As Bitcoin Infrastructure Booms, Mining Heads to the Data Center


The power equipment in this data center in Iceland supports customers seeking cheap and renewable electricity, including bitcoin mining company CloudHashing. (Photo Colleen Miller)

Expansion in Dallas

That’s not all. As soon as next month, CloudHashing plans to open a new data center in Dallas where it will launch an armada of water-cooled mining rigs from CoinTerra featuring cutting edge 28nm ASIC chips. He says the Dallas facility will operate at “an unprecedented scale,” and could eventually house 2,500 machines and use 2.3 megawatts of wholesale space.
That’s not on the immediate horizon, as it was only last week that CoinTerra unveiled the first working prototype of its new TerraMiner IV system. CloudHashing is partnering closely with CoinTerra, a Silicon Valley bitcoin hardware startup headed by Ravi Iyengar, former lead CPU architect for Samsung.

“We always ensure that we’re using the very latest hardware,” said Abiodun. “We’re major hardware buyers, so it’s essential that our approach is as efficient as possible.”

In addition to buying CoinTerra rigs for its own customers, CloudHashing is also supporting Terramine Hosting, which will house hardware for CoinTerra customers. For $1,899 to $2,999 per year, customers who buy CoinTerra’s 4U systems can house them in Terramine racks in CloudHashing’s data center.

IceDrill: Powered by Bitcoin IPO

CloudHashing isn’t the only Bitcoin mining outfit teaming with hardware vendors and data center providers. IceDrill plans to build a powerful mining facility in a data center in Canada, which will be populated with 28nm ASIC machines from HashFast, another Silicon Valley hardware startup. Like its rival CoinTerra, HashFast has seen delays in shipping its mining computers, but recently delivered the first units to IceDrill for testing.

IceDrill is backed by a unit of PetaMex, which raised capital through a public offering on a platform for Bitcoin investors. Photos of the company’s data center, posted by IceDrill co-founder Willem van Rooyen, depict a commercial data center featuring Trane chillers and Cummins generators. The company isn;t disclosing the location or provider of its facility. “We’re glad to be working with a data center which is not only willing (and able) to cater to our ‘special needs,’ but also excited by the future prospects of the Bitcoin mining space,” van Rooyen shared on Bitcoin Talk.

HashPlex: Walking With the Cloud-Builders

A startup called HashPlex is hosting bitcoin hardware in sites in Seattle, and is preparing to open a new data center in central Washington state, where its neighbors will include Microsoft and Yahoo cloud server farms that are among the world’s most efficient facilities. The company says it is backed by venture capitalists and angel investors and will launch with the ability to support customers with “megawatt-plus” power requirements. The HashPlex team includes veterans of Microsoft, Google and the Open Compute Project.

“We think there is a need for hardware hosting as mining moves from being a hobbyist activity to something bigger,” the company said in a post on Reddit. “Traditional datacenters are way too expensive and offer more redundancy in all respects than we really need. None of the options are what we’d call miner-friendly. So we started building HashPlex. We’re building out a data center in central Washington where power is clean and cheap.”

HashPlex will host customers’ mining hardware for $99 per kw-month (1000 watts used constantly over a one-month period).

Custom Facilities: Homebrew at Scale

While some bitcoin mining operations will seek out established data centers, others are creating their own facilities. Among these is MegaBigPower, which also operates a facility in Washington state. Seattle entrepreneur Dave Carlson has created a bitcoin mine from a former warehouse filled with more than 1,300 custom rigs running nearly 300,000 ASIC hashing chips, according to a post at BitcoinTalk.

Bloomberg BusinessWeek recently had a look inside Carlson’s operation: “Inside the facility … row after row of Bitcoin computers sit on cheap metal racks he bought at Home Depot. Industrial fans on the floor keep the machines cool.”

At the other end of the spectrum is a Hong Kong facility operated by ASIC Miner, in which rows of rack-mounted tanks are filled with Novec, a liquid cooling solution created by 3M. Inside each tank, densely-packed boards of ASICs run constantly as they crunch data. As the chips generate heat, the Novec boils off, removing the heat as it changes from liquid to gas.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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  1. Jeff

    The big downside to mining BTC is that the amount of BTC one processor can mine (known as difficulty) is effectively divided equally among all the processors participating (assuming each processor can hash at the same speed). So if for example you have 10k processors and your competitor has 10k, and they upgrade to 20k, they will then get 2/3 the mining revenue (the revenue total has not gone up, the share just shifted) unless you add another 10k just to keep up. The real opportunity now is figuring out what to do with all those ASIC devices once the value of BTC pops...

