Chengdu Mining Industry Observation Notes (4): The "money printing machine" in the currency circle is also worried about selling
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Over the past ten years, Bitcoin mining has not been as complex as it is today.
The halving of Bitcoin, the advent of the flood season, the replacement of mining machines, the pervasive financial game, the erratic mining policy, the superposition of five waves, and the great increase in uncertainty. Leading enterprises join the battle, institutional capital enters the game, overseas power rises, and multi-party games, the stable pattern is ushering in the biggest change.
Ever since, what we are facing may be the prologue of the golden age, or it may be the beginning of a big reshuffle.
Sichuan ushered in "Mining Week", the mining forces gathered in Sichuan, Babbitt reporters went to the front line, brought the most front-line reports of the industry, and made a series of articles "Chengdu Mining Observation Notes" to describe this thrilling scene that is taking place for you changes in the mining industry.
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Over the past ten years, Bitcoin mining has not been as complex as it is today.
The halving of Bitcoin, the advent of the flood season, the replacement of mining machines, the pervasive financial game, the erratic mining policy, the superposition of five waves, and the great increase in uncertainty. Leading enterprises join the battle, institutional capital enters the game, overseas power rises, and multi-party games, the stable pattern is ushering in the biggest change.
Ever since, what we are facing may be the prologue of the golden age, or it may be the beginning of a big reshuffle.
Sichuan ushered in "Mining Week", the mining forces gathered in Sichuan, Babbitt reporters went to the front line, brought the most front-line reports of the industry, and made a series of articles "Chengdu Mining Observation Notes" to describe this thrilling scene that is taking place for you changes in the mining industry.
This is the fourth article in the series.
With the coming of the World Mining Summit, on the 27th, the players in the mining circle basically arrived in Chengdu. Many people got off the plane and didn’t have time to go to the hotel, so they started to go to the reception hosted by the mining brand, the lively hot pot party...eating, drinking, chatting , eating, drinking, chatting...
There is a saying like this, every day is more (price), every day is more, and every day it is more than 3 o'clock in the morning (drinking).
Nervos Lu Guoning has an analysis: "Probably suffocated by the epidemic."
At the scene, I met most of the earliest domestic players who participated in Bitcoin mining, such as Shenyu, Zhu Wei, Pan Zhibiao, Li Peicai, Zhuang Zhong, Yang Haipo and so on. To use an idiom to sum it up is the starlight.
Does this mean that Bitcoin mining is very popular? The answer is quite the opposite. I found that the World Mining Conference is very lively, but compared with the Biyin Chengdu Summit in the second half of 2019, there are fewer people and booths.
Especially mining machine manufacturers, I only saw the booths of 3 old faces, Antminer, Whatsminer and Pandaminer, in addition, there are two IPFS mining machine manufacturers.
I suddenly discovered that in the circle of friends, it seems that Shenma is more active. Where have everyone else gone? In the middle of 2019, there was still a feeling of "hundred regiments fighting", well-known and unknown brands were all selling mining machines.
Today, let's talk about the mining machine.
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The "money printing machine" can't sell anymore?
When are Bitcoin miners most willing to buy mining machines? The answer is when the price of the currency is skyrocketing and the production capacity of mining machine manufacturers is insufficient. Because only at that time, if the computing power of the entire network does not increase, mining will have excess returns. For example, April 2019, or 2017.
Before the halving, many miners began to hoard mining machines because they expected the price of the currency to skyrocket. As a result, we all know that this group of people is basically trapped.
In the past two years, the miners have actually been miserable. At the Chengdu summit, some people complained that before, nightclubs were standard equipment, but this time I won’t go, let’s go and sing K.
But some people say that the new mining machines of Bitmain are not sold out as soon as they are launched? In the market, the futures of the latest mining machine of Whatsminer M30 series have also been sold until September. Isn’t this very popular?
Liu Fei, CEO of Bixin Mining, told Babbitt that in fact, the production capacity of mining machines this year is very small, which means that it is not that the demand is too strong, but that the supply is too small.
Liu Fei feels that the demand for mining machines today is almost 1/3 of last year, while the production capacity is only 1/5 of last year, which is a manifestation of the imbalance between supply and demand.
Why less production capacity? Because the mining machine manufacturers have expected that the demand is very bad, they are unwilling to start production, and they are unwilling to accumulate inventory. They are more willing to set production according to demand. You give me money, and I will produce, reducing the risk of capital occupation and overstocking, that is, the futures mining machine game. You know, the profits of mining machine manufacturers are already very meager today.
So, will there be a round of reshuffle for mining machine brands this year? If the currency price continues to be weak, I think the answer is yes.
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The rise of overseas power?
Previously, the buyers of mining machines were small and medium-sized miners. Everyone wanted to pay back quickly and was keen to calculate the payback cycle. Today, the payback cycle of mining machines has been greatly lengthened, large capital has entered the game, and the annualized return of capital is equivalent to saying that the basis of calculation has changed.
"Capital dares to buy, but miners dare not buy." Sully Yu said that capital values long-term mining, and the future is a large-scale, intensive, and refined mining world, and the expectation of quick payback is unrealistic.
Liu Fei also has his own views on this issue. He said that there are cheap electricity charges overseas, such as 1-2 cents per kWh. In China, electricity costs about 5 cents in winter and 3 cents in summer. Much more expensive.
However, there is an opportunity cost for mining machines going overseas. Liu Fei estimates that it will take about two months to transport the mining machine overseas, and when the market is good, it can pay back in three months. No one wants to do this. However, when the payback cycle of mining machines becomes longer, the disadvantage of opportunity cost is reduced, and the gap in electricity charges can also make up for the costs caused by transportation, tariffs, compliance, construction, and industrial imperfections. There is a market for mining machines going overseas.
Today, China occupies an absolute dominant position in the field of mining, but with the entry of capital and the possible slow market, will this situation change? Maybe, maybe not, but this is a saying, a trend I see in Chengdu.
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Mining is hard, but it's not bad, that's a good thing
If you start reading from the first article in this series, you will find out why this industry is so miserable. The miners are miserable, the mines are miserable, the mining pools are miserable, and today, mining machine manufacturers are also miserable...
I think it is necessary to correct one point. The mining circle is a bit miserable, but it is not lost.
Bitcoin has gone through ten years, and it has been seven years since ASIC mining machines appeared in mining in 2013. Today, this industry is ushering in a huge change.
