On The Brink with Castle Island - Jeff Kirt and Ted Rogers on the Story Behind the Greenidge Plant (EP.219)

Episode Date: June 2, 2021

Jeff Kirt and Ted Rogers, CEO and board director of Greenidge Generation LLC respectively, join the show to discuss the Greenidge plant and Bitcoin mining operation in upstate New York. In this episode:  The origins of Greenidge Why Ted Rogers chose to join the Greenidge board How Atlas/Greenidge converted their NY plant from coal to natural gas Ted's retrospective on the Segwit 2x drama in the context of the Crypto Mining Council How US-based mining has a lower carbon intensity than global miners at large Why Greenidge decided to offset their CO2 emissions and how they went about procuring them How natural gas has a much lower carbon intensity than coal Why banning Bitcoin in NY would actually raise the carbon intensity of Bitcoin How the energy debate ultimately comes down to the societal merit of Bitcoin How Greenidge sent 60% of their 2020 generated energy to the grid How Bitcoin mining has allowed Greenidge to run continuously and better contribute to grid stability Demystifying concerns about the trout habitat Has Greenidge fielded inquiries from mining firms looking to leave China?

Hello everyone and welcome back to On the Brink. Today we're talking to Jeff Kurt, the CEO of Greenwich Generation Holdings and Ted Rogers, the vice chairman of Greenwich, about the Greenwich power plant in upstate New York. This has been the target of some very intense and pretty misleading press coverage, including articles broadcasted by Elon Musk. And I wanted to give them an opportunity to explain what they're doing, how their mine operates, how the power plant works and get the facts straight about the Greenwich Mine in upstate New York. Let's dive right into the episode.

What 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. times more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people start to worry.

So out of this worry, we have something called a Bitcoin. Okay, today we have a really interesting conversation. I'm here with Jeff Kurt, the CEO of Greenidge, LLC and Ted Rogers, who's on the board. Really appreciate you both being here with us today. Thanks for joining us. Thanks, Nick. Thanks for having us. going to be really interesting one because Greenwich has been all over the news lately.

Did you guys expect this level of this level of press coverage when you started out? No, we, I mean, we never imagined it. You know, we really got into Bitcoin mining. I don't want to say by chance, but we had surplus power as a merchant power plant. it started with purchasing, you know, a handful of rigs on Amazon a few years ago. And really just kind of learning as we went, it grew into a one megawatt pilot project that was kind of done in the basement of the power plant, but was generating some nice cash flow. And as a result, we decided to expand it significantly.

and it really, really ramped up commercially early last year, early 2020, and has continued to grow since we've continued to install miners and expand capacity. And again, we were a privately owned merchant power plant, really just managing for cash flow. And kind of late, I'd say late in 2020, early 2021, decided that, We wanted to raise institutional capital and go public because the story behind Bitcoin mining was pretty compelling, but it's capital intensive and requires access to capital markets or institutional capital, more capital than we had. And that's kind of how we got to, you know, how we got to where we are right now. We announced in March transaction where we will be listed on the NASDAQ. and we have right now just our single 106 megawatt facility in upstate New York.

We have plans to take that up to a max of 85 megawatts of Bitcoin mining. And we're actively looking at other locations mainly in the U.S., not exclusively in the U.S. to expand our mining operation. And just to answer your question, no, we, We never envisioned this being much, there being much of a story for the press really in our in our Bitcoin mining operation. The plan's been around since 1937. It was originally a coal-fired plant that we converted to gas in the last six or seven years

and really never imagined the amount of press it may draw. So Jeff, how did you come to be interested in Bitcoin mining? I mean, tell us a little bit about your own trajectory in this space. Sure, sure. So I joined a CEO recently this year. I've been working with the company. I was brought on by the folks at Atlas, who are the private agency that really kind of created and transformed Greenwich into what it is today.

You know, my personally, in terms of Bitcoin interest, I've been nothing more than a, like many out there, a Bitcoin enthusiast, someone who personally owned Bitcoin. And I became involved with this project. I had followed it kind of from inception when Atlas purchased it in 2014. I, you know, was on the sidelines for the, the, the endeavors into Bitcoin mining. And was kind of acting as an advisor to the company, to Greenwich. before they made the decision to take it public, the individuals at Atlas asked if I join a CEO,

and that's kind of how I joined full-time. So I'm definitely, this is my first job in the Bitcoin space. Year to four, I've simply been a consumer, an investor in Bitcoin. Well, it's a baptism by fire. Ted, you a fellow DC native, fellow DC sports fan. We have that shared experience of, I'm a long-suffering DC sports fan. You're former NFL player, right? Yes, yes.

