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Which farms are pushing the new gold rush forward?

The mining industry is probably the oldest activity linked to cryptocurrency. It all started in 2009, when Satoshi Nakamoto generated the first block on the Bitcoin network.

Today, the mining sector is a whole industry that extends over 114 countries around the world and guarantees irreparably the functioning of the global cryptocurrency network. According to the analysis of Blockchain.info, the total profitability of the market in the last year was $ 4.1 billion. This figure does not include income from the sale of mining equipment, which is estimated to be around $ 3-4 billion, as in the case of the industrial giant Bitmain.

Crypto

Bitcoin network

In addition to the popularity of the mining sector, the complexity of the Bitcoin network also grows. Despite the fact that 80% of the Bitcoin has already been extracted, according to the experts, the entire supply will be exhausted only by 2140. The situation is explained by the fact that the calculations necessary for the production of cryptocurrency are becoming more and more complex, and the extraction process requires more time and energy.

At the same time, between 30 and 60 percent of the profit from the extractive activities is spent on energy costs. Figures show that to keep the whole computer infrastructure working with Bitcoin, 30 full-capacity nuclear reactors would be needed.

Blockchain size

In spite of the reduction of the reward for the generating blocks, a halving of the size of the 25 Bitcoin to 12.5 Bitcoin mining rewards and the increasing complexity of the mining sector, miners can still receive up to $ 20 million a day in transaction confirmations. This impressive number attracts new players to join "digital fever" and equipment manufacturers to invent more efficient methods to extract Bitcoin.

equipment

In the summer of 2017, with the increasing popularity of cryptocurrencies, market demand has grown not only for professional equipment, but also for graphics cards (GPUs). In 2017 alone, more than three million discrete graphics cards were purchased for over 776 million dollars, says Jon Peddie Research. PC gamers were not able to buy top-model GPUs, which had sold out to miners before they even hit the shelves, and AMD and Nvidia card makers corrected their profit growth.

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Image source: Wccftech

In the second quarter of 2017, Nvidia increased revenues by more than 50%, compared to the second quarter of 2016, reaching $ 251 million. AMD's revenue for the same period increased by 18% to $ 1.2 billion. Following the fall of the market, mining interest also declined – AMD and Nvidia both expect a decline in revenues in the second quarter of 2018.

At the same time, the mining industry is reaching industrial proportions. All over the world, miners have joined together and created entire plants and hangars, and thousands of GPU boards are gathered in giant farms with hash peta capacity. Some companies reuse previous plants and invest millions of dollars in the construction of mining infrastructure. On June 6, the mining company CoinMint announced plans to open a Bitcoin mining facility in a former aluminum smelter in the state of New York, near the US-Canadian border. Supported by the US government, CoinMint aims to create 150 jobs for the next 18 months and allocate $ 700 million to renovate Alcoa's 1,300-acre facility.

At the same time, great players find more sophisticated ways to reduce energy costs and increase equipment productivity – from building farms in caves to launching miners in space. Who are these industrial miners? Cointelegraph invites you to visit the five largest farms in the world.

GigaWatt

Launched: 2012

Location: Washington, USA

Hashrate: 1.3 PH

The emergence of new actors in young and profitable niches is often difficult to predict. Billionaires are those who, until recently, repaired computers or worked in an electronics store. One of them, Dave Carlson, began mining with an ordinary GPU and now owns the largest mining company in North America.

A software specialist and entrepreneur with 10 years of experience decided to undertake a mining business after facing financial problems in his previous job at an advertising company. Founded in the basement of its home in 2012, the company MegaBigPower, which was later renamed GigaWatt, became a multi-million dollar company in just one year.

Today the farm is located in a former industrial warehouse. However, its exact location is not disclosed, similar to other farms, where landlords prefer not to attract public authorities' attention.

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Image source: WSJ

As the company expands, Carlson estimates its monthly operating expenses, including salaries for 15 employees, at more than $ 1 million. The final figure of the hapeta from 1.3 peta, in his words, repays it in full. Moreover, having succeeded in attracting further investments, the entrepreneur began the production of Bitfury chip-based mining equipment for sale to other Bitcoin enthusiasts.

