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kent thanks for coming to austin excited to record this podcast center of hash i think we're at

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episode 10 and we skipped a few weeks but uh first how was your first crossfit this morning

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oh it was fun man it's been a lot of years since i've been in a gym and working out with a bunch

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of dudes like that so yeah it was fun um and i will be sore and not certain if i'm going to be

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able to put my bag in the overhead bin after all those presses. Guys and girls, we've got a

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Bitcoin group that goes to CrossFit a couple of days a week. And so both represented, but you

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hadn't done it before and it was good to get you out there. Yeah. Good way to start the day. Yeah.

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Thank you. And it's fun to be here, man. I'm glad to be recording with you. And you were at TabConf

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just before this? Yeah, that was the real motivation to get into the U.S. You know,

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I live abroad, but I came for TabConf. You know, development and developers are a big part of our

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business at SAS Mining. And so I came to, you know, rub elbows with that community and learn

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what I could and then flew here to Austin afterwards to record with you. Quick shot over

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to Austin from Atlanta before going back to South America. Appreciate you sliding through.

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so you're founder and ceo co-founder co-founder yeah and ceo of saz mining so a bitcoin mining

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company the set of baseline before we get into the mining business itself and how you guys approach it

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explain a little bit about your background in energy and what led you to both bitcoin and

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bitcoin mining but start specifically with with your background just to give some of that color

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in context? Yeah. So I, I know everybody's got a unique path, right? I just think that mine is a

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little, a wider weave than most, uh, to get here. So I, um, did computer engineering in California.

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Um, actually did it on, if you know who Bob Burnett is CTO of gateway computers. I, uh,

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got a computer engineering degree on one of his computers that he designed, which is very

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synchronous because he's now a, an advisor for SAS mining and friend. Um, but, uh, I did computer

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engineering and then I got quite passionate about solar rooftop solar specifically. And so from about

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2008 until 2005, excuse me, to 2014, I worked in that industry and, um, there's a lot of parallels

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to mining. I didn't realize it at the time, obviously. Uh, but in that industry, you know,

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I ran sales software and post acquisition integration for a publicly traded company

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where we had like nine figure revenue targets. And the odd thing was at that point in time,

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I was competing with like Elon Musk cousins. He was helping to support. So those were kind of my

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primary competitors. But then the board of the company I was working for, they decided to bring

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in a new CEO. And I said, you know, I've always had a dream of seeing the world. So this seems like

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a good time to exit Sage left. So I threw on a backpack and I traveled, took a couple of years

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sabbatical. And during that two year timeframe between 2014 and 2016, I fell in love with a

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Portuguese woman and Bitcoin. So my life restarted in Portugal in 2016. What was first, the Portuguese

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woman or Bitcoin? Portuguese woman. Yeah. But it was oddly enough, both happened in Peru and within

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about a year of each other. Yeah. So kind of, kind of odd. And I now live in Peru. But the,

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the story for how I got to Peru is, is, is that I was in Portugal, tried my hand at all sorts of

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different Bitcoin entrepreneurial activities. And ultimately after reading Jeff Booth, The Price of

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Tomorrow, there's a chapter on solar and Bitcoin mining. I was just like, oh my gosh, what have I

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been doing? Let me figure out how to get into mining. And so had a mutual acquaintance from

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the solar industry that knew the founder of SAS Mining put us in touch and I joined up and helped

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the founder raise some capital and pivot the business into what we're now doing. And then

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eventually the founder actually handed it off to me to run the business. But during this time,

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my wife and her work actually took us to Peru. So that's how I ended up in Peru since about 2021,

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we've been living there.

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At a top level, how do you think about solar energy

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in relation to Bitcoin?

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Bitcoin mining?

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Yeah, I think there's an inevitable collision

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that's going to happen there.

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And I don't think that all the technology

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has fully been worked out yet.

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And I think the magic piece of that is batteries.

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As the cost curve of those come down,

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see the thing about solar that I think a lot of people

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miss in our industry is that it's very analogous to Bitcoin mining. So it's decentralized,

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distributed, disruptive to the grid. You're importing it from China primarily.

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The infrastructure.

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The infrastructure. Yeah, the panels themselves come mainly from China.

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And then your profits are constrained by an energy network. All of those characteristics

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are the same for mining. Now, the cost curves for solar have come down faster than any other

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industry or energy source and you partner that with the fact that solar is the only way we can

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make electricity without moving anything means that the longevity of solar panels is incredible,

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truly. I think it's an application specific issue, but as solar integrates further and further

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into the energy networks along with batteries, I think that Bitcoin mining is kind of the third

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leg of that stool that's really going to make that come alive in a big way. And I'm not as big

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a fan as like the industrial scare, the mass solar farms as I am, like use the real estate that's

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already on people's roofs. But at a certain point when solar gets cheap enough, which it is

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trending that direction, it's going to be pretty ubiquitous. I mean, you see China installing just

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incredible amounts of solar power right now, more than any other energy source.

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before we get to says you mentioned reading jeff booths the price of tomorrow having your background

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if you could just discuss a little bit of that rabbit hole in your own kind of journey to bitcoin

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at a more detailed like what made it click for you and then um kind of your initial thinking and

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how that might have evolved from when that was oh man so i i first bumped into bitcoin in 2015

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And this was during the time when I was on the sabbatical and I was traveling and, you know, getting money in different countries was always just kind of a pain in the arse, right?

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And so as I just stumbled into, you know, I had free time.

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I was living in the sacred valley of Peru for a couple of months and I was just going down different rabbit holes and studying different things.

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And I came across the white paper, read it, and I was like, oh, this is interesting.

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I'm going to go check it out and buy a little bit and play around with it.

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And just as a computer engineer realizing, oh, I can transfer value all over the world and I don't have to be restricted in this way that I have been.

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I've traveled and trying to get money out of various ATMs.

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Like this is incredible.

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So that was kind of the step one.

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And then I got sucked into, you know, the shitcoin wheel of samsara, right?

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It kind of pukes you out and you get to the other side, you know, purified and realizing that really I should be in Bitcoin.

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You know, I did that for a couple of years.

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But that process, I always came back to the signal that I was reading various books about

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Bitcoin itself and money.

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And I think really, you know, that fundamental question, what is money, came to the surface.

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And as I studied that, there's just several aha moments.

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You know, Breedlove's series with Sailor was probably one of those.

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The Bitcoin Standard was another one of those.

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They're just certain aha moments to where, oh, I get it.

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And then you see the world differently.

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It's like part of the matrix opens up to you, right?

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And then you can't go back from that.

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You know, it's like, okay, I could deny I've had this experience or I integrated into my

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worldview and move from there.

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So as I move forward, it just became clearer and clearer that this was the solution to

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this age old problem, right?

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Of basically human greed being sacrificed at the altar of the money printer that has

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plagued us, I think, since 5,000 plus years at this point. And this is the first time we have a

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way to escape that particular trap. And I think it's a civilizational shift that we're going

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through as a result. And so you have an energy background working on the solar side.

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At what point and how did your thinking evolve to connect those in a deep enough way to want to work

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on Bitcoin mining specifically?

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Yeah, it's just very simple.

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So the cost curves of solar coming down

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and getting to be the cheapest energy source on the planet

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combined with Bitcoin mining's need for the cheapest energy

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to be the most profitable, right?

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The biggest input cost for mining is electricity.

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So if you want to be the most profitable miner,

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you're constantly seeking the cheapest energy you can find.

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And if solar is going to become that,

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and it seems inevitable that it will,

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to me over time, which is what chapter five of Jeff Booth's The Price of Tomorrow also reflects.

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Specifically on solar?

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Yeah, the whole chapter's on solar and how the cost curves are coming down.

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And if you just simply look at those cost curves over time, you know, it's not more as I forget what it's called,

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but there's a similar governing rule in solar that every 18 months, basically,

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the cost of production drops by like 10 or 20 percent, something like that.

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So it's just cratering.

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And as energy gets cheaper and cheaper and more ubiquitous, what does that unlock?

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And then in your words, how do you describe the relationship between Bitcoin and energy?

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I actually don't see them as separate.

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I actually think like sats per kilowatt hour is going to become a meaningful metric.

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I think that they're flip sides of the same coin.

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in, I mean, it's an abstraction, right?

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It's not like directly, like you take a Bitcoin

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and you've got electricity tied to it,

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but it is what is securing the ledger.

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And so from where I sit,

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I think that you're looking at the kilowatt hour

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replacing like the dollars per barrel metric over time

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as a result of this shift, not just for Bitcoin,

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But also when you look at AI and the direction society is going for electrification of the grid, electrical cars, I just think that we're moving in a way to where electricity, which is this prime force, right?

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It's electricity that fires our neurons or our synapses, right?

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And cause us to move.

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It's this prime driver in our reality.

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but it seems like it's tying us closer to ultimately this thing

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that so many great thinkers before us have come to, right?

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Like Henry Ford, Thomas Edison, Buckminster Fuller,

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they all saw that money tied to energy was the ultimate way

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that we could get away from the tie of fiat money printing.

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In fact, I think it's this week that Elon just tweeted the same thing, right?

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Yeah, yeah.

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Yeah, he made a comment about how,

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basically fiat can be faked and any country that has a fiat currency does yeah and he basically he

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says something along the lines of and that's why bitcoin is tied to energy yeah then how do you

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think about the the business of bitcoin mining oh that's a very broad question so

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like and i can be more specific yeah please in terms of

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if you were, you know, at a greenfield looking at building a Bitcoin mining business,

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what do you, what are the most important levers to running a profitable Bitcoin mining business?

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Yeah. Let me actually come back to your first question because there's a framing that I don't

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hear many people talk about that I use, and I actually think it's helpful to think about

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Bitcoin as a manufacturer, mining as a manufacturing process, right?

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Manufacturing processes have supply chains. And if you look at what that supply chain looks like

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in our industry, talking about greenfield, right? So you've got some raw source of power,

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whether you're splitting an atom, you've got water falling, you've got wind blowing,

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you've got photons coming from the sun, you've got some raw source of energy you have to harness

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and turn that energy into electricity.

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That's the power generation.

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And maybe that generation isn't there on site.

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Maybe you're tying into some high voltage electricity

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that you need to bring down to a usable form of electricity.

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So that's outsourced someplace else from the location of the mine.

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But ultimately, you need that power generation.

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Then you need the physical site where it's going to be,

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and you need to develop that site.

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And then once it's developed, then you need the...

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So going from greenfield maybe to brownfield,

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Then you need brownfield being like basic infrastructure for, let's say, like co-location, right, where you still need containers.

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You still need the final transformers maybe and the racks to put the Bitcoin miners in.

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And then somebody needs to bring the miners in and somebody needs to operate and maintain those.

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And those to me are all different slices of the supply chain.

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And the output of all of that is Bitcoin that's sent to somebody's wallet, right?

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and generally whoever owns the rig

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is who is getting the Bitcoin.

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This is simplified what I'm saying,

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but those are kind of the various slices of the supply chain.

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Gideon Powell, do you know Gideon?

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I don't.

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I've heard the name, but I don't know him by name.

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We co-authored a piece in NAEP,

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which I think it's the North American Petroleum Expo.

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I always get the name wrong,

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so I probably got it wrong there.

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But we had co-authored a piece.

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It's an oil and gas publication.

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We talked about Bitcoin and specifically why Texas was a hotbed for Bitcoin mining.

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And part of his contribution in the piece referred to, this was from 2020 or 2021, possibly 2022, sometime in that timeframe,

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that Bitcoin mining was the most fungible manufacturing operation that exists with the principal cost being the cost of power

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Obviously, there's ASICs, but in terms of the actual conversion of power.

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So interesting that you kind of framed it the same way.

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Another way that I've started to think about it is, and maybe this is in relation to how you think about it as a manufacturing operation,

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is that of all the goods that could be manufactured,

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its process is completed closest to the source of energy.

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Like everything else that would be manufactured or refined

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converts to electrons, needs to move somewhere

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and be further refined to then ultimately reach an end market.

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But Bitcoin consumes the power right on site

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and the manufacturing operation is complete.

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and this is where I want to go into the sites and how you think about sites

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because of that relationship does basically it's almost I don't want to say the simplest

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manufacturing operation but it's just that it's it's the most upstream

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how does bitcoin from an energy system perspective and I'd like to hear in relation to how you think

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about cheap power in different sites,

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how does it play into determining

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what might be an attractive site?

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And then how do you think,

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you operate on four continents,

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North America, South America, Europe, and...

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Africa.

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Africa.

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So the relationship between Bitcoin mining

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and energy systems,

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how it can help solve problems.

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And then when you think about site selection,

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what are the principal drivers

220
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of how you actually determined this is a good site for SAS

221
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in relation to an energy system.

222
00:16:45,025 --> 00:16:50,185
Yeah, it's interesting because I think first it makes sense

223
00:16:50,185 --> 00:16:53,865
to talk a little bit about SAS and our slice of the supply chain

224
00:16:53,865 --> 00:16:57,845
to explain that because it directly impacts the sites that we look at.

225
00:16:57,845 --> 00:17:00,725
So when I looked at the supply chain,

226
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I compared it to the supply chain I knew coming from rooftop solar.

227
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And one of the things that I knew for another emergent industry, right, which was about 10 years ahead of the Bitcoin mining industry, is that managing the customer relationship actually was incredibly difficult.

228
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And there is value there.

229
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And it seemed like it was being underserved in our industry.

230
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So that's where I placed myself.

231
00:17:28,025 --> 00:17:30,585
And I also took the bet that—

232
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Describe that customer relationship in the context of SaaS.

233
00:17:34,445 --> 00:17:38,845
So, yeah, there's a lot of folks that want to get Bitcoin.

234
00:17:39,045 --> 00:17:40,605
It's wild in mind, right?

235
00:17:40,665 --> 00:17:47,805
So KYC free Bitcoin, but they don't have cheap electricity at home to be able to do it in a cost effective means.

236
00:17:48,065 --> 00:17:55,065
And so, therefore, there is this business demand for low cost energy data centers, right?

