MicroBT COO Chen Jianbing reveals the pricing and one-year warranty of the new M30

Written by: Xiaomaoge MAO

As Bitcoin is about to enter its third halving in history, mining machine manufacturer MicroBT officially released the Shemma M30 series of new mining machines in mid-April, including the new generation mining machine model M30S++ with a single computing power of 112T and a power consumption ratio of 31J/T, and the mining machine model M30S+ with a single computing power of 100T and a power consumption ratio of 34J/T, and expanded the M30S series family to three 3X products.

At the same time, MicroBT also announced that it is the first company in the industry to offer a one-year warranty for its products. The company claims that "the one-year warranty for mining machines is a first in the industry." The reason why it dares to provide a long warranty is that it has made many optimizations in the quality of the mining machine power supply and the performance of the heat sink. The failure rate of the new mining machine is half that of the M20 series. "After all, mining is an investment, and customers are definitely concerned about the return cycle. MicroBT hopes to face the risks of halving and other uncertainties with customers in the future."

As new spot mining machines before the third Bitcoin halving, the first batch of M30S++ and M30S+ were sold out within a few hours after their release.

At the same time, MicroBT’s Chief Operating Officer Chen Jianbing, who faced the media for the first time, accepted an exclusive interview with ChainNews, facing tough questions such as "Is the pricing of the new mining machine too high?" and "Some miners have reported that it takes too long to recoup their investment." He gave a detailed interpretation of the sales and pricing considerations for the entire M30 series of products, and also introduced to ChainNews the story behind MicroBT's achievement of accounting for 35% of the total network computing power last year, as well as the future development plans of this emerging mining machine company.

MicroBT COO Chen Jianbing

Key points of this interview:

• How is the performance of Shenma Mining Machine? Talking about the business status of MicroBit and Shenma Mining Machine in 2019, MicroBit COO Chen Jianbing said that MicroBit took advantage of the bull market from May to August last year to quickly mass-produce products and achieved annual sales of more than 600,000 units. The computing power of the new machines accounted for about 35% of the total network computing power at the end of the year.

• Why launch a one-year warranty for mining machines? Chen Jianbing said that the cumulative repair rate of Shenma mining machine M20S is about 1.35%, and the cumulative repair rate of M21S is about 2.12%, and this data includes the repair of mining machine power supply. He believes that the stability of the M30 series will be better than that of the M20 series.

• Are users worried about the longer payback period of mining machines? Chen Jianbing said that because the iteration speed has slowed down, the service life of the new generation of mining machines has also been greatly extended, so the life of the new generation of mining machines is likely to reach 2 to 3 years, or even 3 to 4 years.

• What is the pricing strategy for new products? Chen Jianbing revealed that the sales of Shenma mining machines have a set of progressive and cumulative pricing system. This pricing system has been tested in the entire market process in 2019 and has been recognized and supported by customers. This year, this pricing system will be further optimized.

• What is the breakthrough of the new mining machine? Chen Jianbing said that through the innovative chip testing method of MicroBT founder Yang Zuoxing, the computing chips used in each Shenma mining machine can be highly consistent, thus ensuring the long-term stability of the mining machine operation. At the same time, the system loss of the Shenma mining machine has been successfully controlled below 2%.

The following is the full interview, which has been edited and abridged without affecting the original intention:

Review: MicroBT’s “difficult and brilliant” 2019

Chain News: 2019 is a special year for MicroBT. After the press conference, the words "difficult and brilliant" were used to summarize the past year. What does this year mean to MicroBT? What are the specific difficulties of "difficult" and what are the specific glories of "brilliant"?

MicroBT COO Chen Jianbing: As everyone knows, 2018 was a long bear market. In fact, we faced various challenges in early 2019, including interruption of cash flow, liquidation of inventory, and supply chain crisis. We even negotiated with team members to reduce a certain amount of salary, but the entire MicroBT team was very united and everyone was supportive.

