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Inside a Chinese Bitcoin Mine That's Grossing $1.5M a Month
- GlickWick 12y agoVery misleading title. It's grossing $1.5M per month. You still need to subtract operating costs, which will be substantial in a bitcoin mine. I'm sure power/land/cooling/etc is cheaper in rural China than many other places in the world, but there's no way it's free.
- wgx 12y ago$80,000 per month electricity bill is mentioned in the video. Sheesh.
- ShannonSofield 12y ago$80K per site. They are running six sites = $480K
- Cthulhu_ 12y agoNot to mention they should've just mentioned 4000 BTC/month, instead of matching it with an USD price. Bitcoin is a currency, its USD value is highly volatile.
- BillinghamJ 12y agoBut also that changes as the difficulty factor increases.
- downandout 12y agoLet's not forget the likely multi-million dollar hardware investment as well. They have 3,000 ASIC miners (although investing in mining equipment that can be used for mining multiple currencies is far better imo than simply buying Bitcoins).
- unreal37 12y agoIt's what they were making per month in October 2014. How is that misleading? Their costs don't appear to be that substantial if you watch the video.
- sctb 12y agoThanks, we updated the title to be less misleading. The article states, "... generated 4,050 bitcoins a month, equivalent to a monthly gross of $1.5 million".
- giarc 12y agoIt's not really misleading since they say "grossing" 1.5M per month.
- andrewchambers 12y agoThey changed the title, it used to say "making".
- aptwebapps 12y agoI propose a convention of quoting the existing title when complaining about it so that later readers know what you are talking about. Maybe a similar one for complaints about the other comments, too, although that's harder. Need snapshots, really.
- lmm 12y agoWhat we need is a moderator action log like that on lobste.rs, or even a simple (edited) indicator on article titles. At the moment the titles magically change under our feet with no visibility, and everyone gets confused.
- giarc 12y agoI agree with you. Even a simple asterisk like reddit has with edited comments would at least indicate that it's been changed. Perhaps a hover over the title shows the last known title?
- hristov 12y agoAnd with current bitcoin prices they are now down to less than a million per month. These are the perils of bitcoin mining.
- deleted 12y ago[deleted]
- flatline 12y agoWas making $1.5mm, in October of last year. There are some off the cuff calculations in the reddit thread [0] that indicate the same setup would currently be netting only about a tenth of that amount now. 0 - http://www.reddit.com/r/Bitcoin/comments/2v02n9/life_inside_a_chinese_bitcoin_mine/codf387 http://www.reddit.com/r/Bitcoin/comments/2v02n9/life_inside_...
- etrain 12y agoBased on the video, it looks like these guys likely swap out for the newest equipment as soon as it makes sense economically. If I were making such an investment, I'd think carefully about the rate of computational depreciation (which is predictable) and probably hedge on the price of power. The only unpredictable thing in this setup is the price of bitcoin, which I believe they're extremely bullish on long term. You could probably figure out a way to hedge that, too, if you could find someone to take the action.
- big_paps 12y agoWhat a depressing business. Making money out of noise, and warm air ...
- criloz2 12y agoWhat a naive comment...
- LunaSea 12y agoExplain how he's wrong ?
- imaginenore 12y agoAnd processing transactions. And increasing security.
- raverbashing 12y agoIncreasing security how? It seems a pointless waste of electricity and human effort, but justifiable with the current bitcoin prices.
- mcintyre1994 12y agoThe security of the whole system depends on no one entity controlling >50% of the hash rate in the whole network (that is, the energy being used to mine). Further attackers with below 50% can impact the blockchain with a lower probability of success. More information better written at [0] and [1], but they'd be able to reverse their own transactions (and double spend), and also stop any other transactions being confirmed. So essentially these miners are making it more difficult for anybody to attack the blockchain, thus they're providing security. [0] http://bitcoin.stackexchange.com/questions/658/what-can-an-attacker-with-51-of-hash-power-do http://bitcoin.stackexchange.com/questions/658/what-can-an-a... [1] https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_...
- tacojuan 12y agoThe thing that interested me the most about this video was when they interviewed him on his thoughts of the future of bitcoin. He didn't seem all that enthusiastic about bitcoin's prospects.
- cheez 12y agoA true businessman
- 1053r 12y agoSo since this video was made, the price has gone down by approx 35% and the difficulty has gone up by approximately 17%, for a total adjustment in revenue of about 50%, unless they added more machines, or upgraded their current ones. That's pretty brutal. Ultimately (and not long from now if these rates of adjustment continue), mining will be a commodity business with a very small profit margin. When you consider that there are uses for low grade heat (like home and office heating), once the ASICs catch up with Moore's law, it seems likely that the profitability will be slightly negative for someone trying to run this kind of business. (As another reason, there will probably be people who have access to basically free electricity that would have been wasted, and just need to amortize the cost of the ASICS). However, because mining is a zero sum game, we can conclude that the profitability of mining was very high at the time of the making of this video, or else the margins wouldn't have been able to drop as much as they did. This says that a rational large investor would choose to put their money into mining rather than directly buying bitcoins, if they were interested in getting into this space. That's probably why the price has been falling since the peak early last year.
