TFTC: A Bitcoin Podcast - Bitcoin Offtake Unlocks Oil Production | Chris Alfano, Center of Hash E003

Episode Date: August 12, 2025

Chris Alfano, co-founder and CEO of 360 Energy, discusses his firm’s strategy as a service company in oil & gas fields, how bitcoin mining is helping to unlock oil production while reducing an environmental liability and how bitcoin is allowing owners and operators with stranded natural gas to monetize an energy asset that would otherwise be wasted or under-utilized.

Chris Alfano, welcome to the Center of Ash. Parker Lewis, it's great to be here. Yeah. Before we get into the topic of the day, we co-work here out of Bitcoin Park. It's mid-July in the Texas summer. How's the summer been? It's been hot, good, rainy. You know, we've done some family trips and stuff like that, so try to get out of it.

we're heading to california end of this week so upstream mining isn't impacted by the 4cp you're in texas no natural gas mining no grid no 4cp no curtailment smu footballs on the horizon on the horizon and rising you uh you were at happy valley for that i was disastrous that was a uh not our best not our best effort cool experience though our expectations is high this expectations are high coach is uh saying big things he's uh good to target for other schools so got to keep him happy at smu but you know good transfer given texas run for the money his best team in texas i'll be uh very pleased if we make it to another playoff that might not happen again in quite some time but that's what i said last year with will cole when we were sitting here

in the summer looking at the team but you know should be better this year than we were last year so very pumped well uh hopefully hash price is higher and come football season in a month that would be nice gotta get the uh ordinal people back selling uh their jpegs that's controversial we'll talk about that towards the end but um we'll use that as a segue into um the topic of the day so in the in in the first couple episodes we've discussed mining at a very broad, high level. And today we're going to go deep on a specific energy strategy and mining strategy. Um, Chris is the co-founder and CEO of 360 energy. Um, Chris, just give a little bit about your background and what 360 does and kind of what defines your strategy.

yeah yeah so 360 energy right before 360 uh i went to smu if it wasn't obvious before um studied finance and economics there and started a company 2016 with a hedge fund manager in dallas called keyman intelligence and built that company for four years sold that company in 2020 and started 360 and uh what did that company do that we did uh sas solutions for private credit hedge funds so we would uh standardize a bunch of the reporting data from you know these these clos have 300 positions in private credit um so a bunch of companies that aren't publicly traded don't adhere to gap and so uh what we would do is aggregate all the data that all of those portfolio positions would report so like their financials um sims credit agreements everything like that we'd

aggregate that all into uh uh our platform and we'd standardize it um so customers of ours like other hedge funds clos would have access to the platform they'd log in they'd be able to see all their borrowers uh be able to see kind of standard financial data uh across um their whole portfolio right if different borrowers report in different ways and even same borrowers quarter to quarter so yeah it's just a tool to make analysts more efficient at actually analyzing kind of get them out of the monkey labor of having to spread financials and figure out where pieces of information were so it's just kind of like a database with standardization for uh everything to do with their portfolio positions and how'd you get from there to 360 well sold the company

um moved down to austin was out of a job at that point kind of figuring out what i wanted to do next kovat happened so i'm a bitcoin class of 2020 going down the rabbit hole at that point kind of right after the company um and obviously fell in love with bitcoin for many of the same reasons everyone else does and being a finance guy being a tech guy uh really made a lot of sense in my mind and so i wanted to start another company i was kind of sick of doing software stuff um networked around austin met a great guy named mike hamilton kind of told me all about this bitcoin mining thing um which sounded really cool and so kind of started going down the bitcoin mining rabbit hole uh as anyone does you try to figure out okay now i can basically plug in a

bitcoin miner anywhere but how do i do it you know cheaply for a long term uh to kind of protect the downside protect the margin all that stuff so um for us that was looking at grid looking at solar looking at many different you know potential options to power our miners kind of settled on natural gas as something that's very abundant in texas and something that's relatively cheap we wanted to take it a step further and actually vertically integrate the natural gas into the bitcoin mining as a way of kind of controlling that future having you know decade at a single location having complete operational control and so uh built a team with sean milmo my co-founder and a few other guys um that had a lot more oil and gas background than i did to uh stand up 360

energy and at that time uh the the company's objective was self-mining through the ownership and operation of the natural gas assets so we went out and bought some uh old producing uh gas wells in the barnett shale right outside of fort worth just 20 minutes north of downtown fort worth and that's really how we got our start um so took over those wells put our first bitcoin mine out there in late 21 um and started you know mining uh at probably the worst possible time to be mining and buying infrastructure and stuff like that and um but yeah that was that was really what it was all about was you know how do we find these old relatively unattractive natural gas assets to traditional oil and gas people um and turn that into something much more profitable

much more valuable through bitcoin mining the two questions what what initially so you mentioned in 2020 what made you go down the bitcoin rabbit hole just quickly and then second um you started out vertically integrated owning the assets but that's evolved a bit yes yeah yeah i mean the rabbit hole was a function of time um and a function of just kind of the macroeconomic conditions in the u.s right uh knowing enough to know uh a ton of money printing is probably not good um and seeing all the free money that was going out there uh was concerning and so and also you know i'd actually been you know i've heard about bitcoin my first experience with bitcoin was actually in 2011 i bought some bitcoin to uh for one function only which was actually purchasing

some fake ids for me and all my high school buddies common amongst the youngins so uh i refused to look back at how much bitcoin i had at that time but um you know it was purely buy bitcoin send it to china get fake ids and so i've kind of known about bitcoin but never spent the time kind of throughout college and in my first job really learning about it and so selling the company having the time having all of the kiwi infinity printing covid madness all like you know put me down the rabbit hole yeah one of the things that i if i'm explaining bitcoin to somebody having nothing to do with energy or mining just using the example that people can't drill an oil well and then sell you know in terms it's not sustainable to do that operation and all the

capital that requires human capital physical capital monetary you know money and time and energy and then sell it for something that can be easily printed that can be created on a computer screen in the fed and today we're going to be talking a lot about natural gas but talk a little bit about how your your strategy has evolved and then i want to talk about the natural gas market specifically in terms of how you guys arrived at um that part of the energy system to be used as a fuel source for mining bitcoin yeah yeah so getting into natural gas bitcoin mining um you know it's i like to say uh sean's background you know is finance investment banking private equity right my background was in software so he's really good at spreadsheets i'm really good at code and so

when we built the model for 360 we're like oh you know it looks good in excel i'm used to fixing problems in the real world with you know just changing lines of code um so the uh first deployment we did was anything uh you know it was not what we expected at all it was a lot more expensive a lot more time consuming to actually commercialize this model in the oil field there's a lot more that you know i naively thought hey you just plug a bitcoin miner it's going to work right but there's plenty of considerations in bitcoin mining people would know cooling server type stuff like that and then on the natural gas side there's there's plenty of stuff there as well so it really took us two and a half years and so to to actually go from first deployment to a fully

standardized repeatable um dependable gas offtake and monetization system kind of through bitcoin mining and uh during that time you know gas prices had gone up tremendously after the you know nord stream russia ukraine thing and then they fell uh you know just as fast and we were actually approached by a few other upstream oil and gas companies in the barnett shale who had caught wind of what we were doing and how much money we were making by mining bitcoin on our assets and they asked us to help them do the same thing and so that was like a big turning point for the company realizing you know that big realization was like when we started the company it was hey oil and gas is means to an end for bitcoin mining those ends are you know sub three cent power

