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Marathon At The Fourth Bitcoin Halving: Bitcoin Magazine Sits Down With CEO Fred Thiel

April 18, 2024

This video features an interview with Fred Thiel, CEO of Marathon Digital Holdings, conducted at the Bitcoin Policy Summit hosted by the Bitcoin Policy Institute in Washington, D.C. Thiel discusses the potential for Bitcoin mining to be environmentally beneficial by converting waste energy into useful heat, highlights a pilot program using methane from landfills for mining, and talks about the U.S. regulatory landscape for cryptocurrencies. He also explores the implications of Bitcoin's layer 2 technologies and reflects on the upcoming Bitcoin halving event, predicting its impact on the market and mining profitability.

0:00 Bitcoin mining can be productive, not parasitic

1:51 Marathon's landfill waste gas pilot program

3:11 The US regulatory environment

6:11 Anduro, merge mining and regulation

8:08 Educating policymakers

9:50 Thoughts on the Bitcoin halving

Transcripts are autogenerated. May contain typos.


all right so we are here today with the CEO of marathon digital Holdings Fred teal we're here at the Bitcoin policy Summit put on by the Bitcoin policy Institute and a think tank here in DC um thank you so much for joining us Fred we sincerely appreciate it um I wanted to start with actually something that you said in your interview earlier today with Senator lumus you said something that you said energy or Bitcoin mining can be productive and not parasitic could you expand a little bit on that if you don't mind sure so Bitcoin mining in


and of itself does something very efficiently which is produce heat and 50% of industrial energy spend is spent to heat things and so imagine if you could capture the heat from Bitcoin miners Y and Bitcoin miners could get paid for that that would subsidize their cost of electricity yeah if you on top of that take things like biomass stranded methane other forms of energy or uh matter which otherwise need to be mitigated and dealt with so for example you look at a large ethanol producer they have all sorts of waste product


after the methanol has been produced that they need to get rid of and they pay people to take care of that imagine you could do that on site turn it into energy turn the energy into heat you need the heat for the methanol production process anyway and the way you're doing that is simply mining Bitcoin that's how we believe that Bitcoin can be extremely productive uh within the economic environment especially in mitigating what are otherwise toxic things for the environment but at the same time eliminating the need to use grid energy


for things like heating you could heat buildings you can heat homes we are heating green houses we will be heating shrimp farms uh all sorts of things you can do with heat being the byproduct of Bitcoin mining and in doing all of that uh you essentially eliminate the parasitic nature of Bitcoin mining as being this thing that just consumes energy yeah no I appreciate that and I I think uh you also just ran a test or pilot program where you actually used I think it was methane a waste scas from landfills to actually power the Bitcoin


mining could you tell us a little bit about that yes that's a site in Utah that um we did it as a pilot for small scale but it was a proof of uh concept that showed that you could uh successfully mine Bitcoin using landfill methane gas um if you uh think about what types of methane you can get landfill gas is a little challenging because depending on the temperature and the climate the quality quity of the gas changes if it's hot out you get a certain type of gas if it's cool out the gas is a different mixed nature um the


type of methane you get from biomass is better because it's a you're getting essentially a waste product from an industrial process that ideally is very consistent so then you can tune the anerobic digestors and all that to optimize for that so mining on landfills is very hard but we were able to prove that you could do it quite successfully and we're now having conversations um in the developing World actually where there are huge landfills um to essentially be able to set up shop uh next to those sites and generate


electricity and mine Bitcoin amazing very very cool um so as I mentioned we're here at the policy Summit so we're here uh talking about what regulation in the US is going to look like you spoke with Senator lumus earlier um let's start or let's just try to jump on like on on a positive side of things what um what are Regulators getting right in the United States right now what has you sort of optimistic about the regulatory approach for the time being well I think the fact that uh the Bitcoin ETFs were


approved after quite a lot of uh issues um is a step in the right direction now some people argue that they were only approved because they had to be approved because of the uh cases that have been broke uh in front of judges um and so we'll see how that bodess for other uh cryptocurrencies like ethereum and others that'll have to go through a similar process but the fact of the matter is that between the fby rule change which allows companies to carry essentially Bitcoin on their balance sheet in Market to Market and the ETFs


it's a quasy stamp of approval from Regulators that institutions can now play in the asset class yeah and so we're clearly starting to see that um and there are many alternative ways institutions can play they can buy equities in company like ourselves they can buy Spot Bitcoin they can invest in um you know in a number of different ways uh today so that is now we're making good progress there the energy narrative in certain States I think we have developed um a good understanding with the utility operators of the good


