The Pomp Podcast - #641 Bitcoin Mining with Mike Colyer

Episode Date: August 24, 2021

Mike Colyer is the CEO of Foundry. Previously, Mike led business development at Core Scientific, which grew into North America’s largest cryptocurrency hosting company. In this conversation, we discuss bitcoin mining, market cycles, China mining ban, building a mining pool, North America focus, and the importance of low cost power.  ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Mike Collier is the CEO of Foundry. Previously, Mike led business development at Core Scientific, which grew into North America's largest cryptocurrency hosting company. In this conversation, we discuss Bitcoin mining, market cycles, the China mining ban, building a mining pool, North America focus, and the importance of low cost power. I really enjoyed this conversation with Mike, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Circle. They're a global financial technology

firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce, and financial applications worldwide. Circle is also a principal developer of USD coin, USDC, which is the fastest growing regulated, fully reserved dollar stable coin in the world. Now standing at more than $15 billion market cap, and it's adding nearly $300 million of net new digital dollars in circulation every single week. The free Circle account and suite of platform API services bridges the gap between traditional payments and crypto for trading DeFi and NFT marketplaces. I've had Jeremy Allaire on the podcast before, the CEO of Circle. I'm really impressed with what they're building and also the growth that they're currently

experiencing. Go learn more at Circle.com. Again, Circle.com, the fastest growing, regulated, fully reserved dollar stable coin in the world. Go to Circle.com to learn more. Next up are my friends at LMAX Digital. They're the number one institutional crypto exchange. That's why you probably never heard of them before. They don't serve retail. They only serve institutions. LMAX Digital offers clients the deepest pool of crypto liquidity on the planet, underscored by 100% uptime track record through volatility spikes. Leveraging LMAX Group's liquidity relationships and ultra-low latency technology, LMAX Digital is the market-leading solution for institutional crypto trading and custodial services. They feature a central limit

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Again, lmaxdigital.com slash POMP. Go check them out today. The number one institutional crypto exchange, lmaxdigital.com slash POMP. All right, let's get into this episode with Mike. I hope you guys enjoyed this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should

not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, let's start with just to remind everyone, what is Foundry and kind of the founding story of this in terms of what you guys are building? Yeah, so Foundry is a wholly owned subsidiary of the Digital Currency Group. And we're focused on supporting decentralized infrastructure. So both on the proof of work side and proof of stake side. And we got started about almost two years ago. And we've been building out both sides of that business. We've scaled now to, we're approaching, I think,

50 employees, which we've got an amazing team here at Foundry. And we provide, so we mine ourselves, we provide advisory services, we provide equipment financing, and we've deployed about three, over $300 million now into the North American mining ecosystem. And then we've launched our North American mining pool, which supports institutional-sized miners, the publicly traded miners, so that they have a clear, transparent pool to mine in. And then we've got an advisory business as well, helping miners get into the business. And then on the staking side, we now stake on about 20 different protocols. So we're essentially like the infrastructure team for uh, DCG and, and the other subsidiary companies. Got it. So when you think about what's changed

over the last year or so, since we last talked, uh, there's been a bunch of changes and growth and, and, um, uh, kind of positive developments with foundry. And then also there's been absolute chaos in the mining, uh, industry in general. Maybe let's start with, um, kind of the market itself and how you evaluate what's transpired over the last 12 months or so. And then how has that allowed you guys to navigate this and kind of where are you both from a size standpoint and then also kind of what you are doing from a service standpoint? Where's most of your attention or energy right now? Yeah, you know, the mining space moves incredibly fast. It's like every 30 days, 60 days, it's it's changing and it's evolving. And which makes it super exciting. I

always say that, you know, about four years ago, I pivoted my whole career to go into the mining space, I don't think I could ever go back to the traditional world. It just moves way too slow. So on the mining front, we were fortunate. We bet a little counter-cyclical. So 18 months ago, we were buying all the equipment we could prior to the halving. And as we went through that process, we launched our equipment financing business to really help support other miners in North America. To be honest with you, what we didn't anticipate was the wafer shortage. So Bitmain and MicroBT, they work with TSMC and Samsung. They're on the latest generation chips.

