WEBVTT - Weekend Bonus: Crypto IRL, Episode 3 with Tim and Katie 0:00:03.640 --> 0:00:06.760 This is Bloomberg Crypto, a daily Bloomberg I Heard podcast, 0:00:07.120 --> 0:00:10.119 and I'm Stacy Marie Ishmael, Managing editor of Crypto for 0:00:10.160 --> 0:00:29.040 Bloomberg mus Yes, I know it's Saturday, but we're here 0:00:29.040 --> 0:00:32.520 to offer you our listeners a special audio only version 0:00:32.600 --> 0:00:35.640 of a new weekly video series called Crypto I r L. 0:00:36.200 --> 0:00:39.120 That's I r L Like in Real Life, and it's 0:00:39.159 --> 0:00:42.159 hosted by friends of the show, Katie Greifeld and Tim Stenovic. 0:00:42.680 --> 0:00:45.559 This is episode three of the series. If you want 0:00:45.560 --> 0:00:48.560 the full video experience, head over to Bloomberg dot com, 0:00:48.600 --> 0:01:06.280 slash qt or check it out on YouTube. You hate 0:01:06.319 --> 0:01:11.240 talking about bitcoin and energy? Why? I just feel like 0:01:11.440 --> 0:01:15.080 you have two sides. They have their opinions, they're very 0:01:15.240 --> 0:01:18.640 entrenched opinions, neither side are going to change, and because 0:01:18.680 --> 0:01:22.759 of that, it becomes just very heated and emotional, very 0:01:22.880 --> 0:01:25.280 very quickly. I don't I mean that sounds like good content. 0:01:25.600 --> 0:01:28.680 It's just it's like watching a presidential debate, like maybe 0:01:28.720 --> 0:01:31.000 there's going to be some singers or like some viral moments, 0:01:31.000 --> 0:01:33.319 but it doesn't feel like we're actually discussing. So you 0:01:33.319 --> 0:01:35.880 think nobody changes their mind? I don't think so. Okay, 0:01:35.920 --> 0:01:38.080 we're gonna try to We're not gonna try to necessarily 0:01:38.160 --> 0:01:41.440 change anyone's mind today, but I want to give everyone 0:01:41.480 --> 0:01:43.640 all the information that they need to sort of understand 0:01:44.120 --> 0:01:53.640 bitcoin and energy. Bitcoin uses a lot of energy. Experts 0:01:53.680 --> 0:01:57.920 say crypto uses more power each year than Argentina. The 0:01:58.000 --> 0:02:01.720 energy it takes to process one single Bitcoin transaction could 0:02:01.720 --> 0:02:05.200 power the typical American home for more than fifty days. 0:02:06.320 --> 0:02:09.679 Bitcoin is so energy intensive because it relies on miners 0:02:10.240 --> 0:02:14.560 high powered computers that process transactions. These attempts to solve 0:02:14.639 --> 0:02:17.799 really complex problems and then get rewarded in the form 0:02:17.800 --> 0:02:21.160 of bitcoin when they succeed, and more computers are trying 0:02:21.160 --> 0:02:24.000 to do this. The amount of computing power needed to 0:02:24.040 --> 0:02:28.200 process transactions hit a record earlier this year. Miners are 0:02:28.240 --> 0:02:31.480 trying to lower their carbon footprint by using renewables, but 0:02:31.600 --> 0:02:34.760 the share of renewables used to power bitcoins network actually 0:02:34.800 --> 0:02:39.359 fell between. All of this is happening at a time 0:02:39.400 --> 0:02:40.959 when the world is seeing one of its works of 0:02:41.080 --> 0:02:44.359 energy crisis in decades, and it raises quite a few 0:02:44.360 --> 0:02:48.200 big questions. Is there an eco friendly way to power crypto, 0:02:49.040 --> 0:02:52.720 and perhaps even more importantly, should energy even be going 0:02:52.760 --> 0:02:55.680 to crypto? While the world struggles to keep the lights 0:02:55.680 --> 0:03:01.640 on at it's good to see you, thanks for joining us. 0:03:01.800 --> 0:03:05.440 So it's not really in dispute that crypto uses a 0:03:05.440 --> 0:03:08.239 lot of energy, that bitcoin uses a lot of energy. 