The most unique thing about how a Bitcoin mining farm operates is the lack of control. This type of money does not belong to anyone, there are no factors such as:
- government issue;
- banking monitoring;
- transaction fees;
- restrictions on the creation of services;
- need to use your real name.
And both the bitcoin system itself and its currency operate almost entirely on the Internet, except for the equipment and people who service the facilities.
The largest farms are Chinese
In fact, a situation has arisen in which the vast majority of the hashrate of the world’s leading cryptocurrency, Bitcoin, is physically located in China. The Celestial Empire initially positioned itself as a country of cryptocurrency permissiveness, thereby attracting multimillion-dollar capital to this industry and receiving additional trade turnover simply from the very fact of the large-scale use of virtual money.
However, you shouldn’t extol everything so much. There have also been cases when cryptocurrency systems received a blow to the gut from the Chinese government:
- In 2014, there was a famous ban on private financial institutions using cryptocurrency in interbank and corporate payments.
- In 2022 (starting from the middle), a serious restriction of the ICO market followed.
- And at the very beginning of 2022, plans were announced (with specific instructions for departments executing government decisions) to radically limit the circulation of cryptocurrencies in the economic space of China and to complicate business conditions for mining.
Such unfriendly actions of the government administration, naturally, could not but affect the market capitalization indicators of both Bitcoin and other cryptocurrencies in general. Each time everything collapsed sharply and violently. And naturally, those who suffered most in such situations were those who made serious investments in this industry, because they were the ones who experienced the direct impact of falling prices on the main product that could “recapture” these investments – the cryptocurrency itself.
What are such investments? This is the physical embodiment of an attempt to increase the productivity of the cryptocurrency mining process through simple scaling. Computing power, thanks to which new blocks of virtual currencies are born, can be increased in two ways: extensively and intensively.
Intensification implies the use of equipment with improved computing characteristics (for example, ASICs). Their use makes it possible to achieve specific savings in energy and space. And extensive development leads to the creation of large computing complexes by increasing the number of units of equipment used.
The initial favorable business environment and favorable investment climate in this area led to the creation of a situation in which this very scaling became a very effective way to increase the profitability of the entire mining business. And in fact, this led to the fact that 75% of the total mining capacity of the same Bitcoin was distributed between the 5 largest mining pools. And sometimes 3, and sometimes 4 (and sometimes all 5) of them are located in China.
Yom Kippur War
Egyptian T-55 tanks (Soviet production).
The workhorse of the Egyptian army. In 1973, Israel was much larger than it is now. At that time, he owned the Sinai Peninsula - a huge piece of barren land, conquered in 1967, during the Six-Day War. But this territory was strategically important, and Egypt perceived its loss as a national insult. For the new Egyptian President Anwar Sadat, the return of Sinai was perhaps his main election promise. And, looking ahead, it must be said that he succeeded, albeit in a paradoxical way - by losing the Yom Kippur War, which he himself started.
Anwar Sadat
Just five years earlier, in 1967, Israel had defeated the Arab coalition with stunning (at least according to the world community) ease. Having destroyed the enemy air force and suppressed air defenses, the IDF quickly dealt with the poorly organized Egyptian army. Egypt was humiliated, and the Israeli government believed that it had won years of peace for itself - after such a defeat it was almost impossible to recover. However, Egypt, especially with the arrival of Anwar Sadat, began preparing for revenge. Five years of modernization, drill and reform made his army much more efficient. In the Yom Kippur War, the Israelis were met not by a chaotic mob, but by a well-organized war machine.
The border between Israel and Egypt ran along the Suez Canal, and the Egyptians brilliantly planned an attack through this barrier. On their side, they set up a powerful protective line of air defense and missile launchers, which covered the Israeli coast for many kilometers. Under this “umbrella,” the Egyptian troops that crossed the Suez Canal could not be afraid of Israeli aviation and received serious fire support. But, as further developments showed, luck was not on the side of the Egyptians outside of missile defense.
Crossing the Suez Canal.
