TeraWulf CEO on Sustainable BItcoin Mining and New Regulation

I think it was an initially called out, notably by Elon Musko of Tesla, is the carbon footprint left by bitcoin mining. Our next guest thinks they have a solution. Here Paul Prager, CEO and founder of Tera Wolf. They are based in Eastern East. I'm sorry Eastern Maryland. Uh, Paul, thanks so much for joining us here. Talk to us about carbon neutral bitcoin mining. Is that even a real thing at this point? Yeah, Hi Paul here, and thank you very much for having me on. Uh. Carols is

all about zero carbon missions. We've got sixty tho miners on order. It's two hundred megawatts. We have fifty megawatts of minor capacity targeted for this year, three for next, and eight hundred and their pipe and and and we're targeting zero carbon emissions. That's not sort of getting even carbon neutral, that's zero carbon emissions. Are energy resources are nuclear, power and hydro. How do you do that though? How

do you get clean energy for bitcoin? So? Um so nuclear doesn't emit any carbon, and hydro doesn't emit any carbon. And I you know, the genesis of tera Wolf was my company, bail Wolf. I've been in the energy infrastructure business for almost thirty years. At its very core, at the very core, bitcoin mining is energy infrastructure. So it's the process of taking a locally produced commodity like electricity from a sustainable resource hydro, nuke, turning it into a

globally traded commodity that stores value. So that's what we do. We have a power purchase agreement on the nuclear power facility in Pennsylvania, and we have a site infrastructure ready that will be online this year with hydropower coming to it.

All right, So, Paul, you know, right now, the Infrastructure Bill, and here in the studio we're watching video of the Senators on the Center floor voting right now as we speak, would require miners like tera Wolf to report tax data to the I R. S that I don't even think you even have access to. What would that requirement mean for miners like you and for the crypto industry more broadly. Yeah, listen, I generally would say legislation and regulation is a very

good thing for the bitcoin industry, right. It just further substantiates the legitimacy of bitcoin, So I think it's a winner. And no matter what. Second of all, I believe that there will be several bytes at proper legislation, UH to ensure that we're given responsibility these for things we can comply with. Um. I I know that they'll focus on the details as it goes into the house, but generally we like regulation. It's something again, I've been in the

power business for thirty years. We've lived with their entire life. And when legislation does come, I think it's going to come along the lines of what's the energy resource? You know. I think it likely comes in the form of a carbon tax. I don't I don't think that legislation will be burdensome if you will, just because you're mining bitcoin or holding bitcoin. Legislation and regulation in the US is one thing, but it's not the only player that's regulating

the crypto space. I mean in China the government banning mining, and I'm wondering how that affected your operations. I mean, I look at what China did as a crackdown as opposed to responsible legislation. UM, I think it was. It was listen net net it was. It was a great result for us. We saw the hash rate come down, so we were able to get a bigger piece of the pie if you're an early mover in bitcoin mining.

Second of all, there was a shortage of miners um, and and now they're readily available and there are better prices and terms. So I think we were able to sort of get a more prominent uh position, and we're able to sort of get a bigger piece of the pie now, uh, being that we're ready to roll here as opposed to where the difficulty rate was much higher. Uh just six months ago. Did you see an influx

of Chinese miners after they faned mining. Yeah, there are many, uh, you know, really good quality credit Chinese miners that are looking to come to United States. UM. There are some things though here that you have to think about. You have to have a site, you have to have uh it permitted properly, you have to have transformers, so you could step down the power. So I think again where

Tara Wolf is advantages. We have these sites, we have the electricity contracted for, we have the transformers, and the sites are shovel ready, and so there's a there's a significant first mover advantage. But yeah, I think Chinese miners very much trying to come here, and I think that's good for bitcoin. Right, you're decentralizing, uh, a lot of Chinese migration to the United States, and um, I think that's all a win for bitcoin. Obviously, a lot of this does come down at the end of the day

to concerns about the environmental impact. And there's a lot of conversation when we talk about investing and you know, treating our money with the environment and mine and kind of these e s G issues. There's a question of greenwashing.

