051 Sean Farrell, SVP of Operations at TeraWulf

[00:00:00] Sean Farrell: So when you talk about nuclear assets, is that nuclear plant running at a 40 percent capacity factor, a 50? If it’s running at 100 percent capacity factor, you know, they don’t really have a need for stranded wasted energy. So, Mark, to answer your question, it comes down to a plant by plant basis for how we target some of those assets.

So I don’t think you can say it’s nuclear in general. It’s just, which is the right nuclear asset to look at a behind the meter crypto operation.

[00:00:26] Intro: Just because the facts are A, if the narrative is B and everyone believes the narrative, then B is what matters. But it’s our job in our industry to speak up proudly, soberly. And to engage people in this dialogue. Those two and a half billion people that are in energy poverty, they need us. America cannot meet this threat alone.

If there is a single country. Of course the world cannot meet it without America. That is willing to. We’re gonna need you. The next generation to finish the job. Overhaul nuclear radiation. We need scientists to design new fuels. And focus on net public benefit. We need engineers to invent new technologies.

Over absurd levels of radiation. Entrepreneurs to sell those technologies. And we will march towards this. We need workers to operate a Assembly lines that hum with high tech, zero carbon components. We have unlimited prosperity for all of you. We need diplomats, businessmen and women, and Peace Corps volunteers to help developing nations skip past the dirty phase of development and transition to sustainable sources of energy.

In other words, we need you.

[00:01:30] Mark Hinaman: Welcome to another episode of the Fire2Fission podcast. My name’s Mark Hinaman and I’m joined today by Sean Farrell, Senior VP of Operations at Terrewolf. Sean, how you doing?

[00:01:41] Sean Farrell: Doing well. Thanks for having me.

[00:01:42] Mark Hinaman: Sean, really excited for this discussion. We’ve done a bunch of research on Terrible Wolf and excited to dive in and talk about the company and some of the work that you guys are doing.

So, before we get there, let’s learn a little bit about you. You’re a CU Boulder grad, as I understand it.

[00:01:57] Sean Farrell: I am go Buffs. We finally have a football team with Deon Sanders. So, not perfect, but doing much better in the previous years.

[00:02:04] Mark Hinaman: Hopefully this does, hopefully this podcast ages well, and you know, people come back and listen to it a year or two from now and we’re happy about these statements.

[00:02:14] Sean Farrell: Well, if we did it last year, it couldn’t get worse. So that’s at least positive.

[00:02:19] Mark Hinaman: What’s your background? Sean you spent a lot of time at Siemens. Talk to us a little bit about that.

[00:02:24] Sean Farrell: Yeah, so I joined Siemens directly out of school University of Colorado Boulder. So a Buffalo grad, did engineering out there.

I was mechanical and biomedical. What year did you graduate? 2010.

[00:02:37] Mark Hinaman: Okay, we overlapped a little bit then.

[00:02:39] Sean Farrell: Nice. Yeah, so I joined Siemens directly out of college was with Siemens for just over 13 years both Siemens Energy and Siemens Gamesa through a variety of different roles. Started in oil and gas, fossil service, transmission distribution did a pretty long stint dealing with renewable H2 transmission solutions and kind of what we call non traditional energy technologies.

In the last two years, I was with Siemens Gamesa. And I was head of sales marketing and business development for North America for the wind division. And I joined Terrewolf June of last year. Most people call joining the crypto space, the wild west. So I took the leap and I’ve been here for about 18 months on the crypto side.

And now I still reside in Denver, Colorado, and I lead development, construction and operations.

[00:03:31] Mark Hinaman: That’s awesome. Well, we’ve got to throw some props for Alma mater and do you feel like see you prepared you well for your career at Siemens and then your subsequent leap into the crypto industry?

[00:03:42] Sean Farrell: Yeah, absolutely. I think a lot of internships with Get my engineering degree at Colorado bode very well for the career that I’ve taken since college haven’t really had a engineering per se role, but just having that technical background, really being there at the table, understanding all the really technical.

Aspects of the energy space has really done well for me, both with Siemens and now as a, I’m with TeraWulf and really leading a lot of construction activities. So absolutely.

[00:04:10] Mark Hinaman: That’s awesome. Yet you held a bunch of different roles at Siemens. I mean, tell me a little bit about your career progression there.

Do you, was it kind of on pace or was it accelerated or did you lag behind and. Yeah, let’s start there.

[00:04:26] Sean Farrell: Well, I don’t think anybody would admit they lagged behind. I’d have to say I joined when I joined Siemens again, directly out of school, I was in a program called Sales and Marketing Development Program.

It’s a pretty prestigious program at Siemens. Those eight people I think I have about a thousand applicants that applied for the role, eight were accepted. It’s 4, 3 and a half month rotations. So you actually rotate through different business groups within Siemens and it fast tracks you out into the field or into our marketing role more on the energy side of the business.

