Hashchain Technology CEO Patrick Gray on Strategic Cryptocurrency Mining

Midas Letter
Midas Letter
Hashchain Technology CEO Patrick Gray on Strategic Cryptocurrency Mining

Hashchain Technology Inc. (CVE:KASH) (OTCMKTS:HSSHF) (FRA:1NQ) is a blockchain technology company that is currently focused on cryptocurrency mining, including Dash, Bitcoin, Bitcoin Cash, Ethereum, and other coins. CEO and Director Patrick Gray speaks to the Midas Letter about strategy and  the company’s competitive edge.


James West:     Pat, thanks for joining me today.

Patrick Gray:     Absolutely.

James West:     Pat, it’s somewhat self-explanatory one would think, but what is it exactly that HashChain Techologies does?

Patrick Gray:     So HashChain Technologies is a Blockchain technology company that has multiple divisions. Right now, we’re strategically focusing on cryptocurrency mining, but we have a lot of exciting other things in the works around Blockchain technology solutions, some really exciting acquisitions coming up, as well as building our own IP in house.

The one thing I want to make clear is, we’re a Blockchain technology company, not just a pure cryptocurrency mining play, although we are focusing on that in the beginning because it makes strategic sense.

James West:     Okay. What are you mining?

Patrick Gray:     So right now we’re mining Dash, Bitcoin, Bitcoin Cash, Ethereum, Decred, and we’re looking at purchasing some other rigs over the next few months to mine multiple other coins as well. So we’re very diversified. I think there’s a lot of companies out there that are focusing on a few different coins, and it’s really important to me that we’re diversified in the space. At the end of the day, I don’t necessarily believe in any single coin; what I do believe in is digital assets. I know that digital currencies are the next evolution of money, and digital assets as a whole will be here in 100 years. And I can’t say the same about any individual coin today.

James West:     Yeah, well, I’m with you there 100 percent. Where do you do your mining?

Patrick Gray:     Right now we’re currently mining in Vancouver; we’re paying about $0.04 kilowatt per hour. But we have one in Montreal as well that we pay $0.03 per kilowatt hour; we’re looking at facilities in Newfoundland, where we would pay $0.02 per kilowatt hour, and we’re also looking at acquiring a facility in Northern Quebec where there’s a dam onsite where we’d be producing our own electricity, which is very exciting.

James West:     Yeah, that is exciting. I’ve talked to a few companies that are sort of putting their operations proximal to low-cost or zero-cost power sources, and that strikes me as pretty important when your highest input cost on mining is energy.

Patrick Gray:     Yeah, absolutely. So there’s approximately 1,000 megawatts being consumed around the world; the majority of that is currently in China. You’ve probably read that that may be changing. To be an optimal, efficient mining facility, you need three things: low temperature, low electric costs, high speed internet. And there’s only a few places around the world that have all three: places like Russia, Sweden, Iceland, and Canada. Only about 14 percent of the world is currently mining, and the most profitable places to mine, which means 86 percent of the world, is mining in less efficient places, which gives HashChain a huge competitive advantage as we will be more profitable.

James West:     Okay. What’s the dollar value at today’s prices of your total year’s output of cryptocurrencies as you envision it?

Patrick Gray:     Yeah, so really high level I’ll just walk you through what HashChain’s doing currently. We have about two megawatts up and running. In the next two months, we’re going to be at about 8.7 megawatt capacity. End of year, we’ll be over 20 megawatts; end of 2019, about 40 megawatts; in 2020, somewhere between 70 and 100 megawatts. Those are conservative estimates.

Right now, revenue projections are approximately $5 million per megawatt. So in the next two months, we’ll be producing over $40 million revenue and that’s EBITDA.

James West:     Per megawatt?

Patrick Gray:     So 5 million revenue per megawatt.

James West:     Oh, okay. So that’s impressive. Now tell me about your Blockchain solutions division, for want of a better word. I’m assuming this is where you’re building Blockchain applications for real-world sort of scenarios?

Patrick Gray:     Yeah, absolutely. So my background is, I have a computer science degree, so I’m a developer, programmer. I’ve been building software solutions for the last 15 years. The first space I was involved in was in the e-discovery space, putting documents online for lawyers to review in huge corporate litigations. It was a start up company that I was involved with that I helped build, and we sold for 200 million within two years.

