Kyle Herron is Chief Growth Officer at Frontier Mining, a cryptocurrency hosting and colocation services company. As a repeat founder, Kyle Herron is focused on catalyzing independence, innovation and entrepreneurship. He gave his first TED Talk at the age of 18 and has had a hand in starting more than 50 companies.

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Transcription

Scott Offord: We’re here today with Kyle. Ethan is our cohost. I’m your host, Scott Offord. Kyle, why don’t you just tell us a little bit about yourself first and how you fit into this whole ecosystem of the crypto mining industry.

Kyle: This big crazy puzzle of a world that we live in then. Well, first of all, let me start off by saying Scott, Ethan really appreciate you guys for a couple of different reasons. First of all for allowing me to be here. I’m extremely grateful for that, but secondarily, the fact that you guys are building these kinds of platforms in this industry means that you both are becoming huge industry movers and shakers. It’s a real pleasure to be operating in the same circle as you guys, it really is.

Kyle: I wish I… Yeah, absolutely guys. I wish I could say more about Ethan. This is my first time getting to meet you, but I can certainly say anybody that comes through Scott’s channels is someone that I have great respect for. Like I said, thank you guys.

Kyle: As for me specifically, my name is Kyle Herron. I’m the Chief Growth Officer and former, well, I shouldn’t say former, it feels former now, but I’m the co-founder of Frontier Mining as well.

Kyle: My partner and I started the business about two and a half years ago and it’s been a pretty wild ride. We started in a very, as I was mentioning this word a second ago, very circuitous path, which I think is a common theme in this industry. It wasn’t just, hey, we woke up one day and said, let’s go try to build massive 200 megawatt data centers. It was, we woke up one day and said, this emerging technology is really interesting. That’s where the conversation all got started.

Kyle: My partner and I, believe it or not, we actually met each other back when we were in second grade. We’ve known each other since we were about seven, eight years old. He grew up around the corner from me. After high school we split off in two different directions. He landed in New York. I landed in Southern California, and we were completely out of touch with each other.

Kyle: We always had this burning desire to want to chase whatever the future might be. Years later after college, we reconnected. I was running a consulting agency in a little bit further Southern California than where I’m at now, which is Los Angeles. A couple of blockchain companies came to me in 2017 and they said, “Hey, we want to do this ICO thing?” I’m like, “What is that?”

Ethan Zurka: I remember that.

Kyle: Once I found out what it was, I was still like, what is that? It was this really strange time, as you guys probably remember, where you were basically having pre-seed startups get funded with hundreds of millions of dollars. It didn’t really add up the way that it was supposed to in terms of building a real business. They came to us anyway and said, “Hey, we want you to brand and market us.”

Kyle: For me, as the savvy businessman that I am, I’m like, okay, well what exactly do you do? Then slowly and surely after that, I started to delve into this world of blockchain, thanks to these ICO clients that came to me, and then shortly thereafter failed their businesses because they didn’t have any real products, which by the way, was the common theme of the ICS at that time.

Scott Offord: Yeah.

Ethan Zurka: Yup. I remember those days.

Kyle: Yup, yup, yup. Like I said, this is a world of, basically, pre-seed startups is what we’re looking at right now. It was a world of ideas at the time. It still really is today. They had come to us and said, “Hey, let’s see what we can do together.” I fell into the world of blockchain because of that.

Kyle: Shortly there afterwards, I was doing just some retail investing. Then I met, well, I shouldn’t say I met, but I reconnected with my partner, my current partner and my really good friend Arland who had been… he was back from New York. He was in school there. He was back home. He was working a corporate job. He was absolutely hating it. They were just grinding him to a T. He came down to my office and he said, “You know what man, I’m really interested in getting in the startup world.” I gave him the whole razzle dazzle on what I was up to. I said, “Why don’t you join the team?”

Kyle: He comes and we start working together, and this was the question that forever changed my life and probably got me to this podcast today was he said, “Hey, do you pay for power in your incubator?” I’m like, “No, actually, we don’t.” At the time, we had free office space, free power for air conditioning, et cetera, which as it turned out, was going to make for a really nice mining environment for at least one machine.

Kyle: He says, “I’m going to bring something down here.” Two days later he shows up with this open air GPU rig, which to me at the time looked like PVC pipes and graphic cards. I had no idea what I was really looking at, to be honest.

Scott Offord: That’s what it is, isn’t it?

Ethan Zurka: Yeah.

Scott Offord: That’s all it really is.

Kyle: That’s pretty much what it is. That’s what most of our data centers are, too. Just PVC pipes and graphics cards.

Kyle: He comes down and he plugs it into our office. We had this little storage closet off to the side, where we had put some of our interns, we put them in the closet. We said, “Hey, we’re going to put this GPU miner in there with you.” We put it in, the room gets to 95 degrees in about an hour. Before I knew it, I had made my entrance into mining for the first time.

Kyle: The long short of the story is Arland, then, he really saw it. He was the visionary behind Frontier. He really saw this being an industry that was going to grow and further expand, particularly on the mining front because he comes from the IT world that understands conventional data centers. He gave me the razzle dazzle and said, “Hey, I’ve got this idea.” It was basically to build these GPU machines and to construct custom portfolios and packages for high net worth investors so that they could have exposure into crypto, but they could have collateralized exposure. That was really what made the pitch unique originally, because when Bitcoin was at 20K a GPU miner was a pretty damn good offer.

Ethan Zurka: Yes.

Kyle: Especially to these institutional guys who were basically just looking for your traditional real estate investment returns. If they were seeing eight to 10% a year, they were stoked. We were saying, “well, we’ll give you 20% a year. Oh, and you’ll get exposure to this new asset. Oh, and by the way, if this asset crashes, you can sell the graphics cards and probably recoup the majority of your investment.” It was a hell of a pitch. They ate it up, and that’s where Frontier really got started, was just basically selling these GPU machines.

Kyle: Arland and I, unfortunately, like you guys probably remember, shortly thereafter the end of 2017 the market said, hey, we’re going to just absolutely go to the floor.

Scott Offord: Yup.

Kyle: Yup, exactly. Arland I had just started our business. I had left my previous company to partner up with him to form Frontier, and we’re sitting there in Q1 of 2018 with a oh shit moment, if you know what I mean.

Kyle: We just dropped everything in our life to pursue this, and now the market is completely falling apart. Then it became a question of, well, are we going to do what the great entrepreneurs try to do, which is pivot, or are we going to completely collapse this business and move on to something else?

Kyle: What we did, actually, is we started to find that every GPU miner that was purchased through us, we had to put it somewhere. We had to actually place it somewhere, provide power, electricity, cooling. We were doing it in our parent company’s office. We were leveraging some data center space that our parent company owned. Our parent company, by the way, is an MSP, so they’ve been operating in the conventional data center space for some time. We just started, basically, plugging our clients’ machines in there.

Kyle: We threw up a form on our websites, said, “Hey, if you want, we can host your machines too, for 20 cents per kilowatt hour.” Some people came through the door and they said sure. It was just that crux of the market where people weren’t sure and they were like, well, it’s a traditional data center. I need to find a home for this. There weren’t that many hosts at the time, if you guys remember. That’s where our current business model began. It was about halfway through 2018 where we were basically just co-locating our clients’ machines, our GPU clients’ machines in our parent company’s data center. Shortly thereafter that we partnered up with an actual mining facility out in Indiana, and then the journey basically took off from there.

Kyle: To cut what could be a very long story, I can keep going, believe it or not, to cut a very long story short, after we made our official entrance into the hosting game back in mid 2018 in Indiana, we expanded pretty quickly from there. From that point until now, end of 2019, we’ve hosted clients and operated data centers in about six different locations in the US. We’ve been in Indiana, Ohio, South Dakota, Texas, Georgia, Colorado, and recently in Calgary, Canada. We’ve worked with about everybody in the industry, whether we partnered with them, white labeled them, shared clients with them, et cetera.

