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A Conversation with Marathon CEO Fred Thiel

January 5, 2022

In a conversation with Marathon CEO Fred Thiel, various topics are discussed. Thiel delves into future predictions, addressing the unpredictability of Bitcoin's behavior as it matures and suggesting regulatory clarity in the cryptocurrency space. He touches on the potential of blockchain to revolutionize industries, including energy trading and data management. The conversation also touches on Bitcoin ETFs, their delayed approvals, and potential legal actions against regulatory denials, mirroring similar strategies seen in Canada's successful ETF approval process.

02:50 First Genesis Block

12:38 How Many Public Bitcoin Miners Do…

18:49 China Migration

29:58 How a Coal Plant Works

32:38 Mining behind the Meter

1:04:35 Us Dollar as a Reserve Currency

1:07:48 Bitcoin Is a Long-Term Business

1:11:35 If You Could Design a Whole New Banking…

1:22:46 Views on the Bitcoin Spot Etf and the…

Transcripts are autogenerated. May contain typos.


well hey it's a pleasure to be here uh you know really appreciate all the support um you know you do some great coverage of the space and you know appreciate your coverage of marathon so thank you well i i'm glad you appreciate it it's been quite a journey and following you guys and your growth has been uh certainly a pleasure to watch and be a part of um it's uh yeah it's uh it's interesting the way things developed and the way my own channel has grown uh through that same time and just


yeah it's uh witnessing that maturity suddenly surged throughout the bitcoin space and then also being able to become a part of it in some sort of public way has been uh quite rewarding that's great it's great yeah it's a i always think it's on one level somewhat of a thankless job um you know operating a youtube channel um just because it's uh there's a lot of work you know most people don't realize how much work goes into at filming editing you know promoting thumbnails you've got to you know


et cetera et cetera et cetera show notes all that sort of stuff it's a lot of work it's a ton of work and it i i mean it doesn't pay that well until you really really make it big but it is fun so you really got to be doing it for the the fun of it otherwise it will drive you crazy yep absolutely but um yeah um so there's a lot of stuff i mean i know you and i were supposed to talk uh on monday which i was actually i was looking forward to that originally because uh you know bitcoin's birthday um and uh i had


intended to kind of kick the interview off talk a little bit about uh you know i'm not sure how much you've looked into all this but if i'm curious have you ever actually like looked at the genesis block and uh things like that i have seen it um and uh you know the embedded comment about the chancellor and uh you know increasing the lending in the uk this is you know 2009 uh that that happened and uh you know it's it's interesting the uh one of your colleagues uh in the podcast youtube world was saying


uh i think it was nick carter maybe uh who's saying that uh you know the you look between when the genesis block was first mined and then the next block afterwards and you know there's this lag and you know what was it uh satoshi kind of experimenting and resetting the counter or uh was it you know god created the earth and then rested it's funny because i think it is six days between the two yeah exactly i never even thought of it that way that's uh that's interesting i thought that was kind of funny to hear yeah


along those lines what people many people don't realize is that that first genesis block um was actually well it's theorized that it wasn't mined i mean satoshi's never commented on this but because it's the only block in the bitcoin blockchain that doesn't point to another block um so it couldn't have been mined not using mining software as it exists um so it wouldn't have worked so it had to have been constructed and that's where a lot of people theorize that it points uh that the time


stamp on it was was artificially placed uh to bear the relevance to that message uh and that the he actually started mining six days later um and yeah it's just reflected in that way but the because of the fact that there's no pointer in that block uh the coins mind quote unquote are not spendable uh correct so he couldn't even that that would be the only argument you could make of a a pre mine but it even that they're not even spendable so you can't even count those exactly uh so i guess that's technically 50 coins out of


the 21 million that right away are not even uh or you can't even really count them exactly so we're at 20 million 999 950 yeah or pretty close to i didn't yeah there's a lot of interesting stuff when you get into the weeds of bitcoin uh and study the technicals and um how the the the the protocol functions there's a lot of nuances uh that come to light and it really gains you an appreciation for how well thought out it was considering at the time there's no way he could have known this was actually


going to work so to get it so uh precise and anticipate so many different things it's remarkable what people uh a lot of times don't understand uh about the difference between for example ethereum and bitcoin is you know ethereum is essentially a very centralized protocol right there are a handful of people that can determine to fork it right away or whatever they want to do uh a lot of the ethereum is in circulation is actually controlled by a limited number of people and ethereum is a great protocol or


network in which to do development work because it's programmable but it's kind of like that ease of development also means people tend to roll out things before they're really fully baked and that's why you have all these issues of a lot of these d5 products having errors in smart contracts and causes for concern regarding security whereas in the bitcoin blockchain you know just look at the effort it took to get taproot through and you see that uh you know it definitely you have to get everybody on


board to make stuff happen but because of that it's a very secure and robust network and anybody who wants to really roll out an application where security is your primary criteria then the bitcoin blockchain is the only place to put it um yeah i would agree with that i mean as you may know i'm i'm uh i'm a big fan of ethereum as well uh i looked at the two as very different and you're absolutely right because well well bitcoin um has a very different culture within it uh and that culture is


well one don't you know don't mess up a good thing it's it's it already functions and for its purpose it's nearly perfect there's not a whole lot more that needs to be done to it the the reality is ethereum has made to accomplish its its goals um it's that move fast and break things they're not afraid to push that envelope which has its it could have its benefits but it also carries a significant uh significantly higher level of risk um if you're if you do that on top of hard


sound money you know but luckily ethereum is not trying to to do that it doesn't need to do that bitcoin already does it um so it's trying to do something completely different it's interesting when you when you look at the um you know the world of um you know dexes and the world of d5 um a lot of these applications being developed on ethereum or solana avalanche etc um i i think that whole world is going to be a really interesting pool to be looking at uh over time because you know there's no guarantee that one


is gonna be the the king of the pile you know there may very well end up being multiples that exist it's not like the search engine world where at the end of the day you only really need one really good search engine in this case i think there are going to be lots of block chains for various applications and use cases right you know a healthcare blockchain may be very different from a supply chain blockchain you may have more centralized type blockchains and more decentralized type blockchains there are all sorts of


alternatives out there which are all very relevant depending on the business cases you want to use them for um and i think you know bitcoin is a great store of value it's a great settlement network and there's all sorts of great things you can build on layer two and above in the bitcoin blockchain um but the same applies to avalanche solana cardano ether you know et cetera yeah uh and it's uh interesting because that's gonna play into a little bit more i'd like to get into in talking with you


because one of the things that has the more you've been in this space the more you realize is that every decision every choice that is made always comes with a trade-off there's there's always a trade-off and that goes for bitcoin mining as well so that is it's going to play into a little bit more in our conversation as we're going to go forward um so with that in mind i guess uh one of the other things before we get started on all that i wanted to talk a little bit more about yourself um you've done a lot of talks a lot of


uh interviews um but in doing a little bit of my own research into your history you've you've got a long history in the public space what do you find like what's the biggest difference between your your experience in public companies before bitcoin and now oh gosh um it's a great question uh so i think you know my first kind of experience as running a public company was over 20 years ago when i took a company called lantronics public and you know we were in the revolutionizing the world of iot it


