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In two days, Bitcoin dropped as much as 52% at one point, and the so-called "halving trend" came to an abrupt end.

The sharp drop in the price of Bitcoin directly affected the mining industry. On the evening of March 12, Bitcoin failed to produce a block for an hour. Many people were worried that this was the result of miners shutting down their machines en masse.

This concern was later dispelled: it turned out that the computing power of the entire Bitcoin network did not drop significantly despite the plunge.

Despite this, the mining industry remains turbulent.

Small miners are out, big miners are buying at the bottom; mining machines are still roaring, but they have already quietly changed hands... A major reshuffle in the mining industry is inevitable.

Faced with an uncertain future, the mining industry has begun to call for respect for risks. After the mining disaster, the mining industry may be forced to upgrade.

01 Shutdown time

In the early morning of March 13, Bitcoin plummeted again, falling to a low of $3,800.

Just at 6 o'clock the previous evening, Bitcoin had experienced a major drop, falling by $1,536 in 15 minutes.

This is an unprecedented drop in Bitcoin's price: in two days, the price of the currency fell by 52%.

“This is the real ‘halving market’.” A person in the cryptocurrency circle said with emotion, “Now it is much cheaper to buy coins than to mine them, and miners can take a holiday.”

At 7:50 pm on March 12, the Bitcoin network produced block 621,342. After that, the Bitcoin network failed to produce any blocks for an hour.

Many people interpreted the “no blocks” as a large number of mining machines shutting down. For a time, the cryptocurrency market was in a panic.

Several mining pool operators disagree. They told a blockchain book that a large number of miners shutting down can lead to a lack of blocks, but a lack of blocks does not necessarily mean a large number of miners shutting down. In the history of Bitcoin, it is common for no blocks to be produced in an hour, and there is no need to over-interpret it.

However, at the critical juncture of Bitcoin's stampede-like plunge, shutting down has still become a common choice for many miners.

"Last night, many miners were doing the same thing, which was to notify the operation and maintenance brothers at the mine to shut down the machines." Miner Wu Liangping told Yiben Blockchain.

He watched the waterfall coming.

"At around 9 o'clock in the evening, I notified the mining farm to shut down for the first time. The first batch to be shut down were the Ant S9, L3+ and other small computing power machines." Wu Liangping said.

At that time, his idea was to shut down the old mining machines first, keep the new mining machines that were still profitable, and observe the subsequent development of the currency price before making a decision.

To his surprise, early in the morning of the 13th, Bitcoin ushered in a new round of waterfalls. Wu Liangping finally decided to shut down all the mining machines.

The F2Pool data shows that as of 11:00 on March 13, based on an electricity price of 0.36 yuan per kilowatt-hour, most mainstream mining machines are close to their shutdown price.

The F2Pool APP shows that some mining machines have reached the shutdown price

In the past two years, the electricity costs of new mining machines, such as Antminer T17, Antminer S15, and Shenma M21S, account for more than 90% of the total cost. Even the S19 Pro, which has the lowest energy consumption ratio, accounts for as much as 50% of the total cost of electricity.

"Low-computing-power mining machines like the Antminer S9 shut down almost instantly, and they couldn't even survive the first big drop last night," said Wu Liangping. "Based on today's lowest coin price, the first-generation 7nm mining machines like the Antminer S15 can't make money either."

Similar to two years ago, a mining accident in the cryptocurrency circle has occurred again, but this time the accident occurred more suddenly.

02 Reshuffle is coming

F2Pool data shows that from the evening of March 12 to date, the computing power of the entire Bitcoin network has dropped from 113EH/s to 108EH/s, and the fluctuation is not obvious.

"Even if a large number of miners shut down their computers, the computing power of the entire network will not suddenly plummet overnight," said mine owner Bai Zhiguo.

First of all, this is because the first ones to shut down were all old mining machines such as Antminer S9. The first batch of shutdowns were often small miners with only a few or dozens of S9s. They are numerous and loud, but their computing power accounts for a very low proportion of the entire network.

Secondly, even if miners request the mine to shut down, the mine may not actually execute it.

"Many mining farms will 'cut computing power', which means changing the coin receiving address of the mining machine to the mining farm's own and continue mining." Bai Zhiguo explained, "This is equivalent to the mine owner using other people's mining machines to mine for himself."

The reason for this phenomenon is that the electricity price offered by the mine owner to the miners includes a series of expenses such as cost electricity price, operation and maintenance, and rent. Even if the miners shut down, the mine owner's cost will not be reduced.

