Solar powered Bitcoin mining operations in Colorado and Texas

0:01I'm Ashton Addison from Block West capital for investment pitch media and today on the cryptocoin show we have Alexandra DeCosta CEO and David Yee the CCO of Aspen Creek digital Corporation or AC DC both of you welcome to the show and thank you so much for taking the time today thanks for having us yeah thank you so much you're very welcome I'm excited to dive

0:23into the world of Bitcoin mining I've been a huge Bitcoin and blockchain advocate for many years but mining is not one of my specialties and I always rely on the experts to to hear on what are the latest Innovations how are we going green and making sure that we're not using too much power and also saving the world with Bitcoin which requires Bitcoin mining to verify the

0:42transactions so it's a pleasure to have you both on uh let's just dive straight into it from the top I'd love to start with an overview of you know what is ACDC uh how is your team working with Bitcoin mining and then we'll dive into all the details sure so ACDC was founded a little over a year ago to be you know kind of the world's leading renewable powered

1:04Bitcoin mining and infrastructure company uh it was really started as an answer to the question how can we maximize a kilowatt hour of power and most importantly how can we harness something that requires a lot of energy in this case Bitcoin mining as an opportunity to stand up new Renewable Power sources so our focus is primarily on solar you will see us with wind and

1:27Battery later on and what we really do is utilize Bitcoin mining which let's be honest does require a lot of energy but we use it as an excuse to stand up brand new renewable resources that are not only sized for our own purposes but also sized larger than our needs to bring new Renewable Power directly onto the local grids what it does for us is gives us

1:47access to very long-term uh cheap power which is excellent for Bitcoin mining but also gives us the opportunity to really understand that relationship between Our Generation and power consumption and how they need to work together so that we can think about you know how we can use this knowledge to apply it you know to other Technologies or honestly just kind of the next phase

2:08of of Bitcoin mining as we continue to scale so I will let David dig into our existing projects but we are a vertically integrated country our country company so that means that we are all the way up to the data center so we develop uh design own and operate our data centers and right now you see us as predominantly hosting with a little bit of self-mining

2:29yeah very very cool go ahead David yeah just to just build on that so today you know we have two sites that are uh built and operational our first facility was our was our facility that we constructed out in Colorado um it is a six megawatt data center that's co-located behind the meter with a 10 megawatt data set or sorry solar farm um and then that was completed uh in

2:52early 2022 and then our second facility which was a 30 megawatt data center that's co-located behind the meter with an 87 megawatt solar farm was fully energized as of October this year and we are just putting the final touches on on full deployment um at that facility and so that um that facility uh obviously is is just Southwest of Texas or sorry Southwest of

3:19Houston in the Texas Market um and then we're currently looking at uh our third and fourth products which are also located in Texas amazing uh great intro and and great to hear about the operations I'm fascinated by the the solar powered Bitcoin mining and just to you know prove the point that as Alexander mentioned you know you can generate excess electricity and you can power

3:42communities with Bitcoin it's actually the opposite of siphoning power away from communities so it's great to hear about that um I I'm curious on the intricacies of solar mining Bitcoin versus the traditional mining that's been happening you know before uh the the energy people came in and realized ways to optimize Bitcoin mining and also just the difference between in Colorado and in

4:06Texas I feel like you might probably get pretty good sun in Texas um can you talk about you know solar and sort of where it's at with Bitcoin mining and is that sort of the status quo now or not yet so you know solar mining uh or you know the Bitcoin mining with backed by solar is is nothing you know kind of new or novel compared to any other type of

4:28Bitcoin mining um it's really just I think for us what's most important is that we are behind the meter drawing from our own power generation I say our own we do not you know hold those assets on balance sheet but you know contractually you know are are there for our purposes and so um what what the criticism um about solar is and this doesn't just revolve around Bitcoin mining but is the

4:52intermittency right so obviously the sun does not shine at night and so there's a concern about how you're mining Bitcoin if you're only generating power on the sunniest of days you know to be very clear we do integrate with the grid not only does it allow us to draw from the Grid in Opportunities when we need to but most importantly it allows us to put

5:10that solar power back on the grid in those highest peak moments when the grid is really under duress for example on a very hot sunny day in Texas when power prices are really high and so I think what's um you know interesting here is that we are able to have access to 24-Hour power it's just that depending on the time of day and also on the state of the grid

5:32our power sources may be different but I think what a lot of people fail to recognize is that whether you're plugged directly into the Grid or whether you're plugged into a combination of grid plus wind or grid plus solar Bitcoin miners are not mining 100 of the time right they are turning off they're turning off when power prices are spiking uh or for other reasons and so

