On this episode, we will interview Kevin Shaw of Omega Power Solutions. Kevin has worked for the State of California and has 17 years of experience in the tax & accounting field. He will share how he got started in his crypto mining journey two years ago looking for power at 5 cents per kWh for $250k per MW up front to now sourcing power at 4 cents per kWh for half the capex requirement. Like a true weekend warrior, around 9 months ago he started to work on a specific location in Georgia, USA. Working on the project only 1 day per week up to this point, he is now close to finalizing the power contract and might be up and running within 2 months after signing. We will discuss the process Kevin went through to find the best place to open a datacenter/crypto mining company and other topics that crypto mining entrepreneurs will find interesting, such as putting certain tax advantages to good use.

https://www.pscp.tv/w/1ZkJzLEYbVwKv https://www.facebook.com/groups/crypto.mining.tools/permalink/543275326586440/ https://www.facebook.com/cryptominingtoolspodcast/videos/2811438475575973/ https://www.facebook.com/scott.offord.milwaukee.seo/videos/10163192276875024/

Transcription

All right. A Showtime. Welcome everybody to the crypto mining tools podcast. And today we have Kevin shot with us. Here’s our co-host, Ethan’s, Erica.

Hi everybody. Ethan here. And Kevin is down there.

Good. You hit the Mark. Perfect.

So first I’d like to start off you know, Kevin, you and I met in Vegas, and what was that? That was a Bitcoin conference in Vegas. And you had just a, some fascinating knowledge to, to share with me while I was in Vegas. So I’m really excited to have you as a guest

On the show.

And yeah, I’m gonna, I’m gonna let Scott start with the first question, then I’m gonna rip into you. Yeah.

Yes. So Kevin you were telling us previously about just your experience in doing the research and trying to find some power and some land for your own project. And so we found that really interesting as a story and then also combined with your experience in the, in the tax world and, and what you’ve done as a profession for the, for the last umpteen years. You know, longer than a lot of us have actually had careers. Yeah. So we, we just really wanted to have you on the show and we think that you have some, some good, interesting advice and stories to tell. So why don’t you just tell us a little bit about yourself first and then and then we can talk about mining.

Okay. for the first 15 years of my life, I was in retail and restaurant management. During that timeframe, I helped open up over 50 different businesses, you know, from the ground up. You know, sometimes it was from at least level. Sometime it was after the lease was done, you know, bringing in the equipment and doing that type of stuff. So I have a lot of knowledge and experience with negotiating the contracts, you know, the leases, the, you know, finding the equipment and finding a good prices on stuff. Then, you know, during that same timeframe I was going to school and everything else. I graduated I got a job at the state of California where, you know, I’ve utilized, you know, and my profession in general is, is accounting and taxes. So I gained a unique knowledge of taxes and, and what can be done and that type of stuff during that process.

And that, I’ve been doing that for a little over 17 years now. And you know, when it comes down to crypto and stuff, I got interested at the very, you know, when Bitcoin hit that 20,000 Mark, you know, it’s really big and everything else and you know, I’m like, okay, you know, I mean did before, you know, I thought Bitcoin was a Ponzi scheme. Right. You know, you had a whole bunch of multimillionaires and, and it just seemed too good to be true, you know? And then I started doing some more research and I realized that there was more to it than what I originally had thought, you know, like a year or two earlier. And you know, so I started off and said, okay, how can I get into this? So I bought some GPU cards and built my own rigs and you know, was going to mine.

Etherium was, you know, I can make around $400 a month, you know, mining a theory I’m and everything else, but at the same time I could sell those rigs or make $2,500 each. So, you know, I went through the stuff and said $400 a month per rig or you know, $2,500 for each big. So I ended up buying on them a little bit, made sure that they worked and you know, they were optimized and that type of stuff. And then, you know, I sold them because it just, it made more sense. I mean, it was a, a better business model and you know, it’s, it’s, and that’s how I looked at this stuff. And at the same time frame a six were really big, right. So but [inaudible] were, were making tremendous money and everything else. I’m like, okay, you know, everybody says a six and noisy, they’re super hot, what to do.

