Guzman Pintos & Colin Harper - Bitcoin, Mine it or Buy it?

Hey everyone, welcome to the podcast. I'm your host JP Baric and this is Digital Gold. Known to many as the Bitcoin Kid, I started my own cryptocurrency out of my parents' basement back in 2013. The goal of this show is to simplify the crypto world and explore how it changes the way the world thinks about money through conversations with thought leaders in the space. JP Baric is the founder and CEO of Orem Capital Ventures. All opinions expressed by J.P. and podcast casts are solely their own and do not reflect the opinions of Orem Capital Ventures. This podcast is intended for informational purposes only and should not be relied upon for investment decisions. Today, my guests are Guzman and Colin from Luxor. Guzman is the CEO, the chief product officer at Luxor Mining Pool and Colin is the head of content at Luxor Mining Pool. Today we're excited to talk about hash rate, how the capital markets have grown in the Bitcoin mining space and the discounts on future ASIC mining machines.

Welcome to the show, guys. How is your Christmas? Very well. Thanks for having us on, J.P. Awesome. I'm glad to close it out with you guys as the last podcast for 2021 and jump into where we all started, which is hash rate. So can you guys give me an indication of what you have seen over the past six months after the China ban, what happened to the market, maybe what you were expecting to happen, and how that's affected future deliveries of ASICs and current deliveries of ASICs? Sure. So I guess kind of the last year or six months in mind, it has been pretty wild actually. So from the China ban, we saw 50% or maybe a little more than 50% hash rate drop immediately overnight in total network hash rate. And since then, we've been essentially, we saw the network kind of come pretty much to all the high hash rate and difficulty levels since that ban.

Guzman Pintos: It has been pretty much every miner has been struggling to get machines plugged in. And right away, everyone is fighting for like rock space that's kind of very scarce right now. And then that's also kind of like reflected in the ASIC prices. From the China ban, ASIC prices also date quite a bit, maybe not as much as hash we did, but definitely we saw like a 30, 40% decrease in ASIC prices. But since then, also with a little bit of help from Bitcoin price going into like autumn highs towards Q3 of this year, ASIC prices have rebounded since then, we are seeing like at least $100 per third hash from like new JNASX. Yeah, that's kind of like a small summary of what's going on in mining and ASIC markets or the last few months. And for those people that aren't familiar with a Terra hash value, Colin, can you give us what a Terra hash means and exactly what that means to a Bitcoin miner?

Colin Harper: Yeah, so Terra hash is just a rating of hash rate. The lowest into the totem pole is a single hash goes all the way up the exa hashes and Terra hashes the third largest unit behind Peta hash and exa hash. And when we look at ASIC prices to kind of make pricing transparency or to make a price is more transparent and to break it down on a more granular level, we look at prices of machines per Terra hash, right? So for instance, right now looking at hash rate index, I believe that the price per Terra hash or average price per Terra hash for a machine like an S19 is 102 bucks a Terra hash. So if you had an S19 with a hundred Terra hashes of hash rate, you could expect to pay just a little bit above 10 grand for that machine. So it's basically just a way to break down ASIC prices.

JP Baric: No, I appreciate that for our audience, it's important that we use this new term Terra hash. I was actually talking about hash out of my mom yesterday and she was like, I have no idea what a Terra hash is. I'm like, well, it's like the building block of this whole space. Most people are familiar with Bitcoin and Bitcoin mining, but this whole concept of a Terra hash, we don't know much about. So can you guys talk about hash rate index and how you develop that and that Terra hash value? So because for myself, I use Terra hash values for modeling for my conversations. I think it's better than talking about how the cost of mining of Bitcoin or how much Bitcoin you're going to get at the end of the day. Guzman, do you mind jumping in and explaining how you guys built that index and what it meant to do for consumers and for industry participants?

We start the hash within like some say, like almost two and a half, three years ago. At that time, hash rate index was kind of like a night's on weekend project, outside from kind of like Luxor main business, which is like mining balls. At that time, what we were seeing is we started to essentially craft this idea of hash price and the expected value of hash rate because we see hash rate as a commodity, which then it can be traded that you can start like building all sorts of financial instruments on top. But at that time, two and a half, three years ago, that was not very well understood in the market. So we went on kind of this mission, like small site project to start like essentially providing the community with some data and insights into what like hash price means, what's the miners' revenue, what are the cost of these basic machines that not many people need about and whatnot.

