With the outbreak of the epidemic around the world, the global financial market has plummeted, and Bitcoin has not been immune to it alone, ushering in a wave of "halving" crashes.
The financial crisis predicted by economists has finally begun. Since March 9, 2020, the virus spreading around the world has become a catalyst for a sharp decline in financial markets.
On March 12, the price of Bitcoin fluctuated sharply, resulting in a one-day liquidation of more than 16.8 billion yuan in BTC contracts, setting a historical record since the statistics of contract big data. A total of more than 90,000 people were liquidated in 24 hours. Some people in the virtual currency circle called the day "the epic liquidation day in the currency circle".
The price of Bitcoin fell from $9,000 to more than $3,000 in a few days. Now, its price has stabilized at around $5,300. The current global situation is chaotic, and the panic in the market may cause the currency price to fall below $5,000 again.
The avalanche of Bitcoin, coupled with the impact of the epidemic, has brought a strong sense of crisis to the upstream and downstream industries in the currency circle. Among them, the upstream mining industry, from mining machine manufacturers, distributors, miners, mines and mining pools, etc., the entire mining industry chain is facing huge challenges. Among them, mining machine manufacturers, distributors, mining pools, etc. are all facing business In the face of a sudden drop in production, miners and mines are facing an unprecedented test of life and death.
The drop in the price of Bitcoin has had a direct impact on mining machine manufacturers. At the same time, a number of mining machines including the Antminer S9 series mining machines under Bitmain, and the Avalon A911 under Canaan Technology (CAN) have reached shutdown prices.
In the face of sudden plunges and surges in transactions, virtual currency exchange platforms will inevitably be affected. It is understood that on the evening of March 12, the pages of many exchanges were down. The internal staff of a virtual currency exchange revealed that the market fluctuated too much, and some areas were congested, and the staff carried out technical repairs overnight.
The sharp drop in currency prices has directly affected the mining industry. On the evening of March 12, Bitcoin failed to produce a block for an hour. Many fear that this is the result of a collective shutdown of miners.
Some mining machine manufacturers have also suffered a lot, because many mining machines have reached the shutdown price. According to Beishu Blockchain, the cost of mining is mainly composed of two parts: one is the cost of electricity, and the other is the mining machine itself and related costs. The operating costs of different models are different. At present, the computing power of 110E in the whole network is mainly composed of Antminer S9, Antminer S17, Whatsminer M20S, Whatsminer M21S and other mining machines.
Miners are facing greater challenges. If the price of Bitcoin remains unchanged or falls further, mining profits will decrease, which will put unbearable pressure on individual miners and small mining farms. More importantly, many miners hope to upgrade to 7nm chips during the "halving" expected in May 2020 for more complex POW mining.
Those miners who failed to upgrade to 7nm chips in time are also facing more dire consequences from the epidemic. Some industry insiders commented that centralized upgrades will lead to mining disasters in many mines that are still buying old mining machines to control costs. To make matters worse, the new chips also increase the hash rate, which makes mining BTC more energy-intensive for older equipment.
Below what price will bitcoin cause mining disasters?
First of all, what is mining disaster? Mining disaster does not refer to the shutdown of certain types of mining machines due to the drop in the price of Bitcoin, but refers to the fact that within a period of time, the mining costs of major mines are higher than their own electricity bills. Both lead to production stoppage, bankruptcy, etc., to meet the needs of mining disasters, a large number of mining machines shut down on the market, mines and mining bullies lost hope in the industry, and then there was a stop loss behavior. At present, there have been 6 mining disasters in the history of Bitcoin. Strictly speaking, 4 mining disasters have had a great impact. The first is that when Mentougou was attacked by hackers in 2013, when Bitcoin fell by more than 70%, it was also the first mining disaster in history. . The second is when Mentougou went bankrupt in 2014. The third is 94 in 2017, when a large number of mining machines were sold out. The fourth time was when Bitcoin fell to $3,150 at the end of 2018, and there was a public opinion that mining machines were sold by the catty.
But every time a mining disaster occurs, the price of Bitcoin is at a historically low price in recent years. The mining disaster can also be understood as the stop loss and meat cutting behavior of Bitcoin miners and mines. In the secondary market, retail investors often cut and cut. When a large number of retail investors cut their meat, the market will at least show a staged bottom state. For Bitcoin, once a large number of mines cut their meat and stop their losses, it is a manifestation of extreme panic, and it is often a stage. historical lows.
We can conclude that before the production reduction, Bitcoin will cause large-scale mining disasters after it is around 3,500 US dollars. After the production reduction, because the production is halved, theoretically, the cost of electricity will double, so the price of mining disasters will be higher after the production reduction. at this point. The panic in the past few days caused Bitcoin to drop to $3,850, which is close to this critical point. We can use this low point as a short-term phased low point reference.
In the mining circle, this kind of mining machine transactions without going out of the mine is very common. During the epidemic, it is not convenient to trade, the currency price has dropped, and S9 is not worth much. Long-term cooperative miners and mining farms may sell dozens of mining machines just by saying hello.
Compared with miners and mining farms, the plunge of Bitcoin has a greater impact on the mining machine circle.
In the mining circle, the mining machine can be regarded as a contract product, and the bet is the income in the next few months. Therefore, the pricing of the mining machine is directly related to the currency price and mining difficulty.
At present, the price of currency in the market fluctuates too much, and no one can give a quotation, so they simply do not trade. The bleak mining machine market has also caused mining machine stocks to plummet.
In addition, in the currency exchange industry, due to the sharp drop in currency prices, a large number of business reductions have also formed a greater threat to the exchange business.
The current business model of the exchange mainly relies on user transaction fees, currency listing fees, issuance of platform tokens or contract transactions to obtain profits. In addition, some exchanges will also add some innovative business models such as "membership system" or dollar rewards to attract users to invest.
Due to the impact of the epidemic and the collapse of currency prices and other factors, many small exchanges are on the verge of bankruptcy, and even cannot afford wages. On the one hand, the assets of the entire currency circle have shrunk dramatically, which has caused a huge impact on the cash flow and asset reserves of some exchanges; Do.
However, in addition to going bankrupt and withdrawing from the circle, there are also some exchanges that continue to come up with new tricks to attract users to invest. At present, there are some unknown exchanges in the market. By cooperating with the so-called teachers in the currency circle, the teachers are responsible for guiding the market, and the exchange operates the platform currency price, thereby deceiving investors to invest and lead to losses.
At the same time, the survival of retail investors is not optimistic, which is the same reason that the encrypted trading market is controlled by giant whales. Small miners can only respond to the market, not control it. Their fate often depends on the electricity prices they negotiate. At the same time, large mining farms and mining machine manufacturers shifted the market. For example, Bitmain not only sells mining rigs, but also pre-mines with its latest mining rigs before bringing them to the market.
By the time retail miners enter the field, they may just be fresh leeks waiting to be harvested by large miners.
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