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MARA Stock Interview with Marathon Digital CEO Fred Thiel

January 27, 2022

Marathon Digital Holdings' CEO, Fred Thiel, discusses various aspects of the company's Bitcoin mining operations. Host Ryan Rosbiani welcomes Thiel and raises questions about the Compute North mining facility's delayed online launch due to permitting issues. Thiel confirms that multiple sites in Texas and other locations are being used for miner deployment and assures that they are getting back on track with schedules. The conversation moves on to the impact of Bitcoin's price on the company's profits, the changing dynamics of the mining market, and the introduction of more energy-efficient miners. Thiel emphasizes the company's focus on becoming experts in mining operations.

00:00 Introduction

00:35 Compute North Mining Facility

02:00 Flying Miners

03:15 Bitcoin Mining

04:35 Infrastructure Issues

05:45 Selling Bitcoin

15:10 Bitcoin Volatility

20:10 Acquisitions

22:50 Model Pool

24:35 Retail Investors

27:05 New CTO

30:05 Monthly updates

32:45 Hash rate explanation

34:55 Fred's thoughts on regulation

42:35 SEC Request

Transcripts are autogenerated. May contain typos.


hello everyone and welcome to the channel i'm your host ryan rosby thank you so much for joining us today for a very exciting interview with the ceo of marathon digital holdings as some of you folks know it is meristock uh they're a leading bitcoin mining company here in north america and we've got a lot of questions for them and we're excited to have them so please welcome the ceo and executive chairman mr fred teal to the channel hi hi sir how are you thank you so much for coming on the channel it's really an


honor um you as you guys probably know you're one of my favorite bitcoin mining stocks and it's an honor to have you on the show well glad to be here and appreciate your support thank you so much um so i know we've got a limited amount of time together and the folks submitted a ton of questions so i'm going to start off right off the bat with the hottest question that everyone's asking how is everything going on with the compute north mining facility there's been shifts as to when that facility is


coming online and we know that you folks have quite a bit of minors that need to come online how is that going there um it's going well there were some delays relative to just permitting which always happens you know when you're bringing online a new facility and just for reference purposes we're deploying these miners in multiple sites so it's not all going into one location they're going into multiple sites across texas and some other locations as well we've already brought on lines some of


them more come online this month and then february and then march etc but essentially it's a complicated process because even though you have a power agreement you then have to get the grid operators um to provide you with energization permits you need a series of things that have to happen so unfortunately there's been some additional delays that have just taken longer there are a lot of people in texas building uh additional capacity air cod is definitely got a backlog but we think we're coming back on track to


schedules here so it's looking good very interesting so in terms of the schedules with all the with um with these situations that are happening when can we expect compete north uh facility to come online the main reason i'm asking is a lot of folks have been asking about because you guys have been flying in the miners and uh with the jets which is as you guys have mentioned it's pretty expensive and people are curious as to because some people are asking because they're like oh we were expecting certain timelines in certain


increments and you guys are putting in such a fantastic investment to fly these over to make sure we have them that's why they were asking so many questions about this sure so two things one actually it's only marginally more expensive to fly them ourselves than to use third-party freight forwarders if anybody has involved in the supply chain issues related to china today it's a capacity and pricing issue the ability for us to actually charter jets is more because the volume of cargo we have allows us to fill a plane


so it's actually only costing marginally more per miner to deliver them but it guarantees that we get them on the ground when we want them uh so the other thing is just uh you know again it's permitting delays uh you have to get through building permits energization permits etc and that's taking a little bit longer but we think that compute north is back on track with that now and so we fully expect to be you know ramping as planned as we go through the end of this quarter and into next quarter everything i think


should be right on schedule perfect perfect that's actually very good news because uh that's because as you know these the more miners come online the more you guys are able to mine bitcoin which is the equivalent of now printing money for the company which everyone loves to see and you guys have been the leading the leader in the bitcoin mining space in terms of hashrate growth and inspiration for the continuous growth of what's going on here and we're still on track with continuous deliveries from


for the bitcoin miners correct so and now there's the new deal for this absolutely we're fully on schedule with those deliveries so that's fantastic all right i have a cat running around behind me here who just clawed me in the back so the fight had nothing to do with your comments it was my character okay i love cats that's totally cool the cat let me know that it wanted attention so i think the cat wants more bitcoin miners online more fancy feast yeah i mean listen we we all want more miners online um


because you know idle miners are are miners that aren't generating uh profits and revenues so uh but there are just pragmatic practical issues uh that you have to face um as you know you i'm sure aware there's additional regulatory scrutiny now around power and so everybody is being extra careful about how they're bringing on a new load and you know that's causing additional delays in the process so no infrastructure related issues it's process issues that's good that's good to hear uh speaking of the


