Bitcoin madness: Mining becomes big business

As the co-founder of Xiaonei.com (now renamed Renren.com), Yang Yaorui may not be as well-known as Wang Xing in the industry, but if you meet him once, you will always remember this unique entrepreneur. This is mainly because he has a beard that is almost as long as his hair, which is very rare.

After Xiaonei.com was acquired by Chen Yizhou's Oak Pacific Group, Yang Yaorui stayed at Oak Pacific for a while, then went to Sohu. Later, he felt that work was meaningless, so he went to Lhasa, Tibet, and opened an inn for two years. After traveling all over Tibet, he went to Hainan and opened a surfing club. He played casually, but in Yang Yaorui's words, he did not stay away from the Internet. Every six months, he would come back to talk to people in the industry about what happened in the industry.

This time when he returned to Beijing, Yang Yaorui formed a team to start a business, and set his sights on the popular virtual currency Bitcoin. His specific business project is to sell mining machines equipped with special mining chips, through which buyers can "mine" Bitcoins, and thus make money by selling Bitcoins. In short, Yang Yaorui is selling "mining machines" that can mine Bitcoins.

Demand for “mining machines”

Yang Yaorui's decision to start a business in the field of Bitcoin was actually quite accidental. In May this year, he saw an article on a technology website that introduced Bitcoin in detail, and then he wanted to buy a mining machine, but after searching through multiple channels, he found that there was no mining machine available.

"After searching for relevant information, I found that as an ordinary retail investor, there is no reliable channel to buy mining machines." Yang Yaorui pointed out the chaos in the current mining machine market. "There are many unreliable 'futures' mining machines in this market."

The company that receives the most orders for Bitcoin mining machines in the world is Butterfly Labs in the United States. The company sells mining machines at very low prices, but does not give a definite delivery time. In other words, after paying, buyers still cannot be sure whether they can buy mining machines.

However, since it is easy to make a profit after buying a mining machine, many people still hope to be the lucky ones and boldly pay for reservations. Yang Yaorui is obviously not optimistic about this operation model. He said, "There are many unreliable manufacturers on the Internet who only occasionally ship one or two mining machines. Many people feel like they have won the lottery when they get a mining machine."

According to Yang Yaorui, the other two teams that have the ability to manufacture mining machines are both from China, namely Shenzhen's Baked Cat Mining Company and Beijing's Avalon Company. However, Baked Cat does not sell mining machines directly. The company sells company shares to buyers, and then distributes the mined Bitcoins according to the shareholding, and the shares can be freely transferred. After selling a batch of mining machines, Avalon has decided to focus on the research and development and production of Avalon chips.

Seeing the extreme inequality in supply and demand of Bitcoin mining machines, Yang Yaorui saw an opportunity. He quickly formed the ASICME team, hoping to assemble mining machines based on Avalon chips. "I happened to have the resources, and I also wanted to change this situation."

Yang Yaorui said that he started to promote the project without consulting anyone around him. "Only if your vision and ideas are different from most people can you see opportunities. But seeing opportunities also depends on whether you have the ability to seize opportunities and whether you have the courage to take risks to start a business." Yang Yaorui admitted that the ASICME team still took a lot of risks in making Bitcoin mining machines.

First victory

The so-called risk of Yang Yaorui actually refers to the possibility that the Avalon chip may not arrive on schedule, because the production and development of this chip are not in his hands. The Avalon chip was developed by a person with the online name "Pumpkin Zhang". This mysterious person was originally a doctoral student in computer science at the Beijing University of Aeronautics and Astronautics. Whether or not to get the chip depends on "Pumpkin Zhang".

Yang Yaorui said that there is a possibility that "Pumpkin Zhang"'s chips will default on payment, and in the worst case, if he defaults on payment with the money, the ASICME team will bear part of the risk and compensate users 20% of the money because 80% of the payment has been spent on chip reservations and product development. However, Yang Yaorui does not seem to be worried about this. He said, "Reputation and reputation are very important in the Bitcoin circle. If you run away, you will not be able to stay in this circle in the future. Moreover, Pumpkin Zhang can make 100 times the profit from selling chips. It is not worth running away for 1% of the chip cost."

