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Inside One of the World's Largest Bitcoin Mines

thecoinsman.com

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Re: Inside One of the World's Largest Bitcoin Mines

#91

Post by pests »

tveita wrote: post #88
latchkey wrote: post #64

Earlier quoted context omitted.

I thought this was a pretty good analysis: https://www.academia.edu/7666373/An_Order-of-Magnitude_Estim... tl;dr: "This means that we can expect our current industry best efficiency of 0.733 W/GH to reach 0.0000000873804 W/GH – so even the most ignorant, arrogant, narrow-minded and pseudo-intellectual critics and arm-chair academics should note that in the event that Bitcoin scales to a million times its current size…

Moore's law is in effect right now, and yet mining keeps getting more expensive. The exact number of hashes per joule is irrelevant since the work being done isn't useful. This is purely a competition about spending the most. If hashes get 1000 times cheaper, they'll do 1000 times as many.

So maintaining the integrity of the blockchain isn't useful ?

Re: Inside One of the World's Largest Bitcoin Mines

#92

Post by bunderbunder »

nmjohn wrote: post #31
bunderbunder wrote: post #19

Earlier quoted context omitted.

The vast majority of fiat currency in circulation isn't in the form of banknotes or coins. (Gold isn't really a currency anymore, so let's ignore that one.) It exists electronically. In a fractional-reserve system, it's also mostly created by its users, but that happens as a by-product of normal economic activity. And it takes a lot less computer work per economic transaction for a fractional-reserve system to create…

You are completely ignoring the issue. Just because a majority of money exists electronically doesn't mean a lot of money isn't spent on paper and metal versions. The United States alone spends tens of millions of dollars a year on producing pennies - beyond the face value of the pennies. So the entirety spent on mining bitcoin is not too far off from what one country spends just on minting pennies.

No, I'm trying to focus on the forest instead of the trees.

It's true, pennies are a horrible waste. It costs almost $0.02 to make one, and nobody even likes them very much, but the mint still churns out billions of the things ever year. That should probably stop.

But overall, coinage is a tiny fraction of the overall dollar economy. And Bitcoin isn't really comparable to coinage, anyway, since BTC is not a fast, convenient, anonymous, peer-to-peer mechanism for exchange that's appropriate for use in small transactions. Compared on that level, BTC seems sub-optimal long before we start worrying about details like energy efficiency of production.

What BTC really compares to is a currency in general, such as the dollar. There BTC at least has a chance of comparing on a vaguely level playing field. And at that scale, pennies are insignificant.

Re: Inside One of the World's Largest Bitcoin Mines

#93

Post by bunderbunder »

latchkey wrote: post #64
CatsoCatsoCatso wrote: post #3

This just strikes me as a colossal waste of energy & time. I understand that there may be good profit in doing it, but that doesn't shirk off any of my feelings.

I thought this was a pretty good analysis: https://www.academia.edu/7666373/An_Order-of-Magnitude_Estim... tl;dr: "This means that we can expect our current industry best efficiency of 0.733 W/GH to reach 0.0000000873804 W/GH – so even the most ignorant, arrogant, narrow-minded and pseudo-intellectual critics and arm-chair academics should note that in the event that Bitcoin scales to a million times its current size…

According to the third table, corruption, money laundering, and the black market are negligible in the Bitcoin economy.

Fascinating.

Re: Inside One of the World's Largest Bitcoin Mines

#94

Post by UweSchmidt »

imaginenore wrote: post #76
Sambdala wrote: post #13

Earlier quoted context omitted.

3,600 * is probably a pretty good approximation of the daily cost. Since Bitcoin is currently ~$500, that's ~$1.8mm per day.

It's not a cost. They spend electricity and get money back. It's basically an indirect currency exchange. They obviously do it because the resulting conversion rate is slightly better than the market rate.

No doubt people get "money back". Contrast this however with a system where "numbers" (= the new "Randomcurrency") were randomly, or evenly distributed among the general population, which could be done basically for free.

Compared to that, there is a cost, if you will. n powerplants had to be built, or x tons coal had to be burnt to do all the calculations. Does that make sense?

Re: Inside One of the World's Largest Bitcoin Mines

#95

Post by TeMPOraL »

baddox wrote: post #87
TeMPOraL wrote: post #80

Earlier quoted context omitted.

Sure, but the difference is well pointed out by @thedaveoflife. The sandwitch vendor doesn't care about me being not hungry, and they would gladly switch to selling toilet paper to me if it was more profitable to them. Likewise, the miners don't give a damn about blockchain security. They have this black box - put electicity in, get money out. They don't care about what's going on inside. If the black box produced sa…

I still don't see why this is a problem. Even if all the miners don't actually care that they're securing the blockchain, the blockchain still gets secured (assuming there's not a design flaw in Bitcoin, but that's a separate issue).

