In an exclusive interview with cryptonews.com Charlie Schumacher, VP Corporate Communications of Marathon Digital Holdings, talks about macro trends that will affect miners going forward, the bitcoin ETF, the bitcoin halving, and how Marathon is preparing for a bull market.
Charlie Schumacher, VP Corporate Communications of Marathon Digital Holdings (NASDAQ:MARA), a digital asset technology company that mines cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets. From 2018 to 2021, Charlie worked at Gateway Investor Relations, first as an Analyst and later as an Associate, specializing in investor relations. Then, in 2021, they joined Marathon Digital Holdings as the Director of Corporate Communications before being promoted to VP of Corporate Communications in January 2022. Charlie Schumacher has a Bachelor’s degree in Economics from Boston University.
Charlie Schumacher gave a wide-ranging exclusive interview, which you can see below, and we are happy for you to use it for publication, provided there is a credit to www.cryptonews.com.
Highlights Of The Interview
- Some changes from the last halving cycle that miners are focused on
- How do miners survive with their revenue being cut in half? (the halving)
- Macro trends that will effect miners going forward
- Bitcoin ETF – what will this entail?
- How Marathon is preparing for a bull market
Full Transcript Of The Interview
Matt Zahab
Ladies and gentlemen, welcome back to the Cryptonews Podcast. It’s your host, Matt Zahab. We are buzzing as always, still coming in hot from Mexico. And my guest was in Mexico last week as well. I had quite the issue on the food poisoning slash Salmonella. Charlie and I had to reschedule our pod. Charlie’s also battling through the same stuff. We’ll get into that. But before then, intro time, today we have Charlie Schumacher on the show today, VP of Corporate Communications at the one and only Marathon Digital Holdings, Ticker Mara. Mara is a digital asset technology company that mines cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets. From 2018 to 2021, Charlie worked at Gateway Investor Relations, first as an analyst and worked his way up to an associate, specializing in investor relations. In 2021, he joined Marathon Digital as the Director of Corporate Communications and then was promoted to VP of Corporate Comms. And in 2022, he also holds a Bachelor’s Degree in Economics from the one and only Boston University. I believe you guys are called the Terriers. My apologies if you are not. Huge shout out to Boston U. I’m a big hockey fan and they have a sake hockey program. Charlie, welcome to show my friend, Pump to have you on.
Charlie Schumacher
Yeah, thanks for having me, Matt.
Matt Zahab
It’s crazy, last week folks, just for the listeners who are tuning in, whether you’re watching on YouTube or for the few of you that still have a commute to the office, I assume a big chunk of our listeners are still commuting and as many podcast listeners throwing those headphones or throw it on Bluetooth and listen. Charlie and I had a bit of a battle last week. I was supposed to record with Charlie, we were supposed to record a week ago. And I woke up on Tuesday morning, actually not even Tuesday morning. It was a battle through the night from Monday to Tuesday went to, we’re not going to shout him out. No free ads. And we’re actually boycotting now, but currently in Mexico and went to my favorite jerk chicken spot. And I got Salmonella and for those who’ve never had it, highly recommended not getting it. It was an absolute battle. And fast forward a week later, Charlie was in Mexico city for a lovely wedding, had a couple street tacos as one has to, and, him and I are in the same boat and battling some Mexico stomach shit. What a story.
Charlie Schumacher
Yeah, what a nice thing to bond over, right? Yeah, it’s not been super pleasant, but fortunately I think I’m on like, you know, I’m below the trough. I’m moving up in the right direction, but yeah, I landed on Thursday in Mexico and I, for me, food is half of like why I travel, maybe more, it’s food in history pretty much. And so I landed and I immediately went out to get street tacos, cause obviously street food is the best food. And that was in hindsight, that turned out to be quite an aggressive move on my part. I think if I’d been in Mexico for one or two weeks, maybe I would have adjusted, I would have been okay, but I ended up spending, you know, all day Friday in bed or, you know, trapped in my room.
I was there for a wedding and, there’s a chance I was a little tardy to the wedding and to the ceremony, but I did end up making it. I was able to rally, have a good time on the dance floor with some friends and was doing better. But yeah, it’s just, as you know, Matt, it kind of like comes and goes, right? So we’re working through it, but we’ll be good.