237
00:17:55,065 --> 00:18:05,225
That's where the hosting model ultimately springs from is because they're able to have energy at a price that a homeowner or somebody in most locations can't.

238
00:18:05,265 --> 00:18:10,545
So to put some numbers on it, right, I think the average cost of retail power right now in the U.S. is like 19 cents.

239
00:18:11,185 --> 00:18:16,665
And you need really sub 7 cents per kilowatt hour to be cost effective in Bitcoin mining.

240
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That's a big gap.

241
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Very few people in the U.S. can get access to that.

242
00:18:20,165 --> 00:18:25,765
So that lack of access spurs the demand for like the traditional hosting business model.

243
00:18:25,905 --> 00:18:37,185
But what I saw coming from the rooftop solar industry was, and it's sort of contrarian to our industry, where a lot of people are saying, hey, you need to own as much of the supply chain as you can.

244
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And what I saw the winning play was in the rooftop solar business was there was in there's companies that tried to do the same.

245
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But the companies that focus on one niche and specialized, they were actually the ultimate winners in the long term.

246
00:18:51,165 --> 00:18:53,225
And so that's where I tried to focus is cool.

247
00:18:53,365 --> 00:18:57,505
Let me just try to own the customer relationship and what's not working there.

248
00:18:57,525 --> 00:18:59,285
And what I saw not working there was trust.

249
00:19:00,165 --> 00:19:03,805
And so I looked at it and said, OK, how do we optimize for trust?

250
00:19:04,465 --> 00:19:06,965
How do we make sure we align ourselves with our customers?

251
00:19:07,185 --> 00:19:12,385
And then this directly impacts how we choose sites because trust is involved with that.

252
00:19:12,465 --> 00:19:17,585
So I see myself actually as kind of a rig custodian, if you will, or an ASIC custodian,

253
00:19:17,745 --> 00:19:22,725
because we manage property that our clients own, right?

254
00:19:22,825 --> 00:19:26,105
And so there's three ways that you can make money in that type of a business model.

255
00:19:26,585 --> 00:19:28,445
You can make money selling hardware.

256
00:19:28,805 --> 00:19:30,105
You can make money selling electricity.

257
00:19:30,405 --> 00:19:34,105
Or you can figure out a way to participate with the rewards that are generated.

258
00:19:34,105 --> 00:19:39,985
And if you do that and you tie yourself to only that, then you're suddenly aligned with your client.

259
00:19:40,385 --> 00:19:41,025
And so that's what we did.

260
00:19:41,085 --> 00:19:50,265
We said, cool, you have to pay the cost of our customer of your hardware and your electricity, but we're going to make money only if you generate Bitcoin.

261
00:19:50,805 --> 00:19:56,145
That way, if we're not successful, you're not getting what you want and we're not getting paid either.

262
00:19:56,585 --> 00:19:59,565
And so we take 15% of the Bitcoin that's mined.

263
00:19:59,665 --> 00:20:02,705
It's paid out by the mining pool, but that's our management fee.

264
00:20:02,705 --> 00:20:04,545
and so

265
00:20:04,545 --> 00:20:07,745
two

266
00:20:07,745 --> 00:20:08,805
one thing you said

267
00:20:08,805 --> 00:20:10,885
another thing I've heard you talk about in the past

268
00:20:10,885 --> 00:20:13,365
you referred to wild sats

269
00:20:13,365 --> 00:20:15,445
but then also

270
00:20:15,445 --> 00:20:17,265
the way that

271
00:20:17,265 --> 00:20:19,725
you think about it is that the bitcoin mining

272
00:20:19,725 --> 00:20:20,405
is the most

273
00:20:20,405 --> 00:20:23,645
is the best way to acquire bitcoin

274
00:20:23,645 --> 00:20:25,405
rather than buying it on a third party exchange

275
00:20:25,405 --> 00:20:27,805
so just go into a little details of like

276
00:20:27,805 --> 00:20:28,905
how you think about

277
00:20:28,905 --> 00:20:31,365
that concept of wild sats

278
00:20:31,365 --> 00:20:39,205
and why, in your view, acquiring Bitcoin via Bitcoin mining is the best way to acquire it?

279
00:20:39,625 --> 00:20:43,705
Yeah, I think it's also helpful to talk about a little bit of history too.

280
00:20:44,105 --> 00:20:45,545
And I will explain that.

281
00:20:45,605 --> 00:20:51,625
But I think, you know, if you look at how we've acquired Bitcoin historically from 2010 to 2013,

282
00:20:52,045 --> 00:20:53,885
most people were actually mining it, right?

283
00:20:53,885 --> 00:20:57,605
If you were running Bitcoin on your computer, you were likely also mining it.

284
00:20:57,605 --> 00:21:04,505
And if you talk to anybody that got into Bitcoin during that time frame, you kind of see a romanticism around mining.

285
00:21:04,685 --> 00:21:06,085
Like they think very highly of it.

286
00:21:06,485 --> 00:21:10,705
2013 is when the first ASICs came out and Coinbase also launched, right?

287
00:21:10,745 --> 00:21:14,925
So you had two things that sort of suddenly pushed people into buying instead of mining.

288
00:21:15,565 --> 00:21:20,945
The ASICs made it harder to mine yourself and Coinbase made it easier to buy, right?

289
00:21:20,945 --> 00:21:23,805
And so I actually think our timeline shifted at that point.

290
00:21:23,805 --> 00:21:29,985
And you see most of our industry, most of the Bitcoiners buying instead of mining.

291
00:21:30,105 --> 00:21:33,885
In fact, if you go to a Bitcoin conference, you usually see very few miners.

292
00:21:34,285 --> 00:21:36,745
And if you go to a mining conference, you see very few Bitcoiners.

293
00:21:37,105 --> 00:21:39,925
That split actually, I think, has had some downstream consequences.

294
00:21:40,425 --> 00:21:47,365
But why I think that Bitcoin, through mining it, is a better acquisition strategy is because you have counterparty risk, right?

295
00:21:47,385 --> 00:21:50,925
You're just shifting it from an exchange to somebody that's going to be operating.

296
00:21:50,925 --> 00:21:57,445
Like for us, we are the first to bring software as a service and then build the software and then apply it to a data center.

297
00:21:57,905 --> 00:21:59,565
So we call that mining as a service.

298
00:22:00,345 --> 00:22:05,345
But you still have operational risk that you're betting on with us if you're acquiring it.

299
00:22:05,705 --> 00:22:08,445
And there's exchange-based risks, right?

300
00:22:08,865 --> 00:22:10,425
But they're a different set of risks.

301
00:22:11,065 --> 00:22:15,745
But the advantage to mining is, first of all, on an energy cost basis.

302
00:22:15,745 --> 00:22:20,645
So this is like how much Bitcoin do I get for how many dollars of energy?

303
00:22:20,645 --> 00:22:26,425
Like right now in Ethiopia, which is our primary offering, that energy cost per Bitcoin is $50,000.

304
00:22:27,005 --> 00:22:30,065
That's a substantial discount to buying it on an exchange, right?

305
00:22:30,125 --> 00:22:32,865
So more sats for your dollar on a DCA basis.

306
00:22:33,225 --> 00:22:35,625
Now, I'm not talking about the hardware when I say this.

307
00:22:35,765 --> 00:22:37,125
That's what I was about to ask.

308
00:22:37,125 --> 00:22:40,065
Yeah, so I'm not trying to hand wave that away.

309
00:22:40,165 --> 00:22:41,865
That does have a return.

310
00:22:42,005 --> 00:22:47,665
And typically that's a two to three year like inflection point before you're totally at that DCA price, right?

311
00:22:47,665 --> 00:22:51,885
But that's one reason is people like that energy cost TCA.

312
00:22:52,565 --> 00:22:57,145
Two, they like that they're wild SATs, you know, so they're, it is cypherpunk, right?

313
00:22:57,505 --> 00:23:02,425
You're plugging in this hardware, you're obeying the rules of the network, and the network is paying you for that service.

314
00:23:03,005 --> 00:23:11,005
And so being able to get the SATs outside of the traditional, you know, surveillance banking system is a prime driver for a lot of our clients.

315
00:23:11,005 --> 00:23:24,785
And then the third one, which I don't think is talked about nearly enough, but I think actually represents an opportunity to bring in more no-coiners into our ecosystem, is the fact that there's no point of purchase volatility.

316
00:23:25,545 --> 00:23:29,485
That single fact, I believe, keeps people away from Bitcoin in a massive way.

317
00:23:29,585 --> 00:23:37,125
It is scary for a lot of people to put money on an exchange, to trade it for Bitcoin, and they don't feel very confident with Bitcoin yet.

318
00:23:37,125 --> 00:23:40,705
And then suddenly Bitcoin has a price plunge and they feel stupid, right?

319
00:23:40,705 --> 00:23:55,805
Like I think that that, I don't want to be stupid for my investment in Bitcoin keeps people away, but you have a fundamentally different experience. You buy a piece of hardware, we're managing it for you. You're just getting a constant flow of sats. You don't really think about it. They're just showing up in your wallet.

320
00:23:55,805 --> 00:24:05,025
Yeah, so on that, you have the purchase risk of, I'd say, in the hardware itself.

321
00:24:05,185 --> 00:24:13,645
Because a Bitcoin mining rig is somewhere like the top end machine, correct me if I'm wrong, is $5,000 plus.

322
00:24:14,505 --> 00:24:25,345
So if you were thinking about buying $5,000 worth of Bitcoin, the price of miners are fairly volatile with the price of Bitcoin.

323
00:24:25,345 --> 00:24:26,665
Is that a fair thing to say?

324
00:24:26,785 --> 00:24:35,725
Not as volatile, but I'm saying like if Bitcoin went up 20% and you call it an ASIC broker, the price isn't what it was a month ago.

325
00:24:36,725 --> 00:24:39,425
No, I actually – so I think that was true a cycle ago.

326
00:24:40,405 --> 00:24:41,765
This cycle, I'm not seeing that though.

327
00:24:41,885 --> 00:24:45,205
The rig prices have been pretty consistently steady.

328
00:24:45,585 --> 00:24:52,405
What you see is as the new versions come out, those have a premium and then that premium sort of decays over time.

329
00:24:52,405 --> 00:24:54,345
and then the next version comes out

330
00:24:54,345 --> 00:24:56,925
and then that's the top price unit.

331
00:24:57,225 --> 00:24:58,805
But I don't see the price volatility

332
00:24:58,805 --> 00:25:01,465
in rigs near as much these days

333
00:25:01,465 --> 00:25:02,945
as I did four years ago.

334
00:25:03,065 --> 00:25:04,785
Yeah, and that's some of the history

335
00:25:04,785 --> 00:25:05,365
that I'm thinking of.

336
00:25:05,445 --> 00:25:06,085
In like 2021,

337
00:25:06,545 --> 00:25:09,365
2020, 2021, 2022,

338
00:25:09,665 --> 00:25:10,465
very volatile.

339
00:25:11,305 --> 00:25:12,385
Price Bitcoin was very volatile.

340
00:25:13,605 --> 00:25:14,685
As with any business,

341
00:25:14,745 --> 00:25:15,845
as there's more competition,

342
00:25:16,425 --> 00:25:18,905
Square entering the space with Proto,

343
00:25:20,045 --> 00:25:22,185
it should trend to the cost to produce.

344
00:25:22,405 --> 00:25:27,645
rather than the market value kind of swinging.

345
00:25:28,005 --> 00:25:29,665
But just highlighting for people saying,

346
00:25:29,805 --> 00:25:31,925
there is some at time of purchase,

347
00:25:32,245 --> 00:25:35,645
because you're going to buy a piece of hardware or multiple

348
00:25:35,645 --> 00:25:40,325
and then have a set of SAT stream from there.

349
00:25:40,745 --> 00:25:44,865
But I do understand also it puts something more tangible to it,

350
00:25:45,345 --> 00:25:48,865
and it is a functional way to DCA,

351
00:25:49,485 --> 00:25:52,385
or to basically average and set it and forget it.

352
00:25:52,405 --> 00:26:17,825
And what I do want to highlight, though, and get your view on this that then comes back to the sites that you select is, or at least the way I think about it, the only consistent way to reliably generate a Bitcoin denominator return or to outperform Bitcoin, however you want to think about it, in a commoditized way is Bitcoin mining.

353
00:26:17,825 --> 00:26:20,945
because there has to be,

354
00:26:21,465 --> 00:26:23,905
and there is built into the incentive structure

355
00:26:23,905 --> 00:26:24,745
of the Bitcoin network,

356
00:26:25,345 --> 00:26:27,465
an incentive for miners to secure the network

357
00:26:27,465 --> 00:26:31,925
such that a miner could produce Bitcoin

358
00:26:31,925 --> 00:26:35,505
at a cost below the secondary market price.

359
00:26:35,965 --> 00:26:37,845
That if that did not exist,

360
00:26:38,625 --> 00:26:42,105
then there wouldn't be a profit margin for miners.

361
00:26:43,005 --> 00:26:46,725
But there is risk inherent to Bitcoin mining.

362
00:26:46,725 --> 00:26:58,945
Certain Bitcoin miners will produce above the current secondary market price or on average above the secondary market price because they're inefficient miners.

363
00:26:59,345 --> 00:27:06,185
And others, the profitable ones, the ones at the lowest end of the cost curve, will produce below that umbrella.

364
00:27:06,185 --> 00:27:23,565
When you're selecting sites and thinking about the energy side of it, what do you guys look for at SaaS to ensure that you're on the low end of the cost curve and mining profitably?

365
00:27:24,485 --> 00:27:31,865
Both kind of in aggregate, all in, but also as it relates to your customers that you host and manage for.

366
00:27:32,125 --> 00:27:35,765
Yeah, so really there's one slight nuance there, right?

367
00:27:35,765 --> 00:27:41,145
It's our job to provide the opportunity to our clients to mine profitably, right?

368
00:27:41,205 --> 00:27:43,525
Not us, because we're not the miners.

369
00:27:43,945 --> 00:27:44,945
The clients are.

