Bitcoiners, welcome back to the Bitcoin Magazine Podcast.
I'm your host CK and I have another mining podcast for you.
Everyone here knows that I am extremely interested in mining.
So every time I get a chance to bring on a Bitcoin CEO in the
mining space, I jump on that and this is going to be a really
exciting interview. I'm talking to JP Barrick from
the mining store and we are going to jump into his story as
well as what is happening in Bitcoin mining right now.
A lot is happening. It's really exciting.
We are just going over all of the different compelling things
before we got on this call. So without further ado, JP,
welcome to the show. Thanks for having me.
I'm excited to be here today and chat about the craziness going
on in the Bitcoin mining industry.
So JP, we're just getting to know each other here.
You're the CEO of the mining store.
Why don't you talk about how you got into Bitcoin?
Why Bitcoin mining? So I got into Bitcoin in 2013
when I was in high school and I got into Bitcoin mining by
buying a Butterfly Labs mining machine.
That the the joke was it was always going to ship 2 weeks, 2
weeks, 2 weeks. And about two years later when
it wasn't making much money, they finally arrived.
It was just little Butterfly Labs, I think 5 gigahertz
machine. So now machines are 150 Tera
hashes, which is insanely more efficient and effective.
So I got in. I started the mining store as a
way to help other people get into mining as a way to sell
graphics cards to do GPU mining to my Ethereum.
And then as that progressed, we started running Bitcoin mines
and building out Bitcoin mines and making Bitcoin mining
accessible. And that's why I enjoy building
in Bitcoin mining, because anyone can participate in
Bitcoin mining and can make can make an income on it.
As long as you're, you know, have access to electricity, you
can make money mining Bitcoin. There's no barriers to entry,
there's no licenses you need. And so to me, with a computer
background and wanting to build computers and explore how to
make money with computers, it just was a perfect fit.
No, I mean, I think that that is really interesting.
Let's talk a little bit about Bitcoin.
What about it captured your attention?
So for me it was this idea that money was separated from state
and that with Bitcoin there could solve this Byzantine
General's problem or could solve the ability to gain consensus
online without the need for a central authority.
And for me, I was like okay, this seems like it might just be
more than, you know, another digital trend that's going to go
go away. And also obviously the price,
you know when you're looking at Bitcoin, you're seeing it's oh,
it's trading. And at that time it was like
60-70 dollars and they got all the way up to like 100.
Dollars plus and I was like oh, I want to I want to get in on
this like I need to you to jump in and and buy some coins and
that price action always accelerates the the adventure
into any asset or any technology.
And so for me it was trading. It was a way to spend time in
school and learn about these technologies, and then it was a
way to create value through the mining process and understanding
that, like I said, anyone could use energy to create an asset
that's scarce and that that fact, that asset was created
with. Electricity was something that I
was intrigued by at a young age. So that's a really interesting
point. I agree.
I think like the fact that you don't have to register, you
don't have to buy coins from somewhere else, so you can just
plug in a machine and go. And that machine could even
really be commodity hardware. It's not gonna make you too much
money, but you know people have plugged in like really really,
you know, weak computers mined on a CK pool, which is a pool
that kind of pulls a bunch of people together and gives only
one minor or one participant the the block award if they actually
get a block. But people do do actually mine
blocks that way. So there's something about the
fact that if you have electricity, you and you have an
Internet connection, you can mine Bitcoin.
That's all you need. Can you talk about like, why
that's so different? And maybe even in the Ethereum
world, people say, hey, we need to switch to proof of stake,
because unless you're an industrial miner, you can't
mine. What's wrong with that kind of
narrative or perception? So you know, in any business
you're going to get into scale opportunities and you're going
to reduce your costs as you scale.
But Bitcoin mining, there becomes a point where you know
you're not going to see those costs above, let's say, 4005
thousand units, because electricity is the core
component of the biggest cost. And so even as a small miner,
you can develop ways, and you can find ways to find cheap
stranded energy. Which allows you to be
competitive and a small minor could be someone who's running
at their house, someone who's running 1020 machines.
