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On January 3, 2009, Bitcoin founder Satoshi Nakamoto personally created the first block, the Genesis Block of Bitcoin, and received the first reward of 50 bitcoins automatically generated by the system. The first Bitcoin was thus born.
From the perspective of Bitcoin's production mechanism, Bitcoin is calculated by mining machines to solve the "mathematical problems" on the blocks in the Bitcoin network. Whoever solves the block first can obtain the accounting rights of this block and obtain the Bitcoin rewards in the block. Miners are born.
In 2013, ASIC mining machines were introduced, and mining gradually evolved into an industry. Although this emerging industry has a history of less than ten years, every industry is like a martial arts world, and where there is a martial arts world, there are swords and swords. In just a few years, miners have experienced two drastic cycles from heaven to earth, with bloodbaths and countless pitfalls, and finally waited for another bull market.
As of March 12, the price of Bitcoin has risen above $58,000 per coin, approaching the record high set last month. From the low point on March 12, 2020 to today, Bitcoin has increased 13 times in one year. According to the rules of the previous bull market, people in the industry believe that this is far from the peak.
With the Bitcoin bull market, the mining industry has once again entered the attention of investors and the public after being silent for two or three years, followed by a crazy rise and rush for mining machines. Take the latest flagship model s19 mining machine released by Bitmain in February 2020 as an example. It has risen from the initial 15,000 yuan/unit to 60,000 yuan/unit. As the latest model, its increase is still the smallest. Even so, it is still difficult to get a machine. According to a reporter from 21st Century Business Herald, futures within six months of major manufacturers have been sold out, and many futures orders have been scheduled until February next year.
People in the industry say that cryptocurrency mining may have passed the era of getting rich overnight, but it is still a good investment asset. Perhaps to confirm this view, large institutions and large companies have recently entered the market. Although there are still doubts from the outside world, it is undeniable that cryptocurrency mining is rapidly moving towards scale and sometimes creating wealth myths.
Miner iteration: Mining is no longer a game for ordinary people
A miner explained mining to a reporter from 21st Century Business Herald. Since blocks are mined every 10 minutes on average, mining is a "Hunger Games" held every ten minutes. Miners from all over the world participate, and the prize of the game is Bitcoin.
The so-called mining algorithm is actually a method of guessing numbers. The method is fixed and simple, so there is no room for improvement. There is only one way to win the game, which is to find hardware that can execute the algorithm the most times in a unit of time. In addition, 1+1=2, whoever has the most such hardware is most likely to win the game. Therefore, the entire history of Bitcoin mining is actually the history of the iteration of mining hardware.
It is said that the era when everyone used ordinary computer CPUs to mine at home was called the Genesis Era. In 2010, someone discovered that the GPU chips produced by AMD had a specific computing component that could speed up the key steps of guessing numbers. As a result, "GPU mining machines" assembled from multiple GPUs quickly replaced ordinary computer mining machines.
By the end of 2011, FPGA mining machines appeared, greatly improving efficiency, and the first mining farm, Eligius, appeared. But the mining farms were still in their infancy, and miners still mainly referred to personal computers that were quietly mining around the world. By now, the mainstream ASIC chip machines are already the fourth generation of mining machines. Compared with FPGA, ASIC chips sacrifice flexibility and are made for guessing numbers for mining, so the efficiency has once again made a qualitative leap.
Some miners have made a quantitative comparison of several types of mining machines. If the mining speed of the CPU is 1, the speed of the GPU is 10. Although the speed of the FPGA mining machine is only 8, the power consumption is 40 times less than that of the GPU. The mining speed of the ASIC is 2000, and the power consumption is equivalent to that of the GPU. Therefore, as soon as the ASIC chip came out, it quickly drove the other three types of mining machines out of the market.
