As Crypto Mining Grows, Data Centers Begin Accepting Bitcoin

miller60 (554835) writes "Citing strong demand from cryptocurrency miners, data center and colocation providers are beginning to accept Bitcoin as payment for large chunks of data center space. It's a sign that the data center industry sees an emerging opportunity in catering to the hosting needs of crypto miners, who typically seek high-density space with cheap power. While many web hosting companies accept Bitcoin, larger data center players have been slower to embrace cryptocurrency. Utah-based C7 Data Centers says it's accepting Bitcoin because of surging demand. The Utah-based company says it now hosts about 4.5 megawatts of mining gear, just down the road from the NSA data center." On-topic: Dish Networks has recently become the biggest company to accept Bitcoins.

Comments

What a dumb waste of energy...

[MillionthMonkey]

Bitcoin mining is for suckers. It barely covers the cost of electricity. Plowing through large swaths of finite numbers, chugging along 24/7 puzzling away, is the stupidest excuse imaginable for damaging the environment. Can we just move to a system where you freeze a block of dry ice, launch it into space, and get a newly minted Bitcoin?

Re:What a dumb waste of energy...

[DanielRavenNest]

Have you considered just how much energy half a million bank branches worldwide consume? Some of those bank buildings are the largest skyscrapers in the world. For a valid comparison, you need to look at total energy consumed per dollar/bitcoin transaction.

Re:What a dumb waste of energy...

[ArcadeMan]

Don't forget the energy and costs of armoured trucks, printing money, ressources required, etc.

Re:What a dumb waste of energy...

[ultranova]

Why is the idea of wanting to unplug our computers before bedtime so alien to everybody?

Nobody's stopping you from unplugging your computer, or are they? But this isn't about "we" can do. It's about other people doing things you don't like them to do, such as leaving their computers running performing work you deem unworthy.

Money is needed as a way for people to handle the flow of resources, not just for handling more money. Dollars can also be handled electronically. They do not consume natural resources when printed except for the piece of paper. A dollar doesn't derive its value from a scarcity of paper.

A dollar derives its value from the cmbination of a scarcity of dollars and the ability to give them to other people. Both scarcity and transferability require resources to maintain. In the case of dollars these amount to elaborate manufacturing process, armored deposit boxes, armored vehicles, guards, police, bank central computers, mailed checks, etc. In the case of Bitcoins they amount to the energy costs of Bitcoin mining, which is a lot cheaper.

Mining Bitcoins is environmentally destructive. As time goes on and the keys get exponentially sparser, the system nominally sustains expansion of its monetary base by surfing on Moore's Law forever- which is a failure point since electrical power is becoming the rate limiting factor to Bitcoin production.

Bitcoin monetary base has a fixed point where all the coins have been mined, it isn't going to expand forever. The real purpose of the mining process is to determine which log of transactions is the "official" version. Doing this algorithmically is far less destructive - enviromentally or otherwise - than doing it through physical force, as is done for the US dollar.

Bitcoins are a currency that requires cotinuous destruction of real resources just to sustain its monetary base.

This is true for all currencies, and for all systems for that matter. Entropy is merciless mistress, or alternatively a very efficient cleanup process.

It's not as simple as the "total energy consumed per dollar/Bitcoin transaction".

True, you also have to add the energy consumed by anti-counterfeiting and anti-theft operations.

We need bank branches because the public actually has dollars to put in them.

We need bank branches because our current economy is based on debt, and someone has to manage it. But the really fancy banks are simply investment firms that want public to cover their potential losses. The inability to tell those from actual banks is what ultimately caused the current economic crisis.

The inherent energy inefficiencies in transferring and handling ordinary money within bank branches is generally considered a nuisance, not a founding principle behind the currency's supposed value. People want dollars because they can be traded, not because finding them consumed someone a lot of work. The energy inefficiencies involved with handling money itself are generally considered to be a nuisance, something to avoid. but now we're sowing a new currency based on the kilowatt-hours that must be wasted by minting it. A Bitcoin economy makes resource scarcity worse to deal with, and it's a bad currency with no usefulness to the vast majority of us.

You are incorrect. The guarantees backing dollar ultimately depend on the US government being able to expend more energy - or work - than an attacker. This is inherent in fiat currencies, altough still a better deal than the idea of mining and then guarding gold.

Bitcoin is also based on the network being able to outpower an attacker. The difference is that with Bitcoin, every attack must take on the network as a whole. With dollars, you can find a bank or a store that is lax with enforceme

Re:I don't get it

[PRMan]

Because there are only 3600 bitcoins per day no matter how many PCs you throw at it. If Amazon started using all their power to mine them, they might get them all, but the price wouldn't rise to accommodate and they would be spending millions to make thousands.

Bitcoin mining is a careful balance between getting enough power to make a profit and not losing money by overspending based on the difficulty. Most bitcoin miners lose money and only make it up by holding the coins until they are worth more. This is by design in the bitcoin protocol, BTW.

Ironically, because of this competition, AWS is considering taking bitcoin even though Amazon is far from it.

Re:I don't get it

[PRMan]

Oh, yeah, and if the bitcoin miners never convert to cash, they are probably not paying taxes on the money ever. That saves 25% or so.

