1 00:00:00,400 --> 00:00:04,840 Bitcoiners, welcome back to the Bitcoin Magazine Podcast. 2 00:00:04,840 --> 00:00:09,240 I'm your host CK and I have another mining podcast for you. 3 00:00:09,480 --> 00:00:12,640 Everyone here knows that I am extremely interested in mining. 4 00:00:12,640 --> 00:00:17,340 So every time I get a chance to bring on a Bitcoin CEO in the 5 00:00:17,340 --> 00:00:20,860 mining space, I jump on that and this is going to be a really 6 00:00:20,860 --> 00:00:25,060 exciting interview. I'm talking to JP Barrick from 7 00:00:25,060 --> 00:00:28,900 the mining store and we are going to jump into his story as 8 00:00:28,900 --> 00:00:31,980 well as what is happening in Bitcoin mining right now. 9 00:00:32,140 --> 00:00:34,140 A lot is happening. It's really exciting. 10 00:00:34,260 --> 00:00:37,220 We are just going over all of the different compelling things 11 00:00:37,580 --> 00:00:41,660 before we got on this call. So without further ado, JP, 12 00:00:41,660 --> 00:00:44,300 welcome to the show. Thanks for having me. 13 00:00:44,300 --> 00:00:46,780 I'm excited to be here today and chat about the craziness going 14 00:00:46,780 --> 00:00:48,020 on in the Bitcoin mining industry. 15 00:00:48,660 --> 00:00:51,140 So JP, we're just getting to know each other here. 16 00:00:51,140 --> 00:00:52,740 You're the CEO of the mining store. 17 00:00:52,860 --> 00:00:55,340 Why don't you talk about how you got into Bitcoin? 18 00:00:55,340 --> 00:01:00,260 Why Bitcoin mining? So I got into Bitcoin in 2013 19 00:01:00,460 --> 00:01:03,300 when I was in high school and I got into Bitcoin mining by 20 00:01:03,300 --> 00:01:05,420 buying a Butterfly Labs mining machine. 21 00:01:05,880 --> 00:01:08,880 That the the joke was it was always going to ship 2 weeks, 2 22 00:01:08,880 --> 00:01:11,280 weeks, 2 weeks. And about two years later when 23 00:01:11,280 --> 00:01:13,400 it wasn't making much money, they finally arrived. 24 00:01:13,400 --> 00:01:16,760 It was just little Butterfly Labs, I think 5 gigahertz 25 00:01:16,840 --> 00:01:20,200 machine. So now machines are 150 Tera 26 00:01:20,200 --> 00:01:23,920 hashes, which is insanely more efficient and effective. 27 00:01:23,920 --> 00:01:26,240 So I got in. I started the mining store as a 28 00:01:26,240 --> 00:01:28,920 way to help other people get into mining as a way to sell 29 00:01:28,920 --> 00:01:31,800 graphics cards to do GPU mining to my Ethereum. 30 00:01:32,260 --> 00:01:34,700 And then as that progressed, we started running Bitcoin mines 31 00:01:34,700 --> 00:01:37,380 and building out Bitcoin mines and making Bitcoin mining 32 00:01:37,380 --> 00:01:40,100 accessible. And that's why I enjoy building 33 00:01:40,100 --> 00:01:42,780 in Bitcoin mining, because anyone can participate in 34 00:01:42,780 --> 00:01:45,580 Bitcoin mining and can make can make an income on it. 35 00:01:45,660 --> 00:01:48,820 As long as you're, you know, have access to electricity, you 36 00:01:48,820 --> 00:01:51,300 can make money mining Bitcoin. There's no barriers to entry, 37 00:01:51,300 --> 00:01:54,620 there's no licenses you need. And so to me, with a computer 38 00:01:54,620 --> 00:01:57,980 background and wanting to build computers and explore how to 39 00:01:57,980 --> 00:02:00,180 make money with computers, it just was a perfect fit. 40 00:02:02,240 --> 00:02:04,760 No, I mean, I think that that is really interesting. 41 00:02:04,800 --> 00:02:06,360 Let's talk a little bit about Bitcoin. 42 00:02:06,360 --> 00:02:08,600 What about it captured your attention? 43 00:02:09,960 --> 00:02:12,920 So for me it was this idea that money was separated from state 44 00:02:13,120 --> 00:02:17,040 and that with Bitcoin there could solve this Byzantine 45 00:02:17,040 --> 00:02:20,240 General's problem or could solve the ability to gain consensus 46 00:02:20,320 --> 00:02:23,360 online without the need for a central authority. 47 00:02:23,840 --> 00:02:27,320 And for me, I was like okay, this seems like it might just be 48 00:02:27,560 --> 00:02:31,720 more than, you know, another digital trend that's going to go 49 00:02:31,920 --> 00:02:34,840 go away. And also obviously the price, 50 00:02:34,840 --> 00:02:36,600 you know when you're looking at Bitcoin, you're seeing it's oh, 51 00:02:36,600 --> 00:02:38,280 it's trading. And at that time it was like 52 00:02:38,280 --> 00:02:41,640 60-70 dollars and they got all the way up to like 100. 53 00:02:42,150 --> 00:02:44,510 Dollars plus and I was like oh, I want to I want to get in on 54 00:02:44,510 --> 00:02:47,910 this like I need to you to jump in and and buy some coins and 55 00:02:48,110 --> 00:02:52,390 that price action always accelerates the the adventure 56 00:02:52,390 --> 00:02:55,270 into any asset or any technology. 57 00:02:55,430 --> 00:02:58,150 And so for me it was trading. It was a way to spend time in 58 00:02:58,150 --> 00:03:00,950 school and learn about these technologies, and then it was a 59 00:03:00,950 --> 00:03:03,790 way to create value through the mining process and understanding 60 00:03:04,070 --> 00:03:07,910 that, like I said, anyone could use energy to create an asset 61 00:03:08,270 --> 00:03:11,510 that's scarce and that that fact, that asset was created 62 00:03:11,710 --> 00:03:13,150 with. Electricity was something that I 63 00:03:13,150 --> 00:03:17,470 was intrigued by at a young age. So that's a really interesting 64 00:03:17,470 --> 00:03:18,750 point. I agree. 65 00:03:18,750 --> 00:03:22,430 I think like the fact that you don't have to register, you 66 00:03:22,430 --> 00:03:25,270 don't have to buy coins from somewhere else, so you can just 67 00:03:25,270 --> 00:03:28,150 plug in a machine and go. And that machine could even 68 00:03:28,150 --> 00:03:32,230 really be commodity hardware. It's not gonna make you too much 69 00:03:32,230 --> 00:03:35,790 money, but you know people have plugged in like really really, 70 00:03:35,790 --> 00:03:41,230 you know, weak computers mined on a CK pool, which is a pool 71 00:03:41,230 --> 00:03:43,750 that kind of pulls a bunch of people together and gives only 72 00:03:43,750 --> 00:03:47,830 one minor or one participant the the block award if they actually 73 00:03:47,830 --> 00:03:51,190 get a block. But people do do actually mine 74 00:03:51,190 --> 00:03:54,550 blocks that way. So there's something about the 75 00:03:54,550 --> 00:03:57,030 fact that if you have electricity, you and you have an 76 00:03:57,030 --> 00:03:59,070 Internet connection, you can mine Bitcoin. 77 00:03:59,070 --> 00:04:02,540 That's all you need. Can you talk about like, why 78 00:04:02,540 --> 00:04:06,780 that's so different? And maybe even in the Ethereum 79 00:04:06,780 --> 00:04:09,180 world, people say, hey, we need to switch to proof of stake, 80 00:04:09,180 --> 00:04:11,780 because unless you're an industrial miner, you can't 81 00:04:11,780 --> 00:04:14,380 mine. What's wrong with that kind of 82 00:04:14,500 --> 00:04:18,290 narrative or perception? So you know, in any business 83 00:04:18,290 --> 00:04:21,370 you're going to get into scale opportunities and you're going 84 00:04:21,370 --> 00:04:22,610 to reduce your costs as you scale. 85 00:04:22,610 --> 00:04:25,770 But Bitcoin mining, there becomes a point where you know 86 00:04:25,770 --> 00:04:29,090 you're not going to see those costs above, let's say, 4005 87 00:04:29,090 --> 00:04:31,170 thousand units, because electricity is the core 88 00:04:31,170 --> 00:04:34,410 component of the biggest cost. And so even as a small miner, 89 00:04:34,570 --> 00:04:37,450 you can develop ways, and you can find ways to find cheap 90 00:04:37,450 --> 00:04:39,760 stranded energy. Which allows you to be 91 00:04:39,760 --> 00:04:42,360 competitive and a small minor could be someone who's running 92 00:04:42,360 --> 00:04:45,160 at their house, someone who's running 1020 machines. 