TFTC: A Bitcoin Podcast - #150: Great American Mining

Episode Date: April 15, 2020

Join Marty as he sits down with two members from the team at Great American Mining, Austin Storms and Tom M, to discuss: - What Great American Mining is doing - The journey and lessons learned along the way - Different energy sources and how they affect the decisions of mining operations - Miners biggest problem; finding cheap power at scale - Austin's journey with Bearbox - How mining is ruthless capitalism - Solving problems for oil companies - The future of mining in North America - much more - Check out Great American Mining's one pager (site to be updated soon) - Follow Austin on Twitter Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse you download the app.

What's up freaks, it's your boy Marty here to introduce a very special episode. Very happy and proud of this episode, proud that we're able to start talking about this. I've been working behind the scenes outside of the podcast and the newsletter on something that I'm very excited about, a mining project, a mining operation where we're using what would have otherwise been flared uh gas on an oil field to mine bitcoin uh the company i work for behind the scenes great american mining uh has been in a quasi stealth mode for quite some time we finally have been live for for about four months now five months almost now geez um on site and are starting to talk about what we're doing um so i sat down with two co-workers austin storms

and Tom Mazero to chat about what we've done, how we're helping this oil company, how we think things may progress, and why we're doing it. So I think you guys are really going to like this. Let me know what you think. I think it's exciting times, especially for mining in North America. This episode of Tales from the Crypt was brought to you by our good friends at the Cash App. as i mentioned during yesterday's episode the cash app is helping uh distribute these uh these stimulus paychecks because now they are official bank they they you can get a routing

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and $10 is going to go to our good friends at Owls Lacrosse. That's Owls Lacrosse. Owls Lacrosse. Down in the Cash App. I hope you guys enjoyed this episode. Again, we're very excited to be doing what we're doing. We're hoping we can expand and make it a large operation

and help bring hash power to the United States, to North America, and begin distributing this network even further. Enjoy. Tiki. Plan beats. each day i'm closer to being cash of the future not in your wallet i'm in your computer i'm the consensus of shared and synchronized digital data spread across multiple platforms from shanghai

To win later Each day I'm closer To being cash of the future Not in your wallet I'm in your computer Not in your wallet What is up, freaks? Welcome back to Tales from the Crypt.

It's your boy, Marty Bent, here for a very, very special episode. I've been teasing a project I've been working on outside the newsletter and the podcast for a couple months now. but i think it's time to sort of break out of the underground if you will out of stealth mode i'm sitting down with two team members in the great american mining company a company that we've been building i mean i've had a small part in it for the last few years in the mining industry we're doing some pretty cool things in the oil and gas industry with a very big oil producer that we're not allowed to name but we're allowed to talk about what we're doing and sort of educate you freaks about what's going on in the mining industry here

in america particularly i want to introduce you freaks to two co-workers of mine austin storms and tom mazzaro what's up guys hello marty what's up thanks for having us thanks for coming on well it feels good to finally uh be able to talk more about this we've been talking uh in slack behind closed doors for so long about this this is again in a quasi stealth mode and i'm just excited to talk more about it because i think we're doing very very exciting and important things uh so i think the best place to start tom you've got the most experience at the company you're the most tenured employee on this call i think uh you can do a better job than i at sort of describing the inception of great american mining and in our story up to this point and how we sort of got to

using waste gas on an oil field to mine bitcoin yeah well i think you know marty it always goes back to where the incentives are and um you know you and i were working with each other um kind of at the parent company to great american mining uh prior to this and this started off as a side project and uh it started off by us accumulating some bitcoin and we decided what most stupid people do when they accumulate a lot of bitcoin is they say oh we'll we'll go mining and make even more that's kind of usually the um the first mistake someone makes so we went down the rabbit hole of buying like a hundred dragon mints at the top of the bull market in 2017 worst possible time you could ever do that but it's probably the best time to actually learn a

very valuable lesson when it comes to mining we thought we could just string these things together plug them into you know wherever and start mining and then the longer that we kind of started down this road we started realizing wow it's not as easy as people make it out to be especially to do it at scale. And eventually you get sucked into this wormhole of trying to chase very cheap, scalable, reliable power. And you would think that that's a pretty easy problem to solve. It's actually a very, very, very difficult problem to solve. And so long story short, starting in 2017 towards the end, all the way up until about last year, this time, we were kind of failing at what we were trying to do. We've gone down multiple routes of trying to set up, you know, power

purchase agreements behind energy grids and doing all kinds of, you know, partnerships with folks, but there's, you know, a lot of things just fell through. And then around this time last year, one of the guys on our team, Reet, has an oil and natural gas background. And in Utah, they have a field out there called the uinta basin and he happened to know someone who had a water treatment plant who had and part of the byproduct of this water treatment plant that they deal with with the surrounding oil wells is they there's a lot of water that comes up and then with that water there's excess natural gas that is kind of part of that process so they actually flare at their facility. So they had a conversation and we proposed to them like, Hey, what if we come put

a generator on site, consume this gas and we mine Bitcoin with it. And it was kind of like a good old boy handshake deal. Said, sure, let's do it. They had certain requirements that they were trying to get under for flaring mandated by the state. So there was kind of an incentive right there for them. And before you knew it, we became experts in mining Bitcoin off of flare gas. And so I would think about two months later we you know had it running for a little bit it was a very small pilot only about 50 kilowatts so maybe like 30 40 s9s wasn't anything you know crazy we just wanted to see how it would work we got introduced to a major oil company in the Bakken in North Dakota and that is when we kind of got our you know our start doing things on a much bigger scale

and really trying to tackle the problem at scale. So that's the genesis of where we're at right now. And we went live early December of 2019. Yeah, it's been a fun journey. A lot of ups and downs, a lot of hard lessons. But it's truly been like a baptism by fire experience, like running into hurdles, sort of self-reflecting, and then moving forward from there.

