Bitcoin Mining 60 Days Visit: Recording the Mysterious Nugget Paradise

Author: In this hasty

Source: DeepChain

In June of this year, Handan miner Zhao Dongyang and four partners bought 600 second-hand mines for a single price of 2,000 yuan. These mining machines had a daily income of nearly 10,000 yuan. But just six months later, the daily income has been less than 2,000 yuan.

The currency price fell, and Zhao Dongyang's 600 mining machines had to face the risk of being eliminated. At the same time, Sichuan local miner Zhang Lei has completed the layout of low-power high-power computing machines.

Currently, 4 million used machines are on the way to being eliminated. The upgrading of mining machines has made mining more difficult, and some miners have to make a choice: should they replace low-power high-power computing machines or continue to use old mining machines for mining?

However, the high input cost of high-powered machines and the uncertain market conditions have undoubtedly increased the risk of mining. In the face of Bitcoin halving, is Bitcoin mining still a mining heaven for miners?

"Little miner enters the ore circle for the second time"

When Zhao Dongyang was contacted again, he was having dinner at his home in Handan. At this point, bitcoin had fallen to $ 6,909. Zhao Dongyang opened his mobile phone and showed it to me. S9i 13.5T. A single machine digs 0.00026 bitcoins a day, excluding electricity costs, and the daily income is only 2 yuan.

At the same time as Kanan Technology became the first share of the world's blockchain, regulatory authorities in Shanghai and Shenzhen have rectified the lCO and MLM disorder in virtual currencies, and multiple exchanges and coin issuance items have been checked. The response fell.

Half a month ago, Zhao Dongyang placed the mining machine in a new mine that can run electricity for the whole year, and the annual electricity price was 0.31 yuan. "If the currency continues to fall, we have to consider shutting down."

"Does the mine shut down?" I asked Zhao Dongyang.

"When the contract was signed with the mine, the other party promised that if the revenue could not cover the electricity bill, they could shut down." Zhao Dongyang's electricity price was relatively cheap. At present, in Xinjiang, Inner Mongolia, Sichuan, Yunnan and other places, the price of mining machine hosting is generally between 0.35-0.37 yuan.

One morning in early August, my colleague and I drove 50 kilometers around Panshan Road to the largest local Bitcoin mine. The mine was built next to the highway, surrounded by mountains and surrounded by clouds.

Close to 100 meters away, there are 5 huge black factory buildings, rows of giant exhaust fans hanging on the wall, within 50 meters, you can hear the roar of 40,000 mining machines.

Zhao Dongyang was the first Bitcoin miner I met in Sichuan. When he first met, he was squatting on the floor to repair the miner.

In 2018, Zhao Dongyang was mining in Handan. At the end of the year, because the price of Bitcoin fell to the shutdown price, he chose to sell the mining machine, and the EOS in his hands, like the mining revenue, continued to shrink.

In June this year, with the arrival of the flood season, the price of bitcoin picked up significantly. A series of miners, mainly Ant S9, restarted in Sichuan, Yunnan, mountain villages, villages, or near a dam. From mid-May to early July, the average hashrate of the entire Bitcoin network returned from 47.98 EH / s to 64.85 EH / s.

In other words, at the beginning of the flood season, about 1.25 million small hashing power miners were restarted.

It was at this time that Zhao Dongyang came to Sichuan and once again entered the mine.

Together with four other Handan miners, he received 600 13.5T second-hand S9i units at 2,000 yuan each.

Zhao Dongyang and others drove from Leshan to Ganzi Prefecture and then to Aba Prefecture. After several rounds, they finally put the machine in a mine in Aba Prefecture.

Zhao Dongyang at the scene to check the hashrate data of the miner's background

"Taking away the 0.25 yuan Fengfeng utility cost, a machine now has a net income of 14-16 yuan per day."

Most of this mine are S9 and T9 + series mining machines. These machines discharge heat waves 24 hours a day, forming a high-temperature air stream, and spraying it towards the northern man.

Despite the operation and maintenance of this mine, Zhao Dongyang felt more relieved that he did not stay there in person, so he rented a room near the mine, 50 square meters, indoor bathroom, without kitchen, 800 yuan per month, every 2 people stayed in rotation 1 Months.

Two months later, Wang Chunhua, a partner of Zhao Dongyang, handed the machine in to the other four. Wang Chunhua told me:

"It's still a lower risk factor to buy coins directly."

