Filecoin miners: Some shut down their machines, some fork, and some quietly make money

2020 has passed quickly, and there have been too many focus events worth talking about this year.

The crypto winter, the sudden emergence of DeFi, the collective appearance of the Polkadot ecosystem, and Bitcoin breaking through $20,000...

Filecoin was once surrounded by the spotlight when its mainnet was first launched.

After all, in the past two or three years, the sales of various "IPFS mining machines" have reached tens of billions of yuan, and finally the time for cashing in has arrived. But it soon fell into controversy and was overshadowed by new hot spots, and slowly disappeared from the public eye.

So is Filecoin mining profitable or not?

Chain Tea House interviewed several Filecoin miners and found that although they were all mining, the miners had different outcomes.

Filecoin mining machines in the sinking market

In the past two or three years, although the launch of the Filecoin mainnet is still a long way off, the sales of mining machines have been very low.

At various blockchain exhibitions, you can see middle-aged women who play Ponzi schemes enthusiastically preaching IPFS and recommending Filecoin mining machines.

Although the parameters of the mining machine had not been announced at that time.

Therefore, those mining machines that start at 200,000 yuan are essentially a futures product that is uncertain whether it can be redeemed.

Naturally, it has been targeted by a large number of Ponzi schemes and pyramid schemes - its expensive and unverifiable attributes make it very suitable for deception.

Many investors purchased mining machines in 2017.

At that time, Filecoin raised $257 million in one month, breaking the ICO world record, which made many investors believe in the strength and prospects of Filecoin. In addition, Filecoin officials also announced that the main network will be launched at the end of 2017.

Opportunities are rare and will never come back. Many people chose to invest in Filecoin at that time, but they didn’t expect to have to wait until October 2020...

During this period, although the mining machines could not mine FIL, they were still selling well.

Because mining machine manufacturers have launched policies that allow users to pre-mine their own tokens and then redeem them for FIL after the mainnet goes online.

Of course it is impossible to really redeem it, so the only outcome is to run away.

Among the many Filecoin mining machine manufacturers at the time, Snail Interstellar Miner may be the scam with the largest amount of money involved, and it was exposed in February 2019.

The Zhengzhou Municipal Public Security Bureau later opened an investigation into the mining machine manufacturer on suspicion of fundraising fraud and discovered that the funds involved were as high as 2 billion yuan, affecting more than 7,000 investors.

More mining machines survived safely through the two or three years before the official launch of the mainnet, and persisted until the moment when the tide was really about to recede.

Naked swimmers: shut down or fork

But the moment Filecoin goes online is when the naked swimmers will be exposed.

On October 15, 2020, the Filecoin mainnet was officially launched. As expected, there was a general groan among the miners.

In fact, such a scenario has already been previewed in the previous "space race".

Regardless of the strict economic model or the computing power requirements for mining machines, most mining machines will face elimination, especially those small mining machines that were sold before.

Filecoin mining is essentially using enterprise-level servers + hard drives to store enterprise-level information. It not only has high hardware requirements, but also tests the miners' operation and maintenance and technical capabilities.

"The hardware threshold is very high, and it requires very high-end equipment, which is relatively expensive. It also requires professional IT operation and maintenance technology. It is really difficult for ordinary users to participate. " said Liu Siling, IPFS code contributor and founder of StarBit.

Therefore, those mining machines assembled from hard drives cannot even meet the basic configuration when mining Filecoin.

Of course, large mining machines that cost 200,000 to 300,000 yuan are even more of a scam.

"We also bought other people's mining machines at the beginning. After the official configuration was released, we found that the machines could not run at all." said Liu Shuai, co-founder of Hash Weilai.

However, he said that later other filecoin service providers helped them with iterative updates, and now the old mining machines have a small profit, producing two or three FILs every day.

However, more mining machines were shut down and became scrap metal, and some were not even assembled. All these failures came silently .

However, there is always a way out. A group of mining machine manufacturers that were originally going to be eliminated united to go on strike and even caused a fork, giving these mining machines a possibility of revival.

They accused Filecoin of being unfriendly to miners, so they wanted to strike or even fork.

For example, Han Weiping, chairman of MIX Group, once listed the seven sins of Filecoin, which can be said to have listed all the criticisms of Filecoin.

1. File hash value calculation is not friendly to Intel storage instruction set;
2. The sealing process is complicated and consumes too much computing resources;
3. Low TPS limits the number of network nodes;
4. The pre-mortgage is too high, which is beneficial to investors but not to miners;
5. The official data set restricts the use of storage networks, and data security is not high;
6. Frequent major technical changes;
7. The blockchain economic model is unreasonable.

“For miners who borrow money to mine Filecoin, such a slow return mechanism could put them out of business.”

Han Weiping believes that FileCoinCash, the fork he is going to lead, is a miner-friendly storage network.

However, when Chain Teahouse confirmed with several front-line Filecoin miners, the conclusion was: although their mining machines vary in size, they can generally achieve a payback period of June to August.

