Podcast: Cann & Kulyk on Mining Investments

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Synopsis: 

In this episode of The Sazmining Podcast, Will speaks with Core Scientific's Russell Cann and Taras Kulyk, Chief Customer Success Officer and Senior Vice President of Blockchain Business Development, respectively. They discuss the nature of capitalized investments in mining, what future miners should keep in mind, how we should think of blockchain technology, and more.

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Will Szamosszegi (00:00:04):

Welcome to the SA mining podcast at SA mining. We are bringing you into conversations with today's industry leaders and blockchain and cryptocurrency. Our goal with this podcast is to improve the understanding and adoption of blockchain and cryptocurrency by giving you an insider's look at what's being built and inform predictions on what the future holds. Welcome to the podcast guys.

So been really looking forward to this conversation, uh, not only because core scientific the things you guys right now are doing in the spaces. Absolutely incredible. But also because this is the first time that we've had two people onto the podcast. So this is, uh, the first of hopefully many

Russell Cann (00:01:07):

Fantastic looking forward to it.

Will Szamosszegi (00:01:09):

Yeah, absolutely. Uh, so I guess we'll start with you, Russell, could you talk a little bit about your journey within this industry, how you got involved in mining and what landed UA core scientific.

Russell Cann (00:01:22):

Yeah. And let's go ahead and I'll give you a little background on core. So core scientific got involved. Uh, the founders started mining in, uh, 2012 in 2017, though. They kind of formalized, uh, a mining operation. At the same time. I got involved in a mining operation in GPU and, uh, the folks that started core, uh, bought a facility in North Carolina and the mining operation in order to really get efficient in early 18, we started actually hosting other folks. And we did that because you really have to get to scale, uh, the, the cost of power, the cost of operations, the cost of software, the management software, that kind of stuff. You really have to have scale in order to, to be efficient. So, uh, mining expanded into hosting. Um, we later on because of the software involved and the infrastructure involved, uh, got involved in the AI space because the, the, the infrastructure is very similar, a lot of power, a lot of heat, a lot of compute power.

Russell Cann (00:02:20):

I mean, well, a lot of electrical power and a lot of compute power. They're both very similar in the blockchain and the AI side of the house. And, uh, you know, from there we've grown, we've expanded and we're now in, uh, we have operations in North Carolina, Georgia, and Kentucky. We have, uh, we're headquartered in Bellevue, Washington, outside of Seattle. We have engineers, uh, you know, sprinkled around the country. And, uh, most of our software guys though are located in the Pacific Northwest. And most of our, you know, our data centers are located, um, mostly in the Southeast and from the perspective of growth, you know, we, we, we are still considered that we still mine, we do a lot of our own mining. Um, but we, you know, we try to be a good host partner for folks. So what we do is we partner with folks that are doing their own mining on their own machines.

Russell Cann (00:03:10):

Uh, but we try to, to be the hosting partner to be an efficient, to be an efficient hosting partner for 'em. And, uh, with the size scale that we have, a lot of times, it's, it's less expensive for folks to come and bring their machines and host 'em with us than say, build and operate their own facility. And, uh, with our software dev team, we've been able to automate a lot of the management process of the machines, thus driving down the operating cost and, and adding efficiencies to the whole market. Um, I guess that was kind of a long answer to a short question. <laugh> about how core got started, but I joined core in, um, late 17, early 18. I sold my business. I was a, had a GPU mining operation, sold it to core and, um, really got core involved in the GPU side of the business when it was doing ASIC mining only. And, uh, I've stayed on at core for this whole, for this whole ride. And it's been, it's been fun. <laugh>

Will Szamosszegi (00:04:00):

Yeah. So yeah, I mean, you guys are all over the place, so you, your firm, uh, when you joined is actually the section of the business that really got them into GPU mining. Cuz I know that GPU mining, it's a whole different animal than just Asics. There's a lot more to it. There's a lot more, uh, downtime difficulties that you might run into. So there is, yeah, definitely have to make sure that, that you got all of that up and running smoothly, so you can make sure that you're hosting to the best of your abilities.

Russell Cann (00:04:27):

That's right. And, and, and actually that facility behind Kassis head marble, um, it has tens of thousands of GPU in it. Uh, so we, we still do a lot of GPU hosting, um, both GPU mining and, and other things we associated with GPUs such as rendering and stuff. Now we also have, uh, you know, your high compute AI GPUs that are housed in a, in a SOC two compliant, uh, tier three data center in Dalton. So we have a full, uh, AI lab in Dalton, which has, you know, your higher end DGX DGX two S from the video that you would not wanna use for mining, because it's a, uh, it's like taking a Ferrari to go to grocery shopping, but, um, you know, but it is actually very similar infrastructure. So we have a lot of experience with GPUs from the software side, the hardware side, managing it. Um, but we, we mostly have, you know, from the blockchain crypto side, a lot of Asics and we, and on the ASIC side of the house, we, we manage kind of everything across the board.

Will Szamosszegi (00:05:25):

Yeah, that's great. And Tanas, what is it that, uh, that you're primarily focused on right now with the team at core scientific?

Taras Kulyk (00:05:34):

Uh, well, I got hired on as the senior VP of blockchain and business development. So my roles primarily on, uh, getting you units into the door, uh, working with new partners, um, looking at new potential sites for acquisition or tuck-in. So then working with the Corp dev team here at core, um, yeah. So anything to do with blockchain, really, um, working to manage the relationship and, uh, really make sure that core is the leader, uh, within the space. Uh, so we've got a lot of articles coming out, some research that the team and I have been doing, uh, these type of interviews, obviously, um, and also some new initiatives that will really bring core as a true infrastructure provided to blockchain generally, uh, to top of mind for folks in this space, uh, as Russ mentioned, uh, we started off being our own self minor, obviously, but as time's gone on, we've really pivoted to be a true hosting provider for clients, public companies, institutional, uh, investors, and obviously high networth individual. So as we continue this massive pivot to, uh, be a true infrastructure, play scales, everything. So that be definitely be also working with some of the guys on wall street in the us and bay street up, up in Canada as well.

Will Szamosszegi (00:06:49):

You must be doing really good work cuz there's a lot of articles coming out about these big orders that you guys have been putting in. How many more? There's more, oh, many more to come. Well, that's good to hear. Are you guys focused right now on expanding at different locations, trying to fill out, um, existing sites kind of what's the, what's the high level overview of, of what you're looking at?

Taras Kulyk (00:07:11):

Do I take this for

Russell Cann (00:07:12):

I'll start? Well, I'll just gonna say, uh, the pitch behind head, each of our three sites in Georgia, North Carolina and Kentucky, they're all over a hundred megawatts of power each. Um, wow. Built out. Yeah. So it's important. It's built out. They're actually finished <laugh> so it's not planned

Will Szamosszegi (00:07:28):

Tos, a megawatts running <laugh>

Russell Cann (00:07:30):

Right. So it's, it's not, we have a substation or we have some big power lines. We actually have it built out and running. So, um, and there's a big distinction cuz someone can say, oh I have 500 megawatts. What they mean is they have a high transmission line running through their property. And one day there might be a substation there. And one day, you know, years from now, there might be a facility there. Um, so what we're doing right now though, and, and Thor asking with some details, but you know, we had the hacking event. So we had hundreds of thousands of old gen machines, um, that, you know, sometimes starting in may kind of through the summer, we've cycled out we've recycled or sold those machines. Um, if there were clients machines, we, we help them do those things. And then, you know, what we've been doing now is moving into that, that new generation of, of equipment and all that timeframe's been consolidated because of the COVID 19 crisis, which puts some constraints on supply chain, cuz a lot of these new gen machines should have been coming to market, you know, earlier in the year.

