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The Coinsman visits another Chinese bitcoin mega-mine

One of many revealing images from the Coinsman’s blog post. Source: http://www.thecoinsman.com/2014/08/bitcoin/inside-one-worlds-largest-bitcoin-mines/

Earlier this month, bitcoin blog The Coinsman reported on the internal workings of a massive hashing center in Northeastern China, revealing key details on the operations of the mining operation. This week, the Coinsman visited another Chinese hashing center, this one being a “larger, even more secretive operation” than the last.

Bitcoin mining is clearly a booming enterprise across the globe, but this massive, four-building facility is something new. As the Coinsman noted: “This wasn’t a repurposed factory like the previous mine I visited… this was an entire facility being constructed just for bitcoin mining!”

According to the report, each warehouse-like space has around 3,000 square meters of floor space (9842.52 square feet). All told, the site will eventually have eight such buildings, all dedicated to creating a true behemoth of industrial bitcoin mining power.

How soon with it be complete? The answer is staggering, both from a logistical and safety perspecitve:

The mine operators told me that each warehouse took fifteen days to construct, and an additional ten days to fill up with hardware and get it all hashing away. The concrete was still drying on some of the buildings.

The buildings are clearly designed for bitcoin mining and little else, with a wall of industrial fans on one side and the opposite wall covered in what appears to be a cardboard-based evaporative cooling system. Not only is the system inexpensive, it’s also seemingly effective, keeping the internal temperatures of the hashing centers at 77 °F.

And inside? Racks and shelves filled with brand-new mining hardware. It seems that the center is equipped for both bitcoin and alt-coin mining, and has new equipment from a variety of ASIC vendors arriving constantly. The Coinsman estimates that the center may already have several petahashes of mining power under its command, and may already account for as much as 5% of the entire bitcoin network.

If you’ve been wondering why the bitcoin difficulty rate has been spiking of recent, look no further than China’s digital gold rush.

With cheap electricity and free cooling, has digitalBTC’s Iceland hashing center cracked the profitability puzzle?

Iceland’s Jökulsárlón, a glacial lake. Image source: https://www.flickr.com/photos/krmuir/142110701/

Bitcoin industry blog CoinDesk published a profile of Australian bitcoin-mining company DigitalBTC this week, revealing the company’s fiendishly cost-effective vision for the future of industrial-scale hashing centers. At the core of their plan: Low-cost renewable power, and a naturally cold climate.

The company is building its new hashing center at the Verne Global data center in Iceland. Powered entirely by geothermal and hydroelectric sources, the data center can take advantage of Iceland’s famously inexpensive electricity costs (roughly $0.10 per kWh). Given that Australian electricity can be hugely expensive (around $0.31 kW/h in 2012), those savings alone could be enough to justify relocating a mining operation.

DigitalBTC told CoinDesk that it expects to see an energy savings of around 40% following the center’s launch, with additional savings coming from cooling. Although relatively mild by comparison to deceptively named neighboring island Greenland, Iceland’s temperature is still exceptionally cool, ranging from an average of 55 °F in the summer to a bone-chilling 14 °F  in winter. For an industry that is increasingly reliant on effective cooling technology to keep warehouses of ASIC hardware operating efficiently, Iceland seems like a veritable mining Shangri-La.

Ironically, due to the country’s capital control laws and the policies of the Icelandic Central Bank, bitcoin and other cryptocurrencies are unambiguously illegal for transactions within Iceland. Iceland’s government, the Althing, has been harshly opposed to cryptocurrency adoption, most notably during the failed launch of the Auroracoin alt-coin earlier this year. With an increasing number of industrial-scale mining operations looking for low-cost options, and Iceland increasingly looking for outside investments, that attitude may be about to thaw.

Miners skeptical of CoinBau’s 0.19 joules/GH claim


CoinBau promotional image from: https://bitcointalk.org/index.php?topic=719143.0

Last week, the Wall Street Journal published a profile of Dresden-based mining hardware startup CoinBau AG and their plan to bring German engineering to the ASIC market. The company claims to have created a custom 28nm chip design that can achieve 0.19 joules per gigahash, an unheard of efficiency in an already cutting-edge industry. By comparison, today’s best-performing real-world ASICs operate at around 0.35 joules/GH.

The company is attempting to raise between $10 and $15 million to mass-produce the new chip, dubbed Wolfblood Extreme Efficiency, although it has admitted that testing of the design has been limited to simulations.

The ever-skeptical mining community has been questioning CoinBau’s claims since the company announced plans to fund chip development by selling shares of an eventual mining operation once the ASICs went into production. With no publicly testable version of their first-generation chip, and no plans to release the second-generation chip into the wild until funding is complete and their hashing center operational, CoinBau is asking investors to take quite a leap of faith.