control, long-term deployments, no counterparties, right? That's what we were after when we started 360. Becoming an upstream oil and gas producer, talking to other producers, talking to our field personnel, we kind of realized that the paradigm exists on the exact other end with Bitcoin mining being a means to an end for oil and gas outcomes. And so during that two and a half years figuring this thing out we were realizing like hey you know we have really cheap power for bitcoin mining but if you look at the rewards of bitcoin mining how much money we're making then you put that in oil and gas terms like that is a much better market to monetize natural gas than you know selling gas into the pipeline so we realized like hey this is actually very impactful for oil and gas companies

who don't really care about bitcoin or bitcoin mining but care about being commercial and making money. And then you combine that with other EMPs asking us to do the same thing for them. And that really launched our services business, which is our main focus today. So today 360 goes, we deploy and operate these, you know, we call them, call it apex gas offtake. It's what we call it, but it's really, you know, generators, data center servers that we go deploy out for other EMPs to help them solve their natural gas problems. The benefit to them is They're not having to go down the same school of hard knocks we did, learning all the same things, making the same mistakes, spending all the time doing it. They'd rather, just like an oil and gas company would hire Halliburton to go Frack Wells because it's highly technical and nuanced, they'll hire 360 to go do this gas offtake system for them.

So that's been really successful for us. Really interesting, you know, taking this model and selling it as a service to oil and gas companies. And you guys don't have the capital intensity of then also having to own, you know, purchase the wells. Yeah, exactly. Exactly. So now we're doing it on behalf of people who have wells. So we're not having to go take on any of the upstream operations or the capital expenditure to actually go take down the asset. Do you guys think of yourselves as an oil field services company? Yeah, I think, you know, in the simplest terms, it's what we're providing as a service to the oil field. um you know i think of it maybe more as like a distributed energy infrastructure company um

you know but it's you know six one way half a dozen another well let's back up and i want to talk about specific use cases upstream you know in terms of mining at the well site leveraging natural gas i want to just kind of zoom out to paint the picture of the, of the natural gas market, at least specific to the U S and so, um, you know, approximately 40% of the market is of natural gas is ultimately converted to the electric power industry. Approximately 32% is for industrial purposes. I think like 14% is residential, 10% commercial, and then 4% transportation, just in terms of the the end market for for natural gas and now increasingly some of that say electric power

is being used to to mine bitcoin and avenues are being leveraged upstream like what you guys are doing to monetize natural gas before it ever hits a pipeline but talk a little bit just about the market for natural gas in the united states where natural gas is typically drilled and how you guys arrived at um what i think is typically uh north texas and west texas for opportunities to monetize bitcoin mine or to use bitcoin mining to create a solution in the oil field yeah yeah so i mean natural gas is extremely abundant all over the united states really in many parts of the world um you know in the northeast you have the marcellus which i think is the biggest natural gas play in the u.s um it's like pennsylvania west virginia um you know then the balkan in

north dakota there's a bunch of oil and gas there then you keep going down powder river in wyoming um dj basin in colorado you get into new mexico san juan basin but further south permian basin which then bleeds over into texas so you start moving east through texas you have um you know the permian basins probably the biggest oil and gas play in the u.s um you have the eagleford in south texas tons of oil and gas there you have the haynesville which is predominantly a gas play uh in east texas and then you have you know the barnett shale north texas you get into oklahoma um you know scoop stack and you keep getting you know keep going up there's natural gas in michigan and in nebraska and kansas you know there's a ton of

oil and gas all over. Now, I think what's really interesting about oil is there's effectively, you know, WTI is kind of the benchmark for oil. You can truck oil, you can move oil pretty much anywhere. And there's effectively one benchmark for oil prices, whereas natural gas is highly localized markets so um you know not all you know gas can have the exact same composition can look the same but can earn widely different prices for that gas um just depending on the the local hub you you sell that gas into and then the terms of your midstream agreement so in haynesville for example there's a tremendous amount of gas where's the haynesville east texas okay tremendous amount a gas in east texas um and it earns a really good price they're you know getting not far off from

from henry hub which is kind of the benchmark or houston ship channel um whereas you go to west texas and the permian those guys are selling into waha which is usually trades at like a two dollar discount um and often goes negative to you know prices in in east texas and elsewhere um say in one basin you know that gas going west earns sometimes higher than even even henry hub so as we explain some of those dynamics that that that caused that and then also if you said that in west texas at the waha hub it might trade at a two dollar discount for an order of magnitude to henry hub like give some sense of where henry hub is today just so we have an order of magnitude of what that discount looks like yeah so henry hub is at you know three dollars fifty cents

that's no car mcf it's like the benchmark for for gas um your haynesville producers are probably after midstream fees are getting maybe three dollars twenty cents in mcf so they're getting pretty close tight a tight band to henry hub whereas in west texas you know i think waha trading at a two dollar discount today to henry hub so that same molecule of gas and then after midstream fees you know might make a dollar an mcf um and not two dollars on fifty dollars like you know yeah it's like a 60 70 discount and the gas can look the exact same it could be the same quantities but widely different um revenue generation potential just based on where it is i think you know why that is right there's a lot of gas in the haynesville there's a lot of gas in the

permian well the haynesville is really close to the coast all the lng export terminals a lot of industrial uses uh houston in the gulf coast so there's a lot of demand uh for natural gas in that particular demographic whereas the permian in west texas there's no industrial i mean hardly any industrial uses out there so it's really a function of supply and demand um there's a ton of supply of natural gas in west texas there's no real localized demand for it and there's not enough takeaway capacity with with pipelines to bring it to where demand centers are and so just economics 101 you have a way over supply of natural gas compared to the ability to actually transport it to major markets and so that's that's why you have this large differential

uh to henry hub um you know and i would say the band of like the discount that waha gets to henry hub is actually a lot better today than it was this time last year i think waha was negative for more than 20 of last year so henry hub could have been two dollars fifty cents three dollars in mcf but the differential in waha was more than henry hub and so if you're an oil and gas producer in in west texas and waha is negative like you're selling gas into a pipeline but you're actually getting charged to put it into a pipeline because the price is negative you're not making revenue you're actually having to pay to get that gas taken away i think most people might be familiar with when like solar power or power trades at a at a negative cost in west texas because of

production tax credits or various different uh you know tax incentives that might dictate an abnormal economic situation what would cause a economic scenario obviously way more supply than there is demand but why would the market be producing all of that if there's not similarly some tax anomaly that's causing the distortion. Yeah, that's a really good distinguisher, right? So in your Haynesville, like those are wells drilled with the intention of finding natural gas, but those are natural gas only wells. And so when they're underwriting drilling those wells, it's for gas economics. Whereas most natural gas in the Permian is called associated gas. So that's gas coming out of a well that was drilled for oil. And so the main economic driver

in the Permian, you're like, you're not there for the gas. Like the gas is a byproduct that you really wish you didn't have to deal with. Um, you're there for oil. And so, you know, no one is going right now. It's like drilling, you know, banger gas wells in the Permian because the market is so bad for that gas. Um, but they are drilling for oil, um, and a lot of it. And so, you know, and then getting a little more technical, like a lot of that, like tier one acreage in the Permian has been you know drilled up and so now they're moving on to you know tier two tier three around the permian basin which is is gassier and so they're you know still after oil you know but they're those wells inevitably going to produce more gas than those those tier one

