In this episode of TFTC Marty was joined by Harry Sudock to discuss a variety of topics around Bitcoin, Bitcoin mining, and the broader energy sector, providing valuable insights into the current state and future of these industries.
In this episode of TFTC Marty was joined by Harry Sudock to discuss a variety of topics around Bitcoin, Bitcoin mining, and the broader energy sector, providing valuable insights into the current state and future of these industries.
The conversation started with the recent event of Griid (a Bitcoin mining company) going public and how that aligns with Bitcoin's ideology. The public market offers the ability to put shares into many people's hands, which helps decentralize Bitcoin ownership. It also provides access to capital, which is crucial in a capital-intensive business like mining.
The mining industry has matured significantly, with home mining and "citadel mining" becoming more prevalent. There's a focus on integrating mining with other use cases like process heat and establishing it as a key player in the energy sector.
Key figures in the energy sector are actively engaging with Bitcoin mining, recognizing its potential to act as a catalyst for change and maturation of the electric system. The flexibility that Bitcoin mining offers is becoming very clear to energy professionals.
Bitcoin's installed hash rate base has reached a level that signifies a strong security model and the increasing utility and value of Bitcoin as a network.
There's a significant focus on technology that allows mining in harsh environments (like immersion cooling), increasing efficiency, and making more energy sources viable for mining operations.
The duopoly of ASIC manufacturers (Bitmain and MicroBT) is strong, but there's room for innovation and new entrants in the market. The conversation touched on the potential for commodification and what that could mean for the industry.
As the next Bitcoin halving approaches, miners are focusing on efficiency and cost-consciousness to ensure resilience. The halving is a testament to Bitcoin's predictable monetary policy.
The emergence of Bitcoin ETFs has shifted the market dynamics for companies like MicroStrategy and public mining companies, pushing them to differentiate themselves more as businesses rather than just Bitcoin holding entities.
The conversation touched on the geopolitical risks surrounding ASIC manufacturing and the need for energy policies that support stable and sustainable power sources, like nuclear energy.
Marty's and Harry's work at Ten31 focuses on supporting the growth of Bitcoin and its ecosystem by investing in companies that build critical infrastructure and by providing guidance to entrepreneurs in the space.
"Bitcoin demonetizes the political class and remonetizes the productive class." - Harry
"You can't virtue signal your way out of physics." - Harry
"Bitcoin is the longest game we've ever gotten to play." - Harry
"The future won't build itself." - Harry
"Being a founder or co-founder of an early-stage company can be extremely isolating. And so having some folks in the 'been there, done that' club who can sit alongside you and hold your hand when you're facing the toughest pieces, that's so exciting to me." - Harry
This podcast episode provided a deep dive into the world of Bitcoin mining and its interaction with the energy sector, as well as the role of venture capital in supporting the growth of the Bitcoin ecosystem. The discussion covered a wide range of topics, from the specifics of mining technology to the broader implications of Bitcoin's monetary policy and the market dynamics influenced by new financial products like ETFs.
The overarching message was clear: the Bitcoin mining industry is at a pivotal stage of growth and professionalization, with a strong focus on energy efficiency, technological innovation, and integration with the energy sector. This growth comes with challenges, including regulatory and geopolitical concerns, but also presents tremendous opportunities for those willing to engage with the complexities of this nascent industry.
As we look to the future, the insights and reflections from this episode offer a roadmap for entrepreneurs, investors, and enthusiasts who are part of the Bitcoin journey. The potential for Bitcoin to reshape our understanding of money and energy is immense, and the continued dedication and innovation from the community will be critical in realizing this vision.
0:00 - Intro
7:26 - Big week for Griid
11:21 - State of the mining industry
15:46 - Industrial adoption
19:43 - Demand response
23:46 - Energy FUD from the parasitic class
31:44 - Future of mining
36:06 - Technical innovation
37:27 - ASIC manufacturers
45:02 - Halvening
51:59 - Political influence and pencil making
58:27 - ETF and stocks
1:02:54 - Ten31 advisor
1:08:56 - Wrapping up
00:00:01:26 - 00:00:03:14
Harry
I'm good for, like, 90.
00:00:03:17 - 00:00:26:00
Marty
All right. You going for 90? Now, the freaks know that we have 90 minutes. We're recording. Harry. We were just trying to determine how long it's been since we last sat down here on TFT to have a discussion for for this audience. Obviously, we've had many conversations outside of TFT between now and the last number recorded here.
00:00:26:00 - 00:00:30:05
Harry
But but until it really happen, if the freaks can't hear it.
00:00:30:08 - 00:00:35:06
Marty
I don't know. I don't know. Well, luckily.
00:00:35:09 - 00:00:41:20
Harry
I have a puppy. There's pepper. Pepper here. We can get a little. Oh.
00:00:41:22 - 00:00:44:00
Marty
It's a pepper. You look warm.
00:00:44:03 - 00:00:49:13
Harry
Yeah. Not a winter dog needs a winter outfit. Yeah.
00:00:49:15 - 00:01:11:07
Marty
So a lot has happened. Big week. I mean, maybe we should start there. It's been a big week. Big seven day week, Big, powerful, big last couple of months. Grid getting through the SPAC process. Finally, life in the public markets. We announced last week that you joined 1031 as an advisor and again, a lot has happened since last time we reported.
00:01:11:07 - 00:01:19:01
Marty
And today I guess let's start there. What is the week been like and what was the the build up.
00:01:19:04 - 00:01:58:05
Harry
To the last. Yeah, I mean the, the, you know, it's the, it's the old saying like, you know, there are weeks when a decade happens and decades when when a week happens and you know for us you know, we didn't we didn't start the business expecting to be a public company in 2018. But that's kind of the road that we ended up on for a lot of reasons and, you know, the reasons why we felt that the public market was the right place for us was was really just, you know, around sort of our Bitcoin ideology and goals, which is that being able to put shares into lots of people's hands and make them available
00:01:58:07 - 00:02:22:15
Harry
serves as another vector around getting you know, Bitcoin and hashrate decentralized on an ownership basis. And also it's obviously a high capital intensive business and and where better to do that than in the American public markets? So we're thrilled to be on the other side of the deal. We're thrilled to be Nasdaq listed. And, you know, more than anything on my mind is let's get back to work.
00:02:22:17 - 00:02:24:22
Harry
We've got a business to grow.
00:02:24:25 - 00:02:39:20
Marty
Yeah, yeah, we all do. It's in the it feels like the timing's perfect a few months before that thing to the winds of a potential bull market seem to be blowing in the distance. Getting closer.
00:02:39:22 - 00:02:59:06
Harry
I wake up every day and Bitcoin is more useful than it was the day before. You know, other people are catching on. You know, Pete McCormick and I talked about this a bunch, but like, we're sort of at the you know, the end of the beginning feels like ETF land took us to the end of the beginning or maybe the beginning of the middle.
00:02:59:08 - 00:03:20:18
Harry
And that kind of makes sense, right? Like the Internet 15 years end was at the end of the beginning. The big killer apps hadn't sort of emerged. You know, we weren't on 3 billion smartphones yet, but you know, but all of that was sort of yet to come. And I think, you know, in our Bitcoin journey, we're at a similar point where, you know, it's not niche and early anymore.
00:03:20:21 - 00:03:43:10
Harry
It might be early in terms of price, but it's not early in terms of of mindshare. You know, Bitcoin is a household name and it's a word that everybody recognizes at this point, you know, for good or for bad, they might have their own, you know, positive or negative association with it. But, you know, but we're not a shadowy corner of the Internet anymore, and that's exciting.
