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FULL INTERVIEW With Fred Thiel: CEO of $MARA Marathon Digital!!

September 6, 2023

Marathon Digital Holdings is actively working to diversify its operations internationally, aiming for a balanced 50-50 split between domestic and international activities, with no more than 20% concentration in any specific region. Thiel emphasized the significance of strategic investments like the one in Auradine, which provides liquidity to support the company's ongoing expansion efforts. Marathon has also developed proprietary firmware to optimize miner performance and is exploring immersion cooling technology for enhanced efficiency. The interview shed light on the evolving perception of Bitcoin mining and its energy consumption, with growing recognition of its positive impact on the industry.

00:00 Intro

01:25 Additional 5 Exahash

02:47 Geographical Diversification

05:10 Growth Plan

07:38 Balance Sheet

10:24 Global Hashrate

14:16 Swapping Machines

15:51 Managing Miners/Immersion Cooling

26:27 Authorized Shares Discussion

31:23 HODL Strategy

32:56 MARA Mining Pool/Global Risks

41:13 $BTC And The Grid

Transcripts are autogenerated. May contain typos.


all right welcome to talking investing thanks everybody for joining us today we have a very special guest we have the CEO Fred field of marathon so uh we're gonna go through ask him a bunch of questions I know that you guys have been asking me tons of questions they have an awful lot going on so I'm just gonna kick it over to Fred for a minute I know I'm sure you all know who he is but I'm gonna allow him to just introduce himself and give a quick background and then we'll get into some of the


questions that I think everybody is looking to have answered great well it's great to be here uh Fred Thiel chairman and CEO of marathon digital Holdings uh large publicly traded minor and uh you know very excited about what's going on in the mining space today obviously we've grown our our capacity immensely over the past year uh now at a little over 23 extra hash of installed capacity and as we announced today we're going to continue to grow both domestically and internationally by adding another 5x a


hash um in the near future and looking forward to more growth beyond that all right fantastic so that leads right into uh fortunately for me you guys put out your monthly operational report today so we got a bunch of new information so I think probably everybody's pretty excited about that there was some exciting stuff some big stuff some stuff I did not expect in there so uh definitely a lot of questions to go through so I guess I'll just start out with what I thought was the the the biggest piece of the puzzle


a kind of an announcement I'll say an announcement um and see you know if I can drag any more details out of you but obviously you can only say what you can say you talked about uh adding five x hash I think the words that you guys used was uh it you added 5x the capacity for five additional x a hash in the ordinary course of business so is there anything more that you can tell us about that or is that for the future um you know it's more for the future um essentially what we've done is uh contracted to buy miners in what we call


the ordinary course of business that would uh increase our capacity by a further 5x hash beyond what we have currently today so uh if you look at the capacity we have in the U.S which is about 20 a little over 23x hash plus the capacity we'll have uh in UAE when that's fully online the end of this year it's another 2x a hash that will be attributed to us if you would that'll be 25 x a hash plus an additional five so uh when these miners uh that we've procured are installed it'll be 30 extra


hash and uh you know we'll continue to announce further growth goals uh you know as they happen okay well that is exciting uh so you guys have done some growth uh I'll call it quietly because I don't think people are as as focused in on it you do have this joint venture going uh in the UAE and like you mentioned I think your portion that I think is you're 20 in that joint venture and that's gonna add two extra hash is that correct to your yeah a little less than 2x a hash so it'll be 1.7 something extra hash


um and then depending on overclock and things like that that's a that site is fully immersion uh and so it operates uh you know it can overclock um because of that so I think when you look at the net contribution to us it'll be somewhere about 2x a hash um okay is that is that something that you guys um I've heard you talk about wanting to diversify geographically so I know you know you're a lot a large portion of your business in the United States a large portion is in Texas and I think you know that seems to be going well but


