The computing power industry is a dream-making machine. Who will become a “giant”-level enterprise?

On April 25, the "2021 New Infrastructure Blockchain Summit" came to a close in Chengdu. This was a two-day mining conference guided by the Digital Chain Digital Finance Research Institute of Zhuhai Hengqin New District, hosted by Inbit, and co-organized by Golden Finance and Yikuang.

Thus, the one-week "Chengdu Mining Blockchain Week" finally came to an end. A mining-themed blockchain week has never been seen in the past ten years of Bitcoin history. Many people think that mining is nothing special.

But in fact, in the past 1-2 years, we have seen the extremely prominent diversification of the mining ecosystem.

1. The IPFS distributed storage industry exploded.

2. Explosion of mining financial products and services.

3. With the rise of Ethereum, the wealth effect of mining small currencies becomes more prominent.

4. With the entry of listed institutions, the mining capitalization movement has entered its climax.

5. With the implementation of new infrastructure policies, the path to compliance has become clearer.

6. Breaking the circle and growing, computing power miners are transforming to DeFi mining.

That’s right, the mining circle is still a world of its own. For example, at the 8th anniversary special event of F2Pool at the 2021 New Infrastructure Blockchain Summit, a commemorative NFT was bought by a miner for 49 ETH. To some extent, this is a wealthy miner using 810,000 RMB to express his support for F2Pool.

At the same time, the mining industry has evolved into a large and imaginative industry. The words mining industry and mining industry are gradually disappearing, and the term computing power industry is more deeply rooted in people's minds. In the future, giant companies may be born here.

At the 2021 New Infrastructure Blockchain Summit, I wrote down the wonderful speeches of the guests. These are common sense for practitioners in the computing power industry, but if you are an outsider, it may be a new understanding for you. The following content hopes to provide you with some new perspectives on this industry.

About Mining

We are facing an extremely important macro-historical development trend. I can say with certainty that the only way forward for the entire computing power system is to use a new type of computing power based on blockchain, which will inevitably replace and transform the centralized, non-blockchain-based traditional (classical) computing power.

Why? Because decentralized computing, decentralized transactions, decentralized storage, decentralized identity authentication, and addressing methods are changing and subverting root nodes and HTTP, and Web3.0 is accelerating the replacement of Web2.0. They are gradually converging into a trend, which is bound to require fundamental changes in the traditional computing power system.

I believe that blockchain, computing power, and storage will become the infrastructure for the operation of future society and the container for human and social behavior.

——Zhu Jiaming, economist and chairman of the Academic and Technical Committee of Digital Asset Research Institute

This year is an extremely extraordinary year. Coinbase exchange was listed in North America, and Bitcoin's market value exceeded one trillion after 12 years. All of this leads to one fact: the development of the industry "creates dreams" for all participants, and we are all dream chasers.

In 2021, we expanded overseas. We not only established our first after-sales service center in North America, but also a new technical service center in the Russian-speaking region of Kazakhstan. We are considering building an overseas supply chain and even providing dedicated products based on actual overseas usage to bring them to the world.

——Wang Xin, Marketing Director of Shenma Mining Machine

In May, Bitmain will send a team to the United States to conduct an investigation, and after the investigation, it will output a mining farm standard. I want to tell all new and old customers a sincere word, we do this not to be a middleman to earn the difference from customers, but to allow investors, mining farms, and power companies to find each other and achieve the purpose of complementary advantages and resource allocation.

——Gao Tianlin, Business Director of Bitmain Asia Pacific

When capital enters the mining circle, most people first think of funds. What I want to talk about is compliance . In the past, the mining circle was relatively unrestrained and casual. For example, cash transactions, including the circulation between coins and legal currencies, used to be done through OTC or unqualified platforms. In the capital market, especially the US capital market, this is completely unacceptable. I remind many new Chinese concept stock companies to pay attention to this, because capital is really a double-edged sword, and you must pay attention to compliance in all aspects.

——Yang Xianfeng, CEO of BitMining

Energy structure transformation is a global revolution that started in 2014. Under this trend, the existing coal-fired power and petrochemical energy will have different regional distributions due to different policies. With the introduction of international new energy, many demands for the use of new energy will also be derived.

Traditional mining relies heavily on energy, and cheap and stable electricity resources are very important operating factors for miners and enterprises. Judging from the current trend of global energy reshaping, it is bound to accelerate the transformation of this industry.

In the past, many mining farms were located in China, but now we believe that the regional distribution will become more diffuse. Corresponding policies have been implemented in places like the United States, Canada, Russia, Norway, etc., and we have also seen that there is indeed an upward trend in computing power in these regions.

——Meng Xiaoni, Vice President of BitMining Group & CEO of BTC.com

The trend of carbon neutrality and energy consumption reduction will only affect electricity prices, but will not lead to the closure or reduction of mining farms in Xinjiang. Overall, it will have an impact on the mining industry, but the impact is not significant. As more and more funds flow into the mining market, relatively stable thermal power mining farms will become more and more important, and mining farms have a tendency to develop overseas.

——Wang Yapeng, Assistant to the Chairman of Yunhe Data

Whether it is a hydropower mine or a thermal power mine, high-quality mines will be in greater short supply, with hydropower being more obvious.

In the past, the mining industry had two migrations during the wet and dry seasons, just like the wildebeest migration in Africa. This year, it is different. First, the price of coins has skyrocketed, and mining revenue has increased dramatically. Second, under the carbon neutrality policy, many large miners have moved their machines from Xinjiang or Inner Mongolia to hydropower mines. They are not calculating economic accounts, but stability accounts. They may not move away in the future.