Should CoinBau’s chips prove up to the task and find funding, the company estimates packing around 4.8 TH/s into a 19” case, and with a targeted energy consumption of 0.27 W/GH/s per case. While impressive in theory, this performance isn’t terribly far removed from several products already announced for Q4 of 2014, meaning that it might be standard performance by the time CoinBau could reasonably expect to test and release a product in mid-2015.

Demand for GAW Miners new Hashlet program briefly crashes Shopify

Over the weekend, GAW Miners launched their cloud-based mining platform Hashlet. The system, which allows users to buy, rather than lease, hashing power in a cloud-based mining operation, was expected to have a significant demand as it went live. What wasn’t expected was that demand would be so high for the service that it would temporarily crash GAW Miners’ payment service, Shopify.

Reports on a variety of bitcoin-focused news sites claim that the traffic was high enough to effectively create a “natural DDoS” attack on Shopify’s servers, causing the payment gateway to return errors on over 100,000 online stores. The problem was quickly resolved by Shopify’s tech staff.

Speaking to Cryptocoins News about the event, GAW Miners CEO Josh Garza said: “We use Shopify, the largest e-commerce system in the world.
And we literally just brought it to its knees! … We knew the response was going to be big, but we didn’t know just how big it’d get.”

Garza added: “We’ve been politely asked to give advance warning next time.”

While the demand for a new product like Hashlet is understandable, from a mining perspective it’s not entirely clear if the pay-per-GH/s model GAW Miners has created is any more profitable than traditional mining systems, or offers significant advantages over lease-based mining.

Spike in the bitcoin network hashing power indicates a return to double-digit difficulty growth


Image source: https://bitcoinwisdom.com/bitcoin/difficulty

After three consecutive single-digit difficulty increases, bitcoin miners are bracing for a return to steep growth in the hashrate and steadily diminishing returns for old hardware. If the current hashrate increase holds, the next difficulty increase will happen around August 19, and will increase roughly 20 percent. 

While not exactly welcome, this is a moderate increase by bitcoin standards. Considering that the network has gained nearly 30 Petahash of power since the last increase on August 8, and currently tops out at around 177.5 PH/s, the situation could certainly be worse. That said, with nearly a week until the next increase, those estimates could change quickly.

What’s to blame for the increase? A better question might be “Why has the difficulty been so low for the last six weeks?” Did we see the results of the bitcoin mining community holding its collective breath until the delivery of new ASICs? Or is the situation more complex and nuanced than that?

Clearly the changes have something to do with the delivery and activation of new mining hardware, and perhaps a boost in new investment in industrial-scale hashing centers. It’s also possible that a reshuffling of mining pools in the wake of the GHash.io 51% incident may have played a role.

For many miners, however, the time for speculation about the past is over. Instead, it’s back to the grind of pool selection, hardware upgrades and ongoing cost/benefit analysis.

The Coinsman offers a look inside a Chinese bitcoin mining operation

A Chinese hashing center. Image source: http://www.thecoinsman.com/2014/08/bitcoin/inside-chinese-bitcoin-mine/

Bitcoin-industry blogger Jason “The Coinsman” Smith recently posted a revealing look inside an industrial-scale bitcoin mining operation in northeastern China. Although understandably light on the specifics,  perhaps in part due to the Chinese government’s ongoing hostility to cryptocurrency in general, the photo essay shed some light on just how global the bitcoin community is. While hashing centers in the U.S. have gained considerable attention in the IT and bitcoin media, the barebones nature of the Chinese center is no less relevant to the growing digital currency infrastructure.

Smith wrote of the experience:

The first thing you notice as you approach the warehouse is the noise. It begins as soon as you step out of the car, at which point it sounds like massive swarm of angry bees droning away somewhere off in the distance. It becomes louder and louder the closer you get to the building, and as you step through the doors it becomes a deafening and steady roar; a combination of tens of thousands of tiny ASIC chips hashing away, and dozens of large industrial fans serving to cool down the “workers”.

According to Smith, even with all of those fans running the temperature was a constant 105° F, a situation even hobby miners can easily imagine. Littered with old, now-useless Avalon mining hardware, the former factory houses 2,500 machines, each “hashing away at 230 GH/s.” The power bill? Around $60,000 per month.

Smith calls the three operators of the hashing center the “heroes that keep our precious bitcoin network safe,” and clearly has a great deal of respect for the operation itself. The original post is well worth taking a look at, offering a glimpse into a side of bitcoin rarely considered, even by most miners.

Does Dogecoin’s new merged mining with Litecoin signal the start of alt-coin consolidation?


Image source: Doge assets

The alt-coin mining world has been abuzz this week after the recent announcement by the Dogecoin development team that the Scrypt-based crypto would be introducing auxiliary proof of work (AuxPoW) in the next core update. While many of the discussions have been about the impact of a hard fork on a coin that is already experiencing a decline in network power, many have focused on the upshot: Merged mining with other Scrypt-based coins, such as Litecoin.