And so that idea that anyone with access to electricity can
now create this currency that can never be taken away from
them, that there's only going to be a finite amount of them, is
so powerful. And the fact that it's in your
hands, it's in the nation state's hand.
It's in a company's hands. It'll it just it's a it's a
level playing field and that's what I loved about it was that
mining allowed anyone without any knowledge prior knowledge to
come in plug in it a specialized device now in ASIC and mine
Bitcoin. Back then it was just GPU, so it
was even easier. You're just mining, you know,
from graphics cards that you could find on eBay or or on
Newegg. And that right there was the
reason why I dove all into Bitcoin mining.
And now Bitcoin mining is so more it's actively working with
the energy industry and receiving energy credits and.
Playing the energy markets because the energy and
electricity is a very interesting market that's always
trading and changing hands and never is fixed at the price and
you can't be can't be stored easily which makes it need to be
consumed and allows a minor to play into that market very
uniquely. So you talked about the kind of
two things just at the end there.
You talked about Bitcoin mining helping balance the grid and
then you also talked about off grid mining.
Can you talk about each of those different elements and why you
think they're compelling? Sure.
So off grid mining will start there.
So the reason why an off grid mine is so compelling to any
type of energy production is because you can amortize that
asset. Faster when you can consume a
significant portion of its generating output over time.
So what I mean by that is, let's say we have a hydro dam, and
this is from a real example in Africa, they have a hydro dam.
They want to build out a dam for the community and they don't
have to pull together their funds.
They buy this dam, they put it together, they put a big
generator in it because they know the community is going to
expand. But the community only has a
small amount of power usage today, and the power usage is
fluctuating over time. So by adding a Bitcoin line, you
can amortize that asset over a shorter period of time because
you're using more electrons, and that same device is creating
those electrons that otherwise would have gone to waste in the
sense of a dam or even like a large electric substation.
When you amortize that substation, if it's not being
used by a lot of people, it's going to be more expensive for
the ratepayers or for the community.
And so as a Bitcoin minor, we come into these areas where
there's stranded assets, which could be, you know, a dam that
is just being built to provide energy to community or it could
be a stranded asset, which would be a substation that was built
with the USDA loan at 3% and has no.
No one really using this substation of the capacity is
less than 20% of usage. And so we go there, we spilled
out Bitcoin mines at those substations and we amortize the
substations much faster for the local cooperative, for the
community because we're taking the electrons.
And when it comes to balancing the electric grid, the electric
grid, especially in the United States is has a bunch of
incentives that are not that don't make it a fair market or
free market. That's just you know.
Let's all just generate energy and there's no, there's no extra
incentives. And So what that does is it
requires or causes the price of energy to go negative.
And because of these incentives for wind and solar, the energy
prices can get down to negative $30 per MW hour, which means as
a Bitcoin miner, you can be making money mining Bitcoin and
be making money taking the energy.
Now this only happens obviously when there's a massive amounts
of oversupply and when there's a lot of wind blowing and that
there's and there's not much demand for it, which is going to
be in the middle of the night, but happens.
More than you think, especially in the Midwest.
So that's one route that Bitcoin miners can utilize the energy
markets to get paid for using energy while they're also
getting paid for money Bitcoin. The other route is through
demand response, which is when we turn off, when the price of
energy gets too high. And that's kind of on the other
side of the price spectrum. And so by turning off or by
saying we're going to use energy every day, the same amount of
energy that allows us to buy energy and something called the
day ahead market. So when you're planning as a
grid operator, you're always trying to balance the load and
you buy a lot of your energy of people that know or that you
know we're going to use it in the day ahead market.
But what happens if the amount of people that you expected to
use that energy in the real time market as it's happening in real
time shifts while you need to be able to make an adjustment and
Bitcoin miners are there to turn off during those peak carbon
emitting times and provide their energy to consumers who want
that and can pay more for it. No, I mean, and for someone
who's listening to this, maybe they're getting pretty
intrigued. Like, wow, it looks like there's
a massive opportunity to make a lot of money here.
But let's talk about like, the utility.
Like, obviously, you know, it seems as though there's these
opportunities on the US grid in terms of grid balancing.