00:03:43:13 - 00:04:10:06
Marty
Yeah, it really is. And we just had the Energy and Mining Summit in Nashville and which was hyperfocus on the mining industry, where it is in its maturation phase and where it may be going in the future. And since we have you on in your deep knowledge of the mining sector, particularly here in the United States, I think maybe not to talk about Bitcoin too broadly this, but hone in on Bitcoin mining as an industry.
00:04:10:12 - 00:04:21:00
Marty
What has happened over the last two years since we last spoke, where are we now? Where may, may we be going in the next 2 to 3 years?
00:04:21:02 - 00:04:42:01
Harry
Yeah, I mean the the, the really great part about what's happened in Bitcoin mining is that the business model, the size and the scale, all of those types of dynamics have gone through maybe an even more aggressive maturation process than Bitcoin has. You know, we're seeing, you know, home miners are doing all sorts of new kinds of things.
00:04:42:01 - 00:05:05:03
Harry
We had a panel about, you know, what we call Citadel Mining, which is, you know, everything from one miner in the garage to, you know, one to Steve Barber's hash huts on your property. You know, anything anything that is sort of a homesteading version of mining. And that panel was was fascinating. A ton of discussion around process heat and other sort of integrated use cases.
00:05:05:05 - 00:05:37:04
Harry
You know, we've seen, you know, the senator from Tennessee, both senator from Tennessee, actually have engaged really aggressively on Bitcoin and Bitcoin mining. We had the CEO of TVA at the event giving what I found to be, you know, truly a profound discussion of where he thinks energy is going and immediately understood that the role of a flexible consumer and the role of the miner is really a catalyst for change and towards the maturation of our electric system.
00:05:37:06 - 00:06:01:21
Harry
You know, that's not a static thing, right? We didn't we didn't wake up with the grid that we had 90 years ago. We've been iterating and improving components of that system all along the way. And so seeing the translation layer between some of them, you know, most senior business experts on the energy side rocking Bitcoin, you know, basically at face value now getting him in a room with miners.
00:06:01:21 - 00:06:34:01
Harry
There's a ton of his customers in that room. You know, Grid is one of them, but there are many others. And seeing the clarity that incredible energy professionals are viewing the mining sector with was hugely refreshing. So, you know, all of that is is super, super encouraging. You know, I think the the other macro topic that needs acknowledgment is just that, you know, bitcoin's, you know, installed hash rate base has gotten escape velocity, right?
00:06:34:01 - 00:07:06:02
Harry
The whole Bitcoin network is running, you know, somewhere between 15 and 20 gigawatts. It's running 0 to 500 index a hash. You know, we're probably sniffing 600 at this point. The ability for the network to go up, you know, 10% on a difficulty or a hash rate basis from here. You know the the base that we're building off of is now so large that each of these incremental components of growth, you know, we're just talking really big numbers and that's exciting.
00:07:06:02 - 00:07:32:10
Harry
It means that the security model for Bitcoin is incredibly strong. It means that the value proposition for sound money that can be transacted on a permissionless and censorship resistant basis is stronger than ever. And the level of professionalism that I get to see you know, both within our company but also across our peers is just really high. I'm really I'm really proud to call them, you know, members of the same you know, the same business community.
00:07:32:10 - 00:07:40:05
Harry
So I think all of those things are significantly more mature than they were even the last time we had a conversation on the show.
00:07:40:07 - 00:08:11:03
Marty
Yeah. And it was extremely refreshing. The Energy and Mining Summit, the president, CEO of the TVA coming really I was extremely impressed by him. Kids about specifics of what was said. But I will say that his presentation and his earnest curiosity was refreshing from somebody in a position of that type of power where you'd expect them just to be a politician like figurehead of his business and just read the script.
00:08:11:05 - 00:08:32:28
Marty
Essentially. He was very engaging and again, genuinely curious, which I was extremely encouraged to find. And then another thing, this whole theme that we're talking about here, it's like one of the questions we get at 1031 quite a bit from prospective investors is we're like, Nobody's adopting Bitcoin. Like, when are people going to start spending it at the store?
00:08:32:28 - 00:08:58:02
Marty
When What am I going to be able to go and buy groceries with Bitcoin? And you have to answer that. Yeah. Obviously it's not there that everybody has bitcoin, but I think it's important to realize different types of adoption and the order of operation through which we'll get to bitcoins and state of full success, which is yes, not everybody is able to spend and receive Bitcoin at the grocery store.
00:08:58:02 - 00:09:23:01
Marty
However, on the earlier side of the order of operations is this this mining, the distribution of hash rate, this growth of hash rate and integration with the energy sector and the energy sector, I believe has reached a critical tipping point of adoption that is not recognized by the people who just view Bitcoin adoption as where can I spend it, who's accepting it?
00:09:23:03 - 00:09:45:19
Harry
Yeah, I think, you know, Bitcoin the currency is it's like saying, where can I spend a barrel of oil or where can I spend a T-bill? Right. Like, that's not the metric that I think is meaningful today. I think all of those, you know, transaction based numbers, you know, numbers and graphs like all of that matters over a longer time scale for sure.
00:09:45:21 - 00:10:14:15
Harry
But at the point where we are today, you know, it's about getting Bitcoin onto balance sheets, whether that's household balance sheets or corporate balance sheets or state and government balance sheets. You know, that's the first beachhead that Bitcoin really is is crossing. And I think, you know, we we we got a little bit sort of twisted up in the weeds of it all, you know, earlier on in, you know, in this great shared history of ours.
00:10:14:15 - 00:10:54:27
Harry
But, you know, the ability to spend Bitcoin is not the same as the ability to send Bitcoin. And those are different ideas. And so I think we're climbing the store of value adoption curve incredibly constructively. And so it's it's great for us to be able to see that. And I think you're exactly right. The market penetration that Bitcoin mining, you know, is accomplishing today, you know along the lowest sort of strata of energy cost sources, you know, whether that's here in the U.S. or it's abroad, you know, the penetration at those low cost, high opportunity points is enormous.
00:10:54:29 - 00:11:17:13
Harry
You know, if you're if you're not thinking about where does Bitcoin mining represent value accrual, if you're, you know, an intermittent generator or if you're a steady baseload generator that needs to manage uptime, anybody who cares about power and uptime should be having a conversation with a Bitcoin miner or be thinking about how do I design a rate class that gets Bitcoin miners?
00:11:17:13 - 00:11:45:13
Harry
The prices that they need which are, you know, transparently the bottom of the barrel. But the tradeoff there is that, you know, my father, a lifelong CFO, would always tell me that in any any negotiation you have to pick between price and terms. And I can tell you that on the mining side, we're very firmly in the camp of picking price and taking terms, and that's reared its head in in the demand response adoption that we've represented already.
00:11:45:13 - 00:12:18:10
Harry
You know, we do it in the TVA version of that reality. The folks in ERCOT are doing that, and the folks in every power market in the U.S. that has programs that offer, you know, a demand response, compensation kind of rate, class or tariff, you know, everybody wants that. So, you know, the the really interesting thing is to see the ability to deliver on the technical requirements of an actual demand response program and then the desire to expand those programs to increase reliability and lower costs for the average user.
00:12:18:12 - 00:12:51:02
Marty
Yeah, just digging into this demand response use case in and of itself, you can already see Bitcoin miners beginning to effect change across different sort of power providers across the country. ERCOT obviously here in Texas, very advanced from the pricing signal perspective, there's API's that are connecting to mining firmware, that mining firmware is reading the pricing signals and adjusting hash rate with those pricing signals almost immediately.
00:12:51:02 - 00:13:15:04
Marty
Whereas if you zoom up to the Tier two VA, it's a bit more manual. You get a call from the TVA a day or two before they expect you to turn down during peaks or peaks of demand where they need electricity sent back to the grid and you have somebody go and turn down the operation or do that from a back end software solution.
