Bitcoin Mining: The huge imbalance in survival behind the imbalance between supply and demand

In the April of the Western Sichuan, the curtain of the flood season is slowly opening. Zhang Xiaokang is carrying a faint morning fog, driving on a mountain path, and the mountain winds whizzing past…

After the "mine disaster", he crouched for a winter and only recently revived. “As bitcoin prices stabilized and the flood season approached, I started thinking about mining,” he said.

The cattle and sheep are grassy, ​​and the businessmen are profitable. At this time of the year, the miners who want to move south are carrying the desire for low electricity prices. Like Zhang Xiaokang, it is urgent to negotiate the host mines before the arrival of the flood season, so as to migrate to Yun, Gui and Chu in time. Right now, this scene is being staged.

However, at the beginning of the year, the self-heavy people of the mines suddenly changed, and they changed their past domineering "painting style" and took the initiative to put down the "body", and they all played "People". Zhang Xiaokang told the Nuclear Finance APP, "In recent days, the mines have frequently shouted orders, not only sincere, but also beautiful prices." This reversal obviously made him a little uncomfortable.

"This year is obviously different from previous years. The mine has a serious excess." Beckham Mines (BTC.TOP) CEO Jiang Zaller broke the secret.

Many industry insiders said that in the mining area of ​​the jungle, the supply and demand relationship was unbalanced for the first time. Next, the competition between the mines will be upgraded, and the "price war" will be inevitable. This made the small and medium-sized miners in the vulnerable groups suddenly become the toon, they have the right to bargain, and they are eager to fight.

The mine started the "price war"

In the past few days, the rivers and rivers in western Sichuan have been surging, and a month later, they will officially welcome the flood season.

"Unlike what I expected, this year's mine investment information has been screened in the circle of friends." Zhang Xiaokang, who wants to "turn over his body", has doubts and has been rushing between the mines in western Sichuan in the past few days. . He said frankly that he had been in office for several days.

Not only that, after entering April, many mines have almost zero profit investment. “Sichuan Fengshui’s custody price is around 0.25 yuan. There is still bargaining space on this basis.” Liu Xing, the mine owner, told the Nuclear Finance News that if the number of miners’ miners is enough, the price of electricity can be discounted to about 0.22 yuan.

The Nuclear Finance APP learned that the current market custody price is generally on a downward trend, which has caused the miners not to rush to finalize the custody of the mine, and the wait-and-see mood is strong. Jiang Zall analysis said that although the price of coins has been falling last year, the mine is still under construction. Among them, only the new mine in the Leipzig mine can accommodate 150,000 mining machines. According to his speculation, this new water mine will have more than 800,000 new construction sites completed, and does not include small mines with hundreds or thousands of positions. Due to the surplus of the mines, the price of water and electricity power storage will drop, and the mines must use the power contracted with the power station, and even the mines will be charged at the cost of electricity.

In his view, "the cost of thermal power has a lower limit, and there is no lower limit for the cost of hydropower." Therefore, it is very likely that a serious price war will occur.

In addition, Longchi partner Han Bing also told the Nuclear Finance App that the head mine site is still very wealthy and the mine hosting price has bottomed out.

Zhang Xiaokang, who is concerned about the changes in the situation, believes that the price of water conservancy projects this year has dropped by one to two points from 0.26-0.28 yuan last year.

Outsiders think that the gap between 1 and 2 is not obvious, but it is a huge expense for miners. “Electricity costs account for 70% of the cost of mining. If there are 10,000 sets of mining machines, the electricity price will differ by 1 point, and the monthly electricity cost will be 70-80 million yuan.” Zhang Xiaokang said, “In the flood season, hydropower and The price of thermal power has a price difference of about 0.15 yuan, and the cost gap of more than 10 million yuan is calculated every year."

Because of this, electricity prices are the lifeline of miners.

The imbalance between supply and demand also allowed Liu Xing to take a life path of "30 years of Hedong, 30 years of Hexi". "In the wet season last year, our mines were sold out for 40,000 positions. This year the market has changed, and now there is still more than half to rent." His face was full of worries and helplessness.

