One of the questions I get asked the most from readers is "What vendors and manufacturers are safe to buy from?" With so many companies abusing their customers like Butterfly Labs and KNC, or starting out well like Bit-Tech and then disappearing, customers are wary of what and where to buy equipment. One of the places I recommend is Minersource. Manufacturers like Rockminer drop shipped me miners from Minersource for review. They always have fast shipping and safely packed miners.
Minersource is a name you can see in many of my articles. They are one of the top mining equipment sales and co-location mining companies in the community. I had been in contact with Matt, co-owner of Minersource, about physical bitcoins through BitcoinTalk, and when the Inside Bitcoins Conference happened in NYC, I was able to meet him in person as well as his partner Dan. What followed were many informal talks and almost two hours of interview time with them.
Matt and Dan are two dynamic persons in different and complementary ways
Minersource has long been an excellent vendor of many different mining manufacturers as well as needed accessories for miners. Matt and Dan, who have been involved in Bitcoin and cryptocurrencies for a very long time, saw that there was a need for suppliers of mining equipment and support. They believe so much in crypto that they decided to start Minersource full-time and not just do a partial job of it.
For them it was customers first. Even when Black Arrow was being delayed over and over, they refunded their customers out of their own pockets to make it right. Matt and Dan started by planning where they could build their business. The settled in Denver Colorado. They wanted some place where they would have great access to shipping routes and lots of power for their co-location miners. In doing this, they gave up everything and moved to Denver. They moved not only themselves, but their entire team as well. The interview follows below.
Could you tell me how you see the current miner market and where you think it is going?
Matt: It has gotten a lot better for both us, and the consumer. With much greater choices being provided by increasing large number of vendors, the space is maturing to the point to where we can do more “normal” sales, vs. the “push the batch until a price drop” market we have had the last few months.
Being a distributor of so many products with high volume and world wide shipping, what are the challenges you have had and what are the advantages you have over the competition?
Matt: One of our biggest challenges was actually accurate stock keeping, and keeping up with the swings in demand. One we may have a huge amount of demand and sell out of all our on hand stock, whereas other weeks we may have little to no large sales, with plenty of inventory left. Balancing these two polar opposites is a full time job, as we want to make sure our customers get the best possible price on the product, as soon as possible.
How hard has the Black Arrow delay been on you and Minersource and what are you looking forward to now that they have fixed their issues and are shipping finally?
Matt: The delays were brutal. Between the anxiety of not being sure in the early days if they would ever deliver, to now finally having received large bulk shipments of completed products, no one can say this was not a roller coaster of a ride. Once they had cleared all the backlog of pre-orders and taken care of their customers - I look forward to a long and fruitful relationship purchasing their in-hand products.
How has Bitcoin changed your life?
Matt: Turned it upside down. I went from preparing for a “normal” 9-5 job, maybe something slightly more esoteric, but I certainly never expected the ball that was Bitcoin to drop into my lap. It almost demanded that I drop what I was doing and get involved – and so far this is a decision I regret not one bit. [not a pun!]
You are so active on the forums and helpful to customers and people who are not your customers, how important is it to you to do that? I know you love miners and mining like I do, are you still enjoying it despite the massive work you do for Minersource?
Matt: I feel that whether or not someone is my customer makes no difference. If someone needs help or reaches out to me for help, if I can help them, there is no reason not to. Sure they may not be my customer or ever have given me, or plan on giving me, money, but that does not remove the human decency from the equation. One of the greatest aspects of Bitcoin is its ability to bring so many diverse and different people together under a united banner, and that’s not an idea that should get sidestepped just to make a few extra bucks. Plus, a large number of our customers specifically purchase from us because we took that extra mile, not just for them – but took it for them before they even became a customer.
How are things settling in for you guys in Denver? I know the move was big, with you and Dan sacrificing so much to get there and build Minersource.
Matt: Settling down much better now. Now that we have our staff settled and things running more smoothly, we can start expanding and looking towards the horizon.
I like how hard working you guys are. Are there any new manufacturers you have met with and are looking forward to carrying?
Matt: We recently started carrying BTC Garden products manufactured by BTC Garden in Shenzen, and we have had great feedback on it. Same thing with Rockminer, their R-Box is our best-selling product in its category. We have a ton of new products coming down the pipeline, don’t want to spill the beans quite yet.
With Dan, we spoke of several other topics in the Bitcoin realm.
One thing that Dan said that stuck out was that all the conferences are priced in such a way to keep out average adopters of Bitcoin. They need to come down to where anyone can afford to go which will help broaden adoption and expand the consumer base for the vendors and manufacturers that go to the conventions. He was not wrong. A regular one-day ticket to most of the conferences can be in excess of $400. Most people are not going to pay that.
Dan: The high pricing of conventions gives an elite atmosphere and slows the industry growth as a whole. For Bitcoin to have sustained growth, it needs wider adoption not a small, exclusive club.
How has Bitcoin changed your life?
