In the mining sense specifically, energy has decided
the fate of nations and civilizations throughout
history, and this is gunpowder for the energy world.
This is a puzzle piece and a technology and a step change
innovation that I think completely changes the game in
what is the underpinning resource of our civilization.
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Let's dive into this episode. All right, Bo Turner, welcome to
Bitcoin for Millennials. Thanks for having me, yeah.
Man, I think it's really fun that you're on.
I haven't really had lots of conversations about mining, so
I'm excited to talk about that. And yeah, I was thinking maybe
to start, I just want to ask you what is the biggest opportunity
you see with regards to Bitcoin? Mining, I think the biggest
opportunity in the very long time frame is to remake the way
that we interact with energy and create an abundant energy future
that makes all of civilization more prosperous.
And since we're recording this in December of 24, the very
immediate opportunity is you can buy some miners and depreciate
them and write them off on your taxes and maybe save some money
from going to the government. So 2 answers.
I think the first one intrigues me.
I mean, I don't want to go the whole software path immediately,
but what what do you mean by what you said?
Like how are we reshaping that with Bitcoin mining?
So Bitcoin mining to me is, is a perfect system of energy
incentives that doesn't pirate or pillage energy, but wants to
use it all the time. And just by the nature of being
constantly hungry for it, but also able to flexibly not use
it. It's this perfect puzzle piece
that completes our step change and how we interact with energy.
And one of the biggest issues that we've seen in in the energy
landscape is not that we don't have enough energy, it's that we
don't have the most efficient use of the energy that we have
available. A stat that I like to to talk
about is that California alone curtails more energy in a year
than the bottom 30 energy poor countries in the world.
So it's not that we don't have enough energy in the world, it's
that we aren't using it effectively.
And to me, mining is the coolest tool that we have to make sure
that we use energy more effectively.
Yeah. Yeah, I love that.
That's a great step I think to to dial in on that because I did
have different conversation or conversations around energy
where we kind of touched upon mining.
But since you're a real mining expert, I think we can go a bit
deeper. I, I remember, I think it was
Dasby who told me that like the efficiency of most renewable
energy sources or like the ROI of just the hardware is like
30%. But of course, there's 100%
investment. So basically we are paying three
times as much for the energy as what it's supposed to be, right?
And I mean, I've also talked with Daniel Batten and I said,
you know, why doesn't anyone understand that if you, let's
say, spend a million, well, it's probably more, it's more, but a
million for the sake of the calculation, right?
On a windmill, you spend that, that's gone.
You have to recoup that investment, right?
So you want the highest ROI possible, or at least you want
the thing to turn whenever the wind is blowing, right?
But I think a lot of people know the images of windmills standing
still even when the wind is blowing, right?
And that's mainly because the energy that's created cannot be
sent anywhere like the either it cannot be added to the net or
there's not, there's no demand. That basically makes us pay more
for the energy that they eventually do create and that we
also actually use, right? But I mean, it makes so much
sense to add Bitcoin miners to a windmill park just to have them
turn always when the wind turns. I mean, and he looked at me and
he was like, yeah, that's right. And I was like, what?
You know why? Why isn't this happening?
Is that something that you can elaborate on or like what?
What is your view or what are your?
Thoughts on Yeah, one of my one of my favorite, Well, maybe it's
not my favorite moment, but one of the most like peak clown
world moments that I ever had when I was doing research on
mining was on wind farms specifically.
They have these things called load banks, and they're
essentially just this expensive piece of equipment that you'll
put next to a windmill that is this like battery that goes to
nowhere because you can't necessarily stop the turbine.
You can't necessarily sell the energy.
So you have to just have this like dump thing.
It's like a buffer thing and it's.
Literally waste by design like you're, you're paying money to
be able to dump energy uselessly into something so you can
replace that with, you know, a fleet of Bitcoin miners and
you've actually got a use for that energy now.
But you mentioned it and it's, it's just a really funny system
of incentives where we, let's say that we are renewable energy
developers. We're incentivized to go out and
develop as much as we can and constantly sell it into the
grid, even if we're selling it at negative pricing.
Because so much of the income that we get comes from subsidies
that require us to sell that energy, even if we're selling it
again at negative pricing. And the downside of that is that
you're selling a commodity and having it subsidized by the
taxpayer that nobody needs at any given time and just creates
all this waste that that people have to bear, but that enriches
people that develop energy project.
I'm a big fan of integrating Bitcoin mining with with these
projects because now you have a real natural consumer that can
pay you market rate for this energy, help you break even, and
then the taxpayer doesn't have to bear the brunt of everybody
who wants to go and develop new energy sources.
