
Extreme Bitcoin Mining Aids an Unexpected Revolution in Iceland - allenleein
https://www.bloomberg.com/news/articles/2018-07-03/extreme-bitcoin-mining-aids-an-unexpected-revolution-in-iceland
======
abhiminator
>Island became a magnet for the practice once miners figured out that the
place is very _cold_ and that electricity there -- geothermal and hydropower
-- costs a lot less ...

This is the next big frontier in data center advancement, imo --
submerged/frigid data center installations. Microsoft's already been playing
around with a submersible data center under a project codenamed 'Natick,'
while piggybacking off of its extreme portability and flexibility in terms of
resources toward R&D, and it's just getting started. Google has already
announced plans to do the same. [1]

It also makes sense from a scale/growth standpoint as 50% of earth's
population lives within 2 hour drive from their respective coastlines. [2]

[0]
[https://natick.research.microsoft.com/](https://natick.research.microsoft.com/)
[1] [https://www.citylab.com/life/2016/02/microsoft-cloud-
ocean-p...](https://www.citylab.com/life/2016/02/microsoft-cloud-ocean-
project-natick/459318/) [2] [http://scienceblogs.com/gregladen/2011/10/18/how-
many-people...](http://scienceblogs.com/gregladen/2011/10/18/how-many-people-
live-near-the/)

~~~
jankeymeulen
> Google has announced plans to do the same.

Citation needed? IMHO putting a datacentre under water is a horrible idea, why
not pump the water 10 meters higher and cool a DC near the shoreline?

~~~
Const-me
Continuously pumping sea water is expensive to maintain, the primary reason
being marine biology. I once saw mussels grew inside a boat engine.

Second reason, land on shorelines is expensive. Many people dream about living
on a seaside (except for people who did, practically speaking the idea is not
that great, humidity, noise). Also many other businesses require shorelines,
beaches, marinas, ports.

~~~
jopsen
Pumping water from a lake seems more reasonable..

------
roryisok
Stuff like this worries me. We should be doing everything we can to curb the
energy and heat we produce and instead we're using vast amounts of energy to
basically waste trillions of CPU cycles so that we can produce digital money
that might never actually be worth anything. It's just about the most
pointless use of planetary resources I can think of

~~~
apr
Why? Doing anything of value requires expending of energy and producing heat,
this is unavoidable. Saying that this activity is pointless just because you
are not seeing any value does not mean that it is actually pointless. In
general anything that people are willing to pay money for is not pointless for
someone, otherwise that money would be spent on something else. It is like
saying why a farmer needs to drive that big tractor down the field using
precious (for whom?) oil and polluting the air whereas I can do things
manually on my pea patch just fine. If anything we should welcome higher and
higher energy use because it means higher standard of living for the
humankind. And just to address 'waste' here, energy is not free so 'waste'
that actually wastes resources cannot go on for long lest the waster goes
bankrupt.

~~~
chris_mc
>anything of value

Bitcoin's value (not price, mind you) is still very questionable.

~~~
robertAngst
There are 21,000,000 bitcoin ever ever ever.

If you can see that, you can begin to exclude yourself from fiat money which
requires centralized control of currency.

I trust rare numbers more than I trust the United States government.

~~~
roryisok
> I trust rare numbers more than I trust the United States government

That's such a silly statement. Rare numbers do not control the value of
bitcoin, the market does. Your rare number might be worth half what it was in
December 2017, and twice what it was a year before that. Tomorrow it might be
worth nothing. Or $1000. Or $1. The rareness of the number is about as
relevant as the colour of the dollar

------
ggg9990
What we have with deep learning is the first data center application for lots
of compute with high latency. This will enable data centers in locations
previously infeasible.

~~~
martinald
Iceland isn't really high latency. In many ways it is perfect for serving
Europe and east coast US from one place (if required).

~~~
stcredzero
Iceland also has sovereignty and very favorable geography. (Being surrounded
by oceans makes it easy to remain fairly neutral.) If I were the government of
Iceland, I would issue a cryptocurrency.

~~~
criddell
If you are a government, why would you issue a cryptocurrency? Why not issue a
more more traditional digital currency with a central ledger?

~~~
stale2002
A government would be responding to customer demand.

Sure, they could create a centralized digital currency. But the market might
not want to use that, so what's even the point of spending all this effort
making it in the first place.

Whereas a decentralized currency has features that sounds me customers want.

~~~
marcosdumay
Currently, demand for cryptocurrencies seems indistinguishable from zero. At
the same time, demand for government issued centralized money is quite large.

~~~
stcredzero
History has seen rapid changes in the demand for government issued money.

~~~
marcosdumay
The word "rapid" on that phrase was an entirely different meaning from when
it's used to describe the rate of change of cryptocoins demand.

A large market is a more stable market. Crypto may get large at some point (I
don't see why they would, but I don't see everything), but today they are
nothing. Thus, preaching that people massively want them is nonsense.