How do you convince people that what you're doing a Tara Wolf is not that well, you know, again, we are about zero carbon emission, so there's a big difference between what we do, for instance, and another mining company that, let's say uses a thermal resource and tries to get the carbon neutrality by buying carbon credits. We don't have

carbon emissions, so it's not an issue for us. And I believe that the industry in general is very responsible and they disclose where their energy resources are coming from, and so I think that ultimately investors will pick and choose based on what their approaches. I think that the other way that will be, you know, a big factor

is going to be in value. Again, we think that legislation to the bitcoin mining industry will come more likely in the form of a carbon tax, So that will drive the cost on the margins for miners that are emitting carbon to a higher level than they will for instance, for Tera Wolf. So I think at the end of the day, that's where the rubber will hit the road and people will see the difference in the value opportunity. Paul on June of this year, teara Wolf, I guess

you merged with Iconics a spack. Give us an update on that transaction and kind of where you are on that. Sure, Yeah, we did a reverse combination. It's not a speck. In fact, it's a reverse merger where we merge into a currently listed company called Iconics icon x uh and we've filed our S four proxy last week. We await you know, all the customary approvals as you see everybody that needs

to chop on it. And hopefully, uh sometime late in the third quarter early fourth quarter, we'll be trading on the Nastack under the ticker w U l F. Wolf very excited about. It's a great transaction. Iconics was a great company, really clean balance sheet, and so it made a lot of sense. And do you view now as

a friendly time to come to the public markets? Absolutely, I mean there are there are several comps out there, so that that's a positive thing in terms of helping people sort of take a look at at at the industry and get a handle on value. I also think that if you take a look at what what what's in the infrastructure bill today, legislation means that bitcoin is here to stay. It's part of the ecosystem. It's an important part of it. It's an important generator revenue and

a store of value. So absolutely couldn't be a better time for us. Well, you mentioned that infrastructure bill, Paul, and we just had the headline crossing the terminal that five hundred and fifty billion dollar bipartisan infrastructure bill has passed the U. S Senate. We understand that a Vice President Kamala Harris will gabble that vote, but again, that measure has passed. This is the first part of President Biden's long term economic spending plans, Paul. But it has

passed that hurdle. Yeah, absolutely, and that's obviously important, and now we will go onto the other bigger, broader spending plan. Paul Pregor, thanks so much for joining us to really appreciate hearing that story. Paul Igor, CEO and founder of Tariff based in eastern Maryland. And again, as Kayleie was just reporting, the Senate has passed the infrastructure pack. The Senate, as we said, is voting as we speak on this UH infrastructure bill, and one of the hold ups was

cryptocurrency and taxation of cryptocurrency. I did not see that coming. I was thinking about maybe they're talking about a road or a bridge that needed to be included or excluded, but no, it was crypto. UM, let's get some color on that. We welcome Meltem Demure's chief strategy officer for coin Shares Group. They have about five billion dollars in assets under management. Meltem, thanks so much for joining us here. What can you tell us about what is or is

not in this legislation as it relates to cryptocurrencies. Yeah, it's great to be here, and thanks so much for having me. Look, if there's anything we've learned over the last five days, it's that lawmaking in the United States is a very complicated process that many of us, as it turns out, don't really understand so well. Um, I

think that's maybe an understatement. So here's basically what happened. Um. Within the Infrastructure Bill, there were certain provisions that sought to raise tax revenue, and one of those provisions was clearer definition around what types of entities in the cryptocurrency space would be required to provide tax reporting in the form of TON ninety nine and those other documents that your broker would typically send you at the end of

the year. And one of the key issues was was in the initial language and the proposed Infrastructure Bill, the definition of what constituted a broker was really really broad, so that it would include cryptocurrency developers, software developers, bitcoin miners, people operating nodes in different open blockchain network and basically the language was really unworkable, and so we saw flew of amendments that came out in the three days that followed,

including an amendment um sponsored by Senator to Me, one sponsored by Senator Apartment, and another by Senator Cruise. None of those amendments were voted on the infrastructure bill passed as is. But certainly know that the House will be taking up this cause. And we don't think this issue is by any means over us as it stands. So what does it actually mean for the crypto market and crypto investors if it does indeed happen as it stands? Yeah,

I think again. Um, the impact of this this bill is that it would impose a lot of reporting obligations on entities that aren't really reporting entities. A lot of activity in the crypto space is done through regulated platforms that are registered as brokers. You might know names like claim base or krack in or Gemini, all of whom are exchanges that operate here in the United States, and

they're already providing tax reporting documents to their users. But under this new language, their entities like software developers who might develop an open source piece of software that's used by anonymous people on the Internet that would not be responsible for reporting. And again those individuals are not going to have any idea who's downloaded their software and how

they're using it. That's the whole point of pure to pure open source software, because I think once of the challenge is really the way that the law has written and the way that this technology actually works. They're really fundamentally incompatible. And we continue to see this on the regulatory front. This is a new type of technology, and I think lawmakers in DC are really struggling to understand how it fits into the existing regulatory frameworks that we

