Quantum Expeditions builds profitable Bitcoin mining with natural gas

0:01I'm ashon Addison from the cryptocoin show and today on blockchain interviews we have Doug Hardwick CEO of quantum Expeditions with us Doug welcome to the show and thanks for taking the time hey Ashton it's great to be here thank you for the invite likewise excited to dive into Bitcoin mining operations and uh operations within the USFA as well excited to hear all about the latest

0:25updates with that uh I would love to start off our conversation by hearing a little a little bit about uh the current operations with Quantum Expedition where and what you guys are doing and then we can dive into all the details you bet yeah we've uh we're currently uh mining with 188 miners 144 s19 uh uh s9s and then another 44 s21s uh we're actually in a hosted space

0:58right now uh which was really a great opportunity that we had at the time while we uh get our uh home base laid out and uh built up so uh it's been an interesting uh Journey as uh as uh we started so yeah we've got those miners up and running and then uh we're also you know building and uh for an expansion into into the peran Basin on

1:28gas very interesting so this operation is in it's all in West Texas at the moment uh pretty close pretty close it's within the continental United States for sure we're kind of keeping the first our our first location it's a temporary location we've kind of kept it uh Under Wraps you know the exact location but uh you know since it is a a temporary uh

1:56situation great so a little bit about your history I believe you were in oil and gas before and then that trickled into Bitcoin mining maybe you could talk about that transition a little bit yeah I've I've been in the oil and gas industry for over 20 years and um I got a call about three years ago last month mon actually uh from Oz Sultan and asking if I had any flared

2:23gas and I was like well I don't but I know where it's at and uh so that started our our journey together I was just out there going to find them some energy but as we uh work together and uh really it it's kind of interesting how it kind of all worked it worked out but uh you know next thing I know I'm the CEO of the company so in the same natural resources

2:53that you uh that that companies are using for oil and gas you actually able to tap into that or the the Natural Gas part of it for Bitcoin mining as well right so when we first started we were talking to some very you know some of the largest oil and gas companies you know in West Texas and uh one site was actually in New Mexico but the challenge is with these

3:19billion dollar operators these eventually they're going to have a pipeline to that gas weld so they could sell the gas and I didn't want and we didn't want to move you know every 12 months the most they would give you is a 12-month contract and so you're going to lose a month or two every year moving and I that just didn't seem like a very good idea and

3:45so uh while we're doing our research and and all uh you know was introduced to a guy through the oil and gas industry had a friend that had us a mining uh location they you know expanding 10 20 megaw but they had their first location with 7 is as big as it would go with a small 20ft trailer and we were actually offered that and so that's what we did

4:11is we moved into there bought some miners got right to mining is and that was uh we bought those miners in November of last year um and uh at the bottom of the market actually which is a very unique uh opportunity and so we went ahead bought those moved in we were mining before Christmas which was you know fantastic and because we felt that was a better

4:37opportunity than buying some s21s and waiting a few months and so on so we did a lot of uh market and Analysis and and research and due diligence and all things it takes to determine when's the right time to pull the trigger and that just seemed like the best opportunity in the meantime we also got our power purchase agreement in West Texas for five

5:00megawatts and uh but we didn't move there because we could you know just move into one that's already built and uh not have to pay any money for infrastructure that's saved us six figures easy right so they just you know things move along you know just when you think you're going to go down through this door it gets shut on you and next thing you know you've got a better

5:26opportunity down the hall and that that's kind of the way our company has been running quite well um so in the meantime I'm still networking and trying to find that oil and gas guy who doesn't think um you know Bitcoin is some scam or pyramid scheme or something you know that most most people out there believe even today not just oil and gas so now

5:56we have this guy uh eventually uh two years later we finded a guy in West Texas who had just bought a field from a guy that passed away years ago hasn't been operating at all and uh but in the past all they've done is just produced the oil and flared the gas and uh so his brother tried getting him into buying Bitcoin years ago he's got a wallet and never used it and so you know he had

