Ryan Condron on Bitcoin mining and profitability

0:00I'm Ashton Addison from Block West capital for investment pitch media and today on the Crypto Coin Show we have Ryan condron the CEO of Titan Ryan welcome to the show and thank you for taking the time yeah thanks for having me very welcome except to dive into the mining aspect in blockchain and Bitcoin today now I'm not as familiar with the Bitcoin

0:23mining because you know when I first got into Bitcoin seven eight years ago it was annoying for me to learn how to set up a rig and learn all the intricacies of the electricity power but from all the technological advancements that have happened since then it's a lot easier and you know you don't really need to have your own rig necessarily it's hard to compete with these large

0:45companies that have giant warehouses that are mining Bitcoin and there's different ways that other people can get involved as well so I'm excited to dive into your insights into where the Bitcoin mining industry is today I would love to kick off our conversation with just a little bit from a high level on what Titan is working on in the mining space and then we'll dive into

1:04all the details all right sounds good yeah so as you said mining started out very much as a hobby I think a lot of us eight nine years ago no 10 years ago were you know doing this in our additions in our in our houses and our garage and our basements and it moved from this hobby into like an industry probably 2017-2018 we started seeing like these huge just

1:31lines pop up all over the place you know no longer just these massive GPU Farms but just a massive Asic Farms all over the place and now as we start transitioning cryptocurrency more into a mainstream we're starting to realize that mining really is now key infrastructure where if these mines go down then transactions don't get processed and I feel like we're really on the

1:56cusp of this transition definitely and yeah it's a lot more than just understanding that you know people are mining Bitcoin to make money but really they're the ones that are keeping the you know deservedly they're making money because they're keeping Bitcoin alive if there was no mining there'd be no verifying any transactions no decentralization in the network

2:15would crumble so it's it's a lot more than just that and now from what I've read Titan is involved in you know like private mining pools can you talk about what that means yeah so I've been doing this for a long time and the mining pool game has always been really interesting you know we started out charging a four and five percent fees we had

2:40different payout models of everything from PPS to PPS plus the pplns to now fpps so we've adjusted the models and different pools and we've probably different payout schemes and mechanisms but the one common thing that we've seen through the years is it's a race to zero so you know what one pool will undercut another Pool undercut another Pool

3:04There will be back room deals where a large Miner will be paying you know point three point four percent where a general member of the public will still be paying two and a half three percent but now we see the largest pool in the world Foundry is zero percent and now everyone's trying to race to zero percent to match Foundry and now everyone's left kind of wondering well

3:26how do we make money at zero percent because the revenue of a pool is historically or the profitable is historically always the fee that they charge so now is always a race to Now find you know how do you how do you make a profit while paying out so much your Revenue to all the miners so our model at Titan is the idea of a private mining

3:54pool we do really believe that a zero percent B model is not sustainable for very long and we believe that every large-scale Miner for the decentralization of network really should be running their own tool so you know if you're running an X hash to 2x hash facility or several facilities you know we're we're urging these miners to adopt their own private pool

4:19sign their own blocks get the street cred but really help start you know keeping the block creation distributed interesting and definitely you know at zero percent it's get it's getting competitive and you have to find other ways to sort of compete when it's like well if it's nothing for everyone across the board then how do you decide where to mine and what do you do

4:45from there to either cut costs and or make it more profitable and one of the major differences that I heard from working in the go ahead like I said the Mantra is If the product is free then you are the product right yeah and that's that's the same thing you know when you start looking at Foundry and some of these other pools you have to start wondering well what

5:10are they doing through your information you know what's what's the end goal where do they make the money because at the end of the day they are running a business they're running a company and the goal is to make money so that's you know that's just the underlying Truth for all this and you know that's why we're you know talking to a lot of these large Miners

5:31and say don't be the product yeah no that's a great point and that's a narrative that I've been paying attention to more and more just in the past few months you know with all of these hacks of centralized exchanges and all of these web3 infrastructures that are really built on web 2 and at some point you know through all the social medias that where everyone's using every

5:52day we are the product and look I'm always looking for other opportunities to not be the product you know to actually get value for something where you pay a little bit to ensure that your personal information isn't isn't sacrificed so I appreciate that ethos Ryan now one of the major things I was going to mention about mining is I feel

