 And we are live. What's up, guys? Welcome back to another episode. And today's special guest is Ty Walker, a little quick buy of his. He started mining Bitcoin in 2010 to 2011 on a single Nivea GeForce GTX 260 and mine somewhere around 200 Bitcoin before his computer died and he had to wipe the machine. He may have backed up the wallet dot that file. But then in late 2011, his machine, for some reason, failed while trying to write the rate array where the wallet file might have been and got corrupted. But then a day he doesn't have that anymore. He took a break from crypto until about 2015 when he left his job to study data science and started getting back into crypto space, spent some time as a mediocre day trader, then started mining again in 2016 and has been doing ever since. And he's currently a self-employed and mining is his full time job. Ty, welcome to show. Thank you for having me. It's my pleasure. The reason why you and I connected is you tweeted the other day talking about the NiceHash hack, and that's a pretty big deal. I want to get a little bit more information since you have some experience using it. Kind of like I just want to dive into it like, A, what is NiceHash? Be your experience and what happened? Sure. So NiceHash is or was, I guess it depends on when, if they come back or not. But NiceHash, we'll just say is for the time being the largest reseller of hash rate for crypto mining on the internet. There are a couple of other places you can rent hash rate from, but NiceHash sort of like cemented themselves in the marketplace by providing a really easy way for anyone with a GPU or ASIC or whatever hardware to mine cryptocurrency. If you ran Windows, it's just a simple executable that you run and it basically just benchmarks your machine, determines what your machine is good at mining, and then it just automatically mines whatever is most profitable at any time. And so, you know, basically the price that miners get paid through NiceHash is sort of like the market price. So like whatever people are willing to pay, so like people like me as well as other people who rent hash rate, whatever the people are willing to pay at any given time to mine on a specific algorithm, NiceHash pays that to the miners basically. So it's like kind of averaged, you know, you take like, you know, there's an order book of prices of what people are paying by order. And then NiceHash kind of averages that out and just pays the miners that average rate. And so it fluctuates over time. So like if you were mining on your machine on NiceHash, you would probably notice in the given day that it would switch algorithms, you know, two, three, four, five, six times or more, depending on on fluctuations of that day. And a lot of that goes into, you know, what the market price of the given cryptocurrency is on a given day and what algorithms those currencies are associated with, as well as just whatever people are willing to pay. And so basically that's kind of how it works as far as the hack goes. So NiceHash typically does payouts every week. And so they offer two ways of being paid out. Either you can specify, if you're a miner, you can specify a Bitcoin address that's that might be an external wallet. So something you would have on like a ledger or a digital bitbox or something of that nature, or maybe even your Bitrex account. Though, you know, I would not ever recommend that, you know, you want to control your coin. They're also getting DDoS attacked as we speak. Right. You want to control your your your private keys whenever possible, right? So you can specify an external wallet address, though they only pay out to external wallet addresses when they when you hit point oh one DTC mined. And so if you're a smaller miner, that only has maybe like one or two or three GPUs that might take you. Let's say if you're using a 1080 TI, it might take you, you know, 12 or two 1080 TI might take you like 12 days to get to that point. Oh, one DTC depending on the rate at which mining happens. And so they incentivized keeping your they incentivize basically keeping the money in a NiceHash wallet. So like a Bitcoin address that was NiceHashes on NiceHashes and essentially and they incentivize this incentivize this in two ways. One, the payouts are much quicker. So like I think it was point oh, oh, yeah, point oh, oh, one DTC with the was the the minimum before it would transfer it into your NiceHash wallet and then you could either transfer it out or you could use it to rent. And also the fee structure was was lower in terms of in terms of like keeping your money on there. It was you were basically financially incentivized to keep your money with NiceHash. So that's from the minor perspective. And then from the rent things perspective, it's pretty simple. You can't rent anything unless you had Bitcoin in your NiceHash wallet, right? Like you have to it's like having money on exchange. You can't go on to Bittrex and make a trade saying like, well, I'll send my Bitcoin as soon as this trade executes. Like your money has to be there like sitting at a poker table or anything else. You can't bet with something that's off the table. And so essentially there were NiceHash is the was a custodian of a bunch of Bitcoin. And we know that 4700 and change BTC was was hacked and sent from a NiceHash wallet, which it was a single wallet that contained all those funds to a hacker's Bitcoin address and I'll tweet the Bitcoin address of the hacker so people can can look and see. I definitely will be monitoring it every day to see where that money goes. But so essentially it's unknown as of this time whether that was all of them, all of the customer funds that NiceHash was holding. Maybe it was just the funds that were to be paid out to external Bitcoin addresses. So maybe the internal NiceHash wallet was safe. It's unknown at this time what