[sc:cm]

And it’s popping up on mainstream media

(I supposed at some point there will be ASICs for Litecoin mining too)

Journey through Hong Kong, the States and Iceland

WSJ

wsj mining

CNN

cnn liquid cooled

http://money.cnn.com/gallery/technology/2013/12/17/bitcoin-mine/1.html

The Hong Kong Facility

https://bitcointalk.org/index.php?topic=346134.msg3709913#msg3709913

also hongwong

http://hongwrong.com/hong-kong-bitcoin/

WSJ

http://online.wsj.com/news/articles/SB10001424127887324665604579079721277783300

For Virtual Prospectors, Life in the Bitcoin Mines Gets Real

Temperatures, Electric Bills Rise as Enthusiasts Hunt for Web Currency

By

Joe Light

connect

Updated Sept. 19, 2013 10:39 p.m. ET
Aubrey McIntosh has taken up mining in his spare time, and he’s finding it hard and hot—even if it’s prospecting for a virtual currency and a computer is doing all of the work.Mr. McIntosh, a semiretired chemistry professor in Morris, Minn., is among the growing ranks of enthusiasts who use powerful computers to “mine,” in insider parlance, “bitcoins,” an unregulated digital currency.

Aubrey McIntosh keeps a bitcoin mining rig in his Minnesota basement. Aubrey McIntosh

Mr. McIntosh keeps his specialized computer, which he said cost about $1,500 and is custom-built to find bitcoins, near the chimney flue in his basement to try to get rid of all the heat it generates.

“It sounds like an aircraft carrier,” he said. Since turning the computer on his electricity bill has about doubled.

Bitcoins aren’t physical objects that you can put in your pocket. Bitcoin is a virtual currency—launched in 2009 by a person or group going by the name “Satoshi Nakamoto”—that isn’t backed by a government. Units of the currency exist only online but are sometimes traded for real goods and services. Users send the bitcoins to each other using digital addresses.

Few merchants take bitcoins as payment, but the number is growing. For example, WordPress.com, a blogging service, and dating website OkCupid both accept bitcoins. There are also currency exchanges that let users trade bitcoins for U.S. dollars and other countries’ currencies.

Related

Bitcoin is attracting attention as a wildly volatile, all-digital currency. How does it work? How are criminals taking advantage of it? How risky an investment is it? In this Bitcoin explainer, WSJ’s Jason Bellini has “The Short Answer.”

Bitcoins are mined by a decentralized network of computers that guess solutions to a mathematical puzzle. As part of that process, miners keep track of and verify all transactions on the bitcoin network, so bitcoins are a kind of compensation for maintaining the ledger of transactions. The faster a person’s computer system can find solutions relative to the rest of the network, the better chance he or she has of being awarded bitcoins.

That can require powerful computer equipment to keep up with competitors. Some people spend tens of thousands of dollars on custom-built “mining rigs” that they say can triple their homes’ electricity bills and raise room temperatures by 20 degrees or more. For some miners, the payoff has been only virtual thus far. Many either hang on to the bitcoins or trade them for traditional currencies on online exchanges. On Thursday, one bitcoin fetched about $135 on Tokyo-based Mt. Gox, one of the largest bitcoin currency exchanges.

Cameron and Tyler Winklevoss, the twins known for battling Mark Zuckerberg over ownership of Facebook Inc., recently proposed the creation of an exchange-traded fund to track bitcoin, though regulators haven’t yet said if they will approve it.

While Mr. McIntosh, the chemistry professor, says he has made more money than he has spent on mining, he tries not to talk to his extended family about it. “I think the whole concept of bitcoin would alarm them,” he said.

Bitcoin mining machine

The system is designed so that only about 21 million bitcoins will ever be mined. So far, about 11.7 million bitcoins have been mined, leaving 9.3 million up for grabs.

That has led to an arms race. The first miners in 2009 used standard home computers. By 2011, they discovered that computer graphics cards, commonly used to render graphics in videogames, could perform the calculations faster. Now, startup hardware companies sell mining rigs designed with no other purpose than to find bitcoins.

For David Perry, a 30-year-old software developer in Las Vegas, things got so out of hand that he had to buy a second air-conditioning unit just to keep his 700-square-foot apartment habitable. During the summer of 2012, he said, his monthly electric bill hit $700, more than five times the normal amount. His mining rig included 14 computer graphics cards, which then were among the most effective kinds of equipment to find the currency.

