arst echnica.

com
http://arstechnica.com/information-technology/2014/05/bitcoin-startup-runs-your-miner-for-less-than-you-might-pay-for-
electricity/
by Jon Brodkin - May 22 2014, 7:40pm EEST
Bitcoin startup runs your miner for less than you might pay
for electricity
HashPlex will give your miner a home and f eed it cheap power.
CoinTerra
There are at least a couple of problems f or anybody who wants to run a Bitcoin miner in their home,
especially if you buy hardware that's powerf ul enough to make some money.
"Miners don't make very good roommates," said George Schnurle, VP of engineering f or miner hosting
startup HashPlex. It's easy f or the most powerf ul miners to "piss of f all your roommates because this
noisy, hot box is running in your living room."
Schnurle's co-f ounder, CEO and f ormer Microsof t employee Bernie Rihn, was running miners in his
apartment, and "he had an extension cord going all the way across the living room because he needed to
connect to one of his circuits that didnt already have a bunch of equipment loaded to it," Schnurle told Ars.
"The one upside of that is he didn't have to pay a heating bill during the winter here in Seattle because he
had these space heaters running in his living room 24/7."
George Schnurle.
HashPlex
That's one of the reasons some people outsource their Bitcoin
mining. In some cases, customers can simply lease mining power
f rom a data center that owns a bunch of Bitcoin miners. The data
center then takes a cut f rom each mined coin.
That raises a troubling question: if the miner host can make a
prof it simply by taking a cut of its customers' mined coins, how can
it possibly be prof itable f or customers? Schnurle says HashPlex
solves that problem. HashPlex doesn't own your hardware. You buy
it yourself and send it to HashPlex, which runs it in a data center
that's near a cheap source of renewable power. You keep all the
mining proceeds and pay HashPlex just a little more than the average US resident pays f or electricity, and
less than you might pay f or electricity yourself depending on which state you live in.
In exchange f or $99 per kilowatt-month (less than 14 per kilowatt-hour), HashPlex does all the work of
operating the hardware while you sit back and watch the bitcoins f low into your digital wallet, the company
says. The average residential price f or electricity is 11.88 per kilowatt-hour, according to government data.
It's above 14 per kilowatt-hour in 12 states.
HashPlex charges the same amount regardless of what mining hardware customers buy and send to them,
and doesn't take a cut of the mining proceeds. Customers can mine alternative digital currencies besides
Bitcoin as well.
You ship it to us, we give it a nice home, we f eed it cheap power, we connect it to the Internet and deal with
the massive amounts of waste heat that it generates, Schnurle said. Traditional data centers are not
really set up to do that in the scale you need to do it f or Bitcoin mining. Traditional data centers are
targeted toward less power-intensive machines.
HashPlex started taking orders in April and is hosting equipment in a temporary space. The company quickly
sold out with about 250 paying customers, but it will eventually be able to host a lot more in a 1MW data
center that's under construction in eastern Washington state with the help of money f rom investors.
Schnurle says HashPlex will have enough power to host about 2 percent of the entire Bitcoin network.
Buying hydroelectric power at bulk, HashPlex f ounders said they expect to pay 2 to 3 per kilowatt-hour in
their bigger f acility. They're paying more until the new f acility goes online, however. "Since our current space
is in Seattle, we're paying the going rate f or power there," Schnurle said. "The purpose isn't to generate
revenue with that location but rather to use it as a testbed f or our miner automation systems, power
management, and miner racks." Washington has nearly the cheapest power in the country, with average
commercial rates of 8.11 per kilowatt hour.
Schnurle is being secretive about HashPlexs exact location f or security reasons, and he declined to
provide pictures of the hosting operation.
Not f or the hobbyists
If you're a miner who spent between $100 and $1,000 on hardware, "you're doing it as a hobby and you're
probably not going to save a whole lot with us," Schnurle said. But many people spend much more than that.
A Cointerra TerraMiner IV costs $6,000 and of f ers two terahash of mining power, or one trillion hashing
calculations per second. "That'll earn you $100 a day depending on Bitcoin prices," Schnurle said. A
TerraMiner IV owner might do well to host it with HashPlex, he argued.
