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Just recently, Bitcoin rose above the $40,000 mark, reaching a high of $40,402. Although Bitcoin has continued to adjust in recent days, it still remains above $30,000, and Bitcoin has still risen by more than 700% from its low point last year.
A reporter from Upstream News and Chongqing Business Daily visited and investigated and found that the skyrocketing price of Bitcoin has boosted the entire industry chain, with both upstream mining machine manufacturers and downstream miners and coin speculators becoming beneficiaries.
Nowadays, facing the sudden and rapid market, Bitcoin mining machines are hard to come by, and the prices of many new and even second-hand machines have doubled in the past few months. However, in this process, Bitcoin is sometimes a diamond and sometimes a bubble, with sharp rises and falls like a roller coaster. In the current market, a group of mining machine dealers and miners have quietly begun to take profits and choose to wait and see or take a new direction.
New and old mining machines are hard to come by
Although bitcoin is trading between $31,000 and $32,000 this week, down 20% from its record high hit two weeks ago, it is still up about 700% from its low of $3,850 in March last year.
A reporter from Upstream News and Chongqing Business Daily found that the skyrocketing price of Bitcoin, coupled with the ongoing epidemic and chip shortages, has led to a shortage of mining machines.
A person related to Canaan Inc., one of the top three mining machine giants in the world, revealed that the company currently has a large number of pre-sale orders for mining machines, and the delivery period has been scheduled to the second quarter of this year.
A reporter from Upstream News and Chongqing Business Daily saw on Bitmain’s official website that the Antminer S19, S19 Pro and T19 on sale have all been sold out, and the delivery time will not be until August this year, and the price has increased significantly.
In fact, since the third quarter of last year, Bitcoin has ushered in another bull market with the continuous entry of big capital such as Grayscale, and a lot of capital has focused on "mining".
Not long ago, Bitcoin mining company Marathon Patent Group announced that it would buy 70,000 S-19 Antminers equipped with ASIC chips from Bitmain at a sky-high price of $170 million. The company expects that the order will be delivered by the end of this year, and the total number of its mining machines will exceed 100,000 by then. The continuous entry of large companies and capital oligarchs has enabled the Bitcoin industry chain to gain strong capital support.
An old miner in Chongqing who has been mining for many years told the reporter of Upstream News Chongqing Business Daily that with the surge in Bitcoin, many people in the industry began to increase their positions in the third and fourth quarters of last year. Mining machines are relatively scarce, especially as the epidemic continues, and the shipments of mining machine manufacturers are less than in previous years. "For example, the price of Bitmain's Ant S19 has more than doubled."
In fact, in addition to the sold-out orders for new mining machines, second-hand mining machines were sold out in seconds as soon as they appeared.
Wang Li (pseudonym), who has his own mining farm in Xinjiang, said that since the third quarter of last year, customers have been asking for additional orders, but mining machine manufacturers have insufficient production, so he cannot get mining machines. "Now it takes at least half a year or even longer to wait for a new machine. Now I have to buy some second-hand mining machines, and they are harder to find, and the price changes every day."
Industry insiders believe that traders and users are closely watching Bitcoin mining, as the amount of Bitcoin they produce and sell to the market affects supply and price. However, Liu Changyong, director of the Blockchain Economic Research Center of Chongqing Technology and Business University, said that from the current news, there is a lack of sufficient chips in China to support the production of mining equipment, and mining machines will still be in a state of being hard to come by in the next step.
Many players have "profited" and are waiting to see
"Just a few days ago, I sold the last 1,000 mining machines I had." Xia Yong was one of the first players in Chongqing to engage in the Bitcoin "mining" business. At the peak, he and his friends opened three mining farms, with thousands of mining machines mining at the same time. In his words, he really felt the joy of making money every moment. In this way, he earned his first pot of gold through "mining" and subsequent capital reserves.
However, while everyone is optimistic about the future of Bitcoin, Xia Yong chose to "take profits". He said that the price of Bitcoin is indeed very high now, and as the remaining Bitcoins are getting less and less, he wants to find new opportunities with his friends. He said that a large amount of capital has been invested in the "distributed storage" track. "I believe there are new opportunities here."
