On June 22, after more than a year of silence, Bitcoin once again stood at the $10,000 mark.
The rise in the price of coins and the arrival of the Sichuan Fengshui period have made “mining” once again the first choice for many new players to enter the currency circle.
However, in the grotesque mining circle, opportunities and risks are at the same time. Even in a bull market, miners may fall back.
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Since 2017, bitcoin miners have gradually become the customers of Sichuan small and medium hydropower competition. The miners got low-cost electricity, and a large amount of “disposal of electricity” from Sichuan Hydropower was digested. This should have been a win-win situation.
However, in front of the power plant, the miners who lived “by electricity” often became the object of slaughter. Even miners sold the mine to the power plant and left the scene.
The power plant may not be able to laugh at the end. In the face of capricious currency prices, they not only have to bear the risk of miners running, but also face the problems of the mining industry alone.
01 dreams come true
The 2019 flood season has arrived, but Sichuan miner Zheng Shumin still hasn't woken up from a nightmare a year ago.
This nightmare began in September 2018. On this day, he was woken up by a phone call from a shareholder. Their partner, a hydropower station under a large power group in Sichuan, asked him to pay a fine of up to $400,000 for breach of contract.
Everything changes so fast that people are caught off guard.
Just three months ago, in June of that year, the hydropower station held an investment promotion meeting. At that time, the Sichuan Fengshui period has arrived. Zheng Shumin, who was eager to find a stagger, decided to build a mine here.
In the preparation of the agreement, the power plant proposed: the mine must be built within one month, otherwise Zheng Shumin needs to pay the power plant a fine of 20,000 yuan a day.
Zheng Shumin feels that this clause is too harsh and unacceptable. Because of the flood season in Sichuan, often accompanied by violent storms, there is a municipal engineering construction near the mine, which may slow down the construction progress of the mine.
"But the people at the power plant said at the time: 'Everyone is a friend, this is only a contract, we will not bother you.'" Zheng Shumin recalled.
Thus, in less than a week, the two sides signed a cooperation agreement – Zheng Shumin needs to build a mine within one month and put into production mining; while the power plant provides Zheng Shumin with a power supply of 0.15 yuan per kWh.
The contract also stipulates that the extension of the project due to weather and municipal engineering has nothing to do with Zheng Shumin.
In order to put into production as soon as possible, Zheng Shumin and the miners followed the construction team to start the rain, pulling cables, drowning curtains, and moving fans. However, the completion of the mine was still delayed by one month.
At this time, Zheng Shumin’s cooperative power plant suddenly turned his face and asked Zheng Shumin to pay a fine of 400,000 yuan for breach of contract, and his attitude was very tough – one point could not be less.
In addition, the power plant pointed out that the electricity price agreed with Zheng Shumin in the contract is the pre-tax price. If Zheng Shumin wants to use electricity normally, he must pay another 16% tax. As a result, the cost of electricity costs increased from 0.15 yuan per unit to 0.174 yuan.
After numerous twists and turns, Zheng Shumin transferred the mine to a mining group and left the right and wrong.
From the start of construction to the transfer, Zheng Shumin lost more than one million in less than half a year.
But compared with Chen Xin, another miner, Zheng Shumin is still a lucky one. Under the tight control of the power plant, Chen Xin’s mine was swallowed up.
Chen Xin's mine is located in Aba, Sichuan, and has been put into production as early as 2017. At that time, the bitcoin bull market became the focus of public discussion. And Chen Xin's cooperative power plant also came to the door at this time, asking for shares.
"The meaning of the power plant is that if you don't buy shares, you will leave." Chen Xin said. In the end, Chen Xin can only agree to 50% of the power plant shares.
But the shareholding did not allow the power plant to bind to the miners. In the end, Chen Xin reluctantly sold the mine to the power plant.
"I didn't expect that the power plant was not my electricity bill, but my mine." Chen Xin sighed.
02 deadly seven inches
In the mine, the power plant is the top of the food chain. The miners who lived "by electricity" have always been a vulnerable group. In the face of capricious power plants, they often dare to speak out.
This is because the power plant is holding the seven-inch miners' electricity supply.
A blackout means that the mine will lose all sources of income. At the highest price in 2018, a mine with 1,000 S9 miners would lose 2,900 yuan for every hour of power outage.
If there is no word, it will be blackout and become the most lethal means for power plants to coerce miners.
During the stalemate with the power plant, Zheng Shumin once encountered frequent "blackouts" at the mine.
"There is no sign of power outage," said Zheng Shumin. "The reasons given by the power plant are also diverse."
“The most common rhetoric is that the flood has destroyed the equipment of the power plant and needs to be overhauled.” Zheng said that “the industrial park of the power plant is brightly lit.”
He once chose to compromise and negotiated a new price with the power plant, but in the end he died.
For the first time, Chen Xin suffered a power outage from the power plant because the power plant had a higher electricity price. At that time, Bitcoin coincided with a large round of bull market, the power plant directly required to increase the electricity bill by 0.1 yuan per kWh.
"In the mining circle, the contract between many miners and power plants is often a piece of waste paper. When the price of bitcoin rises, the power plant will find an excuse to increase the electricity bill." Chen Xin reluctantly said.
In the mining area, most mines operate the mine owner's own and managed mining machines. Even if the miners can do it hard, their hosting customers may not be able to accept it.
"Hosting customers see the machine power outage in the background, will not accept any reason, will only require to start as soon as possible." Chen Xin said, "Many managed mines have a special emphasis on their own power plant relationship, in order to dispel customer concerns in this regard. ”
In addition, Sichuan's hydropower resources are mostly concentrated in remote mountainous areas. Mines often choose to be built in supporting industrial parks of power plants, and most of the land is provided free of charge by power plants. This also means that the power plant controls the life and death of the mine.
