Lukas Pfeiffer charts an arc from dorm room doubter to Genesis Digital Assets executive and institutional advisor, concluding that a Bitcoin only thesis delivers the most durable intrinsic value. He observes a macro inflection where infrastructure capital increasingly treats mining as a power monetization instrument, with pragmatic US operators racing ahead while European boardrooms remain constrained by ESG gatekeepers. Grid Imagery weaponizes this thesis by turning modular ASIC fleets into grid responsive assets that reach sub second frequency response of 0.7 seconds, unlocking premium ancillary service markets. The platform engineers a tri layer revenue stack that earns standby capacity fees while offline, captures negative price arbitrage when switched on, and continuously harvests block rewards. Lukas contends that such flexible miners outclass battery storage and will anchor renewable heavy grids as they converge with high performance compute campuses to maximize capital efficiency and grid resilience.
Lukas Pfeiffer charts an arc from dorm room doubter to Genesis Digital Assets executive and institutional advisor, concluding that a Bitcoin only thesis delivers the most durable intrinsic value. He observes a macro inflection where infrastructure capital increasingly treats mining as a power monetization instrument, with pragmatic US operators racing ahead while European boardrooms remain constrained by ESG gatekeepers. Grid Imagery weaponizes this thesis by turning modular ASIC fleets into grid responsive assets that reach sub second frequency response of 0.7 seconds, unlocking premium ancillary service markets. The platform engineers a tri layer revenue stack that earns standby capacity fees while offline, captures negative price arbitrage when switched on, and continuously harvests block rewards. Pfeiffer contends that such flexible miners outclass battery storage and will anchor renewable heavy grids as they converge with high performance compute campuses to maximize capital efficiency and grid resilience.
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00:00–05:00 Lukas Pfeiffer’s dorm-to-data-center origin story and rapid-scale tour at Genesis Digital Assets, framing his “Bitcoin-only” investment thesis.
05:00–12:00 Institutional capital gets a crash course in hash-rate economics: US boardrooms lean pragmatic while European ICs wrestle with ESG optics.
14:00–20:00 Unlocking ancillary-service revenue: Grid Imagery engineers sub-second (0.7 s) frequency-response capability, redefining miners as grid assets.
20:00–26:00 Triple-stack monetization flywheel paid standby, paid negative-price absorption, plus continuous block rewards creates a capital efficient flex-load platform.
32:00–38:00 Comparative asset analysis: modular ASIC fleets outclass lithium-ion storage on CAPEX, duty-cycle depth, and non-correlated yield exposure.
40:00–46:00 Five-year vision: hybrid HPC-Bitcoin campuses leveraging shared power envelopes, heat-reuse loops, and AI demand-response APIs.
48:00–End Talent call-out: Grid Imagery recruiting US energy-market specialists; connect with Pfeiffer on LinkedIn.
@PfeifferLukas
linkedin.com/in/lukas-pfeiffer-
JP: [00:00:00] Welcome to Digital Gold, where we uncover bitcoin mining's transformative potential. Today's guest is Lucas Pfeiffer, founder of Gridmetry merges bitcoin mining, energy grids, and high performance computing, leveraging eight plus years in digital assets to deploy mining farms in Central Asia and pioneering crypto finance solutions.
At Gridmetry. He mimas data centers as dynamic grid responsive assets, stabilizing volatile energy networks through projects like their partnership with Flex Onyx Energy, ag, and Sweden using Asics to enhance grid flexibility. Lucas's vision is to transform grid challenges into opportunities aligning energy resilience with business innovation.
Welcome to Digital Gold. excited to have you.
Lukas: Hey, jp. I'm happy to be there.
JP: So you found Bitcoin, how, what was the very first interaction with it? And then tell me the story about your first miner before we jump into the journey. It's been for you.
Lukas: I found it through a friend who was, living in the same student [00:01:00] residence as I was living in, in Germany and Munich. , And this friend actually, , discovered Bitcoin. And , he is a mathematician. And, he was completely fascinated by it.
And he then built his own, , mining rigs, , in the student dorm, in the basement. and he basically stopped focusing on his studies and only focused on Bitcoin. And I told him that it's very stupid. He shouldn't do that. And, , like he needs a degree and , he needs to finalize the studies.
And, let's, uh, fast forward a couple of years. This guy, , Marco is the founder of, Genesis Digital Assets. And then he hired me. I must say that I I didn't see it at all when I first saw Bitcoin in 2012, I didn't see the potential and I needed like five years until 2017 really to understand it.
And once I did that, I also, I started focusing my career on it., I worked at, Genesis Mining, which is now Genesis Digital Assets. , Helped them scaling in Central Asia. And also because of my, background, which is coming from m and [00:02:00] a due diligence and traditional finance, I was always working at the intersection between , the traditional financial markets , and bitcoin mining.
And , , so my first own miner really was, or the first miner, I actually saw was in, Kazakhstan in a, yeah. 40 megawatts, Bitcoin mining facility that we developed there. Yeah.
JP: you were on the ground floor of, let's say, one of the biggest mining firms with one of the fastest growth trajectories at that time.
Bring us into a memorable story that you have of either things going really well or you stepping into facility and things going really bad. It and share that pace, that culture, the fast environment.
