At the “New Era Mining Summit” in Chengdu, we had the opportunity to interview Yu Wei, the first person in the Chinese mine and the head of the former Bit Continental Mine. The conversation with Yu Wei made me full. On the one hand, he is an old man who has crossed the bull and bear and has been mining for many years. He has a very rich experience in mining. On the other hand, Yu Wei is very honest and has exported a series of real, grounded and interesting views. He opposes the infinite expansion of the mine, and believes that the flood season is not a life-saving straw for the mines and miners; he called for the mining industry to be standardized and standardized, and can no longer engage in chicken sheds, and welcome new funds to enter the market. Legal compliance.
Interestingly, just yesterday, the NDRC listed mining as a “elimination class” industry, which is a big drop. So what exactly is the mining industry like? Where should the future of mining go? I believe you can find some answers from this article.
The following is the full text of the interview:
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01 wants to do a good job in the mine, the most important thing is not the price of electricity.
Carbon chain value: You are called "the first person in China's mining industry" by people inside the circle, and it is a good hand for mining. I would like to ask you what factors need to be paid attention to when opening a mine? What kind of pit might you encounter? What kind of people can compete in the mine to be successful?
Yu Wei: In public, I generally have three factors, policy, electricity price and law. But in private, I tell you that the most important thing in the end is the human factor, that is, to find someone who is reliable. If you go to a million-dollar business with a billion-dollar person, he will never lie to you because it is not necessary. Some old people like mines in the mine circle have known for many years, and their worth is also at that level. Everyone is still very reassured. And because bitcoin prices soared, the industry threshold was too low, resulting in a large number of new miners entering the market in 17 and 18 years. Since they all want to get a lot of profits from it, but the industry is not standardized, there are many uncertainties.
Why is the human factor the most important? You said the national policy, can you guarantee this? The price change, can you guarantee this? Are you guaranteed by the legal factors? The policy of the country is changing at all times. The price of electricity is subject to natural factors and some artificial factors. The signing of the legal agreement is not necessarily effective, and it will encounter breach of contract. Who can guarantee? Only by finding a reliable person can he guarantee you. Having said that, even if all three factors are guaranteed, people are not reliable and want to be corrupt from inside, you can't make any money; even if these three factors can't be guaranteed, if people are reliable, he can help. You avoid losses, you don't make money at most, but you won't lose too much.
So how do you find someone who is reliable? Then you have to think about what the interests of people are, and whether the direction of the interests of both parties is the same. Is it possible that you can get what you want, I can get what I want, and whether the relationship between the two parties is equal. If it is obviously not equal, then there may be a big problem inside.
Carbon chain value: What is the lowest cost of opening a profitable mine? What is the income of the mine owners? (You can talk about this from top mine owners, medium mine owners and low-end mine owners.)
Yu Wei: Your statement is not very accurate. Because the main factor in the profit of the mine is the price of the currency, the cost is determined by the price of the currency.
I don't think there is much to do with making money or not. As long as the mine has a certain guarantee and the electricity price is right, it will basically be profitable. This is not to say how much you build and how much you invest. Because now everyone stepped on the pit, once bitten by a snake, ten years afraid of the rope, doing things will be very cautious. In this case, if you are reliable and do the work, then you are a good mine, because you are guaranteed. This way people will trust you, you are still very good investment, can make money.
Like some mines we have done before, in the absence of a negative pressure fan, you put the machine in this mine for half a year, and it is still like a new one. That is a good mine; some mine curtains After being put in, the machine is 20%-30% bad after half a year. Even if it is bad, it will definitely not trust you behind. Again, your project is reliable, people are reliable, electricity costs are appropriate, and the mine design is reasonable, so you can guarantee profits to a great extent.
Now the mine's return period is basically one year, and it can be returned one year after the investment. As for the scale of the profit of the head mine, it is now more than 10 million. However, if the mines move toward the IDC model in the future, the scale of investment at that time will be three times or more.
