Sazmining Podcast Episode 30: Cary Hayes on Solar Panels and Cryptocurrency

Synopsis:

On this episode of The Sazmining Podcast, Will speaks with Cary Hayes, President-America's at REC. They discuss the economics of solar panels, the physics of solar energy, and what miners should keep in mind about clean power.

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Will Szamosszegi (00:00:35):

Carrie, thank you so much for taking the time to come join us on the podcast today. Um, very, very glad that Kent put us in touch. You've been doing absolutely amazing things, uh, in your industry. Uh, so how about we just start by having you talk a little bit about your background and your career and particularly your experience in solar,

Cary Hayes (00:00:54):

First of all, uh, pleasure to meet you and, uh, thanks for having me. Yeah. So I'm Carrie Hayes. I've been in this crazy solar industry. We call it the solar coaster for coming on 20 years now. So I, I grew up in Chicago a long time ago and then was in investment banking at Smith Barney in my twenties, and decided back in those years that working on the 52nd floor and driving Excel spreadsheets was not the, the answer to my life. So I kind of chased a dream I had, which was solar energy back in 2003, 2004, when I first got into it, it was really a nacent industry. It was really nothing. There was a small industry in California outside of that in the us, there was really no industry at all. The first country in the world that really had adopted solar was Germany.

Cary Hayes (00:01:37):

And so there was some things happening in Europe back in those days, but, um, it was really a very small industry, not much to it, people like myself, Kent and others got involved in the early days and you know, over the last 20 years or so now we've seen, uh, as we kind of thought was gonna happen, you know, incredible growth, right, incredible growth. Solar's now a household thing. We sell solar into all 50 states in the us. It's a global phenomenon. It's big business. Now it's come a long, long way since those early days, but it's been a hell of a ride. Solar is, uh, in the us has been sort of as we ride the solar coaster, as we like to say, part of that has been driven on incentives, right? Federal incentives, state and local incentives have helped drive these industry, uh, over time.

Cary Hayes (00:02:21):

And that continues today with federal tax credits and other state and local things that are available to drive the industry. It's all about scale, right? So when I first started in solar, we were selling residential systems at $12 a lot, which was enormously expensive for this, this system here in my barn here at my farm in Colorado, that's roughly a 10 kilowatt system. So back 20 years ago, that system would cost about $120,000 before tax credits and incentives. Today, that system costs, uh, about $3 a wat or about $30,000, right before tax credits and incentives to make that more transparent on the module side, where I live at R C and I'll give you a little R C pitch in a minute module pricing 20 years ago, 18 years ago was $4 and 50 cents per what today module pricing is hovering around 45 cents. So you're talking economies of scale in massive price reductions over the long term, a bit of a Moore's law phenomenon, uh, in terms of technology innovation minus price.

Cary Hayes (00:03:32):

And that's, what's allowed our industry to scale, right? We've gotten the cost down and we have been able to thus approach at the residential level folks who are not necessarily green, green, or wanna save the world or believe in climate change, but, uh, think about their wallet in their pocketbook. And it makes a lot of financial sense. So it's pretty exciting having been around for a long, long time to, uh, to see that transition happen in real time in this country, I work for a company called R C R C is currently the number two residential player, uh, in the market, in the us, which is really exciting. We are a global manufacturer and we make about two gigawatts of modules and sell them around the world. I run our America's business, which is, uh, north, south and central America. It's primarily a us business.

Cary Hayes (00:04:18):

Although we do a bit in Canada and Mexico here in the us, we're cranking on all cylinders right now. We have one of the most high efficiency modules out there, which is up here. It's called RAC alpha. And we're doing really well right now. We're excited about the growth, uh, of the industry here in the us as around the world. We have big news. Uh, over the last week, we are, have been acquired by a company called reliance. Reliance is the largest company in India. And if you're Indian, you know exactly who they are, you've probably never heard of them if you're not Indian, uh, like I hadn't heard of them, but, um, they're a huge conglomerate and their chairman and CEO mu cash Hani, who is the ninth richest guy on the planet next to Elon Musk, Bezos and gates has pledged a 10 billion investment into solar over the next three years.

Cary Hayes (00:05:05):

That's 10 billion over three years. And they started with an acquisition of us as well as a battery company, as well as a, uh, upstream wafer manufacturer and an EPC. And that represents 2 billion of the 10 billion call it. So 8 billion to go a lot more, lot more spending to go. So we're, we're poised for a really great ride. Now we've got a huge backer in reliance now behind us, who's willing to invest in us to help us grow. So we are going to expand our production capabilities around the world, which includes a us manufacturing plant here in the us, which is super exciting for us. That's one of my goals in the next, uh, you know, four months over the holidays here, I get to find a us factory and start building. So that's no small task as you can imagine, but it's gonna be a fun ride. So we're, we're poised really well. And we're situated, uh, pretty well. So fun times ahead.

Will Szamosszegi (00:05:57):

Yeah, definitely sounds like it. So a lot of questions coming to mind. So I'll just start one by one. First is just hearing you talk about the efficiency gains and the, the cost coming down in these panels. It's, it's incredible to hear you talk about, and I'm just wondering what is really leading to that type of cost savings and, and improvement in the technology and, and the frame at which, uh, I'm looking at it from, uh, initially is from a mining perspective, right? Because in mining, of course, electricity is your input. And so you're trying to find the lowest cost energy. And with solar, if you're looking at the technology and the panels going down at that type of a rate, you can deduce that solar's going to be a very, very efficient, probably the cheapest form of energy production out there in the future. And so just understanding what is really kind of behind that efficiency gain and how much more we have to go, I think would be really

Cary Hayes (00:06:51):

Useful. Yeah. And that's a great question to start that conversation. That's really a, a cost question, right? Because if you look at solar, solar's been around since the sixties and seventies, NASA started using solar on satellites in the seventies. And anything you see out in space of course has some sort of solar panel attached to it. It's a cost game. The efficiencies of solar have incrementally improved over the years. And, but I would characterize it as we're not talking about macro leaps in technology. We're talking about a Moore's law type of efficiency gain. If you will, maybe not Moore's law is not maybe the best example, but to put it in perspective, solar panels today are hovering in the call. It 20 to 25% efficiency zone. And maybe 10, 20 years ago, they were hovering in the 12 to 13 to 14% efficiency zone. So we're talking about incremental gains in efficiency, but I mean, it is also a doubling, right?

Cary Hayes (00:07:40):

If you take 12 to, to 24, if you will, but the real game is about cost right and scale. So the industry has been dominated by a couple different technologies over the last call. It 20 years, we were in what's called multi crystal and or crystal and Silicon solar modules for a long time than we moved to poly crystalin. Then we move to mono crystalin, which we are in today. And there's a bunch of nuances, which we can talk about inside all of those. And now on the technology side, RAC is moving among others to what's called hetero junction technology, H J T and then sort of the next frontier beyond where we are are at today is called per off Skype, which is sort of the, the next frontier of solar. But I, I would characterize it as all of these are incremental gains in efficiency.