From the perspective of mining development history, by around 2014, there was no room for individual miners in the Bitcoin mining industry other than mining farms and mining pools, and the concentration of the top ten mining pools had been basically determined. It can be said that a high degree of centralization has been achieved while ensuring the security of the Bitcoin network. Many well-known industry star companies and business owners, such as Ant Pool, F2Pool, Litecoin, GuoPool, and the people behind them, such as Wu Jihan, Jiang Zhuoer, and Seven-Colored Fish, appeared during this period.
Jiang Zhuoer, founder of Litecoin Mining Pool, recalled to the 21st Century Business Herald reporter that at the end of 2013, when he was working in the gaming business, he encountered the problem of cross-border payment. When looking for a solution, he learned about Bitcoin: "At the end of 2013, Bitcoin was at the top of a big bull market. I judged that there was a bubble and decided not to participate in the transaction in a short period of time. But at that time, mining had certain returns, so I assembled two graphics card mining machines and mined at home. I slowly accumulated the number of mining machines and Bitcoins, and gradually expanded the business."
Jiang Zhuoer pointed out that it costs money to buy a mining machine. For example, the current price of an S19 mining machine is 60,000 yuan, but once you buy a mining machine, it is equivalent to getting the opportunity to buy Bitcoin at a discount in the next 5-10 years. For example, using an S19 mining machine to mine, you only need to pay 26 yuan in electricity bills a day to mine 200 yuan worth of Bitcoin. The static payback period of most mining machines is 200-300 days. Compared with hoarding or speculating on coins, mining is a lower-risk investment method for many people. This has also led to the hot market for mining machines.
Jiang Zhuoer explained that although Bitcoin experienced a huge bull market in the last cycle, with a 100-fold increase from 1,300 yuan to 130,000 yuan, few people actually made 100 times the profit. For most people, the biggest difficulty in buying coins is that they cannot hoard them. No one can predict where and when the peak of the market will come. Once they fail to escape the peak, Bitcoin will basically fall by 80-90% in a bear market. Therefore, most people can't help but sell when the price rises by 30% to 50%. There are very few people who can hold on to Bitcoin after it rises by three or five times. There is only one person who can hold on to Bitcoin that has risen by 100 times. Most people will even lose money in cyclical fluctuations because they use high leverage to speculate on coins.
"But there is no such problem in mining. In a bull market, a mining machine is a goose that lays golden eggs, and most people will not sell a goose that lays golden eggs. Therefore, most miners can continue to mine throughout the entire bull market. It is not like buying Bitcoin, where they can't help but sell it after it has risen several times. Buying Bitcoin and hoarding it is a process that goes against human nature, while mining is a process that goes with human nature. And because mining lasts a long time, for example, the S9 mining machine in 2016 during the last bull market has been mining for 5 years and is still mining. Each machine has a net income of 20 yuan per day. Therefore, in the entire life cycle of a mining machine, it will encounter more than one bull market. Therefore, it can be said that miners who have actually been mining in history have all been profitable." Jiang Zhuoer said.
However, Jiang Zhuoer said frankly that the current investment threshold for mining is very high and will continue to rise. In the early days, there were still home miners who could mine with one or two mining machines at home, but with the rapid scale development of the entire industry, the mining business model has undergone tremendous changes. Just take the electricity bill as an example. Since electricity in Xinjiang is much cheaper than household electricity bills, the same mining machine will cost 5 yuan for mining 10 yuan worth of Bitcoin in a Xinjiang mine, while mining 10 yuan worth of Bitcoin at home will cost 10 yuan, which leaves almost no room for survival for home miners.
According to a reporter from 21st Century Business Herald, the price of the previous generation of Antminer S9 during the bull market in 2018 was over 10,000 yuan. At that time, if you wanted to mine Bitcoin, you would have to have at least hundreds of S9s running day and night. Mining now will only become more difficult.