Absolutely. It's kind of insane. The things that, in theory, make a lot more sense to do in a centralized warehouse location, especially when the real metric that you're trying to go after is, you know, sub four cent, sub three cent, sub two cent pricing. You know, you're just like, what are we doing out here in the middle of this, you know, desert? No, you know, no existing telecommunications around. We have to work with the satellite. We need special access to get on these sites. um you know in a lot of ways traditional more data center models make a lot more sense so this

is very much a a viewpoint of like what the future should look like especially from an energy producer perspective because obviously these natural gas and oil companies have a lot of incentive to do something with the wasted uh resource that they have right now yeah and so That's, I think, a good synopsis of our goal or a good gist of the goal of what we're trying to do and achieve at Great American Mining is to sort of have these oil and gas companies have the aha moment and realize that they should be investing in this and building out a mining infrastructure on their field so that they can be more efficient with their wasted gas, like you mentioned, and overall in the long term help Bitcoin out and help protect Bitcoin and distribute Bitcoin further from a mining perspective. Yeah, I think like it's like a twofold strategy, which is particularly in areas that have regulatory hurdles to deal with, you know, regarding the flaring. So that's not all of the US. There's very different ballgames to play in different parts of the country, but particularly in North Dakota and in some other states. um the idea is the carrot here is hey we're just going to make your flare problem go away it's a lot cheaper to do it this way than the other options at this point and then eventually it's like hey uh you know this little black box that's sitting on your land um there's it actually

is a an alternative to your pipeline that you're so worried about trying to connect and so eventually i think the idea is for them to look at these as distributed digital pipelines where they can just set these things up on all their well pads without having the infrastructure of having to do kind of traditional pipelines in the future where they can literally get the value from the molecules from the ground in a digital format almost instantly. Yeah, pipelines have been big headaches for oil and gas companies.

There's a lot of pushback, a lot of sunk cost that goes into them and then they're not as profitable all the time once you do finally get them up right and they and they and they lose control too so like for example if you think of it as like a market there it's it's they can kind of get boxed into go into going to one market so like whoever the pipeline owner is at that point they essentially become dictators in a sense because they can dictate the price because where else you're going to send your gas nowhere you got to pay them what they want so this gives us a little bit of like a two-sided marketplace in that scenario that's a very good point um before we get too sick into the weeds here uh i'm very happy that we brought

austin on austin's come on the last what six to eight months awesome yeah well and so yeah and it's and it's this is this is one of the kudos that you get because you've been kind of like along for the ride as like maybe three or four of us were kind of figuring out how we were going to do this and then i think it was around last year this time you said hey why don't we jump on a on a zoom call with austin um and just get caught up on what's going on so i think it was right right around this time last year yeah and so for you freaks that don't know i had the pleasure of meeting austin what was it two years ago bit block boom two and a half years at this point yeah two and a half uh almost probably almost three years i guess it was in dallas dallas right

2017 2018 i don't know it's running together at this point i think it was 2018 we met i mean we've been twitter friend we definitely dm before but and conversed via tweets but i met you in person in dallas so it hit off right away and so for you freaks that aren't aware austin has been in this mining game longer than than tom or i with his first company bear box and has brought an immense amount of knowledge uh when it pertains to like actually building the containers and doing it in economical way so i think this would be a good opportunity to sort of get into your history austin like how did you get into mining originally what were your uh thesis behind building bear box and what was that experience like yeah so uh originally i mean i saw bitcoin

in college like most of us who were you know around 30 years old did um i didn't start building anything really at scale though until like early 2017 um first big scale thing i did was ethereum miners gpus right so we uh we actually a partner and i bought like all the gpus that best buys business team had in the entire country and stood up a big gpu mine um Um, worked was a big pain in the ass, man. Those things are not easy to manage. Uh, and then decided, Hey, let's start doing some of the ASIC stuff at scale. Um, had, uh, participated in the gigawatt, uh, ICO and some of the hosting stuff out

there that all turned out the way that most people know that it turned out. Well, for those who don't know how it turned out, how did it turn out? uh they so they went bankrupt um filed for bankruptcy last year i guess the beginning of last year uh i filed a class action suit against them um before that and so that that happened that was just a crazy crazy period uh in my life um and so then i started looking at some of the problems with okay you have all these hosting facilities right and they have obligations contractual to some of these PPAs that they've signed, or even their leases on the properties. And if they don't pay, then your machines are held in escrow. There's problems with

physical infrastructure being built and invested in that you can't end up moving if something does change, like we saw in central Washington. And so I thought, hey, why don't we start building these things in shipping containers because i'd seen it on some reddit forums i've seen it on uh you know some of the some of the i guess you could say lower quality mining setups your chicken shacks tom those those type of things right and uh and i was like i think we could do a quality though like we can build these to quality we can build them in the states and we can source everything here besides the you know the mining machines obviously and so started building some of airboxes, started working on what the infrastructure looks like physically from an HVAC perspective,

what it looks like from an electrical distribution perspective of, hey, is this in compliance with the National Electric Code, because you get jurisdictional issues. And then the biggest thing, does it actually all work together? You put together this Frankenstein of a 20-foot by 8-foot shipping container that's got half a megawatt or a megawatt of power running through it does it cool itself down fast enough does the internet connection that you're you're mining on can it can it provide the bandwidth up and down or do you have to stand up a proxy server like there's all kinds of questions that come into it that i started doing i guess like two and a half years ago now um still still trying to figure

them all out too yeah i mean that's for me at least it's been crazy to learn the intricacies that go into one of these containers like talking about the like the voltage flowing through the gen sets to the fan speeds of the miners to the quality of the gas that that gen set's consuming there's so many moving variables to take into consideration right there's a there's a lot of moving parts and you know they're they're all interdependent too right so like for instance we just we use variable frequency drives to control the fan speed some people use on off control some people use uh manual on off control or three contact relays we use vfds and like i programmed and built a python pid controller for the for that variable frequency

