Several ways to play and introduce mining derivatives

For most people who are familiar with digital currency, mining is one of the necessary basic knowledge. Since the birth of Bitcoin, the mining industry has developed into a huge industry. The recent disputes in Bitmain are actually the core of the interest disputes between mining machines and the mining machine industry. Mining has become an existence that cannot be ignored.

However, for mining industry derivatives, the current development is still not very mature. This does not mean that a large industry will necessarily be mature. A large industry only means that the participating classes have become relatively solidified, and it has produced insurmountable players. It is difficult for new players to obtain huge profits by participating in mining. For the mining industry, it still needs certain "derivatives" to activate the market and allow more new players to enter in order to achieve sustainable development, rather than simply a game for a few giants.

Comparing the derivatives of Bitcoin and other investment products, we can actually divide the derivatives of the mining industry into the following categories:

1. Cloud computing power sales/leasing/hosting

2. Computing power trading platform

3. Hashrate Insurance

4. Trading platform for mining hardware

5. Options and futures products for computing power

6. Tokenization of computing power products

Currently, the more mature ones in the market are mainly the sales/leasing of cloud computing power, mining hosting platforms, and mining hardware trading platforms. However, computing power trading platforms, computing power insurance, computing power options and futures products, and the tokenization of computing power have not yet formed a scale. They are more of a scattered form presented to users. Therefore, in terms of mining computing power, there is actually a lot of room for development in the future.

Sales and leasing of cloud computing power

This is a product that has been under development for a long time. Although there have been some scams in the market over the past few years of cloud computing development, compared with the chaos of early cloud computing platforms, it is now much better. Each computing power product has a different style, which also shows that the cloud computing market actually still needs one or two well-known leading companies to lead it.

The sale and leasing of computing power is the basis of mining derivatives, and other derivatives are basically developed based on this. The current period is somewhat similar to the period when several early exchanges and over-the-counter transactions were mixed in the Bitcoin trading market. We can call it the enlightenment period.

Computing power trading platform, tokenization of computing power

There are currently several cloud computing power providers providing computing power trading platforms, but there is also a situation where each operates independently, because computing power products are mainly based on the formulation of a standard contract based on mining machines. Although some platforms have given birth to mutual trading of computing power, traders need to have a wealth of basic computing knowledge to truly participate in order to estimate future potential returns and make investments. However, the current trading platforms for computing power products still mainly present an island effect, and it is difficult to connect the data.

Regarding this problem that exists in computing power trading platforms, it can be seen that the current difficulty is actually the generation of a standard computing power product and the provision of computing tools. This is the main stumbling block for the computing power trading platform to become bigger and stronger. Of course, if it is simply to provide an exit mechanism between computing power users, then it is basically sufficient.

The tokenization of computing power is actually a relatively novel method. Of course, this is somewhat similar to the game props NFT in the blockchain game DAPP. Of course, regarding the buying and selling of game props, there are actually related chain game manufacturers doing it. They mainly build a large-scale game props trading platform, such as a model similar to the Spider Shop. In fact, the effect is quite good. If computing power generates NFT, then there will be more ways to play in the later stage, such as giving away and buying, or piecing together a corresponding number of NFTs to pick up the machine. There is also a huge room for imagination.

Hash power insurance

Among the people currently participating in digital currency investment, most of them actually go directly to exchanges to buy digital currency, and very few people invest in computing power. In fact, a big reason for this is the uncertainty of mining income and the unpredictability of future growth in mining difficulty. Therefore, participating investors basically need to gamble like buying coins. The first is to gamble that the coin price will rise, and the second is to gamble that the difficulty will not increase significantly. Only in this way can a steady stream of mining income be guaranteed.

So is there a kind of computing power insurance to guarantee the income? At present, there is still no relevant product on the market. We think it is mainly because no one has designed a reasonable way to operate this kind of computing power product, which has also caused this gap.

However, some smart people have added clauses similar to insurance functions to their computing power products, which should also be worth paying attention to. For example, the joint mining model, in simple terms, is that the user and the mining farm reach a mining agreement, and then there is a provision that once the user's investment is recovered, the excess profit will be shared equally or proportionally between the mining farm and the user.

This form of joint mining is actually a relatively novel insurance method. In order to obtain more profits, mining companies can only give priority to providing good resources to users, such as low electricity costs, low hosting fees and other preferential measures to ensure that users can get their investment back in the short term. In this way, they can enjoy the mining income in the later stage. This is essentially binding the mine and the user together, so that everyone is in the same boat.

Generally speaking, joint mining is more suitable for new users, because the mining machine is still the same mining machine. Since the birth of perpetual contract mining, the insurance portrayed by joint mining can only be a psychological guarantee, because once the investment cannot be recovered, the mining farm will basically lose money, and the reputation of the mining machine manufacturer will also be affected. Therefore, generally speaking, the mining machine basically has a high probability of recovering the investment (here refers to mainstream coins such as Bitcoin and Ethereum. Small mining coins have greater risks due to price fluctuations, and the relevant market is not mature). Therefore, in addition to psychological comfort, the effect of joint mining is not very obvious.

Hashrate options and futures products

Speaking of futures products of computing power, many people have rarely heard of them. However, they have become quite popular recently. For example, the sales of FIL's cloud computing power are actually the sales of futures products. There are relatively large risks at present. Of course, the main reason is the unpredictability of the future. Moreover, compared with new currencies, there are actually more problems, such as the postponement of the main network, the price estimation model of computing power manufacturers, etc. There is too much opacity here, and there is still a long way to go in the future.

The popularity of digital currency has made mining a term known to everyone, but the current participation of the general public in the currency circle is still relatively low. Generally speaking, the main reason is that mining products are not standardized and regularized. However, the immaturity of the industry often represents more opportunities. Whether the mining computing power industry can usher in a new round of development in the future remains to be observed.