Crypto Winter: new opportunities for miners

We had the privilege of conducting an exclusive interview with Batyr Khydyrov, CEO of UMINERS and General Sponsor of Blockchain Life 2023.

Join us in exploring how UMINERS is strategically preparing for the upcoming Forum, gaining insights into the challenges and opportunities stemming from the Crypto Winter period, and delving into the promising prospects for cryptocurrency mining across various global regions.

Hello, Batyr! Has UMINERS already started preparing for Blockchain Life 2023 in Dubai? What has happened in the last six months since the previous event?

Hello! Absolutely, our team is actively engaged in preparations for the event. We are currently in the process of designing souvenirs, creating demo samples of mining equipment, and coordinating with our staff – essentially, we are doing everything necessary to represent the company in a distinguished manner at the Forum.

Regarding the developments in the past six months, UMINERS has been progressing as planned. We are continuously expanding our team and presence in Russia. There is ongoing work towards modernizing our mining sites and investing in infrastructure projects, and we are also gearing up to launch our own container production.

Judging by the Bitcoin exchange rate, the Crypto Winter has dragged on a bit. How does this affect the mining sphere?

I would call this a period of new opportunities for miners. In fact, the so-called “crypto winter” is even beneficial to the cryptocurrency mining industry. It not only leads to a redistribution of forces in the market but also encourages miners to upgrade their equipment.

Nowadays, many cryptocurrency miners are focused on renewing their equipment fleet. This is supported by statistics. Currently, ASIC miners such as the Antminer S19, S19 jPro, S19 XP, as well as the Whatsminer devices from the M30 and M50 series, account for about 70% of all equipment used for mining BTC. This indicates that the increasing hashrate compels miners to dispose of old and inefficient equipment, replacing it with newer and more modern models that boast high performance and energy efficiency. For UMINERS, as a distributor of mining equipment, this is a positive situation. Our task is to assist clients in choosing new ASIC miners based on their goals and budget.

Can we say that today miners are in a difficult situation, considering the low price of BTC and the constantly growing hashrate, which sets new records almost every month?

It is definitely not true to say that all miners are in a difficult situation today. Some smaller players, who entered the market during the hype of 2021 and purchased equipment at inflated prices, may face challenges in terms of return on investment due to the high network difficulty and the decline in Bitcoin’s value. However, such challenges are inherent in any business.

On the other hand, larger players are actively expanding their capacities and upgrading their equipment fleet in preparation for the upcoming halving event. This is an opportune time for them, as the prices of ASIC miners are much lower than they were one or two years ago. Sales of equipment are steadily increasing in terms of quantity.

Since you touched on the topic of mining equipment costs, let’s discuss it in more detail. Currently, ASIC miner prices differ significantly compared to one or two years ago – they are much lower. What is this related to?

First and foremost, the falling price of BTC and the constantly growing network difficulty are interconnected factors. Prices are adjusted to ensure that the costs of equipment can be recouped, as there would be no demand from buyers if prices remained higher. This is not beneficial for manufacturers or distributors.

Additionally, it is important to note that equipment manufacturers are also preparing for the halving event. They are focused on producing new models, and there are still significant stocks of previously manufactured devices. This encourages manufacturers to lower prices in order to stimulate miners to make purchases.

Moreover, the Russian market has become one of the few places where mining equipment can be sold easily and quickly without legal complexities and other issues. This is recognized not only by local companies but also by foreign ones. As a result, there is an excess supply in the market, leading to lower prices. All of these factors are a result of high competition in the domestic market.

Have you noticed that there seems to be a certain oversaturation in the mining equipment market? How does this affect your company’s business?

The situation here is quite interesting. Russia is, in essence, one of the few countries where there is still an excess of available electricity to meet the needs of miners. Furthermore, mining in Russia is still not regulated at the legislative level, providing a certain level of freedom for conducting this activity. This makes the country attractive to those looking for a place to deploy their mining operations.

In other regions, such as China, Southeast Asia, and European countries, the situation with “cheap electricity” is somewhat worse. The lack of available electricity and strict cryptocurrency regulations lead to distributors’ warehouses becoming overfilled with unsold devices. As a result, mining equipment suppliers are searching for new distribution channels and are turning their focus to Russia. This has resulted in an oversaturated market with both local and foreign suppliers.

As for UMINERS, competition in the big business is a familiar phenomenon. However, we have full control over the situation and strive to move forward with the market.

