At the Inside Bitcoins Conference in NYC on April 7-8, I had the opportunity to spend some time with Juan Garavaglia of 112bit.com. He is the Authorized Bitmain Distributor for USA and Canada. Full disclosure: Juan brought me to the Conference so I could meet him and others in the Bitcoin community.
I have spoken with Juan prior about Bitmain products and distribution through forums and emails. As I got to know him, I found he was a very astute businessman with a solid work ethic. My interview gave me the whole picture of who he is and also just how Bitcoin has allowed people to create successful businesses and change their lives. Juan is from Argentina originally and has a world view of the Bitcoin industry that embodies what Bitcoin is supposed to be, a world wide currency.
Could you tell me about 112bit and how it came to be?
We are a small company. We came from the mining business, and we were looking for a mining solution and got in contact with Bitmain. We started ordering from them. During our talks, they asked if we were interested in selling for them. We told them that we could be a seller if we could get the same prices they sell for in China in US dollars to make it easy for people to buy the miners. Other miners had received some of Bitmain’s miners, and they realized they were stable at a good price, and they did exist. Miners started ordering from us, and we started selling to people with home based operations.
Right now we are working on improving all the processes such as RMA, customer support and being able to handle larger orders and more customers. The future looks good so we need to offer the best service we can.
Your customer service is very good before, during and after the sale. A very focused approach in helping your customers where many sellers fall short. Could you tell me about it from your perspective?
We try to deliver all the information to the customer before they purchase a miner. With such small margins, you cannot afford to have unhappy customers and give extra customer support after the sale because you did not follow up before the sale.
It is impossible to find a solution for everyone, but we try and do our best. In this industry, you need to think in long terms, not one week or one month. We are trying to build the base for something bigger, and that requires you to have a good relationship with your customers. We are not trying to make fast money. It makes sense to invest time talking with customers to find out when something is not ok and how we can solve it. In some cases, we compensate for lost mining.
Our biggest sale was to a guy who logged onto 112bit’s chat window and said he wanted a certain amount of miners. If I hadn’t been online I would have lost the sale.
It is all part of the business being online so much, but I enjoy it. It all works out.
What are some of your biggest challenges getting the units shipped? In Bitcoin, time is money, and everyone wants their miners yesterday.
Miners are very time conscious. The buy process in its whole can take up to five days from when they order. One day to process the order and three to four days for shipping.
Large orders is a bit different. Bulk buyers want the mining equipment spread out as they put together their infrastructure. They might want 500 th/s on May 10th, and not 2 or 3 days before as their site would not be ready. So it is a big co-ordination. The big orders take at least 10 to 15 days at minimum.
To get back to your question, we need to be clear on shipping time and the whole process. This is the market, and we need to make it work.
Have you been to any of the large data centers? What are they like?
I have been, but I think the model will start to change. There are many data centers across the US that have lots of empty space and miners use them for co-location. But you are paying data center at rates. In the future, it will take more and more electricity to generate the same Bitcoins. It will be more crucial to get electricity rates as low as you can. In many states, it is more expensive to run a miner a year than the cost of the unit.
In some states like Washington where the electricity is very cheap it is difficult to acquire large enough centers. It is easy to host 1000 units, but not 10000 units as it requires investments in infrastructure for the electricity.
In the end, we turn electricity into Bitcoins. I am sure Bitcoin mining it will move out of data centers. Many are investing in new ways of mine Bitcoins. You need to consider that even in the US you can get very cheap energy, but in some other countries the electricity is 50% less costly. Those places will have a huge competitive advantage. At the Conference (Inside Bitcoins), in one year, we will see people with booths offering electricity. Electricity speculation.
We both noticed that there were several co-location companies at the Bitcoin Conference. Some did, and some did not seem to understand the challenge that we are going to face with the electricity demands and cooling.
Juan did go on to say:
Many have a lot invested in their buildings and business models and will be able to adapt to meet the mining needs. Some will not. Bitcoin is an industry that turns energy into capital.
The interview will continue. Stay tuned.