BTC Sessions - Hashrate Collapse, BIP-110 Chain Split & Banks Will Mine Bitcoin | Bob Burnett

Episode Date: July 20, 2026

Mentor Sessions Ep. 083: Bob Burnett explains the Bitcoin hash rate decline, BIP-110 chain split, nation state mining, and why banks will mine block space.Bitcoin's hash rate has been declining for nearly a year for the first time in 16 years — and Bob Burnett of Barefoot Mining explains why it keeps falling straight through the next halving. This is the mining reset almost nobody is pricing in.In this conversation you'll learn why the big publicly traded miners quietly shed Bitcoin and pivoted to AI and data centers, why Bob believes financial institutions and nation states (Iran included) are the real next entrants — not energy companies — and why they'll mine for block space control rather than the coins themselves. You'll see how the BIP-110 (RDTS) activation at block 961632 in mid-August could trigger a chain split, exactly what miners and plebs should do before that block, and why the fight is really about Core's process and the SegWit discount, not just spam. Bob also breaks down the miner's trilemma, virgin Bitcoin premiums, and why the depths of despair is historically the best time to enter mining.⏱️ Timestamps:0:00 - Intro1:11 - Harsh reality of Bitcoin mining in 20261:46 - Meet Bob Burnett of Barefoot Mining2:00 - First year of falling hash rate2:52 - Why hash rate drops through the halving4:29 - Current-gen miners sold for pennies8:18 - The miner's trilemma: energy, machines, capital11:25 - Easy capital drove public miner overbuild13:39 - Invasive apex predator wrecking the ecosystem14:50 - Why public miners' production costs are broken17:12 - Is the public mining model sustainable?21:43 - Barefoot mines on sub-3-cent self-produced power29:49 - Building a mining business that survives forever31:39 - Enter mining in the depths of despair34:14 - Is falling hash rate a network security threat?35:36 - Could a bad actor mount a 51% attack now?37:44 - Why Bitcoin can't balance the world's power grid42:44 - Activists turning rural towns against miners1:00:11 - Financial institutions and nation states enter next cycle1:01:36 - Banks will mine for block space, not coins1:07:42 - Why institutions will control block templates1:08:26 - Nation state mining and economic sovereignty1:09:20 - Is Iran already solo mining Bitcoin?1:14:00 - The death of full-pay-per-share and virgin Bitcoin1:17:33 - BIP-110 explained: what problem it solves1:18:28 - Core v30 policy change that sparked the fight1:29:11 - RDTS: the reduce-data temporary soft fork1:31:14 - The SegWit discount and CSAM concerns1:31:48 - Activation at block 961632 and chain split risk1:44:19 - Advice for plebs before the split1:46:15 - Advice for miners: get a backup pool ready1:50:28 - The 99% best case vs the really bad scenario1:52:53 - Where to find Bob and Barefoot Mining🔗 Links & Resources:Barefoot Mining: https://barefootmining.comBob on X: https://x.com/Boomer_BTCBTC Sessions: https://btcsessions.caBTC Sessions Dashboard: https://btcsessions.live/Sovereign Sessions — AI, Privacy, and Bitcoin education: http://youtube.com/@SovereignSessions?sub_confirmation=1💡BOOK Private Sessions with Nathan, Benn and the BTC Mentor Team: Master self-custody, hardware, multisig, Lightning, privacy, and more. 👉 Visit btcmentor.io 📌 Previous Episodes: Matt Hill & Odell → https://youtu.be/cOQC81hLSu0⚡ POWERED by Abundant Mines: Fully managed Bitcoin mining. Learn more at https://qrco.de/bgYKPB#Bitcoin #BTC #BTCSessions #BitcoinMining #BIP110 #BitcoinKnots #HashRate #BobBurnett #BarefootMining #NationStateMining #BlockSpace #SelfCustody #BitcoinNode #MiningEconomics

Where do you see the mining industry sitting right now? One of the certainties of Bitcoin for 16 years was hash rates growing. Well, it didn't grow. Approaching a year of hash rate decreases, we will continue to see negative growth probably through the having. The larger organizations that have been in mining, especially the publicly traded, have pivoted. Kind of shed Bitcoin even in their, like the way they position their company. in the next cycle, post the next halving, we will see the entrance of the financial institutions in the nation states. The financial institutions will realize that they must participate in mining.

Now, it's pretty clear that Iran, for instance, is already doing this. The other thing I do want to talk about is BIP 110 because you've been flagging support. I think we have a 99% chance that this is a one to two hour issue. There is a scenario that I think is really bad. team, I'm not going to ask you to like or subscribe, but if you do want to help the show continue, just share it with one friend. All right, so for today, we have one of the most respected voices in Bitcoin, Bob Burnett, former CTO at Gateway Computers, now CEO of Barefoot Mining, and co-host of the Bitcoin Boomers podcast. In this episode, we discussed the harsh reality of Bitcoin

mining in 2026, why nation states and financial institutions, not energy companies, will be the next big entrant into the industry, and BIP 110 activation. Bob shares his thoughts, as well, some specific warnings that you need to hear in preparation. All right, good morning, Bob. Thank you so much for joining me today. Very excited to have this conversation, to have one of my favorite Bitcoin boomers back on the podcast. The mining industry seems to have gone through a fascinating bit of a bare market shift.

We've seen massive capital pivot into AI, and it seems that hash rate has actually been in a bit of a downtrend since October. So to kind of kick off the conversation, I'm genuinely curious. Where do you see the mining industry sitting right now, and where do you think things are headed? Yeah, well, I guess nice to see you, Nathan. Thanks for having me on. Yeah, we're at a very, very interesting and crucial juncture, I think, in the mining world.

And this is a first. We said we're down. Like one of the certainties of Bitcoin for 16 years was hash rates growing. Well, it didn't grow. We spent now approaching, approaching a year, nine months or so of. hash rate decreases. And it's my prediction that we will continue to see at least flat, but probably negative growth, probably through the having.

So I think we're probably got, you know, as much as two years. Yeah. Because, and there are several factors at play. the first factor is that a lot of the larger organizations that have been in mining, especially the publicly traded folks, have pivoted. A lot of them, interestingly, like they've kind of shed Bitcoin even in their, like the way they position their company. Yeah, even their marketing.

I don't hear they're referring to Bitcoin anymore. Yeah. Yeah. They, you know, they'll call themselves infrastructure companies or, you know, data center providers or, you know, they've really radically kind of shifted. And not only have they shifted the positioning of the company, but they have decommissioned equipment in a lot of cases. That decommissioning came because they had facility. that were attractive to the AI and data center world. And some of them wanted like immediate attention.

And so some of the decommissioning of those facilities was not because they had mining rigs that were at their natural end of life, but urgency to convert. And so what we've seen is opportunities in some cases where equipment, like very current generation stuff like S-21 XP 270s that had been in service for four months or six months, suddenly came under the use market. um, uh, S-21 pro 234s. Lots of those, which maybe were a year to 12 months old. So,

so they were like this is like, you know, like really radical shifts. You know, and so, um, it's been good. And it's not we've, we've been able to buy some equipment at that. But you know, what happens, I mean, that's, are pretty radical. So that's part of why this is coming down. At the same time, because Bitcoin's price has dropped even faster than the hash rate has dropped, hash price is really at an all-time low, or at least I would say a current low. I mean, you could say that the miners in the first year or two had a pretty shitty hash price too. but in what we think of maybe as modern times or as you know as bitcoin in its mature era

these are unprecedented so what it's done is it also accelerated the rate at which machines like it's easier to use the bit the bit main family but like an s19 j pro 120 is for most people completely unprofitable. Like, you know, there's no difference between that and an S-9. Like, they're both, they, there's just nothing you can do with them. The, the market price of something like that is like, um, 70 bucks, 80 bucks, you know, if, if you want to buy one. Wait, for the 19s?

for an S19 J Pro 120 you know if you're if you're trying to sell some quantity of them you're going to get like 70 bucks wow that's like a right around where I paid for my S9 like a couple of years ago

and that thing's just sitting in my garage I may still use it for fun but yeah even an S19 K Pro which is the one after that you know that's a that's at one 120 120 terahashes per second, 2,700 watt machine, $160, $170 is the, like, that's what those would go for now.