370
00:27:45,305 --> 00:27:47,825
So our job is to find those right opportunities.

371
00:27:48,585 --> 00:27:59,345
And the easiest energy source for us, so we've got a mandate as part of our brand promise to do Bitcoin mining on sources that are at least 20% more carbon free than the network.

372
00:28:00,185 --> 00:28:04,745
And the reason for that is because there's a lot of those type of opportunities out there.

373
00:28:04,745 --> 00:28:08,705
and it helps people that purchase feel good about their purchase

374
00:28:08,705 --> 00:28:10,225
so we can bring more people in.

375
00:28:10,505 --> 00:28:11,385
You know, it's bragging rights.

376
00:28:11,425 --> 00:28:12,925
It doesn't make the decision for people,

377
00:28:13,025 --> 00:28:16,085
but it does help a lot of our clients feel comfortable

378
00:28:16,085 --> 00:28:18,345
about talking about it with other people,

379
00:28:18,445 --> 00:28:19,705
so it helps our referral business.

380
00:28:20,065 --> 00:28:23,485
But in terms of the sites, hydro is the easiest.

381
00:28:24,105 --> 00:28:27,125
So we look for excess hydro situations.

382
00:28:28,005 --> 00:28:30,725
When you say easiest, because I have two questions.

383
00:28:31,105 --> 00:28:33,125
When you say easiest, what do you mean by easiest?

384
00:28:33,125 --> 00:28:51,345
Well, it's the easiest power source because there's consistent power. It's a great base power source, right? Because it's a consistent output. It doesn't have the variability of solar and wind right now. So you can get reliable uptime at the data center. So that makes it easy.

385
00:28:51,345 --> 00:29:04,085
So strategically, what I've looked at for where we choose sites is, and this wasn't what I did at first, but strategically, it's actually more about who we're going to partner with than anything.

386
00:29:04,525 --> 00:29:10,105
Now, we have built great relationships with different data center operators in different jurisdictions.

387
00:29:10,105 --> 00:29:19,445
And having lived outside the U.S. now, you know, 10 plus years myself, understanding how to navigate like international waters is something that I feel I've got a bit of strength in.

388
00:29:19,445 --> 00:29:26,005
But we find data center operators ultimately that we can trust because just like we are

389
00:29:26,005 --> 00:29:30,865
a custodian for our clients, we also have to make sure that where we're going to place

390
00:29:30,865 --> 00:29:44,510
them that those data center operators are reliable people and are able to deliver what they contractually committing themselves to And that a long vetting process Like a typical data center opportunity takes me about six months to bring to market

391
00:29:45,090 --> 00:29:51,610
And that's part of, you know, my rooftop solar contracting years that I leveraged there to totally vet.

392
00:29:51,770 --> 00:29:57,870
The diligence is deep, but we have to ultimately trust that end operator.

393
00:29:58,490 --> 00:30:00,670
And so the energy source is important.

394
00:30:01,150 --> 00:30:05,830
Hydro makes it easy to know that there is more reliability and uptime.

395
00:30:06,250 --> 00:30:11,430
But beyond that, it's more actually who we're going to partner with than it is even like the energy.

396
00:30:11,830 --> 00:30:20,030
Now, geopolitically or geostrategically, we want to be jurisdictionally agnostic, right?

397
00:30:20,330 --> 00:30:29,950
I mean, even though the U.S. is a relatively low risk place to mine, there is still a period of time here this year with the tariffs that cause disruption in supply chains, right?

398
00:30:30,670 --> 00:30:33,090
And I'm not certain how those have totally been worked out.

399
00:30:33,190 --> 00:30:36,810
We're not actively importing in the U.S. at this moment, so I can't really comment on that.

400
00:30:37,170 --> 00:30:40,250
But you face jurisdictional risk in almost any location.

401
00:30:40,770 --> 00:30:45,950
And so for me, part of the strategy has actually been to be spread over multiple continents,

402
00:30:45,950 --> 00:30:51,950
and that allows our clients to spread out their fleets across multiple continents as well to diversify that risk.

403
00:30:52,670 --> 00:30:54,350
Okay, there's a lot there.

404
00:30:54,350 --> 00:30:56,590
one of the questions is

405
00:30:56,590 --> 00:31:00,770
would it be fair to say you're not agnostic to jurisdiction

406
00:31:00,770 --> 00:31:03,790
is that you want diversification

407
00:31:03,790 --> 00:31:09,770
and you want some degree of regulatory clarity

408
00:31:09,770 --> 00:31:11,970
at the jurisdictional level, right?

409
00:31:12,570 --> 00:31:15,670
Then you talked about it being important

410
00:31:15,670 --> 00:31:17,250
selecting the partners,

411
00:31:17,370 --> 00:31:19,850
the partners that are actually operating the sites

412
00:31:19,850 --> 00:31:22,130
in terms of the data centers.

413
00:31:22,130 --> 00:31:27,710
but whether or not they're able to achieve a low cost of power,

414
00:31:27,770 --> 00:31:28,970
which then you're purchased.

415
00:31:29,110 --> 00:31:30,230
Like if I'm understanding correctly,

416
00:31:30,230 --> 00:31:34,050
you're purchasing power from a,

417
00:31:34,050 --> 00:31:35,770
a data center operator,

418
00:31:36,110 --> 00:31:40,870
but some energy economics underlie that.

419
00:31:41,050 --> 00:31:41,490
Yes.

420
00:31:41,590 --> 00:31:43,430
And so one,

421
00:31:43,530 --> 00:31:45,910
one example that you brought up is hydro is one,

422
00:31:45,990 --> 00:31:46,930
like one of your sites.

423
00:31:47,010 --> 00:31:49,810
Are you comfortable saying one of your sites is a hydro site or multiple?

424
00:31:49,970 --> 00:31:50,310
They all are.

425
00:31:50,410 --> 00:31:50,510
Oh,

426
00:31:50,510 --> 00:31:51,050
they all are.

427
00:31:51,110 --> 00:31:51,230
Yeah.

428
00:31:51,230 --> 00:31:55,810
they're all hydro sites, all four of them. And in fact, they were specifically, so Paraguay and

429
00:31:55,810 --> 00:32:02,530
Ethiopia were specifically targeted because there's long-term growing hydro opportunity there,

430
00:32:02,610 --> 00:32:07,170
right? Like these are, these are sort of like across the planet, there's a few jurisdictions

431
00:32:07,170 --> 00:32:11,710
that seem like they're just going to be around for a very long time in terms of excess hydropower.

432
00:32:11,810 --> 00:32:16,230
So having a seat at the table there, just a wise thing to do. And, you know, several publicly

433
00:32:16,230 --> 00:32:22,430
traded mining companies are also of that same mindset and making that decision. So that's

434
00:32:22,430 --> 00:32:28,690
Paraguay and Ethiopia. And then Norway was kind of a chance opportunity for us. It was a heat

435
00:32:28,690 --> 00:32:34,390
reuse project. It's in the Arctic Circle, kind of a boutique project that we felt was in align with

436
00:32:34,390 --> 00:32:39,130
our brand and the data center operator. It was a smaller project, but the data center operator

437
00:32:39,130 --> 00:32:43,550
we had trust with and we went with it and that's leading to more opportunities with them.

438
00:32:43,550 --> 00:32:50,450
but even the Norway site is, is a hydro. Yeah. The primary power source there is hydro. Uh,

439
00:32:50,450 --> 00:32:57,050
it's a grid powered, uh, but there's a, but the primary, yeah. Um, fuel source of the grid or

440
00:32:57,050 --> 00:33:08,550
is hydro. Given that, given that a lot of the, or all of your sites are in some way tightly

441
00:33:08,550 --> 00:33:10,290
connected to hydropower.

442
00:33:11,170 --> 00:33:12,990
Can you describe a little bit about

443
00:33:12,990 --> 00:33:15,750
the dynamics in those energy systems

444
00:33:15,750 --> 00:33:19,070
that make it attractive to mine Bitcoin,

445
00:33:19,230 --> 00:33:20,690
whether it's excess power,

446
00:33:20,830 --> 00:33:24,550
but then also how Bitcoin mining helps

447
00:33:24,550 --> 00:33:29,650
or should help overall increase utilization,

448
00:33:29,890 --> 00:33:30,830
reduce cost of power,

449
00:33:30,930 --> 00:33:32,030
or how you think about that?

450
00:33:32,850 --> 00:33:34,290
Yeah, no, it's...

451
00:33:34,290 --> 00:33:36,550
So let me talk Paraguay first and then Ethiopia.

452
00:33:36,550 --> 00:33:37,890
So Ethiopia is new.

453
00:33:37,990 --> 00:33:40,990
I don't have as much context to it yet, still learning.

454
00:33:41,550 --> 00:33:46,150
But Paraguay, you know, I believe it was an IMF project.

455
00:33:46,310 --> 00:33:52,590
In fact, I think they talk about it in the, what's it, about the Economic Hitman book.

456
00:33:52,850 --> 00:33:53,770
I'm forgetting the name of it.

457
00:33:53,770 --> 00:33:53,850
Not sure.

458
00:33:54,130 --> 00:33:58,530
Anyway, IMF project, right, this massive dam built in the 70s.

459
00:33:58,970 --> 00:34:00,630
It's 14 gigawatts.

460
00:34:01,030 --> 00:34:05,910
But the way it was developed is it goes across a river that's the border between Brazil and Paraguay.

461
00:34:05,910 --> 00:34:12,290
right and so the imf helped develop this i believe it's imf uh and there's 14 gigawatts

462
00:34:12,290 --> 00:34:17,430
seven gigawatts each well paraguay's total consumption uh has historically been under

463
00:34:17,430 --> 00:34:22,730
three gigawatts right so being under three gigawatts what did they do with the rest well

464
00:34:22,730 --> 00:34:28,010
the way the contract has been developed uh with imf they've been selling it at a loss

465
00:34:28,010 --> 00:34:34,730
uh to brazil right so below the cost of production there's been a net drag on the economy so bitcoin

466
00:34:34,730 --> 00:34:43,010
And miners showing up there helping to repatriate that electricity is actually an uplift on the entire GDP of the country.

467
00:34:43,510 --> 00:34:48,750
So not only that, but, you know, like we are operating on a site that's 100 megawatt site.

468
00:34:48,930 --> 00:34:50,550
It's built a massive substation.

469
00:34:50,550 --> 00:35:02,110
There may come a point where, you know, the competitiveness of the network makes it so this isn't the place that a person can mine profitably, but that infrastructure is still going to be there, right?

470
00:35:02,110 --> 00:35:07,530
So that's going to leave behind the opportunity for more manufacturing in that area.

471
00:35:07,690 --> 00:35:09,550
Heavy industry can be done there now.

472
00:35:09,890 --> 00:35:10,950
And that didn't exist before.

473
00:35:11,090 --> 00:35:13,230
So there's these high tension lines, right?

474
00:35:13,910 --> 00:35:19,090
Those are the big, massive lines that you see in those big steel structures, right?

475
00:35:19,450 --> 00:35:24,210
And those high tension lines are across the country, but you need to bring it down to usable electricity.

476
00:35:24,350 --> 00:35:28,150
And that's what Bitcoin miners are doing there in Paraguay, right?

477
00:35:28,150 --> 00:35:36,970
So there's all this infrastructure, there's jobs that are created, bringing, taking a drag on the GDP and turning it into a positive on the GDP.

478
00:35:37,590 --> 00:35:39,010
So politicians like it.

479
00:35:39,430 --> 00:35:45,430
The unfortunate part is sometimes politicians and developing nations like it a little too much and try to squeeze the golden goose.

480
00:35:46,090 --> 00:35:51,570
And so we've seen a bit of that too, but that's where the industry is organizing and pushing back.

481
00:35:51,570 --> 00:35:56,410
And, you know, there'll be a stasis there that's reached because they don't want to do is kill that golden goose.

482
00:35:56,410 --> 00:36:08,210
And in fact, you know, talking about Ethiopia, for instance, like that's what I ultimately realized about Ethiopia as well is there's a similar like fundamental dynamic that means Bitcoin mining is going to be around for the long term there.

483
00:36:08,270 --> 00:36:14,310
And that's that they also have a desperate need for dollars to service IMF debt that they have.

484
00:36:14,450 --> 00:36:18,190
And last year they brought in a quarter billion dollars, nearly a quarter billion dollars.

485
00:36:18,470 --> 00:36:23,030
And they don't have another way, another export other than Bitcoin, Bitcoin mining.

486
00:36:23,030 --> 00:36:25,870
Because that power effectively would not be used.

487
00:36:25,870 --> 00:36:48,030
Yeah, exactly. Exactly. And so there are some frictions with, again, a developing nation. They oversold the power contracts and then there's too much demand on the grid as the grid has been ramping up. And so there's been some friction there politically as a result. And there's been a backlash. But that has also led to a situation where they've chosen winners and losers.

488
00:36:48,030 --> 00:37:02,650
And it was the perfect opportunity right at that inflection point for us to come in, sort of buy the blood in the street, so to speak, and take a seat at the table because there's some leaked things about the EEP, which is the governing authority for the utility there.

489
00:37:03,010 --> 00:37:07,170
And they're taken out of context and it put a negative light on it.

490
00:37:07,210 --> 00:37:17,810
But Ethiopia itself is fundamentally desperate for those dollars and they're going to keep miners around, especially ones that they've sort of chosen are the winners and that's who we're partnering with.

491
00:37:18,030 --> 00:37:38,110
And this is, hydro is a source of power that I'm less familiar with, but if there's less, if there's a certain capacity and there's less demand, how does that actually affect the operation of the hydro facility? Is it able to ramp down and up similar to like a natural gas peaker plant?

