A cautious reflection on mining with Bitcoin

When it comes to Bitcoin, we cannot escape the topic of mining.

No need to try, no matter what. The emergence of Bitcoin relied on mining; The circulation of Bitcoin relies on mining.

Mining machines can be said to be the printing machines of Bitcoin, and mines are the headquarters of Bitcoin printing machines.

Do you say mining roars or not? Of course roar!

Do you think mining should cultivate porcelain? Of course it should be made of porcelain!

But is the risk of mining significant? Of course it's big! The iron law is that returns are directly proportional to risks. Who says there is no risk in just having returns, that is pyramid schemes.

As the saying goes, if you listen to both, it will be clear; if you listen to one side, it will be dark. Below, I will analyze the pros and cons of mining from several points for everyone to weigh.

p1For more details, please checkLitecoin



1、 Analysis of Profit and Risk in Mining


From a real industrial perspective, mining profits are simply staggering. In this world, besides selling white powder and weapons, it is probably mining.

Calculated in Chinese yuan, based solely on the data, it is basically possible to achieve a one-year return on investment. Fortunately, the price of the currency skyrocketed within six months, and it can be repaid within three months. The rest is pure! Earn it!

What is the threshold? Except for electricity, which is a big threshold, everything else is not a threshold. The wiring for mining involves a skilled electrician and a programmer familiar with Bitcoin, assigning several workers to work, and setting up the mine in a few days. If you can provide a ten cent electricity bill, without you having to speak up, miners from all over China will call you and ask if you want to join the Bitcoin mining army??

The above is a profit analysis. There is too much talk in the market, so tens of thousands of words are omitted here.

The following is a risk analysis for spicy eyes, which can be skipped if not preferred.

The mining mode reminds me of the iron sand factory mode in our small county town. My home is near a river, which contains iron ore mines that are used for large-scale steel smelting2006~2013Opening an iron powder factory in the year is definitely a profitable business. Setting up a shed by the river with one or two million machines+Labor costs have no technical barriers, and selling the sand produced from iron ore can cover labor and equipment costs. Iron sand is pure profit.

At that time, the scene of making money by the river was like cooking oil in a blazing fire, just a short period of time06~07In just over a year, in our small county with a population of less than one million, there have been over 200 iron powder factories, ranging in scale from one or two million to two or three million.

My distant relatives (who can be considered cousins or uncles in terms of seniority) also joined this activity. The four brothers worked together to raise money and raised four million yuan07A small-scale iron sand field was opened in the year.

Don't ask me why my family didn't join this industry, I definitely won't tell you it's because I'm poor. (Laughing in parentheses)

Mining is very similar. The Bitcoin produced every day, excluding the electricity bill, is pure profit, and the profit is even thicker.

But mining and iron sand mining are different, and there is no competitive relationship between iron sand mining and iron sand mining. A large river with wide waves, not to mention more than two hundred iron sand yards next to it, can accommodate two thousand or twenty thousand households. The waves wash away the sand, if you have the ability, go dig. The riverbed sand is infinite, and the iron powder is evenly distributed.
Bitcoin mining is different. There is still competition in mining, and the daily output is only that much. Currently1800Bitcoin coins, if you don't dig, someone will dig. If you dig, someone will grab. The difficulty of Bitcoin mining is constantly increasing, and it is adjusted almost every two weeks. Sometimes the increase is very slow, and the difficulty is increased by one1%Even a few tenths, sometimes rising rapidly,20%The above is completely understandable.

To be honest, this is not nonsense. Countless data is on paper and you can refer to it yourself. Please redirect to Baidu here. (Laughing in parentheses)

So this confirms that Bitcoin production has marginal effects, and if the mining site size is kept constant, the revenue will decrease to varying degrees after each difficulty adjustment. From an investment perspective, a rational approach is to be cautious and keep up with the adjustment of computing power, expand the scale of the mining site, and try to balance returns as much as possible.

The price of Bitcoin fluctuates constantly, but its computing power has always risen and has hardly ever fallen.

In reality, the way to expand the scale of industrial products is fixed: financing from financial institutions——Receiving institution review - obtaining a certain degree of collateral, expanding the scale after receiving financing - obtaining profits after expanding the scale, and repaying the loan. In fact, the vast majority of iron sand mines in my hometown also do the same. Of course, the competition in iron sand is not so fierce, they are just greedy and want to make more money.

However, the production and financing situation of Bitcoin has great particularity. Bitcoin mining machines are worthless in the eyes of any financial institution. Not to mention legitimate financial institutions, it is absolutely worthless in the eyes of any high-interest loan boss in the underworld.

So, the Bitcoin mining industry not only needs Zici, but also genuinely needs itCapital support!

But there is still one problem that cannot be solved, which is, what should we do if the price of Bitcoin drops?