Considering electricity prices in some countries, taxes, and high production costs, is mining profitable today at all? Where and under what conditions is cryptocurrency mining profitable?

Indeed, mining can be profitable, but not everywhere. Currently, there are three major mining zones: North America, Russia and the CIS countries, and the Middle East. Latin America can also be highlighted, especially with their enthusiasm for the widespread legalization of cryptocurrencies and state-level mining in some countries like El Salvador. However, in terms of mining volume, Latin America lags behind the aforementioned regions.

Russia boasts enormous reserves of cheap “green” electricity. This refers to environmentally friendly electricity production through gas burning or renewable sources such as hydroelectric power plants. North America also has no issues with electricity supply and benefits from well-developed infrastructure and regulatory friendliness towards mining. The Middle East is just starting to gain traction in the mining industry but has enormous potential in terms of natural resources that can be converted into electricity. Notably, there is a growing interest from large investors in cryptocurrency mining in Middle Eastern countries. It is no coincidence that Dubai has become one of the global centers of the crypto industry in the past year.

Based on this, it can be concluded that industrial mining is indeed profitable only in these three regions. In other countries, miners may face challenges such as high electricity tariffs, significant production costs, excessive taxes, or even a complete ban on cryptocurrency mining imposed by the state.

UMINERS has been in the mining equipment market for quite some time, and what are you particularly proud of?

We are especially proud that UMINERS has become a well-known brand not only in China and Russia but also globally. Leading equipment manufacturers, major players in the mining industry, and, of course, consumers are familiar with us. Our team has made tremendous efforts to achieve such impressive results.

What is the current focus of your activity? Are you preparing for a bull run?

Right now, our focus is on developing infrastructure projects in Russia to attract investment in mining. Despite the attractiveness of Russia for mining, there is a significant challenge – the lack of infrastructure. Major players in the mining industry are primarily interested in the development of various infrastructure projects, particularly the construction of facilities for equipment placement. Clients no longer want to deal with the challenges of deploying cryptocurrency mining businesses themselves or investing in infrastructure independently. They seek ready-made solutions, especially for smaller miners. The task of UMINERS and other companies in this field is not only to sell equipment but also to offer a complete operating business. As a result, businesses providing equipment placement opportunities, such as data center commissioning and rental services, hosting services, and mining container production, are gaining popularity.

Finding a free and cheap source of electricity in Russia seems impossible today, just as it was two years ago. The reality is that there is an excess of mining equipment but a shortage of suitable locations to place it. Further development of the cryptocurrency mining sector in Russia is impossible without adequate infrastructure. It is important to note that without infrastructure projects, the government may not view mining as a viable manufacturing industry. Large-scale infrastructure projects bring investments, create new jobs, generate taxes, and more. Focusing on infrastructure development could significantly accelerate the process of mining legalization in Russia.

As for UMINERS preparing for a bull run, we understand the cyclical nature of the market. Making accurate forecasts and theories is challenging, but it is certain that the bear cycle will eventually be replaced by a bull cycle. As mentioned earlier, this is an opportune time to expand our capabilities, and we do not neglect this opportunity.

What makes you return to the Blockchain Life Forum every year?

UMINERS has a special fondness for Blockchain Life. For several years, we have been the general sponsor of the event and a regular participant in the Forum since its inception. I would especially like to note the high level of organization and the quality of the audience. Blockchain Life is a serious and respectable event on a global scale, which offers vast opportunities for both participants and visitors. Twice a year, the “cream” of the crypto community, if I may use this term, gathers here.

The Forum’s program deserves special attention. Leading experts in the crypto industry take the stage and discuss the most pressing and relevant topics. Attending the Blockchain Life Forum is advantageous for companies not only from a commercial perspective but also for networking and acquiring knowledge.

What are your expectations for the upcoming Blockchain Life Forum in Dubai?

Year after year, I hope to see more “new faces” at the event. I anticipate the presence of interesting startups with worthwhile ideas and projects that are worthy of investment.

UMINERS is just one of the many intriguing avenues in my business pursuits. As a true entrepreneur, I am constantly searching for new projects to invest in and I am enthusiastic about exploring promising areas within the crypto industry. Therefore, I am excited to meet and engage with intelligent individuals who are seeking support and are willing to share their unique ideas.

Buy a ticket to the Forum: https://blockchain-life.com/asia/en/#tickets-row