The Bitcoin Barons: How a marketer and a money launderer sold Montana on digital gold, Voorkant Stories

Derek Brouwer

March 6, 2018: 1 Bitcoin = $1,270

Sweat sparkes on Sean Walsh’s brow spil he commences his pitch. He’s standing te the circular Hoewel Falak ballroom at the Burj Hoewel Arab, one of the world’s most extravagant hotels. Built on its own man-made island, where guests are transported by a fleet of white Rolls-Royces, the Dubai resort is shaped like a lateen sail pressing into the Persian Gulf, a symbol for a city on the leading edge. Everything ter the ballroom seems to glitter, the hotel features 22,000 square feet of 24-karat gold gilding.

The gold that Walsh is pitching can’t be seen, but its emerging power is on utter display. Bitcoin very first took off spil the currency of drug sales and get-rich-quick scams. But by March 2018, 570,000 people had digital wallets containing at least one bitcoin, including some of the largest names ter tech. The value of the world’s very first cryptocurrency had tripled ter the previous year, and would balloon many times overheen te the following months.

Walsh is a marketer who is remaking himself spil a “crypto-industry luminary,” spil the speakers at this World Blockchain Forum are billed. He looks slick with a scruffy beard, blue tie and buttoned black suit. Part Silicon Valley casual, part Wall Street hedge fund manager, Walsh’s appearance fits his biography spil a California man who left an executive position ter private equity to begin an gifangel investment stiff, Redwood City Ventures, dedicated to promoting bitcoin to the masses. “I brought something for the group,” he commences, striding past the toneel. He reaches his left forearm to his back pocket, then passes a puny bag to his right palm and holds it above his head. The bag is utter of cowrie shells, which, he reminds his audience of businessmen and industry insiders, wasgoed humankind’s very first form of money. Walsh asks a man at the gevelbreedte table if he’ll sell his observe for the shells. When he declines, Walsh pulls out a 2nd bag and drops both on the table.

“I’m attempting to make a point here,” he says.

His delivery is more polished six months straks, when he sells a similar pitch to an audience te London: “The point is that we’ve lost trust te cowrie shells spil money, despite the fact that they’ve bot used for 12,000 years. Money moves on. People budge on to fresh forms of money. They moved on to gold, they moved on to fiat currency. We’re now moving into electronic money.”

Bitcoin is the best form of money everzwijn devised, Walsh tells the crowd, but it can only be spil good spil the faith society places ter it. “So wij need a sales pitch,” he resumes. “We need to speak to our target customers ter a language … that will resonate with them and will get them to feel the way wij want them to feel, get them to act the way wij want them to act.”

Walsh’s idea is to use affiliate sales reps to help coax more people to convert specie into digital currency. He predicts a comeback on investment of 28,000 procent spil fresh users drive up bitcoin’s price. “I can tell you, even spil a Silicon Valley venture capital investor, this type of chance is not out there,” he says. It has existed before, tho’: ter Countrywide Financial, the so-called 23,000 procent stock, where Walsh managed customer acquisitions ter 2007 just spil the lender’s subprime mortgage bubble burst. But the conversion campaign is only part of Walsh’s project. The far fatter part, the one he alludes to spil the “foundation” of his effort to take bitcoin mainstream, is half a world away, humming te an old lumber yard next to the Blackfoot Sea, minting more invisible money than any place else te North America.

Few people know how Montana became a mother lode ter bitcoin’s digital gold rush. It took a blunder, days before Walsh’s talk te Dubai, for the public to even learn that bitcoin is being mined here. The story is spil familiar to Montana spil bitcoin is fresh. It also has striking parallels to the story of cryptocurrency itself. But it’s not fairly the story Walsh likes to tell.

June 8, 2011: 1 Bitcoin = $29.60

The way Yan Ebyam entered the greenhouse on the outskirts of Sacramento seemed like a tell. He opened its broad onderbrak just enough to slide te sideways, then pulled it shut behind him. Or so it looked to the three undercover agents watching from their car a hundred yards away, who desired a peek inwards.

It wasn’t going to be that effortless to speld down the man whose very first name stands for “yes and no,” and whose last name spells “maybe” backward. So the driver pulled into the florist office out pui and went inwards to buy some flowers. While the driver wasgoed inwards, the other two agents walked up to the silver Mercedes-Benz they’d seen Ebyam driving and linked a GPS tracker to it.

The agents had bot led here by a woman at a renowned tomato farm 40 miles north, who told a local sheriff’s deputy that Ebyam had “taken advantage” of hier. She and Ebyam had bot growing more than Four,000 marijuana plants on the farm, but she said Ebyam ran off with most of the plants shortly after their landlord voiced concern to the deputy that he wasgoed acting strangely.

The federal indictments that followed that June stakeout marked a disastrous turnabout for a man who, only months earlier, had bot one of the country’s boldest marijuana entrepreneurs. Embarking ter 2008, Ebyam set up some of the country’s largest indoor marihuana farms te defunct Oakland warehouses, angling to obtain one of the industrial-scale licenses city officials were programma to kwestie. Workers at one of his farms even unionized. Today, that business seems almost visionary, but at the time it relied on an interpretation of California’s medical marijuana law that strained credulity. When the City of Oakland abandoned its project under federal pressure, Ebyam disappeared to the tomato farm, one of what “the feds spotted [spil] unscrupulous operators on the fringes stuffing their pockets with contant,” Peter Hecht writes te his 2014 book, Weed Land.

