Produced | Odaily (ID: o-daily)
Produced | Odaily (ID: o-daily)
2019 is a year of rapid pace and intense rhythm in the mining industry.
At the beginning of the year, the currency price rose unexpectedly, and the price of mining machines doubled accordingly; in April, Bitmain and Whatsmart released new generation mining machines. After the arrival of the goods, the computing power of the entire network skyrocketed, doubling within the year, and breaking through the 100E mark.
In the second half of the year, the currency price fluctuated and went down, which was in stark contrast to the computing power curve. The first-generation machine king S9 was on the verge of death several times; in addition, the node where the 2020 reward was halved was approaching. Confused; at the same time, Bitmain and Shenma experienced personnel shocks that Wu Jihan "exiled" Ketuan Zhan and Yang Zuoxing was detained; The film was highly anticipated by many people.
In 2020, these unfinished stories will usher in a new climax.
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Mining 2019: Computing power has skyrocketed one after another, and miners have undergone drastic changes at the end of the year
The picture below shows the 2019 Mining Yearbook compiled by Odaily. Among them, the two major events that most affect the development of the industry are the rise and fall of computing power and the drastic changes of miners. Let’s focus on the analysis below.
The computing power soared by 1.4 times, and the new generation of mining machines contributed 3/4 of the computing power
According to BTC.com data, in 2019, the average Bitcoin computing power increased by 1.45 times, from 40.16 EH/s at the beginning of the year to 98.67 EH/s at the end of the year.
Among the computing power of nearly 100 E, many industry veterans judged that 50E came from old mining machines at the 15 TH/s level (represented by Antminer S9), and the remaining 50E came from new mining machines at the 50 TH/s level. Mining machine (represented by Whatsminer M20S).
The basis for this estimate is that in October 2018, the peak computing power of Bitcoin’s entire network reached 53 EH/s, but since then, as the price of the currency plummeted, the mining machines continued to be shut down and taken off the shelves; It was not until the end of May when the deadline came that it rose back to 53 EH/s.
In addition, the Antminer S17 series, the new generation of mining machines that arrived at the earliest, have been arriving since the end of May. Therefore, the increase in computing power after June can be considered to be mainly brought by the new mining machines (44.69 EH/s), accounting for about 44.69 EH/s. 76% of the annual increase in computing power, or three-quarters.
Regarding the computing power in 2019, Zhuang Zhuang, the founder of BTC.com, once said an interesting phenomenon.
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Image from BTC.com
Pay attention to the change curves of the computing power of the two this year. Litecoin’s computing power follows the price of the currency, rising first and then falling; Bitcoin broke away from the falling currency price in the second half of the year and has been rising until now.
This is also different from its historical performance. At the end of 2018, the computing power of the entire network fell sharply after following the currency price. Moreover, that drop took the computing power of the entire network for a full 7 months to recover "Yuan Shen".
As Zhuang pointed out, the reason for this year's "abnormality" is that during the rising market, the response of the mining industry lags behind the currency price, and the industry has come to the node of upgrading mining machines.
"The market at the beginning of the year brought better expectations to the mining industry. In the short term, the mining machine market has a large shipment volume, so the computing power is still rising after the Mavericks pass. Of course, this decision is also because of the use of new mining machines for mining. There is indeed a large profit margin, and this is the safest option for next year’s halving.” Zhuang Zhuang said.
Canaan goes public in the United States, Shenma successfully breaks out, internal turmoil in mainland China
Speaking of mining machine manufacturers in 2018, one image that everyone can think of is that they went to Hong Kong for listing collectively. Since May 2018, Canaan Creative, Ebang International, and Bitmain, which have the top three market shares, have successively submitted prospectuses, but half a year later, they all ended up "overdue and invalid".
In 2019, Canaan Yunzhi, who has been running for four years, finally got what he wanted, but at the same time, the "spoiler" Shenma also successfully captured the city in terms of market share.
In October 2019, Canaan officially submitted the prospectus and successfully landed on Nasdaq the next month, raising US$90 million and a valuation of US$1.33 billion. Although the valuation and financing amount are far less than the momentum of going to Hong Kong for an IPO in 2018, it has also become the "first stock" of China's mining industry and even the blockchain.
