« Back

Mining the Future: A Bitcoin Halving Roundtable with Public Mining Company Titans

April 19, 2024

This YouTube video features a roundtable discussion with top executives from leading public mining companies. Moderated by Natalie Bernell of the Coin Stories podcast, the panel includes Fred Thiel, CEO of Marathon Digital Holdings; Harris Basit, Chief Strategy Officer at BitDeer; Tyler Page, CEO of Cipher Mining; Zach Bradford, CEO of CleanSpark; and Nazar Khan, COO, CTO, and co-founder of TeraWolf. They discuss the impacts and future outlook of the fourth Bitcoin halving, which occurred at block 840,000, exploring changes in the mining industry, innovations, and the evolving business models in response to macroeconomic factors and technological advancements. The conversation also delves into regulatory challenges, energy efficiency, and the strategic significance of scale in mining operations.

Transcripts are autogenerated. May contain typos.


[Music] the fourth Bitcoin having is officially here we've reached block 840,000 I'm Natalie Bernell of the coin Stories podcast which is powered by bit deer and I'm here today with a distinguished panel of Executives from leading public mining companies here with me is Fred teal CEO of marathon Harris boset Chief strategy officer at bit Deere Tyler Paige CEO of Cipher mining Zack Bradford CEO clean spark nazeran coo CTO and co-founder of ter wolf all right I want to get right into it so let's talk a


little bit about this having because I think that it can be confusing especially for newcomers can you just talk about how it demonstrates the Elegance of bitcoin's programmatic monetary policy how predictable it is and how we've really never had a macro asset that behaves in this way Bitcoin having essentially takes the incentive that was developed to get miners to want to mine and weans them off it over time as transactions and adoptions uh grows so that ideally adopt um transaction fees would make up the bulk of the


revenues for miners that's the Elegance in it I think it um controls the supply of Bitcoin of course which is its primary purpose but it also forces an efficiency on the industry and I think that I don't know if that was a side effect but it's I think it's a very good effect so we look forward to the having I think they're actually really good for the industry part of the genius and the Elegance of the design of the protocol is that with the having you have fewer and fewer uh new Bitcoin coming to


Market obviously over time that actually mirrors um real world Commodities in a lot of ways and so this having is actually very significant so with this having the amount of new Bitcoin coming to Market every year will actually be less than the amount of new gold mined every year so in as much as people are are using Bitcoin as a store of value and thinking of it as being um a hedge against uh governments inflating your money away or any kind of inflation it's now officially transitioning into an even harder asset in terms of new Supply


coming to Market than gold you know I think that what's amazing about the protocol is how it it mimics human behavior and and it and it caters to it in the sense that it drives towards what we drive for so it's pushing human behavior now towards greater efficiency it's also pushing scarcity which we see as increasing value so when you combine those pieces together you have something that's now predictable in a way that no fiat currency ever is we know exactly how many Bitcoin there's going to be we


know when new Bitcoin is going to come to Market and again it pushes everybody towards more efficiency which also helps Drive value of Bitcoin up on a long-term basis yeah and part of the Ingenuity is built upon the predictability I think is unpredictability mean Zach just said you kind of know you you know when every block is coming you know want a having you know generally is going to occur but if you think about just where we are today and where we're going to be two or three Habs from today you know if the


you know five of us sat here and tried to say you know where are things going to be we'd probably have 27 different answers and so what's interesting that I find is is that layered on top of this very predictable and very disciplined and kind of clean approach is is you kind of put real world on top of it and when you start to kind of layer in what's happening on a macro environment right that's where I you start to see I think kind of the unique properties everyone just discussed here with respect to kind of how hard the asset is


and so you know as we sit here you know we're excited about the the having and kind of what's going to bring because again for those that can kind of manage through that you know there's a tremendous amount of value to be had so that's kind of you know what what I find unique and kind of elgant about yeah I I think it's important to just look at the numbers too right so there's 21 million total Bitcoin by 2140 more than 100 years from now but only 1.


3 million remain and of those 1.3 million half of those are going to be mined in the next 4 years and 1.1 out of the 1.3 million will be mined over the next 10 years so this next 4 to 10 years is really you know the vast majority of the remaining Bitcoin will be mined during that time so it's it's an important time I think in Bitcoin uh of course mining stays you know uh has rewards all the way to 2140 plus of course the fees will take over at some point but um I think it's a really interesting time for Bitcoin yeah


and it's been interesting to see some of the changes we've seen in fees and a very different macro environment than we saw in 2020 for the last having the Bitcoin industry in general has really matured and grown so significantly over the last four years so what are some key differences that you all see with this having compared to the ones in 2016 and 2020 I think the biggest difference is the institutionalization of Bitcoin has driven a different investor class up until really beginning of this year


Bitcoin was predominantly a retail investor Paradise um which meant that it was very emotionally driven now you have longer term Traders working in the marketplace uh the ETFs are still 90% retail buyers but you're seeing institutions now actually look at on boarding you have one of Germany's largest state-owned banks has just decided they're going to offer corporate customers custody as opposed to retail uh obviously Michael sailor has been touting the the corporate treasury thing and uh more companies are actually


evaluating it so I think that's the biggest change but that has an impact on bitcoin's price longer term which means less volatility in the price and so the question is how does the mining industry transition from a business where you're paid to do what you're doing versus you're now just a network that collects fees and that requires a whole different level of efficiency and a very different business model than one where you just build Big Data Centers and mine a lot of Bitcoin I'm going to dig into some of


that in a little bit and I I think the key with that is when you look at scale I think scale is going to be more important than ever in the coming years if you go back to the beginning of the last cycle um anyone that wanted to have a startup and wanted to mine Bitcoin could easily get into it and I think that's actually you know if you were to think of the grand scheme of maybe uh the push towards efficiency right um it I believe it will continue to stay decentralized and in all these different places but every single operator I think


will have to have scale to overcome just the Baseline cost of what it's going to take because then you're overhead and goes further and so at the beginning a year ago all of us could have reached even the very largest minor it was only one or two or three EX aash at the beginning and now you're looking at the scale and you know public minors were talking about 20 and 30 and 40 and 50 Ex aash and so I think it's changed to where it's fully switching to um large institutions and you know we're going to


see nation states start to mind we already are and there's going to be a lot more of it and so from a competitive side although it will stay decentralized I think it's going to be composed of very large players yeah I think to Fred's Point as U Bitcoin grows it has to access deeper larger pools of capital and so it did start with you know personal things and but it's growing and uh you know there's much larger pools of capital out there than what have been accessed so far by Bitcoin so I think


it's sort of the Natural Evolution of it and you know to support the kinds of uh Bitcoin prices that we all expect you know several years from now I think it's just natural that will have to grow coin stories is brought to you by bit dear where the power of Bitcoin mining is at your fingertips as a publicly traded leader bit deer's Global reach and scale means they're everywhere you need them to be ensuring you're part of the thriving Bitcoin economy bit deer is not just mining they are industry pioneers


and biter stands alone as the only vertically integrated technology focused Bitcoin mining company what does that mean well they're not just deploying but developing the latest tech to make Bitcoin mining more efficient and effective with the industry's most experienced leadership team Innovation is in their DNA and it shows with a quarter of their Workforce dedicated to research and development pushing the boundaries of what's possible in Bitcoin mining now they're leveraging years of expertise in Data Center and Cloud


management into high performance Computing through a recently announced partnership with Nvidia join bit deer in reshaping the world of Bitcoin mining learn more at bit dear.com and explore how they are pioneering the future today I think also the barrage of news that happens in this space there's so much of it that sometimes you lose track of time so your question about what's different between the last having and this one think about it this way micro strategy hadn't purchased a Bitcoin at the last


