Chris Kerner thank you for joining me today on acquiring minds thanks for having me Chris you acquired and Now operate as a business a Bitcoin mining facility so we are going to hear a very interesting story we're going to learn something about Bitcoin mining and how all that works you've you've grown this facility uh into a business that is 10 or 12 people so this is even in the this crypto crypto winter that we now find ourselves in this is this this is very much an ongoing concern and when you've grown from um a lot smaller than it was I guess it was just the facility uh into to to a TW 10 12 person business so a super fun story let's get into it Chris start us off as always with your background sure so uh my name is Chris Kerner I live in the Dallas Fort Worth area uh just north of Dallas in the suburbs I live on a couple acres with a wife and four kids um ages 6 through 12 and and I got my undergrad at the University of Alabama um and my MBA from TCU I have been addicted to starting businesses my whole life since I was a kid um I don't shy away from that I I do have a couple college degrees but I've never used them um I just love the starting and the growing phase of of a business and then once it kind of plateaus I get a little bored and I start looking around for the next thing and so that's me well actually Chris on on that point um the obvious question is why are you interested in business acquisition small business acquisition when you're so addicted to the I mean you let me put it another way a lot of people on acquiring minds say you know I see myself more as a 1 to 10 person rather than a zero to one but what I just heard you say is that you actually do see yourself as a zero to one person so why the interest in small business acquisition well because I also love the idea of growing things right especially is small business that is underutilized or underperforming um and you'll learn later on in this story that the small business that I bought it it was more of a zero to one uh story than a 1 to 10 um yeah but I I love fixing and growing and turning things around and yeah seeing results okay okay well I know from our pre-call uh that you have had a lot of really interesting entrepreneurial Ventures uh we might uh get to them at one one or two of them at the end but let's um focus on the Bitcoin mining facility tell us uh you know H where where does that story begin sure so I I've been in crypto for six years now I first bought Bitcoin in 2016 uh speculatively um I sold it when it doubled I felt like a genius felt like Warren Buffett you know bought at 600 sold at 1,200 and obviously that bad decision um luckily for me I quickly learned how bad of a decision that was I bought back in and I vowed to never ever sell my Bitcoin again and so I I started learning about Bitcoin after that point and learning the fundamentals of it and why I felt it would be the future and so then in in 2018 I I started working in crypto a little bit I had a token we talked about that a little bit in our preall um so I've always kind of been dabbling in crypto wanting to work in crypto but definitely a believer in at least owning Bitcoin ethereum and a few other coins anyway uhhuh 2018 I wanted to get into mining uh it was very profitable the market had already started crashing but no one really knew it at the time um right before I started getting involved it was just not profitable anymore and so I backed out flash uh Flash Forward a couple years summer of 2021 China banned Mining and China was they had you know a large percentage of the world's uh mining a hash rate and so literally overnight the profitability of mining jumped about 50% uh they were forced by the government to unplug and the way mining works is the more miners there are the more hard it is for everyone the more you have to share the Bitcoin reward with and um conversely um the less miners there are the fewer there are the more profitable mining is um the other variable of course being the price of Bitcoin and so 2021 was as perfect perfect store where Bitcoin was going crazy China unplugged and so mining was very very profitable to put it in perspective you could mine uh Bitcoin is trading let's say $40,000 you could mine one for about $4,000 and so wow yeah super attractive and so 2021 I I had an e-commerce business with extra warehouse space and some extra power and uh having a history of ordering electronic from China I ordered a couple miners for myself just to learn and to test and to mine so I plugged them in and I learned were you going to say something yeah I was going to say Chris uh what is a minor people assume assume no Bitcoin knowledge of the audience okay and me great question uh a minor is a really expensive computer that is guessing numbers all day every day um in a process called proof of work so here's an analogy for you so let's say you go into a casino and you're the only one there and they say anyone that rolls uh Snake Eyes wins a $1,000 pop and so on your third roll you get it you win $1,000 well then your friend walks in and the casino says all right now anyone who rolls Snake Eyes win it's $1,000 but you have to share it with him and so you both start rolling the die and you you know one of you lands on it twice as fast and so you save that much time but you have to share the a reward so then a thousand people walk in right and you're rolling it very very quickly and so that's kind of how Bitcoin works and it on the surface it might seem silly like these computers you know it's it's kind of a common misconception to say that miners are solving complex math equations they're not they're guessing numbers very very quickly very very quickly and every 10 minutes a block is discovered um that's how it's designed that's how the founder of Bitcoin Satoshi Nakamoto designed it and a block is discovered meaning the snake eyes are rolled what this number some mining device in the giant Network that is the Bitcoin Network lands upon the next the next whatever the next block reward is what it's called a block having at this point 6.5 Bitcoins right okay and so every day hundreds of millions of dollars worth of Bitcoins are mined right and earlier this year it was a billion dollars worth of Bitcoin were mind because the price of Bitcoin was higher and so how that works is um when China unplugged now it that same reward is being split with half as many people so everyone makes twice as much but it's brilliantly designed because as the price of Bitcoin inevitably drops um only the most profitable miners stay pluged in and so those miners paying a higher power cost they're spending $23,000 to mine a $20,000 Bitcoin coin and so they say this is this is foolish and they unplug therefore it gets a little easier for everyone else it's always self-balancing which is the the Brilliance of of proof of work it reminds me of Uber's algorithm which is like when there's a surge in demand the price goes up and that brings more drivers out and then as more drivers come out it pushes the price down if the price goes down too much then drivers drop back off because it's not worth their while to to pick up to pick up customers exactly um Chris the but and and a minor uh to be clear with people like you know you can be a Bitcoin minor somebody who participates in mining but you a minor is also this device this basically it's a custom you know CPU a custom computer basically a box like a physical box that is custom designed to only do this computation that looks for whatever the next block that's all it does and one of these devices you buy it from China and it costs well the cost fluctuates we're going to get into that but it cost anywhere from what what did you tell me $4 to $15,000 yep so last year at the peak of the market they were 15,000 today they are closer to 5 for the same machine okay5 to $15,000 for this computer essentially and um and so the cost to mine so if I'm looking at the price of Bitcoin and wondering if I should do mining is my sunk cost into this machine and then my ongoing power cost and the ongoing power cost you just kind of threw out a number might be $20,000 a month well it would be based on