All right, welcome back to HashrateUp.
Today, I am interviewing Steve Barber.
We are talking current market, AI pivots,
how energy companies are buying equipment from him
to mine Bitcoin.
Are oil and gas companies already Bitcoiners?
Find out in this episode.
Also, find out what VFDs are.
Stay tuned.
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and side brokerage.
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i said in the introduction i'm back this week with mr stephen barber hello stephen how are you
i'm good thanks for having me on jesse 100 it's been a long time coming i know we met
at a bar which we vaguely remember in vegas one time and um so i'm glad that we finally get to do
this before we get started uh we are at 943261 and we are currently 75 blocks too fast so the
previous adjustment 7.76 and we're looking to reverse that a little bit now um and hash price
is still sitting at just about 30. how important is hash price to you steve and what do you think
about the market right now with all of this pivoting to a and i well i don't like when the
blocks are fast i can put it that way um yeah i mean just like any mining infrastructure company
the half price is uh you know that reflects the sentiment in the mining market you know if it's
if it's trending down sentiment is bearish and negative and if it's trending up it's the opposite
So usually we slow down on sales and inquiries, right, as you'd expect.
But it's usually when it's trending down.
Like if it's been flat for a while and things have consolidated a little bit, and then people sort of have an idea of where maybe, you know, where they're projecting the half price floor to be, then the inquiries start ramping up again.
It's often the uncertainty period, right?
Like when things are not so sure.
So that doesn't last so long, right?
I mean, the ride down has not been that long.
I feel like we've been sideways for a bit now and the rush down came quite fast.
What do you expect for like, and expect, I mean, what do you expect for hash price?
And is hash price more important to your business and doing what you do?
Or is it Bitcoin price still?
Definitely half price.
But I mean, when Bitcoin price starts, say, pumping like it was at the end of 2024 and
into 2025, the Bitcoin price is what gets people generally that might not be in the
market to look at the market.
And that drives a lot of the inquiries.
Of course, Bitcoin price going up tends to correlate with the half price going up if
it's outpacing difficulty.
So the price definitely, like the actual coin price is a big factor, like the direction
it's trending, like if it's on the upswing or downswing.
At least as our company, you know, how I have the company set up, we sort of straddle two
markets, you know, like we're not, we've done plenty of Bitcoin projects on the grid,
but the grid projects aren't really, they've never been a focus.
uh so we'll sell equipment into those that market based on the you know the viability of the
equipment itself like the quality of the equipment but we don't like heavily go after that like i've
you know as a company we haven't heavily gone after the big mining companies because our specialty
is off-grid and in the off-grid area you know like over the last i really started doing this in 2022
like after the first or I wouldn't say my second bear market, but the first
call it company, proper company bear market.
I started adding the what I just broadly call like our oil field services stuff.
So that's like building generators, rebuilding engines, building custom buildings.
And in 2025, we started doing VFDs like variable frequency drive packages.
So really, we straddle both the Bitcoin mining space as it relates to the off-grid markets, but we also straddle the oil and gas services space for anything related to power generation and power distribution.
So we don't do enormous generators.
We do these more cookie-cutter, small modular generators that can be used for either Bitcoin mining or oil and gas power generation.
That's one way to put it in a nutshell.
I guess, I mean, you've done three bear markets, you said. What has changed business-wise? Like,
where did you guys start out and what was sort of the learnings from the first and second time?
Maybe what's different this time around? Talk about that for a bit.
Well, a lot of things. I mean, in the first, what I'll call the first bear market that we were
operating in was like end of 2017 peak, because my first year in business is 2017.
So that bear market into like mid-2020, right?
And that's when the China ban happened.
And that's when the hatcheries started migrating to North America.
That was sort of like call it our company discovery phase.
So we were first to market in this off-grid oil field thing.
So we didn't have any, like, especially back then, like in 2019, 2018, it was a one-man show.
Like I was, I designed everything with some help.
I built everything with a lot of help, you know, contractors and stuff and deployed it.
So when I say discovery, I mean, like it was figuring out the product, really, like just like the early iterations of the product.
And, you know, those early days, like the kinds of products I was building back then, we don't build any of it anymore.
So we've iterated like many, many times.
In that second bear market, around that end of 2021 to 2022 timeframe or peak down into 2024, that was more optimization of the product and starting to diversify to add to our capabilities, not just serve the Bitcoin mining market.
