TFTC: A Bitcoin Podcast - #151: Marshall Long

Episode Date: April 18, 2020

Join Marty as he sits down with long time bitcoiner + miner Marshall Long to discuss: - How Marshall got into Bitcoin mining - Why he only mines Bitcoin now - Evolution of chips - Chip fabrication foundries - Stories of procuring miners in China - The evolution of culture in China - The future of Bitcoin mining - much more Follow Marshall on Twitter Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse you download the app.

What's up freaks, it's your boy Marty here to introduce this episode of Tales from the Crypt. The immense pleasure of sitting down with a man by the name of Marshall Long. Somebody who's been in Bitcoin for far longer than most people on this planet. He started mining Bitcoin in 2011 and has been on an insane journey since then. We sit down to talk about that journey, some of the insane stories he's created or developed along the way. particularly trips to China to inspect miners and make sure that they were up to snuff for his operations and the characters he met along the way.

This was a fascinating episode for me particularly. Marshall has a perspective that I have not been exposed to very often and has a unique view on China, what's going on there, the culture there, the economy there, and a very nuanced view of people on the ground, the chinese citizens and and the ccp so i think you guys are really going to like this episode uh this episode is brought to you by our good friends at the cash app you freaks already know all about them they're helping us do many things they're helping us stack sats they're helping us stack slivers of stonks if you want to you don't have to but if you want to you can all right i

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can say um but if you are if you are when you do download the cash app make sure you use the code stacking sats that's one word s-t-a-c-k-i-n-g-s-a-t-s you're gonna get ten dollars and ten dollars gonna go to our good friends at owls lacrosse in chicago i was talking to uh to sam who runs owls lacrosse in chicago last night he's not a big fan of that that dirtbag al he al creeps him out too um so al stop creeping people out please i'm just trying to help here owls lacrosse Ho-ka-ka-ka! Ho-ka-ka-ka! Enjoy this episode, freaks. I know I certainly did. You've had a dynamic where money's become freer than free.

If you talk about a Fed just gone nuts. All the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. Well, hey there, freaks. It's your boy Marty Bent here to introduce...

What is up, freaks? Welcome back to Tales from the Crypt. It's your boy, Marty Bent, here rounding out a heavy mining-focused week on this podcast. We talk about mining every once in a while, the first two years of this podcast, but this last week particularly, this is, I believe, our fourth mining-focused podcast in the last two weeks. Very excited for this one particularly, because we're talking to somebody who's been in the game for quite a while. I'd like to introduce you freaks to Marshall Long.

Marshall, how are things going? Going well, Marty. Can't complain. Can't complain. out here locked down playing video games like a freak does what uh what games you playing you know a little overwatch little rocket league litter a little bit of modern warfare here and there you play on twitch i remember uh do some research before hopping on the mic with you i listened to the hash rate podcast great podcast if you freaks haven't listened to it yet and you're

interested in mining great mining focus podcast uh you're talking about twitch and esports and how you think that's the future do you dabble in the twitch game yourself yeah i mean we've got um players that stream and stuff like that i uh i usually infrequently stream on uh twitch i'm more of just kind of a casual filthy casual gamer streamer here and there you know yeah no i'm i this quarantine is uh have me questioning whether or not i should get back into gaming it's been quite a while um definitely good reprise that's for sure man i uh i can tell you that i would be in a much worse place now than uh if not that's for sure yeah it's fucking nuts man never talking about it it could be doing this for a while which is scary thought but

probably best immensely prep for that is a possibility well never has it ever been more socially acceptable to be a degenerate gamer than now so take the chance while you got it right that's yeah it definitely is my uh opportunity to get back into it but we're here to talk about bitcoin and mining overall who knows we might drift into other conversations as well um again like i said i'm excited to talk to you you've been in the game for quite a while uh you started mining in 2011 is that correct i got in late 2010 yeah yeah um so what were you doing before uh you got into bitcoin how'd you find mining particularly yeah so immediately before i um was working on some app development with a buddy uh and then just before that i was a

engineer doing design work for um paint spray booths uh back in texas so from there i went started designing apps and stuff just like because i got a passion for programming and then uh one of the one of my buddies that was working on the apps with me told me over lunch one day about this new weird nerd money that you could find with your computer and uh i didn't know anything about the financial implications or you know i'm just a country boy i don't know anything about finance or any of that stuff and so i just kind of went down the rabbit hole from the aspect of uh you know this is strictly something cool and nerdy that i was interested in and that's it building apps what uh what languages were you working with particularly

uh the one we were working on at that current time was just uh objective c at the time um swift was i think just coming out so um it was for a golfing app you're trying to track the head of a putter with an iphone and uh a little bit ahead of its time the processors weren't uh what they are now so um that was a nice time to pivot i think that's yeah i'm trying to think of like what the camera quality of the iphone was even back then what version was it on back then like three is it an iphone 3 uh yeah i think it was around the time of the ford 4s actually yeah yeah and so when you got into mining was it still cpu or gpu starting to get on the scene at this point um yeah so around the time i got involved just kind of like passively i started