5:56for us the only difference is that when we're curtailing when we're turning off and selling our power back to the Grid it's when the grid needs it most and we're putting additional power back on it's not that by virtue of the fact that we are using some component of solar power that suddenly we're not able to operate to the same degree I would actually argue we actually have the

6:17ability to operate in more instances than a lot of our peers if they're only drawing from one specific power generation Source right if that power that you're plugged into spikes to some inordinate level you have to turn off with us we do turn off because it's the right thing to do and to put that power back onto the grid because clearly it needs it but technically we could

6:41just continue to run off of our own solar that's great to hear and great explanation that it makes sense you know obviously uh if there were two sons with one at night it would it would be a lot easier to stole their mind but there's a lot of limitations uh to but to work with the grid and then also help it when it needs it um that's that's great to hear and you

7:02mentioned about other potential renewable energy sources for Bitcoin mining as well where is AC DC at with that and are you exploring into ways that could be even more efficient yeah I'll take that one out um absolutely we are already looking at how to integrate is it our site no that's obviously not renewable generation but it is taking in power whether it's like Supply and then

7:27redistributing it back and when it's needed uh we're also assessing wind um and we do have a couple of win projects in our Pipeline and so when we actually integrate solar let's win Plus batteries we will get to a point where 80 to 90 percent um drawing from Power behind the meter and so we'll look very little in terms of power draw to the grid and that's

7:50ultimately where we want to get to we want to get to a point where we are relatively self-sufficient from a power standpoint where we're not you know putting any additional straight on the grid and we're providing 100 optionality where we can then put all that power back to the grid when the grid needs it um and I think that could be a really really strong value proposition in the

8:10future okay that's great to know and with sort of the ESG goals and trying to fight against climate change there's uh the notion of Corporations using carbon credits or trying to be carbon negative or decarbonization maybe you can touch on the ACDC acdc's efforts in decarbonization and and how you play a role in in helping the planet in that aspect

8:37so I feel like that's probably a good one for me my my role before this was was heading up ESG and impact investing and I um we could probably take up 10 hours talking about the hows and whys of a lot of the considerations that go into deeming and investment ESG compliant into carbon credits Etc but I think there's a couple of things that we'd like to focus on

9:00um we like to focus on bringing new Renewables to the grid I think that that's first and foremost and so there is the you know next phase of you know acquiring the wrecks that are created by the solar side retiring them Etc so that's one kind of large argument we're very fortunate that we are part of that process but I think you know primarily what we look at is by the mere fact of

9:26AC DC's existence at these projects did we bring new Renewable Power to the grid and the answer is yes and if you look at our pipeline over the next two years there's about three gigawatts of new Renewable Power that's going to stand up and so how we see you know the the kind of commitment and contribution to you know um climate change that's very much the

9:49messaging of our company um but it's again it's not just about Bitcoin mining it's really trying to show the marketplace that there is an opportunity to integrate large power drawing operators with Renewable Power now some is easier than others right Bitcoin mining is an interruptible load means you can turn it on and turn it off and there's no quote unquote lost work other

10:14than the opportunity cost of mining for Bitcoin but you know you're not starting over from scratch it doesn't take an hour to turn on and an hour to turn off so we are very fortunate but we did this intentionally to start showing how this works again from a contribution from that perspective when you look at carbon credits and all the likes um I think that there are a lot of

10:33industries that are focused on the acquisition of carbon credits or the generation of carbon credits through Affiliates because they themselves are not able to reach their own or their country's Net Zero goals on their you know through their existing operations right so someone is going to be generating carbon with their industry and they don't have a way to sequester

10:56it right now so they think well if I go and I purchase a carbon credit that carbon credit should theoretically help Finance name the initiative right reforestation or copper sequestration research or development I think right now where we're at is an earlier Stage Company is very focused on standing up the brand new Renewables and that's you know massive Point number two to that is and

11:17this is from an investor perspective is being extremely transparent about our processes and that's a very painful position to be in right now in the Bitcoin mining world because there seems to have been this massive kind of divide between who uses what as an energy source as opposed to maybe focusing on can we start shifting it in a different direction that makes it more

11:39efficient to buy Bitcoin or cheaper to mine Bitcoin right stop talking about things that cannot be changed overnight so what we try to do is just be very transparent about energy usage energy sources and say look we're not perfect but we're going to get better and from an investor perspective those disclosures don't just allow them to tick boxes on the ESG you know

12:00spreadsheet it actually allows them to underwrite our risk as an investment and as a counterparty and I think that that's why we really focus on it is that when you start looking at someone's energy consumption or where their materials are coming from not only are you able to make a judgment call on the greenness of that information but also you get a better sense of their supply

