What Bitcoin Did - NATION STATE BITCOIN MINING w/ Daniel Batten

Episode Date: March 4, 2025

Daniel Batten is a Bitcoin environmental analyst and investor focused on mining and sustainable energy. In this episode, we break down why this cycle is different, with sovereign funds, pension funds, and miners driving demand. We discuss landfill gas-powered mining, methane mitigation, and how Bitcoin turns stranded energy into an asset. We also get into the collapse of environmental FUD, the shift in institutional investment, and why Bitcoin’s volatility cycles are smoothing out. MASSIVE THANKS TO OUR SPONSORS: IREN: https://www.iren.com/ RIVER: https://river.com/wbd ANCHORWATCH: https://www.anchorwatch.com/ CASA: https://casa.io/ LEDGER: https://www.ledger.com/

Who's buying? Completely different from the last cycle. Last cycle, it was first-time retail buyers to a large extent in first-time institutions. Now it's sovereign funds, pension funds, micro-strategy, Bitcoin mining companies. And we haven't even started on nation-state adoption. It's massive. And now you could say, well, some of those ETF buyers might be weak hands, that's true, but not all of them are. And certainly those other categories, pension funds, sovereign funds, their long-term buyers. micro strategy, infinitely long buyer, mining companies, long-term buyers. So that's part of my thesis that we're not completely into a super cycle. There'll still be some residue, but it will be

more like rolling hills, not like jagged peaks and deep valleys and ravines. What Bitcoin did is brought to you by our lead sponsor, a massive legend, Iron, the largest Nasdaik listed Bitcoin miner using 100% renewable energy. Iron are not just powering the Bitcoin network. They also provide cutting edge computing resources for AI all backed by renewable energy. So whether you're interested in mining Bitcoin or harnessing AI compute power, Iron is setting the standard. Visit iron.com to learn more, which is iri-en.com. Daniel Batten, how you doing it? It's been a while.

Doing great. Good to be here, Denny. Your backdrop has changed since last time I spoke to you. Yeah, it's a little bit more tropical than last time. This is Costa Rica, San Jose. You'll see the sunset pretty soon. you might hear some parrots if you're lucky. But I'm over here because there's a whole lot of landfills. So, you know, when most people say, why did you move to Costa Rica, it's like, oh, for the beaches or for the jungles or for the sloths or whatever it was.

For us, it was for the trash. Not just in Costa Rica, but all around Latin America, because there's a lot of trash heaps, and those trash heaps reduced methane, and methane's good for landfill gas-powered Bitcoin mining. So is there lots of landfill gas-powered Bitcoin mining in Costa Rica happening right now? Zero. There's only five in the world at the moment, so it's still very nascent. There's not even any power generation happening in Costa Rica at the moment. There is some in Latin America, but there's only Australia and America, they're the only countries in the world that are using it for Bitcoin mining. Okay, so why was there the spot you wanted to go to then? Just opportunity. Because it's in the Goldilocks zone for landfills. You want a modern landfill, so it's not an open dump. So it's already got some infrastructure in place to release methane.

but it's not so modern that it's got regulations that say you have to flare it, which means you've already destroyed a lot of the methane anyway. We wanted to go for venting landfills, but modern landfill sites, so Latin America is a sweet spot. Ah, okay, got you. So, Daniel, you've been the Greenpeace destroyer for the last couple of years. Greenpeace, you say. Not Greenpeace, contrary.

Fair enough. So tell me what's going on there. Have they, like the Fudd seems to have died down a little bit. Is it that they've just run out of Chris Larson's money? Or do you think you're finally starting to get through to these people? I don't think I'm completely getting through. What I do know is the person who was running that campaign who, I had a couple of chats with, so did other people as well.

He's now left. I can't talk about the circumstances of him leaving because that's Chatham House rules. But there was a new person who came on in place in Greenpeace. USA, we were hopeful that they would continue some of the efforts that the previous one had made to want to learn more and engage more with the Bitcoin community, but then it just kind of pivoted completely the opposite direction. There was a whole lot of new fud, which actually got destroyed pretty fast. And we haven't heard from them since June last year. Doesn't mean they're not going to fire up again. And also important to note is Sierra Club and Earth Justice, who were also given money. They were part of the unholy Trinity that was given money by Chris Larson. They still pipe up and snipe from time to time against Bitcoin.

In fact, Earth Justice did something just a couple of days ago. So that keeps us on our toes, but you're right, the whole mood has changed. I think it's recognized now that if you're an environmental NGO and you're going to write nonsense about Bitcoin, you will be challenged. And that you'll be challenged pretty firmly, not

just by Bitcoin advocates, but by peer-reviewed literature. So what's really changed is now we have 14 peer-reviewed articles saying Bitcoin has some positive environmental externalities. And that makes our job a lot easier because we can point to the research. And for them to deny it, they're basically now denying the scientific consensus, which is something that they often say that the people who they're fighting against are doing. So it's an uncomfortable position for them to be in. So the landscape's changed a lot. The thing that hasn't changed, though, is the analogy I use is like there's less poison being poured into the river, but it doesn't mean that everyone who's drunk the poison from that river.

In other words, digested all that fud from 2018 to 2020 and now believes that Bitcoin is bad for the environment. They still believe that. So all it means is we're not pouring new poison in. So there's still a lot of work to be done to turn around mainstream public opinions around Bitcoin. coin. Otherwise, there's a risk that we have half the population are adopted and half the population who are still appalled by it, which doesn't work so well. I mean, you can't really have ubiquity with any technology in this. You have mass adoption. Can you imagine the internet of only half the population used it because the other half believed it was evil or bad for the

environment? So you have to have some at point, a tipping point where that mass perception has changed. We're a long way from that, but at least we've stopped pouring the poison in the top of the well. So how do you think we get to the point where mass perception changes? It's a very good question. The only way to really do it is it's too hard conversation at a time. You can't do it just using data. You've really got to do, it's got to be a coordinated campaign. That's the only way to do it.

So using the tools that basically have been used against Bitcoin to change mass opinions, PR in other words. And in terms of, I guess, like mainstream media circles, whereas a lot of this footage has come from, DeVries was always the sort of cited data that was why Bitcoin mining was terrible for the environment. Has it reached a tipping point where people understand that that DeVries stuff is nonsense? Most people have no idea that it's nonsense at all.

However, they are receptive to hearing the idea that it's nonsense when confronted or when they would quote a study which is from DeVries. And the reason for that is that his work has been so unilaterally debunked in a number of different peer-reviewed studies now that, again, it's not just a handful of Bitcoin advocates who are saying it's nonsense. Now, of course, they were right, but the fact they were Bitcoin advocates, not independent

energy researchers, meant that they weren't taken seriously. Now we've got independent peer-review journal articles saying that it's rubbish. People are taking notice. but it's not widely known at all. I feel like there's a lot of Bitcoiners who have been confronted by this fud for years and years and years and have got to the point where I just can't even bother talking about it. The data's on our side, I give up.

But people like you and Troy Cross and a few others have really stuck to fighting this fight. So why do you think it's been so important for you? Why do you want to keep fighting? I think people like Troy and I, we really like truth. I mean, you don't become a philosopher unless you care about truth. Troy has made it his profession. I haven't become a philosopher, but it offends me when people saying things which are dishonest.

So at a basic core value, when I hear something that's not true that I know to be untrue, I feel a desire to correct it. But not with everyone, because you've got to be pragmatic and not everyone is receptive to hearing the truth. So you have to be mindful of that as well. But the other thing is that I come from a technology. adoption background. I ran a technology company. I then ran a couple of technology funds. And so for the last couple of decades, I've seen a lot of technology adoption trends. And you also see the things that stand in the way of technology adoption. And so when I looked at Bitcoin, and I'm a latecomer.