But like, why is grid balancing something that Americans should
want or Europeans should want or any nation that has a reliable
grid infrastructure? Like, why is that, like, a good
thing? So grid balancing is a good
thing economically and also for the safety of the grid.
So when it comes to the price of energy, the highest point of
energy usage on all of our electric bills or on a majority
of electric bills is during a 15 minute to 30 minute window
called the peak period where everyone is using their energy
at the same time. So you can think about this.
It's the hottest point of the day, 567 o'clock in the summer,
where it's the coldest point in the morning, 7-8 AM Everyone's
waking up and turning on their kettle, turning on their
natural, you know, their their stoves, if they're electric.
And so these areas are. These times of day create
massive spikes in usage of electricity.
And because you need to always have the amount of consumption
match the amount of production that requires us to go turn on
more expensive fuel based energy production such as natural gas
or coal and those are turned on and those bit into the market on
a daily basis and are picked up and so.
As the market begins to accelerate in price, because
there's only so many electrons available, we can see that that
price of that electron at that moment is going to be
significantly higher than if you wanted to use energy any other
time of the day. So consumers, if they start to
put themselves in the in that shoe of like okay, I actually
can affect my energy bill by deciding when I use energy and
by being educated when I am using that energy and when I'm
not. It allows them to take advantage
of these these rates and of the the market dynamics.
Now as a Bitcoin miner, you have a much larger scale because
you're using a significantly more amounts of energy and
you're able to turn off very quickly and it's able to be
automated. So that does help.
You're not always having to focus, you know, do it manually,
and your impact is much larger, which, and there's programs you
can get in that allow you to, since you're committing to using
the energy 24/7, allow you to turn off.
To make money. Now, why is it good for the
grids, grids of stability As I mentioned, it's it's more about
what flexible load we can have, what flexible demand and
production we can have. Because we're always having to
match production and demand. If something happens, like if a
nuclear plant doesn't turn on that was supposed to if the wind
suddenly stops blowing, well, we only have so many choices as a
grid, as a grid operator in order to.
Get energy to the consumer without having a brownout,
without having to turn people off.
And so those options are limited to, you know, grabbing from a
battery, the batteries are very expensive.
Grabbing from turning on other energy sources, sometimes those
energy sources can't come on immediately.
And so that's where Bitcoin miners can play a great part and
demand response can play a great part, which is shutting down
those instances of energy that are being used.
That can be shut down like a Bitcoin miner and then giving
that energy back, which is going to make sure the grid doesn't go
into brownouts, which causes stress on electrical
infrastructure. Yeah.
And just to kind of like add a little bit more because this is
something I'm super interested in effectively.
Kind of what Bitcoin mining does is it increases the power usage
all the time. So that way when power the
community, society needs to pull more power from the grid, the
grid, rather than having to go and find more energy uses, they
can just incentivize Bitcoin miners to turn off, sell that
energy back to the grid, make the energy available for the
grid again and and that is a much, much healthier for the
grid. And it's actually better for
energy reliability because now you just have this grid that has
the capacity to serve society no matter what.
You know, the demand is rather than, you know, again brownout,
which is effectively the grid has to turn off in certain areas
because they're looking for more energy to bring online.
I guess you want to respond to that, JP.
I just want to say that, you know, we're so lucky to be able
to plug in electric outs to the wall and have the assumption
that they're always going to be working and it's always on.
We take it for granted. And the reality is, is that like
stable electricity, even especially in the US, wasn't a
thing, you know, until 1970s when we had the National World
Utility Electric Act. Most of the US wasn't
electrified, wasn't, you know, didn't have the stable grid that
we have today and so. That's so important.
And we take it for granted, because when you think about how
hard it is to live without energy, you're like, wait, I
charge my phone, I charge my laptop, My refrigerator needs
energy. You know, I'm like, at my phone,
every single thing you touch, even my electric bike back there
is using energy. And so it's like, it moves us
through the world and without it it we're less productive,
basically, and less effective as society.
Totally. I mean, we wouldn't be doing
this interview without. It would be great like this is
only possible at this cost. We can just turn on our
computers and get online and do it and record it and then stream
it to the world because of our access to energy.
