A breakdown of the changes in the mining industry in the first half of 2020 and the focus of attention in the second half

As an industry with relatively few participants, the digital currency mining industry has always attracted relatively few people's attention. Due to the changes in the mining industry, individual mining has become less likely, and various exchanges have sprung up like mushrooms after rain. Therefore, most people are still fascinated by the hype of digital currencies, which has kept mining on the margins.

Of course, this situation will not affect the development of the mining industry. The mining industry has its own fixed profit model and is relatively stable. Therefore, it has also attracted a large number of traditional industry practitioners to join. Therefore, the competition in the mining industry is actually quite fierce.

Bull market after halving

Since last year, many people have become obsessed with Bitcoin halving and have repeatedly hyped it up in multiple time periods, such as from April to July last year, from November to February this year, and from April to June this year. Basically, the market's view has changed from a big rise before the halving to a big rise during the halving, and then to a big rise after the halving. However, when the actual market conditions came, it was discovered that the market still tended to see an increase in the coin price after the halving. However, it was not a so-called big rise, because of the previous wave of sharp drops on 312, and the current coin price is actually still above the level at the beginning of this year.

Even so, people are still very confident in their expectations for the bull market, so some hot spots have begun to be hyped, such as DEFI, IPFS, etc., which are still hotly discussed.

Policy supervision of mining

This year's COVID-19 is a black swan event, which has caused losses to many industries. Of course, for the mining industry, the loss of policy supervision is relatively small. The mining industry has always been an industry on the edge of policy. On the one hand, it has increased local taxes and created a lot of profits, but on the other hand, it has been difficult to solve the problem of industry attributes and electricity consumption.

However, the COVID-19 pandemic has become an opportunity. Due to the impact of the epidemic, the production activities of a large number of companies were affected in the first half of the year, so the electricity consumption of companies was greatly reduced, resulting in a large amount of hydropower abandonment in some areas, such as Sichuan. This situation also led to the local government relaxing mining supervision, allowing companies to participate in digital currency mining in compliance with regulations, and establishing corresponding demonstration parks to make rational use of abandoned electricity.

At the same time, in terms of electricity price adjustment, some qualified units are allowed to participate in market electricity transactions, which has taken the free trading of electricity prices to a new step. This mainly reflects the supply and demand of energy in the market at that time. On the one hand, international oil prices were under pressure, and on the other hand, corporate electricity consumption decreased. Therefore, the economic benefits generated by mining were officially seen by the government, which was undoubtedly good news.

Depends on the weather for food, the weather is unpredictable

Mining not only requires strong capital and extensive personal connections, but is also closely related to the climate. Generally speaking, miners use thermal power in winter and hydropower at other times. Thermal power is generally more stable, but this is not the case with hydropower.

This year, there has been a long period of drought and heavy rain disasters. The drought has affected the power supply of hydropower, resulting in frequent power outages in some small mines, while the heavy rain disasters are even more serious. Some mines are built on inappropriate terrain and are easily submerged by floods or affected by geological disasters such as landslides.

Of course, for regular mining farms, these are not actually a problem, and regular mining farms can generally withstand these problems. However, according to the changes in the computing power of the entire network, there are actually many small mining farms that have suffered relatively large losses due to such disasters.

Although this situation has occurred in previous years, the flood disaster in the south this year is more serious than in previous years. Therefore, this also reminds some miners that it is very necessary to do a good job in infrastructure construction.

Internal fighting in Bitmain, losses to miners, Ebang International's IPO

For mining machine manufacturers, what they are more concerned about this year is the internal fighting of Bitmain. Since last year, Bitmain has been at the center of the storm since the "seal-grabbing" incident that shocked the cryptocurrency circle. The two founders have shown a trend of competing with each other and being incompatible with each other, and this year it has further developed into seizing business licenses, talents, subsidiaries, assets, and even orders, damaging customer property, etc.

All of this continued to stimulate the nerves of the spectators, so that in the end everyone began to feel aesthetic fatigue and lost interest.

However, this did affect the interests of some miners. Due to internal strife, Bitmain's latest Antminer could not be shipped in the end, causing losses to the interests of many miners.

