Is Bitcoin mining the new gold rush?
Bitcoin, a global digital currency fostered by geeks, alternately abhorred and adored by privacy mavens and ignored by much of mankind, is making inroads into the Rogue Valley.
At least two Jackson County merchants are now accepting Bitcoin as payment for their goods and services, and a growing number of consumers are dealing in the realm of the virtual wallet as well.
Donnie Rowlett has taken the plunge at Pinehurst Inn Bed and Breakfast and Open Range Restaurant on Greensprings Highway east of Ashland.
"My first Bitcoin transaction just came through," Rowlett said Friday. "I now have ... the equivalent of $20. The customer sent it ahead to be applied to a dinner this coming Saturday night."
About 3,000 businesses around the world accept Bitcoin for payment, according to Coinmap.org, including more than 60 in the San Francisco Bay Area, the Wall Street Journal said. Rowlett views his move the way anglers view shiny lures.
"I look at it as an interesting way to market to people who might be looking for places to spend their bitcoins," said Rowlett, who has operated the bed and breakfast for six years. "It's awfully challenging to attract people to a bed and breakfast out in the sticks."
Bitcoin is like "digital gold" that can be transferred instantly to anyone worldwide (who will accept it) to pay for goods and services. No one controls Bitcoin but the users. Each unit has its own encoded signature to keep it from being counterfeited. Once you purchase a bitcoin, it goes into an electronic wallet run by an app on your personal computer. Once you've transferred it to someone else, it's gone. There's no reversing the transaction. And if you lose it because of a computer crash — well, it's just as if you'd forgotten where you buried your gold. It's gone.
Rowlett, one-time proprietor of Awwwsome Net Services in Redding, Calif., admits to being a bit of a nerd and doesn't mind trying something outside of the established payment lines.
"I might as well jump in and get the bugs worked out of my understanding," Rowlett said. "Then, when it does become something of wider use, I'll have a better understanding."
James Collins, who owns Stim Coffee in Jacksonville, sees Bitcoin as just one more way to pay for coffee.
"My idea was to be the first cafe in Oregon to accept Bitcoin," Collins said. "It is the first digital currency able to gain wide acceptance.
"Even though it's early on in the game, there is a lot of growth happening, and we want to offer that as another form of payment. It certainly gives customers another payment option, and an opportunity to use the bitcoins they've farmed or stockpiled."
The advantage, Collins said, is having a transaction settled without needing to await reimbursement.
"We have a merchant account that allows us to convert to U.S. dollars," Collins said. "It goes into our account, minus a transaction fee, which is much less than for credit cards."
The risk, he admits, is security.
"Generally, they target people with large balances, the same as if you had a huge amount of cash in a safe in your home. If word got around, chances are people would try to break in and steal it," he said, adding that he's not too concerned because he's dealing with small amounts.
"Long term, Bitcoin will learn and keep it from happening," Collins said.
The user demographic is 20somethings, video-game players and computer nerds, Collins said.
Brad Hass of Medford fits that description.
He's worked in the Internet technology industry for five years and considers himself an average Bitcoin entrepreneur.
"I found it on the Internet one day and did a bit of research," Hass said.
In December 2012, he bought two bitcoins for about $8 each. On Wednesday, bitcoins were worth about $620 each.
"It's a volatile currency, so it could be worth $600 tomorrow — or nothing," Hass said. "I've seen it skyrocket and go back down."
Bitcoin can be acquired three ways: mining, buying or trading (as a merchant), he said.
As one who deals in the arcane world of Bitcoin mining, he knows there is one element to which even non-nerds can relate.
"As the difficulty goes up in the mining process, it requires ever-more computing power," Hass said. "In my case, it's caused my electric bill to go way up."
Rowlett admits he has a sort of oxymoronic relationship with the virtual digital currency at his bed and breakfast in the Cascades.
"We thrive on providing a 1920s environment here," he said. "There's a certain difficulty in figuring out how to take an electronic payment when you're giving the illusion it's 1924. That's been a bit of a challenge for us."
Reach reporter Greg Stiles at 541-776-4463 or firstname.lastname@example.org. Follow him on Twitter @GregMTBusiness, friend him on Facebook and read his blog at www.mailtribune.com/Economic Edge.