with the cpu stuff and then it quickly right as i was getting into it switched over to gpu and then very quickly after that was the fpga stuff um fpga is kind of stuck around for i don't know maybe about a year or so from companies like butterfly labs and then you had asics coming out and then from there it was just all asic stuff what was your what was your strategy like early on acquiring this hardware were you looking for beat up used stuff or were you buying off the rack so you could last longer was the the yeah from the onset like i said i didn't have any kind of forethought into this thing i was initially like oh i can get graphics cards for free that's so cool and uh so i would go on craigslist during the gpu days and you know

gaming computers at that time had a really crap secondary market and so i was able to buy nice gaming computers um and and use those and then when litecoin launched um i was able to reposition those to mining litecoin and then uh you know altcoins kind of picked up from there like when asics launched and then i think we switched those gpus to feather coin probably just like a spin off of litecoin and um and of course we went head first into the asic stuff so at some point we were doing gpu and asic mining for uh maybe about a year or two and then the reality is asics are so much easier to manage at scale so we just kind of fell off the gpu train after um probably right around 2013 why uh why do you think they're easier to maintain or why are they easier to

maintain the scale i mean in general the uh with the full computer you have so many other things you have to deal with like windows updates or linux updates and driver issues and uh you know being able to if you want to the greatest thing about gpus at during our time when we were super heavy into them was that you were able to run a lot of profit switching right when all these alt coins first came out so we can mine litecoin or feather coin or manero or whatever problem is the cost of doing those things goes up so in order to mine let's say ethereum you had to have more ram on your computer than uh you would with just like a litecoin rig same thing for ethereum um and so you know upgrading was a huge pain in the butt because once you get over you know

even 50 computers and maybe 200 graphics cards uh that being able to manage all those is a lot harder because you'll have driver failures and it's a lot harder to diagnose what's actually going on um because we're running all custom bios firmware that either we developed or we found online and i mean i'm not you know super hardcore i'm not a graphics card developer right like i don't i don't know how to write graphics card architecture so i couldn't figure out what's here or there and it just becomes a pain in the butt if you really want to scale up hardcore and i have buddies even today that run thousands of graphics cards and they have specialized tools to help them with that we just found it easier to run asics after about 2013 2014

so you're still on that asex train uh predominantly so right now we exclusively mine bitcoin nice um do i have to disclose are you willing to disclose where you're doing that uh across the world yeah sure so we launched a new data center in canada um about a month ago we launched and we're launching another one in the states uh currently that'll be live this summer and um you guys uh yeah i don't want to prod too much i know how some miners like to keep it close to the chest but like what uh what energy sources are you guys using if you're willing to disclose that um yeah sure in canada it's uh mostly renewables and in the states um it's just straight grid power so whatever's available the one in the states is uh much bigger so

we're not able to exactly pinpoint exactly where the power comes from so nice and so is your decision to mine bitcoin only just because of the simplicity of using asics at scale or is it more you said you didn't get into it you didn't know about finance or money originally have you sort of come around to the uh potential monetary revolution that bitcoin represents or yeah i I started really getting involved after the price fell in 2013 it was super boring I mean the price for like maybe even a week or two was like $180 after 1200 bucks and I was like oh my god it was a huge nightmare and from at that point a lot of conferences had started to start going to conferences more and learning and started to really get involved and I didn't know people

were mostly unbanked outside of the states you know i wasn't well traveled at that point so um around that time i got super interested in the financial aspect of bitcoin and um started doing more research around how the government's just like just super crooked to be honest um started learning about you know market manipulation especially around like the silver market it was a huge market manipulation not too long ago and uh started getting more involved in researching why people why gold bugs are super into gold and uh yeah from there it just seemed to be and is now currently something that i really enjoy doing is digging into the financial side of it because really

at this point banks are ponzi schemes run by morons let's be honest no i mean so that's because There's no reserve rule now, right? That's gone. It's not even fractional reserve banking. It's just banking, I guess. Yeah, I would argue it has been even fractionally reserved for a while. It was just semantics that they took out of the Fed's speeches. Very likely.

And policy. And that's how I found it was from a finance angle. I worked at a fund, and my job was to follow these central banks and write commentaries on why they were making the policy choices they were and why currency markets were moving based off those policy decisions. And at an early age, like 21, 22, I really learned quickly that these assholes have no idea what they're doing. And, yeah, it's all a game, a facade.

And it's really evil at the end of the day when you think about how money is created in the current banking system. 100%. and it's interesting the one of the people that works uh in the building we live in he was asking me about credit and stuff and it's the best way to boost his credit this is just last week and i told him you know credit's okay for now but when you get to a point where you don't need credit just don't worry about it he's like what do you mean i was like dude think about it credit is a tool used to enslave people and let people buy stuff that they really can't afford and so

that allows the price of everything to be so much higher because people can attain stuff without actually owning it. And he's like, Oh yeah, you're right. I mean, it's not, if you just bring it to people's attention,

they immediately understand it. Everybody's being screwed left and right. Yeah. No, I mean, and if anything, this quarantine is really driving that home. Most people are living paycheck to paycheck.

