The Pomp Podcast - #909 Jason Les On Bringing Hashrate To The U.S.

Episode Date: April 11, 2022

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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. Jason Less is the CEO of Riot Blockchain. In this conversation, we talk about the Bitcoin mining industry, including how it fits into the ESG narrative, the importance of capital markets, and why Jason is so focused on bringing hash rate to the United States. I really enjoyed this conversation with Jason, and I hope that you enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. This episode is brought to you by BlockFi. BlockFi provides financial products for crypto investors. Those products include

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team is locked up for at least one year. All the centralized competitors have valuations in the billions of dollars. CryptoToday.com started out at $0 as the first decentralized token information site. You can read the white paper at CryptoToday.com. Again, go to CryptoToday.com to learn more. All right, let's get in this episode. I hope you guys enjoyed this one. is for informational purposes only. years. Where did that come from? Why were you so enthralled with playing poker? Sure. I'll give the lowdown of the story here. So, you know, going all the way back to a very young age, I really knew I wanted to be involved in computer science. You know, I was a kid during

the tech boom during the 90s, and I wanted to be involved in that anyway. So from a young age, I was, you know, coding, learning how computers work, repairing computers, making them, all of that kind of stuff. And that led me to studying computer science in college. I started college in 2004 and that lined up right when poker was taking off in a huge way after moneymaker won the world series of poker in 2004 and internet poker was getting crazy. And I just had this like epiphany where, wow, I can sit at my computer and I can play this game and I'm going to make money as long as i'm better at the game as everyone at the table now no easy feat but it captured my attention and it was a challenge i wanted to take on so while you know finishing my degree i embarked

on this 13 14 15 year career as a professional poker player mainly playing online um and then evolved into playing uh high stakes tournaments as well you kind of get to a level at some point no one wants to play you online anymore so you got to play these uh big tournaments and uh towards the end of my career i was really focused on heads up poker which is one-on-one poker to me that was the purest form just you versus another player you're playing almost every hand bluffing is a huge part of the game a lot of strategy goes into it i worked with an incredible incredible group of friends to study the game and help each other and that was you know a great experience and it's through that is how i discovered bitcoin so heads up poker let's start there first like this is the

as you said the most pure form of it it's uh it's probably just savage i sit down for across from another person i either take their money to take my money this is the uh the way it works um is there one you know hand or or one game that you remember playing where you're like people won't even believe how ridiculous or crazy it was uh you know it's hard to now remember one specific hand but i mean there were many times online where i played you know a losing player what in poker we call a fish or if they're really bad a whale and um it would be amazing to me the amount of money some people would have to just lose uh but also you know playing good players you get put in the most tough situations and you know i i think i think one of the biggest hands i

ever played i i mean i don't remember the exact action of the hand but one of the biggest hands i ever played i was just check calling down with like ace high versus an all-in on the turn and i you know thought out the hand you know did the all analysis you know i uh always do and i just called off with ace high and i won this massive uh five figure pot and i was like wow I'm playing with some beast. This is this is what it takes to win. So, yeah, I guess think about that from a couple of directions. Yeah, that's pretty crazy. And so you discovered Bitcoin through this. Explain kind of the way it payments work and and even Black Friday and kind of how you came across Bitcoin.

Yeah. So a big part of Internet poker or even poker in general is, you know, moving money around as a poker player. You're always going after where the best action is, where people are playing, where the highest stakes are, where the worst players are. and that requires a mobility of funds and you know if you have an edge you want to play the highest stakes possible you're trying to move a lot of money around all the time so um uh in 2011 there was something called black friday in the internet poker world where the doj uh released an indictment against the major u.s poker sites that serve you know most of the international market and uh seized funds and you can no longer play on those sites so i was all in on a little funny use the phrase but all in on internet poker and that was everything i was doing all the time

so suddenly one day almost all of my money was just gone and not only is that you know that hurts from a financial perspective that hurts from an ability to do my job anymore and it was also you know an attack on my identity really i had an entire identity wrapped up in being a professional poker player you know a career that you know many people will look at and think is a joke you know you're never going to make it and then for something completely outside of my control it just went away and was gone and that sucked i was pretty upset about that for about one day and then i said you know what one day is enough to be upset we're going to figure out a way around this and figured out a way to continue playing poker and that is when i first discovered bitcoin

