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Mining the Future: A Bitcoin Halving Roundtable with Public Mining Company Titans
This YouTube video features a roundtable discussion with top executives from leading public mining companies. Moderated by Natalie Bernell of the Coin Stories podcast, the panel includes Fred Thiel, CEO of Marathon Digital Holdings; Harris Basit, Chief Strategy Officer at BitDeer; Tyler Page, CEO of Cipher Mining; Zach Bradford, CEO of CleanSpark; and Nazar Khan, COO, CTO, and co-founder of TeraWolf. They discuss the impacts and future outlook of the fourth Bitcoin halving, which occurred at block 840,000, exploring changes in the mining industry, innovations, and the evolving business models in response to macroeconomic factors and technological advancements. The conversation also delves into regulatory challenges, energy efficiency, and the strategic significance of scale in mining operations.
Transcripts are autogenerated. May contain typos.
Fred Thiel: The Bitcoin halving essentially takes the incentive that was developed to get miners to want to mine and weans them off it over time as transactions and adoption grow. Ideally, transaction fees would make up the bulk of the revenue for miners. That's part of the elegance of the system. It controls the supply of Bitcoin, but it also forces efficiency in the industry, which is a great side effect.
Zach Bradford: With each halving, there are fewer new Bitcoin coming to market, which mirrors real-world commodities. This halving is particularly significant because the amount of new Bitcoin coming to market annually will now be less than the amount of new gold mined every year. As more people view Bitcoin as a store of value and a hedge against inflation, it's transitioning into an even harder asset than gold.
Tyler Page: The protocol is genius in how it mimics human behavior. It drives efficiency and scarcity, which increases Bitcoin's value over time. We know exactly how much Bitcoin will be produced and when, making it predictable in a way no fiat currency ever has been.
Harris Boset: We can predict when every block is coming and when a halving will occur, but layering in real-world events, especially in the macro environment, introduces unpredictability. The industry faces ongoing changes, and for those who can manage through it, there's tremendous value to be had.
Fred Thiel: By 2140, there will be a total of 21 million Bitcoin, but only 1.3 million remain to be mined. In the next four years, half of those will be mined, and within 10 years, 1.1 million will be mined. This makes the next decade critical for Bitcoin mining.
Natalie Bernell: The Bitcoin industry has matured significantly in the last four years. What are some key differences between this halving and those in 2016 and 2020?
Fred Thiel: The biggest difference is the institutionalization of Bitcoin, which has attracted a different investor class. Previously, it was dominated by retail investors. Now, longer-term traders are entering the market. Institutions are also starting to take notice, such as one of Germany's largest state-owned banks offering custody services. This could lead to less price volatility in Bitcoin over the long term.
Tyler Page: Scale is more important than ever. Years ago, small startups could mine Bitcoin. Today, the largest miners are operating at 20 to 50 exahashes, a huge increase in scale. We're seeing larger institutions and nation-states getting involved, pushing the industry towards consolidation.
Harris Boset: The natural evolution of Bitcoin requires larger pools of capital. As the price of Bitcoin grows, it's expected that institutional investment will continue to increase.
Natalie Bernell: Fees have increased, which is great for miners but not for users. What are your thoughts on the fee structure?
Fred Thiel: Fees will continue to rise as transaction volumes increase on the base layer. Financial institutions are interested in reserving block space to avoid slippage. Over time, small transactions will move to layer 2 solutions, but large financial transactions will still require the security of the base layer, where higher fees will be justified.
Zach Bradford: Bitcoin is a valuable savings technology, providing a universal need for people to store the fruits of their labor. This savings aspect, rather than microtransactions, is the largest addressable market for Bitcoin. While layer 2 solutions may help facilitate smaller transactions, miners will always prefer higher transaction fees.
Tyler Page: There’s a self-regulating mechanism where fees rise, but they come down again as demand balances out.
Fred Thiel: Innovation will continue at layer 2 to accommodate smaller transactions. Large transactions, however, will likely remain on the base layer. As Bitcoin reaches higher valuations, fees must rise to sustain the current mining model, especially as rewards decrease.
Natalie Bernell: Since China’s Bitcoin mining ban, hash rate has moved to the U.S. and other parts of the world. What’s driving this?
Fred Thiel: We're expanding offshore, operating in three continents. As the U.S. power market becomes more competitive with AI data centers vying for resources, larger mining sites will increasingly move offshore, where there's excess hydro and other energy sources.
Zach Bradford: Some miners are focusing on finding smaller pockets of energy in the U.S. where they can provide grid services, especially in areas with more decentralized, smaller setups. This trend will continue as U.S. miners shift towards flexible, smaller operations, while larger mega sites move offshore.
Tyler Page: The low-hanging fruit of power availability has already been captured, and now miners need to look for more strategic energy solutions. We’re going to see more varied mining models, where some will run 98% of the time, while others will run intermittently to optimize for energy availability.
Tyler Page: The world is transitioning, and while there are opportunities abroad, there will also be innovation domestically in how we balance power use. Miners who can sell power back to the grid and provide services like curtailment will be key players in this energy transition.
Fred Thiel: Bitcoin miners are increasingly finding new ways to monetize stranded energy. We're working with governments on initiatives like energy harvesting, where we’re taking waste energy, such as landfill methane or biomass, and turning it into electricity, heat, or mining opportunities. This provides sustainable solutions that are attractive even to governments that may not currently be friendly to Bitcoin mining.
Harris Boset: At TeraWulf, we're focused on zero-carbon mining, with over 95% of the energy we consume coming from zero-carbon sources. We're helping to balance the grid by ensuring our operations are assets to the energy system, not burdens. This approach benefits everyone by lowering overall energy costs in the areas where we operate.
Zach Bradford: One thing that’s not sustainable about renewable energy is often its financial model. Many renewable energy projects, whether commercial or utility-scale, require government subsidies to remain viable. Bitcoin mining can help solve this problem by providing consistent off-take for renewable energy projects. By doing so, we can help reduce the reliance on government subsidies and bring more renewable energy projects into private markets.
Tyler Page: The relentless drive in Bitcoin mining to lower costs has led to innovation in energy use. At Cipher, we’re working with off-grid wind farms that were underperforming. We mine Bitcoin when the wind blows, and our machines are off when it doesn’t. This helps optimize the financial returns for renewable energy projects and showcases how miners can bring value to the energy sector.
Natalie Bernell: Let’s shift to discussing revenue streams. The halving is a supply shock, but it’s also a revenue shock for miners. How are you innovating to remain competitive and differentiate yourselves?
Fred Thiel: We’re focusing on energy harvesting by monetizing stranded energy resources and selling heat back into processes. If you have zero-cost energy, you can mine Bitcoin indefinitely without worrying about profitability. We’re also heavily investing in technology to automate operations and reduce costs. For example, we’ve developed the only U.S.-made ASIC miner and immersion cooling systems. We believe the future of mining will involve millions of devices mining Bitcoin at near-zero energy costs, which will change the industry completely.
Harris Boset: Bitdeer is also investing in semiconductor technology. We believe there’s significant room for improvement in the architecture of mining chips, which can dramatically improve efficiency. We see a huge disruptive opportunity in developing new ASICs for the mining industry.
Tyler Page: Instead of diversifying into other industries, like AI, we’re choosing to stay focused on being the best at Bitcoin mining. We’re partnering with technology companies that specialize in areas like firmware and platform development. This allows us to concentrate on what we do best, while leveraging their expertise to improve our operations.
Zach Bradford: CleanSpark started as a renewable energy company, and we’ve always focused on optimizing grid usage. We believe miners will eventually become energy generators, whether by partnering with renewable projects or by optimizing energy consumption. Bitcoin mining has the potential to make renewable energy projects more financially sustainable by providing consistent demand.