have so maltime. I know you've spent time in Washington, d C. Talking crypto to the folks down there, and I registered just today about how this whole five days maybe have illustrated the fact that the crypto industry really

needs to up their lobbying game. What are your thoughts there? Yeah, absolutely, Look, a number of firms have been in Washington, D C. Over the last seven years that I've been working in this industry, and seven years doesn't feel like a lot, but for the crypto industry, you know, it feels like like a lifetime. Certainly, I think at the end of the day, there's sort of this fundamental misperception even in Washington, DC,

that crypto is not regulated, which is simply false. There's an alphabet stoop of agencies from the SEC, to the CFCC, to the i r S to the CFPD who oversee crypto, who have issued guidance and continue to issue guidance. So I think what's really needed is more education and advocacy. But also I think what we're starting to see fifteen

percent of Americans own some type of cryptocurrency. This is becoming an important voter issue and in the next election cycle, you better believe that there are a number of Americans who are really motivated and want to see a crypto

policy platform from their elected officials. So I believe in future cycles, not only will we see more lobbying, more advocacy from the crypto industry in DC, but on the flip side, will also see more representatives more or less the officials recognizing that in order to get elected, an important part of their platform will need to be progressive policy when it comes to not just cryptocurrencies themselves, but

blockchain technology and that critical digital infrastructure for America. But regulation. At the end of the day, Melton doesn't just come from Capitol Hill and from legislators. We also have you know, the Gensler SEC, and on that front, or you hopeful at all that we'll see a bitcoin e t F. UM. Look, I think that bitcoin ets this is something we're an asset manager. We don't have any products in the US market.

We love to have a product in the US market, but thus far, the regulatory regime here has simply not allowed for a publicly listed e t F for e TP that tracks the underlying prices bitcoin to exist in this market. We are optimistic that in the next three to five years we will see more structured products in the US market, but we're not optimistic that it will

happen in the near term. Again, I think there's still a lot of uncertainty, and we have to date no less than thirteen et F applications that have been filed and the number of mutual fund applications that are in process. Will continue to see more filings, more applications, But I think UM Chairman Gunsler of the SEC made it perfectly clear that his administrations certainly does not a plan to prove any et F or any such product construction in

the near term. So I think for us, you know, the outlook we have is sometime in the next nine to twelve months might be possible, but more realistically we're looking at two at the earliest. All Right, Malton, thank you so much for joining us. We always appreciate getting your thoughts in perspective. Melton Demure's chief strategy officer for coin Shares based in London, and that et F question

is really on top of people's minds, Kaylee. And as Melton mentioned, um Mr Gensler of the SEC kind of he's I think he's positive towards this, but let's take our time. It seems like he just kind of keeps punting it and punting it. Maybe a future is bitcoin ETF, Bitcoin futures ETF. Right, he kind of gave those hands, but still we wait. Paul a lot, you have a lot of demands, certainly for an e t F for bitcoin. Will follow up on that story. This is Bloomberg. Let's

bring on right now. Jack Tran, CEO of James Hardy Industries based in Chicago. Dr Tron, thanks so much for joining us here. Uh give us just remind us and remind our listeners what James Hardy Industries does within the housing market. Right, So, good morning, Paul, thank you for

inviting me back. James Hardy. We we are the company that transformed the way the world built by delivering more athetically beautiful, safe, and more sustainable building products that really grace the exteriors of homes across UM, the US, UM, Europe, and Asia Pacific. And we're we're about three plus building

down company UM that is quite profitable and it's growing. Uh. So, obviously you have a pretty uniqu vantage point here into the housing market in the dynamics within it, given how high home prices are, how quickly houses are going off the market. Are people now just looking more to renovate the homes they're currently in than trying to buy a new one, um, Kaylee, that is a very good insight.

That is correct because if we look at the new home construction in the US today, uh, it is not enough home built to meet the very big growing demand because we do have a very big group of millennials now really sought to to go into housing markets with grown family and also at the same time, we have a lot of folks now that stay at home. The Wolf from Home and said they would like to do a lot more renovation. But with with the rising prices.

