Editor's note: The original title was "Half the market may be the beginning of a mining disaster for Bitcoin miners"
On November 21, 2019, China's mining machine maker Jia Nan Yunzhi accompanied CEO Zhang Nanhuan to ring Zhong Ling and officially listed on Nasdaq. The company is considered to be China's first listed mining company. Prior to them, the more influential Bitmain also tried to list in Hong Kong. It seemed that it did not succeed for various reasons, and soon fell into a "civil war."
Many people in the digital currency industry often regard mining machine makers as the most upstream of the industry, because it seems that almost a steady flow of funds is flocking to the manufacturers of mining machines, and one Bitcoin mining machine is in the eyes of many people As magical as a "money printing machine", it seems that as long as you can buy a mining machine, it means that wealth is rolling in. But the truth does not seem to be the case, because the huge fluctuations in the price of Bitcoin have always been a huge worry for miners.
The so-called "Bitcoin Miner" is a computer specifically designed for the Bitcoin algorithm, in which the chips are customized for the algorithm. According to the algorithm designed by Satoshi Nakamoto that year, Bitcoin was born on January 3, 2009. At the beginning, it generated 50 coins per hour. This production speed can be maintained for about four years, and then halved every four years. The first halving took place on November 28, 2012. When 10.5 million Bitcoins were mined, the Bitcoin network started to generate 25 every 10 minutes. The second reduction occurred on July 10, 2016, when the total amount reached 15.75 million (newly generated 5.25 million, which is half of 10.5 million), and halved again to produce 12.5 every 10 minutes.
Based on the current speed, it is speculated that the time for halving again will probably occur around May 2020. Once production decreases sharply and demand remains the same, then the price will inevitably rise. This seems to be the main logic of many investors in Bitcoin at present, so there are quite a few people in the industry who believe that the so-called "halving market" will occur in 2020. As a result, many people have invested or increased their investment in Bitcoin mining, which has led to a continuous increase in Bitcoin hashrate.
If calculated at the price of $ 7200 / Bitcoin, at the current production rate of Bitcoin (12.5 / 10 minutes), then a year of Bitcoin miners will produce about $ 4.73 billion of Bitcoin, considering that Bitcoin is currently good Liquidity, then it is not surprising why there are so many funds invested in Bitcoin mining.
First of all, for the so-called "halving market", in fact, if we observe the trend of bitcoin prices, the rise of bitcoin only appears after halving at least half a year or a year, and it peaks after almost a year The two previous peaks were December 2013 and December 2017. In the face of such a long delay, it is questionable whether there is an inevitable correlation between the so-called Bitcoin market and halving.
At least for the peak in December 2017, the general view is that due to the ICO boom, a large amount of hot money has poured into digital currencies, which has caused a huge bubble in the industry, and it seems that there is not much correlation between whether Bitcoin is halved or not. . And even if the peak at the end of 2013 is related to the halving of bitcoin in November 2012, a single case alone seems difficult to give us enough reason to believe that the halving in 2020 will definitely bring a bitcoin. Skyrocketing.
But after all, there are still a lot of funds invested in the manufacture of mining machines, which greatly increases the production cost of Bitcoin. The halving of Bitcoin will make the cost even more amazing, so some people think that because the cost of Bitcoin has risen, it will cause the price of Bitcoin to soar.
This is obviously another unconvincing reason. The price of any commodity has never had a strong correlation with the cost. The price is always determined by supply and demand. If the market does not need or needs so much, no matter the cost Neither can support prices.
In any case, it seems that there are still many people who believe that the "halving market" will definitely appear in 2020, and invest massive amounts of money to buy bitcoin miners and start mining. Although we don't know exactly how much capital is invested, the fast-growing hashrate data has it all.
Since June this year, the hash rate of the Bitcoin network has increased by 80%, probably due to the use of advanced mining equipment. According to a recent report from digital asset management company CoinShares, Chinese bitcoin miners currently control approximately 66% of the world ’s “computing power,” the highest value recorded since China ’s share exceeded 60% in June. CoinShares research director Chris Bendiksen said the increase in Chinese miners' computing power may be due to the use of more advanced mining equipment in China.
CoinShares also said that the most important mining centers in the world are currently located in Yunnan, Xinjiang, Inner Mongolia and Sichuan Provinces of China, of which Sichuan Province accounts for more than half of the global hash rate. Other centers are located in the United States, Russia, and Kazakhstan.
The company expects that as mining chips produced by Chinese companies such as Bitmain become easier to export, Bitcoin's computing power will be more evenly distributed around the world.
At present, the computing power of the entire network is about 95E, and according to the current increasing speed, the computing power may rise rapidly at the speed of 10E-15E in the next few months. When it is halved next year, the computing power may reach a record Between 140E and 150E. And if the price of bitcoin is still maintained at $ 7,200, it means that the total revenue of the mining industry has returned to the level of about $ 3,600 (7200/2) after halving. At the time of the last Bitcoin price of about $ 3,600, the hashrate of the entire network was only between 40E and 45E. This is likely to put bitcoin miners under unprecedented pressure, and eventually pass the pressure on to miner manufacturers.
The issue price of Kanan Yunzhi is US $ 9, the initial supply is 10 million, and the fundraising amount is US $ 90 million. As of December 13, its price has fallen to 5.71 US dollars, a drop of nearly 37%. It can also be seen that investors have great doubts about the future mining machine business.
Compared with Bitmain and Shenma Mining Machinery, the decline of Jianan Yunzhi's stock price may not attract more attention. Recently, Bitmain Wu Jihan regained control of the company through a series of operations, and Zhanke's group seems to indicate that it will not give up. On December 15, according to media reports, Yang Zuoxing, the founder of Shenma Mining Machinery, was sued by the judicial authority for occupational misappropriation, mainly due to intellectual property disputes involving Bitmain.
However, based on the industry situation at this moment, many people have great expectations for the "halving market", and there are already large-scale funds in place. But if the market does not appear on schedule, I am afraid that it will exert huge pressure on the entire bitcoin mining industry, and may even have an unprecedented "mine disaster".