Bitcoin License (and Registration) in New York

In case you haven’t seen the news yet, New York State is taking a stab at passing laws for Bitcoin – Bitlicense – as a precedent for other cryptocurrencies. The biggest part of this, in my opinion, is the wall of anonymity is obliterated when trading in the currency. With the bad press about thefts, hacks, and other non-legal stuff going on something needed to shift, and so the legal folks decided that anonymity was the thing that was to be targeted. Interesting choice.

I will reserve final judgement on whether or not this is a good or a bad thing. I will however point out some things that strike me as interesting in the first few minutes of the announcement being made:

1. It now returns cash, dollars, moolah, bank, green to the top dog spot as the best anonymous way to purchase weapons, weed, killer heroin, or human organs. Of course buying pizza, stuff from Overstock.com, and Newegg is still ok, it just doesn’t sell like buying a Hummer full of heroin off of Silk Road.

2. It now returns the central banks, Secret Service, and law enforcement to the top producers and controllers of the anonymous currency and makes them top cops when it comes to using the best anonymous form of currency we have had in the past 100 years. Back to normal folks, nothing to see here.

3. What remains to be seen is how effective the strategy is in reducing what amounts to a small problem (Bitcoin theft and shenanigans) for a relatively small number of people, while potentially stymying the adoption of the currency and the number of transactions that are made with it (which is where the money is). So at its face value it looks like lawmakers made the decision to make the cryptocurrency system a system of known users so that the key reason for the adoption of the cryptocurrency – anonymity – helps get it squashed.

Given the US Federal Government’s track record of spying on citizens, I question whether anonymity really exists, and what this law does to the reality that there is no more anonymity as evidence suggests, other than telling people if you use bitcoin you are not anonymous, at least in New York State.

It’s a place to start. If the intent was to generate fees (licenses) then they may have stifled growth by requiring fees from businesses vs taking a 1/1000 of a cent or bitcoin from every transaction that flows through the ecosystem. The ecosystem which is audited, auditable, and largely compliant and traceable.

The highlights from the bill:

The new DFS BitLicenses will be required for firms engaged in the following virtual currency businesses:

  • Receiving or transmitting virtual currency on behalf of consumers;
  • Securing, storing, or maintaining custody or control of such virtual currency on the behalf of customers;
  • Performing retail conversion services, including the conversion or exchange of Fiat Currency or other value into Virtual Currency, the conversion or exchange of Virtual Currency into Fiat Currency or other value, or the conversion or exchange of one form of Virtual Currency into another form of Virtual Currency;
  • Buying and selling Virtual Currency as a customer business (as distinct from personal use); or
  • Controlling, administering, or issuing a Virtual Currency. (Note: This does not refer to virtual currency miners.)

Read more: http://www.businessinsider.com/nydfs-bitlicense-draft-2014-7#ixzz37klAhQCE

 

Case in Point for Bitcoin Needing to Act More Like Currency …

I read an article today on Coindesk that once agaian reiterates my position on the need for Bitcoin and the ecosystem to grow up. There are many mature players in the space and this post is not about them, it is about the get rich quick aura that bitcoin seems to have.

Bitcoin mining is the same as any other business that produces, manages, transfers, or exchanges money for goods and services. It’s different in that even though a lot of people don’t think crypto currency is money, if it’s their crypto currency they act like it’s their money. Especially when it is stolen Once again perception is reality.

So the article reports on a $190,000 theft. Some of what was stolen are rigs – worth $160k – and the rest in Bitcoin stashed in a ‘secret wallet’. The alleged perp used at least one alias – John Simms – and used it to dupe Digital Mining Investments out of gear and cash, so this was a sophisticated take down. I have to wonder if using typical safeguards of background checks, 24×7 security, cameras, physical and logical deterrents would have deterred the outcome.

I won’t Monday quarterback this, instead I will use it as another example of why Bitcoin and the cryptocurrency world needs to adopt some grown up operational standards. The more cryptocurrencies are adopted as money, the more people expect it to be treated like money. Things that banks would do to protect their customer’s data, cash, and the bank’s infrastructure need to be employed more diligently. For all the investment in Bitcoin that has happened in the past two years, the assumption that the currency is mature takes a hit when stuff like this happens. Why? Because we know better.