"The current mainstream is to build large-scale mining farms with tens of thousands or even hundreds of thousands of mining machines. Of course, there is usually more than one miner in a large-scale mining farm. Many of them are miners like me who specialize in buying mining machines on a large scale for mining. The mining farm will provide hosting services. But this is still not very friendly to retail investors. If you only have a few or dozens of mining machines and want to put them in a mining farm, the mining farm will most likely ignore you. Therefore, some platforms will provide hosting services, but such retail players are not the mainstream of the mining industry. A large miner with 100,000 mining machines can replace 10,000 small miners with 10 mining machines. Most of the mining machines on the market are held by large miners. And since Bitcoin has been sought after by the U.S. capital market, 9City and many other U.S. listed companies have acquired Bitcoin mining machines at any cost in the market, making mining machines further controlled by large funds and large institutions, and it is difficult for retail investors to participate in mining." Jiang Zhuoer said.
Jiang Zhuoer told reporters that the halving of Bitcoin output every four years will cause huge fluctuations in the supply and demand of Bitcoin, so the Bitcoin market will also show a relatively stable and expected cyclical market. According to the experience of the last bull market, there were more than two 40% drops in the period from $10,000 to $50,000. This time there were only two, and the drop was about 20%, which was very "stable" compared to the last bull market. The reason is that mainstream large institutions and large funds in the United States have begun to enter the market. For example, Tesla has purchased $1.5 billion in Bitcoin, and Cai Wensheng of Meitu has also purchased $40 million in Bitcoin. MicroStrategy has purchased a total of $4 billion worth of Bitcoin. The market giant Grayscale Fund has purchased a total of 650,000 Bitcoins worth $38 billion, and tens of billions of dollars in ETH Ethereum , BCH Bitcoin Cash and other virtual currencies.
These are only the publicly disclosed positions, and there may be many more positions that are not disclosed under the water. They allocate Bitcoin according to commodities and medium- and long-term assets. Although these institutions only allocate a small position to Bitcoin, the huge size is far beyond the funds of previous players in the cryptocurrency circle. Even if players in the cryptocurrency circle want to speculate, the entry of large institutions and long-term holdings will make the price fluctuations smaller. This will lead to the further clearing of the market of small players who chase the rise and fall, and Bitcoin and mining are becoming less retail-oriented.
In Jiang Zhuoer's view, the future of mining is a kind of large-scale industrial production, just like traditional coal mines. Although small coal kilns will exist in the short term, in the future it will definitely be large players participating in this kind of large-scale integrated production.
02
Mining business: grabbing resource points
In an interview with a reporter from 21st Century Business Herald, BitDeer COO Ye Jiejie said that China is still the center of the Bitcoin mining industry. Last year, more than 50% of the world's 9.6 GW of mining power was located in China, and the United States ranked second with about 14%.
In the competition for the right to speak on Bitcoin computing power, China has taken the lead thanks to the rapid industrialization of the industry, and the rapid development of mining farms has contributed greatly. According to a reporter from 21st Century Business Herald, there are currently no less than 100 mining farms in China.
Yang Xiao, co-founder of Panda Miner, a leading graphics card mining machine company, said in an interview with a reporter from 21st Century Business Herald that as one of the earliest companies in China to operate mining farms in a corporate manner and to have established mining farms in Sichuan and Inner Mongolia, Panda Miner currently has 8 online mining farms and 1 mining farm under construction.
Yang Xiao pointed out that the mining farm can be understood as the infrastructure construction of the virtual currency mining industry. To put it simply, the mining farm is the local version of IDC (Internet Data Center, IDC for short). The entire model is similar to IDC, but the construction standard is lower than that of IDC.
The business model of the mining farm itself is relatively simple. First, it has its own mining, and the mine owner will also purchase equipment to mine; second, it provides hosting services to users, and the profit model is to earn the price difference of electricity. Because the income comes from the price difference of electricity, it is basically not affected by the price of the currency. Therefore, unless there is an extreme market like the 312 incident last year (on March 12, 2020, Bitcoin plummeted from US$8,000 to US$3,800 in just 20 hours, which was called the 312 incident in the currency circle), some mining machines may be shut down. If there are still the latest machines in the mining farm, they can resist the risk of a sharp drop in the price of the currency. If there are lower-priced electricity resources, old machines will not be shut down, and basically will not affect the operation of the mining farm. Therefore, except for irresistible natural factors and policy influences, the overall profit model of the general mining farm is relatively stable, and the payback period is normally one and a half to two years.
