6 properties Miners’ troubles: Mining is entertainment, rights protection encounters obstacles, the spring of small miners is over

When talking about blockchain, the public is most concerned about the dynamics of various digital currencies and exchanges, but to some extent ignores the existence of the "miners" group.

Recently, miners went to Bitmain to defend their rights, which revealed the other side of “getting rich through mining”.

After getting the mining machines, what greeted them was not the long-cherished wealth, but the price reduction of mining machines, the decreasing number of coins mined, and the failure to meet their rights protection demands.

We contacted a miner who shared with us his journey from understanding blockchain to getting involved in cryptocurrency trading and mining.

In 1988, he had 6 properties. He played with everything that made money. Speculating on coins and mining became new projects.

Xiang Yang, born in 1988, is the marketing director of a company. Since graduation, he has been engaged in related work in the communications industry, doing both technical and sales work.

He currently owns 6 properties in China, mostly in Henan and Shaanxi; he has also invested in real estate abroad.

The hardware for life is guaranteed, and Xiangyang has no other expenses except daily expenses. He habitually takes out all the money he has no need to spend to play.

"I'll try anything that can make money," Xiangyang is interested in all kinds of high-risk and high-return things.

Stock trading, futures trading and P2P investment have always been his favorite forms of entertainment.

Since March this year, he has added two new entertainment activities in his life: cryptocurrency trading and mining.

He only learned about the existence of blockchain last year, when he took over several smart city-related projects. The project party asked his team to develop the project in the direction of blockchain.

Although he had no idea what blockchain was, in order to meet customer needs, Xiang Yang began to learn about it. He collected relevant knowledge about blockchain on the Internet and bought various books.

During the learning process, he discovered that the cryptocurrency circle and cryptocurrency trading are the essence of blockchain, and he believes that "cryptocurrency trading makes money faster than the stock market, and there are also stable profit plans."

At that time, his reaction was: "This is a way of playing tailor-made for me, it's so exciting."

Just like that, Xiangyang couldn't wait to embark on the road of cryptocurrency speculation.

During this period, he, like many other cryptocurrency traders, experienced multiple liquidations, and it was common for him to lose hundreds of thousands of dollars in a week.

However, his mentality has always been calm. Although he thinks that there are some problems in the exchange that make him unhappy, he laughed and said, "For this kind of thing, you have to accept the consequences when you gamble. I didn't go to the place where they drank DDT to ask for compensation. Besides, there's no point in going there."

According to his estimation, in the past few months of cryptocurrency trading, he has only earned tens of thousands of yuan on the basis of breaking even. It is not a lot of money, but he has always enjoyed the fun that cryptocurrency trading has brought him.

I bought an Antminer and said I was cheated. The negotiation for rights protection failed.

In April this year, Xiangyang, who was increasingly interested in cryptocurrency trading, accidentally saw the training courses of the Blockchain Academy on a forum and spent 8,000 yuan to sign up for the course.

Finally, he summarized the course as follows: "It's only three days, and it's useless. The CEO class is still mainly about bragging. There are more presentations by the project parties, introducing the technical points of the project. Then there are some empty words about blockchain being promising, widely used, and the future."

Although he said that the course was useless, his consciousness was honestly influenced by one of the project promoters at the time, the Bytom team, and he developed a strong interest in BTM (Bytom coin) and the Ant B3 mining machine used by Bitmain to mine BTM.

According to Xiang Yang, more than 20 friends who participated in the training bought B3 mining machines, and afterwards they all said that they were "cheated."

According to official introduction, Bytom can register, exchange, and perform more complex contract-based interactive operations through this protocol. It is used to connect the digital world and the atomic world, and link online and offline. It is an interactive protocol for assets. Ant B3 mining machine is a mining machine equipped with artificial intelligence ASIC, which is specifically used to mine BTM.

So, after the first batch of B3 mining machines came on the market, he immediately bought 11 of them and quickly placed them in an idle yard to start mining BTM.

