Babbitt In-depth | Revealing the sudden drop in Bitmain’s computing power, 20% to 50% off to clear out S9 and launch 17 series

According to Coindesk, the monthly computing power data released by Bitmain shows that as of May 7, the computing power of Bitmain's SHA265 algorithm (mainly used for mining BTC and BCH) has dropped to 237.29 PH/s, a sharp drop of 88% compared to the computing power in early April. The reduction of 1,800 PH/s is equivalent to the computing power of 130,000 S9 mining machines.

As soon as the news was released, it attracted everyone's attention. Some media said that the sudden drop in computing power may be related to Bitmain's urgent sale of more than 100,000 S9 mining machines.

The hashrate of the entire network has been rising steadily, but the mining pools of Bitmain have been declining instead of rising.

First, let's take a look at how the total network computing power has changed recently. According to QKL123 data, on February 1, the total network computing power was about 44EH/s, and on May 1, the total network computing power rose to 56EH/s, an increase of 12EH/s in three months, an increase of 27%. Although the data on May 1 was the highest peak in the past six months, it may be confusing to use it for calculation, but in terms of the overall trend, it can still be seen that with the arrival of the flood season, the total network computing power has shown a trend of continuous increase.

Secondly, let’s take a look at how the share of Bitmain’s mining pools has changed in the past three months. According to the data from BTC.com, we can see that the share of BTC.com + AntPool + ViaBTC, the three Bitmain mining pools, is 16.6% + 12.7% + 7.3% = 36.3% in the past three months, while the total share in the last 24 hours is 17.6% + 9.5% + 5.4% = 32.5%, showing an overall downward trend, especially in the past month, which is basically consistent with the data released by Bitmain.

We know that the flood season is an important time for mining farms to make great efforts to deploy their business, but the computing power held by Bitmain has not increased but decreased. Why is this? Combined with the news that the National Development and Reform Commission recently listed Bitcoin mining as a backward industry and ordered it to be eliminated, we can't help but wonder if Bitmain has captured some policy trends?

With doubts, Babbitt interviewed several mining industry leaders, including BTC.com CEO Zhuang Zhong; BTC.TOP CEO Jiang Zhuoer; Panda Miner founder Yang Xiao; Mine Ocean Club founder Yu Yang; Peking University Blockchain Club secretary-general and mine owner Chen Lei; we thus figured out the real reason for the sudden drop in Bitmain’s computing power, as well as the layout of mining machine manufacturers and mine owners during the flood season.

S9 clearance sale at 20% to 50% off, mining farm owners buy tens of thousands of units

Why did Bitmain’s computing power drop suddenly?

The reasons given by industry insiders are very consistent. Jiang Zhuoer said: "They sold the old S9s." Yu Yang also said that Bitmain "sold off the old machines, cleared the inventory, and prepared to launch the 17 series." However, regarding the sudden drop of 88% described in the news, and the sale of more than 100,000 S9s, BTC.com mining pool CEO Zhuang Zhong said "It can only be said that it is over-interpreted, and it is inconvenient to comment on the rest."

Why should we clear our inventory during the flood season?

It seems illogical, but it is actually easy to understand. Chen Lei told us: "While there are still people who want it during the flood season, sell the old machines and deploy new ones. Many of Bitmain's machines are not in the flood season, the cost is very high, and there is not much profit in mining. With the cash flow, we can make new mining machines. Others have no money to sell futures, but they can always sell spot." Jiang Zhuoer also said: "Now only Bitmain has its own funds to produce spot 17 for sale. The other companies, Xindong and Shenma, have no money and can only produce futures according to user demand."

How many units were cleared? At what price? To whom were they sold?

First of all, the clearance price. Chen Lei told Babbitt: "The goods from different periods are definitely different, 20% to 50% off, but generally speaking, they have been mined for a long time, and they must have made back their investment."

20% to 50% off, this price is still quite attractive, and these cleared mining machines have flowed into the hands of Fengshui mine owners. Chen Lei told us that "there are no individual investors mining now, and it is basically all taken over by big investors."