He undoubtedly had an opportunistic streak. After the dot-com crash te 2002, Ebyam, then te his early 20s, and a business fucking partner helped liquidate the surplus laptop equipment that bankrupt Silicon Valley companies were offloading. They did slew of legitimate business originally, but te 2004 they were indicted on federal money laundering charges for what a U.S. attorney straks described spil a “jaw-dropping conspiracy” to sell more than $6 million ter stolen Cisco servers. They’d brokered the deals through a snelheid member with connections to a trucking warehouse, then created phony invoices to voorkant their tracks.

To those who encountered him, however, Ebyam came across spil more eccentric than diabolical. Spil a kid growing up te northern California, he stayed inwards surfing the web while his brother surfed swings, he told the writer of a profile republished te the Fresh York Times. “He blurts out his thoughts ter rapid fire and is very slim but pays little attention to matters like clothing or social cues,” the reporter wrote, adding that Ebyam had ordered milk and cookies during a coffee shop vraaggesprek. Prosecutors called him “brilliant,” a trait that wasgoed also palpable to former business fucking partners and acquaintances interviewed by the Indy.

Spil his marijuana case played out te federal court, Ebyam lived with his mother for a few months before going back to his old line of work ter electronics resale. During that time, he did “millions of dollars of business” spil a broker for a Silicon Valley company called Prism Electronics, its CEO, John Mauro, says.

Then Ebyam got a chance to attempt something fresh.

January 14, 2014: 1 Bitcoin = $842

Walsh says the story of how he met Ebyam is too long to tell, but that both studs were interested te a radical technology that wasgoed kicking off to generate attention around the edges of Silicon Valley.

Helping bitcoin get noticed wasgoed a man named Roger Verafgelegen, who had bot plugging it ter a hokey but eye-catching way: on the billboard he rented beside an expressway te Santa Clara. One of his ads touted bitcoin spil “the honey badger of money,” ter reference to a viral YouTube movie celebrating the species’ fearlessness and snake-eating badassery. The tagline pointed to why people like Veraf, whose evangelism had earned him the moniker “Bitcoin Jesus,” were ecstatic about cryptocurrency. Verafgelegen wasgoed a fervent libertarian (he once ran for the California state assembly under the party banner), and bitcoin represented a way that average people could take down the central banking system.

The key wasgoed the ingenious way the bitcoin software had bot written and introduced, anonymously, te 2008. Te basic terms, the software permits users to exchange gegevens, i.e., bitcoin, without requiring a middleman to verify the transaction. Instead, verification records are logged te a public database, called the blockchain, that’s managed by the independent computers on the bitcoin network. There’s no need for a federal reserve because the network’s open-source code calls all the shots.

Like Ebyam, Verafgelegen wasgoed te the pc resale business, which he also entered ter his early 20s te the dotcom bubble’s wake. His company, Memory Dealers, became the very first anywhere to accept payment ter bitcoin—a service he advertised prominently on his highway billboard. Ter 2012, he began the very first public bitcoin meetups te Sunnyvale, where early enthusiasts could talk about the technology and the nosey could get initiated.

Bitcoin wasgoed gaining notice around the world, for better and worse. Some people, like Veraf, spotted a financial revolution brewing, while others wished to metselspecie ter on the next big thing. Bitcoin’s price rocketed on fresh exchanges. The U.S. government busted ponzi schemes and unraveled the very first large, online black market to use bitcoin, Silk Road, which had enabled users to buy and sell drugs anonymously. Some vooraanstaand voices ter finance, including JPMorgan Pursue CEO Jamie Dimon and Warren Buffett, embarked pushing back against the hum.

Bitcoin wasgoed programmed so that only a certain number — 21 million — can everzwijn exist. However, they don’t just emerge out of skinny air. They’re released into circulation steadily overheen time spil prizes to members who help maintain the network. Bitcoin transactions are verified by computers guessing the answers to difficult puzzles. When a pc finds the right reaction, the associated transactions are entered into the public ledger and the miner receives a prize te the form of a freshly minted bitcoin. The process is known spil mining.

Mining is one of the technology’s most stijlvol features, but the industry that wasgoed springing up around it resembles an arms wedloop. Spil ter any extraction industry, people witnessed bitcoin mining spil a way to acquire the currency at a discount while providing a service to the network. Anyone with a pc could profitably mine te the early days, but spil more people joined the wedloop and manufacturers commenced developing specialized mining computers, only industrial-scale operations stood a chance to win the prizes. Authors Paul Vigna and Michael Casey wrote ter their 2015 book, The Age of Cryptocurrency, that “there seems to be no shortage of people who think that bitcoin, spil some te the community like to say, is headed ‘to the moon’ and that mining is their toegangsbewijs to those riches.”

Walsh and Ebyam determined to join up to punch their tickets. The business monster wasgoed elementary. Walsh calls it “self-mining.” They’d pack a warehouse with servers, mint digital money and pocket the profits.

