CCTV reminds investors to be cautious about mining investment

Recently, CCTV Finance Channel reported that Canaan Creative submitted an IPO application to the Hong Kong Stock Exchange, which is one of the few news that has boosted the mood of the cryptocurrency circle, and has led to the gradual popularity of mining machine hosting. However, there are many uncertainties in mining and mining machine hosting at present. With the increasing number of investors entering the market and unclear supervision, investors are expected to enter with caution. There are also professionals in the report who believe that under normal circumstances, the cost of mining machines and electricity can be recovered in about 180 days or less, but due to the current decline in coin prices, the cost recovery period has been extended to 400-500 days or even longer.

Recently, Bitcoin mining machine manufacturer Canaan Creative submitted its prospectus to the Hong Kong Stock Exchange. Judging from the sales of Avalon mining machines disclosed by Canaan Creative, there has been a leap from 2015 to 2017, which to a certain extent also reflects the popularity of the Bitcoin mining industry. The A6 (28nm) series sold 9,727 units in 2015, and when the A7 (16nm) series was launched in 2016, a total of 93,754 A6 and A7 series mining machines were sold throughout the year. In 2017, the A7 series sold 290,000 units, and in the first three months of 2018, Avalon mining machines sold another 101,000 units.

Canaan's revenue increased from RMB 47.7 million in 2015 to RMB 1.308 billion in 2017, with a compound annual growth rate of 423.7%; net profit increased from RMB 1.5 million in 2015 to RMB 360 million in 2017, with a compound annual growth rate of 1445.4%. Looking at the entire blockchain hardware market, Canaan's revenue compound annual growth rate far exceeds the global average.

However, as the price of Bitcoin falls, many miners may face a situation where their income is insufficient to cover their expenses. Thomas Lee, managing shareholder and head of research at Fundstrat Global Advisors, once said: "The current trading price of Bitcoin is essentially the break-even point of mining costs ." Fundstrat's model includes three elements: equipment costs, electricity costs and other expenses, such as the cost of maintaining cooling facilities. According to people familiar with the matter, when the price of Bitcoin falls to a certain level, most miners will choose to shut down their mining machines and temporarily give up mining. This will undoubtedly have a certain impact on mining machine manufacturers.