6:24that really close relationship to bitcoin but he never really pulled the trigger and so when I was introduced to him uh you know he's a small operator and he's just going to vent the gas and that's the challenge that they have in West Texas is there's so much production there's more gas than they've got pipeline to get it to Market and so the only opportunity these small operators

6:49have is just to flare it or vent it right and we know now that by taking that gas instead of flaring it is put it through a generator and you can actually lower the emissions and so I was showing this guy all the things that we could do and how we can do it and the the thing that he saw is yeah we're going to pay way below market for for the natural gas

7:17but it's money for him and then we also uh will show him how to take we're going to put a couple of machines in our container for him so that way we he can mine himself and uh we're going to show him how to set all that up we're going to help him set up cold storage so that way he can do you know what our Mantra says is stay safe stack SATs and hoddle

7:42we want to teach him how to be his own Banker too wow that's really cool and this sounds like a great opportunity that Quantum Expeditions has come across so from what I understand Texas has pretty affordable uh electricity with that with that purchase agree but in this case you actually are utilizing the excess of the natural gas and I'm not too familiar with the oil and gas

8:08industry but from what I understand the extra gas is flaring or it's just going up in smoke and like you're able to tap into that to actually mine Bitcoin uh in something that would have just been going to waste that's that's exactly it right and that's why we're able to pay below market for the gas also is you know if they're just throwing it into the air

8:32why not turn it into cash flow and so that's what he he also sees and this is you know part of the the the whole you know what is quantum all about right we want that sustainable we want to be friendly to the environment you know that's very very important to all of us and so we know that by taking a flared you know vented gas that's just you know methane into the air that's

9:00worst case scenario right but instead of doing that they get a permit to to flare the gas but we also know that if we take that gas instead of flaring it and running it um through uh different equipment and then into a gen set that that lowers the emissions as well and so we're able to do a lot of things all under one umbrella and that is number

9:28one is where helping the environment by uh burning the gas properly number two is we're helping this you know small oil and gas company become a stronger Company by giving them another Revenue stream and number three is we're contributing to the entire uh Bitcoin ecosystem and I think that's you know when you put all that together plus

9:57we're going to help orange pill West Texas oil men that ain't all bad yeah no it sounds like a great combination and I think just as you said uh people uh that are outside of the industry often they think you know of some kind of scam or they don't fully understand this new asset class yet I think there's also a misunderstanding about the sustainability of Bitcoin mining and the

10:24fact that oh yeah Quantum Expeditions is able to tap into fully sustainable energy source um and you know there's there's rumors out there that Bitcoin is taking up the most energy of any industry and it's bad for the environment but it sounds like it's the opposite you're actually you know doing the environment a favor in this case yeah we're coming up on

10:45Christmas and I I can tell you when I did the research uh Christmas lights in one month use more electricity than Bitcoin mining wow in the states so it's crazy you know and Yeah Christmas lights make you feel good and make the kids laugh have fun right but this is actually contributing to people's livelihoods and uh you know helping people uh in in a lot of different ways

11:16so yeah Bitcoin does get a bad WP and I don't think uh so for those of us who understand Bitcoin we understand what doing you know how we're contributing and I don't think we've done a really good job of telling people the good news that Bitcoin brings to the whole uh uh electric grid system right so we've got

11:45grid stabilization so you know that's one of the benefits uh demand response you know so if there's a need I mean look people that own Bitcoin mining companies were human right we've got grandmas grandpas Aunts Uncles cousins you know relatives people friends family and we don't want them to in the summer of West Texas you know seltering hot we don't want the

12:13hospitals and retirement communities not have electricity to keep them cool so if there's that time that it's 100 plus degrees in West Texas there's not left enough electricity to go around well with bit coin mining we can shut down it's almost like having a battery you know the battery within the the whole uh grid system because instead of utilizing

