“Ethereum is the backbone to the blockchain network,” said Frank Holmes, CEO of U.S. Global Investors. Speaking with David Lin, anchor for Kitco News, Holmes discusses the growth trajectories for both Bitcoin and Etheruem, and how the latter could one day become the most dominant cryptocurrency.
Frank Holmes, CEO of us global investors and executive chairman of hive is back with us to talk all things, gold, cryptos and crypto mining. Welcome back, Frank, we have a very important announcement to make July 1st and you are going to be listing on the NASDAQ. That's correct. Uh, it was a big day and it was Canada day, but, uh, it really was once a week or relevant in capital markets is, is, is the U S it's interesting talking to NASDAQ.
They said they've had over 500 listings this year. Uh, a lot of the streamlining of regulations brought in by the previous administration has been a big boom to the stock market. And they've had a record number of Canadian companies applying to be listed here on NASDAQ. Uh, so I'm, I'm thrilled about it for the hive shareholders they've been asking and requesting and demanding, uh, to get listed on a much bigger and more viable stock exchange.
So that's what we're doing. Okay. And tell us about your company's plans. Are you expanding your operations are you're raising capital where you, what are your plans for the next year? Well, as, you know, if we made, uh, two major acquisitions during COVID first was in Quebec, not too far, unless shoot for 30 megawatts of energy and, and our real big strategic move was a new Brunswick, uh, acquiring GPU.
Uh, so we, we got, we basically have a great management team coming on board and we have 50 megawatts going to 70 megawatts in new Brunswick. And that's all green energy, you know, high was the first public company in blockchain, crypto mining. And we always had as a fund manager, an ESG strategy, a green strategy, and we mined green clean coins.
Uh, and we hold it. So I'm, I'm thrilled about the fact that now we're seeing a scramble by the peers of all of a sudden running around to make sure that they have a grow stronger green footprint because Isla must tag them all as using too much coal. But the real culprits in this world of bad energy is China, but China's shutting it down.
And there's a whole thesis of why China is shutting down group DOE because they don't want competition. They're coming up with their own digital currency. And the G seven countries are way behind in their initiatives, the fast track coming up with their own digital type of money that, so the Chinese are also big buyers of gold.
And we've talked about this for years now of the tectonic plate shift of gold, leaving north America, going to Switzerland and going to China. This continues, China continues to be the largest gold producer and net buyer, and they need to have. To have the confidence of a global trade behind a digital currency.
People just don't trust the Chinese. They don't trust the one, but if it's backed by gold, Then there's a sort of a confidence. I do trust factor. So these are the shifts we're seeing. And crypto mining is now shifting to north America and the Scandinavian Nordic countries where this is very significant.
And I think you're going to see the pools that are involved. They call them pools for mining, crypto mining, better accounting standards as coming to north America. So there is a major transition taking place. And now the companies that are public and crypto mining in north America. Are really consumed with a very strong ESG strategy.
I'm thrilled that a high was always been that thought leader and is most advanced. And we only have green energy. I've done nothing in Texas because it's not pure green. And I live in Texas. Yeah, let's talk about, but a central bank, digital currencies, you brought that up. Yeah, you're right. Thesis is that they, uh, they don't want alternative currencies, like Bitcoin to compete with what they're coming out with.
Put it this way. Frank, if you were an investor, which you are, would you buy fed coin or would you, or the Chinese coin or the British coin, the bank of England's coming out with their own or the ECB coin, would you consider buying any. Well, if they're going to be used for trades, just like the stable coin is, um, then yes, I would.
What's what I'm thrilled about. David is the Canadian algorithm of the smart contract called Ethereum on the Ethereum platform, mining ether. It is, it is the, it is the applications of the block. And it has many more scientists, many more engineers and coders that are involved in the ecosystem of Ethereum high blockchain is their only company mining Ethereum on a grand scale.
And we're going to expand that footprint and we're going to upgrade all of our computer systems so that when we believe that proof of work is going to continue for the next two to three years before proof of stake really takes off. So we think he theory is going to trade much higher. And so we're very bonus because it's the backbone for defy, for music, for sports.
It's the backbone for NFTs. It's the backbone for stable points. So as these other apps grow. The demand and need free theory them grows. And I really am happy that this is how high was positioned to not only mined Bitcoin and put it over here as a long-term asset. We are the serious players in the Ethereum space.
Do you think Ethereum could overtake Bitcoin market cap one day? Investors want. It's a common question. I get asked. Yes, because it has the apps. It has, it has the growth potential. And then as they grow the need and the demand for Ethereum grows, uh, we've not put our coins up when the 3m 2.0, came on in December because we've believed that Ethereum 2.0 is the first initiative.
We're only going to suck up supply Metcalf's law says if you limit supply and demand grows, it grows exponentially. So that's what we've seen in the past year with Bitcoin. The supply every 10 minutes is add from, from the previous four years. And it's going to have in three years from now. And that means there's going to be tighter restrictions supply it's capped at 21 million points for Bitcoin and demand is growing.
PayPal allows you to buy fractions of a, and so what you're seeing is a clear sea change in the sort of global decentralized mechanism for alternative asset classes. Right. Tell us about Ethereum 2.0, you brought that up. I've been reading about it for the viewers who might not be familiar. Can you give us an overview?
And when we might expect, and the changes in the protocol and the new layers we might be getting. Well, it's more expensive when you do mining the validation process, as you know, is it uses energy and it uses expensive, uh, hardware and software. So the idea was to just use nothing but software, but the risk is it gets hacked.
And so that's always been a great concern. Uh, I'm going to proof of stake. Uh, and, and so this proof of work, which we do, we believe based on our research, our intelligence, uh, it's going to be around for the next several years, so it's not going to vaporize. Um, but one of the other issue parts we're looking at is high-performance compute.
Uh, if you see Amazon and wall street, Jones has covered a story that they're scrambling to get green energy themselves, but they're mega players and the cost. If you want to go and use for, uh, Amazon's cloud service using AI. Yeah. It's more profitable than crypto mining. It's very expensive, David. So, uh, us having the expertise in mining Ethereum and using GPU chips gives us the strategic ability to pivot when proof of stake actually becomes much more dominant.
And then all of a sudden we'll be in high-performance computing and data centers. And our goal is to have small data centers around the world using only green energy. You know, I was reading articles about quantum computers being a threat to cryptocurrencies. And you're a minor you've probably, you probably have addressed this already.
This is a, this is an article CNBC. I'm going to read the first paragraph here. It says within a decade, Frank, within a decade, quantum computing is expected to be able to hack into cell phones, bank accounts, email addresses, and Pitt coin wallet. So the concern is here is that down the line, we'll have computers fast enough, several, several million times faster.
Than what we have now that can, uh, that can break codes in a much more efficient and faster pace. And that could be a serious threat to wallets. Um, what are cryptographers doing right now to combat this? You want to hit you? You can't get consumed with that longterm vision worry, just like Justin Trudeau said that.
Get ready for all these lockdowns because global climate change is taking place and he's going to lock down every citizen and put curfews on everyone. If he gets his way, because this is, this is conditioning and training for Canadians. Uh, come on, please. This is such a long negative narrative. I think so whoever knew in 95, 19 95, that Netscape and AOL were the leaders in, in the internet.
And all of a sudden they're vaporized. So we don't know the, the issue for high is, are we sensitive? Are we agile enough to be able to pivot and position ourselves as blockchain? Basically the second major accounting breakthrough, digital accounting is blockchain and there's been no major accounting breakthrough since the 14th century.
Right. Yeah. Double entry accounting. So blockchain changes all of this. And so who's going to be the winner. I don't know. All I know is I've got to stay agile. I've got to be pivot, able to pivot quickly a hive as a great cost position on his balance sheet hive has got huge cashflow, a high was going to triple its revenue and its cashflow over the next 12 months.
So we're in a great position. Uh, and I'm thrilled about getting listed on that. You know, the, uh, what was, you know, Chinese, uh, party Heights. It's just shut down 90% of their mining capacity in the country. What's going to happen to the mining industry. Uh, Frank, where, where are they? So, what happens with that is two-fold benefits.
One is getting equipment. It's been nothing but horrific delays the disappointments in getting your mining equipment from China, because they've been selling internally and it's easier to sell stuff internally than externally. Now there's hundreds of thousands of machines, hundreds of thousands, looking for two giggle, Watts of energy.
I mean, it's big numbers. It's gone. It has to be sold. So now they're looking for homes. Prices are falling to very significant to us is there's less players. If they can't mine. That means there's, there's more opportunity for big, bigger, gross profit margins. So what they call the difficulty of hashing, that difficulty is going to fall another 30% in the next.
So I it's very beneficial to us. So yes, trickles come down, but our profit margins are actually maintain themselves because this difficulty of mine, there's no competition now. Right. And, and what happened to the Chinese as they burnt bridges in 2018 winter, because they just got up and bolted out and left big electrical bills in Sweden.
I believe also kept back. They left it in Iceland. So no one wants them. They're trying to cut deals, et cetera. Nobody says, no, we will deal with you because it's, it's tragic what you did and you left and that's with all these electrical bills. Okay. Yeah. I mean, they've, they've tried to ban things left and right before this time, it seems a little more serious, but you're right.
You mean that they've, uh, it opens up when, when one door closes another one opens. Let's talk about, uh, your views on Ethereum and Bitcoin. And, uh, we'll wrap up there. You know, you mentioned earlier that if you even could overtake Bitcoin and market cap, Some people would agree with you now, what do you think about the price movement?
People are, people are concerned about the price. It's been stalling for both coins of the last couple of months. Do you think if theme can overtake Bitcoin and growth over the next 12 to 12 months, 18 months? What's your view? I think it's going to take probably two to three years. Uh, yeah. For that to occur.
Uh, eh, even though it's far old performed in the past year has been better producer. I mean, it's like buying silver and gold in a bull market. Silver far performs goal performance Bitcoins. Um, I think there are two different parts, you know, when you look at a big point, it's like buying Andy war art. It's.
And, and there's a limited supply of it. So it's going to have its own DNA of growth and volatility. Any theory is going to become different because it's B it's, the apps is the backbone to the blockchain network. So they're two different parts, but they're both digital money. Uh, I think what's important for investors is that.
They should have about 2% in that space. Like I've always advocated 10% in gold and gold and silver. It just shows you look at the past decade. Gold is much more stable in volatility compared to Bitcoin and Ethereum. Uh, it is Bitcoin Ethereum, right? The daily volatility is six times greater than gold. So if you're doing diversified portfolio and asset allocation goals, a much more stable asset to recalibrate and it's outperformed the S and P the century, the past 21 years by 250%.
So gold is not going to disappear as an asset class, the alternative asset classes and what you're seeing more and more institutions become interested is going to be Bitcoin. Ethereum and hive is fortunate because we've produced an older one. What, what, what do Bitcoin, in theory, investors need for the price to move up?
I mean, do we need another Elon Musk tweeting, positive things and bullish things on Twitter? Like what, why, why is it price been stolen? What do we need now to, you know, get the breaks? I think the bigger part is just the G seven cartel. Uh, finance ministers have spoken before that at works in functions like OPEC.
They just ushered in a 15% flat tax. So maybe see a minimum tax between the nations. And what does that mean? It means that we would longterm harm competition and innovation. Uh, I know that when China grew with Dane shell pangs vision, uh, he created seven tax free zones in San Antonio, Texas, where I live, uh, a Toyota opened a huge trucking plant here only because they got tax breaks.
Uh, people are coming to Texas and to Florida from expensive states like California and New York. Why? Because there's no state income tax. So all of a sudden this sort of socialistic model coming to the east. Is very significant. And, and I believe there's a, a cloud put over alternative asset classes like gold and like crypto.
And they both actually correct it almost in the same step, uh, as a dollar sort of firm. So I think it's, I think it's only a short-term phenomenon that's taking place. Uh, and I think that it's just wise to have buy on the dips as the rational. And you're just one more point, Frank, you brought up a very good point, which is the minimum 15% corporate tax.
I was brought up by the G seven recently. I wonder why stocks haven't moved down a lot on the new, you know, we're still seeing all time highs on NASDAQ and the Dow and the S and P 500. You would think that the stock markets would be very much allergic. So to speak to, to, to news like this, nobody likes higher tech.
No, but it's, it's not come through yet. So it's a, there's a debate for it. You know, like, uh, immediately the UK and London came out to say they want to be exempt from it. Uh, by the way, Ireland, which is basically the platform to go into the EU. Uh, it basically grew because of you've looked back in data 30 years ago, they create tax free zones.
They had a highly educated multilingual, uh, youth. Uh, population and that needed jobs to attract capital the credit tax result. So I just think is a bit of a charade, uh, that won't last long. And I think that, uh, the stock market is showing you what happens when you have negative, real interest rates. Uh, and, and the negative real interest rates is even growing more.
So the dividend. Is actually more attractive. So we still have central banks like Swiss, like Switzerland and Japan buying their own stocks and buying stocks that are in America. All right. Excellent. Frank, congratulations again on your listing today, that stuff luck with high. We'll follow up again and talk about the markets with the effect.
Thank you very much, Frank. Happy Canada day. Thanks. Cheers. All right. And uh, happy Canada day to those watching right now. Stay tuned for more. I'm David linen.
Okay.