Carlson's business is apparently going well. Among the factors that contributed to his success, Carlson specifies not only a desperate desire to escape poverty, but also the good fortune to have low electricity prices. The state of Washington, where the company is based, offers some of the cheapest in the country with only $ 9.56 per kWh for individuals and $ 8.42 per kWh for businesses.

Genesis Mining

Launched: 2014

Location: Iceland

Hashrate: 1000 GH

Another owner of a large mine is Genesis Mining. Initially, their mining capacity was in Bosnia and China, but today they are concentrated in Iceland and Canada. The cold climate – combined with low-cost electricity prices – makes these countries attractive to the mineral cryptocurrency.

It is believed that the Genesis mines are the largest consumer of electricity in Iceland. Problems related to electricity consumption and cooling are usually kept secret by large miners, as is the exact location of their farms. Genesis, like Carlson and others, in accordance with their security policy, does not reveal the exact geographical location of its mines.

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Image source: Bitcoin Wiki

Dalian mining farm

Launch: 2016

Location: Dalian, China

Monthly Minor: 750 BTC

Electricity costs monthly: $ 1,170,000

Hashrate: 360000 TH *

* Given the hashrate of the December 2017 Bitcoin network

China is known for its numerous ASIC video cards and miners. As a result, miners in China have the advantage of buying equipment at lower prices. The delivery of equipment is cheaper – or even absolutely free.

China is among the countries with the lowest price for electricity, along with Venezuela, Taiwan and Ukraine. The most important factor in this matter is the decision of the Chinese government to encourage the industrial production of cryptocurrency by reducing the price of electricity consumption for the official owners of these farms.

China has a huge population, which increases competition at work. In the country, industrial cities have existed for a long time, with workers living without visiting the outside world. The same is practiced in mines, where system administrators are ready to live in dormitories near a farm for a relatively small salary, ensuring an uninterrupted production of cryptocurrencies.

All these factors create fertile ground for the deployment of the largest mining companies, such as in the Liaoning province. His small town of Dalian is the mining center in China and probably all over the world. It is a three-storey agricultural mine with a specially designed ventilation system. Currently, Dalian's farm accounts for over three percent of the hash rate of the entire Bitcoin network.

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Image source: Bitcoin Wiki

Another Chinese province, Sichuan, launched an industrial farm near a hydroelectric plant. Since 2016, the company's capacity has grown almost threefold and has reached 12 PH. Even other provinces, all over China, are not without their big mines. One can easily understand, when a farm is nearby, due to the pile of obsolete mining equipment.

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Image source: Politician

Swiss mine

Launch year: 2016

Location: Linthal, Switzerland

Hashrate: unknown

The largest mining company in Switzerland is located in the small village of Linthal, in the eastern part of the country. Its owner, Guido Rudolphi, has already managed a mine in Zurich but has found operating costs too high. After almost two years of research, Rudolphi opted for Linthal, which offers the most attractive prices for electricity in the country.

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Image source: SRF.ch

The new farm, located in a former industrial building, is considered the largest in Switzerland. Although the issue of cooling processors still remains relevant, Rudolphi insists that any financial benefit is not decisive for him. The world needs Bitcoin more for political reasons, he believes. The owner of the company compares the cryptocurrency with the Internet of the years 90, when many people looked at this phenomenon with great skepticism.

Russian farms

Monthly Mining: 600 BTC

Hashrate: 38 PH

Russia is also among the countries where large mining areas are located. It is believed that the largest of these is located near Moscow, although the exact location of the farm is not revealed. The power of the Moscow farm allows for the extraction of about 600 Bitcoins a month. The currency is generated by 3000 miners ASIN Antminer S9 and, for this, a performance of about 38 PH per second is required. To cool this amount of equipment, modern ventilation from Iceland is used. Electricity costs are over $ 120,000 a month, says Slavorum.org.

Looking at the future

The main mining mines began to appear only a couple of years ago. In 2014, these were passionate farms. Today the mines are made up of large technological infrastructures with a regular staff of professional employees, such as GigaWatt, Genesis Mining or Coinmint, which join forces in the former factory and hangars site. With the increase in network complexity and the decline in cryptocurrency prices, individual miners are coming out. However, players who have managed to deploy large-scale infrastructure will be able to provide an ideal balance of productivity and low cost.

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