93 00:04:45,160 --> 00:04:49,160 And so that idea that anyone with access to electricity can 94 00:04:49,160 --> 00:04:52,560 now create this currency that can never be taken away from 95 00:04:52,560 --> 00:04:55,640 them, that there's only going to be a finite amount of them, is 96 00:04:55,640 --> 00:04:58,840 so powerful. And the fact that it's in your 97 00:04:58,840 --> 00:05:00,640 hands, it's in the nation state's hand. 98 00:05:00,640 --> 00:05:03,610 It's in a company's hands. It'll it just it's a it's a 99 00:05:03,610 --> 00:05:06,210 level playing field and that's what I loved about it was that 100 00:05:06,370 --> 00:05:10,410 mining allowed anyone without any knowledge prior knowledge to 101 00:05:10,410 --> 00:05:14,970 come in plug in it a specialized device now in ASIC and mine 102 00:05:14,970 --> 00:05:16,690 Bitcoin. Back then it was just GPU, so it 103 00:05:16,690 --> 00:05:18,650 was even easier. You're just mining, you know, 104 00:05:18,650 --> 00:05:21,770 from graphics cards that you could find on eBay or or on 105 00:05:21,770 --> 00:05:23,690 Newegg. And that right there was the 106 00:05:23,690 --> 00:05:26,410 reason why I dove all into Bitcoin mining. 107 00:05:26,410 --> 00:05:29,450 And now Bitcoin mining is so more it's actively working with 108 00:05:29,450 --> 00:05:32,330 the energy industry and receiving energy credits and. 109 00:05:32,410 --> 00:05:34,330 Playing the energy markets because the energy and 110 00:05:34,330 --> 00:05:36,850 electricity is a very interesting market that's always 111 00:05:37,170 --> 00:05:42,290 trading and changing hands and never is fixed at the price and 112 00:05:42,290 --> 00:05:45,570 you can't be can't be stored easily which makes it need to be 113 00:05:45,570 --> 00:05:49,090 consumed and allows a minor to play into that market very 114 00:05:49,090 --> 00:05:52,090 uniquely. So you talked about the kind of 115 00:05:52,090 --> 00:05:54,090 two things just at the end there. 116 00:05:54,090 --> 00:05:59,040 You talked about Bitcoin mining helping balance the grid and 117 00:05:59,040 --> 00:06:01,360 then you also talked about off grid mining. 118 00:06:01,480 --> 00:06:04,120 Can you talk about each of those different elements and why you 119 00:06:04,120 --> 00:06:06,840 think they're compelling? Sure. 120 00:06:06,840 --> 00:06:08,520 So off grid mining will start there. 121 00:06:08,520 --> 00:06:13,760 So the reason why an off grid mine is so compelling to any 122 00:06:13,760 --> 00:06:17,600 type of energy production is because you can amortize that 123 00:06:17,600 --> 00:06:21,010 asset. Faster when you can consume a 124 00:06:21,010 --> 00:06:24,170 significant portion of its generating output over time. 125 00:06:24,170 --> 00:06:26,970 So what I mean by that is, let's say we have a hydro dam, and 126 00:06:26,970 --> 00:06:30,290 this is from a real example in Africa, they have a hydro dam. 127 00:06:30,530 --> 00:06:35,090 They want to build out a dam for the community and they don't 128 00:06:35,090 --> 00:06:36,530 have to pull together their funds. 129 00:06:36,770 --> 00:06:38,930 They buy this dam, they put it together, they put a big 130 00:06:38,930 --> 00:06:40,690 generator in it because they know the community is going to 131 00:06:40,690 --> 00:06:42,890 expand. But the community only has a 132 00:06:42,890 --> 00:06:46,210 small amount of power usage today, and the power usage is 133 00:06:46,250 --> 00:06:49,150 fluctuating over time. So by adding a Bitcoin line, you 134 00:06:49,150 --> 00:06:53,310 can amortize that asset over a shorter period of time because 135 00:06:53,310 --> 00:06:56,790 you're using more electrons, and that same device is creating 136 00:06:56,790 --> 00:07:00,230 those electrons that otherwise would have gone to waste in the 137 00:07:00,230 --> 00:07:02,870 sense of a dam or even like a large electric substation. 138 00:07:03,240 --> 00:07:05,560 When you amortize that substation, if it's not being 139 00:07:05,560 --> 00:07:08,400 used by a lot of people, it's going to be more expensive for 140 00:07:08,400 --> 00:07:10,000 the ratepayers or for the community. 141 00:07:10,240 --> 00:07:12,240 And so as a Bitcoin minor, we come into these areas where 142 00:07:12,240 --> 00:07:14,960 there's stranded assets, which could be, you know, a dam that 143 00:07:15,000 --> 00:07:17,640 is just being built to provide energy to community or it could 144 00:07:17,640 --> 00:07:21,000 be a stranded asset, which would be a substation that was built 145 00:07:21,000 --> 00:07:24,560 with the USDA loan at 3% and has no. 146 00:07:25,290 --> 00:07:28,250 No one really using this substation of the capacity is 147 00:07:28,450 --> 00:07:31,530 less than 20% of usage. And so we go there, we spilled 148 00:07:31,530 --> 00:07:34,810 out Bitcoin mines at those substations and we amortize the 149 00:07:34,930 --> 00:07:38,010 substations much faster for the local cooperative, for the 150 00:07:38,010 --> 00:07:39,570 community because we're taking the electrons. 151 00:07:39,570 --> 00:07:42,770 And when it comes to balancing the electric grid, the electric 152 00:07:42,770 --> 00:07:47,250 grid, especially in the United States is has a bunch of 153 00:07:47,250 --> 00:07:50,170 incentives that are not that don't make it a fair market or 154 00:07:50,170 --> 00:07:52,250 free market. That's just you know. 155 00:07:52,600 --> 00:07:55,000 Let's all just generate energy and there's no, there's no extra 156 00:07:55,000 --> 00:07:56,360 incentives. And So what that does is it 157 00:07:56,360 --> 00:07:59,320 requires or causes the price of energy to go negative. 158 00:07:59,720 --> 00:08:02,760 And because of these incentives for wind and solar, the energy 159 00:08:02,760 --> 00:08:06,720 prices can get down to negative $30 per MW hour, which means as 160 00:08:06,720 --> 00:08:09,880 a Bitcoin miner, you can be making money mining Bitcoin and 161 00:08:09,880 --> 00:08:11,680 be making money taking the energy. 162 00:08:11,840 --> 00:08:14,280 Now this only happens obviously when there's a massive amounts 163 00:08:14,280 --> 00:08:17,040 of oversupply and when there's a lot of wind blowing and that 164 00:08:17,040 --> 00:08:20,120 there's and there's not much demand for it, which is going to 165 00:08:20,120 --> 00:08:22,240 be in the middle of the night, but happens. 166 00:08:22,600 --> 00:08:24,280 More than you think, especially in the Midwest. 167 00:08:24,280 --> 00:08:27,800 So that's one route that Bitcoin miners can utilize the energy 168 00:08:27,800 --> 00:08:31,120 markets to get paid for using energy while they're also 169 00:08:31,120 --> 00:08:33,760 getting paid for money Bitcoin. The other route is through 170 00:08:33,760 --> 00:08:36,559 demand response, which is when we turn off, when the price of 171 00:08:36,559 --> 00:08:38,600 energy gets too high. And that's kind of on the other 172 00:08:38,600 --> 00:08:41,760 side of the price spectrum. And so by turning off or by 173 00:08:42,120 --> 00:08:44,480 saying we're going to use energy every day, the same amount of 174 00:08:44,480 --> 00:08:47,200 energy that allows us to buy energy and something called the 175 00:08:47,200 --> 00:08:49,430 day ahead market. So when you're planning as a 176 00:08:49,430 --> 00:08:51,870 grid operator, you're always trying to balance the load and 177 00:08:51,870 --> 00:08:54,270 you buy a lot of your energy of people that know or that you 178 00:08:54,270 --> 00:08:56,190 know we're going to use it in the day ahead market. 179 00:08:56,470 --> 00:08:58,670 But what happens if the amount of people that you expected to 180 00:08:58,670 --> 00:09:01,630 use that energy in the real time market as it's happening in real 181 00:09:01,630 --> 00:09:04,590 time shifts while you need to be able to make an adjustment and 182 00:09:04,590 --> 00:09:08,510 Bitcoin miners are there to turn off during those peak carbon 183 00:09:08,510 --> 00:09:12,350 emitting times and provide their energy to consumers who want 184 00:09:12,350 --> 00:09:17,200 that and can pay more for it. No, I mean, and for someone 185 00:09:17,200 --> 00:09:19,200 who's listening to this, maybe they're getting pretty 186 00:09:19,200 --> 00:09:20,800 intrigued. Like, wow, it looks like there's 187 00:09:20,800 --> 00:09:23,840 a massive opportunity to make a lot of money here. 188 00:09:23,960 --> 00:09:25,720 But let's talk about like, the utility. 189 00:09:25,720 --> 00:09:28,360 Like, obviously, you know, it seems as though there's these 190 00:09:28,360 --> 00:09:31,200 opportunities on the US grid in terms of grid balancing. 