Liu Fei: It is estimated that it will take three months or half a year before the halving effect becomes apparent

"It is a historical necessity for an exchange to be a mining pool."

"It is estimated that it will take three months or half a year before the halving effect becomes apparent."

"After the halving, the payback cycle will become longer, and the proportion of overseas computing power will increase in the future."

"If you know what changes Bitcoin will bring to the financial system, you will be able to hold it, and you won't want to sell it if you get 100,000."

"If the mining machine market is good, then both first-tier and second-tier mining machine manufacturers are producing mining machines. If it is not good, only the number one will produce mining machines."

As an old man in the cryptocurrency industry, Liu Fei never talks in general terms. He has not only been in charge of Huobi spot trading, but also deeply involved in the Bitcoin mining industry, and has a deep understanding of the upstream and downstream industries of Bitcoin.

On May 23, 2020, Golden Finance interviewed Liu Fei, CEO of Bixin Mining, at the "Hundred Regiments War Mining Summit · Battle of the Water Season" summit hosted by Hundred Regiments War, Node Consulting, and Jinse Finance.  

Liu Fei first talked about the impact of the halving of Bitcoin on the price of Bitcoin. He said that the short-term impact is not significant. Because 18 million bitcoins have been dug out, and after the halving, the output of bitcoins has dropped from 1800 bitcoins a day to 900. Now the daily transaction volume of any mainstream exchange is tens of thousands, so the impact is very small. But the long-term is positive. At present, there are about 2 million bitcoins flowing on the exchange every day. At present, there are an average of 17 million US dollars in buying orders in the market every day. It is expected that it will take three months or half a year before the halving effect will be obvious. He predicts that by the end of this year, the price of Bitcoin will return to more than 15,000 US dollars, but will not exceed 20,000 US dollars.  

Bluejay Finance plans to raise US$5 million to issue Singapore dollar stablecoin bluSGD: Jinse Finance reported that the stablecoin protocol Bluejay Finance plans to raise US$5 million through the sale of its governance token BLU to issue Singapore dollar stablecoin bluSGD. The funds will also be used to provide liquidity for bluSGD on Uniswap. (Tech in Asia)[2022/11/3 12:13:23]

In the field of Bitcoin mining pools, we can see a phenomenon that all top exchanges have entered the mining pool industry. After Liu Fei joined Bixin in 2019, he shut down the Bixin mining pool, which was once among the top ten mining pools in computing power. Liu Fei said that it is a historical necessity for an exchange to be a mining pool. Because charging fees is almost the only income model for ordinary mining pools, but exchanges can have many ways to make money.

First, the exchange naturally has a lot of funds, and many derivatives such as currency loans, hedging, and options must be cheaper than others. Second, all exchanges need asset stock. Miners have a lot of asset stock, and the exchange can use it to leverage. The annualized leverage of the exchange is very high, reaching an annualized rate of 20 to 30%. Third, there are many ecological synergy methods. For example, miners can provide more transactions for OTC, a channel for retail investors to enter and exit gold. As long as miners do a good job in OTC services, exchanges can also subsidize miners. The miners themselves also need to make multiple transactions, and the exchange can charge a handling fee of two thousandths. There are many ways for exchanges to realize mining pools, but they cannot be realized. From the perspective of ecological coordination, exchanges are also willing to do so. Fourth, brand effect.

The transaction volume of Parallel Alpha series NFT has increased by more than 4000% in the past 24 hours: Jinse Finance reported that according to OpenSea data, the transaction volume of Parallel Alpha series NFT in the past 24 hours was 371ETH, and the 24-hour transaction volume increased by 4034%, ranking No. OpenSea ranks third. [2022/9/12 13:23:23]

He said that choice is more important than hard work. A far-sighted mining pool should see the big trend, and the benefits brought by the trend are far greater than hard work. So after arriving at Bixin, the Bixin mining pool was closed.  

