If we privatize the energy industry in Venezuela, which will be privatized gradually,
and we allow private operators to come in and say,
hey, look, Venezuela is no longer this single state-owned electricity utility company
that has to finance all of the power generation projects nationwide
with the help of XYZ Bitcoin Mining Company.
If we work together, we do a JV, you know, they can help us basically monetize that excess supply, energy supply that we would have previously been enabled to get demand for with only like a rural village in Venezuela.
So again, it's like an added benefit in another potential way of working out things for the benefit of Venezuela and the benefit of the electrical grid, the benefit of the energy sector.
And it adds up another wave.
Hey, everybody, Frank here.
Just wanted to say thanks to everyone who's tuned in to the previous two episodes.
The reboot of the show is definitely gaining some traction, and we greatly appreciate your support and attention.
On that note, before we get started with this episode, if you could hit the like and subscribe buttons, that would be fantastic.
If you could leave a comment, that'd be even better, or maybe even a review if you're listening on a podcast app.
Also, as for the conversation that you're about to listen to, I'm super pumped to share it with you all,
as I believe Bitcoin mining will play a major role in the revitalization of Venezuela,
including the rehabilitation and reconstruction of the country's power grid.
Yes, I think it's going to play that big of a role in the country.
So just to get you guys a little bit pumped up for what you're about to hear.
Finally, if there are any guests you'd like to see on New Renaissance Capital,
please email me at newrencap at gmail.com.
That's N-E-W-R-E-N-C-A-P at gmail.com.
And with that said, let us get to the episode.
Here is my conversation with Alessandro Cesare, El Sultan de Bitcoin on X.
Welcome back, everybody.
We are here with the third episode of the reboot of New Renaissance Capital.
I am Frank Corva, joined by a very special guest today, El Sultan de Bitcoin,
someone I followed on Twitter, X Forever, a Venezuelan, someone who was mining Bitcoin in Venezuela as far back as 2013
and eventually had to leave the country like most Venezuelans or about a third of the population.
We're going to talk a little bit about that.
We're going to touch on what has obviously what has happened with Maduro no longer being in power,
what Venezuelans actually think about that.
And then I think the meat of the conversation will be around mining Bitcoin in Venezuela, something that I think Sultan wants to go back to do, along with Luxor, the company he now works for, just to get mining operations back up and running, which I think will be a little bit, it's a little bit easier said than done.
But we'll get into some of those intricacies in just a second.
Let me pass the mic over to you.
If you wouldn't mind, just a brief introduction for the audience.
First of all, thank you, Frank.
It's finally a good connector.
were a couple of things over X.
Yeah, so I'm Al Sultan, Venezuelan born.
I've been in Bitcoin, as Frank mentioned,
for about a little over a decade now.
I get to see firsthand how Bitcoin was adopted
in the country through different phases.
So I'm sure we'll touch a little bit about that.
And I'm excited to share a little bit more detail
on the opportunity to mine Bitcoin with flared gas
or other energy sources in the country as well.
So if you could, let's just start a little bit of background. So 2013, towards the end of 2013, you start mining Bitcoin. If you could break down, I'm personally curious, but I think the audience is probably also curious. What was what were things like in Venezuela at that time? What city were you living in? And I say this, I was living in Venezuela through 2011. But I know things got progressively worse moving into 2013, 14, 15. So what was the state of things? What eventually led you to start mining Bitcoin?
something that you said was basically a financial lifeline for you and your family at the time.
Yeah. So 2013, 2014 was basically that period of time in Venezuela where Maduro was starting to do
his campaign so he could become president. In 2014, he became president. When we're speaking
about 2014 Venezuela, we're still speaking about almost 100% subsidized electricity rates,
retail electricity rates so basically that's what helped click bitcoin mining in the country
we're also talking about the era when the a6 were starting to come out so we're speaking about the
end miner s1 the end miner s3 potentially so i first started as a home miner in the country
my dad was his business he was an architect and he had a small business so he had a ton of like
custom-built PCs with GPUs, and I used a couple of those GPUs for GPU mining purposes.
And that's what helped us realize the potential of Bitcoin mining. So we eventually scaled that
to all the way up to 200 ASIC miners at some point. So my dad and I co-founded one of the
first Bitcoin mining farms in the country, potentially one of the first in Latin America
as well. But back then, we're still talking about a time when the Venezuelan state really wasn't
aware or paying attention too much to Bitcoin mining activity in the country. You were still
just like, you know, this weird dude just playing with magic internet money. What are you doing?
You're wasting your family's money on over the internet, that type of stuff. But, you know,
we did that until 2015. By 2015, we're talking about a period where, you know, inflation had
always been rampant since I was born in the country. But it was like, you know, gradually
catching up to all the way to eventually hyperinflation in 2017 so when you're talking
about that period you're you saw increasing interest in general from venezuelans in bitcoin
mining but for the purpose of getting a dollar-based revenue so yeah so you know you have
capital controls in the country uh inflation is going up salaries are still like capped or
regulate it. So as let's say you're a college teacher, if you were mining Bitcoin, you were
making more money than being a college teacher or sometimes a doctor in the country. So that's
how I would describe those initial stages of Bitcoin mining back then in the country.
Yeah, because I know that I think someone like Mauricio from Ledin, he often tells his story,
but he didn't start mining until what, 2016 or right before the government cracked down on it,
if I'm not mistaken, maybe a year or two before the government cracked down.
You were a bit earlier than him, if I'm getting this right.
That is exactly right.
Yeah, I cashed out of my Bitcoin mining operations in 2015,
specifically because it was starting to go into the purview of the Venezuelan estate.
Okay.
When you cashed out, did you or your family leave at that point?
Where did you go?
I mean, you had some Bitcoin.
