans will change from earth civilization to solar civilization, and will enter the next civilization era, just like entering the era of internal combustion engines from the era of horse-drawn carriages.

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It is OK if there is no halving market

Mi Xiaoping: This year is the year of halving. The three major currencies have already been halved, especially the two currencies on the BTC chain-BCH and BSV have already completed the halving. From the perspective of currency prices, the performance of the two currencies does not seem to be particularly good, that is, the halving market that everyone said has not actually come.

Yang Zhou: After the halving of these currencies, firstly, the price will be halved first, the leverage will be halved, and now the block generation will also be halved. This will make everyone start to wonder a question: Will the Bitcoin halving reappear in the bull market?

Pan Zhibiao: The previous two major halving cycles brought a bull market from 50 to 25, and then detonated another bull market from 25 to 12.5. This time it is very embarrassing. After the halving of the two forked coins of BCH and BSV did not bring about a halving market, it is very likely that the halving of Bitcoin will not have a halving market, so we have to deploy ours according to the worst prediction. work and deploy our computing power.

At present, the computing power of BCH and BSV is about 2%-3% of the computing power of Bitcoin, and the computing power of the two currencies is equal to 4%. After halving, 2% of the computing power will be cut to Bitcoin. , Bitcoin is still fully bearable at 96%. Therefore, the impact of 2 points to 96 points basically does not have much impact. However, if Bitcoin is halved again, it may mean that nearly half of the computing power of the entire network will have nowhere to go for income. Of course, because some machines are far away from the electricity fee line - the electricity fee line is lower than 50%, or there is a flood season so that these machines have a buffer zone, but there may still be 20 to 30% of the computing power facing the demand. Risk of shutdown.

Mi Xiaoping: Last year, the currency price rose from more than 3,000 US dollars to 14,000 US dollars. Everyone experienced a stage of high enthusiasm. They felt that the bull market was coming, history would repeat itself, and it would reach new highs. However, there is another group of people who believe that the halving market has ended in 2019. ️So, what will happen to the currency price after the halving in May?

Pan Zhibiao: From a technical point of view, after the halving, you can see that the Bitcoin block reward has been reduced from 12.5 to 6.25. This is an objective fact. This program was written by Satoshi Nakamoto 10 years ago. On the 10th of May this year, everyone will definitely see this happen. In addition, everyone has formed a very strong consensus that the halving will definitely increase. In fact, if we look at this issue from the existing stock and incremental data, more than 18 million Bitcoins have been dug up now, which is just the halving of the newly added currency. In fact, the newly added coins continue to be halved, and the impact on the existing daily bitcoin trading volume, including futures, options, and derivatives, should actually be very small. Therefore, from this point of view, it is completely ok if there is no halving market.

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S2F Model (Twitter @PlanB)

This model uses the value of mined reserves compared with new production, which is useful for consensus assets such as gold. Why is this model relevant? Because both gold and Bitcoin are consensus currencies, consensus is based on facts, not will. Gold's consensus is based on physics, Bitcoin's consensus is based on mathematics. If this model is applicable, the market value of Bitcoin should be in the trillions. According to the quantity that has been mined so far, the price should be more than 50,000 US dollars.

However, some people have always said that the halving market does not exist. I don't think we can always look at current fluctuations. We should actually look at historical price changes. At the time of the first halving, in October 2012, there was a big plunge just before the halving, and leverage was removed. The second halving is equivalent to a sharp drop in deleveraging after the halving, and it fell by 40% without the halving. These two are actually violent deleveraging, which is an unhealthy restoration of the market, and it happened again this time.

Let's take a look at the macro environment again: the price fluctuations of crude oil, the epidemic, and the plummeting stocks have brought liquidity risks, causing Bitcoin to plummet. In fact, in this process, the long leverage in the market has been removed. This may contribute to the basis of a halving market. Because the halving market does not happen before the halving, but starts directly after the halving.

In addition, due to the confusion of the entire digital currency market valuation model and valuation system, we have not really formed a complete model. But it can be said that after this halving, we will be able to know more clearly the market's pricing model for Bitcoin as the market price discovers slowly.

