Cryptocurrency Miners Are Building Their Own Electricity Infrastructure (vice.com)

ted_pikul shares a report from Motherboard: Access to cheap electricity can make or break a cryptocurrency mining operation. The latest move in the quest for bargain-basement power rates: building out local power grids. Canadian company DMG Blockchain is building what it hopes will be a fully-functioning substation in Southern British Columbia, which is electrified by hydro power. Building the substation is costing millions of dollars and required building an access road to haul equipment. "[...] the utility will test everything as a completed substation and make sure that the town doesn't blow up when we flip the switch," Steven Eliscu of DMG Blockchain said.

Comments

I have to hand it to the crypto-miners

[Anonymous Coward]

They find new and exciting ways to waste large amounts of hot asian money.

Money, like trades and bonds, now crypto...

[CaptnCrud]

Honestly I don't care what illusion we all share, because in the end its still an illusion.

Oh Lord

[rsilvergun]

I know this isn't a popular opinion around here, but man, there is something deeply wrong with this much effort being extended for what at the end of the day amounts to little more than a vehicle for money laundering. Folks do know that if crypto ever gets big enough for the big boys to take notice (re: Goldman Sachs) they'll have it under their thumb in no time, right? We're talking about a market that a few guys in China were able to manipulate.

Heck, just legalizing Pot would be a huge blow to the price of crypto currencies and that's more thank likely coming (assuming we can get "tough on crime" conservatives with ties to private prison lobbies out of the way). If we finished the job by legalizing all drugs and treating the hard stuff as a medical problem like the Scandinavians do then all you'd have left is generic money laundering and a few traders playing games.

I'm just saying that we as a species have better things to do with the miracle that is electricity than to make it easy for some guy to get his fix or to hide a bit of dirty money...

Re:Oh Lord

[Anonymous Coward]

I know you are entitled to your opinion, ( its a free country ) but it seems to me that you are shilling for big finance? ( i.e. Goldman Sachs). First of all let me say, Bitcoin is a lousy vehicle for money laundering, since all transactions are permanently recorded on the blockchain. If laundering money is your thing, then the current system ( fiat ) is the best there is, look at the actions of HSBC. Goldman Sachs would likely never want to get Bitcoin under their thumb, if it made them money or they could control it they would have already. Its the very fact that efforts of organizations like DMG is going to make their 'take over' very difficult, it is also the efforts of DMG that will also thwart the ever increasing influence of the Chinese. Finally unlike the fiat system which embraces corruption, cronyism and just outright theft. Basing your money and savings on a decentralized from of security and trust, keeps everyone honest. Also, notice the electricity to power the miners in this case is coming from clean hydro. Its win win

Re:Oh Lord

[Anonymous Coward]

Yes, it's used only for money laundering. ...on a public ledger that anyone (governments included) can read. ...where the only place to get cash to an exchange to purchase bitcoin is through a regulated bank. If you are attempting to launder money using bitcoin, you really are a special kind of stupid. By your logic, *all* cash transactions are money laundering. If that were true though (it's obviously not), it would be much smarter using a money system with no public ledger or transaction record of any kind (i.e. fiat cash).

Re:Oh Lord

[WindowsStar]

I know this isn't a popular opinion around here, but man, there is something deeply wrong with this much effort being extended for what at the end of the day amounts to little more than a vehicle for money laundering. Folks do know that if crypto ever gets big enough for the big boys to take notice (re: Goldman Sachs) they'll have it under their thumb in no time, right? We're talking about a market that a few guys in China were able to manipulate.

Please take the time to research cryptocurrency. You completely missed how and why it was started and being used. It was designed so NO ONE can control it, own it, track it. So big banks and government can't charge fees or taxes on the money. Yes there are some bad actors that are using it for laundering but that comes with all currencies.

Re:Oh Lord

[magzteel]

I know this isn't a popular opinion around here, but man, there is something deeply wrong with this much effort being extended for what at the end of the day amounts to little more than a vehicle for money laundering. Folks do know that if crypto ever gets big enough for the big boys to take notice (re: Goldman Sachs) they'll have it under their thumb in no time, right? We're talking about a market that a few guys in China were able to manipulate.