Matt Zahab
Yeah, it’s crazy. Charlie the honestly the biggest and again folks we are gonna get into the crypto pod of course the crypto aspect of the show. This is not a gut health related pod or a health related pond mind you. But it was just funny that Charlie and I were in the same boat for a very short period of time unless the biggest takeaway for me on top of obviously boycotting the Jamaican jerk chicken restaurant was, we wake up every single day and it’s just like oh another day Matt feels good Charlie feels good. The whole last week I’ve been so friggin happy just because I felt normal not even like feeling better than normal Just feeling normal or even a little sub par has put the biggest smile on my face I’ve been journaling about it and I’m like you know what I’m gonna start I’m gonna stop being a little ungrateful, you know what and I’m gonna be more grateful so I don’t know about you But that was that was sort of my biggest takeaway from just being absolutely in the gutter for two or three days
Charlie Schumacher
Totally. I’m not quite on your level yet. I’m not fully back to a gratitude, but I’m looking forward to getting there. But that’s absolutely what happens, right? We take everything for granted. And it’s when you lose things or don’t have access to them or things get worse that you realize how good your, quote unquote, normal, boring life can be. And so just feeling good, and I certainly take it for granted. I’m sure most people do. And health at the end of the day for me is one of the most important things, but I forget that sometimes, especially when I’m out in foreign country, having fun, eating street tacos and going to weddings and being silly, but yeah, it’s a good reminder, right? Every time I come back from a trip like that, I’m super motivated to get healthy again. And sometimes that works and sometimes that doesn’t. It’s a motivation can be short lived.
Matt Zahab
Well said. Before we get into Marathon, and I guess I do need to disclose this, I am an investor in Marathon. This isn’t the reason why Charlie is on the show. The reason is because Charlie is a great guest and Marathon is an incredible company. But I do feel like that has to be said. Anytime a guest comes on, I do always disclose to the listeners when I am an investor. I got into Marathon way back in the day in 2020 for a multitude of reasons and we will get into those. But again, just wanted to be fully transparent and candid with all the listeners and everyone tuning in. But one thing that I am very curious about and not even so much Marathon related, but just on your job title and how important it is in anyone on the investor relations and corporate comm side of things, I have been fortunate enough to work with a couple of public traded companies in Canada who do actually have Bitcoin on their balance sheet as well. And people don’t really understand the importance of a corporate comm job or an investor relations job. And furthermore, how many companies totally drop the ball? Like you are on the media show and on the road show doing absolutely everything all the time, one of the faces of the company. But there are so many public traded companies, more specifically microcap ones, where it is like the IR team is just sort of non-existent. And the corporate comms are sort of non-existent. It is sort of wild to think about. But walk me through your day to day and exactly what it is and what a corporate comms VP does on a day to day basis.
Charlie Schumacher
Yeah, I appreciate you kind of teeing up some reverence for what I do. It makes me sound a little less self-important, I guess, when I started speaking about it. I agree with you, though, that people, it’s like, well, it’s the same thing we were just talking about. People take it for granted. We take for granted that we all speak and we can all tell stories, some better than others. And it just depends on where your focus is, right, as an individual. But human beings are both story creating and story-consuming machines. That’s basically what we are. And so narrative is close to everything. Obviously, if you think about it from the company’s perspective, you have to execute. If you don’t execute, a story will only go so far. But you need a good combination of both narrative and numbers for something to be compelling and for it to make sense to people. There’s a rational side of us and there’s an irrational side of us. And ideally, you’re capable of speaking to both of those. So my job, it’s funny, I changed this description depending on whom I’m speaking to. Because not everyone gets Bitcoin, not everyone gets Bitcoin Mining, right? So I typically will start if it’s a new person and tell them that my job is I’m a Bitcoin propagandist. And I kind of let that sit for a second. And then they’re like, that doesn’t make sense. And I’m like, well, let me explain what I do. And then once I’m done explaining, they’re like, yeah, okay, that made sense. I get it. So I run communications and marketing for Marathon currently. What that basically means is everything that we produce, that’s a word or a video or our marketing and branding, kind of all comes through my team and through me. So we are in ways responsible for the voice of the company, Fred, our CEO is our primary spokesperson and obviously sets the tone and pace of everything that we do. And so a lot of our job is working with him collaboratively and then kind of like echoing his sentiment. So it’s really, you know, I don’t know, I view my job in some ways as a teacher, as an educator. I love Marathon. I think Bitcoin Mining is really interesting. I wouldn’t be in this industry if I didn’t. And so the job that my team and I have is basically to educate people on what we do, to teach them about Marathon and the cool story we think that is the company, as well as to teach them about the industry and why we spend all of our time doing this and suffer a crisis every single week, as everyone does in the Bitcoin space. And so that’s kind of just a…
Matt Zahab
Yeah, no, your point in regards to the narratives is so, I mean, you’re at least as from your bio former actor and live in LA. So obviously you’re big with, you know, in tune with the Hollywood scene. And it’s like, why does every movie have such a powerful narrative and multiple character arcs and a villain and a love story? It’s like, it’s just classic shit that humans can relate to. That’s all it is. And moving forward to publicly traded companies. A lot of us invest in companies because we hear from person A, B or C that number is going to go up or numbers going to go down. We look at the balance sheet, we look at the chart, all the charts at the bottom of the apex, it’s probably going to go up, but it’s like, a lot of us don’t know anything about the narrative of the company, right? Like besides just the one line or what exactly they do. So again, big fan of anyone in IR, I’ve had multiple ideas of how to jump into the IR space and move in grooves more specifically in Canada. Cause where I’m from, there’s so many different publicly traded companies with Bitcoin on the balance sheet that really don’t move the needle on the IR side of things. So super cool.
