Why the USA needs more Bitcoin mining infrastructure

0:01I'm ashon Addison from the Crypto Coin Show and today on blockchain interviews we have rajie kamani CEO of orine rajie welcome to the show and thanks for taking the time thank you Ashton thank you for having me on your show very welcome excited to dive into blockchain infrastructure Bitcoin mining as well I know your team just came out with a new release which I'm excited to dive into

0:22today I know that you have a lot of experience not just in blockchain in business over the past decades as well so I'd love to start off our conversation with just hearing a little bit about yourself your background what got you to this point and then we'll dive into the latest on ardin yeah absolutely so I've been in Silicon Valley for now more than 30

0:44years and during that period I have worked in certain big companies you know companies like sun Microsystems which is part of Oracle worked at net app which is a storage leader but in the last 20 plus years I've been involved with four different startups so the first company was a company that did Network processing semiconductors it was acquired by Intel I worked at Intel for

1:09several years my second startup company was a company called cavium which was a leader in security processing and multi-core processing products that company went public eventually was acquired for $6 billion and then my third company was focused on the trans position of the world from Enterprise to the cloud and we build very high performance

1:36networking silicon for the cloud and AI networks and that company in 2021 was acquired by Marvell for approximately 1.3 billion so I've done several companies arine which is the current company where I am co-founder and CEO is my fourth company Focus as you can see is on infrastructure and providing very high performance sustainable and Secure Solutions mhm wow that's a

2:03incredible experience for gief and it's so fascinating that now that has led you to working on rodine and at the leadup of all this infrastructure I feel like we're we're rebuilding the entire Internet with blockchain and the cloud and it the beginning of blockchain it wasn't very scalable and as as I'm sure you know scalability is

2:25importance to infrastructure as you know we're still at such a small amount of people that utilizing blockchains but hopefully probably it will be hundreds of millions to billions of people in the future and you need to have scalable infrastructure for that can you talk about the different facets of Arin and what exactly are you working on

2:44Where does the architecture need to be bulletproof for blockchain to scale yes so at AIG we have focused on two areas blockchain and AI both of which we believe will have a multiple trillion impact on the global economy and it over the next decade or more you know the challenges that these new technologies have are not very different than a lot

3:09of the internet Technologies in the past all of them require very high performance all of them require Energy Efficiency all of them require security and so I think the what we have done is we've assembled a team in at arine that has done this many times before very successfully and so that's what we are focused on so in the case of

3:36blockchain we all know that the number one blockchain in the world is Bitcoin and Bitcoin has a se you know a couple of big challenges that are needed to be addressed as it moves into the next few year window and we are focused on delivering that performance and sustainability to bitcoin M yeah no of course that's very important and I'm guessing that

4:04also has to do with securing the Bitcoin network Bitcoin mining and the miners and making sure that they can support the network as it continues to grow and that there's not a backlog of transactions and that it costs a lot otherwise it won't be scalable so how exactly do we address the scalability issues of Bitcoin yeah so Bitcoin has a few different things that

4:31I think need to be addressed number one as we all know Bitcoin uses energy to secure and provide that stability to the Bitcoin protocol and the network so that use of energy is very critical however you know we are in a world where we have to be respectful to The Climate and so the idea is how can the energy that Bitcoin uses be used in

4:58a constructive fashion and there are lots of ways to do that one thing that people are working on well the first thing people are working on is to make sure Bitcoin only uses renewable energy and that trend is happening and it's very positive and everybody is on board with that the second thing is that is happening is this notion of demand response where Bitcoin consumes

5:21energy only when it is either excess energy or it's wasted energy right and when the rest of the world the consumers or the industries need that energy it gives it back right and the benefit of that is that it doesn't increase the amount of energy that's that's needed but what it does is it stabilizes the grid and really makes sure that it

5:45provides a better return on investment to the people that build these energy sources right so that's another big important thing and then the third thing that is happening in the Bitcoin is today you know if you look at the Bitcoin hashing that's very evenly or generally evenly spread out across the world across various geographies

6:12North America has approximately 40% or so of the global hash rate you know that's hashing is happening in China you know and more and more in the Middle East in South America and so forth however the supply of Bitcoin as6 for one reason or another is almost entirely out of China based companies and that's not a good thing for a decentralized protocol you really

6:39need the supply of A6 to come from various geographies and that's another challenge so we had already a focused on addressing all of these some great points I'd love to dive into all of them you mentioned at the beginning there about the renewable energies and ensuring that bitcoin's not sucking energy out from you know households when they need it's using

7:01the excess or the wasted energy and there's I think there's a misunderstanding or just not enough information given to people about how renewable Bitcoin is right now and also how much power it actually does consume people have made comparisons in the past about you know it's it's using more energy than entire cities or entire countries but I don't believe that to be

7:25true do you have any like insights into how green Bitcoin is right now and relatively how much power the network consumes yes so you know the estimates are more than 60% of Bitcoin mining is using renewable infrastructure and that U percentage is increasing every day so that's number one the other thing that a lot of people don't know is that the amount of

