Mining is "cold", but smart mining machine merchants are "making money" by selling mining machine parts

Source: Dongdong Notes (ID: dongdong_note)

Although China's bitcoin transactions are not the most frequent in the world, the number of bitcoins "mined" in China accounts for the vast majority of the world's total. According to a report by Bloomberg New Energy Finance, about three-quarters of the world's bitcoin mines are located in China. It can be said that we are indeed a "mining power."

In this mining ecological chain, not all miners can make money, but many people who "sell water" or "sell jeans" in the mining area are indeed making a fortune.

A recent survey by Dongdong Notes found that with the sharp drop in the prices of Bitcoin and Ethereum a week ago, the market value of all digital currencies in the world was $372.9 billion last Wednesday, but it dropped to $310.4 billion on Thursday, evaporating $62.5 billion in one day. Various negative information has even triggered the sayings of "digital currency pills" and "blockchain is dead" on the Internet.

Some media even revealed that many Huaqiangbei merchants who made a fortune by selling mining machines last year are now facing the dilemma of losing money and gaining publicity after the Chinese New Year. And a large number of "miners" who dreamed of getting rich quickly also suffered huge losses in the severe environment.

So, will this era, which once created the wealth dreams of "miners" and "mining machine" sellers, really come to an end with this plunge in digital currencies? Perhaps we underestimated the wisdom of Huaqiangbei merchants.

Mining machine sellers lose their capital? That’s exaggerated!

“The sales volume (of mining machines) during this period is indeed not as good as before.”

Hua Ge, who has been in the mining machine business for two years, told Dongdong Notes that he rented this stall in Huaqiangbei in early 2016. At that time, digital currencies such as Bitcoin and Litecoin were very popular, and the demand for mining machines among "miners" increased greatly. For a time, the number of companies and businesses producing and assembling mining machines in the market also increased dramatically.

"I don't know much about blockchain, and I just read out the hardware parameters by rote, but they have been selling like hot cakes from the year before last to before the Spring Festival this year." However, not long after the Spring Festival, many Huaqiangbei mining machine merchants, including Brother Hua, seemed to feel the arrival of a cold winter overnight.

The scene is that there are suddenly fewer buyers coming to buy mining machines, and orders for on-site repairs and maintenance are even harder to come by. "The worst thing is that digital currencies have collectively plunged recently, and it is difficult to sell one in a day."

According to him, due to the sharp drop in the price of coins, the mining market has been in a state of panic. In order to prevent the mining machines from being piled up in their hands, many businesses have tried every means to find "buyers". The lowest level of destocking is to reduce prices and promote sales. The reduction ranges from 3,000 to 5,000 yuan, and the highest is directly sold at a discount of 10,000 yuan.

"The entry-level mining machine that used to cost 14,000 yuan is now available for 9,000 yuan, and we can continue to negotiate if the purchase volume is large." Under market pressure, Hua Ge had to sell the mining machines he represented at a 30% discount. However, the low-price measure not only did not bring him sales, but also caused dissatisfaction among many old customers. "One customer bought it at the original price half a month ago, and found that the price had been reduced this month. He came to ask for compensation for the price difference every day. It was so annoying."

In addition, what makes Hua Ge laugh and cry is that some customers said that it is getting harder and harder to open their "mines", and they are losing more and more money, so they don't want to mine anymore. So they want to ask if they can buy back the mining machines they bought from the store at a discount. As long as the purchase price is suitable, at least they can get back some of their losses.

"At first I thought it was just sporadic demand, but it has been increasing this week and I can't handle it anymore." He told Dongdong Notes that some mining machines with good quality and intact functions are only recycled at one-fifth of the original price. But even so, these customers are still very grateful, "There is almost no bargaining during the acquisition process."

Almost all merchants and customers do not want to let the mining machines rot in their hands in the environment where the digital currency collectively plunges and the future is uncertain. When Dongdong Notes asked Hua Ge to confirm the media reports that "Huaqiangbei mining machine merchants are selling at a loss", he responded disapprovingly, "It's too exaggerated, and many of them are untrue." Although the mining machines make less money or no money after the price reduction, "it can't be said that they are selling at a loss."

“Who would do a business that loses money? You should know that in addition to branded mining machines, the profit margin of assembled mining machines is very high.” He said that when the mining market was the hottest, the profit of a branded mining machine could reach 50~100%, and the profit of an assembled mining machine was as high as 200~300%, and it was often in short supply.

Therefore, even if the price is reduced by 30-40% now, it is only the cost price. Even if some merchants reduce the price greatly and lose a little, they have already got the cost and part of the profit when they sold at a high price in the early stage. Now they are making a profit no matter how much they sell. "Except for those new merchants who entered the industry not long ago, who may lose money overall, others have already made a profit."

The lucrative seller's market in the early stage gave Huaqiangbei mining machine merchants a certain ability to resist risks. After the price of digital currencies plunged and the industry panicked, the price reduction of mining machines was only to reduce inventory and reduce risks.

"Losing sales" and "losing business" may just be superficial reports by some media. After all, as Brother Hua said, who among the smart Huaqiangbei businessmen would do a losing business?

And their cleverness may not be limited to this. In addition to the huge profits of new mining machines, old mining machines have also become their tool for "making money" again.

