#1497 Adam Haynes | Will The Government Mine Bitcoin?!

Adam Haynes is the Founder & CEO of Simple Mining. In this conversation we talk about hash rate, how that affects bitcoin miners, what Simple Mining is, how they built the business, and geopolitical environment around bitcoin. =======================This episode is brought to you by Bitdeer (NASDAQ: BTDR), a global leader in Bitcoin mining and high-performance computing for AI. Led by a seasoned management team, Bitdeer is driving innovation with its proprietary SEALMINER ASICs for Bitcoin mining and has a massive 2.5 GW power portfolio across three continents. Learn more about Bitdeer at www.bitdeer.com=======================Bitwise is one of the largest and fastest-growing crypto asset managers. As of December 31, 2021, the company managed over $1.3 billion across an expanding suite of investment solutions, which include the world's largest crypto index fund and other innovative products spanning Bitcoin, Ethereum, DeFi, and crypto equities. Whether you’re an individual, advisor, or institution, Bitwise provides intelligent access to crypto with your unique circumstances in mind. Visit www.bitwiseinvestments.com to learn more. Certain of the Bitwise investment products may be subject to the extreme risks associated with investing in crypto assets. Visit www.bitwiseinvestments.com/disclosures/ to learn more.=======================BitcoinOS is bringing Bitcoin into a new era. For the first time, Bitcoiners can access real DeFi across the entire crypto ecosystem, powered by revolutionary zero-knowledge technology. No more trusting sketchy bridges or giving up security. BitcoinOS reunites all of crypto around the chain where it all began. Follow BitcoinOS on twitter @BTC_OS and Be early to Bitcoin again.=======================Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on guys? Today we've got a great episode with Adam Haynes. He's the founder and CEO of Simple Mining. In this conversation, we talk about what's going on with hash rate, how that affects the efficiency of these Bitcoin miners, what Simple Mining is, how they built the business, what his background is that led him to actually get into the mining

• 0:44Anthony Pompliano?

  game, and then we talk about the geopolitical concerns around Bitcoin and Bitcoin mining. Which countries are mining Bitcoin, who's holding it, and whether the United States should actually get into the mining game or not. This and much more. If you listen to this entire episode, and so here is my latest conversation with Adam Haines.

• 0:59Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:23Anthony Pompliano?

  Today's episode is brought to you by NASDAQ listed Bitdear. They trade under their stock ticker BTDR. They're led by a seasoned management team. Bitdear is a global leader in Bitcoin mining and high-performance computing for artificial intelligence, and they are backed by technological innovation and a massive 2.5 gigawatt global power portfolio. Recently, Bitdear launched its own Bitcoin mining ASIC named the Seal Miner to target what Wall Street analysts project to be a multi-billion dollar annual market. Their proprietary Seal Miner ASICs are redefining efficiency and performance, and they are backed by the industry's most advanced chip roadmap, with two more groundbreaking models set to launch in 2025. To learn more about Bitdear's cutting-edge technology and business, visit their website at bitdeer.com. That's B-I-T-D-E-E-R.com. Go check out Bitdear today.

• 2:13Anthony Pompliano?

  It's no secret that Bitcoin ETFs have taken Wall Street by storm. With over $35 billion in assets in just one year, it's become the most successful ETF launch in history. My partner Bitwise is the first and only Bitcoin ETF provider to openly publish its Bitcoin wallet addresses, allowing anyone to verify the fund's holdings. I believe this level of transparency is exactly the kind of innovation that only crypto makes possible. Bitwise is also the only ETF issuer that is a crypto specialist asset manager, meaning their team solely focuses on Bitcoin, and they have the research, education, and support to help investors navigate the space with confidence. All of that is great, but what I love most about Bitwise is probably their commitment to developers. Bitwise donates 10% of their ETF's profits to Bitcoin open-source developers.

• 2:58Anthony Pompliano?

  Bitcoin developers are the unsung heroes, working tirelessly to maintain, improve, and innovate the blockchain. Their efforts ensure that Bitcoin remains true to its promise as a decentralized system that is built to last. Go to bitwisepomp.com to learn more about their ETF and other services. Once again, that's bitwisepomp.com. Bitwise, P-O-M-P dot com. As always, remember investing is risky and carefully consider the extreme risks associated with crypto before you invest. Today's episode is brought to you by Bitcoin OS. Bitcoin OS is the ultimate upgrade to Bitcoin. Bitcoiners can now experience the magic of the entire crypto world, including DeFi, scalability, privacy, and more. But you don't have to give up control of your hard-earned sats.

• 3:43Anthony Pompliano?

