The flood season is coming. How do miners choose a mine? Bitmain's Wang Wenguang gives these 6 suggestions

The flood season is both an opportunity and a challenge for mines, and some mines will move to different places as the water flows. The cheap electricity during the flood season is what miners and mine owners look forward to the most in a year, but mines will encounter many problems during the relocation process. For some mines, the cost of relocation may be greater than the benefits.

So, how should miners make their choices? What are the "tricks" of mining farms during the flood season? How should miners choose a mining farm? With these questions, BlockBeats interviewed Wang Wenguang, the head of Bitmain's mining center.

The following is the interview content:

01
Relocation of mines

Question: What preparations do mines generally make before the flood season arrives? What preparations do mines make after the flood season? Please briefly introduce the situation during the flood season, including whether the mines will be relocated, the cost, etc.?

Wang Wenguang: Before the flood season comes, there is a lot of work to be done, including: electrical facility inspection, mine main body inspection, mine transformation (adaptation to new models), logistics support confirmation, etc., which is tantamount to the opening of a new mine. After the flood season, the machines are generally removed, and the main thing is to do a good job of safety protection settings.

As the value of mining machines increases and their computing power grows, the cost of relocation is also rising. Relocation costs include: on-shelf and off-shelf fees, operation and maintenance, loss of mining revenue during relocation, maintenance costs caused by DOA, and loss of mining revenue due to power outages.

Every relocation is a calculation, which is getting more and more precise. From the trend point of view, the greater the computing power of the machine, the greater the loss of relocation. Therefore, we cannot simply consider the low electricity price of hydropower. I believe that the situation of Sichuan hydropower in 2019 is still vivid in everyone's mind, because there are very few miners who relocate to generate income.

02
If the price rise after halving is less than expected

Question: After the halving, miners, mining pools, and mining farms will all be affected. If the price does not rise to the expected price after the halving, how many mining farms will shut down? Will the mining farms suffer a large loss in this case? How should they deal with it?

Wang Wenguang: There is no data that can directly show the shutdown data after the halving, because different models match different electricity prices. However, according to our model, the computing power will be reduced by about 20% after the halving, after all, there is still a buffer of low electricity prices during flood season.

Judging from the current situation, more than 1/3 of the mines will reduce their load or shut down after the halving. Now is a special moment for the industry, and everyone needs to work together to keep warm. The mines must survive first, and then live well.

03
Supervision of mines

Question: In 2019, the National Development and Reform Commission removed "cryptocurrency mining" from the eliminated industries, which is good for the mining industry. So what is the current situation of mining farms in terms of supervision? Is it still a gray industry at present, or will there be support from local policies?

Wang Wenguang: I think that the current domestic policy on mining is "not encouraging, not supporting, and not opposing". However, from the trend point of view, various places are moderately liberalizing, and many places have already regarded mining as an indispensable industry, such as Sichuan. This is a good start, indicating that the government has also understood the importance of mining as the underlying support of blockchain, and the important role of mining in alleviating energy supply contradictions.

As the country’s energy system reform moves in a more market-oriented direction, coupled with the strengthening of taxation and corporate self-discipline, I believe the mining industry will become increasingly popular with the government.

04
Tips for choosing a mine

Question: We often see information in the community about mines looking for mining machines and pulling electricity resources. What should miners pay attention to when choosing a mine?

Wang Wenguang: The mining industry has not yet developed into a completely 2C era. High-quality mining farms have no shortage of customers and will not recruit investors all over the market. For miners of average size, there are still many choices of mining farms.

Here, I give you some suggestions:

1. Try to choose an old mine. New mines have more problems, and old mines will be much better after running-in.

2. Choose a mine with a large total load, so that there is more room for maneuver and it is more stable.

3. Choose a mining farm with a good market reputation and cooperate with the company rather than individuals.

4. Do not cooperate with middlemen, but sign contracts directly with the mine owner.

5. Sign a formal custody contract and clearly define the responsibilities and obligations of both parties.

6. Choose a reliable operation and maintenance party. You should know that the machine is not just put on the rack, it also needs to operate normally to make money. A good mining farm plus good operation and maintenance can lead to smooth mining.