infrastructure issues i remember uh about i would say i think i believe it was november or december it was mid-december where harden went offline for a bit for some maintenance and repairs to kind of instead of i spoke to charlie about this um where it was kind of like instead of doing small band-aid updates every month it was full updates so that we don't have to you guys don't have to do this every month were those updates successful so the updates were very successful at fixing the issues in um the part of the plant that takes the


emissions and scrubs them so that the plant operates as cleanly as it does uh so that was very successful uh however there have been some just other small just normal maintenance issues uh that have come up so we've had a little bit of downtime this month but other than that uh december was generally really good as you saw from those numbers that we produced and this month will be most probably out similar i think uh to december um but it's at the same time you've got to realize the global hash rate has grown significantly in the


intermediate period but you know harden continues to have some small headaches but uh we got rid of all the big ones so that's very good to hear because i know again it's more about stop not wanting to stop production because as you guys are mining the bitcoin uh one question i kept coming up that i was just in in research and studying is the new thesis behind bitcoin miners is the buy and the the mine and hotel kind of aspect and then when it comes to for expansion such as as you folks have and other mining companies have it's going


out and getting lines of credit uh raising uh raising notes or doing um offerings i was curious as to it would at what capacity would you folks switch shift from the buying hotel to the maybe we'll sell a bit of bitcoin to be able to kind of fund transactions because one thing that a lot of well it's part of the business now is as shareholders of these mining companies we've gotten used to is kind of the a form of lack of a better word delusion right the word resolution is like oh there's more offerings there's more


dilutions coming down the pike i was curious has there been any thought to maybe we just sell some of our bitcoin we can mine it at such an extremely cheap cost we can mine it so quickly uh why not just sell some bitcoin instead of raising debt or dilution yeah i mean it's a great question it comes down to asset allocation and cost of capital so if um it costs me six thousand dollars to mine a bitcoin generally speaking today uh not including the depreciation of the miners then if i'm selling that bitcoin at say 36


000 uh you know is that a smart thing to do or should i hold it and sell it when it moves back up to 50 or 60 000. so if you think about 500 bitcoin in a month uh just as an average number um and you're talking about say 20 000 of difference uh that's a lot of money uh in difference if you sell it versus you hold it and uh you know if you look at our numbers and you know part of the accounting issue is that when you hold bitcoin on your balance sheet you can only impair it you can't market to market so you don't see necessarily


the actual profit flow through by holding it but um if you look across our portfolio holdings of bitcoin uh needs to say you know they've been very profitable for us to date and so it makes sense to keep holding um for a company that has a 500 million dollar market cap to raise a hundred million dollars that's a 20 dilution for example um for us to raise 700 million dollars last year when we did it um you know that was approximately a um you know six or seven percent dilution which was very de minimis so think of it if you


held the stock at fifty dollars uh you know seven percent of that would have been three dollars and fifty cents a dilution um but the share price then ideally will go up over time so uh generally speaking i think what you'll find is companies always tend to prefer to look at their cost of capital and you know are they better off holding uh their assets or not apple is a perfect example of this right here's a company that most sorry sits on more cash than companies uh generating revenues over their full


lifetimes and uh it took them years before they ever did a dividend or anything and then they to pay their dividend they went and raised debt that's an example of you know that cost of capital um so i think what you have to look at is it's a question of scale and size you know if um at you know two and a half billion dollar market cap we go out and uh decide to go raise a hundred million dollars um you know we can do that through debt we can do that through bonds we can do it through equities there are a variety of things but we're


always looking at that cost of capital and what makes the most sense to do at the best time i think you know along that path um you know we're entering a phase in the market which is going to be really interesting because there are it's harder for people to raise capital right now so that model of raising capital to grow may change and if that then changes then people are going to have to either use debt or sell their bitcoin and so potentially we may start sliding back into what happened in prior cycles where


miners would sell their bitcoin or raise debt and then get into trouble because they can't pay for their expansion which then creates an opportunity for consolidation and so minors like marathon could potentially be consolidators of the industry so it may make sense for marathon to acquire other miners not saying we are going to do that just simply saying that uh you know there may come a point in time where that becomes an attractive option and that also would dilute shareholders but then the value of the resulting company would be that


much bigger one thing a lot of people don't take into account when they value companies like marathon is they don't look at the value of the hardware we actually have and what price we paid for it compared to what it's worth today um all our s19s that we have today had an average acquisition cost of under thirty dollars a tara hash you know market price for that miner is around eight nine thousand dollars so eighty dollars a tara hash right we have a fairly large you know i think 133 000 s 19 miners


