Industrial-scale bitcoin mining booming

bitcoin mining

Is bitcoin mining about to become big business? Until recently, the massive warehouses filled with thousands of ASICs and roaring fans struggling to cool them off seemed like the exception to the rule. Companies like MegaBigPower seemed more like the exception than the rule.

For most of bitcoin’s history, mining operations have been relatively small, both in terms of physical size and financial investment. Even a full-time professional miner might only have $20,000 or $30,000 worth of equipment.

In the last six months, however, large-scale bitcoin mining has become very serious business, with tens of millions of dollars being spent on creating massive new “hashing centers” across the country.

According to a report on Data Center Knowledge, a trade publication for data center technology, the costs of converting a warehouse to a bitcoin mining facility is a fraction of the expense of building a Google or Facebook-like server farm.

“To build out one of these (warehouse) data centers isn’t as expensive,” Butterfly Labs COO Josh Zerlan told the publication. “You can put in $10 million instead of $100 million for this kind of facility.”

What’s more, although the power consumption can be quite high, with the proper cooling arrangement a hashing center can have an extremely dense and efficient layout.

Bitcoin mining servers can pack as much as 1 megawatt of equipment into 1,000 square feet of space, according to Eric Doricko, a veteran of Exodus Communications who now helps Bitcoin businesses find data center space. That’s a big change from the 8,000 to 12,000 square feet of space for 1 megawatt of traditional IT space.

Will this boom in industrial-level bitcoin mining squeeze out the hobbyist miner? Or will it encourage many of those miners to test out the cloud-based operations many of these data centers are experimenting with?

Written on 10 Jul 2014.