Managing Bitcoin Mining Sites: Foundry Site Operations Q+A

We sat down with Foundry’s Director of Mining Operations, Tim Sandau, and Director of Site Operations, Neil Galloway, to better understand the ins and outs of managing large-scale Bitcoin mining sites.

Foundry
Foundry
8 min readJul 8, 2024

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In an industry where uptime is key, and margins are thin, understanding how to run efficient Bitcoin mining operations makes all the difference. With several years of industry experience and unique perspectives of how both new and experienced miners encounter challenges when operating their sites, Tim Sandau and Neil Galloway have valuable insights to share.

Describe your background and how you got into this industry:

Tim: I’ve been personally active in the space since 2013 and professionally active in the industry since 2017. I was employee number one at a mining company where I built and designed one of the first large-scale mining operations in the US, then started a consulting company, and later started a hosting provider company where I learned day-to-day operations, scaling up to 150 megawatts. This led me to Foundry, where I oversee the Site Operations business line.

Neil: I have a couple decades of experience with industrial electrical and small electronics. I discovered Bitcoin in 2010 on mIRC (Internet Relay Chat), but I didn’t understand it well. From here, I just kept an eye on things and started mining heavily when the first ASIC miners were released. My career at the time involved troubleshooting control boards. With my electronics background, seeing hardware developed for mining made more sense to me.

I spent several years at other mining companies where I held a variety of roles, including data center technician, business development manager, and then mining operations. After Tim told me about Foundry’s vision and the resources they were going to provide to support Site Operations, I joined with a mission to bring a new sense of professionalism to the industry.

Tell us a little more about Foundry Site Operations.

Tim: We saw a need for it in the market, and realized we had the tools to be effective in the space. Our goal is to optimize operations through correct SOPs, state-of-the-art software, and the knowledge that our team brings. We can offer effective site operations paired with repair, logistics, and spare parts sourcing.

Neil: With extensive resources, we help customers achieve a high uptime, and offer technicians a better onsite experience — all without cutting corners.

Why do people say that being a Bitcoin miner is difficult?

Tim: There are a lot of varying factors that go into being a Bitcoin miner, based on the size and location. There is no copy-and-paste process. You need to understand the unique environment that you’re in, every single time you set up a new operation. There’s a lot to learn and the information changes regularly.

Neil: We’re not only working in a new industry where there is no playbook, but we’re also dealing with equipment that’s newly created. You often don’t know what you’re going to get until the equipment lands on site.

What do miners need to consider, post-halving, in order to succeed?

Tim: In addition to understanding Bitcoin mining, be aware of the power markets, political and regulatory environments, site location and surrounding climates, difficulty, and hashprice. Understanding these factors may help miners succeed post-halving.

Neil: Post-halving, I think that our biggest problem is going to be infrastructure supply shock. As competition increases, it will be difficult to get things like transformers unless you have partners with connections. Trusted partners can help lessen the burden of finding these things on your own.

How do you choose the right mining infrastructure for a mining operation?

Tim: When choosing the right infrastructure, you need to plan your electrical infrastructure around what your local utility is offering you. It’s important to bring in a professional.

Neil: I would also pay attention to what fits your area and climate. This will vary depending on if you’re near a coast or if you’re near a city. In some cases, you will use things like water curtains, and in others, you might go with immersion.

What are the key components needed to set up a Bitcoin mining site?

Tim: There are a few steps to consider. First, you need to understand the political climate that you’re mining in. Next, you should have a negotiated Power Purchase Agreement (PPA) and understand your power price. Then, understand the local permit laws and regulations. Finally, after these steps are complete, source your infrastructure and miners.

Once you get started, you need to be able to operate and execute on those miners.

Neil: Additionally, you need to have a training program that includes OSHA certification and electrical safety.

What are some hidden costs or challenges often overlooked when setting up a mining site?

Tim: One thing that some may fail to acknowledge is the cost of time. Most people are building sites in places they aren’t familiar with and often underestimate the logistics. Take remote Nebraska, for example. What will you do when there aren’t any hotels and renting a car costs $4,000/week? A great way to plan is to take the number you think building a site is going to cost, and then increase it by 20% to account for all the unknowns you might encounter along the way.

