“I invested in bitcoin when one coin was worth Rs 28,000, one-tenth of what it is today,” the Mumbai-based Gawde said. On August 30, one bitcoin was worth Rs 2,91,822—its value skyrocketing since Donald Trump’s election as the US President in November and spawning an industry of auxiliary services for people rushing in to find gold in the virtual currency.
Bitcoin is a decentralised, paperless crypto currency invented by Satoshi Nakamoto, an alias for an anonymous programmer in 2009. Unlike traditional currencies, crypto coins are not produced by a central authority like a bank or a consortium. It is a mathematical formula. These coins are produced by massively souped-up computers, called ‘mining rigs,’ that solve complex math problems to obtain these virtual currencies. A ledger records all the transactions.
A typical crypto currency mining rig runs round-the-clock, its performance depending on the high-end graphic cards and cooling systems used—not an inexpensive proposition at an average Rs 3 lakh a machine. Even so, several online vendors as well as individuals are investing in these machines with massive computing power to mine crypto currencies.
A Chandigarh-based online vendor who calls himself Letsmine is one such ‘miner.’ He has built and sold 90 mining rigs through eBay at a base price of Rs 3,00,000 each. Letsmine has been selling rigs for the past one year, assuring customers that the investment can be recovered in 8-9 months.
Not just building rigs, “we even host rig of others at a monthly cost. We will install your rig at our location in a temperature-controlled room and charge monthly,” said a spokesperson for Delhi-based Gadgets Deal India, which also sells on eBay.
Bitcoins saw explosive growth in India after Prime Minister Narendra Modi recalled high-denomination banknotes in November. Indian Bitcoin exchanges have received a lot of traction in the past few months with more than 1 million active crypto-currency users. “We recently crossed 100,000 active users on our platform, and are adding 10,000-20,000 users a month,” said Hesham Rehman, chief executive of bitcoin exchange Bitxoxo.
The rise in popularity of crypto-currencies has enabled techies like Saket Nalegaonkar to build services around it. The 28-year-old Internet-of-Things engineer spends his spare time travelling around the country helping enthusiasts set up rigs for mining. “I saw an opportunity in building rigs,” he said. “So far, I have helped more than 10 people in India build rigs and charge them on a per-month basis for upgradation and maintenance.”
Kumar Badgujar, a management graduate, had other ideas for mining crypto-currencies. The 26-year-old rewired five computers in his college lab, making them work in tandem to mine ethereum (another crypto-currency that is on the rise). “Assimilate the computing powers of five personal computers helps me mine faster,” said Badgujar, who has been clustered mining the past four months to produce both bitcoins and ethereum.
Some companies—Hashflare, Genesis and Bitconnect among them—have even set up so-called farms to collectively mine crypto currencies for individuals unable to assemble their own machines, for a fee. “Cloud-mining is the in-thing now,” said Gwade, who runs a bitcoin support website, bitcoinsupport24*7, that receives about 10 email enquiries a day related to investments in bitcoin.
Individuals can now spend as low $2 to start with for mining, and these companies assure fixed returns every month. “These give out fixed payouts… which is what I am going to spend during my trip,” Gawde said.
Given the massive surge in the value of crypto-currencies, real-estate developers, too, are seeking a piece of the action.
Bangalore-based Nalegaonkar, who helps set up rigs for mining, has been contracted by real estate developers to convert entire floors into mining farms. In the last two months, “I have gotten contracts from two real estate developers to create in-house mining farms in Indore and New Delhi,” he said.
The lack of regulations, though, has cast a shadow over the bitcoin universe. “Over the last six months, the (Reserve Bank of India) has issued several statements warning consumers about financial and regulatory risks associated with virtual currencies,” said Kannan Sivasubramanian, co-chief of research and advisory firm Aranca. “Considering the rise in usage of such currencies across the world and in India, the government should look at putting a policy framework in place immediately.”