The story of mining: why miners are better able to grasp wealth?

Miners are having a hard time now

On the evening of February 28, Vitalik Buterin conducted a live broadcast on the blockchain community platform Bihu, chatting with netizens in the Chinese community about rollups. Of course, he also expressed his views on EIP-1559, which is of concern to everyone. His views are not much different from his previous views. Vitalik Buterin supports EIP-1559 and believes that the proposal may cause deflation in Ethereum, which may cause the price of the currency to rise. He also used the example of filecoin to illustrate that EIP-1559 is harmless to humans and animals.

That’s not all. In recent days, miners’ income has also decreased due to the increase in mining computing power. Previously, for every 100M of Ethereum computing power, they could earn 0.006 Ether a day, but now it can only hover around 0.005 Ether. If this trend continues, then soon they may only be able to earn 0.004 Ether for every 100M of computing power.

The current shortage of chips has not shortened the payback period of mining much, but the price of mining machines has been hyped up first. If it was okay in the car before, if you want to buy a machine now to increase computing power, then it is a bit of a high price, and no one knows what will happen in a few months. There are also many unknown risks here.

In recent years, the cryptocurrency industry has developed rapidly, and there are fewer and fewer retail investors mining. Many people say that mining is not friendly to retail investors. Is this really the case? Wrong! In essence, it is the pursuit of overnight wealth by retail investors that makes them leave the mining industry on their own initiative. In fact, as long as you are willing, as long as you want to mine, you can participate in the mining wave at any time. The door to the mining industry is always open, but many people who are familiar with making quick money disdain to enter.

Miners are actually the group of people who are most easily misunderstood. In a bull market, they are either killed by 1559 or scolded by game players. In a bear market, they have to sell their mining machines as scrap metal. In the eyes of others, they seem to be rich, but in fact, they make less money by buying coins at a low price. Only those who have mined can understand this.

The significance of mining

The author purchased cloud computing power from Caiyun Bit in early 2020 and started a mining journey. At the beginning, I didn’t understand it. I was interested in this and curious about that. However, after experiencing the rise and fall of currency prices, the halving of Bitcoin and the decrease in income, and the process of increasing mined coins little by little, I also have a little understanding of the wonderful feeling that mining brings.

Of course, the cloud computing power of Caiyun Bit is beyond reproach. Taking the Ethereum computing power as an example, the computing power of the laptop I bought is about 96M. I have increased the overclocking parameters in the middle, and the income in the past few days is as follows:

The 100M computing power purchased from Caiyun Bit has the following benefits:

In terms of overall revenue, the error is within an acceptable range, and Caiyun's computing power revenue is still real. The staff also told me that this is actually equivalent to Caiyun selling electricity to miners, and other things do not make money. However, the mining electricity fee is not expensive, 0.38 yuan per kilowatt-hour, regardless of flood and dry seasons, which is acceptable. It is precisely because of this that we have basically gained the trust of old miners and have many repeat customers. The promotion of Caiyun's computing power mainly relies on the word of mouth of miners, that is, when everyone chats privately, one person recommends it to another, rather than the kind of advertising and promotion in various media. This aspect is a bit too low-key.

People often say: A day in the cryptocurrency world is like a year in the real world. This means that the cryptocurrency world changes too fast. If you don’t pay attention to it all the time, you will soon be abandoned. But this is not the case in the mining world. Mining is a slow process. Experiencing the mining process is actually a training of the mind, just like meditating in a temple, feeling the stillness of time, and then quietly thinking about one thing, such as how to improve computing power, which mining machine to choose, which coin to mine to maximize profits, etc. If you think about this every day, or pay attention to this, then over time, you will naturally gain experience, and it will be much easier to make money later.

After understanding the meaning of "slow", the author started to buy more cloud computing power from Caiyun. The reason is actually quite simple. If you already have a full position in digital currency, then there is no doubt that the risk is very high. However, if you buy cloud computing power, you can reduce such risks and bring the risks and benefits to a range that you can bear. This is the meaning of mining.

Miners can more easily grasp the bull and bear markets

As for how miners can grasp the bull and bear markets, let’s take a simple example:

We all know the 80/20 rule. In a bull market, only 20% of people can escape the top, while the ultimate fate of 80% of people is to be trapped. Often many people cannot sell their coins in time when they are trapped. The main reason is that they believe that the price of the coin will go up and that they can still get out of the trap. However, the more this is the case, the deeper the trap.

So how to solve it? In fact, if you have cloud computing power or a mining machine in custody, then it is easy to solve. For example, if I bought 300M of Ethereum computing power from Caiyunbit, then if the price of Ethereum falls, I can sell the Ethereum in my hand at the second highest point or the second highest point with peace of mind.

As for when is the high point? In fact, for miners, the high point is also easy to find. That is to calculate based on the payback period. When the payback period reaches a month or dozens of days, then you should be careful, because this is basically when the miners' selling pressure is the greatest. Naturally, miners tacitly make a move. If you only focus on speculating in coins, then you naturally don’t know this and don’t understand why you have to sell. Another is when the right side trades and waits for a rebound. People with a certain trading foundation should understand, or when the bull turns to bear, it has fallen for three or four months, then it must be a bear market.

Even if some miners do not know when to sell, when the price of the coins they hold falls, their willingness to sell is actually stronger than that of speculators. It is also okay to sell at the second highest point, because miners make money by time. Even if they do not sell at the highest point, they will not feel bad, because as long as they dig patiently, they will eventually get those wealth through mining one day. The only difference is whether they earn more or less.

Of course, there are also some miners with faith, such as those who mine Bitcoin, who only mine and do not sell. In this way, they will not pay attention to the market, which is naturally another kind of "slowness".

It is for this reason that at the end of the year, I used the money I had originally intended to use to buy coins to buy Caiyun Bit’s Ethereum cloud computing power. This is also the reason.

The advantage of miners is actually calculation. During the mining cycle, they need to make careful calculations, make constant comparisons, reflect on and summarize their operations, and thus gain their wealth step by step according to the calculation trajectory. As for those who trade in cryptocurrencies, they often follow the market sentiment, are swayed by the market and lose themselves. At this time, they are easily confused and end up becoming the group of people standing on the top of the mountain.