drive um essentially like you've got all these different things if it gets too hot your power supplies they start they start you know working less efficiently and if all of your circuits and and circuit breakers in your wires are sized directly to that like you end up with some issues from the electrical side and so it's really the it's a fine-tuned balancing act to get everything working together um and that's what we're still trying to like i said figure some of the stuff out uh especially on the gas side too yeah i mean you like it yeah well i'm just gonna say and one of the things that we're learning right now is you know we just came out of a you know what was a relatively mild winter for north dakota but still

very very harsh conditions we've got you know periods of time where it was like negative 30 40 degrees and now we're heading slowly into the summer and kind of like rain season so we'll have a whole new set of problems challenges to deal with like you know sideways rain coming in through our intake and exhaust and winds that are very different blowing sand so uh you know now we'll have like a whole nother you know cycle to kind of get as much data as we can on how to run these things um as long and as efficiently as we can yeah so i think that's a good segue into another topic is i mean bitcoin's obviously 11 years old it's a6 going on year seven right now you're you're six and a half maybe or something like that like how how much of a learning curve

is there like for anybody not even us like how early are we to this mining game particularly in your in your your guys minds go ahead austin yeah so i think that there's just a lot of there's a lot of moving parts right um so you have like your your network administration part actually building out your your local networks and how depending on whether you're using like cable or fiber or satellite internet you've got the entire hfac side which is not my forte at That's something that Reed's been, I tasked him with, I was like, Hey man, this is not in my wheelhouse. You go ahead and do it. I know that enough. But you're, you're the chemi, you're the actual engineer on this.

That has a lot to do with like static diff. I mean, there are so many different pieces, Marty, that go into a mining operation. Right. I don't think there's one person that has all the answers. And so, you know, if we're early right that was your question how early are we to the mining game we're still early there's not a lot of people that know how to do this stuff period now that's yeah it's uh it's exciting though isn't it yeah like i've known you for like two and a i mean i've known both of you for many years now but austin you particularly you just seem infinitely fascinated

by like the the tinkering with these boxes and and the writing scripts and apis to communicate with the miners and stuff like that there's so much to be done there is there's so much to be done and it's it's a problem that's never all the way solved you can always improve upon your current setup and so finding that that apex mining setup right the apex predator of mining setups that's what the goal is but then you throw in things like are you operating off of hydro are you operating off of wind are you operating off of gas and those throw a monkey wrench into your entire operation of what you consider to be your apex predator mining setup because your your gas your gas side has different challenges than your wind side versus your hydro side and so it's it's

an ever-evolving game and that's what i like the most about it is like you can't sleep you you always have to like continue to learn whether it's like how you're how you're managing your miners uh from a network perspective or squeaking out efficiencies on your electrical side you can't stop and i think that's what satoshi kind of wanted um he wanted continual continuous improvement in in how we're we're getting our efficiencies um and kind of securing the network yeah yeah and and to austin's point i think what's interesting right now is that in the mining world especially when i say mining world i don't mean um kind of like your normal hobbyist i mean people that are trying to do things over one megawatt and scale it at the minimum is you're seeing a trend now

where even centralized locations are adopting instead of building like a large warehouse and doing all the infrastructure they're actually using the container model as the way to build on-site and so uh you know like a year or so ago that wasn't the case at all and now you're seeing very very large places you know stack 40 50 60 containers um on you know on some land it's just cheaper to do it that way like that's that's why i started doing it that way i mean you look at some of the physical infrastructure costs of like building an actual warehouse and building a steel structure it it doesn't make any sense when you can do it in shipping containers um and that's i mean that's what i came to two and a half three years ago uh and this this game is

ruthless mining is ruthless ruthless capitalism and there's there's no room for there's no room for ornate setups there's no room for traditional data center setups there's no room for smart pdus that monitor every single thing you need you just need the bare minimum to get by in terms of opex in terms of capex and you're head and shoulders like in front of everybody else who wants fancy setups yeah i mean specifically for us what we're doing on an oil field two containers just make infinitely more sense because we're potentially going to move from well pad to well pad as the uh potential gas depletes over time yep absolutely yeah so building them on trailer beds um you know things like that uh you know i think on the container

side you're definitely seeing because there's so much innovation going into container builds whether it's you know what we can probably talk about a little bit later versus passive versus active design our design is active we have powered fans that are helping with the airflow there are some designs that are passive um but in in theory it really boils down to what austin was talking about which is can you drive your operational uh at least you know your initial capex down to as low of a number as you possibly can to help you get you know your payback as fast as you can and so um you know a year or so ago you're talking two hundred thousand dollars easily for like a one megawatt container now have you seen those numbers if you're going to buy one commercially you know

start to come down um pretty dramatically and of course you've got a lot of offshore chinese you know brands and things like that that you can buy but would require you know tons and tons of uh modifications to get them up to spec so that's why we decided to build our own and then also work you know along with austin and modify some of the designs that that he had as well so we've kind of incorporated the two yeah it's been a beautiful it's been beautiful seeing it all come together specifically like the last six months and so i guess that's probably the next topic we should um jump into is sort of the pace we're moving with the oil company we're working with in the the learning curve of the oil company and tom you've been uh the man the forward-facing man

with the oil company what has their learning experience been like what have you seen and how hard has it been to sort of educate them about this well i think just like bitcoin you have to be willing to learn so thankfully we had one person inside this company who was intrigued by this because first and foremost, they were not satisfied with the solutions that they had for flaring currently. Not only was it costing their company a lot of money to do these natural gas liquid setups or just flaring them. So he was looking for a cheap alternative. That ultimately was it. They hear all kinds of people come in and said that they could do this, but it never ends up working out. We, I wouldn't say we got lucky,

but we were very fortunate in terms of our timing because Crusoe, who's another company that's doing this, who had been at it a little longer than we have probably about 12 months longer than we have. They had already approached this company and, and had already been very active. They're, they're, you know, they've, they've done a lot of work with promotional kind of components inside the oil and gas industry so the oil and gas industry is no different than anything else it's a kind of a good old boys network everyone knows what they're doing everyone knows what everyone else is doing and so in that scenario it was like hey this is this new thing on the block and we kind of just came alongside around right around the same time and said hey we're doing this

