The bull market is coming. Should you wait and see or go all in when buying mining machines?

From mining machine manufacturers, dealers to maintenance points, the entire industry chain is raising prices.

The big guys and a group of practitioners are working overtime to do business, and there are many good stories about how mining machines make people rich. But we should also remember the lesson of the bear market. Just a year ago, those former builders of the industry were cut off by mining machines because of the wrong entry time.

"What's the real way the big guys play? In the bear market, they buy a large number of mining machines for mining, and when the bull market comes, they study the timing of selling the coins. It doesn't matter if they sell too early, the mining machines and mining farm positions can still be sold at a high price. In the bear market, when the miners who took over at high prices can't make back their investment and can't pay the electricity bills, the big guys will turn around and buy back the mining machines at a low price." An old miner who has been in the market since 2013 "revealed the secret."

Although everyone knows the secret of becoming a big boss, how many people have the determination of a big boss to act decisively in the face of unknown market trends?

The mining machines sent to Iran were returned before they were put on the shelves, and they made a profit instead of a loss.

The story of "A blessing in disguise" happened to Huang Wenxiang.

At the end of April, Huang Wenxiang purchased a large number of second-hand Ant S9s from dealers in Shenzhen and shipped them to Iran.

Unexpectedly, when the mining machine was transported to the vicinity of Dubai, only a short distance from the planned landing port of Imam Khomeini, "Iran started a war, so they had to transport it back," Huang Wenxiang's friend Zhou Kai told Odaily Planet Daily.

This made Huang Wenxiang panic. The mining machine had sailed for 20 days without mining, and now he had to spend the same amount of time to transport the mining machine back. All the time he missed was a loss.

Fortunately, the continued strengthening of the bull market signal "saved" the young miner.

Starting from May 6, Bitcoin started a new round of rise, breaking through the 6,000 and 8,000 US dollar mark. When Huang Wenxiang's "travel mining machine" was shipped back, the price of the mining machine had risen from 1,600 yuan a month ago to 2,100 yuan. Therefore, Huang Wenxiang, who had not yet found a mining site, made a prompt decision to sell all the mining machines, not only making up for the loss of nearly 40 days of sea transportation, but also making a small profit.

Zhou Kai still found it incredible. "Luckily, we encountered the beginning of a bull market. If we caught the decline, we would have suffered heavy losses."

Zhou Kai was not kidding. This batch of mining machines will catch up with the cold winter period that began in mid-November last year, and the price is likely to shrink by half within a month.

At the end of December last year, one month after the coin price plummeted, the S9 was about to reach the shutdown price. Many bankrupt mining farms began to ship out their products, and the price of second-hand S9 once dropped to seven or eight hundred yuan.

The Huaqiang North Market, one of the main distribution centers for mining machines at that time, was in dire straits. Odaily Planet Daily visited there for 7 hours, and not a single customer came to inquire about mining machines.

But just four months later, the "bull head" that began in April this year reversed the balance of supply and demand again, and mining machine distribution returned to a seller's market.

According to data provided by the mining machine company "Today's Miner", compared to the bottom, the highest increase in mining machines has reached 4.5 times.

The mining machine business in Huaqiangbei is booming again. Novice miners come from all directions to "support" the mining machine business.

“The price is too high to ask”

The prices of mining machines have been increasing one after another. Some miners have taken the opportunity to get off the machines and directly sell them off the shelves, while others have taken the opportunity to increase their positions.

Chen Yulong, founder of a mining company, told Odaily Planet Daily that although he had purchased a number of Ant S9 machines at a low price of 860 yuan in February and March when the "decisive battle for the flood season" began this year, he was also paying attention to the major mining machine manufacturers launching new mining machines.

"The electricity cost of new mining machines accounts for a relatively low proportion of the revenue. Configuring some new-generation machines can save electricity costs for the mine. Moreover, the new mining machines are the direction of next iteration and can withstand the risk of elimination. We have to plan ahead." Chen Yulong said.

Some new mechanical and electrical costs as a percentage of revenue, data from: F2Pool.com

At the end of April when the S17 was just put on sale, Chen Yulong snapped up a machine for 13,000 to 15,000 yuan, close to the official website price.

But when the price of Bitcoin broke through 10,000 and approached 14,000 last week, the machine’s premium doubled to 30,000 per unit at its highest point.

"I don't dare to ask these days." Chen Yulong said frankly.

"The current situation seems to have returned to the second half of 2017, when the market demand for mining machines was three times the supply," Steven Mosher, head of global sales and marketing at Canaan Creative, told the media.

The reason for the shortage is exactly the same as in 2017. Yang Zuoxing, the founder of Shenma Mining Machine, said recently that "the production capacity of mining machines is still a bottleneck."

