Bitcoin Miners Building 10 Megawatt Data Center in Sweden
February 6th, 2014 By: Rich Miller
Facebook has new neighbors in Sweden, and they’re building Bitcoin’s version of the Death Star – a 10 megawatt data center filled with high-powered computers mining for cryptocurrency.
Bitcoin mining equipment company KnC Miner has begun construction on its new facility in Boden, about 10 miles down the road from Facebook’s server farm in Lulea. The data center is being built in a facility previously used as a helicopter hangar for the Swedish armed forces. It will be retrofitted to house thousands of custom Bitcoin mining rigs built by KnC Miner, one of a host of new vendors that has emerged to serve the growing market for Bitcoin hardware.
KnC Miner is based in Stockholm, Sweden and has established a leadership position in Bitcoin mining rigs powered by ASICs (Application Specific Integrated Circuits) to crunch data for creating and tracking bitcoins. The company says it has sold $75 million in hardware since June, with customers in 120 countries.
KnC Enters Cloud Mining Services
The new data center marks KnC’s entry into cloud mining services. It’s the latest in a series of bitcoin companies to announce the establishment of multi-megawatt data centers for Bitcoin mining – the term for using data-crunching computers to earn newly-issued virtually currency. Like hyperscale computing companies such as Facebook, Bitcoin companies are chasing cheap power to improve the profitability of running their power-hungry rigs.
“We searched all over the world for a suitable place to build the first of many of our own mega data centers, and to find the best location lying right here in our home country is fantastic,” said Sam Cole, one of the co-founders at KnC Miner. “Our highly advanced technology consumes a lot of energy, so for us it was imminent to find a production site with access to renewable yet stable and safe energy. We have had an incredible amount of support from The Node Pole representatives, local companies and the government here in Boden.”
The Node Pole initiative seeks to market Sweden as a destination for data center development, leveraging the region’s abundance of stable and competitively priced electricity from renewable energy.
KnC Miner started construction last week, but expects it to be fully operational already within the next few months. Representatives of the Node Pole said that KnC is “already in discussions with local authorities regarding the establishment of even larger facilities in the local area already later this spring.”
Having modeled this out for a prospective client, there are several challenges ahead of anyone in the mining space, specifically as it relates to data centers.
The rigs- fast hashing machines – (right now) are 2.2Kw per machine (Coin Tera TeraIV). They are 4u in size (non standard width) and require special mounting rails to go in a traditional cabinet. There are 10 rigs per 42 U cabinet which means 22 Kw/cabinet +/- which all but a few facilities can handle at scale because of the heat and power density. There is also the issue of equipment supply and track record since BTC itself is only ~5 years old and the TeraMiners are just getting plugged in for their first runs.
Assuming 5 cents per kwh 22Kw*730 (hours) = 16,060 Kwh at 5 cents is $803 in power per cabinet per month. Plus rent and bandwidth of say $200/kw so $4400 plus $803 = $5203 per cabinet per month.
That gets you the environment to mine bitcoin (BTC). You still need to buy the rig, rack it, test it, load the OS, and attract a pool of miners (or become one yourself).
The total available monthly pool is 108,000 BTC. Period. Worldwide. That’s about $80M total at today’s BTC value.
So 1,000 machines (assuming you can buy that many) sets you back $6M in hardware and is most valuable in the first month. After that there are diminishing returns because of the way hashing works, and you’ll have a bigger drop in price or a drop in hashing power when a new more powerful box comes online. You never have the opportunity to make as much as you do the first month.
If you took delivery and turned on $60 million of mining hardware today you’d have a little less than half the hashing power and receive half the reward – ~$30 million in month one. Every thirty days the reward is cut by up to half, so you have diminishing returns. And all of these returns are in BTC so you’re putting real money in and getting BTC back. The value of which will gyrate wildly on a whole host of news (emotion) and technology and will never be worth what it is worth in month one.
If you are a data center provider, the risk is purely with the companies that sign contracts and their ability to pay. If they don’t pay and a lien is placed on the rigs, the rigs typically do not belong to the BTC hosting company.
As a user, one of the most marketed bring your own rig hosting companies is in England so you’ll need to contend with British law if you opt for the bring your own rig plan and things don’t work out because THEIR math didn’t add up. And don’t forget that power is twice what it is in the US.
I tell clients that this is like the first 5 years of the internet – a lot of wild west, a lot of not knowing clearly how you will make money but you don’t want to sit things out either. BTC still needs an AOL and a Netscape to break things wide open and it’s hard to argue we’re not on that path. Place calculated bets with risk capital and you may be the next unicorn.
DahanaPosted February 17th, 2014
AFAIK 1 kWh costs 0,30 $ in Sweden.
In caqse on international transactions between different currencies,
baanks oof the two countries get involved and operate based on exchange rates between the two currencies.
Right now, 25 bitcoins are awarded in a sort of lottery
system about eveery 10 minutes. That makes the total in circulation valued at over $92 million.