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Running Bitcoin with Marathon Digital CEO Fred Thiel

June 14, 2023

In this interview on Charlie Shrem's show, Fred Thiel, CEO of Marathon Digital Holdings, discusses the dynamic landscape of the Bitcoin industry. They delve into the influential factors shaping the sector, emphasizing Marathon Digital's prominent role as a NASDAQ-listed company. Thiel outlines the intricate relationship between energy production and Bitcoin mining, highlighting the innovative approach of utilizing excess energy from various sources. The conversation extends to the future prospects of Bitcoin, including adoption patterns, energy efficiency, and regulatory hurdles, reflecting a comprehensive exploration of the industry's present and future trajectories.

00:00 Intro

00:19 Bitcoin Wallet Growth

03:26 Stranded Energy

06:42 Bitcoin mining and the environment

10:13 Renewable energy transmission lines

13:23 Energy crisis in South Africa

16:25 Bitcoin mining and renewable energy

21:09 Bitcoin's Future Development

23:14 Bitcoin infrastructure development

27:13 Trust in the integrity of Bitcoin

31:32 Bitcoin's altruistic origins

33:11 Bitcoin pool centralization risk

36:21 Bitcoin's risk-adjusted return

Transcripts are autogenerated. May contain typos.


good morning good afternoon good evening what is up everyone I am your host Charlie shrim and you're listening and watching another epic episode of the Charlie Shrum show powered by Waxman where together you and I every week we get to dive deep with some of Bitcoin and crypto's most influential leaders ogs those who are really excuse me influential leaders oh geez I've been talking so much this this past weekend I was in this whole Finance seminar uh in in California it was it's been crazy but


we talked to all the people who who bring us all together who are leading this industry forward those who are not afraid to speak out and talk about what's happening and how we needed to change there's a lot going on this week huge amount that went on last week in our industry this is the time it's like Gandhi said or whoever said it first they ignore you then they laugh at you then they fight you and then then you win and I mean the while the rest of the world has been embracing Bitcoin and crypto on such a massive scale from from


Europe to Dubai and and all over the world it seems like the US is still like fighting this war simultaneously back to back going after coinbase and binance it's been crazy but I like what I like to do on the show is we we talk about as you guys know the positivity and the growth in the industry the things that are happening uh what's been building how we've been connecting web 2 and web 3 how we're going to change the way that we've been doing things for the past decade two decades three decades and how we're


doing in the future and have fun along the way I'm really excited today we have an amazing guest Fred Thiel you're the CEO of marathon digital Marathon digital Holdings you guys are one of the most famous companies in the industry right now you're traded on NASDAQ is m-a-r-a people go around there they're called Mara heads and they they love talking about the company is had you heard that term before no I've never heard of them are one of my oh one of my friends is like the top like you guys have fan


clubs all over the world because you seem to have been embracing uh this Bitcoin uh purism especially by being one of the top miners in the space right now how does that make you feel I mean we're very proud of the opportunity to do what we do which is secure the Bitcoin Network and provide the service that we do to all the people that rely on bitcoin and want to make Bitcoin uh you know the ultimate uh hard money that it could be so we're very happy to do that um we really love what we do we think being focused on only Bitcoin is a way


to stay uh really true to what we're doing and be the best in the world of what we are and we're very focused on truly going global and doing this on a global scale and bringing Bitcoin mining to all sorts of places where there's stranded energy that term standard energy so um if you think about the energy Grid it's like plumbing and it can't store energy it can't hold it and so unless you're pulling electrons out of the plugs in your wall uh there's no place for the energy to go in to the grid and


so you have all these energy generators you have nuclear power plants coal powered plants natural gas plants and then you have solar wind and hydro and essentially what happens is the grid is constantly trying to balance the utilities are trying to balance the amount of electricity going in and that going out but there's a lot of electricity that doesn't get used because electrical demand varies during the day you have a Peak at nine a.