Please take the time to research cryptocurrency. You completely missed how and why it was started and being used. It was designed so NO ONE can control it, own it, track it. So big banks and government can't charge fees or taxes on the money. Yes there are some bad actors that are using it for laundering but that comes with all currencies.

This is just wrong.

Governments don't tax the currency, they tax transactions and the gains made in currency trading. No matter what currency you buy a car with you still have to pay the sales tax.

Banks can charge fees on anything.

Goldman is already involved in cryptocurrency trading and has launched its own cryptocurrency. On both of those they will make money on transaction fees and prop trading, For the latter they will not hold a huge position without a hedge, it would exceed their risk tolerance.

Re:Oh Lord

[Anonymous Coward]

It was designed so NO ONE can control it, own it, track it. So big banks and government can't charge fees or taxes on the money.

I would argue that they have failed to achieve their stated design goals. Consider that a few big miners now control over half of the Bitcoin mining capacity. Not a monopoly yet perhaps, but certainly an oligopoly. As for tracking, the ledger of all transactions is public for all time. All it takes is one mistake linking your RL identity to a bitcoin wallet ID and your entire transaction history is laid bare. The belief that governments can't or don't track cryptocurrency transactions when the ledger is public is crazy. As for fees or taxes on the money, it's the miners collecting the taxes in the form of transaction rewards for putting your transaction into their next computed block. There are plenty of transactions available to potentially fill the next block and any number of them will do equally well for that purpose so why should they include yours? Because you offer a reward to the successful miner who includes your transaction in their next block and wins the verification race. Now supposedly Bitcoin was started as an experiment but I think if we're going to be honest we have to say that what Bitcoin has become is not what it's designers had hoped for. It's a speculative commodity controlled by a few big players and a positively terrible method of payment, particularly for everyday transactions where the designers had most wanted it would be used. Buying a $5 cup of coffee with a $40 transaction fee (Bitcoin block reward) and verification time measured in hours is not a viable alternative to Visa, MasterCard or cash.

Re:Oh Lord

[Anonymous Coward]

Lol, slashdot and the idiots thinking this retarded comment is "insightful" :D

> We're talking about a market that a few guys in China were able to manipulate.

Yeah, the ENTIRE GOV of BIGGEST COUNTRY ON EARTH (well, most powerful) was able to scare some weak hand investors into 10% price movement.
That is nothing, we get 20% movements random (and 1000% movement up, around yearly :)

> deeply wrong with this much effort being extended for what at the end of the day amounts to little more than a vehicle for money laundering.

No, it's vehicle to make people independent of governments in terms of monetary policing. Sure there are swings, but at yearly scale it goes up, and does not go down and down and down decade to decade because of printing empty money, like fiat does always.

Re:Oh Lord

[Anonymous Coward]

No, but please shut down the plastic card companies (VISA, MC, etc). They are wasting electricity while providing a horrible service (bad security, bad privacy) and blocking the market with their dominance.

Re:Oh Lord

[rikkards]

The irony is that area of BC is notorious for grow-ops. Once legal they can provide hydro to the potential "Craft cannabis" growers that might pop up there. The area is like weed mecca.

Re:Oh Lord

[Anonymous Coward]

Tbh, you're the special kind of stupid. It doesn't matter if the ledger is public because anonymization still enables value to move across legal boundaries (both national and regulatory) such that the notion of legitimacy is irrelevant. It is an infinitely better tool for wholesale laundering than cash. Simply because you haven't figured out how to do it doesn't mean it ain't being done.

Re:Oh Lord

[Anonymous Coward]

Forget government level, look at four of the biggest mining pools (btc.com, ant pool, viabtc, f2pool). Together they make about 51.7% of the total pools output (at the time of this posting based on https://www.blockchain.com/pools?) A 51% attack would be fairly trivial if the owners/runners got together.

Re:Oh Lord

[Anonymous Coward]

Weed is legal in Canada is it not?