So I started calling around and and saying, okay, let, let’s try hosting a co-locating. And so I found a whole bunch of places, you know, regular traditional data centers and that type of stuff. And they were wanting $150 per month per [inaudible] looking at this stuff and say, Oh great. So $150 to them, I make $170 total so I can make $20 a piece. Right. There’ll be a better way. You know, it, it, it doesn’t, you know, that just seems outrageous. So you know, that’s when I kind of started my search for, for cheap power and went through many things. And you know, I’ve, my ex wife is from China, so I spent, you know, eight trips over there. I got a lot of contacts in the manufacturing world over there and in shipping world and that type of stuff. And I still maintain most of those contacts, you know, 10, 15 years later.

And the, the thing that I learned is if you can, Oh, you can make better money, it makes more better business sense. You just have to want, have the money to be patient. I mean it’s cheaper to ship it over by sea than it is to ship it over by air. Oh yeah, absolutely. That can make a big difference. So planning out your projects in advance and that type of stuff, that’s important. And so when I first started out, you know, I found 5 cent power in Montana and you know, it’s, but the process to, to get that power is you had to pick a location and then you’ve got to pay $25,000 for a study and then you’ve had to pay another $25,000 for a study. And the study, since, you know, you were like 200,000 line is going to take six to nine months to even get a result on the study to the location that you picked. Will it work? You know, and most people aren’t that patient. I’m not, I don’t know about you guys.

Sure. And, and tell us about this though. You said you, you had to go to study or is that a step that you wanted to do?

No, it was required by the power company and the, and the city and the County. So

An environmental impact or, or what, what kind of grid load set study to make sure that the grid can handle it in the substation that’s close to a can can be expanded to handle this stuff. So it was a more of a study for that, you know, looking at the, the few sure. Use of the power and that type of stuff, how it’s going to impact the community, you know, and you had to say this is what road I wanted. I would expect I want to grow to this and they consider all those things and then you know, you’re either going to get a yes or a no, you know, up to a year later whether the site you picked out, you handle any of that stuff or not, you know,

So there was a lot of variables involved with that. It wasn’t right. You know, a, a straight forward, you know, cap ex situation where you just build out the infrastructure and then you can utilize it. You had to consider how that infrastructure fit in as a piece of the puzzle of everything else,

Right, to the community that are involved. And so, and you still have to do that now. I mean, unless you’re in, you know, you’re in a stranded gas situation or there’s excess power, you know, or, or a multitude of other things, but you still have to consider some of that stuff. I mean, you can be, you can have land right next to a substation, both there’s one megawatt available on that substation. What is it going to cost to expand? Is the utility gonna expand it? Or they’re going to ask you to put up the money to expand it, you know, what is that process? What is it going to look like? You know, and you know, asking the questions is, is the important part of it, you know?

Yeah. So we, we get a lot of people saying, Hey, I want a, you know, five megawatts and, and I want it for 2 cents and they want their miners up and running next month.

Right. I want to retire in two years. So common. I mean everybody, everybody wants that and even the larger company wants Xi power, but then they want to throw wrinkles into the deals and you know, there’s certain things, you know, communication is important in anything we do when we’re dealing with the city. Your County, you know, utility, you know, other people that communicate the thing. Yeah. And that’s where a lot of deals fail because you know, the people in the city will get lazy and not call you back. You know, need to be very active and empathy calling them and keeping in touch with them. You have to ask the right questions, you have to do that type of stuff. And you know, I mean I’ve seen somebody say, Hey, you know, I want a, you know, a hundred megawatts and we want to pay, you know, two and a half cents. Great. But then these guys have the nerve to go through and be even funnier and say we want to be able to cancel the deal.

