Spider Mining Pool Market Partner Li Hui: Risks and Opportunities in the Mining Industry

The main speaker of this forum, Li Hui, the marketing partner of Spider Mining Pool, gave a wonderful sharing on the issues arising from this topic.

The following is the transcript of this issue of [Mi You Lun]:

The Spider team focuses on the construction of blockchain node ecology, providing professional mining pools, mining farm construction, mining machine hosting and other comprehensive and three-dimensional services. It has obtained strategic investment from Huobi Group, Node Capital, and CHAINUP CAPITAL. Currently, Spider supports the three major currencies of ETH, BTC, and BSV, and has successfully mined more than 200,000 ETH and 2,000 BTC. The computing power of ETH and BSV are both ranked among the top five in the world.

Spider Mining Pool is growing rapidly in 2019 and is also a relatively strong new force in the mining pool ecosystem. We are very grateful for your continued support and trust.

This year, Spider Mining Pool is also working on a multi-level mining circle layout. We are very much looking forward to establishing cooperation with more industry partners to jointly contribute to the mining ecosystem.

Miyou Finance: 2020 is bound to be an extraordinary year for Bitcoin mining practitioners and individual investors. The outbreak of the epidemic at the beginning of this year also had a lot of impact on the mining industry. What was your original vision and forecast for the mining market in 2020 at the end of last year? What kind of changes have taken place since the outbreak of the epidemic?

Looking back at 2019, the Bitcoin mining ecosystem as a whole is booming. Mainstream mining machine manufacturers such as Shenma, Antminer, Xindong, and Avalon have successively released mining machines with greater computing power and lower power consumption. The total network computing power has increased from 40E in January 2019 to 133E a few days ago, and has stabilized at around 120E in recent days, almost tripling in more than a year. At the same time, more industry practitioners choose and use sustainable and renewable high-quality energy. Both aspects have enhanced the risk resistance of the entire mining ecosystem and gradually reduced mining costs .

In the context of the development of the global mining industry, China still occupies an absolute dominant position. China's Bitcoin computing power accounts for nearly 60%-70% of the world's total, so the industry soil for Chinese miners is actually very fertile.

2020 is the year of halving for many currencies, and Bitcoin has attracted much attention. Based on the two halvings in history, everyone has high expectations for this year's Bitcoin halving. At the same time, as the Bitcoin consensus is recognized by more people and the country's policy support and open attitude towards the blockchain industry , it has also attracted many professional institutions and large funds to plan to enter the market. But obviously, the epidemic has forced them to postpone or adjust their investment direction.

In recent days, the price of Bitcoin has experienced some corrections and fluctuations, which has caused some high-power consumption machines such as S9 to be temporarily shut down. However, based on the previous two halvings, this is actually a relatively normal phenomenon. The correction is an opportunity for everyone to get on board. In the long run, I am still very optimistic about Bitcoin .

Miyou Finance: At present, how has the computing power in China been affected by the epidemic? What will be the situation of computing power in the world and China in the coming time? What are the factors that affect computing power this year?

Compared with traditional industries, the impact of the epidemic on the mining industry is actually very small. Because many miners and mine owners have completed a large degree of layout before the New Year, the overall impact is not very large. The mining industry has been booming throughout 2019, and China has always been a leader, with computing power accounting for 2/3 of the world.

The biggest impact on the network's computing power is probably the halving in May this year, when the block reward changed from 12.5 to 6.25 bitcoins. Under the premise that factors such as costs and electricity prices remain unchanged, if the price of the currency does not rise rapidly in the short term, the network's computing power will be reduced by about 30%. It is recommended that everyone make plans and decisions in advance and gradually replace old mining machines with new ones in batches .

Miyou Finance: What impact does this epidemic have on mining machine manufacturers and miners? How to ensure the normal operation of mining farms during the epidemic?

Affected by this year's epidemic, leading mining machine manufacturers such as Bitmain, Canaan, and Shenma have successively issued announcements to "postpone production, delivery, after-sales, etc." Logistics have also been severely affected in the short term, which has a certain impact on mining machine manufacturers, miners, and mining farms.