0:03:08.600 --> 0:03:12.040 I think that the dispute the argument is that it's 0:03:12.080 --> 0:03:17.000 not worth it to use a finite resource for something 0:03:17.000 --> 0:03:20.520 like cryptocurrency. But what would you say to somebody who says, no, 0:03:20.800 --> 0:03:23.760 I believe in the promise of crypto, and it is 0:03:23.800 --> 0:03:28.120 worth it for for us to actually spend a finite 0:03:28.160 --> 0:03:32.160 resource like energy mining it and on maintaining it. I 0:03:33.040 --> 0:03:36.680 would indeed agree that if any amount of energy is 0:03:36.720 --> 0:03:39.240 being spent, you always have to look at what do 0:03:39.320 --> 0:03:43.240 you ultimately get back from that. And the thing is, 0:03:43.280 --> 0:03:46.280 when we look at the Bitcoin network, we know that 0:03:46.520 --> 0:03:50.880 is it is a digital currency, a payment system, and 0:03:50.920 --> 0:03:53.200 we also know that it is a payment system that 0:03:53.360 --> 0:03:58.000 is currently handling about one million transactions a year. So 0:03:58.400 --> 0:04:00.920 that means that it's actually not handling more than a 0:04:00.920 --> 0:04:03.600 handful of transactions per second. And that's it, which is 0:04:03.640 --> 0:04:07.520 completely negligible if you look at it from a regular 0:04:08.160 --> 0:04:12.160 oral the finance perspective, because the traditional financial institutions are 0:04:12.200 --> 0:04:18.040 responsible for handling more than seven hundred billion digital payments 0:04:18.080 --> 0:04:22.000 every year, and that amount is still growing, So I mean, 0:04:22.080 --> 0:04:25.920 that's an amazing stat But to be totally honest, part 0:04:25.920 --> 0:04:28.839 of the reason I don't like having conversations about energy 0:04:28.960 --> 0:04:32.360 is because and bitcoin and cryptos energy uses because on 0:04:32.440 --> 0:04:38.160 both sides, it sort of devolves into a toxic conversation, 0:04:38.320 --> 0:04:40.640 is what I've found. And I found that there's a 0:04:40.640 --> 0:04:43.320 lot of bad faith arguments on both sides. And I 0:04:43.360 --> 0:04:46.280 know that you're deeply rooted in the numbers, in the 0:04:46.360 --> 0:04:49.880 actual facts, but what's your best sense about why people 0:04:49.920 --> 0:04:54.599 get so emotional over these numbers. Well, it's not that 0:04:54.720 --> 0:04:56.880 hard to see why that is the case. We see 0:04:56.920 --> 0:05:01.440 that a lot of people have invested money in bitcoin, 0:05:01.600 --> 0:05:07.120 and we see that this type of data reflects extremely 0:05:07.200 --> 0:05:12.200 poorly on bitcoin, and well, actually to the extent where 0:05:12.240 --> 0:05:17.840 we see that China took action to completely banned cryptocurrency 0:05:17.880 --> 0:05:22.560 mining from their country in the spring of the European 0:05:22.680 --> 0:05:27.320 Union almost banned bitcoin trading in the EU a few 0:05:27.360 --> 0:05:31.640 months ago, and actually the White House just released a 0:05:31.720 --> 0:05:37.479 report that also recommended considered potentially eliminating cryptocurrency mining. So, 0:05:37.920 --> 0:05:40.520 of course, with a lot of people having invested in this, 0:05:41.720 --> 0:05:45.560 they definitely won't like this whole discussion, definitely and certainly 0:05:45.600 --> 0:05:49.280 not if that's going to resolve in outright bands. It's 0:05:49.279 --> 0:05:52.240 hard to have a conversation about energy and cryptos use 0:05:52.240 --> 0:05:55.000 of energy without talking about the ethereum merge. Of course, 0:05:55.000 --> 0:05:58.760 the transition from that blockchain from proof of work to 0:05:58.960 --> 0:06:03.560 proof of stake, which of course is much less energy intensive. 0:06:04.200 --> 0:06:08.640 Could that be the green solution for the industry broadly 0:06:08.880 --> 0:06:13.359 beyond just ethereum? Well, I think so. I mean, if 0:06:13.400 --> 0:06:18.680 if you run on proof of steak or well, I 0:06:18.800 --> 0:06:22.800 must say it's not the only alternative to the process 0:06:22.839 --> 0:06:25.880 that is responsible for so much energy consumption in bitcoin, 0:06:25.920 --> 0:06:29.080 but it is definitely the most popular alternative in any case. 0:06:29.400 --> 0:06:31.200 Let me just say, if you make use of proof 0:06:31.240 --> 0:06:36.200 for steak, you can probably get away where using something 0:06:36.240 --> 0:06:38.800 like ten thousand times less power than you would need 0:06:38.920 --> 0:06:41.919 if you were to run on proof of work. So 0:06:42.680 --> 0:06:45.800 just changing that part of the software can