Latest / Simply Bitcoin / Exposing China's Secret Bitcoin Plan | EP 1089

Transcript

Exposing China's Secret Bitcoin Plan | EP 1089 · Simply Bitcoin

0:00
Well, everybody was distracted with the yen carry trade blowing
0:03
up and the and China printing an enormous amount of money.
0:06
Did you miss the Coin Telegraph article that quietly circulated
0:09
online last week showing that China is still the biggest
0:13
Bitcoin mining player in the world despite their 2021 mining
0:17
ban? As crazy as it sounds, that's
0:19
not the only eyebrowsing thing that's going on in Asia right
0:22
now. Only last week, Bhutan got
0:24
exposed for being the fourth biggest Bitcoin holder after
0:28
they've been mining Bitcoin in secret for the last four years.
0:32
In fact, they have 1/3 of their entire GDP in Bitcoin.
0:35
For everyday simply Bitcoin listeners, the Bhutan you should
0:38
not come as a surprise. But until now, it's just been me
0:41
and Opti doing our best, adding commentary to what is a very
0:45
complicated topic. So today we figured we'd give
0:48
you a proper deep dive by bringing on an expert from the
0:51
mining industry. Our special guest for today is
0:54
Adam Sullivan, CEO of Core Scientific, one of the leading
0:58
publicly traded Bitcoin mining companies with a market cap of
1:01
3.16 billion. I'm going to bring stage and of
1:04
course I have my life Co host with me on on off to the side
1:08
like always. Optimus Fields.
1:10
Adam, how you doing? Doing well, thanks for having me
1:13
on. I can't, I can't publicly
1:16
disclose the first time that me and Adam met each other, but
1:19
let's just say that it was awesome.
1:22
So I just want to jump into the the beginning detail and it's a
1:28
very kind of interesting article.
1:30
It dropped September 23rd and it says China still controls 55 of
1:36
55% of the Bitcoin hash rate despite the mining ban.
1:41
So Adam, what's your take on that?
1:43
Like, you know, specifically like it should that worry people
1:46
because, you know, China obviously is not exactly
1:49
friendly. I know they're they're playing
1:50
some games with Hong Kong and using Hong Kong as some type of
1:53
proxy, but should that worry people at all?
1:57
Yeah. I don't know if the number is
1:58
that high. I mean, I think it's probably
1:59
based on mining pool data, right?
2:01
I think from my perspective, it's probably like 25 to 30% of
2:05
the total network. But it shouldn't come as a
2:07
surprise at all. I mean, what we saw after the
2:09
mining ban in China was there was a temporary shutdown, but
2:13
then people started turning on their minds again pretty
2:17
quickly. And from what we've heard, a lot
2:20
of old machines are also still going back into China outside of
2:23
just new machines. So, I mean, it doesn't really
2:25
come to come as a surprise to me really at all that there's still
2:29
a significant amount of mining going on in China.
2:31
Yeah. And and let's talk about that
2:33
because according to this University of Cambridge, it's
2:37
estimated that 21% of the hash rate is still located in China
2:41
despite the ban. What's your take on that?
2:44
That they said 21% is. 21% of the hash rate, yeah.
2:49
Yeah, I mean, I, I, I know for a fact there's still a lot of very
2:53
large mines running in China right now.
2:55
How's that? How's that working?
2:57
How's that dynamic working despite the ban from the from
3:00
the government? Well, it's all based on
3:03
jurisdiction. I mean, the other part is too
3:04
look at the amount of renewables that are being built in China.
3:07
I mean, they're building more renewables than the rest of the
3:08
world is combined. So from a deployment
3:11
perspective, they need to figure out how to make a lot of that
3:14
renewables and especially solar deployments profitable.
3:17
And so there is a lot of different jurisdictions across
3:21
China that are allowing Bitcoin mining to occur.
3:24
And it's, you know, frankly, we can see that see this based on
3:28
the data for where all of the electrical infrastructure is
3:31
going. So I know for a fact that
3:33
there's still mines being built in China.
3:36
It's not like it's just previous mines that were, you know,
3:39
existed before. It's new mines that are still
3:41
going up today because they're still getting low voltage or low
3:46
voltage Transformers being sent all across China, which means
3:49
they're still building new mines today.
3:51
So I think over time, I think that number is going to stay
3:53
relatively constant. But I mean, it's other countries
3:57
right now that I think are experiencing more growth from
3:59
from a China perspective. It's really just they're still
4:03
building new mines. But I would say that percentage
4:05
is probably relatively constant. It's probably been there for the
4:08
past few years. Yeah, absolutely.
4:11
And Speaking of new countries that got into the fold, and by
4:13
the way, this was secretly unveiled due to the Celsius
4:17
lawsuit. This news was not supposed to be
4:19
revealed, but it came out that the Kingdom of Bhutan has been
4:24
secretly mining Bitcoin for the last four years.
4:27
And if you look at the data, 1/3 of their GDP is currently
4:31
allocated in Bitcoin, which is absolutely crazy.
4:35
There was a legacy media clip that we played earlier on the
4:39
week and it was basically making the case that, you know, the
4:42
Kingdom of Bhutan likes to prioritize happiness over
4:46
wealth. And, and I'm just like putting
4:48
Bitcoin and happiness together. And I'm like, that's so poetic.
4:52
So I wanted to get your take on that because that was some
4:54
pretty big news coming out of this very small Himalayan
4:58
Kingdom that, as you know, has a tremendous amount of
5:00
hydroelectric power capability, which makes it, you know, the
5:05
the Nirvana for Bitcoin mining. What's your take on the Kingdom
5:08
of Bhutan? I mean, don't you really think
5:10
the Kingdom of Bhutan is similar to many of us Bitcoiners in the
5:14
sense that they restrict the number of people that can come
5:16
into the country? They make it, you know, they
5:18
make that very challenging to enter.
5:20
They're kind of, you know, they're pretty isolated.
5:24
But when you come in, they're extraordinarily welcoming when
5:27
they finally let you in. I mean, it kind of feels like
5:29
they fit the Bitcoin ethos better than most people in this
5:31
world. 100% agree with that. So when the China ban occurred
5:35
in 2021, coincidentally right when the bull run was happening,
5:40
right, a lot of the hash rate decentralized in the process and
5:45
a tremendous amount relocated to the United States.
5:48
And now I believe if you look at the latest data, it's around 37%
5:53
of the hash rate is located in the United States.
5:56
It's getting pretty high. Like obviously as Bitcoiners, we
5:59
want decentralization. Does that concern you a lot at
6:03
all that 3037 to 38% of the Bitcoin hash rate is located in
6:08
the United States. And I have a follow up question,
6:10
which is do you see any benefits of the hash rate relocated to
6:14
relocating to the United States versus a country like China?
6:18
Well, I think what you're going to see is this occur over the
6:21
course of the next 20 years. I mean, anytime a country
6:24
becomes available for Bitcoin mining there, there's going to
6:27
be an excess amount of mining units or megawatts being
6:31
utilized for Bitcoin mining in that country.
