Inside of Bitcoin Mining
On the edge of a tiny Chinese town is a strange building where you can get an insight into the future – and only a handful of people know what is happening inside.
I am on my way to visit one of the biggest bitcoin mines in the world: where up to $8m in digital currency is generated per year by solving complicated mathematical algorithms with computers.
The location is secret and I have been invited under the strict condition that I live onsite with the miners. The owners don’t want to broadcast their specific location, because while the Chinese government is neither officially pro or against bitcoin, the huge amount of money flowing from these mines is outside state control.
The town itself is so high up in the mountains that you have to bring your own cans of oxygen
The town itself is so high up in the mountains that you have to bring your own cans of oxygen. Mobile phone signals frequently disappear around the mountains and valleys that surround the township. But high speed wi-fi makes video calls and chat apps the main mode of communication.
Chandler Guo, the owner of Bitbank, operates a large bitcoin mine in China (Credit: Danny Vincent)
My guide is 30-year-old Chandler Guo, the co-founder of Bitbank, and a bitcoin entrepreneur. Guo is the very definition of Chinese new money. His family ran a beef farm, became rich and he decided to invest in bitcoin. He has transformed this sleepy town into a hidden bitcoin economy.
“In the past China manufactured simple things like clothes, shoes and things like that. But in the future we will use technology to make products,” says Guo.
In the film below, Guo showed me inside the mine he has built:
Within the mine’s walls stand hundreds of computers shelved on rows. A team of workers live onsite: predominantly male, and made up of former farmers and fresh graduates.They live around six to a room in dormitories. Computer parts are sprawled across their floors and Chinese boy band posters are stuck on walls above their bunk beds.
One of them, Fang Yong, is a 21-year-old graduate who has been working as a miner for around a year. He rides a moped around town and, despite his rural background, dresses as a young Chinese urbanite. He’s fully aware of bitcoin’s potential. “Everyone says this technology is going to have a huge influence on the whole world,” he says.
The miners are rewarded with bitcoins for solving cryptographic problems that verify other bitcoin transactions across the world. Each time an algorithm is solved, “blocks” are added to the “blockchain” – a type of virtual book-keeping that ensures that every transaction is authenticated.