EAST WENATCHEE — George Turner has a task on his hands: Turning around a $30 million blockchain project that’s losing money, laid off staff, lost its CEO, owes money to contractors, and faces a federal class action lawsuit
Giga Watt Inc., a massive host service for cryptocurrency miners, announced this week it had laid off 47 of its 63 staffers, amid liens from contractors amounting to more than $625,000. The collapse came after founder and CEO Dave Carlson spent years as Giga Watt’s public face promoting the promise of blockchain — the distributed computing system that makes cryptocurrencies like Bitcoin possible.
But as trouble loomed, Carlson departed in mid-August — so quietly that even employees weren’t aware of his decision for weeks. He remains head of the board of directors. Turner was named managing director.
“Giga Watt took on, really, the equivalent of one of Hercules’ own trials,” Turner says — namely, the construction of a privately owned substation that would have powered 22 buildings of high-capacity processing equipment with more than 30 megawatts of electricity.
The plan couldn’t come together without agreement from Douglas County PUD and the Port of of Douglas County, and the substation had to be redesigned multiple times to meet standards. That put Giga Watt behind its ambitious construction and financial targets, Turner says, and layoffs became the best option.
Some staff asked to stay on voluntarily, Turner says, “because they believe in the vision. Where do you find people like that? It hurt to let those kind of people go.”
Giga Watt set itself up as a host service for crypto miners, selling equipment and computing power to help them harvest value from Bitcoin and other blockchain assets. Its financing was tied up in crypto-based “tokens,” or shares, that it sold in a sale called an “Initial Coin Offering” last year.
Token value was based on hitting construction benchmarks, which have now passed unmet, alienating both clients and investors. Cryptocurrency values have also fallen generally since the ICO. Giga Watt settled a lawsuit from one token holder, but now faces a class action suit that could represent thousands of them, claiming the ICO ignored U.S. commerce laws.
“We promised certain target dates early on, before we or even the Port or the PUD really understood how complex this project was going to be,” Turner says. “… Was the ICO something we needed to do, was it a good idea, was it a mistake? And the answer was yeah, I think it was all of those things in some ways. We needed the funding, we wanted our clients and investors to be involved in the project, and we saw that as a way to make that happen.”
Giga Watt now hopes to retool — becoming na more traditional server farm, renting processor bandwidth for AI, CGI rendering and other applications. Cryptocurrency remains in the mix, though. In fact, some of Giga Watt’s processors are now hashing Bitcoin to help pay its debts.
“We’re fighting for this company. We’re fighting for our clients. We’re fighting to satisfy the debts we owe to our creditors. We’re fighting really for our own future, and the future of the employees that we had to lay off, most of whom had gotten to be like family to us.”
Jefferson Robbins: 679-7013