Don't have, man, I don't have a two weeks amount of money saved up, let alone potentially six to eight months if we're forced to stay home and not work. It's a very weak, precarious situation. We're finding it out in a pretty terrible way. Yeah, and what's really a joke

is the government thinks $1,200 is impactful. That's the number one thing. Number two thing is, I mean, there were already cracks. A lot of people like to tell me, oh, well, you didn't know that the virus was going to come and wreck the financial system. no but there were already cracks in the financial system before we even got here that's the reality and this is just kind of speeding up the process um i feel grateful that

i've been preparing for a moment like this for the past two years or so with with this exact kind of this meltdown i felt it's coming in the next five years so i feel grateful that i was prepared however many people aren't and now unemployment's like through the roof so you know it's going to get worse a lot worse before it gets better especially once everybody's once there's a vaccine even i mean things will still be really people just yeah i mean it's it's a weird time and bitcoiners talk about a lot too like bitcoin is like a fourth turning technology and uh bitcoiners and gold bugs alike have been prepping for a moment like this and like you said yeah the virus wasn't the cause for all this it was the match that lit the fuel that's been

building for decades i would argue at least five decades since we went off the gold standard arguably a century since the federal reserve was was created and enforced upon us um do you think people wake up to bitcoin because of this you think more people are questioning I can tell you that if they don't now, they never will, to be honest. And, you know, Bitcoin was spawned in a similar time in 2008 and a similar economic time. And a lot more people know about Bitcoin now than they did thanks to the 2017 run up. The price where I'm going to use an air quote stability right now compared to the equities markets right now is really interesting. And I think it bodes well for the future.

But I will say if Bitcoin over the next, I don't know, 24 months doesn't really take some kind of meaningful hold outside of price. Right. I'm not even worried about the price. But once the economy really starts feeling the effects of these inflationary acts, if Bitcoin doesn't shine, I don't think it ever will. But it's starting to show that already. Yeah, I mean, the amount of people that are taking their Trump bucks and buying Bitcoin was pretty surprising to see. that's the other weird thing about the trump bucks like people who don't need it are getting it and then buying bitcoin with it um but yeah no i think the cutoff was if you make over 100k if you filed over 100k last year on your taxes or something you don't get it which and that's a

lot of people who didn't right so yeah no it's uh very again very interesting times no i agree i think right now is the very right moment for people to sort of turn to bitcoin and and learn more about it they may know about it from 2017 but now i feel like people are gonna be diving more into it and trying to learn and actually understand it this time around where 2017 maybe it's a good segue into like what the mining world was like around then even though you would have been in uh transition to a6 but 2017 people were just like trying to make a shit ton of money now hopefully people are trying to fix the money sure i mean 2017 was kind of a meme right everybody and their dad i remember very specifically i was working um doing some consulting work on the side

for a company that's in the crypto space and the ceo came in one morning on a meeting he was like my taxi driver on the way here tried to get me to buy bitcoin i think i'm calling the top and it was sure enough you know like a month later everything kind of started going down but uh that's a good thing in the fact that way more people know about it i mean i can remember very specifically in the early days i would just not tell people that i had anything to do with bitcoin because i didn't know if it was illegal or you know i i would tell people around like 2013 when the first run-up started happening people would say oh that's drugs right like oh god because that's all they've heard about it but now um it's very rare that you go somewhere and somebody doesn't know what it is

to some degree right or have heard of it so yeah no let's pull on the thread a little bit uh how have the different manias uh changed and evolved so like the first all coins like pure coin name coin all that shit uh then the ico bubble uh how did those two compare and what do you think the next one looks like if there is a next one or do you think people wise up about that well i think the the first kind of like new thing outside of bitcoin i i mean i think it still is pretty cool name coin having a decentralized dns service i think it's cool um there are some interesting products that have been built on top of it um but it never really got the chance to kind of shine i don't think um just because i don't think maybe people want that for whatever

reason um the very first attempt in the early days to make something new was an interesting and exciting time um but you didn't see the amount of places to trade these assets right Like I used to be a trader on – thankfully, I was able to skirt Mt. Gox mostly because of my own laziness. But – Why is that? Well, in order to set up a Mt. Gox account, you had to deposit – in order to set up like the US dollar type stuff, you had to set up an account with a PayPal competitor called Douala. and dwala the way it had to work is you set up the account you linked at the mount gox and the mount gox would send like very small one cent or two cent deposits to your dwala account

and then your dwala account would send one cent or two cents deposits to your bank account and you had to verify those deposits and it usually took a week or two so i went through all that and then right before i was going to start sending bitcoin to mount gox to start trading Mt. Gox's Douala account got seized by FinCEN, I believe, and it was $10 or $20 million. I don't remember the exact number, but their Douala account got seized. And I was like, well, all right, this seems super sketchy. Maybe I'll just try to find some other place to trade. And so I ended up switching over to BTCE, and I used BTCE a lot, but I didn't really use the dollar side of things.

I was just trading the altcoins, and that's where I first got interested in things like PureCoin and NameCoin and LiteCoin because a new trade pair would pop up every so often. Like, oh, what's this? And then you start doing research. Oh, it's mineable. Okay, cool. Check it out. And then NovaCoin, the first stakeable coin.

So I learned a lot from the trollbacks on BTC-E, to be honest. BTC-E, RIP. BTC-E was a Russian exchange that got seized. i believe by fin center the fbi as well yeah um because they were there's theories out there that they were helping launder gox coins right oh i i'm sure they were at some point right because i mean in the early days there were there's like trade hill right there was gox btce came up shortly after that bit instant charlie's thing and that was really it so you know i at that point i wasn't going to give anybody a whole lot of information if i didn't feel comfortable and so i just got

on an account that didn't require me to validate any kind of information at all and i just went to town yeah that's fascinating how wild west it was and i'm happy you mentioned name coin even though like it is a cool idea uh it really highlighted how competitive uh hashing is especially shot 256 um that's that's why it failed inevitably right it shared the same hashing algorithm is bitcoin and you have miners competing um or you have hardware competing or this change or competing for the hardware running that that hash function and so did you did you notice that in real time well they the developers for namecoin quickly pivoted to merge mining from namecoin and bitcoin so then they were able to save that quickly because most

of the pools at that time would just integrate that into their pool server so most of the pools were merge mining name coin and then the real problem came was they weren't passing that on to the miners and they were just merge mining it on the back and then this selling all the name coin they would get because it was just extra money and so there's so much sell pressure that it eventually killed it off yeah that's fascinating so what was it like like learning the dynamics of these hashing markets i guess as you were as you were going on and was it a baptism by fire did you foresee any of this stuff or was it a lot of oh shit this is how this works i should adapt accordingly well it was kind of around the time like butterfly labs came out with their thing

a lot of stuff was happening at the same time i can remember the first time thinking man bitcoin could be something very serious when i was walking around the mall with my now wife and i was on btce on my phone just like you know kind of day trading a little bit because i don't want to shop around the mall and i saw the price bouncing up you know 30 bucks 40 bucks 50 bucks 30 bucks 20 bucks 50 bucks just like up down up down super quickly and i'm like man this could be super huge imagine if this thing could get to like 200 how crazy would that be and me thinking i wish i knew more rich people to get them involved in bitcoin because at this time i didn't have any money my parents didn't have any money like i didn't know anybody so um fairly early on i could see the potential

from a price standpoint uh and and nothing beyond that bitcoin but when all the other coins started coming out being able to transfer hardware to those other coins was interesting but then i started to dig into the higher tech stuff like the fpgas that butterfly labs put out those were decent and then all the issues around when their asics launched having huge shipping delays and i actually forgot that i pre-ordered one until like it came like eight months later came in a box and there was like it looked like somebody put a coke can on it had like a coke can ring on the top of it i plugged it up and i was immediately like wow this thing's really cool and uh then like the next week i sold it because they were going for double on ebay and

then the grid seed miners came out and that was super cool because you could mine bitcoin and litecoin at the same time with one asic and that was super interesting and then i got into hardware were hacking because of those because if you cracked them open you could do some voltage mods and get more hash rate out of them and then all the rails kind of came off and we went real deep into the asic mining world yeah it is interesting still to this day people tinkering at the firmware level just to try to eke out crazy efficiencies because it is a podcast i dropped yesterday uh austin storms has been in the game not as long as you but he's been mining since like 2013 described it perfectly well like it's ruthless capitalism you have to

get to the lowest cost possible for your operations if you're going to win this and you mentioned that on the hash rate podcast adam back telling you uh the chicken the chicken check check data center man that's right and it's an arms race too right like if you don't have and and that's why a lot of people from 2017 got absolutely smoked because they overbuilt and they bought the wrong stuff to try to save capex and i ended up biting them in the butt so it's also an arms race in the fact that you got a time you got to have some insider knowledge on what's going on on the chips across all the manufacturers and any new manufacturers that crop up um you know logistics chains is important to consider like if you want to buy from bitmain right now in volume you got to get

it from malaysia if you want to buy from what's minor right now that's a different process and you got to know their lead times so that you can time your upgrade cycles along with the current network issues right now so it's more of a arms race in the fact that you need the newest gear but when do you pull the trigger on that new gear and that's kind of become an art form at this point yeah that's something uh we've learned as well as is it's in the hard way like we a company that i work for we started our mining journey at like the height in 2017 it's like how do you i wasn't part of it then i have come on later but it was like ah we've got all this bitcoin that we've we've made from ad revenue like what do we do with it let's