you've talked about diversification obviously this is the first big step towards that you know is this kind of a test run do you expect more uh in in that location you know continued expansion there or are there other places you're looking to go um great question so and I spoke about this on our earnings call you know we're looking longer term to be about 50 domestic 50 International capacity um and you know our goal is to not have more than 20 or 25 percent of our capacity in any one region of a country


or part of the world uh the goal being that you obviously want to have and operate in different climate zones so you can deal with heat and temperature differently um different curtailment criteria for different grids Etc you know today we have um a lot of our capacity in Texas we brought on North Dakota more recently so we're starting to diversify uh beyond the Texas capacity with UAE we're now diversifying internationally and we'll continue to grow both domestically and internationally but longer term we want


to be about 50 50. and again no more than kind of 20-ish percent in any particular region of the US or you know part of the world okay so without knowing time frame you know if I impute from what you've said you guys do have an awful lot more growth planned uh you know like I said you know as to when that is I'm not sure but just doing the math on what you just said to get to 50 50 you know internationally versus the US and and uh so you right now I believe with what you've got online you're already I think


you are already the largest uh by exahash publicly traded Bitcoin miner at so if I read correctly you're you're at 23.1 which has been your stated objective for quite some time you're there now or it may have said uh imminent uh so you're essentially at that point you just laid out a map to 30.


so you know if if things go well can we expect more to follow well I think the two things one is we obviously want to maintain our share of the global hash rate so as Global hash rate continues to grow you should expect us to continue to grow uh minimally Pro rata with the um uh AS Global hash rate is growing and then you know depending on market conditions uh you know we believe in being obviously very agile and moving very quickly when it makes sense and so we've spent a lot of time and effort developing our technology stack you know from the pool all the way


down to the Asics our investment in oradine is you know now general public knowledge that people are aware of that and that gives us the ability to have really fine-tune everything we do and so we wouldn't have made that investment if we were just going to install on what we have today and sit back and twiddle our thumbs obviously so right we can intend to continue to grow our focus is on delivering shareholder value and creating value for our shareholders and we think that securing the Bitcoin blockchain is a very important part of


that mission so you should expect to see us to continue to grow again as market conditions allow um you know if the current market conditions uh continue I think uh you know there'll be some minors that will grow continue to grow and others won't be able to afford to grow though soybeans are generally readily available today um you know hosting sites are generally ready available if you have Capital to build them out uh the challenge for most minors today is lack of capital and that's not something we suffer from so


no so so I'm gonna pivot just a little bit because um just to to expand on that point uh you guys have an extremely strong I'll say it you guys have a very strong balance sheet maybe you know the strongest in the business if not one of the strongest yeah in this latest announcement you talked about 111 million dollars in cash so you've been consistently over a hundred million in cash you have the largest stack of Bitcoin out of any publicly traded Bitcoin miner over 13 000 I think so you know those two things put together is


the better part of a half a billion dollars of liquidity if you will and I know you're probably not looking to eat into your your your hotel position but it does provide a lot of liquidity so is that you know hot what can you talk about your balance sheet just a minute uh beyond what I've talked about and how that plays into your long-term strategy sure so um you know we the only debt we carry as a company is the convertible bond that we have which is 746 million dollars that's due uh December of 2026


it has a one percent interest rate uh there's no amortization on it so obviously we want to make sure we're in a position to be able to deal with that from both cash and Bitcoin the balance sheet uh you know when that comes due uh there may be opportunities to do other things with that along the way but you know we'll have to see additionally we want to make sure that you know we have enough cash and liquidity so that if all of a sudden an opportunity arises for us to acquire a company acquire sites


um acquire the right types of minors um we have the ability to do that without necessarily having to be dependent on access to the capital markets um or the ability to raise debt so we believe that you know luck is kind of defined as opportunity meets preparation we always want to be prepared to do things and so the key for us is really to constantly weigh kind of where do we think the near-term mid-term and long-term trends are pointing in this industry so that we make the right choices and right Investments and we're


