Fred Thiel on The Blockchain Interviews with Dan Weiskopf

Transcripts are autogenerated. May contain typos.

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[Music] you're watching the blockchain interviews hosted by dan weisbach each episode features interviews with leading industry experts so that viewers can have a deeper understanding of today's quickly evolving blockchain marketplace [Music] i'm thrilled today to host fred thiel ceo of marathon digital as my guest speaker for blockchain interview series we were fortunate to be early investors in marathon based upon the long-term vision of the chairman merrick okamoto marathon digital has an unusual business

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model with only seven employees fred thiel joined in 2018 as a board member and now has the the special role as being ceo and implementing the business strategy today we will discuss three key takeaways why the bitcoin ethereum mining industry is so core to the growth of the blockchain how the industry will grow be transformed and impact different industries and what is happening in the near term in china so fred thank you so much for joining me i really do appreciate i've learned a lot from you um and and i appreciate your time

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dan thank you glad to be here you know people often often say timing is everything but for me execution is about skills experience and culture you know with seven employees um who kind of operate i think as a swat team tell the audience a little bit about how you and merrick met swap seats and and your unique background sure um so i've known merrick for 20 years uh we've we're neighbors members of the same uh beach club and our kids kind of grew up together our wives are best friends and we've you know

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touched on each other's businesses a few times on trader and managed uh assets for people i was running public and private companies doing venture capital private equity and he'd show me some deals i invested in some deals with them and you know usual kind of friendly stuff and when merrick first got involved with marathon uh back in 2017 he needed somebody on the board who a was a technologist and b understood blockchain and the potential for uh blockchain and so he said hey listen i'd really like to

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have you on the board here's kind of what i'm thinking of doing with the company and i got super excited and formally came on board and i think was april of 2018. my background is one of uh you know always been a sort of technologist and a i guess a value creator my first technology job was actually writing software for a big bank in the city of london when i was in high school in london back in the mid to late 70s um back in the day when you had punch cards as opposed to either tape or disk and so i kind of learned about the

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inefficiencies of the financial systems that way i also had the benefit that uh both of my uh parents uh were in the banking industry my father was a banker a chase at the time and uh my stepmom was also a banker and later went on to be senior economist at the oecd responsible for um helping the east block nations come into the oecd and then the eu relative to securities and banking regulations so i grew up with the dinner table conversation of being you know miffed one miffed two discussions about uh all of the stuff

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that bankers talk about um and really lived uh you know at one point i was even writing software for you know bank atms and for the swift system uh and just really lived that financial industry uh as a problem child if you would from a technology perspective and i'd always thought about you know gosh it would be great if you could automate this and you know at the speed of uh the internet if you would um close financial transactions and do things without all these very cumbersome legacy systems that existed

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so i spent a lot of time in a lot of different aspects of the tech industry semiconductors hardware storage uh embedded systems iot a lot of work in the iot world and became kind of known as a transformationalist you know i would get involved in a company and figure out how to take them to the next level and had the good fortune of doing that with a company i took public called lantronics back in 2000 uh did it again with a company in the digital media related to the game space called game spy and then did it with

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some private equity backed companies and really loved that value creation process and uh uh went to the dark side at one point and ran actually a private equity fund focused on technology investing and realize that while i love doing what i do um i'm better off being on the operator side than being necessarily on the institutional investor side and not because i made bad investments but just because i really prefer getting my fingers dirty and touching the dials if you would so um what was great about my relationship

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with merrick um at marathon is you know obviously trust built on many years and you know uh just a really good transparent uh straightforward relationship where we could you know discuss hard topics and we had to make a lot of hard choices over the years you know we had to prioritize spending things we had to look at you know how do we really execute in a world where you don't control the sale price of your commodity there's no product differentiation in your product uh it's all about operational efficiency and capital

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efficiency merrick is an expert at capital and finance side i'm the scale guy so fast forward to uh you know uh this spring and as we're talking it's you know america gotten the company on a great financial footing you know we had uh raised a bunch of cash uh we had closed this big order with bit main for all these miners and timing was kind of perfect uh and you know it was a you know could have gone the other way too but you know we just happened to time the market properly relative to buying machines at

