The battle between the mining machine godfathers: the preacher, the dictator and the prophet

Original title: "Evangelist, dictator and prophet: Feng Yun in the mining industry"
Author: Investment Research Duo

I believe in America. America has made my fortune.

The Godfather opening

The "America" ​​in the Godfather's opening statement was secretly mistranslated as "mining machine", which is quite appropriate. The mining machine industry has been turbulent for seven years, and there has never been a lack of blood and rain. The competition for mining companies to go public is the competition for the "Godfather" in the mining industry.

The mining machine companies that have applied for the main board, GEM, and NEEQ, and have been listed in Shanghai, Hong Kong, Shenzhen, and the US stock exchanges, and have gone through equity restructuring and backdoor listing, are just like the Mafia companies that wander on the gray edge, and they dream of becoming regular soldiers. It is the fate of mining machine companies to go public after breaking their heads and bleeding.

The losers have no choice but to make a comeback or be ruined. There is no third way.

Zhang Nangeng of Canaan Creative, Hu Dong of Ebang International, and Wu Jihan of Bitmain, the three famous mining machine families, are all losers. On this road paved with blood and bones, it is still unknown who will be the "Godfather".

1 Confrontation

"fraud."

When asked about his evaluation of Zhang Nangeng, Wu Jihan was ruthless. "He doesn't follow business rules and has no business credibility at all."

It is understandable that Wu Jihan denounced Zhang Nangeng. In 2012, Wu Jihan invested in the stocks of FC and made tens of millions of dollars. Having tasted the huge profits and dividends of mining machines, Wu Jihan decided to go all out and enter the mining machine market, ordering a batch of Avalon chips developed by Zhang Nangeng. Unexpectedly, when Wu Jihan's mining machines were crying out for food and waiting to make a fortune after assembling the chips, Zhang Nangeng's chips were delayed.

The mining machine could not be delivered, and the arrogant Wu Jihan could only bow and smile, enduring the anger and saliva of customers and investors. Zhang Nangeng and this shame were engraved in Wu Jihan's heart from then on. The rift between the two was sown here.

Wu Jihan, who was born as an investment manager, is the Chinese translator of the Bitcoin white paper and the most loyal evangelist of Bitcoin. "This is a financial free port, a duty-free trade zone and anarchist paradise on the Internet." For the young Wu Jihan, freedom is a belief. He criticized Ripple on Weibo for not being open source and being a centralized currency; he said frankly that he hated Apple and that only cool projects like Google X could truly change the world.

I wonder if it hurts Mr. Wu to be hit in the face by the iPhone now?

At the beginning of 2012, our other protagonist Zhang Nangeng was still studying for a doctorate at Beihang University. He majored in integrated circuits, watched anime in his spare time, and occasionally installed a few FPGA mining machines to sell to foreign companies to earn some pocket money. His life was leisurely and comfortable, a bit like "picking chrysanthemums under the eastern fence, returning to see the southern mountains".

However, his comfortable life did not last long. In June 2012, Butterfly Labs of the United States announced the release of ASIC mining machines with stronger performance and lower cost. In the blink of an eye, Butterfly's wings completely cut off Zhang Nangeng's source of income.

Zhang Nangeng was originally an integrated circuit engineer, and his ability to develop a highly difficult FPGA mining machine was enough to prove his R&D skills. Zhang Nangeng looked at the introduction of the ASIC mining machine and figured out something was wrong: the R&D difficulty of this thing was much simpler than that of the FPGA mining machine.

Zhang Nangeng, who discovered this secret, slapped his thigh, shouted "for world peace", and rushed to the front line of research and development. No one expected that he would actually develop the world's first ASIC mining machine.

It is really difficult for Pumpkin Zhang to shoulder the heavy responsibility of world peace at such a young age.

However, starting a business is never a one-shot thing. Technical experts are great, but what you are doing is mining machines. The mining machine business is a capital-intensive industry. It requires huge cash flow in the early stage, high leverage and high debt to afford mining machines. The production lines and parts of mining machines require real money, and further research and development is a bottomless pit that eats up money. Without money, how can you make mining machines? Without mining machines, what can you sell?

Man proposes, God disposes. There is a line in the song "Beijing Welcomes You": Anyone with a dream is great. When selling mining machines, Zhang Nangeng proposed a "zero deposit super leverage": pay a deposit first, we will use the deposit to buy parts to build mining machines, and no refunds will be accepted for any reason. No guarantee, no customer service, no products at all. It is a complete bully clause, you can't get anything you want, you want to pay first, and you deserve to be cheated.

This is probably the most powerful party B in the history of China and the world. Even Guangguang Media feels inferior to it. Is it selling mining machines? No, it is selling dreams.

Under such conditions, every rational person who considers the balance between risk and return will frown. But history tells us that rationality and getting rich quickly are naturally opposite. The Avalon mining machine is the world's first ASIC mining machine. Zhang Nangeng adopted the method of hunger marketing. It was hyped up to a sky-high price as soon as it was released, and gained fame and fortune overnight. Lei Jun almost shed tears after watching this marketing, and sighed, "The Yangtze River's back waves push the front waves."

Interestingly, after making all the money, Zhang Nangeng took the initiative to give up the sale of the entire mining machine, took the initiative to open source all hardware solutions, and specialized in chips. This approach is exactly the same as the United States strangling the chip industry and leaving other low-profit links to others. Zhang Nangeng initially chose to sell mining machines on Taobao. His Taobao profile picture was a still of Cao Cao killing Yang Xiu, with a sentence on it: I will take care of your wife and children, don't worry about it.

We will mention later that Zhang Nangeng did get involved in the subsequent Sino-US chip war, but let’s put Zhang Nangeng aside for now. The split of mining machine power is like a windfall for other players. It was at this time that Wu Jihan took a fancy to Zhang Nangeng’s second-generation Avalon mining machine. The imagination was beautiful, but the chips could not be issued. A black pot came from the sky and stuck firmly behind Wu Jihan.

Compared with Zhang Nangeng, Wu Jihan entered the mining machine market a step later and was tricked by the former. Wu Jihan was angry. Wu Jihan, who has a baby face, is not as harmless as he looks. The word "grudge" best describes him. Old Wu was fed up with being controlled by others, so he decided to make his own mining machine. One day, Old Wu brought in Zhan Ketuan, whom he met on the street corner, as a technical partner and said to Zhan: "We are poor and have no money to pay you. But if the chip is successfully developed, I will give 60% of the shares to the entire R&D team."

At the end of 2013, Bitmain's first mining chip BM1380 was launched; and Zhang Nangeng's Avalon mining machine, which was priced at more than 9,000 yuan, was sold for up to 400,000 yuan. Wu Jihan and Zhang Nangeng's entrepreneurial fire was burning brightly. In 2013, when the mining machine market was flourishing, everyone was eager to get a share of this lucrative market.

But the crisis is quietly approaching, an industry depression is brewing, and the war between Wu Jihan and Zhang Nangeng has just begun.

2 Winter

The cold winter came suddenly and no one was prepared.

In December 2013, the central bank and five other ministries and commissions issued the "Notice on Preventing Bitcoin Risks". The three-year long bear market began. As the founders of the two major empires in the industry, facing the cold winter, Zhang Nangeng and Wu Jihan took different paths.

Wu Jihan, who was born as an investment manager, has faith in Bitcoin. With a solid financial background, Wu Jihan is a believer in the industry cycle theory and firmly believes that the cold winter will filter out players who are not firm in the mining industry and do not have sufficient funds, leaving a few followers to enjoy the most fruitful fruits.

In 2015, Wu Jihan said to the media with a stern face: "The low price of coins is also a good thing. Only competitive manufacturers can survive." He said this with full confidence, but Wu Jihan's look with his head down and a cold face reflected his hesitation.

The word "Ji Han" may be a kind of fate. The cold winter of the industry chilled Wu Jihan to the core and changed this romantic student who once devoted himself to liberalism.

During the cold winter, Bitmain surpassed Canaan Creative and established an unfathomable monopoly barrier. Wu Jihan was crowned the king and achieved the dominance of mining owners. Back then, Wu Jihan denounced the closed-source Ripple currency as a shame for the industry; now Wu Jihan has changed his position: "In China, open source culture is not popular. I can't understand it myself."

The person who called others a liar eventually became a liar himself.

Wu Jihan, who was bloodthirsty in the sea of ​​blood, went from being a leader of free will to slowly moving towards the road of dictatorship. Old Wu, who holds the power of life and death, began to become irritable and easily angered. When the Hong Kong consensus with the Core development team was rejected by the other party, Wu Jihan completely "expelled" the Core development team that slapped him in the face and refused to let them enter his consensus meeting; when Mr.Hold jokingly wrote fork as fuck, Wu responded sharply with "fuck your mother if you want fuck". Liberalism? That's a trick to deceive young people. An eye for an eye and a tooth for a tooth is Wu Jihan's life creed.