  Bitcoin OS is powered by revolutionary, zero-knowledge technology, and they let other blockchains plug into Bitcoin, offering their service to the world's largest digital asset. This lets Bitcoin holders securely move their coins across the crypto landscape, turning Bitcoin into a productive, programmable asset. Putting your Bitcoin to work once meant trusting centralized companies and bridges to protect your assets, a model that's lost crypto owners billions to hacks and fraud. Bitcoin OS lets you be your own BOS, using a system based on cryptography rather than trust, the way Satoshi intended. Using Bitcoin OS, altcoins are returning home, eager to plug into Bitcoin's security, network effects, and $2 trillion capital base. Bitcoin is the first and final BOS of all digital assets and will soon be reborn as the foundation of the united crypto world.

• 4:28Anthony Pompliano?

  Follow Bitcoin OS on Twitter, @BTC underscore OS. Again, that's @BTC underscore OS, and be early to Bitcoin again.

• 4:39Speaker 02

  All right, Adam, I thought a great place to start the conversation is hash rate has been exploding higher. Bitcoin's price has been going higher and miners seem to be investing very heavily in growing their kind of portion of the network. But we know that Bitcoin tends to be very volatile. And so it's kind of this big buildup in a bull market. There's usually some sort of crash during that crash miners have to shut off machines. Some miners go out of business. It's kind of this game that gets played over and over and over again. What is different? Maybe as you guys look at it, are miners being a little bit more cautious? Is hash rate or price having a different impact? How do you see where we are right now in Bitcoin's life cycle that may be different than past cycles?

• 5:20Speaker 03

  Yeah, I think that this is, you know, certainly like any other business, this is a this is a hard business. If you looked, you know, back in the last few years, we saw lots of bankruptcies, lots of companies taking out significant leverage, getting over leveraged and, you know, getting totally wiped out with the drawdown. So I think you're seeing, you know, a little bit more intelligent investment. Certainly, everybody's continuing to look for the lowest power cost. But I think everybody, you know, like you and I know, that in the long term, we're very bullish about Bitcoin. And, you know, hash rate has continued to kind of prove that, you know, the market is very long term bullish on Bitcoin. So continuing to make a little bit, you know,

• 6:05Speaker 03

  more strategic investments in lower cost of energy, long term, you know, maybe being a little bit more careful with debt and leverage, I think is a, you know, it's something that we're seeing going on currently.

• 6:18Speaker 02

  And talk to me about, you guys are in the business of selling mining equipment. You guys repair mining equipment. One of the things that I've always thought was pretty interesting is there's kind of the depreciation from an accounting perspective. And then there's like the actual, you know, life cycle of this machine machinery. And that has a huge impact on how much should I be buying today? How long is that going to last me? What do you guys see there? Like, how long do these machines actually last for that are being bought today?

• 6:45Speaker 03

  Yeah, yeah. So our business is, you know, Repairs in the sales of, we're kind of a vertically integrated service provider in the Bitcoin mining segment. You know, there's two, two different ways to look at it. You can look at it for the lifespan of a machine from just a physical, is it able to operate? And with our repair, you know, team, we can, we can service a machine and bring anything back to life. You know, and it could run indefinitely. What, what you come down to is the, the economics of, of the machine. And certainly at some point in time, the, you know, the Bitcoin that that machine is producing is not going to cover the electricity expense associated with running it. So there's a certain lifespan there. You know, we've seen generally speaking in the, in the five year range, you know, historically,

• 7:30Speaker 03

  you know, possibly a little bit longer as you're seeing over the last several years, the machines have gotten, you know, much more efficient. Up to, you know, about 12 joules per terahash currently is the most efficient machine on the market today. You know, when we first got started about four years ago, we were in the 35 joules per terahash range. So we've seen a substantial increase in the efficiency of the machines and we're, we're, we're expecting that to be diminishing over time. Just, you know, to continue to, you know, advance at that pace is, is pretty difficult. So there's some people that are expecting that the lifespan could be a little bit longer. But obviously that comes down to the network difficulty and the price of Bitcoin ultimately.

• 8:11Speaker 02

  When you talk to these miners, how much of their machines are having to get repaired versus they just let them run?

• 8:19Speaker 03

  Yeah, it's, um, you know, we have across our facilities, 20,000 machines running several different sites in Iowa. Certainly on a percentage basis, it is a, a low percentage. For the most part, these machines do just run 24/7, 365. However, you know, any computer that's running 24/7 is inevitably going to probably have issues. Now, whether that's a, a small issue like a fan or a power supply failure or a more advanced, you know, chip failure on the actual hash board, where our technicians have to go in and do that advanced micro soldering repair.

• 8:58Speaker 03

  There's a decent amount of repairs that take place and that's why I think the repair side that we bring is such an important value add.

• 9:06Speaker 02

  And you guys are doing this for a lot of the publicly traded miners and private companies as well?

• 9:10Speaker 03

  Yeah, yeah, so we have a repair facility in Cedar Falls, Iowa. We have the capacity to fix several thousand hashboards per month. We work with some of the largest public and private companies across the country. They'll send their machines to us, we'll fix them, we'll test them and then send them back out in addition to doing all of the repairs for our own clients as well.

