Cheap electricity for mining Bitcoin

[xenog]

I am building a Bitcoin mining data center in Venezuela, a country with very cheap electricity. I am planning on offering full hosting at first for the equivalent of 0.20 USD per KW/h to cover initial costs, then reducing the fee to 0.15 USD per KW/h, or even lower, including space, Internet, electricity, and cooling. No setup costs. You send the equipment, and we plug it in and set it hashing. I would like to gauge interest in such an arrangement.

Naturally there are some risks. As many of you already know, Venezuela is a country with a hybrid regime, terrible property rights, violent crime, civil unrest, very high inflation, censorship, and electricity brown-outs that are a bit more frequent than they should (1-2 times per month for a couple of hours).

Nonetheless, cheap electricity is what a miner needs, not necessarily a very stable supply. If electricity falters too often, I will install power generators since petrol is extremely cheap in Venezuela as well.

Would you put your miners in Venezuela if I were to offer such a service?

[boliu]

not to be rude, but why would I sent you my $20K rig just to save .20 on electricity?

[xenog]

If your 20,000 USD rig consumes 6,000 W of electricity, it would cost you only 860 USD per month total to host it with me. That’s probably what you pay right now only in electricity, excluding other hosting costs. I will reduce the fee by 25% after the first two months when the operation is up and running, and it’s very likely I will reduce fees even further as time goes by. I can further reduce fees significantly because the electricity in Venezuela is virtually free. Your rig can remain profitable even when it cannot pay for electricity where you live.

[erre]

If you arrange to escrow a sum equivalent of the miner cost, i think u could claim even larger fees.
Otherwise, i don't think anybody will trust you.

[mgburks77]

why not just set your own miners?

[Kaligulax]

If you have your wind power (wind turbine) can solve all problems with electrical power. hmmm... that is not bad idea...   i must make my own wind turbin....

[libitum]

Running a miner in the Caribbean is far from cost efficient. There is a reason why datacenters are built in the north pole.
Although you save because subsidized electricity, you need to spend twice the electricity due to refrigeration.

Also, Venezuela has blackouts all the time. Miners need steady electricity, not the one that you get during the blackouts. Miners will die in a month. What will you do when your miners dont start up because the blackout damaged the power supplies?

[xenog]

Blackouts won’t damage miners. Power surges damage miners. There have been two brownouts in Caracas during 2014. If it becomes too much of an issue, gas is extremely cheap too. I would buy a generator. Power surges and voltage variations will be dealt with using appropriate equipment.

Miners have a limited lifetime because of the increase in difficulty. Operating older unprofitable miners in Venezuela can bring new life to them.

I have my own mining hardware, and the facility is being prepared to receive this hardware over the next couple of weeks. I will be buying additional end-of-life older ASIC hardware myself to plug it there, but there is enough space, cooling and energy in the building to host more hardware than what I am bringing in.

When all is said and done, if the Bitcoin price stagnates, and the power efficiency of chips stop increasing dramatically, mining power will stabilize at a point where it is barely profitable at EU/USA electricity prices. Having cheap electricity is advantageous.

My own operating costs are three times less by sending this hardware there. This makes the difference between breaking even and making a profit on an ASIC investment. If I add other miner’s hardware, my own operating costs would lower even more. Scale is good.

The reason data centers are in developed countries is because they are cooler, and they have good Internet links. Venezuela has little undersea fiber connecting it to the rest of the world, therefore bandwidth and latency are a problem for most services. Also much of the country is steady at 27-35°C throughout the whole year. My facility is in at an altitude of 1500m over sea level near Caracas, so there’s better electricity and Internet connection than in rural areas, and temperatures are much lower than at sea level (16-22°C). But it is not in the city center, so the space itself is cheap and there’s land to continue building more space for mining as required.

For the trust issue, and escrow, that can be done. We definitely need to discuss that further. Is there anyone who has older ASIC hardware that is nearing the edge of profitbility?

[iglasses]

...and the power efficiency of chips stop increasing dramatically, mining power will stabilize at a point where it is barely profitable at EU/USA electricity prices.

I read this at least 20 times a day on this board and it simply will not happen.  There is precisely a 0% chance of mining hardware slowing down vs. the difficulty.
IT AIN'T GONNA HAPPEN.

