Craig County, Virginia, sparsely settled and mountainous, has a long history of mining for valuables — iron, manganese, cryptocurrency.
Actually, crypto mining in Craig doesn’t have a long history. But there is a company in New Castle that is refurbishing and selling crypto mining equipment. Manifold Mining is investing approximately $420,000 to convert a former furniture plant into a center of operations.
Why is one of the trendiest waves in finance and technology hitting slow-moving Craig County, population 4,892 as of 2020, and why did one of the owners make the seemingly reverse journey, from Silicon Valley to New Castle, where locals exchange news at the Gopher Market on Main Street?
Ryan and Amy McDaniel are Silicon Valley natives. In 2018 the family moved to Salem, and Ryan took at job at Virginia Tech, where he’s executive director of Secure Identity Services.
“My wife is in real estate,” Ryan, 45, said. “And she and her real estate partner were doing most of their business out here in Craig County. And we wanted a little bit of land. And so we made the decision to move out here.” That happened in 2021.
Meanwhile, their son Jacob, now in his third year at the University of Virginia, was getting deeper into crypto.
“Probably back in 2016, 2017, I started getting into crypto mining,” Jacob, 19, said. “I think that was all Ethereum mining so it could be done just with home computers, especially like gaming computers. So I first got into that … with what I had lying around. I think I read about it online and just set it up and started going and you know, a little bit of money would trickle in every day.
“And I just kept expanding it. Especially back in 2017, when there’s a big, big rush-up, when bitcoin went up from just like a very small amount — I don’t remember exactly what it was, a couple hundred dollars — all the way up to like $20,000 [per bitcoin].
“And then about a year and a half ago. I kind of started getting out of the home computer graphics card mining stuff and into the ASIC mining and the heavy duty bitcoin mining equipment.”
If you are an old person — old enough to remember the days before anyone had smartphones, laptops or even pocket calculators — you may never completely understand crypto, but still you can learn something about it.
The word “crypto” means hidden or secret. Cryptography is the encoding and decoding of secret messages. The decoding of complex mathematical programs is part of the process that ensures crypto transactions remain secure.
Cryto is fiat currency, meaning that is not linked to tangible asset such as gold.
It is worth something only because people believe it is. However, “I think one could make that case about just about anything,” said Alice Kassens, professor of economics at Roanoke College. “It is fiat money and if people stopped believing in it, the market would disappear. Yes, the dollar is also fiat. Some might say it’s more stable because it’s backed by the U.S. government.”
But there’s a difference between crypto and the dollar. When you pay for something with a credit card, the card reader, or the merchant website, communicates with your bank and dollars are transferred to the merchant. By contrast, Jacob said, crypto is “a digital currency that doesn’t have a centralized bank. When you pay for something in cryptocurrency the transaction goes through the decentralized networks, there’s no single point of failure. The very first cryptocurrency was bitcoin and everything else kind of branched off from that.
“When you send crypto … there’s no server, and there’s no single entity to verify transactions. So you need processing power in order to complete and verify transactions securely. What mining is, at the core … you’re volunteering processing power to help verify transactions on the network that are happening around the world, and in return, the network … gives you some cryptocurrency back. So the more processing power you’re donating to the network, the more cryptocurrency you get back, and that’s kind of the general idea of what mining is.”
In the crypto world, a “miner” is not a guy covered in coal dust. It’s a muscled-up computer that looks somewhat like your home PC, except with more or bigger fans to disperse the heavy heat output.
ASIC stands for application-specific integrated circuit. The integrated circuit chip in your home computer is designed to handle a wide variety of applications, unlike ASIC chips.
“Those crypto mining machines can’t do anything other than mine cryptocurrency, but in exchange for that — because they’re designed for that particular task — they’re far more powerful and efficient than a normal computer would be,” Jacob said. “In fact, all mining used to be on … home computers. Even bitcoin mining just started off [with] people just running it on their laptops, their desktops or whatnot.
“But after a certain amount of time, companies, manufacturers figured out, ‘Hey, we can we can make hardware that’s purpose built, that is literally thousands of times faster.’ So it’s an incredible difference.”
Inside each miner are multiple printed circuit boards, each with 30 to 200 integrated circuit chips linked in a chain. This compares with home computers that have one motherboard and a single chip. “So it’s very compact, very efficient, and very fast.”
Manifold Mining was founded in 2019 with a focus on software development, with its first headquarters in the McDaniel garage. In 2021 it shifted into refurbishing and selling mining equipment. The owners are Jacob, the CEO; Ryan, who handles the business side; and Bryan Wall, who manages onsite operations.
“Craig County’s natural beauty and Mayberryesque sense of community makes it a wonderful place to live,” Jordan Labiosa, chairman of the county’s Economic Development Authority, said in an email. “In many ways, however, we’ve been held back economically by our lack of broadband internet and distance from a major highway. Due to these circumstances, the 40,000 square foot Crown Building property in New Castle sat unutilized for more than 25 years. Manifold Mining recognized the opportunity that this property could provide as well as the many strengths of our diverse workforce and chose to invest nearly half a million dollars into making New Castle into a base of operations.
