The pitfalls of second-hand mining machines: Don’t touch the “toxic cheese” that big miners dislike

In the series of articles on mining pitfall prevention, we previously mainly introduced the pitfalls of buying new mining machines or futures mining machines. Today, we will focus on the pitfalls of buying second-hand mining machines . Zhikuang University interviewed Shanghai Waiyi @Zhang Zhanqi, a miner on the front line of the mining machine trading market, and the business director of Wabi.com @Qingwen, who has rich mining experience.

01 The leading source of second-hand machinery

Why is there a second-hand mining machine transaction? This has to start with the source of second-hand mining machines. There are two main sources of second-hand mining machines:

Miners are replacing old machines with new ones on a large scale . This usually happens when new mining machines are released, rewards are halved, coin prices fluctuate, and there is a need to fill the load. Some miners need to replace old machines with new ones for reasons of income and safety margin, and the old machines flow into the second-hand mining machine market.

Another major source of second-hand mining machines is the "flood-dry season conversion", where mining machines with high energy efficiency ratios flow from miners with high electricity prices to miners with low electricity prices . After the flood season ends every year, mining farms in Sichuan, Yunnan and other places implement dry season electricity prices. Many old machines are unable to cover operating costs due to mining output, and these machines will also flow into the second-hand mining machine market.

How do these mining machines that flow into the second-hand market complete their circulation?

02 Second-hand mining machine market structure and circulation channels

The circulation of second-hand mining machines in the market is mainly divided into two channels. One is the circulation between large miners, which is a transaction model among acquaintances . For example, large miner A has a batch of old mining machines that need to be replaced. He shouts in the circle of large miners, and the mine owner B thinks the price of the machine is reasonable, so he directly trades. The machines in this channel are generally not for retail investors, and relatively few second-hand machines are sold through this channel.

Second-hand mining machines are more likely to flow to another channel. Speaking of this channel, we have to mention a very small circle in the second-hand mining machine market - the 20 to 30 people who can access the first-hand source of second-hand mining machines. They have many resources from mine owners and have great pricing power and say over second-hand mining machines.

The typical characteristic of these people who have the right to speak on second-hand mining machines is that they basically do the business of second-hand mining machines not in the form of a company, but mostly in the form of individual businesses.

A large number of second-hand mining machines first flow to these self-employed individuals with a say, then flow to second-hand mining machine dealers through them, and then flow from dealers to miners of all sizes . This is the main channel for the circulation of second-hand mining machines, which belongs to the stranger transaction model.

03 Retail investors and second-hand mining machines

The market structure of second-hand mining machines determines that it is difficult for retail investors to access first-hand sources, and they dare not take the risk to take first-hand sources.

As a small retail miner, it is difficult to get in touch with first-hand sources. This is because the first-hand sources of second-hand mining machines are basically monopolized by self-employed individuals who have the right to speak in the circle. They will not give up the big business of big customers and go to small miners to do small business. Profit-seeking businessmen give up reasonable interests. This kind of thing often happens in scams . As a retail investor, if someone tells you that he has a batch of second-hand mining machines, the price is cheaper than the market, the appearance is excellent, and the quality is good and the price is low, please don’t think that you have a good character at this time, but be alert that it is very likely to be a trap.

The quality of new mining machines is related to the reputation of the mining machine manufacturer and has a six-month warranty period, which provides a basic guarantee for the quality of new mining machines. Second-hand mining machines are different. Second-hand mining machines are mostly out of warranty, and the quality of the mining machines cannot be guaranteed. Small retail miners themselves do not have the ability to judge and inspect the quality of second-hand mining machines. Therefore, if you want to buy second-hand mining machines, you should choose to cooperate with mining machine distribution companies with good reputation and long operating time. Such companies will pay a higher price to damage their own reputation and reputation for a single business, and they are more careful about their reputation.