02 normal big companies will not go to Iran to get electricity
Carbon chain value: It is said that the most important thing to do in the mine is to get cheap electricity. Where is the cheapest place for electricity now? I heard that everyone went to Iran to get electricity, and the electricity bill was only one or two.
Yu Wei: If it is a normal big business, it will not go to Iran to get electricity. In fact, Iran’s electricity production came out. I heard that the first-hand resources were only three cents. Some people got the next five cents to sell, and then the miners took over 7 cents. Finally, they built a mine to host other people’s mining machines. You have no problem with this account, right? Is it steady? But in fact, there are big problems in it.
I say a very extreme example, even if Iran's natural gas is very cheap, don't want money. What is the construction cost of my generator set? Even if it has a load of 2000 kilowatts, then this cost must be 10 million. I spend 10 million to build such a load, sell such a little electricity, do you think he can earn interest back? Interest can't be earned.
So, although the natural gas they use to generate electricity is cheap, the fixed cost you have to invest is high. So you can't just look at how cheap the electricity price is, but also look at the implementation of this price.
In addition, if you are standing in the perspective of the Iranian official, or the perspective of the Iranian oil tycoon, this issue is even more interesting. Why did he sell the electric three cents to you instead of one or two hairs, have you thought about this? Are they fools, do you know how to earn more? They can also buy equipment to mine bitcoin, so why not do it, sell your cheap electricity?
The reality is that he can let you in first, so that you can take advantage of it. When you put the fixed capital into it, tens of millions of money will go in and drive you away. What a simple thing. In this way, he also had a mining machine, and the mine also had it, and he did not need to invest money. You, you are still greedy for a little low electricity bill, and the result is being riddled by others.
The chip of human crime is very important. You deal with a person worth 10 million yuan, he will not commit crimes for 100,000 yuan, but he may commit crimes for one hundred million and one billion yuan.
So, you must not only dig into the price of electricity, so go to Iran and some other places. I feel that if you mine the money , you must pay for it, and you have to pay taxes, so you will feel calm in your heart. Why pay taxes, that is, if one day the government comes to you, you are a taxpayer, not a tax evasion company. This is two different things. You said that the government has a way to control you. There must be a solution. He wants to clean up the mining industry in China, and it is easy. Why is he not checking you now? Because this industry still contributes a little to society.
03 did not find reasons why Bitcoin can rise to 100,000 US dollars
Carbon chain value: As a senior old miner who has crossed the bull and bear, what do you think of the trend of the currency price this year?
Yu Wei: When the market was particularly cool last year, I heard some voices saying that the miners can dig out the coins and can’t sell them, squatting, and waiting for the bull market to make big money? The person who thinks like this is really naive. You think, you don’t sell coins as a miner. What do you pay for electricity? You use the currency to pay the electricity bill, is the human power station willing to accept it? People refuse to accept, how do you mine? The bear market digs out the coins and doesn't sell them. It doesn't even go through the days, so you have to sell them when you dig them out. Therefore, the selling pressure from the miners in the bear market is relatively large.
Some people are eager to come back to the big bull market in 2017, but that big bull market is caused by multiple factors. The introduction of national policies, the rise of ICO, the poor economics of the real economy, the desire to find exports… Many factors have contributed to such a big bull market. Some people now say that the next round of bull market bitcoin can rise to $100,000, but I still can't find a reason for Bitcoin to rise to $100,000.
One of the simplest truths: If I am a bookmaker, when will I push the price up? At least I have to wait until the chip in my hand is almost the same, let alone push 10-20 times. But who is the majority of the chips now? It’s hard to say deeper, but in fact, there are not many coins in the hands of the exchange, and there are not many miners in hand. The turnover rate of the coins is not enough.