Almost at the same time, at the end of September, Yang Zuoxing, the founder of Whatsminer, announced at the Coinin Mining Summit that in the third quarter from July to September, 100,000+ units of its latest generation of mining machines M20S/M21S had been shipped. It is expected that a total of 200,000+ units will be delivered by the end of the month.
This is an impressive achievement: Q3 delivered an average of 70,000 units per month, and the monthly output can reach 100,000 units. A single unit is calculated with a computing power of 55 T. Within 3 months, Whatsmart contributed about 100,000 units to the entire network. E computing power accounts for about 27.6% of the newly added computing power, and its market share ranks among the top three.
But only one month later, following Yang Zuoxing's rapid advance, he suddenly "lost his head".
On November 3, the self-media "Wu Shuo Blockchain" released news that according to multiple verifications, Yang Zuoxing has been taken away by the police for investigation, and may be related to the infringement of Bitmain's business secrets. There is no news of his release so far.
This unforeseen disaster was actually "premeditated for a long time". Many people close to Bitmain told Odaily that Bitmain has never given up using various formal and informal means to chase and block its rival Shenma.
At the time of the incident, Bitmain had just encountered Wu Jihan's "seizure of power". Therefore, "reporting Shenma" was also understood as one of the actions of "fighting against the outside world and securing the inside".
On October 29, industry and commerce information showed that Wu Jihan replaced Ketuan Zhan as the legal person of Beijing Bitmain. Immediately, Wu Jihan issued an internal email announcing the dismissal of Ketuan Zhan from all positions in Bitmain. At the same time, a large number of "Zhanpai" employees in the group were dismissed.
Ketuan Zhan, who was suddenly "dismissed", launched a series of counterattacks in the follow-up, including freezing the relevant assets of Bitmain's subsidiaries and hiring lawyers from many places to file lawsuits in Cayman. But so far it has not been effective.
After clearing up the "political enemies", Wu Jihan carried out a series of internal adjustments. In terms of personnel, he first raised the salaries of all employees and then laid off a large number of employees; Some R&D etc.
Miners who have experienced these changes, returning to the key point of mining machine R&D and production, Bitmain and Canaan Zhizhi continue to invest in 5nm mining machine chip tapeouts. On the other hand, the latest mining machine M30S of Bitmain and Whatsminer And Antminer S19 has competed in the advanced performance of 30-40 W/T.
According to Wu Shuo’s blockchain news, the price per ton of Whatsmart M30S will be less than 200 yuan, which seems to be very cost-effective; at the same time, relevant sources revealed that the Antminer S19 is confident that it will have an economic advantage.
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As Shenyu, the founder of F2Pool, said, "This year, we have basically experienced a complete mining cycle, from the disillusionment period at the beginning of the year to the rapid rise period, and now we have entered a period of confusion. Everyone should be in the Thinking, what does the future hold? What should we do to deal with it?"
As Shenyu, the founder of F2Pool, said, "This year, we have basically experienced a complete mining cycle, from the disillusionment period at the beginning of the year to the rapid rise period, and now we have entered a period of confusion. Everyone should be in the Thinking, what does the future hold? What should we do to deal with it?"
Mining depends on two factors, the currency price and the difficulty of the entire network. To be precise, the currency price is the root cause, and the difficulty of the entire network is linked to the currency price most of the time. We still have to seriously consider whether the "halving market" that has been digested by people a year in advance will come.
Let's first listen to the "optimists" point of view.
Asked what will happen after the halving, LeBit founder Jiang Zhuoer's answer to this question is different from most people.
"Mining will be more profitable after the halving." His tone is unquestionable.
"Before the halving, many miners would be on the verge of a big enemy. In fact, they found out later that after the halving, (everyone) earned more in terms of legal currency."
Why do you firmly believe that the halving market will come? Jiang Zhuoer explained from the perspective of supply and demand.
It said that the halving of digital currency will destroy the balance of supply and demand very directly. Even though Bitcoin is about to be halved for the third time, this year's halving still means that 900 BTC are produced less every day. What is this concept? Based on the current price of bitcoin (about 50,000 yuan), it is equivalent to someone buying 45 million yuan of bitcoin every day, and the net buying is continuous.
