XBIT's Second AMA Highlights | Are Mining or Cryptocurrency Trading More Suitable for Ordinary Investors?

Hello everyone, I am XBIT COO Tao Maowen, and also the host of this live broadcast, which will start later.

Currently, the number of confirmed cases worldwide has exceeded 1.5 million. As countries have adopted the most stringent measures to prevent and control the epidemic, the number of newly confirmed cases in severely affected areas has begun to show signs of stabilization, and the panic caused by the outbreak has gradually subsided.

Global stock markets rose collectively, with the Dow Jones soaring, the S&P 500 and the Nasdaq also rising sharply, and European stock markets closing sharply higher, with the UK FTSE 100, Germany's DAX30, and France's CAC40 all rising by more than 3%. In the Asia-Pacific market, Japanese and Korean stock markets also rose sharply, and Hong Kong stocks rose strongly.

In addition, gold, crude oil, and BTC also rebounded rapidly. BTC rebounded from the lowest point of 3,800 points to the highest point of around 7,500 points, doubling in less than a month. Is it still possible to get on board under the current market conditions? Should I invest in mining or speculate in cryptocurrencies? Today, XBIT invited four guests to share their views.

Q1: Tao: Welcome all the guests to the XBIT live broadcast room. Please give us a brief self-introduction.

  Contract Emperor Doraemon:

Hello everyone, I am Xiao Dingdang, the co-founder of Hetongdi. I have worked in Baidu, Alipay and other companies in R&D for ten years, and have written Android, iOS, servers and algorithms.

I started to trade cryptocurrencies in June 2016, and I have been a seasoned trader for almost 4 years. In October 2018, Huasheng and I wanted to make a product for fun, and accidentally created Hetengdi.

Amber Lorry:

My name is Lorry. I am in charge of industry research at Amber, a crypto asset financial service institution led by Coinbase. It was founded in 2017 and now has more than 120 people. Its business scope includes helping customers trade crypto assets, obtain asset returns, manage asset risks, etc. Recently, I have been busy reorganizing some mining derivatives solutions. In fact, we have been promoting this area since the beginning of 2019, but the mining circle has focused on leverage for the past year, and few people have paid attention to hedging solutions. After this round of sharp decline, many more customers have come to inquire about options.

Tian Xin from Ant Mining Pool :

Hello everyone, I am Tian Xin, co-founder of Ant Pool. I founded Ant Pool with Xu Lingchao in 2014.

It has been seven years since the pool was founded, and it is also the seventh year since I joined the blockchain industry.

The second mining pool mainly serves the mining field of the "mining circle" and provides mining services to miners. Currently, the main area and the innovation area support 22 currencies, and the mining server covers the world. In addition, it also provides machine gun pools, proxy mining pools, mining pool construction, cloud computing solutions, and other high-quality services.

Antminer Fan Xiaojun:

Hello everyone, hello host, my name is Fan Xiaojun. I joined Bitmain in 2013 and have been engaged in sales ever since. I am very happy to share with you today.

The Bitmain you are familiar with is back in 2019. 2020 is a year of opportunities and challenges. We uphold the customer-centric service philosophy and continue to create top mining machine products.  

Q2:

We all know that BTC has been developed for eleven years, and the price has fluctuated during this period. Those who entered the market early have achieved financial freedom ahead of others. There are many people who did not catch up with the previous market. What they want to know most is whether it is still a good time to enter the market? If it is suitable, which direction is better to enter?  

Contract Emperor Doraemon:

It can be said that the opportunities are pretty good now. The global economic situation is uncertain, but opportunities come with crises.

I think the best way for ordinary people is to allocate a certain amount of digital currency with their spare money. The current price is still very good in the long run.

I have a reasonable suggestion for you:

1 Take out 70% of your spare money to buy BTC, starting from $6,000 to $3,000, and buy 1/4 of the position for every $1,000.

2 Take out 20% of your spare money to buy platform coins, such as OKB, HT, and BNB, and also build positions in stages.

3 Take out 10% of your spare money to buy ETH and XTZ. One is the leader of the public chain, and the other has the best code in the cryptocurrency circle.