For those who don't know, Genesys was one of the original large graphics, GPU miners at high scale. ASIC miners at scale really would be today's public Bitcoin miner. In, back in 2012.
Lukas: Yeah, it was, , no, actually until I would say until. 2021 also the [00:03:00] scale, what Genesis has and still has today, is still , one of the biggest miners, on the planet. , But it's not so publicly known because they're not trading on the public market, so , they don't have to report big they are.
So that, that's why, , , they're not so much in the spotlight, but, , they were at times when Marathon and other players, they had like their first like 10, 20 megawatt farms, Chinese's already had, in the hundreds of megawatts. It was distributed across, GPU mining. , They focused also a lot on Ethereum in the beginning, but , also transitioned more and more to Bitcoin and yeah, for me, like it was, obviously for me it was a big challenge as, as a German national.
Like I was basically put into a cold water and I was, I moved to Kazakhstan and I. Help there to connect the basically the local companies with the overall headquarters. And, , the, one of the largest challenges was really to explain to local stakeholders that there is a constant load of, 2040 , up to a [00:04:00] hundred megawatts of power that is drawing this 24 7, heavy.
And that the equipment that needs to basically provide this load all the time. So there was a time and also , some transformers when bus, , the equipment was ready for that. So there a a lot of structural challenges. , , we had to take care that, , some precious materials like copper cables were.
Still in place overnight, like after that. So , that was quite a challenging environment , and definitely, not only culturally like people there are super nice and well educated, much more than kind of our Western perception would expect. So that, that has basically, brought me a long way, in my thinking of this region and also of, thinking about digital currencies and currencies in general.
So , that was a great experience.
jp: And so you drop into this region, you do you know how to speak the language or No. And you're trying to explain to the locals the benefits of our industry. Gimme a little bit more on that experience specifically,
as I
can imagine how hard it might be.
Lukas: Yeah. We had, , [00:05:00] actually also organized the first, , Bitcoin or blockchain focus conference in the region. So people speak Casa and Russian. I must admit that I thought, okay, I'm gonna learn like some basic Russian that's also useful outside of Kazakhstan. , So I was able to communicate like in a cab.
So that was my level. So very basic. But , we organized the first blockchain conference in Asana. , And it is also, we had , a bunch of politicians also coming there. So , not unfortunate that I'm , not like, the president, but like people on the first show of ministries and literally having, a whole security apparatus coming there.
Suddenly people, from the Secret Service flooding the place. . And,, then having to basically sit in, or official meetings where you also still don't really understand a thing and just listening in , and maybe say a few words that's translated to you. , Being able to commerce with all of the stakeholders , from , politics and business is very [00:06:00] intertwined there.
, As a European, I could drop ahead and say maybe that's similar today in the US but, it was, it's very intertwined. So that was, something where , you have to really,, understand also some of the local specifics to not, , to don't basically pay any anyone's territory that is.
Might be a little bit tricky to, to play in. So that was always a fine line. And we had, through very great local partners that are still today, leading gene digital assets, were quite successful there.
jp: And so navigate me. What's the next career jump? Where do you head after Genesis? Is there a clear inflection point that kind of an opportunity presented itself?
Lukas: Well, yeah, it was basically , in 2021 , during covid, like there was this big hype on, , the next big hype , on bitcoin, , and in general, , trading when a lot of the institutional also started really seriously looking at the asset class. And I basically , my profile was [00:07:00] quite requested because I had like this very kind of.
Top tier consultancy stuff background, and then went into digital assets, which was something that was not so, available. So I got actually a lot of requests from investment banks pe funds that to help them assessing opportunities. And that's why I found actually the opportunity to also set up our own firm, crypto Oxygen, where we were actually one of the first, yeah, advisors in the space that
Marker
Lukas: helped PEs, , VCs, investment banks or big family offices to assess their digital asset investment opportunities.
And, , that was , quite fascinating because we did it also , on different continents. We did actually a lot of work in the us. , I'm happy that, I can also publicly say that, , we were the lead, , commercial taking advisors . On basically the Pennsylvania nuclear power plant that had a proprietary, mining facility by Terra Wolf on site.
So that's was something that we facilitated also. And there were fantastic [00:08:00] opportunities in South America, Africa, Asia, and, I had the opportunity to see so much. , We did also, it was also funny because we did, not all, literally like we did a lot of different digital assets. So we also did some NFT projects and exchanges.
However, over the years, like this has very much narrowed down and I would say today,, or in last year's, we were really Bitcoin only. It has really shown that the most substance is in what is your podcast digital goal. So, , yeah, coming back there was pretty fascinating.
jp: And you're focusing on m and a initiatives, consulting, , large scale mining. , How did the industry mature and the investor type, mature, and your presentation change from? Presenting this to local politicians to maybe pitching a boardroom of an investment bank or PE firm, , what changed , and where did the narrative shift?
Lukas: so I would still say that boardrooms and investment committees even today, are [00:09:00] still much more conservative than you would think. I think that in the US , it's better. So typically there is already much more openness to digital assets and Bitcoin and, Bitcoin mining, , investments in the us in more institutionalized, funds.
In Europe, it's very far behind. So in Europe, still a lot of ICC still have a problem with Bitcoin. They cannot touch it. They cannot feel it. They don't understand it. , But in general, you would be very surprised if we are stepping out of our own bubble, how, , far behind lots of the boardrooms and see, still are.
