On The Brink with Castle Island - Weekly Roundup 06/07/24 (Bitstamp acquired, Paxos launches USDL, Bitcoin miners and AI, Kraken IPO rumors) (EP.534)

Episode Date: June 7, 2024

Matt and Nic are back for another week of news and deals. In this episode: Kerrisdale versus Bitcoin miners Robinhood buys Bitstamp for $200m Biden vetoes the SAB121 overturn bill Is the Biden admin's pro crypto tilt over? Tucker interviews Bukele Coinbase donates to Fairshake SEC takes more Ls Big inflows into the bitcoin ETFs Are ETF inflows more about the basis trade? Paxos launches the interest-bearing stablecoin USDL out of the UAE Can Bitcoin miners sell into the AI cloud market? Kraken is in talks to raise a pre-IPO round State Street is reentering crypto MiCA and stablecoins Matt's latest crisis The barbell approach to AI investing  Sponsor notes: Breaking Down Ethereum Blobs & EIP-4844 In Coin Metrics' State of the Network issue 262, we break down Layer-2 blob usage and evaluate the success of Ethereum's EIP-4844 upgrade.

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All Vees expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only is an expression of their personal opinion. This podcast is for informational purposes.

What down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated. The federal government loans American International Group, AIG, 85 billion, This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. And print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called a Bitcoin. Bitcoin.

Welcome to Ron the Brink. I'm Matt Walsh. And I'm Nick Carter. And this episode is brought to by Coin Metrics, and here is the Metrics Minute. In today's metrics minute, we're looking at blob usage and the impact of Ethereum's EIP 4844 upgrade. Since the introduction of EIP 4844, over a million blobs have been posted to Ethereum by L2 solutions like Arbitrum Optimism and Base. This is significantly reduced operational costs for these L2s, with median blob fees dropping to a fraction of a cent. In April, the weekly cost for these sequencers searched as well. 700k due to a spike in inscription blobs, but these costs have since dropped to 0.002.

During the April blob subscription surge, daily blob fees spiked to $27 when inscriptions accounted for 61% of all blobs, demonstrating how the blob fee market dynamically adjusts based on demand. That is your metrics minute. Good metrics minute. All right, we're back. we're not at the conference anymore. I'd say we got some props for actually even recording a podcast last week, getting up early conference week.

It wasn't the best audio quality, but we were there. And appreciate the listener saying, thanks for recording. Yeah, I mean, we failed to record in prior years, I think, during that exact conference. We did. I mean, it's just such a hectic event. I don't know if I can do that three-day thing anymore. That was just a nonstop down there. I was there for a whole week.

It was crazy. It was grueling. So karate combat, you obviously did not partake in it because David broke his rib. What a violent event. I was like right. Wasn't it great? It was crazy. I've never seen anything like that.

Billy McFarlane, man. He knocked that guy out. Yeah, that was a great fight. I mean, credit to Billy. You know, the other guy gassed out after one round, which is kind of what happens in the amateur fights and Billy was just able to piece him up. There was some great fights on the card. Joe Rogan was there.

Shane Gillis was there. The Prometheum guy was there. He wasn't in the ring. I saw him though. I wonder how he was doing. There were some very violent fights, actually. You're right. There was a head kick KO.

There were professionals fighting. There was head kick KO in one of the professional fights. And the recipient of that COO was gushing blood. Yeah. I was very, very happy. that you were not in that match. I think you came away looking pretty good just by being on the sidelines. Well, I mean, look, we're rebooking it, so it appears likely that there will be another opportunity in July, so stay tuned for that. Seems like the heavyweights do more damage to each other.

The lighter weight people don't really seem to have the vicious knockouts. Yeah, that's why I like being small. It's safer this way. But it was good to see everyone down at consensus. It wasn't one of these years where, you know, momentum is over the top and you just feel like there's a lot of grifters there. It was a very normal crowd, I thought. The conference itself was very quiet, and I think it's because everybody's figured out the meta, which is just to not go to the conference. So that meta might have gone too far, because now basically no one goes to the conference and everybody does side events or just coffee meetings. That's what it seems like. That's what it seems like. So lots of news this week.

