On the afternoon of February 21, Babbitt's first community interview column, SheKnows, ushered in a mining session. There are only 80 days left until Bitcoin is halved. The event invites Ao Gang, Vice President of Core Motion Technology, Chen Lei, Founder of Blue Whale Blockchain, and Yang Zhou, Founder and CEO of PayPal Finance, to explain the "Operation Guide" for miners, and point you to 2020. Halving the wind direction.
How to seize the halving opportunity? Don't look at what people say, it depends on what they do. Are miners continuing to overweight? Is the mining machine production still full? What are the trends in mining financial play? This issue of SheKnows tells you the answer.
- Bitcoin mining revenue has increased 20-fold in 6 years. Can miners continue to make profits after halving?
- Bitcoin halving may push mining to reshuffle, and efficient miners laugh to the end
The halving is coming. What are the big bosses doing?
SheKnows: What impact did the outbreak have on your business? At present, how is the company returning to work?
Ao Gang: Core Motion has a wide business scope, and the company has more R & D centers. The R & D centers outside Hubei have begun to work normally, while the R & D centers in Wuhan have been greatly affected by the epidemic, and employees can't go there. The company works normally and can only work remotely from home. Fortunately, R & D centers elsewhere have begun to work normally. As for the production and operation and maintenance of the mining machine, we have already arranged in advance years ago. The impact of the epidemic is not too great. At this time, we can see that working with machines has advantages over working with people.
Chen Lei: Recently, the flow of elements in the entire market has been limited. Our Blue Whale Blockchain prepared early and basically overcome these difficulties. From the 30th year of the New Year to the present, the Northwest Mine has been racking machines for customers. The team works around the clock to rectify, rack, and power up the machines one after the other to ensure the stable operation of customer equipment as soon as possible. At present, the mines in the southwest are basically unaffected. The northwest is subject to certain restrictions. Some employees of the Ministry of Operations and Maintenance are still in the isolation period. The high-voltage construction of another project is suspended and it is expected to delay full power supply in March. On the whole, I expect to resume work after the 25th.
Yang Zhou: The impact of the epidemic on PayPal's business is not large. PayPal's business is mainly based on online operations, so it is basically unaffected. During the Chinese New Year, our businesses are operating normally.
Due to the halving of bitcoin, the market's long sentiment has climbed, and some investors have increased leverage, coupled with the arbitrage demand caused by the higher spot premium caused by bitcoin futures, the market's funding needs have continued to increase. In the week when the bitcoin price exceeded $ 10,000, we added more than $ 50 million in stablecoins during the week, and the outstanding loans exceeded $ 380 million.
At present, our company has resumed work in full. According to relevant government requirements, we notified employees in advance. Most of our colleagues returned to Beijing in advance for a period of quarantine. A small number of employees worked from home. At the same time, the health of employees was strictly controlled. Monitoring, daily closed disinfection of the company. SheKnows: Why did the market rise from January to February? If you are asked to use the words "optimistic", "cautiously optimistic", "moderately pessimistic" and "pessimistic" to describe your prediction of halving the market price in 2020, which one do you choose? What is your judgment on future development?
Ao Gang: First of all, I want to emphasize that I am neither a financial scientist nor an economist. All my views are not enough as a guide for everyone's investment, but only for reference. In general, I think the virtual economy and the real economy are somewhat hedged . If the real economy is not good, the virtual economy will still make sense. This is similar to the relationship between yin and yang.
For the halving market, I choose to be cautious and optimistic. I could have chosen optimism, but I must be cautious at any time, so it is always good to be more cautious. The future development cannot be separated from the working principle of yin and yang.
Chen Lei: cautiously optimistic. My opinion on btc is consistent. The possibility of soaring is not so high. Without the occasional events such as the Sino-US trade dispute, the US-Iraq conflict in the Middle East, and the China epidemic, the btc market is less likely to appear. I don't think it is a halving market now. It has nothing to do with the halving. Considering that the major economies have always been unfriendly to digital currency transactions, the restrictions on the access of institutional funds to the pipeline, and the long and short derivatives balance in the trading market, I think the currency price will continue to be around 10,000 and it will be difficult to break the historical high .
Yang Zhou: PayPal's expectation of halving the market is definitely optimistic. There is no saying, "pessimists may be correct, but optimists can move forward." Of course, our optimism also has some reasons and basis.