492
00:37:38,110 --> 00:37:43,070
Yeah. So this is, this is getting a bit out of my depth as well, but there's several,

493
00:37:43,270 --> 00:37:47,970
so usually a dam has several power generators. It's not one. So if you go down to the Atapu dam,

494
00:37:48,050 --> 00:37:52,570
which is what we were just talking about, the 14 gigawatt dam in Paraguay, like there's seven

495
00:37:52,570 --> 00:37:57,750
different two gigawatt generators on that, right? So you can effectively, you know, cut the water

496
00:37:57,750 --> 00:38:04,550
flow to each of those generators and take off two gigawatts at a time. But as far as ramping up and

497
00:38:04,550 --> 00:38:11,670
down past that, like water flows is the other one that can be impacted. So for instance, we're on a

498
00:38:11,670 --> 00:38:18,770
fairly small drainage in Wisconsin and the water flow does have a seasonality to it. You know,

499
00:38:18,810 --> 00:38:23,830
this is actually the worst time of year for us with mining up there. Do you guys basically have

500
00:38:23,830 --> 00:38:29,310
to throttle or like turn up? Yeah. There's just simply not enough power to keep the mine going.

501
00:38:29,790 --> 00:38:33,570
And yeah, there's been other things like, you know, a beaver knocks down. There's four different

502
00:38:33,570 --> 00:38:39,650
uh, individual dams, um, that, uh, feed together with a single line and then route out to the

503
00:38:39,650 --> 00:38:45,630
utility through a substation. And we mine on that last dam that has the, the substation. Um,

504
00:38:46,250 --> 00:38:50,630
but a beaver came and knocked over, uh, one of the lines this last week. So we had a force

505
00:38:50,630 --> 00:38:54,030
majeure event and we're down for about a week while that got that repaired. But you know,

506
00:38:54,030 --> 00:39:00,170
I mean, those are the type of things as funny as it, like the story is like that when people

507
00:39:00,170 --> 00:39:06,830
think about Bitcoin mining that don't do it. And I'm one of those people, but as I get more and more

508
00:39:06,830 --> 00:39:13,530
educated, they think it's plugging in a box to a power source, but in the real world, there's just

509
00:39:13,530 --> 00:39:19,170
a lot of things that can go wrong. And there's forecastable things that can go wrong, but

510
00:39:19,170 --> 00:39:25,770
probably never thought about a beaver screwing up a dam and then that affecting your Bitcoin mining

511
00:39:25,770 --> 00:39:27,510
and having a force majeure in a contract.

512
00:39:27,790 --> 00:39:29,250
Yeah, no, absolutely not.

513
00:39:29,310 --> 00:39:30,850
And I think that's actually something

514
00:39:30,850 --> 00:39:32,090
I'm really passionate about

515
00:39:32,090 --> 00:39:36,690
because mining is where reality hits Bitcoin, right?

516
00:39:36,770 --> 00:39:40,310
And I think I would love to take every single person

517
00:39:40,310 --> 00:39:42,670
that's in Bitcoin to a big mining operation

518
00:39:42,670 --> 00:39:44,570
to just have the visceral experience

519
00:39:44,570 --> 00:39:47,850
of all this electricity being harnessed to mine Bitcoin

520
00:39:47,850 --> 00:39:49,830
because it takes it from this abstract thing

521
00:39:49,830 --> 00:39:51,570
to actually something concrete and real.

522
00:39:52,150 --> 00:39:54,610
And to me, that's the fact that Bitcoin

523
00:39:54,610 --> 00:40:00,090
is tied to the laws of physics is the fundamental thing that actually makes it a viable form of

524
00:40:00,090 --> 00:40:05,990
money. Without that, it just would be another, another abstract crypto. Yeah. I mean, it's a,

525
00:40:06,110 --> 00:40:13,150
well, and then all those other abstract cryptos are snake oil and going to zero. Um, but the,

526
00:40:13,150 --> 00:40:16,510
the fact that you bring that up and I do recommend it for anybody that has the opportunity,

527
00:40:16,690 --> 00:40:20,910
any Bitcoin or that hasn't actually gone to a Bitcoin mine needs to go to a Bitcoin mine.

528
00:40:20,910 --> 00:40:26,050
but also when I went I'd seen a number of mines but one of the things that I had the benefit of

529
00:40:26,050 --> 00:40:31,670
seeing a year or two ago went to a site here in Waco which is about an hour north and actually got

530
00:40:31,670 --> 00:40:40,770
to see the miner interacting in real time with the power company on a ramp up schedule so basically

531
00:40:40,770 --> 00:40:47,350
coordinating it then seeing on their digital dashboard as the miners coming up seeing kind of

532
00:40:47,350 --> 00:40:53,030
the power supply come up as the miners were coming up and having a very visceral connection

533
00:40:53,030 --> 00:41:00,850
with how big of an asset Bitcoin and Bitcoin miners are to a grid, particularly in the

534
00:41:00,850 --> 00:41:06,230
case that you're on a grid, but that you couldn't really appreciate that unless you, you know,

535
00:41:06,230 --> 00:41:07,430
it's one thing to say it.

536
00:41:07,730 --> 00:41:15,250
It's another thing to be in a facility as it happens and then realize that functionally

537
00:41:15,250 --> 00:41:21,210
speaking, there's no other source of power, or sorry, no other source of demand for power

538
00:41:21,210 --> 00:41:24,610
that could be as responsive, that could be as flexible.

539
00:41:25,130 --> 00:41:29,690
People talk about, I don't need to get into the details, but people talk about how AI could

540
00:41:29,690 --> 00:41:37,730
be more flexible than it is today, but nothing will be as flexible as Bitcoin.

541
00:41:37,730 --> 00:41:38,290
Yeah.

542
00:41:38,290 --> 00:41:44,210
It's purely economic because that manufacturing ends at the point of the hash.

543
00:41:44,210 --> 00:41:51,130
the electron being converted into a computer function right there there's no end customer

544
00:41:51,130 --> 00:41:56,010
beyond that yeah i don't see how how there theoretically could be anything that is more

545
00:41:56,010 --> 00:42:01,110
disruptible than bitcoin mining um but i you actually are touching on something that i i

546
00:42:01,110 --> 00:42:08,170
also feel very passionate about which is that i i think this experience should be had by more

547
00:42:08,170 --> 00:42:14,070
bitcoiners not just necessarily going to that site and seeing that center of command

548
00:42:14,070 --> 00:42:16,590
in that ramp up, but just by mining.

549
00:42:17,270 --> 00:42:20,710
I strongly believe that we've seeded the network largely

550
00:42:20,710 --> 00:42:24,190
to fiat hashers is how I think about them.

551
00:42:24,310 --> 00:42:26,290
People that are on the network that are hashing

552
00:42:26,290 --> 00:42:28,610
and using Bitcoin as a proxy to actually get more dollars.

553
00:42:28,770 --> 00:42:30,690
I think most of the publicly traded companies

554
00:42:30,690 --> 00:42:32,370
are in that camp.

555
00:42:32,730 --> 00:42:34,810
Their dollars are expecting a dollar-based return.

556
00:42:34,950 --> 00:42:37,990
So functionally, their Bitcoin has to be converted into dollars.

557
00:42:38,490 --> 00:42:41,550
And as a result, I think most of these mining centralization worries

558
00:42:41,550 --> 00:42:45,690
are downstream of the fact that, in essence, we've chosen to buy instead of mine.

559
00:42:46,110 --> 00:42:49,130
And when you mine, you have a fundamentally different experience.

560
00:42:49,870 --> 00:42:54,550
You're watching it, and you sort of get a visceral sense of the network

561
00:42:54,550 --> 00:42:58,770
and what's going on, what's going on with blocks, and it brings you closer.

562
00:42:58,770 --> 00:43:02,190
And I think it builds our social layer to protect the network

563
00:43:02,190 --> 00:43:04,230
in a much more substantive way as well.

564
00:43:04,390 --> 00:43:07,050
So I would love to see more Bitcoiners.

565
00:43:07,130 --> 00:43:09,830
I mean, forget if it's SaaS mining that you choose to do it through,

566
00:43:09,830 --> 00:43:15,030
But just getting bed axes, like seeing the bed axe movement take off has been a wonderful thing for me to see.

567
00:43:15,130 --> 00:43:21,230
I didn't expect it because if you look at the dollars per terahash, you know, how expensive that compute is.

568
00:43:21,350 --> 00:43:24,110
Like to me, I was just like, oh, no, this isn't going to really take off.

569
00:43:24,190 --> 00:43:31,990
But I totally underestimated the power of just having something physical that people could actually plug in, get educated on.

570
00:43:31,990 --> 00:43:41,530
And, you know, I don't even think the lottery ticket is, well, the lottery ticket I think is somewhat motivational, but I think it's mainly driven by just a sense of I want to touch something.

571
00:43:42,490 --> 00:43:43,430
Yeah, make it more tangible.

572
00:43:43,670 --> 00:43:44,690
I was looking around.

573
00:43:44,770 --> 00:43:46,030
I think we have a BitX in here.

574
00:43:46,430 --> 00:43:47,710
You're there, but it's not running.

575
00:43:47,850 --> 00:43:51,530
We have a BitX running or at least one or two out there.

576
00:43:51,530 --> 00:43:55,870
And I do think I was kind of, originally when I saw a BitX, I was like, ah, this is kind of a LARP.

577
00:43:55,870 --> 00:44:02,270
but then I also co-run the Houston Bitcoin Meetup

578
00:44:02,270 --> 00:44:05,750
and we had Nolan from Club Source,

579
00:44:05,950 --> 00:44:09,250
which is Marshall Long's bid-axe company.

580
00:44:09,770 --> 00:44:12,350
He just described it as a way to educate people on mining

581
00:44:12,350 --> 00:44:14,810
and then that connected up like, oh wow, yeah,

582
00:44:14,890 --> 00:44:18,650
you can literally with a bid-axe do everything

583
00:44:18,650 --> 00:44:22,550
that a mega miner is doing from a protocol level

584
00:44:22,550 --> 00:44:36,275
and there really isn a comparable operation that you could do at that small of a scale that is you know again managing a large power site is obviously very different than plugging something into a wall

585
00:44:36,275 --> 00:44:45,275
But I found that to be, you know, I connected with it when I was actually, you know, seeing one in person and hearing someone that works on it talk about it.

586
00:44:46,855 --> 00:44:50,035
And I do want to get into the discussion of minor centralization.

587
00:44:50,035 --> 00:45:04,375
The one thing I want to ask before that, you had made a comment about how the average price of power in the United States is like 19 cents and to be profitable or maybe break even for a Bitcoin miner is somewhere around 7 cents.

588
00:45:04,895 --> 00:45:08,795
A lot of – every miner has a different break even point.

589
00:45:09,255 --> 00:45:11,495
So there's not like one break even for the network.

590
00:45:11,495 --> 00:45:17,955
but there is something inherent to that that is if there's a higher and better use of power

591
00:45:17,955 --> 00:45:25,375
if someone's willing to pay more for the power that the owner of that power is going to sell it

592
00:45:25,375 --> 00:45:34,175
to the highest bidder and that bitcoin mining necessarily has to seek out the cheapest cost

593
00:45:34,175 --> 00:45:39,775
of power because virtually everything else in terms of whether it's power to power a home

594
00:45:39,775 --> 00:45:47,555
or a hospital or a foundry to manufacture chips or to manufacture cars.

595
00:45:47,735 --> 00:45:49,295
Those are all higher and better uses.

596
00:45:49,535 --> 00:45:52,715
So really it does drive a surge for the lowest cost power.

597
00:45:53,435 --> 00:45:57,035
And when there is and becomes a higher and better use,

598
00:45:57,155 --> 00:46:00,255
that that power will become available if someone's willing to pay more.

599
00:46:01,255 --> 00:46:03,615
When you think about your power contracts,

600
00:46:03,615 --> 00:46:11,835
are you typically trying to lock in a fixed rate over a certain duration or

601
00:46:11,835 --> 00:46:16,675
having flexibility to sell power back?

602
00:46:16,675 --> 00:46:20,975
How do you think about that when you're interacting with the data center

603
00:46:20,975 --> 00:46:21,455
companies?

604
00:46:22,135 --> 00:46:22,195
Yeah.

605
00:46:22,635 --> 00:46:25,675
So this is a subjective thing,

606
00:46:26,415 --> 00:46:26,795
but you know,

607
00:46:26,815 --> 00:46:29,455
you look at the minimum useful life of mining rig and,

608
00:46:29,575 --> 00:46:32,275
and the industry sort of settled on three years is that minimum,

609
00:46:32,615 --> 00:46:33,155
right?

610
00:46:33,155 --> 00:46:35,275
where maybe it's five in reality.

611
00:46:35,455 --> 00:46:37,675
And useful life isn't that your mining rate's dead

612
00:46:37,675 --> 00:46:38,255
in three years.

613
00:46:38,315 --> 00:46:40,175
It's just that maybe it's not competitive, right?

614
00:46:40,235 --> 00:46:42,075
That's what I think of more.

615
00:46:42,755 --> 00:46:44,675
And looking at-

616
00:46:44,675 --> 00:46:45,095
More profitable.

617
00:46:45,355 --> 00:46:46,135
Yeah, that's what I mean.

618
00:46:46,395 --> 00:46:47,955
Yeah, it's the same thing.

619
00:46:48,595 --> 00:46:50,695
But if you look at it, you know,

620
00:46:50,895 --> 00:46:53,395
at what point do I contract this power

621
00:46:53,395 --> 00:46:55,055
and could that happen, right?

622
00:46:55,115 --> 00:46:56,695
To where I'm no longer offering

623
00:46:56,695 --> 00:46:59,455
a valuable price point to clients.

624
00:46:59,555 --> 00:47:00,875
And so the number I've come up with

625
00:47:00,875 --> 00:47:02,695
is three years to lock in

626
00:47:02,695 --> 00:47:05,175
And after that, leave it open to renegotiate.

627
00:47:05,515 --> 00:47:07,495
And I think, you know, to your point-

628
00:47:07,495 --> 00:47:09,135
Login the power contract to basically-

629
00:47:09,135 --> 00:47:10,915
Yeah, fixed price power for three years.

630
00:47:11,215 --> 00:47:11,835
Yeah, yeah.

631
00:47:11,915 --> 00:47:13,435
And that's what we typically do.

