You could do mining at home,
you could buy a video card
turn it on and
it makes money. It buys back itself in a month
The in three months you can make three times more money.
Currently, it does not work like that anymore.
Hi, I am happy to see you, happy to hear you finally…
– Me too… Even though we live nearby
we meet each other not that often.
Traditionally, my first question is –
what are we drinking with you today?
– Whiskey… A good drink…
Is this your favorite drink? – Yes
Which whiskey do you prefer?
– I do not drink that often…
I prefer Jack Daniels from the simple ones.
I like smoky Irish whiskey
Jameson, LaCroix, Glenfiddich
With time your taste changes significantly
These strong drinks, I drink very rarely
Usually, what I can afford is a glass of wine
Lately, I enjoy the state, where my mind works clearly
and fully functionally
I can allow myself once per week
or once in two weeks a cigar with wine
OK, if there is some sort of a holiday
I can allow myself a glass or two of wine
But usually it does not happen very often
– I know that you into cigars…
this is your thing, right?
This is something you understand well?
– I cannot say that I am proud of this.
I did not smoke for more than 35 years at all…
I was into diving and I travelled
to dive in Egypt
and in Arab countries you have shisha
at first I spent time with people who smoked
then I started smoking shisha,
but it is not as harmless as many consider
it clogs your lungs
when you practice yoga
you can feel in the morning yesterday’s shisha
cigars are more balanced,
but you still need a careful approach
– OK, tell me please, what did you do before crypto?
I worked as an auditor for more than 12 years
I did audits on various types of business
I did not work as just an IT auditor
I assessed full condition of businesses
This was document turnover, human resources,
business processes
all stack related to business
and very often I had to
solve some sort of crisis situations
in companies and for 2-3 years
I worked as a crisis manager
this business was growing very well,
but this was a very stressful industry
I was also trying to recruit people
unfortunately, they were no ready to take responsibility
and to tackle difficult situations
this is a very difficult job
and when you have a crisis there
is no beginning and end for projects
the end comes only when the problem is solved
and this is very difficult
too much pressure for many
who prefer to hide in their specialty
I had an accountant
he was good only in accounting
ignoring any attempt to teach him something new
was not successful because he did not want to do anything with that.
– How did you find yourself in the crypto industry?
How did you get from auditors business to crypto?
It was not entirely auditors business…
for more than 34 years I have been in the IT sector
most of my friends consider me as a geek IT guy
it happened so that towards the end of school
I knew 10 programming languages
during my last two years in school
I already worked as an engineer
I was writing code, optimizing
software, so programming
was a great opportunity to exercise your brain
and solve interesting issues.
I was lucky, because I had a good database…
My grandmother was a mathematics teacher
– There was a solid foundation.
– Yes, there was a solid foundation
I grew up with encyclopedias
My mom worked in educational center
So, programming was just there for me to learn
Besides, I also have an economics education
and when I first met Bitcoin
I was in Kiev, Ukraine
and Bitcoin fit the puzzle perfectly
between economics and programming
First, I tried to understand how it works,
to find some potential weaknesses, then after more than a year
I started to understand how
it is a balanced economics system
and third part…
Bitcoin has three parts –
Social, economic and technical part
it all worked together perfectly
It was interesting for me,
I understood it, how it works
and I try to understand it more every day
– What is Bitcoin for you?
Personally, for Alex Petrov
what is Bitcoin?
It is an innovation that can change
all financial instruments
change economics
to something new – faster
and more efficient. Always, revolutionary
economic growth is based on
some sort of innovation. There is a Russian scientist
Kondratiev and there are waves of Kondratiev
economies develop in waves
and every growth cycle
is fuelled by some sort of innovation
steam engines – growth, railways –
growth, electricity – growth. This is where
we see new tool for efficiency
For example, earlier everyone was riding horses
production was donkeys powering
manufacturing lines
when you set a steam engine
it can work 24/7
it nearly never falls sick
it practically gives a rather constant big power
comparing to donkeys who can sometimes be distracted
stubborn or fall sick.
There is a sharp increase of efficiency
if, for example, you produce cloth
made by donkeys – when you change it to a
steam engine, you become way more competitive
accordingly, you manufacture faster and
gradually overtake your competitors
and this is where we have two terms – revolution or evolution
revolution is when we destroy everything and start all over again
whereas evolution is when new things gradually take over the old ones
evolution is a more democratic
because people can choose
– And also, it is slower?