From a macro perspective, we can see that in the past ten years, one of the main factors affecting Bitcoin has been global monetary policy, which is global easing . Judging from the situation this year, we believe that global monetary policy easing will only strengthen but not weaken because of factors such as the US election and the new crown epidemic. Simply put, as long as the global central banks continue to maintain water drainage policies, risk assets such as stocks and real estate, and safe-haven assets including bonds, bitcoin, and gold will remain bullish for a long time.
In addition, from a meso-level perspective, the consensus of bitcoin in the society has continued to increase , which is reflected in the fact that more and more people have started to use bitcoin as a safe-haven choice, and that U.S. financial institutions have continued to improve bitcoin-related issues. Futures, options products, custody and other services have gradually paved the way for traditional institutions to enter this market. Moreover, the price of Bitcoin has a strong positive correlation with the number of users, and it will far exceed the model price in a bull market.
In terms of events , the launch of Libra by Facebook in 2019 and the learning of blockchain by the Chinese Government Bureau have greatly promoted the recognition and popularization of cryptocurrencies and pushed up the price of Bitcoin. Some of these things will continue to ferment this year, such as Libra, and there may be other similar incidents this year, driving up the price of Bitcoin. Geopolitical turmoil could also cause Bitcoin to skyrocket.
From a halving point of view, I have always been optimistic about the SF model of Plan B. After the halving, as the supply of bitcoin drops again, its SF model is expected to exceed $ 1 trillion in market value, and the price may even reach $ 50,000 to $ 100,000 .
Although it is very optimistic, it does not constitute investment advice. The currency market is risky, and admission must be cautious. Leverage must be controlled to survive . SheKnows: Everyone has faith in BTC. In addition to Bitcoin, which coins are you most optimistic about in 2020?
Ao Gang: BTC has a better chance this year, and several other currencies also face halving. ETH has risen more during this period and is already proving itself. Litecoin and Zcash also have opportunities.
Chen Lei: We paid attention to eth in the early years, and now do things around btc. Although our blue whale data group and risk control team include me personally, we still have some experience with the btc market, but one of our principles is not to speculate. It is nothing more than using financial leverage and hedging tools for offline risk exposure, but it will not go directly to the secondary market.
Yang Zhou: The entire cryptocurrency market is actually based on bitcoin. Other currencies are more volatile, and there are other stories, but we focus on serving the bitcoin market. I do n’t have any opinion on other currencies. SheKnows: Halving is coming. What preparations and plans have you made for 2020?
Ao Gang: Core Motion is well-prepared for the arrival of halving. We have been continuously launching energy-efficient miners since 2018 and the goods have appeared to customers as early as possible, and we believe that the stability and life of the miners are very important. Therefore, we have successively produced four generations of chips and miners from 2018 to 2019. The purpose is to provide customers with better energy efficiency, more stable operation and longer life. The earlier the shipment, the greater the customer's profit. In the market, you can't play fictitiously, because in the end, the interests of customers pass the income test. Just pursuing energy efficiency is not enough. Missing the time window and not being able to increase the amount are great losses.
Chen Lei: We BitBlue Whale is an early transformation of integrated computing power operation service provider in China. The main service manufacturers, institutions and financial investors and other customers, halving is not important to us, there is always a natural adjustment of supply and demand in the market.
In 2019, we continue to increase investment, and newly invested in the construction of four mines in southwestern and northwestern China and Kazakhstan. In the first quarter of this year, more than 50,000 new high-standard machines were built, and we are currently attracting investment. In addition to mining services, Blue Whale currently deploys services for large amounts of OTC for individuals and institutions, extended guarantees for mining machine loans, and cross-border industrial chain operations.
Yang Zhou: PayPal's business is mainly to provide users with mainstream currency deposits and loans, leveraged transactions, fixed investment, inter-agency fund lending and other services. In response to this year's market situation, we have also made some corresponding adjustments.
One is for miners. Miners are also our most important customer group. We have always had pledged loans in various currencies. During the period of the bitcoin price drop from 2018 to 2019, our loan business helped many miners to survive the difficult period. Miners make a lot of money. This year, we will further cooperate with mining machine manufacturers to provide miner mortgage loans for miners, helping miners who intend to expand their scale to make better use of funds, improve the appropriate efficiency of funds, and prepare for the halving;
The second is to set up Babel Private, a service department for high net worth customers, to enhance our professionalism and ability to serve high net worth customers. The third is to set up a financial innovation department, which uses financial derivatives such as futures and options in the existing market to design a series of low-risk structured wealth management products. The fourth is the introduction of supercomputing funds for traditional institutions, enabling more professional investors to enter the mining market. SheKnows: This year's mainstream currency is gaining enthusiastically . What is the current situation of the core coin mining machine sales? Which currency miner is finally welcome? The probability of halving will make some mining machines work. What suggestions do you have for miners?
