When the flood season was hit by drought: 70% of mining machines were idle, 20 million evaporated every day

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Author: Clyde

In June, the entire mining community was waiting for rain.

Leshan, drought. Liangshan, drought. Xishan, drought. Aba Prefecture, drought. Muli County, praying for rain.

Ganzi Prefecture, the hardest-hit area.

The rain that was supposed to fall from the sky in late April or early May was held back by God for a month and has been delayed until now.

Affected by water shortage, Bitcoin miners fell into panic.

It is generally acknowledged that 70% of the world's bitcoins are produced in China, and 70% of China's mining farms are in Sichuan, especially in the Dadu River Basin. April to October every year is the flood season in Sichuan, and the electricity price can be as low as 0.2 yuan per kilowatt-hour. Compared with the electricity prices of 0.3 to 0.4 yuan in Xinjiang and Inner Mongolia, many miners have moved to Sichuan, Yunnan and Guizhou.

"Hydroelectricity itself depends on the weather." Miner Yang Haolin told DeepFlow that in mid-May, he moved more than 10,000 mining machines from Xinjiang to Ganzi Prefecture, Sichuan. If it were last year, by this time, they would have been running for more than a month and started to make money. But now, there are less than 1,000 machines running.

Before the flood season, miners would guess what kind of pitfalls they would encounter, but they guessed the beginning but not the end. Some said that the regulatory trends were confusing and uncertain, while others said that it was due to the volatile coin prices and the lack of machine positions. However, the only thing they did not expect was that the biggest pitfall would come from the sky.

Yang Haolin told DeepFlow that currently about 70% of the mining machines in Sichuan are idle. Once all of these mining machines are started, they will account for at least 20% of the total network computing power, and can mine Bitcoin worth no less than US$2.8 million (about RMB 20 million) every day.

This battle during the flood season was half-failed before it even started, and the opponent was unknown and invincible - God.

Rainmaking Ceremony

Sun, sun, sun, several days in a row, no hydropower station can withstand it.

"Oh God, please make it rain soon." Over the past month, Bitcoin miner Zhou Tong's most common action is to look up at the sky, then check the weather forecast app on his mobile phone, and mutter insults and curses to the heavens.

Zhou Tong concluded that "it always rains in some parts of Ganzi", and another conclusion was not to believe in the "useless" weather forecast, which would lead to his continuous breach of trust with his customers.

"Waiting to get on the machine, it said April 20th, then 25th and then 30th. Is this a low-level or medium-level mine?" complained Bai Ze, a miner in April.

Someone comforted him: There was little rain in Sichuan this year, and the power generation of the hydropower station was indeed closely related to the weather.

Due to the weather, a large number of mining machines have been transported from Xinjiang, Inner Mongolia and other places to Sichuan since the end of April and cannot be started.

Yang Haolin told DeepFlow that in Sichuan alone, about 70% of the mining machines are idle. Once all of these mining machines are started, they will account for at least 20% of the total network computing power, and can mine Bitcoin worth no less than US$2.8 million (about RMB 20 million) every day.

The machines that make people rich are now shut down for long periods of time. The mining machines that are not running have increased their sunk costs invisibly every second. The miners can only sigh to the sky, complain and laugh at themselves in their circle of friends.

Some people say to take the Sichuan people to pee

"This year's flood season has started badly. We should ask a Taoist priest to perform a ritual." Miner Jiaming smiled bitterly. He was not the only one who had quietly reduced his load. "The load is not full. It's better near the Dadu River. The driest area this year is Xishan. Some mines have cut their loads in half."

"The flood season means running at full capacity. What does it matter if only 2,000 of the 10,000 machines are running?" Jiaming estimates that his site will have 30% less rainfall this year, and the load will be reduced accordingly.

Jiaming looked up at the sky, feeling helpless. Having been in the industry for three years, he has experienced several mountain torrents, landslides, power outages and other incidents that left him alone in the mountains. For the first time, he lamented that "human beings are so insignificant in the face of nature."

We had agreed with the customer that the products would be put on the shelves in early May. We had hauled tens of thousands of machines from far away and put them on display. We spent millions on shipping. But the electricity was not available. Who can we blame? Was it the "force majeure" mentioned in the contract?