According to Yang Xiao, mining farms are generally calculated based on hourly electricity consumption. The initial construction cost of a 10,000 kWh mining farm is between 5 and 10 million RMB. The wide range is mainly affected by the conditions of the mining farm itself, such as whether high-voltage and weak-current parts need to be built. According to this calculation standard, if it is a large mining farm with hundreds of thousands of kWh, the investment is also in the billions.
However, regarding the technical difficulty of mine construction and operation, Yang Xiao pointed out that the technical barriers are not strong. The difficulty lies in how to select and evaluate the site, and how to ensure a stable power supply and sustainable operation in the later stage.
According to a reporter from 21st Century Business Herald, the income of a self-mining farm = Bitcoin produced × coin price - mining machine cost - electricity cost - maintenance fee and labor cost - mine depreciation fee. Although mining machines are expensive, they are not the most important expense for large mines. The biggest cost of mining is electricity. If you rent your own mine to others for mining, the income of the mine = rental fee - electricity cost - construction fee and labor cost. Therefore, choosing a low-cost electricity area is an important determinant of the income of the mine.
Yang Xiao said that because the mines have to be built in low-cost electricity areas, Sichuan, for example, usually uses hydropower mines, which are close to hydropower stations and have a high risk of encountering disasters such as mudslides during the flood season in summer. Therefore, the ability to evaluate and select resource points is very important. "High-quality resource points are scarce resources for mines. Although the low-cost electricity areas are relatively clear and mainly concentrated in the northwest and southwest regions, it takes a lot of effort to find the right point for building a mine. Our team has been implementing the last-in-first-out system. There is a dedicated mine operation team that searches for suitable resource points around the world throughout the year. After evaluation, they will be taken down and then matched with the back-end electricity demand. If an increase is needed, a new point will be set up. If there is still surplus electricity, the last-in-first-out system will be eliminated and new points will be enabled to continuously update and iterate the mines." He pointed out.
As for mining farms, the current domestic policy is not clear, and there is controversy as to whether this is an innovative product or backward production capacity. On February 25, the official website of the Inner Mongolia Development and Reform Commission issued a statement saying that in order to accelerate the elimination of backward and excess production capacity, it is planned to comprehensively clean up and shut down virtual currency mining projects and withdraw all of them by the end of April 2021. After the introduction of this policy, it has caused a lot of discussion in the currency circle, and it will also have a certain impact on some small and medium-sized mines built in Inner Mongolia.
However, the leading mines have been prepared for the changes in local policies and have gradually moved their mines out of Inner Mongolia in recent years. In the view of many miners, the policies do not apply to mines in a one-size-fits-all manner, but there are differences. Xinjiang and Sichuan are now becoming more and more clear about their attitudes towards the mining industry. For example, Sichuan established a hydropower consumption demonstration zone last year to encourage high-power consumption industries to consume excess hydropower during the flood season. This also gave mines and miners more confidence.
Yang Xiao pointed out that from the perspective of the operation of the mine, its operation is also developing towards scale, specialization and service. From the earliest mining by itself to attracting customers to put mining machines in its own mine, the scale has been continuously expanded. In recent years, it has gradually begun to cooperate with new external funds, which has accelerated the expansion of scale. At present, the ratio of self-owned funds to external funds is 3:7, and the proportion of external funds may increase further in the future.
In addition, mining farms are also considering global layout and transfer. According to a reporter from 21st Century Business Herald, Central Asia and North America are the regions that mining investors are more optimistic about.
Ye Jiejie pointed out that the current carbon neutrality goals and energy control regulations of some local governments have little impact on the industry outlook itself, but will prompt more mining equipment to move to Sichuan and Yunnan, and to a certain extent accelerate the trend of China's mining industry moving overseas.
