Forum 2—In the second half of the year after Bitcoin halved, can the bullish market be far behind?
In June 2013, CHBTC (the predecessor of ZB) was established. In the following 7 years of safe and stable development, ZB has grown into the world’s top trading platform with more than 10 million registered users. Create a real and safe trading environment for users from more than 189 countries, bringing a more professional and efficient trading experience.
This “New Infrastructure, New Opportunities” and ZB 7th Anniversary Celebration is hosted by ZB. The event held on June 28–30, and held twice a day in ZB APP hot chat group and ZAPP (Group Qtv).
The following are the highlights of the Q & A session:
Host (TongXin, ZB Capital Vice President): On May 12, as the 630,000th block was mined, the Bitcoin blockchain reward was officially halved, from 12.5 bitcoins to 6.25. However, the third halving of Bitcoin did not bring about the market’s expected bull market, which only rose by 2.9% that day. Since then, the price of Bitcoin has been hovering between 9,000 and 10,000 US dollars.
Host asked Shao Jianliang (Canaan Blockchain): There are many people in the industry who believe that the expectation of Bitcoin halving has been fulfilled in advance, and even think that it is now a bull market. What do you think?
A：At the beginning of this year, due to the epidemic, all offline activities could not be carried out normally, which made the market with few hot spots even more deserted. In this environment, the major event of “halving bitcoin” received special attention. Far more than its two halvings in 2012 and 2016, under the market hype, we ushered in a wave of “the litte bull market” at the beginning of the year. It can be said that the expectation of halving was fulfilled in advance at that time.
Now that the bitcoin price is trading sideways around 9K, the patience and interest of investors are constantly being worn away. This is far from the “bull market”. However, after a long period of time, after halving, the high probability will rise. I hope everyone will patience for saving or mining, and wait for the bull market to come and get a lot of profit.
Host asked Zhu Fa (Poolin.com Pool Co-founder): For miners, bitcoin halving will inevitably bring a lot of impact. As a mining pool, do you think it has a big impact?
A：The impact of the mining pool is second only to the miners. After halving, the gross profit of the mining pool will also be halved. This is basically what everyone knows. The mining pool is somewhat prepared for this, the overall idea is to reduce costs, or directly accept the reality of lower profit margins. So on the surface, halving income does not have very direct consequences.
But the halving will bring an additional serious problem to the mining pool, which can be called “mathematical penalty lock”. The mathematical penalty is the loss caused by the low luck value. This problem is often ignored, but in the long run, it is the most important factor affecting the survival of the mining pool. If the overall lucky value in the previous halving cycle is low, this part of the loss will be permanent, and it is difficult to make up for the improvement of luck in the next four years.
Because of this phenomenon, the mining pool must collect a certain percentage of mining fees to cover this part of the risk. However, the biggest problem in the mining industry now is that it does not receive sufficient handling fees. At present, the handling fees of the mining circle are generally low, which will cause a series of serious consequences at the industry level. What I am worried about now is that the current status of the industry will cause more people out of this business. There will be too few experienced people in the industry and too many new faces. In the end, the mining pool service is becoming more and more weak and amateur, which will eventually affect the Bitcoin main chain and the cryptocurrency industry.
Host asked YangXiao (Panda Miner Co-founder): After halving Bitcoin, do you think the competition among miners will be particularly fierce this year?
A: Mining itself is an arms race. Whether it is between miners or between manufacturers, there is an arms race. I will answer from two aspects: mining machine manufacturers and miner investment.
First talk about the manufacturer’s perspective: As bitcoin mining chips enter the current 7nm and 8nm process levels, I think that the room for future large-scale iterations of technology upgrades will gradually be limited. In the early years, the chip upgrade of Bitcoin was to catch up with the newer nanometer process. However, after entering the 7nm era, the bitcoin mining chip has caught up with the most advanced nanometer process in the current IC, and 7nm is also used in the latest high-end chips of Apple, Qualcomm and AMD. Although chip manufacturers are currently testing and deploying 5nm or even 2~3nm production lines, there are at least a few years from the completion of the production line debugging to the maturity cycle, and the future improvement is limited. From the perspective of future technology updates, the frequency will be lower and the difference in technical parameters among different companies will gradually decrease. Of course, because the cost of 7nm chip tape is higher, the entry threshold for new players will also be greatly increased. Therefore, manufacturers will gradually change from competition in technology to competition in stability, service, and market capacity. This poses a challenge to manufacturers for more dimensions. The longer future in terms of production capacity is not easy to evaluate, but I believe that this year’s production capacity will not be particularly optimistic. On the one hand, chip manufacturers have limited capacity to invest in the digital currency industry due to the epidemic and the capacity demand of traditional technology companies for new manufacturing processes; on the other hand, affected by the market, manufacturers will not be too aggressive in capacity reduction deployment, so the substantial increase in computing power will not occur in at least the first half of this year.