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the right time and at the right prices and um then it was time to implement and scale and that's something i've done over and over again so it was kind of uh an internal discussion uh you know he was had been shouldering the bulk of the burden over the years and so it was just you know good timing to have a swap of roles and uh so you know we did that in april this year and it's been great uh you know we continue to collaborate very heavily on everything and our team to your point operates a bit like a swap

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team um i'm a big believer in agile and i think what you'll find in all of my whether it's um presentations i've done at mining disrupt i just did one on the one thing i came away from my experience in the private equity world was return on assets you know you can be a technologist you can be a startup guy and you can go operate a company and lose millions and millions of dollars and people are telling you you got to lose more money to grow it faster and all that but at the end of the day an enterprise is only

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worth the return it can generate for its shareholders and so i really looked at this business and said you know we need to be able to be as agile as an enterprise as we are as a small miner and how do we do that and that's where we decided on the strategy of really not being a vertically integrated miner where we own hosting facilities and we own power and we go down that route because my belief and our board's belief is that this business is really about being able to take advantage of um let's just call them inefficiencies

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in the marketplace as they arise you know the big order that merrick placed last year with bitmain was one of those things the market you know there was a lot of uncertainty about the price of bitcoin people didn't feel it was going to go up there was a lot of availability of machines at very good prices you know let's hypothesize what happens if the market all of a sudden goes back on a tear goes up like in 2017 and who's going to benefit well whoever has the state-of-the-art miners well let's make sure we have as much as we

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can get and we were able to get quite a large number um and we continue to believe that in the market there's a time to be mining and there's a time to consolidate and rest and right now it's a time to be mining and so we've been very fortunate in that um timing met with our preparedness to execute so we're very excited about what the future holds um but we're also you know you have to look at the there's a happening happening here in um you know a little under a thousand days and uh who knows if it repeats prior

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cycles you know we could be set up to be mining during this kind of next 12 to 18 months generating huge profits and then we're also in a good position that if the price drops and all of a sudden infrastructure is readily available be a low price buyer of more machines for the next growth path or not it all depends kind of what it is the key though is we're very agile by not owning all this infrastructure um it allows us to deploy capital on purely that what makes us money it's poor english but uh you know essentially

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um and the presentation i did at mining disrupt a few weeks ago was about this was essentially i can choose to deploy capex to build out a 100 megawatt facility that's going to cost me 30 million dollars or i can say hey mr hosting partner you build it out charge me for it based on a depreciation schedule we both agree on i'll even finance some of it for you but let me use my 30 million dollars that would have gone to infrastructure on more miners and now all of a sudden i have 125 000 per day more revenue

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so our model is very much one of maximizing our mining capacity and if you kind of look at us versus riot who's kind of our nearest comparable you know based on this latest order we placed uh that we announced today for an additional 30 000 miners uh will be at somewhere around 13 plus exahash come june of next year and riot will be at seven point something at the end of next year based on their current purchases so you know we've clearly shown that by not investing in infrastructure uh but rather putting 100 of our

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investments in minors we're still able to cut very attractive hosting deals like the one we did with compute north and have the ability to be very agile in the marketplace and so uh you know time will tell whether our strategy wins out um but i think that we're on the right path certainly okay so a couple of things here um let's take a step back first a little bit and talk about why specifically on the bitcoin side why the miners are essential to the ecosystem because i don't want to make any assumptions that everybody understands

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it sure so um the way the bitcoin blockchain works and this is the ethereum blockchain works that way still today though they're in the process of changing to something called proof of stake which i'll explain in a minute proof of work is essentially a theory that's the basis of the satoshi nakamoto's white paper that if somebody has to invest energy and resources to calculate the blockchain and validate it the more people that do that the harder it is for somebody to come in and try and manipulate or change the

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blockchain so when you only have a couple of computers doing this transaction processing essentially validating a about 2000 transactions assemble them in a block do a cryptographic problem to solve for and then you get a nonce which is a technical term for essentially a number you're going to use for guessing another number and when you guess that number correctly you're potentially awarded a block uh from um you're awarded a block reward which today is about 6.