You know, cause they weren’t going to have to sign a power purchase agreement. We want to be able to counsel you within 60 days. How many people on the other side that are going to try to provide the power and give you a good price? I’m going to do that. I’m pretty much, yeah, that’s, you know, it just killed the deal right there. But you know, people think things, you know, whatever they want to do, it’s always about them. And it’s not about sure, make a win, win situation for everybody involved. Absolutely. You know, and that’s the biggest thing. I mean to set power is doable. You know, even three sub three sub power is doable and it can happen. But you know, there’s a couple things that, that, that it takes to get you there, you know? So the first thing is money. The second thing that you have to do is, you know, one, be greedy. You make sure that there’s enough, you know, on the boat for everybody to make money. You know volume is very important. You know, if you’re five megawatts, you’re not going to get sub three power in most cases, you know. Now if you decided to be unique and say, okay, let me get

301 megawatt guys together and we’re going to form a cooperative and now we have the ability to buy 300 megawatts of power. Okay, that group can get a better rate than somebody wanting a megawatt or five megawatts or 10 megawatts or 50 megawatts because they’re a big group. But most people are so out for themselves and they only care about themselves. That is really hard for stuff like to do that. I mean, you’ve got the dairy farmers that do cooperatives. You have, you know, a whole bunch of other farmers that you’re cooperative and they do it because it makes more money for everybody cause it drives the cost down. Everybody benefits in those situations, right? Everybody trying to make their own money and they don’t care about other people and they try to keep it hush hush. You know, it’s like, it’s the, some sort of secret sauce that, you know, if they tell you they’re going to, you know, you’re going to put them out of business, you know, and, and Bitcoin miners going to hard be hard to put another Bitcoin miner out of business. It just, it just doesn’t work like that.

So can, can you paint a picture for us, because you know, everybody talks about this Holy grail of 2 cent power. How, you know, paint the picture, how does it happen now? How can be achieved?

So, so two SunPower’s done one of two ways. Typically you have to put up the capital cap X cost to do it. What are we talking about? If you’re doing power generation, right. So a friend of mine up in Canada and Alberta who is with the Orion power solutions, basically he was a former power company exec. He was the VP of commercial power. He decided to negotiate a lease for gas. And so he has a gas lease. He can operate on the property. He went out and bought the, the generator, he bought one of the digital shovel, you know, 600 containers. He put that on, mash it up, brought in the minors. And so he has a site up and running. And up in Alberta is, is unique because if you’re under a megawatt power, you don’t have any government approval so you don’t have any government regulations that you have to go through.

Wow. So it’s, it’s, you know, it, it’s, it’s something that he could start with little time, you know, but it did take a lot of money and, and he’s sitting at around 2.5 cents us our costs just for the, the gas and the maintenance and that type of stuff, you know. So I mean you basically have to come up with the, a cap X cost to do that. The only other way to do that, to get, you know, good sheet power is it’s unique cause you have to build a substation from the transmission side and not primary power side. So, and those are usually 500 kilovolts or you know, 350. Kilovolts. They’re very high powered. So you have to start off at a high power and pocket profit down that can drop a half a cent off of your power cost, you know, which, which is, which is a huge thing.

I mean if the market in the state is, you know, two and a half cents, you know, and now you, you’re, you’re, you know, you can knock, drop half a cent off that, you know, you’re a much cheaper rate because that’s pretty big. You still will have some transmission charges and delivery charges and taxes depending on the state you’re in. But I mean you have to go out at that, that transmission line voltage and built a substation. So you’re going to have a upfront thing. I’m sure you know, I saw a numbers on a, on a large project, you know, scale project and you know, an example would be a hundred megawatts would cost between 60 and $65 million to build out from that, getting the tap line just to get to it, just to get to that power. And depending on, you know, cause everything comes down to the gas contract you can get.

So the more gas you use, the cheaper price you can get. A for the less gas or use, the less is that more expensive, you’re going to get a four. So it’s truly an economies of scale and once you start getting up in there, like your maintenance cost goes down because it’s all in one location and you can do things that way. And the same thing with when you’re doing the substation, you know, because you own the substation, you get other discounts and that type of stuff. And then certain places have I guess you would call them rebates, you know, that that you buy into and you know, some of the rebates are, you know, up up to like 1.4 cents a kilowatt reduction because the grid can turn you off at any time. Sure. But that has to be built into it. So whom are small as, you know, two tenths of a cent, you know, but you know, definitely take advantage of those.