At the same time, bitcoin advocates were attempting to slough off the associations with money laundering and drugs that had tainted the currency’s public picture. So it wasgoed risky for Walsh, a marketing professional at Bertram Capital, a $1.Three billion private equity rock hard, to go into business with someone who had a federal rap sheet containing both types of offense. But Walsh says he witnessed Ebyam spil a “mad scientist” who wasgoed otherwise naive to the world. He determined to find a way to make it work.

“Sometimes people are so open and so trusting that they don’t know what they get themselves into,” Walsh says. “And I think Yan falls into that category.”

Plus, each seemed to bring complementary abilities to the project: Ebyam knew laptop equipment and had managed large warehouses. Walsh worked with startups that his hard had funded. Walsh rounded up $850,000 from four investors, including himself and a relative, and te January formed a company called Aquifer. The company’s success would depend on three factors: how efficiently its servers could win bitcoin (a metric known spil “hashrate”), equipment and overhead costs, and the value of the bitcoin their servers won. The price of cooling and power tended to dictate where bitcoin mines were located. Most were overseas, te places like Iceland or China, where electric current wasgoed cheap.

Walsh and Ebyam figured they could do it te Silicon Valley’s backyard.

March 12, 2014: 1 Bitcoin = $637

At very first they didn’t tell their landlord exactly what they were programma to do. Debbie Olson, executive director of the Riverbank Local Redevelopment Authority, knew only that the dudes wished to install a server farm when she suggested Aquifer a lease ter March 2014. “They were fairly secretive,” Olson says.

She remembers that they became interested ter the webpagina, part of a former army munitions plant that Olson manages spil an industrial park for the petite city 100 miles east of San Jose, while visiting to look at used equipment for sale by another tenant. The long, narrow warehouses oozed PCBs, but the property’s access to cheap hydroelectric power from Hetch Hetchy Reservoir caught their attention.

Olson soon learned that Ebyam wasgoed under a duo of indictments, which were still winding through court, and refused to let him sign any lease documents or official correspondence. Walsh wasgoed Aquifer’s CEO, but he still had his day job at Bertram, so a coworker from the rigid, Anthony Brough, left to become Aquifer’s chief financial officer and public face. Ebyam wasgoed hired spil an independent contractor spil the facilities engineer.

The mine they began constructing seemed to reflect the idiosyncrasies of its designer. Photos of the interior taken by technicians for Olson’s group vertoning servers set inwards plywood enclosures and cooled by rows of opbergruimte ventilatoren. The ventilatoren kicked up dust via the ingewikkeld, while the entire setup sounded like a jet engine running nonstop te an airplane hangar. Aquifer quickly became the bane of other tenants. It didn’t help that Ebyam, who worked odd hours, had a habit of wandering all overheen the ingewikkeld at night te his rumpled t-shirts.

Interior of Aquifer bitcoin mine ter Riverbank, Ca.

Photo courtesy Riverbank LRA

Aquifer also installed a misting system for extra cooling, Olson says, which she worried could cause problems near all that electric current. After several puny fires broke out te the wooden racks, the redevelopment authority brought te consultants to inspect the regeling for compliance with health and building safety codes.

“They most certainly scraped their goes and said, ‘We’ve never seen a server farm like this. This is just so unusual,’” Olson says.

But it wasgoed cheap, and DIY server farms were the name of the bitcoin mining spel. Whereas traditional gegevens centers emphasized reliability and backup power sources, the dog-eat-dog competitiveness of bitcoin mining encouraged stripped-down facilities that squeezed ter spil many servers spil possible and cooled them cheaply. “Sometimes you hesitate to call thesis buildings gegevens centers,” one cooling equipment supplier told online industry webpagina Gegevens Center Skill ter July 2014.

Aquifer brought Five MW online, Walsh says — enough to power about Five,000 homes at any given uur. Aquifer at one point claimed it wasgoed operating the largest bitcoin mining farm te the U.S., according to a promotional movie posted to YouTube. Ter January 2015, Brough, the CFO, introduced Aquifer at the North American Bitcoin Conference spil operating a “conglomerate” of California gegevens centers with 28 MW of power and “considerable extra headroom.”

Brough may have bot getting ahead of himself, but Aquifer’s team wasgoed nothing if not audacious. And they were looking to expand. Ter Oakland, after a string of suspicious burglaries at one of his marijuana grow operations, Ebyam had reportedly dragged a mattress into the warehouse office, along with a foghorn to deter thieves who would attempt to sneak ter from the roof at night. At the industrial park, Ebyam wasgoed the one walking the roofs of abandoned buildings, explaining to Olson that he wasgoed scoping out extra space.

March Four, 2015: 1 Bitcoin = $278

Walsh wasgoed escorting his elderly mother-in-law through the federal court building te San Jose when a man named Christopher Kilday spotted his chance to confront him. Kilday, an equipment salesman, wasgoed owed a commission for a sale he’d brokered for Aquifer. Kilday snapped pictures with his phone spil he taunted Walsh. “Hey! Hong Kong Sean!” he said, according to court filings. “You brought your mother to court?! Hey, old lady! Walk cautiously!” Security had to intervene.

