Bitcoin mining ‘is about energy infrastructure’: TeraWulf CEO

By April 23, 2022Bitcoin Business
Click here to view original web page at finance.yahoo.com

TeraWulf Co-Founder, CEO & Chair of the Board Paul Prager joins Yahoo Finance Live to talk about zero carbon mining for bitcoin and other cryptocurrencies, outlook on profitability, and sustainable energy alternatives.

Video Transcript

[MUSIC PLAYING]

BRAD SMITH: Welcome back to "Yahoo Finance Live," everyone. Has crypto mining progressed to be more sustainable? TeraWulf generates revenue by sustainably mining Bitcoin at its facilities in New York and Pennsylvania.

And the founder-- well, the co-founder and CEO and chair joins us now. Great to have you here with us today. We got to dive right in in the interest of time here. 800 milliwatts of zero carbon energy mining by 2025 is a goal that the company has set. How have you been able to refine the mining process in order to reach that target?

PAUL PRAGER: It's not about refining the process. It's about the source of electricity. And we're focused on zero carbon. And we're getting that from hydro and from nuclear.

BRAD SMITH: OK. And so the gross margin mining-- well, the gross margin from mining is 86%. But from my understanding, that's the book value, so what percentage of mined cryptocurrency do you hold versus sell?

PAUL PRAGER: So at the current time, the intention is to hold most of it, but the company reserves the right to sell to afford CapEx. Building out these facilities is somewhat capital-intensive, but our focus has been to get the energy infrastructure done first. And that way, you have the plugs with the infrastructure built, so you can optimize around the value of those plugs.

BRAD SMITH: Who do you imagine some of the consumers-- the customers of yours would be if you did decide to sell in the future?

PAUL PRAGER: So we're a proprietary miner. So we're mining for ourselves. And we expect to have investors who like that model as opposed to, for instance, the host model, which is very, very different.

It has very different risk elements to it. And ultimately, we would sell our Bitcoin, if we chose to sell, to the market. I mean, there's no shortage of liquidity in terms of wanting to sell Bitcoin today.

Selling to the market, would you do that as your own company, your own entity, and engage directly with prospective Bitcoin or cryptocurrency buyers? Or would that be to another entity, perhaps an app that holds Bitcoin and custodial services and allows others to buy into that? What would that look like?

Yeah, I mean, you would work through the pools, but again, our model is to try and hold on. I mean, we're taking a local commodity, which is electricity, and we're converting it into sort of a global store of value, which is Bitcoin. Our intention, again, would be to hold on to the Bitcoin. And if you need to sell to afford CapEx, then you make that decision. But ultimately, our goal would be to always look for the least expensive capital.

You operate a facility in New York. What might other states be learning from the early moments of crypto mining in the Empire State?

Listen, Bitcoin mining is about energy infrastructure. And energy infrastructure has always had a regulatory overlay. So I think because we're infrastructure folks, we've looked at the lay of the land.

What are the other states outside of New York and Pennsylvania that you look at and say, hey, that could be promising for future mining? And in a sustainable way, as you mentioned.

I think you could look at a place like Alaska, at hydropower as an example. You could look in Montana and some of the hydro runoff there. I think nuclear power is unique.

What do investors need to know about your business model when evaluating the share price? The company just went public last year.

Right. And I think there are three things about us that we think are rather different. The first one is, we're vertically integrated. So if you are a miner and you've gone to a host who's buying electricity from a utility, when you have an issue, there's a lot of people that you call and there's a lot of change orders that get filed. When I have an issue on one of my sites, I call Gary or I call Doug and they've both worked for me for 20 years. And I think that's very important.

Mm-hmm.

There is no reason why every Bitcoin mined in this country cannot be on zero carbon. There is no reason for it whatsoever. It is the right thing to do. It lowers your costs and it reduces risk.

Right.

--you want to be the low cost. You want to be zero carbon. You want to have the best risk mitigation strategy, which is zero carbon.

Right.

And you want to have a seasoned management team so that you know how to deal in difficult markets.

Paul, we got to leave things there on the day. Certainly appreciate the conversation. We want to check back in the future as it's a big topic, making sure that any mining that does going forward is sustainable and environmentally friendly. Paul Prager, who is the TeraWulf co-founder, CEO, and chair of the board joining us here this afternoon. Appreciate it.

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