And, you know, I have some operations where we produce our own power, we have very low costs, and we still buy some of that stuff, because we can still be profitable mining with even that, you know, that family of equipment, but most people can't. It's probably any, almost anything on grid, those are untenable. So, so, so we have an interesting thing where those kind of units, the, the rate of obsolescence of the lower end units is increasing. but we also had some of the really recent generation stuff also get decommissioned on an accelerated basis.

So I wrote an article for anybody that's interested several years ago. It's in Bikai Magazine. It's called The Miner's Trilemma. And one of the things I realized was that I was looking at new site development and saying, well, what are the things? the factors, what has to come together if you want to put up a new commercial mining site? And it really boils down to three things. You need consistent low-cost energy. You need efficient, reasonably priced mining rigs, and you need money. And so what I realized, though,

was that at any one point in time, one of those three would always be hard. So that's the trilemma. The minor's trilemma is we have to battle through navigating that and solving for the hard one. Like if one of them is easy and it shifts, right? And so if you're a company, maybe that's good at raising capital, as an example, the public companies were always good at raising money. That was a strength. Well, if you were in a market where that was hard, but the other parts were easy, well, that put you in a great position because you had a lot of money at a time when others didn't and the other stuff was there. On the other

hand, if raising money is easy, there is a tendency for the infrastructure, the hash power itself to get really expensive because if there's a lot of money, they quickly buy up the machines and then, you know, their scarcity of those machines. And then on the energy side, what's interesting about the energy side is it used to to be it was really just the Bitcoin miners competing for energy. Well, we have a serious competitor now. And in fact, that one, I usually represent this as a kind of a triangle. Like you could think of, let's say we're in a period right now. The period would be capital, very hard, energy, very hard. and mining equipment very easy.

Like that's the current parameters. So I would represent the mining equipment as green and the other two as red, just as an example. In the period, just after the China mining ban, so let's say the second half of 2021, early 2022, the capital was green, energy was probably yellow, that it was, you know, there was still a lot of energy out there. You had to work for it, but you could get it.

And it was impossible. This was remember people spending like $12,000 on an S-19, 100, terra-hast per second. That's why we made the comments, but how cheap they are right now, that's the number that was still stuck in my mind. That's what, like, took me, like really drew me back and went, whoa, they've really fallen. Yeah. So, you know, so in those conditions, and you saw it, well, what, you know, what happened, well, the, the, essentially what happened was, this is the Bob Burnett version of history. So as I say that, there's, there's people that will object to what I'm about to say. But I would say there was very, very poor fiscal discipline in the public pub coast.

They had all this money, and they spent it. They way overspent. That's why we had these $12,000 systems. And they continued to overspend for a couple years. So a lot of the meteoric rise in hash rate that we saw 2022, 2022, 2023, 2024, was because capital was too easy, and it caused overspending and overbuilding. And that had the very negative effect of meaning that small to medium-sized companies, which typically don't have access to capital, but maybe had operational excellence,

they maybe knew how to run a low-cost operation. Maybe they even had access to some low-cost power, but in smaller pockets. They were forced out of business, or the business never started. So the way I look at it is, some people might look at it as Darwinian, but it really wasn't the survival of the fittest. It was the survival of the biggest. It's kind of like, you know, when I guess try to put it in those animal kingdom perspectives, I'm making this up as I go, it's almost like, you know, when a new, like predator comes into a region, like an invasive species comes into a region, and it completely screws up the balance of the ecosystem.

And the apex predator, the big, the big bad one, the python, like I live in South Florida, the pythons, the Burmese pythons are in the Everglades and they're eating all the rabbits and the, you know, all these other animals. And they're making it hard for even panthers and bears, other apex predators to live. like they just like but but and so so I think something like that kind of happened and so it kind of reminds me of the um braydallo's debt cycle where like you would have had the normal almost like linear trend but we way overbuilt and then we're going to as a result we're going to weigh over correct down because it's been such a misallocation of capital essentially yeah that is

i think that is true and what what's been beneficial though is, you know, the AI thing, one gave these companies. Because if you look at the performance of the public companies, it's shitty. Yeah. Like they, they have not, they have not operated efficiently. They have, many of you have probably seen like the projected cost of producing a Bitcoin. And you'll see, I'm not going to call it any one specific company, but you see a lot of them, $103,000, $108,000, $98,000 for cost of producing one Bitcoin, which, you know,

as we're sitting here today, I think Bitcoin's at 62 after after recovery from 58 like so if you're if you're producing at those levels. But but but you have in your treasury you have 60,000 Bitcoin, you can do it. Like you, you know, you're, you're like a big fat person who has a caloric deficit every day. You can lose weight for quite a while before you die, you know. But if you're, but if you're, you know, an average person who suddenly is on a caloric deficit, You don't have a lot of, you don't have a lot of runway there. There's not a lot of runway.

So I think that's kind of what happened. And so it, you know, I don't wish ill on anybody. Those companies are pivoting. It may save them because they were on a path that was unsustainable. But it was going to take a while. Well, now they've gotten a refresh of capital, maybe under these business conditions, they can survive. Good for them if they can, doing whatever they are. But from a Bitcoin perspective, getting them out of the ecosystem, getting this apex predator who was disrupting the

ecosystem out is, I think, very positive. But it's painful right now. And hopefully it will, it will bring about, you know, the small and medium size vener. Because not to be all over the place, but this concentration of hash rate also, which is bad, right? That's kind of a centralization force. I think too much concentration of hash rate. It also tended to lead to a concentration of pools because the big guys tended to use the same pools. So there was a direct correlation between this activity and hash rate centralization and then pool centralization and then block template centralization. Like all these sort of things kind of played off of this really symptoms of the same disease.

Do you think that the public mining, because I was thinking about this myself, I agree with all that. and I wonder if like publicly traded miners is a business model that is even possibly sustainable in the long run. My instinct is actually know that it has to be more small. You have to be able to be small and nimble and able to move where the cheap energy sources are. And I think that on a large scale, it wouldn't be large publicly traded miners. I think it would be large publicly traded maybe energy companies that end up getting into the space in order to deal with any excess energy or wasted stranded energy.

But I'm just curious on your thoughts. Like I don't, I almost feel like publicly traded Bitcoin Miner. isn't a sustainable business. I agree with that with a few caveats. The first is, so I've been doing this for 10 years, and others may not know my background, but I used to work for Gateway, which was a Fortune 200 publicly traded company,

and I was with the company when we were in public, and I was the chief technical officer there, so I was in the C-suite. So I know what it means to be in a large public company. And so there was an interesting opportunity. I understand why a lot of companies took it in the post-China mining ban is there was a flurry of people that went, companies that went public in that 18-month period after that. And they did so because they were wildly profitable for a brief period.

and so what I think they either didn't understand or maybe weren't as forthright as maybe they should have been about was this was unsustainable. We had a 50% drop in hash rate. And so all the companies saw 50% increase in revenue with no change in their operating expenses. Yeah. So, I mean, when you have a 50% increase in your operating, in your revenue with no change in your operating expenses, your profitability is pretty freaking good. Like it's, and so they were raising money on the back of that. I do think it is unsustainable for a couple reasons.

The first one is that it forces you into a 90-day mentality. It is, in Bitcoin kind of vernacular, it forces a higher time preference behavior because you're beholden. And that was the number one reason when I was thinking about how to take my company forward in that period, I didn't go public. And it's hard. It's a really tough go. It sounds glamorous and sexy and all that, you know. See the people ringing the bell and like all that sort of stuff and and the big IPO. But it's a slog.

It's really hard. Well, my first instinct is kind of like, you know, speedboat versus like giant tanker. That it's something along the lines of because of the difficulty adjustment, no matter how big you are, you can't actually have a moat. Like, you can't be so big that you can basically prevent other competitors from coming in because the difficulty just isn't always going to sneak up on you. Well, it does, but I think you can build your business model. Like, I'll give you some insight a little bit into the way barefoot works. So when we put up a new facility, one, we produce our own energy almost in all our new sites.

We still have a few grid things, but all our new stuff, we produce our own energy. Mostly gas or all gas? We have gas, we have hydro, we have natural gas from natural gas wells, we have natural gas from anaerobic digestion, we have different ways in which we attack it. The common theme, though, is our energy is, let's just say sub three cent per kilowatt energy. We can produce it ourselves, sub three. cents per kilowatt.

