How to Make $80:MCF Mining Bitcoin on the Oilfield

Peter Brecht00:01

All right, welcome to Local Energy. My name is Peter Brecht. I'm here with my co-host, Wade Spear. And our guest today is Paul Cockerham at Veride Mining. Paul, thank you so much for joining. I'm just beyond excited for today's conversation. This is coming out a couple days before NAEP starts, but it's our first Bitcoin oil and gas collision of conversations here on our show. So thanks for joining. How's your day going?

Paul00:29

It's going excellent. No complaints. Happy New Year to you guys. And again, thank you for letting me have that spotlight. I hope I can bring the good news for you guys.

Peter Brecht00:33

Yeah, yeah.

Wade00:33

Yeah.

Peter Brecht00:40

Yeah, I'm

Not too worried about that. I've, just even the pregame and talking before the show, just the stuff that we're going to talk about today is hopefully helpful. But so you're out there in Midland, Texas, is that right? Perfect. Okay.

Paul00:52

That's right. Yes, I live here. I've been here since 2010

Working in the oil and gas industry.

Peter Brecht00:59

Right on. In Texas, as I understand it, Texas is the first state to start a strategic Bitcoin reserve. Back in November of 25, I think they bought around $5 million worth of Bitcoin at $87,000 a coin through iBit. But how does it feel to see your state moving from actually holding Bitcoin on the balance sheet?

Wade00:59

Thanks.

Paul01:24

Yeah, I couldn't be happier. I think that that's like a common first step to kind of like jumping into the deep end with Bitcoin specifically, no matter where you are just buying it for the first time. And then then you can start understanding how immense of a move you made for yourself. And in Texas, look, we're the oil and gas capital, in my opinion of the world. We

Peter Brecht01:52

Mm-hmm.

Paul01:54

We have a heck of a lot of extra resources to play with. It would, to my, I guess selfishness, I am thankful that that state that has sort of that, that, I guess, foundation is making that move. And I think that that will dictate a lot of the other states to follow in that footstep.

Peter Brecht02:14

Yeah.

Paul02:19

And there's no telling what they're going to do with that money. I hope it's all for good, right? And like we all expect that to be the case, but without, without, complaining about anything, I am very happy that we are setting that standard as a Texan for sure.

Peter Brecht02:19

Mm-hmm.

Yeah.

Mm-hmm. Yeah, yeah, yeah.

Absolutely. Well, you've got Wyoming and Arizona, I think, that are working on their next steps. And as we record this, so the Bitcoin price, we're just under 90,000. We're recording this kind of in middle of January. Cruz is just under 60 and Natural Gas at 550 for just a pricing reference as we go this, but.

Man, I signed up for your email sequence So you've if you go on your website verity mining calm you can sign up for like a five-day kind of overview of what you guys do and so on I'm on day three of it and Man, holy cow. There's so much information in that that that course so, it's not like a course per se I should say it's more of here's some information, but I want to talk about that a little bit more but You know talk to us about your background and how that plays into Verity mining's day-to-day operations

Paul03:26

Sure. Okay, so I'm an undergrad as mechanical engineer and I got my master's in petroleum engineering. Texas Tech undergrad, U of H master's. After grad school, I moved out here to Midland, jumped into the oil and gas industry as a driller. Ran the whole prospects, from drilling to fracking to completions, as we call the full vertical integration of oil and gas. And the fact that

Oil and gas is so immense. The energy behind that industry is so immense. We in Midland are excellent at generating it. And unfortunately, we are not the best at getting it to the marketplace. And so you see in Bitcoin world is very much the perfect solution for

A lot of oil and gas problems that we run into. Bitcoin mining is just one solution, but the fact that Midland has all this power and again, we're in a bit of a...

Peter Brecht04:27

Hmm.

Paul04:42

A situation where we don't have the ability to get that resource out of the marketplace where we are. The sum of it goes to the ship channels and all that, but you'd have to build 10 more pipelines to get all the resources out of here. And I think that that puts Midland, specifically Texas, as you say, these strategic Bitcoin reserves, you're going to see them popping up where there's oil and gas activity in that state. If States have those sort of feature,

Peter Brecht04:55

Hmm.

Yeah.

Okay.