What that means is that a lot of homeowners want to look at how they can renovate their homes um but at the same time enhance the value of their home. So we do see a lot of activities that deal with the outdoor, how to improve the exterior of their homes, how to make their outdoor living space a lot more pleasant and yet at the same time enhance the value the home. All right, we just want to update our listeners on the vote ongoing on Capitol Hill and that

five fifty billion dollar bi partisan infrastructure package. That vote is still ongoing, but we understand that the Senate does have the votes to pass that by partisan infrastructure plans. So we will continue to bring you up to date. But it does look like Paul, that measure is going to pass. Yes, that's coming in on schedule, So have

more of that coming up. Dr Trong. I mean, as you take a look at going out here, I mean, how do you think about housing demand, just broadly speaking, over the next several quarters, whether it's renovation, new construction, what's your market outlook? I'll walk it outlook, and it's very robust and very wrong. Um. And what we see is the renovation market will continue to grow because a lot more homeowners would like to renovate their homes. UM. So we do see that means can be grown quite nicely.

UH and certainly in new construction UH there is also a strong demand. But that is that sector a litmited more limited with the lack of skill, labor, and then to a certain degree lack of materials certain materials. Yeah, you know, we we talk a lot about supply chain constraints in the higher input costs that have resulted from that. Are you charging more for your products? We're We're not charging more as much of we are offering more about

differentiated products. For example, we uh in in the Hardy brand exterior product to going to outside of the root protected homes of h of the of the house, and what we offer is of the Hardy brand products that have already been pre finished in our factory with paints and that would allow the homeowners to have different design in their homes and be able to uh to really protect their homes with very durable products aesthetically flees in

product and also enhance the value of their home. UM. And that type of material is actually a lot more easy to in install and and fast to install. So essentially would provide the alternative to the homeowners relative to bricks or stuck call um that's more expensive and also slower to bill. So we we offer the alternative to to those solutions. So we saw in you know, a kind of a folks just kind of leaving urban centers, leaving the city, is going for the bourbs looking for

more space. Is this a trend that you think is going to continue and we'll see that in construction trends or do you expect people to kind of come back if you will, to some of those urban centers. Um, we we do see a lot of trend moving out into the burbs. But also lately, I would say the past a few months that we do see some certain migration back into the cities is because of the affordability

of certain homes out in the burbs. So it's quite move moving back and forth through It depends on the available ability of homes because there's certainly there's a lot more demand right now than the supply. Yeah. Where there also has a lot of demand is for workers. We saw with the jolt stata here in the US yesterday there's something like more than ten million jobs that are open, more than there are in fact of people unemployed here in the US. I know you have over forty dred

employees globally. I'm wondering how many openings you have and if you're struggling to fill them. UM. It's certainly it is an area that that that that we also experience in the shortage of labor, and certainly in markets in the West Coast that we do, we experience a higher shortage of labor in in our facilities. UH. And you know, it's really about come coming down to having to write

uh the value propriation for working at James Hardy. And it is some something that we work very closely with local communities to do really tell the story to be able to attract the right candidates into our workforce. But certainly that is UH that has been in uh in an issue that persistence throughout the whole summer for us as well. All Right, so I see your stock all time high. Just real quickly, how are your earnings? We we just reported our earnings and yesterday and it is

we're very pleased with the results. Globally, our net sales increase by thirty five percent and our net income increased by and what's very pleased and here is that all three regions that we operated in North America, Europe, Asia Pacific all had double digit growth in both the top line and bottom line. And it's really a testament to not only the growing market that we operate in, but also at the same time we're able to take share in the marketplace and deliver more values to the homeowners

across the world. All Right, Dr Jack Tron, thank you so much. We appreciated CEO of James Hardy Industries of strong results of just recently in the stock hitting an all time high and the growth of the housing market. Kay, we've got some wage inflation on Law Street. I think we've been reading stories really over the last month or so about you know, these new investment bankers coming in and you gotta pay him some more money and all this kind of stuff. But Mary Baker, she's a financial

reporter for Bloomberg. She joins us here on a Bloomberg Interactive Broker story studio. She's got that story out today, which is really interesting. JP Morgan boost pay for more staff and not just the investment bankers, but other folks as well. Mary, thanks so much for joining us here. So who else is getting pay bumps here on Wall Street? Well?

Last yesterday, sorry, um, Jeffries Group also announced that they were going to match Goldman Sachs, which announced last week that it would be paying its junior investment banking analysts hundred and ten thousands. So basically all summer um, the banks have been raising pay to a hundred thousand. But Goldman's text was kind of sitting around for a little while waiting, and the recruiters and pay control and I've been talking to said that they did that purposely and

kind of waited to come. They wanted to one up everybody. Yeah, one up everyone. But now Jeffrey's Group is matching them, So that came out yesterday as well. But a lot a lot of these that we've been seeing have been for the junior bankers, the lowest people on the totem pole.

