On The Brink with Castle Island - Bill Spence and Gregory Beard on The Real Story Behind Stronghold (EP.288)

Episode Date: February 21, 2022

Co-chairman of Stronghold Digital Mining Bill Spence and CEO Gregory Beard join the show. Stronghold is a vertically integrated Bitcoin miner that uses waste coal to power their operations – while also remediating this environmentally damaging product. We dive into this fascinating, and counter-intuitive story. In this episode:  Backgrounds of the co-chairmen and how they found the intersection of Bitcoin mining and coal waste mitigation Bill's personal commitment to the mitigation of coal waste Why coal waste has been accumulating in PA since the late 1700s The immense scale of the coal waste and how it continue to affect PA, even though mining no longer occurs How unremediated coal waste can be understood as a form of class warfare Why coal waste exists in the first place Why developments in power plant technology meant that coal waste could be safely combusted Why aboveground coal waste oxidizes and releases CO2 anyway - as well as other harmful particulates Why growing grass over the coal waste doesn't solve the problem Why 2 billion tons of coal waste can't just be moved into landfills How there are 800 sites in PA and 70 of them are currently on fire Why Stronghold is vertically integrated, and the advantage this grants them in mining Bitcoin How Stronghold sends power to the grid in the case of a shortage Has Stronghold evaluated other high energy intensity loads aside from just Bitcoin Why Bitcoin is a more suitable load for their energy resources than others How Bitcoin allows Stronghold to keep their power available at short notice Stronghold's reaction to criticism in the press and from Washington Why nothing had been done about the coal waste for 100 years before Stronghold came along Is the future of Bitcoin mining vertical integration? Sponsor notes:  Compass Mining is the world's first and largest online marketplace for bitcoin mining hardware, hosting, and ASIC reselling. Start mining your own bitcoin by visiting compassmining.io

Hello and welcome back to the mining mini-series. I'm Nick Carter. This episode is brought to you by Compass Mining more on them later in the episode. Today we have a fascinating and narrative-violating episode with Bill Spence and Gregory Beard, the co-chairman of Stronghold Digital Mining, a Pennsylvania-based vertically integrated Bitcoin miner. Now, you might have heard of Stronghold. Certainly they get mentioned in a pejorative way in the press a whole lot for using waste or reclaimed coal in order to mine. But that's not the whole story. As it turns out, they are basically the only ones cleaning up these toxic coal piles that have sat in Pennsylvania in some cases for literally hundreds of years. And Bitcoin is the economic force that allows us to occur. There's a lot of interesting facts about their story, which

really turn the narratives on their head, and I wanted to get Greg and Bill on the show to expose them on a firsthand basis. The Greenwich story was also similar in this respect in terms of the reality of the situation being radically different from the way it's described in the press, in academia, and from the government itself. Do me a favor. Listen to this episode with an open mind. I think you'll find there's a lot more to this operation than meets the eye. Let's dive right into it. it. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and

Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of Concentive Easy. You print a couple trillion dollars and all of a sudden people start to worry. So out of this worry, something called a Bitcoin. Bitcoin. So I'm sitting here with Bill Spence, the co-chairman and Gregory Beard, co-chairman CEO of Stronghold Digital Mining. Thanks so much for joining us, gentlemen. Thanks for having us. You bet. Happy to be here. So I would love to hear about your sort of respective backgrounds and how you came to be at the intersection of Bitcoin mining and coal waste

mitigation. So let's hear a little bit about the both of you. You know, hey, we're sitting, we know this is audio only and we're sitting like, you know, making hand gestures to see the other thing, who's going to go first? I'll give it a try. So I've been an energy investor for 25 years and I did that in the format of private equity investing. I spent the last 10 years prior to stronghold at Apollo 10 years before that at Riverstone. I started in the early 90s as a banker in energy at Goldman Sachs. And so that's really all I've known. So the, my pathway, you know, looking backward, it's crystal clear. The pathway to, uh, to stronghold through through Bill, through power, through energy. It's, it's clear. But, you know, if you had you asked me

five years ago, 10 years ago, if you, if I thought I would be the CEO of a Bitcoin mining operation with a focus of remediation of wasteful, uh, it would have been, you know, not my top hundredth guess. But I'm here really as a friendship, uh, through friendship with Bill. So Bill was one of the CEOs that I backed and supported when I was at Riversone. So we've known each other for more than, what, 15 years now, maybe longer. And we had a great experience then. We had, you know, you know you have a bond with someone when you have no reason, no business reason to stay connected.

