In just a few months, two generations of "miners" experienced the baptism of ice and fire

“Bitcoin is taking another dive.”

“Is there still a chance of recovery?”

Recently, I believe that those who are panicking because of the collective plunge in digital currency prices are not only speculators, but also a large number of "miners."

Over the past year or so, blockchain has gradually become a popular topic, and "mining" has also become a popular profession. Some financial and Internet company executives have even given up their high salaries to become Bitcoin "miners."

In the past six months, digital currencies such as Bitcoin have also experienced several shocks of varying degrees. After experiencing great ups and downs in prices, some "miners" left the market with full loads and "retired" early, while others took advantage of the victory to continue to make money. However, some new "miners" found after entering this seemingly rich mine that the money in the mine seemed to have been taken away by the "predecessors", and now they are only left with losses.

What is the reason that the income and situation of two generations of "miners" who entered the market only a few months apart are so different? Perhaps the mining experience of the two "miners" in different periods in the article is worthy of attention.

Seizing the opportunity, early miners quit

“Sometimes if you bet on the right time, you can have a comfortable life for the rest of your life.”

Aaron, who said this, is just a young man who has just entered his thirties. He is on vacation in Canada with his wife, children and parents. For him, settling down in Quebec with his family is the ultimate goal in the near future. To this end, he returned to tradition and began to look for some immigration projects worth investing in.

"Don't think I'm doing well now. I was also miserable a year ago." Aaron recalled during an online exchange that he began to pay attention to the development trend of digital currency and the wealth value behind it when he was working as a programmer three years ago. However, he decided to become a Bitcoin "miner" at the end of March last year. "I am probably the second or third generation miner, so I have always been worried about sudden changes in the trend."

What Aaron didn’t expect was that he didn’t catch up with the sudden change in the trend, but instead ushered in the best and most profitable era for “miners”. He told Dongdong Notes that the first batch of mining machines he bought with his own money were assembled “second-hand goods”. Not to mention the computing power, the frequent downtime and failures alone made him suffer a lot.

"I had to keep an eye on it all the time, even when I was sleeping at night. If there was a problem with any of them, I would fix it immediately. I didn't sleep well for a long time." Compared with the early mining machines with weak GPUs, these "second-hand" machines equipped with RX 470 mining cards can contribute an average of 0.8 bitcoins to him every day. Using the price of bitcoin in April and May last year, Aaron's daily income is nearly $2,000. "And at the beginning, the mining machines were all placed at home, so the electricity bill was slightly higher."

In the second half of the year when Bitcoin was growing rapidly, he mobilized almost all his trusted relatives and friends to join the ranks of "mining". The scale of mining machines also expanded to more than 20, and even added professional-grade mining machines such as Ant S5+ and S7. Although the performance of the machines is getting stronger and stronger, Aaron vaguely feels that Bitcoin mining is becoming more and more difficult.

"It should be around October last year, when Bitcoin broke through 10,000 (US dollars), and the industry was in an uproar, and a large number of new miners joined the industry." He found that due to the increasing competition, the computing power of miners' equipment was also constantly improving. Therefore, the amount of Bitcoin he could mine every day became less and less. If ten mining machines were running non-stop, he could only mine 1 to 2 Bitcoins a day. "Plus, the price of Bitcoin was rising a bit crazy, and I was afraid of risks, so I chose to retreat at the end of October."

When talking about the fact that Bitcoin soared to a high of $18,674 on January 11 this year, Aaron said that he did not regret quitting the "miner" ranks early. In his opinion, the opportunity to make money is fleeting. But whether it is investment or speculation, the most taboo is greed. It is better to make less money than to put oneself in risk. "But many people do not understand this truth. Those who enter the industry at high prices may not be as lucky as me."

Newbies follow the trend, and it is difficult for "high-consumption" mining farms to make money

“Mining may seem glamorous, but the risks are still huge.”

Zhang Tao, who comes from a financial family, is one of the many "latecomers" mentioned by Aaron. A year ago, he quit his job at the bank, used hundreds of thousands of savings to buy a "mining machine", became a full-time "miner", and officially started his "mining" career.

"Although I didn't catch the wave of opportunities at the beginning of the year, I still reaped a lot of benefits after July last year." At that time, watching the prices of digital currencies of various names rising rapidly, he seemed to see a bright future for mining.

After recovering the cost of the first batch of mining machines, Zhang Tao continued to invest more than 500,000 yuan to purchase new mining machines with higher computing power, and rented an industrial plant in the suburbs of Qingyuan, configuring it into a small-scale "mining farm". In addition to Bitcoin, he also "mined" Ethereum and other more easily accessible currencies. "Because there are more than 50 mining machines in total, only the industrial power grid can handle it."

Although this small "mine" consumes nearly 700 kWh of electricity every day, and the electricity bill exceeds 800 yuan, in theory it can bring Zhang Tao nearly 6,000 yuan in daily income. Therefore, the mine will bring him nearly 200,000 yuan in income every month, which is quite considerable for an individual miner.