Paul05:11

If you can generate revenue through oil and gas, then I promise you Bitcoin is going to follow in close behind. So specific to Verde mining, it wasn't until 2020 that I started mining Bitcoin here in Midland. And my first choice of low hanging fruit, as I would call it, was flair. And in

West Texas, we have an abundance of flare gas. They're doing a lot better at curtailing that. But typically if it's not flaring, then it's not flowing. And for those guys that say, we're not flaring, okay, well, you're also not producing that oil either, because if you can't burn the gas and you're not moving it through some pipeline, then that oil is also stranded. So I started on flare gas and my background being

Peter Brecht06:01

Okay.

Paul06:08

Production and operations and kind of spending my entire career out here and seeing Natural gas is our the redheaded stepchild, right? That's how we treat it. We care about oil. We don't care about the gas the Bitcoin thing kind of hit us out of nowhere left field and slapped you in the face and said no, no, dude, the gas is absolutely the market and I think you guys are missing the forest for the trees and thankful that Bitcoin that technology supports that

Peter Brecht06:22

Thank

Okay.

Paul06:38

And so my jump from oil and gas centric production operations into Bitcoin was more of like a, let's see if we can do this. Like they say it's true. And I'm an engineer that wants to get hands on and tinker. And so I was like, yeah, let's do it. Let's throw some money in the hat and buy 40 miners from Kazakhstan and

Peter Brecht06:39

Hmm.

Okay.

You

Wade07:06

Thank

Paul07:07

They were 66 tera hash S-17s, right? And knowing nothing about that world, I drove to Austin, which is now Riot. It was the Alcoa plant. I picked up my pallet of Kazakhstan A6 and I came back to Midland. I bought an upstream data, 90 kilowatt Hashut version one and...

Peter Brecht07:13

Okay, yep.

Yeah.

Mm-hmm.

Paul07:34

Plopped it on location and plumbed it right into the two-phase separator, which for me in oil and gas world is just a big vessel, a big vertical tank that cooks the gas so that the liquids drop out of the gas and then you're not sending wet gas or anything like that down the line. So tied up to that unit. And then I just started sucking gas, rented the generator. And in those days, I will tell you,

Peter Brecht07:55

Okay.

Paul08:03

That I was buying the gas for 50 % of Henry Hub, whatever the cost of Henry Hub was, because the gas that I was burning was flared gas, okay? That gas had never had a marketplace. The family who was producing that oil and gas for 20 years never sold a molecule of gas until I came along and I bought it at 50 % of Henry Hub. I didn't care if Henry Hub was $6 in MCF or...

Peter Brecht08:09

Mm-hmm.

Right.

Mm.

Paul08:31

A dollar in MCF. We were just happy to be online trying this out. And I'll tell you what, in 2020, in 2021, there were moments where we were generating an equivalent of like $80 per MCF. Like the return on the system was generating for doing almost nothing. And to me, just seemed so like, how was this even real? And why isn't the rest of the world doing this?

Peter Brecht08:35

Yeah. Huh.

Yeah.

Paul09:01

And then go five years and we're here now and slowly the world is actually coming around to seeing the benefit of this. To not rant and rant on here, the background that I have and the location that I fell into and the ability for the technology to have its footprint in the United States, kind of all, like you said, crossroads coming together at the right time.

Peter Brecht09:29

Yeah.

Paul09:30

I was just a lucky guy that kind of just fell into a cool technology and now I'm in love with it and it's the best that we have on the planet. And so I guess that's a small rendition of who I am and kind of how I jumped into this Bitcoin world and I guess where I am today.

Peter Brecht09:48

Yeah.

What are you guys still running the upstream data material or you guys have your own version of that? I mean, I've been a fan of Steve and watching him build that for the last couple of years. And I mean, it's such a cool concept of what he's doing. And I think they're on like version three or four now even of what they're building with those modular systems. But are you guys still using that setup or have you transitioned to something else for your clients? What are you looking at now? Okay. Okay.

Paul10:11

Yeah, no. So that system has been sold. We sold that off to another group that is mining it. And the

Actual core system that we first developed was essentially buying a full kit and caboodle from Giga. You know Giga Energy, they're in the business. Back in the day, Giga was building generators and containers. And so we bought a container and a generator that they had basically paired together.

The generator was based on the volume of gas that I had to work with. My choice when I first started out was to play around on the oil field and prove it worked. But then when we proved it worked, we said, okay, I'll put the flare out forever. And so we wrote a letter to the railroad commission, told them, hey, we have this idea and I would like to put a Bitcoin mine on this

Peter Brecht10:44

Yeah.

