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Inside a Chinese Bitcoin Mine
- beamatronic 12y agoIs there any estimate of how much income this particular mine can produce, compared the the capital outlay and the ongoing costs?
- larrydag 12y agoUsing this calculator https://alloscomp.com/bitcoin/calculator https://alloscomp.com/bitcoin/calculator and using 575,000 Gh/s (is that right?) the calculator gets about $260k per month. With $60K for electricity and let's say $10k for misc. overhead I would guess they are clearing close to $190k per month.
- mrb 12y agoThis operation currently mines about $262k per month: 230e9 (each machine does 230 Ghash/s) * 2500 (# of machines) * 3600 (second/hour) * 730 (hour/month) / (2^32 (average number of hashes to solve a block at diff=1) * 19.8e9 (current Bitcoin difficulty)) * 25 (BTC/block) * 590 (USD/BTC) = $262000/month The article says their electricity bill is $60k per month. Subtract the 3 employees salaries, say $5k per month (this is China). So you are looking at a pure profit of $197k per month. Of course these profits are declining quickly over time; look how fast the difficulty has been rising: http://bitcoin.sipa.be/speed.png http://bitcoin.sipa.be/speed.png (logarithmic scale!) And this mine only represents 0.3% of the total network speed (about 170,000,000 Ghash/s). Edit: bellerocky: most exchange fees are < 1% to turn BTC to fiat. Edit: FigBug: roughly yes, but because the network is growing, there are more than 3600 coins mined per day (blocks are solved a bit more often than every 10min).
- bellerocky 12y ago> So you are looking at a pure profit of $197k per month. Not including liquidity issues and fees for turning that stuff into actual money, at least until you can start paying all your bills with bitcoin.
- Sambdala 12y ago$200k/month is not going to run you into liquidity issues.
- pyre 12y agoIt's $200k/month worth of Bitcoin. The 'liquidity' we're talking about here is converting Bitcoin into local currency that you can purchase things with.
- jafaku 12y agoAgain, not a problem.
- vectorpush 12y agoPossible, perhaps, "not a problem", seems pretty untrue. How exactly would someone go about cashing out $200k worth of bitcoin?
- anon4this1 12y agoI sold $800k US of bitcoin on bitstamp market earlier this year - i did it over 30 minutes and it dropped the spot price about $6
- venaoy 12y agoSell on an exchange. The big ones have a monthly trade volume of 100k+ BTC ($50+ million): http://bitcoinity.org/markets/list?currency=ALL&span=30d http://bitcoinity.org/markets/list?currency=ALL&span=30d Clearly $200k is a drop in the bucket for them.
- yutah 12y agothat doesn't include the cost of hardware but I guess it is negligible... and I thought mining was not profitable at current prices.
- miles 12y agoThe article says their electricity bill is $60k per month. Subtract the 3 employees salaries, say $5k per month (this is China). So you are looking at a pure profit of $197k per month. Three other significant expenses worth considering: rent/physical plant, hardware, and taxes.
- contingencies 12y agoIn most cases in mainland China, no tax is paid and cash is king. Only if you are a large, visible company doing business with other large, visible companies do you need to get formalistic. Even then, double or triple sets of accounts are normal.
- seanmcdirmid 12y agoI pay plenty of taxes. Heck, I pay the tax on my rent for a fapiao that gives me a tax benefit at work. The PRC is getting better about tax collection, though a lot of activity still goes on underground, especially those that are related to money laundering.
- FigBug 12y agoIf they have 0.3% speed, wouldn't it be expected that they get 0.3% of the coins per month? 3600 coins per day * 30 days * 588.41 BTC/UDS * 0.003 = $189831.60 USD gross per month?
- erikb 12y agoI think for this kind of work $5k is already too much for three Chinese workers. Each worker about $500 and maybe some fees for the living room and food. If you pay $2k it might be fine. If you pay $5k for such kind of 24/7 job in China you'll make a middle man very happy.