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25 bitcoin uh per block and um so there's a combination of luck and and just hard effort to it but the more people that mine the more secure the blockchain becomes because uh it's a consensus-based system so that more than 50.1 percent of the people who are mining have to agree that a block contains the transactions that they say it does and when that happens that block is indelibly written in the blockchain if somebody were to go back and try and change a block and reverse a transaction they would have to go back to the block where that

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transaction was included they would have to have enough mining horsepower such that they represented over 50 percent of the total blockchains mining horsepower and then they would have to do the same thing to rewrite every block subsequent to that up to present time uh and that's virtually impossible at this point there are so many um there's so much equipment mining that the capital expenditure required to be able to do that uh is outside of almost a nation-states capacity um the ether uh the ethereum blockchain today

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operates the same way however they're moving to something called proof of stake which is instead of spending all this money on hardware and energy resources essentially put up a bond that if you say a transaction is the way it is and you're wrong you lose that bond and so essentially your ability to verify a block is dependent really on how much you have at stake and so people actually stake ether there are billions of dollars now i think about 32 billion dollars have been staked in ether and as they move to this

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transition then whoever holds the most ether has the biggest vote if you would in my opinion this is a movement towards centralization not decentralization because whoever holds the most ether are going to be the exchanges in the banks who are the custodians so where bitcoin is all about decentralization ethereum is now moving more towards centralization so it'll be interesting to see which of the two models uh works long term we believe that um bitcoin is the more robust more secure and when it comes to uh a network on which you

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want to build future applications with the advent of taproot and now lightning and other things bitcoin has in our mind the same capabilities as ethereum does for building defy applications with smart contracts and all of that so i think we're going to see a lot more being deployed on the lightning network certainly we're going to see um a lot of uh even non-financial uh businesses built on top of the blockchain and uh side chains such as microsoft's identity management system which is being launched on the bitcoin blockchain um i

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think sometime next year so we're super excited about that yeah so so you kind of gave the the street a little bit of a tease though at one point when you changed your name right to marathon digital and um it sounds to me though you're not interested at least at this point in time in diversifying into other things that you're going to stay remain focused on bitcoin our primary focus is bitcoin mining 100 that being said uh if you fast forward and you look at when we've deployed all these miners that we're con we're in the pro process

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of deploying now and we're generating 50 60 bitcoin per day and you start looking at and we're not a seller of bitcoin we all of a sudden become a fairly large investor now granted we're investing in our own mind bitcoin but it's kind of like rio tinto holding its gold and uh we will have a fairly large amount of bitcoin on hand and then now we need to figure out how are we going to maximize the yield on this bitcoin we don't want to sell it what can we do with this bitcoin are there businesses

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that we can use this bitcoin as a type of fuel to drive those businesses and so we in the future foresee marathon digital holdings actually holding a number of crypto related businesses um again i don't think we're going to go down stack towards hosting in power i think if anything we'll go up stack towards layer two protocols layer two businesses you know we could very well become a investor uh in attractive startups and we would certainly have more than enough bitcoin on hand to stake some very interesting businesses

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potentially so when i look at the industry today you know between and i'm just talking about the the mining side you've got bitcoin and you've got ethereum and it looks like right now the ethereum mining is is running at a faster pace right as an industry than than the bitcoin mining and that's and that's fine but together they're roughly what do you want to say 20 to 30 billion dollars you know on a runway basis right how big do you think this industry can get well uh so it's easy to look at it um

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on the bitcoin side because the number of rewards are finite right it's 900 bitcoin made per day whatever the price of bitcoin is that is the maximum size of daily revenue of the industry period uh in the world of ethereum uh it works that way today uh though it's not a finite reward mechanism there and even when you get to the london fork which they're doing now which uh you know isn't a shoe in that it's gonna happen flawlessly there are a lot of miners who say you know we maybe just want to stick

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to mining you know classic ethereum the mining rewards decrease substantially and are hopefully replaced by transaction fees the challenge is that ether will continue to the supply of ether will continue to grow even in the tests they've done uh on roop stand and some of the other test networks as they've been prototyping the london fork they've seen that um about 75 of the newly issued ether are burned if you would but that still means that there's a daily 25 kind of uptick so um i think the different dynamics

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between ether and bitcoin from an investment perspective certainly you know one is a fee you use the monetary value you use for paying for expenses on the ethereum blockchain uh whereas um bitcoin is more of an actual asset people would invest in i think but you know we'll have to see i think the um this business you know is going to be totally driven by the price of bitcoin um and the price of bitcoin is going to drive uh how many people are in the business of mining bitcoin and uh you know the success or failure