Although AuxPoW won’t directly connect LTC and DOGE, it does enable a single miner to hash away on a variety of Scrypt pools at the same time, significantly increasingly the odds of seeing some kind of reward. This is great for ailing blockchain networks like Dogecoin’s, providing incentive for miners to contribute and pushing back the threat of a 51% attack.

This does, however, beg the question: If all of these AuxPoW-enabled coins are mining together, isn’t this a step towards alt-coin unification?

Are we seeing the first steps towards a new crypto paradigm aligning the major flavors of Scrypt coins into a new, more powerful network that is AuxPoW-Scrypt-coin in all but name? Could this de facto network actually make a viable mechanism for all those proposed, non-currency blockchain-using startups? Will this rising mega-alt-coin network compete with the bitcoin network, or complement it?

For established coins like LTC and DOGE, this may not be a bad thing. Although both have established niches (China and tipping, respectively), neither has gained ground against the juggernaut that is global bitcoin adoption. As Litecoin creator Charlie Lee told CoinDesk, the Dogecoin network’s adoption of AuxPow means that the community “can focus on what dogecoin does best (tipping, donations, wow) instead of worrying about defensive mining and network security.”

GHash.io claims nearly $250 million in BTC mined in first year

It may seem strange, given its now-significant impact on the bitcoin mining community, but BitFury-backed mining pool GHash.io launched only a year ago. In that time, the pool has drawn both immense praise (for providing a stable payout system, top-notch merged mining and modern mining dashboard)  and severe criticism (for unapologetically seizing the majority of the bitcoin network, crashing the price and creating unambiguous proof that a 51% attack was possible). Love them or hate them, there’s no ignoring the force that GHash has become.

A new post on the official blog of GHash parent company CEX.io puts the pool’s impact on the bitcoin network into terms almost anyone can understand: Dollars and cents. Since its launch on August 3, 2013, GHash has created over 413,750 BTC, or just under $250 million.

By any measure, that’s a lot of bitcoin. For perspective, that’s 382,760,564,258,698,078,191,616 hashes, solving over 150,000 blocks and confirming over 6 million transactions. All that hashing has taken its share of electricity, consuming 159,519,788 kilowatt hours in the process. No matter how you look at it, GHash,io is a behemoth.

Who is doing all that mining? If you’re reading this post, it may well include you. The pool claims to have over 220,000 registered users.

After testing, Bitmain reduces hashing power estimate for S3

Mining hardware maker Bitmain found themselves in an embarrassing situation recently, as hashing power estimates for their much-anticipated Antminer S3 had to be lowered by nearly 8% following pre-shipping tests. The company had claimed that the new generation of their popular ASIC line would deliver a very respectable 478 GH/s, but testing revealed that not all of the S3’s DC/DC modules were stable enough to deliver that speed.

Bitmain has reduced that estimate down to 441 GH/s, which is claims the chips are stable enough to deliver consistently. The company has also said that it will be possible to overclock the S3, allowing for the previously advertised hashrate, but has yet to release details for doing so.

The S3 is currently priced at 0.64 BTC, and those who pre-ordered the units are being offered a 7.7% refund or a 10% discount on their next order.

In response, many miners have noted that the S3’s power use, while an improvement over many current-generation ASICs, may not actually be as cost efficient as simply undervolting the S1. With a new S3 priced at roughly $375, and two used S1s selling for the same price or less, Bitmain’s biggest competitor might end up being its own product’s secondary market.

ScryptGuild closing down, BTC Guild may be next

Image source: https://www.flickr.com/photos/brownpau/

Earlier this week, popular auto-switching alt-coin mining pool ScryptGuild announced it will be ceasing operations on September 27. While not one of the larger pools in the scrypt-mining community, the group has a significant user base, many of whom expressed shock and disappointment at the closure. Pool administrator “eleuthria” gave little explanation for the closure, noting simply that the pool’s code was “running suboptimally” and “not sustainable,” and that the time needed to rewrite the code to automatically switch to newer and more-profitable alt-coins was significant.

Users will be able to withdraw their current account balances in BTC until September 20.

It’s hard not to read between the lines in the announcement, which suggests that the pool had become less profitable since its launch in February. Alt-coins in general have struggled relative to bitcoin in the last several months, and a new generation of powerful and expensive Scrypt algorithm-specific ASIC miners may be discouraging hobbyist miners from entering the marketplace.

In related news, major bitcoin mining pool BTC Guild also hinted that it might be closing in coming months due to restrictions imposed by the “BitLicense” regulations proposed New York Department of Financial Services (NYDFS). BTC Guild’s operators issued a statement last week noting compliance with the rules would be “impossible to do legally without obtaining significant personal information on all users” and would impose “significant financial costs which would exceed the amount of money the pool has generated since inception.”

BTC Guild is one of the largest bitcoin mining pools, and currently accounts for over 7% of the total network hashrate. The effects of its closure would be difficult to predict, although it is likely that most of its current miners would join smaller pools. BTC Guild has since retailed legal counsel in preparation for the NYDFS’s final version of the rules.