It is especially not recommended for retail miners to trade with individual dealers of second-hand mining machines. The top individual dealers who do big business will basically not trade with retail investors; the individual dealers who look for retail investors to trade with are likely to be some small-scale, second-hand or even third-hand dealers with poor reputation. There are too many big and small pits here, and small miners have no way to identify them. This kind of information asymmetry transaction will inevitably lead to the tragic ending of trying to get a small advantage but suffering a big loss.

If a batch of goods is sold at a price lower than the market price, and you can still buy it, there is probably only one situation: none of the big dealers want this batch of goods, so it flows to retail channels, which in itself shows that there is something wrong with this batch of goods. We do not recommend that small miners buy mining machines through self-employed dealers of second-hand mining machines, because self-employed dealers are far less capable of risk resistance and contract performance than large dealer companies .

When you find out you have been cheated and want to defend your rights, you may not even be able to find the other party. The other party is a self-employed person without a physical company. The brave warriors stepped into the trap and wanted to defend their rights, but the other party was a rogue, and the road was difficult and difficult. With this basic understanding, conservatively estimated, more than 50% of the pitfalls in second-hand mining machine transactions can be avoided.

For small miners, buying second-hand mining machines requires higher professionalism. In the absence of sufficient experience, they should try to choose new mining machines with high safety margins and guaranteed quality. In particular, they should not buy second-hand mining machines from second-hand or even third-hand dealers who are self-employed .

04 Issues to pay attention to when buying second-hand mining machines

Miners with some mining experience may choose to buy second-hand mining machines for cost-effectiveness and other considerations. When buying second-hand mining machines, there are some issues that need to be paid attention to, otherwise it is easy to be tricked.

1. Find a company to buy second-hand mining machines

There are many channels for second-hand mining machines. Small miners should buy mining machines from companies with a long operating history and good reputation, negotiate transaction and after-sales terms, and clearly stipulate the responsibilities and obligations of both parties, so as to facilitate their rights and interests afterwards. It should be noted that second-hand mining machine transactions require quick transactions. The agreement between the buyer and the seller is generally determined through WeChat chat, and no formal paper agreement will be signed.

2. "Guaranteed computing power and guaranteed shelf availability" commitment and after-sales service

In the transaction of second-hand mining machines, the seller will generally make a promise of "guaranteeing the computing power and ensuring that the machine can be put on the shelf". "Guaranteeing the computing power" is a promise of the total computing power of the second-hand mining machine, and "guaranteeing that the machine can be put on the shelf" is a promise that the mining machine can operate normally after being put on the shelf.

There is an industry rule in mining machine transactions that unless there are serious quality problems, they will not be returned. Buyers generally cannot see the actual product when trading mining machines, and the quality of second-hand mining machines is difficult to control, so the promise of "guaranteed computing power and guaranteed shelf life" is very important to buyers. Such a promise puts forward requirements for the mining machine dealers' ability to control goods when purchasing second-hand machines. If the buyer fails after receiving the goods, the seller will bear the after-sales expenses. If the failure rate is too high, the buyer may even ask for a return. There is a price for dealers to pay for poor control of second-hand mining machines.

The quality of second-hand machines depends largely on the purchasing manager of the dealer. Large second-hand mining machine dealers in the industry have relatively rich experience in this area, and they also care more about the company's reputation and reputation, so they are relatively more guaranteed in controlling the supply of second-hand machines.

For second-hand mining machines, the after-sales stage is where dealers fulfill their promises .

Second-hand machines cannot achieve 100% computing power after being put on the shelves like new machines. This is unrealistic. In addition, second-hand mining machine transactions generally involve transportation and migration, which generally causes a 10% decrease in computing power. The quality of second-hand machines can be roughly judged by the damage rate. For second-hand mining machines with a relatively long service life, such as S9, L3+ and other machines that have been in service for about 3 years, a damage rate of less than 20% (including the 10% decrease in computing power caused by migration) is acceptable .