It’s time for a new breed of facility for this cryptocurrency market. A facility like the one it sounds like the folks at The Coin Foundry are raising money for. It makes sense and it’s time. The facilities that exist for the enterprise are overbuilt and based on 30 years of technology innovation that is on the cusp of being eclipsed by new ASICs being developed to service the mining space for all crypto currencies.

Time to make the cryptocurrencies look more like it and be treated like they money they are.

 

 

Where else is there a $90M/year business in an $8B market that has yet to be launched?

I have been pretty quiet lately and I decided that I wanted to follow up on a discussion I had with Rich Miller at Data Center Knowledge last week about an article I was mentioned in that you can see HERE.

Rich and I could talk about Bitcoin and data centers until long after dark on any given day and yesterday was no different. The article he wrote was about the economics of Bitcoin mining as it relates to data centers. I will use this post to do a deeper dive than what he was able to use in the article.

The discussion (and article) was around how active the Bitcoin mining market was, and how few deals had been done and he was seeking an explanation. As someone who gets plugged into things quickly, in this case Bitcoin, and the almost 20 years in the business I guess I would do until a real expert came along. The nuances of the bitcoin market aren’t that different than the data center market of the mid to late 90′s and the subsequent rise of the .com era. Computing changed, and with it the hardware, how we used it,  what it did and how we made it useful all morphed.

The Tier III data center design that has dominated the past 10 years for design, leasing, and use were built for a specific application – the shift from client-server and mainframe apps to the TCP/IP world. Facilities were using more and more electricity because the computers at the time – the 486 – were more powerful and needed more electricity. The form factors changed and the computer footprint went from a Volkswagen bus to a pizza box. The other dramatic shift, while fundamentally the same, was in the amount of heat these pizza boxes threw off.

Designs changed, pizza boxes grew more advanced, and the physical footprint shrank while the computing power went up in less space. The heat footprint changed with the power density (how tightly a footprint an electrical draw fits into) and so more heat in smaller spaces meant more cooling and so the cooling plants grew as a result. Still with me? More computing power = more heat to deal with. Incremental growth every few years as new hardware was developed and sold.

Until Bitcoin rigs came along and f*cked shit up.

I say that tongue in cheek because the rigs are changing a lot of things. They are making ASICs sexy again (still an arms race to the bottom), and they are making a 30 year old multi billion dollar industry think outside the box for a solution. The Tier III design has a lot of risk mitigation built into it. Uninterruptible Power Supplies (UPS) with heavy duty batteries placed in redundant arrays and configurations, those are backed up by generators also laid out in redundant fashion, and everything has to be deployed in pairs and in many cases overbuilt, just in case. Why? The technology inside the data center costs a lot and a lot of people depend on their livelihood for the technology to be available. It’ s cheap insurance (well not THAT cheap, but it beats $100,000 per minute downtime) in most cases and serves it’s purpose which is to get as close to zero downtime as possible.

Bitcoin, and cryptocurrency mining in general, is not mission critical today. If the rigs lose power, no biggie. When the power comes back, they start back up, go like hell until they don’t again. The software is self healing, so when power comes back, so does the mining. You lose a few bitcoin, no one dies or loses their job. Not yet anyway. So for the miners, street power, the more reliable the better, is fine.

Miners are also a frugal bunch. I am Scottish so I know frugal. ‘Good enough’ is great, cheap is better. So a few early adopters flocked to the Pacific Northwest where there is cheap hydro power and tried to find a warehouse that was on the same power system as the dam down the street. Simple. Although like many other things in life simple does not mean easy. The utilities spent an inordinate amount of time with miners who knew how to buy a rig and mine currency but didn’t understand utility scale. Utilities think in gigawatts, not 1100 amp power supplies. Big disconnect. So the warehouses are being scooped up and guys who aren’t proficient with utility scale have some figuring out to do on how to take 10MW of power and power a building – that is not a data center – like a data center. It’s simple but not easy.

