Powering the Future: AI, Energy & Leadership | Asher Genoot (Hut 8)

Things are great. Thank you for having me.

Let's do it.

Yeah. So going back a little bit, I went to college and my sophomore year, like after, I don't know, after the second quarter, my advisor is like, you can graduate at the end of this year. I'm like, what are you talking about? I have two and a half years left. And I had gone into school with a bunch of APs and I had the scholarship. So I took a bunch of classes because it was cool and fun. And so I asked myself, I was like, do I stay another two years? I have the scholarship, and do I just— I was thinking of picking up either computer science or philosophy. And most of my learning at the time was outside of the classroom. I was doing finance competitions, so a ton of self-taught stuff, different organizations I was a part of. I had interned at a hedge fund. So doing a lot of these things, and I think my takeaway was, I think I can learn more in the world, and why don't— the idea was, this— my parents immigrated to the US, they wanted me to go to college, get a job, get like a nice-paying six-figure job out of school.

And so when I had interned at this hedge fund, we did this analysis on this investment for six months. The company invested, the fund invested, the stock like popped, it went up like 3x, but I felt so empty inside. I was like, what actually happened in the world? Like I haven't actually changed the world. I haven't done anything. Like the fund made money, but that's not what I want to spend my life doing. So I had this like early-stage life crisis. I'm like, what do I actually want to do? Early-stage like 19 years old.

18, 19. Yeah, maybe sometime. So I came up with this idea and I'm like, look, I'm two years ahead of my friends. I want to go to Israel, China, India, and Nigeria. And I'll go to each of these countries. And I went and researched and I found like 10 CEOs that I thought were awesome and that I could learn from. And I told our dean, I'm like, look, I want to go and email all these CEOs, and so I'll come work for you for free. Just let me shadow. And at the end of it, I'll either have gained a really great perspective on the world and know I want to spend my time, or I'll come back and I'm a senior with my friends and I graduate college as is. And that's kind of the path. And he's like, that's a great idea. I was like, are you sure? Like, my parents are going to kill you if like you're promoting this. They just want me to graduate and get a job. And he's like, your parents sacrificed for you to have an education to do opportunities like this. You can always go and get a normal job and have a white-picket fence and that journey, but like this is why you're here. And so long story short, he helped me convince my parents to go on this like journey. I went to Israel for about four months, worked in Tel Aviv for two months and two months in Jerusalem. Fascinating story of this company where their management team were Haredi Jews in Jerusalem and their whole software team was Palestinians in Ramla. And like, how do you build company culture through kind of such diverse and kind of conflicting cultures and like all these macro political issues? And then when I went to China—

So it's, I think at the end of the day, this is where my kind of belief— at the end of the day all people are good, right? And their environment kind of shapes whatever actions and that they have. And I spent time in the office in Jerusalem and I also spent time in Ramallah and went out and spent time with the office there. And I asked like the questions, I'm like, how do you guys work together? Like if there's massive conflict geopolitically, like how do you guys still build a company and show up every day? And the answer was, I mean, pretty beautiful, was that like whatever is happening on kind of a more political landscape, that doesn't affect how this person is and the person that I've been working with for X amount of years. And we come in and we work with the people that we work with in the company and everything else is like the lives that we live in and the environments we live in, but it's not these people on the other side that are doing it. And so it was like they were able to put humanity first above all the noise of kind of everyday news cycles and so forth. And I think there was something like really beautiful there.

And when I went— I'm half, my dad's Israeli, my mom's Chinese, so I grew up in the US. So going there, I think when I first— I had never been to Palestine my whole life. And so when I first went there I was like, what am I expecting? What do I think? And you're going through and you're going from like Israeli soldiers to Palestinian soldiers and you have this kind of like your heart beating. And I didn't tell anyone I was doing this. I was like, I really wanted to learn and go. And they were the nicest, most amazing people in the world and I had the most amazing time when I was there. And so I think that maybe drove the education piece, which was like, people are naturally amazing and have so much potential and how can you create an environment where people fulfill the greatest potential that they can have.

And so I think when I went to China, one of my cousins had gone abroad to the US for school. And you have this huge kind of— parents spend a ton of money for their kids to have a better education. A lot of them go out, leave the gaokao system in China and try to go abroad. So you have kids going to the US, UK, Australia, everywhere. But college is pretty easy to know like what's a top school, what's an okay school, like what extracurriculars, what makes a school good and bad. Middle and high school is actually very difficult. Do you know like the top boarding schools? We don't know anything else. And there was a school that my cousin went to, and I think they didn't want to like bother us by asking us and we were in the US, and they just worked with some local company. And she went to a school that was like the second story of your church, and it was 60 kids that are all getting charged like 40 grand tuition for like high school. And I went and I swear when I was there I sat in on their calc BC class and I'm like, I can teach this class better than this teacher, right? And it just made me realize like it was such a shame that like parents were sacrificing so much for their kids to have a better education and that wasn't happening.