percentage of funds that was. And it's also unknown if NiceHash has any sort of insurance or vault of Bitcoin that they hadn't kind of had for emergencies like this to maybe do what Coinbase did when that Ethereum flash crash happened and they reimbursed a bunch of margin trading customers who kind of had all their positions liquidated like in an instance when Coinbase went down and that happened. So we don't know yet exactly what's going to happen. From my perspective, I like NiceHash a lot. I think that they filled a need that no one else really filled. I mean, for me as a person who loves mining, it's really upsetting just because well, number one, I lost some Bitcoin. That's upsetting in and of itself, but also it was a really good and easy way for people who maybe they just had a home theater PC with the single video card in it, but they could just run that NiceHash.exe and maybe pay off their machine in six months or seven months or eight months. And so for me, it's annoying because it was like a really easy avenue to get people into mining and cryptocurrency is going to continue to grow at the rate at which it's growing. Assuming we have these altcoin networks that require hashing power in addition to the Bitcoin network, of course, we're going to need new miners. You know, there's going to be demand for it moving forward. And so I hope that they come back, but what happens? Who publicly stated the hack? Was it them? Yeah, so there was a rumor and then the rumor became a, you know, it was a Wiki something, it was a tech blog that posted that they had spoken with NiceHash and, you know, the quote that was saying like, and we're working with authorities, which, you know, was indicative that something nefarious had happened. And then they came out with a public statement on Reddit and then they posted that public statement to their website as well. So you can go to nicehash.com right now and assuming it's still down, which it is, you know, my question is like, I read the statements. Anyway, sorry, go ahead. Let me ask you this. So they lost 4,000 something of Bitcoin. Why don't they just keep that offline? And when the time comes to reimburse, they just put it back online. Yeah. So this, you know, it gets into their internal management of funds and you know, yeah, I mean, it's pretty standard operating procedure for a pool operator. So we think about pools such as, you know, you know, mining pool hub or, you know, Supernova or Z pool or Litecoin pool or any of these pools, it's common for them to have cold storage to prevent something like this from happening. So I'm not sure, I'm not sure what happened. I don't know if this was their standard operating procedure and they've had this one address. I haven't looked at the historical deposits of the address that the money was pulled from. But, you know, it's possible that this was just their poor operating procedures. It's also possible that the money was in the process of being moved out from, you know, maybe, you know, this address had only some of the nice hash funds and it was being split before it was going somewhere else or going to cold storage for all. I know I'm not sure, but yeah, we, you know, we don't really know. It's all speculation at this point exactly what their procedures were and why and how this happened. So we will know more, I think, as they investigate on their end and then, you know, decide to let us know what happened. So you said something interesting before yesterday. Was it like 50% of the hashing rate dropped off after the hack? Yes. So I noticed, you know, because I have some of my own hardware as well. And so, you know, I noticed nice hash went down when my API, like all my API code failed. And then I also noticed that my miner was not my machine wasn't mining anymore and that my balance was zero, which was concerning. And so I ended up, you know, essentially. Switching it up and mining to a pool directly rather than mining for nice hash with my hardware, which I do periodically anyway. And through monitoring the hash rates on the pool I was on, yeah, I noticed that a lot of the network hash rates for a variety of different coins had dropped substantially. I don't know the average across all of them, but one coin, in particular, a vert coin, which I think just had a having. So that could be part of why the hash rate dropped, but its hash rate was far lower than normal. And I believe that's true for a variety of coins. And this makes sense, right? So you go from being the largest marketplace for renting hash rate in the world and then all of a sudden you go down and there's a lot of people out there who, A, don't necessarily have the skill set to know that they can just throw their machine at a pool using a miner that they can get off GitHub or people are away from their machines. And nice hash was pretty reliable. So people might have been away from their machines and just didn't get wind of the hack and the fact that nice hash was down until later on in the day. And so, yeah, the hash rate of a lot of networks drops pretty substantially, I would say, for a while. I didn't get a chance to check this morning, but I do know that mining with my machine, it was about twice as profitable mining yesterday directly than it would normally be. Actually, a little bit more than that, probably 2.3 or so times as profitable as normal. So it definitely had an effect. Could minors have been involved in this hack? Or I don't know, there definitely could have been incentive to disrupt network hash rates to take advantage of it both on the mining end but also in terms of just stealing the Bitcoin. But that's just purely me just coming up with what may border on conspiracy theory. So I don't know for sure who did it, but it did have a network effect for some time. Moving forward, do you think we're going to see more competition come out