[bitcoin50k]

I am building a Bitcoin mining data center in Venezuela, a country with very cheap electricity. I am planning on offering full hosting at first for the equivalent of 0.20 USD per KW/h to cover initial costs, then reducing the fee to 0.15 USD per KW/h, or even lower, including space, Internet, electricity, and cooling. No setup costs. You send the equipment, and we plug it in and set it hashing. I would like to gauge interest in such an arrangement.

Naturally there are some risks. As many of you already know, Venezuela is a country with a hybrid regime, terrible property rights, violent crime, civil unrest, very high inflation, censorship, and electricity brown-outs that are a bit more frequent than they should (1-2 times per month for a couple of hours).

Nonetheless, cheap electricity is what a miner needs, not necessarily a very stable supply. If electricity falters too often, I will install power generators since petrol is extremely cheap in Venezuela as well.

Would you put your miners in Venezuela if I were to offer such a service?

What are your mining credentials?

[shaobao88]

...and the power efficiency of chips stop increasing dramatically, mining power will stabilize at a point where it is barely profitable at EU/USA electricity prices.

I read this at least 20 times a day on this board and it simply will not happen.  There is precisely a 0% chance of mining hardware slowing down vs. the difficulty.
IT AIN'T GONNA HAPPEN.

I can't get you why it is not possible? Why it ain't going happen?

[DrG]

Xeno, I would aim at attracting the southern hemisphere peeps first, prove your setup, and then expand accordingly.  If you have 100K of mining eq get stolen and you can't cover it with losses I'm sure your investors would find a way to collect it from you (ie steal your body parts).  Start small with a few localized clients and then expand if it goes well.

[xenog]

As soon as I put my hardware there, I will send pictures of the place. At launch there will be six Avalon Batch 2, two BFL Mini Rigs, and twenty AntMiner S1 systems. I would be willing to do escrow. I hope to attract mostly miners that are at the edge of profitability in the USA and EU. Southern hemisphere electricity, hosting and Internet tends to be cheaper, so there’s not so much pressure for them to move their hardware to a more cost-effective jurisdiction.

It must be noted that if your hardware has already been “spent” and you’re at the edge of profitability, the risk of sending your equipment to Venezuela is a lot lower.

I don’t have mining credentials, whatever that means. 

[bjalbert]

In the USA I pay .095 kw/h and that is higher than usual. I assume Europe has higher rates.

[xenog]

Cost of electricity in Venezuela is effectively close to 0.003 $ per KW/h. That is 0.3 ¢.

[DrG]

In the USA I pay .095 kw/h and that is higher than usual. I assume Europe has higher rates.

0.095/KWh is actually less than the residential rates for most of the country by average (don't know about median).  With coal energy going up due to cap & trade the prices are rising.

I pay $0.35/KWh here in CA.  Yes, higher than most parts of Europe.

I've moved most of my stable miners to Washington state and have power at 0.03 thanks to renewable hydroelectric.

Xeno, to attract clients you need to prove you're serious by establishing a company, getting insurance coverage and having contracts.  Look up how Dalkore did it.

[kalelreturns]

yeah no offense, but I doubt anyone will send you their mining rigs just to get cheaper electricity. Many thing could go wrong. Rigs can be damaged during the shipment. It will be hard for people to trust you with their rigs.

[bitcoin50k]

As soon as I put my hardware there, I will send pictures of the place. At launch there will be six Avalon Batch 2, two BFL Mini Rigs, and twenty AntMiner S1 systems. I would be willing to do escrow. I hope to attract mostly miners that are at the edge of profitability in the USA and EU. Southern hemisphere electricity, hosting and Internet tends to be cheaper, so there’s not so much pressure for them to move their hardware to a more cost-effective jurisdiction.

It must be noted that if your hardware has already been “spent” and you’re at the edge of profitability, the risk of sending your equipment to Venezuela is a lot lower.

I don’t have mining credentials, whatever that means. 

You are prospecting on this board.  I am asking for your credentials, LinkedIn profile, etc.  By "mining credential" I am looking for proof that you mined this and that BTC with this and that equipment.  With due respect, I am not personally interested in someone who knows electricity is greatly cheaper elsewhere; that info is limited and largely available.  A top miner would provide more info.

PS-I am merely curious, but felt compelled to clarify my previous statement.

[MoneyMorpheus]

Don't you have severe import rules and a 20% duty on venezuela?

I have cheap electricity here as well, but passing expensive hardware threw customs would render this idea impossible.

[DrG]

What am I to infer from this nonsensical image?