In the cold winter of coin prices, how can the mining circle make a breakthrough?

Since March 9, stock markets in at least 11 countries, including the United States, have triggered circuit breakers. Last Friday, Bitcoin also experienced a waterfall-like decline, and the total market value of the entire cryptocurrency market fell by nearly 100 billion US dollars. What is the main reason for the decline in the price of the currency this time? Many people are questioning.

The second online forum of [Miyou Forum], hosted by Miyou Finance and co-organized by Spider Mining Pool, was officially held. The main speaker of this forum, Pan Guoli, founder of Zhongyan Zhichuang Blockchain, shared his views on the theme of "How can the mining industry be reborn from the ashes under the crisis".

Reasons for Bitcoin’s decline

In addition to the common "banker theory", the mainstream views on the decline in the price of the currency this time include the following:

The first reason is that due to the impact of the global epidemic, various traditional financial assets have generally fallen, with crude oil and the Nasdaq index falling by more than 30%. As one of the global assets, Bitcoin is certainly not immune to the decline and has followed the downward trend of global assets.

The second reason is that the expectation of a sharp rise in the price of Bitcoin due to the halving of its production is too high. The previous two halvings of Bitcoin production were in 2012 and 2017, and both halvings brought about a sharp rise in prices. Based on this, it can be inferred that the halving of production this time should also bring about a sharp rise in prices. Therefore, many experienced miners in the industry, whether they are hoarding coins or mining, have opened leveraged financing, with the least being one or two times, and the most being three or five times. This is also the reason why various mortgage loan products emerged in the second half of last year. High leverage makes the market extremely fragile. Once the price falls, various leverage and mortgage loan products begin to burst in a chain.

The third reason is that due to the impact of the epidemic, the country has implemented isolation policies such as city lockdowns and household closures for residents. A large number of offline roadshows and business activities both inside and outside the circle have been suspended, as well as panic about future economic uncertainty. These have further reduced the funds entering this market, and buying has continued to decrease.

In fact, it is still difficult to say how big the "safe-haven property" of Bitcoin is. The "safe-haven property" mentioned in the financial industry is aimed at the demand for larger-scale and larger-volume funds. The total volume of Bitcoin is only 100 billion US dollars. The market value of the global financial market has evaporated by at least several trillion US dollars recently. How can Bitcoin carry external capital? Naturally, it cannot be called a safe-haven asset.

Impact of changes in network computing power

The total network computing power has dropped from 120E to the current 90E, a drop of about 25%. The estimated computing power may drop to around 75E. The most recent time the computing power stabilized was around December last year, also around 90E. The previous time was at the beginning of 2019, at around 40E. At the end of 2018, the computing power rose to 55E at the highest and fell to 35E at the lowest, a drop of about 35%.

As long as there is no sharp decline, such as a decline of more than 80%, and it remains at the bottom for a long time and cannot rise, the Bitcoin computing power is likely to fluctuate upward. According to historical experience, it will at least double its growth rate every year. The main reason for the upward fluctuation of computing power is that the actual life of each specific mining machine is much longer than everyone thinks. For example, if the electricity price in China is lower than 0.2 yuan/kWh, it cannot operate. As long as the machine is not broken, it may be resold to the Middle East where the electricity cost is a few cents to mine.

At present, the inventory of mining machine manufacturers has basically been sold out around the Spring Festival, and there are not many remaining stocks in the warehouse. Therefore, in this round of falling market, the mining machine manufacturers should be the least affected, and the production in the first half of the year has basically been sold. Under the current market conditions, it is expected that the production of new mining machines in the first half of the year will not be large, and the main purchasers are retail miners. There will be relatively few large miners who continue to deploy more new machines.

Is there really a mining accident?

In fact, some machines like s9, which have a power consumption ratio of more than 100 J/T, were left in the mine for half a year when the Fengshui season ended in November last year, and were considered to be semi-out of the market, waiting to be restarted during this year's Fengshui season. Some s9s have been modified and upgraded to reduce their power consumption ratio and continue to operate.

As to whether there was a mining accident or not, and for whom it was a mining accident, it is actually difficult to judge.

For those who are ready to enter the market with funds, it is actually a good opportunity to intervene.

For machines that entered the market in 2018 or even earlier, those who wanted to make their money back have basically made their money back.

For those who entered the market in 2019, some of the models that entered the market in the first half of the year have actually paid back their investment, and the machines that entered the market in the second half of the year are mainly high-computing machines. Under the current Bitcoin price and electricity price, some machines need to be shut down, otherwise they will lose money on electricity bills, but the Fengshui period is coming soon. When the Fengshui period comes and the currency price picks up slightly, the machines can be turned on and continue to run.

The best mining model this year should be joint mining with the Fengshuiqi mine. The mine will solve the problem of not being able to find more machines to cultivate excess load, and miners will solve the problem of not being able to find low electricity prices.

In fact, the mining industry has always fluctuated along with the fluctuations in the price of currency. When the price of currency rises, the mining industry prospers, and when the price of currency falls, the mining industry is relatively depressed.