Topic: Hosts are dropping like flies... or at least dropping me (Read 599 times)

After some consideration we decided to announce availability of miner hosting at our facility again.

https://bitcointalksearch.org/topic/ann-sunbreak-electronics-llc-3-mw-datacenter-colocation-usa-oregon-5404764

Even if you had free power, it probably isn't worth it to install Antminer S9's because the buildout will be expensive. Even if you could get the miners for $120 each, the cooling + electric circuits will easily cost $200+ for each one (depends on labor cost). So each S9 actually costs $320. The Bitmain T15 or S15 would be better.

Agree with you on the overheads of $0.04/kWh. This is over and above electricity cost.

We did a quick back of the envelope calculations. Unless we were getting free electricity, it isn't even worth it to use S9s to mine anymore.

Where I'm at,
Home miners - USD 0.20/kWh + tax
Wholesale rate for farms - >> USD 0.50/kWh

Screws up the mining economics. Plus land prices aren't cheap. There has been an exodus of colo players here, leaving only the most hardcore home miners..

Wow, this is tremendously useful knowledge that is very hard to find. I agree that there's no free lunch when it comes to ASIC mining. Each hosting option has different trade-offs. Rolf Verslusius was right when he predicted back in 2107 that small miners have many advantages. I also did a calculation last week that showed the cost per BTC for a 1MW miner is only 10-20% higher than RIOT or MARA, not to mention the risk of having 100s of employees.

If I had a million bucks to invest in mining, I would go with the small warehouse with $3k/month of overhead, but I would buy reliable equipment like the Whatsminer M30S/Antminer S19 so that labor cost is zero. It is possible to upgrade the power supply past 400A to 1-2MW, but only if the utility company will do it for free/low cost and that area has enough grid capacity. Let's say operating cost remains $3k but power capacity is now 1MW. The overhead is just 0.4¢/kWh. On top of that, there are only 300 ASICs or so, and if they're reliable, only 1 or 2 will break every month. It should take 5 hours a week max to manage this operation. Power cost won't be 3-4 cents like the giga miners, but it can be as low as 5-6 cents in some places at 1MW.

Some small farms only use containers, which are temporary structures, so no property tax is owed.

The residential power rate can easily be double the 1MW commercial rate in some areas, not just 50% more.

What if you made them sign a contract where a piece of the hashrate is diverted to yourself plus the service fee? You would have some insurance if the customer fails to pay their bill every month. If coin prices rise, you get extra revenue so you can at least get compensated for the risk. I wrote software recently that can do this and I'm using it for my own farm.

What if you also had an efficiency requirement, like 40W/TH, so that it's less likely the mining customers want to shut down?

I have to agree. Back in 2017 we started construction on a general purpose datacenter in Oregon rather than a mining specific one. Between 2017-2020, crypto miners were the bulk of our revenue, but it was also the hardest earned and the most inconsistent.

The boom/bust cycle of crypto is difficult for any datacenter to accommodate. Just for historical context, in November 2018 the market dropped below profitability for our customers. Overnight everyone was asking us to turn their machines off, so we did. Unfortunately that also meant nearly 100% of our revenue stopped.

At the time, my colleague argued that if none of our customers were paying, we should evict them, have them collect their equipment and reclaim the space. However it would have been counter productive, there was absolutely zero demand to host new mining equipment. Which was pretty evident as some of our customers tried to sell their equipment with little success.

After 6 months, in May 2019 the price did turn around and all of our customers took control of their machines again. Unfortunately this only lasted 5 months until November 2019 when increasing difficulty forced all of our customers to shut off again. In June 2020 the halving occurred, which pretty much assured that equipment was never getting powered on again.

Over the course of operating 24 months, we only generated a profit for a combined 10 months. The other 14 months with non-paying "idle" customers consumed whatever profit we had managed to make previously and took us negative into the red.

