Greg Beard ranks among Wall Street’s most successful natural resource investors of the past two decades. He notched a superstar career buying and selling oil and gas companies at Apollo Global Management, then picked Bitcoin as gusher for the ages. Beard’s co-founded what’s slated to become one of world’s largest Bitcoin mining outfits in the old-time Pennsylvania coal fields. Today, the 50-year old adventurer views Bitcoin’s 40% decline from its October peak of over $60,000 as a matchless buying opportunity. “It’s hard to know where Bitcoin’s price will be at, say, the end of the year,” he told Fortune in a phone interview from a family ski vacation in France. “But if you’re a fundamental-style investor that believes in Bitcoin as a store of value, it should be worth multiples of today’s price in five years, I’d say at least five times.” If he’s right, the lead cryptocurrency would be selling for at least $200,000 by the spring of 2027. Beard sees momentum building rapidly as folks and funds increasingly believe that Bitcoin’s the ideal fortress for protection against an inflation-ravaged dollar. “The better Bitcoin does, the more interest it will generate,” he says. “We’ll see a compounding effect.”
Beard also gives Bitcoin the edge over gold. “I’m not putting gold down, it’s a 2000 year success story,” he notes. “But when its price rises sharply, more gold shows up. The number of Bitcoin is fixed forever at 21 million. It also has the edge over gold because it can be used for no-friction buying and selling of goods and services.” As a Bitcoin super-bull, Beard naturally sees his favorite far outperforming the S&P 500 and NASDAQ in the years ahead. But to outpace those markets, he admits, Bitcoin will need to shed the way it now trades, which is more like a super-high risk growth stock than the better-than-bullion vehicle that offers both big price growth and a thick shield against hard times. “For its price to take off,” he says, “Bitcoin needs to graduate from its strong correlation to the Cathie Wood crowd and high-priced, high-tech equities.”
A big bet on Bitcoin mining
Beard started his career as a financial analyst at Goldman Sachs, then specialized in private equity deals at buyout firm Riverstone Holdings. During a ten year span at Apollo, Beard rose to become a senior partner and global head of the natural resource group. Over those years, he raised three funds totaling $7 billion, and captured a number of trophy deals. Among them: Building Athlon Energy into a large shale oil and gas producer in the Texas Permian Basin. Athlon went public in 2013, and a year later, Encana purchased it for almost $6 billion. The Apollo fund’s $400 million investment mushroomed 7-fold to $2.3 billion. He also spearheaded a partnership with of DoublePoint Energy that handed Apollo investors rich return when Pioneer purchased the driller in 2021 for $6.4 billion.
Beard left Apollo in 2019 to make a most unusual transition: Re-purposing aging power plants in rural Pennsylvania that burn waste coal as major Bitcoin manufacturers. Beard’s odd couple partner is Bill Spence, a folksy veteran of the Keystone State’s coal country who ran a business scooping up the mountains of black stuff discarded decades ago by the long-shuttered mines, and bringing it to the plants to be burned––a business heavily subsidized by the state. Beard and Spence’s have epic ambitions for their venture, Stronghold Digital Mining (SDIG).
In its IPO filing, Stronghold predicted that once all its machines are up-and-running by the end of 2022, it could garner a 5% share of all global Bitcoin production. If the company achieves its projections, it will be generating revenues of around $650 million a year by the close of this year, and pocketing fat margins. The markets, however, aren’t so sure: After opening near $28 at the October IPO––Bitcoin was then trading at around $60,000––its shares have tumbled alongside Bitcoin’s price to hover around $9 in mid-March. Still, Stronghold’s total market value, including private holdings by Beard, Spence and other early investors, now sits at approximately $500 million. Stronghold is benefiting from a tieup with Northern Data of Germany, a large manufacturer of mining equipment, to surmount one of the Bitcoin industry’s biggest problems, the shortage of the specially-designed computers that run the “hashes” or codes that win Bitcoin. In December, Stronghold announced an agreement to purchase 4,300 miners at discounted prices from Northern under a profit-sharing arrangement. To date, Stronghold’s received 1,000 of those miners.