In the debate over Bitcoin expansion, Wu Jihan did not support hard forks at first. But in the end, he pressed the "nuclear button" of hard forks. Because the computing power in his hands is the strongest weapon to launch forks and grab profits. At this moment, Wu Jihan is destined to become the most controversial person in the history of the industry, either Judas, the traitor of Bitcoin, or Jesus, the resurrected Father.

It's just that Wu's employees suffer because they are under 360-degree surveillance 24/7 and their speech and thoughts are controlled. Wu is not like a hegemon, but more like a tyrant.

On the other hand, during the years when Wu Jihan worked hard, Zhang Nangeng fell into stagnation. The three-year cold winter almost squeezed Canaan Creative dry. Canaan Creative, which was once just one step away from supreme glory, is now penniless. Zhang Nangeng has no other choice but to rely on investment to survive the long winter.

He found Kong Jianping and Sun Qifeng. Kong Jianping was impressed by the excellent R&D capabilities and unyielding spirit of Zhang Nangeng's team, while Zhang Nangeng, a technical person, also needed an investor like Kong Jianping who could chat over a glass of wine. The two complemented each other's strengths and made Canaan Creative a success.

The cold winter changed Wu Jihan and also revealed the hidden edge of Zhang Nangeng's sword. Compared with Wu Jihan's monopoly skills, Zhang Nangeng prefers the Tai Chi method of yin and yang. Compared with the "grudge-holding" Wu, the word "stable" fits Zhang better. An old investor described that his deepest impression of Zhang Nangeng was that Zhang once said in the bull market: "Everyone makes money, so who loses money?"

This simple sentence reflects Zhang Nangeng's deep insight into this market. Looking back, Zhang is like a prophet who holds the world in his hands. When the government was still not paying attention to Bitcoin, Zhang Nangeng made a fortune; when the "Notice" was issued to deal with the bubble chaos and put things right, Zhang had already plunged into the chip field and dug deep; when everyone was scrambling for the mining pool computing power share, Canaan Creative jumped out of this red ocean in advance and was the first to embark on the long road to listing. The big boss Bitmain and the third-place Ebang International took several months to spare the strength to submit IPO prospectuses to the Hong Kong Stock Exchange.

But even though a prophet can see the future, he cannot see when the future will come. Canaan Creative's road to listing is still a long way off.

3. Listing

In April 2018, ZTE suffered losses of more than 20 billion due to US chip sanctions. Jiang Yang, vice chairman of the China Securities Regulatory Commission, accompanied by Shao Xiangrong, walked into Canaan Creative and said to Zhang Nangeng: "No matter what your chips are used for, you are essentially a chip company. I hope you can go public in China."

In this critical moment of survival, mining companies must also take up the banner. Zhang Nangeng has wanted to go public for a long time, but has been unable to do so due to ambiguous policies. Previously, Canaan Creative had attempted to go public twice, but both failed. Zhang Nangeng had waited too long for Vice Chairman Jiang to say this.

In 2016, the Bitcoin market was at a small climax, with prices rising by more than 60% in 22 days. Shandong Luyitong Intelligent Electric Co., Ltd., a listed company, planned to acquire Canaan Creative for RMB 3 billion, which means that the latter will go public through asset reorganization. Unfortunately, the reorganization failed, and Canaan Creative's first listing came to an abrupt end. In 2017, the Bitcoin bull market came, and the price of mining machines soared. An Avalon mining machine could be sold for up to RMB 20,000. In 2017, the company's net profit reached RMB 300 million, an increase of more than 120 times in two years. Canaan Creative applied to be listed on the New Third Board, but the attitude of the regulators was not clear at the time. After three rounds of feedback, Canaan Creative still had difficulty in listing.

The second month after Jiang Yang found Zhang Nangeng, Canaan Creative submitted an application to the Hong Kong Stock Exchange. They thought they had been given the job and it would be easy to get it; but in the end, there was no news. It turned out that the financial report submitted by Canaan Creative only ended at the end of 2017. Before that, the market was in short supply and net profit increased every year. In 2018, the market changed drastically, and Bitcoin fell straight down from the altar of 20,000 US dollars, and selling mining machines became a loss-making business. They lost money on every machine they sold, and they didn't even dare to show the financial report to the Hong Kong Stock Exchange.