Kyle: We’re definitely… One of the things that we really like to emphasize at Frontier and here’s my two second just pitch on what makes Frontier unique, and I hope that other players in the industry can speak to this is, we really just value the growth of this industry more than anything. We think that the growth of this industry is going to show up, not necessarily from trying to take every single penny from every single client and every single provider, but instead the growth of this industry is going to come from building real, legitimate customer centric sustainable businesses.

Kyle: That’s what we’ve done. We take a very ethical approach to how we run Frontier. We try to make sure everybody’s taken care of along the way. Now we are entering 2020 with about 290 megawatts of power that we’ve got access to, and we’re pretty excited to see what 2020 has in store.

Kyle: That is the seven minute download of Frontier. Happy to fill in the blanks, but I should probably stop talking for just a sec here.

Ethan Zurka: Kyle, I have a quick question for you. Hopefully you’ve got better power rates now than 20 cents a kilowatt hour.

Kyle: I can promise you Ethan, it’s gone progressively down over the years.

Ethan Zurka: Awesome.

Kyle: To that same tea, it’s been an interesting journey figuring out how to get cheap sustainable power. I don’t think the writing is as on the wall as much as people think. Unfortunately, we all live within telegram forums, and now WeChat, WhatsApp, thanks to Scott. We’re on just about every platform. I honestly was never, I was barely ever using WeChat, then Scott’s like, “Hey, I’m going to start a hardware group in there.” And I’m like, Oh God, not another one.

Kyle: This journey to finding cheap power, it’s not just like, hey, let’s just go down to an oil drilling site in Texas and start grabbing flare gas, because you’re also now looking at it from the side of, there’s a lot of different factors going into finding good cheap power. It’s not just how cheap it can be, it’s what kind of environment, and what kind of political climate is it in, how much power really does exist. How long will that power last? Who is the power provider? Have they been the power team before?

Kyle: One of the things that we’ve really emphasized, Ethan… There’s one of our, that’s actually one of our team members, Steven. Hey Steven.

Ethan Zurka: Hi Steven.

Kyle: Steven’s a brilliant, brilliant, brilliant guy. Great to have him on our team.

Kyle: What we’ve definitely found is that it’s not about being the cheapest. That’s what we’ve really figured out, Ethan. It’s about finding that middle ground between customer centricity, sustainability, and cheap power. If you can build all three of those and maintain uptime for your clients, yes, your clients are not going to be paying two cents per kilowatt hour, but they’re going to be much happier in the long run.

Scott Offord: Yeah.

Ethan Zurka: Yeah, that absolutely makes sense. Yeah.

Scott Offord: Kyle, I, from what I know of you, you seem to be able to handle the small players and the big players everywhere in between. Why don’t you just tell us a little bit about how you would take on some of those smaller miners?

Kyle: Yeah, yeah, that’s a great question, Scott. We really look at it as we treat everybody the same. Our business, believe it or not, was actually built off of clients that had between one and 10 miners, believe it or not. We made our first major revenue mark as a company just taking the little guys because nobody else would take them. We’re like, hang on rest of the industry. If I take 100 little clients and I can onboard them and turn them on in a matter of a couple of weeks, and it’s taking you six months to find one big client, who by the way is going to be grinding you down on price, and is going to be looking for every which way to cut corners because the big guys obviously have more leverage and more buying power and I don’t blame them. We said to ourselves, Hey, let’s go for what the low hanging fruit. That’s really why we began with building relationships with smaller miners.

Kyle: The thing was smaller miners, too, that people I don’t think give enough credit for… I think Chad Louderback came on talking and chatted about this a little bit, is that the small miners tend to be the most savvy. They have to be, because if they’re going to survive in this space, they have to be able to know how to buy the right machines, how to make strategic set sales of those machines at the right time. Then they have to know how to run them appropriately. Whether that be certain mining management software, firmware, software, et cetera. Throughout the experience of working with the little guys, I think it’s actually taught us a lot about how to stay lean as a business in this space and how to survive in a market that really isn’t, at least in today’s market, is not really well suited for small clients.