Based on the currency price of US $ 9700 at that time, the daily revenue of these 600 S9i units was about 9,600 yuan. Due to the increasing difficulty of computing power, the currency price fell, and the electricity price in the dry season increased. Now the daily revenue is between 1200-1800 yuan.

"Layout of Big Miners"

Miners invest in mining machines and electricity costs to mine bitcoins, and then sell them on the secondary market, plus the margin difference. Therefore, in a bull market, the currency price is much higher than the mining cost. In a bear market, the bitcoin price reaches the shutdown price. Buying coins directly is more cost-effective.

Mining is equivalent to miners taking money to block market expectations for the next year. Therefore, Wang Chunhua chose to buy coins, and Zhao Dongyang and others chose to continue mining.

"Why didn't you buy a big mining power machine?" I asked.

"The first is the high cost of high-power mining machines. The second is the current mining. The mining cost is 1 yuan / T. After halving, the mining difficulty increases. The mining cost is 0.5 yuan / T. Around 10,000 yuan, maybe 6,000 yuan after halving. "

For Zhao Dongyang, large computing power machines are not urgently needed.

Zhang Lei is a native Sichuan miner.

In May of this year, Zhang Lei began the layout of large computing power machines. At first, a batch of S17 series miners were ordered from Bitmain. Due to the lack of official sales policies and production capacity of the ant miners at that time, they turned to Shenma miners.

"Ant's previous sales policy was very speechless. Pay first, and then set the price. There is no clear sales unit price, can you buy it? And there is no production capacity. Order a batch of machines. How many hairs per day." Hold the spit.

"Isn't it because of a lack of money?" I asked.

"Several manufacturers should be short of money, but Ant's sales policy is really silent, which fully shows that the old Zhan (Zhanke Group) will not do business."

"The price of Shenma is clear. We take the average price of goods at around 207 yuan / T." Shenma's large computing power machine arrived at Zhang Lei's mine as early as August, but the machines in September and October There was a delay.

Shi Wei In September, although the large computing power machines were not fully listed due to the delay, Zhang Lei cleared all the S9 series machines in the mine in advance. At that time, the average price of S9 was around 1700-1900 yuan. At the end of 2018, such machines were sold by miners for 600-1000 yuan.

Bitcoin is halved, the difficulty of mining is rising, and the market is uncertain. Mining benefits and risks coexist. Miners need to think more carefully.

Unlike Zhao Dongyang's idea, Zhang Lei's logic is that high-power mining machines do not need to worry about the long return period. Because 2020 Bitcoin production capacity is halved, and with the difficulty of each month, the currency that is mined a day is equivalent to Mined coins three days after halving.

Zhang Lei believes that the static shutdown coin price of a large computing power machine can be carried to about 23,000 yuan. At this time, the computing difficulty will also drop by 50%, so it is estimated that the shutdown coin price can be carried to 12,000 yuan.

At present, Zhang Lei has completed a four-year cycle of high-power computing machines. Zhang Lei told me:

"If the price of the currency skyrocketed, then sell the coins and sell the machines."

"Why do you sell machines when the price of coins rises?"

"This is the inspiration brought by the S9. If you sell the S9 in 130,000 units now, will you sell it or not? But at that time, 90% of people chose to dig by themselves, including me." Speaking of this, Zhang Lei also I regret that I didn't change hands to sell the low-priced S9, which was the end of 2017 when Bitcoin was $ 19,000.

For Zhang Lei, fearless bulls.

"Mining machine maker segmentation market cake"

In May 2020, the output of bitcoin was halved, and the difficulty of bitcoin mining will rise again by an order of magnitude. The price hype and the replacement of mining machines will come ahead of schedule.

In August 2018, Jianan Yunzhi took the lead in developing a 7nm chip, but the chip design caused problems with tapeouts. It was not until early October this year that a new generation of A11 series rated computing power of 61 TH / S large mining power was introduced.

But since May this year, Bitmain and Bitwei have begun to split the market cake.

On September 8th, at the site of Chengdu Wanda Ruihua Hotel, the organizer Fangdong Technology released a new generation of T3 + 56T mining power mining machine. As the industry's fourth-ranked company, Xindong Technology was one month ahead of Jianan Yunzhi.

There were almost no seats in the venue. Miners and mine owners from Inner Mongolia, Sichuan, Xinjiang and other places sat down at the stage to "listen", and guests spoke on the stage to analyze the benefits of mining while avoiding market risks.