So in the same way, for the listeners who pay attention to the mining market and see all the big Bitcoin mining companies pivoting to AI, whereas a lot of our competition who, say, sell containers or infrastructure, where they've pivoted to AI, we haven't.
I don't like the term pivot.
We've added, because we haven't pivoted out of Bitcoin mining.
is still one of our number one focuses for off-grid.
But we've added, call it adjacent capabilities.
So building generator systems, power, oil, and gas wells,
for example, and facilities.
And the drives that I mentioned earlier,
the VFDs, the power pump, the drive pump.
And that really represents, you know,
like part of that is the market, I believe.
We've, you know, and I experienced this, the company experienced this in 2020.
Bitcoin mining was horrible at the start of 2020 leading into the summer.
And then the price started coming up and the China ban completely put that on its head.
So by the end of 2020, we couldn't keep off of the orders.
But what was interesting with us is also in 2020, for those that pay attention to oil
and gas will remember that like the oil futures went negative in North America.
The oil and gas prices, the future prices went negative.
I had some Bitcoin mining clients talk to me about how they shipped oil to a processing battery, like a midstreamer,
and had to pay the midstreamer to take the oil based on their contract terms.
It was really, really crazy.
Especially in today's context.
Yeah, I know.
I know.
Like, it's something is sort of similar happening.
But back in 2020, given that we straddled this Bitcoin mining industry and the oil and gas, in the town that we manufacture in Canada, a town called Lloyd Minster, the entire industry in oil was dead.
People weren't building anything.
All the budgets got halted.
A lot of layoffs, all that stuff.
We were easily the busiest company in town because that's when the Bitcoin market came up, which is nice.
Having the two markets we serve, we only really need one.
Bitcoin could go really terrible like the Bitcoin mining market for quite a while.
As long as I don't misallocate our resources and get a bit of good luck along the way,
like we can take advantage of this growing oil and gas market.
So it's almost,
it's similar to what guys are doing in AI
where that are keeping the Bitcoin mining.
Like they have the Bitcoin mining
maybe as a flexible load now
and the AI compute is a base load.
But, you know, if Bitcoin rips again,
you know, goes to where we all want it to go,
like, you know, many hundreds of thousands
and Bitcoin mining will get exciting again
for a lot of those grid players.
And yeah, some of them might get rewarded, right?
like for sticking sticking to keeping some of that business running yeah i mean would you say
that over the last um bear markets that you've experienced investing in bitcoin mining in those
times has historically been a good idea or a bad idea you know of course because no one can forecast
out where with the next you know there was a period where everyone was subscribing to this
It's like practically everybody was subscribing to the idea of like a four-year market cycle.
And it feels like, you know, from what I see on social media, like less and less people
believe that, you know, it's just going to pump every four years.
Like it's sort of not hasn't followed the projections.
And so, yes, and at the highest level, investing in capital equipment and Bitcoin mining equipment
in the bear market is, of course, the best time to do it
because you'll get distressed assets that you can acquire,
especially on the mining computers.
And we did see that in like 2021 or into 2020 and into 2021
when everyone had written off Antminer S9s as being dead, right?
They came back with a fury.
They were selling for $5 a pop in mid-2020.
and then they started selling for up i remember selling them for 700 a pop wow now like who did
it did we go and invest in a bunch of s9s at the bottom of that market not really but we did have
some right like they were we had them and we deployed them and sold them and you know and so
i don't know like it's always about what's the near-term outlook i i always just run the company
assuming i try to assume like conservative numbers like i try to assume worst case scenarios like
budget for the worst case and you know that might just mean we don't spend as much money on developing
say or bitcoin mining infrastructure capabilities and then we we don't get as much sales when it
runs up but it's also about just risk you know managing risk and not overspending yeah you you
you mentioned risk right so this is exactly where i am a critic of this whole ai i don't know i don't
want to call it pivot now um but you know what i mean right so oil and gas it's never going to go
away right this world needs oil also needs gas bitcoin also never going to go away this ai thing
who knows you know it's it's super risky i feel like and and i am not sure what the strategy looks
like if all of these big miners who previously bought tens of thousands of asics are not buying
them anymore bitcoin keeps doing what it's doing and then what what happens if we see hash price at
80 90 100 that competition in ai keeps compounding keeps driving the price down like is this maybe a
a bit short-sighted you know that's at least my theory i mean we've seen roughly i think
100 exahash 150 exahash disappear from the network since october um and i don see that trend reversing with the amount of used machinery that i see coming to the secondary market um and i think like your diversification or your your what i hear is that you guys as a result
started diversifying into a different revenue stream that's completely decoupled from bitcoin
and i think that's really smart um there is a question here the the question would be like
first feel free to comment um but my question would be like currently do you see
more demand from miners who soak up these cheap secondary market asics and want to deploy them on
an oil and gas field do you see more demand for your infrastructure as a result of that
Or do people skimp out on expensive infrastructure if the miners that they're buying are worth very little?