lead to 0:06:46.600 --> 0:06:49.760 incredible energy savings. And we see that there are many 0:06:49.760 --> 0:06:54.760 cryptocurrencies already available in the market that are running on 0:06:54.839 --> 0:06:56.640 proof of steak and have been running on poof for 0:06:56.720 --> 0:07:01.479 steake for years. So if yeah, if if if you 0:07:01.560 --> 0:07:05.080 do that, and if that becomes the standard for the industry, Uh, 0:07:05.160 --> 0:07:08.880 then a big part or well almost the entirety of 0:07:08.920 --> 0:07:12.600 the energy consumption we're talking about could be solved. Alex 0:07:12.680 --> 0:07:16.160 de Vreese, thank you so much for joining us, Very welcome. 0:07:16.560 --> 0:07:18.680 If if I can say one thing, is I I 0:07:18.800 --> 0:07:20.920 have we talked about poof for stake, but we didn't 0:07:20.920 --> 0:07:24.480 really bother to explain anything. Have we just mentioned that 0:07:24.520 --> 0:07:26.920 it could save a lot of energy? Is that something 0:07:27.000 --> 0:07:29.360 you might want to spend a few extra words on, 0:07:29.480 --> 0:07:32.080 like why is it even possible to save so much 0:07:32.160 --> 0:07:34.000 energy if you do that? But it's a bit of 0:07:34.040 --> 0:07:37.480 a lengthy explanation and maybe two technical but it can 0:07:37.480 --> 0:07:39.520 it be in thirty seconds? Do you think, like in 0:07:39.560 --> 0:07:42.960 a in a way that's digestible for normal people in 0:07:43.040 --> 0:07:54.720 thirty seconds? Well, um, digestible maybe thirty seconds challenging. Challenging, Well, 0:07:55.080 --> 0:07:57.400 when you have it scripted by a Bloomberg journalist and 0:07:57.760 --> 0:08:01.080 thrown in a teleprapter, it's actually atty easy. So in 0:08:01.160 --> 0:08:04.480 under thirty seconds, here's the difference in proof of work. 0:08:04.680 --> 0:08:07.800 Super Powerful computers owned by miners compete to be the 0:08:07.840 --> 0:08:11.800 first to unlock a cryptographic puzzle. After multiple attempts using 0:08:11.840 --> 0:08:15.200 up lots of energy, one miner solves the puzzle. If 0:08:15.240 --> 0:08:18.120 their first they get a token and a transaction is recorded. 0:08:18.560 --> 0:08:22.080 Proof of State dispenses with the problem solving, removing excessive 0:08:22.160 --> 0:08:26.160 energy use. Instead, transactions are approved by participants who put 0:08:26.240 --> 0:08:29.040 up coins. Is guarantees of their work, and if that 0:08:29.080 --> 0:08:31.680 work is validated, you get a reward. If it isn't 0:08:32.080 --> 0:08:37.440 you don't see it wasn't so hard. Zach Bradford, CEO 0:08:37.480 --> 0:08:40.640 and president of clean Spark with us Now in studio. 0:08:40.679 --> 0:08:43.640 What's interesting about clean Spark is it sounds a little 0:08:43.640 --> 0:08:48.160 bit like an oxymoron, a sustainable bitcoin mining operation. What 0:08:48.200 --> 0:08:50.840 does that actually mean in practice? How do you fulfill 0:08:50.920 --> 0:08:55.640 that sustainable check mark? Our focus on sustainability really comes 0:08:55.679 --> 0:08:59.079 down to you know, bualth sustainable energy, but also sustainable 0:08:59.120 --> 0:09:01.880 business practice is and how we interact with the community. 0:09:01.960 --> 0:09:04.720 So for us, you know, energy is a big deal 0:09:04.840 --> 0:09:10.040 around bitcoin. We approach it with the acknowledgement that energy 0:09:10.080 --> 0:09:13.320 is a feature and not a flaw. And you know, 0:09:13.400 --> 0:09:17.280 we focus on sustainably interacting with the grid, but also 0:09:17.520 --> 0:09:21.080 we use about carbon free power with a goal of 0:09:21.160 --> 0:09:24.920 ultimately getting to at some point in the future. Um, 0:09:25.120 --> 0:09:28.040 but it takes time. We think that being part of 0:09:28.040 --> 0:09:30.959 the transition is what what matters, you know, getting from 0:09:30.960 --> 0:09:34.520 point A to point B. And in a sustainable process. 