Hey everyone welcome back to another episode of the meet kevin show, so we last interviewed the executives over at hud 8 mining, a canadian cryptocurrency mining company. Well, today we are going to interview the ceo of argo peter wall. I'm super excited to have peter here peter. Thank you so much for being here, and you got ta start off by introducing yourself and telling us why you over hut and what makes you different.

Let's get the competitiveness going, yeah nice to meet! You kevin! Thank you for having me on uh. So i'm peter! I'm the ceo at argo, i've been with the company since it started back in early 2018. uh we're at publicly traded cryptocurrency minor, similar to hud-8 listed on nasdaq originally was listed in london. We're still listed on the london stock exchange so like honey, went from canada to the nasdaq we've gone from london to the uk, to the nasdaq, but i'm actually canadian uh and we're uh.

We've got our operations in canada and in the us. I think you have operations in west texas now that you're expanding right we do yeah so we're building our flagship mining facility. It's currently under construction it'll be open at the end of the first quarter of next year. So it's a 200 megawatt facility in in west texas, uh up to 800 megawatts.

We have access to in in terms of power capacity. There um and it's a great place to be mining. I i i call it bitcoin mining nirvana kevin, because it's got low-cost power. Lots of renewable power um and it's just a really great state to be in it's business-friendly state, um and there's um.

You know there's this particular type. I don't know how well you've looked into the grid in texas, but it's a very unique situation for miners because of the flexibility that it gives to sell power back to the grid during times of scarcity. So now in california, when you sell back you sell back at like reduced rates, is, is that different in texas, i'm more familiar with the california grid? I totally keep making it harder in california, it's totally right. They always make it harder.

It's unique in in the us, it's unique in the world in quebec. We do the same thing so in quebec, we've got we mine. We have two facilities in quebec, which we acquired this year. We've been mining, there is the main client for years and we get a low cost kind of flat rate of power and then, during times of peak demand in the winter, when it's -20 out, they ask us: hey, can you guys dial down 25 50 and we Give power back to the grid and they say hey thanks a lot for doing that.

They don't give us any discounts in texas, because the grid is is structured in this kind of really unique manner. When you give power back to the grid, you're actually selling it back to the grid when you're shutting down your power, so you then get discounts which are, you know, counted towards your your overall bill, so whereas in quebec you get, you know four cent power which Is which is really good? 3.8 power in texas? You can actually get sub two cents um per kilowatt hour, which is really amongst the cheapest power anywhere in the world you know is. Is that? Because in texas the government just wants to incentivize the crypto miners to come to texas or or why is it so cheap? There i mean, i know: we've got ready available or uh readily accessible natural gas resources, uh, wind and solar uh, but but can that really get you to two cents? It can and it's it's cheap, because um the the the uh, the way in which the grid has been structured, the urcot grid, is that it's it's deregulated. So there isn't it's a natural competitive market, um and and that's why you're able to tap into what they call these control load response programs and they like miners, because miners are one of the few large-scale industries that have flexibility, because we don't need to be running 24 hours a day, we can shut down for half an hour or an hour and give someone, and we - and you don't do that very often, but when you do you're really incentivized to do it, it's all about balancing demand and and supply like generation and load Right, the way in which these power systems are built is that they're built for peak demand, they're built for peak peak load and so most of the time, there's lots of generation that's available and then on a really.

You know a hot day or cold day. Demand goes up and then oh there's not enough supply, so it gets really tight. Can you give some back and bring you know, bring bring down the load a little bit and that's having that flexibility is very rare and cryptocurrency mining is one of the the only large-scale power users that can do that and let me let me give you an Example, we're building you know 200 megawatt facility. We have access to 800 megawatts of power.

800 megawatts of power is the equivalent of about a city of 400 000 people and to be able to shut that off and turn that down. You know at this at the flick of a switch upon demand, provides more stability to the grid, provides more flexibility to the grid, and so you know the grid in texas likes it, and the governor's on record saying they like it. The head of the urcot greatest is on on the record saying they like cryptocurrency mining, because of that kind of flexibility and and that balancing um you know the way in which it balances kind of the overall grid yeah. It's so fascinating, because i i remember kathy wood made the argument over at arc that, along with square, they did a research presentation together, and their argument was that you could really make grids more reliable and expand them by using crypto as kind of your crutch and And i'm, as you were just explaining this, i was just sort of imagining a a couple of examples and one of them i thought of, is look if i built, let's just say an 800 megawatt factory for for tesla, and i was manufacturing cars.

What am i supposed to do tell all my employees to just stay home when they want their power back right, whereas with group you're just turning off machines for a bit, so it gives you this incredible flexibility, yeah, and it's also. It also is like built into the nature of what we do, which is we turn power into money, we're turning energy into currency, um, and so you know sometimes uh it's more worthwhile for us not to mine and to kind of be that flexible load and to Shut down and give power back to the grid, because power is our main cost. You know it's 85 to 90 percent of our costs of mining is power uh. You know the.

