On The Brink with Castle Island - Weekly Roundup 10/22/21 (Proshares ETF launches, CBOE acquires ErisX, FB's Metaverse ambitions, Tungsten takes over) (EP.253)

Episode Date: October 22, 2021

Matt and Nic are back for a monster week of deals and news. In this episode:  CBOE acquires ErisX FTX raises a monster round Worldcoin launches with their eyeball scanner The Proshares futures-based ETF goes live and sets a record Why are futures-based ETFs expensive? the Proshares ETF starts to max out its futures exposure What will be the fate of GBTC? Grayscale announces a $1b buyback of GBTC Hester Peirce delivers another great talk Tether settles with the CFTC The academia-press complex Diem launches a Novi stablecoin based on USDP Why stablecoins are a frontier in the battle over financial privacy Facebook leans hard into the metaverse Tungsten takes over Square makes ASICs Why you shouldn't eat your tungsten cube Will CMS intern be able to lift the 7 inch cube? Content mentioned in this episode Bloomberg, First Bitcoin ETF Is Already in Danger of Breaching a Limit on Futures Contracts Hester Peirce speech at the Texas Blockchain Summit, Lawless in Austin Sponsor notes This show supported by Coinbase Prime, an integrated solution that provides advanced multi-venue trading, custody, and prime services for institutions. For more information see coinbase.com/prime Corporations and institutions can allocate cash into Circle Yield to gain crypto lending exposure and earn superior returns compared to traditional markets. It's secured, overcollateralized and built on the leading dollar digital currency. Visit circle.com/yield to book a meeting

Brought 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 Concentive easing. You 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. Welcome to On the Brink. I'm Matt Walsh.

And I'm Nick Carter. And this episode is brought to you by Circle, and it's also brought to you by Coinbase Prime. More on those companies later in the episode. So this was quite the week, huh? It's a very busy week. It was extraordinarily busy, I would say, as a week. Yeah, there's a huge amount of news this week. Obviously, the ETF dominating the headlines, but, you know, a monster fund raised from FTX, some big acquisitions, some big settlements, you know, something for everyone.

Something for everyone this week. It's been a busy podcast week, too. Ria and Hunter sat down with G Money, who's a famous NFT collector. That was a great discussion of the landscape for NFTs. It got me very excited about NFTs listening to that podcast. And you had an episode midweek with ErisX CEO, Tom Chippus, and Chris Isaacs, and the CEO of Cebo Global Markets to cover Cebo's acquisition of AirSX. So some portfolio news here too. Yeah, some big portfolio news. So that was a fun episode.

Did that on short notice there with Tom and Chris is the chief operating officer of Sebo Global Markets previously started BATs. So yeah, the news there was that CBOE has agreed to acquire AirSX, one of our portfolio companies that's a spot and derivatives exchange. And I think this will be a huge deal for the industry. You know, having an institution like CBOE running a spot in derivatives market, if you're an asset manager, it's looking to launch an ETF, that's going to be really good news. Yeah, so CBO, of course, dipped their feet into Bitcoin futures back in the day, pulled their feet back out, and have now given the industry another look. And a real show of intent from them with the AirSX acquisition.

So congrats to them and, of course, the ERIS team. Yeah, congrats to everyone there. Next one up, you mentioned already, but it's FTX. This is, of course, the crypto asset exchange. They raised $420.69 million at a $25 billion valuation from 69 investors, including BlackRock and Tiger Global. That's a series B1 financing, huge, huge financing. Yeah, just an enormous raise. And just really one of the most dynamic companies in the industry. They just launched their NFT platform. just recently, you know, moving incredibly fast. That's weird. It's a coincidence that it ended up at 420.69. That's a pretty precise way to land it. Yeah, that's just how the cookie crumbles, I guess. Then we have a crypto fund launch, so variant.

The crypto fund launched by Jesse Walden, who of course has been on this show. Spencer Noon is also partnered there. They announced a $110 million fund too. They've also announced a merger with Atelier Ventures. Great news for Jesse and the team. Congratulations there. Next one up is Element Finance. This is a fixed rate lending protocol.

They raised $32 million from Polychain, A16Z, placeholder, A Capital, Scalar, and others. Then next up, we have Lucid site. They're at LA-based independent game studio. They raised $2.8 million, $2.5 million from Galaxy G. Angels and others. I think LucidSight is the one that did the MLB NFTs a few years ago. I think I have a Mooky Betz LucidSite NFT. That sounds right. Have you lost your keys to that?

Or do you still retain those? No, I still retain those. But that is, let's just say the floor price on that is not good. Yeah, that's how it goes sometimes. Next up we have sublime. a defy lending platform, also a fantastic band from the 90s. Very good band. They raised two and a half million from Galaxy, Electric Capital, FinTech Collective, Collab

Currency, and others. Next is concept art. This is a content provider and publisher for NFTs. They raised $25 million in a series A from dapper labs, blockchain co-investors, and Amoka, hashkey, fabric, redbeard, and others. Then we have Republic, which is the early stage investment platform pursuing tokenized securities. There is 150 million in a series B from Valor equity partners, Galaxy coin fund, Brevin Howard, Pillar VC and Atreides. Congrats to Ken and the team.

Tokenized securities. I think that's, they're coming back. I think we're going to get some clarity there. I'm going to get some ATS is approved and tokenized securities. I mean, really, NFTs are tokenized securities. So why not? Well, I suppose one hopes that they're not considered securities, but certainly cosmetically look kind of similar.

I guess a better way to say that is securities are NFTs when you really think about it, because you can have different types of securities, some of them have different liquidation preferences, some of them are in a different series. It lends itself quite well. The technology lends itself quite well to tokenized securities. Yes. think that's a very fair way to put it.

Next up is Anamoka brands. This is a company that is a big investor in gaming and NFT startups. They raised $65 million from Liberty City, Sequoia China, Dragonfly, Kingsway, Tentie, and others. So Anamoka appearing in our roundup as an investee in an investor this week. That's how you know you've made it, right? In there twice, yeah. Then we have Manton Network, their privacy network building on Poconoff. Pocodot, they raise 5.5 million from Coin Fund, Parify, CMS.

Cross off your CMS slide, free space on the ODB bingo. Divergence, the Z prime, and others. Next is World Coin. This is a cryptocurrency network. It's for the world. It's a coin for the world. They raise $25 million from A16Z, Coinbase, DCG, Sam Bank, Benfried, and Reed Hoffman. So WorldCoin is in a week of cubes WorldCoin is all about the sphere or the ore brother So they're the one where you scan your retina

And get some coins And I'm just dying to know Is it possible to have a hash collision on a retina? I would imagine that it shouldn't be the case if you wanted to have a really reliable fingerprint. So apparently, you know, they've partnered with a manufacturer that can produce 50,000 orbs per year. So, you know, maybe they would be able to harvest all of the world's retinas. I don't know if I'll be, you know, first in line to do that. Who knows? I mean, this reminds me of initiative Q in some ways, not to not to, not to

make a tough comparison. Well, I'm just, I think we've talked about this on the podcast before, but to create the incentive to steal someone's eyeballs, that's a pretty, that can be pretty ugly. That's true. You want more coins. You just go out and you steal two eyes and then you got them, mint them. Yeah, perverse actionalities. So lastly, we have Mojito, probably the best name of the week.

They're an NFT platform. They raise 20 million from Sotheby's in Future Perfect. All right. So it's a busy deal week. And another deal that happened this week was we had a futures-based ETF that launched. So pro-shares, Bitcoin Strategy ETF, ticker BIT Zero. It was approved by the SEC. It started trading on Tuesday.

A lot of takes here, a lot of takes that we've made in the past around thinking that this product is not very good, frankly. If you're a long-term investor in Bitcoin, it would have been a lot better to get a spot product. And I think Bitwise and Fidelity both have great analyses with their reasons. around why that spot market is not only better, but, you know, should have been approved by the SEC already. But it is what it is. The ETF that we're talking about here, BIT zero, BITO rather, it traded over a billion dollars on its first day. It was one of the biggest ETF debuts ever. As of the time of this taping, I think it has about a billion dollars in AUM, if not more. I guess my take here is just going to be to reiterate why this product might not be the best if you're looking for long, exposure to Bitcoin. So, you know, number one is you have the roll cost. So it costs between 5 and 10