Nazar Khan: Our focus is on securing long-term, low-cost, zero-carbon energy sources. One of our sites is located next to a 2.5-gigawatt nuclear plant, and we’ve already partnered with companies like Amazon to use the energy produced there. As AI and other industries grow, the demand for low-cost, zero-carbon energy will increase, and we’re positioning ourselves to be at the forefront of that transition.
Fred Thiel: The competition for power is intensifying, especially as AI data centers, which consume much more energy, are willing to pay higher rates. However, miners have the advantage of being able to curtail energy usage, while AI data centers need continuous, uninterrupted power. This gives miners the flexibility to operate in locations with less infrastructure and helps balance the grid.
Zach Bradford: We’re starting to see some resistance to AI data centers in states like Georgia and Virginia, where they’re removing incentives due to the overwhelming demand for power. In contrast, miners are often seen as beneficial to the grid because of our ability to curtail and provide flexibility. Over time, the AI industry will also have to innovate and reduce its power costs, just as Bitcoin miners have done.
Tyler Page: As Nvidia faces more competition, the cost of AI infrastructure will decrease, and electricity costs will become a bigger factor. Right now, power costs are less significant because the capital required for AI chips is so high, but that will change. AI will need to adopt some of the practices from Bitcoin mining, such as decentralizing compute and finding ways to curtail energy usage.
Fred Thiel: AI data centers are a two-stage process. The learning stage requires high-density power and must be centralized, while the inference stage can be decentralized and more flexible. Over the next decade, the demand for large-scale AI data centers will continue to grow, and they will compete for the same energy resources as Bitcoin miners.
Natalie Bernell: Let’s address the issue of centralization in mining. There are concerns about the centralization of ASIC manufacturing, mining pools, and the mining industry as a whole. How legitimate are these concerns?
Fred Thiel: Centralization is a legitimate concern, especially with mining pools. Two large pools could potentially collaborate to execute a 51% attack. That’s why Marathon runs its own pool, and many smaller miners are starting to do the same. Stratum V2, a new protocol for mining, gives individual miners more control over their operations and helps decentralize the network. Over time, as more sovereign nations and large institutions start mining, they will also want control over their mining operations, which will help mitigate centralization risks.
Tyler Page: While there are concerns about pool centralization, miners can switch pools almost instantly if necessary. If one pool becomes compromised or regulated, miners will move to another. This flexibility reduces the risks associated with pool centralization. As for ASIC manufacturing, we’re seeing more diversity in the market, with companies like MicroBT taking significant market share from Bitmain. This competition is driving innovation and improving the industry.
Harris Boset: On the ASIC front, there’s definitely more diversity now than there was a few years ago. However, TSMC is still the main supplier for chip manufacturing, and that’s an area where we need to see more diversification in the long term. But overall, centralization concerns are not as significant as they once were.
Fred Thiel: The introduction of new mining hardware and the rise of alternative ASIC manufacturers like MicroBT are helping to decentralize the industry. We're seeing more variety and specialization in miners tailored for specific use cases, such as immersion cooling or high-temperature environments.
Tyler Page: As the industry matures, we're also going to see consolidation among mining companies. Today, there are around 21 to 25 publicly traded miners, but I expect that number to shrink significantly over time. The larger, more efficient miners will dominate, leading to a more streamlined industry.
Fred Thiel: I also think that as Stratum V2 becomes more widely adopted, it will reduce concerns about censorship and centralization at the pool level. Stratum V2 gives miners more control over their own transactions, which eliminates the possibility of a pool censoring certain transactions based on regulatory pressure.
Zach Bradford: The concerns around centralization are valid but not as pressing as they might seem. If you look at other industries, Bitcoin mining is still far more decentralized. Additionally, as Fred mentioned, with the introduction of new mining technologies and software like Stratum V2, we are seeing more decentralization over time.
Harris Boset: One of the major strengths of the Bitcoin network is its ability to decentralize in response to pressures. While there are still areas, like chip manufacturing, that need further decentralization, the overall trajectory of the industry is positive. We're also starting to see new entrants into the market, which will continue to push the industry towards greater diversification.
Natalie Bernell: Let’s shift to policy discussions. President Biden’s recent budget proposal includes a plan to tax Bitcoin miners up to 30% on their energy use. What are your reactions to this, and how are you engaging with policymakers to support the industry?
Fred Thiel: The idea of targeting a specific industry for a tax on its energy use is unprecedented in the U.S. We’ve never seen a commodity's use taxed in this way. If it were enacted into law, it would likely be challenged in the Supreme Court, not just by Bitcoin miners but by many other industries. Additionally, if the government wants to generate revenue from energy use, they might start looking at other high-energy industries like AI data centers. I think if any tax is implemented, it will be watered down significantly.
Tyler Page: I'm fairly optimistic that this proposal won’t get through in its current form. I think it’s more of a political statement than a real threat to the industry. As Bitcoin becomes more institutionalized and mainstream, it’s harder for policymakers to enact legislation against it without facing pushback from their constituents. A lot of the noise around these proposals actually highlights the industry's growth and importance.
Harris Boset: We’re seeing the same story unfold that we’ve seen in the past. These types of proposals come and go, but as Bitcoin adoption grows, it will become increasingly difficult for politicians to target Bitcoin without significant backlash. The upcoming ETFs will bring more people into Bitcoin, and once mainstream investors are involved, it will become even harder for policymakers to implement such regulations.
Nazar Khan: This isn’t the first time a tax on Bitcoin mining has been proposed. The same proposal came up previously and didn’t go anywhere. However, the burden is on us, as an industry, to engage more openly and transparently with policymakers. We need to be proactive in educating them about what Bitcoin mining is and how it can benefit communities.
Zach Bradford: One of the challenges we face is that there’s still a lot of misunderstanding about how Bitcoin mining works. We need to do a better job of demystifying the process for policymakers and showing them the tangible benefits we bring, especially in terms of supporting the energy grid and creating jobs. Many of the concerns they have are based on outdated perceptions of the industry.
Tyler Page: At CleanSpark, we take what we call a “front-door approach” to working with local communities and politicians. It's important that the communities we operate in understand what we’re doing and how it benefits them. We make sure to engage with local leaders and educate them on the positive impacts Bitcoin mining can have on their area. Once they understand the value we bring, we’re less likely to face resistance or become the target of negative legislation.
Fred Thiel: It’s also essential to educate policymakers in Washington. The younger generation is much more familiar with Bitcoin, but most of the lawmakers are over 45 and don’t fully understand it. As Millennials and younger generations, who are more crypto-savvy, become more politically active, we’ll see a shift. But for now, we have to knock on a lot of doors in Washington and educate staffers, who often have the most influence on policy decisions.
Tyler Page: The Bitcoin industry is maturing, and with that growth comes more scrutiny. That’s a natural part of our evolution. We need to be prepared to engage with policymakers in a constructive way. It’s important to highlight that we’re not adversaries; we’re contributing to economic growth, energy efficiency, and innovation. As we continue to grow, we’ll need to work more closely with policymakers to ensure they understand our value.
Fred Thiel: There’s a generational shift happening. Younger generations are investing in crypto, and as they become a larger part of the voting population, it will be harder for politicians to ignore or oppose Bitcoin. I think over time, as these voters gain influence, we’ll see a more favorable regulatory environment for Bitcoin.
Natalie Bernell: Let’s talk about why someone should invest in a public Bitcoin mining company instead of just buying Bitcoin directly.
Fred Thiel: Investing in a Bitcoin mining company gives you leverage. Miners have relatively fixed costs, so when the price of Bitcoin goes up, their profit margins increase significantly. Historically, when Bitcoin’s price moves by 1% or 2%, miners’ stock prices move by 3% to 5%. For investors who want more exposure to Bitcoin’s price movement, investing in a miner can provide that additional upside.
