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Will Bitcoin Price Skyrocket Or Collapse Post-Halving? | Marathon Digital CEO Fred Thiel

March 29, 2024

In this video, Fred Thiel, CEO of Marathon Digital Holdings, addresses the control of the Bitcoin network by miners and node operators, the consensus mechanism, and the impact of the upcoming Bitcoin halving on price and mining costs. He also discusses Bitcoin's performance in the market, the adoption of Bitcoin by companies and countries, and the long-term sustainability of Bitcoin mining.

0:00 - Intro

1:50 - Why did Bitcoin rally?

4:40 - Long-term Bitcoin outlook

11:08 - FASB accounting change

14:39 - Developments on Bitcoin

17:00 - Can miners control Bitcoin?

21:50 - Bitcoin mining and halving

24:37 - Bitcoin price post-halving

27:47 - Energy commodities and Bitcoin

32:50 - Bitcoin mining costs

Transcripts are autogenerated. May contain typos.


holders of Bitcoin cannot change the network which is an argument for holding Bitcoin because it's decentralized the other narrative that's common in the Bitcoin Community is that miners however like like Marathon for example have significantly more control over the network and changes to the protocol uh can you address this well I you know miners can't change the protocol at the end of the day it's a consensus mechanism and you need to have the vast majority of uh the consensus makers which are the not just the miners but


also the node operators there are a lot of node operators that aren't minors um thousands and thousands and thousands of them and if you go back to the period of the block wars in 2017 you had 90 plus perc of the miners wanting something to happen and it couldn't happen because the node operators wouldn't validate it Bitcoin having is coming up in a few weeks what will likely happen to the price post having and what will happen to Mining cost post having we'll talk about these issues with our next guest Fred teal CEO


of Marathon digital Holdings one of the largest Bitcoin miners in the US first a word from our sponsor itust capital and Ira that offers 35 crypto assets and the lowest trading fees in the crypto Ira space at 1% I trust also offers unique tax benefits so if you'd like to learn more click on it trust.


Capal David in the link down below remember if you use my referral link down below you can also get a $100 US funding bonus if you fund an account with itust using that link remember if you're over 18 and you want to open a new account or roll over an existing account you can do so just click on the link in the description down below Fred welcome back to the show good to see you great to be here uh let's start by talking about uh what happened in the C last couple quarters since we spoke uh late last year many um theories as to why Bitcoin has rallied


the way it did uh certainly the a Bitcoin ETF approval was one of them but keep in mind it was approved in January the rally continued since January um was it as a result of the continuous inflows into these ETFs that propelled the price up to current levels or perhaps it was something else Fred well I think it's a combination of the ETF approval accelerating the normal um cycle by about six months so the the uptick in the price of Bitcoin we would have seen in this fall October kind of Q late Q3 early Q4 was pulled forward by about six


months um you're seeing you a very interesting Dynamic uh the ETF has attracted Capital that previously was invested in mining Equity stocks so stocks in companies like Marathon some of that flowed uh out of those stocks and into the ETFs and then you also have considerable outflows you know gbtc has seen almost 50% outflows of its original Bitcoin balance from um when the ETFs launched um and so you're now seeing significant outflows from gbtc a lot of which has likely flown back into the other ETFs uh you had a


lot of people who bought shares in gbtc at 40% discount when Bitcoin was at5 and $20,000 and um now they're obviously monetizing that and then reinvesting some of those proceeds but essentially most of the ETF inflows have really been retail dollars at this point you know it's still as an institution a little bit hard hard to um invest in these ETFs and as anybody who maybe banks with BFA or some of these other large Banks finds um you know you have to literally ask permission to almost buy these ETFs


through the banks if you're using their brokerage account so yeah I think we're still early in the adoption cycle from the ETFs but essentially what's happened is the normal Bitcoin cycle has moved forward by about six months um so I think we're going to see a kind of bumpy sideways Road here around 70k um you know if Bitcoin breaks through 70k with strong momentum then we may see another um run up but um I think at some point here the market has to consolidate uh we've already seen uh some of that


happening on the equity side I think we're going to start seeing it here on the the ETF and the spot Market side I know you don't usually give price predictions so I won't ask you that explicitly but I would ask you to address or um respond to Kathy Wood of arc's predictions uh she has updated her forecast a few months ago she now sees $600,000 by three 2030 that's the base case um perhaps 1.