Cary Hayes (00:08:23):

They're not game changing technology. It's not like, oh my God, we've changed the world. This is so much better than the last version. They're all incrementally better. And the efficiencies E out better gains over time. But the, the real game has been cost as those costs. I just, uh, articulated that's where it is. Right? So all of a sudden our cost curve is basically a reverse hockey stick, right. That started here and is now somewhere down in here and sort of leveling out in the 40 cent zone at, at scale, you know, the industry believes we can get solar module costs, uh, you know, 50% lower down to about 20 cents a lot over the next call it five, six, seven years. And that's kind of where it ends up in the, you know, that sort of range, but that's obviously a big difference in $4 and 50 cents. The technology keeps getting better and will continue to get better incrementally over time. But the cost has really been the driver to, to scale our industry. If that makes sense.

Will Szamosszegi (00:09:20):

Yeah. It's interesting hearing, hearing you talk about how it's incremental, cuz just looking at a single incremental change, probably doesn't seem like that much, but when that compounds over time, I guess that's really, when you see these, these massive leaps in terms of efficiency going off of that and getting back to the, the initial question of how this also ties into mining when, when you're looking at what's happening at the panel level and capturing the energy from the sun and then transitioning that into actual usable electricity, what's really going on there within that whole process.

Cary Hayes (00:09:51):

Yeah. That's a great question. It's going back to my early days of solar engineering here, but yeah, so essentially what happens is inside a solar panel, you have a couple of raw materials, right? Silicon is the number one, which is one of the, the most prevalent minerals on earth, right? Silicon sand essentially. And so there are, uh, solar cells inside of a, a solar module. A solar module typically has 60 individual solar cells in a module. A module is, you know, three feet wide by five feet, high, rough, roughly, uh, inside that you have your 60 cells inside of each solar cell, you have a, a thin substrate called a wafer, uh, that wafer is made of polys Silicon. And that is very similar to what you would see in the semiconductor industry, right? And so for years, a lot of the polys Silicon in the world was going towards the semiconductor industry today.

Cary Hayes (00:10:46):

The solar industry uses about half of all the polys Silicon, uh, produced globally, uh, for solar. So that's a huge shift of course, and, and a wild move. And there's some interesting challenges there right now, which is a separate topic, but, um, so poly Silicon, Silicon based solar cells, uh, sunlight comes in the top of the panel hits the solar cell creates what's called a photo VoLTE effect in layman's terms, there are different layers inside the solar cell. Uh there's there are what's called a P type layer and an N type layer. And for lack of a better, uh, terminology, what happens is the sunlight excites the molecules inside that cell and cause them to split the split happens is, uh, amplified by a process called doping where you actually dope your cell with a substance to help that effect if you will. So there's a split of those electrons as they get excited that becomes your current, uh, your current turns into electricity and away you go the solar panel, then each 60 cells will be making power electricity.

Cary Hayes (00:11:51):

It makes what we call makes DC power direct current power. So solar, if you live in Europe, if you live in Germany or other parts of Asia, you live on DC power. So when you go to Europe, you've gotta have your little plug adapter, right for the wall at the hotel because it's DC power direct current power here in the us. We use AC power alternating, current power, right? Which there are reasons for this, but what needs to happen then therefore for a solar installation here in the us, we take AC power that solar panels make on the barn roof or on your roof or wherever. And then we have to convert it to usable AC power for use in the us. And that AC power that conversion happens with a product called an inverter, right? So, uh, DC to AC inverter. And there are a bunch of companies who make good inverters. They make inverters for your car, et cetera, et cetera. So you invert the power, convert it from DC to AC. Then it's usable power for your business, your house, your Bitcoin mining, operation, whatever. And, uh, a away you go. So at a high level, that's how solar power is made from a panel through an inverter to a usable product at your facility.

Will Szamosszegi (00:13:04):

Oh, that's fascinating at kind of a side and a completely unrelated, but I was doing a Euro trip with a few buddies. Like what is it? I think probably like nine years ago. And we get to this place, this hotel in, uh, in Barcelona and he plugs in his phone and it literally just shoots out of the socket <laugh> and the lights flicker. And I'm just like, what did you do to this hotel? Everyone's like coming outta their rooms, checking what happened and, oh my gosh. So yeah, the, the AC and DC, the there's a very important, um, switch and understanding, uh, which one you're dealing with or else you might have chargers shooting outta the wall.

Cary Hayes (00:13:45):

That's right. Be careful on the DC to AC switch there. That's that's why you need those adapters when you travel overseas.

Will Szamosszegi (00:13:51):

Oh my God. Yeah, definitely. So from a minor's perspective, uh, the other big piece that you're looking at, and also thank you for laying that out. That's all that information was new to me. I didn't really understand how that entire process works. So very, very useful to know the other big consideration. If you're a minor, is the actual physical footprint of the panels that are powering a facility. And do you have a gauge of how, I guess what the output is of these panels based on the actual, you know, physical footprint. So, um, and then a lot of times in mining you'll look at things from a per megawatt basis. So in that type of a, of an understanding, you know, how much power do you get outta solar panels and how much space does it take up the power, a single megawatt for a mining

Cary Hayes (00:14:41):

Facility? Yep. Yeah. So a megawatt of power from like a solar farm perspective takes usually around, uh, between six and 10 acres of land from a solar development perspective, obviously on a roof it's different. And, uh, there's probably a square footage number that I don't know off the top of my head. But when I think about Bitcoin mining or I think about solar farms, it's, you know, call it eight acres per megawatt, something like this. If, if the panels are stacked in there pretty well is kind of a good rule of thumb, obviously depends on the output characteristics of where you are, which changes a lot. Right? So in the Southwest us here in Colorado, where I live, you're obviously getting quite a bit better production than you would be in Maine or Alaska or Washington state per se, but you would actually be surprised.

Cary Hayes (00:15:23):

People are always surprised by this, the difference between a, a one megawatt solar array in Las Vegas, which would be ground central for fantastic solar production versus, uh, you know, Maine where it's cloudy and cool all year is, uh, maybe 20%. It's not, it's not as big as you would think, even when it's, it's, it's cloudy out. If you look at Germany, as one of the leaders around the world in solar, Germany is very cool in cloudy climate, and yet it has some of the, the best solar in the world. We think about these things in terms of kilowatt hours per kilowatt installed is sort of how I always think about it, about it. And as an example, kilowatt hours per kilowatt installed in Colorado is like between 1400 and 1600 kilowatt hours per kilowatt per year in Las Vegas, it's probably 1800, 1900 at the top end in Germany or Maine.

Cary Hayes (00:16:17):

It's like 1200 1100 something like this. So it's it? Yes. Is there a difference? Yes. Is it a massive difference? Not really. It's the production is pretty surprising. It's more related to the number of sun hours per day, than it is to actual conditions. If you will, then you get other vari regional nuances. Uh, heat is a big deal for solar panels. So the hotter it gets in general, the worst output you get from solar panels. There are reasons for that, but from a high level, the best production for solar is like 55 degrees Fahrenheit. Nice and cool with lots of sun hours. That's why solar does really well, uh, in sort of high desert environments where it's a bit cool and they can really crank out that production. Some of the new advances in technology are helping this phenomenon, uh, part of it's called light induced degradation, L I D. Um, but there's also a ver a variety of other things happening there, but for a simpleton basis, keeping solar panels cool is better. So, uh, cooler temperatures make better production generally speaking, but that all said, it's hot in Vegas, it's hot in Southern California and other places. That's fine too. Some regional differences, but, um, yeah, those, those are sort of the metrics I think about.

Will Szamosszegi (00:17:35):

Yeah. And, uh, that actually is a great jumping off point into one of my other questions, which was, how do you assess the longevity of these solar panels? Like when you're planning a development? I mean, what type of output can you expect, you know, in, in year five year 10, how does that change and how long do these panels really last? Like what's, what's their

Cary Hayes (00:17:59):

Lifespan? Good question. So the panels, uh, from a bank ability perspective and, and most commercial customers think about it in terms of bankability like, what can I actually depend on? And that comes back to a warranty, right? So the solar industry, generally our company among other manufacturers, warranties solar, uh, output from their panels for 25 years, some manufacturers are different 30, 25, 28, some different nuances there, but in general, think about it as a 25 year design life or warranty design life for a solar panel within inverters. As we just talked about the, uh, DC to AC conversion, that's a product that has a 10 ish year, 10, 12 year design life. So what typically happens with a longer term solar installation is the inverters will fail over the first 10 or 15 years and have to be replaced. That's normal. That's, that's what their design life is.

Cary Hayes (00:18:50):

That's sort of the weak point of the system, but solar panels have a, a 25 year output guarantee inside that output guarantee. What typically happens with a solar panel, is it degrades slowly over time? Right? So we start out at a hundred percent and in the first year or two, you get a fairly decent, uh, production degradation. And what I'm saying decent, I'm not talking about like 1%, you know, 1.2%, something like this. So in year two or three, we're at 98 point something percent. And then from there, typically what happens in, in, uh, real world test conditions, you lose a quarter percent of your production value per year, all the way out through years, 1220, and now to 25. So the warrantied most manufacturers will warranty their product to 80% of their original Watts, uh, after 25 years. But I think what we see RAC and other companies see is that in the real world, solar panels, after 25 years are still producing 85, 87, 80 9% of original intended power after 25 years.

Cary Hayes (00:19:57):

So, and that's just 25 years. I mean, our industry is new en re uh, where I live down in golden. The national renewable energy lab has old arrays from the sixties and seventies out there that are still cranking out power 40, 50 years later. So it's not like they just turn off and die. Right. They still work. But I, I always think about it as a 25 year design life. What typically happens in the real world, right? Is after 25 years, people are like, well, I just want, I want to get the latest, greatest. I want the best. Right. I want the new stuff and then they wanna replace. Right. But again, from a, an actual power output perspective, they still work just fine for a lot long time.

Will Szamosszegi (00:20:34):

Yeah. It sounds like it a lot longer than, than mining hardware. I'll tell you that when you're talking about 25 year, uh, lifespans, that's over two times, as long as the industry's been around. So it's quite some time. So, so with the, and, and this is going to be a loaded question. So feel free to ask further follow on questions after I ask this. But so if we take a step back and, and you look at the panel landscape today, for example, let's say you're going, and you're building out a new solar farm. Is there a type of cost per kilowatt hour that you'll be able to associate with a solar farm that's being built out today?

Cary Hayes (00:21:17):

Yes. Is the answer, um, okay. So we think about cost per kilowatt hour in terms of different scales, right? And so typically the larger, the project sizes, the better the costs become, right? It's a very much a scale driven game. So we take it all the way from the very top the utilities in the us. And there are many duke energy dominion energy in the Southeast Excel energy here in Colorado, Southern California, Edison, PG and E in California, the utilities for years and years were antis solar because they viewed the solar industry as stealing their customers, which is in fact, correct. We've, we've done a very good job of stealing a lot of their customers over a long period of time. So somewhere around the middle of that game, call it, you know, 10 years ago, or maybe it's even more recent five years ago, the utilities kind of woke up and said, oh, wow, solar's actually becoming a lot cheaper than our typical manufacturing of electricity vehicle or other fossil fuels.

Cary Hayes (00:22:11):

And so they started getting into the game themselves. And what they're realizing now at scale is the utility scale installations that are, I would say, largely owned by utilities themselves. Now can produce power anywhere in the three to four to 5 cents, a kilowatt hour range, right? You're talking about extremely cheap power now called 4 cents a kilowatt hour, insanely cheap from a wholesale perspective, right? I think we've seen a couple PPAs in the market around 3 cents today. We've got some inflationary cost pressures happening in the solar industry, just like every other industry out there with what's happening around the world with supply chain and other issues. Uh, seeing those costs rise a bit. Now I think a 3 cent PPA is a little out of reach right now, but I think, you know, a four or 5 cent PPA is still in the strike zone at scale. So that's very compelling.

Cary Hayes (00:22:59):

I mean, the traditional fossils are producing coal, especially is depending on how you wanna think about it is producing anywhere between six and 10 cents or higher. And then you've got natural gas in the eight to 10 cent zone and other other avenues. It also depends on how you think about it, right? We, in the solar industry, we think about it in terms of what's called a levelized cost of energy, an LCOE and an L SOE, uh, takes into account the lifetime costs of an asset, if you will. So for a, you build a coal plant, well, you gotta build the coal plant and then you gotta feed it with coal and that's your input cost. And then you gotta maintain all this equipment. And you've got all kinds of environmental regulations, and you've got a lot that goes into an L calculation. And once you start adding all that up, um, it's expensive.

Cary Hayes (00:23:42):

And so you get a lot of pundit on both sides, the political aisle that say, oh, you know, well, coal's way cheaper, cuz it's just, you know, get it up in Wyoming and it's cheap. It's great. But then you start adding in all these other layers and the whole life cycle cost is much different. Solar looks pretty good from an L LCU perspective because you, you take a 25 year warranty, right? From a manufacturer you take relatively cheap land costs typically, right. To do a big scale installation. And you've got a recipe for success, minimal maintenance requirement, sub maintenance, but minimal, generally speaking and on an LCUE basis, solar at scale is in the call. It 4 cents of kilowatt hour strike zone. That's at big scale top, you know, 50 megawatts, 75 megawatts, a couple hundred megawatt, solar farms. We're talking big big sites here.

Cary Hayes (00:24:27):

As the sites get smaller, the costs typically go up, right? So, you know, a five megawatt solar farm at a farm in your neighborhood, right, is probably more in the six to 7 cent zone, something like this. And then if you break it all the way back down to the residential level, it's not really a fair comparison cuz at the residential level, you're offsetting power through net, a process called net metering against your, what you're actually paying. I pay at my house here in Colorado. I pay about 14 cents a kilowatt hour for my power, which is still relatively cheap in the big picture and my panels on my barn out there offset that, that power and get me to essentially a zero bill, right? I don't get, I don't get paid back over and above for excess production over a hundred percent. The game in residential is to offset a hundred percent of what you use, but not really more because there's no financial incentive to over produce what you can use because the local utilities have now sort of mandated that you only get paid out past a hundred percent of usage at a wholesale rate, again, back to a 4 cent 5 cent number, which doesn't make a lot of financial sense.