having so like that seems like he's been in that trade for a long time that's only within this having Epoch so lots of things happen on the path to adoption so at the last having regular questions people like us would get would be like is the United States going to ban Bitcoin you know now we have Larry thinkink on television once a week talking up Bitcoin and black rock has raised an immense uh you know ETF that's outperformed everything so we're on this path to institutionalization and it seems to be


accelerating so there are many implications for our businesses but like it's also the rate of adoption is still very very early so from a Minor's perspective we run a business that looks on a spreadsheet kind of like you know Commodities production except the difference here that I often try to remind people is it's a little bit like if you were an oil producer but like in the late 1800s like the car is just getting invented so like the real use of the the commodity is just getting figured out so it's


still really early right bitcoin's 15 years old but I mean from my perspective it's still pretty early in the adoption cycle absolutely and then to Tyler's point I think for for me the biggest difference is just the intersection of Bitcoin and the real world right so whether we're talking about how it impacts the energy gri whether we're talking about kind of monetary policy where we're talking about you know how it can be used in different ways so that's I think it manifests itself


whether it's adoption or kind of things it's really that intersection between Bitcoin and the real world and if you go back for 6 eight years I mean there was a small Hinterland of people that were Believers that have critical have been critical to the to the space but now you're seeing I think you know more and more so the average person has and you know is is aware of of it they may have a view that's good or bad but I think that's only accelerating as a Tyler's Point here is as we look the next four


years I mean I think sitting here four years from today we'll probably be saying the same thing again which is hey you know to Tyler's point you know it's like the 1800s for the you know for oil and now like look at how much adoption has occurred and look at how many more people are involved in a number of different ways a global spread really right I mean we didn't really see much Bitcoin in the Middle East or in South America or places like that four years ago and so I think this increased


globalization is important uh adoption worldwide so I think that's going to have a big effect as well yeah we seem to be at an inflection point we've also never seen a new all-time high prior to the next having right but fees have increased and I know they're great for miners but not so great for users who are watching this who are listening to this so what are your thoughts on the fee structure fees are going to continue to go up as transaction volumes on the base level are going to be focused on


bigger and bigger transactions uh we launched a product called slipstream which lets people essentially Reserve block space it's had a huge amount of interest from financial institutions why they want to reserve the opportunity to book transactions in a time frame so they don't suffer slippage and that's going to become very very important going forward at l2s and l3s you'll see really more consumer transaction volumes happening this is you know transactions under $1,000 but think about it there


are fewer Bitcoin than there are millionaires so there are not enough Bitcoin to go around for every Millionaire on this planet to own a Bitcoin soon it'll be there won't be enough for every billiona to own a single Bitcoin and as that happens the transaction sizes become bigger and the fees as a percentage of the value of a block are going to actually come down ordinals are going to move to l2s all of these nfts Etc are going to move to alternate layers because they won't be able to afford the fee structure but the only way mining


will exist in its current form is you essentially have to be at a place in 2028 where transaction fees are two or three Bitcoin per block otherwise the existing model where you pay two or three cents for energy isn't going to work anymore and you're going to have to find ways to mine for free I think also the the use case for Bitcoin is still hotly debated right is it is it a store of value is it does it optimize transactions Etc um I do think you know personally I know there's people that disagree with this but um it it's a very


valuable savings technology and so there's a universal need globally for people to to convert their the fruits of their labors into savings that's sort of a largest addressable Market thing on Earth that every human needs that uh and so the ability to have this decentralized stateless store of value is at least my personal view is is sort of the the the real best use case for Bitcoin coin there may be many wonderful lir twos and things that are built around that to enable transactions to make remittances cheaper to do all kinds


of things there are also other fintech technologies that may develop that better and and so we'll see um you know but to me of course as a minor we always like transaction fees to go up um but I think it's it it probably the layer 2 ecosystem that gets built on top of that may drive the fees up but it does come down to use case and maybe over the next two having epochs we start to see um do transaction volumes gravitate towards other chains uh do l2s take this and do we see new use cases we didn't have


things like ordinals and inscriptions you know a year ago basically and so there there may remain sort of New Uses of block space we don't even anticipate yet well I know there's a huge debate over ordinals um but some people do think that there's a the self-regulating self- cleansing mechanism with in Bitcoin right they get too high so they they decrease they get they get affordable again maybe maybe there's more activity is is that the case you think that was the case last year certainly in both may and late


November going into December where you had days where there were some blocks that eight Bitcoin per block in transaction fees because somebody needed to push something but I think what you're going to find is you know people will adapt innovation's going to happen there'll be all sorts of exciting things happening at l2s uh but at the end of the day financial transactions if you think about the utxos are on the Bitcoin blockchain and so that's where people are going to want to have finality for


large Financial transactions and as sovereigns start owning this and you know imagine a world where Bitcoin is at a million right now you have all of a sudden large countries even holding potentially Assets in Bitcoin you know they are going to want to transact on the base layer and they are going to be transacting in hundred million blocks if you would and so that's why the fees are going to at the Bas lay are going to have to go up you know something else about that too is again if we talk about the human behavior component of this


fees going up actually creates more value for the layer 2os the layer twos ultimately have to have a reason to exist and that's why I think that we're going to see greater Innovation because you know one things we're good at as as humans as mankind is solving problems when they're presented to us and so I think that if it just becomes viewed as either an opportunity or a problem I think that's where later to developed to be something more meaningful um to allow Bitcoin to be more accessible because


ultimately bitcoin's value is based on its adoption and I think that's what we all want is as many ways for anybody what whatever country you're in to get access to bitcoin that's what we want that really democratizes this and creates the human component value of what Bitcoin really is right and I've talked about this on my show before if you haven't yet make sure to consolidate your utxo you want to do that before fees continue to go up um I want to turn now a little bit to Hash rate because


since the Bitcoin mining ban in China we've seen more hash rate move to the United States but also get distributed really around the globe and this is an ongoing Trend this past year there has been more hash rate coming online from outside the United States so what is the driver of this well we're certainly focused on pushing 50% of our Revenue offshore so we operate on three continents today uh North Africa Gulf region we operate in uh Paraguay and Latin America and then we operate in North America and we're going to


continue to grow our offshore business because the US power markets between the AI data center craze that's going on right now the rush to acquir utility scale power sites um is going to essentially Drive mining into smaller and smaller and smaller sites and smaller configurations more Automation and otherwise the large sites are going to be pushed offshore where you still have a gig Hydro Dam that has excess capacity but in the US between what Congress is likely to enact uh regarding energy pricing there's a huge shortage


of transmission capacity in this country you can't add more generation efficiently in this country and there are some states where they say oh we underestimated the power requirement by 30% for the next 3 years those are not places where they're going to enable Bitcoin miners to come in and be good citizens and load balance their grid because there just isn't energy for them you know I think that um where we're taking a little bit of an opposite approach where we're actually finding the pockets because I think what's


important is you know miners we talk about grid Services all the time and I think the the choice between you know going offshore or staying onshore is really how much of that service can we actually provide and to Fred's point being smaller is going to be part of the requirement you know background being in the microG GD space where it's about small Pockets I think that's where it does Trend in the US I think that there is the potential for a future where at least Innovative grid uh providers and utilities there is a small