00:13:15:07 - 00:13:30:16
Marty
You could see they're like, you imagine the TVA's looking at ERCOT. You're like, Oh man, look at all that's this demand response system is with all these pricing signals. Maybe if we could build an API pricing service like that for the miners up here, we could be much more efficient.
00:13:30:18 - 00:13:52:18
Harry
Yeah, efficiency is the name of the game, right? Like these are these are assets that are already bought and paid for. All the transmission lines are bought and paid for, all the substations are bought and paid for. And so now that the CapEx is out the door for all of these electric systems, how do we get to a place where utilization is able to climb even just a few percentage points?
00:13:52:21 - 00:14:15:00
Harry
You know, because at the end of the day, if you think about the you know, I think of sort of the world in terms of a nexus of contracts, there is a contract that your power provider signs with you. The rate payer. I'm sitting in my house like I use Nashville Electric. And, you know, their commitment to me is really around power availability.
00:14:15:00 - 00:14:51:20
Harry
So let's say the system gets super stressed and they've got to import power from meso those megawatt hours are incredibly, incredibly expensive and the price of those megawatt hours would be better, you know, as a as a rebate to their flexible load customers rather than a forced import during the time when things are tightest. And so there's a really compelling economic case around why demand response is accretive, you know, both to the power provider as well as to the individual ratepayers at the household level, as well as to the demand response program participants at the industrial scale level.
00:14:51:20 - 00:15:26:28
Harry
That's a that's found money for everybody involved, right? The power providers lowering their cost. The ratepayer at the household level is raising their uptime and potentially lowering their cost. And the flexible customer is able to lower their costs as well. So it's this incredible, you know, three party positive sum equation that the power providers are able to offer once they've had the introduction of a truly innovative business model, which all the the mining community believes and rightly so, that they represent with this flexible load type of profile.
00:15:27:00 - 00:15:51:20
Harry
And in addition to that, it's better for the generating assets. You don't want to turn those things up and down. You know, as much as you might have to. And so, you know, there's there's this other net benefit over the longer term as you continue into the useful life for some of these plants, which is that operating in an environment with a flexible customer is actually better for all of the hard assets that are being used to generate the electricity in the first place.
00:15:51:20 - 00:16:20:15
Harry
So we're in this in incredible virtuous cycle as as symbiotic partners being the power provider, the bitcoin miner, and then the households and businesses that that power provider serves outside of the flexible customer. So I'm incredibly motivated to keep working on what it means to reinvigorate some of these electric systems in a way that that really benefits the entire kind of, you know, nexus of parties.
00:16:20:17 - 00:16:29:17
Marty
Harry Versus systemic risk to the system. Did you're not here what the Department of Energy in the EIA I have to say last week.
00:16:29:20 - 00:16:56:12
Harry
I understand that that was an interpretation that was floated to the community. I happen to strongly disagree with that interpretation. You know, I think I think that, you know, there's there's sort of a I said this many years ago, but, you know, Bitcoin, you know, demonetized the political class and intact, as is the productive class. And you know, in in keeping with that theme, you know, the the engineers will inherit the earth.
00:16:56:14 - 00:17:15:23
Harry
And so that means the power engineers that work on these systems, the people with their boots on the ground. You know, there's I just found this out. I looked at like, what are some of the highest compensated roles that you could have in America? Because I was just I was just curious. One of the weird ones I don't know about that, that maybe I should have kind of to school for.
00:17:15:26 - 00:17:39:02
Harry
One of them is there's a guy whose job it is or woman whose job is to hang out of a helicopter on, you know, basically a tether with a chainsaw to manage trees on the high voltage lines, super high up in the air. They make like 400 grand a year. And so those are the people who I think we're building, you know, Bitcoin mining for because we make all of those roles easier.
00:17:39:04 - 00:18:06:22
Harry
You know, if that takes an education process in Washington in order to make that value proposition clear, you know, so be it. But I think that, you know, once you once you put the hard data, you know, to these folks, I think the case for Bitcoin is really quite an obvious one. You know, the ideological challenge that we might face is the the sort of baseline assumption, which is that, you know, nobody likes our pet rock.
00:18:06:25 - 00:18:13:16
Harry
And I think we're really facing more of that perspective than any sort of legitimate concern around electric reliability.
00:18:13:18 - 00:18:19:27
Marty
Yeah, Bitcoin has no no value. It's just a Ponzi scheme, a pet rock. If you will. I don't know. Not helping.
00:18:19:29 - 00:18:24:21
Harry
Seems like a lot of market participants who are willing to pay $43,000 a coin right now.
00:18:24:23 - 00:18:49:17
Marty
Yeah, it think they think it's valuable. Their parting dollars to get parting with dollars to get bitcoin. But it is like a we discussed this too on our panel the first day of the summit. But it is like you said, we have this sort of pull between the productive class and the unproductive class. The parasitic class probably more descriptive what they actually are right now.
00:18:49:17 - 00:19:21:12
Marty
And it's not just specific to Bitcoin. I mean, we zoom out and focus on energy more broadly. Like we talked about the example of this wasn't on our panels, the what Bitcoin Did episode, the live episode on day one in Germany, it's like over 20 years they decommissioned, I think 20 gigawatts worth of nuclear power generation more than doubled their overall capacity generation capacity over the first 20 years of the century, but they doubled their capacity with wind and solar predominantly.
00:19:21:19 - 00:19:57:13
Marty
Turns out the sun doesn't shine that much in Germany and the wind doesn't blow as much as they like it to. And so you had a situation in 2002 where nuclear, coal, natural gas were a 86% of the overall generation capacity. Today it's something like 34%. And Germany's got a systemic energy crisis because they don't have reliable power, because they refuse to, for some reason or another, lean into reliable energy sources and say what you will about coal and natural gas and whether or not you think hydrocarbons are here to stay or on the way out.
00:19:57:13 - 00:20:08:14
Marty
I mean, nuclear is a very obvious answer to a lot of these energy stability problems that the governments of the world seem to be neglecting for some reason or another.
00:20:08:15 - 00:20:30:08
Harry
You can't you can't virtue signal your way out of physics, Right? It just you can't. And and, you know, that's that's just you know, for the climate folks out there, like that's the that's the bitter pill. Right. You're not going to you're not going to build enough wind and solar to solve this in any kind of meaningful way.
00:20:30:14 - 00:20:53:20
Harry
And and, you know, the the cohort that drives me kind of the craziest are the ones who are who are staunch climate supporters who believe in the decommissioning of nuclear plants. Right. The these are assets that are fully bought and paid for. They're operating really, really well. They have an incredible safety track record. It's an American technology, nonetheless, that that we were able to innovate on.
00:20:53:22 - 00:21:20:09
Harry
And and, you know, the willing the willing sort of voluntary shut off of of these plants, it's just it's despicable. You know, there's there's really there's really no argument for it. So, you know, the playbook that we expect to see and I'm thrilled to say that the Canadian the Canadian folks have are committing to extending useful life at some of their plants.
00:21:20:12 - 00:21:40:10
Harry
There's folks at OPG who are committed to building a similar ours, and they're going to do that in TVA. That's public knowledge. So, you know, we are seeing, you know, in California, we were able to avoid, you know, the shutdown of their nuke that's in the in the Los Angeles area. You know, so we're we're starting to turn this tide a little bit.
00:21:40:10 - 00:22:02:27
Harry
But, you know, any time you got to turn an aircraft carrier, which is, you know, really the nuclear Regulatory Commission, you know, it's it's a it's a challenge. But but, you know, by gosh, we're going to do it. So I think there is some daylight and some hope on this. But, you know, the the argument that we should shutter nuclear plants is like the single most asinine policy perspective I can think of.