Cary Hayes (00:25:35):

So in residential, the game is offset a hundred percent of your power or 99.9, 9% of your power and eliminate your electric bill completely at scale, a bit different, right? When you're producing power at 4 cents from a utility, and then you can go resell it at eight, 10, 15 cents, whatever. That's a bit of a different game just to frame that it's probably noteworthy to say this power rates around this country are wildly different, which is a fascinating reality in California, which is one of the worst. Uh, in terms of rates, you have power rates that approach 50 cents, a kilowatt hour, 55 cents a kilowatt hour in the upper tiers of the rate structure. They have a, a graduated tier structure there. So the more you use, the more you pay that's among the most expensive in the country. There are other New York is not cheap, either Hawaii, which is all, uh, sort of imported by by oil.

Cary Hayes (00:26:27):

Uh, and a lot of the electricity there is made by oil now transitioned to solar in some respects, but um, also very expensive. So it could, while variedly in Wyoming, uh, you know, power is pretty cheap, six, six to 8 cents, 10 cents, something like this, Colorado 10 cents to 14 cents and a lot of the Midwest zone in the country, relatively what I call normal power rates. But then you sprinkle in a little climate change and then things get really interesting, right? So in California, you're already suffering from some of the highest power rates in the country. And now you've probably seen in the news, some of the big fires in California over the last couple of years, and there are lawsuits flying around the room because homeowners wanna blame PG and E for causing all these fires. And so PG E says, yeah, we're gonna fire old bankruptcy and then we're gonna reorganize and all the old stuff, net result, okay.

Cary Hayes (00:27:17):

We now need to replace all the overhead power lines in California and put them underground so we can prevent future fires. Okay, well what does that cost <laugh> and that cost, which is billions and billions of dollars to make that work is all going to get passed right through to rate payers, right? So as a residential homeowner in California, you're going from 50 cents, a kilowatt hour to probably a dollar per kilowatt over, over the next 20 years. It's not going down. It's a fascinating thing. And uh, solar provides such a great hedge to those rising utility costs. That's part of our pitch in our industry is like, Hey, if you do nothing, your cost to do nothing is really expensive because you're now at the utility company mercy, and you're gonna pay whatever they're gonna charge you cuz they have 'em enough. But if you take control of your own power through a solar system on your house or your barn, in my case, you add in battery storage, which is the next revolution that's coming, which we can talk about. Now you've taken control of your own power and you've taken control of your own costs, which is a very powerful thing.

Will Szamosszegi (00:28:21):

Yeah, it, it is absolutely wild hearing. You talk about some of those power prices in, uh, in California. I, I was not aware. And then the fact that they're gonna have to go and to try and avoid fires, you're gonna see that cost going up. I mean, because these power prices, I mean, I'm generally aware of just retail prices, power like general retail power costs in mining. You're like the last buyer of last resort is what I like to say of the electrons available. And you're gonna go to areas where power's the cheapest and many times those incentives, you're gonna find the cheapest power in areas where there's just no there's excess capacity and no one to purchase that power. And you can come in, begin contributing and purchasing that power and offsetting the cost for whoever owns those assets or the, the means of production of that excess power.

Will Szamosszegi (00:29:10):

And so when you're a minor, you're looking for that cheapest power and you're in competition with every single minor around the world. Who's also looking for the cheapest power because if your power cost is lower, your're minting Bitcoin at a lower price per Bitcoin and the power cost that it's varied. And right now it's obviously extremely profitable if you're a minor to be mining Bitcoin, because your cost is so low, even if your power cost is 10 cents, uh, which may not have been quite as compelling during the deaths of the bear market, your power cost at 10 cents is still generating huge returns at today's prices in Bitcoin. And so it's fascinating to hear the general cost structure of solar at scale versus solar at something like five megawatts and then comparing that to the other energy sources. Cause that all ties into you as a minor, trying to figure out how you're going to stay competitive as the technology gets better and everything else. So that that's really useful to know. Um,

Cary Hayes (00:30:13):

Yeah, I, I also think about solar, which probably has a parallel with Bitcoin too, and Bitcoin mining in terms of decentralization, right? Like we're moving from a world of centralized power, with big utilities and big individual power plants to distributed generation, right? We call it DG in our industry, distributed generation solar on every roof, small micro micro grids of solar electricity on households, on small businesses, on different fields, all over decentralized all over the planet, right? And then we connect those for years and years. We've connected those into the utility grid as the battery, right? And so that's, what's changing. So this system on my barn is tied into the local utility Excel is on net metering. So it spins my electricity meter backwards and offsets all of my power. But the next revolution that's happening in real time now is batteries, right? And so batteries, pretty simple value proposition.

Cary Hayes (00:31:09):

You add in a battery system and you capture all that power into battery system. And now you don't need the local utility batteries are what the upcoming revolution, which is sort of the next generation in solar. Um, so batteries are doing the same reverse hockey stick in pricing that solar did. So solar did this over a 20 year period then went from $4 and 50 cents. A lot to 40 cents. A lot batteries are undergoing the same, uh, revolution and price based on scale. And so we're about halfway there right now. It feels like, and in the next three to five years, we're gonna wake up to a, a battery price and a battery technology. That's very compelling at all levels from the residential commercial and utility level, it's already happening. I was saying that, um, roughly 25 to 35% of all new residential solar installations are now getting batteries as part of their installation.

Cary Hayes (00:32:05):

So it's happening in real time, which is, um, which is wild. And then you're seeing the adoption now of battery technology within all segments of the solar universe, residential CNI and utility. The fascinating thing is, uh, we call it the landline analogy if you will. So if you're old like me, you remember you always had a landline phone before you had a cell phone before the iPhone came out in 2006 or whenever it came out. Right? So for years and years when I was in college and growing up, I had a landline phone and an answering machine. And that's how you interacted with a phone. That's, that's how you did it. Then in the early part of the two thousands, the iPhone came out and all of a sudden you had a cell phone and you're like, wow, I got a cell phone. It actually works too.

Cary Hayes (00:32:48):

It's not super expensive. It's kind of convenient. And I can call people and I have data on there. I email and wow, this is revolutionary, right? And so you slowly stopped using your landline phone and then one day you woke up in whenever it was in 2010 or whenever a decade ago. And you're like, do I really need a landline phone anymore? And first you got rid of your answering machine cuz now have a cell phone and that's all you're using. And then you still had the hardware infrastructure to have a landline phone attached to your house, right at and T or Verizon, or whoever had spent billions of dollars around this country, installing all the, the fiber optics to make sure that you had a landline at your house. So you can have it, but you choose not to have it because you don't need it.

Cary Hayes (00:33:37):

It's not convenient anymore. I've got a cell phone that does everything I need. I don't need a lamp. So the analogy is exactly the same for solar and batteries today. We're sort of in the early adopter phase of batteries. But once we wake up in five years from now and say, oh, batteries are cheap. They're seamless. I have a small battery pack in my garage and I have solar on my roof and now I'm making my own power. Do I really need to buy the utility power anymore? Well, maybe not. If, as long as my needs are met and I've got enough power for my house and for my Bitcoin mining operation, uh, or whatever I need, it's great that the utility took all the time and expense to run power to my home or my business, but I actually don't need it anymore. So interesting dilemma. Right? So we see that as a parallel that's happening in real time and solar. And I think, again, as we look out into time, it's a future that looks like batteries are a big, uh, portion of this. And once you have the storage really figured out, then you really don't need the utility anymore. And that's when things get interesting.