m in the morning and then there's a lull from kind of 10 to 3 P.M and then it Peaks again in the afternoon and so people that are generating energy in the afternoon in the middle of the day and early afternoon they can't sell that energy sometimes and so it's stranded or there isn't transmission lines meaning those high power tension cables that connect solar farms and wind farms to the grid haven't been built yet and so those guys can't sell the energy so we go and locate our Bitcoin miners next to


where there's stranded energy that can't be sold and we absorb it we act like a customer of Last Resort kind of imagine you're selling fruit in this in a farmer's market and it comes to be noon and the farmers Market's about to close are you going to throw that fruit away or you're going to sell it for the lowest possible dollar so we're kind of that customer of Last Resort find that last energy it's like you can you can start a whole business called secondhand Donuts where you just go


around the donut shops at night and they throw them away so you just get all the free donuts that's very that's a very interesting business model yeah so it's it's a way to it does a couple of things one is it gives the energy producers who are the last ones to sell their energy because either their price is too high or um they're uh intermittent so solar and wind are typically the last energy to get turned on by the grid and they're the first to get turned off because of the fact that they're


intermittent and so for them to operate profitably they either have to sell at a premium price when they can sell or they partner with a Bitcoin miner like ourselves and then they can sell energy to us when the grid doesn't need the energy and when the grid does need the energy we can shut down our Miners And The Grid can receive the energy this does two things one is it provides balance to the grid um in the sense that uh when the grid needs extra demand say it's a really hot day in Texas the Sun's shining a lot of


AC is running we can shut down our Miners and all the energy we were using can now go to the grid they don't have to go turn on new power plants or anything like that and so we act as a balancer in that way which is a great service to the grid it seems to me that what you're doing is acting as a battery holder as a way to store energy in a more efficient way than like storing it in a battery because you're storing it as Bitcoin units which are essentially the costs are valued at the cost because energy is probably one of


the only last decentralized things in the world and then you can set up a Bitcoin miner anywhere and then join the network in a permissionless way you don't need permission like proof of stake you need and eventually to join that Network you need to buy a token which you need permission from all the other someone needs to sell that to you so so in here you guys are taking this this system and you're like acting as a battery that can be maybe even moved so why why wouldn't uh governments or even like the state of


Texas themselves start mining Bitcoin it seems like it's the best way to preserve their especially the in the state of Texas where you where you have a standalone grid well it's a little more complicated than that because it's very Capital intensive I mean it's you know hundreds of millions if not billions of dollars to build these large Bitcoin mining sites um and if there are commercial Enterprises that are willing to make that investment and provide the service it's a way to achieve the same outcome


with no capital outlay for the utility or for the government so the alternative for a large solar farm or wind farm for example is to buy lots of batteries now that's capital the solar and wind farm has to pay out and they then have to get that money back by selling electricity at premium prices to their customers or they just partner with us and we provide the exact same service to the grid with no Capital outlay by the power generator so it's much more symbiotic you uh I've been a Bitcoin purist my whole life


I've been in the industry for since I've been a kid so like 13 14 years now and to me whenever someone has has gone over the environmental side of Bitcoin I've always just explained but hey I believe Bitcoin as a value proposition to the world is worth is worth the cost to mine Bitcoin because we're creating a whole new Financial system and critics argued that you know so two things I would have to you know explain to them I would have to like explain to them that one Bitcoin is amazing but two and then get into the


whole Bitcoin mining thing and it's a very large you know High bar but what you've done now is you've taken you've taken the the environmental cause and you've turned it on its head and you've used it as it's like not only are we not using energy and taking it away from hospitals and schools but we're helping balance the grid save money in the long term uh but at the same time the Bitcoin mining industry has been building out hydroelectric dams and all these uh plants that are doing like


power and the most efficient and environmentally friendly way because what other industry if ever has had it there like Financial incentive to have cheap and efficient and more environmentally friendly power like what other industry uh so you broke up there at the very end of your question when you said now it was more like just excited I was saying what other industry has done more for the environmental cause than the Bitcoin mining industry yeah there really isn't another industry that's able to do what


we do because um the only Alternatives you have uh or a really large battery farms uh to your point or large capacitors of some other form uh so it's very unique the the fact that we consume energy does a couple of other positive things we create an incentive for the development of more solar and wind energy because we provide essentially a source of revenue for them if you're going to build a solar farm or a wind farm today and if we're as a country going to get to Net Zero Energy by 2050 we need lots of transmission lines we


need lots of interconnect which is how you connect these solar and wind farms to the grid we are woefully behind in that uh it's about a two to four year backlog if you're going to build a solar farm to get it connected to the grid so there's no way for them to finance their projects now if they have a customer like us who can co-locate next to their wind or solar farm they can get the project financed and so now they can build it and then when the grid transmission connects they can then start selling energy to


