Financial management, contracts, and cloud computing power, how should this account be calculated?

Since 2014, Bitcoin financial management has gradually entered the players' field of vision. After more than a year of development, the Bitcoin financial management market has stabilized. Currently, Bitcoin financial management on the market can be roughly divided into three categories according to different names and profit calculation methods:云算力,理财, and合约.

In cloud computing power financial products, users actually purchase computing power. Usually, in addition to purchasing computing power, users also need to pay electricity and maintenance fees. Cloud computing power carried too many fantasies at the beginning, but its actual performance was criticized. There are many Ponzi schemes created under the guise of cloud computing power, and the 2014 Fried Cat incident also caused many domestic users who purchased cloud computing power to suffer.

Currently, the more active cloud computing platforms in China include Bitmain's HASHNEST. In addition, BW's cloud computing wealth management products are also being launched continuously. As of August this year, the Coin One plan has paid back its investment and generated profits, and the first and second phases of Coin Nine are both in the process of paying back their investments.

Financial management is the part that is most similar to traditional finance. Currently, there are two companies in China, HaoBTC and JuA, that provide relatively typical financial management services. HaoBTC is a Bitcoin wallet platform where users can choose to deposit fixed-term or current accounts. HaoBTC uses part of the deposited Bitcoins to invest in mining farms, and the income from the mining farms is used to pay interest. In addition to providing a current deposit method, JuA is more similar to online lending. Users directly choose which financial investment project to purchase, and the project description, principal guarantee plan, implementation details, etc. will also be made public.

In addition to Bitcoin cloud mining and financial management, Bitmain was the first to propose the term "合约".

The reason why it is called a contract is that it adopts a different algorithm from the past and integrates multiple attributes such as financial management and cloud computing. In the past six months, Bitmain has launched three PACMIC contracts, with V1 earning 0.7 (satoshi/BTC/second), V2 earning 0.45 (satoshi/BTC/second), and the recently launched V3 earning 0.8 (satoshi/BTC/second).

At first glance, they all seem to have attractive yields, but we will have to wait until the contract expires and get the final report to know the actual situation.

This is a difficult account to settle.

The 25% annualized rate of return proposed during the promotion of the contract V3 launched by Bitmain has caused most users to exclaim that it is hard to calculate.

Some netizens calculated this for users:

Make three assumptions:

The difficulty of Bitcoin mining remains unchanged, the price of Bitcoin is stable at 1,670 yuan, and the manufacturer does not breach the contract:
1T computing power = 0.666btc = 1112.22 yuan. The theoretical value of output per ton is about 16 yuan per day (according to the contract, "the maintenance fee of computing power, electricity fee, etc. are provided by the manufacturer")
Payback period: about 70 days Extra income (0.8 satoshi/second): 1.154304 yuan/day, total extra income of 80.8 yuan in 70 days

The customer gets his money back, the contract ends, and the mining machine becomes the manufacturer's property:
Total customer revenue: 1,193 yuan Profit margin: 7.3% (70 days)
Daily interest rate: about 0.1%

This product combines the features of financial management, mining, and Bitcoin, which is very creative (foreigners would definitely not be able to think of it)
The manufacturer borrows coins from players at a daily interest rate of 0.1% to exchange for RMB to offset the RMB costs of production and operation. The manufacturer recovers the cost in one go. The manufacturer uses the mined coins to pay the interest and return the principal. The player recovers the principal and interest after 70 days.

From the perspective of币: win-win, no risk for both parties (note the assumptions)
From the perspective of法币:
There is a risk of loss due to the decline in the price of the currency. Since the manufacturer will return the currency after recovering the cost at one time, there is no such risk for the manufacturer, but the players will suffer RMB losses due to the decline in the price of the currency;
If the coin price rises, the manufacturer will no longer have excess profits, but players can enjoy more RMB profits brought by the coin price increase, which is about 10% higher than holding coins.

There are two other situations where玩家都会发生绝对亏损in terms of both currency and RMB:

1. The difficulty of mining has skyrocketed, and the mining output cannot cover the electricity bill. Manufacturers also do not have this risk, but players will not be able to recover their principal. However, it seems that it is difficult for the difficulty of mining to rise sharply in the short term of 1-2 years.
Calculated based on 0.6 yuan electricity fee and 0.5W power consumption, the electricity fee is about 7.2 yuan/day. If the currency price remains unchanged, the daily mining output is 16 yuan, and the mining output is reduced by half, that is, if the difficulty doubles, the output will not be enough to cover the electricity fee. However, it seems difficult to double the computing power of the entire network at present.

2. If the price of the currency drops by 50%, the output will not be enough to cover the electricity bill, but this seems unlikely at present, as the price of the currency has been running steadily at a low level for a long time.

So overall, the product is not very risky. It just allows geek players to experience Bitcoin mining and decentralization, and lose the fun of adventure as well as the long-term profits after purchasing the mining machine (of course, buying a mining machine directly will not be that cheap, and there are also issues such as maintenance, site, and electricity costs).

We found that the initial contract volume on August 12 15000T , and a few days later the merchant increased it to 30000T .