A lot of people have been reaching out and saying we can't wait to listen to this week's episode, post-Sab 121 veto. So we'll talk all about it. We actually had a busy podcast week. So you sat down with Martin of Mountain and Philip of XPTO or Philippe of XPTO to discuss the stable coin landscape. So enjoyed that episode. Yeah, that was in Bermuda. Really cool episode. Obviously, Mountain is based in Bermuda.

and XPTO moved their office there as well. So, you know, basically, we've talked about it before, but Bermuda is a good place to do business. And Wyatt sat down with Julian Duran of Marathon Digital. They have a Bitcoin L2 now. Yeah, a lot of interesting stuff happening in the mining space. Did you see that Carisdale Capital? They're like short some of these Bitcoin miners.

Might be bad timing for them on that one. Yeah, well, so I think the short itself is short the miners along Bitcoin. So the bet is that they'll underreform relative to Bitcoin, which I actually am kind of sympathetic. Yeah, I guess not the craziest view, but some of these miners are pivoting into AI and maybe that's not a perfect pair. Yeah, there's more news on that that we'll cover later in the episode. But yeah, I mean, historically miners have sort of incinerated capital, but also they can be risky to short them because they are proxies for Bitcoin. So tons of deals this week, and there's actually some pretty big ones, but this is one of our busier deal week. So let's start off Talos, which is a Castle Island portfolio company.

They have acquired Scallum, which is a trading technology company. And I'd say Talos has been one of these major consolidators here quietly in the crypto trading, digital asset trading space. They've acquired Cloudwall D3X in addition to Scallum this year. So congrats to the Talos team and the Scallum teams. Also in our portfolio, Mountain, of course. There is an $8 million series A led by multi-coin. We participated as did Coinbase. I have joined the board of Mountain.

I'm very excited about that. Yeah, Martin was up here in Boston a couple weeks ago for our event and really enjoy spending time with him. So congrats to Mountain team and the multi-coin team for doing the deal. All right, so this is a huge development here. So Robin Hood, the embattled Robin Hood, who has a Wells notice from the SEC, relative to their U.S. crypto business, they're going all in here.

So they have agreed to acquire BitStamp, which is one of the OG crypto exchanges, been around since 2011. They're acquiring the business for $200 million. BitStamp has a ton of licenses. So they're licensed all over Asia, the EU. They have a U.S. business. And this really just represents Robin Hood leading in. So Vlad Tenev said about this acquisition,

we believe crypto will fundamentally reorganize the financial system, and we're acquiring BitStamp to accelerate our vision. Soon we'll combine forces with BitStam's global footprint, core spot exchange, and exchange leading products like crypto as a service, institutional lending, and staking. A huge deal and a lot to talk about on this one. Yeah, I mean, the price here is kind of interesting. That might put some fear into the hearts of exchange operators, but I guess BitStamp is under SEC investigation and their volumes aren't what they once were.

This is kind of an end of an era. Bit Stamp was the longest continually operating crypto exchange. They restarted in 2011. I'll say this about the price. This is a great price for this asset, in my opinion. I've heard some rumors about the revenue profile of the business. Probably doesn't make sense to go into those rumors now. But suffice it to say that this is probably acquired at a very attractive revenue multiple.

What I would say, though, is that, you know, BitStamp is a little bit of a wonky. one because they had done, the original founder had sold the business to a South Korean gentleman as a kind of a private equity style transaction for a much bigger number several years ago. And then the person who bought it, unfortunately, passed away. And so it was sort of in this limbo period where the majority shareholder was deceased and they were kind of working through that. So I think Robin Hood was one of the few buyers here who could step in and actually move decisively. You weren't going to see probably a coin base move on this because they already have. that infrastructure. A lot of the U.S. regulated venues probably wouldn't have been able to

take down BitStamp now, but like early next year it would have been a different story. So I think this is a really smart move for Robin Hood. If only if you look at the synergies. So BitStamp is primarily a retail platform. So they have, you know, thousands of customers here, hundreds of thousands potentially that will come over and be able to be on Robin Hood infrastructure now. So I think it makes a ton of sense. It's all about who has the retail flow and Robin Hood is getting a lot of retail flow here. Yeah, it's nice to see Robin Hood doubling down crypto, I mean, especially after the SEC came for them recently. So it's, I think, really positive development and yeah, good price I think as well. Yeah, it just shows you that, you know, you can't do your business in the US,

