CryptoQuarry, a retrospective (Part 1/4)

  • Crypto: Shorthand for cryptocurrency. Bitcoin is one such example.
  • Mining: The operation in which a GPU does some “work” in exchange for some cryptocurrency, put very simply.
  • BTC: Shorthand for Bitcoin, a cryptocurrency.

Who founded CryptoQuarry / Who am I?

Punching some wire pairs for UW-River Falls’ IT department, one of my first (and absolutely amazing) jobs.
Lucas in Venice, Italy when we visited in 2016
Myself (far left) and Lucas (middle) hanging out with Evil Geniuses at PAX 2017. We both had the honor of playing alongside Arteezy and getting stomped by Sumail playing Night Stalker, in DotA 2.

How did CryptoQuarry start?

  • Lucas and I have both been crypto hobbyists since 2010–2011 when bitcoin first started to show up. I’ve sold a textbook for over 1.0 BTC, when BTC was around $150. I used to (*cough, allegedly) mine dogecoin in the dorms on their free electricity. We’ve followed the space and saw that around 2015, Ethereum became hugely profitable to mine. Running some basic numbers, we realized that one GPU could pay itself off in under 30 days at the time. We were shocked and both bought a couple of GPUs to test this out and sure enough, we made our money back.
Our very first janky iteration of rigs in the basement
Another pic of the first iteration of rigs
  • After we did this, we decided to formally start a business in 2016/2017 (as CryptoQuarry LLC back then), and find a rental property for ourselves to fill with our own rigs and try and make some money. We took out a small business loan of around $50k under the LLC, and spun up our very first iteration of CryptoQuarry in a warehouse that we designated CQ-1; the warehouse was located in Minnesota due to cost + proximity to two of our co-founders. We briefly had a third co-founder, but parted ways amicably due to not having a great team fit. We had a lot of help in the form of contract (and volunteer) work from some amazing friends: Peter, Matt, Evan, and Spencer to name a few.
Our friend (and contractor) Peter who helped us with a majority of our builds and setups, sitting upon the Holy PowerColor GPU Throne
  • We ran the company as a c-corp for about 2 years (2018–2020), expanding drastically after a VC deal with our partner Sia.
Our final iteration of rigs, we had 8x GPUs per single rig and they were enclosed in a case for maximum thermal performance.
Our good friend Matt working on a makeshift desk made out of EVGA motherboard boxes, helping us with our initial setup of the miners in 2017. Thanks again Matt!
  • We raised money at a ~$1.5M valuation, all of which was put directly into the acquisition of a warehouse rental property as well as purchasing hardware. For the most part, we did not pay ourselves (will touch more on this in another part) for the work and were betting on the long term success.
  • For the most part, we succeeded at our main goals and actually ran the operation for nearly 5 years starting with the very small proof-of-concept.

What skills did we need to run the company?

  • I believe the reason we were able to run the company for as long as we did is due to a lot of the existing SME that we brought to the table, as well as being able to partner with an awesome investor. Without this, we would have spent a lot of time and money that we did not have, hire other experts to work with us.
  • The three pillars that I believe were key to us running the company were:

Software/Infrastructure Engineering

  • Some highlights: existing deep subject-matter expertise in software engineering, networking, infrastructure, datacenter operations, hardware management, and software infrastructure. Also moderate SME in cryptocurrency. Designing and creation of various large sized software projects.
  • Some things we could have done better: how to create software projects that would increase profitability or longevity of the business

Entrepreneurship

(arguably the pillar we had the least experience in)

  • Some things we could have done better: Learning how to fundraise early, learning how equity vesting should be done, coming up with ways to reward ourselves along the way rather than put all eggs in the future basket.

Engineering Leadership

  • Some highlights: lots of experience running medium to large software projects, working as senior engineers at various places, having some existing experience with hiring and building teams.
  • Some things we could have done better: vetting for team/experience fit early on, and truly doing our own vetting rather than blindly trusting networks and word-of-mouth.
  • What core entrepreneurial facets did we learn that we could apply in future businesses and/or pass on as advice? Examples here would be fundraising, equity vesting schedules, etc.
  • In what ways did we succeed and fail, and how many of the failures were preventable? Things such as having a stronger vision earlier, having a more varied skill set between our founding members, and being able to run a profitable (albeit very marginal) business for appx. 5 years.
Our very first shipment of GPUs which came on a pallet
Us organizing the boxes/mobos per rig
Our good friend Spencer hand-crafting some artisanal budget datacenter “racks” which suspended GPUs in midair to maximize airflow without purchasing a hot aisle cooling setup.
Lucas setting up the bottom row of our second iteration of rigs
Lucas and I next to ~$350K worth of GPUs

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store