00:22:03:00 - 00:22:14:01
Marty
That's literally suicidal, especially if you're going to virtue signal about transitioning away from hydrocarbons and at the same time decommissioning.
00:22:14:01 - 00:22:39:02
Harry
Which too, to be fair, like we're we're in favor of building a positive sun electric system. For us, that's meant a huge allocation to hydroelectric assets and raising the revenue profile that they're able to offer. It's it's a huge focus on nuclear, which we love. And and, you know, and there's there's really a you can do well and do good at the same time.
00:22:39:09 - 00:22:56:28
Harry
You don't have to you don't have to not have it both ways. But unless you're invest ing in the baseload profile of the electric system, you know you're going to create instability and tail risk that that really will that really will be, you know, significantly detrimental at some point down the road.
00:22:57:00 - 00:23:10:27
Marty
Yes. Oh, God, I'm getting triggered. Just thinking of the the LNG export ban or new contract construction of a new LNG export facility ban that came out a couple of weeks ago.
00:23:10:28 - 00:23:34:11
Harry
It's well and and you know, and let's let's put our let's put our carbon accounting hats on. Right. If you're if you're replacing a coal asset with a natural gas asset, your carbon intensity of that transition and is incredibly positive, it just happens to run on another hydrocarbon, but a much better one from the carbon accounting perspective. So I think, you know, we we need to be very, very realistic about the physics.
00:23:34:16 - 00:23:56:22
Harry
We need to create the demand for these types of flexible load consumers, which means innovating on the contract structure in many of the jurisdictions that are, you know, that are currently not set up to compensate flexible loads as fully as maybe they should be, you know, but these are these are the tough the tough questions and the hard steps that have to be taken.
00:23:56:24 - 00:24:15:00
Harry
And, you know, environmental stewardship and strong business performance are not at odds with each other. We just need, you know, sane, cool engineering heads to come together and design solutions that are that are as future proof as possible and shuttering nuclear reactors is the lowest thing you could possibly do on that list. Yeah.
00:24:15:02 - 00:24:49:10
Marty
Yeah. Very Malthusian when you think about it. But on this trip, I mean, we had this discussion and it was really interesting to see people from different parts of the world come to Nashville to talk about the future of mining and where it may proliferate moving forward. What are your views like? Obviously, the United States, Texas, Tennessee, TVA in Kentucky, other parts, Georgia have really benefited from the Chinese mining exodus that happened a few years ago, two and a half years ago.
00:24:49:10 - 00:25:14:19
Marty
Now, at this point, Rackspace is tight. It seems that Bitcoin in the minds of institutions is now go. You got the black rocks of the world saying it's a good thing. And what I've been able to glean is that there are people in other parts of the world that are looking at Bitcoin mining specifically and saying, All right, it's time for us to develop a strategy, deploy some capital and get some hashrate spending up within our borders.
00:25:14:19 - 00:25:22:17
Marty
How do you see this international competition for hashrate playing out moving forward?
00:25:22:19 - 00:25:42:12
Harry
Yeah, I think, you know, to to win in the mining business, you need to have a structural defensible advantage and that that can come in many forms. I think in America we've got two great structural advantages, one of which are our capital markets, which are the best in the world. The other is that our energy assets are also world class.
00:25:42:15 - 00:26:02:04
Harry
And so what are the two key ingredients to a great mining business as well? Capitalized access to energy and so I think the U.S. has has taken a leadership role on the heels of the China the China ban, you know, several years ago. I don't expect us to slow down, you know, maybe on a percentage share basis we're going to lose ground.
00:26:02:04 - 00:26:23:27
Harry
But I don't think we're going to you know, I don't think we're going to slow whatsoever. You know, I'm very curious to see what's going to happen in some of these, you know, really sort of oil state wealth environments where there's obviously huge amount of capital available to them because they they've made so much money over the past years and they're starting to look down this diversity path for their portfolios.
00:26:24:00 - 00:26:51:07
Harry
And, you know, additionally, they've got access to a huge amount of of incredibly cost effective generation. You know, the US is turning on nuclear reactors and a multi gigawatt solar plant co-located with them. So that's a huge you know, that's a huge opportunity to monetize via the deployment of hashrate. We've seen what Marathon's doing over there. Obviously we've heard the news out of Oman, we've heard the news, you know, in, you know, Dubai and elsewhere.
00:26:51:09 - 00:27:13:27
Harry
So, you know, I think then none of that's to say anything about South America which has been involved in this, both, you know, above board and below board. There's sort of a gray market environment. You know, historically in Venezuela, we're seeing large scaled operators operating out of Paraguay. Now we're seeing the Africa trend that grid loss is really spearheading take root.
00:27:13:27 - 00:27:40:22
Harry
So I think, you know, the exciting part is that the decentralization of mining, you know, that narrative is very strong because there are structural opportunities to monetize energy in each of these regions. There's an opportunity to, you know, to deploy capital in each of these regions. And there's going to be companies and individuals with a very broad range of risk appetite and operating model appetite to deploy across all of this.
00:27:40:22 - 00:27:46:09
Harry
And so, you know, all of it all of it means that, you know, we're probably going to see hash rate go up over time.
00:27:46:11 - 00:28:11:14
Marty
Yeah. Then you combine this with the fact that you have hydro boxes and liquid cooling immersion systems becoming more advanced and you have the ability for the first time at scale to deploy hashrate in areas of the world like the Middle East where it was simply impossible due to the physical environment, the heat, specifically even down here in Texas to some extent, like obviously we have a.
00:28:11:16 - 00:28:12:02
Harry
Does a.
00:28:12:02 - 00:28:34:00
Marty
Lot of hash rate here and a lot of salt, a lot of dust. But the the industry, the picks and shovels, part of the industry building these facilities that allow you to mine in harsh environments has reached a point of maturation as well, where it's really going to open up markets that were previously inaccessible, inaccessible.
00:28:34:02 - 00:28:49:01
Harry
Totally. Yeah. There's there's a technology trend that sits underneath all of this. And, you know, on the one hand, it's the efficiency
00:30:30:28 - 00:30:53:00
Marty
So little audio troubles. They're back at it. What were we're talking about?
00:30:53:00 - 00:31:16:08
Harry
Yes, there's. There's two layers of technical innovation that are happening that I think are going to facilitate broader availability of deployment environments. One of them is that the chips are getting more efficient. And so that just means the units of energy per unit of of hash rate produced over time, you're able to produce, produce more hashes per unit of energy.
00:31:16:10 - 00:31:43:21
Harry
The second is all of the technology that's wrapped around that, which includes things like immersion and things like hydro and, and you know, filtration and all the different tools that are available to a mining operator in order to deploy in a harsher environment makes, you know, more sources of generation and more environments available. It means that there's more, you know, economic viability of places that weren't from an operational perspective, but maybe were from a power cost perspective.
00:31:43:21 - 00:32:03:15
Harry
Historically. So all of this kind of rolls into the idea that I think is is the tailwind that we're all riding, you know, across Bitcoin, which is more decentralization is likely because, you know, more remote operations are viable. But then secondarily, just the gross hash rate securing the network is going to go up as well.
00:32:03:18 - 00:32:37:15
Marty
Yeah, let's let's lean into the ac-dc manufacturers. What are your thoughts on the duopoly, the dominated duopoly by Bitmain? Obviously they've got the S21 series coming to market. They're pricing out of the gate with those machines was very aggressive, many so-called as an attempt to leverage their economies of scale to box potential competitors out of the market. Micro T is it just obviously the second largest player in the market and they have a lot of happy customers.