6:33
So that's what we saw in the United States after the China
6:35
ban. But I think we're actually going
6:37
to see that number come down over the course of the next few
6:39
years. We've kind of extracted most of
6:41
the power that you could possibly get in the United
6:44
States for Bitcoin mining, especially with this more
6:46
competitive data center race that's going on across North
6:48
America. So I think what we're going to
6:50
see over the course of the next few years is continued
6:53
decentralization. And what you're going to see in
6:55
the United States are a lot smaller Bitcoin mining
6:58
facilities actually going up versus these mega sites, because
7:01
the mega sites were were coming to the United States in 2021 and
7:04
2022 because there was large amounts of power available.
7:07
Those large amounts of power are not available anymore to build
7:10
these new mega sites. So I think that story's played
7:13
out in the United States. And so over the course of the
7:15
next 10 years, I think you're really going to start to see
7:18
that number start to come down as a percentage of the overall
7:21
network and you're going to start to see more facilities
7:23
come up all across the world versus the United States.
7:27
Gotcha. And what are your what was your
7:29
take on because this is the first time that this election,
7:32
you can make an argument that is somewhat the the outcome of this
7:36
election will have some type of impact on the industry in the
7:42
United States. What's your take when the
7:45
Republican candidate, Donald Trump is going out?
7:48
First of all, he had a lot of of miners at Mar a Lago and he's
7:53
basically coming out and saying, you know, I want all this
7:55
Bitcoin being mined in the US as a Bitcoiner believing in the
7:59
game theory, you're looking at that you're like, this is great
8:02
when when countries compete for your business, you win as a
8:05
sovereign individual. So what was your take on that?
8:08
Did it surprise you at all? We were anticipating that this
8:13
was inevitable, but we were anticipating that this was going
8:16
to be happening in 2028, not not 2024.
8:20
I think that the Biden administration, due to their
8:23
policies, I think expedited this, made this a a political
8:27
issue when it shouldn't have been one.
8:30
But what's your take on on Trump's comments regarding
8:34
wanting all the Bitcoin being mined in his voice, of course,
8:38
all the Bitcoin being mined in the United States?
8:41
Yeah, I mean he's pro, you know, pro energy generation.
8:44
That's a matter of fact, right. And so that's huge for the
8:48
United States, not only for Bitcoin miners like core
8:51
Scientific, but also all industries.
8:54
So, you know, it definitely came us a surprise that he latched on
8:57
Bitcoin industry like he did. I think it's more of a surprise
9:00
that we really haven't heard much out of the Harris campaign
9:04
related to Bitcoin. And I think that is causing a
9:07
lot of concern amongst many of us in the Bitcoin community is
9:10
what is she going to do if she is elected president?
9:13
And so for Trump to come out and be very positive on it.
9:16
Obviously, we love candidates who are very supportive of the
9:20
industry that we operate in. And so I think we were, you
9:24
know, we were generally very excited and we did participate
9:26
in that, that round table at Mar a Lago.
9:30
And, you know, Trump was speaking about Bitcoin in a way
9:33
that it seemed like he had been reading up on it significantly.
9:37
He'd become very educated on the topic.
9:39
And I think that's something that, you know, a lot of people
9:41
are missing is that he's actually getting more educated
9:43
on the topic. He's not just latching on to
9:46
this industry because he thinks it's an area where he's going to
9:48
be able to raise additional capital to buy more votes.
9:52
Gotcha very, very I I love the the insider take.
9:55
I'm really excited about today's episode guys.
9:57
If you guys are enjoying the show so far, make sure to smash
10:00
that like button and help us break 100 likes within the 1st
10:03
15 minutes of the show. There's currently 600 of you
10:07
guys watching live between YouTube rumble and X and of
10:10
course Noster as well. Guys stay tuned.
10:13
We have a ton of content for you guys.
10:15
But before I do want to give a very special shout out to our
10:18
sponsor. Of course I'm talking about
10:19
Bitcoin. Well Bitcoin Well was a publicly
10:21
traded company coming out of Canada that recently expanded to
10:24
all 50 U.S. states. Buy real Bitcoin Enable your
10:28
independence with the fastest and safest way to buy Bitcoin
10:30
and Canada in the USA. What makes Bitcoin Well unique
10:33
is that it's automatic self custody.
10:35
What does that mean? That means that when you buy
10:37
Bitcoin on Bitcoin Well, as soon as the funds clear, it goes
10:41
straight to yourself custody Bitcoin wallet address.
10:44
Also, when you buy Bitcoin on Bitcoin Well, you earn Bitcoin
10:47
Well points and you could use those points towards the Bitcoin
10:50
Wishing Well contest. Get your Lightning wallets
10:52
ready. First person to scan the QR code
10:55
wins the prize for today, which is 500 SAT's.
10:59
If you use promo code simply BTC again simply BTC to sign up to
11:04
bitcoinwell.com today you get 3 tosses into the Bitcoin Wishing
11:07
Well for an opportunity to win up to 1,000,000 Satoshis.
11:11
All right everybody, let's get some numbers.
11:12
We have lots to talk about. Let's check it out.
11:23
All right, everybody, I also want to give a shout out to our
11:25
sponsor, Stamp Seed. Usually when you buy yourself a
11:28
hardware wallet, it comes with a piece of paper, and you're meant
11:31
that you're meant to write down your seed words on that piece of
11:34
paper. The problem is that paper is
11:35
prone to water damage, fire damage.
11:37
Your dog's probably going to want to eat it.
11:39
The proper way to store your generational wealth is by
11:42
literally stamping your seed into a pipe of titanium.
11:46
And that's exactly what the Stamp Seed kit will enable you
11:49
to do. It's a stamp seed phrase storage
11:51
kit, comes with the letter stamping tools, comes with the
11:54
hammer, it comes with the anvil, comes with everything you need
11:57
to maintain the relationship with your grandchildren because
12:01
you don't want to lose that relationship with your
12:02
grandchildren. Because if you write down your
12:04
seed words on a piece of paper, that's not going to survive the
12:07
test of time. You want to literally stamp your
12:09
seed into a plate of titanium and the stamp seed kit will
12:12
allow you to do that. If you use promo code Simply,
12:15
you get 15% off anything on the Stamp se-ed.com store.
12:19
At the time of recording, the Bitcoin price is 60,660
12:23
thousand. 270 sats per dollar 1659 block height 863,982
12:30
Realized monetary inflation 1.33% market capitalization 1.19
12:35
trillion Bitcoin versus gold market cap 6.44% money supply
12:40
19,762,226 BTC percentage issued 94.1%.
12:47
Again, my favorite stat here is the realized monetary inflation
12:50
of Bitcoin continuing to take Fiat currencies to absolute
12:53
school. It's at 1.33% and it's it's
12:56
guaranteed to go down forever, forever.
12:59
Anyways, I do want to take advantage of the fact that we
13:02
have Adam on the show today to talk about other mining news
13:07
that broke recently. We have Japan's largest power
13:11
company TEPCO is mining Bitcoin using renewables A little bit
13:15
more context Tokyo Electric Power Company, Japan's largest
13:20
electricity provider, has begun mining Bitcoin through its
13:23
subsidiary agile energy X using excess renewable energy that
13:27
would otherwise be wasted with. With over 27 million residential
13:32
and business customers, TEPCO established Agile energy in 2022
13:36
and now they're exploring Bitcoin mining powered by
13:38
surplus renewable energy. The subsidy has installed mining
13:41
rigs next to solar farms in Japan's Gunna and Tochichi
13:46
prefectures. I hope I pronounced that
13:47
correctly. Also on top of Japan, we have,
13:50
of course, freedom country, the Bitcoin country, we have El
13:54
Salvador. El Salvador has my nearly 474
13:58
bitcoins adding to state crypto holdings in the last three
14:03
years. So I'm Adam, maybe call me
14:07
crazy, but I'm I'm starting to see a pattern here where
14:11
different nation States and different countries are looking
14:15
at Bitcoin as a potential way to monetize otherwise wasted
14:20
stranded energy. What's your take on this?