like a kilowatt hour so most Americans pay 10 to 20 cents per kilowatt hour um that is your ST cost which shakes out to be for a minor call it $200 a month oh $200 a month okay okay and so and one thing I didn't understand until our preall was that I always thought that like you know you know thousands and thousands of miners around the world are all you know Computing looking for the next kind of to hit those snake eyes and I yeah I I always thought that when whatever whatever minor rolled Snake Eyes if you will got the Bitcoin but no you're right oh yeah you're kind of I thought it was distributed I thought it was distributed proportionally across the whole network so miners are most miners are in a shared pool where they share their reward right and so for instance most of our customers are on it's called brains pool and so 2.5% of the world's miners um are on this one pool that most of my customers are on and so a block is discovered every 10 minutes and so um every you know let's see uh 25 40 sorry every 40 blocks on average uh because that's it would be 2.5% um a slushpool minor as in one of my customers miners or a minor on the other side of the world that's sharing the same resource pool will find that block and it will be shared proportionately of those miners in the pool um okay and so there are some miners that are not on a pool and they're just gamblers and they don't share resources with anyone and statistically speaking it will take like a thousand years for them to find a block and they never will but occasionally you see in the news that a single minor found a block and got 6.5 Bitcoins all to themselves um okay yeah it it is share distributed you know proportionally but within the mining pools so it doesn't matter what minor it yeah okay and that but that's that's kind of a layer on top of Bitcoin these pools that have evolved over time but the the the the base layer Bitcoin algorithm the way it works is it just rewards whoever mined the the block it rewards 100% of the reward to that minor to that one Min these pools have developed over time okay yep okay okay uh that that's great so you um you have this excess space uh some resources uh for your for your other Venture your e-commerce Venture and you just to learn you buy a couple Miners and you plug them in is that where we left off yep exactly okay so I plugged them in and there's a lot to learn I mean there's a steep learning curve I I was kind of ignorant to it um you need to have a 220 volt Outlet kind of like your dryer right yeah first of all second of all the average minor consumes as much power as an entire house okay so if you plug this in your house your Bill's going to double uh it's like running the dryer 24/7 except all the heat from the dryer is going out into the house like the doors open and it's as loud as like a jet engine it's like 80 DB right so it's not it's very loud very hot very windy and it's like a powerful fan blowing all the time um and so luckily I had a warehouse for this I wasn't doing it at my house but there's a lot to learn I mean you have to pay an electrician to come in he has to put in a special Outlet then you have to get a special plug then you have to have some programming knowledge you have to hook it up to the pool you have to hook it up to the firmware you have to update the firm you have to plug an ethernet cable in so you can't just there's no there's no Wi-fi it has to be hardwired in and so there's a lot to learn that uh I was learning okay all right but you do you plug it in did you buy just the one minor or did you buy a couple I bought two different models um two different brands and just to kind of see how both of them worked and I started Mining and I was mining like literally printing digital money and it was just the coolest thing in the world just well okay and like dollars per day but very just interesting yeah yeah yeah well and so what were the economics you you had spent what on these Miners and what were you generating at the time um the payback period on these miners were about 10 to 12 months and so the the problem with the payback period is it's never accurate because the difficulty rate which is measured by how many miners you're competing with is always changing right anytime a minor plugs in or unplugs in the world it gets a little harder a little easier so y forecasting out 10 months is impossible in addition the price of Bitcoin the other second variable is always changing and so what is cool is that 10 months could turn into uh 6 months or it could turn into 5 years and so it can go one way or the other and so the economics at the time were about $23 a day I believe profit per Miner um which so it was a matter of months like 6 to 12 months somewhere in there where I would get my money from The Miner back um and that's after taking out power cost so $23 in profit and like $6 in power cost per day um and then after it's paid off it's just it's pure profit for the life of the minor and a minor lasts about six years give or take okay okay really interesting okay so you're you're you're totally intrigued you're kind of you're kind of hooked you're you're falling further down the rabbit hole you've got these two miners chugging away then what so then I wanted to scale right because anyone with a money printing machine who who wouldn't want to scale um and so I started looking into that and so I started by looking for abandoned warehouses in DFW now the problem with scaling miners is they take a ton of power like a ton if if if you go uh like find it your average industrial Warehouse it probably like 100,000 ft Warehouse right huge huge Warehouse it probably has enough power on site for like 10 miners okay and then 10 miners in 100,000 ft that's that's nothing that's silly right right and so it's very expensive because you're going to have to get the power company to come out you got to buy Transformers you got it it's hundreds of thousands if not millions of dollars to bring multiple megawatts to that building and so you really need power more than you need space because in a in a home garage you could fit a 100 Miners and you could even get the air flow to get the heat out of there but you would need half a megawatt worth of power which is a lot and so what about the sound of 80 DBS time 40 miners or whatever yeah and so you you wouldn't want to do that like you just yeah there sound as issues as well go ahead yeah and so I I was really just comparing the size of of an average American garage you wouldn't want to do that in a garage you couldn't sleep and so I was running into all these Road box and I was not the only one like it you didn't have to be a genius to want to get into mining when China unplugged everyone wanted to get into mining right yeah and so I'm I I I'm calling the power company I'm calling a power Brokers and they're all like yeah let me guess you want to get into mining like you and your neighbor you know kidding yeah everyone getting calls from everybody and especially in Texas like Texas is the bread bath basket of mining because power is abundant and it's cheap we have more power than we use and it's very cheap and so everyone's coming here and thankfully I had just happen to live here um and so I start looking at warehouses you know Finding old manufacturing facilities CU those typically have a lot more power and old paper mills and but the problem is you know you find this place that's 30 grand a month the lease and it's 100,000 square feet and you just don't need any of that you know and so uh and so it was really really difficult to find a place and so then you start looking into um taking a smaller cheap place and then spending all the money to bring the power in the problem with that is it's a six to 12 month process and a lot can happen in crypto in six to 12 months um the price of minor Chris this this point about China unplugging and so the difficulty rate going down uh and that drawing so that'll then draw in more more miners doing the kind of always self-regulating Supply demand sort of sort of dynamic uh like that window so that window will immediately start closing and as you said like everybody's