{ "episodeId": "SLP787", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "alex_busarov": { "name": "Alex Busarov", "role": "guest", "tag": "ALEX" } }, "segments": [ { "speaker": "stephan", "time": "00:00", "start": 0.0, "text": "Hi, everyone. Welcome back to Stephan Livera Podcast. Joining me on the show today is Alex from Heatbit. Alex, welcome to the show." }, { "speaker": "alex_busarov", "time": "00:07", "start": 7.0, "text": "Thank you. Thank you for having me." }, { "speaker": "stephan", "time": "00:09", "start": 9.0, "text": "So, Alex, I know you've been people have been chatting about your products a little bit. I was interested to chat with you about a range of those things. I know the newest one you've got is the Bitwater, but you also had the Bitair, and you also had some heating related products like the Maxi Pro, Maxi Trio, and so on. but yeah, let's just start with big quick background on yourself and how you got into this idea of doing, you know, Bitcoin mining hardware for retail." }, { "speaker": "alex_busarov", "time": "00:35", "start": 35.0, "text": "So, the whole thing actually started back in 2020. I I lived in Shanghai at the time. we were under lockdown, you know, COVID just started. it was this bird flu, somewhere in Asia for the rest of the world, at the time. And I was, I was getting bored. I bought myself a toy, which was Antminer S9K, just to play with. It wasn't about mining at residential rates, it would be loss making. And I turned it on in my bedroom. It got really hot, and then it got really loud. And I thought, it would be an amazing heater if it weren't that loud. I was coming to it from more of a energy standpoint. I had, I had a lot of background in, in energy. In my first job, I was a consultant, consulting like governments, large corporations, et cetera, on all sorts of energy stuff from the grid to the operations of the, of the power systems. And I thought, wow, this is amazing. We are effectively using a very valuable resource, which is energy, for two things at the same time. For computes and for heat. And hardware was always something I've been interested in. I wasn't involved with hardware professionally that much. And that's how Heatbit started. And then, you know, the, the story of a standard zero to one company, you start to see, do, do people actually even need it? So you go on Reddit and see that people actually do it. Very often, right, people would already convert their miners into, into heaters, even, even then. And then you think, well, you know, maybe, maybe you could do it professionally. And, and that's, that's how you start building up the company." }, { "speaker": "stephan", "time": "02:04", "start": 124.0, "text": "Got it. And so talk to us a little bit about the different, like, who should use these products? Are you seeing this as something that people should be doing for the ROI reason, or do you see it as like something they should be doing for ideological reasons and that they should be, you know, okay to pay more for that because of the ideology aspect? Talk to us a bit about how you see it. Or is it more like a gift that you're trying to get someone new into Bitcoin, this kind of thing?" }, { "speaker": "alex_busarov", "time": "02:28", "start": 148.0, "text": "I think depends on the product. That's one part of the answer. Second part of the answer would be whatever works for you. I think everyone is different. I mean, we try to build something and then it fit for some people, but doesn't fit for the others. So let's start with a simple one. Something we launched this June is Bitair. So I've got, got one here. It's an air purifier. It's an air purifier with a single chip Bitcoin miner inside. So this one is not about ROI, not about heat reuse. Like you've got a single chip inside on residential rates, and you're not supposed to really use it as a heater. You just use it as an air purifier. So there's nothing about ROI. There's nothing about earning from it. You can't earn much." }, { "speaker": "stephan", "time": "03:09", "start": 189.0, "text": "Gotcha. So then the obvious question would be like, what's the point?" }, { "speaker": "alex_busarov", "time": "03:12", "start": 192.0, "text": "Yeah, it's much more about introducing other people to Bitcoin and having a bit of fun. Get your boss to mine Bitcoin for you kind of stuff, right? Or, or get, get, turn your wife into a Bitcoin miner. Like, this is the whole point of this product. Plus, it's, it's, it's a good air purifier, like using it. So, so this more about education. Now, when it comes to Bitwater, this is where economics start to make sense. So, the value of the product comes from ROI, which you can calculate and, you know, see with the terahashes, et cetera, normally would target two to three years ROI. But then there are other functions that when we're launched, people seem to not see them as much. We, we actually built in a lot of things that protect the, the water heater for the user. That's worth quite a lot and people don't seem to be putting it into, into their calculations. That's the anti-corrosion stuff, anti-limescale stuff, et cetera." }, { "speaker": "stephan", "time": "04:03", "start": 243.0, "text": "Okay, so let's talk about, about, a bit about the prices then of these different units and compare them. So let's just start with the Bitair because that was the product we, we spoke about first. Talk to us a bit about how much that Bitair costs and how much would a comparable air purifier that has nothing to do with Bitcoin, how much would that