Bitcoin miners say 2019 is too difficult

Written by: Xiao Maoge

Special thanks to Zhu Yu from Biyin Mining Pool, Weng Ziyao from Maoqiu Technology, Qiu Xiaodong from Xinghuo Mining Pool, and Li Qingfei from F2Pool for reviewing and providing suggestions for this article.

In terms of time, the 2019 flood season was postponed. In terms of climate, according to data from the China Earthquake Administration, six earthquakes of magnitude 3 or above have occurred in Aba Prefecture, Ganzi, and Liangshan, the main flood season areas in Sichuan Province, since April; Sichuan Province issued more than 20 high temperature warnings before and after the flood season, and heavy rains also caused large and small mountain torrents, mudslides and other geological disasters, triggering the "August 20 Wenchuan Aba Super Mountain Torrents and Mudslides". The drought before the flood season, the subsequent abnormal rainfall, frequent geological natural disasters, and increasingly strict supervision are all "natural and man-made disasters" that miners preparing for the flood season did not expect.

For miners who are eager to mine at full capacity at any time, there is a view circulating in the mining circle: this year is a "fake" flood season.

Are miners encountering a "fake" flood season?

The flood season refers to the period when the flow of rivers is mainly replenished by rainfall or snowmelt, which is generally during the rainy season or when the temperature continues to rise in spring. The flood season in southwest my country usually starts from April to May and ends from November to December. There are slight differences in time between different regions. In some areas, the flood season may not end until early January.

Usually, electricity prices are discounted during the flood season. Taking Sichuan, the main mining base during the flood season, as an example, the electricity price can be as low as 0.20 yuan per kilowatt-hour. Compared with Xinjiang and Inner Mongolia, which have electricity prices of about 0.3 to 0.40 yuan, a large number of Bitcoin mines usually relocate mining machines to the southwestern region represented by Sichuan and Yunnan during the flood season, and obtain low-cost hydropower through the abundant water in the rainy season.

On August 21, the video released by Biyin Mining Pool on Twitter showed that some Bitcoin mines in Sichuan were hit by floods and suffered varying degrees of damage. Local government media also reported that Aba Prefecture in Sichuan was hit by heavy rains and landslides had affected 17 counties in the region, with Wenchuan County being the worst hit.

Bitcoin miners say 2019 is too difficult

F2Pool co-founder Shenyu lamented on Weibo on June 18, "This year's hydroelectric mining has been plagued by disasters. First, there was no rain and there was no water, which was much later than in previous years. Recently, there were heavy rains and today there was an earthquake."

Bitcoin miners say 2019 is too difficult

This year's flood season is a "fake" flood season. This sentence almost became a rumor circulating in the mining circle, especially among some miners who were severely affected.

Zhu Yu, co-founder of the CoinIn mining pool, told Chain News that the flood season can be said to be a period of "relying on the weather for food". This year's flood season had three main problems: first, the flood season came late and lasted for a short time due to drought; second, the climate during the flood season was abnormal due to the El Nino phenomenon; third, natural geological disasters occurred frequently. In addition, the local miners also reflected that the supervision was stricter this year.

The Biyin mining pool founded by Zhu Yu was established in November 2017 and has long been ranked among the top three in terms of computing power among Bitcoin mining pools. He deeply feels the difficulties of this year's world and shared with ChainNews some specific observations on the actual status of this year's "flood season":

1. Drought causes delayed flood season

According to the standards of previous years, there will be at least 6 months of wet season and 6 months of dry season in 12 months of the year. However, due to the drought this year, the rainfall started later than normal. Zhu Yu said, "According to past experience, even if there is a drought, the delay will not be too long. This year, the delay of the wet season is particularly serious, and the most serious areas have been delayed by nearly 2 months."

2. Abnormal climate during the flood season

Although the flood season has arrived, the El Nino climate anomaly is serious during the flood season. Either there is no rain for a few days, or there is heavy rain, and this kind of heavy rain and no rain often alternate. This kind of climate can easily cause flash floods. If flash floods occur, rivers need to be dredged and hydropower stations need to discharge flood water. Many sites during the flood season are powered by a single power station and are highly dependent on the power station. Excessive heavy rain may also cause damage to the hydropower station units. If it carries mud, sand and stones, it will cause greater damage to the units.

3. Natural disasters occur frequently during the flood season

If the first two problems can be said to be not "good weather and good harvests", Zhu Yu said the third problem is the real "many disasters". Natural disasters occurred frequently during the flood season this year, including earthquakes, mudslides, landslides and other geological disasters. Based on multiple factors such as construction cost, time, and convenience, most mines in Sichuan are built with steel structure houses. For most geological disasters, most mines themselves do not have strong earthquake and disaster resistance. At the same time, once a disaster occurs, it is very likely to destroy the mine's power supply and network communication infrastructure, which is undoubtedly another unstable factor for the mine.

In addition, some miners also reported that this year's policy supervision is relatively strict and the policy form is still unclear.

Lianwen previously reported that there are a large number of Bitcoin mines along the Dadu River in Kangding City, Ganzi Prefecture, Sichuan Province. The regulatory authorities have doubts about the compliance of these mines. "The factory building cannot be approved, there is no environmental impact assessment or construction permit, it is suspected of illegal construction, and the direct sale of electricity by the power station also violates the Electricity Law." Subsequently, the Economic and Information Bureau of Kangding City, Sichuan Province took the lead in setting up a working group to survey and investigate these Bitcoin mines.

"Old" mining machine encountered bad weather

In addition to natural disasters and man-made disasters, a senior miner friend also told Chain News that he participated in ordering new mining machines this year, but in the early stage of the flood season, the new machines of major mining machine manufacturers had not been shipped. There were more new sites this year than last year, so the power load of many sites was not fully utilized in the early stage. Some sites also encountered design problems such as the size of the new machines did not match.