wells are so it's really the continued growth of natural gas supply in the permian basin is a function of more and more drilling for oil and more and more associated gas coming up with that oil and um you know permian's getting gassier over time as gas oil ratios um widen so if there was no oil in the permian you wouldn't have this problem because people probably wouldn't be drilling much in the permian at all because again that gas market is so bad and then you know on top of that you can have you know you can have pipelines that need maintenance that get shut in that you know compressor stations need to be overhauled things like that that can have like temporary decreases in the ability to move gas out of the permian and that'll cause that differential

that waha price to be worse than you know it's trading that today and with another example something like the marcells is that more like the haynesville where they're drilling for natural gas specifically correct versus in the permian being associated against the primary asset that they're trying to get out of the ground is oil and and there's this associated gas and it's highly variable correct and i guess the other thing that you said is now that they're at tier two you know tier one might have been wells that were expected to be predominantly oil literal little associated natural gas that now increasingly wells oil wells are being drilled that have more yeah yeah so then use that maybe to describe the connection between

um that dynamic and why what the why that creates an opportunity to mine bitcoin more it being more attractive potentially in west texas versus the haynesville or the marcells yeah yeah so then to answer that question gets into the next like two distinctions of gas it can be associated gas or not but it can also have a pipeline like associated gas can be sold into a pipeline maybe talk a little bit about that like okay now go to a well out in west texas yeah yeah and what happens from there to get gas to to market conventionally yeah i mean no matter where the well is to get gas to market conventionally you need a pipeline so whether it's a well drilled for natural gas in the haynesville or associated gas coming out

of an oil well in the permian right to get that gas to market it has to go into a pipeline um so people in the haynesville that are drilling wells like they're not going to go drill a gas well if they don't have line of sight on offtake on a pipeline right that wouldn't make any sense so those guys you know again they're underwriting it all around natural gas economics and they have a pipeline and so you do have a ton of gas in the haynesville but you also have a ton of takeaway capacity for all that gas um whereas in the permian ideally you are drilling wells and you have takeaway for that gas even if the terms of that takeaway are pretty bad given waha um but oftentimes you're there for the oil and you'll actually go flare the gas so the big

distinction is stranded gas versus non-stranded gas stranded gas can occur everywhere it can occur in the Haynesville and the Marcellus, um, you know, and, and in the Permian, there's a higher propensity of stranded gas and predominantly oil plays because again, gas is the by-product and they're just trying to get to the oil. So, um, you know, you'll flare that gas off because you can't sell it into the pipeline, um, because there is no pipeline or the pipelines go into maintenance or, or anything like that. Um, and that, that's kind of what creates the opportunity. So if we talk about, as we look at our opportunity set as a services company, like what assets are we chasing? Like who's the ideal customer profile?

Talking about pipeline connected gas wells. We have never done a deal in the Hainesville because that gas is pipeline connected and it's making great netbacks. And so those oil and gas companies that do have those pipeline connected gas wells that get good price, like they don't feel the pain. they don't need a solution an economic solution for that gas like they're a-okay selling it into the pipeline like there's just not a lot of value for our services there but if you look at pipeline connected gas in the permian especially if you looked you know six nine months ago when it was negative like you might as well just flare it right because the pipeline's not paying you anything for the gas so like that's you know finding just purely talking about pipeline connected gas wells

the opportunity lies in the worst markets so find me the gas wells that have the worst midstream contracts selling into the worst hub and those are the best opportunities because the uplift that bitcoin mining provides over what they're getting from the pipeline that chasm is much wider whereas the uplift it provides in the haynesville you know it's still there but it's just not as attractive um so purely on pipeline connected gas wells we're targeting you know the permian basin the balkan areas where there's an oversupply of natural gas and the realized gas price even though it does have a pipeline is bad um talking stranded gas you know that if it's stranded it has no pipeline it has no market and so bitcoin mining works anywhere stranded gas

exists and so when you talk when you specifically say stranded gas it is where there's a oil and gas well where gas is the byproduct or a gas well that doesn't have a pipeline but typically they wouldn't drill a purely gas well if they didn't already have the pipeline correct correct so a lot of like your gas wells that are stranded are older production where the pipeline company's gone away or the pipeline company's line's 30 years old and they're not going to invest in overhauling it and maintaining it and so that can strand those wells because you know if the pipeline goes away you have nowhere to sell your gas um so again like it's not as common in the haynesville to have you know stranded gas um but you do have pockets in the haynesville and elsewhere where

you know like in wharton county we're looking at a deal um it's like texas gulf coast like wharton county is texas on the gulf coast um you know where you have all these producers impacted by a pipeline decommission so you have this pocket of like nine different companies that all produce in the same region that all sell into the same pipeline and the pipeline's going away so all those guys are effectively stranded now and why would the pipeline be decommissioned just because like the decline curve of the gas yeah decline curve of the gas the age of the pipeline the pipeline company's cost to maintain overhaul it like eventually gets to the point where the juice isn't worth the squeeze for the pipeline company and so they'll abandon the line effectively

give notice and you know the upstream producers are you know out of luck and just to map out that picture starts at a well there's a pipeline it goes to typically a natural gas processing plant and then from there goes further downstream to either you know uh lng on the coast to atmos power plant on course power plants um you know like the barnett gas is pipeline quality in many parts coming out of the ground it's like you know i know our asset in the barnett like that is literally like energy transfer transports that directly from our pad to the gas power plant that's you know five ten miles away like doesn't touch a processor at all it's just field gas going straight into power plant so not all gas is created the same however and so and like in the

permian like all of that gas is going through processing plants before it is reaching its end customer now talk about specifics in terms of a set of scenarios that create a tangible opportunity to to mine bitcoin and and what those incentives like what incentives dictate mining upstream off of natural gas yeah so there's three main value propositions that bitcoin mining in the oil field provides an oil and gas company the first two you call it environmental um slash oil related right so um in in these cases think of oil and gas companies that are flaring natural gas right so they don't have a pipeline but they have to keep producing the well to get the oil out gas has got to go somewhere, their best option is lighting it on fire in a flare. Business as usual has

changed over the last five years where it's becoming harder and harder, more costly to flare at the federal level from the EPA, but also at the state level. And so gone are the days of companies drilling big oil and gas wells and just flaring gas into perpetuity, even in texas um large quantities of gas so and not based on one political party or the other no no it's just kind of in a slow burn in that direction and then you have states like you know new mexico and colorado that tend to be more liberal leaning who have statewide mandates so it's a lot harder to flare new mexico and colorado than it is in texas but even in texas you can't be flaring large quantities of gas forever because that hits like federal thresholds. Um, and even

Texas has some state, you know, rules around that. Um, so if you think of an oil and gas company, you're like, okay, I am here in New Mexico in the Permian basin. I'm a big top 20 oil and gas company producing all of this oil. And I'm only allowed to flare this gas for a little bit of time. And if I don't have a pipeline, I am, you know, in a bad spot because eventually I can't flare. And if I can't flare, I have nowhere for the gas to go, I have to shut my well in. But I'm not there for the gas, I'm there for the oil and I have to shut my well in, I'm foregoing, you know, hundreds of barrels of oil per day. That's, you know, 7,000, 10,000, $15,000 a day of revenue that these guys are not able to produce. And so taking a step back, I talked to value props,

like environmental, some, you know, big public like Exxon, companies like that are, you know, by 2030 we're not going to flare any gas at all so even if it's not jeopardizing their oil like they have a mandate to reduce flaring and so purely a company could deploy a bitcoin mine for no other reason than hey flaring is bad for the environment burning that gas through you know 360s clean burning generators is better for the environment i am not flaring anymore i look good for my esg score like that is a very real value prop especially your bigger companies that are worried about that. More often is the case where that flaring is actually starting to jeopardize the well itself and their ability to produce oil. So yes, it's environmental. Great.

