China's last Bitcoin miners

Interviews: 0x71, 0x44, BlockBeats BlockBeats

Message: 0x71, block rhythm BlockBeats

"I've been drinking for 17 days straight."  

"Binkin Technology Tu, who specialises in mining intermediaries, says to Rhythm, sitting behind a spacious desk in a newly renovated, shiny new office building in Chengdu that still smells faintly of paint.  

His face was slightly puffy after days of hangovers, and sometimes he took off his glasses and pinched his brow. Our conversation was punctuated by business news. More often than not, he unconsciously looks out the window at the sprawling office blocks in the CBD of Chengdu's high-tech zone, and the conversation fades into silence as he meditates.

"What can I do if I don't drink now? Every day after work, all the employees have gone home, many mines have lost power, machines can not be sold, and currency prices are still falling. It's too depressing.  

At midnight on June 20, all Bitcoin mines in Sichuan were forced to cut off electricity under file orders. Previously, Bitcoin miners in Inner Mongolia, Qinghai, Xinjiang and Yunnan provinces, driven by the policy documents, kept moving their machines, with Sichuan becoming the last gathering place. However, the release of the Sichuan closure documents dashed the miners' hopes and marked the theoretical end of mines in China and the complete disappearance from the map of Chinese computing power, which once accounted for 75 per cent of the total Bitcoin network.  

The imprint is engraved on my heart after the night, the domestic cryptographic mining capital - Chengdu, the most is not lack of depressed and confused miners.  

On June 22, chengdu, a five-star hotel's top jazz bar, young men sit together 3322 somberly, while smoking and talking, the shirt with "bitcoins" piecemeal, "To Da Moon" currency signs, conversation is filled with "mill", "sea", "overseas resources docking" as keywords, The corridor in front of the bar is always dotted with a few people, while selling mining machines on the phone, while pacing back and forth, cigarette after cigarette.  

The same day, chengdu in a five-star hotel of the meeting, held "global mining resources docking assembly" low-key, sichuan has been without electricity for miners around here, from the various systematic knowledge of the sea, in the introduction of the sea company attempt to salvage from the bulk and the wisdom of crowds "Noah's ark" to ocean the other shore.  

From the state of the miners, it is not hard to see the shutdown of China's bitcoin mining industry, into a dazed and panic.  

  A defunct mining machine.

In Dujiangyan, 50 kilometers from Chengdu, where the mighty Min River flows down, Li Bing and his son from the Warring States period see world-famous water conservancy projects, and modern bitcoin miners see the electricity that makes mining machines work.  

Situated in the mountains of Dujiangyan, miner Lao Wu's mine covers an area of about 1,000 square kilometers and relies on water to keep tens of thousands of mining machines humming day and night.

Bitcoin mines in the mountains in this photo from Miners & NBSP;

"When Inner Mongolia and Xinjiang closed mines in May, I wasn't panicked." Wu told the law firm that he has been in the industry for a long time. Since 2013, mining policies have been launched every year or two, especially in Inner Mongolia, which relies on thermal power generation. "We are used to it," he said.  

So when mines in Inner Mongolia shut down, Mr Wu went online to buy used mining machines and attract more to his mines for trust. Chatting with friends at the time, he said calmly, "Don't panic."  

Time to enter June, even Lao Wu is a little restless. The mine is on the local front line and has received word of it from various sources, but Lao Wu is still hopeful. "Unlike Inner Mongolia and Xinjiang, Sichuan has a large amount of waste water and electricity, which are all clean resources. We don't use these resources, so we can only waste them."  

The disturbing news began in Ya 'an. On June 17, a market news said that Ya 'an, Sichuan Province, implemented a "one-size-all" policy for mines, and all mines had to be shut down before 25, including the consumption of electricity and abandoning of hydropower. On June 18, the community began to circulate a notice issued by the Development and Reform Commission of Sichuan Province and the Energy Bureau of Sichuan Province on cleaning up and shutting down virtual currency "mining" projects, requiring 26 suspected key objects of virtual currency "mining" projects to close down before June 20.  

