Preston Pysh (04:19):

So talk to us about your doctorate at Carnegie Mellon because you were studying, you did a postdoc on methane emissions, and I know that for Bitcoiners, this is a really hot topic, explain why and then get into some of the stuff that you were doing in that research.

Austin Mitchell (04:37):

Yeah, so right after graduating from the University of Dayton, I went into Carnegie Mellon and started a PhD program in engineering and public policy. And so that really kind of fit who I am, which was, I’m an engineer, I like the technical side, but I also like to understand what does this mean, bigger picture. How do we take science and technology and apply it to the real world? And so that was really the focus of the program. And as I was starting school there, Marcellus Shale, so this is the big shale formation that underlies Pennsylvania, Ohio, and West Virginia primarily. And that was just starting to get going. So had the opportunity to really focus my time there, just really understanding shale gas development, what it meant for the area. And in my approach to my thesis was actually picking three different hot topics and just trying to provide objectivity to the understanding.

(05:26):

And so I ended with this interesting thesis where there was one paper that was very supportive of what the natural gas industry was doing at the time. Another paper that was sort of painted a different picture, talking about ways that they can do better. And then a third that was saying, “Hey, it’s the regulators that are screwing this up.” And so it was in that experience where I think I saw there’s credibility into being this neutral person, somebody who’s being a scientist, not with a bias but just saying, let’s let the data do the talking and let’s figure out how we can structure policy or make regulations to keep everybody happy and protect the environment but also enable economic development to occur. And it was from that experience that I was given that an opportunity to join what was this sort of nationwide study of methane emissions, where we were basically trying to understand at that time throughout the value chain for the natural gas industry, where was the methane coming from?

(06:21):

How can we address some of the things, what were going to be the quick wins? So leading this nationwide study with Environmental Defense Fund, five natural gas companies, Carnegie Mellon, Colorado State. I basically spent a year on the road with the team. We were driving around a van that said Carnegie Mellon on the side, but it really didn’t look like much. And what most people didn’t realize when we pulled up to rural hotels in western Oklahoma, et cetera, was that in the back of that band was a half a million dollars of measurement equipment. So we got to go to all these different sites, really see parts of America that folks don’t typically see energy production in ways that folks don’t see. And that study was really interesting because one of the key findings was not that there was sort of widespread, pervasive issues with methane emissions, it’s that there’s a few sites that on a given day a valve gets stuck open or one particular site that maybe was poorly maintained.

(07:18):

Those are really what we identified to be the issues. My view coming out of that wasn’t necessarily that we have to change things in some giant way. It was, back to the 80/20, we can solve 80% of the problem with just going after 20% of the issues. And one of the other interesting things that happened there, and this actually led to me really wanting to pivot into the industry itself, was the fact that almost on one of our last sites, we pull up to it and it was like 10% of the methane was just spewing into the atmosphere. So much so that you could actually see it just pulling up. We didn’t even need the equipment to measure it. And for me it was sort of simple talking to the site’s operator, “Hey, this is something that we should want to fix, right?”

(08:06):

And the feedback was, “Well, no, it’s not.” And the operator at the time actually took the time, we went and we dug into the actual ROI of fixing things. And for that next dollar that the company had, it actually provided a better return to put it into drilling a new well. And the lesson that I learned there was, okay, well there are problems there, but there’s things about the business that I need to understand to really change the business. I’ve always wanted to be somebody who’s creating positive change, working to accomplish whole things, protect the environment, but also grow the economy. I’ve always tried to strike that balance. And so when I heard that, I realized there’s something I’m missing here, time to go really dive into business. And the very next thing I did is go work for an upstream oil and gas company and laying pipelines and drilling wells was probably one of the most fun jobs that I’ve had.

Preston Pysh (09:01):

In that previous example, now a company would an incentive to plug that up and do a capital investment with Bitcoin miners in order to harvest that, correct?

Austin Mitchell (09:12):

Yeah, I mean I think what’s great is that the incentive structure is changing and it’s partly top-down, but also it sort bottoms up, companies wanting to change the way that they operate. And absolutely, I think that’s one of the things that really drew me into Bitcoin mining in this whole space was seeing an industry that had a wholly different view of what energy means. And whereas ways to trade energy was something that companies, people don’t really want to talk about. The Bitcoin-mining industry wanted to talk about it. They wanted to find those sources of energy so they could use them to mine Bitcoin. And for me that was just sort that mind-blowing event where I was like, “Hey, this is different. This represents something. This is an innovation that I had never come across before in my entire 15 years.”

