Traditional mining farms VS CDN mining farms, where should Chinese miners go?

In just a few days, Bitcoin soared to over $8,000, and everyone in the currency market was happy. So, are the Bitcoin mines, which were previously in mourning, now having a better life?

In fact, according to blockchain media Interchain Pulse, although Bitcoin has risen sharply, Bitcoin mining has not recovered as expected. Mining machine merchants in Huaqiangbei said that the bull market in the past week did not bring about a turnaround in mining machine sales. At most, there were a few more WeChat inquiries, and no one even came to the store to check the price in person.

The mining machine owner said that although the mainstream mining machines have also increased in price significantly due to the market trend, the actual transaction price is not high. He can only make 50 yuan for each mining machine he sent to Iran, which is not enough to pay the rent.

There were once as many as 200 mining machine stores in Shenzhen’s Huaqiangbei, but now there are less than 10 left, and most of them have their own mining farms, and the mining machine business is just a sideline.

Empty mining machine store

Among the existing mining farms, the hosting business is still sluggish. According to a person in charge of attracting investment for a mining farm in Huaqiangbei, despite the arrival of the flood season in Sichuan, the mining machine hosting market remains on the sidelines, with 40,000 of the 100,000 mining machines still vacant.

Jiang Zhuoer, a mining boss, also admitted: "This year is obviously different from previous years in that there is a serious oversupply of mining farms."

If the price of the currency drops, it is naturally impossible to start the machine, and if the price of the currency rises, they dare not expand the scale. Traditional mining farms seem to be in a dilemma. What should the miners do?

Volatility is a fatal weakness

To solve a problem, we must first understand its root cause. Why are traditional mines in a dilemma?

Perhaps the most critical factor is the rise and fall itself. The roller coaster-like price of coins represents a risk in itself, that is, the returns are extremely variable, and the price of coins is difficult to predict, and the judgment depends entirely on luck. If you are lucky, you can make money when the price of coins is high; if you are unlucky, you will lose all your money when the price of coins is low. The greater the rise and fall, the greater the risk. Therefore, this round of raging bull market did not give miners too much confidence, but deepened their concerns about the unpredictable changes in the market.

The mining machine owners in Huaqiangbei feel this the most. They admit that even though Bitcoin has risen to 8,000, they still dare not easily persuade customers to place orders because "if the price drops, we will not be able to explain to our customers."

Traditional mines require large investments and are subject to many constraints. Not only do they have high requirements for capital, but they also require a variety of conditions such as electricity resources and local connections. Once a traditional mine is built, it is difficult to turn around flexibly, so long-term returns are very important to it.

Therefore, the first pursuit of miners for the price of the currency is not a sharp rise, but stability. As long as Bitcoin can maintain a relatively stable price, the mining farm is a business that can be calculated first and then won. It can avoid risks by controlling costs and thus pursue profits.

Unfortunately, this stability is exactly what traditional mining farms lack. Due to the extreme instability of the coin price, the mining farm has changed from a gold mine with a steady supply to a Russian roulette, where no one knows whether it will be a fatal bullet when it comes to their turn.

CDN Mine: A Stable New Mining Ecosystem

From the perspective of stable returns and controllable risks, the newly emerging CDN mining farms on the market this year are a better choice.

The so-called CDN mining farm refers to a new type of business that provides distributed CDN services through intelligent hardware devices. Its external form is similar to that of a traditional mining farm, which is a computer room full of machines. The income is also calculated based on the daily running volume of each machine, so it is called a mining farm.

However, in terms of specific business logic, CDN machine rooms are completely different. They do not earn revenue through computing power competition, but provide CDN services to the outside world. In essence, they are small machine rooms and belong to the category of cloud computing. Therefore, they are very different from traditional mining farms in terms of cost, revenue stability, and policy friendliness.

Taking the most mainstream Xiaorong mining farm as an example, a Xiaorong mining farm with a scale of 1,000 units has a hardware equipment investment of about 440,000 yuan. In addition to the rent of the site and bandwidth, labor costs, etc., the initial investment is basically within 600,000 yuan. And the energy consumption is very low. The power consumption of a Xiaorong box is only 7w, ​​so the Xiaorong mining farm does not have high requirements for site conditions and does not need to be restricted by power stations.

For a traditional mining farm of the same size, the hardware alone would cost around $2 million, not to mention the electricity requirements. Its operating costs would even be higher than its construction costs.

The point is that the income of CDN mines is stable. The daily income of Xiaorong Box basically remains at a stable number, so its annual turnover, payback period, etc. can be calculated. According to official announcements, the average daily income of all Xiaorong Boxes is about 2~3 yuan. The scale of 1,000 units is 3,000 per day and 60,000 per month, with a short payback period; and the weekly withdrawal model effectively reduces the cash flow pressure of miners. If calculated based on the actual production ratio, the annualized income is almost 76%. In some CDN mines with strong operation and maintenance capabilities and bandwidth resources, the single-unit income can even reach more than 6 yuan.

A CDN miner posted a chart of his daily earnings

However, it is difficult to have a clear forecast for the payback period and annualized return of traditional mines. It is more like a gamble than an investment.

In addition, the policy friendliness of CDN mines is much higher than that of traditional mines. After Xinjiang shut down all Bitcoin mines last year, some miners invested in a small financial mine. As a new infrastructure project of 5G, CDN mines quickly received attention from the local government, and the leaders of the autonomous region also came to inspect. Traditional mines dare not even think about such treatment.

CDN mine in Xinjiang

Moreover, with the advent of 5G, the obvious increase in bandwidth demand has led to a surge in the demand for CDN by various giants. The market is large enough, and there is no fierce competition between CDN mining farms. On the contrary, as more and more mining farms are added, the scale effect becomes more obvious, and the service capacity continues to increase. In contrast, traditional mining farms have to compete for computing power, which is essentially a zero-sum game.

Therefore, for traditional miners who are caught in a dilemma, they might as well try the new business of CDN mining. At present, the CDN mining industry has also developed relatively well. For example, Xiaorong Box has established a relatively complete ecosystem. Whether you have resources or funds, you can easily find a suitable way to participate. Miners, custodians, and investors can get what they need.

In short, an iron rule of investment is not to put all your eggs in one basket. Given the current uncertain prospects of traditional mining farms, you can first build a small batch of CDN mining farms to test the waters. What may be waiting for you is a big surprise.

This article is for commercial promotion only and does not represent the position of Wabi.com. Cryptocurrency is a high-risk industry. Please invest with caution. We are not responsible for any losses!