Ethan Zurka: Yeah, I couldn’t agree with you more. Staying lean and nimble is, especially through the tough times, is a skill that these guys are building up. I think it’s going to be valuable for them in the future. As mining grows, as farms grow, there’s going to be farms that are going to be looking for these guys that have been through the trenches, and the mud and the roughest of the rough, to keep their farms mining optimally. A lot of people don’t see it that way, I guess. They’re just seeing it as surviving. I see this as industry job training that nobody else can give you.

Kyle: [inaudible 00:13:25].

Scott Offord: Yeah.

Ethan Zurka: Before I go into the next question though, I would like to thank our sponsors, NovaBlock. NovaBlock came here in North America and opened up a pool back in August, 2019. In four short months they’ve managed to become one of the top 15 public mining pools in the world. They believe that as hash rate shifts from China into North America, they want to be a part of that de-centralization. They want to offer their customers transparency and education, so they can be informed on what pool works best for them. Thank you, NovaBlock. Thank you.

Kyle: NovaBlock.

Scott Offord: Yeah, NovaBlock. We have a special offer today from our sponsor, NovaBlock. You can go to their website on the top right hand corner, there’s a sign up button. When you’re signing up, use the invitation code Offord18. O-F-F-O-R-D one eight, and you can get a permanent reduction in your mining fees down to 1.8%. Also, if you have a lot more hash power to throw at it, you can get even a better rate. Just talk to Vincent at novablock.com there, and give it a try. Thank you.

Kyle: Pretty good deal.

Ethan Zurka: Kyle, I wanted to ask you, now that you’ve been through what you’ve been through, what are some hard stops that you’ve put into place to make sure that the next two years are going to be successful for you in mining?

Kyle: You mean the strategies that we’ve put in place? So we can stick around, basically.

Ethan Zurka: Yeah, yeah. You’ve survived the crypto winter.

Kyle: We’ve survived two crypto winters it feels like, because the last couple of months have not been super friendly. Then the thing that people also didn’t take into account is that, yes, we did survive the crypto winter, but we also survived the crypto summer. I don’t mean when crypto was booming. I mean when we just had the hottest summer on global record a couple of months ago, and I was trying to run data centers in Georgia and Texas. It presented a lot of challenges. Kudos to our team. I’m very, very fortunate to be working with some really talented people who are able to mitigate really challenging scenarios.

Kyle: Secondarily to that, fortunately clients get it, too. That’s one of the things that we really value in our business. When you talk about, Ethan, how have we made it this far knowing that a lot of roadblocks have been thrown our way, I give a lot of credit to our clients. I really do, because it’s a hard space, number one, for them to operate. Then number two, it’s even harder to host your miners in a data center that is not going to guarantee you 100% uptime because I can’t give you that cheap rate if I do guarantee you 100% uptime.

Kyle: It’s a constant ebb and flow of trying to understand as a client, shoot, this market is really tough. I need to make sure my miners are online 100% of the time, because I’m looking at this as on an ROI clock and I’m looking at… A lot of miners, unfortunately they liquidate really quickly, so they’re basically looking at what Bitcoin’s value is today, not what Bitcoin’s value is going to be in five years. It’s unfortunate, but they have power bills that they have to pay at the end of the day.

Kyle: Then on our side of the table, we’re sitting over here like, man, this is tricky. You have these super hot summers, you’ve got data centers that are going to experience issues, whether it be from heat, from power failures, et cetera, and so how do we weather those storms? A lot of it is by creating a really transparent, open relationship with our clients. By creating that collective consciousness as a business, where our client, just like a client in, to a degree like a client, think of it as an advisor role in a young company where you get to see some of how the company works. That’s the relationship that we have with a lot of our clients. I think because we bring them into the fold, because they’ve been with us since day one, they have a greater appreciation for what we do and they ride the waves with us and the storms that have brought challenges to us. Our clients have been our biggest supporters through that time. That’s part of the reason why I think we’ve been able to get through what we’ve gone through.