wasn't even called internet of things in those days it was called how do you take a device that's not a computer and connect it to the internet and control it and we were connecting alarm panels lighting systems health devices uh industrial automation systems uh to networks and uh we felt you know back in 2000 when we did the ipo we felt oh you know everything's going to be connected your toaster is going to be connected to the internet and here we are 20 years later and my toaster still doesn't talk to the


internet um but you know change takes longer than you think um but it's really interesting because uh many industries um technologies need a key enabler for them to become big the internet of things really was highly dependent on the smartphone right the apple iphone the android phone you know it's a ubiquitous human machine interface the minute you had this ubiquitous machine interface all of a sudden all of these uh layer 3 applications on the internet became totally viable video streaming for example you know the vast majority


of video that's consumed think about it most of your audience i'm sure views your program on an iphone or an ipad yep they don't view it on a laptop and so you look at the impact of the iphone on how it allowed the it was kind of a very disruptive technology but enabled a huge industry to be built on top of it i think as you look at the crypto space um you have a similar thing happening which is uh just people are realizing the value of uh blockchain technologies and the value of digital asset technologies and so


you're seeing adoption starting to happen and we're it's like we're in 1997 of the internet it's kind of what i tell people it's you know imagine the bitcoin blockchain is tcp to the internet and look at all the things that will be built on top of that and that's where a huge amount of value is going to be created so i think uh if you think about operating a public company in this space versus other spaces this is very much like operating a an internet company uh in 1998.


you know if you go back and you talk to people who are the starters of webvan and all these companies that raised hundreds and hundreds of millions of dollars back then um and you were to talk to the investment bankers they were saying you've got to lose more money to grow your market cap you know this industry is an industry not where it's not that anybody's losing money in it ideally we're all making a lot of money but it's you got to grow you got to grow you got to grow and the markets want to


give you money and so there has been a lot of money coming at all these bitcoin mining companies and at some point that spigot is going to get shut off yep because you know there are arguably 24 public companies in the space today there will likely be 30 soon um how many public bitcoin miners do investors want to invest in well there's going to be some level of consolidation and i think over the next five years you'll see the mining space look like many other technology sectors you'll have a handful


of very large players and then you'll have some unique niche players and there won't really be a lot of space for people in between in this space and i think you know the power companies as i've said lots of times are coming into the space in a big way and over time the constraints that exist around hosting power and machines are going to totally disappear and then it's going to come down to who can operate profit most profitably in this business it's and that's going to come down to your ability to be agile and move you know


what's unique about this business that i've never experienced previously is that this is the first time i don't have to worry about a sales pipeline this is the first time i don't have to worry about customers you know we mine bitcoin and we hold it um our single biggest stakeholders are the bitcoin community and our shareholders and our employees i i don't have customers that i typically have to keep happy that i have to differentiate my product versus the competition right you know riot and


marathon we have to make the same bitcoin because that's what the market wants we can't differentiate our bitcoin from each other so we have to differentiate it our businesses and our operating models instead so it's it's a different uh it's it's a very different kind of way of competing and i think that's the biggest difference it's capital efficiency of return on assets so it's very financially metric driven uh and then it's just operational excellence yeah it's kind of you're at the opposite


end of the um like it flows in the opposite direction because you're not trying to attract customers um you're trying to attract capital yeah exactly and that's really how because the flow goes in the opposite direction um you don't have your your product ideally you you stockpile it it's not too many uh industries where that that's the the incentive um so not even in the gold or the diamond industry you know in the gold industry look how many gold miners actually stockpile their gold they don't they


sell it yeah all right oil industry they sell it diamond industry they sell it in industry we hold it yeah it's it's the only thing that the only business model i don't think that's ever existed like that which is why i think it's so it took a longer time for people to recognize how to evaluate these companies because they don't follow any traditional model it's a completely unique thing um so but now on that because i mean it's been fascinating listening to yourself and a lot of the talks that you've given


especially against the backdrop of marathons um sort of a early position in terms of like you said um you can't differentiate your bitcoin but there was an attempt to do that early on not just by yourselves but others as well um but that that narrative has completely vanished uh which i would say was was definitely a good a positive development and well frankly i mean the model just never quite uh resonated or made a whole lot of sense to me uh it simply met the the simple means being if if somebody wants to pay additional


money for clean bitcoin um then you could just sure sell it give us the extra premium and then turn around and buy it on the spot market and you've still got the same amount of bitcoin um so that kind of arbitrage would just would kill that market before it ever got a chance to grow legs within marathon what was that transition like coming to that that realization and sort of pivoting and getting in line with the uh sort of the bitcoin um mindset it was a combination of um we had spoken to financial institutions um


and they said you know we want ofac compliant coins because we don't want we can't invest in bitcoin if there's a risk that the coins that we're holding are tainted and so if you can give us coins that are fully o fat compliant and uh don't have any you know dirt on them if you would then we would be willing to pay more for those so that was kind of the genesis of the thinking um when marathon started looking at doing their pool with the ofac compliance and dmg had already been doing this in


canada um and so it just it made sense that maybe people would pay more for ofac compliant coins in practicality um it doesn't work that way because when you win a block and you're awarded coins yes the coins are virgin but the transaction fees aren't that's the other right so now and as you know there isn't such a thing as a bitcoin it's a ledger entry so if you've received uh you know transaction fees and you know the minute we launched this people started dusting our wallets which


so you got free bitcoin as a result too yeah but you know people just wanted to say see it's not a fact compliant anymore so yeah just a wasn't practical b in reality people weren't willing to pay for it uh when you then went to them and said hey okay now would you buy this bitcoin at a next higher price it's like no so yeah it it like many things um uh you know even with products people develop uh you know on a day-to-day basis just the market a wasn't ready and b um i don't think everybody had thought


through the implications to your point it needs to be fully fungible you can't have differentiated bitcoin um i think the big thing that actually killed the need for anything like this was the china migration when china shut down mining in china and you had this exodus from china of miners all of a sudden the industry um went through a cleansing is the wrong word but it all of a sudden started becoming very institutionalized you know the comment you made when we started this conversation earlier was that you know


the industry's growing up well it is it's becoming more institutional it's becoming um you know all these public companies you have all these serious investors investing and um we all have to do things in the right way just look at the whole esg story and uh you know how uh the narrative around energy and bitcoin and how uh the bitcoin mining council came to be around the concept of trying to really uh do mining with renewable energy and really show the world that uh you know we are actually a big incentive for


renewable energy to be deployed around the world and power companies love bitcoin miners as base load customers because you know you can take a couple hundred megawatts of bitcoin miners behind the meter at a renewable energy plant and if the grid needs extra electricity they can just shut down the bitcoin miners and now you've got 200 megawatts going into the grid as opposed to i'm going to shut down this neighborhood's air conditioning systems and on the hottest day of the year when everybody needs the air conditioning


you're shutting it off so that demand response mechanism in the power grid is really um impractical whereas uh having bitcoin miners behind the meter is a very a huge way of making base load um [Music] work much better for the grid and for the energy and that also means that now renewable energy providers have an incentive to build out their capacity because you know at the end of the day in the us we have excess energy we generate too much electricity and the problem is we can't store it and so you blow up the grid if you put