12:19chain constraints you get a better sense of their cost of operation when you know what they're power you know sources are so I think we maybe do it for different reasons than taking the Box you know and as someone that came from that world most recently it's very dangerous to kind of Chase the latest trends because the minute it becomes a trend it's over from a

12:42regulatory perspective right so so do it for your own reasons and be transparent and stick to it is how we thought about it yeah great Point especially in the you know the world of decentralization transparency is key you know be as TR be as transparent as as the Bitcoin blockchain is with its transactions so I like that initiative Alexandra and speaking of you know the Bitcoin and the

13:08revenue being in Bitcoin you're mining Bitcoin you're collecting Bitcoin you need to pay for the operations in Bitcoin as well um miners were loving it when uh the Bitcoin price had skyrocketed last year but the competition increased a lot and then when it dropped down uh there was less competition because some of the miners were struggling as well I'm

13:26curious on how your team uh forecasts you know the the expenses and and the fixed costs when the price of Bitcoin uh you know could go back down it could take another year or two for it to go really high how do you manage you know selling uh the Bitcoin that you get to pay for the operating expenses but maybe holding on to some of the Bitcoin in hopes that you know it does multiples

13:50again in the future years so from our perspective um in order to manage you know our Bitcoin exposure from a revenue perspective um the best protection that we have is is to manage our costs is to increase the margin as much as possible and so if you are a meeting cost operator so if you're on the lowest end of the cost curve you'll always have an inherent

14:14advantage over every other line that's operating the really interesting part of Bitcoin mining from an economic perspective is there is an inherent hedge to your revenues as the price of Bitcoin comes down so if you're on the lowest end of the cost curve and as the Bitcoin price drops other higher cost operators you're going to have to turn off because they'll no longer be

14:39profitable what that does is it reduces the network cash rate and actually increases your Bitcoin mind per block uh you know the amount of passion for per unit of hash that you're contributing so as the price of Bitcoin comes down the hash rate drops your Bitcoin production actually goes up and even with the Bitcoin price coming down your revenues will actually be normal enormous right

15:02obviously when going from 68 about 67 68 000 down to 16 500 it's not like it's a one for one you know makeup there like our revenues are clearly going down but being on the lowest end of the cost period means that you can weather the storm much better than others so that's that's how you really can set up your business with success we have also pivoted not only from South mining but

15:23also to post it and so from our perspective it is more clear more stable defined revenue streams to our business so that we can make sure that we're managing our costs appropriately um and that so I think there's a there's gonna there's always going to be a mix it's going to be self-minding when you know the returns justify the additional capex to purchase additional Learners

15:48um but it's also you know assessing is hosting the right alternative at certain times as well we're really good at Power we're really good at um managing our power costs and so it actually worked really well from a hosting perspective because many hosting businesses over the past year have struggled um to actually deliver on on their performance or their promises right

16:12um you see the bankruptcies and other hosting providers are going through from our perspective if we can manage our costs and we can offer a you know a good rate from a hosting perspective it's a win-win situation for for everyone involved okay great to know and say just to to expand a little bit on what David said because I think it's it's it deserves

16:33you know kind of extra emphasis is the the power first model really enables us to view power inputs as more of an asset than a liability don't get me wrong right the power is not free and if you aren't careful you can get caught off sides uh thankfully you know we have a team in place who have spent their careers managing large risk uh and doing so you know with the

16:59the kind of format that that we carry but but I think that that's a huge differentiators that not only have we Diversified our income stream from a self-mining with the addition of Hosting but our ability to control a large component of our power does enable us to use that fluctuation in power as another contributor to you know AC DC's revenues as opposed to just being a pure

17:24liability okay and I'd love to get a little bit more explanation on uh that the revenue stream of Hosting you know can you explain the difference for for people who aren't familiar with Bitcoin mining on obviously self-mining you you have some rigs that you own them and and you're you're mining but with the hosting is it that you're hosting other people's rigs or you're just allowing

17:46them to tap in and and pay for those costs or how exactly does that work yeah so when in a self-mining vertical integrated business you know you're building um all the way back to the substation and you're building whether it's stick build structures or it's containers the actual racking and networking that's required to draw the power for for Bitcoin mining

18:10um as a hosting provider you essentially do everything up into purchasing the mining rig itself and so our customers will actually purchase those rigs they'll ship them to us we will plug them in and we will operate them and we power them up what that means is that the the customer takes the vast majority of the kind of Bitcoin price volatility on their

18:33revenue line items and then they're going to have to fix costs let out into us we typically charge a fixed rate hosting charge on a per energy usage basis although you know we can enter into some other creative structures as well whether it's you know power cost pastors and property shares and things like that okay okay that's great to know and and yeah that uh that I from what I