the grid and providing that service but until then there's no economic viability for that project so it's a really important Nuance in the industry that Bitcoin miners can act as this initial base load customer for renewable energy sources get them financed get these projects built so that the only thing missing is the interconnect a big challenge in the US is that this interconnect cost you know it's basically two million dollars a mile to build these cables and uh just over the next two years the backlog of projects


that exist is a cost in the hundreds of billions of dollars of interconnect and question is who's going to finance that so I mean these are all like not bad problems you're talking about like there's more demand than there is Supply we have to build more and there's more projects that need financed I mean these are all good things I think the financing will come and the supply chain I think people are not talking about that as much even though it's still a big issue but I'm reading a lot of


charts and reports these days showing that uh were built where there's like a huge manufacturing boom in this country and we're building out more uh factories themselves and and we're so does that help yeah so more factories helps but you got to be building the right things in those factories so if you think about transmission lines it's cables uh it's Towers it's you know a lot of copper if you would and um you know transmission is a very inefficient business you lose a lot of energy once you send electricity


you know about 600 miles you've lost it uh so you have to build these utilities these generators near where your consumers are or else it doesn't work now there's technology in the works that will allow you to dramatically improve that but that's decades out the other thing you can do is build your energy generation next to where it's going to be consumed so it's called Community power so you think of a you have a small town and that town then has its own solar farm it has its own batteries and


there's no high tension cables connecting it to the Grid it's consumed right then and there and I think that's a trend you're going to see a lot more of especially as we see more efficient solar become prevalent better battery technology and eventually small modular nuclear reactors which are very safe and very efficient I want to ask you I want to ask you this so I have a lot of friends in South Africa and what's affecting them right now is really sad for you know rich or poor there's just a


building blackouts you know it's daily it's It's weekly monthly and for those who don't understand it's like imagine living and a lot of people already not in their head listening to this who are living with this right now in other parts of the world I guess I take this for granted here in the US but you have like four to eight hours and they announce it in advance at least over there or in some countries they don't but they just simply don't have power and you have to drive if you need to


like work you drive to a Starbucks or whatever in another County or something and you can see the maps and it's like really an annoying thing to live by a lot of wealthier people have generators and stuff but the problem is there's no gas there's no fuel people have solar but like you said the supply chain is many years out there's no parts there's no Supply you're probably reading the newspaper in the morning I don't know if you flip through like the actual paper I do on the on the plane for some reason do you


do you like think about is there anything you can do to help help them there do something well the challenge in South Africa and I was just there in March um is their electrical infrastructure hasn't been maintained and so it's falling apart bit by bit and so they have to do load shedding as it's called their where they shut down the power for hours at a time and so hotels uh and businesses all have generators into your point um they're running short of fuel the other problem is when you're running all


these generators they are huge pollutants now you're seeing some some very environmentally focused folks and the and generally speaking people in South Africa are very environmentally focused that are building large solar Farms um I was at one place where they had built a three megawatt solar farm with batteries so they were completely off-grid they were just totally independent of the grid now that requires a lot of capital and so that's the other challenge um but you're seeing for example in Kenya you have huge amounts of potential


geothermal energy because they have all this volcanic activity near the rift valley um which could be harnessed very inexpensively the problem is how do you get that energy from Kenya to South Africa for example and you can't transmit it 500 Miles yeah so yeah that's a an issue and uh you know Bitcoin solves part of that by being able to convert all that energy into a monetary store of value that then you can convert back into energy somewhere else can you do that yeah so so that's that's a way to do it


the challenge is as you mentioned the supply chain issues in South Africa you know you've got to get the uh the generators or the solar Farms you got the batteries you got to get all that stuff there so that you can take the Bitcoin you generate somewhere else use it to fund that but you still have a supply chain challenge so it it will get solved over time um and I think people are very ingenious and they're they're Innovative and they'll figure it out I heard that Cape Town is supposed to be fully solar in


the in a couple years yep absolutely which could be really interesting to see um I alluded in the earlier part of the show about regulation but your industry had uh its own regulatory roller coaster in the past couple of months there were supposed to be like the mccartan administration was supposed to put out like a Bitcoin mining tax or something is what's going on there is that is that all that still in the works no so the um Senator Warren and uh the Democrats President Biden uh were backing uh what was called the Dame act