Although he said he has “more than 10 times recouped” in bitcoins his $2,500 investment in hardware even after factoring in electricity costs, his wife is still skeptical of the operation. “It got so hot that we realized we were living in our own personal hell,” said Mr. Perry, who now blogs about bitcoin-mining equipment.

Software developer Daniel Mross, who is 35 years old and lives in Pittsburgh, recently shut down his bitcoin rig after two years of mining. At its peak, his setup included four computers with a dozen computer graphics cards, among other equipment.

“It threw off a hell of a lot of heat, much to my wife’s dismay,” he said. But, he added, “It was nice in winter time.”

Mr. Mross said his monthly electric bill once almost hit $700, up from the typical $250. Though he shut down his rig, Mr. Mross is making a documentary, called “The Rise and Rise of Bitcoin,” in which he tells his mining story.

A major factor that did in Mr. Mross was the advent of pricey computer systems designed especially for bitcoin mining.

One startup, Butterfly Labs in Overland Park, Kan., sells mining rigs that cost as much as $22,484. Co-founder Jeff Ownby said his company consistently sells out each time it releases a batch of new mining rigs.

The bigger systems can be a strain on residential power capabilities. James Gibson, a former Web applications developer, started a mining operation out of his apartment in Orlando, Fla., in 2011 but quickly outgrew it.

“We couldn’t have the TV on and keep all the miners on at the same time,” he said. “The circuit would pop.” Now, he rents space in four data centers in Kansas, in part to make sure his 27 mining rigs never lose power or Internet connectivity.

Mr. McIntosh has figured out a way to limit losses. Before receiving his new $1,500 bitcoin mining machine this summer, he sold investors 69 “shares” of the rig, worth 1% of its future findings.

The deal allowed him to make back his investment even before turning the machine on, he said. The shares sold for between 0.8 and 1.4 bitcoins each.

Michael B. Taylor, a computer science professor at the University of California, San Diego who has also written a paper on bitcoin, in March bought four of the shares for what he said was about the equivalent of $315 at the time. He said he receives bitcoin “dividends” every week. But the payout is dropping as other bitcoin miners throw evermore firepower into their operations. Given the arms race for mining equipment, the rig, said Mr. Taylor, is “guaranteed to be obsolete in a year.”

Write to Joe Light at joe.light@wsj.com

Iceland:

 

NYT (I think it’s been syndicated in a few other places too)

note the venture capital tag

Venture Capital 197 Comments

Into the Bitcoin Mines

By NATHANIEL POPPER
On the flat lava plain of Reykjanesbaer, Iceland, near the Arctic Circle, you can find the mines of Bitcoin.To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings you to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers, each in a locked cabinet and each cooled by blasts of Arctic air shot up from vents in the floor.

Article Tools

  • Facebook
  • Save
  • Twitter
  • Email
  • Google+
  • Print
  • Share
  • Permalink

These computers are the laborers of the virtual mines where Bitcoins are unearthed. Instead of swinging pickaxes, these custom-built machines, which are running an open-source Bitcoin program, perform complex algorithms 24 hours a day. If they come up with the right answers before competitors around the world do, they win a block of 25 new Bitcoins from the virtual currency’s decentralized network.

The network is programmed to release 21 million coins eventually. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years.

The scarcity — along with a speculative mania that has grown up around digital money — has made each new Bitcoin worth as much as $1,100 in recent weeks.

Bitcoins are invisible money, backed by no government, useful only as a speculative investment or online currency, but creating them commands a surprisingly hefty real-world infrastructure.

“What we have here are money-printing machines,” said Emmanuel Abiodun, 31, founder of the company that built the Iceland installation, shouting above the din of the computers. “We cannot risk that anyone will get to them.”

Mr. Abiodun is one of a number of entrepreneurs who have rushed, gold-fever style, into large-scale Bitcoin mining operations in just the last few months. All of these people are making enormous bets that Bitcoin will not collapse, as it has threatened to do several times.

Just last week, moves by Chinese authorities caused the price of a Bitcoin to drop briefly below $500. If the system did crash, the new computers would be essentially useless because they are custom-built for Bitcoin mining.

Miners, though, are among the virtual-currency faithful, believing that Bitcoin will turn into a new, cheaper way of sending money around the world, leaving behind its current status as a largely speculative commodity.

Most of the new operations popping up guard their secrecy closely, but Mr. Abiodun agreed to show his installation for the first time. An earnest young Briton, with the casual fashion taste of the tech cognoscenti, he was a computer programmer at HSBC in London when he decided to invest in specialized computers that would carry out constant Bitcoin mining.