The biggest shift though, I would say is the understanding of, , Bitcoin as an asset class and the inter connect ability with energy. , How important energy is, what role energy plays,, , in, for Bitcoin, but also the other way around what [00:10:00] Bitcoin can play. , And can influence energy and thinking of energy.
So,, a lot of the funds, which are now seriously looking at it, are more coming from the infrastructure side. , Institutionalized infares funds who are really, , seeing this great potential that Bitcoin as an asset class has for better monetization of their different kinds , of power producing assets.
jp: And so this. Merge of real large Bitcoin mining players and small ones and the energy markets. Now obviously on the podcast we talk about those interconnections decent amount. But walk me through industry and maybe where it is today in Europe, maybe where it was five years ago, and where you see it, it going.
So of time can be spent on this question as we digest the market. And then we can talk even about the US as well and what you're seeing there.
Lukas: a [00:11:00] lot, I would say , the biggest mindset shift or the biggest difference is the, focus on. Pure financial incentives versus ideology and. The renewable story, I would say there is , the biggest, think a lot differences that there is, investors in the US are either more agnostic or have understood that actually Bitcoin is a great way to monetize renewable energy assets.
in Europe it is still a very ideologically , driven discourse. So a lot of the funds did that are heavy investors infrastructure. , They having their mandates. They want to be ESG compliant and ESG and this ESG compliance. Sometimes just does not include Bitcoin , so I had a lot of situations , where we spoke, where we talk to, investment managers and they said like, yeah, it's great, but I like it.
But our IC wouldn't probably touch it because , it has a Bitcoin exposure and the amount of education that you still need to do to get them across and explain [00:12:00] like, look guys, , it's bit Bitcoin today is the fifth biggest asset class. It's there it's, you are not the ones that are deciding like whether that has value or not or whether that's so ecologically or not.
It's there. And it's, something that you need to basically, that you also need to, bring to your, investment committee, , in us that is already there. Like , this understanding is already there. In Europe you see a lot of market dysfunctionalities. There is still a lot of, the energy markets, , are very driven by a lot of subsidies, by a lot of energy taxes.
So that, that's something a lot of complexity that you need to understand. And what's happening is that sometimes that drives to, companies that grow very fast. So energy and battery companies, for example, , we have one, companies, one battery supplier in the Nordics North world, which was one of the biggest battery producers in the region.
However, production costs are much too high compared to Chinese, competitions. So they were basically, they just went bus a couple of weeks ago. Another big focus , in Europe lies on hydrogen production. But even where a lot of [00:13:00] scholars tell you that it is, it's just not efficient to, basically produce, , steel by firstly transferring energy to hydrogen and then use this hydrogen , to generate heat and then make like green steel.
But cost wise, it'll never be able to compete with seed that you can source on the global market. , And this is where the biggest mindset difference is, I would say between the US and Europe, is that US in general is much more pragmatic, also sometimes agnostic, much more efficient, , less ecologically driven , on the business side of things when it comes to Bitcoin and energy.
jp: And I would agree with that. And I think we have our own flavor of, and , it runs based on, I would say, the , who's in charge of the presidential level and what type of subsidies that kind of guide allocation of capital to certain energy resources, even if they're not
Lukas: Yes.
jp: for broader society, , to access that cheap energy for multitudes of reasons. And when it comes to the demand response markets [00:14:00] and the ability for. Grid trees and its innovation and integration into the data centers with energy grids. Walk me through that process. Was it always available and now you guys are unlocking it, or is this new regulation that is allowing this type of frequency and grid control.
Lukas: basically. How we got through it is that, in a very strong partnership with, Flexon, which is a data center operating company in Europe with, , data centers in, , Sweden that hosts a large share of asic , service. And, they basically ask us, more than two years ago, actually, like, to, to look at the business , and assess like, what can be achieved with, with it.
Like , where are some value levers, like a very typical,, for you very boring , consulting approach. And actually we were quite stunned because we saw that while they were already active in some low balancing markets, this whole market , was very big. And there was a [00:15:00] lot more potential to actually unlock.
So. basically what the slow balancing mean is there's different levels of, basically you're helping with your flexible load to stabilize energy grids. And there are incentive structures from grid operators in place that pay flexible consumers are also flexible producers to be able to ramp up or down the energy production or consumption at a certain level of time.
And there are basically 12 programs that globally, , it's every where's different, but it's also very similar. So in general there are different programs that have different requirements in terms of reaction speed, in terms of accuracy, , in terms of being able to hold a certain degree of energy consumption over a certain level of time.
And , we. Thought, okay, let's see how many of these programs we can actually comply to with Asics. And over the last two years, we managed to [00:16:00] actually even meet the fastest fast frequency response programs, which have a response time requirement of 0.7 seconds. So that the signal gets to the miners, , the miner is basically shutting off.
And this has unlocked basically a completely new revenue stream for Bitcoin miners because grid operators pay the energy consumer for the ability, not actually, , not even the doing, but just already the ability to ramp up and down very fast. , And yeah, , that's the basic concept.
