Analysis of the pros and cons of mining and cryptocurrency speculation

Currently, there are two main ways to obtain digital currency: the first is to simply buy it with real money; the second is to obtain Bitcoin through "mining".

The process of "mining" is actually to use a computer to calculate the Hash (hash value) of Bitcoin. It is similar to whoever solves the Hash first will get a reward. Whoever can be the first to add a new block to the blockchain can enjoy all the benefits of this block (that is, Bitcoin), while other miners will get nothing.

The Bitcoin protocol stipulates that miners who mine new blocks will receive Bitcoin rewards. At the beginning (2008), it was 50 Bitcoins, and then it was halved every 4 years. Currently (2018), it is 12.5 Bitcoins. By 2140, miners will no longer receive rewards. Yes, you read that right. By 2140, 21 million Bitcoins will have been mined out, so mining must be done as early as possible!

As we all know, mining requires a lot of computing power! Before 2010, ordinary computer CPUs could also mine (after all, the competition was not fierce at that time). But as the amount of Bitcoin mining/transactions increased exponentially, the competition among miners became more and more fierce, and mining required stronger computing power. It was difficult for ordinary computer CPUs to mine Bitcoin.

Since the mining software, from the programming principle, emphasizes large-scale parallel computing, around the end of 2010, GPU mining appeared, gradually replacing the inefficient CPU, and it was at that time that professional mining machines took shape!

As time goes by, mining machines are constantly evolving. The most popular mining machines on the market today are Antminer S9 and Shenma M3. As the price of Bitcoin has skyrocketed, the price of mining machines has also risen. It is reported that in the early days, it only cost 8,000 yuan to buy an Antminer S9 mining machine, but as the price of Bitcoin has risen, mining machines are in short supply. Now, the market price of an Antminer S9 is about 28,000 yuan, and a second-hand one also costs 22,000 yuan to buy, and it needs to be customized in batches, so the price of a single unit will be more expensive.

Let's take an Antminer S9 13T as an example. The computing power of an Antminer S9 is 13000GH/s, and the power consumption on the wall is 1300W. At the current difficulty, the theoretical profit of S9 running 24 hours non-stop is 0.0015 bitcoins. Excluding the electricity cost (assuming the electricity cost is 0.6 yuan/kilowatt, then the electricity cost for 24 hours is 1.3*0.6*24=18.72 yuan), the net profit of an Antminer S9 running 24 hours non-stop is 118.38 yuan (based on the Bitcoin price at the time of posting), and the cost of an Antminer S9 mining machine is RMB 28,000. The payback time for mining alone is about 237 days. Of course, there are also labor costs for miners. But once you form a scale and have tens of thousands of mining machines, the scale benefits will increase exponentially. From this, it can be seen that the benefits of mining with mining machines are still considerable.

Many people in the cryptocurrency circle are quick-in-and-quick-out market swingers, and long-term holders who hoard coins. Recently, I often hear a saying in the cryptocurrency circle: no matter how good the technical analysis is, it is not as good as the word "hoard". Looking back, if you were allowed to go back in time, would you go all in on BTC and stick to it until now? To get a better return on cryptocurrency investment, you must be able to hold on to the coins! It's not that those who do market swings don't make money, but those who can make big money must be the ones who can hold on.

If you don't believe it, look at BTC. If you buy it early and hold it, how many times will it be? Compared with mining, the threshold for hoarding coins is relatively low. You only need to pay the entry principal and the holding time. But you need to have a pair of sharp eyes. Choice and timing are very important. In addition, you must have a good mentality and don't check the market frequently. When choosing digital currencies, investors should still carefully read the white paper, understand the project and technical team clearly, and don't follow blindly. Again, there are risks in the market and investment needs to be cautious!

Advantages of mining:

1. Low risk: The risk of mining Bitcoin is much lower than that of other currencies;

2. Large profits: As long as the cost can be controlled well and the scale can be achieved, the profits will be substantial;

Advantages of hoarding coins:

1. Low threshold: The entry threshold is almost as low as that of the stock market, and there is almost no trading threshold;

2. Low cost: Compared with those mining machines and large-scale factories that cost tens of thousands of yuan, the money spent on hoarding coins is nothing. On the other hand, hoarding coins basically only requires time;

Summary: Therefore, hoarding the coins generated by mining is a way of attack and defense.

Original link: http://www.sohu.com/a/227145578_100137288

Mining income comparison: http://www.wabi.com/mining-income/bitcoin-miner.html