Bitcoin plummets VS difficulty and computing power increase. Where will miners go?

According to BTC.com data, at 19:05 on the evening of March 9, Bitcoin adjusted its mining difficulty to 16.55T at block height 620,982, up 6.88% from February 25. It is predicted that the difficulty will continue to increase by 7.62% to 17.81T next time, and there are 12 days and 22 hours left before the next adjustment.

Data source: BTC.com

At the same time, Chinese mining machine manufacturers that were previously affected by the epidemic have gradually resumed production and delivery, and Bitcoin computing power has also begun to steadily recover, with the total network computing power reaching a high of 122.10EH/s.

Data source: QKL123

As previously reported, both Shenma and Bitmain Antminers started shipping in February, and Bitmain said it has resumed domestic maintenance services since February 20. In addition, Canaan Creative also released its latest Avalon 1066 Pro model on February 28, which has a computing power of 50 terabytes per second (TH/s). The company has also gradually resumed operations since mid-February.

There are still 60 days until the third Bitcoin halving, but the expected halving did not come. Instead, Bitcoin has plummeted for two consecutive days. As of press time, the price of Bitcoin is $7,918.89.

Data source: Huobi Global

Financial leverage mining has a huge impact

Bo He, the founder of Marvel Capital, invested in and established a mining farm in 2019. Bo He told Golden Finance that in this round of market conditions, the miners who have added leverage to mining machines and mining farms are the most affected.

In recent years, the income-increasing model that combines mining with financial instruments has gradually entered the mainstream vision.

Common mining leverages include: mining machine installments, mining income hedging, currency loans, options, contract trading, etc. The existence of these financial instruments gives miners the ability to magnify their profits and resist the risk of market downturn when they are clear about the trend of the secondary market.

Take Bitmain as an example. When it released the s17+ mining machine, it provided miners who booked futures mining machines with a short option of $5,000 in Bitcoin. Bitmain's move is intended to use financial leverage to hedge the risk of a downward market for miners who have booked mining machines and boost the confidence of miners. On the other hand, it also promotes the company's new business line.

There are still many controversies about the use of leverage. While leverage amplifies the benefits, it also amplifies the risks that miners have to bear. Not all miners are willing to accept leverage.

Based on historical experience, many people are blindly optimistic that the Bitcoin halving will come. Bohe said: "During this halving cycle, a group of high-risk (mainly leveraged) miners will definitely be eliminated and new miners will enter the market."

Mining and hoarding coins is the most cost-effective

With the increase in computing power and the decline in Bitcoin, the Antminer S9 series, the Coreminer T1, T2 series, and the Avalon A841, A821 and other mining machines have reached the shutdown price. At present, the electricity costs of the Antminer T15, S17 and other series of mining machines have also exceeded 50%. The new generation of 7nm and 8nm mining machines launched by major mining machine manufacturers some time ago were not greatly affected by the increase in computing power. Among them, the electricity costs of the Antminer S19Pro accounted for less than 30%, and the daily static net income could reach 70 yuan. Shenma Miner M30 is also in a high-yield state, with a daily static income of about 50 yuan.

Data source: Biyin

Matt D'Souza, CEO of Blockware Solution, which provides services to North American miners, said, "Miners have sold the S9 or upgraded to the next-generation infrastructure... Maybe 60% to 70% of miners have abandoned the S9 before 2020." Once deployed, these new miners typically provide twice the computing power of older miners (such as Antminer S9), which can increase the overall network computing power, which is positively correlated with mining difficulty.

Bohe said that at present, it is unlikely that mining machines with high power consumption and low computing power will be shut down on a large scale, because many places in Sichuan will enter the flood season after April. The total global computing power is about 122E, and mining machines with 40E high power consumption, such as S9, will basically be eliminated after the halving.

But in the long run, Mint pointed out that, especially in a bear market, the cost of Bitcoin obtained by mining with mining machines is actually lower. From the perspective of holding positions, it is less likely to sell than the spot Bitcoin purchased in the trading market. The price of a Bitcoin is about 60% of the current price. Therefore, it has been emphasized that it is not recommended to speculate in Bitcoin, especially in a bear market, when the spot liquidity is too poor and the futures market is too strong. If you have the conditions, it is more appropriate to rely on mining to obtain Bitcoin, which can be held for a long time.

Zhang Lu, co-founder of Computing Power 360, said that mining is a business based on electricity resources. The mined bitcoins minus the cost equals profit, so in the long run, miners do not need to keep a close eye on the price of the currency.

She also pointed out that mining machines are leveraged Bitcoin, and mining is a 0.5 and 100 business: if you don't want to mine anymore, you can sell the mining machine assets and the mined coins to get back about 0.5 of the principal, but you can also have the opportunity to use 0.5 to fight for a hundred times; and in the process of pursuing a hundred times, there is a 99% probability of 2-3 times the return. (Golden Finance)

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