Kyle: Now secondarily to that, of course, one of the easiest ways to weather a storm is by creating strong industry relationships as well. I would say that’s the second piece. If you’ll note the two first pieces that I mentioned have nothing to do with good infrastructure and cheap power, because to us, you can’t survive unless you have good infrastructure and relatively inexpensive power. I almost look at those as being the lowest common denominators in the space. If you don’t have that stuff taken care of, there’s a good chance that you’re not going to be able to… You guys hear that?

Ethan Zurka: Yeah.

Scott Offord: Yeah. Somebody’s house burning down?

Kyle: Somebody’s house… Oh, there it goes. Okay. Someone’s house was burning down. Like I said, hot summers, man.

Kyle: As I, what I basically was saying is that the lowest common denominators in the space are having great infrastructure and inexpensive power. We know that those are needed, but how do you differentiate yourself beyond that? Again, great relationships with our customers and then great relations with industry players for sure.

Scott Offord: Right.

Kyle: I look at guys like Scott. I’ll give a couple of shout outs here. I look at guys like Mason from Blockware Solutions, guys like Joseph Stefanelli, guys like Jim Musgrave. There’s a long list of people that we’ve gone above and beyond to make sure are continuously taken care of for two reasons. Number one, they’re friends of ours. Bottom line, everybody in this industry has become a friend. If you guys have been to some of the conferences, you see how familial. this industry really is. There’s definitely an underlying brotherhood, sisterhood type of thing going on, but realistically more of a brotherhood. We’re working on getting more women in this industry.

Ethan Zurka: We are.

Kyle: Frontier is actually about 40% female, and we’re pretty proud of that.

Ethan Zurka: That’s awesome.

Kyle: We’re continuing continuing to try to bump that number up. In any case, what I was mentioning is that we really try to make sure that we take care of everybody that we work with because we find that in this industry, what goes around comes back around and if you burn one bridge, you’re likely going to burn a lot more.

Scott Offord: Yeah.

Kyle: We definitely value relationships in this space a lot. Then I think, of course, the third piece, going back to the hard truths, Ethan, of running a business and mining is, we’ve definitely spent a lot of time figuring out how to effectively run a mining center.

Kyle: Now that we’ve been able to operate in multiple states and multiple jurisdictions with multiple texts and with just this huge, huge long list of different miners that we’ve had hosted with us, I think we’ve figured out a lot of the best practices now in terms of what it takes to run a business in this space. We’re far from perfect. I think there’s a long ways that we have to go and many players in the space have to go operationally to being able to make a client feel like they are your top priority.

Kyle: The fact of the matter is that when you’re running a big data center and you’ve got clients who are as small as one to five miners, and clients that are as big as, 1000 to 2000 miners, a lot of what we try to do is figure out how to be operationally efficient enough so every client feels like they’ve gotten equal value and weight within the organization.

Kyle: As a startup like Frontier, that was only built two and a half years ago, but has now scaled to where it’s at today, I think operational efficiency is a really key component in the data center, in the infrastructure, in the power and in your relationships with your clients. Finding the balance between those four pieces is definitely something that we continue to strive for. We’re pretty excited about where we’ve come today and what we’ve currently got under our roof, because we’re doing that, I think, pretty well now. Shout out to our team for making it all happen.

Scott Offord: Nice. One thing that I wanted to ask you is, what do you think will be the backbone of technologies of the future?

Kyle: That’s a great question, Scott.

Scott Offord: I know it is.

Kyle: For some reason I feel like it would be a question that I would write.

Kyle: When I look at the technological backbone of the future, I think that mining is actually driving a lot of that trend. That’s why that question is really interesting to me. Here’s the thing, and I’m not a data center guy, so I’m sure there are many smarter people than me out there that could answer this question better, but here’s what I do know. I know that data centers are very expensive, and I know they’re overbuilt. It’s just, it’s been a reality for a long time. The problem is because they’re very expensive and they’re very overbuilt, you end up having an end cost out the door to the client that is also very expensive. Because the price is so expensive to a client, we now also are limiting the client’s ability to diversify their risk. What I mean by that, is if you look at like what traditional data center infrastructure is, in an ideal world, you’re distributing… I don’t know why that keeps going off guys. Sorry about that.

