Will 2020 bring the biggest mining disaster in history?

Host: First, please introduce yourself.

Shi Rui: Hello everyone, I am Shi Rui, CMO of BitDeer, and I joined the founding team of BitDeer in 2018. I am very happy to be a guest of Wabi.com today. From the perspective of mining practitioners, I would like to share our perceptions and views with the users of Wabi.com. We also welcome everyone to interact with us.

Host: As the product operation models of the mining and cryptocurrency circles are gradually becoming internet-based, does this mean that the two circles will break down barriers and further integrate?

Shi Rui: From the very beginning, the division between the mining circle and the currency circle was based on the operation mode and coin production model of Bitcoin and other digital currencies. Most of the miners were geeks from the IT industry. With the emergence of professional mining equipment and the gradual increase in computing power, the derivative demand for providing mining services and holding coins has accelerated the Internetization of operations.

Users in the cryptocurrency circle have different needs for holding coins and different risk preferences, and are more focused on the appreciation of encrypted digital currencies and the issuance of digital currencies. As the market value of the entire digital currency gradually increases, the number of speculative players is also increasing, and the trading demand for digital currencies and derivatives has also accelerated the Internet-based operation model of various project parties.

It can be found that no matter in the currency circle or the mining circle, the ultimate goal is to bring better products and services to users at a lower operating cost. This is the convergence of the operating model, and the requirements for operation are gradually increasing. The BitDeer team has more than ten years of rich experience in Internet product operation, bringing the ultimate product spirit of the Internet to the field of cryptocurrency. Improving industry efficiency, understanding user pain points, and polishing product experience have always been our greatest concern and best. At the same time, these concerns are also the same for companies in the currency circle, such as the exchange industry.

The mining circle and the currency circle are two important links in the industrial chain since the development of the blockchain industry. For the currency circle, the focus is still on asset prices and asset preservation and appreciation. It is an exploration and extension of the direction of financial technology, which will promote the mining circle to deepen its high-tech development, such as the research and development of mining machine chips, the innovation of mining algorithms, etc., which will also be reflected in the currency price or bring diversity to the asset market. Mining and currency complement each other, and the mature Internet product operation model adds new impetus to both, promoting the better development of the blockchain industry.

Host: Bitcoin has been rising rapidly since last year, and its computing power has set new highs. May I ask the two guests, has Bitcoin already overdrawn its halving expectations?

Shi Rui: Compared with the previous two times, people have become more sensitive to the big bull market that may be brought about by the halving, and the halving expectations have also been launched in advance. In addition, the impact of the international situation and the sudden black swan event has also accelerated the unexpected rise of Bitcoin.

At the same time, we also see that computing power continues to rise and set new records, which shows that computing power is continuously being invested. It can be said that investors are still bullish on the future of the industry. The confidence of participants in the price of Bitcoin is supportive, which is a positive performance for the sustainable development of the industry.

In addition, miners are currently more willing to hoard coins than to trade them, or they may wait for more attractive prices after the halving, so this expectation will continue. The market will only be late, but it will not be absent. After the halving, the supply will decrease and the demand will remain unchanged. This scarcity is still beneficial to the market in the long run.

Host: What impact will this round of halving have on the mining and cryptocurrency circles?

Shi Rui: Halving means that the block reward of the original coin is halved. Many people would wonder if the corresponding miner's income will also be halved immediately. Theoretically, this calculation is definitely correct. However, if the coin price increases to a certain extent in the later stage and the computing power and difficulty of the entire network are gradually adjusted, the final income may not be halved, especially for high-computing machines above S17.

Some old machines will inevitably be eliminated, but the decline in computing power will offset the impact of halving to a certain extent. 40% of the S9 models will most likely be eliminated, which will also make room for new models of mining machines. Since new models with high computing power will basically not be affected too much, the market computing power and coin prices will show dynamic adjustments after halving, and miners' mining income will not necessarily be halved.

The sudden global "black swan" events and the iteration of new machines have brought about major adjustments to the management and operation capabilities of mining farms. Whether the mining farm operation and maintenance can establish a complete emergency response system for sudden incidents, and the new machines have high requirements for temperature and humidity after they are put into use, then for miners with small capital, the cost of investing in new mining machines is high and the risk is greater. Overall, it is better to buy computing power.

Computing power package products can help miners reduce investment costs to hedge risks to a certain extent, and they can also continue to obtain stable profits after the halving. I believe that before the halving, many people will still choose to enter the cloud mining market.

Host: What do you think about the statement that 2020 may see the worst mining disaster in history?

Shi Rui: Will the price of the coin rise sharply after the halving? This is a topic that everyone is most concerned about. After the halving, the output of the original coin decreased, but the price of the coin did not rise to the expected level, so some people may think that this is a mining accident.

If the price of the currency does not rise or fall below the current mining cost price, mining machines will indeed shut down, but from the perspective of miners' return on investment, mining accidents do not exist. These eliminated machines were purchased in 2018-2019, and they basically recovered their investment in 2019. There were a lot of profits when they were eliminated in 2020.

This halving is also a special time point faced by the mining circle. For mining users holding heavy assets, if they do not take some hedging actions in advance, the risk is indeed relatively large; but for cloud mining users, the cycle is not long, the investment cost is low, the assets are light, and the risk resistance will be much stronger. On this basis, they can also use some financial products for hedging.

Overall, although some small companies have been eliminated, the entire mining industry is still thriving, and more professional and comprehensive mining companies will quickly stand out with their advantages in technology, capital, resources, and services. Companies in the same industry are making efforts, and BitDeer will also work hard to provide users with better services and richer products this year.

Host: Recently, there have been voices saying that the Bitcoin mining industry is shifting from China to North America. What do you think?

Shi Rui: In fact, this phenomenon is not only increasing in North America, but also in Central Asia, Europe and other regions. It is no longer limited to development in China. This also shows that the global market's attention is increasing and acceptance is also growing.

The participation of more regions in the incremental mining market also enhances the decentralized nature of Bitcoin mining, which is beneficial to maintaining the secure self-operation of the Bitcoin network.

BitDeer has been actively making global deployments. Our professional mining farms are now spread across all continents of the world, including Asia, America, and Europe. In the future, we will continue to spare no effort to explore new markets.

But then again, in the mining industry, China still has obvious comparative cost advantages, including cheaper labor costs and cheaper electricity costs. From this point of view, the probability of large-scale industrial transfer is still relatively small.

Host: Are you considering developing new currencies in your current products?

Shi Rui: Users familiar with us know that the currencies currently supported by Xiaolu are all popular mainstream currencies in the market, such as BTC, BCH, LTC, ETH, ETC, ZEC, DASH, and DCR. However, considering user needs and different investment risk preferences, we have undergone strict professional audits. We will also select good opportunity yield currency packages from more mainstream and innovative currencies from time to time and provide them to users.