The Crypto Family Farm

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The Crypto Family Farm

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Inside the Collins household fireplace, underneath nine Christmas stockings that hang year round, sit the cryptocurrency mining rigs. In the winter, these screenless computers are moved below the furnace, where the excess heat they produce helps warm the house. That way, Owen, Cassie, and their seven children can save some money on the energy bill for their rural Washington home. It also helps them avoid unwanted attention from the power company — which, if it found out about their power-hungry endeavor, might ask for bills to be paid up front.

Owen maintains the mining rigs as they search for whatever cryptocurrency earns them the most per watt, but it is his wife Cassie’s trading that really keeps the family afloat. When not homeschooling the kids, she is glued to her computer, hoping to multiply their earnings by trading the cryptocurrencies that the mining rigs bring in for others she hopes will grow in value. Now that she has a few years of experience, she knows how to spot a “scam coin” and which forums to trust. Most days, she earns a profit.

The children, who range from first grade to college, help with both sides of the business. The oldest daughter has been in charge of keeping the miners cool since she was fifteen. In exchange for fixing the fans, reapplying thermal paste, and maintaining airflow, she gets a cut of the profits. Other kids help with the trading. Those who aren’t legally old enough to have their own accounts use Cassie’s spreadsheets to simulate swapping crypto. Owen reads crypto articles aloud at the dinner table to stir up discussion, and even the seven-year old has an opinion on the family business. (She likes DigiByte, an obscure security-focused coin.) The Collins can keep everyone fed by mining and trading crypto, but only because everyone pitches in.

True Believers

The scholar Langdon Winner once observed that all technologies have their own politics. When it comes to cryptocurrency, the politics of its underlying technology, blockchain, are built around distrust — or, as crypto enthusiasts like to call it, “trustlessness.”

To understand how this works, imagine the following scenario. The White House announces that in order to increase voter turnout, the 2020 election will be held online at WhiteHouse.gov. Naturally, this upsets Americans who do not trust the White House to count and collect the votes fairly. One solution would be to let people run the vote-counting program on their own computers. If everyone’s voting program could be kept in sync without depending on the White House, people could trust this “distributed ledger” to keep a list of the votes. This is the blockchain: a technology that keeps data on many computers synchronized without having to trust a central authority, or even each other.

In 2008, an author with the pseudonym Satoshi Nakamoto published a paper that introduced both the blockchain and a decentralized digital currency built on top of it called Bitcoin. The problems that Bitcoin had to solve were: How do new coins get issued without a centralized mint? And how do you prevent people from spending those coins twice? Nakamoto solved both problems by having computers on the network compete an energy-intensive mathematical lottery to determine who gets to add the next “block” of transactions to the ledger. To compensate them for spending that energy, the winning computer is awarded some newly minted currency. This process is called “mining.”

Bitcoin soon attracted a colorful cadre of early adopters, many of whom became fabulously wealthy as the price went from $22 in 2014, to $800 at the start of 2017, to a peak of $17,900 by the end of that same year. Some were asset managers who could afford to take the risk early, like the Winklevoss twins or Barry Silbert. Others sought to improve or specialize Bitcoin’s functionality and earned their fortunes by building their own blockchains or cryptocurrencies, like Vitalik Buterin with Ethereum or Chris Larsen with Ripple.

A large contingent of these early acolytes were ardent libertarians who saw Bitcoin as a technology that encoded their beliefs. They came for the politics and stuck around for the profit. In “trustlessness” and “distributed ledgers,” they saw a way to build a monetary system free from the government control — a goal that gained greater urgency in the aftermath of the massive bank bailouts during the 2008 financial crisis. Perhaps no one exemplifies crypto-libertarianism better than Brock Pierce, who started mining Bitcoin in 2009 and went on to reach number nine on Forbes’ 2018 Richest People in Cryptocurrency, even as he faced a laundry list of financial and sexual abuse scandals. Today, Pierce is working on Puertopia, a crypto-libertarian society built from the rubble of Hurricane Maria that takes advantage of Puerto Rico’s sunny weather and unparalleled tax incentives.

If these nouveau riche are crypto’s landed gentry, then the Collins family are its subsistence farmers. They put in long hours to keep the mining rigs running, the hackers at bay, and the stomachs of nine family members filled. Their yield is unpredictable at best and at worst, catastrophic. They may share the same principles as the crypto elite, but they aren’t making money hand over fist: in fact, they’re just barely getting by. They have made crypto their whole lives for ideological reasons, not financial ones. They are true believers in the principles around which crypto is organized, and their commitment to those principles is rooted in bitter experience. “I’m on this adventure because 2008 almost killed me financially. I’m not on dollars, I’m on Satoshi,” Owen says in his Texas Hill Country drawl. “When you come at me and ask what the value of something is and you say dollars, I’m gonna say fuck off.”

Into the Ether

After the housing bubble collapsed in 2008, the Collins were in dire straits. Owen found himself on Craigslist, responding to people offering freezer-burned meat or, once, an old goat he could butcher. Just as the Collins started to recover, they were dealt another blow — this time by the Fukushima nuclear disaster of 2011. Owen was working as a licensed electrical engineer, helping upgrade the facilities at a nuclear site. But within a month, Owen’s company lost over ten million dollars worth of projects as nuclear sites all over the country put upgrades on hold to reevaluate their systems. He was out of work.

The only option to support his family and get them out of debt was for Owen to pick up government contract work, bouncing around federal nuclear sites. “From 2011 to 2017, I was gone. [I was] living in a hotel, going on an airplane, sleeping in a minivan,” Owen says. He would FaceTime in for the Advent calendar, to say grace at the dinner table, and even to catch the occasional dinner and a movie with Cassie, who was raising and homeschooling the children on her own. The kids called him “Daddy-in-a-box.”

Working for the government, Owen was overwhelmed by the inefficiency. The bureaucracy was farcical, the technology was wildly out of date, and the cubicles made for an environment less “move fast and break things” and more Dilbert. Worse still, Owen, a privacy hound, had to give up a lot of personal information to receive a security clearance. Every place he ever lived, every relative he ever contacted, and every illicit substance he ever used were just some of the data captured in the 127 pages of his SF-86 clearance form. And when hackers breached the Office of Personnel Management in 2015, all of that information was stolen. “Damn feds lost my DNA sample… they got intel on my whole family,” Owen says.

In 2014, during his ample free time at work, Owen came across a white paper about a new blockchain called Ethereum. While Bitcoin is a distributed list of financial transactions, Ethereum is that plus a distributed list of computer states. In other words, it stores programmable ones and zeros that act as a giant, decentralized computer running public, uncensorable code. It’s like Amazon Web Services (AWS) in that users can pay to run applications on it (using its native currency, Ether) but without a central Amazon-like authority. Today, even though it is thousands of times more expensive and millions of times slower than AWS, the Ethereum distributed computer runs code simultaneously on the computers of a few thousand strangers.

Ethereum appealed to Owen right away, not only as an inveterate tinkerer but as a staunch libertarian. The government had failed Owen too many times — first as a facilitator of the 2008 financial crisis, then as a soul-crushing and privacy-annihilating employer. Owen finally had the chance be part of something built by engineers, for engineers. Most importantly, it was specifically designed to resist oversight from some CEO or government official. He had just received a $1,500 signing bonus for his latest gig, and over the phone, he walked Cassie through spending it on two hexadecimal numbers that together represented a couple thousand Ether. And as quickly as they decided to buy it, the Collins forgot about it.

Buried Treasure

To compare trading stocks to trading crypto is like comparing the Westminster Dog Show to a back-alley dog fight. Stocks are regulated by laws around market manipulation, hours of operation, and insider trading; cryptocurrency regulation is practically non-existent. That means the Collins are left to find their own way when it comes to taxes and record keeping. “I can’t call a lawyer or an accountant and say, ‘Help me!’” says Owen. “I have to call them and explain them everything, teach them. I’m tired of it.”

Scant oversight also means the Collins have to be extra careful about security. When Cassie buys any cryptocurrency, she gets a “public key,” which lets her prove to others she owns it, and a “private key,” which lets her spend it. If a hacker steals Cassie’s private key, there is no bank or credit card company she can call up to get her money back. And since most cryptocurrencies are pseudonymous — she could only see a hacker’s public key — there isn’t anyone to take legal recourse against. Like early homesteaders burying their valuables, Owen and Cassie combat thieves by storing their private keys on hard drives and slips of paper hidden around their home: in the chicken coop, by the outhouse, under a flat rock. Cassie likes to joke that they even have one tattooed on Luke, a duck the family rescued from Tropical Storm Bill.

The Collins also tread carefully around the power companies. The family has moved around in search of cheap energy and landed in rural Washington, where electric rates are as low as one fifth the national average thanks to hydroelectric power from the Columbia and Snake Rivers. They weren’t the only itinerant crypto miners to move to the area, especially when the price of Bitcoin grew by over 1,700 percent in 2017. According to the Wall Street Journal, some small local utilities in Washington were receiving upward of twenty calls per week from miners looking to use more electricity. Without sufficient infrastructure to meet demand, power companies have recently clamped down on crypto miners by placing limits on energy usage, requiring hefty deposits, and turning off power to those who don’t comply.