At the same time, at the beginning of the first half of 2019, after the release of the Shenma M20 series mining machine in May, it also faced various technical challenges in the process of mass production, such as power supply quality problems, board pass rate during mass production, mass production of chip grading tests, fluctuations in wafer quality, and delivery delays, etc.

This process is a huge challenge for our entire team. It is also a difficult road for our team to change from quantitative change to qualitative change. It is also in this process that we constantly break through ourselves and bravely face various challenges. This is why we used the word "difficult" in the summary article of the press conference. "Facing challenges head-on" is a main theme of MicroBit in 2019. Whether it is the operational difficulties at the beginning of the year or the various technical challenges caused by the large number of customer demands after the middle of the year, these are the meanings behind "difficult".

As for "brilliance", as mentioned in the Shenma press conference, our team worked together and bravely faced various challenges. We solved problems one by one and challenged difficulties one by one. At the beginning, we also felt that some problems were very difficult or even impossible to solve, such as the chip classification problem. But in the end, we broke through our own boundaries again and again. The core driving force behind this breakthrough came from Dr. Zuoxing Yang of MicroBit, who has always been adhering to the spirit of pursuing perfection and constantly challenging the boundaries in all aspects.

The second brilliant perspective is that MicroBit took advantage of the bull market from May to August last year, overcame various challenges, quickly mass-produced products, and promptly launched them to the market, seizing a large market share and achieving annual sales of over 600,000 units. The computing power of new machines accounted for about 35% of the total network computing power at the end of the year. At the same time, the brand awareness of Shenma Mining Machine is also rapidly increasing, and the stability of its operation has also been widely praised. It can be said that from the results, everyone can see that we have broken through ourselves after meeting various challenges and reached a new height in the development of the company.

Answer: Feedback after the Shenma M30 new product launch conference

Chain News: MicroBT used the new concept of "3X Era" throughout the entire press conference and announced the new standards of "3X Era": low power consumption ratio, high stability, and 1-year warranty service. Where does MicroBT get the confidence to launch the 1-year warranty for the first time? At the same time, what does the 1-year warranty mean to miners?

MicroBT COO Chen Jianbing: In fact, because this industry is a new one, the implementation of a one-year warranty is a decision that requires great courage and confidence in the eyes of industry insiders. Given the current operating environment of many mining farms, this measure is actually challenging.

Back to the aspect of MicroBT's "first launch", our confidence comes from our confidence in our own products. I also said it at the press conference, and it also comes from the MicroBT team's continuous accumulation of product polishing in the past three years, adhering to Dr. Yang's pursuit of the ultimate craftsman spirit. We continue to polish and improve every aspect of chip design, product development, chip manufacturing, packaging testing, and whole machine manufacturing. If summed up in one sentence, the launch of the one-year warranty can be described as a "successful accumulation project."

As I shared with you at the press conference, the cumulative repair rate of Shenma M20S is about 1.35%, and the cumulative repair rate of M21S is about 2.12%. This data includes the repair of the mining machine power supply. It is worth mentioning that because the power supply design in this industry is particularly not suitable for the environment of the mining factory, the repair of the power supply will drag down the repair rate of the whole machine.

I would like to point out that since MicroBT released the first batch of mass-produced M20S and M21S in June 2019, it has been 10 months since the mining machines were sent to the customers’ mining factories. We have achieved a return rate of 1.35% for M20S and 2.12% for M21S, which we can proudly say are the best results in the industry, but frankly speaking, there is still a gap from our ideal goal, so we will continue to work hard.

As we said at our press conference, the stability of the Whatsminer M30 series will be better than the M20 series.

ChainNews: We have also received feedback from some miner friends. One of the feedbacks is that the payback period of Shenma’s new mining machine is more than one year. What does Mr. Chen think of such feedback?

MicroBT COO Chen Jianbing: In fact, everyone knows that in the current market situation, no matter which mining machine is used, it is difficult to achieve a payback period within one year. In the current situation of Bitcoin's total network computing power, difficulty, and price, and the fact that it will soon be halved, our previous pricing mechanism of a payback period of 8 to 10 months from 2016 to 2019 should be said to be temporarily invalid.

