The dry season is approaching, will the "mining reshuffle" under the favorable conditions of halving begin?

I still remember that when the flood season was approaching in early April this year, the news of "oversupply of mining machine positions" seemed to be flying all over the place.

At that time, Chai Hua, the founder of Tiantian Mining, also mentioned at the mining summit that Sichuan Province added 300,000 machine positions this year, but the number of miners and mining machines was much less than the same period last year.

Nearly half a year has passed in a flash, and during this half year, the price of Bitcoin has soared nearly two times. Under the soaring price, the restless hearts of miners and speculators could not be suppressed after all.

Now, let’s not talk about whether there are enough mining machines in the mines, the mining machines have already been sold out. As the flood season is coming to an end and the dry season is coming, the mining market, which accommodates a large number of miners, has also begun to surge.

Has the positive impact of “halving” that was digested in advance rekindled the enthusiasm of miners?

Many miners have failed in the bear market of 2018. After the "mine disaster", some of them chose to stay dormant, some chose to prolong their lives, and some chose to quit directly. However, the market trend in the middle of this year and the flood season that came with it have undoubtedly aroused the idea of ​​mining for most of them again.

Mining is the industry in the cryptocurrency world that is closest to the real economy, and miners are naturally the most "honest" people in the cryptocurrency world - they cannot refuse the rapid rise in Bitcoin prices from $3,000 to more than $10,000, nor can they refuse the low electricity prices during the flood season, and they cannot refuse the huge benefits of Bitcoin production reduction in May next year.

There are many different opinions about the small bull market in Bitcoin in the middle of this year. Some say it is an "institutional bull market" caused by the game of internal funds, and some say it is the entry of traditional institutions that has driven external funds. But fundamentally, I think it is because the market has digested the positive news of Bitcoin's "halving" in advance.

We know that all the positives in the investment market will be digested in advance. For Bitcoin investors, Bitcoin "halving" is almost the biggest and most obvious positive event.

I would not have dared to say the second half of this sentence before the first Bitcoin halving in November 2012. However, what happened later was that Bitcoin reached its peak of $1,175 367 days after the first halving.

So after the first "halving", will the second halving also achieve a surge in the price of the currency like the first one? I still can't guarantee it. However, what happened later was that Bitcoin reached its historic high of $19,891 525 days after the second halving on July 9, 2016.

Halving Market Changes

This time, I have every reason to believe that after the third halving, Bitcoin will usher in another "halving market" with a substantial increase. The reason is simple, because "it rose the first two times" - people are unwilling to believe things without reference samples (such as the first halving), be cautious about things with only very few reference samples (such as the second halving), and actively believe or self-suggest things with more reference samples (such as the third halving that will come next year).

This is human nature, and human nature means that most people think this way. Most people believe that Bitcoin will continue to soar after the halving next year, even if they don’t understand cryptocurrency, blockchain, or even finance.

This positive news, which almost everyone agrees on, will inevitably be digested earlier and to a greater extent in advance, so we see the mining market being reignited and a large number of miners pouring in during the flood season.

The National Development and Reform Commission has listed "mining" as an eliminated industry, and a large number of mines have been closed as a result?

On April 9 this year, my country's National Development and Reform Commission (NDRC) released the "Guidelines for Industrial Restructuring (Draft for Comments)", and proposed in the document to classify some industries as "eliminable industries", among which "virtual currency mining" was listed.

April 9th ​​was the perfect time, coinciding with the arrival of the flood season and the rising trend of Bitcoin. But this did not stop, nor could it stop, a large number of miners from joining the mining market when Bitcoin showed a good upward trend. No one would go against money.

But what is meant to come will eventually come.

During the flood season, the hydropower capacity of Yunnan, Guizhou and Sichuan provinces, which are the main providers of computing power, increased and prices fell. At this time, the electricity cost and the number of mining farms were sufficient to accommodate the large number of miners who poured in under the stimulus of the bull market and favorable conditions. However, during the dry season, the hydropower capacity of the above three provinces will decrease and the price will rise accordingly. Many miners have to move to the northern mining farms with stable electricity throughout the year.

The mines in the north are mainly distributed in Xinjiang and Inner Mongolia. Shortly after the National Development and Reform Commission issued the Guidance Catalogue, the local government of Xinjiang issued relevant regulations, which not only restricted the mining activities of the mines, but also severely cracked down on illegal electricity use.

It is understood that Xinjiang's computing power accounts for about 25% of the entire network, second only to Sichuan in terms of computing power supply. This policy restriction is bound to have a significant impact on Xinjiang's mining resources, and miners who are already forced to face the situation of "too many monks and too little meat" during the dry season will probably have more intense competition for machine resources and power resources.

The variables don’t end there.

Since the cold season in the north is longer and people have a greater demand for heating energy, the government has always imposed restrictions on the energy consumption and total output of mines.

During the flood season, miners who went all in caused a surge in the number of mining machines moving north, and energy consumption and total output naturally increased as well. Then, the mining machines that exceeded the government's energy consumption limits would naturally be deactivated or even abandoned like those mining machines that lost in the competition for machine positions.

At this moment, the mining machines that are working hard in Sichuan and bringing considerable profits to miners will have to face the problem of "migration to the north" in just one or two months. Although most mining machines can still be put into operation after migration to the north, under the multiple influences of policy restrictions and tight machine resources, some mining machines may be forced to shut down.

With policies and resources becoming more limited, will overseas be a fertile ground?

The excessive influx of miners during the flood season and unclear policies have led to a surge in hidden dangers during the dry season, so some miners have turned their attention overseas, with Iran being their primary target.

As for the reason, I think the following incident can reflect it to a certain extent.

At the end of June this year, Mashhadi, spokesman for Iran’s Ministry of Energy, publicly stated that due to the increase in Bitcoin mining activities, Iran’s national power grid has been under a huge electricity load. Iran has not defined mining activities and has not yet issued tax regulations. Therefore, mining is illegal in a legal sense. Companies or individuals involved in mining will be forcibly cut off from power if abnormal electricity usage is detected.

Iran Power Grid

However, the day after Mashhadi stressed that Bitcoin mining would be subject to forced power outages, a Twitter user from Iran shared a photo of a Bitcoin mining machine running in a mosque, seemingly a provocation to the Energy Ministry spokesperson yesterday.

In fact, due to the high status of Islam in Iran, many mosques receive free electricity from the government, which is undoubtedly very attractive to miners. The Twitter user who openly challenged the Energy Ministry spokesperson is a miner who seeks profit from the free electricity provided by the government.

The image posted by the provocateur on Twitter

From this incident, we seem to see the reason why Chinese miners target Iranian mines - illegal "black mines". In addition to the free electricity from the mosque, illegal power supply from the free trade zone is also a major reason why Iranian black mines can operate.

Of course, high returns also mean high risks. Along with illegal and cheap electricity, the Iranian government has gradually increased its crackdown and regulation on mining activities and even cryptocurrencies. In addition to Iran, developing countries in Central Asia represented by Kyrgyzstan are also good places to go. These countries are in the stage of revitalizing economic construction, and the electricity bill is often around 20 cents.