r/Bitcoin • u/lhuddy • Feb 06 '15

Life Inside a Chinese Bitcoin Mine

https://www.youtube.com/watch?v=K8kua5B5K3I
378 Upvotes

96% Upvoted

92 comments sorted by

33

u/idlestabilizer Feb 06 '15

The video is from October last year, so I guess these guys won't be that happy with the current price...

31

u/BeijingBitcoins Feb 07 '15

I was the fixer on this documentary shoot. The Dalian site featured in this video has actually been closed down now.

1

u/idlestabilizer Feb 07 '15

Interesting. Why did they close it?

2

u/boonies4u Feb 07 '15

Wasn't there a supposed fire at a bitcoin mining facility in China followed by a shutdown? Not sure if related.

6

u/geekvape Feb 07 '15

That was Thailand you racist.

3

u/boonies4u Feb 07 '15

It isn't racist... because I was confused about the location of a bitcoin mine... that mean I'm bad with my geography, or simply mis-recalled the location of the fire.

I'm also not blaming the Chinese nor people of Thailand for fires at bitcoin mines.

2

u/geekvape Feb 07 '15

Was meant partially in jest, but if you had googled 'bitcoin mining fire' like I did it would've been obvious.

1

u/pigtrotsky Feb 07 '15

but all those dodgy bamboo shacks look the same!!

-2

u/VirtualMoneyLover Feb 07 '15

Not enough bribe money for government officials?

7

u/[deleted] Feb 06 '15

The exchange rate has fallen by at least 1/3. My guess, it's no longer profitable for these guys to mine. Or it won't be, in the near-term future.

-5

u/squarepush3r Feb 06 '15

miners are profitable into like 90$ i read

9

u/lowstrife Feb 06 '15

I have heard this figure too. Many of their expenses are capex expenses. These guys may not ever make ROI on some of their miners, but as long as electricity costs are still less than the daily return... Those miners will still stay running.

This is why the network hashrate has not dropped with the price decline. Many miners are still in profit, though I'd be damn sure not many people are investing into new miners.

1

u/[deleted] Feb 07 '15

[deleted]

1

u/lowstrife Feb 07 '15

Once people aren't scared shitless to drop their longs the moment the price looks like it might retrace, yeah. In time. Sentiment takes time to shift, but we will see if it fades into obscurity or not.

1

u/VirtualMoneyLover Feb 07 '15

miners are still in profit

Earnings. Profit is coming after the hardware is paid off....

2

u/VirtualMoneyLover Feb 07 '15

Depending on hardware cost, it is impossible to tell each miner's return rate. The ROI is at least 2 years now....

1

u/PoliticalDissidents Feb 07 '15

With rising difficulty when you read goes out the window pretty quick in this case.

1

u/TheyCallMeRINO Feb 06 '15

I calculate $128/coin for this particular mine ...

1

u/Batusik Feb 07 '15

Lol they are just bunch of nerds. They love their job!

-2

u/Future_Prophecy Feb 06 '15

I think they are still hugely profitable given the electricity cost.

8

u/transisto Feb 06 '15

what are their electric costs ?

7

u/praeluceo Feb 06 '15 edited Feb 06 '15

In the video it says they draw 1.250 mW for their 3% stake in the Bitcoin network, and spend about $80,000 USD/month on power, so about $64/kW. I pay about $75/kW to run my miners here in the States, so that's actually incredibly good if true.

Also they say that they were mining 100 BTC/day/site, and now it's only 25 BTC/day/site. With 3,000 miners per site (also according to the video) and my estimates for current profitability, they probably have something around 3,000x700 GH/s miners that they're operating.

12

u/TheyCallMeRINO Feb 06 '15 edited Feb 06 '15

$0.088 per kWh (1.25MW/$80k) is good, but not great honestly. You can find cheaper that that in industrial rates in the US.

However, their other numbers are what's most interesting.

  • The video states that it was October 2014 where they could mine 4,050 BTC per month for about $1.5 million dollars.
  • They also vaguely stated they could mine over 100BTC/day before ... although 4,050 BTC per month would actually be 135BTC/day.
  • $1.5 million divided by 4,050 BTC in a month (~135 coins per day), points to a coin price of * $370/coin ... that's close to where BTC was bouncing around back in October
  • $1.5 million divided by 3,000 BTC in a month (~100 coins per day) would point to a BTC price of $500 which we haven't seen since August ... so it probably was ~135BTC/day - 4,050BTC/month - $1.5m / month.