What with JP Morgan, it's now expanding beyond that, right, Yeah, So basically JP Morgan announced earlier this summer that they would be paying their junior investment banking analysts more, but now they're expanding it out to other analysts within their corporate investment banking division. So that's going to include sales, trading and research analysts. It's all under the same division,

but it's beyond just investment banking analysts now. So it seems like they're trying to attract more analysts, which means they're probably really busy this summer, which is what we've been seeing in terms of revenue. Yeah. So you know, when I worked on Wall Street, it was you know, obviously it was all about compensation. You started thinking about your bonus probably you know midyear, if the summer you started really started jockeying and starting to you know, pitch

and everything. Um. But now more of the compensations is in salary versus bonus. So these pay increases are these are salary increases are really important. They are really important. I think analysts that any analysts are in the job market right now are looking at what the base pay will be and all summer long. I mean from what we're we've been hearing and our reporting is that Goldman Tax was saying we don't really need the razor base pay.

But now they've they've come in line. I think they realize that anyone that's looking to go out and get a job as an analysis investment analysts wants to see their base pay at least a hundred thousand. They wanted to match what where the other banks are coming in. But we do think the bonuses are still going to be big this year. Yeah, the banks have a lot of money coming in. I would bet that the guys at the top are getting paid a pretty a pretty nice sum as well. How does this tale into the

work from home equation? Because you're paying people more, does that mean I'm gonna want you back in the office. I'm not going to pay you more if you're gonna be sitting at home and not commuting in Well, I think the banks, each bank has a different return to work policy going on right now. I mean, we know Goldman Sax and JP Morgan want they're people back in

the office. We know that helps with camaraderie, um. But we do think that the bank, sorry, the pay raises are in part to help keep the anilysts that are part working from home. It has been hard working from home from them, they've I mean, in March Goldman Sax Anilysts put out presentation outlining just how hard it's Been's kind of what started this whole thing, really, right, Yes, I mean when I was in the same group of

these kids working weeks, and it was hard. That's a lot um, but you had the camaraderie of literally being in a room like this where all the analysts were in a bullpen, that's what we called the bullpen, and y'all could lean on each other and you all could go after drinks afterwards. That likely. But boy, if you're stuck at home by yourself, that would be tough. So I guess they're trying to, you know, say hey, we recognize what you guys are going through, and we want

to try to help out. And one of the ways we can do it is pay more money. I guess I think that's part of it. And then they want to keep the analysts that they have on. I mean, we know that there's been a lot of churn going on within their analysts ranks, so analysts are looking to jump out of the banks sooner than when their two year analyst programs are up, so they're looking to go

buy side. I've been hearing that a lot of investment banking analysts that go into the banks go in just specifically to stand for two years and get out and go buy side. As fast as they can. They want to go to private equity for as they want to go to hedge funds. They see that work is more fulfilling, more fun, kind of more like skin in the game. So that's so from all the reporting and all the people you've been talking to, do you have any reason to believe this kind of race to the top in

terms of the talent competition is going to cool down anytime? Sooner? Are we going to keep talking about these stories of banks paying people more. I don't think it's going to cool down anytime soon. It seems like it's just ramping up more and more and more. Are they finding hearing? Are they finding competition offers like the tech industry, Because when I came out of business school there really it was either you go to consulting, you go to investment banking.

But now technology and like the Amazon's the Apple, I mean that's a big threat too. I mean, not only are analysts leaving the banks to go to the by side firms, but they're also going in tech. They're going to startups any any place that who can pay them just as much but maybe offer them a bit of a better work life balance. I was going to say, a lot of those tech companies have, you know, the massive campuses out on the West Coast and all of

the benefits working from home. It seems as more lenient for a lot of those kind of Silicon Valley players than it is for banks on Wall Street. Paul, Yeah, exactly. And I think that's gonna be a big issue. And we've seen that from you know, the business schools. They have to be uh, you know, they have to you know, get their people ready to go out to the West Coast and technology. Hey, Mary, thanks so much for joining us.

We really appreciate a great story. Mary Bakert, finance reporter for Bloomberg, joining us here in our Bloomberg Interactive Broker's studio and Kaylee, it's a it's interesting, I think, is your question. Are they're going to keep raising this this these salaries. I think I'll be interesting to see when they people do come back to work and and and what that means for the work environment, because that's so important for you know a lot of these uh investment

banks that do work long, long hours. Yeah, totally. And then when in terms of doing deals, are you going to be getting back on airplanes having more of that kind of grueling travel schedule. It's not just about return to the office, it's about return to the general deal making environment, because obviously that has been very different over the last year and change. Thanks for listening to the

Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform and you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller N seventy three, and I'm fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.