Will Szamosszegi (00:34:42):

<laugh> wow. That just blew my mind. That is so fascinating. How far away do you think that that future is where cuz I mean, there, there are obviously the cost of getting the panels and then the cost of the battery, but at what point do, do you think that that cost and financing options to your everyday homeowner is just too compelling to the point where using your analogy? You're like, why do I still have this, uh, this landline phone here, there, there doesn't really seem to be any point. When do you think that that type of moment and aha moment starts hitting society at large?

Cary Hayes (00:35:16):

I think it's like five to 10 years from now or maybe sooner. I mean the battery price is on a very strong acceleration down in terms of that reverse hockey stick graph. And so I think within five years the price will be there and then it turns into the adoption and the rollout, right? Which takes a lot of time. You're talking about millions and millions and millions of people and all kinds of different businesses and complicated. You know, the us is a very complicated place in terms of utilities, regulations, and different states and all this stuff. Right. But it'll take time for that transition, right? It's very, it's sooner than you would think. And once it's convenient enough and, and low cost enough, you're there and it's, it's gonna be the same reality. Like today my house, I have a landline connection that I could like, I guess I could call at and T and they could probably install or turn on my landline phone.

Cary Hayes (00:36:08):

Like it's still, the connection is still here. I just don't use it. And it's gonna be the same thing with the utilities. Utilities have a, have a obligation to deliver power to your home, right? There's national security implications. There, there's all kinds of things in the background between fur the federal, uh, energy regulatory commission and other aspects that go into that. But long story short, they have an obligation to deliver power to your house. That's why we have big utilities and regulation and so on, so forth. But once you're able to do it yourself, they're still going to have a meter, an electric meter on the side of your house. You're just not gonna use their power. That's how it's gonna go.

Will Szamosszegi (00:36:45):

Yeah. I mean, what happens to the utilities at that point?

Cary Hayes (00:36:48):

Well, that's why the smart and progressive utilities primarily in California now and now sweeping across the country are figuring out very quickly like, oh, we better do something because we're not only gonna lose all our customers. Uh, but we're gonna go bankrupt. The problem with that, of course, which is another probably multi beer discussion we could have <laugh> is the utilities have all this federal, we need the utilities, right? We actually need them. There's a lot of national security implications on the power grid. Like we need power and reliable power in this country for a variety of reasons. The smart utilities are figuring out that they better change their business models and get in, get with the program. And so the big guys, duke energies and PGS of the world are starting now solely, but surely to deploy huge utility scale, solar farms, big battery storage solutions, and started to migrate away from fossil fuels and then offering those products and services to their customers, which resonates.

Cary Hayes (00:37:44):

Right? And so I have a friend here in Colorado, who's like, listen, I, I don't need to get solar on my roof because I can buy solar power from my utility. It's roughly the same cost. So I'm not really saving money, but I feel better cause I'm buying solar power, et cetera. So, I mean, that's like a early intro for a guy like him. Who's maybe not so green motivated, whatever, if I could buy it at the same cost and feel good, great in the future, it's gonna be okay. I can buy it at a cheaper cost. Why wouldn't I do it? Right. So that's all coming, which is really exciting.

Will Szamosszegi (00:38:15):

Yeah. Interesting. And then from actually the mining perspective, looking at the batteries and going back to that conversion on a per kilowatt hour basis, mm-hmm <affirmative> what does that cost look like in terms of the batteries? And, and what I'm trying to get at with this question is let's say that you're a mining operation and you're trying to run your facility at a certain cost per kilo wat hour, just for simple numbers, let's say that we want an average cost per kilo, wat hour 4 cents being the cost of power to power my mins, how long until the battery technology has reached a point where that that's like the average cost that you're met with when you're powering your mining facility and storing the cost to store it at that average of 4 cents per kilowatt hour. And that might be a difficult question to answer in terms of just the conversion factor with the battery prices, but trying to understand how far away a world is, where you have the batteries that can plug in and be very competitive with the pricing. Um yep. And very cheap storage.

Cary Hayes (00:39:18):

Yeah. I mean, I would say from a high level, if we're, we're probably in that five to 10 year zone from where we arrive at that number, right. If we're, if we agree that we're roughly halfway down the reverse hockey stick price, curve, and batteries, and we can debate if we're three quarters or one quarter, but we're somewhere along that descending price scale, once we arrive into the, the stick of the hockey stick, if you will, that's when we arrive in that call at four, five, 6 cents a kilowatt hour zone, um, or maybe cheaper, depending on where things go. So I give it five years and we're probably there, maybe it's sooner and in very large scale stuff, I think if you ask some of the big utility guys, AEs is one of 'em and again, PG E I, I suspect that they're installing, uh, solar with storage in that four to 5 cent zone now at super scale. But I think at more of a decentralized scale, it's, we're probably five years out, something like this.

Will Szamosszegi (00:40:08):

Wow. That that's very fascinating. And that's actually a discussion that you have with a number of people in the mining community where, uh, you have people evaluating fossil fuels, you have people evaluating renewable energy sources. And when you're looking at solar in particular, you're wondering, okay, well this is where battery technology is today. And this is how expensive it is when you build it into your models. But what prices are we going to see when the battery prices or the battery efficiency gets better over time? So I think that they listen to this conversation, uh, the answer that you just gave will be extremely, extremely valuable.

Cary Hayes (00:40:46):

It's more of an intermittency question too, right? Because it's the whole problem with solar for so long when you talk to utility people is like, well, it's just intermittent resource. It's not, it'll never work. You're doomed. Right. It only works when the sun's out and that's only for half the day, right? Or depending on where you live, it's, you know, Alaska it's all day part of the year and it's no part of the day and another part of the year, right. It's dark in the winter for years, I would talk to utility guys and they would be like, listen, solar's great, but it's not a complete solution cuz it's intermittent. And so in the early days of renewable deployments, they would say, well, we like wind too because the wind typically blows at night, right? So we can pair solar during the day with wind at night and now we've got a end end solution. However, wind is unpredictable, hard to predict when the wind's gonna blow how hard it's gonna blow, et cetera, batteries change all that. Introducing batteries now makes solar an end, end solution. It's no longer intermittent. Right? We store it, we power it up. We store it. We deploy that batteries at night and now we've got a 24 7, 365 solution. That's a big revolution

Will Szamosszegi (00:41:51):

For sure. Yeah. And that's actually one of the things too, when you speak with some minors, they've said that mining facilities are almost like akin to something like a, like a battery because you just have something that you can place at the site and it will consume power as long as it's the, the machines are on, it's consuming that power. It in a way can be looked at as a battery. But I do think that those batteries and battery technology are really going to make the capability for miners as well as different solar providers. It's gonna open up a lot of different and interesting business models and doors for companies in both of those areas.

Cary Hayes (00:42:28):

Agreed. I mean, I would also say from your perspective, probably from the Bitcoin mining perspective, you know, uptime is probably a, a big consideration, right? To, uh, get on the 10 minute blockchain stamp, right? I'm not, I'm not super close to this like you are, but, uh, and so uptime is a big factor. And if uptime's one of the primary factors, what you're starting to see with, as we have climate change playing out now across the country, again, we take California's example. California's actively turning off the power for long periods of time to prevent forest fires because a they're under siege by consumers because we're burning down your hou, your neighborhood and all these other factors, but they're rolling blackouts happening all the time. My father-in-law who lives in, in, uh, just outside of Chico, California just installed a big Tesla battery system because he's like, Hey, my power is out like meaningful days per year.

