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Show Summary
In this conversation, Dan Thompson shares his journey from being a stockbroker to becoming a successful real estate investor and Bitcoin miner. He discusses the integration of Bitcoin mining into real estate investments, the importance of energy efficiency, and the potential of tokenization in real estate. Dan also touches on the regulatory landscape surrounding tokenization and the opportunities it presents for both accredited and non-accredited investors.
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Investor Fuel Show Transcript:
Dan Thompson (00:00)
So we did it. So him and I built this student housing complex. And ⁓ as you’re building real estate, you’re always talking about cashflow. And he says, ⁓He says, one of the ways we could potentially add cashflow is to do some Bitcoin mining on the balance sheet. And so I wasn’t necessarily new to Bitcoin, but I was new to the mining side. ⁓ And he had been doing it since 2011.
Dylan Silver (02:01)
Hey folks, welcome back to the show. Today’s guest, Dan Thompson, is a real estate investor active across multiple segments. And he’s also active in crypto and Bitcoin, Bitcoin mining and tokenization. We’ll talk about a number of these today. Dan, welcome to the show.Dan Thompson (02:19)
Hey, thanks, Dylan. Glad to be here. Should be fun.Dylan Silver (02:21)
It’s great to meet you, Dan, great to connect. And I definitely want to talk about crypto and Bitcoin and mining all new to me. before we hop in there, I do want to ask you how you got started in real estate.Dan Thompson (02:34)
Well, so I started actually as a stockbroker in 1986. Yes, I’m an old guy. And ⁓ after the dot com boom and bust of the 90s, I knew I had to find a better way for my clients. Started diving into all kinds of things. What we kind of landed on was how to use life insurance to get into other assets. And the perfect asset for me at the time was real estate. Excuse me.We started packing policies and then using the policies as our leverage into real estate. We did ⁓ all sorts of different real estate. I actually started building homes with my own company and then we jumped into some commercial properties. One of the properties we like best is student housing. we had a, I was talking about real estate on one of my, ⁓
Dylan Silver (03:23)
Yeah?Dan Thompson (03:29)
YouTube channels or one of my videos and a guy calls me from Houston and he says, Hey, Dan, I got this opportunity to, to build a student housing complex at Texas A ⁓ And I said, well, let’s take a look. Anyway, looked great.So we did it. So him and I built this student housing complex. And ⁓ as you’re building real estate, you’re always talking about cashflow. And he says, ⁓
He says, one of the ways we could potentially add cashflow is to do some Bitcoin mining on the balance sheet. And so I wasn’t necessarily new to Bitcoin, but I was new to the mining side. ⁓ And he had been doing it since 2011.
So long story short, we created a mining company. We put it on the balance sheet of the student housing to create more cashflow. And lo and behold,
We’re probably not far away before we’ll do ⁓ just as much, if not more, in cashflow in the mining side as the student housing side, but together they’ve just been just amazing. So it’s a great coupling.
Dylan Silver (04:37)
When we talk about Bitcoin mining, crypto mining, I’m a fish out of water in this space, so bear with me here. When I think of this, I’m thinking of some type of machine that is high in electricity consumption that someone might have in their home. Am I totally off base here? Walk me and our audience through what is mining and what’s the scale and scope of it.Dan Thompson (05:47)
Yeah, you’re pretty close other than you really can’t do it out of your home anymore. My partner, that’s how he did it. He built his own machines, did it right out of his home, but the cost of power is just prohibitive in a residential area. So yeah, now it’s gotten to the point where it’s very sophisticated, very high tech. We use hydro-cooled containers, but yeah, it’s just super computers keeping the network pure, unhackable.making sure transactions ⁓ are done with thousands and thousands of computers backing up the transaction. yeah, and mining is, I don’t know where they came up with that word. guess in the sense it’s mining in that you’re creating new Bitcoin when you’re part of this whole network. maybe, but really what it is to me, it’s like being a huge Visa MasterCard, just making sure
that all the transactions are verified and clean. And then for doing that, you get paid, if you will, it’s called a reward, you get rewarded in Bitcoin, and that’s how you amass Bitcoin.