Still, the mining rigs in the Collins household run most hours of the day. And so does Cassie’s trading. “If something comes up, I’ll drop everything to look at the chart… I can think of times that I’ve been pulled out of bed at three in the morning when my husband has seen something on my phone,” Cassie says. Even though Owen and Cassie get up early, go to bed late, and don’t take weekends, they seem to thrive off the work. “We’re the kind of people that can’t take a vacation,” Cassie says. “We got married young, we didn’t have a honeymoon, we had kids, we’ve never taken a break.”

A Fork in the Road

There is one way to get a refund for stolen crypto: every miner can agree to undo the transaction. In other words, if a blockchain is just a list of transactions that a group agrees upon, then a coordinated effort can be made to get every individual in that group to remove the theft transaction from their list. This involves what is called a “hard fork,” and it is a massive undertaking, both technically and politically. It is also extremely rare.

Only an unmitigated catastrophe can prompt such a response. In the summer of 2016, this is exactly what Ethereum was headed for. The first major application for the Ethereum network was about to be released: the Decentralized Autonomous Organization, or DAO (pronounced “dow”). DAO was designed to be a democratic venture capital fund. Anyone could purchase shares using Ether, and then be able to vote on projects for the fund to invest in.

Buzz about the DAO reminded Cassie and Owen to check on the Ether they had bought a while back. When they did, they found it had grown close to seventy times in value. It was more money than they had ever had in their life together. Swept up in DAO euphoria, they were ready to make another big investment. Or, as Owen puts it, “Like some dumbass newbies, we took our Ethereum, one hundred percent, and put it in the DAO.” They were hardly alone: the DAO was the largest crowdsale ever up to that point, raising over 10 million Ether — worth $200 million at the time.

Then disaster struck. Within a month of DAO’s launch, a hacker found a hole in the code and began to drain funds out at a rate of $4,000 worth of Ether every three or four minutes. The attack ran into its own bug six hours after it began, but the hole was still exposed. The Ethereum community was divided over how to respond. Some DAO victims begged the developers to get them their money back by doing a “hard fork” and reverting the attack. However, a group of ideological purists argued that a “hard fork” would erode Ethereum’s promise of running code that no authority could interfere with. The Ethereum developers were too chummy with the DAO developers, they insisted. And, by leading an effort to clean up the mess, they were undermining the decentralization that made Ethereum so appealing in the first place.

Even though it would mean losing all their money, the Collins were hardline supporters of the anti-fork camp. “I thought there was no way we were going to roll back the blockchain,” Owen says. “I thought, they’re not gonna do it man… No one is going to do the bailout like they did in ’08.” In the end, though, the hard fork went through. But the fight was so vitriolic that the anti-fork group forged on. They released a “Crypto-Decentralist Manifesto” and continued to mine the old currency, now rebranded “Ethereum Classic.”

It was in this split that Cassie found her sea legs trading. Over the next few days, the prices of the sister Ethereum currencies oscillated violently as they fought for dominance. If she timed it right, Cassie could double her money every couple hours. “I think I was up for two days straight. Trading Ethereum Classic was the most fun I’ve ever had,” Cassie says. She was so glued to the charts on her phone that she couldn’t look away even while driving her daughter to violin practice.

The Collins had learned the hard way not to put all their eggs in one basket, and they didn’t make the same mistake twice. Cassie was soon trading around thirty different cryptocurrencies, and Owen had bought mining hardware to get their hands on more. They picked up their investment tips from the “trollbox,” a freewheeling crypto chat room filled with pump-and-dumpers, flamewar sparkers, and a select few seasoned traders who would dispense occasional nuggets of wisdom. During Owen’s few Friday nights at home, he and Cassie would often crack a beer and watch the trollbox.

Cassie’s homeschooling materials were on the same screen as her trading spreadsheets and eventually the two became mixed. The children already had a STEM-heavy curriculum, with a particular focus on hardware and software. (“They definitely know how to crimp a Cat6 cable, use the amp meter, the fluke meter, ping, configuration setup,” says Owen.) Once they started asking questions about her trading tables, Cassie had them learn all two-hundred-odd currencies on her exchange. “It’s like pulling teeth sometimes,” she says.