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of the industry from a profitability perspective will be a balance of bitcoin price and total number of miners mining uh you'll eventually get to some point of equilibrium where you have to have a certain scale uh just to be profitable in this business and that'll kind of cap the global hash rate eventually at a level but that's why we're very focused on uh you know the more people who come on board the harder it will be to keep up and so we believe it's much better to get out ahead of everybody

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deploy while you can and then as the industry grows around you uh you know you are either hoarding a lot of cash and figuring out what you're going to do next or you're going to have a lot of cash to invest in the next generation of machines that give you the next advantage while everybody is still trying to utilize their prior gen machines you you just teed me up on a question because congratulations on your big order you know you're you're you're a technologist as well right you know when we look out in the future um

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you know how do you see technology evolving and how did you decide to put the order in today as opposed to waiting not to buy used equipment right and who um is the leader in terms of what equipment is most revolutionary right now sure um so you know machine orders are always a question of it's kind of price and timing on deliveries and when do you think it makes sense to put them to work uh because of the chinese shutdown we are in the most profitable time to mine that there's ever been and so from our

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perspective we had the opportunity to buy used machines we don't want to buy used machines because you just don't know the condition they're in you don't know if they've been overclocked you don't even know how they've been abused so we prefer new machines that have come with warranties and we're a very close partner to bit main um you know the order we placed last year was the single largest order in their history i think it was a considerable percentage of their overall uh manufacturing

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capacity and uh you know we have obviously been talking to them all along and you know we were kind of looking at things in the marketplace and determined that okay um you know it makes sense for us to place another order now because provided we can deploy them uh in the you know first half of next year which is the plan here so um from a timing perspective it all just the stars aligned on that um we think the s19 pro is the you know today um from both a cost per terra hash energy use per terra hash and um robustness you know the s19 is such an

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upgrade to the s17 uh it's crazy just a much better machine all around that being said um you know if you look at any technology industry like this somebody is going to come out with an asic that is twice as power efficient as the current state-of-the-art bitmain asic it might be bit made it might be somebody else but somebody's gonna come out with an asic sooner or later that uses half the power and they are gonna get that cycle of machines uh you know in the marketplace um for that particular upgrade cycle and then

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it's you know continues to be a race this is i experienced this um in the semiconductor industry before i've experienced this in the storage industry with hard drives every quarter you're looking for more capacity at lower cost per megabyte uh here it's you know how many joules how many fewer joules per terahash does your chip consume and that's going to be what's going to be pushing this market and where the market has been very um hardware supply constrained uh i think we're going to see a reversal of that uh

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you know tsnc can build a new chip fab in 11 months they're growing capacity by 60 this year over last year so you know bit main and others are going to have increased capacity so we view that this marketplace now with the chinese kind of shutdown this transition of chinese miners coming to the u.s the lag item is not machines it's infrastructure it's hosting and it's power and so all of a sudden there's a available amount of machines in the marketplace and we just took advantage of that um that opportunity if you would

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uh so that being said as you look forward here um the next power upgrade cycle if you would from a perspective of asics is likely going to happen in the next uh 12 18 24 months somewhere in that time frame uh you're gonna see somebody come out with a very viable machine that operates at 2x the efficiencies of current machines and that'll be the new vendor king of the hill vendor provided they're well capitalized enough and can you know supply and the quality is good and then you know you'll see this

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industry effectively produce twice the hash rate at half the power consumption so it's going to be very interesting as you look at the dynamics in the marketplace you know if you're still buying um the typical machine today is about 30 joules per terahash is kind of where you're at from an energy use you know if you're still buying and deploying 30 joules per tera hash machines and your competitors are deploying 10 joules per tera hash or 15 joules per tera hash machines you know you're at a huge cost

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disadvantage it's kind of like using s9s versus s19s uh from a bit main architecture perspective so uh it's really you know um i think you know we're going to see a potential you know technology shift on the minor side just as we're seeing a very large expansion in the number of people mining and you know the as the price of bitcoin continues to move upwards uh you're gonna have more and more people wanting to come into this business and uh you know the people who come in in the last year before the happening which is

