What Is a Bitcoin Mining Farm?8 min read09/05/2019
A mining farm is a set of hardware that includes a computer and graphics processing units (GPUs) connected to it. In a typical scenario, the number of GPUs varies from 4 to 6. With this number of graphics processing units, miners can use a single motherboard and two ordinary synchronized power supply units (PSUs) or one server PSU. Using Bitcoin mining software, mining farms exchange its calculation power for cryptocurrency.
There are various types of cryptocurrency mining: GPU mining, HDD mining, ASIC mining, cloud mining, and CPU mining. The difference between them lays in hardware, algorithms, and principles applied during the mining process. However, each type is suitable for different cryptocurrencies. For example, you can use hard disk drives and special ASIC devices to mine Bitcoin.
When it comes to GPU mining, miners used to utilize usual GPUs for both gaming and cryptocurrency mining. In 2017, Nvidia presented their GPUs specially developed for mining purposes. Nvidia P106-100 and P104-100 were analogs of GTX 1060 and GTX 1080. The difference between GPUs for mining and gaming was in 30% higher hashrate. However, the vendor offered only a 3-month warranty for their new GPUs.
With the rise of the Blockchain technology, Bitcoin mining required only an ordinary computer with an advanced GPU. With the growing number of miners and transactions, the mining complexity was continuously increasing, and algorithms were becoming more complicated. Therefore, in-home mining turned out to be unprofitable.
As a result, miners people began to look for suitable components to make mining more efficient. They started experimenting with central processing units and hard disk drives. Today, GPU mining makes no sense, since large farms use ASICs and miners need to compete with them.
What does a mining farm look like?
Large cryptocurrency mining farms usually look like a data center with servers. You can see long shelves with such equipment as motherboards, central processing units (CPUs), GPUs, and ASICs. MIning farms may not require a team of engineers to work properly. A single miner can manage a farm remotely using camera-based monitoring.
Typically managed with a single console, mining farms also have a cooling system equipped with fans. Since mining hardware often works under high temperatures, flammable objects like trees and plastics shouldn’t be close to a mining farm. That’s why farms often have metallic or concrete walls. Besides high-end hardware, mining farms need stable electricity and Internet connection.
How mining farms work
Long story short, a mining farm is pieces of equipment that use their computing power to mine cryptocurrency. To create a Bitcoin mining farm, you need to purchase special hardware, connect and, configure it. Once properly configured, it will start mining the cryptocurrency. The computing power of a mining farm is much higher than total computing power of a set of the same number of separate computers since mining farms focus on the single task.
The working principle of mining farms lays in calculating unique values in programming code, also known as hashes. In the distributed ledger, these hashes make possible new data blocks to appear and be valid. Miners receive payments for each generated data block. The main goal of a mining farm is to unite computing power of all available devices in order to increase computing power and, as a result, improve chances to get a reward for generating data blocks.
Mining farms typically work on a 24/7 basis. The calculation process can take from a few minutes to several days or even weeks. The cryptocurrency mining speed depends on hardware performance and network complexity. Thus, the more powerful the mining farm is, the faster it can generate new data blocks. Furthermore, the more miners involved in the calculation process, the lower the reward is and the harder it is to calculate new hashes.
Virtual money mining is a complex process that requires much computing power. Today, miners invest tens or even hundreds of thousands of dollars to be able to mine enough for a living. Every 2 weeks, the system increases the complexity of math problems for each Bitcoin farm, thus, reducing the speed of calculating new blocks.
Mining farms can consist of various components:
- A solid-state drive of 100-160 gigabytes
- A central processing unit (CPU)
- Power supply device (one per 5 GPUS)
- Risers (one per each GPU)
- RAM (at least 4 GB)
- USB WatchDog
- A frame made of aluminum for home-based mining farms or a room and metallic shelves for large farms
- A display emulator
- A cooling system
The biggest mining farms
With the price of $5,820 as of May 2019, Bitcoin is the most expensive cryptocurrency in the world. Its closest competitor ThoreCoin is almost 7 times cheaper. Ethereum, a cryptocurrency that is typically used in smart contracts, costs only $169.46. Because of the high Bitcoin price, miners often focus on this cryptocurrency and create huge mining farms.