And this concept exists in a lot of European markets. I. , It also exists , in the US there is already lot balancing happening. Mostly I would say , on the secondary and tertiary reserve markets. , It's a lot of lingo in, , and in Pennsylvania. PJM, , and basically we are here now and for us, this opportunity has really changed our thinking, , how we think about Bitcoin mining because we are [00:17:00] now mainly looking into Bitcoin is a flexible asset with Bitcoin as a side product, where , the key product is the flexibility that we bring to the energy grids.
jp: And if you're breaking down a revenue stream of, let's say an ASIC or a megawatt. What percentage is coming from this new market that you've unlocked with? I mean, 0.07 seconds. Guys, that is so fast. You guys are on the cutting edge of
Lukas: Yeah.
jp: of this technology, what does this do to the economics, especially in Europe.
Lukas: Yeah. And I mean, the cutting edge , is pretty nice because it was a bit like , in Formula one, right? So , we looked into, okay, what are all of the different aspects of the farm that basically slows down the signal and , we stripped them out and we, just made sure that like a little bit, and also high frequency trading, that is as fast as possible.
, And we can really be from the power meter measures the grid frequency , which gives us a signal, to the minor, , that basically reaction time , is so fast, as fast as required. So , that process has been [00:18:00] quite. , interesting. Also, as you probably know, that some miners, they have, restrictions and they have some safety mechanism in place.
So let's say that we have also had to, , circumvent some of these. So that's, , was quite a nice, , r and d process. But your key question was actually about the economics., consultant in me will always, tell you, it depends.
Lukas: It really depends on the specific market, on the specific incentives 'cause system.
So it's really different everywhere in the world. Also within Europe, within us, , even within Sweden, where we are mostly today, there's four different zones where the pricing is different, but in general. It's a auction-based pricing for different types of programs where you, the national or , the grid operates in a specific region.
They say, okay, they need for a certain day. They expect to need this volume of, flexibility in one particular program, and then people start bidding on it. And, the great thing is that [00:19:00] actually miners are the most, , the best flexibility asset there is today., I'm convinced about this.
So miners have like, the lowest, , they are always in the market because they, if they want to participate in some progress and some program, they can always take it. And , our specific, , value add that we also bring is that we can select the best program. So sometimes. , How it actually works is that a program that people probably know us is that , you're online, you're up and running, and you're being paid that the grid operator can actually , turn you down.
So he can say, okay, now you need to shut down within the next couple of seconds. And then this is basically an automated program that shuts you off. , How the economics work is that , in such cases obviously you get your mining revenue and you get an , , additional benefit for the ability to turn off and then you have to pay your electricity deposit and stuff so that, it gives you a certain gross profit.
what is interesting, what we are now mostly focusing on are the [00:20:00] programs that are working the other way round. So our miners right now are actually off most of the time we are being paid, but we are being paid for the ability. To ramp up very fast. , And what that actually means on the economics is that, , you are being paid for basically for doing nothing.
, But sometimes you need to be very fast in activating your minus on a gross profit then obviously measured in fiat because you don't produce any Bitcoin. That is oftentimes actually better than being up and running and just turning off. But the great ability now, for us as an energy, that's why I'm saying we are looking more in the flexibility side and we're less thinking about Bitcoin is that , we are basically profitable , in both scenarios.
If energy prices are relatively low, we can participate in the programs that are, , paying us for being up and running. To shut down if energy prices are higher. We participate in the programs where we are being paid for being on the sideline and being ready to turn [00:21:00] on. , And , this is a true flexibility and the , true ability for law balancing that we bring to the market, which is a completely different mindset, but it really is the best.
It brings the most effect and the best benefits to energy grids. And it really is the biggest strength for bitcoin mining. Yeah.
JP: And this is why mining is such an onion. When you peel it, you start to learn. More and more about this technology that pays you for being on but also being off you don't need to go find a customer because you just connect to the energy market, but also the Bitcoin market, which is always paying effectively SATs or dollars to you for being on and securing it. But at the same time, you are also saying, let me flip it on its head and secure the energy market as well. Let me secure the power grid. And that's something where, is that
only [00:22:00] really Sweden? Is that mu the larger parts of Europe? Is that also , in America? Can you talk to me where this dual-sided market approaches?
Because I most, people understand, oh yeah, you're running power. I turn off my power, I pay less for the energy 'cause
Lukas: Yeah.
jp: But what you're saying is the power is expensive and I'm gonna turn on, but I'm gonna get paid way more. Then if I was off.
Lukas: Exactly. , I'm going to turn on, , and get basically an additional revenue. I'm gonna get paid additionally because the grid operator is allowed to turn me off. Right. For a brief moment of time. So that, equation. Where are the, so these programs, and this is something where I must admit that unfortunately also I'm not already fully in all of the markets.
Right. So we are really, , it's, these markets have always very much specifics and experts in, already in Sweden, Norway, in Finland. But we are really now also diving deeper into other markets. And we are looking into, in US, we are very much focusing on Ercot and PJM [00:23:00] because they have.
The so-called rack a, regulation A markets which are very similar. , So we are now, already having first discussions of the local players to see, okay, can we enroll them there? What else can we bring them in terms of flexibility? How is our product enhancing their flexibility even more? Yeah.
So , that's basically the, distribution. But, you asked me before also , about the economics , and the pricing. And what I wanted to share with you is basically, how the last couple of days, for example, you said that bitcoin's like an onion. , So in Sweden, we have the situation right now that there is a lot of water , in the hydro system.