let's buy miners and figure out what to do with them thinking you could just like plug them in yeah and you find out they're a jet engine basically right super loud yeah no that's fascinating because you mentioned it earlier you weren't well traveled before before bitcoin but it seems like it sent you on this this crazy journey to far off land so what's that been like i'm really grateful to bitcoin because it's uh really changed my entire life i mean i'm from a super small town in texas my graduating class in high school was like 50 people um you know i now i've got friends all over the world i've been to i don't know probably 30 35 countries maybe 40 at this point um you know i'm almost trilingual now and it's it's

really been interesting to be able to see the how different people operate it's had a very narrow view of the world at that time and uh i mean to some extent i still do right like i i've been to a lot of western places i've been to china a whole lot um asia a good bit but i haven't been to south america a whole lot i'm in africa at all and uh it's bitcoin has really kind of helped me develop interpersonally for sure um and i'm super grateful for that and it's uh it's given me a lot of cool stories to tell too that's for sure you got any cool stories you want to share right now like what's the what's the weirdest situation you found yourself on these travels for for the mining and i've been in a whole lot

i mean that could be a whole five-part series to be honest but um i don't know man probably the super the weirdest one was one of the times i went to china um buddy of mine wanted me to go check out some warehouse of asics that he was trying to ship to me and i wanted to see him in person before he shipped him and he said all right fly to shenzhen there'll be a lady there to pick you up i was like all right and at this point i didn't speak hardly any chinese and i i speak okay chinese now i'm not fluent by any means but um i get to the airport and there's two guys randomly standing somewhere and they just say come with me and generally when and people do that they want to take you in like some fake taxi or something try to charge you whatever

and so i resisted for a while but they kind of manhandled me and just kind of put me in a car and i was like all right this is weird so i'm texting my buddy and i'm like hey man you said a lady was gonna pick me up this is two really young dudes am i in the right place he didn't text me back and they're just driving and so like it was like 30 minutes go by I'm like what is going on 45 minutes go by still no text from my buddy and so I'm starting I'm sweating like I don't know what's going on finally he texts me back like an hour we've been driving he's like yeah it's two guys sorry I'm like okay cool at least I know I'm in I'm in the right car but they're like taking me way off the beaten path like back some weird alleys and stuff and

and uh but he said it's two older guys and these are two younger guys so i'm like okay i still like there's no way that this warehouse is literally in the middle of nowhere with like a whole bunch of miners that i need to inspect and so i'm still freaking out walking up these stairs into this warehouse and we go through the first set of doors and all kinds of weird stuff in this warehouse man like in the right hand i can remember there being like a stack of like mammoth tusks that people were breaking down for like chinese medicine or something like elephant tusks and then there's like a dude in the back left corner like just randomly grinding metal laughing his head off and i was like i'm gonna die here this is so sketchy and then there's randomly like giggling

at me and then running away and i'm like dude this is like a horror movie set like what's going on and so i freak out and i'm running down this hallway just like opening doors to see if i can find miners because if i can't i'm out and finally i open a giant room of miners i was like thank god this is the right place they're not trying to kill me because nobody spoke english i didn't speak any chinese my translator wasn't working like my translator app on my phone so yeah found the miners it didn't die was a good day holy shit i don't know if i would have i would have probably pissed myself and ran out of there yeah it was i'm searching for them my blood pressure was up man it was scary so what what happened when you finally got the minors somebody

oh it's you i found i found the minors i was like okay these are the right guys and they're just looking at me like what is wrong with you why are you sweating so much number one and why are you freaking out and uh so i opened the boxes and kind of reviewed them and you know kind of tested to make sure everything was good and i said okay let's go and then i got back in the car i went the airport that was it that was like a three hour round trip yeah back to the airport that's fascinating fuck man and the miners were worth it obviously yeah it was fine it all all panned out yeah shit man fuck it's crazy over i mean i've never been over there what's it what's it like um i can tell you man china has changed a lot so the first time i went to china i think was

2013 2014 maybe um was to develop i started developing firmware for miners around then and i was helping with one of the first sets of litecoin a6 at that time and uh believe it or not it was in wuhan and the first place i went in china was wuhan uh where apparently coronavirus came from but uh being able to see china from that point till now it has changed so much the culture the people um back then it felt people were a lot more kind of about themselves because the thing that most people don't realize just how many people are in china if you think about it's like one out of six people in the world is in china not chinese in china and there is just so many people that if you don't kind of look out for yourself and

be selfish to some extent like you'll die there's just that many people um however that mentality is rapidly changing i've seen a lot of cultural shifts in uh the big cities for sure um even when i went back recently in december um it really felt like a whole different place man it's really cool to see how the culture has changed from being a mostly kind of inward looking culture to now I mean I actually had people like open doors for me in China I mean that doesn't even happen in Boston right so it's it's uh and that's not like me feeling that it's different because I'm white and privileged it's me just like literally sitting outside a restaurant and just like seeing what's going on around me people are the the mentality of the people is changing

um it's really cool to see man i can see people being more caring towards each other and especially now the the work that they've done during lockdown has been very impressive the the amount of respect that they're giving each other it's really cool to see man that's interesting i mean and as on to be completely honest i'm somebody who's been railing against the ccp the last few months uh do their from what i deem handling of the the virus to be like sketchy and probably made it worse um just from not sharing information hourly but that's sure totally well you can do things in china that you can't do right you can do things in china you can't do here right so um my my wife is chinese and and so we have firsthand account of what it took when they were actually on lockdown