14:23
I think we're going to continue to see more.
14:25
I mean, this is the, this is the narrative we've all been waiting
14:28
for, which is large energy companies across the across the
14:32
world and governments are going to be mining Bitcoin, right?
14:35
I mean, that's exactly what we thought was going to happen.
14:37
Everyone thought this story was going to happen earlier, but now
14:40
we're sitting here in 2024. And I mean, those are just two
14:44
examples, right? I mean, there's, there's only
14:46
more examples. It feels like across the world
14:48
right now that, you know, large, large energy companies and
14:51
governments are mining Bitcoin. It's just the it's the nature of
14:55
people wanting to control block space.
14:58
What is, and that's really interesting you said about it,
15:00
which is control block space. I remember seeing a video, I
15:03
believe it was from one of the CE OS of the public minors
15:07
talking about how it's a national security issue that the
15:13
United States has to be a leader in, you know, securing a
15:18
percentage of the hash rate. And this came on the heels of
15:22
the news coming out from Russia or Russia did like a 180 and
15:26
they legalized Bitcoin mining officially.
15:29
Now we know that it was happening, you know, like
15:31
somewhat like happening in China right under the hood.
15:34
But they made it official by that we're we're going to
15:37
legalize Bitcoin mining. I suspect China's going to
15:41
change their minds very, very soon, right?
15:43
They are, you know, they are competing against the United
15:46
States technically. So what's your take on this?
15:48
I think Max Kaiser actually coined a term.
15:52
He calls it the global hash. What is it?
15:54
Opti Global. Global hash war.
15:56
Or global hash war? So what's your take on the
15:59
global hash war? Do you see a continuation of the
16:02
trend? Is Russia getting back into
16:05
Bitcoin? Bullish.
16:06
We know they have a tremendous amount of untapped energy.
16:10
Yeah. I mean, it's going to be come
16:12
down to bit large national superpowers control trying to
16:16
control at least 20% of the box base or 20% of the network hash
16:20
rate because then you at least have a shot at confirming
16:23
transactions when you want to confirm them.
16:25
And I think this is something that obviously Russia's probably
16:29
at least 20% of the hash rate we are trying to that's 20% of the
16:32
hash rate. We have the United States that's
16:34
over 20% of the hash rate. Like these are all very
16:37
important things for governments to have at least, you know, they
16:42
want to have half rate in their country because then at least if
16:46
they ever come, if they ever want to have some sort of exert
16:49
some sort of control, then they at least can, you know, know
16:54
that they have a certain percentage of the network.
16:56
Obviously, I think that's a bigger concern on a go forward
16:59
basis, like looking forward to, you know, 20302040, especially
17:06
in the United States where I think it's probably going to be
17:08
a more challenged environment for Bitcoin miners from a
17:11
regulatory perspective, unless we have, you know, it's a
17:14
multiple supportive presidents in a row Bitcoin mining.
17:18
But for folks like Russia and China who are trying to push
17:22
through transactions that might not necessarily be confirmed
17:25
through the normal banking system, that's something that I
17:28
think is a net positive for Bitcoin.
17:30
And being a, you know, censorship resistant network, I
17:34
think that those types of miners are actually enforcing the
17:38
freedom of Bitcoin. They're very, very, very
17:42
interesting. It, it, it's almost as if we're
17:44
seeing the game theory play out in real time.
17:48
And it it's, it's, it's just fascinating because the aligned
17:52
incentive structure of the Bitcoin network makes it so that
17:56
like normally, normally adversarial players just
18:01
pursuing their own incentives are actually making the network
18:05
stronger. I don't think we've ever seen
18:07
something like this ever. Yeah, you wouldn't necessarily
18:10
expect that, right? Yeah.
18:12
You know, you're advocating for more nation states to enter the
18:16
Bitcoin network, to make it more secure, to make it more
18:20
censorship resistant. I mean, that's the.
18:23
I think that's actually the real key.
18:24
If there's some type of regulation that comes down the
18:27
pipe in the United States where Bitcoin miners have to censor
18:30
certain transactions, I think that's a huge issue for the
18:33
Bitcoin network, and I think that's actually one of the risk
18:36
factors for us right now. Yeah.
18:38
And, and, and when that happens, right, that's when China and
18:42
Russia would come in because they would allow those blocks
18:48
into the blockchain, right. Do you do you foresee a
18:51
potential fork happening? I hope not.
18:57
But. It's not the first time we've
18:58
gone through this type of battle before.
19:01
Yeah, and and we've been. Go ahead.
19:03
Sorry, what are you thinking? I I've been making the case and
19:06
this has been somewhat unpopular.
19:08
I would say 50% of our audience is is positive on this and 50%
19:13
of our audience has been negative on this.
19:15
But I've been making the case that Bitcoin has been living in
19:18
the shadows for a long time. And now it's entering mainstream
19:24
political discourse where, you know, unfortunately, a lot of
19:28
people don't like politics. But I believe that this election
19:32
coming up will have an impact. And, you know, you were saying
19:39
it earlier, right? And we've been covering this
19:41
tremendously with Nick Carter's done incredible work.
19:44
Caitlin Long's done great work as well.
19:48
You know, Trump is saying, you know, you know, mine, what is
19:51
it? Mine baby mine right.
19:53
And you know, at the end of the Bitcoin speech, he says have fun
19:57
with your bitcoins. He's having Bitcoin miners at
20:02
Mar a Lago and the other party, to put it nicely, Let's just say
20:07
you know, they have some little press releases here and there
20:10
with some vague language, but you know, it's it's not very it
20:15
doesn't come from a place of confidence from my perspective
20:18
given. The regulatory record over the
20:21
last 3 1/2 years, metaphorically hitting us with a three by four.
20:26
So Adam, to you, I guess the question is, you know, what is
20:34
your take on that? Because that is something that
20:36
has been quite divisive for our audience a little bit in the
20:41
sense that that this election does matter.
20:44
I, I come from that perspective. Opti comes from that
20:47
perspective. What's your take?
20:50
I think long term this election doesn't matter, but if you're
20:53
focused on what Bitcoin's going to do over the next eight years,
20:57
I think if they push, if Democrats are elected, it does
21:00
push us back, you know, four years in terms of where
21:03
Bitcoin's going to go. So it's going to slow the growth
21:06
trajectory. But I think over the long term,
21:09
I don't think it necessarily is a major hindrance, especially on
21:13
the time horizon that I think about Bitcoin.
21:16
But I also think, you know, if Republicans are elected in this
21:19
upcoming cycle, I think it could be a huge net positive for
21:22
Bitcoin in the United States. So long term, I don't think it
21:26
matters. Short term, it definitely
21:28
matters. And it could affect, you know,
21:30
the next four years could affect Bitcoin for the next eight years
21:33
or 12 years. You said something really
21:36
interesting, which is I completely agree, right, Like
21:38
Bitcoin. You know Bitcoin's a honey
21:40
badger, right? Bitcoin doesn't need any
21:42
politician. I would make the argument
21:43
politicians need Bitcoin right to get elected.
