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A Quick Look at Cryptocurrencies By @Cloudwedge | @CloudExpo [#Cloud]

Cryptocurrencies and Cloud Computing

A Quick Look at Cryptocurrencies and the Cloud

Cryptocurrencies have gained traction in the past half-decade for a variety of reasons. Bitcoin has become the most popular cryptocurrency in the world due to its sudden rise in value and acceptance within the international marketplace. You might be wondering: What does cloud computing have to do with cryptocurrencies?

Cloud computing is beginning to revolutionize the cryptocurrency industry. When cryptocurrencies first began gaining popularity, amateur miners would create rigs in their basements, garages and bedrooms that consisted of computing gear that sometimes housed dozens of video cards with high performance GPU chips. These cryptocurrency mining rigs generated enormous electric bills for consumers with power companies sometimes mistaking the sudden spike in power use as a drug operation. These sets of circumstances along with other economic factors have caused bitcoin miners to rethink the way that they handle their hash workload.

Enter cloud computing

The cloud is being used more and more to handle cryptocurrency workloads. Cloudwedge has extensively covered many of the up and coming cloud cryptocurrency startups including GAW Miners, CloudHashing and ZeusHash. Since cryptocurrency is created using cryptographic techniques, these companies have harnessed the power of the cloud to sell mining contracts to customers. The customers pay upfront for the hashing power and the cloud takes care of the rest. Clients will receive their newly minted cryptocurrenies in which they will be able to buy, sell or exchange at a time of their choosing.

How Does it Work?

Cryptocurrency mining is utilizes application specific integrated circuit (ASIC) technology. ASIC was specifically created to solve hashes and mine bitcoins. Due to the increasing difficulty of solving hashes it is now feasible for miners to cooperate and form groups known as mining pools. A mining pool is where miners cooperate and pool together their resources. Profits are then distributed based on each individual's contribution. Cloudhashing is a company that offers people a chance to join a mining pool and partake in bitcoin mining and share in the profits.

Where Are Cryptocurrency Datacenters Located?

Washington state has become the epicenter for cryptocurrency mining datacenters. Because abundant and inexpensive electricity is available, crytpocurrency miners instantly began setting up shop within the region. The computers that are used to solve hashes and mine for bitcoins require a large amount of electricity and an abundant supply of water to utilize the liquid cooling hardware technology that has recently been developed for the ASIC architecture.

Washington state provides cryptocurrency datacenter entrepreneurs with the free cooling and economic advantages that this industry needs. In March 2014, CloudHashing was reporting that it was generating 2.5 Petahashes per second with their cryptocurrency mining datacenter operation which is consequently located in Washington.

More Stories By Natalie Lerner

Natalie Lerner is a senior contributor for CloudWedge. In her spare time, Natalie enjoys exploring all things cloud and is a music enthusiast. Follow Natalie’s daily posts on Twitter: @Cloudwedge, or on Facebook.