too much energy into it which is why we have negative energy pricing 10 percent of the time in texas for example where you're paid to take electricity versus you're paying to take that electricity so there's no incentive for people to build new generating facilities if there's excess capacity so bitcoin miners are really driving the renewable energy guys to move forward and build renewable energy facilities because they have built-in customers they're not dependent on transmission lines uh initially so there's a whole


economic reason why bitcoin mining is going to be the single biggest incentive for renewable energy in this country um and i think you're going to see the benefit that comes from that as we accelerate the deployment of renewable energy in this country between now and 2040. i do think that is going to be i mean the the esg thing it blew up because of the whole elon musk thing um it's died down somewhat now but i do think it is going to see a resurgence this year um namely because of the impending switch to proof-of-stake from


ethereum i think that is going to reignite that debate the reality is it does make the system as a whole the energy grid as a whole more robust and i think we're going to get a chance to prove that in practice in places like texas that those events will be far easily far more easily managed when you have uh virtual power plants like bitcoin miners to be and the difference being is like you're saying because of the uh the change in maturity of the market um you're dealing with uh participants who are


uh good social actors um you're not talking about in china where they're mining in secret um you know they can't be called to tell to turn off their their machines because you're dealing with a totally different um framework uh but when you have cooperative agreements in place then it makes the system more robust the saying goes bitcoin fixes this uh because the fundamental principles that that support and reinforce bitcoin security can be applied to many many different markets that only serve to improve them


absolutely i think we're gonna see a lot of uh deployment of you know layer two things like identity management microsoft rolling out their ion network on as a layer two on on the bitcoin blockchain you'll see healthcare data you'll see data migrate out of the application silos and onto the blockchain as users take control of their data and i'm not talking just social data but i'm talking corporate data business data you know by having it on the blockchain this is a lot of web 3.0 but by having your data on the


blockchain you're essentially it's impervious to ransomware because you can't encrypt that data it's already encrypted um nobody can change it uh you as the owner of the data control who has access to it you give you essentially give somebody a permission or a token if you would that allows them to view it so when you go to the doctor you open up a window into your data doctor can look at your data when that token expires they can no longer see it um this is a a way to never have data in motion data in flight


data only exists in one place and huge values yeah and you're talking about a whole new world of of cyber security um so now that was all fascinating we got to get into the the meat of all this stuff now um that everyone i'm sure is listening to this for um now getting into the the heart of it i mean right now i haven't looked at it since we started talking but uh stocks are getting kind of getting murdered again today i'm curious to know what your take is when when things like this happen you know bitcoin you know went up from


yesterday um and then all of a sudden you get this massive reaction stock sell-off um what's your take on that kind of thing because i mean that's all like in the retail community it's a you know there's a whole lot of um the sentiment is definitely leads toward there's a lot of manipulation in the stocks versus crypto uh well in crypto as well but it does seem to be more pronounced in the stocks um generally speaking how do you how does the company look at that or how do you look at it well you know the


companies like ourselves or riot i mean you know they're we trade upwards of 10 million shares a day so uh you know if you think about 10 million shares on our market cap um that would mean you'd have to be deploying 300 million dollars of capital a day to move our stock around so i don't think you there's a lot of manipulation going on in um any of the large cap kind of miners um you know it's different uh a company like a terra wolf that does 30 000 shares a day yeah you can move that stock pretty easily


but um bitcoin or riot um you know i'm sure when core comes public here in the next few days the same thing there there's going to be enough volume in the stock so it's hard for retail buyers to really move it at all uh if you look at marathon were any at any given point in time between 30 and 40 percent institutionally held you know they're the big holders so um i think the what people react to is you know if bitcoin goes up four or five percent um you know the impact to the miners is on the margin side right and then obviously


our bitcoin holdings can go up and down what people tend to look at with the public miner stocks is kind of historically people have been valuing i think this is just an opinion um miners based on future deployment and growth and then they kind of look at what's the hash rate at today what's bitcoin at today wow these guys are going to print a lot of bitcoin so i'm going to apply a certain value to a minor i think what's happening now is people are realizing that um you need to look at uh the impact of


the global hash rate you need to look at the fact that you know the price of bitcoin isn't moving upwards at 10 15 a month it's you know going sideways here we're in this sideways kind of chop um in the 40s and so the expectations on revenue uh that the analysts have are starting to come down because we're not seeing bitcoin continuing to rise we're seeing a higher global hash rate than what some of the analysts were predicting um you know i think you could look at the b riley estimates today uh they


revised estimates across their whole suite of miners based on you know the price of bitcoin being different the hash rate etc right so um i i think the whole industry is getting relooked at by people and i think it's going to change but at the end of the day you know the stock prices are about where they were last year at this time yep so it's not like oh my god the market's come down 70 percent no we're where we were last january pretty much uh and now now it's going to be more proved to me that you can deploy all the


stuff your said you're deploying right uh you know and that's especially in our story i think what people are looking at is you know is marathon going to be able to deploy everything they have on order and we're very focused on that so uh right now on that note um let's let's transition into that the um obviously with you guys you're the only miner that i'm a yeah no the only miner where it's very easy to uh get literally up to the second uh production results by just viewing the mara pool on


the blockchain um obviously you share that with dmg currently but they they do make up a much smaller percentage of that so it's it's a lot easier to track that on a daily basis so um i know that charlie spoke with me regarding some of the downtime things you've been doing at the hardin facility trying to get some upgrades done to make that run more reliably we can see that over the especially near the end of the year there was some appeared to be some more downtime how are things going with the hardened


facility when do you guys expect that will be running at a hundred percent uh on an ongoing basis uh more or less yeah you know being a public company you know we have to be careful how we comment on these things because it's kind of future uh perspective but looking backwards uh you know it's a coal-fired plant it's a very modern plant it was built in 2007 but it has its issues and um i think you know they're busy the folks at beowulf are busy trying to work the kinks out of their power plant and we


had a shutdown in november um where we had to do a massive kind of clean out of uh the cleansing facility so if you think about how a coal plant works and one of the reasons why we liked this plant was um from an emissions perspective you measure sulfur dioxide for example particulate um to three decimal points so point zero zero zero is no no emissions um the typical coal plant uh operates at about .


01 or 0.2 the hardened facility operates at .001 or .00 it's nearly immeasurable it's white coal it has a very extensive cleaning system which crystallizes the sulfur dioxide so it never goes out into the air so it's one of the cleanest you know coal plants around however that cleansing process that crystallizes the pollutants if you would um if uh the crystal particulate doesn't properly fall off the i want to get into a deep technical discussion but think of a pyramid where the crystal material sticks to the sides


of the pyramid and then falls off and then you essentially collect it at the bottom of the pyramid you put it in bags and you then deal with it as uh as waste if it's not falling off the sides of the pyramid and it accumulates it uh it starts forcing the plant to lower their capacity and that's what was happening so this particulate matter was getting stuck wasn't coming off so they had to shut down the plant and remove 40 tons of this material that had collected uh over time and so that's been the issue


with that plant and um you know we believe we've worked our way through those kinks um but there's still some tweaking going on so we'll have some up and down time and then it's a power plant so it it tends to go uh operate uh generally very well but every now and again stuff happens uh you can get uh rocks in the coal mix going into hoppers that can then break a hopper and so then now the motors that drive that hopper have to be repaired and so you have to take capacity down a little bit so is all lessons learned