Back in the last good old days with the Redskins, yeah, 91 to 93. We legally can't call them the Redskins anymore. You're right. Washington football. We're going to be canceled by the podcast, please. The Washington football team. So, when was, what was the duration of your tenure on it, not to get distracted, but with the redskins?

When did you play for them? So I, the first mini camp that I went to, I signed as a free agent out of college, out of Williams College up in Massachusetts. And I left briefly in the spring of 91 in April for the first mini camp, was a surreal experience given that I spent my childhood and actually up to that very moment being a fan rather than a player. And as soon as I graduated, I went directly to D.C. for mini camps and then training camp. And my time with them lasted until July of 93. Joe Gibbs had retired. Richie Pettybone had taken over. And I had been injured and appropriately

was cut by Ritchie. I had lost a step due to injury, and I was out. So I went to law school and couldn't get football off the brain. So I left law school midway through and went to the World League. It was with the Scotland Claymore's trying to get back into the NFL and promptly blew up my other knee. So I figured somebody, something was trying to tell me something, and I went back to law school with my tail between my leg.

And actually spent about 20 years in the professional wilderness did some fun stuff and finance and tech and whatever. But until I encountered Bitcoin in 2013, I never had found something that was as important to me and as fulfilling as football. And it's been everything football was and more. That's stirring. Yeah, I guess crypto people are often unaware that you are a former professional athlete. and you're mostly known for having been president of Zapo. Maybe tell us a little bit about how you came to join the board of Greenwich and why you chose to join this firm.

Sure. So when we sold the institutional business of Zappo, the custody business of Zappo to Coinbase in August of 2019, I was about ready to move on. I had a great experience with Wences and deeply grateful to him and to Zappo. I've been with them since late 2013. And I needed just to want to take some time away.

I thought I was going to do all sorts of interesting stuff. You know, write the Great American novel and coach and blah, blah, blah. And I basically stared at my navel or the ceiling alternatively for a period of months. And then I realized, you know, I wanted to get back into the game and I wanted to help Bitcoin. That was the first priority. And my feeling was that the point of the point. places where Bitcoin needed the most help, one of them was mining and one of them, it felt to me like one of the attack vectors on Bitcoin was going to come from the criticism of

Bitcoin mining. And probably we could use some help explaining the importance of Bitcoin mining, the national strategic importance of it, the importance to humanity. And so I let Wences know, Wences is sort of, he's not just the patient zero for Bitcoin in Silicon Valley. He is, if he trace the genealogy of most people in Bitcoin and even crypto quote unquote, it will in some way lead back to Wences, six degrees of separation. So Wences meant Tim Fasio from Atlas, close friend to Jeff's, and Wences connected Tim with me and I talked to the Atlas team. I talk to Jeff. And they're just a great group of people. You know, Jeff maybe can talk a little bit about Atlas's background. They're a private equity firm, and they're pretty much the opposite of the

vulture capitalist sort of caricature. They go into old economy-type businesses, steel mills, and places like that, and actually rehab the businesses and work with unions and keep jobs. They don't fire people and shade people off. They're a great group of people, Jeff included. So it felt like the right horse to ride in the Bitcoin space. And my only concern is making sure I do the most that I can to help them. That's awesome. Well, you're obviously very well-known, very respect in the Bitcoin community. So it certainly pricked up my ears when I saw the announcement.

And then I guess a few months later, like all the negative press coverage started dropping, which took me by surprise because, you know, I looked at the cursory details of the Greenwich plant, but it seemed to vastly differ from the way it was being characterized in the press. And so with the main thing being this is formerly a coal-fired plant, and then you guys actually converted it to natural gas. Is that right? That's right. The plant was, you know, the plant, it's been around since 1937. At one point, it had four coal-fired generators.

It was, you know, New York was deregulated in the late 90s, and the plant became a merchant plant, merchant coal plant. after the financial crisis in 2010 or 2011, it was idled and it was involved in a bankruptcy. And as Ted mentioned, Atlas has a history of buying businesses and kind of not just industries that are potentially in decline, but assets that have been troubled in the past. And what they saw in this plant was it was very close to an unconstrained gas pipeline. And I'm looking at the details right now about what that means, but there's abundant gas that was four and a half miles away from the plant. And the plant had modern emissions controls, modern coal emissions controls, many of which were applicable to natural gas. In fact, the only ones that aren't really applicable are not applicable because they, scrub for pollutants that natural gas doesn't emit at all like sulfur dioxide.