Paul11:09

Operators asset and the railroad commission came back and said absolutely we love it We will give you an 18 month window of a permit to flare while you figure out all your stuff Well, the railroad commission didn't know that I was already out there for a year mining and so I already had the system I just was gonna scale it and take the gas out in its entirety. And so I did that And that there's a learning process to this

Peter Brecht11:10

Hmph.

Wow.

Ha ha ha.

Yeah.

Paul11:37

And I'm going to tell you it. In doing that, we bought a single engine and a single container designed for that volume of gas. Well, as an engineer, I overlooked one of the biggest problems, gas wells decline. And so about a year into the project, gas wells declined to the point where there was not enough gas to even turn on the generator. So I had bought too much generator for the project of gas that we were basically given.

Peter Brecht11:38

Sure.

Hmm.

Okay.

Paul12:07

And that's

A good opportunity to learn. Steve Barber builds his containerized combo units at a rate of gas output that is more normal for stranded assets in the oil and gas industry. His units can consume volumes of gas that are a lot lower in volume day rates compared to like what

Peter Brecht12:26

Hmm.

Paul12:35

The larger big guys are looking for, okay? And so there's a niche to that, right? He has the smaller units that are perfect for these smaller assets. And then we built the bigger asset and it became basically obsolete to me. So I had to sell off a unit and degrade my units down to smaller units. And so the name of this game is to always be online, right? And so we learned very quickly after falling in a deep hole.

Peter Brecht12:37

Okay.

Hmm.

Yeah.

Ahem.

Paul13:05

What that solution looks like. So what the oil and gas needs out here are both the big players and the small players. And so the marketplace is ripe for the opportunity.

Peter Brecht13:16

Yeah, go ahead, go ahead, Wade, sorry about that.

Wade13:18

Could you give me an idea of the footprint you're talking about between the big and the little, and not just in terms of size, maybe on location, but also gas volumes that you're referring to? Because whenever I think about straining gas, a little bit different in Oklahoma, I think, than it probably is out there in the Permian, where takeaway here, I we're a gas basin for the most part. So for us, gas is money. But for a lot of stuff in Midland, like you said, it's not able to be captured or taken away.

Paul13:37

Yeah.

Well, in the state of Texas, you're allowed to vent up to 50 MCF per day without a permit. Okay. And that's low volume. In my opinion, anything under 100 MCF a day of a system that is producing intermittently, it doesn't matter if it's, it doesn't have to be perfect amounts every hour throughout the day. I just need to know that it's 100 MCF in 24 hours. Anything from a hundred down to, look, when I started, I was mining with 10, one zero.

Peter Brecht13:50

Hmm.

Wade13:53

Right. Okay.

Paul14:14

10 MCF I was running one petahash I was able to get like 10 miners or 20 miners going of the 40 because they were all broken from Kazakhstan and I didn't know the first thing about Bitcoin mining repair so I was kind of like dealing with what I had available so 10 MCF is like the proof that that's how low you can go you could probably go smaller if you wanted to but it's just there's a break even point where you have a threshold where

Wade14:14

Wow.

Peter Brecht14:22

Mm-hmm.

Wade14:24

Hahaha

Peter Brecht14:28

Right.

Paul14:43

Do you want to drive out to location at 2 a.m. for some problem for 10 MCF a day Bitcoin mine? You do not because that doesn't even pay for the gas to get out there compared to we the metric here is one megawatt tranches. Okay, so one megawatt is 300 MCF a day. Well, when you're typically dealing with oil and gas guys, they have some of these wells that come on an IP like

Peter Brecht14:50

Yeah, yeah.

Paul15:12

1500 MCF a day 1500 MCF or 1,500,000 standard cubic feet per day. And those are what we would call kind of stepping into the larger scale. And for us, of the gas features that operators are looking to solve fall under two categories. Small volume, like

Peter Brecht15:21

Hmm.

Paul15:41

Plunger lift, 100 MCF or smaller type systems or big 10 million standard cubic feet a day need. However, that's only gonna be for six months because they've got compression coming, but they need to turn on today. They've got a pipeline. They're just not ready to produce to the pipeline because they need their compressors and those are a year out. So they can't burn the gas and produce the oil because that's not allowed or that's against their motto.

Wade15:43

Mm.

Peter Brecht15:45

Hmm.

Right.

Hmm.

Paul16:12

And so I guess the oil and gas sees it basically those two different ways. And yeah.

Wade16:20

I got you.

Peter Brecht16:20

Hmm.

And these are modular. So I mean, you could technically run one for six months or even, short period of time. Just depends on where it's going next.