um i heard people posting on the forums like hey have you guys looked at this bitcoin thing uh you can move money around there's no third parties and i said oh that was kind of interesting but i didn't you know dive too much into it and then as time went on i be like more poker sites started implementing bitcoin after that over the ensuing years and i said wow this is this is way easier to move money around because it's always a challenge in internet poker to be moving money around even though it is not illegal to play internet poker you know transactions are getting stopped banks are you know shutting down your bank accounts so i i've experienced that i've seen that from other people firsthand it's not some theory that in the western world your financing

can just be seized or shut down by banks or the government so i became the use case for bitcoin was right in front of me. It wasn't theoretical. I, it was a tool that I, and we in the poker community needed to utilize to, you know, even do our job. Yeah. It's pretty incredible that, uh, that entire community was so early to understanding it, but it really was out of necessity, right? Like innovation is the mother of necessity. And when you think about, um, uh, how this works, if you can't transact, even though it's not life or death, right. It's more from an entertainment purpose or a work purpose uh it still is a use case that people needed to solve and uh once people see the problem i always think that they understand bitcoin better and it seems

like that entire community that was that was definitely the case yeah i you're you're absolutely right people have to see that problem for themselves to understand why you need it and so it's always interesting to me you know the difference in viewpoints like thinking back to 2013 and people talked about bitcoin like oh you know this would be useful if uh the government started trying to seize bank accounts if different entities were blocking transactions and then there's others you know the detractors are like why would you ever need that it's it's the united states we don't have that here and you know i was experiencing that firsthand so i was like yeah no this this is needed and now you know in almost 10 years since then we're seeing more and more

geopolitical events that i think really gets it in people's mind that hey trustless finance uh permissionless money is very very important yeah and given your background in computer science uh once you started to learn about bitcoin did it immediately click and you're like yep this is like this amazing thing or did it take you time to kind of learn more about it and kind of uh get higher and higher conviction yeah so at first it was you know kind of just for this payments thing that that was interesting but you know there's only so much use for dollars so i started storing bitcoin just holding bitcoin you know using that to move uh deposit withdraw from poker sites and then you know cash out and have a stash sit there and i thought it was cool uh you know it was

actually also was really transformational for me is seeing what happened through silk road when silk road got shut down in 2013 my initial reaction was okay well i mean uh uh bitcoin was cool but i mean if that's getting shut down then maybe uh it's kind of gonna die away here and that very quickly wasn't the case and that was a big light bulb moment for me or in 2013 like a bull market was kicked off after that and i said wait just like it just suddenly dawned on me like bitcoin is way bigger than all of this it's way bigger than even just payments it's a store of value and this is a system that's going to really take off and so i think it uh as our friend the other night said you know where your pocketbook goes your mind follows so as my you know bitcoin

stash started to increase in value i was started to get more and more interested in it over the years and it was really the scaling debate and the block size wars that's you know started kicking off in 2015 that 2016 that really brought back in that computer science background to me because i wanted to understand this debate because it was important to bitcoin and i wanted you know to make sure my money was going to continue on the way i had wanted it to and so that got me really interested in learning about how bitcoin works at as deep of a level as i could understand so So did, you know, studied with Jimmy Song, you know, started trying to get into mining myself and just started doing projects, listening, anything I could just to learn more about Bitcoin. It's pretty incredible because there is this idea of Bitcoin's price is its marketing department, right?

It's a decentralized network. There's no CEO, there's no board of directors. That also means there's no marketing department. And when price goes up, what happens is the people who are already holding it pay more attention. They start talking about it. The media starts writing about it. And you get this positive feedback loop. And Satoshi talked about this early on in some of the forums. But really that price, although many folks who are critics look at it as like the speculation that's occurring in the market, it does serve as a customer acquisition or user acquisition tool as well. And it's very unique in that way because as a decentralized system, if you don't have price attached to it, there's a good argument that Bitcoin maybe never gets adopted because people just don't end up hearing about it.

unless the absolute use case like became a necessity in front of people's mind but yeah that's a great point the volatility is the marketing department even the price going up is the main marketing department and then all the action you know before and after that is the secondary part of the marketing department and that captures people's interest it gets people on this it keeps people on the sidelines sometimes you know a lot of people uh they see that like okay i'm just gonna wait for the right time to come in i know we meme about that in the bitcoin community all the time like oh yeah when it dips i'm gonna buy uh i you know i'm still waiting for it to go to 10k again yeah yeah uh so uh yeah i i can remember like someone naming a price from

every level all the way up that they're gonna wait for it to come back down on and uh yeah but i i think you know eventually it just overwhelms people um in a good way it becomes clear that it's a movement and they want to get on the bus sooner rather than later for sure and so let's move to the riot story itself um you know obviously publicly traded companies there's some things you can talk about some things you can't uh but this was a uh company in the public markets that wasn't doing so hot maybe is a a fair way to put it and you it's an incredible turnaround story and so maybe just start with like at what point do you get pulled into riot and is it even in the bitcoin mining business at that point or is it doing something else sure yeah so i was you know i

continued to play poker through this whole bitcoin journey but eventually the the i was so captivated by bitcoin i couldn't focus on poker anymore i just wanted to study and follow bitcoin full time so you know it's not like the nba you don't announce retirement from professional poker but you just kind of stop playing one day uh and i just you know i had no aspirations of working in the industry whatsoever i just wanted to make bitcoin my life and just did more software engineering more mining stuff like that on my own and eventually i got the opportunity to join the advisory board of riot when it um i guess you could say launched at the end of 2017 they were a reverse merger of an existing kind of publicly traded shell that uh prior business hadn't been

successful and you know at the time riot was trying to meet a need of giving uh public investors exposure to the bitcoin blockchain space very early on riot was involved in bitcoin mining but it was doing a number of other things as well there was like you know a little bit of litecoin mining uh rye was looking at launching an exchange was looking to um you know make a mining pool had some strategic investments in the space it was involved in the space but kind of spread out all over so i was on the advisory board and then uh i was asked to join the board of directors and you know kind of funny i'm like hey i've been a professional poker player for the past you know 13 years like i don't know what it what would entails being on the uh board of

directors of a public company and they said you know don't worry about it it's you know we're looking for bitcoin expertise uh you're learning everything else as you go along which was true you know i dove in to you know figure out everything that i i needed to know to be successful at that job but immediately after that was the end of the 2017 bull market start of the 2018 bear market caused a massive decline in the price of bitcoin and thus very correlated riot stock and you know especially as a public company that brings all sorts of other problems so you don't learn better than through adversity okay so fresh on the board of directors of riot blockchain and we have you know massively declining stock price um would it go down like

80 90 probably uh i think it peaked at near 40 and then quickly went down to like 10 and then quickly i mean went down lower than that there was you know cnbc doing uh negative coverage on the company class action lawsuits start shareholder derivative starts the sec you know issues a subpoena to look into you know what's going on registration statements no longer effective so we can't uh raise money as easily anymore so not i mean massive every curveball possible every curveball possible so everything you need to learn how to solve not everything but it was an incredible education experience to be thrown right into that and i mean really it's like a sink or swim thing like you you you know legally reputation wise you know even financially i was invested in

the company i wanted it to succeed uh needed to needed to swim uh needed to figure out a way to save that company because i believed in the vision even though like the company was you know in very poor condition at that time i still believed this public vehicle would be something very useful for bitcoin and bitcoin mining that was my vision so we went through this period of um i guess you could say cleaning up the company um you know the management changed uh there was a reconstitution of the board and when we finally made it out the other side you know we kind of had this i wouldn't call it a shell you know still we had a mining operation going on we had some other things going on now we had some cash on our balance sheet and the question was what are we

going to do and we had you know a lot of meetings about it and uh you know to support what i wanted I assembled an advisory board to the company full of Bitcoiners. Very lucky that Pierre Richard took that first step in there. I had known him previously and he joined us on the board of directors and that got on Jan Pritzker and Corey Klipsen as well. So a real Bitcoin advisory board that helped me in my efforts to focus the company on 100% Bitcoin and 100% Bitcoin mining. And that management team, it was truly a team effort in believing that vision and wanting to make it happen all together. And so through that, the board eventually tapped me to be CEO because I was one of the driving forces of that mission and vision. so now i know i'm going through a lot a lot of i love this this is one of the most incredible

stories in all of bitcoin over the last couple years so we come out and you know we make that decision in 2019 we start buying lots of new miners from bitmain we're able to you know raise the money uh we raise a good amount of capital with our at the market offering that year we started buying lots of miners upgrading our mining operation and that's what we started charging forward through starting in 2020 but we i think the company the the right stock price hit a bottom of 55 cents in 2020 um after you know the whole crash of everything in march of that year and reached uh i think the peak was 79 50 in 2021 55 cents to 79 50 in about what 18 24 months something like that uh well i think from trough to peak it would have actually been about one year