Were you trading it for dollars to then be able to leave?
And obviously, please feel free to not include any details you can include here.
But but just kind of curious as to so you have this capital, you have this magic Internet money as you refer to it.
What do you do with it at that point?
Yeah, I still stayed in the country because, you know, the state of things wasn't that dire, I would say, as to, you know, 2017 or maybe 2019 pre-COVID when the electrical grid started failing and that type of stuff.
So back then, there was still this discussion going over what we call Bitcoin Twitter of self-custody.
How do you properly custody your Bitcoins yourself, especially after the MTGox debacle back then, right?
So hardware wallets were still like a nascent thing.
So that mostly got me interested into custody solutions.
And so I spun up a small Bitcoin custody startup in the country.
And that's what I dedicated my time for before 11, Israel, and eventually 2020.
Interesting.
Okay, so you were custodying Bitcoin for other people who had it, like a custodial service for Bitcoin.
Yeah, I was helping small fintechs and some banks in the country figure out how to set up their own Bitcoin custody setup
so that they could, for the banks and their small informal remittance providers,
they were already using Bitcoin for cross-border payments.
So they would buy Bitcoin with Bolivars and then sell them,
it's still on local Bitcoins for dollars or euros.
And so the idea on the pitch was basically,
hey, why don't you custody a part of your Bitcoins yourself
and remove a counterparty risk?
So that was mostly it.
Okay, very, very cool.
And there was a decent market for that, because I feel like with Bitcoin in Venezuela, as you said, there doesn't seem to be like a ton of people who were into it before.
Well, I don't know of anyone before you. As you said, you built one of the biggest farms in the country, if not in Latin America.
Was there a learning curve with this or did Venezuelans, because of capital controls and because of the remittance market developing, did they intuitively sort of understand the value in Bitcoin as a result?
uh it definitely helped still when you're talking about a new thing like a multi-signature and hey
here's this different vendors etc here's how we source these vendors securely uh there's a bit of
a learning curve as well okay um okay let's fast forward you leave venezuela in 2020 it's 2025 i
think it happened i'm sorry happened last month i think with maduro time moves quite quickly these
days. Six years later, Maduro's captured by the United States government for good reason. I think
people have very mixed feelings about this. When I say people, everyone from Venezuelans to New
Yorkers, I personally attended Maduro's arraignment in the Southern District of New York,
was really, really kind of blown away to see a protest outside when I arrived, which I wasn't
expecting with Venezuelans waving a Trump for king flag chanting USA while Americans are saying
free Venezuela release President Nicolas Maduro. My brain has not been the same since that moment.
It was quite a moment in time. But I did post something on Instagram and said, you know,
before you critique Venezuelans for being happy about the fact that Maduro was gone,
not necessarily happy about how it happened, but just happy that he's gone. Please understand the
damage that this human being did to Venezuela, obviously as a predecessor, as someone who
followed in Chavez's footsteps.
Could you talk a little bit about, in your opinion, how the average Venezuelan feels
about the current state of things in Venezuela?
Positive.
And I think there's balls that, you know, somewhere over 70 percent approval of a U.S.
intervention.
So look, different reasons as to why, obviously.
But when Maduro took power, the debt, Venezuela's debt, was circling around $32 billion.
Today, it stands at $180 billion.
And the big issue is, you know, back then, that was like 30% GDP.
But GDP contracted 70% as well during the Maduro administration.
So right now, our debt is 180% of GDP.
That's a lot.
Yeah.
So, you know, look, also, I think it is illegal under Venezuela law for the central bank to finance the government's deficit, basically, to finance the government when they're in deficit.
Or the state oil company, PDVSA.
Right now, the Venezuelan central bank is financing both.
like perevesa and the government are still being able to run it to a great extent because it is
being finalized but it is being financed i'm sorry by the venison central bank's money printer
basically so it's new issuance of money and this is what for the most part has you know created
this hyperinflationary problem in the country um the fact that they continue to finance things like
this. Essentially, there's no real income or no industry in the country. They're just printing
money to keep these industries going, essentially. Exactly. Interesting. So generally speaking,
Venezuelans are happy Maduro's gone. I know that there are some people who have, you know,
obviously mixed feelings or against it. As you said, it's about maybe 70% of the population or so.
It's not just going to be that a switch gets flicked right now. Actually, before we go there,
Delcey Rodriguez, the current, the former vice president under Maduro and now the acting president of the country.
Your personal thoughts on her? What is the average Venezuelan think about her as well?
She's closely tied to the previous administration.
And you could argue that it's the same administration to a great extent.
It's just being audited and fully controlled by the U.S. government at this point.
So I think in general, we don't favor her being the president. I think in general, we see as illegitimate Maduro's presidency, all of them.
But let's specifically talk about the last one right in the last elections, which, you know, the proof is there that the opposition leader in Mundo Gursales really won that election.
So without getting too much into the details, into the weeds of it, you know, she's de facto president right now, an interim president.
And so de facto, the U.S. administration is recognizing Maduro as a president, if that makes sense.
Yep, I understand. And also with Edmundo Gonzalez, I think people might be a little bit confused there because Machado is the person that people think should be president right now.
Can you talk about how I believe he I would say the best way to put it, he served as a proxy for Machado, if I'm not mistaken.
Is that the best way to put it? Could you describe that dynamic a bit?
That is that is the right way to describe it.
She she was basically she was ruled ineligible for the elections, and that's why she elected a proxy.
So that's why, in theory, he should be the president of Venezuela right now.
But also, it is what it is.
Look, there is a reality in Venezuela, which is the military side of things.
And that's it's a harsh truth because the opposition has no connection with them.
So in my personal, this is purely a personal view, but in my personal view, one angle by which the opposition has failed is it was they did a great job speaking to the civilian.
but they did a very poor job speaking to the military.
