iDrive Attempted To Mine Bitcoin with 3000 Servers – That was a Mistake

By
Jeran Campanella @@ubbbk
July 4, 2014
The All-In-One Storage Solution Recently Attempted to Mine Bitcoin

If you had a business with 3,000 servers, you might try and do the same thing that iDrive recently tried.

The one stop solution to all your backup needs decided to take a detour from what they do best to look into the idea of mining Bitcoin. They were curious to see if they were missing out on an untapped revenue stream. They learned some valuable bits of information when they went on their detour and spoke to CCN about what they discovered on their journey.

[divider]CCN[/divider]

iDrive decided to give Bitcoin mining a test run

They knew they had some non-peak times during the day and thought the unused server capacity could be used for other operations. A dedicated team of their best engineers spent a week testing the possibility of mining bitcoins and found that doing so would have some profound effects on their business model. These were the areas they found would take a direct hit:

Cost of mining bitcoins

Although iDrive owns 3,000 servers, they decided to use 600 (each with a quad core processor operating at 2.8 GHz) for their tests. Their study projected a year of mining at 100% processing power, 24 hours a day and 7 days a week with the difficulty of mining increasing linearly. They also assumed that there would be no additional charge for operating their servers constantly at full power for a whole year. iDrive pays a set rate for a certain amount of electricity which they use to power the servers. The servers usually run at about 5% of their capacity during non-peak times. However, while mining bitcoins, the servers would operate at 100% the entire time. If they paid more for the increase in the amount of electricity used, this increase in energy would naturally cost more. Also coming into play was the potential that additional server usage would wear out the servers faster, as they would be operating at a higher capacity for longer amounts of time. This could shorten their lifespan and require replacing servers more frequently, which is another added cost. Also, it is possible that they could eventually exceed their allowed electricity usage, which would result in their servers being shut down.

 

Mining bitcoins would be time consuming

They found that it took a longer time to mine a single Bitcoin as more people got involved. Even more so as the complexity of the cryptography becomes more difficult. They also figured that the time spent figuring out the details of the mining process detracted from time that could be spent focusing on their core services.

Increased revenue of mining bitcoins?

Obviously the value of Bitcoin is continually fluctuating based on the market. iDrive saw the ROI as totally unpredictable, not to mention the price paid to miners would decrease as time goes on due to the controlled supply of Bitcoin. The process, energy, complexity, and time would continue to rise as the ROI dropped.

Security of mining bitcoins

The servers at iDrive are not currently optimized or configured to mine Bitcoin. Running Bitcoin software on servers they found, would require installing the Bitcoin daemon on each of them. As well as re-opening parts of their network infrastructure that they’d previously locked down, to enable the Bitcoin network to periodically access their servers. They do continuous network security audits to ensure that they don’t have any areas of the network open that do not need to be. Opening up their network for something non-essential, like Bitcoin, seemed to them like an unnecessary security risk.

In the end, iDrive says they learned a lot about the interesting process of Bitcoin mining, however for iDrive, in no way did the pros outweigh the cons. So, iDrive decided to stick with what they do best.

iDrive is an all-in-one storage solution

 Interview with the CEO of iDrive

Jeran Campanella of CCN was able to grab the CEO of iDrive, Raghu Kulkarni, and to ask him his thoughts on iDrive and Bitcoin.

Why does iDrive not take Bitcoin and do you have any plans to accept it?

Raghu Kulkarni: We have considered it, and I think once we start to see some true Bitcoin stabilization in the market, I think then we can consider it as viable long-term payment option for our users, its a nice option to have available.

Tell us about iDrive and what you guys are doing over there?

Raghu Kulkarni: iDrive is an online backup and sync provider, we’ve got over 2 million customers, storing over 45 petabytes of customer data. We’re giving consumers, SMBs and even enterprises a better way to protect their critical data, photos, videos and many other files. Our platform is highly secure, offering 256-bit AES encryption with an optional private key, that the user holds, allowing them to be the only one who can access the data, even we cannot access the data providing a level of protection not found at other cloud providers. It’s NSA-proof.

What are your thoughts on bitcoin?

Raghu Kulkarni: It’s a groundbreaking currency, that could become the defacto for internet transactions over time, it’s got real staying power and is creating an entirely new marketplace for buying goods/services, as a business owner, its exciting.

What is the future of iDrive?

Raghu Kulkarni: We plan to continue to focus on our core, providing the best in online backup but doing it for many of the new technologies that are on the horizon, like wearables.

All images courtesy of https://idrive.com

Last modified (UTC): July 4, 2014 15:42

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