They're competing now with Apple and the best technology to get access. And there just wasn't as many miners available as we thought. So that kind of constrained the market. And then what we also didn't anticipate was just the last 90 days when China shut down mining. You know, they've always threatened to do it. There's always they've always done it in in in certain pieces, but not like wholeheartedly across the board. And that just sent shockwaves through the industry. And now what we're seeing is there's a surplus of equipment, but there's no place to plug them in.

And that's like changing the dynamic of the industry once again. So it's you got to be you got to move fast in this space. When you think about the China decision, I think everyone agrees they've always threatened it. They've always alluded to it. But this time it was serious. 100 percent of miners out of China, 80 percent. How do you evaluate who's left and who decided to move on? And then also, where are those people going in general? Is it North America or are they finding a home somewhere else? yeah so the way i would so i one i think it was a big strategic mistake on china's part and and hopefully someday they're going to regret this um i would say probably 80 percent of the miners had shut their operations down they're still probably 20 percent in china we're starting to see some of them turn back turn back on their machines you know hash rates starting to increase pretty quick uh and and what the way the chinese miners describe it now in china is it's kind of like a gray market so if you're willing to take a little risk you can still mine but at any point

in time you're going to get you could get shut down most of the time they're like paying off the local authorities or something to let them mine the bigger miners have now um they're they're basically focused on decentralizing their, um, their machines around the world. And the Chinese are going pretty much anywhere they can to find space to plug in. And I think what they're finding in North America is the fact that, you know, most of the big guys have, they bought their own equipment or they've got customers that already bought their equipment. Their build-out schedules are booked for literally the next six to nine months. So they're going to, the Chinese miners are going to have a hard time plugging their machines in North America

to any kind of scale. So they're doing a lot of work in Eastern Europe, Kazakhstan, even into Russia. And really, they're going anywhere in the world they can to find cheap power. When you talk about all those miners looking for power, but they're not really being enough power, is there something that you're kind of pointing your finger to and saying, this is the solution? Is it pursuing gas flaring? Is it trying to find more renewables or clean energy? Or is it literally just, no, the power producers have to get the lead time in order to get this stuff up, running, and kind of ready for the miners? What solves that kind of, if you will, supply-demand imbalance? time you know you can't it's one of these things where you can't just you know we see all these pitch decks we see all these miners these announcements and they're like hey we're gonna we're gonna turn on a hundred megawatt facility you don't turn on a hundred megawatt facility

in a week or a month or three months i mean that's that's like a six to nine month journey and that's if you start if you started six months ago right so it's hard to get the infrastructure equipment now, there's supply chain delays. It's hard to get plugged into the network. You just don't walk into some place and say, hey, I want 100 megawatts. They have to do all kinds of grid analysis. There's usually regulatory approvals you have to go through. There's a lot that takes place. So it's going to take time to get this plugged in. And what we're seeing is energy companies are now waking up to the fact that this Bitcoin mining is not going away. It's a legitimate industry.

And there's this massive baseload that's intermittent. And they're starting to think about how do they plug that into their existing infrastructure or their new projects and kind of marry Bitcoin mining together with power production. And I think that's just, for me, that's super fascinating in terms of how that's going to play out over the next four or five years. So I think it's just going to be bigger and bigger players. When you think about the mining pool versus the other services you have, explain the importance of the mining pool and how that has grown. I believe it's now one of the top five mining pools in the world. It's the largest one in North America. So describe a little bit of what exactly the mining pool is.