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you know essentially think of it as kind of early spring 2023 through spring of 2024 they're the ones who are gonna you know be at risk and so uh we believe that you know now is the time to strike while the iron's hot and then uh you know maybe in a year it'll be time to sit back and just count the shekels and wait for the cycle yeah so so it typically in an industry like this in my judgment there's room for consolidation right because it's so fragmented but you know in this industry what do

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you get when you when you consolidate you get used equipment um you get maybe real estate um uh maybe some technology um what's your view on on this industry consolidating well um you know our model is not to own real estate uh certainly so um every dollar we have you know we want to put towards mining productivity and uh that mining productivity might mean that we invest in something like that as a way to get you know added juice if you would out of our miners um but we're not going to be in in the real estate game uh so consolidation for us

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if we were to buy another miner to your point we're buying some old machines um and paying will on top of that that doesn't make sense uh so i don't think you'll see us consolidating another minor in that way um i think you know people like riot and others you know they're i'm sure are going to be looking at acquiring other hosting providers uh but you know the interesting thing that most people the analysts especially are only now just starting to realize is that um if you think about the two primary input

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costs excluding machines it's power and hosting so the real controller of input cost is power because hosting is a very small percentage of the overall cost it's the power is your primary input driver there are a lot of power companies who control ample power supply who are regulating their power plants up and down to meet demand who are starting to see bitcoin as the perfect load balancer and so you know we put couple thousand miners at a facility we can run that facility at a constant energy rate which

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is much more efficient for the facility no matter what type of energy you're producing it's much more efficient you know whether it's wind solar gas coal whatever it might be if you can run at a constant generation capacity everything runs smoother so you can essentially say okay the grid is going to have demand that fluctuates as it does and then we're going to have bitcoin miners that suck up the excess electricity whenever it makes sense and so now all of a sudden i'm getting calls from people saying hey

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uh you know we have 50 megawatts we have 100 megawatts of power potentially in excess we'd like to talk to you about operating miners on our facility and then we turn around to them and say okay fine you invest in the capex and we'll put miners there and we'll come up with a deal um and you know not that we're in the midst of any of those direct conversations today necessarily but that's clearly what's i think is going to happen and now you have um and this has happened internationally

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you have major cell phone companies that have power because they have all of these central switch operators that they are um and power companies saying you know gosh i've got 10 excess capacity i should be in the mining business and i think what you're going to see is power companies and others large manufacturing companies that have huge power contracts that aren't using 100 of that power who could do some bitcoin mining with it are saying wow this is a great way to subsidize my power or my manufacturing overhead or whatever my

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cost structure is and i'm going to do this and you know provided i partner with somebody who can operate it all i have to do is provide you know electricity and a facility for them to put their miners in they do the rest that's a pretty sweet deal and so what we're going to see is a huge expansion i think in the number of people coming into the industry and a large expansion of people who potentially can do reasonable scale especially in north america and that's going to be very interesting and i think you're going to see

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countries like whether it's el salvador paraguay kenya or others who have access to hydro geothermal whatever it might be you know they're going to do the math and say okay i spend 100 million dollars to build a power plant i bring some bitcoin miners in and now i've got a cash machine that doesn't depend on anybody consuming electricity other than the bitcoin and as you know bitcoin is the single best way to convert energy into money yes i i absolutely agree um but you also have to have renewables

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right you know you you know and talk a little bit about that area of the market and how that's been accelerating and frankly i think gonna accelerate even further absolutely the um the renewable energy sector uh the biggest driver of investment today is most probably bitcoin mining and the reason why is if you're building a solar plant a wind plant and you want to sell electricity you have to sell to consumers or manufacturers which means you have to be located within 500 miles of them because that's

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the maximum distance you can push electrons down a wire and over that 500 miles you will lose 5 to 10 percent of your power so there's a waste so if you have 100 megawatts that you're sending down a wire you're gonna lose you know five to ten percent of that electricity or you can build a power facility solar or wind or geothermal you can put bitcoin miners on the grounds you can start generating revenue and if there's an opportunity to connect to the grid you can then do that and the grid operator will