but there are other places where you can. And so I think this just shows that the industry will survive one way or the other, even if you go through this rocky road under the current SEC. Next up we have Tether they invested 18.7 million in X-Rex, a Taiwan-based exchange facilitating cross-border payments in emerging markets. Then you have Fortunify, which is a real-world asset tokenization protocol. They raised 9.5 million from Shima and Manifold. Then you have Avail, a data availability protocol, there is 43 million from Founders Fund, Dragonfly, and Cyberfund. Mint blockchain, which is an Ethereum layer two focused on NFTs, raised 5 million from J-square and SNZ.

Then you have Blueberry Protocol. They're a decentralized prime brokerage terminal. There is 2.5 million from WSC and Varus Capital. Here's another acquisition. So Polygon has acquired Tapa's Ware, which is a zero-knowledge cryptography company. So interesting to see a protocol deal there. Then you have Phoenix. They're in Ethereum Layer 2, focus on privacy. They raise 15 million from HackVC, GSM, and Amber Group.

Next one is Cookie 3, a marketing and analytics platform for Web3 users. They raised 5.5 million from Spartan, Anamoca, and GSR. Then you have Eldorado, the Columbia-based Stablecoin Protocol. They raised 3 million from multi-coin and Coinbase. Next one is Everclear, formerly known as Connect. They are an interoperability protocol that raised 5 million. from Pantera. Then you have M-Zero, a decentralized stablecoin minting protocol.

There raised $35 million from Bain, Capital Crypto, Galaxy, Winterbutt, GSM, Calden, SCB-10X. Then it's Aperture, an AI-powered, decentralized finance trading platform that raised $7.6 million from Skyland and blockchain founders fund. It took a while for us to get to an AI deal. Yeah. Then we have the sandbox, a Metaverse platform. There is 20 million from Kingsway, Anamoka, and others. GoPlus, which is a Web3 security platform, raised 10 million from OkX Ventures,

hashkey, Redpoint, and Anamoka. Then NewBit, a Bitcoin native data availability layer. There is 8 million from Polychain, Spartan, and OkX. And the last one is Glacier Labs. This is a layer 2 roll-up network. There raised 8 million from Forsyte, Laser Digital, and Ku-coin. Busy, busy deal week, huh? Yeah, so also on the newsfront.

So I guess we'll start with our favorite topic, Sab 112. You know, it's kind of a weird consensus because I had people coming up to me left and right saying, hey, have you heard about Sab 121? What do you think is going to happen here? And, you know, my response was, well, if I'm Biden, I would really not veto this because you just look at the crypto vote. I mean, you have 50 million Americans who care about this. You have the super PAC is getting bigger by the day.

So last week, I believe Fairshake raised over 50 million into the, the super pack. And kind of surprising, right? You have Schumer comes out in favor of getting rid of the sub 121. But then on Friday at the close of business, I guess it was like 530 Eastern time, comes out that Biden has vetoed the resolution around Sab 121. A couple hours after the American Bankers Association came out with a letter to Biden saying that, look, we want to do this as a banking industry. We want this thing to be abolished. But, uh, you know, it was vetoed. Yeah. I mean, I guess we'll return to this at some point, uh, maybe through the courts as well. I mean, I think the SEC violated the administrative procedures act with the way they

impose this rule. Could be that the legislation is picked up in the next session. Who knows? But, uh, it's a bad rule. And almost everybody with the informed view on crypto is against it. I mean, how often do you see the crypto and the banks on the exact same side? Crypto and the banks and the Democrats and the Republicans are all on the same side on this. There is a progressive wing of the Democrat Party that is not for it. That's led by Elizabeth Warren and her lackey John Donnenberg, who is her former chief of staff, who is now, you know, senior economic advisor, I believe, to Biden. So they're against it. But I thought North Carolina Democrat

Representative Wiley Nichols summed it up pretty well. We'll put that in our newsletter. It basically said, look, this is going to hurt consumers. It was a bipartisan bill. And Biden's doing himself no favors here. And by the way, he's not doing favors to any of these Democrats that are in vulnerable seats either. Yeah, I mean, the Biden admin rapprochement

with crypto lasted about three days. Yeah. I guess. And now they've gone back to being hostile on it. I don't think it's very smart politically, but maybe they feel that the Trump, you know, the Trump case really did a lot of damage to Trump's electoral chances. And so it doesn't matter anymore. But still, I think it's a mistake.