Why did you guys start focusing there? And then how have you grown it to become so large? Yeah, so for Bitcoin miners, to solve a block, you have to work with other miners, right? And you aggregate your hash power together to go try to solve a block. And the solving of the block is literally based on luck. and um and and what's happened over time is these pools were established where miners would get together in a pool the pool would solve the block and then the pool pays the miners based on their hash rate contribution and you know when the asics came out all the hash rate went to china or a big

significant piece of it the chinese set up the mining pool layer software or they ended up getting the most hash rate. So for the last six years or so, the Chinese have really dominated that layer of the software stack. And it's been frustrating because it feels like you're always mining into this black box, right? You couldn't audit the numbers. You never were sure if your payouts were correct. There was just this lack of trust. And we felt that if the institutional money was coming into the mining space in North America, we were going to see these publicly traded mining companies, they were going to need a trusted pool. And we felt like we could provide that service to them. And to pull it off, you have to have very deep pockets, you have to have a lot

of, you have to weather the variability and the luck. So from day to day, how many blocks you actually mine fluctuates quite a bit. And you have to have deep pockets to be able to cover that Because the miners, they want guaranteed payouts. They don't want to take on all of that risk. And that's what the pool does. It's almost like an insurance contract for the miners to guarantee their payouts. They don't care whether you mine a block or not. They just want to be paid every single day.

And that's what we provide that service to them. And we do it, you know, we provide FPPS payouts, which means we guarantee the payout for the amount of hash rate that they give us. So it guarantees it guarantees their their their revenue stream. And, you know, we kind of right now it's it's definitely feels like it's like our contribution, I guess, to the to securing the Bitcoin network, because from a business perspective, it's a horrible business model. Anyone in their right mind would not launch a mining pool, but we felt it was super important for the long-term security of the Bitcoin network. Will you allow non-North American miners to join the pool, or is this only available for North American miners?

Great question. So the one thing we've done is, right now we service the institutional size miners, right? We've really focused on the publicly traded companies, the institutional miners. And the one thing what we require is you have to KYC AML into the pool. So if you're HUD-AID or BitFarms, you want to know who you're mining with and be able to pass all the compliance aspects from that standpoint. So we are definitely open to any miner from anywhere in the world. They just have to go through the KYC AML process. And today we're focused on the larger miners. And we're looking at how to service the rest of the market. Got it.

And then when you talk to the individual miners here in North America, what are you hearing from them? Are there specific trends that are sticking out to them or things that they're concerned about or excited about? What are those conversations like right now? Yeah, I think Bitcoin's at 50K, right? So mining is a great business. And I think they're all happy and excited.

And they're all trying to figure out how to expand faster, right? And look at the players that are in the market. Most of the players that are in the market today that you read about, we all live through crypto winter. And I always say the Bitcoin algorithm is ruthless in its drive for the lowest cost. And it goes through these cycles. And you have to be prepared for the bull runs and the bear runs. And, um, and right now I think everybody is trying to expand as fast as they possibly can. Um, so yeah, it's a good time. When you think through those cyclical things, right. Um, most people who came into the 2017 bull market, they saw this massive price increase. It seemed like everyone was so profitable mining. They started to go out, they went to go buy equipment. They started to overpay for some of the equipment, um, kind of at the top of the bull market. It then took a little while for them to get it. And by the time they got the machines plugged in,

Bitcoin had gone from $20,000 to $6,000, $7,000. And then eventually we kind of got a puke out. And there's always this fear of like the mining death spiral, right? Like, of course, mining's over and the game has ended. How do you think about miners that are able to sustain, whether it's a bull or a bear market? Are there some core tenants outside of just low cost of electricity? Or is that literally the most important single thing you focus on? It's just the lowest cost power ends up making you the most resilient business when it comes to mining. So absolutely the lowest cost matters, right?

So when you hit that bear market, you want to make sure you've got the lowest cost. So where people make mistakes is in the bull market, as you said, they overpay for equipment or they spend too much on their build outs. and and i think one of the most important things is cash management right so you want to make sure that that that you have enough cash to get through the bear market cycle and i think part of it is understanding that there will be a bear market right so the minute you stop believing that there's going to be a bear market is usually when you're going to get crushed um you know the worst the worst thing for a miner is having this you know they they mine all their bitcoin they hold

it and then they have to sell it you know during the bear market when it's at the lowest price so you know i tend to tell people that you know it's probably good to you know mine and sell every day is not a bad strategy and to manage your cash you know really careful through through that process and and it is a cycle so you have to understand the cycles we've talked to a bunch of people who have either gone out and through private equity style acquisition of energy producers or power producers. We've also talked to people who run power companies or power generation platforms, and they're all looking to incorporate Bitcoin mining. Is that something that is likely to become pervasive? Every energy producer will eventually have some level of