And that's essentially pretty much how the hash rate index was born. But we essentially went into the mine, the coping mine and put together some really good insights or at that time, what we thought were good insights for the community. And since then, we were even taking feedback, adding new stuff, adding content now, just we just relaunched their website with a bunch of new metrics and whatnot, all community driven. Anyone out there that wants to see like a new metric or wants us to rate on it, happy to take any feedback. And that's pretty much how we built hash with index since the beginning. Can you talk about the data sources that you guys have pulled to get this index created and how Luxor came about caring about the terror hash value and the fluctuation based on what the mining pools are paying for a terror hash.

The hash price index which is the expected value of hash rate, it's actually fairly easy to compute and we like probably a little of information is like blockchain data, which is essentially the expected value of hash rate, the same way as full paper share mining pools pay to its customers. So that's like also a very easy way to audit mining pools. So essentially what we do there is we compute that FPS rate and we come essentially convert that into like a dollar per through a hash per day like metric. So in terms of data source there, it's Bitcoin node, scrape blockchain data and then have like a reference price for Bitcoin itself. Other data sets are a little more complex. For example, we have the re-index pricing and in the index, we try to essentially estimate what's the value of different ASIC machines over different efficiency tiers.

That's a little more complex to essentially generate because most ASIC like buys and orders happen OTC, essentially behind closed doors between miners and brokers and sometimes even manufacturers, right? In order to compute that the index, we've been on an animation for the last couple of years to scrape as much as possible from the web. And I think right now we have over 30 or 40 sources that we collect data from in order to compute that like re-priced index. Can you talk about how these back-of-the-market deals happen? These back-room office deals, I think Marathon just launched or really today that they bought another 78 or 80,000 plus S19s, which is insane. I mean, that's over 300 megawatts of capacity, right? That's where is that going to go? So can you talk about how you guys get insight into this market? You just have microphones and all the boardrooms or how does that work?

Kind of those one-off deals that Marathon is able to do because of their size and how many ASICs I mean, you just said it's 300 megawatts worth of pacing. It's kind of like an insane number, not only of energy, but also grid count. Pallically, 20 companies usually advertise in their public filings or even announcements from whom and at which average cost they bought those miners from. So that's kind of a very easy way to get a reference for Marathon is able to acquire ASICs, but that's not the reality for the rest of the market. The rest of the market usually operates, I was saying like much less from current, transparent way. So there's a bunch of brokers all over the world, mostly in the US, which will try to sell ASICs to small, to even like private companies and even some like palli-driven companies, ASICs and they literally have like telegram groups and they're like advertising, essentially their price for different machines.

So we go into every single telegram group, we chat, websites, we also have other brokers that submit data to us, you know, to compute this index and something that we've been seeing over the last few months, since last, since like essentially Luxor started its own like brokerage business. There's a lot of essentially lack of accountability in the brokerage industry. One of the main reasons that we've been able to succeed in the brokerage business is because we are able to bring the Luxor brand really high quality legal contracts between all of the parties involved in all of this like off-take brokerage agreements and also try to reduce kind of the counterpart to risk that happened on these markets and that's also a data point that we take into consideration for the index, even our own like brokerage business line. So yeah, if you take all of those data points into account, we are adding like hundreds of different data points that go into each week, price update.

Can you talk about where you are seeing the margin? Like you're saying $102 a tear asher. So I know it's possible to get a machine front into the dollar tariff, but that's not usually shipped even at least for us. So can you talk about where is the spread? Is it 102 to 120? Is it 130? Is it 110? And how has the broker business taken off with Luxor and what does that look like? So in terms of margin, what we're trying to do in the index is kind of like kind of the gross dollar per tear hash for the machine. So as Colin was mentioning, if you see like 102 $3 per tear hash, that bait and you are buying like a hundred-throw hash machine essentially means that that machines is worth slightly more than 10k a piece. Of course, different buyers and given economies of scale will get different margins, right?