------
api
One hope I have for the Bitcoin mining bubble is that it will indirectly
subsidize improved information systems infrastructure in many remote places as
well as improved on-demand chip fabrication services. Once the bubble is gone
those things will go to more productive use.

~~~
ixtli
I've spoken to people who've been in the community for a long time and they
seem to view the blockchain hype as something generated to get banks to
underwrite the updating of systems that have barely been maintained since the
80s.

(Despite it not being really necessary for like 95% of problems, of course.)

~~~
api
I doubt it was deliberately engineered as such but it does seem to be having
that effect.

It's also disrupting international wire transfers and venture capital, two
antiquated industries ripe for it.

~~~
chx
You must be delusional to think Bitcoin disrupts SWIFT.
[https://economics.stackexchange.com/a/9184/18775](https://economics.stackexchange.com/a/9184/18775)

> SWIFT handles about $5 trillion per day,

> SWIFT payment message volumes are usually around 11.5 million per day

Now, daily Bitcoin-USD traffic is below a billion
[https://www.blockchain.com/en/charts/trade-
volume](https://www.blockchain.com/en/charts/trade-volume) and even at its
heyday it was five billion give or take. That's 0.1% of SWIFT. And Bitcoin
couldn't handle more than 600k transactions a day even if it tried and these
days it's 150-200K
[https://www.blockchain.com/en/charts/n-transactions](https://www.blockchain.com/en/charts/n-transactions)
which almost reaches 2% of SWIFT...

Also, it's unusable for legit business transfers since you absolutely have no
idea how much money the other ennd receives.

SEPA has higher volumes but lower values
[https://www.ebaclearing.eu/services/step2-sct/statistics/](https://www.ebaclearing.eu/services/step2-sct/statistics/)
but even that lower value is a magnitude above Bitcoin -- worldwide. With SCT
Inst it even beats the transfer speed of Bitcoin.

~~~
jchrisa
Agree -- the major players already know their customers, so they are more
interested in distributed ledger than blockchain. A distributed database with
ACID transactions is a more flexible way to implement this stuff:
[https://blog.fauna.com/distributed-ledger-without-the-
blockc...](https://blog.fauna.com/distributed-ledger-without-the-blockchain)

~~~
DeathArrow
Blockchain is a form of distributed ledgers.

------
jasonkester
I liked this analysis of the situation from when the Bitcoin Miners came to
Washington State for the same reason:

[https://twitter.com/patio11/status/1000966967056941056](https://twitter.com/patio11/status/1000966967056941056)

 _" We are going to place a point-of-presence for an intrinsically global
network, hardware and a skeleton crew, in your geographic territory for as
long as you're the dumbest power provider in the world."_

 _"..."_

 _" If you're not that dumb say so, I have a list."_

------
throwawayqdhd
> Iceland estimates the industry will consume more than 100 megawatts by the
> end of the year.

All this energy wasted mining a virtual currency that no one uses.

We have to ask ourselves: is Bitcoin mining really the best use of our
resources? Is it worth adding to our already engorged carbon footprints?

~~~
nielsole
Isn't that the benefit of Iceland - That there is no (or significantly) carbon
footprint?

------
glenneroo
Well if they hope to succeed, they better start the long process of laying
down some more fiber connections to the rest of the world. They have to go
through Greenland or Europe to get the US.

[https://www.submarinecablemap.com/](https://www.submarinecablemap.com/)

------
ksec
I have been wondering, why hasn't Apple, Google, Microsoft, Facebook, Amazon
built DC in Iceland?

To avoid the risk of volcanic eruption?

~~~
opportune
The main reason is latency - makes more sense to build a datacenter in the UK
or Northeast North America as that would reduce the average latency for more
people. The domestic need for a massive datacenter is also rather small.

~~~
ksec
Apple, Facebook , and Microsoft are all building or had Massive Datacenter, at
least one or two somewhere in EU and US. Likly for Storage and other non
latency sensitive application. But none of them choose Iceland, where
Electricity is clean and cheap.

~~~
krn
Iceland has no direct optic cable connection with the US[1].

[1]
[https://www.reddit.com/r/MapPorn/comments/73ekox/map_of_unde...](https://www.reddit.com/r/MapPorn/comments/73ekox/map_of_underwater_cables_that_supply_the_worlds/)

~~~
ksec
arh. thx

------
koosnel
"looking past the faddishness of cryptocurrencies". Bitcoin is an excellent
proof of concept for blockchains but I sold mine some time ago because of the
ethical issue I have with Bitcoin mining consuming so much power. Some of the
newer coins are much more efficient in terms of consuming power. To refer to
cryptocurrencies in general as a fad though is very naive and sounds more like
central bank desperation.