percent per year to roll these futures contracts in the product plus the fees on top of that. So that adds up a lot. The other thing is that you're getting a diluted exposure to Bitcoin. So this is a product that can only hold about 85% of its assets in these Bitcoin futures. And so the other 15% are held in cash and treasuries, short-term equivalents. So you're not getting that pure play exposure. And then the other thing is that there's there's some risk to the product. And so there's some capacity constraints and position limits on the front month futures contracts. So you might end up in a situation not too long here in the future where the fund would be forced to stop buying the front month and to start buying some of those back months. And so what would end up

happening there is you'd have more tracking error versus the price of Bitcoin. And so this has happened in the past with an oil futures fund called USO back in 2020. and the market basically lost faith in that product, you know, its ability to track the underlying. So I guess my net net is, hey, this is good to have this product out there. It shows that there's a tremendous amount of demand. But let's get one of these 33 Act funds approved here. And let's get a spot market ETF out here because it's just better for investors. Yeah.

So first of all, actually it took me by surprise. I think it took the main Bloomberg analysts who cover ETF. Eric Balcunis and James Seafart didn't expect this robust a level of demand for BITO. And I was kind of in the same camp. I didn't expect that the inflows would be this significant. And in fact, we're staring at the number one ETF launch ever. So huge, huge inflows outstripping GLD already after two days. although it's worth noting that the GLD launch was in $2,004, and the dollar went a lot further back then,

which is maybe why, you know, maybe why this ETF is so popular. But as you say, structurally got some issues. They've got their capacity constraints. They've gobbled up a lot of the addressable contracts already. Katie Greifeld wrote a good article about this. it's on track to hit its limit to max out the number of contracts it can own under CME within the next couple of days. And so it's going to have to start buying further months' worth of exposure. And Bitcoin, you know, that tends to, so what that means is, you know, it'll become

probably even less linked to the actual spot price of Bitcoin because you're just buying futures that are months ahead. And it might mean that the exposure gets more expensive because the generally speaking Bitcoin futures curve is upward sloping. And as you get further away, you get more of a premium to the underlying. And if you look at the December futures on an annualized basis, you're looking at a premium of about 14% to 20% depending on the venue on an annualized basis. So it could actually be the case that, you know, as this ETF starts to gobble up, the further out ahead futures contracts, it becomes more inefficient, you know, more than just 5 to 10% you know, costs embedded within the product.

So, you know, kind of a victim of the construction of the ETF and the demand, which I don't think pro-share is expected demand to be this strong. Yeah, I mean, it's kind of wild. There's other futures-based ETFs that were ready to go. It looks like Van Neck has been approved at this point. I don't know if that started to trade yet, but it was a bit surprised that they let pro-shares just run with this one. I guess we shouldn't be surprised that it was approved in the sense that Gensler has been saying for months that he's, He wants to see a 40-act fund with futures based on the CME. So that's exactly what this was.

I guess people weren't really buying it and thinking that it was going to happen or maybe some people thought that the spot product would still happen, which, you know, again, probably should have happened. But I guess take Gensler at his word. He basically said it was going to get approved if it came before him and it did. And the funny thing is that we went through, we kind of whipsod back and forth on this show. we were very excited about a Bitcoin ETF to start the year, if you recall.

I think we were pegging the probabilities is really high. And then we got really disillusioned about it. And then we got an ETF, but it's not exactly the spot EDF. I don't know if this counts as a win in terms of our predictions. I don't think this is the Bitcoin ETF. This is an ETF that kind of cobbles together some rough Bitcoin exposure, but it's kind of a brutal way to get that exposure. Yeah, it's really tough.

And just compare it to, you know, the beleaguered GPDC product trading today at a 15% discount to the underlying. A few days ago was hit 20. And I said, you know, I guess now we have our fancy disclaimer on this show about, you know, not being investment advice and so on. So, you know, we can talk about this stuff safely. But I said, I mean, I put my whole, my whole. my whole IRA into it.