5 million I think it's I think the Assumption here is that Bitcoin will continue to advance alongside technological innovation I think that's always been her um underlying assumption here can you just address that forecast uh whether or not it makes sense to you well if you think that Bitcoin historically has grown increased in value anywhere from 20 to 35% a year kind of on average over the period of time then you know at 70,000 today going forward to 2030 you're looking at six years yeah 30% a year appreciation that's totally doable um we don't look


out quite that far I mean we limit our Outlook um you know kind of internally to about 2028 and while we don't publish pricing forecast um you know we believe that likely and this is more really my personal uh belief that Bitcoin really if we look at the short term will end this year somewhere between 50 and 100K it's hard to tell um next year likely getting close to 200k potentially uh at the high end otherwise most certainly somewhere in the 125 to 150 range most probably and then it's a question of does the


cycle repeat and you have a bit of a bare Market or are we done with historical cycles and because of the ETFs and longer holding institutional interest in Bitcoin do we start seeing less volatility which also means potentially Less Price appreciation um on a long-term basis uh other than that driven by pure you know supply and demand you again most people think of Bitcoin in compar to gold or other Commodities the key difference between Bitcoin and gold is that there's a finite Supply there's only 21 million


Bitcoin arguably 4 million of that 21 million have been lost and we still have yet to mine about a million of it so you're talking about potentially 16 million Bitcoin that could be tradable on any given moment um most Bitcoin sits uh off exchanges in cold wallets hasn't moved in six to n months over half of Bitcoin hasn't moved in five years uh all of which says at some price point that Bitcoin will move of course but I believe that with the finite amount if you start seeing you know one um percent


of 401k assets beginning to be allocated to this type of an asset class over the next say five to 10 years uh there's not enough Supply to uh provide that level of investment in Bitcoin without the price going up significantly so I I think all of the longer term indicators are that price will go up the question is by how much and how fast and will there be um profit taking and drops along the way the one thing I think that is certain is while longer term volatility will decrease in the short term because of the amount of Bitcoin


that's not on exchanges and the time it takes to get Bitcoin to exchanges from offchain wallets uh we'll see a lot of volatility in the price you know swings of 10% in a day will be normal fodder I think well it it's not normal today um you know I think what you've seen is typically Bitcoin has been for the past year quite stable actually with little spurts of run-ups but you you look more recently in the past few weeks you've seen a couple of days with a 10% drop or fluctuation in the price of Bitcoin


intraday and um while if bitcoin's at 600 and it moves $60 people don't react well when bitcoin's at 68,000 then it moves $6,800 people do react um so again it's just a question of the volatility your outlook for Bitcoin uh is it factoring in Market forces for stocks or the broader economic landscape or do you think Bitcoin per your forecast will move more or less independently based on its own Supply demand fundamentals so you have to look at what money it is that is going into Bitcoin that is creating the demand so you have


normal demand that is you know if uh the markets are moving towards a risk on bias then you're going to start seeing more Capital allocated to higher risk assets which would obviously benefit Bitcoin uh that doesn't necessarily mean that the equity markets are going up at the same time you can look at the macroeconomic situation today and what you're seeing is one where you have persistent inflation pressures you have persistent geopolitical pressures and um let's just say exogenous events that are


causing some of that uh inflation to remain very sticky geopolitical situation in the um Suz area that's creating shipping challenges uh you now also have the Port of Baltimore issues which is another exogenous event that's going to create some form of impact on the inflation side uh while you're starting to see unemployment take up many Industries especially on the services side still haven't seen the downtick in employment manufacturing has seen it so I think that we're either going to go into a recessionary period


in which case people may decide to put actually more money into assets like Bitcoin which tend to be anti-inflationary and maintain value um but at the same time there'll be less risk assets available so it's going to be very interesting to see how Bitcoin behaves because it acts a little bit like a chameleon or a leopard rather and that it changes Its Spots uh if you go back to During the period of covid and all the subsidies there was a lot of money people bought a lot of Bitcoin things like that stocks Etc then we had