The mines of Chen Xin and Zheng Shumin are just like this. Chen Xin’s mine was even the first project introduced by the cooperative power plant, and there was no one nearby. The miners ate every day in the power plant canteen. "If you live in a family, you can eat people, and you are naturally subject to people." Chen Xin said.
The control of the mine by the power plant is not limited to this. When Zheng Shumin invested in the construction of the mine, he designed a set of high and low voltage power supply schemes, but was repeatedly rejected by the power plant. In the end, he chose to take out 30,000 yuan and asked the power plant to design a "same" solution.
“Now investing in a 10,000 kW mine will require about 2.5 million construction costs.” Zheng said that “if the plant is in trouble, the mine can only be abandoned. In addition to the transformer, other equipment will become waste, almost no Transfer space."
In the face of the power plant's step by step, Zheng Shumin also raised objections. The reply from the power plant is simple and rude: "Go to the court."
"My mine is on someone else's site, even if it wins, what is the use?" Zheng said.
03 win-win hopeless?
"In the mining area, the power plant is destroyed. It is not uncommon. Even the completion of the power plant and the power plant is destroyed." Yu Hai, COO, said to a blockchain, "This is actually a lack of contractual spirit."
In the face of power plants, miners are mostly in a weak position. Once the bear market comes, the power plant will often become a victim of a collapse in the currency price.
“Now, many power plants require miners to pay 1-2 months of 'power security deposit' in advance.” Zheng said, “And this is the result of the lack of contractual spirit of some miners.”
In 2018, bitcoin plummeted, and many miners suffered heavy losses, and the proceeds were insufficient to cover the cost of electricity. At the same time, the price of mining machines began to plummet, and some miners could not afford to pay electricity even if they sold the mining machine.
In the face of "mine disaster", some miners chose to tear up the contract and directly "run the road." For the power plant, there is only one abandoned factory and a mining machine that can only be sold as scrap iron.
"There are all kinds of chaos in the mining circle. In the final analysis, there is a lack of industry standards in this industry, and the information is extremely opaque." Yu Yang said.
In the intriguing mining circle, more and more practitioners are beginning to abandon the spirit of the contract in order to protect themselves. Many people have forgotten that between miners and power plants, they should achieve a win-win situation.
In Sichuan, many hydropower resources are distributed in the western region. Since electricity cannot be stored in large quantities, it is difficult to transport it to other regions. In the Sichuan flood season from May to October each year, a large amount of hydropower resources will be wasted.
"In fact, the emergence of Bitcoin mining has alleviated this situation." Chen Xin said.
According to data previously disclosed by State Grid Sichuan Electric Power Company, in 2012-2016, Sichuan Hydropower “discarded” electricity was 7.6 billion, 2.6 billion, 9.7 billion, 10.2 billion and 14.2 billion kWh respectively.
Take the 14.2 billion “abandoned electricity” in 2016 as an example. This power is enough to allow 10.8 million 13.5T computing ant S9 mining machines to work for a whole year without shutting down for 24 hours.
The emergence of the bitcoin mining industry has caused many miners to enter the abundant southwestern hydropower area that was rarely seen. And these hydropower stations have also found greater business opportunities.
“Bitcoin mining is becoming a new 'pumped storage power station',” one energy practitioner pointed out.
Pumped storage power station is one of the solutions for the power industry to solve the problem of electric energy load trough. In order to avoid waste of electric energy, some hydropower stations will use excess electric power to drive the pump when the power load is low, pumping water to the reservoir with higher altitude. And then release water at peak power load to meet higher power load.
The pumped storage power station solves the problem of waste of electric energy. However, its construction is subject to topographical factors and costs are high. In contrast, bitcoin mining can achieve similar results with lower cost, realizing excess power resources.
“This is also why some unscrupulous power plants will use various means to annex miners' mines.” Zheng said that “in fact, in Sichuan and other places, many hydropower stations have established their own mines and started to enter the industry.”
He revealed that some Sichuan hydropower stations now no longer accept foreign mine owners, but instead purchase mining machines, recruit miners, and even start mining business.
In addition, there is a legend in the mining circle: a large miner is jointly building a hydropower station in Sichuan to get rid of the situation of being controlled by people.
But the construction of power plants is not an easy task. Hydropower stations have extremely high requirements on technology and capital. In addition, a series of problems such as environmental impact assessment, demolition and resettlement involved in hydropower construction are easy to drag down miners.
According to the National Energy Administration, the hydropower cost during the “Twelfth Five-Year Plan” period was 7075 yuan/kW, which was a significant increase from the “11th Five-Year Plan” period. This number will continue to increase as hydropower construction continues to penetrate into remote areas with poor infrastructure.
This means that if a miner wants to build a 10,000 kW power plant, he will need to invest at least 70 million yuan. This figure is a high price compared to the cost of mine construction and mining machine procurement.
"The self-built power plant has always been a legend in the mining circle, and no one has actually seen it." Zheng Shumin said with emotion. This means that the game between power plants and miners will continue.
Faced with the various routines of the power plant, and more and more power plants to mine in person, the living space of the miners is experiencing a sharp squeeze.
More and more miners are beginning to look forward to the emergence of an industry standard. They want to use it to constrain the behavior of all parties.
At the moment, the miners can only rely on the word of mouth to choose the power plant.
* Some of the respondents in the text are pseudonyms.
Text | Pizza Ratchet