Ant S9 has reached the shutdown price. It used to make 90 yuan a day, but now it makes 6 yuan.

Source: BBNews

On November 25, F2pool officially released a Weibo post saying, "Based on the current difficulty of Bitcoin mining, calculated at an electricity price of 0.38 yuan per kilowatt-hour, six Bitcoin mining machines including the Ant S9 have reached the shutdown price."

On that day, the price of Bitcoin was indeed not optimistic. In a short period of time, the price of Bitcoin fell below the support level of US$7,000. The price once fell to around US$6,700, and the 24-hour decline reached more than 7%. Coin data showed that on the 25th, there was a BTC liquidation of US$52.05 million in half an hour.

According to data provided by F2pool, the shutdown price of the Antminer S9 mining machine is 47,774 RMB, or about 6,786 USD. If Bitcoin is lower than this price, the income from selling coins by miners will not be able to cover the cost of the mining machine, the maintenance cost of the mining machine, and the electricity cost.

The lower the shutdown price of the mining machine, the stronger the miners' ability to resist falling coin prices.

The shutdown prices of the other five mining machines listed by F2pool are all higher than that of Antminer S9. BBNEWS found through calculations that although the price of Bitcoin has rebounded in the past two days, the four mining machines of Shenma M3, Avalon A741, Ebit E9+, and Antminer T9+ still reached the shutdown price, while Avalon A821 and Antminer S9 are just hovering on the dividing line between loss and profit.

Information source: Weibo

01. The current situation of miners from Antminer S9

The fact that the Antminer S9 has reached the shutdown price has caused many people in the cryptocurrency circle to sigh. It is understood that the Antminer S9 is recognized by the industry as the most cost-effective mining machine, which provides about 60% of the computing power for the Bitcoin network. According to the information on the F2pool official website, under the current computing power, based on the electricity cost of 0.28 yuan/kWh (in fact, the flood season has passed, and the current electricity cost is much higher than this), this model of mining machine can only bring miners 0.88 US dollars (more than 6 yuan) in income per day.

Source: F2pool

In April this year, Mr. Modern, a netizen, published an article titled "How many bitcoins can an Antminer S9 mine in a day? What is the computing power of the Antminer S9?" He also mentioned that "based on the current currency price, the net profit of an Antminer S9 mining machine is about 90 yuan per day."

The market conditions determine the life and death of miners.

In April this year, the market saw a small bull run, and miners used Antminer S9 to mine, and each mining machine earned more than 90 yuan a day. Now, miners have almost no income from using the same mining machine. In April, the price of second-hand Antminer S9 mining machines rose along with the price of coins, reaching 3,000 yuan per unit, and now the price is around 400 yuan per unit.

The "king of machines" Antminer S9 is facing the era of elimination. Old miners are reluctant to give up, while new miners are more unwilling to give up. The mining machines they bought at a high price in April have not yet recovered their investment, and they are about to fall into the situation of "losing money as soon as they start the machine".

The Ant S9’s near-shutdown price also sends an important signal: the mining era is about to reach a turning point.

Network data shows that the price of Bitcoin has fallen by more than 30% in the past three months, while the difficulty of mining on the entire network can be said to be in a continuous growth. In the past three months, the average computing power of the entire network has increased by 27.5%. In other words, without considering other influencing factors, the efficiency of miners in mining Bitcoin has decreased by 27.5% in the past three months, and the rewards obtained from mining have been converted into legal currency, and the income has also decreased by 30%. In summary, miners' profits have shrunk by 49%.

Bitcoin network computing power change curve, information source: BTC.com

02. “Miners surrender”

The current situation is undoubtedly difficult for miners.

Wang Ruixi, founder of Hufu Wallet, said, "The current mining competition is very fierce. For miners, the payback period is getting longer and longer, from 30 days to 60 days at the beginning, and then to 90 days. Now it may not be possible to get a payback in a year."

As computing power increases, the rising difficulty of Bitcoin mining across the entire network has the tendency to squeeze retail miners out of the market. Mike Edwards, CEO of a British mining company, said, "It has become extremely difficult for individuals and small mining companies to remain profitable because the current mining system is only beneficial to large-scale mining."

Indeed, the mining equipment used by small miners is often outdated. For example, some miners still use models such as the Antminer S9 mentioned above. In addition, small miners usually do not have access to cheap electricity, nor can they benefit from economies of scale like large miners.

