How Bitcoin Mining Changed After the Halving
Bitcoin’s third-ever
halving this May was arguably the top crypto event of the year —
especially since the coronavirus pandemic meant that no actual, in-person events
would be taking place. Instead of going outside, the crypto space let loose a
cascade of price predictions in the weeks leading up to the 50% decrease in
Bitcoin block rewards: would Bitcoin go to the moon? Was the
halving already priced in? Would small miners go out of business?
A few weeks after the halving, I spoke about some of these issues with
F2Pool founder Shixing “Shenyu” Mao — another translation of his
name is “Magical Discus Fish” — whose mining pool mined that very last
block before Bitcoin’s block rewards halved. I first wanted
to know how F2Pool had come up with the idea of including a New York Times
headline about coronavirus and federal bailouts in the last block. “To be
precise, an easter egg was written in the block height of 629,999. A few days
ago, at 3:23 am on May 12, Beijing time, the F2Pool fish pond mined the last
block before Bitcoin halved for the third time. A New York Times
headline that day was “
NYTimes 09 / Apr / 2020 With $2.3T Injection,
Fed’s Plan Far Exceeds 2008 Rescue,” and it is written in the block, paying
tribute to Satoshi Nakamoto writing the title of the front page of
the NYT in the Bitcoin genesis block in 2009. Eleven years ago, on Jan.
3, 2009, Satoshi Nakamoto wrote a headline from the New York Times in the
coinbase data: “The Times 03 / Jan / 2009 Chancellor on brink of second
bailout for banks,” to prove that the genesis block was produced that
same day. This article introduced some details of the Bank of England’s bailout
in the context of the 2008 global financial crisis. Another financial
crisis has occurred this year, and the reaction of the Bank of England and the
United States was very consistent with their actions in 2008 and 2009, as if it
“happened yesterday.” So, we took this opportunity to write the headline from
the New York Times article on the Federal Reserve’s bailout in the coinbase data
on April 9 this year, and pay tribute to Satoshi Nakamoto, who created Bitcoin
11 years ago.” This isn’t the first time that Shenyu, or Magical Discus
Fish, used Bitcoin coinbase data to pass on a message (sidenote: see that the
NYT headline above was slightly tweaked by a fish emoji). In 2014, Shenyu
proposed to his now-wife by mining one block (25 BTC at the time) and
storing it in an address that began “1LoveU.” He then unexpectedly mined the
next block and added, “Hand-in-Hand, we shall grow old together.”
“Basically as expected. With the fluctuation of the currency price before
the halving, the mining revenue per T is between 0.8 yuan and 1.1
yuan, and it is currently 0.5 to 0.6 yuan: basically, the income is halved.
Since the water harvest [flood] period has not yet began in the nearly 10 days
after the halving, the mining profit of the mining
machines with an electricity fee above 0.35 yuan/degree was
originally 50 yuan, and now it is 25 yuan, but the electricity fee
accounts for more than 50%. If you can’t pay the electricity bill, you will have
to shut down.” “The most direct impact of the block reward halving is to the
miner, followed by the mining pool. The amount of coins produced is
reduced, and the income is reduced, but the cost of input is basically
unchanged. That will inevitably lengthen the return cycle, and even stop
mining machines from continuing to run for a period of time. The
halving and the halved currency price are very important for miners,
since it determines whether miners can continue mining. Miners need to
replace the more advantageous hardware, that is, the mining machines, and use
financial instruments to hedge the risk. Secondly, they need to look for lower
electricity resources to reduce costs, improve the stability of the machines,
and other optimizations to cope with the decline in revenue. Miners need to
optimize the internal and external as much as possible this year to allow
themselves to survive.” For more insights from Shenyu, check out our previous
Crypto Titans interview with him here.
Bitcoin’s third-ever
halving this May was arguably the top crypto event of the year —
especially since the coronavirus pandemic meant that no actual, in-person events
would be taking place. Instead of going outside, the crypto space let loose a
cascade of price predictions in the weeks leading up to the 50% decrease in
Bitcoin block rewards: would Bitcoin go to the moon? Was the
halving already priced in? Would small miners go out of business?
A few weeks after the halving, I spoke about some of these issues with
F2Pool founder Shixing “Shenyu” Mao — another translation of his
name is “Magical Discus Fish” — whose mining pool mined that very last
block before Bitcoin’s block rewards halved. I first wanted
to know how F2Pool had come up with the idea of including a New York Times
headline about coronavirus and federal bailouts in the last block. “To be
precise, an easter egg was written in the block height of 629,999. A few days
ago, at 3:23 am on May 12, Beijing time, the F2Pool fish pond mined the last
block before Bitcoin halved for the third time. A New York Times
headline that day was “
NYTimes 09 / Apr / 2020 With $2.3T Injection,Fed’s Plan Far Exceeds 2008 Rescue,” and it is written in the block, paying
tribute to Satoshi Nakamoto writing the title of the front page of
the NYT in the Bitcoin genesis block in 2009. Eleven years ago, on Jan.
3, 2009, Satoshi Nakamoto wrote a headline from the New York Times in the
coinbase data: “The Times 03 / Jan / 2009 Chancellor on brink of second
bailout for banks,” to prove that the genesis block was produced that
same day. This article introduced some details of the Bank of England’s bailout
in the context of the 2008 global financial crisis. Another financial
crisis has occurred this year, and the reaction of the Bank of England and the
United States was very consistent with their actions in 2008 and 2009, as if it
“happened yesterday.” So, we took this opportunity to write the headline from
the New York Times article on the Federal Reserve’s bailout in the coinbase data
on April 9 this year, and pay tribute to Satoshi Nakamoto, who created Bitcoin
11 years ago.” This isn’t the first time that Shenyu, or Magical Discus
Fish, used Bitcoin coinbase data to pass on a message (sidenote: see that the
NYT headline above was slightly tweaked by a fish emoji). In 2014, Shenyu
proposed to his now-wife by mining one block (25 BTC at the time) and
storing it in an address that began “1LoveU.” He then unexpectedly mined the
next block and added, “Hand-in-Hand, we shall grow old together.”
“Basically as expected. With the fluctuation of the currency price before
the halving, the mining revenue per T is between 0.8 yuan and 1.1
yuan, and it is currently 0.5 to 0.6 yuan: basically, the income is halved.
Since the water harvest [flood] period has not yet began in the nearly 10 days
after the halving, the mining profit of the mining
machines with an electricity fee above 0.35 yuan/degree was
originally 50 yuan, and now it is 25 yuan, but the electricity fee
accounts for more than 50%. If you can’t pay the electricity bill, you will have
to shut down.” “The most direct impact of the block reward halving is to the
miner, followed by the mining pool. The amount of coins produced is
reduced, and the income is reduced, but the cost of input is basically
unchanged. That will inevitably lengthen the return cycle, and even stop
mining machines from continuing to run for a period of time. The
halving and the halved currency price are very important for miners,
since it determines whether miners can continue mining. Miners need to
replace the more advantageous hardware, that is, the mining machines, and use
financial instruments to hedge the risk. Secondly, they need to look for lower
electricity resources to reduce costs, improve the stability of the machines,
and other optimizations to cope with the decline in revenue. Miners need to
optimize the internal and external as much as possible this year to allow
themselves to survive.” For more insights from Shenyu, check out our previous
Crypto Titans interview with him here.