Preston Pysh (09:57):

When you said ROI for them, to drill in another spot was a far better ROI for them. If you compare that to Bitcoin mining, would the Bitcoin mining now kind of present a better ROI for them?

Austin Mitchell (10:11):

I think so. It’s been a while since I’ve sort of had the spreadsheet open looking at Bitcoin mining in the economics. I know it’s a challenge right now, but I think that anytime you provide more options. It’s an option that didn’t exist. And so at the very least, when you think about how can we keep more methane in the pipeline, prevent it from leaking into the atmosphere and now you have another option to do that and it doesn’t have to just simply be send it to a market where it’s unprofitable.

Preston Pysh (10:40):

Frame up for us the problem as you see it today and talk to us about your company and explain to us what it is you’re trying to solve.

Austin Mitchell (10:50):

So what’s really interesting, Preston, is that in my career I’ve had the opportunity to really experience the full value chain of energy. And so after I worked in upstream oil and gas, I then worked for an energy retailer. So that’s where it’s electric and gas and it’s trading and it’s basically selling in deregulated competitive markets directly to consumer. And then I moved over to utility where now it’s sort of soup to nuts, you’re seeing how the infrastructure gets put in place, that whole centralized mindset in terms of how energy is procured and distributed to homes and businesses. And in that experience, I think the thing that really stuck out to me was we’re really good at moving energy. Energy moves very efficiently through the system, whether it’s natural gas or whether it’s electricity, it’s efficient. And you can have multiple companies in that value chain each touching that energy from the point of production to the point of distribution and consumption in your home.

(11:47):

But what I saw was that as I progressed in my career, there were instances where we’re managing risks of things that had to do more with the financial side, had to do with the fact that it was actually very inefficient to move money from the consumer back up through that same value chain. And so I think that’s really kind of where the light bulb went off on, hey, here’s this problem of financial inefficiency. There’s actually a lot of costs associated with just the financial side that doesn’t add any value to the energy itself. And in fact, when you think about the inefficiency, it distorts the price of energy, distorts the cost of it, and it leads to things like aggregated costs and socializing of costs to sort a broad swath of people. And what we don’t see is really the granularity that exists. Energy, the price of energy, is going to vary across space and time.

(12:37):

One part of Ohio is going to be different than… North Ohio is going to be different from southern Ohio. I live in Ohio, that’s why I say Ohio. But there’s so much of a disconnect today between physically and financially, that that’s really sort of where I was like, “Hey, there’s something here that I want to dig into.” And it was Bitcoin mining specifically, when you think about the fact that, going back to Bitcoin miners moving to the energy itself, you see them eliminating so many pieces of the puzzle in doing that. So much of any inefficiency, they’re cutting it out by cutting out all of those middlemen and saying, Let’s go directly to the source, let’s reduce that waste.”

(13:16):

And what sort of struck me was that even in those situations, and these are the conversations that I had with the team in the very early days of forming Synota, was that everything was changing, but the one thing that was staying the same was how they were transacting with their counterparties. So how the Bitcoin miners were still paying the energy producers wasn’t changing, even though everything else about the equation was changing.

Preston Pysh (13:38):

So let me say back to you what I think I heard. So really the working capital for people that maybe own a small business or whatever and maybe they have a net 60 or a net 90 settlement with their vendors, there’s frictional cost in that working capital to settle. What you’re going after and what you’re trying to solve is you got all these different energy producers that maybe 60% of my house is being provided energy from this one producer. Then later in the day, maybe it’s 50% and it’s constantly in flux and changing depending on which region that energy’s coming from. And what you’re saying is that the settlement, you’re trying to accelerate that settlement time. Am I reading that right?

Austin Mitchell (14:20):

Yeah, that’s exactly right. So when you go to pay your energy bill today, what you’re going to see is that you’re paying for energy that you consumed in a previous month. So it’s often the case that we’re paying for a bill weeks if not months later. And by the time that the money then moves to the other counterparties upstream, it can be months to, in some cases we’ve heard 120 days.

Preston Pysh (14:39):

Wow.

Austin Mitchell (14:40):

So it’s that cash lag, which is really sort of, I think, the starting point of the issues. It’s sort of one side of the problem that we’re working to solve. And it’s significant because… So when you think about that, what’s happening is the energy producers and the utilities, they’re providing that energy to you as a consumer. They had to buy that. They had to produce that. So that was cash out the door to bring that to you.

Preston Pysh (15:03):

Yeah.