So, I had 4 different roles, 2 in Orlando it was service strategy. So, fossil service, more with coal and gas plants technical wind turbine sales. It was a field sales rotation and then I had the opportunity to work at our transmission factory in Jackson, Mississippi. So that’s where I really got to understand the more, you know, transmission and equipment side of that space.

afTer that, I was up in Minnesota supporting the upper center of the U. S., like the Dakotas, Wisconsin, Minnesota. That was more oil and gas, fossil service. And then after that role, I moved out to Denver, Colorado working more transmission distribution. It was a big learning curve for me, since that’s more of the electrical aspect of the engineering when I was a mechanical background.

But I really like that space, stayed in Denver still to where I am today. But I did rotate through a bunch of different roles both management director, and then that’s where I also supported earlier. I mentioned the H2 space battery storage. Transmission solutions again, more than two nontraditional everyday solutions in the energy space.

I supported that at Denver and then from there, that’s when I transitioned to Siemens Gamesa. Again, out of Orlando, that’s the one benefit for COVID. When actually COVID happened, the Orlando office turned into a more of a remote working center. So I got to stay in Denver, Colorado, which also I think is more centrally located in North America for a sales role than the southeast corner of the U. S. So I was there for two years before coming to Terrewolf in June of last year.

[00:06:32] Mark Hinaman: That’s great. That’s awesome, man. But I’m curious, you said Fossil Service, what does… that mean in the power turbine space? Is that fossil power plants or is that smaller fossil generation?

[00:06:45] Sean Farrell: So all of the above. Siemens had a very wide portfolio for the small steam turbines and gas turbines all the way up to the big FH and HL class turbines.

at That time was more on a lot of the coal plants in the Dakotas. And then there was a lot of gas assets as well. So doing their routine service, a lot of those plants come down fall and spring. So, supporting that scope in those service contracts was more the, you know, the fossil service aspect to that role.

[00:07:15] Mark Hinaman: You mentioned hydrogen versus fossil. Hydrogen has a lot of hype right now. I’m curious on your perspective can you give us some color on if we’ll just be able to replace hydrogen, replace natural gas with hydrogen in all of the turbines that we have installed across the U. S. or not.

[00:07:36] Sean Farrell: Yeah, you know, I’ve been out of the space for probably three, four years, but your GE, your Siemens, your Mitsubishi for the larger turbines, they’re able to burn up to, you know, 30, 50%.

Now most all the OEMs now can burn a hundred percent H2. One of the issues with H2 is one storing it, compressing and transporting H2 as well as generating it. So Siemens had. It was called the Syllizer and that was a P a PEM technology for the electrolyzer. veRy energy intensive they are starting to gain a lot of traction with, as the IRA has come out with different tax credits and different incentives to push hydrogen.

That’s what it’s really going to need to really take off as well as when you’re looking at like a big transmission system of H2 you got to be able to transport it. I mean, transporting it by truck is not going to be economical on a large scale. To answer your early question, do I think it’s going to completely take over?

No one knows where we’re going to be in 2050. Like, a lot of the gas turbines you’re looking at burning H2, you’re looking at burning alternate fuels. You know, a lot of the large utilities out there have said they’re going to be zero carbon by 2050. Do I have the magic 8 ball to say if that’s burning 100 percent H2, if that’s going to be burning ammonia or a different type of gas?

I don’t know, but it’s definitely going in that direction.

[00:08:54] Mark Hinaman: Okay, well let’s let’s pivot to your current gig, TeraWolf. What is TeraWolf? How’d you guys get started?

[00:09:00] Sean Farrell: So Terrewolf is a zero carbon crypto mining company. We’re vertically integrated and really focusing on accelerating the clean energy transition. rIght now we’re 160 megawatts of crypto mining across our two sites upstate New York and in in Pennsylvania.

So upstate New York was actually at a. 700 megawatt retired coal plant. The plant was retired in March of 2020. It was 1, 800 acres, a lot of electrical infrastructure at that site. We’re actually able to utilize a lot of the electrical infrastructure from the old power plant and co locate data centers.

It’s a very unique location because, again, we’re striving to be zero carbon. It’s 91 percent zero carbon, so the power for that plant is in NISO Zone A, and it gets the majority of its power from Niagara Falls, obviously a hydro as well as Fitzpatrick Nuclear, which is in upstate New York. So very well positioned plant that’s also an asset where there’s not much load in that area.

So, you know, as we go through our discussion today, that asset actually acts to stabilize the grid and stabilize a lot of transmission in that area. We’re working on a construction at that site right now for an additional 45 megawatts. So with that, we’ll be about 160, 165 at that site, plus our Nautilus site, which is 50 megawatts.