But most people don’t know that they exist. You know, that’s one of the, the issues is because they don’t know what, what exists right there. They don’t know what’s out there. You know, that’s what the big guys find out about their, they do their research, they understand that. Sure. And that’s the, you know, that’s, that’s a thing. I mean it’s, it’s out there. It exists. You know, I’ve seen, you know, an example is up in Newfoundland, if you’re one of the lucky few, you can get power for one and a half cents a kilowatt. Wow. You know, there’s a two year waiting list, you know, but you can get power one and a half cents a kilowatt and it’s a fabulous price, you know? And so it’s possible in small pockets, you know, if you get lucky, if you find a producer, I think the other area that’s not yet tapped is being behind the fence, out of power company.

You know, a lot of people talk about how our companies are, are starting to do this and that type of stuff. But you know, most of the projects I’ve seen, you know, it’s, it’s, it’s not about the greed. It’s, they’re going out on raising the money someplace else. They’re going to want to make as much money as they can. And if they see the market’s at 4 cents, they’re going to try to get at it three, you know, they’re, they’re trying to try and get a three and a half set. It wouldn’t matter. Even if it costs, even if it was free to them. Right, they’re still gonna turn around and sell it for three and a half. So, you know, there’s some flexibility in that of course. And you might be able to get a better price. You know, if you have the, you know, the financials, if you have all all the other stuff to back it up and the volume, you might be able to negotiate a better price, but you really need to know what their cost structures in order to be able to get a better price. Sure.

We have a, a, a user here, a captain crypto 33 says so you know, once you know your location and you know, your approximate cost of electricity, what would be the next step or what would you recommend as the next step? Kevin?

You know, even before you do that, I mean, here’s, here’s some, some things, you know, this is a business and you should really treat it as a business. Most people, how they pick stuff out is, you know, I live here, what’s in my area? Okay. That doesn’t necessarily mean it’s the best deal for them. It doesn’t mean that it’s, it’s, it’s, you know, the, the greatest, you know, the, the, the most advantageous for them. You know. So I mean, the first thing is, is do the homework on the business. You know, make sure that that you have talked to the local governments, have talked to the utilities, have done that much, much stuff. Because a lot of times if you talk to the, to the, the local government help you, they’ll help you find land. And a lot, a lot of times as probably better off buy land next to a substation than it is to buy an existing building or a warehouse that, you know, that’s next to a substation cause it’s probably gonna cost you more to, to redo that, that existing house starting from scratch, you know?

And, and so that’s, that’s one thing. I would say put together a business plan. I mean, how I want to do what you want to do in the future, how you want to grow and that type of stuff. You know, it doesn’t have to be an extensive business plan, but you know, you have to say, you know I want to have 150 S9s or I want to have 150 S17s after the having my income is going to do this. During the meantime, you know, my plan is 75% of what I’m going to earn. I’m putting back into the business, you know, 25%. I’m going to hold it as a reserve, you know, you know, to do the things I need to do. And it’s you know, that, that’s just one aspect. But then the other thing is you should, you know, you should, you know, after those first two things, you need to make sure you have your money lined up.

A lot of people start a business with not having enough funding. Sure. Okay. And so it’s, that’s, that’s why across the U S most businesses fail within two years. They didn’t have enough money that they didn’t expect to run into this situation or that situation. You know, crypto, it’s the same way as any other business. You know, there’s going to be unexpected expenses and costs and things that you don’t really think about. But the more you think the stuff out, the more help you get, you know, the better you’re going to be prepared for it. Then, you know, seek out professional help, you know, seek out people for taxes and accounting and, you know, business help if you’re not that strong in business and, you know, check with power and other consulting’s and other professionals. But I, I’ll tell you now, not all of these people have the same knowledge and experience. So if you have somebody that you know, only only.

Hmm.

But there’s a whole bunch of other things that they don’t know, but they don’t know. They don’t know. So I mean, contact multiple people, talk to multiple people. Do your own research when they tell you X, verify that that’s true. Most of the stuff that’s on the internet is not hard as if somebody says, Oh yeah, you know, your goal is not to have to pay any taxes. That’s everybody’s goal. You know, the top 100 companies in the US do a very good job at it. You know, look at Amazon. Right, exactly. They’re paying a lot of money to other people to do that. They’re not trying to do that themselves. They don’t just just wake up one day. He’s like, I don’t think I want to pay taxes today. No more. No. That. They hire professional. They hire accounting firms. You know, the big four.

They hire consultants and they say, okay, how can we pay less tax? We’re going to structure this, you know, and you as a small business should do something similar, but obviously you’re not going to spend the type of money that, that, you know, fortune 100 or fortune 500 company spends trying to do the same thing, but definitely seek out the help, but seek it out from multiple people. Find out the people that, that are true experts, the people that really know their sure and that type of stuff, you know? Then, then the other thing that you should figure out is what type of business structure you want, right? The business structure can be really important, especially for taxes. A corporation is one of the things I prefer because it’s a separate legal entity. All the money sits in that corporation. If you don’t want to get any money from it, you just leave it there and you can invest it and do other things like that. But if you’re a an S corporation or you’re a partnership or an LLC or sole proprietorship, every dime that that business makes and earns and every expense flows through to you. So even though you’re reinvesting it, you could up end up in a situation where you owe taxes on a hundred thousand or 200,000 or even $1 million, you know, on your personal income tax, you know, just, and all your money’s tied up in the business. So you have to figure out, Oh shoot, how do I come to that?

Well, how’s that gonna happen? Kevin, this is absolutely fascinating but I have to pause you just for a second here because I want to give a shout out to our sponsor Novablock. Novablock is a, they’re a newish company. They’ve only been around for about a half a year or so and they believe, as you know, mining and the hash rate is shifting away from China to North America. They want to be a leader and the way they want to get there is by giving greater transparency than all of the other pools out there. Scott right here is now going to share with you guys how to get a good deal from them. I also want to remind everybody especially, you know, since you’re listening to this podcast, if you have a lot of hash rate, you know, you’re dealing with, you know, these big power situations that Kevin’s been talking about, make sure you either talk to myself or Scott or even Novablock, let them know that you know, you want to connect with their pool and you can even get a better rate than what we can offer.

Yeah. so if you go to Novablock.com, that’s their website. And if you click the sign up button in the top right hand corner, you’ll see this form. And if you just enter OFFORD18, that’s going to actually give you a reduced pool fee down to 1.8%. So that’s invitation code OFFORD18. So give them a try and a thanking Novablock for sponsoring our podcast today.

Awesome. Thank you, Novablock. All right, Kevin, let’s get back into this because you have just, you know, given us some phenomenal information, not only just from how to acquire power at, at very low rates or you know, some strategies or techniques to get there. But now you’re talking about the other side is once I’ve got the great power, once I’m mining coin, now what do I do now? What’s the best thing to do? So please continue with that. I’m very excited.

Right? So w w when, when you, when you know, a part of the taxes is actually picking up, picking the right location, picking the right type of business structure for you. And it really depends on what your goals are, you know. So if somebody, they have an account and talks to you and says you know, I knew somebody that was opening up a farm and their accountant told them to put the land in a corporation and then create like a pass through entity for the operation. And me personally, I would’ve done that exactly the opposite way because I’d want the land in the LLC because it offers protection. You know, and I’d want it owned by the corporation. So I have a dead stop of my income. And you know,

So when you’re saying corporation, you’re talking like, like an inc like a, like an [inaudible]

As a corporation. A C Corp, yeah. Right. So your strategy is to have the LLC owned by the C Corp.

