Zhikuang Q&A: When is the best time to enter the mining market?

Answer from Keven, editor of Zhikuang University:

The price of coins has fallen, the payback period for mining has become very long, the Bitcoin halving is imminent, and with the arrival of the flood season, the situation has become more complicated. So, is it possible to buy mining machines now, and what kind of mining machines should I buy?

01
When is the right time to enter the market? What mining machine should I buy?

Mining is a very time-sensitive business. If you enter the market at a good time, you can earn excess returns; if you enter the market at a bad time, it will be a long time before you can get back your investment, or you may even suffer losses.

The editor believes that from the current perspective, there are two very good time points to enter mining.

The first time point: from now to before halving Mining machine: the latest S19
Suitable for: All miners, especially new miners with poor risk tolerance

1. It is almost impossible for S19 to drop in price after halving

The pricing of mining machines includes manufacturing costs and financial premiums. The latest S19 mining machine has a power consumption ratio of 34.5 and a unit T cost of 163, which is lower than the unit T cost of the S17 mining machine. This shows that the latest S19 is priced low and there is almost no water.

The current coin price is low. If the coin price does not rise after the halving, the payback period of S19 will be longer. The S19 mining machine cannot be priced due to the sharp drop in the coin price, and was forced to postpone the original pricing and release time by one week. It can be inferred that the current price of mining machines is close to the cost price, and the profit margin of mining machine manufacturers is very small, with basically no financial premium.

Assuming that the price of the currency does not rise or even falls after the halving, it will cause a large number of mining machines to shut down, while mining machines with relatively low power consumption such as S19 will still be profitable. If the price of the currency plummets again and breaks through the shutdown price of S19, mining machine manufacturers will not sell mining machines below cost price, but will choose to mine by themselves and wait for the price of the currency to rise.

2. High safety margin

The energy efficiency ratio of S19 is 34.5J/T, which is very low. It is one of the mining machines with the lowest shutdown price. Therefore, its safety margin is very high. No matter how the coin price falls, it is difficult to fall below the electricity cost and shut down, so it is very suitable for newcomers.

3. Risks and benefits

Risk: If the price of the currency does not rise or continues to fall, the payback period of the S19 mining machine after the halving is relatively long. It is currently estimated to be more than 1 year (considering the elimination of old mining machines + adjustment of the difficulty of the entire network) and the emergence of mining machines with better performance, which weakens the competitiveness of the S19.

Income: If the price of the currency rises, there will be a financial premium for the mining machine. At this time, not only will the income from mining increase, but the price of the mining machine will also increase, which is a good Davis double-click.

The second time point: about half a month after the halving Mining machine: T17
Suitable for people: experienced miners with risk tolerance

The second opportunity will only appear if the price of the currency is around 6,000 yuan, or even lower than 6,000 yuan.

1. About half a month after the halving, you may be able to buy T17 at a very low price

After the halving, T17 has low profits and may even suffer losses. At this time, it is far from recovering the investment, so the price of mining machines has fallen. Some small and medium-sized miners will sell second-hand mining machines and leave the market. The price of second-hand mining machines in the market is lower than the cost price. The editor estimates that the price of second-hand mining machines may be around 1,500.

If the price of the coin rises rapidly in the next few months, the revenue of T17 will also rise rapidly (the revenue of mining machines with high power consumption will increase faster), and the mining machines will be repriced at this time. The price of mining machines may double, and the daily mining revenue will increase exponentially, greatly shortening the payback period. This is also a perfect Davis double-click. Such examples have occurred in late 2018 and early 2019.

In the article “Is Bitcoin Mining a Good Business?”, we calculated in detail that from December 2018 to August 2019, the output of coins had increased by more than 8 times, and the price of mining machines had increased by more than 4 times.

Of course, history will not simply repeat itself, as more and more people participate in mining and the impact of Bitcoin halving, mining revenue is declining.

2. Low safety margin

The energy efficiency ratio of T17 exceeds 50J/T, and its performance ranking is low. After the halving, if the price of the currency drops, it will be the first to shut down. Therefore, this mining machine is suitable for veteran miners who have been in the mining industry for many years, have a high risk tolerance, a good mentality, and have channel advantages.

3. Risks and benefits

Risks: If the price of the currency does not rise for a long time or even falls after the halving, the mining income of T17 will be very low, and the payback period will be far away. In addition, as the latest high-performance mining machines are gradually introduced into the market, the competitiveness of T17 will become lower and lower. The longer the time is delayed, the more obvious the disadvantage will be.

Income: If the price of the currency rises rapidly after the halving, the T17 mining machine will be repriced. As the price of the mining machine rises, the daily mining income will also rise rapidly, greatly shortening the payback period.

For machines with high power consumption, the increase in yield will be more obvious when the coin price rises. Let’s take the current mining difficulty as an example: when the coin price rises from 40,000 to 50,000, the S17+ mining machine’s profit increased by 49.9%, but the T17 increased by 79.67%.

02
Halving will restart mining

On March 12, the price of Bitcoin plummeted, and many low-leverage cryptocurrency traders were liquidated. The chips were exchanged, and the cryptocurrency industry was restarted. Due to the unique mechanism of Bitcoin mining, the revenue of the entire network is halved when the halving occurs. At the current price of Bitcoin, machines with a power consumption ratio of more than 60 will be shut down. At that time, small miners will sell their machines, and the mining machines will be transferred from small miners to large miners with higher risk resistance. The mining industry is also restarted.

Restarting is an opportunity to pick up chips and the best time to enter the market.

Risk Warning: This article is the personal opinion of the editor of Zhikuang University and does not represent any investment opinions or suggestions.