Mining machine parts still have unlimited "business opportunities"

"If there aren't many, just bring them over. They're so familiar anyway."

While communicating with Brother Hua, his two mobile phones kept ringing. Old customers also came to the store with mining machines to sell. He told Dongdong Notes that he had received seven or eight old mining machines in the past few days.

"Some merchants are afraid of risks, so they don't recycle them, and some just want to make a profit like me." At first, Brother Hua kept silent about the "way out" for these old mining machines. It was not until a customer came to the store to inquire about the wholesale of "mining cards" that he reluctantly revealed the inside story, "In fact, I only charge one or two thousand (yuan) for a mining machine, and there is greater value in it that can be squeezed out."

He pointed to several mining machines with strong computing power and complete appearance and said that although the digital currency is falling in price, many miners can't stand it and want to sell the mining machines to stop losses. But there are also another group of people who don't believe in evil, thinking that the more bearish the industry is, the more opportunities there are, so they will choose to buy low-priced mining machines at this time.

In the second-hand mining machine market, mining machines that originally cost tens of thousands of yuan can be bought for only three or four thousand yuan. The profit between buying and selling is more than 100%, which is very considerable. "In addition to these speculators, there are also some newbies who are deceived by so-called 'experts' to enter the industry, and they are also the main buyers of (old) mining machines." Hua Ge added.

Those mining machines that are in poor condition and incomplete in appearance after repair will be disassembled into parts. He told Dongdong Notes that because most assembled mining machines are equipped with CPU, memory, solid-state hard disk and other components, which are commonly used in ordinary desktop and laptop computers, they can also be sold as parts and flow into the computer assembly market.

"But because mining machines do not require high CPUs, they are all low-end products such as Celeron, and can only make a small profit from selling them, so the highlight is the mining card." The "mining card" that Brother Hua mentioned refers to the graphics card installed in the mining machine for calculation. In addition to some brands of professional mining machines, most of the "mining cards" assembled in mining machines can be used on home desktop computers, and the display core performance is very strong.

Take the GTX1060 graphics card as an example. It is recognized as a "chicken-eating" artifact in the gaming industry. The price of a new one sold online is more than 2,500 yuan. However, this second-hand GTX1060 graphics card disassembled from a "mining machine" only costs 800 to 1,000 yuan.

"Sometimes, there are six GTX1060s in an assembled mining machine, which can be sold for four to five thousand yuan or even more." In this way, an old mining machine recycled for one or two thousand yuan can be squeezed out into a profit of three to four thousand yuan in his hands, which is really a big profit.

However, those players who buy these cheap graphics cards for the "chicken game" should not think that they have found a treasure. According to Hua Ge, because mining machines require strong computing power, these graphics cards, which were formerly "mining cards", are always operating at full load for a long time. Therefore, there will be more or less "hidden injuries" and losses. Not to mention the problems of reduced performance and increased energy consumption, the operating stability alone is worrying.

"Without the mining machine, the remaining life of these graphics cards will increase slightly, but generally will not exceed half a year, and many of them will break down after a few months." He said that for those players who are addicted to "PlayerUnknown's Battlegrounds" all day long, such second-hand graphics cards may not last more than three months before problems arise, and blue screens, distorted screens, and black screens are no longer uncommon. "Anyway, if they break down after buying them, they can't blame us, because they love to get a bargain."

There are also cases where novice game buyers, when purchasing second-hand graphics cards, were swapped out for "pure mining cards" without video output capabilities (professional mining cards that are improved from graphics cards with enhanced computing power and no video output ports). Even if they go to the merchants to "protect their rights", it almost always ends up in nothing.

"In our eyes, a mining machine is just a server. If the market is really bad, we will sell other products after clearing out the inventory." Regarding the turmoil in the digital currency market in recent days, Brother Hua was very calm. "If things get bad, we can go back to the computer assembly business. Will we starve to death?"

As the digital currency market cools down, the panic of "miners" has also affected the market sales of Huaqiangbei mining machines. However, savvy businessmen have already made huge profits when the concept of blockchain exploded, and continue to squeeze the residual value of second-hand mining machines when digital currencies are plummeting. Although it is not as good as the "guaranteed profit" of blockchain "white paper" practitioners, it is generally profitable.

Those miners who wanted to "get rich" may not be so lucky. Many followers who did not clearly understand the life, characteristics and parameters of mining machines, after investing a large amount of money, suddenly realized that mining was not as profitable as the legend said, and mining machines were not equipment that could benefit from a one-time investment for a lifetime. The huge amount of repair and maintenance expenses made these "miners" lose both their money and their money. The lucky ones earned some wages, while the unlucky ones lost everything.

But even so, there are still speculators who are waiting and watching, hoping for another rebound in digital currency. In addition, media and institutions are never tired of hyping the explosive opportunities of blockchain and digital currency in "third- and fourth-tier cities", "northern regions", "Southeast Asian depressions", etc., which constantly stirs the restless hearts of entrepreneurs, investors, and speculators.

Perhaps, as long as there is market hype, the "business" of blockchain and digital currency will never end, but the wealth is unlikely to belong to the "miners" and "retail investors" at the bottom of the industry. Followers who want to create the myth of "getting rich overnight" should be cautious when entering the industry.