too and we just happened to develop a really good relationship with the company that we're working with. And we said right from the beginning that we were going to be an open book for them. Like we'd be very transparent with our data and all of the findings that we were going to learn because we knew we were going to make some mistakes. But we ultimately believed, and we told them this right from the beginning, was two years from now, we're not going to be the main operators. I mean, we might be the facilitators of the ones who are managing these, but the oil and gas producers themselves were going to be the miners eventually, once the rabbit hole gets them. And so we wanted to take that initiative to get them down the rabbit hole. And they said, okay. And so the

reason why they moved so quick, it took us about, we signed an MSA, which is called a master service agreement. It's a very long, complicated process. I had no clue about this prior to doing this project. So it was lots of legal paperwork, lots of compliance, tons of training that has to go through. Obviously the insurance requirements of being on a well pad are not trivial, but once we were willing to, I guess, put our skin in the game on that, we were approved. And then we were the first one, we kind of beat everyone else who was kind of racing against us at the time. And so we've worked out pretty well because we got in before everything froze and then you know since the whole coronavirus thing has happened a lot of the oil and gas companies have kind of frozen a

lot of their you know projects that they were working on things like that so we've already got kind of like an in with them and a working relationship with data flowing in both directions on gas consumed uptime etc yeah no it's i guess that's another good point too are we allowed to mention the uh the study that we may be a part of um i would just say this that uh we were introduced we got intro to a research center that's tied into a university in that area that their main problem that they're focused on is the flaring issue and so we are going to be entering into a pilot project to essentially allow them to see and validate from like a third-party perspective how the solution

holds up from the flaring side of things so yeah we're excited for that to continue and so six months or wherever we are almost six months in now do we think that the oil companies are going to have this aha moment do you is it really worth it for them in the long run are we are we just being hopeless romantics that that uh that bitcoin fixes everything it'll fix it for them as well uh or do you if you would have asked me that question uh march what is it 10th or 11th 12th you know there's like that was like doomsday week not only for like the markets but initially it was if you go back it was started by the oil market literally was like the starting point that the match got lit when it dropped um if you would have asked me back then i would have said okay we

just want to hunker down and just like ride it out uh you know not make a not necessarily a scene but essentially just become invisible to whatever they have to deal with uh for the foreseeable future because they had a massive triage um scenario that they're you know most of these oil companies are cutting their um you know their operational expenses upwards of 50 to 60 percent of what they were going to. So they had some things they had to get handled. But more so, I would say in the last two to three weeks, as you kind of soak all this in, is that I think we're actually closer to getting them to see Bitcoin as a viable pipeline alternative than we were prior to that. Because prior to that, it was just this, let's make my headache go away of having to deal with

flare credits. Whereas like, oh, wow, we really need to figure out alternative streams of revenue and how to extract value from what we have. Because they made so much money off their oil that this other stuff really didn't make a difference. Whereas I think now there's at least a willingness to say, hmm, what are some other innovative things that we can do to come out ahead in the next upturn? Which ultimately is the same mindset that these oil and gas companies had during the last downturn um and that's how the fracking you know and everything kind of came on online back then during a down market yeah and also what were what was the uh the main source of energy that you were using for your miners before before again grid for sure grid power

i mean there's some there was some wind stuff in the pipeline um that never quite took off like i thought it was um but yeah grid for sure now how did the two sources compare in your mind specifically like gas versus wind or gas versus some of the hydro stuff that i've consulted on or gas versus grid power uh get into the intricacies of the uh source of the power whether it be wind or hydro gas is great when the well pads up like when your well is flowing if it shuts in you don't have any gas um same thing with wind the wind stops blowing you don't have any electricity

being generated um hydro is good but hydro is all tied up in like these cabals of companies that are owned by pe firms who want more than what the energy is actually worth and so i think that like the gas stuff is good as long as you can keep the wells up period and i mean the way that we do it it's what 99.5 percent uptime so far uh which is really kind of fantastic but that's more on the operator um it's not really on us sure our stuff works but they're keeping their well up so that's why it works yeah and so i guess that's a good a good comment because obviously right now the consolidation in the oil and gas market especially shale here in the u.s is pretty massive everybody's uh getting into the hole and figuring out what they need and like you alluded

to tom these companies are going to be uh sort of looking for alternative streams of revenue with mining provides and so as they get into the hole and sort of consolidate it's just trying to convince them that hey on the few well pads that you still have producing like you should also keep bitcoin in mind to to consume that waste gas absolutely i mean the the one metric that obviously is the hook that gets the fish with with them is that there's a certain dollar value that's associated to their gas so they base it off of what they call mcf and so there's like a baseline wholesale price of like like a dollar 70 or something like that now through our you know data and this isn't you know steve

barbers talked about this other guys who are doing similar things i've talked about um and this is why we're all invested in doing this is that when you back out bitcoin to that same wholesale gas value, you're talking even in a down market is five times more profitable to mine Bitcoin rather than sell it into a pipeline at that price. And so it's just making them comfortable enough to know that it's actually real because it sounds like crazy to them that they could theoretically get that value out of that gas. And so they're just more, I guess, not skeptical, but more hesitant and so that's why every day it's kind of like the the story with bitcoin bitcoin is a self-fulfilling prophecy because every day in the day before it was still there and it was still

doing its thing and i think the same thing with us you know when we talk to some of the boots on the ground there on the patch they're always just like yeah it just works like it just continues to work and i guess maybe some of the other things that the other alternatives that happen to take place on an oil pad whether it's natural gas liquid processing and requires you know these huge condensers i guess there's a lot of like maintenance issues we typically don't have the same type of maintenance issues that they have so uh i think you know just it's just playing being on the the ball field and being able to play and go through each inning and eventually like you know we're going to get over the tipping point no i agree and because they're alternatively ngl

So what's their uptime? Like 50% or something like that? It's pretty terrible, isn't it? Right. And then the capital costs for the NGL market or for that initial infrastructure is about two to three times what it would be for an equivalent Bitcoin setup. And then at the same time, the way that most oil and gas producers work is they do not want to take on a lot of risk, which I totally understand.