Charlie Schumacher
If I could jump in on that Matt, something you said I thought was kind of interesting where you tend to look at the numbers and then don’t necessarily know the story of the company. So what you’re kind of doing there though is you’re forming your own narrative based on the information you’re getting. Because what people actually do is they make decisions with their emotions and then they rationalize their choices with their intellect more often than us. Not always like a very optimistic in people’s capacity for rationality, but I also believe that for the most part we’re quite emotional and intuitive creatures. So if you think about it, like you are also creating and telling yourself a story even if you’re just looking at the numbers of something. So the job of a good communicator from a company is kind of to get ahead of that. To make sure that you understand the story from the company’s perspective and what they believe is important before you’re able to create your own narrative yourself and interject it with your own thoughts or your own biases. And obviously we have our own as well, but that’s one of the important things of communications in any company is you wanna have influence over the narrative. Because even if you’re just looking at numbers, you’re not looking at it objectively as much as you might try.
Matt Zahab
Yeah, well said. One last question on the IR stuff and that and the comm stuff then we’ll get into Marathon and everything Bitcoin and Bitcoin Mining related AI I’ve been messing around with AI a shit ton just like every other human on the planet has. How have you been utilizing AI as someone who again is a wordsmith and a not just you know on the writing side but on the audio and visual side of things like I’m sure of all fields you and your team probably have a lot more wiggle room to utilize AI in some capacities because of the nature of the job, but then in others where it’s like you guys have to obviously you know make sure that all of the publicly related regulatory bodies, you know look over all your stuff no forward-looking statements. I bet that’s an absolute nightmare for you we won’t even get into that but how have you in the team been utilizing AI to make your lives a little easier?
Charlie Schumacher
A lot of experimentation and a little bit of actual implementation, I’d say. So super interested in AI. I was on board the ChatGPT train early on. I remember like where I was in December when it got launched and everyone was talking about it. All of our minds were blown and why we were made was immediately calling contacts over at OpenAI and seeing they had, so it was, we’ve all really enjoyed experimenting with it. And to the point where it’s funny actually in the IR space, I thought that I actually almost, I considered starting little side projects related to I and investor relations. I actually bought the domain name AI IR, like air.io. Yep, nice. And I might do something with it. I haven’t yet. So if anyone wants to buy it from me, please let me know.
Matt Zahab
No free ads on the pod, no free ads.
Charlie Schumacher
Yeah, I’d do myself for money like that. But my thesis behind that was a lot of investor relations work and public company finance work is quite formulaic. 10Ks and 10Qs are very formulaic. Press releases tend to be formulaic. If you’re not used to writing them, it may not seem that way. But there’s definitely a formula to structuring the way a press release is done.
Matt Zahab
All of them are like pretty plug and play-ish.
