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Author | Blake, Xinchen Produced by | Gyro Finance APP At the recent Global Digital Mining Summit held by Bitmain in Frankfurt, Germany, Gyro Finance interviewed Yu Wei, the first person in China's mining field, former head of Bitmain's mining field, and founder of Zhijianxinyun . As an old man in the mining circle who has experienced bull and bear markets for many years, he undoubtedly has extremely rich mining experience. During the conversation, Yu Wei was very frank and output a series of real, down-to-earth and interesting views on both the current situation and the future of the mining circle. The following is the full interview: 01 Leaving Bitmain Gyro Finance: You used to work for Bitmain, but now you have started your own business, Zhijian Xinyun. Can you tell us why? What is Zhijian Xinyun mainly doing now? Yu Wei: It can be said to be some personal reasons. In fact, many people have asked this question because Bitmain has undergone some changes from the end of last year to the beginning of this year. In fact, there are many reasons for leaving Bitmain. As you all know, this year Bitmain has made a lot of decisions about mining farms. The mining farms have basically been cancelled from Bitmain's main business. Since I am in charge of the mining farms, it is natural that I will not be able to achieve good results. There are also some personal reasons for leaving Bitmain. I feel that I still need to do something!
02 Mining is a business Yu Wei: After leaving Bitmain, I thought about it for a long time, because I started mining in 2012. At the peak in 2015, I accounted for 5% of the global computing power. After thinking about it for a few months, I realized that mining should actually change. We should really start to adjust from this standard and treat mining as a career instead of a speculative thing . At this time, I thought about the many problems faced by mining farms. Should I have such a vision and such a goal to lead my team? To truly play a role in the entire mining ecosystem? Then we set up a company to focus on resource construction, operation and maintenance, and cloud services for mining farms. We want to create a closed loop so that people who want to mine can easily invest in it, and all their investments are safe and reliable. In the future, it can obtain its own bitcoins through cloud computing power, which is 100% transparent and secure. I think it needs such a platform. From the current point of view, many projects that I will not comment on, which use various forms to attract traffic to make money and quickly attract money, will definitely be washed out. Because it does not have sustainable survival ability, it only obtains some of its own wealth in the short term. In the entire industry, what you may have heard of now are scams, various pits and various problems. Zhijian Xinyun is to allow more people to participate in this mining business. The only real economy in the blockchain world is mining. So how to make mining incremental? The entire mining community needs to establish a standardized and disciplined environment. So we are doing this.
03 Industry development requires competition Gyro Finance: What is the current relationship between Zhijian Core Cloud and Bitmain? You just mentioned the mining farm operation and maintenance services. It is understood that Bitmain is also doing similar things. Are you worried about the competition between the two? Yu Wei: I think competition is a good thing. If you don’t compete, how can you know who is doing better? I have full confidence in myself, so no matter if I was the first to build a mine, all the mines that can be seen now are based on my learning. If you ask everyone in the mining circle, they will know. I think it doesn’t matter, as long as you have a good direction, it is good. What you need is to make the entire industry healthier, so you should have such a mind, and we really want to lead the development of the entire mining industry in the next ten years. So I am not worried about such things.
Gyro Finance: What do you think are the differences between Zhijianxinyun and Bitmain in terms of mining farms? Yu Wei: Our differences are huge, because Bitmain's core is still its chips, AI, etc. Mining is not what it is good at, because building a mining farm and mining, what is it? It is very fast and very flexible. Bitmain is a big company, and it has many limitations in the process of doing these things. It is not as flexible as a mining farm. Those small companies that run mining farms, they just do it today, because mining farms have huge risks. For a listed company, it will strictly control many venture capital investments, so it is not flexible. For us, it does not have a huge impact on us, because its main industry is still making chips and selling mining machines. We just need to provide the services we should provide .
Gyro Finance: Can it be said that it is a relationship between big and complete and small and beautiful? Yu Wei: This can be said this way, and it can also be understood this way, and our business lines will be somewhat different.