Russell Cann (00:08:22):

But when that supply chain kind of got compacted, it hit up against the having. So that means this summer has been, uh, just really busy, um, our data center techs that we're quarantined to our data centers, by the way, during the pandemic and the spring, um, are right now have just been really busy throughout the entire summer, moving old gym equipment out, moving new gym equipment in, uh, making the infrastructure change you need for that. If you're taking a machine that uses 2000 Watts and you're putting a machine that uses 4,000 Watts, there's some electrical infrastructure changes that have to happen. And we've been going through that whole cycle at, at really all in all three states at all of our locations. So, um, we go forward into the rest of this fall. We're gonna be doing the same thing, bringing a lot of Newgen equipment. And right now we're planning 2021. What's that? What's that gonna look like? What's the supply chain gonna look like? What's the, uh, you know, how many wafers it gonna be dedicated to, to ASIC mining machines and how many of those machines can we get? Um, for us you wanna add a little bit to that?

Taras Kulyk (00:09:21):

Uh, yeah, I mean, candidly, we're bumping up to the end of the availability of the Newgen units as, uh, we've been very successful in placing, uh, those with new clients and existing clients. And so a really big push that we've got now for Q3 end of Q3. Q4 is really looking for some of the old gen units that need a place that I need a good home, uh, that they can plug into and really, uh, maximize efficiencies and, and obviously hash rate, uh, with a solid stable, uh, operating partner, like core scientific, uh, I mean we've got some really great programs and initiatives out so that, you know, if some folks are out there with 17 series units that have been at a higher price range and wanna work with core, you know, definitely we've, uh, we're, we're getting much more competitive on pricing to really get some of those units into our facilities. Um, and then from there, uh, racket expand. I mean, once we're, uh, once we're filled up and we've got substations, uh, getting put up, obviously we're looking at additional expansion opportunities as a company generally. So it's gonna be a very busy Q3 end of Q3 Q4. Uh, we've got some really good announcements that will make it a lot more compelling for folks who've got units to, to park them with core, um, based on the level of service that our partnerships with some of the top organizations in the space.

Will Szamosszegi (00:10:45):

One thing that I also want to dive into is the breakdown of how you look at ASIC mining, how GPUs make up part of your operations and then, uh, F PGAs, if that's still, uh, a part of the business where you're doing a lot of work, uh, can, can you just talk about how you look at these different segments of the business and what your focus is on the GPU side versus ASIC side and how the hardware ties into it?

Russell Cann (00:11:14):

I'll start. Um, so we, we basically divide our pro divide, our, our business segments into blockchain and AI, and really they're they're opposite size of the same coin. Um, AI is, is ways to process data. Blockchain is ways to, to manage and secure that data. And we see those two converging as the technologies develop and we see the infrastructure as already converged. So if you go to say our da facility, you'll see that we have a large blockchain data center, HPC data center, lots of ASIC machines. And in the middle of it says a tier three AI center filled with, you know, high compute GPUs, uh, performing data, performing the data processing. So, you know, from the start we divide things between blockchain and AI, um, within the blockchain space, uh, we look at software side of things. So we have, you know, software applications on the blockchain side.

Russell Cann (00:12:10):

We have software that manages the large fleets and there's some great, uh, freeware out there for managing small fleets of 3, 4, 5, even 10,000 units. But once you get up around a hundred thousand units or more, there's not really anything that exists in the market. So we had to develop our own, uh, management software system in our own algorithms to, to really automate that process. The AI dev team actually helps with a lot of that. And because, you know, we have a software called mind and it's our version of Skynet. It really takes over everything when it gets its fingers on it, but it keeps the machines running. So within blockchain we have software and then we have the, of course the infrastructure, which is broken out between the Asics and GPU. You mentioned F PGAs. We really don't have a lot of F PGAs. Actually, we don't have any F PGAs that are outside of our sandbox.

Russell Cann (00:12:56):

We have a pretty substantial sandbox where we take, and we literally get samples of just about anything that comes to market. Uh, and we let our dev team and infrastructure team work in those things. But when it comes to F PGAs, the number of programmers that are really sophisticated enough to program a data stream for the F PGAs, they're very limited and they're hard to find. Yeah. Um, so at least commercially, so, you know, GPUs, that's different, there's a lot of great GPU on the market. Uh, we, I say, you know, we're mostly in the video house, we're partnering with a video on the AI side and most of our GS are in the video that we do have some, some, a and D products. Um, and like I mentioned before, the marble facility behind you, the, the is a 250,000 square foot building almost filled with GPUs.

Russell Cann (00:13:39):

Um, but most of our other facilities are filled with Asics. So in the, in the blockchain hosting side of the house, we split things between GPUs and we split things between Asics and the real difference is the skill of the data center tech, you know, GPU can, and you mentioned this before can be finicky, little fellows. You know, the GPU itself is a great little device, but you have to connect it into a rig. So you have to connect a bunch of, 'em have to be connected to a motherboard and there's risers and there's a lot of small pieces to break. So, uh, and, and then you have the airflow issue. So, you know, we only accept closed case GPU rigs because, um, you know, when I got into business, I built open air rigs, cuz it just worked. And, and when you're, when you only have a few or even a few hundred open air rigs worked, when you start getting into the tens of thousands, you can't have open air rigs cuz they just produce too much ambient heat. Um, so that's really where we look at, look at both sides of the business. Um, and I talked about infrastructure, but I let, uh, rah talk about how we kind of divide the business up as far as who our clients are and what kind of clients we go after. He mentioned a little bit of it earlier.

Taras Kulyk (00:14:43):

Yeah. So I mean on the ASIC side, really it's about large scale mins. I mean we typically the smallest scale that we work with is a a hundred miners and um, we're really targeting to be working with institutional, uh, players. So we've got a lot of new clients that really are, uh, limited partner structures where, uh, several investors or investment entities will essentially pool their capital into a specific entity and then they'll work with core as their operating partner. Um, because of the scale at which we're working with Bitmain, we do have access to very strong pricing. Um, and obviously with the scale of our operations, our, our hosting services are very stable. Um, the environment that we're operating in is very amenable to mining. And so really, uh, when you're looking to deploy say five, 10, 15 million into mining, so that you get underlying exposure to the asset class, you don't necessarily wanna be concerned about it being too hot on a Tuesday in the summer.

Taras Kulyk (00:15:40):

<laugh> right. So core really does provide that stability and peace of mind for some of these more institutional larger players, uh, that are looking to get into the space. Um, that being said, we still do have smaller minors who are moving their units over to us and actively one of the things that we've been doing recently, if you've been taking a look at some of the articles we've been putting out is we're dealing with some, uh, minors in China actually who are looking at the United States, um, as a secondary, uh, place for them to park some of their mining rigs as well. Um, that being, because we do have access to very competitive power rates because of the scale that we operate on, um, the strength of the development team, uh, the engineers and obviously our executive team, the C-suite, you know, with folks like Kevin Turner at our helm, uh, we really are putting, uh, enterprise into, into blockchain and digital asset mining.