Amber Lorry:

The current price has actually rebounded to the level before the 3.12 waterfall. If there is no leverage and no sell-off, the loss is not big. Because our company is engaged in trading, we value the liquidity of the assets we hold more. The liquidity of BTC is obviously better than that of mining machines, and when the price of the currency was at a low point some time ago, the price was even lower than the mining cost of most mining machines. We believe that buying the currency directly is a better choice.  

Any investment has risks, let alone a young and highly volatile asset like BTC.  

However, considering the recent crazy money printing by central banks around the world, algorithmic assets such as BTC, as the opposite of all credit currencies, are worth looking forward to in the medium and long term performance.

Tian Xin from Ant Mining Pool:

In fact, mining is still recommended, because there are many ways to resist risks, such as:  

1. Matrixport, a financial service institution in Singapore, can provide coin mortgage lending services. The price is relatively low now, and the halving is coming soon, which means that the coins in hand will become less and less. It is painful to sell the coins to pay the electricity bill.

Because everyone is definitely bullish on mining in the long run and obtains Bitcoin at a low cost, they can use mortgage lending services to withdraw part of the cash to pay for electricity bills, and then use part of the money to redeem the mortgaged coins when the coin price goes back up. This prevents the loss of coins and solves the cash flow problem.  

2. Gun Pool Business: AntPool Gun Pool has increased its revenue by 3% on the basis of PPS+ and FPPS since its launch. Gun Pool refers to a strategy that aims at different currencies with the same algorithm and intelligently dispatches computing power to the currency with the best return to increase user returns.  

We will launch a guaranteed minimum activity in early April. New users who join AntPool will enjoy a guaranteed minimum income, that is, from the start of the activity, for 30 days, we will ensure that your income in the machine gun pool will not be lower than that of mining BTC coins alone.

If the average is lower than the BTC mining income, we will compensate the difference tenfold and exempt you from mining fees for one year. The activity will continue until the halving to protect the income of miners.  

Antminer Fan Xiaojun:

I would like to make two comments on this issue.  

1. It’s never too late to enter if you’re ready  

2. Risk control is important, please judge

Let me say the first thing first. You must be prepared. You need to understand a series of knowledge such as what is BTC, what is a mining machine, what is halving, mining pools, mining factories, profit calculation models, etc. You must enter the market after understanding the situation, rather than blindly following the trend.

The second sentence is to remind everyone not to take investment for granted and to be aware of risks. Reasonable use of financial tools such as mortgage lending, hedging, futures, options, etc. can reduce your investment risks.  

You can choose to invest in coins, use cloud computing power, purchase mining machines, and other methods.  

These methods have their own characteristics. Direct purchase of coins is highly flexible, while cloud computing power is convenient and worry-free. However, it should be noted that when purchasing cloud computing power, you must understand whether the platform is real and safe.  

Purchasing a mining machine is equivalent to purchasing future BTC at a low price . I personally tend to purchase a mining machine.  

Q3:

After reading everyone's answers, I found that everyone is optimistic about the future development of the industry. I noticed that in the previous question, Lorry suggested cryptocurrency trading, while Ant Mine CEO Chi Tian suggested mining. So for ordinary people, how should they choose? Next, I would like to invite Amber Xiong and Ant Mine CEO Chi Tian to analyze the two aspects of cryptocurrency trading and mining for everyone.

Amber Lorry:

In fact, I don’t recommend you to “speculate”, but to choose the right time to buy coins or make fixed investments, or subscribe to some of our fixed income plans. Those with good skills can adjust their positions in the big cycle. For ordinary users, speculating in coins is definitely not able to keep up with the 7*24-hour trading rhythm. Lack of rest will affect work, and if leverage is added, it is easier to worry about gains and losses.  

Among the early big investors, many of them traded 1,000 coins and reduced the price to 100.  

Tao: It’s true that many great players operate every day but their earnings are not as good as those who hoard coins.

Tian Xin from Ant Mining Pool:

In simple terms: the earlier you mine, the better. Why?  

Let's analyze it from several aspects:

The first one is from everyone’s understanding of blockchain. For example, if you are a newbie and you really want to figure out what blockchain is, then you choose mining and you will know how mining machines in mining farms connect virtual and reality through mining pools, that is, how entities are connected to blocks.  