cost?" }, { "speaker": "alex_busarov", "time": "04:22", "start": 262.0, "text": "So we sell them at $179 per unit right now. A comparable air purifier, which is importantly Wi-Fi enabled, so a smart one, would actually be around $150 on, on Amazon." }, { "speaker": "stephan", "time": "04:38", "start": 278.0, "text": "I see. So I guess that's probably the, the question of if they, if the user is gonna get a, a smart one or just like a quote unquote a dumb one, because then the dumb one will be even cheaper, right?" }, { "speaker": "alex_busarov", "time": "04:48", "start": 288.0, "text": "Yeah, exactly. So, you, you pay extra because there is a, a Bitcoin miner inside. It's a single chip educational device. I would, I would, this, this is how I think about it. But then I think, I think it's worth it. It's, it's kind of fun. It gets you to introduce it to others. And it's, it's like, what, 30 bucks difference? Not that much." }, { "speaker": "stephan", "time": "05:05", "start": 305.0, "text": "I see. And then you see it as just, that might be something that an ideological Bitcoiner might give that as a gift. And that's what, that's how you're seeing it. Like they might give it as a gift to their, you know, their cousin, their friend, et cetera. And then the idea is that you're hoping to spark an interest in that person that they get into Bitcoin mining or at least start learning the process. So in, in the case of the Bitair, talk to us a bit about how the mining works there." }, { "speaker": "alex_busarov", "time": "05:31", "start": 331.0, "text": "So in the case of a Bitair, it's a single mining chip that by default it works with a solo pool. Solo mining pool. But then it's, it's obviously uses hashrate so they can switch it to anything they like, either another solo pool, their own node, or any kind of regular mining pool. It's by default 1.2 terahashes in, in mining power. And which works on any of the modes, like the turbo mode, the light mode, like the quiet mode, it's, it's the same terahashes. And so it can be controlled through a mobile app. So it's a bit of a, like a plug and play experience, for the user. We, we always try to build it more like Apple style rather than more Linux style. So it's an easy plug and play for, for you." }, { "speaker": "stephan", "time": "06:10", "start": 370.0, "text": "And then on the noise aspect, how do you deal with that?" }, { "speaker": "alex_busarov", "time": "06:16", "start": 376.0, "text": "Well, depends on the mode. In a turbo mode, it's, it's fairly loud." }, { "speaker": "stephan", "time": "06:21", "start": 381.0, "text": "Want to hear how you think about the noise aspect on the Bitair." }, { "speaker": "alex_busarov", "time": "06:24", "start": 384.0, "text": "We, we think about these as the consumer products first. Right, so what you expect from an air purifier should be what we deliver with an air purifier that mines Bitcoin. So, if you expect it to be pretty noisy in a max mode, then yeah, it's fine. But then in a light mode, it should be silent. You should be able to sleep right next to it, and that's, that's the bar, and it fits it very well. In a, in a light mode, you can't really hear it. You, you need to like actively listen to it to hear something." }, { "speaker": "stephan", "time": "06:53", "start": 413.0, "text": "Yeah." }, { "speaker": "alex_busarov", "time": "06:53", "start": 413.0, "text": "The way we achieved it is, well, first the, the right design overall, but then we put in a, a, a pretty big, heat sink that does the heat dissipation pretty well." }, { "speaker": "stephan", "time": "07:04", "start": 424.0, "text": "Gotcha. Okay. let's talk a bit about the Bitwater, as you mentioned. So, that's the newest product. Talk to us a bit about that, the, the pricing and how it compares with, you know, the equivalent non-Bitcoin mining form." }, { "speaker": "alex_busarov", "time": "07:19", "start": 439.0, "text": "Okay. Good question. So, we sell them at, $1,000 a piece, and How does it compare? Well, it, we, we kind of built in several regular products into it. The, I'll start with the non-Bitcoin mining stuff first. the first one, that's people overlook very often is the electric or charged, anode, which is something that replaces the, the, the regular sacrificial anode that you'd have in your water heaters in the US in particular. The price of the equivalent product is normally around $200. There's, there's a pretty good product out there called Corro-Protec. I think they're, they're the market leader, and they sell at about $100, $170 to $200, like, depending on the, on the outlet. So that's one part of the value. Second part of the value is the fact that we tremendously reduce the amount of limescale that gets formed within your water heater. And the reason it's important is that limescale is the biggest reason why water heaters fail. Then, you know, you can think of the cost of the failing water heater, calling the plumber, replacing water heater, etc. That's pretty big. So, you know, how, how to, how to value that? Everyone can value that for, for themselves, but if, if we value that at least as the, as the electric anode in a similar way, that's another 200 bucks basically. So that's the 400 bucks of just the plumbing value. We didn't even come to, to the mining yet. Now for the mining, the device is up to 36, sorry, 34 terahashes per, per second in mining. And then" }, { "speaker": "alex_busarov", "time": "08:49", "start": 529.0, "text": "How much are you going to get out of it in terms of mining really depends on your usage. The bigger family you have, the more heating you need to do, the more usage you're going to have, the more sats you're going to have. Like the colder water you have as an inlet. The more mining you're going to do, the more, the more sats you're going to have. In general, we target, between two and three years of the ROI if we, don't even include any value of the, the plumbing stuff, right? The corrosion and, and, and limescale stuff. The last thing is, some people still get confused about it, the, the cost of energy. It doesn't use, so our devices don't use any extra energy. So whatever you used, whatever electricity you use to heat your water, you still use the same electricity to heat your water. So there's like a net zero difference there. So cost of energy is basically zero in this case." }, { "speaker": "stephan", "time": "09:38", "start": 578.0, "text": "I see. And then, so as you're saying, if the target for a, Bitair is, you know, something like a gift to our non-Bitcoiner friends, who is the target for a Bitwater?" }, { "speaker": "alex_busarov", "time": "09:50", "start": 590.0, "text": "So, for the Bitwater, we have a multi, more of the multi-step strategy. The first target is more of the Bitcoin community, someone who would understand, not necessarily someone who's like a deep ideological Bitcoiner, but someone who understands just what mining is and why it works and that it brings sats and why that's valuable, right? So someone who doesn't even necessarily care about the decentralization value of it. And there's just a start. With the Bitwater product, I think we have potential to grow it a lot further beyond the Bitcoin community, because the product just makes sense. And the reason for that is, if you think of consumer products in general, the business model for the company is that you make it at X, you sell it at 2, 3 X, and you make the margin in between, right? Pretty much any consumer electronics company, then maybe you have some subscriptions and stuff. When you make devices that actually make money, make hard money, frankly, You can kind of flip the business model completely. There is a scenario where we're able to offer these devices for free." }, { "speaker": "alex_busarov", "time": "10:57", "start": 657.0, "text": "Right, there's certain risks that we need to manage, et cetera. But especially for people who don't understand Bitcoin, they don't understand, for people who don't understand Bitcoin or don't understand mining, we can offer these devices for free and just give them this plumbing value, like anti-corrosion, anti-limescale, and then earn on the terahashes. And that's, that's actually a much bigger part of the market. It just takes a little longer to develop and make sure that it, it works exactly as intended. I mean, the whole business model, not the device. So, and that's, that's going to be the next step." }, { "speaker": "stephan", "time": "11:28", "start": 688.0, "text": "Interesting. Yeah, and that, that reminds me of some of these businesses I've seen where maybe they do, it's almost like a free garbage collection or free parts collection. And people, people on the front side, the retail side of, you know, everyday users might feel like, oh, that's good. I can just get rid of this old stuff. But on the other side, they can take, strip it for parts and sell that stuff. And that's kind of almost like, it's kind of, I guess it reminds me a little bit of that as a business model. Because in a way, if you were to do this, now, obviously, you need to be bullish on Bitcoin in order for you to offer that. But obviously, you and I, we are bullish on Bitcoin. But I guess, how, talk to us a little bit about the assumptions behind that. How quickly does Bitcoin need to go up? What kind of assumptions are you making then about network hashrate growth? Talk to us a little bit about the assumptions there." }, { "speaker": "alex_busarov", "time": "12:18", "start": 738.0, "text": "So, the Bitcoin doesn't need to go up for the, for the assumptions and the numbers that I'm talking about. If it, if it goes up, it's an upside. If it goes down, I mean, if you think in sats, whatever you spend in sats on the devices right now, and then you earn in sats, so, you know, the, the dollar price becomes irrelevant. in terms of the hashrate growth, at this point, we tend to think in kind of two base scenarios. One is the hashrate stays the same, so it doesn't grow." }, { "speaker": "stephan", "time": "12:46", "start": 766.0, "text": "Right. So about a zettahash or so right now?" }, { "speaker": "alex_busarov", "time": "12:48", "start": 768.0, "text": "About a zettahash, yeah. Or, about 10% per year hashrate growth." }, { "speaker": "stephan", "time": "12:53", "start": 773.0, "text": "We've seen, yeah." }, { "speaker": "alex_busarov", "time": "12:55", "start": 775.0, "text": "Yeah, flat or maybe slightly growing as a more of a conservative scenario. Reasons being, we see big miners who brought in a lot of hashrates because they were able to raise capital from the, from the capital markets, going by, going public, etc. They seem to be switching to AI. So, it looks like a lot less money is going into, Bitcoin mining. And also, it looks like it's getting harder and harder to keep improving the efficiency of the chips, especially with a lot of competition for the fab time at TSMC and the others." }, { "speaker": "stephan", "time": "13:27", "start": 807.0, "text": "Yeah, especially nowadays in the whole AI era. Seems to be, yeah, maybe we, maybe that plateau is actually going to make it more viable for these kinds of products