Outsiders push people at the venue. These people come from mining machine manufacturers, mining pools, mining companies, cloud computing platforms, mining machine power manufacturers, currency loan companies, and quantitative teams. They flew from Shenzhen Huaqiangbei or an office building in Beijing or Shanghai to Chengdu to find target customers. .

At the same time, Bitmain sent all its sales staff for mining machines.

Previously, the embarrassment faced by Bitmain was that due to chip capacity issues, miners were less than the S17 spot, and BitWei has delivered 100,000 M20S / M21S.

A person close to Bitmain said that Bitmain has its own market analysis team that will formulate mining machine chip capacity and mining machine prices based on market expectations. These big leaders often argue that they are red-faced.

In February this year, Bitmain began to customize chips, but did not expect that the market would suddenly rise.

According to statistics, from the beginning of 2017 to Q1 of 2018, Bitmain sold more than 3 million mining machines, including more than 2 million S9 mining machines, with sales of about 30 billion people and a gross profit of about 60%. The production capacity reached more than 10% of TSMC's production capacity, becoming TSMC's second largest customer in mainland China after Hisilicon.

At this point, Bitmain officially dominates. In the past three years, ant mining machines have occupied 70% of the market share.

An investor in BitWei believes that Yang Zuoxing is the actor of the Ant S9 miner: "Zhanke Group has never made the best chip. In the market, the best S9 miner chip is made by Yang Zuoxing."

In August of this year, when Sichuan visited 13 bitcoin mines, high-power mining machines have not been put on the shelves in bulk, and most of them are mainly ants S9 and T9 +.

Bitcoin mine at the foot of the mountain

However, the cakes of the market have been re-divided by Yang Zuoxing and Jenke.

According to media reports, Shenma Mining Machinery's total sales this year reached 6.7 billion yuan. According to Bit Micro Investors, the market share of Shenma Mining Machine is about three times that of Ant, with 6-7 billion orders. Ants only have capacity in December, and capacity is fully booked before December.

And Zhang Lei believes that Shenma's shipments dominate this year, and the market share may be close to 50%, and the rest of the total account for a little more than 50%.

If these data are accurate and comprehensive analysis, the “cake” of the low-power high-power mining machine, the share of Shenma mining machine is close to 50%, the share of ant mining machine is about 16.7%, and the remaining 33.3% is Avalon and Wing Bitt shared.

However, while the Zanke regiment led Bitmain, he counterattacked Bitbit, causing Yang Zuoxing to be arrested for allegedly infringing Bitmain's commercial secrets.

Subsequently, Wu Gang, the founder of Binxin, the owner of BitWei, revealed that Shenma Mining Machine will release the new machine M30S. According to Honeycomb Finance reports, people in the mining industry said that the performance index of the mining machine is 38 watts per T, which exceeds the current best-performing mining machine ant S17 series on the market.

Three days later, Bitmain also reported that the Ant S19 chip has been sent to TSMC's current chip. The performance index of the Ant Miner S19Pro can reach a maximum of 30 watts / T.

A person familiar with the listing of Jianan Technology said that from TSMC, Bitmain ’s chip output in October was 10,000. And another old competitor, Janan Yunzhi ’s chip production capacity in January next year will also reach 10,000 pieces, and December is the start of Bitmain ’s ant mining machine officially entering the mine in large quantities.

In response to the halving of Bitcoin and grabbing the market share of millions of high-power mining machines in the next 4-5 years, the competition among several major mining machine manufacturers has just begun.

Putting aside the many factors such as the price of the mining machine and the price of the currency, if about 3.9 million small hashing power miners in the market were all replaced with large hashing power miners above 50T, the difficulty of mining in the future can be imagined.

"Second-hand miners are on the way to being eliminated"

In the past six months, the second-hand mining machine has been restarted and eliminated again.

At the beginning of 2019, the price of bitcoin passed the lowest point in history, and the computing power and mining difficulty of the entire network began to rise significantly in two stages. The first was the flood season in June, and the second was the large-hash computing machines were put on the shelves in September.

With the coming of the flood season, the price of the coin rushed to over 8,000 US dollars. By mid-August, the computing power of Bitcoin's entire network rose from 53 EH / s to 71 EH / s, and the difficulty of computing power rose from 7.41T to 9.99T. It is the stage of restarting the used mining machine.

Starting in September, second-hand mining machines are on the way to being eliminated.

High-power mining machines have been put on the shelves in batches, and second-hand mining machines have been put off the shelves in batches. As a result, the two indicators of computing power and mining difficulty have risen sharply again. The force remains between 85-100 EH / s.