Cary Hayes (00:43:18):

Now it's not just like a couple hours here and there it's out for three days. It's out for four days, a couple times a year now, so it's getting worse. Right? And that again is part of the uptime conversation. This is more of a residential example. Like I want have my lights on and my refrigerator doesn't spoil, but from a Bitcoin mining perspective, if your metric is up time to play ball, uh, on the 10 minute timestamp, then that's a primary consideration because you, you are arriving now at a point or in a, in an environment where having dependable power from the utility is not necessarily a guarantee anymore, which is a big wake up call. It's, it's

Will Szamosszegi (00:43:59):

Different. That's incredible. Uh, my mind is spinning right now. <laugh> uh, in terms of, I mean, you're, you're whole, you're in the thick of things right now. You're, you're deep within, within, uh, the world of solar. Are there any things that you think would be important for a minor out there based on your understanding of, uh, of our business, anything that you think would be valuable for them to know or keep in mind, or just any, any other types of information that facts that we might not have touched on in this conversation?

Cary Hayes (00:44:31):

Yeah. Well, I would say first of all, thanks for the opportunity. I'm fascinated by Bitcoin. I played as we've discussed, I've, I've played ball there a little bit. <laugh> in terms of my own investments, but, uh, it's very interesting stuff to me and seems like a future revolution, uh, underway, which is super exciting. And I think there's a lot of parallels between our industries in what we've seen play out over some time, uh, in solar now from early days of early adopters to more of a mainstream crowd. But, um, I would just come back to, you know, clean, clean power and reliability. Like that's, that's the name of the game in solar. And as we enter a sort of a digital revolution and currency with Bitcoin and other, uh, currencies there and enter into a wide scale global solar adoption now, too, it seems like it's a nice, uh, a nice fit hand in hand between the, the two technologies and to, uh, disruptive, I guess, technologies, right? So it seems like a match made in heaven. We should deploy all kinds of Bitcoin mins around the world with big solar arrays that have batteries with dedicated uptime and make them successful in, in procuring free Bitcoin on the 10 minute blockchain stamp. Right. And, uh, the way we go, I think it's a nice, a nice match.

Will Szamosszegi (00:45:43):

Yeah. AB absolutely love to hear it. And again, congratulations on all the, uh, traction that you're getting at R C uh, just here hearing what you're working on. I'm sure that there's a ton of growth happening for you here. Uh, it's gonna be a busy year for you.

Cary Hayes (00:45:57):

<laugh> indeed. Keep your eye out on us and watch for big things ahead, but, uh, exciting times for sure.

Will Szamosszegi (00:46:03):

You, you really got me thinking about, um, so cuz I mean, nothing, I, I don't have any panels or anything here. Um, but I mean, it just seems like it makes sense to, to go down that, go down that route, which is, is interesting to think about. Um, and then like how all of them kind of converge like the solar side, then you have star link, which allows you to have internet anywhere. And then you have the mining which can be placed virtually anywhere. So I, I can almost see layer one of the entire world being built on this decentralized network. That's powered by these exponential technologies that no one is even really or not, no one, but a lot of people aren't really aware have been developed and are in rollout right now. It it'll be fascinating. I, I can't even imagine how things are gonna look a decade from now, but, um, the one thing I know is that it's gonna look a lot different than it looks today. <laugh>,

Cary Hayes (00:46:52):

It's what Bitcoin to go to like 5 million, like you told me yesterday and that's, uh, my kids will go to college and I'll be retired early. It's uh,

Will Szamosszegi (00:47:00):

I'm, I'm telling you like, I, I completely understand that I sound like an absolute nut job when I throw out those kinds of predictions and numbers, but I, I do truly believe that that that's where things are heading, unless certain like new data points and things that I had in accounting for pop up in the assumptions that I, I made to get to that point. But like for me, I, I truly think that Bitcoin is the safest way to protect your mind. It's like, even if you invest in like a big fortune 500 company, you're still exposed to, to geopolitical risk, you're still exposed to, you know, um, regulatory risk. You're still exposed to all these other crackdowns. Bitcoin's an actual decentralized network that no single person organization entity in the entire world can shut down. And so when you're looking at it from a long term risk mitigation perspective, you have protection there. I mean, even if you put your money in gold, many times in the past nation states and governments will take the gold, you know, so it's like, yeah. Oh yeah, it's hard. It's hard to protect your, your value that you've created. And, and Bitcoin, I do truly believe is the, is the safest way to do that.

Cary Hayes (00:48:04):

So tell me, I'm looking at your website right now. So you're trying to position yourself as what exactly as a thought leader, you've got a podcast series. Do you, do you actually, how do you make money in your business?

Will Szamosszegi (00:48:17):

Yeah, so, so the way that we had initially started was through consult. Cause as you know, mining's a capital intensive business, right? So the question was, how do you get into this industry when it's not like have 50 million to go deploying to mining or $10 million right off the bat. And the way that we did that was we went and made connections with people in all areas of the industry. So everything from custody to exchanges and liquidation to, um, build the builders who can build facilities, um, mm-hmm, <affirmative> the best mining developers in the world. And then the energy sector speaking with different utilities, different, uh, energy companies, different people in the energy sector and being positioned at the center of that. And the initial game plan before our pivot, our pivot was we're gonna build facilities after we bootstrap through consulting to go and make that happen.

Will Szamosszegi (00:49:11):

What we ended up, what I ended up realizing was we're at the center to create the type of platform and company that I had explained where you have, uh, an exponentially scalable platform like Airbnb or Uber for the mining industry. So connecting the hosts with the minors and allows anyone to buy Bitcoin. And with that model, when you run the financial model, uh, it's kind of crazy how big that market truly is. And so what we've decided to do is focus, um, on building that out and we're going to be launching that early next year. Uh, so right now we haven't publicly stated the pivot, but we're in the middle of building and when we're ready to launch, uh, right now we've got the network to be able to secure the supply side of the platform. And when we launch that's really when we're gonna start taking in, taking in the dollars and building out the platform and, and building out these mining facilities, facilitating the growth of mining globally. So yeah, that, that's kind of the journey that, that the company went on, but it's, it's been a wild ride. It's been a lot of fun. <laugh>

Cary Hayes (00:50:19):

It's awesome, man. It's awesome. Yeah. I, Kent Kent been in my year for years about Bitcoin, so I I've heard it for a long time. He was the, he was the first guy I knew, knew who had started talking about it many years ago. So, uh,

Will Szamosszegi (00:50:29):

Glad you're in the loop now. I mean, just, just since we've been on the, these two calls today and yesterday, we've been, been hearing about like some Bitcoin purchases going in Bitcoin cash, other other positions. So

Cary Hayes (00:50:42):

One thing I've realized in my old age, which is, uh, a nice, uh, thing to know in with some experience and wisdom now is that it's still, like, I always would think like, oh wow, Bitcoin at, you know, a thousand bucks was the time to get in not 60,000 bucks, but if we're going to 5 million, right. It doesn't really matter. Right. So that, that's like one of the lessons I've learned in my trading and investing career, it's like, it feels like it's old news now, Bitcoin, like everyone's heard of Bitcoin by now. It's a household name, but yet it's still not even the first ending. It's the same in solar. Like, I'll give you a great example. There's a company last week called blue Raven solar that got sold for 165 million bucks to sun power. When Ken and I started in this industry, we, we were, it was 2005, right.