00:32:37:16 - 00:32:57:04
Marty
How do you see this playing out moving into the future? Is Bitmain just using their economies of scale to box people out as micro bitty, beginning to make inroads with larger customers to be seen? Intel come back to the market. Avalon Do any of these companies have a chance of competing?
00:32:57:07 - 00:33:16:26
Harry
Look, I think I think that we're still early days. I think that, you know, the manufacturing landscape could change dramatically over time. You know, I think right now Bitmain is sort of winning the day, as they have been for the last couple of years. I think MakerBot is doing a great job. The micro units, you know, are awesome.
00:33:16:28 - 00:33:41:16
Harry
They continue to double down on reliability and performance at the cost of some nominal efficiency, which I think has been, you know, a great strategy from them. You know, you've obviously seen riot roll into market with a huge amount of future order. And so I think that, you know, my committee is certainly earning their scale volumes as well.
00:33:41:19 - 00:34:03:16
Harry
You know, do I think the duopoly is going to break in the next year? Not particularly. Do I hope that more competitive players enter the market always right. I always want a more competitive market to be able to look at when I think about, you know, capital allocation and hash allocation. But I think that, you know, right now things are, you know, reasonably healthy and competitive.
00:34:03:18 - 00:34:24:28
Harry
You know, what we're not seeing this cycle is kind of the price blowout that we saw in 2021 with units trading, you know, significantly ahead of kind of, you know, the future revenue profile. So I think, you know, we're certainly healthier than we were a few years ago, but I'd always love to see additional players enter. Yeah.
00:34:25:00 - 00:34:54:29
Marty
Yeah, I would agree there. Yeah, it is crazy how efficient these machines are getting talent and think through my mind like the whole concept of a commodification. Like is that simply a natural catalyst for more competition? When you get to a level where you can make an investment, a capital outlay in building an asset because you're confident that it's not going to make a step function efficiency improvement like the A6 have in the past?
00:34:54:29 - 00:35:01:29
Marty
Or does that simply allow the incumbents to just really dominate the market? Um, yet to be seen.
00:35:01:29 - 00:35:28:14
Harry
But yeah, yeah, I think, you know, the good news is they don't let me program any of the chips but at least at least not yet. And if they do we have real problems. So you know I think I think there's I think there's sort of the mad scientist and deep technical experts that are working on it. You know, I got to spend some time with Scott from from oh, good Lord, I've lost the name of his project.
00:35:28:16 - 00:35:33:14
Harry
But he's doing the open source basic project now.
00:35:33:14 - 00:35:37:06
Marty
Future but future. Not that they're not open source.
00:35:37:08 - 00:36:01:23
Harry
Hold on. I can find this. He Yeah. So he's working on some open source pieces. You know, I don't think transparently that it's that it is any bit ax I apologize. Scott You know, it's just cool to see people working on stuff and tinkering and innovating along this. You know, we aren't at the mature phase for this industry.
00:36:01:23 - 00:36:23:15
Harry
You know, we don't have the you know, we don't have the the, you know, the intel chip or that or the HP. You know, you know, Chip is an intel chip that's in all of those units. But we haven't reached the full commodification layer. We might be at what I view as a long local maximum, which is really sort of the duopoly continuing to innovate.
00:36:23:17 - 00:36:44:27
Harry
But we may see, you know, another really interesting breakthrough from a market dynamics perspective that attracts additional folks who want to build down this development path. You know, but unlike software, you don't get to put a software release out every two weeks. You know, it's really, you know, six, 12, 18 month type of time scale to be able to innovate on hardware.
00:36:45:00 - 00:36:51:16
Harry
And so, you know, I'm very curious to see what emerges, you know, really over the coming decade, if I'm being honest about timeline.
00:36:51:18 - 00:36:55:07
Marty
Yeah, the hash wars are upon us. Who knows?
00:36:55:09 - 00:36:57:14
Harry
This could be always has been.
00:36:57:17 - 00:37:26:01
Marty
They have been since January 3rd, 2009. Then you have just external factors, geopolitical risk. Who knows what happens in Taiwan with TSMC? Can they spin up foundry here in the United States fast enough to deter any systemic political risks that would come if China were to do something there? Then even then, many people are like TSMC is one of the greatest revenue drivers within Taiwan's.
00:37:26:01 - 00:37:50:22
Marty
So to think that China would just come or prevent that company from accruing tax revenues by selling their goods to market is a bit crazy as well. But these are unknowns that that can affect the market. It's crazy to think the range of effects. While we were in Nashville, the weather was affecting Bitcoin rate. Yeah, weather down south produced a -4%.
00:37:50:22 - 00:38:14:24
Marty
Difficulty adjustment 3.9% due to everybody engaging demand response. And that's why I mean, I'm sure I know that you feel this way too. It's just I don't think there's a more exciting industry to be in than Bitcoin mining right now because of all these different variables you have to think about. It's certainly very masochistic as well, but it's never boring.
00:38:14:26 - 00:38:38:17
Harry
And it's honest, right? Like what I love most about mining is that, you know, I can't make my terror hash our, you know, you know, I'm not going to do I'm not going to outsell my, you know, competitor for the next software sales deal and, you know, sell $9 a seat for, you know, you know, for 12 months, you know, because I've got a better, you know, CRM product in market, right?
00:38:38:17 - 00:39:05:03
Harry
Like, no, it's a it's a pure, honest capitalist endeavor to be able to generate hashes more efficiently than the next person. And that's that's a really refreshing environment to build a company into because you can see on a daily basis, if you're doing it the right way, you get a report card, you know, on a very, very frequent basis, which is fun and is very, very motivating.
00:39:05:05 - 00:39:22:05
Harry
So I love that part of it. I agree with you there. You know, there's no sector that, you know, I'd be more excited to be working in. It'll be my five year anniversary at Grid next week. Official start date anniversary. I was wrapping a consulting agreement before I joined, so I really started, you know, three or four months before that.
00:39:22:05 - 00:39:35:13
Harry
But, you know, but, you know, this is what I've chosen to dedicate my life to, to building, you know, within within a proof of work system and really couldn't be couldn't be happier to get to work on this every day.
00:39:35:15 - 00:39:59:11
Marty
Yeah. Got as many wraps. I want to take this on, I guess, since this is a mining focused podcast obviously the having it's about 75 days away which is not that much time. What should miners be doing? What are miners doing to prepare for the having how may it affect mining businesses?
00:39:59:13 - 00:40:30:23
Harry
Well, you know, the the the known effect is that the block subsidy is going to get cut in half. I you know, it's bittersweet, right? Like on the one hand, you know we're going to earn less bitcoin as miners unless fees do something quite dramatic than we did the day before. The having happens or the or the block before the having happens is the case really is, you know, but that's the better that the suite is that bitcoins monetary policy gets proven every four years.
00:40:30:26 - 00:41:10:02
Harry
So every 210,000 blocks. You know the the the Bitcoin Fed meets and agrees on a new issuance decision and that issuance decision happens programmatically. And so being able to watch the monetary policy happen in real time and with and with, you know, near absolute certainty is one of the most high impact pieces of how Bitcoin works. And getting to see it work in real time is is, you know, is a powerful and meaningful thing that, you know, that's my that's my ideological answer.
00:41:10:02 - 00:41:33:19
Harry
But, you know, tactically, I think we've seen a lot of miners across the industry start to roll into higher efficiency machines. I think that's one way to sort of having proof your, you know, your operation is to continue to to invest into the fleets efficiency. Beyond that, you know, we we at least think all the time about, you know, the best way to be prepared for the having is to be cost conscious.
