Frank Holmes has an extensive background in asset management, having financed gold mining endeavors, participated in the establishment of gold royalty firms, and developed financial products for the airline sector—all through U.S. Global Investors (GROW), the publicly traded asset management company he has led since 1989. He also chairs HIVE Digital Technologies (HIVE), a bitcoin mining operation valued at $345 million, which is rapidly expanding its reach in Paraguay following a recent acquisition of facilities that were formerly operated by another mining company, Bitfarms. HIVE was established after Holmes’ unsuccessful attempt to launch a spot bitcoin exchange-traded fund (ETF) in 2017.
### HIVE’s Sustainable Energy Approach
From its inception, HIVE has prioritized sustainable energy solutions. Its initial facility utilized geothermal energy in Iceland, while another leveraged hydroelectric power in Sweden, located just 100 kilometers from the Arctic Circle. The company aims to have approximately 430 megawatts (MW) of operational infrastructure by the third quarter of 2025, which is sufficient to supply energy for around 86,000 homes.
### Insights Ahead of the BTC & Mining Summit
Holmes is set to speak at the BTC & Mining Summit at Consensus 2025, scheduled for May 14-15 in Toronto. In anticipation of this event, he discussed HIVE’s role within the larger mining sector, the company’s initiative to repurpose its GPUs for artificial intelligence (AI) applications, and his vision for the future. This interview has been edited for brevity and clarity.
### HIVE’s Shift to AI Technologies
CoinDesk: HIVE has been repurposing some of its GPUs for AI. Can you elaborate on that?
Frank Holmes: Previously, we operated 130,000 AMD chips for mining ether (ETH), capturing about 6% of the global ether mining market, which was highly profitable. However, following Ethereum’s shift to Proof-of-Stake in 2022, we pivoted from mining. Utilizing our expertise with GPU technology, we transitioned many of our AMD chips to Nvidia chips, enabling us to explore AI applications.
The distinction between a standard ASIC miner and Nvidia chips is akin to comparing a Bronco to a Ferrari. The sophisticated mechanics and precision involved in high-performance vehicles parallel the intricacies of GPU technology. When we receive Antminers S21 Pros, it only takes us six hours to get them operational. In contrast, establishing Nvidia chips like the H100 can take six weeks to set up and optimize, highlighting the vastly different skill sets required.
### Infrastructure and Energy Costs
Building infrastructure for bitcoin mining involves an investment of around one million dollars per megawatt of electricity. In contrast, high-performance computing (HPC) infrastructure demands significantly more investment, approximately ten million dollars per megawatt, not including equipment costs. This is due to the increased logistical and engineering requirements.
When sourcing energy for bitcoin mining, we can utilize variable energy sources, with cost efficiency being crucial. In Sweden, for instance, our operations can fluctuate between 30 megawatts and three megawatts in just 15 seconds, allowing us to either draw from or supply energy back to the grid. For HPC, continuous uptime is essential, necessitating backup generators and batteries to ensure stable energy supply, making energy consistency a critical factor.
### Regulatory Climate and U.S. Operations
How does the Trump administration’s tariff strategy affect your operations?
We pay attention to developments in the U.S. because it has significant implications for our branding and liquidity. Historically, we opted not to operate in the U.S. due to concerns about regulatory overreach. The regulatory agencies in Washington have been known to scrutinize the crypto sector aggressively. As a result, we decided to remain neutral in that jurisdiction. However, following Trump’s election, we strategically moved our headquarters to the U.S. to qualify for various indexes, although we do not yet have mining operations there.
### Expansion in Paraguay
You’ve made substantial advancements in Paraguay.
The situation surrounding Bitfarms in Paraguay was complicated by the departure of its CEO, creating a leadership vacuum. Riot (RIOT) attempted to acquire them during this period of instability. Additionally, the Paraguayan government imposed a tariff on bitcoin mining, which was unexpected but temporary. This led to uncertainty for the new CEO, who shifted focus towards the U.S. market. Consequently, they merged with Stronghold (SDIG), effectively becoming an American entity.
Bitfarms still operates with 80 megawatts of power in Paraguay, but we are in the process of taking over and completing construction. We are already getting some machines operational and are excited about our growth trajectory for 2025. Unlike many of our competitors, we have avoided taking on risky convertible debentures to purchase bitcoin, which has often led others into challenging financial positions. Our focus remains on stable growth without excessive debt.
### Strategic Advantages of Paraguay
We see significant opportunities in Paraguay, which is home to the largest dam in the Western Hemisphere, shared equally with Brazil. This dam produces 14 gigawatts of power and stretches over eight kilometers. If Paraguay does not utilize its electricity, Brazil benefits from it. Bitcoin mining can help enhance their infrastructure while providing revenue in U.S. dollars each month, creating a mutually beneficial situation for both the Paraguayan government and HIVE shareholders as we remain committed to sustainable energy practices.
### Future Expansion Plans
Are there other regions you are considering for expansion?
We are evaluating proposals from East Africa, particularly Ethiopia, which possesses a wealth of untapped electricity resources. Other miners have already ventured into that territory, capitalizing on funding from the World Bank and other organizations for dam construction. However, the lack of developed power lines remains a significant challenge and expense. We aim to increase our operational capacity from 6 EH/s to about 25 EH/s within the next nine months.
### Current State of the Mining Industry
What is your assessment of the current state of the mining industry?
I believe the current landscape is not particularly healthy. Many major U.S. corporations are not prioritizing mining expansion; rather, they are focused on accumulating bitcoin for their balance sheets, following the example set by Michael Saylor. For Bitcoin’s ecosystem to thrive, however, we need to see growth in both nodes and mining operations, fostering greater decentralization. Some companies should consider investing more in the Lightning Network or Ordinals infrastructure to differentiate themselves.
What Bitdeer (BTDR) is doing with ASIC manufacturing is quite astute. The founder, a co-founder of Bitmain, is introducing innovative technology that is energy-efficient, which positions them competitively in the capital markets.
Bitcoin miners may experience a transformation similar to that of gold miners in the past. The introduction of GLD for bullion created a distinct separation between gold stocks and the GLD. In the current century, gold bullion has outperformed the S&P 500 significantly, but only top-tier gold stocks, particularly royalty companies, have truly excelled. HIVE has consistently maintained a royalty model that generates high revenue per employee, enabling us to weather market downturns without resorting to mass layoffs.
