DJ Dunkerley 00:02
Hi everybody, I’m here with Cale Modie, CEO of Neptune Digital Assets. And I’m from the blog New Currency Frontie as you would know, as you clicked to hear this from my website or my mailout. And we’re gonna do an interview here with Cale Moodie about digital assets, who’s had a very exciting year. But of course we all have. He’s gonna talk a little bit about himself and his company. And just before we begin, I have to go through the usual disclaimers. Of course, everything we talked about is not investment advice and is only for informational purposes only. And Cale is the President CEO of Neptune Digital Assets, which is listed on the TSX Venture Exchange symbol NDA, and also on the OTC Pink Sheets, symbol NPPTF. And I do have to disclose that I own stock in Neptune digital assets, and may consider buying more in the future. So having said all that, enough about me. The first question I always ask everybody when I do an interview is just you know, tell me a little bit about yourself and tell me how you got into crypto.
Cale Moodie 01:26
So I am a CPA by trade,ex-KPMG industrial markets group, way back, I guess, in the late 2000s. And it was a bit of a gold boom back then. So I came, I left public practice went into industry. And I was working for gold and metals companies. So I really, really got a sense for gold scarce resources, scarce assets, and I sort of became a bit of a gold bug. A few years later, I read the white paper, digital gold, which was about Bitcoin. I didn’t really understand it very well, but I understood the concept of scarcity. So that was probably 2012 13. I did start buying some bitcoin back then experimenting with that, in the very early days, I should have bought a lot more in hindsight, but you know, you never know. And so, in 2000, actually, fast forward to 2013-14, I tried to put together a public company called with some friends called Betnoir. And it was a basically a Bitcoin company of sorts that dealt with processing transactions. And it was it was early stage and nobody really understood it. Our lawyers did try to put together a prospectus, but it sort of died on the vine when we got the big pullback from 1000 USD back to like 200 or whatever went to 180 and we all thought Bitcoin might be dead, that died on the vine. Fast forward a few more years 2017 myself and my business partner at time, we tried to put together the first Canadian Bitcoin ETF and it was called Neptune Bitcoin trust. We took it all the way to the OTC sandbox, and we were shut down by the EOS Ontario Securities Commission, because it was it was basically a novel asset class at that time. You know, and in hindsight, , we now have a bunch of Canadian ETF Bitcoin ETFs, and trusts. And so we were basically about two years too early, unfortunately, there. But fortunately, what we did is we said, Okay, well, we can’t do a trust, let’s put together a public company do similar sort of thing. Basically, we put together a company called Neptune Dash at the time, and we had an operating business in which we ran Dash master nodes, and that generates some income. That was it was quite interesting. It was I think, Dash at the time Dash token was, I don’t know number four or five in terms of market cap of all the cryptocurrencies out there. So it made sense to actually just raise capital, which we did. We raised 20 million bucks. We bought Dash, we built masternodes the masternodes generated some income. And there we go, we had a cryptocurrency company. And we did start buying a little bit of Bitcoin, but it was it was mostly just a dash company. And we thought Dash was going to do really well. It didn’t it sort of it sort of stagnated. We did list this company in early 2018. So you can imagine the height of Bitcoin at that time. That was the first big rally where we hit 20k That was in Christmas or December 2017. So by the time we went public, the market was starting to unwind So we basically went public at the top of the market, we bought, we took that 20 million bucks, and we jammed it into Dash, and Dash collapsed. And we were into a bear market by, you know, summer 2018. The bear market was interesting and allowed us to to basically diversify our business. We started moving into Bitcoin, diversifying some of our assets over 2019, we bought some Atom and started, we both actually built Cosmos out and validator. So we started to diversify our basically our assets. And we said, hey, let’s generate as much Bitcoin as we can. Let’s have the little different mining engines, we can get into what we actually do at Neptune here and a little more detail, but it diversified and it grew. And it became Neptune Digital Assets. And so now, you know, I’m a founder of the company, this is this is my, this is my baby. And it’s, it’s growing quite well. Now, again, we see Bitcoin prices coming back, and things are looking good again.