191 00:09:31,480 --> 00:09:35,320 But like, why is grid balancing something that Americans should 192 00:09:35,320 --> 00:09:39,560 want or Europeans should want or any nation that has a reliable 193 00:09:39,560 --> 00:09:42,640 grid infrastructure? Like, why is that, like, a good 194 00:09:42,640 --> 00:09:46,080 thing? So grid balancing is a good 195 00:09:46,080 --> 00:09:49,720 thing economically and also for the safety of the grid. 196 00:09:49,720 --> 00:09:56,560 So when it comes to the price of energy, the highest point of 197 00:09:56,560 --> 00:09:59,480 energy usage on all of our electric bills or on a majority 198 00:09:59,480 --> 00:10:03,320 of electric bills is during a 15 minute to 30 minute window 199 00:10:03,680 --> 00:10:06,840 called the peak period where everyone is using their energy 200 00:10:06,840 --> 00:10:08,920 at the same time. So you can think about this. 201 00:10:09,480 --> 00:10:13,480 It's the hottest point of the day, 567 o'clock in the summer, 202 00:10:13,600 --> 00:10:16,440 where it's the coldest point in the morning, 7-8 AM Everyone's 203 00:10:16,440 --> 00:10:19,080 waking up and turning on their kettle, turning on their 204 00:10:19,080 --> 00:10:21,560 natural, you know, their their stoves, if they're electric. 205 00:10:21,800 --> 00:10:26,240 And so these areas are. These times of day create 206 00:10:26,240 --> 00:10:28,920 massive spikes in usage of electricity. 207 00:10:29,360 --> 00:10:33,320 And because you need to always have the amount of consumption 208 00:10:33,320 --> 00:10:37,640 match the amount of production that requires us to go turn on 209 00:10:37,640 --> 00:10:42,880 more expensive fuel based energy production such as natural gas 210 00:10:42,880 --> 00:10:47,240 or coal and those are turned on and those bit into the market on 211 00:10:47,240 --> 00:10:49,120 a daily basis and are picked up and so. 212 00:10:49,540 --> 00:10:52,260 As the market begins to accelerate in price, because 213 00:10:52,260 --> 00:10:55,060 there's only so many electrons available, we can see that that 214 00:10:55,060 --> 00:10:57,660 price of that electron at that moment is going to be 215 00:10:57,660 --> 00:11:00,620 significantly higher than if you wanted to use energy any other 216 00:11:00,620 --> 00:11:03,340 time of the day. So consumers, if they start to 217 00:11:03,340 --> 00:11:06,780 put themselves in the in that shoe of like okay, I actually 218 00:11:06,780 --> 00:11:10,620 can affect my energy bill by deciding when I use energy and 219 00:11:10,620 --> 00:11:14,140 by being educated when I am using that energy and when I'm 220 00:11:14,140 --> 00:11:16,870 not. It allows them to take advantage 221 00:11:17,110 --> 00:11:22,190 of these these rates and of the the market dynamics. 222 00:11:22,510 --> 00:11:26,190 Now as a Bitcoin miner, you have a much larger scale because 223 00:11:26,190 --> 00:11:28,750 you're using a significantly more amounts of energy and 224 00:11:28,750 --> 00:11:31,510 you're able to turn off very quickly and it's able to be 225 00:11:31,590 --> 00:11:33,310 automated. So that does help. 226 00:11:33,350 --> 00:11:35,790 You're not always having to focus, you know, do it manually, 227 00:11:36,030 --> 00:11:39,150 and your impact is much larger, which, and there's programs you 228 00:11:39,150 --> 00:11:42,830 can get in that allow you to, since you're committing to using 229 00:11:42,830 --> 00:11:45,190 the energy 24/7, allow you to turn off. 230 00:11:45,270 --> 00:11:46,990 To make money. Now, why is it good for the 231 00:11:46,990 --> 00:11:51,430 grids, grids of stability As I mentioned, it's it's more about 232 00:11:51,430 --> 00:11:54,990 what flexible load we can have, what flexible demand and 233 00:11:54,990 --> 00:11:56,790 production we can have. Because we're always having to 234 00:11:56,790 --> 00:12:00,550 match production and demand. If something happens, like if a 235 00:12:00,870 --> 00:12:04,790 nuclear plant doesn't turn on that was supposed to if the wind 236 00:12:04,790 --> 00:12:08,630 suddenly stops blowing, well, we only have so many choices as a 237 00:12:08,630 --> 00:12:11,470 grid, as a grid operator in order to. 238 00:12:11,860 --> 00:12:14,980 Get energy to the consumer without having a brownout, 239 00:12:14,980 --> 00:12:16,260 without having to turn people off. 240 00:12:16,620 --> 00:12:19,260 And so those options are limited to, you know, grabbing from a 241 00:12:19,260 --> 00:12:21,140 battery, the batteries are very expensive. 242 00:12:21,620 --> 00:12:24,460 Grabbing from turning on other energy sources, sometimes those 243 00:12:24,460 --> 00:12:26,460 energy sources can't come on immediately. 244 00:12:26,780 --> 00:12:29,940 And so that's where Bitcoin miners can play a great part and 245 00:12:29,940 --> 00:12:32,700 demand response can play a great part, which is shutting down 246 00:12:32,700 --> 00:12:35,140 those instances of energy that are being used. 247 00:12:35,540 --> 00:12:38,500 That can be shut down like a Bitcoin miner and then giving 248 00:12:38,500 --> 00:12:40,660 that energy back, which is going to make sure the grid doesn't go 249 00:12:40,660 --> 00:12:44,740 into brownouts, which causes stress on electrical 250 00:12:44,740 --> 00:12:47,430 infrastructure. Yeah. 251 00:12:47,430 --> 00:12:50,070 And just to kind of like add a little bit more because this is 252 00:12:50,070 --> 00:12:52,670 something I'm super interested in effectively. 253 00:12:52,670 --> 00:12:57,550 Kind of what Bitcoin mining does is it increases the power usage 254 00:12:57,550 --> 00:13:01,030 all the time. So that way when power the 255 00:13:01,030 --> 00:13:05,390 community, society needs to pull more power from the grid, the 256 00:13:05,390 --> 00:13:09,150 grid, rather than having to go and find more energy uses, they 257 00:13:09,150 --> 00:13:13,150 can just incentivize Bitcoin miners to turn off, sell that 258 00:13:13,230 --> 00:13:16,070 energy back to the grid, make the energy available for the 259 00:13:16,070 --> 00:13:21,210 grid again and and that is a much, much healthier for the 260 00:13:21,210 --> 00:13:23,570 grid. And it's actually better for 261 00:13:23,570 --> 00:13:26,850 energy reliability because now you just have this grid that has 262 00:13:26,850 --> 00:13:30,730 the capacity to serve society no matter what. 263 00:13:31,090 --> 00:13:34,530 You know, the demand is rather than, you know, again brownout, 264 00:13:34,530 --> 00:13:37,970 which is effectively the grid has to turn off in certain areas 265 00:13:37,970 --> 00:13:41,210 because they're looking for more energy to bring online. 266 00:13:42,270 --> 00:13:44,310 I guess you want to respond to that, JP. 267 00:13:44,470 --> 00:13:47,070 I just want to say that, you know, we're so lucky to be able 268 00:13:47,070 --> 00:13:51,590 to plug in electric outs to the wall and have the assumption 269 00:13:51,590 --> 00:13:53,710 that they're always going to be working and it's always on. 270 00:13:53,710 --> 00:13:56,790 We take it for granted. And the reality is, is that like 271 00:13:56,790 --> 00:13:59,630 stable electricity, even especially in the US, wasn't a 272 00:13:59,630 --> 00:14:03,710 thing, you know, until 1970s when we had the National World 273 00:14:03,710 --> 00:14:05,950 Utility Electric Act. Most of the US wasn't 274 00:14:05,950 --> 00:14:09,830 electrified, wasn't, you know, didn't have the stable grid that 275 00:14:09,830 --> 00:14:13,030 we have today and so. That's so important. 276 00:14:13,070 --> 00:14:15,390 And we take it for granted, because when you think about how 277 00:14:15,390 --> 00:14:17,950 hard it is to live without energy, you're like, wait, I 278 00:14:17,950 --> 00:14:20,750 charge my phone, I charge my laptop, My refrigerator needs 279 00:14:20,750 --> 00:14:22,990 energy. You know, I'm like, at my phone, 280 00:14:22,990 --> 00:14:26,150 every single thing you touch, even my electric bike back there 281 00:14:26,190 --> 00:14:29,030 is using energy. And so it's like, it moves us 282 00:14:29,030 --> 00:14:32,630 through the world and without it it we're less productive, 283 00:14:32,710 --> 00:14:34,550 basically, and less effective as society. 284 00:14:35,290 --> 00:14:36,610 Totally. I mean, we wouldn't be doing 285 00:14:36,610 --> 00:14:40,210 this interview without. It would be great like this is 286 00:14:40,210 --> 00:14:42,770 only possible at this cost. We can just turn on our 287 00:14:42,770 --> 00:14:45,770 computers and get online and do it and record it and then stream 288 00:14:45,770 --> 00:14:48,170 it to the world because of our access to energy. 