An Auckland man sold his house and spent all the proceeds on trying to make his fortune through virtual currencies.
The 30-year-old IT professional, who didn’t want to reveal his identity, has created a “virtual-currency mine” at a secret west Auckland location; a small room filled with incredibly powerful computer hardware that trawls through millions of transactions a second.
The man first became interested in the monetary phenomenon in 2013 when the price of a bitcoin was about $1. Earlier today, bitcoin was worth in excess of US$18,000.
Despite an unremarkable start to his venture, a friend suggested he purchase more equipment to increase his returns.
“Then we got talking: What if we put $5000 into it? What if we put $10,000 into it? What if we sold the house and put it into all of these?
“That’s literally what I did: Sold the house in Hamilton and here we are today.”
With the $60,000 equity he received from the $300,000 sale, he purchased the expensive, high-powered computer equipment necessary for a lucrative virtual-currency mine and spent over 400 hours researching how to set it up and find pay dirt.
Fans whir constantly in the 35C heat so his expensive equipment doesn’t crash, but other than a $1500 a month power bill, the digi-miner doesn’t have to lift a finger other than to flick through his smartphone and watch his virtual money rise and fall in value.
And so far it’s mostly been rising – at an astounding rate. In just three months the man has funded his $30,000 wedding and honeymoon, as well as a trip to Fiji.
Being a virtual currency miner doesn’t actually involve purchasing bitcoin or its hundreds of equivalents. They are essentially auditors who are paid a tiny fraction of the cost of digital transactions for assuring that a currency is genuine and available.
“I get rewarded for validating and verifying that people have the cryptocurrency … [and] that if they try and send it to somebody else they’re not trying to be fraudulent,” he said.
Despite the exorbitant power bill, he said he’d already recouped the money he’d spent from the sale of his house.
Anyone with a half-decent computer could become a virtual currency miner, just on a far smaller scale.
“A normal computer could make you $2, $3, $5 a day just by mining these virtual currencies,” he said.
“And that’s the thing, what you mined yesterday could be worth $10 tomorrow or could be worth $100.”
The Aucklander doesn’t actually deal directly in bitcoin. His focus is on other, less well-known virtual currencies like DigiByte and Zcash. He then trades these for bitcoin and, in turn, sells that for traditional money.
Should the bitcoin bubble burst, as has been predicted by many commentators, the man hopes the value of his minor virtual currencies will soar.
However, bitcoin remained “the Greenback” against which all other virtual currencies were measured, he said.
“If you were to take $100,000 and put it into a term deposit you’d get back, what, 5 per cent over five years, 10 years? I mine more than that overnight,” he said.
“I’ve woken up some mornings and I’ve lost $2000 overnight due to the price fluctuations. [But] the good mornings outweigh the bad mornings and unless you’re in a hurry there’s nothing wrong with sitting on it for six months or 12 months.”
He was under no illusions that it was still uncertain territory and that virtual currencies could crash and burn. On the other hand, he still had visions of an early retirement, sipping cocktails on a Pacific Island.
“That’s why I bet the house on it.”