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Yeah, I mean, I would say in what we see less demand from.
I'm going to I'm going to just sort of frame this in a way that hopefully makes sense.
So like there's our products, like the Bitcoin mining products that we built, we design them to, we design them with the end user being the oil and gas company in mind.
Okay, so we, it's designed to be a solution for stranded gas in the highest sense.
Now, historically, a lot of our business has been selling to third parties, like Bitcoin miners who don't own oil and gas facilities.
They buy the equipment, they contract with the oil and gas company direct.
We would just sell them the equipment, they would put it on a contract that they have
developed.
We are seeing less inquiries from, I'll just call them the Bitcoin mining group, like the
middlemen, the people that don't own the gas, and more inquiries from the people that own
the gas.
I think there's a few factors at play.
It is a good time to invest in Bitcoin mining if you have the right application.
Oil and gas applications, they're not all good applications.
There's a lot of people forced the product and the systems that they put out there into
bad applications.
And there's been a lot of people bankrupted doing that.
But for the right applications, it makes a lot of sense.
And it's a great time to do it because you don't have to spend so much money on the computers.
Because usually oil and gas, you do not need the newest computers.
So you're not paying.
If you're on the grid and you're stuck at this, like, you know, let's say you have a good power price, anywhere from like two to four cents per kilowatt hour PTAs.
Even at that level, at least especially towards the four cents, you're almost stuck going towards the newest hardware, right?
It's like closer to the tip.
So like an S21 XP or S23 when that's on the market.
But then you pay the premium because you're competing with these guys,
everyone else in the market that needs that newest stuff.
So you're over, in my view, you're overpaying for the hardware
and you're going to take a bigger hit on depreciation, right?
Like as time elapses.
With the oil and gas folks, though,
you usually don't need to go to the top gen you can go to like second and third gen so like s even
s19 and make sense right now uh if on the right projects and in fact a lot of the projects the
oil companies buy our stuff for uh those are good uh good systems to start with and then upgrade
them later you know they pay themselves off very quickly because the gross operating cost is
relatively low in oil and gas space if you're doing it like if you're smart about how you operate
yeah so so we're in so we're sort of getting a drop in like these colleges random third-party
inquiries but more in the self-mining oil company self-mining space and we probably do you know one
one thing we haven't really been doing for years is just because it's sort of not our business
model. Like we're more of an infrastructure company. Like we quote and sell stuff and help
service it. Like we support the client, but the we don't really go out there and look for gas deals.
And there's two reasons for that. Like one, one, I'm limiting our business to be like a,
like an oil field services business.
We're not looking to be direct contractor for gas.
And I don't want to compete with our customer base.
Like our customer base is doing that.
If it's not the oil company direct,
the customers that are contracting for that gas,
I'm not trying to compete with them on.
So there's elements there, I guess,
that I consider as well.
What's your take sort of on the market?
And do you think, again, with this whole, what happens if Bitcoin price goes up while hash rate goes down, do you think there's enough demand in Canada and North America in general, LATAM, and enough understanding of the market to sort of soak up all of those used units?
Or do you see them sit and collect dust and go down in price until they reach their scrap value?
I do think a lot of the stack, if it stays in a ugly, long-term hash price is just going to keep going down, of course, because of quick efficiencies.
Hardware gets more efficient, so more hash per dual.
Inevitably, it's going to keep going down.
It's always going to be what's the current spot price for machines and their growth margins.
And I do think in any prolonged bear market, like we've been in, I considered it quite a long bear market that we're in, in general, in Bitcoin.
The computer pricing, you know, like is a lot of the computers are getting replaced, especially before the full pivot.