So flexibility and grid civilization in Sweden very much depends on hydrogens because you can imagine that whenever there's like. Too much, too little production or there's too much energy in the system. They use, the hydrogens to pump water from bottom to top. So basically they fill the reservoirs.
Now, , the whole winter was very wet, so all of these reservoirs are full. [00:24:00] So these hydrogens, , they have a very limited ability to react on, , times when they actually need to take energy out of the systems. And that means that the markets, , the energy grid, , the grid operator wants flexible demand to be actually offline, but ready to take energy from the system if they needed to.
So what is happens for us at the moment in flexion is that, , we are basically being paid for being offline. , However. , We are getting a lot of activation signals and which means that we are being turned on, and then the grid operator pays us Additionally, basically, we are being turned on at negative electricity prices, so the grid operator pays us additionally to take energy off the market.
And then additionally, we have Bitcoin mining revenues because we are on and running. So that basically that stacks our revenue. ,
JP: Three times
Lukas: three revenues, yes, three, revenue [00:25:00] streams. , Which I think is basically something that is, , , quite unique worldwide. So, we are quite happy about that and it's obviously, it's all a situation, I would say all the time, but with our flexibility, we are able to profit from that and we are able to monetize it whenever it's there.
jp: And this is just from someone on the outside. They hear mining uses a lot of energy that's it.
what they don't understand is that energy is like water. And if you don't have a place for it to go, it can the electric grid 'cause it is so powerful.
Lukas: exactly. I mean, as we have seen in Spain where, we had a huge outage, a huge blackout of the whole Iberian Peninsula just a few weeks ago. , It's still not a hundred percent clear, like how exactly it happened, but there was a lot of renewable energy in the system when the outage happened, and it's likely to be interconnected there.
So as you exactly say, like it's [00:26:00] like water. Like you need to, the best thing for. Really enabling the energy transition and having more renewable energy producers like solar and wind there, which have a very intermittent nature, is to also balance that on the demand side with flexible demand and Bitcoin is the perfect flexible demand.
jp: So now let's talk about the real technical issues with doing this. We don't need to dive in maybe into the secret sauce or the, how you got from frequency trading to meter. And, you know, I'm guessing you got, a long ,. Fiber cable from the meter directly into the miner, perfectly across the ground in the perfect straight line.
But for real, , the degradation of the Asics, turning on and off h boards breaking is that a problem? Are you using hydro cooling, air cooling? Does it work with s nines? Are you guys s nineteens s 20 ones? Like, where do we
sit in the stack and what percentage is going down every time you, you know, every day?
Or is it similar
Lukas: Yeah.
jp: running a normal Bitcoin mine in the same degradation?
Lukas: So it is more, [00:27:00] maintenance intensive than, just being on and running all the time. So, today, actually, in fact the most, data centers that we manage and also flexion, we have about different types of s nineteens. And, , we have some air cooled. So, obviously in Sweden also there's not , so such a big difference in the temperature, so that's okay.
and we can see that basically turning them on and off and on fairly frequently. A few we have, we basically cycle a few times per day. Definitely requires us to have basically a more, yeah, rebooting a bit more, attention. , We haven't seen so much increasing failure rates on hash bots so far.
I mean, obviously in the testing we had sometimes we broke something in the testing, which wasn't great, but, you need to basically also, , find your boundaries. So , that was also,, we had some learnings there. But also it's, let's say like it's good that we are doing this on s nineteens and not off the latest stage hardware because it's definitely something that you need to get comfortable with [00:28:00] and you need to get more learning.
And you need to see , how this goes, before you roll it up in the later stage. Very, very expensive, very high efficiency, fleet. Yeah.
jp: And so when that's the degradation of the machines, what about the implementation? And the network interface and the programming, did you guys custom code all of that to work with the meters? , And is there obviously special types of meters you need?
Lukas: Yeah.
jp: Bitcoin miners would've to upgrade their meters, and I know in the US some of the programs to get into the meter might be a year out.
Are you seeing the same thing in Europe and where you're operating, where the meters are just hard to get? And then to that point, expanding it about the availability of these
Lukas: Yeah.
jp: what's the scalability of these programs? Do they start to max out when you add 500 megawatts of this load, or is there really so much demand because of all the renewable energy and the inherent problems that you think the market can continue to grow?
Or is there really a local constraint based on the local [00:29:00] economics or local grid needs?
Lukas: That's , very good questions. , So basically. I started on the technical side. So, , power meters. Yes. It's a topic. It's also, it has, long lead times here, but , not like a year. It's like a three months lead time or so, like 2, 2, 2, 2, 3 months. And, as you say, that's also something we learned.
Like you need to have a very high degree of granularity, like in 0.1, , seconds interval. That basically takes the energy to be able to communicate the very precise, consumption to the National Grid operator. Also on the miner, , we actually looked into working with, existing firmware, also existing, , mining maintenance systems and,
, We looked into like integrating as much as possible so that we had just a very limited amount of code that we would need to write ourselves. But our software that we created is kind of a plugin to that can be utilized with , any minor maintenance,
Marker
Lukas: , software.
, Some of the formats they have already,, [00:30:00] dropdowns where you can choose like an, , minor control for flexibility. And we are basically also doing similar things. But we actually also had , to adapt the firmware. So , we here, we actually worked with a, unfortunately, I, I can't say whom, but a very well known, firm.