At the same time, due to the delayed delivery of new mining machines by some mining machine manufacturers, "most of the machines actually in operation during this year's flood season are still old machines, such as Antminer S9, S9i, S9j for mining Bitcoin, and Antminer L3+ for mining Litecoin."

The older machines encountered this year's abnormally wet season, and miners said that the "high damage rate" of the old mining machines was exposed. As the damage rate of old machines increased, the number of machines that needed to be overhauled increased. The heavy rains this year also affected logistics, and the "overhaul progress" was greatly slowed down.

Regarding the overall delay in the flood season, he said that after entering the market this year at the usual time, due to insufficient water, many machines could only run half of the time when they were first put online, and some machines were idle. "Besides, the price of the currency happened to be rising at that time, and I was very anxious, but there was nothing I could do, so I still suffered a lot of losses." He said that the delay in the flood season did have a certain impact on output.

Regarding the subsequent layout, a miner friend told Lianwen that he was also worried about the early end of the flood season, but "this year basically everyone thinks that the flood season will end early around the end of October, at least earlier than last year, so everyone is basically looking for electricity in advance." According to him, this year's dry season electricity "is still relatively easy to find, and many people should have planned new sites."

I can barely eat, but it’s hard to get enough to eat

Maoqiu Technology is a professional computing power service hosting company in China. Co-founder Weng Ziyao said that this year's flood season does feel "fake", not only for users, but also for mining farms. Although the water came almost a month late during the flood season, the rules of mining farms have become more and more compliant in the past two years, and there has been more and more contract awareness. The industry generally has commitments to customers, and many peers have lost a lot of money due to the late arrival of water.

Coupled with mountain torrents, landslides, and mud-rock flows, there are indeed many disasters. Weng Ziyao told Lianwen a short story: We have a client who had three or two trucks of mining machinery entering the mountain, and they were trapped on the road by a landslide. The client brought the driver with him to take a shovel to clear the road, and took a short video while working, and couldn't help sighing, "This life is so difficult."

During the flood season this year, a large number of mines were put into operation, and Maoqiu Technology also welcomed many cross-industry bosses to test the waters. The access to a large amount of electricity happened to coincide with the production capacity gap of several major mining machine manufacturers. The production capacity of hundreds of thousands of units per month in previous years was suppressed by more than half. Compared with previous years, a situation of "more electricity and fewer machines" was formed.

"We can barely get enough to eat this year. It's not easy to get enough to eat."

The weather is bad, and mining is even harder

The cost of mining machines, Bitcoin prices, mining difficulty, electricity prices and other factors determine the miners' income.

Despite the unusual climate during this year's flood season, Bitcoin computing power and difficulty continue to hit record highs.

According to BTC.com data, the difficulty of Bitcoin mining has continued to rise since December 18, 2018. Although there have been fluctuations in the middle, in the long run, the overall trend is rapid. On August 18, 2019, the difficulty of Bitcoin mining officially entered the 10T era, reaching 10.18 T, which is about 100% higher than the difficulty of 5.1 T on December 18, 2018.

The reason for the overall increase in mining difficulty is that the demand for mining continues to grow, and new capital and miners are trying out or entering the market. At the same time, mining machines and chip processes are constantly improving. More and more new mining machines with lower power consumption have joined the ranks of mainstream mining machines on the market, and have gradually been put into use in the second half of this year's flood season, and have begun to show scale. The new mainstream mining machines have fully adopted the 7nm chip process technology. The update and iteration of new and old mining machines has led to more intense competition during this flood season, making mining more "difficult".

Bitcoin miners say 2019 is too difficult

What about graphics card miners?

In addition to Bitcoin miners, how are the graphics card miners who mine Ethereum, Grin, etc. doing during this year's flood season?

Qiu Xiaodong, the person in charge of the operation of Xinghuo Mining Pool, said that GPU mining machines are not as easy to manage and maintain as ASIC mining machines, and relocation is not that easy. During the transportation process, the motherboard, adapter, graphics card, power supply and other parts are damaged, and maintenance is a big trouble. Therefore, GPU mining machines are not involved in the flood relocation itself. However, it has been observed that users in Wenchuan, Sichuan and other places "experienced power outages and network disconnections during the flood period."

Spark Mining Pool is one of the mining pools that focuses on serving GPU miners and is currently the largest Ethereum mining pool. Qiu Xiaodong said that the flood disaster during this period was "not very widespread" and the impact on GPU mining was "not particularly large." From the rise and fall of Ethereum's computing power, it can be seen that the computing power did not drop much during the Sichuan flood period.

As for the timing of supervision, Qiu Xiaodong said that "the supervision issue in Aba and Ganzi areas of Sichuan has little to do with the flood season." The policy of strictly investigating small power stations that steal electricity and fail to pay grid fees had been implemented before the flood season arrived, but it just happened to be at a certain time, making life particularly difficult for Sichuan miners this summer.

Preparing for the dry season

As October is approaching, some miners will also shift their main base from Sichuan to Xinjiang and Inner Mongolia. The short and delayed flood season always gives people an illusion that the flood season has just begun, but they have to start preparing for the dry season two or three months later.

At present, it seems that the challenges that miners will face during this year's dry season are still severe, especially the concerns about whether this year's "silent" flood season will end early, and the situation they will still have to face after it ends: the demand for mining during the dry season is still increasing, the policy situation of mines in the northwest region is still unclear, and electricity prices in some areas of Inner Mongolia and Xinjiang are also on the rise.

When Shenyu posted the Weibo on June 8 about the "many disasters" during the flood season, some netizens commented: "The more disasters, the more prosperity ₿", hoping that this vision will come true.