Exactly. And every state I operate in will have a parent C Corp and then it will be held by a holding company, you know, in another location. And part of the reason for that is, is it’s like bank of America. Every state that they operate in, every country that they operate in, they have a separate corporation. Cause that way everything is compartmentalized to them. So if you’re, if you’re mining in Spain, you know what you’re doing in Spain is going to stay in Spain. You know, if you’re mining in Canada, what you’re doing in Canada is going to stay in Canada. You know,

Be safe to say that if you’re mining in Las Vegas, everything stays in Las Vegas.

Probably. Probably. That’s probably pretty accurate. You know I, I helped a, a business in Vegas. They have a large operation that needs to be temperature control and during the nighttime the temperature can drop. So I helped them put in S seventeens to keep their place. They know their place has air conditioning most of the other time, which is great for the [inaudible] because now you know, you pump the stuff coming from their operation back through there to, to output the hot air and then you’ve stepped up to the ceiling when you’re not, when you don’t need to be reutilizing another business. And it just basically saved them about a thousand dollars a month just from not having to pay the electrical bill to run the heater at item the gas bill. And so it’s, it’s, that’s pretty big plus or making money because you know, they’re using it as seventeens so they’re, they’re still making money.

So to them it was a smart business move. I mean, they had sub 3 cent power already because of the amount of power they use. And so it was a really good fit for them, you know, and they’re very happy to be with that stuff. And that, that’s just part of the, you know, a part of the things, you know, look, look at this business uniquely. But I mean with a business structure, every business structure should be what you needed to be, whatever that may be. But you know, you have to look at what your goals are, what you’re trying to accomplish, how you want the money shown on your personal income taxes and that type of stuff and that type of stuff. The next thing that I talk about would be taxes. And most people don’t really understand taxes for mining. Okay. And mine,

Yeah, I have no idea. Yeah. But please, please help us give us a one-on-one or a really quick one on one if you can.

So, so w when it comes to mining at the minute, it’s mine. Not when it, when you take possession of it, not want it, it transfers to your wallet or anything. But after the incident is created, it’s counted as income. So if Bitcoin is at $10,000 at that timeframe, you know, you have to recognize $10,000 of Bitcoin, let’s say, let’s say you just made a big point. Okay. So you know, you have to recognize $10,000 of income. Now the basis in that coin is that same $10,000 is what the value of it when at the point that was mine. Okay.

Okay. And what you’re referring to just to kind of narrow this down, is if we’re all mining and we’re all, you know, doing a pool, we would have to track down what block our coin was generated from and then, you know, based off the timestamp of that block and what Bitcoin was worth at that time, that’s what we would determine the value of that coin that we would then eventually receive into our wallet.

Yes. And, and, and it’s, it’s there, there’s multiple ways that you can handle that and that’s why, you know, talk to an accounting professional talks to it, to a tax attorney and come up with something that will be acceptable. Because the idea behind the IRS or any government agency is they just want you to pay the right amount of tax. They don’t care what that is, as long as it’s right. As long as you follow the rules, they’re good with it. You know, they may ask you questions, but answer them, you know, as long as you’re good, you’re fine. They’re there. They’ll just go ahead, you know, say your best efforts

To respect, you know how their system works and you guys are crying. You’re trying to be cooperative with it.

Right. Okay. You know, so, so mining is the curation of the coin and that’s why it’s brought into income at the point that is created. The second after it’s created, it’s now property. Okay? Okay. So it has a $10,000 value of the property. That’s how much you have into, it assesses the business. You have the income of now you can do all your, your, your business expenses, you know, your employees, your cap ex, your, the cost of your miners, the depreciation. There’s accelerated, you know you can, instead of depreciate things, you can do what’s called an IRC one 79, which allows you to expense out an item in a year. That’s something that’s supposed to be done over time. You know, that there are sort of rules. There’s also you can pick an inventory method, you know, life four or five O first in, first out or last in first out, and that can have a dramatic effect on your taxes when you’re selling your coins and stuff like that. So I mean there’s a [inaudible]

Is that something that you really just have to do once a year? Like you just have to decide, okay, this year, yeah, I’m going to count it like this. And then next year I might do it the opposite.