Charlie Schumacher
Yes, exactly. And so my thought was, well, but ChatGPT seems to be great at is taking an outline and then converting it into full sentences. And so if you can feed it a really good outline, then you can skip the drafting process, basically. You still have to do some editing, and there’s still a lot of the live work up front, so you have to do most of the critical thinking. But then you can leverage AI for the muscle, which would be the drafting process. And so I kind of had this idea of, well, maybe I could go around and create really good outlines for press releases or for scripts or 10Qs or whatnot, and then feed that into ChatGPT and get a quality press release out. And maybe that’s a service that might function well in the IR world. I don’t think it actually works super well as a company. I think that’s all going to get commoditized super fast, so that already has. But I do think people who understand how to leverage the tools can get more leverage out of themselves. We haven’t used it a ton. So again, we experiment with it, but we haven’t used it a ton, actually, on Marathon stuff. The primary reason is just sensitivity with public company information. Material non public information is obviously super sensitive and important topic. And I don’t fully know in what capacity we can use something like ChatGPT with information like that. So I’m very hesitant to use it, actually, and implement it effectively for our communications. But I do like using it as a brainstorming tool. I do find it really effective for that. So if I’m trying to… So for example, when you write press releases, you often end up saying the same thing over and over. Like every press release ends with the quote of the CEO saying, something about how he gets optimistic for the future, essentially. And excited about the company. If you have to write that multiple times a month or when I was working as an investor relations associate at a consulting firm, you’re writing that every single day. It can get a little dry and you have to kind of get creative and just saying the same thing in new ways. So I do find AI super helpful for that, for bouncing ideas off of, or if we’re trying to come up with a new name for a product or something like that, it’s a nice way to do that as well. So it’s a good brainstorming tool and it’s good for exporting some of the muscle. So we like to play with it, but just given sensitivities of public company, it’s a little hard to just like full…
Matt Zahab
I totally agree. Let’s get into the bread and butter of the show here. I’m gonna go with the cop out question and just to set the tone and stage for the listeners, give us the elevator pitch on Marathon and then we’ll get into the nitty gritty stuff.
Charlie Schumacher
So Marathon Digital Holdings is one of the largest Bitcoin Minerss in the world. I believe at this point, it’s basically the largest publicly traded one in North America. We have a little over 19x a hash of capacity online. We’re targeting to be about 26x a hash around the end of this year. So for reference, that puts us, I think, about 5% of the global Bitcoin network. Pretty sizable, especially given that the company is like what it’s, we’ve been doing this really at scale for three years. So it’s a lot. It’s been fast. It’s been a lot of growth. We’re also a very large holder of Bitcoin. So we hold over 13,000 BTC or a balance sheet, closer to 14 maybe now. So large holder of Bitcoin, large producer of Bitcoin. And we also, we’re a little different in the way that we mine and approach the industry. So we take, we’re really focused on technology and trying to find efficiency through vertically integrated technology and mining. So we’re actually pretty hands on with everything from the pool, which is the software layer that basically interacts between the miners and the Bitcoin protocol all the way down to the hardware, like the actual ASICs. A lot of people know that we’ve invested in a company called Auradine, which makes Bitcoin Mining machines, for example. So we’re really focused on technology. And then we’re also really focused on right now, on exploring some of the interesting things that Bitcoin Mining can do other than just mine Bitcoin. So we’re really interested in kind of the positive externalities that come off the mining, like leveraging heat, for example. What can you do with that? Capturing methane and using that. How are your miners? So we kind of say a little bit of a different approach, I think, from other folks, not just in terms of how big we are, how much Bitcoin we hold, but also just the way that we approach the industry. We’re always trying to do something a little different and trying to figure out, is there something more that we can do other than just grow hash rate, basically, even though that’s obviously our primary.
Matt Zahab
Well said. Charlie, we got to take a quick break and have a huge shout out to our sponsor of the show. But when we get back, we are going to continue to talk about hash price, incentive strategies, other macro trends that will affect miners, and of course, the big bad question, the halving cycle, which I believe we are about five months if I’m correct away from. Until then, we got to give a huge shout out to our sponsor of the show, PrimeXBT, longtime friends of cryptonews.com and longtime sponsors of the Cryptonews Podcast. PrimeXBT offers a robust trading system for both beginners and professional traders. It doesn’t matter if you’re a rookie or a vet, you can easily design and customize your layouts and widgets to take advantage of the highly reliable market data and performance that PrimeXBT offers. Speaking of offers, PrimeXBT is also offering an exclusive promotion for listeners of the Cryptonews Podcast. You can use the code, CRYPTONEWS50, that is CRYPTONEWS50, all one word, to receive 50% of your deposit credited to your trading account. Again, that is CRYPTONEWS50, all one word, to receive 50% of your deposit credited to your trading account. Charlie, I would love to start with the not elephant in the room per se, but just the one sort of question that I’m sure you get asked the most, more specifically as we are getting closer and closer to the halving for someone like yourself, your company’s business that is so heavily reliable on obviously hash rates and the amount of Bitcoin that you guys can produce from all the Bitcoin Mining that you guys do. Everyone must be asking about sort of the Bitcoin halving impacts of the Bitcoin halving how you guys are working around that whole line yards.