So Alice purchased the plant in 2014. They proceeded to convert the boiler to natural gas and buy up right of way to construct a pipeline four and a half miles to the unconstrained pipeline that was nearby. We own that pipeline. And when all of that was said and done, and it's worth noting, you know, the local kind of press coverage, there was a, I'd say, a minority, a vocal minority in the area that opposed the plants starting at all as a natural gas plant. And that's been there. But that's been, you know, something associated with the plant since 2014. and but the plant the plants obtained a new air permit from the from the EPA as if it was a new plant

you know it obtained all the all the proper environmental permits and commenced operation in 2017 and you know I think in many ways this is that this is not not unique in terms of an Atlas type story you know just to As Ted mentioned, they have a 20-year track record of investing in businesses that are often older world economies like paper, lumber, forest products, structural steel that's used in bridges and buildings, you know, auto parts manufacturing. And a lot of these businesses have gone through bankruptcy. They have legacy environmental problems or legacy environmental liabilities that are a result of, you know, decades of prior. ownership and and therefore are a challenge to purchase. But these are necessary industries in the U.S. We need paper to print and write on. We need lumber. We need structural steel for infrastructure. And they also have an excellent reputation working with environmental authorities, working with

organized labor, and that's kind of unusual for private equity investors. Those are typically areas where private equity investors don't excel and they really do excel in those areas. Part of it's just their culture. They have a culture of safety first. It's very focused on the workforce. They have 40,000 employees across the globe. And I think like many organizations, the culture sort of flows top down from the founders. And as Ted said, the founders of Atlas are just genuinely, you know, genuinely good human beings.

and do the right thing, including environmentally, especially environmentally. And if it wasn't for all of that coming into this with all of that knowledge, I wouldn't have been as comfortable as I am joining as the CEO. But they, so the plan started running in 2017 as a merchant power plant and really got in, like I said, got into Bitcoin mining as an, an ancillary source of revenue and cash flow. And it's kind of now evolved to the point where it's, you know, the bulk of the cash flows are coming from from Bitcoin mining. So referring to necessary industries, Ted, maybe if you'd like to weigh in on, you know,

your views on Bitcoin mining and its strategic importance to the US and the merits of onshoreing Bitcoin mining, which seems to be sort of currently occurring. Yeah. God, what an opportunity at this moment. And I confess to feeling a bit of frustration that we're having this discussion about the environmental aspects of Bitcoin mining, especially given what I know about what Greenwich does and how environmentally conscious they are. But let's just back up for a second. Bitcoin is going to be the global reserve currency. And it's going to be the center of the future financial world. And I think that the people that are arguing about whether there should be Bitcoin mining and whether Bitcoin mining should occur in the U.S. And whether it's worth the energy have a profound misunderstanding of what Bitcoin is and what it is going to be in the future society of the world.

So given what I believe very strongly about the future of Bitcoin, I'd say, well, where do we want the center of Bitcoin universe to be? I would much prefer it be in the still relatively free west than in the authoritarian east or in other places that are not friendly to innovation and transparency and to individual liberty. So here we are in the United States at sort of a crossroads where we can take a route with Bitcoin of fear-based regulation first, suppress it, shut it down, control it, or we can be what we are when we're at our best, which is allow for risk-taking, embrace innovation, allow the entrepreneurs to either flourish or fail, as they might. That's who we are, and that's when we're at our best, and that's when we do our best in the country.