If you look at our our overall balance sheet, our our staff, our even our you - know any kind of debt payments that we're making it's all it all dwarfs in comparison to the amount we spend on power, um and even though mining has been. You know this year in particular, extremely profitable. We still have enormous power bills that we have to pay yeah. How do you stay profitable when we continue like the last, like three four months, we've seen uh it become more difficult, for example, to mine bitcoin.

Are you diversifying into different coins? What uh, what are sort of the things that you could do to stay ahead of that curve, especially you know, once china's shut down we've seen difficulty rates finally start coming up again, yeah and - and you know that's, it was expected right. I mean the margins for for 2021 have been so good. Uh we've been well over 80 in our mining margin. You know our profit minus our kind of direct costs, uh or revenue minus our direct cost for for the entire year, which has been amazing.

You know going back to previous years: we've been mining for a long time going back to previous years. You know we were in the 40s and the 60s now we're in the 80s. It's been, it's been a banner year for miners and you know likely as more miners come online and if the price of bitcoin doesn't you know, go through the roof margins are going to tighten a little bit. So what do you do as a miner? There's two things you do one is you stay in the top tier of efficiency, which means you get the most.

You know current machines as much as you can um and you get the cheapest power and then for us. The the key differentiator for us in 2022 is we're building an immersion facility in texas, which means we're putting the machines into a dielectric, fluid and cooling them with liquid, instead of cooling them with air you're able to get the machines to perform better. It's more efficient because it's a more efficient way to cool them and you're able to you know, have the machines last a lot longer, which is obviously a key piece for for when you're running machines. Now in quebec, i imagine as much as possible.

You probably use air cooling out there. Would you say that emerging gets, you immersion gets you to a similar level of efficacy or or is it even better because you overclocked even more it's even better yeah, i mean you know, there's there's no more efficient way. You think about engines like car engines. You know when, when you're building a basic car engine you just cool with air, like you bring in air you blow it through, but when you're building a porsche engine or a very high level engine you're going to want to use liquid, it's the most efficient way To cool machines, and so as these mining rigs get more powerful and use, you know they generate a lot of heat.

You need to clear that heat out and the best way to do it is through moving liquid through them. It's been a challenge for a lot of miners. They haven't felt confident to do it at a large scale. We're very fortunate.

We have an incredible tech team. We've built our own immersion system with a u.s based manufacturer uh, which we're gon na you know hopefully share with the world in in 2022, but it's uh. We totally believe that it's the future not just for cryptocurrency mining, but for kind of high capacity um computing across the board in in the future. Uh i'm just i just looked this in here uh or pulled this up.

You just bought a bunch. It looks like you're buying 20 000 bit main uh ant miners for the s19 jpros for west texas. How do these compare to like asics for bitcoin mining yeah? So those are a form of asics. Those are okay, yeah.

Those are the the the most recent type of asics that are out. I see okay, yes, the s9 that fills in the gap yeah there's a couple of different models that they have. That's that's the one that we've settled on um for for texas, um and uh. You know we've mined with kind of all sorts of different asics over the years, but but the s19 is kind of the standard right now i see okay, okay, got it uh yeah.

I remember when i was talking to uh honey. They mentioned that's essentially what you want to use for bitcoin, but uh. Now they also picked up a whole supply. I think they picked up somewhere around 10 000 units of nvidia uh.

What is it uh, yeah, whatever exactly and uh? They picked those up, but they're mining ethereum. Is that something you all are trying to do as well? So we we used to mine ethereum back in the day and and if you think about asics being like the kind of formula one car that you can only really drive on one road and do only one thing and and you need them for bitcoin mining. You think about the gpus they're more like kind of four by fours and they can go on. You know multiple different roads.

You can move them onto different algorithms pretty easily, and that's why you know ethereum. Everyone thinks ethereum's going to proof of stake. It's always coming. It's always coming, and so there hasn't been a ton of asic development in terms of manufacturing rigs for ethereum mining.

Most people are still mining on gpus, so hud 8 saw an opportunity they bought they. You know they made a good purchase and they had them up and running. In the summer. There was a lot of people who didn't buy, ethereum mining rigs, including us, because this proof-of-stake transition is happening in the future and those machines are are going to not be as profitable in the future when that transition takes place.

So it's a bet you're, making that you're going to get your value back from those machines prior to the proof-of-stake transition. Now bitcoin's not moving to proof-of-stake any time uh anytime soon. So we know that an s-19 would buy this year or next year is going to be we're going to be able to run it for four or five years or maybe longer in immersion, because the machines are so well protected. That's not the case with ethereum um.

That being said, you can move to. Another algorithm might not be as profitable um, but certainly ethereum's been very profitable to mine. You know for the for 2021. yeah, that seems like was one of the uh.

The sort of arguments that uh that i heard as well was that hey well worst case scenario. If we need to move off ethereum we'll go to matic or we'll go to something else, so it was one of the things that we had heard of so so i suppose that depends on if you wanted to diversify in that direction. But right now argo you're focused just on bitcoin right, we're folks on bitcoin we also mine zcash uh on another algorithm on the equihash algorithm, it's about five to ten percent of our revenue. Those machines have actually been more profitable over the last two years than our bitcoin miners, um and uh.