DJ Dunkerley 06:04
Great. I mean, yeah, I want to really dig into the nitty gritty of your company. Because that’s gonna be fun, especially as a shareholder, looking like it’s undervalued right now compared to the assets, which is great. But first of all, I just want to talk a little bit more about the industry in general, and really how it’s kind of impacted. Like, I guess, I just want your views on the industry from a historical point of view, because, you know, you’d have been in this industry for 10 years. So, you know, you went through the crash of 2017-2018. Like, I did not just the recent crash, like I did, like, what are the similarities? And what are the differences? I think, between the two corrections? And, you know, earlier on another question, why does this keep happening? Like, what’s your opinion on that?
Cale Moodie 06:55
Well, I think from a technical perspective, I mean, we’re gonna have bear markets, we’re gonna have bull markets, you know, that, like any industry, crypto is a little bit different, and that there’s some fundamental aspects to it. The hurdles, and the roadblocks seem to be different every time, right. You know, this time, this bear market, obviously, was a result of a lot of recklessness. And basically, mismanagement. And I would say, centralization of assets, where the whole, the whole concept is for these things to be decentralized. So you take, you take a sort of nascent business, run by sort of cowboys, and they centralize everything, and they do a poor job of doing that, and everything collapses. And so that’s what’s really pushed us into this devastating, you know, 2022 was a devastating year, I, you know, I like to say that, you know, winning right now, it’s just not going bankrupt and staying alive. So that’s been sort of the, that’s sort of been the story for this bear market. And it looks like we’re sort of, we’re sort of climbing out of that, which is nice to see. The last bear market, you know, I’ve seen about, I guess, I’ve seen, like, really three bear markets. And the first one, I didn’t have enough expertise to really know what that was, I think that was just, you get a flurry of investment. And then people take profits, and then you sort of get the technical curves that sort of work their way through the system. The second bear market of 2018-19, that’s really hard to say, I mean, you had you had, you didn’t have the same sort of bankruptcies and calamities that you had this most recent one that we’re in right now. So it’s a very different time. And I would say it was just basically FOMO. And it was panic investing, and it was greed, and then everything sort of got wiped out. I mean, we had Mt. Gox, obviously, back in the day, that was a big one. And that, you know, that was like going to be the death of Bitcoin. And of course, as we know, now, it’s never the death of Bitcoin is just a reset. So, you know, I feel like a lot of this stuff is sort of just technical waves. And, but this recent one, it’s been been extra-bad. And I think, on on top of the technical aspects of the bear markets and bull runs, you also have these bad actors that can exacerbate these pull backs. And I that’s what’s happened on this recent one.
DJ Dunkerley 09:32
Okay, and I guess the follow up to that question is I you know, do you think this cycle will ever stop? Or like, Do you think we’ll all we’ll see we’ll see the super bubbles and then we’ll see these massive like blow Bitcoin and crypto content because that’s really I mean, you know, if that’s really the case, then it’s just for guys like us. It’s awesome. Oh, okay. You know, bitcoins hit a new all-time high. It’s five times above it’s pretty solid. Then I’m yeah, I thought I’d be honest, kind of like, I can live with that.
Cale Moodie 10:06
It’s easy. I mean, what Yeah, once you, and I totally agree with you, once you’ve been through a few of these cycles, it’s really easy. You have to just bet against the emotions of everybody else. It’s, it’s sort of, it’s sort of your traditional, like, when it flooded the streets, and you really don’t want to buy it, because you think it’s going to zero. And your, your brain is trying to convince you, it’s going to zero, that’s when you should be buying this stuff, because the rallies are so crazy every time. And so to your question, is it always going to be like this? I don’t think so I think it’s going to become more mainstream. And those peaks and valleys are going to get get reduced, and we’re still gonna have, we’re still gonna have traditional bull cycles and bear markets just like in gold, and other and you know, NASDAQ cycles, and S&P or whatever. And I think it’s going to be more normalized. But that could be that could be 10 or 20 years away still. I mean, you know, it’s hard to say and I think regulation and this stuff becoming more mainstream, internationally and worldwide and and it’s probably going to normalize these the peaks and valleys but I think, you know, for the next couple of bull runs and bear cycles, we’re still gonna have these, these these crazy rallies, and I think there’s a lot of a lot of money to be made, buying the bottoms and then selling and take profits at the top, which is of course, more difficult than it sounds.
DJ Dunkerley 11:30
Yeah, I mean, and just a side tangent, you know, again, I’m a gold bug too. I mean, we are on the west coat, I like gold stocks, buying gold. Do you think Bitcoin going to be a substitute for gold?
Cale Moodie 11:50
I don’t think so.