12:39that energy we can turn miners off and have that energy redirected to you know hospitals and nursing homes and schools homes you know everybody that needs the electricity and so that part of that demand response is what I don't think a lot of people understand the other thing you know here in Texas we have more wind turbines than any other state in the

13:05country and from my understanding recently we also became uh uh the biggest for uh solar energy as well and so there are times when there's more energy out there than the grid needs and so what we can do as miners is take use of that and so by take by these windmills instead of them just parking them turning them off they can keep them

13:34going send that energy to a minor and that way we're utilizing an an idle asset or what would have been an idle asset so what's that you know what good does that do well it's not just the minor making money it's also the grid system that's also earning an income off of a wind turbine that's moving making making money and that's one of the reasons why you know uh the uh Bitcoin

14:04mining companies in general should have a lower cost because we're actually a huge contributor to the whole uh grid system wow that's very cool and speaking of making money you you mentioned starting the operations around last November before the launch of the Bitcoin ETFs and all the institutions driving B into that uh the Bitcoin price was significantly lower than it than it

14:34is now I think maybe it was around 30,000 um at at the time um and 30 to 40 heading into the ETF now we're sitting at 990,000 here one year later um can you talk about the the profitability there's so many variables in supply and demand and when the price goes up the competitiveness of mining goes up um how do you determine that when you started and then as the price Rises and it gets

15:01more competitive how do you stay profitable yeah so I we saw recently A lot of these publicly traded mining companies while the price of and this is after the election right the price is going up but then their stock price was going down well that didn't make sense but then if you go back and you look well they were reporting a loss they were making huge

15:27losses in the third quarter and that's because you know you remember early in the second quarter uh we had the having right so now we're making half as much and these companies are just loading up tons of miners to you know their operations and so what that does it makes the difficulty higher right for for mining so when the difficulty goes up then you got to have more power more

15:57hash rate if you will uh uh to get the same amount of Bitcoin right so there's that balance that they have invested tons of money into brand new machines and what I in my opinion they also have very large offices they have tons of people and uh what I call oak doors and marble floors that they're paying rent

16:26on and they've got multi-million dollar uh salaries to pay and so you take that their operational as well as their Debt Service from all these things that they've bought and still have uh they their operation their cost of doing business is so high and so that's you know a lading contri contributor I believe to why these companies during

16:55the time of Plenty was not making much or none at all or losing much so for our little company the good news is you know most of us I think all of us are working out of our house you know we're we're putting in The Sweat Equity to build this company on the early stage and I think that's really important and when we go back and we do the an analysis and you'll see that in our

17:21reporting is that uh we're actually still making money um even with our s9s and a few 21 so you know that's because we don't have a lot of expense we don't have any debt at all and so we don't have all that taken from our profit and I think that's why you're going to find our company is a very strong even for as little as we are yeah that's a great point about

17:49large operations and we've seen great examples of crypto exchanges versus Banks and you know they have 5% of the employee and their profit numbers are much higher because they're not paying all those brick and mortar expenses that these large companies are and when you start a a new operation like like Quantum and you're you're running it lean and and

18:13you're and you're working from home as well obviously there is still Capital expenditures of the miners and and housing them somewhere um but you don't have to pay for for all those uh extra employees and and marble floors um that that's a good thing but but of course you want to expand as well it might come to that but most importantly is getting more miners getting more Bitcoin mining

18:38power so I'm guessing that's in the works um what is next for the expansion in growing it larger yeah great question that's one of the the beautiful things about uh what we're doing in West Texas and setting up in a uh on the gas itself you know cuz right now mining on the grid is is good right you get good consistent power all the time uh unless

19:07there's a storm we've had one of those blow through and knock us out but uh we also have uh in Texas and there's I don't want to get too deep into it but when being in the oil and gas industry for 20 years I understand that gas Wells are not consistent and so there's that fine balance that you have to have with we know how much

