Cryptocurrency miners are no stranger to adversity. From enduring criticism for pursuing what was labeled as a “passing fad” in its infancy, to being forced to find a new home after China’s ban in 2021, to getting caught in the middle of a political crisis in Kazakhstan earlier this year, they have proven time and again that they are nothing if not resilient – and will continue to find ways to innovate.
Kyle Sidles can attest to this, having mined millions of dollars worth of cryptocurrency since entering the industry in 2013, and weathering the market crashes of 2014, 2017, and 2021 (not to mention this year’s turbulence).
He first learned about bitcoin while living in Florida building web-based applications. A buddy of his told him that people were using bitcoin as a payment mechanism on the “Silk Road”, the digital black market platform that has since been shut down. “People use their computers to make bitcoin and it’s in place of money,” Sidles recalled his friend saying.
Naturally curious, he started looking into bitcoin and how much it cost. “At the time, it was $100 a coin, so I started doing research on what it takes to mine it,” said Sidles. “It was right around the time when ASICs hit the market, so I bought one of those machines for a couple grand to vet the idea.”
Lo and behold, he connected it to a mining pool, it started making bitcoin, and that bitcoin was then deposited into his Coinbase account. But it wasn’t until he went to sell some of the bitcoin in dollars that Sidles realized its potential. “Two days later, the money was in my account. I just remember saying to myself, ‘Wow, this is real and actually works.’”
From there, Sidles started buying more and more hardware. “This was right before the boom happened, so there was equipment still available,” he said. “I bought a machine for $7,000-$8,000 and ended up selling it for $30,000 eight months later after mining it for quite some time.”
Sidles explained that, during this time, he acquired a lot of knowledge through self-education, immersing himself in blockchain technology as a whole. “It really just presented itself as an opportunity and I spent a lot of time diving into what the technology was and how it works, and the more I learned about it, the more it made sense,” he said.
After the price crash in 2014, which put many miners out of business, Sidles decided that if he was going to stay in the industry, the only way he was going to do so was by getting a competitive advantage of inexpensive electricity. “So, we moved to Washington,” he said. “At the time, the electricity there was around 2.5 cents per kwh, as opposed to 9 cents per kwh in Florida.”
Sidles began working with MegaBigPower, which at one point was one of the biggest miners in the world, developing their own ASIC hardware. He was eventually recruited to become the CTO of Giga Watt, the ICO that was building infrastructure so people could use their tokens that they purchased to get at cost electricity for their own mining hardware, or lease out their space to other miners.
“When I first went out to Washington, I was doing a small operation retrofitting some storage units, an old automotive repair shop that was 300kw, a relatively small operation,” said Sidles. “But I hired some electricians to do the electrical piece of the build and when they saw what it was that I was doing, they expressed interest in being involved and joining forces, so we designed multiple mining operations from the ground up – from electrical, to cooling, network, layout, racks, and basically soup to nuts, built out a few megawatts worth of power throughout Washington.”
Pivoting to Software
As things unfolded and they began to encounter myriad challenges that come from managing large scale mining operations, Sidles had an idea: what if he used all the experience he had gained from mining to develop software for miners? He had been looking at a handful of different software vendors, but noticed that they weren’t particularly friendly to the mining environment.
“When we really started to scale beyond one or two megawatts, it became pretty clear that there wasn’t any software off the shelf that was going to do what needed to be done in order to be able to manage an enterprise level mining operation,” said Sidles. “Back then, it was humans logging into miners and configuring them, or using some third party that could configure pools, but were limited in their capabilities.”
“Eventually, I got to the point where it made more sense to focus entirely on building software rather than trying to build full blown mining operations, especially with the amount of capital coming into the market.”
So, that’s precisely what he did. In 2020, Sidles launched Minecheck, a proprietary software solution for the cryptocurrency mining industry. Combining his experience developing web-based applications from his pre-cryptocurrency days with the insights he gained from his hands-on mining experience, Sidles created a software solution that is proven to increase efficiency and reduce costs for mining operation teams.
Given his experience mining millions of dollars worth of cryptocurrency on both a small and large scale, he understood the nuances and complexity of mining in a way that only those with experience would gain. In other words, he knew what the software needed to be able to do in order to be effective.
“Miners are a bit more finicky than traditional computers, so they fail more often,” he said. “Without having software that is aware of all the different devices at all times and what their status is, it’s really easy to overlook some of the underperforming or broken units. If you don’t have a system that is capable of knowing where in the data center a device is, then you might see the miner’s down, but if you have a rack full of hundreds or thousands of miners, you have no way to find it.”
Minecheck’s software solves this problem by automatically deploying, configuring and monitoring miners in real time, enabling teams to take swift, appropriate action to ensure a fully functioning, optimized environment.
“The software is designed to remove the human element as much as possible,” he said. “It creates a whole new level of autonomy to both deploy and configure a mine, and then monitor it over time and alert users of issues.”
Indeed, the software provides a wealth of valuable data that is collected from the machines and fed back to the owners, investors, operators, etc. in a timely, efficient manner. Minecheck also tackles the issue of security, ensuring only certain personnel are allowed to interact with the miners to prevent pool configurations being changed to someone else’s pool.
“All these little lessons that I learned over the course of 10 or so years through mining were thought through in a big way to develop this software,” he said. “It’s ultimately about reducing the overhead and personnel, and increasing efficiencies in identifying and responding to problems when they occur.”
Minechek’s effectiveness speaks for itself: the software has proven to reduce the operating expense of a facility by as much as 68 percent.
While other mining software exists, Sidles explained that most of it is geared toward interacting with the devices. “They don’t have the data center infrastructure management component, which is software designed specifically to manage data centers,” he said. “Minecheck combines what people were doing right in regards to developing mining software with more of an enterprise grade data center infrastructure management package that is geared specifically toward mining.”
He added: “It’s much more of an operational piece of software, interfacing with servers, ticketing systems, layouts, positioning, etc.”
The Future of Mining
The need for software with Minecheck’s capabilities is only going to increase, especially as more large scale mining operations come into existence.
“I think the trend is going toward large, well-funded operations operating at a massive scale, compared to three to five years ago where it was more of the hobbyists privately funding themselves,” said Sidles. “What you’re starting to see now are essentially large funds that are hundreds of millions of dollars, if not more, either publicly traded or there’s some form of capital raise that is involved.”
Perhaps this is why Sidles remains so optimistic about the future of mining in general. “There’s this ongoing debate right now since a lot of people are negative toward bitcoin,” he said. “They look at mining and think it’s stupid or see it as just a waste of electricity, when in reality, it’s the most transparent way to run a decentralized system like bitcoin.”
Sidles also cautions against people who think bitcoin isn’t growing fast enough or doesn’t support enough transactions. “That’s kind of what makes it great,” he said. “It’s not altering or completely shifting the way that it was originally designed. It’s working today almost exactly the same way that it was designed from the beginning. So the mining aspect of it is what contributes to keeping all of those things in check. I think layer 2 solutions such as lightning will end up mitigating the issues with transaction throughput that naysayers see as a major disadvantage of bitcoin compared to traditional payment processors.”
He says one way to think about mining is in terms of brute force. “When we talk about guarding our physical assets, typically throughout history, whoever had the most force was the victor,” he explained.
“When you look at it from a mining perspective, bitcoin is the asset and you have this geographically dispersed network that is made up of multiple countries, with multiple companies that are operating within each one of those. The distribution of the decentralization ensures that the network is not only secure, but legitimate. So that’s literally what bitcoin mining is, it’s a form of brute force protection.”