The computers that do the work eat up so much energy that electricity costs can be the deciding factor in profitability. There are Bitcoin mining installations in Hong Kong and Washington State, among other places, but Mr. Abiodun chose Iceland, where geothermal and hydroelectric energy are plentiful and cheap. And the arctic air is free and piped in to cool the machines, which often overheat when they are pushed to the outer limits of their computing capacity.

The energy required to run these computers is huge, and has led to criticism that Bitcoin mining is wasteful, not to mention socially useless.Richard Perry/The New York Times The energy required to run these computers is huge, and has led to criticism that Bitcoin mining is wasteful, not to mention socially useless.

The operation can baffle even those entrusted with its care. Helgi Helgason, a burly, bald Icelandic man who oversees the data center that houses the machines, said that when he first heard that a Bitcoin mining operation was moving in he expected something very different. “I thought we’d bring in machines and put bags behind them and the coins would fall into them,” said Mr. Helgason, with a laugh.

Since then, the education he has received about Bitcoins has been enlightening, but only to a point.

“It’s a strange business,” he said, “and I can’t say that I understand it.”

Until just a few months ago, most Bitcoin mining was done on the home computers of digital-money fanatics. But as the value of a single Bitcoin skyrocketed over the last few months, the competition for new coins set off a race that quickly turned mining into an industrial enterprise.

“Even if you had hardware earlier this year, that is becoming obsolete,” said Greg Schvey, a co-founder of Genesis Block, a virtual-currency research firm. “You are talking about order-of-magnitude jumps.”

The work the computers do is akin to guessing at a lottery number. The faster the computers run, the better chance of guessing that right number and winning valuable coins. So mining entrepreneurs are buying chips and computers designed specifically — and only — for this work. The machines in Iceland are worth about $20,000 each on the open market.

The energy required to run these computers is huge, and has led to criticism that Bitcoin mining is wasteful, not to mention socially useless. But Mr. Abiodun prides himself on using renewable power, at least in Iceland.

When Mr. Abiodun first heard about Bitcoin mining in 2010, he thought it was a scam. Begun in 2009 as the imaginative creation of an anonymous programmer (or group of programmers) known as Satoshi Nakamoto, it was initially little more than a tech world curiosity. As early users connected their computers into the network, they became a part of the decentralized infrastructure that hosts Bitcoin’s open-source program. The computers joining the network immediately began capturing virtual coins. The network’s protocol was designed to release a new block of Bitcoins every 10 minutes until all 21 million were released, with the blocks getting smaller as time goes on. If the miners in the network take more than 10 minutes to guess the correct code, the Bitcoin program adapts to make the puzzle easier. If they solve the problems in less than 10 minutes, the code becomes harder.

Mr. Abiodun’s opinion of Bitcoin changed in January, when he saw the price rising. He installed a free application on his home computer that linked him into the Bitcoin network and set it to mining, harnessing the power of his graphics card, which is the part of a normal computer best suited to doing the code work.

Mr. Abiodun’s computer was in the guest room of his house in southeast London. Working at HSBC during the day and tinkering with his Bitcoin system at night, he realized if he wanted to make any money, his computer would have to run around the clock.

The constant computing, however, overheated the graphics card and pushed the computer’s exhaust fans into overdrive. When he added another graphics card, then a new computer, the room became too noisy for guests to sleep, and the windows had to be kept open to release the heat. That did not make his wife, Gloria, who was pregnant at the time, very happy.

“It just created a scenario where there was no way our parents would come over to stay,” he said. “I did offer to put her parents in a hotel, but that didn’t go down well.”

Mr. Abiodun’s wife finally gave him an ultimatum — either the computers had to go, or he did. At the same time, he was making money, and friends were asking if they could invest in his mining operation.

In February, Mr. Abiodun used the investors’ money to buy machines from a start-up dedicated solely to manufacturing specialized mining computers. The competition for those computers is so intense that he had to pay for them and wait for delivery.

When the delays became lengthy, however, he went on eBay and paid $130,000 for two high-powered machines, which he set up in June in a data center in Kansas City, Kan.

This was the beginning of Mr. Abiodun’s company, Cloud Hashing, which rents out computing power to people who want to mine without buying computers themselves. The term hashing refers to the repetitive code guessing that miners do.

Today, all of the machines dedicated to mining Bitcoin have a computing power about 4,500 times the capacity of the United States government’s mightiest supercomputer, the IBM Sequoia, according to calculations done by Michael B. Taylor, a professor at the University of California, San Diego. The computing capacity of the Bitcoin network has grown by around 30,000 percent since the beginning of the year.