And Bitcoin mining is probably, you know, since maybe the mid-90s with the advent of the internet and good decisions that the Clinton administration did about. removing liabilities and things like that from people participating in the internet, this is the most important thing to come along since then. And if we were to just take a different route for a second that we said, you know what, we're going to grab the baton and jump to the front of the parade. We're going to encourage Bitcoin mining in the United States. Yes, we're going to ask for certain standards environmentally, but we're going to encourage miners to come here. We're going to and support people who want to fabricate chips here, want to build the equipment here, we're

going to work with entrepreneurs and make the U.S. the center of the Bitcoin world, we'd actually have a pretty good chance of getting out of this tremendous, deep, debt-laden hole that we've dug ourselves into with infinite money printing. So look, it's fine that Elon Musk and other people want to weigh in about how much carbon Bitcoin mining is or isn't releasing into the atmosphere, but they're missing the forest for the trees. And the whole Bitcoin Mining Council, you know, I don't know if we should talk about that or not, but, you know, it's, it's, it should be talked about in the context of how important Bitcoin is to the world and what place we want the United States to take

in that Bitcoin-centric world. Were you guys invited to join the council? Thankfully, no. You know, Nick, I'll tell you, I don't think it'll come as a surprise to you that a lot of this is informed by my experience as a zealous advocate of Segwit 2X. I was a vocal and active proponent

of increasing the block size from one megabyte to two. I was convinced that if we just got together and made a compromise, come on, let's go. We're going to meet a consensus in New York. It was May of 2017, four years ago. It's all in good faith. Everybody's invited. Come on, we're not hiding anything.

All we want is a compromise. We'll go from one megabyte to two. No big deal, right? Well, it was a big deal. And regardless of what our intent was, we were centralizing control over the Bitcoin protocol. And people were absolutely right to resist us. And thank God we got our nose bloodied and we lost.

And I realized at that point, that really was the moment where Bitcoin became digital gold. It was the moment Bitcoin won the store value use case. And when we realized no one, no group of people, no group of billionaires, no group of companies in VC-BEC, you know, minors, no one is going to do. change Bitcoin. And in fact, any type of centralization of control of Bitcoin or an attempt to speak for is generally A, going to be rejected by the community and probably should be. Actually,

definitely should be. And B, we are handing the enemies of Bitcoin an arm to twist. Yeah, first they say, yeah, okay, great. So we're going to need you to abide by these standards. Otherwise, you can't do it. Okay, we were going to do that anyway. We want to be environmentally sound and be storage of the environment. No problem. Oh, and by the way, you can't mine any transactions that haven't gone through KYC. What? Oh, yeah, yeah.

Marathon mining's already said they're not going to mine non-O-fact transactions, da-da-da-da. Pretty soon, Bitcoin doesn't have an energy problem. It's got a fungibility problem. These things are, you know, and of course they start out with the best of intentions. but they are generally speaking not good for Bitcoin and they're going to be resisted heavily. Now all that said, if Greenwich felt, you know, as a member of the board, obviously there's a duty to shareholders of the company and if it was determined that the best interest of the shareholders was to join some kind of association or whatever, then okay. but I'm just saying from a personal point of view I've seen this movie before

and it's not a great idea. One thing that we think is kind of getting lost in the whole debate is the U.S., you know, no one of the attributes of Bitcoin that we all know is because it's so decentralized, the data is not entirely reliable or, you know, it's hard to get consistent data, but

best studies indicate that the U.S. is something like 7%. of the global hash rate in Bitcoin mining. And so we're 7% of the global hash rate would, but no one really, and then of the rest of the other 93%, a huge chunk is in, the vast majority of it is in countries like China, Russia, Iran, Kazakhstan that have much different environmental policies and controls and regulations that we have here. And the other thing that's not really talked about at all is just the efficiency of the U.S. mining fleet. And I'm not just talking about Greenwich's minors.

I'm not saying that ours are any more or less efficient than any other U.S. miner. But if you look at the studies, our miners are more than twice as efficient, or consume less than half as much energy per unit of output per per tarahash as the global fleet. and I think we're probably average, more or less average for U.S. mining. So you have 7% of the mining capacity that's consuming, you know, order of magnitude, 3.5% of the electrical consumption of the entire network, just purely based on efficiency. Before you layer in how much carbon output there is per unit of electricity that's going into that electricity. And I haven't seen studies on it, but just my gut is that the carbon output of the U.S. Bitcoin

network per per minute a quad hour consumed is lower than the global network. So, you know, if the U.S. again, is 7% of the global hash rate, I don't know if we're three or two and a half or what the number is, but at some very low single digit number of the carbon output of the U.S. And we took the step earlier in May to announce that starting June 1st next week, we are going to be 100% carbon neutral in our mining operation. And it's a decision that we didn't just make overnight. It's something that we debated over a long time. We looked at the different options, and there are several.

to achieve carbon neutrality. We determined that purchasing carbon offsets was the best option for us. I'm not saying it's the best option for everyone. I just think we came to the conclusion. It's the best option for Greenwich. And starting June 1st, we're going to buy carbon offset credits to offset 100% of our CO2 output. And we know exactly what our CO2 output is because we're required to monitor it daily. We knew the exact amount that we emit.

and we know how much of that's going to mining and we're going to offset 100% of it. That's awesome. Yeah, the offset discussion is definitely going to get louder in the Bitcoin miner space. I've been looking into it as well. In terms of the nature of the offsets, is there anything you can tell me about the source, what is sort of happening on the other end, so to speak? It's kind of a little bit Byzantine to me, that market. Yeah, so what the offset market is, a carbon offset.

is generated when someone either captures, someone has a project that either captures carbon from the atmosphere, the biggest of which would be forestry, capturing carbon from the atmosphere, or embarks in a project that captures carbon that otherwise would have been emitted. And an example of that could be landfill gas.

Methane gas coming off landfills is a big source of, of carbon and capturing that methane and then using that methane for power generation. We took, we made the decision that we wanted to act locally or relatively locally. The market for certified offsets and it's worth noting the California Air Resources Board is kind of the gold standard for for offset credits and they have, they recognize three agencies that that accredits the carbon offset credits and all the all the offset credits that we're purchasing are credited by one of the three agencies um we made the decision that and you can you can buy offset credits that are generated anywhere in the globe we made the decision that we

wanted to buy 100% domestic credits so we are um we are you know some of the areas what we're assembling a portfolio of credits we didn't just pick one project or, you know, one type of credit that we want to buy. We're assembling a portfolio and we're working with some third parties and assembling the portfolio, but it's a mix of things like, you know, forestry, landfill gas, power generation that, you know, that I mentioned. And the recipient of the offset credit is the person that embarks on the project because the project in and of itself may not be economical or, or, or, or, or, or, or, or, or, or, may be much less economical than it is with the credit.

So the person embarking on the project sells that credit to help subsidize the cost. And therefore, by purchasing credits and we're, you know, this is well-traveled ground. Many, many large consumer-facing companies use offset credits to offset their fossil fuel emissions from their, you know, fleets of trucks, fleets of aircraft or, you know, other sources of CO2. but by purchasing the credits, we're helping finance these projects that are reducing carbon in the atmosphere. And we determined because we own a fossil fuel plant, that was the right solution for us. There are other solutions that are out there that may be and probably are better for someone in a different position that doesn't own a fossil fuel plant. But having researched it pretty extensively, we determined that was the best course of action for us. So, returning to some of the misconceptions people have, you know, as I personally have

dived into the quote-unquote Bitcoin energy debate, the worst debate in the world, I have learned so much about how energy is produced and consumed in society. I mean, it's really a rabbit hole that rivals Bitcoin in terms of its depth. It's unbelievable. I spent a huge amount of time trying to demystify the Chinese energy grid because, of course, that's where a lot of Bitcoin is mined, absolutely fascinating dynamics there. We get into a little bit later. In terms of the U.S. energy grid, it has been so interesting because the carbon intensity of the U.S. grid has come down in the last decade. And as I learned, this is due to the influence of natural gas. So people don't understand that not all thermal sources of energy generation are identical from a carbon intensity perspective. In fact, there's enormous differences.

So they just tend to lump fossil fuels all in one sort of mental category. And so to them, it doesn't matter if it's coal or gas or whatever. But actually, gas is much less worse than coal from a carbon intensity perspective, right? It is and the math of it or the data that is such that there's about a 75% increase for unit of thermal output burning coal versus burning natural gas. So it's about 75% more carbon intensive. In other words, if we were operating our plant as 106 megawatt coal plant instead of 106 megawatt gas plant, it would generate 75% more CO2, but also a series of other pollutants that it doesn't, you know, carbon is easy to measure because it's generated by many sources, but it's not the only metric.

Things like SOX and NOx emissions, you know, there is, there are no sulfur emissions at all whatsoever with natural gas. It's significant with coal. Natural gas has less, NOx emissions than coal. It has no what they call particulate matter or kind of little pieces of soot that get in the air that coal does. And all of those are, you know, just other factors that you get with coal that you don't with natural gas. The U.S. grid right now is about 40% gas, 20% coal.

