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Size of two-bedroom apartment, 'Bitcoin mine' excites financial world

By Catholic Online (NEWS CONSORTIUM)
December 18th, 2013
Catholic Online (www.catholic.org)

Bitcoin, a virtual currency that is gathering popularity, has rather humble roots. The "Bitcoin mine" is found eight miles from Hong Kong's financial district, in a tiny room no larger than a two-bedroom apartment. It is here that high-tech stakes and financing takes place.

LOS ANGELES, CA (Catholic Online) - Dominated by vertical racks that house hundreds of chips, these chips are custom-built to mine Bitcoins.

The invention of an unknown person using the alias of "Satoshi Nakamoto," the Bitcoin was created in 2009, the Bitcoin can be bought and sold without middle men. Purchases can be made anonymously.

The Bitcoin is becoming increasingly popular with merchants - pizza parlors and car dealers are now accepting them. The Chinese have enthusiastically adopted the Bitcoin. This reflects a trend by a lack of more traditional investment vehicles in the country.

Bitcoins can be purchased on an exchange, or transferred via mobile apps or computers. A third method is where individuals compete to "mine" Bitcoins using computers to solve a complex math puzzle, i.e. the Bitcoin algorithm.

Bitcoin mines devote their massive amounts of computing power to working on the algorithm. Those who crack the code are rewarded with an equivalent share of Bitcoins. A winner is rewarded with 25 Bitcoins roughly every 10 minutes.

Those in search of are drawn to Hong Kong because of its proximity to chip makers in China. Hong Kong is also notoriously permissive when it comes to rules and regulations. 

Allied Control's vice president of operations Kar-Wing Lau says the Hong Kong mine is cheaper to run and more efficient than many others due to its technique of immersion cooling.

Fans and sinks are usually used to disperse the heat generated by massed ranks of computer chips. The Hong Kong mine is liquid-cooled using a product developed by 3M.

Processors used in the mine were build specifically for mining - their sole function. "These ASIC chips, they can mine Bitcoins and do nothing else," Lau said. "Given the pace of advancement, we need them to be constantly upgraded."

Immersion cooling allows Allied Control to leave less space between the chips, which saves money that would otherwise be spent on rent.

It also cuts down on electricity use, one of the major costs associated with Bitcoin mining. Lau remained mum about how much it cost to build the mine. He did say that electricity bills for a fully-operational mine of this size would typically exceed $50,000 per month.

"The real question from a business perspective is how efficiently you can run your mining operation," Lau said.

While the Bitcoin is mostly unregulated, this could change. Governments are concerned about lost tax revenues and their lack of control over the currency.



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