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build your plant you're operating you're a viable operator otherwise it's a catch-22 hey mr grid operator i want to build a solar plant to do one gigawatt great we'll build the distribution once you've built the the plant the plant owner says well i have no guarantee i'm gonna be able to sell my electricity unless you build the grid so bitcoin has been a huge driver and if you look at q4 of last year over q3 there was a 40 increase in renewable energy generation capacity in this country in texas

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uh earlier this year 10 percent of all power was priced negatively what that means is that there was excess power capacity in the grid in the us today we consume and generate about four terawatts of power a day we lose 200 gigawatts of power a day just due to transmission line issues all of the north american miners of bitcoin together do not consume 200 gigawatts of electricity so but what we do do is offer the opportunity for west texas wind energy solar energy nuclear power as well as potential for geothermal and

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hydro facilities to get built out even though they don't have customers and you have great hydroelectricity in parts of this country but you have no customers in proximity who could consume the electricity so it's not worth the effort to build a power plant there but if you put bitcoin miners there on site absolutely it does so what you're seeing now is a huge number of projects being accelerated because of the opportunity being given by bitcoin mining uh as a way to monetize that energy and we are already in north america

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today well beyond 56 renewable energy and carbon neutral energy use in bitcoin mining we're going to see that grow uh as time goes on and you know the uh on a global perspective you know china's shutting down mining was a huge boon to that renewable number because 70 percent of mining in china was done with coal yeah and you you don't think that they're coming back right in china but some of the capital might be deployed elsewhere right yeah yeah so you've already seen about um 20 to 30 percent of the chinese miners have

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relocated to kazakhstan kazakhstan is a coal-based energy generation but the rest of them are in a little bit of limbo they are busily chasing i mean i get calls every day from people who hey you know could you host some minors for us um that are chinese uh miners but the other issue is you know they're coming here and they're saying oh wow different cost structure electricity is much more expensive here it takes six to nine months to build out the facility in the capacity and oh by the way you've got to pay for

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that capex and oh by the way you've got to buy the miners and pay for them up front and it's uh the type of math that for some of these miners just doesn't make sense so i don't necessarily foresee a hundred percent of the china miners coming back online that being said i see a lot of expansion from existing other miners and new miners yet to be uh yet to have come to the market uh to drive the expansion of the total global hashrate yeah it seems like it's it's created a great opportunity for the

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north american miners so i agree with what you're saying so um we've gone almost i think 45 minutes and i want to throw some wild card questions at you if that's sure if that's okay you've done a great job answering all the other questions but now the tough ones come okay so looking backwards two years from now what do you think that one of the things that investors in the blockchain should have paid more attention to what do they miss you follow the question yep um so you know i think most investors in the

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blockchain uh have other than a a small handful uh look at it as a hype cycle meaning oh gosh this is a great thing we're all going to invest and you know there's a and you know having been on the dark side and having run a private equity firm and i am a gp and a venture firm also so i can admit to being on the dark side um you know there's a lemming effect it's like oh wow so-and-so invested we have to go chase that you get everybody chasing it and then you hit the peak of the hype cycle it's like well but nobody's really

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deploying anything and nobody's building anything on blockchain you know uh okay so we're gonna forget about it and then anybody who tries to say hey i just did this really cool thing with blockchain they're gonna say yeah yeah yeah yeah yeah you know call me when you got a million users or something well guess what paypal keeps growing every quarter the reserves they're holding in bitcoin because of the amount of transactions they're doing square same thing with the lightning network and what strike has

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been able to do in el salvador and what they're going to do in other countries bought moneygram you know you're seeing this uh adoption that is being done at a foundational level uh and uh we're gonna wake up you know these institutional investors are gonna wake up and say there's blockchain everywhere everybody's using cryptocurrencies you know why didn't we see this sure and it's it's you know this is uh i was actually um speaking to an analyst earlier today and you know we use the analogy of the

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iphone you know when the iphone launched in 2007 it didn't do email and you couldn't use third-party apps it was an ipod that you could talk on not very compelling right and you had you know the head of nokia poo pooing at the head of um blackberry poopooing it and you know oh this is just a toy right well guess what they open it up to third-party apps and all of a sudden it just starts growing because it becomes a more uh there's more relevance to it and i think that's what's happening now with bitcoin and