In terms of supply and demand, some people need to hoard or use digital assets. This long-term demand will not change in a short period of time. After the supply is halved, the price must double to restore the balance between supply and demand. But after the price rose, many people learned that Bitcoin had risen through the news, and then came in to buy it, which caused the price to rise, and finally formed a positive cycle.
Yao Yuan, the founder of Huibi and a veteran miner, agrees with this view from the perspective of miners’ psychology. "The halving also means that the cost of obtaining bitcoins may be higher later, so capable miners are more inclined to hoard coins, thereby accelerating deflation."
Of course, many miners believe that this expectation has been over-digested, and what people think will happen will not happen.
"If there are few people who read history, it will be easier for history to repeat itself; if there are more people who read history, history may change." As an industry insider said.
Currency prices are hard to determine, but production decisions are in sight. In fact, we can make a simple model to prepare for the upcoming halving.
If the price is the same as it is now at the time of halving, then the situation may be as many people expected, those old mining machines with low energy efficiency ratio and high electricity cost will face batch shutdown.
Shenyu divides the bitcoin mining machines in the current market into three grades. The first grade is the latest generation of mining machines with an energy efficiency ratio of 40-50 W/T, and the number is small; the second grade is based on Innosilicon T2T, Whatsminer M10 is a mining machine with an energy efficiency ratio of 50-60 W/T; the third gear is the Antminer S9 with an energy efficiency ratio of 100 W/T. After frequency reduction and modification, the energy efficiency ratio can be reduced to 80-90 W/T .
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Data from: F2Pool
However, Shenyu said that 20 days after the halving, the mining area will be in the rainy season at the end of May and the beginning of June. If the policy is good at that time and the electricity price is as cheap as last year, mining machines with an energy efficiency ratio of 60 W/T or more may also be restarted. Turn on the machine, "and in this waiting process, there will be a stage of 20 days with relatively low difficulty."
If the currency price cannot be maintained after the halving and turns down, for example, it falls to 5000-6000 US dollars, then a mining disaster may occur at this time.
"It may cause more than 50 W/T mining machines to shut down, leaving only 20-30% of the mining machines in the whole network." Shenyu judged. "Those mining machines that are shut down will gradually migrate to foreign countries with low electricity prices."
Of course, if the price increases, for example, by 50%, then the current level can be maintained. If there is a sharp rise, due to the limited production capacity of mining machines, it may lead to an extreme shortage of mining machines, thereby stimulating the prosperity of the mining machine production and distribution market. Miners, as owners of mining machines, can also benefit from it.
"This year may be two extremes, either great joy or great sorrow." Shenyu concluded.
In order to encourage miners to laugh at this confused period, Shenyu served a bowl of chicken soup to each miner at the annual appreciation banquet for major customers held at the beginning of the month.
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Data from: F2Pool
It can be seen from the figure that from the end of 2015 to 2016, the mining industry fell into a very difficult period, and the index was around 4. “However, during those difficult days, everyone was forced to switch from the earliest industrial parks or home-based mining to large-scale hydropower mining. Miners came to Sichuan from places such as the Northeast to dig for cheaper electricity. Resources, the entire mining industry has also undergone a major upgrade, resulting in everyone present and so many large-scale mines." Shenyu said.
Based on the judgment that the halving market will definitely come, Jiang Zhuoer proposed a more radical strategy.
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Beyond Halving, 3 Big Predictions for 2020
1. Accelerated penetration of mining finance
Since the second half of 2018, people of insight have been calling for mining finance. By 2019, finance will fully occupy all aspects of the mining industry.
From miners' joint lenders' recently launched mining machine mortgage 0 yuan purchase & installment purchase, to mining machine dealers seeking loans from service providers when they urgently need a large amount of capital turnover, to miners with certain knowledge through purchasing options and other products To lock in mining revenue, etc., the role of finance in the mining industry, which is a strong relationship, heavy investment, and long-term business, is self-evident.
At present, the most common products and services in mining finance are hedging (also known as hedging, which locks in mining income in advance) and mortgage lending (mortgaging Bitcoin to obtain liquidity to pay for mining costs). The former provides risk-averse exposure, which provides the cash flow needed for production.
In terms of product form, there are relatively few products that provide hedging services for the mining industry, and most miners mainly do hedging through exchanges. Relatively speaking, the shape and scale of lending products are more intuitive.