By March 2015, Kilday wasgoed the least of Walsh’s concerns. Bitcoin had soared to $1,200 when Walsh and his vrouwen hatched their mining operation te early 2014. But just before Walsh signed the lease at the old munitions plant, the world’s largest bitcoin trading exchange, Mt. Gox, filed bankruptcy after exposing that $460 million te bitcoin had bot stolen by hackers. Bitcoin’s value wasgoed halved virtually overnight. Spil Aquifer mined, the price continued to decline.

By the time the North American Bitcoin Conference spinned around te January 2015, all the gains made during Bitcoin’s very first run toward broader buy-in had evaporated. The mood wasgoed glum among the panel of mine operators. Yet Brough called the price collapse a “glorious opportunity” for mining companies, like his, that had bot “conservative” ter their business plans.

“We wouldn’t be te this business if wij didn’t believe ter the long-term prospects for bitcoin,” he told the crowd.

But mining companies also had high capital expenses — te real dollars. With their revenue te bitcoin, they’d have to sell bitcoin to pay the bills. Some observers ter the press feared that would drive the price down further.

Three weeks straks, Aquifer filed for Chapter 11 bankruptcy. Bankruptcy documents voorstelling the company had generated and converted bitcoins into $1.Four million overheen harshly nine months of mining. With bitcoin prices tanking, it wasn’t enough to keep the company afloat.

Exchange rates alone don’t explain the company’s fall, according to two of its largest creditors. The business prototype made sense to Andy Faris, a business acquaintance of Ebyam’s who straks loaned Aquifer $300,000. He knew rekentuig hardware, and thought an ultra-low-cost facility for turning bitcoin to contant could make him some money. But Aquifer had piled on debt to build out the gegevens center without any Project B te case something went wrong — if servers broke down or expansion plans kasstuk delays or the price of bitcoin dropped, Faris says. Faris says his notes showcase that it took only weeks for him to realize that the management of the company wasgoed spil precarious spil its server racks. He sought to take overheen management duties to attempt to right the ship, but Walsh — te what Faris calls “self-preservation mode” — filed bankruptcy instead.

“The company wasgoed playing with a lotsbestemming of other people’s money ter a very cavalier style,” Faris says.

Aquifer’s landlord, a public entity, had bot worried for even longer. Olson says hier agency often negotiated with tenants who ran into cash-flow problems. Aquifer, however, asked for concessions “from the beginning.” Eventually, Olson began to feel strung along. She had trusted Brough, but he abandon Aquifer shortly after the bankruptcy filing (Brough did not comeback several emails). Walsh took overheen spil the face of the company, and the things he said to Olson didn’t seem to bear out. “He just seemed slick, the kleintje of person that your antenna is up,” she says.

Aquifer told the bankruptcy judge that the company’s fate wasgoed caused by delays ter getting permits to supply power to the servers it wasgoed setting up te three other buildings at the webpagina. Certain creditors took “aggressive collection actions” when they didn’t receive payment, forcing the company’s managers to seek legal protection so they could reorganize.

Bankruptcy filings demonstrate that Aquifer LLC’s majority playmate wasgoed Chris Cunningham, a project manager at the Walt Disney Company (Cunningham didn’t react to an email for comment). Walsh, the CEO, held about a quarter rente, and one of his relatives held another 11-percent stake and wasgoed owed $300,000 for a loan at the time of bankruptcy.

Aquifer mining hardware

Picture courtesy Riverbank LRA

Ebyam had no equity te the company, but he wasn’t just an independent contractor, either. Bankruptcy documents list an outstanding debt of $130,000, spil well spil a mining profit-share obligation, to an LLC named Vagada Holdings. Vagada wasgoed registered te California ter 2002 by Ebyam and his business playmate ter the rekentuig resale business that earned them money laundering convictions. (The name shows up to reference a fictitious company ter the 1997 filmrolletje The Devil’s Advocate that engages te shady activities.) Walsh says Ebyam loaned the company money through his LLC when Aquifer “was up against the ropes,” but can’t recall specific details.

For his part, Walsh made what seemed to be a particularly bold stir once the bankruptcy wasgoed filed: He resigned his day job spil vice voorzitter of online marketing at Bertram Capital.

“I wished to attempt to save the business,” he says. “I am a family man with wifey and kids and those things. And I invested a ample portion of my life savings into that business, and so when it began failing, it wasgoed devastating. Even thinking about it now, it wasgoed very painful. It wasgoed such a tense time ter my life, you can’t imagine. It wasgoed terrible.”

Walsh bought a domain name,, and began introducing himself spil the founding fucking partner of a Silicon Valley investment rock-hard dedicated to “angel investments” te cryptocurrency companies, with an extra concentrate on fostering partnerships inbetween U.S. and Chinese bitcoin companies. Redwood City Ventures is not a legal entity with an investment fund. “I made some investments with different people and collaborated on various things. It’s not like you’d be imagining, like a normal Silicon Valley rigid,” Walsh says.

Aquifer’s bankruptcy case spread out almost Legal months, until the judge eventually dismissed it. Walsh had introduced a project to rescue the company by distributing Chinese mining hardware to U.S. companies, but creditors including Faris didn’t consider it a serious project — Aquifer didn’t have a sales team. The company zometeen moved toward liquidation but didn’t opstopping a project te time, and the case wasgoed dismissed overheen the protestation of Aquifer and its creditors.