00:41:33:21 - 00:42:07:10
Harry
And that starts with the power cost. It really rolls across everything that business spends money on. And so being, you know, laser focused on downside risk and cost is the best tool, you know, available in conjunction with with, you know, managing the fleets efficiency in order to be resilient across a reduction in potential revenue. Now, the purchasing power under the last epoch was greater from a mining revenue perspective than, you know, the purchasing power in the 12.5 Bitcoin block epoch.
00:42:07:13 - 00:42:46:27
Harry
And so, you know, we may see a similar dynamic play out across the four years after 75 days from now. So, you know, I think there's there's still a lot of, you know, dynamic components of the market. We haven't even gotten into the expected fee revenues that we might see with additional adoption or additional JPEG degeneracy. However, however you however you might however you might think of it, but at the end of the day, block space is scarce and Bitcoin is an incredible asset to move from point A to point B, And so the fees that folks are willing to pay to move their UTX so I think is a place where, you know, a
00:42:46:27 - 00:43:12:11
Harry
huge amount of value is provided by miners securing the movement and the availability of that scarce block space. So, you know, it's a it's a it's a simple topic because the monetary policy is dead simple thanks to Satoshi Knott-craig and and it's also a very complex business operating environment because there's a bunch of moving variables. So it really is a three body problem between fees.
00:43:12:13 - 00:43:28:20
Harry
Bitcoin price and network hash rate. So you're you're you're managing a lot of uncertainty around that period of time. But, you know, we pride ourselves to sort of always be having and so, you know we'll start preparing for the having after this one the moment this one happens.
00:43:28:23 - 00:43:59:08
Marty
Always be having sage advice That is the environment leading up to this having is different than the two that I've been a part of since I've been following Bitcoin because you have this fee pressure from the JPEGs and all that and it's nothing too crazy right now, but it they get crazier. Oh, that a little under a year ago and at times throughout the last year did provide significant revenues to mining operations.
00:43:59:08 - 00:44:40:13
Marty
The price is up 150% since January of last year and it seems like we're hovering in the low forties. The g BTC bleeding seems to be coming to a slow and the ETFs seem to be net buyers of Bitcoin right now potentially into the future. Like is there a situation where fees are pumping, the price is doing really well, they have incomes and you know the situation where it's not as I think cataclysmic is the right word, but it's not a it's not an event that's detrimental to as many operations as it has been in the past.
00:44:40:20 - 00:44:43:27
Marty
Something people should be thinking about.
00:44:43:29 - 00:45:16:04
Harry
Yeah, I mean, look, like we had we basically had to having last time because we saw price go from whatever, 6500 to 3500 a month and a half before that. And then we bounced back up and then we have so, you know, you can, you can kind of get to having economics multiple different ways. And so if you're not built to be resilient across those different cycles, it's going to be challenging regardless of if it means price getting cut in half or block subsidy getting it cut in half, you know, it's kind of all the same, you know, the same net net from the miners perspective.
00:45:16:04 - 00:45:48:06
Harry
So, you know, it's it's going to be dynamic. It's going to be interesting. There's going to be a lot of conversation around it. It's critical to remember that it is beautiful to watch Bitcoin's monetary policy happen algorithmically without you know, without a central, you know, central planner involved. And, you know, and and it's about it's about, you know, survival and putting yourself in a position to be able to thrive, you know, during periods of really constructive mining economics.
00:45:48:09 - 00:45:54:10
Marty
First, having where Bitcoin stock to flow would be higher than gold. I wonder if that's some emetic for red.
00:45:54:10 - 00:45:57:09
Harry
Dot blue dot green dot.
00:45:57:11 - 00:46:00:24
Marty
Is that the is that the ones that they're like oh.
00:46:00:24 - 00:46:03:22
Harry
People plan B it's the plan B dots.
00:46:03:25 - 00:46:06:11
Marty
Yes we're going all the way up to orange.
00:46:06:13 - 00:46:08:11
Harry
And red dot.
00:46:08:13 - 00:46:28:29
Marty
Now it is this something as simple as oh people are like wait a second, Bitcoin is now officially more scarce. Some gold from a supply inflation rate that people are like, Oh man, maybe I should get this is 2024 is an interesting year. Another beautiful thing of the halvings they line up perfectly with U.S. presidential election cycles and this one for now.
00:46:29:05 - 00:46:36:07
Harry
Unless we have a lot of accelerating or decelerating difficulty adjustments, we could fall of whack. But I don't think we are likely to.
00:46:36:09 - 00:47:06:03
Marty
Know that this will be. I mean, we don't like to get political too much on this show, but this seems like it could be a pivotal election for the Bitcoin industry broadly, but specifically the mining industry. It seems like, again, the actions from the EIA last week were dictated down from Elizabeth Warren in a certain capacity, and it seems like this current administration really does not like Bitcoin.
00:47:06:05 - 00:47:27:19
Marty
And I think that's what a lot of people are asking themselves behind closed doors is Dan like, do we need a new administration to just let this industry run then? Do you think back to Trump's first term, if it does turn out to be Trump first byte in which it seems like that is the case? I mean, he wasn't really supportive of Bitcoin either.
00:47:27:19 - 00:47:56:20
Marty
Yet Steve mentioned, as is Treasury secretary, you hated Bitcoin. Trump explicitly said that Bitcoin was a threat to the US dollar reserve system. And so even though we don't like having to deal with the political part of life here in the United States as an industry, I think it is becoming abundantly clear that we do have to play the game to some extent just so that they will leave us alone as much as possible.
00:47:56:22 - 00:48:19:00
Harry
My Yeah, I'm with you. You know, politics is definitely not my bag, but, you know, the the the goal that I have, I'm always happy to engage with anyone and everyone on this stuff, you know? And and all I want to do is, is, you know, tell them, don't ask me the questions. Ask the people we buy the power from.
00:48:19:02 - 00:48:44:02
Harry
What do we do for the community? Are we good? Are we net benefit or you know, are we an asset. I'll never forget the you know, we had a quote from one of the CEOs of the local utility that we, you know, have an operation at. And it was right when inflation was was peaking at 10%. And he called us and he said, you know, when this kind of stuff happens, I'm really left with a couple of choices.
00:48:44:04 - 00:49:12:17
Harry
I can sell bonds raised that I can raise rates, I can lower quality of service, or I can go find a Bitcoin miner to bring to my area. Those are the only ways that he had in his mind to fight inflation. And he said of those four options, he would vastly, vastly prefer option four, where there's a differentiated customer that he can recruit to sell power to.
00:49:12:19 - 00:49:37:25
Harry
And so it's telling stories like that as many times as we need to to make people understand that, you know, we're not parasites that are that are, you know, suckling on the lifeblood of the American electric system in the economy. We're an asset that pays revenue and that generates, you know, flexible, sustainable load that is an asset to every electric system that we enter so long as the contracts are structured the right way.
00:49:38:03 - 00:50:10:05
Harry
And so what that means for us is we just want more flexibility and more credit, both financial and social and political, for the flexibility that we offer. And I don't think that's an unreasonable perspective to take. And we're definitely seeing, you know, a lot of of serious consideration around that value proposition taken up by the technocrats who the actual, you know, generation transmission and delivery services that keep all of our lights on.
00:50:10:07 - 00:50:12:24
Harry
Yeah.
00:50:12:27 - 00:50:18:10
Marty
Sometimes they have to take a step back because it's so obvious to us. It's like, how do you know? Do you want to see this?
00:50:18:10 - 00:50:23:19
Harry
Well, Marty, how do you manufacture a pencil?
00:50:23:21 - 00:50:25:18
Marty
It takes many moving parts.
00:50:25:21 - 00:50:45:28
Harry
No idea. I've no idea. When I go pick up a pencil, I have no idea how that was made. I assume that the vast majority of people I will ever talk to have the same level of understanding of how the manufacturing process for a pencil works that I that that they do with what happens when you turn the light switch on.