21:47
My, my my question to you is so if it stopped, let's say it
21:55
hinders the industry in the United States.
21:58
Does that mean that there is a risk that the industry goes to
22:03
other countries, other jurisdictions that are
22:06
potentially more favorable to the to the to Bitcoin mining and
22:10
are Bitcoin and is core scientific prepared to go to
22:15
more favorable jurisdictions depending on the regulatory
22:18
environment? Yeah.
22:21
I mean, we have to be, right. I mean, we have a lot of very
22:25
early Bitcoiners that work for Core Scientific.
22:27
They know exactly. They've seen the entire, you
22:30
know, thesis kind of play out multiple times.
22:32
So from our perspective, you know, if Bitcoin becomes more
22:36
challenged in the United States, which frankly, we've already
22:39
seen it be more challenged in the past 3 1/2 years, we've seen
22:41
it be more challenged not only due to whoever is in office, but
22:48
just broad regulatory policy across certain states have
22:51
really clamped down on Bitcoin mining.
22:54
And so this is something where it kind of fits into my longer
22:57
term thesis on Bitcoin mining profitability.
23:00
Regardless of the fact of, of regulations, really from a
23:03
profitability standpoint, you have to be looking
23:05
internationally, you have to be looking at smaller sites because
23:09
you're going to achieve economies of scale, not
23:10
necessarily on the size of a single site, but on how you
23:13
operate lots of smaller sites. And that's really going to be
23:17
what's necessary to be profitable in Bitcoin long term,
23:20
in Bitcoin mining long term is you're going to have to find
23:23
these small pockets of energy that are profitable.
23:26
And so regardless of regulatory policy, regardless of who's in
23:28
office, the decentralization of Bitcoin mining is already
23:31
occurring and it's occurring much more rapidly than people
23:34
realize because everyone wants to talk about mega sites that
23:37
some of the publicly traded mining companies own.
23:40
The mega sites don't really matter that much.
23:42
It's all of these this this proliferation of smaller sites
23:46
across the globe where people are going to find long term
23:48
profitability. That, that's really, that's
23:51
really great to hear. I think it was Bob Burnett that
23:54
made a great report. And he calls them the bigger
23:57
sites, the elephants, the smaller sites the, the horses,
24:00
and then the even smaller sites the, the rabbits.
24:04
And he's basically making the case that look, it's, it's a lot
24:07
easier to catch an elephant than it is to catch a horse than it
24:11
is to catch a rabbit from a regulatory perspective.
24:14
But this is the first time I've, I've heard from a public miner
24:18
executive that you are bullish on horses essentially these
24:23
perhaps these not large mega scale mining operations, but
24:27
smaller scale, but you're going towards these isolated energy
24:32
pockets all around the world to take advantage of that cheap
24:35
electricity. I, I, I, I didn't know that,
24:38
that, that, that is something. But what about the economies of,
24:41
of scale, Adam? Because the, it, it, it's quite
24:43
expensive to deploy a site, right?
24:45
So what is the threshold that you're looking like?
24:49
What is the minimum electrical threshold capacity for these
24:53
smaller scale sites? Yeah.
24:55
So something interesting. We, we operate at 8 facilities
24:57
across 5 states. You don't necessarily find
25:02
significant economies of scale. Where you find economies of
25:04
scale is being able to manage a large number of sites versus
25:09
managing a single site. And so from our perspective,
25:14
it's much easier to have a lot of sites where you can actually,
25:18
it's actually cheaper to run from an operational perspective
25:21
a lot of smaller sites. And so on a long term basis,
25:26
even though upfront cost might be a little bit more expensive
25:28
and I'm not saying that they always are because in certain
25:30
situations it's much cheaper to build a smaller site, but on an
25:33
ongoing basis, you're actually seeing operational efficiencies
25:36
occur at smaller sites, not at larger sites.
25:39
Interesting, fascinating. All right, ladies and gentlemen,
25:41
we're going to continue this conversation.
25:43
During the news segment, we're going to talk about all things
25:47
core scientific. There's almost 1000.
25:50
There's 977 of you guys watching live.
25:53
If you guys are enjoying the show, make sure to smash the
25:55
like button. If you're watching us on
25:57
YouTube, Rumble X Noster and of course, share this video.
26:01
Get the orange signal out there, guys.
26:03
We'll be right back. We're going to hit the news and
26:05
talk to Adam about core scientific.
26:07
We'll be right back. Very special shout out to our
26:11
sponsor Compass Mining. They make Bitcoin mining
26:15
accessible to everyone from beginners to experienced
26:19
investors. Their turnkey miners gets you
26:22
online and hashing within 48 hours, making it easier than
26:26
ever to start your mining journey.
26:29
Plus, with their active marketplace, you can resell your
26:32
miner at any time, adding flexibility and value to your
26:36
investment. Visit their website to access a
26:39
wealth of resources, learning everything you need to know
26:42
about Bitcoin mining. Take your first step into the
26:46
world of Bitcoin mining with confidence.
26:48
Discover more at Compass Mining dot IO.
26:51
Again, Compass mining dot IO and see how Compass Mining can power
26:57
your success. I want to give a shout out to
27:07
our sponsor foundation. It's self custody done right.
27:10
They've built a premium grade hardware wallet called Passport
27:14
right here in the US, and it integrates seamlessly with their
27:17
free app called Envoy. Passport is fully open source
27:22
and verifiable. It's the most intuitive Bitcoin
27:24
wallet design with a UX reminiscent of a classic feature
27:28
phone, so you'll know how to navigate it and use it the
27:31
moment you pick it up. It's also air gapped, meaning
27:34
Bitcoin stays offline, never touching an Internet connection.
27:38
It's Bitcoin only open source, verifiable air gap security
27:42
model, gorgeous design. Craft premium grade materials.
27:45
Get your Bitcoin off exchanges and into your own hands in just
27:49
a few minutes with Passport at foundation dot XYZ slash.
27:53
Simply get Peace of Mind for your piece of Bitcoin,
27:58
everybody. Before we continue the
27:59
conversation, Opti is going to model for you guys the passport
28:03
by foundation devices. It doesn't come with Opti if you
28:06
use the promo code, but it's incredibly easy to use.
28:09
This is the perfect gift to give to someone that perhaps is
28:12
hesitant with self custody because passport makes self
28:15
custody not only convenient, but it also gives you all the
28:18
benefits of cold storage. It's incredibly easy to use,
28:22
it's intuitive, You can pair it up with the Envoy app, use promo
28:25
code simply to get a discount. Again, it doesn't come with
28:28
Opti, but you will get yourself a nice hardware wallet.
28:32
All right everybody, let's continue the conversation.
28:34
Let's talk about core scientific.
28:36
Let's take advantage of the fact that we have the CEO of core
28:39
scientific joining us today. Adam, what is core insight?
28:42
What is core scientific? What makes you guys different
28:45
than all the other publicly traded Bitcoin mining companies?
28:49
Why should you know? Stock investors look at core
28:53
scientific stock. What should they value?