Yeah, Bill and I have, you know, through all of these years now. And I'm obviously glad that we did. Yeah, my background is energy. I've been in the energy business now for close to 40 years. And I've owned that particular power plant for, I guess, going on five years now, where we started this operation. I was in the waste coal business, and it had this power plant and was looking for a way to subsidize our operation because of the hit and miss nature of the grid.

When you have a power plant, you can't just turn on and turn off. And power pricing has been so sporadic that I look for a way to come up with a alternative market where we could sell and utilize our power. and the idea of cryptocurrency came to pass. But right around that same time, I got very, very sick. I had cancer, was in the hospital, and literally laying on my deathbed, I told my wife, I said, I don't know, I mean, it was touch and go if I'd make it. And I told my wife, call Greg and just, you know, talk to him and get him involved to help

you if I don't make it. And when I think back on that, it's funny because when I get out of the hospital, I took my own advice and called Greg and said, hey, come see what I'm doing. I knew he was retiring from Apollo at that point. So we got together and one thing led to another and we have another power plant now and several other possibilities in play and the business. Like Greg said, I would have never in a million years envisioned I'd be mine in Bitcoin or cryptocurrency, but here we are. Wow. We've interviewed a lot of miners on the show, but I've never heard anything like that before.

In terms of coal waste, you said you were in the business of coal waste mitigation before Bitcoin. Is that right? Yeah, I've been very committed to remediating these piles and this waste. This waste has been around since pre-1800. There's been commercial mining in Pennsylvania since the late 1700s. So you're talking about an accumulation of material in excess of 200 years. The particular site right now that's our focus is in Russellton, Pennsylvania. That particular site is included in the Clean Streams Trust.

We're cleaning that for them. It has been there. The mine opened in that area in 1904 and it shut down in 1982. All of that material, the coal that was brought up from underground was used to make steel. It powered the steel plants to make the steel for World War I, World War II, the bullets and the rifle barrels. It was shipped even globally to Korea, to their steel industry to build bridges and buildings. So these communities built really not just America, but the global economy. And the waste that is the residual in this particular case at Russellton, it was 15 million tons. All of that material was brought up from underground.

And the thing that doesn't get publicized, people, really don't understand that this material has omittance much worse even than CO2. The CO2, benzene, toluene, the particulate matter, all of that is methane is 100 times worse than CO2. This comes off these piles in its entire communities and makes it into the same atmosphere as when people who are crying foul about the CO2 emission issue. But, what's our plant controls emissions because it's a fluidized bed that utilizes limestone in its base. That limestone, we then bring back to the sites and it helps to re-vegetate, remediate these particular piles and communities because probably the number one wastewater contaminant, the state of Pennsylvania,

is the runoff from these piles. People think it's just. rain. There's been ideas floated. You can plant beach grass on it. That's an impractical solution. Beach grass just has a root system that goes down maybe a foot or two. That, it doesn't cover the entire surface. So the emissions still come through. And worse than that, this particular pile at Russellton is 200 feet deep. So all of the natural hydrology flows into this pile and goes through and into water wells, the aquifer, and I contend because of the kind of cancer that I had and my father had my grandfather, at first I thought that that particular cancer, that my children were at risk because there could be some type of hereditary aspect to it. When I talked to my doctor,

the doctor told me that only 4% there's only a 4% chance that this could be hereditary. which means it's environmental. So that puts me on a crusade, basically, to clean up these piles and sites because now it's worse. I don't just have to worry about the hereditary aspect with my own children. I got to worry about all the children.

So, I mean, I'm committed to this. I don't know a few chances to one of these sites. They're huge. It's literally hundreds of acres. So just imagine a community where the business of the town has been shut down because the coal, the coal mine is gone. It's not been, you know, sealed off. Yet there is a little mountain of waste that has filled a valley that's left there to, to pollute the, you know,

the descendants of the workers that were there. Like, in my view, it's discussing in a form of class warfare to do that, to the community. And it's a kudos to the legislators in Pennsylvania that recognize the problem that legacy problem that exists and they have you know they're incentivizing companies like ours to clean up this giant mess but it has to be done these are i would call them equivalent to like local super sites or super fun right right they are they burn the you know the runoff is is turning the rivers red it's 5 000 miles of streams and rivers that are ruined by this it's it's the kind of thing what you know when i was a kid i thought hey that's the kind of stuff that you would see coming out of exuber polluted countries not knowing it was actually our own backyard.

So again, like kudos to Pennsylvania for recognizing a problem and creating a structure to incentivize us and others to clean it up. Because if we don't do it, this stuff is going to be here for another thousand years. Like beach grass, the idea that beach grass is a solution. That's a joke. We actually go and remediate sites that others have, quote, remediated with beach grass. So, you know, I think it's a there is no. other way to do this other than to gather it up and burn it in as clean a way as possible,

which is what we do. So just for maybe some additional context, the reason coal waste exists, it's still combustible, you know, it still produces energy when you burn it, but it's not the sort of prime material that was being extracted from the mines, right? What it is, is, you know, mine seams of coal are not flat. They unsulate. So when they were going through the mines, they would either have areas where it pinched off and you had a lot of rock came into the coal scene, or you had it undulated so that you had to tunnel through the rock. That material, that rock and waste material was then brought to the surface and put into these valleys, filled these valleys with waste.

And that waste material is what has some coal attached to it. It's not, the heat value is not enough to burn in a regular power plant. If you put this material into a regular power plant, it would not be able to fire the boiler. It doesn't have enough heat capacity because it's contaminated. It's rock. It's, you know, limestone, sandstone. So you don't have the carbon capacity in this material.

But you're telling me that we, There were some basically technological developments that mean that you can actually employ this material in the production of energy. It's actually a relatively recent thing, right? This boiler system that we have in our plant was designed specifically for this purpose. It's a fluidized bed boiler. And the design is such that the limestone is added in order to create an ash that is a beneficial ash, because the acid mine runoff that Greg mentioned earlier, that red pollutant that goes off of these,

you know, there's a comment here in Pennsylvania, we don't go white water rafting, we go red water or orange water rafting. And that is the metals and the acidity of these waste sites that run into our, as I mentioned earlier, our water aquifer, the water wells, or waterways. And it's Greg mentioned, 5,000 miles. of it.

Yeah. Nick, that's, I think it's really important to emphasize is the facilities that we run

and manage were purpose built for reclamation of this waste material. These are not thermal coal plants that we've redesigned or otherwise are reusing. They exist only because

the problem of waste coal exists in the state. So we own, you know, today, too, of about, you know, less than 10 of these.

these facilities that exist today just for reclamation. And they would cost about a half a billion dollars each to duplicate today. So these are really expensive, really big, you know, and very complicated. And, you know, hey, they're expensive to manage and run. They, you know, we have a big staff to do it. This is not a, you know, like a casual operation where you sort of put in, you know, material in the front and get power out of the back and ash out of the back. It's a big effort to manage the sites where the waste is coming from.

You have to manage the moisture. We have to manage the BTU content of what you put in the front. And with that, you get the benefit of having, you know, power be a byproduct of all that effort. But it's, you know, you think about this versus a gas plant. The gas plant could probably run with four or five employees. And, you know, we need at least 40 or 50 to keep. keep this running. So we're a big employer in our communities. And, you know, we're very, very different from just a power business. We really are, we really are designed to reclaim this, this land that has

been, you know, really decimated and communities have been decimated by this problem. So this is kind of a specialty power plant, you know, if you, if your motive was just to create power, you know most economically you wouldn't be using material but these plants really exist specifically because the waste coal problem correct that's right so in a way like people want to debate hey you guys are putting carbon in the air 100% of the carbon that's in these piles is going to be in the air that is that is that's going to happen one way the other right and it both and it also would be burning or just omitting uncontrolled yeah so all the particulates and these other contaminants the 10 foliolule

wing, toulene, the benzene, and the, for example, methane, that all comes off these piles in addition to CO2, where, you know, the Knox and Sox. I think the other thing I didn't really explain relative to the limestone and that runoff is the purpose of that design of that boiler, when Greg and I mentioned, it was, the purpose was specific for this use. That limestone ash that comes out of there, is then used to neutralize these soils, change the acidity to neutral so that you don't have that acid drainage, which then cleans up all of these waterways, brings back our fish in aquatic life. That is a big part of this. But, you know, we took it one step further, and we actually take our

action and condition it for a special purpose. And we have a permit from the State Department of agriculture to use our ash as a liming agent. So, you know, typically people like to do confrontational type pieces and they want to bring up strictly CO2. That works great for a soundbite. Unfortunately, you have to look into the story. Luckily, you have a platform and an interest where we can really tell our story that doesn't have a big time crunch and get to the root of it so people can understand. what exactly we do. Do we, we admit that the plant does then emit, the only thing emits is some CO2, but as Greg said, that is emitted as these piles set, which with much greater problems. And what, what our, our feeling is, is sometimes perfect is the enemy of very good. And we feel we're very good,

but we're not resting on our orals. We are beta testing continually carbon capture technologies. We're researching, partnering with people, laboratories that have technology. So, you know, we have an ever ongoing vigil to try and fix this. But once these plants are gone, these communities are going to suffer. And when the solution is to plant grass on them, that just isn't going to work. Right. I mean, it makes me, it's literally the expression, papering over the cracks, just putting grass on a pile of juggle, a huge pile of coal,

expecting it to kind of solve the problem. Yeah. And it is a bipartisan issue here. You know, the thing I think that's unusual in America today is to have any kind of bipartisan support. I mean, if you drop the donut on the ground and tried to bend over to pick it up, half the people would want you to do it and have to, the people would contest it. So in our particular case, we have both Democratic and Republican support for this.