I appreciate that perspective.
I think it's really important.
I tweeted about this as well.
I tried to people who just thought it was going to be all roses
and either Machado was going to come in
or they're going to have an election tomorrow.
I think what most people don't understand is that level of connection
that was first established by Chavez and the military
and then obviously furthered by Maduro and the military.
It's he or she or they who controls the military
or has that connection is essentially in control in the country.
And that doesn't just change tomorrow because Venezuelans or the United States even wants
to see the next democratically elected Venezuelan president.
We all want that, I think, as proponents of democracy and people who want to see a free
Venezuela.
But as you just mentioned, from my understanding and based on what you just said, the reality
is far different.
You basically have to have the military under your control.
And Machado does not have that right now.
And it does see Rodriguez definitely does have that relationship right now.
Does that change at any point And what change is that That is a great question And I believe that nobody knows But I think the U Secretary U Energy Secretary Chris Wright who recently
visited Venezuela, he did signal, he did provide signal that between 18 and 24 months, we're
talking about democratic elections again in the country. So we're potentially talking, we're
potentially speaking about a up to two year transition period. The same as this is the
transition phase for Venezuela, etc. So, you know, we'll see how that goes. And I believe that under
an audit, like if we do have democratic elections again, and the U.S. is monitoring the elections,
I couldn't foresee a future where the current Venezuelan administration remains in power and
not a new one. Understood. Okay. So it's not necessarily that Machado is coming into power.
she might run in whatever that democratic election looks like at that point. It's just that ideally,
we see another election at some point. It's not that she just sort of takes the reins.
Yes, sir.
Okay, interesting. There was a lot of talk. I've spoken personally with Leopoldo Lopez about this,
and there's been a lot of talk about ways in which Bitcoin might be able to help in Venezuela. And
for the sake of this conversation, I'm not going to dive into whether or not
Venezuela has this huge Bitcoin fund that some have said that they have.
I don't think that's the case.
I think it was Jorge Gerasati and Mauricio went over this on Laura Shin's podcast and,
you know, basically said it is probably not likely.
But I think one of the things that I know Leopoldo is excited about on some level and
other people in the Bitcoin space is the idea of mining Bitcoin again within the country
and even potentially that being something that helps for the country to build capital reserves back up,
mining Bitcoin with stranded energy, with whatever renewable hydro, clean energy that exists in the country.
But I think you, more than anyone, have done a great job in explaining to people that this is easier said than done right now.
Part of the reason for that, the infrastructure in the country is shot and it has been shot for a long time.
It does not function properly.
Much of the country right now doesn't have access to sustainable power.
So from what I understand, please correct me on this statistic.
I think you talked about the amount of demand in the country, which is around 13 gigawatts.
And you wrote that there's only about eight gigawatts of production for the time being.
So setting up a backdrop here of what power production looks like, are you saying that
almost half the country doesn't really have access to consistent power?
so 13 gigawatts is the top demand the max demand on a yearly basis which is basically when the when
it gets hot and it's summer in the country and people have to turn on the their acs etc so yes
currently what's mostly power in the electrical grid in venezuela is the guri dam you know the
guri dam has a total installed generation capacity of a little north of 10 gigawatts
and it's currently servicing only producing only eight gigawatts so you know we basically at some
point during the year might go up to a deficit of five gigawatts in power and that's why we get
this like tactical uh shutdowns in the country some states lose electricity for a given
period of hours it's been up to some days in the past um so that's however we do have
and a total install generation capacity of up to 30 to 36 gigawatts
when you take into account our thermal production.
But that needs some investment in CapEx
because it's pretty much outdated, deprecated infrastructure.
So it's not working properly.
So this right here is where, you know,
potentially Bitcoin mining could fall into the conversation
because we basically could do what I said in that article,
a cash for infrastructure swap.
So big North American miners can come in.
They can help us recapitalize the energy infrastructure,
especially the ones that is gas-powered.
And here we're not talking specifically of only flared gas,
which was part of the focus of the article.
We're talking about any gas, right, stranded gas.
So if we allow them to come in, pour dollars into investing in infrastructure, and we give them guarantees so that we can sign long-term PBAs with them, so purchasing power agreements, and we give them the guarantees so that they can securely send their miners, set up operations, pay whatever taxes they have to pay, which that needs to be clarified.
and we'll dive into that in a second.
But basically, that's it.
When we're talking about flare gas now,
there's potentially north of two gigawatts of flare gas
that we're currently just like burning away, right?
It's north of 13 billion cubic feet of gas, okay?
So it is a huge opportunity.
Now, when I hear previously,
like when I hear people from the state
or with some connection to the Venezuelan state, whichever degree, Leopoldo or Maria Corina Machado.
I understand that they might see the opportunity.
However, what I think is we do have currently in Venezuela a legal framework that legalizes Bitcoin mining in the country.
So you need to go to the crypto regulator, Sunacrypt.
You need to notify your operations so you get approval through a Bitcoin mining license, basically.
But there's no tax that is stipulated in that framework.
So in theory, it's a zero cost, just a legal cost of setting up a legal entity in the country,
notifying to the regulator your activity, how big it's going to be,
and eventually just maybe the tax for importing the miners.
which is just like an import tax, right, on hardware equipment.
Yep.
Now, that's in theory.
In practice, what's happening is you need to pay somebody
that has affiliations with the government
so that you can have basically protection
so that nobody rates your operations.
And you pay a bonus, whichever that might be,
to get that license, which in theory should be somewhat free,
somewhat free so if you ask me the way that the government would have to participate in this is
just clarifying a tax what is their what is the royalty tax that miners or any operator in the
country that's consuming energy and that's you know capturing this flare gas has to pay the state
also this is potentially a little bit more viable than just per se mining with the electrical grid
And because, Frank, inside this equation fall the American oil companies or even foreign oil companies, because they're the ones that have the oil wellheads, right?
