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Inside a Chinese Bitcoin Mine

thecoinsman.com

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Re: Inside a Chinese Bitcoin Mine

#11

Post by yutah »

bdcravens wrote: post #8
pmalynin wrote: post #3

I 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.

That'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.

they can change the client's code at any time (this might be a Bitcoin flaw)

Re: Inside a Chinese Bitcoin Mine

#12

Post by miles »

mrb wrote: post #6
beamatronic wrote: post #2

Is there any estimate of how much income this particular mine can produce, compared the the capital outlay and the ongoing costs?

This 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 (th…

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.

Three other significant expenses worth considering: rent/physical plant, hardware, and taxes.

Re: Inside a Chinese Bitcoin Mine

#13

Post by vidarh »

yutah wrote: post #10
mrb wrote: post #6

Earlier quoted context omitted.

This 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 (th…

that doesn't include the cost of hardware but I guess it is negligible... and I thought mining was not profitable at current prices.

It's not profitable for people with expensive electricity. Location matters greatly.

Re: Inside a Chinese Bitcoin Mine

#14

Post by Estragon »

bdcravens wrote: post #8
pmalynin wrote: post #3

I 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.

That'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.

The 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/

Re: Inside a Chinese Bitcoin Mine

#15

Post by Sambdala »

bellerocky wrote: post #7
mrb wrote: post #6

Earlier quoted context omitted.

This 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 (th…

> 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.

$200k/month is not going to run you into liquidity issues.

Re: Inside a Chinese Bitcoin Mine

#16

Post by patio11 »

bdcravens wrote: post #8
pmalynin wrote: post #3

I 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.

That'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.

Subverting the entire Bitcoin network is almost certainly not as much as a 1 ACE problem. (Aircraft Carrier Equivalent)

Re: Inside a Chinese Bitcoin Mine

#18

Post by wmf »

yutah wrote: post #10
mrb wrote: post #6

Earlier quoted context omitted.

This 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 (th…

that doesn't include the cost of hardware but I guess it is negligible... and I thought mining was not profitable at current prices.

Mining tends to not be profitable if you pay retail prices for ASICs, but if you make your own ASICs it's still pretty profitable.

Re: Inside a Chinese Bitcoin Mine

#20

Post by yutah »

yutah wrote: post #11
bdcravens wrote: post #8

Earlier quoted context omitted.

That'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.

they can change the client's code at any time (this might be a Bitcoin flaw)

for example, they fixed critical bugs in clients updates... new bugs could easily be introduced (on purpose or not)...
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