On February 18, Crypto Mining Tools Podcast will interview Eli Rouimi about mining adventures in Venezuela and his idea to build a strategic revenue-share alliance with the government once the US sanctions have been removed. One of Eli’s companies also supplies bitcoin ATM machines in Miami with the mined coins, selling them at 15% above spot price. Eli helped found the Blockchain & Crypto Mining Association (BCMA) for the purpose of having a trustworthy network and also to protect the interest of mining and regulation.

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Transcription

We’re live. All right. Welcome to the 16th crypto mining tools podcast. And we have our cohost here, Ethan. Hey everybody. And our special guest, Eli. Hopefully we did your name justice, right? That’s right. All right. So yeah. Eli, why don’t you just tell us a little bit about yourself how you’re involved in this whole crypto mining industry and you know, what, what you’re kind of up to these days.

Yeah, definitely. I mean, I have a background in real estate, so I started with real estate. I’m doing vacation rentals and distressed mortgages. And after missing the the.com boom when I started seeing blockchain and crypto come into play you know, a friend of mine was doing mining and his it has garage. And you know, I was quite intrigued as to how for the first time in human history we can actually, you know, print our own money. So I thought that was pretty cool. And then after reading a Bitcoin magazine that’s really where I got bitten by the crypto bug and understood exactly the future of blockchain. With a few other technologies, like see a technology that was really you know, mind blowing for me. And so then I started a mining farm in a a little bit in the U in, in Miami, but mainly in Canada. So we started out in Montreal made our way to Miami. And then, you know, when, you know, now since we’re seeing that, obviously it’s not so profitable in Miami anymore, just tried to consider you know, some international locations.

Just out of curiosity, you know, you said you looked into it and you’ve got you, you know, excited about it. What, what specifically like caught your interest? Was it the idea of, you know, being, being free from the current financial system? Or was it something else?

That’s a good question. The, you know, definitely, like, definitely from a financial system perspective, I’ve been affected. For example, in my vacation rental business a few years ago, I almost went out of business when I had too many chargebacks from my, you know, people coming on vacation. And what happened was the merchant decided to freeze my account and not give me a weeks and weeks of, of credit card processing, you know, which a very large sum of money. And I found myself without getting money that I had to, you know, I knew I was, I was expecting to pay my property owners. So imagine here I have to pay property. I want all the rental revenues for the rooms that have been booked from their properties. But I didn’t get that, those funds because the merchant decided to freeze them for six months. So that’s when I realized that six months you know, they just want to make sure there wasn’t going to be any more chargebacks and this has nothing to do with my operational.

I did my operation right. It’s just the booking channel. We were using booking.com that was collecting the guests credit card. They stopped collecting the guests, a billing address. And as a result, we, there was no match between the address and the customer’s credit card so people could just submit their credit card. It could be a fraudulent credit card. Now I delivered this day. So they stayed in the property. But I didn’t get the my money until six months later. I had to take loans out. I literally almost went out of business and that’s when I realized that the financial system that we live in today is so messed up where basically they are in control of your, of your funds. You know, you’re not really in control of your own money. Absolutely. You know, and this is why I’m so excited for Bitcoin transactions to take us fans and where they’re used on a daily basis in everybody’s business and become so regular that we can start receiving our funds in a, in a nonreversible way where chargebacks pretty much go away.

Well, I mean even beyond that, you know, I suppose there is a legal remedy, like, you know, if you had the additional funds to hire a lawyer, you could then show, you know, this costs me this much. You know, I had to pay this much in interest and you know, it gave me this much of a hardship and you could possibly get, you know, compensated for that back. But our system is so messed up, you’re absolutely right that, you know, there, there really is no real recourse for an everyday person. The financial system totally controls our money and they told to control us by controlling our money. So, yeah.

So Eli, what are some other things that you’re into? I know that you’re actually on the board of directors with me along with some others on the BCMA

Of course. So when we started you know, when it was actually at the, the North North American Bitcoin conference blockchain conference in Miami, and basically this was two or three years ago, we I was, when I started mining, I didn’t have anywhere to go. So I posted on on, you know, one of the ops that they hide any minors to join me in the lobby of the building. And then from there we were able to get a whole bunch of miners together and actually turned it into a five Oh one, three C nonprofit organization. So a very, you know, fortunate to be sitting on this board and have you know, you guys as partners in this you know, amazing nonprofit organization, which now amazingly has grown very big and very fast and has created a trusted network where basically we can do business with other minors.

And you know, network and, you know, basically have a place where we can vet other vendors where we could be educated, have access to information. You know, the whole idea of creating this a nonprofit was to, for me, for me personally, I mean everybody has their own opinions, but for me personally was to basically create a place where we can all share what we know without feeling this competitiveness and you know, just help each other basically. And what we’re doing, of course, we’re all here to make money, but at the end of the day be there to support each other and give us each other resources, which I think a lot of you have an amazing job. And really getting that into play. And the second reason why I was interested in doing this was because I I, I forced our regulation taking place in, in, in mining.

And I was very afraid that, you know, it’s going to come the day where you know, governments could be knocking on our door trying to regulate mining and requiring all sorts of money transmitter licenses. Because if anybody, you know, right now it’s, it’s, you know, only the men can create currency at the present time. So if essentially for us to be able to do that, I mean, and, and, and have the governments, local governments educated as far as, and also local utility companies educated as to what it is we’re doing. And when regulation does come around the corner that we’re, we’re, we’re United and we can work together towards making sure misses are preserved and that blockchain is protected.

You know, you, you make an excellent point there. On several things. The first question that I’ve got for you is you’re saying that, you know, right now, of course there’s competition, but you know, everybody’s friendly, everybody’s kind of trying to help some, you know, help out everybody else because we’re trying to grow ultimately the industry. When do you think the turning point is going to happen for that? You know, eventually we’re going to kind of all become our own conglomerates and we’re going to all have to, you know, stop doing that. When do you see that happening?

It depends. I mean you know, I guess in what sector of blockchain. But I think within mining I think regulation is really gonna play a role because once mining gets regulated, it’s going to kind of separate the guys that are doing this as a hobby versus the guys that are doing this for a living and, you know, have a longterm financial plan. To me, ma, you know, when it comes to mining, it’s, it’s, it’s very questionable as to a future of mining. I really have a hard time grasping what, you know, the, you know, 20 year plan, 15, 10, 15 year plan. Because, you know, we just have to go through, you know, for example, the upcoming having, I mean, nobody really knows exactly what direction and things going to be better and worse. I mean, there’s so many question marks.

So, you know, it’s, it’s, it’s kind of it’s not like what I’m used to in real estate where you know where you’re headed and where you have so much historical data to work off of. You’re kind of shooting in the dark sometimes and hoping for the best. And so it’s, it’s, it’s, you really have to have a good financial backing. In my opinion, if you know, once especially like things like, you know, regulation come into play, which I think will be good. I mean, I think regulation over time is going to be helpful because that’s going to create a lot more adoption in the marketplace. And I’m just, you know, it’s, it’s, it depends, I guess, which industry you’re in and what your, where you’re planning on non-working instead of watching space.

So yeah, I, you know, it, it’s definitely interesting from a, a revenue standpoint. You know, and it’s good to be diverse in what you do. So you, you said you started out in real estate and now you’re doing some mining. It sounds like you also, we were talking offline and you said you also have another venture that you’ve started recently.

Yeah, we have a few projects underway right now. You know, one project is we’re looking to get a we, we have, we presently have launched a ATM business. So that’s quite exciting because actually that, you know, talking about the money transmitter license, I mean, I’ve had to do that for the state of Florida. You know, and, and you know, the idea was to have a a place marketplace to create my own marketplace from my mind coins. So in order for me to feel like I’m best rewarded for my mining efforts, rather than just selling my BTC on the open market, I can supply them to my UTMs at a marker. And this is a markup, I mean, is generally anywhere from 15 to 20%. And people are ready to pay it. I mean, why?