which was essentially digital asset mining excise tax so applying a 30 excise tax on the energy used by Bitcoin miners to produce Bitcoin uh it wasn't meant to raise money in reality it was just meant to shut down Bitcoin mining in the U.S um under the belief false assumption that if you shut down Bitcoin miners there'll be more energy available to people and you won't have to turn on fossil fuel plants and it it gets into the circular argument about the fact that you know Bitcoin miners don't cause


more fossil fuel plans to get turned on if anything they cause more solar and wind farms to get built which when they get turned on helps the environment Bitcoin miners are predominantly over 50 percent users of renewable energy we don't use fossil fuel and miners like ourselves are very focused on operating as much as possible behind the meter at renewable energy facilities because we want to help those facilities grow and be economically viable now because of the debt ceiling discussions that tax got tabled and so uh there's supposedly no


new taxes for two years we'll see what happens there if that gets resuscitated but um is I'm hoping that all of this symbolic legislation and these enforcement shots are just like the current administration's way to like plant their flag in what's going on leading up to the elections I'm hoping that's what all this is because I don't understand why my beloved United States is like becoming so anti What We spelled what we've spent the last decade building yeah it's it's sad to see if you look


back at how important the internet was to the development of technology and what the U.S really benefited from the development of the internet um digital assets and all the technology around it is a very similar field and the US has decided to be more of a Luddite and shun it and allow other parts of the world to develop and adopt proper regulation as opposed to being a leader in this space so what's happening lots of companies are saying well you know it's too risky to operate in the U.S we'll move offshore and so you see


companies like coinbase and others starting to establish operations jurisdictions where there's much better regulatory Frameworks uh you know Europe has adopted the Mika framework now which will go live next year which provides some regulatory Clarity on digital exchanges Etc you have the UK is working on things Hong Kong is starting to open up and develop regulatory Frameworks Singapore UAE is very advanced in this space and so you're starting to see countries develop an openness to this and the U.S is trying to go in the


opposite direction I think now that being said um you know companies like FTX and the shenanigans that went on there uh you know that was a lot of bad stuff and so that's why this has become so politicized now it's kind of you know the uh Democrats uh seem to be very focused on trying to be the uh the good person here and and shutting down all this criminal activity the problem is uh they're doing it in a way that's really harming the overall industry you guys speaking of the industry you guys put


together like uh a half a million dollar pledge for Bitcoin core development thank you um that's really awesome are you following developments on that are you following like bip 300 or some of the you know the ordinal stuff that's been going on on top of Bitcoin how do you see Bitcoin in the near future so what we're starting to see now is uh a continued adoption of Bitcoin both uh from a user perspective so wallets with less than one Bitcoin in them so think of it as people who hold less than twenty eight thousand dollars in Bitcoin


are growing at a rapid rate but also wallets with more than one Bitcoin in them are growing which is tends to be higher net worth or institutional accounts um so we see developers also starting to shift over to bitcoin because a it's the most secure network it's the only truly fully decentralized Network that's outside of any corporate control or government control um and we're starting to see more and more development happen uh you know obviously lightning is a layer two on top of Bitcoin which facilitates you


know High Velocity transactions at low cost ordinals is a another use case though by the way ordinals work today by taking up actual block space means they compete with financial transactions for that block space which is inefficient and so I think what we're going to see is a lot more side chains and level two Networks where people will develop these applications you'll start seeing things like identity networks you'll start seeing networks for uh Healthcare data you'll start seeing networks for


ownership of properties and title and things like that where all that will be recorded on a level two or a side chain and then authenticated on the Bitcoin blockchain it's kind of funny that two things happen the the demand and the competition of all this other stuff on top of the Bitcoin main chain is causing the developers to finally you know uh take things like that 300 seriously where you can do side chains in layer twos and some of this other stuff and where it's kind of like pushing them into needing to do it which has been


badly needed for a while uh I think that's really really cool but at the same time um don't forget that a lot of these other blockchains were started because people wanted to do smart contracts and other uh Layer Two but a lot of this stuff started because the Bitcoin uh blockchain got really really uh competitive and expensive back in like 2015 when things started to heat up again and that's where like the block size Wars came from so now we're seeing like everyone wants what you just said Healthcare data Insurance products