That’s the one in Pennsylvania. That is a behind the meter Bitcoin mining operation. The overall site is 200 megawatts. We have a 2575 JV with Talon. I’m sure you’ve heard of Talon. They’re a very large IPP here in the U. S. anD we have 25 percent of that. Both us and Talon have an option to expand 50 megawatts each, which you know, for what we’re going after for the zero carbon aspirations that we have for Terrawolf we’re heavily looking at that opportunity.

So by the end of the year, we’ll be over 200 megawatts of crypto mining and we have some pretty big expectations that continue to grow.

[00:11:05] Mark Hinaman: Why is the zero carbon component important for you guys?

[00:11:09] Sean Farrell: ESG personally has always been a large focus for me as of recent, you know, as I said, I started out my career in the fossil side and that transitioned drastically, where my last role was focused on Siemens Gamayce and the wind aspect.

ESG is a huge focus of a lot of investors and a lot of large corporations. So being an ESG focused crypto mining. I really think that differentiates us from our competition as well as we’re all energy guys. The biggest thing for crypto mining is your marginal cost. So where we locate our assets and where not really where, but what we pay for energy.

That is huge when you’re starting to talk about your margin stack and when you’re mining for Bitcoin. A lot of the guys that work at our New York power plant or what, we’re at the New York power plant, which is now Lake Marin or Data. They were at the plant for 20, 30 years. So these guys operated a very large power plant.

And if you can operate a power plant, we say you can operate a data center. The data center has a lot of electronics. There’s not any rotating equipment. You got rotating equipment at a data center. For the most part, it’s bad. So from a maintenance perspective,

[00:12:18] Mark Hinaman: there’s disk drives in someone, right?

And don’t the CD spin, I guess. Right. Yeah. You got the fans,

[00:12:25] Sean Farrell: the fans on the miners for cooling them as well as some of our. Some of our infrastructure has exhaust fans you know, to assist with cooling, but it’s just proven that the guys in the power space just having that you know, that mentality I’d say the best crew that we have and the one that I’ve seen is our Lake Mariner data facility.

You’re probably gonna ask the question, how are we accelerating zero carbon growth? suRe. Again, we’re energy. So when you look at Bitcoin mining, it’s not like a data center where you have to be 99. 9999 percent online, crypto mining, you’re going to mine when it’s beneficial to mine. So where we’re located, we participate in upstate New York and a lot of ancillary service programs.

When the grid stressed, we shut down the mine. So we support the grid and when the grid needs that additional power, you know, we come offline to help the grid ride through some of those peak times. But also when you’re looking at how to make the grid zero carbon, one, the grid’s very old, it needs to be refurbished.

And two, we’re going after huge ESG goals, and the only way that you’re going to build large renewable projects if it makes financial sense. So by having a lot of these responsive and dynamic loads on the grid when it’s nighttime or when it’s, you know, the fall and spring when the demand is a lot lower, you have these dynamic resources that can pick up those troughs.

And you can actually, you know, bring economic value to a lot of these investments, both on the ESG and transmission improvements. So Bitcoin really acts as a stabilization to the U. S. grid and allows for further investment.

[00:14:09] Mark Hinaman: That’s a phenomenal talking point, right? I’ve heard previously that, yeah, energy is kind of the primary input and having inexpensive energy is critical to be competitive in the crypto space.

But. How does hash rate impact your guys’s profitability and business model? Absolutely. Seems like an important metric also. And you know, I guess that’s, it’s changing continuously, but I’m curious, you know, if you had to rank it against energy how do they compare?

[00:14:36] Sean Farrell: Well, you can’t really rank them as they go hand in hand.

Everybody’s battling the same Bitcoin fundamentals. So when you talked about hash rate is the amount of computational power that we have at the site. So to step back, when we’re talking about Bitcoin fundamentals, you have a Bitcoin price, which, you know, everybody sees on CNBC, it’s always there in the bottom right of the ticker.

yoU have your network hash rate, so total number of hash rate on the Bitcoin network at one time. Your hash price, which is usually like a dollar per terahash per day. Which just shows how valuable each hash is on a daily basis. As well as your network difficulty. And your network difficulty is correlated to the amount of hash rate on the network.

noW, everybody’s battling those same Bitcoin fundamentals. I mean, we’re a public trade publicly traded. Bitcoin miner or on the NASDAQ. So all the other publicly traded and privately held Bitcoin mining companies are all battling the same Bitcoin fundamentals. So then it comes down to the size of your mining operation, which is your hash rate, as you mentioned.

But most importantly, it’s going to be the efficiency of your miners. As well as the power price that you’re actually paying to energize those miners. And again, we feel that we are leading this space based on where our sites are located, like up in upstate New York very aggressive power for Nautilus.

We have 2 cent contracted power, which is unheard of in this space. So that allows us to mine all time or almost all time at Nautilus and the vast majority of the time for New York as we do have that low sustainable power.