Neil: Knowing what you’re ordering; each piece of infrastructure comes with different components. For example, some containers come pre-wired, while some will be missing power cables. If you need to order more components later, it can take up to 6 weeks lead time for them to land.

What strategies are used for recruiting talent in small-town America for mining operations?

Tim: Travel there and immerse yourself in the community. This means going to the town hall, visiting the chamber of commerce, eating at local restaurants, and asking around for people who are looking for work. Get involved in the community and talk to people.

Neil: At Foundry, we’re offering an opportunity they wouldn’t usually have. When recruiting and talking to people, I don’t start by asking them about Bitcoin — I ask them about computers and their love for technology.

What factors should be considered when selecting service providers for mining site setup and maintenance?

Tim: While budget is probably the first thing miners are thinking about, selecting a potential partner based on budget alone could mean sacrificing quality. Instead, when evaluating a partner, look at their track record of success — ask for proof. Ask them to show you examples of sites they’ve managed and the historical uptime of miners. Records are a great indicator of reliability.

Neil: You want to ensure the companies you partner with won’t get in between you and your Bitcoin rewards. They should be working out of a sense of service, not out of a sense of greed.

How crucial is network infrastructure in mining site setup, and what steps can be taken to ensure optimal performance and uptime?

Tim: If you think of your operation as a body, the network is your brain. If you have a weak brain, you have a weak body. It all starts with the network. Network infrastructure is the key.

Neil: Infrastructure is important. You don’t run these miners remotely, you run them from the network. If you don’t have a proper network set up, it makes it extremely difficult for the people on the ground. More labor goes into a bad network than a good one.

What role do standard operating procedures (SOPs) play in ensuring efficiency and safety at mining sites?

Tim: To operate efficiently, you need three things: people, processes, and technology. SOPs dictate to people how to act, follow processes, and effectively use the technology. Without SOPs, it is very difficult to create efficiency and scale your operations.

Neil: Standard operating procedures are everything. As you scale and deploy sites, it’s important to understand that you can’t be there to do everything yourselves. You need to have SOPs in order to replicate processes and functions from site to site. This allows your technicians to execute tasks rapidly and efficiently.

What are your thoughts on emerging entrants to the Bitcoin mining space? Who do you see entering the market to establish themselves as miners, and what are the challenges these entrants are going to face?

Tim: Hedge funds, financial institutions, and energy companies. They are the biggest players that are going to be coming into the market. I think they will be looking to establish themselves as large power consumers and looking to monetize that power. I think the challenges we discussed earlier are less for the incoming hedge funds, financial institutions, and energy companies, and more for those already in the space. The days of the Wild West will be over when these guys enter the industry at a large scale; they aren’t just going to bring money, they’ll bring decades of professional business operations and standards. This is another reason having a trusted partner can help you succeed as newer, bigger entrants come into the space.

How long does it typically take to set up a site without a trusted outsourced partner?

Tim: In short, the answer is “longer”. It takes more time, and in this industry, time is money. You should note, is your investment sitting in a box or is it sitting on a rack mining Bitcoin?

Do you have any additional comments?

Tim: It’s important to understand that mining operations are always evolving, and constant education is required. Partnering with the right professional is key to your success. Trust but verify. Anyone who is somebody in this space will have a verifiable background and a proven track record.

Neil: Mining operations require teamwork. Pick your team wisely, ensuring they come with extensive experience — not just in Bitcoin mining but in traditional industries, too.

How can potential Foundry Site Operations clients get started?

Tim: If you’re building or expanding a mining site, we’re here to help you along the way. Fill out the contact form to connect with our team.

Disclaimer

The contents of this post have been provided by Foundry Digital LLC (“Foundry” or “we”) for informational purposes only, and should not be construed as giving legal, financial or any other kind of advice. Although we strive to provide quality information, we do not guarantee or warrant any particular results from the use of this information or any opinions provided. Foundry accepts no liability whatsoever for any damages, costs or any other consequences resulting from any actions taken on the basis of the information or opinions provided. Furthermore, Foundry has no control over information provided in any third-party sites linked herein, and Foundry accepts no liability whatsoever over any consequences resulting from any actions taken on the basis of that information. Foundry reserves the right to make changes to this information at any time without prior notice and makes no commitment to update the information contained in this post.

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