China's idle Bitcoin mining machines may exceed 2 million, and the unblocking is not optimistic for the time being. Overseas "firefighting" will take another half a year

Wu said author | Colin Wu

Editor of this issue | Colin Wu

As the last shoe fell in Sichuan, the computing power of the entire network plummeted to about 90E. The previous highest was 180E. In less than two months, the computing power of the entire network has dropped by about 90E, which also indirectly shows that China's computing power accounts for about 50-60% of the world. 90E is approximately equal to 900,000 S19 mining machines, but the current market share is still relatively large for small computing power mining machines such as S9 and T2, as well as medium-sized mining machines such as Shenma M20. Based on this estimate, there are more than 2 million or even more mining machines in an idle state.

Going overseas has become the main choice for large miners, and news has been revealed one after another: For example, a logistics company in Guangzhou, China confirmed to CNBC that it would airfreight 3,000 kilograms (6,600 pounds) of Bitcoin mining machines to Maryland, the United States. The freight cost per kilogram was $9.37. But in fact, there may only be a few hundred mining machines. Similar news also includes that on June 21, BitMining (formerly 500.com) announced that the first batch of 320 mining machines arrived in Kazakhstan, and the second and third batches, totaling 2,600 mining machines, are expected to arrive in Kazakhstan before July 1.

Miami, Kazakhstan, Texas and even "Bitsalem" El Salvador have all called out to Chinese miners. It seems that the whole world is attracting Chinese miners. It is very lively, but what is the actual situation?

How many mining machines are exported? From the recent Bitcoin computing power, we can see that there are almost no mining machines, and most of the news reports are about a few hundred. In the list of overseas mining farms listed at the Bitmain Chengdu conference, almost the vast majority are under construction, and even need to invest a lot of construction costs first. The construction efficiency overseas is much lower than that in China. Industry insiders estimate that it will take half a year for some new mining farms to be completed, and it is difficult to meet 5% of the idle mining machines in China.

At present, the few manufacturers who have sold cloud computing power or computing power tokens are the most anxious. Even so, it will take nearly two months for the transfer to partially return to normal. It can be expected that the computing power of the entire network will slowly recover to 100-110E in two months, and to 140-150E in half a year.

Under such circumstances, people who own high-quality mines will naturally be able to get a lot of them. Kazakhstan has become the most popular region because of its proximity, low tariffs and electricity costs. Some mines in Kazakhstan have not only started to increase electricity prices, but also require customers to pay various service fees, and some even ask for a share of 10% of the mined Bitcoins. Prices reflect the relationship between supply and demand, so this increase is also a rational result of the imbalance between supply and demand.

The current mainstream migration areas are the United States, Kazakhstan, Canada, Russia and other places. The United States is most suitable for long-term large miners, but the construction period is long, the procedures are complicated, the construction cost is 6 times that of China, it is difficult to use in the short term, and there is a 25% punitive tariff. Under the bidding of large miners, the price of high-quality mines in the United States is also rising.

Kazakhstan is currently the most popular and convenient destination, but similar to Russia, Chinese miners have some concerns about its operating environment. In addition, most of Kazakhstan's electricity is coal-fired, and as more and more miners are employed, it may be questioned by the international and domestic communities. Most of Canada's hydropower stations are small, with relatively small loads and strong local environmental awareness, so they are not suitable for large miners. As for other regions such as Southeast Asia, although hydropower resources are abundant, the chaotic business environment and high temperatures that are not suitable for machine heat dissipation are also flaws.

Therefore, in summary, going overseas is only suitable for the long-term layout of large miners. For small and medium-sized miners, going overseas is almost an impossible choice. It can be predicted that if China's domestic policies are not relaxed, the global mining industry will be in a state of severe shortage of mines in the next six months, and it will not begin to ease until early 2022. At present, most Chinese miners may only be able to wait or sell their machines. However, due to the recent decline in the price of coins, the second-hand spot price of some S19 has fallen below 30,000 yuan, a drop of more than 50% from the previous high point. Therefore, selling mining machines at this low point is not a good choice.

Wu said that in a survey conducted by Blockchain in the mining community, 40.1% of miners wanted to go overseas to try their luck, 45.5% of miners chose to continue waiting, and 14.4% of miners chose to sell their machines and change careers.

Miners are looking forward to policy changes. Judging from the current severity, the industry generally believes that the possibility of large-scale unblocking within half a year is relatively small, but small-scale loosening is not impossible. The "weird" and severe attitude of the Caixin article, which was instructed to speak out, just proves that there may be controversy among decision makers. However, under the combined influence of cracking down on virtual currencies, universal power shortages, and carbon neutrality policies, the situation of large-scale unblocking is definitely not optimistic.