Liu Fei explained the real reason for the tense supply-demand relationship, which is often seen in the mining machine flash kill phenomenon. He said that the tense supply-demand relationship is not due to too strong demand, but because of too little supply. The current demand for mining machines may be equivalent to about 1/3 of last year, but the production capacity may be 1/5 of last year. He also provided indicators for judging whether the mining machine market is good or bad. If the mining machine market is good, then both first-tier and second-tier mining machine manufacturers are producing mining machines. If the mining machine market is not good, only the number one will produce mining machines.

Less than 150 people registered on the first day of the full opening of the Coinbase NFT market: According to news on May 6, according to data from Dune Analytics, the number of new registered users on the first day of the opening of the beta version of the Coinbase NFT market to the public was less than 150. The total number of users is only 1112. Additionally, the first day of the beta saw only 150 transactions worth approximately $75,000. (Decrypt)[2022/5/6 2:53:27]

In addition, Liu Fei also explained why Bitcoin computing power is mainly concentrated in China. He believes that the cost of Bitcoin mining mainly includes: machine cost, electricity cost, opportunity cost, tariff cost, transportation cost, maintenance cost, construction cost and compliance cost. At present, the combination of various costs will add up, and it is still the best in China. , so Bitcoin computing power is concentrated in China. A large part of the cost is the opportunity cost. After the halving, the payback period becomes longer and the opportunity cost becomes lower, and the proportion of overseas computing power will increase in the future.  

The following is the transcript of the interview: (The subtitle is added by Jinse Finance)

Portsmouth, New Hampshire, USA accepts cryptocurrency payments: Jinse Finance reported that according to the latest news, residents of Portsmouth, New Hampshire, USA can now pay with cryptocurrencies. Potential customers who keep cryptocurrencies like bitcoin in their PayPal account can now use it to make any payments.

As previously reported, the US state of New Hampshire passed a bill that favors digital assets such as Bitcoin. (cryptonewsbtc)[2022/3/24 14:14:53]

Jinse Finance: What impact will the bitcoin halving have on the currency price?

Liu Fei: In the short term, it will not have much impact. Because 18 million bitcoins have been dug out, and after the halving, the output of bitcoins has dropped from 1800 bitcoins a day to 900. Now the daily transaction volume of any mainstream exchange is tens of thousands, so the impact is very small.

 But the long-term is positive. Why is the price of Bitcoin maintained at this position now? Bitcoin produces 1,800 bitcoins per day, calculated at a currency price of around US$10,000, which means that there may be more than US$17 million in sales every day. This sale must be picked up by someone, indicating that the market is genuine. In fact, there are an average of 17 million US dollars in buying orders every day. Now the buying order has not changed or even increased, but the selling order may only be more than 8 million US dollars. At present, there are about 2 million bitcoins circulating on exchanges every day. According to buying orders, it is estimated that it will take three months or half a year before the halving effect becomes apparent.

The trading volume of stablecoins yesterday was about 62.7 billion US dollars, accounting for 61.47% of the cryptocurrency trading volume: Jinse Finance reported that due to the continuous decline of cryptocurrencies in the past two weeks, the total market value of cryptocurrencies fell below 2 trillion US dollars, but stablecoins distribution is still growing. As of now, the total market value of the entire stablecoin is $185 billion, an increase of 9.92% since December 30, 2021. The value of all stablecoins in existence today represents 10.41% of the total cryptocurrency market capitalization. In addition, the trading volume of stablecoins on February 22, 2022 was about $62.7 billion, accounting for 61.47% of the trading volume of cryptocurrencies.

Tether (USDT) is still the largest stablecoin by market value, with a market value of US$79.6 billion rising by 1.3% in the past week; USDC’s market value increased by 21.6%; BUSD’s market value rose by 27.9%. The market capitalization of Terra’s UST has increased by 11%, and DAI has increased by 6.1%. Avalanche-based MIM has lost 40.6% of its market value over the past seven days. (news.bitcoin) [2022/2/23 10:10:53]

Jinse Finance: Can you predict the currency price at the end of this year?

