This may be miner Li Wen's most successful investment to date.
In June last year, he spent 70,000 yuan to purchase 10 used mining rigs. Not only did the mined Bitcoin's value skyrocket, but "the price of the mining rigs also multiplied several times over—profiting from both ends," Li Wen remarked with satisfaction.
Those who entered the market earlier, like Peter, reaped even greater rewards.
In the summer of 2019, Peter invested approximately 2 million yuan to acquire 200 Whatsminer M20S rigs. To date, these have yielded over 50 Bitcoins, valued at more than 16 million yuan. After deducting monthly electricity costs of 150,000 yuan, his net profit exceeds 10 million yuan.
Peter plans to hold onto these Bitcoins long-term, confident that their value will continue to rise.
Today’s miners are as fervent as the 19th-century gold rushers in the American West. Where prospectors once relied on pickaxes and sweat, modern miners wield chips and electricity to stake their claims.
Despite slowing mining speeds, soaring cryptocurrency prices have only intensified miners' enthusiasm—reshaping the entire ecosystem of mining rigs, GPUs, and semiconductor supply chains.
Surging Demand and Scarcity in Mining Equipment
"Mining has genuinely improved my life—not just marginally, but dramatically," said 45-year-old Bitcoin miner Li Wen.
In June 2020, Li Wen purchased 10 used Whatsminer M20S rigs for 70,000 yuan. With a combined hash rate of 65 TH/s, these machines collectively mine about 1 Bitcoin annually—worth over 300,000 yuan at current valuations.
Encouraged by steady returns, Li Wen invested an additional 700,000 yuan by year-end to expand his fleet to 60+ rigs, hosted at a mining facility in Inner Mongolia.
After eight months in the industry, Li Wen has accumulated 2.5+ Bitcoins (valued at 700,000–800,000 yuan).
A veteran of crypto since 2017, Li Wen transitioned to mining for its relative stability compared to trading. Now, however, mining hardware is nearly impossible to source.
Eight months ago, retail stores in Beijing stocked both new and used rigs at reasonable prices. Today, most have shuttered due to shortages.
"From what I’ve seen, buyers are bulk-ordering directly from manufacturers. Units sell out before production even finishes," Li Wen noted.
Pre-orders for rigs are backlogged for months, with prices doubling or tripling. Bitmain’s official store lists all Antminers as "sold out," with deliveries pushed to Q3 2021. Similarly, Canaan Creative’s Avalon miners are oversubscribed through mid-2021.
Secondary markets command even steeper premiums.
For example, Bitmain’s Antminer S19 95T (20,000 yuan MSRP) resells for 50,000+ yuan—a 150% markup.
Futures prices have also spiraled.
In March 2020, an S19 futures contract cost ~13,000 yuan. By January 2021, prices peaked at 53,000 yuan amid Bitcoin’s rally—a 307% increase.
Orders reflect this frenzy. An Inner Mongolia mine operator reported single orders ballooning from 50–200 rigs to 5,000-unit purchases, with unprecedented demand driving consolidation.
Bitfury’s subsidiary Cipher, for instance, plans to go public via SPAC (targeting a $2B valuation), signaling institutionalization in the sector.
Li Wen likens the rush to "starved beggars swarming bread." Yet today’s euphoria contrasts sharply with the "312 Crash" of March 2020, when Bitcoin’s 25% single-day plunge forced over a million rigs offline. Used equipment once sold for scrap; now, those same rigs fetch 20,000 yuan.
"Rig prices tripled, but Bitcoin quadrupled—shortening payback periods from 12 months to under 8," Li Wen observed.
Ethereum Mania: GPUs in Short Supply, Laptops Dismantled
Unlike Bitcoin-focused miners, 25-year-old Peter is diversifying into Ethereum.
"With 5 million yuan, I’m buying 1,300+ GPUs to build mining rigs," he said. Graphics cards are Ethereum’s pickaxes, with each rig requiring 6–8 GPUs. Some miners even repurpose gaming PCs.
Industry analysts blame GPU shortages (e.g., NVIDIA’s RTX 30 series) partly on Ethereum miners.
NVIDIA now limits hash rates on consumer GPUs and plans dedicated CMP mining chips—a tacit acknowledgment of mining’s impact on semiconductor markets.
Shenzhen-based factories, facing GPU shortages, are dismantling gaming laptops for parts. "One factory bought 10,000+ gaming notebooks just to harvest their GPUs," reported Mars Cloud’s president Shang Silin. With Ethereum rigs at 200% premiums, this workaround proves cost-effective.
Mars Finance CEO Wang Feng notes that mining’s evolution hinges on chipmakers. Once a niche market, mining chips now drive innovation—though their scale still pales against smartphones.
How Mining Works: The Hash Rate Arms Race
For outsiders, terms like "blockchain" and "mining" remain opaque. At its core, Bitcoin mining secures a decentralized ledger (blockchain) by solving complex SHA256 puzzles. Individual rigs would take centuries to solve one alone, prompting miners to pool resources.
Key Mining Stats:
- Centralization Risks: Four largest Bitcoin pools control 55.61% of hash rate; Ethereum’s top three command 75.51%.
- Hash Rate Growth: Bitcoin’s 35.91% (2020) vs. Ethereum’s 98.78%—attributed to lower entry costs (GPU vs. ASIC).
FAQ: Addressing Common Queries
Q: How does mining differ from trading cryptocurrencies?
A: Mining offers steadier returns with lower risk, akin to dollar-cost averaging. Traders often gamble on volatile price swings.
Q: What’s the break-even timeline for mining rigs?
A: Typically 8–12 months, but variables like electricity costs and Bitcoin’s price drastically affect outcomes.
Q: Why are GPUs scarce?
A: Ethereum miners snap up high-performance cards, outpacing supply. Manufacturers now prioritize mining-specific hardware.
Q: Could DeFi ("yield farming") replace traditional mining?
A: Unlikely—DeFi complements mining by expanding crypto adoption. Long-term, these sectors may converge.
The Road Ahead
👉 Explore the future of crypto mining with Mars Cloud’s insights. As Wang Feng notes, "Bitcoin is digital gold; Ethereum is the ecosystem’s Android." Institutional adoption and DeFi growth ensure crypto’s permanent seat in global finance—a revolution rivaling the internet’s rise.