At the flood season mobilization meeting hosted by Biyin Mining Pool on March 30, many mining machine operators said that they would guarantee electricity by the end of April, or at the latest by the end of May, and that the managed electricity price would be around 0.22 yuan.

At this moment, the wealth-making machine that should have roared all night long remained silent. The millions of mining machines placed in the newly built mine, mixed with the smell of newly built cement, could only quietly wait for God's arrangement.

The miners were helpless and could only cry out for help.

Interestingly, praying for rain is an ancient ritual that has been passed down for thousands of years, and is even accompanied by a memorial ceremony. However, it now appears in another form in the most advanced and cutting-edge blockchain technology of modern times.

In order to pray for rain, the miners used all their magical powers.

Some people made a joke out of the TikTok video, "Wudang Wang Ye, pays homage to Zhang Tianshi" to pray for rain.

Some miners also said that Microsoft has built an underwater server soaked in constant temperature seawater. Can Bitcoin mining machines learn from it?

Some miners also said that this was because Jam Hsiao did not come to his concert.

New miners trapped

"I have been waiting for this electricity for more than half a month. If it doesn't come, I will go to the power station to wait for it." A customer who found a hydropower trust said, "Do you know how it feels to watch the price of the currency jump up and down but be powerless to do anything?"

In mid-May, it rained every day in Chengdu, but there was no rain in the mountains. The customer felt that he was cheated by the mine, so he went to the mine in person and found that there was really no water.

It was supposed to rain on June 1, but it didn't.

In this natural disaster, the ones who were cheated were all newcomers.

May 15 was the last date Zhou Tong agreed to allow customers to use the computer, but it didn't happen.

“Many machines were moved there during the water shortage period and have been stopped for a month. Under this market situation, the loss is huge after being stopped for a month,” Yang Haolin told DeepFlow.

The time for large-scale relocation of machines was concentrated in early May. From the Bitcoin computing power, it can be seen that the bit computing power fell by more than 20% in the half month starting from May 2. This is a period of concentrated relocation of machines, that is, "thermal power machines are taken off the shelves and on the way to hydropower."

In the half month starting from May 2, the Bitcoin computing power dropped by more than 20%.

Most of those who rushed to Sichuan to dig for gold were new to the mining industry. Yang Haolin said that these newcomers were frustrated by the weather.

There are two reasons: first, the new miners were unfamiliar with site selection or had weak bargaining power with the power bureau, and most of them chose locations far away from the Dadu River with insufficient water (as early as April 29, Luding and the Lancang River were flooded). Second, the new miners lacked foresight into natural disasters and copied past experience (water came to Sichuan during the dry season last year) and moved the mining machines to Sichuan early, causing the mining machines to suffer losses of at least one month.

Old miners have a lot of experience in this.

"(We) haven't moved the machines in Xinjiang and Inner Mongolia, because we won't move them until the situation is settled. We'll do it later if possible." Zhou Zijian, a veteran miner with five years of experience in the industry, said, "I'll wait until it's confirmed before moving. If there's water here and the load is not reported there, we can just withdraw it. This way, the customer won't bear the loss, and I won't be under too much pressure. It's easy to do."

In addition, miner Tucson said that it is possible that the initial electricity price was too low and the new miners chose to deliberately breach the contract.

On one hand, God took advantage of the new miners, and on the other hand, the newcomers took advantage of the customers.

“One of my previous clients chose not to come to me and went to another place with much lower prices. As a result, he has no electricity now. He wanted to come back to me, but I had no machine space,” said a miner. This year, there is generally insufficient water in Sichuan, so mines have taken the initiative to reduce their loads, and some have even cut their loads in half.

Many customers decided to choose a new mine, but they always encountered the problem of too many wolves and too few mines, and they had to pay the cost of relocating the machines and the time cost.

“No one would be so stupid as to spend hundreds of millions of dollars just to defraud you of a 15-day advance payment.” A miner said that the responsible mine owner would generally propose two solutions: return the money and withdraw or compensate for the computing power and continue waiting.

"It's normal that the mine has no electricity. Not every miner is honest, especially the new mine owners." The miner said that many new miners are not dishonest, but they just have little experience and are unsure about the situation in this industry with so many variables.

In addition to those who have entered the mining industry, cloud computing platforms have also encountered many setbacks.