scrambling to like plug in a mining machine because they because China's unplugged and they recognize the opportunity so how long are people expecting this advantage to last after chy unplugs like maybe it just lasts a week or no it's like no it's it's going to last for like a number of months for that for all of that kind of demand to be reabsorbed great question so no one knew right everyone knew that it was going to go back up right everyone knew that that slowly over time the difficulty rate goes back up now the difficulty rate only adjusts every two weeks um and so you can predict like there's software out there that can see all right right now it's looking like the difficulty rate will be 3% harder in two weeks and then the next day 4% and then the next day 2% because it's seeing who's unplugging and plugging in right so you can reasonably forecast that only two weeks out but what no one knew was you know there was a chip shortage and so people couldn't get their hands on miners people couldn't get their hands on Transformers due to co people couldn't get their hands on power due to co like it was this really weird time of supply chain shortages and Co and China and Chip shortages no one knew how long we'd be making hay and no one knew what the price of Bitcoin would be doing right cuz it's half half of it is dependent on bitcoin like if if the difficulty rate keeps going up but Bitcoin keeps going up proportionately it stays just as profitable yeah right yep and so that was the big question yeah yeah sure makes sense okay so none none of the facilities are making sense you consider like some smaller older facility and and act and retrofitting it or or at least running the power out there that doesn't seem like a good option so then what so as luck would have it so I'm I'm on bis by cell every Sunday right it's my Sunday Hobby and it's like my guilty pleasure and I'm at I'm I'm like most everyone else I'm a tire kicker and I'm just looking and oh only two times e oh three oh this was near my house we all do it we all do it and so I just thought something came came out of my head and I thought maybe there's a Mining facility for sale and so I did like a nationwide search and there were two and one was out of state way expensive and one was in Texas now on bis by sell you can set your privacy you know only show the city only show the county only show the state and so it only showed the state so I just saw Texas and it was affordable it was 750 grand um which is like less than what I would pay to bring in Transformers and pay the power company um now the building was not owned it was leased um and but the power was already there it was 3 megaw which is enough for like 700 50 miners so if you do the math at the time every minor was making 25 bucks profit a day multiply that by 750 that's a lot of money now granted you have to go buy millions of dollars worth of miners if you want to own them um but it looked really good and so 750 grand for this business and it was listed by by the owner not with a broker and it was not a business it was I was buying a lease with mining infrastructure there and with three 300 late model miners already mining um they were making like I want to say like $8 a day they were like three years old it's called the S the S9 and so it was Cash flowing at the time like 20 grand a month now everyone knew that was going to go down because the difficulty rate was only going to go up and so I wasn't I wasn't really looking at it from like an EA perspective I was looking at buying the infrastructure and then the miners that came with it and the Bitcoin that miners were mining was just like a cherry on top so but and the seller probably was they probably did come up with that 750 number based on ebat because that's basically exactly three times exactly yeah it's doing two 200 a month 2 20 a month that's 240 a year time 3 is about 750 exactly and there wasn't really a way to value a Mining facility cuz there weren't really any on the market and so I was on these obscure lists and looking at these obscure websites learning that to buy a plug-and-play facility without miners just power already on site cuz that's really the value is power already there you're saving a year you're saving six to seven figures in costs right I was seeing that they were going for like 500 Grand a megawatt so which would put this at like 1.5 million plus it had miners that were already Mining and like a lot of times the the places that you buy like they don't have racks they don't have ethernet like you still got to do a lot of work to get a mining but but this was this was not plug and play it was like already plugged in and playing right and so the price looked good and so I started reaching out to the seller and he wasn't responding and he was getting hundreds of inquiries hundreds I was going to say like you you can't be the only person Chris who's who's scrambling to find you know to do I mean you're telling me that all these people are calling all over the place seeing what they can do about power and especially in Texas so I mean he's got the hottest listing going exactly and um but I just I just kept at it and I was texting him and and just everything and I just annoyed him to death and we finally got him on the call and I learned that he bounced between uh West Texas he was like in oil and like uh Massachusetts kind of random and he wasn't even on site and then it was managed by like a consultant that lived nearby and I learned that the facility was 30 minutes from my house in a city called Rockwall which is like you never expect a Mining facility in rock wall like it's known for its School District its family values like usually usually mining facilities are in in the middle of West Texas or in some industrial park and like I'm like by the high school it's really random and so yeah once I learned it was half an hour from me I was like this is either like biggest scam I've ever found or the biggest deal I've ever found um and so I just I kept at it and um I we started talking and you can't Finance anything like this um I didn't have 750 Grand in the bank um and so we worked out a seller financing deal I I paid him a big chunk down and he seller financed the rest over five years and um I worked the loan repayments I tied them to the price of Bitcoin um so as Bitcoin goes up I pay him more as Bitcoin drops I pay him back less now Chris why is he selling now when he's yeah great question so he he wanted to scale up mining in West Texas where power is even cheaper than in DFW and he he's in he has like a lot of industrial companies he has space he has more power out there so he was wanting to consolidate his mining efforts to where it could be more closely under his watch also he thought man like it's kind of a headache that this is a 5H hour driveaway um China just got out like this could be the peak of the market right kind of hedging his bet like if this is not the peak then I'm gonna take this money from selling it and do more mining closer to me if it is the peak then I can just cash out while the getting's good okay okay interesting yeah and so you're it was your persistence that led you to like led him to talking to you I mean I mean he did I guess why wasn't he responsive to you if he had put the listing on bis by sell he was looking to sell it you are a viable buyer um why do you think it took so it was so hard to get his attention just because he was being inundated or what yeah well first of all it wasn't surprising to me because the response rate I get from sellers on bis by sell is like 30% right like it I don't know what it is but I don't get very many responses from bis byell um even when I'm very aggressive and saying like hey I can pay cash or I have financing lined up anyway so there's that just maybe the nature of Biz byell second he was getting hundreds of inquiries and he had already hopped on a bunch of calls and it's like okay I'm going to line up financing and just Tire kickers and so he's just he's just kind of at this point where he's like H like if they want it bad enough they'll find me right yeah also he's very busy he has like four different