Bitcoin mine that is managed purely remotely that's emerg and cooled and that you basically have a milk run where instead of having Tech staff that these large sites they're running sight to sight to site in a small geographic area and they're serving this substation and that substation in this neighborhood and that neighborhood but technology needs to improve um and but I think we'll get there and that's where I think it does Trend in the US so for Mega sites I think Mega sites do end up slowly moving


offshore but I think it's a very long process I think established sites are are here to stay but I think establishing new large scale sites is going to be more difficult over the next four years I mean if you look at what happened kind of post 2020 um I say the lwh hanging fruit you know the Bitcoin miners went after aggressively and so those sites that had you know an abundance of power there was an imbalance between kind of supply and demand you know five of us here at the table plus 15 other people you know were


running around the country I guess pulling kind of low hanging fruit and so as we look at the landscape today a lot of that low hanging fruit is has been taken care of and so some people are looking offshore Zach said kind of you know looking kind of in in scale but I think the the the main thing to kind of understand is as the industry matures you know we call kind of most of the operations we all do today's base load like the idea is that we buy a minor and it runs 98% plus uh percent of time and as I think kind of the decentral


decentralization excuse me continues to occur you're going to find that not all mins are going to be basad you know some of them are going to be designed to operate 40% of the time because that's where their demand profile fits in what what's happening with with the broader context and whether that's 20 megawatts or 200 megawatts is going to be function of kind of what the underlying um Supply demand and transmission looks like and so I think what we're seeing globally is is that people have looked and said hey


this is what's happened in the US let's take that and let's kind of improve upon it and that will feed back to what's happening in the US as well but I think again fundamentally it's that low hanging fruit was taken off the table and now you really having to kind of understand and and find those Pockets to play and I think they're all going to be different flavors and I think as we look four or five years out I think you'll start to see Bitcoin miners that are focused on B slow you'll see Bitcoin


miners that are focused on kind of mid- Merit right because there's going to be that stratification and their economic models are going to be dependent upon kind of how that works and so we're seeing that playing out you know both here and I think overseas as well to to oversimplify and expand on that a little bit maybe I mean I think we see it yeah there's kind of two branches going forward so remember of course our business depends on cheap electricity that's like 90% of the kind of variable


operating expense right so if you know as long as Bitcoin rewards keep going down you're going to constantly when we talk about the drive for efficiency it's this search for for cheap stranded electricity basically um I think so so there's probably a bifurcation in our mind at least that um there you'll either have to go overseas to places that have sort of vast natural resources but not enough demand basically to soak up all that potential for electricity Generation Um or you're going to have to


look in places where you can do what um Nazar was referring to the sort of monetizing your flexibility the thing that's probably I think most underappreciated about these companies and sort of Bitcoin mining at an industrial scale is just how valuable it is uh as a resource to the to the grid to be able to C curtail a large user of electricity quickly um and and so what you can effectively do if you stay domestic as opposed to so I think there's kind of Two Worlds you can go overseas to places that are maybe less


explored and you have to make risk decisions about how stable that regime may be or that source of power or do they change the rules or add attacks or something changes uh or you you focus and and really monetize this flexibility so sometimes we're using the power to mine Bitcoin other times we we're not trying to run 100% of the time other times you're providing that electricity back to the grid you're selling the power you're putting it into battery storage you're doing something else with


it and there's kind of an optimization around that to keep driving your cost lower so it's one of two ways but now the mining industry has gotten to a scale that it's so large in the sense that you know you make these very large Capital allocations decisions that take long time periods to pay back you know it gets tougher right you have to decide where are you going to make your commitment and it's not like well I'll just fire up this rig and if they change their mind I'll move it down the street


it starts to become a much larger question I think it's just natural right I mean most of the world is outside the United States and Bitcoin mining is one industry that's pretty easy and portable in terms of you know it's much easier to place a Bitcoin mine in a remote area than like say an AI data center or something that requires another thing like a semic connector Fab or something like that so I think a lot of parts of the world are anxious to get technology or Leading Edge um you know uh uh


development and uh it's natural for a lot of that to go outside the United States as bit deer we're still very much vested in the United States and globally right so we're going to grow dramatically many hundreds of megawatts within the United States but also many hundreds of megawatts outside the United States but just just from you know the US is only a small part of the world so naturally I think there's going to be a lot more outside the United States overall maybe not among public Bitcoin


miners but overall then there will be within the US well there are so many misconceptions around the energy use within this industry and we're at the human rights Foundation headquarters and they actually have these placards that say not mining Bitcoin is wasting energy and so I want to talk a little bit about that because some have described miners as profit maximalists profit Maxis um you're always going after the cheapest sources of energy like you mentioned Tyler um but there has been this growing


awareness and really scrutiny about the sustainability of mining operations what type of energy are you using is it renewable so how do miners find a balance between these Dynamics how much um Bitcoin mining is using renewable energy and what are the challenges that face in this area so I think we're using 55% roughly renewable energy among this industry that's actually really good you know I mean and I think the public Bitcoin miners have more incentive more desire to use renewable energy than you know folks who are not publicly traded


um and I think we could so we're doing a lot and I think a lot of stuff that we're doing right now is really good helping balance grid I I don't think that relieves the pressure on us we should always think about how we can do more and I think we can do a lot more over the future right I mean I think as some of us get larger more creditworthy and can establish that we can actually be a source of initial off take for new renewable projects and I think that's going to be uh that's some place where


Google and apple play today and I think we can start playing a role there you know in the upcoming years as well so I think we should always feel a pressure as you know people that live in this world of how we can do more next year and the year afterwards but I think we've been doing a lot and I'm I'm actually pretty proud of the fact that we're 55% even today right I mean if we were really profit maximalist it wouldn't be 55% the other thing I think is that eventually Bitcoin miners are


going to be energy generators you know whether it's to NASA's point of you start working with a renewable energy provider and you provide base load off take from them until they get transmission capacity or you do energy harvesting which is an initiative we've started where you're taking biomass taking stranded methane you're taking landfill methane and you're generating electricity from it and then you're selling heat you'll notice I didn't say you're mining Bitcoin one of the most


interesting things we have found is when we engage with governments around the world and we talk about taking stranded energy generating heat 50% of industrial electricity uses for heat generation and refeeding that heat back into an industrial process they ask us how we do it we say we use Electronics to generate heat they say that's great we tell them it's mining Bitcoin they say we don't care at that point because their interest is in the fact that we're dealing and mitigating something whether it's


biomass from agricultural biomass whether it's dairies and manur but there's a huge amount of this out there huge amount of methane that needs to get U mitigated and then generating heat that has a huge implications you we're doing Pilots of heating buildings in Finland we're taking uh methane off of landfills uh we're talking with government about taking large amounts of corn waste and rice waste from ethanol and methanol production and this is in countries where they prohibit Bitcoin mining today but the government is


saying to us no we want you to come in and do this I mean even the beer industry same thing wow that was I mean this is an issue that's very near and dear to my heart I mean at the core of Tera wolf where zero carbon Bitcoin minor 95% plus of the electrons we consume today electrons we consume come from zero carbon energy sources and the reason that was kind of foundational to starting of the company is when you look at it I mean people use kind of the word stranded energy quite a bit and I think it's a bit more nuanced than that right


if you think about how the grid operates it's really the the most important factor is overall system utilization right I if you think about the power consumption that occurs at the peak it's two 2 and 1 half x what occurs you know kind of at the lowest point in the day and so it's less about kind of how you know where it's being consumed and how how much it's being produced and where and it's more about how do we increase kind of overall system utilization and so as Bitcoin Miners and kind of as


