Frank Holmes has had a long career as a money manager: financing gold mining companies; getting involved in the creation of gold royalty companies; developing financial products for the airline industry — all of this with U.S. Global Investors (GROW), the publicly-traded asset management firm he’s been leading since 1989.
Currently, Holmes serves as the chairman of HIVE Blockchain Technologies (HIVE), a bitcoin mining company with a substantial $345 million market capitalization and a rapidly expanding footprint in Paraguay. This expansion has been bolstered by a recent acquisition of facilities previously owned by another miner, Bitfarms. The company’s inception was motivated by Holmes’s attempt to launch a spot bitcoin exchange-traded fund (ETF) in 2017.
From its outset, HIVE has been committed to sustainability, with its first facility utilizing geothermal energy in Iceland and a second powered by hydroelectricity in Sweden, mere kilometers from the Arctic Circle. By the third quarter of 2025, HIVE anticipates having approximately 430 megawatts (MW) of energy infrastructure operational, sufficient to power a city of 86,000 homes.
Holmes is scheduled to speak at the BTC & Mining Summit at Consensus 2025 in Toronto on May 14-15. In anticipation of the event, he has shared valuable insights regarding HIVE’s position in the mining industry, the company’s shift towards recycling its GPUs for artificial intelligence applications, and his outlook for the future.
CoinDesk: HIVE has been repurposing some of its GPUs for AI. Can you tell me about that?
Frank Holmes: At one time, we had 130,000 AMD chips and were responsible for about 6% of global ether mining. This operation was notably profitable. However, following Ethereum’s transition to Proof-of-Stake in 2022, we pivoted to leverage our expertise in GPU technology by replacing many of our AMD chips with Nvidia chips, allowing us to venture into AI.
The contrast between a basic ASIC miner and Nvidia chips is comparable to driving a Bronco versus a Ferrari. The intricacies of a high-performance vehicle correlate with GPU technology. While setting up Antminers S21 Pros is a straightforward process, integrating Nvidia H100 chips can take up to six weeks to fully operationalize.
Building infrastructure for bitcoin mining typically costs about a million dollars per megawatt of electricity, whereas establishing facilities for high-performance computing (HPC) can escalate to ten million dollars per megawatt, excluding equipment costs. The stringent technical requirements for HPC necessitate significantly more logistical engineering and capital.
In bitcoin mining, energy sourcing can include variable sources, with cost-effectiveness being a primary concern. For instance, in Sweden, we can adjust our energy consumption from 30 megawatts to just three in a matter of seconds, allowing for versatile energy management.
Conversely, HPC demands unwavering uptime, necessitating a backup of generators and batteries, making energy stability far more critical in that domain.
Regarding the Trump administration’s tariff strategy, how does it affect your operations?
We stay attuned to developments in the U.S. due to its significance for branding and liquidity. However, we have thus far avoided direct operations in the U.S. due to concerns about regulatory overreach. Following Trump’s election, we strategically relocated our head office to the U.S. to qualify for various indexes, even though we do not currently have mining operations on American soil.
In contrast, you have significantly expanded in Paraguay.
Paraguay’s situation with Bitfarms appeared to create a leadership vacuum after their CEO left. The Paraguayan government’s introduction of a tariff on bitcoin miners added to the instability, which I believe will soon be resolved. We are excited about our takeover and growth in Paraguay, where we are currently constructing facilities and have already deployed several machines.
Paraguay offers unique advantages, including access to the largest dam in the Western Hemisphere, shared with Brazil. This immense 14-gigawatt resource presents a favorable opportunity for us and a reliable return for the Paraguayan government, promoting a win-win scenario focused on green energy.
Are there any other regions you are considering for expansion?
We are evaluating proposals from East Africa, particularly Ethiopia, where abundant stranded electricity exists. Other miners have established operations there, benefitting from funding from institutions like the World Bank. Our goal is to grow from 6 EH/s to around 25 EH/s within the next nine months.
How do you assess the current state of the mining industry?
At present, I don’t find it to be in a healthy state. Many large U.S. companies appear to be shifting focus away from expanding mining operations towards simply accumulating bitcoin on their balance sheets, following a model akin to that of Michael Saylor. For the Bitcoin ecosystem to thrive, however, we need growth in mining operations, contributing to greater decentralization.
What Bitdeer is doing with ASIC manufacturing is particularly savvy, especially with the founder’s experience from Bitmain. Their introduction of energy-efficient technology will be beneficial in today’s competitive capital markets.
In essence, bitcoin miners are poised to undergo a transformation similar to that experienced by gold miners when GLD debuted. This shift created a distinct separation between gold stocks and the GLD itself. In the coming years, while traditional gold bullion has outperformed the S&P 500, only select high-revenue gold stocks have flourished. HIVE’s royalty model ensures sustainability against market fluctuations, preserving jobs and optimizing operations during downturns.