Tyler Page: You also get exposure to innovations and efficiencies within the industry. Bitcoin miners are constantly working to reduce costs and increase profitability. Additionally, miners can sometimes acquire Bitcoin at below-market prices, which provides an advantage over simply buying Bitcoin at spot price.
Zach Bradford: There are a lot of free options embedded within mining companies. For example, miners have the potential to play a significant role in the energy transition, especially as we look for ways to balance renewable energy projects. As Bitcoin miners continue to innovate, they’ll have more opportunities to create value in areas outside of just mining Bitcoin.
Harris Boset: At Bitdeer, we’re focusing on technology. By investing in chip development and other innovations, we believe we can add significant value beyond just mining. There’s a lot of opportunity for growth in technology within the mining sector, and that’s an area where we can differentiate ourselves from simply holding Bitcoin.
Fred Thiel: For investors who are looking for leveraged exposure to Bitcoin, miners provide an opportunity to benefit from the industry’s growth and innovation. Miners have fixed costs, and as Bitcoin’s price increases, their profitability increases at a greater rate than simply holding Bitcoin.
Natalie Bernell: Thank you to all my panelists for sharing your insights today. It’s been an incredible discussion, and I look forward to seeing how the industry continues to evolve.
Fred Thiel: As the halving approaches, we’re going to see a lot of changes in the industry. Miners who are able to innovate and adapt will continue to thrive, and those who can’t may struggle. The key is to focus on efficiency, technology, and sustainability to ensure long-term success.
Tyler Page: One of the biggest advantages of investing in a public mining company is the exposure to operational efficiencies and advancements that individual investors might not have access to. We’re constantly looking for ways to optimize our operations, whether through technological innovations, energy partnerships, or other strategies. That creates additional value beyond just holding Bitcoin.
Harris Boset: Bitdeer is focusing heavily on technology development, and that’s where we believe we can add significant value for investors. By pushing the boundaries of what’s possible in Bitcoin mining, especially through semiconductor innovation, we’re setting ourselves up for long-term success and differentiation.
Zach Bradford: CleanSpark has always been focused on integrating Bitcoin mining with the energy sector. We see tremendous opportunities for miners to play a role in the future of energy infrastructure, especially as we move toward more renewable energy sources. This is something that individual Bitcoin holders don’t get exposure to, but investors in mining companies do.
Natalie Bernell: It’s clear that there’s a lot of innovation happening in the mining industry, and there are significant opportunities for growth, especially as we approach the next halving. Thank you again to all my panelists for sharing your insights and expertise today. It’s been a fascinating discussion.
Fred Thiel: As we think about the future of Bitcoin mining, it’s clear that energy efficiency will be at the forefront. As energy costs continue to rise, especially with competition from other industries like AI, miners will need to find ways to reduce costs and increase profitability. This could include partnerships with renewable energy providers or investing in new energy technologies.
Tyler Page: Another important factor to consider is regulation. As the industry matures, we’re going to see more scrutiny from regulators, especially around energy use. Miners who are proactive in engaging with regulators and demonstrating the positive impact we have on energy grids and local economies will be in a better position to succeed.
Zach Bradford: CleanSpark is already taking steps to work closely with regulators and energy providers to ensure that we’re part of the solution, not the problem. We believe that Bitcoin mining can play a key role in supporting the energy transition, and we’re working to demonstrate that in the markets where we operate.
Harris Boset: Bitdeer is also focused on building strong relationships with regulators and energy providers. By being transparent about our operations and showing the positive impact we have on local communities, we’re able to mitigate some of the risks associated with regulatory changes.
Fred Thiel: One of the biggest challenges we face as an industry is educating policymakers and the general public about what Bitcoin mining really is and how it benefits society. There’s still a lot of misinformation out there, and we need to do a better job of telling our story.
Tyler Page: Agreed. The more we can engage with policymakers and local communities, the better. It’s important to show them that Bitcoin mining is not only a viable industry but one that can have a positive impact on the environment and the economy.
Harris Boset: We also need to be proactive in shaping the narrative around Bitcoin mining. By focusing on the positive contributions we make, especially in terms of renewable energy adoption and economic development, we can help shift the conversation away from the negative stereotypes that still exist.
Nazar Khan: The reality is that Bitcoin mining is more sustainable today than it was just a few years ago. Around 55% of the energy used by the industry comes from renewable sources. That's actually a higher percentage than many other industries, yet Bitcoin mining often gets more criticism. The key is continuing to improve and making sure people understand the progress we've made.
Zach Bradford: We also need to keep pushing the envelope on how we use energy. As Fred mentioned earlier, miners are increasingly partnering with renewable energy providers and exploring new ways to monetize stranded or underutilized energy resources. This not only helps the environment but also creates more sustainable business models for miners.
Fred Thiel: One of the big opportunities for miners in the future will be to move from being pure energy consumers to energy producers. Whether it’s through partnerships with renewable energy companies or by generating our own energy, we can play a key role in helping to balance the grid and support the transition to renewable energy.
Tyler Page: Agreed. The future of Bitcoin mining will involve closer collaboration between miners and energy providers. Miners will need to be more flexible in how they use energy, especially as we see more competition for energy resources from industries like AI. Those who can adapt and find ways to reduce costs will be the most successful.
Natalie Bernell: As we wrap up, I’d like to ask each of you to share your thoughts on the future of the Bitcoin mining industry. Where do you see the industry going in the next 5 to 10 years?
Fred Thiel: I think the industry is going to continue to consolidate. We’re already seeing larger players dominate the space, and that trend will only accelerate. At the same time, we’ll see more innovation, particularly around energy use and efficiency. Those who can innovate and find ways to mine Bitcoin at the lowest possible cost will be the ones who succeed.
Tyler Page: I agree with Fred. The industry will consolidate, but I also think we’ll see more diversity in the types of mining operations that exist. There will always be a place for large-scale industrial miners, but we’ll also see more small, decentralized operations, especially as energy efficiency improves and new technologies emerge.
Harris Boset: The key to the future is sustainability. As the industry grows, we need to continue improving our energy use and finding ways to operate in a more environmentally friendly way. This will not only help the environment but also ensure that the industry remains viable in the face of increasing regulatory scrutiny.
Zach Bradford: The energy transition is going to be a big part of the future for Bitcoin mining. Miners who can work with renewable energy providers and find ways to balance the grid will be in a strong position. We’re also going to see more innovation in technology, particularly around mining hardware and software.
Nazar Khan: I see the industry becoming more integrated with the broader energy market. Miners will increasingly play a role in stabilizing the grid and supporting the development of renewable energy projects. As the industry matures, we’ll see more collaboration between miners, energy providers, and regulators to ensure that Bitcoin mining is a positive force for both the environment and the economy.
Natalie Bernell: Thank you to all my panelists for sharing your insights and expertise today. It’s clear that there’s a lot of opportunity for growth and innovation in the Bitcoin mining industry, and I’m excited to see where it goes in the coming years. Thank you again to the Human Rights Foundation and Bitcoin Magazine for hosting today’s panel. That’s it for this episode of Coin Stories. I hope you’ll join us next time!
Fred Thiel: I’d also like to add that, as we look to the future, one of the most important things for miners is maintaining flexibility. We’re seeing rapid changes in technology, energy markets, and regulation. Miners who can stay agile and adapt to these changes will be in the best position to succeed.
Harris Boset: That’s a great point, Fred. The mining industry is still young and evolving, and we have to stay nimble. I also think there will be a lot of innovation in how we handle transactions, particularly with layer 2 solutions. As Bitcoin continues to grow, we’ll need more efficient ways to handle smaller transactions without clogging up the main blockchain.