I don't know if I'm allowed to say that into GBDC. And then days later, Grayscale announced that they were doing another buyback up to a billion dollars. But that's not been sufficient to get it back to that,

back to par. So we've kind of both ends of the spectrum here. And I think, you know, you've one product that's, that's, you know, got a big premium incorporated it into it and wanted a very significant discount.

out neither tracking the underlying very efficiently. And the commonality is that the SEC is not permitting the market to clear here, whereas it could very easily. I mean, this is a crazy scale is just in a brutal situation here because, you know, they announced these buybacks. They don't have enough to throw at this problem to close this gap. I mean, this is going to take a lot more in terms of throwing cash at this and repurchasing. I just don't think that can close it at this point.

they're going to need to convert it, which they've announced their intentions, but, you know, the SEC is kind of standing in their way in terms of converting it to a spot product. So they're in a little bit of a pickle, and it's, you know, it's making it difficult to raise capital into those funds, I would imagine. Yeah, really tricky situation for them. The thing is they still are harvesting 200 bibs a year from the enormous quantities, over 50 billion of capital in GBDC. so their incentive is not to wind up the trust or have any kind of global settlement

because it's just a gigantic cash flow that they're still getting. Although, you know, I think the ultimate constraint would be if GBDC holders launch some sort of class action at some point if it departs from par too steeply. Well, so first of all, I think that a lot of people have been saying that on Twitter, that Grayscale has this incentive to just rake the fee. And I guess if you're looking at it purely, in that way, yeah, like they're making a bunch of fee on this. But if they have a long-term

perspective, they're going to want to be perceived as an asset manager that knows how to run a closed-end fund. And right now, they're not running one that tracks the price of NAV. And so I think their incentive from just a go-forward basis building a quality franchise that's around for a long time, which we have every indication that's what they're trying to do. They don't want this discrepancy to exist. So I think they'd like to close it. I think that's why the press release is out there, you know, short of glowing to a global settlement. I'm not sure how you do that at this point. And I think we mentioned this on prior episodes of this podcast. If I'm not mistaken, I went on this journey looking back through the charter and the amendments to the charter.

And there used to be a provision that 75% of the shareholders in Jubb,C, could trigger a settlement. So break the piggy bank open. But they, um, amended that out of the charter. And so now it would have to be at gray scale sole discretion to do any kind of settlement. So unfortunately, there's no scope for an activist campaign here, which would have been really funny. Yeah, I think their lawyers have drafted some pretty compelling documents. And I don't really see a world where this ends up in some sort of like a class action lawsuit. But again, I'm not a lawyer.

It would be really nice if the SEC would just allow for that spot product to be approved. and I think this would be a solved problem. They're not exactly helping investors to have this type of discrepancy exist in the market. No, I mean, on the one hand, you're being hurt as an investor in GBDC because it's just not tracking the total return of Bitcoin. And on the other hand, if you're in BITO,

you're not tracking the return of Bitcoin either. So, and it's just incredible. These are the deepest and most liquid securities markets in the world. And we can't put together a financial product, financial product that faithfully tracks, you know, this very popular global commodity. So while we're on the SEC path here, I want to mention this talk that Hester Peres gave at the Texas Blockchain Summit. Is that the name of the conference last week? That's right. Yeah, I watched or give it live. It was a great talk. I had not heard it until this week. So NLW read the entire

speech on his podcast, which you should definitely listen to. The speech is also on the SEC's website. It's called Lawless and Austin. I think this is the best speech I've ever heard from a financial regulator about the industry. It just, I don't know what it was like in person, but to hear NLW read it, there's just such a command of what's actually happening in the industry in such an alignment with like the American values of this technology. I was super impressed by it. I don't know what the take was in the room.

Yeah, I think, well, it was the last talk of the day, actually, right before the cocktail hour. So people were a little bit checked out, especially because that summit was incredibly jam-packed with really amazing speakers. So I don't think I really got the appreciation it deserved at the time. With the exception of me, who was really excited and all fired up and it's like, oh, she's pushing back at the, you know, unwarranted attacks on the free banking era. She did, yeah, she pushed back on that. Yeah. And I was thinking myself, like, this is incredible. I'm the only one that's, you know, appreciating this in real time. I was excited.

But yeah, I'm glad that now everyone else has been able to see the talk. The whole thing. I mean, the bankless guys must have been so excited because it's so clear that she's a listener of that podcast. So many of the themes that they talk about, the Wild West and moving to the frontier were part of that essay. It was just fantastic. Yeah, just a great, great talk. And I think, you know, very overdue. really nice to see that tone from a financial regulator, you know, because the narrative has just

simply been that, that, you know, nothing should be outside the scope of financial regulation. I think she's pushing back really adeptly with that. This show is brought to you by Coinbase Prime. Coinbase Prime offers trading, custody, and financing tools for institutions. With trade financing, you can trade from cold storage instantly. and acquire margin for lending and shorting. Coinbase custody is battle tested with dedicated on-chain addresses and industry-leading insurance.

