Local man turned electricity into cryptocash from 10,000 miles away.

COUTRESY: ALEX WILHELM - The power station in Tattendorf, Austria, in 1925 when it went electric. In 2014 Alex Wilhelm and his father devoted 20 percent of the power to mining bitcoin, as a hedge against the price of electricity.

Facebook recently threw up one of those memories you are supposed to be tempted to share. It was a picture of me at the world's first Bitcoin ATM in Las Vegas at the 2013 Consumer Electronics Show. I dimly recall putting in $5 cash and walking away empty-handed. I presume I signed up for a digital wallet at some point, which is the only way to use the virtual cryptocurrency. Somewhere in the matrix my $5 in Bitcoin sits quietly, purring, waiting for the fall of capitalism.

Anyway, I largely forgot about Bitcoin until a week ago when I noticed the volatile currency was up to its old tricks. When it was formed in January 2009, one bitcoin was worth $1. (Bitcoin, capitalized, is the technology and network; bitcoin, lowercase, is the unit of account.)

At its peak in November 2013 it was trading at $979.45. Then it bounced around the $200-$400 band for a few years until it took off again in 2016. In early January 2, 2017 it traded at $1,129, only to drop back down to around $760 at the time of writing.

Just as I won't get out of bed for less than $400 million when it comes to Powerball, so I don't take much notice of Bitcoin until it gets near the $1,000 mark.

Just before that Facebook memory popped up — I suspect Facebook and Google have ears and listen to our actual audible conversations — I talked to a guy who used Bitcoin in an interesting way: to store electricity.

COURTESY: ALEX WILHELM; PAMPLIN MEDIA GROUP JAIME VALDEZ - One of the GPU arrays devoted to bitcoin mining, designed and managed from Japan by Wilhelm Jr.

Alex Wilhelm, a native of Austria whom I wrote about on January 6, 2017, when I looked at the app Validated, knows Bitcoin intimately because he did more than click and brag. He and his father own a small (120 kilowatt hour) hydro electricity generating plant near Tattendorf, Austria, where Wilhelm grew up. The plant goes back to the early 19th century when it was a water-powered cotton mill. The water-powered generator was installed in 1925.

Wilhelm and his dad were annoyed when the public utility gave them no choice but to offer 100 percent up-time to the village. For this they had to buy extra power from the gird at 1,000 percent mark up.

To get round this they instead started a Bitcoin mining operation — which uses a lot of electricity (and time) and effectively converted their spare power in to digital cash.

He says the same has ahppened at other powerplants in Washington, left behind whenwhere steel mills were unbilted and sent to China.

Bitcoin is pretty weird. It's a sort Pokémon GO for nerds. Real nerds.

You make ("mine") it by setting a high-powered computer to do a digital task, rather like solving a puzzle. When it is solved, other computers on the network check the answer and if correct the solver is awarded one Bitcoin, or fraction thereof. The beauty is that there is a hard limit. As more miners join the network and algorithm makes them more difficult to mine. When the 21 millionth bitcoin is "minted" (in about a hundred years, assuming no one kicks all the plugs out) that will be the last one. We are at about 14 million so far.

From then on, a bit like Roman coins, the only bitcoin market will be in exchanging them, not making more like other currencies (mentioning no names, but all of you).

Bitcoin is a capitalist's dream in that it resists regulation, can be used anywhere and is uncrackably secret. You might be handling the price of an ISIS scimitar or a donation to a major charity, you'll never know. For some people that's part of the thrill.

Bitcoin's price plunged more than 20 percent in three hours on Jan. 5 after a mild warning from the Chinese Central Bank. The 2016 run up was largely ascribed to Chinese investors looking for one more way to get out of Yuan.

 PAMPLIN MEDIA GROUP KAIME VALDEZ - Alex Wilhelm, far left, with his Validated colleagues. Wilhelm is the companys currency and settlment system expert, which swaps credits between one transporation platform and another.

In 2014 the Wilhelms devoted 20 percent of their electrical output to bitcoin mining. Alex was in Japan and never saw the operation for the one year it was up and running. He designed the computer arrays (racks with dozens of Graphical Processing Units (GPU) graphics cards hanging in them, exposed) and managed them remotely. Overheating was not a problem since the power plant has high ceilings. "In summer we just added a few fans like you get at Home Depot," he told me.

He's very proud of the fact that he managed to convert unsellable electricity into an asset (bitcoin) that he could hold or sell. "Doing this you are hedging electricity and turning it into something fungible."

Then the type of computers changed — miners started using the more powerful and expensive ASIC (application-specific integrated circuit) computers. The investment was too high for the Wilhelms. "You can resell a GPU on eBay to gamers, but when a new generation of ASICs come along the old ones are worthless."

So they switched to allowing other miners to come in and buy the electricity on the cheap using bitcoin.

"We went in to it long term, we said let's mine and hold." He doesn't totally hold — he has a Shift debit card linked to his Coinbase account. With this he buys a cup of coffee and pays in bitcoin at the exchange rate of that moment. (And what good value coffee it is, considering he got most of his bitcoin when the rate was $400 to $700 and now it's around $1,000.)

Those who want a chance of consistent payment join a bitcoin pool. Otherwise you are on your own and it's like playing the lottery.

"You can roll the dice and mine on your own. The chances are super low. But if you continually mine and take the cost of the electricity, it might run for 1, 10 or 100 years and if you are very lucky make something between 12.5 or 6.25 bitcoin. Production is set to regulate itself with difficulty. This means the more people are mining the more dificult it becomes to mine a block in addition to rewards halving at certain creation goals. For example, bitcoin block mining rewards halved from 25 to 12.5 per block in 2016. A further halving is currently slated for June 2020

At Validated Wilhelm is the tech brains behind the internal currency and settling systems such as Lyft, Uber, ReachNow and Biketown.

Validated first operated using Bitcoin as re-imburesment for parking & transportation costs until the uncertainty in regulation made them switch to more mainstream options.

He does like systems such as, which allows people to pay with bitcoin by trading them with someone who has Amazon points that are about to expires. (The motivation: a 15 percent discount.)

He says it can be used at Starbucks with, and as a genuine micropayments system across international boundaries. "You can send someone $1 and they get a dollar. There's no $30 bank fee or three day wait."

When he lived in Tokyo, Wilhelm was on personal terms with a man known as the Bitcoin Jesus, an evangelist who bought a million dollar's worth when it was at $1.

In Portland and Seattle though, the scene is a lot tamer. There's a bitcoin ATM at Pioneer Place Mall, a waffle breakfast and a Meetup group in Beaverton.

"Mainly though it's just people helping new people. When the price goes up, more people show up at the Meetup."

The bottom line? "Bitcoin is highly volatile, it's the same as the stock market,

don't put money in that you can't afford to lose."

This has inspired me to exit $2 Powerball for the less risky $1 Megabucks. I like that the tickets are printed and it's all done with ping-pong balls.

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PHOTOGRAPH: JOHN VINCENT - TechTonic: monthly good news about Portland Tech.

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