6:14like it's a whole other kind of calculation from outside of cryptocurrencies is but there are different ways to mine whether it's through renewable energies or through no electricity and as we're seeing now volcanoes and who who else knows I've seen like cooking oil and like crazy contraptions I don't know if those are feasible for the large you know

6:37Warehouse sized mining facilities that your team is working with but do you have any insight on onto you know the renewable energies working in Bitcoin mining and you know lowering the carbon footprint that mining has oh yeah I mean this is yeah this is like four or five hours ago I mean the I guess it boils down to anywhere there is electricity to be

7:03bound for energy to be found on this Earth miners will find it you know that's that's the game is finding cheap electricity stable infrastructure and favorable governments you know so where you might have El Salvador that seems to have a favor favorable government and they're pushing for cheap electricity maybe the infrastructure is not there or in the middle of

7:26Mongolia you might have cheap electricity and good infrastructure but maybe the government's not there and China we definitely saw the government was not there even though they had the cheap electricity and good infrastructure so there really needs to be a balance of these things now in Texas we found a balance of all three of them so now it's becoming a huge hotbed

7:46for mining right now it's it's so much so that the grid is starting to have to adjust and the power producers are starting to have to adjust for the overwhelming demand for production now you have a lot of people having this discussion about Renewables and what's really fascinating about the Grid in Texas is they're able to actually work with the miners based on the load on the

8:12grid so miners can instantly ramp up or ramp down depending on what the power producer needs so in the middle of the summer when it's hot outside everyone's running their AC units the miners will actually ramp down which will provide more power for you know consumers on the group sorry excuse me more powerful consumers on the grid whereas you know at night when it's

8:38cool outside miners can ramp back up and provide a steady purchasing essentially electricity so a power producer can now run at 100 efficiency or 100 capacity 100 of the time and there's always a consumer for the power and this is actually historically been a huge issue with renewable energy when you don't have a peak load all the

9:06time I actually spoke a couple years ago at Bitcoin Miami about this where there's huge solar Farms going in Southern California outside of Palm Springs because the vision of California is to be 100 renewable by 2035. the problem is the legislature has no clue how to do that the reality is it's a kind of hand wavy where they're buying electricity from

9:32other states they're trying to is tell electricity to other states when it's you know not peak time they're they're trying to balance the grid but they don't have the technology to do that and Bitcoin mining could be well right now is the only option for something like that where you can build 100 renewable for Peak capacity and then the other 300 days out of the year when

9:58they don't need Peak capacity you could be you're balancing the grid with mining so at the end of the day if you really look at the way power grid Works Bitcoin mining is the renewable savior and not like this you know burning electricity and hurting the environment it's actually the one thing that will stabilize the grid incredible and from what I understood

10:22you know some of the fud and uncertainty around the amount of energy that Bitcoin mining was consuming was sort of coming from you know Outlets that are in the United States but from what I understand a lot of the mining at least throughout these states like there's a lot of mining in the United States I'm not sure compared to other countries but it seems

10:44like it's a thriving industry in the states and is that where some of the companies that you're working with are mainly in the states yeah so the majority of the country or the companies we're working with are inside the U.S there's huge miners in Canada there's huge miners in you know the Middle East Russia Venezuela there's really massive mining facilities all over the

11:08world you know there's still some in China right but you know they're they're quickly turning turning off and finding other homes so you know the United States does not have the you know I guess the United States does have a huge amount of hash power but they're not the only you know we're not the only country that is mining at

11:32capacity or at scale it's it's really really fascinating but you know what you're saying as far as the communication from news outlets and different individuals here in the U.S I've been talking about Renewables and how mining is bad for the environment and they want to paint this picture that there's like these billowing Smoke Stacks out of a cold

11:58fire plant that is you know polluting burning electricity to mine these Bitcoins that are used on the black web for you know illegal arms trafficking and drugs you know and this is like this Grand like picture that they want to paint that you know not only are we you know killing the environment but we're you know printing illegal money for illegal reasons and for you know illegal

12:26activities it's it's really silly right honestly like there's so many false premises that these people start with for the environment because you know if you take one step back you know from that you say okay if using electricity is bad for the environment why and they'll say well producing electricity is bad for the environment and you'll say

