Stories
Slash Boxes
Comments

SoylentNews is people

posted by cmn32480 on Tuesday April 17 2018, @06:04PM   Printer-friendly
from the community-brownout dept.

Here's a month-old article from Politico Magazine about the big business of cloudscale blockchain minery in the better Washington:

Hands on the wheel, eyes squinting against the winter sun, Lauren Miehe eases his Land Rover down the main drag and tells me how he used to spot promising sites to build a bitcoin mine, back in 2013, when he was a freshly arrived techie from Seattle and had just discovered this sleepy rural community.

The attraction then, as now, was the Columbia River, which we can glimpse a few blocks to our left. Bitcoin mining—the complex process in which computers solve a complicated math puzzle to win a stack of virtual currency—uses an inordinate amount of electricity, and thanks to five hydroelectric dams that straddle this stretch of the river, about three hours east of Seattle, miners could buy that power more cheaply here than anywhere else in the nation. Long before locals had even heard the words "cryptocurrency" or "blockchain," Miehe and his peers realized that this semi-arid agricultural region known as the Mid-Columbia Basin was the best place to mine bitcoin in America—and maybe the world.

[...] As bitcoin's soaring price has drawn in thousands of new players worldwide, the strange math at the heart of this cryptocurrency has grown steadily more complicated. Generating a single bitcoin takes a lot more servers than it used to—and a lot more power. Today, a half-megawatt mine, Miehe says, "is nothing." The commercial miners now pouring into the valley are building sites with tens of thousands of servers and electrical loads of as much as 30 megawatts, or enough to power a neighborhood of 13,000 homes. And in the arms race that cryptocurrency mining has become, even these operations will soon be considered small-scale. Miehe knows of substantially larger mining projects in the basin backed by out-of-state investors from Wall Street, Europe and Asia whose prospecting strategy, as he puts it, amounts to "running around with a checkbook just trying to get in there and establish scale."

It's pretty long for an internet article but it's got pictures.


Original Submission

 
This discussion has been archived. No new comments can be posted.
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
  • (Score: 5, Interesting) by looorg on Tuesday April 17 2018, @09:18PM (8 children)

    by looorg (578) on Tuesday April 17 2018, @09:18PM (#668300)

    I really liked this article, 15 pages isn't that long. Either way it was well worth the read I think. It doesn't really focus on the bitcoins etc but on what happens with the community. It really does open up a lot of other questions, such as the one highlighted in the summary. This mining really won't bring in that many new jobs, will they bring in taxes to cover the costs?

    The region’s five huge hydroelectric dams, all owned by public utility districts, generate nearly six times as much power as the region’s residents and businesses can use. Most of the surplus is exported, at high prices, to markets like Seattle or Los Angeles, which allows the utilities to sell power locally at well below its cost of production. Power is so cheap here that people heat their homes with electricity, despite bitterly cold winters ...

    This here might become an issue. If the miners move in, they are still selling power cheap, but the miners use it all there won't be any exported so the losers will be the public utility. It was only cheap due to the exports. If they miners suck the power out there might not be any exports and the power price can only go up. Still they only use a small fraction of the total power at the moment but it's ramping up quickly.

    ... whose own operations marched steadily from 250 kilowatts to 1.5 megawatts to 5 megawatts.

    In 2014, the public utility district in Chelan County ... in a county whose 70,000 residents were then using barely 200 megawatts.

    ... the three public utilities reportedly have received applications and inquiries for future power contracts that, were they all to be approved, could approach 2,000 megawatts -- enough to consume two-thirds of the basin’s power output.

    In Douglas County, where the bulk of the new mining projects are going in, a brand new 84-megawatt substation that should have been adequate for the next 30 to 50 years of normal population growth was fully subscribed in less than a year.

    ... a prolonged price collapse will cause miners to abandon the basin and leave ratepayers with an infrastructure that may or may not have a use

    Bitcoin Ghost towns?