------
mansilladev
So.. the article concludes that they're "Building Knowledge" on how to
maintain data centers housing racks of servers and ASICs doing
mining/blockchain work? I wonder if the same argument could be made for the
adult content industry, that, for better or worse, has been pushing the
barriers of compute and bandwidth since the dawn of the dotcom era.

------
harveynick
So... bitcoin miners in Iceland _aren 't_ using ASICs?

~~~
wmf
Remember the Gell-Mann amnesia effect. All Bitcoin mining is done with ASICs
but some other cryptos use GPUs. Many industrial-scale miners use both, I
guess for diversification.

------
masonicb00m
“After devouring nearly as much energy as all of Iceland’s households
combined, Bitcoin miners may be about to return something to the community
that’s housed them.” Implication is that the miners do nothing for Iceland?
Seems unlikely. They’re probably incorporated businesses paying taxes and
injecting wealth into local economy through payroll and other expenses. Why is
Bloomberg anti-bitcoin?

~~~
s73v3r_
"They’re probably incorporated businesses paying taxes and injecting wealth
into local economy through payroll and other expenses."

What evidence do you have of this? In other areas where this happens, like up
by the hydroelectric dam in Washington State, this very much does not happen,
and in fact, many mining operations are illegally attaching to the grid.

[https://www.politico.com/magazine/story/2018/03/09/bitcoin-m...](https://www.politico.com/magazine/story/2018/03/09/bitcoin-
mining-energy-prices-smalltown-feature-217230)

------
andrewtbham
post-bitcoin? fadishness? Bitcoin "probably won’t be here far into the future"

When I am interested in the predictions about the future of bitcoin... my
first thought is not to ask a "business development manager at the HS Orka
power plant in Iceland"

Lol... sales people, in particular, have no credibility about predicting the
future... It's always what they are selling.

------
DINKDINK
>Bitcoin “probably won’t be here far into the future” said Johann Snorri
Sigurbergsson

Seeing as this guy -- who could make reams of money[1] if he's an accurate
price predictor by shorting bitcoin by buying deep, out-of-the-money puts --
isn't rich by doing so, indicates he's inept at making price predictions.

[https://99bitcoins.com/bitcoinobituaries/](https://99bitcoins.com/bitcoinobituaries/)

[1] If bitcoin's price catastrophically collapses, a put option would yield
~1,000 _X_ / 100000% returns.

~~~
microtherion
"The market can remain irrational longer than you can remain solvent."

~~~
DINKDINK
That's not how options work and it's precisely _why_ options exist: to
purchase value in domains which are extraordinarily rare without the delta
exposure of leveraged spot-shorting.

The premium:payout ratio of such a trade requires him to be right only _once_
in 5-10 years for him to walk away profitable.

~~~
dragontamer
> That's not how options work and it's precisely why options exist: to
> purchase value in domains which are extraordinarily rare without the delta
> exposure of leveraged spot-shorting.

Yo, Options have Theta-decay. Push options too long, and all your money decays
away.

[https://www.dough.com/blog/speaking-greek-theta-decay-
time-d...](https://www.dough.com/blog/speaking-greek-theta-decay-time-decay)

Seriously, don't just... buy options without understanding the risks. You can
MITIGATE Theta-decay by rolling over your options to longer-and-longer terms,
but it requires maintenance, and you still lose out on money each time you
roll options over.

~~~
DINKDINK
>Push options too long, and all your money decays away.

Assume you let all options expire OTM the following still holds:

>The premium:payout ratio of such a trade requires him to be right only once
in 5-10 years for him to walk away profitable.

Minimizing theta exposure extends that duration.

~~~
dragontamer
If you buy a put option, someone sold that put option to you. Only one of you
will be correct, and one of you has theta-decay (while the other person
benefits from theta-decay).

That's how the options market works. Someone pays theta-decay for the long-
tail chance of hopefully being right sometime in the next year or two... while
someone else collects that theta-decay over time.

Its insurance, plain and simple. Sometimes, the insurance company wins, and
sometimes the buyer wins.

\-----------

But with any trade, there's the other side. If you go long-put, someone else
has decided to go short-put against you. Your final bet is that the short-put
giver will actually give you the money when you win your bet.

And that's a bet within the BTC market I don't believe in. Too many BTC
markets have gone kaput, I'm not trusting anyone in this market.

~~~
DINKDINK
Bringing up theta seems to be tangential to your concern: Solvency. Delta &
Gamma have more applicability to solvency issues than theta

~~~
dragontamer
I'm avoiding Delta and Gamma mostly because its clear that you understand
those issues. Or at very least, I haven't seen you write anything that
warrants me correcting you with regards to Delta / Gamma.

Also, Delta and Gamma are the causes of big-swings. So I think most people
fear those and give them appropriate amount of respect.

Theta on the other hand is the difficult one. Option sellers collect the
pennies in front of the steamroller, while option buyers are hoping that
they're right eventually. Typical human psychology doesn't really handle this
case very well, on either side.

