Has the mining outlet been converted from bitcoin computing power to hard disk capacity?

Early bitcoin mining enabled many ordinary people to achieve rapid wealth growth, but with the upgrading of mining equipment, mining became more difficult, it is no longer suitable for ordinary miners. In the past two years, due to the emergence of star projects such as Filecoin, the hard disk scale that has been put into the field of capacity mining has become very large. The hard disk capacity mining has advantages such as low threshold, energy saving and decentralization. So after Bitcoin, will hard disk capacity mining become the new hot spot?

On July 27, MASS Chinese community invited two veteran guests in mining circle: Co-founder of Coinage, Co-founder of Printing Bit Zhu Mo, founder of HPool Alex, had an in-depth explanation on the problem of hard disk capacity mining.

Sorting out live broadcast content

Question: First of all, a question about the mining motive. There is a saying that "mining is better than buying COINS". What is the difference between the two? Why do people want to stay involved in mining, and what's the attraction?

Alex: Digging mines or buying COINS is really a game between risk appetite and strategy.

Buying COINS (regardless of futures) yields only if the price of the currency rises. Mining can arbitrage the secondary market and make profits in the process of mining. As long as the calculation force does not rise sharply, the currency price will rise or remain stable for a period of time, or even fall slowly. So people with a low risk appetite tend to dig.

And people with a high risk appetite will think "digging mines is better than buying COINS". Take Bitcoin as an example. In 2011, the same cost of 1 million yuan was used to purchase graphics CARDS to mine and buy COINS directly. In the end, it must be more profitable to buy COINS.

The logic of buying COINS is faith, or value investment, while the logic of mining COINS is to achieve long-term stable returns through arbitrage.

In addition, from the perspective of large institutions, when it comes to the allocation of digital currency assets, direct deposit of large sums of legal currency is blocked, and mining is a good tool.

& have spent

Zhu: First of all, the mining machine pricing strategy is to ensure that the mining income is not lower than buying currency. Then, taking operation costs into account, taking Bitcoin as an example, if the electricity price is low, mining will be more profitable than buying COINS; if the electricity price is high, buying COINS will be more profitable than mining. If one has not yet experienced the difference between buying COINS and mining, then it must be more appropriate to buy COINS.

& have spent

Question: It is said that this year is half of the year, with BTC represented by PoW mining back to the current cycle becomes longer, is it an opportunity for PoC to rise? How to look at hard disk mining this field?

Mr. Zhu: The recent halving of bitcoin and other currencies has led to some embarrassment in the pricing models of mining companies. Under the original pricing, there is not much profit in mining now, which leads to the general wait-and-see attitude of mining machine buyers. The second reason is that there are some fluctuations in the internal governance level of mining operators, which leads to users' distrust of mining operators. These two reasons have led some PoW money to migrate to hard drives. Many of my PoW clients have been looking at IPFS and PoC opportunities recently. So recently, I have been inclined to put resources into related fields.

& have spent

Alex: PoW mining from a micro point of view, both early graphics CARDS and later ASICS, mining machine operators were the biggest miners. The miner takes the buyer as a hedging object. When he expects the miner to make more money, he will keep the miner. When he expects the profit from the miner to be lower than the price, he will sell the miner. This is the paradox of PoW mining - the supplier is the miner's biggest competitor. For example, when the S9 came out, it was priced at 8000. If you could buy it off the shelf, you would get your money back in 10 days based on static income, but you would not be able to buy it, because the miners would choose to dig it themselves.

& have spent

In addition, from the perspective of power structure, mining machine production and power monopoly bring challenges to the safety of PoW. In theory, bitcoin is decentralized, but as the computing power of the real world becomes more and more concentrated, the human risk becomes more and more apparent.

& have spent

So if you make the equipment universal, you can reduce the monopoly of the miners, and if you reduce the dependence on electricity, you can reduce the monopoly of resources, which is more friendly to the miners. This mechanism is not to drain resources but to equalize the proportion of resources and opportunities. If two miners have a 100:1 resource input relationship, then their chances are also closer to a 100:1 relationship than to a 1000:1 relationship. At this point, the security of the network will return to what it was in the early days of Bitcoin, and this is the PoC. The MEANING of PoC is more like fixing the engineering problems of PoW. Although not perfect, no mechanism has been found that is closer to the original idea of PoW than PoC (PoS cannot replace PoW fundamentals and structure).

& have spent

We at HPool have always believed that PoC will be a link in the future development path. PoC technology is also constantly iterating, from the beginning of Burstcoin, to BHD, and then to the present MASS. Including Filecoin, the more we study, the more we find that the mining level of Filecoin and PoC projects are highly unified: I think the more accurate definition of Filecoin projects is the custom storage to do storage proof, while MASS PoC projects are non-custom storage to do storage proof, essentially providing storage proof and mining.

& have spent

The problem: Many people confuse Filecoin with PoC mining, and the fact that they both use hard drives is quite different in mechanics. When it comes to mining, what are the advantages and disadvantages of Filecoin and PoC? Which do you prefer?

& have spent

Zhu: For Filecoin, if the operation and maintenance are not good or the hardware assembly is not reasonable, it will be punished by the system, which may be quite serious. The PoC threshold is relatively lower.Filecoin has the advantage of high popularity, but Considering the currency price and machine price, I'm not sure about it.