Coinbase Prime offers integrated trading tools, including real-time market data, smart order routing, robust analytics, and algorithmic execution strategies. To learn more, visit on the brink.link slash Coinbase. If you manage corporate or institutional funds, you're probably looking for ways to access opportunities in crypto. You see the growth and momentum and want exposure, but a lot of institutions don't know how

or aren't comfortable with the risks of Bitcoin or defy. Now there's a new investment that's built specifically to help institutions get into digital assets. Meet Circle Yield. It's a blockchain-based investment built with USDC, the leading dollar digital currency. Circle Yield is fully secured and over-collateralized with Bitcoin to protect your funds. This also makes it a great fit for crypto institutions who want to

diversify their treasuries and reduce risks while staying on chain. You get your choice of terms from one to 12 months and a fixed rate that's higher than what you'll get at a bank or in many fixed income markets. Visit circle.com slash yield to book a meeting with one of their experts. That's circle.com slash yield. All right. So this is the regulatory podcast. Let's keep it on regulatory news. Tether and Bitfinex, They have settled charges with the CFTC over the backing and the marketing of USDT. The entities have agreed to pay a total fine of $42.5 million. These charges stem back to 2016 through February of 2019 when the company misrepresented that it had dollar reserves on a one-to-one basis.

And I guess part of the technicality here was that they said that they had these dollars one-to-one in a bank account with their name. on it and they didn't. So I don't know. What do you make of this? Tether kind of came out and took a little bit of a victory lap, but I'm not sure that's really what's going on here. Well, I mean, what's clear is historically Tether was very much excluded from the banking sector and so they had to hold cash, oweable, you know, liabilities. They had to hold their assets in like a constellation of bank accounts and sort of receivables with affiliated entities and were not. We're not, able to maintain, you know, stable banking relationships. And so it's kind of interesting.

I mean, you know, it's a really kind of a metaphor for what's happened in crypto, you know, especially in the earlier days of crypto firms being excluded from financial services and having to find enderounds there. In Tethers case, the enderounds, you know, push them into pretty insolubrious territory. But I think the ultimate cause here is simply that the bank system is very, very exclusionary by design. And, you know, that seems to be the ultimate, you know, like driving factor behind all this. I mean, one kind of wonders what's next for Tether. It seems like there's probably more regulatory bodies that could, that can see them. Now they have a settlement with NYAG and a settlement with a CFTC.

It's like, well, who's next? Yeah, that's how I feel. There are more regulators out there, and there are more that are probably looking at Tether. Yeah, I mean, I think, you know, I don't think this has any chance of actually quashing, sort of, you know, the rumors that tend to circulate around Tether. At this point, it's clear that they stepped outside the boundaries. during their earlier days in particular. Now they seem to be relatively confident with their current model,

but I think it's kind of like a self-fulfilling prophecy if they keep getting hounded by regulators and their bank partners get kind of targeted that they could find themselves without banking once again. I'm looking for the FUD right now. Tether is still strong FUD in this industry. Yeah, and that's against the backdrop of us retiring the China FUD. But, you know, the Tether Fud is not retired.

And I don't know if we're ever going to be able to put it away. No, I don't think that one will go away. I found myself getting into a little bit of a back and forth around the Griffin and Schaam's paper. That thing is still out there around Tether being what drives the price of Bitcoin. And despite the fact that it's been debunked many times, people still quote that. Yeah, there's, you know, a few papers. that are just completely erroneous that people love to cite.