what's been core to ter wolf is really making sure that our loads are kind of assets back to the grid we're not burdens to the grid we're assets back to the grid and so long as we're doing that and whether you're doing that at 2 megawatts or 200 megawatts or anything in between if you're an asset back to the grid and you're helping with that overall system utilization you're going to find a welcoming counterparty to work with and to the extent that you're not doing that again whether you're 2


megawatts or 200 size really doesn't matter if you're not you're going to find you know regulators and governments that are kind of put their hands up and say hey not not not here and so I think you know we need to make sure that as we talk about this it's it's not just kind of a word that we say but really think about like how do we do it in a way that is again facilitating that transition and is providing benefit to others and when you increase Sy utilization by definition you're lowering the per unit


economics for everybody else right so I think it's also another misunderstood point is is that if Bitcoin miners are doing their thing they should be driving down the overall cost of energy for everybody else in that area as well and so that's really kind of core and critical to how we approach and think about things you know something that's not sustainable about renewable energy is the financial model usually um we actually started clean spark as a renewable energy company we were doing Renewables with balancing grid projects


and very very few projects doesn't matter whether they are utility scale or commercial scale have any sort of financial return that is advantageous to the end user um because it just takes so long to ultimately generate the payback part of the reason it takes so long is because of how we use power you take a commercial building and it uses a lot of Power 8 or 10 hours a day and a lot of times when it's using the most power is the opposite of when Renewables are there and what Bitcoin can do to actually make a financial models of


renewable energy more sustainable from a business practice is to be the first user we can help get projects established we can help them get funded um but that's where we can have a real change because otherwise another thing that's not sustainable most of these projects to work require government subsidies and so this allows governments to not have to subsidize the building of Renewables but instead moves that into um the commercial space into private markets which I think is a huge benefit in the energy markets in general because


again when it's subsidized by the government that ultimately comes right back around to the paay and so that's where I'm sure many of of us have seen it in our areas that we operate in in rural Georgia we can actually help reduce energy prices because of how we consume and use energy on the grip and I think one other thing you know sort of I I agree with with what's been said here but I think one other thing about the industry on this issue that uh is very valuable is that unlike uh the traditional Data Center business that


that that business model again on a spreadsheet is sort of higher cost higher Revenue um bigger name companies that can fund things with debt and build large scale expensive projects um one of the things about Bitcoin mining is this Relentless drive to push down costs actually causes a lot of innovation on the edges so like for example on this particular topic one of our data centers at Cipher is connected to an off-grid wind farm that was underperforming there is no grid connection so literally when the wind blows our machines are hashing


when it doesn't they are not so this is a way that basically we can buy Power at a higher rate than that wind farm would have been selling to the Natural Market this is an illustration of Zach's point that if you build a renewable but you get past subsidies that come from the government in order for it to stand on its own two feet our industry is very valuable because we're looking for that cheap power we innovated a way to work directly basically with just that wind power and so that's a perfect example of


sort of the the the private sector finding a way that's beneficial to everyone it's time for a quick break to hear these messages from my partners who make this podcast possible first up Bitcoin 2024 the world's largest Bitcoin conference is coming to Nashville this July join us for three Amazing Days of Keynotes panels networking events workshops concerts and my third annual women of Bitcoin brunch the Bitcoin conference is actually where I launched my podcast almost three years ago you never know what can happen or who you


can meet here head to B.T ccon and use the code hodle H odl for 10% off next up coin kite coin kite makes everything you need to safely self- custody your Bitcoin including the cold Card Wallet the cold storage device I use for safekeeping my Bitcoin you can verify the source code it's Ultra secure and it's easy to use even if you're a beginner head to their site in my show notes and get a 5% discount with promo code coin stories next up crowd health health insurance costs are Skyhigh and it's money that feels wasted if you


don't need a doctor that's why crowd Health offers a community-based alternative by crowdfunding Healthcare with other bitcoiners I get to avoid traditional Insurance fees and support real people not Mega corporations visit join health.com Natalie and join us and finally the why of Bitcoin is easy to grasp but the how can be so confusing the Bitcoin way is your professional Bitcoin it and security team that offers personalized one-on-one support to guide you through Cold Storage setting up a node inheritance planning privacy best


practices and more don't take my word for it take 82-year-old customer bills give the Bitcoin way a try you will be well on your way to owning and protecting the greatest money ever discovered set up your free 30 minute consultation with the Bitcoin way today all right back to the show well I want to dig into revenue streams just a little bit because people say that having is a supply shock but it's also a revenue shock for all of you that I know you've been preparing for you're already thinking about 2028 you said earlier


Fred um so the mining industry obviously is extremely competitive everyone has to find an edge um I've heard of some companies diversifying the revenue streams by getting into AI um we've mentioned already here on the show reusing heat from the operations for various purposes so I'd love to hear some ways that all of you are really innovating so that you can stand out from the pack well we're doing in really a number of accesses one is energy harvesting that I talked about earlier we we're taking stranded energy


resources getting paid to take those and then selling heat back into processes the goal is to get the zero cost energy if you have zero cost energy you can mine Bitcoin forever you don't have to worry about it the other thing is you need to be able as Zach mentioned run systems with full automation full light out operations so it's a milk run to service the system so you need to invest in technology the second thing we've done is invest in technology we've built everything from our own pool that


operates all the way down to the firmware and the miners we've invested in building the only us Asic Miner uh oradine and now we've launched a whole line of um immersion systems for dual phase immersion why we believe that companies will be wanting to monetize their energy by mining Bitcoin when it makes sense and when they have that especially battery manufacturers we've had a lot of really interesting conversations with battery companies about this and what that then enables is you will have millions and millions and


millions of intelligent devices all over the world that mine Bitcoin every now and again and they do it at zero cost because they're using their own energy Arbitrage and I think when the intelligence goes down to the chip at that level which I believe will be available by 2028 this business changes completely because if you have millions of people mining that don't pay for energy and you have industrial miners paying a lot of money for utility scale sites it's a unfair advantage to the small guy and I think that's where this


industry goes so I think every company needs to find a way of differentiating itself and adding value over what could be just a commodity business of Bitcoin mining and in our case we're going with technology focused very much on the semach Condor aspect and there there's been um I think very little Innovation since 2014 uh the chips that are used for Bitcoin mining have improved uh dramatically since 2014 but it's been almost all based on improvements in manufacturing from tsmc there's been little change in


the architecture of the micro architecture of those chips and so that's my background it's also the background of some of the founders of bit deer so we feel like there's a huge disruptive Improvement that can happen there and uh that's one of the areas that we're focusing on to uh differentiate ourselves from everyone else we've we've always focused on taking a counter cyclical approach to both the cycle but also on you know the diversification is a big conversation point right now and we're choosing to


not do it and what we're instead doing is we're choosing to invest in focus and and what I mean by that is we are always trying to make sure we Master the domain that we're on right now which is Bitcoin mining we want to have the highest uptime the most efficient Fleet and be able to run that above anybody else now how we do that without losing focus is having strategic Partners so rather than like like Marathon has done a lot of investing in um their own technology we are partnering with other groups and our


belief is that then then they can focus on being the very best at what they do whether it's firmware whether it's a platform um and then we can just um kind of piggyback on top of their success and do what we do best and rely on them doing best we think that's the best way to really consolidate and use our resources in the best manner you know running a public company we generally have a Relentless focus on profitability over the long term for our shareholders profit Maxi I mean but but by responsibility


under the law basically um that's not to say we don't consider other stakeholders but that's the primary stakeholder that frankly I serve so I think on to that end um we believe that the a the asymmetric potential uh risk return of Bitcoin mining at this point in the adoption cycle um still provides what we think will be the best returns over time to shareholders that's not to say we won't look at things like AI or um certainly lots of innovative ways to integrate with the energy generation


