It’s time to stop the rumors of “no one in the mine and stagnant computing power”

"I can't leave my house, I can't enter the mining farm, and the mining machines are not being delivered." Bibi News has recently received complaints from several mining machine sellers. These simple complaints reveal the unemployment dilemma that many mining machine sellers are facing. Interestingly, the problems that miners who want to buy mining machines are worried about are exactly the same as the problems that sellers who want to sell mining machines are complaining about.

The liquidity of the industry restricted by the epidemic is like an iron hand, strangling the throat of the two-way market of supply and demand in the mining industry. On the other hand, the difficulty of Bitcoin mining has risen to a historical high of 15.55T a few days ago, and the recent average computing power of the entire network has exceeded 110EH/S, which is about 10% higher than the beginning of the year.

The recent changes in the total network computing power follow the principle that data does not lie, and the mining industry seems to remain unmoved under the impact of the epidemic, with almost no impact. Which one is the true face of the mining industry that is currently colliding with the halving and the epidemic?

01Has the epidemic really put the mining industry in deep trouble?

Affected by the epidemic, well-known mining machine manufacturers in the industry issued announcements at the end of last month stating that the production, delivery, after-sales delivery and repair of mining machines have all been delayed, and the specific recovery time still needs to wait for official notification.

Earlier this month, Jiang Zhuoer, the founder of Litecoin Mining Pool, also said on Weibo that the situation on the front line of the mines was very bad, with transportation and materials cut off, personnel unable to move, and companies unable to resume work, especially in Xinjiang. Jiang Zhuoer's Weibo post was widely circulated and discussed, and for a time, many people who were not in the front line of the mining industry thought that the domestic mining industry was in dire straits.

But is this really the case? An operation and maintenance worker from a mine in Xinjiang told Bibi News, "Strict control of mines in Xinjiang is nothing new. As early as April and May last year, local authorities issued documents requiring strict management and even restrictions on mines." Regarding Jiang Zhuoer's Weibo post, the miner believes that "it is true that mining machines and mines were forced to shut down, but there are traffic controls across the country now, and mines were ordered to shut down in the minority of cases where communication was not in place." A mine owner from Yunnan also revealed to us, "Most mines were not shut down due to the epidemic, but the construction and expansion of mines were stopped."

From the voices of these frontline workers at the mines, we can roughly feel that although the shutdown of mining machines is true, some rumors on the Internet are exaggerated, and the epidemic has not caused much impact on the operation of existing mines. In fact, Jiang Zhuoer himself also posted a message shortly after that Weibo post, saying, "Only one of my dozens of mines has been shut down, and this mine is expected to be open in the near future. Mining is almost the industry least affected by the epidemic."

The picture is taken from Jiang Zhuoer's Weibo. Currently, 70% of the world's Bitcoin computing power is concentrated in China, and China's miners are mostly concentrated in Sichuan, Inner Mongolia, Xinjiang and Yunnan. The increase in the computing power of the entire network undoubtedly confirms that there has been no large-scale suspension of mining farms in these regions.

02The possibility of computing power stagnation remains to be discussed

In addition to the operation and maintenance of mining farms and mining machines, many people's attention to the mining industry is also focused on the changes in computing power before the halving. The delivery of new mining machines and the upgrade of mining equipment extended by the changes in computing power are closely related to the interests of the miners. Previously, Chen Feng, sales director of Canaan Creative, said in an interview with Babbitt, "There are not many spot mining machines in the hands of several major manufacturers, and the factories are temporarily unable to start work. In addition to logistics difficulties, it can be inferred that there will not be a large number of mining machines online in the first quarter, so the increase in computing power before the halving is likely to stagnate." Xiong Yue, director of the Bixin Research Institute, is even more pessimistic. He believes that "in the first half of this year, there should be no way to increase computing power." But in fact, as mentioned at the beginning of the article, from the beginning of the year when the epidemic began to spread to now, the increase in the computing power and mining difficulty of the entire network has not dropped off a cliff.

The recent difficulty change curve shows that in terms of computing power, the increase of 9.8% in the last month is slightly lower than the increase of 22% in the previous month, and the adjustment of difficulty has also dropped from 4.67% in the previous cycle to 0.71%, but from the change curves of the two, there is no gap in the computing power input of miners. In response to this phenomenon, Li Qingfei, CMO of Yuchi, told Bibi News that the view of stagnation in computing power of the entire network is itself debatable: on the one hand, before the epidemic, the mining machines that continued to arrive in major mines were still in the process of being put on the shelves. Although the construction of new mines was restricted, the operation of old mines could be maintained; on the other hand, the impact of the epidemic abroad was very small, so the continued increase in computing power was still possible.