you know mortgage products all these different things people want to build them on bitcoin they want to build them on the most secure network in the world are you kind of feeling that same thing absolutely and we're doing some development work in the area of side chains and other Technologies to help build that infrastructure you know we're big Believers in that we're not just a mining company we're also a technology company we have a fully integrated technology stack from our pool software orchestration layer firmware that runs


in minors uh controller boards and immersion technology that we're co-developing with other partners so we're also developing areas around side chains and the infrastructure to build these things we think that the more we can do to build the ecosystem and build the infrastructure so it's easy for people to develop things the faster adoption will happen as adoption accelerates there'll be more transactions on the Bitcoin blockchain transaction fees will grow and miners will have a revenue stream well beyond


the um rewards we get from uh from just mining from the blockchain uh you just you just reminded me of some of the question I wanted to ask you about software are you guys running stratum version two uh were working to incorporate stratum 2 into our pool and our miners you know again because we're vertically integrated in a way like apple is um we have the ability to adopt that very quickly because we run our own firmware in the miners we operate our own pool so it's easy for us to do that but yes definitely stratum two we think


is a very important technology man it's crazy like all these years later the uptime on on the Bitcoin blockchain it really makes me proud uh for for where we are today and how much we've grown it's just I don't understand the whole binance coinbase situation going on right now I don't understand what the SEC is doing I'm so lost yeah I think the you have to separate kind of um the enforcement the SEC is doing around true kind of uh activity that was focused on skirting laws or rules and


that may be dangerous to investors and consumers versus the fact that there wasn't a set of clear or there aren't a set of clear rules regarding certain tokens and other Securities and not and whether companies offering those are in violation of the law or not uh you have to kind of separate those two into different buckets and again this gets back to the blowback around FTX right what is real kind of criminal activity fraud Etc and what is lack of regulatory Clarity that causes companies to operate in a gray


area until regulation exists and I think the market structure um law that is being proposed in the House of Representatives is a great first step I think it's encouraging that the Democrats are engaging with the Republicans who have put forth that bill in negotiating it and I think we'll start we'll see uh a revised version of that be submitted here uh to Congress to the House of Representatives shortly and then we'll have to see how the Senate kind of takes the bill up but the fact that uh Congress is actively working on it means


that uh you know this may have an impact on these uh enforcement actions that the SEC is doing because the SEC has kind of acting uh as an enforcer without a clear set of guidelines if you would from Congress other than the old original laws around Securities which date you know almost 100 from almost 100 years ago and aren't yeah really applicable yeah it's like they're just follow they're just so new laws have to be passed I'm just I'm excited but I don't like to get too hopeful because I've


seen these things come out so many times and nothing and nothing comes of it so so we'll see what happens it's really cool that you see yourself as a steward of the industry uh because a lot of people will look at large Bitcoin mining pools is like try to look at centralized power but here you are implementing software that decentralizes power and it's almost like your incentive is to have Bitcoin as decentralized and have as much Integrity as possible as your financial business model like that's


your model for it to have as much Integrity as possible as a system well absolutely because if the system has full Integrity people will trust it and uh you know the difference between faith and trust is you know Faith you just believe something but you have no proof that it's actually true uh trust means you have faith plus you've actually seen proof that it's true so if people can trust the Bitcoin blockchain and its integrity and all of the Technologies related to it then people will develop things on top of it and


it'll flourish you know I think if you look at ethereum one of the challenges there is highly centralized from a control perspective you know if vitalik says ABC then that's predominantly what's going to happen um and you have the ethereum foundation then and so you also have um you know some issues that have occurred more recently with ethereum where you've had some outages uh which you know no base layer Network should have an outage ever um Bitcoin certainly hasn't had them and then you also have uh because of the


complexity of ethereum you know what makes it attractive to developers is that you can program it what makes it complicated to operate is you can program it and that adds security risks and all sorts of other risks uh if you think about the internet it's a very simple protocol it's based on TCP period right and then you have other protocols that run on top of that as layer twos you know you have email for example file transfer HTML all these are protocols that run at layers above the TCP layer Bitcoin is like the Internet it's a


basic technology that's very simple and I'm not trying to in any way dumb it down no just saying it is it serves one purpose right um and it's not programmable but you can do all of that programmability at layers above it and I think that's why people are now finally starting to move forward you know Taproot was a big move in enabling Next Generation kind of applications on bitcoin and you know whether it's bip 300 or others I think we're going to continue to see uh you know really good development um like you