“This whole new kind of machine has come into existence in the last 12 months,” said Professor Taylor, who is studying mining hardware. In the chase for the lucky code that will unlock new Bitcoins, mining computers are also verifying and assigning unique identifying tags to each Bitcoin transaction, acting as accountants for the virtual currency world.

“The network is providing the infrastructure for making sure the currency is being transferred between people according to the rules,” Professor Taylor said, “and making sure people aren’t creating currency illegally.”

Even before Mr. Abiodun’s machines in Kansas City were up and running, it was clear that they wouldn’t be enough. So he ordered about 100 machines from a start-up in Sweden and, in October, had them moved to the facility in Iceland. In just a few months, that installation has generated more than $4 million worth of Bitcoins, at the current value, according to the company’s account on the public Bitcoin network.

At the end of each day, the spoils are divided up and sent to Cloud Hashing’s customers. Last Wednesday, for example, the entire operation unlocked 225 Bitcoins, valued at around $160,000 at recent prices. Cloud Hashing keeps about 20 percent of the capacity for its own mining.

Inside a high-security facility in Iceland, one company’s powerful computers toil nonstop on the project.Richard Perry/The New York Times Inside a high-security facility in Iceland, one company’s powerful computers toil nonstop on the project.

The unregulated Bitcoin-mining industry is ripe for abuse, and ventures that sound similar to Cloud Hashing have turned out to be scams. Mr. Abiodun’s company has proved itself real, but it is still unclear if it is a good deal for customers. Cloud Hashing charges $999 to rent a tiny portion of the company’s computing power for one year. That’s an expensive price for the computing capacity they are getting, but Mr. Abiodun argues that it’s a good value because individual miners would not be able to buy his modern machines outright. It’s a little like buying a fractional ownership in a private jet; you might not want responsibility for the jet itself, and it’s out of your price range anyway. He also says he provides the maintenance and keeps away thieves and hackers.

Some Cloud Hashing customers have also complained on Internet forums that it can be hard to get a response from the company when something goes wrong. But this has not stopped new contracts from pouring in. Cloud Hashing now has 4,500 customers, up from 1,000 in September.

Mr. Abiodun acknowledges that the company has not been prepared to deal with its rapid growth. He said he had used $4 million raised from two angel investors to add customer service representatives to offices in Austin, Tex., and London. Cloud Hashing is now preparing to open a mining facility in a data center near Dallas, which will hold more than $3 million worth of new machines being produced by CoinTerra, a Texas start-up run by a former Samsung chip designer.

The higher energy costs — and required air-conditioning — in Texas are worth it for Mr. Abiodun. He wants his operation to be widely distributed in case of power shortages or regulatory issues in one location. But he is also expanding his Icelandic operation, shipping in about 66 machines that have been running for the last few months near their manufacturer in Ukraine.

Mr. Abiodun said that by February, he hopes to have about 15 percent of the entire computing power of the Bitcoin network, significantly more than any other operation.

Inside the Iceland data center, which also hosts servers for large companies like BMW and is guarded and maintained by a company called Verne Global, strapping Icelandic men in black outfits were at work recently setting up the racks for the machines coming from Ukraine. Gazing over his creation, Mr. Abiodun had a look that was somewhere between pride and anxiety, and spoke about the virtues of this Icelandic facility where the power has not gone down once.

“We don’t want downtime — ever, never,” he said. “Not with what we paid. Not with Bitcoin.”

A version of this article appears in print on 12/22/2013, on page BU1 of the NewYork edition with the headline: Into the Bitcoin Mines.

 

Zerohedge

A Trip Through The Bitcoin Mines

Tyler Durden's picture

Submitted by Tyler Durden on 12/25/2013 22:48 -0500

inShare15

 

Once upon a time, money – in the form of precious metals – used to be literally dug out of the earth. Limitations on the amount that could be mined, and on how much growth could be borrowed from the future (all debt is, is future consumption denied), is why eventually the world’s central bankers moved from money backed by precious metals, to “money” backed by “faith and credit”, in the process diluting both. It was the unprecedented explosion in credit money creation that resulted once money could be “printed” out of thin air that nearly destroyed the western financial system. Which brings us to Bitcoin, where currency “mining” takes place not in the earth’s crust, or in the basement of the Federal Reserve, but inside supercomputers.