Producer that has also , a very good, , understanding of energy markets. So , they have really seen what we are doing and they were quite, supportive. So , we are using one specific firm that has a function that allows us , to communicate very fast with the miners. And, yeah.
And then we basically looked into, okay, what security, what does the stock firm or , what does? The miner has to actually slow down any energy consumption. , We even have built in a function , so that the hashing doesn't necessarily start directly with the, ramp up of the energy consumption because that's also something , that the miners want.
They want obviously hash to hash as much as possible with every vats that you put in. So that's something we needed to [00:31:00] kind of circumvent and then, yeah, , we built this, whole,, construction that now allows us to be really fast and really responsive and also what is sometimes a bit underestimated, really accurate in our consumption.
jp: And so you guys have built up this firmware from the ground. You're using, you know, custom firmware, you have custom coordination layer. You have not custom meters, but top of the line meters with sometimes a long lead time. about the to be ability to add capacity to a certain market? Let's say a grid is 500 megawatts
Lukas: Yeah.
jp: start to lose profitability at 50 megawatts?
20 megawatts a hundred megawatts? What is the look like the saturation there?
Lukas: , So basically, , the whole in, let's say in Sweden or., Where we are right now. So in these markets, the flexibility market size is, , I'm just live looking, at the numbers, so I have it there. So, but the flexibility market size is big enough for all of the miners to participate in.
So in overall Sweden, it's across the [00:32:00] different energy zones. , It's more than a gigawatt, which is on a daily basis basically participating in these flexibility programs. the whole European mining market is probably 500 megawatts. , , It's by far not the same as in us.
And so now translating this also to the , much bigger energy markets in ER code and P 3M, I'm just saying like. The Bitcoin miners for, enabling the energy transition and , the amount of flexibility that is required. We are just a piece of the puzzle. Like we are by far not big enough to really saturate these markets, which is great, but we are actually bringing great flexibility , to the markets and we are helping them a lot.
Uh, , Also the feedback that we get from, , for example, Veka cnet, which is the Swedish National Grid Operators, very positive. , And I think similarly also, Airco Qua a Grid operators, they really like that they can actually curtail all of these miners. , And hopefully they will also even like it even more like when we come to the play and help them to become even faster.
jp: And that's the [00:33:00] key your point, to a renewable future, which is really what everyone. maybe opposes Bitcoin mining in its energy consumption actually desires. how do we bridge that gap?
Lukas: So , I'm an economist, , it's this kind of market. I think about these markets still like in, in model types. And we are basically , what Bitcoin miners can do is just that in a world where you have just more and more intermittent energy supply, I think the global intermittent is basically solar and wind, right?
So the share of solar and wind is expected to be over 40% of the total energy production by 2035 or something, 2030. So this means there is a huge amount of intermittent energy generation expected to be in the system. in order to make this actually , not only , for the grid to be reactive enough just to be flexible enough to not having like these situations where , the grid might be contrasted or might have problems and [00:34:00] then it might lead to blackout and so on.
But also to, make actually , all of this renewable energy, to monetize it, to make it profitable. We basically need , Bitcoin miners. in the, in overall economy, , they basically are the baseline, the base load that still the consumer of the last resort. But they're always there and they can always consume when it is makes sense for them, but they also can just not consume.
And ramp up really fast when they need to take out energy from the system. So they're really the perfect piece of the puzzle. One piece of the puzzle, which is, complimentary to batteries, complimentary to, , EV chargers and other types of flexible loads, , , that are there. And that is just a very attractive, , very good.
Also diversification.
jp: And do you see batteries eating away at this market share or are this complementary?
Lukas: our product, which is now the kind of the flexibility product. , Batteries are our biggest competitors, I would say. So they trade on the same kind of flexibility markets and , they do some, energy [00:35:00] trading, however. All of the calculations that we made so far have shown that actually on a unit economic basis, on a one megawatt basis, a flexible Bitcoin miner is much better than a battery.
Why? One is it is cheaper for such kind of products, you don't need to use like the latest age of equipment. We expect like an uptime of like 50%, maybe 30%. So that's fine. You can use s nineteens. They are there on the market. Easy. is cheaper. The second is it has an infinite ability to consume or not consume.
Batteries are full or empty, like , they are limited. They have the capacity of sometimes two megawatt hours or four megawatt hours if they're good. , Which means that they are very limited , in their flexibility actually. best example for me is that also, sorry, I'm talking a lot about Sweden, but in Sweden in the last, winter, we had unexpectedly low energy prices.
They were very low. and also all of [00:36:00] these low balancing revenues, the profitability was very low. So for battery step was shit because they didn't make money , on the load balancing programs. And additionally, there was no spread on the energy, so they couldn't make a spread on the trading. For the miner, it's still great, you're online for like, whatever, 98, a hundred percent, and , you're just mine and vice versa.
If there's times where the energy price , is very high. Typically also the profitability of the flexibility is very high. So you can just be offline and just profit from, being paid for being able to turn on Whenever you're needed. And you can do this also for 24 7, whereas for batteries, the spreads , is still very thin.