- jonas21 12y ago> there will probably be people who have access to basically free electricity that would have been wasted, and just need to amortize the cost of the ASICS That's a really interesting point. I wonder if we'll see utility companies get into bitcoin mining as a way of profiting from their excess capacity during non-peak times.
- beggi 12y agoI don't quite see ConEd getting into Bitcoin mining :) However, it's possible for an entrepreneur to get discount off electricity during non-peak times.
- petercooper 12y agoHigh frequency traders have colocated their machines directly inside stock exchanges to take advantage of the low time latency. I wonder if there's any potential to be had in power stations offering colocation services for customers with very specific uses for either "low latency" excess power or much cheaper power (since it hasn't had to be transported anywhere or had any losses).
- slester 12y ago"the 400 bitcoin millionaires with at least BTC2,000 hold 40% of bitcoins" from https://bitcointalk.org/index.php?topic=316297.0 https://bitcointalk.org/index.php?topic=316297.0 This is the main reason I'm highly skeptical of bitcoin, not to mention wildly fluctuating value, little if any privacy gains (http://www.forbes.com/sites/timothylee/2011/07/14/how-private-are-bitcoin-transactions/ http://www.forbes.com/sites/timothylee/2011/07/14/how-privat...), and a host of other problems.
- deleted 12y ago[deleted]
- ForHackernews 12y agoWhat? Talk about moving the goalposts. This argument doesn't make any sense at all. Following your same logic, the Segway was a rousing success: It might not last forever, but thousands of tourists and mall cops around the world ride it every day. To put another way: I don't think anyone was skeptical that bitcoin was a clever (if terribly inefficient) technical demonstration, and that it has some limited utility for facilitating the purchase of illegal goods online. What we've all been skeptical (and rightly remain skeptical) of are the grandiose claims made by bitcoin believers: That it will revolutionize the global economy, that it will displace the USD as the global reserve currency, that it is The Future of Money (tm), etc.
- deleted 12y ago[deleted]
- mehwoot 12y ago0.30 to 1200.00 within just 5 years is already more grandiose than any of us could have ever imagined. Not really, given the claims. I've seen people predicting values of $10,000+ for bitcoin years ago. If it actually does become the default currency, and there are only 21 million available, it's not hard to imagine very high valuations, and people do.
- jpatokal 12y agoAccording to Reddit, the mine in question has been shut down already: http://www.reddit.com/r/Bitcoin/comments/2v02n9/life_inside_a_chinese_bitcoin_mine/codps2q http://www.reddit.com/r/Bitcoin/comments/2v02n9/life_inside_...
- pstrateman 12y agoThat isn't surprising. You can deduce from the video that their utility rate is ~$0.09/kWh. That's substantially higher than other major bitcoin miners are paying.
- swatow 12y agoyeah, he describes in the video how Dalian is a nicer location than the other buildings they operate. I imagine given the lower profits they could no longer afford the luxury.
- kitcar 12y agoOne comment which I haven't seen come up much is bitcoin mining doesn't actually have to be "profitable" to be useful. For example, if you live in a country that has restrictions to prevent capital flight (i.e. extra taxes on money transfers to foreign accounts, etc...), ignoring the potential criminality implications, mining bitcoins at a "forex loss" and transferring those bitcoins may still be a better net financial option than just transferring the money in whatever your native currency is. I believe China used to have some pretty significant restrictions to prevent capital flight - I wonder if that has something to do with this mining operation.
- johnloeber 12y agoThis is actually a remarkably good point. The key concept here is that Bitcoin mining -- even at a "Forex loss" -- will essentially trade electricity for Bitcoins, which can be used to purchase other currencies. Depending on what the miner values their local currency at, this can still make financial sense. As an example: suppose you are a resident of country X, and you have 1000 XUnits that are valued at 1000 USD, but there are capital flight restrictions such that you can exchange your 1000 XUnits for only 300 USD. And suppose that you need to exchange your XUnits to USD, for whatever reason. You then use your XUnits to buy electricity and mining hardware, and generate Bitcoins, and sell them for 750 USD. Note that you could try to do the same with e.g. steel, barrels of oil, or widgets, but with hardware you'd be subject to import/export taxes, and the entire operation would have much higher overhead costs (comparatively, setting up a mining farm is pretty cheap).
- narrator 12y agoIf you think about it, it's basically a tariff and tax free way to export electricity to any part of the globe.
- aptwebapps 12y agoI think that's taking the abstraction a step too far. ;)
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- shubb 12y agoI wonder if they get new ASIC designs before they ship to consumers. I'm remembering buying mining ASIC and then actually getting shipped them much much later. We thought at the time that they were being held back and 'burned in' at a big mine run by the manufacturers mates. This would explain why they are so hush hush about where the devices come from... If the ASICs already bought and shipped to consumers later, they would be effectively free! Alternatively they might be using the low chips that failed QC and never shipped - they might burn out eventually but if you are running them yourself you can be prepared for that.
- wildchild 12y agoBTC is still very overvalued if there is still surplus profit.