industry over time that the sort of all things we look at but um at the this point in time I'd say somewhat different than some of the other folks here we're we're very much focused on um mining with the best possible unit economics and focused on Bitcoin money yeah I mean our backgrounds from the energy infrastructure space and so that's what you know 20 plus years I ran around the world trying to figure out where to put Power onto the grid and how to do so the most efficiently both operationally as


well as kind of identifying it and so that remains our focus and as we look at kind of where we are today and where things are going you know we think there 's going to be more demands for power to support data and high performance compute and there are going to be places to actually run it and so we're really focused on ensuring that we're identifying those best possible locations that have the lowest possible cost and have the highest kind of zeroc carbon you know um characteristics of the power associated with it and so


that's where we are and we know where we'll play if you look at you know the two sites we have you know one of the sites is in the middle of Pennsylvania it's adjacent to 2 and half gaw nuclear plant and the very first customer at that site was us I mean I sat there and worked with the the owners of that facility and educated them on what Bitcoin mining was the value of having a large load that could kind of sit adjacent to this this large kind of power generation station that wants to run 98% all the time and who was the


second customer that came to that site Amazon I mean so they now have looked and said hey you know what this is actually ingenious I mean this is large scale power at a low cost that has a zero carbon source and so as we think about where we are today and where we're going it's going to be continuing to focus on again bringing that infrastructure that energy infrastructure that's going to support um both Bitcoin mining again we have you know uh you know a long way to go at our sites as well as you know some of the


other things well you're bringing me to my next question because there have been some reports that the competition to secure favorable electricity rates with utility companies it is getting stiffer due to these massive data centers for AI they're drawing in large ounts of capital and they're really I'm reading keeping electricity bid three to four times what you guys were paying before potentially so these AI companies obviously are very well-funded um potentially willing to pay more than Bitcoin mining companies so how are you


guys dealing with this preparing for the future and navigating this emerging challenge the challenge with the AI llm training sites is they need very sophisticated Network infrastructure they need very high-speed access to to the internet to get the data in and out of their systems and so that limits geographically where they can locate because typically it's near metropolitan areas now the state of Virginia has just put a moratorium on data centers so not Bitcoin M data centers because they're just too many of them in the state um


and as you move from Netflix and kind of cloud provider uh and hyperscaler to AI the power consumption goes up by factors of magnitude and so now all of a sudden you have this direct competition most AI guys are willing to pay 8 to 10 cents a kilowatt hour where a Bitcoin minor ideally wants to pay two to three 3 and a half cents a kilowatt hour and the difference is we can curtail they can't we can locate where there are low speed internet connections or no internet connections and use satellite connections so Bitcoin miners are being


pushed to the edge basically interesting I think there's a way for us to work together with you know it doesn't have to be either or I think there are some sites especially some very large sites where you can combine both Ai and Bitcoin mining not in the same buildings or the same data centers but with the same substation I think there's ways of uh taking advantage of that so uh but they're you know they're very different businesses in terms of the expertise that's required in the in the economics


so but you know bit deer is getting into AI uh at a modest level initially but we're looking for partners and are speaking to several people we think there's a lot of synergy in a lot of what we're doing and what AI can do including even our trip development we think there's some you know cross over there so something about AI I think um if if you look at at what we have they want ultimately they're willing to pay more for power but they don't have to and so I think on a long-term basis it


actually helps increase our asset value but because we are a flexible load I think we're a lot more friendly to utilities and utilities to understand the want us there versus the data centers Georgia is also another state it just removed the sales or sales tax incentives for data centers and it did so because there was so much demand that they did not want them to come in and so that was a point of Attraction so they removed it to avoid these big AI data centers coming in because again they they they hog the energy and they hog it


24/7 with an inability to be interrupted and not a lot of people are talking about their energy use compared to the Bitcoin m more substantially more and but I think a lot of that's changing right so so you everyone's saying here you know they're they're willing to pay more and I think traditionally the data center operators whatever the cost of energy was a cost of energy it was a relatively small portion of their overall cost space and so they didn't really focus on it if anyone is to believe the amount of


demand that AI is going to pull and for it to be as pervasive as people say the cost has to come down they can no longer continue to pay 10 cents and so I think you know part of the discussions that we have that I have you know you know I think the Bitcoin miners are the kind of Leading Edge of the spear because we are demonstrating how you should do this and cability people have talked about it and I think there's cability and kind of backup power supply you know traditional data centers want to have a diesel


generator sitting at the site to be able to support the data center you know if if if power kind of goes out both of the you know the cability has to be embedded into it and I think more and more as the forward thinking you know players in the space think about how they're designed their LM models and how they're supposed to work they are thinking about how do we curtail our loads and I think that's going to be pervasive everywhere in the next you know 2 3 years and the second thing is is this idea that you have to


have a backup generator at the site and you you have a centralized place where all of your activities occurring is I think also going to change and so if you think about Bitcoin we talked about decentralization and while we may not have as much decentralization as we want it is the most decentralized secure network that exists and so likewise you know the trends that we're seeing in the a i space are that compute is also going to start to decentralize and so those players that are going to be most the most uh successful in that space are


going to be able to have to reflect on hey how do we ctail so we can kind of drive down our costs if we drive down our cost it's going to be more pervasive and more used and second how do we make sure that we can decentralize our compute and again Bitcoin miners have a lot to be able to talk about with respect to that so we actually see from an infrastructure perspective a number of parallels on where Bitcoin has been and where you know at least I see kind of where the EI demand is going because if it's going to be the same as it is


today it's not going to be what people think it is just physically not going to work I one thing that changes the economics here is that right now if you establish an AI data center the overwhelming cost or the overwhelming amount of capital goes to Nvidia and that's because so it's just so large just like bitm Ju Just like bitman it's so large that the cost of electricity is sort of just a a footnote at the bottom but that's going to change as Nvidia faces competition and the cost of that


Capital drops dramatically uh or significantly then the cost of electricity is going to become more important and so you know uh of course you know the big hyperscalers are developing their own chips I'm sure AMD will come up with a reasonably competitive chip in you know the not too distant future so I think that whole economics of AI will change and electricity will become a more important part of it um so I agree with nther on that I think that you know they're not going to want to spend 8 or 10 cent


in perpetuity but it's it's a two-step process in AI versus Bitcoin mining which is a singlephase process in AI you have to train models that requires this density of power once you deploy a model you can deploy it at the edge and it can run with curtailment options because you load balance across multiple Edge nodes but the learning has to be centralized and so while we are still ingesting huge volumes of data um and sorting out all the copyright issues that are being created by that um you have these large data center needs but


even once inference becomes the primary consumption of AI versus learning uh new knowledge is going to have to be incorporated and so I really don't see this in the next 10 years declining back to a place where Bitcoin mining and AI can sit side by side at similar costs with similar characteristics the other thing about AI that right now people are using a you know a technology that's several decades old for training right it's just been scaled up and there are a lot of really interesting work going on


on how you can get by using far less compute to do the same thing and eventually somebody's really going to have a breakthrough there and then you're going to see the level of compute required to do the same training drop dramatically so I think we're at the very beginning of AI in terms of this scaling thing and I definitely think there's going to be disruptive technology that we see over the next you know few years the other thing not to be underestimated is how long it's going to take to build these data centers so


everybody's talking about what they want to do but again these data centers are fairly complicated buildings with Cooling and everything else that goes into them I don't see it disrupting our space for at least two to three years and that would be very quick compared to how most these projects go so we could be talking about this maybe impacting us as we approach the 2028 happen but but to to Zach's point you mentioned this earlier Zach I think what is true right is is that for all of us I think the


infrastructure that we have is not being properly valued because there is a real alternative use case for it and we can see clearly you know just with recent transactions that people are willing to pay a lot more for it so so you know I don't think of it as kind of you know a zero sum like it's either or it has to be Zero Sum but but again I think what we are doing highlights again the importance of the energy infrastructure and and how that can play out in kind of alternative use cases as well best thing


