VIDEO: Atlas Cloud Enterprises Talks Leveraging Low Cost Electricity for BitCoin Mining

MidasLetter Live
|

Fred Stearman, CEO of Atlas Cloud Enterprises Inc. (CNSX: AKE ,OTCMKTS: ATLEF, FRA: A49) talks about their company model and how important keeping the cost of electricity down, is for the business of mining bitcoin.  They plan to have their facility up and running by mid-April.

TRANSCRIPT:

James West:    Fred, thanks for joining me today.

Fred Stearman: Thanks for having me.

James West:    Fred, let’s talk a bit about what does Atlas Cloud do?

Fred Stearman: Atlas Cloud right now is a cryptocurrency miner. We’re focused 110 percent on Bitcoin mining. We started out as really a proper data centre cloud computing business, and segued into the crypto space. We purchased a large facility in Coulee City, which is now called Electric City by the Coulee Dam, and we have three megawatts of power, expandable to five, and it’s the lowest cost electricity in the world right now.

James West:    How much per kilowatt hour?

Fred Stearman: It’s $0.029 USD.

James West:    Wow, that is cheap! Okay, in the Bitcoin mining world, that’s the highest input cost.

Fred Stearman: Yeah, I mean, in this space, Bitcoin mining, there’s nothing magical about it. There’s no intellectual property; it’s you have a facility, you power it, you buy your crypto miners and you power them up. But in the long term, because the algorithm is so much difficult to solve – every month adds about 80 percent complexity – this time next year, we need double the power to keep our current revenues.

James West:    Wow. And what does your current revenue picture look like?

Fred Stearman: So, we’re having our facility built for us as we speak; it will be ready April 10-20th. We have some more bitcoin miners we’re shipping into the facility, we’ll have about 10 million annualized at that facility.

James West:    From Bitcoin itself?

Fred Stearman: From Bitcoin itself. Then we’re going to expand to eastern Canada – you’ve heard the news that Quebec Hydro is open for business for miners…

James West:    Sure.

Fred Stearman: So we have our eye on a few facilities, one of which will allow us to have up to 20 megawatts of power. So almost with combined take, we’ll have maybe 10 times the revenue. And Montreal, we’re looking at 3.4 to 3.6 cents US.

James West:    All right, well, that’s interesting. Are you going to expand into other cryptocurrencies?

Fred Stearman: No, so right now, the business plan is very simple: find the cheapest power we can, keep our costs as low as humanly possible, and focus solely on Bitcoin for the next 24 months.

James West:    Okay. So right now there’s 17 million Bitcoins in existence, roughly?

Fred Stearman: Yeah, I think it’s 80 percent have been mined, so it’s actually about 18.1 million have been mined so far; 21 million is the limit, and as we get toward Coin Zero, the last one to be mined, that’s going to be a very, very expensive coin.

James West:    Yes, no doubt! Okay, so what are the risks? I mean, the current mania surrounding all crypto aside, what are the risks that the explosion in the various cryptocurrencies undermines the valuation of the whole sector the closer you get to the 21 millionth coin of Bitcoin?

Fred Stearman: Well, absolutely, it’s a hot topic. I mean, everyone and their dog is looking at where the price of these coins go. Bitcoin by itself is perceived as a store of wealth, so that’s why we’re only mining Bitcoin at this moment in time. But saying that is in the back end of looking at electricity, the logistics of creating these massive mining operations, you know that the Bitcoin price will go up over time. If you fast-forward 36 to 48 months, looking at electrical costs only – just electrical costs – somewhere around $25,000 per coin.

James West:    Wow. As the whole crypto space evolves, and the costs of mining it go up and the availability of electricity, I mean, I would assume this is driving up the cost of electricity in every jurisdiction.

Fred Stearman: Well, the beauty of where we are in Canada and in North America, we have renewable hydroelectric power. It’s great. It rains every day, as it was raining here in Toronto; it’s regenerated itself, there’s extra capacity on the grid. But what’s going to happen is, once we get to three or four years out, when these cheap power jurisdictions are taken up, where do we go from there? That’s going to be the question.

James West:    Right. I guess upgrading to the latest and greatest technology is key to being competitive?

Fred Stearman: Absolutely. So we’re using what we call a Bitmain Miner, it’s called VS-9. It has a life cycle about 18 months. So you think about doubling and doubling and doubling your power capacity just to keep your revenues the same, at some point, it’s going to get logistically impossible. So hopefully the miners will accelerate their technology. So you’re seeing a lot of people spend a ton of money into the processing, into the algorithm to solve their problems. And we’re also seeing money into the space itself. So, for crypto-security, for instance.

James West:    Right. What kind of CapEx is it going to take to stay competitive for the next 24 months?

Fred Stearman: So we sort of have a CapEx plan of around $100 million, and it will take us from our facility in Washington, our first one is fully funded, the miners are fully funded. We’re looking at Eastern Canada for a facility and the miners to go along with it. Somewhere else probably in Central Canada, and somewhere else in probably Northern Europe, again, for the hydroelectric power.

James West:    Okay, Fred, that’s a great introduction to the company. We’re going to leave it there for now. We’ll come back to you in a couple of quarters’ time and see how much Bitcoin you’re cranking out. Thanks for joining me today.

Fred Stearman: Thanks for having me. I appreciate it.

MidasLetter Live

Midas Letter LIVE!

Midas Letter LIVE is the video channel from Midas Letter Financial Group's headquarters studio in the Exchange Tower in the heart of Canada's Financial District in downtown Toronto, Ontario, where we interview the CEO's from the top emerging companies on the Canadian publicly traded company landscape. Live Streaming on Facebook...
More Info...

[email protected]

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Free Newsletter,
Priceless Content.

Get more of Midas Letter delivered right to your inbox.

Special Offer

Sign-up today and receive free and immediate access to three recently published special reports!