which is pretty crazy but i mean we were doing so much operationally alongside that we kept we were very aggressive we just made a bet on bitcoin and bitcoin mining we were deploying capital to buying miners in 2020 when it wasn't that popular bitcoin's crashing down to 3500 we're buying as many ant miner s19s as we possibly can we continue to do that and we continue to do that and because we had that long-term view on Bitcoin and that belief in Bitcoin mining and a belief in ourselves and in our ability to compete in that space that paid off in 2021 as we started receiving these miners deploying them our hash rates going up and we're able to mine a lot of Bitcoin in a you know crazy bull market environment yeah so today the company's approximately two billion dollars or so

uh you guys I think reported in December of 2021 for the quarter about 90 million dollars in top line revenue. When you think about this, how big can a business like this get? Is this something where you guys think these can become $50, $100 billion companies? Is it something where you think it's more of, hey, our goal is to get to 10 billion and we think that's a natural size for a business like this? How do you think about market cap and growth or adjustable market for one individual miner? I think a successful miner who has a long-term outlook and is focused on building a sustainable business should in theory continue to scale with the price of bitcoin bitcoin mining is a game of scale so it's not you know i i don't know any miner especially not riot

that is thinking okay we're going to get to just this size we're going to get to just this hash rate and then we're just going to ride what happens with the price of bitcoin over the you know the next five seven ten years we are always focused on expanding and you know our goal as a miner is to grow our hash rate faster than the global network hash rate we want to increase our piece of the pie over time and if we're doing that and in combination the price of bitcoin is going up you know the goal is obviously uh from that that the market cap could just continue to increase over time but you know there's a lot of execution that goes into making that happen way more easier said than done but you know we are we are long-term believers in bitcoin it's a very important cultural

part of our company it's not a bunch of people collected just to you know make money through mining it's a group of people who believe in bitcoin and believe in what they're doing through riot i think that's very culturally important and we are we are doing everything we can to you know our job every day is to mine as much Bitcoin as possible. And I believe in, uh, I believe that the proliferation and adoption of Bitcoin is going to continue on the trend. It does. And I'm, you know, working to position the company to continue to ride up with that trend. So I want to talk about a couple of different aspects of the mining industry that I think you've got some either unique thoughts on, or you just spend all day talking about thinking about,

uh, the first is a geographic dispersion of the actual mining, uh, hash rate. So we know that, kind of going into 2021, about 65% of all hash rate was in China. Contrary to the critics thought process, that doesn't mean China controlled the Bitcoin network. It just means that geographically that's where it was located. They went ahead and they banned miners in a number of different regions. And we saw hash rate drop 50%. And then people moved elsewhere. The United States seems to be the biggest winner or beneficiary of that. How important was it to not have so much of the mining concentrated in china specifically versus uh being you know elsewhere around the world yeah i mean that that was an incredible i think event for the bitcoin um community for the bitcoin

network that was fun for bitcoin for so long oh 65 of mining is in china uh they'll take it over or they'll just shut it down and what's going to happen to bitcoin well okay that's what happened china shut down all the mining and bitcoin was unaffected you know blocks came i think maybe 14 minutes slower for a little bit and then difficulty you know i mean sorry four minutes slower than than average difficulty adjusted and everything moved on the users were unaffected and as riot it's actually kind of funny like before any of that happened we were talking about ourselves as america's bitcoin miner there weren't that many um you know publicly traded miners at that time u.s hash rate was around seven percent of global hash rate and our goal was to build the u.s

presence of bitcoin mining to further decentralize mining and put the consensus mechanism in the same geographical and jurisdiction as where so much adoption is there should be that people participate in the bitcoin network both on a peer-to-peer level and through mining the consensus level that that should be coinciding with where adoption is those two things shouldn't be distinct that was kind of the vision so you know like i mentioned we put a lot of resources into growing our bitcoin presence in north america by buying hash rate and then most importantly the most transformational thing for the company was acquiring winstone us largest bitcoin mining facility in north america so we were making good progress on that goal and then they banned

mining from china and that was just massive tailwinds and it's like okay they made this a little too easy yeah we wanted to accomplish this on our own and then they just you know got rid of 65 50 of hash rate but um i think it is important that hash rate is distributed you know i'm an industrial scale miner but i think it's very important that hash rate is distributed in all levels i think home mining is important like i'm here because i'm a bitcoiner and i uh i i care about every aspect of this network of this protocol of this system so it's important that there's a proliferation of home miners it's important that there's medium scale miners and i do think industrial scale mining is important as well gives benefits that i think trickle down to all the other

