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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.
(Score: 2) by looorg on Wednesday April 18 2018, @12:10PM (1 child)
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
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.
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?
I don't buy that in the least. These miners aren't using much property or municipality infrastructure.
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.