19:34gas we need to make a megawatt of power so now you and what like what we're doing right now we've got the equipment on on the ground going around testing all these different Wells we'll get all these reports together and then we take all these reports to the Gen set supplier to determine exactly how much we can mine um and uh one of the things that uh figure out how to say it properly

20:04here I mean we're we're going to expand in a big way we've got the plans we know that it's going to take about 6,000 mcf to get an ex aash of mining on the uh off grid uh on the gas so that's kind of our first step and we've also got the power purchase agreement with 5 megawatts and uh I mean truth be told we've been talking

20:32to AI people for a while and so I think you know with AI you need the uptime you got to have the guarantee uptime in order to get the AI contract and I think that's probably going to be the nucleus of our um the power from our on grid will probably be in that Arena uh haven't made any definite plans on that yet but you know we're we're in conversations with people

20:59so you know we're going to be Blended I'm very confident but you know and I've repeated this a million times or at least a 100 is that uh we don't just shoot from the hip uh we will be cautious and I'd rather error on the side of caution as opposed to just jumping in with two feet not knowing what's at the bottom so you know we we take a real methodical approach I mean

21:26we did research for two years before we pulled the trigger started Mining and I think that's really a testament to our company and just because the door shuts and especially now you know we we keep saying this is that a lot of it people say you could just got lucky or whatever and and I and others in our group all three of us and the founders and uh our

21:51newest edition uh which just got announced today uh but we all believe in in divine intervention as well so I think that has a lot to do with you know not getting upset when we see a a door closed you know we don't throw up our hands we just say okay there's something better on the uh around the corner and and sure enough there is so we we've been very fortunate and all along the

22:17road and uh you know I can't tell you how much I appreciate all the people that have you know our seed round and what that meant to our company and then with the we we funder and the people that have joined us on the we funder through a safe and uh you know for future Equity is what they're looking for and I think they're going to find it with us that's great thanks for sharing that

22:44Doug and I want to ask a few more questions about the we funder uh and and the equity and getting involved while it's smaller but I also want to ask about the future with in America with the new Trump Administration do you see that as a door opening that will make uh even more opportunities for Bitcoin mining it seems like Trump wants Bitcoin made in America um he wants more

23:13hash power probably you know more miners uh controlling Bitcoin inside of America how do you think that Administration over the next coming years might affect uh the Bitcoin mining industry and and Quantum I uh from what I've been hearing on spaces and you know through the different uh places is everybody's excited um about the new uh Trump Administration when it comes to bitcoin

23:42and Mining and really the whole crypto ecosystem we've seen uh some you know yearly highs on all types of crypto not just Bitcoin and so I think that's going to really enhance the whole the the whole ecosystem right uh but I think web 3 it it depends on who you talk to but me personally I I think web 3 were still early you know you see 990,000 and

24:10people are like woohoo you know and dancing in the streets popping champagne but you know what I I think we've got a long way to go you know we've heard about seven figure you know Bitcoin from a lot of different people and I think that's in the cards when it'll be I don't know you know I I did uh some AI analysis and I realized uh you know if you had put

24:38$100,000 uh into Bitcoin 14 years ago you'd be a multi-billionaire today and so you know what's the next 14 years hold for Bitcoin it's anybody's guess but I think if the current Administration structures it right and uh I'm leaning to the side that I think he's going to get good at uh advice I I don't think he's going to go at it alone I know uh you know many in me uh feel

25:08that sometimes Trump will shoot at the hip and just do things but I think uh he's going to be a little bit more methodical and I think we're going to move a lot further away from the Fiat uh what is it like connectivity you know cuz right now when you think Bitcoin you think of well it's 90,000 you you got a dollar figure in mind right when you think of Bitcoin but Bitcoin really is a

25:36lot more than a dollar figure you know and I think when people and I don't know how long it's going to take for you know those ideas to actually become two different ideas as opposed to okay I got Bitcoin I got money there's going to be I got Bitcoin and I got money um in a different sense so anyway there there's a lot of uh I think changes and I think they're G