Cary Hayes (00:51:32):

And Kent was gone by like 2010, my company, my old company, you know, different R C was, uh, packaged up and sold in 2012 or 2013. And I already ha had had, you know, like a 10 year career at that company of residential, solar, all the stuff we're talking about, we already did it. And then this company blue Raven started, started their company in 2014 after we'd already done all this stuff and then was sold last week for 165 million. So it's like, it's all about your frame of reference. Solar now is like maybe in the second inning, but like, I used to think, like, it was old news, like, oh, everyone knows solar, but they don't. Yeah. And it's still early days. So like 10, 20 years from now, Bitcoin is still gonna be in the first inning is my point.

Will Szamosszegi (00:52:19):

Yeah. Oh, you're you right? You hit the nail on the head. I mean, I, whenever I speak with people, I literally say, I, I say we're still in chapter one, but first inning, same sort of concept. Just when you understand at the protocol level, that last Bitcoin's being mined in 2140 and we're just over a decade in. And so that means that, I mean, we're over a century away from that, uh, over like we're like a hundred and, and that's right. Pretty, yeah, like almost 120 years away from that last Bitcoin being mined. And you realize that at that point in time in the future, you're gonna have a global grid of minors around the world competing for that one Bitcoin reward. Humans have have a very difficult time thinking in exponential curves. It's like that old folks' tale where they put a chess board and the guy asked the king.

Will Szamosszegi (00:53:12):

I just want you to give me enough rice where I put one grain on this first on this first square two on the second four on the third and double all the way through. And then by the end, he owns the kingdom. It's that type of a concept where it's really hard for our brain to comprehend exponential growth. And so when I'm talking about 5 million a coin, that's also not close to year 2140, that's happening oddly soon, because this is the first time that as a human race, you've solved money, tying it to real world energy. And I just think that the early the people getting in right now are the earliest of adopters, but the people who understand it and know to hold for the long run are the ones that are going to actually maintain their value all the way up. Cause if you don't understand it and you bought in at 50 and it goes to 200, most people would sell it because you don't underst where it's going.

Will Szamosszegi (00:54:05):

Absolutely. But the thing is, is that the very smart people who are ahead of the curve, who understand where it's going and have a well thought out thesis, aren't paying attention to the short term volatility, they're paying attention to where it's going. And it's going to $5 million a coin. I think a lot faster than people really think in terms of like, that's not something that's gonna happen, like in a hundred years, that's something that's gonna happen far, far sooner. And, um, I can't even think exponentially about where it's gonna be in a hundred years. I think that those types of predictions are just too far out to really understand the technologies that you're talking about.

Cary Hayes (00:54:39):

That's good stuff, man. It's good stuff. What was I gonna say? Do you follow, um, you follow like I, Michael sailor?

Will Szamosszegi (00:54:46):

Yeah. Yeah. Michael sailor. Uh,

Cary Hayes (00:54:48):

What's, what's your take on that guy?

Will Szamosszegi (00:54:50):

Like he, he's a technologist extremely, extremely intelligent. He's obviously fully bought in like a, a huge Bitcoin bowl. Kind of like, like Bitcoin Jesus in a way <laugh> in, in some people's eyes. But I think that he, he plays a massive role in the industry. I mean, he's, he's really brought the idea and the value proposition of Bitcoin to a lot of corporations. And I think that that education's the biggest piece in the adoption of Bitcoin and getting people to understand the technology that we're dealing with. He's an example of someone who saw the value in apple, Amazon, Facebook early on. And he's saying that right now, we're the Bitcoin is the equivalent apple, Amazon, or Facebook in 2012, he's also of the mindset that we're gonna be seeing a huge move upward in the coming, coming years.

Cary Hayes (00:55:36):

He had a, he had a funny podcast that I listened to. I think it was last year and it was him. And it was like a Bitcoin trader guy. I don't know if you heard this one, but it was him. And

Will Szamosszegi (00:55:47):

I, I think I know which one you're talking about.

Cary Hayes (00:55:49):

It was hilarious, cuz he was like, no, you don't trade this stuff. You just buy it and hold it. And don't think about it for 10 years. This is guy like, no, you gotta, you know, it's got this pattern. It's gonna go up 5,000 bucks next week and it's gonna go down. You gotta sell, you know, he was a total trader. Yeah. And, and they were just like butting heads the whole time. It was great.

Will Szamosszegi (00:56:08):

Oh, it was so funny. I, I think Michael sailor was like, uh, oh my God, what was he saying? He, he was saying something along the lines of, um, if, if like 10 billionaires decide tomorrow that they want to get a, a significant portfolio allocation to Bitcoin, then all, all your models are broken <laugh> or something like that. Just like, and then, and then this guy's like, no, my models are the best. Like they account for everything. And then I think like history proved that that guy, um, like, I mean his position Bitcoin ended up shooting up. I think that that was when Bitcoin was like what

Cary Hayes (00:56:42):

Like 20,000, 30,000?

Will Szamosszegi (00:56:43):

Yeah. It was like twenties or something. And but yeah. And then everyone in the comments is like roasting this trader <laugh> because I think like the video ends on like on this guy being like, trust me, I know what I'm doing. Or like, trust me, this is what I do. And then like, they just like in the comments, you just see like, oh, the guy was wrong with stuff, but yeah. Read out of it. When you realize where it's going.

Cary Hayes (00:57:07):

<laugh> I'm, I'm, I'm under the buy and hold methodology. Now I've already, I'm up 150% on a couple hundred grand investments. So I'll take that

Will Szamosszegi (00:57:16):

And there's no need to sell it. You can just hold it and borrow against it and continue to borrow more and more against it as the price appreciates. And so you never have to sell it and create the taxable event.

Cary Hayes (00:57:26):

How do you borrow against it? How, what do you, what do you do?

Will Szamosszegi (00:57:28):

Oh, this is life changing. If you don't know, I, I can send you some resources to do it, but it's, it's pretty simple. Um, you can just go through like block by Nexo Celsius, you post the collateral and then you can borrow directly against it. Really? Yeah. So like right now I'm I'm I put up like just for spending, I wanted to take out like 25 K in, um, in just spendable cash. And I got it at 1% because I put a hundred Ks collateral.

Cary Hayes (00:57:53):

That's pretty good.

Will Szamosszegi (00:57:54):

1% on the dollars and I'm borrowing.

Cary Hayes (00:57:56):

Yeah. Yeah. That's that's super cheap.