I, you know, it’s, there’s different opinions. Other reasons? Yeah. I mean, I think I know what the main reason is and I feel that it has to do with remaining anonymous. So when someone deposits a hundred bucks into an ATM and he’s paying $15 fee and only receiving $85 in crypto two things. Number one, he believes he wants to remain anonymous and, and, and just own that BTC without having to go through any type of KYC, which we do have of course, KYC, AML procedures in place, but they’re only required for usually more than a thousand dollars a day. So if somebody deposits 20 bucks, we do not have the requirement of going through that entire KYC. Some, some ATM companies do they, you know, they take a, maybe a cell phone number or an ID or, or our credit card, whatever it is. But we don’t require it for anything less than a thousand dollars.

I mean, that’s what we have built into our KYC policy. Some companies have more or less, you know but basically the idea is that we want to remain what blockchain is set out to do and what Bitcoins it’s really set out to do. And that is to be a to remain, to keep these transactions anonymous and for chat more peer-to-peer really. Yeah, exactly. I mean, when it’s, and the way I look at it is when you go to the store and you buy a chocolate bar, do they ask you for your ID sometimes?

What kind of chocolate bars are you? What’s, what’s there in Miami? Was CBD being so popular and all these great, you know, these infused everything. But basically you know, so, but that’s the way I look at it. I mean of course when you come with a luggage of money and you’re like, I want to buy your store and buy all your stock, you know, then you start asking questions. So, you know, we just made sure that we’re compliant. Of course there’s a lot of marketing that goes into it. We have to do, we have to, we use coin ATM radar, which lists the ATM on a map. And then basically you know, I know effectively what it costs me to mine each of those coins. So when I’m supplying those BTC to my wallet connected to the ATM, I can set a minimum price. So if, if just for example, let’s say the BTC costs me $9,000 even if the price of VTC went down today to 8,000, I can still set a minimum of 9,000 with my markup. So it kind of protects me from always being in the green.

What might happen in that example? A, if somebody tried to use the ATM, you know, and there was like a, a flash crash and it wasn’t recovering anytime soon, but somebody wanted to buy from that ATM does it basically just say there’s nothing available today or

No, it’s just always available at that high price. Exactly. So

What happens is, what I try to do is I try to keep every ATM with not more than about $500 of BTC at a time, so that if we do experience a sudden drop, you know, I just have to sell out the last hundred dollars left of that of, of that wallet, and then I can go ahead and make a new purchase of BTC at the new price. So, so far we haven’t had to experience that. I mean, maybe it’s cause I’m pretty new in the business, but you know, we’ve, you know, we’ve, we’ve, we’ve, we’ve protected that by only having a limited amount of BTC and the that at a time.

So there is a BTC ATM, like literally just up the street from my house. And I was watching a guy use it and you could see on the screen, it was crystal clear. This is when when Bitcoin just crossed over nine K they were charging $11,000 for a book. There was, there was that much margin in it. And I went to the guy and I said, you know how much a Bitcoin really cost? It’s right. And he had no clue. He had no clue. So, you know, I pulled up on my phone, I, I opened the coin days and I said, yeah, it, it just crossed over 9,000. He’s been tracking the value of Bitcoin only by looking at the ATM price. He hasn’t been going online. He hasn’t, you know, gone a trading view or he hasn’t Googled current Bitcoin price that, that’s his only knowledge of it. But you know, he, he’s constantly buying Bitcoin. Like we have people like that in this industry. And so, you know, every time I think, ah, you know, maybe this industry is saturated or you know, maybe it’s, it’s not going to grow. I then think about guys like him and you know, how much more,

You know, probably what, like nine out of 10 people you speak to don’t even know who, what Coinbase is and that they can buy Bitcoin on an app on their iPhone. You know, that’s, that’s surprising. I mean, I, I think as long as people are not gonna know what Bitcoin is, we’re, we’re going to be pretty busy. But, and at the same time you know why I saw this as a, as you see, I, I kind of got hurt very badly with the price of our minors. The value of our minors dropping so fast, so quick. And I, and in the ATM space, you don’t have that because in ATM and ATM, cash dispensers, a cash dispensers, CPU, and the CPU. So, you know, I, I like the idea of spreading my capital between, you know, something a little bit less risky, which I find that the ATM business is less risky because you’re not dealing with the volatility of the pricing of machines.

And of course you’ve got some ones that are better, someones that are are, are worse, but at the end of the day, you know when you’re going to pay off that ATM machine, it’s just going to be green from there. But at least you know, I have an exit plan where if in six months, a year, two years, it’s not as popular anymore because ATM machines I dunno are like for example, one, one, one thing I know is that when payment terminals in stores are going to include crypto, then what’s the point of the ATM at that point? Right. I’m talking about a terminal where you can swipe a credit card or where you can go to a cash register and just give them cash and get Bitcoin where it becomes completely fungible. Easily interchanged between.

Exactly. Then then what’s the point of the ATM? You know, so the ATM is really to eliminate is because right now there’s no education, there’s no process set up involved where basically somebody can go to any store and buy some, I mean, you can’t buy, it’s like if you buy, if they made them in the form of a, of a gift card, you know, and you have like 50 bucks a hundred bikes, you know, then you know, which I saw like, you know, you have people like ballet for example, you know you know, Bobby Lee, he’s, he’s, he’s, you know, I, I when, when I was with him like couple of weeks ago, you know, his, you know, we were thinking of maybe doing some sort of interchange where people can actually have a physical wallet and, you know, dispersed from the ATM machines. You know, or they can just be purchased at the store.

Yeah. In Miami. I saw some very interesting, you know, interesting solutions to that. And it would be very interesting to see the ATM industry partner up with, you know, some of those other solutions, you know, physical solution.

Yeah. Which we are doing now. I mean our ETFs actually prints out a paper wallet on a, on thermal receipt paper as of now. So we do have that as an option. But you know, it looks fancier on a nice shiny card, right?

Sure, sure. Or you know, even if you had a card that could store, you know, multiple wallets or you know, just handle the transaction of going from the wallet of the ATM into the wallet on the card. Like,

Yeah. Yeah. Well you could do that. I mean, you could do that today. I mean, you just have to point your QR code to the camera of the ATM and you know, your, your, your crypto will be deposited within seconds. Let’s take a little break. Ethan, why don’t you tell us a little bit about our sponsor here?

Yeah, I, I definitely like to give a shout out to our sponsor Novablock here. They came, what was it, a summer of 2019 to North America and in that short period of time between then and now, they’re now one of the top 15, not the top five. I have to correct myself. They’re not one of the top 15 mining pools in the industry. And they believe that as mining becomes less centralized and China becomes more decentralized and transitions into North America, that they want to be here and they want to be one of the, you know, the major pools here and they believe that, you know, it’s educating their customers about you know, their pool technologies and having transparency with their pool services, gives them an edge, gives them an advantage in the industry. And if you haven’t tried them, try them out. Scott’s going to give you an offer now that they have specifically only through us.

So if you go to their website and Novablock.com on the top right hand corner, you can sign up and when you’re signing up, there’s an invitation code that you can actually add. It’s OFFORD18. And what that gives you is a permanent reduction in your pool fees down to 1.8%. Now, if you have a lot of hash rate that you’d like to try out here, we can get a little bit lower than 1.8. But just definitely go to Novablock.com and try out this invitation code and check them out as as a Bitcoin pool. All right, let’s get back to Eli here. All right. So there you are. Oops. Yeah. So tell us a little bit, you told us that you started in Canada with mining and now you, you went to Florida, but the electricity costs were huge there. What other ideas are you exploring in, in other countries and, and what, what are your thoughts on, on mining and other countries?

So basically, I mean you see, we thought that Canada was going to be the solution, so we started with Canada. You know, and you know, I’m actually originally from Montreal, Quebec, and just like anything I’ve seen growing up in Montreal, one of the reasons I’ve left besides of the Colt is that I realize that whenever something goes well and come back the Quebec government just basically gets greedy and starts, you know, taxing and making things more difficult, which is exactly what happened. You know, at first hydro Quebec opened their doors and they actually posted on their website, you know, minors, 3 cents per kilowatt. This is the energy company. Okay, I’ve got, this is a Hydro-Quebec we’re talking one of the largest suppliers. Then they wrote, they wrote, yes, you’ve read it correctly. Like, like, this is for real,