289 00:14:48,540 --> 00:14:52,980 So JP, I want to transition over to talking about the mining 290 00:14:52,980 --> 00:14:55,500 store. So you started the mining store 291 00:14:55,500 --> 00:14:58,660 early on and you know the business has kind of transformed 292 00:14:58,660 --> 00:15:01,340 through several cycles here within Bitcoin. 293 00:15:01,540 --> 00:15:05,700 Can you just talk about being an operator in Bitcoin, building a 294 00:15:05,700 --> 00:15:08,900 company through Bull and Bear and what's that like? 295 00:15:08,900 --> 00:15:11,260 And then we can talk about your your services. 296 00:15:12,020 --> 00:15:14,820 Yeah. So you know when you're in the 297 00:15:14,820 --> 00:15:17,540 mining business and especially in the Bitcoin business. 298 00:15:18,020 --> 00:15:22,060 It's 1 where no one wants to talk about Bitcoin and then 299 00:15:22,260 --> 00:15:24,020 everyone wants to talk about Bitcoin. 300 00:15:24,460 --> 00:15:28,260 And that always presents a struggle because you know, 301 00:15:28,260 --> 00:15:31,660 you're scaling rapidly. And then things go and go to a 302 00:15:31,660 --> 00:15:34,620 screeching halt, almost. And they slow, so slow, slow 303 00:15:34,620 --> 00:15:37,300 down. But it's let me be patient, let 304 00:15:37,300 --> 00:15:40,420 me figure out okay, how do I slowly scale a business? 305 00:15:40,420 --> 00:15:44,620 How do I scale a business that I know the hires I make today are 306 00:15:44,620 --> 00:15:48,100 not going to have to be let go when the bull market comes down? 307 00:15:48,420 --> 00:15:51,660 Or how do I scale a business with the intent of okay this 308 00:15:51,660 --> 00:15:54,140 hires for this many months or this many years? 309 00:15:54,580 --> 00:15:57,020 For this period knowing that it's a bull market and then 310 00:15:57,020 --> 00:15:58,860 we're going to have to let them go in the bear market. 311 00:15:59,260 --> 00:16:01,780 And so really trying to build the business in a programmatic 312 00:16:01,780 --> 00:16:05,380 fashion where the amount of machines we have running matches 313 00:16:05,380 --> 00:16:08,750 the amount of employees we have. And then it all comes down to 314 00:16:09,030 --> 00:16:12,630 services and what you want to add to it and how you can make 315 00:16:12,630 --> 00:16:14,550 Bitcoin mining easier, more accessible. 316 00:16:14,950 --> 00:16:18,070 And for me, that's the reason why I've been mining and started 317 00:16:18,070 --> 00:16:21,510 mining store was to get Bitcoin mining in the hands of 318 00:16:21,510 --> 00:16:24,710 consumers, in the hands of people who would not other would 319 00:16:24,750 --> 00:16:27,790 not otherwise be able to take that opportunity and get Bitcoin 320 00:16:27,790 --> 00:16:29,630 mining exposure. Because they don't want to spend 321 00:16:29,630 --> 00:16:32,710 the time, you know, running a whole facility, staffing it, 322 00:16:32,710 --> 00:16:35,110 cleaning their machines, dealing with the RMA's. 323 00:16:35,470 --> 00:16:38,550 And so our focus is on providing white glove solutions for 324 00:16:38,710 --> 00:16:42,230 consumers for larger institutions with building out 325 00:16:42,230 --> 00:16:44,830 their own facilities and owning them and then for your real 326 00:16:44,830 --> 00:16:50,510 estate investors, all right. So those are three different 327 00:16:50,910 --> 00:16:52,830 groups of folks that you're trying to work with. 328 00:16:52,830 --> 00:16:55,390 How do you, how do you kind of manage And it sounds like if 329 00:16:55,390 --> 00:16:57,830 you're talking to real estate investors to some degree, you 330 00:16:57,830 --> 00:16:59,430 might have to orange coat a little bit. 331 00:16:59,630 --> 00:17:02,630 I guess talk through, talk through those different elements 332 00:17:02,630 --> 00:17:04,490 of the business. Sure. 333 00:17:04,490 --> 00:17:07,730 So the, the first element of the business is the consumer, the 334 00:17:07,730 --> 00:17:11,089 basic consumer. And I've been on a journey of 335 00:17:11,089 --> 00:17:14,530 how do you provide Bitcoin mining access to people you 336 00:17:14,530 --> 00:17:19,050 know, for under $1000, for $100 and you keep, you know, we've 337 00:17:19,050 --> 00:17:21,730 heard of smart these, these hash rate contracts. 338 00:17:21,730 --> 00:17:24,690 And then there's people doing NFT's with Bitcoin miners. 339 00:17:24,970 --> 00:17:28,569 And what I settled on was doing something called a Reg CF, which 340 00:17:28,569 --> 00:17:32,400 is regulated crowdfunding. Which allows me to just create a 341 00:17:32,400 --> 00:17:35,360 company that's just a Bitcoin mining company with an 342 00:17:35,360 --> 00:17:38,400 influencer or with someone like with myself for example. 343 00:17:38,720 --> 00:17:43,320 And then say I'm going to raise money to buy Bitcoin miners and 344 00:17:43,320 --> 00:17:46,920 operate them on behalf of everyone in this company, 345 00:17:46,920 --> 00:17:48,360 everyone who invests in The Reg CF. 346 00:17:48,360 --> 00:17:51,280 So they're buying a security, and it's a regulated security 347 00:17:51,280 --> 00:17:55,680 that you can solicit on Instagram, TikTok all over the 348 00:17:55,680 --> 00:17:58,160 Internet. And so for that, that's one 349 00:17:58,160 --> 00:18:02,040 level where we're providing entry at $100 minimum and we're 350 00:18:02,040 --> 00:18:05,840 working with influencers to invest into Bitcoin mining 351 00:18:06,040 --> 00:18:07,520 through a program called Bit Vault. 352 00:18:07,720 --> 00:18:11,720 So if that's appealing to you, that's on wefunder.com and you 353 00:18:11,720 --> 00:18:13,840 can search Pit Vault. You can find different 354 00:18:13,840 --> 00:18:18,040 influencers of myself raising money all year round into these 355 00:18:18,040 --> 00:18:21,560 Bitcoin mining companies, and you own a percentage of those. 356 00:18:22,000 --> 00:18:24,160 They said the reason why we do that is to follow security rules 357 00:18:24,160 --> 00:18:27,840 and make sure that we can be compliant when we're issuing and 358 00:18:27,840 --> 00:18:30,480 offering these securities and knowing that you're only owning 359 00:18:30,480 --> 00:18:33,640 part of a Bitcoin miner. But the company is defined and 360 00:18:33,640 --> 00:18:35,760 it's not going to go out and spend, you know, millions of 361 00:18:35,760 --> 00:18:38,240 dollars on corporate jets like Core Scientific did. 362 00:18:38,240 --> 00:18:41,520 It has a very clear mandate and it's more of like an SPV or 363 00:18:41,520 --> 00:18:45,240 special purpose vehicle. The 2nd investors are going to 364 00:18:45,240 --> 00:18:48,000 be investors that are putting up $100,000. 365 00:18:48,410 --> 00:18:50,970 Now why don't you just take, you know, the investors that are 366 00:18:50,970 --> 00:18:53,530 taking $100 and say okay, yeah, maybe they maybe $100 is not 367 00:18:53,530 --> 00:18:55,610 enough to buy machines, but $1000 is. 368 00:18:55,890 --> 00:18:59,850 The problem is with from 1000 to $100,000 is when you scale your 369 00:18:59,850 --> 00:19:03,010 Bitcoin mine in order to keep costs down you need to make sure 370 00:19:03,010 --> 00:19:04,930 you can scale that customer service layer. 371 00:19:05,130 --> 00:19:09,530 And so if you have one owner of 1 machine and they are always 372 00:19:09,610 --> 00:19:11,850 you know putting in tickets and you got to manage their asset 373 00:19:11,850 --> 00:19:14,410 and you got to manage the life cycle of the asset, it's much 374 00:19:14,410 --> 00:19:17,480 harder to do. In that individual owner 375 00:19:17,480 --> 00:19:20,840 structure And so at $100,000 it's you have enough of a 376 00:19:20,840 --> 00:19:24,840 savings where that client's going to own maybe 20 machines, 377 00:19:24,840 --> 00:19:29,480 50 machines and they're going to be able to be serviced well and 378 00:19:29,480 --> 00:19:32,560 understand that their portfolio of machines will shrink over 379 00:19:32,560 --> 00:19:36,320 time and because of the nature of hardware and you know it 380 00:19:36,320 --> 00:19:38,400 failing. So that investor is part of our 381 00:19:38,400 --> 00:19:41,720 MMP program which is a profit sharing program where we're 382 00:19:41,720 --> 00:19:44,920 releasing that the machine from the investor operating at them 383 00:19:44,920 --> 00:19:47,640 and taking a percentage. Of the generated revenue just 384 00:19:47,640 --> 00:19:51,600 like a pool takes the percentage of of Bitcoin mine and then we 385 00:19:51,600 --> 00:19:54,480 charge electricity at cost plus a basis. 