We bought some in 2019. We bought some in 2020 um and that's yeah they've been great, so we're opportunistic. If we see other coins or other projects that are available will lean into them, we're also super interested in in and we'll be talking more in the future about about what we're calling our non-mining activities kevin. So we think that there is this enormous wave, this transition.

That's happening in the world of finance and you know d5 web 3.0. All of these projects are really gaining steam. We were an early investor in in pluto, i'm sorry in um, in polka dot back in in 2019 um, you might have heard of you know you probably know dot. It's done.

We i think it's like we act since we invested in it. So we think you know our team is able to identify early stage projects and and, like i said, we haven't fully announced that yet but we'll be leaning more into kind of the non-mining side of the business in 2022. Okay, so almost more uh, i mean in theory what you're doing when you're investing into these earlier stage. Product projects is you're, essentially a publicly listed almost venture capital firm that that's hunting for those opportunities, huh yeah.

We have to be a little bit careful about the language. Uh venture capital is probably not the right word because we're an operational company um, but we what we, what we think of is is where you know we like to support projects in the early stage. In the blockchain, so whether it's you know running a validator or running a node or um, you know we've done some. Also, some investments into this year we invested in a company called pluto, which is a is a uk based startup focused in the in the world of d5 and web 3.0.

We've we also invested in wonderfuy, which you might have heard of, which is a d5 based startup uh, based in in canada, that's listed on the neo exchange, so we we. We just think that the space is so exciting in general. Mining is awesome. Mine has been really profitable for us, but looking into the future, we think there's other parts of the space that are too important to ignore.

That makes sense, uh, and so the goal right now is obviously uh build out your west texas facility. Are you planning any expansion in uh in canada? We haven't, announced any expansion in canada. The focus right now is is really west texas, like i said we have an 800 megawatt runway there, which you know is an enormous amount of power um. The first phase will be 200 megawatts, which will be you know operational in in 2022 um and then we'll we'll go from there.

Now, where are you going to come up with the uh the funding? I was just working on pulling up your balance sheet, but it's going to be expensive to buy all of these asics. I know you bought 20 000. Have you already funded those or those just planned to be bought? I know you had a senior note offering. So maybe that helped in november yeah so essentially there's three ways for us to to access capital to to grow, and obviously growth is super important for for a cryptocurrency miner for any company in the space given how quickly the space is moving so number one.

You know we can sell bitcoin. We did that a lot in 2019 2020 to cover operating costs to buy new machines. We don't we didn't particularly like it, because who wants to sell bitcoin when it's appreciated so quickly um, but it is. It is a lever we can pull on.

The other two levers are debt and equity. You you mentioned the note, uh or or the the bond that we did. So we did a baby bond uh this quarter. Just a little while ago we raised over 40 million through the through the baby bond.

We've done a bitcoin back loan we've done machine financing, we've done mortgages against our facilities in quebec, so debt is a is a realistic opportunity and become even more realistic. Given the credibility that this space is is gaining um people think you know that that crypto, miner crypto mining company debt is is more valuable than it was two years ago, where no one would give us a loan, because it was such a new base right, um And then the third is equity. We've done three equity raises this year: uh we did one in january one in march, and then we did one with our nasdaq ipo in september and those have all kind of helped build up our treasury um. So we have those three levers that we can pull on as we grow and we'll kind of use, whichever one is, is most appropriate at any particular time.

How much bitcoin are you holding right now, so we've got about 2 400 bitcoin on the balance sheet. Right now um, so it's it's a decent amount. You know we we always want to have more. We love our our hotel, um and uh.

You know every month it continues to grow. That's awesome! So what about like? More broadly, then, where are your all's thoughts on things like nfts? I know you briefly touched on d5 uh would would you consider holding nfts on the balance sheet at all or if you were going to hold, let's say bitcoin or even ethereum? Would you prefer to hold the coin yeah, so we've always had kind of an expansive view of of the space. You know there's some bitcoin miners who say we only hold bitcoin. But if you go back - and you look at our you know - 2020 financials, our 29 2019 financials - you can see we we've held a host of cryptos over the year over the years.

The main you know, currency that we hold in in terms of uh digital assets is, is bitcoin and that's you know the big daddy, but we've held ethereum uh we've held other coins. As i said, we're leaning into other non-mining activities. You know again we haven't announced anything. Nfts is something that we, we believe is only gon na continue to.

You know, gain in energy and and space, and so it's it's um. It's a space that we're really keen on yeah. I mean really there's endless opportunity once you're in this established uh uh, you know crypto space, that you're in and you are an established player uh i mean you could essentially get into anything. If you wanted to, could you i mean credit cards or or any sort of uh exchange services or whatever uh is uh building off your reputation in theory, right yeah? In theory i mean there is, you know, as a publicly traded company, you've got to be on side of the regulators.

Obviously you know we're we're governed by both the sec and the us and the fca and the uk. So there are guard rails and there are you know, places you can go in places that are still unclear. I mean the world of defy, as we know, we're still waiting for guidance from the sec on on how it's treated, how it's handled. So you have to be, you know you have to push the envelope but also be cautious as you're doing that that you're you're on side - and you know, you're, not pissing, anyone off so um we're not kind of breaking any rules.