632
00:47:13,675 --> 00:47:21,435
There's also just a cost to the setup and the transaction on our side to integrate our efforts with theirs on the ground in that data center.

633
00:47:21,555 --> 00:47:25,935
And so we want to make sure that that cost is sort of recovered in a fair amount of time.

634
00:47:25,975 --> 00:47:29,735
So doing that for too short a duration wouldn't be justifiable either.

635
00:47:29,735 --> 00:47:35,895
But you're talking about that higher value that somebody is going to pay for the power if it's not Bitcoin miners.

636
00:47:36,015 --> 00:47:38,695
And I think we're seeing that right now with AI, right?

637
00:47:38,775 --> 00:47:43,275
I think there's a competitiveness that's going on for the power that Bitcoin miners have.

638
00:47:43,335 --> 00:47:50,015
And that's why you see all the many publicly traded mining companies pivoting that direction is because they have these low cost power contracts.

639
00:47:50,215 --> 00:47:53,835
And here the AI companies are looking for power.

640
00:47:53,995 --> 00:47:55,435
And so they're willing to pay a premium.

641
00:47:55,575 --> 00:47:57,895
So it's playing out right now in real time in the US.

642
00:47:57,895 --> 00:48:05,575
and then when you think about your business,

643
00:48:05,715 --> 00:48:08,595
which you're operating these sites,

644
00:48:09,035 --> 00:48:12,855
so you're identifying the sites that you think will deliver

645
00:48:12,855 --> 00:48:16,095
a cost-competitive price of power.

646
00:48:16,095 --> 00:48:17,635
You're also selecting machines

647
00:48:17,635 --> 00:48:19,795
or maybe giving a few different choices to your customers.

648
00:48:19,955 --> 00:48:21,755
So while they're the actual ones,

649
00:48:22,495 --> 00:48:24,835
ultimately owning the miners and mining,

650
00:48:24,835 --> 00:48:29,935
you are functionally managing all the inputs of the cost,

651
00:48:30,055 --> 00:48:31,055
if that's fair.

652
00:48:31,315 --> 00:48:31,435
Yeah.

653
00:48:33,595 --> 00:48:34,155
Traditionally,

654
00:48:34,675 --> 00:48:38,015
people have referred to your business as a hosting business.

655
00:48:39,615 --> 00:48:41,335
You think about it a little bit differently.

656
00:48:42,435 --> 00:48:45,215
Maybe explain that,

657
00:48:45,295 --> 00:48:50,815
but then also in terms of how you think about the hosting business

658
00:48:50,815 --> 00:48:53,555
and what SAS's approach is specifically.

659
00:48:54,835 --> 00:49:08,295
But a lot of people look at, oh, if I'm aggregating a bunch of individuals and then having customer service costs, that might not be cost competitive.

660
00:49:09,015 --> 00:49:15,155
But a lot of these massive miners that people think would be or not, like Marathon Mines Bitcoin at a loss.

661
00:49:15,155 --> 00:49:23,695
so if you could how do you how do you think about you know if you if you are hosting people

662
00:49:23,695 --> 00:49:29,615
how do you think about it relative to the history of people that have that have hosted in some in

663
00:49:29,615 --> 00:49:36,695
some ways had a checkered past but then why in your mind it's the right alignment in terms of

664
00:49:36,695 --> 00:49:42,655
who is actually owning the infrastructure and getting the benefit of it being

665
00:49:42,655 --> 00:49:50,915
more decentralized, more individual-based versus, say, a megamine that's a public company

666
00:49:50,915 --> 00:49:54,175
and the way that you're accessing mining is through owning a security?

667
00:49:55,795 --> 00:50:01,495
Yeah, so there's a lot there to impact, but let me take it from a philosophical level

668
00:50:01,495 --> 00:50:05,055
approaching this industry and how to come in.

669
00:50:05,055 --> 00:50:10,095
I think we found a sweet spot, and it tends to be reflecting in our demand and the growth

670
00:50:10,095 --> 00:50:10,475
as well.

671
00:50:10,475 --> 00:50:15,275
So I'm compelled to believe the market is validating it right now.

672
00:50:15,355 --> 00:50:19,795
And so the sweet spot, we actually built software for a year before it came to market.

673
00:50:19,975 --> 00:50:23,315
And then we found the data center we were going to attach that software to.

674
00:50:23,775 --> 00:50:30,175
And the whole intention behind our approach was, hey, there's a winning playbook we can look to in Web 2.0.

675
00:50:30,455 --> 00:50:31,915
It's called software as a service.

676
00:50:32,535 --> 00:50:35,315
You know, Uber applied it to the taxi industry.

677
00:50:35,635 --> 00:50:38,135
Airbnb applied it to the home share industry.

678
00:50:38,135 --> 00:50:43,995
You know, Shopify applied it to the, you know, small store, small retail store.

679
00:50:44,075 --> 00:50:49,355
So there's all these industries where software as a service has been applied to successfully.

680
00:50:49,755 --> 00:50:51,675
And the argument was, why not mining?

681
00:50:52,215 --> 00:50:54,315
So that was our entire approach to begin with.

682
00:50:54,355 --> 00:51:00,615
And then taking it from that and peeling the onion back further, it was like, okay, those three different levers, how are we going to make money?

683
00:51:01,395 --> 00:51:06,735
Well, if we only make money and we will get audited financials here and get those out to the public at some point.

684
00:51:06,735 --> 00:51:08,735
We're not there at that stage yet.

685
00:51:09,115 --> 00:51:15,515
But, you know, I can look at my financial and see that my inputs and outputs for the electricity and hardware are equally matched.

686
00:51:15,855 --> 00:51:23,615
So the only thing that's driving the growth of our business is that management fee, which means I don't make you Bitcoin, then I'm not getting paid, right?

687
00:51:23,735 --> 00:51:34,875
And so that alignment combined with the ease of use of a software as a service product is, you know, kind of the secret niche, not even secret, but the niche that we decided to land on and put our chips on.

688
00:51:34,875 --> 00:51:39,375
Now, as far as, ask the rest of the question.

689
00:51:39,915 --> 00:51:54,815
So building on the question of, you just explained your approach, software as a service, building that software first, figuring out what you needed to then connect it to a data center.

690
00:51:54,815 --> 00:52:07,715
But in terms of a business model and ultimately financing the underlying hardware, you're hosting miners that are owned by individuals or businesses potentially.

691
00:52:08,995 --> 00:52:23,055
Discuss in your mind why the incentives and cost structure work for hosting, maybe in a way that's better than might be perceived for a large public company mining Bitcoin.

692
00:52:23,055 --> 00:52:50,055
Yeah, I think first of all, so it's hard to tell just how big the hosting market is. But, you know, even Mara, right, is traditionally done hosting with their business model. So there's a lot of people that have separated those two. And in some ways, it's natural. If you think about it, the people operating the mining rigs might not necessarily need to own the mining rigs. Like maybe that's just a form of specialization that's naturally coming up.

693
00:52:50,055 --> 00:52:58,215
But the best data I've been able to find is about 55% of the network right now is by hosted mining, is where the mining comes from.

694
00:52:58,215 --> 00:53:00,455
And now I don't know how valid that is.

695
00:53:00,575 --> 00:53:05,415
That's an LLM driven data point and it's hard to find good data on that particular point.

696
00:53:06,735 --> 00:53:17,615
But if I look at that, that is ripe for disruption because if most of that is the publicly traded mining companies,

697
00:53:17,615 --> 00:53:25,355
They have all this corporate governance necessary to be publicly traded that is a cost that I can compete against as a privately held company.

698
00:53:25,775 --> 00:53:32,015
And in fact, I was just running data just this morning, actually, to kind of look, what is their cost of Bitcoin?

699
00:53:32,135 --> 00:53:33,775
I did a very simplistic way, right?

700
00:53:33,935 --> 00:53:44,515
So I just said, hey, Grock, go back and take on all the publicly traded companies, add up all their expenses over the last three years, add up all their Bitcoin that they've generated and divide.

701
00:53:44,515 --> 00:53:51,455
and that average price per bitcoin was 166 000 so no wonder why they're running at a loss right

702
00:53:51,455 --> 00:53:55,955
like their expenses are exceeding the cost of actual bitcoin out there now i know that's not

703
00:53:55,955 --> 00:54:02,295
a refined approach that is a very rough sought approach to getting to the right number but when

704
00:54:02,295 --> 00:54:08,815
you look at it um and uh at my cost structure so this is sas mining our management fee what does it

705
00:54:08,815 --> 00:54:15,235
cost for me to get a Bitcoin. And this year we're running at about like $80,000 per Bitcoin, right?

706
00:54:15,975 --> 00:54:21,975
So we represent if I can continue to grow and scale that, which is different. It's just a 15%

707
00:54:21,975 --> 00:54:27,715
management fee that is driving my business model. But if I can continue to scale that, then that

708
00:54:27,715 --> 00:54:33,135
represents, you know, fundamentally disruptive force to those approaches. If the entire goal

709
00:54:33,135 --> 00:54:35,735
is ultimately to get the lowest cost Bitcoin.

710
00:54:36,735 --> 00:54:36,835
Right.

711
00:54:36,935 --> 00:54:40,235
And I guess another way to think about it is

712
00:54:40,235 --> 00:54:43,575
if you are self-costing Bitcoin,

713
00:54:43,735 --> 00:54:44,335
you hold a hardware,

714
00:54:44,635 --> 00:54:46,935
you have a hardware wallet or use a multi-sig

715
00:54:46,935 --> 00:54:50,595
versus potentially holding it at,

716
00:54:51,275 --> 00:54:53,095
I won't say the name,

717
00:54:53,095 --> 00:54:56,935
but using River, which love River, great service,

718
00:54:57,215 --> 00:54:58,095
but it's a custodian,

719
00:54:58,275 --> 00:55:01,255
or you could get another derivative away from that,

720
00:55:01,255 --> 00:55:05,715
which is holding it, or not holding it at all,

721
00:55:05,815 --> 00:55:07,975
but owning an ETF to have some exposure to it,

722
00:55:08,975 --> 00:55:16,375
that I think there's a bias and likely an incorrect frame

723
00:55:16,375 --> 00:55:18,835
that would think, hey, at large scale,

724
00:55:19,755 --> 00:55:22,295
of somebody who might have a 500 megawatt site

725
00:55:22,295 --> 00:55:24,295
running the site themselves

726
00:55:24,295 --> 00:55:30,155
would naturally be able to be more cost competitive

727
00:55:30,155 --> 00:55:37,675
than hosting how many, like on the order of magnitude, how many customers do you guys have?

728
00:55:38,195 --> 00:55:40,595
Oh, we've got a bit over 400 at this point.

729
00:55:43,175 --> 00:55:48,515
Then managing all the communications with them. But if you're a large miner, you're having to

730
00:55:48,515 --> 00:55:53,095
manage investors and someone like Riot certainly has more than 400. So people think of like that

731
00:55:53,095 --> 00:55:59,675
as adding cost to a, to a business that, and it's really just a shift of cost. And when I was looking

732
00:55:59,675 --> 00:56:08,115
at Marathon, their direct mining costs are $125,000 a coin in the last quarter when the

733
00:56:08,115 --> 00:56:10,775
price of Bitcoin that they mined was $98,000.

734
00:56:10,955 --> 00:56:13,215
And that does not include all of their overhead.

735
00:56:13,915 --> 00:56:16,055
Those are direct mining costs.

736
00:56:16,715 --> 00:56:21,635
The depreciation of the machines, the power costs, but things specifically to the operation

737
00:56:21,635 --> 00:56:22,135
of mining.

738
00:56:22,695 --> 00:56:28,615
And then when you layer in all the G&A costs, it would be easy to see how, using one example,

739
00:56:28,615 --> 00:56:33,435
that would go from $125,000 to $150,000 to $175,000,

740
00:56:33,495 --> 00:56:34,315
whatever that estimate is.

741
00:56:34,415 --> 00:56:39,735
So even though it's not a hard number,

742
00:56:40,075 --> 00:56:42,155
it's also reasonable.

743
00:56:42,815 --> 00:56:48,615
But that comparing it to if you actually own the rig itself,

744
00:56:49,475 --> 00:56:53,155
not you, but as someone that you're operating for,

745
00:56:53,155 --> 00:56:55,795
it's more analogous to

746
00:56:55,795 --> 00:56:58,395
owning Bitcoin

747
00:56:58,395 --> 00:57:00,235
non-custodially

748
00:57:00,235 --> 00:57:01,695
than

749
00:57:01,695 --> 00:57:06,935
mining through a public company

750
00:57:06,935 --> 00:57:08,735
or owning a security. You're not actually owning the miner

751
00:57:08,735 --> 00:57:10,815
so it would actually make more sense that if you were

752
00:57:10,815 --> 00:57:11,935
to own them directly

753
00:57:11,935 --> 00:57:13,855
that that would be

754
00:57:13,855 --> 00:57:16,895
an incentive structure that would align

755
00:57:16,895 --> 00:57:18,655
you the operator

756
00:57:18,655 --> 00:57:20,955
versus the person who's actually mining

757
00:57:20,955 --> 00:57:22,315
if that makes sense.

758
00:57:23,155 --> 00:57:40,475
I'm not sure that it totally does, but I think I want to pick apart one thing that you're saying here that is, I think, important, which is ultimately what is my expense for acquiring all these customers?

759
00:57:40,475 --> 00:57:42,575
It's a different way of going about it, right?

760
00:57:42,615 --> 00:57:44,935
It's just comparing apples and oranges.

761
00:57:45,575 --> 00:57:49,875
And so I've got a cost to acquire customers and I've got a cost to manage those.

762
00:57:49,875 --> 00:58:16,855
But that again is back to where the fundamental thesis is. If I build the right software, I'm not having to communicate all the time with all the customers. I'm transparently providing the information that they need so that their needs are met. And then it becomes lightweight. And sort of as proof of that, you know, we started off this business model January 2023 operationally, took 2022 to build the software. But 2023 is when we got operational, we had 11 staff members.