Will Szamosszegi (00:16:36):

Yeah, definitely. And when you're putting together these packages, you kind of just outlined how there are the capital partners, the institutional investors they'll come in, they'll bring the capital. Are you putting in front of them, uh, a fully ready to go turnkey operation that is already, uh, that already has power. Like there's already building built. Everything's ready. Absolutely. And then they're just there financing the minors,

Taras Kulyk (00:17:02):

Correct. We are a white glove service. Literally they can cut a check and then they'll get access to, uh, a gooey that they will be able to track, not just their fleet, but all the way down to a granular by unit basis, uh, of what their, uh, check has essentially converted into. Um, and then based on whichever pool they select, they'll actually be able to see in a real time, their hash that they're generating. And then obviously from the pool rewards that they've decided, uh, will have the pool outcome deposited accordingly. Uh, so really it is a turnkey solution.

Russell Cann (00:17:32):

Yeah. And we, what we've seen is as over the years, especially since 17, as the industry has developed in north America, we've seen, um, specialization and that happens in any industry. People specialize and people get good and efficient at, at whatever they're good at, you know, know whatever they perfect. And we have gotten, we've gotten good at the hosting game. And what that allows folks to do is if they have a $10 million, they wanna invest or a million dollars, they wanna invest instead of spending a big chunk of that on building out infrastructure and then trying to go and negotiate power contracts, and then trying to go to negotiate, uh, the mining contracts to buy the miners. We say, look, we'll take care of all the infrastructure. Um, the price at which we'll do it for is most likely cheaper than what you're gonna pay for just your power alone, because we have it at such scale.

Russell Cann (00:18:21):

Then as Toroso saying, we, we provide that kind of white glove service. So if someone says, Hey, I'd like to buy a thousand of the new S nineteens instead of you having to try to figure out if you're dealing with the correct Bitmain and you're dealing with, uh, us customs and your freight forwarders and logistics, and making sure you pay the right tariffs, if you have tariffs to do we handle we'll handle all those things for, for customers. And, and it's mainly just because we wanna make sure the customer has a good experience. We wanna make sure that, you know, they don't have a bad experience, their first foray into cryptocurrency or digital assets. We don't want it to be a bad experience for 'em. So we really will hold their hand and walk them through it. But we also deal with sophisticated clients too, that say that, call us up.

Russell Cann (00:19:00):

Hey, we have a thousand miners that are gonna show up on Tuesday. Can I have those deployed by Thursday? All right, sounds good. We'll take care of it for you. So it just depends on the level or, or how long someone's been involved and how long, how sophisticated of an operator they are. What we really do is we try to, to be that layer of the infrastructure piece in the blockchain space, uh, for, for the minor. So that if you're a home mine and you have a hundred units, uh, and you're paying, you know, 12 cents for powered Ballard, your home or something, you know, we're gonna come in and cut that in half for you and, and handle all the work for you. So you're really gonna appreciate it. And if you're a, uh, an hedge fund or a small public traded company, um, and you have limited capital to invest, we say, look, investing in minors, invested in, in, in revenue, returning assets and, and let us handle the infrastructure side of the house for you. We've already done the engineering. We already managed the airflow. We already managed the heat. We manage all those tough things. We we've done that. And because we're a minor ourselves, you know, we eat our own dog food, we do this for ourselves. So we understand, um, exactly the, the heartache and the, and the headache that comes along with this, uh, being involved in this industry.

Will Szamosszegi (00:20:09):

Yeah, definitely. And I, I like what you said about the specialization aspect, cuz you really do see different minors going into different areas. Some people go down the hosting route, others might go and be on the minor purchasing side and trying to find some sort of ways where they can work with a hosting partner to make the best return. And then at that point they're just going and evaluating different sites. And so, um, I've, I've spoken with a number of different companies, uh, that have been in the hosting game. And I mean, I'm sure that every single person who's in the hosting game naturally is going to say, oh, we're the best hosting service. We, um, will get you the, the fastest ROI will take care of everything. And, and then sometimes, uh, when you go, when people go and host at those sites, they might not have the best experience. And so just taking a step back where we're not talking about, I guess, an individual company, whether it be core scientific or one of the other hosting partners out there, if you're speaking to a minor who is evaluating a hosting site, what are the key factors that they should look out for? And what are some of the things where you think as an industry hosting is still running into problems with and the challenges that hosting providers are facing?

Taras Kulyk (00:21:23):

I mean, candidly, it's a small space and everybody has their challenges and the way I'd recommend any investor, uh, or potential minor, who's looking at the space, um, is to do their due diligence. And just like you would with any investment, look at management. I mean the top three things to look at with any investment is management, management, management, right. Um, make sure that the hosting partner that you're working with, you can see where their management team is from. They're on LinkedIn, they're public. It's not folks in the back alley. Like you're not gonna give somebody that you meet in a back alley, a thousand dollars to invest with. No, I mean, you'd trust it with the banks. Somebody you can see online and see their credibility in history and reputation. And that's the same thing that I'd say with, with a hosting provider, uh, make sure the management is topnotch, uh, make sure that they're audited in some way, not necessarily big four, but at least some CPAs reviewed their books, uh, operating history, uh, make sure that if you ask to see the facility, they don't give you a side eye and say, what do you mean?

Taras Kulyk (00:22:26):

Like they're willing to open up their facilities, bring you in, show you around and allow you to kick the tires. Right? Uh, and then finally, uh, look at the competitive rates and find out what type of services and value adds that they offer. Because at the end of the day, someone might go to you and say, I can get you 3 cents all in hosting. And then you read their MSA, their master services agreement, and all of a sudden they're nickling and diving you on every single thing that you'll be needing them to essentially maintain your fleet. Um, additionally there's larger operators like core where we have entire teams dedicated to development to firm more optimization to making sure that our latency, when we're connecting to pools is as low as possible. I mean, all these little things eat away at your margin because at the end of the day, hash rate equals block rewards equals BTC, right? Or whatever crypto you're mining. But in those key steps, you can be losing a lot of value because your server goes down your Latin seat, your latency isn't as strong as it could be. Um, connectivity may not be as strong as it could be within the different servers that you're using, um, cetera, et cetera, et cetera. So you really do need to do your due diligence, um, especially when it comes to trusting a hosting provider with the CapEx that represent this represented by your hardware units themselves. Right?

Russell Cann (00:23:52):

Yeah. And, and I would add just a couple things, you know, at core, um, we, when we onboard new clients, we, we have them meet with our network engineers, our software engineers, our facilities, uh, ahead of facilities. Uh, they're assigned a client representative, a client success rep to, to kind of be their point of contact within, within core. Um, but we also walk through things as minute as the average temperature, you know, they're in marble that facility behind SIS head that sits about 1800 feet of elevation in the mountains, North Carolina. So even when it's hot in the summertime, it's not hot there. <laugh> just because you have that elevation. We have the same elevation at, at other sites. So I would ask about, if I'm looking at a facility personally, I would ask about, you know, temperatures I'd wanna see the thermodynamic engineering I'd wanna see what the airflow looks like.