I'm not saying it's universal, but for example, you know, we've had Democratic and Republican governors that have assisted us. Former Governor Ed Rendell gave his energy speech on one of our sites. I mean, he was a campaign manager for Hillary Clinton's campaign.

And the former governor, as I said, of Pennsylvania, head of the Democratic Party. We've had tremendous report support from Republican legislature, legislators. So I think that just shows the kind of work we're doing. This episode is brought to you by Compass Mining. Compass Mining is the world's first and largest online marketplace for Bitcoin Mining hardware hosting and ASIC reselling. Bitcoin mining is only getting bigger, and so is Compass Mining. Compass is adding 280 megawatts worth of hosting capacity next year with more to come. That's over six times Compass's current hosting capacity, meaning more people can mine Bitcoin. With Compass, anyone can mine Bitcoin. Start mining your own Bitcoin

by visiting compassmining.io today. This thing you just explained to me is actually explained to me by one of your engineers contractor, Andrew Link-Allis, so credit to him for walking me through it because I was under the impression, as many are, that Stronghold is just, you know, was turning back on disused coal mines, which is the way it's portrayed in the press. And the fact that these, you know, that first of all, these are specialty operations, you know, for the mitigation of coal waste, very distinct from sort of regular power plants. And the fact that these piles of waste coal emit anyway, the default is emitting and oxidizing. That totally flipped the script in my brain. So these piles of coal, they're not sort of visibly combusting, but they are emitting, they're

oxidizing just gradually over time. You can't see actual. They do burn in place. One of them, we took out of a 128 acre center of a community, there was a major gas trunk line running through the pile, 15 feet from this trunk line. The pile was burning. And had that reached that gas line, I mean, there's a risk the entire community could have exploded. So you're talking about, like you say, I guess the shark in jaws that you can't see it. But the frustration for Greg and I is what you would earlier mention. And that is how we are portrayed. I mean, we have been, this plant's been there since 1994, and I have been cleaning up and sending waste materials since it started.

And as I said, I owned it prior to the crypto operation. So, I mean, my commitment to this has been really a life's work. And Greg, once he really understood the problem, I'd say he's now. also very committed because he sees just how ridiculous the situation is. And because it's regional, if this was in New York City or in Los Angeles or where people could see the issue more readily, I think the press would be all over it. There would be an outcry about these sites. And the idea that you could either plant grass on them or there's also been some people

say move them to a land landfill. You're talking about where in Pennsylvania, they estimate the actual amount of this material is two billion tons, two billion tons. So if you have two billion tons of this material, it would probably cost in the neighborhood of a half a trillion dollars to put this wherever you could find somebody to want this in their community at that volume that you would have a line landfills. I mean, it's a ridiculous idea, and it's, in my opinion, a poor use of tax money. You know, we have a lot of needs. When you have kids going hungry that don't have school lunches and all of the things associated right now with shortages, I mean, we need to have our tax dollars utilized for more important things.

Let technology evolve. Let us see if we can come up with ways to mitigate the carbon. And people are working on it. But don't let these plants go away and then expect this problem to be, as people said, just swept under the grass as opposed to the rug. Right. Yeah, the only I would add is that this is public data, there are more than 800 of these sites in Pennsylvania.

More than 75 of them are on fire right now. And so, you know, it's a, this is not a, it's not a secret. that's in the public public realm. And so the, you know, it's really, it's a, it's a, it's a, this is a, a hundred year crisis. And really at the rate that we are all, you know, all the industry is cleaning up the mess. We have 30 years of work to do to clean it up. And like we're saying, it doesn't happen this way. It's another thousand years plus of the problem.

And, you know, who knows how many more cancer victims, how many more children with asthma, I'm no more, you know, decades where the streams have no aquatic life. And there was really a scar on the environment. So, hey, we know what we're doing this is the right thing. So without the economic motive to eliminate this waste product, it just wouldn't be remediated. That's right. And there isn't, you know, enough enthusiasm at the fact. federal level to sort of allocate the tremendous amount of funds to to clean it up.

