Matthew Brown and Carl Shaw have been mining bitcoin for a decade. Josie Adams asks them why they still believe – and how they answer criticism about mining’s environmental impact during a global climate crisis.
In early 2018, shoppers at Queen Street’s The Strand Arcade had clammy feet. The ground was hot and making a rumbling noise. In a basement underneath the building, 250 1,350-watt Asic machines, plus a bunch of Mitre 10 pedestal fans, were plugged into the wall.
The two young and sweaty guys responsible for this ruckus in downtown Auckland were in their seventh year of mining bitcoin. Carl Shaw and Matthew Brown had spent all the money they had on these mining machines, large rectangular bundles of microprocessors, which were $4,000 each. The men didn’t know it yet, but were about to lose all their money – again.
That year the price of bitcoin crashed, and their holdings crashed with it – from around $3 million to $125,000. The council kicked them out of The Strand when hotel guests across the road complained they couldn’t use the microwave. The transformer was drawing the power of half a block of Queen Street.
They had nowhere to go and no money to do anything anyway – but that wasn’t the first, second, or final straw for these two aspiring bitcoin millionaires.
The infamously electricity-hungry bitcoin is a kind of money, but digital. Mining bitcoin is sort of like mining gold but instead of pickaxes hitting rocks, computers solve puzzles. When the bitcoin network reckons the computer’s done enough it rewards it with a bitcoin block, a big chunk of bitcoins. This is why bitcoin mining is also called “proof of work” – the computers prove they’ve done some work, and get a reward.
Bitcoin enthusiasts like Brown and Shaw believe they can return power to the people by taking finance out of the hands of central banks and governments. The first bitcoin ever mined came with a message from its creator, the mysterious Satoshi Nakamoto. The message was a news headline that spoke to the coin’s purpose: “The Times Jan/03/2009 Chancellor on brink of second bailout for banks.”
It was an ideology a young but already jaded Brown could get behind. He began his career as an apprentice at Goldman Sachs, where he learned how companies invest and source funds. “I got an overview of how it actually works, and came to believe it’s not right, what they tell you.”
He came to understand the traditional standard for borrowing money – that loan money is based on gold – was no longer practised. “That was all dropped in the early 1970s. A bank doesn’t actually need gold. They can inflate the price and invent it, pretty much. It’s not real.
“It increases inflation, which is pushed out onto the masses, which isn’t really fair. And that’s where my interest comes from.”