Zach Bradford: And I think that’s one of the things that sets Bitcoin apart from traditional commodities. It’s constantly evolving, and we, as miners, need to evolve with it. The Bitcoin network is becoming more sophisticated, and the role of miners is changing. But that’s part of what makes it so exciting – we’re not just digging things out of the ground; we’re part of a living, breathing system that’s shaping the future of money.
Tyler Page: The key takeaway for me is that Bitcoin mining is a long-term play. It’s not just about what’s happening today or tomorrow. We’re building infrastructure that will last for decades, and we need to keep that long-term perspective in mind as we make decisions about where to invest, how to grow, and how to navigate the regulatory landscape.
Natalie Bernell: It’s been great hearing all your perspectives on the future of Bitcoin mining. I think we can all agree that the industry has come a long way, but there’s still so much potential for growth and innovation. Thank you again to everyone on the panel for sharing your insights today. It’s been a fascinating discussion.
Fred Thiel: Thank you, Natalie. It’s been a pleasure being here, and I’m excited to see where the industry goes in the coming years.
Tyler Page: Absolutely. Thanks for having us, Natalie.
Zach Bradford: Thank you, Natalie. It’s been a great conversation.
Harris Boset: Thank you, Natalie. It’s been a pleasure discussing these important topics.
Nazar Khan: Thanks, Natalie. I’m looking forward to seeing how the industry continues to evolve.
Fred Thiel: "We’re doing it really on a number of accesses. One is energy harvesting that I talked about earlier, we’re taking stranded energy resources, getting paid to take those, and then selling heat back into processes. The goal is to get to zero-cost energy. If you have zero-cost energy, you can mine Bitcoin forever, you don’t have to worry about it.
The other thing is you need to be able, as Zack mentioned, to run systems with full automation, full lights-out operations, so it’s a milk run to service the system. So, you need to invest in technology. The second thing we've done is invest in technology. We’ve built everything from our own pool that operates all the way down to the firmware and the miners. We've invested in building the only US-based ASIC miner, at Auradine. And now, we've launched a whole line of immersion systems for dual-phase immersion. Why? We believe that companies will want to monetize their energy by mining Bitcoin when it makes sense, especially battery manufacturers. We've had a lot of interesting conversations with battery companies about this.
And what that then enables is you will have millions and millions of intelligent devices all over the world that mine Bitcoin every now and again, and they do it at zero cost because they're using their own energy arbitrage. And I think when the intelligence goes down to the chip at that level, which I believe will be available by 2028, this business changes completely. Because if you have millions of people mining that don't pay for energy, and you have industrial miners paying a lot of money for utility-scale sites, it's an unfair advantage to the small guy. And I think that's where this industry goes. So, I think every company needs to find a way of differentiating itself and adding value over what could be just a commodity business of Bitcoin mining."
Nazar Khan: "And in our case, we’re going with a technology focus, very much on the semiconductor aspect. And there's been, I think, very little innovation since 2014. The chips that are used for Bitcoin mining have improved dramatically since 2014, but it's been almost all based on improvements in manufacturing from TSMC. There's been little change in the architecture, the micro-architecture of those chips, and so that's my background. It’s also the background of some of the founders of Bitdeer. So we feel like there’s a huge disruptive improvement that can happen there. And that’s one of the areas that we're focusing on to differentiate ourselves from everyone else."
Tyler Page: "We’ve always focused on taking a counter-cyclical approach to both the cycle, but also on diversification. It’s a big conversation point right now. And we're choosing not to do it. And what we’re instead doing is we’re choosing to invest in focus. And what I mean by that is we are always trying to make sure we master the domain that we're on right now, which is Bitcoin mining. We want to have the highest uptime, the most efficient fleet, and be able to run that better than anybody else. Now, how we do that without losing focus is by having strategic partners. Rather than, like, Marathon has done, investing in their own technology, we are partnering with other groups. And our belief is that they can focus on being the very best at what they do, whether it's firmware, whether it's a platform, and then we can piggyback on top of their success and do what we do best, and rely on them to do what they do best. We think that's the best way to really consolidate and use our resources in the best manner."
Zack Bradford (CEO of CleanSpark): "You know, running a public company, we generally have a relentless focus on profitability over the long term for our shareholders — profit maximization. That’s not to say we don’t consider other stakeholders, but that’s the primary stakeholder that, frankly, I serve. So, to that end, we believe that the asymmetric potential risk-return of Bitcoin mining at this point in the adoption cycle still provides what we think will be the best returns over time to shareholders. That’s not to say we won’t look at things like AI or other opportunities, certainly lots of innovative ways to integrate with the energy generation industry over time. But, at this point in time, I'd say, somewhat different than some of the other folks here, we’re very much focused on mining with the best possible unit economics and focused on Bitcoin mining."
Nazar Khan: "Our backgrounds are from the energy infrastructure space. That’s what, for 20-plus years, I ran around the world trying to figure out where to put power onto the grid and how to do so the most efficiently, both operationally and in terms of identifying locations. That remains our focus. As we look at where we are today and where things are going, we think there’s going to be more demand for power to support data and high-performance compute, and there are going to be fewer places to actually run it. So, we’re really focused on ensuring that we’re identifying those best possible locations that have the lowest possible cost and the highest zero-carbon characteristics of the power associated with it."
Nazar Khan (cont.): "And so that’s where we are and where we’ll play. If you look at the two sites we have, one of the sites is in the middle of Pennsylvania, adjacent to a two-and-a-half-gigawatt nuclear plant. The very first customer at that site was us. I sat there and worked with the owners of that facility, educated them on what Bitcoin mining was, and educated them on the value of having a large load that could sit adjacent to this large kind of power generation station that wants to run 98% of the time. Who was the second customer that came to that site? Amazon. They looked and said, 'Hey, this is actually ingenious. This is large-scale power at a low cost, with a zero-carbon source.' So, as we think about where we are today and where we’re going, it's going to be continuing to focus on bringing that infrastructure that energy infrastructure that’s going to support both Bitcoin mining and some of these other things."
Natalie Brunell (Host): "Well, you're bringing me to my next question because there have been some reports that the competition to secure favorable electricity rates with utility companies is getting stiffer due to these massive data centers for AI. They're drawing in large amounts of capital, and they're really — I'm reading — keeping electricity bids three to four times what you guys were paying before, potentially. So, these AI companies, obviously very well-funded, are potentially willing to pay more than Bitcoin mining companies. So, how are you guys dealing with this, preparing for the future, and navigating this emerging challenge?"
Fred Thiel (Marathon): "The challenge with the AI LLM training sites is they need very sophisticated network infrastructure, they need very high-speed access to the internet to get the data in and out of their systems, and so that limits geographically where they can locate because typically it’s near metropolitan areas. Now, the state of Virginia has just put a moratorium on data centers — not Bitcoin mining data centers — data centers, because there are just too many of them in the state.
And as you move from Netflix and kind of cloud providers and hyperscalers to AI, the power consumption goes up by factors of magnitude. So now, all of a sudden, you have this direct competition. Most AI guys are willing to pay eight to ten cents a kilowatt-hour, where a Bitcoin miner ideally wants to pay two to three, three-and-a-half cents a kilowatt-hour. And the difference is, we can curtail. They can’t. We can locate where there are low-speed internet connections or no internet connections and use satellite connections. So, Bitcoin miners are being pushed to the edge, basically."
Nazar Khan (Terawulf): "I think there’s a way for us to work together. It doesn’t have to be either/or. I think there are some sites, especially some very large sites, where you can combine both AI and Bitcoin mining. Not in the same buildings or the same data centers, but with the same substation. I think there are ways of taking advantage of that. So, they’re very different businesses in terms of the expertise that's required and the economics. But, you know, Bitdeer is getting into AI at a modest level initially, but we're looking for partners and are speaking to several people. We think there's a lot of synergy in what we’re doing and what AI can do, including even in our chip development. We think there’s some crossover there."