And we can essentially do it 100% of the time. So we're not dealing with curtailment or not dealing with demand response. We're not dealing with all these things. And maybe you can kind of get that same situation, especially like in Urquot. You know, maybe you can get that. But as I view it, I can't say for sure five years. from now, 10 years from now that those on-grid opportunities will still exist. I also, I'm here to mine Bitcoin.

So I don't want to be curtailed. Yeah. You know, that's a Fiat mentality thing, right? To say, well, I'm going to curtail my Bitcoin mining because I can get more essentially selling my access to this energy back. may be true in Fiat measurement, but you're not making Bitcoin. You're not securing the network. You're, you know.

And so that, so that's one issue. The other issue you brought up is that there's a law diminishing returns. So, and as it applies to this is, if we reverse the clock back, let's say, to 2021, go back five, six years, if you, let's say you had a lot of capital and, like I said, very different time, you had a lot of capital, you wanted to build a 100 megawatt facility. There were at that time still plenty of places you could go and you could maybe find $3.7 per kilowatt hour with some kicker because you'll curtail at a certain time and, you know, maybe you didn't even have to build out that much of the you didn't have to build out a substation

maybe it was already there um maybe there was an old aluminum smelting plant that you took over like you remember probably remember you've been around the long time too like you probably remember these sort of stories well those are all gone like that that's all been sucked up so do those kind of opportunities still exist. Yes, they do, but at a small scale. It might require going to a small town in Iowa or Missouri. I'm talking on grid, first of all, on grid. And you find a town of 3,800 people that used to have 11,000 people. And it used to have a, I don't know, a factory, a grain drying, operation or whatever and they have this rural cooperative power company and they have the infrastructure for 12 megawatts but they're currently using seven so they would love to have somebody come in and

buy five megawatts yeah now if you're a small company um three five seven guys and you can stand up the capital to go build that out, that's a real business. Like you can, you know, again, you might be, maybe you can get that three point something cent per kilowatt hour price. You can still make it in Bitcoin doing that. And it's a real business. But if you are a public company with 972 megawatts under your already mined, you're already mining at that, are you going to chase a five megawatt opportunity? No, it doesn't, you know,

it doesn't move the needle for you. And you have to put in the effort. You have to apply the overhead of this monstrosity onto this little operation. It, you know, it doesn't work. However, you know, gives some of my advice to anybody out there too. Like when you build these operations, and this is what Barefoot does, we build an operation, you have to build into your cost structure, like reserves.

So when we're mining Bitcoin in our operations, we learned this. We didn't start this way. We learned this like, hey, we have to set aside a certain percentage. We hold it in Bitcoin. that's for machine refreshes. We have, because we produce our own power,

we have reserves for engine rebuilds, for unexpected maintenance, for like all this stuff. All this stuff is built into the business model. When I first got into Bitcoin, I was overwhelmed. The jargon, the security risks, the fear that one mistake could cost everything. I remember staring at my screen and wondering, Are my keys safe? Did I do this right? That experience is why I started BTC sessions.

For over a decade, this channel has helped millions of people like you learn how to use and secure Bitcoin. But I realized something. For many people, videos aren't enough. Everyone learns differently. Some need to ask questions in real time as an expert walks through their setup, their goals, and their threat model. And certain things like advanced cold storage, inheritance planning, privacy, and node or mining setups often can't be fully solved by watching another tutorial. So I built BTC mentor. I recruited the best Bitcoin educators on the planet to work with you one-on-one. Real experts, real answers, personalized hands-on guidance tailored to your exact situation. Whether you're brand new or building a complex setup, we meet you where you're at and walk with you step by step.

By the end, you don't just hope your Bitcoin is safe. You know it is. If you're ready for that level of confidence, then head to BTC Mentor.io and book a call with us today. What's the usual kind of timeline for machine like deprecation? What would you normally cycle through an ASEC? Would it be like two, three years? Three to four.

Three to four? But again, that's at, you know, let's say well under three cents per kilowatt hour. But that's fully burdened, by the way. That includes like maintenance cost of engines and cost of gas and those other things. So, but here's the thing. As you're building the reserve, you can make business decisions. So if you've built a reserve and suddenly, maybe you don't have all the money

you need to replace everything, but suddenly a deal comes. up and you can buy 200 S-21XP-270s that are only six months old and you get them for 40 cents on the dollar, okay, well, then you pull the trigger and you accelerate the replacement cycle. So what you have to, the mistake that I see a lot of companies and people do is they, they don't build mining businesses for perpetuity. They, they kind of look at it as a four-year cycle. And they, they don't build it so that it, it's cash flow and these reserves preserve it so that it, you know, We, as a small company, at least compared to the PubCos, you know, we're trying to build our sustainability and survivability. That's a lot of what mining is, by the way.

Mining is a business of periods of survival followed by. brief windows of prosperity. Yeah. Followed by another period of survival. Like you, you know, and so you... It's like being a hodler.

You're only right for like two months out of the cycle and then we're just back down to the trenches. It is. Yeah, it is. It is. And so you have to be realistic about it. And I know, kind of been all over the map.

But one of the things that I think is pertinent is that you, What that means is you do not enter mining because you're in a period of prosperity. The best time to enter mining is to figure out how to do it in the depths of despair, which is by the way where we are right now. Which is right now. It's right now. Like if, you know, you know, figure out how to raise the money, figure out how to find the energy or produce the energy. I recommend the latter.

That's what we do. Figure out how to produce your own. And go take advantage of the fact that you can get equipment at much cheaper than normal prices. And build a business that makes a little bit of money right now. And wait. Because the thing about Bitcoin is, if we. If we wake up 45 days from now and Bitcoin is $100,000, the hash rate can't respond to that. That fast.

It can turn off. If we woke up tomorrow or 30 days from now and Bitcoin was $20,000, the network will turn off, right? There'll still be some people out there that can survive. or even the philosophical miners. Like, they'll still be a network. It'll still work. But you can respond instantly to the downside, but you can respond only with big lag times to the upside.

And that's, so when the hash price goes up, you get a period if you're there. But if you try to respond in that period, you're probably not going to get up before the, the period of prosperity ends and we're back into the other period. You know, it's interesting. It reminds me of,

I think it was, Ben was pulling the stats on like, if you missed the best 10 days out of each year in terms of the Bitcoin market, then you were down at the end. Like, you have to be in it when you have those little rips. Otherwise, you don't really benefit in a way prosper.

There's tons of want to unpack there, even going to the centralization risk with miners and hash and all that as well. But before that, you mentioned that you think that hash rate's going to continue going down into basically into the having, which I think is one year and nine months away, something like that. Why such a long, drawn-out timeline and continue declining in hash rate? And then additionally just to throw in there, is there any point in time where you'd be concerned about the security of the network from a hash perspective? For me, I was trying to think about this the other day.

And if I remember correctly, I think, oh, geez, I think if I go back to like 2020 or 2019, we're only at like 100X a hash or whatever it was. And so that would be like a tenth of what the network is roughly right now. And I didn't think it was unsecure at that point in time. So even just as a loose heuristic, I was like, look, if I lost 90% of hash, I still don't think we'd necessarily be insecure. Yeah.

Yeah, I don't have concerns about the security because the, as you said, you know, if we fall by half or two thirds or something like that, it's still massive. Yeah. And although I, I, would say the risk does start increasing. But it's it's up it's it's it's really edge case stuff where the concern the concern of a large bad actor trying to assemble

enough hash power to attack the network. That's what we always have to worry about. Okay. So in the current conditions, there's no way that bad actor could get the power or that the compute, the hash, to do so. So because even for instance, like if we're 20% off of the peak right now, it's roughly in that range, you could say, well, if the bad actor acquires that 20%, like somehow they take all the hash that went offline and they acquire it. and they're able to energize it, and they direct it in a negative way at the network. Could they do anything? No. Like, it doesn't. Now, if the network falls by half,

and, you know, so now theoretically they could, right? So, in fact, even if it falls by like 40%, because there's a misperception that a 51% attack takes 51%. It actually doesn't. It only takes like a third. But realistically, no. Not likely, you know, because the, even the hash rate being there, like, where's the power come from? Where does, you know, a couple gigawatts of power. come from directed at this.