Let's make an analogy:13After the second half of the year, the iron sand field experienced the harshest winter in history, as the international market steel prices plummeted. It can be said that prices were cut in half and then cut in half, and the expanding scale of the iron sand field's funding chain broke

Many people are concerned about the cost of Bitcoin, which is easy to calculate. As long as it falls below the electricity bill, Bitcoin mining machines will shut down. Currently, most mining machines in China are150W/Tperhaps300W/TAccording to the electricity bill2.5Gross calculation, if the coin price is lower than2600，300WAll mining machines are shut down, if the coin price is lower than1300，150WAlso shut down all devices. But it seems that new mining machines have just been introduced in the market,100W/TSo the coin price must be lower than900Only then did it shut down.

Of course it's not that exaggerated, how could it be so serious? Even if it's turned off and you're still playing nonsense, if it falls, it will always rise back. Fluctuations are the market law. (Laughing in parentheses).

The international steel material prices are the same. After the cliff is cut off, the price will increase from2015The year began to warm up, with a strong momentum of rapid progress.

Unfortunately, in the2015In the first half of this year, almost all of the over 200 iron powder factories in our county town have disappeared. I heard that someone was stripped of all their assets and became bankrupt due to owing money to the bank.

Don't ask my uncle how they are doing, they are2013At the peak of steel prices in the year, the iron sand field was sold at a high price to the receiver, with a staggering surplus value. A small factory sold for about 40 to 50 million yuan, and with more than five years of operation, the profit was also over 100 million yuan. They have all moved out of their hometown and the entire family has moved to Xi'an.

thatWhat about the person who takes the tray? But you ask me, how do I know?14When I returned to my hometown in go home, I rode by the Qinglong River on my bicycle. I could see rows of abandoned equipment like broken bones, casting dark shadows in the setting sun.

however15In the second half of the year, due to the recovery of the steel market and the shortage of iron powder supply, more than ten new iron powder factories were opened in the county.

Do you think it's time to invest now? Or should we just laugh it off? If a iron powder factory is established at this time and sold at a premium in the future, can Uncle Xuexue succeed?

Some people will definitely make a lot of money from Bitcoin mining, but how can you guarantee that you will make a lot of money by participating in mining?

Anyway, I don't know.

I also don't want to invest in any iron powder factories or purchase computing power because I am poor. (Laughing in parentheses)

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2、 Motivation for mining behavior


Bitcoin mining is the cornerstone of all Bitcoin industries.

Without fur on the skin, how can one attach themselves? Without mining, there would be no Bitcoin; Without Bitcoin, where would there be any cryptocurrency industry?

So, miners are the bottom core of the coin circle. Miners use all their strength and assets to fully support the entire coin circle.

They are hardworking, hardworking, and down-to-earth, firmly optimistic about this industry and investing in the future……

The above are all praise words. There are too many words on the market, so tens of thousands of words are omitted here.
The following is an objective analysis of spicy eyes. If you don't like it, you can skip it.

Are miners firmly holding Bitcoin?

To make an international joke, please go back and take a closer look at the first part above: Miners must constantly expand the scale of their mines and balance their own profits. Moreover, there are certain difficulties in financing the Bitcoin industry.

Continuously selling coins and expanding the scale of the mine (while also phasing out old equipment and replacing new machines to maintain a reasonable efficiency of updates) is what miners are doing.

When the coin price rises, of course, miners may hold the coin in their hands for a period of time, because the price is good, and they will sell it again when it is higher; But when the coin price is unstable or drops, there is absolutely no doubt that it will be sold immediately. It is better to switch to machines to expand one's computing power.

So some people say that when the price rises, miners are the protectors of Bitcoin, and when the price falls, miners are the vampires (smashers) of Bitcoin.

Perhaps some readers may argue that Bitcoin's current production is limited to just one day1800A piece, it's very small, it's nothing at all, it's a smashing plate.

It's okay, one day1800Ten days is enough18000One hundred days is enough180000A year is like a broken rope, a broken wood, and a dripping stone.

We cannot mythologize miners. Miners are not fools, let alone saints. They have indeed made significant contributions to the cryptocurrency industry, but this has been driven by self-interest and achieved a self path of appreciation.

From a personal perspective, I greatly admire the courage and courage of Bitcoin miners. I don't have these courage and courage, and in fact, most people don't. Therefore, many Bitcoin miners have made money, a lot of money.

The Bitcoin world needs miners, and other corners of the world also need brave people like miners, but the actions of miners should not receive more praise.

Just like we praise the teacher for the candle, the doctor for the angel in white, the ancient well at the village entrance for selfless dedication of nectar, and the sun as a way to illuminate the world.

These praises should all be refuted. Teachers are not candles. My teachers and friends are all eye-catching. Don't ask me how I know, my family is all teachers (with a smile in parentheses); Doctors are not angels in white. My doctor classmates say on their social media every day that if they have the ability, they can praise a salary increase of 100 yuan and praise them hard; The ancient well at the entrance of the village was wronged, and I have selflessly contributed to it until now, but I heard that it was eventually filled; Sun Gonggong... Could you explain why the solar heating system in high school was still chasing us for heating fees back then?

