Discount code and Primecoin mining enthusiasm cause cloud server overload

Miners of Primecoin, a new digital currency, caused DigitalOcean, a cloud server provider, to restrict sign ups in some regions of the world. Primecoin was recently announced, with the aim of creating a currency that had a useful proof of work system: the search for prime numbers.

DigitalOcean is a provider of virtual private servers (VPS). These servers are not actual computers, but simulated computers – several of which run simultaneously on powerful server computers at once. This is a cost effective way for any business providing online hosting services whether it be virtual private servers or web hosts.

Usually, a group of virtual servers hosted on single (or across a network of) physical servers do not all need the CPU and network resources at once. Therefore, having several simulated computers contained within one physical computer is more efficient as one set of hardware can be active all the time, providing resources to all of the virtual machines it hosts.

The whole business of virtual hosting is somewhat like fractional reserve banking in that it relies upon most of its users not requiring its resources at any particular moment. This is why many cryptocurrency miners signing up and starting computations all at the same time caused a headache to DigitalOcean.

After a detailed set of instructions was posted to the bitcoin forums, over 18,000 users signed up to DigitalOcean, using a discount referral code from the original poster. We should point out that the DigitalOcean referral program means that the forum user who posted the referral link would earn $10 for every user that was billed $10 or more.

Furthermore, the instructions that he/she listed could be done on any Linux computer. However, the advantage of mining in the cloud means that much more powerful hardware is available than most people will have at home, if they are willing to pay the monthly fee.

Mitch Warner II, DigitalOcean's head of marketing, is quoted as saying that this represented 90 days' worth of growth in just 2 days. The company has three server locations: Amsterdam, New York and San Francisco. DigitalOcean had to temporarily prevent creation of server instances (called "droplets") at its Amsterdam and New York locations to stem the tide of budding miners. The Amsterdam location is still closed off to new users.

At the time of writing, 1 Primecoin (XPM) was worth 0.00516662 BTC, and 0.13238239 LTC, according to the Coins-E exchange.

Source: The Register