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the bitcoin blockchain you're seeing applications being deployed on lightning you're starting to see um between nidig and fis you know 300 million u.s bank accounts being empowered to hold buy and sell bitcoin uh alloy and i dig did a deal for payment capture you know every every day you're reading about somebody adding bitcoin and blockchain to their business model and so either all of these people are stupid and are going to lose a lot of money i don't particularly think that i think they're smart and i think they're

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out there you know laying the path works laying the uh the highways if you would that uh we're gonna see that are gonna be used by all these cryptocurrency businesses that uh have uh yet to appear and i think the next five years are going to be the most dynamic and exciting times in this industry so second question wildcard question which industry will be most affected by blockchain there are three industries uh obviously financial services uh as a key one because you have all of these inefficiencies but because

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it's such a regulated industry it takes time for this penetration of technology to really affect it so we'll see that we'll eventually be at you know stock clearing will be at t zero uh you know uh you send money anywhere in the world it'll arrive there within minutes automatically there won't be this so fed wire closed type of things healthcare is another huge user of the blockchain and then lastly identity and identity is going to be by far the single largest user and here's why today

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all of your data whether it's your personal data your corporate data is held ransom by some provider whether it's facebook whether it's google whether it's sap whether it's a sales force it's held in somebody's cloud imagine if that data were on the blockchain instead and you the consumer you the owner of the data you the company who that generates the data controls who can see it when and how and you officially you you essentially just issue a token to your medical provider when you want to share your medical data

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it gives them access to read your data but the minute the token expires they can't read it anymore they're never getting a copy of that data now imagine i'm a corporation and i have marketing team i have a sales team i have customer service and i have all this customer data today it's all in salesforce and everybody has to use salesforce but imagine if it's on the blockchain some people could use hubspot they could use salesforce they could use whatever tools they want to access that information provided i give them

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access to it and i think this is the single biggest change that we're going to see is the uh essentially taking data back from the providers who hold it hostage today putting it in the consumer and companies control such that you control who gets to read it how it's read and that data is 100 trustworthy because it's kept on a blockchain so whether that is asset and ownership data which is ideally suited to be on the bitcoin blockchain so think title of homes cars artwork all that sort of stuff or an application on which you network on

41:05

which you build uh applications like ethereum is ideally suited for building applications you're going to have all these things kind of developing and you know there are going to be many more base level protocols than just bitcoin and uh ethereum i think we're going to see many more uh that are specialized in nature you know if the fed goes down the the central bank digital currency route they'll have their own blockchain uh you know you have paxos doing this blockchains with banks so you know blockchain is going to be as

41:37

generic a term as the word internet is today and i think you know we're in 1995 in internet terms uh you know in 1995 you had netscape this browser you had a few websites that actually had some cool stuff tens of millions of dollars to build a website you had to buy all this proprietary hardware all this software um you know fast forward to 2003 and that disappeared fast forward another 10 years and uh you know you're at a place today where you want to start an e-commerce business you know you go to shopify you're in

42:10

business in 10 minutes uh if you believe in s-curves which is this concept of you know technology innovation uh you know it takes 10 years to get to kind of 10 of the number that you're going to get to and the following 10 years you have you penetrate the next 90 and i think we are just at that cusp where bitcoin is now 10 years old a little over 10 years old in general terms not since the white paper was written obviously because that was 2008 but um in application terms it's about 10 years old and we're now starting to see all these

42:49

rumblings of all these applications and all this stuff that's coming to light uh about uh use cases for bitcoin and blockchain and blockchains in general d5 all these things and uh you know the regulatory environment is going to catch up uh to make sure that this is a safe place for consumers which is their job and then i think this thing is just going to take off so i am super bullish about uh the next 10 years i think we're gonna see this penetrate every industry but primarily financial services healthcare and identity i think

43:20

are the the top three right now that are the most in need of this and where there's the most monetary value to be extracted yeah i see the insurance company being industry very impacted absolutely absolutely so fred thank you very much for spending the time with me um i look forward to seeing your company grow it's going to be very exciting keep up the good work blocking tackling we definitely appreciate it and um have a good day thank you thank you and you know appreciate your support as always as an investor and uh

43:50

you know look forward to a great future for all of us bye-bye thank you bye thanks you

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