Bitcoin as an investment
Beard warns against mistaking Bitcoin’s drop from last fall’s highs as a sign it will languish moving forward. “Bitcoin isn’t struggling, it’s just a matter of where you start and stop the window,” he says. “Overall, it’s been a fabulous investment over the past three years. Any quarter or month or week time frame doesn’t tell you much.” The problem, he says, is that Bitcoin behaves like wildly-careening, mega-expensive tech stocks. “It has a high beta relative to the markets,” he says. “It appears that the group that buys and sells Bitcoin is the same as the group that buys and sells the Cathie Wood ARK funds. It’s clear it’s highly correlated with high-risk equities.” But that attachment to the most volatile of tech, he predicts, will be short-lived. “Bitcoin is still in its infancy,” he says. “It will mature rapidly.”
He believes Bitcoin will eventually break loose start trading on its own fundamentally sound dynamics. “You’re already seeing the beginnings of that trend in the institutional adoption that’s leading to higher trading volumes,” he says. He believes Bitcoin will trade as a currency, but one that’s far more stable than the dollar: “As we’re now seeing with rampant inflation, the dollar isn’t capped. But Bitcoin is capped. The day will come when the dollar crashes, and Bitcoin proves the stable one. That will demonstrate its reliability as a store of value.”
Biden’s executive order on Bitcoin is good news
“The Administration’s executive order to have multiple agencies study and get observations on Bitcoin by September is a positive,” says Beard. It’s encouraging, he says, that the order imposed no restrictions on cryptocurrencies for now. “The order suggested that the U.S. didn’t just take a knee-jerk reaction, it considered that the U.S. can be the long-term world and market leader in crypto and blockchain,” he adds. For Beard, it’s also a potential plus that the U.S. is studying a plan to create a digital dollar. “It would be contradictory to favor a digital dollar, and not embrace Bitcoin,” he says.
Conventional banks are scared of Bitcoin, he adds, for good reason. “Bitcoin and crypto remove banks from the middle of credit card payments or money transfers,” declares Beard. “Their transactions can be done by blockchain, with no bank involved. Ultimately blockchain and stores of value like Bitcoin will eliminate the ‘middle man’ in a huge share of today’s traditional banking activity.”
Beard also reckons that Bitcoin will gain more and more traction for everyday purchases, fueling demand that will swell its value as a currency. “Retailers, think of Amazon, will have their own Bitcoin wallets as it becomes less volatile,” he says. “And people will put Bitcoin in their own wallets, see the stores’ ‘pay with Bitcoin’ option, and click,” he predicts.
All in all, he thinks that over time, people will realize that Bitcoin emulates the qualities of gold. “Humanity gives gold huge value,” he says. “For Bitcoin’s price to take off, society has to adopt it and give it great value. That will happen because of its strong fundamentals. Bitcoin’s been around for just a decade, it has plenty of time to reach gold’s status.”
How Bitcoin can fix America’s wobbly electrical grids
Besides launching Stronghold, Beard’s started another venture aimed at ensuring that America’s businesses and households have sufficient electricity in the shift to green power. Late last year, Beard Energy Transition Acquisition SPAC (BRD) raised $200 million as a first step towards building a specialist in infrastructure that will “optimize the demand and supply sides of the electrical power grids supplied by intermittent renewable energy.” That’s an essential and overlooked mission, argues Beard. He insists that the idea the U.S. can move to far greener supplies without a substantial backup from the likes of nuclear and natural gas is an illusion. “If you’re talking about unplugging and and replacing fossil fuels with wind and solar, you’ll end up with a grid that can’t service demand and an unhappy customer base,” he asserts. “People want access to a constant supply of power wind and solar don’t provide.”
For Beard, battery technology isn’t anywhere near the point where big storage units could harbor even a fraction of the juice needed when it’s cloudy or raining, or when windmill blades don’t whir. He claims that Bitcoin mines could prove a big part of the solution by filling the gap. “What Bitcoin brings to market is a way to have old fossil fuel plants stay online, so all that power going to the data centers goes down when the grid needs power, and opens new capacity. While wind and power is intermittent, Bitcoin use is steady but interruptible when required. Bitcoin mines can free up energy in milliseconds.”
Beard praises Texas for welcoming Bitcoin miners to backstop its wobbly grid, which suffered a famous breakdown in the winter of 2021. “Texas stands out in finding a solution,” he says. “The state welcomes Bitcoin as a supply source when wind and solar fail.” Indeed, Greg Beard is one of Bitcoin’s most sophisticated evangelists. And the story of Bitcoin’s dominance or demise will prove one of the great financial spectacles of the decades ahead.
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