Yeah, I think that's one theory is just that the Trump news came out that day. And maybe all of a sudden the Biden administration felt that, look, we don't need to do any favors for this industry. We're going to have a huge bump up, which, by the way, didn't happen at all in terms of the polling numbers after the Trump case. So, I mean, I think another school thought is, you know, maybe Biden's not going to be the candidate. So he's maybe just sticking with his existing alliances and he doesn't really care about reelection for himself personally. Yeah, it is weird that the Trump, I guess, guilty verdict doesn't seem to have materially impacted the polls very much. Well, if anything, I think it's, if you look at the prediction markets, it's gone the other way. So it's actually helped Trump.

And certainly from a fundraising perspective it has. Yeah. Did you catch the Tucker Carlson interview with Naid Buckele? I haven't watched the whole thing. I did see the clip, though. Pretty interesting guy, huh? Yeah, it's funny that Buckely got on all of our radars because it was Bitcoin stuff. And now he's known for, of course, sort of eradicating a lot of the violent crime in that country.

And apparently it's a model now that's being followed by other countries. so that's what he's known for now. We all know him as the Bitcoin guy. Yeah, he's a lot of a bunch of Bitcoin. That faded into the background completely. What did he say on his economic stance? He just looks to God first for his economic policy. He's a three-step plan on his economic model,

and the first one is to consult God's will. That's a pretty good plan. It's a plan. Yeah. For sure. We have next up, DMM Bitcoin, a Japanese cryptexchange I've never heard of

was hacked to the tune of 4,500 Bitcoin, which is a huge amount. Yeah, so you know, you don't want, the last thing you'd want is reputable U.S. firms custodying Bitcoin, when you can really have it on DMM Bitcoin or whatever the hell that is. And, you know, you lose 4,500 Bitcoin.

So let's try to push as many U.S. persons offshore where they can actually get serviced by some of these places and sound policy, guys. Good job. all around. On that front, Coinbase CEO, Brian Armstrong, saw this veto. I don't know if you saw this. So Monday after the veto, Coinbase came out, donated $25 million to fair shake. So good for you,

Brian Armstrong. Yeah, awesome stuff. Also on the SEC, they have taken two more Ls this week. Their private funds rule, which was demanding a pretty staggering level of oversight into, well, venture capital and private equity, that was struck down by, by the Fifth Circuit Court. So that was vacated. They shut down their Salt Lake office

on the heels of the debt box debacle. And they were sued by the American Securities Association for their lack of transparency around their enforcement actions. So that's three else, actually, this week. So I thought shutting down the Salt Lake office was interesting. I mean, that's where all the alleged criminals

in the SEC resided actually. So all of the lawyers that fabricated information. But you'd like to think that some of these lawyers that were dismissed here will actually tell the true story at some point in the way out because there's no way that it was just some random rogue employees in Salt Lake City taking a scalpel to the crypto industry. So on the FTX front, they settled charges with the IRS this week. The FTX debtors have to pay the IRS 200 million plus another. a claim of $685 million. That makes sense, right?

I think the IRS came in with a priority claim initially demanding some insanely high number, but that was always just a placeholder. So it turns out Sam and the boys weren't really paying their taxes. So you got to pay some back taxes here. Yeah, that doesn't surprise me that they were not buttoned up from a tax perspective. Do you see Sam had a nice little road trip last week? No, what was that? So he is appealing in order to stay at MDC.

We always talk about Brooklyn, MDC is a bad prison, but he wants to stay there during appeal. And I guess they started to move him to California. So apparently you can track on the Department of Prisons website where someone is, and he got to the middle of the country, and then he must have won the appeal, and then he drove him right back. But I think this all happens in a bus. So you got to see some of the country. Oh, that's nice for him.