The grid in New York State where we operate is 45% gas. zero coal. There are some, you know, some standby oil fired plants in the, you know, in the area, but there's there's no coal in New York State. Yeah. And, you know, I looked into the New York energy mix out of curiosity, as one does, when I saw that New York policymakers were thinking about this moratorium. And I reflected to myself, well, hang on a second, New York State's energy mix is actually pretty good from a U.S. perspective, let alone a global perspective. So it's, it's really good from a carbon intensity standpoint. And so if they ban... Right, the nuclear, nuclear and hydro, it has much more nuclear. Yeah, I mean, the hydro in

upstate New York, I actually have been to a Bitcoin farm in Messana, New York, the coinment facility, which I'm sure you guys are familiar with, that's on the banks of a river. I don't remember what it was called exactly, but it was a really big river. There's a lot of hydro up there. And so I was reflecting myself, well, hang on a second. If the New York state legislator put some sort of ban on Bitcoin mining, they are going to increase Bitcoin's emissions footprint causally because most likely the hash rate that leaves New York and flows to other jurisdictions will be more carbon intents. No, you're right. New York has three times as much hydro is the overall grid in the U.S.

and has just under 50% more nuclear than the rest of the grid in the U.S. and has zero coal. So really, if they want to reduce Bitcoin's climate impact, they should encourage the mining of Bitcoin. Right. That's what the data would. But that's the point, Nick. They don't think that mine Bitcoin is worth it, period.

And that's why this is a, I know we have. have to engage in this debate, but it's hard to engage in a debate with people who don't understand the value of Bitcoin first as part of a context, because there are always trade-offs involved in what are you going to expend energy on, and what are you not? And if you believe that Bitcoin has no value, it doesn't matter if we're using natural gas or hydro or anything else. They're going to think it's a waste. Right. So with regards to the plant, I guess the other thing that people don't understand is that you guys are not solely mining Bitcoin. You're also producing energy, which goes to the grid, correct?

Right, right. So, you know, for instance, last year, 60% of the energy that we generated last year went to the grid. We're supplying power to the grid. I'm just pausing to make sure this is accurate. Literally every second, there isn't a second that's gone by. this year or really while the plant's been running for the last you know more than 12 months where power hasn't been supplied to the grid we will always supply a substantial piece of our power to the grid you know we don't have plans to take the mining operation at our plant above

85 megawatts in that side of a 106 megawatt plant we're asked a lot about a response time in an emergency or would we be there as emergency power to the grid, especially given what happened in Texas this winter. And the way it works is before we were Bitcoin mining, the plant wasn't always on. There would be periods of time where the plant would be shut down and then the system operator would call the plant and say, you know, we'd like to have the plant up and running. We, you know, We need the electrons for whatever the load is on the grid. For some reason for grid stability, they wanted the plant up. And we'd say, okay, we'll be there in 14 hours.

It took 12 to 14 hours to start up. So if they called it 6 a.m., we'd say, okay, we'll shoot for 6 p.m., but we can guarantee we'll be up and running by 8 p.m. Well, now the plant runs 24-7, and we can increase nearly instantaneous, and we can bump up the amount of electricity supply to the grid by by two megawatts a minute. So if something like Texas happened and we wanted to had to shut down all the mining and immediately ramp up ramp up the plant to full capacity, supply that to the grid and shut down mining, that can all be done in less than an hour.

So because Bitcoin is your alternative buyer, you're now much more responsive to the grid's needs. Right, because we have a 24-7 customer in the Bitcoin mine. We're able to ramp it up much more quickly and also without a startup charge. There was a startup charge associated with the cold start. When the plant was off before, there's no startup charge because the plant's already running. and the other interesting thing is the plant the new york is a capacity market this gets in a little bit of the details about the electricity market but plants in new york are paid just to be there just to be on the grid if needed for grid stability well the the megawatts that we use for mining are not counted in that capacity payment but our plant is still on the grid so if the polar vortex has to be or something like happened recently in Texas occurred in New York, we could and would

supply all of our power to the grid. But the grid is only paying us, the grid is not paying us for the portion that we're using for Bitcoin mining even though it's there. So the rate payers are paying less and ultimately it's the rate payer that pays for all this, right? So the rate payers are paying less for capacity that's still there and our response time is better. So I have to ask you guys about the trout. This is something that I keep seeing somehow in the discourse.