The second is that the halving will bring more people to understand what Bitcoin is. The last tipping point was Libra, and this time the tipping point may be the central bank's digital currency, which can prompt more people to understand cryptocurrencies, blockchains, and Bitcoin. At least the word digital currency has been thoroughly popularized.

We can regard Bitcoin as a scenario. Due to the promotion of DCEP or other countries, more people are involved, and the top of the basic customer acquisition funnel model is increased. Even if the conversion rate remains the same, including investment, research technology, mining, etc., the number of participants has increased significantly, and the number of remaining users will also increase.

In addition, with the development of the digital currency derivatives market and the gradual improvement of the futures and options market, in the long run, Bitcoin will have fewer and fewer sharp falls and sharp rises, and the volatility will decrease, making it more suitable for institutions to participate. Based on the above analysis, I am still optimistic about the halving market.

Pan Zhibiao: We still have to wait for the global liquidity to be restored. Now everyone has no money. In the case of relatively short cash flow, it is definitely better to sell assets with better liquidity. After the global supply chain is gradually restored, everyone should start to have some spare money or other funds to come in, and the price of Bitcoin will have to be pushed up by new funds from outside the market.

Mi Xiaoping: The most directly affected by the halving is actually the entire mine supply chain. Each industrial chain is impacted differently, such as wallets or exchanges, they are impacted indirectly, not directly. Let's talk about what will be the limit for miners after the halving? Although it is said that the price of abundant water and electricity is coming, mining is a dynamic balance, but some mines may stop due to this. How does Brother Biao think about this matter?

Pan Zhibiao: In the past, we stretched out the entire mining timeline, and there were always some positive returns, or no matter how difficult it is, you can basically earn money by mining with a mining machine for two or three years. Because the gap between the currency price and the electricity fee line has always been relatively far, the electricity fee line has never caught up with the currency price line.

There is a problem now, or a phenomenon that may be about to happen, that is, the existing machines may be interspersed with the currency price for mining-the currency price is slightly lowered, and it will be turned on. This is the most uncomfortable, breaking everyone's previous cognition for the first time. We used to have a GAP, and now the GAP has disappeared.

The mining machine is made with semiconductor process chips, so from a technical point of view, the limit of the mining machine depends on the progress of the semiconductor process. At present, the most advanced technology for mass production in the mining circle should be 7 nanometers and Samsung's 8 nanometers. The limit of this mining machine may be further advanced by 20%. If the process does not change, these mining machine manufacturers will be forced to work hard to find room for optimization, and there may be 10%-15% or 20% room for improvement.

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If the mining industry becomes like the aviation industry

Mi Xiaoping: Regarding the wet season this year, many people think that 60 W/T is a watershed. What do you think?

Pan Zhibiao: It is predicted that once the flood season in Sichuan and Yunnan starts this year, some mines will stay in the low-lying areas of the border, and the computing power may drop by 20%-30%. Then some miners will salvage some during the flood season. 60 watts/T is not an absolute number, and it does not mean that it is the same across the country. It needs specific analysis of specific issues.

Yang Zhou: I don't have a deep understanding of this issue. I may express my views from a slightly macroscopic perspective.

Miners are not strong against risks. After being eliminated, the income of other remaining miners will increase, which will attract more miners to join the market. As more people use Bitcoin, the price of Bitcoin will rise, which in turn will bring more users. This creates a cycle.

Let’s take the plunge of the Bitcoin market in 2015 and 2018 as an example. In fact, every time the computing power plummets, it is a good opportunity to enter the market, because stampede is the most irrational time for the market. At this time, many new miners were attracted to enter the market. For example, after the sharp drop in 2018, the computing power rose from 40E to 100E in just half a year. Recently, the price of Bitcoin has plummeted. After the price of the currency fell, some miners may leave the market again, and the price and computing power will affect each other.