like you mentioned you know we we did this uh Grant to the core Developers um and that was really important for us because uh you know the core developers they really are there volunteering their services and um you know it's very important that we support them as much as possible so that we can ensure a the Integrity of the Bitcoin network but more importantly that it continues to advance and innovate I remember I tell you a funny story um so the year is 2012 and I'm sitting or 2011 and I'm sitting with Gavin in a cafe in Austria


and I was like 21 years old and um uh um Gavin Andreessen who the uh Satoshi passed the keys off to uh at the time was the the Bitcoin core maintainer and um for for a couple of years and I remember we're sitting across and he's like Charlie I need to get paid yeah and so that's why we founded the Bitcoin Foundation actually uh and at the same time why we found that it is why we realized very quickly that that Bitcoin has no use for a foundation uh type of type of thing but essentially originally


the idea was to like bring advertising dollars together because the companies that existed at the time were just like my company bid instant Mount gox the some you know the Bitcoin miners you had slash pool and you had um a few other companies and you had Rogers memory dealers and we're like we need to start buying Billboards about Bitcoin and we need to pay these developers just in Grants to continue maintaining the software and uh it felt like a very purest thing but over time uh as Bitcoin grew uh there was like a


general pushback against like a centralized entity and I'm really happy for that because now you mentioned with ethereum Foundation that's the biggest problem is that you have when you have it's not about even how much control they have because a lot of people are going to write emails and say oh you know the the developers have all the control and ethereum and proof of stake and yada yada it's like I know I know I know more than you know trust me but the problem is is that the perception when


you have a perception of a leader or a founder or a centralized entity it loses that like decentralization it also creates someone that they can go after Satoshi leaving was one of the best things that he could ever the best gift that he could ever do for us absolutely absolutely no that's what makes Bitcoin very unique I think it's much more uh altruistic in its Origins than a lot of these other networks which are designed as businesses and you go back to the internet it was free so there was no economic model in owning the internet


other than the government wanted to control it um you know Bitcoin is a bit like that as well you uh I'm exciting myself here because I don't often get to talk about Bitcoin these days in in deep you know we're not even like deep but just more like the altruistic exciting part um with someone who knows this is really refreshing conversation um this weekend I was I was telling you earlier I was at this like um Financial Summit type thing just like a gathering of 20 or 30 people with my friend John and Jerry and he has his company Market


Market rebellion and um and um I was giving this very passionate talk about Bitcoin because it's all I know and love other than big a Bitcoin my wife and my dog and um guy walked over to me and he said you know it was really nice to hear someone speak so passionately positively about Bitcoin because all I hear lately about Bitcoin and crypto is so negative and it literally made me want to go and cry because he's right it's been so negative lately there other than me and some other holdouts it's just been all


negative on and so like this has been a very refreshing conversation thank you you guys are investing in a lot of stuff too which has been really great I just I just read a list thank you for that yeah absolutely no we think the uh you know the industry needs uh needs help and so we're very focused on investing in everything from Asic development down at the hardware layer all the way up through the software stack and and into the application layer so we think the more we can do to kind of ferment good ecosystem the better you


know in companies like Intel Microsoft Apple all have done that to develop their ecosystems and we think that you know the Bitcoin miners um really have a responsibility to help do that you guys are developing software to make it more efficient to mine Bitcoin I'm reading um at the same time Asic development has gone gone a long way further decentralization for Bitcoin so we've tackled the environmental concern is there any any other like Bitcoin centralization attacks that you hear people pointing to like oh only a few


pools can control Bitcoin but like what do you say to that well I think uh you know when you look at the pool issue um one of the reasons we run our own pool is uh we want to be fully in control of our own kind of Stack if you would because we can optimize it to operate most efficiently that way but more importantly we don't want to be uh under somebody else's control now stratum 2 that you mentioned earlier is a technology that will enable miners to become more in control Take Back Control from pools and our pool doesn't have any


third-party miners it's only us so uh stratum two for us is more of a technology enhancement around efficiency but for miners who are mining on third party pools it adds it gives them their power back if you would um no pun intended um yeah to take control of uh their hash rate and so I think it's really important for the industry uh you know as we see this kind of concentration of uh mining pools um you know in some case is some pools have over 30 percent of the network hash rate and we you know personally think