So JP, I want to transition over to talking about the mining
store. So you started the mining store
early on and you know the business has kind of transformed
through several cycles here within Bitcoin.
Can you just talk about being an operator in Bitcoin, building a
company through Bull and Bear and what's that like?
And then we can talk about your your services.
Yeah. So you know when you're in the
mining business and especially in the Bitcoin business.
It's 1 where no one wants to talk about Bitcoin and then
everyone wants to talk about Bitcoin.
And that always presents a struggle because you know,
you're scaling rapidly. And then things go and go to a
screeching halt, almost. And they slow, so slow, slow
down. But it's let me be patient, let
me figure out okay, how do I slowly scale a business?
How do I scale a business that I know the hires I make today are
not going to have to be let go when the bull market comes down?
Or how do I scale a business with the intent of okay this
hires for this many months or this many years?
For this period knowing that it's a bull market and then
we're going to have to let them go in the bear market.
And so really trying to build the business in a programmatic
fashion where the amount of machines we have running matches
the amount of employees we have. And then it all comes down to
services and what you want to add to it and how you can make
Bitcoin mining easier, more accessible.
And for me, that's the reason why I've been mining and started
mining store was to get Bitcoin mining in the hands of
consumers, in the hands of people who would not other would
not otherwise be able to take that opportunity and get Bitcoin
mining exposure. Because they don't want to spend
the time, you know, running a whole facility, staffing it,
cleaning their machines, dealing with the RMA's.
And so our focus is on providing white glove solutions for
consumers for larger institutions with building out
their own facilities and owning them and then for your real
estate investors, all right. So those are three different
groups of folks that you're trying to work with.
How do you, how do you kind of manage And it sounds like if
you're talking to real estate investors to some degree, you
might have to orange coat a little bit.
I guess talk through, talk through those different elements
of the business. Sure.
So the, the first element of the business is the consumer, the
basic consumer. And I've been on a journey of
how do you provide Bitcoin mining access to people you
know, for under $1000, for $100 and you keep, you know, we've
heard of smart these, these hash rate contracts.
And then there's people doing NFT's with Bitcoin miners.
And what I settled on was doing something called a Reg CF, which
is regulated crowdfunding. Which allows me to just create a
company that's just a Bitcoin mining company with an
influencer or with someone like with myself for example.
And then say I'm going to raise money to buy Bitcoin miners and
operate them on behalf of everyone in this company,
everyone who invests in The Reg CF.
So they're buying a security, and it's a regulated security
that you can solicit on Instagram, TikTok all over the
Internet. And so for that, that's one
level where we're providing entry at $100 minimum and we're
working with influencers to invest into Bitcoin mining
through a program called Bit Vault.
So if that's appealing to you, that's on wefunder.com and you
can search Pit Vault. You can find different
influencers of myself raising money all year round into these
Bitcoin mining companies, and you own a percentage of those.
They said the reason why we do that is to follow security rules
and make sure that we can be compliant when we're issuing and
offering these securities and knowing that you're only owning
part of a Bitcoin miner. But the company is defined and
it's not going to go out and spend, you know, millions of
dollars on corporate jets like Core Scientific did.
It has a very clear mandate and it's more of like an SPV or
special purpose vehicle. The 2nd investors are going to
be investors that are putting up $100,000.
Now why don't you just take, you know, the investors that are
taking $100 and say okay, yeah, maybe they maybe $100 is not
enough to buy machines, but $1000 is.
The problem is with from 1000 to $100,000 is when you scale your
Bitcoin mine in order to keep costs down you need to make sure
you can scale that customer service layer.
And so if you have one owner of 1 machine and they are always
you know putting in tickets and you got to manage their asset
and you got to manage the life cycle of the asset, it's much
harder to do. In that individual owner
structure And so at $100,000 it's you have enough of a
savings where that client's going to own maybe 20 machines,
50 machines and they're going to be able to be serviced well and
understand that their portfolio of machines will shrink over
time and because of the nature of hardware and you know it
failing. So that investor is part of our
MMP program which is a profit sharing program where we're
releasing that the machine from the investor operating at them
and taking a percentage. Of the generated revenue just
like a pool takes the percentage of of Bitcoin mine and then we
charge electricity at cost plus a basis.