as to why um if you think about why does marathon want to be agile and not own hosting facilities it's because we don't want to have to deal with these issues yeah uh and obviously i mean that's even the the counterparty and then there's that's the advantage to being able well you there's again trade-offs again like we were talking about earlier um the benefit of being attached to the grid means that you're not dependent on any individual source it's more distributed um but you guys have talked


a lot about mining behind the meter which would require you to be located at a facility and reliant on that facility for for continuous uptime um but you're behind the meter so you could get better rates what i guess um with compute north that's uh you guys have just recently amended the agreement with compute north to house the remaining roughly 100 000 miners um overall they're going to be distributed at various locations throughout the united states um i'm assuming some behind the meter maybe some not


uh some in texas some elsewhere potentially i know there hasn't been a whole lot of disclosures around that um but i guess i want to talk about compute north and i guess that that uh roll out going forward i know that you guys have forecasted you know uh mid uh around the first around the first quarter of uh 2022 to be a major uh deployment of these miners but uh in your last uh um operations update you had received 72 495 miners throughout the year from bitmain currently at hardin uh well it sort of currently installed


32 350. vast majority of that is at hardin which is now at capacity that leaves a remaining 40 145 miners currently waiting to be installed that's that's over your existing entire uh capacity um which equates to roughly four exa hash of additional power um that's literally just waiting to get turned on what i guess what's uh what's holding this back because a lot of those have been delivered over the last couple of months um are like are they like where are we with that so those machines are in the process of


being deployed and i think you'll start seeing when we do our january update our february update and march updates you'll see that flow through the system pretty quickly okay so yeah they're literally yeah so obviously that was the the place to get those things install or expedite the delivery of those so you have them now what obviously the like the charting of the air air of the um aircrafts to deliver those um what were you looking at otherwise if you had let those just work their way through the supply chain because that's


one of the concerns out there is that okay all that money was spent they're here but they're still not turned on um what what was the alternative how long was that going to take to get here yeah so the the alternative was uh anywhere from 20 to 45 days of delays so what we didn't want to be and what we'd never want to be in a position of is where there's a uh where we have multiple constraints choking our ability to deploy so right now if you look at we did the compute north agreement in june of last year we


purposefully lent them the capital so they could order all the switch gear all the containers and everything for the deployment so that wouldn't be a constraint point um we expedited the delivery of the machines so they wouldn't be a constraint point and in reality the additional cost to fly the miners ourselves versus not was about a hundred dollars a minor it's not a whole lot of extra money uh but it gave us peace of mind that we'd have the miners on the ground ready to go so as soon as we could


energize containers we could deploy them so we've already started deploying um at the new facilities that'll continue a pace through q1 um it'll start really ramping accelerating here towards the middle of the quarter uh and uh towards the back half of the quarter and then it'll just keep going through the balance of the year because not only do we have these 100 000 miners but we also have the additional 84 000 miners that we've ordered for delivering the back half of the year so you'll see


um in the near term here announcements regarding where where and how those will be deployed okay and um is there a preference for for marathon to focus on behind the meter or say connected to the ercot grid in texas so all of our go forward sites are predominantly behind the meter with a grid connection in addition as a backup so again lesson learned um we're going behind the meter because of the flexibility and the pricing but we're adding a grid connection such that we always have backup okay and realize that when you're in and


these are predominantly renewable energy sites by the way so wind and solar we're not going you know the bulk of this is not going through any fossil fuel or anything this is renewable energy sites so we're really focused on being carbon neutral um in all of our operations by the end of this year so by deploying it the renewable energy site behind the meter we act as that load balancer for the energy provider but then we also have a grid connection for when we don't have access to renewable energy and that grid


connection uh in aircop for example uh has a very high proportion of it which is renewable and then the balance of that we offset with renewable energy credits okay interesting okay um from that uh the the partnership agreement that you have with compute north um that's been amended a couple of times and now uh it's at the i believe four four point four cents per kilowatt hour uh which is uh certainly a respectable and this plays into your uh asset light uh approach when you you've talked about this in terms of um


how you you know what you bake into that overall cost in terms of uh that infrastructure and how you i mean the only way you can evaluate that is by uh depreciating uh the that infrastructure my understanding here and i guess you can speak to a little bit further the the hardened facility you guys have are depreciating that on a five-year basis um depending on the type of infrastructure i guess it like you would depend on how how rapidly you'd appreciate that i would imagine you know uh the hardened facility has a longer than five year


lifespan um well even with its existing uh equipment yeah you have to look at it based on the duration of the hosting agreement remember we don't own the power plant um we just buy power from the power plant the data center um agreement with the power plant is for five years so we have to depreciate the data center investment over five years because there's no certainty that that data center will operate beyond that five year period mm-hmm and this is you know it gets in it's accounting tax accounting it's


accounting right yeah so if you kind of do the math on it you'd say well uh you know between energy and hosting costs and this is all you know public information in the contracts um it's about uh you know three point um eight cents uh all in when you look at the energy and the cost operating the hosting if you then add the depreciation for the data center where we've spent you know a significant amount of money to buy containers switch gear etc um that depreciation takes the actual cost per kilowatt hour um to about four and a


half cents kilowatt hour so our cost with compute north is actually uh about 0.09 cents less than our cost to operate harden and we have no capex requirement other than the miners which so think about it this way uh in harden we've invested over 30 million dollars in infrastructure that essentially we're writing off over five years and so now with there was one in the uh recent filing with uh the sec uh where there was a slightly different model on the i think it was the last thirty thousand or so miners uh whether


you guys had set up a joint venture between compute north and marathon uh what's how is that set up so that just has to do with there's a very small portion of the miners that um the energy provider is actually going to be using for their self-mining we can say so we're doing a joint venture with the energy provider so this is um essentially a joint venture between us compute north and the energy provider such that they're able to uh mine their own bitcoin okay interesting okay so if you've been following my kind of


presentations at some of the conferences regarding power companies um this is kind of how power companies are going to operate going forward you're going to see power companies being very focused on owning a certain percentage of the mining capacity and mining for their own benefit so um i mean what what kind of uh what kind of contribution i guess do they do they i mean or is it just providing that cheap that cheap power well yeah so think about it the single biggest input cost of bitcoin mining is power so if you can get subsidized power uh by


partnering with the uh energy provider then you're going to have a overall lower cost of mining bitcoin i think the biggest takeaway from that kind of uh those kind of developments is that again it's further evidence that the industry is maturing because now you have well established legacy power generation companies that that that want to become a part of this they're not going to do that if they think it's not going anywhere exactly so i think what you're going to continue to see is you know bitcoin mining is


the constraints around capacity and machines are going to disappear over time and what that means is that the only limit to your ability to mine is going to be access to capital i think there are uh enough public companies today in the mining space that it's going to get harder and harder for people to go public as miners because the margins over time as the constraints disappear the global hash rate will grow to the point where the profitability and mining will drop to be 30 or 40 percent over time and by over time i mean over


many years and at that point it's about enough to support the renewal of machines every five years right if you're not earning 30 or 40 margin uh you're not going to be able to do that and so what ends up happening the beauty of the bitcoin blockchain is miners will grow capacity as much as they can and then there comes a point where it's not economical to grow capacity and people start shutting things off and so the hash rate will go up and down uh in relationship to the profitability of the business as it always has