Like a, like a legal promise. Exactly. So what happened? I mean, you know, everyone’s getting excited. Even China is moving their operations, starting to scout, you know, people are getting jobs, all that, you know, real estate is booming. And Quebec you know, people who would normally charge 20 bucks a foot for their warehouses are charging 50, 60, everything’s going crazy. And of course, just like anything, what happens? Quebec says okay now that we got your attention and we got you guys to all move here, boxes, we’re going to increase taxes for this. You can have to get a mining license and you’re going to, I mean, people were like, what’s going on? You know? So I literally, when I started feeling, so, so, you know, my father was helping me with vocations and as you know, we start, you know, seeing this come to play, I immediately said, you know what?

They’re doing it again. The reason why Hollywood left Montreal many years ago is because Hollywood became very popular in Quebec and Montreal. And so as soon as a, you know, Hollywood’s, as soon as they started taxing and making it more difficult, Hollywood was like, why do I have to deal with this? There’s so many other cities. Yeah. You know, so they figured, you know, why? Let’s just you know, let’s just leave. And so Hollywood left. And so when it came to mining, you know, all the miners were like, we’re outta here. So this is exactly what I did. I, I packed up all my ass nines, I moved all my minors. I said, I’m getting out of there because it’s just a matter of time before. I feel like it, it’s a matter of time before they start taxing me more to get my minors out.

Right? So I said, I, you know, so I basically, you know, shut that operation down. And then I start exploring other options and we’re looking into places like Venezuela and a few other countries that have that we actually know of a few clients of ours that are mining in those countries and their, you know, their energy costs are close to nothing. Right? So, I mean what the, what’s been in discussion is how we can strategically work with other governments in terms of being, receiving a supply of, of, of power and doing, you know, by doing some sort of a revenue share. So if we can, you know, give back to that country a percentage of our mining profits in exchange for our power costs to be built into that revenue share, then essentially we can be operational 365 days a year. We don’t have to shut down our operation when difficulty levels, you know, rise or when BTC values go down. We’re not affected by, you know, those economics.

Now are you concerned about maybe the same issues that happened in Canada happening in Venezuela? I know a lot of people are concerned about, you know, that

Of course hundred percent. I mean, you know, so that’s why, you know, if those, you know, ideas come into play, we have to have some sort of an international insurance, which is very hard to get in some of those countries. So, you know, it’s kind of a, it’s kind of one of those things where we have to either be willing to take a trance that if politics go wrong and it could be, you know, there’s a safety issue involved that we’re ready to lose our asset, which a lot of, of course, you know, when you’re speaking to investors they don’t like that. So, you know, that’s why we’re, we’re also exploring you know, very attractive us locations where, you know, some, we’ve, we’re, we’re in talks right now with the a company that has, you know, acres and acres of land with natural gas.

You know, how can we convert that type of, of you know, energy and to power that will power our minors off the grid and, and, and kind of come with the same ideology. Tell me we’re going to help you build it out. Why don’t you do a revenue share on return? Because I think that the two I think there’s two elements to the future of mining that are a necessity for longterm. The first is, is a revenue share model. Okay. Because I think that anybody who’s paying power, it’s just a matter of time that the power prices gonna out mine. You’re right. The second I is going to be the ability to do effective overclocking through immersion court. I think immersion cooling as the future. I think that, and I personally so I’ve actually sent some of my minors to Ukraine for example.

Have a real estate partner in the U S that has his own mining farm there. And I’ve given him my minors and I see what you can do with them. And you know, we’ve successfully gotten a stable, you know, 20 terahash immersed on, on RS nights. You know, that were 14 Terra hotshots nights. So, I mean, you know, the, the advantages are, is that you’re not having to cool, have a cold HVAC environment as you do not want, you know, when your air cold and second, you know, when it comes to shipping and purchasing miners, if you’re shipping miners from around the world, you don’t need the, the encasing that comes with the AC.

Ah, yeah. I didn’t, I didn’t think about that. You could just shift the hash

Or you’re just just the, exactly. And the controllers and the, and you don’t need you don’t need the fans either. So your, your shipping costs are dropped drastically.