04 Flood season is not a life-saving straw Gyro Finance: In the first half of this year, many people entered the mining industry due to the flood season. Now that the flood season is over, what should these new miners do? Yu Wei: Actually, the number of new miners this year is relatively small. It can be said that new miners have been exhausted, because in 2017, the huge buyers were all new miners. There are actually very few new miners. In fact, before the flood season in March, I said at the miners' conference that newcomers want to mine. If you have good resources, a relatively good site, and low electricity prices, you can buy a mining machine to mine. If not, just buy coins. You know that the coin is going to rise, and it has already told you 100% of the signal, so you just buy the coin. At that time, many people listened to him and bought coins. Later, they told me that I really rose a lot, and my mission this year was completed. I finished it, and it was fine, just sell it. I think the whole flood season and dry season are not affected, the main factor is the electricity price. To be honest, it is a problem of the thinking angle of the mining people, because why do they treat it as a speculative thing? So I think this logic is wrong, who will only run a physical business for half a year. If you think about it this way, if you are speculating, then just buy the coins directly, and wait for a few years to see if you can find them. They will definitely rise. If you always think about what will happen in half a year, what are your risks, because the iteration of mining machines is to solve your electricity cost problem. The elimination of S9 is inevitable. If you can't afford it, you can change it. It's just now. S17+ is out, it's just for survival. So this kind of thing, flood and dry, it will not have a huge impact on the computing power. There may be some fluctuations in the short term, but after the elimination, new machines will fill in.
05Four major factors in industry development Policy factors Yu Wei: How does the price of the currency come about? I think it is like what I have said before, one of the four potential factors is policy. If you don’t have a strong policy, traditional funds can’t come in. If there is no large amount of funds coming in, it will not increase the price of the currency. Because the coins you have mined now are just a small part of the 21 million bitcoins, even if it is halved or something, it will not affect it.
Gyro Finance: Some people previously said that the price of a currency is positively correlated with computing power, while others said it is negatively correlated. However, no one can clearly explain the relationship between computing power and the price of a currency. What do you think about this? Yu Wei: But the two must complement each other. The price of the currency must be affected by the computing power. When the computing power goes up, the price of the currency will naturally go up. Otherwise, no one can survive. Because when the price of your currency is falling, the computing power will naturally fall.
Gyro Finance: The cryptocurrency community is very much looking forward to the Bitcoin halving, hoping that it will bring about a wave of market conditions. From the perspective of your mining community, what is your opinion? Yu Wei: For us old miners, it has no impact. We have already mined so much. Whether it is halved or not, the only impact on you is your income. Bitcoin becomes more precious. It is more difficult to obtain, and its price will be affected to a certain extent. Maybe many people will use it as a gimmick. It will rise if it should rise. It will fall if it should fall. It is not because of the halving that the price of the currency will definitely rise. You see, everyone said that Litecoin would rise after halving, but now it has fallen , so the rise and fall of its price has nothing to do with halving.
Environmental factors Yu Wei: This environment includes the entire mining farm, whether the environment has its ecology, whether some related services have been established, etc. If you don't have these things, even if there are policies, it will be difficult to promote them. If there are really policies, I believe that there will be more and more large-scale ones, and not just a few small groups of people like me will participate, there may be more large institutions and enterprises, and they will all participate in this matter.
Basic factors Yu Wei: The third one we think is the foundation. What is the foundation? It depends on the foundation of the three circles of the mining coin chain. How do you build a more transparent mining farm, how do you build a compliant project selection project, and how to implement the entire chain are all the foundations . Who does the work? You still say that many companies and many people do some things. Through this policy, you have policy-related legal things, including then he will conduct an assessment and research on his environment and his foundation .
Landing factors Yu Wei: Only when everything is truly done well can it be officially implemented. Which ones are doing practical things? They wanted to do practical things, but they can't do practical things. They can make a few hundred million by launching a project. What practical things can they do? You see, people in the cryptocurrency circle are much richer than those in the mining circle. After the leeks are harvested, they all leave. Many people don't return to China. It's just such a simple truth. Therefore, the entire policy, environment, foundation, and implementation must be in place before we can start.
06 Policy Risk Gyro Finance: You just mentioned the policy aspect. Some time ago, Inner Mongolia’s policy said to restrict mining. Do you think there will be policy risks in domestic mining in the future? Yu Wei: I think the biggest problem with the policy is that the entire mining industry does not treat this as a business, but as speculation. So it has a negative impact on the whole. All kinds of problems such as fraud and deception are irregular things, very bad things. These things still need to be influenced through our other environmental foundations to have a positive impact, and then influence some policy directions. For example, to build a supercomputing center, put mining in the supercomputing, formulate its standards, and improve the legality and compliance of the entire project. These are all things that need to be done, but no one has done it yet, because everyone thinks it is speculation.