Paul16:27

So

Yeah, again, like we're early in the space. So there's not enough Bitcoin miners in existence on gas to have a fleet of generators sitting in a yard, not getting used like to a Bitcoin miner. You're like, what? You're not mining with it. What? Your engine's not on. So we can't really do that yet, but like we are building to that service. That's why the pipeline comes in and is such a integral feature in the whole oil and gas opportunity here.

Peter Brecht16:40

Yeah, yeah.

Yeah, yeah.

Paul16:57

The oil and gas companies want gas takeaway to whatever they are seeking, and then they're gonna kick you off. But you want, as a Bitcoin miner, I need longevity. I need at least two year runway to pay off this equipment. So what do I do? Well, kind of you mix both worlds. You come in there and you do something what we call hub and spoke. You go and sign a NASB contract on the pipeline where you have a market like Waha that's usually negative, and you don't have that in Oklahoma.

Peter Brecht17:13

Okay.

Wade17:25

Mm-hmm.

Paul17:27

You don't have Waha, you got market. So, yeah, well, not to the Bitcoin miner. The Bitcoin miner is like, I want Waha in Oklahoma.

Wade17:27

Right. No. Thankfully, we don't have Waha. I wouldn't be here. Right.

Peter Brecht17:28

Yeah.

Yeah, yeah.

Paul17:38

But

Peter Brecht17:38

Yeah.

Paul17:39

So, we know that like those marketplaces are positive and negative to kind of what we're trying to accomplish here. I'm sorry, I went off on a tangent there, but.

Peter Brecht17:51

That's all right.

Was great.

Wade17:52

No, that's, yeah.

Paul17:54

The

Wade17:54

Brings it home for me.

Paul17:56

Information is it's really important that how oil and gas operators see you and then how you see yourself as the solution. And most Bitcoin miners just want low hanging fruit. And I think they missed the forest for the trees where they're not thinking of themselves as a service to that operation before they are just a service to their investors, right?

Peter Brecht18:16

Right.

Paul18:20

So you got to have a relationship with the oil and gas community first before you come in there and say, I'm going to make you guys a bunch of money. No, no, no. It's like, I'm here to solve for these problems that we have out here because there's tons of them. And like you said, like scoop stacks, I got their stuff figured out, but Waha hasn't. And in the meantime, this is a great arbitrage to, either make better choices in the future and build the infrastructure that's necessary or, This is obviously the low hanging fruit that we're all accustomed to. Hence the reason everyone is moving to Texas to do data centers and Bitcoin mining.

Peter Brecht18:59

Mm-hmm. No, that's a great point. I something that's the data center conversations a whole nother animal and like, you know I've been talking to people about grids and you know how data centers are operating versus shutting off Bitcoin miners and like just the value of having a miner online that can show off instantaneously if they need to read, redirect power and stuff. That's a whole nother piece of this which is kind of fun. But it seems like the kind of the other thought I have here is you're talking about like people that are adopting this technology is

Are you guys specifically looking to go like put your I guess are people coming in saying hey look I've got stranded gas Please buy it from me and you guys keep the Bitcoin or are they saying I want you guys to set me up on the technology so that I can own the Bitcoin like what's the conversation like because you could almost think of it as Like you can do it both ways But it almost feels like a conflict of interest if you choose one over the other like is there a do you have to pick one or can you do both?

Paul19:55

You definitely have to pick one option, but either can work. So this is not financial advice. What I'm going to go into. Okay. I'm just going to tell you, I'm just going to tell your listeners how it can be perceived. So there's two ways you're going to have two different clients. So we do a training course. We train people. It's like a three day training course, and we teach you how to mine Bitcoin on gas. And we take you out to sites.

Peter Brecht20:06

Nothing on our show is. We're just talking shop.

Wade20:06

Ha ha ha ha.

Peter Brecht20:12

Yeah, yeah.

Paul20:25

The people that come to that training are the same in the world. So you have folks that want to mine for themselves and you have folks that want to get mined. Right. And so that's the same with the oil and gas world. You have folks in the oil space that want to do it for themselves because they're hearing something. And then you have people saying, hey, dude, I've been paying a dollar to get rid of my gas. Would you buy my gas for me? And like, what kind of market could I be? Let's get into those two different worlds. World one.

Where I'm just buying gas from you and you are not participating at all. That is going to be a static model. Nine out of 10 times a Bitcoin miner, if they know what they're doing, are going to come and offer a static price on a multi-year term. I talk about this a little bit in the class or in what you're reading in the emails. The oil and gas are slow to adopt.

