On the morning of November 6, Qianjie Zhao, the senior vice president of BTCC, left the following message on his Wechat Moments:
“Thank you for all of your support along the way. I have spent four years in the cryptocurrency field, mostly in the mining pool. I’ll say no more—see you around.”
He also forwarded an announcement that, due to business adjustments, the BTCC mining pool will suspend all mining services on November 15, and indefinitely suspend the operation on November 30.
This is a major disruption in the mining pool field. Is it competition from other companies or the depression of token prices that has forced the once-promising market leader to close its doors in this bear market?
BTCC Mining Pool was one of the First of its Kind
BTCChina went live on June 9, 2011, with members from China, America, and Europe. As the first platform that allowed users to trade Bitcoins directly with RMB, it set a precedent by storing Bitcoins for customers, making it China’s earliest and, at one time, biggest Bitcoin trading platform. Its transaction volume once surpassed Mt.Gox and BitStamp, the top two Bitcoin trading platforms in the world that made up 80% of the volume worldwide. Its highest daily trading volume was close to 90,000 Bitcoins and its highest daily turnover exceeded RMB 200 million.
The BTCC mining pool was launched in 2014 as a key addition to the BTCC exchange and wallet, and in 2015, BTCChina was renamed BTCC.
Zhao joined BTCC in 2014. He once flew to Chengdu, rented a car, and drove along the river, asking every small hydropower station he saw if they could mine cryptocurrency, because he heard about ones in Sichuan. Basically, the map of the BTCC mining pool was built going door-to-door.
In 2016, the computing power of BTCC’s mining pool accounted for 15% of all power on the network, ranking in the top three. But recently, the computing power of the BTCC mining pool has dropped dramatically; its share of computing power on BTC.com has fallen out of the top 20 and is now close to zero. Over the last few months, it has also generated no profit.
Zhao once said that a mining pool is a purely technical service. A well-maintained mining pool remains competitive by having both technical strength to lead nodes and produce blocks, and stable computing power to continuously produce blocks. For the BTCC mining pool, its decreasing share of computing power has become a wound that never healed.
Right now, the BTCC mining pool supports the mining of BTC, BCH, LTC, SBTC, BCD, BTM, and other virtual currencies. The following announcement came as a shock to miners.
|Announcement Regarding the Indefinite Suspension of BTCC Mining Pool Operations
The BTCC mining pool was launched in 2014. For the past four years, we have stuck to our idea of providing miners with the most stable and transparent mining services. We received trust and support from miners for our low rejection rate, low latency and 7*24 premium services. While safeguarding the cybersecurity of digital assets, we assumed the liability of facilitating the development of the blockchain ecosystem.
Today, we regret to announce that due to business adjustments, the BTCC mining pool will suspend all mining services on November 15 and indefinitely suspend the operation on November 30. To avoid unnecessary losses, we recommend that all miners switch to another computing power source before November 15 and bind mining revenue addresses before November 20. We will distribute benefits to all miners in time.
We firmly believe the digital crypto asset and blockchain industry represented by Bitcoin will keep improving and developing. We will not forget you, our dearest supporters. Thank you, again. We’ll see you soon!
BTCC mining pool
November 6, 2018
The BTCC Mining Pool Could not Compete with Other Computing Power Strategies
When reflecting on the strategy of the BTCC mining pool, Zhao said that other pool creators started to deploy mining rigs to expand the ecosystem in 2017. The BTCC mining pool, however, insisted on building a perfect mining pool, which shrank its business.
With the entry of mining rig manufacturers such as Bitmain from 2016 to 2018, the Bitcoin computing power of companies like BTC.com and AntPool soared. The BTCC mining pool’s strategy—attracting computing power through services—failed.
The gradual failure of the BTCC mining pool may have had something to do with BTCC’s parent company. On September 4, 2017, five departments jointly issued a ban on virtual currency exchanges. In Shanghai, BTCC closed all Bitcoin transaction businesses. By contrast, Huobi and OKCoin chose to close their platforms in China but operated HuobiPro and OKEx overseas, which gave them a chance to gain on BTCC.
On January 29, 2018, BTCC claimed that due to the pressing supervision requirements, it had transferred 100% of its shares to an investment fund in Hong Kong. The four original shareholders—Li Qiyuan, Light Speed Capital, Yang Linke and Huang Xiaoyu—cashed out all their shares. After being acquired, BTCC made business adjustments and focused on the BTCC mining pool, the Mobi digital asset wallet, and a USD spot trading platform. But soon afterwards, the BTCC mining pool was sold once again. On June 24, 2018, Value Convergence Holdings Limited, under Hong Kong Financial Investment Holding Group Limited (HKFIHG), announced that its indirect wholly-funded subsidiary planned to buy 49% of shares of the BTCC mining pool for around HKD 147 million.
It’s tempting to think that the parent company, BTCC, just had bad luck in an environment of changeable policies, but in reality, its downfall began with its choices in 2017. After that, the exchange business ended up declining despite renewed marketing campaigns.
Could it be due to the bear market? Zhao thought so in an interview with Honeycomb Finance, going on to say that computing power increased by three times from January to August of 2018. That means the computing power that could mine 1 coin a day at the start of the year would mine only 0.2 coins half a year later. “The profits gained from mining Bitcoins are affected by the price of mining rigs, electricity fees, and token prices,” he said. “Last year, many miners spent a lot on computing power and suffered from gradually increasing electricity costs while the token price kept decreasing. These three factors put miners in a tight spot.”
Zhao once said on Wechat Moments, “A staunch dream will eventually come true.” Perhaps as a veteran of cryptocurrency who had devoted himself to the BTCC mining pool, he had too many expectations of it. However, business often follows its own path.
Will Market Sentiment Become Worse over the Winter?
BTCC’s mining pool used to be called “the state pool.” It is a tragedy that one of the original mining pools has fallen: tough times are ahead for miners. Other news confirms that the life of a cryptocurrency entrepreneur is not an easy one.
Huobi made a recent announcement that due to violations of exchange rules by project initiators (such as serious discrepancies between the amount of locked tokens promised in the whitepaper and the actual locked amount), the Huobi OTC desk suspended all transactions and CDC top-up services on November 5 at 17:30.
After that, BlockBeats, a blockchain media reporter, accused CDC of trying to make a hasty exit. They pointed out that the latest update of CDC was made in August while Weibo’s was in May. The CDC price fell from 0.43 at ICO to its current price of 0.001354, which is essentially zero. Yang Ning from LeBox Capital, the standing adviser of CDC, has said that he invested RBM 20 million but reclaimed only several million, and that investing in cryptocurrency was the biggest regret of his career.
Binance and OKEX have announced plans to discontinue some virtual currencies and currency pairs over the past two months, involving more than one hundred virtual currencies in total. This was a precision strike at empty projects.
Investment in virtual currencies is essentially a bet on the future of certain startups. Market downturns and price declines are inevitable when a company makes no profit. CDC is not the first to pull out and it won’t be the last.
BCH may experience a community split on November 15th. Right now, the price of BCH is promising, bucking the trend, but some say that splitting BCH won’t be easy. The current price of BCH is about 9% of BTC, and since the price corresponds to computing power, both child currencies will confront further decline due to computing power division after the split. Moreover, the split will confuse developers and further devalue BCH, putting BCH in a dangerous position.
Suspension of the BTCC mining pool, discontinuation of virtual currencies, a BCH split—what other black swan events are awaiting cryptocurrency this winter?