I think is that the AI Lobby which has much deeper Pockets than the Bitcoin mining industry is going to be lobbying the government in the US firk etc for more transmission capacity more interconnect capacity better internet etc etc all of things that are beneficial to us the challenge is going to come at the local level where they're going to be lobbying for their use case for a limited amount of power versus our use case but I think overall it bodess very well for the electrical infrastructure in the US it'll be


interesting to watch these developments I I really want to turn now to discussing the risks about centralization because many people are concerned about centralization within the mining industry from everything within Asic manufacturing the chip manufacturers mining pools I mean mining is mining is distributed around the world there are miners everywhere but there are very few mining pools so how legitimate do you think these concerns are and what are the potential long-term consequences and Industry solutions to


maintain decentralization well very legitimate concern because you have two pools that basically together could collaborate and do a 51% attack if they wanted to one of which is an offshore pool um we operate our own pool we do it because we prefer having control of our own destiny it's actually not difficult for people to operate their own pools they could do it the problem is the economics if you're a small scale minor the uh likelihood that you're going to win a block in your own pool while statistically the same as you would in a


big pool the difference is instead of getting small portions of everybody's hash rate you're now dependent on getting a block maybe every month versus getting a little bit of every block that's been won during the course of a day by a big pool so a lot of people opt not to do it but most of the foreign countries that are mining Bitcoin as sovereigns are operating and beginning to operate their own pools because they don't want anybody to be able to restrict them from transacting their Bitcoin and over time that's going to


become more and more important as we see this long tale of Bitcoin mining with intelligent devices in places mining Bitcoin uh the whole concept of pools will again become very decentralized but a pool is really an orchestration layer as stratum 2 becomes more prevalent then the miners are really in control of their own Destinies and that whole concentration issue of pools disappears completely so I think this is u a moot point long term um there's a transitionary period where there's some concentration but I don't think it's a


big issue and with stratum hopefully that reduces any chances of censorship at that Block Level A lot of people are concerned about that yeah I mean the only the and you know I took a knee when I became CEO of marathon in 2021 because our pool could filter out ofac non-compliant uh wallets right the fact of the matter is you know Bitcoin don't have serial numbers so you're tracking based on wallets you can take a pristine wallet and pollute it with some dust from a wallet that's on an OAC list somewhere and now that wallet will be on


an OAC list and so filtering based on wallet addresses just doesn't work as much as the government in Washington would love to be able to do it I think there's some people in Washington who uh you know over the age of 55 don't really understand that Bitcoins just like the dollars in their bank accounts don't have serial numbers you know people think that well no my dollar bill there at BFA has a serial number it does not it's fictitious it's just a ledger entry I don't think the centralization


concerns are near the top of my list to be honest with you I mean I think the point is to expand a little bit on what Fred said the you know a minor can can switch what pool it's using basically instantly so if there's concern that like there's a regulatory body that would capture the pools that have the hash rate and then corrupt the network it's not really a risk in the sense that as soon as that happens all the hash rate will flee that pool um and while it's not optimal for smaller miners to


to Fred's point to run you know effectively their own pool and use their own hash rate directly it can be done I mean the people at this table certainly could do it right you would introduce more volatility to your returns but it's it's something that can be done so like I don't I don't that is not something I lose a lot of sleep about the the sort of capture of the pool um you know yeah if Washington got really adventurous on wanting to filter transactions at the minor level it starts to get scary


because then you have questions as a US public company like are you complying with that regulatory body or not um but and and then on the other pieces you you reference the Asic manufacturers things like that um I do think one of the benefits of getting to this industrial scale level of the network is that it's really prohibitively expensive for something like that to try to capture the network um I know bitmain's very large they're the largest rig manufacturer they run a lot of their own hash rate um but I I still think there's


enough diversification it's not something I lose sleep about the other thing is if you are that large think how much value you have tied up in the value of the network being decentralized by capturing it you would instantly destroy your own value um so again I'm sure there are edge cases that people worry about that I just I'm not I think this is a it's interesting to discuss but I I haven't found something that gives me a great concern and at the Asic level there's more diversity in basic


availability and machine availability today than there was at the prior having this is the first time bitmain micro BT are on the same kind of cycle where before it used to be kind of a flip-flop now microbt is you know they've taken some serious market share um from bitmain Riot has gone all in on microbt I'm sure a number of the large miners have ordered micr BT machines I know we have um but we think it's the diversity is great cuz now you're starting to get to a place where you know you'll have a


specific minor model for a specific use case I need something that's liquid on a cooled I need something singlephase immersion I need something dual phase immersion I need something that's air cooled that can operate in 50° C ambient all of those types of things will just breed better variety better selection and make the industry much healthier yeah I think that Asic mining manufacturers have gotten more diverse certainly than four years ago and and you know we're adding to that there is still a concentration and I'm


not sure anything can be done about it uh if you go down one step lower I mean everyone's still using tsmc as their Source I guess there's one using Samsung but that's sort of small and but that's you know that has a concentration effect on many different areas not just Bitcoin so I think that's something that needs to get handled but it's got to be done at a larger level than just Bitcoin Bitcoin miners defend Taiwan yeah it's all and centralization is all relative right I mean that I think with the ethos


of Bitcoin is you know everyone has their laptop and the world's completely decentralized and so are we at that end of the spectrum no but versus any other network that's out there the level of decentralization that exists you know we think is is actually profound and you know to both Tyler and Fred's point I mean I would say the five or eight largest Bitcoin miners three four years from today will all will be running their own pools right I mean just it's just kind of a scale and a matter of


time that's see so so some of the the you know the concerns I think are again so other folks said here not real and again I think where we can continue to highlight the value of Bitcoin is again like L you know compare our centralization as you want to call it against any other network that exists and by Far and Away the level of decentralization that exists here is again unique and that positive incentive system that really works for us as well you know I I agree with what everybody said so rather than repeat agreement I


think maybe I'll talk about practicalities because I think that's maybe insightful um is how how are we actually addressing this so we actually have three backup pools so we operate at a Foundry which is one of the big ones but we are ready at a moment's notice if we ever needed to to fall over to another Pool we also will have our own mining pool at some point you know it's pools make it easy it Dr risks things it takes the volatility out but in a especially in a high fee environment there's no reason that all miners of


large scale will not have their own pool it just won't make sense because all the other pools the high the environment creates risk for a mining pool that that's the only service they provide and so they have started to change the rules to make the fees ultimately lower to what they pay out that's going to give us the incentive also to further diversify into all of our own pools on a long-term basis so I think on a practicality point of view all the pieces in place I'm sure all the other miners have backup pools upon backup


pools too and then I think actually There's an opportunity in where there is some concentration related to the actual as6 themselves because you know being a believer in competition breeds a better product and so I think that right now you have small groups that have an aim to take out you know the big guy which is pitm right now and in looking at it that way they're going to have to beat them they can't just catch up and so I think if you take scrappier smaller companies and give them an incentive to


not only catch up but to pass that's what's going to make them suc successful and I think that's good for all of us so I think it breeds really solid competition as the environment is right now some of you brought up Washington so I have to ask you about President Biden's latest budget proposal because it raised some eyebrows in the community laid out plans to bring in more than $2.