Yeah, it feels like you can add like two or three extra
dimensions to prop up the ROI, which I think can go to over
100%. You know, if you, if you also
keep some Bitcoin as like the proprietary owner of of the wind
farm, right? If you keep a cut of that like
that, it just makes so much sense that when you buy
equipment, you just want to use it whenever you would be able to
use it and therefore, you know, make make some revenue.
I just googled because I saw last week something about the UK
paying to waste power and I found it.
This is a Bloomberg headline which it's from December 2.
UK is paying £1 billion to waste a record amount of wind power.
Britain faces mounting costs from overwhelmed electricity
grid constraints on the network could jeopardize decarbonization
plans. Right.
So I think there's, there's multiple things.
There is just a general problem of the fact that you cannot
store energy. I once heard a stat, I'm not
sure if it's fully correct, but I heard it later again, like if
you put all the batteries in Europe together, you can store
like all the energy for 10 seconds or something like that.
Like there's no way to to store energy over over time.
So you have to use it. So that's one.
So like not all the energy is used, plus the grids are not
ready to even transport that energy to maybe a distance
further away from where it's where it's sourced with, with
wind, for example. So yeah, it just makes so much
sense for me that to add the Bitcoin miners, like that's
probably the lowest cost and quickest way, most mobile way to
at least make sure that you don't pay £1 billion a month.
It's just, it's just low hanging fruit.
I mean, at some point we expect batteries to get better, to get
less expensive. It's not that these technologies
aren't helpful and that they don't exist.
It's just that in the case of batteries specifically, you
mentioned it, you have to put on a ton of capacity in order to be
able to to store any kind of appreciable amount of energy
that would keep civilization running.
And it's super expensive. I mean, it's, it's just way cost
prohibitive to be able to put on that much capacity in a short
period of time. And Bitcoin miners are a natural
user of that same energy. And you can build facilities
for, you know, depending on your metric, two to 10% of the cost
per MW of some of these energy storage vehicles.
And I like to be, you know, as as academically honest as I can
be and, and have integrity when we talk about this, because it's
not that these solutions don't exist and that they're not good.
It's just that this is, this is the cheapest thing that we can
use in the meantime to kind of bootstrap our way to maybe a
long term solution where we can store this energy.
And Bitcoin isn't exactly a a battery in the true physical
sense, but it is a battery in the economic sense that allows
us to store that wealth per SE and redeploy it somewhere else.
So what do you think or what is your biggest, what's like the
biggest misunderstanding about Bitcoin mining that that you
would want to address? You know, I'm really grateful
for people like Daniel Batten that that do a way better job of
this and a way more consistent job.
And same with with Satoshi Action Fund and Satoshi Action
Education. But the whole idea that Bitcoin
mining is bad for the environment is just the most
heinous lie that I spend most of my time debunking for people
that aren't familiar with the industry.
And in reality, it's, it's one of our greatest tools for saving
the environment, cleaning up the environment, using our resources
more effectively. I mean, if you've seen things
like, you know, Crusoe or any of these natural gas miners that
are taking flares and instead of letting those flare out into the
atmosphere or vent into the atmosphere, you know, they're
mining Bitcoin with it. Those kinds of projects, I think
just completely invalidate everything that has been said
about Bitcoin mining where you're literally removing waste
from the atmosphere. We're working on projects in, in
Oregon as well, where we partner with local landfills that are,
are venting methane into the air.
And those projects, while they're expensive, they're,
they're extremely beneficial for, you know, the atmosphere
and, and just reducing pollution.
I'm sure if you've, if you've talked to Daniel, he would tell
you, you know, methane is 25 to 85 times more pollutant than
CO2. So anything that you can do to
mitigate methane is a huge benefit to the cleanliness of
our atmosphere. And that's one of the the
coolest things that I think people don't understand about
mining and don't understand about Bitcoin is that it's one
of the first non subsidized ways that we can profitably clean up
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Yeah, it's actually a way to attract for profit companies,
right, that have to innovate in order to be competitive, right.
As opposed to well, when you get grants or subsidies or whatever,
I think there's a less of an incentive to actually do that.
And I love that you mentioned methane, right, because reducing
the methane emission I think is one of the top three UN
sustainability goals, right? I think there's different
approaches to doing that from making like huge fans, I think
in Norway where they suck up air and then do something and then
they, they, they put air out again.
And I remember, yeah, Daniel telling me that if you do the,
if you turn off the flaring, right?
Because even with the flaring, there's still like a certain
percentage of pure methane that just gets in the air, right?
