Bitcoin faces challenges in getting above $68,000 level

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[Music] zering in now on another big story we're watching which is Bitcoin already in the third worst week of the year here you can see that is down a little over 4 and a half% I want to take a look at Bitcoin though year to date still obviously having a lot of success up 38% you can see though in the month of June a little bit of capitulation heading towards that trend line similar to the kind of dip that we saw in early May it'll be a big question mark as to whether or not bit Co is going to pass that threshold given

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some of the downward pressure that we've seen as of late we already know that the start of this week for Bitcoin in the broader crypto Market has been rough as well so investors keenly watching this digital asset to see what the moves might look like moving forward and for more on exactly that with regards to crypto markets we're going to bring in Fred teal Marathon digital Holdings CEO Fred thanks so much for being here as always really appreciated talk to me about this downward pressure that we are

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seeing in Bitcoin I'm curious from your perspective is this being driven by a demand issue or is it being driven by macro questions about what might be coming next for the Federal Reserve well it's a couple of things going on one is you have the German government uh the criminal Bureau is selling supposedly about 50,000 BTC they've already sold a few thousand of those Bitcoin uh so that creates a bit of a supply shock then you have Mount gaau bankruptcy supposedly will be Distributing the Bitcoin

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in that bankruptcy which is a very large volume of Bitcoin starting in July um you have macro expectations impacting generally the riskof assets and so Bitcoin has been very correlated to risk on uh as of late so there's a lot of things going on as well post having you have miners selling a large proportion of their um Bitcoin that they're mining as a way to continue to fund operations and uh their attempts at expansion but we are seeing hash rate starting to come off the uh difficulty rate will likely have a um

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significant downward adjustment uh here in the next uh at the next update but I think right now what we're seeing is just basically a lot of Supply in the market and uh you know you've seen about $1.2 billion do of outflows from the ETFs so generally demand is kind of waiting some analysts have predicted that Bitcoin could drop down to about 57 as a support level uh we have to see but clearly um you know Bitcoin right now is challenged at getting up beyond that kind of 68 69,000 level and one thing that's interesting for you as CEO is

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that the performance of this asset directly plays into the performance of your company's stock given the interconnectedness of the two um for our viewers some context Marathon digital engaging in mining digital assets focusing on the Bitcoin ecosystem in particular how do you navigate that as a company executive what is your thinking on being so heavily impacted by the performance of this digital currency that does have a history of being really volatile yes Bitcoin is historically very volatile uh you deal with it by

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having a very strong balance sheet we have amongst the strongest balance sheets in the industry with you know over a billion and a half dollars of Bitcoin and cash uh available to us and uh not too much debt at the same time we focus on diversifying our business uh we started a portion of the business which is a technology division which focuses on selling infrastructure technology uh especially liquid cooling technology which is applicable to the AI space just as much as it is to the mining of Bitcoin we have a full software stack uh

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for the Bitcoin mining industry as well uh that we've begun selling and um have announced some recent Partnerships around and then we have a part of the business called Energy harvesting uh which focuses on leveraging um Bitcoin mining and digital asset compute as a way to essentially generate revenues through alternative means that exam of that is last week uh we announced that we have started a heating project in Finland so we're heating 11,000 homes with the heat from our data center and in that way we can subsidize the cost of

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our electricity essentially lowering the cost for us to mine Bitcoin by being paid for heat off take um the same token uh we are generating Bitcoin using methane gas off of landfills which again lowers our cost to my Bitcoin so as that business begins to build over the next few years we expected to contribute significantly to lowering our cost to mine Bitcoin whilst most other miners are just paying for electrical fees off of the grid which whose prices aren't going to go down however through this energy harvesting model we can

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essentially subsidize our cost of Mind Bitcoin well Fred it's a great point on being defensive and also I know you're working to diversify your revenue streams as well I'm not going to ask you to comment directly on your competitors but I am curious about a competitor of yours that's buying in h100 computers diversifying by renting those out to clients I just want to get a sense of your thinking on that move and do you think that that's something that you would prioritize moving forward as AI

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starts to and has really been driving the success of this market and individual companies within the market I mean it's a great question so a number of our colleagues in the industry think that Bitcoin mining and HPC or AI Cloud uh have similarities they do they both require a lot of power but I'll give you an example of where those similarities end if you have 200 megawatts of power and you're going to build that out for AI Cloud compute the infrastructure the buildings basically that you need to build are about $800

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million and the uh Nvidia equipment is about $3.2 billion that's $4 billion in total to use that 200 megawatts for Bitcoin mining will cost you about $200 million so there's a very big difference in the amount of capital you have to have and as you can see the companies that really have gotten into the space are having to receive large Capital injections from their customers core weave you know did a deal with core scientific uh where they're essentially financing the infrastructure buildout and they're providing the compute um you

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know HUD eight recently today I think announced $150 million Capital injection from a core weave Affiliated uh entity so what we're seeing is people trying to get into this business but just look at nvidia's product announcements and think about techn obsolescence here if the Nvidia equipment is going to get four times more powerful at a similar power load meaning the power required isn't going to go up by four times then why would you be buying machines today if within 24 months you'll be four times

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behind the power curve and so I don't believe today it would be prudent for our shareholders for us to be investing Capital Equipment capex rather um in buying a bunch of Nvidia machines only to have them obsoleted within 24 months that being said providing a equipment for the infrastructure the picks and shovels if you would for AI compute are very interesting and that's what our technology division is focused on doing with our liquid cooling infrastructure because you need immersion cooling technology to keep these AI rigs cool

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especially the next Generations of Nvidia machines and other machines that we expect to see coming the other thing that is much more interesting I believe is the inference part of AI you have essentially the learning models that you need to train and then you have the inference inference is where the user really interacts with uh AI if you think about chat GPT when you ask a question it's running an inference query that's where the real volume will be and that will be at the edge of the network in very different types of data centers

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running different types of machines and that's an area we're very interested in Fred as we wrap up here I finally want to get your take on the upcoming presidential election and I'm curious from your perspective as an executive in the digital currency space which candidate would be better for your Marketplace Trump or Biden um so president uh or former president Trump has obviously positioned himself as uh the candidate that is pro Bitcoin he believes that all Bitcoin should be mined in uh the US and uh has

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been very open in his relationships with Bitcoin Miners and people in the space uh the Biden Administration has been very hostile to bitcoin um you know through its various agencies whether it's the banking uh and the so-called operation choke point 2.o whether it's the SEC Etc um I'm sensing a a thawing of uh the cold if you would from the Biden Administration as they realize there are 55 million voters in this country who care about crypto that's a pretty large voting block and while nobody in this industry wants it to be

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partisan I mean we believe that um Bitcoin serves the needs of everybody it doesn't have any political color to it um we think both parties should embrace it and in Congress we've already seen the Democrats um in both the Senate and the House of Representatives embracing Bitcoin and crypto legislation you know the Sab uh repeal and then um the fair markets act both of them you know bipartisan uh attempts to get something passed and that were blocked by the White House so I think that you know what we're going to have to see is more

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bipartisan work on this to get it worked uh ped but it really is a bipartisan thing it's not one party versus the other on this yeah it's certainly become a bit of a uh political football as we head closer to November Fred thanks so much for being here with us really appreciate your insights that was Fred teal he's Marathon digital Holdings CEO

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