- jedc 12y agoHow much would they have paid for 2500 machines that can do 230 Ghash/s each?
- epynonymous 12y agoyou forgot to include capital expenditures, asics are expensive.
- pmalynin 12y agoI wonder about the effects of such establishments on the Bitcoin ecosystem as a whole. In theory, they're supposed to strengthen the network by providing more hashing power. But what worries me is the onset of mega-pools composed of such factories that will gain >51% of the network's computational power effectively gaining a monopoly on Bitcoin.
- bdcravens 12y agoThat's the one thing that keeps eating at me. Would it not be trivial for a large corporation or government entity to throw enough money around to accomplish this? The only response I hear is that the market will magically prevent this.
- yutah 12y agothey can change the client's code at any time (this might be a Bitcoin flaw)
- yutah 12y agofor example, they fixed critical bugs in clients updates... new bugs could easily be introduced (on purpose or not)...
- Estragon 12y agoThe hope I've heard from cryptocurrency enthusiasts is that they stay under the radar until they're too big for any traditional organization to overpower the network. It would certainly still be feasible for the US government to overpower the network, but it would not be cheap. The Minerscube 15 is due to ship next month, and will get you about 1.666 GH/s/$ [0]. The current speed of the bitcoin network is about 160,000 TH/s [1]. Duplicating this would cost about $96M, assuming you could get that many Minerscube 15 chips at that price, and assuming the infrastructure costs are trivial. So I would say it's still doable, but far from trivial. [0] https://en.bitcoin.it/wiki/Mining_hardware_comparison#ASIC [1] http://bitcoin.sipa.be/
- patio11 12y ago
- hodgesmr 12y agoGoogle Cache: http://webcache.googleusercontent.com/search?q=cache:ZwsYcfxQH8kJ:www.thecoinsman.com/2014/08/bitcoin/inside-chinese-bitcoin-mine/+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:ZwsYcfx...
- mandelbulb 12y agoGoogle doesn't cache images but archive.today does: https://archive.today/8EX79 https://archive.today/8EX79
- readerrrr 12y agoWhat is their internet connection, fiber? Surely they must have a special contract or multiple providers.
- brixon 12y agoI don't think Bitcoin is a big bandwidth user. A lot of little/small connections.
- vbuterin 12y agoThey also only need one connection; they can simply split the data across all the workers. They will need to send shares from all the workers if they're not solo mining, but even those are less than 100 bytes each, and if that becomes too much of a nuisance they can just solo mine.
- astrodust 12y agoFor an operation like this you'd need, at most, a couple of kilobytes per second. It runs as its own pool. Internally the traffic would be much higher. Running a wallet with a full block chain would take more bandwidth.
- VBprogrammer 12y agoI wonder how much effort they've put into optimisation? Small gains (1-2% rather than order of magnitudes) for these guys obviously mean a lot more than for any bedroom operation.
- b1db77d2 12y agoThey're ASIC processors. It's already set in stone (silicon, whatever).
- VBprogrammer 12y agoThat occurred to me while writing the comment, but I assume there are other factors which could be worth monitoring and improving, for example network topologies or even cooling methods.
- wmf 12y agoOTOH, every day earlier that you start mining is also worth money. This favors more conservative chip design. Now that conservative 28 nm ASICs are available, they may switch focus to optimizing the design.
- rightnow 12y agoThink how good we are at destroying the envirorment for nothing!
- misterbwong 12y agoQuite interesting. What's to stop the bitcoin pool from consolidating into a few key players as difficulty to mine progresses? There's no way that the miners are spending >250k/mo and pushing bitcoins back into the system. Wouldn't this hypothetically consolidate wealth in the hands of those with enough capital to create monstrous factories like this?
- angersock 12y agoThe cables snaking everywhere and the old hardware piles give me flashbacks to Serial Experiments Lain. All they're missing is some chrome and neon, and we're living the cyberpunk dream.