So if you are going to let's say a retail miner is going to buy an ASIC, they're pretty going to be paying at least a 20-30% premium, if not more. Like we are seeing, for example, some ASICs on Compass Marketplace going like wild 450 or like $180 at their hash, which is insane. I have no idea how these people are going to ride these machines in the short-term. On the opposite side, you have like Marathon, which is buying thousands of ASICs at even a much lower cost than this like a hundred-throw hash. So it really depends your volume, your size, but they act like on average. If you're like a mid-size miner, you should be looking to pay as you just mentioned, something very close to this index. Yeah, Colin Harper: I was going to jump in there with talking about Compass. If you look at their turnkeys, because they have that new marketplace, so anyone who minds with Compass can now liquidate through Compass.

And these turnkey machines are expected usually that turn around on after you buy them. It's like a week and it's going to be online free, right? Those carry a huge premium because instead of waiting a few months or in a lot of cases with some of Compass's machines, if you're buying them, you're waiting six months until it gets online. When those six months machines usually have a discount, right? Like you can actually find some S9s, S19s that are like 90 to 95 bucks a tarot hash, and that's because the lead time monitor is so long. And inversely with some of the big players, if you look at pre-orders for the S19 XP, that thing is 140 tarot hash, but it was selling for like 10,500 for the first batch of pre-orders, so that's like 75 bucks a tarot hash. Obviously, the caveat here being no one actually knows how well this machine will perform.

The miners are taking a risk. I mean, it may make some good machines, but we all know that the S17 was garbage, right? So you always kind of run the risk of newer models not being up to snuff. And obviously, those machines are not going to start hitting racks until Q3 of next year, probably even a little later, depending on how supply chain issues and just general logistical problems interrupt the supply chain schedule. So it sounds like this marketplace has a lot of work still to be built into. Even though we have people building on top of it trying to build futures and pre-orders and ability to string transparency to the market, it seems like it's still very disjointed. And that's what we're seeing on our side. Is that a statement that you guys agree with? It sounds like that's the case. How do we, what do you guys see this market being in two years?

Does it compress? Do we get a easier to use platform? How do you guys see this market changing? Does it become tokenized? Where you don't actually own the physical machines? What things are people throwing around in the back of the office? This is the easy answer, but I'll build on it. I think that transparency, ease of use, and just general access to services only goes up from here, even in just this year, right? Like you've had product offerings from companies like Compass, that make it easier for retail to get into mining. You also have companies like Luxor that have started doing brokerage, right? So before the China ban, so much obviously of Bitcoin's mining industry was concentrated in China. And that also meant that machines were somewhat harder to come by if you weren't well connected, right? And even then you wanted to make sure that the supplier and the broker was a trusted, were trusted parties because people got screwed all the time.

And not even in just orders not being fulfilled, but you'd order a batch of 100 machines and 90 of them would be lemons, right? So I think that with the China ban, there was this opportunity right in a lot of North American companies like Luxor jumped on it. There is this huge demand for not only more transparency, but just services for the North American mining industry. And so companies like Luxor are establishing brokerage arms. We kind of absorb some of that business. The other thing that I think is going to really, on the brokerage side, you know, you're going to see more and more players for mining companies across multiple different business lines. Just make sense to do it. You're buying these machines anyway. You have buddies and friends and colleagues that need machines. And so it's just a natural extension of the business. Another thing that I think will help kind of grease the wheels of this going forward is just having more manufacturers too, right?

So we had block stream purchase bond duels this year. A lot of people are pretty optimistic about that bringing some much needed competition and hopefully opening up access to smaller miners, right? Because again, one of the big problems right now with the current model, you have Bitmain and MicroBT, which are the giants. And who's Bitmain going to service? They're going to service marathon who comes to the negotiating table and says we have $800 million to spend on pre-orders. And so of course, marathon's going to get that business. A lot of the flows from those kinds of deals obviously go to the bigger guys and then it kind of trickles down to the rest of us. Some people think that block stream will probably not be able to compete with Bitmain in terms of efficiency, but if they can kind of carve out a niche with smaller miners and retail miners, even if the machines aren't as efficient, then perhaps they can really kind of make some ground on that front.