um between what we have and what's still coming um not to mention the xps that are worth a substantial amount more than what we paid for them right and a lot of times people don't really reflect on that value of our balance sheet and what it's worth and you then you have to start looking at the benefits of uh ar low cost of mining compared to many people in the industry you know at four point four cents a kilowatt hour or most probably anywhere from 25 to 30 percent lower than some players out there um and then


if you look at the fact that we'll be deploying in the back half of this year s 19 xps which are 30 more energy efficient than existing miners you now look at um you know a business which starts getting even more profitable so we're super excited about the back half of this year and yes frustrated that deployment has taken a little longer than expected but as i said earlier we expect to be on track here soon again yeah the the big thing is that you folks are able to conquer the whole supply chain issue which is the big thing that


every company around the world has been dealing with every single earnings call i've been listening to this quarter and for the past few quarters just been talking about so the fact that you folks have the miners in my opinion puts you ahead of any company that's looking to expand because they're going to deal with this issue as they're going out and purchasing minors and that's one thing that unfortunately you were discussing about the evaluation of the company and in terms of hardware that i don't think


wall street fully understands or investors fully totally take into account because the unfortunate thing is for all the bitcoin miners not just marathon is that they move up and down in correlation at a higher alpha to bitcoin and bitcoin is now pretty much a tech stock which it moves out of 0.6 alpha to the s p 500 and the unfortunate thing is to me it doesn't make any sense because and i'd love your opinion on this that's why i'm asking is because the price of bitcoin fluctuating as long as bitcoin is over 6 500 in the case of


marathon or whatever price for any other bitcoin mining company it shouldn't be affecting the price the the share price of your companies because you folks are still mining fundamentally nothing has changed some might even say the difficulty rates could drop with the price drops and the shifts that are happening in the network cash rate i was curious just that what is your take on this because again i don't think anyone's value the hardware side of it and people tend to forget that hey they're still mining bitcoin


yeah so the you know the price of bitcoin impacts us relative to our um our profits because we recognize revenues on a daily basis as we uh receive bitcoin rewards um and then when that bitcoin goes down in price we have to impair it so that impacts kind of the profits uh so while uh your argument is very valid that in theory we should just look at you know how many bitcoin are we producing in disregard the price because we hold a lot of bitcoin the value of that treasury asset goes down if bitcoin goes down and um our revenues go down even


though nothing has changed in our production so it's just something you have to look at it's that's the nature of being in an industry where you're effectively mining a commodity uh you know gold miners uh you know they are affected in the same way the price of gold goes up or down they make decisions about their business and the market makes decisions about their business even though nothing has changed regarding their reserves or their ability to pull gold out of the ground you know the interesting difference is


that very few gold miners hold the gold that they mine they sell it right away yeah so that's a unique characteristic of this industry in this phase of the industry where miners are holding their bitcoin um will it be a long-term thing we'll have to see you know if um if bitcoin uh were to drop dramatically i think you'd see minor selling which would only exacerbate the problem um but you know i think it's all going to come down to how well capitalized companies are and how they're positioned


to handle downturns and and upswings i think we're very well positioned to handle both at the moment definitely yeah and you brought up my you transitioned me uh to the next question uh which is as you've seen the volatility in bitcoin has been wild for the past i want to say six to eight months we've just been in up and down trends and realistic we've been in a massive downtrend at the cusp of q4 until now um what is your take on this like what do you feel is causing all this and how is it affecting marathon internally are


there certain conversations that are being had certain adjustments that are being made internally to adjust to the price of bitcoin because right now the key support level that i'm seeing in terms of uh technical analysis is the 28 000 metric and if that breaks we can fall even further are there any conversations that are happening internally at marathon uh in regards to this well i mean we discuss price of bitcoin many times a day and where we think it's going uh obviously we are focused on generating yield on the


bitcoin that we hold so we're making investment decisions uh regarding our bitcoin holdings uh you know on a let's just say we're not making decisions on a daily basis but we discuss it on a daily basis and then you know change our strategy as appropriate just like any other investor would um you know we look at the price of bitcoin and just try to plan kind of what we think the implications for the market are what we think the implications are going to be uh really on global hash rate you know if the price


of bitcoin sits at these levels will the global hash rate grow as much as beduda expects it to you know to 320 x a hash by the end of the year maybe not who knows um but it does affect kind of those longer term decisions um it affects decisions do we go buy more miners or not for example that's driven more by the expansion rate of the marketplace and our desire to continue to grow our share of the market um it doesn't affect the decision as to whether uh we're going to travel or not or do a trip or something like that


operationally because obviously the business is very profitable right um and you know we are we have grown uh to the point where we're now almost 10 employees so we're still a very small company from an operating overhead uh perspective and uh you know very proud of the team for being able to do as much as we do using the model that we do that lets us operate this way and have this agility and flexibility um so i guess you know the best way to look at it is uh we're constantly aware of what's going