Bitcoin mining associated with their business. You know, everyone from I think we've heard about Saudi Aramco all the way on down to much, much smaller operations. How do you see this playing out? I absolutely believe that the energy companies are going to be major players in the next cycle. If you go back four years ago, we would have never guessed that the marathons, the cores, the riots that are buying hundreds of thousands of machines, they're raising hundreds of millions of dollars to pump into the market, that scale just seemed out of control. Four years ago, if you had $5 million of mining equipment, you were like a mining king. I think the next cycle is going to be the major hedge funds that invest in infrastructure, the power companies are

going to be making big plays. And I think that it, you know, I'm a firm believer that the cheapest energy source long term is going to be renewable energy. And battery technology is not ready today to support a lot of the renewable energy projects. And I think Bitcoin mining is going to be that gap. And I think more and more companies are starting to realize that, So, man, if you can co-locate a large base load with intermittent demand, that can be a really powerful tool to expand renewable energy projects. And I think that's going to be a real thing going forward. I also think immersion technology is the next kind of wave for Bitcoin miners. And once we get a reliable immersion technology, it's going to open up a lot of new places

where you can put Bitcoin miners. When you start to think about the chip or wafer shortage and some of these supply chain issues, is that something you believe will ultimately be solved with the existing players? Or does this really open an opportunity for a US-based foundry to actually be created and solve this more domestically? Like, how do you see what I would say, like the intersection of chip and wafer production with like some of the geopolitical things

and this pursuit of sometimes efficiency, but now maybe we should be thinking more about resilience than just efficiency in that conversation. Yeah, so I look at, I think the last, whatever, 70 years, 80 years, it's all been, it's been about oil. and i think the next 100 years is going to be about the microprocessor chip and i think a lot of our geopolitics is going to revolve around who can build the next greatest microprocessing chip um you know right now it's tsmc they they kind of lead the way it's

It's all in Taiwan, and I think that's why Taiwan is going to be a focal point for the U.S. and China and the rest of the world. And I think the U.S. is starting to make the stride. I think the U.S. realizes that we're behind on that, and we've got exposure there. And I think Intel is going to – they're doubling down on North America and kind of trying to get back a piece of that pie. But that's probably four or five years out. Do I think Bitcoin mining is going to play an important part of that? Absolutely. You know, one of the interesting things is with Bitcoin miners, you can really test new technology with those, like when you're looking at building out new wafers, you can experiment pretty easily with Bitcoin mining without taking a lot of risk.

And I think that's what we're going to see is some of that happening over the next four or five years. It's not this year. It's not next year. it's probably like 2023 2024 when you think about the bitcoin miners that are publicly traded uh they seem to have pretty straightforward business models um and i think that they probably have an advantage that they've been able to tap some of the capital markets but i think one of my surprises has been they haven't really kind of gone all in right if you look at something like a michael saylor he's probably on the other extreme of tapping capital markets being able to take on

a lot of debt, use it to acquire Bitcoin specifically. But do you think that the Bitcoin miners themselves more and more will go public and then the companies in the public market will start to become a little bit more well-versed in the use of capital markets? Or is it something where, no, really they're just businesses, they've got products, they're selling those products by renting that hash power out and driving revenue. And we probably won't see as extreme use of the capital markets as maybe I previously thought? I don't know. I think that's going to be an interesting thing to watch here over the next 24 months. And so on one hand, you know, they're infrastructure companies at their core, right? Like they're building out

