The price of mining machines has shrunk by 90% in half a year. If they cannot be sold, they are like scrap metal.

A few cents can crush a small miner.

Since the second half of this year, the second-hand mining machine market has ushered in a wave of selling. The price of mining machines has dropped from 20,000 yuan per unit at the beginning of the year to 2,000 yuan per unit today, and sometimes they are even unable to be sold.

In fact, behind the phenomenon of mining machine selling, we can see that the market is undergoing a reshuffle. The Matthew effect is gradually becoming prominent, small mines and new miners are experiencing life and death, and profits are more concentrated on large mines with strong resources and financial resources.

01 Sold at half price, like scrap metal

On second-hand mining machine trading websites such as "Huosu Bitcoin Trading Network" and "Caiyun Bit", the price of second-hand Antminer S9 has dropped to around 1,200-1,500 yuan, while the price of a new S9 mining machine on Bitmain's official website is 3,000 yuan. During the bull market, the price of this mining machine was even hyped up to more than 20,000 yuan.

The second-hand price of the Ant T9 model is as low as 500-600 yuan, which is only one-third of the price of a new mining machine. In the bear market of the cryptocurrency circle, the price of the second-hand mining machine market is getting lower and lower.

(Caiyunbit second-hand mining machine trading network)

On the Caiyun Bit website, as of November 5, there were a total of 2,176 transaction data. According to statistics from Odaily Planet Daily, sales information accounted for 72.8%, while recycling information accounted for less than 28%. This shows to some extent that these second-hand mining machines are in a state of unsalability.

According to members of a mining machine exchange QQ group called "CoinIn Mining Pool Partners", many second-hand mining machines cannot be sold, especially the old ones, because the technology of the old mining machines is outdated, the power consumption is high, and the computing power is small. They cannot mine as well as the new mining machines with high computing power, and are "almost like scrap metal."

Many miners told Odaily Planet Daily that the group currently selling mining machines in the second-hand mining machine market is mainly concentrated in small miners and small mining farms that entered the market at the end of 2017 and the beginning of 2018.

At that time, the price of coins was high and the mining machines were expensive. After they bought the mining machines at a very high price, they encountered a sharp drop in the price of coins. The income from mining and selling coins could not cover the costs such as electricity bills, so they had to sell them. But unlike holding coins, if the price of coins falls, you can continue to hold them and wait for them to rise again. But the mining machines need to mine every day, so you have to pay electricity bills every day. Those who can't bear the pressure can only sell them.

02 A few cents crushed the small miner

Odaiy Planet Daily came into contact with a mining machine seller named Chen Hao, who entered the mining market a few months ago because he heard the saying "speculate on coins in a bull market, and mine coins in a bear market". However, within two weeks of buying the mining machine, he was looking for buyers in QQ groups, "because the coin price was low and the electricity bill was too expensive".

This week, Chen Hao's mood is like the weather in Northeast China, which is a bit bad. A week ago, he bought 10 Antminer DR3 mining machines, which are specially used to mine a small currency called DCR.

Before the machine arrived, Chen Hao asked someone to find an abandoned factory in an old industrial area in Shenyang. The factory didn't even have cables. He spent about two days digging holes, burying electric poles, and hiring electricians to pull cables. He originally planned to continue to expand the scale, so he also demolished some redundant walls.

After the construction was completed, the electrician suddenly told Chen Hao that the electricity fee here was calculated according to the tiered electricity rate. He roughly calculated that the average price was 1.05 yuan per kilowatt-hour, which was twice as high as the 0.5 yuan his friend told him before. The average household electricity price was only 0.8 yuan per kilowatt-hour, and the electricity fee in the southwestern mountainous area was between 0.28-0.45 yuan.

Unable to afford the 1.05 yuan electricity bill, the rented factory building had to be returned. The demolished wall was rebuilt. The cables and electric poles are still there.

Later, a friend of his gave him a place in his assembly plant to store the mining machine. Although he didn’t have to pay rent, it still consumed electricity every day.

"All these add up to more than 10,000 yuan," he said somewhat frustratedly.

“Why not host the mining machines in the mountains? The electricity cost is low there.”

"If I knew someone there, I would have gone there to entrust my computer to a server long ago." Chen Hao said with some frustration, "And if you want to entrust your computer to a server, you need to have at least 100 computers. I only have 10, so they won't let me entrust my computer to a server."

Recently, Chen Hao asked in a QQ group whether anyone was recycling mining machines, but there were few responses.

People like Chen Hao can be seen as a specific portrait of the group of sellers. They have just entered the industry and do not know enough about it, nor do they have the resources to find low-cost hosting. They rushed into the market because of an investment logic, and had to withdraw in a hurry under the pressure of high costs.

"Can't we stop first?" the reporter asked.

"If we stop for even a minute, we will lose money... We can only dig while looking for someone to help."

When Chen Hao rushed into the cryptocurrency market in September last year, everything he bought went up, like a dream. Later, he encountered a bear market and suffered losses. He began to believe the saying "mine in a bear market and sell coins in a bull market". So he wanted to mine some coins in a bear market and then sell them in a bull market. But he didn't expect that his practice of this saying would end in failure in just one week.

