Bitcoin miner: the crash happened and I didn't leave

Bitcoin fell, the network's power fell, the mine stopped.

Starting from the afternoon of March 8, BTC fell rapidly, and it hit $3,600 a few days later. The constantly fluctuating price stimulated the fragile nerves of cryptographic investors. Shut down, also kui.

Those most affected are smaller mines and miners, whose cash flows are inadequate. Some have collapsed on the eve of halving, either because of the liquidation of encrypted loans or because they are no longer viable. For the miners who are still on the field, which is the best solution, leaving or staying?

The mine stops, some hold on, some leave

At the beginning of the Spring Festival this year, the encryption mining market has "flying" two black swans.

The encryption industry, of course, has not been immune from the domestic outbreak, and then the global economy, which has been devastated by the outbreak. Since March 8, the entire market has been falling for several days in a row, and the price of bitcoin in the hands of investors has been halved before the long-awaited price rise.

The sudden outbreak has indeed affected the normal operation of some mines.

"Have you received your c1?" An early order in a mining mall miners are very anxious, he asked in the group for more than a day, the reply is on the way, logistics delay directly affected his mining income, "originally still want to return the cost, now estimated far away. In addition to the machinery on the road, not yet out of the factory has also been affected, including bitmainland, jia nan yunzhi, shimo mining machinery manufacturers have issued announcements, announced the delay in the production, delivery, after-sales and other time.

Another miner said his mine had been cleared and shut down, but he was not aware of many similar cases. "most of the mines are located in remote mountainous areas, and the movement of people is limited," he said.

In addition to outbreak control, the biggest hit to miners is the market. Starting on March 8, the price of bitcoin continued to fall from $8,800, touched $3,600 in a few days, and is now stable around $6,000. The extreme situation of bitcoin miners also led to a sharp rise and fall.

Source: glassnode&cake;

According to the market price, many types of mining machines, including S9, have reached the shutdown price. The profits obtained from mining with this machine can no longer Cover the cost.

After more than a year, March 12-13, tumbled to ore has been seven years of age old miners wang wei (a pseudonym), once again felt the extreme market under the impact of the best authorities stopped, this time, he and his friends run by mines, has shut down nearly half of the machine, "mostly in the integrated and L3", however, he is lucky, because have to mortgage lending, leveraged financial tools such as keep cautious attitude, and always get their money from traditional industries to absorb, did not let their own mines in danger.

"It was never a bull market and it never recovered." Wang wei regrets, because of the price collapse, before the "mining machine said jin sell" the miserable situation is still vividly in mind, when many mining machine manufacturers downsizing, selling the mining machine friends turned to do wechat business, selling oranges, is his most "piercing" impression in the past. Now, the wash market again, he has opened up: "greatness is to endure."

Mine owner xitao (not his real name), who entered the ring two years ago and survived the "mine accident" in 2018, was devastated this time. "the whole army was wiped out". A few days ago, he and his team had decided to terminate the contract and plan to sell all the mining machines and leave the field. And shenzhen huaqiangbei mining machinery sales li kong (not his real name), the recent period of the depression of the market also has deep feelings: "in addition to the old customers, few new people to consult the quotation.

From the outside, a shakeout of miners appears to be under way, but shutdowns and departures are not the whole picture. In the frontier regions of China's south-west and north-west, where the disease has not yet reached, many mines are still operating normally, such as those that completed the machine iteration early and are profitable even at today's dismal prices. Of course, there are a lot of boot namely loss, but still stick to the players.

"When you sign an agreement, you have to pay a fine for shutting down, or the number of machines running after shutting down does not reach the agreed standard, and the electricity bill will also rise." One miner explained why he had not turned off the machine he had lost money on, and that if he was only on the verge of losing money, many miners, like him, "would turn it on" and not be "knocked out" in a short time.