"But theory is theory, and reality is much more complicated than theory." He said that when he mentioned that he was mining, many people around him would think he was rich and look at him with envy, but only Zhang Tao himself understood the hardships of the mining process. "If I say I don't make money, some people will say I'm hypocritical, but mining really doesn't make much money nowadays."

He told Dongdong Notes that at that time, a brand new S7 mining machine cost around 10,000 yuan. Based on the daily revenue of 250-280 yuan per mining machine, the cost could be recovered in one and a half months. However, many people don’t know that mining is a job that consumes a lot of equipment performance. Running at high speed for 24 hours, within a month or so, the mining cards and other components in the mining machine will have different degrees of yellowing and unstable operation. At this time, although the mining cards can still be used, the computing power is greatly reduced and the power consumption has also increased to a certain extent.

"Generally speaking, a mining machine will be eliminated after two to three months, otherwise it will have a high failure rate, high power consumption, and poor performance." Therefore, when the second batch of mining machines purchased by Zhang Tao was "full month", the first batch of mining machines were basically facing elimination. "After a mining machine recovers its cost, it will only have one or two months of life left."

A friend once asked him, after the mining machine "pays back", is the income generated by the remaining life cycle the net profit earned by the "miner"? This idea seems ridiculous to him.

Zhang Tao took out a stack of receipts and did the following calculations with Dongdong Notebook. The monthly rent for the factory building was 14,000 yuan, and the electricity bill was 26,000 yuan. The high-intensity operation mode caused the damage rate of the mining machine to be alarming. The cost of various minor repairs and maintenance was as high as 12,000 yuan, and the salary of the technical workers on shift was 24,000 yuan. The total was 76,000 yuan.

"This is the ideal minimum value. Usually the monthly cost is around 90,000 yuan." He also said that in the process of mining, there are always problems such as downtime, network failure, power grid failure, and currency price fluctuations, which makes it difficult for the "mine" to achieve a theoretical monthly income of 200,000 yuan. It is even only 50-60% of the theoretical value. "To put it bluntly, I only earned a wage at first, but now I am smiling secretly because I am not losing money."

After experiencing the ups and downs in 2017, Zhang Tao managed to survive. However, the various regulations and withdrawals that began at the end of last year made him feel that a storm was coming. In particular, the sharp drop in the prices of Bitcoin, Ethereum and other digital currencies that began on March 15 this year made Zhang Tao realize that it was difficult for the "mine" to continue to maintain a balance between income and expenditure. He told Dongdong Notes that if he continued to lose money next month, he would make up his mind to close the "mine" and completely withdraw from the cryptocurrency circle.

The cryptocurrency world is a top game, and novices have become the main players

In Zhang Tao's eyes, Aaron's career as a "miner" is undoubtedly enviable. But in Aaron's view, Zhang Tao's following the trend of "mining" is a very "stupid" behavior. He told Dongdong Notes that since mid-2017, as more and more people have been mining, the competition has become more and more fierce, and the requirements for mining machine computing power have been constantly breaking records, so the number of bitcoins that can be "mined" has become less and less.

On the other hand, examples of people getting rich overnight through mining are still frequently reported in the media, which has led to more and more new "miners" like Zhang Tao who are unaware of the truth to follow suit and join the industry. However, they do not know that the risks in this industry are already high, and many people find that the returns are far less than expected after investing in expensive equipment.

"Two years ago, all the topics of conversation at friends and classmates' gatherings were real estate, but since last year, the topics have all become blockchain and Bitcoin." Aaron said that because of this, he felt that the blockchain, especially the bubble of digital currency, has become bigger and bigger. You know, blockchain has existed as early as 10 years ago, but because of a Bitcoin packaged as a "scarce resource" by an institution, it has become mysterious. "Let me ask, does the digital currency in the blockchain have real circulation significance?"

He told Dongdong Notes that he had noticed this since he started paying attention to mining. In the blockchain, after grabbing a block through accounting, miners can get a certain percentage of Bitcoin from the transaction as a "reward."

However, the accounts they record may not have value, and the recorded transactions may not have any practical significance. Not to mention the principle of random numbers colliding to produce blocks during the mining process. "To put it bluntly, it's the same principle as buying lottery tickets and drawing prizes, but the chance of winning is higher," he explained.

Therefore, in essence, the purpose of Bitcoin's wanton speculation with the beautiful cover of "blockchain" is to attract more retail investors. After entering the cryptocurrency circle, many novices will follow the trend and send money to the market without knowing the truth, while those who stand at the top of the pyramid and have a large amount of original digital currency will become wealthy.

When the digital currency bubble bursts, all virtual media will become worthless. A large number of "miners" who follow the trend will become hype tools used by institutions, and retail investors will become "bag holders".

"Although I am glad that I was among the group of people who withdrew at the best time, I still feel scared when I think about it now." Aaron told Dongdong Notes that if he had hesitated for a few more months last year and had not withdrawn from the cryptocurrency circle in time, he might have become a martyr now, or even worse than those "miners" who did not make money.

Follow the WeChat public account "Dongdong Notes" to get the latest and hottest technology information for you every day~ With many years of experience in financial media, a senior industry analyst, and the author of three best-selling books: "Xiaomi Ecosystem Battlefield Notes", "WeChat Thinking", and "WeChat Power".