companies that he's running and um yeah so cool really cool well persistence pays so you you you acquire it with this this seller note tied to the price of Bitcoin so you've hedged uh and and he and can you tell us what you pay The Upfront piece the down payment piece I paid 50 Grand down and I talked him down to 700 Grand and so my note was 650 um we closed on October 1st 2021 um so very cleanly first day of the quarter um and in September I was already laying the groundwork for some customers because I the original model was all right let me back up so yeah when I was striving to scale up the first and easiest thing I did was start reaching out to hosting facilities so I didn't want to have my own I just wanted to buy a bunch of Miners and M Bitcoin and so dozens of Hosting facilities overseas and they wouldn't respond to me or they were full or they were too expensive I could not find a place for my Miners and the reason is very simple is because there's a lot of big money in mining there's a lot of people that have hundreds or thousands of Miners And so these hosting facilities fill up like that with someone with a lot more money than I have right and so why are they going to mess with a guy with 10 miners or even 50 miners when they're full uh from having so a hosting facility to be clear is a place where somebody who just you know buys a minor buys 10 or buys 100 miners plugs in the minor and all the things that you were looking for it plugs in the minor and runs it and it's got all it's basically like a data center for minor specifically so this is an established practice an established business within the Bitcoin ecosystem yeah that's exactly what it's a data center for miners um and a lot of times it's a win-win because they'll take their fee well the fee is really they're just marking up their electricity that's how hosting centers make money um okay and it's usually a win-win because even their marked up rate is usually cheaper than what you could get it for so there's there's there's not a lot of reasons to not use a hosting facility but they were just I was I was a small Frid of them and so I I couldn't use them and so all of September I'm laying the ground where think thinking all right in order to fill this entire hosting facility I need millions of dollars worth of minors now that would be very profitable but The Upfront cost is insurmountable now there's a lot of people that raise money to buy miners but I didn't want to go that route and so I thought I'm going to buy as many miners as I can um and then everything else I'm going to be a hosting facility and my power costs are 6 cents and I'll charge 12 uh which at the time was expensive um my competitors were charging 8 or 9 but there was so much demand and so little Supply I thought why not charge what I can charge right um and so anyway I will I'll pay my bills as a hosting facility and then I'll mine Bitcoin with everything else and the numbers looked really good and then over time I can add more power I can add more Transformers and megawatts and scale up as we go um so I started doing that I started doing a little marketing I came up with a a mining Syndicate and I this was before even closed so that way when I closed I could kind of hit the ground running but what I soon Learned was people not only needed a place to host their miners they needed a place to buy them um and so people kept asking like can do you have miners for sale and I'm like well you know I spent seven years importing Electronics from shenzen China which is happens to be the minor capital of the world too so I was like yeah I I could do that so I reached out to my network over there and I started importing Miners and then then I soon learned wow I'm not a hosting business I'm a I sell miners right that's a lot more profitable and but I also needed a place to host them um because my customers needed both so you are the plan is to do your own mining which was of course what drove your initial interest uh in this facility so you're going to buy a bunch of Miners and do your own Mining and then you're going to become a hosting facility and then you realize as you've started kind of marketing this service that people also need to buy the miners and so you can also become a a reseller of miners uh and are you going to uh basically put your name on a new like a your own private white labeled brand of Miners and and assemble all the components or you're just going to be a distributor like a US distributor of of miners that you Source in in China yeah why can't those folks just you know go like I assume it's not that hard to buy a minor via like you know I can go to a website and buy a minor and have it chip to the to the US no why why do they need to come to you why is it hard for them to get their hands on a minor sure well for the same reason that I was able to sell so many iPhone parts that I imported from China like what we're really selling is trust right the the insurmountability of ordering something from China wiring thousands or tens of thousands of dollars to China is too much and so I knew from my experience with LCD cycle that we had to put trust at the Forefront and so from day one we did the opposite of what our competitors did we said come visit us here's like come take a tour come shake our hand let's do a FaceTime call um here's my background and I was hopping on calls all day every day and once they overcome that trust parrier barrier it it made perfect sense to order miners from us okay so so there is no place there's no like there aren't good e-commerce options to buy from a US buer miners if I want to buy a minor I'm wiring money to China um yes or you're buying from a reseller like me yeah okay okay um okay and so all of this as this plan is kind of coming together this is still September like you actually haven't acquired the facility this this deal could still fall apart at any time yeah I actually sold my first batch of miners in September before we had closed um just figuring I'll put in my warehouse I'll figure out what to do with them just in case it doesn't close but it looked like it was going to close and it did on time actually which never happens but yeah no kidding and how you say you're marketing you're starting to Jin up business how are you doing that in in the kind of Bitcoin circles in which you run or are you running ads online or what yeah I'm doing some ads um on Facebook Facebook Marketplace um and the ad was basically just like I have a hosting facility and I was just marketing primarily DFW folks so they didn't have to trust me as much they could come meet me they didn't have to blindly send me money um and so honestly it I was just benefiting from immense Tailwinds like it wasn't anything genius that there was just so much demand and that was not being met at the time so there's enough demand to to do Bitcoin mining that in one market one Geographic Market just DFW you can would find enough customers to basically get this facility business going yeah like you're not talking to people all over the country these are just local people there's that much there's that many people in DFW alone interested in mining initially it was DFW but even as soon as October we started getting orders from people out of state um so I I don't know if you could support it in DFW I don't know that that's the case but that got us going right yeah yeah okay okay so you do you do acquire the facility it does close in October on time weirdly uh and and and so so this is now a year ago so so what happens in the first few months How does it go it was it was the craziest month of my life like by far um on a personal note at at the same time my so I have a 10-year-old daughter she has a lung disease right and so things were getting really bad in that same month of October and so I was taking calls from the Texas Children's Medical Center in Houston four hours away from me um at bedside basically because she her lungs were getting worse she ended up getting a transplant in February she's good now she's in school her life is normal but I I was also forced to move my whole family in December and so in November we were packing