Bitcoin's entire network computing power: reached a low point in December 2018, and has surged since late May this year

Wang Chunlei travels around various mines in Sichuan all year round. He resells second-hand mining machines for income. From August to December, he handled nearly 30,000 second-hand mining machines with an average profit difference of 250 yuan per unit.

In mid-September, a miner asked him to help out 300 units of 13.5T S9i. The price given by Wang Chunlei was 980 yuan per unit, and he changed hands at 1,300 yuan per unit, but the customer felt that the price was low, and the sale was not concluded.

"If one month ago, these machines could sell for 1900 yuan / set, but if they are not sold now, it will be worth several hundred dollars in October." Wang Chunlei advised the other party. In November, Wang Chunlei sold 7,000 14.5T S9j units for the first batch of 800 yuan / set, while the second batch of the same models sold only 690 yuan / set.

Compared with mountainous Sichuan, Xinjiang mines are generally located in the area of ​​Mapingchuan, and the size of a single thermal power mine is much larger than that of Sichuan's hydropower mines.

This year, a Beijing company built a 200,000-bit Bitcoin thermal power mine in Xinjiang. At the beginning of September, I met a commercial manager of the mine in Chengdu. He was talking about machine hosting with several major customers in Sichuan.

When he was contacted again, this mine had already hosted 100,000 load stations during the flood season, and 100,000 loads were left unfilled.

At present, 70% of these hosted machines are high computing power machines, 40% are Shenma, and 60% are core motion. Beginning in December, its investment invitation standard is: the annual electricity price for hosting is 0.35 yuan, and only the annual electricity and high computing power machines are accepted.

Bit Zuo's founder Yang Zuoxing said at another mining circle summit in September:

"Bitcoin will probably reach around $ 110,000 in 2021. As predicted by the currency circle, this is the highest point, and of course it may fall; in the short term, according to the information I collected, based on our current production capacity, This year (Bitcoin's full network computing power) is estimated to be around 120 EH / s. "

Core Motion Technology is more aggressive, and they expect that the computing power of the entire network will reach about 150 EH / s by the end of this year. But Zhang Lei disagreed with these predictions:

"The power resources in the dry season are limited, and by the end of the year, the computing power of the entire network is expected to increase by 8%."

Zhang Jun is a medium-sized miner in Yunnan. I asked him if this data was exaggerated. He feels that: in the flood season next year, the Bitcoin network's computing power reserve will reach 200E EH / S. Now Shenzhen Huaqiangbei arrives at 10,000 ants T17 per month, and now the monthly guarantee increase is 5E EH / S.

Zhang Jun revealed that a few days ago, in a mine in Inner Mongolia, Bitmain just released 10,000 14.5T S9j mining machines, each of which cost 700 yuan, and replaced them with high-powered machines.

"Then why are some mines not yet full?" I asked.

"The reason is not full, because small miners did not buy large computing power machines, S9 passively shuts down, and large miners not only have large computing power machines, most of them have their own mines."

In fact, the mining income of a miner is determined by four factors: the difficulty of mining, the power consumption ratio of the miner, the currency price and the electricity price.

Data source: Bitcoin Hashrate

Data source: F2Pool

Data source: BTC.COM

When the currency price, electricity price, and power consumption ratio are constant, the mining difficulty is greater, and the daily currency standard income is smaller; when the currency price, electricity price, and mining difficulty are constant, the lower the power consumption ratio, the lower the mining electricity cost, but in the end The decisive factor in mining revenue is still the price of Bitcoin.

Comprehensive reference to Bitcoin Hashrate, F2Pool, and BTC.COM data. In October 2018, the computing power of the entire Bitcoin network began to decline from a maximum of 53EH / s to 36.55EH / s, and the difficulty of mining gradually decreased from the highest 7.5T high to nearly 5T. .

This period of time is the beginning of the bear market and the end of the flood season. During the shutdown and migration of the mining machine, the second-hand mining machine was "discussed for sale". Those miners who had high hosting electricity prices and insufficient cash flow were once washed out of the mining circle. .

"Behind the" Nuggets "Paradise, Benefits and Risks Coexist"

From the era of roast cats, from Northeast and Hebei to Henan and Guizhou, bitcoin miners, like gold prospectors in the 18th-century American westward movement, went deep into the mountains and plains and continued to develop power resources. For several years, From north to south, from east to west, four "mine areas" in Sichuan, Yunnan, Inner Mongolia, and Xinjiang were eventually developed.