3 billion in the next 5 years and they want to tax Bitcoin miners potentially 30% for energy use I would love to get your reactions um how are you educating policy makers to support this industry as opposed to proposing such extreme legislation I think part of it is a question of we have never taxed the use of a commodity by a specific industry type and so this is something that the um if it were to be enacted into law would go to the Supreme Court very quickly um not just by our industry but by lots of other people um who would just view it


as a perfect case of government overreach and so I don't worry so much about it happening in that way plus very quickly people will say well wait a second and the AI industry is also a big user of energy so if you're going to generate a tax and you want revenues for the government focus on the people who are really doing go across all data centers make it fair so I think if it were to come into fruition it would be highly watered down in its worst case scenario would it drive the industry offshore sure you raise the cost of


doing business by 30% you're going to push everybody offshore so you have to kind of HED your bets uh we have no idea for example whether the Biden government or a trump government would want to prohibit the use of Chinese technology period not just imported from China but Chinese origin manufactured in Malaysia Indonesia Thailand Mexico wherever being used we don't know those things and so you have to as you scale the risks and downsides of these types of issues become bigger for us but educating Washington is really just about knocking


on a lot of doors talking to staffers who can educate their bosses because the bosses really don't get it other than a few limited number of people who've actually done the work to study and learn the vast majority turn to a staffer and say what do you think about this and so you have to educate the staffers and just a lot of door- knocking great I'm pretty sanguin about this news and the sense that you know I'm I'm friendly in the camp that generally everything's good for Bitcoin in some way is the fact that this is


used for headline attention grabbing sort of validates our industry's arrival in a lot of ways I mean the Bitcoin mining the miners are now protecting one and a quarter trillion dollars of value and that's after a recent sell-off so this is a real industry with real companies and real budgets providing jobs paying taxes at the state levels and if it gets more and more attention in some ways that's validating its arrival as like a part of the firmament that doesn't really answer your exact question which is what do you do and of


course again agree with Fred like we try to be proactive we work with different lobbying organizations to point out these very bizarre sort of questions about why why is this industry being picked on it doesn't make sense and it it rhymes with the discussions we've been having for years about like what about Christmas lights they use more energy and you know like it it feels very similar I think the one other thing about this particular issue is that um it does reinforce like a lot of these things what happens with increased


competition with AI what happens with the having schedule what what happens to all these things it reinforces why building a sustainable business model as a minor needs to focus on those unit economics and having the lowest cost to produce you can create because let's say they do pass a tax that's going to favor the people with cheaper energy more than anyone else right so like you know like I don't think it instantly means it would go all offshore I mean I'll talk my own book a little bit but we're known


for having very low power costs of course we would not want to support any kind of tax if something against everyone's better efforts if somehow that happened okay we'd still be cheaper than most people are today on their power cost so like it it reinforces yet another reason on the pile why the industry has to be more efficient over time we're not very worried about this exact legislation getting through I think it if something gets through it'll be very watered down from this and probably much better um I think one of


the side effects of the ETFs that will have an effect here is that as more more people get involved with Bitcoin it'll be much harder for politicians to enact legislation specifically against Bitcoin right now you know there's there are fewer people involved but when it's you know your grandmother and a bunch of other people have investments in Bitcoin it's going to be very difficult for a politician to take a a stance just against Bitcoin I mean this isn't the first time this same tax was proposed


and so as other people are saying here you know it came and went I mean I think I think it's important to think you know a lot of times in the Bitcoin space we preach the choir right we're all believers we're all very passionate about it we believe it we believe it brings good and I think that's true when we are engaging with those that don't have that same view though uh I think we as a community and you know point my fingure out myself you know first is I think we have to be more engaging and


more transparent and a lot of times what I think happens is is the second we see some sort of push back we kind of retreat and sometimes it's Justified I mean the whole eia Fiasco I think I mean how they went about trying to capture information you know so sometimes while it may be justified sometimes I do think that the burden should be on us to be able to kind of educate and if we're more willing to engage in a more transparent way and in some sense demystify what we're doing you know I you know even today it's shocking to me


that when I actually talk to people and tell them like what how does a Bitcoin mind work what do you do they're like that's all it is yeah and so the demystification of what we do and we do it I think is important for that kind of you know adoption and interest and so all those staffers and all those kind of Representatives and Senators can have a much clearer understanding of it because a lot of times right now they're going on a premise that's probably as far from the truth as possible because there just


some concept in their mind they haven't really been able to engage and so I think you know we have a burden as a community to I think be more open and transparent and try to engage and again I completely understand that a lot of times we're not reciprocated in that and not I mean we're going to have to deal with that but at the the same time I think again the more we can do that the more we can kind of address some of these things and over time you'll just start to see that you know and I tell


people all the time there's a right way to mine Bitcoin and there's a wrong way not all Bitcoin mining is perfect if you do it in a certain way you can increase costs you can have problems right to the grid and so I think the discussion we should be is like yes there is a right way to do it and by the way that right way to do it is also the right way to integrate large loads of any kind into the grid and let's talk about all of that like we're more than happy to talk about what are the parameters and how


this should happen and I think we have to work together to kind of you know shift the discussion that way and if we do so I think those that are engaging with us will start to see that we're really kind of an asset as a part of that discussion rather than kind of an adversary I think a big part of this I don't think the conversations happen in Washington I don't think that's where the meaningful conversations happen where they happen is what we refer to as our front door approach it's about


having the community that you operate in understand Bitcoin what it does and how it's benefiting their Community when that happens that's a community that then then isn't complaining Upstream to anybody else because one thing we know is politicians always look for a headline and so we think the most important thing that we can do as Bitcoin miners is not be the headline for the complaints whether it's noise power all the other list you know that everybody loves to publish instead it's about being the good citizen right where


you live it's about using the local workforces it's it's about making an impact where it matters because then the headlines don't happen first and then the second is is bringing the senators or bringing the House of Representatives to then cover those communities into the community I think walking a senator through a Bitcoin mine is really what should happen we I think all of us have engaged in on Capitol Hill um but how many of us have wanted Senators through our facilities I know it's one thing


that we're really focusing on because I think the Grassroots side is where it's going to matter more um because also once you can touch and feel what a Bitcoin mine really is and experience it everything starts to make a lot more sense while I don't disagree with you I think it's very important to do the Grassroots that works really well for the politicians in the states where there is a lot of Bitcoin mining so in your case in Georgia Texas North Dakota but it's less than 10 states the problem in Washington is you have


members of Congress uh influential members of Congress who write letters like Senator Warren to people like the head of the cftc now saying you had meetings with Sam bankman freed you need to report on this well hey her whipping dog Gary Gensler had a very near uh relationship with Sam bankman Freed's family um and she's not crowing about this so politicians in Washington are uh let's just say soap boxing this issue there are 50 million voting Americans or voting eligible Americans who have owned crypto or own crypto they


happen to all be under the age of 45 for the most part most of the members of Congress are over the age of 45 you have a generational shift that's about to happen where the crypto Savvy the crypto willing the crypto wanters um like my kids Millennials for example who all have invested in crypto before I even got involved in it are this is an issue for them and it's something they really want and I think that's when this is going to change it's you start getting the Old Guard unelected all of a sudden and they lose