0:09:34.840 --> 0:09:37.880 What is carbon free power? So carbon free power can 0:09:37.960 --> 0:09:40.240 come in many forms. It can be solar, it can 0:09:40.240 --> 0:09:43.000 be wind. We actually use a lot of nuclear energy 0:09:43.160 --> 0:09:46.600 which puts off no carbon into the atmosphere, so that 0:09:46.640 --> 0:09:49.480 those are kind of the cornerstone of the energy sources 0:09:49.520 --> 0:09:52.400 with that we use. Do also tell us about the 0:09:52.520 --> 0:09:55.679 role of carbon offsets because I know that there are 0:09:55.760 --> 0:09:59.160 a lot of miners who do use carbon offsets. How 0:09:59.240 --> 0:10:02.520 much of that is part of your business model? Very little? 0:10:02.720 --> 0:10:05.400 So again we we focus on the source. So we're 0:10:05.440 --> 0:10:08.560 only using about ten of the power has any sort 0:10:08.600 --> 0:10:13.240 of carbon offput right now? Um, it can be a strategy, right, 0:10:13.280 --> 0:10:16.760 but not all renewable energy credits or carbon offsets or 0:10:16.800 --> 0:10:19.559 created equal. Right. So anything that we do we try 0:10:19.760 --> 0:10:23.400 and you know, go through a mechanism that results in 0:10:23.559 --> 0:10:27.080 new solar generation being added to the grid. So that's 0:10:27.120 --> 0:10:29.360 that that's the only one that we've participated in. Right now, 0:10:29.960 --> 0:10:33.520 do you buy power that is carbon free or are 0:10:33.520 --> 0:10:37.000 you actually generating it? Yourself. We're buying power, so so 0:10:37.080 --> 0:10:39.360 you don't have your own solar arrays or anything not 0:10:39.480 --> 0:10:41.200 right now, we don't. We are adding a solar ray 0:10:41.240 --> 0:10:43.560 to one of our facilities in the near future, but 0:10:43.640 --> 0:10:45.600 it will still just be part of what it is. 0:10:45.640 --> 0:10:48.000 So we we connect directly to the grid in the 0:10:48.000 --> 0:10:51.600 areas we operating. I want to get existential a question 0:10:51.600 --> 0:10:55.120 that I have about the bitcoin mining industry because there's 0:10:55.160 --> 0:10:58.360 a lot of pressure on the entire industry right now, 0:10:58.400 --> 0:11:01.520 and then you layer on the need or the push 0:11:01.600 --> 0:11:05.319 to become sustainable. It feels like it's fallen way down 0:11:05.400 --> 0:11:07.719 the priority list because there's a lot of miners who 0:11:07.720 --> 0:11:10.760 are just trying to stay in business right now and 0:11:10.800 --> 0:11:15.720 in this path to a sustainable, a green bitcoin mining future, 0:11:16.600 --> 0:11:20.480 how much has that timeline been pushed out? You know, 0:11:20.559 --> 0:11:23.920 I think it's actually been shortened in some ways, um, 0:11:24.000 --> 0:11:26.400 because it's actually getting more important. You know, some of 0:11:26.400 --> 0:11:30.000 the conversations are actually leading to quicker change, so you know, 0:11:30.120 --> 0:11:33.080 depending on how you pull the industry. But it's estimated 0:11:33.120 --> 0:11:36.680 about six the power used by the industry is already 0:11:36.720 --> 0:11:40.080 renewable or carbon free UM. Now, that still leaves a 0:11:40.080 --> 0:11:42.400 big gap to close. But if you were to compare 0:11:42.440 --> 0:11:44.560 it to any other industry, we're actually doing a lot 0:11:44.640 --> 0:11:47.520 better in most cases. What would you say to someone 0:11:47.840 --> 0:11:52.280 who says, Okay, electricity is still a finite resource, even 0:11:52.280 --> 0:11:57.760 if we're getting it from renewable sources, and they just 0:11:57.840 --> 0:12:01.000 don't think it's a good use of energy to be 0:12:01.559 --> 0:12:04.200 mining crypto. They would rather that energy be used for 0:12:04.720 --> 0:12:09.120 keeping the lights on or running air conditioning in hot places. 0:12:10.040 --> 0:12:12.679 I would say, you know, look at the regions that 0:12:12.760 --> 0:12:17.319 miners are operating in. UM miners focus on finding cheap power. 0:12:17.440 --> 0:12:20.840 It's part of our strategy, right and you know, we 0:12:20.920 --> 0:12:24.200 operate a lot in Georgia where there's actually abundant power. 