positioned properly for whether it's a more extended period of this sideways choppiness in Bitcoin which we personally view as something beneficial to us because a we're not servicing a lot of debt um we have ample Capital to continue to require other minors uh either mining companies or Rigs and the ability to build out sites where others might not have that capability so we believe that the current environment really is you know as beneficial to minors with strong balance sheets like ourselves um and uh you know we're very excited


about kind of opportunities uh over the next 12 to 18 months so any thoughts uh you mentioned you want to at least keep up with the global hash rate I know you know there's a lot of uh word on the street if you will that a lot of machines uh across the industry are going to have to be retired at the having some people expect to pull back in the global hash rate I you know I'll just give you my personal opinion not that that matters for anything I'm not necessarily expecting that I'm wondering if you guys have any


expectations or you're just in a wait and see you know be flexible and just you know play it by ear well you know if you think about our Fleet um the majority of our Fleet today is made up of s19 XPS which is the most energy efficient Miner uh in production and widely available today so our average uh Energy Efficiency across our Fleet is about 25 joules uh today where the industry average is well over 30.


and as we come into the having you know s9s definitely have to come off line s17s that have to come offline um and you know s19s uh Pros uh potentially may have to start coming offline depending upon um you know their source of energy where they're and you know the cost of their energy so you know I think it wouldn't be strange if Bitcoin remains at these kind of sub 30k levels to see maybe 20 30 of global hash rate come off initially uh if you look at the difference between 30k Bitcoin and 25kbit Bitcoin uh if it's 30k you saw


miners still growing now that it's been operating at 25k they're upcoming a difficulty adjustment is downwards so what that tells me is there are miners that already are having to shut off now imagine Bitcoin at 25k where the cost to produce Bitcoin uh for the majority of miners is somewhere over 28 30k that's a situation where you know hash rate is going to drop significantly so we just want to be prepared for all contingencies if you would and um we think that there are a lot of scenarios that could


happen uh I think a lot of stuff is going to happen in q1 of next year that you know may portend very fortuitously for the price of Bitcoin or not you know there are a lot of these ETFs the expiration on these applications is kind of you know q1 time frame next year uh there may be other things and uh you know whether Bitcoin follows its historical pattern or not is yet to be seen uh but I think Global liquidity plays a major role in where the price of Bitcoin is going to be and if uh recession fears pick up in this country


and the FED kind of pauses or even begins to decrease interest rates then uh we'll see an increase in global liquidity which will drive uh you know more interest in Risk assets like Bitcoin so uh you know TBD will have to see kind of what next year looks like so I think that's a very fair comment uh there's a obviously there's a massive amount of speculation but you do see a scenario uh you know one of the scenarios is you know we things remain tight we we live in a world where you know maybe the global hash rate does


reduce just based on the pressure and and you brought up an excellent point even the difference between twenty five thousand dollar Bitcoin and thirty thousand dollar Bitcoin prior to the having it does seem to have you know some ramifications so certainly after the having it would be you know if we're still floating at some lower numbers like that then I I feel like what you talked about maybe that 20 or 30 percent pullback in global hash rate so in in that instance I imagine you know obviously you're not going to be turning


machines off uh so you may end up having a larger percentage of the global hash rate but what what that does lead me to is a quick question you mentioned in your report that came out today that you swapped out some s19 I think some s19 Pros for some s19 XPS so are those machines being retired or just moved elsewhere um so we're constantly adjusting um and evaluating new sites new locations New Uses for machines we've spoken before about our interest in lfg so landfill natural gas uh you know other areas and other opportunities


where the cost of energy is a lot lower than in traditional hosting sites or sites where you build out your own hosting so we can deprecate machines to those type of lower cost sites and while we don't have a lot of capacity in in that type of uh site or or configuration we can deprecate these machines to those types of applications so you know essentially the J Pros that we have we think are still going to be viable if the cost of energy is Right specifically to King Mountain which is you know site in Texas there's a lot of curtailment in


Texas we want to be able to optimize and maximize our ability to run there and by lowering the Energy Efficiency the energy required to generate a Terra hash of um of hash rate by using XPS we're able to effectively increase the hash rate of that site so that brings me to a point uh you guys have you guys have some vertical integration that I want to talk about later that some other companies don't have conversely uh you've taken I think what you used to call I don't know if you're still using the terminology more of an


asset light approach where you're you're more focused on you know buying the actual Bitcoin mining machines versus the infrastructure so as a result I think your machines are hosted uh how does that affect your your energy cost I know you've mentioned you know for you energy is really energy cost plus hosting cost is your direct costs do you have the ability uh you mentioned curtailment so I know a lot of that curtailment is forced in the summer months in Texas and like you said you know geographically every area is going


to have it's time for curtailment you know if you're if you're further north obviously that would be in the winter if you're you know in Texas that's in the summer so do you guys have the ability to manage or micromanage your machines in addition to the curtailment that's kind of required do you have the ability to shift gears on your power usage to kind of keep your power costs down uh by by dialing things back at Peak energy cost times or you know is that or or are you more in a fixed


purchase you know a fixed price scenario with the host it varies by sight um so for example in uh in West Texas at the King Mountain site that's a wind farm we have a PPA on the wind energy and then we're sourcing energy Off the Grid um to complement that uh that wind energy is at a very low price um so we're able to kind of you know move back and forth between those two as the Dynamics of the site allow one of the key reasons though that we wanted to be vertically integrated from a technology perspective is you know bit main Miner


mining rigs don't offer the ability to underclock or overclock natively you have to use custom firmware and we wanted to have some other special capabilities built into these Miners And so that was one of the reasons we developed our own firmware and as we continue to deploy our firmware across our sites where our miners are located it'll give us the ability to you know we can run the miners super efficiently by underclocking them at times as opposed to having to curtail them when it's an energy price issue when it's a force


curtailment then you have to curtail obviously and we're going to curtail regardless in those situations but by being able to underclock it allows us to operate at times when other miners can't operate profitably by being able to overclock it lets us take advantage of times when pricing is extra low in the marketplace so we have historically had this kind of asset light model as you said where we work with third-party hosts the UAE site was a site we designed developed and built together with our partners there so that's not a


hosted site uh that's really you know fully vertically integrated uh you know technology and site it's you know we designed the immersion technology together with the immersion vendor that's operating at that site and you know that site was kind of unique in that because of the aspects of how we designed it the pilot site it operated for over 100 days without an engineer having to go on site so the ability to run miners hands off with very limited downtime is huge because when you run air cooled miners


you have a lot of downtime you have a lot of dust getting in these machines they need to be cleaned they need to be serviced Etc fans break uh in you know this type of immersion that we're operating in UAE you don't have that downtime so you can optimize your Performance Plus because it's immersion it allows you to to a certain degree overclock miners uh when you know the environment is right for that and so that's something that you know as we continue to build out our capacity uh you'll see less third party hosted more


fully vertically integrated hosting uh you'll see more variety of types of sites large and small and even micro sites potentially especially in the lfg side of our business um right which will give us an opportunity to continually focus on lowering our cost of operations you know if we can operate miners with very few hands then that takes a lot of the operating expense out of the hosting piece and you're just focused on energy cost at that point and especially if you can do that at scale um you know building utility scale sites


is very expensive it starts getting more interesting and there's more energy readily available in smaller scale sites but the problem with smaller scale sites is that you need to have a lot of Engineers to you know service machines well if you no longer have to service machines because the sites can operate for longer periods of time and you only maybe have somebody go by once a month and do routine maintenance that's a game changer in how you build out sites so that answers a big question that I had on my list immersion cooling I know


there's been a lot of uh optimism around the future of immersion cooling but it sounds like you guys at this point now have some real world experience some data to draw on of you know actual performance and uh the the statistic you just gave me about you know being being able to be that hands off it feels like a game changer from you know an overhead standpoint and like you said being able to have Micro sites where you know you're not reliant on you know these gigantic 200 400 megawatt facilities so you know you can spread