• 9:31Speaker 02

  Got it. And then there's been a huge push into artificial intelligence and high performance computing. What are you guys seeing there with your customers and is this something where you guys could also help on some of the non Bitcoin mining side or is it just stay focused 100% on Bitcoin?

• 9:46Speaker 03

  Yeah, we're focused on Bitcoin right now. It's my personal opinion that the AI, HPC, high-power compute stuff is a little bit overblown.

• 9:59Speaker 03

  You're looking at the Mag7 companies, the largest companies in the world that are really making heavy investments into this space. And I don't know if there's a true business case at this point in time. Very optimistic about AI long-term. I think that there's going to be an enormous amount of productivity gains and certainly very optimistic about the future of AI. However, I think today, over the course of the next, certainly two, three years, it would be, possibly, we could look back and see this period would be a period of malinvestment where we're just throwing money to see what works and there's no clear revenue or customer

• 10:42Speaker 03

  where that investment is going to make sense.

• 10:47Speaker 02

  And in that world, how do you all evaluate when maybe, okay, hey, it does make sense to do AI-related stuff versus just stick with Bitcoin mining?

• 10:56Speaker 03

  Yeah, I think it'll come down to if we're seeing demand for it, you know, naturally speaking, you are seeing especially across some of the larger public companies. You know, Core Scientific, for example, they have some big contracts with CoreWeave. But that's pretty isolated and you know, there's several other companies that are working in the space. And I think it's, you know, as far as the public image goes and the public companies, you know, they need to do certain things to, you know, maybe from a press release standpoint, or you know, whatever it may be, at least consider those options.

• 11:26Speaker 02

  You think a lot of it is just kind of fluff, that there's not as much reality in the AI stuff?

• 11:30Speaker 03

  Yeah, yeah. Again, I think, I think long term that there, there certainly will be some, some good opportunity there. I think maybe on our side of things, you know, we've seen, you know, no demand, you know, and it's not really something that we're pursuing actively. I think that would potentially change if we, you know, over the long term, somebody contacted said, hey, you know, we have, you know, we have a lot of, you know, GPUs we need to plug in, H100s, and we don't have anywhere we can plug them in at. You know, I think a lot of that demand is being fulfilled currently by, you know, the large public companies and so on and so forth. So maybe not a perfect fit for, for our business. Certainly we'll, we'll, we'll evaluate it. And I think that if, if the market has a demand there over the long term,

• 12:15Speaker 03

  certainly it's something that we would.

• 12:16Speaker 02

  I saw recently that Microsoft was canceling some of their data center contracts, which I thought was pretty interesting. What, you think they just ran out, signed too many of them and realized that maybe they don't need all of them?

• 12:25Speaker 03

  Yeah, well, in, in the AI world, you know, there's, I think we're just in the early innings still. It's kind of, you know, kind of trying to see through the fog. You know, the deep seek thing happened a few weeks ago and, you know, there's still not perfect clarity on maybe exactly how all of that played out. But yeah, you certainly wonder if it could get into a situation where the AI, you know, investment is, you know, in data center, overbuilt. And if it becomes overbuilt, you know, who's going, where, where is the demand going to be from for, for all of that compute power, you know? Certainly, like I said, a lot of these large companies are making investments into their, you know, large language models and so on and so forth. But at the end of the day, where is that demand going to be?

• 13:10Speaker 03

  It's kind of like, you know, if you go back 20, 25 years ago, like there's a cost to do a Google search and that cost has trended towards, you know, basically zero over time. And I think, you know, AI, certainly there's going to be more costs there, especially now, but over time that cost is going to continue to trend towards zero too as well.

• 13:27Speaker 02

  When you look out at the Bitcoin mining kind of landscape, it seems like energy detractors are still loud and being annoying. But ERCOT and other maybe electrical grid providers, they are very much pro Bitcoin mining and they seem to see a value there. If I remember correctly, there's also been a, at least pilot with some of the larger oil and gas companies where they're trying to see, hey, is there something that we should be doing here with this technology? How do you see this all kind of playing out in the incumbent world? Like, you know, there's people who will go set up a native Bitcoin mining facility and they'll say, hey, look, it's purpose-built to mine Bitcoin. We're going to consume power at the lowest cost we possibly can find and we're off to the races.

• 14:11Speaker 02

  But it does feel like to go from, you know, kind of like 101 or 201 class to the upper level, you have to start to interface with the legacy world and kind of get scale. We see Bitcoin do this with Wall Street now with the ETFs and obviously it's been a big boom. Is this, there an equivalent thing like that in Bitcoin mining?

• 14:28Speaker 03

  Yeah, I'd say, you know, as it specifically relates to our facilities, we have, you know, unique curtailment strategies and agreements where during those peak times, we will actually curtail our operations. We can shut down 98% of our load within 120 seconds to help support the grid during maybe the hottest days of the year where everybody's running their air conditioner, coldest days of the year where, you know, everybody's running their heaters, so on and so forth. And I think that those are going to be, especially as it relates to new energy production, renewables such as wind and solar, if the sun's not shining, the wind's not blowing, the energy still has to come from somewhere. You know, they're forecasting capacity constraints in 2028.