Tiantian Mining CEO Chai Hua judged that this year, no matter whether the miners or mining machines are less than last year. "One is that the old mining machine is facing elimination, such as Shenma M3, Avalon A741 and other faded out of the market; second, many miners sold off the mining machine at the end of last year after a disappointment; third, some miners moved overseas, to a certain extent, this has been reduced The volume of the southward migration during the second flood season," she said.

At the same time, Flora Chen, head of the RHY mine, confirmed to the Nuclear Finance APP that some of the Middle East mines can get cheap natural gas, and the price of the mining machine is as low as 0.18 yuan / kW, which has successfully attracted a group of miners overseas gold. .

In response to the current unfavorable situation, Liu Xing increased the intensity of investment. Not only did he dig up a sale at a high salary, but he also advertised on Weibo, WeChat, and so on. However, the inquirer is embarrassed and the bargaining party is even rarer.

In response to the changes in the situation, Zhang Xiaokang is full of ambitions, determined to take the profit, waiting for the trust price to fall.

Migrant miners have a pain

Recently, some media said that it is expected that 30% of the total mining machine in the whole network will move south from Xinjiang and Inner Mongolia, about 1 million. Jiang Zall believes that this is only a conservative figure.

However, the sale of the flood season is not as easy as it might seem.

Cai Liang, who is familiar with the migratory gates of the mine, calculated an account with the Nuclear Finance APP. First of all, from the transportation fee, the transportation cost of each mining machine is about 20 yuan, and 10,000 units are moved. If the mining machine is small or the two places are too remote, the transportation cost will be as high as 30 yuan or more. Secondly, the mining machine should race against time and strive to complete the disassembly, transportation and installation in the shortest time. This process takes at least 10-15 days. During this period, the mining machine was shut down, and millions of losses were lost in one day. In addition, there is a slight difference in the handling process, which can easily cause damage to the old mining machine. In the past two years, Cai Liang’s mining machine damage rate is about 5%, and the migration cost is not low.

"Although toss, but if you can guarantee the power supply according to the contract, it is worth it." In contrast, the new miner Zhang Xiaokang's luck is much worse.

At this time last year, the mines were in a tight position. Zhang Xiaokang’s mining machine entered the market for less than half a month, and he was subjected to various martyrdoms for the purpose of price increases.

"Power outages, mining machine failures, leadership inspections… The moths are always in an endless stream." He said that once on the "ship", "man-made knife, I am a fish", let you have no temper. In the end, he can only agree to raise the price of electricity by 0.02 yuan per kWh.

Talking about this matter, Zhang Xiaokang complained about his stomach. “The power consumption of a mining machine is about 35 degrees per day. The difference of 0.02 yuan makes each mining machine increase by 0.7 yuan per day.” He is very worried about this.

According to the Nuclear Finance APP, taking the ant S9 as an example, the effective calculation of the mine is 14.5TH/s, the power consumption of the mining machine is 1356W, the handling fee of the mining pool is about 4%, and for every 0.01 yuan of electricity, the mining revenue will be reduced by 15%. %. When the electricity fee reaches 0.42 yuan / KWh, the mining income is almost zero.

Cai Liang, an old miner, believes that Zhang Xiaokang’s experience is not a single case, and he has personally experienced it. During the period of the flood season, if the 'Party' intentionally increased the price, the miners basically have no resistance. After all, on other people's sites, the miners are vulnerable groups." He said that unless the relationship is hard enough, it is common practice.

This year, the mines were over-remained and the attitude of the mine owners was much lower. A few days ago, at a mining resource matchmaking conference held in Chengdu, the mine owners gathered and the miners were few. Zhang Xiaokang said that for the first time in the dinner, he was treated like a VIP. The mine owner toasted him after a wave of rounds, and the hospitality was full of words.

However, the more enthusiastic the mine owner is, the less the heart of Zhang Xiaokang is. “Now, many mines attract miners at low prices, but who can guarantee that after the mines are really on the shelves, they won’t sit on the ground?” He whispered as he told the nuclear financial APP, the pit of the mine. Too many to mention, if you don't pay attention, you have to pay millions or even tens of millions of "tuition fees."