And the last group of investors are large scale institutions who
are looking for getting. Who are looking to get Bitcoin
at A at a discount and facilities that they either own
or are major investors in where they own the land, they own the
infrastructure, they own the machines and they sign longterm
contracts with us as an operator to operate their facility for
them and. They receive the Bitcoin, they
pay their power bills directly and we just helped facilitate
the production, the deployment and then the operations of those
mines and that's going to be closer to 5 to $50 million
projects. Gotcha.
So I mean, you're really kind of hitting the entire scale both
with I guess, the crowdfunding option and then with the ability
to. Own machines and I guess it's
the leasing option And then lastly it's operating on
investors land. I guess my question is in terms
of you talked about there's this whole wide variety of different
environments in which you can mine in, what's the when you are
operating mines, what's kind of your bread and butter.
So our bread and butter is gonna be in the Midwest and going and
starting off at substations 5 to 15 megawatts building out there.
That's where we've gotten really good at deploying hiring,
staffing and ensuring that these facilities work well with the
local grid. Now the grid's always changing
and the grid rules are going to be changing over the next six
months in the Midwest. And so that could provide the
opportunity for us to deploy more facilities in, in a single
area because we don't have to worry about the local
communities power usage as we're not going to be impacted as much
by our usage relative to theirs and that peak load and getting
out of that peak load as I mentioned earlier.
But that's where we're focused on, that's where we're scaling.
And I'm also always looking for larger projects where you can do
100 MW sites and those just require a lot more time and
throughput and you have to build out more substation
infrastructure versus sites that already have infrastructure,
which is what we like to target today.
And then on those projects, effectively the real estate
owner, they're interested in getting Bitcoin.
They own the ASICS, they own the infrastructure.
You're making it all happen in turnkey fashion and operating.
And actually operating the mine is that and some of those sites
are owned by us as well, right. So some of those sites we have a
portfolio of projects to building out and some sites will
market to the family offices. They like sites that are in you
know different areas, different tax zones and we really our goal
is to find the lowest cost electricity and so we then will
build out the sites, then we offer to our MMP clients,
traditional hosting clients and then also The Reg CF default
influencers as well. Gotcha.
Awesome. I guess what's next for the
mining store? What are you excited for really
it's just adding more megawatts under management, scaling and
then building a a presence where it it makes sense for
influencers to come on raise through The Reg CF and are able
to very quickly deploy their own Bitcoin mining community with
their fan base. And so there's that continuing
to put out social media content really trying to figure out you
know what goes viral. We have this script that always
seems to go viral and playing around with that more and really
just driving awareness and engagement on social media as
well about Bitcoin mining and its impact on the electric grid
and how you can make money from electricity.
So last question about kind of your offering and then we can
jump into like what's happening in the Bitcoin mining landscape
right now, because a lot of interesting things are kind of
going down, but in terms of The Reg CF?
You know what are I guess like what are the kind of risks
involved when someone is is kind of investing in one of these
projects? Yeah.
So when you're investing in a Bitcoin, you know, Bitcoin
mining, Reg CF, you're investing in a company that's gonna buy
Bitcoin miners and run them in a hosting contract.
So you're having, you have the exposure that any Bitcoin miner
has on the electric electric prices, the price of machines,
the operator's ability to keep up time.
You know, the insurance costs or insurance risks of theft of a
tornado, of a hurricane. You know, whatever that is,
that's a real risk. And so you have the risk of
owning a physical asset. The reason why it's potentially
less risky than buying one machine is now you're spreading
that risk over 50 or 100 machines.
And so you own a proportional share of each machine because
you own a share that represents that ownership in the company.
That's the risk of investing in a Reg CF in in any type of, I
guess, Bitcoin mining investment for us.
We're focused on different types of distributions and each
influencer can choose how they want to distribute the funds and
when they want to distribute the funds.
So for Josh, Terry, default which is one of the defaults you
successfully raised, deployed and launched, he's going to
distribute the Bitcoin after five years.
So the investors in there are not receiving any dividends.