0:12:24.480 --> 0:12:26.920 So would I say it would be a good use 0:12:27.000 --> 0:12:29.760 to come into California, which has a very you know, 0:12:29.800 --> 0:12:32.160 the grid is unstable and under a lot of stress 0:12:32.160 --> 0:12:37.080 and open up bitcoin mine. Probably not. But ultimately, if 0:12:37.080 --> 0:12:39.760 you do it in Georgia or a few other places 0:12:39.800 --> 0:12:43.679 like that where there is abundant energy, we're actually focusing 0:12:43.720 --> 0:12:47.880 on using the underutilized resources that do exist and then 0:12:47.920 --> 0:12:51.319 adding to the generation. So again you have to think 0:12:51.320 --> 0:12:54.320 of it as a transition about what we can add. 0:12:55.120 --> 0:12:57.839 I have a series of simple questions. If we can 0:12:57.840 --> 0:13:00.720 go there, let's talk about the ethere emerged um the 0:13:00.920 --> 0:13:03.800 switch from proof of work to proof of steak. We've 0:13:03.840 --> 0:13:07.400 all seen the headlines that it cuts ethereum's power usage 0:13:07.400 --> 0:13:13.040 down or something. Why can't bitcoin just go to proof 0:13:13.040 --> 0:13:16.559 of steak? It seems like a pretty easy solution. Well, 0:13:16.559 --> 0:13:20.280 I would point to again, proof of work is and 0:13:20.320 --> 0:13:23.040 the energy uses is a feature and not a flaw. 0:13:23.640 --> 0:13:27.720 Um Again, proof of work. What is bitcoin? You know, 0:13:27.760 --> 0:13:31.440 there is no CEO of bitcoin. It's fully decentralized, and 0:13:31.760 --> 0:13:36.040 really proof of work is the really the only good 0:13:36.080 --> 0:13:40.520 way to truly secure a blockchain without an overseer. And 0:13:40.640 --> 0:13:44.160 that has value because bitcoin is used worldwide as a 0:13:44.200 --> 0:13:50.880 currency without you know, somebody changing the mechanism. What creates 0:13:50.920 --> 0:13:53.160 that value is Ultimately, there's only going to be twenty 0:13:53.200 --> 0:13:57.080 one million bitcoin. Ever, so somebody can't just decide tomorrow, 0:13:57.120 --> 0:13:59.439 hey there's gonna be forty million. It's kind of like, 0:13:59.800 --> 0:14:02.280 you know, we're all experiencing what the Fed is doing 0:14:02.360 --> 0:14:05.600 right now to kind of pull back from inflationary you know, 0:14:05.640 --> 0:14:08.800 money printing. That won't happen in bitcoin. But that reminds 0:14:08.840 --> 0:14:12.000 me of another simple question I have one million bitcoin 0:14:12.120 --> 0:14:16.680 will ever only be mind we're at nineteen million now. 0:14:16.960 --> 0:14:19.720 I believe what happens to the miners when we get 0:14:19.760 --> 0:14:23.320 to twenty one million. They will essentially live off of 0:14:23.880 --> 0:14:27.800 very small fees. So think of Visa, master cardamic. These 0:14:27.800 --> 0:14:31.280 are all companies that are very large and function very 0:14:31.280 --> 0:14:34.960 well and actually very small incremental fees. That's what will happen. 0:14:35.480 --> 0:14:40.000 But you know that doesn't happen until so every four 0:14:40.120 --> 0:14:43.040 years there's a halfing. So basically the reward right now 0:14:43.120 --> 0:14:45.760 gets cut in half every four years. So even though 0:14:46.040 --> 0:14:48.240 you say, oh, there's only two million left, how do 0:14:48.320 --> 0:14:50.080 we get to where it's a hundred and twenty years 0:14:50.160 --> 0:14:54.239 before the reward runs out? By that time, the expectation 0:14:54.400 --> 0:14:58.400 is that the bitcoin essentially truly functions the worldwide currency, 0:14:58.440 --> 0:15:01.800 and the small fractional t action fees can be support 0:15:01.880 --> 0:15:04.480 all miners even started planning for that. Yet we have 0:15:04.600 --> 0:15:12.480 not started planning. Twenty years from now, we're still talking 0:15:12.520 --> 0:15:19.200 about bitcoin. Yeah exactly, you know which is and everybody 0:15:19.200 --> 0:15:23.920 will be using bitcoin there. So this special audio only 0:15:23.960 --> 0:15:26.240 episode of Crypto I r L will be right back 0:15:26.280 --> 0:15:29.120 with more from Katie Greifeld and Tim Stanovic. If you 0:15:29.160 --> 0:15:32.080 want the full video experience, head to Bloomberg dot com 0:15:32.120 --> 0:15:53.280 slash qt. If we think about crypto mining compared to 0:15:53.800 --> 0:15:57.080 mining of natural resources, a lot of the