Charlie Schumacher
Yeah. So the Bitcoin halving is obviously a huge deal for the industry. Mining is a very weird business for many reasons. One is technically you don’t really have a customer. So that’s the weirdest business in the world already. The other is you don’t control your revenue. And as a business, the inability to control your revenue can be a very difficult thing to plan around and try to strategize for. That’s also one of the reasons though that I think people are gravitated towards this industry is it’s a very intellectually stimulating question to try to figure out how are you going to increase profitability, drive value for shareholders, or even for some people just survive as a business when you don’t necessarily know what the price of Bitcoin is going to be. Because obviously, we know that if Bitcoin prices can go up. and the halving occurs, then your revenues get cut in half. And I remember back in, I’d say the start of 2021, when institutional investors first got started being interested in Bitcoin Mining and hearing about Bitcoin, that was one of the big questions we got was, why would I invest in an industry where every four years your revenue gets cut in half? Great question. The reality, I mean, is I think there’s an element of hope and faith that you have to have to be in this industry. You have to believe that at some point, Bitcoin is going up in price. Otherwise, yes, why would you be in an industry where revenues are cut in half every four years? Historically, we’ve seen that around, having cycles, right? So the price of Bitcoin tends to go up post-halving. It kind of peaks, what, like 18 months, I think, or so after the halving, and then you get this crash, and you go sideways for a while, and it settles at a higher low, and everyone gets disenchanted. The rational route does awesome analysis on this stuff, by the way. But I think most people didn’t understand that. So for us, it’s interesting, there’s a lot of people who love Bitcoin and are very interested in Bitcoin, and we were talking about it this morning, actually, in a meeting. There’s some people in the room who are bullish and very much believe in the halving. There’s some people who don’t. Long-term, everyone obviously believes in Bitcoin. That’s why we’re in the room. But we have differences of opinion on what’s gonna happen in the short term. So to be in Bitcoin, I think you have to have some degree of hope and faith to operate effectively as a company. Hope is not a strategy, and you have to plan for downside. So what we’ve been positioning Marathon to do is to hopefully be in a good spot where we are very well protected from downside, but also in a position where we can capitalize on the upside. So let me explain that a little further. We’ve recently retired about 56% of our long-term debt, which we got a little pushback on because it’s low interest debt, and some people were confused as to why we were retiring it early. But for us, we’re looking at it. We’ve seen other people in this industry get upside down because of they were overlevered. You don’t exactly know what’s gonna happen at the halving. And we had a pretty steep discount on the debt that we could take advantage of. So we went ahead and did that, cleaned up the balance sheet. As a result, we now have more cash and Bitcoin than we do debt first time in two years. Also, typically around having, there’s potential for acquisition opportunities. Some people struggle, some people got ahead of their skis, and so they’re not able to continue operating, and that can be a good buying opportunity. And if you’re looking for acquisitions, or you want that optionality, you have to have a strong balance sheet. So a lot of that’s being opportunistic. We’re also super focused on reducing costs to mine Bitcoin. I think we reduce our costs from Q2 to Q3. And then we’ve also been exploring a lot of interesting ways that you can get really cheap, or ideally someday, potentially free power. So we have a pilot project we just announced in Utah, where we’re using the methane that comes off of a landfill, and using that to mine to power our Bitcoin Miners. It’s super cool. Yeah, we can get into that as you want. It’s like, it’s a really, neat project. We’re excited about. Well, let me finish on the first topic before I get too off track, then we can come back maybe to the methane thing. But that is by far our cheapest operating site. Like the energy cost is so much lower than anywhere else. So we’re very much focused on costs, because you can control costs as a company. So you want to do that as best as you can. The other thing you can do as well though is put yourself in a position to capitalize on upside. So cleaning up the balance sheet is part of that. I talked about like for interested in acquisitions, we want to have a really good balance sheet. The other part of that is growing hash rate and getting hash rate online now. Because in Bitcoin Mining, if Bitcoin starts to take off, the most profitable time is typically like in that first 6 to 12 months. When the price of Bitcoin is much higher than the global hash rate, which expands your margins. And the reason that happens is there are real world constraints in mining where it takes time to go buy machines, find a place to plug them in. If you’re going to build a facility, you have to buy transformers, containers, there can be leads. It’s a lot, right? And it can take 6 to 12 months to get miners online once you make the decision to actually purchase them. So if you have hash rate, what you want is you want hash rate on before that happens. So that you can capitalize on them as much of that upside that typically might occur in that 6 to 12 month window post halving if you believe in historical halving cycles. So that’s why you’re seeing us both do these things like really focus on reducing our costs, clean up our balance sheet as well as grow hash rate simultaneously. I think we’re supposed to be close to 23 or 26x a hash at the end of this year. We said we’re going to grow another 30% in 2024. So we’re really focused on doing both sides of that. If I had to really quickly summarize it, you don’t control price of Bitcoin, you don’t control global hash rates. So do everything you can to control the other variables. Grow your own hash rate, reduce your costs as much as possible. I think every miner knows that.