They'll get depreciation or appreciation on the asset at the
end of every year through K1, but they're not going to
receiving any dividends until five years when they're going to
get one lump sum payment either in cash or Bitcoin.
And and that's, you know that's their final payout of the of the
infrastructure and of their investment.
For my investment work, I'm considering a few different
options and looking to pay a flat interest rate or flat
preferred return and then a split at the end of a five year
period or seven-year period where the investor receives the
capital left in the left in the entity at the end of the day.
So I guess at that expiration period when the payout happens,
does the entity kind of dissolve or like what?
What happens? No more assets.
It just dissolves. And it's just like, here's your
funds, you know, we'd say what we were going to do.
We're going to go buy as many Bitcoin as we can.
You know, we're going to hope the Bitcoin appreciates as well
on the balance sheet and then pay you out in cash.
And so you're taking a long Bitcoin bet.
And there's there are some influencers that we expect to
say, hey, I want to pay everyone quarterly and I just want to pay
them out, you know, annually. But it's up to the influence to
decide their distribution because it's their offering.
And with The Reg CF, you can solicit any security as long as
it's defined and it's done through the right mediums and
platforms. Gotcha.
So really you, you kind of have like 2 audiences here.
It's, it's the main audiences. You're looking for people who
want to be able to have run a hosted Bitcoin mining business
that have an audience. And on the flip side, you are
looking for audiences that are interested in a turnkey way to
mind. Bitcoin makes a lot, it makes a
lot of sense and first time I've heard of the model.
So very interesting to kind of see how that evolves.
Wanted to pivot into talking about the actual mining
landscape. A lot is happening right now.
I could just list off a bunch of things, but I prefer just to go
back to you and you know, maybe you can talk about what you're
interpreting, you know, between the public markets, hash rate,
all that kind of good stuff. You know what?
What, what are you paying attention to?
So for me, I'm paying attention. Obviously the bub goes, they're
growing at a rapid scale. The ones who are owning and
building infrastructure and have a lower operating cost and are
continuing to deploy those projects are key opportunities
in this space. Now obviously I think with the
Bitcoin run up it was a little frothy before.
You know, public stocks went up dramatically, 300, four, 100%.
We saw Vanguard take a 10% share and Riot.
So there is some massive institutional capital coming
into these pub goes and buying up stock.
We saw Tara Wolf announced that they purchased 18,000 S 19 XP's
from bit main with delivery, you know November, October, December
time frame. So there's only going to be more
and more machines plugged in and these are S19JS151 terror
hashes. And so the amount of capital
that's going to be deployed on the balance sheet in books of
these public companies is going to be astonishing.
And it's going to be, it's going to rapidly grow because the way
a Pubco is, you know it's mark gap is defined is on that cash
flow and how many assets they have and what the asset value
is. And so the goal of a Bitcoin
mining company is to get as many Bitcoin miners on the books
during the bull market and before the bull market during
the having event. What I think is going to happen
is I think S times are going to be obviously turned off S
seventeens and any type of model in that range is going to also
have to be turned off, won't be profitable.
And even S nineteens and most energy rates are going to barely
be profitable and could have to be shut off as well for a few
weeks. Difficulty as we saw last having
usually takes 30 days to adjust just because there's two
adjustment periods down. And so if we're at, let's say
six cents of Tara Hash now with that difficulty or the having
event, we could be at three cents of Tara Hash.
And then with those difficulty adjustments move back up close
to that 455 range, but still not all the way up to six.
And so as a Bitcoin minor, the best way to prepare for that is
to build a cash position. Don't be afraid to take some
cash off the table if you don't have a large Bitcoin stack
that's unencumbered and be ready to turn off some of your
machines. Make sure your energy contracts
aren't going to force you to buy all that power and that you can.
You do have the ability to shut off and not pay for energy,
which is called a take or pay contract if you have to pay for
energy and that's the best way to survive the having event in
the bear market. And this will be my third
having, so I'm super excited for it.
Yeah, I mean I think that really good insight there JP.
And I guess why don't you kind of break down what is the
having, why is it good for Bitcoin and Bitcoin miners?