infrastructure. Some of them are going to be providing hosting services to others, some mind themselves. I think how they manage their cash and their debt is going to be super important as we go through this cycle. I think that sometimes what I think gets lost on a lot of folks is the fact that, look, there's only 900 Bitcoin available every day, right? So if everybody executes on their plan, hash rate's going to increase, which just means your share of the market gets smaller. And you need the Bitcoin price to go up to kind of keep the margins that you have, right. So we kind of we're going to go through this cycle. And I think whoever plays a cycle, the best is going to be the long term winner. When you think about kind of

where the entire industry is going, you sit right now what I would consider one of the best positions in, uh, the mining industry. Uh, you guys have the mining pool. You obviously have a lot of advisory work. You guys were very forward thinking in terms of your ability to get your hands on, uh, hardware, et cetera. What does the future of your business look like over the next, you know, call it 24, 36 months? Yeah. Great question. It's something we think about quite often. Um, the, uh, uh, you know, so honestly the other half of our business is around proof of stake. And we stake on about 20 different protocols. And it's funny because we have all these debates internally because we've got like half the team is our Bitcoin maximalists and the

other half of the team are all like DeFi whiz kids. And some of these other protocols on the staking side are unbelievable. And I think there's room for both. So I actually think a big part of our business in 2022 is going to be around staking um and we're super excited about that there's so much happening there um on the mining front um you know our goal is we we we have the luxury of like stepping back and figuring out where can we add value to the to the mining ecosystem and that's and that's what we want to do so if there's there's places where we think we can add value. We want to step in and try to add that value into the marketplace. Over the last 12 months, it was provide equipment financing to miners because they were cash poor and they had

to get to the front of the line to get equipment. We wanted to provide the pool service. There's a few things that we're thinking about for the future, but it's going to be interesting to see how it all shakes out. Yeah. Joe, John, Mike, I've got two of my brothers here with me. You guys have any questions? Yeah, my, my first question was going to be around kind of the next 12 to 36 months, but we'll let that one slide. My other question would be, I guess, around as Bitcoin's price, most people expect it to continue to appreciate. How does that work for the economics of your business and kind of the miners you guys work with? Yeah, so Joe, it's so I lived through the last bull market as a miner and it was absolutely crazy. It was crazy

on the way up and it was crazy on the way down. And I just haven't felt that craziness yet in this market, believe it or not. Obviously, there's lots of people that want to get into the mining and you can't get equipment and all that, but we haven't reached the peak, I don't think. And so my guess is, I think over the next six months, it's going to be, there's a chance it's going to just be out of control. And everybody is going to want to be into the mining business and people are going to be paying ridiculous amounts for machines and it's just going to get out of control. And then we're going to, you know, we're going to have this down, downward slide into, into the Bitcoin halving, right? Like it's, it shouldn't be lost on anybody that in less than three years, you know, the, the revenue is going to get cut in half for all the miners. So, um, it's going to be, um, I think it's going to be a wild ride, you know? And as we approach your seatbelt, yeah, I was going to say like, that's a good point. As we approach the having last time, like, what does that demand look from a mining perspective? Right? Because I'm assuming as the price appreciates, the margins look good. And people, the interest comes in and you guys obviously can, people want to pay more for machinery and all this kind of stuff. Like, how does that look on the way down? yeah on the way down it's a bloodbath usually um at some point and i don't know how it's going to play out this time actually because you know it's it's it takes a lot more to get the machines

plugged in um so the cycle may extend a lot longer than what what anybody anticipates which is exciting if you've got machines plugged in right if you're mining today it's it's going to be an incredible business over the next, you know, 24 months. Um, on the way down, it's, it's absolutely punishing, right? It's, it's really painful. Um, so you just have to manage your cash appropriately. Gotcha. You know, it's almost, you know, like those that trade Bitcoin, right. And they're taking leverage out on trading Bitcoin, right. They can make a lot of money on the way up and they can just get absolutely wrecked on the way down. Um, so I think you got to manage your portfolio appropriately. John. Yeah, Mike, thanks for doing this. I