It can be either slower or faster,
it depends on the technology.
a lot of inventions were made within 50 years
or 70 years after that there was a period of
approximately 50 to 70 years when
people remembered about these projects
or reinvented certain technologies
for example, electric cars
are not an innovation. In the year 1884
most of the cars sold
were actually electric
in the year 1890 more than 35 percent of
freight transport –
milk was actually delivered
by electric cars.
Only because of conveyor assembly
because of Ford
because of General Motors, we moved away from
electric cars and decided to
internal combustion engines
because it happened so historically
that the innovation of conveyor assembly
was made by those who were building
internal combustion engines.
If they were working on electric engines
we would all be driving
electric cars now, because even
back then electric cars already had
decent range capabilities that
satisfied most of the users and
cars could be charged during the night
as most people use their cars only during day time,
so there was a certain balance already back then.
Even, electric scooters that have
gained a lot of popularity.
There is a picture from the year 1904, where a woman
is on an electric scooter.
And, not only a woman…
The US Postal service bought electric scooters
for all of their employees and they were used
and, if you take a look – they
look very similar to the scooters
that we are using today. The humans just
made a loop… – A 120 year bypass…
So, in the end is Bitcoin evolution,
revolution or a combination of both?
It is evolution, because it is not
killing off
entirely a specific industry
and not telling us that it will be
building something, but you wait
everyone has a choice.
This is where evolution also
provides new opportunities,
including banking services that
are currently available to less than seven percent
of the World population. Opening a bank account
is a serious issue for many people –
opening a credit card
is a problem for many
the purpose of banks has changed drastically
credit economy in itself is
a sort of a violation
economy is stimulated very strongly
and it is not entirely a good thing.
Fractional reserves,
and many, many things we have invented
they distort the system strongly.
Every two years, economy
starts to work
two times faster and besides this
we do not offer these services to everyone.
The majority of the population is without access
to payment settlement systems, they do not participate
and there is no improvement.
But besides this, a strange thing is that more than
78 percent of the World population have
a cell phone and it is the reason why
for example, in Africa we see a strong
development in payment system
on mobile phones. China made a huge leap
already in the 21st century by using mainly
mobile phones for payments.
There is Alipay, WeChat and during the past
three years their banking segment has contracted
by close to 40 percent.
To open a bank account, set up
a terminal for credit card payments
and to obtain a credit card
is a serious issues. And for a salesman, who
who are selling goods on the streets
is an impossible mission.
But on the phones you can
make payments with ease. Even one time
when I was last time in Beijing,
I have the WeChat app with money,
but while I was travelling
WeChat was updated and when I tried to pay
for a taxi, the app did not want to load
it was asking me to enter something
and do something. The taxi driver just said – go.
I said I have some Chinese Yuan, I can
pay with cash.
He said the app is fine, but he does not want cash.
It is a time while he counts them
during this time he can take two
or three customers, so he just let me go.
This makes it a very serious
economy of time.
– At the base layer of all these payment apps
there are still banks, meaning
that this just a set-up?
– Yes, but the question is – what exactly
are we using from banks and what service
to go to the bank to get something
or to do something remotely. Unfortunately, in banks
there is a long chain, where you
make a payment from one country
to another country this is a long sequence
in banks and SWIFT
every intermediary
takes their fees and with banking there is also
a big issue that they work five days per week
eight hours per day
– This is a good bank working eight hours.
If it is a Spanish bank
There you will have Siesta.
Bitcoin works 24 hours, 7 days per week and 365 days and the difference is
is enormous. Even if you
listed to what Bill Gates or Steve Jobs have said.
Elon Musk as well – they often say that
time management for business is
a huge advantage, because
if you competitor works eight hours per week
five days per week, 40 working hours
but I worked
16 to 18 hours, then I have
and I can basically give them two months
head start
and in three months I will take them over.
You just do more because of the extra time
Here is exactly the same
We have discovered a new economy
When online shops were opened,
the number of sales grew rapidly
the number of the possible deals
grew rapidly, but we still
do not have an equally rapidly developing payment service
When you make a payment with the swipe of a card
or pay for something in an online shop
the real transaction happens after
three to five days and you can see this
in your bank details.
When you pay this amount stays
as locked funds
until clearing and this takes
The difference is huge. First of all,
you have a whole chain of
sequence from banks – all these
middleman want to earn their cut, they have
huge administrative apparatus
employees and they have offices- all of this
is costs and this is where
you get exponentially growing costs
for services. But Bitcoin
does not have offices, it does not have employees
no CEO, no central bank,
no need to hire employees,
no need to pay rent for offices
this is simply mathematics that exist
up to the point where we all agree that
this system is good for us and that we
maintain it and we use it
Because of these factors
there is a strong decline in costs and a strong
increase in effectiveness because it works
24 hours, seven days a week and 365 days per year.
Besides this, everyone is talking about
these 10 minutes, that SEPA or SWIFT
are aiming to be
one minute ten, yes, but
the difference remains significant
Bitcoin is both money and
infrastructure and payment environment
and many things more. Banks are only
banks – they just hold your account
and manage your money. If you want
to do something, first of all,
you contact your bank, send them
send them an order message what needs
to be done. they contact the
corresponding bank and they
contact another bank and publish
the message on SWIFT, it goes
on the network and returns back
and then all of these middle-men
you need to firstly feed and then secondly,
they cause delays. With Bitcoin,
You have a ready infrastructure. Visa and
MasterCard are also not money themselves.
This is basically a mean of transport.
They exist as a separate system that
allows you to make a money transfer
from one place to another. But Bitcoin
includes all of this.
It is the transport.
It is the currency and the messaging service.
There are other side products that have emerged.
For example, time stamping.
This is a multi-party digital signature
this allows you to execute
simple contracts without middle-men
which allows you basically
making a simplified notarization
and this simplifies a lot of processes
and, again, if want to compare
transport, precisely like Visa or
Master to find some sort of analogy
it best suits lightning.
This is the layer where it is exclusively
over Bitcoin and lightning
as a payment channel, the speed
of transactions is millisecond. This is why
even if Visa achieves the speed of 10 to 1
seconds, the difference is still in 10,000
the difference in costs is even bigger.
– While all of this sounds very good,
we can discuss for a long time
how great it all sounds,
but where is the mass adoption?
At least a part of the people
using WeChat or Revolut
or other platforms, will start to
make some regular purchases with Bitcoin?
what needs to happen for this?
Does this come from the government,
like Japan approving as a payment method
or technological solution
or these have to be
investors and institutional money
to say, let’s all use
Bitcoin and give a certain signal to the market?
To this retail market, so people
would catch up and start
using it more actively. Currently, it seems that
unfortunately, as an asset yes, but as a payment
method at this point we are not seeing this traction
what do you consider
what needs to happen for adoption?
Time. Time for everyone to better
better understand this instrument
and this instrument also is still in a
rudimentary stage
First of all, this instrument has just over
ten years. It was developed from zero
and it has no analogies
when you try to compare it with
classic instruments
It is a new world with new rules.
Every instrument that has just been developed.
Yes, technically it is genius.
It is a great idea, but it has no user interface.
– Something that we always discuss.
As with any geeky and great idea
it is sticked together with
toothbrushes and chewing gum in the first construction.
It has been replaced with a more serious and
reinforced construction, but it is still
it’s reinforcement, these ribs
and these pieces of steel,
they stand out. If you just remember how
the user interface looks like for the majority of the
Bitcoin applications and payments,
it is still very far from perfect.
Mass adoption will take place when
it will be easy enough. Easy like
swiping your card, when you do not think what
what technology is behind this and when people
will see that
a number of positive aspects
positive aspects arising from
using Bitcoin or any other
cryptocurrency, only then they will
start to use it. Currently, we see only
small bits that some people
use for themselves as protection against
inflation, having your own prive money,
that you keep to yourself and bank cannot
take them away like in Cyprus.
This is real control over your personal funds.
It is trans-border payment method – you can pay
from one country to another and it does not take 10 days
It is also a fast payment type.
Something that we do not have have.
It offers making payments not only
from 10 till 5, but 24/7 when it is
is needed for you from any place in the world
without any middle man. All of these factors
are slowly tried out by people
someone finds some benefits for themselves,
someone fills a certain area
and starts building a business. They understand
That, for example, transfers between countries,
they can do by using Bitcoin,
at the same time they meet some sort of
local challenges that they need to solve
issues like regulation,
how it is taxed in a certain
country and regulatory environment.
People are giving it a try and people are
trying to figure it out and this is the way
how we are understanding this system
– The lack of a middle man is
something many people are citing as
one of the main advantages of Bitcoin.
It is sort of a peer-to-peer money
and you do not need someone’s approval
to send funds to someone
that are equivalent of a certain amount in Euros
or Dollars in Bitcoin. Don’t you think that
this is a little bit of a
ideological issue, because a lot of
people are living in this world with
middle men and they are feeling well this way
by having this certain middle man
in the bank who can help
to return a transaction, who you can
give a call and a have a chat.
This person can of course also
reject and block your transaction
and start asking a lot of questions
your transaction can be stuck forever or
for three, four or five days, but the fact is
the majority of the people
are actually not worried by the middleman?
In some cases,
for some deals, you need a certain middle man or arbitrator
and it can even be required.