After the third failed IPO, Canaan was depressed for a while. In March this year, Bitcoin started an upward cycle again. The sky cleared up and the rain stopped. Canaan's financial statements looked good again. Zhang Nangeng felt that he was doing well again. On October 28, Canaan submitted an IPO prospectus to the US SEC and went public in the United States, once again striving to become the first blockchain stock.

Will Zhang Nangeng succeed this time? It's a bit mysterious. Let's wait and see how his old rival Wu Jihan is doing recently.

4 Coup

Unlike the "golden combination" of Canaan Creative and Zhang Kong, the relationship between Bitmain's Jihan Wu and Zhan Ketuan is very delicate.

The matter can be traced back to the equity distribution between the two. When Zhan Ketuan received the shares from Wu Jihan, he began to walk unsteadily. The weak steps are probably osteoporosis. Zhan Ketuan's loose bones are not leg bones, but the anti-bone behind his head. It is said that there are three ways to drink: whale swallowing, dragon sucking, and tiger swallowing. Zhan Ketuan imitated the three methods and poured all the shares shared with the technical team into his own stomach. The largest shareholder of Bitmain is now Zhan Ketuan, not you Wu Jihan. Old Wu accidentally lifted a stone and hit his own foot.

This is not the end. In 2018, Bitcoin fell from $20,000 to more than $3,000 in early 2019. As a believer in Bitcoin, Wu Jihan held high positions and suffered heavy losses. According to the prospectus disclosed by Bitmain Hong Kong, the digital currency assets on the books at the end of the first quarter of 2018 were worth about $890 million. A rough estimate is that Bitmain's digital assets evaporated by about 60%, more than $500 million.

The two co-CEOs of Bitmain, Wu Jihan is a staunch believer in Bitcoin, while Zhan Ketuan prefers AI. The two had deep grudges, and each wanted to get the other out. Wu Jihan was unlucky and was eliminated after the bear market. In March 2019, Bitmain reorganized, and Wu Jihan took some people out to start a new company. Bitmain also invested some money. In the eyes of outsiders, Wu Jihan lost, and the two did a face-saving project and broke up peacefully.

But Wu Jihan, who graduated from Peking University with a double degree, was unwilling to accept this big loss. He was waiting for the perfect opportunity. Old Wu had been struggling for six or seven years and had never been able to tolerate anyone.

Old Wu didn't have to wait too long, the answer came just seven months later.

In April 2019, Bitcoin turned from bearish to bullish, breaking through the 10,000 yuan mark. On October 24, the general secretary in Beijing emphasized that blockchain should be used as an important breakthrough for independent innovation in core technologies. Old Wu knew that his chance had come.

On October 28, when the world was focused on Canaan Creative's impact on the US stock market, Wu Jihan quietly returned to Beijing and sat back in his long-lost boss chair. The next day, Wu Jihan, as the chairman of the board of directors of Bitmain Group, the legal representative and executive director of Beijing Bitmain Technology Co., Ltd., announced the removal of Zhan Ketuan from all his positions in Bitmain.

When Wu fired Zhan Ketuan, Zhan was still the largest shareholder of Bitmain, holding 36% of the shares. He spoke freely at the Shenzhen press conference. But he was fired as soon as he walked out the door. The last founder fired by the company was a bookseller who was exposed by his wife for having a male lover.

Peking University is a magical school. The previous Peking University student was fired by a company, and this Peking University student fired the largest shareholder.

The internal fight in the company is far from over, and the two are fighting in overseas courts. But there is no doubt that this battle will be a "classic case of corporate control struggle in business history." Now, the onlookers remember that Li Xiaolai, who once said a year ago that "Buffett is not my opponent even if he plays blockchain," told the Jiemian News interviewer that the only opponent he can't beat in this world is Wu Jihan.

5. Ending

The mining industry has been full of ups and downs for seven years, and there has never been a lack of blood and rain. For miners, the few boards of the stock market are an unreachable Garden of Eden. The listing is like the forbidden fruit on the tree of knowledge of good and evil, constantly attracting the three major miners. Outside the iron railings at the entrance of the garden are piles of bones and floating blood.

The godfather battle in the mining industry is still going on. The three major families are still constantly attacking and hesitating. The preacher of freedom has gone away, and what has returned is the iron-blooded dictator and the scavenger of the coup; the wise prophet is still there, carrying a hot and unyielding will, colliding with the Truman of the new and old worlds.

The mining industry is like a place where corpses are buried and broken swords are buried. In the near future, this place may play the sacred hymn of the hero's return, and it will also surely raise the mourning movement of the legend's end.

Source link: mp.weixin.qq.com