It seems like almost everyone now in the public Bitcoin mining space is now pivoted or is leaning into the AI thing.
But prior to that, there was a lot of upgrading, right?
they were upgrading s19s to s21s you know like watts minor m30s m50s m60s to get their their
value down like the cost per joule or cost per watt and yeah like i do think a lot of the secondary
market will it's gonna have to find a home like you know at the market's edge you know like oil
field. I see we actually still get sort of steady, but it's really low volume, like low revenue.
Like a lot of these small like solar projects that people might buy one of our black boxes for,
and they're just filling it up with dirt cheap, like, you know, M30s or S19s.
So they're getting in at a really cheap price just to utilize some small scale waste power.
right and so those are like i call it you know those to be referred to as like you know edge
cases like market edge cases like they're not they're not going to be like scalably massively
by like one entity most likely so and really i mean really like bitcoin that's always been my
personal thesis is that bitcoin belongs at the edge and i've always been a little critical of
like the big miners and their strategies of building these big brick and mortar facilities
on grid for two reasons. Like one, they weren't, a lot of them didn't build them to be portable.
And now that AI is taking up, they sunk a lot of capital in these facilities that can't really be
retrofitted for AI. And they've wasted a lot of money when they could have just liquidated the
whole site and shipped it out if it was containerized.
Explain that, Steve.
Why can it not be just upgraded to tier three or tier four from tier one?
Well, I know, I don't want to say can't.
I know there are some companies that have marketed that they can, like Core Scientific.
You got to give Core a lot of credit.
They're very early to investing into this data center pivot.
and they've always claimed that they designed their Bitcoin facilities to be dual compatible.
But I haven't seen evidence of it yet.
I know they've been already, I think they have stuff online with the AI now, but I haven't
seen any evidence.
They haven't shown how they took that existing Bitcoin mine and just took out the miners
and put in the AI racks.
and fundamentally there's like yeah if you design a site to do both uh just like from mechanically
from like what has to go into the site you're either overpaying if it's being used as bitcoin
mining you're either overpaying on the infrastructure to make a dual compatible
or if you you know and you know if you don't get the ai going there the hbc compute then you just
like way overpaid um or you know or they did the opposite like they didn't make it dual compatible
and now they have to gut the whole thing i mean some of the the bones of some of these sites you
know the land the land is you know not going to change if it can it can be dual compatible
sometimes the buildings like the buildings sell they can be gut the internals of the building and
redo it. I think now though, there are some companies, like when I think of some sites that
I don't know if as a matter of fact, if they're dual compatible, but like, like a HUD-H Vega site
in Texas, like they, they built that as a hydro site with like server, you know, rack mounts for
hydro mining. So that hydro will have a lot in common with say like hydro GPU compute. And so I'd
imagine a lot of that infrastructure might be dual compatible. But I still would recommend and
who's my money, you know, I'd be building portable, like if you have a piece of land that you can put
fiber into for the bandwidth needs and networking demands of AI, like build it, build a portable
Bitcoin mining stack, like transformers and containers, like just get a good quality product
that's going to operate well.
And then get your AI stuff going
and then just move the Bitcoin load off
like when you need to.
Just sell it, remove it, put it on a new site.
And there are companies like I think
that appear to me to be doing that strategy now.
Like I think Giga Energy might be trying
to do that kind of strategy
because they'll build these like,
they're like a competitor to us in the sense,
you know we build similar bitcoin mining systems but you know they're they're they're they're going
out and getting these like projects like maybe i don't know what the sizes are but like 10 plus
megawatts maybe 25 projects getting it started with bitcoin mining and if i was them you know
that that and it has like if it's in a strategic location where you could get fiber and like
have someone then come in and and buy it up for ai compute that's great now you can just move all
all that stuff you put down and you really haven't lost a lot of money.
Like you haven't sunk a lot of capital.
I think I remember CleanSpark doing that.
It's just sort of an anchor for that AI, right?
So just to reiterate that, to understand your thoughts, right?
So you bring Bitcoin mining somewhere.
You secure all the energy, right?
Because at the end of the day, that's what investors are interested in.