[00:16:10] Mark Hinaman: SEan, what’s the regulatory landscape look like for the industry? Are there a lot of rules that exist or are there more on the pipe? I mean, you know, regulators always like adding rules and never likes subtracting them, but where do we sit now? Is it still wild west?

[00:16:25] Sean Farrell: Well, I used to say wild west.

Now, I guess I would just say wild west and knock off one of the wilds. But no, I mean, to answer the question directly, it’s gray. But there’s a huge optimism in the

[00:16:35] Mark Hinaman: gray, like the color not great, right? G

[00:16:39] Sean Farrell: R E Y.

[00:16:42] Mark Hinaman: I heard that correctly, right?

[00:16:44] Sean Farrell: Yeah. But no, there’s a lot of optimism right now. I mean, if you’ve been watching Bitcoin just in the last week, it’s up almost 20%.

And a lot of that is based on, there’s a lot of optimism on BlackRock getting their ETF approved via the SEC. anD, you know, I think that’s just showing that where the public persona, you know, where governance is going around Bitcoin, it’s going in the right direction. You also will see I think it was October 12th, the Bitcoin network hash rate hit an all time high, hit 450x hash, which it’s going in that direction, and I think the numbers don’t lie.

It shows that, you know, Bitcoin is here to stay. It’s an asset, it’s an industry, it’s not going anywhere. And there’s gotta be regulation behind it. In the past, to answer your first question of. Where are we right now? A lot of the regulation has been based on enforcement. As I said, Bitcoin’s here to stay.

They’re forecasting the last Bitcoin to be mined in 2050. We have a long road ahead. You know, everybody that I’ve talked to were wide open to accepting regulation and governance. It just needs to be bi directional.

[00:17:50] Mark Hinaman: I guess you say based on enforcing. What does that mean? Yeah, I don’t understand that.

[00:17:56] Sean Farrell: It was more based on enforcement. It wondering what was right and what was wrong. And you know, when someone did something wrong, it was more of an enforcement. I mean, a good example is with Coinbase. I think it was Coinbase and Binance. There was a lot of the

[00:18:11] Mark Hinaman: tokens that or illegitimate activity in the market, and people are abusing either the marketplace or the financial instrument to take advantage of people, then how do you adequately punish them?

Am I, is that a different way to say

[00:18:25] Sean Farrell: it? Yeah, exactly. So a lot of the, a lot of the tokens that were in that lawsuit with Coinbase and Binance, it was, is this a security or not? And there’s not a fine line of what’s a digital security and what’s not. So I think once we get some more transparency on what the regulation and the governance is, it’d be better for both sides.

[00:18:48] Mark Hinaman: Do you guys, you’ve got several hundred megawatts installed. Now do you have a growth profile that you can share for kind of how much more you expect to add or a year over year? I mean, data centers are grown 40 percent year over year, right?

[00:19:00] Sean Farrell: Yeah. Yeah, so for so Lake Mariner again, that was at the the Somerset power plant in upstate New York.

We have aspirations to grow that considerably. So right now what’s under construction, like I mentioned, we’re gonna be close to 160 megawatts. Right now the interconnect at that site is the 250 megawatts. We’re in the process right now to open that up to 500 megawatts from an internet interconnect perspective, which is very feasible.

Again, it was a 700 megawatt power plant, and that power plant had plans to build a second unit. So that transmission line really was built to do almost 1. 5 gigawatts of capacity.

[00:19:39] Mark Hinaman: So the aspirations… That’s big, right? Oh, massive. And for an electrical asset in the U. S., that’s relatively uncommon.

That you’ve got that say overcapacity or excess capacity already in place and have an area that can readily accept that.

[00:19:56] Sean Farrell: And we’ve already done the the engineering study. Again, I don’t think we’re ever going to put 1. 5 gigawatts at that site. But the 500 megawatts. Oh, come on,

[00:20:05] Mark Hinaman: come on, Sean. Yeah, you think big.

[00:20:09] Sean Farrell: Build build. I mean the 500 megawatts is very feasible. We have plans to do it. I mean, I have plans right now that goes out to building building seven. And right now we’re building three right now, so the buildings are gonna get larger. They’re gonna get more efficient. So that’s for Lake Mariner.

There’s other growth plans. We have an opportunity to expand at another retired asset in upstate New York more in Ithaca County. There was a 300 megawatt plant up there that we have an option to expand about 30 megawatts or sorry, 50 megawatts at that site. And then we’re looking at other sites across the US again.

It’s gotta be zero carbon. so We’re looking at a lot of renewable sites that are heavily curtailed where we think we could co locate crypto mining and get some very cheap, low dollar energy, but again, sustainable and actually more system utilization. That curtailed energy is stranded, it’s wasted, and it’s making, struggling economics for the developers or the owners that built that renewable asset.