They're the ones that are operating the oil field.
So they are specifically the ones that are flaring the gas.
Can I ask a question there?
Actually, this is a great, really, really important question.
from my understanding a lot of oil production in the country or gas production in the country
stopped because as things broke down as society essentially broke down in venezuela people
literally stole even like the diamond heads off of the drills you would use to drill for it this
is what i was told years ago from family numbers um in the venezuelan family members and so
are there people extracting gas and oil the company you're saying there are companies right
now that are functioning there and that they're american companies where these deals made directly
with the maduro regime devron is in the country then you got shell shell repsol any and i'm missing
one yeah but it's basically those four so whichever whichever those four or five companies
somebody gets to them first and pitches hey you're burning a ton of gas we can buy that gas from you
okay or you know there's some business models in the industry already where the oil and gas company
provides the gas at zero cost but they they get a part of the revenues right they do
they do jvs and so the green flare mining is doing this in nigeria for example with the japanese oil
and gas company okay so it's doable the models are there it's just a matter of kicking off the
discussion and providing north american miners or foreign mining companies whatever
with the safety guarantees that they can you know ship hundreds of thousands of machines or
thousands of machines and that they won't be you know excessively tasked yeah or seized at customs
etc or eventually at the oil fields now that's one of the one of the benefit in my view of dealing
with gas flared mining in Venezuela because you're basically if you if you were able to do that you're
basically also somewhat backed by a foreign oil and gas company so they already have to a certain
degree guarantees even better ones now where they're operating right they're operating safely
Nobody comes in without their approval or the state's approval.
So you would be operating already in, let's call it a Bitcoin mining safe zone for the purpose of the conversation.
Okay, because all parties would essentially be winning in this deal.
Exactly.
Yeah, you'd be protected.
Jurisdictional risk was always one of the biggest risks, obviously, in Venezuela, but particularly since they had a full crackdown in 2017.
But I do want to back up just a little bit.
You've referenced this article that you wrote. You posted it on X, so Bitcoin Mining Around the World, Venezuela.
You did an incredible job in breaking down the nuances of what it would take to revive the Bitcoin mining industry or Bitcoin mining in general in Venezuela.
Also, how Bitcoin mining could then rehabilitate and help restructure and repower the grid in Venezuela, which largely doesn't work.
And there are certain parts of the country where it's difficult to get power from those parts of the country, which I think is the south through different parts of the country.
So if you could, could you give us a bit of an overview, maybe for those who haven't seen or read this piece,
of why you wrote the piece and then what was included in the piece?
Yeah, so first on that piece, I basically started with a bit of historical context.
So diving into at some point, you know, Venezuela, this is not mentioned in the article, but this is also a fact.
at some point Venezuela was the was the main supply of of Bitcoin volume inside local Bitcoins
in Latin America so most of the activity in Latin America that was coming through local Bitcoins
was specifically coming from Bitcoin mining in Venezuela and you know they basically served as
the supply side of Bitcoins in the continent. So it's hard to track that data and historical data
of like hash rate in Venezuela or per country back then. But there are some that would argue,
including myself, that at some point Venezuela used to be a top 10 country by amount of hash
rate managed globally. Right. So can I ask how much of the hash rate do you think was there maybe
at the peak? Yeah, I think that at some point we owned more than five percent of global hash rate
on the country. Yes. So, you know, Venezuela was famously back then known as the Bitcoin mining
cemetery as well. So all of the or all of the or most of the hardware that was becoming unprofitable
that was being squeezed through bear markets by American miners,
they would send those machines to Venezuela
to basically mine with less than a cent per kilowatt hour.
So yeah, very cheap rates, very hard to find elsewhere.
Now, that was basically what I described in the article back then
as the Wild West or the Far West era of Bitcoin mining in the country.
Because you're still speaking about not sophisticated miners or mining activities.
You're still speaking about spreaded and decentralized Bitcoin mining activity.
So this would be families that would buy, you know, all the way from one machine to 10 machines.
Whoever got interested in this ramped it all the way up to 20 machines.
but also like the hardware back then would last like what like a year that's what i was gonna say
you had to know how to repair these things if you were going to be sustainable no exactly yeah two
years two years at most doing forward calculations for bitcoin mining and like bitcoin mining
calculators rois that was insanely difficult um and also look the mining the asics were were
you know you could plug them to a 120 volt uh infrastructure now we're talking about three
phases so these are 380 volt machines nowadays it's purely it became like an industrialized
activity so that's part of what i capture in the in the article now based on what we're seeing at
luxury through hashrate index venezuela could have a little like sick i believe it's like five
exahash of hash rate. So that basically positions us a little less than 0.5% of global hash rate
currently. So we went from 5% global hash rate to 0.5% global hash rate. We lost potentially 90%
of our participation in the global hash rate map or global hash rate worth, as some people would
call it now depending on how you look at it most of the most of the hardware that was shipped to
venezuela to mine bitcoin was s7s and s9s so we're talking about the 2017 window etc
and that's basically now considered like obsolete mining equipment not not even old gen mining
equipment okay so if if you met if we measure it in terms of you know s9s purely s9s mining in the
country we're speaking about potentially you know hundreds of thousands of of miners currently
operating in in the country or okay so like mining mining hardware uh there's still some small miners
that are currently mining with new gen and mid-gen equipment so like hydros s21 hydros etc
But there's very small activity.
OK, so at most we're like mining with very antiquated hardware.