and making arrangements and Renning out our house and renting a house down there because in order to get a double lung transplant you have to be within an hour of the hospital doing it and so the hospital said she has to have a transplant therefore you have to move to hon and so it was the worst timing ever um but it we made it work and so luckily I had like a network of people that have worked for me locally in the past for other companies and projects and I just like assembled my dream team and we just got to work and it was insane um it was insane well you you're now at about 12 employees so tell us quickly about how you went from just you to this the first small hand of employees and how you really got the business off the ground yeah so I started with customer support help um and then I started with sales help um someone else to hop on sales calls and then I converted one of our customers to more customer support uh he was looking for a job in mining and he was also a customer of ours um and then I was building out the website and managing that myself um and then I took one of my e-commerce employees um he did operations help and then another e-commerce employee operations help cuz I mean we wer like Drop Shipping like this was very Hands-On we're plugging in miners they're 32 lbs each they're heavy it's hot it's loud it's it's it's dirty work right and so I we had like a skeleton crew and we were just ordering miners every day from China and making it work and so if we were to go into your facility now what would we see just rows of loud noisy loud kind of um heat generating boxes yeah rows of them huge fans in the ceiling to to get all the air out because it's um you have to have constant air flow in and out they get really hot and so you have to keep a little bit of negative air pressure and so we've spent a lot of money building out the facility it was kind of underbuilt because it had old model Miners and the newer model miners that we've replaced them with are like twice as big and they can twice as much power and so we're not able to store as many miners as we originally thought which has been a bummer um but we we use three different partner facilities across the US for all of our overflow okay okay so and so are you full now then yes we're full we've we've been full since like December um in rock wall where we are right but we do have capacity at our partner facilities so yeah today we use Rockall we call it like our our Test Kitchen our prep kitchen so to speak um we'll get miners from China we'll unbox them inspect them plug them in um get them mining to the right pool get them configured put them back in a box put them on a pallet and then ship them off to our partner facilities so when they get them there's almost no work for them to do they can literally just plug it into the wall connect it to their Network and they're good to go so rock wall is no longer like a place where we keep miners long term we're just constantly cycling them in and out yeah yeah and so has the the sales or the the reseller business become the primary business yes definitely and so we have to host miners because 70% of our customers need a place to put them 30% host them at home or offsite so if we didn't have a place to put them if I never bought this facility our sales would be 70% less if we only sold miners yeah right but your facility is full now so you're not even uh you're not even offering availability to your new customers you're having to go outside and with your partners yeah so our facility in rock wall is full but as far as our customers are concerned we're not full right because I see they yeah they we tell them rock wall pool it's tapped out it's it's a prep kitchen your minor will not be here um we're going to you're going to ship it to us we're going to test it and then send it off to one of our partner facilities I see but the the kind of what's fa for all intents and purposes that they're they're hosting with you yes Y correct hosting with you okay yeah great and and so what you know a year later or more than a year later after China turned off you know here we are in the crypto winter Bitcoin stuck around 19 20,000 uh what what does the business of you know what do all these Dynamics do to the business what yeah tell us kind of like how how that's going yeah so lots of headwinds right now um let me list them out for you so first of our first of all Topline Revenue drops significantly simply because the price of the products we're selling has dropped 70% so we could sell just as many numbers of Miners and our revenue is 60 70% less right wow because the price of our products are less furthermore the price of Bitcoin is down mining is not as profitable uh what used to pay off in a year pays off in 3 to four right so now we're having to do a lot more education of saying like hey like as long as you don't sell your Bitcoin this is still a very profitable Endeavor if you believe bitcoin's here to stay right you can still just keep your Bitcoin turn it around and your payback period can still drop retroactively if you don't sell your Bitcoin so what was like on easy mode in q1 Q4 is like we're having to really try right which is good like it's we've been building new systems and we built a whole Suite of software and like we've been getting organized and um we're still we're still growing we're still getting new customers but it is it's much much harder today than it was um but we know that it'll get a lot easier when it does turn around and we'll have better systems in place next time around and and and your business is sustainable like if if Bitcoin were to persist at 20,000 for let's say another couple of years you know I guess crypto Winters the last one was from what 2017 through 2021 so it was a three or four year winter if this one lasted that long but Bitcoin hung out at 19,000 is the business profitable so it depends on how you look at a crypto winter or a bare Market um it was more like two years if you look at it from like are you comparing the peak to Peak or bottom to Peak right and so we're we're expecting so if we're comparing Peak to bottom you know we don't know where the bottom is till it's well behind us but we know that it peaked almost a year ago November 2021 and so I expect this to last 12 to 18 more months um but what was really smart of us um looking back was we charge significantly more for hosting than our competitors did um our competitors were basically breaking even on hosting and selling a minor at a good profit and we kind of had the approach of like let's let's have our cake and eat it too because there's so much demand like it's kind of foolish to to break even on hosting when people will pay whatever they can to get their minor plugged in cuz this was the thing where where it was 6 cents and you were like well let's just charge 9 cents because the there yeah 12 yeah which was honestly unheard of like charging 12 um but we knew that our space was so constrained that we would still sell out at 12 right yeah and so what that did was now that we're in a crypto winter those and we you know we're in contracts we're in contracts with our partner facilities and our customers have contracts with us and so now the hosting Revenue has only gone up every single month because every month we've plugged in more and more miners right so our minor sales that's what I'm referring to having dropped 70% if nothing else because the price of the miners have dropped but every single month our hosting sales are growing and it's also profitable it's not just break even because of those contracts we signed and so our payroll is getting covered by the hosting bills and so basically every Miner we sell is kind of like the gross profit is net profit because our overhead is being covered by the hosting right now that that won't last forever because these are one-year contracts um and in January February they'll start expiring and we'll have to come down on price I'm sure or ship their minor somewhere else um so we'll burn that bridge when we get there but for the time being we've still been good and we're still sustainable without any outside funding so okay