You would direct it all at a loss too. It's not, it's like as soon as you start buying up, as soon as they started to come in and buy those ASICs, it'd also be raising the price of the ASICs on the second had market, and it'd be running away from them as well. Yeah, yeah.

Well, I will say this, though. It reminds me of something you said earlier that I forgot to comment on, which is you talked about maybe some of the energy companies stepping in and. Yeah. some stuff like that. So kind of go back to that for just a second.

I think we will see some of that. I don't think we will see nearly as much as people think. The part of the reason is, and I think it's important to maybe shatter an illusion that's often used as a narrative. Okay. So as things stand today, Bitcoin uses a little over one-half of one percent of the world's electricity. Okay. It, as an industry this year, it will generate all the miners worldwide together. It depends on how the price of Bitcoin goes, but let's call it $12 billion.

that's the total revenue for the industry so that 12 billion dollars defines really the maximum power budget for the industry so we could buy if we took 100% of the money that we earned and directed it just to buy power to keep you know to keep us going it's 12 billion dollars Well, we're like in order and a half magnitude smaller, or like two orders of magnitude actually, smaller than the global electricity market. We are so freaking small that the truth is we can't balance the world's grids. We can't be the curtailment solution for everybody. Can we do it in like select cases? Yes. And it and has helped Urquot. Yes. Wonderful success story.

It is not scalable and extensible. And I think we should not fool ourselves. We should not be propagating this message to the world about us being the savior because we're not. And I don't, I don't see a path where we ever are big enough. Maybe we could become. or three percent of world. I mean, I could probably stretch myself to find a scenario where we're like two or three percent of the world's electricity consumption, but highly unlikely. The economics aren't there. And so getting back to your thing about the energy companies, we just don't solve a big

enough problem for them. Like, we're just not big enough. We can do it on small localized situations. but but it really doesn't work um at scale and and i think we should be careful about creating this false what i perceive to be a false promise because um you know because it's kind of weird on one hand we have we it's not so bad anymore but we live through this period of people think bitcoin was going to use all the world's energy that was one side of this.

And then the other side, I'm not trying to be critical of people. I'm just trying to be realistic. Like, we just don't have the capacity to really solve grid problems, you know, to provide base load, to be curtailment, to be demand response, like all this sort of stuff at any level of scale.

So I think the narrative on both sides should go away. Like, it should not be there. What we can do, it's where I'm focused, is we can find spots where energy is trapped. It could be a, like I have natural gas wells. So there are natural gas wells that are trapped. The well exists, but the pipeline is either unaccessible, or too far away or something like that. Well, you know, we can use that gas.

We can find these different pockets, little hydro facilities and things like that. We can provide some benefits of the world by doing that. We can do it in a way that is unobtrusive. And I think that really helps fight because interestingly now, I think we've seen a lot of narrative pushing against AI and data centers.

Like there's all these movements, I think, that were directed. Oh, yeah. And the youth in particular, which is kind of surprising. I mean, I get it. I feel like it threatens their first opportunities on the career ladder. But like, I didn't realize just how strong it was to maybe about a month ago or so. Yeah. And we even face it.

So we have some operations, for instance, in western Pennsylvania, very rural areas. And like one of our facilities, it's a five megawatts facility, all powered by natural gas. We're not connected to the grid. We use Starlink and cellular for backup. We don't have a water line. Like we exist in our own little mining citadel there, like you could say. Like we are completely self-sufficient within that facility. We are close to a small town.

And we just in the last, we've been there for over a year, but we just received a call from the town supervisor. And we try to be friendly and be a good citizen. But he called up and said, hey, I'm starting to get a lot of feedback from the community that they're concerned that you guys are going to raise their power costs and use up all the water. And we had to remind him, this is the town supervisor, we don't use any of your power. We don't use any of your water. We don't touch it.

We don't touch it. We employ some of your, it's the town of like 860 people. we employ like five. Like that's a big fucking deal there. Like, like don't come after us. But what's happened is the general community doesn't understand things well. They're aware of our presence kind of just outside of town on this, you know, hill on a well pad.

And they're scared because these movements are stirring people up. And a lot of these are fixed income people. oh, if my power cost goes up, if my water cost goes up. Like, they're afraid, I understand, you know, but they're, these activists are causing undue problems. Maybe, maybe in select cases they do have something to really protest. That's probably, maybe true, maybe not. I don't know.

I'm not an expert on every site, but, yeah. No, it's interesting. It's, and I wonder to, because while you're talking there, I wonder if there's been misallocation. Like, I'm thinking even only terms of these, like, credit cycles and cycles moving forward to, like, I wonder if we're going to see at some point in time. Like, we just had meta announced that they're going to be selling excess compute coming up here. Like, I wonder if you'll see the same sort of pattern play out in the AI infrastructure industry where they way overbuild. That might actually come to the benefit of Bitcoin miners down the line when they just have way more power than they even necessarily need for the operations. Do you quick thoughts on that?

and then also want to click tag on there, just to get some clarification. Again, why do you think hash rate will come down for such a long period of time? Yeah. Okay. So, okay, so why will hash rate come down for a long period of time? I think I've avoided that question more than once already. So I'll hit us. So, okay.

I mean, we are in the depths of despair right now. yeah, every sentiment. So by the way, even just on like the YouTube side, because I watched the videos and what people are searching for it and all this stuff too, every possible thing that I could look at the try and gauge sentiment says it's absolutely shit, that everyone is miserable or they just don't care. Yeah. So the truth of the matter is raising capital is hard. It's not impossible, but it's hard. And we're just about to actually enter. We're planning expand. So we we're we're going to open up a new investment opportunity here probably in the next 30 days. Similar site to the one I just talked about in Pennsylvania, natural gas site. But there's a select group of people who one have the money. Money's tight because, you know, when you're raising money and when Bitcoin at 110,000, I mean, our most likely investors are Bitcoiners, right? So if Bitcoin's at 110,000, they feel a lot better about either cashing in some Bitcoin

or taking a loan against the Bitcoin to feed the investment. The banks and the lending institutions, which traditionally hate us anyway, we've never really been able to secure them. They really hate us now. Like, you know, so capital is there. I don't see any of the Pubco's jumping in. Like I just, I see nothing. I want to come back to who I do think will come in on the backside of the.

Okay. So remind me to do that if I don't hit it naturally. The halving is scary. Yeah. So when you're putting a business plan in place and you look at it, you go, well, okay, I'm going to, if I start today, let's say a site takes four months to bring up, like a small site, you know, let's say four months, just pretty quick, actually. Well, now you have maybe a 15-month run, something on that order, 16-month run, pre-having.

You've got to deal with the subsidy getting cut in half. and we have a fee market that are so low yeah yeah so you know you can't while historically fees look like they rise just in front of the halving but you know a lot of that was like the last one which was especially high was driven by a lot of the ordinal inscription yeah a lot of the crap that was going on at that point in time i remember on the day of the having that like fees just went through the roof One company I like pointing people to when they ask about Bitcoin mining is abundant mines. They were founded by Bo and Christine Turner after losing over half a million dollars to broken promises in the mining industry.

And they built their hosting model to remove the usual headaches. With abundant mines, you own your machines and keep 100% of the Bitcoin you mine. There's no revenue share, no hidden skims. Pricing is simple. One flat monthly fee covers power, parts, labor, and repairs. They also guarantee uptime. The machine goes down, their hash rate redirect system routes hash power from their fleet, so earnings don't just stop.

And every machine is insured at full replacement value. Everything is hosted in the U.S., powered by hydro, and mining equipment may qualify for 100% Year 1 bonus depreciation. Learn more at Abunditmines.com slash sessions. Oh, yeah, well, there was a... The block 840,000, which was the having block, I think it was like 38 Bitcoin was the fee. Whoa. Yeah. So like I said, the ordinal's inscription guys, which those you don't know me, I'm not a fan of that stuff.