You know, we've reduced our emissions by going with 360, but that's really not the primary driver. The primary driver is if I don't have a solution in two months, like I'm going to have to shut my oil well in, and that's a million dollars of revenue I'm not going to be able to produce. And that's a very real, very impactful problem that, that we're solving for. We are giving people an outlet for natural gas so that they can produce more oil. You know, we were working with, you know, one of the top 20 U.S. onshore oil and gas producers on a, just to kind of put a real example around that. You know, this is a site in the Texas Gulf where, you know, drilled this great oil well it's making 350 barrels a day has been for the last you know

three years um doesn't make a ton of gas makes around you know two megawatts worth and they're flaring all that gas like they have this big that seems like a lot of gas two megawatts yeah well i mean there's a lot you know go to the balkan and the permian there's a lot more quantities of gas being flared but for this company like it was okay you know they're flaring as much as they're able to flare but they want to go drill other wells like in the on this lease because they have a great oil well but there's never going to be a pipeline getting to the site and they're already at the capacity of what they're able to flare so they've been kind of sitting on their hands for the past five years in with an inability to drill more wells and so we're working with them now we've

deployed um you know we've we've done two different deployments with them to capture that gas so now like they're still producing the oil and now they have a solution for the gas. Their flaring has gone way down. Their emissions have gone way down. What does that mean? Well, now they've drilled and completed another well and brought another, I think this new one's doing like 450 barrels of oil a day. So, you know, yes, this Bitcoin mine is making them a little bit of money on the gas. Yes, it's a feel good emission story, but what we've really done is unlocked their ability to make another 450 barrels of oil a day. And that's worth, you know, well over a million dollars of of annual revenue. And so that's where you're really starting to add value. And it's like,

that's really the sites where after we're putting another one up in the powder river, uh, it'll be a little over three megawatts. Where's the powder river? Powder rivers in Wyoming. Okay. And so, you know, you know, this is a top 50 onshore oil and gas company that, you know, has a very similar problem. They're, you know, the biggest producers in Wyoming. And so, um, you know, and these problems are prevalent, right? These are widely like this is one site in wyoming these guys operate thousands of wells and this is not a one-off thing it's you know portfolio wide across many different assets um so that's so finishing long-winded answer your question like that's the emissions oil value problem and one way to think

about that is you're it's it's less about the bitcoin mining economics it's more about combination of reducing a liability flaring as well as unlocking an asset being able to tap more capacity on the oil side that you wouldn't otherwise be able to because of limitations on the environmental side correct that's exactly right and then where are then the opportunities or how do you guys think about where it's actually about the bitcoin mining economics and how does that vary from a setup that you just described if you give some some specific examples that would also help yeah definitely so then the third value prop is an economic value prop so purely people saying i can monetize my gas in a bitcoin mine

and make you know i said henry hubs at three dollars fifty cents an mcf like mining bitcoin with new gen servers in the oil field is thirteen dollars and fifty cents it's ten dollars more an mcf to go mine bitcoin um and so you have people that again find me like this is a better fit for pipeline connected gas producers in the permian that are sick of getting ripped off selling gas into the pipeline for nothing like they can say to hell with that i'm gonna deploy one of 360 energy systems on my site and i'm not going to sell gas to the pipeline i'm just going to monetize it you know through the bitcoin mine um and so you know we've done a lot of deal like when we first launched the services company like those first two deals in the barnett like that's what

they wanted they wanted to fund all the capex buy all the infrastructure and mine bitcoin at their site so they can make a lot more than they were getting in the pipeline and we've continued to do uh, deals like that. I think those deals, like, I mean, there's just so much gas out there. There's plenty of opportunity to do that. I think the challenge there is most oil and gas companies don't know anything about Bitcoin. Certainly don't know anything about Bitcoin mining and hash price. Um, nor are they in the business of spending millions of dollars of capital to with that payback and that return being determined by Bitcoin mining economics is very out of pattern for an oil and gas company. And so, you know, our customers that have done

that model, um, tend to be smaller, family owned, multi-generational independent oil and gas companies. And we've deployed that particular model where they're purely chasing the economics, you know, all over Texas, not in the Haynesville, but we've done that in the Panhandle and the barnett and the permian and other places again for those you know even if you did have that same characteristic multi-generational you know family owned oil and gas company in the haynesville they're still probably not going to do it because they're not feeling the pain they're getting you know three dollars 25 cents in mcf that same guy in west texas you know he might be willing to go spend two five ten million dollars on a bitcoin mine because the chasm and the uplift that this

provides is so much better because if because functionally the revenue side of the equation for either of those mines looks almost identical to each other but the cost side of the natural gas there's a there's a material differential in terms of if you could make 320 or 350 depending on on houston chip channel or henry hub index versus a dollar then that would be a spread that would create an economic incentive potentially to mine bitcoin yeah like bitcoin doesn't care but hash rate's going to be created anywhere and it's going to get cleared out at hash price so you can deploy this anywhere natural gas is available uh it's just where does it provide the most uplift maybe you walk through the like in a in a tangible way like you mentioned 1350 mcf if you're mining

bitcoin but it comes with additional infrastructure just maybe talk a little bit about the like what the actual operation looks like there's infrastructure on the gas well but you have to bring infrastructure out and how that you know it's not you're not just getting the benefit of the differential between a buck or a buck 50 and 1350 of hey if i were to go down the traditional route this is what the economics would look like but if i brought on incremental infrastructure took on the capital cost what that incremental kind of bottom line looks like on a gas unit yeah yeah so traditionally on the upstream side only on the oil and gas side they're going to well they're going to have you know tank battery and facilities to separate water and oil and gas

and they're going to have storage tanks for water storage tanks for oil and they're going to have some offtake for that gas which would there be a pipeline or it'll be a flare stack um it's like that's your traditional you know that's what exists on wells all over the world right that typical facility um on the bitcoin mining side you know to go deploy these at one of these sites you're talking big natural gas generators that's the first component um so you're you're plumbing you're having to plumb that natural gas generator into their system where the gas is flowing um and then downstream of that generator you know so that generator is consuming all of the gas um create a bunch of electricity right and then where's that electricity go well you know 10

feet away you wire that generator into one of these data center boxes um and inside one of those boxes are hundreds of servers and so that's you know a very simple way of talking about the three main components you know there's we you know we have to meter the gas you know we put separators and volume tanks and pressure regulation there's a lot of other little nuanced infrastructure between all these steps but the three main components that you have to add to an oil and gas site is a generator data center servers and you know data centers are air cooled or emergent or hydro and servers there's old ones new ones efficient ones different deals come together in different ways that warrant different infrastructure for us we only deploy one type of