Ao Gang: Our mining machine sales in 2019 are better, because we have seized the correct time rhythm and launched the earliest mass-produced high-efficiency bitcoin mining machine. We have also successfully launched Ethereum ASIC miners, which has given our customers a comparative advantage in this regard, so many large GPU miners have also chosen to purchase our Ethereum miners, and the response is very good. In addition, our Wright mining machine and Big Zero Coin mining machine are mainstream models with very good energy efficiency, which will be more competitive when the halving arrives.
There is no doubt that when the halving arrives, the machine with the worst energy efficiency shuts down first. Everyone knows that the base of the last generation of backward mining machines is very large, and the mining market will develop more healthily by eliminating those machines.
Mining + Finance, New Fashion for Miners
SheKnows: The public likes to talk about mining costs. What is the average mining cost of BTC now? Is this really the last line of defense for Bitcoin price?
Chen Lei: This is a complicated issue. The industry's transparency is not sufficient, and it is difficult to give accurate estimates. I personally estimate that the current average mining cost of the entire industry is about 4,000-5,000 US dollars, but this number is dynamically changing. The so-called "average mining cost of the entire industry" for static calculation is meaningless to me. For any investor, the actual mining cost should be (the cost of mining machine purchase) + (mining machine operation and maintenance cost) + (mining cash flow strategy) + (hedging / leverage instrument intervention level), etc. The elements are superimposed , and the single calculation of how much money it takes to buy a miner and how much electricity it costs per day is a bit outdated and hasty.
This so-called overall mining cost is often used by friends outside the circle to calculate annualized returns or payback cycles, or to evaluate the bottom of the bitcoin price. I don't think there is a linear logic in this matter, and the correlation is very poor, otherwise in history There will be no mining disasters. The relationship between the price of bitcoin and the mining industry is more because the bitcoin market affects the mining industry. I don't think the mining industry has the ability to influence the Bitcoin secondary market . SheKnows: Mining comes with its own leverage and high risk. Financial tools will provide a lot of help for miners in 2019. What financial products are miners currently using? Can you give some examples.
Yang Zhou: Miners are one of PayPal Finance's main business customer groups. Since the low price of coins in 2018, we have continued to serve the mining style through pledged loans to help miners solve the liquidity crisis and have spent the most difficult cycle. For example, in the BTC bear market in 2018, there was a miner with a daily electricity bill of US $ 3,000 to US $ 4,000, and the electricity bill accounted for as high as 80% at one time. Later, with our help, miners pledged 1,000 BTC to PayPal and did not sell BTC because of paying electricity bills. By the end of the bear market in 2019, when BTC rose back to $ 14,000, BTC retained by miners was equivalent to earning $ 60 million.
In 2019, in addition to our traditional borrowing, we also have low leverage leverage. To put it simply, users deposit their bitcoin as collateral. We loan to users to buy bitcoin at the spot price, up to 3 times the leverage, so that users can get higher returns when bitcoin rises. In addition, miners can also use currency-based wealth management products to obtain a lower risk gain on the basis of TunCoin. SheKnows: There is a point that miners are the biggest "shorts" in the bitcoin market, because there is so-called miner selling pressure, is that true? Now, how do bitcoin miners deal with the bitcoin they mine? Sell it directly?
Chen Lei: The amount of coins sold by miners is very small in the BTC trading market in front of the total daily transaction size. Of course, there is a problem here, that is, the daily network-wide statistical data, there are many market-making orders, and the actual transaction really shrinks a lot. However, the market order does not exist in vain. The trading market has the logic, rules and gameplay of the trading market. Ability), or the proportion of actual participation in market transactions, are not enough to disturb the trading market of btc . This is my personal opinion. Of course, it is obvious that more and more miners now choose mortgages instead of selling coins , which is good for the entire industry.
SheKnows: 2020 is destined to be a year for the replacement of mining machines. Will mining machine chips enter the 10nm era? How far are we from the 5nm miner? In addition, what is Core Motion's listing plan?
Ao Gang: Different chips have different requirements for energy efficiency. The bit mining machine must have entered the 10nm era. From the perspective of chip design, the technical threshold for bitcoin mining chips is not high. 10nm, 7nm, and 5nm are designed from There is no difference in difficulty, and everyone is advised not to be misled. We have been saying that good design is better than expensive craftsmanship . The new process may bring some improvements in energy efficiency, but the cost, stability, output and delivery time are all greatly reduced. I hope everyone is not misled. For miners, time is money, scale produces benefits, and more coins are the winner.