When does Samsung, Nvidia, AMD, Intel get into this space and really start putting pressure on the market? Big core mining, we have 20 years left where 99% of the coins will be mine. So that's where I tell people after that, I don't really know what's going to happen, but I know we have another 20 years left to really play this game. Have you guys heard of anything like any of these guys, the bigger chip players getting into this space and really showing Bitmain that they can do it better and it's not that hard to do? Guzman Pintos: They've been in this space for some time, right? Mostly on the GPU mining market. In VD, and also Intel, they released GPUs that are specifically signed just for the theory mining, right? I think how they today are taking the livery right now of a huge batch of GPUs that were designed by Intel.

And these GPUs, they got them before the rest of the market or the GPUs were essentially available to the market. So they got these miners well in advance. I think they are still getting their feet into the water and testing for this giants, right? There's a lot to say about the kind of if you're not into the space, what's essentially what's like long-term Bitcoin mining going to look like? And if there's actually worth a time and investment for them to get into the space, at least I think that's what's going on into all of these executives' minds, right? Kind of like an ASIC pointer, it's completely different to the kind of chips there used to manufacture. ASICs are we, I'll say like robust, in a different sense, the chips that go into cell phones and all of the MacBooks and computers that we use. Yeah, I think they're kind of like thinking what's the long-term outlook for them to essentially decide if it makes sense for not to get into a space.

And I think too, it depends on like the over-tune window of how much people actually accept Bitcoin mining. I think that there's still a lot of people in the United States who are looking at Bitcoin mining and saying it's wasteful, saying we don't need that, talking about how much e-waste it creates and how much the resources could be allocated to other industries like cell phone, manufacturing, car manufacturing, you know, chips go into everything, right? And everything from your refrigerators to your TVs. So I think that for some of these bigger players, they're going to need both more public support. And it's going to have to be normalized. I think that once you start having large energy producers in the United States and grid operators mining Bitcoin, I think that kind of opens up the avenue for them. And it also to go to Gozeman's point, like it has to be in their interests, right?

The kind of business that they might get starting out from just the mining industry who's got all of these ties with all of these legacy companies, like Bitmin and What's Miner or MicroBT might be a little harder to get their foot in the door, but if some American companies and some American entities start mining Bitcoin at scale, like those energy providers, and they kind of set up these deals with Samsung or Intel or something like that, then maybe that kind of opens the door a little further and kind of spurs them on. JP Baric: So it definitely seems like it's going to come from these larger, well-financed companies that are going to come into this space and build out this maybe new layer, this new side of the business for chip manufacturing and for for new or machines. How do you guys see the capital markets in the recent string of public companies in the mining space affecting capitalization, affecting how much percentage of mining is done by the public companies versus the retail market is retail dead?

Can you guys talk farther on that and what you're seeing from the interest side from the content you guys are creating and your pulse on the market in general? I think our last 2021, in my opinion, was kind of the year for publicly traded mining companies. It's specifically in the public markets, what we are seeing is like a market arbitrage, where a miner is able to go and raise funds in order to procure Asex and get a really good multiple. So like more detail, like beyond this, and in Hashron Index, we have a kind of like a stock in which we track a bunch of metrics on putting the real mining companies, right? So for example, if we take Marathon as an example, and also their latest filing in Hashron, they're like operating just over three hexahashes of Bitcoin mining Hashron and under market capitalization, it's just over three billion.

So if you look on a like market cap to Hashron ratio, that means they are worth $1,000 per ter hash that they're able to plug in right now. We've been talking to this very beginning of the podcast, what's the cost of these six miners, and we are talking like on a spot basis, you can go and procure a new gen hardware for a hundred bucks a ter hash. So essentially, that means that they're getting a 10x multiple on essentially any amount of money they can raise and get their hands on miners. And that's kind of the arbitrage that all of these companies are trying to pursue. You get a hundred bucks and you can immediately turn it into a thousand just to your public market valuation dynamics. And that's kind of like every single public trade company is trying to aim for just raise money in the capital markets, get orders, and like future orders from Bitcoin, MicroBT, brokers, Luxor itself, and try to go and get this crazy valuation multiples.

