As Bitcoin Infrastructure Booms, Mining Heads to the Data Center

This is the first of a two-part series on the boom in Bitcoin computing infrastructure, and what it means for the data center industry.

Emmanuel Abiodun once mined for Bitcoins on a desktop computer in his home. He’s now running 160 powerful computers in server space in Iceland, where the machines are cheap to power and cool. Later this year, Abiodun expects to have an empire of 4,000 bitcoin mining rigs spread across two continents, eventually filling nearly 5 megawatts of data center space.

Five megawatts of computing? At 10 cents/kwh, that’s $500 bucks an hour (someone check my math) to mine bitcoins, to say nothing of his capital investment, which sounds like several million dollars.

He must be finding enough of them to make it worth his while. Or, maybe he’s like the guy who pulled off a bank heist and spent all of the money on lottery tickets, winning very little.

I’m guessing the hardcore miners feel they have the inside track on BC’s future value not only as a currency, but the core of an unstoppable disruptive technology that transcends law and business practices as we know them... When all are mined, the miners switch over to processing fees, a la Visa. Miner today, Scrooge McDuck tomorrow.

This is one of the many aspects of BitCoins that puzzle me. We saw the story a couple months ago about the guy that threw out an old hard drive from his laptop that he used for BitCoin mining. He said he left it running for a week and amassed 7500 bitcoins. Today this would be worth $6 or 7 million dollars. So what was he computing with his laptop that was worth that kind of jack? And who was paying him? And for that matter, who is paying the guy in this story? What is he paying him for?

I think the guy who lost the hard drive was mining years ago as a lark when Bitcoins were less than a penny. Remember, two years ago a guy paid 10.000 Bitcoin for a pizza. I also heard that a female singing performer turned down an offer of 100,000,00 Bitcoins to do one performance a few years ago.

To get back to the hard drive guy, he was mining when they were worthless. People were giving them away. Anyhow I think a significant amount time passed and he learned that Bitcoin were now worth 100x more and began to look for the hard drive. He inadvertently threw it out when he was cleaning his apartment.

As far as Bitcoin value goes it is determined by the market. Bitcoin the currency is a small part of Bitcoin the protocol that will solve many problems that have plagued man for time and memorial.

When this guy was mining hardly anyone else was. It was easy for him to grab large amounts. The algorithm gets harder to solve and the difficulty rises as more miners jump in with more powerful gear and the price continues to rise because more people are adopting the technology. This is the network effect that feeds on its self and gains traction as more and more people adopt. We are now standing at the bottom of a volcano that is about to erupt with exponential mass adoption. This is going to be amazing to watch.

Read this to get an idea of the incredible potential of this breakthrough.

http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/

If you’d like to know more about mining take a look at this

litecoin- please elaborate

Litecoin is commonly referred to as the "silver" to Bitcoin's "gold". Bitcoin is currently trading at about $800/coin right now. Litecoin is trading at about $22/coin.

There are dozens of coins besides bitcoin...sometimes called "alt-coins". IMHO most are traded on wishful thinking that they will experience a similar rise to bitcoin. Heck, litecoin may be one of those as well...only time will tell.

What I like about Litecoin is that it just sort of sits there right below Bitcoin. It's value of $22 is solid enough to give it a chance for survival, but low enough to not attract the huge datacenter mining activity that is being drawn to bitcoin.

So that makes litecoin something that the "common man" can mine requiring a very minimal investment. If you're a hard-core gamer, you may already have the equipment you need to get started.

There are tons of links out there that can describe better than I can. Some that I found useful:

Graphic card hardware comparison the higher the kH/s the more coins you can mine.
BTC-E Exchange one of the many places you can buy and sell litecoins (LTC) and others.
Coinotron one of many "mining pools" you can join to earn litecoins.
Homemade Rig Example Instructions for building a rig. However, I don't really like how he jams the thing into a milk crate. However, I looked at the page for examples of different hardware that can me used.
Litecoin 101 Forbes article.
bfgminer example of software you can use for mining. Lots of switches and settings to figure out, but once you get the right script in there, it basically runs on its own.

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