The flood season is here, and the "reshuffle" game in the mining circle is quietly unfolding

Huang Meng is very busy. Since the temperature warmed up, he has been traveling all over the country: Sichuan, Shenzhen, Shenyang, Beijing, without stopping; he was in an office building in Beijing one day, and appeared in a mine in the south the next day. As the flood season approaches, the earlier you find a mine with low electricity prices and negotiate with the miners who need services, the more you can get. And his running around is just a silhouette of the busy mining industry in the south when the flood season is approaching.

Seize the opportunity of low electricity prices, the curtain of flood season slowly opens

The most obvious feature of the crypto mining industry is that it is driven by electricity. The combination of the price of coins, electricity prices, and the computing power of the entire network determines whether the mining machine can be turned on. During the dry season, the hydropower supply in the south is interrupted, and thousands of mining machines migrate to the north to maintain their business. When the flood season comes, the hydropower supply is sufficient and the electricity price is low, the mining machines will move back to the south again.

"50,000 load machine positions are being recruited! Power will be supplied in April"; "First-hand factory source, 50,000 load, 42,580 machine positions are being booked, book in advance, enjoy preferential prices in April, 500 units minimum..." In the miners' WeChat group, mine recruitment advertisements with power load as the selling point frequently appear. Hidden behind these advertisements are the compliance of electricity prices, the stability of power supply, and the operation capacity of the mine, which will determine the success or failure of the final cooperation.

Policy is still the most uncertain factor facing the mining industry. Since January this year, the governments of Sichuan and other places where mining farms are concentrated have begun to introduce corresponding policies and regulations to supervise the mining industry during the flood season. On the one hand, they require the legal closure of mining companies without any approval procedures, and on the other hand, they require the mines to withdraw from the local area and refuse to open new mines.

On January 4, Sichuan Financial Risk Office issued mining supervision policies

Strong supervision has made the compliance and standardized operation of the mining industry increasingly clear, and has invisibly protected the rights and interests of practitioners.

Stable power supply is the key to success

Only when the power supply is stable can the mining machine's profit be guaranteed. Once the power supply fluctuates, the profit will be damaged at best, and the life of the mining machine will be affected at worst. The construction of the mine is directly related to the power supply factor. The construction of the board house, the layout of high voltage electricity, and the layout of the network are all very sophisticated. From the selection of transformer models and the matching of cable models to the specifications and location distribution of power sockets, all of these are tests for the builders of the mine. Only the mine owners who are proficient in this can obtain enough customer resources in this PK.

List of equipment requirements for the mine

The layout of mining farms is complex, and portable "container mining farms" have emerged. On March 20, 2018, Bitmain officially announced the release of the mobile mining farm ANTBOX, which can accommodate up to 324 S9 mining machines. The initial selling price was as high as 180,000 yuan, and the current price on its official website is 88,000 yuan. In addition to these container mining farms with clear product parameters, some individual miners have chosen to assemble them by themselves, which is convenient for transportation, but the overall performance is poor.

Although container mines are convenient and easy to manage, they have not really become popular due to high costs and insufficient capacity. Currently, the most common mines on the market are still traditional board houses. "Mining is not an industry that likes to relocate. Mining likes stability." Huang Meng, head of the Rawpool mining pool market, said. The current coin price is still in a bear market downturn, and miners have to choose to survive in places with low electricity prices. If the coin price is at a bull market high, most miners will not easily choose to relocate. Every minute lost during the relocation process means a huge economic loss.

Apart from these obvious resource conditions, the operation capacity of the mining farm is also critical. Generally speaking, a mining farm will host multiple customers' mining machines at the same time. These mining machines have different models and performances, and the management methods are also very different. If the mining farm lacks operation capacity, it will be difficult to manage the hosted mining machines. If there is a sudden failure, it will not be able to respond in the first time, which will inevitably cause losses to customers. What's more, some mining farms will secretly switch the computing power of customers to their own accounts to seek profits.

In addition, the mining industry is resource-intensive, and electricity conditions have a certain degree of resource monopoly. How to connect various resource relationships and eliminate the mine's worries also tests the mine's operating capabilities.