DJ Dunkerley 11:57
What’s happening with gold? I guess if I should just ask you
Cale Moodie 12:00
Yeah, I mean, is it a rigged market? That seems it seems easier to to? It seems like it’d be way easier to rig Bitcoin? Because you have you have you have a number of parties who own a lot of Bitcoin, rather than them rig their gold market. But yes, I’m an advocate of gold, I think it should be part of your portfolio. It’s part of my portfolio, I don’t think it’s an end. You have to have Bitcoin or gold. You know, the next generation, I think they have a hard time wrapping their head around gold, because most people want everything to be instant. Right? And, and, you know, the blockchain is instant, it’s easy, it’s instant. It’s just like, you know, the next generation doesn’t care about cars, they just want to get from A to B, quickly and easily,. So I think I think it’s sort of like that, I would say, Yeah, I would say it’s, it’s going to be a part of everybody’s portfolio, you want to have a bit of gold, you wanna have a bit of Bitcoin. And I think both are going to do well in, you know, in an environment where there’s where there’s QE, and that’s what we’re seeing again now. And yeah, I would agree with you. I mean, I would have expected gold to be you know, 2500-3000 by now, but we just haven’t seen that and that’s so it’s a little bit odd to me. It is bizarre. But you know, these, these bear cycles of gold can last 10 to 15 years. Fundamentals aside, so you just need to see people coming back into the space for gold but I think bitcoins an easier bet plus it’s new plus it’s cool technology and for sure not going to be diluted past 21 million we know that so that’s so conceptually. Yes, we can find more gold we know that we know that gold will get more difficult to mine but there is more gold out there and we just don’t know how much
DJ Dunkerley 14:08
Now the question I want to ask you… and it’s kind of … not a question where we go into the usual scripts that we see on Twitter about regulation in general. Not just like the usual hot story… but regulation of Bitcoin in general all over the world? And just just detail that like in the last last correction Asia and China in particular, were just just trying to do everything they can to ban Bitoccoin and now they’re starting to open up about Bitcoin again. Hong Kong is putting in new rules to trade Bitcoin, which I think is tremendously underreported here. You know, I just flag it to show that it’s kind of weird that in the last correction you know, China was hating Bitcoin and North America was still pretty cool about now. But you’re kind of seeing a reverse, where you know, China through Hong Kong is now really warming up to Bitcoin again, which is quite remarkable. But then North America and the US in particular are kind of really starting to clamp down and you know, theory in particular, all the SEC is doing on that. And then just, I want to have your thoughts on that. But I want to hear your thoughts really, from like a historical point of view, like over the last 10 years, you know, kind of what have you seen in terms of regulation? You know, what the regulators and governments have thought about Bitcoin and crypto in general, and how they progressed over the last 10 years? Or if they haven’t progressed at all?
Cale Moodie 15:39
Yeah, what’s interesting is that, you know, it was never taken seriously at the beginning. So so it was, it was a joke. And, and nobody paid much attention to it from government bodies, even when it went even when in 2017, we had the first rally. It wasn’t until Mt Gox, that it was sort of like, wow, that was big. That was like, and it could, it could get bigger. So I think that was the first big wake up call for government. But yeah, I mean, I don’t pay attention to the sound bites anymore. So much, because they just sort of bouncing back and forth, you know, India’s banning it now India is accepting it. Now. They’re banning it and other accepting it. Same with China. It’s been it’s been back and forth, endlessly. You know, I think I think the bad actors in the space has created problems for the business, in that the government’s now are being pushed into back into a corner, they have to rush to regulation. So you have all these bad actors and bankruptcies. And now retail consumers are saying, Hey, we’ve been ripped off. Why didn’t you do anything about this? Or what can you do about it, or this needs to be regulated. And so now, the government is sort of in knee jerk mode, where governments are scrambling to regulate in an environment where they just haven’t been paying that much attention or enough attention to it, and, and doing thoughtful regulation, as the industry grew. And so I think that’s part of the problem, knee jerk is never good, you end up with rules that don’t really that make a ton of sense. So that’s the concern for me is the knee jerk stuff. But like in terms of countries like China and India, I mean, I think it’s just nonsensical to even pay attention to them. Because, you know, the Chinese are gonna use Bitcoin either way. And, you know, all the all the mining rigs are coming out of China. I mean, there’s so they’re so tied to it. I think it’s just I literally just think it’s political posturing. When you hear China, China is going to ban Bitcoin or India is going to ban Bitcoin or cryptocurrencies, you know, the governments at the end of the day, just want a piece of the pie. So they want a piece of the pie, and they want to make sure that they don’t get in trouble for people being ripped off. You know, that’s my sense of it.