Peter Brecht21:15

Yeah, yeah. Yeah.

Paul21:23

But when they do, they take it over. Okay, we've seen it over and over again. Typically, I would go out and say, oil and gas operator, I would like to buy your well head gas. Maybe it's flared gas, maybe it's stranded gas. Or maybe it's a short term contract like we're talking about for six months until compression gets there. But either way, that gas has value and I'd like to be the one that uses it. I'm gonna set up a structure, not the six month piece, the other ones.

I'm gonna need like a two year minimum. And I'm gonna go to that, I'm gonna go to the oil and gas operator and I'm gonna look at your gas composition, which is gonna be your gas analysis that you're gonna give me. And you're gonna tell me what the quality of your wellhead gas is. And I'm basically gonna put a price to that. And that's gonna be a static price. It's somewhere between 25 cents to could be up to $1.50 per MCF for the entirety of the contract that I'm out there. I would be buying your gas for

50 cents per MCF for three years. That's an option one. And then that option, I am buying your gas. I am no different than a, I am a virtual pipeline, okay? And if a mineral interest owner is gonna get mad because the real pipeline is buying the gas for 10 cents per MCF, and I come along and offer the same deal, you can't get mad at me. I'm just saying this, I'm just saying this.

Peter Brecht22:35

Hmph.

Wade22:50

Mm-hmm.

Paul22:50

You

Can't be mad at me, the Bitcoin miner. You're have to be upset with the operator. They're the ones who have your fiduciary interest at hand. So if they're making the deal, they're the ones that pay the royalty for whatever they, as the operator, can generate for that product, that commodity. They don't dictate the gas price. They are just trying to get the best price they can. So you see that camp of...

Peter Brecht22:50

Yeah, yeah.

Sure.

Right.

Are you offering more than the 10 cents? Are you saying, hey, that's what we're going to offer the same? Because I would say they're only going to switch if there's an economic variable that improves their situation. Or maybe I'm...

Paul23:27

And that economic variable

Is usually volume. So if they're asking for this and they have the volume, then the price can go up. Typically what happens in yes, we would just say, Hey, your gas, I'm sorry, but your gas is still worth 50 cents or less. And you're asking for one megawatt to be consumed out here in the middle of nowhere. And my threshold is like two megawatts for enough food.

For meat on the bone for everyone to eat, right? So that static price is gonna be less for you operator, but you get your oil out and you're not flaring and you get everything else that you wanted. And because you chose to operate a Bitcoin mine with me, you don't pay gas severance tax anymore in the state of Texas, House Bill 591. And so,

Peter Brecht24:18

Hmm.

Okay.

Paul24:21

That's seven and a half percent you save as an operator. You don't pay that tax because you are mining that gas with Bitcoin. Those are sort of features for that. The other option which we are pushing more of is, hey, operator, do you want a dollar per MCF? Because that's what I'll offer you today. Or how about you put up the money because you can write an AFE very quickly and have your subordinates pay for this. And this maybe through this process, we can now realize

Peter Brecht24:27

Yeah.

Paul24:51

Four dollars we're going to beat henry hub like we will always beat henry hub if we are mining for ourselves and in that situation then there's a plenty of meat on the bone and i am now serving as like a contract operator to that asset that's what i would like to do for the oil and gas guy i don't need to own those assets i'm happy to take a small percentage piece of the operation to maintain

Peter Brecht24:54

Mm-hmm.

Yeah.

Hmm.

Yeah.

Paul25:21

That operation and they would just be like your standard. It's honestly going to look like probably an 80 20 split. The operator pays LOE pays everything pays all capital costs Bitcoin miner comes in generates $10 per MCF gross and walks away with $2 in MCF and the operation keeps eight.

Peter Brecht25:23

Hmph.

Yeah.

Paul25:44

And now you're saying, Hey, we're making $8 per MCF. Now we turn around and pay our mineral interest owners, whatever their portion is of that $8 that they're due. And now as a oil and gas company, you're going to be the best of the best at being the fiduciary to that lease contract that you signed two years ago before you started drilling. Just saying that's coming and we push for that agenda. We want the oil and gas operators to take on Bitcoin. It's not hard. Mining Bitcoin is not hard.

Peter Brecht25:44

Right.

Mm-hmm.

Right? Right?

Yeah.