Russell Cann (00:24:39):

I'd wanna see how they move the airflow. I'd wanna see some, uh, thermal maps. Again, this is just me personally, if I'm bringing in 10,000 units or something, um, I'd wanna see downtime, I'd wanna know what the SLA is, how, how fast is someone gonna respond? Um, certainly, uh, the hoster's not responsible if there's a, a bad machine, as far as if there's, if there's bad engineering in a machine, but if a machine goes down, how fast is the response time? I don't know how fast a fan can be repaired, how fast a hash board can be replaced. And we have in each of our facilities, we have our own site repair centers. So all those kind of things are, are measured in minutes, not even in hour, you know, a fan, a PSU. Now, if you gotta replace some chips that takes a little while because it's a, it's a finite, it's a time consuming process to sit down and replace an AC chip on a hash board.

Russell Cann (00:25:24):

But, you know, I would ask a lot of those kind of questions and, and core certainly the largest in north America. Um, but there are a lot of great operators out there. Uh, there, there really are. Um, but I would look, as Torah said, I would look at the history of the operation, the management team I'd make sure the management team is, is, has a strong experience in this space. And, and I would look at the facilities themselves and I just make sure that you have some quality engineering and quality construction. Um, and quite frankly, because of some of the bankruptcy issues around the country's been going on with some facilities, I would look and see how everything was paid for <laugh>. Um, you know, there's been, there's been two or three high profile, uh, court cases recently with operators. And, and if you're a mine, if you own the mine, the themselves, you get stuck in the middle of all that, right? Yeah. Uh, your machines get turned off and then they sit there for three or four months and these machines are like bananas. They, they, they go, they get worse every day. Right. So if you haven't turned off for three or four months, you've lost a lot of money. So I, I would pay particular for those things.

Will Szamosszegi (00:26:22):

So yeah. Yeah. You guys are on the front lines with these large equipment orders, you're in contact with the different manufacturers. You I'm sure have teams of people who are analyzing kind of what's happening in the markets and what's happening with the overall network, difficulty understand the ROI times. What are some of the things that you think, think you might have insight into that your everyday minor or everyday person in blockchain might not necessarily be aware of?

Russell Cann (00:26:52):

So I'll, I'll take a stab at this. Um, supply chain is a big one. You know, we have, uh, great working relationships with the C-suite of all your major suppliers, even at Nvidia on the H on GPU side, and then all your ASIC manufacturers as well. So I think, uh, and we try to work very diligently to maintain that insight as to what supply chain's gonna look like. Not just the next quarter, but going into 2021. So that means looking at, you know, the foundries, what is the Foundry? Who, who, who is in line with everyone at the Foundry, how many wafer chips in 2021 are gonna be set aside for ASIC, you know, uh, BTC, cryptocurrency, mining versus iPhones and laptops and iPads. So, uh, you know, we, we manage those things. We also have an analytics team that looks sorry

Will Szamosszegi (00:27:41):

To interrupt, but how does that look? Do you have like any sort of like insight into how, how the Foundry,

Russell Cann (00:27:47):

Uh, yeah. I'm not gonna say anything here. It's not public information, but it might not be something you actually look at every day. Like we do. There is, uh, supply constraint coming, serious supply constraint coming. Yeah. When, when COVID happened, um, it, it shut down some of the, the way for manufacturing and it really caused constraints. That's gonna ripple for a while. So you know how in, in March of April, you couldn't find toilet paper in the United States cause toilet paper, no serious toilet

Will Szamosszegi (00:28:14):

Paper. Yeah. Hundred

Russell Cann (00:28:16):

Percent supply demand curve is very strong and it hits exactly. So supply the industry had figured out exactly how much toilet paper Americans use. And it produced that much every week when there was a disruption, it, it just caused a massive backup. Even today. There's still a backup because the supply was so tight on, on demand. And it's the same thing in the wafer chips. The supply is so tight. The, how many phones, computers, laptops, what does Intel want? What does apple want? The supply was so tight with the demand that when there was a halt, there's some bunched up demand right there. And, uh, we're gonna experience it going into 2021. You're already experiencing it right now, because if we had twice as many S nineteens, as we had ordered, we'd had clients that to take 'em, we could've taken 'em three times as many S nineteens as we had, and we'd had clients take them, but they're not available.

Russell Cann (00:29:03):

They're not available. Not just us, they're not available to the Chinese either. So there's just no availability. Um, and availability that is there is getting sucked up, whether it's a Bitmain product, a micro BT product, a Canan product, it's getting sucked up as fast as the wafer chips come off the line at foundries and are turned into machines. They're getting sucked up because there's some, there's a pent up, uh, supply issue. And, and we're gonna experience that going through 2021. And again, I'm not saying anything that's outside of NDA, all this is public available information. Yeah. It just might not be something that the everyday minor looks at. Right. Who's gonna look at, at wafer chip manufacturing, supply lane, <laugh> supply chain management, like who does that?

Taras Kulyk (00:29:40):

But we have

Will Szamosszegi (00:29:40):

To,

Russell Cann (00:29:41):

Yeah. Somebody at core does that, we have a team of analysts who does that, and possibly there's got they're. They're great. We have a team of analysts that, that study that stuff and, and, and produce reports for us internally so we can know. And it, it tells to Ross when he starts talking to clients and they say, oh, well, what's, what's it look like in December? He goes, he can honestly tell them here's, what's, here's, what's coming to north America. Here's what they're producing in China. Here's, what's coming to north America. Here's how many we have access to, you know, if you're willing to, you know, pay a little more, you can bump this other guy he's willing to sell his spot or whatever. So, um, that, that's one of the things we look at THS. Are there other things that you think,

Taras Kulyk (00:30:17):

Yeah, I mean, uh, what a key issue that we're tracking right now is TSMC. Onshoring some Foundry manufacturing and production in the United States. Um, you know, obviously with the existing tariffs on some of the Chinese goods that are there, unfortunately, digital minors, uh, fall under those existing tariffs. Uh, so 20, 21 beginning of 2022, uh, we're hoping to see a TSMC, uh, Taiwanese, uh, semiconductor company, uh, actually onshoring and building and assembling, uh, units within the United States. So that's something that we think will be a big relief and obviously will change the global mix of Silicon use and production, uh, for high performance computing chips and Asics, and, uh, crypto mining units, obviously as well. Um, that's something we're tracking and candidly, the more high net worth and institutional investors look at the space and really understand that it's here for the long term. Uh, the more capital that will be able to be dedicated to production and manufacturing capacity. And, uh, once that happens, a lot of these supply constraints within the space should ease up and it should really be, uh, a much better matching to the required hash rate to maintain proper security of, uh, the requisite main blockchains, uh, that are now being viewed as monetary instruments versus pure commodities. Um, so a lot of words there, but, um,

Will Szamosszegi (00:31:44):

<laugh>, that's

Taras Kulyk (00:31:45):

Fascinating. There's, there's a lot of topics unpack, and candidly, it is really is an industry that's coming outta the basement and into the boardroom. Right. And, and core scientific is, uh, leading the charge within the north American, uh, sector to do so. Um, so it's really, it's busy time right now for, for the team.

Will Szamosszegi (00:32:04):

Yeah, definitely. And when you're looking at, you mentioned the institutional capital, that that's really, I think in part going to be a major piece in pushing this industry forward out of the basement and into the boardroom, as you said, uh, there are a number of different capital groups that have come out that have said, we're looking at investing more capital into the us moving forward within cryptocurrency mining and correct. And that's a trend that obviously, uh, MI in the us love to hear cuz a lot of that mining has been happening overseas. How do you think that it's going to continue to play out over time? Like, do you have some sort of insight into what a lot of these institutional investors who are trying to get into mining are looking at and why they're starting to deploy more capital into the us? It could be regulatory, it could be for other, some other sort of reasons, maybe good power availability. What are some of those, uh, key factors that you guys are seeing today?