DJ Dunkerley 17:57
But do you think, especially maybe, in the US, like more regulation is actually helping? Like, I’ll put a subversive question like maybe more regulation, as poor as it is that we think, you know, we’re kind of the experts. But more regulation, more government scrutiny is actually not hindering the price of Bitcoin and Ethereum. No, it’s not. Back down. We’ve had a 40% increase in the price of crypto and I’m like, oh, my God, just go arrest more people like why not?
Cale Moodie 18:26
Oh, yeah. Yeah, absolutely. Awesome.
DJ Dunkerley 18:30
Seems to be like that, just, I mean, do you see the same thing? No, I agree with you. I think I think people and the industry is responding well to regulation. The only the only thing that makes me nervous is regulation that doesn’t make sense. Because it’s knee jerk. But I think, yeah, in terms of when we’re just talking about the price of Bitcoin, and that market and how it’s reacting to regulation, I think it’s been positive. So unless there’s something we’re missing, but generally, it’s been positive. And the bad actors, the bad actors just need to be pulled out of this space completely. And, but like, I’d like to also highlight the bad actors exists in all industries, as we’ve seen with the banks being completely reckless. So yeah, you know, I mean, there’s complete fraud in some of these Bitcoin companies, but you know, some of the banks are pretty close to that as well in traditional banks. So you know, people will do what they’re allowed to do to make the most money for themselves generally. Especially, especially in a business where they don’t they know there’s no oversight. So I think that was like, I think we needed that I think we needed this big wash out. I mean, you know, I’m a victim of Celsius myself. So you know, I’d like to see these guys arrested I think it was pretty terrible what what happened and what went down. But and yeah, and some people need certainly to be made examples of and then we need like, you know, adequate regulation for the sectors but you know, at the same time, we could say, hey, there’s not even adequate regulation of the banking sector, as we know now, So let’s not let’s not over regulate, but let’s get something practical in place that prevent bad actors from ripping off retail investors. Yeah, no, I agree with you and all that. And I mean… the banking sector … really? Yeah, I think all of us crypto guys are kind of a bit upset with the banking guys, because you know, when we do goofy stuff, when we lose all our money, you know, the government goes, well, you deserve it. Right? Banks get stripped out of all their money. They’re like, Oh, here’s some taxpayer money.
Cale Moodie 20:37
Yeah. Totally agree with you. Yeah. It’s ridiculous. And you know, and I, the way I look at it is like, the analogy is sort of like, crypto was the canary in the coal mine of the sort of broken financial system. You know, where, where money is just being floating around to hot, too hot sectors, with no real adequate, you know, assessment of risk. And, you know, banks don’t have the same regulation. And yes, you’re exactly hit the nail on the head. When it’s crypto. It’s like, oh, well, it’s crypto. So that makes sense that everybody got ripped off. Oh, wait, it’s the banks. Better bail them out? Yeah, you know what I mean? So it’s like, it really is complete double standard. And, you know, in 30 years, it won’t be that way. But it is a it’s also a testament to why are we centralizing these asset classes that were made to be decentralized. When you mix in people you’re gonna have bad actors every time. So what is what is fascinating is that, hey, we centralized something that was the whole beauty of it was to be decentralized, and it didn’t work. But what did work? Well, Bitcoin still around, the price is coming back. And a number of other cryptocurrencies are doing just fine. So companies got wiped out. And unfortunately, the retail investors got wiped out. But if you’re just sitting on Bitcoin this whole time, and you’ve been you’ve been consistent, and that in that model, you’re fine. Yeah.
DJ Dunkerley 22:11
No, I agree. Yeah. Okay. Let’s talk about your company. You are hopefully going to be trading soon, correct?. Yeah, I mean, How did get to that process?