But it did. It did show what happens. When, so what I'm grateful for is I think it was a economic experiment or social experiment on the scarcity of block space. Yep. And so, you know, we got to see in real time with real data what happens when there's competition to get in a block, to get in a block before a certain date or a certain time, like how valuable that can be. So that gives us hope for the long run, but it's not in the short run. So I just, I don't see any major investment in mining until we get to the back side of the having. And we see some indication of either much higher Bitcoin price, sustained higher Bitcoin price,

and or a sustained spike in the fee market. And I just don't see any money coming in. What I do see is a lot of machine obsolescence coming up. So next on, like we're seeing the S19K pros start to flip out of circulation. and then we'll have the S-19 XP class. We'll follow that. And so there's a lot of hash rate represented by those machine classes, currently in operation.

And I just don't see it being refilled. One of the traditional things that would happen, by the way, is that let's say if you had a, Let's say you had an S-19 K-Pro. Okay. Now, it breaks or its economics no longer are viable. Well, traditionally what would happen in a commercial situation is somebody's going to go buy a better machine. It would probably be something like an S-19 XP27.

So what you would see is with roughly the same power profile in that spot, you would see a doubling of the hash rate. Yep. So while, you know, hash rate was doing this, it was going up. See, the first part of it was actually new energy coming in and new machines. And the second part of the spike was a lot less new energy, but a lot more, uh, replacement is basically Moore's law driving us up. So that's, but we're not, I think we're instead seeing the opposite. We're either seeing facilities shut down or facilities converted to AI or data center applications.

Are we still seeing the same kind of growth in machine and ASIC efficiency, or is that starting to kind of taper off a bit as well? Well, it appears to be slowing and I think it will continue to slow. And this hasn't been talked about a lot. It's a really good question. I'm purely speculating. I have no inside knowledge, but I lived in the chip world from my personal computer days a lot. It's been a lot of time with these kind of companies. Bitmain, MicroBT,

uh, Kanaan, these sort of companies, like they, they have relationships with these, um, with TSM or Samsung that build the chips. Um, if, if I were them, I would be extremely reticent to be placed. And you have to place orders like a year ahead. You have to put deposits down. You have to reserve the way for, for, you know, Like I would be, I would be shutting that shit down big time, not to zero. Yeah. I would, you know, because, or I would be selling my wafer starts to invidia or Qualcomm or these other companies, but I would be doing everything I could because once they

get the chip built, they got to turn it into a system. Yep. And, you know, that takes a lot of capital on their side. And I don't think even when they sell new units today, they're really making any money. We also have, by the way, even though there's not a lot of it in our systems, you know, there's still like DRAM and things like that that go into a Bitcoin mining system. Yep. And those prices are just ungodly, right?

And so the market can't bear it, though. Like, we, you know, we can't bear. It's why I think the use, the use market's flush because, like, those are, those are sunk costs. But the new systems, I think they're having trouble getting anybody interested in new systems. Prices just aren't cheap enough. So anyway, that's my long-winded way of saying, I believe we're going to see way, way less wafer starts directed at Bitcoin mining, and then that will.

So what could happen then, if we go back to the trilemma, is when the next period of prosperity comes, there's going to be no systems. they're like use systems will get like super expensive because like they won't be producing the new ones and then they'll they'll restart the engine but it's a it's many months if not a year to restart the engine um at the same time they're going to most likely slow down R&D and pushing these efficiency gains, which get harder anyway.

So, so yeah. So I see a lot of that kind of just really, really dragging. Not financial advice. It almost sounds like if you want to go long Bitcoin mining and prosperity,

like just buy a palette of used ASICs and put them in the barn, just wait to sell them when everything takes off. You could try it. You know, so I'll never forget that in, it would have been like late 2020, I had an opportunity to buy 10,000 S-9s for 25 bucks a pop. Yeah. And I passed, right?

And that would have been a, what would that be? That'd be a quarter million dollars. So, like, well, am I. going to, you know, I don't know. But a year later, I probably could have sold them for 150 to 200 each. Yeah. In the midst of the China mining band. So we all have our woulda, coulda, shoulda stories. Um, so that could happen. And in hindsight, it wouldn't have been that stupid because other than that was 10,000, maybe I could have bought a thousand, something. Yeah. But, but, but,

because had the China mining ban not happened, they still would have probably been worth $20 or something. Like they wouldn't have, they had of a scrap, they was like barely over scrapped. I could have probably scrapped. Let's say I put $25,000, instead of $250,000, I put $25 grand in.

And then, you know, had a chance to 10x my money. But my downside was maybe getting, 60 cents on the dollar in scrap. Like, like, I don't know. I, I didn't see the 10x possibility, though. That was, I don't think, that was, that was, that was, that was, that was the part of the equation. So I, yeah, I do want to make sure. I mean, you said, wasn't that good.

Who will be getting in? You want to make sure we hit on who will be getting in the industry. So, as radical as this will seem, um, with blocks, space being so available and fees being low. I expect in the next cycle, so we'll call that the next, you know, post the next having, we will see the entrance at a decent scale of the financial institutions in the nation states. I completely agree. Sorry, I just want to throw they're super quick. And please continue, let me interrupt,

but I'm just so excited you brought that up. Because with, what is it, with Intel getting bought by the US government, the US government having to share in Intel, and then Open AI is trying to give them 5% stake as well, too. I completely agree, but please continue. Yeah. So we'll see it before the having, by the way.

We will see the evidence of this occurring beforehand. But the institutional adoption of Bitcoin will start there, and we'll talk about nation states separately. The institutional adoption is there. It's part of the reason why I think people are just completely fluxomed by the price, because we have all this institutional adoption of Bitcoin. I think they are on the cusp of realizing that the power of Bitcoin, is not simply the asset, but the network.

And that, in essence, block space itself is the, from their perspective as a bank or a financial institution, that's actually what's precious. Yeah. Their ability to participate and control transactions. and in a way potentially existential. So if you're a bank, financial institution and you have a shitload of Bitcoin, but block space is crowded, you don't have a mechanism to move it. And you're, you know, how many big businesses regularly use services where they can't predict when they can get access to the service

and what the cost of the service is. It doesn't seem very reasonable, right? So, you know, would you rent hotel rooms by just showing up at the hotel when you want to sleep a night at a hotel, would you just show up in the lobby and say, how much is a room? And so, well, we're full, sir. Oh, shoot.

What do I do? You know? Or, yeah, we have a room available. But it's, you know, $750 a night. Yeah. Like, well, that's, that's the way Bitcoin is structured right now.

Right? So if you're, people will probably hate this, but I'm just giving the reality. Okay. If you're BlackRock, if you're Bank of America, if you're Morgan Stanley, and you want, every day you're going to be making Bitcoin transactions, moving from account to account, doing trades, putting things into storage. and you don't know if you're going to get in blocks and get confirmed and you don't know what the cost is,

that does not sit well in corporate America. Right? Doesn't pencil. Yep. So there is a way around it. And the way around it is Bank of America gets, now they could build it themselves or they could rent it beforehand, but rent it from somebody or have a partnership with somebody.

but they go control, let's just say, one half of one percent of the world's hash rate. And they control the block template creation for that. And what do they do? They put all of their transactions in the block. It has nothing to do with fees, right? They just say, well, okay, we have, percentage-wise, we're going to get roughly a block every day. Some days we may get one, some days we may get none,

some days we may get two, but, you know, at that rate. And we're going to just prioritize all our own shit. And we'll put other stuff in if there's room, but we're prioritizing our own shit. And I think that's what's going to happen is the financial institutions will realize that they must participate in mining. And that might sound wild, but go look at like Bank of America, pull one of their like year-end financial statements and look at their IT budget. It's like $10 billion. Whoa. I told you earlier,

the Bitcoin Network's revenue is like $12 billion in a year. The IT budget, they could stand up a couple hundred million dollars a year of mining. And it barely moves their operational costs. They don't have to look at it. they don't have to look at mining as a business producing Bitcoin. They look and they will look at Bitcoin as an expense to get access to block space. Yeah.

So that's a misnomer, by the way. I've said this several times, but I think if you ask most people, what is the business of a Bitcoin miner? They will say something like, oh, they make Bitcoin. The answer is wrong. They make block space and they get paid in Bitcoin. Yep. So people that are hashers, and to distinguish a hasher, from a miner, hashers, which most of the Pubcos were not, were actually not minors,

they were hashers. They would send their hash rate to a pool. They would get paid for that. So for them, as a hasher, yes, their product, the product was their hash rate. They got paid in Bitcoin. If you're a minor, barefoot's a minor. We use Ocean with datum. we produce block space. We create our own templates, as do hundreds of other companies and individuals now. And there's even been recently an SV2 block created on the man. That's great. That's wonderful.