However, he did not expect that within a few days after purchasing the mining machine, his troubles only increased. First, the second batch of mining machines dropped sharply in price, and then his mining machine mined fewer and fewer coins. What made him even more angry was that "this high-priced mining machine does not mine as many coins as the cheap graphics card mining machine."

Later, Xiangyang found on the Internet that many miners encountered the same trouble as him, and the coins they mined were getting fewer and fewer.

The indignant miners set up a WeChat group to defend their rights and decided to seek an explanation from Bitmain. The miners signed up in the group on a voluntary basis to go to Bitmain’s office in Beijing for rights protection negotiations.

At that time, we also tracked and reported on their rights protection. They demanded that Bitmain refund and compensate for the Antminer B3 that was suspected of false advertising, or compensate 2,000 Bitmain coins.

Photos of the miners' rights protection negotiations, during which police officers were on site to mediate.

The negotiation process ended with mutual respect, but the negotiation results failed to satisfy the miners. Finally, the helpless miners chose to end the negotiations.

In view of Bitmain’s perfunctory response and dissatisfaction, the miners collectively held up notes accusing Bitmain and took the above photo in front of the entrance of Bitmain’s office building.

Finally, the miners summarized the results of the negotiation: "It can be summed up in one sentence. If there are any problems, you can take legal action. We will not return the mining machines. Moreover, Bitmain denied the false propaganda and explained the unfair terms, saying that mining machines are investment products and you have to bear risks when you buy them. These are explained in the terms."

Xiang Yang was one of the miners' representatives at the time. Talking about the rights protection at that time, he admitted: "Our rights protection organization is too loose. Everything we do is just to vent our anger. It is difficult to achieve the expected goals, but we will not give up."

However, compared with the problems of the mining machine itself, Xiangyang is more dissatisfied with the relationship between Bitmain and the Bytom team. During the initial promotion, the two parties endorsed each other. "Now it seems that they are working together to cut leeks."

Regarding the relationship between Bitmain and the Bytom team questioned by Xiang Yang, we have previously specifically asked Bitmain to verify this issue, but Bitmain has not yet responded.

It is worth mentioning that Bitmain co-founder Jihan Wu and his friends Chang Jian and Lao Duan founded the Bitcoin information exchange platform 8btc in 2011. Among them, Chang Jian is also one of the founders of Bytom.

There are also reports that Wu Jihan invited Chang Qia to co-found Bitmain, but Chang Qia refused.

Now Xiangyang mines more than a dozen coins per machine every day. Each mining machine consumes about 5 yuan of electricity per day. In addition to the initial hardware investment of 140,000 yuan, he said he would not make an estimate on the payback.

Later, he reflected on a course at a certain college, saying, "One should not be too naive. Activities that require payment are all designed to make the scam more realistic."

However, Xiangyang doesn’t care whether his mining machines make money or not. Instead, he smiled and said, “I’m just learning and I’m not afraid of losing money.”

A 10,000 yuan mining machine is sold for 3,000 yuan, and the spring of small miners is over

After experiencing rights protection, many miners viewed mining as a scam to make money, and Xiang Yang also began to think deeply about the relationship between the mining industry and blockchain.

In the end, he concluded that: "The mining industry serves the blockchain. There is no definition of whether mining itself is a scam or not. It mainly depends on the project."

He believes that mining is based on the recognition of current value, while buying virtual currencies such as Bitcoin is the recognition of future value. Buying coins is to earn the price difference, and buying mining machines is just to get the benefits of renting mining machines to the network. The sensitivity of currency price fluctuations is not high.

“Given enough time and space, the possibility of mining losses is relatively small, while buying coins is more likely to be affected by market conditions and make wrong decisions.”

However, Xiangyang believes that the overall number of people mining and speculating in cryptocurrencies is not large, and the popularity is not high enough. The people around him who mine are mainly friends in the cryptocurrency circle. In real life, only four or five friends mine, accounting for about 1% of his overall social circle.

According to his analysis, judging from the current implementation of blockchain projects, most coins have basically no actual value, but with the influx of funds and personnel, blockchain will inevitably bring some changes to society. It depends on who can finally make it land.

