Exclusive interview with Fan Jianwei of Bitmain BSCI: GPU mining machines have become standard equipment in mining farms, and the net growth of computing power will reach about 20% next year

Recently, the Venezuelan Army released a video on its official social media account, confirming that the "Digital Currency Production Center" built by its 61st Battalion in Fort Tiuna in the capital Caracas has been put into use. It is understood that due to the high inflation rate and the economic sanctions suffered by the United States, Venezuelans have to use cryptocurrency as a daily transaction currency.

On the other hand, Iranian authorities have also been active in formulating policies for cryptocurrency trading and mining. On October 30, Iran began to formulate new regulations that will allow local miners to sell bitcoins directly to the Central Bank of Iran so that the authorities can use them to pay for imported goods. In addition, TPPH, one of Iran's major power companies, is preparing to hold a tender to provide electricity from three power plants to Bitcoin mines.

Compared with the previous situation of domestic computing power monopoly, Bitcoin computing power is gradually decentralized, and many new mines and computing power have appeared around the world. It is not difficult to speculate that this situation will become more prominent in the future as local policies become clearer.

How has the domestic and foreign mining landscape changed this year? With favorable overseas policies, will miners choose to go overseas? Have the old S9 series mining machines been eliminated? With the arrival of Ethereum 2.0, will miners choose to leave? With Bitcoin prices hitting highs repeatedly, will miners sell coins on a large scale?

Regarding these issues, BlockBeats interviewed Fan Jianwei, head of Bitmain Supercomputing Center Institute (BSCI). The following is his summary and views on the current status of the mining industry.

BlockBeats: Can you briefly explain the situation and changes in the domestic and international mining landscape?

Fan Jianwei: Currently, the Asia-Pacific region is still the main location of global mining farms, and there are also mining farms in Europe, America and the Middle East, and the number is increasing.

It is not difficult to see that the scale of overseas mining farms is accelerating. Among them, the hosting of mining farms in the United States is in short supply, and there is a large demand in sanctioned countries such as Iran. There are even traces of mining farms in Africa. All these have led to a surge in demand for mining machines to go overseas. It is estimated that machines above 60W are facing the choice of going overseas.

Compared with domestic mines, there is still a clear boundary between the dry season and the flood season; the stability of Sichuan "park", a major power supply province in the flood season, has been greatly improved. Unlike the situation of supply and demand of mining machines overseas, there are still existing mines and existing loads in China, and the short-term increase can be huge; and the situation of comprehensive existing and incremental models continues, the mine will still be a buyer's market in the next 1-2 years.

Global Mining Atlas (Asia Pacific)

Global Mining Atlas (Europe and America)

The resource allocation of the mine has also changed:

1. Xinjiang Zhundong accounts for more than 40% of the total dry-water power load; if the market conditions allow, 30-40Wkw will be added in a short period of time;

2. The distribution of resources in foreign regions is relatively concentrated: Central Asia (Kazakhstan), the Middle East (Iran, UAE, Kuwait), North America (the United States, Canada), Northern Europe (Norway, Sweden), Africa, etc.;

3. Foreign power load approaches 40%;

4. An industry has emerged that uses the entire country's resources to deploy mines and mining machines; providing one-stop services from construction, procurement to operation;

BlockBeats: You mentioned that foreign mining farms are growing in scale. Do domestic miners have the intention to migrate? Because it seems that overseas policies are moving towards standardization.

Fan Jianwei: The foreign environment is becoming more friendly. This is reflected in:

1. North America is as stable as ever, and the mining farms in North America are in a situation of "supply less than demand", with excess mining machines; short-term investment returns are better;

2. The Middle East has dispersed power resources and relatively low power generation costs, so there is a strong demand for models above 80W to be exported to the Middle East;

3. The new load in Central Asia (Kazakhstan) accounts for a large proportion;

4. The mine first appeared in Africa (Ethiopia).

Therefore, some miners will choose to go overseas, and the way to build a mine overseas is mostly "cooperation". Few domestic miners use the sole proprietorship to build a mine overseas, which is very risky. Usually one party is familiar with the overseas situation and is responsible for the establishment of the mine; the other partner is responsible for the provision of mining machines and technology.

In fact, domestic policies are also gradually changing: "Sichuan local" is restrictive and friendly, while Xinjiang and Inner Mongolia are close to selective "neutrality". The "consumption park" power led by the Sichuan government is very stable and will become the mainstream trusteeship in the future; but due to government coordination factors, "consumption park power" and "direct power supply" will coexist competitively in the next 1-2 years.

