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A Brief Glimpse Into the Lives of Chinese Bitcoin Miners
Bitcoin ^ | July 17, 2017 | Jamie Redman

Posted on 07/19/2017 3:01:09 PM PDT by 2ndDivisionVet

Last week on July 11, China’s Central Television (CCTV-2) channel aired a special documentary on bitcoin mining operations located in Kangding county in the southwest region of the country. The channels news reporter drives to a desolate mountainous area in Sichuan to visit a three-story mining data center. Each floor is filled with mining rigs housed on metal racks and surrounded by massive fans. CCTV also interviews Wang, the young data center owner in his twenties who runs five mining sites in the area. According to a translation from the local publication, 8btc, Wang says he runs a medium sized data center that can grow bigger. The twenty-year-old native says the operation mines 16 BTC (US$30,000) a day.

“We are a middle-sized mining factory with 5000 bitcoin miners,” explains Wang. “We still have room to run another 5000 mining machines.”

Wang and the data center’s operations manager Xu says lots of people are choosing to set up mining sites in Xinjiang, Sichuan, Yunnan, and Inner Mongolia. The reason for this is cheaper electricity from hydropower stations located in the mountains. Wang details that typically electricity in China is 0.7 yuan per KwH, but by partnering with neighboring hydropower stations mining facilities are paying 0.3 yuan per KwH (about 0.045 USD at the time of writing).

“[Electricity] is directly transmitted from nearby hydropower stations,” Wang tells the CCTV journalist. “This is mainly why we set up the site here. Bitcoin mining is electricity-consuming and 50 percent of our profits go to the electricity bill.”

The price is the outcome of our negotiation with the hydropower station. Put simply, we made a deal with them and give them part of our profits. They provide electricity, we provide machines, and we share the profits. It’s win-win.

‘Why Should We Pay Taxes for Playing Games?’

According to CCTV’s broadcast, an executive at the Sichuan Electric Power Company says that these mining sites are not supposed to partner with hydropower stations. The sites have been investigated he says, but nothing materialized from the local government inspection. Furthermore, Wang says he doesn’t pay taxes for his bitcoin revenue.

“Why should I?…We are mining bitcoin, it’s all about computational power. It’s like playing games. Why should we pay taxes for playing games?”

A Sichuan Bitcoin Miner‘s Dorm Life

Another report from the Chinese photographer Liu Xingzhe covers the interesting world of Chinese bitcoin mines. Liu’s photographs show workers at data centers in another area located in the Sichuan prοvince living in dormitories and taking care of machines for weeks on end. Many of the workers travel from other towns and hitchhike to the remote mountainous region to make a better salary than most local jobs.

Miners at Lui’s farm work during all hours of the day and evening reassembling calculatiοn bοards and fixing malfunctioning machines in the middle of the night. Lui tells the publication he has moved his mining operation from Henan to Sichuan to leverage the cheaper electricity in the region. Additionally, Lui details that he manages roughly 7,000 mining rigs for clients located in China.

One of the bitcoin mine workers explains that the nearest town is roughly 20 miles away and there is nowhere to spend money near the facilities. “Τhe gοοd thing is, there isn’t anywhere tο spend mοney, sο yοu can save yοur whοle salary,” οne miner tοld the photographer Liu Χingzhe.

What do you think about the Chinese bitcoin mining operations? Let us know in the comments below.

TOPICS: Business/Economy; Computers/Internet
KEYWORDS: bitcoin; blockchain; btc; china; cryptocurrency
Can someone here please explain this to those of us who know little or nothing about it?
1 posted on 07/19/2017 3:01:09 PM PDT by 2ndDivisionVet
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To: 2ndDivisionVet

Think of:

Hi Ho, Hi Ho, it’s off to work we go....

2 posted on 07/19/2017 3:09:11 PM PDT by Paladin2 (No spelchk nor wrong word auto substition on mobile dev. Please be intelligent and deal with it....)
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To: 2ndDivisionVet

Exploitation of the retarded is mean.
Funny but mean.