Russell Cann (00:33:05):

I'm gonna, I'm gonna leave that for <inaudible> the former investment banker turned, uh, cryptocurrency executive, it's like a lo it's like a law in home plate for a former investment banker.

Will Szamosszegi (00:33:16):

<laugh>

Taras Kulyk (00:33:17):

Uh, yeah, I mean, candidly, it's about scale. It's about sustainability and it's about long term returns. Right. Um, and you know, I have to put on the, the core scientific hat here because really we are positioning ourselves to be the large scale asset for, uh, larger pools of capital to invest and get behind. Um, and really that's about making sure that Capax is built up properly. So we have more of these type of facilities within the United States, uh, Canada eventually as well. Uh, so that when you put down 50 a hundred million, you're actually investing for a 20, 25 year term. Um, so they're, they're definitely looking for again, management teams, expertise and stability on an operational basis and, and obviously a cash flow basis. Right. Uh, and that's really, Russ mentioned it earlier that we've moved away from self minding to a dual revenue model where we've got, uh, you know, SOC two type one, uh, HP, true high performance computing centers that are doing AI GPU, computational powers, graphic rendering, et cetera.

Taras Kulyk (00:34:21):

Um, and also on the blockchain side for the hosting services, um, we're going to be launching a new type of, uh, support for blockchain, uh, where we're providing infrastructure support for, uh, protocol, uh, team. So if they want a master nodes, they don't know have to go and buy $40,000 of the equipment, they can contact core and we'd essentially spin them up a master node. Um, and so what that means from an institutional side is that we have stable longer term cash flows for them, uh, for, for certainty essentially. Yeah. When yeah, go ahead, Russ.

Russell Cann (00:34:56):

I was just gonna add a little bit, so an interesting part you talked about, or you asked about William was the capital that's, that's interested in moving or funding mining moving into north America. And for us mentioned this earlier, we're seeing a lot of that movement, uh, from China. And it's not that anyone wants to re anyone in China is replacing their infrastructure there. They're just looking and saying, Hey, for new infrastructure and new deployment, we wanna look outside of China. We wanna look at, into north America. And some of that quite frankly, is related to COVID, you know, uh, back in the spring, it's hard to think back that far now, cause it seems like forever, but, uh, you know, we had borders had to close down in order to protect, uh, you know, the spread of, of virus and everything. So it made people really wanna say, okay, how am I protected?

Russell Cann (00:35:37):

How am I diversified? So what we're seeing is two things happening. We're seeing capital in north America say, okay, we will, we will loan money to, to this industry. And then we're seeing, uh, the international market looking at north America as a destination for this industry. So we we've always been in the space here, here in us and Canada, but now we're seeing a massive movement and a massive move into the space. Um, we're a perfect location for it. We have a lot of excess power capacity here. Our power grid was designed, you know, fully built out after world war II when the us and Canada was really the, the industrial base to rebuild the whole world after the last world war we had. So you have this enormous infrastructure base and it's, uh, hydro it's it's nuclear. Um, it's well, it is some cold, but coal's very expensive.

Russell Cann (00:36:27):

So we don't, we don't use any coal cause it's so expensive, but uh, natural gas. Um, so we, we have this big power base, which the it's the natural natural need, but then having the capital markets open up, uh, I think it's gonna see, see some accelerated growth and those capital markets are just another piece of the stack where we talked about, uh, an industry that is, um, you know, becoming more efficient to become more efficient capital needs to be efficient. And it's just another piece. So if there's a minor that wants to buy a machine, there's a capital source to loan money for that machine. There's a company like core that says we'll build the infrastructure, all of a sudden efficiency start coming into play. And, and when you start seeing efficiencies, you start seeing industry grow. And I think we're gonna see a lot of that, uh, in 20 21, 20 22. Yes. As, as north America, um, as north American capital wakes up to this market, cuz north America has a lot of capital in it. And as, as it's waking up to this market, uh, we're gonna see a lot more of it deployed

Taras Kulyk (00:37:25):

Here. Yeah. And candidly, uh, just like has happened in the, uh, traditional mining industry, gold, uh, metal PGM, obviously iron or, um, I venture I'd bet a shiny dollar that there's gonna be a lot of, uh, consolidation in the space, a lot of M and a activity. Um, candidly, a lot of the smaller folks will probably not be able to survive regardless of how cheap their power is, uh, because you'll need to scale to get the efficiencies, uh, to really operate competitively within the market. Um, so right now there's, you know, 15, 20 fairly substantial mining plays, I'd say within the next three, five years, that'll probably go down to maybe at five or 10 tops. Um, and obviously core, we, we are looking at additional assets to, to really roll in and uh, we'll continue to do so as the market is very supportive of this type of activity. Um, and so yeah, to reinforce Russ it's really diversification, uh, from institutional players to ensure that they're going right up the value chain within, uh, blockchain, not just going after the assets themselves, but obviously the operational side of it, uh, so that they have full, uh, diversification within the sector.

Will Szamosszegi (00:38:36):

Yeah. And I mean, you guys just touched on so many, uh, interesting pieces within that. Uh, one of them, I, I agree. I think that there's going to be a lot of consolidation within the industry. And I think that a lot of the big players are having those types of conversations right now with other firms. Uh, I just, what happened like within, within gold, I think that not only within mining, I think that we're gonna see a lot of consolidation within other parts of the industry. Just not necessarily mining, but among potentially exchanges and other types of companies that provide these infrastructure like services that are not related to mining. But then also you mentioned, uh, Russ on the investment side that a lot of these north American groups are more interested on the, on the debt play. Whereas a lot of the, in the international investors are coming in more on the equity side. Did I hear that correctly or, uh, was it

Russell Cann (00:39:30):

Well there it, well, I think it's two things north America, there's plenty of equity moving into this Mar there's plenty of north American equity moving into this industry. But what I think is gonna it really accelerate the growth is when the north American capital markets decide to start to start putting debt on in this, in this area, for instance, got it. Uh, mining operations, the minors themselves, but also infrastructure. So, you know, equity and debt are measured differently. Debt normally is cheaper, cheaper source of capital, less risky. It's the first in the cap stack. So I think you're gonna, I think you're gonna see both in north America. Um, but certainly what's coming from is particularly Asia. Particularly China is gonna be your, your equity owners that are coming in and taking and saying, okay, if I wanna, if I wanna have my next 10,000 miners, I don't want them based in inter Mongolia.