So for us it's it's about! Looking forward being progressive thinking about, what's coming down, um the pipe at the same time as to you know protecting the core business, which is which is bitcoin and crypto money now do you ever have concerns that in the event let's say a bitcoin goes to back To twenty thousand nineteen thousand, something like that, uh that uh, that your ability to operate or fundraise might might be impaired - i mean especially if you have bitcoin backed loans, would would those be at risk of potentially a margin call yeah i mean, fortunately, our bitcoin backed Loans are, are pretty, you know, not super material in the kind of grand scheme of our overall bitcoin holdings. Um we've been doing this kevin for four years. It's a roller coaster. Like you know, we've been through, we've been through the the crypto winter um.

We know if things get lean, we know how to operate in a lean way, whether it's running the machines more efficiently, whether it's making sure that we're you know not kind of overloaded with debt or um or can't cover our operating costs. We know how to survive. In that environment, that being said, i think that we're you know, as an industry really moving. We've progressed a lot, we've matured a lot, particularly over the last year, i'm not a subscriber to like you know the the overarching big super cycles that we've seen.

I think that we're in these micro cycles now and that you know as things and and this is just me talking but as things move forward - i think we'll see you know the volatility kind of start to stabilize and um and - and you know, there's so much Capital in the space now there's so much energy in the space there's so many institutions in the space that i'm not particularly worried about bitcoin going. You know below 20 000 or 15 000, or i i and if it does, you know we'll we'll weather it um, because we're we've done it before and and uh we're a pretty resilient company yeah, and it's always so interesting because did you go? I don't think you went through the crypto winter as a public company. I don't know how much of a difference it would make. If anything, it should still give you some more of an opportunity to raise capital, but i i just always imagine: if crypto prices fall, then your share price usually goes down because people are paying in, in part at least usually like what one six one.

Seventh of your market cap seems to be your your underlying huddle of bitcoin, so that price goes down and potential mining rev goes down. Uh, your ability to raise capital or equity also goes down, but what you're saying is: hey we've as long as we keep our debt low, we're able to weather those opportunities and just become more efficient with the machinery we have kind of just plowed through it hub Yeah and we were publicly trading so we were listed on london. You know in august of 2018 um and then we became we just listed on the nasdaq in in the in this. This fall recently went and rang the bell uh in new york.

For congratulations bell. Thank you, it was, it was a moment. It was pretty awesome. Uh we've got a youtube.

Video kind of behind the scenes youtube video up on our on our site, which you should check out, um and um and yeah. So we we did it before right in in you know, when we were listed in london, yeah it it sucked. I mean it was. It was a challenge.

Like the you know, we were we didn't trade where we think we were valued at and the entire space was. You know, kind of down um, but it makes you a better company. It makes you understand how to run the company in an efficient way uh and how to protect capital and, and how, to you know, pay attention to um to to making sure that you're, you're, lean and and intelligent, and so we've we've always kind of kept. That mantra, even through the boom times, um that you know this is a volatile space and you need to be prepared for all eventualities, that's a good way to put it now.

You mentioned that you're more of a subscriber to uh the the smaller cycles, as opposed to these super cycles. Is that sort of a dare i say a day gets stopped to flow yeah. Maybe i mean it's obviously been a bad month for stock to flow yeah. You know so it's hard to be a big believer right now, stock to flow given where the price of bitcoin is at what 47.48 today um yeah look.

I i just think that you know you see it happening. It's just maturing. It used to be so much about um certain narratives at any one particular time and certain you know. Having i mean even even the next having.

I don't think it's going to have the same kind of impact that this that the last having has had on the price, because there's just so many factors now that drive the price um. So i think i think it's just the whole space is maturing and stabilizing got it got it so, potentially hey you want to apply a chart looking backwards, maybe stock to flow works, but maybe going forward you're. Not as convinced do you have a bullish price target for it in a time frame, so i i uh. I get asked this all the time um and i don't generally you know um give a number.

I i just think that the space is continuing to appreciate and continuing to strengthen and i'm i'm super bullish long term. I don't know you know where we're going to be in three months or six months, but i know in 10 years we're going to be. You know in a very different place than we are today. Would you think it'd be unreasonable to see a seven-figure bitcoin? I don't think would be unreasonable.

No, i i mean obviously depending on what time frame, but i i don't think it'd be unreal. I mean what is kathy: wood she's, still saying: 2026, 600k, 500k right 5-600 you're right, it's somewhere right around there yeah! So you know she's, pretty smart, uh kathy! So um, you know, add another five years to that we could easily be um. You know twice that nice nice, so what uh? What do you think the biggest risk factors are that investors should analyze when they're, comparing the different mining companies, i mean there are a few of you. You've got some competition uh in it.