So if we upgrade that to like, let's say, American miners have right now sitting on some of their warehouses, all generation mining hardware that is basically just squeeze or unprofitable in Texas right now or different parts of the US.
if they ship that, they get to mine Bitcoin, you know, with all that hardware that they already own.
And Venezuela would be in turn upgrading like our base Bitcoin mining fleet hardware So we could potentially upgrade from S9s to S19s if you do the same calculation of moving you know those what is in the article i think we speak about 40 megawatts or something that we
using in in the country uh we could potentially go all the way up to 1.25 1.5 percent of global
hashrate just by helping us miners block the miners that they have sitting in their warehouses
doing nothing just by doing that that's not even including the flare mining with flare gas
that doesn't include mining with the 20 plus gigawatts of installed capacity that we have with
They're thermal plants.
So we could potentially become a top 10 or top five country by measured hash rate if we fully unlock all the potential of Venezuela for Bitcoin mining.
Amazing.
It sounds quite exciting to hear all this.
And I also just want to clarify, when you say American companies, you're talking about the major pubcos, riot, marathon.
is that what you're thinking when you say that or private enterprises as well
enterprises as well yeah you know the likes of like crusoe crusoe ai or like crusoe crusoe mining
they've already been mining with flare gas since 2018 okay so i think it's uh i think it's a mix
and probably at first you know before a popco sends hundreds of thousands of miners it'll
probably be uh you know a participant from the private sector uh or sorry like a private company
just saying hey you know let's ship 100 100 miners or a thousand miners see how it goes
i think that's how it'll it'll unravel do you think that there's sort of a potential do you
think in the minds of some of these companies there's maybe a first mover disadvantage in that
because as we talked before things are a bit uncertain with those who are riggs and her
connections to the military. And we don't necessarily have assurances that these facilities
that host this mining, that these things will be OK, that these machines will be OK.
I mean, and sending over 100 machines. OK, granted, it's not all the machines in the world,
but it's still there's there's an expenditure there. Right. What do you think it will take
for these companies to feel comfortable moving in? It's going to be more than somebody's word,
it seems like, because it just seems like the situation, while maybe it's better without
Maduro is still relatively uncertain and maybe even unstable. So what does it take to lay the
sort of groundwork necessary to get started with this? That's a great question. And look, I think
how I would start answering that, Frank, is for the listeners, you need to understand that
everything related to the energy industry or energy sector in Venezuela is being fully audited
by the U.S. Department of Energy.
So there's no project that will be approved,
nothing that will happen that will consume
a considerable amount of energy in our grid
or at a nationwide level
without the U.S. knowing it'll happen,
without pre-approval from the U.S., basically.
I think that miners, U.S. miners,
have done a great job,
especially like Texan miners,
at engaging with the energy regulator
and the DOE in the US.
So the DOE is aware of, you know,
the potential of Bitcoin mining for curtailing purposes,
for, you know, capturing excess demand
or excess supply of energy directly on site, right,
where the electron is being generated.
Venezuela needs most of our electrical problem right now,
our energy demand problem,
is more than the generation demand.
it's a transmission demand uh so we will need hundreds of millions of dollars if not billions
of dollars to rebuild all the all those transmission lines right recapitalize them
upgrade them and potentially a lot of that capix can be lowered if instead of building per se just
transmission lines and potentially not capturing all of the domain all of the power generation
right all of the energy that we can generate from those sites we could capture it with bitcoin
mining facilities right next to them so i think that's that's something that will need to be pushed
by the industry so it is it is as an industry us that we will have to engage with the doe
and to some extent the utility company in venezuela corpulec okay which is which is fully
state-owned but could potentially be privatized and privatization is part of the talks and the
requirements of the U.S. and the Department of Energy with respects with regard to the Venezuelan
energy sector okay and the Venezuelan energy industry participants in general so I believe
that we in the engagement of those talks to like push for a framework that can safely help
foreign companies mine you know legally and safely in the country it will have to come from us from
the industry from the bitcoin miners ourselves right from the bitcoiners now why i emphasize on
when i really say emphasize a lot like hey you was mining companies versus more general foreign
companies it's because if you look at our current agreement with the u.s it's look we're gonna buy
the oil but you're going to use most of those proceeds to buy u.s goods and services so if we
go to the department of energy and we say hey look there's all this flare gas but you know what
we can sell we can solve it we can sell it solely to u.s mining companies and that's the deal
you know look this is a safe heaven but for u.s mining companies first or at least the first
right right and then maybe other companies can come in but that's how i would expect things to
unravel before you know a big pubco sends miners to venezuela right like they will they will need
to see some assurances some framework that is being pushed some new laws that are being passed
maybe the current crypto regulator is unfit it's being restructured more than three times in the
country and it's only resulted in corruption schemes so maybe that doesn't work maybe we should
you know shove it off but who knows frank who knows i you have uh this plethora of ideas and i
genuinely appreciate your enthusiasm and i'm very grateful i'm happy on behalf of you know i'm happy
for the venezuelan people that someone is thinking the way you're thinking because i think the stakes
here are incredibly high when it comes to enlivening the country reinvigorating the power grid
making things work again for the Venezuelan people with this very misunderstood technology
with Bitcoin, this technology that most people don't have a great understanding of.
My question here for you is you've been using we, and I think you're using that term as a
Bitcoiner, but as someone who's going to be working with Luxor as well.
So I'm curious as to what you imagine your personal level of involvement is going to
look like.
Do you plan to be back on the ground in Venezuela anytime soon?
What are you going to be doing for Luxor?
How much sway do you have over influencing some of these dynamics that you're talking about?
Yeah, I do plan on going back to the country.
You know, sometime this year, I'm waiting for things to continue like stabilizing.
Yep.
Stabilizing.
They are stabilizing.
That's what we've seen from, you know, almost two months now since the intervention happened.
