White Rock CEO talks renewable energy, dealmaking, challenges and more In this edition of "Crypto Currents," The Fly conducted an exclusive interview with Andy Long, Chief Executive Officer of White Rock Management, a digital asset mining company headquartered in Switzerland.
DIGITAL ASSET MINING: White Rock is a bitcoin miner focused on building large-scale renewable energy-powered mining operations globally. The company, which currently operates three leased data centers in the U.S. and Sweden with an installed power capacity of 30 MW, is continually evaluating further renewable energy-powered expansion sites with a mission to build a globally diversified, lowest marginal cost bitcoin mining business. “The two key elements of digital asset mining are securing the hardware that you need to do the work and securing locations and operations with clean, low-cost energy for that hardware,” Long said. “For the first of those, we have a great relationship with Bitmain and last year, we were able to secure long-term supply of the latest generation hardware.” The company signed a contract with Bitmain for 6,000 S19 miners in March 2021, purchased an additional 6,000 miners in April of that year and added several thousand more miners in September. “Then in terms of the location, we currently operate in Sweden and the U.S. as we rely on renewable power for those operations and secure that power at a low cost,” the CEO said. “You want to ensure the operations are diversified, so you don’t have all your eggs in one basket. If you have good equipment, good locations and a good team, then that’s really what you need to be an efficient miner.”
COMPETITIVE EDGE: As competition continues to rise in the crypto industry, Long pointed to White Rock’s geographic diversification as one of the company’s key differentiators. White Rock has had mining operations in Sweden since November 2021 and began operations in the U.S. in June 2022. “A lot of companies are solely in the U.S. or in a particular territory so the fact that we are in Europe and the U.S. helps to differentiate us,” the CEO said. “Secondly is our focus on renewable energy.” White Rock’s operations are 100% green with mining in Sweden powered by hydroelectric energy and mining in the U.S. using captured natural gas waste flared from oil wells to recycle that energy to produce bitcoin. “Lastly, our great relationships with suppliers sets us apart,” Long said.
RENEWABLE ENERGY: One of White Rock’s key values is environmental sustainability, the CEO said, adding innovation should deliver positive impacts without being detrimental to the environment. The company’s use of green energy sources throughout its operations helps White Rock to ensure the long-term sustainability of the business, he said. The miner recently deployed its first U.S. bitcoin mining operation in Texas, which is powered through by-product natural gas from active oil wells located onsite. “One of the byproducts of the extraction industries for oil is this flare gas and it bubbles out of the oil,” Long said. “You don’t want to release that into the atmosphere as it contains methane and methane is very damaging for the environment.” Traditionally companies will flare the gas, burning it by putting it down a pipe and lighting it, he said. “The problem with that process is that it is not 100% efficient, so not all of the gases are burned completely,” the CEO said. “Instead if you divert that gas into generators, you can completely neutralize the gas, use all of that energy within it and convert it into electrical energy. We then use that to power our equipment, so it mitigates the operations on the site and at the same time provides an off-grid source of energy for us.” White Rock also utilizes 100% hydroelectricity for its mining operations in Sweden, he said. “Sweden is an excellent location for these types of operations, not only is the weather cold, but there is an abundance of hydroelectric power,” Long said. “The river that we’re on in the North of Sweden has 4,200 MW of power, so we have a security of supply and low-cost energy for the operations.”
NGON PARTNERSHIP: Along with the launch of the U.S. bitcoin mining operation, White Rock announced it was partnering with NGON, a green energy services and technology company, to capture the by-product gas from active oil wells through environmentally friendly mitigation services and divert the energy to produce bitcoin. “In the case of the NGON partnership, working with gas, we wanted to work with experts in that area,” the CEO said. “We don’t have direct experience of operating on these extraction sites. By working with people who have been in that field for 20 years, it gives us the operational expertise on the ground to fully implement the infrastructure that we need.”
EXPANSION PLANS: White Rock decided to open data centers in Sweden due to topographic advantages, low cost of electricity, the stable taxation system and support of local authorities, Long said. The location also featured favorable climatic conditions optimal for operations, he said. “We went to Sweden for the low-cost power, cold climate and stable political environment,” the CEO said. “Then Texas has been a great option for us to expand our footprint and to make our initial operations in the U.S.” He added White Rock does have near-term expansion plans in the U.S. but has yet to announce where those locations will be. “I expect us to be in two, if not three, overall locations in the U.S. by the end of next year and we have some new sites that we expect to announce quite soon,” he said.
