The currency market is slightly cool and the mining industry is storing up for winter

Yesterday, the news that Bitcoin mining machine giant Canaan Creative will go public in the United States in November spread widely in the cryptocurrency circle. It is reported that the overall valuation of Canaan Creative is at least 2 billion US dollars. In this regard, Kong Jianping, co-chairman of Canaan Creative, said "no comment".

Just half a month ago, the price of Bitcoin fell below $10,000, once dropping to $7,700, and now hovers around $8,500. In the past two weeks, people in the cryptocurrency circle have already felt the slight cooling of the market, and some exchange practitioners predict that the cooling may continue until the end of the year.

Everyone knows that the market is cold, and the first to bear the brunt are the mining industry on the Bitcoin production side. Some mining pools have disclosed the shutdown prices of some mining machines. Compared with the industry optimism before the last bear market, this time, the mining industry's response seems much more sensitive.

It is not just Canaan's move to go public in the United States. On October 9, Bitmain and Matrixport held the Global Digital Mining Summit in Germany. Half a month ago, CoinIn Mining Pool, together with mining machine manufacturers such as Bixin, MicroBit, and Canaan, also held a summit in Chengdu.

At the two events, people from the mining circle showed up one after another, revealing their intention to work together to cope with market changes and discuss industry plans.

Some mining machines hit shutdown prices, and manufacturers are rushing to launch new products

The news of Canaan Creative's listing in the United States successfully stole the spotlight from Binance's opening of OTC.

On October 10, it was reported online that Canaan Creative will be listed on the Nasdaq in November with a valuation of US$2 billion to US$3 billion. Although some media have obtained confirmation of the US listing from Canaan Creative insiders, the specific time has not been disclosed to the public, and the company's co-chairman Kong Jianping also said he "would not comment."

If the news is true, Canaan Creative has achieved its wish and become a Chinese company involved in Bitcoin mining machine business accepted by the traditional capital market. Previously, this mining machine giant, which was established six years ago, tried to enter the capital market in June 2016, August 2017, and May 2018, but failed to succeed in "backdoor listing", listing on the New Third Board, or even going to Hong Kong.

In the past three years, Canaan Creative, which has been busy with capital operations, has also experienced the ups and downs of the cryptocurrency market. It has experienced the calm period when Bitcoin was trading sideways, the eve of the rise in the price of the currency, and the coldness of the bear market as it entered deep waters.

Half a month before the news of Canaan Creative's listing in the United States was revealed, that is, in the early morning of September 25, the price of Bitcoin suddenly fell below $10,000, "waterfalling" to $7,700 overnight, and has not recovered to date.

Since July, Bitcoin has started to turn downward

The next day, the founder of F2Pool, Shenyu, posted data on Weibo. Based on the electricity fee of 0.35 yuan and the currency price at that time, the Shenma M3 and Avalon A714 mining machines with a computing power of 11.5T and 7.3T respectively have reached the shutdown price, that is, the electricity cost is higher than the mining income. If the currency price does not rise, miners will lose money if they turn on the machines.

Even worse is Litecoin. On August 5 this year, after the LTC halving, the miner's block reward dropped from 50 LTC to 25, but the price of the coin has been falling since the halving. The electricity costs of Ant L3+, L3++ and other mining machines have exceeded the mining cost, and miners joked that "halving means shutting down."

However, Litecoin miner Shi Lei (pseudonym) told Fengchao Finance that the flood season has not ended in the past few days, and many people can still make a profit with electricity costs of 0.2 yuan per day. He revealed that after L3+ is combined with the mxminer power reduction firmware, the same computing power can save about 3.0-3.6 kWh of electricity per day compared to the official default power consumption.

As for Bitcoin, it is indeed far from the shutdown price at present. Data shows that the shutdown price of mainstream mining machines is around US$4,000.

People in the cryptocurrency industry are more sensitive to the chill that people in the mining industry feel. Everyone knows that when the Bitcoin market is not doing well, the mining industry, which has huge scale costs, will be the first to bear the brunt. Compared with the last bear market, this time, the mining industry seems to be more responsive.

Just before the market crash, Biyin Mining Pool, together with Bixin, Microbit, Innosilicon, Canaan Creative, and Ebang Technology, held a conference in Chengdu called "New Era Mining Summit 2019 Annual Ceremony". Sichuan, which is rich in hydropower, is the concentration of Bitcoin mines, and the organizers of the conference also brought together well-known mining pools and mining machine manufacturers in the industry.

On October 9, Bitmain and cryptocurrency asset management platform Matrixport held the second Global Digital Mining Summit in Frankfurt, Germany. The scale of this summit was more international, and overseas mining practitioners also appeared on the scene.

In the mining machine market, mining machine manufacturers have shipped a lot in the second half of this year. The revenue of Bitmain's mining machine alone reached 3 billion yuan in the third quarter. At the Chengdu Mining Conference, it was reported that 4 billion yuan of futures have been sold in the mining machine market.

Mining machine manufacturers still have no intention of slowing down. At the German Mining Conference on October 9, Bitmain co-founder Jihan Wu announced that two new Antminers, S17+ and T17+, will be officially released on October 11, Beijing time. The new mining machines support the SHA256 algorithm and can mine Bitcoin (BTC), Bitcoin Cash (BCH) and other encrypted digital currencies. They are expected to be shipped from December 1 to 10.

As the flood season draws to a close, thermal power plants face regulation

A large number of futures are waiting in line to enter the mining farm, which also means that once these mining machines are turned on, the overall computing power of the POW mechanism currency will increase, the difficulty of mining will increase accordingly, and the payback period for new miners will be lengthened.

