Is the bear market better for buying miners?

Anyone who has speculated on coins knows that the price of coins is affected by the market, policies, news, etc., and fluctuates 24 hours a day, and the fluctuation range is large. In just a few days, multiple doublings and price zeros are possible. Under such a sharp rise and fall, the mentality of the currency people has been greatly tested.

Although buying a mining machine or speculating in coins is an investment behavior that is independently chosen by individuals, from the perspective of profitability, there will be optimal choices under different market conditions. When the market is good, speculating coins can get huge profits in a short time, and the profit of mining is slightly less than buying coins directly. But when the market is in a downturn, it is more suitable for mining, because mining can reduce risks more than speculating coins. In a nutshell: mining in a bear market, speculating in a bull market.

As a special investment product, the price of mining machine will fluctuate up and down according to the price of Bitcoin. In the bull market, the high price of the currency will drive the “mining fever”, and there will often be a situation of “in short supply” of mining machines. Many customers even buy mining machines from scalpers at prices 2-3 times higher than the official website. Therefore, the bull market is often accompanied by a sharp increase in mining computing power, and the consequence is that the mining difficulty adjustment period becomes shorter. For example, after a large number of ASIC mining machines came out in 2017, in the next five months, the average computing power growth of each period reached more than 30%.

Now many novice miners who are just getting started have some misunderstandings about the calculation of mining income. When they buy mining machines, they often use the current mining difficulty to estimate future earnings, but do not consider the difficulty adjustment in the future. In fact, when the bull market buys mining machines, miners not only need to invest higher machine purchase costs, but also bear the risk of reducing the number of coins mined due to the skyrocketing difficulty. In fact, in addition to the currency price itself, mining difficulty is also an important factor affecting miners’ earnings.

So, why is the bear market more suitable for buying mining machines?

When the bear market comes, all mining machine manufacturers will adjust the mining machine price according to a certain proportion. On the one hand, it is because the market determines the price, and when the supply is less than the demand, the seller launches a price reduction policy. On the other hand, it is to consider the actual income of the miners. After all, the mined coins have shrunk in accordance with the exchange rate of fiat currency. In order to shorten the payback period of the miners, we can only reduce the cost of the miners to purchase the mining machine. Therefore, one of the advantages of buying mining machines in a bear market is that they are cheap. In addition, some manufacturers will also issue coupons for the purchase of mining machines, the face value is generally ranging from 400-1600 yuan, which can be said to be quite cost-effective.

In addition to the currency price, another key factor that affects miners’ earnings is the difficulty of mining. When the bear market comes, the enthusiasm of miners for mining is not as high as that of the bull market, and the growth rate of the computing power of the whole network will also slow down, which means that the difficulty adjustment period is relatively prolonged. Then miners can mine a stable amount of coins for a long time.

When the bull market comes, miners can sell the coins they have dug in the bear market, thus making huge profits. In addition, the price of mining machines has also risen with the bull market. If you buy new mining machines at this time, the input cost will increase, but the batch of mining machines you bought in the bear market will appreciate in value.

 

 

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