One of the common topics of conversation at dinnertime in Kangding is bitcoin mining. Seems strange, but it isn’t because the 5 men discussing bitcoin mining depend on the virtual currency for their livelihood. Kangding has turned out to be an ideal location for mining bitcoins because it is populated by high mountains with under-used hydro power plants.
Melbourne-based Chinese businessman Ryan Xu has tried Iceland, Georgia, Washington State and Inner Mongolia but Kangding had cheap electricity and a relatively cold climate that will make bitcoin mining operations a lot cheaper. Bitcoins are mined used super-powered computers that use a lot of electricity and generate a lot of heat while solving complex mathematical problems.
Apart from being an investor in bitcoin mining, Xu is also a chief strategy officer of a Bitcoin Group that tried to get listed in the Australian Stock Exchange but was rejected due to fears that lack of capital may not allow them to last for a year. Xu is now in charge of three long blue sheds that contains 5000 supercomputers to mine about $60,000 worth of bitcoins daily.
Electricity for the supercomputers is provided through private hydro power plant that is just one hour drive away. Xu and his partner Wang Ruixi are on the process of building a slightly more modern facility in the area that will contain about 8000 supercomputers. Cheap electricity is very important for bitcoin mining in order to lower the costs of operations and be profitable.
Another investor, Boris Shen has invested more than $1 million into bitcoin mining equipment at a nearby facility that contains about 10,000 machines. There is camaraderie among the group of bitcoin mining investors instead of rivalry because they want to ensure the industry’s future and protect the value of the digital currency.
Bitcoin Mining Hardware has evolved over the last few years because new groups have introduced custom equipment that pushed performance standards higher. The customized machines run at unprecedented speed while using less power making it more profitable for bitcoin miners. As machines become efficient and productive, mining becomes more attractive for more and more people.