VIDEO: Bitcoin May Be Valued “Dramatically Higher” Than $100,000 Per Unit, Says Chairman Of Blockchain Power

Blockchain Power Trust (CVE:BPWR.UN) (OTCMKTS:TNSTF) Executive Chairman Ravi Sood says bitcoin “has the potential to go dramatically higher” than $100,000 per unit. He talks to James about how the company will become leaders in the cryptocurrency sector due to their scale and low operating costs.  Perhaps the most intriguing aspect to Blockchain Power is that they are a renewable energy producer, and because of the subsidies associated with that, they believe they can either completely cover all their operating costs mining bitcoin or come very close to it.  


James West: Ravi, let’s talk about Blockchain Power. Now, you’ve just recently entered the crypto space with Blockchain Power; tell me what it does, and what’s the value proposition for investors.

Ravi Sood: Absolutely. So when you’re looking at cryptocurrency mining, the single most important variable in terms of your cost structure is the cost of the power that you’re using; it uses a truly awesome amount of power, and every cent per kilowatt hour, every fraction of a cent, and the availability and stability of that power, are very important.

So we’ve come at it from a different approach. Others have done a very good job in some cases of securing very low cost power locations and jurisdictions; the only way to get lower cost than even that, than going to places like Manitoba or Quebec where you get good costs, is to generate it yourself and do it very efficiently. Also important to do it with renewable energy; that’s increasingly becoming an issue in the sector.

James West: Sure.

Ravi Sood: So we started as – we started the company as a renewable energy producer, 100 percent green energy from solar, hydro and wind, and what we’ve done is, we’ve changed the focus of the company so that we are still producing that power, we’re still collecting a substantial revenue stream from e-subsidies, based on generating green power, but refocusing initially some or most (and eventually perhaps all of our power) towards actual cryptocurrency mining onsite. So, on station, where we’re generating that power. So, getting the absolute lowest possible cost, with the objective being a completely vertically integrated cryptocurrency miner, with the objective of being the absolute lowest cost operator in the space.

James West: Interesting. So you’re mining Bitcoin exclusively, or other – I mean, is it an ASCI base or…

Ravi Sood: Initially we’re focused exclusively on Bitcoin and we’ve done that for a couple of reasons. It is a pivot for us, so we’re trying to minimize any execution risk. Bitcoin is obviously the largest and most liquid; there is a challenge sourcing the hardware even for Bitcoin, obviously, that’s a major consideration. But we have taken steps to minimize our execution risk and minimize the time that it’s going to take us to get to market. So we will be mining other currencies over time, we will have a more flexible diversified approach, but initially it’s a focus 100 percent on Bitcoin and on an ASIC-based solution.

James West: All right. So where are you at right now with the company’s evolution in terms of equipment, and how soon until you start producing meaningful volumes of Bitcoin?

Ravi Sood: That’s the important question. So we’re in process, we’ve closed a financing – we closed it just last week. Sorry, this week; we closed it four days ago. And we started the process to procure the hardware, we started that about two months ago. It’s a very long lead time on certain aspects of it, so we’re very focused primarily on sourcing the ASICs. We expect to have about one-third of our initial operation running by the end of March, which would be about a 3-megawatt mining operation, equivalent to about 2,000 Antminer S9s, and the remaining two-thirds by the end of June. So that would be about a 10.05-megawatt operation utilizing approximately 6,400 Antminer S9s.

We continue to be optimistic about hitting that timeline, but it is certainly one of the main challenges out there, to get into business and to get into business in a timely fashion.

James West: So an investor in your company is going to expect that you’re going to profit from the mining of Bitcoin by selling Bitcoins as they’re mined?

Ravi Sood: We have indicated an initial policy of primarily holding the Bitcoins, so one of the advantages or real attractions to our business is, and we think this is perhaps the most robust business model in the cryptocurrency mining sector is, we generate renewable energy. We earn EU-based subsidies for that generation; we don’t have to sell it into the grid and earn a fee and tariff. So we have a baseline revenue from that subsidy income; that covers, we believe, all of our operating costs, all of any interest or principal repayments, any cash taxes that we need to pay, within reason, and we’re able to be then very flexible on the Bitcoin.

We will sell some from time to time, but our main promise to investors is that we will be completely transparent on what the policy is around our Bitcoin, the objective being to hold as much as possible without becoming a closed-end fund whose primary asset is just Bitcoin; we don’t want that to happen, either.

James West: Okay. So then, you subscribe to the idea as the manager of your investors’ money, that Bitcoin could potentially reach $100,000 per unit or higher?

Ravi Sood: I’m not going to give you a price target, but I will say my personal opinion, not necessarily reflecting that of the Board or continuously reviewing it, my personal opinion is that it has the potential to go dramatically higher, and the very nature of Bitcoin, how the supply of it is limited, the competition that’s created to build out this network, the network is feeding itself, it’s driving itself, and the nature of it, operating cost, the marginal cost of the next Bitcoin can only go up. And the power requirements for that Bitcoin go up and up as the difficulty rate or the network hash rate goes up.

And that marginal cost of the next Bitcoin is climbing so steeply that either the price continues to be very good, and continue to go higher, or you’ll see a curtailment of that supply.

From an operator’s point of view, that means whereas people have made money, particularly by holding it and certainly by mining it in the last several years, you are going to need to focus much more on your operating cost and your scale. This sector is institutionalized and it’s happening fast. So hundreds of millions, billions of dollars are being thrown at it; people are moving around operations to low cost and ultra-low-cost power jurisdictions; and scale is going through the roof. So costs, what you need to get that marginal coin, is going to go up and up, and I personally believe that we are past the tipping point here on Bitcoin. It is something that’s here to stay, and as that adoption curve goes up, it’s going to find its role in our monetary system, and the price is necessarily much higher. What it is, I don’t think it matters; the direction is up.

James West: All right, Ravi, that’s fascinating. We’re going to leave it there for now. We’ll come back to you in a quarter’s time and see how you’re doing. Thanks for joining me today.

Ravi Sood: My pleasure.

Midas Letter LIVE

Midas Letter LIVE is the video channel from Midas Letter's headquarters studio in the heart of Canada's Financial District in downtown Toronto, Ontario. We interview CEOs from top emerging companies and the best financial analysts with the highest reputations in the business.
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.