The following post is a curated version of our weekly Telegram channel Q&A session.
Max Matrenitski, Cyberian Mine’s CEO, addresses the most important questions that arise in our community, with an emphasis on navigating the current geopolitical context that affects our mining operations.
Max Matrenitski, Cyberian Mine’s CEO, addresses the most important questions that arise in our community, with an emphasis on navigating the current geopolitical context that affects our mining operations.
Telegram Question:
How long is the contract with the miner? What if the BTC supply reaches 21 million? What would happen to my miner?
How long is the contract with the miner? What if the BTC supply reaches 21 million? What would happen to my miner?
Max, Cyberian Mine CEO:
"Our contracts have no time-period limitation (virtually, forever) and we’re providing some real hosting and mining power with physical devices, our fleet, that we manage and maintain in our facilities. Our mining contracts correspond with 1 identified physical unit at the time of contracting: each mining unit has an underlying piece of hardware with a specific serial number. We host and use those units to produce all the hashrate. No maintenance costs. Your miner will never fail.
Your contract will run:
— As long as you cover your hosting costs, you can mine with us for an undetermined period. There is no contract period, there is no limitation,
— Or until you decide to quit and to sell your Miner at our Internal Marketplace; then you can refund the sale price to your bank account.
Remember, Cyberian Mine doesn’t touch your coins: the mining rewards in BTC arrive directly on your personal wallet address from the BTC Network. We’re not an Exchange, and we don’t touch your coins.
When the 21 Million BTC supply gets produced, then the miners will keep on working, but will only get rewarded for their work from the transaction fees on the Network.
This should happen in 2140."
"Our contracts have no time-period limitation (virtually, forever) and we’re providing some real hosting and mining power with physical devices, our fleet, that we manage and maintain in our facilities. Our mining contracts correspond with 1 identified physical unit at the time of contracting: each mining unit has an underlying piece of hardware with a specific serial number. We host and use those units to produce all the hashrate. No maintenance costs. Your miner will never fail.
Your contract will run:
— As long as you cover your hosting costs, you can mine with us for an undetermined period. There is no contract period, there is no limitation,
— Or until you decide to quit and to sell your Miner at our Internal Marketplace; then you can refund the sale price to your bank account.
Remember, Cyberian Mine doesn’t touch your coins: the mining rewards in BTC arrive directly on your personal wallet address from the BTC Network. We’re not an Exchange, and we don’t touch your coins.
When the 21 Million BTC supply gets produced, then the miners will keep on working, but will only get rewarded for their work from the transaction fees on the Network.
This should happen in 2140."
Context:
Miners do the work of processing new transactions and securing the network, a process for which they are rewarded with each new block added to the blockchain. The block reward is made of the transaction fees paid by users and the newly created bitcoins that are put into circulation. Currently, there are 6.25 new bitcoins issued with each block, but once every four years the reward is cut in half. This leads to a total supply of 21 million bitcoins, after which miners will only be rewarded transaction fees for doing the work.
Miners do the work of processing new transactions and securing the network, a process for which they are rewarded with each new block added to the blockchain. The block reward is made of the transaction fees paid by users and the newly created bitcoins that are put into circulation. Currently, there are 6.25 new bitcoins issued with each block, but once every four years the reward is cut in half. This leads to a total supply of 21 million bitcoins, after which miners will only be rewarded transaction fees for doing the work.
Telegram Question:
What are the measures (economic) for CM if the BTC price falls below 10,000 dollars?
What are the measures in this case? Can CM survive this period (rent of the hall, personnel costs, other running costs)?
What are the measures (economic) for CM if the BTC price falls below 10,000 dollars?
What are the measures in this case? Can CM survive this period (rent of the hall, personnel costs, other running costs)?
Max, Cyberian Mine CEO:
"That is a very good question.
Hypothetically, if mining per se dies, or if Siberia dies as a place to mine, there will be no more Cyberian, there will be no Mine. By definition. 🙂
But this chance is quite low. There are a few reasons for that:
Our running costs and expenses are rather small, most of the expenses are volume-dependent. I believe we’ll be able to survive any crypto-winter. We’re Siberians, after all. That’s our thing 🙂
Anyway, eventually, we plan to expand to different locations across the world, some of them will stay profitable for as long as Bitcoin is of any worth."
"That is a very good question.
Hypothetically, if mining per se dies, or if Siberia dies as a place to mine, there will be no more Cyberian, there will be no Mine. By definition. 🙂
But this chance is quite low. There are a few reasons for that:
- The system is self-balancing. If most miners are switched off, the difficulty will drop, hence those who have the most efficient machines will still mine profitably.
- Long-term miners. We have quite a few clients that mine always no matter what, even with "unprofitable" units. Because the overall result of mining depends more on when you sell your mined coins. And most patient ones wait out the winter, and then later from a perspective of new ATHs for them all this time they will have mined super-profitably.
Our running costs and expenses are rather small, most of the expenses are volume-dependent. I believe we’ll be able to survive any crypto-winter. We’re Siberians, after all. That’s our thing 🙂
- Siberia will always mine. Russia has immense electric capacity from soviet legacy hydropower stations, that otherwise would be wasted, so there’s a political and economical will to ensure mining is fine. Especially now, when it’s one of the ways to survive sanctions for Putin’s regime. They are already working hard on new regulations that are long overdue.
Anyway, eventually, we plan to expand to different locations across the world, some of them will stay profitable for as long as Bitcoin is of any worth."