Alex: Bitcoin is privatized, Filecoin is privatized data. The data we have on the Internet right now, it doesn't belong to me, it might belong to a company, it might belong to IDC operators. On Filecoin, the data belongs entirely to the person with the private key, and it has its own application scenarios. What Filecoin wants to do is a distributed IDC based on blockchain, which is much more technologically difficult.

PoC is more of a supplement to PoW, which is a common chain facility. For example, MASS is the infrastructure to make a common chain.

When it comes to mining, PoC is easier to popularize and expand than Filecoin.

Whether it is MASS, BHD, or Filecoin, they are essentially mining with effective capacity. When participating in mining, you must first write data on the hard disk, which is verified by the system as the proof of effective capacity, then you can participate in blasting blocks (mining).

If BHD's disk difficulty is defined as 1 and MASS's disk difficulty is 10 (which, like Filecoin, requires some calculation), Filecoin's disk writing difficulty is up to 400.

We now dig BHD, MASS, and only need 10-20% of the equipment to do the calculation. For example, if it costs $1 million, it only takes $200,000 to do the calculation, and you can fill up 800,000 hard drives very quickly. Currently, most Filecoin devices on the market only give capacity parameters, but if not equipped with enough computing devices, it may take as long as 5 or 10 years for 1 T hard disk to become effective capacity. If you want to complete P disk within 40 days, for every 50,000 yuan hard disk, you need to configure 950,000 yuan computing equipment. So Filecoin is more like PoW in the write stage, requiring a large number of computing devices -- CPU, graphics card.

In addition to device thresholds, Filecoin's economic model is the most complex ever, and its operational difficulties are also very high, requiring it to reach a professional level close to Ali Cloud.

In addition, Filecoin faces many challenges when it comes to storing data. Filecoin wants to store data that is valuable to humans, but "data that is valuable to humans" cannot be determined by algorithms, so it can only specify stored content in a centralized way, such as maps, museum data, Wikipedia data, and so on. This has led to a new contradiction. The original aim was to give control of the network to consensus, but now it is equivalent to taking control back to the project party and becoming semi-centralized. However, failing to do so will lead to another paradox. In order to dig mines, miners will write a lot of garbage data, which is no different from PoC, and even waste a lot of computing resources and electricity resources.

Of course, new technologies need to be inclusive. Filecoin has brought huge flow to the industry, which is good for the industry.

Question: MASS is a new comer in the PoC field and has attracted a lot of attention. Besides capacity consensus, it also adds binding and locking mechanism. How to understand this unique economic mechanism?

Alex: The advantage of PoC is that the market value of mining equipment is basically 1:1 with the market value of COINS. The market value of bitcoin mining equipment is about 1 trillion, and the market value of COINS is about tens of billions. This gap is quite large. The benefit-cost ratio of attacking PoC is close to 1, while the benefit-cost ratio of attacking PoW is much higher than 1. Theoretically speaking, THE PoC network is more secure than PoW.

In addition, the cold start of PoW projects is difficult. An increase in the computational power of one project means a decrease in the computational power of another. This is a zero-sum game. However, the low computing power of the whole network will lead to the network insecurity and the overall unfriendly to new projects, which will lead to the lack of diversity.

The economic model is the catalyst. The key is to make the underlying technology valuable and meaningful. A well-designed economic model can accelerate ecological development and operation. The earliest PoC project Burst did not have an economic model, which did not develop well later. When there was no cost for the production of COINS, it was difficult to price the price storage. In MASS, mortgage mining helps lock in some of the incentives to make the model work better. In mining, the savings in hardware and power costs are offset by mortgages and locking. In addition, if the block reward is 100% obtained through naked digging of the hard disk, it will make the network vulnerable to attack.

Audience questions

Question 1: Is MASS still suitable for investment?

HPool has also configured some MASS for collateral mining, and we hope it will rise. From the perspective of the whole market, if Bitcoin enters a breakout period and starts a bull market, this market will benefit the whole cryptocurrency and conform to the shape of the pendulum. The larger the market value of the currency, the greater the amount of capital, the more stable the rise rate, that is, the two ends of the pendulum, and the bottom of the pendulum is the currency with the smaller market value, it has a small amount of capital, the market value will fluctuate more. This type of currency can be configured decentrally.

Question 2: There are many COINS in the PoC ecology, such as FIL, BHD and MASS. What is the advantage of MASS? Compared with PoW, PoC has the advantages of power saving and decentralization. What are the disadvantages?

Compared to PoW, PoC's disadvantage is that it's not stable. The CURRENCY of PoC is not mainstream, and the market value of BHD does not enter the top 50. Therefore, the reference cycle for miners to purchase equipment is not meaningful. In addition, if too many hard drives are added, the capacity of the whole network will rise very fast, which will lead to low profits. Of course, there are also opportunities in this process. Moreover, if you can't dig for one coin, you can dig for another.

Take graphics mining, for example. Ethereum mining is trivial compared with the new profits made by graphics machines. I believe there will also be such an ecology in the hard drive field. If you are an IT enthusiast, digital enthusiast or science fiction enthusiast, and you have the energy to play with IT, you should not be disappointed to configure the hard drive.

(Alex: The trading depth of BHD is among the top 10 of huo Coin, which is also the characteristic of new currency. At the beginning, the trading volume is not large, but the price rises very fast. After the first halving, it will settle down.)

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