How to package blocks and produce blocks through mining pools, why is blockchain irreversible, and what role does the mining pool play in it. How many blocks are mined every day? How often is a block mined?  

How does mining support the operation of blockchain? In fact, mining is the earliest way to understand blockchain. In 2014, there was no concept of blockchain, so if you fully understand what mining is, you will understand everything about blockchain.

The second is from the perspective of long-term investment and short-term investment. For example, if you are a short-term investor, you can try cloud computing power and light mining investment. If you want to increase assets quickly or get your money back, mining is not for you, but cryptocurrency speculation and leverage are for you.  

For example, if you are investing for the long term, there are two ways to invest for the long term. The first is to directly hoard coins for a few years and expect them to rise all the way. The second is mining. Miners are generally people who have been exposed to blockchain very early and have a deep understanding of it. Why don't they choose to hoard coins directly? Because mining machines are equivalent to "printing machines", which can produce BTC continuously, that is to say, "coins cannot generate coins, but mining machines can generate coins continuously after they have recovered their investment."  

Blockchain is something that cannot be seen or touched. Only mining can make you feel its existence. There are physical hedges such as mining farms and mining machines. Although it is not as fast as the leverage of currency speculation, mining is more reliable. So any time is the best time to mine. The earlier you mine, the more "free" you are. However, although mining is good, you must understand everything before entering the market to avoid pitfalls. Finally, I would like to give you a word of advice: judge lightly and take risks seriously.  

Tao: Thank you both guests for your wonderful sharing. There is no better or worse between mining and cryptocurrency trading, but you must have a good investment strategy and strictly implement it, and you must also be wary of various pitfalls in the market.

Q4:

Next, I would like to ask Mr. Fan from Antminer, we all know that BTC will be halved in May, when the reward for each block will be reduced from 12.5 to 6.25. After the halving, the direct income of miners will definitely decrease. Since mining has hard expenses such as equipment and electricity, will the price of BTC be affected by the mining cost in the case of halving? If I want to participate in mining, how should I choose? Fan Xiaojun from Antminer:

1. I personally believe that changes in mining costs will not affect the price of BTC.

2. If you want to participate in mining, you must first understand what halving is and what impact does halving have on us miners?

First, the block reward decreased from 12.5 to 6.25, and the number of BTC per day decreased from 1,800 to 900.

Secondly, under the premise that the computing power and difficulty of the entire network remain unchanged, the number of BTC earned by miners per unit of computing power will also be halved.  

The total income of miners has been reduced by 50%, and the net income has been reduced by >50%. The reason is that the electricity expenditure of miners is always fixed, and the part reduced by halving is all net income.  

Example

Assuming your mining machine's total daily income is equivalent to RMB 50,

The electricity bill is 10 yuan, accounting for 20% of the total.

The net profit is 40 yuan, and the net profit accounts for 80%;  

After halving, the total income becomes 25 yuan.

The electricity bill is still 10 yuan, accounting for 40% of the total.

The net profit is 15 yuan, accounting for 60%.  

Net income decreased from 40 yuan to 15 yuan, a decrease of 62.5%.  

You also need to understand the dynamic changes between price, difficulty, electricity costs, and total network computing power.  

It is a wise choice to choose this time point to invest in purchasing mining machines.  

1. The price of mining machines will not be high.

2. The computing power of the entire network will not increase very much this year. The 5G industry has exploded this year, and Samsung and TSMC do not have many chips left for our industry. Coupled with the impact of the epidemic, the production capacity in 2020 is very limited.  

This way your mining machine will retain its value better.  

There are two options for choosing a mining machine. One is to choose a machine with the lowest J/T and a high safety margin, such as S19 Pro. This machine has the lowest electricity cost, so you don’t have to worry about no profit after halving.  

Another option is to choose a machine with a relatively high J/T. When choosing this type of mining machine, miners must judge the changes in the difficulty and computing power of the entire network after halving based on their actual electricity costs.

There are also questions about how to choose mining plants and mining pools, and how to reduce investment risks through financial tools such as mortgage lending, hedging, futures, options, etc. I will not elaborate on this here. If you have any questions about mining, you can add me.

It is indeed as Mr. Fan said, if you want to invest you must first understand the principles behind it. Blind investment is not advisable. If you have any questions, you can contact Mr. Fan.

Q5:

There is an old saying that "you can't put all your eggs in one basket", and the same is true for investing in digital currencies. If you concentrate all your assets together, you may suffer greater losses when risks arise. We all know that Contract Emperor Xiao Dingdang has rich investment experience and a great record. I would like to ask Contract Emperor Xiao Dingdang to share some of his own experience in the proportion of positions in investing in cryptocurrencies.

Contract Emperor Doraemon:

This question starts with why most people lose money when speculating in cryptocurrencies?

I have found that most people lose money for the following reasons:  

1. There is no trading goal. Sometimes you play with futures, sometimes with mainstream spot, sometimes with copycats, sometimes with ICO, and sometimes you listen to news from friends. You are in an endless pursuit of trends, and the end result is always small profits and big losses.

2 No matter whether the market goes up or down, you don’t know whether you have made a profit or a loss?  

3. Rarely do independent thinking and connections. Although I have spent a lot of time in the cryptocurrency circle, I seldom think independently or place orders, and I lack practical experience.

So I have the following experience to share:  

1. Divide the accounts. I have four accounts: [futures, spot] * [long-term, short-term].  

For example, in the wave of 7000-10000,

I bought the spot long-term at 7300 and sold at 9800.

My short-term spot trading is buying at 7300, stop loss at 6900; buying at 7300, stop profit at 8200; buying at 8300, stop profit at 9300. Buy at 10000, stop loss at 9700.

I bought my long-term futures at 7300 and took profit at 9300.

And I have a lot of short-term futures operations.

The benefit of this is self-evident. During the period from 10,000 to 3,800, as a die-hard bull, I actually made money by combining several accounts together. This is the benefit of having multiple accounts.  

2. Think less about fundamentals and look more at the K-line.

Fundamentals are the elephant, everyone is blind, and no big boss can take the lead.  

Think back to the time before the New Year, when [asset outflows during the Spring Festival] [ the view that the halving of 6500-7500 has nothing to do with the bull market] [policy reasons] couldn’t explain the rise of 7000-10000? If you want to talk about halving, didn’t you notice that when there was a 1w fluctuation in 2019, the guests at the blockchain conference all said 2w, 3w, and 5w.  

When it was fluctuating between 6500 and 7500 at the end of the year , they all said that halving had nothing to do with the bull market and it might go up to $8500.

Then in February it was 10,000, and the statement changed again.  

The world is too big, and ordinary people like us don’t understand the fundamentals of the United States, Singapore, and Europe. Our best weapon is our own sense of the k-line, which is the most valuable thing. All factors react fastest on the k-line.

3. Completely follow your own orders and set stop loss. Think independently, practice 1,000 stop loss orders, and you will be on the road to profit.

Tao: This is the personal experience of top traders in the market over the years. I believe it can help everyone avoid many detours and is worth referring to.

Q6:

All the guests are "veterans" in the industry . They have experienced several rounds of bull and bear cycles in the digital currency market. They must have accumulated a lot of investment experience and learned a lot of lessons. I hope that all the guests can introduce their investment cases and methodologies, and give you some investment advice.

Please let Tinker Bell start.

Contract Emperor Doraemon:

1. Build your own trading system, practice and update it constantly. This is the most important methodology for my investment.  

2 When it comes to cryptocurrency trading, I don’t think I have a keen eye, but I can seriously make a good product, just like the current Contract Emperor.  

3 The lessons can be summarized in two simple points:

a. No matter who talks to me about trading from any perspective, I only listen to his way of thinking, and I never remember his reasoning and conclusions. The eternal essence of trading is to fight with your own heart.  

b. Users are king, and the entire industry needs to be more down-to-earth.

Amber Lorry:

My suggestion is to focus on cash flow management, especially in the context of a global economic recession. Many die-hard fans like to buy at the bottom on the left side, whether buying coins or buying mining machines at the bottom, but you should be aware that the bear market may last longer than we think. Don't go all in and then find that the company you work for suddenly goes bankrupt and you are forced to sell coins at the bottom to make a living, which is a big loss.  

I bought a lot of LTC in 2014, but later I sold almost all of it to save money for buying a house, and I didn’t make it to the bull market. If you use your spare money to invest regularly, your mentality will be much better.