because I guess how long would you normally have these kinds of water heating elements installed for before people would change them over anyway?" }, { "speaker": "alex_busarov", "time": "13:47", "start": 827.0, "text": "Are you talking about the, the mining parts of it or just the regular heating element?" }, { "speaker": "stephan", "time": "13:50", "start": 830.0, "text": "Just the regular heating part of it, yeah." }, { "speaker": "alex_busarov", "time": "13:52", "start": 832.0, "text": "Well, the regular heating part, the regular heating element, you'd install it and it would be until it fails. And it depends, the average lifetime would be four or five years. And then the reason it fails is actually it, it grows a lot of the limescale and then because the limescale that's that kind of salt that protects, it prevents the heat from transferring from the heating element to the water, so the heating element starts to overheat and then it breaks. And I like, that's kind of the problem that was solved with, with our design. So let's see, I think, I think ours can last longer." }, { "speaker": "stephan", "time": "14:22", "start": 862.0, "text": "Yeah, I see. And so as you were saying, the ROI you're targeting is more like two to three years." }, { "speaker": "alex_busarov", "time": "14:28", "start": 868.0, "text": "Yeah." }, { "speaker": "stephan", "time": "14:29", "start": 869.0, "text": "And that's if somebody buys it upfront, right? Not the case of they're getting a, you're going out and doing this is like, we'll give you free, free Bitwaters." }, { "speaker": "alex_busarov", "time": "14:37", "start": 877.0, "text": "Yeah." }, { "speaker": "stephan", "time": "14:41", "start": 881.0, "text": "And so then would part of the case be to try and talk to like B2B, like a commercial kind of thing, like you would go out and talk to like water heater installers and say, \"Hey, why don't we partner so that when they go out to Like is the idea then that people could be mining without even knowing about it?\"" }, { "speaker": "alex_busarov", "time": "14:59", "start": 899.0, "text": "Yeah, exactly. Exactly. Look, there's if you think of the of the markets, like there are there's, you know, let's say there's there are 100 people in the world who heat their water with electricity right now. Out of them, you know, how many of them are going to be Bitcoiners? Maybe 10. Right, so the much bigger part of the market is actually someone who probably heard of the word Bitcoin, but they never held a miner in their hands. Maybe they don't hold any Bitcoin. So, for us it's, it's natural to start with the, with the Bitcoin community, because these are the people for, to whom we don't need to explain what hashrate is. And the business model that makes sense here is, to offer the hashrate and to offer the, the Bitcoin mining rewards that go to the user. Because people care about this, and, you know, it makes sense. But then the bigger parts of the market is, yeah, going after the people who just heat their water right now, but they don't know anything about Bitcoin. And the channels to reach them can be different. some of the biggest channels, I agree with you, are actually," }, { "speaker": "alex_busarov", "time": "16:01", "start": 961.0, "text": "More B2B channels. You know, think about the commercial real estates, there's, plumbing companies, like the, the, any kind of different kind of installers, actually, you don't even necessarily need a plumber to install these kind of devices. Sometimes it's just, you know, different installers without, without the plumbing licenses." }, { "speaker": "stephan", "time": "16:16", "start": 976.0, "text": "Interesting. And so then, I guess you're trying to tap this bigger market of people who are not ideological Bitcoiners, may not even hold Bitcoin themselves, but without knowing it, might be contributing in that way with a small amount of hashrate, admittedly. Now, I guess talk to us a little bit about what that looks like. I mean, I are we saying like out of the, okay, if global population is what, 8 billion people, I don't actually know the number of how many households there are worldwide, right? It would be, it would be, I don't know, what is it, like three or four people in a household? I don't know, I'm guessing. So maybe there's like one or two billion households on earth. And so maybe that's kind of, you know, a market that you can go for. I guess now, more clearly it'd be the ones where they, where they have a water heater, obviously." }, { "speaker": "alex_busarov", "time": "17:01", "start": 1021.0, "text": "Yeah, there, there is an easier way to think about this. There is data on energy used for residential electric water heating. So we don't even need to worry about the number of households. We can just look at the amount of energy used. And I can give you the numbers. So let's start with Bitcoin mining. Bitcoin globally uses about 160, maybe 170 terawatt hours. So that's the amount of energy used for mining Bitcoin in a given year right now by all the big mining companies, etc. The residential electric water heating globally uses about 300 terawatt hours." }, { "speaker": "stephan", "time": "17:34", "start": 1054.0, "text": "So it's literally more than the Bitcoin mining network today." }, { "speaker": "alex_busarov", "time": "17:38", "start": 1058.0, "text": "Roughly double. But if that's if we take globally. If we take just the US, it's 150 terawatt hours. If we add Canada, it's going to be 170. So if we take, even just the US, it's already, electricity that goes into heating