BFL Jalapeno mockup

An Interview with Sonny Vleisides

Butterfly Labs (BFL) is a company that manufactures Bitcoin mining equipment. Like most companies of any meaningful size they have their fans and their haters and every product release or announcement is heralded by some as the best thing ever and by others downright awful. This is all pretty normal, really. What’s not normal is the chatter about the possibly checkered past of a member of its executive staff: Sonny Vleisides.

After a few days of watching accusations fly, an attempted response by Mr. Vleisides, and some serious smear campaigns being waged, I contacted BFL requesting an interview – I wanted a serious no-spin chat with Sonny and quite to my surprise, that’s exactly what I got.

I was surprised because, well, for an executive of a Bitcoin company, Sonny is a pretty private guy. In one chat I had while trying to track him down he was referred to as “the most elusive motherf***er I’ve ever known” and that about sums up the average response when you start asking about Sonny Vleisides. So when I sent a private message to his brand new, only ever had two posts account I expected to receive silence – Instead I got “Sure, I’ll be happy to answer any questions you have” and an email address. A few emails later I fired up Skype and we had a frank discussion about his past, peoples’ concerns and the present and future state of BFL and their upcoming ASIC line.

Now this probably isn’t going to help a lot, but a lot was said that I simply can’t tell you. I’ve seen mockups and details about the upcoming ASIC line that aren’t public yet and I’ve promised not to release them. The few details that I’m able to release without violating anyone’s trust, I will, but I’ll go so far as to say that while I haven’t seen a physical ASIC actually churning out hashes I’ve now seen more mockups than any scammer would bother producing. I’m not one to vouch for anything I’ve not laid eyes upon, but everything seems pretty well laid out from here.

Practically the first words out of my mouth were something like “what assurances can you actually give us that the ASIC exists and you’re not running away with our money.” He responded with the aforementioned torrent of still-secret product information. He then proceeded to make a few very sound points that I think most folks aren’t taking into consideration when judging BFL based on his past.

  • Contrary to what the public records seem to indicate, he’s not the CEO of BFL – Sonny Chris Vleisides is not the CEO, Chris Vleisides (his stepfather) is the President (as opposed to his natural father, James Ray Houston, who was listed on the indictment) and Nasser Ghoseiri is the CEO – the confusion is understandable what with all the similar names, step and biological fathers and BFL’s seeming hatred of titles. Sonny is an upper-level executive within the company, but he’s not the absolute head, nor is his stepfather.
  • Even if he were the CEO, the CEO doesn’t have the ability to arbitrarily run away with much of anything. Like most incorporated entities they have a board of directors. The CEO certainly has a lot of sway with the board, but not enough to take the money and run.
    • Quite important sub-point: One bit of the inner workings of BFL that I explicitly got permission to publish is that almost all bitcoins received via bitpay for preorders etc. are converted to USD by bitpay and deposited into BFL’s bank account. This is important because that account is a corporate account with per-user limits, multi-signature requirements and all the standard protections enforced by the bank that keep the CEO of any company from emptying the company’s bank account. The small fraction that remains denominated in bitcoin is only what they need to process refunds reasonably quickly. Almost all of BFL’s funds are secured against embezzlement the same way most companies’ funds are.
  • BFL isn’t really doing anything that we’d consider scammy if they weren’t a Bitcoin business.

That last one may actually be the most important thing in this entire article, so I’ll say it again: BFL isn’t really doing anything that we’d consider scammy if they weren’t a Bitcoin business.

Bitcoin is a double-edged sword and it carries with it some major boons and some frightening responsibilities. Because the transactions are irreversible and somewhat anonymous, it’s easy for people to run away with your bitcoins, so “caveat emptor” applies double. Because Bitcoin is by nature open-source, most of the projects that sprung up around it were, too. The few that aren’t open-source still operate with an abnormally high level of transparency, so when a comparatively normal business like BFL steps onto the scene and keeps, let’s face it, the same kind of trade secrets that most companies keep, it seems like they’re hiding something. Let’s be clear though – they’re not abnormally secretive, Bitcoiners are just used to radical transparency.

There are arguments that I agree with, too. I do worry that with BFL so readily beating the price point of their nearest competitors that they may come to dominate the market in a way that could be dangerous, should a fault be found in any of their processes. I also have concerns that such a fault probably would have been caught prior to manufacturing in an open-source project. I’m a card-carrying member of the Free Software Foundation for crying out loud, of course I would prefer an open-source methodology. But I also recognize that there are certain arenas where black-box manufacturing techniques just work better – at least for now. With open-source hardware still in its infancy I can’t help but admit that my closed-source Samsung phone is leagues better than the nearest open-source competitor in the same way that the BFL FPGA miner sitting on my desk is frankly better than the next nearest open-source competitor, which by the way – also costs more.