So they end up not buying the equipment. They end up, you know, utilizing these NGL, I would say, service providers similar to what we are, and they have like a lease type scenario, you know, like a service fee, and then they have some type of rev share built in. But, you know, when the natural gas market or natural gas liquid market first came out, they were converting the gas into natural gas liquids, and then those liquids would then be valuable on the on the secondary market. Um, and so it was a good deal for them. Now those, now those liquids are virtually, um, worthless and yet, and it's still costing them to produce that same, you know, output. So, uh, you know, I think they're, they just want to take their time, see what they're dealing with. But in reality, it's a simple digital conversion from gas to electricity. We're just creating little mini, I wouldn't call them power plants, but eventually that's what they potentially are to them. If they are the ones who are going to be owning that asset. How much potential gas can be consumed out there right now? If production is at a steady pace and obviously above where it is now, when the economy gets back up and running at some point and people are driving their cars and consuming gas,

what's the what's the potential waste energy that can be consumed i think reet's going to probably yell at me later because i don't have this off the top of my head but i i want to say that just the provider that we're working with um has hundreds of megawatts um available and that's like you know we're not we're not talking you know exxon val i mean like it's just this one player in the field so you're talking gigawatts and gigawatts of of of gas that's just being flared not that's going into a pipeline not that's having any other value just that's just that is being flared currently so is gam helping the environment at the end of the day that's a question i ask a lot and i would i mean we're working on getting the data to back it up but

it's uh like we hopped in uh the slack and reet reet and i had this conversation it seems like the generators we're using uh the opportunity cost of wasting the gas instead of turning into bitcoin and getting value out of it it seems like we are making it more efficient and helping the environment is this is this true in your mind yeah i mean i mean if you just follow the flow instead of uh the output of that gas being in the raw form that it just gets burned up versus going through an engine then going through catalytic converters and going through that whole process of you know all of the engines that are mostly used in the gen sets that are mostly used on these well pad sites have um you know strong epa ratings specifically for this use case so um

no we i feel really good about uh that aspect of things never mind the down the road impact of the amount of infrastructure that will not need it you know like think about all the pipelines and going through uh you know people's you know backyards and through forests and you won't have to do that you literally have these places where gas is available and you'll be able to extract that value right on that well pad and not put anybody else in danger with any leaks breaks explosions etc that's a pretty good point awesome what are your thoughts on this uh consuming it on site's always better you know that's that's what we're doing right we're consuming the gas right there locally um and essentially providing liquidity where there is

no liquidity especially for some of these well pads that we've seen that are stranded and can't be connected to a pipeline um i think from an environmental perspective i'm not well versed enough to talk about whether we're helping the environment or not uh i think like tom said reed can speak more to that um might be a good follow-up session for us to get him on here and talk about the intricacies of the oil and gas industry because he he he's forgotten more than i know and more than tom knows um and so i think that that's a that's a question for him i'm gonna go ahead and just give it to the experts yeah and that's and to just you know quick follow-up on that that's part of the reason why we want to partner with um some of these research um groups

as well so they can be the ones that determine uh the efficacy of that or not yeah that's very good point my uh my bitcoin is a real green new deal meme it's uh you're gonna be the aoc of god no yeah no um yeah no it seems it seems like it could work out but hopefully we're able to back it up with data very soon well yeah i mean and you know for us too i think you know the way that we look at it is you know gas company or oil and gas companies they have lots of capital to spend if they want to um so eventually like what every miner needs uh is the ability for to do it at scale you actually need it's a very capital intensive uh game it's not cheap to mine you're talking at a minimum a million dollars a megawatt sometimes it's more than that and so when you

think about that in terms of being able to scale you know the the industries that make the most sense for that are you know energy companies and that's essentially you know whether it's a large wind farm or an oil and gas producer or a hydro farm or a hydro plant they would fall into that same category yeah now and again these oil and gas companies provide you alluded to it earlier tom the cheap and scalable energy in one spot that is necessary to scale a mining operation at a reasonable cost and so what does this mean for bitcoin mining in the long run if these oil and gas companies do come around and they do start retrofitting their fields with bitcoin miners in mass like right now there's not enough hardware on the planet to do it for probably even the one

we're working with, let alone every oil and gas company in America and the world by extension. Yeah, I think it'll, I think it will continue to happen at the pace it needs to happen at. I think there is definitely a lot of attention and adoption that's starting here in the United States in their very different types of miners versus what we see in other parts of the world. So, you know, I'm thinking that this kind of unstable kind of environment that we're in, right now will actually be a catalyst for a lot of innovation to take place um i don't know exactly how they'll treat it right like there's a part of this where okay well what would a publicly traded oil company that's doing this like how would they manage their bitcoin treasury

like are they sophisticated enough to deal with multi-sig wallets uh you know what does does um them choosing a pool like slush pool does that you know change any dynamics in which they're able to operate from a you know um compliance standpoint like there's all of these things that are like completely wild west territory right now we don't know that so uh i think it's just going to be more and more people just dipping their toes trying to understand and then you know folks like us who and others who are kind of can come by and you know try to figure it out with though, because all of this is not, you know, it's not completely solved. There's a lot of this that is, you know, we have to have essentially like self-checks all the time. Like, is this worth it?

