Editor's Note: This article comes fromZhikuang University (ID: gh_37c9e0eaf00a), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Zhikuang University (ID: gh_37c9e0eaf00a)
, reprinted by Odaily with authorization.
On October 15th, Jiang Zhuoer, the founder of Lebit Mining Pool (BTC.TOP), a Bitcoin evangelist, and a big miner, participated in a live broadcast event held by Shanghai Diyi as a special guest. ——What is the underlying logic of graphics card mining?
The following is the transcript of Jiang Zhuoer's Q&A section:
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Graphics Card Investment Opportunities
The moderator, Apple, Investment Department of Shanghai Quyi: Graphics card mining is a hot topic in the market recently. Quyi has developed the business of graphics cards very early, and Mr. Jiang has also made a key layout for graphics cards. Can you talk about how you combine your business? Found this year's graphics card investment opportunities?
Jiang Zhuoer, CEO of Lebit Mining Pool: First of all, I didn't just discover the investment opportunity of graphics cards, but I have been on the track.
Friends who are familiar with me know that the ratio of my investment targets is public, mainly BTC+BCH+ETH. And when I entered the circle in 2013, the first thing I bought were two graphics card mining machines, mainly considering the low risk of graphics card mining machines.
The second point is that the graphics card mining machine is a non-standard product. The graphics card models in each batch of graphics card mining machines are slightly different, unlike Bitcoin mining machines with tens of thousands or hundreds of thousands of the same model. One graphics card mining machine may take up the space of three S9 mining machines, which has relatively high requirements for mines, and only a small number of mines can accommodate graphics cards. In the foreseeable long period of time, it is very difficult to deploy a large number of graphics cards, and it is difficult to quickly accumulate positions. Therefore, I have not accumulated a lot of graphics card mining machines before, and I have not sold them to the outside world. I am mining them myself.
It is very difficult to find opportunities in the market, because there are so many new hotspots and new concepts in the market, and if one analyzes them one by one, one person cannot finish the analysis. Like this hot DeFi liquidity mining, although it is still very promising, it is meaningless to analyze it from a rational point of view.
The emergence of liquidity mining is actually due to the problem of DEX, which is a decentralized exchange. In a centralized exchange, an order can be placed at a very low cost and then withdrawn. However, if on a decentralized exchange, the behavior of placing and canceling orders must be uploaded to the chain, the chain is slow and the handling fee is high, which makes it impossible to carry out pending orders on DEX.
Later, someone came up with an AMM method, instead of using ordinary exchange orders, but through a supply and demand curve, only when a transaction actually occurs, it needs to be on the chain, and when there is no transaction, it does not need to be on the chain. A flow pool to solve the problem of TPS upper limit.
The AMM method transfers the price difference loss, which is borne by the liquidity provider, that is, the "farmer" who finally creates a new thing called "impermanent loss", which is essentially because the depth of the order is not enough Caused. After the "farmers" suffer such losses, they must be compensated. The way to compensate is to distribute the equity of the exchange to the liquidity provider. Once the whole set of things is circulated, it will form a capital disk. In the long run, this bubble will burst.
DEX has a certain significance. It can be a supplement to CEX, and it can go to some long-tail tokens that are difficult to find on centralized exchanges, but it cannot become a mainstream exchange. If you analyze it in advance, you will think that liquidity is meaningless, but once it enters this fund mode, it will immediately form a big hot spot, and it is very difficult to notify in advance.
A more meaningful way is to look for some places where new ways of playing and new opportunities may emerge. Ethereum is such a blessed place, and various interesting things will continue to appear on Ethereum.
This is why I am interested in Ethereum.
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The underlying logic of graphics card mining investment
Moderator: Mr. Jiang once predicted that "there is a high probability that in this round of bull market, the highest market value of Ethereum will exceed that of Bitcoin." Can you analyze from the underlying investment logic why you made such a judgment? What do you think is the underlying logic of graphics card mining investment?