If you agree to build a house,
build and formally it
actually exists, but it is fake
electronic system cannot assess this.
If its quality is not up to the agreed standard,
you will still need an
arbitrator who can say that this building
matches the needed quality or not. Two different
people with two different opinions –
He asked me to build a house, I built it.
He did not say what kind of a building.
He did not say that it has to be a brick house
and I built it from cardboard.
– Solution of disputes is understandable
but I am talking about payments.
In payments, it is exactly the same.
For big companies,
you are not doing deals right in your pocket
it is a managed fund, which
is managed by the whole company and it has to
arrive at a certain account.
You will most likely have an accountant
who is responsible for making these invoices
and accounting. This, for example, is
this is also a middle man that you trust
within your company
it is a normal social architecture
which normally sets its own requirements
some limitations and gives you
advantage and if
banking simply handled all of these
requirements and could offer some sort of
more effective instrument with
lower costs and higher
effectivity, I think that we actually
would not be looking for any alternatives
we would gladly use the services. The problem is
that banking services and
also the
regulation, kyc, aml they
are currently slowing down deals significantly
holding back deals solely because
most of these deals
are analyzed manually, i.e. banks for this
Then sit, looking at the contract and ask
questions and try to understand the essence
of these contracts. Money laundering
Very, very thin line that you need
to understand very well. If someone wants to
in a large array of transactions
to hide some expenses
it will be hard to find and the bank is trying
to do this manually
Because this is done manually,
this is where electivity comes into play
The cost of banking services
has grown in some cases by 2.5 times
just because of the implementation of AML
and KYC
because it is a large amount of manual labor,
a lot of paper work that does not happen
If we talk about blockchain,
again, the advantage that you can get
you can simply
launch a mathematical algorithm
which will simply return
a result of 0 to 100
to identify how clean the money is.
20 percent from gambling,
30 percent from some sort of presents and 80
percent – most likely clean funds
from business organization. That is all,
you do not need anything else
this happens automatically within a second
you print it out and
based on this you understand what measures to take.
– But still you analyze and some sort of
final decision is made by you?
You, as a human?
The human factor is still present?
There is no full automatization
even KYC and AML is not fully automatic on blockchain?
– It is hard for me to provide some arguments
because we are heading into a theoretical
If we look at the transparency of some
funds just to accept payment, then
even Crystal Data
which was created by Bitfury
it is more like a statistically
analytical machine which is
making these kinds of reports, where from 0 to
100 shows where approximately
some funds came from. If you accept
some tainted funds and then
tax authorities visit you or
there is a check and they ask why you
accepted certain funds
to avoid these situations,
you need some sort of a mechanism
to understand how dirty or clean funds are.
And to have this
to have some sort of instrument
Crystal Data was created.
Obviously, it is not ideal and
humans still have to
make some decisions and think
as every situation is different
someone does not care at all,
someone specifically chooses
unanimous currencies
specifically not to leave any
trails and not give
any information. But for big companies
the situation is quite the opposite
for them it is valuable to show their accounts
all their turnovers and deals
because this transparency gives you
advantage and this is why I
consider that Bitcoin, which is
a pseudo-anonymous system
pseudo-anonymous system precisely because
when you make a deal
it is extremely hard to
find it in the large mass and understand
what kind of a deal it is. If you specify that this
your address and address of your company
then formally we can obtain a very strong
accounting optimization and a strong
transparency of all the transactions that
company makes – you see everything
like payments for taxi
that you employees made in Hong Kong,
how much money deals brought it.
The question is – what part you want to show,
and what part you do not want
to show. For example, some specific deals
with specific organizations.
These can be transferred to a dedicated account
But for the company this gives
full transparency of the source of income and
Bitcoin if we split it up,
there is both the transparent and not transparent side
it includes both sides – you can choose
you can make small transactions that are not transparent.
You can use mixers,
make them somehow more difficult,
These are your rights.
– Are fully anonymous transactions possible?
Absolutely, yes. First of all,
you can use Dandelion, or you
you can use Mimblewimble or
you can use the Lightning Network.
These are very fast peer-2-peer
transactions and they mix everything
and there are a lot of methods.
The question is – will you
use them unless you really need to?
Bitcoin includes both
sides – transparent and
the private part, you can choose.
This gives you all the instruments.
If we speak about something like Monero,
Zcash or Grin – they are entering a
a very busy market where there are a lot of
other privacy coins
that they will have to share with
and they have only one of the two sides of the coin
they cannot be transparent
so you get only half of the
from all options and this brings
a certain weakness
From the social viewpoint,
a universal instrument can be used both ways.
but if you are building a business that
you initially want to have no
Tell me, please. You were at te origins of
why did you choose this mining direction in the end?