  2. What is the useful lifespan of hardware? What is the term for a lease? Is density factored into roadmap on hardware and product planning with the data centers? The way the article is written it is pretty clear that the hardware is the driver of the business. Master the hardware design and manufacturing and deployment and you have a leg up on competitors. That said, what is the useful life on the chips and the design? 2 years tops? One of the companies flamed out after a few months because they appear to have been stymied by the rapidity of hardware designs. Short lifespan/short useful runs makes for volatility the underlying real estate business. From the data center perspective - the challenge will be looking at lease terms and density. You have new companies with rapidly changing hardware requirements that may obsolesce a facility before the end of term. If hardware changes that quickly, then the hardware in the first 10 cabinets of a row will likely be different densities than the next ten and have different cooling requirements, and if you outpace the ability of the facility to (1) keep up with densities and (2) keep up with the flexibility required for cooling and or constantly dealing with hotter hot spots then you may have a situation that will be hard to fix. I could also see a bait and switch (for lack of a better term) on signing up for 3MW and burning through that in 1-2 hardware refreshes in two years and no expansion because of the heat footprint increases. I hope the bitcoin miners look at containers as options - fixed number of racks, fixed cost, onboard cooling that can be dialed up from 250Kw-750 Kw in the same form factor and down the road the companies can order 2x250 Kw's to get rolling, roll in another 250, and then add a chunk of 500Kw containers as they designs change. They may be one of the few options that can service the need that quickly. When it's time to move up again, they recycle the container, or create a secondary market, or retool them along with their hardware. Integrated bitcoin hardware and data center containers for speed of manufacture & maximum flexibility across densities and commonality of platform would be safe way to go. Then just lease power without the facility overhead, it could be a very compelling proposition. I'm game to model it out...

  3. Mike

    Mark this might help you, Asicminer are working on containers see

  4. Pepe

    If you really want to take mining to everyone's hand you can develop more user friendly mining software, or cheaper, afordable and reliable ASIC... when you buy equipment for mining, is always very close to break even or loss, and always is below to buy and hold bitcoins. But in the long run at some point you'll get the same in btc. But in a time limited contract you can calculate more o r less how much BTC you'll get from mining and compare with buy and hold the BTC in the same time. And contracts for the prices that Cloudhashing offers, the customer will get about a 20% of the BTC compared to buy and hold... so the only profit is made be cloudhashing as they keep the equipment mining and renting in. With the renting profit the get the mining product in advance so they are mining before the network... So dont trust this people saying they do it for the customer, all that is a lie the customer is at the end paying to maintain cloudhashing's mining farm. And that is the business model...

  5. Mark: A few weeks back we wrote in more depth about the ASIC Miner Hong Kong project, which uses immersion cooling but deploys it in rack-mounted tanks. Check out the photo here: As Mike noted, they've also looked a container model, which makes great sense for this use case, especially for those wanting to use traditional cooling rather than immersion. Lease lengths and bitcoin are an interesting topics, due to the built-in changes in the difficulty and block rewards over time. Watch the site for more on that, probably tomorrow.

  6. Miners have been exchanging a lot of their new Crypto coins, for gold,silver,platinum, and palladium at sites such as

  7. Jeff: Re the hardware, I'd be interested in hearing from folks with specific experience with Bitcoin ASICs and whether they can be repurposed. There's been chatter in online forums about efforts to adapt ASICs for mining Litecoin and other Scrypt-based cryptocurrencies (which were designed to be accessible to miners using GPUs).

  8. Jeff

    Rich: One of the more interesting things I've read is that since the ASICs are good at hashing they would be great at cracking encryption keys otherwise thought to be impossible to brute force in any timespan shorter than the predicted life of the sun (outside of the creation of a true quantum computer). One particularly paranoid write-up even postulated that Bitcoin is already a front for a [insert favorite covert agency here] plan to create a rainbow table of hash reverses. Bitcoin's inevitable downfall could be a pretty devastating thing to happen to secure communication, if any of that is true. I suspect if it is, an arms race will ensue with servers of any value needing onboard ASICs for elaborate encryption, just to stay far enough ahead of the brute decryption capabilities that are out there. Last I checked, the Bitcoin mining pool (not including any alternative cryptocurrencies like you mentioned) is hashing 15 quadrillion times a second (thats 15,000,000,000,000,000,000). Nervous yet?