okay phenomenal Chris and um what are are you fully investing is this taking 100% of your time or are you working on other stuff at the moment yes so this is my main thing I'm here now I'm here every day um but then I also have uh a project called co-founders where I'm launching things with other people kind of on the side but I'm not playing a main role in that anymore so this can be my main my main thing yeah yeah well I had referred um earlier to a bunch of your interesting stories so I I think we will have time to have one or two of those but even before we do that um you also have a little side hustle going with something called bsy MH right so tell us about byy this will be really interesting to the acquiring minds audience yeah so the the domain is used buyb i.com and the impetus for this was like I told you about Biz by sell I'm always looking for businesses even if I'm not always a serious buyer and it's super timec consuming right like if you want to buy a Mining facility um there's all kinds of different websites and they're all in different places and they use different Brokers different metrics available for all of them and so I hired a developer to start aggregating any listing site I could find like from like a a random broker in Western North Carolina who who doesn't use VI by sell he's only on his website to B by cell right and everything in between so busy is basically an aggregation of all of those in the same place to save Searchers a few hours a week and so it's still in beta um it's going well we don't charge for it it's free um it's a long-term play um but it's fun it's a fun side project and and and the the actual the output is a CSV file right so if I like tell me a little bit about the user experience so we have a website built that's not launched yet where it'll all be done from the website they can filter they can sort they can get email updates right now it's a um it's a Google sheet that updates once a week so we send out a weekly email and they can go they can export that as a CSV or they can look at it within the Google sheet um and then we are going to be moving it to air table cuz it's a little more user friendly so okay okay great and something like this doesn't exist in the in the market because there are a couple of of of kind of deal platforms that do claim to aggregate uh from a bunch of the big sites but you still thought that you perceived a gap in in the aggregator among the aggregator sites here's what I think the Gap is I think that they don't aggregate enough right that they're not aggregating from the really obscure ones a lot of times those obscure ones have the best deals right like an HVAC business with 700k e right also we have on our list like 130 different sites to Aggregate and we've done about a quarter of those so far and so I haven't seen anyone else doing that many furthermore I want the ability to sort between like only Show Biz by sale or show no Biz by sale or show all the for sale by owners and so we're building a mechanism to filter out all the ones that are broker listed also we're building a mechanism to to find off-market listings and be like our own listing site right where it's the the buyer can work directly with the seller in addition it's not even listed on the market right furthermore we've got we got all kinds of things on the pipeline but I think there's a there's still a lot to be desired there yeah in that market and and you have found that there are uh businesses listed for sale on like a broker's website that that broker has not put on bis by sell yeah yeah cuz a lot of these old school Brokers are like I've built my email list over the last 20 years and I send an email and I get it done and I don't need to pay bis by sell 250 bucks for a listing Well it's like it's kind of like good is the enemy of great like I'm sure they do sell businesses with their list alone but the more eyeballs you have the higher you can sell the more you can sell your business for right or the faster you could sell it and that's a better experience for the seller and so I think a lot of Brokers are super old school super complacent and so yeah I don't think everything's being captured I know everything is not being captured on bis by cell so okay well that that's good to know I mean obviously um broker Outreach and and talking to Brokers about deal flow and and maybe getting access to a deal that they haven't yet brought to Market and put on bis byell is a is a classic kind of Searcher best practice Yeah but but this is different this is talking this is basically brokers who have publicly listed the business they just haven't put it on bis by sell it's just like on their website or out to their email list and I didn't so it's good to know that there are Brokers out there who who yeah who have public you know it's out there for the world to see they just haven't put it on put it on bis by so yeah yeah okay um Chris let's close out with uh let's let's hear your John McAfee story um John McAfee is uh kind of an Infamous character founder of McAfee software antii famous antivirus software uh kind of a larger than life uh character and um you partnered on a business with them uh and and I want to tell the story have you tell the story because it's interesting but I also just want you to get credit Chris because you have you're just a really Dynamic entrepreneur you've got a lot of really fun interesting stories I mean you bought a you know a bit kindon a Bitcoin mining facility for crying out loud and and here you are a year later with 10 employees so that that alone kind of um kind of shows the type of entrepreneur you are but there's a lot more where that came from so tell us this this John McAfee story sure so back in late 2017 uh is really the kind of the peak of the last last uh Bull marketing crypto um everything was going crazy and I was looking at coinmarketcap.com which is like you know the site for tracking all the prices and I just kind of had a thesis that I developed which was a a crypto token that had a low market cap but everyone was talking about it was primed to go up in value over the foreseeable future and conversely a crypto token that was a top 100 or a top 10 token it had a high market cap but it there wasn't much Buzz about it would go down and so I thought surely there's a way to measure those two things right the market Cap's already done for you um you can pull an API from coin market cap I just need to measure like a hype score that's what I called it so I partnered with a friend who's a lot better at Google Sheets than I am and we made like a whole Suite of Google Google Sheets uh that pulled those two variables a hype score that we measured from Reddit Twitter Facebook Google searches mentions and then the market cap which we pulled from coin market cap and we divided and that gave us a number and so we were able to take like say the top 100 coins and sort them based on like most least promising so I did this for myself and then I started investing in it and so I would take like the 10 most promising and put an equal number of money in each of them and then watch it over time and it worked and it it was amazing and I thought you know this is this should be out there um I wasn't on social media much I didn't have much of a Twitter presence uh I was more of a consumer than a Creator on Twitter and so I I thought man if I could just partner someone that could save me a a Year's worth of time and so John mcavey at the time was like he was the guy he had 800,000 followers he was pretty well respected in crypto and uh I started cold emailing him uh I didn't know his email he you know there's all kinds of tools to find email addresses I could not find his and so I started emailing like John macy.com or JM or you know I tried all the variations and I used a software that showed me if he were opening his emails or not and frequently they would bounce back bounce back bounce back and then one day showed he opened it and he opened it again and my pitch was like I developed this algorithm I tested it it works I want to partner with you on it I kept responding I kept following up because he was opening but