By Leslie Anne Jones
Reporter with Silicon Hills News
Rated Austin’s fastest-growing startup in December by Mattermark, CoinTerra is less than a year old and did $35 million in sales in the five months since announcing its first product. The TerraMiner IV is sold out through April and the company is currently taking orders for May. Founder Ravi Iyengar says they will likely announce new Bitcoin mining products in coming weeks.
A bit of background for those who find cryptocurrency rather cryptic: Bitcoin is the frontrunner among dozens of decentralized peer-to-peer value transfer systems (including but not limited to Litecoin, Peercoin, DogeCoin, Kittehcoin and BBQcoin). Bitcoin’s current market capitalization is more than $10 billion, where every other alternative is less than $1 billion.
Introduced in 2009, Bitcoin is based on a cryptographic algorithm. It was created by an anonymous person (or perhaps group) known only as Satoshi Nakamoto. There will only ever be 21 million bitcoins in circulation, and presently there are only about 12 million. Bitcoins are released in blocks about every 10 minutes. A miner can obtain bitcoins by having his computer solve complex math problems in order to uncover the blocks and also to record transactions, for which the miner earns a fee. When Bitcoin was first introduced, this could be done on a personal computer, but Bitcoin is designed so the algorithmic problem solving (“mining”) becomes increasingly difficult over time. Today, a many thousand times more powerful system like CoinTerra’s is necessary to effectively mine Bitcoin.
This time last year, Iyengar was happily employed as a lead CPU architect at Samsung where he worked on next-generation mobile hardware. Last March, two people from the Bay Area contacted him over LinkedIn and asked him to head up their engineering team for a mining system. They offered half a million in base pay. Later, two Belgians approached him about cofounding a similar company. Iyengar asked them to invest in him instead.
“I decided to do it myself,” Iyengar said. CoinTerra was incorporated on May 15, 2013.
Iyengar and his wife were about to close on a house, but they couldn’t get their loan approved once he quit Samsung. “My wife was so bummed. It took a few weeks before she would talk nicely to me,” he recalled.
For the first five months, Iyengar didn’t pay himself anything. He received his first investors in June and raised $1.9 million between then and October. It took seven months to go from concept and product, and CoinTerra partnered with Open Silicon for the TerraMiner’s physical design and with AES for the system design. The boxes are manufactured at an undisclosed location in central Texas.
“We accelerated every part of this product,” Iyengar said. “We threw expediting money at everything.”
The finished product is a self-contained system that just needs to be plugged in and installed to start mining. “Your grandmother could do it,” Iyengar said, though most of his clients are men – home enthusiasts, mostly between ages 20-40, a tech background is common among miners. CoinTerra has some bulk customers too, but Iyengar said they plan to concentrate on retail.Presently, Iyengar doesn’t mine. He says he wants to take care of the customer backlog before he gets his own TerraMiner. However, some staff are engaged in other kinds of cryptocurrency mining: CoinTerra’s 24-year-old business development manager Stephen Henry keeps a warehouse in eastern Washington (cheap electricity) filled with computer hardware that mines various digital currencies around the clock. He doesn’t convert any of it to dollars though, “I believe in increasing stores of wealth based on technological innovation,” Henry said of his venture.
CoinTerra’s first local customer to pick up a unit was computer programmer Jake Gostylo. Gostylo first started mining on a more basic system with friends back in 2011. They cashed whatever they mined out immediately, and he estimates they made $15,000 before power and hardware costs. They had to give up that system when the algorithm became too difficult and power intensive to make it worthwhile. In the eight days since he and his friends received their TerraMiner IV, Gostylo said they mined 3 bitcoins, an equivalent of $2,400.
“I don’t doubt that we will be making our money back and then some very shortly,” Gostylo said. However, they aren’t going to exchange for dollars right away anymore, they’re keeping it in bitcoin now: “We’re hoping for the strength of the bitcoin economy to increase as well and the coins we have now will be worth more.”