competitive advantage 0:15:57.120 --> 0:15:59.720 has to do with location. So you know, de Beers 0:15:59.720 --> 0:16:02.600 has rate access to diamonds, and Rio Tinto perhaps in 0:16:02.600 --> 0:16:04.840 the US has great access to copper, whether or not 0:16:04.880 --> 0:16:07.400 they can get it's a different story. Um, what's the 0:16:07.440 --> 0:16:12.000 competitive advantage for a bitcoin minor for for your company? Yeah, 0:16:12.240 --> 0:16:16.160 and it is partially location, right. So for example, we 0:16:16.240 --> 0:16:19.760 have four facilities in Georgia, and the reason we chose 0:16:19.760 --> 0:16:22.000 are the ones you guys recently bought. Yeah, yeah, we've 0:16:22.080 --> 0:16:24.800 we've we've had you know, we've been operating in Georgia. 0:16:25.960 --> 0:16:30.800 We recently did buy two more. Um and these areas 0:16:30.840 --> 0:16:33.600 where we're at is we're kind of on grid edge areas, 0:16:33.760 --> 0:16:39.240 areas where there's actually excess infrastructure, excess energy that's not 0:16:39.280 --> 0:16:41.680 being used. And because they used to be a factory 0:16:41.720 --> 0:16:44.840 or something like that. So yes, it allows us to 0:16:44.880 --> 0:16:48.440 get good rates on power. But we're also bringing back 0:16:48.480 --> 0:16:52.160 to communities, Um, you know, workforces factories that used to 0:16:52.200 --> 0:16:55.040 be there closed, so we have a workforce that's ready 0:16:55.080 --> 0:16:57.840 to go. We have energy that's ready to go and 0:16:58.320 --> 0:17:03.560 lower rates. But couldn't any minor do that? Yes, you know, absolutely, 0:17:03.640 --> 0:17:06.520 And to the point that you recently made a few acquisitions. 0:17:06.520 --> 0:17:09.200 When you broaden out and look at the broader industry 0:17:09.400 --> 0:17:13.080 in this moment where we've gone through a pig downturn, 0:17:13.119 --> 0:17:17.200 would you expect more consolidation between some of these miners. Absolutely, 0:17:17.560 --> 0:17:19.320 you know for us, we we saw it as a 0:17:19.320 --> 0:17:22.000 big opportunity. But you had to have a healthy balance sheet, 0:17:22.000 --> 0:17:23.919 you had to not be over leverage, you had to 0:17:23.920 --> 0:17:27.200 be ready for this, you know, downturn. Um. It's something 0:17:27.280 --> 0:17:29.080 that we've been preparing for for a long time, and 0:17:29.119 --> 0:17:31.199 so the miners and we're not the only one the 0:17:31.240 --> 0:17:34.480 miners that have prepared. There's definitely gonna be some consolidation 0:17:34.520 --> 0:17:37.520 in the space. Can you explain his kitty? And I've 0:17:37.520 --> 0:17:39.000 talked about this a lot, and I don't know if 0:17:39.040 --> 0:17:41.360 anyone really has been able to answer this for us. 0:17:41.960 --> 0:17:43.680 When we think about mining, if we if we take 0:17:43.720 --> 0:17:45.840 it back to like pulling you know, natural resources out 0:17:45.840 --> 0:17:48.840 of the ground, that's clear to understand how somebody gets 0:17:48.880 --> 0:17:51.600 gold or or oil or copper out of the ground. 0:17:52.720 --> 0:17:57.680 Bitcoin miners don't just find new bitcoin. They also help 0:17:57.960 --> 0:18:03.199 keep the bitcoin network running. Yes, can you explain the 0:18:03.240 --> 0:18:08.600 difference between like discovering new bitcoin versus maintenance on the network. Yeah. 0:18:09.080 --> 0:18:11.840 So really, what we're doing all the time is we're 0:18:11.840 --> 0:18:14.639 processing data. So you know, we have tens of thousands 0:18:14.680 --> 0:18:19.000 of computers processing data. And what that data ultimately is 0:18:19.119 --> 0:18:22.800 is it's you know, locked by a cryptographic key, and 0:18:23.080 --> 0:18:25.080 that's what our machines are trying to guess and so 0:18:25.119 --> 0:18:28.200 they're putting in all this effort to do that. But ultimately, 0:18:28.720 --> 0:18:31.119 when you get a block, so what is the block? 