Like Xia Yong, Zhang Xin (pseudonym) is also a player in the mining circle. Zhang Xin told the reporter of Upstream News Chongqing Business Daily that in the third quarter of last year, after Bitcoin continued to strengthen, he used many connections to get a batch of second-hand mining machines. Although the second-hand mining machines had many problems, they were already difficult to buy at the time. He earned more than ten times the profit of the mining machines in this bull market, and also had dozens of more bitcoins.
Zhang Xin told the reporter in detail, "He has used a lot of mining machines to mine Ethereum for more than two months. The machine he bought was only 8,000 yuan, and now it can be sold for 13,000 yuan. I find mining is still good." In his opinion, the price of Bitcoin is too high, and the market is uncertain in the next few months. Now at a high price, he has sold half of his Bitcoins, and will make plans for the rest when the market becomes clear.
Zhang Xin recalled this wave of Bitcoin bull market, and some mining bosses said they missed out, saying that the market since the end of last year was too fierce and too fast. "I was lucky to make a fortune by mining. It can be said that those who have been mining are really winning without doing anything."
However, just as there are risks in speculating in cryptocurrencies, there are also risks in reselling machines. Many miners or dealers of second-hand mining machines admit that at the moment, especially with such high prices, everyone is very confused and doesn’t know what to do in the future. They can only choose to wait and see, so as not to end up with nothing.
How long can Bitcoin remain “crazy”?
As the crypto market heats up again, Nvidia recently announced that it is considering relaunching products mainly targeting Bitcoin and cryptocurrency miners. Undoubtedly, more and more giants are eyeing the big Bitcoin pie.
Before 2020, Bitcoin was still stable at $5,000. But the arrival of a global epidemic has suddenly given this type of virtual currency extremely high value.
In Liu Changyong's view, the recent surge in Bitcoin prices is not just the result of speculators and retail investors following the trend and hype. Many well-known financial institutions and payment giants have also joined the ranks of buying Bitcoin.
Pantera Capital, a cryptocurrency fund, pointed out that PayPal has recently purchased about 70% of newly mined Bitcoin, while Cash App accounts for 40% of the total purchases. Cash App once revealed in its financial report that it spent $50 million on purchasing Bitcoin in October 2020 alone. The purpose of PayPal and Cash App's purchase of Bitcoin is to prepare for the upcoming new services.
In fact, over the past year, institutional investors such as Morgan Stanley have also shown a significant increase in their enthusiasm for crypto assets; US insurance giant MassMutual also announced an investment of US$100 million in Bitcoin; British asset management company Ruffer also revealed that they have used 2.5% of their investment funds to purchase Bitcoin.
The entry of giant companies has turned mining into a game of capital. Liu Changyong is very optimistic about the future of Bitcoin. He believes that the current decline is just a temporary adjustment. "This year should be a big bull market for Bitcoin. Bitcoin is expected to rise to the target of $100,000. With Bitcoin and Ethereum as the main currencies, small currencies will also rise in turn.
Huang Zhen, director of the Financial Law Institute of the Central University of Finance and Economics, also wrote that if you want to invest in Bitcoin, you must have a long-term perspective and confidence in long-term investment. If you speculate, you may be washed out if the price goes up or down, and may even suffer losses.
Guosheng Securities Research Report pointed out that Bitcoin, as a fast-growing asset, has both the characteristics of commodities (similar to gold) and the hope of blockchain emerging technology (similar to Internet technology companies in the stock market). Therefore, Bitcoin is entirely possible to develop an independent market independent of commodities and stocks. However, as an emerging asset, Bitcoin also has some risks: with the entry of institutions with a large amount of funds and the further development of financial derivatives such as Bitcoin futures, the price of Bitcoin still faces the risk of violent fluctuations; the regulatory level of various countries is becoming increasingly tight, and the government's supervision and crackdown on anti-money laundering, tax audits, and legal currency transactions are also increasing. |