Like it's only like a 80. It's a 80% reduction of the, of
the original, something like that.
I'm butchering the numbers, but not that much, right.
But just doing methane landfills and using that to mine Bitcoin
is again, it's just such low hanging fruit.
Like what, what do you run into? Is this an I mean, we talk about
it like it's an easy pitch, but I can imagine it's it's not in
real life. Like how do how do you approach
that? Or like what it what do you come
across? It's it's such an an educational
barrier to overcome with people. I mean, if you if you think
about how much most people understand about money, how much
most people understand about energy, you know, it's very
little Trying to show them this shiny beautiful system over here
that helps us fix all of these problems that in many cases
they're not even aware of is the the biggest thing.
And it's not necessarily that people don't understand it or or
won't understand it or actively fight you so much as it just
takes a while to build the mental model for them to
understand, you know, what is really going on and what is the
solution to it. I mean, it takes, if you're
anything like me, Brahm, you spent hundreds, if not thousands
of hours at this point studying the network, the impacts of the
network, the ways that it, it runs through different aspects
of our lives. And the difference between you
an hour in and you 1000 hours in is, is just profound.
And many of us lose sight of what it's like to go through
that journey the first time and be exposed to essentially have
the mirror held up to how how things really work.
And just just getting people to recognize that when there's no
real incentive for them to is the biggest challenge, in my
opinion. Yeah, it's a good point.
I also think that because that is so hard, kind of like counter
arguments that people have that they, I think a lot of the times
repeat from the TV, right? So like, no, it should be used
for another type of the like this energy should be used for
something else, right? But as you pointed out to the
beginning, the entire incentive, the goal of a Bitcoin miner is
to find the cheapest energy possible, right?
So not the regular energy. It's it's, it's, it's always at
the end of a of a certain chain, the energy that's wasted or just
thrown away. So that's like the main thing
that that you hear a lot. And I think that comes from this
kind of like in between phase where you're like, OK, I'm
talking about the subject, but I don't know enough, but I heard
this thing about it right. So there, there I go with my my
kind of like counter arguments. I think that in general is the
same for, you know, just this with with understanding Bitcoin.
It's just, it's just such a big, big topic, you know, and I think
one of the questions I wanted to ask is like, how can we educate
people? And you, you alluded to it
before, like Bitcoin mining is probably the probably has like
the only purpose built computers that can be turned on and turned
off in the quickest way possible to actually help the
distribution of the energy that is created, right.
Sometimes people say, well, no, AI is going to be a thing.
It should, it should power AI clusters and stuff like that.
But yeah, if I'm on ChatGPT and and and the cluster that I'm on
turns off, then I cannot use the thing, right?
Like I cannot use the product or the surface.
So there's not really an alternative for any other type
of, well, let's call it a data center, right, to just turn on
and off in. I don't know how quick can can
you do that with a bit. Less than 60 seconds.
Exactly right. So there's, I don't know if
there's anything else that could even compete with that.
But yeah, I'm thinking about where I wanted to go with my
question, but I see that like there's just a gap, you know,
like you start a conversation, but where you are is is it's so
much further. So you have to like drill down
to what are like the closest benefits for whoever you're
you're talking with you. Hit a talk about benefits, not
features when you're talking about a product that's like
marketing one O 1 is is talk about why it's why it's
applicable to the person that you're talking to and why it
solves a pain point. So you know this as well as I
do. Now we're starting to get more
and more serious about our media and education.
And that requires you to do something or it requires me
particularly to do something which I'm not used to doing,
which is really lowering the kind of engineering speak down
to a fifth grade reading level as much as I can.
And not because, you know, you're trying to pander to
somebody, but just because there's so much to unpack, you
have to get people to a way that they can actually understand
what you're saying and for it to be accessible to them.
Many, many times I see specifically in the mining
industry, you go to a mining conference and it's like, it's
my people, right? It is the nerdiest of the nerds
who understand all of the stuff and absolutely love talking
about it and talking about the nuances.
But most people walking around don't get joy out of that and
their brains just turn off. I think about people like my
wife who's who's a brilliant woman, but you know, I start
talking about demand response and curtailment and energy
abundance and she is just asleep faster than anything you would
imagine. And that's most people.
So we, we have this challenge of educating people not just about
Bitcoin, which is already a kind of hard to understand niche for
most people approaching it for the first time, but go one level
deeper into the niche sphere of Bitcoin mining, which is
everything that they already didn't understand about Bitcoin,
you know, actualized into physical reality and interacting
with all these other huge global systems that they don't
understand necessarily like energy.