On the evening of the 19th, Lao Wu finally let go of his luck and sighed that he was going to change his profession again. He turned off the roaring mining machine and began to transfer the mine.  

Compared with miner Lao Long, Lao Wu is one of the lucky ones. After all, Lao Wu's mine has been in operation for several years, and the profits in the first few years are still considerable.  

"I started to build a trust mine in Ganzi Prefecture in March this year and completed it in May. The mine has a capacity of 50,000 kilowatts and can accommodate more than 30,000 mining machines. However, it was blocked by the policy just before construction began." The total investment in the mine is close to more than 20 million yuan, so it can be said that it will lose all its capital. "After all, the profit of a custodian mine comes from the difference in electricity prices and custodian fees."

  已经清空的比特币矿场，图片来自矿工 

This time, the government's policy has been swift and forceful, and the country's attitude has been resolute, making Lao Long a little desperate. "I've been doing this for five years and every year or two there is a policy crackdown, but this one is so severe that it affects the mines, the miners, the pools, all the mining communities," he said.  

In the mining circle, the old dragon's experience is not the most difficult. "I have a friend who is also a trust mine, which has been put into use before. His mine has an investment of 160 million yuan, and the total value of the mining machinery has reached 400 million yuan. However, after the policy was issued, not only did the mine power outage, the mining machinery shut down, the road in and out of the mine was blocked, and the machinery could not be shipped out, so I was in a state of trouble."  

Mining machinery 50% off sale & NBSP;

In the face of mining disaster, selling mining machines has become a forced choice for many miners.  

Unlike Shenzhen's famous mining machine selling point "Saig Tower", although Chengdu is an important city where miners gather and disperse, the computer city known as Chengdu's "Zhongguancun" did not appear the scene of mining machine selling in full swing.  

Rulyfield visit found that Chengdu computer city can not see the related stalls of mining machines, to businesses further inquiry, found that businesses are not unfamiliar with mining machines. "Now the offline channel outflow of Bitcoin mining machine is very few, we also need to ask the supplier, but the graphics card mining machine is a little more." Computer City some sales staff to tell rhythm.  

In stark contrast to the quiet offline market, online bitcoin miners are going through 50% off sales.  

In a miner's world where credibility and privacy are prized, information from strangers can easily make them wary. They prefer to deal with miners and mines who are in the same circle and know each other well, so the main marketplace this time around is still the big online middlemen and communities.  

"Now the price of mining machines has more than doubled, and it has entered the buyer's market, and the price is determined by the buyer," Tu of Coin Chip Technology told Ruly.com. Taking Ant S19 Pro 95T mining machine, which is common in the current market, as an example, the price can reach 60,000-70,000 RMB at the peak of the bull market, while the current domestic price is only more than 30,000 RMB.

Ant S19 online quote at the time of writing, image from Minere 

Ruling also found that although foreign mining enterprises and mines are taking advantage of the domestic "mining disaster" to buy mining machinery at a low price, but the price of mining machinery is lower. Foreign demand side said, "hope to receive $40 /T of S19J PRO", equivalent to only 252 yuan /T, the total price of 100T machine is only 25,200 yuan, which can be described as the "floor price" in recent months.  

Such low prices indicate that the market for used mining machines has reached saturation, after Bitmain also announced that it was suspending sales of spot mining machines. However, some miners think the price is too low and choose to wait and see.  

"Maybe because I've been through several rounds of policy crackdowns, I always think the mining industry has a future." "Now the price of mining machines is too low, I would rather shut down and wait and see, rather than sell at a loss," Lao Long told Lu Dong.  

Senior mining circle Aho also told Rhythm, at present most of the mines are shut down wait and see, do not sell, are waiting for the policy to be clear, "most of them are so struggling now."

Go West !  

Domestic living space continues to compress, unwilling to sell mining machines to leave the industry miners, want to go out to sea to find a chance of survival.  