Austin Mitchell (15:04):

Cash isn’t coming back in the door until you pay them two months later. So there’s that lag that is not free. So initially, when we started talking with folks about the problem you were trying to solve, they would say, “Well, hey, I like the float.” And our response was always, “Well, the float isn’t free, you’re getting a loan every month, but you’re paying for it.” And it turns out that it’s actually quite costly. So the last couple of companies I worked for, there was sort of a seasonal dynamic to the cash flow where during the winter time, consumers are consuming a lot, especially here in northern states in their natural gas. But the bills don’t come in until the spring, so you have this cash-negative to cash-positive situation and when your cash-negative, you have to turn to the banks and to your credit line, you have to turn to the commercial paper markets, wherever, to get the cash to run your operations.

(15:54):

So that sort of setup is pervasive in the industry where folks are constantly dealing with cash imbalances, constantly having to deal with the question of credit worthiness of their counterparties. And what’s the one way that you can solve that? Well, post collateral, post a bond. Again, things that are inefficient tie-up capital. So you have this whole edifice of structures established in the industry that’s affecting cash flow, creating this credit risk. And then on top of that, it just is the pure financial inefficiency of the daisy chain of payments where you pay your bill and then the utility then pays the supplier, the supplier then pays the producer. And so it’s just these big chunks of money that are sort of piecemealing in large chunks their way through the energy economy. And it’s just really inefficient when you really sort step back and look at it, it’s huge.

Preston Pysh (16:43):

How much of the expense, if you would go from the top line of a hundred and maybe the bottom line for one of an energy company, what are their margins, 8%, 6%, something like that? So how much of that expense structure that’s eating away, we’ll just use the really easy numbers, let’s say they have 5% margins. How much of that $95 of expense is attributed to what you’re describing here with the settlement?

Austin Mitchell (17:07):

Yeah, I think that our conservative estimate is 10%.

Preston Pysh (17:11):

Wow.

Austin Mitchell (17:11):

Of the cost of energy. So your bill, 10% of that is likely to be just financial inefficiency.

Preston Pysh (17:18):

Wow.

Austin Mitchell (17:19):

Back office overhead, fees from intermediaries. It’s really sort of a poster child for inefficiency. So the other thing too that, when you go back to the fact that… Preston, I’m sure you always pay your bill, but there’s a lot of people that don’t and there’s a lot of businesses that go out of business, especially in tough economic times. So one of the things, we just published an article in Bitcoin Magazine and we talk about, is a perfect quote from MacKenzie where they say, “Hey, 5 to 7% of people don’t pay their bills.” And so that cost doesn’t get eaten by utilities and energy companies. That cost gets passed on to you and me. So not only are we paying for the inefficiency, but we’re also paying for the people who don’t pay their bills. And it’s not the case that this is one of the things that we can certainly talk about. It’s not the case that folks not paying their bills is… There are solutions to that available, but they’re inaccessible today again because of the financial inefficiency that’s out there.

Preston Pysh (18:19):

So basically you’re saying they don’t pay the bills for 90 days or a hundred days and so then that’s being passed onto the customer. So how do you solve this? Because you’re solving this with Bitcoin and Lightning and nodes and explain to us how you are solving this problem, because this is fascinating.

Austin Mitchell (18:36):

And we’ve talked a lot about the problem and I think it’s because it’s so big. So how do we solve it? I think the very first thing that we would really focus on is just the instant settlement aspect of it. So if you go back to somebody, you’re paying your bill two months later. So not only are you consuming energy that entire time, so you’re waiting to… Here we are in October and you’re paying your bill let’s say from August or September. So by the time you pay that, now you have two additional months of consumption, et cetera. And so that whole thing, what we want to do is sort of realign the cash flows and how we’re using doing that is instant settlements over the Lightning Network and in what the Lightning Network gives us the opportunity to do. So I mean I think everybody understands the benefits of the Lightning Network, the features, so low cost, instant payments, finality-

Preston Pysh (19:27):

Streaming money, I think is the best way, if people don’t understand it.

Austin Mitchell (19:33):

So what we have to do from there is we just have to figure out, how do we use those properties? How do we use the features of the Lightning Network in Bitcoin peer-to-peer payments and apply them to energy? And so what we’ve done is we’ve created a programmatic link between energy meters, IOT devices, et cetera, anything that is part of the energy system, hardware that’s associated with the energy system, creating that programmatic link between that hardware and the Lightning Network itself. And so what our software does is it’s really that intelligent bridge, that programmatic link, so that as energy is moving, now we can be using that as a trigger to then send payments going in the opposite direction. So what we like to say is it’s money moving at the speed of energy. And that’s really sort the view that we want to create.