China is the main global Bitcoin mining center. The country offers cheap electricity which encourages local entrepreneurs to create huge farms. Chinese Ordos is an unofficial capital of cryptocurrency mining. 33% of all citizens are involved in mining. The largest farm is located in the south-east of the city. It looks like a huge warehouse that has a length of 655 feet. It has about 90,000 devices and forms 5% of the global Bitcoin network capacity.
More than 100 people work in the Ordos-based mining farm. They even live at this farm to avoid wasting time on traveling to their workplace. The average daily electricity bill is $40,000. When the Bitcoin price was in its maximum (about $20,000), the Chinese mining farm was generated daily income equal around $500,000.
Genesis Mining, one of the largest companies focused on Blockchain, used to have a few farms in Bosnia and China. Today, their main facility called Enigma is located in Iceland. This northern country has suitable conditions for mining: cheap electricity, stable Internet connection, and cold climate. The latter is an extremely important factor since it allows significant savings on cooling systems, thereby lowering the cost of Bitcoin mining.
A company called Allied Control built the largest Hong Kong-based mining farm that has a two-stage liquid cooling system. Supported by Chinese investors, the farm works quit and used to utilize ASICs for mining. In 2015, BitFury, a vendor of mining equipment, acquired Allied Control’s farm. As a result, new owners replaced ASIC with their own devices.
A well-known Bitcoin miner Guido Rudolphi created a mining farm in Switzerland. Previously, he had mining experience and had a farm in Zurich, Germany. Two years since his first mining farm launch, he understood that his operating costs were too high. So Rudolphi decided to create another farm in a small Swiss village Linthal that offers the cheapest electricity in the country.
Located in the building of the former factory, the new farm is the largest in Switzerland. Guido Rudolphi says that making money is not his main goal. He supposes that the world needs Bitcoin rather for political reasons. The farm owner compares the cryptocurrency with the Internet in the 1990s when many people didn’t take the technology seriously and regarded it with skepticism.
Washington D.C., USA
A Bitcoin mining farm located in Washington D.C. is one of the first mining farms in the world. Its owner Dave Carlson started his initial farm from a single computer and GPU at home. It took only a year to turn his idea into a business that could bring millions of dollars. Dave called his company MegaBigpower that now looks like a huge warehouse.
Nobody knows for sure where this mining farm is located except his owner. Dave Carlson claims that 15 employees manage his farm. With the growing income, he launched the production of mining equipment. Dave could mine 12,500 Bitcoins within a month, thus making millions of dollars at his mining farm.
Within the last few years, you could hear many success stories about millionaires who have made their money mining Bitcoins. This encourages young entrepreneurs to follow the same path and create their own mining farms. The question is whether it’s worth it. How much can you earn with a mining farm? Is Bitcoin mining profitable in 2019?
Since December 2017, a Bitcoin price has dropped by 70%. Furthermore, a reward has been cut too – now it’s equal to 12.5 coins compared to 50 coins at the beginning of 2012. On May 23, 2020, a Bitcoin mining reward will be halved again. That’s why you should accurately calculate your expenses and potential earnings.
- The cost of the GPU Radeon R9 380x is about $250
- An average electricity price is $0.12 per kilowatt-hour
- power consumption – 375 W
- Bitcoin price is $5,800 dollars as of now
Since a GPU has the power of 0.5 Ghash/s, a miner can’t get any profit by mining Bitcoins because expenses are higher than income. As a result, home-based mining farm is worthless. Furthermore, increasing the number of GPUs leads to higher expenses. As a result, GPU mining makes no sense in 2019.
Let’s consider the profitability of Bitcoin mining with ASIC devices:
- The cost of ASIC AntMiner S9 is about $1,700;
- The electricity сost is $0.12 per kilowatt-hour;
- A mining farm consumes 360 kW (excluding computer);
- Bitcoin price is $5,800 dollars as of now
The effectiveness of this equipment is 28 thousand times higher than mining with a GPU. However, it consumes much more electricity. Taking into account the price of ASICs, using a single device won’t allow you to earn enough to pay off your expenses. You can build a large mining farm with tens or hundreds of ASICs but you will be able to get any profit in decades since mining hardware requires a significant investment. You should find other much more promising and prospective application of your extra tens of hundreds thousand dollars.