At present, Filecoin mainnet has gone live for nearly 2 months. Everything is unfolding as it should, so far the progress looks promising. However, miners and investors are still facing numerous challenges.
Mining companies suffered major loss
Since Filecoin mainnet went live, many mining companies have been struggling. Some of them were even sued by the customers who purchased mining power from them. They failed to please neither their customers nor Filecoin.
Once miner’s reputation is undermined by loss of storage files and collateral tokens caused by faulty hardware or technical issues, they will have to pay a higher price for cloud storage space so as to build a distributed file system. The maintenance costs of broadband and server room will also increase.
- Perhaps some mining companies lost their faith in Filecoin. They stopped mining to cut the loss. They also disposed of sold servers(??). After these changes, users would have to purchase collateral tokens by themselves.
- Some mining companies sold too many mining machines. They cannot fulfill their promised payout. If the sale continues, they will run out of fund.
- Some companies does not have enough technical capability to meet the industry standards. Hence it is best for them to get out early.
- Before Filecoin mainnet came online, there were various scams. Some people paid for mining machines but never actually receive them. Some dodgy sellers simply disappeared. The launch of the Filecoin mainnet led to the discovery of more scams such as the ‘snail interstellar miner‘ fraud. Numerous victimized investors were left to fight for their rights.
- Some mining companies split off their sold mining machines to unknown overseas companies so as to circumvent risks.
Miners cannot recover their money. Reality doesn’t meet expectation
- For miners the biggest challenge is that they have to purchase both mining machines and upfront collateral tokens. This renders the mining activity susceptible to coin price fluctuations on the secondary market. Mining machine’s pricing will also be affected.
- Although traditional financing tools are versatile, they also have long pay-back periods. Miners are most concerned by the lack of capital liquidity. Their purchase decisions are also affected.
- With the increase of Filecoin’s value and price, the entry barrier and the participation cost of Filecoin mining will continue to grow.
Filecoin cloud mining becomes the primary option
In order to mine Filecoin, miners must possess ‘effective storage power’. The more effective storage power a miner has, the more likely he will win the vote. Correspondingly the miner will be more likely to obtain block reward and hence generate more mining incomes.
- The ‘mining power’ sold by some dodgy brokers are actually ‘storage space’ or ‘cloud space’. These are not ‘effective storage power’. Many users failed to tell the difference. They fell victim to the trick and suffered a loss.
- In many scenarios, users cannot obtain an exact figure of the percentage of the cloud mining power nodes they purchased versus total mining power. Therefore they cannot calculate their income. They can only rely on the estimated figures provided by the brokers. There is little transparency in mining power income.
- After users purchase mining power from the brokers, they cannot transfer or trade the mining power. There is a shortage of alternative financial services. Mining power has poor liquidity. Users cannot transfer their asset or sell the investment early. Therefore a large amount of capital is trapped and thus cannot be fully utilized.
DMEX helps both miners and brokers to create a win-win situation
Recently, the decentralized cloud mining power financial service platform DMEX has been promoting creative investing methods by utilizing financial tools. DMEX tokenizes effective mining power into NFT, thereby improve capital liquidity and lower financial service costs.
DMEX platform uploads all key data to Ethereum smart contract, including the total mining power of a mining farm, actual mining yield and mining powers purchased by users. The smart contract also automatically distributes user incomes. The blockchain technology has made the data fully transparent. Investors can avoid hidden commercial traps or the grey area concocted by centralized operator.
DMEX platform adopts the DAO governance mechanism. It has a set of strict scrutiny rules and income distribution procedures. Every user, investor or broker who holds the platform token will be able to participate in the decision making process and enjoy the platform benefits. DMEX creates a fair and transparent platform and a win-win situation for all parties.
We believe that the current pitfalls of the mining industry will be gradually addressed over time.