not responding he finally responded he said Chris even if God himself appeared to me and told me that this works um I would not believe you because you can't see the future no one can see the future and this would be more widely known if it worked and so I said John let me get in front of you like where do you live I will fly there I want to show you in person I think you'll believe it we went back and forth three or four times and finally he said meet me in my house in lexic Kentucky uh at 1:23 p.m. on I think it was February 28th 2018 so I started building this in the fall when crypto was 1 123 p.m. not 124 123 yep and is this just an indication of of John mca's eccentricity or is he just being difficult or like why 1:23 p.m. um yes all the above it's his eccentricity I think uh is what it was and so our spond said what's your address and he said I'll tell you the day of so I'm like okay so I flew to Huntsville Alabama I used to live there stayed with a friend um the morning of I started I checked my email no email uh I knew it was about a 2-hour drive so I just started driving so I wasn't late and he still hadn't told me the address and so I pull over email him hey John I'm on the way what's your address he finally responded uh he gave it to me he lived in like a gated community and I pulled in and his house was like you could tell it was like the problem child House of the neighborhood they were all like Southern like brick style homes and then his was like a Spanish style like it just looked out of place and like the driveway had like a yellow Hummer and like a 1998 beat up Nissan Ultima and like a motorcycle and like it was just very eclectic and so I I pulled up at like 120 waited for 3 minutes I knocked on the door um he opened the door he had a gun on his hip he had a bodyguard behind him with like an like an AR15 and then he had his wife uh Janice and he looked at me like he's just like who are you like he had no idea who I was you're like John I'm here for 123 yeah I was like I I emailed you about the and he was like oh right okay Janice this is what was your name Chris Chris thinks he can predict crypto no one can predict crypto but I told him i' give him a shot um Chris uh we're about to go to the liquor store uh just come in here and sit down and I'll be back in a little bit I was like uh hang out with my my buddy here with the AR-15 I'll be right back right so I go in and it's just like you know that scene of Home Alone when they're they're all getting ready to go on their trip the night before and it's just people everywhere back and forth kids and the pizza guy comes in it was literally like that and there was like a team of cleaners and then was a film crew there were cameras there was a boom mic and the film crew had an Australian accent and later I found out they were literally an Australian film crew that were there to film like the Australian 60 Minutes documentary just that day so just coincidentally just on John macafee yes on him yeah and so I it's this Buzz of electricity and activity and I go in and then they leave and he sits me down at like the breakfast milk in the kitchen and I took a picture at the time and like you couldn't even use the countertops cuz there was so much liquor on them right just liquor everywhere and uh and I'm guns perfect mix exactly and here I am like I'm Mormon right like I've never tasted alcohol like I'm so out of place I don't even cuss right so I'm like not in my element it was just very strange and so he sits me down at this table and I'm at this table with like three laptops and like four external hard drives seemingly at the time by myself and I'm like here's this guy that has guns and bodyguards cameras and no one knows his email address and he just sits The Stranger at a table with hard drives probably full of crypto right like what are you thinking and so I'm like texting my wife I'm like here's my address I'm safe like I don't know what's going to happen and so I'm just sitting there like a like a good little boy and then I he and Chris Chris at the time John McAfee so I know him just because of McAfee software but he at this at this moment in time is like a big crypto influencer he's like the Michael sailor of 20178 sort of thing yes exactly okay okay 800,000 followers and all just about kind of crypto I assume he went all in yeah and so I was just sitting there and I thought I was home alone and then I hear like a cough around the corner and I go to the bathroom and it was like his main bodyguard his name was Jimmy and he had like a gun on his hip and a gun on the table and a Macbook and he was just like typing away he was likey hey man what's up who are you like what are you doing he's like sit down and he was he was cool and we just got to talk in and he he's like give me your pitch and so I gave it to him and couldn't wrap his mind around it and then he did he's like oh this is Mr MCA is gonna love this like this this is brilliant he's goingon to love this I was like okay cool great so we waited and then they all got back bunch of liquor film crew followed him and um he he like forgot about me again and then Jimmy's like hey you got to listen to Chris like I was nothing I was nothing to him and I was an inconvenience and so we sat down at this long table and he's like all right you have my full attention and so I open the MacBook and I start going into it and then the the film crew was just like they were just nearby and then they kind of glistened in they're like hey do you mind if we film this can we get and John's like Chris do you care I'm like uh I don't care I guess you know I didn't want to say no but I wanted to say no um sure and so they start filming it and I give him my pitch and I show him the Google Sheets and like how it works and like a minute into it he's like Chris this is brilliant like complete 180 complete character shift like it's like of course this works like why wouldn't it work it's like no one knows crypto hype more than I do like it's all hype there's no fundamentals there's no profits there's nothing there's no financials of course it works you're measuring the hype you're dividing against the market cap what to short what to buy and I was like yes he's like perfect brilliant Chris this is brilliant what do I need to do what do you what do you need for me I was like H um can you tweet about me twice per week and I'll give you a quarter of the profits and I don't remember if we negotiated I don't remember if he said a quarter I I don't remember that's what we settled on and and and was that just off the cuff or had did did had you already worked on what you were going to pitch yeah yeah cuz at the time there were a lot of like paid groups that were charging like $500 a month for access to pick right uh I see so a paid group so the business model is you pay to be in this group and in this group people are talking about like whatever the next hot Ico yep and and so I basically I told him we're going to spend a month building a free group we're gonna give them a little bit then we're going to convert to a paid group and I need you to tweet about me twice per week and I'll let me write the tweets you can edit it but you don't need to worry about anything I'll send you the tweets you can tweeted out and he said let's do it and so that's a great deal man yeah yeah and so he was totally cool after that totally chill and he said hey hang out Janice is getting Mexican so they brought back all this Mexican food and we had burritos and then he had like this big like formal interview in the in the living room with all the lights off and we were just like watching it from the side I spent like eight hours there and then I just left and I was like what just happened like what what just what just happened I was like this is the biggest deal of my life like everything's different from now on and um little did I know like crypto was crashing right like you only know crypto's crashing once its way behind you right cuz it's it's always up and down right so it went from like 20 grand to 17 grand and so everyone's thinking oh man it's great time to buy cuz it's going to go back to 20 you know