Probably one thing that could be say this, these miners might be taking a little bit to risk. They're not necessarily trying to build like long-term cash flow positive businesses, but at least seeking kind of like short term valuation while we still are in a mall market. JP Baric: And so you hinted at Luxor's plan, how does Luxor fit into going public? What does the roadmap look like that you guys have discussed internally or you're able to share externally without Ethan the CEO breathing down our approach? I met like public markets procuring ASICs from Luxor. We are not necessarily looking to go public anytime soon, especially not in 2022. Colin Harper: So I feel like a public mining pool, I mean like Marathon's public right and they have a pool. I feel like that just opens up a very interesting dynamic. I mean once mining pool, especially one that's retail focus, like Luxor's pretty retail focus.

I mean we've got a lot of guys slinging big hash rate, right? But the core of the business was built on the back of club miners, right? And so once you go public, I feel like those, I mean it really kind of puts those guys in a tough spot. Suddenly the pool is kind of making decisions based on the board and based on what they feel like their shareholders want and no longer really making choices based on what the core of the business, the retail, the users need. Orem provides a bridge to the digital currency mining world for individual investors, financial institutions, and energy companies. By combining over seven years of mining experience, 24, seven management and directly aligned incentives, Orem's managed mining program is the simplest way to enter the digital currency mining market. To learn more, please visit oremcapitalventures.com. JP Baric: So let's talk about this future of hash rate.

And I want to talk about financialization of hash rate more specifically. So can you guys discuss where you see Terra hash or when you see Terra hash as being purchased in bulk quantities and we're not buying the underlying asset? How are there, is there interest from investment banks? Is there interest from family offices? What type of structures do you guys see in the marketplace? And is there anything out there today that's actually working? Well, that's like a couple of years we've been seeing different approaches to this ideal planization of hash rate, right? Kind of like first take was cloud mining contracts where essentially you could go with your credit card and buy hash rate future like X amount of compute power. In most cases, it was like focused for retail and all of these people were ripped off, but that was the idea, right? Like sell hash rate future.

Then we have like a purchase like pull-ins and Binance hash rate tokens. So it's a way like tokenized hash rate as well. And both tokens got quite a bit of marketabilization in them, not only in retail, but like bunch of people like trading them. So in terms of volume, there's definitely kind of like offering there. We also have like FDX, difficulty adjustment, like instrument, and then we have kind of like big best poke to the OTC hash rate contracts, right? So there's been like multiple iterations over the last couple of years and while like a hash rate, the real tip could look like specifically the hash rate futures, right? I think none of them have fully succeeded from like a product market basis for different reasons, but we're like Luxor comes in and I think where we have like our differentiation there is that we believe that hash rate, like a financial product that involves hash rate needs to be built by the mining pool because nobody knows how to manage and deliver hash rate and like also like understands hash rate better than the mining pool.

Essentially, all of we do is take hash rate every single second in order to build consensus on a blockchain, right? And we buy the hash rate and paid miners for their service. So essentially, what we're trying to do is like take off the knowledge that we've been building into receiving and delivering hash rate, right? To be like a financial product on top. One of the key aspects that you can like self-thinking there is like physical delivery of hash rate. You can do like a physically delivered hash with contract and the only way to do it is if you're the mining pool that you are able to like proxy hash rate just basically contract and not. I think there's where like our different take on the hash rate product is going to look like we sound like a broken record here. We've been trying to bring this to market for a while now.

I think 2022 is going to be the year where we start seeing some of those first iterations. And I definitely think it's needed. But you guys have been on the podcast earlier talking about this at least Ethan has. So it's not a broken record, but it's innovation. And something like this where we had to even explain what a tear hash is to people shows you how far we have to go before we're financializing the value of a tear hash. JP Baric: So Colin, can you talk to me about the marketing and the content game at Luxor? I've seen a lot of blog posts, but I haven't seen many TikToks. I'm just so confused. What are we doing? No, I'm joking. What are we doing at Luxor? And how are you guys getting the name and brand out there? Colin Harper: It's funny that you say that because Will Foxley was talking to Ethan.