07 Differences between domestic mines and overseas mines Gyro Finance: Now many mine owners are planning to set up overseas mines. What do you think are the differences between domestic mines and overseas mines? Yu Wei: North America is a good place, but I personally do not recommend countries like Iran. Many people have asked this question. I don't dare to use electricity that costs only a few cents. It has too much uncertainty. No matter how you do this business, as long as you are profitable, someone will know it. He will not give you this piece of cake for free, which is not reasonable. Business must be reasonable. He makes money, you make money, and the business is sustainable. Of course, I think North America is still good in this overseas market. The spirit of contract is better. There is no spirit of contract in Central Asia. If he signs an agreement, at least you can still find him . He just needs to execute it according to this. Everything in Central Asia is uncertain and meaningless. So we still have to find a place with a spirit of contract. Then there are some other factors in the mining field, such as the specific situation of electricity, the power infrastructure, our entire construction cost, electricity price cost, your operation and maintenance cost, and personnel cost. You have to calculate all these things. In fact, mining is legal in the United States, and he has to pay taxes. The overall cost is not low, so its construction cost is very high, so not everyone is willing to invest.
Gyro Finance: What about Canada ? Is it because of the electricity price advantage? Or is it the business environment itself, like the spirit of contract you just mentioned, or is it other aspects, such as policies? Yu Wei: There are many aspects, because Canada just canceled its carbon tax this year. The previous electricity price had no advantage, because the cost of building a mine in Canada is higher than in China, about five to six times , and it will take a long time to recover. So after the carbon tax was canceled this year, many people are still considering this issue. The main reason is that China's policies are unclear, not because Canada is better than China. In fact, I think that from the current point of view, there will be no decision. If you want to make a one-size-fits-all policy, you should have done it earlier. Now that you have money, you are also contributing to the Chinese economy. All the excess electricity in China is consumed by you, and you have paid the electricity bill and have not stolen it. I think it is normal.
08 Is decentralized mining the future trend? Gyro Finance: Some people say that decentralized mining will be the trend in the future. What do you think of this view? Yu Wei: All mining has always been decentralized, and decentralization actually means de-Sinicization. Previously, a guest actually vaguely mentioned that it was necessary to de-Sinicize. You know, right? Now the computing power is decentralized, and it is not owned by one person. Although you can see the mining pools, such as Biyin, ANTPOOL, and F2Pool, you have to look at the top five mining pools , which account for so much computing power, and they are not owned by one person, so it is decentralized. To put it bluntly, it means that the computing power should be de-Sinicized. There is nothing wrong with this statement. I think it is a good thing that more foreigners overseas have computing power, which is more conducive to development.
Gyro Finance: Is there still a risk of highly concentrated computing power? For example, if Bitmain suddenly switches computing power from BTC to BCH , and then BCH is pulled up immediately, will there be such a risk? Yu Wei: Bitmain will not do such a thing. Didn’t Jihan say it today that the community should just develop BCH on its own? Bitcoin is decentralized, and so is BSV. It must be decentralized. So this statement should not be decided by a certain person, a certain company, or a certain team. I think this is normal. But how to let more foreigners have computing power is something they need to think about.
END Gyro Finance: Now it is only two months away from 2020. What is your judgment on the industry in the coming year? Can you tell us? Yu Wei: I think we should talk about the mining circle first. We have just talked about the four major mining circle foundations. We should establish better environmental standards to make the investment in the entire mine transparent and attract more people to participate. Only with these foundations can there be better coin prices. Will the halving have a direct impact on the price of the currency? In fact, it is not the core factor. I think the core factor is that the halving will become a point of speculation. The core factor is still the four factors I just mentioned and all the policy environment foundations. The purpose of landing includes the landing of many software, all these applications, and all related things. The bull market should last for a year. As for the price of the currency in 2020, after my personal calculation, the total computing power of the chips that can be made before the halving next year should be 160EH. If the current computing power is used, the price of the currency will inevitably rise to about $20,000 if all 160EH are pushed up. According to the output of Samsung and TSMC, many manufacturers can calculate these things. If the price of the currency does not have this upward trend, many people will not tape out the chips, or some old chips from the past, and will not make them after they are finished. Then Samsung and TSMC will throw a huge amount of production capacity to mobile phones, because the output of mobile phones is very large now. With the trend of rising currency prices, everyone will invest in more chips. With chips, many will make supporting equipment for the machines produced by these chips. With these supporting equipment, all mining farms will build so many mining farms to provide supporting equipment for these machines, then this market will make an increment, and then more funds will enter, and all investments will be incremental. The dealer will certainly think about how to increase the increment so that the currency price can truly be prepared for the next bull market and all computing power can be prepared for the next bull market. Therefore, the development of the mining circle and the currency price are inseparable.
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