um the drop in Bitcoin and then all of a sudden Bitcoin started acting like an inflation hedge again so Bitcoin changes its meme if you would uh and its bias a little bit depending on the types of investors who are buying or selling Bitcoin at any given moment and I think what we're going to continue to see is Bitcoin have more uh pressure to move price upwards than to move price downwards in the near term one group of of not so much investors but entity that could hold Bitcoin is probably just corporations you and I spoke about the


changes in the fby accounting rules um last year late last year it happened in December of 2023 fby issued the accounting standards update 20 uh 238 uh which basically uh allows companies to record crypto Holdings at fair value where uh changes in Fair Value to be recorded in the net income uh rather this is a change from prior Accounting Standards where crypto assets were accounted for at Cost Less impairment uh what do you think this change means for companies and whether or not it would incentivize companies to


hold more or less Bitcoins well I think it clarifies how Bitcoin uh is reported which is 9/10 of the battle in this case because if a company's going to hold Bitcoin on the balance sheet they have to have a very clear ability to hold to report on it and investors in those companies have to have a very clear ability to understand um how the value of that Bitcoin is going to change over time and by the old standard where you could only impair its value you know Bitcoin might have been at 100,000 and it that Bitcoin may have


been impaired down to 15,000 which was kind of the low point of the most recent draw Downs um and you would have this Delta between the real market value of the asset versus the book value now there Clarity you essentially it's Market to Market treatment which makes it much easier so essentially a company will hold Bitcoin on their balance sheet just like they hold cash now does that mean they'll hold they're likely to hold more of their Assets in Bitcoin I think over time yes it's going to take a while


but I think you're starting to see uh companies begin to evaluate it as a way to store cash uh you know your Alternatives today are to put money into uh T bills uh you're going to get 5% five and a half percent something like that so what's the alternative and Michael sailor has for years been the advocate of taking corporate assets and putting them into Bitcoin and while he has accumulated more Bitcoin than most companies would feel comfortable with uh it certainly has worked out quite well for him so I think it's really something


that companies are going to evaluate but it's not just companies it's countries are also evaluating this there are sovereigns who want to hold assets in Bitcoin why because it can't be controlled by another government and having sovereignty over your assets is very very important especially as a commodity producer um so I think you're going to start seeing more countries holding small amounts of Bitcoin in their balance sheet uh as Bitcoin begins to continue to permeate the Institutional Investor base and then


you're going to see all sorts of derivative products that are Bitcoin um uh related uh products you'll see uh options you'll see the funds that short Bitcoin versus go long Bitcoin you'll see all sorts of different investment instruments that companies will be able to use to get exposure to bitcoin without actually having to hold Bitcoin in a wallet so I think uh the fact that it's now readily available with institutions you know you could go to Fidelity and buy and sell Bitcoin um spot Bitcoin directly or you


can use ETFs you can use all sorts of different things uh that make it easy for corporations to hold it now with this new reporting it's easy to report on it and uh are there any technological innovations built on the Bitcoin layer one that may prompt people to hold more Bitcoin that you're looking out for well I think on layer one it's more about the fact that the Bitcoin is the most secure place to store something um and so what you're really going to see is innovation on Layer Two where because


there's only one Bitcoin block minted every 10 minutes that level of transaction speed um does not work well for Bitcoin to act as a medium of payment but it does work well as a store of value and so what you're going to see is more systems like lightning built on layer tws with Bitcoin that act as that means of payment you're going to see all sorts of data stored at Layer Two with the security anchored in the Bitcoin blockchain you're going to see digital identity products launched which is


likely the next big use of the Bitcoin blockchain uh where people will essentially have a digital ID it's a think of it as a token that once you have validated your identity with some form of authority say a bank government whatever it might be they issue a token that is now your ID your kyc if you would uh and whenever you need to do a transaction with somebody and they need to validate your ID you simply show the token and um they can validate that it's real without getting the underlying data it's part of this concept of zero


knowledge proofs and when you get to that level then people can have trust without actually having the underlying knowledge about the person because there will be a token that validates they they are who they are um and they have done full kyc same thing with your health data you go to a medical professional you give them access to your health data via token they can use it they can read it they can update add new data to it U but they can't copy it and then when they're done using it they no longer


have access to it and will absolutely kill ransomware there's no way for ransomware to operate if it can't re-encrypt the blockchain which it can't do so speaking of the uh the network itself so I've heard uh the narrative that holders of Bitcoin cannot change the network which is an argument for holding Bitcoin because it's decentralized it doesn't matter how many Bitcoins one particular entity holds that particular entity cannot have more control over the network than somebody who owns maybe only a fraction of one


