There's not much in rural Washington, but there are lot of dams. And dams mean hydroelectric power. Following the lure of cheap electricity, Bitcoin miners and their power-hungry server farms are making out for sleepy little towns in the US Pacific Northwest.
Although Bitcoin is a digital currency, mining it still has a gigantic physical footprint. That's because computers "mine" Bitcoin by solving a cryptographic equation. To mine more Bitcoin, you need more computing power. Or you can just have more computers. This is what a "multi-GPU mining rig" — basically a bunch of processors hacked together — looks like.
Powering up and cooling all those processors requires a lot of — you guessed it — electricity. Last year, Bitcoin miners were sucking up an estimated one million kilowatt-hours per day. That's a hefty electric bill right there. But Washington has some of the lowest electricity rates in the country — less than two cents per kilowatt-hour for industrial customers in certain area. The average US household pays something more like 12 cents a kilowatt-hour.
Big tech companies running big data centres have been in on the state's cheap electricity for a while now. Dell, Yahoo, Microsoft and Intuit all run data centres in Grant County, Washington. But Bitcoin mining's reliance on intense computing power means even a small operation — relative to a behemoth like Microsoft, at least — needs a giant building full of servers. MegaBigPower, which has considered itself the largest Bitcoin-mining business in the US, has a Washington outpost. Grant County says it has two Bitcoin mining companies operating, with five more to come.
The engineers who first built Washington's dams could not have possibly anticipated Bitcoin mania, yet those dams are now drawing some of the currency's biggest backers. This is a modern gold rush, shaped by the electric infrastructure we built long ago. [Seattle Times, Bloomberg Businessweek]