763
00:58:17,415 --> 00:58:22,095
Here we are, 400 customers later, and I've got 13 staff members, right?

764
00:58:22,195 --> 00:58:25,675
That's the power of building software to automate this.

765
00:58:25,675 --> 00:58:34,535
And that, to me, is direct evidence of how we can keep those costs low over time for the end customer to continue to get a valuable proposition.

766
00:58:35,055 --> 00:58:35,735
Yeah, that makes sense.

767
00:58:35,735 --> 00:58:57,655
And I was just saying that I think some of the hang up that people have when they think about the umbrella of a Bitcoin miner that hosts others and specifically hosts individuals is the perceived and potentially incorrect perception of the encumbrance of a customer service business.

768
00:58:57,795 --> 00:59:03,535
But what you're saying is that you solve a lot of that via software.

769
00:59:03,535 --> 00:59:06,135
so that it's not somebody

770
00:59:06,135 --> 00:59:08,335
constantly managing phones

771
00:59:08,335 --> 00:59:09,535
of customer issues.

772
00:59:11,055 --> 00:59:12,335
The more pain points

773
00:59:12,335 --> 00:59:13,655
that you can eliminate and automate

774
00:59:13,655 --> 00:59:15,635
that it's lower.

775
00:59:15,755 --> 00:59:18,095
And I was just making the point that

776
00:59:18,120 --> 00:59:24,160
If you looked at a public company, they might not have that that was assumed that they were mining themselves.

777
00:59:24,160 --> 00:59:30,540
They might not have the customers and have to manage those, but they have other costs.

778
00:59:30,720 --> 00:59:36,600
They have to manage investors and regulators and filing costs.

779
00:59:36,600 --> 00:59:57,920
And so even though it might not be intuitive to people that hosting does create the incentives to drive the cost down the most, it actually likely does, given the direct incentive that you're owning the rigs themselves and cutting out a lot of general and administrative costs that very large companies have to necessarily deal with.

780
00:59:58,380 --> 00:59:59,080
Yeah, that's right.

781
00:59:59,120 --> 01:00:01,620
And I think I inadvertently actually answered your question then.

782
01:00:01,920 --> 01:00:02,700
Yeah, you did.

783
01:00:04,700 --> 01:00:05,180
Yeah.

784
01:00:06,600 --> 01:00:17,520
Going from the business, and one other point I just want to clarify for folks that might not be as familiar with the hosted mining concept.

785
01:00:18,600 --> 01:00:22,140
The 400 customers that you use, you have four sites on four different continents.

786
01:00:23,960 --> 01:00:30,120
The individuals own basically rack space and miners in individual facilities.

787
01:00:30,120 --> 01:00:38,540
They're not having some exposure to four different sites unless they own equipment in four different sites.

788
01:00:39,220 --> 01:00:43,300
And as you bring new sites online, you basically have capacity.

789
01:00:43,780 --> 01:00:47,660
And so when you're selling that capacity, it is tied to a specific site.

790
01:00:47,980 --> 01:00:54,180
So someone can know what they're buying and where and what the cost structure is for the site itself.

791
01:00:54,200 --> 01:00:55,020
Is that correct?

792
01:00:55,020 --> 01:01:11,940
That is correct. And I think to just go one level deeper on it, you know, we started from the very beginning, and I received a lot of pushback from my developers for doing this, but I wanted to tie our software down to the smallest possible unit, which is a single mining rig.

793
01:01:11,940 --> 01:01:18,100
And so we've built our entire platform based on ownership of a single mining rig.

794
01:01:18,200 --> 01:01:19,320
That's the discrete unit.

795
01:01:19,660 --> 01:01:22,240
So serial numbers are tied to every single mining rig.

796
01:01:22,300 --> 01:01:25,620
So it's your mining rig and you own the outcome of that, right?

797
01:01:25,660 --> 01:01:32,960
So if it goes out for maintenance, of course, because of the alignment of incentives, I want to resolve that for you as quickly as possible because I'm not making money either.

798
01:01:33,800 --> 01:01:41,280
But we ultimately make sure that the experience that you are having is tied to the ownership of the hardware that you own.

799
01:01:41,940 --> 01:01:59,760
And then while you have mining sites that are warehoused and operated within larger data center sites, are there SaaS team members that are actually on site or at least geographically located?

800
01:02:00,020 --> 01:02:01,180
Or do you have contractors?

801
01:02:01,540 --> 01:02:05,920
Like if there's downtime, repairs, how does that get managed?

802
01:02:06,700 --> 01:02:09,660
Yeah, so that's all managed up front with the contract negotiation.

803
01:02:09,660 --> 01:02:12,680
So our data center operators are managing all of that.

804
01:02:12,800 --> 01:02:20,420
So in the same way that software as a service and all those other industries that I mentioned before, you know, Uber doesn't own the cars or the car drivers.

805
01:02:20,880 --> 01:02:22,160
You know, they contract that.

806
01:02:22,540 --> 01:02:24,200
And so we've arranged the same.

807
01:02:24,340 --> 01:02:28,520
But the way that we go about contracting that is pretty specific.

808
01:02:29,200 --> 01:02:32,180
There's a long process that we go through to vet everything out.

809
01:02:32,180 --> 01:02:37,240
my philosophy with contracting and I, I actually got lucky and was able to work under somebody that

810
01:02:37,240 --> 01:02:43,480
taught contract law, uh, in my solar career. But the way that I approach contracting is that we're

811
01:02:43,480 --> 01:02:48,020
going into a marriage situation, not a transaction here. And I want to go through all the tough

812
01:02:48,020 --> 01:02:52,880
conflict and negotiation upfront. That way, when problems happen, we've already discussed how we're

813
01:02:52,880 --> 01:02:58,780
going to handle them. Um, and so we negotiate in how repairs are going to be handled in term times

814
01:02:58,780 --> 01:03:05,480
and penalties. Same with downtime. We negotiate to our data center operators and they commit to

815
01:03:05,480 --> 01:03:10,080
deliver. But they're actually doing the repairs on the mining equipment themselves. So they're...

816
01:03:10,080 --> 01:03:16,020
Some, some. There's a split in repairs, right? Like popping off fans, replacing power supplies,

817
01:03:16,120 --> 01:03:20,460
control boards. Those are all onsite, typical, easy things to do. Make sure that they have

818
01:03:20,460 --> 01:03:25,920
bench parts and pay for those ahead of time so that they can make swaps quickly and get them up.

819
01:03:25,920 --> 01:03:32,980
But then if there's hashboard level repairs, oftentimes those are sent out to, you know, most of our equipment right now is coming in from Bitmain.

820
01:03:33,160 --> 01:03:36,880
So we can send out to the Bitmain repair center because they're under warranty.

821
01:03:37,260 --> 01:03:41,900
And our prices actually include warranty costs as well.

822
01:03:42,300 --> 01:03:45,120
So we just cover warranty costs.

823
01:03:45,120 --> 01:03:50,900
We've taken a statistical average that, hey, look, let's look at our fleet year over year and see how much it costs.

824
01:03:51,060 --> 01:03:53,440
And let's just assume that is part of our service fees.

825
01:03:53,520 --> 01:03:55,760
That way we don't have to nickel and dime our clients for it.

826
01:03:55,920 --> 01:04:03,580
So we backstop that up to $150 a year in case there's some catastrophic failure that happens and takes out a bunch of our fleet.

827
01:04:03,660 --> 01:04:06,940
And we have to tell clients, hey, look, we can't afford to cover you here.

828
01:04:06,940 --> 01:04:09,740
But we've used that once in our three years of operations.

829
01:04:11,580 --> 01:04:14,520
And so your customers, what's the typical profile?

830
01:04:15,940 --> 01:04:17,800
Yeah, that is a good question.

831
01:04:17,920 --> 01:04:18,980
I'm still trying to get that.

832
01:04:19,120 --> 01:04:22,620
So because we don't require any KYC information, right?

833
01:04:22,620 --> 01:04:26,520
Like we get all sorts of unusual names and phone numbers and emails.

834
01:04:27,260 --> 01:04:31,860
So what we can tell is that there's a few different types of customers.

835
01:04:32,540 --> 01:04:35,460
We find a lot of our customers are actually service oriented.

836
01:04:36,060 --> 01:04:41,660
So in the various service industries, whether that's military, police, firefighter, nurses.

837
01:04:42,200 --> 01:04:43,240
But generally Bitcoiners.

838
01:04:43,360 --> 01:04:43,900
Yeah, Bitcoiners.

839
01:04:43,960 --> 01:04:44,420
People that are.

840
01:04:44,420 --> 01:04:44,900
A hundred percent.

841
01:04:45,340 --> 01:04:49,000
We don't actually, we intentionally have focused the value proposition.

842
01:04:49,220 --> 01:04:50,740
Actually, this is an important thing to share.

843
01:04:50,740 --> 01:04:56,540
Um, so if you look at Bitcoin mining, whether people realize it consciously or not, they

844
01:04:56,540 --> 01:05:00,800
have an implicit bias and that bias is defined by what they consider money to be.

845
01:05:01,360 --> 01:05:07,900
And the, the client base breaks in two at the point of, am I looking for a fiat based

846
01:05:07,900 --> 01:05:10,560
return or am I looking at acquiring Bitcoin?

847
01:05:10,900 --> 01:05:15,980
And that distinction on what your money is decides who you're going to, how you're actually

848
01:05:15,980 --> 01:05:16,900
going to be as a customer.

849
01:05:16,900 --> 01:05:20,720
So we realized pretty early on that people that were trying to acquire fiat, they want

850
01:05:20,720 --> 01:05:25,080
wound up frequently just being bad customers for us. So he said, no, no, no, we're going to get rid

851
01:05:25,080 --> 01:05:29,980
of this. So we only focus on our messaging and everything on people that are focused on acquiring

852
01:05:29,980 --> 01:05:34,020
more Bitcoin. And when you look at it from that standpoint, it's what does it cost for you to

853
01:05:34,020 --> 01:05:38,760
acquire this Bitcoin versus buying it? And so we've baked that down to the energy cost per Bitcoin

854
01:05:38,760 --> 01:05:43,400
because that's very simple to understand. The hardware costs, layering that in gets a little

855
01:05:43,400 --> 01:05:49,940
bit more abstract because to your point, hardware prices do change. And most people, you know, you

856
01:05:49,940 --> 01:05:53,840
buy your mining rig to get on the ride and you sell your mining rig to get off the ride

857
01:05:53,840 --> 01:05:55,780
and the price points of both of those change.

858
01:05:55,780 --> 01:05:59,480
So like doing an analysis on that is pretty, pretty tricky.

859
01:05:59,480 --> 01:06:03,680
But in general, what we see from our customers is over a one to two year timeframe,

860
01:06:03,680 --> 01:06:14,475
most of them are seeing that the rewards they received have more than offset their their purchase of that hardware That that historically looking what we what we seen

861
01:06:14,775 --> 01:06:15,295
Yeah.

862
01:06:15,295 --> 01:06:16,715
We actually do the same at,

863
01:06:16,715 --> 01:06:17,195
uh,

864
01:06:18,075 --> 01:06:23,375
at ZapRite is just really focusing on the Bitcoiners because work on the

865
01:06:23,375 --> 01:06:23,815
payment side.

866
01:06:23,855 --> 01:06:24,075
And one,

867
01:06:24,135 --> 01:06:26,095
and one thing I want to touch on briefly,

868
01:06:26,095 --> 01:06:28,835
but there's other things specific year business.

869
01:06:28,835 --> 01:06:33,375
I want to spend more time on is just that if we built a product,

870
01:06:33,375 --> 01:06:38,115
not for Bitcoiners, specifically in Bitcoin payments,

871
01:06:38,175 --> 01:06:39,575
we'd build the wrong product.

872
01:06:39,715 --> 01:06:42,015
If we were building people that just wanted to get fiat,

873
01:06:42,675 --> 01:06:44,535
that that's not actually the signal.

874
01:06:45,275 --> 01:06:49,135
And then the derivative of that is that the quality of the people

875
01:06:49,135 --> 01:06:51,095
that you interact with and why they're there

876
01:06:51,095 --> 01:06:57,755
and how they're thinking about it also then is just a lot more alignment,

877
01:06:57,755 --> 01:07:03,035
both in terms of product feedback, in terms of the value that they derive,

878
01:07:03,375 --> 01:07:04,315
how they approach it.

879
01:07:04,395 --> 01:07:05,655
So I do think it's a,

880
01:07:06,495 --> 01:07:10,755
it might not seem night and day,

881
01:07:10,835 --> 01:07:11,675
but it really is.

882
01:07:11,735 --> 01:07:16,175
If you flip the frame of mining for fiat

883
01:07:16,175 --> 01:07:18,695
versus producing Bitcoin,

884
01:07:20,355 --> 01:07:21,535
converting power to Bitcoin,

885
01:07:21,735 --> 01:07:23,055
not thinking about it through that lens

886
01:07:23,055 --> 01:07:26,195
and having that permeate through your business,

887
01:07:26,195 --> 01:07:28,175
but then also through a customer base

888
01:07:28,175 --> 01:07:30,155
and then how there are positive benefits

889
01:07:30,155 --> 01:07:32,035
in terms of how those customers become advocates.

890
01:07:33,375 --> 01:07:34,895
we've found it to be really important.

891
01:07:35,235 --> 01:07:37,595
You guys are a customer of ours and we're appreciative of you.

892
01:07:40,435 --> 01:07:42,255
Because you open up a range of payments,

893
01:07:42,255 --> 01:07:49,975
but also your customer segment is a clear progression of who our customers

894
01:07:49,975 --> 01:07:50,175
are.

895
01:07:50,235 --> 01:07:54,935
And I think that's why it works so well in terms of where I want to go next.

896
01:07:54,935 --> 01:07:56,315
So is something you brought up,

897
01:07:56,395 --> 01:07:57,935
which was centralization.

898
01:07:59,935 --> 01:08:01,075
Two questions.