Bitcoin uh the other narrative common in the Bitcoin Community is that miners however like like Marathon for example have significantly more control over the network and changes to the protocol uh can you address this narrative well I you know miners can't change the protocol at the end of the day it's a consensus mechanism and you need to have the vast majority of uh the consensus makers which are the not just the miners but also the node operators there are a lot of node operators that aren't minors


um thousands and thousands and thousands of them and if you go back to the period of the block wars in 2017 you had 90 plus% of the miners wanting something to happen and it couldn't happen because the node operators wouldn't validate it so it's a consensus mechanism you have to have over 50% of the consensus contributors the node operators miners Etc all vote for and signal for something so as an example when tap rot which was one of the more recent changes to the Bitcoin core Network uh was approved it was


approved because miners signaled they were going to accept it and node operators did as well and eventually you got to 90% and it was approved so there's a very high hurdle for anybody to change anything programmatically in the Bitcoin blockchain uh and then the only way somebody could change data that's recorded on the blockchain is to do a proverbial 51% exploit which is virtually impossible because of the share cost to do it you would have to accumulate as much compute power and energy to run that as 51% of the


existing miners uh on the Bitcoin blockchain which would mean you would have to have over 300 x aash of capacity the minute you add 300 x aash of capacity to the network total network capacity would go to 900 you would now have to grow to 450 and then every time you're adding you're only making your number bigger and so it it is it becomes hundreds of billions of dollars to even try to do an exploit so um the long of it is to change the software protocol it takes the vast majority of people involved with Mining and node operators which is


a very high hurdle um and to try and change go ahead can M theoretically band together and perhaps just as one example change the hard cap of 21 million no is that that's not mathematically possible no because it's not for the miners to do you have to change it in the actual code of Bitcoin so miners would have to choose to Fork Bitcoin to something else and then do that that's essentially what happened in 2017 is you had a fork you had Bitcoin cash as it's called or classic Bitcoin and then you have


current bitcoin and uh while there are still people that mine Bitcoin cash it is much much smaller than Bitcoin um and the Bitcoin that we have today is uh based on true consensus so yes you could group of miners could band together and Fork Bitcoin but they would have to get the vast majority of the users of the Bitcoin blockchain to go with them which they're not going to do very easily if they're changing the hard cap right um can you explain the relationship between the hash rate and the price is there a


definitive causation for one variable to affect the other well rate doesn't necessarily change price it's the other way around as the price of Bitcoin goes up and the profitability of mining goes up miners are incentivized to add more capacity and when they add more compute the global hash rate goes up so think of the hash rate as the sum of all the compute power applied to the Bitcoin blockchain so miners can't in theory miners can't hypothetically collude to just you know lower the hash rate and bump up the


price would that make any sense no well if you lower the hash rate again hash rate doesn't drive price price drives hash rate it's the other way around so if the price of Bitcoin drops if the price of Bitcoin drops dramatically hash rate will drop because a lot of people won't be able to mine Bitcoin profitably if the price of Bitcoin goes up dramatically more people will order you know more miners will order more machines they'll build more capacity because there's more profit to be extracted in that way Bitcoin


operates very much like gold or petroleum markets you know if the price of oil drops oil producers shut down their oil rigs and their production if it goes up they turn them back on it's the same thing with Bitcoin miners you add capacity when price is high you shut down capacity when price is low well let's talk more about mining itself uh you are an expert on Bitcoin mining after all uh let's talk about having it's coming up in a couple weeks how do you think the Bitcoin mining costs would


