Mystery in Bitcoinland…. the disappearance of FriedCat

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This one doesn’t seem to have gotten picked up by any of the bigger news outlets, despite it being several days old. FriedCat has, apparently disappeared.

Who is FriedCat?

He’s the driving force behind ASICMINER, the first company to develop ASIC’s for mining Bitcoins. Some will remember that back in late 2012, FriedCat took to the message boards at Bitcointalk, seeking to raise money from the community by selling virtual shares in ASICMINER; the funds raised were to be used to design and produce the first ASIC’s, which ASICMINER would then deploy into a mining farm.

The project seemed to go off suffered through a few initial delays, but within a relatively short time, ASICMINER controlled roughly 30% of the mining market, and shareholders were rewarded doubly – in time, they earned far more Bitcoins than they originally invested AND the value of Bitcoin itself went up as well. For contenxt, when Friedcat was raising funds for ASICMINER, Bitcoins were worth around $10 each.

From Mining to Selling ASIC’s

Still mostly using GPU’s (and to a lesser extent, FPGA’s), ASICMINER and Butterfly Labs spearheaded the shift to ASIC’s. Ironically, it was Avalon ASIC who ended up shipping the first operational units, albeit in relatively small batches. As ASICMINER ramped up and came online, the rest of the mining world looked on at the few owners of Avalon miners and at FriedCat’s operation with a certain amount of jealousy and envy, and hopped at the first opportunities to buy ASIC-powered miners of their own. Unfortunately, Butterfly Labs, who  was the chief beneficiary of those desires floundered, taking over a year to ship the products that that their customers bought and paid for.

Seeing that ASIC’s were entering the hands of the general populace, but not in nearly enough quantity to meet demand, FriedCat pointed ASICMINER in a new direction – rather than mining for their own (and their shareholders) benefit, they began producing ASIC for sale to the public. Some shareholders were turned off by the new strategy, but FriedCat proved to have great insights into the market, and managed for a long time to sell ASIC devices to the public for amounts that were far greater than they would have earned by retaining the devices and using them to mine, themselves.

One issue with FriedCat’s leadership was a lack of timeliness and transparency. True, dividends were paid when they were expected, but for shareholders found themselves wanting for information like company updates and financials. Eventually, though, dividends tapered off. Though ASICMINER still maintained a sizeable mining operation, the revenues were put back into the company to pay for the design and development of future generations of mining chips.

Late last year, FriedCat announced that they would once again be involved in developing and deploying a sizable mining operation. AMHASH was born, and shares were sold through Bitcoin-related stock exchanges like Havelock Investments, alongside shares in ASICMINER itself, not to mention the smattering of other companies listed on the exchange.

What happened next, is not clear. Apparently, AMHASH’s operations went smoothly for the first couple of months, only to see dividends came to a halt without explanation. When people started reaching out to AMHASH for explanation, they were told that, actually, they had stopped receiving dividends far earlier, but had continued to pay out dividends from their own monies, in anticipation that FriedCat would make up for it at a later date.

Apparently, AMHASH had stopped performing and no one thought to tell the public. Not just that, but FriedCat, being the only person in control of ASICMINER’s and AMHASH’s private keys, has disappeared off the face of the earth as well, not having been seen or heard from since January. His last posts on BitcoinTalk were on January 25, 2015. Some speculate that he has been kidnapped, but many more simply think that he and his business partners let temptation get the better of themselves.

For whatever reason, personal identity has been overlooked in the Bitcoin community. After all, the currency itself was designed by a person or people operating under the pseudonym “Satoshi Nakamoto”… And FriedCat, having originally raised over $100,000 from the Bitcoin community, proved himself to being a trust custodian of his investors’ hardware and Bitcoin for a few years despite no one having any idea of who he actually was, until… until he suddenly wasn’t around anymore.

What happens next is anyones guess… Indeed, facts are still hard to come by, and the many shareholders of both ASICMINER and AMHASH are scrambling for information, some even putting up bounties in hopes of gaining clarity. Because nothing at all is clear, at this point.

It’s not clear, for instance, if all the the hardware that AMHASH owned has been physically stolen, or if it’s just been reprogrammed to deliver the mining proceeds to a different address than the one which would be able to pay out to shareholders. It’s not even clear if FriedCat is really missing, or if he’s just taking a hiatus from the internet (there have been instances where he didn’t surface for weeks at a time before, but during those times, all of the operations of his companies were executing flawlessly.

What most people are now assuming is that they’ve lost out. The value of their ASICMINER and AMHASH shares will likely go to zero, and any accrued dividends will likely go unpaid.

Thankfully for the community, ASICMINER is only a bit player at this point. It’s just saddening that this happened with a person/company that had such a huge impact on Bitcoin’s earliest days.

Author’s note: 

If I’ve gotten any facts wrong, or if I missed out on any important information, please let me know and I will update accordingly. Thanks!

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