28:55
What's your pitch? We're the first institutional
28:58
Bitcoin miner in North America, started the company back in
29:01
2017. We currently operate the largest
29:04
operational infrastructure fleet of of eight sites across 5
29:09
states, currently operate about 800 megawatts and that's enabled
29:12
us to be the largest publicly traded Bitcoin miner for the
29:15
past three years. We've recently announced a few
29:19
deals on the artificial intelligence side for high
29:22
performance computing as well. We'll be converting some of our
29:25
sites to high performance computing and some of that's
29:28
related to the fact that Bitcoin mining is becoming more
29:32
challenged in North America. And we have an opportunity to
29:35
centralized and create a much more profitable Bitcoin mining
29:38
business in North America via this shift to high performance
29:41
computing for certain facilities.
29:44
That's awesome. And, and, and let's talk a
29:46
little bit about AI, right? So you can make the like, aren't
29:51
ASICS supposed to just be ASICS? Or are you taking advantage of
29:57
the fact that the infrastructure is already there and you're just
30:00
basically switching out ASICS to, I'm assuming GPU's?
30:06
Yeah. So we're actually popular rises
30:09
about core. We were one of the largest
30:11
toasters of GPUs from 2019 to 2022 because we also hosted some
30:16
of the largest Ethereum miners in North America.
30:20
And so we do have significant experience in hosting GPUs.
30:25
And if it is a significant and expensive process to go through
30:28
for converting facilities. But if you look at our
30:31
facilities, they don't look like the facilities that most Bitcoin
30:33
miners run. And that's because when we were
30:35
the first institutional Bitcoin miner in North America, we built
30:39
what looked like more traditional data centers and we
30:42
essentially created them to be, I would say, much more flexible
30:48
in terms of what they could operate.
30:50
Obviously, we've publicly announced that it costs like 5
30:52
to 8 million to per MW to convert a facility to hosting
30:57
high performance computing. But you know, our facilities are
31:01
are best in class. And that's the reason why we
31:03
maintain higher efficiencies than other Bitcoin miners.
31:06
It's because we build the best facilities in the industry.
31:09
Gotcha, gotcha. Man, that that's fascinating.
31:11
I'm just looking at some of the pictures showing the audience
31:14
right now. I mean, it's I, I actually a
31:17
little known fact my so I got into Bitcoin in 2016 and I got
31:22
into the industry through mining.
31:24
I didn't get into the industry through media.
31:27
I got transitioned to media in in 2019, bane of my existence.
31:30
I wish I stuck it out, but 2018 was was a little bit brutal, a
31:35
little did I know? But yeah, so I remember and I
31:40
think every Bitcoin miner goes through this.
31:42
I ended up, you know, having that one room in the house that
31:46
was excessively loud, excessively hot.
31:48
And I built holes in the wall and, you know, put little like
31:52
vents so that, you know, the, and it was the, the, the machine
31:55
of the, the, of the era back then was the of course, the,
31:58
the, the famous S 9. And just, you know, it turned,
32:03
it turned one of the, the back rooms into like a little mining
32:07
thing. Then of course the power goes
32:09
up. And then you, you know, you have
32:11
to, you figure out how to scale from there.
32:12
But compared to what you guys have, you know, mine look like a
32:17
disaster. So these are, these are
32:19
beautifully, you know, beautifully built there.
32:22
I don't see any wires whatsoever.
32:25
Whoever you have for cable management is a guru because I
32:30
don't see any wires there. So this is this is very, very
32:33
nice. Well, let's see that is the out
32:37
or that's the the hot aisle. So the hot aisle, all the wires
32:39
are in the cold aisle. Yeah, but I'm sure that even the
32:42
wires in the cold aisle are are are, you know, they have the
32:44
little zip ties and you know. You take a bunch of data center
32:48
people who build, you know, it's like cable porn, I think they
32:52
call it. Where on my credit, like all of
32:55
those guys are really into ensuring that all of our
32:58
facilities look like they would be, you know, up to data center
33:02
quality. So that's a huge, huge shout out
33:04
to our team. They've done an exceptional job
33:06
of making our facilities look amazing.
33:08
You know, and and and it really, really looks like it as well.
33:12
So a question for you, Adam. Bitcoin mining is frequently
33:17
under scrutiny for its energy consumption.
33:19
Can you share how Core Scientific is approaching the
33:21
integration of renewable energy into its operations, and whether
33:25
you see the Bitcoin mining industry leading or lie or
33:27
lagging in the global push towards sustainability?
33:31
Bitcoin miners represent the main reason why renewables can
33:36
come online in many jurisdictions.
33:38
Most renewables are not profitable and often times
33:42
renewables are located in areas that are not on major
33:46
transmission lines and people have a hard time bringing that
33:49
power to major metropolitan areas.
33:51
It's the nature of the fact that Land's cheaper.
33:52
You need a lot of lot of land for either solar or wind.
33:56
And so when I would say probably one of the worst things that we
34:00
are bad at in the United States is regulation around
34:04
transmission lines. And so you can take, we have one
34:07
cruise line in Texas that's essentially our main
34:10
transmission line. There's been no transmission
34:13
line even though it's been trying to be permitted for the
34:16
past 20 years, taking power from the Moses Saunders Dam up in the
34:21
top part of New York State down to New York City, which which
34:24
significantly lower power prices.
34:26
You can find these examples all across the United States where
34:29
we are atrocious of building transmission lines.
34:31
And so that creates a huge vacuum of where it's cheapest to
34:36
actually create power, generate power and where the power is
34:39
needed. And so Bitcoin miners represent
34:42
the opportunity to bring renewables online locations that
34:45
otherwise would be unprofitable. Well, we go through the process
34:48
of building transmission lines to actually start bringing power
34:50
to the major metropolitan areas. Now, of course, scientific,
34:54
we're all on grid mining, so we have no behind the meter
34:57
opportunities. But in locations, we generally
35:01
choose locations where or I'd say we choose locations where
35:04
there's low cost, abundant power and that's usually created due
35:08
to excess renewables on grid. And so we're located in states
35:12
where there are higher than average, generally speaking,
35:15
higher than average renewables on the local grid.
35:19
Gotcha. And that leads me to perfect
35:21
segue to my next question, which is what are some of the biggest
35:25
misconceptions about Bitcoin mining that you think the
35:27
general public still holds and how does core scientific work to
35:32
address these concerns? Are these misconceptions better
35:35
said? I would say we spend a lot of
35:37
time on the local level, not only with local politicians but
35:42
in the community, because most people don't really understand
35:47
Bitcoin mining and what what we're doing.
35:50
They think it's a facility with no people inside that is just
35:53
running machines. And in fact, that's not true at
35:56
all. We have a lot of employees at
35:59
all of our facilities. We have a career development
36:01
program where people understand their growth trajectory.
36:04
Most of our site leads actually started as temps in our
36:08
facilities, made their way to data center technicians, worked
36:10
their way up to site leads and site managers, and then we've
36:13
actually brought people from the sites into corporate roles as
36:16
well. So many corporate roles are
36:18
fulfilled through the site level employees.
36:22
And so that's something that we're really proud of.
36:23
And I think a lot of people don't really understand how much
36:26
technical training is needed to operate a Bitcoin mining
36:29
facility. I think the other part is
36:30
related to the power. And they think, you know, we
36:32
just consume power and we're the reason why power shuts off when
36:36
demand gets really high. But that's not true at all.