In addition, mine owners generally have a stronger risk tolerance than miners and do not care about the price fluctuations of coins. "Miners with conscience will give miners some mining machine rental after cutting computing power; those without conscience will just mine secretly," said Bai Zhiguo.

Various signs indicate that although the computing power of the entire network remains calm, undercurrents are surging in the mining circle amid the plunge.

A new round of reshuffle is coming.

"Some of the people who hosted mining machines with me have already left. Dozens of S9 mining machines were sold at a low price to another client of mine, directly cutting the computing power," said Bai Zhiguo.

In the mining circle, such transactions of mining machines without leaving the mines are very common. "It is inconvenient to trade during the epidemic, the price of coins has fallen, and S9 is not worth much. Long-term cooperating miners and mines may sell dozens of mining machines with just a word of greeting," he said.

Compared with miners and mining farms, the plunge in Bitcoin has a greater impact on the mining machine circle.

In the mining industry, mining machines can be considered as a contract product, betting on the profits in the next few months. Therefore, the pricing of mining machines is directly related to the price of coins and the difficulty of mining.

"The price of the currency fluctuates too much now, and no one can give a quote, so no one is trading anymore." Zhang Heng, a second-hand mining machine merchant, told Yiben Blockchain, "The machine that someone ordered for more than 7,000 yuan is now only worth more than 5,000 yuan. How do you think we can sell it?"

The bleak mining machine market also caused mining machine stocks to plummet. Under the dual pressure of the sharp drop in the US stock market and the cryptocurrency market, Canaan Technology's stock price fell 10.23% yesterday, lower than the performance of the Nasdaq market.

03 Awe of Risk

The price of coins keeps falling and the outlook for the mining industry is unclear. Faced with huge risks, many industry practitioners call on miners to respect risks and remain calm.

"Before this round of plunge, the cryptocurrency circle was generally optimistic due to the expectation of halving. The computing power has continued to grow for two months, indicating that miners are constantly purchasing new mining machines and the industry has accumulated certain risks." said Hao Tian, ​​author of blockchain self-media "Chain View".

However, the sudden plunge caught many miners off guard and caused heavy losses.

"The biggest impact of the plunge in currency prices on us is that we can’t sell the currency," said Bai Zhiguo.

Bai Zhiguo runs a mining farm in Guizhou, which has both its own mining machines and custody services. Since the beginning of the year, he has been hoarding bitcoins and waiting for the price to rise after the halving. The recent two-day plunge in Bitcoin has directly locked up his bitcoins.

"We can hold on for 10 days at most. After 10 days, we will sell the coins no matter what the price is," he said.

The sharp drop caused heavy losses to many people in the mining circle. Wang Yang, the owner of a mine, said that the coins he held plummeted by 500,000 overnight. But compared with those miners who mortgaged their coins in exchange for loans, he was still lucky.

“This morning, everyone was saying that the owner of a certain mining farm had hundreds of BTC liquidated,” he said.

In the face of mining accidents, mining reform is imminent.

"What miners need to do now is to improve their ability to resist risks, avoid leverage, hoard less coins, and ensure smooth cash flow of fiat currency," said Bai Zhiguo.

In Wang Yang's view, the best time to upgrade mining machines has arrived. "When everyone thinks that mining disasters are coming and no one is mining, it is time to buy mining machines at the bottom," he said.

At present, the mining industry generally believes that the S9 mining machine, which is expected to exit the historical stage after the flood season in 2020, is likely to exit the market ahead of schedule. "The exit of S9 is not necessarily a bad thing. If S9 is not shut down, new mining machines will not sell well, and mining machine manufacturers will not launch more new models." Wang Yang said.

After the mine disaster, miners and mine owners need to improve the operating efficiency of the mine. Perhaps this mine disaster will force the entire mining industry to upgrade.

At present, Wang Yang is working on purchasing mining machines to fill his own mine. As early as last year, he kept selling old mining machines and buying new ones. "When others shut down their machines, I can mine more coins," he said.

According to statistics, with the two recent plunges in Bitcoin, 38 mining machines fell below the shutdown price.

"A mining disaster is coming!" Many miners shut down their mining machines overnight, and some bid farewell to the industry sadly.

This situation seems familiar. At the end of 2018, when the price of coins was low, it was rumored in the circle that some mining machines were sold by the kilogram as scrap metal.

Now, another cycle has come, another round of reshuffle has begun.

*Some of the interviewees in this article are pseudonyms.