generator uh that works very well on associated gas and a wide range of natural gas right i think the hardest part about this business is the continuous operation of converting gas into electricity for bitcoin mining you know the mining servers are relatively dumb you know as long as they're getting power they're they're pretty much going to run and as long as you have a starlink satellite you're good um but the proof is in like the uptime is really in the the power side the ability to consistently generate power and so we've as a company been through many different generators um small big paralleled island mode and can go on and on but that's the typical infrastructure we're putting out at every site every site's going to have generator data center

servers it's just a matter of who owns the equipment um and what the servers produce in terms of hash rate and so if you're looking at a site that is particularly attractive to actually mine for the bitcoin economics and the mining economics versus reducing liability or unlocking an asset like you know being able to drill more oil do the the scale of those differ typically or what is the traditional like what is the typical scale that you guys work at in terms of you know the the size of a generator or the ultimate yeah so we only deploy one type of generator right we deploy waukeshas and those are 1.3 megawatts a piece so for us to do any type of deal you know it has to be at least you know 300 mcf a day of gas which is enough to feed that

waukesha um we use the same most of our sites use the same air cooled data center um and then the servers can vary widely so no matter who owns the asset like we have two different commercial models which we can get into um the ability to convert gas into hash rate is really a function of what servers you have the new 2025 best in class what's miners or or ant miners like those are what's making 1350 an mcf um they just make a lot they're way more efficient at producing hash rate from the same amount of power um you know some of our sites were deploying old 2020 miners used miners that are very very cheap to get and you know make significantly less dollars per mcf they're three times less efficient they're you know four times cheaper um so it really just

depends for the customer you know what they're after um you know should i talk about the commercial models yeah if you could yeah so we have a rental model and we have a purchase model right as what i talked about earlier focusing on purchase first that's where the oil and gas company will actually buy the generator by the data center by the servers they're doing that purely for the economic value prop um of bitcoin mining of bitcoin mining the uplift that that provides versus what the pipeline will pay them or if the gas is stranded uh typically what we've seen is those customers prefer best-in-class miners so they're trying to maximize the bitcoin production in the shortest amount of time possible before the next halving you know they're bullish on bitcoin they're

bullish on hash price um and so they'll want to deploy the best servers and hodl as much of the bitcoin that they mine um that product is not a great fit for your oil and gas companies that have the environmental oil problem um what we've heard over and over from customers is and just from traditional oil and gas patterns right these guys don't want to fund capital into anything other than drilling wells what they will do is rent compressors rent production equipment rent gas treatment facilities um it's like it's much easier for them to spend opex versus capex and so uh you know it and especially as you know if we're after these curtailed oil situations these environmental situations those are usually bigger emps like your big pubcos your big privates

who you know have a lot of gas um they're a better fit for rental because one you know renting infrastructure is way more in pattern for them. Um, you know, the, what we'll do in rental, they'll pay us a fat flat fixed monthly cost. We own all the assets. So same exact generator, same exact data center, but we're putting in older used miners, uh, which are a lot less capital intensive. Um, it's more a function of getting their rental cost to be achievable and not offensive, while also still giving us the ability to make a return on our capital investment on our units. So in the rental, you know, they will pay fixed flat monthly cost to us, they'll get the Bitcoin mining rewards. Traditionally, these are big

companies, they don't have the accounting to custody Bitcoin, they don't want to custody Bitcoin, they just get cash at the end of the month. And so same system, different servers owned by 360 will go deploy to capture that gas for them they'll get the u.s dollars at the end of the month it's not 1350 in mcf because we're using you know 2020 2021 servers um so net net net they're paying us 50 you know 50 grand 60 grand 40 grand depending on the site and how many units we're deploying and the term length but they're coming out of that you know right now making about five grand a month um however if hash price is that what does that translate to on a mcf basis about a dollar an mcf right but it's highly sensitive to and realistically in those scenarios

those operators care less about yes exactly what the uplift is to their natural gas they are not there chasing gas economics if they can subsidize the rental rate with you know the cash they get at the end of the month, like that's great. But the reality is like, even if they're losing 20 grand a month, like let's say hash, you know, Bitcoin goes from 120 today to 70 grand. Like all of our customers on rental are not making money. They're losing money. They're paying us a rental rate. Cash they get back at the end of the month is not more than the rental rate. Right now it is more, it comes out to about a dollar in MCF. But the point is like, those guys are not there for gas economics. Most leases they do in the oil field are cost centers.

and so this right now is great because it's you know it's not a cost center for these guys but what they're the reason they'll still do this even if they're losing money every month on our deal is because they're getting oil out of the ground yeah it's a cost center or in in certain scenarios it's a marginal profit center but it's really there to enable yes uh the modernization of an asset they couldn't otherwise exactly exactly so that's that's exactly right like they're willing to lose you know call it 20 grand a month on our deal because now they're making an extra 500 grand a month of oil that they wouldn't be able to produce without us there so it's it's cost of doing business and then walk through the economics of us of a typical site in the in the

other scenario where they're actually going after the bitcoin like it's a stranded gas play in terms of a lot more capital so more cost they might be getting the 1350 and mcf but they're investing what per mcf and like what does the uplift look like versus what they might get from selling to a uh a pipeline like the you know the waha assuming it's not negative but it's a dollar an mcf yeah so in that case right focusing on best in class right again same generator you know same data center and then best servers cost roughly two million dollars per megawatt per 300 mcf a day of gas um that infrastructure stack deployed at their site turns around and makes call it 1350 and mcf of top line revenue um which comes out again you're investing two million and

across a year that's about 1.7 million dollars of top line revenue after all your mining expenses generator maintenance expenses um site expenses like opex you know you're making about call it eleven dollars in mcf ten dollars in mcf of ebitda um per mcf which is substantial um Um, which rounds out to about 1.3, $1.4 million of EBITDA per year. So our customers who are making this big investment in the infrastructure are also looking at really attractive paybacks. And so, you know, they're making their money back in less than two years at current hash price.

Um, it's a good time to do that. Miners are obviously a lot cheaper than they were, you know, when we started the company back in 21 and hash price was at $400 today, hash price is about $60. And all the things hold true. It's just funny. And the payback on the same well would be far longer if they were just selling to a pipeline. Yeah, generally.

And so then the next question, because you mentioned this before, like the variability in hash price, and I would presume that the first scenario where it's less about the mining economics or more agnostic to the variability in hash price, But talk about how you got 360, how you manage this operationally, but then also how you manage it and evaluating target situations or target sites in terms of managing volatility of Bitcoin, as well as volatility in natural gas. because you know almost at the start you talked about the scenario where natural gas

um what was what was the the scenario where um natural gas went to like nine dollars yeah yeah so that's a perfect example like i think but just talk about that you know generally but also potentially specifically to scenario planning and site planning of how you manage volatility of both of those the um the bitcoin price and hash price as well as the uh the cost of natural gas which is revenue potential totally i think the best way to look at that would be like our company owned wells and site in and bitcoin mine in fort worth right so when we started the company gas prices were at three dollars mining bitcoin was forty dollars at mcf so it's like worth deploying that infrastructure to realize that outsized gain um because that chasm was so