Will Szamosszegi (00:57:58):

Yeah. I mean, the LTVs kind of ridiculous because, but like I could either have a hundred K sitting doing nothing. Like I could access dollars basically without having to sell it. And that's really the big draw of having dollars is that they're liquid. But if I can go and get it at 1%, granted you could go with a 50% LTV and be working with, um, like a, an eight or 9% interest rate per year. Uh, but I mean, it just depends on what type of rates you're looking. Um, and just making sure that you're, you're protected and not getting margin called cuz it is marked to market. So if it's marked to market and you just have a extremely volatile asset, you might get liquidated. So that's why I took mine out at, um, at 1% at the, at the 25 K to a hundred K collateral because that LTV, I'm not worried about getting margin called at all. I could experience a huge draw down and yeah, but I can help you out and even set, set you up on, if you wanna run through it on a screen share, I could show you how to do it because it's life changing for me. It's made it so easy for me to just live on crypto and never have to sell it and um, live the lifestyle I wanna lead because I could just hold it and then borrow money against it. So what

Cary Hayes (00:59:10):

That's, that's amazing. How, how many Bitcoins do you own?

Will Szamosszegi (00:59:13):

Um, I own a, a fair amount of, uh, of Bitcoin. Um, I, I bought a lot when it was in the ballpark of eight to 35 K, but I've been accumulating slowly over time and continue to huddle and, and let it grow and just using that to support, support the business as well, if need be just trying to grow it. Yeah. We'll, we'll see how, uh, we'll see how things play out. But um, yeah, I'm of the mindset now that I just can never sell it because then the selling would be far more than the interest that I'm ever gonna pay on it. If I borrow against it.

Cary Hayes (00:59:46):

Yeah. That's the game. Right? So the taxes are the huge part. So am I, am I right in saying that Bitcoin is fully taxable, just like a stock trade would be, is that how the IRS thinks about it?

Will Szamosszegi (00:59:57):

Yeah, exactly. It it's basically like that. It's like, uh, so, so you just don't wanna sell it if you can borrow against it for dollars. The big difference is with the stock. You don't know that it's gonna continue to keep going up. Whereas like with this, if we're getting in at this stage of the game and you have a long time horizon and you're not worried about mark to market margin calls, then you're gonna be pretty safe in the long run.

Cary Hayes (01:00:19):

Assuming it keeps going up. I just want that 30%, 40% drawdown. I wanted to go back to 10 grand after Elizabeth Warren comes out with some overregulation thing and people panic and sell. Yeah. <laugh> maybe, maybe, maybe we'll get it. Maybe we won't. I don't know, but well,

Will Szamosszegi (01:00:35):

Well in the near term, I don't think we're gonna get it. Um, I think that right now we're in a heavy bull cycle and I told you all this the other day with plan B stock to flow, but I think we're in a heavy bull cycle. You're gonna see a huge price increase. And then I think you're gonna see little liquidity on exchanges and a, a huge FOMO like you had in 2017. And then at that point you could see a huge crash when everyone starts getting out after the huge FOMO. And that's the big crash that I, I don't think it will necessarily be an 80% draw down like in previous cycles, but I, I could see a very large draw down from a FOMO hype and new like just like legitimately you could see crazy all time highs, like, like 300, 400, 500,000 in this having cycle at its very peak. Um, and then I think that once you reach that, it's, it's a time where you're gonna see a huge draw down afterwards and then you might see it settle like, you know, around where it is today. Maybe a little bit higher,

Cary Hayes (01:01:37):

When's this having cycle again

Will Szamosszegi (01:01:39):

End. So the last one happened in may of 2020. And so you're gonna have, uh, the next having happen in 2024. Um, so some the, and the average cost or the average price per BTC at the end of this having cycle, the models for the stock to flow, put that at, um, a hundred K. So we haven't even hit the stock stock to flow models, um, prediction for the average Bitcoin price through this cycle, which means that there's still quite a ways for it to go and run up. And right now all the signs on a trading side are, are very bullish for the asset

Cary Hayes (01:02:19):

Random question, but I'm still trying to get my head around this. So when these minors print the 10 minute blockchain stamp and get lucky and win, who, who is actually giving them 6.25 Bitcoins.

Will Szamosszegi (01:02:33):

Yes. So right now there's, let's just, I don't know the exact number. Let's say 18.9 million Bitcoin. That's been mined. Um, that could be off by like a million or so, but let's say roughly that many, uh, that means that there's still, you know, like a million to two, like 2 million, let's just say Bitcoin remaining for distribution, right? That's Bitcoin that no one owns in their wallets, that the protocol is governing R every block, roughly every 10 minutes, you're having this many Bitcoin go out. And so right now it's 6.25 in 2024, it's gonna go to 3.1, two, five, and then in 2028, it's gonna be half that and it's going to continue to have. And so that's when the last Bitcoin's being mined in year 2140, because that's when the last Bitcoin on the network out of the 21 million will have been given out as, just as block reward for the people, um, on the network, the minors. So it's, uh, to answer your question in short, it's governed in the code and the rules that dictate the, the protocol for Bitcoin. So the, the, the laws of Bitcoin, if you want to think about it, have it written in and no single actor can change those laws.

Cary Hayes (01:03:46):

Again, more tactically, if I'm a Bitcoin minor and I win the lotto a 10 minute lotto, who is my counterparty in depositing 6.2, five Bitcoins into my account.

Will Szamosszegi (01:03:57):

So that would be the Bitcoin network. If you were the on, if you're not in a mining pool, if you are in a mining pool, which means that you went put your hash rate together with other miners to have a higher chance, mm-hmm <affirmative> to win the block for a more predictable cash flow. In that case, your counterparty is the mining pool. So your counterparty is either if you're plugging in directly into the decentralized protocol, it's just the Bitcoin protocol. If it's, if you're in a mining pool and you're with other miners, there's that central mining party, that will be your counterparty. Does that make sense?

Cary Hayes (01:04:31):

It does. It does. So, but the mining protocol is like big brother and cyberspace, some ethereal thing that no one really knows, produces some Bitcoins somehow, or,

Will Szamosszegi (01:04:43):

Yeah. So it's, the protocol is what was outlined in. Um, so like, if you wanna have a chance of winning the next block, you have to appropriately run the algorithm in line with the protocol. So let's say that you said, oh, I want there to be 24 million Bitcoin. Then you would need over 50% of all the decentralized servers around the world to be putting in the exact protocol that you're running, that's different from the original. So that means that it basically won't happen because you would need over half of the network to all of a sudden change the protocol, which is possible, I guess, but it's, it's much different if it's decentralized versus, you know, a single party changing the protocol. I, I think that we've reached enough minors on the network for that to be something that's impossible to do.

Cary Hayes (01:05:32):

Okay. That's getting a little ethereal, but, uh, that's a, that's a too bear conversation. I gotta hop. I gotta hop and, uh, get back to it here, but, uh, fascinating discussion. Uh, yeah. Do I call you William or will or bill or

Will Szamosszegi (01:05:45):

Will or William works? I, I go by both. <laugh>

Cary Hayes (01:05:48):

Got it. I'll call you will. Thanks so much for the, uh, opportunity will

Will Szamosszegi (01:05:52):

Of course. Yeah.

Cary Hayes (01:05:53):

Super fascinating. Nice to meet you. Yeah, man. Let's keep in touch. I'm fascinated by your business. So, uh, I'll talk to Kent and, uh, yeah, let's be in touch and maybe we can work together somehow. Be fun.

Will Szamosszegi (01:06:05):

Yeah, definitely. Sounds great to

Cary Hayes (01:06:07):

That's great.

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