Jiang Zhuoer: Let’s not talk about logic first, let’s talk about facts first. In the middle stage of the last round of bull market, the highest total market value of Ethereum reached 80% of the market value of Bitcoin, and the highest active address was about twice that of Bitcoin. In fact, Ethereum has the strength to challenge Bitcoin.
In addition, Ethereum is more volatile than Bitcoin. In this round of bull market, and Ethereum often has various interesting things, it is very likely that the highest total market value of Ethereum will exceed Bitcoin.
Why do all kinds of interesting things always appear on Ethereum?
First of all, we must figure out the underlying value of Ethereum. The value provided by Bitcoin is monetary freedom. Whether the currency is in China or the United States, there are actually many capital control regulations. For example, in China, only 50,000 U.S. dollars can be exchanged each year. As a free currency, without any restrictions at all, this is the greatest value of Bitcoin.
What is the value of Ethereum? Ethereum itself also has currency freedom, and its high volatility will have a certain impact on currency freedom, but it provides something else to make up for this-Ethereum smart contracts.
At this time, as I just said, you should look for a target that will generate more opportunities for profits or benefits. Like Ethereum, opportunities will continue to emerge through contract freedom. This is the underlying logic of Ethereum.
Secondly, I have very limited funds to buy Ethereum directly. If you go to mine, you can use a lot of funds to become a fund-raising node for mining, and get a part of the profit after making money.
In a bull market, it can be expected that Ethereum will continue to be congested. The congestion of Ethereum is different from the congestion of Bitcoin. Bitcoin can be expanded, but it does not expand due to various reasons, while it is very difficult for Ethereum to expand. Now, due to the side effects of smart contracts in Ethereum, each transaction consumes far more computing resources than Bitcoin. The expansion of Ethereum may have to wait until the 2.0 sharding, which will bring about an increase in the complexity of the entire system. Therefore, during the time period when Ethereum is congested, investing in Ethereum mining machines will yield very high income, even double to triple the income some time ago.
Why did I invest in graphics card mining machines in the earliest days? When first entering a new market, the market is virtually unknown, so consider some low-risk approaches first. The low risk of graphics card mining machines is that they are all general-purpose hardware: CPU, hard disk, motherboard, and the most critical graphics card. According to historical data, graphics cards depreciate by about 30% every year. Under normal circumstances, the residual value of graphics cards that have been mined for two or three years is still 30%. At this time, if the graphics card is refurbished, or the GPU and video memory are removed, and a new card is sold on the market, there will still be a certain residual value. As Moore's Law gradually fails, the update of graphics card hardware will become slower and slower, and the speed of hardware elimination will become lower and lower. This is the underlying logic of my investment in graphics card mining machines.
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Timing of Graphics Card Mining
Moderator: The graphics card market was extremely hot before, but now it has returned to a calm stage, and the payback period has gradually lengthened to more than one year. In the face of such a changing market, is now a good time to enter the market? Mr. Jiang, you are a top miner in the mining industry and have purchased a lot of graphics cards. Please share your views on the layout of graphics card investment at this stage based on the investment in graphics cards.
Jiang Zhuoer: Now is a good time for graphics card mining.
The first reason is that Ethereum is currently in the early stages of a slow bull market. The currency price will recover in 2019, and the currency price will rise slowly in 2020. The more obvious bull market may be between 2021 and 2022. At this time, it is a better choice for miners to hoard coins.
The second reason is that graphics card mining machines are not the same as Bitcoin mining machines. Here is a further explanation of why graphics card manufacturers do not welcome miners. In 2017, mining was very popular. Miners almost bought out all the graphics cards on the market, and the price of gamers buying cards was very high. At this time, the market share was affected, which was very troublesome.