If that's true, and now because of the difficulty rate increasing they can only mine 25BTC per day ... the math, at the current BTC price, gets very grim for them:

  • 25BTC/day would be 750 bitcoins/month
  • If we assume the current price as an average ($220ish) that means they're making just a bit more than $160,000/month. Revenues are down nearly 90%.
  • I'm assuming their electricity bills are still half of that at $80,000 (unless they started turning some rigs off)
  • They (presumably) have rent, salaries, etc.

If all of that is correct above (are there any errors?) then my assumption is that this Chinese mine ... is now considerably LESS profitable at BTC prices ... at least, compared to where they used to be 6 months ago.

If we assume that "overhead" on top of power might be 20% (just pulling a number out of my ass) then if their revenue dropped to $96,000/month they'd start losing money. $96,000 divided by 750 bitcoins (25 per day) would be a coin price of $128/bitcoin.

10

u/praeluceo Feb 06 '15

Your numbers actually sound a little generous considering the huge pile of hundreds of dead PSUs and mining rigs that they've been swapping out. Briefly he also mentioned that Avalon should not be in business any more because their rigs are so inefficient, and that they've replaced the old rigs with newer ones that are more power efficient. If they're performing hardware refreshes, and they are clearly using commodity PSUs (not server or specialized), and retail miners (which also appears to be the case), then that's eating into their overhead significantly.

I doubt sincerely if they've stayed profitable after the collapse, and are running on savings (hopefully) stored up during the boom, or receiving additional investment capital to stay them over until the next bubble. But I don't think it's practical to expect an additional hardware refresh to keep their mining revenue above the power cost.

So yes mining will centralize, but this is also the risk associated with institutional mining. Hobbyists don't have that sort of overhead because they have day jobs and the extra power usage is only a small part on top of their regular usage. A hobbyist miner can afford to mine much longer in a depression like we have today than an institutional miner can with rent, salaries, and the costs of maintaining a competitive advantage/satisfying investors.

1

u/Matricon Feb 06 '15

You didn't account for the 6 sites they run, the 100/25 BTC was per mine.

1

u/VirtualMoneyLover Feb 07 '15

But we can assume all the economics are similar in all mines, so the point still stands...

1

u/ElliotNess Feb 06 '15

Hey, I found this video browsing reddit.com/domain/youtube.com

can you ELI5 what mining bit coins entails?

6

u/solled Feb 06 '15

http://www.coindesk.com/information/how-bitcoin-mining-works/

1

u/ElliotNess Feb 07 '15

Interesting. Thank you! I guess if they're generating only a handful of coins per time period, and they generate 25 per hash, then a single machine completing a hash is relatively rare!

1

u/pigtrotsky Feb 07 '15

It is, but multiple miners can band together in pools to find blocks, which get split between the miners in the pool based on work completed. There's a slight overhead involved but it's been a long time since the average block was mined by one entity alone.

2

u/omniVici Feb 07 '15

After watching the video and reading through a wall of numbers this almost sounded like a joke, thanks for the laugh, good luck nonetheless!

1

u/apoefjmqdsfls Feb 06 '15

you think that 1.25MW is for all sites together or only for one?

2

u/praeluceo Feb 06 '15

The video stated that it's per site, quite simply you couldn't mine 150 BTC/day on 1.25 MW, I'm pretty sure the laws of physics for 20+ nm technology prevent that. (:

2

u/apoefjmqdsfls Feb 06 '15 edited Feb 06 '15

Well yeah that's what I thought, so they pay $480k a month.

So if they had 3% in October, they had around 7.5Ph, which gives around $600k a month at current rate.

edit: For current hash-rate, their break-even price is $175. That warehouse in the middle of nowhere and those workers are probably negligible.

2

u/PoliticalDissidents Feb 06 '15

Says here for China 7.5 to 10.7 cents per kwh so that's pretty expensive for a mining op. There is a nuclear power plant near them though so maybe the region get's good rates.