Liu Fei: By the end of this year, we will see more than 15,000 US dollars, but it is expected that it will not exceed 20,000 US dollars.  

Jinse Finance: Now that the leading exchanges are all in mining pools, in your opinion, why do exchanges start to become mining pools?  

Liu Fei: It is a historical necessity for an exchange to be a mining pool. I saw this trend when I was at Huobi.

There are two types of encrypted currency, POS and POW. POS obviously only exchanges can do, they are zero cost. Exchanges do POW mining pools Exchange mining pools have zero fees or even subsidies for miners. why? Because charging fees is almost the only income model for ordinary mining pools, but exchanges can have many ways to make money.  

So the exchange is willing to be a mining pool even if it loses money.  

Choice is more important than hard work. A far-sighted mining pool should see the big trend, and the benefits brought by the trend are far greater than hard work. Sometimes it's not a relationship issue, so I closed the Bixin mining pool after I got to Bixin. Many people don't understand why the Bixin mining pool should be closed? Why spend energy on something that has no future.

Jinse Finance: What do you think of the tense supply-demand relationship and the futures phenomenon that often see mining machine manufacturers selling out quickly? How to judge the status of mining machine manufacturers?  

Liu Fei: The tension between supply and demand is not because the demand is too strong, but because the supply is too small. The current demand for mining machines may be equivalent to about 1/3 of last year, but the production capacity may be 1/5 of last year. The reason for the insufficient supply of mining machines is that mining machine manufacturers have already anticipated that the demand for mining machines is not good, and they are unwilling to put into production, nor are they willing to sell goods, and are more willing to set production according to demand. This is the reason for selling futures. The miners first give money to the mining machine manufacturer and then sell it to you. The mining machine manufacturer is unwilling to bear the loss of inventory and the cost of capital occupation.  

How do you think it is difficult for mining machine manufacturers? In fact, it is very simple. If mining machine manufacturers are not difficult, then both first-tier and second-tier mining machine manufacturers are producing mining machines. If the mining machine manufacturer is difficult, only the number one can produce mining machines. Just like last year. No matter what brand or even a brand that you have never heard of is producing mining machines, it means that mining machine manufacturers are getting a good deal.

Jinse Finance: China's Bitcoin computing power accounts for more than 65%. Why is Bitcoin computing power mainly concentrated in China?  

Liu Fei: Machine cost and electricity cost are just two of them. Another big cost of mining machine is opportunity cost. The time it takes for a mining machine to be transported from China to overseas customs declaration and local deployment, for example, it may take two months to transport it to the United States. I don't want to spend the opportunity cost of two months to do this.  

Just now I only mentioned opportunity cost, transportation cost, customs declaration cost, etc., as well as local compliance costs, the cost of slow construction, and the cost of imperfect maintenance industry chain after the machine breaks down. All kinds of costs will add up. Still the best in China. The fundamental reason why most of the computing power is concentrated in China is determined by economic issues.

But when the payback period of the mining machine becomes longer, the opportunity cost will be greatly reduced. Considering the electricity price of 1-2 cents in foreign countries, the electricity price in China may be 3 cents in the wet season, and the electricity price in winter will basically be 5 cents. If the reduction in electricity costs can make up for tariff costs, transportation costs, maintenance costs, construction costs and If there is no compliance cost, the miners will recalculate.

In the future, the proportion of overseas computing power will become larger and larger, because the payback cycle will become longer after halving, and this can be done.  

Jinse Finance: Suggestions for investors in the currency circle?

Liu Fei: Try not to touch the lever as much as possible, and don't let yourself lose sleep. Then you need to read more blockchain principles and financial knowledge in order to hold the currency. It is difficult for a person to earn money beyond his cognitive ability. If you don't understand why Bitcoin is valuable, you will want to sell Bitcoin when it rises from 3,000 to 10,000. If you know what changes Bitcoin will bring to the financial system, you will be able to hold it, and you will not want to sell it if you get 100,000.

Tags：

Bitcoin Price