386 00:19:54,840 --> 00:19:59,160 And the last group of investors are large scale institutions who 387 00:19:59,160 --> 00:20:01,200 are looking for getting. Who are looking to get Bitcoin 388 00:20:01,360 --> 00:20:04,400 at A at a discount and facilities that they either own 389 00:20:04,480 --> 00:20:08,400 or are major investors in where they own the land, they own the 390 00:20:08,400 --> 00:20:11,520 infrastructure, they own the machines and they sign longterm 391 00:20:11,520 --> 00:20:14,880 contracts with us as an operator to operate their facility for 392 00:20:14,880 --> 00:20:17,200 them and. They receive the Bitcoin, they 393 00:20:17,200 --> 00:20:20,360 pay their power bills directly and we just helped facilitate 394 00:20:20,400 --> 00:20:24,360 the production, the deployment and then the operations of those 395 00:20:24,360 --> 00:20:28,280 mines and that's going to be closer to 5 to $50 million 396 00:20:28,280 --> 00:20:32,320 projects. Gotcha. 397 00:20:32,320 --> 00:20:35,360 So I mean, you're really kind of hitting the entire scale both 398 00:20:35,360 --> 00:20:39,720 with I guess, the crowdfunding option and then with the ability 399 00:20:39,720 --> 00:20:41,910 to. Own machines and I guess it's 400 00:20:41,910 --> 00:20:45,870 the leasing option And then lastly it's operating on 401 00:20:46,070 --> 00:20:50,470 investors land. I guess my question is in terms 402 00:20:50,470 --> 00:20:54,430 of you talked about there's this whole wide variety of different 403 00:20:54,430 --> 00:20:58,470 environments in which you can mine in, what's the when you are 404 00:20:58,470 --> 00:21:01,550 operating mines, what's kind of your bread and butter. 405 00:21:02,310 --> 00:21:05,890 So our bread and butter is gonna be in the Midwest and going and 406 00:21:05,890 --> 00:21:10,690 starting off at substations 5 to 15 megawatts building out there. 407 00:21:10,850 --> 00:21:14,450 That's where we've gotten really good at deploying hiring, 408 00:21:14,450 --> 00:21:18,370 staffing and ensuring that these facilities work well with the 409 00:21:18,370 --> 00:21:20,660 local grid. Now the grid's always changing 410 00:21:20,660 --> 00:21:22,940 and the grid rules are going to be changing over the next six 411 00:21:22,940 --> 00:21:25,020 months in the Midwest. And so that could provide the 412 00:21:25,020 --> 00:21:30,020 opportunity for us to deploy more facilities in, in a single 413 00:21:30,020 --> 00:21:32,500 area because we don't have to worry about the local 414 00:21:32,500 --> 00:21:36,220 communities power usage as we're not going to be impacted as much 415 00:21:36,220 --> 00:21:40,060 by our usage relative to theirs and that peak load and getting 416 00:21:40,060 --> 00:21:41,740 out of that peak load as I mentioned earlier. 417 00:21:41,980 --> 00:21:44,100 But that's where we're focused on, that's where we're scaling. 418 00:21:44,300 --> 00:21:47,220 And I'm also always looking for larger projects where you can do 419 00:21:47,220 --> 00:21:51,300 100 MW sites and those just require a lot more time and 420 00:21:51,300 --> 00:21:53,860 throughput and you have to build out more substation 421 00:21:53,860 --> 00:21:57,300 infrastructure versus sites that already have infrastructure, 422 00:21:57,500 --> 00:21:59,100 which is what we like to target today. 423 00:22:00,420 --> 00:22:04,420 And then on those projects, effectively the real estate 424 00:22:04,420 --> 00:22:06,780 owner, they're interested in getting Bitcoin. 425 00:22:06,980 --> 00:22:09,340 They own the ASICS, they own the infrastructure. 426 00:22:09,540 --> 00:22:12,900 You're making it all happen in turnkey fashion and operating. 427 00:22:13,500 --> 00:22:16,940 And actually operating the mine is that and some of those sites 428 00:22:16,940 --> 00:22:19,940 are owned by us as well, right. So some of those sites we have a 429 00:22:19,980 --> 00:22:22,420 portfolio of projects to building out and some sites will 430 00:22:22,420 --> 00:22:26,180 market to the family offices. They like sites that are in you 431 00:22:26,300 --> 00:22:30,420 know different areas, different tax zones and we really our goal 432 00:22:30,420 --> 00:22:33,900 is to find the lowest cost electricity and so we then will 433 00:22:33,900 --> 00:22:36,700 build out the sites, then we offer to our MMP clients, 434 00:22:36,900 --> 00:22:41,060 traditional hosting clients and then also The Reg CF default 435 00:22:41,060 --> 00:22:43,490 influencers as well. Gotcha. 436 00:22:44,010 --> 00:22:45,770 Awesome. I guess what's next for the 437 00:22:45,770 --> 00:22:49,130 mining store? What are you excited for really 438 00:22:49,130 --> 00:22:52,570 it's just adding more megawatts under management, scaling and 439 00:22:52,570 --> 00:22:56,330 then building a a presence where it it makes sense for 440 00:22:56,330 --> 00:22:59,690 influencers to come on raise through The Reg CF and are able 441 00:22:59,690 --> 00:23:04,410 to very quickly deploy their own Bitcoin mining community with 442 00:23:04,410 --> 00:23:06,890 their fan base. And so there's that continuing 443 00:23:06,890 --> 00:23:09,690 to put out social media content really trying to figure out you 444 00:23:09,690 --> 00:23:12,290 know what goes viral. We have this script that always 445 00:23:12,290 --> 00:23:15,090 seems to go viral and playing around with that more and really 446 00:23:15,090 --> 00:23:19,130 just driving awareness and engagement on social media as 447 00:23:19,130 --> 00:23:23,050 well about Bitcoin mining and its impact on the electric grid 448 00:23:23,170 --> 00:23:24,690 and how you can make money from electricity. 449 00:23:26,850 --> 00:23:30,170 So last question about kind of your offering and then we can 450 00:23:30,170 --> 00:23:33,890 jump into like what's happening in the Bitcoin mining landscape 451 00:23:33,890 --> 00:23:35,930 right now, because a lot of interesting things are kind of 452 00:23:35,930 --> 00:23:39,450 going down, but in terms of The Reg CF? 453 00:23:40,340 --> 00:23:43,980 You know what are I guess like what are the kind of risks 454 00:23:43,980 --> 00:23:47,140 involved when someone is is kind of investing in one of these 455 00:23:47,140 --> 00:23:48,620 projects? Yeah. 456 00:23:48,620 --> 00:23:51,220 So when you're investing in a Bitcoin, you know, Bitcoin 457 00:23:51,220 --> 00:23:55,500 mining, Reg CF, you're investing in a company that's gonna buy 458 00:23:55,500 --> 00:23:59,620 Bitcoin miners and run them in a hosting contract. 459 00:23:59,980 --> 00:24:02,620 So you're having, you have the exposure that any Bitcoin miner 460 00:24:02,620 --> 00:24:07,460 has on the electric electric prices, the price of machines, 461 00:24:08,020 --> 00:24:10,700 the operator's ability to keep up time. 462 00:24:11,460 --> 00:24:16,780 You know, the insurance costs or insurance risks of theft of a 463 00:24:16,780 --> 00:24:19,620 tornado, of a hurricane. You know, whatever that is, 464 00:24:19,620 --> 00:24:22,020 that's a real risk. And so you have the risk of 465 00:24:22,020 --> 00:24:26,220 owning a physical asset. The reason why it's potentially 466 00:24:26,220 --> 00:24:30,300 less risky than buying one machine is now you're spreading 467 00:24:30,300 --> 00:24:32,820 that risk over 50 or 100 machines. 468 00:24:32,820 --> 00:24:36,880 And so you own a proportional share of each machine because 469 00:24:36,880 --> 00:24:40,080 you own a share that represents that ownership in the company. 470 00:24:41,000 --> 00:24:46,400 That's the risk of investing in a Reg CF in in any type of, I 471 00:24:46,440 --> 00:24:49,320 guess, Bitcoin mining investment for us. 472 00:24:49,320 --> 00:24:52,840 We're focused on different types of distributions and each 473 00:24:52,840 --> 00:24:56,720 influencer can choose how they want to distribute the funds and 474 00:24:56,720 --> 00:24:58,280 when they want to distribute the funds. 475 00:24:58,280 --> 00:25:01,280 So for Josh, Terry, default which is one of the defaults you 476 00:25:01,280 --> 00:25:04,640 successfully raised, deployed and launched, he's going to 477 00:25:04,640 --> 00:25:06,640 distribute the Bitcoin after five years. 478 00:25:06,640 --> 00:25:09,960 So the investors in there are not receiving any dividends. 