Bitfury is not only mining.
– Currently yes, but initially?
This is what people usually see, because
this is where Bitfury began.
Currently this is a big group.
It is a holding which includes
software, which is producing
more than seven different products
some of these products we create
initially internally
then we do a spin-off and create a separate
company which has its own CEO
and CTO which work on
development of this certain product
As an example, it is Lightning
Peach, implementation of Lightning,
implementation of Lightning wallet and
implementation of Lightning mechanisms for
merchants and customers
in a more convenient form, integration with the
paytomat and also
Crystal Data
Initially, this was just a statistical machine
it allowed analyzing what is going
with Bitcoin to better understand business development,
to better understand what service to offer.
To do this, you need to understand
what is going on in economics,
global understanding of how much money flows
in 24 hours in transactions
You cannot monitor all of the Bitcoin transactions.
It is not real, it is a gigantic amount of data,
which is impossible to identify
even if you try to compare
it with a database, you won’t have enough computing power
it will not be enough.
You can track certain operations
with some certain wallets.
For example, when an exchange gets hacked.
You can try to try to unravel it but it’s about
the same as a crime scene investigation
in real world –
a bunch of forensics, a bunch of analysts
who are trying to add up all the factors
to get the whole picture.
It is unrealistic to do this automatically.
As a statistical machine, it is interesting.
A statistical machine to understand
the bigger picture
it is still operational in
Bitfury and we are using it to
generate block occupancy
to analyze some sort of
transactions and how they changed in Bitcoin,
but also it is a statistical machine
as some clients come to us asking
that funds were stolen and they
want to understand and
visualize approximately where
these funds went, on what wallets they
are currently located.
You can sell this service and this
is exactly what Crystal Data is going.
They sell this visualization of this data,
provide analysis, try to look for
certain addresses with
certain patterns, including
some mixers and this is a technological
weakness and when not done correctly,
these mixers can sometimes
be untangled
To improve this process,
you have to identify a weakness
that exists and Crystal Data is good
to realize this and it is currently a
separate company. Marina is
CEO of Crystal Data, a separate
company, which is currently working separately
only on this product.
not Bitfury
and they sell it separately
Also, Exonum is a big project.
It is a big framework and it is more
difficult to separate it into a different company.
One of the reasons is that we
sell these services to government organizations
as a separate service and here is the question
of trust in a big company like Bitfury
as a holding… Exonum is also developing rapidly.
and it is very likely that
we will launch
a separate Exonum public for
public services, people who want to build
a private solution. Exonum includes
all of the solutions that we have already made.
Like Georgian land registry
this is all not to invent the bicycle
every time from the point zero.
Or to reinvent the wheel…
We can take an already existing solution
it is available on Exonum,
you can implement your own land registry
simply by taking an example
of an already working solution
by adding some functions that you need
Exonum is a flexible framework that allows
building various solutions
which includes your own blockchain
and it can also be used as a bridge
between various blockchains
You can see what is happening on Bitcoin
and make a transaction on
Litecoin based on that
Even smart contracts
which you are creating
for example, on Ethereum in Solidity
where it is 50 lines
On Exonum it will be 200 lines, but
it gives a lot more flexibility
you can do a lot of things that
are very difficult on Ethereum
or that cannot be done at all.
Chip development is also an important sector
chip design is a very complicated
area. We started with
practically no
experience in development and production
microchips and crystal
currently, we are developing microchips
at a level, where density of
transistors surpass Intel in 2.5 times
and Apple in 1.8 times and NVidia
the pascal p100 chip
which they released claiming that
they have reached the highest density
transistor with the highest
efficiency, they just did not know our
results that we actually already achieved
a year and a half earlier. From one side,
it is a very intensive
road when we have walked a very strong
evolution within,
developed our competency is various
directions in a short period of time, but
from the other side it is a strong indicator
how new technology,
innovation, competition between miners
for example, makes you work hard to
optimize and look for some
absolutely new solution you can achieve
completely different results and it is the
highly competitive and growing sector that
stimulates these improvements.
Banks, for example, are stagnating,
there is practically no competition,
the market is well-established
and conservative, but in this industry everything is different
here the growth is very rapid and
due to the very high competition
you have to look for ways to optimize
all of your expenses, capex expenses
main capital expenses,
operational expenses.
