Amid rapid changes in the bitcoin mining industry, another bitcoin miner is going into the cloud.
CoinTerra on Monday announced that it will begin offering cloud-based mining services to its customers, becoming the second big miner this month to make the move. As the price of bitcoin has tumbled, it has become increasingly difficult to profitably mine bitcoin, a problem for the miners and the companies catering to them.
As more miners come aboard, the bitcoin algorithm automatically adjusts its difficultly higher. This has sparked an arms race, with miners deploying increasingly powerful computers to stay on top. That has led to a rising spiral of costs. It’s reached the point where it’s become cost-prohibitive for people to mine on their own. Cloud mining, where miners buy contracts from companies like CoinTerra and PeerNova, is emerging as a cheaper option.
CoinTerra, founded nearly a year ago, will be selling one- and two-year contracts for a range of mining power, from 200 gigahash (small) up to one petahash (big), as well as continuing to sell mining rigs. “We’re catering to basically the entire spectrum out there,” CEO Ravi Iyengar told BitBeat. Through the mining rigs it sells, CoinTerra comprises about 15% of the total mining output, the company said, and it expects to maintain that market share.
As bitcoin has grown, the”hash rate,” a measurement of mining power, has skyrocketed. In September 2013, the entire mining network reached the 1 petahash/second rate, a multiple of 40 times higher than in January 2013. Now CoinTerra will be selling 1 petahash contracts. It’s gotten so big, it’s harder to mine profitably on anything but a very large scale. CoinTerra itself saw sales drop 30% in April. Thus the move into cloud mining.
In the early days of the cryptocurrency, it was possible to mine using desktop computers. As it grew, CPUs gave way to graphics cards, which gave way to generic chips modified for mining, which gave way to chips programmed for a single task called ASICs. It now takes machines with multiple dedicated chips to mine profitably, and increasingly even that kind of computing power doesn’t provide a sufficient return on the investment, given the falling price of bitcoins, the increasing size of the mining community, and the concurrent increasing energy demands, which has emerged as a major roadblock. “Space and power is a big issue,” Mr. Iyengar told BitBeat. “The power required is unlike any other server industry.”
CoinTerra is leasing space at several data centers in the U.S., he said, and has some plans to build its own data center.
The upheaval has resulted in a string of problems for the industry, from bankruptcies to delivery delays to lawsuits. KnCMiner has had problems with deliveries, and branched out into selling rigs that mine for altcoins rather than bitcoin. Butterfly Labs is involved in several lawsuits, and a startup called HashFast Technologies (which is also involved in a lawsuit) on Monday announced that it laid off 50% of its staff. Washington-based Alydian simply went bankrupt as the cloud-based mining business it built couldn’t keep up with the increasing power demands.
“A lot of people got into this space in the mad gold rush,” Mr. Iyengar said, “here you’re trying to combine hardware and software and the whole supply chain associated with a server market.” He likened it to trying to combine Intel, Microsoft, and Dell.
The total computing power is rising at such an exponential rate, that machines have a short productive lifespan. Even a delay of a month or two between the time a customer places an order and the time the machine arrives can severely cut into profits.
Thus the move into the cloud. CoinTerra joins the recently formed PeerNova in offering cloud services.
Source:http://blogs.wsj.com/moneybeat/2014/05/12/bitcoin-mining-company-cointerra-enters-cloud-mining/
CoinTerra on Monday announced that it will begin offering cloud-based mining services to its customers, becoming the second big miner this month to make the move. As the price of bitcoin has tumbled, it has become increasingly difficult to profitably mine bitcoin, a problem for the miners and the companies catering to them.
As more miners come aboard, the bitcoin algorithm automatically adjusts its difficultly higher. This has sparked an arms race, with miners deploying increasingly powerful computers to stay on top. That has led to a rising spiral of costs. It’s reached the point where it’s become cost-prohibitive for people to mine on their own. Cloud mining, where miners buy contracts from companies like CoinTerra and PeerNova, is emerging as a cheaper option.
CoinTerra, founded nearly a year ago, will be selling one- and two-year contracts for a range of mining power, from 200 gigahash (small) up to one petahash (big), as well as continuing to sell mining rigs. “We’re catering to basically the entire spectrum out there,” CEO Ravi Iyengar told BitBeat. Through the mining rigs it sells, CoinTerra comprises about 15% of the total mining output, the company said, and it expects to maintain that market share.
As bitcoin has grown, the”hash rate,” a measurement of mining power, has skyrocketed. In September 2013, the entire mining network reached the 1 petahash/second rate, a multiple of 40 times higher than in January 2013. Now CoinTerra will be selling 1 petahash contracts. It’s gotten so big, it’s harder to mine profitably on anything but a very large scale. CoinTerra itself saw sales drop 30% in April. Thus the move into cloud mining.
In the early days of the cryptocurrency, it was possible to mine using desktop computers. As it grew, CPUs gave way to graphics cards, which gave way to generic chips modified for mining, which gave way to chips programmed for a single task called ASICs. It now takes machines with multiple dedicated chips to mine profitably, and increasingly even that kind of computing power doesn’t provide a sufficient return on the investment, given the falling price of bitcoins, the increasing size of the mining community, and the concurrent increasing energy demands, which has emerged as a major roadblock. “Space and power is a big issue,” Mr. Iyengar told BitBeat. “The power required is unlike any other server industry.”
CoinTerra is leasing space at several data centers in the U.S., he said, and has some plans to build its own data center.
The upheaval has resulted in a string of problems for the industry, from bankruptcies to delivery delays to lawsuits. KnCMiner has had problems with deliveries, and branched out into selling rigs that mine for altcoins rather than bitcoin. Butterfly Labs is involved in several lawsuits, and a startup called HashFast Technologies (which is also involved in a lawsuit) on Monday announced that it laid off 50% of its staff. Washington-based Alydian simply went bankrupt as the cloud-based mining business it built couldn’t keep up with the increasing power demands.
“A lot of people got into this space in the mad gold rush,” Mr. Iyengar said, “here you’re trying to combine hardware and software and the whole supply chain associated with a server market.” He likened it to trying to combine Intel, Microsoft, and Dell.
The total computing power is rising at such an exponential rate, that machines have a short productive lifespan. Even a delay of a month or two between the time a customer places an order and the time the machine arrives can severely cut into profits.
Thus the move into the cloud. CoinTerra joins the recently formed PeerNova in offering cloud services.
Source:http://blogs.wsj.com/moneybeat/2014/05/12/bitcoin-mining-company-cointerra-enters-cloud-mining/
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