Charles Allen, CEO of BTCS, Inc., was recently interviewed by Benzinga. BTCS is a blockchain company committed to innovation and building next-generation blockchain infrastructure. The company is committed to fostering scalable growth through diverse business initiatives that integrate with its robust blockchain infrastructure. In 2021, the company shifted its focus to Ethereum and started operating validator nodes. Following this, in early 2024, it further expanded into Ethereum block building with the introduction of its advanced Builder+ technologies.
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00:00And it is my pleasure to welcome in the CEO of BTCS, Charles Allen.
00:09Wonderful to be with you today, Charles.
00:10Dan, thanks so much for having me.
00:13It's great to be with you as well.
00:14Pleasure and honor is all mine.
00:17Let's start off.
00:18Just give everyone an overview of BTCS.
00:19So we're the oldest public company in the crypto space.
00:24We're currently focused on blockchain infrastructure, specifically
00:28around Ethereum.
00:30So we help maintain the Ethereum blockchain through running
00:34validator nodes and we're doing block building.
00:35So we're, I kind of like to put it, we're kind of like the best of
00:38both worlds.
00:39We have the exposure that you would get from like a microstrategy
00:41owning Bitcoin, albeit Ethereum, but instead of just holding it,
00:45we're actually generating revenue by, you know, driving scalable
00:49revenue through our, you know, blockchain infrastructure and
00:53block building operation.
00:54So it's kind of similar to like a Bitcoin miner.
00:56Imagine if you took microstrategy and Bitcoin miner and put them
00:58together without all the depreciating assets.
01:01That's kind of us and we're, you know, focused on Ethereum.
01:04So right now we're the only public company with a core focus on
01:08Ethereum infrastructure, which is pretty cool.
01:10Yeah, and who doesn't like the best of both worlds?
01:12It's always the way to be.
01:13What does it mean to build next-generation infrastructure for
01:19blockchain?
01:19And what does that entail?
01:20I know it's, you know, it can be complicated, but I know you can
01:23explain it well.
01:23Yeah, so think about like what Ethereum does, right?
01:28Like it's very different than Bitcoin and Bitcoin is just a store
01:33of value, right?
01:34It's a digital gold, people kind of call it, but it doesn't really
01:37do anything beyond a store of value, right?
01:39People kind of hold it and that's it. Ethereum, you can build on
01:42top of it.
01:43It's right.
01:43It's kind of like a global decentralized computer that you can
01:47build applications on top of it.
01:49And it's also kind of a form of money, just like Bitcoin.
01:52So by having both of those things, you're kind of like, and there are
01:57other blockchains apart from Ethereum, but like by doing that, it's
02:00almost like investing in like the internet.
02:02Like, do you think the internet is going to be around, right?
02:05Like 20 years ago, clearly, right?
02:07Well, what if you could actually just bought the internet, right?
02:10As opposed to buying a company that operates within it, you would
02:15have had a lot less risk.
02:16And so that's kind of what you can do by holding, you know, Ethereum.
02:20You're basically buying into a decentralized computer system that
02:24all these cool applications are going to be built on top of.
02:26And we are kind of the infrastructure that helps secure that, just like
02:29a Bitcoin miner helps secure Bitcoin's blockchain.
02:31We are a core player in securing Ethereum's blockchain.
02:36And we're driving a scalable, you know, revenue model off that.
02:40Yeah, like I said, I knew you could explain that perfectly.
02:42I like that you buy part of the internet.
02:44Why would you not want to do that?
02:44And let's talk about this, Charles.
02:46Why Ethereum?
02:47Are you concerned by competitors, smart contract, like Proof-of-State
02:51tokens, like Solana?
02:52Why is Ethereum the big piece right now?
02:55I think there's room for multiple blockchains, right?
02:59I mean, Ethereum's the number two blockchain.
03:01So you're always going to hear people say, hey, Ethereum's dead, Solana's
03:04coming up.
03:04Well, you know, I've heard Bitcoin's dying for over 10 years.
03:07And it's, you know, now we're debating, you know, it's on the, you know,
03:12president's talking about it.
03:13Should it be a strategic reserve?
03:15So I don't think Ethereum is going anywhere.
03:16I think there's room for competitors.