• 15:11Speaker 03

  Now fortunately, that won't affect our business because we have, you know, the ability to be reactive and shut down very quickly in those times where, you know, demand is maybe exceeding the capacity for generation. On the AI side, unfortunately, you know, they need that demand all the time because they can't just turn on and off their, you know, AI data facility. So. I think that's only going to become more and more important over time. You know, the, the relationship with the grid operators such as, like you said, ERCOT, MISO, in, in our case, SPP, so on and so forth, where they, the, the closer, the, the closer and better we can be an asset to them to react to these different situations is going to be a, a really, you know, long-term benefit.

• 15:57Speaker 03

  And over the last four years, specifically in Iowa, you know, it's gone from kind of a, a small, you know, niche, unique situation to you have a full-blown industry now. And, you know, we're talking about, you know, hundreds of megawatts across the state of Iowa, let alone in Texas where you're talking gigawatts. So, yeah, I think, I think long-term, those agreements will continue to be very important.

• 16:22Speaker 02

  When you look at the hardware itself, there's been immense amount of innovation on that front. Liquid immersion is obviously this huge, you know, kind of trend that I think it's really becoming the, the default or, or the popular kind of approach. Talk about the hardware and what you guys are seeing there in terms of dropping the cost, but also the sufficiency that you, you mentioned earlier.

• 16:43Speaker 03

  Yeah, yeah. So there's, you know, just like any other technology out there in the world, they're, they're continuing to try and make improvements all the time. Right now, I would say the market is probably, you know, 85% air-cooled, you know, globally. If we were to look, it's cheap, it's easy to do, so on and so forth. We, we are seeing a push towards more hydro. We're actually in the process of building a 50-megawatt hydro facility in Iowa with our partner, Alps Blockchain. We're really excited about that project. I think it's a new technology that possibly will reduce the number of issues. It's a little bit more reliable. You don't have, you know, the dust getting into the hashboards, potentially causing corrosion and those sorts of issues.

• 17:25Speaker 03

  So we could see benefits from the reliability standpoint of the hardware. And then I think that, you know, there's also some other components to it as well, where the, the hydro is also maybe a little bit easier from a, you know, local approval standpoint, because there's a little bit less noise from the hydro as well.

• 17:45Speaker 02

  And hydro, what advantage is there to using that?

• 17:49Speaker 03

  Uh, it's just that it's, it's, it's able to cool the hashboards more directly. And it's a little bit more efficient system. Now there's some, some additional costs and you know, maybe some additional plumbing required to, to do that, but really it's just a, a newer way of doing it where maybe you can get a little bit more efficiency out of the machines.

• 18:10Speaker 02

  So you're not talking about hydro, like the power generation, you're talking about hydro in terms of the actual liquid cooling.

• 18:16Speaker 03

  Exactly. So this, um, uh, like our project that we're working on is a dry, uh, it's a closed loop system. So we have a liquid that goes into a dry cooler. That liquid then passes through, um, each individual machine. That cool liquid gets warmed up from the machines, goes back into the dry cooler. That dry cooler cools the liquid back down, so on and so forth. So yeah, not hydro from a power generation standpoint, but actually a, uh, liquid that is used to cool the individual machines in the containers.

• 18:45Speaker 02

  And how much, uh, or how large can a facility handle, um, you know, with liquid cooling versus, uh, air cooling, you know, if you have 50 megawatts, is it the same number of machines?

• 18:57Speaker 03

  The, the hydro machines are actually a little bit more, um, a little bit higher power capacity. Um, you know, we're seeing them around the five kilowatt range, you know, even a little bit more versus the air cooled machines are traditionally closer to three to three and a half. So you get a little bit more density there. There is a little bit larger footprint required as far as the number of, um, you know, you have to have a cooling tower for, for the dry cooler, so on and so forth. So perhaps a little bit larger, um, real estate footprint. But you know, eh, more or less it's, it's pretty simple.

• 19:28Speaker 02

  And then what about costs, right? If you want to go and do air cooling versus, uh,

• 19:31Speaker 03

  Yeah, traditionally the, the air cooled has been a little bit more, uh, cost effective. Certainly it's, uh, all you have to really worry about is exhaust fans at that point in time. You don't have to worry about any, uh, cooling towers, you know, plumbing equipment, so on and so forth. Um, special liquids used here. Um, so it's, it's potentially a little bit more, um, Cost effective to do the air cool, but we're starting to see the cost come down on the hydro. And we're really excited about the project that we're working on currently.

• 20:00Speaker 02

  Got it. Talk about your business and with simple mining, you guys are hosting.

• 20:05Speaker 03

  Yep.

• 20:05Speaker 02

  You're doing sales of hardware. You do repair of hardware as well?