At present, Yang Yaorui's team has obtained the Avalon test chip and successfully manufactured the mining machine developed by themselves. At present, they are waiting for the first batch of chips shipped by "Pumpkin Zhang" in July. According to Yang Yaorui, they have ordered more than 40,000 Avalon chips. After getting the chips, they can assemble the mining machine within 15-20 days and ship it to the first batch of buyers.

Yang Yaorui revealed that the company's sales have reached 5 million yuan in less than a month since its establishment. However, he believes that the ASICME team is still a "small shrimp" and that "many large teams have already acquired assets of more than 1 billion yuan."

Yang Yaorui clearly remembers the first day of the ASICME Taobao store going online. As a customer service representative, he sold mining machines online for 20 hours, with sales of nearly 100,000 yuan on the first day. He replied to buyers' positive reviews himself until his fingers were stiff.

Less than a month after its founding, the ASICME team has already achieved profitability. Yang Yaorui said, "80% of the money we received was used for chip reservations, technology research and development, and material preparation, while the rest will be used for website operations, software development, etc."

As the issuance of Bitcoin is halved every four years and the number of people mining is increasing, it is becoming increasingly difficult for a single mining machine to mine Bitcoin. Yang Yaorui revealed that the ASICME team will soon launch a package of mining machine hosting services, and ASICME will charge a share of about 5%. In this plan, users only need to host the mining machine in ASICME's computer room, and do not have to worry about security, power supply, noise and other issues. The Bitcoin mined by the mining machine can be settled on a weekly or monthly basis, or even at any time.

Long-term development

Yang Yaorui said that he would continue to develop Bitcoin mining machines as a long-term project, and the reason is very simple. He believes that the trend of virtual currency is unstoppable, and Bitcoin's design mechanism, security, and transaction convenience make it the dominant force in virtual currency now, and it is most likely to continue to be the dominant force in virtual currency in the future. Recently, many foreign merchants have announced that they support Bitcoin payments.

"Bitcoin can be used as a financial safe-haven asset. It has the same anonymity as currency and can be traded securely and privately. Its credibility is not guaranteed by the government or gold, but by mathematical models and computing power." Yang Yaorui said that this is a theoretically perfect monetary system.

But he believes that although Bitcoin is still in a rising period, it may reach a bottleneck in the next few years. This is mainly because as the difficulty of mining increases, mining income may reach a dynamic balance with electricity, manpower and other costs.

However, Yang Yaorui insisted that it is still a good business for ordinary people to enter the Bitcoin mining industry now. According to the parameters of the mining machine announced by the ASICME team, a minimum configuration mining machine priced at 3,000 yuan can pay back the investment in more than 30 days at the current Bitcoin mining speed.

"If you can get your money back in one month, it's a good business. If you can get your money back in half a year, it's actually also a good business. If you invest in Bitcoin, although I am optimistic about its long-term growth, you may encounter short-term risks. But for mining, the only cost is electricity. Compared to some financial products, this is definitely a good business." Yang Yaorui said.

Recently, the ASICME team has received investment from Li Xiaolai, a well-known figure in the Bitcoin industry. According to public information, Li Xiaolai used to be a teacher at New Oriental and was one of the earliest people in China to come into contact with and invest in Bitcoin. He now holds a large amount of Bitcoin. Because the value of Bitcoin has skyrocketed, he has benefited greatly. Yang Yaorui revealed that Li Xiaolai holds a large share, but gave ASICME a good valuation.

In addition, Yang Yaorui admitted to Sina Technology that as the company's initiator, he held about 5% of the company's shares in the internal agreement, but had absolute control over the company when it was registered. He said, "I hope that as a decision maker, I can keep the company on the path of promoting the development of Bitcoin and on the path of idealism."