    Early data from Douglas County, for example, suggest that the sector’s economic value, especially the sales tax from nonstop server upgrades, may offset any loss in surplus power sales ...
    Miners have agreed to pay heavy hook-up fees and to finance some of the needed infrastructure upgrades. They’ve also labored to build a case for the sector’s broader economic benefits like sales tax revenues. They say mining could help offset some of the hundreds of jobs lost when the region’s other big power user the huge Alcoa aluminum smelter just south of Wenatchee was idled a few years ago.

    This is only an option tho for as long as the mining is profitable.

    Starting Score:    1  point
    Moderation   +3  
       Insightful=1, Interesting=2, Total=3
    Extra 'Interesting' Modifier   0  
    Karma-Bonus Modifier   +1  

    Total Score:   5  
  • (Score: 5, Interesting) by ese002 on Tuesday April 17 2018, @09:51PM

    by ese002 (5306) on Tuesday April 17 2018, @09:51PM (#668317)

    The region’s five huge hydroelectric dams, all owned by public utility districts, generate nearly six times as much power as the region’s residents and businesses can use. Most of the surplus is exported, at high prices, to markets like Seattle or Los Angeles, which allows the utilities to sell power locally at well below its cost of production. Power is so cheap here that people heat their homes with electricity, despite bitterly cold winters ...

    This here might become an issue. If the miners move in, they are still selling power cheap, but the miners use it all there won't be any exported so the losers will be the public utility. It was only cheap due to the exports. If they miners suck the power out there might not be any exports and the power price can only go up. Still they only use a small fraction of the total power at the moment but it's ramping up quickly.

    Sounds like they need to take a page from the playbook of the utilities in New York and charge the bitcoin miners higher rates [utilitydive.com]

  • (Score: 5, Insightful) by hemocyanin on Tuesday April 17 2018, @11:41PM (3 children)

    by hemocyanin (186) on Tuesday April 17 2018, @11:41PM (#668340) Journal

    This is pretty bothersome to me -- yes it is hydro but hydro does not come without costs, particularly salmon. Secondly, as far as energy generation goes, hydro is still pretty good compared to alternatives -- especially coal -- and if the electricity gets used for doing bitcoin mining, that means coal will be burned elsewhere for useful work. Lastly, bitcoin was supposed to be some sort of anarchic money but it appears as if it has gotten to the point that only the top end of oligarchy as represented by Wall St. now have any real chance at being successful.

    So basically, bitcoin seems to be the worst of everything environmentally and socially, all rolled up into a massive bubble that will hurt a lot of people if (when?) it implodes.

    • (Score: 1) by khallow on Wednesday April 18 2018, @02:35AM (2 children)

      by khallow (3766) Subscriber Badge on Wednesday April 18 2018, @02:35AM (#668396) Journal

      So basically, bitcoin seems to be the worst of everything environmentally and socially, all rolled up into a massive bubble that will hurt a lot of people if (when?) it implodes.

      Why would you say that? It's just a significant electricity consumer. That has significant environmental impact, but they're not a massive pollution source or land user otherwise. And socially, they're invisible - see how long it took these communities to even notice they were there. And why should we care that bitcoin miners are voluntarily hurting themselves? Just eat the popcorn and enjoy the show.

      • (Score: 0) by Anonymous Coward on Wednesday April 18 2018, @05:36AM (1 child)

        by Anonymous Coward on Wednesday April 18 2018, @05:36AM (#668444)

        Hemocynan above stated it perfectly.

        and if the electricity gets used for doing bitcoin mining, that means coal will be burned elsewhere for useful work.

        • (Score: 1) by khallow on Wednesday April 18 2018, @11:21AM

          by khallow (3766) Subscriber Badge on Wednesday April 18 2018, @11:21AM (#668515) Journal

          and if the electricity gets used for doing bitcoin mining, that means coal will be burned elsewhere for useful work.

          Or natural gas combined with renewables. Or not at all (because higher prices elsewhere meant less demand overall). But so what? Burning coal and other fossil fuels in power plants is a relatively low pollution activity compared to a lot of other things that electricity gets used for. We're also not heating so much wire with that electricity which gets used closer to the source.