479 00:25:10,000 --> 00:25:13,480 They'll get depreciation or appreciation on the asset at the 480 00:25:13,480 --> 00:25:16,040 end of every year through K1, but they're not going to 481 00:25:16,040 --> 00:25:18,800 receiving any dividends until five years when they're going to 482 00:25:18,800 --> 00:25:22,840 get one lump sum payment either in cash or Bitcoin. 483 00:25:23,200 --> 00:25:26,720 And and that's, you know that's their final payout of the of the 484 00:25:26,720 --> 00:25:28,400 infrastructure and of their investment. 485 00:25:28,760 --> 00:25:31,480 For my investment work, I'm considering a few different 486 00:25:31,480 --> 00:25:34,300 options and looking to pay a flat interest rate or flat 487 00:25:34,300 --> 00:25:38,060 preferred return and then a split at the end of a five year 488 00:25:38,060 --> 00:25:42,500 period or seven-year period where the investor receives the 489 00:25:42,500 --> 00:25:46,300 capital left in the left in the entity at the end of the day. 490 00:25:47,700 --> 00:25:51,340 So I guess at that expiration period when the payout happens, 491 00:25:51,340 --> 00:25:53,820 does the entity kind of dissolve or like what? 492 00:25:53,820 --> 00:25:55,220 What happens? No more assets. 493 00:25:55,220 --> 00:25:57,580 It just dissolves. And it's just like, here's your 494 00:25:57,580 --> 00:25:59,300 funds, you know, we'd say what we were going to do. 495 00:25:59,580 --> 00:26:01,300 We're going to go buy as many Bitcoin as we can. 496 00:26:01,920 --> 00:26:04,280 You know, we're going to hope the Bitcoin appreciates as well 497 00:26:04,280 --> 00:26:06,480 on the balance sheet and then pay you out in cash. 498 00:26:06,480 --> 00:26:08,040 And so you're taking a long Bitcoin bet. 499 00:26:08,400 --> 00:26:10,920 And there's there are some influencers that we expect to 500 00:26:10,920 --> 00:26:13,320 say, hey, I want to pay everyone quarterly and I just want to pay 501 00:26:13,320 --> 00:26:16,200 them out, you know, annually. But it's up to the influence to 502 00:26:16,200 --> 00:26:19,080 decide their distribution because it's their offering. 503 00:26:19,280 --> 00:26:21,960 And with The Reg CF, you can solicit any security as long as 504 00:26:21,960 --> 00:26:24,480 it's defined and it's done through the right mediums and 505 00:26:24,480 --> 00:26:26,590 platforms. Gotcha. 506 00:26:26,590 --> 00:26:29,710 So really you, you kind of have like 2 audiences here. 507 00:26:29,710 --> 00:26:32,390 It's, it's the main audiences. You're looking for people who 508 00:26:32,390 --> 00:26:38,110 want to be able to have run a hosted Bitcoin mining business 509 00:26:38,470 --> 00:26:41,270 that have an audience. And on the flip side, you are 510 00:26:41,270 --> 00:26:45,870 looking for audiences that are interested in a turnkey way to 511 00:26:46,030 --> 00:26:48,870 mind. Bitcoin makes a lot, it makes a 512 00:26:48,870 --> 00:26:51,310 lot of sense and first time I've heard of the model. 513 00:26:51,430 --> 00:26:55,270 So very interesting to kind of see how that evolves. 514 00:26:56,420 --> 00:26:59,460 Wanted to pivot into talking about the actual mining 515 00:26:59,460 --> 00:27:01,940 landscape. A lot is happening right now. 516 00:27:02,420 --> 00:27:05,100 I could just list off a bunch of things, but I prefer just to go 517 00:27:05,100 --> 00:27:08,100 back to you and you know, maybe you can talk about what you're 518 00:27:08,100 --> 00:27:11,780 interpreting, you know, between the public markets, hash rate, 519 00:27:11,780 --> 00:27:13,340 all that kind of good stuff. You know what? 520 00:27:13,340 --> 00:27:14,900 What, what are you paying attention to? 521 00:27:16,610 --> 00:27:19,850 So for me, I'm paying attention. Obviously the bub goes, they're 522 00:27:19,890 --> 00:27:22,810 growing at a rapid scale. The ones who are owning and 523 00:27:22,810 --> 00:27:25,490 building infrastructure and have a lower operating cost and are 524 00:27:25,490 --> 00:27:28,930 continuing to deploy those projects are key opportunities 525 00:27:28,930 --> 00:27:31,470 in this space. Now obviously I think with the 526 00:27:31,470 --> 00:27:34,030 Bitcoin run up it was a little frothy before. 527 00:27:34,030 --> 00:27:37,470 You know, public stocks went up dramatically, 300, four, 100%. 528 00:27:37,710 --> 00:27:41,110 We saw Vanguard take a 10% share and Riot. 529 00:27:41,350 --> 00:27:44,150 So there is some massive institutional capital coming 530 00:27:44,150 --> 00:27:46,590 into these pub goes and buying up stock. 531 00:27:47,190 --> 00:27:51,150 We saw Tara Wolf announced that they purchased 18,000 S 19 XP's 532 00:27:51,150 --> 00:27:55,150 from bit main with delivery, you know November, October, December 533 00:27:55,390 --> 00:27:58,030 time frame. So there's only going to be more 534 00:27:58,030 --> 00:28:02,350 and more machines plugged in and these are S19JS151 terror 535 00:28:02,350 --> 00:28:05,150 hashes. And so the amount of capital 536 00:28:05,390 --> 00:28:08,630 that's going to be deployed on the balance sheet in books of 537 00:28:08,630 --> 00:28:11,710 these public companies is going to be astonishing. 538 00:28:11,710 --> 00:28:15,990 And it's going to be, it's going to rapidly grow because the way 539 00:28:15,990 --> 00:28:21,440 a Pubco is, you know it's mark gap is defined is on that cash 540 00:28:21,440 --> 00:28:24,160 flow and how many assets they have and what the asset value 541 00:28:24,160 --> 00:28:26,240 is. And so the goal of a Bitcoin 542 00:28:26,240 --> 00:28:28,960 mining company is to get as many Bitcoin miners on the books 543 00:28:29,760 --> 00:28:33,240 during the bull market and before the bull market during 544 00:28:33,240 --> 00:28:34,840 the having event. What I think is going to happen 545 00:28:34,840 --> 00:28:37,720 is I think S times are going to be obviously turned off S 546 00:28:37,720 --> 00:28:40,880 seventeens and any type of model in that range is going to also 547 00:28:40,960 --> 00:28:42,680 have to be turned off, won't be profitable. 548 00:28:42,920 --> 00:28:45,600 And even S nineteens and most energy rates are going to barely 549 00:28:45,600 --> 00:28:48,480 be profitable and could have to be shut off as well for a few 550 00:28:48,480 --> 00:28:50,760 weeks. Difficulty as we saw last having 551 00:28:50,960 --> 00:28:54,810 usually takes 30 days to adjust just because there's two 552 00:28:54,810 --> 00:28:58,250 adjustment periods down. And so if we're at, let's say 553 00:28:58,250 --> 00:29:02,090 six cents of Tara Hash now with that difficulty or the having 554 00:29:02,090 --> 00:29:03,850 event, we could be at three cents of Tara Hash. 555 00:29:04,240 --> 00:29:06,480 And then with those difficulty adjustments move back up close 556 00:29:06,480 --> 00:29:09,960 to that 455 range, but still not all the way up to six. 557 00:29:09,960 --> 00:29:12,960 And so as a Bitcoin minor, the best way to prepare for that is 558 00:29:12,960 --> 00:29:16,120 to build a cash position. Don't be afraid to take some 559 00:29:16,120 --> 00:29:20,000 cash off the table if you don't have a large Bitcoin stack 560 00:29:20,000 --> 00:29:23,080 that's unencumbered and be ready to turn off some of your 561 00:29:23,080 --> 00:29:24,920 machines. Make sure your energy contracts 562 00:29:25,120 --> 00:29:28,440 aren't going to force you to buy all that power and that you can. 563 00:29:28,440 --> 00:29:32,000 You do have the ability to shut off and not pay for energy, 564 00:29:32,000 --> 00:29:34,920 which is called a take or pay contract if you have to pay for 565 00:29:34,920 --> 00:29:38,280 energy and that's the best way to survive the having event in 566 00:29:38,280 --> 00:29:40,040 the bear market. And this will be my third 567 00:29:40,040 --> 00:29:41,680 having, so I'm super excited for it. 568 00:29:42,760 --> 00:29:46,280 Yeah, I mean I think that really good insight there JP. 569 00:29:46,280 --> 00:29:50,600 And I guess why don't you kind of break down what is the 570 00:29:50,600 --> 00:29:54,440 having, why is it good for Bitcoin and Bitcoin miners? 