Preston Pysh (20:20):

So the energy’s flowing in and the sats are flowing back to the source instantly.

Austin Mitchell (20:26):

And in that programmability, what it does is not only is it sort of create that secure intelligent linkage, that programmatic connection, but what it also does is it opens up the world of possibility in terms of how energy is priced and structured, so much of the system that we exists today. So part of what I would say in terms of the background for where we got to today is the fact that everything was built at a time in the fifties, sixties and seventies. A lot of the infrastructure and the energy space was built then, and it was all centralized and it depended on somebody reading your meter once a month. So the whole energy system has changed over the last 20 years to be digital. Now most people, their utility knows how much energy they’re consuming the moment they’re consuming it. Because we have smart meters on most homes in the US.

(21:15):

So that’s changed, there’s no more meter readers, but the financial back office systems, those are still stuck in that era. And so what that does is it makes it very difficult to now deal with the richness, the abundance of the data that’s out there and still try to push that through those centralized systems. Because if you think, went from one data point per customer per month, to now thousands of data points per customer per month, that becomes a big data problem. It becomes an issue with processing that. And so what we can solve by decentralizing the whole system is now we can actually handle the data in its entirety, and we can process in a decentralized way and really open the door up to now more flexibility in terms of how we transact. So you press and could choose to pay your bill… You could choose to do streaming payments, maybe you want to pay every 10 minutes for your energy and you like to open up your phone and see money come out every 10 minutes, but maybe your neighbor says, “No, I’d actually like to pay once a month still.”

(22:17):

Now we can of solve the differences. And that’s sort of an easy example. I think the biggest opportunities are going to exist in terms of how we actually reflect the true cost of energy. Because most people today, they’re just assigned a specific rate and that rate is, “I’m a residential customer in southern Ohio, so I pay this price for this month.” Well, we all know, and in the Bitcoin community knows better than I think most industries, that is not the true cost of energy. It’s not one price over a broad service area that’s fixed for a month, it actually goes up and down. So now we actually have the processing capability through the decentralized, through how we built the software, to say, “No, we can do real-time pricing at a very granular level, and Preston can pay differently than his neighbor.”

Preston Pysh (23:11):

Austin, how do you think about the exchange rate? So most people want to still denominate their expenses in fiat because they see that as less volatile than Bitcoin. But there’s also, I know when you look at Jack Mallers and he’s streaming US dollars from one account to another, but he’s using Bitcoin lightning as the rail to do it instantaneously. And so there’s nothing… That exchange converting it from dollars to Bitcoin back to dollars again, is that how you guys see happening for the user? And talk to us a little bit about the user interface that you see this happening under.

Austin Mitchell (23:47):

Yeah, that’s it. So number one, Jack Mallers and what Strike has done has absolutely been an inspiration for us. I think that was one of those light bulb moments through the progression of Synota and in how we got to where we are today was Jack Mallers talking at Bitcoin 2021, Jack Mallers being on CNBC, telling the world how we can really change, use the Lighting Network for payments, but in a way that sort of meets people where they are, meets them where they’re comfortable. And so we’ve really embraced that concept of our vision is that people will interact with their energy payments and will have the opportunity to interact it in just the same way they are today. It’s the outgoing leaving their bank account, but it’s really leveraging the Lightning Network as the payment rails and then having decentralized processing connected into that network to really make it be more complex and dynamic.

Preston Pysh (24:40):

And they don’t even need to understand that.

Austin Mitchell (24:42):

They don’t even need to understand it. And ultimately what we want to see is, just as Jack says, a better user experience. Because it creates a whole different… The landscape will completely change in terms of the products and services that people can be offered related to energy, because there’s going to be no limits in how they transact.

Preston Pysh (25:04):

And so the pitch to the end user, so here I am at my house, the energy company contacts me, they say, “Hey, would you like to save 5% every month on your energy bill? If so, load $300 into this account via whatever app” and then it’s basically streaming that money through the Lightning Network, which would be all on the back end that user wouldn’t have to deal with, correct? Is that kind of the-

Austin Mitchell (25:32):

Exactly the idea. And what’s interesting is there are actually a number of companies that have sprung up with that same approach of pay-as-you-go, but it’s still tethered to the way things were. The only difference is just that it’s really it… They’re called pay-as-you-go, but really it’s just a prepaid. So I think with Bitcoin and Lightning, you can actually have a true pay-as-you-go option where it’s your money until you’re using it to pay. And so I think that’s really what the big change is and cutting out all of that financial inefficiency. And one of the other really big opportunities, Preston, is that back to that sort of daisy chain of payments that’s out there today, what we can do now is think about split payments. So I know many of your listeners are probably familiar with the value-for-value model that’s out there where you know can have multiple people receiving instant payments the same time.