"If you want to do anything of any signif icant scale, you are likely to be limited by the amount of power your
house can provide and you're going to have to f ind a spare bedroom where you can leave the window open
and have a f an blowing cold air in," he said.
Here's a look at how much you'd pay to host some popular miners with HashPlex:
Butterf ly Labs Mini-Rig: 0.5TH/s, ~2.2kw $297 / month
KNC Miner Jupiter: 0.55TH/s, ~700w $99 / month
KNC Miner Neptune: 3TH/s, ~3kw $297 / month
Coincraf t Rig: 2.8TH/s, ~3kw $297 / month
Cointerra TerraMiner IV: 2TH/s, ~1.9kw $198 / month
HashFast Sierra: 1.2TH/s, ~800w $99 / month
BlackArrow Prospero X-3 (@1.56GHz): 2TH/s, ~2kw $198 / month
HashPlexs data center will have f iltration systems to eliminate dust and a custom-designed ventilation
system with massive f ans to optimize airf low and remove waste heat, Schnurle said.
In addition to providing space and power, HashPlex uses management sof tware that monitors miners and
automatically reboots them in case of f ailure. While an enterprise-class data center guarantees something
like 99.999 percent uptime, HashPlex keeps costs low by only guaranteeing just 95 percent. For most
miners, the downtime is less of a concern than it would be f or companies running applications and services
f or customers or employees.
"We f ound that the added cost of triple redundant Internet connections doesn't make sense when you can
provide some downtime, Schnurle.
Eventually, customers will be able to control their miners remotely. We sort of have an internal version of
this working now but don't want to push it to customers until its f ully baked, Rihn told Ars.
The remote management sof tware will let customers view historical perf ormance, reboot miners, or set
what mining pools they want to join. Currently, HashPlex perf orms those tasks on behalf of customers,
setting the miners up however the customers pref er.
We intend to f ully instrument the miner f rom the sof tware side and provide that to the customer, Rihn
said. Currently, it's an internal system but we intend to turn that public as soon as we can.
HashPlex doesn't store any customer inf ormation that could let attackers take money f rom their Bitcoin
wallets, Rihn said.
"When a miner submits work to a pool, it submits it based on a miner worker name and password, which are
not suf f icient credentials f or removing value f rom the account," he said. "You cant withdraw bitcoins f rom a
persons account with their miner worker inf ormation. You can only submit work, so you can only add value
to their account."
Schnurle and Rihn said it's possible that sophisticated attackers could take over the miners in their f acility
and redirect the mining power to wallets they control. HashPlex's monitoring sof tware, which is hosted of f -
site, should detect that immediately, allowing them to regain control of the machines within minutes, they
said.
"Our biggest security threat is not somebody hacking the network and redirecting bitcoins or stealing
bitcoins," Schnurle said. "It's somebody coming to our f acility and literally physically picking up boxes and
putting them on a truck."
For that reason, they have a security guard present at all times.
Preserving Bitcoin democracy
Besides making money, Schnurle said HashPlex aims to "bring democracy back to Bitcoin mining."
One Bitcoin miner we prof iled has a goal of controlling 10 percent of the entire world's Bitcoin mining as
measured by processing or hashing power. Schnurle said there's reason to worry about big miners
controlling more than half the network and launching a so-called "51 percent attack." With majority control
of the network, attackers could spend bitcoins twice or interf ere with other people's mining and
transactions.
GHash.io entered 2014 with more than 40 percent of all hashing power, but it pledged to keep its share
below 51 percent.
Because HashPlex doesn't own any of the equipment it hosts, the miners who are its customers retain their
individual "voting" power, Schnurle said.
The 51 percent attack is "based on getting a voting block of miners," he said. "This is because Bitcoin is a
distributed network and there is no one central authority that says 'this transaction is valid and this
transaction is not valid.' Its all based on a consensus, and you can only have a meaningf ul consensus if
you have a large number of small players What we want in a democracy is a large number of voices, you
want an ef f ective marketplace, really. But the nature of Bitcoin mining hosting really is such that those with
the larger data centers win."