Well, life. Oh, and Pfeiffer was a, his election you make and then after you make it, you have to request the counting change if you want to change and then you may,

You’re going to stick with one way or the other or go through a process to switch.

Right, right. Where whereas the depreciation method, I mean once you express it out, you can’t appreciate it. So it’s pretty much over if you decide to, to depreciate it, you know, you’re stuck with depreciating it. But the, the, the, the one 79 where you expense it out is basically on, on new purchases, you know, new new assets that you bring in. You can decide, okay, let me expense them out and that will all have an effect on your bottom line tax. Now one of the interesting things is the IRS recently changed some reporting and so there’s now a question about, you know, if you have crypto, you know, on the return and you know, this year, you know, you probably had it last year, you probably had it the year before that you probably had it.

Yeah, I’ve noticed that everybody who answers yes to that question immediately gets an audit or a request for audience.

No, it’s not like that. They’re not going to go after the small people. I mean the, they, you know, they have quotas or if you want to call it quotas, but I mean, they’re going after the people that they’re going to make money on. They may go off all our guys to set an example, but if you’re, you know, $5,000 a year, you’re probably not going to go after you.

No, that’s I have a question here. What’s the difference between the government asking you as a person, if you own or bought crypto versus asking a company, are they asking companies or only are they asking individuals

Because everybody [inaudible] everybody, you know, the, the, let’s see, that’s not, that’s not, they’re probably not gonna come after you for taxes on that. They’re going to try to get you on other areas because after nine 11 and so there’s a question on the return that asks, you know, at any time, did you have financial interest or signature Ori over a financial account? You know, such as the bank account, securities account, Virtru cap located in a foreign country. And you know what, most of the people who were on finance or yogurt or any of these other things that had an account, even if they have a dollar in crypto on it, should have answered yes to that question. Yeah. Then we had to file additional forms. They had a file, the, the, you know, fin send form one 14 and then they also had a file. What is it IRS form a nine 38, you know, and so they’re, they’re basically anti money laundering forums. Yeah. So if you answered no, which most people answer no right. Cause they don’t, you know, that type of stuff. Yeah. They’re going to come after you on those things cause there’s a $10,000 penalty per account per year. Oh wow. Each for, so if you didn’t do that this year, you can get, you know, let’s say you only have one account that’s a $20,000 penalty if you didn’t do it.

Okay. Can you, you’re scaring us to death here. Kevin, can I ask you a question? Let’s say we’ve all realized now that we had a dollar here or there somewhere in the crypto verse, can we go back and amend our, you know, our returns and, and put these proper forms in and avoid these penalties. Is there any saving grace we can do?

The feds, they have a tax amnesty program that you can go ahead and utilize and so, you know, seek out a professional that can file a tax. I’m going to shoot the file, the proper forms and everything else as far back. The crypto tax return is six years. As long as you reported it properly. If you didn’t report it, there’s no statute of limitation on it. They can come get you 20 years from now if they want to. And not only you with the penalties, then there’s interest,

The interest and all. Yeah,

It just becomes real ugly. So if you made a mistake and didn’t answer that stuff, it’s not the end of the world. I mean, voluntary compliance, that’s their goal. That’s why they exist voluntarily. You know,

As long as you show you’re making your best efforts to do the right things, they tend to be very forgiving. But if you show that you knew that there was a better way but you didn’t do it, that’s when they come after you like, right.

Well it’s easy money for them, right? You know, it’s $20,000 and they don’t have to do anything or you didn’t slam dunk, right? Two minutes here in this podcast episode. What else do you want to share with us? You know, there’s a whole bunch of tax incentives that you can get by picking locations. So I’ll give a brief example. I did a analysis between Illinois and Texas and you know, one point $2 million investment into either into each round $450,000 worth of income, that taxable income. Just the difference between the two States. Over two years, Texas, you made $84,000 more than you’re in Illinois. Now if you out in the new markets tax credit, which is up to 39% of your investment, you know, that adds means it would be, let’s say it’s in Texas now, you’re at $200,000 or $100,000 a year more so picking the site is about, you know, the state of local tax differences and that type of stuff. It’s, it’s about, you know, finding, you know, where has the best incentives for you and different things like that.