“However, mining is no longer profitable for everyone. The spring of ordinary small miners has long ended.”

We also found in the B3 mining machine rights protection group that since there has been no progress in the rights protection, miners can now mine about a dozen or even less than ten BTMs a day, and many miners have directly shut down the B3.

There are also some miners who borrowed money to buy B3 mining machines with the determination to "get rich by mining", but with no hope of making a profit or protecting their rights, they sold the mining machines worth more than 10,000 yuan for a few thousand yuan.

There are also many users on Xianyu who sell B3 mining machines at low prices.

Even if spring is gone, Xiangyang has no plans to quit the mining industry, and believes that mining can keep him sensitive to the blockchain industry.

Recently, he also asked the company's R&D team to design some mining machines that are pro-CPU algorithms, and he plans to design and produce mining machines by himself in the future.

It is worth mentioning that we contacted Yi Hong, who has been engaged in the sale of mining machines for nearly two years. He has sold a total of about tens of thousands of mining machines, but he still maintains a wait-and-see attitude towards the mining industry and has not participated in mining so far.

After making a lot of money, mining machine manufacturers are seeking transformation, and the future is difficult to predict

How are the mining machine manufacturers at the top of the industrial chain surviving?

Currently, the mining machine industry has a high degree of market concentration. The top two companies in terms of market share (Bitmain and Canaan Creative) account for more than 80% of the market share, and the industry's competition landscape is an oligopoly.

According to ICWise, Bitmain's sales in 2017 are expected to reach a staggering 14.3 billion yuan, surpassing the domestic mobile phone chip design company Spreadtrum and ranking second in the 2017 list of China's top ten integrated circuit design companies, second only to Huawei HiSilicon.

Analyst Bernstein estimates that Bitmain had an operating profit of $3 billion (about 19 billion yuan) to $4 billion (about 25.3 billion yuan) in 2017. Bernstein's US semiconductor team estimates that Nvidia's operating profit was $3 billion during the same period.

Canaan Creative has submitted its prospectus to the Hong Kong Stock Exchange, and the prospectus shows that its operating income in 2017 reached 1.3 billion yuan, an increase of more than 4 times year-on-year; its net profit in 2017 was 360 million yuan, an increase of 6.9 times year-on-year.

Although the market data of the above two mining machine companies are encouraging, the business model of major mining machine manufacturers is basically based on the research and development and sales of mining machines, and the business model is single.

Many analysts say that the current downturn in digital currencies has led to a decline in demand for mining hardware, and mining equipment suppliers are currently seeking new alternative income to offset the decline in demand for the mining industry.

Among them, Rosenblatt analyst Jun Zhang predicted in a research report that Chinese cryptocurrency mining machine companies Bitmain and Canaan Creative may cut their orders for TSMC and Samsung foundry equipment by another 50% as digital currency market prices come under pressure.

Gigabyte Technology Co., Ltd. recently stated directly at an investor conference that the company's graphics card sales are expected to drop by 20%.

As the analyst said, Wu Jihan previously stated in an interview that Bitmain will continue to vigorously develop mining equipment in the next few years to ensure its competitive advantage. In the next few years, the encryption market will begin to support the real economy and build more financial markets on the Internet.

According to him, Bitmain will also launch a large number of artificial intelligence chip products to the market, and is expected to launch hardware for artificial intelligence acceleration (similar to Google's TPU) by the end of this year.

In addition to the problem of a single business model, policies are also an important factor affecting the development of the mining industry, and the international situation is also unclear.

Jonathan Bertrand, founder of D-Central, recently said that due to the "unreasonable policies" of the Canadian province of Quebec and the lobbying efforts of Bitmain, small mining companies in Quebec may move their operations to other regions.

In addition, with the competition in the mining machine market itself and the reduction in the number of fixed currencies, mining will become increasingly difficult, and the marginal benefits of mining will gradually decrease.

The future of the mining industry will also become more unpredictable.

Note: All names in this article are pseudonyms