water just in the US is almost the same as the amount of electricity that goes into mining Bitcoin globally." }, { "speaker": "alex_busarov", "time": "17:59", "start": 1079.0, "text": "So in terms of potential, it's there. How many would we be able to cover with our designs and our devices? Let's see, like it's up to us to make sure that we do good quality products that people like and can keep growing. One additional thing that I think is a lot of your viewers would appreciate is why it's actually important for Bitcoin, right? There is potential, right? And it can be pretty big. Why is it important for Bitcoin mining? One, the obvious one is decentralization. It's naturally physically decentralized. And then it's up to us how do we make sure that we don't become like the biggest miner, we don't start becoming a problem. I think by kind of passing on the control, kind of selling this hashrate to different parties, I think is a natural way to do it. Second, these are the miners that don't really care about the price. If you think of the large miners out there right now, they actually operate in pretty thin margins. If the price of dollar price of Bitcoin drops 20-30%, some of them will stop mining. Well, a lot of them will stop mining with a 30% drop. Our users, like people who mine heat and water with our devices, they don't really care about the price of Bitcoin. It drops, it drops. They, they, they just earn more, more sats, this way because the, you know, the, the others get less competition. Third, whatever they earn, they don't actually have to sell." }, { "speaker": "alex_busarov", "time": "19:20", "start": 1160.0, "text": "Right, again, the, the big miners that have to sell their Bitcoin to fund their operations, fund, fund the machines, pay for electricity, pay for crews, salaries, whatever. Our users, they don't really have to sell the Bitcoin. They, they can become the natural holders for this." }, { "speaker": "stephan", "time": "19:33", "start": 1173.0, "text": "Interesting." }, { "speaker": "alex_busarov", "time": "19:33", "start": 1173.0, "text": "So, it's almost really resilient mining. I think that's, that's what I'm trying to say." }, { "speaker": "stephan", "time": "19:38", "start": 1178.0, "text": "I see. And I guess in some cases, it would be driven by the user or maybe the plumbing company. Maybe in the other case where you're doing the business model of giving them a free Bitwater, maybe in those cases, it's more like a, a pre-sold or a, the sats associated for that have to come back to, to you or to whoever the partner is who gave them the free Bitwater, right? So, I mean, that would be, I guess, the different business models that are available here." }, { "speaker": "alex_busarov", "time": "20:02", "start": 1202.0, "text": "Exactly, exactly. And this is what we are, what we're busy with, that's, you know, part of our team is busy with right now, kind of making sure that all of this does, does come to life. We are, we actively fundraising to, to make this, this model come to life because I think this is really where we have a, a chance to make very big difference to how Bitcoin is mined and to make sure that it stays there no matter what, like no matter what the price, no matter what the regulation, etc." }, { "speaker": "stephan", "time": "20:31", "start": 1231.0, "text": "Yeah, that's an interesting idea. And then I guess the other thing I'm thinking of, just naturally, as you mentioned that the, the sheer amount of electricity that goes into this, what about from like an efficiency perspective? I presume like, you know, because this is a smaller thing or it's not, you know, going to be the, the latest hottest generation of Bitcoin miners, how would this compare? Like you mentioned this is 34, is it terahash? How would it compare on a joules per terahash efficiency basis with the latest stuff from Bitmain or that kind of thing?" }, { "speaker": "alex_busarov", "time": "21:03", "start": 1263.0, "text": "We saw for, for this one, we use BM1370 chips. so this is S21X generation, so slightly, slightly older generation. But frankly, we could use the, the latest and greatest chips as well. And it's just kind of the balance that we're trying to catch between the, the upfront cost of it and the, the efficiency. So, in terms of joules per terahash, the, the standard ones here would be between 15 and 17 joules per terahash. Then there's there's an auto tune, right? So when you when your water gets hotter and you don't need to put as much energy into the water, you start to downclock the chips. So you start getting higher efficiency, so basically better joules per terahash on your chips even on these ones. And then, you know, it's it's not a single product that's just going to stay there. There's going to be others with newer chips, maybe different kind of chips combinations. We'll see. Ultimately, I think what's important is this is the most efficient miner in terms of joules per terahash. Like in terms of extra energy used for mining, what we do is actually zero joules per terahash. Versus—" }, { "speaker": "stephan", "time": "22:08", "start": 1328.0, "text": "Because you're counting incremental, right? It's zero incremental." }, { "speaker": "alex_busarov", "time": "22:11", "start": 1331.0, "text": "Exactly." }, { "speaker": "stephan", "time": "22:11", "start": 1331.0, "text": "I see. Interesting. Okay. And then talk to us a bit about the maintenance on this. Like, would you say the maintenance for a Bitwater is more or harder work than a standard non-Bitcoin mining water heating, water