571 00:29:54,480 --> 00:29:58,160 And on the flip side, why is this such a stressful kind of 572 00:29:58,160 --> 00:30:00,740 event for operators to? You know obviously need to 573 00:30:00,740 --> 00:30:04,220 maintain cash flow and you know they have a lot of you know 574 00:30:04,500 --> 00:30:06,620 complexities in their operation per se. 575 00:30:09,300 --> 00:30:12,100 The biggest you know problem with a Bitcoin owners you're 576 00:30:12,100 --> 00:30:14,180 spending all this money on energy every day. 577 00:30:14,180 --> 00:30:16,740 And so most Bitcoin owners, you know we collect our Bitcoin at 578 00:30:16,740 --> 00:30:19,540 the end of the month. We like have to sell them or 579 00:30:19,540 --> 00:30:22,660 lend against them and pay our bills, pay our employees, pay 580 00:30:22,660 --> 00:30:25,540 our electric bills. And so when the having happens, 581 00:30:26,510 --> 00:30:28,190 you know the employees aren't leaving, they don't change. 582 00:30:28,190 --> 00:30:30,790 The electric price didn't just change. 583 00:30:31,310 --> 00:30:34,910 And so as an operator, especially at an operator who 584 00:30:34,910 --> 00:30:38,830 has debt and who has leverage, you now have to start pulling 585 00:30:38,830 --> 00:30:42,920 from your balance sheet in order to pay these liabilities until 586 00:30:43,200 --> 00:30:47,280 the value of Bitcoin appreciates rapidly, until mining 587 00:30:47,280 --> 00:30:50,520 profitability increases again where you can turn back on that 588 00:30:50,520 --> 00:30:53,000 fleet of machines. And so most operators are in 589 00:30:53,000 --> 00:30:56,680 this chicken and egg game of like do I buy new machines now 590 00:30:57,080 --> 00:30:59,200 or do I wait for the halving event to bind them because 591 00:30:59,200 --> 00:31:00,480 there's going to be some cheaper deals? 592 00:31:00,760 --> 00:31:03,600 Do I buy the latest version of machine or do I buy a cheaper, 593 00:31:03,600 --> 00:31:06,080 newer machine? Do I take these machines off the 594 00:31:06,080 --> 00:31:08,640 shelf because they're not profitable or do I keep them on 595 00:31:08,640 --> 00:31:11,760 the shelf because it takes time and energy to and maintenance 596 00:31:11,760 --> 00:31:14,640 and hours to take them off and then put them back on a few 597 00:31:14,640 --> 00:31:18,120 months later when they are and you what you're always managing 598 00:31:18,120 --> 00:31:19,800 that Rackspace. And so that's the name of the 599 00:31:19,800 --> 00:31:23,160 game of an operator is they have their fleet of operations. 600 00:31:23,160 --> 00:31:25,840 How do you get the most juice out of it? 601 00:31:26,120 --> 00:31:28,960 And then what type of incentives are outside of Bitcoin mine do 602 00:31:28,960 --> 00:31:32,440 you have in the energy business and and is there value to just 603 00:31:32,440 --> 00:31:35,720 running at break even if you can make money in the energy side of 604 00:31:35,720 --> 00:31:38,360 the business by selling the rights to the energy. 605 00:31:38,690 --> 00:31:40,530 Now the having is going to happen April and May and so 606 00:31:40,530 --> 00:31:43,050 you'll be going into the summer, which is usually when we see 607 00:31:43,050 --> 00:31:45,650 difficulty adjustments drop down either way because of demand 608 00:31:45,650 --> 00:31:48,330 response, because operations are harder to run in the summer. 609 00:31:48,570 --> 00:31:51,770 And so even in June and July, there could be significant drops 610 00:31:51,810 --> 00:32:00,050 in difficulty in 2024. JP is the having priced in. 611 00:32:00,050 --> 00:32:04,340 I feel like that's the age-old question is the having. 612 00:32:04,340 --> 00:32:05,820 No, the having is never priced in. 613 00:32:05,820 --> 00:32:11,300 I mean the the, the effects that Bitcoin miners it has on their 614 00:32:11,300 --> 00:32:13,900 industry is not priced. I mean that's why we see the run 615 00:32:13,900 --> 00:32:17,260 up every time we see a massive run up because it's like if we 616 00:32:17,260 --> 00:32:21,860 priced in the halving, the price would be gradually going up over 617 00:32:21,860 --> 00:32:23,620 time. But no, no one really cares. 618 00:32:23,620 --> 00:32:26,500 There's a halving and then the amount of Bitcoin miners, 619 00:32:26,980 --> 00:32:30,300 Bitcoin that Bitcoin miners are selling gets cut in half and 620 00:32:30,300 --> 00:32:32,620 it's like, oh, there's no more salt pressure on this book. 621 00:32:32,780 --> 00:32:36,700 It's very thin already. And the price rips and I think I 622 00:32:36,700 --> 00:32:38,780 think they're going to call it, you know, maybe this year or 623 00:32:38,780 --> 00:32:40,420 next year. Oh, it's, you know, it's a Black 624 00:32:40,420 --> 00:32:43,500 Rock ETF that's doing it. But no, this is program money. 625 00:32:43,500 --> 00:32:46,100 It happens every four years and it's the having event that 626 00:32:46,100 --> 00:32:50,340 causes it doesn't matter what new vehicle comes online that 627 00:32:50,340 --> 00:32:51,780 allows people to put capital into it. 628 00:32:52,300 --> 00:32:55,020 It's a plays a fundamental part in the whole thing. 629 00:32:56,300 --> 00:33:00,540 Do you ever speculate about? The timing of the having and the 630 00:33:00,540 --> 00:33:05,220 US political cycle, I mean I've heard heard the theory. 631 00:33:05,260 --> 00:33:08,340 I don't want, don't want to say I speculate about it, but I do 632 00:33:08,340 --> 00:33:12,260 think it plays nicely with being in the presidential election but 633 00:33:12,260 --> 00:33:15,940 being the same same year. And when everyone's talking 634 00:33:15,940 --> 00:33:18,380 about, you know, the the new elect, the new government or the 635 00:33:18,380 --> 00:33:21,380 new government, the new president coming in Bitcoin is 636 00:33:21,380 --> 00:33:25,540 saying, OK, I'm chugging away one block at a time, it doesn't 637 00:33:25,540 --> 00:33:27,960 matter. And by the way the price just 638 00:33:27,960 --> 00:33:32,120 got, you know, it just got much harder And the public, you know, 639 00:33:32,120 --> 00:33:34,160 they just they just they don't they don't really care 640 00:33:34,160 --> 00:33:35,920 necessarily like okay continue living my day. 641 00:33:36,240 --> 00:33:38,560 But the presidential election, we're all focused on that like 642 00:33:38,560 --> 00:33:40,040 Oh yeah, it's going to change my life. 643 00:33:40,040 --> 00:33:42,400 The reality is like the having will change your life and you 644 00:33:42,400 --> 00:33:45,480 can get economic freedom and financial freedom by paying 645 00:33:45,480 --> 00:33:47,840 attention to that. But people like shiny objects. 646 00:33:47,840 --> 00:33:50,730 That's why we don't focus on complicated things per se. 647 00:33:50,730 --> 00:33:53,370 If you're looking to make, you know, an entry into Bitcoin 648 00:33:53,370 --> 00:33:55,770 mining, you know the other route we haven't talked about, we 649 00:33:55,770 --> 00:33:57,050 talked about stocks, public stocks. 650 00:33:57,050 --> 00:34:00,170 And so you know Full disclosure I am invested in a lot of the 651 00:34:00,170 --> 00:34:03,930 pub goes so I do have incentives to talk talk about this. 652 00:34:03,930 --> 00:34:07,010 But the public companies you're you're wanting to understand 653 00:34:07,010 --> 00:34:10,090 like okay if Bitcoin having is going to be in May 2024. 654 00:34:10,250 --> 00:34:13,330 You know what type of you can buy option contracts you know 655 00:34:13,330 --> 00:34:16,090 for a year after that event like when the price of Bitcoin has 656 00:34:16,090 --> 00:34:17,969 gone up. The other route is to look at as 657 00:34:17,969 --> 00:34:21,050 a Coinbase, you know MicroStrategy, what companies 658 00:34:21,050 --> 00:34:25,650 have a lot of Bitcoin exposure that have the potential to you 659 00:34:25,650 --> 00:34:29,969 know you and get a value when the Bitcoin price increases. 660 00:34:30,350 --> 00:34:35,030 Because value in the public market is I would say aggravated 661 00:34:35,030 --> 00:34:38,710 or it's it's much larger, it's when it's in the public market 662 00:34:38,870 --> 00:34:41,190 versus the private market because of the multiples on 663 00:34:41,190 --> 00:34:42,630 those businesses and those companies. 