From another perspective, the chip manufacturing process is now approaching the physical limit, and has reached the level of 8 nanometers, 7 nanometers, and 5 nanometers. The iteration speed is actually slowing down, and the performance of chips and the iteration of mining machines are also slowing down, so it is unlikely that the performance of each generation will double. And overall, because the iteration speed has slowed down, the service life of the new generation of mining machines has also been greatly extended. Unlike many people who used to invest in mining machines for "short, flat and fast" and hoped to get their money back very quickly, more and more investors now regard mining as part of an investment portfolio, especially some old money, that is, when some old financial institutions and investment institutions enter, they are more concerned about a full life cycle, comprehensive, and relatively stable return on investment, so the life of the new generation of mining machines is likely to reach 2 to 3 years, or even 3 to 4 years.

Because of this, we take the initiative to extend the warranty period to one year based on our customer-centric philosophy and confidence in our products. In this way, Shenma Mining Machine can better accompany customers and allow miners to work with peace of mind during the transition from bull to bear markets.

Chain News: Some people have questioned that the price of the newly released Shenma M30 series mining machines is higher than expected. What are MicroBT’s considerations in the pricing of spot and futures of the new Shenma mining machines?

MicroBT COO Chen Jianbing: Yes, I can understand that. After the press conference, or even during the press conference, we have seen some friends’ feedback and even doubts, comparing our prices with those of our competitors. Under the current market conditions, it is expected that the prices released will cause a gap between the expected prices and the prices we released at the press conference. The prices we released at the press conference are the retail prices of spot and futures. In fact, our sales director Zhang Wencheng also announced that the sales of Shenma mining machines actually have a set of progressive and cumulative pricing system. This pricing system has actually been tested throughout the market process in 2019 and has also been recognized and supported by the majority of customers.

M30 Series Futures Quotes

We will further optimize this pricing system this year. The core is still to achieve win-win results with our customers. We will overcome difficulties together in difficult times and share good times together.

Chain News: What efforts did the MicroBT team make behind the impressive figures shown at the "Shenma M30 Global Online Conference"? What are the core advantages of MicroBT?

MicroBT COO Chen Jianbing: The achievements we made in 2019 are actually just the beginning. We are still quite far from the success we aim for. So we never dare to be proud and have always been relatively low-key.

The current stage of achievement comes from our accumulation of more than two years. MicroBit will continue to uphold the ultimate concept and craftsman spirit advocated and practiced by Dr. Yang and continue to improve. In fact, since last year, we have been working hard to coordinate the entire team to build a standardized operation and professional management system. MicroBit has been polishing its products, from the continuous evolution of chip design methodology, to chip packaging, standard formulation and improvement, innovation and iteration of chip testing methods, continuous optimization of the entire mining system design, and continuous improvement of power supply. Our entire team and various business groups are making continuous progress day by day.

In terms of standardized operations and professional management, our team began to establish rules and regulations last year, and began to sort out and improve various work processes to refine the division of labor and cooperation, including optimizing the ERP system to build a closed loop on the entire supply chain data and use it for business decisions. We also held a one-year special meeting for each business and functional sector to deeply analyze the company's current situation in various aspects, find areas for improvement, and formulate the direction of efforts for the next six months, one year, and two years. At the same time, we also recruited and equipped professionals for core functions, stepped up the construction of a human capital system, and strengthened the construction of organizational capabilities. We emphasize that in order to enable the company to undertake greater business development, it must be able to have organizational capabilities and transform from guerrilla tactics to a professional regular army, so that we can fight big battles instead of just guerrilla warfare.

All the efforts in this regard, or the so-called phased achievements made last year, ultimately come down to one point. The core point is actually the ultimate concept, which is reflected in the fact that Dr. Yang Zuoxing leads the company team to innovate with the spirit of craftsmanship, and the company's concerted efforts to continuously pursue excellence in products, technology, and services.