Dylan Silver (06:55)
Now, what’s the infrastructure like needed for this? You mentioned that it started out, maybe you could do it in someone’s home, but now ⁓ it’s cost prohibitive. Are these like warehouses that like industrial warehouses that people are doing them out of? What does it look like?Dan Thompson (07:09)
You can, and a lot of people do, it’s actually, they all come, they come in at, at least the way we do it, we do it in a container. So literally anywhere I can hook up to power, can put this container. Each container holds, I don’t know, 180 to 200 different computers or, and so as long as you’ve got power and, you know, some maintenance people on hand, you can put them almost anywhere.Dylan Silver (07:35)
Again, another question for you. What’s the risk for someone who may be setting up a Bitcoin mining ⁓ infrastructure? Is there a risk to them? Could this go down? Could they lose their investment or is it relatively low risk?Dan Thompson (07:53)
Well, it’s relatively low risk if you can keep up. So you got to imagine every seems like every six to eight months, a faster computer comes out, ⁓ better technology on cooling and all those things. If you have a plan to keep up with new technology, I think it’s one of the safest things you can do. If you’re going to just plow a bunch of money in today with no plan ofhow to keep up. Four or five years from now, you’re probably gonna be way behind and you’re gonna end up just unplugging your computers because they’re costing you more in power than they’re delivering in rewards.
Dylan Silver (08:33)
This is a very interesting area of conversation. I’m listening to you talk about this, I’m thinking about the ways where we experience inflation in our lives related to energy consumption. know, something like solar panels and, you know, electric cars. Do do does this in some way ride parallel to that? Like if you if you have energy efficiency overall and you’re mining Bitcoin that you could potentially ⁓ not just⁓ power your home, but also power your bank account to an extent.
Dan Thompson (09:05)
That’s a good way to put it. Yes. Look, it comes down to this. The cost of a Bitcoin is your cost of power. So if you’re getting relatively inexpensive power, you’re picking up Bitcoin sometimes at less than half its trading price. ⁓ and oftentimes we can even do better than that. But the idea is if you can get to whether it’s solar, natural gas write off or burn off.Now we’re getting back into nuclear, it looks like. So between AI and all the data centers, power consumption is going up like, I mean, multiples. And so they are coming up with better and more efficient ways to generate that power. And if you can tie into that, which we’ve been very fortunate to be able to do that, then ⁓ it’s a very, profitable venture.
Dylan Silver (09:59)
Now, when people are running large scale Bitcoin mining operations, are they relying on clean energy for this to reduce their costs? Is that in some ways maybe cost prohibitive because they have to put the money up front to get the clean energy out there and then it also doesn’t maybe power it 100%. So they’re also relying on the grid as well.Dan Thompson (10:56)
Yeah, that’s definitely true. ⁓ It doesn’t necessarily need to be clean energy. ⁓ You get some nice tax benefits using clean energy. So it’s not a bad idea to go down that path. ⁓ You know, we’re finding Texas, Wyoming, ⁓ where else? ⁓ We’re actually in Arkansas. So there’s different places that are developing clean energy, particularly solar. But we found thatthat hydro dams, things like that are actually very efficient in generating that power.
Dylan Silver (11:33)
Okay, I want to pivot a bit here and ask you how does that come in a player? So I’m thinking a hydro dam that’s I’ve never seen someone hook into a hydro dam and forgive me for my thousand foot view looking looking in on this. This is all new to me. So would this be like a partnership with the municipality or is the dam making it so that the energy for the municipal area is lower overall than it would be in an area without a dam?Dan Thompson (11:57)
Exactly. Yeah, that’s really, that’s really, you hit it right on the head. The hydropower will come and it’ll be for a specific area of that, ⁓ you know, whether it’s an entire city or county, and then they get lower power rates for being there. Yep.Dylan Silver (12:14)
Now, when we talk about pairing this with real estate investing, you talked about adding it to the cash flow, right, of the business. I guess the natural question for me and maybe some of our audience members is, why not make it a separate business? And is it beneficial to, all people who are investing in Bitcoin, to maybe consider adding it to their real estate business versus separating it entirely?Dan Thompson (12:39)
Yeah, that’s a great question. yeah, sometimes, look, I don’t recommend everybody go down and try to build a ⁓ data mining facility and do all that. ⁓ It’s an undertaking. What we did is we are tokenizing our operation. So we are splitting off the asset versus the yield. And I don’t want to get too complicated, but it’s very simple. We have a token.that you can buy that you now own the yield on the data center mining. So that yield then just becomes cashflow. It works well with real estate in the sense that real estate is always looking for cashflow. And so if I can add, I’ll give you a perfect example. We recommend somewhere between 15 and 20 % of the asset
value being in inside of our token. So let’s just make it real simple. Let’s say I’ve got a hundred million dollar apartment complex and I add 20 million of our token to that balance sheet. Well, now I’ve just increased the cash flow, appreciation of the Bitcoin that I get every month. So we pay out inside of that token all the Bitcoin that’s being mined each month.
right to their own app, right to their wallet, right on their phone. And that ultimately adds to the balance sheet of the real estate. And we use real estate just because we’re familiar with it. But this could be your business. This could be ⁓ on its own. It doesn’t necessarily need to be with real estate, but it works very well with real estate. Did that sound about clear as mud?