And they were like, if we even go outside, like we go to prison, like as soon as we step out the front door, like we're done. And now if you wear a mask – if you don't wear a mask outside, you get in trouble. So it's like there are things that you can do in China that you can't do here that really helped them kind of stamp out coronavirus to some extent. I don't believe that there's no more outbreaks there, but the extent that they went to locking down the country is definitely not something that you could do here. So I will say that – and like this, it's interesting. What do you prefer? You want an authoritarian government that can really get stuff done, or do you want to have personal liberty? And this is an interesting kind of thought experiment. I've been having several of my friends, especially Chinese friends, that are messaging me daily like, are you dead yet? Is everything okay? And they feel a lot of national pride now that their country has been able to, to a large extent, control the pandemic inside of China. So it's really interesting now, and I think this might be signaling the end of the American capitalistic monolith now compared to – I think at the end of this, you'll start to see China really taking over from an economic powerhouse standpoint because now there's a huge sense of pride inside of China that they've been able to do such a good job.

And even a strong sense of community internally, you know, people are really trying to look out for each other and stuff, mostly from what I've been seeing. And again, I don't know everything about China. This is just my opinion, what I'm seeing. A lot of people will be like, oh, he's white. He doesn't know nothing about China. I mean, to some extent, that's true. But this is just my observation. I think it's going to be interesting for sure. I think this might be the beginning of the end of the U.S. powerhouse. we'll see how the inflation goes but and we'll see right and that's i mean this is fascinating because i i've been on the complete opposite of them where i think interesting i mean at least the west and that's why i'm happy to speak with you as sort of an insider view of what's going

on in china as i've been obviously have a western view of the world and a western frame and uh data source right or data stream and i've been saying and have talked to people who believe like this is gonna this virus particularly is gonna have people turn away from china and like shift supply chains home which may not be best for them in the long run and it could be however china is really good at a lot of different things um you know the education system in china is i mean just like regular schooling is way better than in the states that's for sure but beyond that the way they approach post high school education is interesting it's you know a lot of people will go to a traditional like a harvard type deal there's a big prestigious

university in beijing called xinhua and um you know a lot of people go there however the people who can't get into those schools in the state you just don't go to school right you just your mechanic or something uh focused school and so there are people in china who can do things that we can't do in the states and i'll give you a good example of that when the apple watch first came out um the crystal on that watch the what looks like a glass piece on that watch the screen it's actually made out of sapphire and the the edges are rounded in a way that a lot of people tried to criticize apple in the west saying like oh there's no way our simulations can grow sapphire in this kind of shape in this curve and here's our proof and

blah blah blah but when it actually came out that whole thing is made out of sapphire because there were people who were trained specifically on growing crystalline structures in china at foxconn that were able to develop that in such a way that it worked and so um that's something that you can't take out of china it's really hard to export that kind of talent because it's just been in their their culture for so long that there are people a lot of people in china who can do stuff that nobody else in the world can do so right now china's on lockdown right you can't go into china right now as a foreigner um but i don't think that there's going to be a way that you can export that kind of talent in such a large volume that it would shift the paradigm

time interesting fascinating so like more like trade focus specialization that you don't see anywhere else that's right fascinating getting back to like that's something i i've actually thought about a lot like my sister is a ceramicist and i wish she was just able to focus on that alone and nothing else and just master that craft but yeah like you said the american schooling system doesn't allow for that you need anyone well it's also the economy right like Like in China, there are very few things that are super expensive. Cars are pretty expensive, housing, and most people – like you can't buy land. You can't own land unless you live very, very in the outskirts, very far away in the countryside. So the only things that are – those are mostly the only things that are expensive.