(26:22):

Well, energy has this property where it doesn’t change value for the last bit of the value chain quite a bit, and there’s usually a number of parties involved in the transaction. So now instead of the utility paying the supplier, supplier paying the transmission company, et cetera, et cetera, now everybody can pay to once. And so that’s where you start to see enormous savings come to bear. And that’s what we get really excited about because now everybody in the equation’s happier, and it’s everybody from the energy broker who can say, “Hey, I had a part in this supply deal.” They’re the last people that get paid in a lot of transactions, now they can get paid right at front with everybody else. And so it just really changes the dynamic.

Preston Pysh (27:08):

Do you see any role at the main hubs, the main energy hubs between the various energy companies using a similar model? Or is it kind of handled in the business maybe on a tighter timeline like net 30 or something between the various energy companies?

Austin Mitchell (27:28):

So I’ll tell you that part of our vision is that really the entire energy economy is going to… I mean, that is our vision is the entire energy economy is going to settle on the Lightning Network. So every energy transaction, your bill, B2B, when you think about one of… There’s a number of platforms out there where wholesale energy trading occurs. Those platforms will be a perfect use case for, “Hey everybody, on everybody who’s trading energy, let’s be linked into Lightning Network and let’s do the financial settlement right away.” And it’s all of those platforms where to be a participant in them, you have to post exorbitant amounts of credit or collateral to be a participant. So now we can expand access to those types of trading platforms, if you don’t have those barriers in place.

Preston Pysh (28:17):

If we had an executive for a major energy company listening to the show right now, what would be your one to five-liner to them?

Austin Mitchell (28:28):

So I think that what we need to talk, when we talk with executives and things like that, what we really are talking about is cash lag, credit risk and the barriers, the inefficiency and just the inflexibility of the system. It’s not easy to change the billing system today.

Preston Pysh (28:45):

Yeah.

Austin Mitchell (28:45):

So now you can. So those things resonate, top to bottom with everybody we talk to. Usually the feedback that we get when we talk to the energy executives is it is more of just like a skepticism around Bitcoin still at this stage, but “Hey, you’re solving some of our biggest pain points.” And I know it because I’ve been on that side of the equation. I’ve had to manage the credit risk, I’ve had to track the cash flow. So I understand what all this is about, and that’s why I know that the solution is perfect. It’s just making it so that way adoption is easy. And I think that’s where, going back to Strike, energy companies today do not want to receive Bitcoin, but a company like Strike has opened the door to say they can receive USD in that transaction. And everything can still be the same, but just as Jack says, right before it gets to their bank account, it flips to USD and everybody’s content with how the transaction went.

Preston Pysh (29:40):

I think so few people understand that right now, that you can do these atomic swaps between fiat and Bitcoin, back to fiat. Huge news with Cash App this week, fully integrating Lightning. So here you are talking about immediate streaming money via Lightning and you have arguably one of the biggest payment platforms on the planet with Cash App fully integrating the Lightning Network into their app. And I don’t know about vendors, restaurants and whatever that are also using their platform, but I would imagine it’s available there as well. What are your thoughts on that? And I’m assuming you’re very bullish on this idea.

Austin Mitchell (30:22):

Yeah, absolutely. So I think the big thing for us, a part of all how we view our company in the progression that we’re going to make in the development is we’re leveraging third parties. We’re integrated with some of the leading companies in the space and we expect them to continue to advance just as we will. So as an example, we’re not focused on building that off ramp, we’re leveraging a third party to help us do that. And so we only expect that also Cash App, strike, et cetera, are going to continue to progress as they have. And we’ll be able to continue to tap into what they’re building to really provide good on-ramps, good off-ramps to really sort round off the full user experience. So yeah, part of everything that we’re doing is anticipating the growth and key areas that today are not as mature as they need to be to get of mass adoption, but we think in a short period of time they will be.

Preston Pysh (31:13):

So I don’t know that if I’m just reiterating something that you previously said, but you wrote an article just recently the other day called Towards a Future of Energy Abundance. One of the quotes in there that I really liked, you said, “The future energy economy will be settled on the Lightning Network. Every home business, substation, solar farm, whatever energy is produced, distributed or consumed will be programmatically linked to a node on the Lightning Network. Instant settlement on the Lightning Network reduces or eliminates financial inefficiencies, cash lag and credit risk.”