3 posted on 07/19/2017 3:10:52 PM PDT by humblegunner
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To: 2ndDivisionVet
Interesting article. Thanks!

Decades ago people would run aquariums as screen savers, when some folks figured that you could use those computer cycles for good, such as the medical research that a few dozen FReepers do for Folding@Home.

Bitcoins use a form of encryption to secure their value (hence, “cryptocurrency”). They can be “mined” by running extremely intensive math formulas to find new, unused ... numbers ... and make new bitcoins.

Once everyone moved from CPU calculations to GPU calculations, companies such as NVidia have exploded in value, as young Asians buy hundreds of the latest high speed video cards and cram them into servers, and the servers into racks of servers and the racks into FB, AMAZ and GOOG style data centers.

$16,000 per day is probably 50% to 60% profit but the cost of buying enough equipment is pretty high.

I'll find some related articles and post them.

4 posted on 07/19/2017 3:19:28 PM PDT by texas booster (Join FreeRepublic's Folding@Home team (Team # 36120) Cure Alzheimer's!)
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To: 2ndDivisionVet
It can take this guys servers over 300 days to produce one bitcoin, and some super duper hardware.

It is not an easy computation.

5 posted on 07/19/2017 3:21:13 PM PDT by texas booster (Join FreeRepublic's Folding@Home team (Team # 36120) Cure Alzheimer's!)
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To: 2ndDivisionVet

What do you want to know about BTC?

A couple of points:
- It is a blockchain based cryptocurrency. (good for sending money with no fees).
- “Fiat”, but limited to 21 million in circulation.
- I personally like “Ethereum” better right now...(better blockchain structure).

Current “Crypto” prices:

6 posted on 07/19/2017 3:22:34 PM PDT by Drago
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To: texas booster

All about the NVidia new Volta GPU chip.

7 posted on 07/19/2017 3:30:36 PM PDT by texas booster (Join FreeRepublic's Folding@Home team (Team # 36120) Cure Alzheimer's!)
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To: 2ndDivisionVet

VEERY basically it is like this. Bitcoins rely are a massive encryption ‘code’ to function. You have to calculate heavily to ‘discover’ a new code. So this guy owns a pile of computers that are constantly running the math to discover a new coin. When they ‘find’ one they can sell it for real money.

8 posted on 07/19/2017 3:35:56 PM PDT by TalonDJ
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To: texas booster

“Once everyone moved from CPU calculations to GPU calculations,”

They moved from GPUs to FPGAs to ASICs several years ago :-) ... they’re using racks and racks of ASICs doing the operations to mine BTC now ... ASICs are the lowest power, highest performance solution (and also the reason why it’s not very cost effective to mine BTC on your home PC these days since China all but cornered the market on mining BTC cheaply, quickly, and efficiently).

9 posted on 07/19/2017 3:36:54 PM PDT by edh (I need a better tagline)
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To: 2ndDivisionVet

Other freepers have explained Bitcoin so unless you have other questions (feel free to reply to me) we can leave those explanations as-is. The real challenge is competing with China for the cost of electricity. Even in states like Washington or Texas, you’re paying double what these Chinese miners are paying for electricity, so the margins for mining Bitcoin in the US are considerably lower - after paying for the equipment, electricity is generally the second-largest expense in a Bitcoin-Mining operation.


10 posted on 07/19/2017 3:39:08 PM PDT by mjustice (Apparently common sense isn't so common.)
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To: 2ndDivisionVet
Bitcoin secures its ledger using Proof Of Work (POW). Miners have to demonstrate that they have expended a lot of computational power before they are allowed to add a block of transactions to the Bitcoin ledger. The computation to add a block is added to the computation of all the previous blocks in the ledger making it more and more difficult to change a block the farther you go back in history. Once a block gets far enough back it is effectively unchangeable.

