The evolution of cloud computing power, how to break the mining dilemma?

Since its birth, cloud computing power has received mixed reviews from the community. Some people compare the purchase of cloud computing power to the purchase of a "money printing machine". As long as the cost can be covered, it is like purchasing a continuous "money-making machine" and you can get mining income every day. On the contrary, due to uncertain factors such as the rise and fall of currency prices and the adjustment of computing power difficulty, there are also many people who cannot get their money back after purchasing cloud computing power products.

The earliest cloud computing products were based on Bitcoin and Litecoin. With the creation of the Zcash Genesis Block, its cloud computing products are emerging in an endless stream. Mining is no longer a game for retail investors and non-professional miners, and cloud computing is the best way to achieve mining for everyone and standardize mining.

The earliest platforms that provided cloud computing power products and are still active today include: Bitmain's Hashnest, Genesis Mining, Biwang, and Niubit. In the second half of this year, several companies, such as Hashbar, hash mining, ViaBTC, HAOBTC, and BitSE, also joined the cloud computing power market.

There are many companies that make a fuss based on computing power, and they also show their talent in naming. The cloud computing power platform of Bitmain, Hash Nest, first proposed the term " Accelerated Return on Investment Cloud Computing Power Contract (PACMiC) ", and it has been the fifth issue since its launch in 2014. It can be said that Hash Nest has four key factors for the development of cloud computing power platforms: Bitcoin mining chips, mining machine production capacity, rich market operation experience, and user groups accumulated in advance. Therefore, even in 2014 and 2015 when cloud computing power was called "cloud mining pit", Hash Nest's cloud computing power contract is still running as before.

BW is also one of the oldest platforms in China that first joined the cloud computing army. Named with the beginning of B, it launched products such as B1, B9, B11, B12 financial cloud computing power and B16 cloud computing power. BW's futures cloud computing power guaranteed contracts have attracted many users, but in fact, mining output is greatly affected by the outside world, and futures products are naturally more risky.

In order to highlight the product features and facilitate identification, in the second half of this year, HAOBTC proposed the " standard computing power ", and BitSE's Shuma Asset also launched the Zcash cloud computing power product ZMC, which is called " computing power equity certificate " in Chinese. In fact, both can be regarded as variations of the computing power contract.

The following article takes three typical computing power products on the market as examples to analyze the characteristics of the types of computing power products currently on the market, as well as the possible development trends of computing power products in the future.

Hash Power: BTC & Zcash Cloud Hash Power Contract

Pow88 was founded in 2014 and is one of the few cloud computing platforms in China that owns its own mining farm and operates professionally. After being wholly acquired by Chengdu Bitquan Company for 5 million yuan in November this year, it was reorganized and launched online. The first product it launched was the cloud computing power contract of the community's popular project Zcash.

The cloud computing power products launched by HashPower adopt the relatively traditional cloud computing power contract model, which is also the type with the largest number of products on the market. The main products promoted in the past two months are Zcash cloud computing power contract product Zcash1711 and Bitcoin mining machine BTC-A7Miner hosting contract.

Most of the products here are named after the corresponding mining machine models, usually sold by T or by unit, and the user's income is deducted from the maintenance fee and electricity fee. The corresponding payback period can be calculated using a common mining income calculator (http://mining.btcfans.com/).

Compared with the cloud computing power products in 2014 and 2015, the computing power bar provides computing power secondary market transactions and leveraged transactions. Buy and sell at the same time, and user funds are more flexible.

Other platforms that provide similar cloud computing products include Niubit, ViaBTC, hash mining, etc.

Good Bitcoin: Standard Hashrate

HAOBTC, a startup famous for its Bitcoin financial wallet, launched a new product "Standard Computing Power Exchange" in November this year. "Standard Computing Power" was also named by it.

Hao Bitcoin launched two computing power products this time: 150W/T standard computing power, corresponding to the Antminer S9, and 300W/T standard computing power, corresponding to the Antminer S7 and Avalon A6. At the same time, the standard computing power exchange was launched, where users can trade computing power at any time.

Standard computing power, as the name implies, is standardized computing power. According to the official definition of Bitcoin, its standardization includes four aspects:

Standardized units, in T; standardized power consumption. The first batch of standard computing power of HaoBitcoin launched two types of computing power with different power consumption. 150W/T means that each T computing power consumes 0.15 kWh of electricity per hour, and 300W/T means that each T computing power consumes 0.3 kWh of electricity per hour. Standardized income. At 8:00 every day after purchase, HAOBTC will deduct the income from the electricity bill for that day and distribute it to the user. The daily income and cost are public. The computing power period is unlimited income, and it will not be shut down until the mining income is insufficient to cover the electricity bill.

Wu Guanggeng, COO of Good Bitcoin, said, "Hash rate income = theoretical income - electricity cost. So there are two factors that affect the price of hash rate. The first is the change in theoretical income caused by the hash rate of the entire network, and the second is the proportion of electricity cost caused by the coin price."