yep yep um and so I didn't know that was happening at the time and so I I get home and I I launched this Discord group and I um that was a story in and of itself I didn't hire anyone I didn't have anyone I didn't know what to expect I'm I wasn't used to using Discord so I set up a group I call it nobs crypto I buy the domain name nobs crypto.com and that was the whole shtick was like this is real like this is not just like some guy like getting paid from an Ico therefore he's Shilling that like I'm using data real data I'll show you the data and um you can see what's going to happen right I launched this but it is really just some guy yeah yeah it's just you behind your laptop like launching a Discord group and and you're not even that at Discord I'm not at all yeah yeah and so I launched this group called nobs crypto and um I I I text John and I said all right here's the Tweet here's the link and um go ahead and he's like all right so he tweeted out and thousands of people started flooding it like thousands it was just like the timing the person everything was perfect and they're like all right minutes this is in minutes minutes like it was like I was just writing this Euphoria high and it's like here they are like this is amazing and the way Discord works is when you create a new group The the default setting is that anyone that joins can be an admin right which I don't know if it's still like that this was four years ago foolish I didn't know that I could have just checked a box and remove that permission that I didn't know to I should have done that research and so people you know my username was blue all the guests were white and I was like trying to manage it like I had different groups like anyone with with like altcoin picks or Ico picks or Bitcoin picks and um all of a sudden I see all these blue admin user names flooding in and I'm like how is that happening like I didn't invite any admins and um I didn't know at the time about this setting and so then they started flooding the Channel with like just vile vile terrible things like spammers and Bots and just filth and I was just like what is happening and it then like before I knew I was kicked out of the group like I was blocked or banned or something and I was like this is over the span of like 3 minutes and I was like oh my gosh what just happened then I start looking into it then I found out the setting and I was like wow I just totally blew it I blew it and so I called John I told him I was like uh I don't know what happened but hackers took over and the Channel's gone and it's he's like what do you mean it's gone it's like it's I don't have access so Chris somebody these people basically saw that they could make themselves admins these nefarious types they made themselves admins they were spamming whatever and then they also just kicked you the originator of the group out yeah and just totally just basically totally hijacked it hijack the whole thing okay and so I was like John I can delete the group like I still I can still delete it but I have to delete it like it's too far gone um he's like so I was like you have to delete the Tweet I'll send you a new link L create a new group same name more you know tighten down settings and he's like Chris I don't delete tweets like that goes against everything I believe in like you know me like I it's out there it's public like this is crypto it's all public I don't delete tweets I was like John like you have to because I can't you can't edit the Tweet we know that very well you couldn't edit the Tweet to change the link it was just the link was the problem and so I finally convinced him he deleted the Tweet he tweeted again along with the picture that said hackers took over the channel here's the new link so we tried it again and U people flooded in not as many maybe about a third to half as many and um we were Off to the Races we had a community I got some moderators some admins some real admins and um I started releasing my pics and they were working and they loved it and we grew and we grew and we grew to like 880,000 people in in all the groups we had telegram Facebook Twitter Twitter page like everything and um and I don't remember why we hadn't built the pay group yet we wanted to launch our own token not an Ico uh you have to sell a token for an Ico but a free airdrop um uhuh I I I thought with an Ico there's either a lot of Regulation that I have to do beforehand or I don't do any regul you know I don't fill out any paperwork and I get sued so let's just give away a token for free and then see if it can trade on the open market so we can fund our operations from that so we did we we did an airdrop it went super super viral um I tweeted about the airdrop and it got like 15,000 retweets like it was just and tweets yeah yeah like it was and you can still see it like you can go do it Twitter Advan search and see it um because that was part of the deal to get the free airdrop tokens was they had to retweet it right yeah and so we were able to track that with software to make sure that they did and so the airdrop went super viral and we got listed on a handful of exchanges um and it was trading and haded 3040 million market cap and it was just a wild ride and we would slowly sell a little bit of tokens here and there to fund CU I had like eight people working for me and fund operations and then we ended up you know the market kept crashing this was like April May June it get got worse and worse and then we launched a paid group as kind of a last ditch effort um and there was just no interest in the paid group it went super poorly and so uh at the end other day it was taking more time than it was worth and like I wasn't able to just keep doing this for free like I I either needed to ditch it or to make money from it and so I I ended up uh one of the community members that I met through this project his name was Ryan I gave him the project with half a Bitcoin and I was like it's like I I sold it to him but I I didn't sell it I gave it to him and I said good luck run with it you know best of luck and he rebranded to something and then they ended up failing I they gave it a valiant effort but they ended up failing so and all the while is John McAfee upholding his twice weekly tweet agreement he was great yeah he was and uh and what has happened to John McAfee since so he got so he got sent to prison uh for not paying taxes um he had a ton of unpaid crypto taxes crypto gains that he never reported but it was very easily trackable um thanks to crypto and so he got I think he got caught in Spain and he got yes he got caught in Spain they locked him up in prison in Spain and then the day that the news broke that they were going to extradite him to the back to the US he killed himself in prison he hung himself wild yep so and had you do you feel like you developed like a personal relationship with him or like a meaningful person relationship did you ever talk to him again after that you know frenzied phone call about what was happening in the Discord group I did yeah we would talk like every week um he was managing a few different other projects at the time so I wasn't like Soul focused or anywhere near to it but he would call me with like wacky business ideas like I saved his voicemails he had one where he's like he wanted to distribute tokens to mes and like car dealerships and like it was just like a rambling three minute voicemail that I just like I'm never deleting this and so we we had it I mean he we probably have a lot more in common than I'd like to admit because he's a Serial entrepreneur you know and wacky ideas so just yeah less morals I guess yeah yeah wild what what a story man well Chris thank you very much for sharing that thanks for sharing your story about uh the acquisition of your bit Bitcoin mining facility um be really interesting to hear it goes for the rest of the year hopefully this cryp for you the crypto winter doesn't last doesn't last very long um but we'll be sure to check in sometime next year and and maybe have you back on to see how things are going okay thank you I would love that thanks a lot for coming on Sir all right well thank you