They don't want energy in five years.
they want I don't know 500 megawatts tomorrow right yeah and Bitcoin mining can secure that
relatively easily and deploy it really really fast and so then when you have it and you can
actually draw that power because that's what the utility wants from you right they want you to then
also please take that power not just announce that you could potentially at some point
then you make yourself a good friend that also likely to give you a lot more power in the future right so in that sense Bitcoin mining is anchoring that And if you can do that with cheap machines
maybe even, I don't know, run at 80% uptime
and shave off the peaks for the utility
and get a really good deal.
There's a lot of things that can be done there.
And I think that's also what the majority of these old units
are going to be used for.
But then I agree with you.
like why if I was a shareholder in one of these big miners and they would be building tier four
data centers and then be putting I don't know m50s in them I'd be like what are you what are
you doing like that makes zero sense um but yeah it's what really stuck out to me from from what
you said earlier was also that you have a lot of these um gas and oil companies reaching out to you
What do you think changed that?
Do they reach out to you and ask about AI too?
Can we just do AI on this oil field?
What do you think changed from, I don't know, maybe three years ago
that they now approach you for Bitcoin mining solutions on their oil fields?
I think in general, in the broadest sense,
just because we're getting more bigger oil companies now
than we were in the past too, like publicly traded ones.
Even there's one right now we're working with in the US.
They're pretty decent, well-known name,
and they're self-mining Bitcoin.
So they just did a pilot with us and are expanding it.
I think one of the biggest things that stands is
I do believe that whole, like when the ETFs started,
a lot of the institutes,
there there's well i have a lot of like criticism towards some of the institutional adoption stuff
that's been happening uh i would give it a lot of credit on making uh making it more palatable
right like for other institutions like other public companies on bitcoin dressing it yeah
yes the the suit coiners have made it palatable for other suit coiners and that definitely has
an effect because you know especially these bigger oil companies uh who would come to us and we quote
them now a lot of time they still want us to they still want like a no capital option like you know
we provide everything and they give us gas for free or something and we won't do that but uh
with the ones coming to us for quotes often you get like a mid-level engineer who runs the numbers
he's like this is the best solution for this facility but then he gets stopped by legal or
management, right? Like someone above him. I think that legal stop and all that like risk management
side of it. And of course, like there's been a lot more tools and like credibility, even on the
custody side, right? Like, you know, of course, Coinbase is like one of the suit favorites,
not a favorite of mine, but a suit favorite. There's other companies like, like say that oil
company we're working with who whose management actually approved like the call it mid-level
engineers project plans uh they're an interesting group because they're they they're actually using
like they're not even using custodians they're using like unchained capital for treasury management
so they're they're more hardcore uh which is sort of surprising for a company the size that they are
because usually we just see that with the smaller companies and but even I can tell you like when I
started and had a lot of these small projects with a lot of small oil companies
now given that there's more than just a custodian that they could use like a coinbase or a kraken
or you know whoever's the best in the jurisdiction is now that they have like these multi-sig like
partners like onramp bitcoin is a good group uh i just met with them the other day yeah uh
unchained of course yeah they're great uh unchained of course has been around for a long time
they they've helped pioneer that model and that gives the that gives people a middle ground where
you're not just giving it you know trusting the custodian which for a lot of corporations are just
fine with um but if they do want a little bit more self-control and you know not have risk on
on the capacity side like they can use like those you know unpained and like so i just had a lot of
infrastructure yeah yeah i was just saying i i just had the the guys from sangha renewables on
as well and they're also working with total energies which is a giant in the energy space
you know the ngs of the world um they announced that they're doing something in brazil like
and do you think maybe
I don't know if this is a bit
reaching too far but I feel like
the
story
or the public
image of oil and gas companies over
the last 10 years has not been the greatest
right so do you think
that the that fact
coupled with hey we
might as well associate ourselves with Bitcoin
now you know can't get much worse
is that a factor or not
no i don't think so um yeah i mean of course oil and gas companies have been uh
known as you know considered a negative like in from a marketing and like news level you know
view for quite a long time um of course that the oil price is going up due to some like you know
middle east drama uh people are remembering how important oil is and at least you know um anyone
rational about it understands that you know you can't really you can't really do anything without
crude oil and and that especially crude oil and its byproducts but i wouldn't say that i wouldn't
say there's a huge element of like oil companies being like you know they've been demonized for so
long and let's uh you know like bitcoin's not going to make it that much worse you know they're
actually they're actually pretty you probably actually won't find a higher concentration of