it's just we're in a cycle right now where you have a lot of new capital coming into the business there have been these constraints around availability of hardware availability of hosting that have held back the hash rate from exploding you had the transition out of china which kind of delayed the increase in the global hash rate and now what you're going to see over the course of 2022 is the hash rate double and so if the way we look at it is um you have to look at your cost of mining a bitcoin right our cost of money in


bitcoin is around six thousand dollars when you look at energy hosting depreciation on the hosting all in right it's not not the depreciation on the miners but everything else right so at about six thousand dollars a bitcoin in 2021 terms at the end of 2022 you have double the global hash rate your cost of minor bitcoin is arguably 12 000 yep in 2023 you have a 50 increase in the global hash rate your cost of minor bitcoin is 18 000 and then in 2024 you have a having so you get half as many bitcoins so your


cost to mine a bitcoin just doubles right and so now you're at thirty six thousand dollars to money bitcoin so the price of bitcoin is going to have to be you know well north of seventy thousand dollars a bitcoin in 2024 for um you know mining to still have that north of fifty percent margin in it now that's marathon's model now let's look at somebody paying six cents a kilowatt hour you know so ten thousand dollars to produce a bitcoin today times six do the same math right um times six that's sixty thousand dollars to produce


a bitcoin that miner who's paying uh six cents a kilowatt hour so think of all of riots and coors customers those guys are paying six seven eight cents a kilowatt hour those guys are going to be producing bitcoin somewhere between 70 and 100 000 of bitcoin cost that doesn't include miners or the depreciation of miners we're at thirty six thousand dollars a bitcoin so what do you think's gonna happen come 2024.


there are going to be a lot of people who are paying six and seven and eight cents for hosting who aren't going to be able to afford to be mining unless bitcoin continues to go you know north of 200 000. and that's the uh that of course that is the golden question is um you know i mean trying to predict what bitcoin is going to do over the next four years um has never been very no i don't know anybody that's been very good at it despite the the cycles and but now what we're looking at is again a change in the incentive so um bitcoin's


behavior over the next four years is going to be very difficult to predict especially now that it is a maturing market i don't think we're going to see the same drawdowns that we've seen before but we also might not see the huge blow-off tops that everyone's become accustomed to um it just it doesn't it does not behave the same way because the products and uh and um like financial products available in the market are just different than they were before it's a change in the incentives uh so


the i guess the what you're getting at though is the time to grow is now um as aggressively as possible is to grow as quickly get as big as you possibly can because the incentives exist today to let that happen if you wait um and the hatch rate has grown and those margins get compressed there's the the availability of capital is it's it's going to dry up um and despite what happens between now and then once you're once you're big um you can remain profitable regardless of what the price does if bitcoin's


price drops difficulty will drop with it um because other miners that can no longer be profitable are forced to shut down which then makes you more profitable and you can only really accomplish that by being as big as you possibly can obviously that could lead us down that whole rabbit hole about uh centralization of mining which just sort of reconstitutes itself into uh public companies which that's it's probably headed in that direction because that's the nature of these systems um but i if you don't have to i


don't know what are your thoughts on that quickly you know listen at 23 extra hash in early 2023 will still only be six to seven eight percent of the global hash rate uh and will arguably be one of the biggest miners um so you take core ourselves riot add a couple others in there you know we're all still i mean today all of the bitcoin miners that are public added together represent about 12 percent of the global hash rate when you add us all together um you know fast forward a few years we may get to 25


you know something like that i i think there's still plenty of decentralization uh out there i i think it would be very hard for anybody come 2024 to uh be north of 10 any single miner yeah and i i think the the market's just going to make it harder market is going to make it harder to grow over time to your point you need to be deploying capacity now when the reward rates are high because come 2024 uh or even 2023 you know just think about your costs are going to double over the next 12 months right so your time to pay back the


machines you're deploying is going to stretch out which means your ability to raise capital to buy more machines to continue to grow is going to stretch out so it's grow deploy capacity as soon as you can such that you have the bitcoin uh that you can then use to whether generating yield or you're borrowing against it or god forbid you sell it um so you have a way to kind of fund your operations longer term but i think the dynamics in the industry are going to change i think the cycle is changing to


your point uh you know we don't have people using hundred to one leverage using bitcoin as them as the collateral for their margin uh so you don't have this ease of people manipulating the price of bitcoin by blowing through stops and pushing the price down 80 percent and then buying it right back up again um that ability in the marketplace i think has disappeared uh you've got arguably based on glass nodes kind of numbers uh 13 million btc and long-term holders hands at this point so your liquid supply is only about 5 million btc


and with the miners not selling you have no new liquidity coming onto the market so it's really easy just to look at what's going from you know off chain to you know what's going from a cold storage onto exchanges and back again you can see exactly when people are going to buy or sell by looking at that dynamic and i think um you know there's going to be a lot of resistance to get north of the 51 000 price point where kind of is the break-even point on a lot of the bitcoin that traded hands more recently


um so i think we're going to be in a sideways chop for a while and that's going to be really interesting for how uh you know companies that want to grow are able to grow we were i think very lucky and you know our definition of luck is you know good preparation meets an opportunity uh you know we raised this convertible debt offering and had the cash to be able to place this very large order we placed with bitmain recently so we were in a position to do that i think it's going to be harder for somebody if bitcoin keeps operating in


this range and you know the stock prices keep doing what they're doing now um for people to raise capital to go try and do something like that yeah that's once certainly i mean the timing of that that debt offering could not have been any better um that was quite remarkable and how quickly you were able to do it and put it to good use so it's going to be like i said i've said before it's going to be a pleasure to watch uh marathon grow throughout 2022 i think it's going to be a signature


year for how things are going to play out in the the coming years uh but the reality is you're building a company uh that that you know you're looking beyond just what happens this year or next um it's two three four halvings from now um what's going what was what is the space going to look like and the opportunity is now to do exactly what it is you're doing um and i do think that that's going to set uh set it apart and set the stage for what that space is going to look like five or six or ten years from now um


yeah it's um i mean again you go back to the the basics and the fundamentals and the the the use cases that keep developing it's hard to deny the the the premise that we're that we're that we're all sort of anticipating to come next yeah i think longer term you know what we're going to see um i i think i forget who it was but um one of the famous kind of you know management gurus uh had often said that um innovation and disruptive technologies sneak up on us uh and again you know the iphone when it


was launched wasn't viewed as either disruptive or innovative most people thought that's an ipod that you can talk on you can't develop software because it's a closed ecosystem now apple changed that and it became what it became um [Music] but i think what you're starting to see you know uh there's been an appearance of not a lot of innovation in the bitcoin world and a lot of innovation with other protocols and platforms but as people start looking at gosh look at how many lightning node channels


exist now all of a sudden and you're starting to see this kind of slow um seeping into the ecosystem of bitcoin and blockchain based systems uh i think 2022 is when we're going to start seeing um the banks start rolling out bank accounts with bitcoin wallet capabilities you know you're familiar with this announcement that nydig did with fis last year essentially that will prepare any bank that's on the fis platform will be able to offer a digital wallet to their customers that they can hold crypto in