(31:46):

I just found that to be a very profound quote. I got one more here, “This industry sees value in stranded or wasted energy, when many are trying to cover it up. Where the legacy industry mindset seeks to curtail demand to meet supply, a miner sees an innovative and inclusive future driven by increased demand.” That quote there at the end is… I think it’s a slap in the face to all these people running around saying we need to consume less, right? You’re saying the exact opposite with what the promise of what a lot of this delivers. Tell us your thoughts.

Austin Mitchell (32:27):

Well, I’ll tell you, I’ll own the fact that two years ago I was one of those people who thought we needed to consume less. So through the past years I’ve-

Preston Pysh (32:35):

Walk us through that, walk us through the transition.

Austin Mitchell (32:38):

Yeah, so for me it was actually attending Bitcoin Miami 2021. So I attended that as a representative of the utility I worked for at the time. I saw Bitcoin mining… I knew about Bitcoin, I was buying Bitcoin on Robinhood through my weekly DCA, forgive me for using a non-custodial solution. But that was what I knew, I knew enough about it to like it. And I was really intrigued by Bitcoin mining, the growth in the US, and since I worked for an energy company, I said, “There’s certainly maybe some risk here, some opportunity. I was in charge of risk for that utility, so I really wanted to go understand this.” And being down there, a couple things happened. Number one, I got a math lesson from Greg Foss and that sort of pushed me really close to the rabbit hole and then I spent a dinner with the IDEX team, and I can just tell you I just instantly saw the mindset shift.It just started, just kicked off. That plane ride home, I can’t even describe how I felt jotting down everything that I had learned in all of my preconceived notions of energy and things and how they could be changed. Because what I saw was, not only was this, as the quote says, people who are seeking ways to trade energy, but I thought about how much more efficient… So you talk about efficiency as reducing consumption, but I thought there is an even greater efficiency that’s possible if we have just a flexible grid where supply and demand can be constantly tugging and pulling at each other, with price going up and down to reflect the true dynamics of the market. And I was like, that’s the efficiency we should be seeking is that. And the financial system that we have today in energy finance prevents that, and it is an absolute barrier to that.

(34:26):

But if we can get to a point where energy is freely traded at a granular level and the true cost and the economic value are known, that transparency is going to do wonders for not only the efficiency of the market but just wonders for how people use energy. And I think it’s just going to open up, really unleash innovation, unleash investment, not only locally but globally because as we know, you can send Bitcoin anywhere in the world instantly. So I think that’s really sort the transformation. One of the other things that happened shortly after that was I started to talk to people that I also knew in the energy space and people that I knew had open minds and would be willing to say, “Okay, well how does this change things?” And it was incredible and a lot of the folks are on the team today I either added as advisors or full-time members of Synota, and they all saw it the same way.

(35:20):

They saw this is transformative. You can really, truly reimagine the energy system when you aren’t sort of tethered to a one sort of viewpoint on how it should exist. And one of those people is my friend Dan Schnitzer because he is the CEO of a company called SparkMeter. And basically, one of the things that they do is hardware and software and mini-grids in emerging markets. Now they do a whole lot of other things and it’s really neat, but that’s really kind of what got them started. And we talked about how the very first few years of a mini-grid in let’s say rural Africa, it’s actually quite risky and very unprofitable. People there are spending 30, 50 cents a kilowatt for electricity and there’s not a lot of sort natural demand. I mean, you put a mini grit in where there was previously no electricity, the people there don’t have all the appliances that we’re accustomed to that consume energy.

(36:14):

And so we talked about how can Bitcoin mining really uplift and enable that and de-risk these projects? And so that led to just incredible conversations, not only about the US but globally of how we can change the narrative, change the dynamic. And so one of the cool things which we’re going to talk a whole lot more about as a company, is just that of some partnerships that we formed in Africa to do that, to basically say, “Hey, we’re going to help seed mini-grids there with Bitcoin mining, as I sit here today in Columbus, we’re going to be paying for the energy that’s being consumed in Africa.” And so we’re mining Bitcoin in two places in Africa today and paying for it in Columbus, Ohio. And what it does is it’s created this win-win-win scenario where not only are we able to get the Bitcoin at a good price, a good price for the energy, but now we’ve increased revenue for zero costs to that mini-grid.