on in the marketplace um we're not making any short-term decisions based on one day or another if you were to ask me what i think is happening with bitcoin in the marketplace right now you've got a lot of uncertainty and turbulence that always causes people to revisit their decisions we had a lot of institutional capital come into the bitcoin accumulation last year and as some of those investors are going risk off they're going to sell across their portfolio uh equities they're going to sell bitcoin they're going to sell bonds et


cetera so you're going to see a lot of variation in that regard um and then i think if you look at uh kind of the behavior of the selling it appears that there's a lot of selling kind of in the night hours which you know not that this is by any way you know known fact it's just kind of i'm inferring here it would seem that there's a lot of selling going on internationally and so look at where is there uncertainty internationally well you know the russian central bank said that crypto was a bad thing though putin


turned around and said it wasn't such a bad thing after all um you've got some geopolitical issues going on in the ukraine which likely are driving some sales you have potential russian miners selling if they're afraid that you know russian central bank is going to shut things down you have kazakhstan that shut down mining so you have kazakhstani miners that are liquidating positions so there are a lot of reasons for people to be raising cash you may also have miners who have started to sell because they need to raise cash because


they can't do it through ipos back listings or other you know the capital markets are getting tougher for the smaller people to come into the business and um you know i'll kind of jump forward some potential questions and say you know if things keep at this kind of choppy rate where they are now i think what you're going to see is any constraints regarding hardware availability and hosting availability are going to disappear next year completely you also have you know intel coming into the business with hardware you have


other companies coming in to the marketplace i think the dynamics in the market are going to change next year um and if the price of bitcoin doesn't move up uh you're going to see a big expansion of hash rate without the commensurate expansion of profitability and uh that may create a slower kind of growth rate longer term for some companies right right and a company in your position um you mentioned a little bit before uh about uh non-organic growth through mergers and acquisitions um as you mentioned a lot of these mining


companies are going offline they're gonna have to dispose of their hardware have or just their full-on companies because as you mentioned as the price of bitcoin goes down some of these companies will not be able to afford to mine especially as we're literally on the cusp of another happening in about 24 months which will wipe out another set of bitcoin mining companies as we saw in the past two years ago um are you folks looking at certain companies not to mention any names of course because you know we can't legally


discuss that but is that an option in the back of marathon's head of hey there might be some opportunities for inorganic growth that we can just go out by this company they're already operating like for example one to two x of hash and just bring them online in tomorrow through the mara pool and just stamp them our name on it um yeah so definitely not going to mention any names but i think a better way to look at it is uh so we can grow organically by buying miners and that's just a question of market availability so if


there are miners available and you know it costs us fifty dollars a tear hash just to throw a number out there then and that's a brand new miner if i'm buying somebody who has existing miners that have been running for say a year then there's a year of wear and tear on them uh and they're already hosted and what's their cost of hosting is it as attractive as ours and what's the duration of that agreement and so you have to start looking at the you know if we go acquire somebody uh the only thing we're gaining is time to


growth right um and so it has to be at a price that makes value out of that time so if i were to acquire somebody and in six months could double my capacity just throw a number out there you know um if that were possible uh then you know what would that be worth to me versus how hard would it be for me to go buy that number of miners and tie up that hosting and how many days would i gain or lose between those two and that would drive a value equation so today you know you have to kind of it's going to be a


comparison of buy build always but there may be some fireside opera fire sale opportunities that come along where somebody's got you know 20 000 miners and they need cash urgently that could make sense um you know depending on the age of the miners where they're located how they're hosted if they're currently hosted or if they're not stuff like that no that makes perfect sense uh in discussion to hosting and growth the marathon pool um i know it's uh one of an interesting binding pool that you folks created with


yourselves in dmg i was curious um i haven't heard or seen anything have there been any other uh larger known bitcoin mining companies that have joined the model pool are you folks looking to expand that or is that just a come as you are style situation um we have a number of people who have applied to join the pool and they're going through all the usual kyc aml processes and then some initial onboard testing because we have to make sure that their hash rate is consistent of good quality and we're obviously being cognizant of where


do they mine what's their source of power things like that so we're being very selective we don't have any big miners coming on board i think you know there are other alternatives for miners who uh you know you can go to foundry and essentially pay zero fees now as to whether you're going to have the same win rate as you would somewhere else who knows uh but you know the uh value of having a pool is more strategic than being a revenue stream of collecting money from other miners you know as we grow this out to


you know we'll be at 23x a hash this time next year you know that's a very significantly sized pool and owning your own pool gives you certain abilities to direct where your miners are starting and stopping what numbers they're guessing things like that that is a much more strategic value to us than necessarily having 5x a hash of third-party miners join the pool so uh you know we're very focused on optimizing the pool for our benefits and then being very selective as to who we bring on as third parties