bitcoin and ether i think primarily um and buy it and sell it and custody through knighting so when that happens now you're starting to see adoption at the consumer level in a very different way um a lot of people think well there's no people aren't buying things with bitcoin you know that's not true go talk to a realtor in any high-end market i was talking on the phone yesterday with somebody in dubai and they said uh one out of three cars sold at the exotic car dealerships in dubai are sold with bitco with paid for


by bitcoin think about that one out of three uh there's a story about a guy who put paid three million dollars in bitcoin for a bugatti you know so you know this is starting the trip transactions are starting to happen people are buying homes apartments planes yachts uh you know high ticket items with the advent of stable coins um and uh lightning like channels now and mastercard rolling out credit cards where you can hold your crypto and essentially they'll pay the merchant in fiat and they'll just deduct


it from your wallet the whole tax reporting issue becomes much more simplified and as soon as you remove the friction in the use of um bitcoin and other digital payment forms um then you'll see this really explode in a really unique way and i think it's going to be a very you know the next five years um i just likened to 2000 to 2005 in the internet when you just all of a sudden went from now you can browse some websites and there's some rudimentary e-commerce uh to all of a sudden now you can stream


videos youtube launched kind of all these things launched and then the iphone happened and it all just exploded you know i i think the next five to ten years uh are going to see some great advancements this year we'll see regulatory clarity on d5 we'll see regulatory clarity on stable coins um that'll hopefully stabilize those businesses so now um you know consumers will start operating them as that grows that'll just drive more adoption crypto overall i think i would agree with that and there's uh


i mean that's a whole nother conversation i'd love to spend a lot of time on uh maybe at another point but i wanted to get a little bit more into again you mentioned a couple things a little while ago uh marathon is um involved in the uh there is the bitcoin mining council has that gone anywhere since uh because we haven't really heard much from that uh organization over the last little while what's happening there yeah i mean the purpose of the bitcoin mining council was to educate the marketplace uh


regarding bitcoin mining and energy use and so we publish each quarter the numbers regarding you know what uh the total amount of extra hash of members uh what percentage of the energy used is carbon neutral versus not okay so and then a projection so we we keep doing that that's going to continue happening uh what uh happens behind the scenes is more uh what you're starting to see from groups like the digital chamber and perrian boring um in washington who are you know working closely with regulators


in trying to do things like the public accounting board and how bitcoin is treated today it's a long-lived intangible asset so for companies to hold it on your balance sheet you can only impair it you can't market to market um which is a detriment to companies holding their assets in bitcoin so if you could fix that accounting treatment um then and that doesn't require any regulation that's just the public accounting board having to make a change in how they view it um the irs doesn't care they collect taxes on


it regardless so they're happy with that um and so that needs to happen uh the taxation you know potentially treating bitcoin more like a currency as an asset class from a taxation perspective for example uh if you have an account in euros as well as dollars uh you have to declare that you have that foreign bank account but you're not declaring the gain and loss on the euros in that account compared to the dollars uh the same thing we would want to have applied to people who have crypto in a wallet that when you


uh spend your crypto it shouldn't be a capital gains transaction right it should once the crypto's there if you've bought it then you it's a currency just like any other currency and when you spend it you're not declaring it up to a certain amount obviously companies that hold more than you know a certain amount of uh digital assets are going to have to declare the gains in them anyway but for the consumer there should be some level where a consumer doesn't have to worry about a tax uh declaration at the end of the year for


every bus ticket they bought using bitcoin what's the stop gap well the stop gap is you have your assets in bitcoin you convert to a stable coin once a month and you pay your bills using that stable coin therefore it's only one taxable transaction from an accounting perspective and from a you know an irs perspective as a consumer but all that needs to get worked out and as we start working out the practical aspects of it then the friction in using digital assets disappears and the minute that happens you get really broad


adoption very quickly well i think that's what it's you're touching on an interesting um conundrum in the bitcoin space because while you have it has a lot to do with where bitcoin got its beginnings uh its origins it was very you know um the the uh very a little archaic uh and they liked it that way they liked that it was outside government outside uh institutions um but you but at the same time you want adoption and um you know bitcoin has reached that level of maturity where um especially in the


united states is just now starting to come to terms with it and the but at the same time because like we said before it's so vastly different uh from anything that's existed before it's that that transition to to getting regulators to even understand it um let alone uh understand how to treat it and its transactions um it's it's gonna be a bumpy road and then having someone like an organization like the bitcoin mining council might provide uh uh a means of of of advocating for for what the community wants because


i think michael saylor said it best uh you know we can be decentralized doesn't mean we have to be disorganized and but it does it is kind of like closing uh the you know closing the turning the page or you know closing that chapter of bitcoin's history where it was outside it was it was this whole separate world and some want it to stay that way because they figure the government's going to come in and just mess it up but there's again the further to what we were saying there's always a trade-offs uh you got to get if you want


something you've got to give something and that's bitcoin that is how it's designed and that's what i think ensures a success but it means that you know it um you know everybody has their own way of looking at it and what this is going to become how it's going to get there well well that's the part none of us really really know or what final form it will take because it is going to it's going to morph somewhat in terms of uh like just in different places are treated in different in different ways as we see el


salvador it's not taxable at all under any means um so if that's what you like you can move to el salvador i mean you can live in puerto rico and uh you know there's no capital gains federally there so uh you can do quite well there um provided you want to live there i mean you know great climate certainly but i i think you're going to see other countries again back to this concept of innovation disruption happens kind of from the bottom and percolates up uh you're gonna see other dollarized


economies start looking at bitcoin um as a potential tool for i mean look at turkey the single highest adoption of cryptocurrencies in the world on a per capita basis is happening in turkey why well because the currency is depreciating at this huge rate uh and you know people need to hold their assets in something and uh they don't necessarily want to hold it in dollars so uh you know why not hold it in crypto so i think you're going to start seeing more and more uh countries with sort of dollarized or or


economies where their local currency is either highly inflationary or otherwise uh you know venezuela um turkey you're going to see uh potentially other latin american countries uh some countries in africa possibly um as an alternative to the dollar i think you're going to also start seeing certain countries wanting commodities to be priced in currencies other than the us dollar this is something that gets into this whole concept of the us dollar as a reserve currency um there is a benefit to the u.s from a geopolitical


perspective and having the currency be the reserve currency but there's also a huge cost to it uh in that the u.s has to print a lot of currency a lot of money you have to keep a lot of liquidity in the markets for the us dollar to be a reserve currency you know oil is all priced and denominated in dollars so there's certain power to that um but at the same time i think you're going to start seeing certain countries that are large exporters of commodities looking at the dollar and what's going


to happen to it relative to its actual purchasing power and saying you know maybe we should look at an alternative currency for denominating our commodities um you know the biggest threat to the us dollars the reserve currency is the euro it's not the chinese yuan because that's subject to currency control so it can't be a reserve currency um but as more trade is done in other currencies than the dollar and you know over time the dollar has been decreasing the amount of trade that's uh done dollar denominator versus in other