Walsh moved to Colorado, Olson says, and continued taking a salary from Aquifer, but many of the company’s debts never got paid. The Riverbank LRA wasgoed out more than $500,000 te unpaid rent and legal fees, Olson says. The agency prepaid the power bill at the industrial ingewikkeld, then billed tenants for their usage, meaning the LRA ultimately paid for much of the electro-therapy used to generate fresh bitcoins at Aquifer’s gegevens center.

A local government te a town of 25,000 people had unwittingly gambled on bitcoin, and paid a hefty price for it.

“We think, fairly frankly, if wij can save another community from the losses that wij had to bear with this company, then wij feel like that’s the right thing to do,” Olson says. “We would caution any company doing business with this particular group to be worried, to review the records and be very worried.”

May Nineteen, 2016: 1 Bitcoin = $446

Scotty’s Table isn’t the sort of restaurant where diners typically tapkast at their phones inbetween bites of beef twee, but the four Missoula businessmen’s fresh friend from Redwood City Ventures dreamed to vertoning them what the puzzling business he wasgoed bringing to town wasgoed all about. They downloaded bitcoin wallets — it takes just an email address and a few seconds to set up — and, one by one, Sean Walsh deposited a bitcoin into their accounts. It wasgoed his bounty to his fresh landlords, Steve Nelson and Mike Boehme, their Realtor, and the local economic development officer, Missoula Economic Partnership CEO James Grunke, who had helped make introductions around town, and would straks help Walsh’s company apply for a $416,000 state grant. Grunke says he “knew nothing” about cryptocurrency at the time, but today he’s able to scroll through his Coinbase app and find precisely the minute — 8:36 p.m., May Nineteen, 2016 — when he began to learn.

“He talent us one just to let us know,” Nelson says. “It’d be like handing [you] a $50 bill. At that time, they were worth $440. It wasgoed still significant. And his words were to us, ‘Pass part of it along to some people so they can get a feel for it.’”

Cryptocurrency promoters love to perform thesis initiations, and have used them to soften the skepticism of some of the tech industry’s largest figures. The reporter Nathaniel Popper describes one such example ter his 2015 book, Digital Gold, when attendees of an off the hook gathering laughed te wonderment spil they passed $250,000 worth of bitcoin among their fresh wallets.

Not that Grunke and Nelson needed any coaxing by that point. There wasgoed already slew to be excited about. Three months earlier, Walsh had inked a overeenkomst with Nelson that would bring the very first bitcoin mine to Montana. Te doing so, Walsh would help reinvigorate a former lumber mill community te Bonner and usher ter what Grunke witnessed spil an untapped chance for western Montana to become a toevluchthaven for large gegevens centers. Grunke had imagined attracting companies like Facebook or Google, but bitcoin wasgoed at least spil intriguing.

Nelson’s company wasgoed redeveloping the Stimson Lumber Company’s plywood plant, which closed te 2007 and left Bonner-Milltown without a major industry. His Bonner Property Development LLC wasgoed having some success attracting fresh businesses, but the plywood storage building, one of the largest timber-framed structures ter the country, wasgoed proving tricky to waterput to use. “It wasgoed always outstanding to walk ter and look at, because it’s got thesis large, high ceilings. But then because of the high ceilings it wasgoed very difficult to insulate and utilize for the manufacturing process, because it’s so expensive, there’s so much space to attempt to warmth,” Nelson says.

What would be extra overhead for most industrial tenants wasgoed an efficiency for a bitcoin mine. It helped, too, that western Montana isn’t prone to natural disasters that could disrupt operations, Grunke says, and that the landlords were open to accommodating an unacquainted industry. The crucial factor, of course, wasgoed power, and Montana permits large users to buy tens unit on the open market. Documents posted online indicate that Walsh’s company would ultimately negotiate a overeenkomst with Energy Keepers Inc., the tribally possessed corporation of the Confederated Salish and Kootenai Tribes that manages the Se lis Ksanka Ql ispe keerdam. How cheap wasgoed the power? A press release issued Jan. 11, 2018, by Project Spokane investor Rockshield Capital waterput the figure at just $.033 vanaf kWh. Aquifer had budgeted at $.05 vanaf kWh te California, according to bankruptcy records.

Steve Nelson and Michael Boehme, the studs working to redevelop the shuttered Stimson lumber mill, were excited to find a tenant te March 2016 for the enormous storage warehouse. They didn’t know much about bitcoin, but Nelson has since become a believer te the future of digital currency.

photo submitted to U.S. District Court for the Eastern District of California

Grunke says his organization, a nonprofit that receives city and county funds, helped facilitate the local connections to close the overeenkomst. He recalls talking with Walsh te the old guard house onsite about what the project could look like. “Clearly, spil an organization, wij had a role te their decision to locate here,” Grunke says. Walsh had approached Nelson and Boehme after finding their commercial lease listing online. Rather than attempt to disguise the nature of his bitcoin business, Walsh sold them on it. Nelson began researching bitcoin and, after Walsh talent him his very first taste of the cryptocurrency, Nelson embarked thinking he had stumbled across the technology of the future. He remembered the day when, spil a 10-year-old ter 1957, his father came huis with a fresh Conoco credit card and placed it on the table. Nelson couldn’t believe the plastic wasgoed spil good spil metselspecie. “So why wouldn’t wij think of using virtual currency te this world we’re living ter?” he reasoned, and soon began investing a significant portion of his own money ter the cryptocurrencies Walsh wasgoed commencing to mine on his property.