As mentioned by many media, in the face of a sharp drop in mining revenue, there is a trend of "surrender" among small and medium-sized miners in the market. Previously, a large number of miners gathered to mine, pushing the computing power of the entire network to a high point (it is still at a high point at present), but now, small and medium-sized miners may shut down at any time, which means that the computing power of the entire network may show a downward trend.

The article “What is ‘miner capitulation’ and what impact does it have on the market?” points out that the network’s computing power growth rate has been running sideways below 0.5% for more than a week, but has not fallen below 0. “This shows that miners have been struggling for a while and have been slow to make a decision on whether to ‘capitulate’ (shut down and sell Bitcoin).”

In fact, the recent price drop has caused some miners to surrender. According to BTC.com data, the total network computing power has reached a reversal point recently.

On November 7, the total network computing power dropped by 7.1%. The last time such a large drop in computing power occurred was in November 2018. Around October 2018, Bitcoin fell to more than $6,000, after which a large number of miners "surrendered", with 600,000 to 800,000 Bitcoin mining machines shut down. After that, the impressive bear market from the end of 2018 to the beginning of 2019 appeared.

On November 7, the total network computing power fell by 7.1%. Information source: BTC.com

The situation this time seems similar. The falling price of coins has deepened the plight of small miners. Mining cannot make a profit. Some small miners choose to shut down or even sell the mined bitcoins at a low price. The selling pressure from miners may cause the price of coins to fall further, thus forming a vicious cycle until it reaches the bottom.

From the current perspective, miners, especially small and medium-sized miners, are in the downward phase of this adjustment cycle, and they are undoubtedly suffering. As one practitioner said, "Bitcoin prices have already halved before mass production." Small and medium-sized miners are under the heavy pressure of a sharp decline in coin prices and fierce competition in computing power.

03. How to “survive the winter”

However, even though the current situation is not good, the possible Bitcoin halving in May next year is still attracting many miners to persevere and get out of this dark period. They are trying to survive the cold winter in various ways.

It is understood that some miners have shut down their Antminer S9s, "because they can't afford the electricity bills, so they shut down all the machines." Other miners are selling their S9s, "while they can still make some money, they should sell them quickly." They want to stop losses by transferring their machines, and use the funds they get back to buy machines with better performance to improve mining efficiency and prepare for the halving next year.

Some miners choose to buy coins. For example, the head of a mining community said, "If the new machine cannot pay back before the halving in May next year, it is better to buy coins." "Buy some when the price is low, and sell it when it goes back up. You can make some money both ways, which is higher than the current mining yield. I plan to wait until the price goes up before turning on the machine."

Of course, some miners decided to bear the short-term losses and hold on to their coins. "The halving will happen next year, and I can't bear to sell."

Miner Xiao Ma has thousands of mining machines, all of which have good performance, but the recent sharp drop in the price of coins has caused a significant reduction in revenue. In order to bear the high electricity costs and mining machine maintenance and labor costs without selling coins, Xiao Ma found some Bitcoin lending and storage financial management platforms. He pledged 100 Bitcoins and borrowed more than 200,000 USDT to pay these expenses.

This type of mortgage business is the fastest growing financial business direction in the bear market. It can not only protect the bitcoins in the hands of miners, but also bring interest income to the platform.

In addition, as mentioned above, the industry environment is severe, and small and medium-sized miners are experiencing a reshuffle and elimination. "Miners invest real money, so they are most concerned about the payback period. Once the shutdown price is reached, many miners will choose to 'close down'."

Some miners who are unwilling to be eliminated will save themselves by going to sea. Iran is one of the destinations for these miners. It is understood that this country has abundant natural gas resources and the cost of electricity can be as low as 0.4 cents per kilowatt-hour. Compared with the cheapest 0.15 cents per kilowatt-hour in China, mining here can save miners about 73% of their electricity expenses.

But this does not mean that miners can go to Iran to mine without restraint. According to information in July this year, Iranian officials said that although local laws do not prohibit crypto mining, the government and the central bank have ordered customs to prohibit the import of mining machines. A miner also said that "I was pulled into an Iranian mining group before, but after the group was established, there was no movement."

As Bitcoin rises and falls, miners are the first to experience the ups and downs of the industry. Now that the market is in a trough, the miners are moving forward alone. In this process, some have quit midway, while others have seen hope in the cold winter.