——Liu Jibin, Vice President of BitMining and General Manager of Changhe Hydropower Consumption Park

The mining circle is a place where you can make money steadily. It is the only place that is relatively stable. The cost of mining coins is the lowest, and mining is more reliable. Of course, the mining cycle is relatively long. If you can withstand the time, you can continue and go through the bull and bear markets.

——Zhang Yunxin, President of Juan Technology Greater China

There are four popular sayings now, and I think they are all wrong.

1. Bitcoin halving will make mining more and more difficult;

2. Mining has shifted overseas, and it is becoming increasingly difficult to mine in China;

3. Mining machine updates and iterations may cause mining accidents;

4. In the era of institutions, it is difficult to poach retail investors.

Why is it wrong?

1. The daily output of Bitcoin has been reduced from 7,200 at the beginning to 900 after three halvings. It is only 1/8 of the initial output, which sounds like it has become more difficult to mine. But the price of Bitcoin increases by dozens or hundreds of times every four years. Our goal is to earn RMB and US dollars. In terms of legal currency and US dollars, this industry has been developing at a high speed.

2. The country where the computing power is concentrated is always changing. In a bull market, the returns are high and the electricity costs are not important, so Americans and Europeans can afford to mine. In a bear market, it will definitely flow to places with lower costs. Sichuan and Xinjiang have always been the world's mining centers.

3. The past three years have seen the latest generation of mining machine technology mature. It is now difficult to overturn past technologies to launch mining machines with particularly large computing power growth and particularly energy-saving. We predict that the computing power of the next generation of mining machines can only increase by 20% to 30%. In addition, the trend of Bitcoin's computing power doubling has slowed down, and the difficulty of mining will not increase exponentially in the future, and mining revenue will not drop precipitously.

4. More institutions are actually representatives of retail investors. Every mature financial market organizes retail investors into institutions and big investors through various forms of financial products, funds, or cloud computing power and cloud mining machines within the circle. The logic is very simple.

——Zhu Yu, co-founder of Inbit

The development of the DeFi world is feasible on the blockchain, but there are some problems that need to be solved: to achieve technological breakthroughs and solve performance problems, the current network performance is not enough to support the development of ultra-large-scale applications. In addition, to improve usability, the development of blockchain, especially the DeFi industry, is currently limited to senior players in the industry. It is difficult for novice users to use DeFi or DAO at this stage, and the industry's usability needs to be developed urgently.

——Shenyu, co-founder of F2Pool and Cobo

Pragmatists want to make the chain faster, but in the long run, a chain can run for 10 or 100 years. What really determines whether the chain can survive in the long run is decentralization and fairness. We must not compromise on this aspect. (Nervos insists on POW)

PoS is an involutionary chain. Time is not its friend. The longer time goes by, the more problems PoS will have. Ethereum has used 6 years to prove that PoW can protect hundreds of billions of assets. People who have not worked on public chains don’t know how difficult it is to cold start PoW, but as time goes by, the performance of this chain will get better.

——Lv Guoning, co-founder of Nervos

About Bitcoin Price

I mentioned in last year's article that the price between 50,000 and 55,000 is a very big watershed. After 55,000, as a good-sized asset, more traditional financial institutions will come in to serve it in the future. But human nature will not change. When will this thing enter a bear market? When the new money coming in is not enough to support the profit-taking order, the market is always determined by supply and demand. And the profit-taking order cannot always stop winning.

You should know that all vertices are not considered vertices when you reach them. This is a natural reaction of human nature. Each vertice is a sharp peak, which is suddenly blown up and explodes with a bang. Before this sharp peak, I think it was around 150,000 US dollars, and the sharp peak was 200,000 US dollars. This position is already on par with the market value of gold as a financial trading asset, so this should be a peak.

The next bear market will not be like the past, because its lower limit has been raised, because the attributes of players are different, and there are a large number of people holding coins. I don’t think the next bear market will be as painful as the past bear market, which lasted for 18 months.

——Wan Hui, founding partner of Primitive Ventures

In the final analysis, the ultimate driving force of this round of bull market is still the monetary easing of central banks led by the Federal Reserve. Many people ask when the bull market will end. I think the core of this question is to pay attention to the macroeconomic framework.

We need to pay attention to several points: the development of the epidemic, the progress of vaccines, the pace of economic recovery in various countries, the level of inflation, and the debt levels of resident enterprises and governments in various countries. They will all be reflected in the interest rate index. As long as we pay attention to the interest rate index, we can predict the rhythm of the bull market in advance with a high probability.

The market size of stablecoins has increased eightfold from last year to this year, which is relatively consistent with the trend of the coin price. Interestingly, the proportion of newly issued stablecoins flowing into exchanges has decreased, while the proportion flowing into various smart contracts has increased significantly and has been accelerating. Its far-reaching impact on the cryptocurrency market is particularly worthy of our attention.

In the cryptocurrency credit market, there are large inter-institutional lending transactions, and the interest rate of this lending market deserves our greatest attention.

The transaction volume of the spot market and the contract market are rising simultaneously. The lending rate and the contract volume are also rising simultaneously.

Data released by the Commodity Futures Trading Commission of the United States shows that the proportion of short positions held by institutions is very large. Why do smart trading institutions hold short positions in a bull market? Are they going against the market trend? The only explanation is that they also hold a large amount of spot. These traditional trading institutions are actually entering the market to do Bitcoin arbitrage. They hold long positions in spot, which is also an important factor that allows the bull market to last for so long.

Under the current circumstances, traditional trading institutions face many obstacles in doing such arbitrage transactions, such as accounting, taxation, and regulatory obstacles when holding Bitcoin spot positions. However, if US Bitcoin ETFs are listed one after another, the environment may change, and more traditional funds may enter the market, which is particularly worthy of attention.

——Tong Lei, Head of Financial Services at PayPal