So, how many S9s were sold? Bitmain did not directly respond to our clearance numbers, but we were able to get a rough idea of ​​the situation from the buyers. Yang Xiao said: "According to the reported data, there are 1,800P less this month, but it seems that he cleared them out in several batches. Now there seem to be more than 20,000 units on the market." I also asked several large mining owners how many units they had received. Jiang Zhuoer said "more than 30,000 units." A mining owner who wished to remain anonymous said, "Bitmain has less than 20,000 S9s in my mine. I have the right of first refusal, so I bought them all." Yang Xiao told us: "We have received some after the New Year, but the quantity is not particularly large."

The 17 series was launched to attract funds, and the industry is selling it well.

Since the bigwigs in the mining circle all believe that Bitmain is clearing out S9 in preparation for the new 17 series, we indirectly inquired about the sales of Bitmain's 17 series.

Chen Lei said, "I think it's very good, and it's in stock, so it sells very well." Yang Xiao also said, "Bitmain's new machine sales are still very good, and the overall production capacity of the new machine is not large." There is not much third-party data on the specific sales situation, so it can only be obtained through information exchange within the industry.

But when we continued to ask, does the mining farm have plans for the 17 series? Or other new series from Bitmain, Innosilicon, and Shenma? Yang Xiao told Babbitt: "Our main business is graphics cards, which we produce ourselves and have a thorough understanding of the supply chain. For ASIC, we have never bought too many machines from Shenma and Innosilicon, and we still mainly buy machines from Bitmain. So there is no problem of ordering too many futures. We mainly buy machines that are circulating in the second-hand market, such as T15 and S15. I have been considering the 17 series recently, and I may wait until the price is a little lower before buying it. I haven't planned too many 17 machines for the time being."

Why not buy new machines? Yang Xiao explained: "Because we have more advantages in electricity prices during the flood season, we did not deploy the latest generation of machines, especially when their prices are still relatively high, and we expect that the prices will gradually fall in the future."

This shows that the preferences of mine owners are actually different. Yang Xiao of Panda Miner prefers old machines, and so does Chen Lei. He frankly said, "Because old machines are cheap and pay back quickly, new machines are not only expensive, but also not necessarily available, and most new machines are futures."

But not all mining farm owners think so. Yu Yang said, "I don't buy S9, I should buy 17." The reason is that "the computing power of the old machines can't keep up, but the new machines are okay." He also compared Bitmain's S series and T series to Huawei's Mate and P. The T series is cost-effective, but he said that he "only plays S and doesn't touch T series."

Mines fight for the flood season, heading south like migratory birds

Regarding the layout during the flood season, Bitmain’s official response to us was “While selling some S9 mining machines, we are also building new mines, adjusting computing power, and the company will continue to develop high-performance, low-energy products.”

The reply is very official... but from the description above, we can roughly outline it. In short, it is to sell old machines, recover funds, and launch new machines. What is interesting is that many mining machines here are just sold to mine owners from being entrusted to mine owners. The machine is still the same machine, the site is still the same site, but the rights and interests have been transferred. In the past, they paid electricity bills and rent to the mine owners, and now they are resold to the mine owners after mining enough. It is really a good business.

So how do mine owners prepare for the flood season? Yu Yang simply summed it up in six words: "Build a mine and buy machines."

Yang Xiao explained in detail: "The focus of the flood season is on the mining farm. This year, we have invested relatively more in the infrastructure of the mining farm, so we are doing composite filling recently. On the one hand, it is the support of our own machines, and on the other hand, it is the hosting and operation of external machines, including the warehouse corresponding to the cloud computing business. We still want to make some relatively stable money, which is probably the strategy."

In addition to building mines and buying machines, there is actually another very important thing, which is "relocation". Chen Lei told us that "during the flood season, these machines are basically moved from the northwest to the southwest hydropower station. In previous years, they were also pulled back to the northwest in winter."

I imagined this scene in my mind, it's like the migration of migratory birds.

To sum up, there must be something wrong when things are abnormal. The sudden drop in computing power in Bitmain is actually not true. All the causes behind it are reasonable. Although the sudden drop in computing power during the flood season is unusual for mining farms, we should not forget that Bitmain is more importantly a mining machine manufacturer. It is reported that in the middle of this month, Bitmain will hold a new product launch conference to officially promote the 17 series. Presumably, the S9 that was sold out in several batches should have brought back a lot of funds for it, and the deployment of the new series 17 is about to begin. The computing power war during the flood season has just begun.