03:18It's an amazing value proposition compared to other blockchains like Solana.
03:24And so for a small company, it's a great place to build a business.
03:27And we've had really good results when we've moved into kind of the
03:30block building.
03:31And we've put out our 2024, kind of, we've kind of put out our results.
03:35We've said we hit management goals, the minimum.
03:38So the minimum revenue for 2024 is 3.7 million, which is, you know, over
03:44175% of what we did the year before.
03:47Most of that driven by block building.
03:48And we've put out kind of new management goals, not, you know, guidance
03:51per se, with a target of 8 million and a threshold of, you know, 20 million
03:55revenue.
03:56And that's like my goal.
03:57Like if we can go from, you know, 1.4 to, you know, plus 3.7 in revenue to,
04:02you know, 20, you know, that would be amazing, right?
04:06So I don't think, you know, having been in the crypto space for 10 years,
04:09there are very few business models that have the same scalability as Bitcoin
04:13mining.
04:13But this is one of the few ones that you can do in a compliant way.
04:17And you don't have all the CapEx.
04:19We don't have to buy expensive machines.
04:21Most of our assets are tied up in Ethereum and a couple other cryptos like
04:25we do on Solana.
04:26And so if those go up, we benefit.
04:29It's kind of like that.
04:29You get that micro strategy angle.
04:31So you get a revenue generating crypto play with a, you know, a hoodle
04:36strategy, you know, built in.
04:38Yeah, which is always a very exciting way, you know, position to be in.
04:41And, you know, I'm really interested, Charles, in BuilderPlus.
04:44How does it work and who is it for?
04:47I think we'll start with who's it for, right?
04:51So our business model is kind of unique, right?
04:54We're not a B2C.
04:55We're not a B2B.
04:56We're a B2N.
04:57So we're a business-to-network business model.
05:00So we don't have traditional customers.
05:02We are a provider to the network.
05:04And so what, you know, the way transactions end up on-chain with Ethereum
05:10and various other blockchains is relatively complex.
05:13It's almost the way a securities market would work.
05:16And so it's not, you know, if we validate transactions with the validator,
05:19that's one thing.
05:20What BuilderPlus does is we basically build blocks by going to get
05:26transactions where people are willing to pay the most amount of money.
05:29So if you want to send, you know, a piece of mail to me, I mean, you
05:32could, you know, snail mail, right?
05:34You can stick a stamp on it and put it in your mailbox and that's going
05:37to take, what, three, five days?
05:39Or if you want it to meet tomorrow, you're going to FedEx it.
05:41That's going to cost you, what, $15, $20, right?
05:44And so if I want to send you some Ethereum, I'm going to broadcast that
05:48to the network and as the sender, I'm going to pay a fee, right?
05:54It's called the gas fee and I get to select what my fee is.
05:56There's going to be recommendations, right?
05:58I can pay a little, a medium, that or a lot.
06:00And so how fast do I want that transaction to end up on-chain?
06:03And that fee makes a big difference because if you're going to be cheap
06:06and put a postage stamp on it, it's going to take a lot, right?
06:08And no one wants to deliver that mail.
06:11If you're willing to pay like FedEx, someone's going to be like, ooh, I'll
06:13take that transaction and put it in the, make sure it ends up on-chain.
06:17And that's what block builders do.
06:18They look at all the potential transactions and they pick the ones
06:21that are willing to pay the most.
06:22And so that's what we're doing.
06:24And then you can get, it's much more complex from that,
06:27but I'll kind of keep it simple, right?
06:28It's your private order flow.
06:30You can get it from the public mempool.
06:32But really, it's about kind of building blocks with the most profitable
06:36transactions and proposing those to the network for inclusion on-chain.
06:40And that's what we do.
06:41And then we also, on the validation side, because we run validators,
06:44are the ones that are writing those blocks to the blockchain.
06:47And that's how we earn money.
06:49Sure.
06:49Who's that snail mail anymore these days?
06:51You want more advanced stuff.
06:53Let's talk about this.
06:55I know a lot of people will be interested in your staker protection plan.
06:58Can you talk about that?
07:00So really, it's a way for us to control block space.
07:02So our, kind of starting from the top and moving down, our core goal is
07:06drive revenue and improve margins, right?
