What strategies should we rely on to win the flood season? See what the veterans of the mining industry say...

- 01 -

Roundtable Question 1

Q1: The flood season in Yunnan, Guizhou and Sichuan is coming soon. How many mining machines are deployed in your mine? How long did the entire layout take to plan? What is the business model of the mine? What kind of growth do you expect the total network computing power of Bitcoin to experience during the flood season?

Jiang Zhuoer: Before the bull market, store as many coins as possible

We have deployed more than 200,000 mining machines in our mines. The entire layout has been planned for more than half a year. We have established several large mines and recently completed the cleanup work such as recruiting personnel and replenishing mining machines. The purpose is to store as many coins as possible before the bull market, during the low electricity fee period during the flood season, to prepare for the bull market.

Our mining farm's business model is self-built + self-operated + running our own mining pool, so we are leading the industry in terms of cost, operation and maintenance efficiency, and control. For example, we will place a mining pool server in the mining farm to reduce the ping value of the mining farm, and monitor and scan the mining machines through the server at the same time to promptly detect mining machines that are offline, faulty, or have misconfigured mining pools.

During the flood season, a large number of old mining machines are expected to be turned on. Coupled with new mining machines such as S17, the computing power of the entire Bitcoin network is expected to increase continuously by about 30~40% at a rate of 5% per cycle.

- 02 -

Roundtable Question 2

Q2: According to recent news reports, the flood season does not seem to be as optimistic as everyone imagined, and the investment promotion situation of many mines is not satisfactory. From your intuitive experience, what obvious changes have taken place in the mining market this year? Why did such changes occur?

Lin Jiahan: The mine is still under construction, but the mining machines are unsalable, and the supply far exceeds the demand

There is no problem with the flood season itself, and the electricity price is not higher than last year. Friends who worked in mining farms last year have the most intuitive feeling that last year the manager of our investment promotion department was bombarded with calls just to ask for a few machine positions. This year, the situation is completely reversed. To ask for machines and resources, the deposit has been reduced from 2 months to half a month. This is because supply far exceeds demand.

In 2017, the cryptocurrency market was crazy, and mining machine manufacturers expanded production in large quantities. The market demand was also strong, and mining machines were hard to buy. After the market went bad, the mines were still under construction, but the mining machines were unsalable. Now the power load required by all domestic mining machines is only 2 to 3 million, and the supply of mining farms is already 8 to 10 million, so it is difficult to attract investment.

Shao Jianliang: How to raise funds and resources to maintain project operations will be the key factor in the decisive battle during the flood season

I believe that this issue is of particular concern to everyone, especially miners and mine owners. Compared with the booming industry last year, when everyone rushed into the industry, this year's market has become more heavy, and everyone has more concerns about their investment decisions and behaviors.

With a large number of mining farms put into operation last year, the price of coins has fallen by nearly 80% from the peak, and the current mining farm hosting is a bit oversupplied. At this time, industry participants need to have longer-term thinking and planning. How to raise funds and resources to maintain project operations will be a key factor in the decisive battle during the flood season. In such a big environment, how to avoid losing money, lose less money, and not leave the market is a question that many people need to think deeply about.

Jiang Zhuoer: With the start of the flood season, the custody price of the mine will see a significant decline

This year, the mining market saw a large-scale oversupply of mining farms for the first time. The reason was that after the price of bitcoin hit bottom in 2018, most of the last batch of mining machines manufactured by mining machine manufacturers were put into production in the middle and late 2018. Therefore, since then, the price of bitcoin has dropped sharply, causing the funds of the entire mining circle to be very tight. Both large and small miners basically have no funds to buy new mining machines.

Throughout the second half of 2018 and the first half of 2019, there were almost no new mining machines, but many were eliminated, such as Antminer's S7, Avalon's A7, Shenma M3, and Ebit E9. These hundreds of thousands of mining machines were not enough to cover the electricity costs and could not run. Therefore, starting from the middle of 2018, the number of mining machines has decreased, but mining farms are still being built. Whether it is hydropower or thermal power mining farms, there are several giant mining farms with a capacity of more than 200,000 or 300,000 kilowatts, which further led to an oversupply of mining farms and a shortage of mining machines.