And it makes me realize this is sort of media academic complex that academics like getting press coverage and if they have a specific agenda, they can launder it through the press. And then the press likes to inherit these talking points from nominally authoritative sources like academia. And so they mutually benefit from this process. process. And so then you end up with papers like Griffin and Chambs, which is basically,

you know, an erroneous paper. And then you get more at Al, 2018, on the climate impact purported climate impact to Bitcoin. And they become like impossible to rebut because they just become, you know, doctrine among journalists who just cite other journalists and don't bother, you know, reading the papers themselves or doing any critical thinking. So it's just like horrible, you know, whirlpool of academia and the press that we're kind of stuck in. It's just this world is flat type of mentality. All right. Well, I think that's that's the regulatory news. In brighter news, so Coinbase is now the official cryptocurrency sponsor of the WNBA and the NBA. So this is good. We're getting crypto out there, getting it on jerseys,

getting it in sports leagues. This is great. I mean, you can't escape it. Like I drive past the FTX arena pretty much every day. UFC has crypto.com as a sponsor, MBA has Coinbase involved. Found out actually today that XPTO sponsors Miami's soccer team, the one that I think it's called Inter Miami. It's one of the David Beckamones. So you basically just can't escape crypto when you spectate on sports these days. The NFL came out and said that individual teams can't do their own sponsorships.

that must be paving the groundwork for one of these big deals as well. Whoever lands NFL, that's a big one. Well, yeah, it's a franchise model. So, you know, I think there's a notion of revenue sharing for merch and stuff like that. Interesting news this week, which, you know, made Elizabeth Warren upset, which is always nice to see. Facebook launched their Novi stablecoin product, which is actually based on the Paxos, stable coins. So congrats to the Paxos team. And, you know, certain members of the Senate banking committee tried to just intervene and stop, just arbitrarily stop Facebook launching

this product, which is kind of incredible to me. It's like, what authority do they have to stop a private company launching a, you know, a fintech product? I mean, it's kind of wild. So if you think about the journey of Facebook's Libra, it was initially called Libra efforts, One is they wanted to create just a like a public blockchain network, like an unbacked monetary network, which is a huge swing. The second thing is they wanted to do their own stable coin. After they couldn't do that, after that sort of ran into issues, they wanted to launch their own. Can't do that. And so now they're launching one in beta partnership with Paxos, just using a third party stable coin.

And Warren and the Senate Democrats are putting letters out there calling for them to stop that, which is a product that exists in the market. You know, there's plenty of companies offering this. So I don't know, Facebook's not, I'm not a huge Facebook fan or anything, but they're, that team over there must feel pretty disempowered because they try to do anything and it's going to get shut down. I would feel very hard done by if I were them. And this is an enormous battle line that's going to define the decade, I think. Will the government in this country allow private entities to issue dollar denominated liabilities outside the banking sector? That's the question. And that extends to PayPal dollars and all of the like. So stable coins just crystallized the debate by injecting hundreds of billions of dollars,

well, really tens of billions of dollars, over 140 billion now, into that theme and freaking everyone in Congress out basically in every financial regulator and making the government think they were going to lose the battle to create the new digital dollar to the private sector, which they are losing that battle. And now the attempt to regulate, if you think about what a dollar in PayPal is, and the difference in that in a stable coin, there's not a huge difference, frankly.

It's just it depends which network it circulates on. But, you know, PayPal, they don't have a bank charter. And there's plenty of other, you know, analogous firms that issue sort of dollar-based liabilities that aren't doing it, you know, through the bank model. And, you know, this is just an enormous question that we're facing, catalyzed by the growth of stable coins, which is, will everything have to be done through banks? What's that going to look like? Are they going to create new avenues to get charters?

Because it's basically impossible to get a bank charter. They barely give them out anymore. Is there, you know, we're going to get some new construct or are we going to get some sort of hybrid CBDC? Is the government going to sort of reassert its control over finance? through the banking lever, or are they going to let the private sector blossom and continue to sort of service, you know, consumer needs? And I think that's really, that's the battle line. That's the critical financial battle that we're going to deal with for the next few years. It's going to be really interesting to see. In unrelated news, do you see Facebook is changing their

name? Like, that kind of Philip Morris Altria vibes right there. I saw an interesting take, which is that Facebook of the big tech companies is the only one that's still founder led, which having said that occurs to me that Amazon is still founder led. No, he's a step back from day to day. Bezos said step back? Yeah. I guess I should have done that. So that, I think, was one explanation for why Facebook is able to make kind of a pivot like this. well, we'll see, but moving clearly very hard into the metaverse, whatever that is,

whereas the other big tech companies don't appear to be taking, you know, public blockchains or Web3 or the Dweb very seriously. Yeah. Is the fact that Zuckerberg still has discretion over the company and can move pretty fast. I mean, he clearly has an eye on cryptocurrency space. So Libra's original vision here was pretty. compelling, pretty disruptive, potentially pretty cannibalizing to other pieces of Facebook. So big bold initiative that just clearly is not going to see the light of day at this point,

though. So Square in really interesting news, Square has mentioned the prospect of them building Bitcoin Aix. Great. Apparently, Square has an ASIC team already of its own, not historically Bitcoin focused, but in theory they could sort of repurpose them. So maybe we're going to get more decentralization on the manufacturing front. Right now it's very centralized, mostly through Bitman and microBT. Yeah, we need more manufacturers.

