BLOCKSPACE: AI & BITCOIN
Episode: MINING: Inside Tether’s 50 EH/s Mining Empire w/ Elektron's Rapha Zagury
Date: Feb 26, 2026
Host(s): Charlie Spears & Colin Harper
Guest: Rafa Zagury, CEO of Electron

Episode Overview

This in-depth episode dives into Tether’s massive and quietly-assembled Bitcoin mining operation, with a spotlight on Electron, the company responsible for managing about 50 exahashes (EH/s) of Tether’s mining hash rate. The hosts are joined by Electron’s CEO, Rafa Zagury, for a discussion covering the evolution of this mining juggernaut, the dynamics between Tether and Electron, the shifting energy landscape, competition with AI/HPC data centers, and mining strategy in an uncertain market. Zagury also shares nuanced insights into global mining opportunities, capital efficiency, and what the future holds for large-scale miners in the post-halving era.

Key Discussion Points & Insights

1. Bitcoin Market Conditions & Mining Sentiment

[05:09–07:40]

• Market Volatility and Crypto Predictions:
  • Zagury refuses to give price predictions, citing Ray Dalio: “Those who live by the crystal ball eat shattered glass.”
  • He notes Bitcoin remains in a price discovery phase:

    “I think the odds are much better on the upside than they are on the downside. But again, it’s bitcoin. I wouldn’t be surprised if it goes another 50% from here. I wouldn’t be surprised, you know, if we see an all time high in a month.” (Rafa, 05:51)

  • Hosts observe typical cyclical market capitulation is underway, seeing non-believers exit as a bullish sign.

2. Rafa’s Background and the Birth of Electron

[08:09–11:16], [11:24–14:46]

• Rafa’s Unique Perspective:

  • Grew up in Brazil during hyperinflation, had a tech/financial background, and worked on Wall Street.
  • Left a successful fintech exit to “go all in” on Bitcoin in 2022-23, initially as a portfolio theorist (“Nakamoto Portfolio”) and later into mining.

• Company Origins:

  • Electron, spun out of Swan Bitcoin’s mining team, is now one of the largest miners globally, with about 50 EH/s under management.
  • Initially adopted an “asset-light” model (managing sites without ownership), now shifting into selective site ownership.
  • Tether provided the strategic capital and partnership for rapid scaling.

3. Unpacking the Swan-Tether-Electron Legal Saga

[14:46–16:53]

• Brief Context:
  • The legal drama between Swan, Electron (formerly Proton Management), and Tether is acknowledged but not deeply discussed.
  • Rafa reiterates that the team has focused on “building and scaling.”

    “We’ve been very quiet about that… Unfortunately we can’t talk too much about litigation, but I think it did a good job covering it… It shouldn’t be litigated on public opinion or on Twitter or anything like that.” (Rafa, 15:59)

4. Tether’s Mining Strategy & Partnership Structure

[18:16–25:52]

• Tether’s Holistic Asset Strategy:

  • Diversification is central; Tether owns hard assets (real estate, gold, mining ops) alongside highly liquid US Treasuries.
  • Within mining, Tether has many ventures but is consolidating most mining assets under Electron due to alignment and institutional discipline.

• Mining vs. Holding Bitcoin:

  • Rafa notes that for most, buying bitcoin is generally better than mining, but strategic, well-structured mining adds diversification, smoother returns, and optionality (e.g., potential synergies with energy assets).

    “If you just buy bitcoin and let it sit…nothing wrong with that. But having, you know, a business behind it that can be generating income that…can be substantially better than just buying bitcoin.” (Rafa, 25:52)

• Optionality through Mining:

  • Tether mining opens doors for grid management, AI/HPC pivots, integration with energy assets, and risk hedging.

5. Operational Details: Geography, Scaling & Governance

[33:12–40:50]

• Geographic Reach:

  • US: Texas (largest), Oklahoma, Wyoming
  • Canada: Small site
  • Norway: Small presence, not expanding
  • South America: Brazil—described as an emerging, highly promising opportunity due to excess renewable energy and utility-level curtailment.
  • Vision: Deploy small, test deployments in new regions, scaling only after success.

• Operational Discipline:

  • Institutional-grade processes—investment memos, rigorous modeling (“You either run the numbers or the numbers run you over.”).
  • Transparent and hands-on management, especially vital in an “amateur-heavy” industry.

• Lessons from Bad Sites:

  • Experienced “disasters” with unreliable hosts or regulatory nightmares—always initiate with small deployments to minimize risk.