Ultimately, you're all doing the same thing when it comes to mining bitcoin. How can an individual investor looking at the different companies differentiate y'all? What what sets you apart? I know: you're you've got the immersion facility in texas. How is somebody supposed to look and understand those things? Any key tips you could give folks yeah. So i i think you know and like i said, we've been doing this for four years and i think that there's there's two things that really stand out for me in terms of like risk factors, one is as much as possible.

You wan na you know own. The real estate you wan na own, your own infrastructure, there's a difference between renting and owning, and you know we were renters for a long time. We were at you know, we, we still have machines that are hosted by partners, and you know they do their best and they run their machines for you and that's great, but having machines in your own facility making sure that you're fully in control of your power Costs of your infrastructure um is super important if you're gon na, if you're gon na thrive long term in the space, you need to be able to control those things from an operating side of things and from a cost side of things, full stop, and so we're Super excited about building out texas. I mean there's no one that i know of in the space that has an opportunity for 800 megawatts of capacity at the kind of low cost of power that we have there.

So that's it's a huge opportunity for us. It's a huge runway for us and i think that's a key differentiator. The second is sorry. No.

The second is esg kevin. I i think that if you're creating burning fossil fuels to make bitcoin, i think that you're vulnerable to potential um. You know regulation down the in the future uh depending on the jurisdiction you're in um. I i think that you know i, i think it's it's a risk to the company.

I also think investors don't like it um, both retail investors and institutional investors um, because climate change is real, it's happening uh, you know we need to do something about it, and so we've we've been very proactive on the esg side of things. We've been mining in quebec for years, where it's 100 renewable power through hydro we set up in texas for a reason you know you can see windmills from our facility. Are you standing on the on the land? You look off in the distance. There's a wind farm right there there's an enormous amount of wind power there that we're tapping into um, and then you know this year we put out a full climate strategy.

We became the first company in the space to become climate, neutral, climate, positive or carbon neutral climate positive. We offset our scope, one two three emissions um, and so i think that for me again and speaking to institutional investors and retail investors, they really like that kind of green message. Um, obviously, there's a certain amount of fun around you know, power and and uh and bitcoin that that is sometimes just ridiculous, that just doesn't make any sense and and bitcoin gets picked on it for it. That's that doesn't justify it, but at the same time you do if you are an esg friendly miner, you have a huge huge advantage and i think you're future-proofed in a way that, if you're burning fossil fuels to make bitcoin, you know like a lot of folks In in alberta or or um in montana or wyoming are doing um you're vulnerable.

That's a good point. I'm uh! Looking to your uh your balance sheet, i'm trying to find the dark thing here we go. I think i just found it uh, i'm looking for. If you, maybe you could tell me your current uh uh cash balance that you have cash and equivalents yeah, so we haven't put out our cash balance um recently, i you know, we explained why i can't find it no problem.

We do that at the end. Where is it yeah? We only do that at the end of the year, so we we put out an operational update every month and it's something that so i was originally the vp of operations of this company. For the first few years i took over ceo in january 2020 and when i did that i i saw that there was a demand, like kind of a need in the market, to understand this space more like there weren't there wasn't any metrics out there. So we started putting out in january 2020, my first month as ceo, an operational update at the end of every month, which had how many bitcoin we've mined for that month.

What the mining margin was, how much revenue that met was in pounds and usd and what our overall bitcoin hotel was um, so not our cash position, but because we do that as part of our um. You know our annual report um, but that was those were metrics that now everyone in the space is using and everyone's putting out these operational updates um and, i think that's a good thing for the space as a whole, because it allows investors. You know people who are who are listeners of yours and and followers of yours to kind of really understand. You know what kind of production, what does it mean to have 1.5 x, a hash or 1.6 extra hash of of bitcoin mining capacity? What does that actually mean on a month-to-month basis? What does that mean in terms of cash? What does that mean in terms of of of bitcoin um in in you know in the company's treasury, so the more data that's out there? I think the better and we've tried to be as transparent as possible and kind of take a leadership role in being transparent about you know putting out data to the market, nice, so the 320 acres.

I believe you have in texas correct me if i'm wrong on that acreage uh. What how far along are you on that is it? Is it hey we're in permitting you break? What's that i mean so we just put out a video. You can look on our twitter page um, we're about 50 complete for the project, so the the most of the skin of the building is up the the um. All of the the infrastructure is up in terms of um uh, not the infrastructure, but all of the the um.

The support beams are up, and the last little bit of skin on the outside of the building will be up by the end of next week. Uh likely so we just we, we put, we try to put update videos out on our twitter page as much as we can. We just put one out, like i said this week and then next week, we'll put a little bit longer piece up with our uh with our head of construction, hopefully um, so we're we're making great progress there and, and there you go there, it is right there, Um a little bit of a little dumpster action, so a little dump truck action, so um there's a great wide shot here at the end. So this is some of the power infrastructure uh.