While Bitmain is in a mess, Ebang International, the third largest mining machine manufacturer, has started to go public in the United States. Ebang was actually engaged in communication products before, but took advantage of the popularity of Bitcoin in 2017 to switch to mining machine production and made a fortune. As a result, it went public in 2020. Compared with the number one Bitmain, if there was no internal fighting, then going public would be a foregone conclusion. Bitmain's experience also made many people sigh. A unicorn has gone downhill like this.

What to watch for in the mining industry in the second half of the year

Generally speaking, there is not much to watch in the mining industry in the second half of the year. The policy impact on mining is actually not something that the mining industry can control. Weather factors are gradually becoming stable due to climate reasons. It is not as windy and rainy as in summer. Therefore, this period may be a better time for mining. Mining companies may enjoy a brief period of calm and prepare for relocation in winter.

As for the internal fighting of Bitmain, the public now has no interest in paying attention to it. Therefore, we have also noticed that Bitmain has not released any explosive news for a while, which is more concerned about the mining machine issues of miners. Maybe more mining machines such as Shenma and Avalon will usher in a wave of rise in the future. After all, DEFI hype is very hot now, which may lead to a bull market in the second half of the year or next year. There will inevitably be some people who are foresighted and make arrangements in advance. If Bitmain gives up internal fighting and concentrates on the market, there will still be a chance for a comeback. Once it is missed, it will basically face the worst fate.

For miners, the most important issue is actually the mining income. DEFI has driven the rise of Ethereum and brought Ethereum mining into a good period. This is the first opportunity for miners. Of course, with the advancement of Ethereum 2.0, although POW and POS will continue for a while in the future, it is better for miners to leave a way out in advance.

The current price of Bitcoin has entered a critical period. This period may require waiting until the market has finished hyping up some hot spots before it can explode. We can think that the hype in the fields of DEFI and cloud storage is actually to attract new funds into the currency circle. After completing the historical mission, the next wave of currency circles will begin to be taken over by the big cake, and this wave of rise will refer to the routine of the previous bull market. Generally, it may be at the beginning of next year or the end of this year. Now is a good period for layout. Therefore, miners only need to maintain patience. Often, the period when most people do not pay attention is a good period for layout.

DEFI provides a good way for new liquidity mining. Although this is innovative, there are still many uncontrollable factors. At present, DEFI farmers are mainly participating in new projects, most of which are actually highly homogeneous and lack innovation. Therefore, it can only be regarded as a good way of investment and financial management. For example, you can play with it like the magic fish in the fish pond. If you are addicted to it, you will inevitably get your shoes wet by the river later.

The second mining opportunity is the opportunity of filecoin and cloud storage currency. Although filecoin was overhyped by the market in the early stage, and a large number of companies sold cloud computing power to the market, and even some exchanges traded futures currencies, the market speculation seemed too hot, and some bubbles may appear in the later stage. However, for miners, mining is a relatively long cycle, not a short-term profit like speculation. Therefore, filecoin and cloud storage mining coins should be viewed from another perspective, that is, the long-term role in the blockchain industry. Obviously, filecoin's technical capabilities are still very good, and its innovation is also very good. Therefore, there may be bubbles in the short term, but in the long run, it is still a good mining target.

In fact, the most important thing in the second half of the year is the launch of filecoin, which will usher in a wave of relatively large hype opportunities. For example, we have been paying attention to the mining conference in the field of cloud storage held in Ningbo in recent days. On that day, some cloud storage-related currencies such as storj and AR all ushered in a wave of pull-ups, and the increase also exceeded 10%. The hype of the cloud storage sector has begun to warm up, and there will inevitably be some opportunities in the future, just like the Polkadot hotspot during this period.

The third is the opportunity of some small mining coins. The mining of HNS and CKB is more prominent here. There are mining machine manufacturers willing to develop corresponding mining machines for these two mining coins, which has prompted the market to pay attention to these mining coins. This is different from traditional graphics card mining and CPU mining. The difficulty in developing mining machines lies in the choice of currency, not the development process of mining machines. Once the choice fails, the money invested will be wasted instantly . For example, the mining machine of Bytom is an example. Therefore, for HNS and CKB, basically speaking, there are no problems with mining now, which means that these two currencies will gradually move from the perspective of miners to the general public of currency investors in the later stage, so they will also usher in a wave of attention in the later stage.

Tip: Although there are many opportunities in small mining coins, the risks for small mining coins are still relatively large, such as the risks of the project party, which is unpredictable. High returns mean high risks, which is also well explained.