Tyler Page (Cipher Mining): "Something about AI is, if you look at what we have, they’re willing to pay more for power, but they don’t have to. And so I think, on a long-term basis, it actually helps increase our asset value because we’re a flexible load. I think we're a lot more friendly to utilities, and utilities understand they want us there versus the data centers. Georgia is also another state that just removed the sales or sales tax incentives for data centers, and it did so because there was so much demand that they did not want them to come in. So that was a point of attraction, and they removed it to avoid these big AI data centers coming in.
Again, they hog the energy, and they hog it 24/7 with an inability to be interrupted."
Zack Bradford (CleanSpark): "And not a lot of people are talking about their energy use compared to Bitcoin miners. It’s substantially more, but I think a lot of that’s changing, right? So, everyone’s saying here they’re willing to pay more. I think, traditionally, the data center operators, whatever the cost of energy was, it was a relatively small portion of their overall cost base, so they didn’t really focus on it. If anyone is to believe the amount of demand that AI is going to pull and for it to be as pervasive as people say, the cost has to come down. They can no longer continue to pay 10 cents."
Zack Bradford (cont.): "So I think part of the discussions that we have is that Bitcoin miners are the kind of leading edge of the spear because we are demonstrating how you should do this. Curtailability — people have talked about it. And I think curtailability and kind of backup power supply — you know, traditional data centers want to have a diesel generator sitting at the site to be able to support the data center if power kind of goes out. Curtailability has to be embedded into it. And I think more and more, as the forward-thinking players in the space think about how they're designing their LLM models and how they're supposed to work, they are thinking about how do we curtail our loads.
And I think that’s going to be pervasive everywhere in the next two to three years."
Zack Bradford (cont.): "And the second thing is this idea that you have to have a backup generator at the site, and you have a centralized place where all of your activity is occurring, is also going to change. So if you think about Bitcoin, we talk about decentralization. And while we may not have as much decentralization as we want, it is the most decentralized secure network that exists. And so, likewise, the trends that we’re seeing in the AI space are that compute is also going to start to decentralize. And so those players that are going to be the most successful in that space are going to have to reflect on how do we curtail so we can kind of drive down our costs. If we drive down our costs, it’s going to be more pervasive and more used.
And second, how do we make sure that we can decentralize our compute? Again, Bitcoin miners have a lot to be able to talk about with respect to that."
Fred Thiel (Marathon): "So we actually see, from an infrastructure perspective, a number of parallels between where Bitcoin has been and where, at least I see, where the AI demand is going. Because if it’s going to be the same as it is today, it’s not going to be what people think it is. It’s just physically not going to work."
Zack Bradford (CleanSpark): "One thing that changes the economics here is that right now, if you establish an AI data center, the overwhelming amount of capital goes to Nvidia. And that’s because it’s so large. Just like Bitmain, it’s so large that the cost of electricity is sort of just a footnote at the bottom. But that’s going to change as Nvidia faces competition, and the cost of that capital drops dramatically. Then the cost of electricity is going to become more important.
And so, you know, the big hyperscalers are developing their own chips. I’m sure AMD will come up with a reasonably competitive chip in the not-too-distant future. So, I think that whole economics of AI will change, and electricity will become a more important part of it. I agree with Nazar on that. I think they're not going to want to spend 8 or 10 cents in perpetuity."
Fred Thiel (Marathon): "But it's a two-step process in AI versus Bitcoin mining, which is a single-phase process. In AI, you have to train models. That requires this density of power. Once you deploy a model, you can deploy it at the edge, and it can run with curtailment options because you load balance across multiple edge nodes. But the learning has to be centralized.
So, while we are still ingesting huge volumes of data and sorting out all the copyright issues being created by that, you have these large data center needs. But even once inference becomes the primary consumption of AI versus learning, new knowledge is going to have to be incorporated. So, I really don’t see this, in the next 10 years, declining back to a place where Bitcoin mining and AI can sit side-by-side at similar costs with similar characteristics."
Fred Thiel (Marathon): "The other thing about AI is that right now, people are using technology that’s several decades old for training, right? It’s just been scaled up. And there’s a lot of really interesting work going on in how you can get by using far less compute to do the same thing. Eventually, somebody’s really going to have a breakthrough there, and then you're going to see the level of compute required to do the same training drop dramatically. So, I think we’re at the very beginning of AI in terms of this scaling thing, and I definitely think there's going to be disruptive technology that we see over the next few years."
Tyler Page (Cipher Mining): "The other thing not to be underestimated is how long it’s going to take to build these data centers. So, everybody's talking about what they want to do, but again, these data centers are fairly complicated buildings with cooling and everything else that goes into them. I don’t see it disrupting our space for at least two to three years, and that would be very quick compared to how most of these projects go.
So, we could be talking about this maybe impacting us as we approach the 2028 halving, but to Zack’s point — you mentioned this earlier, Zack — I think what is true is that for all of us, I think the infrastructure that we have is not being properly valued. Because there is a real alternative use case for it, and we can see clearly, just with recent transactions, that people are willing to pay a lot more for it."
Tyler Page (cont.): "So, you know, I don’t think of it as a zero-sum game, like it’s either/or — it doesn’t have to be zero-sum. But again, I think what we are doing highlights the importance of the energy infrastructure and how that can play out in kind of alternative use cases as well."
Fred Thiel (Marathon): "The best thing I think is that the AI lobby, which has much deeper pockets than the Bitcoin mining industry, is going to be lobbying the government in the U.S. — FERC, etc. — for more transmission capacity, more interconnect capacity, better internet, etc., etc., all of which are beneficial to us. The challenge is going to come at the local level, where they’re going to be lobbying for their use case for a limited amount of power versus our use case. But I think overall, it bodes very well for the electrical infrastructure in the U.S."
Natalie Brunell (Host): "It’ll be interesting to watch these developments. I really want to turn now to discussing the risks about centralization because many people are concerned about centralization within the mining industry. From everything within ASIC manufacturing, the chip manufacturers, mining pools — I mean, mining is distributed around the world; there are miners everywhere, but there are very few mining pools. So, how legitimate do you think these concerns are, and what are the potential long-term consequences and industry solutions to maintain decentralization?"
Fred Thiel (Marathon): "It’s a very legitimate concern because you have two pools that basically, together, could collaborate and do a 51% attack if they wanted to, one of which is an offshore pool. We operate our own pool because we prefer having control of our own destiny. It’s actually not difficult for people to operate their own pools — they could do it. The problem is the economics. If you're a small-scale miner, the likelihood that you're going to win a block in your own pool, while statistically the same as you would in a big pool, the difference is instead of getting small portions of everybody’s hash rate, you're now dependent on getting a block maybe every month versus getting a little bit of every block that’s been won during the course of a day by a big pool.
So, a lot of people opt not to do it. But most of the foreign countries that are mining Bitcoin as sovereigns are operating and beginning to operate their own pools because they don’t want anybody to be able to restrict them from transacting their Bitcoin. And over time, that's going to become more and more important as we see this long tail of Bitcoin mining with intelligent devices in places mining Bitcoin. The whole concept of pools will again become very decentralized. But a pool is really an orchestration layer. As Stratum V2 becomes more prevalent, then the miners are really in control of their own destinies, and that whole concentration issue of pools disappears completely."
Natalie Brunell (Host): "And with Stratum, hopefully that reduces any chances of censorship at that block level. A lot of people are concerned about that."