• 20:09Speaker 03

  Yeah, exactly. Exactly. So we like to think of ourselves as a vertically integrated service provider. We, you know, we're really trying to offer the and make it the easiest place to mine Bitcoin, if you will. So we have clients from all around the world that are, you know, looking to, you know, participate in the service, whether they just want to be a part of the ecosystem or whether they're doing it as a part of a business. You know, there's some unique tax advantages of Bitcoin mining as it relates to depreciation. And, you know, we've lots of different things, but yeah, hosting for clients and then the repairs. And then the sales of the equipment, we carry inventory of machines in stocks. You can go live same day as payment.

• 20:48Speaker 02

  And walk me through the economics, right? So I come and I say, hey, I want to start mining Bitcoin. What does that look like?

• 20:53Speaker 03

  Yeah. So we're really big on, you know, just trying to sell on our service, you know, certainly in the Bitcoin world. As you know, forecasting any sort of return on investment is, is, is difficult. And I think our strategy has been more so we're going to be the, you know, best service provider as it relates to doing this business. So we're going to, you know, have a very high uptime. We're going to provide the repairs. You know, we have the customer service support, you know, so on and so forth to offer the highest level of service possible in this industry.

• 21:26Speaker 02

  Well, just walk me through like if let's say one machine, right? So I want to install one ASIC. How much is that going to cost me? And then how should I think about what I'm getting from a hash rate standpoint?

• 21:38Speaker 03

  Yeah.

• 21:38Speaker 02

  Or anything like that?

• 21:40Speaker 03

  Yeah. So some of the newest machines out there, you know, there's certainly a range, you know, depending if you want the newest, most efficient machine, or possibly if you want to have an older machine that's a little bit less efficient. In the, you know, maybe five to $9,000 range is currently where the pricing is for some of the newer equipment. You know, our operations, we charge between seven and eight cents for hosting, just depending on capacity. And, you know, that value that you're going to get every single day is just going to be a function of where the difficulty is at. And the value of the Bitcoin, obviously, as the price of Bitcoin goes up or down, you're getting a sort of fixed amount on a daily basis, amount of Bitcoin. And then you have your fixed utility cost and then the.

• 22:23Speaker 03

  Thing that varies there is the difficulty adjustment every two weeks, you're going to get a little bit less or a little bit more Bitcoin. And then certainly the value of the price of Bitcoin. So.

• 22:31Speaker 02

  And so what does that look like over the last 12 months or so? You have to, it's impossible to predict what can happen in the future. When you look over the last 12 months, you know, let's say somebody spends $7500 on one of these new machines. What has that looked like in terms of payback periods?

• 22:45Speaker 03

  Yeah, yeah. Historically speaking, and you know, by no means, obviously things are subject to change in the future, but.

• 22:52Speaker 02

  Things change tomorrow.

• 22:53Speaker 03

  Yeah, exactly. Exactly. It's been a while last week.

• 22:56Speaker 02

  Yeah, Chuckie Go announced another strategic reserve.

• 22:58Speaker 03

  Yeah. So, you know, we've had some of our clients that have, you know, returned their investment, you know, quote unquote, within six months. We've also had some that have certainly taken, you know, if they bought the top of the market and then, you know, rode it all the way down. Certainly maybe in the two-year range, you know, so there's certainly a time period there. And, you know, as it relates to even just buying Bitcoin, certainly timing is a, you know, plays a factor in there too as well. I think one thing that, you know, we've seen and we've conducted some surveys across our clients is, you know, the emotions and the, you know, of the market and, you know, even as it relates to buying Bitcoin, because that's a common question that we get asked. Should I buy it? Should I mine it? You know, what's the perfect answer there? And I think, you know, it's certainly not one or the other.

• 23:41Speaker 03

  As it relates to mining, I think mining is a great tool where it's a forced DCA. So you're going to get Bitcoin every single day, no matter what. And there's also other advantages that come along with that, such as the depreciation of the equipment, running it as a business. You still retain that machine as an asset, you know, on your balance sheet. And we have a marketplace where you can sell it at any point in time. And then, you know, what I tell people is if a good buying opportunity presents itself, if you get a nice dip, yeah, buy the dip. But if, as it relates to mining, you know, we've seen and conducted some surveys where a lot of our clients have net-net ended up with quite a bit more Bitcoin than that they otherwise would have had, just because it removes the emotions from having to buy.

• 24:21Speaker 03

  You know, when price dips down, we all know, you know, we should be buying, but it's, it's, it is hard to, you know, pull the trigger. So. I think that's something that's really interesting about mining as well.

• 24:33Speaker 02

  It is the ultimate dollar cost average, right? I think it makes a lot of sense. What are the challenges with running a business like this? Like, obviously, there's hardware, which immediately every software developer is like, I don't know what that means. But talk about some of the challenges.

• 24:47Speaker 03

  Yeah, I think, you know, it's a really fun business.