Pan Zhibiao: Because sometimes there may be a situation where some miners may earn more than some mining machine manufacturers. For example, the profit of our mining machines throughout 2019 is not as high as before, and our output is basically on the electricity bill. Once the currency price rises and mining machine manufacturers have no time to quickly produce a large number of mining machines, there will be a vacuum period, about 3-6 months, so that existing miners can obtain an excess profit. But now the electricity bills of the mining machines are all on the high side, unlike before the electricity bills were relatively low, so the fluctuation of the currency price, the proportion of its space is actually not that big. If the current electricity rate is 70%~80%, and the currency price fluctuates by 10%, your profit may fluctuate by 20 to 30%, so there is a strong leverage effect, and there is still risk. If you can deploy the computing power well in the early stage, after the price of the currency rises, you will earn more than if you buy the currency directly.

Mi Xiaoping: In May and June of last year, the mining machine manufacturers did not have time to respond. Just like the transition from S9 to S11 to S15 is very fast, the mining machine was launched before the miners had time to react. But in the end, there is no way to mass-produce, and there will be some shortages in the market supply. In fact, in the S17 generation, mining machines were gradually and steadily produced and continuously improved.

Pan Zhibiao: At the end of 2018 and 2019, mining machine manufacturers were not so optimistic about market forecasts, so they sometimes reduced their costs and paid more attention to cash reserves, but they were suddenly pulled out of a small bull market. At this time, the courageous mining machine manufacturers may let go of it.

Mi Xiaoping: From a certain perspective, is our current state somewhat similar to the state in 2018? I just read the data from Biyin that the current real-time computing power should be around 118E. In fact, it was almost this number before the currency price plummeted.

Pan Zhibiao: There is a little difference in this. The time in 2018 was because there was no new computing power. This time, when you suddenly dropped from more than 10,000 to 3,800, the mining machine was actually placed on the shelf, so when the price rose, the miners immediately pushed the switch up. This is still somewhat different from 2018. This time, the restoration of computing power is extremely fast-miners can immediately open the gates when the price rises, and turn off the mining machines when the price falls.

Mi Xiaoping: This time has something to do with the epidemic, because the overall supply chain, including logistics, is extremely slow, which affects the transportation of mining machines to a certain extent.

Pan Zhibiao: When the epidemic first broke out, the price of the currency had not yet fallen, and the price of the currency was still rising. During the Spring Festival, the price rose from 7,000 to 8,000 to 10,000. Everyone is very happy, because the epidemic is equivalent to helping to suppress the mining machines of the same industry in circulation, and also suppress the difficulty of the entire network. Everyone is very happy to mine. However, when encountering a sharp drop, the situation is different.

Mi Xiaoping: Whether it is the media or some people in the industry, they are conveying a point of view, that is, the so-called "mine disaster". In fact, "mining disaster" has multiple meanings, which are not understood by everyone. When a mining disaster comes, the miners will be killed collectively. Many miners have done update iterations, or as Brother Biao said, there are reasons such as better electricity bills. In this case, mining accidents will not actually occur.

Pan Zhibiao: Just like the epidemic, although many people are infected, those who are physically strong and have a very strong immune system will be less affected. So, in the mining circle, how can one be considered as a person with a relatively strong anti-risk ability and a relatively good physique?

As long as it is the most advanced and intelligent machine, plus a reasonable range of electricity bills, your ability to resist risks is the strongest. No matter how others fall, your machine can always be turned on. If the investment is not counted, basically such a person will have a daily cash flow income, so it is nothing more than two years to pay back the capital, but now it has been stretched to 5 years, 8 years or even further. So, such miners are less affected by adverse situations. However, for a miner with an old machine, this price is equivalent to completely cutting off his cash flow. It is really a mining disaster for this group, and they can only sell the machine at a very low price.

Mi Xiaoping: So when you enter this industry and choose mining, you should proceed from your own situation, consider how to allocate assets, and manage liquidity risks well.

Pan Zhibiao: It is equivalent to buying options with different maturities. Each type has different risks and different returns. You might pay a little more for a state-of-the-art machine, but it's less risky. If you buy a fixed-term option, such as an option that expires tomorrow, the biggest risk may be that the machine cannot be turned on. But once the price rises sharply, your leverage effect will be expanded. Because his electricity bill may be the same as your line, once you pull it up, your leverage factor is unlimited.

Yang Zhou: Some of the arguments I have heard recently are whether there will be dealers in the trading circle or mining circle. After suppressing the price, the price will be lowered first, or the price will not rise after the halving. After the miners decide to shut down , to mine more bitcoins before the halving. It is possible that the computing power jumped from 130E to 110-90E. Is there such a possibility?

