Bitcoin 我的掘礦記事報告 三 / My Mining Journal - 3

### English Version

The situation of my mining progress deteriorated drastically since the previous 3 weeks in Journal 2.

Price Surge brings Back Fire

Price surges are 2 blade sword for Bitcoin Mining. It is best for describing the the 1st 3 weeks in August 2017.

1St, the completion of Bitcoin Cash hard fork cleared the annoyance to the Bitcoin community and the market. Bitcoin’s survival after the hard fork re-assumed Bitcoin as a store of value unchanged, leading to more purchases, including the purchases from the Wall Street.

At the same time, the activation of soft fork SegWit had long been awaited by the whole Bitcoin community, making the first Bitcoin network processing capacity scaling succeeded. Higher capacity for the existing Bitcoin network increased the possibility of higher adoptions of the cryptocurrency. Just as what I have said in my previous stories, the higher adoptions could mean more people is likely to price their asset in Bitcoin, helping the market to seek the optimum values Bitcoin could represent.

When you do not want to buy it directly, you will seek ways to obtain it – mining. There is always a time lag between price surged and increase in hashrates. To get new miners ready for mining, the initially shortage miner production line had to make them, test them and ship them to the buyers. When these miners arrived the buyers' farm, they had to be set up, and for most of the time they had to wait for the power adapters to arrive as well. These hashrates went live to the network in the last week of August.

To me, figures below were are more important than the hashrate plot:

Date	Mining	Maintenance	Net Inccome	Price
2017/8/25	0.00378607	0.00074859	0.00303748	4408.2876
2017/9/5	0.00315528	0.00074625	0.00240903	4422.1106
2017/9/20	0.00242016	0.00091345	0.00150671	3612.6772

You can tell how much I was shocked simply by looking at the Mining column. This Mining is the output before Maintenance. 33% drop.

Steep Price Drop

As the Demark indicator shown, Bitcoin must fall when it first shot near $5000. Original estimation on the best technical analysis guy in Bitcoin world was a drop for around $1000.

What screwed me up was the ICO Ban by China on 5th Sept. The market died down immediately because China was the most important Bitcoin buying country in the world before 2017. You know, it was about capital flows… This made the adjustment restarted at around $4500, to around $4250. It was still talking about ICO. The next round was crypto exchanges close down, all of them in China. This created a cliff to around $3000. This was killing me because the drop was strong and the time was long, 10 days.

Date	Mining	Maintenance	Net Inccome	Price
2017/8/25	0.00378607	0.00074859	0.00303748	4408.2876
2017/9/20	0.00242016	0.00091345	0.00150671	3612.6772

Look. It was a drop from the highest Net Income to this point for more than 50% in this short period of time. My projection was still acceptable to me when the Net Income was down 7%. It was is way too much. It looked like I am getting close to mining contract cancellation…

Mined Bitcoin < Maintenance in Bitcoin

Feeling extremely Bad

Net Income dropped significantly + Price dropped continuously. This is the worst case in my projection. From the heaven to the hell is pain like kicking my ass hard, feeling worse than financial crisis.

Key Take Away

My aim for this story is to explain 2 simple facts:

• Mining difficulties is inversely correlated to Mining Output. Do not think price rise can compensate the loss in Mining Output.
• Even if price adjustment is inevitable, bad news always make your Net Income further reduced.

The next story will be about expectation management. This is way more meaningful than everything. Stay tuned.