I saw a tweet that he's cellmates with Abraham Eisenberg. I don't know if that was a joke tweet or not. I don't know if they're cellmates. They're in the same facility. I wonder what they talk about in there. Well, they're probably talking about how they exploited various defy protocols. Because Sam is Chef Nomi, right? That was the theory.

That was the theory. So these guys might already know each other. It was a good week for Bitcoin ETFs. They finally saw, well, actually huge inflows. Tuesday was the second biggest day of inflows for the Bitcoin ETFs. So what do you make of this? So Bitcoin ETF inflows are through the roof, but the Bitcoin price is not necessarily through the roof.

So we're at, as of the time we're recording, 70,700 or so. My theory on this is that the basis trade here is just getting much bigger. So short futures, long spot. and clip the, clip the middle there. And it's a function of how much leverage can be injected into the system via these prime brokers. And I think that balance sheet is probably getting extended to facilitate more of this trade. So it's not a one-to-one relationship of new ETF creations and the price of Bitcoin,

because there's an offsetting short position in the futures market. That's an interesting point. So you're suggesting that actually some of the, these flows might be delta neutral and they're just capturing the basis. It seems to me like most of them are delta neutral actually. Otherwise the price of Bitcoin would be at $80,000 right now. Right. Also in asset management news, Franklin Templeton is looking at the launch of a new crypto fund that would invest more broadly beyond just Bitcoin and Ethereum. You'd have to think that this is the wave of the future, right? Separately managed accounts, you want exposure to BTC, ETH,

but you want longer tail exposure to. And you also probably want someone that knows what they're doing to manage it for you. So have an opinion on the various assets. This just seems like the way the industry will go over time. Franklin Templeton is rapidly becoming one of the more crypto-native of the legacy asset managers. Yeah. And I think it goes all the way to the top. Jenny Johnson over there appears to really love this stuff.

So it's no surprise that most of the institutions that have moved first actually have leadership that understand what's going on. So I thought this is very interesting. Paxos is launching an interest-bearing stable coin called U.S.D.L. I think the L stands for Lyft, which is regulated out of the UAE. So of course, Paxos issues stablecoins out in New York, but they had to go overseas for this, unsurprisingly, given the SEC stance. Very directionally interesting.

And I think in terms of showing where the stable coin issuers are going, especially Paxos has been in the U.S. here for so long. And of course, interesting trend in terms of interest-bearing stable coins. Interest-bearing stable coins is where the whole market's going. And it's just another data point of a U.S. company that has done everything right from what I can see, having to go launch their next marquee product internationally. So finding a home in the UAE that apparently wants to embrace this innovation. and it's a shame that you can't do this out of New York. Bact announced their partnership with crossover markets to launch an ECN trading platform in the U.S.

Yeah, ECNs, man. I think this could be a full-blown category here. I'm really interested to see where this ECN idea goes. The idea of having the trading fully divorced from the custody of the asset, that is where the market structure eventually will go for this market. So that's an interesting play. Backed itself, the balance sheet looks a little tough right now, though,

if we're being honest, that's a publicly traded company that's really struggled. Yeah, I mean, I feel like they never really found a product. Now, they had that loyalty points, whatever that was, that app. That was just a, I don't know what that was. Yeah. The original idea was really good. They had the, wasn't it a futures venue at one point? They should have just stuck with that.

I feel like they pivoted like five times. Yeah, they had custody, they had futures, and then they did loyalty points or something. So another interesting deal this week. So CoreWeave, they're a AI cloud company. They proposed a billion-dollar acquisition offer into Core Scientific. Core and Scientific is one of the biggest Bitcoin miners. They went through restructuring in the last couple of years. they also struck a deal which would deliver 200 megawatts of power to core weave,

which power really is the bottleneck and sort of AI compute right now. But that a billion dollar takeover offer was rejected by CoreSci. I mean, also I think on account of the fact that the core size shares surged after the deal was announced. So explain to me what's happening here. So these Bitcoin miners have power purchase agreements. that are very lucrative and attractive to outside buyers. Is that what you can infer from this? Yeah, I would say more than just PPAs,

