When miners are "fighting fiercely", their mining machines will be shut down

At around 2:30 this morning, the price of Bitcoin dropped sharply to $6,817.1, and then fluctuated below $6,900. As of 2:00 p.m., based on the current Bitcoin mining difficulty (12,876,842,089,682 - 12.88 T) and the dry season electricity price of 0.37 yuan/kWh, the current Antminer S9i, Avalon A841, Ebit E10, and Flying Fish D18 mining machines have reached the shutdown price. Miners who depend on the price of the currency are once again facing the shutdown crisis.

The fiercely competitive mining machine market

As we all know, mining is the most profitable industry in the entire crypto market. According to CoinMetrics, the crypto mining industry generates more than $8 billion in annual revenue, of which Bitcoin contributes 75%. In the mining industry, mining machine manufacturers take a large part of the profits.

Take Bitmain as an example. Its prospectus submitted to the Hong Kong Stock Exchange in 2018 shows that Bitmain has a market share of 74.5% in the mining machine market, making it the world's number one ASIC-based cryptocurrency mining machine company. In the 2019 China Rich List released by Forbes in November, Bitmain's Zhan Ketuan and Wu Jihan ranked 100th and 200th with a wealth of 22.77 billion yuan and 12.73 billion yuan respectively, while other blockchain people are not on the list. It is not an exaggeration to say that Bitmain is a "wealth-making machine."

According to Tianyancha data, more than 54% of the companies related to mining machines were established after 2018. It can be seen that huge profits are attracting more and more people to enter this market.

The mining machine product quotation page of "Zhongguancun Online" includes 26 mining machine brands, including Antminer, Avalon, Shenma Miner, Core Motion, Wingbit, Lightning Miner, Mine Nest, Panda Miner, Zhanqi Miner, Maya Miner, Mavericks, Aladdin, StarBit, Triangle, Galaxy Miner, Snow Leopard, Flying Fish Miner, Bijin, Biostar, Dayun, Pyramid, iBeLink, Bee, Pinidea, MSI, Baika. This does not include new mining machines such as Bit Deer and Hummingbird. In the weekly popular mining machine list, Antminer and Shenma Miner have 3 models of mining machines on the list, and the rest are Core Motion, Avalon, Lightning Miner and Wingbit.

Not only are there more and more mining machine brands being released, but with the arrival of the Bitcoin halving next year, the difficulty of mining on the entire network has increased, and high-computing-power mining machines are increasingly sought after by miners and mining machine sellers. Mining machine manufacturers are also competing to release high-computing-power mining machines.

In October this year, Bitmain released two high-computing mining machines, the Antminer S17+ and T17+. Its next-generation mining machine S19 chip has been sent to TSMC for wafer production and will soon be returned for wafer verification. The S19 will use TSMC's 7nm technology, and the S19PRO performance index can reach up to 30 watts/T. According to the self-media "Wu Says Blockchain", Bitmain's 5nm mining machine chip may be the world's first packaged 5nm test-level chip. Previously, Canaan Creative had won the world's first 7nm test-level chip. At the same time, Bitmain has also launched three sales models: mining machine installment payment, mining machine leasing, and buying mining machines and giving options to seize the mining machine market.

According to media reports, Shenma Mining Machine, whose market share is expanding rapidly, had a revenue of RMB 3 billion in the third quarter of this year, and its market share in mining machines has reached 40%. Its latest generation of 8nm mining machine M30S has been successfully taped out by Samsung and is currently in the wafer return verification period. It will start mass production in the next 1-2 months, with a performance of 30-40 watts/T.

Miners have already focused on high-computing mining machines, which is actually a kind of technical competition. However, from the "book and sword feud" between Bitmain and Shenma Mining Machine, we can also have a clearer perception of the fierce competition in the mining circle.

Shenma Miner was founded by Yang Zuoxing, a former part-time employee of Bitmain, because Zhan Ketuan was unwilling to grant him 2% of the equity. In July 2017, Bitmain sued MicroBit and Yang Zuoxing for patent infringement, demanding that suppliers stop cooperating with MicroBit and demanding MicroBit to compensate for economic losses of 2.6 million yuan and 80,000 yuan in litigation fees. In early November this year, it was reported that Bitmain filed a case for infringement of trade secrets, and Yang Zuoxing was taken away by Shenzhen police to assist in the investigation. Recently, Yang Zuoxing was approved for arrest on suspicion of occupational embezzlement.

Is mining still profitable?

Some senior miners said that the easiest thing now is mining, and the hardest thing is to persist. The payback period of mining is generally between 200 and 300 days. Miners not only have to endure 70 decibels of noise 24 hours a day, but also have to bear the psychological pressure brought by the unpredictable market changes.

In order to make profits from mining, the factors that miners can control are costs, including electricity, mining machines, labor, land rent, etc. Among them, electricity and mining machines are the most important. Low electricity costs and mining machine prices can help miners shorten the payback period, and then make more investments in mining and gain more benefits.

Based on the given data, Twitter user "Bitcoin Theory" calculated that the mining cost of one Bitcoin is about $6,603. As long as the Bitcoin price is not lower than this value, miners will be profitable, but this break-even price is not low.

The fate of mining machine manufacturers and miners is closely linked. Once the price of coins plummets or other unfavorable factors occur, the interests of miners and mining machine manufacturers will be threatened, and the uncertainty cannot be prevented in advance. This is also the reason why "mining machine giants" such as Bitmain, Canaan Creative, and Ebang International have transformed and listed.

However, Bitmain has failed to go public three times, and its "unstoppable internal strife" is also consuming the company. Canaan Creative's stock price was nearly halved in less than a month after it was listed on the Nasdaq on November 21. Ebang International, which was previously listed as one of the "three giants of mining machines", has already been squeezed out of its market share and is currently preparing for its third impact on the capitalist market, but cannot produce competitive mining machines.

At present, the trend of "centralization" of mining power is becoming more and more obvious, and the future of the digital currency mining market may be in the hands of a few companies. At the same time, as the mining market matures, many new business models have emerged. For example, in the cloud computing power mining model, users do not have to directly conduct mining activities, but can earn Bitcoin mined by the corresponding computing power by purchasing computing power contracts. More new ways of playing may be born in the future.

However, the mining industry is in its growth stage and there are still many possibilities in the future.