00:50:46:00 - 00:51:15:09
Harry
Yeah, right. It's a it's an unknown thing, you know. No, you know I, you know, my, my dad believes that he's reducing, you know, the carbon intensity of our household by turning the thermostat down a degree or two in the summer or in the winter. Right. So like the level of understanding and the level of, of, you know, transparency, you know, he doesn't think that way anymore because I've, you know, locked him in a room and yelled about it long enough.
00:51:15:11 - 00:51:37:29
Harry
But, you know, but these are these are topics that are not taught to us as young people. They're they're topics that are wildly esoteric for the vast majority of people, you know, certainly in America, not on planet Earth, nobody knows what happens or why their light switch works. And so that's the that's the fight that I that I'm excited to take on, which is I don't believe that.
00:51:38:02 - 00:52:04:27
Harry
Look, I didn't go to school for electrical engineering. I went to school for Keynesian economics. And I somehow shook loose of that of that horrible fate. And and so if I can learn how the electric system works, I have no technical background whatsoever. But I read a bunch of books and asked a lot of dumb questions and and arrived at something approximating a level one understanding of how electricity works in America.
00:52:05:00 - 00:52:07:06
Harry
It isn't that hard.
00:52:07:08 - 00:52:29:01
Marty
Now that I seriously been thinking about this reason, like we need in terms of curriculum, like people should know money works and people should know how energy works. Like that should be high school classes mandatory, know how your money works, know how your energy systems work because they are the best base layer of the economy. They're going to go out in the world and try to be productive in.
00:52:29:03 - 00:52:30:07
Marty
And the fact that I.
00:52:30:11 - 00:52:38:13
Harry
I swear I didn't set you up for this, but but Grid's mission statement is to to build a generational company at the intersection of energy and money.
00:52:38:15 - 00:52:39:15
Marty
Yeah.
00:52:39:18 - 00:52:49:12
Harry
It's that's our goal. Our goal is to build a company that sits right on that street corner. Energy going this way, money going that way. Right on the corner is grid and Bitcoin mining.
00:52:49:15 - 00:52:53:17
Marty
Yeah, it's happening. It's going to be a long journey. Not for grid.
00:52:53:18 - 00:52:54:03
Harry
For young man.
00:52:54:03 - 00:52:54:20
Marty
All of us.
00:52:54:20 - 00:52:56:12
Harry
For young men.
00:52:56:14 - 00:53:00:09
Marty
And you see this airline, it's it's not getting any it's not.
00:53:00:09 - 00:53:01:09
Harry
Coming back LeBron to.
00:53:01:09 - 00:53:25:21
Marty
My eyebrows that's true. It's true. Um, one other topic I want to talk about with the emergence of the ETFs, how do you think that affects stocks like MicroStrategy and public mining stocks that have historically been used as a way to get exposure to Bitcoin without direct exposure via public markets?
00:53:25:24 - 00:53:58:15
Harry
I mean, look, I think that I think that we saw we have evidence now, right? We saw the ETF come out and we saw a bunch of those stocks, especially MicroStrategy, go down. I think MicroStrategy was viewed basically as a holding company for Bitcoin. Now they deserve some premium because they're able to lever into some bitcoin. You know, I love I forget who did this analysis on on XCOM, but they basically looked at the you know, the SATs per share that you own if you own, you know, stock in MicroStrategy.
00:53:58:15 - 00:54:22:01
Harry
And that number actually goes up based on the way that that they've issued new stock and bought Bitcoin with it. So I think there's there's some interesting sort of deeper fundamental analysis that's going to go into the decision to own, you know, a stock like MicroStrategy versus a share of of what we'll talk about the bitwise folks we like that be and we like, you know, the ark folks and have relationships across there.
00:54:22:01 - 00:54:43:21
Harry
But I love that they're funding developers out of those management fees. And, you know, I think we've seen you know, we've seen the premium come out of microstrategy's to a large degree and enter, you know, ETF land. I Think the miners are a more interesting case and I just look at them broadly but I think it's an opposite it's an opportunity for differentiation.
00:54:43:28 - 00:55:03:11
Harry
Right. You're taking sort of some of the market data into a different vehicle, but maybe that means there's more room for the market alpha for a differentiated operator to, you know, to really show their chops or many of them to show different chops. You know, there's a lot of different kind of operating models across the different pub codes that are out there.
00:55:03:13 - 00:55:26:23
Harry
But yeah, I mean, it's it's an opportunity to demonstrate differentiation and, you know, attract people to those names or explain to people why, you know, being able to generate revenue in Bitcoin terms and, and do so on a profitable or highly profitable basis is a compelling equity investment. And so maybe they can get looked at more like companies and less like Bitcoin, you know, holding companies.
00:55:26:25 - 00:56:04:20
Marty
Yes, I completely agree. Which is good for the market too. That particularly the differentiation that's going to be necessary to set your self apart in the world of public markets, you under clocking strategies that getting more ingrained with demand response systems, becoming energy providers, maybe getting acquired by an energy provider, becoming part of that stack, people are going to get creative, which should be a forcing function for a more efficient mining industry and a more healthy Bitcoin overall at the end of the day.
00:56:04:22 - 00:56:28:01
Harry
And and a more and a more fulfilled investment community. Right. Like, you know, I think there's a lot of sort of well, as the ETF like bad for bitcoin I'm like I don't know I like when people have access to more choices right at the end of the day, like I don't know somebody's personal situation and maybe the ETF is the most, you know, obvious and greatest thing in the world for them.
00:56:28:04 - 00:56:46:07
Harry
It's not how I would choose to get exposure to Bitcoin, you know, for me, because I can't, you know, engage in and, you know, the self-sovereign component of it. But, you know, but I'm sure there's lots of people out there who that's a much more constructive product and they want the price exposure to Bitcoin and that's really meaningful for them and that's great.
00:56:46:09 - 00:57:06:15
Harry
So I think any time that that, you know, the market's able to make better, more informed and broader choices across, you know, a broader range of vehicles, like I think that's net positive and is in keeping with sort of the the, you know, the libertarian on my shoulder which says that, you know, people deserve more choices and more freedom to choose and that's positive.
00:57:06:15 - 00:57:28:10
Harry
And then ultimately the market over time will will, you know, move away from being a voting machine and moving back towards a weighing machine. And and you know that. And that's where sort of the truth gets to be, you know, litigated which is which is in the market for ideas first in the market for, you know, for financial outcomes second.
00:57:28:13 - 00:57:43:05
Marty
Yeah. Which is a perfect segue way into how well we can end it on, which is the fact that you joined 1031 as an advisor as well. We've been talking behind the scenes for, gosh feels like years now, but it's official.
00:57:43:05 - 00:57:46:12
Harry
It has been years and confirm.
00:57:46:15 - 00:58:09:23
Marty
It's official now. And that is our our goal, our aim, our mission is to go out and find the entrepreneurs that are building out the critical Bitcoin infrastructure that will lead us to a Bitcoin standard, make it easier for people to access Bitcoin, to use Bitcoin to leverage Bitcoin to mine Bitcoin, whatever it may be, and to give the market more options.
00:58:09:23 - 00:58:37:07
Marty
At the end of the day. And we're extremely excited to officially have you on board. And I think the opportunity that lays before us at 1031 specifically is extremely exciting as well. I said mining is the most exciting industry and I truly believe that. But having the luxury of getting a view into every other sector of the Bitcoin economy is extremely rewarding as well.
00:58:37:07 - 00:58:41:22
Marty
And I couldn't be happier to have you on board to advise.