And on the flip side, why is this such a stressful kind of
event for operators to? You know obviously need to
maintain cash flow and you know they have a lot of you know
complexities in their operation per se.
The biggest you know problem with a Bitcoin owners you're
spending all this money on energy every day.
And so most Bitcoin owners, you know we collect our Bitcoin at
the end of the month. We like have to sell them or
lend against them and pay our bills, pay our employees, pay
our electric bills. And so when the having happens,
you know the employees aren't leaving, they don't change.
The electric price didn't just change.
And so as an operator, especially at an operator who
has debt and who has leverage, you now have to start pulling
from your balance sheet in order to pay these liabilities until
the value of Bitcoin appreciates rapidly, until mining
profitability increases again where you can turn back on that
fleet of machines. And so most operators are in
this chicken and egg game of like do I buy new machines now
or do I wait for the halving event to bind them because
there's going to be some cheaper deals?
Do I buy the latest version of machine or do I buy a cheaper,
newer machine? Do I take these machines off the
shelf because they're not profitable or do I keep them on
the shelf because it takes time and energy to and maintenance
and hours to take them off and then put them back on a few
months later when they are and you what you're always managing
that Rackspace. And so that's the name of the
game of an operator is they have their fleet of operations.
How do you get the most juice out of it?
And then what type of incentives are outside of Bitcoin mine do
you have in the energy business and and is there value to just
running at break even if you can make money in the energy side of
the business by selling the rights to the energy.
Now the having is going to happen April and May and so
you'll be going into the summer, which is usually when we see
difficulty adjustments drop down either way because of demand
response, because operations are harder to run in the summer.
And so even in June and July, there could be significant drops
in difficulty in 2024. JP is the having priced in.
I feel like that's the age-old question is the having.
No, the having is never priced in.
I mean the the, the effects that Bitcoin miners it has on their
industry is not priced. I mean that's why we see the run
up every time we see a massive run up because it's like if we
priced in the halving, the price would be gradually going up over
time. But no, no one really cares.
There's a halving and then the amount of Bitcoin miners,
Bitcoin that Bitcoin miners are selling gets cut in half and
it's like, oh, there's no more salt pressure on this book.
It's very thin already. And the price rips and I think I
think they're going to call it, you know, maybe this year or
next year. Oh, it's, you know, it's a Black
Rock ETF that's doing it. But no, this is program money.
It happens every four years and it's the having event that
causes it doesn't matter what new vehicle comes online that
allows people to put capital into it.
It's a plays a fundamental part in the whole thing.
Do you ever speculate about? The timing of the having and the
US political cycle, I mean I've heard heard the theory.
I don't want, don't want to say I speculate about it, but I do
think it plays nicely with being in the presidential election but
being the same same year. And when everyone's talking
about, you know, the the new elect, the new government or the
new government, the new president coming in Bitcoin is
saying, OK, I'm chugging away one block at a time, it doesn't
matter. And by the way the price just
got, you know, it just got much harder And the public, you know,
they just they just they don't they don't really care
necessarily like okay continue living my day.
But the presidential election, we're all focused on that like
Oh yeah, it's going to change my life.
The reality is like the having will change your life and you
can get economic freedom and financial freedom by paying
attention to that. But people like shiny objects.
That's why we don't focus on complicated things per se.
If you're looking to make, you know, an entry into Bitcoin
mining, you know the other route we haven't talked about, we
talked about stocks, public stocks.
And so you know Full disclosure I am invested in a lot of the
pub goes so I do have incentives to talk talk about this.
But the public companies you're you're wanting to understand
like okay if Bitcoin having is going to be in May 2024.
You know what type of you can buy option contracts you know
for a year after that event like when the price of Bitcoin has
gone up. The other route is to look at as
a Coinbase, you know MicroStrategy, what companies
have a lot of Bitcoin exposure that have the potential to you
know you and get a value when the Bitcoin price increases.
Because value in the public market is I would say aggravated
or it's it's much larger, it's when it's in the public market
versus the private market because of the multiples on
those businesses and those companies.