but also infrastructure, transformers, and physical infrastructure data centers. Some of that is addressable to AI-style compute. Much of it is not, actually. So a lot of Bitcoin miners tried to undertake this transition. HUD-8 was one firm that tried to get into AI with limited success, many other Bitcoin miners, because they all wanted to represent

that they were doing HPC as well as Bitcoin mining. But it's a very different business between Bitcoin mining and something like AI. You need more robust and high uptime data centers to do AI stuff. You need serious investments in networking. You need the data centers to be in relatively low latency locations, depending on where, depending on exactly what you're doing,

but if you're doing inference, you kind of want the data centers to be near our population center, and you need really good networking. So it's not always suitable. The Bitcoin mining installations are often in the middle of nowhere. They might specifically be set up to be interruptible from a power perspective so that they can sell ancillary services to the grid. Whereas AI, you kind of want that to be always on.

so and also you know bitcoin miners you can sort of just toss them in a shack have some cooling in there and let it run GPUs are more delicate and need you know better cooling and better facilities so most bitcoin miners that tried to get into hBC failed to do that core size installations and just as a disclaimer personally i'm an investor in both of these companies core size installations were suitable to sell power into AI and so that's why Corey struck the deal with them. But yeah, for the most far, Bitcoin miners have actually failed to do this. But now multiples are expanding for the Bitcoin miners because public markets think Bitcoin miners can now ride the AI trend, which I would say is not necessarily true across the board.

Well, I just think these companies belong together because I get them infused all the time. Just call it core and drop the ending. Yeah, they should merge for that reason. is the name. It's a lot simpler. So that's interesting. So this just hit the tape. Cracken is in talks to raise a pre-IPO round. That's pretty interesting.

Yeah, I mean, they've been wanting to IPO since, I feel like I've seen these headlines since 2017. Yeah, I wonder where they'll go public. Do you think they'll go public in the U.S.? Yeah, I mean, it's interesting because the complaint last time was that their books weren't in order. They weren't ready to be a public company. Is that right?

I didn't even see that. I mean, I just wonder if it's just going to be difficult to get any company public in the U.S. right now. I mean, there's a few crypto companies aside from just the miners that are public. But, yeah, I mean, it would be interesting to see if they're able to do it. I think it would be great for the industry that, you know, they could probably drive some consolidation to crack in. They're in some different lines of business other than just the exchange. So hopefully that goes through. Another interesting development, did you see this information?

article that State Street is getting back in. So they're rebuilding its digital asset division. They're actively hiring into this group. Yeah, I think you'll see headlines like this across most of Wall Street. A lot of these firms that had plans to do crypto and were stymied for some reason or other, whether it's SAV-121 or the Fed harassing banks or other firms that are dealing with crypto in some way. And also the market opportunity looks brighter again. So Good to see them coming back. Yeah, it is good. So there's an interesting development here.

Binance put out an announcement saying that they're implementing Micah Stablecoin rules in Europe. So there was a fear that Tether would actually be banned in Europe. I don't think that's the case, but it does look like Europe is kind of tightening up rules again in the stablecoin space, specifically with regards to non-EU stable. So there isn't anything explicit right now about USD stable coins being banned in Europe. But if I had to guess, I would say it's actually kind of the direction of travel here and that the EU is a little bit concerned about how dollarized stable coins are and the lack of EU stable coins.

Sounds like that could be bullish for euro stable coins, huh? Yeah, I would expect to see something like circle, what is it, your, your C, EURC, Circles, Euro stable coin gain some market share here. Not if I really want a Euro stable coin. I think I'm going to have my dollar stable coin. Yeah, it doesn't really do it for me. But, you know, there is a market for that. So we'll see where that catches on.

Probably Europe is my guess. So Matt, you didn't, before we started recording, you telling me about a story that you, some kind of debacle that you suffered, it's not animal related. No. No, I mean, I, It's real trials and tribulations of the Walsh household. I mean, I almost burnt my house down last night.

I'm like one of these guys who almost burnt his entire house down at this point. So my wife had some friends from out of town come in. So she went out to dinner with them. So I had to watch the kids and do the dinner thing. So I asked them what they wanted and they wanted breakfast for dinner, which is their favorite thing. So I figured I could do that. So, you know, I had a keesh. made some pancakes and some bacon.