The Core Motion Group has many businesses, some of which are already in the plan of going public, but we don't think that the business of mining is suitable for the traditional financial road, so there is no plan in this regard. SheKnows: We say that it is fashionable for miners to participate in financial gameplay. From the perspective of financial service providers, what are the financial service needs of miners?
Yang Zhou: The current products have basically met the needs of miners, such as inventory, pledge loans, structured wealth management products, and mining machine pledge loans. One point in the future is to help miners do a full cycle of asset management . For example, miners need to pay electricity bills on a regular basis, but the currency price fluctuates every month, and at what time is the most appropriate time to sell coins, it is a problem for miners. One strategy is to wait until the electricity bill is paid to sell coins on the market, no matter what the price, but this may not sell a good price. We can reasonably use some of the market's derivatives and make a strategy based on the demand for miners' electricity fees to help miners sell coins at relatively good prices to maximize the benefits. Of course, this requires that the derivatives market be more mature, which is also a trend we are currently seeing.
SheKnows: This year, financial derivatives are very hot. Futures contracts, perpetuity, options, ETFs, and a market-wide derivative market. What do you think of the impact of these derivatives on the market and the industry as a whole? Is this the core reason why Bitcoin has soared this year?
Ao Gang: I think financial derivatives are indeed a driving force, but professional people should do professional work. Crossing too far can be problematic.
Chen Lei: Derivatives in the financial industry have always been a symbolic development for the prosperity of bulk products. I have been saying since last year that derivatives have greatly limited the volatility of bitcoin, but at the same time, they have expanded the channels of funds in and out and increased the activity of the trading market. Hedging tools. The more derivatives, the more institutional investors are more willing to pay attention to and study the industry. Although there are some pitfalls in the industry due to lack of industry supervision, it does not affect our positive evaluation of Bitcoin derivatives. As Bitcoin's volatility is slowing down and derivatives are becoming more active, derivatives have contributed .
Yang Zhou: Indeed, a trend in the cryptocurrency industry in 2019 is the emergence of more derivatives, including the emergence of futures and options contracts, and the release of BAKKT. Driven by these products and platforms, we have observed that Bitcoin has brought Changes in pricing have made Bitcoin contracts and derivatives a major pricing market for cryptocurrencies.
This is also a trend that began in the fourth quarter of last year, with contractual transactions and retail leverage. In the short term, it will cause the market to skyrocket, but it will also promote better market liquidity. Because there are more institutions entering, then more derivatives and contracts are used, and speculators often become counterparties in this industry, so the volatility may increase, but at the same time, the transaction volume of the entire industry It is increasing.
We expect that the trend of cryptocurrency financial derivatives will continue to deepen in 2020 , which will further strengthen the professionalism of industry talents, and improve the infrastructure, and will also help traditional financial institutions to enter. Of course, we also noticed that the quarterly spot price spread in the first quarter of this year was higher than the ordinary level, and the interest rate of the stablecoin soared. For traditional finance, such as a crude oil trader, it is easy to get enough liquidity of the US dollar to arbitrage and thus smooth the spread, but at present, the supply of US dollars in the crypto financial circle is insufficient, and traditional institutional participation is still low. SheKnows: The rise of cloud computing power in 2019, why is everyone willing to do cloud computing power? What is the current user usage? Whether ordinary users buy coins or cloud computing power is a one-click order, what suggestions do you have?
Chen Lei: Cloud computing power will enter a period of global competition. Why cloud computing power is valued by all parties, I think there are probably several reasons:
1. Cloud computing power is a financial product in structure and has a derivative basis. It seamlessly runs from the primary market (production) to the secondary market (transactions, loans, and wealth management). It has high playability and can be designed for many types of products. Different people have a higher level of confusion. Good and bad people can do it. Under the cover of the primary market, it is convenient for multiple levers and models to intervene. No matter the traditional finance, currency circle, or mining circle has its own product opportunities.