office because some crypto bro took their seat that's going to be an issue and many people do feel that we need a generational shift in Washington absolutely that's going to happen no matter what cuz they're pretty old and yeah I think there's also a change in our industry right we started off as a small Scrappy industry a little belligerent and and uh you know we didn't have that much impact so we were sort of ignored by politicians but as we grow as we mature you know we're going have an impact and like any industry uh


people are going to say hey what are you doing there you know you you it looks like you're impacting my daily life and so we have to learn how to just sort of work with that I like what Fred said about working with politicians I think that's really important as the industry matures it grows uh you know we live in the society we have to be able to engage with the people that we've elected and um I think just in a more mature way you know everyone's not against us you know we're not fighting this uphill battle


there are a lot of allies allies and there are people who are yet to be allies right I mean I think um we overreact a lot of times and I think we can just be more calm more chill and realize that a lot of people don't understand and maybe we need to change some things too right we're not right about everything as much as we'd like to think that and so let's engage with the wider society and see where that takes us but you know we're here to stay I'm sure of that so it's um everyone has to


adapt a little those are fair points I had the chance to visit Capitol Hill to educate on bitcoin and I was encouraged by a lot of the people I met in Congress who actually did seem like they understood Bitcoin and they were um for favorable regulations that that encourage Bitcoin mining to to grow and to stay in in the United States and then I was disappointed by some of the members of the the Senate obviously a lot of people are familiar with Elizabeth Warren stance um but also with the Biden Administration and and I think


that there's nothing less American than trying to decide what is good energy use right because it won't stop at Bitcoin they'll start looking at who can fly planes and who can you know be a tourist and whether you can use your washing ma machine so we do have to I think be really thoughtful about making sure policy makers are aware of our industry and what we're doing funniest thing I find is the people that say Bitcoin is not a good investment I if you looked at the performance of Bitcoin over take


pick your time period it's been the best and yet you still have people that say we're looking out for you and you shouldn't invest in Bitcoin because it's not a good investment I mean to me that's the most kind of you know kind of damning of them all is because literally the the the data is the data just like I said pick any time period you want and look at the performance of Bitcoin it outshines anything else and yet they still try to tell people it's not a good investment and the fear that Bitcoin is going to


displace the US dollar is so unfounded if you were to look at it um if anything Bitcoin helps the US dollar gain dominance it's you know a Curious Thing tether is the single biggest contributor to the US dollar growing a little little bit again as a reserve asset because they hold hundreds of M hundreds of billions of dollars uh in treasuries and you know they have supplanted Japan as a buyer of us treasuries and I over time people are going to get it you we're in that transitionary phase where you know


the next buggy whip got invented and then somebody invented a car or you know people are going to put the 12 propellers on an airplane versus starting to use Jets it's that transition period we're going through all right well we have to start to wrap up but I'm going to ask you just very very simply and directly why should someone invest in a public Bitcoin mining company as opposed to just buying Bitcoin uh you're investing in all sorts of things depending on the type of exposure you want and volatility you


want so you can invest in gold or you can invest in gold miners Warren Buffett has chosen to invest in gold miners because he prefers having the ability to in an upswing in price maximize The Profit potential because a miner has relatively fixed costs and if the commodity they're mining goes up in price then their profit margins increase if you're mining Bitcoin it's the same thing you look at historically how Bitcoin miners have traded versus Bitcoin bitcoin price moves one or 2% Bitcoin and miners move 3 to 5% there's


Beta And there are certain traders who like that beta for the average consumer they may not like that added volatility and so this type of additional volatility is very attractive Ive to people on Wall Street hedge funds they trade in and out of our stocks we're highly liquid most of us uh we provide a great ability for them to go long Bitcoin short a minor do vice versa and now they're doing it with ETFs because ETFs settle t+1 and so now they found that they can do this with uh ETFs nicely I think post having you'll see


the money will start flowing back into Bitcoin miners again and I think there's a reason that that happens why is there that beta it's the only place unless you're mining Bitcoin you're yourself that you can gain exposure to an entity that's buying Bitcoin under spot otherwise if Bitcoin is 50,000 70,000 200,000 a million dollars at some point a minor generally if they're running profitably is the only place you can gain exposure below that spot price and if that minor then adds it to their


Capital stack and structure you get that benefit as a shareholder so I think that's why miners become a really interesting place and that's why you can get that beta on the trade where you get more than just the upswing in in bitcoin's value the other thing is I think it's an interesting place that we're going to see happen as a from just an investment standpoint this flight to Quality um right now there's between 21 and 25 depending on how you measure Bitcoin miners that are publicly traded


and I really see that consolidating to a much smaller group and then that group is going to be able to be stronger and able to be able to do more in Bitcoin mining space and therefore produce more Bitcoin lower cost structures things like that so I think that it's a really interesting time to get involved and you know I think all of us own Bitcoin and believe in Bitcoin directly but I think for myself I think it's a great investment point because it's the only place to get it for less than you would


be able to buy it directly from somebody else the other piece I think beyond the the levered exposure um that's been referenced which I think is you know pretty obvious people can see that um as an investor you do have now long exposure to some of these other themes are somewhat independent so the next ordinals type thing makes transaction fees blow out and they stay elevated miners are being paid transaction fees uh the world starts to appreciate um the value in a location agnostic large user of electricity that's instantly cril


there's a ton of value that's underappreciated in that that sits within the mining company so to the extent they're developing their own Tech stack to monetize that there are you know what I'd call Related but somewhat orthogonal investment themes that you can get exposure to in a minor that you can't get in Bitcoin directly yeah I mean to build off Tyler's point I mean I think there's a number of free options embedded Within These companies right so you everyone looks and says what's your


hash rate how much you produce and and so we're making Bitcoin we're making money but embedded within that again whether it's energy transition I mean there's a massive shift on happening in the energy space and the energy the power Market is you know many multiples of what the Bitcoin Market is we are playing in that and there Services we're providing they're effectively free options kind of built into that from a tech perspective again the curability of our loads and how we do that and how we


bring things back up is going to be applied in other places as well and again free options and all of us are spending time thinking about how do we do that what's the technology what's software how do we actually Implement that so again there's a number of free options AB in here so it's not just you're buying Bitcoin for below spot but then also I just think there's a number of embedded free options in here that you just don't get buying Bitcoin all that being said everyone should buy


Bitcoin before get your whole Bitcoin before while you can but uh but again you know in addition to that you know the miners I think provide a unique way to to play the space yeah I agree with everything that's just been said I'd say in addition to that in terms of bitter we have really a technology angle where we feel like that's going to add a lot of value above and beyond just the mining that we do which I think is you know clearly a good thing to invest in I think as part of a balance portfolio


Bitcoin Bitcoin between Mining and you know I think it's sort of a a good balance to have well from 6.25 Bitcoin to 3.125 I hope one of you maybe perhaps got the first Satoshi in the having um thank you so much to my thoughtful intelligent panelist thank you so much to the human rights foundation and to bitcoin magazine for our production coin stories is brought to you by bit dear thanks so much and check out our next episode next week thank you so much for checking out this episode of coin stories if you're listening on the


fountain app you can show your support and share your thoughts by sending a boost last month's top episode on Fountain was with Michael sailor and I had at Joe Martin music boost a thousand SATs to say sounds like sailor is describing noer when talking about identity is he purple pilled yet well if you're asking if he's on noer yes he is at sailor I love reading and replying to your Boost so download fountain on iOS or Android today and make sure you subscribe to coin stories this show is for entertainment and educational


purposes only nothing should constitute as official investment advice and you should always do your own research my inbox is open if you want to share feedback or guest suggestions just reach out at Natalie talking bitcoin.com I'll see you next time