So it's a journey, It's a, it's a skill for us to build, for all
of us to build. If we're in the space and we're,
you know, public facing and, and speaking to people as much as
you can simplify things and, and really connect it to how it
impacts each individual, like making your electric bill
cheaper or cleaning up your environment.
I think those approaches are far more effective than talking to
people about why this is the soundest money in the world.
Yeah, it feels like everything. You know, Bitcoin is kind of
like the sly, roundabout way to escape from the Fiat currency,
right? But in order to yeah, have
something like mining permeate more like certain types of
services like there it's the same kind of approach this lie
roundabout way, right? Like kind of like, you know, do
you want to up the ROI of your of your, of your wind farm?
Yeah, of course I want to do that, you know, and then later
you talk about the mining part. But yeah, it feels like, feels
like an interesting journey and like the, the being such a geek
and being totally into a subject and then trying to see if you
can, you know, find the market for it.
I think it's a very, very fascinating challenge that
you've that you've given yourself.
Yeah. But before this, you were in
real estate. I understood, you know, the full
time real estate. How did you go to Bitcoin
mining? Like how?
How did you make that that switch?
At the time I was a full time real estate investor managing
rental properties, mortgage notes, you know, basically a
property portfolio across the southeast.
And the events of 2020 just forced me to re examine so many
different things about how our world works.
And a few well placed podcasts from our friend Michael Saylor
came into my world at the right time.
You know, forced me to to look at how our systems work and what
value really is derived by and our, our modern world be built
on a foundation that I no longer thought held true.
So while it was the perfect vehicle of the last 50 years or
even 500 years depending on your time frame, I wasn't so sure
that it was going to be the right vehicle for the next 50
years. And so I moved up to Oregon at
that time as well. So it had kind of a gap where
lifestyle was changing. I had a lot of time for reading,
discovered price of Tomorrow's Sovereign Individual, you know,
all of these books that that are foundational for a lot of people
in the space. And I knew that it was time to
start unwinding the real estate portfolio.
But the biggest gap for me was how can I sell a cash flowing
asset for an asset that doesn't produce any cash flow at all.
And we all saw what happened with Celsius and Block Fi and,
you know, all of these places where people were trying to get
yield on their Bitcoin and, and get an income stream from it.
That blew up. That didn't work out too well.
So the thought was, how do I, how do I actually make an income
in the space? And so I felt, OK, I can do
this, you know, let's give it a shot.
So started small, tried out with just a few small facilities, but
really went big with a collocation host and that was
about a half $1,000,000 purchase that I made.
Yeah, it's very interesting point to make.
And I wanted to ask you like why did you decide to sell the the
real estate portfolio like was there?
I mean you talk about best of income.
You know, if you see the discussions around real estate,
I have a friend who sold a lot of homes and and eventually is
into Bitcoin and he says, you know, I never get called about a
leaky faucet or a squatter or whatever.
You know, Bitcoin ever calls me about that.
So yeah, like what, what made it click for you to like move from
real estate into Bitcoin? Like, was it like realizing that
passive income isn't really passive at all?
I mean, the mining is also not, you know, setting up the mining
for your example. You know, it's also not passive
in that sense, but like, what? Yeah.
What? What made that click for you?
20/20 showed me that most people's properties were backed
by debt and you can go back to 2008 and and see why this is the
case. Didn't matter if you owned your
house. I will not have real estate as
my wealth building and wealth securing vehicle.
It was just too much this quote passive income and find that
it's not so passive even if you have a a halfway decent manager.
So, you know, the extra time, the extra maintenance, the loss
of faith and it being the right asset for the next 50 years.
Wow, that's awesome, man. Awesome.
Well, that's that's really cool to see to make the switch,
right, Because conceptually, you know, we talk about, you know,
Bitcoin will eventually demonetize everything that's
overvalued, right? With real estate, I think as the
prime example, then you know, that's Michael Saylor talk.
He talks about the S&P 500 on these companies.
But I think that the store value kind of like like moving from
preferred real estate to preferred Bitcoin, I think will
have a great impact on society in general, right?
Like that. If if everything or like all the
homes become cheaper to live in, I think we will solve a lot of
problems. So I think it's really cool to
have you as an example, someone who actually made that switch.
So now you offer, I would define it as like hosted mining, right?
I think that's the term for it. How can people that participate
in New York facilities generate this passive income?
Like is it really passive? Is it really like, OK, I send
you the money and and you give me Bitcoin every month or is
there more to it? Yeah.
So you, you nailed it. If you want to simplify it to
its, its bare bones. The reason that people invest in
real estate is to get tax advantages because you can
depreciate these assets over any time frame.