And I went in to get the bacon out of the oven, and I grabbed an oven mitt, but it turns out that I got a child oven mitt for a fake kitchen, like not a real kitchen, but it looked like a real oven mitt. It had mini on it. I guess I probably should have known it was not a real one. And I burnt my hand.

And I ended up when I was grabbing the bacon, and I ended up tossing the bacon back into the oven and just grease one everywhere and just threw it. I mean, I have like a scalded fingertips now. They're like red and instantaneously smoke everywhere. Fire alarms going off had to open up every single door, every window. It was a disaster. Kids were going crazy.

But my house almost burnt down. Like bacon grease is nothing to mess around with. And then I ended up getting it under control, but I spent about an hour and a half cleaning up bacon grease out of my oven. It was a disaster. So how did the fake, play oven mitt end up with the oven mitts? My children brought them in and said, can I help?

And I just grabbed one of them thinking that it was, you know, I thought that you could use it. It looked like a real oven mitt. So just totally identical to a normal oven mitt, but just not rated for anything actually hot. No, I mean, I'm kind of an idiot, because if you would take one look at this thing and you'd say that's probably not something you'd want to grab,

like a scalding hot pan with and that's what I did. I'm actually really, I'm very curious to see what the fake oven mitt looks like. I'll take a picture of it and send it to you. It's, it looks like a real oven mitt, but it has a picture of mini mouse on it. So it's clearly not.

And I don't think that's a product issue. I don't think they should make those things. Yeah, there should be a warning. It should say don't use this in an oven. Like put a little extra of padding on that. I mean, literally I don't even have like fingertips on the,

it's like fully scalded my fingers. It's not good. How are you going to pass KYC? Like are your fingerprints? Are they gone forever? They might be gone. Oh, that's a good question. Yeah, DFS, now that I go for DFA.

I hope it's grown back by the time I have my DFS check-ins. The crypto crowd knows what I'm talking about. You need to fingerprint in some of these states. Maybe you should send some feedback to, you know, whoever made the toy oven met. I mean, this doesn't seem safe. There's probably many such. many such cases. I'm sure

that's happened in the past. I was thinking about what I was going to tell the fire department when they showed up in my house, but luckily I was able to get the alarms to stop. It was bad. You can't be the only person that's been fooled by a false oven, but. I'm sure that's happened before. It has

to have happened before. But yeah, so I survived. But speaking of products, you like that transition, we have to give a shout out to a listener Andrew who sent us some Satoshi Pickleball Club t-shirts. Really sharp shirts.

I've been wearing them around. Thank you. I actually played pickleball this morning for the first time in months. I'd been away from it. It's honestly not the best game, if we're real. Yeah, I've only played it with you, but I like it. I mean, you don't have to be the most athletic person in the world to play it. No, I fell out of love with pickleball. But now I'm wearing this Satoshi pickleball thing around town,

and a lot of people don't know who Satoshi is, it turns out. People are like, what is that shirt? Are you on a pickleball team? I'm like, well, they don't know Satoshi? Come on. I mean, there is a big Bitcoin logo on it. How can you not know Satoshi? Satoshi is going to be the wealthiest individual on the planet pretty soon.

I think a lot of people just aren't really, I don't know. If you walk down the street and you ask 10 people, do you know who Satoshi is, how many people would actually know? Well, technically no one knows. Well, that's true. None of us, no. I still think we're going to find out soon. That's my weird thesis for the next 12 months.

Oh, really? Just because of AI and crunching the writing. People don't like it when I say this. I think AI will deliver to us the identity of Satoshi. That's kind of a shame. That's kind of a shame. I'm not saying I'm going to do it. I think someone will do it.

Well, maybe this California bill, isn't there some California bill to dramatically clamp down on AI? We're just stopping the progress of technology here. Yeah, that's actually pretty bad. I think it would ban open source AI and it puts specific limits on how big the models can be. It's pretty disconcerting, actually. Yeah, that doesn't seem like a great play. I just finished a book called The Coming Wave by this guy. Mustafa Suleiman who founded DeepMind.