And the bigger— so what actually was, when I went through school, I knew how to do well in school. That's different than like I knew how to learn and intrinsically had a passion for learning. And that only really happened to me in college. In high school like I was doing sports, I was in student government, I had straight A's because my deal with my parents was, you have straight A's and you can do whatever you want and you can live your life, right? And so like I upheld my part of that bargain. And so when I actually found this sense of kind of like this innate love of learning and wanting to explore and learn new things and for my own life saying okay, if I don't want to go into finance and the buy side, what the hell do I want to do with my life and starting that journey, I realized that so many people in life they kind of go through middle and high school then they go to college because it's the next thing to do and everyone goes. And you say like if you ask a high school kid why do you want to go to— I want to get a better job. I want to learn. Like it's all these like generic answers, but very few have like a deep, deep-rooted reason. And so they go through their college years, spend the first two years kind of messing around, enjoying college life, junior year getting this internship, and senior year you get this job. And I think a lot of people hit their kind of mid-20s and like they realize they're not in love with their jobs, right? Some kind of go off and go to like MBAs or whatnot.

But I don't know, I believe that if you don't love what you do and you only live once, like it's such a sad way to live life. And I feel like a lot of people find passion, happiness when they go home and they're like, work is work. I'm here to make money and my passion, my life is like outside of work. But you're spending the majority of your hours working. And I know people that I don't know sell products on Amazon that make millions of dollars a year. Like you can make money doing anything. You just have to do it better than someone else. And you do it better than someone else by having more passion. And so the whole company I started in China was focused around, if I want to make an impact on the world, how cool it would be if I could leverage that and make an impact on the next generation of kids that could all have that mindset and go make an impact on the world. So that was kind of the driver. And the thought was if I can start working with kids in middle and high school and start challenging them on why they're doing the things that they're doing, instilling this like innate true love of learning, then when they go into college, you have four years where the whole world wants to help you to succeed and you can really capture that moment rather than kind of just go mess around and then graduate and go get a job. And so that was kind of the ethos behind the second business that evolved from the first, because I asked a lot of kids in the first business— we started doing well and I'm like, why are you going abroad? Like why are you doing it? And no one could answer the why. And I'm like, okay, we just helped fix this process of kids finding better schools, but that's not the real problem. The real problem is like why people are in school in the first place. And so that was kind of the driver of— education kind of just fell into it.

So we had built out the business, started working with kids across— and the whole idea of why China for the second business, because I thought about should I start in the US, was there's such a big emphasis on like going to a good school and like just getting good grades and like this love of learning, this like natural inquisitive passion is like not very prioritized in their culture. And so I was like, if I can crack the nut here and the problem here on like doing it with Chinese parents that are very strict on their kids, we can expand this anywhere else in the world. Ultimately, this is kind of personal life, right? I met my now-fiancee, and I had a real kind of question for myself, which is, am I going to be here and is this where I'm going to build a family and kind of build my roots, or is it going to be back in the US where I was born and raised and all my friends are and all my family is? And so the answer was it was going to be in the US. And so I ultimately ended up running a process and sold that business. And when I came to the US, my co-founder in the company that ultimately now is Hut 8— him and I have known each other since I was maybe 17, him 18, 16 maybe. We met at a Peter Thiel fellowship conference. And so both of us had been entrepreneurs our whole lives and we, you know, made some money, had disposable income. We would work hard, go on a vacation somewhere, and we were like living a life that not many of our friends could live because they had to go into their job and whatnot. And so we became really good and dear friends and had looked at opportunities to work together, but when I'm like doing something, I'm tunnel-visioned. I don't do anything else. And those opportunities just didn't work. And so when I was selling the business, I called him. I'm like, hey, I know you've always been wanting to work together. I'm selling, moving back to the US. Are you still interested? We actually flew out to Shanghai that next— like I think it was like two days later when we sat in person, like 1,000%. And so we started a company called US Bitcoin Corp. And that ultimately ended up merging and becoming what is now Hut 8.

