Who look at Bitcoin price are expecting a correction into the low 90s, high 80s, and then a return to growth ending somewhere approaching $200,000 by the end of next year. Bitcoin unhackable? Will it be unhackable in the future? What's your take on this story? As we enter the New Year, we're looking at how the Trump administration's policies will affect Bitcoin. We're looking at a potential Bitcoin strategic reserve implementation not just in the US but probably around the world, and of course what's next for the price of Bitcoin. Investors would like to know. We'll be talking about these themes with Fred Thiel, CEO of Marathon Digital, one of the largest Bitcoin miners in the US. Welcome back to the show, Fred. Always good to see you.
You've been correct in calling for a Bitcoin run after the halving. We spoke several times this year. People can check out our last interviews. The $100,000 Bitcoin run. Let's start with that first before we start talking about some other topics like the Bitcoin strategic reserve. Since you were on the show a couple months ago, the Bitcoin price has stalled, and recently, only recently, I say recently because it's only been the last month and a half or so since the election of Donald Trump as the next president, Bitcoin has just skyrocketed to unprecedented heights. People are wondering whether or not this is a fundamental drive or just kind of a buy the rumor, sell the news kind of event. What's your take?
So I think what you're seeing is there is no lack of demand on the sidelines. What you're seeing though is very prudent buyers. You had, as of a few weeks ago, every single Bitcoin in existence was in profit. You know, when you had Bitcoin at $18,000, every single Bitcoin anybody held, no matter what price they paid for it, it was either break-even or in profit. And if you think about back in August when we did our first convert to buy Bitcoin in this year, we ended up doing three of them. You know, Bitcoin was at $54,000, $55,000, and here you are at $108,000. That's almost a 100% profit. And so there's going to be selling pressure. So you have people towards the end of the year, they're going to sell off some of their Bitcoin holdings and potentially buy back into the market when it drops down. I think a lot of people were expecting some sort of correction post-election. And it seems that everything the administration is saying today tends to indicate that they're going to follow through on their commitments regarding Bitcoin and strategic reserve, etc. So I think what you're seeing is some opportunistic selling. And as we come around to the beginning of the year, post-inauguration, when things start actually being put in place, we'll start seeing it run again. I think the majority of the people who look at Bitcoin price are expecting a correction into the low 90s, high 80s, and then a return to growth ending somewhere approaching $200,000 by the end of next year. I think that's a pretty valid scenario just based on the demand that we're seeing kind of on the sidelines. If a strategic reserve is announced, that'll drive a relatively big push. If other countries start announcing reserves, again, there's a finite supply of Bitcoin. There are only 21 million Bitcoin that will ever exist. 20 million more or less have been mined, and of that, maybe 4 million are in wallets that either have keys that are lost, are inaccessible for other reasons, or just won't move. You know, a million of which is in the Satoshi wallet itself. So there's not a lot of Bitcoin to go around. And if countries want to have 5,000 Bitcoin or 500,000 Bitcoin, you think about it, that's roughly what MicroStrategy has, right? So now you're talking roughly $50 billion of Bitcoin. That's not a very big reserve for a country. And so you start adding up those demands on supply, and it's a big number. And then you look at pension funds that want to put 1% or 2% into Bitcoin, and you see the growth of the ETFs. The Bitcoin ETFs in 12 months have grown to have more assets under management than gold ETFs took 20 years to accumulate.
So let's talk about this Bitcoin strategic reserve. And I do want to touch on some other aspects of Trump's policies that may or may not affect Bitcoin, including of course the appointment of another SEC chair, Paul Atkins. But on the Bitcoin strategic reserve first of all, there's now talk of Russia launching their own Bitcoin strategic reserve. Take a look at this particular article here from Forbes. A lot of articles covering this story, but this one's from Forbes: 'Leak Reveals Russia's Bid for Bitcoin Strategic Reserve Amid Huge 2025 Price Predictions.' After the US Treasury named Bitcoin digital gold, a leak has revealed Russian lawmakers are pushing for the country to create their own Bitcoin strategic reserve. This came from Russian state news a week and a half ago. Now I wonder what their incentive is. We know that Russia wants to de-dollarize. Perhaps they have a different agenda than the US. Can you comment on this?