Context:
The bitcoin network is designed to process a new block of transactions every ten minutes, on average. In order to compensate for the fluctuations in processing power contributed to the network, there is a difficulty target adjustment that occurs once every 2016 blocks. If more hashing power is contributed to the network, the difficulty goes up, making mining less profitable.
But in periods of price drops in bitcoin, some of the oldest miners stop being profitable and are forced to shut down. This leads to a decrease in hashing power and lower difficulty which makes the most efficient miners more profitable.
The bitcoin network is designed to process a new block of transactions every ten minutes, on average. In order to compensate for the fluctuations in processing power contributed to the network, there is a difficulty target adjustment that occurs once every 2016 blocks. If more hashing power is contributed to the network, the difficulty goes up, making mining less profitable.
But in periods of price drops in bitcoin, some of the oldest miners stop being profitable and are forced to shut down. This leads to a decrease in hashing power and lower difficulty which makes the most efficient miners more profitable.
Telegram Question:
A lot of locations in the USA will be cheaper in electricity costs than Cyberian Mine for the moment. Should we stick on the Siberian side? I believe the big American miners will have some wiggle room to at least float along the break even point. But with rising interest rates this will become increasingly harder, as the biggest operations most likely are heavily financed with credit and therefore the cost of said credit is a major factor in their cost calculation.
A lot of locations in the USA will be cheaper in electricity costs than Cyberian Mine for the moment. Should we stick on the Siberian side? I believe the big American miners will have some wiggle room to at least float along the break even point. But with rising interest rates this will become increasingly harder, as the biggest operations most likely are heavily financed with credit and therefore the cost of said credit is a major factor in their cost calculation.
Max, Cyberian Mine CEO:
"Thank you very much. Yes, the business model is rather robust, and it actually came to life through some iterations in the first years of CM. At first it was rather messy and very operationally inefficient. Over time we developed the platform along with our current approach step by step. Still, any system fails when such force majeure events happen. Hopefully, in the future we’ll be able to diversify such risks across different locations, countries, and continents. Then we’ll be unstoppable. :)"
"Thank you very much. Yes, the business model is rather robust, and it actually came to life through some iterations in the first years of CM. At first it was rather messy and very operationally inefficient. Over time we developed the platform along with our current approach step by step. Still, any system fails when such force majeure events happen. Hopefully, in the future we’ll be able to diversify such risks across different locations, countries, and continents. Then we’ll be unstoppable. :)"
Telegram Question:
I understood that the relationship between us customers and Cyberian Mine is not affected by the sanctions, as Cyberian Mine is a German entity. Still, I am wondering how it constitutes the relationship between Cyberian Mine and its suppliers. Could it become an issue for you to pay the local energy supplier, for example?
I understood that the relationship between us customers and Cyberian Mine is not affected by the sanctions, as Cyberian Mine is a German entity. Still, I am wondering how it constitutes the relationship between Cyberian Mine and its suppliers. Could it become an issue for you to pay the local energy supplier, for example?
Max, Cyberian Mine CEO:
"We pay for energy as a Russian legal entity, that should not be a problem. Only if something comes up regarding that CM Rus is fully owned by German CM. But as I see it, it’s too common to own even the biggest of local companies by some offshores or any other companies. I don’t think the Russian authorities would restrict the activities of all foreign-owned companies, as long as we pay taxes in Russia.
As for our relation with customers, CB (Central Bank) is in desperate need for extra liquidity, especially in foreign currency, and all their actions aim to get as much money from export. So we are helping reach their goals and I believe we’re on the safe side of things."
"We pay for energy as a Russian legal entity, that should not be a problem. Only if something comes up regarding that CM Rus is fully owned by German CM. But as I see it, it’s too common to own even the biggest of local companies by some offshores or any other companies. I don’t think the Russian authorities would restrict the activities of all foreign-owned companies, as long as we pay taxes in Russia.
As for our relation with customers, CB (Central Bank) is in desperate need for extra liquidity, especially in foreign currency, and all their actions aim to get as much money from export. So we are helping reach their goals and I believe we’re on the safe side of things."
Telegram Question:
My Bitcoin exchange is now testing their Lightning deposit/withdrawal functionality, it’s working great so far.
Will Cyberian Mine also start accepting Lightning payments for hosting costs? It would significantly lower transaction costs on hosting payments.
My Bitcoin exchange is now testing their Lightning deposit/withdrawal functionality, it’s working great so far.
Will Cyberian Mine also start accepting Lightning payments for hosting costs? It would significantly lower transaction costs on hosting payments.
Max, Cyberian Mine CEO:
"We’ve enabled Lightning Network options already for our BTCPay server, and we’re in the test phase so far. We are still facing a few technical difficulties at the moment, but we feel like we’ll be able to announce that new functionality opening very soon."
"We’ve enabled Lightning Network options already for our BTCPay server, and we’re in the test phase so far. We are still facing a few technical difficulties at the moment, but we feel like we’ll be able to announce that new functionality opening very soon."
Context:
Lightning network is a layer two solution that is developed on top of the Bitcoin blockchain. It’s designed to enable the faster and cheaper processing of a large volume of transactions while preserving security and privacy.
Lightning network is a layer two solution that is developed on top of the Bitcoin blockchain. It’s designed to enable the faster and cheaper processing of a large volume of transactions while preserving security and privacy.
The goal of these sessions is to be as transparent as possible so that our clients can make informed decisions. We are fully aware that these are troubling times in the real world, as well as in the crypto world, and want to work with our clients to best address their needs in this period of uncertainty.
If you have any questions, please feel free to ask us or other community members on our Telegram Community Channel, or jot a line in Support Tickets on the platform, we are always happy to help.