yourself thinner if they operate this well so so you're having a positive experience with immersion cooling is that oh yeah I mean we we love it um we're very actively on this is single phase immersion uh currently uh you know we're very actively uh developing technology in the Dual phase immersion technology area which um is a very different type of cooling it's a single phase immersion you get dual phase you allow the liquid to actually boil what that gives you is the ability to pack miners more densely in the immersion


system which means you can pack more mining more hash straight into a smaller square footage which means you can now do these micro sites even more efficiently are are the machines that are coming out obviously they keep getting bigger you know from an exahash standpoint or really a terahash standpoint they keep getting larger and larger are they physically getting larger or is it being more are they more efficient from a space standpoint in that regard as well as you know yeah it's a little different every


vendor has a different spin on it um you know bit main has been focused in the past on their Hydro Solutions which is you're essentially pumping water through the miners uh cooling fins to cool the uh the hash cards the hash boards uh and the Asics uh not a very efficient model it uses a lot of water there's a lot of piping that can you know leak Etc um and I think if you were to sort of uh you know do a poll amongst miners you'd see that they're not a lot of miners using bit Mains Hydro Solutions micro BT


has done a different spin on hydro with their new uh m56 plus pluses which is better because it's a closed loop system and there are only two hoses per Miner versus lots more hoses like in the bit main solution we personally believe that um you know as you get to dual phase immersion you can design the minor physically different you know the problem today is essentially miners are still shoe boxes and you put them into immersion tanks and there's a lot of wasted space in those tanks one of the reasons we


invested in oradine was we wanted to have miners designed to our specs and so I think what you'll find over time in the future is that different vendors will have different configurations of miners you know our goal is to have the densest potential amount of compute uh possible in the smallest amount of space so that it can be very efficient and you get a lot of density which means you don't need a lot of land you don't need a lot of square footage and you can put these things right next to power sources


that are fairly small in nature if you would and so we believe you know a lot of instrumentation a lot of capabilities for redundancy a lot of remote operations and then the ability to fine-tune the operations of these miners um some of the technology that oradine has developed is really groundbreaking from a total cost of ownership perspective and we believe that that will be a huge differentiator longer term in this industry because if you can essentially tune your miners based on a price of Bitcoin a cost of electricity and a


global hash rate so they can maximize profitability now you're talking about building AI into miners that's a pretty unique solution that again reduces the need for Hands-On on site and if you can do that in a very dense way um you know you get a some very interesting very interesting options so for if you could talk a little bit more about oradine you've mentioned that a couple of times that's a you guys are you've invested in that you're a part owner uh the firmware you also mentioned


some proprietary firmware so is that firmware only compatible with the oradine machines that are coming online is that going to be able to go across your Fleet and when do you expect to have the ordyne machines I guess start to roll off the line for you guys uh and have some of those purchases happen so I'm not going to comment on you know when we're going to have the oradine machines rolling into uh our Fleet because you know that hasn't been announced so uh gotcha yeah we'll have to keep that under the cover so to say


uh our proprietary firmware is actually designed for a bit Main and all of the main miners so that's why we're rolling that out across our Fleet the auradine firmware is separate and apart and that's specific to the Ardine miners uh and how those are managed they've developed that technology themselves and will obviously take advantage of it as we deploy those miners okay so more to follow uh at the appropriate time on that one yep I wanted to take a minute and just clear up a little bit of an issue that I


know a lot of my subscribers were concerned about and I think people have a little bit of a misunderstanding so I'll tell you what I'm talking about uh you guys recently had a vote to increase the number of authorized shares in my opinion A lot of people don't exactly understand what that means I'm sure you got more of the talk than I did but my comment section was full of that and I tried to do my best to explain that you know the difference in what that means so I'm hoping to just give you a minute


to explain to you know your investors into the world what what that was about and you know kind of the difference for me underscoring the difference between authorized shares and outstanding shares and you know what your intentions are around all that right great well I appreciate the opportunity so authorized Shares are essentially when you form a company you typically in your Articles of Incorporation you determine how many shares is the company authorized to issue it doesn't mean you're issuing them it doesn't mean you're going out


and selling them in the market it doesn't mean you're raising Capital with them it simply sits a cap on how many shares the company will have and then as the company continues to develop over years you extend that number uh and increase that number rather um to a higher number now marathon is Incorporated in the state of Nevada and in the state of Nevada you have to have 50.