types of scales of mining so i think the network is better off even though i don't think i think the risk of 50 to 60 percent of hash rate in china was overstated i think we are much better off today because of that and i think what we're seeing now with people understanding the value of bitcoin mining and wanting to adopt that in jurisdictions all over the world, the network is just becoming more resilient. Hash rate is just becoming more distributed. When you start to think about that hash rate coming to the United States, I don't know the exact numbers, but the last ones I've seen are the U.S. has about 35% of hash rate globally. 10% of the total global hash rate is in Texas alone. Is it a bad thing if all of a sudden, let's say America had 50 or 60%? So

basically went from you know 50 to 65 in china to now 50 to 65 in america is that an issue as well or is it something where hey look it's naturally going to coalesce in a couple of regions and we'd rather it be in a democratic society versus uh maybe you know a different society yeah i mean i think it's going to 50 very quickly when you look at all the capital that has flown into uh bitcoin miners particularly publicly traded bitcoin miners in north america uh and that capital being deployed in the form of a new hash rate within this jurisdiction, it's going to get to 50% very quickly. But yeah, I think one, because it is a more democratic environment,

I think there's much less risk of the government, for example, taking over all the hash rate and directing that for some type of attack. Even if they could take over 50% of the hash rate in the United States, that success that the likelihood of that attack succeeding is very low you know a lot of people talk about 51 attacks that's just a probability to succeed it's not doesn't mean you're going to sustain that attack it's still cost prohibitive the bitcoin incentive system still works but also the united states is a more federalist system where these different states approach bitcoin mining a little bit differently and um the fact that so you look at hash rate in the united states

but then see it's distributed over you know however 10 15 uh maybe even more states uh i think that that that is uh you know kind of further uh diversification within a jurisdiction and texas like i mean great point i we believe we build in texas uh we are 100 focused on texas i believe that is going to be the future bitcoin mining capital of the world and i feel secure about that because of how friendly and accommodating texas is to bitcoin um from the governor's office to the ceo vercott to the local county judge that we work with in milam county in rockdale texas they are they understand the value of bitcoin mining and they understand the value of bitcoin in general and uh with that type of support you know i'm not i'm not worried about

that and i think if anything it it is an example that other countries will see and want to follow as well. And that problem of hash rate, if you want to call it a problem of hash rate being 50% in United States or North America, I think just naturally solves itself over time. This is a growing, you know, this distribution of hash rate is like a growing and flowing organism that moves with energy markets and moves with the Bitcoin market. And I think the incentives are such that it'll be spread out in a secure way over time. Yeah. One of the things that we've seen a ton of conversation about mainstream media, critics, et cetera, is all the ESG FUD. And yesterday at the Bitcoin conference, Peter Thiel gave a talk.

And in one part, he said, you know, when you think ESG, think CCP. And I thought it was a really unique way to kind of position this idea that folks are using what sounds like a good idea. Right. This kind of virtuous, hey, we want to be good for the government, for the environment. We want to be good for governance. We want to have all these positive impacts in the world. but at the same time those people will go home and they'll fly in a private jet they'll go ahead and they'll use their refrigerator right they'll use their uh clothes dryer and all this stuff and so uh it's a very complex issue but how do you view you know we're mining bitcoin uh there's obviously a economic empowerment story there there's a security uh story there uh but there

are people who are worried about the environment and some of the esg issues like do you think about that do you just say hey look it's all bullshit like where do you come out on uh how uh you as an industrial scale miner should uh um interface with some of these uh concerns yeah we we think about you know the the esg discussion that's becoming more and more prominent prominent in the public domain a bit but i i think uh what's important is we and everyone you know don't get stuck at just the e there's a there's energy social and governance that goes into that and all three of those are important from an energy perspective bitcoin mining does have a positive impact i believe it is help strengthening energy grids and is giving a better environment for all

participants in an open and free energy market and i was thinking like bitcoin has this really interesting impact on people people didn't think about money and how money works as much before they discovered bitcoin and then when they see they see something then it clicks like wait a second everything i knew before is wrong this is how it's supposed to be and then i feel like it has this downstream effect when then when the energy discussion comes in relative to bitcoin mining then people start to understand how energy markets and grids work and they're like wait a second i didn't quite understand how that works before i i can now see how flexible loads are important here so we believe from the issue standpoint that we are having and the feedback

