The currency price roller coaster "crazy mining machine" becomes a thing of the past in Huaqiangbei?

An analyst at a New York investment institution said that the current trading price of Bitcoin is essentially the break-even cost of mining one Bitcoin. Due to different regional electricity costs, the cost of Bitcoin still varies greatly. Assuming that the electricity cost per kilowatt-hour is 6 cents, plus other expenses, the current cost of mining one Bitcoin is $8,038.

"Crazy mining machines" are gradually becoming a thing of the past in Huaqiangbei.

Recently, affected by the market of digital virtual currencies, the mining machine business has fallen into a slump. A reporter from 21st Century Business Herald recently visited Huaqiangbei, the largest market for mining machine transactions in China, and found that the price cut of mining machines, which was nearly halved, did not attract more customers. The grand occasion of global players buying mining machines in Huaqiangbei is no longer seen.

No more glory

With the rise of virtual currencies, the "mining machines" that are customized for the optimization of virtual currency algorithms have set off a wave of enthusiasm in Huaqiangbei. Many shops on the 3rd to 6th floors of SEG Electronics Plaza, which used to be mainly engaged in computers and accessories, have started to engage in the mining machine business since the second half of 2017.

Since October 2017, the price of tokens has skyrocketed, with the price of one bitcoin exceeding 100,000 yuan at one point. The dream of getting rich quickly attracted countless people to invest, which also pushed up the price of mining machines. At that time, a shop owner compared the "mining machine" to the "Apple mobile phone" in the past, saying that the mining machine business has revitalized the Huaqiangbei computer market.

On January 29, 2018, the price of Bitcoin hovered around 74,800 yuan. The reporter visited the Huaqiangbei market and found that the most popular Ant S9 (13.5T) mining machine was priced at about 26,000 yuan. In addition, most stores were short of supply and had little stock. It would take several days or until after the Spring Festival to get the goods.

The booming mining machine business has also made mining machine companies successful. Bitmain, which produces Antminer, Canaan Creative, which produces Avalon, and Ebang Technology, which produces Ebit, are the top three digital currency mining machine manufacturers in the world. These companies have become the enviable model of making a fortune in silence.

ASIC (Application Specific Integrated Circuit) mining machines have become the dominant force in mining, and have also provided new opportunities for upstream chip manufacturers. For TSMC, which leads in advanced process technology, due to the favor of the three major mining machine manufacturers, its third quarter 2017 financial report mentioned that $300 million to $400 million in sales revenue came from virtual currency and AI smart products. In addition, Samsung, which is looking for new profit growth points, also followed up immediately. It is said that it has signed an agreement with a company engaged in Bitcoin mining at the end of January this year to start producing chips for Bitcoin mining.

In February, the emergence of a series of negative news caused the price of Bitcoin to fall to nearly $6,000 at one point. Compared with the high of nearly $20,000 in December last year, the drop was a staggering 70%.

Inevitably, the market of mining machines was also affected. When the reporter of 21st Century Business Herald came to SEG Electronics Plaza again on March 19, many counters were neatly placed with unopened Antminers in stock. Many merchants quoted the price of Antminer S9 (13.5T) mining machine with official power supply at 13,600-13,800 yuan. Compared with more than a month ago, the price was nearly halved. And many shop owners said that there was no need to wait, and they could get the goods after paying the money.

Currently, on Bitmain's official website, an Antminer S9 (13.5T) mining machine with an official power supply costs 15,000 yuan, and the current status shows that it is sold out and can be shipped from March 20 to March 30. This also means that unless they are stockpiling at low prices in the past, current mining machine sellers have almost no profit margin.

According to Huobi.com's quote at 18:00 on March 20, Bitcoin was quoted at $8,570, up 4.3% on the day, and the cumulative decline over the past week narrowed to 11%. Ethereum rose nearly 1% and traded around $550.

Uncertain future

The process of Bitcoin mining is to use high computing power to solve a series of complex mathematical problems to prove that the "miner" used this process and put the transaction record on the blockchain. If the miner can successfully verify the equation, he can get the corresponding number of Bitcoins.

As the mining industry becomes increasingly large and regulatory winds tighten, it has become increasingly difficult and risky for individuals to enter this market to seek gold. Charlie Hayter, CEO of industrial data website CryptoCompare, said that people's interest in Bitcoin mining has surged since December last year, and since then, miners' income has been almost halved.

Theoretically, when the cost of obtaining Bitcoin exceeds the return, miners will lose the motivation to mine, and the mining machine business will naturally fall into trouble.

Thomas Lee, an analyst at New York investment institution Fundstrat, said in a report last Thursday: "The current trading price of Bitcoin is essentially the break-even cost of mining one Bitcoin. Due to different regional electricity costs, the cost of Bitcoin still varies greatly. Assuming that the electricity cost per kilowatt-hour is 6 cents, plus other expenses, the current cost of mining one Bitcoin is $8,038." This model allegedly includes three factors: the cost of mining equipment, electricity, and other expenses (such as the cost of maintaining cooling facilities). Another analyst at the company said that the Bitcoin price that makes most miners really start to shut down their operations is $3,000 to $4,000.

"Yesterday the mining farm's figures showed that it could mine 0.0017 coins every day, and the investment will definitely be recovered in more than five months", "Spot goods are cheaper than futures now, so if you have ample funds, act quickly, the price of mining machines will definitely rise", "The current price of Bitcoin definitely has room to rise", a business-savvy Huaqiangbei businessman told customers who came to inquire about prices on March 20.

A hesitant virtual currency enthusiast told reporters that there are many uncertainties in buying mining machines, including the stability of the machines, the price of Bitcoin and regulatory policies. "The current mining machine costs and mining income are directly linked to the price of the currency. Once the price of the currency fluctuates significantly, it will have a huge impact on the capital recovery cycle of mining. Since the beginning of this year, countries around the world have tightened their regulatory attitudes towards digital currencies. In the future, if more countries strictly control or ban Bitcoin, the price of Bitcoin may plummet. According to the current price of the currency, the average recovery cycle of mainstream mining machines takes about half a year. Mining machines are in high-load operation for a long time. Whether they can maintain healthy operation for more than half a year will determine the success or failure of the investment."