07:08Pretty simple for most public companies.
07:10We've seen progress doing that.
07:12The question is, how do we do that?
07:13And there's three things we're working on to achieve that goal.
07:16One is technological improvements.
07:19So we want to be, you know, equal or better to our competitors.
07:22And so we had a release that went out today that we moved to Rust.
07:28It's a different programming language than Go.
07:30And we've moved away from Amazon Web Services to Bare Metal, right?
07:34So faster performance, better languages, right?
07:37So that's technology improvements.
07:39The other thing we're working on is controlling block space.
07:44And that's being able to propose blocks to the blockchain.
07:47And in order to do that, you either need to run a validator, which gets
07:51chosen to propose a block, or you need to do, which is one of our
07:56initiatives, a staker protection plan, which basically allows a validator,
08:01not ours, but other validators to opt in.
08:03And they're basically going to sell us their block space at a
08:06predetermined price, right?
08:08And there's like a profit share on that.
08:10And so that's the next thing, right?
08:12Like controlling block space.
08:14And the third piece of this puzzle is order flow.
08:17And so those are the three, you know, key tenants that we're looking
08:21at in terms of how do we grow revenue and improve margin.
08:24And so over the future, as you see releases come out, they're going
08:27to fall in one of those buckets, all with the end goal of let's grow
08:30revenue and let's improve margin.
08:33Yeah, it's absolutely fascinating stuff.
08:34And, you know, how is BTCS, by the way, using RocketPool as well?
08:40That falls into the, you know, kind of control block space bucket.
08:44So basically the way it works is we could run our own validator nodes
08:48or if we include the validator nodes we have as part of RocketPool,
08:53we earn slightly more, right?
08:55So we put up, to run a validator node, you need to put up 32 ETH,
08:59right?
08:59That's the minimum to run a node.
09:01If we do it with RocketPool, they're a liquid staking provider.
09:04We're putting up 8 ETH and they're putting up the remaining 24.
09:08They get that 24 ETH from liquid stakers, right?
09:11People that want to be able to stake crypto but freely trade it.
09:14And so the way that basically works is we have a revenue split with
09:18RocketPool.
09:18So on our 8 ETH, we're going to get the full rewards.
09:21On the 24 ETH, they put up the rewards that would go to their customers
09:26that are liquid staking, gets, there's a commission that goes to
09:30RocketPool and that's split with us.
09:31So we get a piece of the total rewards, but we also get to control
09:34the block space, which is really interesting.
09:36So we get a levered way to control the block space for our vertically
09:40integrated infrastructure play.
09:42So that's that third, you know, control block space.
09:45Again, anything we can do to control block space is really important.
09:48Anything we can do to get more order flow is important and anything
09:51we can do on the technological improvement side is really important.
09:54You put those three things together and, you know, it's the end goal
09:58of let's drive, you know, scalable revenue and improve margins.
10:02Yep, fast, absolutely fascinating stuff.
10:04And Charles, listen, we're living in fascinating times, new
10:07administration.
10:08I wonder what you think the biggest changes in crypto you foresee in
10:12this next year are going to be.
10:15Well, I think it's huge.
10:16I think at a high level, we're going to see more crypto projects
10:20come to fruition, hopefully in the US.
10:23I hope a lot of those will be built on Ethereum.
10:26And also, you know, that's kind of on the grand scale of schemes.
10:29For us as a company, it means we should hopefully have, you know,
10:35a more reasonable SEC to deal with, right?
10:37I mean, we've been public 10 years and we've had probably answered
10:40more questions than any other crypto company combined, never gotten
10:44any trouble, but it's, you know, just answering questions is time
10:48consuming and expensive, you know, and they tend to be either
10:52fishing expeditions or educational exercises.
10:56And, you know, we're just excited for a time where we can run our
10:59business and, you know, have good disclosure that investors can
11:03rely on, but be treated like any other public company.
11:07So, I think, you know, it's a really interesting time with the
11:11new, you know, new administration as it pertains to crypto.
11:15Like I like to say, what a time to be alive.
11:17Listen, it was an absolute pleasure talking with you today, Charles.
11:20Thank you so much for your time.
11:23Yep.
11:23Thank you so much for having me.