So by co locating the Bitcoin mining at some of those sites, it’s a win situation. The stranded, wasted energy gets turned into money. So, you know, it’s a real asset and a real benefit for a lot of these projects that are struggling to stay online today. Got it.

[00:21:20] Mark Hinaman: You’ve already mentioned that price is important to you.

But is there perhaps nuclear recently or historically for new nuclear has not come in at the lowest dollar per kilowatt hour often? And so I’m curious, how do you guys think about nuclear being advantaged in this space or you guys wanting to go with nuclear? As a generation source versus perhaps other low carbon or zero carbon sources.

And if it’s not, or you don’t, then it doesn’t make sense. Then yeah, that could be an answer, but,

[00:21:53] Sean Farrell: bUt that’s a great question, but it comes down to which nuclear asset are we discussing? I think nine mile was the the oldest operating nuclear plant, you know, it was built in 1969, still operating today when you talk

[00:22:08] Mark Hinaman: for those that are unfamiliar

[00:22:10] Sean Farrell: New York.

So when you talk about nuclear assets, it’s, is that nuclear plant running at a 40 percent capacity factor, a 50? If it’s running at 100 percent capacity factor, you know, they don’t really have a need for stranded wasted energy. So, Mark, to answer your question, it comes down to a plant by plant basis for how we target some of those assets.

Again, we will target areas that have historically low energy price, very sustainable energy, so almost 100 percent zero carbon, so hydro, nuclear heavy renewable penetration, and it’s, You know, it’s, you look at a lot of different metrics and see where those lines cross and that’s where we really look for expansion opportunities.

So I don’t think you can say it’s nuclear in general. It’s just, which is the right nuclear asset to look at a behind the meter crypto operation.

[00:23:01] Mark Hinaman: Would that include new nuclear, like advanced technologies new reactors?

[00:23:08] Sean Farrell: That, that’s the question of the day because when we talk about a diverse energy mix going forward I think nuclear’s gotta play a part.

You have Vogel nuclear site in Georgia. Unit three and four, I wanna say started construction in 2009. Unit three just went live this year. Unit four is still under construction. That’s 14 years for unit three and 14 plus years for unit four. So just the length of, yes, you got to do it faster. I mean, you got to make sure that safety is still at the forefront of a lot of these nuclear designs.

But I mean, nuclear is a fantastic technology. Nuclear has been around definitely older than you and I. And it’s a proven technology. And I, and that’s a big need for the nuclear industry is educating the public persona on why nuclear is good as we look at these ESG goals and as we want to go zero carbon.

So do I think there’s going to be larger nuclear plants built in the future? Yes. Do I think a lot of the small modular nuclear actors that. A lot of, you know, private equity groups, a lot of companies are investing in and doing heavy R and D. It’s also being heavily discussed in DC. Do I know if it’s going to be small reactors or large reactors in 20 years from now?

No, but I do believe there’s going to be reactors being built as we you know, move through this energy transition.

[00:24:36] Mark Hinaman: I like that. Do you think there’s opportunity for you guys in the coal communities that are transitioning right now in the U S? You know, you mentioned workforce transition in one area.

[00:24:46] Sean Farrell: We are the best example of that.

[00:24:50] Mark Hinaman: Tell me more because there’s multiple communities in Colorado, including like where I grew up that, you know, our coal communities, they’ve got coal plants and those are all closing. So how, what would it look like to have you guys move in and make some of those transition, some of those jobs?

[00:25:04] Sean Farrell: Well, well, first off, even though I’m sitting in an office in New York city, I live in Denver as well. So I I know all the coal plants you’re talking about very well. We’re

[00:25:12] Mark Hinaman: biased. Yeah, it’s close

[00:25:14] Sean Farrell: to home for us. Absolutely. It’s a huge opportunity. We call that a brownfield opportunity. So you have, like, one of the hardest things for a large load on the grid is the interconnect.

So if you can actually go in and decommission some of these coal plants and then utilize that interconnect, utilize the local resources, because a lot of these towns are small towns. When you shut down a big coal plant, it makes it tough for that town to survive. So Somerset’s a prime example. Somerset was shut down.

We’ve brought back 21 of the local employees in a very small community up on Lake Ontario in upstate New York. And those are the guys that we’re, you know, we’re employing today. The vast majority of those 21 folks. Are the ones that were working at the power plant before, and there’s multiple examples of father, son, father, daughter, examples that we have multiple generations working at that plant or worked at the plant prior.

So that’s a huge focus for us as we’re looking at expanding. We look at the old coal plants. Is there any equipment that we can get from those plants and repurpose some of that equipment for some of our data center operations? We look at that. So we look at equipment resources. It is a space we heavily focus on.

[00:26:32] Mark Hinaman: That’s awesome. I’m really hopeful that you guys can execute on some of those projects and really make a difference in a lot of these communities, so let’s shift gears a little bit. There’s been some, I think, recent legislation that’s come through, but what’s, what are some, what’s your view on some of the more macro energy industry lens and the Micro crypto mining lands, like have any recent laws or bills been positive or negative for the industry and for you guys?

[00:26:59] Sean Farrell: Well, obviously if we talk, you know, macro from a renewable perspective, the IRA that’s going to be huge for driving.

[00:27:05] Mark Hinaman: It’s a little helpful. It’s a little helpful.

[00:27:07] Sean Farrell: Extremely. So, you know, when I left Siemens Gamesa, that’s when it was finally starting to get the guidelines put in place, but it’s a huge runway.

It’s what’s needed to drive the renewable transition, but the IRA, I mean, it was across the board. It was wind, solar transmission. There was some nuclear language in there as well. So it’s just helping the whole entire energy landscape as a whole. So that’s gonna be a huge driver as we talk, you know, accelerating the zero carbon energy transition.

So. Thank you. Again, thanks to the IRA and we’re heavily, you know, heavily following that. Is there any wind projects that we can co locate at? Is there any renewable projects we can co locate at? I think there’s going to be a lot of those opportunities in the future. From TeraWulf, we’re a public company.

We’re listed on the the NASDAQ. So we’re heavily compliant with the fund, 1010 queues and all those filings that our accounting and finance team has to do. I think you know, 1 thing that you’re probably going to ask is around are we heavily tied into. The NRC, Nuclear Regulatory Commission, and the answer is us directly, no our JV partner at at Nautilus Talon owns Susquehanna, that 2.

5 gigawatt nuclear plant. So they do a lot of that compliance and they’re very, you know, very tied in there. From a crypto space, there’s a di there’s a digital commerce chamber of Commerce. We actually had some folks there I believe it was yesterday or today. That

[00:28:33] Mark Hinaman: is really . Is that non-centralized also?

I mean, is that they only have Zoom calls or they’re all anonymous. What’s the digital chamber of commerce? I picture

[00:28:39] Sean Farrell: a lot of people come together. So that one was definitely in person. It’s a great distributed

[00:28:46] Mark Hinaman: currency, in person parties.

[00:28:48] Sean Farrell: There you go. Yeah. Decentralized you know, currency and centralized get togethers.

But for the digital chamber of commerce, they’re really driving how energy and the digital space come together. And that is a huge aspect. As I mentioned earlier, you know, a huge input for both crypto and also data centers is energy, your cost of energy, your reliability of energy, your sustaina is the energy sustainable?

Thank you. Those are all huge metrics when you look at this space. So tying those two together together and really, you know, being a voice in DC as we navigate this journey together is a necessity. So that’s one we’re heavily involved in.

[00:29:28] Mark Hinaman: Got it. How critical do you think having stable power on today’s grid?

Do you think it’s going to be critical to have stable power for today’s grid? Seems like an obvious question, but we’re deploying a lot of assets that don’t have reliable or dependable power. And I mean, you mentioned that crypto can be a solution to that, right? To absorb it when you need it and turn it off when you don’t.

But yeah, why don’t you just riff on that a little bit?

[00:29:58] Sean Farrell: Yeah. So there’s different ways you can look at it. You know, does crypto need. Super stable, reliable power. Again, like I said, not like a data center, but the only way you’re going to get stable power is by having responsive loads on the grid. So you have your big nuclear, your big fossil, which again, you asked earlier, your fossils your gas powered you know, gas turbines or gas plants, and then a coal power plant.

That’s a dispatchable resource. As you have where the grid of the future is going, when solar fuel cells hydro pump storage well, I guess pump storage hydro is more dispatchable, but your wind and solar and that’s an intermittent resource. The more intermittent resources you have on the grid, the more dynamic and responsive.

Resources and loads you are required to have so. You’re going to need loads like Bitcoin mining that can turn off and turn on when needed. They’re going to turn off when you have those big peaks, when the grid’s stressed, and they’re going to turn on when there’s, you know, very low load on that transmission line, and they’re going to, you know, support the load.

And when you have a lot of these power plants, like the nuclear power plant that we’re tapped into in Pennsylvania, by having the crypto mining behind the meter at that asset, It’s a floor. So you’re always going to have that load and it’s a, you know, it’s a load sync for that power plant. It keeps that power plant on.

I mean, that’s a very large power plant. So you need you know, some other others demand to keep a 2. 5 gigawatt power plant online. But as you look at co locating crypto to other assets by having that floor position and be able to keep that power plant on power plants don’t like to start and stop.

So they can stay online, stay above that minimum load, or if that can be the buffer to let them operate more at their max load, power plants were built to operate their full load. If crypto or other assets can help a plant operate more efficiently at that higher load, it’s a benefit for both sides.