Controlling your own positions does have a great impact on your investment mentality. Next, Mr. Tian

Tian Xin from Antminer Pool:

Personal summary of experience:  

1. Mining is a must, and asset allocation must be considered. At least half to three quarters should be allocated to mining. BTC has the best resistance to declines in a bear market. The more assets a person has, the higher the allocation ratio. No other digital currency has the financial carrying capacity of mining.  

2. You must have cash. Regardless of whether you are running a mining farm or hosting, you must cash out regularly and keep a large amount of cash on hand to cope with a sharp drop.  

3. You must learn to use financial tools. You can use Matrixport, a Singapore financial services agency, to increase the amount of coins in your hands, because there will be fewer and fewer coins in the future.

4. You must control the proportion of your assets in cryptocurrency trading. However, cryptocurrency trading can be divided into long-term and short-term, large and small currencies. This depends on the individual. For the long term, try to choose large currencies such as BTC, BCH, and ETH. Although small currencies have high returns, the risk of bankruptcy is also high.  

5. Be sure to use less leverage because we are all hurt.  

6. Six-word motto that must be said: judge lightly and take risks seriously!  

Antminer Fan Xiaojun:

There are two types of thinking in mining , one is the legal currency standard, and the other is the currency standard.

The main purpose of the fiat currency standard is to quickly recover the investment. You can choose to hedge when mining. Hedging is a financial instrument such as futures and options to lock in part of the profit and minimize the risk of mining. Individuals can choose full or partial hedging based on their ability to control their shares.

The currency standard is to mine a corresponding amount of BTC. When hedging, you can choose to hedge the electricity bill.

You also need to do some corresponding financial management work for your own currency, such as quantitative or other financial products.

There is another situation where coins are used to generate coins and coins are used to buy mining machines.  

1. Why do you borrow money instead of selling your coins when you are using them to buy mining machines? Because most customers are optimistic about the long-term price and mining income. As long as the price increase can outperform the interest, this operation is valuable. Years of experience in the cryptocurrency industry has taught me that you cannot sell your coins because you cannot buy them back if you sell them.

Many platforms can provide currency lending. When borrowing, you must reserve a sufficient proportion of margin to prevent liquidation in extreme situations.  

2. Use mining machines as collateral for loans. To buy mining machines, the mining machines in the hands of miners are also valuable. For general mining machine collateral, the mining machines need to be placed in the mine designated by the lender, or the miners’ own credit endorsement can also be used. However, there are not many platforms that support mining machine loans, because the borrower has to consider the risks.  

So my personal advice is to hold on to the coins and the mining machines.

Contract Emperor Doraemon:

Thank you Mr. Tao. Under the current circumstances, it is really rare for the organizer to take out 10 bitcoins at a time to hold an event. Let’s support the organizer XBIT and hope that everyone will actively participate.

Amber Lorry:

https://www.chainnews.com/articles/811185186966.htm

The most important thing in cryptocurrency investment is to be able to hold on and not be affected by short-term price fluctuations. I am optimistic about the future development of XBIT and hope that XBIT can achieve new breakthroughs. I hope everyone will support XBIT and Amber.

Tian Xin from Antminer Pool:

Ant Pool Machine Gun Pool has always adhered to the principle of user-first, and it is also our goal to always ensure the benefits of users. The machine gun pool mining service recently launched by Ant Pool has greatly increased the mining benefits of users. Since the public beta of the machine gun pool was launched, the average daily high benefit has increased by about 3%, and the highest benefit has reached 52%. We will continue to launch more preferential activities, and we have also prepared generous mining gifts when the flood season comes. Let me tell you in advance that it will be online in April. I hope everyone will participate~

Thank you very much, especially thank you for the invitation from Mao Wen. I hope everyone can gain more this year. I wish Mao Wen's event a success. If there are bosses who are interested in the machine gun pool, please contact me ~

Antminer Fan Xiaojun:

At present, the first batch of 19 sold in May has been sold out. If you have the need to purchase later, you can add me on WeChat or search on the official account: Ant Pre-sales.

Finally, I would like to thank the organizer XBIT and Mr. Tao for inviting me to share and discuss with you all here. I wish XBIT better development this year and I also wish the coin price guessing event a success.