Chain News: Mr. Chen, you said at the press conference that each generation of Shenma mining machine products "although the appearance is very similar, the interior is very different." How should we understand this sentence? What changes have occurred in Bitmain and Shenma mining machine products?

MicroBT COO Chen Jianbing: What I want to express here is that although it looks like a few computing boards in a box, with a similar appearance, the product actually has continuous progress and iterations. The first point is that our chip design team continues to improve on the "full customization methodology". The chip manufacturing process has been advanced from 28 nanometers to 16 nanometers, 8 nanometers, etc., and it is still being promoted. The chip design architecture is also constantly iterating. From the perspective of "full customization methodology", we are continuously optimizing various aspects such as customized logic units, manual layout, and clock optimization. The goal is to minimize the chip area, power consumption, and overall cost.

Secondly, the BitMicro chip operation team and packaging partners have established standards specifically for Bitcoin chip packaging design and quality control. More significantly, BitMicro and its testing partners have innovated chip testing methods. When Dr. Yang Zuoxing proposed this new testing method at the beginning of last year, we actually did not expect that we could achieve such an extreme chip binning operation time today. This time can be said to be unprecedented in this (crypto mining) industry, and for the entire chip industry. Through this innovative chip testing method, we can ensure that the computing chips used in each Shenma mining machine are highly consistent, thereby ensuring the long-term stability of the mining machine operation.

Third, the system team of MicroBT has been continuously reducing the power consumption of the system. In addition to the power consumption of the chips on the computing board, there will also be power loss between the fan, power supply, and various interfaces in a mining machine. In this way, if we can reduce the loss of the entire system while optimizing the chip, the performance-to-power ratio of the Shenma mining machine will become more and more excellent. I also said at the press conference that day that the system loss of the Shenma mining machine has been successfully controlled below 2%, which is not our end point. We have also continuously improved the power supply from the original 91% and 92% of the first generation of products to the current 94.5%. This is not the end point, and we are still continuing to improve.

Fourthly, the software team of MicroBT has been iterating algorithms with each passing day. Due to the innovation of our chip grading test method, we have customized personalized parameters for each model, each chip batch, and each chip, thus ensuring that each mining machine can run with extreme high performance and low power consumption.

At the same time, we are not only polishing the product level described above, our marketing team, sales team, and especially the customer service team, are also constantly improving our ability to serve customers. Serving customers cannot just be a slogan, but actually involves our entire team, from customization models to our own skills, including the continuous evolution of our own technology through internal training, etc. Only when we do it bit by bit can we truly serve our customers well.

We are also constantly strengthening our after-sales service network. Last year, we deployed a relatively good on-call service network in China. This year, we will also lay out a global after-sales network to better serve our future global business development.

Outlook: Microbit and Crypto Mining in 2020

Chain News: Back to the theme of the press conference, "3X Era", what is the significance of the standards of the "3X Era" to the entire mining industry? In order to implement these standards, what practical actions has MicroBT taken?

MicroBT COO Chen Jianbing: I answered in the previous question that MicroBT has made various efforts to achieve this standard. On the other hand, the standard of the "3X era" is actually a manifestation of responsibility, because we believe that there will be a longer product life cycle in the future, and we must provide customers with the best, sustainable, and able to accompany customers through rounds of bull and bear cycles. Obtain comprehensive benefits throughout the life cycle of the mining machine.

Many people previously emphasized quick returns, but now this logic may change in some sense. As investors become more mature, institutions are increasingly including Bitcoin assets in their investment scope. Whether it is investing in mining farms or investing in Bitcoin itself, we must consider the market customers responsibly, so we must push our products into the "3X era". Based on our current perspective on the evolution of technology and product evolution, we believe that the "3X era" will be a standard with relatively strong vitality in the next few years. This is a direction.

As for the various policies I just mentioned about continuous product polishing, product iteration, standardized operations, and professional management, they are actually all for the purpose of providing services to achieve the standards of the "3X era", and this is only our intermediate stage. We will continue to work hard and everyone will see it.

