Huobi has been copied again, which exchange mining pool is the best?

On April 1, Zhao Changpeng, the founder of Binance who has fled overseas, revealed that Binance will soon launch a mining pool business, which made the public mistakenly think it was an April Fool’s joke. Soon after, some media verified the news and pointed out that Binance finally chose to copy Huobi’s homework - the latter had already launched a mining pool business in March 2018.

Previously, the launch of mining pool business has always been considered a symbol of the complete strategic layout of the exchange. The entry of Huobi and OKex has also made people look forward to the reunion of the three major exchanges. However, Huobi Mining Pool has been online for more than two years and firmly occupies the top spot in the exchange mining pool. OKex Mining Pool has also made some achievements in some areas. But Binance Mining Pool has only just been launched, which is really too late.

Late copycat: Why are exchanges interested in mining pools?

Why did Binance come to copy homework so late? What is it that Binance can't let go of? What made Huobi and OKEx decide to make plans early?

PANews previously reported that in 2019, the actual output of the entire network was about 678,700 BTC, and the annual transaction fee (mining fee) was about 19,473 BTC. Based on the average price of Bitcoin of $7,365.21 in 2019, the annual miner income was about $5.14 billion. According to the general commission rate of the mining pool of 3%, in 2019, the estimated annual income of BTC.com, the largest Bitcoin mining pool, was about $26.495 million (186 million yuan). F2Pool also had an estimated annual income of more than $20 million, reaching $20.0677 million (140 million yuan). In addition, the estimated annual income of Poolin, AntPool, SlushPool, and ViaBTC also exceeded $10 million.

Obviously, exchanges at the core of the industry are also interested in this piece of cake with growth potential.

Some commentators believe that connecting the upstream and downstream of the mining industry chain, introducing new traffic, and enhancing liquidity may be the real reason why the exchange decided to place a bet.

According to Chainalysis data, in 2019, mining pools sent 700,000 BTC to all exchanges, and 10 major exchanges received 77% of them. The main exchange that received BTC was Huobi, accounting for 29%; followed by OKEx, accounting for 12%. In addition to these two exchanges, exchanges are also competing for BTC from mining pools. Mining pools provide exchanges with the main non-trading BTC source, increase the supply of BTC in the market, and inject liquidity into the market. Liquidity is of great significance to exchanges.

In addition, the market has entered a period of subtle ups and downs, and the scarcity of industry traffic has also prompted many exchanges to seek people and forces that can bring "market excitement", and miners are a very good group - loyal to the industry, generally recognize long-term returns, and have more industry knowledge and thinking than ordinary traders.

Most importantly, they need to find a place to store and trade the coins they mine. This is a natural business.

It’s interesting, but not every exchange can do it. For example, the KuCoin mining pool and Bibox mining pool that followed suit in 2019 have small business volumes and lack a complete ecosystem and economic model, which has caused great complaints from miners who choose to follow.

This also shows that the threshold for exchanges to set up mining pools is still there. Even if you are interested, being able to do it and being able to do it well are still two different concepts.

What are the advantages of exchange mining pools?

There are still exchanges that can run mining pools, a long-term business that can be linked with exchanges, and they are doing quite well.

This is where we will talk about the advantages of exchange mining pools. First, we need to see that there is a problem with the presence of the basic miner group that the mining pool faces: many miners who only invest tens of thousands or hundreds of thousands are actually retail investors. Perhaps large miners can get preferential treatment and respect from some traditional mining pools - but these small miners are obviously not valued enough from there.

But the exchange mining pool is different. If you choose to join the exchange mining pool, even if you cannot be treated as a big miner as a miner, you may be able to enjoy lower exchange transaction fees in the future, which is also a good benefit feedback. On the other hand, exchanges generally have a good user education system, which can well solve the confusion of some miners about some basic issues - from another perspective, the exchange has been serving users for so long, it has seen all kinds of people, and it knows how to reassure users in the most effective way.

Others say that the entry of exchanges can bring more new ways of asset management to mining pools. Relying on strong risk control capabilities and operating the same products, the security of exchange mining pools seems to be more guaranteed, especially for leading exchanges.

Huobi may have taken the lead

At present, among the mining pools with exchange backgrounds, Huobi Mining Pool is the earliest one to be deployed and has the greatest leading advantage. Huobi Mining Pool was launched in March 2018, and has established a position in the industry as part of Huobi’s strategic layout.

Shortly after its launch, Huobi Mining Pool quickly became one of the top ten mining pools in the industry, and its share of computing power has been steadily increasing.

In August 2018, Huobi Pool, which was established only half a year ago, took the lead in issuing Huobi Pool's global ecological token HPT, which completely subverted the gameplay mode of the mining pool.

The HPT token here has triple mining properties of "locking is mining", "voting is mining" and "mining is mining". It is not only the mining of POW mechanism digital assets, but also makes users willing to put specific POS mechanism tokens into the Huobi mining pool to exert their computing power potential and have the motivation to vote for the POS mechanism digital assets.

In March 2020, Huobi Mining Pool changed the tradition of other mining pools to be secretive and took the lead in releasing the Huobi Mining Pool 2019 Development Report with an open and transparent attitude, disclosing in detail the financial and development situation in 2019. This is also the first time that the mining pool industry has disclosed an annual operating report.

The report shows that in 2019, Huobi Mining Pool's operating income was RMB 2.278 billion, an increase of 549.27% ​​over the previous year; the profit was RMB 44.1968 million, an increase of 218.19% over 2018. Both revenue and profit stood out among all exchange mining pools.

Huobi is indeed moving too fast. In just two years, it has developed its new business of mining pool into a profitable growth point, which is perhaps something no one could have imagined.

In this way, the anxious and eager pursuit of other exchanges at this time also has a best footnote.