getting is we have a positive impact on you know the energy market ercod in texas we help capture surplus energy most people probably don't know that one-third of all energy globally is wasted it is congested lost in transmission there's no buyer bitcoin miners are the buyers of last resort for energy so by being that buyer we believe we provide a positive incentive in the market for creating generation sources uh and with the different types of renewable generation sources in that market it's important that there's buyers uh when there might not otherwise be so and we have the flexibility i touched on we you know we have deployed capital to secure a load of energy for a very long time like that's that's a bet we took we're going to buy energy for 10 years no

matter what because we believe uh in our continued presence in bitcoin mining and since we now own that energy we are able to provide that energy to the grid when it becomes strained when supply is low and demand is high now that's the e portion we focus a lot on the social portion as well as the buyer of energy of last resort we are finding surplus energy in rural communities that not what that would not otherwise have these major industries in them for example our windstone facilities at rockdale texas rockdale texas used to be the home of an alcoa aluminum smelting plant and illuminate generation facility one of those towns like that was built around those two businesses being there and in 2008 they were finally both shut down that has a real negative

economic impact on that town so much of the employment and money flowing around there was gone now what else would normally come to that you know who else would suddenly want to come in and build a 700 megawatt bitcoin mining facility uh out 700 megawatt load in the middle of nowhere a bitcoin miner is that answer so winstone has built that facility there has employed now over 200 full-time benefited employees and indirectly about 400 contractors work around that facility as well that's in a population a city with a population of about 5500 we have created jobs we have put a face to bitcoin mining and we have brought bitcoin to people who would otherwise not know it because this business is in their town they become interested they're

trying to figure out what what it is that all this economic activity is about and it gets people thinking about bitcoin and now we have individuals that maybe didn't know what bitcoin was a year ago and are now bitcoin mining maintenance technicians so we are in in pursuit of capturing stranded energy we are bringing jobs and economic opportunity to rural communities that would not maybe not otherwise be exposed to that and then finally the g the governance standpoint we care a lot about transparency well as a publicly traded company we have to be very transparent but in addition to that we uh put a lot of focus on effort on following the best principles of corporate governance and being even uh more transparent than would otherwise be required

we put out monthly updates about what's going on how much bitcoin we mined what's construction progress how many people we hired last how much bitcoin we have on our balance sheet we care about getting the information out there and letting the market you know make a decision for itself so the esg is a very hot topic right now it is it is actually amazing like how much attention it gets now than maybe even 12 or 24 months ago but it's important to remember there's three letters in that acronym acronym not just one it's also a really interesting thing because what you just walkthrough of taking the e the s and the g uh kathy wood i've heard her talk about it not necessarily around bitcoin mining but just bitcoin in general uh and in some way i think the people

who are uh using it they're somewhat intellectually lazy right because it's like oh uh there's energy being consumed so let's use the esg label and i actually think that was part of teal's point was uh people are using this as a way to create enemies or to create kind of a list of hey we don't like these things but if you actually apply the framework to bitcoin mining or bitcoin in general uh it checks all the boxes and i think uh what the bitcoin community is starting to do but no one has really kind of uh had the courage or conviction to say it is this is the most esg friendly thing that could actually happen right who else is driving renewable energy production uh and innovation right who else is it going out from a social perspective who is driving this type

of governance like there is no more transparent system in the bitcoin market right and so when you start to understand some of this stuff you realize like maybe it's a marketing problem more so than it is like an actual esg problem of just we have to talk about in a way that those folks start to understand like hey i should actually be a proponent of this not a critic yeah i think i think it is a marketing problem and the onus is on all of us in the industry to be out there on education and be out there in advocacy we focus a lot on that at riot we you know we we benefit uh alongside bitcoin so we care about you know telling the story about bitcoin and telling the story about why bitcoin mining is valuable and i think that starts with with that why bitcoin

mining uses energy instead of you know there are all these other you know the whole esg discussion is important like everything i just went through the impact that we have but to me the foundational part of the discussion is making sure people understand why bitcoin mining uses energy it's not a design inefficiency it's not because uh the devs uh needed so much energy to be able to find the block it is an incentive mechanism to drive trustless finance to drive a decentralized payment system where individuals all over the globe can agree on a valid state of the ledger without having to trust each other energy is the mechanism that makes that possible humankind has has has improved its quality of life um for all economic classes over the past century by using more and