I remember I already only started writing about it 22. But when I saw it, I was like, oh, I was looking at it through a technology adoption lens and specifically about what are the things that could stop being why they adopted. And very fast, one of the top things was FUD. And then you look at the FUD and I did just a couple of weeks ago a search about the top terms that are used against Bitcoin. So Bitcoin useless, Bitcoin worthless, Bitcoin criminal, etc. You go through a list, then you do Bitcoin energy and Bitcoin environment and the order of magnitude, larger amounts of articles written on that subject than anything else. It's not even close. It's more than 10x. And so this has been a very sharp and effective attack

vector against Bitcoin. Now, if you care about Bitcoin adoption and you have roughly 60% of the population, we suspect, who still think the Bitcoin is harmful for the environment, how are you going to get it unless you change that perception? And there'll be people say, it doesn't matter, you know, stuff them, have funds staying poor. Okay, well, that's one approach. and okay, that has its legitimacy. I can understand why people would say that. But for me, it's like, no, no, I care about this being widely adopted. If we want it to be as ubiquitous as the internet,

we can't have 60% of the population who opt out. Or we're not going to have that widespread adoption. It may become a store of value. But how's it going to become money? How is it going to really reach its potential as an investment if so many people still believe that it doesn't fit with their values? And the sooner we change that, the sooner we can hasten Bitcoin adoption.

So that's the other thing that really drives me. So it's interesting that you say, because you came into Bitcoin, as you said, relatively late, 2022 is when you started writing about it. Why was it that mining was the thing that got your attention straight away? Like, it seemed like you went right in at the deep end with mining. Yeah, I had an unusual baptism with Bitcoin. I was writing about mining for about a year before I really even started looking at Bitcoin as an asset by itself.

Okay. And it was because that one of the funds that I ran was a climate tech fund. And so I was first looking at Bitcoin in terms of just the question Bitcoin mining, is it net positive or net negative or which way is it trending with the environment? That was all I was interested in. And it was only really thrills Moses and been mixing with other Bitcoiners. And I said, okay, well, what is this Bitcoin thing then? What does it do apart from the Bitcoin mining?

And then I realized it had a whole lot of other uses to humanity, apart from the environmental ones, but it was the environmental ones and the energy ones, the ability to balance grids and all the rest of it, mitigate methane, reduce prices for everyday consumers, etc., stock curtailment of your new energy. Those were the utilities that I understood first, because that was just that the entry point and that intersected with the things that I was researching anyway, namely climate tech. And since then, since you started writing about Bitcoin mining, What have been the biggest changes in the industry?

In the industry itself, there's been a huge amount of changes. One of the biggest changes is last cycle, so people started mining at an enterprise level, maybe 2017. That's when companies like Marathon Riot came along. And then the first cycle where you had enterprise miners in quite some numbers, numbers was last cycle. And because of that, you also had the first cycle where some of them got wrecked, core scientific, for example. Now, they've had a wonderful rebirth, which is great. I think it's the best bounce back from bankruptcy ever, isn't it? It was incredible. Yeah, the pivot to AI really was effective. But they, it was a last gasp effort. And they, the reason

they went into chapter 11 was a combination of buying ASICs at completely the wrong time. Because the cost of basics, a lot of people don't realize, is it closely mirrors the price appreciation of Bitcoin. And we had a cycle where you buy it at the right time. Wrong time. They cost four times more, five times more than they cost at the lower point. There's no other asset in the planet where the actual machine. That doesn't happen with computers. It doesn't happen with laptops where suddenly they cost five times as much.

As they do in a bear market versus a ball market, they're impervious to it, the same price. Bitcoin miners change fundamentally. So if you buy them at the wrong time, then the amount of hashing you can do relative to the capital you've spent is minimal. So that was one thing that happened with core scientific. They also didn't have lockdown PPAs in place and they also were paying a high price for electricity. And that combination led to them and others getting liquidated. Did they also loan against their ASEX or were they not one of the companies doing that? Possibly.

I don't know enough of those details. I know some were definitely. But those things, three things by themselves. and that happened not just with them, but with a number of companies, was enough that a lot of them just got wrecked. But when companies get wrecked, there's also learnings. And so this cycle round, you're not seeing that same behavior. You won't see, even when the ball market really starts ripping,

that people will be chasing the market. You won't see large mining companies that are buying at the peak cost for ASICs. You won't see them failing to lock down power purchase agreements. You won't see them paying a high cost for the market. electricity. And that's really positive because that also means you won't see a lot of large miners being liquidated. And when large miners get liquidated, that's bad for everyone, because then the Bitcoin eventually gets liquidated as well, and that's bad for Bitcoin price, and that's exactly what happened last cycle. So one of the big changes of cycle is as the market

matures, and as people understand mining dynamics better, the risk of large players getting liquidated has gone down and therefore the risk of one factor that affects downside volatility has also gone down. The other thing you're seeing is that people, mining companies are really wanting to not have Bitcoin mining being their only source of revenue. And every mining company has a different thesis about what their secondary source is. For a number of companies, it's going to be selling ancillary services back to the grid, demand response, basically getting paid to shut down and help stabilize the grid. For other companies, it may be AI. It may be AI hosting. It may be carbon credits and wrecks. It may be mining some other proof or work-based alt-coin. But it has to be

something. It may be selling some other proprietary technology. But all the mining companies, all the big ones anyway, they all have some ancillary source of revenue, which is reasonably substantial and it's relatively uncorrelated to Bitcoin price, which is really important, because again, if you go into a Bitcoin bear market, you want to have a secondary revenue source that isn't dipping at the same time. So that's another factor which is making these miners much more resilient. There's a whole bunch of factors, but I think those are the ones that have the biggest impact on the market as a whole. This episode is brought to you by Anchor Watch. The thing that keeps me up at night is the idea of a critical error with my Bitcoin called storage. This is where Anchor Watch comes in.

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and earn up to $100 in Bitcoin when you buy. That's r-I-V-R.com slash WBD. One of the things that I think now most of the big public miners have done is they've gone out into the debt markets, raise money to do one of two things, really. They're either going to try and put Bitcoin on the balance sheet, just go out and accumulate Bitcoin, or they're looking to invest in their infrastructure with these convertible notes. Do you want to first explain those two different strategies, and then we can get into it from there? Yeah, so standard business practice, when you don't have a Bitcoin business

and you don't have an asset such as Bitcoin that can radically appreciate and value, particularly in the infrastructure development arena says you get really good at what you're doing, you raise debt, you use that debt to reinvest an infrastructure and grow your business. So that's what an electricity generator would do, for example, right? If you're a solar farm or a wind farm, you get profitable, which means you have to use Bitcoin mining for your wasted energy, therefore you get profitable, you pay off your operation in 3.5 years rather than 8.1, you get more profitable, you. you expand your solar farm, you expand your wind farm, you reinvest in infrastructure.

And that's what a lot of Bitcoin mining companies do as well. They'll get very good at what they do. They'll lower the price it takes to mine Bitcoin. They'll get very efficient. They'll get good economies of scale. Purchasing A6. They'll get great wholesale electricity agreements. They'll earn demand response revenues. They'll raise debt against that. And then they will use that to expand their operation. Completely valid strategy. However, because miners get paid primarily or rewarded in Bitcoin, there's another option, which is you don't straight away translate that into fiat currency and use that for more infrastructure, but you huddle it. And why would you do that? Why, that seems to make no sense, because then you cannot

expand your infrastructure. Well, actually you can. It just means there's a slight delay to doing it, but when you do it, you could do it even more aggressively, and that's the bet they're taking. So they're saying, well, if we huddle Bitcoin instead, then as Bitcoin appreciates some value, then our balance sheet gets way, way better, and we can raise a whole lot more debt, and we can raise even more debt to expand even faster again because we're riding off that increase in Bitcoin price. So that's another group of miners who have chosen that strategy, which is to hoddle. But lately you've got this third category, and this has only happened since November last year, who said, well, how far could we take this?