You know, I would just say hopefully, as we were saying, in a 10 second sound bite, you'd say, you know, stronghold are those jerks are burning coal to make, you know, power to make Bitcoin. That's not what we're doing. That's the, you know, but it takes, you know, pay two minutes to describe that the source and scale the problem and that this is the only solution. But hey, once you have the patience, you know, I think, I think people, you know, Pennsylvanians know it. And those that grew up in communities like this are aware, are aware of it and know that this is the only answer. So at some point, who knows, maybe the federal government has some, you know, Pennsylvania representatives there that know

about this problem. And who knows, maybe it could be a federal, in my view, hey, all the the steel and effort that was the result of all this mine coal built these cities in the united states you know built our war machines uh built the bridges and so this is a very much so this is a national the the nation benefited from this the the effort and resulting coal that was mine um and then left behind the problem so yeah i think told the right way you could absolutely understand why the federal government would say you know what we should we owe it to these communities to clean it up because it's not like the communities, you know, mine this coal for their own use. It was it was it was mine to benefit all of us. And and the benefits like, hey,

we're looking at out at the New York City skyline, the steel from these buildings came from Pennsylvania. It's not, it's not a secret. It's all here. And this particular Russellton site that I spoke about earlier, it's 12 miles from the center of Pittsburgh. And, and, and, and this particular, And there are other multi-million ton piles between that pile in the city of Pittsburgh. They abut the Allegheny River flow. That flows into the Ohio, into the Mississippi, into the Gulf of Mexico. So you're talking about a big problem that I imagine a lot of people in Pittsburgh wouldn't even know these exist if they weren't made aware of it. But these are in our communities.

So turning to the actual Bitcoin mining operation for a second, would you, is it the case that it's quote unquote behind the meter or drawing power directly from the factory or is there the connection to the grid or how does it work exactly? So you know what's great about about we call it being vertically integrated. So that means we own our own power asset. We own our own data centers. And the data, we're using those data centers by plugging a Bitcoin mining equipment. which say that's the best margins as well, what we can generate is with that equipment. So that's right.

So the power never leaves our site, except when the grid calls on us to deliver the power to the grid. So occasionally, there's a shortage on the grid of power and we will shut down the Bitcoin mine, really almost instantaneously, if it's called upon, and we'll supply that power to the grid. So we are still earning a capacity payment

from our local grid for the privilege of the, of supplying power to the grid when it's needed there. So I think there's a lot of attention around renewable energy, like solar and wind. Those are intermittent sources of supply that really require big large scale batteries to create a more stable grid. Think about our data center running behind the meter

as being a giant battery. that can have that power diverted to the grid when it's needed. So I think on a national basis, I absolutely believe that Bitcoin mines will serve as a help in the bridge to get from, you know, the continuous load or generations supplied by the fossil fuel plants. And as we migrate toward these more intermittent sources of power, you need to have either batteries or load centers that can be shed to keep the grid stable. So that's right.

I think right now we're constantly sending a supply of power to the grid and using an increasing amount of power to our data center that we're running more mining Bitcoin on. I think what makes it different from other Bitcoin miners is that most are just buying power on a contract. And this is not that that power is not like a wall outlet in your home that you only pay for the power you use. Like they are at a massive structural disadvantage to us in that, hey, if power prices are high, we can we can shut our data center off and take advantage of those high power prices by selling that power into the grid. If power prices are low, fantastic. We can stop generating power and we can buy a power from the grid of those low prices. I think others are really in a just a one-way transaction that puts them at a great risk.

If Bitcoin mining margins decline or power prices go through the roof, they are stuck. And so we view our machine as a massive option on both Bitcoin pricing and power pricing in our area. And I think that's that's that's that's that's that's that's that's underpriced. Um, if Bitcoin mining were to go away, we would still generate tens of millions of dollars of cash flow as a power business. And obviously as a Bitcoin mine, we, you know, uh, as we grow, it'll be hundreds of millions of dollars of cash flow. So it's a, uh, I think others would say if Bitcoin goes away, they, they're just, uh, and I think they're sitting on their hands with nothing to do. And that's a big financial risk for them. But I think we're, we're, we're,

are happy with the reclamation efforts. We're happy with the option that we provide. We're happy with the jobs that we bring. And we're happy with the giant amount of optionality we have on this whole business. I think that's one of the powerful benefits of what we do is, you know, you had the issues in Texas with grid, the grid failed reliability of the grid. What the bottom line is, is we enhance the grid with our business. We, you know, we have, as he said, and not it's not intermittent. It would be able to be continuous. We could sustain production and put all of our power into the grid on an as needed basis

to support the grid. You know, we've been doing a lot of that here lately because of the very cold temperatures we've been having in our area. So we are cognizant of that and are there to help. And we feel this is a win for everybody across the board with this type of a crypto operation. It supports the grid. We proactively clean up the environment. We're not displacing a renewable energy that would otherwise be going into the grid if it was wind or solar.