00:58:41:22 - 00:59:08:17
Harry
I couldn't be happier. I couldn't be happier. No, I think, you know, any any time you get to work with a market leader, you take it right. You guys have done have done so much hard work, you know, John. Jonathan Grant You know. O'Dell And you obviously as well as as well as all the LP's, you know, have just done a phenomenal job putting together a really thoughtful and mature, you know, investment platform.
00:59:08:17 - 00:59:34:18
Harry
Obviously, that's skewed significantly towards venture thus far because I think, you know, Bitcoin is still in in venture land where, you know, the biggest companies are being built are yet to be built. They haven't you know, they haven't reached maturation by any stretch, you know, thrilled to obviously be a portfolio company at GRID. But but for me, like what's most exciting is getting to work with it's used to work with founders, right?
00:59:34:18 - 01:00:00:19
Harry
The startup journey is not like any you know, nobody nobody could have told me what it was going to be like on the way in. And we're not done yet by any stretch, obviously. So getting to share, you know, the hard lessons, the good lessons, you know, what did we do right? What did we do wrong from along the way with other founders and being able to kind of take the the you know, the the the long the long, dark night of the soul type of call.
01:00:00:21 - 01:00:21:03
Harry
You know, that's what was really exciting to me because it's really hard. And, you know, being a founder or a co-founder of an early stage company can be extremely isolating. And so having some, you know, folks in the been there done that club who can sit alongside you and hold your hand when when you're facing kind of the toughest pieces.
01:00:21:05 - 01:00:43:28
Harry
That's so, so exciting to me getting to work with you guys on, you know, on fundraising and on and on allocations like all of that kind of stuff is something that, you know, that I'm tremendously passionate about, along with, you know, working directly with founders. So, you know, couldn't couldn't be happier, couldn't be a more symbiotic relationship between Grid and 1031 and between me and 1031.
01:00:43:28 - 01:00:46:03
Harry
So thrilled to be here.
01:00:46:06 - 01:01:13:20
Marty
Yeah, I that's another thing that is really unique about the position that we're in. This is Bitcoiners more broadly, but 1031 specifically, yes, we're a venture fund, the portfolio, the portfolio of companies that we've allocated to. But in your incumbent venture space, it's usually spray and pray across many different verticals, many different subsectors of companies doing wildly different things.
01:01:13:20 - 01:01:52:18
Marty
But with the focus that we have a 1031 on Bitcoin specifically, it enables us to sort of enable the portfolio companies to help each other out where they can and to give that advice obviously very small industry right now. But you have a very large goal and very similar problems. I mean last year to Bear Claw portfolio retreat, I mean the topic of the year was banking relationships and that's something that Bitcoin companies have been targeted, Whether it's explicit or implicit is for for others to determine.
01:01:52:18 - 01:02:13:10
Marty
But wasn't isn't easy. Still, for many companies to get banking or banking relationships in the space and just having a focus and being able to have this cross-pollination of ideas and experiences among portfolio companies is something that I think is unique to what we're doing here.
01:02:13:13 - 01:02:42:11
Harry
And this is catchy, but I'll say it anyway, which is like Bitcoin is a social hack where when I meet other Bitcoiners, I'm like 90% of the way towards friends. When I meet other Bitcoin entrepreneurs, I'm like 97% of the way towards friends. So, you know, being, you know, being able to kind of self-select into a group of people who are convicted enough to be, you know, to be bitcoiners in the first place, but then convicted and asked to build companies around Bitcoin.
01:02:42:13 - 01:03:00:02
Harry
It's just rarefied air, whether you're a portfolio company of 1031 or not. I just think, you know, the founders and employees at Bitcoin companies are a pretty special breed and and it's just it's just the most the most gratifying thing to get to be around those kinds of people all the time.
01:03:00:04 - 01:03:05:11
Marty
You got to be a little crazy. Just get I like crazy. It's a.
01:03:05:13 - 01:03:06:28
Harry
You know. Yeah.
01:03:07:03 - 01:03:12:07
Marty
Oh yeah, yeah. You can tell that is this was this.
01:03:12:07 - 01:03:14:16
Harry
Was a Marty Jones free episode.
01:03:14:19 - 01:03:16:27
Marty
I I've got the white collared shirt on.
01:03:16:28 - 01:03:18:10
Harry
You got the button down on.
01:03:18:12 - 01:03:29:15
Marty
I've got the button down on. I've got two buttons unbuttoned here and a little loose. But that's it. It's Monday morning. It's Monday afternoon now. The morning flew by yesterday.
01:03:29:15 - 01:03:30:07
Harry
Ran away.
01:03:30:10 - 01:03:44:12
Marty
Keeping Marty Jones in the cage for this one. Uh, what haven't we talked about? That's on top of your mind. I think maybe we should cover it. Doesn't have to be mining related. Could be Bitcoin related.
01:03:44:14 - 01:04:14:20
Harry
I mean, I think, you know, I think this is this is a good kind of time to remember that, you know, lower your time preference. Bitcoin comes at you super fast and so cherish these days of like quiet in the markets, you know, you know, it's great to be bouncing between 38 K and 45 K or you know, 42 and 43 like these are these are calm waters that we're in right now and they won't stay calm forever.
01:04:14:22 - 01:04:26:05
Harry
So, you know, cherish the cherish the peace of mind that you got, you know, on these kinds of days. And and, you know, remember that Bitcoin is the longest game we've ever gotten to play.
01:04:26:07 - 01:04:31:00
Marty
Yeah, it gets crazy when the price starts having.
01:04:31:02 - 01:04:33:12
Harry
Focused productivity down, price up.
01:04:33:14 - 01:05:03:26
Marty
Well, anybody out there building a company, humbly stacking sets, just prepare for the distractions. Mentally prepare, especially if you're running a company. Let your employees know that your team. Now things are going to get crazy. You're going to get the pull of distraction, pulling you day in and day out. So we're getting large green candles, large red candles up into the right, buckle down and try to focus.
01:05:03:28 - 01:05:08:15
Harry
Anticipating exactly when.
01:05:08:15 - 01:05:11:27
Marty
It comes, because we got we've got a lot to build.
01:05:12:00 - 01:05:16:13
Harry
We've got a lot to build. Harry future on build itself.
01:05:16:16 - 01:05:19:29
Marty
It's not takes individuals like you.
01:05:20:02 - 01:05:20:25
Harry
And you.
01:05:20:27 - 01:05:36:08
Marty
Many other people out there. We're doing it though. We're winning. Yeah. People working out here in the Commons working hard. You're in Nashville. The park is full partner, not there. But I was on a call with somebody earlier at the park and I saw it was full. We're doing it.
01:05:36:14 - 01:05:54:05
Harry
I went in there. I went in there. I had I had to do a little bit of stuff last night. I got I got to the park at like 8:00 and there were like six cars there and there were like two conference rooms lit up. People were working. Like the state of our network is strong. This is what winning looks like.
01:05:54:08 - 01:06:09:05
Harry
It's Bitcoiners who can't sleep on a Sunday and have to grind on their next, whether it's their next release or their next slide deck prep or whatever. Like they're grinding and our enemies aren't. And so we're going out working.
01:06:09:08 - 01:06:13:05
Marty
The momentum is building. It's going to be a good year.
01:06:13:07 - 01:06:14:17
Harry
Harry. Good year.
01:06:14:20 - 01:06:20:23
Marty
Thank you for joining me. We can't wait two years for the next episode. That is to answer.
01:06:20:25 - 01:06:24:09
Harry
Well, we'll put it on the calendar. Less than two years.
01:06:24:11 - 01:06:28:19
Marty
Yes, less than two years. You heard it here first. That's all we got today for X peace, love.