I predict that a large number of mines will be idle during the flood season this year, especially thermal power mines, because thermal power mines have costs, and it is impossible for them to reduce the electricity fee to a level of more than one cent like hydropower mines. Hydropower mines may see a sharp drop in prices after a price war.

Because many hydropower mines have signed electricity usage agreements with hydropower stations, if the mine cannot use the electricity after it is built, it is still necessary to pay capacity fees and even electricity fees. Therefore, there is a high possibility that there will be no lower limit to the price war started by hydropower mines, and the hosting price may eventually be less than 20 cents.

But for miners, there is another very troublesome thing, the mining machines in the thermal power mines may not be able to be withdrawn. Because the thermal power mines are unwilling to leave them vacant for the entire flood season, they will reduce the price or even forcibly detain the mining machines to prevent them from leaving the mines.

I suggest that miners do not rush to sign the water and electricity trusteeship agreement, unless the mine you are interested in is an old mine, which is historically stable and has rarely had a record of power outages. You can consider signing with such a mine. Then you can keep some mining machines and wait until the flood season begins before signing, because at this time the market trusteeship price will drop significantly. This is a bit like asking ten people to fight for nine portions of food. If everyone must grab it, otherwise they will starve to death, and the price may collapse directly.

- 03 -

Round Table Question 3

Q3: Recently, the three major mining machine companies have released their own new mining machine products. On March 29, Canaan Creative released the A10 mining machine; on March 30, Ebit released the E11++ mining machine; on April 9, Bitmain released the second-generation 7nm mining machine S17. As far as you know, is the market enthusiastic about these three mining machines? What are the characteristics of each of the three mining machines?

Jiang Zhuoer: Don’t use the income method to buy mining machines, use the cost method. The mining speed of the mining machine may not keep up with the speed of the decline.

In general, these three mining machines have their own characteristics. The biggest difference is that Bitmain's S17 is in stock, while the other two mining machines are not yet available for sale. As a result, the price of S17 is now the most expensive.

In this cycle, I suggest that miners do not buy mining machines according to the income method, that is, divide the price of the mining machine by the net profit of the day to get a static payback period, such as 200 to 300 days. There is a big problem with this algorithm, that is, the computing power growth rate in this round of bull market may exceed that of the previous round of bull market.

We can look at the data from the last bull market. The data from the last bull market shows that the output per 1T is stable at around 5 yuan, but the price of the currency has actually increased by dozens of times. This also means that in the last bull market (except for the crazy rise in the last few months), the manufacturing capacity of mining machines can keep up with the rising speed of the currency price.

In the next bull market, as the manufacturing capacity and supply chain of mining machine manufacturers are further enhanced, the volume of Bitcoin will increase and the volatility will decrease, which means that the manufacturing speed of mining machines will be faster and the price of the currency will rise more slowly. Therefore, if you buy according to the income method now, there may be a big problem. The increase in computing power may exceed the increase in the price of the currency, which will immediately eat up the expected static income.

Therefore, I suggest that in this round of bull market, miner friends should try to use the cost method to buy mining machines and analyze the cost of a mining machine. If the current selling price of a mining machine exceeds the cost too much, you need to purchase it with caution and do not put all your funds into it at once.

In the last bull market, Ant basically controlled the market, especially in the first half of the last bull market, when other mining machine manufacturers did not ship much. But in this bull market, we can see that several mining machine manufacturers have grown up, including Canaan Creative, Xindong, Shenma, etc., so Ant can't control the market either, which also means that several mining machine companies will engage in direct price wars.

The parameters of a mining machine are very simple, that is, how many watts per T. If the parameters of several mining machine manufacturers are the same, they will inevitably engage in a price war, which means that if the selling price of the mining machine is obviously higher than the cost of the mining machine, then this price cannot be maintained for a long time.

If the price of the mining machine purchased by the miner is obviously higher than the cost, it is possible that the mining speed of the mining machine cannot keep up with the speed of decline, so try not to use the income method to buy mining machines. If you think that the mining machine is expensive and not worth buying, it is better to hoard coins. In this bull market, the mining income will continue to be far less than the hoarding income.

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Round Table Question 4

Q4: The arrival of the flood season is not only a battle between mining farms, but also a competition between mining machine manufacturers. In addition to launching new mining machines, what other plans have mining machine manufacturers made? Previously, the three major mining machine companies all failed to go public, and a large part of the reason was that the mining machine companies had a single profit model. In what aspects will the mining machine companies expand their business model?