Russell Cann (00:40:18):

I want them, uh, in north America, I already have minor. I'm not closing down my inner Mongolia operations. I just want to expand more. Um, and they're not, it's not just the United States. They're, uh, you know, minors are kind of minors everywhere are really diversifying, uh, and, and looking at the geopolitical risk of having all of their operations in one umbrella now here in the states. And you know, this cuz you know, you live in the states, each of our states are there, there are 50 little political FTOs, right? So in the United States, the way you joke, the way you diversify politically is you have mul you're in multiple states. Um, but we're, we're a very large country with lots of states and each state operates independently. So, uh, just like in the states, you operate in multiple states in order to avoid political risk associated with one state. Uh, a lot of this larger international operators are saying, Hey, I need to be politically diversified, geopolitical risk, climate risk, natural disaster risk. There's all these kind of things, pandemic risk that I wanna diversify out of. So I think we're seeing some of that play. Um, and it's the same flight, it's the capital capital's moving with it. So

Taras Kulyk (00:41:19):

Yeah. Yeah. And candidly also larger, uh, plays like core are emerging within north America to show institutional money that we do have the expertise and the infrastructure where they can place capital. Whereas before there really weren't too many players that were at scale to compete on a global basis. And now we're really showing and giving, you know, the Chinese and Russians a run for their money. Uh, I know that, uh, Kazakhstani government recently announced 750 million to support digital mining. Uh, the Chinese government has, uh, had some issues with crypto mining recently. Uh, Russia has, you know, been flip flopping all over, uh, regarding regulations around how to deal with crypto mining and cryptocurrency. So a lot of these points of instability point to Canada, us obviously, um, as places that are a little bit more stable and supportive of larger scale infrastructure projects, um, because one thing I don't think Russ mentioned yet, but a lot of these projects where there's large scale hydro facilities or power access are in zones that used to be manufacturing hubs that aren't really, uh, as productive as, as they used to be. Um, and so by giving them a new source of, of high tech labor, uh, and use of these existing pieces of infrastructure, we really are giving a second wind, uh, to some of these, um, some of these communities, right?

Will Szamosszegi (00:42:42):

Yeah, that's right. A hundred percent. I mean, you also have the incentives of exactly kind of what you're, you're mentioning E economic development zones. And when you think about the concept of, uh, cryptocurrency mining and how it works, whatever community you operate, a large facility and you're bringing in so much, uh, new taxable dollars to that community, mm-hmm <affirmative> because it's a global industry that clearly is producing lots of value. And rather than having that, uh, Bitcoin that could be produced in China or, uh, Russia or Kazakhstan, now it's going into the us if you're operating in the us and in particular that local community where you decided to build up that large facility. So, I mean, definitely see a lot of benefit from having a large company like core scientific or any mining company who wants to build a large facility in a community. Once you talk through the benefits with those, uh, those people in, in government there, the state government mm-hmm <affirmative>, they really do. Once they grasp the concept, they, they really want you to come into their state and bring that value in.

Taras Kulyk (00:43:46):

Yeah,

Russell Cann (00:43:47):

William, it's a very compelling story. The facility behind the Ross said in North Carolina, uh, it sit vacant for 10 or 12 years. It was a, a dinner manufacturing company, but that particular facility is in a town of under 300 people. So it sits in a town of under 300 people and, and, and wow, we, we employed 10 or 15% of the population of the town, right? So we employ a large chunk of the town and that facility sat empty for over a decade. So it, it, it has a meaningful impact cuz we also, by the way, we pay a lot, you know, we pay a lot more than the local than local wages are by, uh, by significant margin. So those folks, uh, are seriously contributing to the local economy. They go out to eat, they buy things, it moves the local economy in a, in a meaningful way.

Russell Cann (00:44:32):

The same thing in our Kentucky location, our Kentucky location is in an enormous building, it's over a million square feet. Um, it has traffic patterns inside the building. It's so big. The, the facility was a former aluminum smelting plant that had been empty for years. Uh, and it's in a, a, again, it's in a very small town, uh, less than 900 people. We employ a significant portion of the town's population. Um, and it has a, has a, has a serious impact, a meaningful impact in, in that area in Kentucky. So, um, at, for us mentioned, this, we have to go where there's lots of readily available power in a lot of instances, that's in heavy industry. And then of course what happened in, in eighties, nineties and in the two thousands is the us economy changed. Some of that heavy industry moved out, but it left these vacant shells with heavy power infrastructure.

Russell Cann (00:45:20):

Yeah. And it's just really interesting that this very new technology of blockchain is moving into some of these spaces and taking legacy, uh, textile legacy, aluminum, Ming. It's crazy that we're now mining Bitcoin. And, you know, think, you know, we talked about the MI the old metal plant, you know, we're mining Bitcoin in an aluminum Ming plant. We're, we're, you know, mining we're, we're doing GPU rendering and a, in a former Levi's denim plant. Right. Yeah. It's just the craziest thing. Um, so its it's really cool and, and it's, and it tells a great story, um, locally. So I think it's a good move for the us, for Canada. It's a to, to open this industry up in north America. Um, and it's been there's there's regulations that have that have, uh, slowed it down, but certainly, um, you know, we've found a lot of, uh, local government is very, very open to, to what we have to offer.

Taras Kulyk (00:46:11):

Yeah. Yeah. And one of the things that Russ and I have been working on is really, um, getting core to be part of some of that policy change. So we'll have an announcement in the next few weeks around, uh, one of the groups that core has partnered with, uh, that really is on the forefront of that within, uh, the us political scene. Um, and the only other thing I'd add to Russ's comments is there have been instances in the past where the overuse of power and the inappropriate planning has led to some issues with, you know, power prices go up with local consumers. But, you know, with the proper planning, this can obviously be avoided, you know, to make sure that the power utility has a good line of sight on the power use of a good of a large scale mining operation so that it doesn't impact power use rates for local consumers. That's something that core looks at and does tons of studies on we've hired some of the top experts within the power industry to work with core. Uh, and so as we scale up to a gig, OFAT more, uh, we will definitely be making sure that any communities that we work within are, are treated properly, we're creating jobs. And we're obviously not increasing the power rates for local consumers.

Will Szamosszegi (00:47:16):

I've talked with a lot of different people in mining, who who've had the conceptual idea of what could be done within AI or data processing, high performance compute outside of purely mining for Bitcoin or one of these other, uh, blockchain networks like Ethereum. And so you guys seem to have made that, that next transition into actually going and monetizing a route that is outside of mining, but is more along the, the HPC play. And can you talk about how that began and where it is today and just kind of what that journey was like? Cause I'm sure that that would be extremely, uh, valuable for anyone listening.

Russell Cann (00:47:56):

So, you know, our AI side of the house, uh, first off it developed organically, uh, we were developing the software and the means to, to manage our own machines. We developed our own, you know, version of what to mine, where machine learning the algorithms, tell us, you know, how, uh, coin switching in, in a mining platform on what's the most profitable. So we, we were developing all this in-house and we decided to, uh, you know, eat our own dog food and develop the data center in order to house this, this high compute stuff, you know, the higher end D GXS than the video products. And from there, we went ahead and went full on, you know, as, as Ross mentioned, the SOC two type one compliant, tier three AI data center. And that led to us developing software stacks with plexus and, and some of the other big data folks.

Russell Cann (00:48:47):

Um, and, and I think we publicize it all over the news. And I'll tell you what sometimes if you wanna really dive into it, uh, Ian, who's our head of AI. He's a brilliant, uh, brilliant fellow. Yeah. Um, and could, could really go down a rabbit hole with you on this, if you want to, if you wanna go down it, but I'm gonna kind of keep glossing over. At least I know about, see I'm not, I'm a, on my tech side of the house, I'm an infrastructure guy, you know, I can, I can plug some coax cable in and, and make internet, but, um, on the AI side, we offer the software stack for developers and data scientists in order to access the high compute GPUs and process their data. So we'll help them migrate their data to our system and then our GPUs, uh, they will either rent or buy time on our GPUs to process all that data and then spit out the results.