But I will try to engage in talks locally to push for the idea with different parts of the current administration.
I believe, as I mentioned, when we're speaking about the huge opportunity of mining Bitcoin with flared gas, I believe it's somewhat intelligent to try to engage the private side of the equation, which is the oil and gas companies and like engaging with the executives that they have locally in Venezuela to pitch that idea.
This is potentially something that will take years of talks.
We are anticipating that.
From a Luxury perspective, Luxury is a software and services Bitcoin mining company.
We don't run operations ourselves, but we have a plethora of U.S. Bitcoin mining companies as clients of ourselves.
and, you know, more broadly globally.
We have clients globally, you know, Middle East, Asia, Europe,
Latin America, and the U.S. included as well, all of North America.
So Luxor, one of the things that we serve is, you know, we have a pool.
We have one of the biggest pools in the market.
If we're going to mine Bitcoin in Venezuela,
those operations are going to need a pool, okay?
why shouldn't we pick a U.S. pool versus a Chinese pool, right?
The conversations with the U.S. and the U.S. regulator are
how do we get out some of the Chinese and the Russians out of the country
and we give more participation to American companies.
So that's one way we could help.
Also, if we're speaking about mining in some parts of Venezuela,
we're talking potentially the rural side or the countryside of Venezuela.
So those are places that during the summer gets hot.
So miners will potentially want to underclock some of their operations
and like have temperature control management there for software for that.
We offer some of that.
So I believe they're like at a operational level.
Luxor is not who will directly participate,
But Luxor has a plethora of ways that it can help miners that will operate in the country, be it logistics, sending the ASICs to the country, be it from a firmware perspective, be it from a pool perspective, be it from a financing perspective, because we're the only pool in the market that can offer upfront payments for your future production of hash rate.
So you could potentially foresee some miners that mine with Luxor send hardware to the country, operate it.
We collect their historic uptime and then we say, hey, we can help you sell forward up to 12 months of your hashering production
and then use that to purchase new equipment that you can send to Venezuela or send to the U.S.
So you could picture a world where you have all these U.S. miners.
They have all this old generation of artwork that is unprofitable.
They send it to Venezuela.
They collect more revenues.
And they could use those operations to sell forward the hash rate they're producing to finance the purchase of more equipment.
Or American mining companies for U.S.-based mining operations.
So different ways that you can look at this, but they're all strategic levers of saying, hey, we can continue connecting ties between Venezuela and the U.S.
Amazing stuff. I truly appreciate how your mind works with all this. Really, really good stuff.
One of the things that I'm thinking also is the story of Gridless a little bit about how, you know, they're they're the buyer of in some cases, the buyer of last resort.
They always make sure that people in villages and the places where they're mining or their energy facilities that they're using, that those facilities can provide affordable power to the people there who need it.
Obviously, before school, after before and after work, the times when the when energy use is high and they do more Bitcoin mining when things are a little bit lower, like during the night or during the day when people are at work.
Do you see some of this potentially?
Because so Venezuelans, before everything collapsed, they were used to having this subsidized power.
They were used to having a cheaper power.
Venezuelans obviously don't have a lot of money because of everything that's gone on.
I mean, that's evidenced by the fact that a third of the country has turned into refugees, essentially.
There was no opportunity.
Money there obviously is not worth much.
The Bolivar is not worth much.
Do we see opportunities for Venezuelans on the ground here in terms of Bitcoin miners being something,
buyers of last resort, or at least we know someone who's going to buy some of the electricity being
generated as the power grid gets renewed, gets rebuilt? Does that help Venezuelans? And then also,
are these companies potentially going to be hiring local? What I think about there is some
of the work that Sebastian is doing with the Block Data Center in the Congo. Some of the people that
work with Sebastian are some of the best mechanics that know how to fix these machines because you
You can't just go and send it back to China or wherever the machine is made.
They don't have the time to do that.
They don't have the resources to do that.
So does this also turn into an industry that, again, supports Venezuelans by subsidizing power on some level, the cost of power on some level, but that also potentially even provides employment to Venezuelans on the ground?
100% of both because what happens in those use cases you mentioned like in Africa is
you talk to the you talk when you talk to the energy producer that they're working with to
you know basically get them that demand that they were missing big what big this bitcoin
mining companies are doing is turn profitable some of their projects that were previously
unprofitable because they said, okay, wait, look, this part of Africa is missing electricity.
But if we go there and we, as an energy producer, and we finance this energy project, this energy
generation plant, there's not enough demand to make it profitable, to run it profitably. So that's
where if we privatize the energy industry in Venezuela,
which will be privatized gradually,
and we allow private operators to come in and say,
hey, look, Venezuela is no longer this single-owned,
state-owned electricity utility company
that has to finance all of the power generation projects nationwide,
and we allow private companies to come into the country,
you know legally established themselves and say hey now maybe there's not enough demand in this
xyz village but with the help of xyz pickling mining company if we work together we do a jv
you know they can help us basically monetize that excess supply energy supply that we would have
previously been enabled to get the man for with only like a rural rural village in venezuela
So again, it's like an added benefit in another potential way of working out things for the benefit of Venezuela and the benefit of the electrical grid, the benefit of the energy sector.
And it adds up another way.
It almost in a way sounds too good to be true, but we're seeing this reality play out.
Like I said, I think in the places where gridless operates, I always get this wrong, but I believe it's Malawi, Kenya and Botswana, if I'm not mistaken.
And so I think people, many people who are unfamiliar with this story, this reality of what Bitcoin mining can do might not see this opportunity.
So I think your work seems to be creating this framework for people in the in the so not only within the Venezuelan government to see the opportunity here, which is massive, but obviously then also being the liaison between.