currencies and the euro is the single biggest competitor to the dollar in that regard um and you know i have to but wonder that there's some people in washington that might be thinking you know if a fully decentralized currency like bitcoin that nobody controls were a reserve currency then there's no geopolitical power in it if the euro becomes too much of a reserve currency then the europeans have a lot of power uh by the same token that people don't want the us to be the only reserve currency because it gives


the u.s a lot of economic power well a decentralized currency would be the only way that there could be trust in a reserve currency because nobody controls it yeah that's touching on to a huge macroeconomic backdrop into how you know what you know what you're talking about in my opinion i think it's it's uh you know maybe a multi-decade uh uh uh outlook um in terms of how this might play out and it really does depend on really how bitcoin evolves um it would have to be a whole lot more stable than


it is now which means a whole lot bigger than it is now um and maintain its decentralization where uh one at that size you can't manipulate it no matter what you do or how much you've got um and the reality being if that that the decentralization of its ownership is spread out amongst enough of the you know uh g8 country you know whatever you want the the mega powers the mega economies of the world if it was distributed enough throughout that then yeah it would be a fair um baseline it would be a fair uh


foundation to build everything else on top of because yeah then everybody else everyone's playing by the same rules and nobody's uh holding the keys as it were yeah it's definitely a long-term game you know uh bitcoin is a long-term business from a miner's perspective because the last bitcoin won't be mined until 2140 so there's a long a lot of halvings between here and there if you would um for that to happen i think the other thing is if you look at the average amount of bitcoin held in wallets


uh that number is decreasing which is a very good thing because it means there are more and more wallets holding bitcoin which means it essentially there's more and more decentralization of the holdings happening uh over time which is to your point a very good thing as bitcoin becomes more and more distributed um and potentially becomes maybe more of just a staking tool uh who knows but um you know i think we're gonna start seeing things being priced in satoshis versus bitcoin because even now yeah right i mean it's uh and you know


michael saylor has talked about some really interesting things regarding using bitcoin as a way to uh and essentially staking as a way to deal with things like trolling deal with spam things like that so hey if you want to send me an email um you know you're gonna have to have at least a hundred thousand satoshi staked for my email client to receive an email from you and that means that if you spam me i get that hundred thousand satoshi's guess what spam would cease instantly with that it's funny because


what you're describing um proof of work was originally uh well there was a thought that a a form of proof-of-work was created to solve that exact problem uh of spam because you have to do this computation in order to send it and for one person to send that message it's no big deal but if you want to spam a million addresses while suddenly you have to expend all this power just to do it yeah again the incentives change that's where proof of work was originally created a form of it anyways not the existing uh


uh model but uh again like i'm curious because you've got a very uh broad and uh high level of uh knowledge about bitcoin it's underlying where do you what's been uh your like your journey how do you where do you source your information and when you're looking to understand all of this because it's not like there's a course well i'm sure there are courses you can take but um the reality is it moves so fast that any course you might take is already outdated by the time you take it uh


where do you how did how have you come to uh develop your your understanding of it so i mean part of it was um by way of background i come from a family of bankers and people in the banking regulatory framework so my dad was a banker who was very involved in the funding of the north sea oil build-out and he worked for a number of banks and was responsible for doing a lot of managing a lot of the capital raising that was done for the north sea oil deployment and so i grew up where dinner table conversation was around you


know economies the economics of commodities the economics of you know the oil industry how does the oil industry work how do you look at project finance and how do you look at return on assets my stepmother was a senior economist for the oecd responsible for writing the regulatory frameworks for russia and the east bloc countries to come into the oecd after the wall fell and so again dinner table conversation all around stock trading all the regulatory frameworks if you could design a whole new banking framework how would you do


it i grew up in that kind of world my first software programming job was for a bank in london in the 1970s when i was in high school and this was at a time when banks in england still when you went to cash a check there was a handwritten ledger at the teller used to write the check and the transaction in that later was loaded into a computer so i lived through that transition of banking and just the inefficiencies that exist in the banking framework and so as i kept sort of operating in the technology industry i


was constantly just kind of thinking about this problem that a money and how money moves is very impractical uh and then as we looked into the post kind of sarbanes-oxley world and we looked at um especially uh you know the post-911 world money became even harder to move because you had now kycaml issues and uh money laundering issues and so um when bitcoin started appearing on the radar screen i had a cto that worked for me at one of the companies i was running and um you know we started just having these debates about you know bitcoin and what


problem could it solve what could blockchain solve and you know being a technologist at heart um i was very focused on what blockchain could solve less about bitcoin as a currency more about blockchain and bitcoin as a technology to enable instantaneous payments and settlement to deal with uh trust issues and um in about 2016 uh i was became chairman of a european company that was one of the top uh encryption companies uh around what's called root of trust so the german company that made a device called a hardware security module think


of it as a hardware wallet on steroids this is where the um three-letter agencies and the military store their keys this is the absolute highest end um key storage system that you could imagine uh literally james bond asking that if you touch it it would melt and all the data inside it would disappear that's how sensitive these things were so that nobody could hack into them totally air gapped etc and in looking at that you know again started thinking back about blockchain and had the opportunity to get involved in starting one of the


first licensed otc desks uh in liechtenstein and built an escrow service in switzerland for dealing with crypto transactions uh and through that uh was very involved in the early stages of european the regulatory frameworks that were designed around crypto um especially in liechtenstein um and you know our company was the first licensed entity that could trade bitcoin legally if you would um and that taught me a ton about kind of the capabilities but also the issues around uh the risks around what platform you were using uh smart contracts and how


not to write smart contracts and so on so uh when merrick my predecessor got involved with marathon i'd known merrick for 20 years our kids had grown up together and we've been close friends he said hey i need somebody who understands blockchain on my board so i joined the board in 2018 um and you know worked together with merrick to get marathon kind of where we are today um and so for me it's just been this long-term journey of i'm a believer that technology can solve all sorts of problems um and blockchain


technology in my mind is the perfect evolution of the internet and where everything uh we're going to move to a world where we can be fully decentralized even power generation is becoming decentralized with solar power today in energy storage you can do community level power where a community in a state that has enough of the right solar footprint could easily deploy solar panels on all the industrial buildings in a particular area take that energy store it in batteries deploy it to homes within a certain radius now you're moving away from the


grid as a power distribution network and only using the grid as a load balancing system so if you need some more power somewhere else you can ship it from point a to point b which is by the way what the grid was originally designed to do we have centralized power generation designed to provide power to people around it and then you only have to touch the grid actually to move from one generator's utility to another today the grid is being used to transport electricity all over the place and it's just not designed for that


and so we need to move to edge power generation which becomes really economical now with the cost of solar having come down the cost of batteries having come down and if you add just a little bit of bitcoin mining at those edges um all of a sudden you can fund the development of that solar power or renewable energy and more importantly uh you can subsidize it and so bitcoin mining starts becoming an enabler for this edge energy deployment and so imagine instead of a huge solar farm located in the desert where you're now


going to have to ship electricity hundreds of miles to civilization and your consumers you have that generation on every rooftop you clad towers buildings in solar panels so that they generate their own electricity they sell the excess energy into the buildings around them and you get this edge generation it's kind of just like in the ai world with computational engines at the edge you know otherwise if you're going to do all your ai computations and operate your models in the cloud you have to take data from the edge and ship it up