26:02we're going to be in a a very very fast track over the next uh couple of years yeah I think it's very exciting times ahead and 14 years is not a long time for for a currency um and the next 14 years again is also not a lot of time even for Bitcoin miners the mining uh rewards will still be here until 2140 so we're looking 100 plus years ahead

26:31and even then the transaction fees will continue to acre revenues for uh to infinity and beyond so um that the the time frame is is much more than just uh a decade and a bit so yeah I I agree that I think we're early on and uh we'll see how this uh Trump Administration deals with it but it seems optimistic based on on the excitement in Bitcoin since the announcement on November 5th

27:00uh it it it's all looking positive so I hope that translates into um more positivity for for your team at Quantum as well so we'll see how that goes thank you and and now on the we funder and the capital that you've raised and plans for expansion can you talk a little bit more about where you're at with that and how many people you've got involved and if you're

27:24looking to get more people involved absolutely yeah I mean we're still uh running I think we're we're going to close up this uh round by April unless it funds before then uh but uh looking at the ticker we're at 493 th000 and some change uh we have over 500 uh 589 on the we funer plus you know a few uh early uh seed investors so we're

27:52about 600 total um and so when we hit a half a million we did something to to help uh give people a little bit because you know the we funder is in a safe which is simple agreement future equity and so they really aren't going to get anything for a little while so what we've done is we put together some merchandise and so you

28:20know if you invest up to 500 you get a hat uh a th000 you get a shirt and a hat and so on 2500 uh you get an A free ordinal uh so that's really kind of cool they're beautiful uh but because ordinals have to be so small we're also including a a fullsize print to go so you get a high-res print and a pfp size uh ordinal so that's pretty cool uh and

28:51then once we hit a half a million we're going to give everybody a free board game and we hit a million dollars and the Max on this round is 1.25 million but if we hit a million or more then we're going to do a rave in the desert so to bring because at the end of the day the whole thought process of the we funder was bringing the community together because most people can't

29:15afford to put four or five grand down for a minor and then all the stuff it takes to hook it all up at home and plus their electricity is usually too expensive to make money so mining for the individuals kind of out of of reach and so yeah you can invest in you know the billion dooll companies and get a stock in their company but with us it's a little more intimate we're a

29:39little bit smaller we're we really wanted to bring the opportunity to the individual investor that can't really mine but wanted a a a more tighter Community than just being part of a billion dollar company and so what we're doing it you can get in for as little as $100 and uh you let that ride for a few years and and uh you know right now our evaluations at 33 million and when we

30:07make it to being a billion dollar company which you know I think we've got a good uh road map to get there um that's a 30 to1 on your money right there so we also plan you know since we're filed with the SEC and you can see that on our we funder page if you go to our website Quantum expeditions.com there's a link to our we fund and you can read all the the all the

30:32details as much as you want you know we have to file our uh our uh accounting and all that so you can see where all of our money came from where it goes um but at the end of the day you you can see all the things it takes to get part of the uh the crowd fund we uh and since we are filed with the SEC we can't say we will but our plans are to actually offer dividends

30:58uh you know when the when the time comes and so we're not there yet so you know right now you're going to have to settle for some merchandise very cool Doug uh I will leave a link to Quantum Expeditions and the we funder and the other information in the show notes below I really appreciate your insights into sustainable mining uh in in America in Texas um and I'm optimistic for for the

31:25future for Bitcoin and and that means Bitcoin mining as well and you're right uh what you mentioned about getting involved on your own it's really tough to figure out the miners and and the electricity costs you don't have the economies of scale um and so it it seems like uh an opportunity presented where you know you're able to get involved without doing all the hard work of what

31:48you and your team did the two years of research that you did to make sure that you have a profitable business um I'm wishing you and the team all the best moving forward and thank you so much for the time and love to follow up in the near future thank you very much Ashton