Like, this is crazy. Some of the stuff that we have to deal with. And yet, you know, I think it's part of the process to evaluate this as an option. Yeah. Austin, what about you? I think that the first oil and gas company that decides to go all in on this is going to become one of the largest bitcoin miners in the world um there's a significant amount of human capital that they're going to have to use a lot of them have their engineering teams already already built in right um they don't have to outsource a ton of stuff uh they just have to actually look at the problem as a problem worth being solved and whether that's uh you know one of the majors or one of the you know mid-market players i think that whichever one does it first and does it the

right way and actually you know concentrates their value and concentrates their time and concentrates on solving that problem of hey we have all this flared natural gas that we should be consuming we can't put it in a pipeline we have to pay for the capacity let's just go digital with it um one of my favorite sayings is that every company is a tech company they just don't know it yet right that's the same with these oil and gas companies and that's a really good point about the like the fracking and shale side of things because right now it's kind of all halted for the most part but when they do in a new well the amount of um gas that is that is produced in that first six months actually less than that first three months is in orders of magnitude

Like, for example, the pad that we're on right now, you know, we could probably extract about four or five, maybe six megawatts worth of gas at the top end. When that well broke ground 12 to 18 months ago, it was producing upwards of 75 megawatts. megawatts. So that's like, you know, it's, and of course the oil and gas producer is incentivized to try to capture as much of that at the beginning as possible, but only an oil and gas producer could have enough capital to actually put the mining capacity in place to be able to do something like that, at least initially. And then it would essentially become a part of their, you know, their ongoing, you know, rig operation where they just, okay, we're going to go launch a new well okay here's this you know modular you know 30 megawatt you know bitcoin mining um you know

containerized solution that travels with these new well pads and they launch you know most bigger oil and gas producers will launch anywhere between 30 to 100 new wells a year i mean the opportunity is enormous uh and i love that you said that every company is a tech company they just don't realize it and that's one thing i really love about working for great american mining particularly is that I've never been in the same room with everybody we work with, the small team that we have. We have Tom and Austin on the call now. We've referenced Reet, who's the chemical engineer on the team

and is doing an incredible job. We've got Isaac and Todd as well. So it's a small distributed team building out this pretty crazy project, which has been incredible to see come together while we're all doing this via Slack and Zoom calls. Yeah. and you know especially to the i would say the craziest part of the entire experience was when we launched the uh the unit that we have in north dakota that was supposed to go live somewhere in

november lots of red tape we rushed it we literally got the deal agreed uh first or second week of october and then uh two to three guys uh isaac reet and we had another gentleman that was helping out uh literally did this in the backyard of uh of their friend's house who had some equipment in utah and built out the container that we have out there right now and so within four to six weeks got it together got our miners that we had ordered our what's what what's minor m20s they were delivered to us and then we had it ready to be installed end of november and it took about three and a half to four weeks of excruciating uh issues after issue after issue on the well pad working out gremlins with the generators all kinds of um other obstacles that took place our guys

literally lived uh on that oil patch for almost a month and a half in like in the middle of the winter uh putting that together so true grit and determination just to get this up it's crazy just to get this little box up but then like you see the pictures of the flare stacks like in our little 500 kilowatt container like reducing the flare stack materially in pictures and it's all worth it at the end of the day you can see your work uh tangibly in in the flare stack that's been reduced um yeah what uh but overall like bringing bitcoin mining more hash rate more hash power to north america and u.s soil what does that mean for you guys let's start with you austin so i've i've always thought um and i think you know you and i have gone back and forth on twitter

about this a few times about like bitcoin mining in the united states being a matter of national security um there are some other folks in the industry uh alex over layer one thinks the same thing um you know currently the u.s has a bit of a stranglehold on the on the world's financial system if we truly believe that it's going to be a bitcoin first bitcoin only system moving forward Whether that happens in five years, 10 years, 20 years, 50 years, we need to bring as much hash power onto U.S. soil and in North America and Canada and Mexico as we can. I think this is a big step towards doing that, solving the plethora of natural gas that we have underground and capturing that and turning it into Bitcoin and mining Bitcoin with it. You know, same thing with the hydro in the Northeast and the Northwest. Solar's not quite there yet, but we have multiple gigawatts of wind production as well that's underutilized right now. And so, yeah, whatever we can bring here in the States to North America, it's a big step moving forward. And then, you know, like we've talked about to the fabrication facilities, right?

Our chip fabs, that's another issue. We got to, we got to bring those over here later, but it's a, it's capital intensive and, and information intensive as well. And so moving the needle forward is, is what I care about right now. Yeah. Yeah. There's an order of operations long-term. We want to get a foundry on American soil in the next 20 to 30 years.

At some point, people say we're stupid for thinking that it'll never happen, but. 10 years. I want it in 10 years. well hey let's make it happen and and and again i have said this before the order of operations maybe hey we get the oil and gas companies realizing they can get the parallel revenue stream with bitcoin uh they sort of start investing in it they're like oh man uh this is making us a lot of money we should protect it and the supply chain of this forces us to uh order a lot of hardware from china and places overseas uh is that going as

we're finding out now at the whole coronavirus uh out out of fall fall out excuse me uh supply chains are are not very distributed right now no they're they're fragile um and that's that's a big part of vertically integrating as much as you can uh with your mining operation it's it's a huge huge advantage uh it's mean it's even like kind of what we do at gam where we build the containers i'm designing and building new pdus for us right now uh so we don't have to we don't have to order from manufacturers we don't have to order from overseas we're doing everything here um because those supply chains are fragile super fragile yeah and i could foresee a scenario where it's not going to shift overnight i could definitely see

you know like you know first of all the two of the founders are outside of china so really it's the kind of like the glue that makes everything work is how the chinese have that stranglehold on the asics right now so we can potentially get chips that are outside of their reach i think there's just going to have to be a next step into what a bitcoin mining machine is right like there's a lot of talk about doing immersion and i could see a scenario where like it becomes more standardized or you're like a rack system where you could um maybe strip away yeah it's expensive but um you could kind of strip away some of the things that make it more proprietary to like the you know the chinese manufacturer so i think you know just like anything else there just

needs to be incentives and whether that's uh regulatory ones or you know things you know just from a monetary perspective if you get enough energy producers who understand what's going on you could see things speed up pretty quickly yeah this is a gradually then suddenly type thing um i think bitcoin itself and then the mining uh industry because again like if people 20 million people out of work that's what that's my one of my favorite tweets about bitcoin of all time is neil wood finds a little it'll induce a second enlightenment because and potential industrial revolution because there's just so much infrastructure to build out and so much to learn And like we've been describing this whole podcast, this has been a learning process, the whole journey for us.