Shao Jianliang: Canaan Creative is more concerned about the miners' return on investment and payback period

When the flood season comes, Canaan Creative launched the A10 series of mining machines. Currently, there are manufacturers in the industry that pursue large-capacity mining machines and manufacturers with extreme chip technology. We are more concerned about the return on investment and payback period of miners, and provide products with reasonable cost performance and competitive equipment in the next one to two years.

Canaan has been developing AI chips since 2015. Last year, it released the K210 series chips, making it the world's first manufacturer to produce AI chips using RISC-V technology. This is another important business area for Canaan, which leverages our advantages in chip design to make the company's overall business development more comprehensive and robust, and more scalable and interconnected.

Lin Jiahan: As long as the market picks up again, mining machine manufacturers will still bring back foreign chips for assembly

Mr. Shao is actually the most clear about this issue. Mining machine vendors do not go public not because of a single business, but because many listed companies also have a single business. The biggest reason why mining machine manufacturers cannot go public in Hong Kong is that the Hong Kong Stock Exchange believes that the Bitcoin market may be manipulated. Many mining machine manufacturers have transformed into AI, but I think as long as the market picks up again, manufacturers will still pull foreign chips back for assembly. The core of the Bitcoin market is mining, and with the support of the currency price, mining machine manufacturers will not easily transform.

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Round Table Question 5

Q5: On April 8, the official website of the National Development and Reform Commission announced the "Guidelines for Industrial Structure Adjustment (2019, Draft for Comments)", which explicitly stipulates that virtual currency "mining" activities are eliminated industries. How do you interpret this "Draft for Comments"? If the "Draft for Comments" is finally released, what impact will it have on mining companies? I heard that many domestic mining companies have made preparations for "going overseas". Do you have such plans?

Chang Yong: The overall impact of the policy on the mining machine industry is not significant

The draft for comments will have a greater impact on mining farms, especially large ones. If the draft for comments becomes final, local governments will no longer be able to acquiesce to the operation of large mining farms, but must implement industrial policies. Small mining farms may not be taken seriously for the time being and will benefit from the withdrawal of large mining farms, but it will be difficult for them to last.

The overall impact of the policy on the mining machine industry is not significant. As long as the price of coins rises and mining profits rise, the demand for mining machines will grow. If mining cannot be done domestically, mining will be done abroad. Unless the country prohibits the production and export of mining machines. Even so, mining machines can still move production abroad. Of course, this will also incur costs and losses, but as long as the price of coins rises, the costs can be covered.

Mining is no longer allowed in China, and various cloud computing powers supported by overseas computing power may have a market. The top priority for the domestic mining industry is to communicate with relevant departments to demonstrate the significance of mining in terms of efficient use of energy, increasing employment and tax revenue in poor areas, and pollution-free, and strive to get rid of the label of high energy consumption and high pollution.

Alex: This time it will basically be implemented, but not completely.

This "draft for soliciting opinions" actually needs to be interpreted in conjunction with the five-department document of 2013 and the 9.4 of 2017. First of all, let's refer to the five-department document of 2013, which defines cryptocurrency assets as commodities. Individuals can buy and sell them, but financial institutions are not allowed to participate. At this time, the implementation level was still relatively mild and friendly (the main implementation at that time was to cut off the Internet payment interfaces such as Alipay and Caihutong from the exchange).

However, in the two waves in 2017, the first wave was to remove financial leverage, and the second wave was to completely ban exchanges. From these two points of view, it is indeed in line with the meaning of the 2013 document. Financial services are also prohibited for financial institutions to participate. The one-size-fits-all policy attitude can also be seen from 2017. So from the perspective of execution, it may be late, but it will definitely arrive, and of course, the possibility of change in the future cannot be ruled out.

This time it will basically be implemented, but not completely. Because where there is profit, there will be people. Mining has always been a marginal industry in China, and it is impossible to pay taxes and operate in a corporate system. Large mining farms, especially those disguised as cloud computing industrial parks, may be the sites that face the most impact this time, while small and medium-sized mining plants may continue to operate because they have not received support in the first place and continue to be in a gray area.