(37:14):

And so that mini-grid is now benefiting from more revenue coming in, they can lower the cost to the community. And because if you want to go back to credit worthiness, with a credit worthy customer paying instantly, the mini-grid operator themselves is really happy to have us as a customer as well, because they’re not worried, are we going to pay the bill in 30 days? So everybody is better off in this equation. And it just is another example of a productive use of energy. So there is a whole series of things that folks call productive uses of energy. Well, mining belongs in that space, belongs in that… It fits in that definition for me and it’s truly transformative in what it can mean. But it does go beyond that and it goes to how do we think about just investing in energy infrastructure generally. And so what we’ve done is we’ve run the numbers, we’ve built the models to say actually what it really now enables us to do is build bigger mini-grids.

(38:06):

So now we don’t have to just think about where the community’s going to be in five years. We can think about where that community will be in 10 years and just continue to optimize or maybe maximize the opportunities that are there. So it’s just one example. So we’ve talked a lot about the US but here’s where it’s not only Bitcoin mining… Bitcoin mining is a piece of the equation, but it’s how we can transact across borders, really open up markets and now we can really envision a whole new future for what it means for energy equity and energy access.

Preston Pysh (38:38):

I can just see it on your face. This is something you can’t unsee.

Austin Mitchell (38:42):

No, that’s exactly right. Once the light bulb went off, I think I was a changed person. I remember coming home and after that same plane ride I talked about where the thing I spent three hours with my wife just downloading everything, and just the excitement that I have has carried with me since that moment. And really the community then has just further reinforced everything, because not only have I experienced people who see… I think as Jeff Booth talked about on the podcast with you recently, it’s about abundance and hope and just that mindset shift that you see in people in the space. But the other thing too is just along with open-source, just people who are open.

Preston Pysh (39:29):

Yeah.

Austin Mitchell (39:30):

I’ve grown accustomed to all my years in the energy space and even in academia where it was like, you didn’t want anybody to know what you knew. You wanted to find the best location to drill your well, or you wanted to publish your paper first. I feel very differently being in the Bitcoin space, and I think that’s very freeing because then I can go into conversations, my team can go into conversations and just talk about what we’re doing. And for some people, it really resonates, and we’ve gotten a ton of great feedback to help really enhance what we’re doing.

Preston Pysh (40:02):

So Austin, you guys are a brand new company, you’re just starting out. How are you guys prioritizing what you’re going to focus on at the start?

Austin Mitchell (40:10):

Yeah, Preston, thanks for the question. I think where we’re going to be focused is in the Bitcoin mining space, we think that they are the ideal energy consumers to really initiate this innovation. And the reason being is because Bitcoin miners understand the technology. As we readily admit, there’s areas in terms of on-ramps where we don’t have all of the solutions yet to do that seamlessly. So Bitcoin miners being able to pay in Bitcoin really sort of streamlines, and we can build a frictionless payment flow around that. And it’s really also what’s good for the goose is good for the gander, because now we’re talking about bringing significant scale into the Lightning Network and really helping us evolve and mature the technology.

(40:54):

So we’re definitely starting there and its ideal because Bitcoin miners more than anybody understand the value of price-responsive demand and price-sensitive supply, et cetera. So here we can link those two things up. We can provide that transactional flexibility, provide instant settlements. And what it ultimately would do is I think it will change the narrative around Bitcoin mining because now the energy suppliers are not going to view all Bitcoin miners as a credit risk, because now they’re going to be able to be paid more frequently. So we think it’s a really big opportunity to really demonstrate what’s possible in this space and at the same time grow and scale our own technology.

Preston Pysh (41:34):

Austin, tell us a little bit about the team.

Austin Mitchell (41:36):

So the team is incredible. It’s comprised of folks that I’ve met throughout my career and people who are open-minded in the energy space but also bring just a wealth of knowledge. So we have folks who have been on the front lines fighting for energy equity, we have folks who are on the front lines fighting for deregulation. So collectively, we have over 125 years of experience in the energy industry throughout the value chain. My co-founder Lisa Scott, she is a JD and a CPA and really sort brings that back office experience. She’s seen how things look when it’s not sort of operationally on the front line of energy, it’s sort of dealing with things as they come in paper form and across the financial platforms in the back office. So we have that experience and what we’ve been able to do is really combine it with Lightning expertise.

(42:29):

And so Max Dignan, our head of technology, he’s previously worked at Strike, he’s an incredible developer and he’s building a great team around him today. And one of the important things about how Max and I connected, which I think is just a true sort of Bitcoin community story was at the meetup. And being at the Columbus meetup talking about, “Hey, here are these problems.” And then Max says, “Hey, we can solve those and we can use the Lighting Network to solve these and we don’t need to do a smart contract to do it.” I still look at the technology and I think, “Hey, looks like a smart contract, right?” But he is like, “But it’s not. And it’s way more efficient, it’s way more secure and it’s Bitcoin.” It does things that you can’t do with other technologies and it does it faster better and cheaper. So it’s just really kudos to the team because I’m just one part of what Synota is and what we will be with the talent that we have.