of this? Do you think a nice hash will survive this? What's your, let's say, predictive analysis for the future when it comes to crowd mining like this? So yeah, I'm not sure if nice hash will survive it. $60 million in Bitcoin is a lot of money. $4,700 in change in Bitcoin is a lot of Bitcoin. And so if they don't have any ability to pay back their customers, then the question becomes, well, who's really going to trust mining for them? And more than that, who's going to trust putting Bitcoin on their platform to rent? Because if you're a miner, you get paid out every week. So your risk profile is reasonably low. If they get hacked, in the worst case, they get hacked the day before payout and you lose your week's worth of earnings unless you were just keeping money on there and you just weren't sending the money off to a hardware wallet or cold storage or something like that. So I don't know if they'll come back. There are other providers out there, miningrigrentals.com is a provider. They might see an increase in business. They operate a little differently than nice hash. It's a little less user-friendly than nice hash is on the renting side. But who knows? Maybe this will be an opportunity for them to grab a bigger chunk of the market share. I know that there are going to be people out there that are going to want to run their rigs on a platform like nice hash because it's just simply a lot easier from a workflow perspective to do that versus writing your own custom scripts to the algorithm switch based on profitability. It's a lot easier to have a provider just do all that for you. So it's possible we'll see a competitor, a new competitor nice hash emerge. It's also possible. My game plan? I don't know, honestly. I mean, we're still early. It's only been roughly 24 hours since I kind of learned about what happened. I think that I just haven't really figured it out yet in terms of exactly what I'm going to do. I'm still kind of just like in shock. I mean, that was a big chunk of my budget for mining that I lost somewhere in the neighborhood of 0.22 to 0.29 Bitcoin, which maybe doesn't seem like a lot to people, but I'm a self-employed at home magic internet money miner. So that's a lot of money to me. That was a lot of my budget. And so it just kind of has me thinking, is this really the direction that I want to be going? That's well over a month's worth of profit for me. So at my current stage, anyway. So yeah, I'm just still kind of like in shock, I think, in terms of existential life crisis. Maybe I don't know just like. I think we're going to see many more different variations of this. I wouldn't be surprised if some of the big exchanges get hacked. There's a lot of issues going on with that. Those are the weak points in the crypto space, the centralized servers that are holding countless of bitcoins and cryptos and tokens online. And should be told, if you look at history majority of time, and I would say 50% of the time is some kind of insider information. Doesn't have to be insider information. Sorry, it doesn't have to be insider person, but it can be somebody who gave information that's happening inside. And I think that. Yeah, it could have been anything like that. Who knows? Yeah, I mean, for all your viewers out there, I'm sure you have said this many times. I'm sure the people you've interviewed have said this, but never trust third parties. Never trust, hold your private keys whenever possible. I know this. I tell people this all the time, when people are asking me about buying Bitcoin and holding it, or whatever, or any crypto. It's like, keep it on exchanges for as little time as possible. I have multiple of these. Ledger, Trezor, whatever. I prefer this one, the UX. And this, this small $100 investment can save you a fucking lifetime of headaches. Yeah, it can save you at least 0.2 to 0.9 Bitcoin. Yeah, I mean, it's true. I mean, unfortunately, in this case, I didn't really have a recourse. You got to have money on there in order to rent, and I rent on a pretty regular basis, daily basis. And so you get into the cost-benefit analysis of risk versus paying a transaction fee every time I send a small amount of Bitcoin to run a mining job. And so for me, it could have been a lot worse. I certainly have had way more than that amount of Bitcoin on NiceHash when I was running a large quantity orders over the course of a few weeks, or a month. And so it could have been much worse. But yeah, I mean, maybe it has me reviewing my security. Interesting to see what you said, where everyone knows where the address is and how much is on there. What did you say it was? It was like $40 million? It's $60 million US dollars as of yesterday, but today Bitcoin price shot up again. So, you know, probably if it does move, if it does move, it might move over an OTC counter. Yeah, I think that that would be, yeah, I don't, I mean, I think that NiceHash will have been able to say, you know, to exchanges, hey, look, anything, you know, this is the address that hacked us and anything downstream from this address, like don't accept deposits from it. And, you know, they may agree to that. The more reputable exchanges would probably agree to it. Whether, you know, like Chinese and Eastern Europeans exchanges would or wouldn't, I don't know, but, you know, in all likelihood, yeah, if the hacker doesn't wanna get caught, they're gonna just basically sell it for far less than market price for some sort of fiat over the counter. So, yeah. So if people wanna get, like in touch with you, I know you're pretty prolific on Twitter. What's your Twitter handle? It's at, sorry, drinking water here. It's at Yorktronic, Y-O-R-K-T-R-O-N-I-C. Cool, I'll leave a link below this video and Ty, thanks so much for coming on and telling us this story and I'll talk to you soon. Absolutely, happy to be on, thank you. Thanks, peace. Bye.