Bitmain Launches Three Strategies to Lower the Entry Barrier for Miner Buyers
Bitmain’s Jihan Wu launches three strategies of “installment payment”, “option hedging” and “joint mining” to lower the threshold for buyers.
Speaking at annual customer appreciation meeting, Jihan Wu, CEO of Chinese crypto miner manufacturer Bitmain are trying to teach crypto miners to hedge risks and turn other mining farms into Bitmain’s franchisees.
On the afternoon of December 7, Jihan Wu stood at the closed-door meeting in Chengdu with a relaxed expression. Now, he is no longer haggard, Wu introduces himself as “The chairman and CEO of Bitmain” with a high-profile. To this day, Micree Zhan seems to be out of the game.
According to the introduction, the installment payment mode launched by Bitmain allows a minimum down payment of 50% as long as more than 100 mining machines are purchased. If more than 5000 mining machines are purchased, the buyer only needs to pay 20% down payment, and the remaining payment only needs to be paid 7 days before delivery.
The installment payment mode objectively reduces the threshold for distributors to get more stock in and the pressure of cash flow as Antminers are generally futures with an all-cash offer, and the delivery time is often delayed by 1 to 2 months from the order date which causes great capital pressure for the buyers.
But the move is also understood as a kind of concession for Bitmain to speed up its market share capturing.
In order to prevent a dump in the Bitcoin price, Bitmian said it would purchase options products from Matrixport to help customers resist the risk of price dumping. All orders over 10 million Chinese yuan can obtain 1% of the total amount of option.
Assuming 1000 sets of S17 Pro mining machines with a 53T computing power are ordered, the unit price of each S17 Pro is 11130 Chinese yuan, and the total order amount is 11113000 Chinese yuan, 1% * 11113000 = 111330 Chinese yuan is the Put Options (PUTS) that order can obtain.
The option product provided by Bitmain is called “Bitcoin 2020 / 3 / 27 35000 CNY Put Option”. In short, if you hold one of the option, on the exercise date of March 27, 2020, you can sell one bitcoin for 35000 Chinese yuan. The value of this Put Option lies in that the more bitcoin price dumps, the larger your profit margin will be. For example, when the price falls to 20000 Chinese yuan, you will gain 15000 yuan when you exercise. But if Bitcoin price exceeds 35000 Chinese yuan, the Put Option is canceled.
Bitmain’s move is actually a double shot. Because this option product can not only reduce the psychological threshold for customers to buy mining machines, teach miners to use financial tools to hedge risks, but also effectively promote the new company Matrixport to the public.
Besides, Bitmain also launches a brand-new ” one-year joint mining mode”, in which Bitmain provides S17 series mining machines and pays the annual electricity charge (0.35 Chinese yuan/kW·h). The partners should provide the mining farm, maintenance personnel and other infrastructure.
The income during the cooperation period is settled on a monthly basis, which is distributed as 25% for the partners and 75% for Bitmain. If the revenue cannot offset the electricity charge, no distribution will be made.
Bitmain’s move saves the cost of self-built mining farms and quickly deploys machines to the production. Bitmain has changed its usual arrogant posture, whether it is “installment payment” or “option hedging” or “joint mining”, all is to lower the user threshold and firmly bind users for the long term.