Mike Alfred doesn’t care if you like him.
As founder of Alpine Fox LP and non-executive director at Bitcoin miner IREN, the investor has built a reputation as one of crypto Twitter’s most polarizing voices, always relishing in a good ole fashioned Twitter dunk and never shy to share his (often colorful) opinions.
Listen to the full podcast episode on YouTube by clicking here.
His concentrated bets and combative online presence have made him both enemies and fortunes, turning a $2 Iren position into a 15x return while sparking heated debates about the ethics of financial influencers in the social media age.
Below is an edited transcript of his conversation with Will Foxley on The Mining Pod, recorded at Pubkey in New York City.
What is the Alpine Fox Fund?
Let’s start with Alpine Fox. When did you start the fund?
Mike: I started working on it in October 2022, as the last bear market was coming in for landing. I thought there would be an opportunity to buy infrastructure stocks in particular at a great discount to their long-term fundamental value.
I was at a conference in Miami, on stage with Nic Carter. Afterwards, a guy came up to me at dinner and asked what I was doing. I said I’m basically tweeting and being obnoxious on the internet, and I’m on the board of this company called Iren that no one had heard of at the time. He asked what I wanted to do. I said it would be cool to start a fund.
Literally in 3-4 minutes we agreed to terms. That’s still to this day my one outside LP, a billionaire family office from the Midwest. It’s basically just my money and theirs. I’ve been really resistant to taking more capital. I had a whole bunch of 1 to 5 million dollar tickets, and I looked at the people offering the money and thought, you’re going to slow down what I’m doing. I’m trying to build something really unconventional. If more money comes in it won’t be from me chasing it.
The IREN investment thesis
Iren’s been an interesting miner. It broke $30 recently after you called it from $2. What gave you that confidence early?
Mike: I’m a really tactile investor. I take big concentrated positions. To do that successfully over a long period of time, they can’t just be tickers on a screen. You have to be in the business, talk to management, understand how they think, how they run the business, what makes them tick.
Having spent time with 30 or 40 management teams, I had a huge edge over the market. I tried to explain this to people on Twitter. I tried to explain that I had that edge, but nobody cares until they see the results. I just knew from a character standpoint, from a mentality standpoint, from an experience standpoint, from a strategy standpoint, that they were highly differentiated.
There was really nothing about Iren in December of 2022 that would have given you the perspective that I had, unless you were deep into it already.
What specifically stood out?
Mike: Everything they said they would do, they did. On time, under budget. No one else in the history of the institutional Bitcoin mining space at scale has ever done that. In fact, the polar opposite has been true, it’s been one of the most underperforming industries with the highest comp for management relative to actual execution and shareholder results.
The current thing the market doesn’t believe is that a legacy Bitcoin miner can compete with CoreWeave or these cloud companies. I strongly disagree because Iren’s already doing it today. I think it’s about to be more obvious. Of course, by the time that happens, the re-rating is already in the stock.
The AI infrastructure advantage
Why do you think they can compete against the established cloud providers?
Mike: The conventional wisdom is often wrong. The narrative floating around today is that your orchestration layer, your software, your middleware is what’s going to drive value. I think that’s completely wrong.
Over 5 or 10 years, the biggest and most challenging part is to control the physical infrastructure. These existing clouds that have a big brand today are going to have tremendous service delivery issues because they have a hodgepodge of physical infrastructure operators through which they need to deliver service to very demanding hyperscaler-style customers. Without controlling the physical infrastructure, they’re going to struggle.
CoreWeave recognized that and went out and tried to acquire Core Scientific. That’s an admission of what I’ve been saying this whole time. They financed a bunch of GPUs that are previous generation now, depreciating very quickly relative to the newest generation, using pretty expensive financing.
There’s this time-to-power arbitrage. If you own the infrastructure today that you can bring online quickly or is already online, and you can plug in GPUs, burn them in and get them generating revenue, there’s a window here where there could be some displacement of the status quo. My job isn’t to convince people though, my job is to take advantage of that and generate performance.
Twitter (X) as an investment tool
How does your Twitter (X) account fit into your investment strategy? You tweet a lot about your positions but say your job isn’t to convince people.
Mike: I don’t use it to actively convince people. I just explain what I’m doing and let the market figure out whether that’s right or wrong. If you’re right over a long period of time, you will aggregate a lot more attention organically.
It was never intentional to have a big following. For years I barely used it, I’d just post Wall Street Journal articles like a ten-year-old view of how to engage with social media. That’s not how you get followers. You have to be polarizing. You have to say stuff people don’t agree with. You have to get in arguments occasionally.
