Bitcoin and Blockchain

Bitcoin miners hardware UK

These photos are from Genesis Mining, a cloud mining company. It lets customers mine using their "cloud, " without having to buy specialised hardware.

Genesis Mining

It's technically possible to mine on just about any computer, but it's not profitable to do so unless you have the right kit. Many people do mine themselves, often joining large pools to improve their odds. But Genesis' model is another option.

Genesis Mining

The company had early mines in Bosnia and China, and most of its operations are currently based in Iceland.

Genesis Mining

The country boasts three very important qualities for mining: cheap energy, good internet connections, and a cold climate.

Genesis Mining

Climate is incredibly important. Mining hardware generates a tremendous amount of heat and uses huge amounts of power. If you can save on cooling costs due to the natural temperature, it could mean the difference between losing money and making a profit.

Genesis Mining

Even so, Genesis' electricity consumption is very significant. CEO Marco Streng says energy companies "offer us helicopter rides whenever we arrive, " and speculates they may be one of the biggest single users of power in the country.

Genesis Mining

Assuming you're getting a good deal on electricity — and ignoring all other costs — Streng says one bitcoin currently costs about $60 to mine. For reference, one bitcoin is currently worth $235.

Genesis Mining

But, when you factor in hardware, production costs, staffing, and more, "one is able to mine a Bitcoin for about 20% less than its current price."

Genesis Mining

Streng says that "cloud mining has a major trust issue." Customers never actually see or own the mining hardware themselves — putting them at risk of fraud.

Genesis Mining

Ponzi schemes can pop up, with perpetrators using later customers' money to pay earlier customers, while keeping most for themselves. "They don’t ever even own their own mining facilities. They just take pictures from other companies, photoshop them, then pretend they are theirs."

Genesis Mining

"You're constantly surrounded by machines that are completely shouting at you all the time, " he explains. "It's as if you were listening to jets starting and landing without stopping." Heat is another factor — parts of the facility reach 40 to 50 degrees Celsius (104 to 122 Fahrenheit).

Genesis Mining