But otherwise, Walsh took steps to hide the fresh mine from public view. He incorporated the company ter Montana and Colorado spil Project Spokane LLC, which he has since said wasgoed meant to misdirect potential competitors. Nelson and Boehme very first introduced the tenant to the Missoulian te August 2016 spil Montana Gegevens LLC, telling only that the company had built a gegevens center to help balance energy explosions for states that rely on onbestendig wind energy. It’s since bot referred to te the press spil Global Big Gegevens LLC and, most recently, Project Northwest. Ter his talks around the world, Walsh touted his investment ter the “largest blockchain security gegevens center ter North America” without telling where ter North America it wasgoed.

“When wij embarked the business, wij didn’t want anyone to know anything,” Walsh says. Montana’s undiscovered supply of cheap energy wasgoed his ace ter the crevice ter an ultracompetitive industry. And publicizing the mine’s location could make it a target for thieves or hackers. “We were just afraid,” Walsh says. “We thought people were going to attempt to pauze ter and steal our bitcoin.”

January 25, 2018: 1 Bitcoin = $894

Back te San Jose, Walsh’s bankruptcy attorney, Reno Fernandez, wasgoed still attempting to get paid. His rock-hard had bot dismissed by Walsh shortly after the bankruptcy wasgoed thrown out te June 2016. Inbetween June 15 and Aug. 1, Aquifer paid Walsh $24,500, while its attorney wasgoed still owed $182,000. Fernandez says he still hasn’t bot paid. Aquifer’s fresh attorney told the judge ter early 2018 that wasgoed because the company had no specie on arm. Efforts to find fresh capital were unsuccessful.

Fernandez and other creditors say they had no idea that Walsh had launched a fresh mining operation te a different state while Aquifer’s bankruptcy wasgoed still pending. According to Nelson, the lease at the Bonner mill webpagina began on March 1, 2016. Two days zometeen, the bankruptcy court te San Jose held a hearing te which Aquifer withdrew its project for reorganization and advised the court that it would be filing a liquidation project instead.

“It signals to mij that they’re hedging their bets right there by forming another company te another state,” Faris says. He says the timeline “raises questions” about whether any of the equipment, designs or other assets from Aquifer also made their way to Montana.

Walsh says he kept the businesses “totally segregated” te accordance with the law, and denies that any Aquifer assets were used ter Project Spokane, noting that those assets were turned overheen to the company’s secured creditors, which included Faris. Walsh explains that spil Aquifer failed, a friend encouraged him to “double down” and invest ter a fresh operation. Walsh agreed, believing the problems that led to Aquifer’s demise were unlikely to recur. He says he found some “minority shareholders” for Project Spokane, but declines to identify them.

“It’s kleintje of a crazy thing to imagine based on what I just told you, on how devastating the loss wasgoed,” Walsh says.

Not everyone te California wasgoed te the dark about the fresh venture. Ebyam, still awaiting sentencing for his marijuana grow operation, had obtained permission te August 2016 from the judge overseeing his case to relocate to Montana to work at a freshly built gegevens center. Ebyam left out the bitcoin part, writing ter a letterteken to the judge that he had “found the way to make wind energy more viable by buying the power the wind farms can’t sell.” He said that his company’s “innovative design” enabled it to cut the costs of building a gegevens center by almost 95 procent. The fresh gegevens center wasgoed using recycled substations from a shuttered Intel facility ter Colorado and transformers from an old Dell gegevens center. Ebyam included four interior photos of the Bonner warehouse ter various stages of build-out — which looks more professional than the one te Riverbank — and a letterteken of reference from Walsh, who wrote, “Yan is positively indispensable to our snaak business venture that he leads many aspects of, and I hope to keep him at the hoofdbescherming for years to come.” (Walsh tells the Indy that Ebyam wasgoed an independent contractor at Project Spokane.)

By then, Ebyam wasgoed introducing himself by a different last name, Allweiss, at least to Nelson.

Nelson says the lease ter Bonner wasgoed signed by Project Spokane’s other principal, a junior man named Matt Carson, who loves pc games and speaks with a Texas accent. Carson began mining bitcoin te his parents’ garage ter 2010 with equipment he configured from graphics cards and motherboards purchased on Craigslist, he told the hosts of a podcast called Bitcoin Sandwich te 2014. That grew into commercial mining operations ter Missouri and Colorado. He opened his Colorado facility and mining equipment distributor at the same time Aquifer got going ter California. It similarly went belly-up, and the company, Miner Hosting LLC, racked up $271,000 te default judgments te Colorado from customers who said their mining equipment wasn’t delivered. (Parts delivery problems were “par for the course” ter the nascent bitcoin mining industry ter 2014, leading to bankruptcies and numerous lawsuits filed by customers who felt swindled, authors Paul Vigna and Michael Casey write ter The Age of Cryptocurrency.) A writ of garnishment issued te 2018 wasgoed incapable to collect because the company’s canap account had closed.