What if we not only hold all Bitcoin, but we actually raise through convertible notes or debt? And we use that not for infrastructure, but to purchase more Bitcoin. And Mara, Riot and Hut 8 have all chosen the strategy and have all added more than 10,000 Bitcoin to their own corporate reserves, not through mining it, but yes, through mining it,

but also through purchasing it. And that's something that no one really all coming even six months ago. And again, the bet they're taking is that by, it's the micro strategy playbook. And they're saying, well, that micro strategy playbook works. It creates this flywheel where you create more Bitcoin in your balance sheet. Therefore, you can raise more debt. You can issue more convertible notes. You can use those convertible notes to raise more. Bitcoin, why wouldn't we repeat that? The only thing that stops a company from doing that is the fact they don't understand Bitcoin well enough to feel comfortable doing it, such that they can convince

their board it's a good idea. And they look around and say, well, hang on, we're all, we understand Bitcoin. We understand how it works. All their board is Bitcoiners. And so they're like, well, we get it. This makes sense. So the due diligence process for them saying yes to it was actually quite simple. And they're saying, yeah, we're going to do that too. Sometimes we'll purchase it. We'll always be mining it. And therefore, we'll be growing our best. Bitcoin treasury faster than if we just mine it. So you said there the only reason you wouldn't do that was if you didn't get Bitcoin. But I think there's another reason.

So like CleanSpart and Iron, Iron obviously a sponsor of the show, have both done this differently where they've gone out, they've issued convertible notes and they're investing that in infrastructure to go out and mine more Bitcoin. And I think their reasoning for that, I assume, would be that they want to back themselves as Bitcoin miners. They know they can mine way under spot price of Bitcoin. Bitcoin. So why go out and buy Bitcoin at 100K when they can go and mine it at 30 or whatever their cost for mining Bitcoin is? So why do you think Riot and others are deciding to buy

Bitcoin at a spot rather than try and mine more Bitcoin way below? Well, they're both completely valid strategies. I mean, the way I look at it is there's no one right strategy. It's a little bit like if you're playing for a football team, the way that one person's going to score a goal is going to be completely different from another person. If you're a winger and a rugby team, the one way that's someone who is the size of Joan Alamu is going to try and score a try is very different from a lighter winger. And so you've got to work out what's your strength and choose the strategy that's appropriate for your strengths. And if you build a business around rapid deployment of infrastructure capital as fast as possible, that's what you should do.

if however you've realized that you want this really the third leg of the stall i would call it which is that you've wrapped your head around the micro strategy playbook you've realized you can develop a flywheel around it where you can continually create basically increase the size of your corporate treasury faster than other people and therefore have a war chest of bitcoin which is bigger than other miners in the ecosystem then that becomes a competitive advantage in and of itself. It gives you more resilience. And again, as you're building up that corporate treasury, even though, as you say, theoretically, that may have come at a larger cost than it may have come to mine it, you can only mine so much with the hash rate you've got. And to get enough Bitcoin

to be able to mine vastly more than your competitors, that's hard when they're all growing very fast as well. So I think it's more of a bet that's saying, well, let's rapidly grow our corporate treasury so that it's three times, four times, five times bigger than our competitors. And I can see why mining companies would want to do that. It's also sending a message which is saying, look, if you're going to sell your Bitcoin, we're going to buy it. And the interesting thing there is now, what that does is, is in the last two months of last year, it flipped Bitcoin miners to being net accumulators of Bitcoin for the

first time ever, which means that they were actually buying more Bitcoin than they were distributing back to the market, but not even that. They were buying more Bitcoin than they were responsible for the issuance of through mining Bitcoin. And so that happened a long time earlier than anyone expected that the mining network flipping to net accumulators, and that has some very interesting consequences for a lot of the theories and models around supply shots. Some would say they're broken anyway. They make no sense. Other people say, no, they're still in play.

But if you have miners who are no longer distributing back to the network, because they're buying up everything they can and effectively buying off other miners, it changes the dynamics enormously. And it has repercussions for Bitcoin price too. So I definitely want to get into that. That's really interesting. But before we move on from the sort of the corporate strategy here, what risk does that bring to companies like riot and marathon and Hute? Well, the risk really is that, you know, Bitcoin tanks and price. It's the same risk that exists with micro strategy.

And so you have to feel comfortable that the price at which Bitcoin would need to retreat to in order for those convertible notes to exercise would be. be so low that you think that chance of that occurring is infinitesimally small. The other thing that they're doing is they're saying, well, the very act of us purchasing Bitcoin, that will have an impact on driving price up. And if we're not the only one's doing it, if it's there's three different people, the largest corporate treasury holder as a publicly listed company is now a marathon behind micro strategy. They've got about a tenth. a micro strategy, but it's not nothing. And then you've got some other riot and Hadei, as you say, who have now also got large Bitcoin treasuries they've added through purchasing

Bitcoin. And every time they purchase more, again, it means that that impact of Bitcoin miners becoming net accumulators is heightened, which in turn has an effect to help to stabilize the Bitcoin price. And we're starting to see this in place. And we're starting to see this in place. now where over the last few months, you've had a lot of downside pressures on price. You've had a lot of hodler distribution, a lot of hodler selling, huge amount. You've had some pretty negative macroeconomic information coming in. And yet you haven't seen this big 30% pullback that you've normally seen. And the reason for that is you've got new people coming in and old people coming in,

micro strategy, the miners, etc. other new corporate treasury holders, sovereign funds, pension funds, and they're soaking up a lot of what these hoddlers are buying. So these mining companies will be watching that very closely and saying, you know what, I don't think we're going to get the same big price drawdowns that we used to get in the past. And even if we do, we've done our calculation and we're not going to get forced liquidations. So what's the market's reaction to this, Benz? Obviously, these are all publicly traded companies so we can see what the market's kind of valuing. If you compare the kind of clean spark and iron strategy to the hutte and the riots,

which one has been taken more favorably by the market? Well, in terms of share price, it's really interesting because you've got this strange dynamic where if you announce you have a Bitcoin treasury strategy, it's an aphrodisiac to share price unless you're a Bitcoin mining company. Interesting. Which is fascinating. And the logic seems to be, well, if you're a Bitcoin mining company, you should be sticking to your core business and mining Bitcoin because you say you can do that cheaper than buying it. So why would you buy it? And I think that's just a market perception issue. And as the market starts to mature, they'll go, well, hang on, that makes

no more sense. Forget the fact there are Bitcoin miners for now. Let's just imagine there a business which has a profitable business model, and then in addition to that, they're decided to buy Bitcoin. And let's treat the fact that it's also a Bitcoin mining business as irrelevant, because it largely is irrelevant to the Bitcoin Hodel strategy. It's like you've got a profitable business, right? And then in addition to that, they're decided to purchase Bitcoin. That's really the way that the market, when it's matures, will start to evaluate this, but in the meantime, the market's taken a little bit of time to wrap its head around whether this is a good thing or a bad thing for miners to be doing. And that's why you haven't seen yet the radical

appreciation of share price of these mining companies who've been doing this. Interesting. So just before, you were talking about this kind of changing dynamic in the market is maybe one of the drivers for like the super cycle. We've obviously, we heard the super cycle last time, and that didn't happen. There's talk of supercycle again this time. I'm skeptical, person. but we will see. Do you think we are getting closer to that? I've never used the word super cycle and I'm not ready to use it yet. So don't you go putting words in my mouth. But what I think I did say was I don't think we're going to see the same radical price drawdowns. I think we're still going to get cycles. We're still going to get tops. We're still going to get bottoms. And

that'll simply because people's expectation there will be a top and a bottom has an impact on the market itself. What I think it'll be is it'll be more like the hills in Australia and less like the mountains in New Zealand. You don't get the same kind of sharp peaks and deep ravines like in New Zealand. It'll be more like you get rounded hills. And that'll be because that a lot of the things that drove the depreciation of Bitcoin, they're going to be softened, they're going to be dampened, and there's just not as many drivers.