We are now only focusing on mining the new capacity consensus algorithm. Due to the characteristics of the algorithm, it requires almost no electricity support, so there is no need to go overseas. We use general hard disk equipment as the basic mining production tool. There is no need to find gray electricity. We can mine anywhere in the world with a network. We do not need special mining tools. A home hard drive can do it. It is green and environmentally friendly, and there is no equipment investment risk.

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Round Table Question 6

Q6: We have to admit that both mining machine manufacturers and mining pools are controlled by a few industry giants. Is the current mining industry still developing towards a highly centralized model? Do newcomers or new institutions still have opportunities to enter the mining industry?

Lin Jiahan: The prices of mining machines and electricity are very low, and now is a very good time to enter the market

I want to emphasize that I feel there is a great opportunity for newcomers or new institutions to enter the mining industry. In my understanding, mining machines and mining farms are two different concepts. Mining farms are about building mining farms and then attracting investment, while mining machines are about owning mining machines and then mining.

Why is the opportunity so great? Because the electricity price offered by my mine last year was 4.5~5 cents, and a two-month deposit was required. This year, there are many more mines, and the electricity price is more market-oriented. The price offered this year is 3.4~3.6 cents, which is close to the cost price of building a mine in Xinjiang. So if you go mining at this time, the electricity price will be much cheaper than last year.

This year's mining machines are also very friendly, because the mining machine market is also in oversupply, and basically no one is buying or ordering mining machines in large quantities. The Avalon A851 mining machine sold for more than 20,000 yuan last year, and now it has fallen to a factory price of 950 yuan.

At this time, the prices of mining machines and electricity are very low, and they cannot be any lower. In addition, with the arrival of the flood season, there will be a big increase in computing power, so now is a very good time to enter the market.

Alex: The production relationship of POW mining is sick, and POC capacity consensus is a new diverse ecosystem

The current situation of POW mining is entirely due to history. Mining machine manufacturers and mining pools are the result of game-playing. They have also faced many risks to get to where they are today. Mining farms are pure power system monopoly resources, which deeply suppress the systemic risks of POW. BTC has not accumulated the value of basic equipment to the hundreds of billions level in ten years because of the high degree of power and ASIC monopoly, which also threatens the basic security of POW.

Those who want to mine in the future will find that investing in POW mining is more risky than buying coins. Mining is originally a financial risk hedge against the cryptocurrency market, and hedging products are also a relatively conservative investment channel for the overall cryptocurrency market to absorb external resources, manpower and funds.

The previous S9 price rose to 30,000 yuan per unit, and then fell to a minimum of 700 yuan per unit, while Bitcoin also fell from over 100,000 yuan to around 30,000 yuan now. The price of the currency fell by 3 to 5 times, but the mining machine price fell by more than 40 times. Originally, mining was for calculable risks and hedging the risks of directly buying coins, and participating in building positions in disguise and earning a certain amount of "stamp duty" on cryptocurrencies, but it ended up becoming a monopoly channel.

Here I would also like to explain the production relationship between mining machine manufacturers and miners. In the original CPU and GPU ecosystem, Intel and AMD will not be direct competitors of miners. It is completely a supply and demand relationship. Therefore, even if the GPU price rises due to huge profits in mining, it is limited. This is because of the supply and demand and miners are scrambling to get goods. However, mining machine manufacturers and miners themselves are both your service providers and your most direct competitors. What will happen at this time?

That is to say, we see that mining machine manufacturers use mining as an arbitrage tool. For example, if I can make a profit from producing a mining machine in 10 days, why should I sell it to you? It must be calculated that I can give you a profit in 50 days, and I transfer the risk of a crash to you. Sky-high prices for mining machines have happened before and will definitely happen in the future.

Assuming a new bull market comes, and BTC soars to 1 million today, would you buy a mining machine that can pay back 100,000 in 40 days? Many people will still be tempted by the immediate profits. My friend bought the first generation of Avalon mining machine for 8K and sold the first one for 260,000. History is repeating itself.

The production relationship of POW mining is sick. The monopoly of electricity is also a non-renewable resource, and you have to pay a resource fee for using it. Miners are very important in the ecosystem. They maintain the security and accounting rights of the ledger and are also doing distributed issuance. The number of strong POW miners needs to be as large as possible, but the reality is that they are shrinking due to these design flaws.

