• Bitcoin mining has become a more specialized activity.

• One factor is the invention of faster bitcoin mining cards.

• At least one bitcoin mining hardware and software firm is reportedly making nearly US$100 million.

THE early bitcoin mining pioneers are giving way to giant organizations operating on multiple continents.

Nearly a decade after an online user named Satoshi Nakamoto published a paper describing how “Bitcoin: A Peer-to-Peer Electronic Cash System” does not need to rely on trusted institutions, individual bitcoin mining is growing more difficult, while large enterprises have emerged.

Today, mining bitcoin is “such a specialized activity,” said Jonathan Mohan, founder of an enthusiast group called Bitcoin NYC. He said he’s never actually mined bitcoin himself. “I wouldn’t go about doing that without partners.”

“It used to be something that non-specialized hardware could do and non-specialized individuals could do,” Mohan said. “If you’re looking for exposure into bitcoin, it’s more cost effective to buy.”

Sometimes called “digital gold,” bitcoin has leaped exponentially from 6 cents seven years ago to a record US$3,025 this June, according to CoinDesk.

The meteoric rise in price has not only attracted bitcoin buyers, but also resulted in a surge of interest in digital currency mining. Mining bitcoin requires high computing power to solve a complex mathematical equation, proving that an anonymous miner used the process the network agreed upon to build the blockchain record of transactions. Miners then get bitcoin in reward for successfully completing the equation.

Miners used to be able to use ordinary video graphics cards to process the computations profitably. But in 2013, a Chinese-based company sold the first application-specific integrated circuits, or asic, computer chip cards that mined bitcoin 50 times faster than traditional video graphics cards.

Today, those specialized mining sets can cost anywhere from a few hundred to more than US$1,000. It’s often also more cost-effective for miners to join mining pools and collaborate on solving the equation, often for a small fee.

“The fact that graphics card manufacturers are making special cards, cryptocurrency mining cards, I think it’s a pretty big turning point for the crypto [currency world] in general,” said Roger Ver, an early investor in bitcoin and sometimes outspoken figure in the digital currency community.

Ver now heads bitcoin mining hardware seller and mining contracts firm Bitcoin.com. “The demand is just incredible,” he said.

Some models of AMD and Nvidia graphics cards have sold out in the last few months due to high demand from digital currency miners. Through their partners, the companies are now planning to sell cards specifically for mining bitcoin, ethereum and other digital currencies.

Advanced Micro Devices topped earnings expectations in the second quarter, and AMD raised its sales forecast for the current quarter, implying US$1.5 billion in sales, or about US$100 million more than Wall Street forecast.

Bitcoin mining hardware and software company Bitfury generated nearly US$100 million in revenue for fiscal year 2017, according to a July 24 report from CoinDesk, citing documents it obtained.

For Nchinda Nchinda, a graduate student at the Massachusetts Institute of Technology, he said a roughly half-year bitcoin mining stint at home was “definitely not profitable.”

Now he helps run his university’s bitcoin club, which he said bought mining equipment for about US$9,000 and works with the school data center to mine bitcoin. That operation at least breaks even, he said, while “at home, I was like losing everything.”

The biggest mistake new bitcoin miners make when calculating costs is using the current price of bitcoin to estimate returns, Nchinda said. “Instead of mining hardware, you should have just bought bitcoin,” he said. “If we just used that US$9K and bought bitcoin, we would have had more.”

Despite the emergence of bigger players in bitcoin mining, some regions of the world still provide an edge for individual miners. Since the process is very energy intensive, low or essentially free electricity in China and Venezuela make the two countries relatively attractive places to mine bitcoin today.

Political turmoil and soaring inflation in Venezuela also give locals more incentive to mine bitcoin, which has more than doubled in value against the U.S. dollar this year.

Chinese bitcoin miners dominate the bitcoin network. The top six mining pools by global processing power are Chinese, and make up more than half of all hashrate, according to blockchain.info.

Sichuan in Southwest China is transforming into a global bitcoin mining capital primarily due to its cheap electricity, low population density and cold climate.

According to major local publications, including the China Money Network, more than 20 mining companies and 10,000 bitcoin miners are located within Sichuan’s Mabian Yi Autonomous County, a cold and mountainous region with just over 215,000 residents, and Kangding.

One of the major reasons behind the rapid growth of mining companies within Sichuan Province is the decreasing electricity costs, as mentioned by various respected bitcoin experts including Andreas Antonopoulos and Chandler Guo in the past.

Another major issue which miners and mining facilities struggle to deal with is noise resulting from high intensity and performance mining equipment. A manager of Mabian Tianjia Network Technology, a Chinese mining company, stated that mining facilities are migrating to remote regions with a limited number of residents so that they won’t have to deal with noise complaints.

(SD-Agencies)