It's not to say that, look, you're still going to get negative macroeconomic events and news, right? Of course, that's still going to happen. You're still going to get storms. You're still going to get insane strategies with alt-coiners who do crazy things, which drags Bitcoin down too. That will still continue to happen. But what will be different is that the impact of those events will be less because some of the other market dynamics have shifted.

And that will provide a lot of buffering to the amount of drawdowns we're likely to see this cycle. So I think it won't be a super cycle yet. but it will be a softer cycle. We'll have, I would expect, not the same blow-off tops, but I don't think we're going to get massive drawdowns of 70% plus either. This episode is brought to you by CASA, the leading Bitcoin self-custody solution. I've been using CASA since 2019, and I can't recommend them enough. CASA have options for all Bitcoiners from a 2-of-3 multisig to a 3-5,

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never been more convenient. Whether you're a long-time holder or new to the world of Bitcoin, Leger makes it simple to keep your assets protected. If you want to find out more, visit ledger.com and secure your Bitcoin today. That's L-E-D-G-E-R.com. Do you think the access to capital markets of these public mining companies now have, which obviously private mining companies don't have to anywhere near the same degree, drive minor centralisation? Well, it certainly means they're going to be pulling away in terms of how much Bitcoin they have in their treasury. However, I would see that not as something that creates more centralisation in mining,

because again, if you look at the next biggest player as a public company, which is Marathon, it's still one-tenth the size of micro-strategy. So I think a bigger centralisation risk is more the centralisation risk that one player, i.e., strategy has a lot of Bitcoin and its corporate treasury. That's something that I think we should keep an eye on. In terms of miners themselves, it's really just the hash rate distribution that's the biggest factor. And you hear this talked about a lot, but if you compare again Bitcoin mining companies to other companies, say, for example, the automotive sector, there's much more centralization in the automotive industry than there is in Bitcoin mining.

where the largest Bitcoin mining company in the world right now, which is Marathon, I think has around 6% of total hash rate, well, the largest automotive manufacturer I haven't caught up lately, I would imagine it would be more than 10%. And then if you look at industries like social media, search, smartphone manufacturer, they're way more centralised again. And so it's not as much of a concern,

I think it's more of a rhetorical concern. I'm not as concerned about that centralisation, and whilst you are going to see that definitely if you have access to capital markets, you can use that to grow faster, absolutely. But by the same token, you've got to remember there's a whole lot of Bitcoin mining loves cheap energy, a lot of cheap energy is stranded. And a lot of that stranded energy is just, it's in pockets which are too small for it to be worth the while

of large enterprise miners to be worth chasing. They won't chase things for the most part that are less than 20 megawatts, and in many cases, less than 100 megawatts. So that leaves massive amounts of opportunity for the long tail of stranded energy to be soaked up by smaller and mid-sized Bitcoin mining operations. So they play this incredibly important part. So yes, capital markets will continue to buy us in favor of the large Bitcoin mining companies, but so will the fact that now more than ever stranded energy.

harvesting is becoming a thing, yes, Bitcoin mining companies who are large will soak that up, but there'll be a lot they can't that smaller ones will come in and they'll chew up. That's one of the most interesting parts of Bitcoin mining world to me, is that the work that people like Gridless are doing in Africa, there's obviously lots in Central and South America as well. Where do you think the most interesting area for Bitcoin mining is right now? Well, I'm biased, of course, so I think it's trash sheets and landfills. But if you look a little bit more broad than that, look, it's exactly people.

like gridless. In terms of new innovation, I think there's a number of different areas. Not all the innovation has been done by small players, a lot of it's been done again by larger players as well, such as heat recycling. A lot of the people who are moving into that are some of the larger players. In terms of using wind farms to

deploy your older A6s, so rather than them going to a recycler, if you've got some five-year-old mining kit, you can send them to this intermittent power source once they've already paid off their investment and you use them on intermittent power. You're not going to do that with your new miners, but you can do that with old miners. So there's fascinating applications with stranded energy, with renewable energy, with microgrids, as you said, with flare gas mitigation,

with methane mitigation, with heat recycling. It's just phenomenal. And for someone who loves the innovation that it drives, it just keeps on getting better and better. And then you've got these crazy, brilliant people like Nate Hahnan, who's using Bitcoin as a catalyst for making this technology called O-Tech that was mothballed in the 80s as this new baseload renewable energy source. And he's using Bitcoin mining to make it profitable to the point that R&D can continue where previously it couldn't because they wouldn't be able to monetize it offshore. So there's a whole range of areas that are all pretty fascinating, I think. For anyone that doesn't know what Nate's doing. He's using, this O-Tac, it uses like the temperature differential between

like the surface and like deep sea, ocean temperatures to create energy. I've not heard from Nate in ages. How's that going? He's doing well. He's got some funding to do it and he's moving to the next stage and basically what they're doing is the problem with O-Tech is you had, you had to have these barges out in the sea and it works best in the tropics because in the tropics, You have really warm water at the surface, and it's as cold as anywhere in the world, if you go far enough down. And so you get a really good temperature differential, and that's used to basically boil substances like ammonia, and use that to create steam and compression to drive turbines, as my primitive understanding of it. But it works really well in the tropics.

Now, what else works really well in the tropics? Hurricanes work really well in the tropics. So you can immediately see the problem. You've got these big sea barges who are doing O-Tech. and then they've got to, that energy has got to be deployed, so they've got to then tether those barges, and they've got to run these big underground cables back to the mainland so they can supply it to the grid,

and then they've got a, the minute it's hurricane, the minute that it's tethered, you've got a hurricane proof the entire vessel. Now that's still the goal of O-Tech to be able to do that, but to do the R&D on that was cost prohibitive, so no one would invest in it. So what Nate worked out, he said, well, hang on, we can make it,

we can do stranded energy harvesting in the middle of the ocean. So let's not tether it to the grid yet. Let's just prove the concept works. Let's use that energy on site. Let's put Bitcoin miners on these barges. Let's have them floating around to avoid the hurricanes. So they're not tethered to the land. So that stops the tethering cost, the cabling cost.

They can move around when they see hurricanes coming. So that means they don't have the hurricane resilience cost. And suddenly it made that next stage of R&D. feasible where previously it wouldn't. So that's a fascinating development. It's not that Bitcoin is making O-Tech work technically. It's making it sufficiently profitable for the next stage of R&D that it progresses where otherwise it just would never have progressed to the next day.