Fred Thiel (Marathon):"Yeah, I mean, the only — and, you know, I took a knee when I became CEO of Marathon in 2021 because our pool could filter out OFAC-non-compliant wallets, right? The fact of the matter is, you know, Bitcoin doesn’t have serial numbers, so you’re tracking based on wallets. You can take a pristine wallet and pollute it with some dust from a wallet that’s on an OFAC list somewhere, and now that wallet will be on an OFAC list. And so filtering based on wallet addresses just doesn’t work. As much as the government in Washington would love to be able to do it, I think there are some people in Washington who, you know, over the age of 55, don’t really understand that Bitcoins, just like the dollars in their bank accounts, don’t have serial numbers. You know, people think that, well, 'No, my dollar bill there at Bank of America has a serial number.' It does not. It’s fictitious — it’s just a ledger entry."
Tyler Page (Cipher Mining): "I don’t think the centralization concerns are near the top of my list, to be honest with you. I mean, I think — to expand a little bit on what Fred said — a miner can switch what pool it’s using basically instantly. So, if there’s concern that, like, there’s a regulatory body that would capture the pools that have the hash rate and then corrupt the network, it’s not really a risk, in the sense that as soon as that happens, all the hash rate will flee that pool. And while it’s not optimal for smaller miners, to Fred’s point, to run effectively their own pool and use their own hash rate directly, it can be done.
I mean, the people at this table certainly could do it, right? You would introduce more volatility to your returns, but it’s something that can be done. So, I don’t — that is not something I lose a lot of sleep over, the capture of the pool. You know, yeah, if Washington got really adventurous about wanting to filter transactions at the miner level, it starts to get scary because then you have questions, as a U.S. public company, like are you complying with that regulatory body or not?"
Tyler Page (cont.): "And then on the other pieces, you referenced the ASIC manufacturers and things like that. I do think one of the benefits of getting to this industrial-scale level of the network is that it’s really prohibitively expensive for something like that to try to capture the network. I know Bitmain is very large; they’re the largest rig manufacturer; they run a lot of their own hash rate. But I still think there’s enough diversification — it’s not something I lose sleep about.
The other thing is, if you are that large, think how much value you have tied up in the value of the network being decentralized. By capturing it, you would instantly destroy your own value. So again, I’m sure there are edge cases that people worry about, but I just, I’m not... I think this is a — it’s interesting to discuss, but I haven’t found something that gives me great concern."
Fred Thiel (Marathon): "And at the ASIC level, there’s more diversity in ASIC availability and machine availability today than there was at the prior halving. This is the first time Bitmain and MicroBT are on the same kind of cycle, where before it used to be kind of a flip-flop. Now, MicroBT is — you know, they’ve taken some serious market share from Bitmain. Riot has gone all-in on MicroBT. I’m sure a number of the large miners have ordered MicroBT machines; I know we have.
But we think it’s — the diversity is great because now you're starting to get to a place where, you know, you’ll have a specific miner model for a specific use case. I need something that’s liquid on AC-cooled; I need something single-phase immersion; I need something dual-phase immersion; I need something that’s air-cooled that can operate in 50-degree-Celsius ambient temperatures. All of those types of things will just breed better variety, better selection, and make the industry much healthier."
Nazar Khan (TeraWulf): "Yeah, I think that ASIC mining manufacturers have gotten more diverse, certainly than four years ago. And, you know, we’re adding to that. There is still a concentration, and I’m not sure anything can be done about it. If you go down one step lower, I mean, everyone’s still using TSMC as their source. I guess there’s one using Samsung, but that’s sort of small. But that has a concentration effect on many different areas, not just Bitcoin. So, I think that’s something that needs to get handled, but it’s got to be done at a larger level than just Bitcoin."
Fred Thiel (Marathon): "Bitcoin miners defend Taiwan!" (Laughs)
Nazar Khan (TeraWulf): "And centralization is all relative, right? I mean, the ethos of Bitcoin is, you know, everyone has their laptop, and the world’s completely decentralized. So, are we at that end of the spectrum? No. But versus any other network that’s out there, the level of decentralization that exists, we think, is actually profound. And, you know, to both Tyler’s and Fred’s point, I mean, I would say the five or eight largest Bitcoin miners, three or four years from today, will all be running their own pools, right? I mean, it’s just kind of a scale and a matter of time."
Nazar Khan (cont.): "So, some of the concerns, I think — again, as other folks said here — are not real. And again, I think where we can continue to highlight the value of Bitcoin is, again, compare our centralization, as you want to call it, against any other network that exists. And by far and away, the level of decentralization that exists here is unique."
Zach Bradford (CleanSpark): "And that positive incentive system really works for us as well. You know, I agree with what everybody said, so rather than repeat agreement, I’ll talk about practicalities because I think that’s maybe insightful — is how are we actually addressing this?
So, we actually have three backup pools. We operate out of Foundry, which is one of the big ones, but we are ready at a moment’s notice, if we ever needed to, to fall over to another pool. We also will have our own mining pool at some point. You know, pools make it easy, it de-risks things, it takes the volatility out, but especially in a high-fee environment, there’s no reason that all miners of large scale will not have their own pool. It just won’t make sense because all the other pools — the high-fee environment creates risk for a mining pool that’s the only service they provide. And so, they have started to change the rules to make the fees ultimately lower to what they pay out. That’s going to give us the incentive also to further diversify into all of our own pools on a long-term basis."
Zach Bradford (cont.): "So, I think on a practicality point of view, all the pieces are in place. I’m sure all the other miners have backup pools upon backup pools too. And then, I think there’s actually an opportunity in where there is some concentration related to the actual ASICs themselves because, you know, being a believer in competition breeds a better product. And so, I think that right now, you have small groups that have an aim to take out, you know, the big guy, which is Bitmain right now. And in looking at it that way, they’re going to have to beat them; they can’t just catch up. And so, I think if you take scrappier, smaller companies and give them an incentive to not only catch up but to pass, that’s what’s going to make them successful. And I think that’s good for all of us. So, I think it breeds really solid competition as the environment is right now."
Natalie Brunell (Host): "Some of you brought up Washington, so I have to ask you about President Biden’s latest budget proposal because it raised some eyebrows in the community. It laid out plans to bring in more than $2.3 billion in the next five years, and they want to tax Bitcoin miners potentially 30% for energy use. I would love to get your reactions. How are you educating policymakers to support this industry as opposed to proposing such extreme legislation?"
Fred Thiel (Marathon): "I think part of it is a question of we have never taxed the use of a commodity by a specific industry type. And so, this is something that if it were to be enacted into law, it would go to the Supreme Court very quickly — not just by our industry but by lots of other people, who would just view it as a perfect case of government overreach. And so, I don’t worry so much about it happening in that way.
Plus, very quickly, people will say, 'Well, wait a second, the AI industry is also a big user of energy, so if you're going to generate a tax and you want revenues for the government, focus on the people who are really doing it. Go across all data centers; make it fair.' So, I think if it were to come into fruition, it would be highly watered down in its worst-case scenario. Would it drive the industry offshore? Sure. You raise the cost of doing business by 30%, you're going to push everybody offshore. So, you have to kind of hedge your bets."
Fred Thiel (Marathon) (cont.): "We have no idea, for example, whether the Biden government or a Trump government would want to prohibit the use of Chinese technology, period. Not just imported from China, but Chinese origin manufactured in Malaysia, Indonesia, Thailand, Mexico, wherever. We don’t know those things, and so you have to — as you scale, the risks and downsides of these types of issues become bigger for us. But educating Washington is really just about knocking on a lot of doors, talking to staffers who can educate their bosses, because the bosses really don’t get it. Other than a few limited number of people who have actually done the work to study and learn, the vast majority turn to a staffer and say, 'What do you think about this?' And so, you have to educate the staffers. It’s just a lot of door-knocking."