BitDeer, which started to engage in cloud computing this year, proposed a flood season package at the CoinIndex Summit, with an electricity price of 0.22 cents, which stunned many miners at the scene and they said they could not compete.

Why does BitDeer have such a cheap electricity price? An insider told DeepFlow that Bitmain negotiated 100,000 locations in Jiulonggou in 2016, with a price of 0.6 cents per kWh of bare electricity, and BitDeer may be using electricity from there. Jiulonggou is also a drought-stricken area this year.

BitDeer is a cloud computing platform incubated by Bitmain, and this year it officially entered the cloud computing mining platform.

On May 21, an official from BitDeer said: Power outages are currently the norm during the flood season, and things may get better next month.

“There are only five months of abundant water, but they insist on selling it as six months,” a BitDeer customer complained.

Whether it is mine owners, mining machine hosting customers or cloud computing platforms, they have all been hit hard by the drought. However, in the mining industry, there is a profession that can truly ensure a stable income regardless of drought or flood: mining machine sellers.

The hash rate war has not started yet, but a group of miners have already fallen

"This year is very strange. On the one hand, it is difficult for mining sites to attract investors, and on the other hand, miners cannot find mining sites." Yang Haolin said that there are still many mining sites outside that have not attracted investors.

The sense of superiority of miners has disappeared in recent months. The bull market that started in April this year did not belong to new miners who risked their lives during the flood season, but to mining machine resellers.

“Nowadays, mining is obviously not as profitable as reselling mining machines and machine positions. Reselling mining machines is the most profitable, and there is basically no risk.” Zhou Tong sighed deeply.

A mining machine seller who entered the market last year said that the price of an S9 mining machine has undergone earth-shaking changes in the first half of the year, from 700 yuan to 2,600 yuan, and the current price is 2,070 yuan.

The new miners who entered the mine this year saw a messy mine and had not made any moves. Then they ran into a pit and watched others drinking and eating meat. It was hard not to be traumatized.

Before the computing power war in the flood season officially started, a group of miners had already fallen. Some miners even abandoned their weapons and cleared out the site, handing over the mines that had taken half a year to build at a discount.

On March 30, at the Biyin Mining Pool Summit, Chai Hua, founder of Tiantian Mining, said that the flood season in 2019 will be a major reshuffle of miners. She estimated that Sichuan Province has added 500,000 seats this year compared with the same period last year.

How many of these 500,000 additional aircraft seats will become cannon fodder?

The beginning of the hash war

The computing power station during the flood season has not yet started, but the sound of artillery fire has already been heard on the front line.

On June 6, Bitcoin’s hashrate showed 61.63 EH/s, surpassing the previous high of 60.4 EH/s on November 1, 2018.

The new high in computing power tests the nerves of everyone in the mining circle, and the arrows of war are ready to be launched.

On the eve of the battle, the old miners recalled one another. One of them said that last year it rained for too long in Sichuan, causing mudslides and floods. The two sites he worked on had to stop working, and he had worked for nothing for half a year. This was a lesson learned.

Yang Haolin always keeps awe of risks in mind. Because you never know what flag God will send. This reminds me of an old saying: "When humans think, God laughs."

"Starting a business is an all-round test of your personal ability, emotional intelligence, and IQ." Zhou Zijian added, "Otherwise we would have died long ago. Would we still be alive today?"

According to conservative estimates, it is normal for Bitcoin computing power to increase by 30% by August. How many soldiers will be alive by then?

It is generally recognized in the industry that this year will be the last year for the Antminer S9 to be on display. If the price of the currency continues to rise, the Antminer will be eliminated in October. If it remains unchanged, the time will be the end of the year.

Now, in June, news of power supply has begun to come from all over Sichuan. On Monday, June 3, miners reported that Dadu River and Luding were basically fully powered.

After being delayed countless times, on the evening of June 5, raindrops finally fell from the sky at the foot of a remote mountain in Ganzi Prefecture.

Many miners predict that it will rain throughout Sichuan on the 15th.

After the Dragon Boat Festival, thousands of streams will converge again, as they have for thousands of years. The water will fill the hearts of miners little by little, connecting the blue shed mines in the mountains and rivers again. At that time, the computing power war during the flood season will officially begin.

The drought has worn out the patience of mine owners, depleted the credibility of some miners, and proved who is wise and who is brave, but all of this is just the beginning of the battle of computing power.