aspects of having Bitcoin in a grid how it helps balance the grid it means you don't need to use as many peer plants which are fossil fuel plants by definition um it also means the utilities don't have to invest in Battery Technology because Bitcoin miners will come in and do all the capex and Mining and if you think about Battery Technology you're essentially generating energy storing into battery and then offloading the energy off the battery when you need it well Bitcoin miners are consuming energy from the


grid so they're paying the utility for that energy so the utility has a revenue stream and more importantly we can shedload or curtail whenever it needs it and then they get the energy back so the benefit to the utilities is that they don't have to invest in batteries they don't have to pay themselves to put the energy into batteries as they're getting paid by us to consume the energy and so there are a lot of uh benefits there uh the one area where I think um we still have a lot of work to do is just around


um Bitcoin and financial Independence and people being able to have self- sovereignty and have uh wallets that are not Central Wallets on exchanges yeah I think that's the next big step there um um but again Bitcoin has clearly bifurcated itself from the overall crypto narrative which is the best thing at this point okay yeah that's important to note um one of the things that uh will now become a part of the equation when it be when it comes to regulation is the idea that side chains will now sort of create a situation where Bitcoin


will need to be pegged in and out so you have a situation like andur and merge mining where now there it could potentially invite more financial regulation what are your thoughts about that What will what will this this new idea of maybe Bitcoin l2s that require pegging in and out what will that mean for some for a company like Marathon well I think the way to look at it is a little bit like the way the internet was built okay tcpip was a protocol that was developed by essentially DB it's an extension of daret um but uh Vince Surf


and some professors at UCLA built the first kind of router set of routers and connected that um only thing that allowed you to do was connect computers to each other and then the layer two there was HTTP is a protocol that allowed you to build websites sntp simple mail transport protocol which lets you do email and you look at all the businesses that have been built at layer three in the internet um Facebook Salesforce Etc uh those are the businesses that where a regulator would start to get involved okay right so if


you do trading stock trading on the internet then it's at the application layer it's it's not down at the protocol there and so we built uro and contributed the technology to Enduro together with others as a way for people to be able to build things so think of it as HTTP or an sntp collectively it's a protocol and an ability to build things so that you're pegging them on the Bitcoin blockchain from a security perspective so it's simply a piece of additional Plumbing okay so if you are


in the e-commerce business and you want to charge people using credit cards that you would typically use a protocol by tulo it's a piece of Plumbing got it that's the same thing uro is a piece of pluming okay do you feel that most people who make policy understand these Dynamics you're you're describing them in a very sort of easy to digest way do you feel that this message is now getting across the policy makers and they're starting to sort of understand that we do have a bit of um a precursor to this with the internet


something similar to bitcoin or is this still a message that you're really trying to kind of share with people it's a great question I think think that it's all a question of how you frame it okay so context is critical and everything um and so if you think of Collectibles right baseball cards inarguably are private property that people are allowed to trade the radio layers don't have anything to sound yeah but what happens if you tokenize it part now all of a sudden okay you've tokenized it are you going to sell


fractional shares in that are you now selling securities um what are you doing and so it's not the asset itself or the underlying technology but it's the manifestation of those two things in an application okay that is where the Regulators get involved so for example um there is no issue with sending money to people it's only if you send money to the wrong actor sure that it becomes illegal the regulator gets involved right that's like um when uh you do anything in the Securities World um it's


really the application is where uh you run a f the regulator so we're not concerned about uh the ability for side chains and applications being built on bitcoin as having a negative impact on bitcoin we think it'll be up to those specific applications justify their existence with the regulators and do all things that are needed to make them compliant okay well perfect any any final thoughts anything you'd like to share we have the having coming up anything on your mind I yeah I I think this is going to be a very interesting


cycle for Bitcoin miners and just Bitcoin in general you know this is a having we're going into a having post ETF approval with a lot of demand for Bitcoin uh the price of Bitcoin is at a very comfortable level for miners going into the having so uh there won't be the Doom and Gloom that you normally associated with habings yeah um as the cost to mine will double right now we're in one of the most Prof arguably profitable periods in in Bitcoin um at the moment and so everybody's already focus on mining as much as they can


before the having but I think there'll be a small Supply shock to bitcoin which should be very supportive of driving the price a little bit higher okay and uh you know everybody I think is very optimistic that uh we'll see new all-time highs and Bitcoin will continue to climb one little stat that I I find quite amusing is that we are already at a point in the world where not every Millionaire on this planet can own a Bitcoin Bitcoin right yeah that's interesting yeah we have some interesting interesting years ahead of


us thank you so much for your time today we sincerely appreciate it all right