Sure, sure. People seem very concerned about the trout. So what is the concern about the trout? And is this something that people should be worried about? So, well, it stems from our water, from words in our water permit, not from our actions, but from the words in our water permit. So in terms of the actual data, we publicize the data. of the intake temp and the outtake temp from the water that we bring in. The average temp during trout season this year was 49 degrees.

And on average, the water that we discharged was it was between 6 and 7 degrees warmer than the intake water that we received. The permit, the words of the permit say that we are allowed to discharge water up to 108 degrees. And all that means is we would be in kind of like a bright line violation. if we discharged above 108 degrees. And, you know, the water that we take in is not going to be made cooler, obviously, running it through our planet. You know, it's going to warm up. So there are, you know, there are times in summer where the water that we take in is over 80 degrees.

So the water coming out of the plant is going to be in the 90s in the peak of the warmest season in August. but, you know, the average, I forget that, I don't want to misquote, so I forget the average temp, but I do know that in trout season, it was 49 degrees. And over the course of the entire year, I believe the average increase in temp, and this is all in Fahrenheit, for anyone that's, just to be clear, but the average increase in temp is eight degrees throughout the course of the calendar. So we oughtn't be concerned about the trout. The trout are going to be just fine, basically.

Right. And, you know, we do have people that, you know, that call the plant and or just read and read the paper that we're discharging, you know, discharging 108 degree water in the like, which is, which is simply untrue. But, you know, though they believe it and call the plant and complain or write letters and complain. and there's only again we publish the data it's it's it's it's very difficult because again it's a number and a permit it's easy for someone to fixate on and point to and say oh they're discharging 108 degree water into the lake when it's five degrees right so i want to talk briefly about this hash rate transition the world is going through so china has begun it looks like credibly cracking down on Bitcoin miners. The province of Inter-Mongolia, basically, independently, the central government had already begun their own crackdown. Inermongolia is 70% coal, 30% solar and wind, give or take.

But of course, the big bad in China is Xinjiang province. I'm probably garbling that, but heavily coal-fired, probably around 60% coal. during the dry season, lots of mining occurs there. During the wet season, it goes to Sichuan-Unan, which is actually where the hash rate should be now, we're in the wet season. Looks like the Chinese central government is kind of fed up with all this mining,

and there's been a big, you know, move in the last week from China miners to look for capacity elsewhere. So I want to ask you guys, you know, first of all, have you actually fielded calls from panicked Chinese miners looking for hosting capacity out here in the cleaner USA. And second of all, what do you make of this opportunity to kind of reset the narrative, move away from this notion of Bitcoin being mined with Chinese coal and mine Bitcoin with much cleaner US energy?

Right. So the answer to the first question, yes, we've been contacted directly by it's funny. people that we've been contacted with are not domiciled in China, but say they have significant mining operations and assets in China, but that they're looking to get out of China. And I believe them. But it's just interesting to note that they're, you know, they're domiciled somewhere in, in Southeast Asia, just not just not in China. So this, the rumors are true, basically.

Like, they're, I think the rumors are true. And I don't know if, you know, I don't know if those people are just. on the forefront or just paranoid, but these are calls that we had not been receiving until very recently. So there's definitely an impact. It's definitely impacting people's actions. I think one thing that isn't talked about much is it pertains to the U.S., and I don't know about the rest of the world, but I'm asked a lot about minor availability for new miners that are on order in the U.S. given the chip shortage and how that's going to impact everything. And I'm really not concerned about the availability of miners.

I think that the U.S. is getting very short on places to put the miners. Right. And what I mean by that is if you're going to expand a mining operation, you obviously need the mining equipment, but you also need a place to plug it in at the required voltage. and that voltage is different than the transmission voltage or the voltage of a major former industrial site. And there's a big lead time on the equipment that's required to step down that voltage

and the lead time on that equipment is maybe not as long as miners, but not that much shorter. And I know for a fact, I mean, we're seeing it because we're not only getting calls from people in Southeast Asia about miners, but we get calls from people in the U.S. that have miners delivering that they're not going to have space to plug them in for three, four, five months. And they're asking if we have space. And the answer is we don't because we're managing our own build.

And, you know, we've done a good job because everything we do is in house. We don't outsource any of our hosting or any of our, you know, we do all of our engineering in-house. We don't do our own construction. We contract that out to local contractors. But we're just given the fact that we grew up as a power plant, we're pretty good at project management, planning all that, and having spare parts and redundant equipment on site. So we've been lucky enough to meet our build timelines.

