Doug Hardwick

This transcript has been edited for readability: Henry Harrison Welcome to the Entrepreneurship, Business, and Finance podcast. We’re fortunate to have Doug Hardwick with us today. Doug, how are you doing? Doug Hardwick I’m doing really good, Henry. How are you? Henry Harrison Doing well. Let’s start with your background. We work together in oil and gas, but you have other ventures as well. How did you first get started in the oil and gas industry? Doug Hardwick It was back around 2001 or 2002. A guy I had worked with in technology during the 1990s called me. He had moved into the oil and gas business and told me I needed to come over and work with him. That working relationship is really what got me into oil and gas, and I’ve been in it ever since. Henry Harrison That’s interesting because a lot of people might not see a relationship between technology and oil and gas, but there’s actually a huge connection. Do you want to talk about that a little bit? Doug Hardwick There really is. In my opinion, the oil and gas industry is probably one of the biggest consumers of technology in the world. You need technology to find oil, technology to get it out of the ground, and technology to refine it into commercial products. Technology is involved all the way through the process. Henry Harrison That brings up another important point. When people think of oil and gas, they usually picture drilling rigs in the background, and that’s where it starts. But where it ends could be something as important as saving someone’s life with a plastic tube in a hospital. When we talk about oil and gas, people often think only about transportation, when in reality the applications are much broader. Doug Hardwick That’s exactly right. One of the biggest misconceptions about oil and gas is that people hear the term “fossil fuels” and think only about fuel. They think of oil, natural gas, and coal simply as energy sources. But the derivatives that come from refining natural gas and crude oil are where we get polymers, plastics, and many of the products we use every day. In my opinion, almost everything in life revolves around refined products from oil and gas, if not oil and gas itself. Henry Harrison That might surprise some people. Explain that a little further. Doug Hardwick When oil comes out of the ground, it contains more than just liquid crude. I remember a well we had in West Virginia. As the oil came up the tubing and started to cool, paraffin would stick to the sides of the well. In some areas, there’s so much wax in the oil that it can clog production. Once the oil is brought out of the ground and stored in tanks, it’s transported to a refinery. There, the crude oil goes through a process called cracking, where the different components are separated. Some of those components become polymers, and polymers are used to make plastics. If you think about a hospital operating room or a recovery room, there’s plastic everywhere. Plastic has become essential because it’s reusable, disposable when necessary, and helps reduce infection risk. Natural gas is also used in the production of medicines and many other products. The applications are extensive. Henry Harrison That answers the question well. And of course, all of those products have to be manufactured and transported too. Manufacturing plants need power, and while people often say “electricity,” electricity still has to be generated somewhere. At least for now, we really haven’t found a full replacement for oil and gas except in limited ways. What first sparked your interest in the oil and gas industry, and what has kept you interested all these years? Over the last 20-plus years, there have certainly been plenty of ups and downs. Doug Hardwick There definitely have been. I’ve always been fascinated by the fact that oil and gas touches nearly every part of our lives. I think that has been one of the biggest factors for me. It’s something society needs, and I want to be part of something that people truly need. That has been a major driving force behind why I do what I do. When I first got started, it was mostly on the drilling side, what they call the upstream side of the business. You can see the pump jacks behind us here. There’s something fascinating about watching a pump jack pulling oil out of the ground. I remember when my dad was growing up in Abilene. My grandparents had sold the farm, and one year when I went back to visit, I looked out the back window and saw a pump jack running out there. I thought it was the neatest thing. At the time, I didn’t know anyone in the oil and gas business, so I didn’t really know how to become part of it. But it always intrigued me. I also remember a client once telling me, “Doug, see that pump jack out there running 24/7? That means it’s making somebody money 24/7, and they don’t have to do anything to it.” That’s an intriguing part of the business too — the idea of mailbox money, getting checks every month and creating cash flow. Henry Harrison And for people listening, that’s especially true for those who own interests in wells or own the property where wells are drilled. We’re talking about royalties. Doug Hardwick Exactly — royalties. When I was involved on the drilling side, we were always dealing with expenses. And when the price of oil drops, which it always does from time to time, those expenses can really squeeze your profit margins. On top of that, the rules and regulations surrounding oil and gas production have become very difficult for smaller operators. One of the things that really changed my direction was a relationship I built with a landman while I was working with a company in West Virginia. Later, when I went to work for a company in the Dallas-Fort Worth area, he was back in the Metroplex as well. When I told him what I was doing, he said he was working in minerals. We ended up building a relationship where we could work together at another company. Henry Harrison I’ve known you a long time, and I know you’ve explored several ventures over the years — residential real estate, working to gather data for an invention out of the national labs, including a plasma torch, and other projects. Some things work out better than others. Now you’re involved in something that seems to have really captured your attention: crypto and mining. How did that come about? And I believe that opportunity also came through a relationship connected to your roots in Abilene, Texas. Doug Hardwick Yes, that’s right. I got a phone call from a man in New York City who had a mutual connection with me in Fort Worth. He asked, “Doug, do you know anything about flared gas?” I told him, “A little bit. What do you want to know?” It turned out he was looking for flared gas to use in Bitcoin mining. About six months before that call, I had opened a wallet and started buying small amounts of Bitcoin here and there — maybe twenty dollars, maybe a hundred dollars at a time — just to get my feet wet and begin understanding it. So when I got that call, it really caught my attention. Long story short, yes, it all came through a relationship in Fort Worth. They knew I was still in the oil and gas business. Even though I didn’t know much about Bitcoin mining at the time, two years later I’m now the CEO of a Bitcoin mining company that is actively mining Bitcoin. It’s been a very interesting road. Henry Harrison It really is interesting how these different worlds connect. We all want a cleaner environment. And coming from the country, growing up with open space and nature around you, I think you probably appreciate as much as anyone what nature has to offer. So we’re always looking for ways to make oil and gas more efficient, get more usable energy from what comes out of the ground, and use it more effectively. What’s also interesting is that power still largely comes from oil, gas, and coal, even though there are some alternatives. One of the things you’re exploring now is connected to a woman who is raising a large fund to help make data centers more efficient. And that matters because all of us are using data centers now, whether directly or indirectly, and they consume enormous amounts of power. So now you’re really operating at the intersection of crypto, oil and gas, and energy efficiency. It’s another example of how these industries overlap, and how things are rarely as simple as they look in the headlines. Doug Hardwick That’s exactly right. There’s a huge connection between all of these things, and energy is obviously a big part of crypto mining. With oil and gas knowledge, you understand what flare gas is — or vented gas, which we also call stranded gas. If an oil and gas company doesn’t have a way to sell its natural gas, it has to get permits to flare it or vent it. What we want to do instead is capture that gas, convert it into energy, and use it for crypto mining. We’ve found that smaller companies are often easier to work with than billion-dollar operators when it comes to these opportunities. So part of what we’re doing is helping smaller producers make money from stranded gas. The larger companies often already have their own systems in place, but I think you’re going to see more and more exploration and production companies — the ones operating pump jacks and pulling oil out of the ground — eventually adding a crypto mining division alongside their oil and gas production. It’s a pretty interesting relationship. Henry Harrison You are a very interesting person to talk with — an entrepreneur, businessman, and someone involved in finance as well. Thank you very much for coming on the show. We’ll talk again soon. Doug Hardwick All right. Thanks, Henry. Have a great day.