Today I’d like to tell you another short crypto story. In 2013, when I was working as an intern on my first job, I convinced my colleagues to start mining Bitcoins (in the office 😁). You might think we are rich now, unfortunately not… Here is what happened.
After finishing my software engineering degree, I found an internship in a small telecommunications company in Miami. We were a small team of five people, counting the founder, which was away from the office most of the time - more on him later. My coworkers had different backgrounds and nationalities, and we were all in our early twenties.
Bitcoin price history. It was worth around $100 at the time of this story…
I was reading an internet forum one day - I can’t recall which one exactly - and I found a post about Bitcoin mining. If you are familiar with its history, you would know in 2013, it wasn’t popular, and it was very cheap (one Bitcoin was around $100 to 200$ at the time). I read, and read, and read… Mostly about mining, mining pools, and how the whole blocks and rewards worked. One day, I brought the topic up to my colleagues in the office. We had a relaxed vibe, not much stress, to be honest. We didn’t have a boss, only the founder, who was away from the office most of the time.
Here is how my workstation looked… Pretty messy, I know.
I explained the basic concepts one day during lunchtime. I have to admit, I was no expert, and most of the things I couldn’t explain well. Again, the focus was mainly on the mining and rewards part, not on the actual usage, decentralization, transparency, and all those things that came after, like Web 3 and dApps (Ethereum didn’t come to life until 2015).
They were all intelligent guys with techy and economic backgrounds. One was a Ph.D. candidate in electronics from Iran, another an electronics engineer from Switzerland (hired just a few weeks before), and an accountant from Mexico who managed the company finance. They had some questions, but we changed the topic after some time, and I thought that was it. To my surprise, one day later, all of them spent their afternoons reading about this new crypto thing.
We spent the day trying to understand Bitcoin mechanics on the whiteboard. The Ph.D. in electronics was into the mining blocks mechanism and could understand it, at least much better than us. We got a decent understanding of Bitcoins generation. The Swiss engineer read a lot about blockchain, and he showed us what was happening with the blocks and how the transaction signing process worked. We were very excited, but we all wanted to know how to mine our own coins?
The accountant came up with some weird-looking machines he found on eBay. There were many models, sizes and they all had a long list of specs. We were hardware experts, so we spent some time reading and calling some manufacturers. That same day we bought two USB miners for around $100 each.
Bitcoin USB miner… Discontinued
They arrived a couple of days later, and I remember setting up my Bitcoin wallet and joining a mining pool. We got our first Bitcoins some hours later! They were worth cents at the time, but It felt like magic digital money!
Those USB miners weren’t impressive; it would have taken months to reach the $200 investment (according to our calculations). So we agreed to purchase a more powerful miner (around $1k) and split the cost. We calculated our investment would be covered in less than two months, and after that, it would be magic internet money. Exciting!
This is a “Butterfly Labs” Bitcoin device similar to what we purchased and set up in the server room…
A couple of days later, we got our device and set it up in the company’s server room. It was a small space, and nothing major was happening to be honest. We didn’t have a big data center; the room just stored two or three servers and several telecommunications devices. It was the perfect place. At that time, high energy consumption wasn’t a big topic, but we checked the specs, and the accountant (who also paid for the office rent and services) said he was going to monitor the costs, just in case.
Then, one day, the founder came to the office and noticed some strange noise coming out of the server room. I remember getting nervous, as we forgot to tell him anything about our little mining business.
We are trying this new Bitcoin miner thing… Have you hear about Bitcoins? - We asked him, acting casually…
He said yes, looked at the device again, and… started laughing very hard.
You hire a Swiss engineer and a couple of months later he creates a bank in your office! (remember, my Swiss colleague just joined the company a few weeks before).
And left to his office, without paying much attention.
So we went on. I took care of the wallets (smart 😉) while the Swiss and the Iranian constantly checked the calculations and the miner production. The Mexican kept an eye on the energy consumption to ensure we didn’t surpass any crazy limits. Everything was going well… I’d like to tell you we expanded our mining business, moved to El Salvador, and are billionaires now. But something happened.
One day, my colleague from Iran told us there was a drop in the miner’s production. He said it was almost half. What was going on? It is called a currency with a finite supply. In other words:
Bitcoins are created each time a user discovers a new block. The rate of block creation is adjusted every 2016 blocks to aim for a constant two week adjustment period (equivalent to 6 per hour.) The number of bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 210,000 blocks, or approximately four years.
The result is that the number of Bitcoins in existence will not exceed slightly less than 21 million.
Basically, our early calculations were wrong because the device we purchased decreased its production much faster than we anticipated. Therefore, we wouldn’t earn enough to cover the costs as fast as expected and panicked. We listed the miner back on eBay and sold it quickly, getting around our initial investment (+ some mined Bitcoins). I guess you could say we were one of the first paper hands…
While this was happening, I wanted to invest more in these mining things. After all, I didn’t have much money (this was my first job), so I convinced my dad (I don’t know how) to lend me some money to buy more of these weird-looking devices. It took me a while, but he agreed to give $5k.
I never took the money. After the experience with my colleagues, I didn’t continue with my Bitcoin endeavor. I know, I know… What could have been? By the way, I left some of those mined Bitcoins on my company laptop… Those should be worth anywhere between $1k to $5k now (probably wiped out after the system reboot when I handed my computer back). Over the years, I saw this cryptocurrency rising, but I always thought it was too late. I repurchased some cryptos in 2019 (primarily altcoins).
My colleagues and I stopped our experiment and returned to our real job. We were building some exciting stuff back in those days. This machine could make calls, produce sounds, record, react and transmit information through the power line.
Why, even though we were at the right time, we couldn’t seize the opportunity? I’ve thought a lot about this over the years, and the reason is we didn’t understand the real Bitcoin’s value. We concentrated too much on the mining and techy aspects, not on the long-term vision. We never even discussed the possibility of it going up in value. That is easy to say now, but at the time, we thought this currency would remain stable, and it was mostly about generating coins (not really about it mooning). Again, this ended up happening because we didn't think about the possible use cases and applications (such as Defi, NFTs, decentralization, etc.). We didn’t have a clear conviction.
Looking back, this was a great learning experience for me. This “missed” opportunity taught me to look for the long-term implications, evaluate all the variables, and avoid doing things just to make a quick buck. I don’t think I would have gone all-in into NFTs without being so close to catching the Bitcoin wave.
Until next time,
- Kaloh
No comments yet