“Manifold Mining signed a performance agreement which requires them to meet certain milestones including employment. During the next five years they are expected to have a minimum of 15 employees, the majority of them full-time, which would make them one of the largest employers in our locality. Many of these well paid high tech jobs will require only a high school diploma or GED and all related training will be provided by Manifold Mining.
“It is natural to be concerned about environmental and sociological impacts when a new industry is formed, and cryptocurrency is already a complex topic with intransigent opinions both for and against. Manifold Mining was able to navigate the concerns of Economic Development Authority members and provide a business plan which took into consideration a wide range of factors residents of New Castle could have been concerned about. While some of the business Manifold Mining does is based on mining cryptocurrency, much of the revenue they will generate is related to the repair, refurbishing, and resell of ASIC cryptocurrency miners which alleviates apprehension related to sound generation.”
Facilities elsewhere in the country that focus on mining rather than repair have drawn noise complaints — that’s how hot the miners run and how loud the fans are.
“The [power] circuit coming in from Roanoke into Craig County is limited,” Ryan said. “So as far as actually running machines, it will never be particularly big at this location. It’s really more the refurbishing and our selling activities. And we’re starting to offer repair as a service. So if you own a machine, and it breaks, you could send it to us, and we’ll repair it for you.”
As China’s communist masters have cracked down on crypto — nothing’s more free-market — the Chinese have been shipping unwanted miners to the U.S. where companies like Manifold Mining are buying them. “Get the miners here, repair and refurbish them,” Jacob said. “We usually upgrade them, we put more efficient firmware on them. So we upgrade the software and then we resell them here in the U.S. market.”
There are a variety of reasons why people buy crypto miners, Ryan said. Some simply want to support the network or enjoy it as a hobby. “Others want to make some money. So they buy the machines, they set them up, and they mine that cryptocurrency and as soon as they get that cryptocurrency, everyday, they sell it, they pay the electric bill, and then they got coffee money or whatever.”
If you want to invest in bitcoin, you can buy it with dollars, “or you can go and buy a mining machine, and then you set that mining machine up, and you get to mine bitcoin,” Ryan said. “And over the course of a year or two years, or three years or whatever, you’ll actually get significantly more bitcoin than you would have gotten if you just went and straight up bought it.”
Matt Muller of Roanoke described himself as a crypto investor and hobbyist, “a little bit of both.”
“I’ve bought many miners, I tried getting into mining, but now I’m just like buying crypto. But I learned some lessons about do’s and don’ts of mining.
“When you’re mining, it’s a question of how much is the bitcoin going to be worth that you’re mining. And how much do you have to spend on electricity. So, for instance, the miners that I had purchased, I would spend $100 a month per miner in electricity. So if I’m not making at least $100 worth of bitcoin from the mining process, then I’m losing money.
“There’s one pot of bitcoin that’s awarding money … and right now the reward is like six and a half bitcoin, or six and a quarter bitcoin every 10 minutes roughly. This is an oversimplification, but it’s effectively split amongst every computer that’s out there working on it. That’s a quarter of a million dollars in bitcoin generated every 10 minutes. But there’s tens, or even hundreds of thousands of computers out there competing for that. So if, if you’ve got free energy, for instance, solar or something like that, that’s great. But if you’re paying 11 cents per kilowatt hour, and you know many kilowatts your machine is going to take, and you know the power [i.e., calculation rate] of your machine … you could very easily calculate whether or not you’re going to be making money or losing money.”
Those who got into bitcoin early have been on an incredible roller coaster ride. In 2011 the price per bitcoin ranged from 30 cents to around $31. In 2017 the price zoomed above $10,000, and in 2021 it rocketed above $60,000. The current price is about $30,000.
“Over time, you kind of become a little numb to the crazy movements,” Jacob said. “But on the other hand, I would definitely say that cryptocurrency is many orders of magnitude less volatile than it used to be. As the market matures, gets accepted in more areas, more big companies get into it, especially [as] big financial companies like Wall Street move into this space, things become have become significantly less volatile than they were several years ago. I think over time, just as people become more informed on it … it will just naturally become less volatile, because there’ll be more trust in the system.”
Still, crypto is an evolving experiment, as Ryan acknowledged.
“I’m a big believer in the economics of the free market,” he said. “I think it’s a really fascinating experiment in free market economics. But nobody really knows, I mean, there’s so many different opinions on where this is going and whether it’s just going to keep going up or whether it’s going to crash and burn. And so it’s really a fascinating kind of emerging and exciting field on a number of levels. You know, both technology as well as economics. So it’s kind of an exciting time, I guess, to be into it.”