Dan: On a personal level it has not changed all that much, we were in school when it all started. We quickly realized we were outgrowing our community at school where it all started, so we took a semester off and moved to Denver. I went from being a student to a business owner overnight.
We end up travelling a lot from city to city, getting to know a bunch of people in the industry that are out of my league, but still respect me because I know what I am doing and what I can do for the community. As far as family and friends they still don't get it but I am sure they will eventually. In a way, it can be a bit lonely as not many people can hold a discussion with me on it or understand me when I do talk about it.
Today at this conference there was a woman I spoke to whose daughter asked her to come to it. I spent 45 minutes explaining it to her, and she kept saying. "So if I buy this machine I can play the game?" I suppose in a way it is a game, but it is also real money with real results and real change in the world. It is going to take a while for people to understand that.
What is your key position in the business and how has it evolved as you have grown?
Dan: Matt and I specialize in consulting with people who want to get involved with our business. We show them how not only we are setup, but can work directly with the manufacturers to get the customers exactly what they need. It helps to have someone who can do that for them and will not talk down to them if they are asking for a little bit of advice. Matt and I excel in that area and are working to improve even more over time.
I see you and Matt work very well together and have been friends for a very long time how does that help Minersource overall?
Dan: It is very nice as when we travel together we are an excellent team. If I need to stay back because we have a client coming to us, and we need to meet with another client or manufacturer, it is nice to know we are on the same page. We have a great relationship that allows us to do that and agree with the correct path to get there.
How do you feel the new guidelines by the IRS are going to affect consumer protections?
Dan: I feel that the IRS saying Bitcoin is a property is a good thing as now you have a whole new type of barter system. You are basically exchanging one piece of property for another. This should allow for better consumer protections. A good example of this is the HashFast situation. Here you have given them your property for their property and refund in FIAT is not right you should get your property back. The IRS ruling makes it much clearer. It's a good first step.
Where do you see Bitcoin going this next year or two?
Dan: I think it's huge. This fall Second Market is coming into play. They have raised huge amounts of funding. This is going to bring much more transparency to Bitcoin. Some regulation needs to happen because as it is now. You send your money to MtGox like exchanges overseas and, therefore, relinquish control of it. Second Life will be based in the US and have the rules and regulations behind it that if something happens like happened with MtGox it would be like Berny Madoff and they would be going to jail and their assets seized.
I also see Bitcoin as a form of savings and remittance. I do not see it very quickly being a form of currency only. Right now if I want to go to a soda machine and get a drink, am I going to want to wait 6 minutes for the confirmation to hit before I get my soda or do I just want to use the dollar. Can you imagine the lines at Walmart if we all had to wait 6 confirmations? It will get better and maybe Litecoin, or Dogecoin could fill in there as verification is almost instant.
What do you like about the Bitcoin community?
Dan: The enthusiasm. I've gone to three conferences now (at the time of the interview many more now) and I cannot think of an industry where I have seen the community more enthusiastic and engaged. This enthusiasm leads to cooperation and as you and Matt spoke about competitors are working together and would rather find common ground to work together. The volume is there, and this is an emerging market and that is a very strong symbol of Bitcoin and should be done everywhere.
Do you have anything you would like to add that I may not have hit on yet?
Dan: On the manufacturing side I just wish they would hold the agreements more. Too many back out of agreements, changing orders and changing pricing last minute. That cannot keep happening if Bitcoin is going to go mainstream. If I was to go down to Best Buy and do a purchase order agreement with them, that is as good as gold. They are going to honor that. You cannot do that with a Bitcoin purchase order because they might decide to change it, not going to honor it or ask for more. That type of stuff has to stop happening. I have personally been burned by Butterfly Labs; there is the HashFast issue. It just cannot happen. You have to honor your commitments to your customers. We work hard to do that. Other companies just don't they run with your Bitcoin.
It should phase out, and many of these companies are experiencing growing pain, and some will not be here much longer. The normal development time for an ASIC is 18 to 24 months so when these Cointerra guys say they have six months and holdup to the stress or be out on time maybe not. They do not have the proper time to develop it. It is adapt or die as you said right now and many can't and a few will. Once it all stabilizes it will be different.
Matt and Dan at Minersource have taken the adapt or die effort seriously. If it is refunding Black Arrow customers out of their own pockets to make it right, or to fly off all over the world to meet manufacturers in person to develop relationships with them, allowing Minersource to bring out new equipment to their customers, Matt and Dan do it.
A couple things I could see from speaking with them is that they are dedicated to doing a good job on all ends. When they see a problem they work hard to fix it and if it affected their customers to make it right. There have been growing pains along the way like all companies, but they continue to learn and work hard. Engaging the community directly as well as their suppliers has led to a strong trust line. Their commitment to working with others in the industry is shown by how they work with other vendors like HolyBitcoin and others. Matt and Dan have shown me another side of the Bitcoin and Cryptocurrency industry.
Thanks for your time guys I appreciate it.