I will Foxy from countless was talking to Ethan the other day and he tried to convince him to get me to start at take-clock. Maybe if I was a little bit younger, personally have no interest. I'll do what these guys tell me to do though. I don't know how many zoomers are going to be hopping onto the mining pool. Maybe they'll mine some pirate or some Z-cash or something like that. I think when I started at Luxor, the way that I was viewing content or trying to position Luxor in terms of getting research and stuff out there, I really wanted to put our proprietary data sets at the fore of what we do. So a lot of the time that I spend in the content minds is just looking at differences in ASIC prices, looking at trends from that, looking at a hash price too and trying to pair those together to give a picture of exactly what is happening both on the ASIC market front in terms of what machines are being prioritized.

Why are they being prioritized that way? Why have, for instance, one question that relates to one of the things that Gozeman was talking about earlier, ASIC prices have not hit a yearly high again, even though Bitcoin roared to an all-time high in October and November. And I think usually you expect ASIC prices to perform a little bit better than Bitcoin and up swings. But they haven't since the China ban and why is that? And it's what Gozeman was talking about earlier, RAC space, infrastructure, all of that is still being built out. There's not enough demand to absorb all of the supply that the China ban left and people's laps. I really just want to bring more transparency on some of these topics, especially rig prices. You know, when I first heard about Hashtag Index in Luxor a few years ago when I was a journalist, Ethan dropped this data into my lap and I was just like, holy shit, like how do more people not know about this?

I can actually quantify how much money a miner can expect to make at a full-paper-share pool with hash price. Like that to me was completely revolutionary and same with rig prices. I mean, this is something that I feel like. The mining industry out of everything in Bitcoin, except for maybe core development, which is that's just a Leviathan that very few people I feel like are really equipped to fully understand. Mining is such an upstruse and esoteric topic that there's a lot more that can be done to shine a light on the kind of darker parts of the side of the industry and I think that our data sets are great for that. So I really just try to use those as much as possible, draw in supplementary research for certain metrics and data when it's needed. I definitely agree with you guys. You guys have one of the best data sets out there.

I utilize it for not only research purposes, but also our team will utilize it for internalized internal purposes for models. One of the things that I think would be very helpful in the data set world would be the compounding percentage decrease or increase of hash rate over time. And if you could set a date and see how far it's dropped or how far it's gone up, that's something that I've noticed when I modeled that data out, I was really shaken back, taken back by like, wow, this, when this drops, hash rate drops low. So let's talk about the bear market of 2023, 2024. What can people do today? Because you mentioned $180 a tarot hash, like, what do we need to do today, especially for the plebs out there, people who are buying one or two or three machines and are running them at other people's facility?

That's why I have really stopped doing hosting contracts personally is because I understand when there's blood on the table and you sign a contract that's six, seven, eight cents a kilowatt hour, the odds of you owning that machine is zero to none, especially if you have more than 10 of them. What advice can we give people today so that they don't set themselves up for failure in 2023 or 2024? Of course, not financial advice, but just advice as market participants and being in the space for as long as we have. Guzman Pintos: Also, kind of the scenario that you describe, it's not as mad as some of the contracts that we are seeing in the market right now. I've been seeing even large miners not only plebs, but getting to 10 to 12 cents hosting contracts, which is insane. I mean, right now you could potentially be profitable with S9, of course, on S19, but that's not not going to continue to happen.

I mean, hash price will go back to like under 10 cents eventually. I mean, hash rate is only going to go up until it's like marginal cost here. So I think like advice there it there's been like a few golden ages of mining. The China ban was one of them where you could procure a six in June and if you were able to plug them in right away, you have potentially already arrived those miners. If not, you are very close to doing so, but right now that's not the scenario anymore, right? So kind of like thinking long-term, try to secure hosting rates as low as possible, but most important on the hosting rate is what's the capex that you are deploying, because if you're buying 150, 280, 200 dollars per trillion hash, that machine essentially takes twice as much to ROI as what like everyone else or all of the other institutional miners are paying for.