more energy the correlation is undeniable and bitcoin mining i believe is the latest use of that we are we are using energy uh and actually quite a bit less energy than traditional finance systems to give a a a better outcome a better system a more open and free system for for everyone so to us yeah it's important to tell that story to make people understand the mechanics of why bitcoin uses energy it's not intuitive to people at first i mean just like bitcoin it kind of blows people's mind it's hard to wrap their head around it so you get them that far then you have to explain you know the bitcoin mining component as well but it's important people understand why this energy use is important how energy markets work and i think that will lead to

exactly what you said. People understanding that Bitcoin mining under the framework they defined as ESG is actually, well, Bitcoin is one of the best, if not the best ESG tools out there. And as a society, we benefit from that proliferation. Last thing I want to talk about is capital markets. Obviously, as a publicly traded company, you guys have been very, very effective at getting access to capital. And if you're an industrial scale miner, it's the lifeblood of your business. It strikes me as this probably wouldn't be as possible or be much more difficult to have done what you've done in the private market. And so talk a little bit about public versus private and the advantages of not only

trading publicly, but also having quite a large appetite for the stock price and also kind of capital markets for these types of Bitcoin miners. Yeah. So a real advantage that Riot has had over the years and another thing that contributed to me seeing, you know, kind of this longer term vision during the dark days of what this uh publicly traded vehicle vehicle could be was how much trading volume was around a ride stock um people it tracked very closely with the volatility of bitcoin there are certain investors that are looking exposure to bit looking for exposure to bitcoin through uh public markets as opposed to just buying bitcoin you know for whatever reason they can't custody they don't want to custody what have you and that resulted in a

lot of trading volume for riot stock our stock has traded over its total public float multiple times before which is crazy so that liquidity uh makes it significantly easier to raise money particularly you know different types of equity financing and different companies have seen that over especially the past 12 months we went from a handful of publicly traded miners to probably 25 companies either publicly traded or looking to be publicly traded shortly and they're all going after the same thing access to public markets to raise capital bitcoin mining is a capital intensive business if you have more cash you can buy more miners you can mine more bitcoin that's the whole game right there and as a private company that's a lot more difficult you know you're maybe not

necessarily going to get the same valuation uh the the the pool of liquidity for investment is quite a bit smaller but you know with being a public company there's a lot more logistics that go into making that as well uh private companies don't have to necessarily disclose everything they have going on um they have more flexibility from that standpoint they aren't preparing audited financials and having all these extra you know accounting and legal functions going on but um so you know there's there's definitely pros and cons but the benefit of having access to those public markets uh is pretty big and that allows uh miners to scale a lot more quickly but it is by no means a requirement there are very very large successful private miners out there uh that are

very smart and are very good at what they do um but uh i i having access to the capital markets definitely you know if someone is trying to get there a little bit quicker that's a tool but you need to have that liquidity to be successful you need to and to get that liquidity you you need to have a good story you need to actually be you know doing what you say you're doing actually have a plan and the uh ability to execute and you know the confidence from the market that you are going to execute so when i talk about 25 publicly traded miners out there i actually think much less than that are going to be able to execute over time and i think that skepticism from the market is making life harder on many of those companies than they probably would have expected yeah it's

pretty incredible when you start to think about just how much capital uh has obviously gone in but at the same time the financial performance is there and you can see it reflected in the stock prices going from 55 cents or whatever to you know 79 80 dollars uh that doesn't happen because uh uh nothing's working right like like there's something here and i think that uh as the public markets wakes up so that uh wakes up to this uh we're going to see more and more capital investment which then leads to more miners and you kind of get this whole positive feedback loop yeah yeah absolutely and um what what's been really interesting i i see in the public markets Now, as Bitcoin has matured, as the concept of Bitcoin mining as a public investment has matured, there are becoming more and more tools for financing that business.

So, you know, I tell people at Riot, we do two things. We're focused on two things to be successful, financing our businesses in the most accretive terms possible and and mining Bitcoin. Those are the two focuses of the things we do. And everyone on the team contributes to making those two things happen. and uh because of the former you know i i think people are a lot of companies are starting to understand that it's not so those two components are important it's not it's mining bitcoin but it's also being very strategic with your financing strategy and the allocation of that capital so i think we are going to start to see over over time here that the differentiator is not only

operational capability but uh capital market strategy opportunity and that is being enabled by the maturity of this market and more and more tools coming out there for miners you know there's so many now bitcoin uh related companies that offer different types of equipment financing uh yield strategies um hedging strategies the the suite of tools is very rapidly growing out there for these bitcoin mining companies and the most effective miners going forward are going to be the ones that are able to put those together and the ones that are able to convince new types of financiers different types of debt financers to enter the market and support their growth yeah um how much sleep do you get one of our sponsors is eight sleep like this is you're going a thousand

miles a second like yeah are you sleeping eight hours a night three hours so this is actually a perfect setup i am an eight sleep user oh shut up really i i i love it it is one of the same obviously yeah sleep is is very very important to me um i i aim for eight hours a night don't always get there um but the eight sleep mattress for me has not only been comfortable you know it gets me at the right temperature you know my my fiance you know maybe we each like different temperatures so we have you know we could pinpoint that exactly i like the smooth wake up i like having the data on how i sleep so that you know that's very important to me and i i do feel like I get a good amount of sleep.