7:54wasted energy on the planet today is just unbelievable you know I just have been learning about this space over the last few years and what I've learned is that natural gas and methane flaring combined across the planet is you know 250 billion cubic feet gets flared and wasted it actually adds to carbon emissions

8:23and global warming and so forth the total energy that the Bitcoin Network consumes is a small fraction of that so if we if we can use that wasted energy we can actually in many ways reduce carbon emissions and global warming if we do it responsibly right and so that from our point of view is an important thing to do and it requires obviously education as well as

8:51Effort on the part of the Bitcoin miners as well as Regulators to make sure that the whole world moves in this direction mhm great insights rajie and on the minor side on the actual hardware and the infrastructure that's used to make the calculations and bring the energy in and turn it into Bitcoin how how do you guys build new hardware to measure the efficiency to

9:19make it more efficient making sure that it is green making sure that it works well with renewable energies it requires very you know Bitcoin is one of the things that requires Leading Edge process technology semiconductor technology and so we have to be developing at the most advanced process notes in addition there's a lot of architectural

9:43work and process work that needs to be done so I believe that there's very few companies that can pull this many companies have tried and not succeeded in the space seems like a simple problem but it's not it's very very hard from a silicon point of view but that silicon by itself is not sufficient you have to build at a system level and at a software level capabilities that allow

10:09for very rapid demand response and at aine we have this technology that we've innovated from the ground up which we call Energy tune where the miners can at a single minor level or at a data center scale level modulate the energy consumption in close partnership with the energy providers to make that demand response happen so it requires a lot of Technology

10:35Innovation to put this together so you said that the hash rate the hash rate in the network is fairly decentralized geographically but the actual production of the miners themselves is mostly in China I feel like that could be a problem for different reasons and from different countries reasons is that something that your team is working on trying to

11:01bring more decentralization to that and fix that balance yeah so today we are the we are us-based company we are based in Silicon Valley California we have put together a supply chain that allows miners to get that optionality and risk mitigation so we are working hard to make that happen and what we what we also believe is that not

11:29only centralization is the risk but the world has gone through and continues to go through Supply related shocks because of pandemic also because of geopolitical issues sanctions tariffs access to Leading Edge process technology are all important aspects of this and so I think it's important to have supply of as6 from multiple places

11:56in the world and I think it's important to you know Bitcoin is at a at the verge of lots of ETFs lots of people will end up owning Bitcoin through those ETFs it's going to become an integral part of our financial system and you don't want to have a scenario where there is risk of centralization and as you know centralization can result in the 51% attack on the Bitcoin

12:21protocol which we never want to happen M no great point and when a lot of the miners are are built in one specific country you know I don't know a lot about the intricacies of these as6 but I'm familiar with you know ant Miner as one of the bigger names in mining I'm guessing that's from one of the Chinese made companies it's is it a matter of efficiency versus cost

12:48and quality you know are you able to produce something at equal cost to what could be produced in China but also obviously better quality yeah so what we are doing is our focus is to build the best efficiency products our focus is to build the highest Performance Products and our focus is to deliver you know better capabilities on demand response and uptime so the

13:15way we are focused on this is to provide a much better total cost of ownership to the miners so the quality of our products is better you know we have the ability for C rapid curtailment of energy which provides economic value to the miners as well and so overall you know we believe we offered the best solution on the market today and I'd love to sort of Zoom this

13:42into Bitcoin and the mining environment throughout 2023 and 2024 You know despite the price of Bitcoin sort of fluctuating but overall going up quite a bit in 2023 it seems like even during the bare Market the Bitcoin hash rate and the amount of people that are getting into mining continues to rise and from what I understand Bitcoin hash rate is near all-time highs and it's

14:07probably only going to get bigger and with the major event which primarily affects Bitcoin mining but it does affect everybody in Bitcoin in 2024 is the Bitcoin having event can you talk a little bit about what you're seeing in the mining environment throughout 2023 and throughout the price rise of Bitcoin that we've seen this year is there a significant amount more miners

14:33coming into the space and is getting more competitive halfing is going to happen right people expect it to happen in May 2024 and when that happens the amount of block rewards reduces by half and so what people in my view are trying to do is maximize the hashing to capture as many of the Bitcoin rewards they can in advance of the of the halfing now what happens

15:02after halfing if you are a miner that's running a Bitcoin mining data center there are four things that become much more important than in the past number one is efficiency MH because what you want to do is consume less energy because the cost of mining a Bitcoin doubles so that's number one second thing is I believe we spoke about energy demand response and energy

15:28partnership I think that's going to become even more important than ever before the shift to Renewables and so forth and we may for all we know see some consolidation where energy providers will want to either buy miners or vice versa and we could see that over the next four year window okay so that's another big thing third thing that