He pointed out that although Bitcoin mining consumes huge amounts of energy, the current power system still has a lot of room for improvement in the rational use of energy. Bitcoin mining only requires two things: electricity and the Internet. It is basically not restricted by time and location, and can make rational use of the electricity that would have been wasted, providing certain jobs and tax revenue for some backward areas. The mining industry is not saturated at present. With the increase in the market value of Bitcoin, the scale of mining that can be accommodated is also significantly increasing. However, it is difficult for new companies or investors to enter the market, mainly because of the severe shortage of mining machines in the market.
Mining machine manufacturers: Cash flow concerns amid sharp rise and fall
At the end of February, a reporter from 21st Century Business Herald visited SEG Electronics Plaza in Huaqiangbei, Shenzhen. This mining machine market, which was once world-renowned in 2017-2018, is no longer as lively as before when it ushered in a bull market again three years later.
Several stores still have mining machine signs, but the shops are empty. There are two or three mining machine stores whose decorations are more like teahouses, but there are no sales staff. A salesperson from a mining machine dealer that is open for business said that there are currently about six or seven mining machine dealers in the entire mall, two or three of which are engaged in ipfs, and the others are engaged in bitcoin and Ethereum mining machines. Since the second half of last year, everyone's business has obviously picked up, but there are currently few offline buyers who come to the mall to shop, and most of them place orders on WeChat or online.
Although offline shopping is hard to find and the market is booming, mining machine manufacturers have reported that spot stocks are hard to come by.
Yang Xiao told reporters that currently, virtual currency mining mainly involves two currencies, Bitcoin and Ethereum. Bitcoin mining machines mainly use ASIC chips for mining, while Ethereum mining machines mainly use graphics cards for mining. Therefore, the hardware track of mining machines is relatively simple, and is very similar to traditional manufacturing, except that the pricing model is slightly different from other industries.
"Mining machines are not consumer products in essence, but have the nature of investment products, so there may be differences between the comprehensive pricing and users' purchasing expectations. We will reversely infer the pricing based on the payback period of the mining machines. Bitcoin mining machines will control the payback period of the machines to 10 months to 1 year, and the payback period of Ethereum mining machines will be shorter, generally 4-6 months. Due to the sharp increase in the price of coins, the net income of miners' mining has increased. In order to control the payback period to be relatively stable, the price of mining machines will also increase several times. And this part of the premium dividend is mainly obtained by component manufacturers, mining machine manufacturers and dealers." Yang Xiao said.
However, the sharp fluctuations in currency prices have also brought unpredictable cash flow pressure to mining machine manufacturers.
Yang Xiao pointed out that cash flow instability is common in the industry, whether it is a listed or unlisted mining machine manufacturer. Under the current extremely good market conditions, corporate cash flow must be very healthy, but because of the lag between the market and the cycle, whether the manufacturer places an order with TSMC or purchases particles (i.e. video memory particles, which are the physical storage components of video memory) from NVIDIA and AMD like us, it takes 2-3 months to prepare materials, and the production cycle is at least 4 months. If the market falls during this cycle, the funds have been used to prepare materials, and the machine is unsalable, the cash flow will be reversed rapidly.
As the only listed mining machine manufacturer, Canaan Technology disclosed its third quarter 2020 financial report showing that its revenue was RMB 163 million, a year-on-year decrease of 75.7%, and its net loss attributable to Canaan Technology shareholders was RMB 84.8 million, compared with a net profit of RMB 94.6 million in the same period of 2019. The impact of the bear market on manufacturers is obvious. How to resist cyclical fluctuations and enhance risk resistance is a common problem faced by this industry.
In this regard, Yang Xiao said that there are two main countermeasures. First, in comprehensive business decision-making, sales plans and production plans need to be reasonably formulated to avoid huge fluctuations in sales of long-term customers under extreme market conditions, and to minimize fluctuations through adjustments to plans.
The second is to make good use of financial derivatives. In the past two years, financial derivatives in the virtual currency industry have become increasingly sound. For example, lending and hedging through options have provided more investment protection for investment in mining machines and mining industries.