899
01:08:01,075 --> 01:08:11,255
why you think the hosted model is important to decentralization of hash,

900
01:08:11,575 --> 01:08:18,075
but then also how you think about pool centralization from the SaaS side,

901
01:08:18,835 --> 01:08:22,955
but then also derivatively in terms of what you make available to your customers.

902
01:08:24,895 --> 01:08:28,055
Yeah, so I want to address something about ZapRite

903
01:08:28,055 --> 01:08:32,195
because this is a fundamental lesson I learned in the first year of operating SAS mining.

904
01:08:32,995 --> 01:08:37,815
It was Bitcoiners made better customers, but then lean into Bitcoin companies.

905
01:08:38,355 --> 01:08:44,655
Because I truly believe that, you know, I live by the quote that Buckminster Fuller said,

906
01:08:44,995 --> 01:08:46,735
which is you don't fight the existing system.

907
01:08:46,795 --> 01:08:49,755
You just build a better system and people will move into it.

908
01:08:49,935 --> 01:08:53,335
And I believe that's what we're doing with Bitcoin is we're building this parallel system.

909
01:08:53,335 --> 01:09:05,275
And the more we lean into other Bitcoin companies, Bitcoiners, the more that the hubs and spokes of that network on the social layer come together and more ancillary benefits compound.

910
01:09:05,515 --> 01:09:06,075
100%.

911
01:09:06,075 --> 01:09:12,415
So that was one of the decisions that made it easy to choose ZapRite for our payment orchestration needs.

912
01:09:12,415 --> 01:09:26,495
But then as far as the, as far as the decentralization side of things, you know, I think decentralizing ownership of mining rigs is what we are doing.

913
01:09:26,495 --> 01:09:32,155
So there's a second order consequence that I want to get to.

914
01:09:32,315 --> 01:09:49,635
But if you think about a data center that has 50, 100 people in it, or 50 to 100 customers that own mining rigs in that data center, well, if a regulator comes and knocks on my door, sure, and tells me, hey, you have to shut down.

915
01:09:49,815 --> 01:09:52,335
Well, I have all these contracts with the people that have property there.

916
01:09:52,335 --> 01:09:57,515
Mr. Regulator, you need to go talk to these other people and make sure it's okay. Like I'm,

917
01:09:57,995 --> 01:10:01,595
you know, I have a contract with them, you know, so that's a, that's a little bit of a friction

918
01:10:01,595 --> 01:10:06,315
point, but I think the more important point is actually building the social layer of Bitcoiners

919
01:10:06,315 --> 01:10:12,775
that are mining because no, there's no more protective social part of our fabric than the

920
01:10:12,775 --> 01:10:18,895
Bitcoin miners. You know, Bitcoiners that are mining, they have a tangible skin in the game

921
01:10:18,895 --> 01:10:23,155
relationship with their Bitcoin acquisition that you just don't have if you're buying.

922
01:10:23,575 --> 01:10:27,895
And I think that that's a very positive force that unfortunately, because there's not been

923
01:10:27,895 --> 01:10:31,455
enough of it, I actually think most of our centralization issues that have occurred

924
01:10:31,455 --> 01:10:37,315
have occurred downstream of that, right? Can you imagine if the majority of the Bitcoiners

925
01:10:37,315 --> 01:10:42,335
on the network or if the majority of the hash rate on the network was coming from Bitcoiners

926
01:10:42,335 --> 01:10:46,675
looking to acquire Bitcoin? I don't think that we'd have the mining centralization,

927
01:10:46,675 --> 01:10:51,355
the mining pool centralization issue that we have today, we just wouldn't have allowed that to occur.

928
01:10:51,775 --> 01:10:52,675
I think that's accurate.

929
01:10:53,655 --> 01:10:58,455
Nor do I think like the hop return debate that's going on right now, it wouldn't have even come up.

930
01:10:58,915 --> 01:11:00,055
So I think it's actually...

931
01:11:00,055 --> 01:11:00,715
I agree with that as well.

932
01:11:00,975 --> 01:11:06,195
I think if you look at the core issue behind mining centralization,

933
01:11:06,495 --> 01:11:11,695
it's simply because we've ceded the network to others instead of the Bitcoin community owning the network.

934
01:11:11,695 --> 01:11:17,315
and I think we can fix that through this mining as a service approach that we're taking as well

935
01:11:17,315 --> 01:11:22,515
as bed access. I mean, the, the hash rate heating, you know, there's a, there's a litany of different

936
01:11:22,515 --> 01:11:28,675
offtake. You know, the hash rate heaters. So like the in-home heaters, like kind of like use it or

937
01:11:28,675 --> 01:11:36,515
the heat offtake is not the right term. Basically using the heat to make some use of it that then

938
01:11:36,515 --> 01:11:41,675
reduces the cost to make it economically attractive or. Yeah, exactly. I mean, here's the thing. If

939
01:11:41,675 --> 01:11:44,095
There's so many people that have plug-in electric heaters.

940
01:11:44,495 --> 01:11:46,335
Why wouldn't you earn sats on the side for that?

941
01:11:47,295 --> 01:11:49,395
It's just that simple for me, right?

942
01:11:49,535 --> 01:11:51,935
And that could actually become a big, big thing.

943
01:11:52,015 --> 01:11:55,895
Like I lived in Portugal for six years, and most people do not have central heating.

944
01:11:55,995 --> 01:11:58,035
They plug in these little heaters there, right?

945
01:11:58,075 --> 01:12:02,895
Like that is a big core heating element for several months of the year.

946
01:12:02,895 --> 01:12:07,975
And so swapping those out for people being able to put some Bitcoin in their pocket, I think, is just trivial.

947
01:12:07,975 --> 01:12:11,195
But that will add a substantial amount of hash rate.

948
01:12:11,195 --> 01:12:28,655
The point being, though, that the more that we get the mining into the hands of the people, whether it's through, you know, mining as a service, hashrate heater, bid access, the more that the network itself will become protected and the less of these centralization issues that we'll see in the mining sector.

949
01:12:28,655 --> 01:12:53,415
And so I agree with that, that mining centralization likely, maybe inevitably, is a function of the fact that those that control the hash rate are not as minded to, I don't want to say, I don't want to secure the network.

950
01:12:53,415 --> 01:13:06,770
where there not a Bitcoin minded that they see it as a fiat business model or a way to make fiat And if you do that you going to think about every decision you could possibly make

951
01:13:06,810 --> 01:13:09,770
whether it's working with a centralized pool or looking at pool centralization

952
01:13:09,770 --> 01:13:13,850
and whether you ascribe it to be a problem to you, to your own self-interest,

953
01:13:13,850 --> 01:13:18,170
not to the network, but saying, how is this point of centralization a risk to me?

954
01:13:19,270 --> 01:13:21,770
If you were a Bitcoiner or if you're a Bitcoiner running,

955
01:13:21,770 --> 01:13:26,890
because a Bitcoin could run a large megamind that's a public company.

956
01:13:27,130 --> 01:13:28,770
If you look out at the landscape,

957
01:13:29,370 --> 01:13:34,270
you can identify who the CEOs are and determine that they aren't, mostly.

958
01:13:34,630 --> 01:13:37,230
I would say there are exceptions to that.

959
01:13:38,930 --> 01:13:43,890
I particularly think very highly of someone like Jason Less at Riot.

960
01:13:45,450 --> 01:13:49,470
But by and large, you go public company to public company

961
01:13:49,470 --> 01:13:51,630
and not say that there aren't others,

962
01:13:51,770 --> 01:13:55,110
but that you can see how they think about Bitcoin.

963
01:13:55,830 --> 01:14:02,390
And point being that if you're not looking at it through the Bitcoin lens,

964
01:14:02,630 --> 01:14:06,410
and it's not something altruistic for the network, it's risk yourself.

965
01:14:06,570 --> 01:14:11,330
That if more people looked at risk the way that Bitcoiners typically do more adversarily,

966
01:14:11,730 --> 01:14:15,930
they'd look at pool centralization differently and they'd help be the solution to that.

967
01:14:15,930 --> 01:14:19,890
And I am confident, though, that that will evolve in a positive way.

968
01:14:19,890 --> 01:14:29,230
but part of the solution is Bitcoiners participating in ownership of the hash rate.

969
01:14:29,910 --> 01:14:34,090
You guys are hosting miners on behalf of others.

970
01:14:34,830 --> 01:14:39,870
You recently made it available for people that mine with SaaS

971
01:14:39,870 --> 01:14:45,450
to point their hash rate to Ocean's Pool.

972
01:14:46,150 --> 01:14:47,590
Talk a little bit about that.

973
01:14:47,590 --> 01:14:55,350
and you also uh or sas found a block or one of the sas miners found a block so just yeah talk about

974
01:14:55,350 --> 01:15:02,690
in relation specifically to sas how you think about risk of pool centralization but then how

975
01:15:02,690 --> 01:15:10,290
you how you think about that space evolving and de-risk it for the people that you host for

976
01:15:10,290 --> 01:15:15,470
yeah so i think first of all mining pool centralization just to touch on that for a

977
01:15:15,470 --> 01:15:20,190
minute and give, give, uh, listeners some stats if they're not aware of this, you know,

978
01:15:20,550 --> 01:15:25,130
ant pool and foundry are the primary two. You add them up. And last I looked, it was like 47%

979
01:15:25,130 --> 01:15:31,150
of the network. Right. So two throats to choke and you would be able to double spend, uh, in essence,

980
01:15:31,250 --> 01:15:35,650
right. Or create censorship risks. Yeah. Create censorship risks, but the, that threat level

981
01:15:35,650 --> 01:15:39,290
is too high. And then there's a bunch of ant pool proxies on top of that. So.

982
01:15:39,870 --> 01:15:44,490
But one of the things that not, not censorship of the, of like the network of the network rules,

983
01:15:44,490 --> 01:15:46,630
but potentially of you as a miner.

984
01:15:46,910 --> 01:15:47,370
Yeah, exactly.

985
01:15:47,670 --> 01:15:50,110
They could say, hey, you're not allowed to get your blocks out.

986
01:15:50,110 --> 01:15:55,170
You know, like it's a serious risk and it's being addressed, right?

987
01:15:55,890 --> 01:16:00,310
It's not trivial to bootstrap a mining pool, but Ocean has effectively done that.

988
01:16:00,530 --> 01:16:03,710
And we know that that is not part of those two, right?

989
01:16:04,210 --> 01:16:06,170
It was about 18 months in the making.

990
01:16:06,310 --> 01:16:12,270
And I'm proud of the fact that we were the first to bring an Ocean integration to market.

991
01:16:12,410 --> 01:16:13,710
So doing a revenue share model.

992
01:16:13,710 --> 01:16:14,710
In the sense of?

993
01:16:14,910 --> 01:16:15,370
The rev share.

994
01:16:15,870 --> 01:16:16,070
Okay.

995
01:16:16,250 --> 01:16:18,210
Yeah, because our rev share model is unique.

996
01:16:18,330 --> 01:16:25,250
We're the only ones that I've seen in the space that have chosen to tie their fate to the output of their work,

997
01:16:25,450 --> 01:16:29,110
which is actually helping people produce Bitcoin, right?

998
01:16:29,530 --> 01:16:34,050
So as a result of that, there is a consequence that we have to integrate with the mining pool

999
01:16:34,050 --> 01:16:38,570
because we have to instruct the mining pool to split the block reward when it's being paid out.

1000
01:16:38,570 --> 01:16:40,310
So that's how we receive our management fee.

1001
01:16:40,310 --> 01:16:43,270
So our revenues are tied to that mining pool integration.

1002
01:16:43,810 --> 01:16:47,610
Ocean didn't have a good solution for us when we first approached them 18 months ago.

1003
01:16:48,150 --> 01:16:49,930
And so we worked with them for a while.

1004
01:16:50,030 --> 01:16:53,710
We had to go through legal to make sure that the approach they were going to take was going to work for us.

1005
01:16:53,810 --> 01:16:57,850
But they ultimately had to code a solution that we were able to then integrate.

1006
01:16:57,970 --> 01:17:01,510
Is that because Ocean pays out directly from the Coinbase or something else?

1007
01:17:01,830 --> 01:17:02,290
It was.

1008
01:17:02,430 --> 01:17:04,930
Or is it more of the software side of the pool operation?

1009
01:17:04,930 --> 01:17:10,330
It was more the software side of the pool operation and setting up how to split that.

1010
01:17:10,410 --> 01:17:14,870
So they had to build something specific in Datum for us to work.

1011
01:17:15,630 --> 01:17:23,010
And once that was built, our developers could work on our side to integrate our offering with theirs and then brought it to market.

1012
01:17:23,010 --> 01:17:30,750
And now it's a simple choice with a drop-down menu on a per data center level.

1013
01:17:30,750 --> 01:17:34,970
however many mining rigs you have in that data center you can switch between luxor and ocean

1014
01:17:34,970 --> 01:17:43,210
so quite a simple uh approach to shifting pools um and yeah we found our first block last week or

1015
01:17:43,210 --> 01:17:47,850
two weeks ago now and that was pretty momentous for us because how much time and effort went into

1016
01:17:47,850 --> 01:17:52,570
getting to that point i expect we'll see several more over the the coming months but yeah it's

1017
01:17:52,570 --> 01:18:00,690
exciting one thing that i realize is you start seeing um individual miners names coming through

1018
01:18:00,690 --> 01:18:09,950
on whether it's mempool space or other block explorers that that makes a difference you know

1019
01:18:09,950 --> 01:18:15,330
where it's like in certain times you see foundry foundry foundry or ant pool ant pool ant pool

1020
01:18:15,330 --> 01:18:21,050
ant pool foundry ant pool but then seeing sas mining come across seeing barefoot mining come

1021
01:18:21,050 --> 01:18:31,310
across seeing um peak mining seeing i think uh nice hash you know like it it impacts the culture

1022
01:18:31,310 --> 01:18:40,630
you know so maybe if just the the way that because the other thing i realized through that was that

1023
01:18:40,630 --> 01:18:47,230
a lot of miners will mine their entire lives and never know whether they actually hit a block or

1024
01:18:47,230 --> 01:18:55,890
I mean, if they're working in that model of the centralized mega pool model, that's functionally true.

