Inside the secretive world of a Chinese bitcoin mine
Source: Vice

Bitcoin, the world's leading cryptocurrency, has had a roller coaster ride over the past 12 months.

Despite wild fluctuations in the exchange rate, scams galore and the involvement of many a shady character, the process of mining is still a lucrative exercise.

This documentary, produced by Vice, gives a rare glimpse inside a Chinese bitcoin mine. Situated in northeastern Liaoning province, the mine turns over $US1.5 million worth of bitcoin a month.


Inside the secretive world of a Chinese bitcoin mine


Bitcoin, the world's leading cryptocurrency, has had a roller coaster ride over the past 12 months.

Despite wild fluctuations in the exchange rate, scams galore and the involvement of many a shady character, the process of mining is still a lucrative exercise.

This documentary, produced by Vice, gives a rare glimpse inside a Chinese bitcoin mine. Situated in northeastern Liaoning province, the mine turns over $US1.5 million worth of bitcoin a month.


What is a cryptocurrency?

A cryptocurrency is a digital medium of exchange that uses encrypted software to operate a market for transactions. That market is overseen by those using the network, based on rules coded in to algorithms. It's a transparent, peer-to-peer operation, similar to the file-sharing protocol BitTorrent which is widely used for the illegal sharing of movies, TV shows and music.

How are cryptocurrencies propagated?

Cryptocurrencies are created, or mined, based on a mathematical formula. In the mining process, computers are tasked to solve complex mathematical problems and rewarded with virtual coinage. Over time, the equations become progressively more difficult to solve, slowing down the supply of new cryptocurrency units.

Can anyone become a miner?

Theoretically it is possible to start mining at home. But as the mathematical challenge becomes harder, more computational grunt is required. For this reason, miners often pool resources to buy access to supercomputers or server farms (networked arrays of smaller computers).

How many cryptocurrencies are there?

The market for such payment instruments is dominated by bitcoin, but there are scores of other currencies including litecoin, dogecoin, megacoin and there is even a sexcoin.

The rise and fall of bitcoin.

What are they worth?

Values fluctuate based on supply and demand (and market sentiment). At the time of writing, one bitcoin is worth $US234, down from a peak of over $US1000 in December, 2013. A unit of litecoin, on the other hand, is currently worth $US1.80.

How do you buy and sell it?

A transaction is similar to a direct transfer between bank accounts. Algorithmic verification ensures that the same unit of currency can't be owned by more than one person at the same time. In most cryptocurrencies, accounts known as wallets are stored either on hard drives or remotely in the cloud. Every transaction is recorded in a ledger called the blockchain that is accessible by every currency owner.

What can you buy with it?

Because of its widespread adoption, bitcoin is the most liquid of the alternative currencies and can be readily exchanged into US dollars. In addition to being used to pay for goods and services on a person-to-person level, a number of larger enterprises have begun accepting bitcoin as payment.

Is it safe?

These self-regulated markets are high volatile. And the infrastructure around cryptocurrencies has attracted the attention of scammers and hackers. Caveat emptor.