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These days, the three Bitcoin mining machines I purchased have just completed the migration and moved from the hydropower mine in Sichuan to the thermal power mine. Starting from the official launch on June 1 this year, in just half a year, this batch of mining machines has recovered 68.16% (excluding the residual value of the mining machines). If the residual value of the mining machines is included, the recovery is 174.41%. For a newbie like me in the mining circle, this can be regarded as a relatively satisfactory mining investment. As Bitcoin is about to break through the $20,000 mark, it is a good opportunity to do a simple mining review and recap. 01
Why buy a mining machine? There has always been a lot of controversy in the industry as to whether mining or cryptocurrency trading is easier to make money. From my personal experience of being harvested by various projects and various "blind operations" in the circle, making money is not "as easy as breathing". Hoarding coins in a bear market and selling in a bull market, this seemingly simple strategy is actually a test of human nature. Faced with the ups and downs of the market, I always can't help chasing ups and downs, using leverage and contracts in turn, and finally frequently "breaking my thigh" and "turning off the lights to eat noodles", and the coins in my hands are getting less and less. "Making coins is harder than climbing to the sky", this is the truth. In May this year, the halving of Bitcoin output came into effect, and the entire crypto market also recovered from the trauma of the 312 crash. The most obvious signal is the recovery of Bitcoin prices: in May, Bitcoin has risen to more than $8,500. When everything started to become clear, I decided to take out a small amount of funds to participate in mining and test the waters. At this time, I saw that B.TOP, a subsidiary of LiteBit, launched a batch of Shenma mining machines M21S-64T. Mining requires great attention to timing of entry and cost control. After some comparison and consideration, I decided to buy three mining machines first. Here is my decision-making process: 1. The halving of Bitcoin output has been completed, which means that the media hype surrounding the topic of "halving" will come to an end. Media hype is a major destabilizing factor affecting the market. 2. The market has recovered, and the price of Bitcoin has risen to more than $8,500, returning to the level before the 3.12 crash, but it has not broken through the new high of $10,500 at the beginning of the year. This means that the price of the currency has only returned to normal levels. 3. The price of mining machines lags behind market changes and has not increased significantly. According to the price at that time, the static payback period of the Shenma M21S-64T mining machine is about 300 days. Since the coin price is still low, the 300-day static payback period is very attractive. 4. The flood season is coming, and cheap hydropower will significantly reduce the proportion of electricity costs for mining machines. If you buy now, you can enjoy the electricity price bonus during the flood season. 5. The price per unit of computing power is low enough. At that time, the price of the latest Antminer S19 Pro-110T mining machine was 178.8 yuan per ton of computing power in August futures. In contrast, the price of the Shenma M21S-64T mining machine at 80 yuan per ton seemed very cost-effective. 6. Spot mining machines will be launched one week later, thus avoiding various uncertainties and pitfalls of futures mining machines. 7. Due to the impact of the epidemic and internal disputes within Bitmain, the output of mining machines this year is relatively low, which means that there will not be too many new mining machines entering the market in the future, and the computing power of the entire network will not grow too fast. 8. In May, the total network hashrate of Bitcoin was about 108E. Considering that a large number of S9 mining machines would be phased out after the flood season and the new mining machines had insufficient production capacity, the prediction at that time was that the total network hashrate would stabilize at 110E~120E during the dry season. (Looking back now, this prediction was too conservative) 02
Mining machine performance and mentality changes in the past six months On June 1 this year, the three mining machines I purchased were officially put into operation, enjoying the cheap electricity during the flood season. While the flood season brings abundant rainfall to Sichuan, it also brings many natural disasters. In June this year, due to heavy rainfall, Sichuan suffered floods, mudslides, and landslides, which inevitably led to network interruptions for telecom operators and power outages for hydropower stations to clear silt. Once such incidents occurred, the mining machines would have to be shut down for one or two days. But even so, participating in joint mining is still more cost-effective than directly purchasing cloud computing power, because when cloud computing service providers sell computing power, they have already taken into account the factors that will cause mining machine downtime - the unit computing power and electricity costs are sold at a higher price, so ultimately it is the consumers who bear the cost. Since July, the performance of the mine has been very stable, and power outages have rarely occurred. In addition, one of the advantages of the Shenma mining machine is that the machine is relatively stable. There have been almost no problems in the past six months, and the computing power has been very stable. The happiest thing about mining is that the price of the currency continues to rise steadily after the mining machine is put into operation. The following figure is the BTC price trend chart in the past six months. The opening price on June 1 was 9448 USDT, and now it is 19206 USDT, which has more than doubled. The price of coins has doubled, and the price of mining machines has also risen. The three mining machines I bought have passed the six-month warranty period. Based on the price of ¥80-90/T in the second-hand mining machine market, each mining machine can be sold for 5120-5760 yuan, with a median of 5440 yuan, which is higher than the price I paid for the mining machine at the time. If I sell it now, it means that the coins I mined in the past six months are free of cost. This is the "Davis Double Click". After deducting the electricity fee, the coins mined every day are automatically transferred to a separately created Bitcoin wallet for storage. When the bull market reaches its climax, they are sold. The income will be much higher than directly "mining, withdrawing and selling". To give a practical example, if I "mine, withdraw and sell" every day, the current return rate of my three Bitcoin mining machines is 58.79% (excluding the residual value of the mining machines), and the residual value is 165.04%; if I store them first, according to the price of 19206USDT at the time of writing, the return rate has been 68.16% (excluding the residual value of the mining machines), and the residual value is 174.41%. After I joined the mining, my mentality has changed a lot. When the price of Bitcoin goes up, I don’t need to chase the increase, because I receive more coins every day (less coins are deducted from the electricity bill), and the income from the coins I mined and hoarded before also increases; when the price of Bitcoin goes down, I don’t need to sell at a loss, because the coins I mine every day are constantly reducing the cost of my mining machine. Without chasing the rise and selling the fall, I can receive coins steadily every day, and my mentality will naturally become better. 03
Conclusion At present, the total network hashrate of Bitcoin is 132E, and the first-generation king Ant S9 has been revived due to the surge in Bitcoin prices. So looking back now, the total network hashrate predicted in the dry season before buying the mining machine was conservative. However, the current spot supply of mining machines is still tight, so there is no need to worry too much about the hashrate surge. The best time to enter the mining market is in the middle and late stages of a bear market, followed by the early stages of a bull market. Different people have different views on how the Bitcoin market will develop in this bull market. The following is a comparison chart of Bitcoin's four cycles made by the Litecoin team, which may help you make mining investment decisions.
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