Paul26:14

The hard part is maintaining power 24 seven on. That's the part that we shine at. We're engineers. We can do that. Like we work in this industry. Everything that we do in the oil and gas is a copy of Bitcoin. The only thing we're missing is the A6. We have everything in the industry already exists out here in the field and we already know how to do it. And the beautiful thing is, is the Bitcoin mining industry is building to our power standards, which is 480.

Peter Brecht26:21

Yeah, yeah. Right?

Mm-hmm.

Paul26:44

Three phase and no longer that shiny stuff. Okay, we get the American stuff which runs better cleaner and it's cheaper to build. So I rest my case that there are two different people that are seeking one is going to get the cheap static price and then the guys who are willing to do it and do the work. They're the ones who are going to win take home the $80 per MCF market.

Peter Brecht26:45

Hmm.

Yeah, yeah, yeah.

Right.

Yeah.

Yeah.

Well, and I think that's where the light bulb goes off too is like, okay, so I'm going to, and this goes back to a comment that I read on X a couple of months ago, which was, Bitcoin mining is, is parasitic or, on the grid. And I think there's a certain perspective where I could agree and understand with that, especially, if I go back 10 years, five years ago when

I didn't know what Bitcoin even was, right? And it, I think everyone goes through this arc of like, you buy a little bit on PayPal when PayPal was doing that. And then you're like, I hate this. Just lost, I lost five grand. And then, you know what I mean? Then the next thing you're like, they're doing it again. I think by the time you do the third time, you start to understand the technology, right? And you want to study it. But, in this case, it, Bitcoin could be perceived as parasitic, but I think that what it's doing is actually drawing a note. It's, another

Income source and it's also taking a negative of flaring and turning it into something better. So I mean, what's the perception of Bitcoin? Is it positive where you're at or is it do you still get the people that are like, man, I don't even want to talk about that. That's radioactive. What's the sentiment?

Paul28:20

I would say it's still a pretty gray area. Are oil and gas at $55 oil is not great, but like the ROI on these mineral deals are excellent. And there's no denying that if Bitcoin doesn't exist that these guys aren't going to make money. Okay. Like oil and gas does very well on its own. Just

Peter Brecht28:23

Okay.

Wade28:23

Hmm.

Paul28:45

Not eating anything other pressure from anyone else telling you how to make more. It's a fine line. Think Bitcoin has what like a keger that people are claiming of like 25 % or something like maybe like if that's really happening but like oil and gas is like can be 25 % to right. So like I think that they're just there's not enough like

Peter Brecht28:59

Yeah.

Sure. Yeah.

Paul29:13

Like Exxon isn't coming out showing how it's done, right? They're not doing that yet. They're probably doing it internally playing devil's advocate. Like, I don't know how to answer that question because like, because the industry is already very strong here and Bitcoin is just a bolt on to anything we're doing out here in the oil and gas world. And it's a huge gain solution.

Peter Brecht29:21

Yeah.

Sure.

Mm-hmm.

Paul29:43

But folks can make really good money and really good returns just staying in their lane of just the oil and gas, just being good stewards of oil and gas and not thinking anything else that they're gonna do fine. Okay, some of them yes, some of them no. Okay, and.

Peter Brecht30:02

Yeah.

Paul30:02

Typically when we're talking to the big box guys like the publicly traded companies, we don't bring up Bitcoin. None of them wanted on their balance sheet. Still, I promise you, nobody's putting Bitcoin on their balance sheet. They're claiming that it sounds good on by nature and others have made examples of it, but the oil and gas guys are just slow to adopt.

Peter Brecht30:09

Right, right, Yeah. Yeah.

Paul30:25

But when they do, it's over. Note, there won't be any more miners for you and I to buy for our house. Everything will be backlogged. Do you think data centers are backlogging generators? Just wait until Exxon and the pioneers of the world are like, I think we wanna play this game too. And we can buy the generators faster than the data centers, because those don't even exist yet. And we've got a hundred years of oil and gas generating revenue that we can bank on.

Peter Brecht30:25

Mm-hmm. Yeah. Right. Yeah, yeah.

Mm-hmm.

Wade30:50

Mm-hmm.

Paul30:53

To buy those engines for twice as much, right? We could outpace the data centers if we wanted to. And let's not forget back to the grid stuff. Where do you think that grid comes from? The grid electricity comes from? It's us, it's gas, it's peaking plants. So we're already the best at making your electricity. So why wouldn't we just do it at the source? And I think that's what's catching on, but...