no i agree 100 um it's just as you as you probably know and you've had discussions with many people i've watched almost all of your interviews it the bitcoin mining space is very loved by retail investors i myself uh discovered marathon when it was about a dollar started my initial first long-term investment at three dollars um when mr america comodo put out the initial pitch deck and i was like okay i see the vision marathon's gonna execute and i love it um it's just the bitcoin mining spaces you know it's


such a complicated aspect so there's so many questions that retail has so and i agree with you 100 it's i'd rather marathon focus on optimizing the pool for themselves and grow growing it out instead of rather than getting a party at 50 miners under a pool and getting a small a pay cut from what's going on there it makes it makes more sense to me um at that point that's why i agree with you 100 in terms of that uh speaking of mr america okamoto um first of all i want to congratulate you on the


executive chairman position and i also want to say i know this is a long overdue but i was extremely excited when you took on the chief executive officer role because i'd read a lot about you when you were working at marathon and when the shift happened i was extremely confident because there's as you know as shifts happen in the c-suite a lot of shareholders get shaky and but it was one of those shifts i was like all right this is fantastic how has the shift been from for from the exit of mr okamoto um from the company because


you and him were such huge pivotal players in not just marathon digital holdings but the whole bitcoin mining space um yeah the shift was very smooth uh you know both the shift me coming in as ceo back in april of last year was very smooth um and uh you know the transition uh really over the kind of back half of last year uh has been very smooth uh america and i have been friends for many years and so it was a very easy transition um i i think the you know the challenges that that faced um marathon in its early years were


perfectly suited to merrick's uh skill set and capabilities and you know what marathon is focused on now is more scaling operational issues which is very suited to my set of skill sets um so i i think it's been a great transition and my goal now is to build an organization where i have a successor and there are successors to the various people in our organization so marathon can go on and have a you know a great bench for the long term where we'll be able to continue to grow and expand what we're


doing globally that's fantastic and recently folks put out a presser about the new cto that has just come on i was wondering if you could tell the audience a little bit about him the decision to bring him online because then he's coming from another bitcoin mining company as well yeah so uh ashu swami has a great set of experiences and a strong career not just in the mining hardware space even down to the level of designing uh mining asics so depth of uh knowledge there but also in the financial assets


and trading space um and building products around those types of of services so for us you know the cto role is really somebody who's looking out over the horizon what technologies do we need to be cognizant of you know what's going on in the chip world for example who's doing what which chip should we be focused on looking at for next generation miners we think this industry is going to go through a very big hardware change if you think about it we're kind of like where the pc industry was in its early


days and you took desktop machines and used them as servers um you know uh your antminer what's minor uh kane and miner basically is like a desktop machine still and uh though bit main has now announced their hydro machines um which are water cooled uh i think the industry is going to move towards an immersion type technology over time which does a number of things it reduces the energy consumption over all the miners by a certain percentage it increases the efficiency it extends the life of the miners and lets you run them


at a slightly higher performance number than they're running at today so we're very actively looking at immersion nobody has really deployed immersion at scale yet so there are a lot of experiments going on i think you're also you should expect to see some things coming out of ashu's kind of office if you would uh that are software related you'll see some a variety of things we're going to do to make mining operations more efficient um and uh also uh you know get better yield out of what we're doing uh


on a regular basis so super excited to have him come on board um we've also added uh a vp of mining ops who uh uh comes to us with a great reputation uh in that background you know raymond has a great set of skills and you know ran mining for um folks at bitmain before so you know just great background great reputation we're really focused on building out this team of experts and even though we don't operate our own hosting facilities uh you know we need to know better than a hosting operator how to run miners so


that we can optimize their operations and we've learned a lot of lessons through this hardened process uh that have hardened our resolve no pun intended uh regarding how we want to operate and i think uh you know there'll be some great great progress over the balance of this year in that regard that's fantastic news um i was curious so from marathon we received monthly updates i was curious a few folks were asking me to ask about this as well i was wondering would it be possible to get shorter term updates i know it's not


like huge things happen every single week at a mining facility or something people a lot of investors especially in the retail space who are asking questions we're curious as to if we can get more maybe shorter term updates because there's so much change that happens in a month scale of time and when the monthly updates come out it's fantastic we get the new numbers we get the new hash rate but more of an understanding of where uh or more of an update of like some day-to-day changes that have happened or


maybe if a small rollout starts or like hey like today we're starting the compute northwell or some small updates like that folks were curious if marathon would be open to providing uh much shorter scale updates so you know the challenge is um what happens in the course of one day is has a different impact when you look at it that day versus a week versus a month so i think we're more transparent than most companies on most publicly traded companies on this planet uh yeah most companies a they don't give