Sure. So Putin said at the recent BRICS meeting that he wanted the BRICS countries to be able to trade outside of the dollar system, and he mentioned Bitcoin was a good alternative, which is why you start seeing now those countries looking at Bitcoin as a strategic reserve. Donald Trump has also said that he wants the BRIC countries to continue to trade in dollars. What wasn't said is that I think there's a likelihood that you could trade in digital dollars, like Tether for example. And I think what you'll see is stablecoins take on a bigger and bigger role in payments, especially cross-border payments, because they're obviously much more efficient than the Fed, they're easier to get, easier to dispose of, etc. So what you'll see is some countries just starting to hold Bitcoin. You have Bhutan, which is a very small country that has a very big reserve relative to its population. El Salvador, obviously everybody's familiar with. But now you're starting to see not just countries, you're seeing states. The state of Texas has a bill that's been submitted to the legislature to have a strategic reserve. Louisiana, I believe, also has done that. So you're now seeing more and more states look at this as being a valid thing. You're seeing commercial banks refinancing commercial building loans where they put a strip of Bitcoin as a way to essentially balance for volatility. Because from a risk-adjusted perspective, if you have 2% of Bitcoin in a portfolio or in a basket that makes up a loan, you can dramatically positively impact the return potentially, which can offset some volatility risk in the value of the underlying commercial asset that you're refinancing. So I think we're starting to really see Bitcoin come into the financial system. You're starting to see Bitcoin derivative instruments starting to happen. And people like BlackRock and others are very active in building all sorts of other products on top of it. So I'm very bullish.
I think we can discuss the issue of why. So from Russia's perspective, I think there are many reasons as to why this may benefit them. We saw their currency devalue during the Ukraine war, so that's a hedge for them. They don't want their bank accounts frozen again through the SWIFT system by the US and allies, so a hedge against that through Bitcoin makes sense. But what is it for the US? What's in it for Congress to do this?
So I think there are a couple of things. One is, we have a gold reserve. Why do we have a gold reserve? It's certainly not to back the US dollar, because the US dollar is not backed by gold. So we have a gold reserve as a way that we have the ability to pay for things in the event the dollar would be somehow locked out of a market or fully debased. And so why would you have a Bitcoin reserve? Well, if countries start trading using Bitcoin for international settlement, or they use it as a reserve asset, the US needs to have an ability to affect those markets. And if the US holds enough Bitcoin, they can essentially either support or have a threat of attacking a market by using Bitcoin as a strategic weapon. You know, we have a strategic oil reserve today that was created as a response to the 1970s oil crisis and the oil embargo, as a way to protect this country from people keeping us out of getting oil. And today it's just used as a mechanism for leveling pricing in the oil markets domestically. But internationally, if we have a Bitcoin strategic reserve, we can impact Bitcoin price, we can impact people's ability to use Bitcoin. This is also why Bitcoin mining is so important. Think of Bitcoin mining as block space. You need to have block space to be able to process transactions. The more mining that exists outside the US, the more outside nations have the opportunity to block the US from putting transactions into those blocks, right? It's kind of like airplane capacity. There are only so many seats in every block, and there's a block every 10 minutes. And if the US only has 10% of global hash rate, US transactions could only be guaranteed to be processed in 10% of the cases, right? So it's very important for the US to have a significant amount of block space, somewhere upwards of 40%, such that no nation can lock us, Bitcoin holders or investors, especially the large institutional investments that are coming into this country to invest in Bitcoin, so they can't be locked out of the market. So you have to have both the strategic reserve and a large amount of mining in the country to make sure that you can back that.
Well, let's talk about the implementation of this reserve and how it could actually be done, starting with the Federal Reserve side. Take a look at this question that was asked to Jerome Powell at the latest FOMC press conference. 'So if I may, speaking of assets that have been buoyant, do you see any value or benefit in the US government building a reserve of Bitcoin?' 'So, you know, we're not allowed to own Bitcoin. The Federal Reserve Act says what we can own, and we're not looking for a law change. That's the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.' Okay, he didn't really answer the reporter's question. The question was, 'Do you see benefit?' He did indirectly, which is he said it's not for the Fed to do it, right? So he's trying to stay apolitical, which is his job. Essentially, it would be the Treasury that would do it, not the Fed. And there are two ways it would be done. One is by executive order. The president could order all Bitcoin held by the US government that's been confiscated and held by law enforcement agencies and other departments, prohibit it from being sold, and be contributed to a central fund that would be managed by the Treasury Department, for example. That's about 200,000 Bitcoin. If you wanted to go beyond that and actually go out and purchase more Bitcoin, now you need to have appropriation for that. And so this is part of the bill that Senator Lummis put forth, which is about essentially creating appropriation. Congress would essentially fund the purchase of 200,000 Bitcoin per year over a period of 5 years to build a reserve of 1 million Bitcoin. So that's another way. Then there are other ways. You could allocate, for example, that certain capital held by the Social Security funds and other similar funds that are managed by Treasury, that you could say, 'Okay, you need to allocate 2% of those to Bitcoin, and we'll consider that part of our strategic reserve.' So there are lots of different ways they can do it. I think it's really going to come down to Congress's appetite for doing something like this. Either other nations are going to beat the US to it, or the US is going to be first. I think there's a high likelihood that it's going to be an active item on the agenda, and we'll have to see where it goes. But I'm positively inclined to think that it'll go through in some form or another. It may be as small as the 200,000 Bitcoin I mentioned that the president could offer to be put into this fund, or it could be bigger. We'll just have to see.
