{"version":1,"type":"rich","provider_name":"Libsyn","provider_url":"https:\/\/www.libsyn.com","height":90,"width":600,"title":"Episode 017 - JP Baric, CEO, Aurum Capital Ventures Cryptocurrency Mining & Energy Technology","description":"Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use. Episode Introduction: Hello again everyone.  Today, I have the pleasure of welcoming back to the program one of my favorite guests, JP Baric, CEO and Founder at Aurum Capital Ventures, because he is my go-to source & expert in explaining and making sense of all things crypto;  BTC, crypto-mining, crypto-energy\u2026 JP thank you for coming back to join me on the show.    And to reiterate so that folks know, Aurum Capital Ventures is technology\/energy company engaged in multiple aspects of the crypto-mining business. And we\u2019re going to highlight a new Fund you\u2019ve launched for providing exposure to crypto assets, called Lucid River Partners BTC\u2019s Very Volatile Week: I would like to anchor the conversation initially with:   All that\u2019s been going on in the news over BTC volatility and in crypto-asset category over the last week to 10 days; Recent price crash and negative commentary around crypto mining activity in general; Including effects of China\u2019s announcements on banning mining, Elon Musk \u201cpoking the bear\u201d on ESG concerns, and Jim Cramer, who gets it completely wrong, suggesting it points to the need for regulation of crypto b\/c of \u201csystemic\u201d risk\u2026blah, blah, blah JP, I know you\u2019ll make sense of this for us and put it into understandable English!  What do you make of all this?  What are your initial thoughts, your take? Mike Novogratz CEO of Galaxy Digital chimed in with a short video providing some perspective and reassurance \u2013 I thought some of his comments were insightful: Mike Novogratz:  \u201cThe underlying progress that is happening in the BTC ecosystem, the ETH ecosystem and crypto in general is full speed ahead.   \u201cThis is not trading Tulips \u2013 this is trading a technology that is going to revolutionize how we transmit value to each other\u2026\u201d JP, what do you think?  Is Novogratz right about this? [Galaxy Digital\/Galaxy Fund Mgt. - a full-service institutional player, with asset management, capital markets, and investment banking.]     Galaxy is well positioned to compete with Coinbase and Gemini around institutional funds, as well as with Fidelity on third party wealth management, as well as Grayscale on asset management. This entire business exists because of Mike Novogratz\u2019 bet on crypto assets. Is Crypto-mining Eco-unfriendly? JP, I also wanted to spend some time discussing the energy use side of crypto-mining because, again, there is so much faulty information disseminated by folks in tech media and financial press that is just simply erroneous.   Many articles recently published are suggesting crypto-mining is not environmentally feasible due to the amount of energy used\u2026and that this is unsustainable And China is often claimed to be a geographic center of concentration for BTC mining.  However, several bloggers and others point out this is not true at all\u2026 See Dec. 29, 2020 Forbes Article by Roger Huang, The \u2018Chinese Mining Centralization\u2019 Of Bitcoin And Ethereum Link:   https:\/\/www.forbes.com\/sites\/rogerhuang\/2021\/12\/29\/the-chinese-mining-centralization-of-bitcoin-and-ethereum\/?sh=25b14792f669 Take-aways from Article:   The first thing to understand about this erroneous argument is: Mining pools command loyalty not based on geographic traits or even political ones, but rather, reward types, fees, and how the pool deals with bitcoin transaction fees. Mining pools might have a geographic base, but miners that pledge their hardware and their hash rate might and can switch their loyalty depending on a host of factors.   Important to look at the hash rate of a mining pool not as one monolithic bloc that can be controlled and manipulated at will, but rather as a marketplace or as an aggregator that commands a fickle amount of loyalty.  At any given time, if the rewards and technical conditions of mining pools change, there can be a shift towards mining pools based in Europe or North America \u2014 or anywhere else in the world. In addition, Miners are very long BTC;  they wouldn\u2019t act contrary to their financial interest to damage the ecosystem. Mining pools based in China also run contrary to State policy; The People\u2019s Republic of China has a skeptical view towards bitcoin and other cryptocurrencies Finally, Miners are also not the only institutions that matter in the balance of proof-of-work blockchains;  Nodes are run around the world.  The coders\/developers that build up the framework of cryptocurrencies are distributed around the world,  With US-based institutions such as cryptocurrency exchanges and non-for-profits like the Human Rights Foundation providing funding \u201cEthereum Merger\u201d announcement;  that Proof-of-Work will merge to become Proof-of-Stake, and that the benefits are energy conservation on the blockchain to confirm transactions\u2026What do you make of this announcement?  From our October 2020 Conversation \u2013 you went into some detail regarding Energy Utilization & Economics of Crypto-Mining: JP provides a deep-dive into the interrelated metrics and dynamics of Energy and Crypto-mining.  Here is what you will learn: Crypto-currency Mining involves sourcing and utilizing the most advanced equipment, for sure, which you guys provide, but also one of the key components that has a huge impact on the cost and viability of crypto-mining itself \u2013 is the cost and amount of energy consumed \u2013 and, therefore, the energy component and its costs have a huge impact on the industry and its success. Metrics\/Discussion: Terahash Rate \u2013 core measure of energy usage in crypto-mining Can predict and model the Terahash rate for mining equipment.  USD per terahash \u2013 how much we make on a USD basis - the speed of how fast a mining machine runs.   Price per terahash dropped to 7.5 cents \u2013 when BTC crashed (March 2020).  Was 13 cents per terahash prior.   Amount of new machines on the network has grown \u2013 at 8 cents per TH \u2013 betting that price of BTC will continue to rise\u2026 Miners all over the world are thus, searching for most cost-effective energy costs.   Cost\/Mwh Rates in crypto-mining Old machines vs. New machines and economics Revisit the halving event from May 12, 2020 \u2013 when reward for mining was, by design, the reward went from 12.5 BTC to 6.25 BTC \u2013 Impact? Inflation Rate of BTC (1.8% infl. Rate) compared to USD inflation\u2026digital currency has a lower effective inflation rate than the fiat currency! BTC price may be volatile but depends on what you compare it to New equip. is coming online line as fast as the manufactures can produce them.  Most are made in Taiwan and China Coming into facilities that have power in the 4cent to 5 cent range Mining Machines: The S-9s are the older;  Newer are the Ant Miner S19 Pros are  Let\u2019s talk about your new Fund \u2013 Lucid River Partners;  What was the idea behind creating it? What will be its mandate\/mission? How do folks find out more? Closing Remarks Contact Information for Aurum Capital Ventures Those seeking additional information and wishing to learn more about Aurum Capital Ventures: JP\u2019s Twitter Account \u2013 @JPBaric Email:  jp@theminingstore.com The New Fund - Lucid River Partners:  www.lucidriverpartners.com\/learn Thank you for joining me for this edition of DVC.  I hope you found our discussion today with JP Baric and Aurum Capital Ventures interesting and useful.   Stay tuned for my next Episode, where I will have a very special guest and accomplished expert on building successful tech companies in LatAm.  Brian Requarth, who created the leading Real Estate Technology Co. in Brazil, Viva Real, will join me.  He\u2019s also an author -   Thank you again and I look forward to joining you for my next Episode of Distilling VC. ","author_name":"Distilling Venture Capital","author_url":"https:\/\/markwking.libsyn.com","html":"