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.

View image of (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.View image of Miners live on site in apartments, and eat together (Credit: Danny Vincent) All day we mine 50 bitcoins… 24 hours this machine never sleeps – Chandler Guo Based on the current exchange rate, one bitcoin is worth approximately $450.“All day we mine 50 bitcoins,” says Guo.“24 hours this machine never sleeps.”Guo started his operation only two years ago, and mines like his have boomed ever since.“Two years ago Chinese mining was just 40% of all the mining equipment in the world,” he says.“Right now it’s already 70%.So Chinese mining is very important.”Guo has built two fully functioning mines in China and is building what he claims will be the largest bitcoin mine in the world – capable, once complete, of producing more than 30% of all bitcoin globally.Guo is also developing an app which can mine the digital currency from a smartphone or tablet.

He believes that China is likely to become the centre of the digital currency’s universe.View image of (Credit: Danny Vincent) But there is competition.bitcoin chart yahoo financeMuch of the Chinese population is already using online currency such as Alipay or the WeChat wallet.bitcoin miner bladeThe Chinese government has also recently announced its interest in developing an official digital currency.ethereum ether newsSome think that organised Chinese bitcoin mining could damage the currency’s future There is also the possibility that organised Chinese bitcoin mining like Guo’s could threaten the future of the currency.bitcoin millionaire reddit

At least that’s the view of a prominent bitcoin enthusiast, Mike Hearn, who in January claimed that “the experiment had failed”.bitcoin mining motherboardHe argued that China’s dominance of mining means that the majority of bitcoin transactions are verified in China, but that the slower internet connections used there are hampering the flow of the currency, which could prevent its popularity growing.bitcoin fibonacciThis, he argued, would ultimately lead to bitcoin’s failure.Guo is dismissive of Hearne’s comments.buying bitcoin vancouverHe says he remains optimistic about the future – and the potential for bitcoin to change established ways of using money.dogecoin value mining

“For me it is a kind of freedom.Everyone and anyone can use it anywhere.It doesn’t belong to just one country.It is already crossing borders.ethereum maximumIt belongs to everybody,” says Guo.Danny Vincent is a BBC video journalist. features newsletter, called “If You Only Read 6 Things This Week”.A handpicked selection of stories from BBC Future, Earth, Culture, Capital, Travel and Autos, delivered to your inbox every Friday.In a perfect world where mining difficulty was lower, bitcoin prices were higher and a warehouse full of mining rigs could be run by one man, Dave Carlson, the owner of North America's largest bitcoin mining operation, could be earning $8m a month.However, just like reports of bitcoin's death, reports of Carlson's personal earnings are, unfortunately for him, exaggerated.With the mainstream media continuing to paint bitcoin as a modern-day gold rush, Carlson's rags-to-riches story has been of particular interest, even if it hasn't always been put in the proper context.

To be fair, though, estimates of his potential earnings don't seem unlikely when you consider he went from driving a $300 Honda to presiding over a million-dollar company in just under a year, and that bitcoin mining is still widely misunderstood.Still, when the facts are examined, Carlson's business is no less impressive.To get to the truth of his story, CoinDesk spoke to Carlson about the increased attention his Washington-based warehouse operation (he won't reveal the exact location) is receiving, how he built the company and how it earned $8m a month when bitcoin prices were near their peak.Carlson summed up his transition, saying: "I used to spend long hours connecting cables, assembling rigs and configuring servers.I now have a core technical team that covers facilities, assembly, deployment, optimization and management.I spend most of my time working on the larger picture issues the company faces regarding future growth and operations."Of course, that explanation doesn't tell the whole story.

Carlson said he first got involved with bitcoin mining when he started an online mining supply company MegaBigPower "like most bitcoin miners", from his basement.From there, he said his ambitions evolved with his interest.Carlson credited his current operation's success to the bitcoin mining community, who tipped him off that he lived near some of the cheapest power in the country and helped guide him toward large-scale industrial mining.BusinessWeek indicates that his warehouse is now powered by an array of Bitfury-designed rigs.Bitfury, an influential and still largely anonymous chip designer, was a key early supporter of Carlson as well.However, while technology played a role, Carlson also needed capital, which he would receive in part from Leszek Rychlewski, of Poland-based scientific research center BioInfoBank, who he credits as integral to his success."[Rychlewski] has provided incredible guidance as well as funding along the way.If it weren't for his bold risk taking and generosity, I wouldn't have had the chance to take this concept into reality."

Though Carlson now has a successful business to his name, this wasn't always the case.He recalls that when he first began his mining operation he had to share an office with 30 GPU rigs for mining litecoin – not exactly an ideal scenario given their heating and cooling needs.Now, Carlson looks back on this test of will as his research and development stage."LTC was $2 and I was selling it all to pay rent, but I needed to work in a real world setting to test my math around power and cooling requirements.I learned enough to know I needed to move to a different setting."Soon, he upgraded to a 2,000-square-foot warehouse space powered by 30 tons of air conditioning.In his current space (which he estimates is 10 times larger) Carson upgraded to fans in order to pull air out of the building, citing problems with AC units.He now estimates these fans move 150,000 cubic feet per minute.In case you're not familiar with the terminology, Carlson has an anecdote that paints the picture of this type of fan power.

"Before we added more intakes, you could barely open the door, and the insulation was literally being sucked off the ceiling," he said.Carlson indicated that his operation also thrives on a network of partners, including investors BioInfoBank and PicoStocks, which manufacture the chips and boards.Explained Carlson: "My business model is to do construction and hosting, so I take very little risk up front in return for a revenue share.I sell shovels basically."He is also helped by large internal tech team that has optimized his warehouse topography, an important factor given that servers can easily become overloaded.Further, he uses Linux and open-source monitoring software to keep his eye on key processes that could indicate systemic problems.Said Carlson: "My biggest fear has always been having a silent, slow and undetected leak that could result in a large loss over time."Another tip Carlson revealed is his use of simple board design to keep production costs low.For example, his rigs do not require liquid cooling, and he doesn't use fans on the boards, stating that everything is cooled by air movement.

"Due to these factors we expect to remain competitive and be able to mass-deploy until the market pushes margin-per-chip down closer to a few dollars.This could happen faster than we would like, so of course we work on a better chip."Carlson estimates that the operation costs more than $1m, and now involves 15 people.The end result was 1 petahash of mining power that is fully paid off.Of course, with interest in bitcoin on the rise, Carlson knows he needs to keep his operation sharp to maximize profit, though he sees less competition and more collaboration.For his part, this is an initiative that Carlson is willing to lead: "I'm not well connected to the other big miners out there, but I hope to establish an industrial mining consortium this year that will seek to educate and set agenda, especially with respect to regulatory efforts."As for repeating his model for another alternative currency, Carlson isn't convinced there's a clear market leader."Until another coin is created that has its own unique value proposition, the alts will remain as transfer mechanisms for mining bitcoin.