Even if there are cyclical fluctuations in the industry, the benefits to mining machine manufacturers and mining machines this time are already set in stone.
Jiang Zhuoer believes that this year is likely to be the year when mining machine profits exceed the increase in Bitcoin. Due to the chip shortage, the increase in Bitcoin mining computing power from 2020 to 2021 is very small. If the computing power remains unchanged, the number of coins mined by a mining machine per day is fixed. In the last round of increases, the price of the currency and the computing power increased simultaneously, so the daily output of a mining machine is relatively stable. However, this round of computing power increase is not as fast as the price of the currency, which leads to a faster increase in the value of Bitcoin that can be mined per TiB of computing power, which is also the reason for the sharp increase in the price of mining machines this time.
For example, the latest s19 mining machine has the smallest increase, and its price has also increased from 15,000 to about 60,000 now, which is a 4-fold increase. If it is an old mining machine with high power consumption, because its electricity cost itself accounts for a high proportion, assuming that it used to cost 8 yuan for electricity to mine 10 yuan of Bitcoin, and only 2 yuan was produced, but the price of the currency has increased fivefold, and the computing power has not increased much, it means that 8 yuan of electricity can mine 50 yuan of Bitcoin, and the output is 42 yuan, which is 20 times the output. This also leads to a greater increase in the old mining machine.
Cloud computing power: the entry ticket for ordinary people to enter mining?
As the value of the currency rises, more and more people outside the industry want to get a piece of the pie by mining. However, as the threshold for mining becomes higher and higher, ordinary investors can only sigh in despair.
As a result, in recent years, a mining product called "cloud computing power" has emerged and been rapidly promoted.
According to a reporter from 21st Century Business Herald, the so-called "cloud computing power" means that users purchase cloud computing power contracts through the platform, rent computing power for mining, and obtain income regularly. Its core advantage is to simplify the process and lower the entry threshold. Users do not need to buy expensive mining machines, select mining sites, or perform 24-hour operation and maintenance by themselves. After the contract ends, there is no need to deal with machines, sites, etc., and exit is more flexible.
According to statistics, there are currently more than 50 cloud computing platforms in the world, including Huobi Mining Pool, BitDeer, and Algorithm Square. Based on the recent currency price conversion, the highest rate of return can reach 100%.
People in the industry say that cloud computing power can be seen as the securitization of mining computing power, but the emergence of this new product undeniably also carries risks.
Ye Jiejie, COO of BitDeer, told the 21st Century Business Herald reporter that cloud computing power has indeed significantly lowered the threshold for ordinary people to enter the Bitcoin mining industry. The risks mainly come from two aspects: the volatility of Bitcoin prices and the reliability of service providers. But in his opinion, there are also risk control measures. First, ordinary users can sell Bitcoin after mining to control the risk of price fluctuations, and second, they need to examine reliable service providers. In terms of the reliability of computing power service providers, a comprehensive analysis should be considered from the platform's mining scale, mining authenticity, and business sustainability.
Jiang Zhuoer believes that cloud computing power is relatively complicated and has certain risks. The cloud computing power model looks very much like financial management, and there are some chaos, making it difficult to comply with regulations. Assuming that the cloud computing power platform operates in good faith and has indeed bought mining machines for mining, there is a high probability that there will be no problem in the bull market, but when the bear market comes, investors may not be willing to bear the losses caused by huge fluctuations. And because the cloud computing power model looks like financial management, if there are a large number of retail investors who have suffered losses and report it, they may face economic charges. The other is dishonest operation. The platform claims to sell computing power but does not actually buy mining machines, because it is troublesome to buy mining machines and operate them. Some platforms may be Ponzi schemes. Therefore, if investors want to choose cloud computing power products, they must recognize the risks and invest cautiously.
Financial derivatives: hedging or gambling?
In addition to cloud computing power, the emergence of financial derivatives in the cryptocurrency circle is also unclear whether it is an angel or a devil.