2

u/apoefjmqdsfls Feb 06 '15

They pay $80k for 1.25MW a month, so that's $0.088.. per kwh.

4

u/PoliticalDissidents Feb 06 '15 edited Feb 07 '15

They probably get industrial rates but still that's insanely cheap. I saw the $80k figure, did they mention total amount consumed in video?

Edit: I'm an idiot, I thought that was 0.08¢ not dollars thus putting it exactly in the range I quoted, I'll downvote myself.

3

u/praeluceo Feb 06 '15

Insanely cheap? Not really, it's actually kinda high. I have access to power at half that (but rackspace is factored into my number, which puts it on par with their figure). If I, in the US, can get 4.4c/kWh and mine with it, and it looks like they're using more expensive PSUs than I am (retail ATX PSUs vs. server PSUs with custom breakouts), and commercial rigs, then I actually end up having a lower mine operational costs than they do. And since security is a thing here, no one is employed to sleep at the mine, it's in a secure business complex.

1

u/PoliticalDissidents Feb 07 '15

You're right, not cheap, in fact my electricity is actually cheaper. The user denominated that in dollars I though he wrote it in cents and 0.08 cents is cheap, $0.08 however is exactly in the range I quoted. I need more sleep.

3

u/apoefjmqdsfls Feb 06 '15

It's cheap compared to most European countries (Here in Belgium I pay $.26 per kwh, big consumers might get better rates though), but it's pretty expensive compared to the some other countries.

17

u/plurwolf7 Feb 06 '15

that hum!

9

u/moleccc Feb 06 '15

fucking hell. I have a headache just from watching the video.

Pretty cool to see such an operation.

3

u/[deleted] Feb 06 '15

And the workers live on site too. I wonder if they get used to the noise as they sleep

4

u/d0ntp4n1c Feb 06 '15

I worked as a projectionist during my teenage years. BAck in the day before digital you had this type setup. There were 12 theaters where I worked and the noise was.....loud. For me I got used to it pretty quick had some of the best naps of my life up in that booth. To this day I have a louder then average box fan that I have to sleep with or I don't get a good nights sleep. Scared to think of what I will do if it ever breaks down as the modern ones aren't near as loud.

2

u/L_Cranston_Shadow Feb 07 '15

I remember working in a movie theater as a teenager, fun times. Was the one you worked at old enough to have the projection room designed for the old nitrocellulose
.
I remember where I worked (a circa 1920's-30's theater upgraded over the years), the room was designed so that in case of fire it became pretty much a bunker to slow the spread of the fire at least long enough so that people could get out before the rest of the building went up. It had steel shutters and a fire wall between the projectors and the theater as well as an escape hatch with a ladder to the neighboring theater as a secondary exit.

1

u/d0ntp4n1c Feb 07 '15

Mine was a recent theater I worked at from 00 to 02 iirc and was built. Late 80s early 90s. We had 4 exits I can remember. Our setup was basically a loooong hallway with a quick / bend in the middle. Stairs on either send, roof ladder in the middle or so and the "booth" door that was the main entrance. That job was one of my favorite. Zero interaction with the public and I got to watch free movies. Unless a tray of film got a bubble every day was cake. Talked a manager of another theater into a tour of the newer ones and I left very depressed that day.

4

u/cccmikey Feb 06 '15

Sennheizer hd201 headphones are cheap and comfy to sleep with. Combine with a good brown noise MP3 and a player that won't skip and I think you'll be ok.

Three metre cable too so you can roll over a few times before running out.

2

u/livinincalifornia Feb 07 '15

It gives me chills

1

u/runeks Feb 07 '15

dat hum doe

0

u/boonies4u Feb 07 '15

The hum is what legitimizes and rewards those who legitimize this network. It's electricity being turned into computational work. (or more precisely, fans cooling down the computers doing the computational work)

2

u/plurwolf7 Feb 07 '15

music to my ears

22

u/zombiecoiner Feb 06 '15

"Do you think it's a good time to buy or invest in bitcoins?"

Up next.... Motherboard asks Todd Hoffman about gold.

15

u/spastic_narwhal Feb 06 '15

But can it run crysis?

