Large-scale bitcoin miners are competing head on with AI companies for power: Marathon Digital CEO

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00:09

Bitcoin, after an all-time high of 37,000 last week, joining us exclusively to talk about the highs and lows is Fred Thiel, CEO and Chairman of Marathon Digital Holdings. It is great to have you back on the show. Welcome. Thank you. Good to be here.I will start. The incredible torrid rally that we have seen in Bitcoin, what is spurring it and how much hinges on the upcoming work?I think most of this has been the pent-up demand for the ETF.

00:36

You had some rotation out of miners, into the ETF. And a lot of these ETFs have really started marketing their products to wealth advisers. You have very few wealth advisers that actually recommend it to their clients yet. So you have to see the real kind of flow of alternative assets and just retirement accounts, pension accounts, into Bitcoin.

00:59

And that will come most probably later this year, early next year. I think right now, we are continuing to see a rotation. At the same time, you're seeing people looking at the economy, and what's going on, uncertainty in the world, and just some jitters. The other thing is that the ETF now holds a very large amount of Bitcoin, and so there is not a lot of liquidity in the market.

01:22

Any move one way or the other has a big impact due to the low liquidity, which over time will normalize because as the market cap of these ETFs and Bitcoin overall continues to grow, volatility will decrease, and it will operate more like a traditional asset, but we have a while to go before we get there. We have a while to go.

01:40

And I wonder, is this good or bad for Marathon? I guess more specifically, what does it do to the mining market? And how do you position yourself for it?Great question. So what this does to the mining market is essentially create a situation where some miners will be under stress. If you think about the mining market, in this cycle, compared to prior cycles, there hasn't been available credit or

02:07

And of the public miners, only really the larger miners have the opportunity to raise capital. And so there's been this race of the large miners growing, scaling very rapidly, and the smaller miners not. So I think you will see the smaller miners under stress, and this will enable the bigger miners to consolidate the industry.

02:30

We have done two acquisitions, and we're going to keep acquiring. We have quite a strong balance sheet. We're ready to go as opportunities arise. But you know, you have to be very prudent. You have to do these things at the right prices. And I think more stuff will come to market.It raises the question, how quickly can you build your own capacity to meet forecasts? And perhaps just as importantly, what are the power needs and dynamics of that process as well, at a time when power generation in this country is

03:01

starting to get more attention as we see generative AI needs beginning to pull on it, too?Yes, so definitely large-scale Bitcoin miners that have been traditionally building utility-scale sites, 100 megawatts, 200 megawatts, are competing head-on with the AI companies. AWS did a recent buy of an operation site for $650 million.

03:27

So there is direct competition going on. The advantage Bitcoin miners have, and I think especially Marathon, is we're able to operate with real stranded energy — energy that doesn't have a natural good connection. So we're able to consume that energy and use it where they otherwise can't sell it. We rely on a lot of renewable energies, which are also intermittent — solar, wind, etc.

03:50

The other benefit we have is we're a load balancer on the grid. These AI loads are not load balancers; they just consume. They don't shut off. We have the ability to shut off at any time when the grid needs it, in response to demand response mechanisms. So when energy needs are high in the afternoon, for example, we can shut down our systems and free up hundreds of megawatts of power to the grid. This way, the grid operators don't have to buy power on the spot markets, and they don't have to turn on

04:17

peaker plants and do all of those things. There are a lot of benefits of mining over AI. But yes, we do compete. And that's where things stand.

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