Tyler Page (Cipher Mining): "I’m pretty sanguine about this news in the sense that, you know, I’m friendly in the camp that generally everything’s good for Bitcoin in some way. The fact that this is used for headline attention-grabbing sort of validates our industry’s arrival in a lot of ways. I mean, the Bitcoin miners are now protecting one and a quarter trillion dollars of value, and that’s after a recent sell-off. So, this is a real industry with real companies and real budgets providing jobs, paying taxes at the state levels.
And if it gets more and more attention, in some ways that’s validating its arrival as like a part of the firmament. That doesn’t really answer your exact question, which is, 'What do you do?' And, of course, again, I agree with Fred — we try to be proactive. We work with different lobbying organizations to point out these very bizarre questions about why is this industry being picked on. It doesn’t make sense. And it rhymes with the discussions we’ve been having for years about, 'What about Christmas lights? They use more energy.' You know, it feels very similar."
Tyler Page (cont.): "I think the one other thing about this particular issue is that it does reinforce — like a lot of these things: what happens with increased competition with AI? What happens with the halving schedule? What happens to all these things? It reinforces why building a sustainable business model as a miner needs to focus on those unit economics and having the lowest cost to produce you can create.
Because let’s say they do pass a tax — that’s going to favor the people with cheaper energy more than anyone else, right? So, like, you know, I don’t think it instantly means it would go all offshore. I mean, I’ll talk my own book a little bit, but we’re known for having very low power costs. Of course, we would not want to support any kind of tax. But if somehow that happens, okay, we’d still be cheaper than most people are today on their power costs. So, it reinforces yet another reason on the pile why the industry has to be more efficient over time."
Nazar Khan (TeraWulf): "We’re not very worried about this exact legislation getting through. I think if something gets through, it’ll be very watered down from this and probably much better. I think one of the side effects of the ETFs that will have an effect here is that as more and more people get involved with Bitcoin, it’ll be much harder for politicians to enact legislation specifically against Bitcoin. Right now, there are fewer people involved, but when it’s, you know, your grandmother and a bunch of other people who have investments in Bitcoin, it’s going to be very difficult for a politician to take a stance just against Bitcoin."
Zach Bradford (CleanSpark): "I mean, this isn’t the first time this same tax was proposed, and so, as other people are saying here, you know, it came and went. I think it’s important to think — you know, a lot of times in the Bitcoin space, we preach to the choir, right? We’re all believers. We’re all very passionate about it. We believe it. We believe it brings good. And I think that’s true.
When we are engaging with those that don’t have that same view, though, I think we, as a community — and I’ll point my finger at myself, you know, first — I think we have to be more engaging and more transparent. And a lot of times, what I think happens is, the second we see some sort of pushback, we kind of retreat. And sometimes it’s justified — I mean, the whole EIA fiasco, I mean, how they went about trying to capture information, you know — so sometimes, while it may be justified, sometimes I do think the burden should be on us to be able to educate."
Zach Bradford (cont.): "And if we’re more willing to engage in a more transparent way, and in some sense, demystify what we’re doing — you know, even today, it’s shocking to me that when I actually talk to people and tell them like, 'What, how does a Bitcoin mine work? What do you do?' They’re like, 'That’s all it is?'
And so, the demystification of what we do and how we do it, I think, is important for that kind of adoption and interest. And so, all those staffers and all those representatives and senators can have a much clearer understanding of it. Because a lot of times, right now, they’re going on a premise that’s probably as far from the truth as possible because it’s just some concept in their mind. They haven’t really been able to engage."
Zach Bradford (cont.): "And so, I think, you know, we have a burden as a community to be more open and transparent and try to engage. And again, I completely understand that a lot of times, we’re not reciprocated in that, and we’re going to have to deal with that. But at the same time, I think, again, the more we can do that, the more we can kind of address some of these things. And over time, you’ll just start to see that, you know — and I tell people all the time, there’s a right way to mine Bitcoin and there’s a wrong way. Not all Bitcoin mining is perfect. If you do it in a certain way, you can increase costs. You can have problems, right, to the grid.
And so, I think the discussion we should be having is like, 'Yes, there is a right way to do it.' And by the way, that right way to do it is also the right way to integrate large loads of any kind into the grid. And let’s talk about all of that. Like, we’re more than happy to talk about what are the parameters and how this should happen. And I think we have to work together to kind of, you know, shift the discussion that way. And if we do so, I think those that are engaging with us will start to see that we’re really kind of an asset as a part of that discussion rather than an adversary."
Tyler Page (Cipher Mining): "I think a big part of this — I don’t think the conversations happen in Washington. I don’t think that’s where the meaningful conversations happen. Where they happen is what we refer to as our 'front door' approach. It’s about having the community that you operate in understand Bitcoin, what it does, and how it’s benefiting their community. When that happens, that’s a community that then isn’t complaining upstream to anybody else. Because one thing we know is politicians always look for a headline.
So, we think the most important thing we can do as Bitcoin miners is not be the headline for the complaints, whether it’s noise, power, all the other lists that everybody loves to publish. Instead, it’s about being the good citizen right where you live. It’s about using the local workforces. It’s about making an impact where it matters because then the headlines don’t happen first."
Tyler Page (cont.): "And then the second is bringing the senators or bringing the House of Representatives, bringing them to those communities, into the community. I think walking a senator through a Bitcoin mine is really what should happen. I think all of us have engaged on Capitol Hill, but how many of us have walked senators through our facilities? I know it’s one thing that we’re really focusing on, because I think the grassroots side is where it’s going to matter more. Because once you can touch and feel what a Bitcoin mine really is and experience it, everything starts to make a lot more sense."
Fred Thiel (Marathon): "While I don’t disagree with you, I think it’s very important to do the grassroots. That works really well for the politicians in the states where there is a lot of Bitcoin mining. So, in your case, in Georgia, Texas, North Dakota, but it’s less than 10 states. The problem in Washington is you have members of Congress — influential members of Congress — who write letters like Senator Warren to people like the head of the CFTC, now saying, 'You had meetings with Sam Bankman-Fried. You need to report on this.'
Well, hey, her whipping dog Gary Gensler had a very near relationship with Sam Bankman-Fried’s family, and she’s not crowing about this. So, politicians in Washington are — let’s just say — soapboxing this issue."
Fred Thiel (cont.): "There are 50 million voting Americans or voting-eligible Americans who have owned crypto or own crypto. They happen to all be under the age of 45 for the most part. Most of the members of Congress are over the age of 45. You have a generational shift that’s about to happen where the crypto-savvy, the crypto-willing, the crypto-wanters — like my kids, Millennials, for example, who all have invested in crypto before I even got involved in it — this is an issue for them, and it’s something they really want.
And I think that’s when this is going to change. You start getting the old guard unelected all of a sudden, and they lose office because some crypto bro took their seat — that’s going to be an issue."
Nazar Khan (TeraWulf): "And many people do feel that we need a generational shift in Washington."
Fred Thiel (cont.): "That’s going to happen no matter what because they’re pretty old."
Matt (Bitdeer): "Yeah, I think there’s also a change in our industry, right? We started off as a small, scrappy industry — a little belligerent — and we didn’t have that much impact, so we were sort of ignored by politicians. But as we grow, as we mature, you know, we’re going to have an impact. And like any industry, people are going to say, 'Hey, what are you doing there? You know, it looks like you’re impacting my daily life.'
And so we have to learn how to just sort of work with that. I like what Fred said about working with politicians. I think that’s really important as the industry matures and grows. We live in this society, we have to be able to engage with the people that we’ve elected. And I think just in a more mature way — you know, everyone’s not against us. We’re not fighting this uphill battle. There are a lot of allies, and there are people who are yet to be allies."