The more the merrier, there's always been a few solo miners out there. Although some of the solar miners aren't really creating their own template. They're kind of, but anyway, we won't go into that. So that's the direction. And I think the financial institutions will become miners. And it's going to get funky because the way they view the economics of mining, they're not trying to maximize the block reward. They're trying to maximize their financial interests,

which include making sure that all their Bitcoin business is prioritized. So the value is not in the block reward. The value is in the power of the block space, which leads us to the second one, which is the nation state. So the nation state has some similar things. And now I think we're talking about things like economic sovereignty. So if you're a nation and you want to insert. insulate yourself or insure yourself against economic sanctions or what I would consider financial attacks by the global financial system, this is how you do it. Now, it's pretty clear that Iran, for instance, is already doing this. Yep. And people, what I think got missed, I can't prove what I'm about to say. So this is speculation.

Within the Bitcoin community, there was a old look. Iran is taking Bitcoin payments as a tax to use the Strait of Hormuz. I remember when that came up. Yep. Well, what nobody knows for sure, but they have like a percent or two, most likely, of global hash rate too. And I would expect, and they've been doing it for a long time, I would expect that they have a mechanism in place. They may or may not be using it,

but they have a mechanism in place where they can solo mine if they have to. So that if we ever saw things like olfax compliance trying to be forced into the pools or like any of these sort of restrictions, that they'll just go and create those templates. And I think that's smart. And I'm sure North Korea knows they can do that. I'm sure Iran knows they can do that. Russia knows that they can do that.

And I think what we're going to see is we're going to see dozens of countries realize that this is their safety valve. It's their their, their, their, their, their, their, national sovereignty, certainly their economic sovereignty is dependent on this. And we're going to see an explosion of that. I completely agree. I even think that you'll see geographical pools. Like I what is the amp pool? I think is based out of Singapore. And so if you're dependent on them to actually pay you out from the coinbase after the fact, that kind of becomes a liability potentially at some point in time that you'd want to have like an American pool, like a UK pool. Like you might even see a little bit more. decentralized in that sort of sense where they wouldn't want to have it outside the bounds of their legal system. I also just want to quickly point out that if you really want to get your tinfoil hat on,

which is great and tons of fun, what was it? It was June of last year that the U.S. bombed Iran and hash came down. That when there was that first attack on their nuclear facilities, hash rate fell off a little bit. Could be complete coincidence, but I thought it was interesting worth pointing out. Yeah, I mean, none of us know for sure. but I doubt it was the full reason for that drop, but it's... Oh, I agreed. I think it was just perhaps a similar power source or something.

But it could have been a contributing factor. And, I mean, there's smart people in every country of the world. And I think the realization... of the power of Bitcoin. See, here in the West, we take for granted certain things. Like, we talk about like the sovereign individual, right? I mean, that's a very common. Most Bitcoiners have read the book and, you know, we have all this thing.

But the exact same principles extend at the state level. And so if you're Israel or are being, or, you know, pick your country or El Salvador or, you know, Ecuador, or whatever, whatever country you are, especially these small, medium-sized countries that are not, like, super aligned with either the U.S. or China, like they don't have Big Brother. And they don't want that either. Like, they want to stay sovereign.

They don't want that. Bitcoin is a fabulous tool. Because if they can say, well, even if we get kicked off the SWIF system, we have a way to sell oranges and buy wheat and move commerce around the, you know, sell goods and services around the world, that's really freaking powerful. And any country, I've spoken on this a couple of times, but. But any country that doesn't at least have that as a safety valve and have some sliver of the template control is correct. And by the way, the other thing, I think you're going to see more and more pools. I think we're going to see the death of FPPS. And I don't know how much your typical audience would understand the different payout methods.

Give them a quick rundown of like, what is it, a full pay up per share? What is it? A full pay per share? Full pay per share. Full pay per share in terms of, and then what, something like Ocean and you were doing. So the simple version is this. If you point your hash rate at Foundry, you're essentially leasing that hash rate to them. And whether they win blocks or not, they're going to pay you.

and when you get paid, it's kind of like getting a check in the mail. So you're not getting paid from the Coinbase. You are getting paid from Foundry and you're, by I'm not telling you to be worried about this, but you're dependent on them paying you. And they might pay you from Bitcoin that they won in a block 10 minutes ago, but they might also pay you from Bitcoin that they had from a year ago. Like you don't know. if you mine with Ocean, or you solo mine, also, you get paid from the Coinbase transaction.

So the Bitcoin network is paying you the money. And so there's no counterparty risk, essentially, in the equation. It also means, by the way, so you're getting virgin Bitcoin. and we get approached regularly from people who want to buy virgin bitcoin there is a secondary market for virgin bitcoin and it and it it's a premium why the premium because there are people who believe that in the future there may be um enforcement by certain organizations of Bitcoin that came from the wrong group. Oh, they're weird about like the transaction history prior to them getting it?

Correct. So they say, well, if I buy it from barefoot as an example, and barefoot was paid directly from the Coinbase transaction, I know that. And by the, so let's say, I'll just give you an example. Let's say you're a family office. You're building a massive Bitcoin stash in a trust for 50, 100 years from now. You're going to take this Bitcoin, you're never going to touch it for 50, 100 years. Yep.

You want the most pristine Bitcoin you can get. Yep. And would you pay an extra 3 or 5% for it? knowing you're not going to touch it for 50 or 100 years, do you really give a fuck? Like how? Oh, it's like a 6% spread for non-KYC, right? There's absolutely potentially the value there.

Because if you're planning to hold it for that long, you're de-risking any sort of regulatory or cultural changes along the way. Correct. And so that's, essentially, that's the way some of these big boys' family offices are thinking. So. Interesting perspective.

Okay. So we got Nation's a United States. coming in. We talked a little bit about the decentralization. The other thing I do want to talk about is BIP 110 because you've been flagging support for BIP 110. And I'm curious, even just laying out quickly for people that might not be necessarily familiar. We touched on a little bit with the centralization there. What are the problems that essentially are trying to be addressed? And then additionally, come August here, I'm curious on what you think the, maybe the top two most likely scenarios are. And what do you hope to see? What do you think is likely to happen? Okay. All right.

BIP 110, different people have different reasons for supporting it, by the way, and mine may not be the same as other people. I'll give you mine and I'll try to steal them in a few others. But I would say it's a collective response from a group that objected to the policy changes. promoted by Bitcoin Core, starting with version 30. And the biggest thing was a propensity to essentially stop using policy. So traditionally what would happen is an opportunity. So there's an option for something called opertern,

for those less technical in the audience. Think of it as if you were writing a check, I was writing Nathan a check for $100 so I was buying his bicycle, like old school check, right? I would have in a memo field and I could say a note to myself, buying Nathan's bike, something like that, right? So Bitcoin has the same opportunity. And there are historical examples like, you know, Chancellor on the Brink and different times when people have used that field to put what I think a lot of people would call data into the blockchain.

Okay. And so it historically was restricted to 40 bytes and then a few versions ago it got changed to 8. 83 bytes. I think most people find that that's fair. Like, not really a problem. And useful. Like, I, I, I think that the example I just gave, if instead of writing Nathan a check,

I was buying his bicycle, we were using Bitcoin, and I wanted to, for whatever reason, make a note I was buying his bike, I could do that, right? It costs me a little extra because that makes the transaction larger, and the fee structure is based on the size of this transaction. Now, Bitcoin is set up so that, and so that was called policy, or sometimes it's called the standard, and the nodes that you, when you would create a node

with a Bitcoin core client, that's the way the standard was set. That also meant that as your node was running, if it saw transactions being broadcast to it, that violated that rule, they would not rebroadcast them. They would not enter the mempool of that node and they would not rebroadcast them. So what did that mean?

Well, there's something called consensus in Bitcoin, which is different. So it says, like, what is the largest transaction that could be created and be considered part of a valid block? So that happens to be the whole block. Like you could theoretically have a transaction that, yeah. So that was not. So if you were out there and that's what you wanted to do, then you had to get a minor essentially to help you. Like you had to do something special.