And nobody has complete information in this industry, in the small niche within the Bitcoin ecosystem alone. Yeah, absolutely. I definitely want to thank Steve Barber, who put together or started that Oil & Gas Telegram channel. oil and gas bitcoin telegram channel there's been um uh there is some some some noise in there and little less signal than there used to be but uh pretty much all the big players um whether there's i would say probably a half a dozen or so independent canadians who are doing some stuff north of us and then there's three or four of us in north dakota and then i um you know i've got some folks who are working on some stuff in texas as well and uh you know everyone's there sharing

information asking different questions and of course one of the reasons why we all really love bitcoin is that you can have a different interdisciplinary kind of skill or talent stack and um you've get you get all of those types um you know in there talking about um different angles and and things like that so uh i'm you know i'm really excited to see where things go from here me as well Austin you have anything to add to that no I think I think we're all racing towards the uh towards the same finish line um I would say you know I think the Canadians have they're in a bit of a more dire situation than we are I uh following Francis and following some of Steve's stuff especially about what they do um in terms of exporting the oil from Canada they're

their incentives are a little bit i wouldn't say more aligned than us in the states uh but they have they have a greater incentive to solve this problem up there that's for sure yeah no i had the pleasure of sitting down with steve drinking some beers talking for two hours about it uh his story's fascinating man huge fan of steve barber yeah absolutely yeah no there's some really great uh folks in that channel and what i like about it is that like you know austin alluded to there are very different use cases and incentive mechanisms depending on where you're at so you know for us we're a little closer to canada in terms of like uh you know like they're not even really allowed to like have flares per se it has to go into a

pipeline north dakota there's incentives for them to you know bring down their flare volume but for the most part in other parts of the country specifically in texas where the permian is where there's a i mean you know it's the largest field there is um they don't have regulations um focused on flaring yet and so it's always interesting because you've you get some of these texas oil guys who will be in the room and they're just trying to wheel and deal like hey let me sell you some gas and it's like oh sorry dude it doesn't work that way like yeah unless you're mining this yourself um you need to either be paying us or the gas needs to be for free because like we we're not going to mine something where we could just go plug in uh at a data center

somewhere for roughly the same cost so you can tell there's been a little bit of um you know they can't wrap their head around that um because for them it's just much easier because like they only want to come out of the ground and go into a pipeline and they don't want to have the work of potentially investing in mining stuff uh or mining you know infrastructure so i think it's gonna for them it's gonna be a little slower adoption rate because there's not as much of a push for them to do it yeah no i would agree and yeah it'll be interesting to see how this all plays out what uh what was that well i was just gonna say there's another guy who you're going to be potentially interviewing here marshall holbrook uh who owns a i don't know is a variety

of of oil not oil fields gas fields in kentucky and so it's like a smaller he's like much more of like a smaller independent player but like he's took this route where in kentucky they have i believe that's part of the marcella shale they have a very dry gas we have a very dirt i wouldn't say dirty gas but there's a lot more that has a higher btu rating it's harder to burn it's a little bit more rough on like the um the the gen sets down there they've got very very clean gas very minimal scrubbing or taking out any water etc so he's essentially bootstrapped his own mining operation on his own land and i mean it's like it's like the perfect citadel conversation i guess like he's got his you know he goes and buys second hand uh gen sets and um and old ms9s

and literally just tries to drive the cost down as much as he can and he's and even though he's hooked up to a pipeline that he can very easily just turn the switch and send it to he chooses to mine bitcoin because bitcoin is more more profitable by a lot than sending it to the pipeline so those types of people those types of stories i think eventually will lead to bigger players as well yeah uh so why do you guys how'd you guys get into bitcoin originally why are you into Bitcoin outside of the mining? What drove you here to go on this

mad dash to form-fit oil fields with shipping containers filled with hardware? Go forward, Austin. I like solving problems. And Bitcoin solves a really,

really big problem. ideologically and uh you know from a capitalist perspective if i can make money solving that problem i'm happy with that you know i think all of us who are in this space and most people who listen to your podcast marty they understand that the feds added trillions and trillions of dollars to their balance sheet right singly out of thin air we have what is what does neil say infinite amounts of capital infinite amount of money right as much cash as you need baby yeah as much cash as you need and so uh it was similar to gold which don't get me wrong i think i think gold is great i just think bitcoin's better um if if you've read if you read vj's

long long medium post what was it two years ago three years ago that he put out The bullish case for Bitcoin. Bullish case for Bitcoin, right? He compares the two very intricately. And from a technological perspective, people look at Bitcoin as digital gold. I think it's oversimplifying what it is. It's a censorship resistant free way

to communicate value across the internet, right? And that is a fascinating problem to solve and a fascinating problem to work on and so that's that's kind of what's always driven me towards it um i had friends in college who were like mining in our dorm room back in 2011 and i thought they were crazy but i was still fascinated by it right and so it's uh it's just a problem that needs to be solved like i like i alluded to earlier and the more that we can solve that problem and you know the more efficiencies we can kind of eke out of whether we're mining on gas or hydro or wind

or whatever our source is or nuclear, which is nuclear is going to happen in the next five years, freaks. It's going to happen. The thorium reactors are on the way. They're on the way. That's why I'm here, to kind of

ride that wave of solving the Bitcoin problem. Well, thank you for riding this wave. I'm happy to have you on it. not that happy to be on it with you not that it's my wave or anything it is your wave that's the best part tom what about you uh specifically the problem that we're working on right now uh i i would say two things uh the

people uh that that's the team that i get to work with uh we like we like love and fight with each other like a family uh but ultimately you know to see how much everyone has um essentially you know just blood sweat and tears the amount of time waking up at three in the morning because you know we get an alarm going off because the uh the generators have lost pressure and there's all hands on deck um you know like you know just trying to figure out this problem for the past almost three years has been like a labor of love. And I've always been a entrepreneur at heart. I've been very fortunate to work for the parent company and do entrepreneurial things inside the company and kind of spearhead like new projects and things like that. So this one started out very similarly