Critics of this plan, even from the big community, said the risk of the government becoming one of the largest whales, so to speak, and then if they sell these or even part of these holdings, that could dramatically move the market downwards, right? They've sold the Strategic Petroleum Reserve before. Other countries have sold their gold reserves. So it's not impossible for them to do this, even if Trump has said that he doesn't want to, but it's not unlikely. How would you respond to this risk?
Well, so you have a hundred billion dollars of assets in US ETFs for Bitcoin. I don't think the US government would necessarily want to tank the price of Bitcoin and suffer the ire of all these investors. You have a substantial amount, a growing percentage of Bitcoin holdings in the world flowing to the US because of the ETFs. And I think that over time, it's going to be of strategic importance for the federal government to defend that, in the same way that they defend the dollar and try to control oil prices. But it's interesting, you see the dollar is moving up, which typically would be a bad thing for Bitcoin. And we're not going to see interest rates drop dramatically any further. We're just going to have to live with interest rates, real rates somewhere in the 3 to 4% range most probably, which means that people need to find assets that are going to drive returns that are above the risk-free rate of return. And there are not a lot of assets that do that effectively today outside of really equities and Bitcoin. And Bitcoin has been the best performing asset over the last 13, 14 years. So I think that you'll see more and more institutional investors own Bitcoin. You'll see companies start to own a little bit of Bitcoin. And over time, this number will grow. And the best thing that could happen is that it doesn't happen all at once. It happens slowly, it builds slowly, because if it happens all at once, you get risk for high volatility. If it builds slowly, the system just starts adapting over time. The risk you have though is that the whales become the ETFs. The government sure could be a whale, but government never acts very quickly about anything. The ETFs are very driven by the underlying shareholders, right, who are the individuals who are buying shares in the ETFs. And so public sentiment and emotional sentiment for Bitcoin will be just as important as public sentiment is for equities today.
How do you see the miners positioned in this Bitcoin strategic reserve transition or implementation? Could you see a scenario in which the government could perhaps invest directly in Mara or perhaps have a partnership with some miners like yourself and buy directly from you?
So the only reason for the government to try and buy Bitcoin from a miner is because they would want to buy Bitcoin that hadn't been in a wallet that may have been tainted at some point. Because miners are going to sell them at the spot price if they sell them, which the government could go buy in the spot market anyway. I mean, look at MicroStrategy. If anybody would have had a benefit of buying Bitcoin directly from miners, it would have been Michael Saylor, but he buys them in the open market because he knows miners won't sell them at a lower price. And most miners are hodling their Bitcoin anyway, like ourselves. So there isn't a lot of new Bitcoin going into the market. And as every halving goes by, it's less and less. So I think if you look at investing in the equity of whether it's MicroStrategy or Mara or spot Bitcoin, it really depends on what the objective is. If what they want to do is hold actual Bitcoin, they're better off holding Bitcoin because they don't have control over what Mara or MicroStrategy do with the Bitcoin by being a shareholder. And I don't really foresee the Treasury Department ever being a shareholder in companies like that unless it was because of a major financial crisis and they were doing a bailout like they did with the banks back in the Great Financial Crisis. However, I think people can look at proxies for Bitcoin like miners and like MicroStrategy. But ever since the ETFs have come, I think the interest in the miners being a proxy for Bitcoin has decreased. From a pure Bitcoin perspective, if you look at our company, we are valued. If you use the similar multiple of how many Bitcoin a company has on its balance sheet to its market cap from MicroStrategy and apply that to us, it would appear that the market doesn't value our Bitcoin mining business at all. They value our hodl. Right? So clearly there is a misalignment in people's understanding of the business, because we mine Bitcoin at a discount to spot as well as buying Bitcoin at spot, where MicroStrategy just buys Bitcoin at spot. So I think there's a transition happening in how people view miners. You have miners going down the HPC route, AI route, which is selling the future. We'll see how many of them manage to do that successfully. I think the CoreWeave strategy was a one-off. I don't think you're going to see other miners be able to do that successfully outside of Core Scientific. And then you have the pure-play miners like ourselves, CleanSpark, and Riot, who are very focused on mining. We're different in that we also own energy generation. We own a wind farm, we own flare gas, oil field flare gas where we generate electricity, all driving towards zero cost of energy. Because as a mining company, if our energy cost is zero, then we can mine no matter what the price of Bitcoin is, and we're not being stressed about having to upgrade our fleet all the time. Whereas if we're just buying energy off the grid like Riot or CleanSpark, then we have to every three years refresh our fleets, etc. So we're moving towards a different business model which is much more long term. And we'll see what those companies do up to the next halving, when things will get very different.
