Unless bitcoin prices stabilize above $8,000, mainstream miners will not mass produce new miners.
Starting in April, the bitcoin bull market seems to be back, and the domestic second-hand mining machine price has almost doubled. Because Bitcoin mining has started to make money again.
According to blockchain data company TokenInsight, the price of bitcoin was about $4,000 at the beginning of April this year. When investing in mining machines, the cost recovery cycle might take 200-350 days (according to the market price on April 8). However, when time came to early May, the current bitcoin price has risen to nearly $5,800 (coinMarketCap's bitcoin price was about $5778.57 at the time of writing), which means that the payback period of used miners has been reduced to less than 200 days.
- Three indicators of bitcoin's "escape and dip"
- After the price of the mining machine doubles: overseas buyers sweep the goods, and the trillions of giants enter the market.
- Deep adjustment period of mining industry: Bitcoin's overall network computing power has changed rapidly in the short-term mining machine pattern
- Jianan Zhizhi's total revenue in the third quarter was 670 million yuan, and mining machine revenue accounted for 98.3%.
- Big Competing Mining Machine Battle: Bull Market Saving Mine
- Perspective | Can Energy Investment Determine Bitcoin Value?
Michael Zhong, a TokenInsight cryptocurrency mining analyst, said:
“As long as the investment return period of the mining machine is less than 200 days, the miners will seize the opportunity to make money. Obviously, the increase in bitcoin price has stimulated the miners’ demand for second-hand mining machines. However, the market recovery will also lead to the price of mining machines. Rising, and then the return on investment will return to more than 200 days."
For miners like Darius Sharif Samani, today's market dynamics have had a huge impact on them. Darius Sharif Samani currently mines in China, he owns his own mining machine and also provides mining machine sales agency services for other miners. He revealed that the price of the second-hand ant mining machine S9 had risen as early as March this year, when the price was about $140. This mining machine made by Bitland can provide 14TH/s mining power.
But soon, the price of the S9 second-hand mining machine climbed rapidly to more than $250 in April. The better-equipped second-hand ant mining machine S9 (computing power up to 14.5TH/s) will cost more than $280, and some even It has reached $320 per unit. Darius Sharif Samani said that if it is calculated at $320, this means that the 1TH computing cost will reach $22 (320/14.5).
Darius Sharif Samani said:
“If the price of second-hand mining machines continues to rise, buyers may not start because, except for a few well-funded mines, individual miners are seldom willing to pay $23 for 1TH for a new mining machine.”
Mining machine wholesalers and market makers are beginning to hoard?
Darius Sharif Samani also revealed that some mining equipment wholesalers told him that certain models of mining machines had been sold out, which made Darius Sharif Samani very puzzled because the market could not change so fast, he said:
“There has not been much change in the market in the past few months, but for the first time, someone has told me that some mining machines have been sold out. This has not happened for a long time.”
In fact, Darius Sharif Samani suspects that the mining machine wholesaler is “making the market” and he explains:
“Some people may be hoarding miners. By squeezing individual miners on the market, they can make a lot of money after the market recovers.”
TokenInsight cryptocurrency mining analyst Michael Zhong also recognizes Darius Sharif Samani's view that he believes that some mining equipment wholesalers and second-hand mining market makers in the current mining market are hoarding, hoping to make a profit in the next bull market. One stroke.
The mine plans to lay out the flood season in advance
Indeed, the recovery in bitcoin prices has spurred a large number of miners to return to the market, but another factor that favors the bitcoin mining market is the upcoming flood season.
At present, the total power of Bitcoin is about 50EH/s, but with the arrival of summer, the southwestern region with abundant water resources in China can provide very cheap hydropower resources for the mine. Some mine operators have estimated that during the summer flood season, Sichuan and other places are expected to deploy more than 1 million mining equipment, which will make the Bitcoin network's computing power reach 70EH/s, which will exceed last August. The highest 60EH/s computing power record in Bitcoin.
But the question is coming. Who will provide the extra 10EH/s computing power? The answer is simple, the mining machine.
10EH is equal to 10 million TH. Let's do a simple calculation:
- If the extra 10EH/s computing power is provided by the ant mining machine S17 (each computing power is about 45TH/s), this means that in the case of stable bitcoin prices, there will be in the next few months. At least 220,000 mining machines are put into the market;
- If the extra 10EH/s calculations are provided by the old second-hand miners such as the Ant Mine S9 (each with a power of about 14TH/s), this means that when Bitcoin prices remain stable, At least 700,000 mining machines will be put on the market in the coming months.
“Futures Mine” business model is not reliable
Aside from the two factors of rising bitcoin prices and high water prices, there are other drivers for the rise in demand for used miners.
Chris Zhu, co-founder of Poolin, a cryptocurrency mine, believes that the introduction of new capital is another factor driving up demand for the second-hand mining market. He said:
“In 2019, the mining industry actually invented a lot of new funds, because some investors want to mine cryptocurrencies in the bear market, which will make their risk much smaller.”
Fundamental Labs, a Shanghai blockchain investment company that recently raised $44.5 million, is a “newbie” who has just entered the bitcoin mining industry and is preparing to “bet” the bitcoin mining market before the summer. Chris Zhu and Raymond Yuan, founder of Fundamental Labs, believe that there may be more mines in the mining market this year, and the number of individual miners may be reduced.
Chris Zhu also found another problem. Now there is a so-called “futures mine” business model in the mining market. Some mine operators will not find customers after the mines are built. I have already reached a cooperation with the customer before. Not only that, they will raise funds and equipment from customers first, and then use this money as the initial funding for building a mining infrastructure.
According to Chris Zhu, this “futures mine” business strategy is very unreliable, because no one can be sure that Bitcoin mining will be profitable. Raymond Yuan, founder of Fundamental Labs, also acknowledged Chris Zhu's view that he said the supply of mining machines is limited, and that some mine operators may overestimate the benefits of the wet season, so there may be equipment available at the mine. The total supply exceeds the total supply that the mining machine manufacturer can provide.
The new mining machine investment return cycle may be longer
It is worth mentioning that although many new equipment will be launched in the mining machine market this year, these mining machines will not be able to be put on the market in large quantities, or the investment return period will be longer.
Take the current three manufacturers of Bitewei, InnoSilicon and Bittland on the market:
- The InnoSilicon T3 miner can be up to 43TH/s and is priced at $1,580, but will not be shipped until June.
- Bitewei (English brand name MicroBT) has launched the new mining machine WhatsMiner M20S with a power of 70TH/s and 48W/hash in April this year, but the company's founder Zuoxing Yang said that shipments can only be shipped in May. Buyers who have orders between 1000 and 2000 will have to wait until July or August if the order volume exceeds 10,000.
- Bitcoin seems to be doing well. They recently launched the flagship ant mining machines S17 and S17 Pro, and the first batch of products have been shipped in May and are currently marked as sold out.
However, the return period of the new mining machine may be longer than that of the second-hand mining machine. TokenInsight cryptocurrency mining analyst Michael Zhong believes that the current bitcoin market price has not reached the 2017 level, so the current cost-return rate of investing in new mining machines May be lower. Not only that, but unless bitcoin prices stabilize above $8,000, mainstream miners will not mass produce new miners.
This article comes from CoinDesk, the original author: Wolfie Zhao
Odaily Planet Daily Translator | Moni
This article was translated from https://www.coindesk.com/bitcoin-minings-new-bidding-war.
Please indicate the source if you reprint.