Kyle: Did you mute yourself?

Ethan Zurka: I was letting you know that my mic was actually turned off. I don’t know where it’s coming from, but it’s not me.

Kyle: I don’t know where it’s coming from either. I think it’s a good chance it’s coming from here.

Kyle: If you look at traditional data center infrastructure, the bottom line is if you want, if you’re trying to create a decentralized storage, right, for example, and you want to do a private decentralized storage, so you’re basically distributing your assets across multiple physical locations. In the crypto and blockchain industry, you’ve got companies like Filecoin, or… What’s that… Scott, help me out here. It’s the decentralized storage system behind Filecoin. IPFS, right?

Ethan Zurka: Yeah, the Cycoin?

Kyle: It’s the InterPlanetary File System, right?

Ethan Zurka: Okay.

Scott Offord: Okay.

Kyle: IPFS, where basically what you’re doing is you’re just distributing assets across multiple nodes on the network, effectively. I look at, now we’ve got the ultra decentralized world of crypto mining, where basically you can effectively power the network out of your home. With the IPFS you can basically partake in this decentralized storage model out of your home. Then you’ve got the fully other side of the spectrum. The polar opposite of the spectrum, which is traditional data centers, which are these massive physical locations that really, because of size, infrastructure, weight, et cetera, cannot be as easily distributed. Logically, there’s a middle ground to that. That’s where I think that the technological backbone of the future is to be found.

Kyle: What I see the future looking like is actually, I see data centers looking a lot like mining centers where you’ve got things like… Let’s just break it down to really simple terms. Take a storage container for example, which is now these 40 x 8 storage containers have been converted effectively into mining centers. Well, think about it like this. If we’re talking about technological backbone of the future, every major city of the future wants to become a Singapore. It wants to become on the bleeding edge. It wants to be able to have computer vision in its stoplight. It wants to be able to have blockchain running its logistics systems. These future cities are going to require a bunch of computational power, but the only way to be able to acquire that computational power is going to be, theoretically, by effectively renting it from data centers.

Kyle: The problem is then you have the latency issue, where if the data centers are so expensive to build out, they’re going to, at the end of the day, they’re not going to be as widely spread out as we would like.

Kyle: Then when you have something like a Google Stadia or Google Stadia project, which is Google’s cloud gaming initiative… Theoretically, if you want to be able to decrease latency and run a game on your computer at full speed, you need to have a data center that doesn’t have any local hardware, you need to have a data center that’s within a stones throw from your location. Again, very challenging to do because of the cost to build.

Kyle: It gets to my final point, which is that what if there was a world where we were able to take your traditional mining infrastructure and you’re able to basically put it adjacent to all major cities? Within that mining infrastructure you would have traditional server infrastructure. Say you took a 40 x 8 storage container and filled it up with Xboxes, and you put it directly next to a suburb of Los Angeles. Then all the kids in that local neighborhood now could basically play an Xbox without any latency issues. On Microsoft’s side, they’re able to deploy it for a significantly cheaper cost than if they were to go build a full data center. It’s a very long winded way of saying, Scott, that I basically look at the technological backbone of the future as being really fragmented and really distributed. I think it’s going to become more effectively distributed by being able to use the practices that we’ve taken from our industry.

Scott Offord: Yeah. Well, it sounds like it has a little bit of a commonality with the the 5G network that’s that’s coming up and how instead of having these towers that are further apart, you have a smaller towers closer together, and really just more of a mesh system going on.

Kyle: 100%. Yeah, that’s where I see computational power going and, of course, the logical next step from that is, okay, so we’ve decreased latency, we’ve decreased costs to build, which means we’re decreasing operational costs to the end customer. Well now we’ve got… What’s the next question I always love answering, and I’m actually kind of curious to hear your guys’ perspective on this before I give mine, because I preach this all the time. What do you think the evolution of mining looks like? What I mean by that is not necessarily what does the next S17 look like, but more of a, what is the future of monetizing computational power look like? I’m really curious to hear your guys’ thoughts on that.

