Mining company Bit Digital reported its latest quarterly earnings results this week.
The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. Mining Company. Bit Digital reported. Its latest quarterly earnings are results this week. The company earned 318 Bitcoin during Q two. That's worth about $9 million or so. Joining us now to discuss is Bit Digital CEO Sam Tabar. Welcome Sam. Thank you for having me. Thank you for being here. So, in your report, uh you said some factors that are, that are involved here that you're facing include relocation of miners uh of some miners uh curtailing activities. Um And there's also the growth of the uh overall Bitcoin hash network uh network uh hash rate uh what these are all headwinds basically. So, uh you know what's what's the strongest of them all you you think as a potential uh problem coming up in Q three? Well, I think we have, we don't, I don't think we, the biggest headwind would obviously be the price of Bitcoin. That, that's, that's a, that's a macro factor that we can't control. But what, what we're able to control we've done very well on. So, with respect to our fleet we're now at 99% carbon free, that's carbon free, not carbon neutral. There's a big difference and we've led the way in the industry with being very environmentally responsible while running a very good business. We've added 35 megawatts to our mining capacity. We've announced the purchase of miners to fill that capacity. We've even revised our goal earlier this year when I took over as CEO, we announced a goal of 2.6. Aha. We're doing very well on that. In fact, we've just revised our goal just a couple of days ago. We're now at 3.5 a hash. By the end of this year, we have a very, very pristine balance sheet. We have 65 million of liquidity on the balance sheet. So we're very flexible going into the hacking and we're diversified across jurisdictions. We're now in Canada, the United States. And in our uh last quarter, we announced our entry into Iceland which the Wall Street Journal reported on the front page not too long ago. And, you know, that's in response to just being um diversified from a jurisdictional perspective. You know, you never know what will happen in one single country. And uh we don't think it's prudent or responsible to have all your mining operations and in one country because the politics when it comes to crypto can change overnight and we don't want the, the rug to be pulled from under us. Well, so you you mentioned non carbon. So this is mostly uh uh what's the breakdown? Is it uh solar or is it uh geothermal? Is it? Uh iii I is it uh what, what's your breakdown on your source of energy? Sure. So in the United States, the primary source is hydro, we drop power from the Niagara River uh and so on. So, you know, in the lower state of New York, it's fossil fuels in the upper state of New York. It's, it's where Robert Dam, the Robert Moses Dam in Messina, which has been producing nothing but cheap electricity. But you do have uh a New York state which is kind of hostile to uh production of Bitcoin. Uh even though they're basically giving away electricity up there uh in, in, up in, you're in Messina, correct? Or yeah, we, we have a couple of locations in New York but with respect to the political stance, we, we're, we're, it's been very, it's been very safe but you, you're right in some parts of the States of New York, it's a little bit more hostile. The trick is to just play by the rules, obey the laws, have the right permits and so on. But to answer your question because I want to make sure I'm answering all your questions with respect to Canada. We draw power from hydro and um and in Iceland, I'm sorry, I didn't mean to interrupt. I, I I'm sorry for interrupting, but what what uh what provinces are you in? In Canada? That we keep that uh undisclosed. I'm assuming it's uh I assume they don't always speak English there, Canada is a bilingual country. It is Multilingual if you count the uh the first nations and then Iceland, Iceland uh it's just one big place and hydro. Um geo yeah. So Iceland is a unique country in that 100% of its energy is sourced from hydro and geothermal. Geothermal is volcanic power. So we draw from that from, from both and we draw from excess energy energy that would not have been used otherwise. So we're not competing with anybody in Iceland. We'd simply buy non guaranteed power and that's power that households and industries would not really be in a position to buy because you Bitcoin miners are in this unique position of buying non guaranteed power. What does that mean? It means that one day you can get a phone call and they'll say, you know, from the power company and they'll say today you're not getting the power, we have to use it for other purposes and we agree to that, but most industries couldn't be in that position. They need guaranteed power. A household can't have non guaranteed power, but we're in a unique position to buy excess power, non guaranteed power. This is kind of a power product that people would not buy except for Bitcoin miners. So we're happy to buy that. II I don't mean to interrupt Jen but uh this is for your sake, you know, she's in Ontario. How come you can't tell her where, where the mining facilities are? I mean, why is it a big secret in Canada? I mean, she, you know, Ontario deserves some love. If there's some anything there, we keep, we keep our uh centers uh to. So just to let you know the way we work is we have, we don't own the actual operating centers. We have host agreements, we're tenants to the hosting partners and we do that to, to stay, to keep our infrastructure light. So we just pour our money into buying the machines and then we find hosting contracts with local operating partners. So these are not our facilities, these are our facilities that we have contracts with and we put all our money in buying machines. And that way we're trying to provide very high shareholder return by putting money where there's high return, which is the machines as opposed to real estate. So that's one of the reasons why I'm being somewhat coy on the actual operations because they're not actually our operations, they're operations we have hosting contracts with. And we're very nimble and dynamic. For example, in the last quarter, it was a transitional quarter, we reshuffled our entire portfolio from partners to partners. We have a number of different parts and we did that. One of the reasons were there are two reasons for economics. So we get these local operators to compete with each other on economics. But also our North Star is sustainability. So we want to make sure that we are contracting with partners and we get out when we see that it's not renewable. So that's another reason why we begin to reshuffle these, these partners. So what, what I say to you today, if I, if I were to tell you that it was in, it's not, it would be very different. It could be very different tomorrow because we, we constantly reposition and, and source new operating partners to optimize the fees to make sure that everything is sustain, is sustainable. But how do I, how will we know, how will, you know, it's not carbon, how do we know if it's not carbon free? We, we do do diligence. We send, we send our, our field engineer. So, and we have this long list of diligence and we make sure that it, they're sourcing from a renewable source of power. All right. And Sam, we, we've been talking about this kind of decentralization of your mining operations for this whole interview, the US Treasury Department proposed recently a 30% excise tax just from your perspective and operating in all these different jurisdictions. What is the most friendly when it comes to crypto mining? Where do you think other crypto miners are going to follow suit and set up operations? Well, it's funny you say that when that announcement came on. That's when we decided, you know, what, we should diversify our fleet even further than just the United States and Canada. So we as a public minor, we have a fiduciary duty to our shareholders to make sure we manage jurisdictional risks. So when that announcement happened, we announced that we were going to send a new miners to Iceland. And that was a huge story. The Wall Street journalist I mentioned did a front page story because it was in reaction to that particular announcement. I realized that threat is not, has not receded and they're no longer talking about that tax. But that's a very good classic example as to why it's very important for Bitcoin miners, particularly public ones to have jurisdictional diversification. Would you consider leaving the US? Well, the digital was originally had its fleet originally in China a number of years ago and we started to migrate our entire fleet from China to the United States because we felt that there could be a jurisdictional risk. And indeed, we were right. By the time we were in very advanced process and migrating the entire fleet, we're talking tens and tens of thousands of machines from China to the United States. China banned Bitcoin mining. So that's why we're very allergic and very sensitive to having all our eggs in one basket. And when we heard about this tax, that President Biden was talking about with respect to a 30% tax on this particular industry. I realized that that threat is no longer around. But when that, when that talk was occurring a few months ago, we took, we took it very seriously, which is one of the reasons why we entered Iceland. All right, Sam, we're gonna have to leave it there. Thank you very much for joining us this morning. Thank you for having us. That was bit digital, Ceo Sam Tabar.