At present, there are about more than 10 million loads of mining machines in Sichuan to the sea, hao told Rhythm, stagnant in the domestic words, these buy mining machine boss and capital side will be under a very large cost of capital. As with leveraged real estate, there are miners in the mining sector who borrowed money to buy machinery and build mines, and are saddled with millions of dollars. "They have to replenish every day, and they're panicking." Howe says.  

In the face of the demand for going abroad, mining machinery companies that have been overseas for a long time saw the business opportunities and designed customized "module containers for going abroad" aiming at the plight of miners, integrating cold and heat isolation, fan, network, monitoring, power distribution cabinet and other equipment, which is equivalent to a mobile mine built from containers.  

Such a design is certainly not cheap. Take the Bit Deer as an example, the minimum unit price of each container is 142,000 yuan, which can accommodate 180 sets of 19 series mining machines. At present, domestic mines often have thousands of mining machines. A small and medium-sized mine needs nearly one million yuan for shipping containers, and a large mine needs tens of millions of yuan.  

At present, the mining industry mainly has North America and the Middle East two major directions. In North America, represented by the United States and Canada, the local policies are relatively stable and the legal system is relatively sound. Many large mining enterprises have been stationed there, but the comprehensive cost of mining in North America is too high, and the United States imposes a 25% tariff on Chinese electronic products.  

Another relatively cheap option is Kazakhstan. The region has abundant energy resources, is closer to China, has lower labor and construction costs, and has far lower tariffs than the United States. But the rule of law is not high, the business environment needs to be improved, and, as in China, policy is the biggest risk.  

The road out of the sea is long, "take the true scriptures" on the road not only no "Sun Dasheng" escort, but also may encounter countless pits.  

A mine in Kazakhstan was robbed of all its machinery just after it arrived, leaving workers in tears, industry sources said recently.  

"There are too many potholes and it's not that easy." Ahau agrees, "At first, the Kyrgyz government talked about attracting investment, which once attracted the mine, but in the end, the army directly took the mine away from China and lost all their money."  

In the United States, Canada and other countries with the rule of law, the cost of setting up factories abroad is extremely high. A hao told the rhythm, in the domestic construction of ten thousand load of mines, almost need 3.5 million to 5 million yuan. For the same scale, foreign countries need 18 million to 40 million. The current price of Bitmain is 18 million, and the price of Bitfawn is 40 million.  

It is worth noting that although there are all kinds of resource docking and one-stop service in the process of going to sea, the final loss is often "the miners pay all the bills".  

Miners to sell coins?

In the mining industry, Mr. Tu is a stick to the domestic.  

He always believed that it was impossible for all miners to go to sea. It was unrealistic. "Mining is an industry that requires resources and experience, and just having money is not enough. It's easy for foreign mines to take money and give you a hard time, and ultimately put the Chinese out of business. I think that's a very real possibility."  

At present, it is true that some miners in Sichuan are going to sea or have already gone to sea, "but the vast majority of miners are still waiting, and those who are waiting believe that the policy will be clear." Mr. Tu told Rhythm.  

Waiting, waiting often requires super psychological quality and adequate financial supply.  

What about the waiting miners' cash flow? "Selling coins." "He said of course. "I've been selling coins and buying mining machines."  

O Hao also told the rhythm, under the pressure of funds, many miners can not, can only sell coins. "But often the person who holds the coin gets the reward."  

"It's not about how strong my faith is," Tu explained. "It's about how much money Bitcoin actually makes us, which other industries can't make in a lifetime." For example, the normal return period for a hydropower station is 20 years, but due to the entry of the mining industry, the return period for some hydropower stations may be reduced to three months.

"In this industry, as long as you keep digging, you basically don't lose money." "Said Mr. Tu, smoking a cigarette.  

"Starting from 2018, all office buildings near Chengdu High-tech Zone, as long as they are a little more expensive, are basically mining companies." "We are not like a large company or a state-owned enterprise, which has always been a loose way of working," Mr. Tu said, sitting in his large boss's chair. "There are no barriers to entry in the mining industry. If you have some money and experience, you can be successful."  

"But this time around, Sichuan and Chengdu will lose a lot of mining companies." Mr. Tu sighed, looking out the window again at the endless rows of buildings.                                            

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