So, the second thing is that the, this infinite ability to consume , is a very distinguishing factor. And the third advantage is that there is an uncorrelated revenue stream. Batteries are , a hundred percent depending on energy markets for, , the flexibility. Bitcoin miners, , you have the flexibility markets and you have Bitcoin.
so that makes you actually a much [00:37:00] safer asset to invest into.
JP: And are the institutions that you're talking to, are they getting this? Are they seeing this
Lukas: I.
JP: wait a second, this isn't Bitcoin. This is energy disguised as a
computer, I.
Lukas: To be totally honest with you, like all of the investment managers we are talking, we have spoken to and we spoken to basically the tier one infrastructure funds in Europe. The investment manager at the level, they love it. , They say it's so great.
It's incredibly interesting. But then like still, they were so afraid of bringing this now to, the investment committees. Which is a pain , , and I think it, has a lot of reasons because , a lot of them, they have a lot of, Exposure to batteries.
They have invested a lot in battery markets, so they don't want to really say like, okay, , there's a better product. It is not the easiest to them. So the mind shift is still not there. And for a lot of them also, Bitcoin is still a problem in Europe. Which for flexion, it's not a big problem because we are actually very profitable and we can also grow like this.
We are looking right now, , we are still [00:38:00] trying to, get an institutional, large scale battery investor , on board because we think that, basically we can just improve , their portfolio so much and we can just be , a great add to their own balance sheet. And it'll help foster very fast growth.
But, That there's still this concept, which is very clear to us, is still not an super easy sale, , in the financial markets, I must say.
Still very innovative.
JP: We hair dryers, we plug them into PDU and we control the hair dryers up and down right? To do the same thing, but without the extra revenue stream. , That's what we're doing. , , We're making heat
Lukas: Yes, it is. Yes.
JP: up and down.
Lukas: It would also work like , economics would still work.
It would still work, yeah. , It's sometimes it's not, sometimes,, it is not purely logical. , , what is being done? And there's a lot of, , , influences also , in the infrastructure I vessel.
jp: What do you call that as an [00:39:00] economist?
Lukas: I would say it's not pato efficient.
It's not efficient. It's not an efficient market. , But we are getting there and, with, \ basically also the push also , from the us So where Bitcoin is now, on the brink of becoming also,, basically a state status reserve and, , federal. So that helps also to basically, these old, , fund managers, , drinking their cappuccino , or , their Macha latte in Berlin or cappuccino in Paris. They also wake up.
JP: So five years from now, where do you see your company and where do you see this industry , we've talked a little bit about what happened in Spain. market's only gonna become more volatile.
Lukas: Yeah.
JP: is only gonna need more control and frequency. What's the future look like?
Lukas: so basically, I mean, if you wanna look five years ahead, , let's also look five years back. So, I mean, now it's 2025. So in 2020 I think that people still haven't realized that. as you say, as we are peeling the [00:40:00] Bitcoin onion, we are basically abstracting it even more, right? So in 2020 people started to realize.
And started to dig into the interaction between energy and, Bitcoin. Right? , And how that can be monetized. So they started to look into basically exec access, energy, really like remote assets and so on. , Now we are starting to look into flexibility, but if we abstracted even more, , the Bitcoin miners, they are basically reactive on any type of signal.
So, and this can be not only the signal cannot only doesn't need to come , , from electricity grids, but it can also come from, for example, other data center applications. So I would expect that we will see even more integration between high performance computing data centers and bitcoin mining data centers where,
The reactiveness of the Asics can be used to [00:41:00] flatten out a, , very volatile consumption line of high performance computing that can be helped to basically have that capacity all utilized all the time. , It can be used to basically coexist in a hybrid data center, where you basically more and more have a very comprehensive approach to how energy is transformed into types of computational services.
And I think that this is the way where we are going and a few of the large players are already making, leaps in this direction. And I think we will also see more interconnectivity, but I also think that we will also see you have more like, , not the large. The mega size sites, but you'll even see like smaller size and having more market deficiencies, distributed , across the Ns.
JP: And this is really the future of grid management. what Sam Altman says is like, AI is not going to be stopped by anything else other than the cost of an electron. [00:42:00] And the grid is only going to become more and more important. And some could argue, , there was a period maybe the past 40 years before data centers really started taking off where the grid was flat. Consumption was flat. It was an interesting, but now it's one of the most interesting and fast growing industries in the world because of bitcoin compute, because of AI compute, because of renewable. And that the stimulus, on renewable energy this whole space., If you are someone who's looking for a role, , you have to be looking, , in this sector. And am just always amazed when I talk to people like yourself and just how much more I can learn about the opportunities to. Across the world because to your point, everyone has electricity effectively, and every electric market has these same problems and it's localized. So, which means it gives entrepreneurs like yourself and me, opportunities to all play in the same market, [00:43:00] but not directly compete against each other.
Lukas: Yeah. And you can learn so much from each other also. Like it's different types of, so whereas like some of these, systems are more advanced in Northern Europe, like , they, they also being implemented step by step in, in the us and then you can basically transfer this knowledge to there and different settings, can be also transferred to other regions.
What I find always very fascinating is to, , if you look into how the Bitcoin algorithm is set up, and we have through the halving , this crazy drive to more efficiency, this setup it's a genius move. sometimes hate it because obviously the profitability goes down if the price doesn't react.
but if you look at it like more , from a philosophical perspective, it basically. Drives miners to utilize the cheapest resources or , [00:44:00] to be more creative in being more efficient in utilizing of the resources and to be very comprehensive in the approach.