into the cloud get the computation get the results ship it back down to the edge where it's acted on that's very inefficient the and the internet isn't designed for that sheer volume of data moving up and down on and off the internet if you would but if you do the computation at the edge and you're just shipping the insights the learning if you would it's a much smaller data package so think about how content distribution networks are built today right you can watch your streaming on youtube because it's


not located on one server your program is located on tons of content distribution networks that are near to the edge of the network so they're only actually transporting it the user is actually streaming it off a node from an akamai node for example which is nearby it's not having to ship from one central server that whole architecture is what's going to happen to the power world and especially as we get to small modular nuclear down the road i'm not saying in five years but 20 30 years from now there will be the ability for


people to generate electricity um using some form of renewable other than just solar and wind might be hydrogen might be small nuclear but that is clean and safe enough so you can have communities generating all their own power and you know this is where i think some really exciting stuff that is going to come out of blockchain and come out of the crypto world in bitcoin mining um you know we're going to end up funding a lot of those developments because that's what's going to drive true energy independence


at the community level not just at the national level but the community level i can tell you definitely you got definitely bit with the bug because uh yeah your mind cannot help but go to those those um those use cases that don't exist today but you see the potential and a lot of what you're saying plays into tesla's goals around solar roofs solar roof tiles which they certainly pioneered and while again still fairly costly today the trend is only headed in one direction and um it's not necessarily practical in every


climate um where i am all of our roofs are covered in snow uh for half the year but uh a lot a large uh percent of the population doesn't have that uh same issue but the point being is that the more you can distribute that power to the edges and the reality is you're um it would be very difficult to do that with any of the existing uh financial models that we've had in the past because like what does every person now have to keep track of that or all that information would have to be stored in a centralized way that someone would have


to be able to run um blockchain would have completely eliminate that where you could tokenize that energy and um uh trade it back and forth and you add bitcoin into the mix as well uh to to for people to pump that excess into that and store that energy in the form of bitcoin again like the the possibilities just they just don't end and you ha it's it can be hard for a lot of people to imagine what that world would look like um but i think it will be like 10 to 20 years from now we'll look back and we'll wonder how the heck we


were doing it any other way much like before the internet um just think about it yesterday the blackberry network was shut down permanently now it wasn't many years it wasn't many years ago that the blackberry was the key executive communication device the iphone was viewed as a toy right today the iphone rules uh android rules right smartphones rule and those devices have been totally shut down um [Music] you know people think these things take these trends take decades um but these curves accelerate you know the


iphone's only 13 years old 14 years old at this point it's a about as old as bitcoin just one year older yeah so if if bitcoin adoption follows internet adoption curves you know iphone adoption curves etc then the network effect is going to be huge over the next it's going to be exponential over the next five years and that adoption is going to drive a lot of deployment of solutions applications use cases uh for crypto which are going to drive um just a further uh increase in the value of all of these


various protocols and networks well i want to thank you you've been very very generous with your time um i've very much enjoyed this conversation um there is one more thing i wanted to talk to you about uh and that is the we we touched on regulations and and your views on all of that and where things are headed and that this year is probably going to be a big year for that um what are your views on the bitcoin spot etf and the delays um that they they keep pushing those approvals back and then denying others citing the same


thing over and over again where do you think we are with that and like how does this play out like how do we get from where we are to where we all think we're headed where the united states finally accepts and starts to um embrace uh the bitcoin on uh etf products so i think the challenge uh that the regulators have um is if you think about liquid supply being 5 million btc right 13 million are held in long-term holders hands uh today according to glass node um so 5 million in liquid supply you have an etf that receives a billion


dollars of influence funds they have to go buy a billion dollars in bitcoin right because this way an etf works you get 100 million you get a million dollar deposit you got to go buy a million dollars a bitcoin right away uh and they have you know a certain number of days to balance their uh their books if you would and so each time one of these funds starts it's going to drive the price of bitcoin way up because there's going to be demand all of a sudden and there is no supply it's you know supply you have to buy


bitcoin from people who are currently holding it because there isn't new supply coming to the market and so the price will go up and then the price will sit once that etf has bought everything is it bought then you're gonna have people selling into that demand and the price will likely trickle downwards so what the sec is very afraid of is that you create financial instruments that move markets you know in the equities markets today a billion dollar etf won't really move the market as a whole it may move one stock


but it won't move the whole market the problem is an etf tied to bitcoin will only move the bitcoin price up and down and you know you just look at the galaxy trust for example and the fact that it can trade at a premium or a discount shows the kind of inefficiency in the marketplace and the easiest etf to get appointed or approved i think would be converting galaxy into an etf because they're by far one of the single biggest holders of bitcoin today um and the minute that turns into um an etf i think uh


that's an easy one because they don't have to go buy the bitcoin they already have it and so uh there would be less market risk there but that being said um i just think there is concern regarding the lack of liquidity in the marketplace and uh you know the canadians have been very much more uh forward thinking with this um i think you're gonna see etfs for bitcoin appear in every market around the world over time um uh the regulators in this country will finally just bite the bullet and approve it uh but what i think they're trying to


do is what are the rules and the regulatory framework you have to put around how this fund will operate such that it can't manipulate the market yeah it's um i've been researching this a lot myself and uh the the argument of manipulation does seem a little bit rich considering we have it in existing markets um it's just kind of baked into that cake as it is but i do think it's different because bitcoin is international um a large amount of the exchanges are outside the the uh jurisdiction of the


sec or any other uh united states uh body um so they are limited in what they can do in that power in the interest and on top of that who who's going to be responsible for it in the first place um it took a long time for them to decide to even uh come to terms with what bitcoin is um but further to what you're saying i think that they'll soon come to realize that a little bit of control over these markets is better than none at all by by uh pricing yourself out so they're gonna have to come to terms


with it and i do think that the there's enough attention on this now and uh the intentions of i'm trying to recall which fund it is or which application i'm not sure if it was galaxy like you were just talking about that got delayed until i think it was february 2nd actually have those in my notes here somewhere but uh they are planning on um basically suing the sec if they deny it this time and that as it turns out is somewhat how the first etf in canada got approved it was denied and appealed and that


appeal is how they won so i think the states is getting to that and that's what i predict is going to happen over this next year is the uh the maturing space is going to get a lot more organized and more aggressive in advocating um you know what what the community wants and they have the means to do it now uh so be interesting to see interesting yeah can be very interesting uh but i think that there are lots of other proxies you know institutional investors you know they've invested in minors as a proxy they've invested in microstrategy


as a proxy um i think the one thing that's definite is that the millennials um are viewing crypto as their version of gold if you would so i think uh if anything long term i'm definitely a gold short uh and uh you know obviously bitcoin long but um i think what we're going to see is a shift uh that's generational as well happening at the same time so it's going to be very exciting times i think this is going to be a watershed year um and you know i really look forward to revisiting this conversation


uh you know later in the year or maybe early next year and seeing you know what did we think was gonna happen and what actually happened uh it'll be interesting to see well it's always fun to those predictions i got a video coming out on that um with a few of my own um you'll see how well it ages i can't wait to hear it uh so yeah again thank you very much for your time before we go is there anything else you wanted to add no just really appreciate the opportunity to be on appreciate your support for marathon and for the


industry and the effort you put in i know it's a lot of hard work so thank you all right thank you