36:40
In all of the locations that we operate in, we participate in
36:42
programs that we turn off when the grid needs us to turn off.
36:47
It's not just Texas. With Texas are most people are
36:49
familiar with, you know, people trading around power.
36:53
You know, many other folks have spoken frequently about their
36:56
power trading strategies in the state of Texas.
37:00
But in other locations we turn off when power costs or power
37:04
demand exceeds supply. And so that's something where
37:08
we're actually a lever that acts like a battery on the grid.
37:12
Many people utilize this analogy, but in reality, we're
37:15
just the, the grid doesn't care whether it is demand coming down
37:19
or supply going up. And so when power is in high
37:23
demand, when we pull off the grid, we represent a major
37:27
contributor to power being available to every every person
37:31
in the community that most people don't recognize how big
37:35
of a deal that is because our smallest facility is 100
37:38
megawatts, that's about 40,000 homes.
37:41
And so that means when we turn off, we supply enough power to
37:44
power about 40,000 watts and. And, and, and it's, it's like
37:50
it's, it's, it's obvious if you're in Bitcoin.
37:55
I think the other conception, which is like Bitcoin uses a lot
38:00
of energy. The misconception is what energy
38:02
is Bitcoin using? Like that's a very important
38:06
question which they conveniently leave out for some reason, even
38:09
though we've informed them in 100 different ways.
38:12
But but yeah, I think that the more the public, did you hear
38:17
the news by the way of of that town in Norway that banned
38:20
Bitcoin mining and then their their power bill increased by
38:23
like 27%. Yeah, I saw that.
38:26
Yeah, that happens. I mean, like a great example is
38:31
in one of our locations, we came into a location that was an old
38:35
industrial area and they had old transmission lines and the old
38:39
transmission lines didn't work for us.
38:40
And so we actually paid to upgrade the transmission lines.
38:43
And then we became the one of the largest taxpayers due to the
38:46
amount of power that we are drawing, which allowed them to
38:48
upgrade the rest of their electrical infrastructure in the
38:50
town, which actually lowered the power cost and increased up time
38:54
for all of the homes in the community.
38:57
And so that's like a perfect example of how Bitcoin miners
39:00
actually contribute to the local community outside of, you know,
39:04
all of the acts that many of the Bitcoin miners are doing today,
39:07
being actively involved, bringing new salaries into the
39:09
community, high paying jobs, training, you know, we can
39:14
actually, we're actually a net positive for many of the grids
39:16
that we enter into from a power price perspective.
39:20
Absolutely, 100%. So this leads me to my next
39:23
question. Looking at the future of Bitcoin
39:25
mining, what new technologies or innovations are you most excited
39:28
about that could drastically improve mining efficiency and
39:31
profitability? I would say it's probably
39:37
smaller mobile deployed sites. I think it's something that
39:41
people have been trying to attack in the industry for many
39:44
years and we've kind of been atrocious at it.
39:47
Not core scientific, but us as an industry.
39:50
And I think being able to tap into power that might only be
39:53
available for two years or four years is actually something that
39:57
is going to be a major contributor to global network
40:00
hash rate in the future. I think it's something that
40:03
we've been, I would say we've been much bigger on building
40:07
these big monolithic sites. But in the future, there's going
40:10
to be a lot more mobile deployments and it's going to be
40:14
much cheaper to do those, especially as we get much better
40:18
at. Changing form factor of these
40:21
machines because right now we're designing facilities around shoe
40:25
boxes and that's the way the industry's been dating back to,
40:28
you know, the 1st S1. And so as we look forward and as
40:33
we start to move towards this more of a hash board style
40:37
deployment, I think that's something that's actually going
40:40
to radically change the industry because it's much easier to
40:43
deploy hash boards. They travel much better, they
40:46
travel much safer with less damage.
40:49
And so that's something where I believe we'll be actually be
40:52
able to generate a lot of hash rate out of mobile deployments
40:56
that are temporarily set up that can move very quickly as the as
41:01
power markets and as Bitcoin prices adjust.
41:04
Gotcha. So this leads me to my second to
41:08
last question. But before we get to it guys,
41:10
there is 1200 of you guys watching live right now.
41:13
If you guys are enjoying the show, make sure to smash that
41:16
like button. Consider sharing the video to
41:18
get the message out there. If you guys are just tuning in,
41:21
we are here with Adam Sullivan, the CEO of Core Scientific and
41:25
we've just been talking about Core Scientific for the last 30
41:28
minutes or so. So last two questions, Adam.
41:31
First, we have been in a little bit of a mining bear market,
41:35
specifically after the halving, you know, the rewards got cut in
41:38
half and the price has been chopping sideways.
41:44
You know, 58K gang forever I guess.
41:47
And what has Core Scientific been doing to navigate this
41:53
pretty hostile mining environment?
41:58
Yeah. I mean, let's talk about that,
42:00
right. Q1 we had 9.2 cent hash price.
42:05
Hash price is essentially the dollar denominated revenue per
42:11
Terra hash that you generate out of your facility.
42:13
And so for us the 9.2 cent hash price was representative of a
42:19
very strong market today in QO and our and now we're in Q4 I
42:24
guess for three days in Q4, but in Q3 you know that was low 4
42:29
cent hash price. So it was more than halved in
42:32
terms of the profitability on a per tear hash basis.
42:36
And so very challenging environment for us that's that's
42:39
meant greater intermittency at many of our facilities, meaning
42:43
we turn off at much lower power prices than we did in the past.
42:48
And then also we've been going through this shift in our
42:51
infrastructure base. There's actually been locating
42:53
machines at much cheaper power cost sites.
42:56
And that's because half price and hash are in economics right
43:00
now for Bitcoin mining are very challenged.
43:02
I mean, look across the industry Q2 for numbers for publicly
43:07
traded mining companies. Most had negative gross margins,
43:10
which means that Q 3 is going to be even worse.
43:13
And so I think, you know, we're in a market today where if
43:17
Bitcoin price doesn't continue to perform the way it's done in
43:20
previous halvings, many publicly traded mining companies, many
43:24
miners across the world are going to feel the pressure to
43:27
start turning off facilities. They're going to run out of cash
43:30
on balance sheet. And we know that some miners are
43:32
mining on economically right now, but that doesn't last
43:34
forever. And if you can't afford the next
43:37
refresh cycle, you're out of the Bitcoin mining game.
43:40
And so that's something where we saw that actually occur.
43:43
You know, looking back to 2018, we saw this occur.
43:47
Many sites shut down, never turned back on.
43:49
And if half price continues to trend lower, I actually think
43:53
we're going to be in that environment much sooner than
43:54
people think for many sites, not only in the United States, but
43:57
globally. And so unless people can afford
44:00
to upgrade to the newest machines that have a much lower
44:02
break even hash price, I think we're going to see a lot of
44:05
facilities start to shut off starting at the end of this
44:08
year. Do you, do you think that people
44:10
got ahead of it, ahead of themselves because the hash rate
44:12
like continues to go just parabolic to the moon despite
44:18
the having, despite the very, very, you know, let's just say
44:24
not a very great environment to mine right now profitably.
44:31
Why, why does the hash rate continue to go up?
44:33
Do you think that's just people anticipating for, you know, if,
44:39
if Bitcoin follows its previous cycles, it's expected to perform
44:42
very well, very well in 2025? Are people just making bets?