Russell Cann (00:49:28):

So, uh, we play in a very specific piece of the bell curve on the AI, you know, hardware chain, uh, we play on the far right hand side. We, we on the very, very high compute piece and we do that because the infrastructure for those, those very high end compute piece, it's power, heavy, it's heat, heavy, um, and it's actual weight heavy. And all those things are very hard to do in traditional data centers. So we actually, but they're not hard to do in, they look a lot like GPU mining. So when we we've learned that little, that little tool there, we said, Hey, we can develop data centers that are very specific for this, this piece of the AI platform. So we did. So we developed data centers that are, are great at housing hardware. That's hard to house in tradit in a, in a traditional data center.

Russell Cann (00:50:15):

So, uh, we are an HPC high compute, lots of data processing happens. And on our AI side, uh, we do the software stacks. We help them, uh, develop the infrastructure to move their data to our location, um, or at their locations. And we'd process that data and send it back to 'em. And I think we announced it sometimes, but our, our clients are public traded companies, uh, government agencies, um, and, and then some smaller houses, you know, one of the coolest things we did recently that I'm really proud of, uh, the COVID outbreak in the United States first really hit home in Seattle. We're headquartered there. So it affected us pretty, pretty dramatically. And our whole AI team got together and we threw a lot of AI compute at the, at the vaccine. And we still to this day, uh, some of our da data scientists, some of our programmers, and a lot of our hardware are going towards that RNA. Um, some of the RMA mapping that's used in the vaccine, that's gonna be coming out in a couple months here. Uh, core was part of that team. Uh, we teamed up with MIT to, to make it available for folks. Um, so we don't just do it just for make money. We also do it to try to try to help a little bit too. So,

Will Szamosszegi (00:51:25):

Yeah. Yeah. That's great. But outside of blockchain and crypto, uh, my, my next question, I guess we'll start with you. Todos is what is your favorite book?

Taras Kulyk (00:51:35):

Well, funny, you should ask it's, uh, 1984 by George Orwell. <laugh>, um, kind of, uh, in line exactly with what we've been talking about, uh, and you know, the, the parallels between what he prophesized in that book as to what's going on today, you know, ministry of truth, double speak, uh, it's terrifying, candidly. Yeah. Um, and it, it really is something that we should all be looking at and trying to get our heads around. What is the purpose of technology and how are we using it on a day to day basis? You know, um, personally I think that 1984 is something that everybody should read at least twice. Uh, because the first time you read it, it's more of like a shock to the system. The second time you can see that there are nuances and, um, you can also draw some learnings as to how at the end of the day technology is there to support us. But if it's used for these nefarious purposes to, you know, control a population, et cetera, it's, that's not what it should be doing. Right. And so it's my favorite book because it's the most salient, uh, the, the reality that we're all experiencing today, not the most fun book, but it's definitely, uh, it's definitely the one I talk about most. Yeah,

Will Szamosszegi (00:52:51):

Yeah. That, it's a, actually, you're not the first person that has said that book. So I guess that that book, uh, really has resonated with a lot of people. Who've who've come on this podcast at least. Yeah.

Russell Cann (00:53:02):

Cause 2020 is a shit show. So like as year, it just one, you know, it

Will Szamosszegi (00:53:06):

Really, you think this interview was done like three years later, we'd we'd be getting some different answers. Yeah.

Taras Kulyk (00:53:11):

<laugh> yeah. If 2020 is hindsight who needs hindsight, right. <laugh> oh yeah, yeah.

Will Szamosszegi (00:53:17):

Oh yeah. That's great. Well, what about you, Russ? What's your favorite?

Russell Cann (00:53:21):

So, uh, my wife would tell you, my head's always in a book. I read somewhere between one and three books a week. Wow. Um, most of it is escapism. I like fantasy science fiction. Uh, now I do read your occasional business book and it's something educational periodically. Um, but I thought about this and, uh, I really like the will of time series, uh, Penn named Robert Jordan. Um, he's passed away now, but it was about a 14 book series, probably 15,000 pages, small print. Um, it's really fantastic, but it's kind of a whirl. It's a world builder. It's a time builder takes place over thousands of years. Um, much like the Doune books that take place over, you know, 30,000 years. Um, and I just say that, cuz I was just reading recently, there's a new version of the movie of a movie version of the books coming out again. But uh, so you know, if I look at books, I like stuff like that. I like the fantasy, the world building, uh, seeing how people think, uh, reality might be in the distant past or the far distant future. So, uh, for me that that's where it's at.

Will Szamosszegi (00:54:24):

Yeah. Actually now that you bring that up as your favorite book, it kind of makes sense, uh, like going into what we'll talk about later with AI, but just a lot of those sci-fi, uh, type books and stories. I think it's almost like a map for what's going to eventually happen in the future. I mean, if you can think of it, then you can build it. And I think that, um, star Trek. Yeah, exactly. Yeah. <laugh> the, the people who write those books really are guiding in a way where the innovators and the people who try and build these businesses try and take it just directionally.

Russell Cann (00:55:00):

Yeah, for sure.

Will Szamosszegi (00:55:01):

Yeah. Do you normally listen to those on like audio books or are you, are you reading like page, page?

Russell Cann (00:55:07):

I'm a reader. Um, if I'm laying in bed, it's on my iPad or e-reader, but um, if it's the weekend, then I'm outside and it's in a, it's a, it's a hard back, you know, I still, wow. I can't can't travel with hard back. So I used to, when I would go on a business trip, you know, prior to your e-readers and stuff, I'd have to take a handful of books with mean, they'd literally take up half of my luggage. Now I can take my iPad and I have, you know, 200 books on it and I'm good to go. So, and then if I don't, if I finish something, I can put my thumb on it and I can download the next three versions or the next three copies or something. So, um, you know, but I, I, I still, I love sending the pool or St. Outside in, in the woods. And so like having the actual print material in my hands sometimes. Yeah.

Will Szamosszegi (00:55:46):

So a piece of paper <laugh> yeah, yeah. Actually it I'm starting to connect the dots now, cuz before like before the, the podcast started, we were talking about how much you travel and that's a lot of plane time where you can just crank through oh yeah. Books and books. Yeah. How many miles was it? Did you say that you traveled over

Russell Cann (00:56:02):

300,000 last year? Oh

Will Szamosszegi (00:56:04):

My gosh. A lot of air that's nuts. Yeah.

Russell Cann (00:56:07):

Is, and you're right. That's it was, I will say this. Yeah. During the COVID when I have traveled less, I have been reading less, uh, because I was spending a lot, a lot of plane time and plane time is great for reading

Will Szamosszegi (00:56:17):

Ask what are some of the most, uh, interesting and potentially scary things that you think are being worked on today with AI and where do you think that given a longer time horizon where that could lead?

Russell Cann (00:56:30):

So some of the most promising things I think are in the, in the fields of medicine, um, particularly I think if we can take and use artificial intelligence machine learning to take the best medical doctors in the world and make them available, uh, you know, or make them available to everyone, I think we're gonna see some crazy advances in healthcare. So I think that's, I think healthcare's kind of one of the most promising, uh, on the similar line, I guess, related to health and wellbeing. Uh, I think machine learning and AI in, in the food process, supply chain is gonna improve our yield as far as food production goes. Um, and that's related to weather and water and soil content. Uh, so many plants, there's a lot of inputs that go into our food supply around the world. And certainly if you can have machines learn, um, and we've done this, you know, it takes a lot fewer farmers to feed the whole world than it did even a hundred years ago.