6. AI & HPC Impact on Mining, Power Markets & Bifurcation

[40:50–49:11]

• AI Changing Power Market Dynamics:

  • Exploding demand for high-quality, grid-adjacent, redundant sites for AI/HPC.
  • Mining cannot and should not compete for these premium sites; focus remains on lower-cost, fit-for-purpose facilities.

• Anticipated Market Shift:

  “People think all electrons are the same right now... There’s going to be a flushing out. I think we’re six months to a year away from… a bifurcation of the market.” (Rafa, 00:00 & 42:28)

  • Many minor-grade sites aren’t suitable for AI, so repricing and market segmentation is expected.

• Bullish on Energy Innovation:

  • Rising power demand will stimulate new energy development and grid innovation, which is “massive for humanity.”

    “There is a direct correlation between progress and energy use. And I think what we are seeing with the need for power, for AI, for bitcoin mining, it’s actually extremely bullish for human civilization in the medium to long term.” (Rafa, 00:52 & 42:28)

• Mining vs. AI Pivot:

  • Electron remains 100% focused on Bitcoin mining, unlike most peers pivoting to AI/HPC.
  • Emphasizes their “lean” structure and cost-control, citing SG&A at just 3.8% of revenue (industry peers as high as 20–50%).

7. Mining Economics & Halving Era Outlook

[49:31–57:27]

• Network Hashrate Trends:

  • Recent hashrate dropped from 1.275 ZH to 800 EH in a historically large pullback, signaling lower growth ahead.
  • ASIC demand is low, prices are falling, and only a few buyers (like Electron) are scaling.

    “Nobody’s buying machines at scale other than us, right?” (Rafa, 53:45)

• Difficulty Adjustment as Self-Correction:

  • Long-run, the halving will force inefficient miners offline, favoring the most cost-competitive.
  • Optimistic this is a “contrarian” moment to double down on mining as others pivot to AI.

8. Unseen Opportunity: Utilities & Mining Convergence

[57:46–59:44]

• Energy Grid Synergies:
  • Predicts “early innings” for integrating mining with utility load management (e.g., using miners instead of “giant toaster” load banks).
  • Expects utilities to wake up to the unique flexibility and value bitcoin miners provide:

    “When we started, [utilities said] ‘I don’t want anything to do with bitcoin mining…’ Now…these guys…get paid daily in bitcoin, and they like it.” (Rafa, 57:46)

9. IPO Plans & Governance

[59:44–61:03]

• No Immediate IPO Plans:
  • Prepares company for future optionality (“maybe” an IPO one day), but has sufficient backing and prefers the private route—at least for now.

Memorable Quotes & Moments

• On Market Cycles & Timing:

  “By the time that everybody’s capitulating… it’s usually the right time to be positioned. I think bitcoin is much bigger than these cycles… Long term, this is very, very bullish.” (Rafa, 07:20)

• On Investment Philosophy:

  “You either run the numbers or the numbers run you over.” (Rafa, 18:16)

• On Energy and Progress:

  “Demand leads to innovation… There is a direct correlation between progress and energy use.” (Rafa, 00:00 & 42:28)

• On Surviving Industry Turbulence:

  “I like that it’s raining and I like that, you know, we’re keeping our course. This is when we’re going to overtake people. Maybe we’re wrong. Maybe bitcoin mining is dead… But mining by definition has a self correcting mechanism through the difficulty adjustments.” (Rafa, 49:31)

Timestamps for Key Segments

• 05:09 – Bitcoin volatility & price discussion
• 08:09 – Rafa’s background & how Electron started
• 11:24 – Structure, assets, and scaling of Electron
• 14:46 – Swan-Tether-Electron legal backstory
• 18:16 – Tether’s mining strategy; benefit of mining vs. buying
• 25:03 – Why Tether is a miner (portfolio rationale)
• 33:35 – Where Electron mines: US (TX, OK), Brazil, Canada, Norway
• 40:50 – Strategy: small-scale testing in new geographies
• 42:28 – How AI/HPC competition is transforming power and mining markets
• 49:31 – Mining costs, efficiency, and post-halving survival
• 53:45 – Network hashrate and ASIC market trends
• 57:46 – “Unsexy” utility-company mining synergies
• 59:44 – IPOs and company governance

Tone and Language

• Thoughtful, analytical, and candid; Rafa frequently punctuates technical analysis with personal anecdotes and market-wide observations.
• The hosts maintain a blend of technical curiosity and industry-wide perspective.

For Listeners

This episode is a must-listen for anyone interested in industrial-scale Bitcoin mining, power markets, and how legacy crypto giants like Tether are pivoting from tokens to tangible, cash-generating infrastructure. It’s dense with insights about industry economics, energy-market shifts, and the real-world challenges of running a global mining business as the world’s power needs and market incentives change.

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