The selection of a mine site is a very cautious matter. In addition to on-site inspections, we will also communicate with the power supply party to avoid risks at every level.

Thousands of miles of journey, the long road of mining machine migration

Two months later, the miners in Inner Mongolia, Xinjiang and other places may usher in a new round of north-south migration. Leaving the remote and dry northern frontier, their destination is the remote but humid southern forest. However, not all miners will move back. Those miners who have signed a full-year custody agreement with the mine will still place the miners in the entrusted mine in accordance with the agreement, regardless of dry or wet seasons; and except for ASIC miners, graphics card miners, due to their requirements for humidity environment, are unlikely to move out of the relatively dry northern mines.

The mine is located in a remote area with few people and inconvenient transportation. The number of mining machines to be transported is huge and small vehicles cannot meet the transportation needs. Railway transportation has many transit points and mining machines are easily damaged. Hiring a large truck with high price and convenience is the best choice.

Some of the miners are packaged

In addition to large trucks, the increasingly improved logistics network in recent years has also become an alternative way to transport mining machines. Deppon Logistics accepts many orders for the transportation of mining machines every year, but there are too many uncontrollable factors during the logistics transportation, and mining machines are high-precision equipment, which is not suitable for large-scale "migration" of mining machines. Unlike general freight, the transportation of mining machines requires special packaging cartons and sufficiently thick foam fillings. The quality of packaging is also directly related to the transportation safety of the mining machine and its operating performance after being put on the shelf.

In general, the transportation and packaging costs of each mining machine are between 15 and 20 yuan. However, this price is not the industry standard price. Due to different transportation distances, transportation conditions, etc., the unit price of mining machine transportation may be higher.

In addition to transportation costs, the cost of putting mining machines on and off the shelves also accounts for expenses. The mine management has limited manpower and cannot complete the work of putting tens of thousands of mining machines on and off the shelves. Generally, the mine will choose to hire local villagers to move the mining machines and place them on the corresponding shelves, and then the mine's professional operation and maintenance personnel will arrange the lines. And this fee will eventually be paid by the miners who host the mining machines. However, at present, the price of coins is sluggish, and the mine also needs to host profits. The cost of putting on and off the shelves is converted into the electricity price and is not settled separately. However, if the market is at a high point, this part of the cost will also be an additional expense.

The mining boom is surging, but profits still require careful cultivation.

According to industry insiders, the revenue during the flood season is expected to account for 60% of the annual revenue, and the revenue of some mines is even 50-50. It is true that the flood season brings low electricity prices, but it also brings more competitors - low electricity prices, previously shut down mining machines restart, computing power difficulty rises, and the revenue of the same mining machine also decreases. The revenue during the flood season is not as optimistic as imagined.

“The essence of mining is to seek profit. Although the mining sites in the north and south are incompatible, they have reached a delicate balance because of the interests.” Huang Meng, head of the Rawpool mining pool market, told ChainDD, “However, people are still relatively bullish during the flood season.”

In addition to market trends, the management capabilities and resource conditions of mining companies and miners also affect the final profit. The mining industry chain is complex, involving not only the high-tech links of chip research and development, but also resource-intensive industries such as power resources. The complex links have brought about a more complicated division of interests.

In the face of interests, various low-probability events may occur at any time. Mining farms may raise prices, electricity prices may be blocked, and even malicious terminations may occur in this flood season war. Among them, the power supply link is the most prone to problems. There is often a "middleman" between the power station and the mine. He holds the surplus electricity of the power station, and the mine owners can only buy electricity through them. However, the current coin price is not high, and these "middlemen" will not choose to breach the contract easily and raise prices; but once the coin price rises, the demand for electricity will soar and return to the seller's market, then the possibility of "middlemen" doing evil will also increase.

How to avoid these risks? How to deal with emergency problems? There is no standard answer in the industry at present, but it is undeniable that more answers can be obtained from repeated communication and docking, which also echoes the scene at the beginning of the article: the flood season is approaching, and running around has become the norm in the mining industry.

Because the tide is coming and we can only go with the flow.