[00:32:00] Mark Hinaman: You know, it’s a really interesting paradigm because prior to Bitcoin mining or crypto mining I don’t know that there was a comparable. dEmand side solution, Or product that could respond as rapidly as Bitcoin does. And I mean when you run the economics on deploying Bitcoin miners, it is helpful if they’re on all the time, right?

Like it makes the denominator bigger, which then, you know, brings down your total dollar per hash rate and your total capital cost. Economics are better, but they can, you know, if you have a lower capacity factor for mining, then it can still be acceptable, right? You can still hit your financial targets.

But I mean, can you think of an example prior to Bitcoin that like had as rapid of a demand response? Like it’s almost like this product didn’t really exist in the electricity or power markets.

[00:32:49] Sean Farrell: Yeah, like our site in New York, we will, we can take 93 megawatts off in a matter of seconds. So we actually can ramp down.

[00:32:59] Mark Hinaman: Which is like unheard of, right?

[00:33:00] Sean Farrell: Yes, we can ramp the whole entire site down under, I mean, we do it quicker than this, but we like to do it below 30 seconds. Sometimes we can do it in 10 seconds. Which is a very dispatchable and, you know, like I said, a responsive load. The only thing I can really tie to this would be battery storage.

So battery storage you know, acts on the grid if there’s a need for power. It can actually inject power on the grid. But the other side of a battery actually absorbing the power is very similar to crypto. So when the power is low, or when there’s a need to actually pull that energy off the grid, you know, that’s where the batteries will charge very similar to you know, crypto, you know, crypto is going to take that energy, turn that into a decentralized currency versus a battery is going to take that energy and store that and wait for a time to either sell that power for ancillary services or do like an energy arbitrage.

So I’d say it’s very similar to You know, the the charging of a battery.

[00:33:57] Mark Hinaman: Yeah, no, that’s a good point. Batteries, it’s kind of similar, but yeah, there’s some, there’s a few dynamics that are different.

[00:34:04] Sean Farrell: Just one more thing about a battery. I mean, you’re talking about, you know, peakers and batteries right now, they’re starting to become, you know, very competitive against a thermal peaking power plant.

So as you look for, when you’re doing a contingency study in different areas of the grid, you know, if you have a three hour, four hour, you know, five hour need. Do you need to put a power plant there? Or could you put a battery storage solution? So that’s, you know, as you talk about stability the answer is diverse.

And that is one of the diverse, you know, solutions that we’ll look forward to in our future grid.

[00:34:41] Mark Hinaman: Okay. So, but if it’s diverse there is a mix and people have opinions on what the mix should be. You know, what percent wind, solar, what percent hydro. Do you have an opinion about kind of what the right makeup looks like?

[00:34:56] Sean Farrell: Yeah. The reason why I’m smiling, if I had that answer, I’d be yeah. I probably the richest man in the world. It’s a tough answer. And again, it’s going to come down. You have a large U S grid. It’s gonna, it’s gonna differ from different load pockets of different areas, both in the U S both in Canada, both around the world.

So there’s not one size fits all. YoU know, Siemens used to run those exact studies for certain utility footprints based on their load and their demand. What is the optimal mix? That’s an optimal mix today. Can you forecast what that mix is going to be? 5, 10 years down the line? That is the toughest question to answer.

And that’s, you know, what. Everybody’s really diving into and they look at their integrated resource plans for all these utilities. But it’s going to be heavy hydro. You’re going to have nuclear. You’re seeing a lot of extensions and a lot of nuclear plants, which I think is very positive for the energy grid and a lot of renewables like we mentioned earlier.

The is going to be driving a considerable amount of renewables. When I was at Siemens Gamesa, You know, we were forecasting 10 gigawatts per year just in the U. S. Year over year, once the IRA really got put in place and guidelines set. I mean, that is a lot of energy coming on the grid. So you will start to see your renewables start taking down your coal.

You know, there will be, you know, probably a select few in certain pockets.

[00:36:18] Mark Hinaman: Except in India, China, Malaysia, and… Agreed. Still just one atmosphere, right? Yeah,

[00:36:27] Sean Farrell: no, absolutely. And you know, as you look at other forms of technology, you know, they’re becoming more efficient you know, more diversified.

You mentioned about H2 earlier. Yeah, I mean, you’re gonna have, you know, gas turbines running on H2. You’re gonna be running on different alternate fuels or some kind of syngas. Is there different fuels out there in the future? But to answer your question, it’s gonna be diverse. There’s gonna be a lot of both intermittent and you know, dispatchable resources that meet the load and the demand that we have in our communities.