I don know if it liaison but doing the work to convince companies to come there and set up shop and to then help to orchestrate all of this Who else This is a big you know this is a big endeavor I think that a modest way to put it
Who do you see working alongside you with this?
How heavy of a lift does this feel like in your mind?
Will people quickly or gradually see the opportunity that you see
and come on board to sort of naturally support just because the opportunity is there?
yeah look um i tweeted out this opportunity like a threat bay a threat form of the article
mentioning maria corina machado so the you know the facto opposition leader it went by her in
venezuela and i got tons of feedback from engineers uh oil engineers uh venezolan oil engineers um
a banker that i know pinging me privately like hey whenever this is up let me know how i can help
how we can like finance this so there's interest um and you know i believe again this won't be a
night today thing right it'll probably take years and potentially a new administration
administration i just say potentially maybe it can happen before um but i will do my best frank
that's how i can answer that you're already doing your best for sure which is really really inspiring
but it's good to hear that simply putting the signal out there putting the word out there
is attracting people with some know-how and some not only capability, but maybe financing
capabilities to come to your aid, because I think the opportunity is tremendous. And it seems kind of
like, you know, just a sit down or two with people at the very least, or simply putting out a tweet
thread would be enough to sort of open people's eyes to the level of opportunity here. More broadly,
when it comes to a Venezuela revitalized, renewed, a democratic Venezuela, a Venezuela that returns
to its glory days of maybe decades ago. I'm not sure. I think I know in the 50s and 60s,
Venezuela was truly a destination. But even up until the 80s, you know, it was still a place
where it did have its problems. Don't get me wrong. You call it the haves and the have-nots.
Don't get me, you know, that was there, but nowhere near what it's seen in modern history,
nowhere near that, but a place where there's at least opportunity again, some level of hope,
a place where we're not seeing a third of the country have to flee, where people feel safe,
where people feel they could build a life and build a family again. What does that timeline
look like in your mind? Yeah, well, look, as I mentioned, we own $180 billion. That is currently
180% of GDP. I believe that to start fixing the economy, the first thing that we, we have tons
of creditors outside and we defaulted both on our government debt and state oil company debt okay
we've been defaulting since 2017 when sanctions came in so we haven't even we haven't even like
paid the interest on that debt since 2017 the national institute of statistics in venezuela
has not been publishing the statistics of the economy since then,
since like even before.
So our creditors globally don't even have an idea
of what's the real state of the nation of the Venezuelan economy, right?
Like how much are we really making?
How much profit is the country getting?
And so how much can we service our debt
so that we can restructure the debt.
I hear from experts and previous directors of the of Venezuela Central Bank that I've spoken with that the process of just making transparent and calculating the state of the economy and the actual statistics of our economy is a process that will take at a minimum nine months.
So only figuring out where we're currently sitting at will take up to a year.
OK, so say a year of transition where we understand what our account balances are, like a real balance sheet, basically.
Say another year where we renegotiate the debt, right, with their with our creditors so that Venezuela's the Venezuelan government bonds get are quoted again.
in the international markets and they're not like sanctioned equity titles right like or or debt
titles i'm sorry and and then we restructure the debt that will be probably like another year
so the transition of just normalize normalizing things will take three to five years
okay three or five years at a minimum now what we've seen already frank is the dollar
has dropped by 50% in the country already.
That is...
Versus the Bolivar, eh?
Versus the Bolivar, yeah.
So the Bolivar has been gaining significant strength.
I haven't seen this on here. Is that right?
That is correct.
Oh, okay.
USDT, at some point during the intervention,
went all the way up to 1,000 Bolivars per USDT.
It's currently sitting at 500, 520.
It dropped all the way down to 385 Bolivars.
So at some point it dropped like more than more than 60 percent.
Right. So what happened, Alessandro?
What happened that that what changed?
Well, what changed is the state is no longer taking, wreaking in all the revenues from oil, from the sales of oil to wherever that went to before.
And now it's going directly to a trust and a bank in Qatar that the U.S. government set up for Venezuela's central bank.
And so the proceeds of the sales of oil to the U.S. are going to that account.
Then, again, as I mentioned, the Venezuelan government has to provide a plan for how they want to consume those revenues.
revenues, okay, and then it's audited by the U.S. and then released. What is released in this case?
It is those dollars are being poured into the private banking system in Venezuela,
and it's a bid and offer process, right, like supply and demand process for setting up what is
the rate in the economy, the exchange rate. So truly more like a free market type of thing,
It's not a single entity owned by the state that dictates, hey, this is the price of the dollar in the economy.
It's more like a participation of all the banking system, basically.
So what has happened is close to a billion dollars have already landed in the hands of the private banks in Venezuela.
and in turn those dollars are being resold to private companies in venezuela to import goods
from the u.s wow i did not know this was this had been good is this widely reported i feel like i
have widely reported and this is until then i can share with you from a private conversation that i
had with one of the presidents of one of the main private banks in venezuela i cannot share his name
yep but you get that you get it so that's the whole thing it's like we sell oil to the u.s
the u.s gives us dollars in qatar those qatar's go from the venezolana central bank in qatar
to the venezolana central bank in venezuela it is sold to the private banks and then the private
bank sell it sells it to private companies that import goods from the u.s so there's already some
progress being made like up to 20 percent of all the dollars that were poured into the venezolan
banking system through the venezolan central bank in 2024 have already been poured in venezuela
in less than two months
the state the state can no longer steal the oil revenues and that's what's happening we're
literally just fixing the accounting the accounting here and that's already making a huge difference
right like wow yeah see this is the stuff i you know it's hard like americans are just so caught
up on like uh oftentimes and i get it for good reason at a certain level like well it's just
another it's just another colonial takeover of a latin american country and blah blah blah i'm like
yeah but you don't understand okay theoretically sure no question that's what happened i get it
But on a practical level, things are changing and will continue to change.
