Newsletter #00020

Happy Friday!

Do you know what real estate wholesaling is? If not, here’s a quick explainer.

1. Get a property under contract at below market value.

2. Find another buyer for that same property that’s willing to pay more than your contract price.

3. Assign that contract to them and profit the difference.

There’s a dozen ways you can structure these deals that I won’t get into. Many a hotel seminars have been taught about get rich quick easy simple wholesaling profits, but nothing is as simple as it seems, right? Don’t go to those seminars.

And I really don’t like residential wholesalers, because many of them are outright crooks that I wouldn’t trust with a used 1993 550cc Kawasaki motorcycle. You almost have to be shady with all parties involved to be really successful at residential wholesaling.

But commercial is an entirely different ball game.

My buddy Connor just profited $352k on a wholesale self storage deal. He could have made more by buying it himself, but risk adjusted, he made the right call. He didn’t need to invest a dime of capital or undertake any of the post-close risk that comes with buying any piece of real estate.

His weekly newsletter is great BTW. And I’m not being paid to plug it. It’s a lot like mine, except shorter.

That’s an awesome story in and of itself, but I want to take it up a notch.

There is a MASSIVE opportunity for someone to wholesale industrial properties to BTC miners. You’re getting an inside look from the insider himself, because I AM a BTC miner. I know this market inside and out.

Businesses exist thanks to uneven distribution of information and resources.

Think of it this way:

1. A soccer mom is thirsty and driving home from yoga.

2. A 9 year old girl has access to lemonade on the side of the road that the mom is driving home on.

3. Supply + demand + convenience = the 9 year old is closing a sale.

The 9 year old knew that thirsty moms would be driving down this road, and has access to resources (lemonade). commerce enters the room

I made millions because iPhone repair shops didn’t know who to buy cheap iPhone parts from in China. I did. So I sold them to them.

CPAs make millions because they know finance and business owners don’t.

Uneven distribution of information and resources.

I paid above market for this property behind my house. I literally paid too much! Why?

1. Because I knew that I could convert it to a better and higher use than a woodworking shop.

2. Because I wanted to control who lived behind me.

3. Because it was one of the only buildable sub 2 acre lots in my city, thanks to it being grandfathered in.

4. Because I knew that Texas Snax would one day be a tenant.

5. Because I knew that I could do any number of things with it in the future, such as the sports complex idea.

6. Because I wanted to put in a road so i could have a 2nd driveway leading from my house to the road behind me.

Asymmetric information works both ways. Because I had more plans and ideas for the property than the average investor, I paid more for it. The seller wanted way too much and so it sat on the market for years, until I paid what he was asking.

Ok, back to Bitcoin mining. Here’s what this process will look like in 3 steps:

1. Find a property that would be great as a BTC mine and get it under (an assignable) contract.

2. Find a BTC miner that wants to buy or lease it.

3. Assign the contract and profit at close.

Step 1: Find a property

To have a profitable BTC mining facility you need a few things:

1. Covered space.

2. Cheap power (under 6 cents per kWh)

3. Heavy power already on site

If you don’t have all 3 of these things you will have to pay a ton and wait a ton to get what you need. Transformers are EXPENSIVE and take many months to arrive.

If local power is expensive, just forget it altogether.

If the climate is hot, you’re still okay if you install enough fans to move hot air out, but ideally the climate should be cooler. Texas is the mecca of mining, after all.

So if I were cold calling owners or searching on Crexi or Loopnet I would need this type of property:

1. The words “Heavy power” or “MW” or “megawatt” in the description

2. Not too big, because you don’t need much space. 2k - 20k square feet

3. Sub 6-7 cent power

4. An old manufacturing plant. Think paper mill, auto manufacturing, or anything requiring heavy machinery.

5. If the listing has BTC or Bitcoin or mining in the description, then the added value is already priced in, so just ignore. Make that a negative keyword, actually.

You want to find a property owner or broker that doesn’t know what they have. This is more common than you’d think. Cheap heavy power is the key.

You want a facility with at least 1MW of power, but the more, the better.

You can also cold call landowners that own property next to substations in OK, WA, OR, PA, NV, WY, OH and TX. There are a TON of miners that buy or lease land like that. Those states are mining friendly.

Where to find a map of all the substations? Right here.

Next step? Get it under contract. EVEN IF IT IS FOR LEASE ONLY. But preferably it’s for sale.

You’ll want to use a contract that’s assignable, like this one. Lock it up under contract for as long as the seller will allow. 3-6 months. The more time you buy the higher likelihood if finding the most profitable buyer.

Use rows 116+ of this sheet to get a feel for pricing per MW on these types of facilities.

I buried the lead right here: