New mining coin ecology

2020 is a year of production cuts. In addition to Bitcoin, mining coins including BCH, BSV, DASH, ZEC, MONA, etc. will also see production cuts. The competition for computing power has caused miners to start looking for some marginal opportunities, and new mining coins may be such opportunities.

At present, many industry participants are exploring the new mining coin track. Some exchanges are dedicated to discovering and promoting new mining coins; some miners are allocating computing power to mine new mining coins as a supplement to mainstream currency mining; some investors include new mining coins in their investment portfolios and actively promote concepts and gameplay; and some leeks come here because of the reputation and get stuck at the top of the mountain...

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Miners are in a race to mine new coins

Miners are one of the groups of people closest to mining coins. The appreciation potential and price fluctuations of new mining coins attract miners, while the concentration of computing power and competition in this ecosystem are also driving miners away.

Since the beginning of this year, before the Bitcoin crash on March 12, new mining coins such as CKB, HNS, and TRB have attracted many miners to mine because of their encouraging growth. Bibi News learned that some miners have FPGA mining machines and started mining early, so they have reaped several times the profit from the price increase.

But at the same time, it is also a competition for miners to mine new coins in a "faster" manner.

Xiao Yong is a mining machine seller interviewed by Bibi News. In addition to selling mining machines, he also mines. Xiao Yong told Bibi News that the new mining coin CKB was originally mined using FPGA mining machines. In February this year, the daily net income was 36 yuan. In March, the ASIC mining machine C1 was launched, and there was almost no profit in mining CKB with FPGA.

Therefore, when miners mine new coins, they make money by taking advantage of the time difference before high-computing-power, low-power models come out.

“Mining is about profit. When miners buy mining machines to mine, they first consider making a profit. New mining coins do not have as high a global consensus as Bitcoin. Miners have low loyalty to new mining coins and tend to mine whatever coin has the highest profit. If there is no profit, the computing power will be cut off.” Xiao Yong said.

When miners mine new coins, they also make money from information asymmetry.

Darren is another miner interviewed by Bibi News. He admitted that because he has a good relationship with the mining pool, he can always know what coins the mining pool is going to list first, so he can start mining some new coins earlier than others and enjoy early mining dividends.

According to information obtained by Bibi News, some miners take action even earlier than the mining pools and mines. Some miners start mining before the new coins are listed in the mining pools, because the early mining difficulty of the entire network is very small. If the new coins develop well in the later stage, miners can get very high returns.

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Some people make a lot of money, while others are stuck at the top of the mountain

The market value of new mining coins is small, and violent ups and downs are the norm. The average increase or decrease of several new mining coins queried by Bibi News reached 30-40%.

Li Peicai, co-founder of Waiyi, also said in an AMA this year that the investment risk of new mining coins is relatively high. Although many new mining coins can generate super high returns of dozens of times, many of them have fallen from their high prices, with a drop of more than 90%.

Darren: Earned a Tesla

When talking about his investment experience in SERO, Darren said that he "happened to speculate and earned a Tesla." According to Darren's description, they bought SERO when the price was around 0.2 yuan. After SERO was launched on Gate.io last year, the price once rose to 2.6 yuan, making a fortune.

Bibi News was deeply impressed by Darren’s investment logic.

"If you want to invest in a coin, you should first check whether it has a main chain, whether it has transfers, whether it has salons, etc. When a team makes a coin, it needs a mining pool, a server, and an exchange, all of which cost money. Where does the money come from? Of course, it comes from the market. So some projects have investment value and operating costs. If the project party wants to make money, you can buy them in the early stages."

Secondly, Darren also emphasized the issue of investment rhythm.

Darren and his friends have successively invested in SERO, PGS, EKT, BFC, HNS, TRB, and POST (some of which are not mining coins, but are all small-cap coins), and they have almost all stepped into the price increase range of these coins.

After the price of the coin went up, the price space was not so big, so Darren started to use FPGA mining machines to mine. He took advantage of the computing power to run ahead of the market and made a profit in more than ten days. "The rhythm cannot be messed up." Darren said.