And the kind of initial background behind it was he had built some of the first large-scale Bitcoin mining facilities and had Ethereum facilities early on as well that existed. He built a lot of the facilities that a lot of these public companies today kind of— the assets that they initially bought, both private and public, back in kind of 2017. And so he was like, you remember that business that I had in 2017 where I basically sold picks and shovels for the gold rush and built all these data centers and these machines for people? I was like, yeah. He's like, I think we could do it, but we can do it at an institutional scale because of the amount of institutional capital going into the sector. And this was like 2020 when like Bitcoin wasn't a thing still, right? 2018 the markets kind of crashed and didn't really come back till kind of '21. And then the second one is he's like, I think we can be great operators. He's like, look, you're an operator. Like most companies who are in the space are here because they love Bitcoin, but this at the end of the day is an infrastructure operating business and if you can be a great operator, that's how you win. And for me, like I wasn't a huge Bitcoin or crypto person and actually I pushed back at first. I'm like, I don't want to be known as like a crypto bro. Like that's not— I've come from a finance background. I've built an education company. Like I want to do things that are better for the world. And I didn't know much about crypto. I didn't spend much time on it, to be honest. And so when I dove deeper and deeper, I got more and more kind of bought in on two fronts. One is I think this idea of Bitcoin as a store of value, digital value, and especially in places that you visit around the world. We talked about traveling before we just started here, like not all countries have the ability to believe in local currencies and inflation and so forth.

And then secondly, like one of the bigger drivers, which is why Hut has been evolving so much since we've merged, is Bitcoin mining at the end of the day is really just an energy arbitrage. You're consuming large amounts of power and you're converting that into a form of compute, and in this case it's Bitcoin compute. And so when I looked into kind of the energy sector, I thought it was really interesting because you had all these renewable projects being built and at the time like wind, solar, ESG, the IRA, the Inflation Reduction Act, like so much money was being put into clean power, quote-unquote. And a lot of that was in the form of kind of wind, solar, but where there's ample amounts of land, cheap land, where it's really sunny, a lot of wind, if you think about it kind of like West Texas, the Panhandle, and you have this whole wind belt, that's where a lot of the wind and solar is being built. The problem is there's not that many people there to consume the power. And transmission— think about like transmission lines when you're driving down a highway. Transmission hasn't been built to actually transfer that power from generation to where the load is and where the consumption is. And so a lot of these assets actually ended up having negative pricing in those regions at the nodal price. And so these plants would produce, but because let's just say they got a tax credit where they can get up to two or three cents in tax credits, they could go negative one, two or three cents because they could still make the delta on the production tax credit. Or there would be kind of curtailment sites would shut down because they're saying we can't— it's too negative, like we can't produce. And I was like—

Yeah, exactly. And so I was like, okay, that's shocking. Like this is not sustainable. Like you can't go and subsidize this industry without a real commercial use case and the economics making sense. And so we're like, okay, Bitcoin data centers are essentially infinite batteries in the sense that they can shut down and they can consume power for as long as they need. And it's really price sensitivity. If you think about a traditional manufacturing facility or a mission-critical data center, like you can't just shut down if power prices are high. That doesn't work, right? You have real employees that like need to continue making the product that they're making or data centers that are running any critical loads or email browsers and so forth. And so that was the prompt of building the company. I was like, you know what, I think people are thinking about this business wrong. People are seeing it as a Bitcoin-first company where it's really an energy-first company and you have exposure into Bitcoin. And so that was kind of the origination story.

Yeah. I think today people can say, oh, you're a Bitcoin company or you want to be a data center company. Like we don't want to be either.

The problem that we're trying to solve and the kind of big vision is as technology continues to advance, so too does the consumption of energy. And if you look at kind of historically, like we've exponentially consumed more and more power as society has progressed. And the World Bank came out with this like beautiful chart that put this into a visual for me, which showed GDP per capita of countries and energy consumption per capita, and it's essentially a linear correlation, which is the more GDP per capita you have, the more energy that you're consuming. And so our belief is the question is not how do we consume less power. If you want to continue to advance society, continue to advance humanity, continue to advance technology, the question is how do you allow power to be consumed in a way that's sustainable, how do you allow it to be consumed in a way that's economical, and that allows the grid to be fortified. And so for us as a business, if we build a company at that intersection between technology and power and we can go build new types of infrastructure— so Bitcoin mining at an industrial scale, when we started building multi-hundred-megawatt campuses, wasn't really a thing.

Right now it is. Data centers today— for data centers you're building these massive data centers. In the past, a couple megawatts, tens of megawatts was a big deal. Now we're talking about hundreds and gigawatts of power. And so power is increasing and really understanding your consumption of the load profile versus actually the energy grids. What grids have the ability to bring on these customers? How do you structure it in a way that is good for the actual normal people living in those regions? The ratepayers or the actual citizens. And so I think understanding the load dynamic of the technology, understanding the grid dynamics of transmission, generation, and finding the best places those two come together. I think that's what we've done exceptionally well and we'll continue doing, and kind of show the world— and that's our big vision. Today we're building data centers to power Bitcoin compute. We're building data centers to power AI compute. Long-term, like we may build hydrogen plants to power rockets being shot into the sky if SpaceX and Blue Origin are successful. And so I think the company is anything that consumes large amounts of power and is new and emerging technologies. How do we think about the infrastructure that's able to support them?