Chain News: 2020 is an eventful year. In such an environment, what performance goals has MicroBT set for this year? What new trends will Shenma mining machine products have in the second half of the year?

MicroBT COO Chen Jianbing: This is a very good question. There is a lot to say about it, but it is also a difficult question to answer.

In fact, 2020 is a "tumultuous year" as it is said. Our generation is actually quite lucky. We have witnessed the past two decades. After the reform and opening up, the accumulation of strength and accumulation, the accumulation of quantitative changes, and the real entry into the stage of qualitative change and take-off after China joined the WTO in 2001. The past two decades should be said to be booming. China has become an indispensable hub connecting raw materials and product innovation in the world. In the global COVID-19 pandemic, everyone has also seen China's responsibility.

But recently we have witnessed many new trends and problems that we have never seen before, especially those born in the 1990s and 2000s. The global pandemic of COVID-19 has triggered political, economic and social crises in the international community, such as the outbreak in the United States and the depletion of asset liquidity. In March, the U.S. stock market plummeted and circuit-breakers caused the Federal Reserve to lower interest rates to zero, and then unlimited money printing to curb the potential Great Depression. More and more countries may move towards negative interest rates.

The price of Bitcoin plummeted in mid-March due to the sudden tightening of US dollar liquidity, and has gradually recovered to around US$7,000 now. It is now facing another halving and will enter the flood season. In fact, the uncertainty of the entire industry and the world economy should make it more difficult to set business goals.

No matter what, the entire MicroBit team can only adhere to this principle: "Only by staying the same can we cope with all changes", to ensure the company's cash flow, to ensure a stable, orderly and rapid response to the supply chain, to lay a safety cushion for the company's operations, and to be ready to seize opportunities as soon as the market picks up. But to expand on this, MicroBit still has a lot of preparations and efforts to make day and night.

Chain News: For MicroBT, what may be the biggest disruption or challenge this year? How is MicroBT prepared to deal with the challenge?

MicroBT COO Chen Jianbing: The biggest disruption comes from the potential global economic recession or even depression that may be triggered by the global COVID-19 pandemic. Including the epidemic in Europe and the United States, as well as countries such as India and Bangladesh, which have high population densities but tight medical conditions, the world is actually still facing great uncertainty.

As I said in the press conference, Bitcoin has been commoditized over the past two years, and more and more investment institutions have included Bitcoin in their investment portfolios, which will cause the macroeconomic and financial markets to have a greater impact on the supply and demand relationship and price trend of Bitcoin. On the other hand, we are now also facing the halving of Bitcoin. In fact, from my personal point of view, I think the impact of halving is both short-term and medium- and long-term. In the short term, if the price of the currency does not change significantly, including positive changes, the halving may lead to large-scale shutdown of mining machines, the computing power of the entire network will drop significantly, and the price of the currency will also fluctuate accordingly. In the medium and long term, the halving will cause the inflation rate of Bitcoin to drop below 2%; at the same time, because of the rampant outbreak of COVID-19 in various countries around the world, coupled with the impact of global currency issuance, it is very likely to lead to potential stagflation or even depression, which may have a positive impact on Bitcoin in the medium and long term. Everyone also believes that the price of Bitcoin is the most important factor affecting the demand for mining machines.

To sum up, overall, I think the biggest challenge this year still comes from the potential global economic turmoil and recession caused by the global COVID-19 pandemic, which may even be comparable to the Great Depression of the 1930s.

Facing such a challenge and these uncertainties, no one is a genius. We can only fight hard, set up camp, and advance step by step, just like Zeng Guofan did when he suppressed the Taiping Rebellion. We should remain unchanged in the face of ever-changing situations, which is reflected in managing the company's cash flow, ensuring a stable and orderly supply chain and rapid response, and making good security preparations. In this way, we can quickly seize opportunities once the market picks up. Because there is a four-month cycle from the production of wafers to the final completion of the whole machine, a lot can happen in the Bitcoin industry in these four months. Only if we are well prepared can we protect ourselves and seize opportunities at the same time.