In this space, candidly, there are just a lot of people who don’t know what they’re talking about. I do enjoy reminding people of that.
Is Binance a trustworthy exchange?
Last cycle you were a vocal critic of Binance. People said you called it would fail.
Mike: That’s not actually what I said. I never said Binance would fail. I said they were doing things that would later be viewed as quite nefarious, running in-house market makers, liquidating customers, supporting people using accounts for money laundering, Iranian Revolutionary Guard, people already under scrutiny. There were accounting issues. They admitted publicly their stablecoin was not fully backed 1-to-1.
These are facts. The thing people don’t understand is nuance. I can call out a factual thing that a company doesn’t do correctly, and the Twittersphere, the masses of unnuanced retail investors, think “Mike said Binance is going to fail.” Not once did I ever say that. I just said this is a company that’s not behaving the way you’d want a company where your assets are.
Of course, CZ served jail time and they paid a multi-billion dollar fine. So irrespective of the business today, those claims have largely been validated and proved correct. There were also a ton of smaller but similar companies that collapsed. I didn’t want them to collapse anyway because it’s bad for the industry, I wanted them to conduct themselves better.
The ethics of financial influence
How do you see this new movement of social media influencers and activist managers? Where are the ethical lines?
Mike: I think it’s a meta thing. Donald Trump is changing what is traditional decorum and behavior on social media. He’s posting memes that some people, even Republicans, might think are disrespectful. Elon Musk changed the game when he said “$420 funding secured.” Even though there was a fine, it’s basically irrelevant, in the meantime a bunch of shorts got blown up.
Everybody’s blurring the lines. It’s happening at the highest levels, the president, the richest person in the world. What’s happening here is quite small.
I’m an investor first. X is entertainment for me. I actually use it mostly as a reverse indicator, to the extent the entire feed is going a certain direction, it’s almost always a great time to consider going the other direction. I’m not easily psychologically manipulated because I tend to always be skeptical. I read the feed and don’t think “I should do what everybody’s saying.” I read it and say “I wonder what’s wrong with this argument?”
Breaking bitcoin mining news
You’ve broken news on the industry quite a few times. What have been the reactions from peers?
Mike: I make a lot of predictions about Bitcoin, about markets, about M&A. My goal is to be right 55 or 60% of the time. You only find out how good you are if you make a lot of calls.
Occasionally I’ll make a call and it comes out right and I go, “Oh crap.” If I had known for sure I was going to be right, I obviously wouldn’t have posted it. I only posted because I didn’t know I was right and wanted to test the hypothesis.
There have been some situations that, with the benefit of hindsight, maybe I would have done differently. I’ve apologized in some cases. We’ve forgiven each other. It’s a rough and tumble emerging space.
The key thing is to avoid the clear red lines in terms of legality, which I’m really well versed in. A lot of stuff people think “wow that’s pretty aggressive,” but it’s actually entirely legal. I try to be collegial and help people, but I don’t think you can be a world class investor if you care too much about being liked. You need to be a little contrarian and hard to deal with at times.
The contrarian investing philosophy
Do you see a drawdown coming? How does your fund manage that?
Mike: We’ve already had three 50% drawdowns in Bitcoin miners this cycle. A normal equity investor does not want to experience a 50% drawdown more than once every 30 to 50 years. We just did it three times in two and a half years.
My structure is such that I have more of a permanent capital mindset. I do not manage towards short-term volatility. I think a lot of people over-manage for minimizing a 5 or 10% drawdown and they miss the 500% or 1000% return that you often get in this space.
Crypto funds typically go up 800, 900, 1000%, but they don’t do any hedging or defensive positioning. They end up giving back 80-90% during the next cycle. When you net it all out, it’s a rather pedestrian looking return, like 15%, when it could have been 50% CAGR over a couple decades if they just played a little bit of defense.
A lot of my strategy is around bringing traditional value-oriented principles from Graham & Dodd, Buffett and applying them to this space. That’s one of the reasons I like these infrastructure companies. I could underwrite them really well because they have hard assets that have optionality value for other forms of compute.
Final thoughts?
Mike: It’s been a really good cycle, but for Bitcoin mining in particular, it’s been a very frustrating cycle up until very recently. If you’re in the pure play and you never got into AI, you didn’t understand that thesis a year and a half ago, you’re way behind the people that did.
But it’s not too late to reposition. There’s still a lot of upside left for anyone who has real AI optionality over the next year or two.
