Popular Science: How long is the life of a mining machine?

Participating in mining is one of the important ways to enter the blockchain industry and enjoy industry dividends. Moreover, compared with cryptocurrency speculation, mining is more stable and more suitable for large institutions and large funds to enter the market.

Mining is a highly specialized activity. Many novice miners will face many problems before entering the market, such as: What are the ways to participate in mining? How to scientifically select mining machines? Is it more cost-effective to buy new mining machines or second-hand mining machines?

Today, we will also solve a problem that many novice miners may encounter before entering the market: How long can the purchased mining machine mine coins? In other words, how long is the life of the mining machine?

01
The physical lifespan of a mining machine

The life of a mining machine can be divided into its "physical life" and "economic life". The physical life of a mining machine refers to the time from when the mining machine is put into use in a brand new state until it is damaged and scrapped. In plain words, it means how long the mining machine will be completely scrapped due to irreparable failures, wear, aging, damage, etc.

There are two main factors that affect the physical life of a mining machine: the quality of the mining machine and its operation and maintenance.

The quality of the mining machine is closely related to the mining machine manufacturer, the structural design of the mining machine and other factors. For example, the Antminer, which is famous for its low power consumption, uses a series circuit to supply power to the hashboard. If there is a problem with the circuit or chip of one of the hashboards, the entire hashboard will be unusable.

The level of operation and maintenance will also affect the physical life of the mining machine. The mining machine will emit a lot of heat when it is running. If the heat dissipation is not timely or the fan on the mining machine is damaged, the continuous high temperature will cause the mining machine to shut down, or even cause a short circuit in the circuit inside the mining machine. In addition to temperature, there is also humidity. If the air is too humid, it may cause the mining machine to rust and corrode. In addition, in mining farms in Xinjiang, Inner Mongolia and other places, because of the heavy wind and dust, the dust condition of the mining machine must be checked regularly. Failure to clean the dust in time will also affect the physical life of the mining machine.

Under normal circumstances, the physical life of a mining machine can reach 5-10 years. For miners, what they need to pay more attention to is the economic life of the mining machine.

02
Economic life of mining machines

The economic life of a mining machine refers to the service life of the mining machine from the perspective of cost and benefit. Simply put, we only need to look at the two indicators of the mining machine: "electricity expenditure" and "mining output" (because the maintenance cost of the mining machine is less than the electricity expenditure).

When the mining output of a mining machine cannot cover the electricity bill, the economic life of the mining machine ends. Generally speaking, the economic life of the latest mining machine can reach more than three years.

1. The mining output of the mining machine is greater than the electricity cost, so the mining machine can run continuously

The mining output of mining machines can be divided into block rewards and transaction fee rewards. Taking Bitcoin as an example, the current block reward is 12.5BTC, and the transaction fee is about 1.4% of the block reward. During the bull market, the Bitcoin network is prone to congestion and the transaction fee will increase. For example, at the peak of the bull market in 2017, the transaction fee reward for a single block was as high as 10BTC or more.

The mining competition is very fierce. The sum of the daily mining output of all miners is basically fixed. The higher the computing power involved in mining, the lower the output per unit computing power.

At present, the total network computing power of Bitcoin is about 109EH/s. Based on the average daily output of 1,800 BTC, the daily income of each TH/s unit computing power is about 0.00001624 BTC. If you have a computing power of 55TH/s (such as an Ant T17 mining machine), then your daily mining output is about 0.000891 BTC.

The output of each TH/s computing power is inversely proportional to the total network computing power. If the total network computing power increases, the output of each TH/s computing power will decrease, and vice versa. Generally speaking, the total network computing power increases rapidly in a bull market, and increases slowly in a bear market, and may even stagnate or fall.

In addition, from a long-term perspective, mining machines are upgraded and the performance of new mining machines is continuously improved. In this process, low-performance old mining machines will be gradually eliminated. The computing power of old mining machines is a buffer for new mining machines. The elimination of old mining machines slows down the increase in the computing power of the entire network, which can appropriately extend the economic life of new mining machines.

2. Low electricity costs extend the economic life of mining machines

Electricity costs have a significant impact on the economic life of mining machines.

The electricity used in the mine is mainly thermal power and hydropower. Thermal power is mainly concentrated in Sichuan and Inner Mongolia, and its price is relatively stable; hydropower is mainly concentrated in Sichuan, Yunnan and other places. Affected by the season, Sichuan and Yunnan have flood seasons and dry seasons. The price of electricity is cheap during the flood season and expensive during the dry season.

During the dry season, some mining machines will be shut down and sealed. When the flood season comes, if mining can continue to make a profit, the miners will turn the mining machines back on.

Different miners have different electricity costs, which are also the core competitiveness of miners. Therefore, the economic life of the same mining machine is also different. For example, because the price of coins was low before, many small miners had high electricity costs and had to shut down the Ant S9 mining machine and sell it to large miners with electricity advantages.

At present, some domestic miners are also shipping mining machines that are about to be eliminated, such as T9+, to countries with lower electricity prices such as the Middle East.

3. Bitcoin halving every four years has a significant impact on the economic life of mining machines

Due to the block reward halving mechanism, Bitcoin's block reward will be halved approximately every four years. In May this year, Bitcoin will usher in the third block reward halving in history, from the current 12.5BTC to 6.25BTC.

After the Bitcoin halving, the miners will be the first to be affected, because the mining output of mining machines will be directly reduced by half (without considering transaction fee rewards), and some old mining machines with low performance will face the fate of being shut down and eliminated.

4. Technological progress makes the economic life of mining machines longer and longer

The current mainstream mining machine is 7nm, and it is expected that 5nm mining machines will appear around March 2020. As the chip manufacturing process of mining machines is getting closer and closer to the physical limit, Moore's Law is gradually becoming invalid, and chip upgrades are becoming more and more difficult.

The iteration of chips is gradually slowing down, and the subsequent improvements in software and hardware will have limited impact on the power consumption of mining machines, which may extend the economic life of existing mining machines.

03
summary

The life of a mining machine is divided into its physical life and economic life. As a miner, we need to focus on its economic life. The economic life of a mining machine is mainly determined by its electricity expenditure and mining output. When the electricity expenditure exceeds the mining output, the economic life of the mining machine expires.

Now that we know the economic life of a mining machine, how should we choose a mining machine scientifically? Welcome to read the previous post of Zhikuang University, "Mining, choosing the right mining machine is half the battle, a guide to scientifically purchasing a mining machine".

Risk Warning: The content of this article is for introductory science learning only and does not constitute any investment opinion or recommendation.