1 percent of the shareholders have to approve any change in the OR 50.1 percent of the outstanding shares have to approve any increase in the number of authorized shares in other words shares the company could potentially issue um the challenge is that a lot of marathons and shareholders are retail shareholders who don't vote at annual meetings and so we tried for multiple years to expand the number of authorized shares uh above the 200 million that we had authorized uh previously and so we had to use a method using a super preferred type of share that allowed us


to gather the necessary votes to do this and we wanted to do it once because it's very expensive to do it's very hard to go out and solicit proxies from shareholders so we increase the number of authorized shares from 200 to 500 million so we wouldn't have to go and do this again for many years that way we have enough shares so that as opportunities arise and as the board determines that the company should use those shares to then raise capital for various growth initiatives or Acquisitions or whatever it may be we


have the flexibility to do that we didn't want to be in a situation where all of a sudden all these opportunities arise and our hands are tied because we don't have authorized shares available so that impacts everything from M A opportunities it impacts opportunities to fund growth it impacts opportunities for us to compensate employees there are a lot of things that go into that mix but you know we're not going to go out and spend 300 million shares overnight here by any means all right I just I feel like it's more


powerful coming from you than it is from me so to go to that point you know just me looking at your most recent quarterly report you guys did very little dilution uh from my perspective in the previous quarter and there's been no you know since you authorized those there's been no change that we can see in in what's going on so uh more of an ordinary course of business in my personal opinion so you know I don't want to put words in your mouth but I think that's yeah yeah I think if you look at it


there was a lot of dilution in 2022 because you know there was a point in time in 2022 when we had zero production uh you know in the month of July we were not mining a lot of Bitcoin because uh King Mountain hadn't turned on fully and we had issues um at the Harden site so you know we had to use equity there to fund operations um you know we're not in that position anymore today we produce more Bitcoin than uh we need to sell to cover all our operating expenses so the only thing we use equity for today is for growth


initiatives so if we're going to buy a lot of minors which means we're going to deploy those miners or if we're going to develop new sites and we need to buy equipment for those sites um that all generates and creates value for shareholders just like us holding Bitcoin generates value for our shareholders um you know you can do the math and look at um how our stock trades you know vis-a-vis Bitcoin and you can see that um interestingly you know the beta in our stock relative to bitcoin um could potentially some people you


know believe is very much driven by the fact that we hold as much Bitcoin as we do so we're kind of a proxy for Bitcoin in that regard right so for those of you who don't know uh Marathon has the largest total on their balance sheet of the publicly traded Bitcoin miners uh so over 13 000 I think you just reported today is that a number uh and you know what to whatever extent you can answer that in general is your whole is your hotel strategy to continue to add to that maintain that add to that or is it


just depend on you know what the future holds so um I think the Bitcoin Maxis out there would uh skewer me if I were to say that we believe it's better to hold our Assets in fiat currency than Bitcoin and as a True Believer in Bitcoin um we believe it's better to hold uh our liquid assets as much as possible uh in Bitcoin but we also need to have the flexibility of having fiat currency available um so that we can take advantage of opportunities that arise so no different than how anybody manages their