But I think as an industry, I think people are a little bit behind the ball there. And I'm not saying that's true of everybody. I'm just saying that there are definitely some, some companies out there that are looking for space for miners that they have that are idle. And given that dynamic, I don't think there's a lot of room for the machines coming out of China in the U.S., which tend to be older, less efficient machines, right? Everybody in the U.S. is making room for much more efficient machines. And the efficiency matters, obviously not just because of the environmental impact,

but just the pure dollars and sense of mining with a more efficient machine. So I don't know what will happen. I don't know if all that, if in fact there is a big piece of capacity that is low efficiency capacity that wants to leave China, I don't know that it will all find a home in the near term. It may take a while, and who knows by the time it finds a home, the next generation of equipment may be out and some of that generation may just be. completely obsolete. Ted, any comments on the narrative resetting opportunity we see here?

Yeah, I mean, it's as old as Bitcoin, well, almost as old as Bitcoin itself, that the mining was centralized in China, and therefore it was unfair or inaccurate to say that Bitcoin was decentralized. And this is basically one more fud, one more perceived threat. to Bitcoin that's getting knocked down. Bitcoin is inevitable. And, you know, for an individual, character is destiny. For a society, culture is destiny.

And for a money, characteristics are destiny. And Bitcoin has the characteristics of hard money in greater aggregate amount than anything human beings have ever had access to. And it's inevitable that it's going to be adopted and it's going to be ubiquitous. So all we're seen is the inevitable defeat of these quote-unquote risks or more accurately fud that people say is going to bring Bitcoin down.

So in this case, it's just another pin, that pin being, oh, it's too centralized in China that's being knocked down. Well, sad. Well, gentlemen, I've had you on for a while here. This has been really eye-opening. I mean, you know, frankly, Ted, when I saw that you'd made the move, I know you don't take these decisions lightly. And so I looked into Greenwich and wanted to, you know, peek beneath the veil, you know, the way that was characterized in the press I knew was not representative of reality. And this has been incredibly encouraging to hear the ways you guys are being so thoughtful about mining responsibly and onshoreing hash rate.

any concluding thoughts or anything else you'd like to say about about Greenwich that we haven't had the chance to say yet? The only thing I think I'd like to touch on is, you know, we try not to make comparisons of why we're better or why we think we're better than any other minor that's out there. We are different in that we own our own generation. But I think the thing that really differentiates us is our purpose. people and the, you know, the fact that we perform all of our functions in-house. And I think that's going to become increasingly important, not doing it in house necessarily,

but operating a mine efficiently as the mines globally, not just in the U.S., really significantly ramp up in terms of their size and scale. you need to have, you know, fundamental operational KPI's and metrics and procedures and protocols that you're following in order to maintain your uptime because that, you know, miners break. It's like any other operating asset. It's a fleet of assets out there. And if you operate a fleet of trucks, some are going to break down.

If you operate a fleet of miners, some are going to break down. And we do all that in-house with our staff. And as we move to new locations, new geographies, we're going to take that same staff and use our existing staff to help train people and manage people in new locations. And the only thing I really think differentiates us is a minor is our people. I think, yes, the power plant aspect is different. but when it comes down to it, miners are all looking for lower cost electricity. We achieve lower cost electricity because we have the plant,

but everyone's striving for lower cost electricity. Everyone is buying more or less the same equipment. And I think ultimately in the maybe not the immediate term, but in the medium term, how what you do with that equipment at some point is going to matter. And I think that we have the people in house that we're really proud of that can help manage that as we grow. Yeah. I mean, Jeff said it best about Greenwich itself.

I think it's a self-contained company that's poised to be dominant and very beneficial to the ecosystem. And that's why I joined it. And I'm grateful for that. But Nick, I also wanted to say, like, I'm grateful to. to you and all the writing and time you put into this and all the study you put into it you and a few other people you don't need to do that you know no one needs you to do that you stuck your neck out there you continue to um in this debate and it's really really helpful and we do need people that can refute misinformation and put things in perspective and keep things in context so

context so grateful for that and thank you well that's kind of you to say it's my privilege and honestly I find it very interesting to look into Bitcoin's energy dynamic so it's rewarding in its own right this has been really great guys I'm really glad we could do this and very excited to uh to get the actual truth out there you know truth matters so let's uh let's that's all I wanted to do and uh you guys did great so thanks thanks again for coming on today thank thank you for having it