0:18:31.240 --> 0:18:33.960 The block is the ledger of all the transactions that 0:18:34.000 --> 0:18:36.760 got recorded. So if you know, you sent bitcoin to 0:18:36.840 --> 0:18:41.680 your rather whatever it may be, right, that ledger has 0:18:41.720 --> 0:18:44.680 to then be compared to all the ledgers before it, 0:18:45.040 --> 0:18:47.439 and so all of this work is going in to 0:18:47.600 --> 0:18:51.000 make sure that it's secure and that block doesn't get 0:18:51.040 --> 0:18:54.600 placed without verifying everything behind it, and if there's an error, 0:18:54.640 --> 0:18:56.879 then the block doesn't get placed. You also don't get 0:18:56.920 --> 0:19:00.119 the reward. Do you actually need to be on the grid, Like, 0:19:00.160 --> 0:19:02.960 couldn't you find a spot in the Mojave desert that 0:19:03.080 --> 0:19:06.040 during the day it's hot and it's sunny and it 0:19:06.080 --> 0:19:08.919 provides solar power, and then at night it's windy, so 0:19:08.960 --> 0:19:10.800 you can get wind power. So you could, you know, 0:19:10.960 --> 0:19:13.679 in a perfect world, be run seven. Couldn't you just 0:19:13.720 --> 0:19:16.960 be self sustained? Absolutely, you could, and but I would 0:19:17.000 --> 0:19:19.760 I would also argue that then you're providing your own 0:19:19.800 --> 0:19:22.639 benefit with that energy, right. I think that there's true 0:19:23.080 --> 0:19:25.280 and this is how we've always set up the company. 0:19:25.720 --> 0:19:28.320 There's true ancillary benefits to the grid that provide value. 0:19:28.760 --> 0:19:31.240 We actually operated out of California for the first six 0:19:31.320 --> 0:19:34.720 years of our business, not as a cryptocurrency mining company, 0:19:34.760 --> 0:19:36.919 but as a renewable energy company. That's how we got 0:19:36.960 --> 0:19:40.920 into the space. And what we found is the interaction 0:19:40.960 --> 0:19:43.720 with the grid was incredibly important, so we had software 0:19:43.880 --> 0:19:47.800 that would do that. And as scale, though, you start 0:19:47.840 --> 0:19:50.720 to run into these interesting issues to where you know, 0:19:50.800 --> 0:19:54.080 renewables going onto the grid at the wrong times of 0:19:54.119 --> 0:19:57.119 the day is actually causing a problem for California. There's 0:19:57.160 --> 0:20:00.040 too much power hitting the grid. Um, well, the and 0:20:00.119 --> 0:20:03.200 is shining and everybody's at work and they're not using 0:20:03.280 --> 0:20:04.800 all their power at their home. Then they go home 0:20:04.840 --> 0:20:07.639 at night, the sun goes down, they turn their TV on, 0:20:07.760 --> 0:20:10.879 they turned their A C. On Yeah, whatever they may 0:20:10.880 --> 0:20:14.320 be doing, and now there's not enough energy at that moment. 0:20:14.760 --> 0:20:17.159 So it was about balancing the time the energy is 0:20:17.160 --> 0:20:21.359 available and not available, and so you know, really interacting 0:20:21.359 --> 0:20:23.679 with the grid. We see it's important because if we 0:20:23.720 --> 0:20:27.040 do a behind the grid project or behind the meter 0:20:27.200 --> 0:20:31.199 project where we're self generating wind and solar, yes, it 0:20:31.280 --> 0:20:34.480 means that we're only using renewables and we're not impacting 0:20:34.520 --> 0:20:36.879 the grid, but it means we're not helping the grid. 0:20:37.320 --> 0:20:40.679 So it's definitely one way to do it, um, but 0:20:40.720 --> 0:20:42.760 it's it's not the way that we've approached it because 0:20:42.880 --> 0:20:46.520 we want to drive change at the entire grid level. 0:20:46.600 --> 0:20:50.320 We really think that our sustainable strategy should provide a 0:20:50.320 --> 0:20:53.960 benefit to everyone around us. So convince me who you know, 0:20:54.840 --> 0:20:57.960 for the sake of argument, just a total crypto skeptic, 0:20:58.480 --> 0:21:02.080 that we shouldn't be spending an energy on cryptocurrency, that 0:21:02.080 --> 0:21:05.600 it should all go toward, you know, actually essential things 0:21:05.600 --> 0:21:08.720 that we need power for, like this lightboard behind me 0:21:09.280 --> 0:21:11.960 that probably doesn't use much energy because it's led, but 0:21:11.960 --> 0:21:14.560 you get the idea. Yeah, I would. I would point 0:21:14.600 --> 0:21:17.639 to the fact that that energy that we're using is 0:21:17.720 --> 0:21:21.560 generally already available, but it's no one's using it, and 0:21:21.720 --> 0:21:24.520 so you think of you know, I'm gonna point to 0:21:24.880 --> 0:21:27.919 you know, uh, one of the communities we operate in 0:21:28.000 --> 0:21:31.480 kay they have a goal to transition off of coal 0:21:32.520 --> 0:21:34.840 and they're in the process of doing so. Where this 0:21:35.440 --> 0:21:39.080 is in Georgia, Um, it's actually in College Park. It 0:21:39.160 --> 0:21:41.879 is the same city that serves the Jackson Heartsfield Airport. 