• 24:51Speaker 03

  There certainly is a lot of challenges, you know, as it relates to having thousands and thousands of machines. You know, we've really, we have a CTO who's been with me since I started my first company in the cellphone repair world. And we have, you know, several other developers on staff, and we've really tried to build out all of our, you know, software and, you know, dashboard and all those other types of features to optimize our operations. And, you know, especially as it relates to serving, you know, you know, retail clients, where if, you know, somebody has one machine and that one machine offline, it's very critical to get that machine back online quickly. So it's a very difficult business when you're looking at thousands of different machines, different repairs that have to happen, different model types,

• 25:36Speaker 03

  you know, agreements with the utility company where we need to power down. But I think that we've really, you know, over the last four years, built everything from scratch to be able to, you know, really optimize our efficiency across our onsite operations, our repairs, and keeping machines up and running.

• 25:54Speaker 02

  And when I think about these businesses, it takes somebody who understands Bitcoin, takes someone who understands software and hardware.

• 26:02Speaker 03

  Yeah.

• 26:02Speaker 02

  It also takes someone who has like emotional control because of the ebb and flow of the market. What is your background?

• 26:10Speaker 03

  Yeah, so I guess going back a ways before simple mining, my first business was cellphone repair. And that was really born out of, in high school, I dropped my phone and broke it at the pool. And my parents, my parents told me, you know, tough luck, you broke it, you have to buy a new one. And I didn't have it, you know, I was in high school, small town Iowa, you know, I grew up a town of a thousand people in Iowa. They said, you know, tough luck, you gotta, you gotta fix it yourself. So I figured out how to fix it and then kind of realized that, you know, maybe there was

• 26:43Speaker 02

  How'd you figure out?

• 26:44Speaker 03

  Ah, just YouTube. Yeah, I just went on YouTube, kind of figured out how to fix it. It fixed my phone and then realized that maybe I could make a business out of this. This is when I was a sophomore in high school. I think I had a lot of this from my dad. My dad was a grocery store manager. My mom was a nurse. And growing up, my dad was always going and buying cars off Craigslist. He'd buy a car off Craigslist, you know, 1930s Chevy for 500 bucks on Craigslist and then parted out and, you know, it'd be me and him in the garage wrapping up old car parts, shipping them to New Zealand. And, you know, he, that's kind of what he did on the side as a side business. And, you know, I had always wanted to do something like that. And, you know, I think the phone thing kind of fell in my lap. So after practice in high school, I would sit on the phone and call all across the country to people on Craigslist,

• 27:28Speaker 03

  having them send their broken iPhone to me, you know, broken iPhone fours for 40 bucks. I'd fix it and then sell it on eBay. So I did that throughout high school. Ended up going to college.

• 27:37Speaker 02

  And how does that work? So you buy their phone for $40, it's broken.

• 27:41Speaker 03

  Yeah.

• 27:42Speaker 02

  You fix it. And then how much were you reselling them for?

• 27:44Speaker 03

  A couple hundred, you know, 200, 250. So parts were, you know, 20, 30 bucks. So pretty, pretty good margins for, you know, business out of my room in high school.

• 27:55Speaker 02

  And you were doing it yourself?

• 27:56Speaker 03

  Yeah, yep, yep, yep. So, you know, kind of did that eBay business fixed and, you know, I'd go to the local McDonald's and, you know, offer to fix people's phones on Craigslist. There wasn't really a lot of repair shops around at that point in time. So it wasn't a crazy business by any means, but it definitely kept me busy for, for a high school student. And, you know, I was able to save up some money and so on and so forth.

• 28:19Speaker 03

  So after high school, I went down to the University of Northern Iowa in Cedar Falls, where our current headquarters is for Simple Mining. I was there. I was, you know, pre-med, I was a computer science, a doctorate lawyer,

• 28:34Speaker 03

  finance and real estate, so on and so forth. And ultimately I

• 28:37Speaker 02

  You did all that?

• 28:37Speaker 03

  Yeah, I was changing my major, you know, four or five times when I got down there. After the, after my freshman year, I moved back home and I worked at a cell phone repair place that was about an hour drive. So I commuted an hour every single day over the summer because that's what I knew how to do. Really enjoyed doing that. And by the end of the summer, the owners at that company wanted me to move to a different city where they're opening a new location. And I was like, no, I gotta stay in school. You know, that's what my parents want me to do. So um ended up going back to school, was there for a short period of time and realized that, you know, um, I wanted to take that job and I wanted to, you know, because I wasn't getting anywhere in school. I was changing my major. I didn't know what I wanted to do. Um, ended up taking that position. The plan was to stay in school. Um, but that