Investment Portfolio you have a certain amount in cash a certain amount in stock certain amount of bonds maybe some gold and Bitcoin we have a lot of our assets in Bitcoin and a little bit of cash that we have so we can be opportunistic with that but you should expect to continue to see us total and add to that photo okay that makes sense yeah and and like we mentioned earlier you guys do tend to keep a hundred million dollars of cash uh over the last couple of quarters anyway it seems like of liquidity for


you know any of those potential opportunities as they arise uh one of the things that you guys do differently is you have your own mining pool so I believe you're the only you know of the large Bitcoin mining publicly traded companies that has your own mining pool can you just talk a little bit about advantages disadvantages what's the thought process there and that's earlier we alluded to the fact that you guys are vertically integrated in some ways that other Bitcoin miners are not so if you think about how third-party


mining pools operate they have to be able to manage all of the different types of miners meaning the mining rigs that are connected to them they have to deal with different quality of network connections meaning latency to um connect those Miners and uh you know miners are constantly uh you know taking minors offline adding new miners shifting things and so uh mining pools that service third parties have a difficult task and they're not necessarily the most efficient at operating uh and if you go back to


the period when even Foundry pool was a no fee pool you have to wonder how does a pool operate without charging fees and run a business they obviously must be making money somehow off of all that hash rate that comes in and so we uh you know if you think about it's not economical for you to run your own pool unless you have a certain amount of capacity which we believe is kind of as you start getting up to 10x a hash it starts making sense because now you have enough hash rate that uh you know luck as opposed to playing out over an annual


period is now playing out over a you know 30-day period more or less and so you get more consistency smaller miners need that consistent payout that traditional pools have um based on your contribution of hash rate but because we have only two types of machines in our pool and we have J pros and we have XPS and the vast majority are XPS because we control all the network connections we don't have any third party is connecting we have a fully secure way of firewalling you would our pool and our miners it allows


us to eke out efficiency gains it's also how we test miners if you think about what a pool's role is it's the orchestration layer it essentially orchestrates what miners are doing and so by only worrying about our miners uh and by being able to really control the latency with the connections and um the type of minor and then when you run that capability with custom firmware where you've optimized the firmware to run against your proprietary pool now you get these small incremental benefits that allow you to be slightly more


efficient slightly more productive than other miners based on the same hash rate and that's what we're trying to do because we believe that you know in down markets it's the most efficient minor and efficiency is not just a question of energy cost it's a quite you know it's uptime it's really how productive are your miners when they're running and how productive is your pool so all of those things roll in together and that's why you know we really focused on this vertical integration of Technology the


other reason why we wanted to operate our own pool is we didn't want to be dependent or have a risk of a pool operator all of a sudden saying guess what can't do redemptions right now for whatever reason or having to depend on them to ensure the security of their pool and so we are really focused on owning all of the core components to what we do because we're now at a scale where it totally makes sense for us to do that and it gives us those little incremental efficiencies um there's also the potential that other


people would be interested in using some of our technology whether it's our firmware whether it's our immersion technology whether it's our pool and as you look at foreign miners so miners mining offshore um there's always this risk of what happens if the pool that I'm sending my hash rate to if all of a sudden it ends up on some form of ofac list or perp list and and gets blacklisted what happens if uh you know the hosting provider I'm working with gets on some sort of list and so internationally as


sovereigns are getting into the uh business of mining Bitcoin for example you know our partners in UAE are The Sovereign it's very important for them to have real sovereignty over their mining operation their pool um such that they're not dependent on third parties because if they're holding their Reserve assets for government in Bitcoin you can bet that they want to make sure that they can sell that Bitcoin if and when they need to and if they're mining using third parties or if they're in a third party pool those


Bitcoin reserves may all of a sudden be able to be blocked because governments have weaponized the financial system the U.S is an expert at it if you look at the central banks of a number of the uh you know developing countries in the world especially the brics who within a very short period of time will have a larger GDP than the G20 Nations which include the US and Europe um they are buying gold for their reserves they are not buying U.