Then I started my own niche IT company around the e-licensing and IOT space. I built that company to 120 employees; we’ve had 66 percent growth year-over-year, with over 50 percent margins. We’ve become the biggest implementer in the world, and we’ve had strategic partnerships with some of the biggest companies like Xerox, GE, and it’s been a huge success.

My passion and love over the last five years has fallen into Blockchain and cryptocurrencies. I was an early investor, I was buying a lot of these coins very, very early. I started mining; I turned my garage into a professional data centre, so it was very, very exciting. I started building mining rigs, GPU rigs, with my bare hands, configuring them to tool mine Ethereum, Decred. Also purchased some ASIC miners as well.

So I’m a huge believer in this space, and again, we strategically started focusing on mining because it makes sense. We can bring money back into the company, but I’m more excited about actually building innovation. As I just explained, that’s all my past, all my experience, and we’re strategically looking at acquiring some companies first. You can acquire companies quicker and scale them, and it’s typically cheaper than actually building IP in your house. So to lay out my vision of HashChain: Step 1, scale mining operations. Step 2, acquire some companies in the Blockchain space that we can help scale. Because I’ve been in the space for a while, I know some of the best Blockchain developers out there, and these guys have built genius platforms and software concepts. And I have the expertise to help them scale these businesses and ideas.

So we’re currently looking at a few companies around regulation, around master node hosting, and those are two areas that really interest me. Everyone is talking about 2018 being the year institutional money is coming into the space; I believe that’s true. I also believe that regulations are coming, and although you can’t regulate Bitcoin or Blockchain itself, you can regulate the doors and windows into the space, which are the exchanges and the wallet. So you probably read the news that the courts are subpoenaing 14,000 users from Coinbase; I think they’re going to make an example of those users, and regulations are coming.

That scares many people; I see total opportunity of building and scaling software solutions around the regulation, around the tax base, working with the exchanges, working with the IRS, working with the government. So I’m very excited about that particular sector within Blockchain, and we’re currently looking at a few exciting acquisitions. We’re still working out the details and the news will be released down the road. I can’t get into specifics, but all I can say is that we’re doing some really, really exciting things in the space. We’re going to acquire some top-tier development companies and help scale those companies.

And then the third part of my vision is building software solutions and owning our own IP in-house. And again, this is what I’ve been doing for 15 years, so I love building innovation, I love this space, and I think we’re going to do things specifically around my expertise in e-discovery and e-licensing.

So right now everyone’s talking about how the Blockchain disrupts finance, insurance, health care, and I agree with all of that. There are small, niche markets that have better use cases for Blockchain tech, and some of those I’ve been lucky enough to be involved in and participate in, and I know the space very well. So I’m looking at taking my past experiences in these niche markets, implementing Blockchain tech, and growing HashChain to be one of the biggest software solution companies in the world.

James West:     Wow. That’s impressive! That’s – and you know, the trading in your shares seems to reflect a certain conviction, at least on the part of your shareholders, that you’re right. Let me ask you: so is the third tier of your business there, let’s say that I have a industry that I am a global leader in, and I have finally reached an understanding of Blockchain sufficient to recognize that boy, if I put a certain aspect of this industry onto a Blockchain, I would be 10 times more efficient and even more profitable. Does that company that has this realization, do they come to do you and say look, here’s what we want to do, this is the aspect of our business that is right for moving onto the Blockchain?

Patrick Gray:     Yeah, I mean, absolutely, and I would almost say that’s even a Tier 4, maybe that’s down the road, absolutely. I want to be a software solution company. I’ve built development teams, I’ve managed software teams; as I said before, I’ve built one of the biggest implementing companies in e-licensing in the world. So yes, I want to participate and help other companies do that, but first, I have some really innovative ideas that I want to do from my past experience. And eventually, I want to work with other companies, partner with other companies, and help build out their dreams and their concepts as well in the space.

James West:     Wow. That’s ambitious, and it looks like you’re executing so far. Patrick, I’d like to wish you the best of luck, and we’re going to come back to you in a quarter’s time and see how you’ve made out. Thank you so much for your time today.

Patrick Gray:     I really appreciate your time as well. Thank you so much.

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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