Opinion: BTC mining is dead

As an old miner, I may have to stop my BTC mining.

Surface reason 1:

Because my machine is not profitable, it has been halved, the output has decreased, the electricity cost has not changed, the currency price has not increased, and there is no profit. So why not buy a new upgraded machine?

Reason 2, a phenomenon scares me:

What does it mean that the total network computing power has not decreased after the halving? A large number of machines should have been eliminated and shut down, but this did not happen.

In other words: only my machine was shut down because it was not making money, but others' machines were not shut down and they continued to operate.

Who didn't turn off the phone?

Lower than my electricity bill?

Electricity costs in the United States: 7.5 cents (after tax)

Electricity costs in Southeast Asia are 6.5 cents (after tax)

Electricity in Central Asia is 6 cents (after tax)

Electricity costs in Russia: 5.8 cents (after tax)

Electricity costs in Africa: 5.5 cents (after protection fee)

The only other regions that can be swept away are: Russia and Africa. I cannot trust these two places. I have also looked for mines in Africa, but the regimes are unstable and it is impossible to sign contracts.

Even if the mine owner is willing to sign for me and help me with the custody, he may be arrested by the government in the next second.

For example, before the halving in February, I wanted to send the machines to Angola in Africa. Just as I had negotiated with the mine owner, there was a policy change in their local area, and he immediately turned from a foreign entrepreneur into a lawbreaker.

Who produces more than me?

Those who have better machines than mine, I am currently using the last generation 19 series machine, which is indeed outdated, people who have newer machines do have higher output than me, and machines with higher outputs over 200t can only be water-cooled machines.

Water-cooled machines are extremely expensive! Because we not only need to buy the machine but also the cabinet.

A cabinet costs 70,000 US dollars and can hold 210 machines. But each machine costs more than 6,000 US dollars, so 210 machines would cost more than one million US dollars.

How can I have such a huge sum of money at such a young age?

So, who has the ability to not shut down?

Listed companies!!!

What you may not know is that in 2021 and 2022, when our industry was in a very bearish situation, several North American Bitcoin mining companies had already secretly gone public.

They raised a large amount of funds in the secondary market and used large sums of money to build mines and buy machines.

For example, Marathon, the largest listed mining company by market value, has a market value of nearly $6 billion. BlackRock and Vanguard are its top two shareholders.

In addition to the first place, there are 20 listed companies including the second place Riot, BitDeer, etc.

These listed companies are bigger and stronger, and it is precisely because of their existence that the total network computing power, which should have declined due to the halving, has remained standing until now.

I don't have that much money, so I'm out of this track.

Small and medium-sized miners are going to be eliminated

I represent the small and medium-sized miners. Almost all of them were wiped out in this round, leaving only a few comrades who persisted at the risk of their lives in Africa or Russia.

The gradual elimination of small and medium-sized players means that BTC mining is the first industry in our blockchain industry to achieve monopoly, the least profitable industry in the future, and the biggest time bomb in the foundation of our entire blockchain!

Why do we say he doesn't make money? Let's do some economic calculations:

According to the configuration at the beginning of the article, we use water-cooled high-end to mine BTC. The cost of equipping a mining box machine is: 70,000+210*6000=1.33 million US dollars.

With a computing power of 257T, you can buy a total of 53879T of computing power.

The power of a mining box is 1030kw. We calculate it based on the US electricity cost of 7.5 cents and the ideal state where the mining difficulty does not continue to increase.

We can see that I cannot make back my investment in 4 years of mining. 4 years is a halving cycle. After 4 years, the output of this machine will be halved again, and it is very likely to be eliminated.

Some people say that the electricity bill I calculated is too high, and that some listed companies have lower electricity costs, so I will calculate it at 6 cents.

It still takes 1159 days to get your money back.

Therefore, even if these listed companies squeeze us small and medium-sized miners out, the meat they get won’t be that much.

A payback period of 1,159 days may be a good thing for listed companies, but for those of us working in the crypto industry, if I have $1.33 million, I might as well just buy 22 bitcoins.

If BTC doubles in value three years later, I will have double the return. If BTC drops by 50%, I will lose 50% of my principal, but mining may be even worse. If the machine is turned off, the income will be 0!

Bitcoin may become a time bomb

Why is he a time bomb? Is not making money a time bomb?

Some novice players may think it is, because miners are actually helping the BTC network to do calculations and keeping accounts for everyone who uses BTC to transfer money. If miners do not make money, no one will keep accounts, and BTC will collapse.

No, not at all!

Because of Satoshi's genius design, this situation will not exist, because whenever miners do not make money, they will shut down their computers. However, since each company has different electricity costs and shutdown prices, they will start from the ones with the highest shutdown prices. If some people shut down, the computing power of the entire network will decrease, and the income of the remaining part will increase, and they can still start operating to maintain network security.

Therefore, BTC will not die just because miners do not make money.

What really killed BTC was the 51 attack.
What is a 51 attack?

Blockchain is a distributed ledger that records every transaction on a cryptocurrency network.

A 51% attack is an attack on a blockchain by an entity or group that controls more than 50% of the network.

An attacker with majority control of the network could disrupt the recording of new blocks by preventing other miners from completing blocks.

Due to the chain of information stored in the Bitcoin blockchain, it is impossible to change historical blocks.

While a successful attack on Bitcoin or Ethereum is unlikely at this time, smaller networks are frequently the target of 51% attacks.

But now the BTC mining industry has changed, and 51 attacks are now possible.
Two reasons:
1. Settle the Accounts

Take a look at this table. If IBIT slowly stops increasing its holdings of BTC now, it will be calculated based on the holding of 400,000 BTC.

Eight years later, it only needs 10% of its financial resources to eat up the entire BTC mining market's annual output, and 51% control is easy for it.

He can tamper with and interrupt every future transfer, and the security of the BTC network will no longer exist.

Reason 2: Conspiracy

I discovered last year that BlackRock has been quietly making some acquisitions in our industry. It is now one of the top three largest shareholders of the world's largest mining companies:

Of course, I would rather believe that BlackRock is issuing BTC spot ETFs and acquiring BTC mining farms simply because it is optimistic about the development of our industry, rather than because it has greater ambitions to control the entire BTC computing power network.

After all, human nature is good.