This is why we use various systems
of cooling, because this allows us to
lower our costs. If the main
industry data centers are being built
and there is an indicator – PUE,
Power Unit Efficiency
It is a coefficient…
If your server consumes 100 percent energy,
then cooling, lights,
maintenance, heating, filtration
and infrastructure consumers another 80
percent, it means that the PUE coefficient is 1.8
it is calculated as the ratio of
server consumption against the total consumption
of electricity. In the whole industry,
a normal coefficient is regarded as
approximately 1.7, but 1.6 is considered state of art
then in Bitcoin mining in most cases
most farms have coefficient 1.05, 1.07.
is a highly competitive business.
This competition has made
everyone in the industry
seriously consider optimization
of their costs to obtain completely
different level of efficiency.
As it is another level of efficiency, the client
gets this service at a lower
cost and this is what we
spoke about earlier about the banking
If banking infrastructure
uses standard data centers
with less efficient structures, where
you just have cooling and no-one
thinks about it, you get
higher expenses and these are covered
by customers
they are just split between someone
this is where this difference emerges.
In the beginning it all started with mining?
Yes, sorry we discussed a huge topic.
Initially, it all started with mining.
For most of the participants and
founders of Bitfury there had already
their own businesses. Valery had five businesses
or even more – related to IT
and not related as well.
Initially, it was just this
perspective opportunity that we saw.
Yes, we can build a system,
we can run mining,
Bitcoin are for sale over there,
here you can buy, here you can build
and make money. Let’s do this.
We started to develop, needed to create out own ASIC chip.
We did not have any expertise.
How much will it cost,
how to do this?
Let’s hire engineers,
but we did not have time to hire people.
The first chip was created by the technical director,
a genius person, Valery Nebesny,
who previously had zero
experience in developing
chips, he had a look and said, guys
I will research this and give you approximate time frame
in how long I can make this
After a while we meet again and he said
we do not have time to hire more people, I will
I will try to draw it and myself. I had a look
and I have more or less understood it all.
I will try to do it by myself.
He locked away himself for seven months.
During this time he created single handedly
the first chip. Right now, of course,
there is a team working on this, but this team
uses a
quite unique approach
changing strongly the concept
how it was done in the industry
thus pushing the efficiency higher and all miners
have hit a certain level where
everyone uses some kind of a trick
and achieves better efficiency.
Currently, it is already extremely difficult to move.
We have reached technological maximum.
Why mining?
There is also the exchange business,
where you earn commissions,
for me it seems to be more simple
in certain ways, there are other types,
why was it mining initially?
It seems easier when you don’t know
and don’t understand all the details.
rules of bankers and businessmen from 1881 – know
understand the subject of your investment – exchange
is not something that we all worked with.
Even with the fact that I worked for banks,
knew how a lot of finance institutions work,
understood financial regulation.
This is a highly complicated business.
There must be some groundwork,
there must be some potential already
there must be some parts lined up
for business or relationships of some sort
some resources to build this, it is very
complicated and exchanges are very difficult.
And any exchange, since these are
it is the so-called matching engine
this is the mechanism that matches the deals
this trading engine is not an
easy thing at all – I read some technical
documentation on how they operate
and these are very thick
books with a large amount of formulas
that you need to get into
to really understand
These exchanges that
we currently have on the market,
are made in a way
that Nasdaq or Forex
do not even use these technologies
they have gone ahead and every deal
is recorded, as a rule
matching engine is not a software
it is actually in the hardware
this is why no manipulations
actually do not work on these exchanges
I have encountered high frequency trading
and I know how it works
we are still far away from this
but, yes, the industry will come to this in time
this is a natural process
some exchanges do not survive
the pressure from transactions
and they are forced to optimize
but most of them
just like you say, it is so easy
just take a fee, they start
this is actually
a very good position and there is
a book by Boris
Berezovsky, where he explains
approach without knowing all of the
difficulties start doing something on enthusiasm
and as a rule these people get lucky
why are they lucky?
because they are not afraid and just do,
just start it and tackle all the issues
they always find solutions to various
difficult situations
and here it is the same – you can
can evaluate how big the volume
of work is and then just
do something different
and more efficient
here you can understand, that yes
will achieve more, but the level of
headaches and potential problems will
be geometrically more
so, everyone chooses
based on the resources
the direction which he likes the most
if you have done something similar in the past
if it is a known industry
then your risks will be significantly lower
and since you have already walked this road
and you know all of the bumps along the way
where and what surprises are awaiting you
then it will be a lot easier.
About enthusiasts and enthusiasm,
many people are trying at home
in basic
to mine or at least they did mine.
Especially, during the 2017 bull market.
We spoke about
this back in 2017
you said that it is possible, but best not to do this
because this is work and just like
Bitcoin works 24/7
you will also have to work 24/7.
Can you currently
install a mining farm
in your home environment
to make some profits?