Hi, can you give me, can you, can you give us an idea? Like is it 10%, is it 20%?

So, so for example, on the S nine on 14, terahash S nine was stable at about 19 to 20. Terahash so that’s already what, a more 30%. Right? I know that the thing I was talking about the reduction in shipping costs. Yeah. Put it this way. I can fit three minors in one box. So like three Bitmain in one. That’s fine. So, okay, so nine, I could put up the nine boards in one box and one regular minor box.

Yeah. So let’s say it would cost me 50 bucks to ship a minor. I can ship three for the price of one. Okay. Wow. Wow, that’s amazing.

I mean, I, that, you know, I could save you a lot. And then you know, so, so overclocking I think is, and then there’s of course you have a combination of your immersion cooling with your firmware over clock. When you combine the two you know, such as high voice, you know, you know, any of these overclocking type programs, the combination of the two can do some pretty amazing things. So in addition, another benefit is that we can have our miners sitting outside in the heat. You know, so, exactly. So you have a lot of, you know, States for example, where they have a big problem when it comes to the summer time. So we get away from that because now you’re, you’re, you know, you’re, you’re basically, you’re, you’re not bound or affected by the weather you know, surroundings. So it’s, it’s, it’s pretty amazing. Right.

Well we’re going to wrap this up soon, but before we do we, we want to tell everybody where they can find you online. But before we do that, let’s just talk a little bit about mining. Disrupt. Ethan.

Yes. Mining disrupt. It’s going down in, in Miami. Elliot, you’re going to be there, right?

Of course. Sorry. I think we’re, yeah, we’re there. We’re going to be there. I mean we’ve, we, I mean last year was a great success. You know, I mean it’s, it’s pretty much amazing. I think it’s the only real mining conference that you can BCMA is also a sponsor. I mean we’re, we’re there, I mean, and everybody that I know in the industry that I’ve always met came across as all that was there last year. So it’s really amazing what we’ve seen last year’s conference. Yeah.

You know, Scott and I are definitely going to be there. We are definitely looking forward to seeing you there. Eli. Everybody else come on down to Miami. If you are curious about the mining industry, if you just, you know, are, are a seasoned old salt in the mining industry, there is something for everybody there. Scott and I are going to have a really big presence there and we’re looking forward to seeing everybody. And now Scott’s going to tell you guys how to, how to get tickets.

Yeah. So just go to.tools/mining-disrupt. So that’s to.tools/mining-disrupt. And when you do that, you’re going to be brought to the Eventbrite page and you’ll actually see that you’ll have a discount code automatically added. And you’ll see at the top there it says OFFORDSCOTT applied. A 10% discount is available. So get your tickets. Now you know how these things always work with conferences. The later you buy your ticket, the higher the price gets. But, but right now we can get you 10% off, so definitely secure your ticket and go to the to.tools/mining-disrupt.

But I think also last year there was like a couple of guys that were doing their own containers and things like that. They had a lot of on display. So, you know, we had a, you know, like a, you can even see some immersion in the on display. I mean, you know, yeah. You could see live what people are talking about, hearing about, you know, since it’s pretty cool.

Yup. So Eli, why don’t you tell us a little bit about how people can find you online. Where do you hang out and

Definitely so, I mean, Instagram cryptoking26 that’s my user ID. Our website for the ATM business, you can visit www.cryptoniteATM that’s www.cryptoniteATM.com. You know, I’m on LinkedIn and search my name Eli Rui me and you know, if you have any questions, you know, feel free to send me a message on there or reach out on our website anytime.

All right, so is that right? Cryptoniteatm.com. That’s right. All right, well, awesome. Elliot,

One, one last thing before I hang up. If anybody is not a member of our nonprofit organization, the BCMA ourbcma.org just, you know, plug in your email address for your information or just go to telegram typing, type in mining association and you know, in telegram, we’ve got our group over there evolve. I’ll, I’ll, you know, I may us amazing minors. I’ll and thank you so much as Scott and Eaton for this opportunity.

All right. Yeah, definitely visit our ourbcma.org for more information about that nonprofit organization. All right, well thanks again. Eli and we’ll talk to you again.

Thank you very much. Take care. Bye.

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