{"id":208837,"date":"2017-11-04T07:00:22","date_gmt":"2017-11-04T05:00:22","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=208837"},"modified":"2017-11-03T16:04:41","modified_gmt":"2017-11-03T14:04:41","slug":"meet-the-sheepherder-who-now-mines-bitcoin","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/208837\/meet-the-sheepherder-who-now-mines-bitcoin\/","title":{"rendered":"Meet the sheepherder who now mines Bitcoin"},"content":{"rendered":"

Eugene Mutai\u2019s Nairobi apartment is filled with the sound of money: That would be the hum of a phalanx of fans cooling the computers he\u2019s programmed to mine cryptocurrencies around the clock.<\/p>\n

The 28-year-old has given up a chunk of his living quarters to the enterprise. What\u2019s more, he invests every spare cent in initial-coin offerings: fundraising tools some startups are using to crowdsource capital.<\/p>\n

He\u2019s a proud citizen of a strange and controversial new world \u2014 and a rather rare breed, with just a high-school education and no formal training as a coder.<\/p>\n

That\u2019s one thing he holds up as proof that cryptofinance isn\u2019t the scam that a diversity of critics, from Jamie Dimon of JPMorgan Chase & Co to Saudi Arabian Prince Alwaleed bin Talal, have suggested it is.<\/p>\n

\u201cThe entire ecosystem could be the biggest wealth-distribution system ever,\u201d Mutai said as his 2-year old daughter, Xena, named after the warrior princess, played with a tablet, swiping from app to app. In the world of internet-based currencies traded without interference from banks or regulators, \u201cbig players can\u2019t deny anyone from participating in the financial system.\u201d<\/p>\n

For Mutai, the appeal is simple: It levels the playing field in global markets that don\u2019t give people like him many breaks.<\/p>\n

An opposing view is that what this young man is doing is wrong or stupid, sucking up massive amounts of electricity to create a software-fabricated asset that\u2019s traded anonymously in a lottery criminals find irresistible.<\/p>\n

So Mutai is either in the middle of a fraud, or a revolution. Whichever, the market has exploded \u2014 growing to $190 billion from just $17 billion at the start of the year. Hundreds of new digital tokens have sprung up as entrepreneurs started projects based on blockchain, the public bookkeeping technology that supports digital currencies, raising millions and even hundreds of millions of dollars in minutes.<\/p>\n

The value of bitcoin, the biggest of them all, has increased six-fold. And it\u2019s about to go mainstream, with CME Group Inc. in Chicago planning to introduce bitcoin-futures trading contracts by the end of the year.<\/p>\n

Cryptocurrencies are especially attractive in economies where there are restrictions on taking cash abroad, or people don\u2019t have bank accounts, or the local currency is being trampled by inflation.<\/p>\n

That\u2019s the case in Zimbabwe, for example, which is facing a liquidity crisis as inflation spirals: Bitcoin in the local Golix exchange has soared to more than $10,000, a 75% premium on global prices, as locals rush to it to protect savings.<\/p>\n

In six of the largest African nations for which there is trading data in the online exchange Local Bitcoins, the average premium to the Bloomberg bitcoin index is 7%; the gap in major bitcoin trading hubs such as China, South Korea, Germany and the UK doesn\u2019t surpass 3%.<\/p>\n

Mutai said he sees cryptocurrencies as safe because \u201clocal political issues don\u2019t affect them\u201d \u2014 something of note in Kenya, where after two elections within three months there\u2019s still a stalemate over who is the rightful leader.<\/p>\n

Just last year, Mutai hadn\u2019t heard of bitcoin, which hardly makes him unusual. Neither does the fact that a decade ago he didn\u2019t have access to a computer. He was interested in technology, though, and borrowed a friend\u2019s Nokia\u00a0Symbian S40, one of the first non-smartphones that could download apps.<\/p>\n

In between odd jobs in farming, herding sheep and ferrying people on his motorcycle, he taught himself the basics of HTML and CSS coding languages.<\/p>\n

He was living at the time in his mother\u2019s home village \u2014 they moved there from the city for his last year of high school, after his twin brother died and his mom lost her job \u2014 and was barely earning enough to survive. So he decided to move in with his uncle in Nairobi, who happened to have a desktop computer and a WiFi connection.<\/p>\n

\u201cIt was do or die,\u201d he said.<\/p>\n

\"\"<\/a>

Cables and electronics components that make up one of Mutai\u0092s mining machines. Photographer: Luis Tato\/Bloomberg<\/p><\/div>\n

Mutai spent four months glued to the computer, worrying his uncle, who at one point took the machine away. After mastering the mysteries of code, he landed a job as a programmer.<\/p>\n

He also became a consultant for the technology incubator iHub and for the Nairobi County government. By 2016, he was named Kenya\u2019s top-ranked software developer by Git Awards, which bases its rankings on data from GitHub, a site where coders store and share their work.<\/p>\n

Now Mutai works for\u00a0Andela, which trains developers and engineers throughout Africa and connects them with companies including Microsoft Corp. His current contract is with\u00a0Restaurant Brands International Inc., building an ordering app for Tim Hortons.<\/p>\n

He\u2019s in the Kenyan middle class, a feat for a guy without a college degree.<\/p>\n

But his opportunity for real wealth, Mutai figures, is in cryptocurrencies, which he can exchange for dollars or hold as an investment. His mining rig\u00a0runs six 1080 Ti graphics cards. Maintenance is pretty low, as he wrote on his Facebook page: \u201cIt sits in my living room doing its thing all day every day with little or no supervision.\u201d<\/p>\n

At the moment, the rig churns out mainly digital coins called Zcash and LBRY Credits. Mutai said he\u2019d like to increase production by plugging in two more graphics cards, but that will have to wait until he can upgrade the power supply to his apartment.<\/p>\n

As it is, his monthly electric bill is about $200, steep for a residence in Nairobi.<\/p>\n

His initial-coin offerings investing takes more personal energy. \u201cI do a lot of research,\u201d Mutai said. \u201cI feel like a small VC.\u201d<\/p>\n

Is he treading dangerous waters? Possibly, but he\u2019s up for the gamble. \u201cThey say no-risk, no-return, and I\u2019m willing to take the risk.\u201d<\/p>\n

\"\"<\/a>

Mutai arranges a rack of cryptocurrency \u0093mining\u0094 machines at his home in Nairobi, Kenya. Photographer: Luis Tato\/Bloomberg<\/p><\/div>\n

\n

Read: Bitcoin just hit R100,000 in South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Eugene Mutai\u2019s Nairobi apartment is filled with the sound of money: That would be the hum of a phalanx of fans cooling the computers he\u2019s programmed to mine cryptocurrencies around the clock.<\/p>\n","protected":false},"author":59,"featured_media":208839,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[5537],"class_list":["post-208837","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-bitcoin"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/208837","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=208837"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/208837\/revisions"}],"predecessor-version":[{"id":208955,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/208837\/revisions\/208955"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/208839"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=208837"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=208837"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=208837"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}