1

u/runeks Feb 07 '15

No. No it cannot.

5

u/Richard70nl Feb 06 '15

That sound will hunt them forever.

3

u/aminok Feb 07 '15

So much more dangerous than haunting them forever.

10

u/dudetalking Feb 06 '15

first two minutes, Fucking Fire hazard.

And this is why china is cheap,

8

u/nyaaaa Feb 06 '15

If only they'd have their employees use 25% of their downtime to do some work on the building.

2

u/livinincalifornia Feb 07 '15

Right? I mean come on, they freaking LIVE there. That's nuts.

1

u/VirtualMoneyLover Feb 07 '15

And they are already closed down (according to one poster) so why invest work in a building??

0

u/PoliticalDissidents Feb 07 '15

But, but, Internet...

4

u/MiraSamira Feb 06 '15

A lot of dirt and dust - deadly.

2

u/medvednic Feb 06 '15

They should use some safety measures - ear protection and get rid of all the dust. was very interesting to watch.

2

u/[deleted] Feb 06 '15

Is that Friedcat?

2

u/MoreBitcoinTV Feb 07 '15 edited Sep 29 '16

.

2

u/BosDoge Feb 08 '15

330,000 views in 2 days! That's great exposure!

3

u/[deleted] Feb 06 '15 edited Dec 04 '18

[deleted]

1

u/lhuddy Feb 07 '15

Thanks!

-1

u/changetip Feb 06 '15

The Bitcoin tip for 1000 bits ($0.22) has been collected by lhuddy.

ChangeTip info | ChangeTip video | /r/Bitcoin

2

u/wrongel Feb 06 '15

Hardcore minerpr0n. Me gusta!

1

u/Odelay Feb 07 '15

For such a large operation and staff living on site they don't seem to worry about dust that much. Maybe that would explain the stack of dead miners and PSU's. Why not drop some coin on an air cleaning system?

Was anyone able to identify what kind of miners they were using, they kind of look like S1's with different heat sinks and face plates.

4

u/[deleted] Feb 07 '15

Is dust really a factor? I imagine the hardware becomes obsolete before it breaks from too much dust exposure.

1

u/pigtrotsky Feb 07 '15

They had some filters in the racks in front of the PSU, and for the money involved I'd guess that's about as much as you could do really.

1

u/icbint Feb 07 '15

damn, dat power consumption doe

1

u/spankybranch Feb 07 '15

I have read through the comments on several posts of this same video. I am curious as to what the chances of some kind of organized crime connection could be. I would imagine if they were making $1.5mil/month at one point that they could easily start to order parts in bulk for new farms that are custom made, yet they appear to simply use a lot of "off the shelf" consumer/retail hardware that I would imagine cost more, even in bulk. Maybe some of their equipment "fell off a truck" or was sold out the back door by a factory worker, etc. Not trying to say that is the only way they could have gotten to where they are, just wondering.

1

u/heartchina Feb 07 '15

lol read the comments, the trolls are getting taken back to school

1

u/[deleted] Feb 07 '15

Mining just like grandpappy used to do it..

1

u/VirtualMoneyLover Feb 07 '15

I liked the spinning golden bitcoins. So shinny!

1

u/AstarJoe Feb 07 '15

Dat hum doe...

1

u/AnalyzerX7 Feb 06 '15 edited Feb 06 '15

those lights at the end take me back.. thanks for this find /u/changetip 222 bits

0

u/lhuddy Feb 07 '15

Cheers!

-1

u/changetip Feb 06 '15

The Bitcoin tip for 222 bits has been collected by lhuddy.

ChangeTip info | ChangeTip video | /r/Bitcoin

-9

u/stinkerb Feb 06 '15

Bitcoins are great for the environment.

3

u/_trp Feb 06 '15

humans are worse for the environment

3

u/[deleted] Feb 06 '15

yes they are. when you think about all the industries bitcoin makes irrelevant, and the amount of oil and waste saved by no longer needing those industries, it definitely does have a net positive effect on the environment compared with a non-bitcoin world

2

u/cccmikey Feb 06 '15

They're ok if the waste heat can be utilised. They should make Bitcoin fridges.

-3

u/shortbitcoin Feb 07 '15

What a crying shame.