And so if you can think of assets or Pubcos that are going
to have Bitcoin exposure and look for those purchases in
December, in January of 20-25, then you're might be in a good
place to, you know, to make some money outside of a Bitcoin run
up. So.
JPI want to talk about you know 273 days until the having
estimated you know that's a little bit less than a year and
you know and from a BTC denominated perspective you're
going to be getting half as much Bitcoin after those 273 days are
over. How do you take advantage in
stacking as as much coin as possible given the fact that
this kind of like? Timer is kind of clicking away
and and you know how do you kind of operate once it becomes a lot
more real that the having is on the way.
Well, I would say it's can create extensive urgency to
deploy capital to deploy machines to continue scaling
projects For us. It's five MW sites, 5 MW sites,
5 MW sites lining them up and it's less of like the having
we're playing against. But it's really winter.
You know when winter comes around in the Midwest, we can't
put infrastructure in the ground for about a four month period
because it's so cold. And in order to do that, we have
to unfreeze or unthaw the ground.
And so there's more of those technical problems that we're
working towards. And so the goal is to build out
as much rack space as you can and be filling your rack space
quickly. So scaling A deployment team,
working on deployment operations and showing that every part of
the deployment checklist is done and verified.
And that you're improving the process of how you're verifying
on these sites. Hiring new technicians, getting
them through your training programs before they go and are
out in the facility or out in the field.
You know, doing that prior to when you need them.
So that when they're, you know, when the site's ready or as the
site's being finalized, they're able to come on site and help
finish that. So that's the keys that you
know, key success that we're putting together in places,
building this systematic process that can do five MW site this
month, 5 MW site next month, 5 MW site the next month.
And then still focus on your much larger projects where
you're putting up a whole substation but in a building.
And that's going to take you know the same a similar period
of time, but it's going to take you know waiting on parts,
waiting on components versus these five MW sites.
It's very quick. We're buying off the shelf
items. The lead times aren't very long
and the amount of planning that we have to do on longer lead
time items is minimal. But we're still deploying
infrastructure and always you know adding more and more hash
rate when it comes to the having a lot of people will stop and
ask. We probably will too on the
amount of new rack space we're building because some of that
rack space will be turned off and won't be running as many
machines. Makes complete sense.
And you know ultimately it, it's something that if you have the
luxury of being able to plan that far ahead, you would want
to. But a lot of times with these
mining businesses the, the constraints are a lot more right
in front of you. You need to make it past this
month of bills or whatever. And so it really is difficult on
operators. Yeah.
Every month is another month you're fighting for.
And if you're even like you saw the pub codes, like some of
those guys got so low in their stock, you know, wanted to
declare bankruptcy or some of them declare bankruptcy because
mining is not an easy game. And if you take out debt at the
wrong time to buy Bitcoin miners, you will not be around
because those Bitcoin miners you bought will never, no matter how
well you run them, generated you enough Bitcoin in terms of
dollars or in terms of Bitcoin, you know to to pay them back.
And so that's what a lot of those pup goes did and that's
why it's important you find people with a low cost, you know
with it, with a great balance sheet, that's a public company
and that are have great operations and low cost of
energy. JP, this has been a great
conversation. I think you, like really told
the audience a lot of insider information about how this
actually works and in in real life, right?
And you've done it for such a long time.
I want to give you a last word before we close out the
interview. All I'll say is Bitcoin is
amazing. It protects you from inflation
which is taxation without representation.
And check out my my Instagram is at John Paul Barak at Mining
Store on Twitter. And TikTok, if you're on TikTok,
is JP Barak as well, always putting out Bitcoin mining
content and have a podcast called Digital Gold.
If you're interested in learning more about the energy side of
things and hearing energy experts talk about Bitcoin.
If you're interested in building with us, reach out.
We'd love to build with great creators, great developers,
great people who are infrastructures, and if you want
a technician job and you want to work on mining machines all day,
I'm living in the middle of Iowa and the beautiful cornfields,
let us know. Thanks again for the time.
No, absolutely. Thank you so much for coming on.
And to all the audience, thank you so much for listening.
This has been CK with Bitcoin Magazine.
You can come see me at Bitcoin Amsterdam October 12th through
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Can't wait to see you there. Peace.