A number of lenders told Odaily, "Conservative estimates show that domestic digital currency centralized lending has a loan scale of 400-500 million US dollars, and about half of the users are miners."
However, from the perspective of penetration rate, the combination of finance and mining, the "blockchain entity industry", has only been initially opened up, and the outbreak of the market will take 2020 or even longer to complete. The reason is that factors such as miners' cognition and use costs have blocked the popularization of options, a conventional but complex tool.
Making miners aware of the role of these tools may be the first step for service providers.
In this regard, Zhuang Zhong is quite "worshipful".
"I know that many old miners are more 'faith fans'. Everyone's strategy is relatively simple, that is, I will hoard the coins and not sell them. But this way of thinking must be problematic. If you die hoarding coins, you will lose For the return on legal currency, you will always have so many machines. In the end, it may be that someone else bought a new machine with high-ranking money, and then the computing power is more than you. So I think miners should have some knowledge about how to use financial tools to leverage the growth of mining revenue. planning."
2. The business boundary of mining enterprises disappears, and the competition becomes increasingly fierce
In 2019, one of the most intuitive feelings for everyone is that "a lot of cloud computing power platforms have come out this year". The reason behind it is that many companies that originally specialized in mining farms, mining machine distribution and even mining pools have begun to transform into a comprehensive platform integrating mining machine trading, hosting, cloud computing power, and financial services.
Among them, there are many players who come from the currency circle and even traditional industries to seek gold, but more of them are led or supported by players in the industry. Relying on a single business, these players make full use of industrial resources for vertical and in-depth expansion.
The implication behind this is that players who have gone through the big waves in 2018 or waited for an opportunity to enter the market during the cooling-off period of the industry in 2019 are becoming more and more institutionalized and professional. At the same time, the downturn of the industry in the second half of the year is also diluting mining profits. In order to seek diversified sources of income, mining companies that want to become bigger and stronger have to transform into "treasure boxes" to integrate multiple resources and provide one-stop services. .
For example, miners such as Bitmain and Jianan Zhizhi have cooperated with professional lenders such as MatrixPort and PayPal in order to "destock", and launched mining machine mortgage 0 yuan purchase & installment purchase; Bitmain and other miners also widely issued Hero Post recruits mining farms to "joint mining"; and Biyin also cuts into the industrial chain of OEM mining machines and mining machine maintenance after the brand is formed, opening a "one-stop" "post-service market".
In the market for mining service providers, the industry structure is far from being formed, and now professional players have been in place one after another. If the market is not too bad, this year will be a year for these players to race wildly.
3. Chip production capacity is tightening, and Canaan’s listing is positive
Production capacity has always been the hard top for computing power growth. In 2020 it will be even more severe.
This year, the view that 5G chips grab the production capacity of mining machine chips has almost become a consensus. It can be deduced from this that the support of chip manufacturers (that is, TSMC and Samsung) will largely determine the success or failure of miners in the market competition.
In 2019, Bitmain was slightly inferior to its rival Shenma in terms of new mining machine shipments. One of the important reasons is that the chip production capacity/yield rate is limited. In 2020, this situation may be even more serious.
Moreover, in addition to competing for production capacity of 5G chips, there is also competition among miners. It turns out that Bitmain’s chip foundry is TSMC, Whatsminer, Innosilicon and Ebit are Samsung, and Canaan has two major suppliers at the same time.
"Swinging between TSMC and Samsung can free Canaan Zhizhi from over-reliance on a single supplier." Some industry insiders believe.
"After Jianan Zhizhi is successfully listed, it will gain more trust in the supply chain." "Wu said" the blockchain quoted relevant sources as saying. It is reported that when Bitmain’s 5nm test chip is successfully released, Canaan will also follow up with TSMC’s 5nm process.
The newly raised US$90 million in Canaan's IPO can also help it invest in research and development and increase production capacity. "After listing, we can gain more trust and support in financing and sales channels." Shenyu commented.
Now that chip production capacity is getting tighter, Canaan seems to have found a few good cards.
References:
References:
"2019 Mining Industry Research Report", TokenInsight, January 2020
THE BITCOIN MINING NETWORK , CoinShares Research , December 2019