And so one of the other things you spoke about a minute ago was the landfill mining. Now, we've not covered that on the show for a long time. Just for anyone that isn't aware, do you want to explain what's happening people like Vasbine and Nodal. Yeah, so there's now five companies in the world who are using landfell gas, which is 50% roughly methane, scrubbing that methane, and sending it to a generator, which will burn that methane and turn it into electricity. And then they're using that electricity for Bitcoin mining. And a lot of people would say, well, why don't you use it for supplying electricity to the grid. And the reason for that is simple, and that is a lot of the landfills in the world

where you can supply it to the grid, because the grid's close and you didn't need a major substation upgrade, they're already doing it. But for the rest of the landfills, which is most of them in the world, who either it's cost prohibitive to connect to the grid or regulations such as in Costa Rica, there's government regulations. It says you can't sell to the grid, so it's not an even option. For them, the only profitable way to use that landfill gas is either you distribute it as gas, so you purify it, turn it into natural gas, which is really expensive, or you turn into power, which is relatively cheap. So that's the best option, but they've always had this problem. Well, if we can't sell it to the grid, and we just got the strand of power,

what do we do with it? And then Bitcoin miners said, well, we can think of something. And this works out brilliantly because it's part of this whole movement you're asking about themes, and one of the themes is more stranded energy harvesting. And within that is this theme where, look, it's expensive to do Bitcoin mining on a landfill versus just hook up to the grid. It takes a lot more capital. You've got to pay for generators. You've got to pay for gas capturing collection infrastructure.

You've got to pay for things that are going to compress that gas because it doesn't come out of the landfill compressed like it does from an oil field. And you've got to pay to take the condensation out of it. You might have to pay to take the seloxanes out of it. There's a lot of purification involved. And then you've got this completely self-contained system of power use on site. So then you've got to balance it and have circuit breakers, and you've got this have transformers to step down the power,

not step up to the grid. You actually step it down in the voltage. And that'll cost a reasonable amount of money. And so the only person in the world who would want to spend that money to do that would be Bitcoin mining companies, because for anyone else, why would you spend all that money to chase power when power is only a fraction of your bill? But when it's 80% of your OPEC, you bet you're going to spend that extra money because you'll get a return on investment on that extra capital within around three years. So it makes economic sense.

Again, it's not that other people couldn't use that power. It's just that it doesn't make economic sense for other people to be chasing stranded power and smelly out of the way places like landfills. and the really cool thing is that everyone agrees that methane should not go into the air, right? No matter what your position on climate change, everyone agrees that methane should not go into the air. It's a really bad idea. As well as the global warming factor, if it been 84 times more warming than carbon dioxide, it also is responsible for a million premature deaths every year. And it's also just a waste of power.

It's like, you know, would you rather live in a house that had your gas stove on, unlit all day, or would you rather be using that to heat up something? It's like, well, one is terrible because it's a waste and it's basically poisoning everyone who's close to you. And the second one is actually using power effectively. And it's the same on landfills. The people who live near landfills, most of them have some degree of respiratory illnesses, often chronic. Often they're in places in the world. We have impoverished communities. You have children who are born with birth defects and deformities. It's horrendous because they're living on these landfills and they're continually exposed to basically elevated methane levels. It's like the unleit pilot light on your gas

stove. 24-7, 365 days a year. So Bitcoin mining has not just the ability here to monetize a wasted asset. It's actually improving human health. It's solving major environmental issues and improves the smell because you get rid of the gas doesn't take it away completely, but it takes away a lot of the odor. So it's tremendous, and it just slashes emissions, which are a major concern as well in the form of this methane. It's coming off this landfill. And the landfill owner wins because they get a monetizable asset, solves a pollution problem. It means they don't have to pay a million dollars for a flare stack. The Bitcoin mining company wins because they get cheap power.

And we come in as the infrastructure investment company, and we basically loan the capital for the Bitcoin mining company to get the the gas capturing collection system and the ASICs. So we win because we get the financing on the deal. So everyone wins here, including the environment. So we're on the lookout for more and more sites at the moment. That's been our constraint. We just haven't found enough people, not because it doesn't make sense, but just because it's new and most landfill owners don't understand what Bitcoin is. There was a joke that Vest been told where they first talked to landful owners about Bitcoin. looked at them quizzically and said, how do you know there's Bitcoin on this landfill?

It's so cool, like these downstream impacts from Bitcoin mining that you would never have seen happening like five years ago. It's really, really, it's so cool to see. It's crazy. Absolutely crazy. And if we look at that and we project through time, it's so crazy now, how much crazier is it going to get in five years' time?

We just can't imagine. It's like the internet. You can't imagine at the point in time where you're, it's like the internet in 1995. before. Could you have imagined what would have happened in the next 10 years? Well, it's in the same way. That's where Bitcoin and Bitcoin mining is now. What's going to happen to energy innovation in the next 10 years? It's going to be extraordinary. Well, Troy Cross put a tweet out just the last couple of days talking about this. And he was basically suggesting that anything that creates

heat is going to be a Bitcoin miner at some point in the future. I mean, I've actually got my Canaan Bitcoin miner set up here that's not plugged in because it's summer in Australia. and even that tiny little thing is too hot right now. But is that the future that you kind of envisage happening? Yeah, absolutely. If you look at heat, if you look at energy use, it blew my mind the first time I looked into this. 50% of all the world's energy is used to heat things up.

Sometimes it's houses. Sometimes it's factories, sometimes it's warehouses. Sometimes it's melting steel or smelting aluminum or, or zinc or zinc, whatever it is, or sometimes it's melting the silicon for solar panels. But 50% of the application of, 50% of all the world's energy is used for heat. Now, obviously, what comes off the back of a Bitcoin mining rig, no matter how much of a Bitcoin enthusiast you are, you're probably not going to suggest that's going to be enough to melt steel or to melt silicon for solar panels.

It's not. But it is enough for a whole lot of other things. It is enough to heat up water for residential users. This is enough to heat up homes. It's enough to heat up swimming pools, New York bathhouses. It's enough to dry timber. It's enough to heat up a tropical fish farm. It's enough for district heating in Finland.

And so we're continuing to go, hang on, what else could this be used for? What else have we been using something we have to pay money for where we've got free heat here? it's just a matter of how do we distribute it. And in the future, I think you'll start to see, industries will be co-located based on whenever there's a Bitcoin mining unit, there'll be a timber tannolizing factory as well, because you'll be saving so much money. We have a tropical fish farm.

It'll just be a no-brainer. You have Bitcoin mining co-located. We have a bathhouse. You'll have Bitcoin mining co-located. If you're going to set up and you build a new residential apartment, you'll have Bitcoin mining that will be set up to do the heating of that apartment. I absolutely imagine a future where this is not some crazy exception that just a few Bitcoin mining enthusiasts do, but this becomes the norm. Why? Because it makes

economic sense. A year or two ago, I had a call with a company that were in, I don't remember exactly where. It may have been Finland, but it was definitely a Scandinavian country anyway. And they were looking at putting Bitcoin mining into the municipality to do at least like the first portion of heating the water. Because obviously, like, these houses have to have boilers and a Bitcoin mine is not going to boil water, but it might get it to like 40 degrees C or I don't know how hot it will get it. Even hotter, actually. So how much, is that something that's growing?

And is that something that's actually happening now? Yeah, it's actually happening. It's happening in Denmark. And it's happening even more in Finland. These Scandinavian countries, they have this thing called district heating where they have this supply of pipes. And at the moment, how they're heating it is, they're using biomass.

They're using peat, coal, natural gas, a little bit of oil, a few other things. But more than 50%, about 54% of it comes from fossil fuel sources. Now, if you're doing Bitcoin mining in Finland, then it's only 8% fossil fuel sources. Because Finland has a very, mainly hydro and quite a lot of nuclear as well. And so that difference between that 8% and that 54%, you're actually reducing, this is decarbonizing. So this is another fascinating argument where the critics who have said that Bitcoin is creating emissions, you're going, oh, hang on a minute.