appreciate it. It's nice to meet you. Um, so I'm curious about like larger companies that you guys work with, how should they be looking at it? If they're not into mining already with you guys, uh, what should they be looking at? Is it just kind of like cost profit? Should they be looking at what, uh, what time in the cycle we are in? Like, how do they think about it, uh, from their end? And then how do they work with you? Yeah. So, you know, we get this question a lot in terms of, of, um, should we be, you know, we want to get into the Bitcoin mining business and I'd say, well, like, what's your, what's your competitive advantage, um, to be in the business? Like why, if you, if you're going to get into Bitcoin mining and just to, because you think you're

going to get rich, I'd say, well, we'll just buy Bitcoin. And so it's way easier. Um, just ride the Bitcoin cycle. If you want to truly get into Bitcoin mining, you got to treat it as a real business and you have to think long-term, right? It can't be like, hey, I want to get into the Bitcoin mining business and I want to make a bunch of money over the next six months. It doesn't work that way. You really have to think through what's your competitive advantage, which means you've got access to low cost energy, you got access to cheap machines, um those and you've got the the ability to scale your operation and run it effectively um so if you if you've got one of those things um then you have to be it make sure you time the

market properly right so you take companies like core scientific uh compute north you know they they built right through um crypto winter right they had a plan they had a strategy even though bitcoin price came down they were still expanding they were still adding capacity because they believed the market was going to come back um those that stopped they're kind of dead in the dead in the water when the market came back right so you definitely have to think through where you are in the cycle and make sure that you're um investing appropriately for that that part of the cycle does that answer your question yep yeah i appreciate that mike talk to us mike talk to us a little bit about, um, the talent in terms of, as you all have built this up, I know that you

have been focused on hiring great people. Has that been easy? Where are those folks coming from? Are they crypto native? Are you finding them in other industries? Talk a little bit about kind of the people that make up the business. Yeah. You know, pop that's, that's my favorite part of this, um, industry. It's the favorite part of my job, um, is, is finding great people and turning them loose and giving them an amazing environment to go change the world, right? That's what we're doing. And at Foundry, we've come at it from a couple different ways. We're based here in Rochester, New York, which is a fantastic place to live. But we've mixed it with people that have got a lot of experience in the industry with folks that don't have any experience in the

industry, but bring a certain skill set. Also with folks that have been super passionate about crypto, but just didn't know how they were going to work in the industry full time. And it's been really a ton of fun having folks here that are super excited about building out the future. I mean, we're literally, I sleep well at night because I know we're building a better system for the future right like you can get really depressed watching the news all day and all all the bad stuff that's happening in the world and and you know the government as they continue to print more money it just i feel good that that we're building a better future and we've got a team of people that feel the same way and it's it's super fun so um in terms of recruiting you

know we're going into the college campuses um we're we're looking globally now you know so it's not just, um, we're, we're finding people, you know, all over the world that, that, that want to participate in, in our mission. I got to ask you the question that we ask every single person we're in the Bitcoin bull run. We just crossed over 50 K. What's your price prediction for the end of the year? I don't, all I know is I, I went and I bought a t-shirt off your website that, uh, you said you're going to start selling when it hit 50. I was like, Oh, it hit 50. I'm going to go get a t-shirt so i got one of my t-shirts um i think i got the one that said few i like that i like that one um i you know i i get the question a lot from from like friends and family and

everybody and look i think dollar cost averaging is a really good idea um and and the way i always think about it is what you know think longer term when you come when it comes to bitcoin investing of where do you think Bitcoin is going to be in five years? And when you feel good about that number, whether you buy Bitcoin at $48,000 or $50,000, it won't matter. But man, it's hard to know where the price is going to be. So a second part of this, and really the reason why I was excited to ask you that question, is when you are advising or talking to miners, is there anything that they change about their business related to price on the way up. So on the way down, we know that there's a certain threshold where miners at a certain energy input cost

are mining unprofitably. But if they've done the right cash management and they have a long-term view, they can survive, they're resilient, etc. But I've never heard anyone talk about on the way up in a bull market, are there specific things that miners should be thinking about? Is there almost like a, if you were a trader, you would have a plan to get out of a trade? Is there something like that equivalent in the mining industry? Or is it basically mine as much Bitcoin as you possibly can do great cash management and know that there will be a bear market at some point? You know, I think on the, I think the thing that I think about the most is not the bitcoin price it's the it's the hash rate of the network so i think if you're going

