On the flat lava plain of Reykjanesbaer, Iceland, near the Arctic Circle, you can find the mines of Bitcoin.
To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings you to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers, each in a locked cabinet and each cooled by blasts of Arctic air shot up from vents in the floor.
These computers are the laborers of the virtual mines where Bitcoins are unearthed. Instead of swinging pickaxes, these custom-built machines, which are running an open-source Bitcoin program, perform complex algorithms 24 hours a day. If they come up with the right answers before competitors around the world do, they win a block of 25 new Bitcoins from the virtual currency's decentralized network. The network is programmed to eventually release 21 million coins. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years.
The scarcity - along with a speculative mania that has grown up around digital money - has made each new Bitcoin worth as much as $1,100 in recent weeks.
Bitcoins are invisible money, backed by no government, useful only as a speculative investment or online currency, but creating them commands a surprisingly hefty real-world infrastructure.
"What we have here are money-printing machines," said Emmanuel Abiodun, 31, founder of the company that built the Iceland installation, shouting above the din of the computers. "We cannot risk that anyone will get to them."
Abiodun is one of a number of entrepreneurs who have rushed, gold-fever style, into large-scale Bitcoin mining operations in just the last few months. All of these people are making enormous bets that Bitcoin will not collapse, as it has threatened to do several times. Just last week, moves by Chinese authorities caused the price of a Bitcoin to drop briefly below $500. If the system did crash, the new computers would be essentially useless because they are custom-built for Bitcoin mining.
Miners, though, are among the virtual-currency faithful, believing that Bitcoin will turn into a new, cheaper way of sending money around the world, leaving behind its current status as a largely speculative commodity.
Most of the new operations popping up guard their secrecy closely, but Abiodun agreed to show his installation for the first time. An earnest young Briton, with the casual fashion taste of the tech cognoscenti, he was a computer programmer at HSBC in London when he decided to invest in specialized computers that would carry out constant Bitcoin mining.
The computers that do the work eat up so much energy that electricity costs can be the deciding factor in profitability. There are Bitcoin mining installations in Hong Kong and Washington state, among other places, but Abiodun chose Iceland, where geothermal and hydroelectric energy are plentiful and cheap. And the Arctic air is free and piped in to cool the machines, which often overheat when they are pushed to the outer limits of their computing capacity.
The operation can baffle even those entrusted with its care. Helgi Helgason, a burly, bald Icelandic man who oversees the data center that houses the machines, said that when he first heard that a Bitcoin mining operation was moving in he expected something very different. "I thought we'd bring in machines and put bags behind them and the coins would fall into them," said Helgason, with a laugh.
Since then, the education he's received about Bitcoins has been enlightening, but only to a point.
"It's a strange business," he said, "and I can't say that I understand it."
Until just a few months ago, most Bitcoin mining was done on the home computers of digital-money fanatics. But as the value of a single Bitcoin skyrocketed over the last few months, the competition for new coins set off a race that quickly turned mining into an industrial enterprise.
"Even if you had hardware earlier this year, that is becoming obsolete," said Greg Schvey, a co-founder of Genesis Block, a virtual-currency research firm. "You are talking about order-of-magnitude jumps."
The work the computers do is akin to guessing at a lottery number. The faster the computers run, the better chance of guessing that right number and winning valuable coins. So mining entrepreneurs are buying chips and computers designed specifical