So why not use any data center? There are thousands around the world, right?

Remember the Tier III build I took us through? Bitcoin miners don’t need the redundancy and all of the expensive equipment to go with it, and the data center operators already paid for and bolted the systems to the concrete so they are sunk costs. It’s like Nissan only making Infinity FX50′s for the people that want to drive Versa’s. The Tier III guys have a bunch of overbuilt facilities and even if they leased the space at less than cost, they still least the space for less than cost and drag the margin down across the board and Wall Street doesn’t like the build/buy high, sell low model. It costs a lot to change a factory over to build a different animal.

So we have a ton of demand, and no matching supply. In other words – Opportunity.

So what is a data center operator to do? Take it in the shorts? Some have. A deal is a deal in this day and age and revenue coming in offsets carry costs of an overbuilt Tier III building.  Here is the issue with that – a data center operator goes out and raises money against a plan that has the amount of the investment (millions) and a certain rate of return. If the operator starts selling at rates way lower than the plan, and below the rate of return, then we have a problem. What is a really, really tough spot as an operator (I have been an owner/operator) is that here I have an exploding market that I can’t service because my cost of goods is too high on stuff I already built and can’t un-build.

There is a group out there raising $10M in convertible notes to service this need that the incumbents can’t touch. I think the investors who get in will do quite well. Why? It’s about supply and demand. Right now there is a ton of demand. I know of 151 MW right now, today being shopped for. The demand continues to grow. Current owner operators want the demand but when I tell them that the price point needs to be $50/kw, the silence is deafening. They can’t do deals at $50/kw for facilities that cost $75-2,000 a foot to construct.

So there is opportunity here. How much? Well 151 MW equals $7.5M in monthly rent at $50.  $90M a year. That’s a lot of opportunity…

 

Follow the cold data center model?

One of the interesting things that came out of an interview I did with the Wall Street Journal was that someone else, in this case Michael Casey, picked up on something that few do – there is another operations model that most companies don’t consider when thinking about a data center strategy – especially for the upper realm of power (and cooling) densities which is a ‘follow the cold’ model.

What we discussed was the problem that Bitcoin Mining companies will have in the Northern Hemisphere as summer approaches – more heat. Mining is great when it’s cold out because a rig can help heat 1,000 square feet. So you’re making Bitcoin AND heating your living space and getting a double benefit because what you are paying for electricity to mine will also cover heating costs because the rig is turning electricity into heat just like any other computer. Now that winter is over in the Northern Hemisphere and Summer is on the way, that formula isn’t very attractive.

That same electricity that is making Bitcoin is now a liability because the last thing you want is more heat when it’s 100 degrees outside already. So you need to pay for electricity to cool your living space AND to make sure the rig doesn’t get wonky because it goes outside its operating temperature. You’re paying double for power to do the same thing. So how does a miner normalize things?

One simple and pretty basic way to do it is to follow the cold. Ship rigs to a place in the Southern Hemisphere and plug them in so you get the heat benefit when the climate is ideal for it. The things to figure out will be cost of electricity, any language barrier issues, and security of the facility and/or the operator. You don’t want to ship an expensive rig or handful of rigs to a place that sells them out the back of their remote mountain top hideaway because he doesn’t have electricity to begin with.

I still think the way to mine, and make money, is to only do it at scale and move off of air cooling. It’s too expensive when you run hot machines. Look at liquid cooling like the solution from Allied Control that has already deployed it for a mining operation in a challenging environment – Hong Kong. Then you can stay put, mine, and make money – as tempting as shipping your rig to an exotic cold spot for the Winter down under might be…

 

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The Summer of Bitcoin – Hotter Than You Think

Last week I had the opportunity to spend some time with the folks at Allied Control to talk about immersion cooling some more, the impact to Bitcoin and ultimately the impact on computing globally. One of the interesting things we discussed was what was just starting to be FELT by miners and data center operators – the heat problem.