be affected post havening well essentially your marginal cost to produce will double uh so to produce Bitcoin if today it costs you I'll use $20,000 as a round number to produce Bitcoin then uh and that is your cost of energy um to produce Bitcoin then your cost to produce a Bitcoin post having would be $40,000 um notionally there are some slight differences your operating expense that is non- energy related relative to mining Bitcoin it does not double that cost doesn't double it just takes twice as much compute to to


generate the same number of Bitcoin and so what ends up happening is essentially if you have you know uh 10% of the Bitcoin Network in your mining Fleet uh the capacity of the Bitcoin uh Network then instead of producing um 90 Bitcoin a day you're going to get 450 Bitcoin a day but the amount of energy you're expending is going to cost you the exact same so that 45 Bitcoin will cost you what 90 Bitcoin cost to produce before the having right and suppose the price doesn't appreciate to the same extent as


the mining costs do uh what would the miners do in that case would they scale back on on on mining or would they realize a loss what would be the appropriate course of action from someone like Marathon it it depends on the nature of the energy contracts if you have energy contracts that are power purchase agreements where you have to take it or pay it meaning you either consume the energy or you're just going to pay for it anyway then there is um no real incentive to shut down completely because if you were to shut down


completely you're still paying for the energy but you're generating zero Revenue however you would have an incentive to keep at least operating seeing as you're paying for the energy and you'll generate some revenue and it'll cover some of your cost so there's a a reason to keep producing even if it's at a loss because it's less of a loss than if you just shut down completely in the event where you have an ability to sustain that because you have cash on your balance sheet as a


minor then you know that could go on for a long period of time potentially um in the event you are able to uh tell the power company I'm not going to take this power it's yours and you don't have to pay for it then yes those those miners will likely shut down immediately um and wait out the the drop in the in the price what do you anticipate could happen to bitcoin post happening this cycle uh people have speculated that it will just history will just repeat itself because Bitcoin has always gone


up in Prior havening cycles and so why would this time be any different um have you observed any evidence at this time could be different well I think you need to look at the supply shock right now we have a demand shock because of the ETFs that's what's been driving price up um as you get and that's you know a demand shock to the tune of about 2,000 Bitcoin a day if you look at the having we're going to go from having 900 newly minted Bitcoin a day to 450 a day so you're taking the total new emissions of


Bitcoin if you would the total Supply that is being newly introduced on a daily basis will go down by 50% will go to 450 Bitcoin in a day when typically four to 5,000 Bitcoin are trading hands a decrease of 450 in new Supply will likely have some impact on price um though it's hard to determine what it might be so there's going to be a small Supply shock it's not a big Supply shock it's a small Supply shock but it's still 10 to 15% of typically the liquidity in the marketplace and again these having


events will have less impact on the price of Bitcoin over time as liquidity in the market for Bitcoin increases so if 10,000 15,000 20,000 Bitcoin are trading hands uh a day um then that's very different than if only a couple thousand Bitcoin are changing a day right so it's very likely that what we'll see is there'll be some upwards pricing pressure on bitcoin um post having and uh again as I said earlier when we were talking about price predictions you know likely we'll end this year above the former all-time high


um and then we'll see another runup likely in 2025 as more adoption happens but it's really the cycle post the peak um so post the next year Peak that will be different going forward and that's something we just it's a hard to tell because it's a question of institutional demand for Bitcoin and how's that going to change will adoption continue at this current Pace in which case there will continue to be a deficit in available Bitcoin in the marketplace so there'll be a continued demand shock so price


will go up there'll be scarcity uh in the event all of a sudden uh there is some major event that causes the price of Bitcoin to drop you may see the supply glut in which case you may see price decrement uh quickly I I think we're in unknown territory and everybody is I think uh many people are betting on the long term that yes it's going to go up so I'll keep investing but people are kind of keeping their fingers crossed that something doesn't dramatically change negatively uh while they're making these Investments we're


very optimistic about longer term opportunities with Bitcoin and obviously what we're doing and how we're investing and I think the rest of the industry is on a very similar track speaking of mining production are there any energy Commodities that you think have the most impact on uh the production of Bitcoin for example uh suppose access to natural gas or oil were limited because of tensions in the Middle East or attacks on supply lines uh which Commodities would have the most impact on bitcoin production well it's the same