Cale Moodie 22:23
Yeah. Let’s talk about 2022. Because obviously, it’s been a it’s been a nightmare for pretty much everybody. You’ve seen the values of some some alt coins come down. 99%. You’ve seen wipe out So Celsius, Genesis FTX. bad actors in the space, it’s been a real disastrous 2022. So back to back to my point, you know, surviving is winning right now. So I’d like to say we’re winning. What we did encounter this year, was difficulties with auditors having in house technical expertise to deal with complex financial aspects of the blockchain really. So for us, the big, big issue was, hey, well, there’s a component of our business that is based on smart contracts, which is, you know, we we did really well on DeFi, up to about February 2022, until the market collapsed and the DeFi tokens crashed down 99%. But we did really well in the DeFi space. So that was a big part of our audit for the year ended August 31 2022. So by the time the auditors realized that they’re going to have to bring in external technical expertise at Christmas time, and our filing deadline was the 31st. We knew that this was just going to end in disaster, which it did. So you know, a few days before. Yeah, a few days before filing deadline, we’re told that we need to basically have a ton of work to do still in terms of what they needed to do for their audit procedures. But disappointing to me, as I feel like there should have been more foresight there and said, Hey, let’s have a management cease trade rather than a full cease trade. Because if you apply for management cease trade in advance, then you’re not a victim of the cease trade order and your shareholders can still trade the stock. We didn’t have that advance notice. I’m not going to get into all the aspects of that because it’s unresolved at this point in time, but very disappointing to us, obviously on to our shareholders, and very stressful time for everybody. I’ve never had a cease trade on any company I’ve worked with ever. So this is all new to me. But, you know, there’s some other some other crypto companies that also have these trades in 2022 and they’re fine and strong and strong entities as well. So I wasn’t entirely completely surprised but disappointing nevertheless. We have got through that audit, now those financials have been released, we just put out Q1 today. So Q1 was due at the end of January, but we couldn’t put out Q1, obviously, without getting our year-end financials out. So I had to do that. So it’s sort of a sort of a domino effect when you get a CTO, you know, because then you’re missing your quarterly as well. So the longer it goes, the longer you fall behind in terms of your filing requirements. Happy to say everything’s out now. So now we’re just waiting for the exchange to say, Okay, you’re good to go. You’ll be trading again, on such-a-such date. We heard it’s a few days, so. So that’s that, we put that behind us. And next year, we’ve learned a lot. I mean, we’ve learned a lot about the audit process, how the regulatory environment is changing. Now, the scrutiny is crazy for these audit firms. I mean, CPAB is basically just coming down hard on all the auditing firms who are auditing crypto companies, from what I’ve heard, and I don’t know if this is 100% accurate, but I heard one out in two crypto companies are getting the files are getting pulled from the auditing firms by CPAB, which is the oversight board of the auditing firms. So it’s like the police at the police. Right? Yeah. So CPAB is apparently pulling every second crypto file from what I understand. So, you know, there’s a lot of pressure on the companies to get everything right. And there’s no guidance. So you know, the, the Financial Reporting Standards and the auditing standards are built for a different industry, but traditional financial finance industry. So so how do you take these these accounting guidelines and apply them to smart contracts? I mean, it’s just like, you’re at this point in time, everybody’s guessing. And everybody, every every audit firm, you know, is trying to try a new approach or a different approach. And so, you know, you’re sort of, again, you’re sort of, you have to create an opinion around it. And you have to look at the standards. But there’s nothing in the handbook that says smart contracts should be audited as such and such. And this is the treatment of smart contracts. So that that just hasn’t been built yet. Because the business market has moved so fast in the crypto space, the standards just aren’t there yet. So we’re dealing with an old financial system standards, we’re trying to apply it to this new cutting edge technology and blockchain and it’s very difficult to do. And I get it that the, the auditors have a lot of pressure because, you know, if they get a file pulled, and the oversight body says, Hey, you didn’t do this, right? This is a fail. That happens enough they lose their license, it would be it’d be very destructive to the auditors. Right? So that pushes the auditing fees higher, it pushes the auditing standards higher the time it takes to get the audit done, that sort of thing. And that’s been every that’s been a challenge for every crypto company out there. That’s publicly traded.
DJ Dunkerley 28:03
I mean, what what your company is going through and really all the companies that are doing DeFI is going through really reminds me what the Bitcoin mining companies had to go through. Three or four years ago, it was the same way the auditors didn’t know how to deal with Bitcoin mining. Like DMG, which was a company that was shut down, I think for about it six months. Yeah. Yeah. Then, of course, as soon as they traded, you know, everyone dumped their stock, because they completely freaked out. Yeah, that was a bad move, because DMG now is doing quite well.