Everything else, food, the essentials are super cheap, and if you don't have a job, the government, if they don't have any available for you, they will create one for you. So the focus of people is much different than here. Right. What you worry about every day, what I worry about every day is something different than what people in China might worry about every day because of the government structure. So people might have more time. They have definitely less freedom. They definitely have a lot less than here. But they also have – don't have the fear of if your company blew up today and my company blew up today, and we had to somehow burn through all of our savings and all our investments went to zero, what would you do? You would have to start all over, but that's not the case in a communist-focused government. You can argue that China is mostly capitalistic, and that's true on the economic side, but the government side it's not. so um you know it's a give and take and by no means should that be construed that oh marshall long thinks chinese communism is awesome it's not true i'm a libertarian and mostly i just want

people to leave me alone and just let me do my own thing but i mean there's there's that's why the system allows people to be able to focus on certain things and getting super detailed on a few aspects yeah now again it's infinitely fascinating and uh that's always been my biggest wonder is there's a huge shadow banking system you have the uh like the ghost cities and stuff like that is this oh yeah temperate is this just like a temporary boon before an inevitable collapse because the system is just inherently fragile because of the top-down nature of the government sure well that and i i've been to ghost towns man i've been in 60 foot high-rise buildings that i'm the only person in i mean that's that's real what was that like and why

it's weird man it's super crazy i was uh it was in northern china and i mean that's just like a a weird place to begin with but uh you know we were riding bikes inside the building like you could ride a dirt bike in there if you wanted to because there's nobody there's like a dude at the front desk that's sleeping all the time and it's you and that's it and so uh the reason that happened is because the government's trying to stimulate the economy and they're getting like seven percent gdp growth year over year during that time and it's because you know a lot of internal corruption this guy's giving his cousin the the construction contract and this guy's marking everything up so they can make more it's a super super corrupt system

not to say that that's not the case in the states but it's almost transparently corrupt so it's a it's a really weird feeling to be in a very large large building and be the only person there so um but at the same time china's got other things down pat right like what like uh you know like the manufacturing and engineering a lot of i mean there's electronics people in china that i've met that they have no a lot of my chinese buddies who worked at amazon and you know paypal and tesla and all these really great companies to work for some people argue tesla's not a great company to work for but they're leaving these companies to go back to china because they're making more and startups in china or the culture is very different and

they want to be a part of it yeah it's a lot of a lot of my indian buddies are quitting jobs at facebook and google to go run big startups in in india you know so it's it's an interesting time for sure that's very interesting now that's i mean so do you believe in like the sovereign individual thesis that nation states are going to break down to smaller and smaller municipalities potentially citadels and that's and again so that's what drives me crazy about china is like you just described as crazy innovation especially at the app and engineering level but are they for us to sort of build for the ccp and do we want like a social uh credit system and is it is it dangerous to even though it is insanely capitalistic and in some sense at the end of the

day you can't route around the ccp and if we get that exported across the world is that something everybody should live under and put up with yeah and you know that's that's the question and i i by no means would want to live under that um however there are perks you know if if and i can tell you right now i risk especially now like i respect people's right to go outside even when they're urged to stay inside however that doesn't make you not an asshole right that's the reality you go and you want to party with people and stuff right now like it just means you're selfish it It doesn't mean you can't, and I respect your right to do that. That doesn't mean I don't dislike you because I definitely do because I think it's selfish and stupid. So in this kind of give and take, you can kind of see that there's a silver lining to being so oppressed constantly.

Yes, every Chinese startup has a backdoor built-in full stop, period. End of story. So every message I send on WeChat, I know that it is being read by some machine learning algorithm that is flagging me for XY. That's why I have to watch what I say on WeChat. I mean, even when you go in now, they have a facial recognition thing that you must register your face print with these cameras before you go through customs. So China knows where I am at all times. It's the most heavily pervasive CCTV country on the planet. It is full lockdown all the time. They know where I am all the time.

Is that a place I want to live? Hell no. Is that something that's super scary for like a post-utopian society? Definitely. But, you know, and I don't know why I feel the culture changing in China, but the social credit system might be part of that. I don't know. yeah yeah is it the uh the black mirror like click yeah it feels like that sometimes man but

uh every time i talk to my family about it in china they they'll say we don't really have to worry about that anyway because we're not assholes and that's true i guess but the thing that i always hate is people say well why don't you want to be watched all the time if you're not hiding anything you shouldn't have anything to worry about i hate that because i don't really have a good retort to that besides i don't want people watching me all the time um give me your phone let me read through all your texts and your pictures and exactly your passwords like it's interesting in china though because everybody knows that it's going on they're very uh i'm not gonna say transparent about it but it's very opaquely obvious that that's happening and people know

that um in the states it's definitely happening too i mean in england gdpr all this kind of stuff gchq like that's where the internet cables come into england is literally gchq so um i mean everybody knows it's happening it's just are you in a position to be able to protect yourself do you want to protect yourself most people are just so lazy they don't care and that's the scary part exactly that's very scary and that's it's actually too like how has bitcoin and survive so long in China, specifically the mining and all that. Do you see the government clamping down on Bitcoin?

Particularly, they just announced their digital cryptocurrency last week or earlier this week. Do you think they'll clamp down on or try to clamp down on Bitcoin usage within the country at any point? Right now, Bitcoin usage inside the country is a weird place.