Matt Zahab
100%. One second, Charlie, before we get into the methane project or other cool things, how does, just as a bit of a primer, how does one increase their hash rate? Because that is one of the magic variables that really does truly move the needle. How does one improve hash rate?
Charlie Schumacher
The very oversimplified answer is buy Bitcoin Mining machines and plug them in. Obviously, it’s more nuanced than that. You want the latest and greatest technology always in the industry. You want the most powerful equipment and the most energy efficient equipment. So we’re always really focused on that. The other thing though is when you’re at the scale that we are, it’s not as easy as plug machine into the wall and sit back and just watch it make Bitcoin. There’s a lot more that goes into it. Air-cooled machines, for example, have to be cleaned about every 30 days because they get dusty.
Matt Zahab
Really? Holy shit. I didn’t know that.
Charlie Schumacher
Yeah. It’s pretty frequent. And that’s, by the way, that’s one of the reasons that we were super excited about our immersion project that we did in the UAE, which has now been built out into… It’s going to be 250 megawatts worth of Bitcoin Mining because we ran that immersion project in the worst environment possible for Bitcoin Mining. Super hot, super humid, and it ran for over 100 days without anyone having to touch it. So that’s another thing that’s really big for us is the way you can increase hash rate. Again, this is part of our focus on technology, is you want to reduce downtime. So anytime a machine is offline, whether that’s heat, maintenance, repair, maybe curtailment, which happens in Texas a lot, that’s all lost revenue. That’s opportunity cost. So we’re really focused on trying to maximize uptime. 100% is theoretical, not necessarily possible. But we’ve been doing a lot of that in Texas. One of our facilities, the site that’s in McKamey, Texas, it’s at a big wind farm. That one historically struggled with uptime and our team’s been spending a lot of time there working on everything from just repairing machines to network connectivity, stuff that’s not super sexy, but just comes with territory of Bitcoin Mining. And we’ve really seen performance improve there. So you want to try to do what you can to increase performance, but in very simple terms, it’s also just a matter of like, you have to have the capital to buy a lot of machines, and then you have to have somewhere to plug them in.
Matt Zahab
100%. Very quickly, walk me through, because we do have a couple, we are getting a little tight for time, and there are definitely a couple topics that I’d love to jump into, but very quickly run me through the methane project out of Utah.