Well, let's talk about your company and your future plans. Do you foresee any changes to your strategy or core strategy and timeline now that we do have this idea of a Bitcoin strategic reserve?
Well, we're going to continue to grow our Bitcoin mining operations. Historically, we grew our capacity 3x in 2023. In 2024, we grew a little over 2x, and we'll likely continue at a similar rate in 2025. Our technology business is now starting to get traction with commercial customers. So we're starting to sell our liquid cooling infrastructure to folks in the mining space, and we're very actively involved with people in the hyperscale and AI space. We have a lot of exciting products in that roadmap for the AI HPC industry. We see a lot of synergies between what we do today in load balancing the grid and helping hyperscalers and inference AI operators balance their energy needs, and we think there's a great business model there. And we're very excited about what we're doing in the power world. So we think that we're really covering the end-to-end spectrum from energy generation to consumption and helping people optimize every little electron that they can get their hands on.
Okay, I want to comment on the price performance of miners versus Bitcoin. So this is Bitcoin. If you overlay this with Mara, you'll see that miners, including your company, have underperformed Bitcoin over the last year. I see a similar narrative among the gold producers as well. Several large resource companies have underperformed the underlying metal. The reason there, some speculate, is that investors are just more interested in tech, while they see less risk just buying the underlying commodity. Is that the same narrative in the Bitcoin space?
I think there's a lot of correlation with Bitcoin mining and gold mining, and that's very CapEx intensive. The difference is that in gold mining, you can time when you're going to exploit the underlying commodity. You're sitting on a gold mine. You can choose if the price of gold is low, you just don't mine, so you keep your OpEx low, and then when the price comes back up, you start mining it, and you didn't lose any gold. In the world of Bitcoin, it's a zero-sum game. If you're not operating your Bitcoin operations, every 10 minutes a new block gets awarded, and if you're not in that race, it's not something you can put on the shelf and come back to later, right? So it's a very CapEx intensive business. And there are some people who view the volatility, the beta if you would, that Bitcoin miners provide as a little too risky sometimes because of that volatility. And you saw people who saw the swings in 2022, 2023. And as MicroStrategy built their model, they don't have that CapEx risk that Bitcoin miners have. And so I think you've got this kind of you can hold an ETF, you can hold MicroStrategy, you can hold a miner. We are moving much more towards being an energy and a technology company where Bitcoin mining for us is a means to an end. And we believe that our model over time is going to attract investors because of the excitement around what we're doing on the technology side and the fact that we hold a lot of Bitcoin gives us an extremely strong balance sheet. I mean, at this point, we're over $4 billion in Bitcoin on the balance sheet, and able to have the optionality to do a lot of things in the marketplace.
Well, over the past five years, the Mara stock has outperformed Bitcoin by almost 100%, as you can see here. But I wonder what happened over the last year. Did you sell some Bitcoin? Did you reduce your balance sheet holdings in Bitcoin?
No, no, no. Actually, the only time we've sold Bitcoin was during 2023 when the price of Bitcoin was so low and our stock price was low that we didn't want to go in and use equity as a way to fund operations. So we stopped hodling and started selling Bitcoin to cover our OpEx. So we kept whatever Bitcoin was profit, if you would, but our OpEx we paid for with Bitcoin. As of January of this year, we stopped doing that and we went back to a full hodl. So that's the only period where we haven't maximized our Bitcoin holdings. But 2023 was a pretty big transition year for us. We grew from 7 exahash to over 23 exahash. And then starting this year, we started buying and owning sites. Up until December of last year, we didn't actually own any of the sites we operate. Today, we own over 65% of the capacity that we control, which is over 1.6 gigawatts of power.