Like Marathon has a service called SlipStream and you could, that would be one way. You pay them extra and they would do that. Okay. I think that for the most part, everybody was okay with that. What it meant, though, was that different nodes could be configured so they had different Mempool policies, and we could move certain transactions may or may not get propagated through the network, depending on it. There were several services outside of SlipStream,

for instance, something called Libra Relay, written by Peter Todd, that was a group of nodes that said, well, we'll relay everything. Like, we'll try to get, like, they're, I'll try not to be critical. Just say, like, well, they, they just wanted to say, like, hey, we're, we're going to enable the maximum freedom. So we'll, anything that is considered consensus valid will propagate it. Yeah. Set a preferential peering and make their own little way through. Right. Okay. So those nodes got set up that way. What kind of happened, though, was when Segwit and then Taproot were activated, certain things happened.

One of them was that the opportunity to create data in places other than Apperturn also came about. and so things like ruins use the operative but then other things like inscriptions primarily the inscription used what I would consider to be an exploit of the window open by Segwit and taproot. Yeah. Okay. And so the thing we talked about earlier were,

the 38 Bitcoin or whatever the number was, got in fees was because people were doing those sort of things. Well, it got to the point where I think the development community basically looked at it and said, well, everything is ultimately getting through. So these policy restrictions of like 83 bytes really were meaningless because everything is getting through. So starting in version 30, we're going to change the default from 83 bytes to 100,000 bytes. And so you could, from the perspective of a certain group, that became a lot of them were part of the Bit 110 movement.

It was like, we're giving up on trying to fight spam. Now, I should also point out that as this was occurring, as the proposition for Bitcoin Core to do this, when they were still working on version 30, there were lots of people, myself included, that said, hey, I think this is wrong. And by the way, one of the reasons I think you're wrong is, while it is true that all the spam gets through,

I think it gets through because of pool centralization. So if you only have, if you have 90% of all the templates created by five pools, it's really the behavior of those five pools that determines what gets in blocks. And by the way, if they were the opposite, none of it would get, through. Correct. Right. So, so you're making, you're kind of giving up based on what I believe are current conditions that aren't necessarily the long-term conditions. And so I think that's a mistake. So, and the manner in which Bitcoin core, I think rejected the input of, me plus a whole bunch of other people. It's not about me, but I'm just representative of one

group of people. It was somewhat offensive, felt kind of flippant. We didn't see the need for why now. They have other reasons that get somewhat technical. Interestingly, a lot of them had to do with them, something called compact block relay, which we don't need. to talk about, but let's just say it's a creation that I think is cool and that will work better. It doesn't mean it doesn't, it will work better, honestly, with this policy, but the benefit is trivial to the small miner. And I, you know, one of the things I've said publicly is like the Bitcoin core guys and gals that were working on it. they were doing something under the guise of helping the small miners,

but to my knowledge, didn't talk to any small miners to say, like, do you want this? So what we had was kind of a couple things happening simultaneously. I know this is long-winded. One was a technologically. disagreement about whether this stuff worked or not. A second piece that I think was kind of around the process and the culture,

like whose voice matters, who are they listening to? And it pissed a lot of people off, right? And it also scared a lot of people. So ultimately this resulted in BIP 110. So it was a proposal to say, well, this has gotten out of hand. So what we're going to do is temporarily, BIP 110 is also called RDTS, reduced data temporary soft fork. So what it does is say we will change consensus

for a one-year period of time and reduce it to 256 bytes of what's called arbitrary data. It's kind of that memo field I talked about. So you could still do it, but you do it within reason. It, and it gives us time as a community to hopefully come back and actually have a dialogue

about where to go in the long run. So for me, that's a big part of it. The second part of it, for me, is that there's something called the Seguid Discount. So when we saw the arbitrary data that was going in moved from OpperTurn over into this Taproot script, what happens is the users of that method get a 75% discount on the block space that they use. So that's called the Segwit discount. Probably a lot of people have heard of it. That's basically what happened.

I'm like, well, if we go back to earlier, my job is to produce block space. So this is like a really bad thing. My job is to produce block space. yet the protocol is forcing me to give a 75% discount to somebody no matter how much they use. And I want to see that changed. The third reason, which I'm less concerned about, but some of the people that are BIP 110 proponents, feel very passionately about, is the risk that a transaction, including, C-SAM is a child or even just normal, you know, sexually explicit materials or very offensive

materials, becomes higher. I think that's less of a risk than others, but some people view it as even like an existential issue. So that happened. So hence we have BIP 110. Well, BIP 110. activates at block height 9-6-1-632. It's roughly 35.

Excuse me? It's roughly mid-August, yes? Yeah. So what happens is somewhere around 15% of the nodes and the network today say that they support BIP 110 and they're configured such that after that date, they will only accept blocks which also signal support for it. And then we have 80% roughly,

we'll just use our numbers right now that appear to say they will accept blocks either way. Because a BIP 110 compliant block is compliant with, quote unquote, the normal chain or the current chain. however it presents a real issue for minors because we have to decide starting at that block height what blocks do we accept so if if when we hit that block height let's say foundry produces a block that is not compliant with bip 110 and at a similar time another minor producer produces one, maybe slightly later even, that is compliant. But it's the same block height, you know.

Well, we have to decide which block to build on after that. And so you could have minors. I think this will happen. Okay. So people talk about a chain split. I think it will happen. Is it substantial or not? I don't know.

So I think what will happen is there will be some miners that build only on blocks signaling for BIP 110. And there will be others that will accept either. However, as soon as they start building on different blocks, you have a split. So it's a real conundrum for the miners. I don't think it presents a node risk. We can talk about that. and to users. But, like, which one do we build on?

Because if there are two chains, and we need to, let's say, sell our coins, well, if the Coinbase transaction we get is, let's say, from the RDTS chain, but Coinbase doesn't view that as the viable chain, well, we got to find somebody who does. And by the way, Vice- versa. Same thing. Like, you know, it can go either way. And I think we're at a point now where I'm trying to be

as unemotional and as level-headed on this as possible. I think we're at the point where there are factions on both sides that are very obstinate in their position. Maybe that's the wrong word, very tied to their position, such that they will, they will, they, will go, these two chains will exist for a while. I was saying, you're being very nice about it. I think it's gotten really heated,

at least to some extent on either side. It's not everyone, but you can see the temperature's really gotten dialed up on both sides. Oh, yeah, it is, it is very, very, and by the, part of the, I'm trying to walk it while I clearly support BIP 110.

And that's what, that's the path I would like to see. I do not want to see a chain split. And I think that there are, I don't think it's good for Bitcoin. And I think if BIP 110 ends up not becoming the dominant chain, that there are still paths for us to hopefully resolve these differences and figure it out some,

some of the people on the BIP 110 side feel like. Like, this is it. Like, this is, you know, this is D-Day. Like, the invasion is going to work. That's probably a bad term, but, you know, we're either going to stand, you know, the fort's going to hold and or, or we're going to get overrun. Like, and, and, and, I don't view it that way. Even, and I, and I try to keep good relationships with people on the other side.

There are people, you know, for instance, like wicked who, um, never met him in person. actually. But we communicate regularly on a private basis. I don't want to say that, I don't want to say anything publicly that he said to me privately. But I will say that the dialogue is respectful and it's maybe, you know, joke around with each other a little bit. And I wish there was more of that, like, hey, we just, we see two things differently. And, um, but, but it's, um, it's a very unfortunate that we've come to this. Um, I think both sides have some fault in it getting to where it is. Um, I, I have some real concerns about core that I've expressed both privately.

to some of the leadership there, but also publicly. We've seen, for instance, in the last few days, even like Jeff Booth and some other folks have come out and talked about this. It's interesting because I think that there's somewhat of a lack of understanding. like I think core a lot of the course what we'll call the core supporters to represent the legacy side think a lot of the issue is about spam but I think most of the people on the other side it's less about spam and more about the process by which things happen and the way core behaved in the way that...

