It all started when a customer asked us if we’d become a premier Bitcoin mining hosting service. He’d tried to host Bitcoin at home, but the problem with Bitcoin mining is it takes about six amps to run and an average house has a 63-amp power supply. To make money from Bitcoin you’d need, for example, 20 Bitcoin miners and double the power supply of an average house. Consequently, the customer gave up and asked if he could host it at our data centre if we had spare power capacity.
We put the Bitcoin in a rack at Cloud Centers and everything worked well – some months he made money, some months he lost money. The fluctuations in price were based on volatility of the market at the time, back at the end of last year. But the trend has been generally upwards because the currency is backed by powerful individuals who won’t allow it to fail.
For example, the British pound is propped up by the UK government, while the dollar is backed by the US. The reason Bitcoin is a good investment is that – similar to many cryptocurrencies – it’s backed by criminals, drug dealers and Russian oligarchs, to name a few unsavoury investors. Ironically, however, this international criminal network is an excellent guarantor for ensuring Bitcoin is profitable in the long term. With this large, unpleasant gang of people looking after their investments, Bitcoin will always be fairly stable because those people need it to be.
The reason we took over the Bitcoin farming was simple – we sell power at commercial rates. My customer was struggling to make money, so he gave it up and I kept his kit in exchange for his last two power bills. And suddenly Cloud Centres had a Bitcoin farm. The only difference was that we were immediately making money.
The big market for bitcoin is in China where they have huge storage centres the size of Amazon warehouses, full of miners. To the Chinese, it’s a business. In the UK, it’s largely DIY; there are almost no commercial operations. For example, I know investors who set up a Bitcoin farm in a 300-year-old cider press in Somerset where the kit kept blowing the fuses and the walls were constantly running with water from the damp conditions. So for many Bitcoin miners it’s very low tech. People buy their own kit and run it.
At Cloud Centres with our spare electricity we’re able to offer a good solution. I personally get my hands dirty designing the immersive cooling solution. We started experimenting in an empty fishpond, filling it with oil that we bought from China. You can then take out a light piece of electrical equipment and just dump it in the oil. It doesn’t conduct electricity, but it does conduct heat. It’s a bath of liquid and we transfer the heat from the pond to radiators that we’ve created on the roof. We pump the oil up and back down again. It’s pretty complex overall, but we’re nearly finished on our prototype site. Once that’s in operation we scale it up so I can build an operation here with our current power costs.
What’s ideal is that even if we fail to win new customers, we’ve built something here at Cloud Centres that creates maybe £300-£400k a year profit. We don’t need customers, marketing or take any support calls, we just have to put baths in a big room and fill them with kit.
And because Cloud Centres is owner-managed, we can experiment with this type of investment and make mistakes along with the way. But, above all, we have the flexibility and agility to take a job like this on. We took on the kit and now operate it. It’s a Cloud Centres project. The mechanics of getting the money back is that you generate Bitcoin and trade it on one of the Bitcoin exchanges. We use Coinbase, which just happens to be the biggest, and it takes two/three days to convert it back into Sterling and put it in the bank.
For Cloud Centres, Bitcoin has become our business insurance model – particularly at the moment during the post-Covid environment. It’s a great backup business. It’s very simple, it’s all online and you can do it if your electricity is cheap and the mechanics is done sensibly, sitting in a data centre. Most other data centres are owned by multiple investors and this type of experiment would never see the light of day. Consequently, we’re the only data centre to offer this service in the UK.