And when you actually own your mining computer and it's managed
by somebody else, that means that you're handing the money to
manage an asset for you that produces Bitcoin, but that
depreciates over a three to five year time frame.
But the the benefit really is hands off.
You get as involved as you want to, you can to your setup call
and and send us money and just see Bitcoin come in and and not
really talk to us. Or you can participate in every
one of our educational calls and come out for a site visit and do
it like I did. So they can either go, you know,
retire to a beach somewhere or keep doing what they do best in
their active business. That's the service that we
offer. Yeah.
So how do you position it with regards to, you know, if I'm
into Bitcoin and a half cash, you know, I, I can also buy
Bitcoin versus buying a miner and getting this passive income.
Like how, how do you approach talking about this?
So there's. There's a couple different
reasons why you would mine instead of buy, and I qualify
this by saying you should buy Bitcoin, you should own Bitcoin,
and you don't get into mining to stack miners, you get into
mining to stack Bitcoin, right? Let's just set that as the the
ground level. The goal is not to end the game
with the most miners, but with the most Bitcoin.
So the reason that people would get into mining 1 is it's a tax
lever to pull. So if you just say you have
taxable income this year and you go and buy Bitcoin, still own or
excuse me, you still owe taxes on your income because you
didn't offset it with any kind of physical equipment.
Businesses with things like heavy equipment or pre paying
for marketing expenses or buying a private jet, you'd appreciate,
you know, there's there's all these different vehicles,
trucks, you know, SUVs, Range Rovers, whatever it may be.
They're all trying to offset the need to pay the government to
get something that you can use in the business.
So how do you mitigate kind of like this hosted mining FUD?
I mean last cycle we had different companies, I think the
the main one that got attention and implode it as Compass mining
and I think you know mainly and it's also my fault.
So I'd love to hear how you approach that.
You know, like conceptually I'm all on board, but it's of
course, it's hard to think about, you know, OK, so I own a
miner that is in some sort of facility, perhaps in another
geographical location, another jurisdiction, etcetera.
You do the maintenance, you make sure it's working, but what if
it breaks or, I don't know, there's a flooding or there's a
whatever, right? If you've been in the mining
space for any length of time, you've you've heard any number
of horror stories and there's a a couple things to unpack with
that. One of them is, you know, many
miners have gotten burned by seeking out the cheapest energy
they could overseas somewhere, whether it be Russia or, you
know, Paraguay or Venezuela or Kazakhstan.
Miners are naturally incentivized to find the
cheapest energy. But sometimes the choice to take
the cheapest energy at all costs is the most expensive decision
that you can make. So that's one.
And, and the way that we approach that is being in the US
is, is one of the safest places historically that you could be.
And specifically Oregon we really like because it's got
this extremely friendly climate. It's got really good precedent
for data centers being here. And in general, your machines
are going to last much longer than if they were in, say, Texas
or somewhere that's very hot and humid.
So that's one thing is being at a good jurisdiction and being in
a good environment. And then the the second thing
is, yeah, if you have a fire or flood or, you know, tornado or
something that destroys your facility, like earlier this
year, there were quite a few hurricanes that that spread
through the southeast of the US and a lot of facilities in in
Georgia were damaged. One way that we mitigate that,
again, Oregon is really great because it's got this really low
incidence of natural disasters where it's this very even cool
climate throughout the year and not really prone to these these
kind of more terrible natural disasters that happen.
And then the other thing is just insurance.
I mean, in the case that everything goes wrong and, and
your stuff gets destroyed, your host needs to be insured, which,
you know, we carry great insurance policies.
And unfortunately sometimes it's hard to get a strong insurance
policy when you put your minors in questionable locations in the
world. So anything that would be true
of running a more traditional business, you also have to look
forward to or you have to look out for in the mining business.
And unfortunately, throughout the history of hosted Bitcoin
mining, there's been a lot of stories of people not running
businesses in the way that you would expect someone to run this
kind of operation that often is housing millions or 10s of
millions or even hundreds of millions of dollars worth of
computing equipment. So basic standards around
securing a business and securing property are extremely important
and I think we've done a great job mitigating those.
And we're in Oregon, so we have the mighty Columbia River
Hydropower Network that goes through Oregon and Washington as
well as British Columbia up in Canada.
So that is our main source of power is hydroelectricity.
And if you check out for example, video on our YouTube
channel, you can actually see our site as well as the dam
that's nearby that's supplying that that electricity.
And in terms of just, you know, raw numbers for growth, we
started out the year with just one site.
