2020: Analysis of Bitcoin Mining Situation

2020: Analysis of Bitcoin Mining Situation
As we entered 2020, there were several pieces of news worth paying attention to in the Bitcoin mining industry.
First, Chris Bendiksen, director of research at digital asset management company CoinShares, expressed his views on the situation of Bitcoin mining in 2020 in the latest episode of "What's Halvening".
He believes that Bitcoin mining power will be affected by halving, and claimed: "If the price of Bitcoin remains unchanged, then we may see a 50% drop in the total network power, and some mining companies will go bankrupt. However, if the price of Bitcoin doubles, then the total network power will return to its original level."
The second piece of news is that the mining giant Bitmain has recently begun to adopt the so-called "personnel optimization plan" to cope with the new situation in 2020.
Last weekend, Bitmain CEO Wu Jihan held a meeting and asked all managers in the company to submit lists for optimization. Bitmain will hold its annual meeting on January 17, and the optimization plan is expected to be completed before the meeting. It is understood that the fundamental reason for this personnel optimization is that the mining industry is facing the pressure of Bitcoin halving, and the company needs to streamline its organization to "survive the winter" while focusing on its main business and maintaining its leading edge in technology.
Wu Jihan's return will once again bring Bitmain back on track with digital currency as its main business, and this personnel optimization plan also verifies this.
The third piece of news is that on New Year’s Day, January 1, 2020, Canaan Creative Chairman and CEO Zhang Nangeng delivered a New Year’s speech.
The end of 2019 was Canaan Creative's highlight moment. After unremitting efforts, Canaan Creative was finally listed on the Nasdaq and became the first real blockchain stock. For this reason, Hangzhou also staged a special light show to celebrate Canaan Creative's listing.
Canaan's listing not only solved the company's urgent financial needs, which will help the company survive the current severe winter, but also created history in the blockchain mining industry. However, the glamorous scene did not last long. Shortly after the listing, Canaan's stock price fell below the issue price.
Therefore, this New Year’s speech is more like a positive response from Canaan Creative to investors and the overall market sentiment.
In addition to Zhang Nangeng's outlook for the company's future, it is worth noting that he mentioned a lot about the company's expansion and R&D plans in artificial intelligence chips. For example, he disclosed for the first time the progress of the company's second-generation AI chip K510, and the chip's support for 5G, multi-channel cameras, etc., but not much was mentioned about the research and development of digital currency mining machines.
By comprehensively evaluating these three pieces of news, I can see the following impacts that Bitcoin mining may have on the market in 2020:
1. The 2020 Bitcoin halving is a severe test for all mining machine companies, and this test is more severe than that in 2019. If the market continues to be sluggish in 2020, mining machine companies will not only face the problems they faced in 2019, but to make matters worse, Bitcoin rewards will be reduced, which may lead to the closure of a large number of mines, and the demand for mining machines will be even less.
2. Bitmain and Canaan Creative have responded differently to the challenges brought by Bitcoin halving. Bitmain is more focused on the mining machine business, while Canaan Creative is actively expanding into the field of artificial intelligence. If we look at it purely from the perspective of the mining machine field, we believe that Bitmain's focus will increase risks due to its business focus, but it will also allow its technology to maintain its leading edge. It is very likely that Bitmain will launch new products with lower prices and higher cost performance.
3. For all Bitcoin investors, if we look at it in the long run, the test of mining machine companies is the welfare of investors. Because once the price of Bitcoin is lower than the starting price of the mining machine, it means that investors are buying Bitcoin at a price lower than the cost. Therefore, investors who are optimistic about Bitcoin in the long run should continue to increase their positions and grab chips if they have spare capacity, rather than miss the opportunity in vain.

Thank you for being here

Today's Fear & Greed Index (FGI) is 39

Compared with yesterday's 37, the degree of fear has weakened. The FGI index is inversely proportional to the market state, with 0 meaning "extreme fear" and 100 meaning "extreme greed."

Global Blockchain Index (GBI) 7941.73

The GBI index reflects the macro trend of the blockchain asset market. The peak index of the last bull market was 22570. The better the market conditions, the higher the index.

Risk warning: Investing involves risks. The content is only personal analysis and is for reference only. It does not constitute investment advice. Maybe what I said is wrong, so you have to be careful.

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