I mean, we're in. I think our stronghold is the only environmentally proactive, proactive beneficial company of its nature in existence because of what we actually do. This is so interesting. You know, we've done this mining miniseries now. We've talked to a bunch of miners, and this is a theme that we keep coming back to is effectively assisting in the stabilization of the grid.

And Bitcoin seems, I don't know if I want to say uniquely, but really, you know, it is quite well positioned to assist in grid and intermency and be that flexible load source. You know, we heard similar things on the Greenwich podcast when I interviewed them about it. Obviously, they have a very different model in terms of, you know, where they're driving their power from. But they also are behind the meter and then selectively provide their full power. to the grid if the state of New York needs it. And they told me that that is economically efficient

for the grid operators. And the other thing that crypto does for Greg and I is we actually partner with the Pennsylvania Environmental Protection Agency, the state DEP, because they've come across these areas with these piles. They're not even sure they haven't even found them all. I haven't even found them all to know where they exist. When they locate them and they have a specific environmental problem,

they approach Greg and I, ask us if we would help them partner in cleaning up this site. They put large signs up talking about the partnership with us and they to remediate and clean up these areas. Because of the revenue from crypto and Bitcoin, it makes us a better partner too for the state from an environmental standpoint where we're able to move material in from greater distances to offset the trucking and reclamation that's necessary at these sites. So I have a question for you guys. So a lot of people trumpet Bitcoin's sort of location agnosticism, I think is the expression

these days, meaning that it's something you can do with a lot of energy that doesn't care where you're, you know, where the industrial process is. occurring, right? Obviously you can, you know, your bitcoins are digital so you can liquidate them wherever. And people sort of, and this is, you know, often touted as, you know, a reason Bitcoin is differentiated from other industrial loads. When you realized, you know, you had this asset and you had this abundance of energy, did you go through the list of other energy intensive industries that you could possibly opt into and then you ended up with Bitcoin? Or was it always just, you know, the desire was, let's mine Bitcoin.

Let's do a data center and mine Bitcoin. You know, I think owning a power plant, you're always thinking about other things that you could do on your site. But I would say the margins on Bitcoin mining are, you know, over 90% or they were at least a few weeks ago before the prices received it a little bit. But it's this tough to, and by the way, I wouldn't expect that the margins on Bitcoin mining say this high forever. You know, it's really the chip shortage

is exacerbating the difficulty in getting equipment. So global hash rate is not growing as quickly as it might otherwise, trying to kicking out all the miners and the Kazakhstan. And there are issues that will be, solve over years that will, you know, cause hash rate to grow again. So I think we're sort of in a heyday of Bitcoin mining margins that will not last forever. So like I think part of what, you know, us building the, I would say the most efficient lowest cost machine puts us in a

great position versus our peers. You know, our cost of mine Bitcoin is under $3,000 a coin. I think that price can that that price can go lower as we as we scale up. And so I think that's interesting. But the, you know, yeah, you're always, we're always looking at considering other coins, other industries should they become profitable. But again, that's owning the power asset gives us that luxury. And then I think we're also building the data centers to have a life after Bitcoin. So I think at some point, yeah, I would say, Will Bitcoin be profitable in 10 years?

I hope so. But if it's not, we think there are alternatives to use our already built that data centers, all that infrastructure we own. And it was a big effort to put it in. And my bet is in 10 years that Bitcoin isn't profitable will be, you know, doing, you know, AI or digital rendering of some kind or, you know, maybe potentially sell the assets to a, in another big data center aggregator because that's really the

the cost of power being so low and the fact that we are so ESG friendly. You know, we're really building this to last for decades. And while we are big believers in Bitcoin and I believe it's actually being institutionalized and, you know, I think they, I'm sort of waiting for the day that, you know,

you buy it now on Amazon and you have Bitcoin as an option. I think that'll be the, You know, a really interesting few quarters for Bitcoin in terms of its adoption. And that will happen at some point. But hey, you think about a few years ago, you didn't have serious institutional interest. You had curiosity, but if you looked at the list of investors that were cornerstone investors in our IPO, these are the household names of institutional capital.