New opportunities are always in front of us. POC capacity consensus is a new ecosystem full of diversity. There is no need to worry about the monopoly of electricity and ASIC mining machines. No special equipment is needed. You can mine with your own home hard drive. It is truly "having a mine at home".

Shao Jianliang: The blockchain industry is still in its early stages and there are opportunities at any time

The entire blockchain industry is still in its early stages. From the perspective of our own development, there are always opportunities. From the past to the present, there are many such examples around us. If you seize an opportunity, you may gain a foothold in the industry. Compared with the heights that the industry may reach in the future, companies in the current industry still need to maintain a hungry and humble mentality.

However, any industry has its own thresholds and accumulations. You can't just rush into it casually. Mining is an industry with technical and financial thresholds. Some people make money with mining machines, while others lose money. I think timing is more important. Some people say that mining machines are a kind of Bitcoin futures. The key to comparing such tools is how you look at it.

When the industry is experiencing ups and downs, it is difficult for us to define what the future of an industry will be like. However, it is also because of such expectations that people are tested and a group of people with true faith can be precipitated. In this industry, as long as we are willing to study, learn, and try boldly, there are still many opportunities for everyone to participate and grow with the industry's big dividends.

Chang Yong: Mining should be decentralized before a new stable pattern is formed

Let me talk about mining centralization. There is no need to fear the centralization of POW ASIC mining. The Bitcoin fork and the Bitcoin Cash hashing war both show that hashing power centralization cannot determine the route and direction. In the Bitcoin fork, more than 51% of the hashing power cannot match a core, so it can only fork out a BCH. After the fork, most of the hashing power can only honestly mine BTC.

In the BCH hash rate war, CSW and CA, who claimed to have more than 60% of BCH hash rate, did not get the BCH name, and had to toss BSV. The BCH supporters whose real hash rate crushed CSW and CA, finally ended the hash rate war by relying on reorganization protection rather than hash rate advantage.

I suggest that POW miners focus on mining and making money, and stay out of national affairs. The current mining competition should be more intense than in 2017. If prices continue to rise and mining machine profits continue to grow, it is not ruled out that large traditional computing equipment manufacturers will join the mining machine market. Making money is the bottom line. This round of competition has just begun. Before a new stable pattern is formed, mining should be decentralized.

I don't agree with the opposition between mining machine manufacturers, mining farms, and miners. They all make money legally, judge the market by themselves, and bear their own profits and losses. If you lose, you can't blame the people who make money.

- 07-

Round Table Question 7

Q7: The core of proof of work is an incentive mechanism designed around energy consumption, with the goal of exchanging rewards for protecting the global distributed data ledger. What do you think will happen to the mining industry, which is intertwined between electricity, industrial chain, and cryptocurrency? How can we give the mining industry new impetus?

Alex: The future of POW may shrink, and POC is the only successor at present

In our opinion, the proof of work of POW is designed to generate currency credit with extreme security, so almost all of it uses mature and verified computer and cryptography technologies. It is precisely because of this that Bitcoin is so safe and reliable, and it can be regarded as the achievement of Bitcoin.

However, today, due to a combination of social, human, and technological reasons, the design has begun to deviate from development and become a monopolistic closure. Currently, the equipment supporting BTC in the entire network is only worth a few tens of billions. This is a relatively dangerous data when maintaining a Bitcoin network with a market value of hundreds of billions of RMB.

In addition, since the infrastructure of the POW consensus (miners, electricity, and mining machine resources) is exclusive, we can imagine Bitcoin as Tencent. Tencent has established a dedicated telecommunications network as a communication tool. The telecommunications network here can be seen as a node network composed of miners, mining machines, and electricity.

The question is, if a new company (blockchain project), such as Alibaba, comes, since Tencent's telecommunications system is exclusive, Alibaba will have to pay a high price to build another one or compete with Tencent for telecommunications resources. The purpose of the consensus algorithm is to generate financial trust, but it is exclusive.