We're now at 4 sites all across Oregon.
We have about 25 clients in all of those sites from a single
unit to several 100 units and excited to keep growing.
I would expect that in a few months we're probably at at
something like 10X our current capacity just because we've been
in the middle of a fundraise now for a while.
And we really want to be the largest grid balancing resource
in the Pacific Northwest to that mission of abundant energy and
making the cost of living cheaper for everybody through
energy innovation. If we can grow to the size that
we want to, then we've got a real vehicle where we can have
an impact on the lives of people not just that are in our
facilities and getting passive income through Bitcoin mining,
but the local communities as well.
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stampseat.com. I'm not really up to date about
the the Oregon the Bitcoin friendliness in Oregon, but have
you had interest or are talks with with local or or state
government? Yet so Oregon is is a blue state
so it's it's not necessarily as easy of an environment like
Texas or Oklahoma or some of these states that have passed
right to mine bills. But the benefit that we have is
we've got some very prominent and active bitcoiners who live
in Oregon, including Troy Cross and Dennis Porter.
You know, they're they're both based here and so earlier this
year, I'm not sure if this has been put forth yet, it might be
about a month from now in the legislative session, but they
are going to introduce some Bitcoin friendly legislation
that is a right to self custody bill, right to run a node and
all of the things that we've come to expect from, you know,
enshrining the rights of bitcoiners in there at the state
level. And I'm really, really excited
about what Dennis has done in several states across the US and
the way that that's been progressing and excited that
Oregon to that list. It's good you mentioned that.
I think my least watched episode is the one with Dennis, whereas
I think that should be one of the most watched episodes.
It's, you know, when you think about policy regulation, stuff
like that, you know, you think like, oh, that's boring.
But I think actually Dennis has found a great, let's call it a
strategy in order to, yeah, basically like create a
blueprint right for for states to enshrine these rights into
state state policy, which I think is a perfect another like
sly roundabout way to actually, you know, really get these
rights in into law, which probably will open up, you know,
way more opportunities for you or anyone else who wants to do
something with Bitcoin in in the state that they live in.
So, you know, if you're listening to this podcast, go to
my channel, look for a Dennis Porter, and you will find that
episode because I think it's really, really great what he's
doing. It's, it's a constant topic in
the Bitcoin circle that, you know, we don't need the state.
We don't need the state for anything.
You know, this is an independent system and I appreciate that
perspective. But you know, and in line with
what Jeff Booth talks about, there is no US versus them.
Like it's all us. We're all in this together in
some sense. So everybody that you have no
interest in cooperating with or say, you know, doing business
with or, or making these things happen, there's just other
people that are waiting to be orange built and their vehicle
might be getting some of these bills passed into law such that
they're forced to look at it. It's the same with getting
pensions on board, getting other corporations on board.
All of this is critical infrastructure for the next wave
of people to be able to come on and feel safe.
Yeah, yeah, I, I, I, I agree 100%.
I mean, what? Whatever way up, up over, under
left, right, you know, we have to get Bitcoin everywhere.
And I think, you know, you, why would you want to keep arguing
with people that don't like it if you can also, I don't want to
say subvert, but like make them adopted through logic and reason
or, you know, in, in terms of Wall Street, I'd say great.
But that only solidifies Bitcoin into the world, you know, and
then we get closer to that future that we all envision.
So I, I agree with that 100% that we should always, we don't
need these people, I'd say, but I think it's beneficial for
everyone when they are on board, whether they understand it or
not, you know, So, yeah, I, I, I agree with that.
But yeah, I'm excited to see that, you know, like just just
general game theory of adoption and that something I wanted to
talk about. But then more like about the
game theory of, of mining, you know, like currently we have
about 5 countries known that that are mining Bitcoin with
government resources. I think it's Kenya, Bhutan, El
Salvador, Ethiopia. And the other one I forgot.
I think it's is that Qatar or Oman where there's like a
marathon? Oman, I think it's Oman, yeah.
And you know, it's so fascinating to think about like
we are still so early, etcetera. I think we are still early.
But I mean there's countries mining Bitcoin with government
resources. I mean that's where we are after
15 years. And I really realized that
actually when someone talked about that Middle East facility,
you know, like that's a billion dollar facility.
And then the someone said, like, do you think that's an
experiment? Like if you invest a billion
dollars, like you know what you're investing it to, right.
So you should not approach this as an experiment.
This has a business case, you know, so they know what this is,
they know why they want it, they know why they can do it, you
know, like all these things. And then I really realized,
yeah, like, of course, like we are already there.
And I think that will that will grow.