0:21:41.960 --> 0:21:46.320 We operate there and we are working with them to 0:21:46.359 --> 0:21:49.760 help them transition away from any reliance, right and this 0:21:49.840 --> 0:21:52.159 has been a multi year strategy for them. It's not 0:21:52.200 --> 0:21:54.280 that there isn't enough power, and I think that that's 0:21:54.320 --> 0:21:58.679 a mindset that that we we can change is power 0:21:58.840 --> 0:22:01.800 is abundant, it's around us. It's about how it's harnessed 0:22:02.280 --> 0:22:04.280 and if we're there to pay for it all the time. 0:22:04.920 --> 0:22:09.000 We can help support grid infrastructure, which in this country 0:22:09.160 --> 0:22:11.480 we need to invest a lot in grid infrastructure. But 0:22:11.480 --> 0:22:13.400 why do you have to be mining bitcoin to do that? 0:22:14.160 --> 0:22:15.840 I guess, I guess what I'm still not hearing is 0:22:15.920 --> 0:22:18.800 like the argument about is the argument? And this is 0:22:18.840 --> 0:22:21.800 the argument that totally bothers you. I think of, like 0:22:21.840 --> 0:22:26.280 why bitcoin should exist? Well, let me ask what else? 0:22:26.640 --> 0:22:28.399 What is it going to be used for and how 0:22:28.440 --> 0:22:30.959 if I'm gonna put myself as the utility now right 0:22:31.280 --> 0:22:34.280 when you know, in Georgia it's been a hot summer. 0:22:34.720 --> 0:22:38.200 When the power prices are peaking, that also means demand 0:22:38.280 --> 0:22:42.040 is peaking. We shut off we you know, all that 0:22:42.080 --> 0:22:45.800 power goes back into the community. UM. We can actually 0:22:45.880 --> 0:22:49.919 help reduce power rates in communities because being a large buyer, 0:22:50.400 --> 0:22:53.760 if it's not being purchased when you know it's off peak, 0:22:54.119 --> 0:22:55.960 then that means that they have to take those dollars 0:22:56.000 --> 0:22:58.440 and they have to put them back into the community somewhere, right. 0:22:58.800 --> 0:23:01.040 And so we're we're actually able to do all of 0:23:01.080 --> 0:23:03.959 those things. So we're really providing a grid's service in 0:23:04.000 --> 0:23:07.120 addition to everything else. So the question is why bitcoin, 0:23:07.400 --> 0:23:12.280 I would say, point to another UM asset or another 0:23:12.320 --> 0:23:15.160 business that's willing to do that, come on the grid, 0:23:15.240 --> 0:23:18.520 off the grid and really interact in a way that 0:23:18.600 --> 0:23:22.000 balances both you know, the grid and the power itself, 0:23:22.000 --> 0:23:27.359 but also balances the monetary system behind utilities. And you 0:23:27.400 --> 0:23:29.600 can't find one, you know, if you're a regular data 0:23:29.640 --> 0:23:33.080 center right now, UM, which which is a whole other conversation, 0:23:33.119 --> 0:23:34.560 but you have to be there all the time. You 0:23:34.560 --> 0:23:37.320 can't just shut down because there goes somebody's website, right, 0:23:37.680 --> 0:23:41.240 or there goes somebody's backup system. Um. You know something 0:23:41.240 --> 0:23:43.840 that we're not talking about just pointing to data centers, 0:23:43.960 --> 0:23:47.560 is you know why why data centers? Why can Why 0:23:47.640 --> 0:23:50.639 is it okay to you know, host hundreds of megawatts 0:23:50.640 --> 0:23:54.119 of selfies of power all the time and set up 0:23:54.119 --> 0:23:58.000 in a system that cannot interact with Yeah, I know 0:23:58.320 --> 0:24:05.800 the people need my content, true, Yeah, yeah, Tim, I 0:24:05.800 --> 0:24:07.800 think I made it pretty clear that I did not 0:24:07.920 --> 0:24:09.960