It's wake up till bedtime, focused on Bitcoin, focused on Bitcoin mining and Riot. But then when I sleep, I'm pretty good till the next day starts again. Yeah, that's incredible. And then the facilities that you guys are building, you're managing a lot of folks remotely as well, right from an actual operational standpoint.

How's that been? Yeah, it's gone very well. So Riot, I'll kind of give the breakdown of all our offices here. I live in Orange County in California and we have an office there. We have an office, the company headquarter and the historical office of the company in Castle Rock, Colorado. We have our biggest corporate office is actually in Austin, Texas.

And then we have our facility in Rockdale, Texas, Winston facility that has, you know, over 200 people there. And most recently we acquired in Denver, Colorado, a company called ESS Metron, which has been one of our biggest partners and suppliers of engineering, electrical equipment for our facility and manufacturing that as well. They help build our whole industrial scale immersion cooling infrastructure build out. So people all over, you know, all that adds together about 400 employees at this point. um we try to be very mobile going around the site visiting different offices zoom is obviously an incredible tool um you know i think we we have been very effective at working remotely but one thing we do value is that in-person time and you know i especially in this day and age i think a lot of companies can start to maybe get complacent with the remote tools there's but there's no

replacement for that in-person human interaction that's why you know we're here in miami right now Being able to get together with so much of our team in one place around Bitcoin, I think, is an incredible bonding experience and good for us culturally. So I'm leaving here next week. I'll be out at our facility and our offices in Austin, spending time with our team members there. So we have been working through the remote thing with multiple offices, I think, successfully. But we certainly value the in-person interaction with each other. Yeah, I completely agree that the in-person is really, really powerful. where can we send people to find out more about Riot

find you on the internet or figure out what they can do to help you guys yeah so you know first up I think is encourage people to follow us on Twitter at Riot Blockchain my personal Twitter is at Jason Les underscore last name is L-E-S-O-N L-E-S

underscore this guy's got the Jason L-E-S Twitter handle and won't respond to my DMs to try and buy it from him if you're out there in Indonesia please respond uh but uh you know also uh riotblockchain.com and actually you know you'll get exposed to this from the riot twitter account but the ceo of winston chad harris his twitter account if you look up chad everett harris he posts videos and updates of what's going on at our facility in winston all

the time uh he's an incredible leader in the company he's built something amazing out there alongside the team uh that he's worked with to do that and if you want to get bullish on bitcoin if you want to get bullish on bitcoin mining follow those social medias and you'll see that material and you'll see what's going on yeah that's awesome i love the uh the on the ground updates yeah like uh you guys do a couple others uh do it and you just see it and like there's something uh i said this is somebody one time and they were like you're an idiot pump but like there's something when you see the machines running that you're just like they're on our side yeah right like like those babies are literally fucking running and they're protecting purchasing power in a way

that's never been possible before and it's just cool when you see an entire you know essentially warehouse full of them just buzzing along and you're like yeah that's how this thing operates yeah you know the first time i walked into winstone i walked into there at that time first of three buildings that have been built each building about 50 000 square feet walk in 70 000 miners every direction and you hear the fans you feel the heat and you're like wow there's some there's some bitcoin mining going on in here and now it's actually even kind of a different experience in our immersion cooled building you walk in and it's a very different experience you now have you know in our immersion building about 23 000 miners and it is dead quiet you know i joke

with people we're gonna turn this into a day spa it's so peaceful in here but it feels it's it's motivating from another perspective because it's really cool just to see all these tanks minor submerge in immersion fluid uh still doing the same way it's through the same thing you know running nonsense, trying to solve blocks, driving security of the network forward. And yeah, it gets you bullish on Bitcoin for sure. I love it. That's a perfect place to end. I appreciate you coming on. I'll definitely do it again in the future. Yes. Thank you for having me. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking

to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more and I'll meet you guys for the next episode.