In the extreme of the slump, some have been able to stay out of the picture. Liu wu (not his real name), an Iranian mine owner who has travelled abroad to get cheap electricity, told BlockBeats that the outbreak and slump had not affected them at all. So far, Iran has confirmed the number has more than 20000, is one of the global outbreak is relatively serious, however, because of the outbreak spread mainly in the north of the country, is located in the central and southern Iran, and Washington's mine "local zero case", so the disease had a little effects on the mine, and they get cheap electricity, at less than a dime, "an". So even if the price of BTC drops to $3,600, they don't have to worry about downtime.

Worries about the ore ring

When looking back on the crash, most of the miners and analysts we asked pointed to one of the main culprits: crypto-lending, leverage and other financial instruments.

In the past two years, the concept of cryptographic derivatives has become popular in China. These third-party institutions, which claim to help miners obtain stable returns and reduce risks, have successively launched financial products including cryptographic lending, arbitrage and insuring mining machines. It has become an option for many miners to borrow money for some of the cash users' living expenses, or to expand production and repay the money back when the capital flow is normal.

In early march this year, paypal, the industry's leading financial platform, released its annual report. At its peak, paypal's loan balance exceeded $330 million, and it can be estimated that the ratio of miners to non-miners on the platform is close to 1:1, so the loan amount of miners on only one platform is over $100 million.

Of course, if bitcoin continues to rise, everyone will be happy. Once the market drops rapidly, the mortgaged assets will touch the price line of the platform to dispose of the collateral in a short time, and the system will forcibly dispose of the collateral and automatically sell it, further intensifying the market selling pressure.

Loan assets are huge. "it's like a quake lake." Miners zhang from hebei handan tumbling on 12-13, as far as he knew, miners with encryption lending out money basically used for reproduction or electricity, operational expenses, "rarely used in the steady investment", and this period of time, speed down, several of his friends because of too late to increase pawn, eventually "did not have money, money also didn't", "everybody is heal each other".

But without public data, it is impossible to say exactly how many miners have been wiped out by the market, and we can only tell from individual miners that things are bad. As Mr Wang says, "cash is more important than gold at the moment", and clever miners avoid over-leveraging themselves.

Will sticking to it pay off?

If the price of bitcoin remains the same, when the halving comes, the mining earnings will be reduced by half, then the mining machines with the electricity ratio of more than 50% will be shut down in theory. Shall we continue to dig or sell the mining machines and stop the loss? It became a must for the miners.

Now, with more than a month to go before it has halved, the profitability of bitcoin mining has fallen to a relatively low range. Several miners believe that despite the recent $1,000 one-day rise in bitcoin, they still see no sign of the currency's recovery from the downturn, and that the mining industry will continue to wash its hands.

Source: BitInfoCharts 

However, unlike the previous two halving periods in November 2012 and July 2016, the third halving of bitcoin coincides with this year's flood season. Is it expected that the flood period will come earlier than usual, which is more important?

Some heavy mines are already gearing up for a flood season, and advertisements for "hosting" and "cheap electricity" are not uncommon among miners of all kinds. "This year's electricity bill is expected to be cheaper than in previous years." Even so, Mr Chang reckons, the mining business does not seem optimistic. According to his knowledge, many mines under construction have been largely suspended due to the outbreak and slump, and several major miners have not shipped much. "the mines that have completed the iteration of new models are likely to be profitable," he said. There are, of course, intrepid miners quietly hoarding or reselling machines to bet on the next two months.

This ups and downs mining game, the first out will still be small players.

Starting in the second half of last year, many mines began to upgrade their machines. And those who are able to go to overseas mining miners, all with his back against a deep resources, in the low to MAO 1 KWH of mining "paradise", seems to only dropped to $1000 of currency will shake their determination, mining and is, therefore, in the currency fell to $4000 to, they can also plotting to "expand" or not.

After more than a week of correction, bitcoin has now recovered to around $6,000, a far cry from the halving it was supposed to go, but a rise is always a good thing, the miners' hope.

The copyright of this article belongs to BlockBeats, if you need to reprint, please attach the hyperlink of this article. & have spent & have spent

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia