John sits down with Eliza Gkritsi and Aoyon Ashraf, who both cover crypto mining for the digital currency focus website CoinDesk. Before joining CoinDesk, Eliza worked as a reporter at TechNode, a leading media source on tech and startups in China. She holds a master’s in science and journalism and in communication and media studies. Before joining CoinDesk, Aoyon spent nine years at Bloomberg where he covered equities and commodities in mining, metals and energy.

(This transcript has been edited and condensed for print.)

John Belizaire: It’s interesting to turn the tables. You’re both journalists and you spend a lot of time covering the space. In fact, each of you has interviewed me on occasion, so it’s great to just have an informal conversation about this space and just learn from your experience covering it. But before we jump in, I always like to get to know the individuals.

[1:44] Eliza, starting with you, can you tell us a bit about yourself? I’m intrigued by your studies and how you ended up in China? Give us a little tour of your career up to this point.

Eliza Gkritsi: I was studying and I was doing a double degree and I ended up in China because it was quite interesting to go. And I got a scholarship, so it was a very low opportunity cost for me to go. And then, I started reporting and I became quite interested in blockchain and FinTech and all of these things. And I narrowed down my journalism focus to that. And at the time, mining in China was a really big thing. It was very natural for me to focus on that when I later joined CoinDesk, because it was when everybody was moving away from China and I had done a lot of work in that and I knew a lot of people, so it was quite natural.

[3:23] Aoyon, what’s your story? How did you come to CoinDesk?

Aoyon Ashraf: It’s kind of an interesting one. I spent almost a decade at Bloomberg covering equities and commodities. Before that I was on the sales side, I was on MSN banking for three and a half years. And during 2020, when my former boss at Bloomberg, who’s now Editor in Chief at CoinDesk reached out to me that, ‘Hey, we need someone to cover mining at CoinDesk for US companies.” At first, I said, “I don’t know about that.” But then he convinced me that this space needs additional help in terms of the reporting side of it. Then I did some digging. I realized that the miners there, there’s so many of them public, but not much on the reporting side that are being there. I saw the perfect opportunity to blend my financial background and the storytelling background. And then, talk about what mining and these mining companies do at CoinDesk. So I jumped ship.

[4:44] I’m curious how you both have been enjoying it and what you find the most interesting about covering the space. What have you found to be different from what you expected about this space?

Aoyon Ashraf: So obviously, covering equities, it’s a very different world. I covered most of my contacts, even I had a distribution list at Bloomberg and they were all hedge funds, institutionals, big guys with a lot of money, big name traders, and everything was quite hush-hush. Either you are an insider or you’re not, there is no public information. You just have to know them, and that’s how you get your information. Where over here on the crypto side of things, everything’s on Twitter, everything’s on Telegram. You just hit someone up, everybody wants to talk. Which is, I think it’s a great way of covering any growth industry, given how young and technology advanced crypto is. That’s the biggest differentiation I have seen coming from equities background into crypto.

Eliza Gkritsi: It’s an interesting space. I mean, there’s a really wide variety of people that are involved in this and they all bring their own thing to the table. Anyone from pseudonymous people that mine at home and heat their homes using miners, and will only talk to you with masks on to really experience business people, professionals, people with military background. And it really is a mish-mash of personalities and experiences, so I quite enjoy that. I would say the hard part is, I mean, what has surprised me in the last year as miners have come more to the US, it’s less hard to get stories. It’s less hard to talk to people. I think when mining was more focused in China and in Russia and all these places, it was more of an uphill battle. But there is increased transparency, as Aoyon says, with all these public companies, we can get a lot more information than before.

John Belizaire: That is a great point. I didn’t think about that, it wasn’t, you’re right. It was fairly opaque when it was more concentrated in those countries and probably getting insights like the Cambridge report always found it challenging to get any data out of China, around mining size and industries and every now and then they would get a few people that would talk to them. I could see how that can be much more satisfying as a journalist, where your connections were people and actually got some stories pulled together. I want to talk a little bit about renewables and the mining space, and I know you both have been covering it. I think we started talking to you just after the congressional hearing.

[7:52] What are some of the trends you’re seeing in the mining space? Especially with regard to the shift to clean energy. If someone didn’t know anything about the crypto industry, how would you explain what’s happening in the space right now?

Eliza Gkritsi: Definitely there are companies that are interested in being more environmentally friendly, using more clean energy. I think a lot more pressure from boards, from investors and miners to not use as dirty energy as they used before. That at the best of cases manifests through things like using solar, using hydro, investing in your own solar or in your own hydro and in the less good cases would mean something like buying carbon offsets, which are debatable. I would, that’s definitely a trend. It’s hard to know exactly how big of a trend it is. But I do think it’s something that we’re seeing.

Aoyon Ashraf: If you go to Twitter every other day, there’s someone talking about proof of work versus the proof of stake. And then I know how proof of work is so energy intensive, and then they’re coding stuff, it’s more than some countries. I don’t think the debate is ever going to go away, not anytime soon at least.

Eliza Gkritsi: In general, the Ethereum merge has also pushed things more, because that has been really highly publicized. And even through mainstream media and a lot of people are saying, “well, if Ethereum can do this, why can’t Bitcoin do it?” And we can get into all the arguments for, and against why Bitcoin can or can’t do it. But I think what Ethereum’s doing has also added pressure on the Bitcoin network.

Aoyon Ashraf: Of course, and also the fact that the investors are very much focused on ESG. Well, I mean, they’re more focused on the E part of it than S and the G, but nowadays. But ESG is one of the mandates for some of these big name institutional investors nowadays, and like it or not, that’s driving a lot of those narratives behind the renewable push. And we know mining is a very money intensive industry. You need the money and who has the money? Institutional investors.

And if they don’t see ESG incorporated in your growth plan, they’re not going to give you money. That’s also driving the debate.

[10:51] I’m curious what each of you feels about the whole Elon event where he said, “I’m keeping my Bitcoin, but we’re not going to let people buy cars with it because of the environmental aspects.” Do you see that? Was that a very prescient and pivotal move or just typical Elon marketing? What’s your opinion on that?

Aoyon Ashraf: I think so. I mean, I was at Bloomberg at that time and I was covering, I remember coming in in the morning, I used to get started at 4:00 AM and then all of a sudden, the tweet comes up before the market opens and everything starts to fall and everything is screaming and yelling and screaming. “What the hell is going on? Why are all the mining companies falling? Why is Bitcoin falling?” And I feel like from my perspective, given that I wasn’t covering mining at that point, I feel like that was the pivotal point where miners decide or even the investors decide, “oh yeah, ESG is very important.” So that’s my point of view from the outside of it.

Eliza Gkritsi: I didn’t know if internally within the industry there was such a big push, I think maybe people were already thinking about it. But it definitely catalyzed the idea in mainstream media and just the public’s mind that mining is a huge environmental footprint and all of this, which then has affected the industry massively in all the ways, which is just said, but I don’t know if that’s a good question. That’s a good thing to look into.

Aoyon Ashraf: Yes. What do you think, John?

John Belizaire: Personally, if I may opine, I feel like it was pivotal. You’re both right. I mean, ESG is important, a lot of the companies were already focused on it. We already focused on it, so we didn’t start doing it because Elon said it’s important. But the fact that he has this incredible platform with Twitter and all the things he’s doing, his voice allowed the conversation to rock it to the top of the stack, pun intended there. And everybody was just talking about it all of a sudden, and it showed how immensely it could move public valuations in stock and the asset price as well. If suddenly the institutions are like, “well, wait a second, there’s an ESG problem here. We can’t touch anything that’s not ESG plus,” right?

So it just got everybody intensely focused on it. And I think it did change some behaviors in the industry where people were not caring about that. And suddenly, you now have entire consortiums focused on making sure it heads in the right direction. I don’t know how it affected the creation of that investigative committee and everything, but it certainly catalyzed something that’s for sure.

[13:54] I want to ask you both, what do you think of the biggest roadblocks or challenges in moving the industry away from fossil fuels? What do you think of the big roadblocks and challenges?

Aoyon Ashraf: I’ve talked to quite a few people about it and it seems like one thing that everyone says is that regardless of the mix of the green or renewable energy or sustainable energy, whatever they use, they will not be able to get away a 100% from using the grid and fossil fuel. That is the main reason from what I heard from people is that renewable energy is intermittent.

You talk about wind, you talk about solar. The sun only rises during the daytime and wind only blows when it blows. I mean, obviously you can store the energy and then you can use it so that, something like being able to continuously mine Bitcoin or any proof of work cryptocurrency, you need that continuous operation. That is one of the main reasons why I think that they’re facing the challenge in going to 100% renewable or sustainable energy and ditching the grid or fossil fuel completely.

Eliza Gkritsi: I fully agree with my colleague. I don’t know, I think one thing is probably the wider energy situation we’re in right now, which is quite bad. I mean, even on a wider scale countries are talking about scaling back the use of renewables. There’s this feeling that maybe we rush too quickly into it. And now with everything that’s going on in Russia, the tables have really turned. I don’t know how that’s going to affect mining in particular. The other thing is, I don’t know if the incentives really are there. I would liken it to the difference between you wanting to do your homework, because you want to do well in school and your parents telling you, you have to do your homework, right? The parents in this case, being the investors and the boards and all of these people. I still, I’m not sure whether everyone in the industry has the desire to do well in school because they themselves want to do well in school.

And at the same time, there is something of a lack of regulation as well in the sense that maybe it would be a good thing to have certain standards about how you build minds and why energy they use, and where it comes from and all of these things. I’m not saying ban or anything like that, but having some standardization perhaps would be a good thing in creating incentives.

[17:09] What do you think are the policy implications? What would be good policy based on your discussions for the industry? Does it make sense to say, you must use clean green energy or have a certain carbon mixture or what’s the right incentives to get the industry to do the right thing here in the US? May not be able to control everything that’s happening in the whole world, but at least here where there’s rule of law and processes and systems, what are your thoughts?

Aoyon Ashraf: I think I agree with Eliza on that one, that some standardization of the mix at least. For example, the Bitcoin Mining Council reports every quarter, but what mix we’re using or the mining industry is using. And right now, I believe it stands at 64% mix. If we can standardize that, some percentage or a threshold that as a miner, regardless if you’re established one or you’re getting right into it, you must use a certain X% of renewable energy to be able to start operation. I think that would probably incentivize a lot of miners to start using this renewable energy.

Eliza Gkritsi: I do think there’s a lot of room for creative policy making in this. I feel like nobody has really come up with creative solutions to this because as we’ve discussed many times and we’ve written about many times, miners can be a useful asset to the grid. It’s not necessarily incentivizing them just to use clean energy. But how do you incentivize them to use clean energy at the right place, at the right time, to support the grid and how do you incentivize that behavior? In general, it’s very complicated, grids are so complicated and very few people actually understand how they work. I wonder if you could have different tax incentives depending on the energy you use, like you could probably do a lot of things. But I’m not going to do any of them.

Well, on that point, I think what we’ve seen during February or later, the snowstorm that happened. And a lot of miners had to shut down or did shut down their operations almost like 90 to 95%. And it looked like great PR, I mean, it’s great. It looks great on a company, but I feel like there were some incentives, and I’ve heard from a lot of locals that there are incentives for these miners to shut down their operations at certain times to help the grid. They get tax cuts, they get better rates at certain points later in the future. I agree with Eliza that if that kind of incentive appears for renewables as well, I think that could help, not just as the regulation part of it, but also the business part of it.

John Belizaire: One of the things I wanted to talk to you two about, I don’t know if you’ve been following this discussion or narrative that’s been underway, it’s on Twitter and some of the conferences, it’s led by a philosopher, Troy Cross, philosophy professor. And he’s been talking about the concept of creating incentives for miners to go green. And effectively, the way he describes it is if you hold Bitcoin, let’s say you hold Bitcoin, that represents 1% of the network. Then you should invest in the equivalent size of green mining to incentivize the network to go green. If you scale that now, let’s say you are a large institution and you own several double digits percentages of the asset. Then you offset the potential carbon footprint of the asset. By essentially saying, if I own 10%, I’m going to go invest in or buy 10% of the hashrate that’s green, where it can be certified back to your point about it, having a standard that certifies that you’re green.

And that will create incentive because if somebody’s buying the hashrate now or miner can sell their hashrate forward at a fixed price, taking a page out of renewable industry, converting that variability of the asset base to a fixed price, reducing their cost of capital, which will increase the amount of green mining that gets done. Which increases the amount of mining that gets connected to renewables, which increases more renewables, which increases the amount of renewables on the grid, which increases grid stability, et cetera, and flexibility. It’s a virtuous cycle, but that could, I just want to get your thoughts on that idea. It’s not regulation, but it’s economic incentive, which tends to be much more effective in driving behavior than the teachers saying, “do your homework.” It’s like doing your homework and you get to go to the circus.

Aoyon Ashraf: No, I think that’s actually very interesting. There’s one company called Sustainable Bitcoin Standard, who’s doing something similar like that. They go through the companies that mine using sustainable energy. And that they provide them a certificate of that hashrate of that amount of Bitcoin and which they can sell it to someone else if they want to. I feel like you’re right, John, that’s something that could be very lucrative. If someone can actually use that credit, that certificate, the trade certificate, they can trade it and make a market out of it. That could create a good incentive.

John Belizaire: It’s more like an offset, because you’re coming from the trading where people like offsets, things that have value. People want to buy and trade them and then, the value increases. It’s a way to create ideas from other industries and bring them here to mature the industry and give it a more positive utility in the space.

The mechanics would probably be something around, he uses the percentage of the total network. Your Bitcoin represents the total asset, the percentage of the total value of the global supply and then you own, he says just match that to the total hashrate. Because technically speaking, if Bitcoin was all $1, it would be the same thing. Bitcoin didn’t increase in value and you hashed it. Then it would almost sort amount to the same percentage. By doing that and using this offset concept, it essentially is just offsetting any potential carbon that exists in the Bitcoin you hold. Because you don’t know where you’ve got that from and it’s fungible. You don’t know if the Bitcoin you had was green or not, but by investing in the equivalent amount of green mining, you’re basically offsetting the carbon footprint.

It’s just like for renewable energy, for those renewable electrons to be green, you have to have a wreck that offsets them. Even though you’re using green energy from a sustainable source, it’s technically not green according to the standard until you have those wrecks and you retire them or sell them to somebody else, to the person who bought the power from you so that they can all set it right. It’s kind of the same idea. If I buy Bitcoin, then I buy the offset, which addresses the ESG concern for institutional investors to invest in the asset, because maybe there’s lots of capital, has gone into the space because it’s not ESG friendly or they don’t know if it is yet. But if they had a mechanism to use some standard to ensure that it was, that could actually just catalyze the industry to do the very thing they wanted to do. It’s interesting.

It’s not like this is rocket science. There must be a way to create maybe an essential entity, maybe that’s where the government gets involved. They issue these credits, if you meet some certification to ensure that the hashrate is in fact green. And then, you have this marketplace for buying that offset or buying that hashrate. Could be interesting. Anyway, I want to get your reads on that because you see everything and you talk to everybody and it’s like, where’s the industry going? That’s actually my last question, based on everything you’ve seen, there’s this narrative around dirty Bitcoin. And actually, I have a question for you too, before I jump into the dirty Bitcoin question.

[27:30] Do you believe crypto and Bitcoin are the same? Are they interchangeable or fundamentally Bitcoin is different just based on your own experience in everything you’ve learned about the industry?

Eliza Gkritsi: It’s definitely different. I mean, of course, there is overlap, but Bitcoin is crypto. But crypto is not necessarily Bitcoin. And you can think about POW and how integral that is to Bitcoin, which is not to the rest of crypto, I’d say.

Aoyon Ashraf: If you think about cryptocurrency as a commodity, gold is not oil, even though they’re both commodities. I think that’s an analogy that I can think of.

Eliza Gkritsi: Another interesting thing I’ve heard from outside the mining industry and not necessarily related to green mining is, if we could sort track bad Bitcoin and good Bitcoin. Where did this particular Bitcoin come from? Did it come from Iran? Did it come from a sanctioned country? Did it come from a miner that uses a lot of dirty energy? And then, having that tool would then mean that everybody who is using Bitcoin, all of the companies that are holding Bitcoin for treasure, everybody, could then make a choice, make a more informed choice almost as a consumer or an investor. I think that’s similar to what you were mentioning, John.

John Belizaire: There are some challenges with it, which always kicks up a very interesting debate. And it’s driven around this concept that Bitcoin is meant to be a digital sound money. And one of the key requirements for something to be money is its fungibility. A dollar is a dollar just because if you put a red light on it or a magnifier, you see a bunch of cocaine and all sorts of stuff with it. You can still buy your bubble gum at the store. Nobody’s going to be like, “oh my God, what is that? Where did you find that dollar?”

That’s the challenge with essentially painting a Bitcoin with a color based on its providence and where it came from to imply that it’s not a good asset for you to hold. The goal is to create the same behavior to encourage less of bad Bitcoin being created in the first place is really the challenge. How do you incent that? But there’s lots of sovereign Fiat that floats all around the world that you wouldn’t want to have in your pocket. But if you did, you can still buy some bubble gum with it.

Aoyon Ashraf: It’s still money.

[30:53] What’s at stake if the existing dirty Bitcoin narrative continues to gain popularity?

Eliza Gkritsi: Right. First of all, I think the one question is, why is it popular? And I think it’s more than the fact that people like negative stories.

Of course, that has a lot to do with it. But also, there is dirty Bitcoin and there are people mining Bitcoin in a dirty way. And I don’t know, maybe clean Bitcoin could make minds flashier and talk about them more. But I think it’s important to consider why is that taking hold? And I’m always reminded when I talk to my friends who are outside crypto of the fact that for us, reality is A, but for everyone else, reality is B. And for everyone else, Bitcoin use a lot of energy, and a lot of that energy comes from fossil fuels, that is the reality. And not me specifically, I just write about the industry. But the industry has a lot of work to change that narrative. Now, if we assume that it’s a completely false narrative and it’s taking hold for completely illegitimate reasons.

A lot of things are at stake. I mean, I think regulation will be confronted in some form eventually. At least in the US, I think we’ve seen a lot more attention on this lately, perhaps with a change of administration that could change. But I don’t know, a lot of things are at stake. But at the same time, in other countries, that doesn’t really matter, whether it’s dirty or clean Bitcoin or not. I think the network overall will be fine, probably.

Aoyon Ashraf: I agree. And I was talking to Eliza about this, that something like this, what happened in New York, right? It necessarily wasn’t a complete ban on mining, right. It was just a ban on some of the mining companies that are trying to renew or restart some of the fossil fuel.

Locations, right? But the way it was portrayed or at least the sentiment happened is that, “oh, they’re banning everything.”

That’s what the cost of it or if you call it damage of it, that if you keep calling it dirty or if the industry doesn’t get their act together and make sure it’s not called dirty Bitcoin is that, the cost of it would be the sentiment. And the sentiment will sour and it will continue to sour if it’s not. Even if it’s not targeted just for mining, it will sour overall and not just going to be mining. I feel like it will just go over all of it. The whole ecosystem of crypto is bad.

[34:50] I get asked this often. Why is Bitcoin worth more than zero? How would the two of you answer that?

Aoyon Ashraf: You can make the same argument as to why gold is worth what it is. You can make shiny jewelry, but what is it worth to someone, right? I think that the main idea behind Bitcoin is, what is it worth to someone that’s using it or that’s using it to transact or hold it. I think that’s where the value comes in or how a Bitcoin value comes in, is that it’s something that is worth to someone that might be worth different to someone else. Which is, again, going back to commodities, for example, gold to someone could be worth, just a bar of gold is just, I’m keeping my money at borrow of gold because it’s a great inflation hedge, which could be same for Bitcoin, right? It could be an inflation hedge. But to someone, a bar of gold is worthless because they’re not using it, he or she’s not using it. To them, the bar of gold made into jewelry is a better use right than just holding a bar of gold under your mattress.

That’s where I think the thought behind it should be changed in ways that, what is worth or the value of it is why is it not zero? What is it worth to a person who understands it, who uses it or who transacts in it? So I think that if that’s how we can talk about it, I think we’ll have a much deeper conversation around why it’s worth what it is worth today.

John Belizaire: Thank you both for taking the time. I want to shift to our lightning round now where we get back to asking you personal questions.

[37:17] So Eliza, first one is for you, tell us about a memorable assignment you’ve had in your career as a journalist.

Eliza Gkritsi: I really enjoyed when I was in China, I became really fascinated with agricultural technology and I traveled with my colleague and we did some work on drones in China, in agriculture. And it was just incredible, because farming in China is not like the US. It’s really small, tiny farms that have been passed on from generation to generation. And to see these gigantic, fully automated drones flying over them is just really amazing. And the contrast of the old and new, I would say that was really normal. And also I had some really delicious lemons in that farm and lemonade. That was in South China. It was in Guangdong, maybe two hours out of Kwangtung.

[38:39] Hey, Aoyon, how about you? Your most memorable assignment that you’ve had.

Aoyon Ashraf: Well, there are quite a few because I’ve been around since the 2008 financial crisis. I was actually in the sales side at that time, and I was fearing for my life there. But I’ll show you one recent one that it’s very interesting and I’m very proud of it that I have done it. You all remember Bill Hwang Archegos fall, right?

Actually, nobody talks about it because there’s so many stories about it, but I was the first one who broke this story in Bloomberg Terminal, very first journalist out of everyone. And the way I figured it out is that again, I was in at 4:00 AM, talking to all my contacts and traders, chat rooms and everything. All of a sudden, one of my great contacts comes in. He’s like, “hey Aoyon, do you see all these big block trades on the big tech names that are going through?” And I was like, “what are you talking about?” He started giving me all the 5 million shares going through Goldman Sachs and Morgan Stanley.

And nobody knew what the hell was going on. And all of the block trades shares were trading at 10% discount to what the prices were at that point. And the second he sent me those stuff, all I saw was tick by tick, everything’s just falling. And the panic’s just everywhere that all the trading desks, they start hitting me up. And then one guy who actually was very well connected. He said, and he actually covered China and he used to trade Chinese companies. He came back, he said, “listen, one of my client, who’s a big hedge fund in US, but is blowing up and this is why.” I’m like, “well, buddy, you got to tell me more about what’s going on”. And I promised him that I will take him out for a good, expensive dinner and lots of alcohol. He said that it’s Bill Hwang’s hedge fund, Archegos, that’s blowing up because of the way he played his derivatives.

And from then on, that was me breaking this story right after using that information, I had all the term sheets. I had actually the live trading of the block trades in front of me happening as I saw all the prices falling. I remember by the time the market opened,, I’d seen most of the block trades go through and everything, all the big tech names were down like 20% of that or 10, 20%. And that panic that I still remember, I have never seen that many phone calls because I was the first one to break it. Phone calls from traders who I’m talking to are big name traders. I’m not going to name any names, but I’m talking about the millennial point 70 twos of the world calling me saying that, “what is going on? Do you have any more information?” And the panic in their voices, I have never heard that.

Even in 2008, I haven’t heard that panic in their voices, just because the market was so frothy. Everyone was in tech stocks and tech stock was everyone’s portfolio. Everyone was hurting and that panic was still to me, to this date, is the most interesting thing I have ever covered.

[42:23] What do you hope will happen this year? 2022 prediction. Doesn’t have to do anything about crypto.

Eliza Gkritsi: I hope the world doesn’t implode. I hope 2023 comes, that’s what I hope.

Aoyon Ashraf: I hope inflation gets back to where it was before.

Eliza Gkritsi: What about you, John?

John Belizaire: I hope that Ukraine fends off the invaders, I hope they win. I think that they’ve done a valiant job of holding their own. I think it’s unfortunate what’s happening to them. And I also agree that I hope that the world continues in a positive direction.

Eliza Gkritsi: Here’s to hoping. Otherwise, I hope I can visit Aoyon in Canada again, so that we can visit nature there.

John Belizaire: Canada is part of the world you know. What are you trying to say? Canada is a different planet or something? Whatever happens to the world, it happens to Canada too.

Aoyon Ashraf: Any disaster happens, as long as the apocalypse happens, Canada is the way, place to be. It’s the best place to be.

Eliza Gkritsi: For sure, I’m there. I’m with you, Aoyon.

Aoyon Ashraf: Everyone is welcome. Please come by.

John Belizaire: Well, thank you both so much for giving me a chance to ask you questions today. And thanks for coming on the show, really appreciate you both and all the best for the rest of the year.

Eliza Gkritsi: Thank you.

Aoyon Ashraf: Thank you, John. It was a pleasure.