environmentalists in any other industry than oil and gas because they all have especially with all
the all the scrutiny in north america especially and in europe uh for like the you know uh northern
european companies like they actually invest a lot in environmental remediation and they employ a lot
of environmental professionals so i have to get their numbers straight yeah yeah yeah and i mean
like oil and gas folks to see bitcoin mining like the ones that are thinking about it correctly like
they see it as a not just like an economic win versus some alternative like you know flaring gas
of course you don't have a payout like you never make any money uh but uh even though not every
flare is a the right spot to put a bitcoin mine um it's it's pretty much irrefutable at this point
that it's still a better thing for the for emissions uh putting it through an engine than
through a flare and it's and it's definitely more responsible right like you're you're monetizing
the energy and you're basically creating jobs. You might not even create a lot of jobs
in the oil company, like operations or maintenance. You're upstream of that. Like my company,
you're creating jobs, buying it. And anything that generates a royalty, like in the cases where the
gas being used is generating royalty versus not because it's being flared or it's sitting in the
ground you're paying into that's going to the local government and it's it's building hospitals
and road maintenance and all that stuff so that is like well understood like you know in the oil
industry and it's yeah it's a better it's not without its challenges to like succeed at doing
it but it's uh it is and you know and that's also why i've always advocated you know even we were
talking about the grid stuff like whether you're on the grid or off the grid the bitcoin mining
infrastructure should always be portable uh because it's the it's like the only and that
this one got me into it it's like it's the only technology that can scale and be just moved wherever
the energy is it just has almost no you don't need contracts because you have the global network
buying the hash rate you don't need high internet you can just use a cell modem even on even on a
gigawatt mine, you can use a spell modem. If you're using like proxies and local internet
proxies to minimize what's going out to the internet. So it's just like unbelievably
awesome that way. And that's why I think everyone who's invested in the portable infrastructure,
whether you're on grid or off grid, it's really the only way to do it.
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yeah i there yeah i'm i'm in i'm in two two fields because you said like it needs to be portable but
then in a lot of jurisdictions you have to have a certain size to even qualify for the power
contracts like if you take i don't know power at medium voltage you know you're not gonna get a one
megawatt contract um and a lot of miners in ethiopia are feeling the pain of not really being
movable right now because once you make all of those investments you know that sunk cost and you
can't just move away from it on a dime so that there is that but i do agree with you that those
miners who remain flexible and who can move and ship the machines elsewhere those are typically
that's a big advantage to have because it's it's diversifying your risk 100 um steve i want to
talk to you about the vfds i want to understand that more for maybe another five minutes and i
want to do a quick rapid fire and then round out cool yeah let's do it all right so tell me those
vfds that you mentioned explain to my audience please what those are and why they're important
and why you guys are selling them focusing on them yeah they're part of the so i'll just
yeah my my background personally is oil and gas production so oil and gas production facilities
and optimization. That's what I was doing before Bitcoin. That's what I started doing in this
company. So when I started upstream data, almost everything we build for off-grid has a package
genset, like an after-ass generator in it. So our Bitcoin mining product might have it in the
building with the Bitcoin mine, or it might be separate depending on the scope of the project.
When I started wanting to, even though I'm straddling those two industries, like I said,
all the people I have in the company are building both. So it's not like we have two different
divisions. It's the same company doing the same stuff. We just shift the work to whichever is in
demand. So all the machines we have, like manufacturing machines, all the people,
they're completely liquid on both markets. So when I started adding to the oil field services
side to get that market, which in hindsight, I think I was pretty smart because the oil price
is going up and our business is going up with that. It started with generators. So instead of
just making a dedicated generator with a Bitcoin mine, we started just making dedicated generators
and selling those. We do buildings for Bitcoin mines. Now we do custom buildings for oil and gas
companies that have nothing to do with even generators. We just built a 30-foot building
for an oil storage like they're just putting oil like a bunch of field maintenance components like
oil drums and stuff in the building um so i got into vfds because generally in the oil and gas
industry as it is in many um the end user doesn't want to piece out every component from different
suppliers they want someone to package everything like and serve it to them on a silver platter
So people that sustain oil and gas operators
who are interested in our generators because they gonna set up a well site with electric pumps and they need VFDs It a lot easier for us to get their business if we do the full meal deal right up to the pump
Now, because I'm Canadian-based, I'm Canadian and sitting in Calgary, the oil and gas industry is
extremely broad. We're not trying to tackle every basin. What I'm doing with oil and gas right now
is all Canada and it's all heavy oil production.