BlockBeats: Bitcoin prices are approaching their all-time highs recently. How much market share does the S9, which has been eliminated several times before, still have? What is the approximate ratio of new and old mining machines?

Fan Jianwei: The total network computing power declined from the end of October to mid-November, when the mining machines were migrated after the flood season. We estimate that S9 and some old mining machines in the same series (16nm) account for about 25% of the total network computing power. After the flood season, most of them should have entered the phase-out period, and many old mining machines have been put on standby or shut down.

At the beginning of November, the total network computing power was about 105E, and it has rebounded recently. This means that the inventory of several major mining machine manufacturers has basically been shipped to various mining farms, and a lot of mining machines have been added to the market.

There are also many futures mining machines that have been shipped ahead of schedule. For example, some futures of Bitmain Antminer that were originally scheduled to be shipped in December have already been shipped in November. Another factor is the overseas migration of mining machines. These mining machines that cannot maintain profitability in China due to low computing power are transferred to overseas mining farms. It is understood that the average unit price of electricity in some overseas mining farms is even less than 0.2 yuan, which is far lower than the current electricity price of domestic mining farms.

However, there are still some risks in going overseas. Miners need to find reliable and appropriate resources and channels, otherwise they will face the loss of both funds and mining machines.

In general, if we start from today (December 1st) and before the flood season next year, it is expected that 250,000 new mining machines will be added. The computing power growth is about 25-30E. This data does not include the stock computing power, but is entirely incremental computing power.

BlockBeats: What is the market share of Ethereum mining machines? Will Ethereum miners give up mining after it switches to PoS?

Fan Jianwei: The influence of ETH2.0 is the greatest in the history of Ethereum. It is predicted that it will exceed the impact of the previous 1CO and DeFi periods on ETH. First of all, the PoS staking mechanism generates a huge demand for ETH. Currently, about 8% of ETH is staked on DeFi, and about 2% on Grayscale. In the future, the ETH staked on ETH2.0 is expected to reach about 30%, which will lead to a significant reduction in the ETH in circulation. (Data as of early November)

This future expectation has brought about a huge demand for graphics card slots. 10% of the load of newly added mining farms and expanded mining farms will generally be equipped with graphics card slots. The load utilization rate of "graphics card slots" is not high, and targeted supplementary design and construction plans are needed.

In fact, as far as we know, the deployment of Ethereum mining machines is very large, and the benefits of Ethereum mining machines are also very considerable. Compared with ASIC mining machines, graphics card mining machines consume less power, are not sensitive to changes in electricity costs, and can continue mining. Mining farms now basically reserve some positions for graphics card mining machines, but the size of graphics card mining machines is relatively large. The position of a graphics card mining machine can accommodate 3 S19 mining machines. However, its low power consumption and stable load can effectively improve the utilization rate of the mining farm. Graphics card mining machines are already a rigid configuration of mining farms, and the proportion of graphics card mining machines in mining farms can reach about 10%.

After Ethereum 2.0, the impact on miners is that 4G graphics cards may no longer be able to mine, while 5G and 8G graphics cards can still continue to mine. 2.0 is not a one-time process, and graphics card mining machines should still be able to mine for 2-3 years.

BlockBeats: We know that miners not only maintain network security, but the bitcoins they hold also have a significant impact on market trends. So when bitcoin prices soar, will miners sell their coins on a large scale?

Fan Jianwei: Most miners will not sell their coins immediately, but selling coins to pay electricity bills is indeed a rigid need. After the dry season, electricity bills in most places may rise by 50%, which is a challenge for miners. Some miners will also hedge, which is normal. However, now is a bull market cycle, so selling coins is generally not a good choice.

BlockBeats: Thank you very much for accepting our interview today. Finally, can you introduce the Bitmain Supercomputing Center? For many readers, the existence of the supercomputing center is still a little mysterious.

Fan Jianwei: Actually, we mainly play a role of bridging and integrating in the crypto market. In the upstream of the industry, we connect with investors, which are companies, institutions or individuals who have funds and investment needs but don’t know where to invest. We help them provide options so that they can invest in mining farms.

For the downstream of the industry chain, we will follow up with some major customers and contact miners who have the need to build mines. These customers may have equipment, experience and even power resources, but lack sufficient funds or are willing to accept more funds for the construction of mines.

Our role is to integrate the resources of upstream capital parties and downstream resource parties. We have rich resources and experience in mining fields.

Simply put, the advantages of the supercomputing center are twofold:

1) Rich resources and able to avoid various risks;

2) The future is promising and the return on investment for investors is stable.