You see, when Bitcoin mining started getting a lot of press mentions (before MtGox, Silk Road, and the other tabloid-esque stories), and was starting to take off, it was October of 2013. That was 6 months ago. Since then the hash rate has grown 46 TIMES. Not 46 percent, but 46 TIMES in just six months. That is a lot of hardware being built and shipped to support the growth of something that is still being defined as often as it is reviled but still has grown faster than anything else in the past 5 years. Given that level of growth, which by the way isn’t sustainable, there will be some plateaus, cliffs, and other negative trends that will impact the Bitcoin ecosystem. The most worrisome is heat.

The reason heat is so worrisome is because heat is a cancer on the roots of the ecosystem.

Heat eats away at profits in the form of cooling costs, it spreads as the Bitcoin ecosystem spreads, and if not dealt with aggressively, it may not kill the ecosystem but it will kill a lot of the ecosystem’s food chain because it takes more money to cool the rigs than the rigs can make mining. The more hardware put into service adds more heat to the ecosystem. Dealing with the amount of heat put into the ecosystem is breathtakingly inefficient today, and the density of most computer equipment is 10X less than a Bitcoin rig. One 4U Bitcoin rig generates 2.5 Kw. That was the electrical footprint of an entire 42U cabinet just a few years ago. Maximizing the number of rigs that fit into a 42U cabinet is 10 rigs and draws 25 Kw per cabinet. And unlike computer equipment that ebbs and flows with elastic traffic, workloads and users, Bitcoin rigs get turned on and they go. All gas, no brake until they get replaced. So you pay to cool 25 Kw per cabinet equivalent the moment you plug the rigs in and turn them on.

Going to a data center company to host your rigs is an expensive proposition. The cooling systems in most data centers that are older than 3 years (99% of them) cannot effectively cool that concentration of heat effectively. Even modern facilities can cool it, but a premium. Want to mine in the cloud? Forget it. We talked to an animation/CGI company a year ago and they build their own data centers because going to the cloud meant a 900% increase in cost for 30 Kw cabinets, and most of that was the cost of spreading out the horsepower used by those 30 Kw cabinets to too many cloud servers. Why? Heat. The 30Kw cabinets run really hot.

It is like trying to blow into the nozzle on a heat gun to keep your face from burning at that density.

So Bitcoin mining is not the only business where heat is an issue, but they are the newest, and least experienced. Bitcoin has largely grown up in the company of cowboys and 20-30 somethings mining on a rig that also doubled as a heater this winter, which was an efficient use of electricity. Since computers turn electricity into heat, if you are going to run a rig and get the extra benefit of heat along with Bitcoin, then it’s like mining Bitcoin and getting heat as a bonus. Now that these folks need air conditioning to keep their apartment cool, the added heat from a mining rig makes it VERY expensive to mine because electricity is now needed to cool the room and the rig, and the rig is adding heat on top of the heat and humidity that comes with summer, and you pay for the electricity to mine and to stay cool, so you double down, or in business speak, double your costs which will be variable based on climate. That’s a lot of risk added to a risky business.

The issue with cooling technology to date is air is nearing the end of its useful life. Air cooling got us to where we are 30 years after the first data centers were built to deliver 25 watts per square foot and cool it effectively. We are WAY past that today. In fact 3 years ago, you were boasting saying you built a facility to 250 watts/foot, and even that is not dense enough for Bitcoin. Every high density facility will tell you they can cool a Bitcoin footprint, but tell them you want to put 400 racks in a 10,000 square foot room, with an average rack density of 25 Kw that will draw that 24x7x365 from the money you light that rack, and see how they respond.

You are asking them to put 10 Megawatts in  what has traditionally been a 2.5 Megawatt space and cool something that is 400% hotter than their best design can handle. And that is just for the rigs that will ship in the next 90 days. So yes, Virginia you can cool Bitcoin rigs with air cooled systems, however not at a cost that is palatable for the operator or the mining pool, or even worth it today. Using air cooling will make it virtually impossible to make money mining – the chips in the rigs are too hot to be cooled with air.