There are also some manufacturers in the industry trying to ASIC them, but this is tantamount to recreating the graphics card, which is costly and has no residual value, so the market does not actually accept it. The only advantage of ASICization is that when there is a big bull market, if Ethereum wants to exceed the total market value of Bitcoin, it will rise many times. goods to occupy the market.
The third point is very important, do not buy graphics card mining machines in the bubble stage.
For example, when graphics cards were hot a while ago, it was not very cost-effective to buy mining machines. The most typical example is buying 20,000 to 30,000 bit mining machines in 2018, which may never pay back. If the bubble is relatively high, you can go to order futures. For example, when we ordered futures at that time, when the bubble arose, we actually exchanged time for price. At this time, order the goods first, avoiding the time when the bubble is the largest.
After buying graphics cards, I will pay more attention to the new graphics cards of Nvidia and AMD, including Nvidia's 3000 series and AMD's 6000 series. Now the graphics card upgrade is getting slower and slower, the new graphics card mining machine has certain advantages, and it is possible to find that the residual value is still 50% after two years.
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Financial tool
Moderator: Hedging is an application of financial tools. In addition to hedging, Mr. Jiang, what other financial tools did you use?
Jiang Zhuoer: First of all, hedging is not wrong, because hedging avoids big losses when the currency price falls. This is somewhat similar to options, giving up part of the profit to offset the other part of the loss. Therefore, hedging should be viewed from a larger perspective. If some high-risk funds, including some loan funds, are used, there is a need for hedging. If you use your own funds to mine, hedging is generally not recommended, because hedging greatly reduces the probability of return. One's own money can actually bear relatively high risks. At this time, risks can be exchanged for profits.
In most cases, including our advice to clients, it is best not to hedge. If some leverage has been superimposed in other places, the risk must be eliminated through hedging at this time. The essence of mining is a financial behavior, and the essence of finance is risk control. Different methods must be used in different time periods to control the overall risk. The core purpose of all financial instruments is risk control.
In fact, many people use financial tools wrongly, and use financial tools as a way of gambling. Financial instruments, such as futures, were actually created to hedge farmers' risks. The only thing we can be sure of is that the blockchain provides more freedom, so it will continue to rise in the long run, but there will be very large fluctuations in the short term. At this time, financial tools need to be used to reduce risks.
Therefore, among financial tools, I am most opposed to the use of on-site leverage, especially Ethereum, which fluctuates too much. On-market leverage means that if the currency falls by half, the market will be forced to liquidate, so do not use on-market leverage. For example, on March 12, Bitcoin fell in half, and all those who used leverage even doubled their leverage were all wiped out.
If you must use leverage, you can use off-exchange leverage to find ways to borrow money off-exchange. There are many off-exchange financing channels, whether it is credit loans or mortgage loans.
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Material Standard
Moderator: After talking about the combination of financial tools and mining, I would like to know more about Mr. Jiang's insistence on the "currency standard". Please share your views with specific investment cases.
Jiang Zhuoer: In fact, I am not a currency standard, but a material standard.
Whether it is RMB or Bitcoin, they are all currency units, and currency units will bring the illusion of currency. For example, 10,000 yuan is deposited in Yu'ebao, and today's interest is 1 yuan. How much wealth has increased? In fact, regardless of whether you manage money in Yu'ebao or other banks, if you charge one dollar in interest, your wealth will be lost by about three times.
Why is wealth tripled? For example, find some long-term stable real objects, such as a bowl of large noodles, and use it as a physical unit, convert wealth into large noodles, and calculate how many bowls of noodles your net worth is today. This is a more interesting target, because there are ingredients, labor, rent costs, etc. in the big row of noodles. In the past 20 years, compared with Da Pai Noodles with French currency, assuming that this year you can buy 3,000 bowls of Da Pai Noodles for 10,000 yuan, next year you can only buy 2,700 bowls if you do nothing, and you will lose 10% of your wealth. You can convert anything into something you just need, such as how many bowls of noodles your net worth can be converted into to see whether your wealth has increased or decreased.