monthly updates b with our pool you can see every day exactly how many bitcoin we're mining you can see exactly what our hash rate is every day so that's about as transparent as you can get um you know every time it's not as simple as tweeting out hey we just turned on a container at in kearney nebraska or in texas um because we're a publicly traded company we have to file an 8k and we have to do all this stuff every time we make any sort of pronouncement so yeah uh you know it it causes a lot more work for us


uh and it's not going to really help an investor make a decision you know nobody should look at our stock as something to day trade yeah i mean there are people who do it right because it moves you know there's a lot of beta in our stock right so people like it uh for that reason but uh what i would you know uh request from the investment community is you know realize this is a long-term play uh you know uh we have a lot of hash rate we're bringing online this year that's going to generate a lot of value


i don't think it's you know good use of an investor's time to worry about um the impact this week versus at the end of the month and each month so uh you know and not all miners provide monthly updates even right so right i i think again yeah we're more transparent than anybody having our own pool means our numbers are transparent uh on a daily basis and you guys can see the minute we turn on a container right you can look at the hash rate i've i've done tons of videos on the channel teaching them exactly how to see


the block rewards and the hash rates and all these different stuff and i i'd rather them hear it from you so i'm gonna ask but i know the answer a lot of folks were like how come marathon only got two blocks today then seven blocks tomorrow then three blocks the next day and i explained to them the whole spot bitcoin mining space and the game theory behind it i was wondering if you could give them a brief explanation from an expert sure so um the whole concept of luck um is you know plays a role uh in this and


so uh the difficulty is regulated by the range within which the number that we have to guess is denominated right so we have to guess to think of it to a certain level of accuracy and when the difficulty rate is decreased the accuracy goes down so you know a there's a higher likelihood that a guess is going to be right versus wrong uh in that case so as the difficulty rate goes up you have to get more and more precise in your guesses and that's how the the beauty of how the blockchain self-regulates the difficulty


level um so uh you know you'll read about somebody with a usb stick that mined a block and one a block they might not win another block for 20 years um you know as we continue to grow our hash rates statistically our block rewards over the course of a month should be pro rata to what our portion of the global hash rate is on a daily basis that can vary simply based on the luck factor right hydra so uh you know uh it's great there are some days like you say where we win seven blocks or eight blocks bang you know


home run day and then there might go two days and we win nothing but yeah it averages out over the course of the months of the right number yeah my buddy jordan um he he messages me on discord all the time he's like marathon just did seven blocks today this is a fantastic day i'm gonna celebrate and then the next day it's like they only did two blocks i'm like well that's the name of the game that's how it goes my friend and no that's very very exciting um i want to shift to the bitcoin space for a


moment so we we're hearing about um jerome powell's jerome powell talking about bitcoin we're hearing about the white house is now going to be putting out some stuff about bitcoin and bitcoin regulation i was curious as to what your thoughts on what your thoughts are on the whole bitcoin mining regulation space and how it can affect bitcoin because you folks are of course embedded into this space on a 24 7 365 basis how do you feel any form of regulation could affect bitcoin so um let's kind of go to 50 000 feet for a


minute so the the regulators primarily so jerome powell um you know obviously gensler at the sec the cftc and the white house are very focused on um how the crypto industry uh more broadly d phi uh especially altcoins and stable coins their impact on the economy their impact on consumers uh their impact on the financial services industry so for example if um a stable coin has a very large amount of capital tied up in it and is responsible for settling many transactions which is really what stable coins are primarily


used for today um and all of a sudden it's discovered that that stable coin doesn't have ample reserves and there's a run on that stable coin that could result in the uh a lehman brothers type moment if you would of crypto exchanges possibly uh you look at the amount of open interest so futures and options trades that are essentially collateralized using stable coins where before it was bitcoin itself now it's more stable coins which actually lowers the volatility of bitcoin um you know if there's a run on that stable


coin then you know uh all of a sudden all those positions have to get liquidated and crashed and so um people look at stable coins uh as something that is as stable as fiat currencies and that's not true they're only as stable as the assets that are used to back them and uh you know in the case of uh you know i think some of these stable coins they're backed by dollars and treasury bonds in the case of other stable coins they're backed by commercial paper which is a less than optimal thing because if


you have to liquidate commercial paper in a rush to provide liquidity back to the stable coin owners then you could run into some problems the other thing is the um defy industry where essentially consumers are staking coins and uh earning interest in other things yeah that's quite close to what a bank does it takes deposits and lends out money and so what the regulators are trying to do is basically say okay on the one hand we've got these things called banks that we've regulated up the gazoo and you know banks after um