An All-Liquid Diet

While the Collins kids were learning their cryptocurrencies Aeternity through Zcash, my friend Dan and I were just catching wind of the cryptocurrency hype. Some time in the first half of 2017, we thought we might as well invest a couple hundred bucks into Ether on the offhand chance that it would make us wildly rich. More than that, though, it was something for us to talk about. Dan and I had been friends since kindergarten, but we were living on opposite sides of the country. The day-to-day price fluctuations gave us a reason to keep in touch, and made for pleasant conversation when the price was up, which it usually was.

When the price of Ether hit a thousand dollars at the start of 2018, Dan and I were elated. Our investment had paid off and we were hailed as brilliant prognosticators. People came out of the woodwork to seek advice on whether or not they too should buy: a college classmate I hadn’t heard from in years, the owner of a diner in my hometown, my dad. Dan and I started fantasizing about blowing our profits on an opulent party, with free drinks and flights for our friends from around the country.

This was also around the time I met Owen and Cassie while doing research for a piece I was writing about Ethereum Classic. We met on Discord, a chat application popular in crypto circles, and after a while, Owen and Cassie suggested I do some crypto day trading. They provided tips on how to avoid scams and what to buy — including Ethereum Classic of course. They also set me up on a more reputable exchange and gave suggestions about how to store my crypto more securely. Cassie even offered to share some of her spreadsheets.

But I was barely able to handle the little bit of crypto I already had. I had gone from checking the price once a week to several times a day, sometimes in the middle of conversations. It was the first thing I did when I woke up and the last thing I did before I went to sleep. Should I sell before the bubble pops? Or was I on the brink of getting rich? As the price slipped, I picked up a new habit of grinding my teeth. Despite Owen and Cassie’s advice and assurances, I cracked under the pressure and sold most of what I had. The pain in my jaw from holding just one cryptocurrency had reduced me to an all-liquid diet. I was not cut out to be a trader.

As for Dan, he has always been more relaxed than I am and wasn’t bothered by the daily ups and downs. While I was stuck drinking soup, he was living entirely off his crypto earnings for months after having been laid off his job. But one day, Dan went to the exchange website to chip a little off to refill his bank account and found his entire account emptied. All of it. His private key had been compromised, likely by malware. Our crypto adventure was over.

Keeping Warm in the Crypto Winter

Business has been rockier for the Collins since the value of cryptocurrency peaked in 2018, right around the time that Owen quit his job. The mining rigs are less profitable than ever. The threat of government regulation looms large as the Securities and Exchange Commission and the Treasury Department’s Financial Crimes Enforcement Network consider how to treat cryptocurrencies. The promised “killer app” that will do for crypto what email did for the Internet has yet to materialize. Crypto-enthusiasts call the downturn a “crypto winter,” a reference to the “AI winter” of the 1970s and 1980s when interest in AI declined. Still, Cassie has a knack for trading and can still consistently turn a profit. The family had a nice windfall when one of their holdings, a currency called Verge, was selected to be the coin of the realm for pornography conglomerate MindGeek.

In his spare time, Owen is trying to get his own mining consulting business off the ground. Unfortunately, most of his inquiries come from shady clientele — perhaps because he is reticent to tell clients his real name or what state he lives in. After one man from Montana wanted to open a mining business suspiciously fast, Cassie did some snooping and found out he had defrauded senior citizens out of millions of dollars. Another potential client had an FBI rap sheet. Owen took on neither project.

Meanwhile, the piece that I was writing about Ethereum Classic became a piece on the Collins family. Wired picked it up and wanted to fly me out to Washington to see the crypto homestead in person, but Owen and Cassie wouldn’t have it. The magazine insisted on using their real names and the Collins thought such prominence would make them a target. (I have changed their names for this piece.) I pleaded with Owen — this was his chance to help others escape what he called the “cube farm.” Maybe he could even stir up some legitimate consulting business! My pleas fell on deaf ears. He stopped responding to my messages and Wired dropped the story.

I shouldn’t have been surprised. The Collins are true believers in anonymity and autonomy, values they believe the blockchain embodies. Their principles had already been tested in the DAO hack — there was no way they would compromise them for a little press coverage. The newly minted crypto millionaires may begin to divest as the crypto winter chills the industry, but the Collins, like true homesteaders, are battening down the hatches.

“I’m not a rich dude,” Owen says. “I’m still living the same lifestyle — broken down cars, broken down house. The reason that I do this is the freedom to make my own choice. I don’t want to be told it’s Hawaiian shirt Friday.” The costs of such freedom are considerable: the paranoia, the anxiety, the endless hours spent mining and trading. But for the Collins, it’s the only life they can imagine.

Gabriel Nicholas is a fellow at the Center for Cybersecurity at New York University.

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