Miners are rewarded with new bitcoin as an incentive (which is where the name miner comes from). But their main purpose, as described above, is to secure the ledger.

Another post mentioned mining with GPUs. This hasn't been worthwhile in Bitcoin for a few years now. Bitcoin mining is now done with special purpose hardware devoted to doing POW computations.

11 posted on 07/19/2017 3:40:09 PM PDT by Database
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To: 2ndDivisionVet
Yes. Bitcoin is a crypto-currency, which is essentially an enormous group of related prime numbers, stored in an anonymous list of secure, virtually unbreakable Internet transactions.

Since the mathematical algorithms underlying Bitcoin produce only a finite number of the special numbers, Bitcoin is finite. Because like gold, Bitcoin is both useful as a currency and is finite, it has value. Presently, one unit of Bitcoin costs $2261.76.

Because of the secure transaction nature of Bitcoin (called the Blockchain), Bitcoin is fractionable; you can buy something from me for 0.001 Bitcoin.

It is possible to find more of the Bitcoin numbers, by searching the mathematical algorithms using supercomputers. This process is called "Bitcoin mining". The "easy to find" Bitcoins have already been found, and those yet unfound require exponentially more computing power to calculate the long strings of calculations to find them. Hence, supercomputers in the Chinese mountains powered by hydroelectric dams.

12 posted on 07/19/2017 3:45:11 PM PDT by backwoods-engineer (Trump won; I celebrated; I'm good. Let's get on with the civil war now.)
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To: edh

Just to clarify something :

An ASIC (application specific integrated circuit) is a device that performs a specific task. In the case of bitcoin mining, the ASIC is a circuit dedicated to computing the “stuff” it needs to successfully mine BTC.

This differs from a CPU in that a CPU has “overhead” to compute something. A CPU is a more “general purpose” solution for various problems ... the tradeoff is some performance. A GPU has various task processors that can handle the BTC computations a bit more efficiently (and in parallel), but, again, there is some overhead involved and GPU typically require a lot of power (as in electrical power).

FPGAs are basically configurable digital circuits. An FPGA will eliminate a lot of the CPU/GPU overhead and is pretty close to an ASIC. The price you pay (compared to an ASIC) is overall performance. Since the FPGA is a configurable device, it is a bit slower compared to an ASIC since an ASIC’s dedicated circuitry can be optimized for things like propigation delay, clock skew, etc. In an FPGA, these resources are at fixed positions in the device, so you’re going to get a performance hit compared to the ASIC.

The big tradeoff between ASICs and FPGAs is one of cost ... it costs north of $1M to make an ASIC these days ... FPGAs can be purchased for far, far less. However, it seems like the Chinese can afford the $1M cost involved with fabricating the ASIC since they seem to be using thousands and thousands of these devices on their BTC farms.

13 posted on 07/19/2017 3:45:22 PM PDT by edh (I need a better tagline)
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To: 2ndDivisionVet

Dang, it took me so long to compose my answer that 10 other people got in ahead of me. Sorry, Vet.

14 posted on 07/19/2017 3:46:37 PM PDT by backwoods-engineer (Trump won; I celebrated; I'm good. Let's get on with the civil war now.)
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To: Paladin2

15 posted on 07/19/2017 4:15:47 PM PDT by Charles Martel (Progressives are the crab grass in the lawn of life.)
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To: 2ndDivisionVet; P-Marlowe
I set up an operation many months ago to mine "P-Marlowe Coins".

It seems to be going well (so the miners tell me) but all
I really have to show for it are three of those old pop
bottle caps where you peel off the cork to get a prize.
So far I have found a free pop and one half of a J.C. Higgins bike.

(Whatever happened to that "Tsunami" guy anyway?)

16 posted on 07/19/2017 8:26:41 PM PDT by shibumi (Cover it with gas and set it on fire.)
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