The Yom Kippur War began on October 6, 1973, as Israel celebrated one of its most important religious holidays, Yom Kippur, the Day of Atonement, from which the campaign took its name. Egyptian rocket launchers destroyed the artillery and tanks stationed on the Israeli side, and the army began a rapid crossing of the canal. At this time, the Air Force bombed Israeli airfields (the Soviet TU-16 missile carriers were especially useful in this), and the air defense completed the massacre - as a result, in the first two days of the war, Israel lost a third of all aviation. In addition, the Egyptians used innovative tactics: with the help of powerful water cannons purchased abroad, their engineers were able to quickly destroy Israeli sand fortifications. The path to Sinai was open, the IDF suffered huge losses.
Syrian T-62 tank (Soviet production) during the Yom Kippur War.
But that was only half the story - at the same time, Egypt’s ally, Syria, also launched a massive attack on Israeli fortifications. The Golan Heights in the northeast of the country became the site of fierce fighting. However, the Syrians planned their operation much worse - their attack quickly fizzled out, and they themselves were forced to go on the defensive, fearing an Israeli forced march to Damascus.
How farms work in China
This review is based on materials from a photojournalist for one of the European publications, Liu Xingjie, who was lucky enough to visit one such Bitcoin farm. The secrecy of a mining farm in China is at the level of military facilities of the Soviet period, that is, everyone, of course, knows about everything, but actually getting to the site is extremely difficult due to the poor condition of the roads (the farm is located about 30 km from the nearest asphalt road - there this also happens).
Secrecy
Despite the favorable reality, legal uncertainty regarding cryptocurrencies in the country automatically transfers its entire infrastructure into the so-called “gray zone”. Entrepreneurs perceive it this way: it is possible to engage in this type of activity, but talking about it, and even more so, demonstrating its aspects (equipment, communications) in the media (including the Internet) is highly discouraged. Law enforcement agencies are toned up, as if at the command “Ready.” And if suddenly someone “at the top” doesn’t like something, then the command “Fas!” will follow immediately, and most importantly, will be executed just as quickly. Therefore, no advertising and, preferably, prying eyes.
Saving electricity
The main variable resource that virtual money requires just to be born is electricity. A huge farm may require maintenance by several people, but without the required number of kilowatts of power consumption established, the mining process simply will not begin.
Bitmain antminer s9 (suitable for mining Peercoin (PPC), Bitcoin (BTC), eMark (DEM)), with a computing power of 13.5 TH/s, a power consumption value of 1.32 kW (!!!) (like the largest burner on kitchen electric stove)
That is why mining farms in China are located mainly in the province of Sichuan (which is considered a kind of “capital” of Bitcoin mining), since there are a large number of hydroelectric power plants supplying the cheapest kilowatt.
Terem-teremok, it is not low, not high...
In general, such a farm is the last thing that resembles a high-tech complex. More likely, some kind of newfangled eco-art project, when goats peacefully graze around industrial hangars located on a country road and whirring with cooling fans...
- The total amount of equipment is 550 units (mainly, of course, ASICs).
- The number of staff is “approximately” one and a half dozen people.
- There is a forced cooling system.
- Living rooms (with combined bathrooms) are also combined with the room containing computing equipment.
In general, nothing too cyber-technically complex or incomprehensible. The farm consists of orderly rows of shelves under a roof (sometimes leaking) with miners and power supplies installed on the shelves. On the side of the aisles, everything is hung with signal wires and power cables. From there, fresh air is taken in for local cooling of the boards. Air convection is carried out in a passive-intensive way (this is when the circulation of the atmosphere in the room is artificially influenced by industrial air conditioners that cool the heated air under the ceiling). The roof needs repairs (because there are puddles on the floor), but it is not the wild elements that are the main enemy of the organizers of this business. One “unfriendly” factor has already been mentioned here - these are government actions that are tightening the atmosphere of cryptocurrency regulation and mining. And the efficiency of mining is greatly influenced by the growing complexity of mining right before our eyes.
In less than six months it grew from 1.6 trillion. conventional units up to 2.6 trillion. And it doesn't seem like he's going to stop. Difficulty directly affects mining efficiency, reducing not only the production of winning hashes, but also the production of “shares” (blanks, semi-finished products for later selection). In other words, process performance decreases. And at an accelerating pace! Therefore, it is not rain or wind that accidentally blows into the room that affects the video card and its service life, but mainly purely economic and technological factors.