From an investment perspective: First of all, from the manufacturer’s perspective, the future machine update iteration will not be so fast, so if you stand at the starting point of the next four-year halving cycle, if you invest in a new generation of mining machines, there is a high probability that your machine will be stable. Four years of operation will not be eliminated. At the same time, from the perspective of the market, the halved market expectation will still exist but it has not really triggered the start, so the market will still erupt in the near future, and it is still a good time to participate in mining.
Host asked Kong Meng (VeryHash CEO): Do you think that after bitcoin halved, have you made any improvements in computing power? Is it difficult?
A: VeryHash is an exchange that specializes in serving miner groups. We hope that both mining machines and computing power can conduct high-frequency trading, so that users can achieve the purpose of digging and selling today. The current status of the market is: cloud computing power is essentially mining machine leasing, lock-up mining, and lock-up in any financial market is unfriendly to all investors. The mining machine trading market is a trading market built with mining as an intermediary, and most of them are operated by calling orders in the WeChat moment and selling to traditional investors. For investors, the most important thing in choosing assets is liquidity. With liquidity, the value can be more truly reflected and the market uncertainty can be better dealt with. There are also many excellent companies on the New Third Board. It is because of poor liquidity that the value of the company is not well reflected.
After halving, we found many problems through the data:
1. The currency price is highly volatile. The high volatility we are talking about here refers to the fluctuation within a period of 90 days.
From December 2013 to December 2017, the price trend of bitcoin is a typical bear market to bull market.
The trend of bitcoin after December 2017 is only 3 months, a typical monkey market.
2. Low mining revenue
The mining revenue per T has gradually decrease from 2013 to the present.
After 2015, the maximum revenue per T does not exceed $3.
We counted some operation and maintenance data on the market and found that the online rate >90% is less than 30%. The mine stability and operation and maintenance efficiency need to be improved.
The changes we have made are as follows:
Standardization: mine standardization, mining machine standardization, operation and maintenance standardization. To meet the situation that the power outage of the mine and the damage of the mining machine affect the online rate of the mining machine, we must ensure that the user can obtain stable income. We pay for power outages, and we pay for downtime.
Circulation：We have already introduced market makers to test trading strategies through S19 trading, and more market makers will be introduced in the coming months to participate in mining machine (computing power) trading online, so that users can buy and sell when they want.
Speculative: We will focus on a series of rhythms from spot trading to futures trading, and then to derivative research and development, and carry out more innovations around the computing power market to help this market be more transparent and interesting.
Host asked Lin Nianlong (Flash Mining): As a platform focused on one-stop mining services, will Filecoin fluctuate significantly due to the impact of the external environment or the impact of Bitcoin?
A: That’s for sure. Market value is inversely proportional to volatility. The larger the market value, the smaller the fluctuation, and the smaller the market value, the greater the fluctuation. If Filecoin launches derivatives, its volatility will be greater because it is leveraged and will increase market volatility. At the same time, bitcoin is like “the stock market index”. In the case of other currencies without other external forces, Filecoin is like “single stock”. Normally, bitcoin is positively related. Normally, volatility (Rising and falling range) will be greater than Bitcoin.
Media interview question：
Coinvoice asked Shao Jianliang (Canaan Blockchain): Some people say that the biggest hotspot in the industry after bitcoin halving is IPFS. There are also many friends who bet on this track, and many people hold different opinions. What do you think of this track?
A：Indeed, after the halving of Bitcoin, the entire market is lukewarm. Compared with the deserted digital currency market, IPFS/Filecoin is in full swing. At the same time, the mining circle, chain circle, crypto space and other three circles in the blockchain field have all organized activities related to IPFS/Filecoin, contributing to the wave after wave of Filcoin.
In addition, on the morning of June 24, the Coinlist platform sent important notices to investors, claiming that the Filecoin mainnet will be launched in mid-to-late August to prepare investors for receiving Filecoin coins. From this statement, it can be judged that Filcoin’s main online time is basically locked, based on optimistic expectations of currency prices.
Personally, I am still very optimistic about the IPFS/FIL project. After Bitcoin and Ethereum, there have been few major innovations and breakthroughs in the blockchain field. IPFS/FIL solves the problem of bulky data storage, so that the development of blockchain technology is not limited by insufficient data storage. Its continuous feature allows participants to take out the idle space for paid sharing, which is a great innovation for the whole blockchain.
Odaily asked Zhu Fa (Poolin.com Pool Co-founder)：Which business and corresponding business plan are you responsible for now?
A：At present, the business related to poolin.com and mine operation has been ended. currently has gradually been put into the new brand “Inbit” to engage in comprehensive services around mining machines and miners. At present, the relatively mature business is maintenance of mining machines. At present, it is the maintenance company with the most complete qualification and the highest market/customer coverage in the world. Next, there will be power supply and other peripheral products and services of mining machines. The previous Bitcoin peripheral products and conference activities are another line. We are actively exploring and preparing to meet the bull market and strive to serve the “next user”.