But that is the question that I wanted to ask you, like what are
your thoughts on the progress of this global game theory with
regards to mining Bitcoin with government resources?
Five countries is still quite early in my opinion, and I'll be
the devil's advocate on this and say a billion dollars, that's a
lot of money maybe to you and I. But for a sovereign wealth fund
or a nation state, a billion dollars is just a taste test
that is, you know, regularly wasted in a government budget
on, you know, an hourly basis, let's say in the US.
So it's, it's a lot of money. But put it in this framing.
Bitcoin now is a $2 trillion asset and it's still .2% of all
global assets. When Bitcoin was a billion
dollar asset, it was huge in the sense of of most companies never
get to that size, but it was absolutely minuscule and could
be really easily overlooked in the sea of investment vehicles
that most people store their wealth in.
So mining as the underpinning infrastructure for that.
A billion dollars sounds like a big investment, but if you put
it in the context of the world's energy resources and the world's
untapped energy resources is still just the very beginning of
what we're going to see go into the space, in my opinion, Yeah.
Yeah, it's just, you know, just such an interesting thought when
you just think about like, I have a seat, we have a seat in
this stadium and we're going to watch this unfold.
You know, like it's just so interesting to to just follow in
general. Like we can conceptualize about
the game theory and all the low hanging fruit that we mentioned
in the beginning. Like, yeah, it just makes so
much rational sense to start doing this.
But yeah, the information around this is not evenly distributed,
right? So it goes in waves up and down.
But I do think there, there will be some sort of inflection
point. I like the analogy that safety
in a moose has with like gunpowder, right?
Like you cannot ignore gunpowder.
You cannot say like my sticks and stones or my Spears are
better than your than your gun, right?
And then the poof, you're dead. You know, like that I like
thinking about these processes that have already happened in
the past dozens of times. And this is just a different
type of context. If this was a bad idea, a bad
concept, you know, if the concept of decentralized non
sovereign, you know, global instant money is a bad idea,
that it would have died 15 years ago, you know, do you know how
many ideas, random ideas get, you know, published on the
Internet every day? And we are at countries mining
Bitcoin with government resources, you know, so this is
not a bad idea. Like this has potential to exist
for a very long time. Yeah.
Once you see that, it just becomes entertaining to see how
how this is all playing out, you know?
Just for Bitcoin in general, the fact that we are entering a
period where the most powerful country in the world has a
supportive administration for this technology is something
that we haven't had yet. And I don't think people have
fully underwritten what that means.
I mean, a talks about a strategic Bitcoin Reserve bill
coming out within the next 90 days are just like if you had
talked about that two years ago, people would have called you
crazy. And the fact that it's being
drafted and and likely going to come to a vote within the next
few months is something that I don't think most people are
priced in. And you know, just in terms of
what we're talking about earlier, most of the capital in
the world still has not fully understood the space and still
has not entered in any kind of size at .2% of global assets.
If we think this is the most important asset in history, then
there's a very, very long way to run in terms of people getting
on board with this and the most the deepest pools of capital
getting on board. And in the mining sense
specifically, energy has decided the fate of nations and
civilizations throughout history.
And this is like you said, this is this is gunpowder for the
energy world. This is a puzzle piece and a
technology and a step change innovation that I think
completely changes the game in what is the underpinning
resource of our civilization. So the fact that only 5 out of
however many countries are in the world, 183 or 293, I can't
remember, you know, less than 10% of the countries in the
world have caught on to the most important energy innovation of
the last century shows you that this is like electricity in the
late 1800s. You know, people are still
afraid of it. They don't understand it.
They're worried that it's going to to upend civilization and
kill them. And the progression of that
being integrated into society is going to be one of the most
impressive things to, you know, watch on the one hand.
And, and in my case, I'm, I'm really excited to participate as
directly as I can into it. There's there's not many people
through history who get an opportunity to participate so
directly and something that can be so impactful.
So I'm personally just really grateful to live in this time
and to have a set of skills that I think are applicable to
bringing about a future that makes life better for everybody.
Yeah. I think this is also one of the
things that makes it hard to realize that we are living
through this time, right? It's so big and it feels
sometimes that all the big things, all the big shifts,
right? Like all the big technological
advancements are things of the past.
But we are really living in a time where a lot of things are
happening at the same time. And I feel like because
understanding Bitcoin is such a ego journey in a sense, right,
that that is also something that challenges you where you think
like that. I really figure this out.
Am I really living through this period in time now?
Probably not. You know, like I should not pay
attention. You know, something like that.
I think it plays part in that. But yeah, I love what you said.