Dylan Silver (14:22)
Now, well,I want to dive into the tokenization aspect of it because you’re talking about tokenization for the Bitcoin mining locations themselves, right? But this could also be applied to ⁓ apartment complex. If someone wanted to tokenize an apartment complex, right?
Dan Thompson (15:22)
Yeah, for instance, we have that student housing complex at Texas A and we’re tokenizing each apartment. And so a family could come in and say, my kids are going to be going here for the next eight, 10 years. So they literally could buy the token and own that specific unit for their kids to live in for the next eight, 10 years. That’s just one small example.The tokenization gives liquidity to the owners. It’s the easiest way to raise capital. A lot of big real estate firms talk about going IPO someday and the hassle and the headache. Well, a good example, Grant Cardone is one of the apartment investors out there. He wants to go IPO someday, but it’s getting very complicated for him.
What he started doing is on his new projects, he’s putting like 15 % just directly into Bitcoin, which is great, but Bitcoin itself doesn’t produce yield and real estate investors love yield. So the way we’re doing it by tokenizing the mining, you get the yield off of the Bitcoin every single month and you can do anything you want with that yield. If you want to reinvest it back into the real estate,
keep it as Bitcoin. ⁓ Some people are selling the Bitcoin and buying more of the tokens so that their yield continually goes up. But really the whole point is that if you can add this asset to your real estate holdings, ⁓ more appreciation, more cash flow, ⁓ a little bit ⁓ added ⁓ safety net in our opinion because
The way the world’s going and the way we’re seeing institutions and banks, ⁓ the demand for Bitcoin is going up dramatically.
Dylan Silver (17:16)
When we talk about tokenizing real estate as a whole, I’m imagining that it’s somewhat tricky in a sense of the traditional bodies and governing authorities in the state may look at this and say, OK, well, you’re effectively creating a security. Right. And so then it becomes highly, highly legal.Is there a general, I suppose it’s probably complex, but is there a consensus on how people are gonna and individual states are gonna proceed with tokenizing real estate and making this an option for more investors?
Dan Thompson (17:52)
Oh, we made it really easy. actually do these as a security. you might be familiar with the term a Reg D. So it’s a Reg D offering that’s tokenized. So SEC is comfortable with it. The only thing you have to be cognizant of is that when you do a Reg D, you’re looking at accredited investors and they need to hold it for 12 months.After that, it becomes wide open. That token can ⁓ be traded throughout the whole world to anybody after those 12 months.
Dylan Silver (18:30)
Very interesting. it’s a way for folks who are even non-incredited investors to get access to like institutional grade investing opportunities.Dan Thompson (18:39)
Yeah, the SEC for some reason wants accredited investors in these things for at least 12 months. And then after that, I guess it’s been vetted. And now they can finally let the guy who really needs it get it. Accredited investors. I mean, I have a little bit of a issue there because I think, well, and I get it, but mom, pa, regular people need this stuff.And unfortunately, it taken up by just accredited investors and it’s kind of frustrating. I’d like to make everybody rich.
Dylan Silver (19:14)
I’m with you, Dan. And this term even accredited investors, the first couple of times that I heard it, I didn’t necessarily know what it what it meant. But now aware that it’s effectively a gate kept way to have access to institutional grade investing opportunities that the average person doesn’t have access to. Right. And so, you know, it’s there, like you mentioned, for maybe the protection of the retail buyer. ButIt does feel like from the outside looking in that, there’s all this opportunity that everyday folks are missing out on. But we are coming up on time here though, Dan. Where can folks go? Where can our audience go if they’re interested in reaching out to you or your team or if they’re interested in maybe some of the opportunities that you have going on in the mining space?
Dan Thompson (20:01)
Yeah, the easiest way to get a hold of me is my company is called Wise Money Tools and I’m on pretty much every social media channel ⁓ or Dan at wisemoneytools.com. But we can talk about tokenization. We can talk about how to add cashflow to your real estate. can talk about the reasoning for adding Bitcoin to your balance sheet. We can even show you how to leverage all this.through life insurance. I mean, we’ve got so many ⁓ strategies that are, I mean, I just got to tell you, they’re just crushing it. We’re loving it. People and investors are really appreciating what we brought to table.
Dylan Silver (20:42)
Dan, thank you so much for coming on the show today.Dan Thompson (20:44)
Absolutely. Good to be here.