So we need another technology better than air- liquid cooling.

There are two types that  have emerged as solutions in the market – one is oil and the other is manufactured fluid, like Novec from 3M. In a data center application oil is messy. It clings to boards, it drips, it gets on and soaks into anything that it comes into contact with. In videos I have seen touting its awesomeness, I cannot see a server tech wanting to put on gloves to go add a server to an oil tank. The other things I saw in the videos were the fact that the tanks were on raised floor and CRACS were in the background. Why cool the ambient air with air conditioners? Someone is paying for that no matter how much you are saving. The other issue with oil is that you still need to leave the heat sinks on the boards, and periodically take them out and scrape the paste buildup off of the heat sinks, and then put them back using NanoFoil and so the whole process is time consuming, messy and expensive.

The Novec liquid immersion cooling solutions, like the Immersion-2 option from Allied Control, I think holds the most promise. The liquid rolls off the boards and they come out dry. No dripping on my shoes, the floor, or ruining my clothes. It does not require a massive chiller plant to make it work, the cooling can be dialed up or down to cool whatever density gets thrown at it. It’s non-toxic. A tank is a tank, so as densities increase, the method of cooling remains constant, as does the equipment, solution and operational tasks associated with the new method. Once you go liquid, there is one system to learn and it’s low maintenance and you can fit 200 boards in a 42U equivalent cabinet. That is density air cooling and cabinets can’t manage effectively.

I think the headwind ALL of the liquid/immersion cooling solutions will have is with hardware manufacturers. Using liquid cooling negates the need for fans, cases, and cables for the components inside the box. That cost is stripped out, and while logically it makes sense to want to lower costs, if those costs translate to margins then it slows adoption. The perception is that the hardware manufacturer loses money. The reality is that the hardware manufacturer can maintain price because a customer’s perception that they are paying more for a stripped down model with no case, etc. is quickly smashed when they get their first data center bill and it is 50% less to run more powerful gear. I am willing to bet that the hardware manufacturers that want an integrated stack which consists of their lowest cost/highest performance hardware, in an environment that is free to cool their hardware in will win out. Or the cloud provider that wants to cool their more powerful hardware without paying for the electricity to do it that gives them a competitive advantage over EVERY other cloud provider because the others will be paying for electricity to move air around their data centers – on top of the cost of the chillers, piping, CRACs and CRAHs needed to do it.

So as things get hotter for Bitcoin, it will drive more of them to find a cost effective solution to cool their hardware that gets hotter and hotter, because paying for the power required to cool a rig is going up along with the temperatures. Summer is coming and it’s getting hotter already…

Stay cool, and look at liquid cooling.

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Math of Bitcoin – IV

In this installment, I wanted to throw out some reference data for people trying to size their heat signature so they can make better decisions about where to host rigs for Bitcoin mining.

1 Rig = 4U

1 Rig = 2.5 Kw

1 Rig = 8,540 BTU

1 Rack of rigs (8 rigs) = 20Kw

1 Rack of Rigs = 69,000 BTU

1 Ton of cooling for every 12,000 BTU

So for one (1) rack of rigs, you’ll need 7 tons of cooling

400 tons of cooling per MW (355 Tons for 1.2MW) in most facilities

Figure .6 Kw per ton to run a chiller so 240 Kw per 400 tons

So for 1.2 MW/10,000 sq feet of space you can put no more than 57 racks in or 456 rigs per MW

So 912 TH/s is the hashrate per MW using Cointerra TeraMiner 

 

Life as a Service – Part I

The topic for this post came about as more and more stuff gets virtualized and offered as a service. Software was my first foray into *aaS and I worked at a managed services company in the forefront of the transition from site licensed software to paying for it as a service. I can remember the pricing gyrations we would go through because the architecture didn’t exist to support shared servers in the early days so we had to figure out the license (usually an unlimited version) then add in hardware, bandwidth, and some labor, and come up with a price that made money. 