Peter Brecht30:57

Yeah.

Yeah.

Right. Yeah.

Sure. Yeah.

Paul31:20

The Bitcoin piece, they don't want that. They want the daily ACH contribution. And that's where we kind of shine as well. Hey guys, remember net 30? How about net 24 hours? Like how about getting paid for your resource the day you produced it? Not 60 days later. Bitcoin can do that for you. Nobody else can. So there's trade-offs. There's trade-offs for like that sort of thinking, but the Bitcoin on the balance sheet, we're not there yet.

Peter Brecht31:33

Mm-hmm.

Yeah.

Paul31:49

So let's keep pounding that that that that nape we'll work on that.

Peter Brecht31:53

Yeah, yeah, yeah. I'm

Certainly not mining Bitcoin in California. We pay about 36 cents a kilowatt hour. So I don't think it's not worth it. I, in fact, I got to keep the lights off at night, but I'm going to turn this over to Wade for a quick second. Cause, we night and this isn't something that Wade and I really talked about before, but,

Paul32:00

My goodness.

Peter Brecht32:17

What do you see in Oklahoma, like in the circles that you're with? Is this even a conversation or is this more of a Texas thing? How would you define, I don't know, like what's your concept of Bitcoin? I'm curious.

Wade32:29

I would say aside from a personal level, I've seen the conversation happen two or three different times where we worked at a company that had a gas processing plant and people would approach and talk about being able to purchase some of the gas and do some of that.

There's probably resistance to it for a couple of different reasons. Number one, think it's seen as a volatile asset, which you kind of laugh at because it's like, well, what about oil and gas? I you want to talk about volatility. We set the curve, you know? But I would also say in Oklahoma, I think there's resistance too, because Oklahoma is what Paul kind of hit on. It's a gas basin. We have a lot of takeaway already set up. And so getting it to market isn't near as much of a challenge.

Paul33:01

Yeah.

Wade33:21

The really interesting thing I think you're going to see though is kind of what you're talking about is finding some of these areas where gas is stranded or pipelines are even being filled. There's some of those areas where we've been to where they're shutting you in because they can't do takeaway. I see it if what you're saying here, I guess one of my questions, and this is maybe from a stupidity question,

Five years ago, you talked about being able to make $80 in MCF on your gas return. You go out there and you start throwing that out to operators and I think you get big eyes. Now, from what I understand of Bitcoin, as it gets closer and closer to all of it being mined and being in circulation, it becomes more more challenging. What have you seen the economics do in regards to that over the last five years?

Paul34:09

Yeah, diminish. For surely. Yeah, yeah, you hit a nail

On the head. It diminishes for sure. Obviously, first to the game, early adopters kind of relish in that, those small wins that come along in the marketplace. But there is a decline over time as you, know, mine for the next 120 years. But you are paid for maintaining that ledger.

Wade34:21

Right.

Paul34:38

So I think as a Bitcoin miner, you're gonna find in the future, maybe more spread out facilities that can be like if war struck and like, you just have to go to like the plant over there, the data center and shoot a couple of transformers out and the whole five gigawatts is gone.

Wade34:53

Right.

Paul35:01

You're not going to take out five gigawatts of data centers in the oil and gas fields if they're all small, thousands of them all over the place. Yep. So there's going to be some sort of strategic like defense piece to that. That's a and so I think that that's going to bode on how you develop.

Wade35:09

Right, modular and right.

Peter Brecht35:17

Mm.

Paul35:23

Assets out in the middle of nowhere off grid because there's a safety concern not to blow up a safety concern that it's gonna like attack you personally in your data because that's what we care about is our data and I mean oil and gas is nothing different than the banks and they protect our data I think those opportunities are gonna be more as we

Peter Brecht35:34

Mm-hmm. Right.

Wade35:34

Right.

Peter Brecht35:40

Yeah. Mm-hmm.

Wade35:47

And

Peter Brecht35:47

Yeah.

Wade35:47

One of the really interesting things you were talking about earlier was that I thought, guess being secondhand or hearing a lot of these kind of discussions secondhand up to this point, the point about the operator going out there and purchasing the equipment and essentially having a contract operation that runs it for a percentage of the profits.

That's like you said, that's nothing new to oil and gas. And that's something that I could, something that I could see maybe being more easily adopted. But like you said, it's probably not going to be the Exons and Conicos of the world. It's probably going to be the smaller operators who are working some smaller fields. Right. Yeah, exactly. Right.