We need more foundries. It would be great just for the stability of the network to have more diversity there in the supply chain. It doesn't strike me as an obvious thing to do if you're square, but good for them. Yeah, I'm looking forward to seeing what they come up with. they are also, you know, excited to see what the Clean Energy Initiative comes up with. I think, you know, there's a lot of really interesting stuff happening in the energy space lately, which I touched on in the last podcast. In other interesting corporate news, Chainalysis has added Bitcoin to its balance sheet.

So maybe this will alleviate some of the claims that chain analysis is an anti-Bitcoin company. Oh, did people say that? Oh, yeah. Yeah, I think crypto asset on the balance sheet is kind of a no-brainer. Most companies have them at this point. Got to have it. And then probably the most important news of the week, Midwest tungsten, the primary retailer of tungsten curiosities and cubes,

has now accepting Bitcoin through OpenNode. This is a really exciting. development and I don't know if people will know what we're talking about but the tungsten community is just on fire right now the tungsten crypto overlap I think brink nation had a front row seat to this whole thing because I believe this podcast is where we you know ramped up our discussion of tungsten long before it became a mainstream phenomenon who is the first person you gave a tungsten cube to your dad my dad for Christmas I want to say three years ago and he told me that it was his favorite present he got that year.

Just the density alone, yeah. The intensity of the density. So look, I've been a cuber for many years now. I was meming about it years and years ago. And then somehow this month it caught on. I don't know why. Some people have been informing me. You know, it's like, you know, when authors read, you know, literary criticism of their own

work and it just comes to all these hypotheses about what their motivations were and stuff like that and yeah you know oftentimes it's just completely baseless it's like that with the cubes for me so people have been telling me that this is a really clever critique of nfts this is like a satire of nfts oh wow that might be a layer deeper than what you're actually intending yeah i'm not operating at that level of sophistication to be clear i just literally enjoy the chemical properties of this metal it has a remarkable density i mean the most abstraction I'll get is what I told the press. I've been fielding press inquiries about this now,

which is that, you know, we live in the abstract world, these like shapeless, you know, synthetic assets. And it's nice to have a physical, useless asset for once, as opposed to just, you know, JPEGs or fake internet money. So, yeah, that's as deep as it gets. If we can find that coin desk article that came out last Friday and post it in the show notes, let's do that, because that was one of the funniest articles I've ever read in my entire life.

just you and Dan from CMS just opining about why you like tungsten so i mean i fielded inquiries from bloomberg now uh coin desk uh decrypt uh the block and most recently the wall street journal about about the tungsten craze among crypto traders which to be clear has increased uh you know retail prices of tungson cubes so it's the biggest spike midwest tungsten has ever seen seen. So, you know, if you doubt our purchasing power, you know, that's a little show of strength from us. But yeah, I believe the WSJ might actually write an article about this, in which case, this would be, I think, my number one sort of meme into reality accomplishment ever. So is Midwest tungsten service? Is this an investable startup, I guess is the question?

I've been trying to find that out. They seem to think that, you know, the industrial demand for tungsten far outstrips, the sort of decorative retail demand, which I guess is fair enough. So maybe they're not as focused on this market as maybe they ought to be. I think that there's a lot of SPAC sponsors that are just mobilizing around trying to figure out if they can make something happen because this is probably the hottest company in the world right now. I mean, everyone, it seems like on crypto Twitter has a cube. So I wanted actually, I want to added disclaimer here in addition to our financial advice disclaimer. So Tungsen is the heaviest element that's considered actually essential to biological life. So it has a role to play,