Cale Moodie 28:35
And a great company. It’s a solid company. Really,
DJ Dunkerley 28:38
And I missed the boat on that. So now, I understand, you know, you’ve been through a lot, a lot of pain and agony. But you know, as a vulture investor, which is what I call myself in the paid group, it’s kind of like, well, I see a regulatory moat here. And, you know, it’s the same thing with Bitcoin mining stocks, they’ve had volatility, but the fact of the matter is, if you bought a whole bunch of these guys, five years ago and just held it…
Cale Moodie 29:02
Yeah. Oh, totally. I mean, that the values have been so beat up, like, you know, when I look at our … we sort of track in real time, our AUM, and when I look at it, and I compare it to our NAV while our loss NAV, which was when we when we were CTO, we’re like 0.6 nav. So to put that in perspective, at the very height, when we raised money, we were like 12 to 15x NAV. Now, so, so that sort of fluctuations you can get a space which is, as you say, a tremendous opportunity to to make really, really significant gains, as long as you’re patient. If you get impatient and you sell early, you’re gonna kick yourself because we’re always going to have that bull run. And that bull-run translates into these socks way exceeding what they’re worth. And, you know, it’s a speculation of business. So, you know, we’ll see Bitcoin rally. I mean, we’re, we expect to see it far exceed its last high, but then our NAV is going to far exceed one to one, right. And our revenues are also going to grow substantially. So it’s kind of interesting. And you really get that exponential curve. So it’s nice to see. And on, you know, when we start trading, it’s anybody’s guess, I mean, is it? Is it? Is it going to be dumb money getting out? That don’t look and then smart money getting in? Are we going to ….? We’re gonna go down or up? I have no idea. But you know, I’m, I’m definitely hungry to buy some more more of my stock. And, and I’m the largest shareholder of the company at about 12%. So I continue to grow that and I’m aiming for 20% At some point in time here.
DJ Dunkerley 30:46
Yeah, I mean, I literally don’t know how your stock will trade when it’s open. Yeah, I mean, I literally don’t know. In the long run, obviously, you know, I have your stuff. I really hope to buy some more. But, you know, that’s just mostly based on my experience. You know, I went through the crash of 2018. A lot of the lot of the crypto companies TSX Venture trading for pennies, like absolute pennies, and I was like, oh, well. And I didn’t accumulate and then…
Cale Moodie 31:14
Yeah, totally, totally. I mean, let’s put it in perspective here. Our last capital raise was at $1.35. So I mean, you know, and we have we have 35 million in assets. So, you know, we’re not raising we’re not raising more capital anytime soon. So if anybody thinks they’re gonna get into the PP, that’s never gonna happen. Because … We got plenty of cash. I mean, our burn rate, our burn rate is super low, even in this super depressed market at the bottom. We’re still doing about $350 to $400,000 a month in earnings. So it’s not bad. I mean, our burn rate is far less than that, probably 25% and when I say earnings, I mean, it’s mostly crypto earnings. So we just keep it as crypto on the books. So I mean, that’s all mostly Bitcoin, Bitcoin and ATOM and we sit on that Bitcoin? The whole angle to our business is growth of Bitcoin if we didn’t, we don’t believe in the growth of Bitcoin. We’re not there’s no point in doing this. So you know, we’re here for the long run for Bitcoin but, you know, a discount to NAV is essentially you’re buying Bitcoin at a discount to Bitcoin price. So, you know, indirectly that’s what it is.
DJ Dunkerley 32:32
Okay, before we get more into Bitcoin, tell me about like, ATOM is like the biggest non Bitcoin asset on your book. Yeah, how did you get it? And why? You believe it in at all?