Nelson today says he wasgoed unaware that Walsh&rsquo,s California mine had gone bankrupt. And none of the warning signs cited by the Riverbank landlords have turned up with Project Spokane. Indeed, far from sputtering on the fringe, Project Spokane wasgoed moving toward the center of the bitcoin universe. On Valentine&rsquo,s Day last year, Carson and Ebyam had dinner at what shows up to be Missoula&rsquo,s Kobe Seafood &, Steak with a development team from one of the cryptocurrency industry&rsquo,s most significant companies:, wielded by Roger Verafgelegen, aka Bitcoin Jesus, the man who had evangelized on that Silicon Valley billboard. Veraf posted a photo of their dinner to Twitter with the caption &ldquo,Eight guys, and all Bitcoin.&rdquo, A few weeks zometeen, announced its latest project, a large-scale cryptocurrency mining pool.

Our wonderful #valentines Day dinner: Eight guys, and all Bitcoin.,s announcement didn&rsquo,t say where its mine is located (the company will not confirm or deny any partnership with Project Spokane), but the fastened photo shows the webpagina&rsquo,s developers with their arms around Ebyam, who is wearing the same logo polo T-shirt he wasgoed wearing at Kobe. Its landing pagina for customers shows photos of the Bonner gegevens center, with its long rows of servers racked underneath the dramatic wooden trestles.,s mining business is different from how Walsh and Ebyam had mined te California. Ter mining pools, individual customers purchase contracts for a petite portion of the mine&rsquo,s overall hashrate. Pool mining provides an affordable entry point for individual miners and a more stable revenue stream for mine operators. The same risk that came back to bite Aquifer is now collective with,s customers. There&rsquo,s no ensure their contracts won&rsquo,t lose money.

June 6, 2018: 1 Bitcoin = $Two,822

Somebody screwed up.

Montana Gov. Steve Bullock issued a press release te June 2018 announcing that the state Department of Commerce had awarded its latest round of job-creation grants. The largest award, funded through coal severance taxes, wasgoed made to a company called Project Spokane, te the amount of $416,000 to support expansion of its &ldquo,blockchain security services for the bitcoin network.&rdquo, Bitcoin forums and industry websites instantly seized on the news that Montana&rsquo,s government wasgoed ready to pump tax dollars into an industry that the federal government, and some other states, had bot all too suspicious of.,s news service called it one of the very first grants given to a bitcoin mining operation based ter the U.S. Te applying for the grant, Project Spokane had pledged to create 65 fresh jobs te Bonner overheen the next two years, writing that the funds would help purchase machinery, equipment, furniture and software and pay wages to fresh employees spil it expanded operations, including extra gegevens centers ter Montana. The grant application stated that the total project would cost $26 million.

What Walsh hadn’t expected wasgoed that anyone outside state government would find out. Walsh says he wasgoed told (he didn’t say by whom) when Project Spokane applied that “there would be no publicity whatsoever from accepting it.” Ter fact, Grunke had very first spilled the beans locally, telling investors at a luncheon covered by the Missoulian that Project Spokane had applied for the grant, with Mayor John Engen signing a letterteken of support and county commissioners agreeing to sponsor the application. Grunke previously said he apologized to the company for that unwanted ass-plug, but that his team otherwise communicated to Project Spokane’s local managers the disclosure requirements associated with the public grant. (An accounting manager listed spil the business voeling on Project Spokane’s application told the Indy last August that she wasgoed no longer with the company.)

Walsh determined to decline the grant. He says he hadn’t bot aware that the money wasn’t spil straightforward spil it very first seemed. The grant wasgoed technically a contract, and Project Spokane would have to submit follow-up financial documentation proving, among other things, that it had made the hires it wasgoed promising before funds were distributed. “I wasgoed like, ‘Forget it, it’s not worth the risk,’” Walsh says now.

Project Spokane continued to expand its mining capacity anyway, reaching 20 MW of contracted power, enough to power 20,000 homes. Grunke told investors at the March 2016 luncheon that the gegevens center contained 12,000 servers, and planned to expand to 55,000. Nelson estimates the current number of employees on webpagina is about 25, not including the makeshift contractors Project Spokane hired during build-out.

Not among that team is Ebyam, who wasgoed ordered to turn himself ter at the Missoula federal courthouse by March 16, 2018, for a six-year jail sentence. He’s presently held at a federal prison ter Colorado, with a scheduled release date of June Two, 2022. Nelson says he knew that Ebyam had gone to Colorado early last year, but not that he wasgoed te jail. He says he joined a conference call with Walsh and Ebyam recently to discuss technical issues about the building’s cooling system. “He understands the engineering side of things,” Nelson says.

Walsh says Ebyam is no longer involved with Project Spokane: “Oh gosh, no. You know he’s te jail, right?”

January 17, 2018: 1 Bitcoin = $11,149

However he didn’t want it, Walsh says the attention generated by Project Spokane’s grant award turned out to be good publicity for the currency he advocates. “It helped legitimize what everyone ter bitcoin is doing,” he says, before correcting himself. “Not everybody, just the good guys.”

