BitStarz News Exclusive Interview with Elite Mining CEO

Reading Time: 11 minutes
  • The crypto mining world remains murky in the eyes out outsiders, earning a bad reputation after various cloud mining firms suddenly vanish and hardware manufacturers ship used equipment.
  • “We are focused on being transparent 24/7… what we are mining, what we are doing and what our revenue is – we’re putting it all out there,” said Justin Podhola – Elite Mining CEO – in an exclusive interview with BitStarz News.
  • Podhola also made promises of company transparency, along with declaring a non-discriminatory funding round, “We’re giving everybody opportunity and a fair shot – we’re not just seeking out venture capitalists.”

Crypto mining is the backbone of the crypto industry, as without quality miners many blockchains would become vulnerable to attacks and abuse from hackers. However, crypto mining consumes large amounts of power, so using renewable energy is vital to ensure the environment is minimally impacted by such an energy-intensive process.

Earlier this year, Elite Mining announced its intentions to host an STO to raise funds to expand its operations and continue to develop its renewable energy supplies. Alex Meears recently spoke with Justin Podhola – Elite Mining CEO – to find out how Elite Mining is creating a crypto mining brand with a commitment to using green and renewable energy.

AM: Could you tell our readers a little bit about Elite Mining?

JP: One of the main pain points in the crypto mining industry is the fact that mining is so shrouded and secretive. There is a lot of shade thrown on the mining industry as well, because of the various activities that have happened in the past – like we saw with Bitmain pulling stunts. People began to not trust preorders, deliveries and shipments from hardware manufacturers – Bitmain selling old or used mining rigs that are dusty when they are supposed to be brand new is another great example of this.

All those types of activities have really created a lot of distrust in the entire industry. We as Elite Mining are really trying to solve these pain points by creating our own niche and doing the exact opposite of the status quo. This means we are focused on being transparent 24/7 365 days a year. We’re completely transparent with the entire mining process, including things such as how much we’re mining, what we are mining, what we are doing, and what our revenue is – we’re putting it all out there.

Our main goal is to mine for the people – for lack of better words. Essentially, we’re giving people a better alternative to cloud mining as well as creating an ecosystem around blockchain mining that is a really positive force.

AM: Where are you currently based?

JP: Currently, we’re in Washington state and the company’s office is based in Thurston County, but Elite Mining is very agile. We currently have multiple properties and we’re planning to expand around the state. Right now, we have three properties and we have another one that looks like it’s going be closing somewhere around May.

That leaves us with four properties of out the gate during our series A funding round. This is a huge advantage, as it means we’re in multiple counties and therefore we don’t rely on any one entity. The reason why we took that approach is because over here in Washington state we witnessed a California gold rush effect with crypto mining. Basically, all the miners said “oh wow, there’s really cheap power in eastern Washington” and they all scuttled over here. This then led to all the Public Utility Districts (PUDs) having their substations completely maxed out and then they couldn’t offer any more power to anybody else – they simply had no more power left as everyone had already taken it. To make the situation even worse, people were doing things like plugging in a bunch of ASIC mining rigs in their multi-family homes and doing whatever they could to mine, simply because the PUDs were restricting all the power access.

Due to all of this, the only solution to the PUD’s problem was to raise the prices of electricity. This created a huge problem for Giga Watt. Giga Watt was one of the biggest mining operations in existence – especially as they started out early on – but they recently had a huge capitulation and fell into bankruptcy because their electricity rates went from two cents and changed to almost 8 cents or so – meaning their costs went up 4x.

So – back to the point of having properties all around the state – essentially, we want to make sure the same thing won’t happen to us. We want to make sure that we don’t ever rely on one person or one county too much, but most importantly we want to establish long term contracts that lock us into a good base rate. We can then work from there and make sure we can very consistently go from place to place and then really build the foundation of the company through a long-term safety net. This way investors actually know that we’re going to be here in a few years from now.

AM: Green and renewable energy is a big part of your brand promise, when will you be deploying solar and wind energy capturing devices?

JP: One of our properties that we are really excited about has a south facing hill, which is ideal in Washington state for gathering solar energy. There is also some fresh water on the property and we’re going to investigate the possibility of putting in some hydro facilities in the future – we’ll see how it goes. The solar and wind deployment is slated for early 2020 – hopefully late Q4 in 2019, but 2020 would be the realistic deployment of the wind and solar. Those are both really key elements to our company and how we function, so getting them up and running is a key priority for us.