I also think this is this is the most important technological
discovery of our lifetimes. And yeah, I mean, we should pay
attention to it. So I think that's what we're
doing. And I love that.
And I, I see your enthusiasm. So I think that's great.
I I wanted to ask you two more more questions.
A small question, but also I think what could potentially be
a big question, because one of the things that that people talk
about in the future. And I wonder what you think when
that will be. You know, like if the block
reward, you know, it gets cut in half, of course, every time gets
smaller and smaller, where probably the competition will
heat up more if Bitcoin becomes worth more.
So I think there's an interesting dynamic.
They're like, yeah, how will miners operate and make money
when a block rewards keep getting smaller and smaller?
Like what has to happen for that business to stay sustainable but
also also to keep the network secure?
Over the next 10 years, we're at 94 point, like two, 5% of all of
the Bitcoin that will ever be mined has already been mined,
right? And the next 5% will be over the
next 10 years and then it'll be 120 years for that last 1% to be
mined. So if you're not paying
attention to mining specifically in the next 10 years, I'm not
going to say that it won't be viable.
But you know, this is kind of like do or die.
This is really the opportunity of a lifetime to participate and
focus and really buckle down and put energy and resources to
being the best in the world at this if you can.
So that's one thing I'll say is that this is absolutely the
time. The next 10 years is, you know,
laser focus, don't think about anything else.
And you'll probably not have to do anything else after that if
you prefer not to. The second thing I'll say is,
you know, this was the intention of the network design all along
was that it wouldn't run on subsidies, that it would run on
actual transaction fees and and use of the network.
So we've seen this happen in brief periods when people are
are using the network very actively or they're putting on
these things like ordinals or runes or these other, other
types of data on the chain where transaction fees become the
majority of the revenue that miners are earning.
And so the question really is just when does that flip happen?
Is it in the next year? Is it in the next 5 years, next
10 years? You mentioned that the block
subsidies going down to the point where by today's
standards, it's not a lot of Bitcoin that miners are going to
earn and the number of miners on the network are absolutely going
to be greater. So there has to be some
mechanism, some way for minors to still be viable 140 years
from now. And the answer to that is just
more usage of the network. So if you, like me, think that
this is the world's money minimum, the base layer of the
world's assets, then you expect more people to be using it and
paying to use it. And that is the bet that we make
as minors looking out further than 10 years in the future is
that people are actually going to be using this network and
paying for block space and that one to 10% of transactions or
one to 10% of mining revenue coming from transactions that
it'll be more like 50 or 80%. So that's that's the directional
bet that you make is that more people will use the network and
pay for it. Yeah, I think that's a good
thing to emphasize because in essence, Bitcoin at least for
the next 10-15 years, I'd say it's still an experiment because
I personally do see some sort of failure opportunity there,
right? Like I think the next 1020
years, if the price goes to a million plus, then you know,
Fiat wise you could still probably earn enough, enough
money, right? But yeah, we have to get to a
point where all the blocks are full all the time, basically,
right, With with with lots of more and more transactions for
you to also earn more. And I think there's still a
challenge there. When we look at like how we
approach Bitcoin now, which I agree with, you know, it has to
be a store value. Like I have to be able to save
in it and be protected before I'm going to ask for it in
return for a product or a service or whatever.
But I do think we have to get to the medium of exchange part
eventually. Because even when layer layer
twos will be built on top where for example there will be
quicker transactions, the settlement eventually will be
maybe one big transaction from one party to another.
Kind of like how banks do it now.
Everybody's got different opinions on the kind of
arbitrary data on top of financial data being transacted
on chain. And it's my opinion that there
will just be more of it and that people will be putting different
types of use cases on top in addition to just moving money
around. So historically, those have been
what people have paid most to include in the blocks versus
just standard financial transactions.
And we would expect that we see more of that, not less of it as
time goes on. So personally, I think that
there's more than enough opportunity for people to
actually use the chain for all sorts of different purposes and
pay to use it and that minors are going to be well taken care
of far into the future, but can't predict the future.
So you know, going to take it day by day.
All right, man, last question and I ask everyone the same
question, which is what is a core belief that you will never
let go? Any time that you find scarcity
in your life, you might ask yourself, is this true?
Or is this just my pattern of thinking, and I've found it to
be true in my own life, that any really truly wonderful thing
that was unlocked for me was usually unlocked just by a shift
in perception and realizing something that was already
there, but that I was ignoring? Also, man, thanks so much for
sharing and thanks for this conversation that I really
enjoyed it. And yeah, man, let's stay in
touch. I hope you enjoyed this episode.
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Bye.