15:53miners have to always be prepared for is volatility so the bitcoin price is volatile but in addition there's the difficulty that you can't predict the climate that you cannot predict regulation is another thing you can't predict and then the transaction fees on the Bitcoin blockchain these are all unpredictable things and you want to be prepared from an

16:19infrastructure point of view to mitigate or adapt easily to that volatility so that's another very important thing and then finally as we discussed earlier geopolitics and supply chain resiliency is an important aspect subsequent to the halfing mhm there's so many different factors to consider when you're running these mining rigs it's it's crazy and with

16:44your team being in the Silicon Valley I'm curious if you have a knowledge of mining within the United States versus you mentioned in China and in the Middle East I know there's a lot of factories there as well that have probably thousands of miners in them does the United States have competitive energy costs or is there specific I'm guessing in inside of the

17:08US there's different regions that you can probably get the best bang for your buck in terms of where you should be mining and where is the most efficient yes it varies it varies from place to place you there are places in the United States in fact you know I just met somebody yesterday that is building a brand new company just focused on natural gas

17:33flaring and they're able to get attractive costs for that because not only are they getting cheap cheap energy that would otherwise be wasted but they also get some carbon credits along with that okay so that kind of gives it makes it a win-win for everyone there are cases where in South America for instance people have been able to get very attractive

18:00energy costs in Hydro you know energy sources where it's stranded energy where there is no transmission line and until those transmission lines get built and the demand happens that energy is available in a cheaper rate and then eventually will go up so it's one of those things where Bitcoin can fill the void and provide some good

18:27Roi I've I've when you mentioned South America there I'm not sure if it's efficient and working but I heard the story about you know powering the Bitcoin miners through the volcanoes that was a big thing in El Salvador but I've also seen other videos and working testimonials about know cooking oil or burning garbage and all these different ways to sort of power

18:50Bitcoin miners I'm guessing that the main renewable energy sources are I don't know solar and natural gas and things like that wind is another one wind Hydro solar and then of course natural gas and methane yeah very interesting and with the leadup to the having what does it look like for you guys that just released this minor are M are the miners looking to buy

19:20they're buying them now or I guess because there is a sort of there's an efficiency every time you around every year or so it seems like there's always it's like a new iPhone there's always a new Miner coming out that's more efficient and of course the miners have to buy them and put up costs ahead of time and then sort of average those out over the use of the

19:46lifetime of the miners but I feel like right now we're maybe six months away from from the having are people buying the new Miner in relation to the having or is it in relation to the business that they're running and hey you know their miners are 2 years old or 3 years old so Now's the Time to get a new minor I mean like I said efficiency is going to be super critical and

20:11then if you look at the trajectory of the Bitcoin price while it's volatile it does follow a pattern we don't know whether it'll recur in the future but typically in the 12 month or 18mon window beyond the Hing there is a Bull Run mhm and what happens is that you have to be prepared with that infrastructure to be ready for the bull run right and so in order to be ready

20:38for the Bull Run you have to have deployed this infrastructure ahead of that time not at the tail end of that bull run and typically after that bull run we've seen a crash and we've seen this multiple times in the past so the current expectation and again we don't know if it's going to happen is that 25 2025 could be a great Bull Run and so if you

21:03want to take advantage of that potential Bull Run you have to be ready in 2024 and so we are talking to a bunch of folks that are working with us on pre-orders and you know want to lock in those Supply because you there is always a scenario where Supply becomes tight in that time frame MH yeah no great insights and I'm guessing that the business is probably going

21:28to be quite busy for ardin leading up to the Bitcoin having which it's by block number but it's it's approximately the end of March or April which comes quickly yes so is the plan for your team now mainly to just push out as many of these Miners and focus on efficiency and quality as

21:55possible from from now until the end of the having certainly for our Bitcoin product line that is absolutely the case and you know we are building the supply we're executing on the product we are getting ready ourselves to be able to put the best software and the capabilities we actually have you know our first product line which we

22:19announced earlier this year we have shipped initial units of that to you know about a dozen or so customers we have ship we have some meaningful orders already in place that we will ship in the first half of 2024 and then the new products that we just announced will start shipping in Q2 of next year which is like right after the halfing through the balance

22:47of 2024 and Beyond very cool so we are really busy getting this whole product pipeline in place definitely and what is the best way for people to learn more about Arin Tech and just to follow your Works they can visit our website idine.com there are ways to connect with us there are ways to learn more about the products that we have and U

23:16we are actively talking to some customers we would welcome people to reach out if they want to sounds great rief thank you so much for all the insights on Bitcoin mining Energy Efficiency see building out the infrastructure for Bitcoin and blockchain to be more scalable we're going to need it and I hope that you know Bitcoin outperforms all our

23:40expectations for the next two years and I know your team's going to have a role in that creating the miners to actually mine the Bitcoin so all the best with everything moving forward into the having and Beyond and let's definitely follow up in the near future thank you very much Ashton it's great to be on your program