An overseas mining machine dealer also revealed to us that although the start of domestic factories has been repeatedly delayed, the shipments of mining machine parts manufacturers in the United States, Southeast Asia and other places are still proceeding as planned. According to him, more than one-third of miners abroad are still using the former king of Bitcoin mining machines - Antminer S9. The computing power in the hands of this group has a lot of room for improvement and optimization. At the same time, some old mining machines that have been shut down in China have also been restarted, which will naturally bring continuous impetus to the increase of the computing power of the entire network.

However, Li Qingfei also mentioned that from a long-term perspective, the slowdown in the growth rate of the entire network's computing power may be unavoidable. After all, it is a fact that new mining machines in China are difficult to deliver, and Chinese miners are the main source of computing power. In addition, if the impact of the epidemic continues to prolong, resulting in relatively serious traffic control and logistics restrictions in the next three or four months, coupled with the impact of the dry season, the computing power may really stagnate.

03 Marketing on hold

Although the facts show that the impact on mining farms and computing power is not as serious as many people imagine, it is undeniable that due to liquidity restrictions across the country, huge resistance at the logistics level cannot be avoided.

A mining machine salesperson who was forced to stay unemployed due to the heavy pressure of "not being able to ship new mining machines" confided to Bibi News that there are many mining machine salespeople like her who are unemployed at home, and some have started side jobs and become WeChat merchants. What makes her even more frustrated is that "Bitcoin performed mediocre in the second half of last year, and I had to chase others to buy the mining machines I had. Now that the price has recovered and customers have demand, I can't ship them."

As we all know, the demand market for mining machines is directly linked to the market, and many mining machine manufacturers are betting on this year's halving. But when the halving market came as expected, the mining machines were delayed in delivery, and the pressure on mining machine manufacturers can be imagined. Zhang Qing, a mining machine seller from Wuhan Xindong Technology, said, "Because of the epidemic, the resumption of work in Wuhan is not ideal, and the progress of logistics recovery is also extremely slow.

In this case, the machines purchased by customers cannot be shipped at all, and the new machines in stock can only be shipped after the factory resumes work. However, Zhang Qing believes that although the situation is not ideal, it is not pessimistic. After all, only part of the logistics and production are blocked, and customer demand will never disappear. "How to use the machine resources running in the mine to alleviate customer demand, how to resume production as soon as possible under the tense situation and complete order delivery earlier are the problems that mining machine manufacturers must work hard to solve. Solving these problems will enable us to seize the huge market of halving." Zhang Qing said, "For mining machine companies, this epidemic is more like a reshuffle than a predicament."

04 “Flustered” Novice Miners

As for customer demand, since it is difficult for suppliers to deliver new machines in a short period of time, the demand side will naturally be more eager to see the rising mining machine profits. Especially for those prospective miners who have been waiting from last year to this year, with less than 100 days left before the halving, their urgent desire for mining machine investment is self-evident. This has also caused some "panicked" novice miners to step into the "pit".

A miner who just entered the market revealed to Bibi News that due to the upcoming halving and the recent rise in Bitcoin prices, he recently invested in a batch of S9 mining machines, but these mining machines did not bring him the expected returns. After the miner told his story, the author realized that he was probably trapped because he was too impatient, so he immediately asked him about the relevant information about these mining machines, such as hosting fees, electricity fees, and unit prices of mining machines.

The answer from the miner friend was not surprising: the unit price of his batch of S9 mining machines was 3,000 yuan per unit! As for the electricity and hosting fees, he did not disclose the details. Obviously, this miner was in a hurry to buy the existing mining machines and ignored the product identification. We can see from the official website of Antminer that the lowest unit price of Antminer S9 is only 700 yuan per unit, but his purchase price is as high as 3,000 yuan. It is undoubtedly influenced by the overwhelming news of "mining machines are difficult to ship" and chose unofficial channels. It is precisely because of his choice, coupled with insufficient prior investment considerations, that he ended up being cheated.

Due to the significant reduction in the liquidity of mining machines, it is easy to think of the huge advantages of existing mining machines. In addition, the market is good, so the number of people willing to sell existing mining machines at this time will inevitably be much less than at other times. Even those who are willing to sell will deliberately raise the unit price of mining machines, or try to exploit loopholes for benefits from other angles. Regarding this point, Li Qingfei of Yuchi expressed his advice to Bibi News, "It is indeed difficult for new miners who want to enter the market recently to find suitable sources of supply. If you can't wait for machines from official channels, you can contact to buy some machines that can be put on the shelves or directly bought and run. Of course, before that, you must ensure that the price of mining machines and electricity prices are appropriate. If you lack such resources, you can try cloud computing power with a lower threshold."