Bitmain's "Three Axes" Opens the Age of Mining Leverage
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Risk warning: regulatory policy risk, market trend risk
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1. Bitmain launched a "promotion" three tricks
The sales model of the S17 series mining machines launched by Bitmain has the following characteristics:
Mining machine rental model. That is, Bitmain provides S17 series mining machines and electricity fees, and the partner provides operation and maintenance and venues. After one year of joint mining, the settlement will be carried out. After deducting the electricity fee from the mining income, the customer can get 25% of the net income, and the rest will belong to Bitmain. If the net income is less than the electricity expense, the income will not be distributed.
Support installment payment. According to the information disclosed by Bitmain, according to the order quantity of different mining machines, miners can enjoy up to 20% down payment discount.
Buy mining machines and get options. In order to drive the sales of mining machines and help customers hedge against the risk of falling currency prices, for customers with orders over 10 million yuan, a put option of 1% of the order payable amount will be given as a gift.
2. Behind the leverage: currency prices drop, mining machine sales decline
Alternation of new and old mining machines. On November 25, the price of BTC fell to the lowest point in 2019 ($6638), which was lower than the shutdown price of the S9 series mining machines. Since its launch in 2016, the Antminer S9 has been occupying the mainstream position in the mining machine market, and has even become the standard equipment for BTC miners. However, with the emergence of new mining machines with low power consumption and high computing power, the mining computing power of the entire network has been continuously pushed up. With the recent decline in BTC prices, the profits of S9 mining machines have gradually decreased, and even the value of mining output cannot be reached. Covers electricity and O&M costs.
The sales of mining machines have declined, and the price of mining machines has continued to decline. The price of BTC continues to fluctuate, and the future trend is uncertain. At the same time, the payback cycle of new mining machines will be extended due to the halving of BTC production in 2020. Therefore, miners maintain a wait-and-see attitude, the sales of mining machines have declined, and the price has continued to fall. Therefore, Bitmain launched this sales model, trying to use the marketing methods of traditional industries to promote the new S17 mining machine.
Relieve financial pressure and increase mining machine sales. The mining machine market has always been characterized by heavy investment and a long cycle, so the barriers to entry are relatively high. In order to increase the sales of mining machines, alleviate the shortage of funds in mines and mining pools, and provide convenience for miners and investors who want to participate in mining on a large scale but lack funds, Bitmain has launched a preferential plan for installment payment. Help to ease the financial pressure and sales pressure of Bitmain itself. Installment payment is a typical marketing plan in traditional industries. Bitmain's introduction of the installment payment model means that mining machine sales have opened the era of leverage.
Option hedging token price drops, alleviating customer concerns. Bitmain provides put options of 1% of the order payable amount for customers with more than 10 million orders. If the future token price is lower than the strike price of the option, income will be generated to subsidize the loss caused by the decline in the token price. In essence, the BTC mining machine market is a medium-term call option, and the put option provided by Bitmain can be regarded as a kind of insurance to hedge against mining losses under extreme market conditions.
3. The mining industry will be further centralized and institutionalized
With the gradual popularization and application of new mining machines with high computing power, the increase in computing power is inevitable, and the difficulty of mining will also show an upward trend.
Mining machine versions change, and new mining machines occupy the market. For the mining machine market, through the profit-sharing sales strategy of mining machine manufacturers such as Bitmain, new mining machines will soon spread out on a large scale to occupy the mining machine market. This situation will inevitably lead to an increase in computing power and mining costs in the future, accelerating the elimination of old mining machines, and accelerating the change of mining machine versions.
Due to some reasons, some nouns in this article are not very accurate, mainly such as: general certificate, digital certificate, digital currency, currency, token, crowdsale, etc. If readers have any questions, they can call or write to discuss together.
Due to some reasons, some nouns in this article are not very accurate, mainly such as: general certificate, digital certificate, digital currency, currency, token, crowdsale, etc. If readers have any questions, they can call or write to discuss together.
For the original text of the report, please refer to the research report released by [Tongzhengtong Research]: "Bitmain's "Three Axes" Open the Age of Mining Leverage - Blockchain Event Comments 1211"