Stimulated by huge demand, the delivery time of new-generation machines from several major mining machine manufacturers, such as Canaan Creative and Shenma Mining Machine, has been scheduled until October.

The whole industry chain has seen price increases, with large mining companies acquiring maintenance sites

As a down-to-earth miner, Chen Yulong doesn't really like the current bustle.

"I prefer a stable bear market. The bear market lasts long and the income is stable. Although I don't make much, I am happy." Chen Yulong said frankly. "Now the price of coins has risen, from buying mining machines to after-sales service, all the fees are doubling. It started when someone made three or four thousand yuan from buying a mining machine."

When it comes to maintenance, Chen Yulong said that it used to cost 30-40 yuan to repair a mining machine control panel, "but now it costs at least 80-90 yuan." Moreover, there is often only one maintenance point in a province (not in provinces like Sichuan where mining farms are concentrated), and the mining machine is waiting to be put on the shelf. "If it is not suitable to transport it back and forth, you can only be slaughtered."

Zhao Jiancai, a mining machine maintenance businessman, also frankly stated that in this cyclical industry, “in summer you are the boss and in winter you are the grandson, that’s it.”

"Nowadays, people don't ask about the price when repairs are done. They basically just ask when the repair can be done. But I've been running this shop for three years and I've always been consistent. There's no tricks. All my customers are regulars, and I haven't raised the price much. It costs 50 to 100 yuan to repair a panel, depending on the problem," Zhao Jiancai told Odaily Planet Daily.

According to him, the recent passenger flow is 2-3 times that of a few months ago, and another old maintenance station he is familiar with may be "taken over" by an old mining company recently.

"It's easy to understand. When the market is good, if the big mining companies want to do business happily, they will make a one-stop service including buying and selling mining machines, recycling second-hand mining machines, and after-sales maintenance. The maintenance point they want to acquire has many skilled craftsmen. Generally speaking, the big mining companies want to upgrade their equipment and expand their operations," said Zhao Jiancai.

As prices rise across the entire industry chain, mining farms may be one of the bugs.

Liu Yiheng, a mine owner, told Odaily Planet Daily that the price of mine slots has basically not increased. Firstly, there are more mines this year due to the flood season; secondly, the price of mines will not increase too much. "Once you buy electricity and build a factory, it's like a flight that must take off. You can only get as much as you can out of fuel and service costs, which are fixed investments. Therefore, mine owners don't have much say unless the market is extremely hot."

Listed companies invested hundreds of millions in mining, but were left hanging

High returns often come with high risks.

When it comes to mining risks, leaving aside all the scammers, when to buy and sell mining machines is also very important.

For example, miners who bought mining machines in 2018 are likely to lose all their money. "That is equivalent to using mining machines (prices) in a bull market to mine coins in a bear market (low prices, low profits). Who can make a profit?" Chen Yulong concluded.

Huatie Technology (603300.SH), which is listed on the Shanghai Stock Exchange, once paid a heavy price due to poor entry timing.

On March 9, 2018, Huatie Technology announced that it would increase the capital of its subsidiary Huatie Hengan by RMB 70 million (total investment of RMB 170 million, including registered capital) to carry out mining field construction and mining machine leasing business. From May to June 2018, Huatie Hengan ordered 36,500 "servers" (mining machines) from two major mining machine companies, Canaan Creative and Ebang International, at a unit price of RMB 4,740 per unit, with a total price of RMB 173 million.

But then, the cryptocurrency market entered the second half of the bear market, and many miners also liquidated and left the market one after another, and the demand for mining machines continued to decline. Affected by this, Huatie Hengan suffered an operating loss of 110 million yuan. By January this year, Huatie Hengan, which could no longer be maintained, was sold at a low price of nearly 60 million yuan.

"If you choose the wrong time to enter the market, you will easily get lost if you enter at the waist or tail of the bull." Countless miners have emphasized this.

But it is hard to say whether newcomers can understand this rule, and whether old people can practice it. Just like we all know that we should not get out of the market when the price goes up or down after buying the currency, but in fact we still get out.

"What's the real way the big guys play? In the bear market, they buy a large number of mining machines for mining, and when the bull market comes, they study the timing of selling the coins. It doesn't matter if they sell too early, the mining machines and mining farm positions can still be sold at a high price. In the bear market, when the miners who took over at high prices can't make back their investment and can't pay the electricity bills, the big guys will turn around and buy back the mining machines at a low price." An old miner who has been in the market since 2013 "revealed the secret."

Most of the big guys have learned their lessons. Perhaps only after being harvested repeatedly can we have the determination of the big guys, making decisions without going with the crowd or letting FOMO emotions dominate us.

All interviewees in the article are pseudonyms.

Text | Huang Xuejiao

Produced by | Odaily Planet Daily (ID: o-daily)