wide right and then kind of play it out over the next year and a half like operationally we were not doing well like we're trying to figure this thing out for the first time like we were not you know having to spend way more money the uptime was not good you know and then what you had happened was you know ftx and sam bankman freed and bitcoin went from you know 63 000 to 17 000 16 000 and hash price 22 yeah just 22 and like coincide like you know happenstance russia ukraine happened nordstrom blew up gas prices went to nine dollars at that period of time you know the mining rewards were $7 in MCF. Gas prices were $9 in MCF. We had all these operational issues. We actually shut our Bitcoin mine completely down for six months, hired Halberd

and fracked three more, refract, recompleted three of our wells, went from, you know, 400 MCF a day to well over 2000 MCF a day. There's really a function of these two uncorrelated markets. It was like, well, the hell with the Bitcoin mine, you know, if we can sell gas for $9, let's go invest in our wells and, you know, make a great return in, in, in natural gas. And so you do have these two uncorrelated markets, you know, a lot of, some of our customers look at this as like revenue optionality. Why have one market when you can have two? Um, and so, yeah, there certainly is like a function. Describe that, like, just like that idea of having the optionality. um like do people when you're talking to customers does that resonate it definitely resonates

it's you know the challenge is like to make a return on the bitcoin mine you need to be running the bitcoin mine 24 7 and so it people have many different ways of thinking about it um but generally you know having a pipeline there and having a bitcoin mine gives you optionality so you can sell gas for gas prices or you can effectively sell gas into the bitcoin mining market you know for a widely different gas price and historically the bitcoin has way outperformed henry hub um we have a chart on our website that plots it out over five years like the only crossover was for three months kind of during that refract period that that we had uh generally customers if they're going to go do this are thinking about like it would be very bad if i

was having to sell gas to the pipeline um you know they're doing this thinking bitcoin mining is going to be the sole offtake for that gas you know for the foreseeable future and so we had a conversation previously my understanding though is that certain midstream pipeline agreements basically dictate under all scenarios they have your gas so you don't have that optionality so you might be looking at scenarios where they do have the option correct yeah correct right i would say just overarching theme here is it's a lot harder to do any type of deal on pipeline connected gas because that gas is earning some nominal or attractive gas price first and foremost to your point you're alluding to like acreage dedications so why can we do this at our site

in the Barnett, but maybe not at, you know, Exxon site in the Permian, right? I think, you know, our wells were drilled in 2007, right? At that time, and these are gas wells, right? So traditionally when a new well is drilled in oil and gas, you have an offtake for that gas, energy transfer, Targa, or one of the big midstream companies. They'll say, okay, you know, you need to get this gas sold. I will build the pipeline to you. I will invest in the infrastructure so energy transfer will go pay you know a million bucks or however far they have to build out but in return for that they're going to say and i'm going to do this for you but you have to sell all your gas to me under all scenarios no matter what for the next 5 10 20 years right

and so it's unfortunate because in west texas like you'd think everyone would be doing this but a lot of guys especially last year when waha was negative uh you know if you're dedicated to targa like you can't siphon off gas to go mine bitcoin even if gas prices are negative right all that gas has to go into the pipeline company contractually because they invested to build out to you um and so again the acreage dedications are a big there's like two main disqualifiers in natural gas bitcoin mining acreage dedications are one they're really hard to get out of and around and you definitely don't want to go toe-to-toe with these big midstream companies and violate those terms and then you know gas composition like if you have a lot of h2s like

sour gas can't really do much about that it's very cost prohibitive to treat sour gas and so like if it's sour it's really not much you can do because that's highly corrosive will destroy your generator dangerous for people so those are the two main deals but you know i'd say in the permian like there are a lot of dedications and so you'd think a lot of pipeline connected guys out there would be doing this but you know your newer wells your five year old wells and newer like if there is a pipeline like the acreage dedicated we run into that a lot when we're talking to your top 150 oil and gas companies you know that have newer production they're you know tied in with the midstream and they can't do anything i would also gather that even if you were someone

that owned an asset and looked at this equation and understood it and wanted the optionality that in most cases if you want the pipeline you don't have any leverage to preserve optionality in just in terms of negotiating power with a midstream company yeah i mean like your every deal we've done on pipeline gas has been older production we've not done any like new wells um because chances are it was dedicated at one point and the dedication's rolled off it's termed out 10 years later five years later so now those guys do have optionality like they're not mandated to sell gas to the midstream companies they do have the functional ability to do something else with that gas um but again it's it's asset by asset so from a customer segmentation standpoint

like when we're looking at selling the product where the oil and gas company purchase it like we're finding we're targeting like the worst potential assets from a gas realization perspective um which would imply like permian basin older conventional wells that you know don't have oil it's like there's you know pockets of the um you know southeastern permian uh like valverde crockett county where you have older production that's predominantly gas it's old you know 20 years plus they have a pipeline but chances are the midstream company is not taking very good care of it it's not dedicated it's like those would be great targets for those companies specifically like those turn those wells turn into cost centers

right if they only produce gas and you have to pay a guy to go out there and chemicals and everything to actually produce the gas and you're selling it for 50 cents or a dollar like chances are like those wells are shut in not producing because they're uneconomic like that's where this would be a great fit do you just basically being in the market do you expect midstream companies you know it would be unlikely to to mine upstream but to start mining at the point of aggregation and do you see that as competitive not necessarily competitive but potentially a competitive dynamic when evaluating sites of what would make something an attractive site to mine bitcoin upstream yeah i think midstream companies are very conservative

they are um they like to clip their fee just by moving molecules so i don't foresee in the near future uh you know again just like oil and gas companies their dollars are to drill wells like midstream companies dollars are to drill i'm not to drill but to build pipe and processing so for them to go way out of pattern you know and then at these you know gathering centers that these midstream companies have i mean shit it's like hundreds of megawatts you could do so like i don't see those companies doing this themselves and capturing the spread very very easily like energy transfer could go do that in the permian right now they have custody of the gas they're stripping out all of the valuable parts of the gas like the ngls and propane and all that

they're left with the least valuable which is just the methane like the dry gas um you know they very easily could do that i think what we're seeing is more those guys facilitating energy transfers to the world, facilitating sales to your hyperscale data centers or your big Bitcoin miners where they'll say, you know, look, we have all this gas. You can buy it from me for some premium over Waha, that energy transfer, like some premium over energy transfer would get just moving it down the pipe. So I don't, I don't see that as competitive. I don't think that kind of runs into any of our evaluation, like that particular one. I mean, I do think it'd be, there's a future where midstream leverages Bitcoin mining as a way to

maybe win more deals. So like if you're a midstream company, you want this big Exxon pad, right? You say, Hey, Mr. Exxon, this is in New Mexico. I can help you complete these wells three months faster than any of the other midstream companies, because I can put a mobile gas offtake solution while the pipeline's being built out. I do see that as a future for, for midstream. one one last question on kind of the evaluation of of sites and then i want to zoom out to more of the bitcoin side of it how do you guys manage decline curves of wells you talked about those scenarios where you know customers actually going to buy the infrastructure to mine they're buying the latest highest end machine it is highly efficient but expensive

how do you guys in mining bitcoin at as high utilization as possible is most ideal if you have those expensive machines how does that factor into evaluating the sites and then also thinking about the duration of how long one of these solutions is at an individual site and moving between sites yeah like those are like that's a great question to just kind of go and going into like wow there's a lot more to this than i thought in 2021 um because you're totally right like old conventional wells like are producing flat like new horizontal wells are dropping off a cliff in the first two years right and so and then gas composition right is widely different and different gas compositions