Commodities that have an impact on inflation in this country and the reason I couch it that way is if Energy prices go up it affects the consumer uh that is inflation and that effect on the consumer is something the FED is very focused on and you know they're fighting two battles inflation and unemployment so so if you see high pressures on energy costs which means energy prices are going up gasoline's going up natural gas will go up all those things will go up uh impacts Bitcoin miners yes Bitcoin miners


typically have longer term agreements for Energy prices uh they're hedging their bets just like any large Industrial company Hedges its commodity risk um but that being said you're going to have a Fed that is going to want to accommodate and loosen to keep those inflationary pressures from driving which will then bring uh easy money into the market which will impact the price of Bitcoin which will drive it above whatever the commodity cost increase is and that's been kind of the historical Norm but right now we have a glut in


natural gas pricing I mean natural gas pricing is uh way below where it was a year ago uh primarily driven by the fact that on the one hand we can't export more lfg than we do today and the all that Natural Gas is backing up in the market here locally and the us today is producing more oil and natural gas than it has in history it's one of the largest producers in the world and uh until that stops I think um you know we'll continue to see uh you know good good pricing uh on Commodities well let's just take Marathon digital as


an example um what energy sources are predominantly behind the production of your Bitcoin so we're F we're predominantly renewable so 56% is solar wind Etc um and the balance is a mix of natural gas nuclear other things so the natural gas component of our Energy Mix is obviously impacted by commodity pricing you know solar and wind the good thing is there's no marginal cost really to producing that electricity and so uh those prices remain fairly constant what we're also doing is we're very focused


on moving into we call Energy harvesting and this is where we're taking True stranded energy in the form of methane gas landfill biomass and other sources of energy converting that into electricity and then using Bitcoin mining as a way to generate heat which we can then sell back into an industrial process or another commercial use case what that means is essentially as a Bitcoin miner my cost could potentially go to zero and when my cost for energy is zero then can mine Bitcoin no matter what the price of Bitcoin is no matter


um what the global hash rate is can you just elaborate one more time how would the cost go to zero hypothetically well because uh for example there are uh situations where you can be paid to take biomass or you can be paid to mitigate methane you take methane flare you mitigate it you get renewable energy credits for that those credits can be sold for quite a lot of money um you then generate electricity with the methane gas or the landfill gas or the biomass um that electricity has essentially cost you nothing because


you're getting paid for the the renewable energy credits or you're being paid to mitigate uh or take that biomass and process it and then if you can sell the heat from the Bitcoin mining operation Bitcoin miners are great sources of heat and if you capture the Heat and reuse it by the way 50% of the energy used by industry today is used for heating things so there is a natural um virtuous cycle between taking biomass and uh waste essentially from certain process Industries reusing that to create energy and then feeding the heat


back into the industrial process you are now being paid to take a waste product process it you're being paid for the heat you're producing for it and this is before you've even mined a Bitcoin and then those two Revenue sources can offset potentially your energy cost for mining Bitcoin okay uh if somebody were to say to you well I guess at least my next question if somebody were to say to you I'm concerned about whether or not a Bitcoin miner as a business is sustainable over the long term I'm talking about decades


down the line as the cost of mining inevitably go up to a point where it may not be sustainable for many businesses or that computing power becomes so great then well the necessary computing power becomes so great that we no longer have the capacity to mine Bitcoin at scale how would you respond to that well let say two things uh or actually three things one uh there's a floor on what energy costs right uh natural gas pricing won't fall below a certain level um wind solar won't fall below a certain


level uh so there's a floor as to how low Commercial Energy pricing can go uh the only way to get your energy cost lower is to generate your own energy as I just explained a minute ago and so um what will happen is eventually Commercial Energy will become too expensive for Bitcoin miners to use why well for one thing you're going to see a um with more batteries at utility scale more energy storage mechanisms at the edge such as homes with solar and Battery Systems the curve on energy demand during the day the duct curve as


we call it which typically has a lull um uh there's a glut in the middle of the day and a shortage in the evenings uh to simplify it that will normalize because people will take that energy produced at the middle of the day when there's too much of it because there's lots of solar and lots of wind and they'll store it and then they'll make it available at night when there's a shortage when the sun's not shining for example so as soon as you even out the cost of the amount of electricity that's being pulled by