Bitcoin mining prevents emissions from landfills. Okay. It helps to incentivize solar operators to pay off their operators. to pay off their operation to expand the grid faster. Well, that means a higher renewable energy proportion on the grid. That's decarbonizing. And it's taking these sources which are parsley fossil fuel or more than 50% fossil fuel

and replacing it with something which is only 8% fossil fuel. That's decarbonizing. And then the critic might say, well, it's not happening at scale, but actually that's not true either. Finland now, if you look at the different Bitcoin mining companies who are operating in Finland, there's about three of them now, maybe four.

four at scale and then quite a few small ones. The largest one's Marathon. They're heating now 80,000 homes. Wow. Through the recycled heat from Bitcoin mining units. That's substantial. To put that in context, that's 1.4% of Finland, right? You put these other miners into the mix, too. That's more than 2% of all the district heat in Finland. This is no longer just some little pet project in someone's backyard, this is happening at scale. And that's just a start. And why are they doing it? Because it makes economic sense. But there's a second reason they're doing it, and that is Finland have this aggressive target where they want to decarbonize their district heating and make it net zero by 2030. Okay. Now, some people might debate whether that's a good idea or not. The reality is that's their goal.

So how are they going to do that unless they have Bitcoin mining? Well, there's a number of ways they can do it, but none of them are profitable. Bitcoin mining can do it profitably. In fact, it's more profitable to do it using Bitcoin mining than to use their existing methods. So that's mind-blowing. Now suddenly you've got Bitcoin mining companies who are partnering with environmentally focused organizations with government to help them to realize their net zero emission targets for 2030. And does the Bitcoin mining as like one of the parts of heating homes in Finland, does that actually drive down the cost?

Or is it kind of just there for the net zero emissions? Because like those incentives will come and go. But if it's actually economically viable and making heating homes cheaper, then that's different. Well, it's, I can say definitively, but if you just look at it theoretically, as long as You can, you're basically comparing what the status quo is, which is, okay, there's a lot of peat around in Finland, and that's relatively inexpensive, because you just dig it up from the ground, you burn it.

Okay, then there's biomass. You've got to transport that. Then there's coal. Okay, that costs money to extract. Then there's natural gas. That costs money, and that's not going down in price in Europe. And then you're replacing it with someone which just already exists. All you've just got to do is make sure you co-locate in the right place and divert it, basically

through a system of tubing and pipes. So I'd be very surprised if it's more expensive than what they're doing at the moment. And as it scales, they're only going to find more efficient ways to do it. And I think the original catalyst for doing it wasn't even net zero was simply because it was more cost effective.

Then people discovered, hang on it, this actually helps this secondary thing that we care about in Finland as well. It's very cool. Again, it's like the crazy second order consequence of Bitcoin mining is it's really hard to even kind of get your head around.

Just changing gears a little bit. One of the other cool things we've seen over the last few years is Bhutan. I think amongst like all the talk of strategic Bitcoin reserves and nation-state adoption of Bitcoin, I think Bhutan is one of the coolest examples of actually using Bitcoin. So they've mined Bitcoin. I think they've got over a billion dollars worth of Bitcoin now. First of all, do you want to talk about that?

And then do you think this is a model that other small kind of energy-rich companies, are going to follow. Oh, look, absolutely. So for context, Bhutan did this on the quiet for a long time. And then they announced a couple of years ago, hey, by the way, we've been mining Bitcoin secretly with our surplus hydropower. So in Bhutan, did they get outed in the Celsius bankruptcy? I don't know, to be honest. I don't know. Couldn't say. But they were, yeah, could have been. Could have been. I'm not sure. I think they wanted to keep it quiet for as long as possible. They didn't have any incentive to go telling people, but someone found out anyway. It was around about that same time. And the reason they did it was that in Bhutan, so it's in the Himalayas, and they've got, it's a tiny little kingdom, very small population, they are self-sufficient in energy. In fact, they are a net seller of energy to India. They weren't particularly happy. It's hydro, exactly. So this is all hydro, 100% hydro. So basically, it's the glacial melt from the Himalayas.

But of course, that only occurs, well, occurs more at certain times a year than in others. And so when you are getting that glacial melt, you've got a lot of surplus hydro energy much more than the population needed. And they worked out they could earn more by Bitcoin mining than by selling that. So that's what they decided to do.

Exactly the same as what Ethiopia. decided to do with their dam that they wanted to use it for Bitcoin mining rather than to sell that energy to another country, same as what Paraguay did, rather than sell it to Brazil, they wanted to use it for Bitcoin mining because they could get a better price. So in all cases, it's been absolutely brilliant. And it's no coincidence in all three cases, it's hydro energy, because hydro is baseload, and hydro has these big seasonal fluctuations where you can use Bitcoin like in Costa Rica, same thing. You can mine Bitcoin all you. year round, but you'll get a lot more of it in the rainy season than in the dry season.

So it's ideal for Bitcoin mining. And in terms of building up a strategic Bitcoin reserve, there's two ways you can do it. One is to buy it. And second is to utilize your existing energy assets, which are stranded or wasted, and you just turn that into Bitcoin, which is an even more beautiful way to do it because it doesn't, well, it does cost you money, but it doesn't cost you nearly as much as if you have to buy it at spot price, particularly if you have that infrastructure already in place. Now, the interesting thing with dams is, and this is the case in Ethiopia, when large dams

are built, often they're built with World Bank or IMF funding, and they overbuild them. And the reason they overbuild is you're going to build a dam, you have to build for the future capacity, not for today's, because it's pretty hard to build half a dam, right, and then you expand it later. So you build these enormous dams that have the capacity. to deliver more energy than people will need for at least the next 15 years, which means they take a very long time to get a return on investment unless you mine Bitcoin with it. And so what they've worked out in Ethiopia is there's this huge dam.

They can get a return on investment much faster. And what happens is as they use it to mine Bitcoin, because suddenly they've got another buyer of energy, it's not taking energy away from anyone. It's just energy that would have been wasted. then they can reinvest in building more transmission lines ahead of schedule. What do they do with those transmission lines? They direct more energy to rural populations or from dispersed populations. So again, more people are getting more energy, more energy abundance.

It pays off the damn faster, which is good for the electricity board, good for the country. And in the meantime, you build up an entire Bitcoin mining infrastructure. So, and these are countries that, again, Paraguay, Ethiopia, Bhutan. what do they have in common? Small countries, none of them are inside the West, all of them have these big assets that they've been innovative enough to work out, we can mine Bitcoin with that. And they don't have a lot of the fud in the media that's dissuaded to a whole lot of people that it's a bad idea. So they can come at at neutral. They don't have a whole lot of unlearning to do. Like a lot of people, regulators and policymakers, they've actually got to unlearn the nonsense they've read in the media before they can actually start to neutrally appraise Bitcoin. So they don't have that impediment, so they can actually start looking at it fresh based on whether it makes economic sense. And they've concluded it absolutely makes economic sense. It's the cool kind of like asymmetry in Bitcoin where countries like Bhutan and El Salvador, which I imagine most Bitcoin is five years ago probably haven't even barely heard of these countries. And now they're

kind of front and center in the world stage of Bitcoin. Have you heard any kind of rumors or have you got any idea of where the next kind of like Bhutan might be? Where do you think there's other for nation-states be mining Bitcoin? Just look at where there's superless hydro energy. Bitcoin loves hydro.

