Jiang Zhuoer graduated from the University of Science and Technology of China. Obtained a double major in computer science and business administration. After graduation, I worked in data warehouse and big data analysis at Shanghai Mobile. The first time Jiang Zhuoer heard about Bitcoin was in 2011. Like many people, he didn't take it seriously when he first heard about it. When he heard about it again, it was basically the next time Bitcoin rose rapidly. Bitcoin once again entered Jiang Zhuoer's vision in 2013. At that time, he was still active in Shanghai, leading a team of more than a dozen people to do big data analysis. This time, he did not miss the opportunity again, but identified Bitcoin as a future trend. In October 2013, Jiang Zhuoer resolutely resigned. Starting from two graphics card mining machines, he started mining Litecoin and other altcoins. After 4-5 years, he created a mining giant.
I can summarize what I am doing in the blockchain industry into two points: The first is science popularization. Jiang Zhuoer wrote a long science popularization article "What is Bitcoin" on Zhihu, which is a Chinese community The most widely circulated Bitcoin science article in the Internet, with nearly 6 million views, is a must-read article for many people to get started with the blockchain. Many blockchain companies even use it as a training material for new employees.
In addition to popular science, Jiang Zhuoer’s other label is miner. Mining is Jiang Zhuoer’s biggest business in the blockchain industry. The Bitcoin mining pool founded by Jiang Zhuoer is one of the world's leading Bitcoin mining pools, and it all originated from two graphics card mining machines at the end of 2013. After the bull market in 2013, and throughout the long bear market of 2014-2015, Jiang Zhuoer was firmly optimistic about Bitcoin in the long term, and converted all profits into Bitcoin to hoard them by mining altcoins and then converting them into Bitcoin. In October 2015, during the long and boring bear market, Jiang Zhuoer spent a month writing the famous 60,000-word science popularization "What is Bitcoin" on Zhihu, and predicted that with the rise of Bitcoin The number of active cryptocurrency addresses continues to increase, and a bull market is coming. The second is the dispute over Bitcoin’s expansion, which has spread from within Bitcoin developers to the entire community to participate in the debate. This made Jiang Zhuoer realize that “if you want to protect your own Bitcoin, you must have Bitcoin computing power.” Therefore, in early 2016, Jiang Zhuoer established his own Bitcoin mining pool-BTC.TOP. At the end of the bull market in 2017, BTC.TOP once became the mining pool with the largest computing power in the entire network. During the "September Fourth Movement" period in 2017 and the mining disaster at the end of 2018, many mines were shut down, mining machines were sold by the pound, and panic spread throughout the mining industry. Surprisingly, Jiang Zhuoer bought a large number of mining machines that were sold at low prices on the market at this time. Jiang Zhuoer is also nicknamed the "Black Hole of Mining Machines" in the industry, because he only buys mining machines in large quantities and never sells even one mining machine. Jiang Zhuoer's logic is: "He is very interested in blockchain and Bitcoin." If you are optimistic about the currency in the long term, if you buy a mining machine, you will mine it until it is scrapped, and you will eat the long-term excess returns from head to tail. There is no need to do short-term tossing." And every time, Bitcoin continues to rise beyond market expectations in the long term. , it also allows people who hold mining machines for a long time to make a lot of money, and makes people who play short-term swings regret it.
Unlike many people who have just entered the currency circle, many people who have just entered the currency circle have. It is by buying coins, and Jiang Zhuoer’s method is to buy mining machines for mining. Why did Jiang Zhuoer choose mining? Our analysis shows that compared with currency speculation, mining has many advantages for long-term value investment.
1. In terms of cost, mining is a lower-cost and more stable way to obtain Bitcoin. There are two ways to obtain Bitcoin, namely purchasing from the secondary market and mining. Obtained. Bitcoin purchased through the secondary market, also known as currency speculation, carries a market sentiment premium. This premium may be a positive premium or a negative premium because of the recent waterfall decline in the price. Negative premium of market sentiment.
With data on mining machine costs, electricity costs, other fixed operating expenses and the computing power of the entire network, the cost of mining to obtain Bitcoin can be roughly calculated. In the early stages of industry development, Many miners with faith have accumulated huge amounts of wealth.
With the rapid development of the industry, the difficulty of mining and the computing power of the entire network have increased significantly, and the price of mining shutdowns has become higher and higher. The cost advantage of acquiring Bitcoin is gradually decreasing or even disappearing, but at the same time, this has also promoted the specialization and centralization of the industry. Large mining farms and mining pools have gradually appeared, which has greatly reduced the marginal cost of mining. Under better circumstances, mining is still profitable.
2. Mining is a good risk hedging method. The ups and downs of the blockchain industry are good evidence of this. The volatility of currency prices is huge, and it is difficult for most people to calmly face the sudden rise and fall. During the development of Bitcoin, extreme market conditions have occurred many times, with currency prices falling by 75% or even 90%. The panic caused by the market situation caused many people to sell coins to clear their positions. The change in mentality caused these people to lose the opportunity to get on the market. When the currency price reaches a fluctuation range of nearly 30%, any short-term operation, especially leveraged trading, will be a problem. There are huge risks. Mining that continuously produces coins has become a risk hedging method to reduce the average cost of acquiring coins.