His thing was you can't really slow this stuff down, but maybe there's some sensible guardrails you can put in place. He started inflection and then inflection of a spot by Microsoft. Oh, that's right. Yeah, it was kind of like Aqua. Wasn't he like Aquarred by Microsoft? It was a weird deal. A lot of these AI deals, it seems like the companies would just do M&A,

but you can't really do M&A with this FTC chair, it seems. So you just do these weird deals where you're acquiring the company, but you're technically not. That's true. I'm an A's legal now. Yeah, I put out a sort of AI thesis this week. A lot of people got mad at me for that. I mean, people get mad for anything,

but people are giving me grief about it because I apparently are not allowed to talk about stuff that you're not a specialist in. Hey, you're a specialist, man. We've done AI. We did a testive back in 2018, Deepfakes on the blockchain. Yeah, look, we've done AI deal. Okay. So my theory about all this is that the big model companies, that's just going to incinerate capital. And you want to play the barbell. So applications that are newly unlocked by AI, and those won't even necessarily be AI companies per se, just, you know, new unlocks for consumer apps. And then at the other end of the barbell infrastructure, so compute, power, data centers, etc. I think the middle of the barbell,

is challenging because these models become obsolete and replaced very quickly. Look at how quickly the new models become obsolete. It's every few months now, the state-of-the-art model is replaced by something new. But the opening eyes and the anthropics, et cetera, they're spending tens of billions of dollars training these things. And they just don't seem to last very well. Yeah. And you have open-source models.

There's open-source models that are almost a parody with the proprietary. ones. So that whole sector seems like a black hole. So I'm focused on kind of the edges. Yeah. I think that makes sense to me. Hey, did you see the ECB and Bank of Canada both cut rates this week? They did. Yeah. I mean, are we expecting it in the U.S. as well? Or no, you have non-farm payrolls coming on Friday, right? So maybe get weak numbers there. I think FOMC is next week. everyone is a macro trader now. Everyone's a macro expert, you know, cut the rates. Well, then I think the simplest thing is Howard Lutnik was on CNBC.

I don't know if you saw that the other day. We need to get him on the podcast. He's awesome. They didn't ask him about crypto. He didn't. Because normally what he does is he unsolicited brings up how much he likes to other. He didn't do that. Yeah, no, he didn't do it.

It was a little bit of a different forum. He was sort of, I think it was Bob Pisani did it, so he was sitting with Bob Pisani and there's someone else. jumping in with questions over the air. And they asked him about interest rates and he's basically like, yeah, I mean, there's an election. Of course they're going to cut rates. It's kind of like a don't overthink it. Yeah.

I mean, I don't know if there's that much precedent for a nakedly political rate cut like that. But, I mean, it's not out of the question. I don't know if it's nakedly political now that the ECB and Bank of Canada have done it. I think now it's just everyone's moving in line. I think it's, I think you will see it in September, if not sooner. So standard chartered said they think Bitcoin will be at 100K coming into the U.S. elections and 150K if Trump is elected. Do these guys just have like a new prediction every two weeks?

Is that what it is? Look, I like the predictions. I do. I like it. Vanek said that they, Vanek is calling for $22,000 Eth by 2030. Yeah, why not? Yeah, I like that number, 22K. That's a nice round number.

Yeah. Is there a DCF model behind that? I wouldn't worry. I wouldn't worry about that. Is there multiple analysis? It's just banks and broker dealers. Everyone's coming in. Everyone's buying it.

Don't worry about it. Yeah. Well, I like those predictions. Keep them up. So I think that's it for the week. I don't know if I can last on Twitter until this election, man. It's getting peer-to-peer combat on Twitter these days. Yeah, and we have, what, four more months of this?

Yeah, I mean, the election's, what, November 5th or something? November 5th, I think, is the election. So it's going to be a while. I mean, a lot of animosity out there. But keep your head up out there. Sab 121 didn't go our way, but we got banks and broker dealers that are all trying to do stuff. They're all looking to buy companies now. And it'll go away at some point.

Just going to stay alive. numbers going up so there's not that much you complain about if you just measure it by the deal section and the number of new companies getting started i'd say we live in a very healthy times yeah it's the age of abundance all right everyone that's it for the week have a safe and healthy weekend and we will see you on monday