Take Bitcoin as an example. The current price of Bitcoin is $8,533 and the total computing power is 90E. Based on this calculation, the payback period of new mining machines is about 10 months. If the price of Bitcoin continues to fall, the risk of miners will increase. In May next year, the Bitcoin mining reward will be halved again, from 25 BTC per block to 12.5 BTC. Some mining machines may not pay back their investment before the halving, and mining income will also decrease.

Captain Yu, the person in charge of the Mining Association, directly stated that if the new mining machine cannot pay back the investment before the halving in May next year, it would be better to just buy coins.

Bitcoin halving has always been seen as a positive by cryptocurrency investors. In theory, if the production quantity decreases, the market supply decreases, and the demand does not decrease, the price of BTC will increase.

However, some industry insiders are not optimistic about the judgment that "BTC halving will lead to price increases." At the German Mining Summit, Wu Jihan mentioned that it is very important for miners to have a long-term perspective. "I am negative about the halving raising the price of the currency, but I am still optimistic about the value of Bitcoin in the long run."

Seasonal changes are also a topic that miners cannot escape. Miners who rely on hydropower to operate mining machines can get cheaper electricity prices during the flood season. Currently, in Sichuan, where mining farms are concentrated, the flood season is about to end, and electricity prices are bound to rise.

The situation of thermal power in the north is not optimistic either. In August this year, a Bitcoin mining rectification document jointly issued by five ministries and commissions in Inner Mongolia circulated online. The document shows that in the first phase, from September 3 to September 25, 2019, each league and city will conduct self-inspection and self-correction, and feedback will be submitted to the Ministry of Industry and Information Technology before September 30; in the second phase, from October 10 to October 30, 2019, it will be the supervision and rectification phase. The relevant departments of the autonomous region will form a joint inspection team to conduct supervision and form a report on the clearance, supervision and rectification.

Rumor has it that Inner Mongolia cleaned up mining files

Fengchao Finance contacted the relevant departments in Inner Mongolia, and the staff said that relevant documents had indeed been issued and they were preparing to clean up.

In fact, China is including Bitcoin mining in the list of industries to be eliminated. On April 8 this year, the National Development and Reform Commission released the "Guidelines for Industrial Structure Adjustment (2019, Draft for Comments)", and virtual currency "mining", which was previously required to be gradually phased out by the policy, was also included in the elimination category and was listed in the "outdated production process equipment" column.

Soon after, Sichuan began to regulate the mines. Starting from May 27, multiple departments in Kangding City, the capital of Ganzi Prefecture, set up a working group to investigate and regulate the Bitcoin mines on the Dadu River, and some miners chose to relocate.

Miner Shi Lei told Fengchaocai that the large mines in Inner Mongolia are still running and electricity prices in Xinjiang have begun to rise. He also mentioned that the above document may only be for the National Day. However, some senior miners also mentioned that thermal power mining is not very safe. He predicted that thermal power mines may face a wave of thunderstorms next.

New capital is eyeing the "winter storage" response of old miners in the mining circle

The cryptocurrency community always expects traditional institutions to enter the market and inject funds, but the mining community has always been closed. Traditional institutions have huge financial strength, and the large-scale purchase of mining machines also means that the mining plate is shrinking, and small miners are struggling.

On September 29, Koala Finance reported that the initiator of a mine in Central Asia revealed that Hon Hai Precision Industry Co., Ltd. (Foxconn) has 300,000 mining machines in the mine. Large institutional investment in mining is gradually surpassing individual investment, and some practitioners said that mining 2.0 is coming.

However, mining professionals believe that "traditional institutions are too confident." Once the price of the currency rises, the computing power will increase exponentially. "It is really not what they think. In addition, how to build a mining farm and how to supply electricity after it is built are all very complicated. There are many people in the mining circle who enter the market with hundreds of millions of RMB, and finally leave after losing all their money."

In addition, the emergence of cloud computing platforms is also changing the mining industry. Since the beginning of this year, several cloud computing platforms have made their debut in the cryptocurrency industry. BitDeer, Future Mine, and XMX initiated by Yuhong all use the model of selling and renting computing power to attract cryptocurrency investors to participate in mining. Some computing power platforms, such as Future Mine, even issued platform coins to encourage user participation.

Shi Lei believes that the impact of these platforms on the mining circle is not significant. He explained that the computing power of cloud computing platforms also comes from large mining farms, and they just package the computing power into "financial products" and sell them to novices at a premium, "and many of them are pyramid schemes."

Ren Silin, business director of Future Mine, said that Future Mine cooperates with large enterprises or local governments to obtain relatively cheap electricity in the market, builds mines in compliance with regulations, and even produces mining machines by itself to achieve the lowest overall cost and maximize profits. "Future Mine is also expanding its mining industry as much as possible within its own scope to allow more people to participate in Bitcoin mining."

It seems that small investors can also participate in mining with the help of cloud computing platforms, but how to deal with the risks?

In response to this, Ren Silin said that if the price of the currency falls to the mining cost price, the possibility of downtime cannot be ruled out, but the user's contract period will be extended to control user losses.

The sharp drop in Bitcoin has revealed the cooling of the market. Whether it is Canaan Creative, which is listed in the United States, or Bitmain, which is stepping up the launch of new mining machines, including those mining pools and miners who are holding meetings to "band together", the mining industry at the Bitcoin production end has shown a state of winter storage to cope with market changes.