The damage rate is reflected by computing power. Assuming that the computing power of the second-hand machine you bought is 1P, after the machine is put on the shelf, it has 0.8P computing power, which is equivalent to a damage rate of 20%. This 20% of computing power may be caused by damage to components such as the computing power board, control board, and power supply.

If the machine cannot be turned on after being put on the shelf and the computing power does not meet the standard, it is time for the dealer to fulfill its promise. The buyer and seller agree on a repair plan, and finally through repairs and other means, all machines can operate normally and reach the agreed computing power target. The cost of repairing the damaged parts shall be borne by the seller .

3. Beware of water-soaked machines

Abundant water resources bring cheap electricity, but sometimes also bring natural disasters such as floods. Every year, some mines are flooded, and there are thousands of machines soaked in water. These machines will also flow into the second-hand mining machine market. At this time, the value of the information channels of large mining machine distribution companies is reflected. They can know the models of machines soaked in water, and when purchasing second-hand machines, they will try to avoid machines of the same model, so as to avoid the risk of buying machines soaked in water. This kind of news in the industry is basically out of reach for small miners. Choosing a large second-hand mining machine distribution company can largely avoid the risk of buying a machine soaked in water.

As mentioned earlier, the price is lower than the market price, and some of the machines that are not wanted by large miners and are sold to retail miners may be soaked in water.

4. Things to note when purchasing second-hand mining machines

Some second-hand mining machines are relatively new and still under warranty (in jargon, this is called "under warranty"). The price of such second-hand machines is also relatively higher. You can check the remaining warranty time by checking the SN code of the machine. This method can verify the seller's statement.

In addition, the warranty of the machine should be noted that if the machine is disassembled, assembled, or flashed with unofficial firmware, the warranty rights will be lost, and the official will still charge high after-sales fees for repairing such machines . This is also something to be aware of when buying a second-hand machine under warranty.

5. Second-hand mining machine firmware issues

When buying a second-hand mining machine, you also need to pay attention to the firmware of the mining machine. Some second-hand mining machines have third-party firmware installed for various reasons. If conditions permit, you can ask the seller to flash back to the official firmware first.

Why do you need to revert to the official firmware? This is because third-party firmware may have backdoors, which may lead to the risk of stealing computing power and being more vulnerable to attacks .

If the seller has removed the machines from the shelves, you need to ask the seller for a way to uninstall the third-party official firmware. If the seller cannot provide this uninstall method, you can only flash the official firmware back to the original firmware by flashing the card, which takes a lot of time. In this case, you need to ask the seller to extend the after-sales time or get a certain discount.

05 Summarize

The first-hand supply of second-hand mining machines is monopolized by a very small circle of super self-employed dealers. With their extensive network of contacts, rich channel resources and financial advantages, they have a huge influence on the second-hand mining machine market, and their main customer group is large miners.

When buying second-hand mining machines, small miners should try not to trade with self-employed second-hand mining machine dealers. There is no such thing as a free lunch. All bargains come at a price . Buying second-hand mining machines should be done by second-hand mining machine dealers with a long operating history, good reputation, and large scale. It will cost them more to damage their reputation and reputation for a single business. They are more careful about their reputation. They are more experienced in purchasing and controlling goods, and have more guarantees in after-sales service.

When purchasing a second-hand mining machine, you must have a strong sense of after-sales awareness and require the seller to promise to "guarantee the computing power and guarantee the shelf life" ; be wary of machines that have been soaked in water; if you are guaranteeing a second-hand mining machine, you need to pay attention to the remaining warranty time and whether the warranty rights have been artificially damaged. In addition, you must also pay attention to the firmware issues of the second-hand mining machine.

Regarding purchasing second-hand mining machines, have you ever encountered any pitfalls? I look forward to you sharing your experience in the comment section.

Thanks to Shanghai Waiyi @Zhang Zhanqi and Wabi.com Business Director @Qingwen for their wonderful sharing.