These are kind of the internal support beams and external support. Beams we've got a great construction team on the site and they're uh they're hammering away, and then this is what the space looks like. So it's 135 000 square feet. Um it'll be one of the largest immersion facilities, if not the largest facility immersion facility in the world, when it's up and up and done um there's a great drone shot right at the end, kevin and um yeah we're hammering along the goal, is to be operational By mid-march of of uh 2022.

wow, that's incredible! Oh yeah! There! You go! Look at that! That's so that's dickens county for you! It's 320 acres um, but it's actually 160. We have an option on the other 160. So we haven't. We haven't closed the option on this on the second piece, but there's lots of space to kind of rinse and repeat and continue to add um capacity, so this will be 200 megawatts in that in that space right there and um it's a cool place.

If you ever want to come, do a tour, let me know once we're up and running absolutely yeah. Thank you for that. So uh. You said this was a 135 000 square feet.

I believe you said right yeah, so so, somewhere just a little over three acres. Uh, i i mean how many of these facilities could you build out, or is it a matter of how much access to power you have uh and if it's a matter of power, what do you need all the land flow for you do solar panels, uh win Texas, so there's lots of land so land is. It was a parcel that that's what it came as 106. got it uh acres.

You didn't go looking for 188, we didn't and we'll you know we'll we'll end up using. Probably i i don't know how much we'll end up using of it all of all that land but um, we'll use it we'll use a good portion of it uh. We can rinse repeat that bill, so that's 200 megawatts. We can do three more of those to get to the full 800 megawatts, which is what the interconnection agreement is.

There's a substation literally right adjacent to the property, and that's why we've chose that that spot, because there's a substation, that's a five and a half gigawatts. So 5500 megawatt uh substation that we're tapping right into um. And that's that's there's you know, there's a ton of congestion at that substation because there's so much renewables that have gone up in west texas in the last 10 years and the power has nowhere to go. Lubbock is the nearest big city, it's an hour away, there's 200 000 people they use 400 megawatts in lubbock or 400 megawatts, which means the rest of that power needs to go to dallas or or fort worth or to you know, austin other parts of the state And you know: there's transmission challenges with moving power, long distances and also there's infrastructure challenges with there's just not enough transmission wires.

They've really through subsidies, have built a ton of wind power in west texas, but um there's no local load to use it. So we're happy to be using it up now. How much would you say uh this once once you're all said and done not not including the land? What does it cost you to build out this 200 megawatts because you've also you got to do the immersion and the a6 i mean the asics are expense. All of that.

Do you have a ballpark, so we haven't announced publicly the the final number um we haven't disclosed that to the market um, but uh. You know, what's the best way to think about costing um initial estimate, i mean we, we have been on so we, let's say between one to two billion - to build out 800 megawatts, but then divide that by four right. For for the first um, you know for the first 200 megawatts, so you know somewhere or in that in that kind of ballpark, 250 to 500 mil. That's i mean it's not that easy for a new, a new person to just set up shop.

Next to you i mean it's not that easy to come up with 250 million dollars, even on your low end there to compete with you yeah. I mean, as as i've said many times before the three things you need to bind uh to be a cryptocurrency miner, capital machines and and power you know, and the hardest one to get right now of those three is power um, because the chinese have been looking. You know for new places to park their rigs since the since the you know the crypto mining ban in in china in in in the summer or late spring um, so power's really hard to get so to have a 800 megawatt runway is amazing, um for us Rigs, if you, if you've, got the right connection - and you know you've been in the game long enough - you can get machines. The the time frame to get them is now extending further and further into the distance it used to be.

When we first started you could you could call up bitmain and get machines delivered in a month or two now you're looking for you know a quarter or two or more often, if you're gon na, if you're gon na put a large order in um. Fortunately, we have a good relationship with bitmain. You know we're we're on their christmas list uh or their christmas card list um and then the last is capital, and you know there there's lots of capital in the us, obviously um, but uh. That's a key piece that you need in order to build out.

It's it's a very capital, intensive business, but you know if you're, if you are running 800, megawatts right now of s19s, you know you're bringing in three to four billion in revenue a year. So you know it's capital intensive to build, but it's obviously very profitable. Um and very you know, especially with where the price of bitcoin is right. Now there's generating lots of revenue.

That's incredible! So this um uh, you know i was surprised, that's why i wrote this down. I was surprised that you said your biggest challenge: wasn't chips with the whole supply crisis and everything you got. You mentioned the right connections. Yeah time frames taking a little bit longer, but you actually said the hardest thing right now is finding places to get energy and - and are you really seeing that much competition? Are the chinese miners really coming over to north america? Tell me more about this yeah there's, no doubt um and and people are knocking at our door to try to get into to our facility, because because we've got access to power and we're building out, you know a world-class immersion system like like a hotel yeah.

I mean no hotels, yeah you're, like a hotel, i mean there's companies that do this right, compute, north or scientific, they they are hosts. So if you bought, let's say, you've got 50 million dollars and you want to put up you know 25 or 30 30 megawatts of of machines to run um. You know you call up core scientific and say: hey, you know, can you find me some hosting and you know what's your rate and so core looks around at their various facilities and they say sure we've got a spot for you in july of 2022.. You know you can install machines and we'll decide it'll, give you a three or four year contract.

