Miners prefer projects with native tokens, high mining ratios in token models, and proportional computing power and profits.
(Previous summary:
Kaspa fork coin Karlsen (KLS) triggers mining frenzy! Internet celebrities earn 3,000 pounds in “4-day mining test” using graphics cards
)
(Background supplement:
Rise of PoW altcoins: Another victory for miners, communities, and mining machine manufacturers?
)
Table of Contents:
How are miners doing?
Mining power is declining, and it is being redirected to traditional industries for server rentals and small-scale idle use.
Only low-end graphics cards are used, and there are basically no high-end graphics cards for mining.
What kind of economic model do miners like?
Miners like economic models such as BTC/Filecoin.
Miners do not like PoS, ETH L2, and others.
What benefits do miners like from projects? How much power do miners have?
In most projects, miners are just supporting roles at the base level (e.g., ETH L2).
In the above-mentioned projects with economic models that miners like, the role of miners is very clear (e.g., Filecoin).
BTC is very special, and miners have a lot of power.
Which type of project needs to consider miners’ interests? How to attract them?
Projects that require computational resources need to consider miners’ interests (ZK, AI computing power).
A comfortable collaboration model for miners.
Conclusion:
In the cryptocurrency field, miners are a powerful group. I have interviewed several large mining companies and summarized how miners view blockchain projects. If you are a project party, you can learn how to obtain miners’ support. This article will answer the following four questions:
How are miners doing now?
What kind of economic model do miners like?
What benefits do miners like from projects? How much power do miners have?
Which type of project needs to consider miners’ interests? How to attract them?
Starting from last year, the market conditions have been poor, mining profits have been low, and there are many projects using graphics card machines. Many miners chose to sell their mining machines or return to traditional industries, renting them out for servers, graphic rendering, cloud servers, etc.
The situation started to turn around in November, and some miners organized their computing power to mine in the mining circle.
The price of graphics cards has skyrocketed, and high-end cards can immediately make money through rentals or reselling. Miners are not willing to invest in mining, which is an unknown field.
The U.S. ban on graphics cards and the popularity of AI have led to a shortage of graphics cards.
The price of the 3090 graphics card has increased from a few thousand to 10,000.
The price of the 4090 graphics card was 10,000 two months ago and is now 20,000.
The graphics cards in the mining circle do not have such good configurations. Low-end graphics cards like the 3080, P106, 1080, and 2080 are in large quantities and many are idle. Currently, some companies in Shenzhen are expanding the low-end graphics cards through soldering to run more demanding algorithms. Some companies have also made software improvements to AI algorithms, allowing these algorithms to run on low-end graphics cards like the 3080.
Filecoin mining machines with 3090 graphics cards are rare. Most Filecoin mining machines were purchased in 2020-2021 when the 3080 graphics card was already good. The profits later decreased, so no more investments were made. Therefore, most Filecoin mining machines use the 3080 graphics card.
Firstly, as long as the project’s profits are high enough, miners are willing to mine. Then, miners will choose their preferred economic model.
It is a layered chain with native tokens.
More computing power leads to higher profits. Miners can earn a proportionate block reward with 11% of the computing power. Projects where block rewards account for a high proportion in the economic model are preferred by miners (e.g., Filecoin, where 60-70% of the coins are block rewards). If the proportion is low, miners are less interested.
Most ETH L2 block rewards are controlled by the project party, and miners do not participate. Even if they do participate, it is only as part of the project party’s computing power.
Miners do not like these projects’ economic models. Miners are marginalized in the design of tokenomics, only earning some computing fees. The profit margin is not enough, so miners have less interest. In these projects, miners are just supporting roles, and the success of the project mainly depends on the project party, capital, market conditions, etc. Miners have no say in it.
Some L2 projects have already issued tokens, and it is difficult to incentivize miners when developing decentralized sequencers/zk provers. It is not friendly to miners.
Miners’ investment capacity is significant. Miners can deliver on their promises.
In pure PoW, 100% of block rewards go to miners, without foundations/VCs taking a share. Miners have great power.
Miners have significant investment capacity and can even fork if necessary.
Miners can clearly see that rewards are halved every four years, and they see it getting harder. Innovations like Ordinals allow them to earn more.
New projects have unknown profits for miners but require investment in data centers and electricity bills. Therefore, they have requirements for collaboration models.
They do not consider the investment in equipment, but they care about the investment in data centers and electricity bills. To attract miners, it is best to choose a collaboration model they like.
Among these models, the trust model is the best, as it puts less economic pressure on the project. However, this requires the project’s economic model to be friendly to miners and have good capital endorsement. Otherwise, miners are not willing to invest their real money in the unknown and work for love.
Projects that require a large amount of computer resources, such as storage, ZK, AI, and PoW projects, should fully consider miners’ interests when designing economic models.
Miners prefer projects with native tokens, high mining ratios in token models, and proportional computing power and profits. They can directly refer to the economic models of BTC and Filecoin.
New projects are best suited for the “trust model,” which puts less economic pressure on the project. However, this requires the project’s economic model to be friendly to miners and have good capital endorsement. Otherwise, miners are not willing to invest their real money in the unknown and work for love.
Related reports
Bitcoin sold after 13 years for 100 pounds, with a 430,000-fold increase, and miners finally found their wallets at the same time.
BlackRock warns: Bitcoin may be “classified as a security” or have a negative impact on spot ETFs.
Reversal! Bitcoin developer: “Not all scriptures need to be eliminated” ORDI soared 70% to a new high.
Tags:
BTC
Filecoin
Mining