the grid that evens out the cost then Bitcoin miners are going to be incentivized to go look at alternative ways of generating energy because because they can't play this role of load balancer on the grid anymore the other thing that's happening and the more important Delta is the AI industry has um potentially 10 times the demand for energy that Bitcoin ever could have and it's already growing to the point where it's going to be eclipsing Bitcoin soon what that means and they are prepared to pay much higher prices for


energy so Bitcoin miners will essentially be squeezed out of markets where AI data centers could potentially operate because they are willing to pay higher prices for energy they're willing to pay higher prices for infrastructure a typical AI data center is a 8 to 12 times more expensive infrastructure investment than Bitcoin mining and the only similarity they have is they both consume energy to a great scale so Bitcoin miners will over time be forced to essentially go into the business of generating their own energy or finding


energy that is free essentially um and doing things where Bitcoin mining is just a byproduct of what they're doing and I think that is the longterm um trend for Bitcoin mining and it also means Bitcoin mining will move from large utility scale sites which is the typical standard today down to a long tail of small uh implementations where it's maybe one megawatt 2 megawatt 3 megawatt and that requires systems that are very self-contained very redundant uh very automated and that's the core of our technology Investments


over the past few weeks we've announced a number of technologies that essentially will form the basis for the ability to mine fully remote fully hands-off small scale with very high efficiency uh anywhere uh well do do you see us miners continuously being competitive with other miners in other regions in other words how can you remain competitive um with Min in regions that may be more Pro Bitcoin or crypto friendly in nature well I think it's more miners are going to continually Chase cheap energy so if


energy becomes too expensive in the US miners are going to go to Latin America where there's lots of stranded energy they're going to go to Africa where there's lots of stranded energy and you don't have these grid balancing components that create big incentives for batteries or other utilities you have other issues and so miners will continue to Chase large energy sources that are inexpensive internationally they're going to deal with regime risk all of the other issues related to operating in those countries um but I


think the longer term if you look over the course of the next two decades Bitcoin mining will migrate to the longtail it will move away from utility scale Bitcoin mining will be built into all sorts of industrial processes such that it's really just a way people are generating heat um and then oh by the way they're also so mining Bitcoin at the same time are you interested in pursuing a strategy of Acquisitions which is to say acquiring smaller miners to diversify your portfolio yes we've been doing that uh


over the past uh recent months we've done two major Acquisitions uh acquiring hosted providers where we actually had some of our miners running so we've now transitioned our Fleet from uh really uh 3% owned and operated back in December to now over 54% owned and operated when you think about the actual physical infrastructure in the sites and we'll continue to do that um both for growth purposes and also for uh vertical integration purposes okay um just out of curiosity which which jurisdiction in


the world does have the cheapest energy in abundance oh gosh the US is uh definitely a leading Source um parts of Texas uh if you have the right type of PPA can be very attractive uh there are parts of Africa where you can find very attractive energy costs um and there are parts of Latin America too so it's it's available all right um finally uh are you ever concerned about computing power not keeping up with the demands of Bitcoin mining um if Bitcoin mining requires more and more computing power in the future are you concerned about us


not having enough of this power to make Bitcoin mining a scale efficient well if you think about what it is that makes Bitcoin mining efficient part of it is the amount of energy that the mining rigs the compute power consumes to generate one terahash or think of it as uh you know one horsepower of compute power um and you know if that progression downwards uh in cost to produce a Bitcoin thes is to happen uh yeah you then have to seek efficiencies in other places which means getting lower cost energy you have multiple inputs if you


would uh you know if you have free energy for example if you have solar panels in your backyard you can use old technology to mine Bitcoin because your Energy Efficiency is not important but um if you're doing it at scale yeah you want to have the latest and greatest always and you know nowadays you have us-based companies developing technology for Bitcoin it's not just offshore companies and so I think we're going to continue to see like any technology industry uh continued Innovation right well Fred I appreciate your time where


can we learn more about um either yourself or Marathon you can find me on Twitter at uh FG t iel or Fred mar.com my email address or just mar.com m.com okay perfect we'll put those links in the description down below thank you very much for your time today Fred thank you thank you for watching don't forget to like And subscribe