And so I would say that acceptance is here now. one industry people have suggested for you know these sources of power which might be stranded or you know like maybe not deliverable to the grid for some reason i know that's not exactly your situation but um is hydrogen uh electrolysis i don't know if i'm pronouncing that correctly um is that something that you you guys ever looked into or is that still sort of uh too immature as an industry you know we we always look at the cost, at the cost profile of these opportunities. And I think while hydrogen is, that's certainly gotten a lot of capital and attention in the past year. From our vantage point, the costs are still not there to make it the, you know, the most economic thing for us to

do with our power. And I was just looking while we've been talking here, the power pricing, On our section of the grid, which is called Penteleck, it's almost $100 a megawatt. And that's, you know, we're really, we're really benefiting from that. That's a high price for us even as a power generator. The great news is that for the power they're using in my Bitcoin, we're making more than $200 a megawatt. But in a normalized power market, we might make only $35. So it's a just selling into the grid isn't a disaster.

this point. You know, it's, it's economic. And so we're not having to, you know, scratch and bite for technologies that are expensive that might not be economic. And to explain to you what Greg referred to, when the grid needs power, if you, if they don't need the power you're generating, you cannot put it into the grid. So in our case, case it's scrub grass were an 85 megawatt plant. If they need 30 megawatts, you know, you have 55 megawatts worth of power that's useless. And with a power plant like this, you can't turn it on and turn it off. That's why when Greg referred to the battery and the us supporting the grid, it makes us so much more important to the grid because we're able on a moment's notice that they need

the power to hit a switch and leave the data center and go into the grid with that power. If we were trying to come up or go down, you know, and light it, it would take 24 hours to reignite the plant. At that time, the grid's need could be gone. So we're not utilizing power that would otherwise be going to a home. We're utilizing power to support that those homes get the electricity they need when they need it. Right. So in times of energy abundance, you guys are not delivering energy to the grid. In times of energy, scarcity or shortage, the fact that you're always operating means you can deliver energy at short notice, which you otherwise wouldn't be able to do because it takes a long time to turn the plant on and off. That's correct. That's correct. I think the thing about this sort of like Bitcoin energy debate, which is sort of my world,

I mean, you guys are part of it too, is that the critics don't do the work to understand how the energy sector works. And frankly, I understood nothing about it before I started diving into it. So I get it. But it's totally counterintuitive. It's endlessly complex. And it's something that most people have been. very poor intuition it's about, you know, people aren't really well educated on how

electricity actually gets their homes and how the grid is composed, which is why I find this series so interesting because I learn new things every time. And so, you know, just reacting to, obviously, you guys are villainized in both the press and then, you know, at the highest levels of government too at the federal level which must feel really odd given sort of the contrast with the sort of the reality of the situation that you guys are just described to me what's your reaction to your documents like this house memorandum from the energy committee um use you know pointing you guys out um in a in a pejorative way i mean how do you even respond to that i think the biggest thing is it's it makes me want to try and edge

educate people more, do things like your show so that we try and get the truth out there. I think the frustration for me personally is when I feel people purposely report or say things that just aren't true. They know it, but they've already have a pre-existing agenda. they want to have a simple solution, you know, that maybe fits what their ideally sort of view of the world is. But, you know, I think the thing when you're in business or as you get older like I am, you realize that life's not black and white and you have to navigate the gray. And as I said earlier, you have to make the best of a bad situation. So, you know, Oscar Wilde had a great quote, Nick. He said, the only thing worse than people talking about you is people not talking about you.

So, you know, when people make these statements, hopefully even if it's incorrect, it gives Greg and I an opportunity to go on shows like yours where we can tell in depth what the problem is because you're right. People go to their electric, look at their electricity, they hit a switch on the wall, the electricity comes on. There are a lot of places on this planet, and even here in the United States, where that does not happen, Nick. And intermittent power would be a huge problem, especially from a technology development aspect in this country. You know, we realize having a power asset, as Greg mentioned, too, vertical integration, that what technology needs is an endless supply of power. So the argument about technological development like blockchain and where that could ultimately lead, should it be just thwarted because we don't want to supply the power? I just think that's full-hearted. I'll just say, send me the address of the legislator that made the pejorative comments.

It'll send him a five-gallon water jug from runoff for one of these sites. And he can enjoy that and say it's the right answer to legal. that. You know, so it's absolutely maddening. We're not losing anything because we know it in the right thing as we're educated on it. And as Bill said, hey, just getting it to talk about it, hopefully get people to understand that this is a problem that we're cleaning up, that we're not making this problem. You know, it exists and we're remedying it. So, and the best way that we can't, you know, and like making a more stable grid to make more renewable energy possible, that's just their fringe benefit of it. So hopefully local, uh,

you know, Pennsylvania legislators will really be at the forefront of defending the system that they set up to incentivize, you know, a billion dollar operations like ours to be built in the first place. Because it would be, you know, unreasonable to say, hey, we're going to change this system to then make, make all this effort that they set up, you know, with incentives to go away. We've got 30 more years to go to clean it up. And then hopefully we'll say, you know, hey, great, job, well done. All these waste piles are gone. And that's an excellent point. And the point I want to make is until we started doing this cryptocurrency, typically nobody even knew these piles existed.