But in fact, as mentioned earlier, this is good news for the existing mining machines running in the mines, as it buys miners more time to obtain relatively higher profits.

Mining machine manufacturers are under great pressure to produce new mining machines because workers cannot return to work as scheduled .

In terms of mining farms, Xinjiang was more affected by the epidemic, and Xinjiang’s policies to deal with the epidemic were relatively strict, so many miners were unable to return to work. However, the overall impact on mining farms in Inner Mongolia, Sichuan, and Yunnan was not very large.

A while ago, a customer told a joke that in order to solve the problem of materials for mine operation and maintenance personnel during the epidemic, the owners of mines in Sichuan and Yunnan delivered a truck of instant noodles to their employees. A customer in Inner Mongolia said that their mines had arranged enough manpower during the Chinese New Year to ensure that the machines were running normally 24 hours a day, so they were hardly affected by the epidemic.

However, under the timely command and leadership of the country, various places have gradually recovered from the impact of the epidemic in recent days, and have resumed work one after another, and many situations are improving.

Miyou Finance: Some people say that 2020 will be a year of qualitative change for the mining industry. Will the old generation of mining machines, such as the S9 series, be completely eliminated under the halving effect?

On March 5, the total computing power of BTC network reached 133E, and then fell back to 119E on the 9th. During this process, with the entry and startup of new high-computing mining machines, the increase in the total computing power of Bitcoin network has increased the difficulty. In addition, with the decline and correction of the currency price in recent days, some high-power machines such as Ant S9, Innosilicon T1 T2, and Valon A841 A821 have reached the shutdown price and have to be temporarily shut down. At present, the old machines that are still running account for about 25% of the total computing power of the network, which is about 10% lower than before. In fact, it is also a stage in the iteration process of new and old mining machines.

However, I think the recent correction in the price of the currency is temporary. I am optimistic. I think the price of the currency will rise above $10,000 before and after the halving . The Fengshui period in May will also provide miners with more cheap electricity. On the other hand, due to the impact of the epidemic, the resumption of work of major mining machine manufacturers has not been fully restored, so the production of high-computing power machines will still be affected, and there should not be much increase in the short term. Then when the Fengshui period comes, if factors such as electricity prices, currency prices, and difficulty can reach a relatively ideal state, the currently shut down S9 can still be turned on again and run until the end of the Fengshui in November, but it should also be the last survival cycle of the " original version of S9 ".

Miyou Finance: What do you estimate the price of Bitcoin to be after the halving this year? Will the price of the currency fail to support the mining cost? How should investors deal with this situation?

I dare not say that I can predict the price of the currency, but we can briefly review the previous two halvings. Based on historical conditions and data, we can still find some valuable things for our own reference. First of all, the first Bitcoin halving was on November 28, 2012. At that time, the price rose from more than 10 US dollars to more than 1,000 US dollars, an increase of nearly 80-100 times; the second halving was on July 10, 2016. The price of Bitcoin rose from more than 600 US dollars to more than 18,000 US dollars, more than 30 times. And according to the data of the first two times, after the halving of Bitcoin, there will be a bull market in about a year.

After the halving in May this year, the reward for Bitcoin blocks will be reduced from 12.5 to 6.25 BTC, and the number of new Bitcoins generated per day will be reduced from 1,800 to 900, and the inflation rate will be reduced to 1.8%, which is lower than the target inflation rate of the US dollar.

Everyone can seize the opportunity before the halving to mine and hoard coins. They can use mortgage loans to solve their capital turnover needs and choose better financial means to hedge risks, such as hedging, futures options, etc.

Finally, I would like to thank Miyou Finance for the invitation, and thank you all for your patient listening. I look forward to having more exchanges with you all. Spider will have more new moves in the near future , and I hope you can pay more attention.

Disclaimer: This article does not constitute any investment advice, it only represents personal opinions and has nothing to do with the official position of Spider Mining Pool. The cryptocurrency market is risky, so be cautious when investing.