#761: Miners Own The Power Gold Rush with Brandon Bailey

**SPEAKER_1** (0:07)
You've had a dynamic where money's become freer than free. When you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven.

**SPEAKER_2** (0:18)
I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor.

**SPEAKER_1** (0:29)
I mean, that's part of the bold case for Bitcoin.

**SPEAKER_2** (0:31)
If you're not paying attention, you probably should be.

**Marty Bent** (0:36)
Brandon Bailey, welcome to the show, sir.

**Brandon Bailey** (0:39)
Thanks for having me. Excited to be here.

**Marty Bent** (0:42)
Excited to have you, dude. I mean, we've been, known you for what? Probably like seven or eight years now at this point in the Bitcoin mining space. And I mean, you've done an incredible job of knowing what's happening inside and out, starting a galaxy, moving on to Nakamoto. You just launched dymetrics.ai to help people grasp what's going on with the Bitcoin mining and AI compute themes for colliding with each other. And I'm incredibly excited for this conversation because I think despite what many Bitcoiners will get butthurt about is that AI is taking the wind out of the sails of Bitcoin. I'm incredibly excited about what's happening in AI, and I actually think it's going to be massively beneficial for Bitcoin overall. And so having you here to help get a lay of the land of what's happening on the compute build outside I think is going to be incredibly valuable.

**Brandon Bailey** (1:44)
Absolutely. I'm really excited to dig into the conversation. There's a lot to talk about.

**Marty Bent** (1:49)
Well, a lot to talk about. Where do you think the best place to start is? Like the history of this emergence of AI compute.
I think maybe starting there, like the intersection of Bitcoin and energy infrastructure that really exploded in 2021, what the Bitcoin miners were able to do successfully in terms of locking down power and really ingraining themselves in energy systems. And then the appearance of AI compute really, I want to say throwing a wrench, but really accelerating things on that front as well.

**Brandon Bailey** (2:26)
Yeah, let's jump into it because that history there, especially in the 2021, 2022-ish era is ultimately what led a lot of these Bitcoin mining companies to stumble onto this gold mine of the power portfolios that they ultimately amassed. And so, it was really around 2021 shortly after we had the China mining ban, which resulted in as much as 30% of network hashrate coming off line and this re-domicilation, hopefully that's a word, of Bitcoin mining hashrate relocating to the US. So Bitcoin mining was largely dominated by China. That's where a lot of the network activity occurred. After the China mining ban, we saw this sort of gold rush of re-establishing Bitcoin mining hashrate and compute in North America, which led to some of the first publicly traded Bitcoin mining companies. So that's where you had companies like Marathon and Riot and CleanSpark really start to emerge in that time frame.
And so we were kind of seeing the institutionalization of Bitcoin mining during that era, which led to a lot of these companies acquiring massive amounts of power so that they could ultimately have a pipeline to build out these 100, 200 megawatt data centers that were all going to be allocated towards Bitcoin mining, which made a lot of sense at the time. Bitcoin ran from, I want to say, the lows, like coming off the lows of last cycle. I think Bitcoin touched maybe around 4K, like in the bear market post 2017 And then from that point ran up to the highs of 60K. So the margins on Bitcoin mining were just, I mean, incredible during that 2021 bull cycle.
So all of the investment that was pouring in from public companies acquiring that land and power made a lot of sense, given the economics at the time. And so that's what ultimately allowed these companies to be sitting on effectively gigawatts of power. And then as we now seen AI really blow up, all kind of starting with the advances that were made with ChatGPT and et cetera, you've seen like obviously an explosion and just demand for AI. And we were kind of going through this massive capex bull cycle. All of these Bitcoin miners were super well positioned because they already had all of this energized power that is one of the biggest bottlenecks right now when it comes to just trying to stand up more compute.

**Marty Bent** (5:22)
Yeah. And I think it's been funny watching it all play out because you're seeing the, I mean, going back to the 2021 era, having been involved in Bitcoin mining back then and still, to this day, like the mad dash, like the lessons that you had to learn to acquire power were pretty massive. It was a steep learning curve. And it's interesting watching the AI world get into this, obviously, out of necessity, the amount of power that's needed is almost incomprehensible.