Matt (cont.): "I think we overreact a lot of times, and I think we can just be more calm, more chill, and realize that a lot of people don’t understand. And maybe we need to change some things too, right? We’re not right about everything, as much as we’d like to think that. And so, let’s engage with the wider society and see where that takes us. But, you know, we’re here to stay. I’m sure of that. So, it’s — everyone has to adapt a little."
Natalie Brunell (Host): "Those are fair points. I had the chance to visit Capitol Hill to educate on Bitcoin, and I was encouraged by a lot of the people I met in Congress who actually did seem like they understood Bitcoin and they were for favorable regulations that encourage Bitcoin mining to grow and to stay in the United States. And then I was disappointed by some of the members of the Senate. Obviously, a lot of people are familiar with Elizabeth Warren’s stance, but also with the Biden administration.
And I think that there’s nothing less American than trying to decide what is 'good' energy use, right? Because it won’t stop at Bitcoin. They’ll start looking at who can fly planes and who can, you know, be a tourist and whether you can use your washing machine. So, we do have to, I think, be really thoughtful about making sure policymakers are aware of our industry and what we’re doing."
Fred Thiel (Marathon): "The funniest thing I find is the people that say Bitcoin is not a good investment. If you look at the performance of Bitcoin over — take, pick your time period — it’s been the best. And yet you still have people that say, 'We’re looking out for you, and you shouldn’t invest in Bitcoin because it’s not a good investment.'
I mean, to me, that’s the most damning of them all because literally, the data is the data. Just like I said, pick any time period you want and look at the performance of Bitcoin. It outshines anything else. And yet they still try to tell people it’s not a good investment."
Fred Thiel (cont.): "And the fear that Bitcoin is going to displace the US dollar is so unfounded if you were to look at it. If anything, Bitcoin helps the US dollar gain dominance. It’s, you know, a curious thing — Tether is the single biggest contributor to the US dollar growing a little bit again as a reserve asset because they hold hundreds of billions of dollars in treasuries. And, you know, they have supplanted Japan as a buyer of US treasuries.
And I think over time, people are going to get it. We’re in that transitionary phase where, you know, the next buggy whip got invented, and then somebody invented a car, or, you know, people are going to put the twelve propellers on an airplane versus starting to use jets. It’s that transition period we’re going through."
Natalie Brunell (Host): "All right, well, we have to start to wrap up, but I’m going to ask you just very, very simply and directly: Why should someone invest in a public Bitcoin mining company as opposed to just buying Bitcoin?"
Fred Thiel (Marathon): "You’re investing in all sorts of things, depending on the type of exposure you want and volatility you want. So, you can invest in gold, or you can invest in gold miners. Warren Buffett has chosen to invest in gold miners because he prefers having the ability to, in an upswing in price, maximize the profit potential because a miner has relatively fixed costs. And if the commodity they’re mining goes up in price, then their profit margins increase."
Fred Thiel (cont.): "If you’re mining Bitcoin, it’s the same thing. You look at, historically, how Bitcoin miners have traded versus Bitcoin — Bitcoin price moves one or two percent, Bitcoin miners move three to five percent. There’s beta. And there are certain traders who like that beta. For the average consumer, they may not like that added volatility. And so this type of additional volatility is very attractive to people on Wall Street, hedge funds, they trade in and out of our stocks. We’re highly liquid, most of us.
We provide a great ability for them to go long Bitcoin, short a miner, or do vice versa. And now they’re doing it with ETFs because ETFs settle T+1, and so now they’ve found that they can do this with ETFs nicely. I think post-halving, you’ll see the money will start flowing back into Bitcoin miners again, and I think there’s a reason that that happens."
Fred Thiel (cont.): "Why is there that beta? It’s the only place, unless you're mining Bitcoin yourself, that you can gain exposure to an entity that’s buying Bitcoin under spot. Otherwise, if Bitcoin is $50,000, $70,000, $200,000, or a million dollars at some point, a miner generally, if they're running profitably, is the only place you can gain exposure below that spot price. And if that miner then adds it to their capital stack and structure, you get that benefit as a shareholder."
Fred Thiel (cont.): "So I think that's why miners become a really interesting place, and that's why you can get that beta on the trade where you get more than just the upswing in Bitcoin's value. The other thing is, I think it’s an interesting place that we’re going to see happen from just an investment standpoint — this flight to quality. Right now, there’s between 21 and 25, depending on how you measure it, Bitcoin miners that are publicly traded, and I really see that consolidating to a much smaller group. And then that group is going to be able to be stronger and be able to do more in the Bitcoin mining space, and therefore produce more Bitcoin, lower cost structures, things like that."
Fred Thiel (cont.): "So I think that it’s a really interesting time to get involved. And, you know, I think all of us own Bitcoin and believe in Bitcoin directly, but I think for myself, I think it’s a great investment point because it’s the only place to get it for less than you would be able to buy it directly from somebody else."
Tyler Page (Cipher Mining): "The other piece I think, beyond the levered exposure that’s been referenced — which I think is pretty obvious, people can see that — as an investor, you do have now long exposure to some of these other themes that are somewhat independent. So, the next ordinals-type thing makes transaction fees blow out, and they stay elevated. Miners are being paid transaction fees.
The world starts to appreciate the value in a location-agnostic large user of electricity that's instantly curable. There's a ton of value that's underappreciated in that, that sits within the mining company. So, to the extent they're developing their own tech stack to monetize that, there are — what I’d call — related, but somewhat orthogonal investment themes that you can get exposure to in a miner that you can't get in Bitcoin directly."
Nazar Khan (TeraWulf): "Yeah, I mean to build off Tyler’s point, I mean, I think there's a number of free options embedded within these companies, right? So, everyone looks and says, 'What’s your hash rate, how much you produce,' and so we’re making Bitcoin, we’re making money, but embedded within that — again, whether it's energy transition — there’s a massive shift happening in the energy space. The power market is many multiples of what the Bitcoin market is. We are playing in that, and there are services we're providing that are effectively free options kind of built into that."
Nazar Khan (cont.): "From a tech perspective, again, the curability of our loads and how we do that and how we bring things back up is going to be applied in other places as well, and again, free options. And all of us are spending time thinking about, 'How do we do that? What's the technology? What's the software? How do we actually implement that?' So again, there’s a number of free options embedded here. So it's not just you're buying Bitcoin for below spot, but then also, I just think there’s a number of embedded free options in here that you just don’t get buying Bitcoin."
Nazar Khan (cont.): "All that being said, everyone should buy Bitcoin before — get your whole Bitcoin before — while you can! But again, you know, the miners, I think, provide a unique way to play the space."
Matt (Bitdeer): "Yeah, I agree with everything that's just been said. I'd say, in addition to that, in terms of Bitdeer, we have really a technology angle where we feel like that's going to add a lot of value above and beyond just the mining that we do, which I think is, you know, clearly a good thing to invest in. I think as part of a balanced portfolio, Bitcoin and Bitcoin mining — I think it’s sort of a good balance to have."
Natalie Brunell (Host): "Well, from 6.25 Bitcoin to 3.125, I hope one of you — maybe, perhaps — got the first Satoshi in the halving. Thank you so much to my thoughtful, intelligent panelists. Thank you so much to the Human Rights Foundation and to Bitcoin Magazine for our production. Coin Stories is brought to you by Bitdeer. Thanks so much, and check out our next episode next week."
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Natalie Brunell (Host, outro cont.): "This show is for entertainment and educational purposes only. Nothing should constitute as official investment advice, and you should always do your own research. My inbox is open if you want to share feedback or guest suggestions. Just reach out at natalie@talkingbitcoin.com. I'll see you next time."
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