It is worth noting that PACMIC V3 is characterized by the gradual repayment of the principal, and the returned principal will no longer be charged interest. In short, the gimmick of 25% annualized rate of return can be achieved by continuously opening the additional principal mode, but the probability of this happening is undoubtedly very small. The actual income is subject to various conditions. The contract is sold out (or the additional principal is not opened), the price of the currency falls, the difficulty increases, etc., which can make the 20% annualized rate of return unattainable. In extreme cases, users may even find it difficult to recover their investment.

Li Yingfei from Bitmain said:

“In fact, PACMIC is essentially a product that allows miners to store unused coins in hashnest to earn extra income. If 0.666 coins are priced at 100T, they will be returned instantly, and the miners’ idle coins will still be idle. This product will be completed in about 100 days of mining, and the annualized income is expected to be around 10%.”

Let's try another calculation. The mining machine used in Bitmain's V3 contract is Antminer S5, with a computing power of 1150GH/s and a power of 590w. The difficulty increase is assumed to be 1%, and the electricity fee is 0.32 RMB per kWh. Roughly calculated, the annual income is 3769.72 yuan, and after deducting the cost of the S5 machine, it is all the profit. The V3 contract states that all income will be returned to the user.

So what do manufacturers earn? First, the manufacturer borrows coins from players at a daily interest rate of 0.1% to exchange for RMB to offset the RMB production and operation costs. The manufacturer recovers the cost in one go, and the contract is completed, and the mining machine still belongs to the manufacturer.

However, regardless of the assumptions, the risk is almost entirely borne by the user. In fact, in a high-risk industry like Bitcoin, when purchasing financial products, users must consider whether the income matches the risk you take. In addition, if there are no accidents, financial products denominated in Bitcoin will certainly receive corresponding Bitcoin interest when the final income is reached, but whether it can be converted into legal currency greater than the purchase amount is unknown.

How to play the financial management game?

2014 was a year when many digital currency financial products emerged one after another. An insider said, "Last year, I used Bitcoin to buy financial products with a 25% interest rate for one year, but now I have lost almost 20%."

It seems incredible, but based on the actual drop in Bitcoin prices, it is true that some users have suffered losses due to factors such as different purchase times.

In such a wealth game, every player wants to get a piece of the pie with the least effort. Therefore, there are always endless financial products and a constant influx of new purchasing power.

At the same time as Bitmain released the V3 contract, BW also launched the pre-sale of B11 financial cloud computing power. The basic parameters are: 0.26W/Ghs, maintenance fee 0.00312¥/Ghs/day, 0.76BTC/T, and financial interest of 0.000312BTC per T per day. At the same time, BW promised that if the customer still has not recovered the principal by 0:00 on July 1, 2016, BW will make up the remaining principal in one go, and the B11 contract will enter the profit sharing stage. According to the existing data, if nothing unexpected happens, the principal can be recovered in three and a half months.

Zhai Wenjie of Longkuang Technology posted on Weibo:

"The B1 plan has recovered 137%. There is still a weekly return of 2.35%. Now selling it in the secondary market can earn another 0.75B, with an estimated return of 120%; B9's first phase recovered 73.5% and the current sale price is 0.65, with an annualized return of 35%; B9's second phase recovered 58.7% and has an estimated return of 29%; a user return rate of less than 40% is difficult for us to accept, so in the later stage of operation, we may replace B9 equipment with old equipment for new equipment with B11 equipment."

In April this year, Longkuang Technology announced a 14nm chip plan, named " B-eleven ". The theoretical power consumption of its 14nm chip is 75W/T. Although the 14nm chip has very impressive parameters and has the advantage of eliminating most of the existing mining machine chips, it has not yet been mass-produced. It is also unknown when its mining machine will be put on the shelves.

The reason why the project is called B11 Financial Cloud Computing Power can perhaps be understood in this way: from the date of purchase to the computing power delivery date, you will enjoy financial management interest before delivery; after delivery, you will no longer enjoy financial management income, but cloud mining income.

The special feature of B11 is that from the computing power delivery date to July 1, 2016, CoinNet guarantees that all expenses including electricity charges will币网垫支, and customers will enjoy all the benefits of holding computing power. Some users said that CoinNet is actually losing money by doing this.

In addition, some people speculate that the biggest benefit of currency-based financial products for manufacturers is that they hold a large amount of Bitcoin and will throw the coins into the market to hedge the difficulty and exchange rate risks. At the same time, as a miner, they will continue to manufacture mining machines and increase the computing power share of their own mining pools.

In general, whether it is financial management or cloud computing power, it provides users with an additional option for their idle coins. Whether it is 10% or 25% annualized, whether to buy contracts or buy computing power, it depends on the user's consideration.

High returns inevitably correspond to high risks. The reporter consulted senior people in the industry and gave the following risk suggestions:

1. If you want to make greater profits in the next year, you must ensure that the difficulty growth is close to 0 or negative growth, which is unlikely.
2. Negative growth in difficulty most likely corresponds to low coin prices, and you are buying high-priced coins, unless you short sell the corresponding amount at the same time when purchasing computing power.
3. There will be a problem of production reduction next year, which is likely to have a greater impact on the difficulty growth model. It is necessary to consider whether the 20% return-risk ratio is reasonable.
4. The cryptocurrency industry itself is a high-risk industry. Whether it is an exchange or a large miner, the rate of return corresponding to its credit risk also needs to be considered.