2. Cloud computing power is an Internet product in form , with low thresholds. The design structure of cloud computing power products is simple, with few embedded elements, and there are no standards and regulations for data interfaces. The secondary market team and the general mining industry team are very easy to get started, as long as players who think they have certain channel capabilities can enter the market quickly;
3. Cloud computing power is essentially a traffic entrance . Outside forces, giants in the mining industry industry chain, exchange giants, and global computing customer channel giants will start a complicated confrontation in the field of cloud computing power. All parties have different purposes for different purposes. , With different products to kill, but in the end all are to keep the traffic entrance and open the flow increase valve. Among them, domestic small and medium players who conduct market activities based on vertical communities, offline sales, and hierarchical sales are not the main battlefield. I personally believe that overseas traffic is the top priority. The final offensive and defensive efforts of all parties must be here. This is an important part of competitors' integration and annexation of the global industrial chain during the further rise of industry concentration.
Which one is better to buy coins and cloud computing power depends on how to buy coins and cloud computing power. Buying coins is essentially an act of holding assets. The biggest difficulty is that you can't hold it. If you buy it and keep holding it, it is actually two unrelated actions that are related to cloud computing power. Compared with buying bitcoin directly, cloud computing power has an extra layer of buffer, which essentially equals some more leverage and hedging opportunities . If you hold it for a long time, you can buy coins directly. If you want to make short-term profits in market transactions, especially trend transactions, you can consider cloud computing power plus a variety of derivative instruments, or you can pay more attention to choosing cloud computing that allows free trading. Force platform. SheKnows: Bitmain now also uses financial derivatives to sell miners. What do you think of this new play, will it be a trend?
Ao Gang: To be honest, I ca n’t understand their plans, but I think that a mining machine manufacturer playing financial derivatives is not a normal way. Now even hospitals are required to decouple from medicines. If they also bring wreaths and coffins, I do n’t know how customers accept it? It is not very good for professional organizations to do professional things. If financial derivatives are needed, I would rather go to PayPal.
Yang Zhou: In late December 2019, PayPal and Avalon also jointly launched the business of mining machine installment purchase and zero down payment purchase. We feel this is also a new and useful attempt. The challenge is that the mining machine needs to be hosted to a reliable mine. For financial service institutions, such as PayPal, it may not be possible to monitor independently. So how can mining machine manufacturers, mines and financial service institutions cooperate to provide this product together? Is more feasible. This will certainly have a certain scale of market demand, but how big it will be, it is still unclear.
Grasp 2020, these suggestions you may need
SheKnows: For investors and miners who want to seize this halving opportunity, can you give them suggestions or advice? What's your judgment on the new trends and new ways of playing in 2020?
Ao Gang: Oppose to eating alone and engaging in monopoly . In fact, the basic rules of mining have not changed. It is to start early, scale up and stick to it. Mining more coins and keeping the results are the winners. There are too many scams in the virtual circle, from mining machines, mining farms, mining pools to exchanges, wealth management products, etc. There are many tricks, many scammers, and many running roads. I hope everyone will brighten their eyes and not dig hard The coins arrived were used to pay tuition. Don't make things you don't understand are my advice !
Chen Lei: The biggest risk of the mining industry is that the returns are heavily dependent on the btc market. As mentioned earlier, I think that btc has entered a period of volatility volatility. There were not many hedging tools in the secondary market in the past. It was not a high enough profit and could not offset the risk expectations. With the advantages of cheap electricity, the risks are there. We serve a large number of institutional clients and have a generally conservative risk appetite. When designing investment strategies and deployment plans, we must consider whether the risk exposure can be closed. After several rounds of baptisms over the past 17 years, I believe that when large funds are admitted, they will be more mature and fully prepared, and will use a variety of tools to implement them. Vendor sales will further sink, and traditional channels of mining machines will be squeezed. Investors will actively increase the proportion of upstream investments to control entry costs and operating costs. In general, in order to cope with the new trend changes, we recommend that investment must choose a professional team, do not do the full chain yourself, and at the same time must consider more the use of risk control tools .
Yang Zhou: In 2019, there are also many changes in the cryptocurrency industry. One of the trends we observe is that mining has attracted many institutional investors. In addition to their strong financial strength, these institutional investors are also more professional, which means that they are resistant to risks. More powerful. For example, one manifestation is that they can expect a longer payback period. Compared with previous individual miners, these institutional investors may endure a payback period of two or even three years. In addition, their understanding of finance is more professional, and we feel that it is easier to reach cooperation in using financial products to control risks and improve returns.
Therefore, we feel that this may also bring some changes to the industry of miners, requiring everyone's operational capabilities and grasp of the market to be more refined. Of course, we are also very willing to cooperate with miners to help you complete the upgrading of these aspects through our products and services. More exciting, click on the link to see this event: http://dwz.date/3Zp