to be in the mining business you have to get your head around where you think the hash rate's going to be um and and and that and then you base your your investment decisions around around that piece of it right so um you know hash rate's going to go up 12 on wednesday like it's just a huge jump um and this is where we're seeing more capacity built out in north america we're seeing some chinese miners actually plugging their machines back in in china um but it's kind of like where's that hash rate going to go and i think that's how you you um base your decision in terms of buying more equipment or not and part of it is like what's the price of the equipment and can you actually get it plugged in right so today you can you can kind of get equipment

but there's a delay, it's not going to be here for six months or four months. And then you got to make sure you can actually get it plugged in in that time period. So it's making sure you can time it and you've got enough time left in the cycle to get your money back. I think that's probably what I'd be thinking about. Do you have a prediction for what the hash rate will be by the end of the year? I did. And then China shut off all their mining and kind of crushed my prediction in the right way. It was good for us, but I think we're sitting at somewhere around 125 exit hash right now. And if China wouldn't have shut off, I would have bet we would have been at closer to 200 exit hash right now.

So by the end of the year, I'd say it's going to be around like 220, maybe 225, 230, somewhere in there. And then, you know, it's going to continue to grow. I mean, people are just investing huge amounts of money and building out facilities and the machines are going to be there. So it's just a matter of time to get them all plugged in. And I mean, that's a pretty serious jump from where we are right now, right? Almost double, give or take. That's all being driven by the work that's being done today, I'm assuming, right? Most of those people have already bought their equipment. They already know where they're going in. And now it's the blocking and tackling of actually getting the hash rate up and running by getting the machines installed at those

locations. Or do you think that there's the ability for a player to come into the market? Let's say, you know, we get to middle of September and some really large energy business or some large corporation says, we want to be in that business. And they can literally go and get up and running in, call it 100, 120 days? It just takes time to build out these mining facilities. They may make those announcements, but actually doing it, take the core guys. I mean, what are they? They're sitting at like 250 megawatts or something, and they've been at it for three years building full speed. The Riot guys, they're expanding really fast it's it's pretty impressive what they're doing down there um but even so they're

you know maybe they add a hundred megawatts or 100 200 megawatts over the next you know six months you can't if we if we said hey we want 600 megawatts they just physically can't do it you got to get transformers you got to get wire you got to get conduit you got like there's so much infrastructure pieces that have to go into it that it's you can only scale so fast if you were talking to a miner right now what's your pitch leave you with this uh for why they should work with you guys you obviously have uh you know literally come out of nowhere over a two year period uh grown into one of the top five mining pools in the world but what's the pitch for foundry in terms of why folks should work with you across the various uh product or services

that you guys offer? Yeah. So I think there's a couple of things. One, it's clearly the team. We have an amazing group of, of really experienced miners that have been there, done that. And so, so definitely taking advantage of their expertise. And then I think the second part is we're not going anywhere. I mean, you know, I signed up for this job. Barry said, go build a business for the next 10 to 20 years. You know, so it's not a fly by the night kind of operation and we're making significant investments for the longterm. So we can weather the ups and the downs of the market and, um, and, and we're going to be here. So we're, you know, our focus is building long-term strategic partnerships with folks and, and help them at the different, at different times

in the cycle joe john any last questions no mike appreciate you doing it yeah i'm super i love what you guys are doing by the way i'm i'm glad uh i'm glad you got the brothers involved and uh i think spreading the message around bitcoin is just so important and you guys are the best in the business at it so i uh i said to them i said listen if we're going to talk about mining i know just the guy let's go get him and uh and you were kind enough to uh to join us on short notice i I appreciate it very much. Yeah, it was exciting. Thanks.

All right. We'll talk to you soon. All right. I'll see you guys. Bye-bye. Thanks.