[00:37:00] Mark Hinaman: Sean, thinking about location for these projects, I mean, you’re focused in New York and Texas is obviously a great target with kind of the ERCOT grid and the amount of renewables. I know there’s a lot of companies chasing that. Are there other areas of the world that are attractive? Or are you guys thinking internationally?

Maybe the easy answer is yeah, wherever power is cheapest. There’s also the community stakeholder, you know, state legislators that could be more accepting of crypto mining and have advantages for net zero power. I mean, how have you guys thought about this?

[00:37:33] Sean Farrell: Yeah. I mean, you took the words out of my mouth.

It’s we were up opportunistic. We’ll look at energy price, sustainability. Obviously we’re not going to build like a small site outside the U S cause just from economies of scale. Have a boots on the ground at a local site just again that helps out your marginal cost, but we’re open to any sites.

We need contracted power. A lot of times if you’re taking the energy risk and you’re floating on merchant power, that’s. You know, not the best thing to look at, especially to sell to investors. But contracted low dollar power, sustainable power. That’s really what we’re looking at as we look at expanding outside of our Pennsylvania and our New York asset.

[00:38:15] Mark Hinaman: Awesome. Cool. Oh, Sean. I think you’ve answered a lot of my questions,

[00:38:22] Sean Farrell: but not to lose my voice. You’ve been having me talk this whole time. I know. Well,

[00:38:26] Mark Hinaman: that’s, you’re the guest. You’re the podcast guest. I’m supposed to, right. We like talking about nuclear on this podcast, but what do you think is one of the most impactful steps that we can take to building more of it?

[00:38:36] Sean Farrell: We need to educate the public persona. Again, like we talked earlier, there’s some nuclear plants built in the sixties that are operating today. Once that nuclear plant’s there, you know, it’s a very stable, usually they’re very large loads as well. agAin, like educating the benefit of nuclear power.

Everybody loves talking about ESG, zero carbon. You’re going to need nuclear to get there. You’re going to need, because

[00:38:58] Mark Hinaman: nuclear is a zero carbon Why do they only say renewables in all of those? News articles, right? Yeah,

[00:39:04] Sean Farrell: it should be zero carbon and nuclear is a zero carbon dispatchable resource. Which is going to be needed as we go down this this energy journey.

So I think education is key. If we can get some traction on some of these small modular reactors, you know, to smart start small, really prove out that concept and prove out the technology and prove out the rigidity of those solutions. That’s what we really need to drive this forward.

And I’m really optimistic. You know, I think nuclear has got a huge runway ahead of us and I’m really excited to see what has you know.

[00:39:40] Mark Hinaman: Okay. So changing public persona, would you say that’s something that people can do to help move this conversation forward? How do we change that public persona?

[00:39:50] Sean Farrell: That’s a good question. It’s gotta be education on just nuclear technology, the safety measures that’s taken to build nuclear. I mean, the reason why. Vogel took so long to build. They have so many checks and balances to go through. That’s why it took him 14 years to build, among other reasons. But just really understanding the safety measures that go behind the design of a nuclear reactor, I think would really settle a lot of the, you know, people’s nerves when people hear nuclear, they immediately think, oh, my gosh, they, you know, they think of some of the disasters for Fukushima for Chernobyl and some of those.

But you know, The technology has definitely come around and it’s a, you know, it’s a technology that’s here to stay.

[00:40:36] Mark Hinaman: Oh, Sean, what’s what’s your vision of the future? Leave us on a positive note. How much crypto mining do we have moving forward? How many nukes do we have set up that are actively powering this stuff? Yeah. Yeah.

[00:40:49] Sean Farrell: So many crypto mining, like in the US, I think we have 1200 gigawatts of you know, power plants across different assets.

There’s under 10

[00:40:57] Mark Hinaman: gigawatts. Gigawatts of, sorry that’s total power. Electrical power generation,

[00:41:03] Sean Farrell: total capacity or less than 10 gigawatts of. Mining in the U. S. So I do see this space growing largely, but to answer your question more from a macro view it’s going to increase diversity. Like I said, you’re going to see a lot more renewable penetration that’s going to call for a lot more spikes.

You know, a lot more peaks and valleys in the grid where you’re going to need your battery storage. You’re going to need these dispatch resources. You’re going to need responsive loads like crypto mining. It’s going to be a pretty diverse grid from what you saw 50 years ago. Extremely different.

You know, the traditional grid that we had in the grid of the future. You start seeing bidirectional flow of power as you start having rooftop solar and a lot of community solar projects. So the grid has to be fortified for that. It’s changing drastically, but the change has to happen and, you know, it’s needed to hit a lot of the goals that we’ve laid out.

You know, both from a reliability front as well from a sustainability front.

[00:42:04] Mark Hinaman: I love that answer. That’s a great place to leave it. So Sean Farrell, I really appreciate it.

[00:42:09] Sean Farrell: Thanks for the time. Appreciate it, Mark.

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