  • (Score: 1) by khallow on Wednesday April 18 2018, @02:28AM (2 children)

    by khallow (3766) Subscriber Badge on Wednesday April 18 2018, @02:28AM (#668394) Journal

    This mining really won't bring in that many new jobs, will they bring in taxes to cover the costs?

    What costs? They're already paying for the big one, electricity. They don't bring in huge demand for city services either while they're paying elevated amounts for property tax.

    Bitcoin Ghost towns?

    Once the bubble is over, sell off the gear, bulldoze those shipping containers, and do something else with the land (including nothing). It's just not that big a deal.

    • (Score: 2) by looorg on Wednesday April 18 2018, @12:10PM (1 child)

      by looorg (578) on Wednesday April 18 2018, @12:10PM (#668536)

      Actually from the information in the article they don't even seem to be paying that. I even highlighted it in the quote, what they pay for the electricity is below the cost of production. Something the municipality made back when it resold power to Seattle and California -- they still do that at the moment, but if they start to build more and more megawatt farms there will be less to sell. So prices for electricity will have to increase to cover the cost, which makes mining less profitable. The below cost of production electricity is really the only reason it seems that they are building these farms where they are. Yes they do seem to now pay some kind of hookup-fee but they are not paying for the massive upgrades and maintenance required to the infrastructure. That is dumped on someone else. If you want to build your megawatt-sized-farms you can't just use normal cables as with a house -- that place would go up in smokes if you did.

      So if, or when, things go belly up the town(s) or counties will be left with massive amounts of upgrades to infrastructure that will remain unused and that was not actually paid for by the user that demanded it -- cables, power stations, transformers etc. That will now still require maintenance or it will have to be disconnected, yet another cost and loss. It might have been possible to cover this cost if they had created a lot of jobs or paid a lot of taxes, but they don't. There are only temporary construction work, very few staff and all other costs are pushed on the municipality. There is no sales tax on what they do or create either, very little in the way of that in the second tier either (as in workers buying things for their salaries).

      So when it becomes a bitcoin Ghost town it will be the towns and municipalities that will be left with the bills and they won't have really gotten any kind of profits from it. At least that is my conclusion from the article at this point. The entire business idea really does seem to be only feasible when others take, almost, all the costs and they take all the profits and someone else is left paying the bills. There doesn't seem to be a second hand market for the gear either. If bitcoin farming goes bust who would buy it? There is hardly any use for these specialty rigs if that happens. That isn't "bitcoin hatemongering", it's just stupid business.

      • (Score: 1) by khallow on Wednesday April 18 2018, @01:47PM

        by khallow (3766) Subscriber Badge on Wednesday April 18 2018, @01:47PM (#668561) Journal

        I even highlighted it in the quote, what they pay for the electricity is below the cost of production.

        Then why are they getting electricity for that price, if it really is below the cost of production? Price electricity via a market mechanism and the problem never happens.

        It annoys me when we again have some long winded complaint about cryptocurrency mining and it turns out just to be a stupid electricity subsidy. Get rid of the subsidy. Cryptocurrency mining is just the tip of the iceberg. There will be more where that comes from.

        So if, or when, things go belly up the town(s) or counties will be left with massive amounts of upgrades to infrastructure that will remain unused and that was not actually paid for by the user that demanded it -- cables, power stations, transformers etc. That will now still require maintenance or it will have to be disconnected, yet another cost and loss.

        Disconnect that crap and auction it off. And if those communities didn't get amply paid for their costs from the property tax increases that have resulted, maybe the locals should look at what's going wrong with their local governments?

        So when it becomes a bitcoin Ghost town it will be the towns and municipalities that will be left with the bills and they won't have really gotten any kind of profits from it.

        I don't buy that in the least. These miners aren't using much property or municipality infrastructure.

        The entire business idea really does seem to be only feasible when others take, almost, all the costs and they take all the profits and someone else is left paying the bills.

        Unless, of course, that unfounded assertion happens to be false.

        And if we really have municipalities that are too dumb to exist in a world with Bitcoin, then get rid of them.