Cale Moodie 32:45
Yeah, yeah, we got into ATOM. Well, it came recommended to us by some individuals who were in involved in the ecosystem. And they said, Hey, there’s this added token COSMOS IS putting together, this token ATOM. And you can build a validator and make money. And we said, Okay, that’s great. It’s cool. It’s kind of like Dash let’s put a very small amount of money into it, build this validator and, and start earning some rewards. Because we’re all about diversification in the space and bringing in as much crypto as we can, and eventually moving it out to Bitcoin. So we built this validator, which is pretty neat, which is a physical server that we had to have it a server room service center. And it would validate transactions on the blockchain, just like anything, just like any validator or node. And then we get paid a percentage, that was a bit of a headache, because if the validator goes down, you get hacked, earnings. And you want to… it was just labor intensive. So we said, hey, this is like for two or 3%. Let’s just Let’s just delegate and and take in delegate our ATOM and just earn the rewards the other way, if the differential was so small, validating versus actually just delegating, you’d have to have so much there’s so many people delegating to you. How do you compete with binance and you know, all nodes and the big guys just just don’t. So it didn’t make that didn’t make sense or keep keep bringing the validator and keep paying hosting fees. So we said, okay, let’s just delegate our ATOM. Now, keep in mind, we got into ATOM, I think, at a couple of bucks. So today, you know, the market lows, it’s, it was eight $9 here on this on this, this? Yeah, it’s 11 something. Yeah, I mean, it’s $11.30 or something. I watch it every day because l personally, I hold it as well. And I delegate it and so ATOM has become a real significant piece of our business because we just kept on re-staking rewards. So it became such a big piece. So I mean, I don’t know, what do we have right now. So we have 170-176,000. ATOM. So that’s like almost $3 million Canadian. And right now, when I did the math, it’s running about 20%. Payment. And it’s stable, it’s been around for a long time, and you cold storage, your tokens, I don’t have to send them anywhere. So I still, I still control my tokens. They are staked, but I control them. So once you delegate them, you know, we can, we can cold-storage it, we can delegate it, and then every month collect the rewards. And we can do something with the rewards, which is, you know, 10s of 1000s of dollars each month. So it’s become a fairly big piece of our business. So we’ll take some of that, and we’ll buy some bitcoin with it, you know, by we’re buying some eight, we’re actually getting into some AI tokens that we see, there’s a potentially good future for this AI tokens. So we’re getting into some of that. So we use it as a diversification tool, also, as a Bitcoin generating tool, and it’s just been solid, consistent, seamless, no issues. And, you know, at the, at the peak of the market was 45 bucks a token. So, you know, US. So that’s, that’s great. I mean, that we did really well on that, I mean, we’re up, you know, that 2 million bucks was whatever, seven $8 million and generating 20, generating, 10 to 20%. It depends on on what’s happening, and you know, the volume and stuff like that. However the rewards work, but anywhere from 10 to 20%. And, yeah, great.
DJ Dunkerley 36:44
So are you looking for… do you actively look for crypto assets outside of Bitcoin? Yes, we do. Yes, for sure. We’re always looking but as a percentage of our whole portfolio, it’s the speculative investments that are smaller. So we’re so you know, we might put $100,000 into something, something that we really like that we think is going to be great, the next Bull Run or we find something that we can generate revenue, and it looks like it’ll fit into our staking program or our DeFi program, and then we’ll build that up over time. But, you know, we’re pretty cautious you know, given given what we’ve seen over the last year 2022 So we’re pretty cautious now. And that our mainstay is going to be Bitcoin and we’re sort of all in agreement there at a board level, but you know, wherever we can find the big gains because obviously, you get into the right token early and you can, you know, you can see multi 1,000% gains, or Bitcoin moves doubles, right? So, so Bitcoin by double but some some great new blockchain that we get into some altcoin will go up 10x 20x 100x And so we can take, we can take those profits and dump them into Bitcoin. Perfect. Because that’s like for us going back to cash. Right? Yeah, no, I can see that. Now for Bitcoin. You guys were leasing machines for a while. Are you just buying Bitcoin? Are you like buying?