Charlie Schumacher
Sure. Yeah. So it’s that we’re running a small number of miners at a landfill in Utah. We’re working with a company. They’re called Nodal Power. They’re great. We really like them. We check. There’s a couple of people in the space that have figured out how to do that. We really like those guys. They’re good operators. This is a small site. It’s not like it’s not going to make a dent in our hash rate, but it has the potential to really change the way that Bitcoin Mining is done. So as we were talking about around the halving earlier, everything you have to lower your energy costs. That is the one big variable that you do control. Miners have this very interesting economic incentive to go find right now it’s been cheap power. In the future, it’s got to be basically free power. What you’re looking for is because if you don’t have free power in two halving cycles, unless Bitcoin’s very high, it’s going to look bad. You’ve got to plan for that now. We think like six, eight years ahead. So we’re trying to go after places that there’s potential for energy that literally no one can use. Landfills are one really interesting example of this. So landfills emit quite a lot of methane. I forget the exact percentage. It might be like 14% of all the methane in the United States is from landfills. I may have that number wrong. It was in the press release we issued, which I should know. But I’ll cite that. People can check it out. Typically, that energy is wasted, not all of it. So really big landfills, they produce enough methane that it makes sense to them to basically capture that methane and put it into a pipeline. Then that methane can be sold elsewhere and utilized elsewhere. So there are people who use the methane off of landfills for power, but there are a lot of really small landfills out there where it does not make any economic sense to capture the methane or build a pipeline to it, which is super expensive. And so typically this methane is flared, which it’s burnt, right, and turned into CO2. Or it’s fented, which means that you are literally just letting methane go into the atmosphere. And it’s been estimated that methane is 80 times worse of a greenhouse gas than CO2 is. So it’s a big environmental problem, actually. So what miners can do if this does work, it seems to be going quite well actually so far, but the question is, can this work at big scale? Is can you capture all this methane that’s currently being just vented into the atmosphere and use it converted into electricity, basically clean it, burn it. So you produce CO2 as byproducts, and then you produce electricity and use that electricity to power your Bitcoin Miners. If you do that, you’re reducing greenhouse gas emissions, and you’re leveraging energy that no one else was using that already existed. So the energy to begin with is super cheap. You’re actually benefiting the environment, which is contrary to how most people think about Bitcoin Mining today. Certainly how the media tends to portray it. And you can actually, in addition, lower your costs because there’s potential for carbon credits or things like that. So it’s super exciting for those reasons. There’s another, and I know this is a little long-winded, but it’s cool, which is I think that this can make Bitcoin’s hash rate much more decentralized. So with public companies coming on board, these sites have gotten really big. You’re talking hundreds of megawatts at some of these, 300 megawatts, 500 megawatts. And so you kind of get this concentration in hash rate, which as Bitcoiners, people love. Although, to be fair, it’s not huge percentages of the network. But what I think this is going to do is it’s going to take mining off grid, and it’s going to take it to much smaller sites. So I think long-term, if stuff like this works, you’re going to end up with mining that is much more decentralized and spread out all over the world, and leveraging stuff like methane as its source of power. So I think you’re going to get more decentralized hash rate. I think it’s going to get cheaper power, and I think it’s actually going to be cleaner all at the same time.
Matt Zahab
So cool. I love that. Such an interesting space and we barely scratched the surface. Another not elephant in the room per se, but another very sexy and trendy topic that absolutely everyone and perhaps even their grandmas are talking about is the Bitcoin ETF. A lot of people think it’s going to make Bitcoin absolutely rip. I don’t truly believe it will. Long term, I definitely think, I mean, how could it not help? I really don’t see any argument in regards to how it could not be a net positive in the future. But in the short term, I feel like it’s already somewhat priced in. What are your two cents on that? How’s the Bitcoin ETF? Couldn’t affect the price of Bitcoin? And will it have any effect on Marathon at all as well?
Charlie Schumacher
I think yes to both. I think it, I don’t disagree with you that it’s getting priced in. I think this has been a large part of the, you know, the recent kind of rally in Bitcoin’s price is people are anticipating the approval of the ETF. I think for the industry, it’s super important. Bitcoin’s biggest problem, in my opinion, is that the user experience sucks. It’s like, it’s so bad.
Matt Zahab
It’s trash ass. It’s terrible.
Charlie Schumacher
Yes. Like buying Bitcoin, holding Bitcoin, trading Bitcoin, selling it is all like very cumbersome. And honestly, it’s high risk. Like I know that most people who got into the space early, they love the idea of sovereignty over their money and over their assets. I’m one of those. I was like, I love the political and philosophical aspects of Bitcoin. But the reality is that the majority of people do not want to run the risk of being able to vaporize their net worth by forgetting their private keys. And so like custody, right? So like, it’s like, that’s real. Like, it’s scary. And so like custody is super important or some type of vehicle that makes it easy for people to get exposure without running that risk of vaporizing a ton of their assets is really important. So I think the ETF is a vehicle like that. It doesn’t solve all the problems, obviously. But it is a very familiar way for people to get direct to get exposure to Bitcoin, maybe not direct without having to worry about custody and the potential consequences of that much freedom. So I think it’s actually really good for the industry. I think it’ll pull new people in. What is it going to do to miners? Kind of remains to be seen. What we’ve seen so far is miners haven’t exactly been trading and locks up with Bitcoin. You know, historically, miners have held much higher beta to the underlying asset. And I do think like long term, that’s true. Gold miners tend to operate this way. Gold miners have higher beta to gold. So I and I think Bitcoin Miners will are very similar to that. But I think what you might see in the short term is kind of people move out of mining stocks and move into the ETF. Because previously, one of the primary thesis of mining stocks was that they were a an easy way to get exposure to Bitcoin. Now, I think people are going to look at them as yeah, so I think they’re still an easy way because they’re publicly traded stock. But I think people will now look at them more the way they look at gold miners. So there’s, you know, you can capture the cash flow from the company, but also it’s a levered play on Bitcoin. So I think it’s just going to change like the mix of investors and what people are interested in. But overall for Bitcoin adoption, I think it’s quite helpful.