Those are really hard to find right now, kevin, there's, there's you know corey, i think is booked up for all of 2022 there's just not for hosts to give out space so um we're not interested in being hosts, but we we're always open to to you know Business commercial relationships that make sense. So if there's a partner out there uh or a collaborator out there that comes to us and says hey, you know we need x amount of megawatts. Are you guys interested in you know, being a uh, you know being a being a collaborator at your space, we'll we'll listen to them, but those are really hard. It's really hard to find power right now, especially given that you know supply chain for transformers supply chain.

For kind of just general electrical equipment - um, it's really hard to find, i mean riot, you know just acquired a company that makes um pdus, which is essentially the the machines that the they're kind of like big power bars that you put in mining facilities and you Plug your machines into them, even pdus are hard to get you've got it. You know, there's a long lead time. You've got to plan ahead, uh and make sure you know what you're doing. Do you see the supply chain issues getting any better at all? Recently, i think by 2023 they'll start to get better.

I mean wow um. I i think you know we're fortunate. We already have a big order in for 2022.. There's there is machines on you know the spot market that you can buy, there's used machines machines that you can buy there's ways to get machines.

If you know you know the right doors to knock on um, but in terms of access to chips. Certainly, there's you know it's: no, it's no secret! There's a there's, a shortage of ships in the world right now and um. It's it's hard to get access to to high quality chips. If you're a smaller player - and you know, cryptocurrency miners are still in the grand scheme of things.

Smaller players - they're, not you know: they're, not apple um, they're, not they're they're, not any of these kind of large. You know companies, um and so tsmc. You know we're. I saw a graph the other day.

Tsmc makes 54 roughly of the world's semiconductors wow. So you know if you're, if you're able to get in at tsmc you're in good shape and um, but it's hard to get in the door. That's incredible yeah! I would love to try. I just wrote a little note to see if i oh yeah, okay, i found uh.

I found one here. This uh this might be roughly similar. Let's see, was it uh potentially this one here something like that. It was something like that.

It's actually a website called the visual capitalist. I don't know if you've seen this website i'll check that out it's an awesome site. It comes up my feed all the time and they have all these incredible, like kind of maps and graphics of um. Essentially, you know the world of finance and and the world of of industry uh and that one that one popped up this week for me very cool.

I like that. Thank you for that. That's i i have to say i haven't been to this website. I've been to a lot so that is very cool.

I'm gon na check this out that actually uh yeah hashtag not sponsored but uh. Hey! Look at that! They've got stuff on everything here, yeah and it's nicely done, i'm a sucker for good design and it's really well well designed. I don't blame you. I think.

That's great! Oh, that's cool! Well! Thank you for that recommendation. So, okay, what does the future hold for? You know inflation and and this monetary system you know you've, got this whole uh cohort of folks who are mostly younger, uh many millennials, who think that fiat's dead uh it's going away, crypto's, replacing it something's gon na, be the new monetary system for for the world Regime, obviously central banks wouldn't be happy about that, but uh and then you've got the older cohorts. The folks uh. You know whether they're boomers or gen x, who are like, ah look we'll, invest in it.

Maybe we'll diversify a little bit into it, but it's it's not gon na replace our existing monetary system. Where do you sort of fall on this whole spectrum? Yeah i mean i i'm you know, i'm not an economist, but i'm happy to weigh in i i think. What's interesting, is you know you mentioned inflation, i mean when we were looking back. You look back to the summer of 2020..

What was everyone in the crypto space saying they were saying this is insane the amount of like money, that's being printed right now. You know these, these central governments are just backing up the truck and just pumping cash out, and it was something like a 25 increase in the money supply over. You know the course of 20 to 25 over the course of that year and everyone's like, oh inflation, inflation, inflation is gon na happen, and then we didn't hear about inflation for about a year and now what? What's the you know, on every news feed that you see it's inflation, inflation is kind of out of control. Obviously, there's other factors.

There's supply chain, there's there's it's more than just the money supply, but it's it's interesting. How little discussion there still is in the mainstream media, about money supply and about you know the kind of some of the root causes of of inflation. So i i am i'm a believer in sound money. I'm a subscriber to you know the michael saylor school of of economics and i and i think bitcoin is sound money.

I think the kind of natural scarcity that's built into the system is going to mean that it's going to continue to appreciate - and i think the innovation that we see in the decentralized world of finance is really exciting. And i think, if you're in your 20s or in your 30s you're not going to buy gold, you know you're not going to go, get a um. You know a mortgage from a a straight bank you're going to look to do a bitcoin, backed loan you're, going to call up celsius or block fire. You know one of these other lenders, some form of portfolio line against my crypto, i mean there's just a and canadian company.

I saw today that raised 70 million um that is doing bitcoin back mortgages, um really yeah, so they're, it's kind of a hybrid model of mortgages with bitcoin. That's super interesting. I mean for those of us that have you know a bitcoin portfolio, why? Why should we not leverage off of those i mean? Obviously it's done in the trading world, but to do it against hard assets like real estate and to combine hard assets with bitcoin is super interesting um and i, i think, that's kind of a you know a precursor of what's going to come in the future. Uh interesting yeah.