AM: Why did you decide to mine a basket of cryptos, rather than focus on one crypto and go all out?

JP: Personally, I’m very partial to bitcoin. I think Bitcoin is an amazing currency – there are so many good things about it. Of course, the tech is older, but things will change with time. I’m not a bitcoin maximalist, but I’m just about as close as you can get without being one. The way I look at mining is diversity is the key, so we approach mining in the same way you would when running a fund.

When you have a fund, you have your portfolio – you set it up and you invest in multiple different assets to diversify your risk. Mining is quite the same in the fact that if you put all your eggs in one basket with one coin and there’s an adjustment period of difficulty, you’re going to have a serious issue on your hands. Typically speaking that doesn’t happen too often, but whenever there is a new tech cycle, the difficulty rises quite quickly.

The tech cycle is what we deem as an advancement in technology, someone comes out with a better chip, or a better mining rig. In those situations what ends up happening is you have way too much risk attached to one coin. We take and we evaluate all these different cryptocurrencies and decide which are the best ones, as well as which ones have the best tech cycles.

We base our tech cycle approach by deciding whether we can get the equipment set up quick enough and for long enough to get back a good chunk of our ROI before the difficulty starts to really climb. Then, by not putting all your eggs in one basket you don’t have the exposure to just that one coin or one tech cycle.

AM: Do you divert hash rate to other chains when it becomes more profitable to do so?

JP: Yes, we can do that and we have the ability to do that, but we don’t do it if we don’t have to. There are certain coins we don’t believe in mining – let’s put it that way. We like to support projects that we deem more of a quality coin overall. That being said, if it’s massively more profitable or there’s a period where it’s better for us to do something for shareholders, we’re going to do that.

At the end of the day, you shouldn’t need to divert hash rate. Mining is more about the initial judgment before you deploy a certain number of rigs to a certain coin, making sure the coin is not oversaturated. Take a look at Bitcoin for example. Bitcoin is heavily saturated, especially a couple of quarters ago it was immensely saturated with way too many miners. Then as everyone saw the price of Bitcoin go down, you could watch the difficulty going down with it and you could see the older tech basically falling off of the off the network.

It’s important to note that because there is an equilibrium between tech cycles, price and hash rate that even though price does push the difficulty, when you have tech cycles the hash rate changes considerably faster.

So, back to your question. When we’re diverting, we don’t really do too much target mining – that’s what diverting hash rate to a different network is called – but we will if we have to. We usually do a pretty good job of figuring out what coin is going to work with what mining rigs we have.

AM: What made you pick Grin, Zen, and Bitcoin?

JP: We have lots of different kinds of mining rigs – we have GPU, FPGA, and ASIC. In fact, we’re looking into developing some of our own FPGA ourselves, but what it comes down to is the fact that we have a five-man research and development team. This team looks into these coins, figures out what they are, what they stand for, how much “hype” is behind them, and then essentially try to figure out what to do in terms of how much power and money do we dedicate to mining it. There are questions such as: is it speculative or not, is it a top one hundred coin, what kind of coin is it, or what are they trying to accomplish.
We found this with Raven. We mined it very early on and we held that – thankfully we did – and we find Grin to be on the same kind of trajectory. We don’t mine a lot of it, but we just mine and hold Grin speculatively speaking, while not risking very much of our hash power.

When it came to Zen we actually really like the coin overall. We talked to the team behind it, we did our due diligence and we found out that overall there was quite a bit of traction from other investors as well as people around the VC space. So, we decided that that was a good investment for us – especially with the new tech cycle coming out. At one time Equihash was the best algorithm to mine and does that play a factor into the decision process.

Then there is Bitcoin, of course. Bitcoin is just the father of all, we’re always mining bitcoin and in the future, we’ll be doing even more. To get ahead in Bitcoin mining you need to have a real edge as the market is so saturated. That means miners are leaning towards, oil cooling and different methodologies to prevent your machines from becoming obsolete quicker.

AM: Why did you decide to do a public series A funding round rather than tap up private investment from a VC firm?

JP: The main reason we went for a series A is because we really want to give people the opportunity to invest alongside VCs. In this industry, in order to do anything substantial you’re going to need VC if you want to go bigger quicker – that’s just what you have to do. I don’t really like a reg d506c because it only allows accredited investors to invest into funding rounds. I firmly believe there are a lot more privy people out there in the investing world that don’t have one million dollars of net worth and they don’t make two hundred thousand dollars a year.