Re:Oh Lord

[Anonymous Coward]

pretty sure the bankers do have it under their thumb

https://entethalliance.org/members-2/

Re:Oh Lord

[Anonymous Coward]

you have no clue about what cryptocurrency is about, nor the fact that it is unstoppable and will reach global worlwide adoption.

youtube search: bitcoin documentary

Re:Oh Lord

[Anonymous Coward]

Governments absolutely DO tax currencies. If a country inflates their currency 3%, the money in a person's pocket (or account) loses 3% of the value and the printer (aka the country) gains the difference. Since the wealthy hold most of their value in hard assets rather than cash, they are affected to a much lesser degree than middle and lower-class people where a large amount of assets are not cash.

It's also interesting to note (though mostly unrelated) that this inflation taxes across national borders. If Russia has 100B dollars and the dollar inflates 3%, the US will effectively tax them 3B dollars. Now consider OPEC. If you want to buy from OPEC, you have to buy in dollars. To get dollars, you must trade with the US (or trade with someone who traded with the US). Once the dollars leave the US, they are then able to inflation tax everyone forced to buy these dollars. In 2000, Iraq started selling oil in Euros in Oct 2000. In March 2003, the US crushed them using the (now thoroughly debunked) claim of WMDs. The only country not selling in Dollars is now Iran who started selling to India in Rupees and euros in 2016 (as of 2016). Interesting that Trump seems intent on starting up an incident there...

Re: Oh Lord

[Anonymous Coward]

Worse, we're diverting enormous amounts of capital and raw resources at generating a hash. The only good way this can end is if we can reuse all this highly specific infrastructure for more worthwhile blockchain pursuits later.

Otherwise, when the governments start arresting people who own bitcoin we're going to be left with $500B of scrap metal, rotting powerplants, and a lot of unemployable people.

The only good that's come out of this so far is "graphics cards are getting a bit better". This industry subsidizes AMD and NVIDIA.

Re:Oh Lord

[Anonymous Coward]

I know this isn't a popular opinion around here, but man, [bitcoin sucks].

Dafuq? Not only is that not an unpopular opinion around here, that appears to be the only opinion around here. Every single cryptocurrency story here is swamped with negative comments by ignorant outsiders. You fit right in.

The grey goo theory becoming true

[xack]

With nanobots replicating miners.

Re:The grey goo theory becoming true

[blindseer]

With nanobots replicating miners.

Minors have been getting together to make more minors for a very long time, long before nanobots existed. What are these kids doing with the nanobots anyway? Then again, maybe I don't want to know.

FFS

[Anonymous Coward]

At what point do people ask themselves "Maybe the fact we have to build extra power stations just so we can verify a few transactions means we've gone full retard?".
Never go full retard people...never go full retard.

Re:FFS

[Anonymous Coward]

At what point do people...

Shortly after they finish binge watching Game of Thrones in 4K on their 83" display for the 18th time.

Re:FFS

[Anonymous Coward]

Wait till they build their own dam

Re:FFS

[ChrisMaple]

They can't build a dam. They've tried to attract beavers, and it's beyond their capability.

LOL

[Anonymous Coward]

As I read the headline I'm imagining thousands of angry inch millis enraged at the very thought of using hydropower for mining. OMg! Teh 3|\|Vir0nMEn4
Man!!!11" Ban it!!. Ban it all noooooooooWW
!1!111
1

Think of the polar bears. SIGH

[Dorianny]

If Climate change wasn't a worry the this topic wouldn't even be worth discussing.

Unfortunately it is and cryptocurrency mining is just making things slightly worst

Re:Think of the polar bears. SIGH

[AHuxley]

Its hydro power ...

Re:Think of the polar bears. SIGH

[Anonymous Coward]

Being hydroelectric there's very little environmental impact from this particular example.
I try to have hope, from time to time, and picture a time when solar thermal plants are built around mining operations, and then when the arse drops out of the crypto market the miners are shut down and the owners are faced with wearing a capital loss, or selling power to the grid with a chance of making more modest profits than they'd hoped to with crypto.

The sheer dollar scale of investment in mining in crypto in China alone either makes this another bubble in a frothy market with no hope of recouping the cost, or something beyond our current ken. Probably the former.

Re:Think of the polar bears. SIGH

[Anonymous Coward]

That COULD be used to power something that is currently powered by carbon generation.

Re:Think of the polar bears. SIGH

[AHuxley]

A community is getting new investment and hydro power is getting used AC. Win, win.