heating?" }, { "speaker": "alex_busarov", "time": "22:28", "start": 1348.0, "text": "It's less. There, there's, there are few, few things there. oh, by the way, one function I didn't even mention is the, leakage detection, which is kind of important. so if the tank starts to leak, sometimes, you know, the leaking tank itself is a problem, but if it leaks a lot, it becomes a problem for the whole house. So, even detecting it early is kind of important and we, we built it into the product. In terms of maintenance, the biggest reason for the maintenance is the limescale. So, do, do, do you know what limescale on, on this water heater is like, where it comes from?" }, { "speaker": "stephan", "time": "23:00", "start": 1380.0, "text": "I wouldn't say, no, I wouldn't say I have good knowledge of that." }, { "speaker": "alex_busarov", "time": "23:02", "start": 1382.0, "text": "So, limescale is basically the, the water that you get into your tank is not pure distilled water, right? It's the water that comes from some natural salt, natural source, and it would have salt in that water. Now, when you, that water touches something that's very hot, that water can boil, or anyway, when it, when, when it touches something hot, the salt that is dissolved in the water starts to come out as physical hard particles. And over time, that salt can accumulate. And that's why if you, if you go on YouTube and type something like flushing a 20-year-old water heater, you're going to see a lot of, like, hard salt kind of, like, stuff coming out of it. Right, that's what's being accumulated. It comes from the water itself. Now, and that's, that's been the, historically the biggest problem with the water, the, the, the water heaters, especially in the, in the US, especially in the south of the US, where very often the, the water tends to be quite hard. And we, I, I, I can't say completely solved it, but we solved a big part of this problem. And the way that we solved it is just lower surface area of the heating element. The regular, the regular heating element, like, looks like this." }, { "speaker": "alex_busarov", "time": "24:12", "start": 1452.0, "text": "When it heats, it goes at very high power for a short time, but when it goes at very high power, the surface area goes way above 100 degrees Celsius. And when the water touches it, it basically boils. So when the water boils, like, the molecules of water, they actually evaporate, and then the, the, there's a lot of salt that gets built up. Now, with this thing, we make sure that the, the temperature doesn't go above 65 degrees Celsius. So there's, there's still some limescale, but a lot less. And that reduces, coming back to your question, that reduces significantly the, the biggest reason for the maintenance that you need to do on, on the water heater. and that's, that's the whole beauty of it." }, { "speaker": "stephan", "time": "24:55", "start": 1495.0, "text": "So you think there might even be an argument longer term that this, this is the way it should go, that most people should be using this kind of Bitcoin mining heating elements instead of non-Bitcoin mining heating elements." }, { "speaker": "alex_busarov", "time": "25:10", "start": 1510.0, "text": "Yes, I think we're reaching that, that time in the development of mining and of Bitcoin. It's not, you, you see a lot of things kind of they need their time to develop, and I think this similar, similar thing was happening with Bitcoin mining. If you think of mining, at first, the, the, the way that's good to think about this is the, within the cost of mining single Bitcoin, what's the cost of hardware, what's the cost of energy. When it starts, the cost of hardware is by far the biggest, and energy plays just a small, small share. Over time, the hardware tends to develop and to get, tends to get cheaper. And then you would see that, for even for a big mining company, the cost of energy of mining a single Bitcoin is by far the biggest cost right now. So, and this is where heat reuse applications become more and more relevant because kind of energy plays bigger and bigger role within the cost of mining a single Bitcoin. So, by now, I think we reached the right spot in terms of this energy versus hardware kind of, cost, balance. And the only thing that's been missing is the right products that would mine throughout the year. This, this is what was missing with the space heaters. They only mine part of the year, it's seasonal. But with water heating, it mines throughout the year. And on top of that, finding the, the right business model where you can connect the dots, where you can grow very fast. That's, that's essentially what we're targeting right now." }, { "speaker": "stephan", "time": "26:29", "start": 1589.0, "text": "Interesting. So, would you say your businesses also shift a little bit because as I understood you, I mean, you tell me, but as I understood you, you maybe were more retail focused at the start, and then over time it's almost like you've actually, you're sort of shifting a little bit more to be more, let's say, B2B in the way things work because it just kind of naturally, that's the natural customer, or it's maybe easier to do it that way." }, { "speaker": "alex_busarov", "time": "26:56", "start": 1616.0, "text": "Yes and no, maybe yes with a small qualification. Yes, we started with more B2C, but more of a like traditional consumer electronics kind of company. You make something at X, sell it at a margin, and leave off that. And as right now, we we're going to be shifting from just that business model by