In the future, new competitors and challengers may need a process of development from small to large. If POW is chosen, security challenges will inevitably be faced. If a new small project has only 10,000 mining machines in the entire network to mine and maintain the network, it will be attacked by 51% in minutes. The POW here is not even as safe as DPOS. DPOS is local trust, not the global trust of POW. However, for blockchain projects, there were only these two optional consensus algorithms before, and there was almost no choice. Therefore, diversity has been destroyed in the POW ecosystem, which is why it is difficult to have new POW challengers now.

POC brings new possibilities, because the infrastructure of POC can be shared with any project, not exclusive. POC is more in line with the physical infrastructure network of traditional Internet, which can be used by all project companies, thus reducing the cost of credit production. Since there is no dependence on electricity and no need to purchase monopoly-type special equipment, everyone can participate. In the future, the number of participants in POC will be in the hundreds of millions, and the mining pool distribution addresses counted by POW so far, assuming that each address is a different person, there are only hundreds of thousands of people participating worldwide.

In summary, the problems of POW are lack of diversity, high trust cost, and declining consensus breadth and strength. POC improves consensus strength and breadth, reduces trust production cost, and enriches the diversity of more projects in the future. The future of POW may shrink, and POC is currently the only successor.

DPOS is far from reaching the global credibility of POW. It is another reform of the on-chain governance of the company's equity system. Each has its own uses. Currently, the only POC-based currencies are burst and BHD. You can pay attention to them. Perhaps this is the future.

Jiang Zhuoer: The more POW energy is consumed, the better

First of all, I want to correct many people's misunderstandings. Many people say that POW is energy-intensive and high energy consumption is not good. This understanding is wrong. For a currency, the most important thing is fairness, not energy consumption. If the most important criterion for a currency is not fairness, then why don't we choose to use legal tender? Legal tender is the most universal currency issued by the government, with low energy consumption and security. If this is the case, why do we use Bitcoin? The most important reason is that legal tender is unfair.

The unfairness of legal tender is reflected in the fact that the government can issue legal tender without cost and without restraint. There is no cost for the government to issue legal tender. Every time the government issues legal tender, it is equivalent to stealing money from people's pockets. This behavior is wrong. The most important characteristic of a currency is fairness. Energy consumption is not important at all. After Bitcoin is mined, it can be circulated thousands of times. If the cost of mining Bitcoin is spread evenly 10,000 times, it is almost negligible.

Another consensus algorithm, the POS algorithm, is also unfair because it does not solve the problem of fair distribution of the initial currency. All new coins are distributed to the original coin holders, which means that the original coin holders can get the coins at no cost, and then new users must buy them from them with real money, which will definitely lead to the problem of currency concentration.

From a psychological perspective, human psychology is very subtle. If a coin is mined by burning money, people will think it is fair because the person who gets the coin has paid a cost, unlike POS coins where new coins are obtained at no cost. Mining Bitcoin is just like mining gold. Consuming resources to mine gold is a fair behavior, and it can even be said that the more resources consumed, the fairer it is. Therefore, the energy consumption of POW is not a disadvantage, but an advantage.

If we look at it from the perspective of the system, the energy consumption of POW is also very beneficial. It plays a very important role in connecting the virtual world and the real world. Most people in the world today cannot accept a currency that is completely created out of thin air and has no physical foundation, such as EOS, which is created out of thin air by 21 super nodes.

Bitcoin is mined by tens of thousands of mining machines. If you have ever visited a mine, you will be shocked by the scene inside. When you push open the door of a factory, you will see tens of thousands of mining machines neatly arranged on the shelves, stretching as far as the eye can see. The huge roar and heat wave hit you in the face. Ordinary people will be shocked by this scene and further agree that this currency has a real basis.

In summary, POW consumes energy, which is beneficial, and the more it consumes, the better. The more it consumes, the more confidence, consensus and value it injects into the currency. POW is like an advertisement. Although it consumes some resources, it can attract more manpower, material resources and resources from the real world, which is beneficial to the development of the entire virtual currency.

Chang Yong: POW is the fundamental driving force of mining, simple and crude, no other

I believe that the POW consensus mechanism is currently the simplest way to implement it. It is the most reliable decentralized security mechanism that has been tested over a long period of time and will continue to form the industrial foundation of cryptocurrency.

POW cryptocurrency is currently the strongest and most stable cryptocurrency and has the greatest potential to become a universal currency in the world. Therefore, in the near future, mining will continue to expand in scale with the development of POW cryptocurrency, and in terms of quality, mining will continue to develop in a faster, more energy-efficient and more professional direction.