Scott Offord: That’s a good question. I wouldn’t say I’m necessarily an expert on it, but I think like you were saying, there’s all sorts of different types of things that can be computed, whether it’s self driving cars or cryptocurrency, whatever needs to be processed. Video rendering. I’m just really excited that we are in this, the very beginning, the startup of this new industry that’s coming around. What do you think, Ethan?

Ethan Zurka: I’m a firm believer that we’re going to move away from conventional and traditional manufacturing materials, copper, gold, silicone, and we’re going to segue more into these new novel materials. Graphene, carbon nanotubes, which is basically graphing, and optics using glass instead of copper wire to transmit data. An interesting fact is, a lot of people think that electrons move through wire at the speed of light and that’s not actually the case. They actually move at about a third of the speed of light. By simply replacing the wires in a transmission system with fiber, with optics, we get very… We can run 99.9% the speed of light. That would speed up even the greatest technology that we have today by a factor of at least three just simply by switching over to those technologies.

Ethan Zurka: I believe the next big breakthroughs that are going to be happening is we’re going to switch to different manufacturing materials and manufacturing technologies to increase our compute power and increase our efficiency. A lot of people don’t understand is, what’s slowing that electron down through that wire is resistance and that resistance gives a side effect of heat. When light travels through glass, it has very little restriction, very little resistance and doesn’t give off any heat or very, very little heat. Just by simply changing those materials will increase our efficiency by magnitudes of thousands. That’s where I see things going.

Scott Offord: Yeah, that’s coming. Yup.

Kyle: Ethan, hell of an answer. Scott, your answer sounded a lot more like mine. We are clearly not as intelligent as Ethan is, but I think it’s fascinating to see where the two worlds blend. Ethan basically talks about, well, okay, you guys are right. Yes, the future computational infrastructure is going to be distributed. It’s going to appear in many forms. It’s not just going to be mining, it’s going to be all these different ways that we can trade computational power. Ethan looks at it from the perspective of how do we do it faster. That’s the same perspective that I look at it from, is how do we do it faster, which is why I was talking about this many distributed data center model where you’ve got containers theoretically placed adjacent to major metropolitan cities, where you can decrease latency for local applications.

Kyle: That kind of leads into basically how I look at it, Scott, which is the same way you look at it, which is that mining is not the end all be all for the trading of computational power. That’s what I look at mining to be. That’s all. It’s me saying to the blockchain network, let’s personify blockchain for a second, “Hey blockchain, you want to use my computer?” “Yeah, sure. Can I pay you before it?” “No problem man.” Unfortunately you can’t set a flat fee on what the blockchain network will pay you. It would be nice, but the blockchain network, of course, thanks to difficulty and the price of Bitcoin, is constantly fluctuating like what you actually get paid at the end of the day as a miner.

Kyle: That being said, I think that there is going to be a model that exists where we are able to create a much more attractive offering to institutional players who don’t necessarily want this incredibly volatile exposure into crypto. That’s where we get into the world of, basically, HPC or high processing compute, high density compute and that, it will manifest in some of the things that Scott said, which is film rendering, AI, deep learning, cloud gaming, cloud computing, cloud storage. There’s a long list of items that have massive computational demands.

Kyle: I think that what we’re going to eventually get into, my guess, you heard it here first guys. My guess is that a lot of the miners that we are currently buddies with, especially the guys who have significant capital deeply involved in this space, my guess is that within the next two to three years we’re going to start seeing 20 to 25% of their operation dedicated to specific GPU infrastructure that can be utilized for these other purposes. The reason I say it’s not going to happen today is because the demand for it is not there yet. That’s the main, that’s the primary issue. The demands for it is not there. There’s not enough, basically, independent film rendering jobs out there, like the major players, like the Pixars, et cetera. They’re going to massive data centers like Switch, for example, out in Vegas. They’re saying, “Hey, we’ll put our GPU infrastructure there.”

