Scarcity makes things valuable, and fewer coins make them precious! Is it already so difficult for miners?

"Initially, no one cared about the disaster. It was just a wildfire, a drought, the extinction of a species, the disappearance of a city."

“Until this disaster becomes relevant to everyone.”

——A line from the movie “The Wandering Earth”.

【Original by Shilian Finance】

Bi Shumin's novel "Corona Virus" also mentioned: "I believe that humans and viruses will have a battle, and there will be many clashes. It is still unknown who will win and who will lose."

As expected, the year 2020 came overwhelmingly, like a true reflection of all the warnings.

2020 has been a difficult start to the year.

From the beginning of January to now: Australian forest fires, Spanish blizzards, Philippine volcanic eruptions, locust plagues in East Africa, an outbreak of deadly type B influenza in the United States, earthquakes in Turkey, Cuba and other countries, and then the new coronavirus swept in at a slightly magical speed.

Various human disasters have come one after another, and millions of netizens can't help but ask soul-searching questions: What happened in 2020?

The year 2020 is so special. It is the year when China will complete the building of a moderately prosperous society in all respects and the final year of the 13th Five-Year Plan. It is also the first century-long goal that China must achieve.

For the cryptocurrency community, 2020 is also an extraordinary year. As early as last year, the panic that 2020 brought to the market had already begun to show signs, because 2020 is the third halving cycle for Bitcoin. This not only means the rise and fall of Bitcoin prices, but also means that miners are struggling.

Scarcity makes things valuable, and fewer coins make them precious. This has always been a motto in the world. For miners in the currency circle, the sharp rise and fall of Bitcoin really affects whether they can still make a lot of money.

If the price of Bitcoin unfortunately falls below the mining cost, the short-term losses can still be sustained for a while, and miners can only bite the bullet and stick to this loss-making business. If this bad situation continues for too long, miners will have no choice, after all, the high cost will force many individual miners to choose to shut down and exit.

Faced with their hard work and such a market, the initial investment is just going to go down the drain? They are really unwilling to accept this. They want to get back as much as they can before hitting the bottom. Second-hand sellers of mining machines are not impossible. In order to get back their investment as much as possible, miners sell mining equipment such as graphics cards at low prices, and even the news of mining machines being sold by kilograms spread all over the market.

Every article on the web about selling mining machines is so sad, but is this the only way to recover some of the costs from the visible losses? It’s just that this money-making treasure is sold at such a low price, which is really painful, but it is also a helpless move forced by life.

Bitcoin production continues to decrease, and the output is getting smaller and smaller. Does this mean that there will be less and less profit in the future, causing miners to stop mining?

This is a problem that troubles many newcomers. Production cuts are daunting, while bull markets make people fearless. If we follow the analysis in the previous article, wouldn’t the only news in the currency circle be about production cuts? In this way, there will be no one to protect the Bitcoin network, and Bitcoin will not decline?

Don't panic, it's too early.

Newbies who have just started to work may overlook the composition of miners' income. You should know that in addition to block rewards, miners' income also includes handling fees, and the level of handling fee income depends on the coin price. When the coin price reaches certain conditions, the handling fees earned by miners are enough to support themselves.

Experienced novices may find that if the conditions for the currency price are not met, then relying solely on transaction fees will still not enable them to achieve their “moderately prosperous goal”?

Naturally, at this stage, most miners’ answers to this question are basically based on speculations based on the assumption that Bitcoin itself or external factors remain unchanged.

But in reality, Bitcoin is constantly changing.

At least for now, the Lightning Network is one of the solutions to the current dilemma. Just like the Olympic torch relay, a Bitcoin believer named "Hodlonaut" randomly selected a user on Twitter and sent 100,000 satoshis to the other party through Bitcoin's Lightning Network, and the transaction relay was continued. And so far, it has spanned 6 continents and 39 countries around the world.

What exactly is the Lightning Network?

Simply put, the Lightning Network is a technology independent of the Bitcoin mainnet, which moves Bitcoin's daily small transactions out of the main blockchain and onto the sidechain, making transactions faster and fees cheaper. Most importantly, it has greatly improved the congestion of Bitcoin mainnet transactions.

In February 2019, Domino's Pizza, which was ridiculed as "the first to try it out", announced that it would accept payments via the Lightning Network, with transaction settlement taking less than 30 seconds. Because of this decision, more than 150 people bought pizza using the Lightning Network in the following days.

This shows that small payments using Lightning Network technology are feasible, and the public is not averse to this approach.

I have to say, the Lightning Network is really awesome.

Even if the Lightning Network fails, will we just sit there and wait for it to fail? Will the external infrastructure no longer be improved? Will super-large storage, super-speed network 5G, 6G...10G network not be gradually launched? In fact, as long as it can ensure that small and medium-sized nodes can easily participate, under the premise of ensuring decentralization and security, then the block can naturally begin to gradually expand. This is an indisputable fact.

Therefore, the situation is far from as bad as imagined. Be optimistic and you will see the light at the end of the tunnel.

This article is original to Shilian Finance, author: Suancaiyu, unauthorized reproduction is prohibited

This article only represents the author's views and does not represent the official position of Shilian Finance