It almost seems to me like it’s, it’s coupon hunting. Like you’re looking through all the different, you know, store coupons to find the, you know, the best value, you know, you can get the biggest bang for your buck or I can get, you know, so I, I mean, yeah,

The business still comes down to the basic thing, the biggest driver and the biggest input is your cost of power. Having that as low as possible will make you the most money. But now you have secondary can decider, which is the location. Are there credits available of what other incentives to the local city and government is that they could give you, you know, free loans. They could, you know, you know, you know, one of the offers that they offered me was I could get two acres of land is located, you know, the a five megawatt substation is located on the property and I could lease it for $100 a year for five years. You know, instead of spending 50 grand on the land, we would lease it. You know, they would lease it to me for $100 a year cause they own the property.

So that’s a pretty big incentive. You know, it, it, you know, but you know, you have to look at these things, you know, the, I, and I think the thing that I, I’d want to just stress is, is a lot of people in this industry, you know, collaboration is big. It’s very big. But most people’s idea of collaboration is, you bring me a deal and I’ll tell you if I want to participate or what I want. Do you want part of it? Right. And that’s not really collaboration, you know. Now if mining community got together and they wanted to get the cheapest power possible, you know, let’s form a cooperative, you know, let, let’s do the other stuff. Let’s be able to go in and say we have 100 million, we need a hundred megawatts of power, or we need a gigawatt of power. And then we find the land, do the other stuff, bring everybody in, you know, make sure there’s a cushion in the cooperative can go out and expand, you know, when we need more power on that type of stuff. But now there’s can be used for other things. Okay. Scott, you know, you’re involved in, I believe a basic manufacturer in the US or, or you have some ties with one people that have, you know, a gigawatt of power, you know, as a cooperative from saying, screw man, let’s go over it. And, and you know, we raised $10 million, a $20 million, let’s form, let’s do our own mind, basic manufacturing. Let’s do our own tape out, buy our own machine and we’ll make the money. Instead of giving them the money.

You are singing my tune, Kevin,

The common thing, but everybody’s out to make their own money. It’s all about them. It’s not about what’s, what’s for the greater good, you know, it’s not about, absolutely, it was all about the almighty dollar and greed kills pretty much every deal that doesn’t get done. It’s all about greed.

So you’re saying it’s, it’s really about the economy of scale and, and if you can cooperate together and, and maybe, you know, one guy is using two megawatts and other guys use in half a megawatt, you can put that all together and come up with this, this minimum so that you can then get the cheaper power and, and yeah, working together.

Well, Kevin, as always, this is absolutely fascinating, man. I want you now to let our audience know what is the best way to get in touch with you because you’ve let it known to us that you can talk about these things privately, one-on-one with people if they have more questions. And I’d like to open up that opportunity for people to be able to connect with you. Maybe they want to be a part of this cooperative. So how can people reach out to you and, and get, you know, this started

You know, that they can email me. My email address is [email protected]. It’s spelled differently. So it’s [email protected]. Okay. With telegram, you know, I’m think I’m @pezpeople. And that’s a long story about how I got @pezpeople. It was a, just a a unique way. Does that make sense? I, I came up with a, you know, something that nobody else was going to use ever. I’ve had it for 25 plus years.

Oh, nice. So that’s a been a longterm handle. Right,

Right. So it’s [inaudible].

Oh, excellent. Well, Kevin, thanks a lot for joining us and we look forward to speaking with you some more. We’ll, we’ll see you on telegram.

Yeah, definitely. Kevin, we must have you back. All right. We, you, you must come back. We must continue this conversation. Unfortunately. We’ve kind of run out of time for today, but awesome man. Yeah, I really look forward to,

That’s great. Take care. Bye. Have a nice day.

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