So anyone basically buying anything to drive artificial lift pumps,
so ESPs for high volume oil and gas production,
or like PCPs or pump jacks for low volume production.
If we want to like get on their bids and get VFD sales or generator sales,
the more we can offer them like as a full package, like the better.
So we're, we're already selling like these VFDs that are a little small,
just small modular VFD panels. Like they're only like three foot wide,
you know, four foot tall that just sit on the stand.
It's a very commodity business, a low margin.
We're also doing like the more integrated building systems,
like the MCC buildings. We're just sort of starting that.
but between the generator packages the mcc packages the vfds whether they're modular or not
it's sort of like i'm trying to build a full meal deal around oil and gas production and i say
production i don't mean processing or midstream i'm not really we're going after the upstream oil
and gas industry and that because that's also where bitcoin mining fits it doesn't really fit
downstream so much. Just like on the grid. On the grid, you're downstream from the energy source,
and that's why they're getting priced out. The Bitcoin mining stuff we do can go right to the
wellhead. The generators that power the wellhead, it can actually do both. We can build a generator
that powers the well site and a Bitcoin load, if you know what I mean. If you just think of the
stack it's like we you know they have the they have the gas we provide the generator the buildings
and enclosures for it everything power distributed in like low voltage switch gear and vfds uh we
won't be supplying pumps because that's getting into artificial lift that's like downhole stuff
and we're surface power but we're basically doing everything now on the surface like all everything
everything from the gas to convert it to power to drive the well sites and mine bitcoin if that
makes sense yeah so it all comes i mean how important just briefly follow-up question how
important do you think it is that it all comes out of one hand and kind of has the chance to speak to
each other because i understand the bitcoin mining load is flexible you have to control that somehow
you have to adjust it according to how much power is available at any given second and i'm guessing
that with if you just piece different manufacture like um parts together that there's a lot of
friction and the advantage here would be for you guys to supply all of that as a package that is
designed to do that specific thing yeah and i mean a lot of you know the companies that are really
successful in oilfield services are the ones that have great services so they can support the product
so like they you know um one issue with and i had this issue early it was upstream beta like
you know when i was buying generators instead of building them ourselves and then a customer had a
problem i'd have to work through this my supplier to troubleshoot and let's say it was a warranty
requests to deal with that it was it's absolute nightmare it's it's the same thing in oil and gas
there's going to be problems eventually like you know whether it's a quality problem out of our
shop or an application problem how it's operated there's going to be something so you know when i
started the vfd thing the first thing i did was hire vfd experts like he he's like one of the best
in Canada because we can't support a VFD product without someone like him.
And, you know, I hired other folks to train under him.
So part of it is like the full meal deal.
They want the package.
They want the full bid.
But the other thing is like being able to support the client.
We also do, we build a lot of stuff under subcontract now.
So like a lot of the buildings we build and even the VFD modular packages we're doing, they're actually not direct to customers.
It's through a packager like Slumberjay.
Slumberjay buys a lot of our buildings.
They just started buying some of our VFDs.
So we'll support them.
They'll support their customers, basically.
And that's sort of a nice thing for us because we don't have the – we're not spread out.
I don't have a service job in every basin, like oil and gas production basin.
I mean, it's on the roadmap, but it's probably a lot longer.
It's going to take me longer than I want.
That's just the way things happen.
But we have two manufacturing facilities now, one in Canada, one in the US.
The US one isn't going to touch oil and gas yet.
They're focused on Bitcoin mining, like hash generators,
because a lot of it there is also training,
learning how to build these systems.
And then when they're like optimized,
then I'll start adding,
branching out there like I did in Canada.
Because Canada, we're a lot more robust as a company.
We spread out into oil and Bitcoin
and a few different product lines.
I'll do the same thing in the US
once we have more of a foothold,
if you know what I mean,
the personnel and the capabilities.
How
unconceivable or conceivable
is it for you guys
to start building your own
miner?
Oh, like the actual hardware?
Yeah.
I mean, it would be...
