GAW Miners

» see gawminers.com as it lived, on the wayback machine

~ the goodbye ~

GAW Miners started in 2014 in Bloomfield, Connecticut, selling other people's mining hardware to people who wanted to mine bitcoin at home. That was a real business with thin margins and a shipping problem, and Homero Joshua Garza replaced it with something better. Instead of mailing you a machine, GAW would keep the machine and sell you a slice of its output. The slice was called a Hashlet, it cost about as much as a nice dinner or a used car depending on the size, and the marketing said it was always profitable and never obsolete.

Between August and December 2014 more than ten thousand people bought roughly $20 million of them. The problem, which the SEC laid out in a complaint filed on 1 December 2015, was that GAW had sold vastly more hashpower than it owned and pointed at mining. The daily returns owed to Hashlet holders exceeded anything the company's actual machines could produce, so the payouts to early buyers came out of the money later buyers were still sending in.

By November 2014 the maintenance fees on a Hashlet had passed the payouts, which meant customers were paying to hold an asset that lost money every day. At the end of January 2015 GAW announced it was terminating Hashlet mining altogether. In February a cache of internal emails ran to hundreds of thousands of messages and became public, and the SEC inquiry was in them.

~ the chronicle ~

~ what a hashlet actually was ~

A Hashlet was a number in a web dashboard. You bought hashing power measured in megahashes and the dashboard showed it earning. You could point it at whichever pool you liked, which made it feel like ownership. There was no serial number and no machine you could name. GAW also told buyers it had acquired a controlling stake in a company called ZenMiner for $8 million, which sounded like scale and was not, because Garza had owned and controlled ZenMiner the whole time.

In 2014 I was writing computer vision code and the mining boom reached me only as a hardware annoyance, the year certain Radeon cards got scarce and expensive for reasons unrelated to graphics. Buying a dashboard entry that claims to represent a share of a machine in Connecticut was never going to appeal to me, and I want to be careful about saying that too smugly, because the pitch was not aimed at people who wanted to build a rig. It was aimed at people who had already decided bitcoin was going somewhere and did not want to learn how any of it worked.

~ the twenty dollar floor ~

In December 2014 GAW launched its own cryptocurrency, Paycoin, alongside a wallet product called HashStakers that paid you for holding coins in it. The headline promise was a guaranteed price floor of $20 per coin, supposedly defended by a fund and by exchange partners. CoinDesk reported on 7 January 2015 that the floor had already quietly disappeared from the story. Paycoin traded around six cents by that July. The SEC's reading was that HashStakers existed to lock Hashlet money in place long enough to postpone the collapse, and the arithmetic makes that hard to argue with.

~ the week the site changed ~

There is no press release marking the end, so the archive has to do the work. The Internet Archive's capture of gawminers.com on 21 March 2015 is still the full company site, titled for ASIC bitcoin and litecoin mining hardware, with Hashlet and ZenMiner in the markup. The capture from 28 March 2015 is a placeholder reading BTC.COM, Coming Soon. Seven days is the whole gap. Paybase, the exchange arm, closed in April. Today gawminers.com bounces to a domain-parking lander with nothing on it.

~ connecticut, 2018 ~

Garza pleaded guilty to one felony count of wire fraud in April 2017. On 13 September 2018 a federal court in Connecticut sentenced him to 21 months in prison, followed by three years of supervised release with the first six months in home confinement, and held him liable for $9.182 million in restitution plus $742,774 in pre-judgment interest. He was 33. It was among the first American criminal sentences handed down for a fraud built entirely on cryptocurrency, which is the reason this small Connecticut company still shows up in filings a decade later.

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