Author | Qin Xiaofeng
Editor | Mandy
Produced | Odaily
Author | Qin Xiaofeng
Produced | Odaily
At 23:00 last Saturday night, a short video was widely circulated in the circle of friends of encryption practitioners, and many KOLs forwarded it one after another, with the text: the end of an era.
In the video, hundreds of mining machines are neatly arranged on the racks, and several workers are turning off the power of the mining machines one by one; the sentimental soundtrack and the repeated "Bye" are not only saying goodbye to the mine that is about to be cleared , more like an emotional farewell at the end of the golden age of mining.
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(Video screenshot)
The video was shot at a mine in a hydropower consumption park in Sichuan, and the same scene was also staged in many places in Sichuan that night.
In the past two months, Mongolia, Xinjiang, Qinghai and other places have successively issued policies to clear out encryption mining projects. Sichuan, which is regarded as the last "hope" by miners, has also recently implemented a policy to fully clear out mining farms. So far, the once major encryption mining provinces in China have closed their doors to miners, and the Bitcoin computing power has been affected and has shown an avalanche decline, which has nearly halved compared to the peak in mid-May this year.
However, there is not much time left for miners to be sentimental. There are many old miners who have long been free of wealth and have since died down, selling their machines cheaply and leaving the market. But for more miners who have purchased new machines and are still returning to the current period, they must find another way out.
After recent years of development, the financial tools of the mining industry have been perfected. There are not a few miners who are heavily leveraged. The pressure of monthly repayment forces them to restart their machines as soon as possible. Going to sea is their last choice.
“Several high-leverage companies around me have already been liquidated. I should be able to last for another two months. I am also investigating suitable overseas mines, and I am currently leaning towards Texas in the United States.” The interviewed miner told Odaily.
However, going to sea is not an easy choice. There are already many obvious difficulties in transporting heavy assets to unfamiliar places on a long journey, but there are even more hidden traps. There are not a few miners who have lost their money and lost their money when they went to sea before.
During the ups and downs, Odaily interviewed a number of miners and listened to them talk about the two or three things before and after the shutdown, as well as all kinds of mining related to the sea, where did they go? How many difficulties are there ahead? Where is the most reliable foothold?
1. The mines were completely cleared and the "golden age" came to an end
"Actually, we were mentally prepared as early as more than a month ago. But the ship turned around in a catastrophe. Even if you know, what can you do? Just like this shutdown, we have notified you one day in advance, and we have no power to change the result. .” Old miner A was quite helpless.
Old A's mine is located in a hydropower consumption park in Sichuan, with a total load of hundreds of thousands of kilowatts. Based on the calculation of 10,000 kilowatt load input cost of 5 million yuan, the total investment will reach hundreds of millions of yuan.
However, only 10 days after the mine was completed and excavated, it was urgently stopped.
On June 18, a copy of the "Notice on Cleaning up and Closing Virtual Currency "Mining" Projects" issued by the Sichuan Provincial Development and Reform Commission and the Sichuan Provincial Energy Bureau was circulated in multiple communities. According to the document, the State Grid Sichuan Electric Power Company has investigated and reported 26 suspected virtual currency “mining” projects to the country, led by the relevant city (state) government, and cooperated with the State Grid Sichuan Electric Power Company and Provincial Energy Investment Group. The work of screening, clearing up and shutting down will be completed before the 20th of the month. The news was later confirmed by The Paper and other mainstream media.
On the evening of June 19, dozens of registered mines, including the old A mine, were all shut down as the first batch of "demonstration enterprises", which is the scene at the beginning of the article. That night, "Sichuan Bitcoin mine collective power outage" also appeared on the Weibo hot search list.
On May 21, the Financial Affairs Commission of the State Council proposed to "crack down on Bitcoin mining and trading activities" in a meeting. Since then, Xinjiang, Qinghai, and Inner Mongolia have introduced relevant policies to rectify and clean up virtual currency mining.
Although the regulatory signal is clear, many miners still maintain a wait-and-see attitude and are not in a hurry to relocate their layout. In the view of many miners, the suspension of mining in Xinjiang and Inner Mongolia is mainly due to the serious environmental pollution caused by coal. For the Yunnan-Guizhou-Sichuan region, which uses hydropower energy, it is still optimistic. Especially with the advent of the wet season, Sichuan and other places have a demand for hydropower consumption, and there may still be vitality.
On June 2, the Sichuan Supervision Office of the National Energy Administration held a small-scale research symposium to analyze the impact of shutting down virtual currency "mining" on Sichuan's abandoned water and electricity this year. Some miners who participated in the meeting said that mining can be carried out normally, which also sends a positive signal to the outside world.
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(Screenshot from the community on June 2)
At that time, old A had signed a cooperation agreement with relevant departments in Sichuan and filed it. He also let go of his worries. He has a formal contract as a guarantee, and there is a high probability that there will be no sudden power failure.
