There are at least a couple of problems for anybody who wants to run a Bitcoin miner in their home, especially if you buy hardware that's powerful enough to make some money.

"Miners don't make very good roommates," said George Schnurle, VP of engineering for miner hosting startup HashPlex. It's easy for the most powerful miners to "piss off all your roommates because this noisy, hot box is running in your living room."

Schnurle's co-founder, CEO and former Microsoft employee Bernie Rihn, was running miners in his apartment, and "he had an extension cord going all the way across the living room because he needed to connect to one of his circuits that didn’t already have a bunch of equipment loaded to it," Schnurle told Ars. "The one upside of that is he didn't have to pay a heating bill during the winter here in Seattle because he had these space heaters running in his living room 24/7."

That's one of the reasons some people outsource their Bitcoin mining. In some cases, customers can simply lease mining power from a data center that owns a bunch of Bitcoin miners. The data center then takes a cut from each mined coin.

That raises a troubling question: if the miner host can make a profit simply by taking a cut of its customers' mined coins, how can it possibly be profitable for customers? Schnurle says HashPlex solves that problem. HashPlex doesn't own your hardware. You buy it yourself and send it to HashPlex, which runs it in a data center that's near a cheap source of renewable power. You keep all the mining proceeds and pay HashPlex just a little more than the average US resident pays for electricity, and less than you might pay for electricity yourself depending on which state you live in.

In exchange for $99 per kilowatt-month (less than 14¢ per kilowatt-hour), HashPlex does all the work of operating the hardware while you sit back and watch the bitcoins flow into your digital wallet, the company says. The average residential price for electricity is 11.88¢ per kilowatt-hour, according to government data. It's above 14¢ per kilowatt-hour in 12 states.

HashPlex charges the same amount regardless of what mining hardware customers buy and send to them, and doesn't take a cut of the mining proceeds. Customers can mine alternative digital currencies besides Bitcoin as well.

“You ship it to us, we give it a nice home, we feed it cheap power, we connect it to the Internet and deal with the massive amounts of waste heat that it generates,” Schnurle said. “Traditional data centers are not really set up to do that in the scale you need to do it for Bitcoin mining. Traditional data centers are targeted toward less power-intensive machines.”

HashPlex started taking orders in April and is hosting equipment in a temporary space. The company quickly sold out with about 250 paying customers, but it will eventually be able to host a lot more in a 1MW data center that's under construction in eastern Washington state with the help of money from investors. Schnurle says HashPlex will have enough power to host about 2 percent of the entire Bitcoin network.

Buying hydroelectric power at bulk, HashPlex founders said they expect to pay 2 to 3¢ per kilowatt-hour in their bigger facility. They're paying more until the new facility goes online, however. "Since our current space is in Seattle, we're paying the going rate for power there," Schnurle said. "The purpose isn't to generate revenue with that location but rather to use it as a testbed for our miner automation systems, power management, and miner racks." Washington has nearly the cheapest power in the country, with average commercial rates of 8.11¢ per kilowatt hour.

Schnurle is being secretive about HashPlex’s exact location for security reasons, and he declined to provide pictures of the hosting operation.

Not for the hobbyists

If you're a miner who spent between $100 and $1,000 on hardware, "you're doing it as a hobby and you're probably not going to save a whole lot with us," Schnurle said. But many people spend much more than that. A Cointerra TerraMiner IV costs $6,000 and offers two terahash of mining power, or one trillion hashing calculations per second. "That'll earn you $100 a day depending on Bitcoin prices," Schnurle said. A TerraMiner IV owner might do well to host it with HashPlex, he argued.

"If you want to do anything of any significant scale, you are likely to be limited by the amount of power your house can provide and you're going to have to find a spare bedroom where you can leave the window open and have a fan blowing cold air in," he said.

Here's a look at how much you'd pay to host some popular miners with HashPlex:

Butterfly Labs Mini-Rig: 0.5TH/s, ~2.2kw → $297 / month

KNC Miner Jupiter: 0.55TH/s, ~700w → $99 / month

KNC Miner Neptune: 3TH/s, ~3kw → $297 / month

Coincraft Rig: 2.8TH/s, ~3kw → $297 / month

Cointerra TerraMiner IV: 2TH/s, ~1.9kw → $198 / month

HashFast Sierra: 1.2TH/s, ~800w → $99 / month

BlackArrow Prospero X-3 (@1.56GHz): 2TH/s, ~2kw → $198 / month

HashPlex’s data center will have filtration systems to eliminate dust and a custom-designed ventilation system with massive fans to optimize airflow and remove waste heat, Schnurle said.

In addition to providing space and power, HashPlex uses management software that monitors miners and automatically reboots them in case of failure. While an enterprise-class data center guarantees something like 99.999 percent uptime, HashPlex keeps costs low by only guaranteeing just 95 percent. For most miners, the downtime is less of a concern than it would be for companies running applications and services for customers or employees.

"We found that the added cost of triple redundant Internet connections doesn't make sense when you can provide some downtime,” Schnurle.

Eventually, customers will be able to control their miners remotely. “We sort of have an internal version of this working now but don't want to push it to customers until its fully baked,” Rihn told Ars.

The remote management software will let customers view historical performance, reboot miners, or set what mining pools they want to join. Currently, HashPlex performs those tasks on behalf of customers, setting the miners up however the customers prefer.

“We intend to fully instrument the miner from the software side and provide that to the customer,” Rihn said. “Currently, it's an internal system but we intend to turn that public as soon as we can.”

HashPlex doesn't store any customer information that could let attackers take money from their Bitcoin wallets, Rihn said.

"When a miner submits work to a pool, it submits it based on a miner worker name and password, which are not sufficient credentials for removing value from the account," he said. "You can’t withdraw bitcoins from a person’s account with their miner worker information. You can only submit work, so you can only add value to their account."

Schnurle and Rihn said it's possible that sophisticated attackers could take over the miners in their facility and redirect the mining power to wallets they control. HashPlex's monitoring software, which is hosted off-site, should detect that immediately, allowing them to regain control of the machines within minutes, they said.

"Our biggest security threat is not somebody hacking the network and redirecting bitcoins or stealing bitcoins," Schnurle said. "It's somebody coming to our facility and literally physically picking up boxes and putting them on a truck."

For that reason, they have a security guard present at all times.

Preserving Bitcoin “democracy”

Besides making money, Schnurle said HashPlex aims to "bring democracy back to Bitcoin mining."

One Bitcoin miner we profiled has a goal of controlling 10 percent of the entire world's Bitcoin mining as measured by processing or hashing power. Schnurle said there's reason to worry about big miners controlling more than half the network and launching a so-called "51 percent attack." With majority control of the network, attackers could spend bitcoins twice or interfere with other people's mining and transactions.

GHash.io entered 2014 with more than 40 percent of all hashing power, but it pledged to keep its share below 51 percent.

Because HashPlex doesn't own any of the equipment it hosts, the miners who are its customers retain their individual "voting" power, Schnurle said.

The 51 percent attack is "based on getting a voting block of miners," he said. "This is because Bitcoin is a distributed network and there is no one central authority that says 'this transaction is valid and this transaction is not valid.' It’s all based on a consensus, and you can only have a meaningful consensus if you have a large number of small players… What we want in a democracy is a large number of voices, you want an effective marketplace, really. But the nature of Bitcoin mining hosting really is such that those with the larger data centers win."