Therefore, the motivations of those mining machine manufacturers who loudly threatened to fork are self-evident. As for whether their future forked chains can be practical, it is even more difficult to say:

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Pay back your investment in half a year - make a fortune in silence

The miners who really make money always do so quietly.

“We invested 2 million yuan in the early stage, and now we expect to get our money back in 180 days, which is a very good return on investment. It is much faster than BTC (BTC is 300 days+).”

As the co-founder of HashNIO, Liu Shuai revealed that the mining machine they assembled themselves during the first phase of the Filecoin testnet could produce 6 FILs per day.

It is understood that the payback period for mainstream mining machines on the market is generally 6 to 8 months.

For example, the mining machine sold by the leading miner Interstellar Alliance for RMB 210,000 can produce 16 FILs per day, and the investment can be recovered in about June to August.

For Filecoin miners, the most critical factor is the packaging speed , that is, the speed of data storage in the proof-of-copy phase.

FIL daily output = cumulative effective data storage / total network effective data storage * total network daily output.

The daily effective data storage of the mining machine = packaging speed (GB/h) * 24h. In other words, the packaging speed determines the effective storage, and the effective storage determines the output.

Of course, the amount of FIL pledged in a single sector is also important.

According to Filecoin's economic model, storage miners need to stake FIL tokens to obtain the right to produce blocks.

Aaron, an investor in Filecoin mining machines, told Lianchaguan that he wanted to reap the first wave of Filecoin dividends and invested nearly one million in total.

“At that time, the mining machine manufacturer promised that the payback period would be 4 to 6 months, and I had high expectations for the price of FIL.”

But at the moment, it has not met his expectations, but has become even more pessimistic.

Because unless additional investment is made to purchase FIL for staking, the payback period will be more than 3 years.

But in general, miners who cooperate with leading mining machine manufacturers can basically achieve a payback period of June to August, which is much higher than other types of mining income.

Variables - Filecoin's Effective Computing Power

Although the current return rate of Filecoin mining is very high, this is based on the premise that the current storage data is basically invalid.

"I can say responsibly that more than 70% of the data on the entire network is junk data. " A Filecoin miner bluntly stated that the data all comes from web crawlers.

Although Filecoin has only built a market based on IPFS and set up a set of market trading rules, since it involves content storage, it will inevitably face the issue of content supervision.

Moreover, Filecoin officials have always emphasized that "a solid foundation for information in human society" should be laid, so publicly accessible scientific data, innovative mass media, historical archives and archives should be stored.

So how do we identify these data as valid data?

Filecoin officials will launch a terminal audit tool in the future . The specific implementation method is still unknown, but the purpose is to guide users to use safe and effective data.

At present, Filecoin has solved the problem of storage capacity, and it may soon be the turn to solve the problem of data validity.

At that time, the difficulty of mining will increase significantly - because miners need to find customers with real needs (especially enterprise-level customers) to store data.

This further excludes small miners, but it is still a problem for large miners.

Although many leading miners have begun to cooperate with centralized storage such as Alibaba Cloud, centralized storage companies will open distributed storage sections to attract groups with small data volumes and low willingness to pay.

But it has to be said that this is only a small piece of the pie, and the bigger piece of the pie is still enterprise-level users.

“Customers who are willing to spend money to store data are not worried about cost, but security, followed by cost.”

When HashNIO discussed cooperation with different enterprise users, it had to face the problem that customers would worry about the data security of distributed storage.

Although in fact Filecoin storage divides data into 24 parts for distributed storage, which is more secure , it requires a long education cycle for users.

"Currently, when discussing cooperation with customers, cold data is still easy to negotiate , but hot data that can be accessed and retrieved at any time is very difficult."

The Filecoin network has just been built. If the Filecoin ecosystem develops, its security, transmission and encryption will be better guaranteed and more convincing.

Not long ago, Filecoin and Huobi Group cooperated to launch the Huobi Filecoin Incubation Center, with US$10 million in funds to support the Filecoin ecosystem (focused on 3 areas: incubation, investment, and community development).

Whether the bottleneck of Filecoin's effective computing power can be broken in the future depends on this.

FIL - Can there be any improvement?

In fact, for most investors, to evaluate the quality of a project, they only need to look at the price of the currency.

Therefore, Filecoin is easily criticized because FIL did not rise as much as people had expected, so many people think that Filecoin, like its price, has not improved.

But in fact, this is the result of Filecoin official's intentional guidance.

Since not much FIL has been released in the market at present, FIL is basically still controlled by the official, and the official does not want the price of FIL to fluctuate too much to affect the stability of the network.

So I will control the market for a long time...

Many miners think that after 180 days, the linearly released FIL will come out to crash the market, but in fact, if the price falls too low, it will not be in the interests of the miners.

And there is reason to believe that Filecoin officials will definitely support the market to keep the price stable...

Of course, things further ahead are unpredictable.

Regarding Filecoin mining, those who shut down their machines are cutting losses, those who forked are happy with themselves, and the top miners are making money in silence. They all have different futures.

For ordinary investors, there are only two options left : cloud computing power and crowdfunding mining pools - if they still want to go.