Fast forward 10 years and the software models I grew up with are all but gone. Enterprise Software Licenses and even sales people to a large degree have had to scale and become integrated with the stacks they are now selling as cloud. Even Microsoft came around to some degree and paying for experiences and application functionality has become the norm versus paying for stuff (products usually). People want to pay for functionality and usefulness and we finally understand that it can change, so flexibility is key.

Zoom out to other industries – the automotive industry as an example. In the car business 20 years ago leases were new, and now it’s leases with maintenance thrown in – one monthly payment to just drive a car. You still need to pay for gas, but it’s sign and drive and pay for the car’s functionality and usefulness. I think there are huge market shifting opportunities to go even further in integrating the ‘stack’ even for cars. Imagine a car as a service. The car, the features you want, built for you in your color. The payment (assuming you have one) includes the car, the insurance, the scheduled maintenance, wear and tear items that are part of whatever driver type you are and for the mileage that you want. We have the sensors in the vehicle and the big data mining to stay on top of the trends. Variable costs like insurance – accidents, DWI, and other risky issues, are one time corrections assuming the car is OK and drive-able. Gas you still have to pay for. Or imagine if Tesla, GE, Allstate, and jiffy lube (figuratively anyway) decided to band together and create the experience of just using the car – driving as a service. That would be pretty amazing. 

What else? How about home ownership? What if there was a company that provided houses as a service? All of the components exist, they just aren’t integrated. What if I want to live in Sedona AZ for a couple of years, then Kennebunkport Maine, then Austin TX while kids were at school and then find a cool place to retire and everything was provided as a service? My alarm system, keyless entry, lawn mowing, maintenance, wifi, TV and even furniture were offered as a service? Is this where the Internet of Things is headed?

What about airlines? What if each airline has its own experience. Business travelers fly one airline – no kids, families, or bags too big to lift over your head into the overhead compartment.  You can’t lift the bag, see you at baggage claim pal for that amateur move. Or one that does cater to kids – tv’s and plugs for tablets & devices to charge and no sugary snacks or juice for flights over an hour with extra time to wheel a house full of stuff brought ‘just in case’ down the aisle. Or the airline that only flies NYC to LA airports but really fast. Each with a different price for each experience and functionality.

Things change over our lifetimes – income, jobs, relationships, health, members of the family, you name it. What if we could roll with those changes better if we just had to live?

What if we just went through life paid for as a service?

 

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The Math of Bitcoin III

Blunt Hammer has been looking at and working through the math of Bitcoin as it relates to data centers over the past several weeks and the more we dig, the more we see Bitcoin working the way it should and also how there are several cracks in the system. Many news stories, especially the one by Newsweek trying to relaunch itself – apparently into oblivion – have added more stories about Bitcoin that are for the ‘standing in the checkout line’ crowd vs. people who want to understand its potential as currency for their business.

‘The Face of Bitcoin’ story threw the media into a frenzy because they thought there was finally a man, one human, who was allegedly behind it and would have answers. It reminded me of the running segment in Forrest Gump when reporters are running next to him with cameras asking him why he does it, and people thinking he was some kind of messiah or had answers. Nope. Newsweek got Gumped. The math analogy here is Bitcoin = 1, Newsweek =0. In fact, had Newsweek done even some basic research they would have found what I did – a link to a bunch of quotes from Satoshi Nakamoto going back to January of 2009. More than 5 years ago. Take a look and you may see as I did, the guy created something, opened it up to a community of other smart people and left it to go do something else not knowing if what he had created would have the impact or value it does today.

The real math I was doing however in spite of the riveting OJ-esque white bronco chase was related to the additional load the Bitcoin and crypto mining in general will add to the current electrical system worldwide. The rigs have the same electrical draw of an entire 42 U cabinet. In 4u of space. The rigs are chips and fans, a board, and case. The power supplies don’t ship with most of them, so like we used to say – batteries not included. So data centers where 2.5 KW were taken up by entire cabinets, now will have that inventory sucked up by something 1/10th the size. Said another way – it’s a 10x rise in density. That is an incredible amount of heat to add to a data center, especially ones that can’t handle a 2-3x increase from 2.5 up to 10 Kw/cabinet

Satoshi Nakamoto posted this on Aug. 9, 2010: ‘If you’re using electric heat where you live, then your computer’s heat isn’t a waste. It’s equal cost if you generate the heat with your computer. If you have other cheaper heating than electric, then the waste is only the difference in cost. If it’s summer and you’re using A/C, then it’s twice. Bitcoin generation should end up where it’s cheapest. Maybe that will be in cold climates where there’s electric heat, where it would be essentially free.’