will perform differently in the generator will you know really really lean dry gas low btu that's less efficient in the generator than like a richer 1200 btu gas so moral of the story is like our customers both in rental and in the purchase model like they're leaning on us to evaluate with them how many units how long where this makes sense which means are we talking about a single well like that's not ideal um single point of failure we're talking multiple wells a gathering system what's the decline on all these wells show me the production history over the last three months show me the gas composition it's the gas composition for all the wells the same um the ambient conditions of the site you know is it high elevation is it cold is it hot

um the pressure like the flowing field pressure of the gas like uh are are the wells on artificial lift are they free flowing like there's all these considerations to really evaluate the quality of a site to put a bitcoin mine on there and have it be a legitimate 24-7 operation and how many units do we need and how long can they be there for so like that's part of every you know customer journey evaluating um those fine details to actually propose them something that we're confident in um and something that they can be confident in and kind of all of this adds up to bitcoin mining solving an upstream energy problem describing principally two different types of problem one unlocking oil reducing environmental liability the other side greater monetization

of natural gas than could otherwise be monetized traditionally or conventionally zooming out for someone that's you know a traditional energy professional that might know less on the bitcoin side how do you and how you know you personally but then also 360 think about bitcoin the money side in terms of what is actually creating this demand and so i'd just like to hear kind of your views on that of you know the actual source of the demand because i could envision you're talking to customers talking about how you can get 13 dollars an mcf versus a dollar an mcf or 10 to 11 of ebitda or talking to someone about you know eliminating a environmental liability being able to unlock oil and that tracking and

then saying well how do i know this is going to exist in two years or three years if i invest in this infrastructure so just like talk a little bit from your own perspective of how you think about you know the bitcoin side of what is actually creating the demand to make this sustainable so what's kind of like the just bitcoin in general like what am i telling customers yeah you know i think i mean i'm a 360 we're very bullish on bitcoin uh always have been and try to maximize our holdings and so when we're talking to customers like you know i tell them i don't have a crystal ball like i can't tell you bitcoin's going to be at 200 000 at the end of the year or 50 000 um what i can tell you is you know it's if you look at the last you know you look at

the history of bitcoin it's the best performing asset over the last 15 years um and you just look at some of the macroeconomic tailwinds of the ETFs are a big one, right? A lot of our customers are old school, but when I can say, look, BlackRock is the biggest purchaser of Bitcoin, Fidelity is buying Bitcoin. Texas has a strategic reserve. The U S has a strategic reserve. Wisconsin pension fund just bought, you know, 250 million. And some of those like tangible macroeconomic tailwinds really help people come to terms that like bitcoin is not you know fly by night um snake oil scam right and then you know the fixed 21 million uh bitcoin supply and then in light of you know trillions of dollars you know they can keep printing them right it's

you have and then the deficit i mean you can get really philosophical on bitcoin but i think the main diffuser for customers is like talking about texas talking about blackrock being like look if it's good enough for these massive institutions like it's not going anywhere um so i think that is how we frame it i can't tell you what hash price is going to be but i can tell you that you know things are going to continue to get better for bitcoin if you look at some of the the things that are happening right now and i think that helps people you know come to terms with it make no mistake if someone's going to go buy two million dollars plus of our infrastructure like they are going to have to go down the bitcoin rabbit hole themselves some of them already have

some of them are are more new to it some of them are more risk takers wildcatters families that know they want some bitcoin exposure and this is a way to get it um on the rental side again like that level of evangelism like frankly doesn't happen because they could give a shit about bitcoin it's about getting oil out of the ground like i'm not having to like they're not worried if they make 10 grand this month or lose 10 grand next month on our deal they're worried about getting oil out of the ground and if this works and we have the track record and customers and backing and they know it works like they're fine with it you know irrespective of bitcoin and in that scenario they're just renting equipment for you so

they don't really care if two years from now three years from now it doesn't turn out because they don't have a huge amount of capital investment so now now they in theory could have gone and drilled an oil well and then if you're not able to continue to to pay because yeah but worst case scenario like bitcoin goes to zero like this will still function as the same service that off takes gas that lets them produce oil so like if bitcoin's at zero like we can still run i would challenge that well i mean you can still run the cost so you could i guess what you're saying is you could still reduce the emission it would just be i'm still unlocking oil for them right if they're paying us you know 50 grand a month and they're getting zero dollars back but

now they're making 500 grand of oil like still you know it's less attractive but again for them it's not really about how much money am i going to make on this bitcoin mining deal it's about how much more oil am i getting out of the ground and then how do you think about this is obviously in the oil field i presume even though this is people have been mining upstream for probably a decade now it's still very nascent it's still a drop in the bucket do you see or i don't say do you see what would bitcoin in terms of scale need to be to more meaningfully change maybe how the legacy industry sees the map such that they're more proactive about using bitcoin to solve these problems

rather than having you show up to try to educate them and yeah i mean my business partner sean always says that you know one day the bitcoin mining is going to be a tailwind for 360 energy not a headwind right now it's a headwind because you know a lot of customers are like can you do anything else can you do ai can you do any does it have to be bitcoin right because they still have this phobia that bitcoin is you know a scam so that is changing though like it's absolutely changing i think the level of evangelism we're doing now is a lot less than we've been doing i think that's also a product of being more mature as a company having real institutional backing you know track record being producers ourselves like we come across more trustworthy more proven

um but you know i don't i don't know i don't you know if it's 500 000 bitcoin i don't know if it's the u.s buying five percent of the outstanding supply um i don't know if they'll ever do this or if they'll continue to outsource it i mean i think you can look at as maybe as a comp as you know some of these big super major exxon bp getting into some more the renewables and they're kind of dabbling into geothermal which is at least more tangential on the energy side like i don't think in the next three years i don't even know if it's a bitcoin price signal i just don't see these big oil and gas companies wanting to go invest a huge amount of money in bitcoin mining to go do this themselves in the near future i think they'd rather outsource it via the rental

product um to get the oil and gas value propositions that they're looking for i could be wrong i just now if when you guys look at the map what percentage of wells that you would say hey this would be a great opportunity to unlock oil production for an emp company what percentage of them have some type of solution is it one percent is it point one percent is it you know Yeah, that's a great question. I don't want to get the statistics wrong, but I believe about half a percent to 1% of natural gas in the United States was flared last year of produced gas. I think it's a half a percent. I think pretty sure it's half a percent, somewhere between half a percent, 1%. so that's all stranded gas that's creating emissions that may or may not be curtailing oil production like that's addressable what does that mean that's over two gigawatts of electrical generation bitcoin mining capacity just in the u.s of gas that's specifically being

flared that's not talking about gas that's being sold into waha or negative that's not talking about wells that are shut in because they the market's uneconomic um that addressable market you know is four to five times larger in the middle east it's about the same size if not bigger in south america um you know and so for us you know all over texas today putting stuff in new mexico wyoming you know going to be going to north dakota this year like um that's a huge addressable market you know for us to to go do this and so i think that's i don't know if that answers your question no it does and then my last my last question on this and i want to pivot for the last 10 minutes is if you're going to mine bitcoin at the top level why are you guys focused