to other projects that I had worked on, but kind of just took on a life of its own. I became essentially obsessed with mining. I even have my own mining podcast that isn't as regular as it should be but um just so i could try to level up on trying to understand everything that is involved with this and uh and i think austin made a good point there's a lot of people that you know say that they're experts but that's kind of the i guess like the tell is that there are really no experts like the people that are doing it every single day like that's as close as you can get to an expert but we still are just literally everyone's still figuring it out yeah and i mean the amount i've learned alone i i have a very small part like on the biz dev side just trying

to help make sure that we can expand like i'm not dealing with the pdus or getting into the nitty-gritty of uh engineering the miners and setting up the electrical work but just from being in the slack alone i've learned an immense amount about electrical engineering mechanical engineering uh what goes into these miners how to for uh fine-tune them it's crazy and you'll Neil Woodfein was right. I feel like a renaissance man being able to learn about monetary policy and hardware, energy,

the energy industry. I've learned so much about oil and gas in the last eight months alone. It's insane. There's lots of rabbit holes. Tons of them. It's a rabbit hole fantasy, right? You're just there. It's a rabbit hole fractal.

More and more. It is. All of us, too. like you know to kind of add on earlier we love privacy like we don't want to see a surveillance state we we like the hong kong protests right we like the the the underdog fighting against an overreaching state and i think that's a lot of what bitcoin stands for as well um at least to me so yeah it's very american and i i would say like american uh americana in terms of uh the the spirit behind it so you know embracing this avenue to do uh mining in this way i feel is

like very much in line with that yeah it's a true wild west it's a true like it's truly free where you can if you have the uh the drive and the ability to attempt to build this out or like we've been alluding to there's so much to do and if you're willing to do it you can innovate and do stuff that people have never done before in a permissionless way. Totally. I'm expecting in the next, I'm hoping by some of just us having this conversation

and some of the other conversations that you're having with folks who are kind of in the same realm as us is that people will even take it further, right? Like, you know, you could potentially buy your own gas field. You know, there's like leases available. You could take it over.

And like, I'm sure there are going to be people from a speculative side start doing things like this um so i can't wait for what's going to happen in the next 12 months well we're an hour in gentlemen i think that's uh that's enough of a little teaser for the freaks out there let's just give them that bite i know we've got uh calls and family to get back to uh is there anything particular that either of you wants to touch Sean, before we wrap up here. The only thing I can think of is, especially in terms of the oil and gas industry,

it would greatly benefit your listeners to have Reid Browning on here. He knows it inside out. And he's the one that built a lot of the stuff within the container as well. The racks, the fans, the intakes. i'm i'm just the one isaac and i are just the ones that like make it work and collect the data um redesigned and built a lot of it and he uh he's very very well versed in that industry so

yeah i just i agree i i look at this as an uh just the start of a conversation within the bitcoin community about like how we can support this and uh we look forward to being able to kind of share you know now that we've kind of come out of like this pseudo private mode um we're really excited to continue to like allow you know your listeners people that we you know uh communicate with via like our website or you know articles that we'll write etc um the process um so yeah getting people introduced to the rest of the team um and also dealing with some of the uh potential challenges of like this market that we're in right now there's a lot of uncertainty um so we'll be making sure that people are aware of this and look forward to mining a lot

of bitcoin even after the happening a lot of uncertainty but a lot of opportunity and yes it would be remiss if we did not give reed all the uh uh what's the word i'm looking for all the uh all the praise he deserves it's again i talk about learning a lot about the oil and gas industry it's all from him uh and he's very very big reason we were even working with this company yes but the biggest reason is papa todd who uh who's kind of made this all happen because he's believed in this and if you want to really be a uh proponent of having skin in the game like you can't get any more skin in the game than um what todd has done with this um so uh it's been cool because everyone has I would say had to put their own skin in the game in one way or the other

whether it's time resources money etc we've all done it and we all believe in it and I think you know the reason you know Marty you know it wasn't like a situation where we said oh let's let's recruit Marty to to do this like you were just part of organically around when it just happened when it started and then it was like you kept asking well dude how can I help out more Cause this is like incredible. I don't want to be a part of this. And I kept saying like, dude, just, we got to get live on this pad and we got to do this. And you're like, okay, cool. Well, just let me know when, when you're ready. And, and so, you know, just from, you know, December, January, when we went live to where we're at now, it's, you know, lots happened since

then. And you've taken on a much bigger role with helping us be a little bit more public about what we're doing and helping us engage with folks who might want to help us be able to grow this too. so you know it's it's it's all part of the team we're excited about that i mean todd yeah again we can't we can't not shout out todd either i'm sorry todd but we'll keep the best for last he uh i mean he builds these incredible distributed teams he's driven and he gets shit done i mean this is it's been a non-stop grind for three years i don't know if i was uh putting as much skin in the game as he was if i'd be able to stomach it after the first year and a half alone and it's uh yeah going through that that bear market of 2018 i think really hardens you so uh

it was a very it was a very good thing to have because it's not you know all the mining ups and downs and even in the last like three weeks was it was like a walk in the park compared to that to that bear market all right boys i'm happy to be mining with you happy to be working with you uh i hope you guys are safe wherever you are as this quasi hurricane blows through where i am uh it's a pleasure to work alongside you and uh yeah they visit us at gam.ai is that what i should end it on yeah you're the pitch man bro we're gonna work on the website we're gonna get again we alluded to it we're trying to get some good quality third-party research out there about what we're doing uh we're gonna be we're not gonna be pushy or like uh uh we're gonna tell you about

what we've done we're not going to predict what we're going to do how about that i like that yeah um so keep a lookout for what we're doing we're we're going to keep doing it and best of our abilities and uh i hope you guys enjoyed this episode and i hope you learned a little bit that's all we got this week freaks peace and love