Kyle: When we start having your buddy down the street, who just got a brand new Canon Red and is shooting in 8K and can’t edit his film locally, I wouldn’t be surprised if he went to a marketplace like a computational marketplace and said, “Hey, I want to go rent this GPU for a three hour period to render my film.” The cool thing is that hey, Scott actually owns that GPU, and even better, that GPU is in my data center. The cool part of this ecosystem now is that Scott comes to me and says, “Hey Kyle, I’ve got you. I’ll pay your 13 cents, 14 cents per kilowatt, hour rate.”

Kyle: The reason Scott’s paying more is because I have to offer him traditional data center infrastructure, but it’s even better news for Scott is that he is not trying to mine Bitcoin anymore. He is selling computational power, which has, how do you value that? You can only… There’s no… Basically, you value it based off what the market’s currently paying, and right now a Pixar will pay 35 cents per kilowatt hour to render a film.

Scott Offord: Wow.

Kyle: Now we’re talking about Scott, instead of going and making 10, maybe three, $4 a day with an ASIC, he’s making 20, $30 a day by doing film rendering projects, and he’s making it in a fiat currency, which I know to all of the Bitcoin of Angeles listening to this podcast-

Ethan Zurka: No.

Kyle: … No. Not fiat. I still think fiat has a place in the world, and that if anything, go convert it. Go buy Bitcoin with it. At least you know that you’re going to be getting a guaranteed return versus a, one day I make 20 cents and one day I make $3. You know what I mean?

Scott Offord: Well, I don’t know. I think within the next two or three years that that might be a reality where we don’t have to do that kind of thing based off of a fiat dollar.

Kyle: Yes. 100%.

Ethan Zurka: Yeah.

Scott Offord: We’ll see. Hey Kyle, it’s been a great time talking with you. We’re going to wrap it up here. Thank you for personifying blockchain like that.

Ethan Zurka: Yeah.

Scott Offord: Why don’t you just quickly tell us how we can find you online and how our audience can follow up with you.

Kyle: Yeah, absolutely guys. Well again, Scott and Ethan, it was a real pleasure.

Ethan Zurka: Yeah, likewise.

Kyle: Thank you guys so much for having me here. Great to chat to you guys. I could talk about mining all day with a couple of other industry experts. It was a lot of fun.

Kyle: In terms of Frontier, we’ve got a couple of quick exciting updates I want to let the audience know about. We’re launching a new facility in Calgary, Canada that I mentioned. It’s a 200 megawatt natural gas site. It’s going to have all of the bells and whistles of a great mining site. We’re really excited to share that with the world, and get that going in Q1 of next year.

Kyle: We also have our facility in Colorado that’s an indoor facility, 90 megawatts with approximately 15 megawatts of infrastructure ready to roll. If you’re looking for a home for your new machines, please feel free to reach out.

Kyle: In terms of how you can find us, we’re pretty easy. You can actually just go to Google and type in Antminer hosting. We’re the number one result on there, which we’re pretty proud of. You can also go to frontiermining.co, and you can find me on basically every single platform that exists out there. A really easy way to reach us is just by going to our website and submitting a form, or chatting with the little AI bot that’s on there, and he will get you right into my inbox.

Kyle: We’re excited to continue the conversation. If you guys, if the world of mining is listening, anyone needs anything, I always say I’m happy to help, whether it means growing Frontier or not. Like Scott and Ethan, I think we’re all here to collectively grow this industry and we’re happy to do it any way we can.

Scott Offord: Thanks again to NovaBlock, Novablock.com. They believe that as mining is shifting from China to North America and other parts of the world, that it’s going to become a leader in the industry and you can try out their pool. We have an offer right now. If you go to their website, sign up, and type in Offord18, that’s O-F-F-O-R-D, one eight while you’re signing up, then you can reduce your pool fees down to 1.8% for life. Or like we said earlier in the show, if you have a larger amount of hash power that you can put to this pool, you can even negotiate a lower fee than that. Thanks for everybody for watching.