In fact, the logic of this sentence is correct, but Chen Hao didn’t know that there is a prerequisite: you must have sufficient financial resources and resources to support the mining costs in order to survive the long bear market.

Obviously, Chen Hao went to the wrong theater and he was not the protagonist of this story.

"What did you do before? Can you go back?" the reporter asked.

"I can't go back anymore. This is my last resort..."

03 Large mining farms are still profitable

After some twists and turns, Chen Hao finally found a buyer. After Liu Zhekai reached an agreement with Chen Hao, he bought an overnight ticket from Beijing to Shenyang.

He and Chen Hao were actually lurking in a QQ group. Unlike Chen Hao, he mainly looked to see if anyone in the group wanted to sell mining machines, and he would buy them back. Because the group updates too quickly, the two never communicated at the same time.

10 mining machines will be delivered from Shenyang to Beijing by express delivery, and will eventually be delivered to Liu Zhekai's customers or kept for his own company. He said that their company is not only a mining machine sales company, but also has a mine in the mountainous area of ​​Sichuan, where they mine and outsource mining to others, with a scale of nearly 20,000 mining machines.

While introducing, Liu Zhekai handed the mobile phone to the reporter and clicked on the video stored in it, "This is our mine, and this is the hydropower station..."

In the video, there is a stream, with rapids hitting rocks and splashing water. Beside the stream, there are mines and hydroelectric power stations. It is unclear whether the roaring sound comes from the stream, the mines or the hydroelectric power station.

He probably realized that the sound was a bit loud, and quickly scrolled to the next photo. In the photo, a car was parked on a steep mountain road surrounded by lush trees. This was the general environment of their mine.

Liu Zhekai revealed that a mining farm of their size gets 0.38 yuan per kWh of electricity. Currently, each mining machine makes a net profit of about 4 yuan per day (80,000 yuan per day for 20,000 mining machines), while last year it made 200 yuan (4 million yuan per day for 20,000 mining machines). He said that the larger the scale of the power plant, the cheaper the electricity bill.

"To get electricity at a lower price, it actually depends on the company's resources, such as government relations." Their company is part of Huobi, which is a great help to them. "Small mining farms with thousands of machines have a hard time," he emphasized. While he was talking, a phone call came in asking if he still had a certain model of mining machine.

In fact, companies like Liu Zhekai's have industrial layouts in multiple links such as mining, hosting, and sales. The scale effect makes the unit cost they actually pay much lower than that of small miners and small mines, so they can survive better.

Liu Zhekai revealed that their company is still profitable, but relatively speaking not as profitable as last year.

04 Large companies take advantage of the opportunity to enter the market with capital

Taking advantage of the plummeting prices of mining machines, some traditional large companies and capital parties took the opportunity to enter the market.

Liu Xianmin, a veteran miner and owner of a mine, revealed that some funds and listed companies have recently come to buy mining machines. Because the returns of traditional industries around the world are very low, everyone wants to find opportunities in this new market.

"Mining is a physical industry and is closest to the logic of their traditional world. They have also seen Bitmain's financial report, which shows such high profits. The overall dividends of blockchain have not yet been consumed. The year 2017 was what we called a small bull market," Liu Xianmin explained.

There are two ways for traditional financial institutions and large companies to participate: one is to invest in mining farms, and the other is to build their own mining farms. For some listed companies with poor financial reports, high cash flow mining is a good way to save themselves. But their biggest difficulty is how to obtain policy approval. Recently, some Internet giants have laid out their server business in Africa, and some people suspect that they are secretly doing mining business.

In addition, capital parties and large mine owners in the industry are generally optimistic about the mining industry .

Zhang Yiyun of Jidou Capital believes that mining is the real estate in the blockchain field.

Liu Xianmin, an old miner, said that the mining circle, as the cornerstone of the industry, not only provides computing power for the blockchain, but also introduces the most advanced wallet technology. He believes that when mining, the mining pool issues coins every 10 minutes, and the coins distributed to miners need to be stored, which requires wallet technology. The earliest wallets all came from mining pools.

Bao Erye, the owner of a large mine, said on Weibo that he had found electricity at 4 cents in the Middle East and called on everyone to go to the Middle East to develop mining.

Shenyu, founder of F2Pool, the earliest Bitcoin mining pool in China, told Odaily that mining machines are mainly used for POW mining, and the number of public chains using POW mining algorithms accounts for nearly 50% of the total number of public chains. This shows that the demand for mining machines in the blockchain industry is extensive and lasting.

Prior to this, Bitmain’s layout in the AI ​​field has aroused speculation from the outside world that the mining industry is in decline because of the decline in profits from mining machines. Zhang Yiyun told Odaily Planet Daily: “The AI ​​business does not make money, but it is good for telling stories. At present, the main profit in Bitmain’s financial report is still mining machines.”

As for the future, he expressed optimism about distributed storage mining, and therefore believed that domestic IDC computer rooms (similar to Alibaba Cloud's computer room hosting) will usher in a new era.