Hive’s Frank Holmes on Expanding Bitcoin Mining in Paraguay

Frank Holmes has had a protracted profession as a cash supervisor: financing gold mining firms; getting concerned in the creation of gold royalty firms; growing monetary merchandise for the airline business — all of this with U.S. Global Investors (GROW), the publicly-traded asset administration agency he’s been main since 1989.

He’s additionally the chairman of HIVE Blockchain Technologies (HIVE), a bitcoin mining firm with a $345 million market capitalization and a quickly increasing footprint in Paraguay, due to a current deal in which the agency acquired services beforehand owned by one other miner, Bitfarms. The agency was born, he stated, after he tried to launch a spot bitcoin exchange-traded fund (ETF) in 2017.

HIVE has been inexperienced from the get-go. Its first facility used geothermal power in Iceland; one other used hydro-power in Sweden, solely 100 kilometers south of the Arctic Circle. Now, the corporate expects to have roughly 430 megawatts (MW) of infrastructure up and working by the third quarter of 2025 — which means sufficient power to energy a metropolis of 86,000 properties.

Holmes might be talking on the BTC & Mining Summit at Consensus 2025, in Toronto on May 14-15.

In the lead-up to the occasion, Holmes shared his ideas about HIVE’s scenario throughout the broader mining business, the corporate’s choice to recycle its GPUs for AI functions, and what the long run holds.

This interview has been condensed and edited for readability.

CoinDesk: HIVE has been repurposing a few of its GPUs for AI. Can you inform me about that?

Frank Holmes: At one time we had 130,000 AMD chips and we have been mining ether (ETH). We have been about 6% of the world’s ether mining and it was very worthwhile. When that went away [with Ethereum’s transition to Proof-of-Stake in 2022], we had this experience in GPU chips and we changed a number of our AMD chips with Nvidia chips. That allowed us to start out happening the AI path.

The distinction between a primary ASIC miner and Nvidia chips is like driving a Bronco and a Ferrari. The delicacy of the motor, the engines, all of the gearing that goes right into a excessive efficiency automobile — all of that relates way more to a GPU. When Antminers S21 Pros present up, it takes us six hours to unwrap them and plug them in. When the Nvidia chips present up, like an H100, it’s six weeks earlier than you’ve constructed the mind and it’s working. So it is a utterly completely different talent set.

When you are constructing infrastructure for bitcoin mining, you are spending one million {dollars} per megawatt of electrical energy. When you go into excessive efficiency computing (HPC), the services want a lot redundancy that you just spend $10 million per megawatt. That’s excluding the gear. You’ve bought a lot increased logistical engineering necessities, and you have a lot increased capital bills.

When you need to supply power for bitcoin mining, you’ll be able to take variable power, and the actual key half is the price of the power. In Sweden, we are able to go from 30 megawatts to a few megawatts in 15 seconds. So we’re in a position to give again power, or take it on.

When you are HPC, you need to be up on a regular basis, and so you have to have this backup of turbines, batteries. Stability of power is way more crucial for HPC than it’s for bitcoin mining. So you’ve gotten a matrix that you just’re making an attempt to play with.

Does the Trump administration’s tariff technique impression your operations?

We hearken to the U.S. as a result of it is so essential for branding and liquidity. But we by no means did something in the U.S. as a result of we’re at all times involved in regards to the overreach of regulatory businesses in Washington. They principally weaponized the auditors to go after anybody that was in crypto. So we stated, ‘Let’s just stay neutral in this jurisdiction.’ Then Trump gained, so we determined to maneuver our head workplace over. That’s strategic, as a result of in case your head workplace is in the U.S., you qualify for most of the numerous indexes. We don’t have mining operations in the U.S. but.

But you’ve expanded considerably in Paraguay.

I believe what occurred in Paraguay to Bitfarms is that they went by some distraction with their CEO [left]. There was a vacuum. Then Riot (RIOT) tried to return in to purchase and management them. During that turmoil interval, the Paraguayan authorities put a tariff on bitcoin miners, which was actually very bizarre, nevertheless it occurred, and it’ll drop away, I believe, subsequent 12 months. It was all unsettling for the brand new CEO, and he wished to pivot to the U.S. So they merged with Stronghold (SDIG) to principally turn into an American firm, like a reverse takeover.

They nonetheless have 80 megawatts of electrical energy in Paraguay, however many of the operations we’re now taking up. We’re ending the development, and we’re very enthusiastic about it. We have already got a couple of machines working. We have the most important progress profile in 2025 of all of the bitcoin miners. We haven’t performed any of those funky convertible debentures to purchase bitcoin. Most of them paid a lot increased costs. No, we have not performed that as a result of we all know how risky it may be. Every time everybody begins doing this binge debt shopping for — properly, earlier than, in 2021 it was all for getting mining gear. This time, it is all for getting bitcoin. Bitcoin then goes to a correction, and so they all get strangled. We simply do not need to be in that place.

We actually see the chance in Paraguay. It has the biggest dam in the Western hemisphere, shared 50/50 with Brazil. It’s 14 gigawatts and like eight kilometers lengthy. It’s so immense. If Paraguay would not use the electrical energy, then Brazil will get to maintain it. Well, Bitcoin miners do not do this. We assist construct out their infrastructure, and so they receives a commission U.S. {dollars} each month. So it is a win-win for the Paraguayan authorities and it is a win-win for HIVE shareholders, as a result of we need to keep centered on inexperienced power.

Are there different jurisdictions you’re trying to develop to?

We’re proposals coming from East Africa. Ethiopia in explicit has a number of stranded electrical energy. Some of the opposite miners have already gone into that space. They bought all this low cost cash from the World Bank and different establishments, and so they constructed the dams, however then they did not construct the ability traces all through the economic system. It’s an enormous expense. We have a really clear imaginative and prescient to go from 6 EH/s to about 25 EH/s in the subsequent 9 months.

How do you see the mining business’s scenario proper now?

I do not assume it is wholesome. You must be cognizant that there is a change for lots of the massive miners. Major U.S. firms usually are not actually into mining enlargement. They’re predominantly centered on including bitcoin to their stability sheet. They’re all emulating Michael Saylor’s enterprise mannequin. But for Bitcoin’s ecosystem to perform, you have to have progress in the nodes. You must have progress in mining operations so we turn into much more decentralized. Some of the businesses must be most likely investing extra in the Lightning Network or in Ordinals infrastructure to distinguish themselves.

What Bitdeer (BTDR) is doing [with ASIC manufacturing] is de facto sensible. The founder was additionally a co-founder of Bitmain. So coming in with a brand new piece of expertise which could be very power environment friendly in phrases of joules consumed, I believe that is excellent and aggressive for the capital markets.

Bitcoin miners are going to undergo a course of that occurred to the gold miners. When the GLD got here out for bullion, hastily there was a separation — gold shares versus the GLD. This century, gold bullion has outperformed the S&P 500 by a large margin. But solely the standard gold shares, the royalty gold shares, have truly outperformed. One of the issues that HIVE has at all times had is the previous royalty mannequin of excessive income per worker, in order that we are able to cope with these down drafts and never must undergo this panic of massive layoffs.