And the end game really is the most beautiful miner would be the one that is in a region where there's a lot of renewable energy that is already reactive, is embedded in another data center. So you can basically also react to different types of compute loads.
And you can shift these loads and you can be, , very, diversified your, , computational load. And then also that the excess heat is also utilized for whatever district heating or, , or greenhouses. So you basically have a complete. Circular column. He , just within this one product that is since still like the ones that is basically has the best economics and is the, is the most beautiful setup that you can have. And people are going more and more in this direction. There is , on all these layers. There's more and more products. , There, there are a lot of feature usage projects in the US in Europe, , where miners are being used for. , And yeah, [00:45:00] and we are playing our part in the flexibility side, so I'm very happy to work in this field.
JP: And you are not only playing your part in the flexibility side, but you've been in the industry for so long and 80 plus years working through the different problems in the different errors of industry. , The first one with Genesis was really scaling, industrializing mining. Second one is the bridge between finance capital and bitcoin mining. And the third is one of the most exciting by far with the electric markets telemetry, keeping the grid running. And keeping people warm in their house and or cool with air conditioning because the grid's always running and that's really saving lives at the end of the day.
Lukas: Yeah, it's a good feeling to be at this, , actually very beneficial industry that is still, it is still nascent, it's still niche, and, it also has a great spirit. Hopefully meeting you in person again.
And [00:46:00] speaking to a lot of the, yeah, forward thinkers , of the space.
JP: So, Lucas, what would you tell yourself in that dorm room if you were listening to this and you're in college again, knowing what you know now, what's the advice you would give about this whole journey?
Lukas: You know that there is, this one, comic, where a, modern human is traveling back in time and he's, he's sitting there with all of these s and the caveman, , and they say, so, so what is this internet? He says, I don't know. He say, yeah, and what are , , these cars, how do they work?
He says, I don't know. As they ask that, , so what should we do? And he says, buy Bitcoin.
JP: I love it. So the moral of the story is if you were too late to Bitcoin and you don't understand why it has value and you can't touch it, that's okay this is the [00:47:00] value of a network that can pay people to use electricity anywhere in the world. And all to your point with the having, getting significantly harder. To actually earn that Bitcoin every four years.
Lukas: I think so, yes. it's always good to be, it would've been always paid off to be as early as possible in the market. I'm still very happy that I was relatively early, I would say. but in general it's really, understanding how money works and why Bitcoin actually makes sense is I think a journey that needs to take time.
So that's something that people, I would recommend everyone that actually. Everyone is growing up to look into and to understand how money works because it will determine a large portion of your life. , And still like everyone who is now looking into getting a space, it's still not super early, but it's still early.
And we are seeing that with all of the macro movements that we have. , None of them actually are like really speaking against Bitcoin. So, it's still a good time to get [00:48:00] familiar in the industry, look into, Hey, what is, what are opportunities that we can have? , How can I look into mining?
Mining also sometimes is a bit overlooked I feel in, a lot of the discussions, and it has a lot of value and it has, it plays a huge role in the security of the system. So that's also something that, , is, will always be there and thinking about creatively how this concept can be applied.
in your own economy that you live in is always a good thing to do.
JP: And as you mentioned, heat, and we haven't talked too much about it, but are you guys exploring that in the Nordics at all? Like have you integrated that into your systems?
Lukas: Unfortunately we have not in, so we are exploring it a lot. We haven't integrated it yet. , The biggest problem is that, still like if operate a already, if you operate like a 10 megawatt mining site, which if you compare like to like the hundreds of megawatts that like the riots and marathons and core Scientifics of this world , are operating.
Doesn't sound like a lot, but , [00:49:00] the amount of feed that you're generating is actually a lot. So, the problem is really having the off taker to the facility that it can be utilized. That this amount of heat be utilized, , or transported somewhere , where it can be utilized.
That's the key challenge. , We want to do it. If you have any ideas, happy to discuss. , But, it definitely plays a big part in, should play a big part in every new development , of any bitcoin mining site. What to do with the heat that is generated
jp: And there's so many options 'cause so many applications as you begin to realize need heat, the one issue I might see with kind of what you guys are doing is that you don't always have a constant source of heat with this miners being off for a long time. And so if it needs heat all the time, you still need a backup resource. But I don't
Lukas: Exactly.
JP: an end of the game, kind of a horrible situation to be in. Well, Lucas, thank you for so much for coming on the podcast. Where do our listeners connect with you and [00:50:00] are you guys hiring? , How do people get a job to work on this amazing stuff?
Lukas: You will hate me for this, but , you best way to connect for me is , actually on LinkedIn. , I'm also on Excel, on Telegram, but I'm not super active there because, yeah. Best way to connect is on LinkedIn. You can find me very easily. Lucas Pfeiffer. , And yes, , we are looking to grow our team.
We are looking for energy market experts. We are looking for people that are very familiar, especially with energy markets in the us. So , that's quite, I think especially interesting for your audience.
JP: Thank you so much for coming on. This has been one of the most interesting discussions I would say on the grid, and I've learned a lot and I know our listeners have too. So remember guys to mine on and support your local electric grid.