He also revealed that the miners who earlier finalized the custody price this year also paid attention to the price changes. It is unfair to them to cut prices. It is not known whether it can be changed smoothly.

The "outlet" under the prisoner's dilemma

“The mining has entered the era of meager profit, and the future survival situation will be more severe.” Zhu Xi, co-founder of the coin-printing pool, pointed out that the Fengshui period is not as optimistic as everyone imagined. The Bitcoin mining chain is complex, including chip development. This highly sophisticated technology involves the division of interests in power resources.

He further stated that the three core elements of whether mining is profitable are currency, computing power and electricity. In October 2018, Bitcoin's total network computing power reached a peak of 53.33 EH/s. At the end of this year's Fengshui period, it is expected that the total network computing power will exceed 60EH/s.

In these few days, Zhang Xiaokang took advantage of a slap in the face of the mines in the deep mountains of western Sichuan, vowing to find a shelter for 600 ants S9 mining machines. He believes that the mine plays a very important role, whether the electricity price behind it is compliant, whether the power supply is stable, and whether the mine operation is effective, etc. all determine the ultimate success of the cooperation.

More unfortunately, the industry shuffle is coming quietly. Yuyang, COO of the Mining Association, believes that 2018 is a year-round mine that does not understand wind control. In 2019, it began to reshuffle small and medium-sized mines and new mine owners and miners who are blindly expanding.

Mei Chaoqun, the sales director of Panda Mining Machinery, is deeply impressed. He told the Nuclear Finance APP that the overall network computing power will increase, and the difficulty of mining will be further improved. The older generation models such as Shenma M3, Ant S9, and Wingbit E9 will face elimination with the increase of the entire network.

Its implication is that this will be the last battle of Zhang Xiaokang 600 Ant S9 mining machine.

A bit mainland salesperson who did not want to be named revealed that after the listing of the S17 series on April 9, the replacement effect of the old technology, high power consumption and low output value of the mining machine will be formed. According to the official news of Bitcoin, the three new S17 series S17 Pro, S17 and T17 will be on sale on the official website of Bitcoin on April 9. The data shows that the ant mineral machine S17 series is equipped with the second generation 7nm chip BM1397 independently developed by Bitland, and has been continuously optimized in terms of circuit structure and low power consumption technology. The chip energy efficiency ratio is as low as 30J/T, compared with the previous generation. Energy saving is about 28.6%. From the performance parameters, the old mining machine has become a crushing trend.

"In this wet season, it is very likely that the mines and miners will not be better off." Yu Yang speculated that some small and medium-sized mines and miners could barely collapse from May to August. However, in September and October, as the total network computing power peaked, resulting in a single mining machine halved, they are likely to be squeezed out.

In fact, Bitcoin is a computing game based on computing power. At the beginning of the creation of Bitcoin, Nakamoto added the “Prisoner's Dilemma” to the network, that is, the bitcoin yield rate is constant (the average is excavated every 10 minutes). In the block, the current mining bonus for a block is 12.5 BTC. The more mining machines involved in mining, the greater the net computing power, and the less the revenue of a single mining machine.

It is not difficult to see that after the arrival of the flood season, the miners who poured into the mining market increased, and the income did not rise and fall. As a bitcoin miner, if you want to get more bitcoin, you have to have more computing power to compete with the whole network. Zhang Xiaokang told the Nuclear Finance APP that when he entered the market at the beginning of last year, he spent a high price to buy the ant S9 mining machine. At present, he is not only worthless, but also borrows ten million yuan, and is unable to afford the purchase of a large number of new machines.

"Maybe, the continued rise in bitcoin prices will save me." After a few thoughts, Zhang Xiaokang seems to have only a life-saving straw.

(At the request of the respondent, Zhang Xiaokang, Liu Xing and Cai Liang in the text are pseudonyms)

Text – Nuclear Finance Master Vincent