I think we can and I think it's being open to technological advancements, right? And so if we think— let's use renewables, for wind and solar specifically— like okay, you're building a lot of wind and solar in areas that don't have that much consumption. So then you should be spending a lot of money building transmission to take that power where it's generated to the area that's consumed. And in that interim, while generation is being built maybe faster than transmission, what are consumers' consumption of that power, right? And so if we think about kind of the last administration, I mean, there was a lot of negative press coming out there about Bitcoin mining is consuming power and it's hurting the grid. And I feel like it was viewed as more energy equals bad.

And it's hard because the true answer is by understanding the details and the nuances. So I'll give you an example. If someone in New York City goes and shoots someone, are you going to say now every single person walking around is a murderer and you're going to go shoot people? So why I say that is because yes, you might have one player and one bad actor who goes and builds a data center in a city and consumes power and hurts the grid, but like large-scale players like ourselves, we have to go to the places where they have the lowest cost of power. Usually the lowest cost of power means there's not that many people wanting that power because of supply and demand. And so a lot of our sites, for example, we have joint ventures with like large— NextEra is a large energy company. We literally have a project, a 200-megawatt site at their wind farm because that wind farm wasn't getting the best economics and was having negative pricing and negative curtailment, and we built a Bitcoin mining wind farm data center at their wind farm. And so I think a lot of the times, like the large-scale data centers that powered Bitcoin compute were actually net additive and net beneficial to the grid and helped the economics of those projects that were there.

You have kind of unique circumstances where maybe price went up and so forth, but that's not kind of the broad strokes because if price goes up, Bitcoin mining is not really viable anymore and they have to go elsewhere. And so there's a natural economic driver. And so when I think about technology, I'm a massive believer in nuclear. And so as we think about nuclear— really like the problem with nuclear in the US is we grew up hearing about Three Mile Island and Chernobyl and there's this like fear of nuclear. If you think about it, so gen-two power nuclear reactors essentially you have like your uranium core is an active uranium core and you basically create all this protection to protect it and to cool it so there's not a nuclear meltdown. A lot of the new technology today you actually have an inactive core and when you turn up the facility you're applying so much pressure and you're actually creating it to be in an active state. So if something goes wrong and it shuts down, it's no longer active. And so like for example, China, Russia, they're building more and more nuclear. In the US, like the last nuclear plant that was built bankrupt companies along the way, right?

And so I was actually— so Mayo Shattuck, he was the CEO and chairman of Constellation Energy and Exelon, which owns some of the biggest nuclear sites. I had one of his former kind of predecessors who took over when he had retired, and we were talking about nuclear and I was kind of telling him like, why don't we build? And he's like, the problem is there's so much regulation that people are signing up for essentially suicide if they're building because you don't know how much it's going to cost. You don't know what amount of kind of red tape there's going to be.

And so I think we have to like— in order to build a more sustainable world, we have to embrace new technologies, but do so in a way that's safe and thoughtful.

So I guess I'll start with the first one on like energy emergency. I mean, if we want to win in this AI race, like we need to build the largest AI facilities that can power compute. If other countries are building it, like we're going to get left behind. I know we have kind of regulations around semiconductors and who can own these chips and so forth. At the end of the day, like power is what is fueling these large models and being able to be at the forefront of that is really important. And in any technologies, right? Even these large manufacturers. So TSMC, I mean, you're talking about massive multi-hundred-megawatt, multi-gigawatt campuses to fuel these. And so we do need to develop and build—

More power generation, and you see that in the demand itself — how much demand there is for net new generation across the whole US. So definitely need to continue. It's also a mindset shift as a country. Are we in a kind of protect mode, or are we in a growth, drill baby drill, can't be left behind mode?

And I think the second is like change, to your point. Change is never easy. I probably lean on the side of being more of an entrepreneur and disrupting things. I mean, our company knows — I change up our company every like six months. People can't be too comfortable. I change up our work structure, I change up our seating in the office. I'm constantly changing things to keep people on their toes and focusing on building and not being too content with the status quo.

So it depends what you're changing, right? You have long-term initiatives that you set. But how do you actually keep people continuing to be engaged? So even like our mining sites, we operate them really well. Can we do them better? So now in our town hall we just had earlier today, the head of our software engineering team or data science team is like they're now starting to add in machine learning and AI into our algorithms that manage these machines to be able to optimize them even better. So there's always a way to do better — you can never be too content.

And so I think, look, when Elon first bought Twitter and went through his change and the firing, and they're like, this thing is gonna blow up, it's never going to work. And look, I think people are still using the platform and adoption has been higher. And so I think in times of change, not everything is going to be done perfectly.