Cale Moodie 38:21
No, we’re actually mining. So we have about 71 Petahas right now. And we have two facilities in the US. Well, sorry, we don’t have facilities, we have our rigs parked at a hosting facility. So we just pay, we just park our rigs there and we pay for power. And that’s the that’s the sum of the agreement. And we have some in Colorado and some in Texas. Some with Aspen and some with Frontier, been great. But you know, Bitcoin mining is, is tricky. And there’s lots of variables at play. So I would say like most people who are most companies that are involved in Bitcoin mining, you know, the breakeven is probably 14 to 17,000 USD per bitcoin. So the margins are pretty skinny, when you get down to 17 18 19 BTC nobody’s really making money. And that creates problems because people have to sell the Bitcoin to pay for the power and then you’re sort of completely out of the game of accumulating Bitcoin. Because, I mean, who cares about a margin of between 17 breakeven and and 19k Bitcoin you’re selling you know, unless you’re doing so much Bitcoin, but we know nobody is because there’s only 21 million of them. So everybody at the end of the day well a lot of these companies were forced to sell Bitcoin because they didn’t have cash to pay the power bill to be can’t pay the power bill, then you’re forced to sell the Bitcoin you’re mining, which to me is sort of doesn’t make any sense because it’s, it’s labor and it’s a lot of work to run these rigs. It’s a lot of money. Things are breaking all the time. It’s high power cost, and you know, things can overheat, you gotta replace boards, like there’s just like a lot of a lot of work, it’s a lot more difficult than people think it’s not just like plug in your rig and sit back for four years, and everything’s going to be great. And then, and then take into account the halving. So you have a halving event, and now all of a sudden, you’re mining 10 Bitcoin before, now you’re only mining five, if the price of Bitcoin hasn’t doubled. You’re not making any money, you’re losing money. And you’re spending your cash. If you’re not building your Bitcoin, just spend your cash, you know, and then you’re out of cash, now you’re selling all the Bitcoins that you’ve mined at a loss to pay for the power bill. And usually you’re locked in for two or three years to these these power contracts. So it is a very risky business. And I see, you know, over time, what’s probably going to happen is that, you know, Bitcoin mining is going to roll up to a few big international entities that will be doing it, because, you know, they’ve got the cheap power, they run the facilities themselves, so they can pay four cents versus so your average person pays, you know, six and a half to seven and a half cents per kilowatt hour for power. So it can be it does feel at times, like it’s a race to the bottom.
DJ Dunkerley 41:13
You get that way and then FOMO and yeah, you know… I always tell people, why I’m in crypto because when I go into any other sector, I’m like a horrible investor. Everything else outside of crypto usually turns to ashes. And then buy, complete garbage in crypto. And three years later, I’ve doubled my money.
Cale Moodie 41:40
The thing with the Bitcoin miners that you want to look for, you want to look for is that A: they have enough cash to pay the power bill and B: they are keeping the Bitcoin they have mined. Because you’re not in this to make a tiny little skinny margin, or breakeven, you’re in this to have to be investing in a company that has a massive growing pool of Bitcoin, and that Bitcoin is going to go higher, and that’s the trajectory. So Bitcoin going higher, if that’s not the trajectory that you believe in, then you should never be buying this stuff anyways. Not you, anybody, nobody should be buying the stuff, if they don’t believe bitcoin is gonna go a lot higher for mining companies, because it just the economics just don’t make a ton of sense. So for us, you know, we mined the Bitcoin, we hold the Bitcoin, we have ample cash to pay the bill, we’ve done for calculations on that for 10 years. So so we’re patient, I mean, we can keep paying our power bill, even if bitcoin dips down to, you know, 10 grand or something, we’ll buy more, obviously, who wouldn’t? But, you know, we have time on our side. And so, you know, the margins get really good, you know, when bitcoins is at 60,000, 100,000,250,000, all of a sudden, we’re making, you know, tens of millions a month in income. And at that point in time, you know, it’s a high and it’s a big, green, big green candle, you probably want to take some profit and go back to cash, because we know what happens, there’s always going to be that pullback after the after the heyday, the heyday can last a year sometimes. So you never know. So that’s the tricky balance that we play at this company. But again, the end of the day, it’s the growth of our our cold storage, Bitcoin pool. And, and how we manage that it’s sort of so critical to the business.
DJ Dunkerley 43:28
Great, well, I’m getting near the end, but I mean, I was gonna ask the last question, is there anything that you want to talk about, but didn’t ask you about? Like, is there anything I’ve missed?
Cale Moodie 43:39
I think all the critical information is out there. We filed our Q1 so I can say, we’re doing great. Now we have $35 million in assets, no debts we’re a diversified company. So we’re doing the staking Defi. We’re actually Bitcoin mining. We have a number of elements to our business. So I think we’re one of the few companies out there where you where you can buy the stock and have exposure to all the all the facets of the blockchain space and revenue generating in the blockchain space. And on top of that, we got some SpaceX stock, which is pretty cool. Yeah. That’s important one, because you can’t buy that. You can’t buy that on the public market.
DJ Dunkerley 44:24
Maybe
Cale Moodie 44:31
All right. Well, thanks for having me.
DJ Dunkerley 44:32
Awesome. Thanks, Cale, for taking time to talk. Thank you, and hopefully you trade soon. Hopefully it’s imminent.
44:46
Yeah, yeah, well put out news. As soon as we know that the trading day we’ll let everybody know. Yes, for sure. All right. Thank you.