In January 2020, the Chicago Mercantile Exchange (CME) announced that it had obtained the necessary regulatory approval to launch its new Bitcoin ( BTC ) futures options, and Bitcoin futures began to land on mainstream exchanges. In addition, other financial derivatives such as leverage, contracts, and ETFs are also giving virtual currencies more financial attributes.
The use of financial derivatives is also a common means for miners to fight risks. Jiang Zhuoer gave an example, "If you have 100,000 yuan, you can buy the best mining machine, or two medium-sized mining machines. My choice is the third one, buying the best mining machine, and then using the mining machine as collateral for a loan, and then buying another best mining machine. Although banks and other financial institutions do not recognize Bitcoin and mining machines, there are some platforms in the currency circle that are happy to provide such mortgage lending services, and the platforms also have relatively reasonable risk control. The loan period is 3-6 months, and the interest rate varies from 8% to 15% annualized depending on qualifications."
This interest level is not low, but the profits from mining are huge in a bull market. For example, if you borrowed money to buy a mining machine in November 2020, the interest cost of the funds has been 3%-5% in the past four months, and the profit from the mining machine has increased by 4-6 times. This does not include the mining income during the period, which is quite cost-effective.
But it is undeniable that the rapid development of financial derivatives has also made many investors pay a heavy price.
Yang Xiao pointed out that the key to dealing with financial derivatives is to understand the mechanisms behind each tool, and then make accurate judgments on the market, use the tools and execute the strategies, and finally ensure a more sustainable cash flow. When traditional financial derivatives were first introduced, they were more about hedging risks, but speculation always exists, which eventually led to a game between risk hedgers and speculators.
Yang Xiao further stated that there are some relatively immature forms of financial derivatives in the cryptocurrency circle. For example, in the case of futures, normally the spot price affects the futures price, but in the cryptocurrency circle, an inversion has occurred, and the futures price has in turn affected the spot price. There are two reasons for this: one is that the leverage ratio is too large, and the other is that the threshold for obtaining leverage is too low, which leads to an exaggerated fighting behavior in the cryptocurrency circle. It is normal to complete a double explosion of long and short positions in one day.
"I think the track of financial derivatives itself needs to continue to develop, and we cannot stop eating with the bathwater because of the various speculative incidents that exist now. Especially for some large institutions, they need to hedge and protect their companies through derivatives, but small and medium-sized investors and speculators need to be aware of the huge risks before entering this track. Try to avoid blind investment. Although virtual currency is an emerging field, it will also require planning, supervision and investor education in the future." Yang Xiao said.
Unknown Experimental Outcome: Faith and Reason
In the eyes of many people, Bitcoin is an important socio-economic experiment in human history. Because of the mechanism of Bitcoin, it is difficult for any party to control it, especially as the total market value of Bitcoin continues to increase, it will become increasingly difficult to control the total market, and multi-dimensional economic games are also increasing.
In Yang Xiao's opinion, no one knows how this economic experiment will develop. Will it continue to develop in a positive direction, or will it encounter a huge black swan at some point in the future and cause a systemic collapse? This is precisely the charm of Bitcoin itself.
When the reporter from 21st Century Business Herald asked how participants would deal with the worst possible situation in the future, Yang smiled and said, to be honest, I think it may be difficult for early entrants like us to give a particularly good explanation for this answer. We have too much faith in Bitcoin. Although we may have expectations of various situations that may happen in the future rationally, from an emotional choice, faith in it will prevent you from making any considerations beyond the destructive impact in the future, so many people in this industry call each other believers. We will cherish the coins in our hands very much and are reluctant to sell them, because we feel that selling any coin will be a particularly big loss to our future.
As Yang Xiao said, it is difficult to predict the final outcome of this experiment. But it is undeniable that in this era where everything can be involuted, virtual currency mining has created countless miracles of wealth creation, and there are also waves of speculators who have lost all their money. Whether to join the game or not, in the face of risks, may depend on choice and belief. (21st Century Business Herald) |