I know ASIC and chip level
design and shit is super difficult,
but all of these machines
that come to market are designed for always
on use at some
point in time. And then we use them in a way that they're not designed. So I'm just waiting for that
application where people say, hey, we have this specific use case. That's what we want to build
an ASIC for. Yeah. I mean, the way I look at things is like you only build in-house, right?
what you know what is or what's the thing you buy from your neighbor if your neighbor does it cheaper
than you you buy it from your neighbor right so like i can't remember what the actual saying is
but you don't build in-house but your neighbor can sell to you cheaper right you you just contract
it out so in our stack right say in a generator package uh we have a lot of really competent good
engine people like really technical really hands-on they understand how to troubleshoot engines
especially natural gas engines and that's sort of a rare skill like it's not as common as like an
automotive engine right uh because you know you're dealing with variable fuels and conditions um
the you know like i'm more thinking rather than like integrate in-house the asics uh like would
we invest in that like would we hire the right people to develop that or would i hire the right
people to develop engines? Because we don't build the engine in-house, we buy it from a packager,
like PSI at a Chicago or Mesa at a Casper, Wyoming. Will we do that instead of buying it from them?
Maybe in the future, if there was a point in time where it was better for us to take that
in-house than to rely on their product. To answer your questions more concisely,
there's no plan to do ASIC design and supply.
I'll give you one example that the way I think about it is, say,
who's it, Bitdeer, right?
Bitdeer has developed their own, you know, former Tihon Wu,
former Bitmain, you know, they know that business.
They've started that business.
Like they have the steel miner.
At least by all reports, they don't sell very many externally.
And they're using them in-house.
Not according to plan, but yes.
Yeah.
And I mean, it's also market driven.
Like no one's selling a lot right now.
Like Bitmain, MicroBT, Kanan, you know, I don't think they're doing great on new hardware sales.
But yes, there's an element of that that's affected, say, BitDeer's plans.
But if you were building something that you can sell to the public, but you're only using it in-house, that's a very bad sign.
when I look at an infrastructure company
because you can't price it to sell.
You have to use it yourself
because if you build something for yourself,
you should be able to put a price on it
that's better to just sell it
and return your investment and do more stuff.
That's going back to that thing I bought on that saying,
like don't build in-house,
but your neighbor will do better at lower cost.
For them, it's optionality, right?
Yes.
But they're also selling a lot of their used machines to make space for AI and for their own seal miners.
But yeah, anyway, sorry, I interrupted you.
No, I mean, I know what you mean.
And you're right.
It's sort of like, you know, we build half generators and then people put those machines in our buildings.
We will put our own half generators to work on different contracts with oil companies.
it's not how we're scaling our business we do that as a trial basis you know I talked about
not wanting to compete with our customers as well but just to be blunt there's more money
and a faster return on investment for us to sell to sell the equipment and if we can't sell it
because the market is city then we'll have more reason to use it in-house like to just go direct
to do deals and but as soon as the market corrects like the objective is to get the max value out of
you know the productivity of the company and that's always selling externally um generally
yeah makes sense steve you're already way over time let's do a quick of quick round of rapid fire
you ready all right yeah go ahead okay cool number one flare gas or grid power which one has more
upside?
Going into future flare gas.
Coldest temperature
you've ever deployed a
hash generator in?
Northern Alberta, sort of like north of
Edmonton, it gets to minus
55 degrees C.
And the hottest?
West Texas.
Has Bitcoin mining ever been harder
than right now?
from a unit profitability no from an infrastructure supply chain stack it's pretty good right now
are any oil companies bitcoiners yet
yes we have many many customers that are yes one thing every miner should know about running in a
remote location?
I have professional help.
If you don't know how to maintain an engine, make sure you find something that does.
You're going to fail miserably.
Loved it.
I have to commend you.
You've been able to answer these questions the quickest out of all my guests so far.
Do you want to give people a quick handoff on where to find more about your company in
Canada, a company in the US,
socials,
all of that good stuff.
Yeah, I mean, Upstream Data is the
company name. We're in Wyoming
manufacturing in Alberta.
And if you want to reach me,
that's probably best.
I ignore LinkedIn.
It's full of trash.
So, yeah,
at SCBarber on X.
Awesome. Steve,
you've been a great guest
to interview. I hope we do this again.
I know you're a wealth of knowledge.
Thanks again for coming on, spending some time that I know is scarce for you.
So yeah, appreciate it very much and hope to see you soon.
Thank you.
You're welcome.
Thank you very much, Jesse.
All right.
Bye.
Cheers.