Preston Pysh (43:24):

Austin, if people wanted to learn more about your organization, if people wanted to get involved, are you looking to add people to your team? Talk to us about where you guys are in that timeline and where people can learn more about you.

Austin Mitchell (43:39):

So as a company right now, we are right at the very beginning of our seed stage. And what we’re doing is really kind of focusing on commercializing our initial product, which is going to be tailored to the Bitcoin mining space and can talk about that certainly. But what we’re going to be doing is from there, moving out into other industries and into other of segments of the energy space. And one of the things that we’re looking to do is bring people on board. So we have a great team today. Our technology’s being headed up by Max Dignan. He’s an incredible talent. And we can see as we move from Bitcoin mining into the other areas where we want to go, we’re going to need to find additional folks. And so obviously as a Bitcoin-only company, we are trying to attract Bitcoiners to the mission.

(44:26):

And so that’s how we’re approaching this. And so we’ve got a couple of postings on our website, we invite anybody to go check those out. Or just any general inquiries, we’re happy to tell you what we’re doing. And this is really just for us a really exciting time to be getting our start and putting ourselves out there as, here’s a really important and potentially huge use case for Bitcoin. It’s not the case that we’re trying to solve a problem that doesn’t exist, or here’s a really big problem of financial inefficiency and financial inflexibility and we have an opportunity to use the things, the tools, the technologies that are being built to solve those. And what it does is it’s better for energy companies and it’s better for energy consumers. So it’s win-win there. I mean I think we all know who loses out in that equation, but it’s not the consumers and it’s not the energy companies.

(45:20):

And so we get really excited about that and we hope others see that as well. We also think that one of the core things in how we’re building is we’re also doing the tech out in the open as well. So as a new company, we’re still figuring out exactly what that means and each facet of it. But some of our core technology is open-source today because we think that this is not… It’s not going to be Synota that brings the whole energy economy to the Lightning Network. It’s going to take a lot of people doing that, and it’s going to be done through integrations and it’s going to be done through partnerships and finding new ways to connect people, because there is really an opportunity for a network effect here. And that’s what we want to see happen, because if you have two parties transacting together, now let’s think about, okay, well somebody who’s then upstream says, “Hey, I want to also get paid right away.”

(46:10):

So there’s sort of a very natural network effect that we want to create, but there’s definitely some big challenges to solve and that’s what we’re excited to do. We tell people with what we’re doing today that we fully intend to bring the Lightning Network along the way. Not the full network of course, but the transaction volumes that we’re talking about, the amount of liquidity that’s going to be required, the reliability. So one difference is we’re not paying for podcasts, we’re paying for critical service. So if people’s energies bills don’t get paid, well then their energy gets shut off and that can be a big issue. So we need to push reliability to 99.99%, and it needs to be that high for very large transactions as well. So it’s things like that which haven’t been done before that we’re going to have to do. And we know we’re going to have to break things but then build them back up. And so that’s sort of the mission that we’re on and why we get really excited about the tech and where we’re at today.

Preston Pysh (47:09):

And what I love is you’re doing it in developed nation states and you’re doing it in underdeveloped nations. It’s fascinating to see the breadth of what this offers the world. And for people that aren’t intimately familiar with the Lightning Network, when you look at the growth rate of this thing, I mean it is moving out at a clip that’s unparalleled when you look at the amount of coins, channels that are being set up within that. Austin, what a pleasure talking to you. Thank you so much for making time and coming on the show. We’ll have some links in the show notes for people if they want to check out some of that stuff. We’ll also have a link to your Twitter handle so people can follow you there and keep track of what you’re up to. Any final comments or things that you want to highlight?

Austin Mitchell (47:51):

No, Preston, this has been a real pleasure. Thanks for giving us the opportunity to talk about it, just really love everything that’s happening in this space and excited to now be a part of it. So thank you very much.

Preston Pysh (47:59):

Absolutely. Thanks for coming on.

Austin Mitchell (48:01):

Thank you.

Preston Pysh (48:03):

If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for, We Study Billionaires. The Bitcoin-specific shows come out every Wednesday, and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it’s something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I’ll catch you again next week.

Outro (48:35):

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