If I were to invest, I would much rather get into high like opax hosting rate, much lower capex, so I'm sure that I can like ROI before we go into market, which eventually is going to come, right? But yeah, if you're a player, try to look for the best it possible and not get into the first opportunity that arises, because yeah, I mean, we've seen lots of miners going bankrupt. Even the public companies that are right now are training on a few billion appears. If you look at all of us 2020, most of them were really close to going bankrupt. These machines were like, hash rate was seven sensors or a hash. Always keep that in mind when you're modeling, what we are going on right now is a super-cycle of hash rates, where margins are really, really thick, but that's not going to be the case moving forward.

Keep that in mind and prepare for it, it's the recipe for success. Yeah, don't drown in the froth. I think that like during bull markets, everyone gets so jazzed, there's so much excess, and every cycle, some Bitcoin or some pleb wants to start mining, which is awesome, right? I would never discourage people from trying, but I think people just get in a little too deep. So like people need to manage their expectations, instead of trying to find a hosting contract and trying to buy a bunch of S19s and negotiate all that, just like get an S9, run it at home, see what it's like, figure out how difficult it is, like why did it just go off? Like you were hashing 10 minutes ago and now you're showing me the red light. There's so many factors to consider. To me, it's almost like, I know it's easier because you can buy the machine and plug it in, but it's almost like handing someone a shovel and saying like, all right, now let's go find a backhoe and start gold mining.

People think that it's so simple, you just plug the machine in and it prints money, and that's true, but like Gozeman was saying, I was modeling out 2021 ROI is for different setups under different kilowatt hours and different capex costs for this report, and when you buy your machine and when you get it plugged in, it changes everything. If you bought a machine at the beginning of this year, like you bought an S19, you were ROIing at S19 in 258 days, and that's nine, you were ROIing it in 65 days, this is under four cents, so it's not really fair for everyone, but if you look at six cents, it's not much different, but you turn around and you buy that machine in July after the China ban, your ROI actually goes down because you're getting basically the same price, if not lower than at the beginning of the year, and you're turning it on right before this golden window of opportunity for hash price, specifically BTC denominated hash price.

JP Baric: So you mentioned BTC denominated hash price, so for the listeners who don't know, that one's when you take a Terra hash value to nominate in Bitcoin. So you guys get the question, Bitcoin, buy it, or mine it. What do you say? What's the answer in short two or three minute kind of spiel? Because it's a hard question to answer, and I think there's multiple variables, but I'd love to hear your guys' thought and approach on that question. Yeah, I think going back to our previous question, it really just depends on your situation. I'm actually appalled to hear that some people are paying 10 to 12 cents in these hosting contracts, Gozeman, because that's what I get in Colorado. I get 12 cents at home. So for me, it's almost like, dude, I mean, not everyone has that, right? Colorado has pretty decent electricity rates, that's well below the national average in US.

I think it really does depend on everyone's personal needs in their setup. I was living in Colorado or my home state of Tennessee, my residential rates are pretty low, home mining for most of 2021 would have been a very good idea, especially if I started earlier in January. Now, if I was living on the west or east coast, it's not possible. Unless I was just willing to eat the electricity costs for a newer machine, and just basically dollar cost average KYC for Bitcoin, and that's another thing entirely. But if you are some waste with higher electricity, you obviously need to get those hosting rates, and that's a whole new hurdle, right? These hosts are not sharks, but they're economic actors. They want to squeeze the women as much as possible. And if you don't know what you're doing at the negotiating table, you're going to get squeezed.

So I would generally say, I think it's worth it to try. I just wouldn't be betting half of my stack on mining equipment, right? And I personally probably wouldn't have as much equipment as I have today if it weren't for the connections I've made through Luxor and the mining industry, like getting more favorable hosting terms, having the BD team help broker deals for employee mining program we have. It takes expertise. And if you don't have that expertise, I would generally advise against exuberance. But I would always encourage someone to get one S9, if they are more heavily capitalized, maybe an S19 to run it at home, if they're really passionate about it. I just think it's about managing expectations, right? Yeah, and I would add to that it's about managing expectations, but it's also timing. A lot of this comes into when do you get into the market.