A couple of years ago, the major power source was hydro. I think it's only gone up since then. And so you can bet that a lot of it's still going on in China

for the exact same reason. You just won't hear about it. But you've got massive, massive hydro facilities in China. They're building a new dam, right? That dam will also

be built for it'll have more capacity than it can realize. I would be very, very surprised if they don't use on mass Bitcoin mining to monetize a lot of that surplus energy. We already know that China is doing a lot of Bitcoin mining right now, including Inner Mongolia. Why in a Mongolia? Because that's where they're building out a lot of solar and wind. And what happened there was a lot of the heavy industry. They went through an economic downturn. They're still in it. A lot of the heavy industry left. and so there was more solar and wind well there were two issues number one was the inherent

intermittency of solar and wind which meant that sometimes wind was being turned into power where people didn't need it or solar was turned into power when people didn't need it so immediately they said well we can monetize that we can mine Bitcoin with it but then when every industry left that left a permanent need

for another user of energy and they said well let's put more Bitcoin mining in place so that's already happening so there'll be more going on in China and you'll start to see where else is there, anywhere near the Himalayas, anywhere near the Andes, because those are places you'll get a lot of Bitcoin mining occurring, because you have a lot of water with that glacial melt as well. So it'll be defined geographically to some large extent, and that's exactly what's happening already. And then you don't have to have snow cat mountains either,

basically wherever you have hills and there's a lot of rain. You also have that. potential. So then places like where I live in Costa Rica, you're not going to see it at the same scale, but what you might see is you might see a whole lot of microgrid development. There are two operations that I, one of which I visited recently, which are about one megawatt, microhydro, stranded energy mining Bitcoin in Costa Rica. So that makes a whole lot of sense. Gridless in Africa doing the same thing. Yeah, they're looking at building out lots of these microgrids. They're going to do a lot of that. And a lot of that. And a lot of that sum is going to be biomass, but a lot of it's going to be hydro.

The other place is really interesting is the Gulf states. So we know that they've just come out, they've bought over $400 million of the Bitcoin ETF. They're obviously energy rich as well, not hydro, but they've got a ton of oil. Do you think they're going to look at mining Bitcoin? Yeah, they're already mining Bitcoin. There's a collaboration that's occurring there at the moment with water desalination effort. again, that was Marathon in the UAE a couple of years ago.

Fascinating as well because one of the applications, this is about the time the water fud came out about, you know, Bitcoin uses too much water, which turns out didn't. It was just more of the same transaction, energy use per transaction. Okay, we can measure water use per transaction, which is equally a fake metric. But anyway, that's another story.

But then I got interested to say, well, what is the real story with Bitcoin and water? and it turns out that with desalinization, desalination, I think it's called, takes a huge amount of energy. And you've got to separate the brine from the water, the salt from the water. And the problem with desalination is that it's always been like cost prohibitive, right? Cost prohibitive, yes. So again, that's a candidate for heat recycling from Bitcoin mining units.

So there's a massive opportunity there where you can co-locate Bitcoin mining with desalination. you use a heat exhaust and what's going to happen is it's going to drive down your heating costs for your operation, which means that this is going to drive down costs, but it's also going to drive down emissions because rather than using a whole lot of natural gas, you can use some Bitcoin mining. And so the amount of water you create, relative to the amount of emissions you create, the balance is going to be much better. So it's going to be better economically. It's going to be better environmentally too.

So this is going to make a huge amount of sense as well. Yep, they're already mining Bitcoin. There's a lot of Bitcoin mining occurring in those Arab states right now. It's only going to ramp up. It kind of came on the radar. River was the first to announce it in 2003 when suddenly it was like, oh yeah, and by the way, there's 500 megawatts or Bitcoin mining happening in UAE. And everyone's like, whoa, where did that happen?

But that's what we're going to find out. We didn't know about Bhutan. And then suddenly it's like you look at all the knowable hash rate, then you look at all the actual hash rate. And so, well, there's a difference. Where is it happening? And then you find out maybe a year later or two years later that's been done in secret in these incredible parts of the world. Are there any rumors coming out of Russia? Because I assume they're mining Bitcoin to some degree. Yes, they are. Yeah, they're mining Bitcoin. What's happening in Russia is interesting is they are banning it from certain regions and encouraging it in others. and because you have a highly centralized state, let's say, you can basically say, look, let's, we don't want Bitcoin mining here

because we want that power for other things and the grid's old and fragile. We want it over here, however, because we have the opposite problem. We actually need it to stabilize the grid. And we also have some spare capacity, and it's going to be making things much more profitable for everyone. Can you please come on and help us provide the stabilization? Or maybe there's a new project that's happening and maybe they're building out some new generation. And it just makes sense to have Bitcoin mining companies being that first user of that stranded energy.

Maybe they use Bitcoin mining temporarily before it gets grid interconnected. And then they say, right, you can move on to the next project now until that gets grid interconnected. And they just kind of migrate like these little nomads from site to site to side, making it become more profitable, then it gets grid interconnected. So there's a whole range of possibilities that Russia could use and is already using for Bitcoin mining. So, I mean, this is all fascinating. We've gone into loads of different tangents here

of how Bitcoin mining's being used across the world. Is there anything we've missed that you think it's like an interesting breakthrough in mining? Look, honestly, there's just so much that Bitcoin mining is enabling. what you're starting to see happen already with just last week again, it was announced that Tether and this large, I think it's Brazilian agricultural company had done a deal where Tether had purchased 50% of the company or 51% of the company. But it's not just an agriculture company.

They also were an energy company. And you might think, well, that's an unusual combination. It's not unusual at all. when you run a lot of sugarcane, for example, you get a huge amount of waste, and what do you do with that waste? Well, you can turn that into methane and you use that for power, and they have multiple 100 megawatt-plus operations. And so they realized that that was a candidate for using for Bitcoin mining, because particularly when it's stranded, it made more sense to mine Bitcoin than to try to sell it to the grid. Sometimes they can, but sometimes they can't. And also what

they realized is if they have this off taker for their stranded energy, that allows them to set up a sugar refinery, for example, or any other agricultural enterprise that has some organic waste component. And then they just use the Bitcoin mining company to process that waste, not processing, an anaerobic digester does that, but to use the power that's generated from that methane on site. So it just made sense. Now obviously that, again, that's capex intensive, anaerobic digesters aren't cheap. So you only do that if you're talking like around about 100 megawatts, maybe

10 megawatts at least, but fascinating, isn't it? You're just seeing this convergence of energy companies, agriculture companies, and Bitcoin mining companies. Again, who would have thought it? And again, you could have a big agricultural business, that's just agriculture with

sugar cane. Okay, what about farms? What about cattle farms? again, natural candidate for Bitcoin mining. You would have got laughed out of town if you'd say, yeah, yeah, farm and Bitcoin mine, they go together like a hand and glove. But people are realizing it's true. Because cows produce Dunn, Dunn produces methane, methane produces power, and power produces Bitcoin. So it's three or four steps, but it's already been done it.

Yeah, we're seeing it in Ireland. Is it skilling mining and doing it over there? And that's obviously a small scale, but again, that's some of the most interesting stuff is the small-scale Bitcoin mining just like finding a use case within your business and implementing Bitcoin mining in that. It's amazing to see. And the only thing we can't really predict fully is that some of the small stuff, the small-scale stuff might stay small-scale, but everything starts small-scale, right?