Paul36:29

Yeah. Who don't have the pipeline. They don't have the pipeline. Exxon has the pipeline. They come to them first. So the mom

And pops are getting snubbed and they're like, okay. And let's not forget in scoop stack, you're going to have operations there say, you know what? I don't care that there's a pipeline here. I'm not going to do an acreage dedication with this midstream company unless they give me these nine get out of jail options. And one of them is the

Peter Brecht36:40

Hmm.

Paul36:58

If I want 30 % arbitrage myself to mine Bitcoin because we, the oil company want Bitcoin on the balance sheet, we'll continue to send the other 70 % to you guys, the pipeline. No, we're not going to take that deal. Then piss off. The deal is not yours to have anymore. I'm telling you right now when they do it for themselves, because they don't want to just make $3.85. They want to make $6 because that's what we can... Sure. But how about six...

Peter Brecht37:11

You

Wade37:13

Right.

385 would be great sometimes. That's the

Peter Brecht37:26

Mm-hmm.

Wade37:27

Challenge, right? Like I still remember 2020 when we were selling for less than a dollar at the Wellhead. I mean, we aren't Waha, but it can definitely get down there, you know?

Paul37:28

Yeah, or,

Yeah,

Yeah. No, no, no, you're right. And there's going to be the opportunity that Bitcoin presents to you is that you are not in a marketplace. You are. Oklahoma is going to make midstream come up in price because they're going to say, you know what? I'm not going to send 100 million a day.

Peter Brecht37:51

Hmm.

Paul37:54

To the system anymore. We're just going to figure out how to mine it here. Do data center city and you guys can go pound sand because you're not giving us a fair shake and this gas is worth $9. So give me something closer to nine, not closer to one. And if they're like, we need to rebuild the pipeline. Pipeline's already there. We're drilling new assets that can be tied in. We don't need you. You need us. That's what's going to happen here in the next couple of decades.

Wade38:14

Right.

Peter Brecht38:16

Yeah.

Hmm.

Wade38:23

Interesting.

Peter Brecht38:24

Interesting, that is, I have to think about that one a little bit. Well as we're coming up here on our time, and Paul I hope to talk to you more here in a couple of weeks, but you'll be at NAEP, so I'm just kind of curious like what, if there's any particular, like you'd be walking around, no booth, but like is there any, are you gonna be wearing a hat or anything? Like how am I gonna recognize you I guess, like I don't know.

Paul38:48

That's a good point. That's a great.

I will be on the floor. I'll be walking around. I'm six, five, very tall. I will. I'll be hanging probably around the.

Peter Brecht38:53

Okay. That's, we're done, we're good.

Wade38:58

You gotta wear like whether

In Bitcoin orange, a Bitcoin orange cowboy hat.

Peter Brecht39:01

Yeah.

Paul39:02

Yeah, maybe I'll just dress up as a Bitcoin.

Peter Brecht39:05

Yeah. Alright, don't deal.

Paul39:05

The Bitcoin B, that would be pretty cool. Yeah, no, I'll be on the more so in the Bitcoin and data center area and happy to talk to anybody that wants to pull me to the side and riff about Bitcoin game on.

Peter Brecht39:13

Okay.

Yeah. Sweet. Massive,

Massive Bitcoin presence. This is my first year going and I'm excited and I see a couple guys that have actually been on the show. You have to go. First of all, I get to hang out with all these guys and meet them in person. So whatever, book my flight. But excited to meet you as well. Give people a hand off. Where can we find you? How can we get in touch? Go from there.

Paul39:41

Yeah, so we have VerdeMining.com is a great way to get access to us. We also have VerdeTraining.com. We do a training program. Anyone who's interested in kind of taking the next step to learn more and come out to Midland and hang out with us for a few days, you can do that. We have a training coming up in March. Let's see, we have a lead instructor, Mike.

Peter Brecht39:58

Yeah.

Paul40:06

Mike lives in Houston, Mike Santaniello. You can reach out to Mike at mikeatverdemining.com. You can reach out to Paul at paulatverdemining.com. I would love to talk Bitcoin with anybody who wants to talk natural gas mining. Absolutely.

Wade40:16

Yeah

Peter Brecht40:17

Easy enough.

You

Awesome. Well, Paul, thank you so much for being on. Wade, always good hanging out with you. I'll see you guys again next week. I appreciate it. Thank you.

Wade40:24

That's awesome.

Paul40:31

Thank

You.

Wade40:32

Thanks.