3. The profit model is clear, and mining is favored by a large amount of traditional capital. .
For investors in traditional industries, the violent fluctuations of Bitcoin can bring the possibility of large profits from speculative transactions, but the risks are also unbearable for ordinary people. At the same time, many traditional capitals do not understand the value of Bitcoin and are therefore unwilling to rush into currency speculation. The economic model of mining is relatively easy to understand. The scale of the mine will give people a very spectacular and down-to-earth feeling: the huge roar of the mining machines and the endless factory buildings will give people the impact of large-scale industrial production. The payback cycle of mining is basically about one year, and the payback cycle and profit rate can be quantified and estimated. It is easier to raise money through mining, and it is safer to use leverage in this way. Therefore, if you don’t have money to buy coins, a good solution is to borrow money to mine! Therefore, mining is essentially a financial behavior.
4. Mining can build a business system with currency as the core. The past history of huge fluctuations in currency prices and cyclical changes has given old users in the industry the idea of ????escape from the top and buy the bottom. Unfortunately, history is always surprisingly similar, but it is not a simple repetition. If you follow the previous "data rules" to buy the bottom or escape the top, you may make wrong operations because the currency price does not perform according to the preset script. Once you get off the bus at the wrong place, your mentality is likely to collapse, and it will be difficult to get on again. Mining generates currency-based cash flow every day, allowing you to keep yourself on the road. From this perspective, mining can avoid the risk of getting off the bus.
Of course, mining is not the only option or the only way to enter the currency circle.
The direct reason why Jiang Zhuoer was able to obtain thousands of times of income in just a few years was that he had successfully escaped from the top and bought the bottom many times. Jiang Zhuoer has his own methodology for judging the general trend. And dare to bet on your own judgment. His method does not apply to everyone. What worked in the past does not mean it will work in the future. Everyone needs to think independently. As for the recent wave of market trends in 2017, Jiang Zhuoer successfully escaped from the top at the end of 2017, and also successfully predicted that the bottom of this wave of Bitcoin would be around US$3,000. So how did he do it? This is related to his three bubble indexes.
Let us first say that the first bubble index is the "user bubble index", which is calculated by dividing the "total market value" by the square root of the "number of active Bitcoin addresses". The underlying logic of this index is Metcalfe's law, which states that the value of a network is proportional to the square of the number of Internet users.
In this model, if the currency price continues to rise, but the number of users fails to keep up for a long time, according to Metcalfe's law, such network value is not supported by actual users, and a bubble will appear. The blue line is the total market value of Bitcoin, in units of 10 billion; the orange line is the active address of Bitcoin, in units of 100,000. The bubble index is the total market capitalization divided by the square root of the active addresses.
The second bubble index is the "Growth Bubble Index". The method is to calculate the cumulative increase of Bitcoin in 60 days, and add the increase in each day of the last 60 days to get it (not by dividing the price on the 60th day by first day price). The increase on the first day plus the increase on the second day adds up to 60 days. The higher the amplitude, the closer it is to the top. The logic of this indicator is: the bear market is created by the bull market, and the rise in currency prices requires continuous new people and new funds to support it. New funds generally flow in steadily with the spread of news and the wealth-making effect of the bull market, but if the market is so crazy that To a certain extent, if existing users in the market exhaust all their funds or even significantly increase leverage investment, the price will rise sharply in the short term and the speed will exceed the entry speed of new funds. New funds cannot support the price that rises too quickly. The currency price will eventually collapse at a very high position with huge potential energy, ending the bull market and starting a bear market.
From the picture we can see that before the end of the bull market in 2011 and 2013, there were 60-day increases of 300% to 200%. Before the crash at the end of 2017, there was also a peak of 120% increase in 60 days.
The third bubble index is the "Mining Machine Bubble Index", which is calculated by the static number of days to pay back the mining machine (mining machine price divided by daily net income). If the number of days to pay back the capital of most mainstream mining machines drops significantly, it is a peaking signal. The logic of this indicator is that if the speed of industrial production of mining machines cannot keep up with the rise in currency prices, it means that the currency prices are rising too fast and are unsustainable.
From the picture above, we can see that during the bull market of 2016 to 2017, the static payback cycle of S9 was stable at 200 to 250 days, and the daily profit was stable at 5 yuan. But in December 2017, the payback cycle of the S9 dropped rapidly to around 100 days, and the daily profit soared from 5 yuan to 20 yuan. This is an obvious mining machine bubble index.
It should be noted that these three bubble indexes need to be comprehensively referenced and combined with market sentiment to make judgments. Even if these conditions are comprehensively referenced, it is still difficult to accurately escape from the top. These indicators are the most important. The meaning is to let us know which stage of the big cycle we are currently in.