It is these supercomputers, that are the laborers of the virtual mines where Bitcoins are unearthed, that the NYT focuses on in a recent expose:

Bitcoins are invisible money, backed by no government, useful only as a speculative investment or online currency, but creating them commands a surprisingly hefty real-world infrastructure.

 

Instead of swinging pickaxes, these custom-built machines, which are running an open-source Bitcoin program, perform complex algorithms 24 hours a day. If they come up with the right answers before competitors around the world do, they win a block of 25 new Bitcoins from the virtual currency’s decentralized network. The network is programmed to release 21 million coins eventually. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years.

As the following chart shows, in addition to the surge in the price of Bitcoin, another explosion witnessed recently is in the processing power of the Bitcoin network: from non-existent a couple of years ago, the “mining” power dedicated to hashing, or the calculations used to extract new Bitcoins, has risen to nearly 10 quadrillion per second!

So what do these supercomputer-populated mines look like? Below we look at two examples of just that.

* * *

First, we look at Hong Kong, where one of the largest Bitcoin mines in the world is located.

In an industrial backwater near Hong Kong’s massive port, one of Asia’s largest Bitcoin mines is quietly turning raw computing power into digital currency.

Located about eight miles from the city’s finance hub, the entire facility is no larger than a two-bedroom apartment. Aside from a small bathroom, the mine offers no creature comforts.

It is dominated by vertical racks that house hundreds of ASIC chips. Shorthand for application-specific integrated circuits, these chips are custom-built to mine bitcoins.

These racks house hundreds of ASIC chips used to mine bitcoins.

Chinese investors have been enthusiastic early adopters, a trend amplified by a lack of more traditional investment vehicles in the country

The Kwai Chung mining facility is extremely quiet — except for the whirr of computers

Industrial bitcoin mines devote their massive amounts of computing power to working on the algorithm, and are rewarded with an equivalent share of bitcoins. Currently, a winner is rewarded with 25 bitcoins roughly every 10 minutes.

A closer look at the towers. Most of the facility is devoted to mining for an investor group in China.

Miners are lured to Hong Kong because of its proximity to chipmakers in China and the city’s permissive regulatory environment.

A bubbling liquid produced by 3M cools the ASIC chips.

This mine was purpose-built by Allied Control for clients based in China.

Kar-Wing Lau, Allied Control’s vice president of operations, said the mine is cheaper to run and more efficient than many others because it uses a technology called immersion cooling.

Heat sinks and fans are typically used to disperse the heat generated by massed ranks of computer chips, but this Hong Kong mine is liquid-cooled using a product developed by 3M.

The processors used in the mine were build specifically for mining. They have no other function. “These ASIC chips, they can mine bitcoins and do nothing else,” Lau said. “Given the pace of advancement, we need them to be constantly upgraded.”

These radiators, housed on a balcony outside the mine, help disperse heat produced by the chips.

Immersion cooling allows Allied Control to leave less space between the chips, which saves money that would otherwise be spent on rent.

The technology also cuts down on electricity use — one of the other major costs associated with Bitcoin mining. Lau wouldn’t reveal how much it cost to build the mine, but he said that electricity bills for a fully-operational mine of this size would typically exceed $50,000 per month.

“The real question from a business perspective is how efficiently you can run your mining operation,” Lau said.

 

The inside of the racks used to house the mining chips.

Cooling, however, is only one of the key factors when determining Bitcoin “mine” placement. Another key one: access to cheap electricity, because those massive servers sure soak up a lot of electricity: electricity, whose costs can quickly add up once a parallel processing cluster gets big enough.

* * *

Which brings us to Bitcoin mega-mine #2 in Iceland.

It is here that the NYT goes searching for digital excavators used to procure the digital currency.

On the flat lava plain of Reykjanesbaer, Iceland, near the Arctic Circle, you can find the mines of Bitcoin.

 

To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings you to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers, each in a locked cabinet and each cooled by blasts of Arctic air shot up from vents in the floor.

 

“What we have here are money-printing machines,” said Emmanuel Abiodun, 31, founder of the company that built the Iceland installation, shouting above the din of the computers. “We cannot risk that anyone will get to them.”

 

Mr. Abiodun is one of a number of entrepreneurs who have rushed, gold-fever style, into large-scale Bitcoin mining operations in just the last few months. All of these people are making enormous bets that Bitcoin will not collapse, as it has threatened to do several times.