Matt Zahab
Yeah. Amazingly said there. And again, I said I am an investor in Marathon. I never sold one share since I got in 2020. And why did I get in in 2020? I was like, in Canada, we have a TFSA, which is like, I believe your version of the, what’s it called? Oh geez, how am I forgetting this? What’s the retirement account again called?
Charlie Schumacher
Oh, IRAs. 401Ks.
Matt Zahab
Exactly, where you guys can invest tax free. That’s our version of tax free investing, TFSAs and RSPs. And I was like, okay, I already bought some regular Bitcoin. How can I do this and not get taxed when I want to sell? Oh, lovely. There’s a company like Marathon who has a shit ton of Bitcoin on their balance sheet and who’s doing great things in the space. It’s an absolute no brainer. So I totally agree with you. I still think companies like yourselves who do have other verticals as well, where it’s not just Bitcoin Mining. You guys are investing in a bunch of tech and other cool stuff. I think that’ll definitely move the needle. But we are getting tight for time here, Charlie. One last question, then we’ll wrap up. Hopefully knock on wood, fingers crossed, bull market incoming. If it is, how have you guys prepped yourselves to absolutely take advantage of this and make some shit happen?
Charlie Schumacher
Yeah, love that. The optimistic side, right? So one is getting a lot of hash rate online, which we’ve been doing a lot this year. We went from 7x of hash to 19, supposed to be 26 by the end of the year. So that’s been like a ton of growth. And obviously you want that online so that you can make Bitcoin if and when Bitcoin goes into a bull market. So keeping continuing to grow is a huge one. The other one, I think that we’ll come back to look really positive is the fact that we’ve cleaned up our balance sheet so much. So you really want to be in good position for acquisition opportunities or to buy a bunch of machines or to buy immersion tanks, whatever it is, when other people can’t because you want to move first. And that’s actually historically what Marathon’s done. In 2020, we bought machines before anyone else could. And as a result, we’re, you know, we kind of cornered the market for that. And that’s what allowed Marathon to grow so much so fast. So that’s still in our DNA. We still keep focus on that of trying to grow as much as possible. But we’re doing so in a much more controlled and intellectual manner these days.
Matt Zahab
I love that. Charlie, what an episode. Thank you so much for coming on. I had an absolute blast here and can’t wait to have you on for round two. Before you go, can you please let our listeners know where they can find you and Marathon Digital Holdings online and on socials?
Charlie Schumacher
Absolutely. So companies website is www.mara.com. M -A -R -A. So it’s the company sticker. Pretty easy to remember. We’re @MarathonDH on Twitter. I am @charlieshu on Twitter thou I’m not super exciting to follow. So you’ll get more updates from the company than you will for me. And then we’re all pretty easy to get. So if anyone contacts the company, we’re happy. We’re always happy to chat.
Matt Zahab
I love it. Charlie, thanks a lot, man. Truly a blast, learned a ton. Definitely have some homework to do and can’t wait to have you on for round two.
Charlie Schumacher
Thanks, Matt. It’s a great time.
Matt Zahab
Folks, what an episode with Charlie Schumacher, VP of Corporate Communications at Marathon Digital Holdings. Great episode by Charlie. Huge shout out to both of our teams for making this happen. If you guys enjoyed this one and I hope you did, please do subscribe. It would mean the world to my team and I. Speaking of the team, love you guys. Thank you so much for everything. Justas my amazing sound editor. I appreciate you as always, my man. And back to the listeners. Love you guys. Keep on growing those bags and keep on staying healthy, wealthy and happy. Bye for now and we’ll talk soon.