dodd-frank you know have huge reserves they're very stable uh you know likelihood of another banking crisis knock on wood is fairly low based on kind of everything the government's done to make it very hard to be a bank because there's very complex regulations um none of these defy companies are covered by that regime yet and so all that systemic risk that existed within banks before can exist in the d5 space and so i think what you're going to see is powell and the regulators the white house included are really going to


create a policy if you would that says you know either we need to appoint um a point regulator to manage all this or all of these various um you know digital exchange distributed exchanges and d5 companies are going to have to fit to the existing regulatory framework and i'm not saying one is better than the other but um yeah that's kind of the options that are on the table there uh when it comes to bitcoin mining you know bitcoin as an asset class the irs and treasury have already kind of pigeonholed it it's a commodity


it's a store of value we collect taxes on it that's fine if anything the noise around bitcoin mining today is around the energy footprint there's a lot of fun being spread by people who have a vested interest in proof of stake becoming the uh next um way to validate you know as you know the problem with proof-of-stake is uh it's a totally centralized system that's no different than the banking system today and uh which is why it's kind of an anathema to bitcoin maximalists um it doesn't provide independence uh and it


is very centrally controlled so and we're but we are starting to see some proof of stake networks that are going to leverage proof of work from a bitcoin perspective as a way to create that independent oracle right um so i think that kind of leaves some of the noise that you're seeing in the press regarding certain members of congress looking at the energy footprint of proof-of-work and are we putting consumers are we taking power from consumers and necessarily using that um instead of the consumer having it and while there may have been


some bad actors in some uh towns uh previously i think if you were to talk to um us or any of our you know major colleagues in the industry you'd see a we're all very good citizens relative to supporting curtailment uh when the grid needs the energy we give it um will totally voluntarily the other thing is by being this kind of capacitor bank for the power companies where they have this load you know be it 100 megawatts 200 megawatts that we have that all of a sudden can be put into the grid then um you know if they didn't have that load


to give to the grid you know the grid couldn't get it so you can choose as a grid operator do you want to curtail individual consumers air conditioners heaters cooktops etc or do you want to curtail a bitcoin miner i think people would much rather inconvenience the bitcoin miner than the consumers and i think that's an important thing that the you know leaders in states and in congress need to really look at is realize that bitcoin mining is the single biggest uh incentive for power companies to deploy and grow the amount of renewable


power in this country we generate more power than we consume in the u.s so there is no need to actually build more generation capacity in this country we're actually trying to curtail energy europe has a problem because they shut down nuclear and fossil fuel uh well in advance of having the uh enough load from their renewable energy and so now they're in a position where they don't have that good base load uh something the u.


s is not doing so i think the us's power providers are approaching this in a very smart way very cogent way uh you know we're partnering with them to provide big base load that they can curtail when needed uh very willfully and i think it's really a question of educating the right people so they understand uh you know what's going on and i was on a call yesterday with the president of airco together with a group of minors and uh you know working with them to you know uh on how we're all going to be very good corporate citizens relative to


ericot's needs and you know i think if you were to look at the behavior of you know the large miners like ourselves you'd find that we all curtail when requested provide are more than happy to provide power back to the grid whenever it's needed right and i imagine that's what's kind of causing the hold up on the permits for compy north it's all it's a little a lot of political stuff i imagine yep exactly and do we have a uh i forgive me if i ask before do you have like a timeline on when they're gonna


like give you guys those permits uh no i mean we're getting stuff done as we speak so perfect perfect perfect um i'm gonna ask the next question and if you can't answer that's completely fine um in the uh in a previous filing there was an sec request of information that was made to marathon and you folks complied and gave them all the information i was curious has the ssc gotten back to you guys has that been closed um are there is was there any further requests yeah we've supplied all the information


uh that was requested and you know at this point we're just in kind of a holding pattern waiting to see what happens uh with it all again we don't think it's a material issue it wasn't related to anything specifically we were doing so um we think and by the way these things don't get you never receive a formal letter saying okay we're done it just they stop asking you questions and that's it you know again it's a it's a request for information it's not we're going to accuse you of something i


think yeah people get these things wrong and they think oh my god they've been accused and we haven't been accused of anything they were looking into a transaction to see if there had been anything and to date they haven't said anything to us that we've done anything wrong or not so we don't think they are that we don't think we have done anything wrong we don't think that um they will so no that's good news yeah that's that's what i spent uh about two weeks trying to educate the community on it's a


request for information it's this and i showed them the sec filings and all this other interesting stuff that was really going on during a time where it was really it was a lot of fun which is unfortunate because it came on the tailwinds of such an interesting um kind of a historic uh note race which yes which unfortunately failed to on somewhat deaf ears when it came to to this footnote in an sec filing which was quite unfortunate um in terms of the debt raise um were there any significant players in this that we might know of from from the