There are a lot more of those individuals that are below the mark – or they have their taxes done differently – that should be able to contribute. That being said, I believe in fair investing like an equal investing act. So, I think that what it comes down to is we really want to give everyone a shot of having a piece of our series A.

Next up, we’re planning on doing a series B in early 2020 which is more of a “retail investor around” I guess you could call it. The main reason is that Series A’s are a nightmare right now. They take forever to get one and then you have to jump through a lot of hoops and it takes way too long. On top of all that, it’s very unclear if you can even do one right now. So, we figured that we would just do a series A reg d506c and if investors are unable to do it because of the restrictions from those exemptions then we’ll catch them on the series B.

AM: Why did you go for an STO rather than an IPO?

JP: First of all, we need to make a distinction here. An ETO is much different than an STO. An STO is a security token offering, where as an ETO is more specific in that your tokens represent equity of a company – a lot of people don’t know that because ETOs are still a rather new concept to most people. Basically, the reason why we went with an STO is because we really first of all we want people to have more liquidity early on. When a typical VC invests in a company, they’re looking at a like a five-year exit – that’s pretty industry standard.

An STO allows you to be able to acquire tokens a year after the safe agreement expires – there’s two different kinds of agreements – SAFT and the SAFE. The SAFE agreement is the equity version and the SAFT agreement is a token version of that without equity. Once those agreements expire you’re able to go on exchanges. Unfortunately, there aren’t a lot of exchanges that you can go on right now with your security tokens. That being said, we feel that there is a movement starting to emerge in the crypto markets that is going to allow us to able to do that in the very near future. So, that’s one big reason for the STO.

The other reason is that security tokens have the ability to be way more structured in your dividend model. It saves our company thousands of dollars on the back end of things. So, we use the ST20 which was created by Polymath – a great company by the way, good people to work with – and Polymath essentially created ST20 token that has a dividend module built into it. So, when we want to distribute our dividends we just go through the smart contract that we’re concurrently developing right now and we just press a button for all the dividends to be calculated and sent out – in layman’s terms, of course. The dividends can be paid out in Ethereum, USDT – or any token that uses the ERC-20 framework as it’s on the Ethereum blockchain.

AM: Will your series B funding round be another STO?

JP: So, we haven’t had the chance to fully disclose all that information yet, but it will be similar to the series A. It definitely will be in the form of a token – we’re aiming for that. For the Series B, we’re planning on hopefully doing a regulation A+ so literally anyone can invest. Also, we believe that by that time the series A is over we’ll have a lot more exposure and we’ll have a lot more overall presence in the market.

AM: Let’s say Elon Musk manages makes it to Mars, would you consider opening up a crypto mining farm there? Maybe you could use the strong Martian winds and solar power to make cryptocurrency use truly intergalactic?

JP: I haven’t thought much about that one, that’s for sure. It would have to be viable, but the exploration of something like that would be so intriguing. I think it would be very interesting to even entertain doing something like that. The answer is yes, it would be really cool to do. As a reality, it’s rather hard to say. I can’t imagine the opportunity happening in our lifetime unfortunately.

AM: Is there anything you would like to add?

JP: If anyone is interested in our series A, we’re giving everybody opportunity and a fair shot – we’re not just seeking out venture capitalists. We’re very excited about our funding round starting closing on September 30th. We’re taking in pledges right now if anyone’s interested. What that means is you’re pledging a certain amount and then we have to do our KYC and AML procedures – as well as an accredited investor if you’re inside the US, if you’re outside the US you don’t have to be accredited.

On top of that, we’re simultaneously running a reg S which is important to know. If you guys want to be a part of something that’s on the cutting edge of a better way to mine crypto and be a part of an organic brand that allows people to buy Bitcoin from a green mining company, then this is your chance!

So, we implore you to join us and if you have any questions we have a Telegram room, we have Twitter and we’re on Instagram as well.

If you’re looking to grab a slice of one of the hottest – and greenest – crypto mining firms around, head over to the Elite Mining website and make a pledge. Looking after the planet by using green and renewable energy is essential in an energy efficient industry such as crypto mining, so it’s great to see Elite Mining taking such good care of our planet.

As always, stay tuned to BitStarz News for more exclusive interviews with industry-leading experts and intriguing projects!