Pan Zhibiao: There is such a possibility, but the strength may not be enough. If he wants to control the market, he may control the price for a day or two, maybe pulling and smashing. But if you want to control the price above the monthly or weekly line, almost no one can control it.

The jump between each generation of previous mining machines is very large. From S9 to now, there are many brands and models of mining machines, and there may be several generations in one model. Basically, from the energy consumption ratio of 100 to 110, there are machines in every gear. So, it doesn't mean that after killing that machine, you can happily influence the market in the future. not like this. When the price of Bitcoin rises a bit, this machine of this model is turned on once, and then you pull it a little bit, and another machine is turned on. It is a continuous process.

So that's not the case. Unless this person has very strong funds and can precisely control the spot, make the price of S9 very cheap, then collect the corpses, and then push the spot up. He still has to have enough money to buy those mining machines.

Yang Zhou: A few years ago, the pricing power of Bitcoin was in the Chinese market. After the "94", the country gradually lost its pricing power. It is equivalent to a process of price discovery and transfer, but we do not have much pricing power over Bitcoin. Now the pricing power of Bitcoin may be in Coinbase and Binance, the contracts may be in Bitmax, OK, and Huobi, and the options may be in Deribit, CME, and Bakkt.

As the past few years have progressed, bitcoin price volatility has declined, and the profitability of the mining industry has become more and more predictable. We have noticed that now institutional players are starting to enter the market, and then they start to use various financial instruments to hedge their risk exposure. So, will it bring about a change, that is, in the future, the mining industry will no longer be an event that many people participate in, but will become an institutionalized event?

When Bitcoin first appeared, we hoped that it would become a powerful supplement to traditional finance. In the future, the entire society may become more technical and virtualized, and Bitcoin is something that everyone can participate in. Then, the current development trend is gradually moving towards institutionalization. Doesn’t this run counter to Satoshi Nakamoto’s original idea that everyone can mine?

Pan Zhibiao: This industry is definitely developing in the direction of large institutions. Because the risk of mining has always fluctuated greatly, but the previous volume was too small, and no big company or big boss was interested in this business. At that time, the mine was like a thing built with a broken shed. We called it a "factory". It's too far off.

Now the volume of mining is large enough, and the annual output value of Bitcoin is about 15 billion. This volume is already equivalent to some small industries. Big investors and big bosses have a particularly strong ability to bear risks. It does not mean that they will stop doing business after losing money this year. Investors such as large crude oil, refined oil, and small iron and steel companies are all large industries, with funds of 500 million, 1 billion, and 2 billion. Therefore, after these big players come in, their risk tolerance is far higher than that of some individual investors. It would be an embarrassing thing if the mining industry becomes like the aviation industry in the end, with a huge amount of funds, and mining companies become airlines. I think things are likely to go in this direction, similar to crude oil mining companies.

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The threshold for blockchain entrepreneurship is still relatively low

Pan Zhibiao: The second question you mentioned just now. Mining may become a more risk-resistant institution to do this with a high probability, while payment and various attempts in Bitcoin, or entrepreneurship in the entire blockchain industry, are still a relatively low business threshold.

In 2016, someone mentioned a point of view that the value of Internet business companies lies in data. We install one such as Weibo, or live broadcast. Everyone can access their own data, but it is impossible to access other user data because commercial companies control the database.

On Bitcoin or the blockchain, this matter becomes particularly interesting. In the DeFi scene, it can be felt very clearly: when everyone enters this field, you will find that you can get all the services provided by other commercial companies. According to your needs, you develop something to solve a certain problem, which is equivalent to adding bricks and tiles to the entire blockchain world. This matter is difficult to control, because all the data we produce is on the chain, and the data is forced to be open, and others may use this data to contribute again. This is an obstacle to making money, because it is difficult to build a high commercial barrier.

This involves the issue of open source. Those who operate open source software do not have a strong commercial purpose, but think this thing is useful, and he hopes to contribute this thing to more people.

Yang Zhou: During the chat with Brother Biao just now, I heard a key word, which is full competition.