Satoshi knew that heat was the issue four years ago when rigs were no where near the power they are today. In fact the hash rate was at 3GH back in August when he made that statement, and now it is at 40.8 MILLION GH! The computing power and electricity required to sustain and grow the hash rate is the Achilles heel of the entire network’s profitability because of the heat. When we use A/C to manage it, the cost of Bitcoin production doubles, and that doesn’t take into account any efficiency factors in a data center. As we have said many times, computers turn electricity into heat which is great if you live above the Arctic Circle 12 months a year, however for most of civilization that is not the case and A/C will be used to manage the heat that is produced from mining rigs. If the power costs are higher than the ability to make money making Bitcoin, there is no profit.

Here is a real world example of costs for a 1.0 MW Bitcoin mining operation:

1 MW IT load = 1,000 Kw

Cost per Kw (rent) = $100/kw 

Cooling ‘uplift’ = 50% (assumes a PUE of 1.5) 

Cost of power = .10 per Kwh

1,000 Kw (load) * 730 (hours in a month) * .1 (price per Kwh) = $73,000 for IT load power. Add 50% for cooling

Power =$109,000 per month at full load plus $100,000/rent = $209,000 per month = $2,514,000 per year for a 1 MW mining operation.

 As hash rates go up and the math gets harder and reinvestment in faster rigs is required just to keep up, you MUST eliminate costs of mining, which is all about managing power costs. Cut power costs, find efficient ways of cooling, and buy the most efficient rigs you can find. This is an arms race for the next 16 years, and you cannot bring bullets to gunfights.

If you want us to help you model out a successful mining approach of your own, email mark AT blunthammer.com. We are working on several game changing technologies…

 

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Bitcoin and Crypto currency in general just got real

My first reaction to the news about Autumn Radke may have been a bit of an over reaction, but it has sent shockwaves through the crypto currency world that could be as much an aftershock from the MtGOX implosion and bankruptcy as anything.

I hope you’re in a better place Autumn. Rest in Peace.

 

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Air cooling’s demise?

I have been watching the developments with a company – Allied Control – for the past several weeks. The reason they intrigue me is that yes, they have an interesting technology, but more importantly they fundamentally change the approach of how to approach managing heat from computers. They have developed a liquid cooling solution that removes the thermal ceiling for chip design. This is important because it means that the ability to to cool chips is no longer a factor in design. Sure there are other factors to contend with, but a significant one is removed.

The total addressable market just ballooned because enterprises can now build and ultimately run more powerful computers in smaller spaces more efficiently and without the worry of burning a data center or office building down. The ancillary benefits are that it will not take tons and tons of air conditioners to cool lots of these hotter boxes which amounts to significant energy savings on top of technology that is far less expensive to deploy in the first place.

The other thing I find compelling is that their solution is attainable. I just saw this article over at Gizmodo and while impressive as far as computational speed and coolness factor go, the DWave2 at $15M is impractical for most organizations and besides you need to have an environment 150 times colder than deep space (and two degrees above ABSOLUTE ZERO) and a vacuum that is 10 billion times less than atmospheric pressure which I also thinks means stronger than a Dyson vacuum. I live in New England and own a Dyson and even if I had the $15M I am sure I would still not have the right environment to run it in, aside from the $15M being able to buy a lot of chum for bluefin tuna fishing this year.

Keep an eye on Allied Control – it changes the game fundamentally like when props were replaced by jet engines. This is a new jet engine for computing and data centers, and while it may or may not be the demise of air cooling, the only time a see a biplane is at an airshow. Well before the Blue Angels take to the skies…

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