And as I said earlier, they've been there in most cases, at least 100 years. and some of them, a lot of them, well over 200 years. So you're talking about hundreds of years of pollution that has been put out from these piles that we're cleaning up. And to have people, anybody criticize it is insane to me because, you know, they've been there. If there was this interest in debate, why weren't they doing these things all along? So, you know, interestingly, you guys do, or the crypto industry certainly has an ally in Pennsylvania in Pat Toomey who has you know is known as one of the more

crypto-friendly members of the Senate have you guys you know reached out to his office to sort of help you know correct the record on these things in Washington you know we we have it and I think part of what part of what I want to make sure it's noted we didn't we're not in this position in reclamation because we've lobbied politicians to change regulation. They did it on their own in a bipartisan way, you know, from the governor to the legislator. They did it not because they were paid by us or because we lobbied them or anyone else liby them.

They did because it's the right thing to do. And I think we want to keep it that way. So we, hey, we're part of what we're doing, but we don't want to, you know, give anyone the idea is that, hey, we, we're looking for. a handout. We operate within the existing structure. We didn't set it up. It was it was done this way because the problem is so acute that they had to do it. And, you know, so I think it's a, it's a little bit of a dangerous thing to get to, you know, to start showing in politicians' offices. You know, they'll get some grandiose ideas that we then owe them something, you know.

Right. Right. And in terms of the, the hearing that was last Thursday a few days ago in the House Energy Committee, that was the first hearing on cryptocurrency. Obviously, the Democrats in their memo called you out by name, but did you get an invitation to testify and sort of defend yourselves? You know, I have a bunch of unread emails, but that one I think I would have found. We're absolutely gone. I think we're passionate about what we're doing. We know it's the right thing. And I think, you know, I think the best, the best venue to, to have this debate,

in my view, hate the debates over. These piles, these sites exist and need to be cleaned up. To sit in a, in a Washington, you know, conference room to talk about it is the wrong place. Go to one of these communities that have been ravished by these waste piles, these sites, and see that's hundreds of acres, go to one of the 80 of them that are currently on fire and have the debate there and say, is this okay?

And it's absolutely not okay. It's not debatable. And the federal government, maybe it should get involved and clean them up. Maybe it can be done in 10 years instead of 30 if the government did it. Yeah, well, I'd love to come by sometime. Honestly, before I became aware of Stronghold,

I didn't even know these sites existed. So that shows how little, the public is aware of this. Now, lastly, before I let you go, and I really appreciate your time, in terms of the vertical integration of the mining industry, you guys mentioned you're vertically integrated. There's a few others, but that's not the norm. That said, there are a lot of energy companies,

large ones that are getting into Bitcoin mining. We'll see a few probably in the next quarter as the disclosures roll in. Do you think that vertical integration is the future Bitcoin mining as sort of margins compress over the next few years here? You know what? I would say some of the biggest miners in the world are stubbornly sticking to the notion that they don't want to be vertically integrated. And I think only will time tell if the vertical integration is the right approach.

I think right now with everyone's margins, you know, in the 90s, it doesn't really matter. It's the heyday of mining, as I said. But as we go through a cycle here or a crypto winner, you will see the vertically integrated miners will show with much more protected margins than those that don't. And I think that will be the tell. So I think you'll find those that will have access to more capital because they're vertically integrated and have protected margins. Those that are just buying power from a power source.

having a third party even managed their data centers, like, what are they really doing? They're really not adding any value or any proprietary value. And I think they're going to end up being, you know, they'll end up with margins that suffer because of it. And I also think there aren't a lot of people that have sort of the expertise melding where you can take the power plant, which you had mentioned earlier, how complicated and complex the power industry is. and to have that associated along with crypto. I mean, we're unique, I think, and that we have so much expertise inside our company where we have two parallel groups running with our business model.

Yeah, well, this has been really awesome. I really appreciate the time. And as a last word, where would you encourage listeners to follow you and follow Strongholds work more closely? You know, hey, we're on LinkedIn, and we do post occasional LinkedIn, and then we have a website, obviously, as well, that people can see what we're up to on that front. That's probably the best two spots for us. And we're listed on NASDAQ, so that's where our stock is under S-DIG, DIG. Awesome. Well, Greg, Bill, this has been really, really fascinating, totally eye-opening. Thanks,

again for coming on. Nick, thanks for taking the time to really delve into it like you did with us.