18:54understand you know the mining rigs it's it's tough for somebody to build have one and use it at their house and try to you know the cost of electricity they don't have that economies of scale like they have you guys at the warehouse so it's probably better for them to use it at your facility I mean that's that's exactly the point right um most residential customers cannot

19:16compete with wholesale electricity prices and so I don't know what issues that you guys are at but you know typical retail prices where I'm here up in Canada can be near 10 cents you know a kilowatt hour that right now is is unprofitable to be money Bitcoin with an s19 J Pro um and so yeah I mean that that's that's Point number one is it's just not competitive from a cost perspective but

19:40more importantly a lot of Bitcoin mining uh investors they're not operators they're for the most part they're Financial buyers and they obviously see um the value add that Bitcoin mining brings to the network and they want to you know dollar cost average their Bitcoin by by mining Bitcoin as opposed to purchasing Bitcoin um so they may go out and they may buy

20:01100 mining rigs but then it's like okay so now what right um it's actually slightly more complicated to to run these things than people expect uh they're very finicky they like to operate under certain temperatures under certain climates they need the proper airflow they're also Extremely Loud so you can't really put them in other facilities um so these are very very purpose-built

20:23facilities um if you want to be mining at scale you need you need someone that knows what they're doing mm-hmm okay great explanation David thank you and and speaking of uh very loud and large facilities I'm interested to know about this expansion of the newest facility in Texas and you know how big is that and what does it mean for the expansion of AC DC

20:46so the third facility is going to be a 150 megawatt data center uh co-located behind the meter with 200 megawatts of solar the Solar Development is already complete so now you know the the Final Phase of kind of the interconnection work is underway and and it's standing up the data center so that is Project number three you know we've kind of been jumping in in 5x increments from our six

21:11to our 30 and you know 30 onwards so um it's it's very exciting but you know I think what's doubly exciting about this project is that the real um Achilles heel of the industry right now is access to these new power infrastructure and access to you know very attractively priced power and so you're seeing that in you know a lot of particularly the publicly traded minors

21:35that have to disclose you know what their house rate is what their you know projections are going to be and so you know what really what we're really excited about is the opportunity to enter into some really great strategic Partnerships and the industry I think again if you go back to the core values basic DC it is to help stand up new Renewable Power and to think about you

21:52know the creativity between power generation and power consumption it's not to only ever self-mind and never share and not never collaborate uh we actually you know we leave with power first and there are folks out there that lead with you know whether it's operations first or access to more capital or access to more machines and so this is a cool one because it is big

22:11and there is a very large amount of unused minors sitting on the sidelines looking for places to plug in and there is more of a Focus right now on on utilizing Renewable Power you know particularly in Texas you don't want to just be sucking more power from the grid they really need more folks to help add new power to the grid and add flexible loads so it's a really great state to be

22:35doing business in with our business model and we're pretty excited to partner with some folks in the industry to you know kind of team up on this bigger one very exciting and David do you have any other details around the timelines or the Partnerships or what you're excited about for for the next Warehouse yeah well I think what we'll say is um we're guiding towards the second half

22:57of this year um in terms of deployment um but hopefully have it all fully operational by the end of the year um this this site at this scale is something that's going to have to come on at phases right yeah it's not like we're gonna flip the switch and then all of a sudden 150 megawatts worth of monitors are going to be operating the next day so you know it is a big

23:17Endeavor but we are targeting you know second half of this year for for deployment um yeah like Alex mentioned that the solar is done so it's really on us to do the necessary work to uh to to do the site work that's required in order to actually get the powerful Wing where it needs to be it's very exciting I'm looking forward to following along with that and and

23:39it's it's fascinating to see things that large like uh be built so I'm looking forward to it now what is the best way for the viewers to to learn more about AC DC the types of power you guys are using or get involved with some of the operations you're doing so we have our website which is uh acdigitalcorp.com um we are also on Twitter AC DC

24:08underscore HQ uh and you can find any of us on LinkedIn or Aspen Creek digital corporation on LinkedIn um so you'll see some news about some of the Partnerships that we currently have at our sites you know we're always looking for you know wonderful people to reach out and those that want to learn more about you know integration with power and and most importantly I think

24:29those that are pretty excited about this next phase of of integrated Renewable Power with existing Technologies definitely well thank you for making Bitcoin A Greener place um and and this initiatives that your team's building I'm really interested to to see this new facility go up I will put those links in the description box below for the viewers to to follow along

24:50and let's definitely stay in touch and and follow up you know in these phases of the newest facility I would love to do another video in the future so thank you so much for your time to today both of you thank you so much for having us yeah thank you so much