Iceland’s low electric bill and its effective infrastructure, may be a reason why the one country that rebelled against the banker syndicate and jailed some of its bankers, may become the place where the bulk of Bitcoin mining takes place:

The computers that do the work eat up so much energy that electricity costs can be the deciding factor in profitability. There are Bitcoin mining installations in Hong Kong and Washington State, among other places, but Mr. Abiodun chose Iceland, where geothermal and hydroelectric energy are plentiful and cheap. And the arctic air is free and piped in to cool the machines, which often overheat when they are pushed to the outer limits of their computing capacity.

 

The operation can baffle even those entrusted with its care. Helgi Helgason, a burly, bald Icelandic man who oversees the data center that houses the machines, said that when he first heard that a Bitcoin mining operation was moving in he expected something very different. “I thought we’d bring in machines and put bags behind them and the coins would fall into them,” said Mr. Helgason, with a laugh.

No coins, but the cash miners get in exchange for BTC, especially if each Bitcoin continues to trade close to $1000, the mining can be quite lucrative. The flipside, however, is that the business is just as if not more capital intensive than running a gold mine for the same profit.

Until just a few months ago, most Bitcoin mining was done on the home computers of digital-money fanatics. But as the value of a single Bitcoin skyrocketed over the last few months, the competition for new coins set off a race that quickly turned mining into an industrial enterprise.

 

“Even if you had hardware earlier this year, that is becoming obsolete,” said Greg Schvey, a co-founder of Genesis Block, a virtual-currency research firm. “You are talking about order-of-magnitude jumps.”

 

The work the computers do is akin to guessing at a lottery number. The faster the computers run, the better chance of guessing that right number and winning valuable coins. So mining entrepreneurs are buying chips and computers designed specifically — and only — for this work. The machines in Iceland are worth about $20,000 each on the open market.

 

In February, Mr. Abiodun used the investors’ money to buy machines from a start-up dedicated solely to manufacturing specialized mining computers. The competition for those computers is so intense that he had to pay for them and wait for delivery.

 

When the delays became lengthy, however, he went on eBay and paid $130,000 for two high-powered machines, which he set up in June in a data center in Kansas City, Kan.

 

This was the beginning of Mr. Abiodun’s company, Cloud Hashing, which rents out computing power to people who want to mine without buying computers themselves. The term hashing refers to the repetitive code guessing that miners do. 

 

Today, all of the machines dedicated to mining Bitcoin have a computing power about 4,500 times the capacity of the United States government’s mightiest supercomputer, the IBM Sequoia, according to calculations done by Michael B. Taylor, a professor at the University of California, San Diego. The computing capacity of the Bitcoin network has grown by around 30,000 percent since the beginning of the year.

What is the upside of mining?

At the end of each day, the spoils are divided up and sent to Cloud Hashing’s customers. Last Wednesday, for example, the entire operation unlocked 225 Bitcoins, valued at around $160,000 at recent prices. Cloud Hashing keeps about 20 percent of the capacity for its own mining.

To be sure, like any industry in its infancy, there are numerous glitches, and mining for Bitcoins is no different:

Some Cloud Hashing customers have also complained on Internet forums that it can be hard to get a response from the company when something goes wrong. But this has not stopped new contracts from pouring in. Cloud Hashing now has 4,500 customers, up from 1,000 in September.

 

Mr. Abiodun acknowledges that the company has not been prepared to deal with its rapid growth. He said he had used $4 million raised from two angel investors to add customer service representatives to offices in Austin, Tex., and London. Cloud Hashing is now preparing to open a mining facility in a data center near Dallas, which will hold more than $3 million worth of new machines being produced by CoinTerra, a Texas start-up run by a former Samsung chip designer.

 

The higher energy costs — and required air-conditioning — in Texas are worth it for Mr. Abiodun. He wants his operation to be widely distributed in case of power shortages or regulatory issues in one location. But he is also expanding his Icelandic operation, shipping in about 66 machines that have been running for the last few months near their manufacturer in Ukraine.

 

Mr. Abiodun said that by February, he hopes to have about 15 percent of the entire computing power of the Bitcoin network, significantly more than any other operation.

Hopefully Bitcoin will still be around by then.

* * *

The future of Bitcoin mining is uncertain. There are a fixed number of bitcoins available — and more than half have already been extracted. Kar-Wing Lau of the Hong Kong-based Allied Control, compared the explosion of professional mining operations to an arms race. For now, it appears to be a profitable endeavor. Lau said that Allied Control is currently exploring other mining platforms, including a mine built in a shipping container — something that could prove useful if regulators crack down on the currency.

[sc:prepost]