This has always been the fundamental driving force of mining, simple and crude, nothing else is needed.

- 08 -

Round Table Question 8

Q8: Finally, let me ask you a sentimental question. Mining is a special industry in the cryptocurrency world. Whether it is miners, mining farms, mining pools or mining machine manufacturers, all the money they earn is in RMB. However, to a certain extent, it is most affected by market conditions. How do you face huge losses and profits? What changes have taken place in your heart since entering the mining circle?

Alex: I am still calm even though the industry is going through ups and downs.

Overall, mining is the industry with the most controllable risks. I believe that most veteran miners who stick to their jobs in the mining industry are still profitable winners. Moreover, mining is actually the basic maintenance of the chain and the reform of the financial revolution. The right to package and record is returned to the people.

Since this industry is still in its infancy, it is inevitable that there will be wide fluctuations and crashes during development. After a long time, people will get used to the ups and downs of the industry.

I started mining in 2011. Until now the price of Bitcoin has increased from 30~1300, 1300~500, 500~8000, 8000~20000, 20000~130000, 130000 to around 30000 now. The change in my mentality is shown in this picture.

Now, I am still calm even though the industry is experiencing ups and downs. However, this industry is full of revolutionary friendship and passion for life. It is a tool to change financial production relations and human collaboration, and it also provides opportunities to get rich and change the world.

Finally, I would like to take this opportunity to advertise that for POC mining, welcome to hpool.com to experience a new green mining life.

Shao Jianliang: Curiosity - Excitement - Thrilling - Settlement - Calmness - Faith

Indeed, the ups and downs of the industry from 2017 to 2018 are still vivid in my mind. As far as I know, there are many such cases in the investment circle and the mining circle, because I am also responsible for the investment of some projects. A common saying in the industry is that the money earned in the bull market depends on luck, and the money lost in the bear market depends on strength. Behind this is more of a test of human nature. Facing your own greed, how to restrain yourself and allow yourself to move forward steadily requires great wisdom and ability.

I believe that many people have suffered a great loss in this wave. However, our Canaan team has experienced multiple bull and bear cycles, and we have also explored a set of effective development paths, which also allows us to find our own value in the industry's fluctuation cycle. It is also because of this concept that we have been able to grow steadily in the past few years.

I have been in the mining industry for many years, from curiosity to excitement to thrills to settling down to calmness to faith. This is my spiral development path for your reference.

Jiang Zhuoer: I have seen miners with billions of dollars in their pockets, and some of them lost all of their billions in half a year.

First, we actually aim to hoard coins, and hoarding coins actually faces greater profits and losses than mining. Mining is a marginal industry at the intersection of digital currency and the real world, so its income is only the spillover of the core profits of blockchain, which is the crumbs. For example, even a large-cap stock like Bitcoin rose 100 times during the bull market of 2016-2017, from 1,300 to 130,000, while the income from mining is far from 100 times. If you don’t hoard coins when mining, and sell them as soon as they are mined, it would be good to get 5 times.

Second, don’t think of mining as an industrial production. Mining is a financial behavior and must be analyzed from a financial perspective. From a financial perspective, profit and loss are like two sides of a sword. If you treat it as industrial production, you may make less money than others and lose more than others.

Third, many miners come from traditional industries. They do not have a full understanding of the mining industry and do not have enough knowledge of the benefits and risks. They only understand mining in the blockchain. They think they understand it, but in fact they don’t understand it at all. Especially they will mistakenly regard mining as an industrial production rather than financial behavior. They will think that mining is a relatively safe industry, and then blindly leverage without considering the huge fluctuations in computing power and currency prices. I have seen miners of 1 billion levels who increase leverage to buy high-power mining machines and lose 1 billion in half a year in the bear market.

Therefore, when faced with such large fluctuations in returns and risks, try not to use leverage. This is a bit like people sitting on a bumpy car and then tied with a dagger on the steering wheel. The dagger will eventually pierce your heart because of a bumpy bump, so you will be dead and leave this high-growth market forever. So try not to use leverage. Even if you use leverage, you should have other financial means as hedges. Pay attention to anti-fragility.