• 29:21Speaker 03

  didn't happen. It was very short-lived. Um, ended up moving to Mankato, Minnesota, uh, to open this location for them. I convinced the owners of the cell phone repair business to let me sleep in the back of the store for free. So I lived rent-free. I slept in the back of that store for about a year. Right when I got up there, I kind of knew that I wanted to do my own business and um, you know, just focused on saving as much money as I could. I, you know, soup and yogurt every single day, uh, lived rent-free. And then um, uh, in 2017, I moved down to Cedar Falls and opened uh, my first cell phone repair location. Um, so that location went well. Uh, we kind of expanded and uh, grew over the next several years. Um, opened uh, another location shortly after and then

• 30:06Speaker 03

  ended up acquiring five additional locations uh, across the state and one down in Kansas City after that. Um, COVID happened and you know, kind of put expansion plans on pause because it was very uncertain times. And uh, one of our employees was actually mining Bitcoin at the time. And I had heard of Bitcoin, but I'd never taken the time to, you know, uh, do a deep dive and, you know, fully understand it. So, you know, uh, like every Bitcoin maxi, you go down the path of reading the Bitcoin standard and, you know, listening to your podcast and, you know, um, just going down that rabbit hole and learning more about it and got very, you know, long-term bullish about Bitcoin and its place in the world and all that good stuff. So then we started looking at how we could possibly, you know,

• 30:49Speaker 03

  uh, create more Bitcoin and that led to mining. Iowa is a really beneficial state to do this business. We have um, you know, about two-thirds of our energy. It's the highest um, state in the country for wind power production from a percentage standpoint. So in Iowa, we have a lot of cornfields and a lot of windmills and that's about it. But a very competitive state to do this business. We started mining with a bunch of GPUs in the back of our store mining Ethereum. Realized that, you know, that wasn't the most efficient way to do this business and started having conversations with our, our local utility company. On how, you know, how we could possibly do this at a more industrial scale. One thing led to another and, you know, we started mining down there in 2021 with 50 machines.

• 31:34Speaker 03

  And that's kind of where, where our journey started.

• 31:36Speaker 02

  What was that conversations like with the utility company?

• 31:39Speaker 03

  Yeah, we, I think we were very fortunate in the beginning. Um, you know, the utility company that we first started working with, I think they're very innovative and forward thinking. You know, certainly there is a lot of utility companies out there. We've had conversations with where. We call them and say Bitcoin and it's click, you know, hang up the phone. They don't want anything to do with it. But that's certainly greatly improving, you know, uh, over the last few years. You're, you're starting to see a lot more. Utilities open to it. We have great, you know, we have several different utility partners across the state, great relationships with all of them. And, you know, they see that this is a business that's here to stay and how mutually beneficial it can be, you know, we usually, when we look to go in and partner.

• 32:18Speaker 03

  With communities and utilities, we look for win, win, win scenarios. So win for the local community is where, you know, we're going to bring in jobs. It's a win for the utility company, you know, they're going to obviously make a profit off of it. And then it's a win for our company too, as well as we can expand and grow our business.

• 32:34Speaker 02

  That, um, that makes sense. And then what are some of the lessons that you've learned over the last couple of years, kind of doing this, right? Like you come from. That repair type background, but obviously Bitcoin is very different. Maybe what's some surprises or lessons learned?

• 32:45Speaker 03

  Yeah, yeah, it's, um, it's a, learned a lot the last few years, certainly. You know, this is a, uh, it's a fun business, um, you know, certainly it ebbs and flows, you know, you're going to have. Days where Bitcoin price just rips and it's euphoric and then you're going to have the, the bear markets where it's, um, you know, um. Certainly not as fun. So, uh, but I think it's a good, all, all good long-term opportunities. You know, during the bear market, um, you know, I think that's a great time to just be accumulating, obviously. And that's, you know, kind of relates back to why I personally like. mining a lot. It's just because it's that forced DCA. You're always getting the Bitcoin. But yeah, it's a it's a unique industry. I think it's you're seeing this industry is starting to mature.

• 33:27Speaker 03

  You know, certainly the last few years, you could have said it was more of the wild, wild west. You're starting to see some consolidation and kind of, you know, some industry standards be put in place. And yeah, I'm sure there's some, there's a lot more growth that has to take place, but it'll be cool to see where things go.

• 33:44Speaker 02

  We've seen the crypto strategic reserve get announced. Do you think that the United States should start mining Bitcoin as well? Like, should we use government resources and or energy that the government controls right now?

• 33:55Speaker 03

  Well, you know, I'd love to say that's a great idea, but also, you know, as it sits right now, the government operates pretty inefficiently. So I don't know how, you know, if they'd be able to do that. I don't know if the government would be able to do that at an efficient scale where it would, you know, it makes sense. But I think the, you know, strategic Bitcoin reserve is a is a great, you know, long term idea. There's several states that we've seen to get introduced, Iowa being one of them recently. And I think if we can just get, you know, if we can just get a small allocation of Bitcoin in these strategic reserves, it'd be a great long term situation for the states and for the federal government.

• 34:31Speaker 02

  Yeah, well, it feels like the government, when it comes to energy, is a whole different conversation than like, should we buy, you know, the coin or all coins or whatever. And things like mitigating flare gas.

