In the winter of 2017, the night in Inner Mongolia was very cold, and the outdoor temperature was below minus 20 degrees Celsius.
In a desolate "mine", Feng Sheng, a Bitcoin miner from Hangzhou, Zhejiang Province, went to bed early in a large room with a "bunk bed, sleeping seven or eight people" because there was no entertainment.
"That site is very off the beaten track. It's a half-day drive from the nearest small county town, just like the Gobi Desert. There is nothing but the site and a road." He told The Paper reporter that it was an endless wasteland.
The "mine" Feng Sheng went to was on a wasteland in Inner Mongolia. The picture is provided by the interviewee
What drove this southern guy to this cold and frozen wasteland was a hot Bitcoin market. In 2017, the price of Bitcoin rose from USD 1,000 at the beginning of the year to USD 13,000 at the end of the year, an increase of more than 10 times.
Feng Sheng is just one of many "gold diggers". Behind him is a large group of people who are eager to Bitcoin, who regard Bitcoin as "digital gold".
Starting in the second half of 2020, Bitcoin miners seem to smell the "crazy" smell of three years ago. After the price of Bitcoin broke through $10,000, it went up all the way and once broke the $40,000 mark.
Feng Sheng just graduated from university in 2017, and now he has more than 3 years of "mining" experience, during which time the Bitcoin price plummeted from nearly $20,000 in December 2017 to $3,000 in December 2008 about.
After experiencing the "big storms" and facing the current wave of Bitcoin's rising market, Feng Sheng told The Paper, "Mining is a long-term job. Update the mining machine, plan the site, electricity price, and electricity bill in advance. The subsequent currency price changes have little effect."
Mining is actually an activity with potential policy risks. In September 2017, the People's Bank of China and other seven departments jointly issued the "Announcement on Preventing Token Issuance Financing Risks", halting various token issuance financing activities. Domestic cryptocurrency exchanges were gradually closed, and virtual currency mining was once required to withdraw in an orderly manner. Due to its high power consumption characteristics, virtual currency mining was once included in the list of "eliminated industries" by the "Industrial Structure Adjustment Guidance Catalog (2019 version, draft for comments)" issued by the National Development and Reform Commission, but in the official draft "Escaped".
Miner's ledger: Cost includes electricity fee, custody fee and mining machine cost
"Bitcoin mining takes 12 months to pay back" and "Bitcoin mining machine prices doubled and still in short supply." As the price of Bitcoin surpassed the $30,000 and $40,000 mark, Bitcoin mining has also been listed on hot searches twice in a row. Wandering in the gray area, the "miners" hidden behind the speculators have also reappeared in the mainstream sight.
In 2015, Guo Li went to Sichuan to inspect the "mine". It was the rainy season, and the rain often broke off the road, and rolling stones continued to fall off the road.
"It's dangerous, I felt like I was doing this with my life," Guo Li recalled. However, since then, Guo Li began to build mines.
Bitcoin was "mined". According to the Bitcoin POW (Proof of Work) mechanism, each computer node uses its computing power (computing power) to grab the right to keep accounts. Whoever grabs this right to keep accounts will get the corresponding Bitcoin rewards generated by the system. The process is called "mining". The hardware equipment for mining is called "mining machine", the individual miner who purchases the mining machine is called "miner", the place that hosts the mining machine and provides power is called "mine", and there are also mining platforms "mining pool", etc. .
"People outside now see that our industry is quite profitable, but it's actually quite hard behind it. Everyone is very hardworking and hardworking." Guo Li said.
In 2019, Liu Wu, a Bitcoin miner from Suzhou, invested a sum of money on the cloud mining platform with the mentality of “throw away a little money and cheat if you are scammed”. After the first purchase of more than 2,000 yuan for selling bitcoin, Liu Wu had the idea of entering the bitcoin mining industry.
The income of the miner is the number of bitcoin rewards in each block mined. The cost is mainly the electricity fee and custody fee paid to the mine, and the cost of purchasing the mining machine.
The custody fee and the electricity fee are usually calculated together. Chen Jiu, a miner from Nantong, Jiangsu, told The Paper that his monthly electricity fee custody fee now costs 60,000 yuan, and he can dig out one bitcoin every month (according to the current market price 34,000 US dollars).
How profitable is mining? Soaring prices of mining machines are still hard to find
"In a traditional industry, it takes three years to recover the cost of investment in a traditional industry. The cost of mining is basically recovered within a year, and the cost is recovered from the first day of operation of the mining machine, which is temptation Powerful." Liu Wu said. He has hosted dozens of mining machines in mines in Xinjiang, Yunnan, Sichuan and other regions. According to the currency price in 2019, his income is 12% per month.
The price of Bitcoin mining machines will change with the price of Bitcoin.
"I bought 30 68t Shenma M20s at an average price of 6,500 yuan/unit in the summer, and now the machine has risen to 14,500 yuan a unit." Chen Jiu told The Paper.