to more of actually being a Bitcoin miner that doesn't pay for electricity. Like, that's effectively the business model, right? When we install the device and we'll take a big part of the hashrate. So, it doesn't go instead of the initial business model." }, { "speaker": "stephan", "time": "27:26", "start": 1646.0, "text": "Yeah." }, { "speaker": "alex_busarov", "time": "27:27", "start": 1647.0, "text": "A complementary." }, { "speaker": "stephan", "time": "27:29", "start": 1649.0, "text": "Yeah, oh, it's, it's fascinating. And so it's just interesting to see how this is all playing out. I know when I talk to people who are, you know, researching Bitcoin mining and things like this, they'll talk about heat reuse, right? And that might be, you know, a factor going forward, right? That there'll be different ways to attack this idea of profitability or sustainability from an economic, as in economic sustainability, and heat reuse is one of those. And obviously that's more relevant in a cold country where you would have otherwise needed a heater to keep it at a reasonable temperature for humans. So let's talk a little bit on the heat, heat reuse side of things. How would you explain, you know, the Bitcoin mining contribution in heat reuse?" }, { "speaker": "alex_busarov", "time": "28:13", "start": 1693.0, "text": "Bitcoin mining and what, what, what do you mean?" }, { "speaker": "stephan", "time": "28:15", "start": 1695.0, "text": "Yeah, sorry, as in the, the way in which people can make it, you know, cost effective or worthwhile because they're saving on the heating cost." }, { "speaker": "alex_busarov", "time": "28:26", "start": 1706.0, "text": "Okay, there are, so there are different ways to think about this. Essentially, when you do mining with heat reuse, you can always think of like comparables and benchmarks, right? So let's say you have a heater, heater for whatever, like space heater, water heater, etc. That doesn't mine Bitcoin, like traditional regular stuff that you get in Home Pro, any other shop, and something that mines Bitcoin. You will always have the higher cost of the device when it mines Bitcoin. It's more complicated, there's high-end electronics that goes into it, etc. So you can think of it as high CapEx." }, { "speaker": "alex_busarov", "time": "28:59", "start": 1739.0, "text": "Right? So that's one part of the equation. Another part of the equation is energy. In terms of energy, it's going to be pretty much one-to-one. Frankly, unless you're changing the Type of energy that you're using, if you're switching from gas fuel to electricity in, in a particular case, then it's not one-to-one. But if it's electricity to electricity, it's one-to-one. And then there is the amount that you are earning from the mining, given the particular specs. So, these are the parts that are going to be within your equations, and then there's one element, which is super important, which is utilization. So, that's the, how much do you actually use the device throughout the year? And when it comes to space heaters, obviously depends on where you live, but you would use it for heat reuse, probably about Your heating season can be six months in a year, but the same time you would use it at full power, maybe equivalent of 35% of the year. Right, because in like slightly warmer months, you'll use it at like half the power, maybe you don't use it at night or whatever. But when it comes to water heating, it's not seasonal, so this utilization is actually much higher." }, { "speaker": "stephan", "time": "30:08", "start": 1808.0, "text": "I see. Yeah, because if you want a hot shower every day, then you're using it every day. So, interesting. And then, you know, we've, so we've spoken about the Bitair, the Bitwater. Talk to us a bit on the heating side. I know these were some of your first few products. You've got, is it the Maxi Pro, the Maxi, the Trio, and the Canvas. Talk to us a bit about those products." }, { "speaker": "alex_busarov", "time": "30:27", "start": 1827.0, "text": "Well, these are more traditional, space heaters in different shapes and, and, and forms. so Trio and Maxi are the, the more regular kind of space heaters that you'd put on, on, on the floor. We added an air purification function to it as well, but that was more like trying to problem, trying to turn a problem into a solution. Basically, the, the problem that you face when you put High-end electronics into a space heater is the, the dust. I'm, I'm, I'm sure you've seen miners or pictures of miners, how dusty they get because there's a lot of airflow. So, you can, you can live with that if it's a miner in a warehouse that you can maintain, like this, you know, maintenance guy would go and clean them. You can't really rely on that when it's in a residential home. So, we're like, okay, let's, let's add an air pur, some sort of a filter. But then when we add the filter, it actually becomes an air purifier. So, it becomes kind of additional function that people can use even in summer when they don't need the heat. And then the, Canvas is a different kind of form factor, for delivering the heat. The way it works, so with, with a traditional space heater, the way it works is that it heats the air and then that air circulates around your room, right? It's gonna blows the air up, hot air goes, goes up, then it cools down and, and, and goes down, et cetera, and goes in circles. With, Canvas, it's a, it's a different kind of heat. It's more like, it's more like a little sun." }, { "speaker": "alex_busarov", "time": "31:51", "start": 1911.0, "text": "So