Re:Think of the polar bears. SIGH

[Anonymous Coward]

Unfortunately it is and cryptocurrency mining is just making things slightly worst

No way that environmentalists are going to guilt everyone into giving up their cars and using public transport when we have jerks buying up and restarting old coal burning power plants to convert them into their own personal bitcoin miners. If we're going to destroy the planet anyway, I'd rather continue enjoying my car while I still can.

Re:Think of the polar bears. SIGH

[blindseer]

This cryptocurrency mining might be a dead end in short order but I'd think that building these sites are pretty low risk investments. Suppose the mining doesn't pan out, they still have a data center at a site with the cheapest electricity rates they could find. They can still rent out the computing power for lots of things, and it seems to me that there have been a lot of data centers opening up all over North America.

If someone can figure out how to get solar thermal to provide 24/7 power to one of these data centers then that's a bonus for a selling point, they'd have reliable power for running the computers. Put in redundant network links, such as a telco provided main link and satellite backup, and that would be a site that keeps running through a zombie apocalypse.

If we are speculating on getting power to these sites then consider this, micro nuclear power plants. There's been people building nuclear power plants as small as 5 MW since the 1950s, back when they were still figuring out how to make it work. A more reasonable size might be more like 50 MW. I don't know how much power a typical data center uses but if the goal is reliable, cheap, and low carbon, energy source then nuclear is just as good as solar or hydro. The problems for such a reactor is legal, not technical. There's a lot of people out there with experience building and operating these reactors. They weren't called a "small modular reactor", or "micro nuclear power plant", they were called a "naval reactor". We just need to work on the laws that make it so expensive to run outside of a military submarine.

Re:Think of the polar bears. SIGH

[Anonymous Coward]

Are you stupid or what?

On its own, the fact that hydro power is consumed is not a win. A win would be reducing power generation from burning carbon. The "something that is currently powered by carbon generation" will not be receiving hydro generated power.

This is a lost opportunity at a time when it may be of serious consequence.

Coming soon to Google Maps

[Applehu Akbar]

There has been enough controversy lately over Google Maps dreaming up its own names for urban neighborhoods. Wait until British Columbia starts sprouting new lakes with names like Etherium, Monero, Dogecoin...

Re:Coming soon to Google Maps

[Anonymous Coward]

Most lakes in canada dont have a name. Yep, there is that much of them.
1- go on google maps
2- go on the nothern canada, above the prairies or northern region of quebec.
3- notice there a bunch on lake there.
4- zoom in, more lakes appear
5- zoom in more lakes appear ...
Yes we will need google to name all the lakes...

Full Retard

[Anonymous Coward]

This is has to be the best example of going full retard that I can think of.

Dude look at my /. Id

[rsilvergun]

if I'm still posting after this much time I've long since lost hopes, dreams and aspirations. Dry eyes aren't a problem though. Amazon can ship eye drops same day.

Oh, and is it just me or is the quality of Trolls declining? I mean, can I at least get a Greased up Yoda doll in here or some of Natalie Portman's Hot Grits (I'd display a trademark symbol here but /. doesn't support Unicode...)

Re:Dude look at my /. Id

[Anonymous Coward]

if I'm still posting after this much time I've long since lost hopes, dreams and aspirations. Dry eyes aren't a problem though. Amazon can ship eye drops same day.

Oh, and is it just me or is the quality of Trolls declining? I mean, can I at least get a Greased up Yoda doll in here or some of Natalie Portman's Hot Grits (I'd display a trademark symbol here but /. doesn't support Unicode...)

Sad fact is GNAA killed your goatse BSD dead with its gay apple frist ps0t.

Re:Dude look at my /. Id

[Anonymous Coward]

It is official; Netcraft confirms: *BSD is dying

One more crippling bombshell hit the already beleaguered *BSD community when IDC confirmed that *BSD market share has dropped yet again, now down to less than a fraction of 1 percent of all servers. Coming on the heels of a recent Netcraft survey which plainly states that *BSD has lost more market share, this news serves to reinforce what we've known all along. *BSD is collapsing in complete disarray, as fittingly exemplified by failing dead last [samag.com] in the recent Sys Admin comprehensive networking test.