Yes, but
these profits have declined significantly
because there is
high level of competition in the market.
Just like all of the industries,
like back in the day with gold mining,
first it was collected on the surface
then just dripped shovels and you’re rich
but not anymore
most places are already explored
gold mining is now a
Very, very hard work
you have to be an industrial miner
you cannot really do it solo
maybe you can get lucky, but the
gold rush we saw in
it is over and it was possible
during the initial period
if there is a new way
that allows
you to make easy profit
the market always levels itself afterwards.
As an example,
imagine that
in the morning, you walk outside of your home
and you see your neighbor getting into his car
to get to his work
which is roughly where you have to go to
your university
you walk up to him, say hi, ask if he can
drop of you off on his way – he says fine
get it, no problem – it does not
really cost anything for him. This is the phase
where his an your interests align
for him it is an extremely tiny expense
maybe he will use a little bit extra fuel
like 0.2 liters, which he won’t notice
you can get to your destination, but if the
next morning you decide that
you got to another place in the city for free,
then I can make business out of this
maybe my business can be package
delivery, so you say to your neighbor
that we are driving the same way, but
we need to deliver 10 packages on our way
and he will say – no sorry, this will be a different
fuel consumption and different route
and it is not rational any more.
We have exactly the same here in this industry
when mining just began,
the community was extremely
small and expenses were very low
no-one thought about them as
there was no commercial
use, so mining
had very high profits
and you could do this at home,
you could buy a video card
turn it on for a couple of hours
it earns itself within a month
and in three months you
make three times more money
no this is not happening any more.
First of all, because
a lot of players came to this industry.
Secondly, the requirements for these
players grew significant.
there are no such fabulous rewards any more
they have level out and the system
was just picking up the miners back then
there were not enough miners, but
now there is so much mining
the price is enough to cover the costs
of the existing miners on the market.
If you are joining this market as a tiny
miner from home who bought a
very effective mining device,
you were most likely just being lucky,
you have logistics as you have set the miner,
but you are competing with people who do this
as, for example, apple growing
professionally – you can
grow apples in your backyard and
sell them for cheap if you
do not count your expenses fully
maybe you will spend more time and efforts
then you get into an agreement that you have to
deliver 20 tons of apples and you will start to
seriously consider how much this costs for you
how much effort you have to put into this.
If you grew apples,
moth did not eat them and they did not rot, then you take
them to the market and it is all good.
But if you have liabilities and you
could not make the delivery on time
then you have not fulfilled your
obligations while money has been spent
and this is a different level of business
it is the same with mining – it is a competitive
sector, where you have to work 24/7
if your miner was idle for at least
five days
then you already start to lose a lot of your
profits. It means that you cannot just simply
just turn it on like iron and leave
you have to monitor it closely
to make sure that it works properly
that it has internet access, that
it has normal temperature, if a board has died
you have to replace it
if you do not meet all of these points, then
you will either make very little or
lose money.
To make decent profits
and if you work according to a formula of
income and expenses
then you have to work, there is no way around.
Any income requires work
it can be work with you head or hands,
but it does not just happen by itself.
There is this
controversial opinion that mining of
Bitcoin is extremely harmful for
environment and we are hearing more and more
often this opinion.
We hear this opinion from many people
is this really so?
In a strange way, but it is not
strangely, it
due to circumstances and
The cleanest electric energy
comes from hydroelectric power stations
if we talk about electricity in general,
many thing that it is a clean
and ecological product, but
it is not true. One kilowatt of electricity
emits more than half a kilo of co2 and
more than 86 percent
power plants use fossil fuels like
hydrocarbons, it is coal, it is fuel oil – they
quite dirty at the same time a lot
and a lot of this dirt makes it into air
especially from coal, so it is not
ecological way to make
electricity and it brings a
only a bunch of emissions, but also a big
chemical trail as an effect on
the environment
less on people.
For example, in Singapore
tax on Tesla is two times higher than for
an internal combustion engine car
because they do not just calculate
that this car has zero co2 emissions
they calculate the whole process
of manufacturing – there is a lot of plastics
there are a lot of
lithium elements and they are not easy
to recycle, so they take all of this
into consideration. In Asia,
electricity is mostly generated, unfortunately,
by burning hydrocarbon and this is not considered
ecological and as a result
you get a double tax, because
it is not ecological
there is also a lot of waste
when you are charging
your battery then efficiency coefficient
is far from 100 percent
to charge, discharge and deliver to
the engine, in the best case you lose
30-40 percent. Hydroelectric power stations
from those options that
we currently have is one of the most clean and
eco-friendly ways as even solar
panels have a lot of chemicals during manufacturing
these batteries can be of various types
but they still work a certain amount
of time and then they start to
lose their effectivity and you have
dispose of them and it is too a dirty
process. You can consider as more or less clear
power plants that use
mirrors for heat condensation and
turbines generating electricity, but there
also are a bunch of side effects like birds,
animals that suffer from all this
so, also a shady process.