Tuoniaox.com asked YangXiao (Panda Miner Co-founder)：What is the current pattern of the mining machine market? What are the development goals of Pandaminer in the second half of the year?
A: As bitcoin mining has gradually passed the era of huge profits, the majority of miners also need to consider the further allocation of mining assets. The mainstream currency is a more stable mining investment, while the small mining currency is more high-risk and high-yield. Mining of small currencies is currently divided into: graphics card mining, asic mining, fpga mining, CPU mining, hard disk mining.
Mining is an investment in zero-grade market, and the investment logic is more robust, especially for non-specialized machine mining. After an investment, you can switch mining currencies for investment selection, which is worthy focus on such as graphics card mining FPGA mining.
At present, the graphics card is statically recoup investment within one year of this cycle, which is lower than the highest cost-effective S19 machine in Bitcoin, and the graphics card itself has the characteristics of high residual value. The profit is more considerable after considering the residual value. At present, the electricity cost of digging ETH in graphics cards is low, so the risk will be relatively low. In addition, the difficulty of ETH in the past two years has been stable, and the income is stable.
According to the information analysis of ETH itself, this year’s price advantage is strong, and the expectation that 2.0 will be launched in the second half of the market is gradually igniting. At the same time, those who continue to pay attention to the exchange rate of ETH and BTC know that ETH is at a low point and can be hoarded by mining.
As the largest graphics card manufacturer, we have prepared a plan for the graphics card market this year. If you are a 4g graphics card owner, you can find us to upgrade the 8g service. Compared with the manual upgrade solution in the market, we have completed the SMT production line upgrade. The efficiency is more than 100 times that of manual upgrade and the stability will be much higher than manual.
We will use the advantages of integrated resources to design IPFS mining solutions that better meet the needs of miners. Including fund products, a full set of hardware, basic supply chain support, and IDC custody services, we hope to lead our miners’ friends to the next 100 billion market.
In the face of this year’s overall market, our overall thinking is that BTC mining seeks stability without blindly expanding investment, graphics card mining seeks growth to fully grasp the ETH dividend, and Fil mining risk to grab the first mine opportunity.
Biniuniu asked KONG Meng (VeryHash CEO): what happens to bitcoin’s total computing power change after halving? How does the marginal cost and benefit of miners change? What is your understanding?
A: The total computing power will definitely continue to increase, but the growth rate will become lower. The average growth rate of computing power this year is 1.9%, and the lowest average growth rate in previous years is 3%.
Mining machines are the biggest cost for miners. Now bitcoin mining machines have entered an iterative stagflation period, and mass production and optimization around 7nm will continue. At the same time, we are also faced with the risk of external currency price fluctuations, internal struggles of mining machine companies, and the timely availability of chips under the influence of the international situation. These are obstacles that affect the mass production of mining machines.
The purchase of mining machines by miners is actually more of a strong expectation of the price of the currency. I think the price increase of bitcoin will shrink in the future. This is why we now pay attention to the changes in mining machine asset prices first, and then pay attention to the situation of mining income. Because the change in the asset price of the mining machine is greater for the miner than the mining income.
chainfor.com asked Lin Nianlong (Flash Mining)：Filecoin and Defi related fields have been in flames this year. Do you think it is still suitable for entering the market? Which area will the next industry outlet be next?
A：Distributed encrypted storage is divided into two fields: first, Amazon, Microsoft, Tencent, Ali, Jinshan Cloud and Baidu Cloud will integrate their centralized storage and master-slave logic into the encrypted blockchain distributed storage technology to improve their security and stability. As an investor, whether it is a large or retail investor, the first thing to consider when investing is market risk. Investment is a financial game, and investment must first consider the market volatility.
The future of Filecoin’s finance depends on the maturity of future products. Whenever the maturity of derivatives in a market, the risk for institutional investors is actually reduced, because institutions can use derivatives to hedge risks. But on the contrary, the maturity of derivatives will increase the risk for retail investors, because derivatives can increase the volatility of financial products, and this market has no limit and circuit breaker, therefore, the process of Bitcoin from US$9000 to US$3800 was witnessed last time. When the maturity of market derivatives will definitely accelerate the risk of the market, these retail investors are likely to regard speculative products as a casino.
For investors in the primary market, more is to consider the return on investment. The first is the timing of buying, and the second is whether it is applied to financial derivatives to protect your investment. In general, Filecoin is still in the early stage of Bitcoin, and there are many opportunities for profit. However, due to the large volatility and the lack of insurance protection for derivatives, investors must pay attention to controlling positions and doing risk management. The benefits and risks are always a twin brother.