apparently, in certain organic cellular processes. So I'll give it credit, but it's also toxic at high concentrations. So, you know, there's actually a case in Nevada where there was a town where, you know, of the inhabitants got tungsten poisoning from tap water actually believe it or not so everything i've read indicates you're not really going to get any toxic level of tungsten through skin absorption so you'd have to you know liquefy the tungsten and and consume it but yeah it can be toxic in high concentration so don't eat the cube um is my advice you can handle the cube, but don't consume it, would be sort of my, my PSA. Like, how many of these cubes could one theoretically, like, have on their desk before running into,

like, some of these toxic element issues? Hypothetically speaking, if, you know, if I had some friends that had that. Any number of cubes, really. And Bloomberg ran the numbers for us. They said that the world produces enough Tonicson to make $35 million to $2.5.2. cubes per year. So we're in no danger of running out of cubes anytime soon. The tungsten cube, man, it's the gift that keeps on giving. I love this industry. Yeah. And you know, to the people that are fans of osmium or depleted uranium, I say this.

First of all, tungsten is more dense than depleted uranium. And second of all, no one's heard of osmium, okay? No one's heard of that. Like, what are the industrial applications of osmium. Who knows? There are not. Is there a Midwest osmium? I don't think so. Tungsten is the asset here, and I won't accept any alt metals. Here's a quote from the Coin desk article. Pure unsolicited obsession with the density drove CMS holdings, Dan Medashefsky to tungsten cubes. The trader said over Twitter DMs, he's already bought a four inch cube that weighs 41 pounds

from Midwest tungsten. Man, that's a good quote. So CMS, I believe, has commissioned now a 7 inch cube, which weighs 230 pounds, and I believe is going to see if the intern can lift the cube. And I'm going to go on record right now and say that CMS intern will not be able to lift the cube because it's 230 pounds and it, you know, doesn't have any grips. There's nothing you could. No chance. No chance.

I mean, that's not an impossible way to deadlift, and I've actually met CMS intern. It looks like the fellow that could deadlift 230 pounds, but a cube in a cube form factor, you can't do it. I just feel bad for that delivery driver. Like, oh, we're going to need this on the second floor here. Yep, come on. There's no elevator. You'd need handles somehow.

You need to affix handles to the cube, but I think that's cheating. I think you got to get that into your house with like the same way you get a piano and through a window or something. You just take out the frame. You'd have to hoist it in. I mean, you share an office with CMS, right? Is that, can we talk about that or is that a secret? I don't know.

That might be a secret. But yeah, there's no way that thing's getting in there. I mean, it's small. It's just, it's heavy. So, and I've also heard some discussion about spheres. Look, I own a tungsten sphere, but I think Cube is really the primary shape here. So I'm not going to abide alternative shapes. All right. Well, I'm ashamed to say that I'm not a big tungsten holder yet.

You have synthetic tungsten exposure, though. I do have some synthetic exposure. It's a little bit easier to move. So I think that's really the future of tungsten cubes is, you know, creating IOUs that are redeemable four cubes in a full reserve kind of Rothbardian free banking model with, tungson species as opposed to gold specie. Just Neil Stevenson, just eat your heart out. I mean, if anything, it's truly Hayekian. That was what Hayek, I believe, was looking for, actually was, you know, currencies issued against baskets of commodities.

And tungson, you know, has some industrial purposes to it. So I think that kind of satisfies it. So maybe that actually might be sort of, you know, IOU issued against tungsten reserve, that might be the high X original vision here. It might be. It very well possibly could be. Well, that was talking tungsten. I'm sure we'll have more updates next week.

Hopefully there's no like mission critical defense stuff that tungsten goes into that we're absorbing here. But it's been fun. Yeah, I was thinking to myself, like, what are we going to be blamed for? Because it's kind of hard to do anything without, you know, just generally being attacked and blame for some shortage somewhere. You know, the new thing is being blamed for e-waste production because of Bitcoin A6. So probably there's some life-saving medicine that uses tungsten that we're going to be told that we, you know,

we were depriving, you know, children of this product because we bought all the cubes. I hope not. The press will find something. All right. Well, I think that's it for the week. We will be back on Monday with an episode. Are we talking about who that's with? Yeah, we're going to be covering in great detail.

This is about a two-hour episode, so Strappin, about Bitcoin miners as load balancers on the Texas grid specifically, which is something I've been obsessed with. And I've made some very interesting discoveries. Well, that will be a fun one. Looking forward to that. So everyone have a safe and healthy weekend, and we will see you on Monday.