that there's risk there um you know there were some issues with poolin's pool for example last year or the year before so you know we think this is stratum two is going to be a very important part of continuing to decentralize the Bitcoin Network do you do you ever Envision a world where you can't mine Bitcoin in the United States anymore um it's something we're thinking about always you know we're constantly focused on resilience the bigger of a mining operation we have the bigger risks we


have the and so we're very focused on expanding globally um at the same time as we're expanding in the U.S so our goal longer term is to be 50 outside of the U.S 50 in the U.S because we think um it has all sorts of prudent reasons one is there are different climates in different hemispheres of the planet so yeah you can find cooler temperatures when it's warmer in the U.


S in the southern hemisphere there's plenty of renewable energy that's stranded and hasn't been developed yet in places like Latin America Africa and Asia Kenya you were just saying too yeah yeah so we you know as you keep seeing this industry develop I think you'll start seeing Bitcoin miners actually focus on owning and investing in power generation uh you know we're very focused also on looking at methane uh emissions from landfills and being able to mine using those gases because methane is 80 times more


damaging to the environment than carbon dioxide and so if we can use methane as an energy source for our Bitcoin mines we're actually helping the environment and at the same time we're providing a revenue stream for landfills so they can continue to improve the ecological aspects of what they're doing so that you don't have all of this trash leaching into groundwater and things like that are you are you able to pay your vendors in Bitcoin for this are you able to create a circular economy using


um you know I I think it's difficult at kind of industrial scale because the counterparties worry about the volatility in the in the price of Bitcoin now Bitcoin of late has been showing very little volatility and it's actually the risk-adjusted return of Bitcoin because the decrease in volatility has become much more attractive for people because the risk of volatility has gone down interesting so people you see people buying it or like wanting to mine it well it's people wanting to hold it as an asset and so uh


if you say that again you think that the risk adjusted so the risk adjusted return on an asset is basically how much is it what's your return on investment uh weighed against the risk of volatility and so if something is highly volatile but has a huge return then it's risk-adjusted return maybe uh attractive now Bitcoin because its volatility has decreased if you look over the past five years there is no asset that has had a better risk adjusted return than Bitcoin it's one of the by a long shot and you know Michael


Saylor talks a lot about this other people talk a lot about this but um Bitcoin is becoming um more stable now the benefit there is it then becomes more attractive to institutional investors and um you know business users but I think we have a ways to go yet before in the U.S we'll start seeing circular Bitcoin economies develop what do we need to get to where we saw like year-over-year growth of the Bitcoin price it like like what would be a great like a seven percent price like what would you like to see that creates like


a stability but also a good investment class like real estate or like a bond or something right so um that number do you think yeah we have to think of it this way the the having happens every four years so you have to essentially double the price of Bitcoin every four years given your energy costs are constant plus you have to then layer in the fact that the global hash rates increasing along the way as well which increases the cost of mine Bitcoin so the the you know the mining industry needs to get transaction


fees increasing to maintain its viability long term Beyond not this having but the having beyond that I think um but that doesn't affect users of Bitcoin it affects miners do you uh you ever think everyone thinks that Satoshi was some sort of mathematician or whatever do you ever think Satoshi was maybe some sort of like engineer or or something in the energy field instead because the the creating of like a monetary unit that that tracks the cost of decentralized global energy in real time this is that is the


invention in and of itself yeah I I don't know I think Satoshi may have been one or many people uh may have been a team effort it's hard to say but regardless it's an amazing thing it really is it's so cool they I really appreciate it and there you have it everyone another probably one of an amazing eye-opening episode of the Charlie Trump show a huge thank you huge huge thank you to our Bolding and candid guest Fred teal thank you so much for joining us today uh thank you so much to my value listeners for tuning in we


continue to push boundaries every single day and challenge the Norms because we believe in the power of conversation Bitcoin and crypto and its ability to spark change it's the only way we can make changes by continuing to talk about these things and correcting the wrongs and and you know exploding the rights if you found value in today's episode please subscribe to the show please leave us a review your feedback fuels the show it helps us bring us more amazing guests follow us on Twitter Twitter remember keep asking questions


I'm Charlie Schram signing off keep challenging the status quo