Hydroelectric power stations
are always built with big enough
reserves and all of these reserves
cannot be taken, there is
a large part left as a reserve in case
if the load will vary in
within the city during certain times of the day and so
forth, but since this is a dam, they have to
drop all of the time a certain amount of
water and miners as a rule
are usually choosing hydroelectric
power, because turbines are spinning in
these power plants, they have to
maintain them and they are ready to
sell close to their base costs –
just take it, as it is there any way.
Most of the miners are located in
China, Guangzhou
Yes, mostly they use hydroelectric power
according to conservative estimates
80 percent comes from hydroelectric power plants
so it actually means that
this is of the most environmentally friendly type
of electrical energy that we have
available. The situation can be different
with other miners as no-one has
forbidden people from
miners near atomic
power plants, but if we speak about
eco-friendliness, I already mentioned the
efficiency coefficient for most
miners efficiency ratio
compared to data centers that have 1.7, 1.6
for miners it is 1.05 or 1.08 and in some
cases even smaller than 1
if the heat is given away. In Georgia we
built a data center where the heat is given to
greenhouse heating and essentially tomatoes
– Bitfury manufactures tomatoes?
It is manufacturing that is next to the data center
this was done as a pilot project
we have our business and we are
generating heat any way and we just share it
– Are those tomatoes tasty? Yes, tasty and ecological.
nothing is being burned for this
there is no extra
energy, it is a business that fully
covers expenses of the greenhouse
so, energy is basically
free, making this a great opportunity for
symbiosis and there is also a company
Hotmine that is manufacturing with
Bitfury chips
radiators and boilers for home heating
and a boiler for heating water.
This is a wonderful symbiosis and not just
burning electricity, but you
support the economic system
do useful work, get a reward for it
and also produce valuable heat.
It is about the same use
of electricity. – Perfect…
with miners
there is also one interesting
moment that people tend to forget –
and “cannot see the forest behind the trees”
we are burning an
enormous amount of electricity to
just to maintain financial systems
there are three and a half million ATMs in the world
and these machines work 24 hours
per day
they constantly consume electricity
but they are active just
briefly during the day
even the most eco-friendly ones consume
260 watts during idle time
there are even more power hungry ones
older machines that consume 800 watts
or even more. When you withdraw money
at this moment, they consume 24
as the machine is counting money
there are a lot of mechanical parts
just to start this machine
If you just consider these numbers,
they are already exceeding the consumption
that the mining sector uses.
If you also add all of the
data centers, all of the banks
lights in bank,
heating, security systems,
all of this consumes electricity.
According to a conservative estimate of all the
electricity produced
from 14 to 17 percent
goes to maintaining
simply the financial system
Even manufacturing of
money and printing of money is huge
electricity costs. One kilogram of
paper is more than 14 kilowatts
of electric energy
just to manufacture
one kilogram of paper, but it is also
processed to print money
it still needs paint
this money will not stay around
forever, it wears down.
also, if you just want to keep this paper
it also requires a large
amount of resources. In America,
they have statistics where they evaluated
how much it costs approximately for companies to
store bookkeeping documents
Storing 100 pages of paper
cost approximately 150-160 US Dollars
per year, because this documentation
has to be stored at a certain humidity,
there are certain rules of storing
and this all adds extra
– So, use Bitcoin, save the planet!
As I understand, we can confidently say this?
– I think that yes,
there are many different opinions
that are based on a narrow angle of view,
but overall if we moved
entirely to digital money, then it
would be more environmentally friendly and
economical. I can list by point
what I see and
what jumps out right away
there is a bunch of useful properties that are
using less electric energy
energy to maintain a certain system
which is more balanced.
We are protecting money by
adding water marks,
with special printing methods,
specific tricks, but
all of this is expensive to manufacture
quite inefficient, not economical and
with money in the real physical world
with the old ways that
were historically used
with goods that we can touch
there is an enormous segment of economy
that exists in virtual environment
VR, Big Data,
IT Services
physical money and
does not work there and they are not easy to
work with. There is also the shift from
the physical world to the virtual
and there is always this border
which you must somehow match
ratio of physical assets and
virtual. Digital currency is more effective
while we have
digital services
it is a lot easier to maintain
digital ways of payments