And most Venezuelans aren't sitting around thinking in like a textbook, thinking, oh, well, these colonists, it's like I want to be able to eat in my country again and I want my country to function again.
And this may be like an unfortunate step or not the way some people envisioned it, but it is what it is.
And this is sort of what we're dealing with and dynamics, as you just described, are shifting as a result.
so i think looking at it through a little bit less of a philosophical lens and a little bit
more of a realistic lens of like okay some repair is already now taking place it's at least also
setting up a situation where someone like yourself who's obviously been incredibly active both you
know here in public and behind the scenes can go back to the country to actually sit down with
people and to and to have incentive-based discussions with them here here's how look
because what some of these people who are in power they're not maybe they're not inherently
bad people. They think they just had to sort of, they got swept up in whatever's going on there.
It's not that, you know, everybody there who had any sort of affiliation with Maduro, who was in
any sort of position of power, was inherently evil or won't do anything ever again there. Things are
going to shift. Some of those people might be involved. Some of those people might not be
involved as things change. But ideally, you want people to feel re-incentivized to do something
that they'll still be sort of making money or doing whatever they're doing, but also that
Venezuela will benefit as a result, where it's a win-win scenario versus the sort of only the government winning and extracting from people for the last two decades or whatever it's been.
More than that, Chavez came into power in the late 90s.
So sorry about that.
A little bit of a I'm just sort of thinking out loud here as I go through this, because I think it's a really exciting time.
But it does seem that people need to be mindful of the fact that it's not a snap of the fingers.
Everything changes overnight.
And I would imagine it's all just not smooth sailing.
There's going to be a lot of negotiations, a lot of things that need to shift.
But if we're already seeing a shift in the accounting, if we're already seeing certain deals being made that are benefiting both the U.S. and Venezuelan people,
if we're setting up a scenario where it's going to become or Venezuela can become a relatively business friendly state again,
and where some of that business activity will provide jobs and subsidized power and things for Venezuelans,
then in my mind it feels like we're on the right track but let me stop you know sort of ranting
about it there you tell me are you sort of i mean it sounds like you're optimistic about things um
you know just i guess maybe that's just as a final thought is it does this feel good you know i mean
venezuela has been through hell you were there while it was going through hell does it feel nice
to see something change you can see it as naive because i still haven't revisited the country
after everything that happened but it feels great man okay and like talk to talk to venezuelans
outside there's eight million people outside the country that as you mentioned we didn't leave
because you know things were were just like not okay now it's like it was like a big deal
almost all of them are happy with what's happening at the moment right like if if the bank and
eventually if the banking system down the road gets connected again with the global banking
system right so like you you don't have to juggle as a venezuelan overseas to send money back to
your family right you see a stabler dollar with respect to what the market was dictating so it'll
it'll it'll balance that that's basically almost like a de facto dollarization in the country
so people's wages will be kind of dollarized as well people's wages will improve we're finally
like dude we exported the first molecule of gas for the first time in history this month okay so
first time in modern minute well post all the uh post all the chaos i guess all the chaos correct
yeah post all the chaos so like change is happening there's tons of videos of like
hundreds of trucks of just like gas trucks to carry gasoline throughout the country
which was a common thing it's like hey yeah we are the country with the biggest oil reserve
reserves in the world but all of our refineries are screwed so we got to refine it overseas and
then we got to import it but we also didn't have like enough trucks to service all the gas bombs
in the country so even the gas bombs a lot of gas bombs are like inoperative so things are improving
gradually and i can maybe i'm not there but i got family there i got friends there i get people from
the industry that are there and everything that I'm receiving is positive comments.
I think we could leave it there. I think that's a good place to leave it. Sultan,
this has been a pleasure. As I said, I followed your work forever. I really admire, it seems like
what you're not only doing currently, but what you have been doing for a while, it seems like,
because it doesn't, I would imagine some of these people you're speaking with, those aren't
relationships that just get spun up overnight. So obviously you've cared deeply about your
country and fixing it in this time since you've been away. Ideally, if you do get back this year,
if you actually want to ping me and let me know if it's safe to come and visit, I'm very much
looking forward to getting back and seeing it with my own two eyes as well. But yeah, I wish you
and obviously the Venezuelan people all the best. I do hope that Bitcoin mining does have this
positive catalytic effect on the people there, on the country as a whole. And yeah, I think these are
ideally exciting times or making the best of a very tough situation. And it seems like we're
sort of pushing in the right direction. So thank you for the work you're doing to help that
be the case. And yeah, it's been a pleasure speaking with you, my friend.
Look, Fran, it's great connecting with you after so long. And look, one doesn't get to rebuild the
country every day of our life. Yeah, right. Man, maybe the time is now more than ever. And also,
So, you know, whenever the time comes to visit the country, I'll let you know.
And the first gold one goes on me, man.
I appreciate that.
Well, again, it's been a pleasure.
Yeah, we'll talk soon.
All right, sir.
Have a good one.
All right.
Take it easy, everybody.
Talk soon.
Pretty awesome stuff, no?
Alessandro is absolutely incredible.
I'm truly excited to see what he accomplishes in the upcoming year or so,
especially when he returns to Venezuela to start doing some work on the ground.
Venezuela is super lucky to have someone like him,
someone who truly gets Bitcoin and Bitcoin mining and who also truly wants the best for his country.
Really, really exciting stuff. Thank you to everyone who tuned into this episode. As mentioned,
if you could hit the like and subscribe button, maybe leave a comment or a review,
I would greatly appreciate that. It helps the algorithm to find us and we're trying to make
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Again, thank you to everybody for watching. We will be back next week. Take it easy, everybody.