12:49oh because burning coal is polluting like okay well what about all the electricity that's not burning coal well okay well natural gas is a limited resource and we'll say okay well yeah how much do you actually know about natural gas to say that you know how much do you actually know about solar panel production wind farms hydroelectric facilities you know once

13:10you actually start digging down into all the false premises that they've built this you know massive statement on you'll you'll quickly realize that there's not a whole lot of information backing up the statement they're just going for the headlines well said and with the companies that you're communicating with throughout the states are they in you know at least

13:34partially all using renewable energies all of them seem to have a mix of Renewables there are there are some that are strictly on a grid that's natural gas or circlionic a grid that is Renewables like I've seen some facilities that are 100 Renewables most of them are mixed and they'll have a complete you know most of the large facilities are very professional

13:59and they'll have a complete report of their exact mixture of power usage and then even their their curtailment of when they when they turn off their facility to help balance the grid so these things are actively happening and you know the no one is more watched you know than you know the power producers in this country when it comes to regulation

14:24You know for this part of the ecosystem right now the power producers are heavily watched and the reporting from the miners is spot on so you know once again the lot a lot of the communication I hear about it being bad for the environment or you know miners just burning electricity it typically comes from people that are just woefully

14:50uninformed good insights Ryan and throughout this year as you know in throughout 2022 the Bitcoin price was dropping but I saw some some data about how the Bitcoin hash rate continued to rise and was like at all-time highs and I'm not sure if that's just the competitiveness or the profitability of mining but maybe you could explain that Divergence and

15:16the difference there on what's happened this year yeah so the hash Freedom network is a backwards calculation from the difficulty it takes to find a block so essentially how many leading zeros there are in the final block Dash and we do have backwards relation to determine or guesstimate the amount of hash rate or you know compute power

15:40it took to find that block in 10 minutes so what we see is people are still plugging in miners even though the price is dropping and the reality is there's a lot of the miners took out a lot of loans and they are locked into contracts for receiving devices from what's minor or bit Main and those devices get delivered regardless of what their financial books look like because they

16:04already committed to the deliveries and committed to the purchases and they borrowed the money for them so that's why we see things happening like compute North and certain things that Marathon and so you see a you see a lot of onboarding of devices and what happens is if these miners get stuck where they keep

16:32receiving devices and they don't have anywhere to plug them in and then it now becomes a deficit where they're paying for devices and they're not able to you know have power for them or they don't have room for them and a lot of the Mind Partners have gotten stuck in this cycle where they'll have the machines becomes a huge burden on them because

17:00a lot of these guys still have to pay their electric bills and still have a huge amount of Opex you know three or three or four years ago I feel like it was exact opposite where a lot of guys had power and they had space but they didn't have the machines so now we're we're kind of flipped now everyone has machines and there's a huge amount of machines

17:21but not everyone has the power or the facilities for them yeah so I don't know if that answers your question but essentially people keep plugging in machines even though the price is dropping but I think we're gonna see it actually reverse here because a lot of people can't pay their bills so a lot of those machines that they plugged in over the past year are going to be unplugged

17:44yeah it's interesting that there's so many variables because from what I understand these the mining producers they're always making new models that are you know faster and more efficient and you can't really have a minor for more than a few years before you know the next versions become that much more fast you know computation wise to like outbid

18:08And meanwhile you know bitcoin's going through these four-year Cycles if you buy your miners right when the price is going down it actually makes it more competitive because you know it sometimes people lose profitability but then they can't they can't operate but then there's less competition so then the cycle comes back and more people are like oh now

18:31it's there's less competition let's let's join in and then it goes back up again so I feel like a lot at least the Smart Companies they're not thinking you know how how are we just gonna get our Bitcoin this year and sell it they're they're thinking like way down the road about the next cycle and the Cycles beyond that and hopefully mining the Bitcoin and not having to sell it

18:54and just paying for just the basic operating expenses and hoping that you know the visions of 100 000 Bitcoin or million dollar Bitcoin will come true yeah you know and we'll get there you know it's we're we're on a cycle we're in a deflationary system and I mean we're on a clock it's it's every four years as you said it really shouldn't be that

19:19surprising to people it's really just what do you do in the three years in between each of the run-ups right and that's what it's come down to is do you build do you Turtle do you know what do you do and a lot of times people are trying to guess the top and I felt like this was some of the large minors and publicly traded Miners And even some of