(Note: The above table uses 1T computing power as the unit, and 1 Bitcoin is equivalent to RMB 5,200. Source: Good Bitcoin)

The standardization of computing power simplifies the user's understanding of computing power products. For those who purchase standard computing power, profit = expected total computing power income - purchase price. However, using the mining income calculator above to simply calculate whether the investment is recovered is not applicable to this product. Because the computing power price of the HAOBTC computing power exchange is a market behavior, it is uncertain whether the computing power purchased at different prices at different times can be recovered. Users need to judge whether the current computing power price is appropriate based on the estimation of future changes in the computing power of the entire network and the fluctuation of the currency price to decide whether to buy or sell.

For the issuer, Good Bitcoin, the one-stop service of borrowing coins for mining, sharing of mining revenue, and computing power trading is an attempt to deeply explore the Bitcoin industry chain. At the same time, the emergence of the Standard Computing Power Exchange can be seen as accumulating depth and cultivating users for future computing power futures trading. In the future, there will be more ways to play with computing power products.

A thoughtful user compared the revenue of several products (source: Babbitt Forum), and can roughly see the static payback period of each cloud computing product.

(HAOBTC officials pointed out that the current price of 150W per ton should be about 1,000 yuan.)

Digital assets: ZMC (Zcash mining power equity certificate)

With the popularity of Zcash, companies that do not have an absolute advantage in Bitcoin mining have deployed a number of graphics card mining machines to take the lead in Zcash mining. In addition to the aforementioned Zcash cloud computing power product contract launched by Hash Power Bar, F2Pool, Niubit, and overseas Genesis Mining, Toomim Brothers and Hashflare have all targeted Zcash mining, and the types of Zcash computing power products launched one after another are similar.

The recently emerged ZMC is different from all previous computing power products and can be regarded as a new cloud computing power model. ZMC is the abbreviation of Zcash Mining Coin, which represents the right to mine Zcash computing power and the right to obtain the corresponding Zcash. What is more interesting is that the design concept of ZMC is to integrate the computing power and re-cut the equivalent shares to form a standardized product. When evaluating the product, the issuer will package all possible influencing conditions into a package, so investors do not need to calculate and deduct electricity costs and maintenance fees when calculating their returns.

The most important significance of this cloud computing power product may not lie in the revenue, but in creating a new example: packaging computing power products for standardized cutting, solving the problem of the life cycle of ZMC computing power products and the maintenance costs of the corresponding life cycle, which is the first time such an approach has been proposed in the field of digital assets. Rather than saying that this is a cloud computing power product, it is better to say that it is a quasi-financial product that copies the model of traditional financial derivatives to the digital currency industry.

With value mining like this, the number and types of computing power products in the future, as well as their potential value and market, are immeasurable.

The three types of products launched by the three companies listed above all have their own computing power. HAOBTC and Algorithm Bar have their own mines and sell their products by themselves, while ZMC adopts a sales model in cooperation with trading platforms. Other cloud computing power products also have a sales model that does not use the platform's own computing power and earns the difference, which is also relatively rare in the market and will not be listed here one by one.

In the era of everyone mining, standardization and specialization are the general trend

Why are domestic companies flocking to cloud computing power? The first is the consideration of the issuer to transfer risks. Undoubtedly, the cost of mining is high, and launching cloud computing products can recover costs the fastest. The second is market demand. In addition to the realization of "everyone mining" that we often mention, Wang Ruixi, the founder of the computing power bar, also revealed that

“Some users abroad who want to participate in mining are suffering from the lack of good methods. The electricity price abroad is higher than that in China, and the transportation of machines is inconvenient. They have a strong demand for domestic cloud computing products.”

Wu Guanggeng believes that this is the inevitable result of full competition in the mining market:

"The era of huge profits from mining has passed. The core competitiveness of large mining companies lies in two aspects: 1. Power resources; 2. Large-scale and professional maintenance level. In short, they are cost advantages and technical advantages. For large mining companies, relying on these two advantages to earn stable and reasonable profits is a requirement for stable operation. For users, they invest money, share the mining dividends, and also share the mining risks. The two sides connect to form a market where everyone has computing power."

However, it is undeniable that despite the increasing number and types of cloud computing products on the market, users do not seem to be buying in. Wu Guanggeng is not overly worried about this.

“Now is the early stage of the market, which needs to be nurtured. There is information asymmetry and users are not very enthusiastic about participating. At the same time, mining is a long-term investment behavior, which is different from the quick in and out of cryptocurrency speculation, so it is normal for users to wait and see.”

Looking back to 2013, the world's first cloud computing platform CEX.io emerged, driving the rapid development of the entire cloud computing market. Today, overseas has completely lost its advantage in the digital currency mining industry, and domestic cloud computing platforms also have a trend of expanding into overseas markets.

As more and more cloud computing platforms emerge, the platforms want to stand out in the fiercely competitive market environment. After a process of survival of the fittest, in the future, as user awareness deepens, the computing power market price will become more transparent, and the value of computing power products will gradually return. Professionalization, standardization, and transparency are the inevitable trends in the development of the computing power market.

This article only lists product types and is not intended as an investment reference. There are many cloud computing products and the profit calculation is complicated. Please correct any errors.