I believe I understood your comment [0] as saying more-less "bitcoin miners work to maintain blockchain security; monetary reward is just thrown in to sweeten the pot", which would not be true because the miners only care about that monetary reward. After re-reading the entire thread I now think you just wanted to say something like "miners get paid to keep the blockchain working, the same way e.g. plumbers get paid to keep the plumbing working", which would be something I of course agree with. Therefore, I apologize for arguing against a point you didn't make in the first place.

[0] - https://news.ycombinator.com/item?id=8243425

Re: Inside One of the World's Largest Bitcoin Mines

#96

Post by TeMPOraL »

dllthomas wrote: post #85
TeMPOraL wrote: post #83

Earlier quoted context omitted.

The difference is that tptacek won't claim that he's doing it because he cares about your software; he will say he's doing it to earn money. He will definitely try to do it well to maintain his opinion of a professional, but he won't be pretending he does something altruistic. I'm not saying doing things for money is inherently bad. I'm just saying, let's call things what they are.

I still don't see where the claim of altruism comes in. We're labelling things for their effects. Matasano secures your software in exchange for dollars. I'm currently making software respond quickly to network events in exchange for dollars. The sandwich vendor makes me a sandwich in exchange for dollars. Calling us all "dollar miners", simply because we're doing it mostly for the dollars, is not really "calling thi…

I think I got the wrong sentiment from baddox's post and have been arguing against the "claim of altruism" that wasn't really made by anyone. See https://news.ycombinator.com/item?id=8244741.

Re: Inside One of the World's Largest Bitcoin Mines

#97

Post by wilsonfiifi »

gwern wrote: post #35

> They keep the machines cool with an evaporative cooling system. Its basically a durable paper product that looks like the wavy corrugated part on the inside of cardboard. Water is pumped to the top and flows down, and the fans blowing outwards on the other side create negative air pressure, drawing fresh air through the holes and cooling it. The cardboard cooling system looks pretty interesting, but I wonder how du…

It's the same system/technology used by Port-A-Cool http://portablecoolers.com/models/PAC2KCYC01.html and this is one of their promo videos https://www.youtube.com/watch?v=WoI1BDEiawY

I was searching online for cooling systems that could run on solar power and "evaporative cooling" seemed like a good candidate. I was looking for a "whole house cooling system" though but these folks come up in the search results.

Re: Inside One of the World's Largest Bitcoin Mines

#98

Post by dllthomas »

TeMPOraL wrote: post #96
dllthomas wrote: post #85

Earlier quoted context omitted.

I still don't see where the claim of altruism comes in. We're labelling things for their effects. Matasano secures your software in exchange for dollars. I'm currently making software respond quickly to network events in exchange for dollars. The sandwich vendor makes me a sandwich in exchange for dollars. Calling us all "dollar miners", simply because we're doing it mostly for the dollars, is not really "calling thi…

I think I got the wrong sentiment from baddox's post and have been arguing against the "claim of altruism" that wasn't really made by anyone. See https://news.ycombinator.com/item?id=8244741 .

It was thedaveoflife who made explicit his understanding that a label of "transaction security auditing" implied altruism. He's not really answered queries as to how that's the case.

Re: Inside One of the World's Largest Bitcoin Mines

#99

Post by at-fates-hands »

WayneS wrote: post #79
at-fates-hands wrote: post #50

Earlier quoted context omitted.

I couldn't agree more. The overhead must be staggering. New construction, all that equipment to purchase, set up and keep running, the amount of electricity it takes to power the whole thing, monthly warehouse rent. This has to be a loss leader, I see no way this is a positive ROI anywhere in the near future.

You understand it is making $90k/day revenue?

What's cost of the new construction? Maybe 5-10 million? What's the upfront costs of all the miners? Maybe another 2-3 million? What's the electricity costs to run the machines per month? Maybe a few hundred thousand?

Even at 90K/day, this guy has a gigantic hole to crawl out from under before he starts to sniff a profit. That's assuming that 90K is a constant for the next 6-8 months. What if his production slows down or the market swings down in a day and he loses a few million?

BTC is anything but stable, and any way you look at it, it's a huge risk.

Re: Inside One of the World's Largest Bitcoin Mines

#100

Post by tveita »

pests wrote: post #91
tveita wrote: post #88

Earlier quoted context omitted.

Moore's law is in effect right now, and yet mining keeps getting more expensive. The exact number of hashes per joule is irrelevant since the work being done isn't useful. This is purely a competition about spending the most. If hashes get 1000 times cheaper, they'll do 1000 times as many.

So maintaining the integrity of the blockchain isn't useful ?

Mining 1000 times more hashes doesn't maintain the integrity any better than the current situation.
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