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Digital coin miners can earn money by investing a few thousand euros in the right equipment, but electricity bills can eat into their profits.
Bitcoin is probably the best-known cryptocurrency, but there are many other digital coins, including Dash, Ethereum, Litecoin and Pure.
After a spell mining Dash, Ko Hamer, a structural engineer at De Voogt Naval Architects, started mining Pure. “Dash is an interesting coin, but it is getting tougher to be mined,” he said. “Pure is a relatively new currency, with block rewards of about 100 coins. That is very interesting.”
Whether Hamer is going to get rich by Pure, he does not yet know. “I have earned about 2,500 coins a week over the last few weeks.” he said. “If Pure is put on the Exchange for €50, I earned €1,250 a week. If it is not worth anything, I have lost €30.”
Hamer began selling Antminer D3 machines this summer. The demand for these Chinese-made appliances is huge and while others couldn’t get hold of any, Hamer managed to order 45 machines from supplier Bitmain. He kept two for himself and started mining crypto currency.
“The downside of the machines is that they emit a lot of heat, make lots of noise and consume a lot of power,” he said. “Because I live in an apartment, I have built an installation box, which reduced the noise level by 20 decibels.”
The heat generated by the machine was not too much of a problem for Hamer – he used it to heat his house – but his energy bill shot up.
Digiconomist estimated that mining the popular Ethereum currency globally consumes more than 4.5TWh of electricity each year, which is almost as much as a country like Moldova – with a population of about three million – uses annually. The mining of Bitcoin uses considerably more power – 15TWh a year, which is enough to light the Eiffel Tower for 250 years.
All this power costs a lot of money, which reduces the profits of digital coin miners. To maintain their profits, miners need their energy resources to be as cheap as possible.
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In Iceland, a “Bitcoin mine”, based on the country’s relatively cheap geothermal energy, has been set up. Such mines can also be found in China and the US, where they get their energy from water or solar power. And in northern Sweden, which also has cheap energy, a large datacentre was put in place for mining cryptocurrencies this summer.
In the Netherlands, Hamer got into contact with Crypto DC, part of the Datacenter Group, which gives digital coin miners access to a professional datacentre.
“Miners do not have to deal with a large datacentre directly – we do it for them,” said Daan Posthuma, Crypto DC’s initiator. “Through our agreement with the Datacenter Group, we can provide miners with low energy prices.”
Hamer added: “Because a datacentre uses a lot of energy, it can command special, lower rates with the supplier.” Other advantages are temperature and humidity, said Hamer, who has now placed his Antminer machines in the Crypto DC datacentre.
Miners can use a special portal to log into their machines remotely, said Hamer. “That way, I can check if my miner is doing well or I can switch to another pool or currency if I want to.”
Datacentres are often too expensive for regular digital coin miners or their contracts are too long-term. For that reason, Crypto DC negotiated special rates with the Datacenter Group. “We offer an all-in-one price for the rack, power and internet connection,” said Posthuma. “We enter into a three-month contract that can be terminated thereafter.”
Hamer is happy about moving to a professional datacentre. “Even if it is more expensive, a datacentre is still a better environment for your machine than at home,” he said. “The air in a datacentre is just better, which is important for the life of your machines. And with the all-in-one price, you know exactly what to expect.”
In the Netherlands, cryptocurrency mining is gaining popularity, judging by the wide range of new and second-hand machines on Marktplaats (a Dutch digital marketplace, much like Ebay). The demand for graphics cards has also risen sharply.
As more and more people take up digital currency mining, it is becoming more difficult to do so successfully. Posthuma said there will come a time when mining will no longer be attractive for people at home because it will become too expensive.
“As long as they can buy new equipment and pay the energy bills, they can continue, but somewhere there will be a tipping point when only mining in a professional environment will be interesting.” Hamer added: “Sometimes it’s quite unfortunate that more and more people know about this. If they didn’t, we miners could become rich while we sleep.”