Investing in new mining coins seemed to be a very easy thing for Darren, but for other buyers, things developed in a completely different way.

Yawei: Losing money but gaining publicity

The Daily Planet once reported the story of retail investor Yawei and Turtle Coin TRTL. Turtle Coin was once very popular in foreign communities, with the code update frequency in the top 20, but the project market value was outside the top 1,000. In addition, Turtle Coin sounded interesting, with a good-looking logo and low unit price, Yawei decided to invest heavily and actively promote this currency in the community.

In April 2019, Turtle Coin was launched, and the price of the coin increased by 3 times at its peak, but it only stopped there. Because the depth, liquidity, and buying were very poor at the high point of the coin price, although Yawei spent a lot of effort, he made almost no money on it.

According to Feixiaohao information, the price of Turtle Coin has fallen by 85.05% in the past year. In addition to Yawei, I believe there are many retail investors who are deeply trapped in it. Even some new mining coins that many people are optimistic about recently have seen huge price drops since they were launched.

The importance of ecological construction to price and community stability

For the project team, the price of new mining coins and community stability are very important. Pope, one of the founders of SERO, conveyed the importance of ecology to Bibi News in an interview:

“The key is how to convey confidence to the market. In fact, we have observed that the classification of mining coins is no longer applicable to the definition of a type of digital currency. If PoW consensus is used as the basis for classification, there are actually very few new currencies that use PoW computing power rewards as their economic model. Even BCH, which was initially positioned as a Bitcoin fork, has already entered the DeFi market.

The same is true for SERO. It is obviously too inefficient to rely solely on the SERO Foundation to preach SERO to the community. Now the SERO community is completely dominated by the ecosystem, and the scale of the ecological community is far beyond the scale of the SERO native community. "In other words, in addition to the more conventional actions of pulling the market, for new mining coin projects, how to do a good job in the community and ecology is particularly important. A strong ecology will help feed back the development of the project.

Some mining coin projects have no centralized issuer and do not do pre-mining, so they have a more loyal and less profit-driven community. Although the coin price is still easily fluctuated by external influences, the community has basically achieved self-growth.

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Early investors actively build a new mining coin ecosystem

New mining coins can be said to be potential players. Among the top ten currencies in terms of market value, mining coins account for half of them. Pan Shi, founder of Hash Pool, once said that after competition and game, some new mining coins may be promoted to mainstream mining coins.

For early investors, discovering new mining coins with potential and quality is a very test of their vision. Once they recognize a project, early investors will spare no effort to help promote the project and build a community ecosystem.

Eric is an early investor in the new mining coin project Handshake. This is a decentralized domain name project, and the project token is the recently popular HNS.

Invest in new mining coins to see potential

Eric invested in this project because he thought the decentralized domain name market had great potential. "I think the only thing that has proven to be valuable besides Bitcoin is the decentralized domain name market, and it's hard to predict how big this market will be. If a blockchain domain name system can account for 1% of traditional domain names, it will already be a top ten coin."

In addition, Eric also made a prediction about the development of Handshake mining fees. Bitcoin was born as an electronic cash, and its selling point is to pursue low-cost transfers. If the transaction fee (mining fee) is high, users will complain.

But Handshake is different. "If you run a large website and need to change the domain name, you will be willing to pay $5 or more in mining fees to change the domain name, which may be a huge income for miners. If more people use it, the mining fee may exceed the coins mined in each block. Miners have the motivation to mine for a long time." Eric said.

It is precisely because of seeing the potential of HNS that Eric continues to invest in and promote this project.

When asked what he did after investing in this project, Eric said that the first thing he did was to collect more coins, with a hint of smugness in his tone.

“I went to find some other early investors. Because it had been two years since the project started to actually issue coins, many people were getting impatient, so I bought their coins at a low price.” Bibi News found that even in the two days when the cryptocurrency market plummeted, Eric was buying HNS at a low price in his circle of friends.