Lots of places "accept" bitcoin now

[Algae_94]

No one seems to mention that they accept bitcoin like they accept VISA cards. All of these places actually want dollars. Any bitcoins they accept through a payment provider are instantly converted to dollars by that provider and that is what they really want. In that scenario, it is failing to pick up as a currency, but is gaining some ground as a money transfer device. The downside is that now instead of just the third party payment provider, there is a third party payment provider plus the bitcoin network.

It seems to me that this is only maintainable while new coins are being mined. Once the mining approaches 0, people will start wanting a transaction fee to process the networks transactions. At that point it can't possibly be cheaper than the traditional payment processing networks. I don't believe in bitcoin as the lasting cryptocurrency. Unfortunately (or fortunately), as bitcoin is the dominant one, if it falters and fails, it will be a long time before anyone would trust another cryptocurrency even if the bugs are worked out.

Re:Lots of places "accept" bitcoin now

[Richy_T]

Why can't it possibly be cheaper than the traditional payment processing networks? I'd like to see an explanation.

Re:Lots of places "accept" bitcoin now

[DanielRavenNest]

> All of these places actually want dollars.

That's because their supply chain doesn't yet accept bitcoins. For a data center, I imagine their main costs are IT hardware, electricity, and staff. Once those also accept bitcoin, they don't need to use a payment processor to convert, just send the coins along to the next person.

There's a natural progression from hobbyists paying for pizza, to small online retailers taking it for socks, to larger retailers, now to satellite TV. Eventually second level suppliers will start taking it, and you begin to get a complete economy in bitcoin. But such things don't happen overnight.

> Once the mining approaches 0, people will start wanting a transaction fee to process the networks transactions.

They already collect transaction fees, but they are about 1% of miner's incomes. The real limiter is transactions/hour on the block chain. There is a 1 MB limit per block, and you can fit about 2500 transactions on average, so 15,000 per hour. This will drive up fees once the supply of transaction slots is eaten up, which in turn will drive off-chain transactions. This already happens to a limited extent. If you use your Coinbase wallet to pay a merchant that uses Coinbase as their processor, it never hits the block chain. It's just internal at Coinbase. Nothing prevents Coinbase from arranging with other processors and large merchants to do bulk transactions on the block chain, which represent many individual small customer amounts. Transaction fees to miners can then be made as small as necessary, because it's spread over many users.

Re:Lots of places "accept" bitcoin now

[Algae_94]

Well, I very well may be completely off base, but my theory is that you have two situations. Situation #1 has just a third party payment processor. Situation #2 has a 3rd party payment processor like bitpay + a non-zero fee from the bitcoin network.

Of course, my assumption is that all 3rd party payment processors are approximately equal and that may prove to be totally unfounded with bitcoin processors.

Re:Lots of places "accept" bitcoin now

[Anonymous Coward]

The point behind getting a currency started is making it available, easy to tender in, and widely accepted.

When someone that has NO interest in bitcoin, finds out that EVERY supplier you have (think you local grocers, coffee shops, clothing stores, etc) accepts it, (even if they only accept it through payment processors) you're likely to be willing to accept it when it's offered to you.

Now, when suppliers of goods and services start getting more and more % of their customers paying in BTC, they're more and more likely to start really looking into how it all REALLY works (accepting it through a payment processor is one thing, but few of them are interested in holding BTC!) they start finding out THEIR suppliers accept bitcoin. (again, even if it's through a payment processor) If it becomes cheaper to accept say, 5% of the bitcoin transactions directly and USE that directly to purchase from others, things really start rolling.

I've said it a million times before: Every currency ever started began exactly the same; some "governing authority" walked in and said: "don't trade like that anymore, use these!" and it takes YEARS for people to even stop laughing at how silly the entire system is. One day, years have passed and people start warming up to the idea of using the "currency", international trade begins
which always starts wonderfully:
1. "oh hey there! I want some of your [wheat], will you take my [insert currency of choice here] for that?"
2. "Uh, no. why would I want that?"
1. "Well, a group of people say that you can use them to get other things!"
2. "well, I sure can't get anything of use for them.."
1. "huh, maybe only some people get it.."

YEARS later, 2 hears about the "wonderful things" that 1 and his friends have done, and runs into 1 again, suddenly willing to accept some of their "currency" now knowing what they can do with it.

EVERY currency ever started has gone through these pains. The difference here, is that EVERYONE get's a say in how it's created, maintained, and governed. The more people involved, the more votes there are.

Side fact: to the people that STRONGLY believe that bitcoin "can't be a currency because you can't issue more": There's NOTHING preventing more from being issued. It's not some "hard baked, the algorithm can't be positive again after date X": it was simply agreed upon by the majority of people running the software. (the codebase simplys halfs the block reward 210000 blocks)
If anyone wanted to fork the current code base and allow for inflation over time (vs the current deflation) it's less than 20 lines of code. The trick isn't implementing it in code, it's getting the network to hard fork; the vast majority of NODES would need to agree on the protocol change, nothing more.

A new coin, again?

[ArcadeMan]

Citing strong demand from cryptocurrency miners, data center and colocation providers are beginning to accept Bitcojn as payment for large chunks of data center space.

Damn, and I was just getting used to Bitcoin.

Re:A collosal waste of energy.

[themusicgod1]

...and the legacy financial system runs on unicorns and fairy dust, I take it?

Re:I don't get it

[sir-gold]

During every gold rush throughout history, there is always one group of people who are guaranteed to make money, regardless of the actual gold supply, and that is the merchants selling the equipment to the miners.