Will renewable energy become cheaper?
May be. Over the past ten years, the cost of generating solar and wind energy has dropped significantly. In November, the Financial Times reported that the price of electricity from renewable energy sources had "almost reached parity with consumer rates in California, China and parts of Europe." That is, next year consumption from “green” sources may become even cheaper.
In early 2022, China's National Development and Reform Commission announced plans to encourage investment in solar farm projects. For the development of such projects, it was proposed to introduce a reduced tax on land plots, and the energy network should have been rebuilt for the prompt delivery of electricity to the consumer from a renewable source.
Source: South China Morning Post
Despite all efforts, China still remains the world's number one coal consumer. This year, imports of the resource increased by 10 percent amid the trade war between China and the United States.
In the world, the trend towards switching to “green energy” will very soon bear fruit. According to Fatih Birol, executive director of the International Energy Agency (IEA), by 2024 the amount of electricity consumed from renewable sources will increase by 50 percent.
Renewable energy sources already satisfy a significant share of demand in the world. However, their creation must accelerate if we are to achieve our long-term goals for climate conservation, air quality and energy efficiency.
Financial situation of mining
More recently, users of cloud mining services cherished the opportunity to acquire additional tens of gigahashes/sec of mining power as the most attractive gift for the New Year holidays. Well, of course, cryptocurrencies then reached the peak of their value (in the current time period), and the same Bitcoin was happily bought for $20,000, forming (with a mining complexity of even 1.9 trillion conventional units) mining profitability at the level not less than $2.8 for 1 Th/s.
Since then there has been a big avalanche:
- The Chinese government slammed its fist on the table, threatening to impose an unbearable tribute on mining farms and eradicate the cryptocurrency infrastructure altogether (which is fraught with additional costs for the organizers of virtual money mining projects, both official and “left”).
- Bitcoin's value has fallen by half from its peak (and is trending downward). As a result, at the moment, the net profitability of mining is steadily going down, below $1 per 1 Th/s.
So what do you tell entrepreneurs who have invested in expensive ASICs to do? Productivity fell by almost 1.5 times compared to the same October 2022, and the cost of the main products received - cryptocurrency blocks - also fell by half (and then even worse expectations). The situation is not easy (it’s clear why there are puddles on the floor of a Chinese mining farm).
17 October
The 460th Brigade, under the command of Colonel Gabi Amir, was ordered to cross the Canal after building a pontoon bridge and advance on the city of Suez with an eye to further movement towards the oil fields to the south.
This plan did not work, and on October 16 the brigade received a new order: to turn around south of the Akavish Highway and wait for the paratroopers to clear the highway in order to continue moving towards the Canal along the Tartur axis and further to the bridgehead.
Closer to the morning of October 17, when the difficult situation in which Mordechai's paratroopers found themselves became clear, Divisional Commander Adan ordered Brigade Commander 460 Amir to take part in the evacuation of the wounded. Communications between higher headquarters and units on the battlefield did not work at that moment.
The commander of Tank Battalion 100, Ehud Barak, who had volunteered to carry out the order to evacuate the wounded, instead waited until dawn and led his battalion in an attack on the Egyptian positions. After coming under rocket fire and suffering heavy casualties, he retreated.
Electricity consumption as a political argument
China is on the warpath using cryptocurrency money. Mining farms have not yet been outlawed, but they will be taxed without any preferential rates or periods, which, coupled with the cheaper prices of virtual coins on exchanges, as well as the exponentially increasing complexity of some altcoins, can seriously cut off the cryptocurrency theme at the root.
It is wrong to think that a reduction in the number of farms will lead to a decrease in production, that is, supply on the market, as a result of which the price will begin to rise. No, it's not oil! Reducing the amount of computing power will lead, first of all, to an increase in transaction confirmation times. And the problem here cannot be solved at a price, because there will simply be a stupid shortage of miners. As a result, cryptocurrency networks will simply…stop being used. Such an argument sharply reduces the resource of a mining video card.
The thesis that mining consumes a lot of electricity sounds especially hysterical in the political context, therefore, caring for the welfare of the people, the government intends to reduce the number of cryptocurrency mining farms in the country. Amazing insight into market economics! As for me, if the proceeds from the sale of something exceed the costs of producing it, then this something has a complete economic justification for its existence.