Therefore, we should establish an industry norm and reputation system to build a good ecology for the entire mine circle. To reach the scale and volume of the billion-level users, then this industry should be gradually compliant. Now you go to see our mines. It is built like a chicken shed, and it looks terrible. How can the investors of the regular army dare to invest? You see that people who make loans are doing digital currency loans. No one is doing mine loans. Because the mines are not standardized now, there are a lot of pits inside, you have collected mines, and you don’t know if the mines will really work. So, from my personal point of view, this industry still Not ready to meet more users.
In addition, you can look at this problem from the perspective of electricity. We assume that Bitcoin can rise to $100,000, and the price of the currency has risen by more than 20 times, because the machine is still iteratively optimized, and the estimated power is pushed up by 30 times, and the power is pushed up by 15 times. Now the entire bitcoin is 6 million, and 15 times is 90 million. Do you know Xinjiang, the power generation province of our country, what is its power generation? That is more than 87 million. By that time, the entire Xinjiang power was not enough to support the power needed by the Bitcoin network. In my opinion, this matter is still relatively difficult to imagine.
Carbon chain value: Some people pinned the price increase on this bitcoin production halving. What do you think of this?
Yu Wei: It is not very optimistic, but the price of the currency will inevitably fluctuate upward in the long run. But just because I have experienced a lot, I will think more quietly about these issues. 99% think that the price will skyrocket after halving. In fact, I don’t think there will be a huge increase in the price. The opposite is usually reversed, so that the price can be cut in half. There will be tremendous changes.
04 Mine should not expand indefinitely
Carbon chain value: I heard that there were some companies last year. They used to do P2P. Later, when they had no money, they went to the mine and hoped to get a sum of money from the mine. They themselves did not do well in the mines, but because they had the means to take money and take investment from the people, they joined the industry.
Yu Wei: Yes. In 17 and 18 years, many miners came into the market. They saw that the mines at the time could make money, and they would not be able to build a mess. When the results were built, it was discovered that waiting for them was a big bear market. The market did not need so many mines, which was a tragedy. At present, there are a total of 3.8 million total loads during the flood season. These loads are not filled. Although the mines are built, the miners are not willing to buy so many mining machines.
Why do you say that? Assuming that mining mining machines can really make money now, the first mine that should buy a mining machine is the mine. The person who owns the mine does not buy a mining machine, but also buys a mining machine. I am going to buy a mining machine. I have to pay the electricity bill. This electricity bill is higher than the mine’s own affirmation. Why don’t the mine buy me to buy it? It is you who have no confidence in yourself. You are the lowest cost person, why should I do it?
This is the most basic problem. However, in 2017 and 2018, everyone was stunned by the price of the currency, and they did not think about it. Instead, they were blindly building a mine. The last time the Chengdu Miners Conference (the host of the Mines Association) was also asked me what I thought about the price of the currency. I said that I have not yet reached the bottom. My psychological expectations are at least $2,500-2,800. why? Because if you don't let more than 50% of people in this industry die, he won't go to the bottom. And if you look at the people who came to the miners' assembly today, which one is not a smile, think that you can make a fortune by digging a coin?
Now everyone is still very confident. But who is this who gives you confidence? Who gives you the courage? The reason why everyone holds this idea is because they earned a lot of money in the last round of bull market. In my opinion, the dealer must launch the next round, he must wash the chips from the hands of these old people, because the last round is like this.
Therefore, some people are still building mines and building mines infinitely. This is incomprehensible. As it turns out, you have built so many mines and you have not sold the seats. So I still appeal to everyone to take a rational look at mining.
In principle, it is the first mine ring; after digging out the currency, it can be traded, and then there are coins; it can rely on the currency circle to make money to support R&D, and then have a chain. At present, the research on the currency circle and the chain circle is relatively deep, and it is relatively standardized. It is relatively tall, and our mines should gradually move toward this rational and scientific road, so that outsiders can understand and feel that you It makes sense to do this, in order to attract funds outside the circle to enter the market. It’s not possible to do things with such people back and forth in our mines.
Carbon chain value: I find that the problem you are thinking is very different from that of ordinary miners. You are better at using reverse thinking and thinking at a higher level.