You don't need to be a Kreskin [amdest.com] to predict *BSD's future. The hand writing is on the wall: *BSD faces a bleak future. In fact there won't be any future at all for *BSD because *BSD is dying. Things are looking very bad for *BSD. As many of us are already aware, *BSD continues to lose market share. Red ink flows like a river of blood.

FreeBSD is the most endangered of them all, having lost 93% of its core developers. The sudden and unpleasant departures of long time FreeBSD developers Jordan Hubbard and Mike Smith only serve to underscore the point more clearly. There can no longer be any doubt: FreeBSD is dying.

Let's keep to the facts and look at the numbers.

OpenBSD leader Theo states that there are 7000 users of OpenBSD. How many users of NetBSD are there? Let's see. The number of OpenBSD versus NetBSD posts on Usenet is roughly in ratio of 5 to 1. Therefore there are about 7000/5 = 1400 NetBSD users. BSD/OS posts on Usenet are about half of the volume of NetBSD posts. Therefore there are about 700 users of BSD/OS. A recent article put FreeBSD at about 80 percent of the *BSD market. Therefore there are (7000+1400+700)*4 = 36400 FreeBSD users. This is consistent with the number of FreeBSD Usenet posts.

Due to the troubles of Walnut Creek, abysmal sales and so on, FreeBSD went out of business and was taken over by BSDI who sell another troubled OS. Now BSDI is also dead, its corpse turned over to yet another charnel house.

All major surveys show that *BSD has steadily declined in market share. *BSD is very sick and its long term survival prospects are very dim. If *BSD is to survive at all it will be among OS dilettante dabblers. *BSD continues to decay. Nothing short of a miracle could save it at this point in time. For all practical purposes, *BSD is dead.

Fact: *BSD is dying

Re:Dude look at my /. Id

[Zontar The Mindless]

What are these "hopes", "dreams", and "aspirations" of which you speak?

Or notice the insane orange man in the WH?

[Anonymous Coward]

Yeah. This is why the aliens don't land.

Re:Or notice the insane orange man in the WH?

[Anonymous Coward]

Yeah. This is why the aliens don't land.

Because the aliens are also binge watching on-demand TV shows?

Roll your own...

[Torodung]

Roll your own currency. Roll your own power grid. Pretty soon people will be rolling their own towns, institutions, and power structures to control those assets.

And then we'll be right back where we started. Blockchain doesn't fix that.

Roll your own blunt. It's way more clever and rewarding.

Re:Roll your own...

[Anonymous Coward]

Rolling your own will likely become the norm in the near future. We have so much automation in manufacturing now that people can get customized pieces and parts for just about anything, and cheap too. You want a transformer for your own substation? Sure, someone will make one to your specifications in no time.

For some stuff that's a bit more out of the norm there might not be someone that will be willing to make what you want, but they'll make the tools you need to make what you want. We see some of this with people running around like their hair is on fire over 3D printed firearms. Getting the licenses to sell a firearm can be difficult, but selling the tools and plans to make a firearm is not restricted. (Or, at least it shouldn't be restricted.) Maybe the firearm example isn't the best one since firearms are basically a commodity, and the limitations on selling custom firearms are legal, not technical.

It used to be that making clothes was a very labor intensive process. Then came mass produced clothing. What I expect to come soon is inexpensive "build to order" clothing, delivered overnight. Once we get to this point a lot of things centered around mass production will fade, and we've been living in a society built around mass production for at least a century. This destroys a lot of "power structures" that constrain what people can and can't do.

This roll your own revolution is making a lot of people in these existing power structures very nervous.

Re:Roll your own...

[Anonymous Coward]

Except then people won't want to roll their own. So they'll pay other people to do it for them, so they don't have to.
Then some people will be specialised in rolling specific things for other people.
Then we get in exactly the same spot we are already.

The power of speculation

[Anonymous Coward]

So they're building all of this infrastructure... to what end, exactly?

Bitcoin still has no commonly accepted use as a currency.
Blockchain still has no commonly accepted use as a technology.

I can't wait until the bitcoin bubble implodes on itself after the reward halving in 2020.