In fact, under the rising market of Bitcoin, mining has become a veritable "gold mine". The influx of newcomers and retail investors makes it difficult to find Bitcoin mining machines on the market. Currently, the latest mining machine S19pro produced by Bitmain is priced at 27,700 yuan, and the current market price is more than 50,000 yuan.
"The Antminer is more difficult to grab than the Xiaomi mobile phone. Every time it is officially released, it is robbed in one or two seconds. The current order seems to be shipped in August." Chen Jiu said.
According to the price of the mining machine of 27770 yuan, under the current market, Bitcoin mining only needs 6 months to pay back. If it is based on the market price, the payback time will be doubled.
Therefore, for miners, the opportunity to enter the mining industry is very important. Long Tan, a Liaoning miner who started mining in 2018, believes that his entry point is not very good. The machines he bought before were all small computing machines, and he can only say that he is slightly profitable.
"In 2017, the price of the machine was as high when the Bitcoin price was $20,000, but it plummeted in the following months, so choosing the entry point is very important," said Long Tan.
Liu Wu also mentioned, “This year many newcomers have entered this circle. I don’t think they have made any money. Because they are entering the market with a good market, the price of the machine is relatively high.”
Long Tan said that since 2020, its income has been good in the current bull market. If Bitcoin is sold at $41,000, it will "at least triple".
2020: March 12 - halving, Bitcoin bull market
In 2020, Bitcoin has experienced a big ups and downs. Among them, March 12 is a day that cryptocurrency practitioners still remember.
Under the dual influence of the new crown epidemic and the crude oil price war, the price of Bitcoin has fallen in a cascading manner for two consecutive days. On March 12, Bitcoin even fell below $4,000, a drop of more than 50% from the highest price in February.
When the miner's mining revenue is not enough to pay for the consumed electricity, the currency price at this time is called the "shutdown currency price", and the influencing factors include currency price, electricity price, mining difficulty, etc. If the currency price falls below the "shutdown currency price", miners need to shut down the mining machine, otherwise they will lose money.
"Everyone was a little overwhelmed for a while, and mine friends also called each other to ask if the plunge would continue, whether to sell their holdings or continue to choose to wait and see, no one can give an answer." Yunge Industrial Park founder and mine owner Chen Xiaolong said.
He confessed that he was really confused at the time, and a lot of panic occurred. If the price of the panic currency continues to fall, the electricity will not be consumed, and there will be a big loss.
"Many retail miners did not pay their electricity bills at the time and they chose to shut down. Some retail miners didn't use their machines to cover their electricity bills. I don't know whether to take back some customers' machines at a low price." Chen Xiaolong said.
Will the scene of "mining machine sale by catty" in 2018 be repeated? This was the "dark cloud" that haunted many Bitcoin mining practitioners at that time.
However, the generational optimization of the mining machine lies in the computing power. The price of the mining machine with high computing power is lower. Therefore, Feng Sheng, who has just bought a new machine, is not affected too much. “The optimization of computing power is nothing but electricity. The issue of settlement". Miner Liu Wu also said that at that time he invested not long ago, and the profit was a little bit, not much, but he could continue to operate.
"3.12 has no impact on the mining farm, but at 312, the overall mining and the coins in the hands, everyone's mentality is quite collapsed. Because no one can think of it, it has fallen below my expectations, and I feel that Bitcoin may be possible. Go to zero," said Guo Li, the owner of the mine.
In May, Bitcoin ushered in the four-year halving moment, which means that the number of Bitcoin rewards in each block mined by miners has dropped from 12.5 Bitcoins to 6.25 Bitcoins, and the income of mining machines has also been reduced. Half.
"The Bitcoin halving is the most uncomfortable for mines and miners, because the output is instantly halved. Originally, mining a Bitcoin requires electricity costs of 30,000 yuan. After the halving point, the mining price instantly becomes 6 10,000 yuan, but the currency price is still hovering between 40,000 and 50,000 yuan." Mine owner Li Bo once told The Paper. At that time, his mine was closed by 30%.
At the end of October, Bitcoin's upward momentum was unstoppable. It went from $11,000 all the way to breaking through $20,000, $30,000, and $40,000, and is now hovering at a high of $34,000.
In 2020, miner Long Tan has been insisting on hoarding coins, and the three bitcoins he dug have not been sold yet.
"I think it is impossible to end this way. There are certain historical rules to follow. I have not experienced the first two halvings, but the third halving is only once every four years. I don't think the last wave was 20,000 US dollars. It's over at 40,000 USD, so I do have confidence. I will pay a little bit when Bitcoin reaches 50,000 USD, and I will pay a little bit more when it reaches 100,000 USD," he said.
Feng Sheng, a miner, believes that mining is a long-term job. Plan the machine update, site electricity price, and electricity bill in advance, and the subsequent currency price changes will have little effect. "It's nothing more than that after the currency price rises, shareholders are a little bit more diligent, urging them to make money every two days," he said with a smile.
Miner Chen Jiu is a little worried: "It's going up too fast. I like the bull market, but I can't go up and down like that. I hope it will be a slow bull, and the rise will be slower, which will extend the bull market cycle for some time."