44:50
I think it's mainly driven by the fact that people are
44:52
replacing J Pros at 100 Tera hash with newest 20 ones that
44:56
are 200 Tera hash. And so you're doubling,
44:58
effectively doubling the amount of hash rate for the same amount
45:01
of power draw and that's driving a lot of this growth in the
45:06
total network cash rate. I think the other part is too,
45:09
we're seeing a lot more facilities come online across
45:12
the globe and some large ones in places like Russia and China and
45:16
that's also driving up network cash rate.
45:18
And so I think this is going to be a global phenomenon.
45:21
We're going to continue to see half price trend lower and
45:26
that's the nature of the industry.
45:28
Like if you look back, hash price used to be much, much
45:30
higher, but the break even hash price for a machine at a higher
45:33
efficiency, I should say really a lower efficiency, but a higher
45:37
number, you know, that is essentially similar to gross
45:40
margins. And as hash price starts to turn
45:43
lower and as your break even hash price also starts to trend
45:45
lower, you're generating a similar amount of gross margin.
45:48
But soon we're going to be at a point where a lot of the network
45:52
in terms of what's online today is, I would call it XPS are
45:57
worse and XPS are even being challenged in certain economic
46:01
or in certain power price environments.
46:04
And so I think this is actually a massive challenge for the
46:07
industry. If Bitcoin price doesn't react
46:09
positively coming up in the next really like 6 to 12 months is
46:14
you're going to see a lot more miners be much more uneconomic
46:17
than I think many people expected.
46:19
Do you like an an Afghan of where we're heading into
46:22
speculative territory? But you know, after all, we are
46:25
an entertainment. When do you anticipate the
46:30
Bitcoin bull market for miners to come back?
46:35
I know that I don't know if you can answer that question as the
46:38
CEO of a publicly traded Bitcoin mining company, but you know our
46:42
our viewers would love to know if you if you could answer it.
46:46
As I I don't know where Bitcoin price is going and I don't
46:50
really check it that often, mainly because if I did I
46:53
probably would have gone crazy like 8 years ago.
46:58
I know how I felt in 2018 watching my net worth slowly
47:03
dwindle away, but I was fine. So it's looking forward to the
47:08
next. You know, I would say 3 1/2
47:11
years until we get to the next having Bitcoin price has to
47:14
perform in order for many Bitcoin miners to be profitable.
47:18
Otherwise we're going to see a lot of them tread water and
47:23
probably a lot more bankruptcies, a lot more
47:25
facility level sales. You know, a lot of people in
47:28
North America are going to try to sell out to data center
47:31
businesses just for their available power capacity.
47:34
It's going to drive further centralization on the network
47:37
and I think it's going to force a lot more people to find
47:40
smaller facilities that have power prices that are more
47:43
defensible, that are very, very cheap.
47:46
And you're going to see greater intermittency.
47:48
So I think you're going to see a lot more hash price volatility.
47:50
And that's going to be driven by the fact that people are going
47:53
to be going to locations where they might only be online 40 or
47:57
50% of the time. And so that's going to cause a
48:00
significant amount of volatility on on the hash price and it's
48:03
going to cause a significant amount of volatility of
48:06
difficulty. I think if we start to see a lot
48:10
of hash rate or a lot of hash rate turning off for extended
48:13
periods of time. Gotcha.
48:16
So last question for you, Adam, before we transition to AV
48:19
culture segment, what are the plans for Core Scientific for
48:24
the next 5 years? You have anything coming down
48:27
the pipeline? I know you were talking about
48:29
focusing on smaller scale sites, you are focusing on AI, but
48:34
anything that you can reveal to the 1300 people watching right
48:39
now? Yeah, it's a shift in form
48:41
factor. I think that's the big, that's
48:43
the big plan for on the Bitcoin mining side of our business
48:47
right now. We've been in an environment, I
48:49
talked about this earlier, but we've been in an environment
48:51
where we've designed facilities around shoe boxes and that's a
48:54
really challenged environment to be in.
48:57
Looking forward, we signed the deal with Block for 15X hash of
49:00
chips. This is going to represent a
49:02
major shift in Bitcoin mining going forward.
49:05
The shift towards developing your own hash boards and be able
49:08
to just replace hash boards in a facility versus the entire
49:12
shoebox of fans, control boards, etcetera.
49:15
All of those things are a significant amount of CapEx
49:19
dollars that have to be deployed every single year.
49:21
When we shift to hash boards, this is going to represent
49:24
lowering the amount of CapEx we have to spend to be able to
49:27
maintain a certain percentage of the network.
49:30
And so this is something that I think we're really, you know,
49:33
core scientific, we're really excited about.
49:35
Our research development team is extraordinarily excited about
49:38
this potential shift. Our finance team is excited
49:40
about lowering the amount of cap X dollars to just refresh
49:43
machines. And I think this is going to be
49:46
a market where we're going to see a lot of fast followers come
49:48
behind us as part of this broader shift in the entirety of
49:52
the Bitcoin network. Awesome, awesome, ladies and
49:56
gentlemen, Adam Sullivan from Core Scientific.
49:58
If you guys want to find out more, check out
50:00
corescientific.com. And of course, if you're
50:03
interested in investing, the ticker is CORZ.
50:08
Again, you can find it on NASDAQ CORZ.
50:11
Stay tuned for the culture segment.
50:13
We're going to talk to Adam about the bid acts.
50:15
So stay tuned, ladies and gentlemen, we will be right
50:18
back. Here we go
50:32
buddy. I do want to give a shout out to
50:34
our sponsor. Of course, I'm talking about the
50:35
orange pull up Stack friends who Stacks stats join the 12,233
50:40
Bitcoiners that are currently on the app.
50:42
The orange pull up is the number one Bitcoin social layer.
50:46
So if you're travelling to a new city, you have a really clever
50:49
geographical feature and it'll allow you to send messages and
50:53
DMS to bitcoiners that are around you.
50:55
So if you're going to a conference, perhaps the
50:57
conference is only two days, but you're there in the city for a
51:00
week, the orange pull up is for you.
51:02
It's also one of the best ways to reach me directly.
51:04
Don't really answer Twitter DMS these days or emails, but you
51:07
can send me a message on the orange pull up and I'll make
51:09
sure to get back to each and every single one of you guys.
51:13
Download it today by scanning the QR code or checking the link
51:16
in the video slash podcast description.
51:19
Anyways, I this is the culture and we do have Adam Sullivan on
51:23
O'Sullivan on the show. Adam, what do you think about
51:26
the bid ax Man I? Think it's great.
51:29
I think it represents something that's actually more interesting
51:33
that people don't think about, which is in the future if you
51:36
want to produce heat, utilizing Bitcoin miners is actually
51:40
probably one of the most interesting ways to generate
51:43
heat while also, you know, it's obviously consuming additional
51:47
power, but it also represents an opportunity to stack more SAT's.
51:51
So the Bid X is a really interesting opportunity for
51:55
people to do something like that.
51:56
And I've actually chatted with a lot with the big bid X guys.
52:01
I think what they're doing is great.
52:02
I think the longer term question for people is, you know, what is
52:05
the profitability look like if the profitability matters.
52:09
Yeah, and, and I think, and that's a, that's a big question,
52:12
'cause we like, you know, you're not going to make money on this.