We've talked about getting it in the frothy time and how that's not good. We've also talked about opportunities like the June China Band and when that was a great time to get in. So I mean, my advice to people is if you're interested in Bitcoin mining, watch, learn, pay attention, and wait for the time to really deploy a lot amount of capital, start off at least getting your foot in. So you have reason to stay and pay attention, and that would be one or two machines. But if you're only have a million dollar net worth, put in 50,000, don't put in 500,000 or 250,000 because it can provide great returns, but without leveraging debt, without a low, a low energy price, and without a low cost per tarage for acquisition, it doesn't make sense. I want to ask you guys one last question, and that is what advice would you give your 18-year-old self now that you come into this mining space into the wild, wild west of an industry?

For those people out there that are 18 years older, younger, listening to the podcast today, what advice do you have for yourself and working with people connected to you guys on social media and contact you guys for more about Luxor? Guzman Pintos: I would say definitely buy more Bitcoin. When we have like 2019 crash going Bitcoin back to like 4-5K, I definitely got as much as I could, but I could probably have gone like even deeper. So continue to stack to DCA every single day, every single week, and then mining. For me, mining is my perfect DCA strategy, because through Luxor mining pool, I'm getting sats onto my wallet every five minutes at a much favorable electricity price. I'm not only stacking in Bitcoin every five minutes through my ASEX, but I'm also doing it at this country spot because my machines are profitable, right? So yeah, definitely, I would say getting to the industry as early as possible, and then just learn.

Going to, for example, this podcast, try to lease in all of the people in the industry, go on and read, get into a rabbit hole of research and Bitcoin mining research, I think there's amazing and really intelligent people writing about topics related to Bitcoin itself, layer two technologies and mining. So yeah, I'll say those would be kind of my two recommendations. Colin Harper: Yeah, I would say obligatory tell my 18-year-old self to buy more Bitcoin, to buy Bitcoin at all. I didn't hold the knee Bitcoin at that point. And then to just anyone else that are interested in the industry, they're interested in Bitcoin or trying to find maybe a way to make it into a career, I would say is that like we need everyone, we need all stripes. I mean, I studied English in college, right? Like I was reading Faulkner and Shakespeare, and now I use Excel, and I never used Excel before, and I model out these charts and do all of this research.

But to Guizman's point, like there are a lot of really smart people, learn from them, understand the lingo, figure out what are the talking points, and learn how people engage in discourse, because the Bitcoin community is truly amazing, because it is so global and so connected. I've met so many interesting people from all around the world through this thing, all really united under this passion to learn more about and to build this alternative monetary system. And so I would just say, take what talents you do have, figure out what interests you have outside of Bitcoin, and try to find a way to make them fit, because some people might want to try to get into mining as a way to make money, and look at it as a career. I remember I was in a space with Steve Barber a while back, and some guy was asking, how can a guy like me get started, and Steve was just like honestly dude, maybe mine as a hobby if you want to, but don't try to make a career out of this, right out the gate, find another way in, with a way that plays to your strengths and compliments to your God-given talents.

And I think that's really important, because back in 2017-2018, I think there's this conception that this Bitcoin crypto industry, and you got to be a finance bro or a coder or something to make it work. And as the industry matures, it's just not true, right? Like we need people from all walks of life to build these companies, so figure out what your talents are, take them, and then try to market yourself to one of these companies. Well gentlemen, where can people connect with you? That was a great run-down, and I really appreciate the time today talking about Hashtray. It's hard to get people with your level of expertise to talk about this in an open form, so I appreciate it. So definitely you can find us on Hashtraydindex.com, that's like Luxures, data platform, all the community driven, then I'll say a corporate website that mining pools, likes to attack, mining that likes to attack, and then we are also a little bit Twitter writing and publishing renewable threats in sites, data points.

So you can find us also at Hashtraydindex, and also at Luxures Tech Team. Guizman's Twitter handle for anyone wondering is at Guizman Pintos, and I'm at As I Lay Hodling, you can also just look us up by our names. Guizman has S9 fans for his eyes on his Twitter profile picture. I like it, gentlemen. Thanks again for the time. Everyone, remember to continue to mine on, and thanks for listening. Narrator: I hope you enjoyed today's episode of Digital Gold. Be sure to subscribe, so you're notified when the new episode drops. Don't forget to leave us a five-star review to support our journey to become the number one crypto podcast. Thanks so much for listening, and until next time, mine on.