Actively promote new mining coin projects

Eric also found a team to set up a domain name exchange to buy and sell HNS and trade domain names. "With this exchange, it will be much easier to promote this coin because ordinary people can also use it."

Decentralized domain names may indeed become a very lucrative market. Bibi News learned that in an auction on Handshake, the top-level domain name NB was bid for 200,000 HNS, equivalent to more than 30,000 US dollars.

When talking about investment direction, Eric said that he did not consider HNS as a new mining coin investment. "We don't look at projects in this way. We look at projects to see whether they are meaningful, whether people will use them, how good the technology is, and how good the people who do the project are. As for whether there is a model or what model is used, it is not important."

This year, Eric plans to focus on promoting Handshake. "Not only do I want more people to buy domain names, I hope more people will actually use this system and put up some web pages on these decentralized domain names. These decentralized domain names may become as popular as some cool license plates in the future." Eric told Bibi News.

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Mining pools and exchanges are

Important participants in the new mining coin ecosystem

If we observe carefully, we will find that before the 312 coin market waterfall, many exchanges and mining pools were planning and promoting new mining coins.

The F2Pool Innovation Zone has launched new mining coins including HNS, BFC, CKB, IMG, SERO, etc.; CoinIn Mining Pool is about to launch CKB and HNS; Whale Exchange has launched Grin and HNS; Matcha has launched HNS, IMG, SERO, etc.; and Citex has positioned itself as a mining coin exchange and has discovered many 100x coins.

Listing mining pools and exchanges is extremely beneficial to the project

Mining pools and exchanges are important participants in the new mining coin ecosystem.

The launch of new mining coins by mainstream mining pools means recognition of the mining coins. With the injection of mining pool computing power, the mining computing power of the currency will be more decentralized and the currency will be safer. In addition, after the large mining pools take the lead in supporting mining, other mining pools and miners will follow up, which is extremely beneficial to the project parties.

The listing of new mining coins on the exchange means that the mining coins will have greater trading exposure, and the currency liquidity and trading depth will be improved.

Mining pools and exchanges provide promotion support for project parties

Both mining pools and exchanges are actively exploring and promoting high-quality new mining coin projects.

C network has currently launched nearly 80 mining coins, most of which are small-cap mining coins.

When talking about how to discover potential mining coins, Vivi told Bibi News, "Many high-quality mining coins are overseas projects, so Citex has established a good relationship with overseas mining communities. In addition, Citex also has its own mining coin research institute, and researchers will take the initiative to discover some mining coin projects that are underestimated or have actual landing value."

New mining coin projects are often relatively niche in the early stages of development, and even if there are some technological advances, it will take a long time for the project to explode. However, through the support and promotion of mining pools and exchanges, new mining coin projects can be better discovered by miners and investors.

The mining pools and exchanges interviewed by Bibi News all stated that they would join forces with media and community representatives to provide publicity and promotion support for new mining coin projects after they go online.

For example, Whale Exchange has strategically invested in the first generation of ASIC mining machines of Grin and Handshake, and has joined forces with mining machine manufacturers and mining pools to provide users with one-stop mining services; in addition, the Handshake domain name auction is also connected to the Whale Exchange APP, allowing users to participate in domain name auctions more conveniently...

Conversely, high-quality new mining coin projects are also needed by mining pools and exchanges.

Liu Kang, the key account manager of Biyin Mining Pool, said in an interview that "mining pools and miners are also looking for high-quality currencies." Many new mining coin projects have small market capitalizations and great potential. Once they attract attention, they can show strong explosive power, which can bring some user traffic to the exchange and also bring considerable mining income to mining pool miners.

In fact, Bitcoin, which was born in 2009, was also a small-cap mining coin. We are surprised that a white paper on Bitcoin can spawn such a rich cryptocurrency and blockchain community, as well as the unique new mining coin ecosystem. Will the next mainstream mining coin be born from these new mining coins?

Note: Darren and CL in this article are pseudonyms. In addition, the above content is not intended as investment advice. Bibi News hereby reminds readers to pay attention to investment risks.