Meet the Hong Kong start-up hoping to make bitcoin mining environmentally friendly
Cryptocurrency mining is the latest industry to ‘go green’ thanks to the technology behind Hong Kong’s first and only bitcoin mine
Mining for virtual currencies like bitcoin may not be as messy as its real-world equivalent, but the supply of electricity needed to cool the massive computing power that produces the currency means it has also developed a reputation for harming the environment.
A Hong Kong start-up is seeking to change that by coming up with a cooling method that proves the mining of bitcoin and other blockchain-based currencies can work in a city with a short supply of land and high electricity costs.
The five year old firm, Allied Control, even built the city’s first and only bitcoin mine to demonstrate it.
“Hong Kong is not really the best place for bitcoin mining,” said Lau Kar-wing, CEO of Allied Control, pointing to its subtropical climate and high cost of rent.
The bitcoin mine has since closed but Lau said he got what he wanted: proving he could mine profitably in a previously unthinkable location like Hong Kong.
The burgeoning market for cryptocurrencies is backed by blockchain technology, essentially a digital ledger that records transactions across many computers so their record cannot be altered without the permission of multiple parties.
Until recently, the dry and arid plains of cities like Ordos in Northwestern China have been responsible for half the world’ s mines thanks to cheap electricity and a relatively cool climate. But in September this year, authorities in Beijing shut down cryptocurrency exchanges in the country, citing potential financial risks – arguing they were being used for illicit means.
The clampdown coincided with a push from both governments and miners in other countries, including several in eastern Europe, that wanted to jump on the trend of mines “going green”.
In conventional cooling fans disperse the heat generated by racks of computer chips, whereas with immersion cooling, the technology behind Allied Control, computers are immersed in a specially designed liquid that dissipates heat as it converts from liquid to gas.
This proved to be particularly useful in mining for bitcoin, which involves computers solving difficult mathematical problems to generate new “blocks” which are added to the blockchain. When these new blocks are found, miners are rewarded with a certain number of bitcoin for each block added.
Lau’s Hong Kong experiment has been closely monitored by Bitfury Group - a giant in the crypto space that sells blockchain-based software and hardware solutions for businesses and governments, in addition to running its own mines.
Bitfury acquired the Hong Kong start-up in 2015 for an undisclosed sum, hoping immersion cooling would help it slash operating costs and provide a differentiator in an industry not known for its environmental credentials.
“We were interested in making our data centres some of the most sustainable and cutting-edge in the world,” said Jamie Smith, global chief communications officer at Bitfury, adding that it has now incorporated the technology into its mines in the Republic of Georgia.
“As high-powered data centres are increasingly used for everything from internet searches to securing the bitcoin blockchain [from hacking], it is crucial we work to make sure they are energy efficient, sustainable and productive.”
Bitfury is not alone in its bid to tout its environmentally friendly credentials. Blockhive, a Japanese backed start-up, is making similar progress in eastern Europe.
Located on the outskirts of the Estonian capital Tallinn, the industrial park Blockhive is based at generates electricity from renewable power and supplies it back to a smart grid. Co-founder Kazuteru Arimura said the estate that houses the mine has a policy of buying back the excess heat generated by the mining, which further reduces the mine’s operating costs.
Arimura said it is a trend that is likely to continue as more countries realise the benefits of hosting mines.
“The growth of mining outside China will continue,” he said, adding that local governments in
Hokkaido, Japan and even Austria – previously unheard of locations for mining because of high operating costs – are actively promoting their location for mining.
Bitfury is even looking to do deals with clients in the Middle East, one of the hottest and dryest climates on earth.
“The train is moving quickly,” said Smith. “The fastest and most capable innovators will win because they will be able to keep pace.”