There are very serious doubts that the owners of these farms did not regularly pay for the electricity that is consumed by mining farms on a particularly large scale. This is too important a factor of production to be ignored. On the territory of the People's Republic of China, the cost of a kilowatt hour is heterogeneous (as in Russia, however). Is it any wonder that energy-dependent objects are “huddling” closer to cheaper sources? And if “it was paid for the light,” then where is the sedition? Reasoning in this way, then it is necessary to close aluminum smelters with the wording “for overconsumption of electricity.”
“Excessive energy requirements” of mining facilities is nothing more than a reason, an internal self-excuse by government officials to initiate persecution of the cryptocurrency infrastructure. Well, the electricity situation is a strong signal sent to the market that virtual money has fallen on hard times.
Summary
China once created a fertile climate for investing in cryptocurrency infrastructure. Organized financial platforms, private conversion services on Chinese domains, and mining have appeared. Chinese mining farms are located not only in Sichuan province. A similar giant is present in Hong Kong. The enterprise is located approximately 14 km from the administrative center of Hong Kong - in the Kwai Chung district (in the territory of the seaport).
Despite the modest footprint, it was possible to cram quite a large number of high-performance ASICs mining Bitcoin into this room. This is all thanks to the intensification of the cooling method, which makes it possible to “compress” the placement of computing units closer to each other (cooling is carried out using the immersion method using liquid refrigerant). This method also significantly saves energy consumption. (And the amount “for light” per month is over $50 thousand).
As for the mainland of the country, the largest Chinese mining farm belongs to. What makes scaling attractive is its similarity. Everything is very much reminiscent of the Hong Kong version (there is also liquid cooling, which allows you to save kilowatts). The difference between the continental farm is its power: it is larger - the hashrate (as of autumn 2017) was 4.7 PH/s (the subject of mining is classic Bitcoin).
Operation Undaunted
The Battle for the “Chinese Farm” - a map of the area according to the War Thunder version.
Back on October 10, the tank brigade of Israeli Colonel Amnon Reshef found out that there was a gap between the 2nd and 3rd Egyptian armies, at the place where the Suez Canal meets Bitter Lake. Reconnaissance in force made it clear that the “emptiness” was quite large - a tank column could easily pass through it without being noticed. It was decided to use this fact for a counterattack. The operation was called “Dauntless” and was, in fact, a desperate military adventure. However, it worked and allowed Israel to win the war.
The plan of the operation was as follows: drive an entire army through the gap, build a crossing across the Suez Canal, land on the opposite bank and go behind enemy lines. At the same time, it was intended to encircle the 3rd Egyptian Army and deprive it of supplies, forcing it to surrender. Looks like complete madness.
Israeli "Magah 6" (modified American M60-1).
The implementation of the plan was delayed until October 15. On the opposite bank there was still a huge amount of Egyptian equipment - up to 900 tanks, which had not yet been transferred to Sinai. Moreover, they were concentrated exactly where the Israelis planned to cross the canal. During this time, the plan acquired new details: it became clear that the gap needed to be expanded by force, and then protracted battles should be imposed on the Egyptians - so that during this time as many soldiers and equipment as possible would have time to cross to the west bank. First of all, for this it was necessary to capture and hold the so-called “Chinese Farm” - an abandoned experimental farm, which received its nickname due to the fact that Japanese agricultural technicians once worked on it. On the doors and hangars of the farm one could see hieroglyphs that Israeli soldiers mistook for Chinese.
Why was she so important to the operation? Firstly, the farm covered the place where Ariel Sharon's 143rd Division was to seize a bridgehead in order to begin crossing the canal. Secondly, it turned out that the pontoon bridge needed for the crossing could be pulled without problems only through the area of irrigation ditches. Thirdly, to the south of the farm there was the Akavish highway (from Hebrew - “spider”), which passed through the gap between the Egyptian armies and went from the Israeli rear straight to the crossing point. In other words, the “Chinese Farm” was vital for protecting the bridgehead of Sharon’s division, and for building a bridge, and for bringing reinforcements to the crossing (they became Abraham Adan’s division).