But when any industry develops into the industrialization stage, its pattern becomes a game between capital.

In essence, mining is a heavy asset industry. On the one hand, mining costs tens of millions to hundreds of millions of yuan. On the other hand, sufficient cash flow must be guaranteed to pay for electricity. However, due to the high price of bitcoin, The volatility also makes the risk of mining much higher than that of traditional industries.

At present, miners are generally divided into the following categories: one is the early miners who started with graphics card mining, and these miners have accumulated deep capital; the second is the companies with strong mining circles, such as Bitmain, Bitmicro, and Core Motion Several major mining machine manufacturers and Leibite mining pools, coin trusts, and powerful mining companies; the third category is local miners with power resources, and such miners generally own their own mines; the fourth category comes from traditional industries and the Internet. The factory regards mining as the tertiary industry, but they generally only mine and do not build mines; the fifth category is small and medium-sized miners with dozens to hundreds of units.

Taking Bitmain as an example, there are 12 cloud computing power branches in China, including 2 in Sichuan, 3 in Yunnan, 4 in Inner Mongolia, and 3 in Xinjiang. An indigenous mine owner in Ganzi Prefecture of Sichuan told me that there are In each mine, Bitmain put a 50,000 load mining machine.

In mid-October, my colleague and I drove for 8 hours and came to a certain county in Liangshan Prefecture, Sichuan Province. One of the mines is hidden on the mid-mountainside of a highway fork. If it is not contacted in advance, I am afraid that the roar of 80,000 load machines will not be heard.

Mines on the mountainside

This mine was built by Anhui miners from traditional industries, and the person in charge of the mine told me:

"There are about 14 mines in the local area. Due to abundant hydropower resources, the smallest mines are also starting from 40,000 loads."

The first four types of miners either produce their own mining machines, or own their own mines or pools, or have all three advantages. The focus is on sufficient cash flow, and their ability to resist risks in the face of market bullish transitions. The miners are unmatched.

Bitcoin's technology and investment attributes have made many supporters believe that Bitcoin will rise to 20,000 or 100,000 US dollars, whether it is the currency circle or the mining circle. It is even more exaggerated to say that Bitcoin will eventually rise to 500,000 or even 1,000,000.

Wu Jihan, who has always been known for his calmness and restraint, believes that each time Bitcoin's bear market and bull market are growing, it is possible that when this time is halved, the bull market will not come. For the impact of halving in the future, I I think there are still many uncertainties; if I am an investor in mining equipment, it will be more conservative, but I will continue to invest.

Compared with the bear market reshuffle at the end of 2017, the halving of bitcoin production in 2020 leads to a reduction in mining revenue. The mining revenue of small computing power machines cannot compete with the computing power of large computing power, while the input cost of mining power of large computing power increases. Uncertainty in prices and many factors will undoubtedly increase the current mining risk.

As early as July of this year, an analyst from an industry investment institution expressed his views on the market: Previously, Bitcoin's mining cost was an average price of $ 3,000. According to the consensus price of $ 5,600, Bitcoin will fall to $ 6,000 in the second half of the year. Then, in May of next year, Bitcoin can rise up to 18,000 US dollars.

Mining fights for the price of electricity. If the price of electricity is cheap enough, it can outperform most miners. Zhang Jun has stated many times that if the price of a currency rises, we will make money. If the price of a currency falls, the computing power will also decrease. We will dig more bitcoins.

Based on the Bitcoin price of $ 7,499 and the mining machine's managed electricity price of 0.36 yuan, the Shenma M20S 68T mining machine has about 0.001308 coins per day and a daily net income of 42.44 yuan. It returns 318 days to this cycle, while the Ant S9i 13.5T mining machine's daily income Only 1.46 yuan.

Bitcoin halving pushes the upgrading of mining machines, and also pushes miners to choose high-power mining machines with low power consumption. If the price of the currency drops to $ 6,500, and Zhang Lei's mining machine has not been replaced, he may have to face the risk of shutdown, just like Zhao Dongyang. At this time, Zhang Lei was drinking tea in a tea house in Chengdu.

(Note: In the text, Zhao Dongyang, Wang Chunhua, Zhang Lei, Zhang Jun, and Wang Chunlei are pseudonyms)

This article was originally created by Deepchain Finance (ID: deepchain-eva). Reproduction without authorization is prohibited.