It's a loss in faith of core, is what I read a lot of it as. Yeah. And it's a rejection of core, which is, in my opinion, a little bit... One of the things I find unfortunate about the whole situation, if I'll just talk to even just a little bit on it,

was that I felt it became very, like, Democrat and Republican. Whereas, like, if I know one bit of information about your position, I can guess the rest of them. Like, we can talk about core and knots and the client and the proposal all separately, They don't actually necessarily have to be linked together. And I think that's almost like one of the casualties of what's happened here. Sorry, I just wanted to get that in.

No, it's true. And, you know, I mean, I want to say like, you know, certain things. Like, I have some dialogue with members of Corps, you know, even now. I don't think any of them are stupid. I think that for the most part, they are well intended. But I also think they have failed from a communication standpoint. Yep. I think they have been very selective about the voices that they're listening to.

I believe it's a hard job. And I come from a product development background. It's very hard to listen to everybody. It's very hard to decide whose opinion you should value and who you shouldn't. It's very difficult. So I understand it's hard. And I also understand that most of them just want to like code. like they want to get in there and do their job and work and they want to have technical discussions.

I have certain technical capabilities myself and experience. I am not as good as they are at what they do. I'm not even close. I do know a hell of a lot about mining and the way mining works, though. And I, if not me, then there are, you know, eight, ten, twelve other guys that I think are really good too. And I would like them to have a voice. And I think that that that has to change. I think that there's been a lot of antagonism.

And, you know, it's kind of like any sort of fight. I mean, at some point, Hatfields and McCoy sort of stuff, too. Like, who started this? Who threw the first hunch? I don't know. I don't know. But, you know, it's pretty toxic, dysfunctional. And, you know, I've been around the block for a long time,

stuff with Bitcoin. And part of the reason why I'm trying to keep open channels. I'm trying to be respectful. by the way, I don't agree with everybody on the BIP-1-10 side. So I have private conversations and signal groups and things like that. And I'm not agreeing with everything going on there. Like, it's not, I'm sure it's the same thing on the core side. Like, we don't all agree on everything.

Our motivations are not exactly the same. Our commitment and ability, like there are people on the BIP-110 side who are, this is it. This is like, you know, we hold the fort. If we lose the fort, if we lose the fort, then we lose Bitcoin. And we better, we better try to fork this off and, you know, maybe even a hard, like, they're thinking two or three steps ahead. They just want it to win this way.

But there are people that say, well, well, then we have to hard fork. And then we have to do this and we have to do that. I'm not there. If the, on the other hand, if BIP 110 ends up not being the dominant chain, I'm going to be really upset if there's people on the other side that gloat and also take it as reinforcement that the existing behavior and method should continue. Or that the problems that are brought up, the initial problems are not worth addressing still.

That's one of my biggest concerns about this whole thing. And I've been strategically quiet on it for a number of reasons that I won't get into. But more or less, one of my biggest worries is that the, that legitimate concerns throughout this whole process are negated from the social consensus layer if it's unsuccessful. Yeah. Yeah. Yeah. And that's, that's legitimate. And I, you know, I would, I mean, there's a, there's a lot of perspectives. I, my advice is, so if, if, if, if, if, if, if, if, if, if, if, if, if, if, if, let me give

advice to minors and also advice to the plebs. Okay. Let's do it. If you're a pleb, um, as we approach 961, 632, um, if you have things that you, need to do. You got to move something to cold storage. You want to UTXO consolidate. You want to do, you know, whatever. Try to do that before that block height. Or give yourself several days or a week or two after that block height because things could get a little wonky. Fees could probably go up going into it too. They could. That would be a nice little side benefit. Um,

do not, this is really bad, given the current situation, don't buy Bitcoin in that time period. I mean, you probably would be okay buying it from an exchange. Yeah, they don't get there for just like a week. Yeah, right. I know. Always self-custody. Yeah, that's the weird thing, right? Yeah.

So if you really had, like advice you will probably never hear from me again, if you must go buy it from Coinbase or a really large exchange and leave it there until this settles. Yep. That's so faithful to say. But yeah, I get it. Yeah, we get it. But you know why I'm saying it, right? I mean, yes. We don't know which chain is necessarily going to be recognized.

there's also the possibility of like a, what is it, a replay attack. It's just, just don't move from a. Yeah, there's, there's, yeah, those things exist. If you are a minor, be in a position where you can pivot pools quickly. And I'm not quite in a position to talk about. about some public things. I think ocean should be able to give you

quite a bit of flexibility in this period. That's about all I can say in that to help you navigate. As the only pool that at this point clearly gives you a path to mine on the RDTS chain, that option exists, then have that as a backup. Get a datum server up with a node that's RDTS compliant and signaling.

And even if you're mining with Foundry or somebody else, have that option available so that you can pivot. If you are a miner, whatever day or time of day block 961,662 comes up, I was joking to somebody the other day. I know it's going to be like 3.30 in the morning. You're going to stay up for it. On a Sunday or something like that.

But you got to watch because we don't know where the heavier chain is going to be. And you need a mechanism that you can flip between an RDS, the RDTS compliant chain or the legacy change very quickly. and there's going to, in my opinion, it's going to take an hour or two to sort out. And we'll hopefully, like, I think that's the probable situation. Either an hour or two, we know, yeah. Yeah, either RDTS very quickly is showing support

and the chain length is keeping up or exceeding the other chain. and if it does, I think it will go. But the opposite's also true. That if, you know, if we get an hour or two hours in and RDTS isn't getting much hash rate, it's going to get six, 10, 12 blocks behind, and it won't be able to catch up. Yeah.

So, but you're going to have to watch it. And you're going to, you're almost, certainly going to have some risk of spending at least a certain period of time mining the wrong one. If that is unpalatable to you, then just plan to turn off at 9-6-1-632 and take a couple-hour break and see where, you know, see which one emerges and then turn back on. But I think those are either either you got to have, but either way, you got to have the back. Because you don't know when you come back up. Let's say you're with Foundry.

I'm not trying to, I'm on the board at Ocean. I'm an investor in Ocean, but this is not an ocean advertisement. I'm trying to help people like. If you're with Foundry, I'm not telling you to switch from Foundry or Ampool or whatever. Just, you know, keep doing that for right now. Go get a backup. Signing up to Ocean is easy, but, you know, getting a datum gateway set up and getting it configured properly takes a little bit of work. Most miners would have the technical competency

to do such a thing. But, you know, do that. Be ready because we don't know. The good news is, I think we have a 99% chance that this is a one to two hour issue. There is a scenario that I think is really bad and hopefully doesn't exist, which is the two chains kind of have the same weight, roughly equal weight. I think what will happen, though, is the big miners will be in a quandary too. So imagine you were somebody that had 30 or 50 X a hashes,

let's say, you know, and you're trying to make this decision. well, you're going to have to swing one way. So if these two chains are coexisting in, we'll call it, roughly equal weight, like one guy can sway it then. Like, let's say, 50 X of hashes, 30 or 50 X of hashes to be like 3 to 5% of the network, could then just sway it and become self-ful.

fulfilling. In the, in the worst case scenario, you get a little bit that gambler's dilemma. Like, if you're on, if you're 50-50 and you're on one side and you've got a block or two, it's like, do you, do you discard those to pivot? Yeah, well, it's tough. Yeah, it's really tough. But it'll be a tough one. Yeah. Um, well, so if you, if you're with ocean, the miners making that decision probably. But if you're with Foundry and Foundry, now Foundry's got to make that call. Yeah, the pool. You know, unless they decide to fire up two.

I mean, they could do the same thing. They could Foundry or Handpool could do the same thing. They could say, well, we'll have two pools and then force the hasher to pick. to pick which side. To pick which side. That could happen, too. It could be a very interesting summer there, my friend. At least I think you're right.

I think we'll know in very short term. And I hope that everybody kind of comes back to the table the matter what happens when it's all said and done. Bob, we've been almost going for two hours. This has been absolutely phenomenal. Where can everybody go to check out you, your stuff, follow you work, the Bitcoin boomers, everything you're doing at Barefoot. What's all the links and the goodies?

Yeah, thank you. Barefootmining.com is our website. I'm on Twitter at Boomer underscore BTC and YouTube and other channels. You can see my show with Larry Lepard and Gary Leland called The Bitcoin Boomers. And then also my own show, which is called Old Maniels, wherever you get your podcast shut. If you enjoyed this episode with Bob Burnett,

check out the previous episode with Matt Hale and Matt Odell or the recent live stream.