Yu Wei: How to say it, because I have been digging for a long time. You said that I can live too much. I don't have to worry about earning one or two million a year. I can't do it. Any friend in the circle can squeeze out a little from there, and it will be enough for me.
Moreover, after the turmoil of 2018, my heart became quiet. At that time, I was able to earn money by investing in ICO. But who is losing? I didn't think about it at the time. So good, there is a saying that "the money earned by luck, all out of the loss." This sentence is what I said at the earliest. I was a person who lost a lot of money last year, so my heart is now very quiet.
After losing money, you will go back and look at the previous things, you will understand: Oh, it turned out that people used to lie to me. In fact, those projects are full of loopholes, but why should I invest? Because I am greedy.
So now I think that people still have to rely on their own true skills to make money, not too greedy. You lie to this today, lie to you tomorrow, put people into your mine, and then make people lose money, in the long run, the damage is the reputation of the entire industry. Who would dare to come to invest here in the long run? How is the industry expanding? Even said that these mines are not swindling outside the capital. I gave Guihua and Wu Gang, who gave the letter to the company, all saw the mine, and then found that it would not work. It proved to be a liar afterwards. Do you know that there are too many pits? The industry is not regulated and it is difficult to develop soundly. This is the main problem I am thinking about now.
05 after leaving Bit China
Carbon chain value: You used to be the head of the Xinjiang mine in Bitland. When did you leave the Bit Continental? Why are you leaving Bitland?
Yu Wei: Bitcoin is a very young and very good company, and our boss is also very personal. Leaving Bittland is a personal reason.
Carbon chain value: What have you done after leaving Bitcoin? What are you doing now?
Yu Wei: After leaving the Bitland, I have been working on the construction of the mining ecosystem. I am willing to share with you my experience in the mine for so many years, and I hope that all mine miners can make money. The miners can earn money, which is also very good for the entire mine. why? Because the miners earned money, he would buy a mining machine, the mining machine developer earned money, and they had the money to develop new and better-performing machines, so that Bitcoin could go back to the computing power. Push up one step. This is good for the whole ecology.
06 Feng Shui period is not a life-saving straw
Carbon chain value: Can you give an estimate of how many mining machines will be newly invested in bitcoin mining during the wet season? What is the growth of Bitcoin's overall network computing power?
Yu Wei: Some guests said that they will reach 60-70E today. I think it is possible to achieve it, but it may not be possible. why? After the launch of Bitin's new machine S17, everyone's basic attitude is still on the sidelines. First of all, the miners don't have that much money in hand. They didn't make so much money in this round of bear market. It's still a bit stretched to get a new machine. Secondly, the cost of electricity during the wet season is very low, so the first thing I want to consider is to make money quickly with this low-cost electricity.
In 2017, S9 sold 30,000 yuan, and now the second-hand S9 can sell a few hundred dollars. Then, when the electricity cost is extremely low during the wet period, I am sure to find a product with a faster cycle, and not necessarily find the best performance miner. For example, if I buy a 1000-dollar mining machine, I can get my mining machine back to the whole during the flood season. When my second-hand mining machine sells another 600 yuan and 700 yuan, then the whole Fengfeng I can get 60%-70% of the income during the water period.
In this case, why should I buy a new mining machine? This new mining machine S17 definitely has more than 10,000 yuan a piece, right? Then the cost is high. At the same time, because of the large volume of electricity in my hand, I said that I invested 10,000 kilowatts of old equipment, it is better to invest 100,000 kilowatts of old equipment. This investment cost is similar, you can count it.
Therefore, the preference of the miners is not to buy a new mining machine, but to open the old mining machine. You can't think about it from your own point of view, think from the perspective of miners. They lost so much money to buy new mining machines in 2018, and now they have to invest money to buy new mining machines. This wave of leeks has been cut by miners. Isn’t this a magical thing? ?
Of course, some people will buy new machines, but they will be few. Its return period is different. For example, he has money in his hand. He wants to return to the book in two years. He has his own algorithm and has stable and sustainable electricity in his hand.
Carbon chain value: How do you see the possibility of new funds coming into the market to buy new mining machines?
Yu Wei: It is very difficult for new funds to enter the market. Because no matter who invests, he always has a certain degree of protection for investors. Whether you are taking the money from the fund or taking someone's money, you can't say that I have no guarantees. I want to do what I want to do. When I lose, no one will take responsibility. How? What about it?
But if you use this standard to see the current mine, then all mines are now illegal and non-compliant, so it is difficult to get any protection at the legal level.
However, although the country has not yet intervened in this field, it does not necessarily want to supervise this piece. As a mining circle practitioner, we should have a considerable sense of self-consciousness in our own business, and try to do legal compliance. For example, if you paid the network fee and paid the tax, it is relatively legal. After all, I paid taxes. Do you think I am illegal? Why are you collecting my taxes? But now the miners are not paying taxes. Can you be legal?
The concept of many miners has not changed. In fact, your 100% annualized rate of return is already very impressive. If you go to a real enterprise, the annualized rate of return of 25% is very high. Everyone is still eager for the era of profiteering, thinking about returning to the two or three months, so that they would not want to do business in the past two years. This kind of industry is not going to do much. Because once an industry is bigger, its profit margin must be aligned with the entire average profit rate of the society. We must have this awareness and psychological preparation to promote the industry forward.
07 is not worried about the concentration of mining
Carbon chain value: What is the current pattern of the mine? Is it highly centralized and is mainly controlled in several hands? If so, which ones?
Yu Wei: No, I think it is still very scattered. I don’t say who the mine controls. When it comes to resources, everyone has a relationship. Is there anyone still going to Iran to mine? There are still people mining in North Korea. Then you can say who is in this hand? As long as there is profit in the mine, the future will pop up like popcorn.
Not only the mine, but the future mining machine market will also be a situation of competition, not to say that the light bite mainland is a big one. I personally think that there will be no more times like that before. As for some people think that Bit S7's S17 may rule the next round of bull market, this depends on the price of the currency and the production capacity. Core Dynamics and Shenma now have such production capacity. Moreover, if the next round of bull market really arrives, new mining machine manufacturers may emerge again. This is possible. This round of mining machine manufacturers are triggered by the last round of bull market. And the next round of bull market will be even bigger, not a miner can swallow it.
Therefore, I personally do not worry about the centralization of the mining industry. Now, the industry is still relatively scattered, and it will not concentrate in a certain period of time in the future.
Carbon chain value: As we have already discussed, some private small power plants began to build their own mines instead of selling electricity to the mines. There is no such a situation: Some people try to monopolize the acquisition of private small power plants to monopolize the mine?
Yu Wei: No, because this economic model is still immature. Mining is a risky, unsustainable business in the eyes of many traditional investors, and can even be said to be a non-incoming business. The acquisition of these private small power plants is costly and costly. So they won't do it.
As for the people in the industry, there is currently no large-scale acquisition of private power plants. If you mine, you will mine, why buy a power plant? This is like you are a beer producer. Why do you want to produce beer caps? In addition, the mine is now relatively weak in maintaining the relationship between the plant and the power plant. At this time, it is more laborious to consider the acquisition of the power plant.
There is no merger between private small power plants. Because the real economy is declining now, the electricity consumption index is falling, and everyone does not need to use electricity as before. Therefore, many power companies are now having a hard time, and the government has shut down many small thermal power plants some time ago. From their point of view, they are more difficult, and how can they acquire the same bad assets as they do?
Therefore, the large number of acquisitions or mergers of small power plants has not yet occurred. There is no need to worry about the centralization issue in this regard.
Produced by the Carbon Chain Value Editor
Interviewee: Yu Wei, former head of Bit Continental Mine
Interview & author: Tang Wei