Pan Zhibiao: It is difficult for mining groups to fully compete because energy is in limited supply. Not everyone can buy electricity for 30 cents or 20 cents. For example, ordinary people can only buy electricity for 45 cents. The energy market is not a fully competitive market.

Mi Xiaoping: There is an interesting question in the barrage. A friend asked how long the S19 can run?

Pan Zhibiao: Unless the 5nm chip has a huge performance leap, the S19 should still be able to mine for a long time. According to previous experience, it can be mined until the next halving.

Mi Xiaoping: There is also a view that the S19 is likely to be a new generation of S9, what do you think?

Pan Zhibiao: It is possible. They are now facing a process improvement problem, which was close to the most advanced technology that a mining industry could afford. Now, if they see 5 nanometers mass-produced, it is very likely that they will be squeezed to 5 nanometers.

Now the world's largest chip demander, such as Apple, is very important for them to increase production capacity and yield, so mining machines can benefit from it. Because the mobile phone and 5G markets are too large, and it is a stable consumer market, the market profits are huge, so we will continue to promote the reform of this IC manufacturing process. The mining circle should follow behind them. They will join in the first year, and we will join in the second year. Therefore, how long the S19 can be dug depends entirely on whether the advanced technology of TSMC and Samsung is stagnant or developing rapidly.

Yang Zhou: Another angle may be the price of Bitcoin. If the currency price remains at the current level, people may not have the motivation to use 5nm chips, but if the price of Bitcoin reaches hundreds of thousands of dollars or seven to eighty thousand dollars in a few years, everyone's mentality will change. Very different. If it rises to 1 million US dollars, it is estimated that in addition to Samsung and TSMC, there will be a blockchain foundation called Biyin or other Blockchain Foundation. If the amount of funds is strong enough, they will build nuclear power plants themselves.

Pan Zhibiao: Open your mind. If energy can be very cheap, like air and water, this will change too many things. We humans will change from earth civilization to solar civilization, and will enter the next era of civilization, just like starting from a horse-drawn carriage. The era has entered the era of the internal combustion engine. Then we abandoned fossil fuels like oil and entered a super energy era, an era of unlimited energy. The mining machine will change, because your electricity fee line will always be posted on 0, and any machine can mine, and then the distribution will be truly realized. As long as you buy a machine, all the chips in your home are running, not only Bitcoin, but also other emerging products.

Yang Zhou: There have been some recent news about quantum attacks. From this perspective, when quantum computing can come out, Bitcoin may already have a way to resist quantum attacks.

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The future of the forked currency needs to be "maverick"

Mi Xiaoping: What do you think of the future of forked coins?

Pan Zhibiao: The more well-known fork currency was Ethereum’s fork currency ETC, and later it was BCH and BSV. My personal opinion is that whether a thing has value or not depends on its demand. If you are a forked currency, you must stick to your own logic and philosophy, so there will be a different thing that can be reflected in technical characteristics and in certain scenarios. If it is a completely homogeneous thing—technically the same, the market thinking behind the operation and the consensus of the community are very close, then this thing is open to discussion.

There is a very powerful Matthew effect on the Internet. If the Internet + blockchain is added, the Matthew effect will be strengthened, rather than the addition of two Matthew effects. Therefore, if the forked currency wants to step out of its own role and its own market, it must be unique, and how long it can develop depends on these factors.

Yang Zhou: This does not mean that miners like to be different, but that they need to have certain characteristics or spirits, just like Bitcoin miners are pursuing freedom.

Mi Xiaoping: Just now, an audience member asked about privacy coins and cross-chain technology. What do you think about this issue?

Pan Zhibiao: Currency must be private, just like cash is completely private, so privacy coins are also very promising. However, the biggest potential competitor of the various privacy coins is Bitcoin. If Bitcoin can hide skills, or hide input and output once the technical design is completed-Bitcoin only needs to realize one of these two conditions, then the current privacy currency may be abandoned, because everyone needs better technology .

The problem with cross-chain technology is that the trust problem has not been completely solved so far. This technology is currently implemented either through alliances or individual large companies, so if a trustless cross-chain system can be realized, that would be a very good thing.