what happens there is that there's the surface that gets heated to around 80 to 90 degrees Celsius. It's a temperature that kind of you can touch, you're not going to immediately burn your skin, but you're going to remove your hand very quickly. And then when it heats to that temperature, it emits infrared radiation, which is a bit like the sun, it kind of helps you to feel warm, it warms the bodies. In terms of conversion of energy from electricity to the heat, it's again, it's one-to-one. But in terms of delivering that heat to yourself, it can be a lot more efficient than the space heaters. Because for the space heaters, what happens is most of the heat actually goes to the ceiling and stays there. I don't know if you ever noticed, like you, you go up in a room that's being heated and then you immediately start feeling like it's hotter up there. Whereas with the radiant heats, like the, the Canvas, it actually heats the bodies directly. So it needs less energy to, to feel warm, even though the amount of energy is delivered is actually the same." }, { "speaker": "stephan", "time": "32:43", "start": 1963.0, "text": "Yeah. And then, yeah, similarly with the heating products that you have, talk to us a bit about like the economics of those and I guess, is it a similar case where it would cost more than a non-Bitcoin mining thing and you're doing it more for ideological reasons or as a gift, like for that reason, or how would you explain those?" }, { "speaker": "alex_busarov", "time": "33:05", "start": 1985.0, "text": "I think it's, it would be more in between. And then the, the space heaters, it kind of costs about the same extra to build them versus the non-mining alternatives. At the same time, the utilization of the space heaters is a bit lower. So in terms of the payback, it's, it's harder to have the same kind of payback that you would have on the water." }, { "speaker": "stephan", "time": "33:28", "start": 2008.0, "text": "I see. So then like for five years or something like that instead." }, { "speaker": "alex_busarov", "time": "33:32", "start": 2012.0, "text": "Yeah. And who would that fit for? Well, you know, whoever likes it and whoever kind of needs, we kind of build premium products. People tend to forget about that, but they're like super nicely looking. We use the leather bands on them. There's like high grade aluminum as the body, etc. It's not some cheap plastic. And yeah, it's it, I think it fits a wide range of people. We normally compare those to like if you're thinking of buying a Dyson, especially the expensive Dyson, then yeah, think about getting one of our space heaters." }, { "speaker": "stephan", "time": "34:03", "start": 2043.0, "text": "I see. And so, yeah, I guess maybe it's a similar kind of category where it could be a gift, it could be the kind of thing where it's not like straight dollars for dollars like the, you know, it's not necessarily going to be the cheapest thing, but it might be something that you have and you like people might see it and it might kind of spark an interest in Bitcoin and this kind of thing. I mean, in the same way that you might I don't know, have like a Bitcoin book on your coffee table. People might sort of see something and then kind of get an idea, oh, okay, I'm a guest in this person's house. Oh, but that's like a Bitcoin mining thing. Maybe there's something to that also. So I guess, but yeah, it's good that you're, you know, you're upfront about like which ones are kind of economical and which ones are, let's say, a bit more, you're using it to, you know, as like to show that you're interested in something or you're passionate about Bitcoin as an example. So any other closing thoughts you've got around Heatbit and where you think this kind of category of products is going?" }, { "speaker": "alex_busarov", "time": "34:58", "start": 2098.0, "text": "Well, I think the category of products actually has a lot of the tailwinds, and the biggest tailwind is halvings. The halvings actually push the miners to be a lot more efficient, and when you think of it, you realize heat reuse is the most efficient mining. Like I said, like it's zero extra energy being used, right? So, with every next halving, the case for heat reuse becomes bigger and bigger, and, I think the industry is going to be shifting more and more towards the kind of things that we enable with our devices. And I think it's important that heat reuse takes off in a much bigger way than it did thus far, just because mining is important for Bitcoin. And if heat reuse didn't exist, you know, what, you can ask yourself, what are all the big miners going to do after another couple of halvings? Are they still going to be there? I don't, I don't know if Bitmain will be able to reach, what, four or five joules per terahash, and I don't know if Bitcoin will keep doubling every halving. You know, maybe it will, maybe it won't, but then, you know, do we want the existence and security of Bitcoin to depend on the, on the price growth that much? Probably not. So, I think the growth of heat reuse is going to be happening for, for the natural reasons and for, for the reasons the halving is there. And at the same time, it's actually quite important that it does happen." }, { "speaker": "stephan", "time": "36:15", "start": 2175.0, "text": "It's fascinating stuff. So, listeners, you go, go and check it out. My guest today has been Alex from Heatbit. Alex, thanks for joining me." }, { "speaker": "alex_busarov", "time": "36:21", "start": 2181.0, "text": "Thank you very much. Have a great day." } ] }