Taking advantage of the surge in coin prices, Bitmain sells off 100,000 Litecoin mining machines

On the evening of March 7, a message suddenly appeared in the group of "Latiao Wanba Cult Headquarters":

“Bitmain sold 100,000 Litecoin mining machines today.”

"Latiao" is the name of Litecoin (LTC) in the currency circle. Since the Spring Festival, affected by the halving of Litecoin production in August, the price of Litecoin has continued to rise, with the highest increase of 77% in one month.

As a result, all stakeholders in the Litecoin interest chain - mining pools, mining machine manufacturers, miners and coin holders began to become active, and some of them gathered in the "Latiao Wanba Cult Headquarters" group led by the CoinIn mining pool.

According to Odaily Planet Daily, the 100,000 Litecoin mining machines sold by Bitmain are of the L3 model, which has not appeared in the market for a long time.

A person close to the buyers of the mining machines said: "After L3, Ant launched L3+ and L3++. L3 may not have been sold in time, so they took advantage of the current market to clear their positions."

The person also introduced that Bitmain sold L3 at a price of more than 300 yuan, from which it can be known that this batch of mining machines helped Bitmain recover at least 30 million yuan in funds.

As the price of the currency rises, everyone from miners and dealers to miners and currency holders will have a good time. However, if one person loses confidence in this consensus, the price of the currency will plummet like a domino.

An industry insider said: "Behind this wave of Litecoin price boom is a good opportunity for big investors to reap the profits, but also a 'trap' for small investors."

“The digging is too fierce.”

As of March 12, the total network hashrate of Litecoin is 248 TH/s. If all 100,000 L3s (250 MH/S) sold by Bitmain are powered on, the network hashrate will increase by 8%. Therefore, this news inevitably makes Litecoin speculators excited.

A member of the "Latiao Wanba Cult Headquarters" group lamented: "The digging is too fierce."

Some people also speculated that such a large order might be used for reselling. Previously, some miners speculated on SC (Siacoin) mining machines. At that time, the price of SC increased by 10 times, and the price of mining machines also soared. The dealers who had the goods immediately made a fortune.

"Now that Litecoin has just doubled, mining machines may still be worth speculating on," he said.

However, some miners in the group also expressed their concerns, "The SC mining machine will not make money after a short period of operation, so don't buy the mining machine yet. The price has gone up now, whoever buys it will take over."

Regarding the 100,000 L3s sold by Bitmain, Hao Fan, a dealer who has been in the mining circle since early 2018, said that he had never handled a new L3 machine.

L3 was produced by Bitmain at the end of 2016. Since L3+ and L3++ were launched later, L3 has almost been eliminated by the market.

"Some of this batch of L3s are used for mining, and some are used for speculation (i.e. reselling). Thanks to this market situation, (Ant's) inventory was cleared out in an instant." said a person close to the buyers of this batch of mining machines.

Since February 8, the price of Litecoin has started to rise rapidly. By February 9, the market value of Litecoin once surpassed EOS and jumped to the fourth place in the market value ranking. In the following month, Litecoin fluctuated and rose, with the highest increase reaching 77% compared with February 8.

The strong trend of Litecoin not only helped Bitmain clear its inventory, but also brought rich profit margins to the Litecoin mining machine market.

Multiple hype

As shown in the figure below, Bitmain's Litecoin mining machines (Antminer L3+, Antminer L3++) have been sold out since March 7.

“Also, I heard that all the futures contracts have been reserved by dealers, and the (Bitmain) official website has not started selling them again so far.” Hao Fan told Odaily Planet Daily.

Image from Bitmain official website, date: March 12

On the afternoon of March 7, Hao Fan bought several hundred L3+ bare machines (without power supplies) from another dealer for 295 yuan.

As the news of Bitmain’s mining machines being out of stock came out, the prices of mining machines rose accordingly.

“The other party regretted selling it to me, but there was nothing he could do. I should have bought out the last batch of spot goods.” Watching the price of mining machines continue to soar, Hao Fan excitedly posted advertisements on his WeChat Moments.

These advertisements attracted many miners and peers to inquire about the price. "330", "360", seeing the market price continue to rise, Hao Fan quoted a price of 380, and by the next day, most of the machines had been sold.

"There is almost no pressure. I make a net profit of 80 yuan per machine." Hao Fan is very satisfied with the business.

The miners who purchased L3+ from Hao Fan then sold some of the mining machines to make a profit, and the rest were hosted in Hao Fan's mining farm for mining.

"Be careful when you take over for someone else"

When asked how much room there is for speculation on Litecoin mining machines, Hao Fan shook his head: "I think this wave of speculation has almost reached its peak."

But if we look further ahead, Hao Fan is also unsure about the market of Litecoin. Since February 8, Litecoin has risen three times. Entering the market at this time has both the risk of taking over for others and giving money to others, but of course there is also the possibility of further rise.

Jiang Yuan, a marketing staff member of an asset management platform, bought some Litecoin in early February. Now he has tasted the sweetness and is hesitating whether to sell or continue buying.

"On the one hand, it is difficult to say whether this market situation has reached its peak; if there is another market situation, when will it occur and how much will it rise?" Jiang Yuan hesitated.

Buying coins requires judging the timing, and buying mining machines is even more so.

Cryptocurrency speculation is an instantaneous operation, flexible and controllable. However, mining requires consideration of when the investment can be recovered, as well as the risks brought about by the significant changes in the price of the currency and the difficulty of computing power during the process.

Based on the current network difficulty and price, the payback period for a low-end Litecoin mining machine is 130-150 days, but if the price and difficulty fluctuate significantly, the results may be very different. However, this is exactly what Litecoin miners are experiencing.

There are still 5 months left before Litecoin halving. If it goes as expected, the total network hashrate will most likely only increase and not decrease (unless the price of the coin drops to the shutdown price). In fact, from January 19 to February 18, the total network hashrate of Litecoin has increased by 37%. The continued increase in hashrate means that the mining machines that were originally expected to pay back in 3 to 4 months will no longer be able to pay back.

In addition, the negative effects of the halving should also be included in the negative factors. Before and after the halving, the callback of the currency price due to speculation and false highs may make miners who fail to recover their investment in time even more sad.

After clearing L3, Bitmain launches new machine?

Another piece of bad news is that Antminer is suspected to have launched a new mining machine - Antminer L5.

Screenshot from cloud computing platform BitDeer

Previously, Odaily Planet Daily introduced BitDeer, which has a close relationship with Bitmain. For example, BitDeer uses all Ant series mining machines, and many of them are the latest generation of Ant mining machines, which are less in circulation on the market. Now it has taken the lead in announcing that the mining machine used for its Litecoin computing power contract is the Ant mining machine L5, which Jiang Lin believes should be an upgraded version of the Ant mining machine L3 series.

When Odaily Planet Daily asked BitDeer marketing staff for confirmation, they said Bitmain did launch the Antminer L5 and BitDeer got some machines but not in large quantities. As for the parameters of the Antminer L5 and other questions, they did not respond.

Odaily Planet Daily asked Bitmain’s public relations staff for confirmation regarding the Antminer L5, but the staff refused to respond on the grounds that they did not understand the mining machine business.

Since the new machine is likely to be released, the parameters, pricing and time to market of the new mining machine have become the key to miners' decision-making. The advent of new mining machines means that the computing power and efficiency are likely to be greatly increased, which also means that it is likely that the investment in old mining machines will never be recovered.

"When everything is still unknown, there are too many factors that affect our survival." Jiang Lin sighed in confusion.

(Hao Fan, Jiang Yuan and Jiang Lin in this article are all pseudonyms)