So we don’t know every detail of BFL’s ASIC line. So what? From a competitive standpoint that’s way better for BFL – their competitors won’t know what they’re competing against until BFL is ready for them to know, by which point they’ll likely be entrenched in their own release with contracts signed and production runs starting. It may not be the kind of tactics we’re all accustomed to in the radically-honest world of Bitcoin businesses, but it’s certainly nothing that Samsung wouldn’t do to HTC or Motorola or that Apple hasn’t actually done to, well, everyone that’s not Apple.

What the entire discussion comes down to, though, is that BFL in its entirety is being dragged through the mud because of the checkered past of one employee. We’ve all seen the mug shot of Bill Gates, yet no one feared that he was going to tank Microsoft and run away with the cash – not because we trust old Billy that much, but because he’s operating within a system that was explicitly designed to prevent him from doing so. BFL operates within exactly the same sort of system.

More than anything, what I took away from my discussion with Sonny is that he seems like a quiet, private guy who suddenly found himself in the public eye. He sounds a lot like I imagine I would if this were happening to me: like he just wants everything to blow over so he can go back to his life and stop explaining his youthful indiscretions. Sadly, I don’t have any great words of wisdom for him – he’s kind of a public figure now and dirty laundry has a way of getting out. He calls it his “scarlet letter” and I think it’s an appropriate analogy – the charge is unfortunate, it would be easier to calm the crowd if he’d just been drunk in public or something, but it’s difficult to be taken seriously as a businessman with “mail fraud” in your record.

So am I a true believer now? I don’t know. Sonny’s story is certainly compelling and he seems like a fantastic guy. I legitimately want to just have a beer with him and talk Bitcoin for a few more hours. Would I willingly give my money directly to him? I don’t know… I just met the guy, after all, and while he seems okay enough the “con” in “con man” does stand for “confidence.” Thankfully, I don’t have to worry whether I should trust Sonny with my money, I just have to trust BFL: a big structured organization of 22 people with a board of directors and no one with unilateral access to the bank accounts.

As for the product itself, I’m very impressed with what I’ve seen and heard. I want a BFL ASIC more than ever now and I’m kind of upset that I didn’t have the funds and timing together to be first in line. If someone wants to send me one to… y’know… review or something… that’d be all right… Anyway, I’m only allowed to discuss a small portion of what I’ve learned today, so let’s see if I can get through the technical side of this without violating anyone’s trust…

The featured image for this post is the lower end of the ASIC scale: the Jalapeno. It is in fact, a cup warmer, though Sonny warns that they tested a lot of USB cup warmers when they were designing the Jalapeno and frankly, even the ones that aren’t Bitcoin miners don’t really work that well – most coffee cups are insulated after all. The Jalapeno is selling for $149 and should clock in around 3.5 GH/s. I was given an approximate power usage figure, but that’s one of the details I can’t share beyond simply saying: It’s freaking amazing. Sonny sees the Jalapeno as a way to introduce friends and relatives to Bitcoin mining and as such is trying to make things as user-friendly as possible. We discussed ease of use and he even took some input from me on how it could be made even friendlier both hardware and software. He really seemed concerned about producing the best product he was capable of.

BFL is also painfully aware of the heavy delays customers experienced with their FGPA lineup and I’ve received great assurances – as well as more secretive evidence – that things are going to be different this time around. While I can’t share a lot of details I can say that many of the secret bits and pieces revolved around moving manufacturing processes that had been external previously into internal hands.

The Single “SC” is the next step up and while I didn’t get to see any mockups of that bit of hardware, he did proffer some reasonable explanations for how they would be able to simultaneously release two completely different products without backing up their production lines and delaying orders. The Single runs $1,299 and clocks in at a startling 40 GH/s. I wasn’t given a power use figure for the Single, but extrapolating upward from what I was told about the Jalapeno, my guessed figure is still pretty freaking amazing.

A quick word to those nay-sayers in the audience who, any time BFL releases figures stand up and shout that they’re impossible: They’re better than their competitors, certainly, but not by so much that the “i word” should get pulled out. If BFL’s claims are impossible and ridiculous, then so are the claims of every other ASIC miner.

For all our talking, though, we did not discuss the Mini Rig “SC” – if for no other reason than I assume the folks that have nearly $30,000 to spend on Bitcoin mining equipment in one go probably already have BFL on speed dial and don’t need me to do their research for them.

I still believe that competition is essential to the mining marketplace and I’m very glad to see new competitors springing up – for what it’s worth, so is Sonny; healthy competition keeps companies working to stay one step ahead of each other and as long as BFL wants their product to be better than the competition, the results will be good for everyone.

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