664 00:34:42,909 --> 00:34:46,469 And so if you can think of assets or Pubcos that are going 665 00:34:46,469 --> 00:34:50,429 to have Bitcoin exposure and look for those purchases in 666 00:34:50,989 --> 00:34:55,230 December, in January of 20-25, then you're might be in a good 667 00:34:55,230 --> 00:34:58,270 place to, you know, to make some money outside of a Bitcoin run 668 00:34:58,270 --> 00:34:59,270 up. So. 669 00:35:00,070 --> 00:35:06,470 JPI want to talk about you know 273 days until the having 670 00:35:06,470 --> 00:35:10,430 estimated you know that's a little bit less than a year and 671 00:35:10,430 --> 00:35:15,230 you know and from a BTC denominated perspective you're 672 00:35:15,230 --> 00:35:19,870 going to be getting half as much Bitcoin after those 273 days are 673 00:35:19,870 --> 00:35:22,830 over. How do you take advantage in 674 00:35:22,830 --> 00:35:26,390 stacking as as much coin as possible given the fact that 675 00:35:26,390 --> 00:35:30,750 this kind of like? Timer is kind of clicking away 676 00:35:30,750 --> 00:35:35,510 and and you know how do you kind of operate once it becomes a lot 677 00:35:35,510 --> 00:35:37,430 more real that the having is on the way. 678 00:35:39,310 --> 00:35:43,230 Well, I would say it's can create extensive urgency to 679 00:35:43,310 --> 00:35:47,270 deploy capital to deploy machines to continue scaling 680 00:35:47,270 --> 00:35:50,710 projects For us. It's five MW sites, 5 MW sites, 681 00:35:50,710 --> 00:35:53,830 5 MW sites lining them up and it's less of like the having 682 00:35:53,830 --> 00:35:55,430 we're playing against. But it's really winter. 683 00:35:55,830 --> 00:35:57,870 You know when winter comes around in the Midwest, we can't 684 00:35:57,870 --> 00:36:01,110 put infrastructure in the ground for about a four month period 685 00:36:01,270 --> 00:36:04,230 because it's so cold. And in order to do that, we have 686 00:36:04,230 --> 00:36:06,910 to unfreeze or unthaw the ground. 687 00:36:07,230 --> 00:36:09,910 And so there's more of those technical problems that we're 688 00:36:09,910 --> 00:36:11,830 working towards. And so the goal is to build out 689 00:36:12,110 --> 00:36:15,310 as much rack space as you can and be filling your rack space 690 00:36:15,310 --> 00:36:17,590 quickly. So scaling A deployment team, 691 00:36:17,830 --> 00:36:21,070 working on deployment operations and showing that every part of 692 00:36:21,070 --> 00:36:23,230 the deployment checklist is done and verified. 693 00:36:23,230 --> 00:36:27,630 And that you're improving the process of how you're verifying 694 00:36:27,870 --> 00:36:30,630 on these sites. Hiring new technicians, getting 695 00:36:30,630 --> 00:36:33,830 them through your training programs before they go and are 696 00:36:33,830 --> 00:36:35,510 out in the facility or out in the field. 697 00:36:36,030 --> 00:36:38,270 You know, doing that prior to when you need them. 698 00:36:38,590 --> 00:36:41,750 So that when they're, you know, when the site's ready or as the 699 00:36:41,750 --> 00:36:44,310 site's being finalized, they're able to come on site and help 700 00:36:44,310 --> 00:36:46,700 finish that. So that's the keys that you 701 00:36:46,700 --> 00:36:49,220 know, key success that we're putting together in places, 702 00:36:49,500 --> 00:36:53,260 building this systematic process that can do five MW site this 703 00:36:53,260 --> 00:36:56,100 month, 5 MW site next month, 5 MW site the next month. 704 00:36:56,380 --> 00:36:58,740 And then still focus on your much larger projects where 705 00:36:59,020 --> 00:37:01,660 you're putting up a whole substation but in a building. 706 00:37:01,660 --> 00:37:04,220 And that's going to take you know the same a similar period 707 00:37:04,220 --> 00:37:08,100 of time, but it's going to take you know waiting on parts, 708 00:37:08,100 --> 00:37:10,460 waiting on components versus these five MW sites. 709 00:37:11,000 --> 00:37:12,840 It's very quick. We're buying off the shelf 710 00:37:12,880 --> 00:37:15,400 items. The lead times aren't very long 711 00:37:15,600 --> 00:37:18,080 and the amount of planning that we have to do on longer lead 712 00:37:18,080 --> 00:37:20,680 time items is minimal. But we're still deploying 713 00:37:20,680 --> 00:37:23,720 infrastructure and always you know adding more and more hash 714 00:37:23,720 --> 00:37:26,680 rate when it comes to the having a lot of people will stop and 715 00:37:26,680 --> 00:37:28,200 ask. We probably will too on the 716 00:37:28,200 --> 00:37:30,520 amount of new rack space we're building because some of that 717 00:37:30,520 --> 00:37:32,960 rack space will be turned off and won't be running as many 718 00:37:32,960 --> 00:37:38,410 machines. Makes complete sense. 719 00:37:38,490 --> 00:37:44,690 And you know ultimately it, it's something that if you have the 720 00:37:44,690 --> 00:37:48,610 luxury of being able to plan that far ahead, you would want 721 00:37:48,610 --> 00:37:50,450 to. But a lot of times with these 722 00:37:50,450 --> 00:37:54,010 mining businesses the, the constraints are a lot more right 723 00:37:54,010 --> 00:37:56,010 in front of you. You need to make it past this 724 00:37:56,010 --> 00:38:00,010 month of bills or whatever. And so it really is difficult on 725 00:38:00,010 --> 00:38:02,090 operators. Yeah. 726 00:38:02,090 --> 00:38:04,410 Every month is another month you're fighting for. 727 00:38:04,410 --> 00:38:06,450 And if you're even like you saw the pub codes, like some of 728 00:38:06,450 --> 00:38:09,210 those guys got so low in their stock, you know, wanted to 729 00:38:09,210 --> 00:38:13,210 declare bankruptcy or some of them declare bankruptcy because 730 00:38:13,210 --> 00:38:16,050 mining is not an easy game. And if you take out debt at the 731 00:38:16,050 --> 00:38:19,250 wrong time to buy Bitcoin miners, you will not be around 732 00:38:19,250 --> 00:38:22,330 because those Bitcoin miners you bought will never, no matter how 733 00:38:22,330 --> 00:38:25,370 well you run them, generated you enough Bitcoin in terms of 734 00:38:25,370 --> 00:38:29,560 dollars or in terms of Bitcoin, you know to to pay them back. 735 00:38:29,760 --> 00:38:31,760 And so that's what a lot of those pup goes did and that's 736 00:38:31,760 --> 00:38:34,840 why it's important you find people with a low cost, you know 737 00:38:34,840 --> 00:38:37,200 with it, with a great balance sheet, that's a public company 738 00:38:37,520 --> 00:38:39,880 and that are have great operations and low cost of 739 00:38:39,880 --> 00:38:42,680 energy. JP, this has been a great 740 00:38:42,680 --> 00:38:45,680 conversation. I think you, like really told 741 00:38:45,680 --> 00:38:49,680 the audience a lot of insider information about how this 742 00:38:49,680 --> 00:38:53,720 actually works and in in real life, right? 743 00:38:53,720 --> 00:38:55,480 And you've done it for such a long time. 744 00:38:56,090 --> 00:38:58,730 I want to give you a last word before we close out the 745 00:38:58,730 --> 00:39:03,290 interview. All I'll say is Bitcoin is 746 00:39:03,570 --> 00:39:05,850 amazing. It protects you from inflation 747 00:39:05,850 --> 00:39:08,010 which is taxation without representation. 748 00:39:08,530 --> 00:39:13,810 And check out my my Instagram is at John Paul Barak at Mining 749 00:39:13,810 --> 00:39:17,370 Store on Twitter. And TikTok, if you're on TikTok, 750 00:39:17,370 --> 00:39:20,690 is JP Barak as well, always putting out Bitcoin mining 751 00:39:20,690 --> 00:39:23,930 content and have a podcast called Digital Gold. 752 00:39:24,440 --> 00:39:26,240 If you're interested in learning more about the energy side of 753 00:39:26,240 --> 00:39:28,280 things and hearing energy experts talk about Bitcoin. 754 00:39:29,040 --> 00:39:31,000 If you're interested in building with us, reach out. 755 00:39:31,000 --> 00:39:34,160 We'd love to build with great creators, great developers, 756 00:39:34,160 --> 00:39:37,160 great people who are infrastructures, and if you want 757 00:39:37,160 --> 00:39:39,520 a technician job and you want to work on mining machines all day, 758 00:39:40,080 --> 00:39:42,400 I'm living in the middle of Iowa and the beautiful cornfields, 759 00:39:42,720 --> 00:39:44,640 let us know. Thanks again for the time. 760 00:39:45,240 --> 00:39:47,800 No, absolutely. Thank you so much for coming on. 761 00:39:48,000 --> 00:39:52,280 And to all the audience, thank you so much for listening. 762 00:39:53,230 --> 00:39:56,110 This has been CK with Bitcoin Magazine. 763 00:39:56,310 --> 00:40:00,950 You can come see me at Bitcoin Amsterdam October 12th through 764 00:40:00,950 --> 00:40:04,390 the 13th. Use promo code PM LIVE to save 765 00:40:04,630 --> 00:40:07,830 10% and a lot more. Exciting speakers being 766 00:40:07,830 --> 00:40:10,430 announced for that event is less than 90 days. 767 00:40:10,790 --> 00:40:13,430 Can't wait to see you there. Peace.