from a strategy perspective upstream natural gas versus other potential points at where somebody could capture some natural resource convert to power mine bitcoin yeah i mean it's it's a good question i think what we're really energized about like culturally like what is exciting about our bitcoin mining application is like it's solving real world problems and if you're gonna go plug in 500 megawatts on the grid like are you really solving any problems maybe it's the load balancing it's you know better for the grid something i'm not as well versed in but i think what we're really energized about is you know this bitcoin mining being a function of solving real oil and gas problems for these guys

has nothing to do with bitcoin but it's a tool in a toolbox to solve those problems i think that's what really gets us excited um you know we don't want to be a big self-mining company um you know for a variety of reasons i think in our future like i definitely see us getting back on on the upstream side like if if the right opportunity came about i could see us going and doing something larger completely vertically integrated i don't think we're ever gonna do some big gas purchase agreement with energy transfer and just put a bunch of bitcoin mines out there on their gas because it you know is makes sense from a bitcoin mining side i don't know our what we're seeing right now is like is a massive problem that we have a solution for

um that is growing very fast um both in 360 size deployment size customer profile and backers and so you know i i think to some extent we have some really positive momentum that we want to keep you know why change if it's not broken sort of thing and you know we have a lot of runway ahead of us to go really make an impact in uh this flare gas market stranded gas market now to pivot though from the energy side and um i mentioned that i wanted to go here to the bitcoin side and even though yeah certain of your target customers are more mining bitcoin for the bitcoin side of it others are solving a different problem to mitigate you guys are either helping others you're operating

others to mine bitcoin or you're mining bitcoin and people are renting equipment from you how do you guys think about your role as bitcoin miners and your assets within the broader bitcoin ecosystem in terms of the function they're providing yeah great question i think you know as a bitcoiner we are distributing hash rate um away from your call it at a very low cost right the cost to mine the bitcoin is very low and so that enables us to kind of distribute a hash rate away from maybe your largest publicly traded bitcoin miners that control a lot of that hash rate so philosophically like that's attractive to have these smaller distributed nodes uh of bitcoin mining and so i think that's something

that you know is an asset to bitcoin in general um you know i know we talked a lot about pool centralization right which is its own problem but i think our function in the broader bitcoin ecosystem as like distributed nodes of hash rate is uh is pretty cool but on that point of you know a lot of bitcoiners and then bitcoin developers talk about mining centralization and mining incentives do you guys think about

pool centralization as a risk to your business or a risk to Bitcoin because while maybe the further away you get from Bitcoin to the end customer

the Bitcoin side of it doesn't come into play as much but the long term integrity of Bitcoin is critical to the demand for these solutions and as bitcoin grows the demand for the solutions will grow and and perfectly fine if you guys don't think a lot about it but i'm just curious

if you if you do evaluate those risks and how you think about the risks of centralization within the mining ecosystem because from my vantage point it's not at the it's not in the interest of the actual miners the people that are distributing the hash rate like yourselves i'm just curious how you guys evaluate or whether or not you you view it as a material risk and um and just how you think about that yeah you know it's hard because like on one end we're running a business so it's like we're incentivized for ourselves and our customers to go with the pool option that's the most reliable from a payout perspective for the lowest fees right trying to run a business we need to maximize or optimize around those points right what does that

mean it means we're usually pointing hash rate at some of these big pools right which is a conflict from your point about pool centralization and you know i think a lot of miners would say oh but you know if boundary starts acting nefariously we can you know easily just switch the pool address on all of our you know miners and move our hash rate somewhere else which is true i think there's a lot more to it right i think it's not you know a five minute process to go do that especially you know if you're not set up on other pools and the kyc and all the stuff that goes along with it so yeah i you know again our little portion of the global hash rate you know from our day-to-day business we're not optimizing around the risk of pool centralization we're optimizing around

you know what's going to maximize our cash flow and the cash flow of customers in the most predictable way um but you know i i do think there's something to be said about pool centralization as being a risk and i say it's fair to say that mining bitcoin is i mean for all the things that we talked about in terms of all the different variables that you have to think about in terms of evaluating sites mining bitcoin is difficult uh not for the faint of heart probably not you know similar but different to the you know anybody who was going to drill well not for the faint of heart not for everybody but that um you guys don't have a lot of time to think about or consider regardless of you know the consequences of pool centralization but just as changes

are being considered yeah to the bitcoin network and your role in that you know in terms of what you know where you're pointing at hash rate not just that like hey is centralization risk and do i want to have a second option i'm curious if you guys have ever thought about kind of splitting hash rate across pools to to have that solidly de-risked but then also you know is it fair to say you know you guys aren't you know as changes are being proposed in bitcoin or people are evaluating soft forks that doesn't really get surfaced in your certainly not day-to-day but rarely yeah no i mean as a bitcoiner personally and at the company like i'm very interested in some of the more thematic you know the quantum computing is a big one like how do we make

bitcoin quantum resistant right am i active in discussions no i don't know anything about the code base i can't speak competently on all the fine details but i recognize the problem and you know i'm excited to hear what potential solutions are and will be um i think you know as a bitcoiner i'm very concerned about that i think you know we have tested a couple different pools one we're excited about trying is ocean um you know could we do a better job of that absolutely but to your point we're got 10 000 other things going on um running a pool test uh is not the number one objective right now um but you know we do talk about that stuff and we certainly talk about some of the more thematic things coming down the pipe for bitcoin um and

what those mean and you know i would say both my normie friends and customers like quantum is the one that a lot of people are talking about right now um so you know we need to be educated on what the risks or not risks are and what timeline and you know what bitcoin core is you know doing about that so all right well take that opportunity to wrap but last question what are you guys most strategically focused on and what do you see maybe categorically shifting your business in the next few years yeah you know i think our focus is on putting out as many units as possible for large oil and gas companies um obviously we're trying to build the biggest you know business we can build the biggest services company we can build um which is really a function of of putting

units out in the field um i mean you know we don't look at 360 like oh we got to sell the company in the next three years or you know we're more focused on building a company that is solving problems in the oil field which is a function of evangelizing people on who we are what we do how it works and why they should do it and then getting units out in the field i think a lot of like that's the near-term focus like we need to get to 20 rental units out in the field before the end of this year, right? That unlocks our ability to go raise more money, get better cost of capital on credit facilities to then continue doing that. We're really focused on partnerships, like one of our investors is Halliburton. And so, you know, continuing to work with

Halliburton on strategic initiatives together is a big driver for us and our growth. You know, I think over the next, you know, two years, I imagine we're going to continue to be across the lower 48, uh, potentially Alaska. Um, you know, we are evaluating some international opportunities as well. And so, you know, if we're successful domestically, there's no reason this can't be successful at a much larger scale internationally, whether that's the Middle East or South America. So, you know, we're, you know, we're excited. The addressable market for what we're doing is massive you know bitcoin mining as a function is uniquely situated to solve the problem like you can't go put an ai data center in the middle of the oil field and

run it off starlink there's not many other things that are so flexible like bitcoin mining so um and we're good at it and we've been doing it now for four years and we're producers ourselves so uh you know i do think to some extent there's lightning in a bottle right now and it's trying to just capitalize on that grow that and um you know grow the company all right well uh last question what is what smu football game are you most you have starred on the calendar uh yeah virtually all of them yeah i go to most um uh clemson smu at clemson oh nice uh that's going to be really exciting and the u is coming to and the u is coming to smu so that one's a big deal yeah arson deck that's going to be uh interesting yeah i love it i appreciate you coming on center

of hash episode three yeah thank you thanks for having me appreciate