However, only half a month later, the direction of the wind changed suddenly. Yunnan and Sichuan successively announced the banning of encryption mining projects, which also gave old A a head-on blow.
"When Xinjiang and Inner Mongolia began to rectify the mines, many people have already noticed that the intensity is different this time. Because in the documents of Inner Mongolia, the content of "preventing financial fraud" has been added. What attributes do you use to close mines? The electricity doesn't matter. "Old A made a summary afterwards.
According to previous media reports, Sichuan is the largest concentration of bitcoin miners in China and even in the world, with about 8 million of them being used for cryptocurrency mining. With this round of rectification, all large mines have been shut down.
However, old A revealed that some mines with small loads (1000 kW ~ 2000 kW) of isolated grid power (not entering the national grid system) are still operating in the Sichuan jurisdiction, but with the implementation of the policy, these mines are closed. The stop has also entered the countdown.
2. It’s okay to sell the machine cheaply, but some miners can only liquidate and go bankrupt
"The group of miners who used to communicate has now started selling transformers and mining machines." Old A explained. With the closure of mines in Inner Mongolia, Xinjiang, Sichuan and other places, some miners feel that the policy has been tightened and began to consider selling equipment at a low price.
A large number of second-hand machines have poured into the market, causing the price of mining machines to plummet, which is like a world away from the situation of "hard to find one machine, hard to find one card" a few months ago.
A second-hand mining machine salesman told Odaily that now the mining machine has completely become a buyer's market, and the seller's quotation has basically become invalid. Taking the S19 as an example, it was once fired to more than 70,000 yuan, but now the second-hand mining machine only costs more than 20,000 yuan. In order to ease the pressure on miners to ship, Bitmain also recently announced the temporary suspension of the sale of spot machines.
However, selling cheap mining machines and leaving the market is actually a choice. Some highly leveraged miners have no choice at all. They can only find another way to continue mining, otherwise they will face liquidation and bankruptcy.
Due to the rise of various financial instruments in the past two years, the leverage ratio of the mining circle has begun to rise. A small number of miners choose to pledge coins to borrow money to buy machines, and pledge the machines to buy new machines again. Some people are burdened with millions or even tens of millions of loan repayment pressures every month.
Previously, new coins could be mined every month and the price of the currency continued to rise, so loan repayment was naturally not a problem. But now it is cut off from the source, and miners cannot mine coins, which will lead to a break in cash flow. After the expiration, the machine and the pledged tokens will be liquidated, and they may not even be able to repay, and they need to bear liabilities.
There are not a few such miners. Recently, a mine owner with a load of hundreds of thousands of kilowatts was blocked by creditors because he could not afford tens of thousands of cash. An interviewed miner said that if mining is still not possible in the next two months, "a lot of people in the mining circle will die."
At present, only a few provinces have introduced restrictive policies, and other provinces have not yet implemented them, which also gives miners breathing space and can circulate around (commonly known as "guerrilla"). There are still many mines in operation in some areas, but due to limited energy, it is difficult to load large mines and can only meet the needs of some small miners.
Many domestic miners still maintain a wait-and-see attitude. One is to expect lower demand for electricity after the summer power peak; the other is to expect some relaxation of policies. This is also the truest thought of many miners who are currently "fighting guerrillas" in various places.
Due to the guerrilla needs of miners, the demand for mobile mine boxes has soared recently. A mine box salesman told Odaily that its business volume has increased five-fold in the past month, and some orders have been shipped until next month. (Note: The mobile mine box can be separated from the mine, and the whole can be relocated at any time to protect the mining machine from damage)
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(The mining machine is being put into the mobile mine box)
3. Where do you go to sea, Central Asia, Eastern Europe, North America or Northern Europe?
As regulation becomes stricter, small and medium-sized miners may be able to afford losses and leave the mine, but for large miners with tens of thousands of mining machines, it is necessary to go to sea to find a suitable site to build a new mine.
Nic Carter, the founding partner of Castle Island Investment Company, previously judged that 50% to 60% of Bitcoin computing power may eventually leave China.
"In the past month, friends in the circle, including the leading mining pool, have been asking me how to go to sea and how to run the process smoothly. We also gave a few friends tens of thousands of loads to help them tide over the difficulties in the short term." Miner Dong told Odaily that the current total load of all mines in Kazakhstan is about 1.3 million kilowatts, but it is not fully running.
As early as 2018, Lao Dong began to build mines overseas. Currently, he owns a large mine in Kazakhstan with a load of more than 100,000 kilowatts. When the domestic mining machines were cleared this time, Lao Dong took advantage of the opportunity to transfer his mining machines overseas one after another. "In the past two years, it was because there was always a back and forth in the country, and the electricity price overseas was cheap. I wanted to leave myself a way out, but I didn't expect it to be used now."
