Understand the mining logic of Conflux, Tsinghua University’s most powerful project. Is it worthwhile to mine with graphics cards?

Recently, the news that Ethereum 2.0 will be launched on December 1st has been all over the cryptocurrency circle. The launch of ETH 2.0 means that the PoS mining function will be officially launched. Although it will take a long time for Ethereum 2.0 to completely abandon PoW, it is still a long-term negative for graphics card miners to some extent.

However, the star project Conflux, which was launched at the end of October, still chose PoW as the consensus mechanism, and many graphics card miners began to bet their computing power on its token CFX. Conflux is the strongest project of Tsinghua University, with Mr. Yao Qizhi as an advisor, and the team is mostly composed of the strongest Yao class students in China's AI field. Investors include Sequoia, Baidu F2Pool and Huobi, which seems to be able to break the vicious circle of the bad reputation of the "Tsinghua-affiliated" currency circle.

Interestingly, CFX has not yet been listed on any mainstream exchange, and it was first launched on MoonDEX, a decentralized exchange within the Conflux ecosystem. Although some small exchanges have already started to force their way in, Huobi, which has invested in CFX, may also be listed later if nothing unexpected happens (unless it is affected by the recent investigation).

For graphics card miners who are used to mining and selling CFX, can they really make money by betting on the opportunity cost of ETH's appreciation to mine CFX?

CFX's recent mining revenue outperforms ETH

Conflux supports GPU mining, but the graphics card must be 6G or above. At present, the cost of assembling an 8-card 3070 mining machine is more than 30,000 yuan. Calculated at the price of ETH 440 US dollars, the net profit of a single machine is 70 yuan/day, and it is expected to pay back in 13 months. Considering that the graphics card has a residual value of more than 30%, it is expected to pay back in more than 9 months.

But for Conflux, if calculated based on the static computing power on November 8 when this article was written, under the same machine parameters and based on the current CFX price of $0.09, CFX's net income can reach 100 yuan/day, and it is expected to recover its investment in 10 months. Taking the residual value into account, the payback period is about 7 months.

In addition, in the first two days after the mainnet was launched, the computing power of the Conflux network was less than half of what it is now, and the mining income was even more exaggerated. The net income of an 8-card 3070 could reach 200 yuan per day.

Despite this, mining CFX is not as lucrative as imagined, but the income can still outperform other PoW coins, so we can also see that the mining difficulty and computing power of Conflux are growing rapidly. However, the premise for maintaining the current income is that the CFX coin price is not less than $0.066 per coin under static computing power, or the coin price is not less than $0.13 per coin when the computing power continues to increase by 1 times, otherwise the CFX mining income will not be able to outperform ETH.

However, for miners who are sensitive to the shutdown coin price, the current shutdown coin price of CFX is only around US$0.017, so there is no need to worry about mining accidents in the short term.

Currently, CFX has the largest trading volume on MoonDEX. Although the coin price has reached a high of $0.1, the average daily trading volume is only $80,000. Excluding market-making funds, the exchange does not have sufficient trading depth, and miners may mainly ship out goods off-site at this stage.

The selling pressure is small below $0.1, and miners have a chance to win by hoarding coins

The initial number of CFX is 5 billion. After Conflux goes online, the monthly fixed selling pressure mainly comes from private equity investors and the Conflux Foundation. These tokens account for 12% and 4% of the initial number of tokens respectively, and are expected to be unlocked within 2 years. The tokens of the founding team, community and ecological fund account for 84% of the initial total. These two parts of tokens can be unlocked in batches within 4 years.

In addition to miners, the holders who are most likely to sell in the short term are private investors. According to CFX's early unlocking rules:

It can be seen that the tokens of private investors will be unlocked faster as the price of the currency rises to the above price. There is an invisible price ceiling, which puts pressure on the price of the currency. The private price of CFX is $0.1. Therefore, when the price of the currency is lower than $0.1, all holders may lack the motivation to sell. Now, the token sellers in the market are mainly miners, and the circulation is very small, so it can even be seen that some investors are quietly acquiring CFX off-site. Combined with the above calculations, CFX miners who are currently entering the mining market (at $0.09 at the time of writing) have a good capital safety cushion, and the mainstream exchanges have not yet listed the currency, so they have a high chance of winning in the short term.

CFX still needs to be paid by retail investors

Fortunately, N cards are a panacea. Miners can cut off computing power at any time when a mining accident occurs, and do not bear too much risk. However, whether it is the official tokens or the tokens in the hands of miners, they will eventually flow into the market, and the sellers' profits will be paid by retail investors.

The amount of tokens to be unlocked in the next few years will be a considerable number. Calculated at $0.1, the initial token market value is $500 million, and if calculated at $1, the market value is $5 billion. In addition, Conflux produces 2 blocks per second, so there are about 63,072,000 blocks per year. The block reward in the first four years is about 7 CFX, and the inflation rate is around 8.83%, which will lead to further accumulation of CFX selling pressure. Generally, under the token inflation model, if there is no ecological value support like Ethereum, the price of the currency is difficult to maintain, and it may even enter a long-term decline in the price of the currency like EOS.

Therefore, if miners want to hoard coins for a long time, they still need to pay attention to each unlocking time point and the ecological activity of the project to avoid losing more than they gain. (Special author: miaohash Editor: Wu said blockchain)