Russell Cann (00:57:32):

And certainly, you know, 200, 300 years ago. Yep. Um, and so we're continuously using technology to improve the yield of one person working to, to feed many. And so I think the world of AI machine learning is gonna see that. And of course, um, there's, there's the scary side of things. Um, we have a, a defense contractor that uses our AI and is one of our clients. And I can't mention who, but I can tell you when I, when you say defense contractor and AI, it's immediately scary because my immediate jump is Skynet, right? Like I've seen Terminator, we've all seen it. We know how this ends, you know, you start letting AI control drones. And if you tell a drone to go kill a human and that's AI, I've been told to kill a human next thing, you know, that can spiral outta control.

Russell Cann (00:58:16):

Um, and, and indeed, you know, that's the scary part. That's, there's a lot of sci-fi movies made about that. So, you know, um, and, and, and people like to say, oh no, you know, uh, machine will never be smart or human. Well, you're just, you're, you're being ignorant as a human to think that, uh, we're not gonna have machines that are gonna be smarter than us. Um, so I think if we control it, AI can make our lives much better. Um, I think in the very short term, we're gonna see self-driving cars. And I think, uh, for, for those of us that are middle-aged and drive all the time, it's just gonna be a great convenience not to have to drive, but for older folks, it's gonna be life changing for folks that, um, may have have some handicap that makes their mobility difficult. It's gonna be life changing.

Russell Cann (00:59:00):

So I think, um, in the very short run, we're gonna see AI in, in the form of self-driving cars. That's just a prime example. That's gonna make our lives much better. Um, yeah. You know, we, because of, of COVID, we're already, a lot of folks are getting groceries and stuff delivered to their house where if all of a sudden that grocery delivery is done by a drone and it's dropped off, it dropped it to your kitchen. You know, I think there's gonna be a lot of things that's gonna make life life easier for folks. Um, I will say, I think there's gonna be an enormous divide and, and it's gonna be country and industry specific. So I think, uh, in, in developed world in the states, um, parts of Asia and Europe, you're gonna see a lot more AI that is involved in your daily life, and there's gonna be some parts of the world where it never reaches it. Um, so again, I think there's gonna be great things related to healthcare related to life conveniences. Uh, but then there's gonna be scary things, uh, scary things related to defense related to space exploration. Uh, humans are a violent, violent, violent animal,

Taras Kulyk (01:00:03):

Violent, yeah,

Russell Cann (01:00:04):

Paranoid, violent animal. So, um, I think those things are gonna happen. Um, you know, and, and our hope is not to be involved in the paranoid, violent side of the house, but be involved in helping ride the RNA mapping for the COVID vaccine, helping, uh, we have announced coming out about food, supply chain, um, stuff soon. So like, I think those things are very promising. And, and I think, um, you, you mentioned this about data in 2018, the world started producing more data every day than we could process, you know, so AI is gonna have to advance, it's going to advance in order to process all that data. And if we could start analyzing that data and use it to, to make mankind better, to make life better for folks, um, it could be a pretty exciting thing. Uh, of course, most likely it's gonna first be used in a commercial sense to sell us more crap, uh, to make us buy more trinkets online. We already do that. Our, we have AI right now in house at core that is literally used to make you log into your video game and, and buy more on online, uh, trinkets or whatever. Right. I mean, so seriously, AI's gonna be developed air first. Um, but that, that will spin out into other things. So, um, I guess I should say I'm cautiously optimistic, but to us, I'll let you, you grab that if you want.

Taras Kulyk (01:01:16):

Yeah. I mean, the way I look at it, it's, um, you know, humans have always had tools, right? And from the days where we made fire using rocks and stones, et cetera, um, you can look at a tool, for example, a knife, you know, a knife can make you lunch or a knife can stab your neighbor, right. And just like that, an AI can either be a net positive or a net negative for the world. And I mean, I touched on it briefly earlier, but Russ gave a lot more insight into it. And I mean, when it comes to waste, you know, there's huge amounts of waste in today's, uh, industries, you know, look at food waste. I think it's like 30 to 40% of all crops that are produced are just destroyed because of waste. Well, guess what, AI can actually help optimize a lot of our systems, you know, there's entire industries built around productivity and efficiency improvement, you know, like ask the McKinseys, the bang, the booze and companies of the world.

Taras Kulyk (01:02:12):

Well, AI can do a lot of that stuff fairly simply and pretty quickly as well, once we've developed the software and obviously the hardware infrastructure to be able to process those questions. Um, you know, back to one of the points you mentioned around, uh, simulation theory, you know, that's Monte Carlo analysis, right? And that is really one of the major things that, uh, AI is able to do a lot faster than any human could possibly, you know, you could run through a million simulations of a specific fact pattern within a few minutes using for example, cores infrastructure, uh, but generally a super computer that we now have access to. You know, and this is where I think hardware will be the tool versus the weapon of the future. You know, I think that our politicians really need to get to the table and start understanding at how potent of a weapon AI can be.

Taras Kulyk (01:03:10):

And I mean, we've got major thought leaders that are already, you know, lighting off that red signal flashing to the politicians. I know Elon Musk has talked about it. Uh, Peter Theo, bill gates, you know, they've all said that AI, if not checked and controlled and regulated properly, could lead to the destruction of humanity because of an uncontrolled, uh, program that goes off that has too much access to, you know, key infrastructure, et cetera. And so the, the fact of it being a weapon, I think can be contained. I think it can be controlled, but the benefit of it, I think it'll be changing for humanity completely. Um, and so, I mean, I could talk about AI for, for weeks and weeks, but <laugh>, uh, that it's a net positive. And I think that, uh, being part of the core team being part of the, the group, that's building the infrastructure to support this type of computational need for, to answer the problems that the world has is, is being part of the solution.

Will Szamosszegi (01:04:09):

Yeah, definitely. Well, I think that's, uh, that's a great note to finish up on. This has been a lot of fun guys. Thank you for coming on.

Taras Kulyk (01:04:16):

Appreciate the time. Thanks for,

Will Szamosszegi (01:04:18):

Yeah. Just before we sign off, is there anywhere online where everyone listening can connect with, uh, you guys individually or the company

Taras Kulyk (01:04:30):

Absolutely.

Russell Cann (01:04:30):

Or scientific.com go to the website and, uh, uh, we're both actually on the website, under the, the teams or about us or something like that. But from our website, you can connect to us, you can connect to our AI team. If you think that's a, that's a platform you need to be involved in, are the blockchain, uh, software side are the crypto, uh, mining digital asset hosting side. We can, we can do all that from, uh, right from the web. Yeah. So of course we're on, you know, LinkedIn and, and all the, all the major social medias as well. Yeah.

Taras Kulyk (01:04:56):

So,

Will Szamosszegi (01:04:57):

Awesome. Thanks again.

Russell Cann (01:04:59):

Thanks William.

Will Szamosszegi (01:05:02):

Thank you for listening to this episode of the SaaS mining podcast. Be sure to follow us on social media and YouTube for the latest updates and previews of upcoming episodes, full episodes and transcripts can be found on SA mining.com every Thursday. If you want to hear us interview a particular guest on a future episode, please reach out to us@podcastsamining.com.

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