• 34:43Speaker 03

  Yeah.

• 34:44Speaker 02

  And landfill gas. And you kind of go through this, that seems way less controversial than maybe which coins are we gonna buy?

• 34:51Speaker 03

  Right. Yeah, there's, you know, several companies out there that are working on the flare gas situation. It's that's a that adds an additional layer and, you know, I think makes this business pretty difficult, but you can see the opportunity with all the wasted energy out there. So and as it relates to some of the larger energy producers such as Chevron, BP, so on and so forth. I think that they're, you know, evaluating that. And as this industry continues to grow, we're going to need more and more energy. You know, Bitcoin mining industry today is plus or minus 15 gigawatts. I've seen some forecasts and, you know, some of the experts are expecting it to be, you know, double that in five years, you know, all the way up to 30 gigawatts. It's a lot of energy.

• 35:33Speaker 03

  And there's plenty of opportunities out there, you know, including the stranded stranded stranded energy where either governments around the world were already seeing taking advantage of that, whether that's, you know, not the United States government right now, but we're seeing governments around the world that are, you know, mining and or, or, you know, large public and private companies.

• 35:51Speaker 02

  Yeah, one of the parts to me that I think people kind of forgot, I think the UAE has already announced a joint venture with one of the publicly traded miners in the US that are mining Bitcoin. And it's unclear where the Bitcoins going, right? Is that going on the UAE's balance sheet or not? Russia has come out and said they're mining Bitcoin, that they're definitely holding that Bitcoin, they've said that they're holding that Bitcoin. So it does feel like Bhutan, El Salvador, like these countries are mining.

• 36:18Speaker 03

  Yep.

• 36:19Speaker 02

  The US kind of feels like we're behind a little bit.

• 36:21Speaker 03

  Yeah, yeah. And that's, you know, I think it would be, I think it would be a great opportunity. You know, the United States is one of the largest, you know, energy resources in the world. And I think it's just a matter of our government being, you know, efficient at doing that. You know, some of these other countries like Bhutan and El Salvador, you know, they have, I think they can pivot and move much quicker compared to our government. But yeah, it's a massive opportunity and that kind of just plays into the, you know, the long term, long term game theory of Bitcoin, you know, we're seeing it play out. And, you know, thinking back even a few years ago to where we are now, interesting to think about where things will be in the next five, 10 years.

• 36:59Speaker 02

  Yeah. What do you look forward to the most or think are like the big milestones that we still have yet to go?

• 37:05Speaker 03

  Yeah, I'm just looking forward to continuing to build our business. You know, it's a lot of fun. You know, we definitely are in the weeds and, you know, working really hard with our team. And sometimes we have to take a step back and, you know, realize that we're working on, you know, these magic internet money machines every single day. It's a, it's a lot of fun. So, no, just continuing to, you know, grow the business, you know.

• 37:28Speaker 03

  Look for, you know, it's a lot of fun working in Bitcoin, so.

• 37:31Speaker 02

  Where can we send people to find out more about Simple Mining?

• 37:33Speaker 03

  You can visit our website, simplemining.io. You can visit us on Twitter, you know, at simplemining.io, visit our LinkedIn page. You know, there's lots of great information there. We're really big on the education piece, so we have a lot of great content on our website, simplemining.io/insights. There's a lot of, you know, information there as it relates to, you know, self custody of your Bitcoin, you know, how does Bitcoin mining work, you know, even to more advanced stuff like UTXO management, so.

• 38:03Speaker 02

  The website is an incredible resource. I think people, they wouldn't expect a company like yours to have really high quality research, but a big part of it probably is the more educated your customers are, the better, one, they'll view you, but also, two, probably the better customer they are.

• 38:18Speaker 03

  Yeah, yeah. I mean, it's just something that we're really big on, you know, we want, we're gonna put that, you know, content out, you know, regardless. It's something that we're really passionate about, especially as it relates to, in the early years, you know, we had several clients that had, you know, their funds lost on FTX or Celsius, and, you know, we just really want to promote the education, so everybody can be, you know, understand fully what's going on.

• 38:43Speaker 02

  That makes sense. Where can people find you on the internet?

• 38:46Speaker 03

  People can find me on LinkedIn, Adam Haynes. I'm not, I'm not very active on Twitter, but LinkedIn, no, no, but LinkedIn, you can find me, so.

• 38:54Speaker 02

  Why not active on X?

• 38:56Speaker 03

  Yeah, I should be, I should be, but no.

• 38:59Speaker 02

  LinkedIn's more your thing?

• 39:00Speaker 03

  LinkedIn, yeah, yeah.

• 39:01Speaker 02

  All right, all right, sounds good. Simplemining.io.

• 39:03Speaker 03

  Yep.

• 39:04Speaker 02

  All right, thank you so much for doing this.

• 39:05Speaker 03

  Yeah, thanks, Anthony. Appreciate it.