19:43the large exchanges that we saw or crypto Banks were trying to guess the top and just because it was it was going up in price and all these coins were going up in price they you know invested like they're always going to keep going up and then the shrewd people and the people have been through the cycles before are expecting the crash expecting for or the ShakeOut to

20:06happen like it always has I think we're on our fourth or fifth cycle now and this one actually hasn't been as bad as some of them in the past I mean you know do you mind from 20 000 down to three thousand you know right now we're sitting at just under a third of where we were let alone like a sixth or a seven of where we were so you know we've seen a lot worse

20:33crashes than this and you know maybe we're not at the bottom now but I do know that miners have a theoretical limit right now with their Opex so miners even with cheap power are you know producing coins at about twelve thousand dollars a coin maybe ten thousand dollars a coin under that they're losing money you know so right now you know at sixteen thousand seventeen thousand

20:56dollar Bitcoin they still have good profits so they're still Mining and they're still you know bringing new coins in the ecosystem the moments the price drops any lower than 13 or 12 or 11 we're gonna start seeing a whole different economics and we're gonna start seeing changes in network difficulty and a whole new ShakeOut of companies really well we'll see what

21:22happens in 2023 and now how does Titan fit into that play if the price does drop you know does that negatively affect you know obviously the people that are mining directly it how would that affect Titan if the price dropped to eleven thousand yeah well miners are going to be looking to optimize and they're going to be

21:50looking to squeeze every last penny and optimization out of their pool Partners out of their devices out of the facilities and renegotiating with their lenders you know so for Titan we offer a very competitive pricing model with our private pools we really don't think the zero percent fee model for public pools can last very long I mean I could be

22:15wrong but it just doesn't seem sustainable so I'd imagine you know three years from now four years from now public pools should be few and far between or just not you know not really in the running anymore I imagine most large at scale miners will be running their own pool I mean that's that's the vision that I'm hoping for and that's what we're

22:40banking on so we're positioning ourselves to provide those private pools awesome and moving forward to 2023 you know with that vision in mind what's sort of the next stages of the road map of you know public releases or adaptations to where you see the industry going oh 2023 is a hard one because there's we're still in a ShakeOut right yeah

23:09Like no no one no one saw I mean a few people saw Celsius coming but it took a lot of people by surprise you know what's going on with core what's going on with compute North on the mining side what just happened with FTX I don't think this is the end of it you know as the market contracts we have all-time high inflation we have high

23:35high interest rates we have huge amounts of layoffs the market is swinging you know the other way we saw a huge upswing in the market in 2021 and the economy a huge upswing in the economy coming out of covid and now we're seeing it come back the other way like like a pendulum with a Vengeance right

24:02So 2023 is going to be a hard year I think I don't think it's going to be all unicorns and rainbows and to the Moon I think it's gonna be more crunch time and people really need to plan ahead with their Capital to make it through the as we call it the crypto winter good insights and I think that it's it's better to be realistic than you

24:29know overly optimistic but I'm sure you would agree that eventually in a couple years we'll be back to where we were or even beyond that yep yeah the you know what we're doing is we're keeping our heads down and we're building we're working on a street Marketplace through the project called lumarin which is for minors to get the utmost of profitability out of their hash rate so

24:57they can feed their hash rate onto a global hash rate grid which we're calling the Lumen Marketplace and that allows for anonymous decentralized buying selling trading and transmission of hash rate so that's you know that's the future of where we want to see things go we want to see if there are public pools with their own private pools

25:29So that's that's really the vision that we have is seeing this idea of hash rate as a commodity so you can start building Financial products on top of hash rate very cool I'm interested a whole different discussion yeah I know I'm interested to see how that grows Ryan what's the best way for people to learn more about these private mining

25:51pools and follow along with Titan's updates and these road map points that you spoke about yeah you can check us out at titan.io for the pools if you're interested in the decentralized routing of hash rate and the marketplace and the more like futurist futuristic Ambitions we have for the space that can be found at loomeran.io very cool thank you so much for all the

26:18insights into the mining space I am learning a lot it's it's a whole other world from just buying Bitcoin and holding it but it's important to understand because without it there would be no Bitcoin so I do appreciate you taking the time I will leave the Titan and lumarin links as well in the description box below all the best with Titan moving forward into 2023 and let's

26:39follow up in the near future awesome thanks Ashton