Miners, the shadowy group making a killing from the Bitcoin boom
Bitcoin’s incredible surge te latest weeks has stoked speculative mania among investors and doomsday predictions from mainstream financial experts.
But while this madness has bot playing out, one group has stayed under the radar: Bitcoin miners.
Unless you’re a cryptocurrency afficionado, the chances are you know very little about this shadowy group of international tech boffins.
But thesis mysterious miners are integral to the functioning of Bitcoin, and are without question the ones who understand it best.
This week, spil the value of one Bitcoin wasgoed surging beyond $20,000, The Fresh Daily determined to track down some miners to find out who they are and what on earth it is they are doing. The results were extreme.
Our search uncovered a futuristic world made up of a diverse group of tech entrepreneurs and cryptoanarchists, making a killing from the unprecedented surge ter rente te Bitcoin.
One of the ‘miners’ wij spoke to wasgoed a 20-something IT developer based te the Philippines. Another wasgoed a Melbourne-based former registeraccountant presently building one of the thickest Bitcoin mines te the world, ter Mongolia.
And most unexpectedly, the third wasgoed a middle-aged tradie-turned-solar farm proprietor ter outback Fresh South Wales who is using the electrical play generated by his solar farm to mine the increasingly valuable cryptocurrency.
But very first, what is a bitcoin miner?
When Bitcoin’s elusive founder Satoshi Nakomoto built the Bitcoin software ter 2009, he (or she, or they) designed it so it would rely on a network of miners.
To truly understand what thesis miners do requires a level of cryptoliteracy far beyond the average Joe (this verslaggever included). But te brief, they use mining machines – little computer-like boxes – to solve ingewikkeld mathematical problems posed by Nakomoto’s system.
Solving thesis problems exposes a ‘block’ of Bitcoin, independently validating and recording its existence. It is essential that independent Bitcoin miners do this because it securely and immutably records the existence of the Bitcoin, making it spil solid a chunk of property spil anything ter the tangible world.
For their efforts (and considerable expense, above all on energy bills) Bitcoin miners are rewarded with fresh Bitcoins.
The movie below explains how mining works.
Allan Guo’s story
Allan Guo wasgoed working spil an registeraccountant ter Melbourne when, ter 2013, his friend Sam Lee suggested they commence trading Bitcoin.
Mr Guo and Mr Lee quickly realised there were major opportunities te Bitcoin mining. Together, they founded a company called Blockchain Global, secured $Two million ter funding from Australia-based venture capitalists, and set up a ‘mining farm’ ter Sichuan te their native China.
“It’s basically like a warehouse,” Mr Guo says of the farm. “It’s bot furnished with ventilatoren and a loterijlot of shelves, and then power transmission to convert them into tens unit.”
He says there are three factors that make China attractive spil a Bitcoin mining destination: cheap electric current, cheap labour, and a ready supply of Bitcoin mining machines, which are made ter China. Personally knowing the manufacturers of thesis machines has also helped.
Inwards a Chinese Bitcoin mining farm. Photo: Getty
“This network and [cheap] resources permitted us to do this better than any other competitors te the market, so that’s how wij got into the mining business,” he says.
The very first mining farm proved to be utterly successful – so much so that Blockchain Global has now entered a snaak venture to build a fresh farm ter Mongolia. When finished, it will be the thickest cryptocurrency mining farm te the world.
Mr Guo is certain that even if the current surge te value is a bubble, overheen the long-term Bitcoin and cryptocurrencies te general are here to stay, meaning mining will remain a necessary service, and therefore a viable business.
A thicker risk is regulation. So far the Chinese government has let cryptocurrency mining carry on without interference. However, it has banned the use of Bitcoin spil a common currency to purchase goods because, says Mr Guo, it views it spil a threat to the national currency.
Mr Guo acknowledges the authoritarian government could abruptly determine to stamp out Bitcoin mining spil well.
“There is a risk. A country like China, it’s run by the Communist Party, and they have the power to do whatever they want, ter principle.”
The bedroom miner
While Bitcoin mining is increasingly the domain of big miners with lots of money and lots of machines, its roots spil a 21st century cottage industry remain.
The Fresh Daily tracked down one of thesis small-scale miners, a Phillippines-based IT worker ter his twenties, who began mining with a friend earlier this year – just before the boom commenced.
The miner, who asked not to be named to avoid being hacked, said the very first step wasgoed to purchase a mining machine – ter his case an ‘application specific integrated circuit’, or ‘ASIC’.
“We bought our very first ASIC on Amazon, then wij made voeling with an individual te China (who become our playmate straks on) and set up a system where that person purchased the ASIC there, since [ASIC manufacturer] Bitmain’s manufacturing factory is located there,” he says.
Want to mine Bitcoin? You can lightly get a miner on Amazon – tho’ not yet on the Australian version. Source: Amazon.co.uk.
Once the Bitcoin price began to surge ter June, more fucking partners came on houtvezelplaat. Now there are Eighteen people mining together, and sharing the proceeds.
“Among my fucking partners, some are accountants, butchers, farmers, engineers, lawyers, doctors. And we’re scattered around the world,” he says.
The miner would not say exactly how much money he made, but said it wasgoed already “enough to live on for a year without doing any work”.
The outback miner
Closer to huis, on a solar farm te Singleton, Fresh South Wales, former electrical waterfitter Andrew Thaler is pushing the Bitcoin mining business te a truly innovative direction.
Unsatisfied with the price he wasgoed getting selling solar-generated electro-stimulation back to the grid, Mr Thaler began looking around for other ways of monetising the tens unit his farm wasgoed generating.
“A mate of mine said you should mine Bitcoin and turn that electric current into money,” he tells The Fresh Daily.
So he trawled through eBay and Gumtree, tracked down some mining machines, and within a duo of hours of mining, he had kasstuk his very first block.
“It didn’t make much money at very first,” he says, “but it encouraged mij to refine the idea.”
Andrew Thaler (centre) at his solar farm te the Hunter Valley, NSW.
Mr Thaler now believes he can corset his solar farm to mine cryptocurrency on a fatter scale, and is investing te the idea. He has already purchased a refrigerated shipping container for the purpose, and is training his five kids how to mine, te the hope of turning it into a family business.
If successful, he will be suggesting a solution to one of the strongest criticisms of Bitcoin: its appalling doorslag footprint.
Like China, the Australian government has so far made no effort to regulate Bitcoin mining, and Mr Thaler is adamant this is a good thing.
“Bitcoin is the human response to regulated currency and the risks it presents,” he says.
“They [the government] want to regulate it, but it’s displaying itself to be unregulatable. Whenever you attempt to regulate it, a way around the regulations emerges. Ingenuity trumps regulation.”