S treasury notes as they used to and so you know as these countries look at alternative assets including Bitcoin as a way to hold their reserves um you know they are obviously very concerned about the U.S weaponizing uh things that would uh somehow prohibit them to access markets with the Bitcoin that they hold so so for your pool if you're doing business with a sovereign like the UAE will are they going to have access to your pool or or is marathons pool really just simply for marathons machines so marathon's pool is simply for Marathon


now our pool technology can be licensed and if they would want to operate their own pool we're happy to license it so again we we don't view our technology as a moat we view our technology as enabling us to operate more efficiently and if people want to buy our technology people want to buy our firmware people want to buy our pool software they're more than happy to do it well and another if I could just highlight a takeaway from what you just said uh one of the keys to having your own pool you guys have now scaled up to a point where


uh luck really is a factor I know that's hard for a lot of people to uh comprehend that such a complex uh thing as Bitcoin you know does have a luck factor involved and that obviously reduces and reduces as you scale up so like you said you're at a size where you can do this most Bitcoin miners really this is this would not be a viable option necessarily for them to have their own pool you know until they're you had mentioned I think 10 acts of hash so you know some something along that scale or bigger and obviously the


bigger you are the less luck uh or the luck it's the same amount of luck just equals out like you've said on a monthly basis versus having to wait longer periods of time so yeah and and when you do have good luck as the only operator of a pool you get a hundred percent of the benefit of that you don't have to share it right the opposite also applies to when you have bad luck you know you pay for it but uh you know in having benchmarked our pool against other leading pools in the world um you know we believe that uh based on


our the results of all our tests that uh we're better off running our own pool than being part of a third party pool well and another thing and and you've kind of alluded to this and I'm just gonna you know kind of say for the benefit of our audience I have often wondered you really don't see the fee that that pools charge you know as I look at all the financial statements that's not a disclosure and and I'm not even necessarily sure the Bitcoin miners themselves can fully you know put a


number on that but there there clearly must be some cost to being in somebody else's pool so you know that's that's a cost you guys don't incur yeah I mean just think of it this way I think Foundry pool at Large Scale charges you know one percent one and a half percent so you know just look at that uh you know that's a fee we're not paying all right well you've done a great job of I think hitting all the major points that I know you know the questions that I get asked for my viewers and


subscribers uh and the questions that I had personally any other thoughts you want to leave us with anything else uh obviously your report came out today so you know you guys gave us most of the news there but any parting thoughts um yeah I think you know an important thing is that you know we're finally now starting to see this narrative around Bitcoin and energy use moving from being a negative to being viewed more and more as a positive you know energy companies especially grid operators um who have Bitcoin miners uh who are


complying with uh curtailment are absolutely seeing the benefit of Bitcoin miners helping to balance the grid and you know we see this in Texas we see it in North Dakota where we operate and even in UAE where we operate you know we're seeing very positive feedback from the grid operator there regarding the the benefit to having this large load that can all of a sudden shed load um in very short period of time and then come right back online and it's in Texas gotten to the point where you know utilities are looking at Battery


Technology and saying why do I want to invest in batteries if I can just partner with a Bitcoin miner and essentially achieve the same outcome uh and so you know I think we're starting to see that more and more people you know view the positive aspects of Bitcoin mining relative to the energy grid certainly the KPMG report that came out um you know last month um articulated that and I think we're going to continue to see that I think we're going to continue to see you know the folks in Washington beginning to kind of


understand that Bitcoin mining actually is a positive granted Elizabeth Warren and her minions who just hate anything to do with crypto because they want to control everybody's money um we'll never view that but I think uh we're definitely starting to see some positive uh Trends in that direction well as an alumni of the big four I appreciate it KPMG for putting that report out I thought that was very impactful there and and I also want to thank you I know you've been uh one of the larger voices in trying to explain


uh the benefits of Bitcoin to the grid and and you know like you said there's a lot of uh I'm gonna call it my words misinformation out there or or lack of information out there so I appreciate you uh taking a big role in being a big voice in in trying to educate people on on how that all actually positively impacts the grid thank you appreciate that all right well thank you Fred thanks so much for coming on the channel uh I appreciate it I know our subscribers appreciate it and uh hopefully best of luck going forward and hopefully we can


talk to you again in the future look forward to it thanks so much for having me on okay thanks a lot