1025
01:18:56,210 --> 01:19:07,290
And I do think that there is something visceral or infectious about knowing that your work was actually the work that solved the block.

1026
01:19:07,790 --> 01:19:09,830
Was that how you and your team thought about it?

1027
01:19:09,930 --> 01:19:15,970
And then down, I mean, not even downstream, because it was ultimately tied to an individual rig owned by an individual miner.

1028
01:19:15,970 --> 01:19:19,310
Did you guys share with that person who, who it actually was?

1029
01:19:19,550 --> 01:19:20,090
Yeah, we did.

1030
01:19:20,190 --> 01:19:20,630
We did.

1031
01:19:21,150 --> 01:19:28,370
And, you know, I didn't, I don't think I tied the cultural impact to, to mining that block.

1032
01:19:28,410 --> 01:19:31,430
I think you're right, but I hadn't actually thought about it until just this moment.

1033
01:19:31,670 --> 01:19:36,550
When I, when I say that, I mean like it, it drives others to want that.

1034
01:19:36,850 --> 01:19:37,070
Yeah.

1035
01:19:37,490 --> 01:19:39,890
I think it creates something to aspire to, right?

1036
01:19:39,890 --> 01:19:40,930
It's like, Hey, cool.

1037
01:19:41,050 --> 01:19:42,070
Saz mining could do it.

1038
01:19:42,390 --> 01:19:43,350
I can do it, you know?

1039
01:19:43,350 --> 01:19:43,570
Yeah.

1040
01:19:43,570 --> 01:20:02,385
And so we did ask Luxor when we first did the integration hey can we identify if one of our mining rigs found a block No And so yeah I certain with the amount of hash rate we had statistically we had to have discovered blocks We don know So there is something impactful I would say it analogous

1041
01:20:02,385 --> 01:20:07,745
to the impact of when our clients mine their first Bitcoin and they receive it in their wallet,

1042
01:20:07,905 --> 01:20:12,665
there's sort of a disbelief until that occurs. But it's something similar. I think our company

1043
01:20:12,665 --> 01:20:16,725
went through. There's sort of a disbelief that we actually were mining until, wow,

1044
01:20:16,725 --> 01:20:18,425
that's our block that we found.

1045
01:20:18,485 --> 01:20:19,245
And we shared it with that,

1046
01:20:19,345 --> 01:20:23,345
the client who's mining rig was behind that particular hash that found the

1047
01:20:23,345 --> 01:20:23,625
block.

1048
01:20:23,685 --> 01:20:25,085
And he was of course all excited,

1049
01:20:25,245 --> 01:20:25,485
but yeah,

1050
01:20:25,505 --> 01:20:25,665
it was,

1051
01:20:25,665 --> 01:20:26,345
it was for sure.

1052
01:20:27,065 --> 01:20:27,245
Yeah.

1053
01:20:28,125 --> 01:20:28,345
No,

1054
01:20:28,405 --> 01:20:28,625
I mean,

1055
01:20:28,625 --> 01:20:29,245
when I saw that,

1056
01:20:29,285 --> 01:20:30,685
I was genuinely excited.

1057
01:20:31,085 --> 01:20:31,585
So yeah,

1058
01:20:31,585 --> 01:20:32,085
we were all,

1059
01:20:32,205 --> 01:20:33,865
we had a group of us just randomly.

1060
01:20:33,865 --> 01:20:35,165
It just was appropriate time.

1061
01:20:35,245 --> 01:20:35,385
You know,

1062
01:20:35,385 --> 01:20:36,625
we're remote only team,

1063
01:20:36,685 --> 01:20:39,565
but there's about six of us on a call and we were like a lot of fist

1064
01:20:39,565 --> 01:20:39,845
bumps.

1065
01:20:40,025 --> 01:20:40,385
And yeah,

1066
01:20:40,445 --> 01:20:41,385
we were all,

1067
01:20:41,385 --> 01:20:42,565
all jacked up.

1068
01:20:42,645 --> 01:20:42,965
It was fun.

1069
01:20:43,185 --> 01:20:43,345
Yeah.

1070
01:20:43,365 --> 01:20:44,785
So I'm not sure if you're familiar with the,

1071
01:20:44,785 --> 01:20:46,045
the time chain calendar.

1072
01:20:46,725 --> 01:20:47,505
I am, yeah.

1073
01:20:47,505 --> 01:20:49,525
But you can set notifications on that

1074
01:20:49,525 --> 01:20:53,445
that when a certain pool finds a block,

1075
01:20:53,685 --> 01:20:54,985
you can get push notifications.

1076
01:20:55,445 --> 01:20:59,245
So it'd be fun if...

1077
01:20:59,245 --> 01:21:03,005
Maybe I do sometime in the near future

1078
01:21:03,005 --> 01:21:05,345
go ahead and get something set up,

1079
01:21:05,405 --> 01:21:07,085
but just whether it was you and your team

1080
01:21:07,085 --> 01:21:08,705
or people that mine with you

1081
01:21:08,705 --> 01:21:10,085
to basically have an alert set,

1082
01:21:10,185 --> 01:21:12,265
it's like shoot me a push notification

1083
01:21:12,265 --> 01:21:13,525
when Saz finds a block

1084
01:21:13,525 --> 01:21:15,845
or if you're part of another mining team,

1085
01:21:15,845 --> 01:21:27,565
Like when, when we find a blog, I do think that there's something impactful to that, that will drive a, um, a movement towards decentralization, which I think will be positive.

1086
01:21:27,725 --> 01:21:28,105
Yeah.

1087
01:21:28,165 --> 01:21:32,085
I haven't thought about those ideas, uh, until now, but I agree with you.

1088
01:21:32,085 --> 01:21:35,385
There's like a Pavlovian response that you're sort of invoking by doing that.

1089
01:21:35,445 --> 01:21:39,665
Cause it's like, Hey, look, this mining company generated all these rewards.

1090
01:21:39,665 --> 01:21:41,725
Like you can do that too, you know?

1091
01:21:41,725 --> 01:21:46,445
So I think back to the aspirational point, like I think it helps to encourage that behavior.

1092
01:21:46,445 --> 01:21:53,005
If there's more apps that are notifying when these smaller miners like us help to find the blocks.

1093
01:21:53,265 --> 01:21:53,425
Yeah.

1094
01:21:53,445 --> 01:21:58,885
I mean, I just think about when I see that somebody at Riot, they want to see that.

1095
01:21:58,985 --> 01:22:01,465
They're like, wait, SAS can do that?

1096
01:22:01,525 --> 01:22:02,485
We should be able to do that.

1097
01:22:02,645 --> 01:22:03,025
That's true.

1098
01:22:03,165 --> 01:22:05,905
You know, not just Riot.

1099
01:22:05,905 --> 01:22:09,145
I say Riot because I think fondly of them and the team.

1100
01:22:09,145 --> 01:22:11,965
but any large-scale miner driving that say,

1101
01:22:12,025 --> 01:22:13,645
hey, maybe we should be doing this as well.

1102
01:22:14,685 --> 01:22:15,985
So I think it's great.

1103
01:22:16,185 --> 01:22:18,145
And I do think that the economic incentives

1104
01:22:18,145 --> 01:22:20,165
will dictate decentralization,

1105
01:22:20,345 --> 01:22:23,665
but it actually has to be a concerted effort.

1106
01:22:23,865 --> 01:22:25,385
And so I guess on y'all's side,

1107
01:22:25,665 --> 01:22:27,385
the concerted effort was working with Ocean

1108
01:22:27,385 --> 01:22:29,945
to create choice for people that mine with you

1109
01:22:29,945 --> 01:22:31,685
because you had a sense that that was important

1110
01:22:31,685 --> 01:22:33,825
to your customer base.

1111
01:22:35,865 --> 01:22:37,645
And you've just now released that

1112
01:22:37,645 --> 01:22:39,505
like in the last month or so.

1113
01:22:39,845 --> 01:22:40,045
Yeah.

1114
01:22:40,045 --> 01:22:40,165
Yeah.

1115
01:22:40,525 --> 01:22:44,165
And to be fair, it was driven by customer demand, right?

1116
01:22:44,205 --> 01:22:47,185
We listened to our customers and just repeatedly they were asking.

1117
01:22:47,185 --> 01:22:52,965
I mean, the same way, like right now, we're getting a similar request for proton, proto rigs, right?

1118
01:22:53,825 --> 01:22:58,145
And I was going to ask about that earlier, but we're running over on that segment.

1119
01:22:58,505 --> 01:23:03,445
So, yeah, but there's no, there's no opportunity to acquire them.

1120
01:23:03,445 --> 01:23:08,125
And so we are, you know, we're not able to service that demand right now.

1121
01:23:08,205 --> 01:23:14,025
But similarly, I think that coming out of the chute, like those rigs are going to have a lot of demand.

1122
01:23:14,465 --> 01:23:16,705
And I'm curious about the fleet software as well.

1123
01:23:16,885 --> 01:23:26,425
Like that's not on the market yet either, but that's also quite a big opportunity because the monitoring solution and how we manage all that is quite, yeah, it's a sophisticated layer.

1124
01:23:26,665 --> 01:23:33,145
Well, I think it's also a testament because that is the other side of the centralization is the hardware manufacturing.

1125
01:23:33,445 --> 01:23:51,745
And I think it's a testament to the fact that if there are more people that are actually Bitcoiners or Bitcoin-minded, thinking about it as, without having to define what a Bitcoiner is, somebody that is converting power into Bitcoin, their goal is ultimately to have the Bitcoin, that they will drive those type of decisions.

1126
01:23:51,745 --> 01:23:54,305
like being interested and aware of something like Proto

1127
01:23:54,305 --> 01:23:58,305
and putting a priority on helping be a part of the solution

1128
01:23:58,305 --> 01:24:01,705
to hardware centralization.

1129
01:24:01,885 --> 01:24:03,845
Because we experienced this at Zaprize,

1130
01:24:03,965 --> 01:24:06,385
like getting feedback from customers on what products to build

1131
01:24:06,385 --> 01:24:10,985
then lets us build the right things that allow for our product to be adopted.

1132
01:24:11,265 --> 01:24:16,805
And so if people in the industry are committed to making,

1133
01:24:17,365 --> 01:24:20,505
you can't make a business make a good mining rig work,

1134
01:24:20,505 --> 01:24:29,345
But someone like Square and Proto will benefit from having miners giving them feedback of what's working and what's not.

1135
01:24:29,725 --> 01:24:49,525
And the people most willing to have a stake in that are people that are minded that see this problem of centralization and that they can be a part of decentralization that exists both on the manufacturing side, hashing, controlling how the hash rate is controlled, which you are helping to democratize.

1136
01:24:49,525 --> 01:24:51,365
and then on the poolside.

1137
01:24:51,525 --> 01:24:53,265
So I think all of that brings together

1138
01:24:53,265 --> 01:24:57,125
and it's benefited by more people being Bitcoin-minded.

1139
01:24:57,345 --> 01:24:59,705
So I just want to thank you for what you guys are doing at Saz.

1140
01:25:00,425 --> 01:25:01,925
Appreciate you swinging through Austin

1141
01:25:01,925 --> 01:25:03,705
on your way back to Peru to record.

1142
01:25:04,165 --> 01:25:06,185
We're a little bit late to go get some Cooper's Barbecue,

1143
01:25:06,505 --> 01:25:07,985
but before we wrap,

1144
01:25:08,365 --> 01:25:09,885
just tell people where they can find you

1145
01:25:09,885 --> 01:25:14,845
and where they can find Saz if they're interested.

1146
01:25:15,605 --> 01:25:17,465
Yeah, no, it's been an absolute pleasure

1147
01:25:17,465 --> 01:25:22,465
And I have to say thank you for also your part with ZapRite and helping to create that virtuous circle.

1148
01:25:22,605 --> 01:25:24,285
You know, it's Bitcoiners serving Bitcoiners.

1149
01:25:24,385 --> 01:25:27,765
It ultimately leads us to a new reality is what I see.

1150
01:25:27,825 --> 01:25:31,365
And I think that we're all working on that same journey, whether it's Square, ZapRite, SaaS, Mining.

1151
01:25:31,525 --> 01:25:42,265
But leaning into each other and building that alternate opportunity, the lifeboat, is how we avoid the catastrophe that's dead ahead here.

1152
01:25:42,405 --> 01:25:46,285
But yeah, looking forward to grabbing some food at Cooper with you.

1153
01:25:46,285 --> 01:25:52,905
And if anybody wants to reach me at Kay Halliburton on Yahoo, or not Yahoo, excuse me, Twitter.

1154
01:25:53,705 --> 01:25:54,645
You just aged yourself.

1155
01:25:54,805 --> 01:25:55,245
I did.

1156
01:25:55,325 --> 01:25:56,385
I did age myself.

1157
01:25:56,545 --> 01:26:00,585
At Kay Halliburton on Twitter is the way to reach me.

1158
01:26:00,645 --> 01:26:01,625
DMs are always open.

1159
01:26:01,965 --> 01:26:05,365
And then you can go to sasmining.com if you want to check out our latest offerings.

1160
01:26:06,065 --> 01:26:11,845
Yeah, well, that made me remember that you're also powered by Square on the processing side of the card zone.

1161
01:26:11,845 --> 01:26:16,625
And we worked with you guys and Square to help kind of get that to that point.

1162
01:26:16,785 --> 01:26:27,745
So it really is Bitcoiners working together to create solutions to then benefit Bitcoin and benefit ourselves, certainly, like in our own self-interest.

1163
01:26:28,105 --> 01:26:30,045
So very grateful for you.

1164
01:26:30,065 --> 01:26:30,885
So thank you again.

1165
01:26:30,985 --> 01:26:32,185
And let's call it a wrap.

1166
01:26:32,985 --> 01:26:33,445
Sounds good.

1167
01:26:33,605 --> 01:26:33,965
Thanks, Kent.

1168
01:26:41,845 --> 01:27:11,825
Thank you.