Re:The power of speculation

[DontBeAMoran]

I can't wait until the bitcoin bubble implodes on itself after the reward halving in 2020.

You don't seem to understand what happens when rewards halve. Hint: it usually pushes the value of a coin to near double its value, sometimes more.

How about gold mining?

[Anonymous Coward]

Gold mining operations have had their own electrical infrastructure - e.g. diesel generation on site - since soon after electricity was invented. Collectively, gold mines use about ten times the total electrical power used for bitcoin mining. And, apart from a tiny sliver of gold output that gets used for industrial purposes, the results of gold mining have no more practical value than the results of bitcoin mining.

Why should one be upset about the electrical consumption of bitcoin mining, but not upset about the much greater electrical consumption of gold mining?

Re:How about gold mining?

[Anonymous Coward]

Why should one be upset about the electrical consumption of bitcoin mining, but not upset about the much greater electrical consumption of gold mining?

Because with gold mining at least something of material value was produced?

Re:How about gold mining?

[weilawei]

Information of the right sort has material value. Try arguing otherwise to the SEC.

Re:How about gold mining?

[DontBeAMoran]

Correction: with gold mining at least something of material value may be produced. There's no guarantee on the quantity of gold that will be produced.

Re:How about gold mining?

[ChrisMaple]

According to wikipedia, 2,500 tons of gold are produced a year. 10% goes to industrial uses, 40% to finance, 50% to jewelry. 10% is more than "a tiny sliver."

Timescale

[Ronin441]

Infrastructure investments like this usually pay off over a period of decades. I'd love to see their cost/benefit analysis.

No need for your own grid with APKoin

[Anonymous Coward]

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Re:No need for your own grid with APKoin

[Zontar The Mindless]

Obviously a ringer. Try harder next time, FakeAPK.

cryptocurrency

[Anonymous Coward]

Governments don't tax the currency, they tax transactions and the gains made in currency trading. No matter what currency you buy a car with you still have to pay the sales tax. Never go full retard people...never go full retard. Unfortunately it is and cryptocurrency mining is just making things slightly worst

  Tech Savvytech

Suuuuure they are.

[Anonymous Coward]

Keep shrugging Atlas. Whores dont need pants anyways..

It's going to kill the fish

[Anonymous Coward]

Since they will fail to be able to swim upstream with this new obstruction. I mean, it's better for the environment if they just upgraded an existing hydropower plant to draw more energy.

Re:It's going to kill the fish

[blindseer]

Since they will fail to be able to swim upstream with this new obstruction. I mean, it's better for the environment if they just upgraded an existing hydropower plant to draw more energy.

Just how many times do you believe an existing hydroelectric dam can be "upgraded" to draw more energy? How do you know that these dams have not already been upgraded to the maximum available output? Hydroelectric dams have a hard limit on their output, the amount of rainfall behind the dam. Unless you can think of a way to increase rainfall then there isn't much we can do to improve hydroelectric output. What has happened in much of the USA and Canada is that smaller and smaller dams are being built, which increases operating costs due to lower economy of scale.

If I'm reading my results from Google searches correctly most hydroelectric upgrades in North America are to add pumped storage to existing dams, and most new hydro around the world is the construction of closed loop pumped storage hydro. These upgrades don't add any additional generation capacity, they only add storage for matching load to supply from base load power (nuclear, coal, and other thermal) and intermittent power (wind and solar).

Hydro kills fish, wind and solar kills birds, coal and natural gas kills everything. What choices do we have for more actual power generation capacity? I believe the answer is in nuclear power. If the concern is to reduce the impact on the environment then we need more nuclear power.

Ever hear of Layering?

[rsilvergun]

or ever wonder why there are so many little itty bitty crypto currencies? Go through enough layers and by the time the law catches up to you your long gone. It's the money laundering equivalent to putting a club on your car steering wheel. The cop'll get an easier target.

As for Drugs, we have very, very uneven enforcement of drug policy in America. Solidly middle class folk can often use with impunity while a poor person (especial if their black) can get 2 years for a bag of weed. More if it's a second offense. That makes using a traceable medium practical.

And finally, I never said these folks were smart. A woman in California just got nailed in a sting op because the undercover cop told her the money they were giving her came from drugs.