I see it here, so it yeah because i'm you know you. Obviously you could get some pretty desirable financing against your real estate up to a certain point like 80 or something like that. So i imagine there must be some sort of additional link to where hey use your bitcoin as your down payment decision, yeah essentially and you'd, get like kind of an ltv against the bitcoin um. You know kind of combine it into your your mortgage.

So it's, i think, there's all kinds of innovation. That's going to happen, um! You know through through those kind of things like just straight lending, but then i also think that you know i'm a blockchain is just going to change how we do everything um and i think people in the short term tend to overestimate the impact. But in the long term underestimate the impact just like we did with the internet, i mean you, you recall everyone. You know thought in 1997 1989 that the internet was going to change everything and it took 10 years 15 years.

I think it's we're looking at a similar time frame for for crypto, probably a little bit more accelerated, but it's happening that makes sense what about uh? Let's see um! Oh that's right! I was going to ask you about big digital uh and these these digital forensic firms. This is another canadian company. Any comments on on a company like that yeah i mean. I know these guys uh.

I know mark bin's, the the ceo um yeah. I think it's interesting, i mean, obviously they have their exchange side of their business, but then they've also got the forensic side um and they they work with law enforcement um. I i i think you know it's part of what's going to start be happening in the space which is people are going to be able to to track more and more of some of these transactions. And if you do want to use digital assets in an anonymous way, you're going to have to move to you know hardcore privacy coins like monero and and zcash um.

You know people think that bitcoin is anonymous. It's not that anonymous. You can. Actually, you know for the most part figure out where transactions are coming from yeah, gotcha, gotcha and and so uh overall, something uh like as a i mean, i short of, let me put it this way.

Is it something? Would you ever consider adding like forensic services to to your sort of company, or is this more of like hey, you look for maybe opportunities as they come up, but they'd be more in that d5 space for consumers or any b2b. Basically yeah i mean for us. We're interested in generating yield and generating revenue off of you know: cryptocurrency uh consensus mechanisms, so you know we're doing that's: rejection, mining um. What are other consensus mechanisms staking uh? You know farming um, you know being early stage, investors and new projects and and taking tokens.

So all of those kind of opportunities - i i think, the further we get away from that, the less we're going to be going to be. You know connected to our core business but individually. I'm super interested in all of those those kind of spaces and um, and i i'm i'm just really interested right now personally, on the connection between - and you know, you're a creator, the connection between creators and value - and i think nfts are kind of leading this right. Now you know how people are are generating um digital assets and then turning those into revenue streams for themselves and then, if you can combine governance tokens with that and kind of a a connection between those two worlds.

You know i'm a former journalist and former filmmaker um. I find that world really interesting, so i'm i'm learning more about it and and seeing how we can decentralize. You know value as much as we can there's so much to learn in blockchain and cryptocurrency. It's incredible! Uh, so i um on that note.

What do you think about melania's nft release this morning? Yeah i read about that um. I think it's interesting, i mean well. I guess the question is like: when do you hit peak you know craziness? Is it when tom brady uh releases the nft or was it when uh? You know mrs trump releases, the i'm not sure um, but we're getting close to it now is, is peak craziness another way of you saying peak bubble. I don't think there's a bubble, but i think that you know just like in the internet.

You know um back 20 years ago, things get hyped, you know, d5 was getting hyped, you know like crazy. A year ago it doesn't mean it's not real, it doesn't mean there isn't value there, it doesn't mean there isn't uh uh, uh uh huge opportunities there um, but things do get a little over inflated and people who don't necessarily aren't great cultural, fits for the space Star kind of leaning into it got it got it. That makes sense. So i think the last big question that that i have uh and it's also just more industry broad.

You know if, if things like usdc, you know stable coins are so so strong and i'm coming up with this question because of your interest in getting into more of that yield based uh revenue, in addition to mining right uh, why doesn't someone like apple or why Don't we see larger companies move some of their treasuries and into stable coins that have these incredible yields? We'd expect their yields to. Maybe these yields maybe go down, but still there'd still be a yield. Yeah i mean i'm i'm a fan of stable coins. I just think their utility is so useful, like they're.

Just such you know for someone i used to live overseas and it's it's hard to send an international wire transfer, it's hard to move money internationally. You know through these large institutions, so i think, there's a practical side to stable coins, and then you combine on top of that. This yield generating ability um. It just makes a huge amount of sense.

I don't know i mean it's hard for me to get into the head of of you know, tim cook and and the folks at apple, who are looking trying to decide about how they're allocating resources and how you know what their strategy is for for their own Treasuries um, but i i think that um, i think, there's something there and i think we're gon na see. More and more, you know institutions follow retail. I mean the interesting thing about this space kevin. It's been, it's been the retail folks that have been.

You know at the tip of the spear for the last few years in crypto and have been driving a lot of the the adoption. And then it's been the institutions that have been following um and i think we'll we'll see the same thing with d5, we'll see the same thing with stable coins, um, it's retail, retail, retail and then you know, institutions are they're like big ships. They take a lot longer to kind of come around and come on board um these these trends um and it's just the nature of of you - know they're just cautious, whereas retail, particularly the younger uh retail investors.