Today we have almost no crypto customers, although we do have a growing number of "traditional" datacenter customers. If we hadn't built the facility with customer diversity in mind we would have perished like everyone else.

Which brings me to my point, the "mining facility" concept has little chance to succeed even with scales 10 MW and beyond. Even when you have low priced power, there are unavoidable overheads. Rent or mortgage payments, construction loans, staffing costs, local taxes, licensing, insurance, accounting fees, property tax, etc.

Obviously there are some economies of scale that can help average these costs out, but we have found that beyond a certain scale the cost actually goes up. There are a lot of cost saving opportunities when you don't have to buy everything new, pay premiums for expediting construction, permits, lawyers, etc.

No matter how you balance it, you always end up paying ~$0.04/kWh in overhead.

- Want to mine at home? Then your stuck paying for retail power with a 50% premium over commercial
- Found a mining facility with super cheap hosting in some remote country? Now your exposed to a very likely risk of losing your equipment.
- Found a warehouse to rent for $2k/month with 400 amps of power? That's $4k/month in power that your paying a 50% premium on thru rent.
- Decided to go big! Get a loan for $3M to build a 10 MW facility. Paying your loan is equivalent to paying a 50% premium on power for 24-36 months.

Ironically, I have been considering hosting mining customers again now that they aren't critical to the success of our business. I just need to find a creative way to more appropriately split the risk between hosting provider and miner.

A month or two ago, some people said that home mining at a rate of 10-12 cents was possible with the most efficient ASIC on the market, which was a Bitmain Antminer S19j Pro. But now, the power cost is half the revenue. Profit is half of what it used to be for that miner.

Now you need at least a Bitmain L7 or Goldshell KD2 for home mining to be viable. The only other option is a GPU rig for altcoins, but even that is not becoming worthwhile for many U.S. households who pay 15-16 cents for power. It's becoming more compelling to just sell the cards and buy the coin, since coin prices are low.

Yes, that would make sense. Where I'm from, its a factor of a few things - garage space is a luxury where 99% of us don't have the luxury of one..

Colo spaces will then make sense. But with the recent macro happenings, home electricity pricing isn't working out either..

I would imagine as the price falls more people like me question running their miners in the garage at residential electric rates and start looking for some place to host their machines instead. Haven’t found any so far only replies that places are at capacity.

Resurrecting this thread..

Very interesting discourse.. I am a miner & colo myself and I totally agree with the "ROI" required. If its too much hassle, we'd rather drop customers. Its easier to deal with 1 customer with 1000 miners than 1000 customers with 1 miner each.

Well at the moment profitability is super high, the only hang-up is that gear is super expensive. 10K to get a single miner these days, but you could run it at 10c power and be only marginally less profitable than the 5c people. So in that sense, it seems there are more possibilities for small operations to start up, just not the home miner that wants to run a miner or two in the basement/garage.

That's the name of the centralization game.  Cheaper and easier always has sacrifices somewhere.  First it was the home miner and they said to find a host.  Then the hosts started dropping customers...  It's a shame nobody has thought of a good way for the network to incentivize decentralization and small miners.  I don't think the blocksize has as much to do with it as the narrative would have one believe.  You saw different pools and companies come and go a lot during the CPU->GPU->FPGA->ASIC evolution which I think helped keep any one operation from grabbing a long term foothold on the market, but I fear that more and more individual miners will only continue to be squeezed out until another evolution hits the reset button and Antpool goes the way of Deepbit (to make a poor analogy).

The answer for me, is to run a small diversified mining operation on renewable energy while trying to stay nimble.

That's just what we have for the servers & networking stuff we use.
Even worse it's @ 110v but we needed rack space for the stuff, none of it is really power hungry and 2KVA is minimum of what they give with racks there. Unless you are taking dozens then it's all negotiable.
The point I was making (poorly) was that if you go into some of these places and take a lot of space and power then it's fairly inexpensive even in a high price / high power cost location like NY.
Asking for 4 racks and a bit of power is a much larger cost for both power and space. To the point of if the paperwork from the other people was accurate, and I have no reason to think it was not, they could have marked up what they are paying by 40%+ and sold the 4 racks / 8KVA to us for less money they we are paying direct.

-Dave

We could host a few s17's (3 or 4)  at our place.  For the winter it would be easy enough. Say til April 1. Or may 1.  After that it gets hot.
What did you pay 8 cents?  We have dead s17 gear that needs repair maybe we can do a deal of some kind.

Both hosts I am/was using were relatively small operations, and the owner/operator of each had lots of their own gear running. You could maybe even call them a mining operation with a hosting side business. If these guys have been stacking sats all this time, after last year they are flush with cash and have plenty of capital to buy machines to fill out their capacity. I know the NY host was paying under 4c for power, so with a 55w/th miner, cost to mine 1BTC is under $10K. If I was looking at those numbers, I'd have done the same thing, boot everyone and bring in all my own new gear. Why settle for a profit of ~4c/kwh for a 1 year hosting contract, when your own 1 gen old miner can make 21c/kwh profit.

I'm not sure about network/server colocation facilities for miner hosting, I would have thought the cost to build out one would be multiples higher than a mining farm. And the power density not as high. Can only run 2 S19s with 8KVA. Maybe if you can find a local one that hasn't built out fully they'd be willing to lease space with only power and allow you to build out your own infrastructure.

What is kind of interesting is at least IMO is that for the server / network hosting kind of thing 3 year contracts and longer are readily available at least here in the US. 3 years does tend to be the best option for pricing in a lot of them.

Looking around at mining stuff it's all month to month or 1yr.
So for mining are these hosting facilities expecting you to fail or don't want to commit for more that that amount of time or

I'm wondering if a lot of them are not "real" hosting facilities, but rather someone who is getting space in a much larger facility then sub-leasing to miners. For what the company I work for pays for 4 racks / 8KVA there is no way we could be competitive to rent space to miners. For what the company in the next area over pays 100+ racks and 900KVA they could (don't leave your paperwork sitting on the table in the common area, I will read it). But they obviously have a much bigger monthly bill then we do....

-Dave

Got a quote for an immersion system including tank, liquid, dry cooler, and pump for a system large enough to handle 28 S17s at 40% overclock. Cost comes in at about $50K. That's roughly 4 months of profit for the 28 S17s at today's conditions.

About half of that cost is the pump + dry cooler. Could probably save >$10K by finding some 2nd hand surplus for those.

Might pull the trigger on it if I can find a good place to run it.

Mercy! I haven't mined in years (2016) so my perspective is totally out of date *apparently that's like 100 in bitcoin years  
It was always as a home/hobby project so it took maxing out my houses ability, increasing difficulty + a cross country move for me to stop "upgrading".

That is definitely not a 'benefit' since it means in any court of law, you own the hardware, not the person sending it to you.

You can explore hosting solution in Georgia (Europe) with us. We at Maas Ltd are creating two mining facilities in Free Industrial Zones in Georgia.

We will be starting our Hosting services from Next Month and have total of 8 MW available which will be scaled to 25 MW by mid-2022. Our pricing is competitive and starts from 0,065 EUR/KWh.

Currently our website is under development (https://maas.ge) though you can email us at [email protected] to inquire more regarding our services.

Some of the benefits of hosting with us:

* NO IMPORT DUTIES (INVOICE REQUIRED TO BE ON OUR NAME, otherwise regular rates of import duties)
* Regulated Entity
* 24x7 Armed Security
* 24x7 Monitoring
* 1 Month deposit only. Discount of 0,005 EUR/KWh on longer contract
* REMOTE HANDS ON DEMAND
* SPARE PARTS READILY AVAILABLE (FANS/PSU/CABLES)
* VPN Access
* MINER REBOOTING

Regards,

Maas Ltd