  9. "One thing is certain: Bitcoin infrastructure will need to become more energy efficiency. Recent estimates from suggest that the global bitcoin network has been using between $12 million and $15 million of electricity each day, while generating $5 million to $6 million in new Bitcoins." Energy efficiency will not solve the overall energy consumption rate. When you increase the efficiency of the overall network, then it lowers the entry barrier for new miners and rigs to compete on price. This hypercompetition results in favoring those miners who can operate on the thinnest profit margins. This translates into mining profits being just slightly above mining expenses, resulting in the *same amount* of power consumption per coin mined. As the price of each bitcoin increases so does the incentive to spend more on electricity. Assuming a bitcoin price of $100,000, and a mining rate of 100 coins/hour (it's currently 185 coins/hour), and a global average rate of 0.10 Kwh (1000 watt-hours), translates into 50 Gigwatts of continuous power, or 1.25% of global electrical power output! At a $1 million per coin that works out to 12.5% of global power output! Clearly, these power consumption rates will in turn act as a constraint on bitcoin's ability to scale to handle demand, thus limiting it's future price. As a bitcoin investor I am very troubled by this "energy problem" and I'm amazed no one in the community has addressed it. Again, increase energy efficiency of mining rigs does not lower the cost per coin, it only increases competition for that coin, and thus the energy required to mine it.

  10. Paul, wasn't that $15 million number completely flawed? I believe it was just in some statistic on that took the hashing power multiplied by some random GPU's power consumption, for fun I assume. It has been taking down in the meantime. Whoever broke that story was probably only after creating some headlines. There have been arguments over the true cost of Bitcoin mining (and hence production of new bitcoins) versus existing infrastructure of banking data centers and the cost of printing, dispensing and exchanging physical money all around the world. One popular but oversimplified approach to estimate total electricity cost is to multiply the estimated total network hash rate by the electricity required by popular GPUs for each mega hash per second (MH/s). However flawed this method is, due to the ever changing mining market and devices in use and different electricity cost throughout the world, none of these estimations take cooling and infrastructure electricity consumption into account. While it is not unheard of that hobby miners reuse some of the heat to keep their homes warm in colder climates, it is safe to assume that large scale mining is carried out in either commercial or purpose built data centers and not very different from commercial data centers in this respect - very little of its generated heat is reused for a purpose.

  11. Hi Alex, Actually, it was our story that mentioned the $12 million to $15 million number, which indeed came from (which Paul cited in his comment). I realize that's just a guesstimate, and the 15 cents per kWh rate seemed pretty high to me, but may reflect rates on miners outside the U.S.

  12. Alex

    The $15 million was on Forbes too a few weeks ago, so I didn't mean to address you with "creating headlines". Not sure who broke it though. What I am really asking myself is where all these 2kW 4U boxes are supposed to go? Is there even broadly available infrastructure in the US that can support this kind of density?

  13. Good discussion, thanks for the input and reference articles esteemed colleagues. I was in meetings in Chicago the past couple of days and the discussions were focused on a number of things - very little of which was solution or application focused. What I mean is that many data center operators think of what the data center is from a capital, construction, or 'market' based perspective. It's still led by raised floor with the variables of density and size and the caveat of *we can build anything with enough time and the right financial model to back it. Seems to me there is a vertical focus emerging that is high risk/high reward in the mining outfits. The gear is volatile and obsolete well before the end of a data center lease. That much volatility in a data center won't play well from a leasing or power management perspective because the tenants are chasing the dragon for more power while the operator will likely run out of the power and cooling to service them AND the other less dense customers. It happened in a facility a former employer had in Minnesota - cages every 100 feet with small clusters of hotter and hotter gear. And that was years ago. For someone that sees this for what it is - a great opportunity to work through these challenges and come up with a model that embraces the changes, the risk, can handle the responsiveness required to serve the dynamic nature of the clients - there is a specific application to be mastered and modeled here. I for one want to be a part of the solution. I know the focus has been on the liquid cooled stuff and I get the benefits, but I have yet to see techs jumping up and down at the opportunity to wear aprons and boots to keep mineral oil off their clothes to swap out a blade. The additional infrastructure required in tubing, pumps, and enclosures adds points of failure from what I have seen and piping is expensive. In one project it made a $20M difference in price from piping alone. Maybe I am wrong, but I haven't modeled it out vs what else I know and have modeled and I'm willing to learn. Great stuff, and I would love to see more of these specific applications covered as it relates to data centers. Watts per square foot is not what it used to be...

  14. Mining doesn’t have to be so power hungry. That’s what happens if you choose a proof-of-work scheme that’s computationally intensive. A scheme that minimizes computation and maximizes random access to GBs of memory, like Cuckoo Cycle (, will require large investments in RAM but relatively little power.