For miners going to sea, Central Asia, Eastern Europe, North America, and Northern Europe have also become several important options:
Bit Mining, a listed company in the U.S. stock market, announced to build mines in the U.S. and Kazakhstan. The latest news is that its first batch of virtual currency mining machines (320 units) arrived in Kazakhstan and is expected to be deployed and put into operation on June 27. Other self-owned mining machines are also being shipped overseas in batches.Jiang Zhuoer, CEO of Leibit Mining Pool, said: "The joint mining business will no longer be open to mainland China, and the mine will be mainly deployed in North America."“We are trying to diversify our global mining hash rate, which is why we are moving to the US and Canada,” said De La Torre, vice president of Poolin mining pool.
From a policy point of view, many overseas regions have a friendly attitude towards cryptocurrencies and have introduced relevant plans as a guarantee. For example, the Kazakhstan AIFC
Investment
Recently, through the Chinese media, Chinese miners are welcome to enter the country, and a compliant managed mine can be established in three to four weeks. Additionally, in June of this year Texas Governor Greg Abbott (R) signed a bill creating a legal framework for cryptocurrencies and blockchain, and the Texas Department of Banking notified state chartered banks for custody of cryptocurrencies.
In addition to the old A, Texas is also an ideal destination for many other miners. Miner Lao Chen said that the United States, Canada and other places with sound laws are given priority when going to sea, where personal and property are more secure, while places such as Central Asia and the Middle East have great uncertainty and are more prone to accidents.
"North America is the one that is more formal, and Kazakhstan and the Middle East are the ones that are more cost-effective." Some insiders summarized the selection criteria for mines going to sea.
Since it has become a trend for mines to go to sea, container resources are also in short supply. A number of miners have recently posted messages in Moments asking for containers.
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4. Difficulties in going to sea: constant difficulties and many traps
Whether it is policies or electricity prices, overseas seems to be very friendly to miners. However, those who have not really experienced shipping assets across the ocean can't imagine how many pitfalls are waiting for you after going to sea.
First of all, the construction cost is high and the construction period is long.
According to old A's investigation, the input cost of a 10,000-kilowatt load in Dezhou currently needs about 35 million yuan, which is 7 times that of China. Even in Kazakhstan, which is famous for its cost performance, the construction cost is much higher than that in China.
An important reason is that although Kazakhstan has a large number of electrical equipment from the former Soviet Union, they are already aging and are not suitable for the construction of mines. Take Lao Dong's new mine as an example, the total load of 30,000 kilowatts can only run 10,000 kilowatts.
Therefore, miners need to choose to purchase electrical equipment from China, carry out customs clearance and transport it abroad. It takes about 20 days for mining machines and electrical equipment to be transported from China by rail to Almaty (the largest city in Kazakhstan), and then transferred to various mines.
In addition, Lao Dong also reflected that foreign teams are generally slow in construction, and there is no professional mining machine maintenance team, so it is necessary to recruit labor from China, apply for visas, and prepare vaccines. After the whole process goes down, it basically takes about two months to build a new mine. "The salaries we pay for mining machine maintenance personnel may reach one million a year. And the prices of materials and bulk commodities are now rising, which will further increase construction costs."
In addition, there are many hidden pits in actual operation, which are hard to guard against.
In 2018, when Lao Dong went to sea for the first time to test the water, he chose to build a farm in a city in the Russian Arctic Circle. However, in actual operation, due to the low temperature, electrical equipment and mining machines often fail, making it impossible to mine. When they finally withdrew, the partners found various reasons to seize the machines, and after negotiation, only half of the mining machines were finally returned. Later, when he moved to Kazakhstan, Lao Dong’s electrical equipment was also “rented free” by his partners.
Due to the high difficulty of building overseas mines, many small and medium-sized miners choose to entrust their mining machines to mature overseas mines. However, Lao Dong pointed out that this move is very risky and may lose the ownership of the mining machine. "When the machine is cleared, whoever clears it will own it. If you encounter unreliable ones, it is not impossible to swallow all the machines."
V. Conclusion
In addition, there are also many overseas mines claiming to have a large amount of idle resources to attract investment in China. According to Lao Dong, currently due to the epidemic, Kazakhstan does not have sufficient idle resources. "Many mines have a big tone, saying that I have 200,000 or 300,000 loads, which is all nonsense. Now because of the epidemic, people can't get in, and equipment can't get in. It should be until next year that the real scale starts to build. At the beginning of the year, it is reasonable. But what will be the new situation at that time, no one knows."
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V. Conclusion
For the entire encryption market, the mining circle has always been a mysterious "big rear".
The communication among miners is mainly on the Internet and in the community, and every offline summit is a large-scale meeting of netizens. Once you get acquainted with each other, the connection between people will quickly become closer, and they will hug each other to keep warm. After this centralized shutdown, some miners in overseas mines also helped domestic friends to go through the process of going overseas, and even directly shared their own power resources.