M&A: In the U.S. launch announcement, White Rock founder Serhiy Tron noted the company was seeking potential M&A opportunities within the bitcoin mining industry and the CEO said White Rock is still actively looking for potential deals. “In this bear market, it actually provides a fertile ground for dealmaking,” he said. “When we’re in the middle of a bull market for bitcoin, everybody is focused on the coin price, their own expansion or perhaps the strategy of doing deals, but in times of market stress, it gives us opportunities for synergies between businesses to combine to reduce their costs.” Long said White Rock is seeing distressed assets available in the market and mulling possible acquisitions. “When we consider M&A, we look at what the hashrate is of an organization, that’s the peer comparator,” he said. “If one company has half an exahash and the other has one exahash, then you can do relative valuation pretty easily. The second is the age and the type of the hardware equipment that they have. More efficient hardware is better, newer hardware is better and remains profitable for longer in difficult market conditions.” Lastly, White Rock considers the quality of the management team and the location of the assets, the CEO said. “We see lots of interesting opportunities in the market right now,” he said.
HASHRATE: White Rock currently has a corporate hashrate of 1 exahash per second and is working on achieving a 1.6 EH/s rate in 2022, Long said. “We’re on target for our rollout plan,” he said. “In the future, it would be fair to expect us to double that next year to get to 3.2 EH/s. I think that’s what we’ll be doing and then it’s about continuing to keep growing to keep up with the network.”
REGULATION: When asked about what global regulators need to do to address the current crypto crisis, the CEO said there are two parts to the industry, bitcoin and everything else. “In the case of bitcoin, governments just need to leave it alone. They need to recognize that it is a decentralized system that is global in nature, that is underpinned by consensus in the community and it’s just fine,” he said. “They should focus their activities on regulation of the non-bitcoin ecosystem, so pseudo-securities, tokens, decentralized exchanges. These are things that I think they would be better spent turning their eye to.” However, Long added it is important to allow innovation to bloom even in those areas. “They should do the minimum intervention necessary to ensure that people aren’t misusing these technologies,” he said. “The best thing government can do for bitcoin is leave it alone and let the global community continue to build the technology.”
CHALLENGES: When asked about the largest hurdles facing the crypto space, Long said as the bitcoin network advances, it becomes increasingly difficult to find great sites to locate network. “The scale of the network is such now that it makes bitcoin incredibly secure, but it also means you have to be at an industrial scale,” he said. “This is another reason that I think we will see consolidation. We’ll only really have players in the market that are half an exahash, one exahash and above, because that’s kind of scale you need to be operating at to be efficient.” The CEO also noted the current bear market but said its similar to periods in 2015 and 2018. “The most important thing is just to hold your nerve and not be distracted by short-term volatility,” he said.
OPPORTUNITIES: As the crypto industry develops, Long said White Rock is excited about the future of bitcoin as well as increasing adoption of the cryptocurrency. “We’re excited about its potential to provide access to finance for the unbanked world through technologies like lightning,” he said. “We’re seeing great innovation from these manufacturers, we have new entrants in the space and we’re watching all of it very carefully.” The CEO said the continual growth of the network and rising adoption of bitcoin across the world provides many opportunities. “I think we’ll see more authorities, whether they be countries or cities, adopting bitcoin as legal tender,” he said. Long added White Rock is also excited about its planned operations and its partnership with Bitcoin Magazine for editions in Ukraine, Eastern Europe and the CIS countries. “We have Bitcoin Magazine in Ukraine, which is an important educational resource for the people of Ukraine at this time,” he said. “Bitcoin is a pretty useful technology in those circumstances, so we’re excited for bitcoin to provide freedom for individuals. We’re doing what we can to both secure the network and educate the community.”
CRYPTO STOCKS: Publicly-traded companies in the space include Applied Blockchain (APLD), Bakkt (BKKT), Bit Digital (BTBT), Bitfarms (BITF), BitNile (NILE), Canaan (CAN), CleanSpark (CLSK), Coinbase (COIN), Core Scientific (CORZ), Galaxy Digital (BRPHF), Greenidge Generation (GREE), Hut 8 (HUT), Marathon Digital (MARA), MicroStrategy (MSTR), Riot Blockchain (RIOT), Sphere 3D (ANY), Stronghold Digital Mining (SDIG) and TeraWulf (WULF).
As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. The Fly’s “Crypto Currents” highlights the intersection of these old guard and new school areas of finance.