Miners see it as a token business, and it is reasonable for them to invest in mining to gain benefits. The ancients said, 'No gain, no gain.'. The world is bustling, all for profit, and the world is bustling, all for profit.

Making money is already the most beautiful thing in the world, whether it's Chinese yuan or Bitcoin. What miners do is their own behavior, which can withstand praise and slander, and has nothing to do with others.For more details, please checkBitcoin price

I don't want miners to engage in any behavior that does not conform to their profits, and I don't want them to be burdened with moral burdens. I want them to be more rational, and there is nothing better than good.

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3、 The Future of Mining


13At the end of the year, it was predicted that mining would become large-scale in the future, and this "future" would soon become a reality.

There are two futures for mining. One is that mining will eventually be taken over by the state, just like the national power grid, becoming a national monopoly resource. Miners are powerful, places that sell electricity are even more powerful than miners.

exceptGuo Jia, no enterprise can afford this kind of electricity demand that is uncertain in revenue, requires continuous expansion of scale, and almost endless.

The future is far away, so far away that Bitcoin needs to be recognized and supported by the state, and its assets need to be recognized by banking institutions, which can be packaged and issued through securities institutionsABSVarious institutions are willing to take over underwritingSPV... (I can't keep up any longer. Can you give me a break?)

Another future for mining is to truly achieve the Internet of Things.

For example, by fully utilizing the waste heat generated by mining machines, the cost of electricity can be offset. Low level mining machines can be combined with appliances that require heat, such as kettles, water dispensers, rice cookers, water heaters, heaters, and electric blankets. Everything that needs heating can actually be transformed from a mining machine.

The above ideas are relatively low-level. If we switch to other types and have a richer imagination, any form of calculation can be used for mining. Think about itSETIThe screen saver used to search for extraterrestrial civilizations... Actually, from scale to thousands of households, just like the development process of communication systems. Do you know how much it cost to send a telegram in one word during the late Qing Dynasty? A full one or two silver coins! Now, who will still use telegrams?

As the saying goes, the overall situation of the world will be divided and combined over time... For example, mining, going to the countryside is a lot of hardship (no, Zou Guwen is too sour, let me retch for a while)

Of course, there is another possibility, which is also the least desirable one for everyone. The mining industry ultimately declined and there is no motivation to return to its glory. The hustle and bustle gradually subsided into silence. Just like Nangong Yuan once wrote an article that he claimed to love, I also liked it very much. Even if I read it today and found it to be a wrong prophecy, I still couldn't help but want to give it a thumbs up:

“2017In the spring of the year, the almost desperate guardians of Bitcoin ultimately did not welcome the spring of Bitcoin.
Yes, the price of Bitcoin has already dropped to below par500RMB (at this time, China has just issued)500One yuan.
A large number of mining machine operators have fallen one after another after struggling for several years.
Pumpkin Zhang, who once dominated the world, returned to his alma mater to teach. Before leaving, he sold all the company's assets and just paid off all the debts. He came naked and walked naked, without taking away a single cloud.
The roasted cat mining machine has successfully transformed into an electric heater production factory, and due to its good name, it has also sold well.
Ant Mining Machine's attempt to transform into a mouse pad manufacturer has failed and is nowhere to be found.

Li Xiaolai repeatedly claimed that Bitcoin was just an experiment, but still couldn't resist the enthusiasm of fans and was forced to go abroad. It is said to be teaching Chinese on a small island now.
BitEra and Biter have already announced an indefinite shutdown, notifying everyone to quickly withdraw the coins. However, it is said that some counterfeit coins have been withdrawn for half a year but have not been credited. It is possible that some coins have already died, but everyone did not notice.
Huang Tianwei continued to work on his web games, while Han Lin continued to focus on software development, as if he had never been here before.
He Yi returned to host a program on Tourism TV and said:"I have been here, loved, and blacked out. My life has been without regrets."
HuobiOKCOINAfter multiple rounds of layoffs, Bitcoin China has finally decided to merge its offices. Total insufficient20The person maintained the operation of three exchanges in a small office. On the snow-white wall hung four big characters: "Believe in the future!"
Biter Xiaojiuer went to a kindergarten to teach, and Biter Era Xiaofeifei opened a foreign trade company to smuggle stockings.

The Bitcoin players of the past dispersed in a frenzy.
The debate back thenPOWandPOSThe players of counterfeit coins and second tokens also dispersed in unison.
Only those words still flow on the internet.
It's like a joke.”

Nangong Yuan has been repeatedly ridiculed recently, saying that your prediction has been criticized, right? Perhaps predicting the future itself is just a joke. But I really like this article, I don't know why, it's like honey.

Nangong Yuan is not singing empty Bitcoin, it is showcasing his unique imagination that ordinary people do not possess.

How sad is playing Bitcoin without imagination?