bigger investing spaces that came into this into this debt note raiser was it just a straightforward um just you're under the middle of that race uh you know it hey it wasn't run of the mill because of it was four times oversubscribed so forgive me for that for that i meant like the customary yeah i know how historic this was it was uh it was all of the usual actors that buy convertible bonds were well represented uh in this and i think you can just go look online if you go to i think it's edgar or you can see the filings who


bought into it um you know all of the investors have to have to do filings so you could see who they were and you know a lot of them will buy and then trade you know that's what their business is so you look as an example a company like a citadel or somebody like that you know they'll go in they'll buy these they'll trade them and you know get them off their books either immediately or later or hold them there are other people that buy them in the secondary market so um the great thing for marathon is


obviously it's extremely low cost capital i mean one percent coupon and it'll convert at a price of 76 dollars a share which uh you know from a dilution perspective is de minimis right right definitely there's been a lot yeah since for the past year there's been a lot of huge in uh institutional investors in marathon uh names such as blackrock jp morgan um have they been in contact with you guys or was it were they just passive investors that just passed they bought on the markets and just filed and that's


how we found that or is this like part of these large pitch presentations that you folks do uh no a lot of it is just open market buys uh or block trades um that they do through their traditional desks you know being a member of the russell 2000 index forces certain investors to have to hold us because that's the their investment thesis um [Music] so that's an aspect of it um and then um you know the various etfs that are around uh the space that include us you know have to buy our stock depending on kind of what's going on in the space so


um yeah nobody has come to us specifically saying you know i'm gonna buy sell us shares directly everything that they're all open market buys right no that that's that's that's very good to hear and very interesting to hear um but no thank you so much for your time i really really appreciate you coming on and having this conversation with us and filling us out on everything that's going on with with marathon the future growth um i asked this question to all the bitcoin mining um members of companies that come on and


speak about this um how how do you feel about the confidence and growth of bitcoin into the next few years i used to ask what do you think the price of bitcoin be at the end of the year but we're so early on in the year i can't ask that question but how do you feel about it because we're seeing such immense growth in in the institutional aspects of bitcoin every single day there's like a new article or a new actor that joins the bitcoin mining space from these old guard companies how do you feel about it going


into the next year or so so i think uh you know bitcoin miners our role in life is to um secure the blockchain and process transactions uh and for that we earn our rewards in bitcoin um i think the larger group of uh bitcoin miners are looking at you know what go what comes beyond bitcoin mining some of my colleagues in the industry are focused on becoming hosting providers for you know high availability data centers um i personally think that the future um you know the web 3.


0 if you would future and separate from the metaverse is really going to be focused around uh taking data and separating it from applications putting that data onto the blockchain where it can be controlled by the owner of that data and then separating applications from data and those applications can then run in the same data centers that do bitcoin mining today which can be turned on and off at will uh you know you can't turn amazon aws on and off it will because there's mission critical stuff running in it uh so


there's a lot of aiml so artificial intelligence machine learning applications that could easily run in bitcoin mining type data centers where you can turn the power on and off and all that and the data can reside on the blockchain so i'm very optimistic about the future i think you know as i've said in many presentations and interviews you know this industry is where the internet was in 1997 if you go back to that time those of you who were around then um you know you could read stuff using a web browser


and then came the next phase you know internet 2.0 where you could start writing stuff you know you could social media you could post you could upload music you could do all sorts of things and you know web 3.0 is about ownership it's about you know owning things on the internet and that's going to be part of the metaverse yes but it's also the transition of the existing internet you know everything is going to move to a digital world we're starting to see digital stock exchanges we're going to


start seeing fully digital banks we're going to see digital real estate we're going to see digital assets across all sorts of asset categories you know today you can buy uh token-based ownership fractional ownership and modern art through uh you know companies that offer that through token so they're you're gonna see a whole slew of things come up and you know again go back to the late 90s those of you who are alive then um and look at what it took for the internet to turn into what it is today


that 20-year plus progression uh you know the bitcoin adoption and blockchain adoption is going along at the exact same rate you know there are a number of people who post charts online showing the adoption of bitcoin and blockchain to the internet and how it's following the same trends so you know this is a long-term industry that's just going to grow and grow and grow and right now it's about scaling the base layer but then it becomes all about layer two layer three all the applications and you know that's what


we're super excited about as am i as am i i'm sir thank you so much for your time thank you for everything you do for marathon digital holdings um it's exciting to be a retail investor and thank you for being transparent coming on the channel and talking to us and answering all the questions that we had and hopefully in the future we can have you back on it mean the world thank you absolutely anytime really appreciate it ryan thank you for sure thank you so everyone is watching thank you so much for coming


online watching and supporting if you haven't already hit the like button subscribe i'm going to be ending the broadcast mr chill if you could just stand by for one second i'd appreciate it sure