Heat recycling used to be really small scale. Now it's pretty big scale already in Finland. that. Flaug gas-based Bitcoin mining used to be small scale until Cruz O started doing it with multiple hundreds of megawatts. And then suddenly it's large and people are talking about it. Using off-grid wind for Bitcoin mining for older Bitcoin mine, that was tiny. Now it's suddenly big with Bitcoin mining companies starting to purchase these assets and using them for their older Bitcoin mining units. So everything that gets big, started off small. Some of the things will stay small. Some of them will grow big. We don't know

exactly which one. I don't know whether it will take off in a big scale on farms. A lot of it will depend on just factors such as whether it helps to drive down the cost of anaerobic digesters to the point that it becomes more cost-effective on more farms around the world. And the other cool thing is, like, it's really good for the network in the sense that Ireland is not a natural place to be mining Bitcoin. Energy prices are very high. It's terrible places. It's some of the most expensive. electricity in the world. But again, if you can do it on a farm or you don't pay anything, it's perfect. It's perfect. It's very cool. Well, this has been fascinating, Daniel. Is there

anything you wish we'd talks about that we've not covered yet? Oh, it's kind of linked, but kind of not. And it's interesting to look at what Bitcoin mining, but not only Bitcoin mining, does to volatility this cycle. So, because it's not a, when Bitcoin mining companies don't get liquidated, it drives down volatility. But there's a whole bunch of other factors that are just really interesting that also drive down volatility this cycle. I don't know we've got time to talk. Do you want to riff on that a little bit now? We've got time. Let's definitely talk about this. Yeah. Okay, let's do it then. Yeah, so, okay, fewer miners getting liquidated. That's good, because when miners don't get liquidated, they don't sell their, dump their coins on the market,

that's good because it helps to keep Bitcoin price higher. What else is good that used to happen that doesn't happen anymore. Well, you don't have the risk that a company like Tesla could say we're not allowing Bitcoin purchases of our vehicles anymore, and that could drive down price by $17,000. That's not going to happen anymore. Why isn't it going to happen? Because the reason they said they were going to stop using Bitcoin was environmental fud. They cited the Cambridge Energy Consumption Index. They talked about emissions. We now know that Cambridge's data is three years out of date. It was overcooked anyway. There's a lot more peer review. research it says there's positive environmental

externalities. It's just not possible to the same extent. And we've also seen since 2021, for better or worse, and people have different opinions on this, that ESG isn't as much of an investment consideration certainly in the US as it was back in those days. So what that means is that

there's not the same risk that some environmental fud could drive down the price of Bitcoin so much. I think, didn't ask to also say that once it was proven that at least 50% of the energy going to Bitcoin as renewable, that they would reenable transactions? Yeah, that's Elon must say. You can change his mind. So, you know, they may or they may not. I'm not holding my breath for that to happen, but we have gone over 50%. And yeah, that may happen.

It may not. But it's not going to drive up Bitcoin price in the way that it drove it down at the time, because it's just not such a relevant consideration anymore. Not to say it's not relevant that Bitcoin hasn't achieved that milestone, that's incredibly important to a whole bunch of people, but more that it's not going to have the same impact on price. That's the second thing. Third thing is that the way that institutions buy Bitcoin has become much more sophisticated. Back in 2021, when they started to buy, you had these really blunt instrument rules, which said, thou shalt only have up to 1.5% of Bitcoin in thine treasury, or you have to liquidate it. And so what that happened was in the, I don't know if you remember, but the first quarter of 2021, you had a lot of

people who were buying Bitcoin. Price was moon. It went up from 20,000 to 40,000. And then because it doubled in price, they suddenly had too much allocation. They had to dump it on the market. And then, you know, Bitcoin price kind of wobbled a bit. And one of the wobbles was because of this exact behavior of these large institutions having dump winners to buy losers. Now, and the irony was, as soon as they did that, it drove down the price of Bitcoin. And they turned out they didn't have to sell as much. Now what's starting to happen with pension funds, sovereign funds, is they having more flexible rules that might say,

not you can't have more than 2%, or maybe even 3%. They might say something more like, well, you know, you can have up to 3%. However, you have a maximum capacity of 6%. And if Bitcoin goes down in value, such that your portfolio allocation is now with only 2%, you can top it up. under certain conditions to 3%.

And when you do have to sell down, you don't have to sell down straight away. And you might even have a rule that says once you've paid off the original capital purchase, then beyond that, there's no limits on how much you can hold. So you've got these much more flexible criteria, which means you're not going to get their same dumping on the market. So that's going to have an impact on driving down volatility.

So that's the third factor. What else have you got? Okay, like I said, you still have these macroeconomic events. You still have crypto industries doing strange things, which blow up their businesses. You still have the equivalent of the FTX or whatever. Something on that could still happen. But it wasn't just those things that drove down price. It was a combination of the fact those events occurred and you had a whole lot of weak hands

who sold their Bitcoin in fair, retail adopters. because you had this big distribution from strong hands into weak hands. Now what's happening, if you look at the people who are selling, okay, it's the long-term holders, same as the last cycle. Who's buying? Completely different from the last cycle. Last cycle, it was first-time retail buyers to a large extent and first-time institutions.

Now it's sovereign funds, pension funds, micro-strategy, Bitcoin mining companies, other corporate treasuries. And we haven't even started on, nation-state adoption, even without nation-state adoption, and of course, ETFs. It's massive. And now you could say, well, some of those ETF buyers might be weak hands, that's true, but not all of them are.

And certainly those other categories, pension funds, sovereign funds, their long-term buyers. Microstrategy, infinitely long-buyer. Mining companies, long-term buyers. So these are strong hands. So again, you're not going to see that same capitulation event occur, even when you do get negative macroeconomic events. Price will still go down, but the extent to which it goes down

will be much more limited. So you start to factor those things in. You're going to get smaller drawdowns. We're already seeing some possible evidence to suggest that's happening right now, but you also get smaller bear markets. So that's part of my thesis that we're not completely into a super cycle.

There'll still be some residue, but it will be more like rolling hills, not like jagged peaks and deep valleys and ravines. And with all this, do you think you also get dampen volatility to the upside? Potentially. But again, none of these things is an argument that says you have to. All of these arguments are all saying you'll get less downside volatility.

But what would be an argument that said you necessarily had to get less upside volatility? None of these arguments. So you'd have to come up with a different thesis. It doesn't necessarily follow that both will occur together. the only thing that's a little different is that you say that you will get less upside volatility is you haven't seen retail participation to any degree this cycle, which has been typically what's caused those big upside volatility blow off tops. So that you're not seeing yet, and you may not see to the same degree as you did in previous

cycle. We don't know yet. It would be speculative. No, I agree with that, though. I think just anecdotally, I've not had the same interest from like my no coin of friends. And one of the things that I always put that down to is unit bias. I just wonder if for like the first time retail by a 100K Bitcoin seems like too much for stretch now. Yeah, it's possible.

I think it's a range of factors. That's possibly part of it. You have a lot of people who just think they've missed out. They've lost the chance to participate. You definitely have a lot of people who won't even consider it because they don't feel it's a value fit. That's a big problem. Not only because they think that it, okay, that the traditional group of users who have this problem think that it's a speculative asset has no value to humanity, it's bad for the environment, and it's used by Donald Trump and his friends, right? So that perception, which is completely wrong and incorrect, it's used across the political spectrum.

Troy Cross's research has already shown that very definitively. but that perception is an obstacle to a lot of people and will probably shut out a lot of retail investors this cycle. Everyone gets Bitcoin at the price that deserve. Daniel, this has been really great. Thank you very much for giving me the time. Is there any way you want to send anyone before we close out? Oh, just in terms of where to find me,

I'm on Nostra and I'm also on X at DS Batton. Those remain the two best ways to get hold of me. And what about the fund? Oh, the fund, yes. So, yeah, we're really interested in people who, if you know a landfill anywhere that's sufficiently big enough, we'd love to talk to you. And I know that sounds very vague and broad,

but we can work with you to say, hey, what are the criteria we're looking for? Tends not to work so well to say, hey, there's a landfill down the road that you could use. It's much better if you actually spoken to the landfill owner. You've had a conversation. But if you have something like that, we'd love to talk to you.

And our fund is CH4 Capital. com. Amazing. Thank you for the time, Daniel. You're welcome.