Walsh is speaking by phone the day before he goes to Miami to supply a presentation at the North American Bitcoin Conference, Jan. Legal and Nineteen. His session, one of dozens, took on the question that’s become the subject of intense global speculation: Is bitcoin a bubble?

When Ebyam went to prison ter early 2018, bitcoin wasgoed trading at around $1,000. By year’s end, it wasgoed trading at $13,000, down from a breathtaking rise to $20,000 te December. Spil the price rose and word got out that Montana wasgoed ripe for bitcoin, Grunke says his office began fielding daily calls from blockchain companies interested ter setting up gegevens centers ter the area, if only they could find a big enough space.

Plans for the state’s 2nd bitcoin mine emerged te December. The Anaconda Schoolgebouw District agreed to sell its recently vacated elementary schoolgebouw for $205,000 to a company called BitPower LLC, and the county agreed to lease BitPower a 40-acre webpagina ter a tax-increment financing district for $100 vanaf year. Schoolgebouw Superintendent Gerry Nolan jokes that he didn’t know the difference inbetween a bitcoin and a candy brochure when the company turned up with an suggest a duo of months ago. He says he still doesn’t have any idea what its representatives meant when they told the schoolgebouw houtvezelplaat they desired to turn the elementary schoolgebouw into a “training facility.” The Montana Standard reported that one of the company’s local spokespersons is Rick Tabish, who wasgoed famously convicted, then acquitted, of murdering gambling mogul Ted Binion and then stealing silver stashed te Binion’s desert vault. Nolan says knowing that another mine wasgoed already running te Bonner wasgoed one factor that waterput the schoolgebouw houtvezelplaat at ease. That, and the 300 jobs the company reportedly promised to bring to town.

Project Spokane has contributed fresh tax base to Missoula County, but it’s also becoming a problem for the mine’s neighbors. The everpresent noise generated by the facility’s thousands of servers and 450 cooling ventilatoren is keeping them up at night — even some who live several miles away, depending on how the wind carries the sound through the canyon. Members of the Bonner-Milltown Community Council have bot discussing the problem for more than six months, requesting monthly progress reports from Nelson. They’re kicking off to grow restless.

“We need for the company to come do face-to-face,” says Burt Caldwell, the council’s secretary. “We think the right thing to do is for the company to come face the community and acknowledge there’s an punt.”

The council has invited state lawmakers indicating the area to attend a special meeting on Feb. Five to “see if the community has any recourse at all, other than declining property values and loss of sleep.” Nelson says he and his tenants have bot working for months to engineer a solution, and he’s already spent more than $Ten,000 to commission sound analyses. They’ve lodged on a project that involves interchanging out the fan blades for a quieter configuration. If the project works with the very first few dozen ventilatoren, Nelson says, he plans to apply for tax-increment money to offset the upgrade costs, which will amount to several hundred thousand dollars. Nelson considers the potential upgrades an investment less te Project Spokane than te the burgeoning bitcoin and blockchain industry spil a entire.

So far, Walsh&rsquo,s play is paying off. Walsh has bot quoted increasingly by national publications for his crypto-industry insights, and wasgoed announced spil founder and CEO this month of Hyperblock Technologies Corp., a Canadian cryptocurrency mining company that disclosed $15 million ter securities distribution ter December. A company webstek unveiled Jan. 22 says it is &ldquo,building the future of cryptocurrency mining&rdquo, and features extensive promotional material showcasing the Bonner mine, which it calls Project Northwest. Hyperblock touts a diverse revenue monster, including wholesale hashrate sales to, server hardware sales, server hosting generating &ldquo,monthly USD-denominated payments&rdquo, and &ldquo,self-mining&rdquo, like that done by Aquifer. Its mission is the same one Walsh promoted ter Dubai: &ldquo,to accelerate the development of the blockchain and cryptocurrency industry through hyper disruptive innovation.&rdquo,

“I’m glad that I did take a 2nd risk and invest a bunch more money, because wij have a thriving business now,” Walsh says.

A manager hinted obliquely te a latest vraaggesprek with Business Insider Nordic that the webpagina wasgoed making &ldquo,an awful loterijlot of money&rdquo, spil the price of bitcoin and other cryptocurrencies spiked. The Indy plugged te,s advertised hashrates, the power costs advertised for &ldquo,Project Northwest&rdquo, and other inputs into a bitcoin mining profit zakjapanner, which suggests that Project Spokane has mined hundreds of millions of dollars worth of cryptocurrency, at current prices.

When the price of bitcoin reached $17,000 te December, Grunke determined to metselspecie out one-tenth of Walsh’s bounty — the very first time he’d sold any cryptocurrency. He says he felt a petite thrill.

“It’s like pretend money to mij, or being te Vegas,” says Grunke, who on Jan. Nineteen announced his departure from MEP to pursue other opportunities out of state.

But should Montanan communities canap on it? Is bitcoin just another gold rush? And who will be left holding the bag if the rush goes bust?

“Those are good questions,” Grunke says. “They aren’t ones we’ve thought about.”

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