52:15
It's, it's kind of like a, it's, it's like a, it's like a, like a
52:18
trinket. Like you're supporting the hash
52:21
rate somewhat. It's also a lottery ticket.
52:25
You are supporting decentralization of the hash
52:27
rate, even if it's on a very small scale.
52:30
But it is, it is, I think it is a very interesting project.
52:34
Now my question to you, Adam, is what's your personal mining
52:38
setup? I don't have one anymore.
52:41
I did. I used to mine in Brooklyn.
52:44
I had 17 cent power. I consumed more power than my
52:47
building in the building next to me.
52:50
I used to have a four foot fire escape window open in the middle
52:54
of the winter and I had to put AI would have to replace the
52:57
towels in front of that window because it was producing so much
53:00
heat. Yeah, after you do it at a large
53:04
scale, your personal setups feel like they're just a little weak.
53:11
Let me ask you something. So $0.17 that's better.
53:13
So when I was doing it at home like in in Miami, it was like 7
53:17
cents. So it wasn't that bad, but still
53:20
obviously not like economical, if you can reveal this, like
53:24
what is like a economical price? Like what?
53:28
What are you searching for? Are you searching for two cents
53:31
per kWh, three cents per kWh, three cents per kWh?
53:34
What is that magic number? Sub four cents with the ability
53:39
to bring that much lower based on intermittency.
53:41
You need to have power programs that you can be turning off
53:45
machines during very difficult times, very difficult half price
53:48
environments and also give you an opportunity to run older
53:52
generation units. And so that intermittency
53:54
component to bring down power price is critical to Bitcoin
53:58
mining facilities. Do you, do you believe the era
54:02
of, of, do you believe the era of individual miners is over?
54:08
Do you believe that it's not because it's like the reality is
54:13
to to set up a site, you know, it's it's out of the economical
54:17
hands of most people, like most people can't, you know, put up a
54:20
quarter $1,000,000 set up a, you know, a semi semi decently sized
54:26
site. Do you think that home, the era
54:29
of home mining is over? That's why I brought up the bid
54:31
acts in the beginning because it made a comeback in a way that
54:35
obviously isn't going to break the bank because before, you
54:38
know, people were making heaters out of S nines and stuff like
54:41
that. But do you believe that the era
54:44
of the home miner, the so-called pleb miner, is over?
54:50
I think we're in a little bit of a wall period right now.
54:54
I think, you know, Jack Dorsey and some other folks have some
54:58
ideas about how to bring or put ASICS on more devices across
55:02
your home. I haven't necessarily seen that
55:05
come to fruition yet. So I think we are definitely in
55:08
a, we're in a dark period for, for home mining at the moment.
55:13
It is very challenging. We're like the dark.
55:16
We're in the dark ages of home mining.
55:18
You know, Renaissance, I mean, I I like and it reminds me because
55:22
in 2018, I wish I stuck around, man, I wish I stuck around.
55:26
But anyways, we are getting to the top of the show, so I do
55:30
want to give an opportunity. Opti, do you have any questions
55:32
for Adam? Well, since we're talking about
55:34
bid X and I, I just saw the chat and so I'm kind of ripping off
55:40
what the chat was saying. And you are coming from Core
55:43
Scientific, one of the biggest public Bitcoin mining facilities
55:46
or companies in the world. What are your thoughts or
55:50
concerns about the centralization of mining?
55:53
Because I know that's all the hype right now on Bitcoin
55:55
Twitter is the centralization concerns.
55:57
And I think this is where the efforts coming out of bit bit
56:00
acts are kind of trying to or also, you know, Jack Dorsey and
56:04
the whole Ocean team trying to push back against the
56:06
centralization of Bitcoin mining.
56:08
So looking out maybe, I don't know, five years from now, what
56:12
are your thoughts on Bitcoin mining becoming centralized?
56:16
It's becoming more decentralized as we speak.
56:18
Economics are forcing that. And So what we're seeing are a
56:22
lot more sites really start to pop up all across the world and
56:28
on a much smaller scale. I mean, that's the reason why we
56:31
think this is a a growth factor for core is that we're seeing
56:38
the most profitable sites actually be smaller sites, 5 MW
56:42
sites, 10 MW sites, 15 MW sites that are located all across the
56:45
world. And they're in these small
56:46
pockets where people aren't necessarily attacking those
56:49
types of miners from a regulatory perspective because
56:51
they represent a small portion of the grid.
56:54
So I actually think economics today are going to drive further
56:58
decentralization. If we go into a massive bull
57:01
market like take 2021 for example, that's what brings in
57:04
these mega sites. That's what brings in massive
57:07
amounts of capital into all sorts of companies.
57:10
I think right now we're actually moving into a much greater
57:14
decentralized network than we've had over the course of the past
57:17
four years. And as we look back, I mean,
57:19
mining has gone through multiple forms of, I'll call it
57:22
centralization, but that's part of Bitcoin.
57:25
It's going to go through these cycles as countries open up to
57:29
Bitcoin mining in a large way. And when the economics allow for
57:33
it to occur, you're going to start to see pockets of
57:35
centralization. But Bitcoin has a habit of
57:40
always finding the paid trade for Bitcoin miners, and that
57:43
flushes out a lot of not only large scale miners, but a lot of
57:47
new capital that's come into the mining space.
57:49
It always has a habit of falling to a point where a lot more
57:53
people have to shut off than you'd expect.
57:55
And we're at that point right now.
57:57
And that's what's driving this further decentralization.
57:59
So bid ax is, yes, they're a great part of the broader
58:02
narrative for driving decentralization, but also
58:06
economics right now are driving decentralization purely because
58:09
a lot of larger scale miners aren't going to be profitable.
58:12
They don't have line of sight to when they're going to be
58:14
profitable and they're going to run out of cash on balance sheet
58:17
to fund negative gross margins. And that's going to be a point
58:21
in time where you're going to see even a further drive to
58:23
decentralization on the network, which is a net positive for for
58:27
the Bitcoin network and for Bitcoin security going forward.
58:31
Beautiful, beautiful. Well Adam, we are getting to the
58:34
top of the hour. There's currently 1500 people
58:37
watching live right now. If you have any final words for
58:40
everybody watching, what would they be?
58:45
Stack more stats, something that you can, you can you will always
58:49
regret in the future. That is, that is my, that's my
58:53
thesis. Wait, wait, wait, wait.
58:57
I could attest to that. Ladies and gentlemen, Adam
58:59
Sullivan, CEO of Core Scientific.
59:01
To find out more, go to corescientific.com today and
59:04
check out the NASDAQ. The NASDAQ ticker is CORZ Coors
59:10
CORZ. Alright everybody, if you guys
59:13
enjoyed the show, make sure to smash that like when it consider
59:15
subscribing if you feel like we provided you value.
59:18
But the number one thing you could do to help push the orange
59:20
signal forward is share this content, get the message out
59:24
there. We'll be back tomorrow at 12:15
59:26
PM Eastern Standard Time time for another episode of Simply
59:28
Bitcoin Live, and stay tuned for Ruston's Simply Bitcoin
59:32
Originals dropping later today. Take care, everybody.
59:37
Code was brought to you by bitcoinwell.com, a Bitcoin only
59:40
platform on a mission to enable financial independence.