He doesn't have many coins in his hand now, and even if it rises more, it doesn't make much profit. Moreover, Chen Jiu believes that the bull market can easily end early if the rise is fast.
"It's too eye-catching, and there will be many uncertainties, such as stricter supervision policies." Chen Jiu said.
Like "migratory birds": migrating between the southwest and northwest
In China, in order to pursue cheap electricity tariffs, mines are basically distributed in Sichuan, Yunnan, Guizhou, Xinjiang, and Inner Mongolia. The types of electricity include hydropower, thermal power, and wind power.
Hydropower in Yunnan, Sichuan and other places is the cheapest, but its drawback is that there is a difference between a wet period and a dry period. In the wet period, there is more rain and electricity is sufficient, and the electricity price is low.
Therefore, in order to reduce costs, some miners need to be like "migratory birds" in the wet seasons to move mining machines to Yunnan, Sichuan and other places rich in hydropower, and in the dry seasons to move mining machines to thermal power or wind power rich in Xinjiang, Inner Mongolia and other places. .
“10%-20% of the miners don’t need to migrate, and 80% of the miners will relocate,” Chen Jiu said. “I was digging in Sichuan during a wet season. Now that there is no electricity in Sichuan during the dry season, I will go to Xinjiang to dig. Next year, there will be abundant water. I will move back to Sichuan when I come."
However, this kind of migration is more aimed at mining machines with small computing power.
Chen Jiu explained: "Because the power generation is low, the mine has to drive away some customers. It must be driven by low-power users and leave the big ones behind. The high-power 3,500 watts, the low-power 1,300 watts, and a high-powered one. Arriving at two and a half small machines, you will definitely retain the big ones. For the same operation and maintenance, you only need to maintain 100 machines for the big ones, and 250 for the small ones. The fewer the machines, the less the workload. Every mine likes the big ones. Power machine."
Such migration also means a loss of profits, because it takes a month to go back and forth on the road, and the mining machine cannot be produced, which is equivalent to a stagnant state.
In order to meet the needs of miners, many mine owners have opened mines in areas with sufficient hydropower and other electricity. For example, Guo Li owns mines in Sichuan and Inner Mongolia to facilitate the migration of miners.
It is worth noting that the rising trend of currency prices does not seem to bring much profit changes to the mines.
Mine owner Guo Li said that his income is actually decreasing year by year. “In 2015, one kilowatt-hour of electricity had at least one or two cents (revenue), but now it is only about 4 cents, because the mining industry is the currency price drop. At that time, electricity bills have been falling, and electricity bills will not rise when the currency price rises."
"I have small profits but quick turnover now." Guo Li said.
Many customers signed contracts in 2020 and moved to mines in Inner Mongolia after the end of the flood season in Sichuan. "After all the mining machines have been installed, the currency price will rise, so it is not easy to increase the electricity price for customers, and there will be no credibility, right?" he said.
The mine owner Chen Xiaolong also pointed out that his current electricity bill is 0.26 yuan, and the custody electricity fee charged to customers is more than 0.3 yuan.
Miners' wishes and plans
Mining and hoarding coins seems to be the inevitable plan of miners.
"I hope to increase slowly, and give us more time to mine coins," Chen Jiu said. "Now even if it rises to 1 million, I don't have many coins in my hand. Let me dig more time to hoard coins."
He regretted that he had dug almost 220 coins in the past few years, but unfortunately he didn't stock them up. Most of them were sold on the eve of the 2017 bull market. Chen Jiu also mentioned that the difficulty of mining is increasing rapidly now. He can mine 1 of 4800T a month, while 6 in a month in previous years.
Miner Liu Wuze recently received a batch of Bitcoin machines. He plans to wait until the price of the currency is enough to cover the cost of acquiring the machine, and then throw it out to recover the cost. "The subsequent actions will be more casual and will not be so passive." .
Long Tan does not plan to buy Bitcoin mining machines for the time being.
"I have 500 machines, and there is no electricity in the dry season. I can run nearly 400 machines recently. I am very satisfied," he said. Just wait, you can't buy any more machines at this time."
Liu Wu, who owns both ether and bitcoin mining machines, plans to buy ethereum mining machines because "the price of bitcoin mining machines is too high now."
Mine owner Guo Lize plans to build a new mine with a scale of more than 100,000 kilowatts.
"If the currency price can be maintained at a level of 30,000 to 40,000 US dollars, some electricity bills should be gradually increased this year." He said.
Do Bitcoin mining practitioners have a Bitcoin belief?
Chen Jiu has always insisted on "the faith of old miners."
Chen Xiaolong said that his Bitcoin belief is "one coin, one villa", and he hopes to leave some bitcoins for his children.
"It may be more than 8 years." Miner Liu Wu said that he will change the direction of investment according to the income, and will not always be on Bitcoin.
Guo Li said frankly that there had been.
"It's the same as believing in love when you were young. The first time you experience it, if you believe in this belief when you rush up, you may be suspicious of life the first time you experience a plunge. , It won't be like this, it doesn't matter." He said.
Source: Sina Tech Report
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