PRIVATE – CyclicMint: Mustafa, can you tell us what you are doing about mining?
Mustafa Yilham: First of all, we have two main focus points in the business field: Bixin Wallet and Bixin Finsans. With Bixin Wallet, we offer services such as OTC, trading, lending (allocation), payments, cloud mining. In the Bixin Finance wing, we are interested in Bixin Mining and funds fund. We are currently mining 300MegaWatt power per hour, and this corresponds to 2.5% of the total mining power.
“All supply chain and expansion policies stopped”
THREE: How did the Kovid-19 mining industry affect our lives? Can you tell us?
MY: Our sector has been affected by this situation, but in the long term, the entire sector will be stronger due to the negative consequences of this situation. To make a short-term comment, the entire supply chain has stopped due to curfews and restrictions. Our employees in mining facilities cannot change shifts, we have difficulties in the process of sending employees when our devices fail, and we cannot repair some of our devices. Our international operations were also affected by this process. We do not send our employees abroad, and our employees who are already abroad had difficulties to return. In addition, all our expansion policy abroad will have stopped, and I think the same applies to companies in the west. Since mining is not a very common industry, we hear stories from all other miners, such as repairing devices and reducing the number of employees.
Halving and mining industry
THREE: Halving took place, how was the mining industry affected by this situation? Will miners sell more Bitcoins?
MY: This situation may differ according to the miners. As Bixin, we believe in the future potential of the industry. We even created a fund consisting of 100% Bitcoin worth 6600 BTC in the near future. We think about which mining facility or quantitative funds we should invest in even in our meetings, because we believe in Bitcoin. For this reason, we evaluate our work on Bitcoin basis and want to contribute to the ecosystem.
However, like other miners, we get help from various financial instruments to always minimize our risk. Like lending, options, hedging with futures. For example, as miners, if the futures price is above the spot price, we can earn USD income by buying from the spot market and selling through futures. We carry out these studies together with our trading team.
“Rainy weather saved many miners”
THREE: Hash power dropped by 15% with halving. What are your comments on this subject?
MY: Rainy weather started in China and we can say that this year rainy weather saved many miners. However, I think many miners in the West prefer financial tools and more efficient energy solutions to reduce their operational costs.
“We use surplus or residual electricity in mining”
THREE: Can you talk a little more about rainy weather? What correlation is there with mining?
MY: We use surplus electricity or residual electricity for mining. In China, there is always electricity surplus in the summer months, especially in the Sichuan region, there is an excess electricity production due to rains and prices fall. We already know that facility, employee, logistics and other operational costs are already low in China. In addition, in North America, miners can use electricity independent from the mains and this is a very unusual situation. In Russia, with natural gas, old aluminum factories, associated gases (combustible gases), they can reduce their electricity costs to 2-3 cent prices.
“The end of the rainy season can lead to the closing of many devices”
THREE: So there are many discussions about miners' device shutdowns, what are your thoughts on this subject?
MY: Devices continue to operate as long as they make a profit. For example, nearly 60% of mining takes place in China, and if the price of Bitcoin rises upward while the rainy season continues, S9 devices will continue to operate for a while and will go down in history as the most working legend device ever. However, as I mentioned earlier, it is likely that electricity costs will rise and the device will shut down if miners do not use various financial instruments. However, the end of the rainy season can cause many miners to turn off the device.
“No miner alone has more than 2% power”
THREE: Can we see centralization in the Bitcoin network as some miners shut down their devices after halving?
MY: Although we see pools in the name of mining, no miner alone has more than 2% power at the moment. It is also impossible for miners to come together.
THREE: What do you think about cloud mining?
MY: As Bixin, we offer cloud mining service, but there have been many fraud cases in the market. Cloud mining can be done with reliable institutions.
THREE: What do you think about exchanges opening mining pools?
MY: We see that exchanges create mining pools and we will see more. For example, exchanges such as Binance, Okex and Huobi also carry out such studies. Stock exchanges, rather than traditional mining pools, do not want to earn from these services because they earn money from transaction fees. Exchanges that can keep miners on their platforms will have more BTC and will progress towards earning more income in the long run.
Stock exchanges also offer many financial instruments. The highest efficiency can be achieved by ensuring that miners are informed about these financial instruments.
“Mining will become more decentralized in the future”
THREE: Do you have anything to add about the future of mining and Bitcoin?
MY: We think that mining will be more decentralized in the future. We see that electricity prices are decreasing all over the world. For example, we see that the number of miners in North America is increasing and we anticipate that people will be more free in the future with regulations and energy purchases and sales. There are also many developments in the mining field, for example, we see quieter mining devices, stronger cooling systems and different energy sources. We even see that flammable gases from oil wells are being used for mining. When such cheap and efficient electricity sources are combined with new technologies, mining can come to very different dimensions.
For Bitcoin, I can say that BTC has become a huge hedging asset against local events. For example, during the nuclear crisis in North Korea in 2017, the BTC price was 30% higher in South Korea. Similar stories took place in India, Zimbabwe and Cyprus. After the COVID 19, we will see the real power of Bitcoin with the global inflation and many people will use Bitcoin to reduce their risk. Limited supply, security and global liquidity are now a potential paradise for many.