I think it's a gray market right now. um however all the major chinese exchanges are kind of not chinese anymore if that makes sense they have either shut down or moved their offices to like thailand or something like that um the great thing about bitcoin is we don't need anybody's permission to use it that doesn't mean that you know there's pros and cons to a public blockchain too if you want to do nefarious stuff there's a lot of really good companies that are great at tracking this kind of stuff so problem with the blockchain is it's there forever and the best part about a blockchain is it's there forever so it's kind of a double-edged sword at that point but i you know it's nothing you can

really do to kill bitcoin at this point so if the government decides to go one by one and axe every single data center in china they'll just relocate keep going yeah you don't think the government could like forcefully take over all the data centers in china and try to 51 attack back the network or at this point i feel very confident that less than 50 of the hash rates in china so interesting i'm not number you hear number you're here throwing around a lot is like 60 to 70 that used to be the case uh however a lot of stuff's getting spun up in like kazakhstan a lot of stuff still going in sweden iceland south america even the states you know there's some big operations in the states canada's got some big operations so i mean it's it's getting

a lot more geodiverse now as uh large players start to hone in on cheap power pricing yeah i mean that's what again we discussed it before we hit record company i work for that's i mean that's our main goal is to try to bring hash hash power to u.s soil particularly on oil fields and you have some thoughts on on particularly particularly on mining on oil fields what uh you haven't shared them with me yet so i'm interested to hear yeah you know the biggest problem with like doing flare off stuff is two things number one like in order for me to go to a site right i think you have to take like a 24-hour osha class so you can't do like a lot of okay come to this thing and check it out can't do like a lot of dog and pony shows if you're

trying to like raise capital to investors it kind of becomes a problem uh number two it depends on your like i said it depends on the business model right your business model is is not necessarily mining so much as it is trying to facilitate a need to kind of take control of the excess gas allow them to continue to to drill um but that's not my business model right so my scale that i can hit as far as mining in one location is much greater than any kind of flare-off place that you could run in a safe very large scale because at some point that well will be capped or you know you're not going to be able to generate 200 megawatts from one well flare-off it's just not you know a reality and so your issue if you really wanted to go super big would be

finding more locations more locations means more unique ways to manage those locations having different people in different locations so your your opex is a lot higher than what mine usually is however my capex is all up front right so it just depends on your business model right so that that's the only thing i'll say about about flare stuff yeah no i mean we've definitely uh noticed that those are hurdles to overcome but yeah it depends on who you partner with right and some and that's the interesting thing about drilling so you drill a hole in the ground and maybe for six to eight months you can have enough flare to do uh maybe 100 megawatts or something like that but then after that it's considerably reduced for the remaining life

cycle of the uh well pad um well we think we found interesting scenarios we're working with one oil company has got a lot of uh well pads uh pretty close together and so that like you that is something we're we're working to figure out and i think we're solving is is how to manage many disparate containers across an oil field where you don't have a data center where you can just send five people into one location. The other thing, too, is for oil specifically, the biggest problem for mining in general at large scale

is the fact that there are so many variables that you must try to control. And when you're a slave to another variable being oil price, god i cannot imagine that financial headache for a very long-term mining situation right because the oil price goes down like it is right now like tell me are our people like shutting off like what's what's what's the deal in the field uh where we are the pad we're on is not shutting off they are consolidating they've decided not to drill any new holes i believe um i can't speak too much because of nda stuff uh but yeah we are safe our operation

it's relatively small just to be clear we haven't scaled up immensely yet um uh is safe right now and for the foreseeable future from we we can tell um but yeah there that is definitely a variable to take into consideration that but that's where i think we think that we can come in and sort of help some of those uncertainties for the oil companies is hey uh yes you guys have price volatility uh and you're wasting all this gas so that's where we're basically again flare mitigation trying to help them get on their emissions levels and so they're just giving us the gas like hey if you can throw this through uh catalyze this throw throw it through an epa uh approved generator and reduce emissions and actually get value out of that that helps us immensely

um and so that's the first step and then eventually we'd like the oil companies to start investing in these mining ops and that's our thesis is that they will start and they'll start to see bitcoin as a sort of supplementary revenue stream to to the oil stuff so it can help when um when the oil prices is a bit suppressed yeah i mean i think if you can overcome the challenges of you know managing dozens of containers at the same time with limited overhead i think that that's something that's potentially interesting for sure biggest problem is like if you spin up 100 megawatt spot and then they cap that thing or reduce the the rate at which they're giving the gas out then the question is what do you like how do you transport 100 megawatts worth

gear right it's a huge logistic nightmare yeah yeah no that's part i mean again i don't want to disclose too much but container design and specifically making the containers portables is very yeah very high super crucial yeah and then and then who you partner with is is also very crucial as well um how how well their business is run and whether or not they can weather these storms so i got a lot of a lot of factors but it's fascinating and it is it would be a cool problem to solve and to actually that's why i yeah decided to to jump on this team and work for great american bodies because it's a big problem uh and it would just be cool to be part of the team that that helps solve it right um sure i mean we've we've kind of talked about

all kinds of stuff over the years where you know you could back up a container to like a warehouse and provide heat in the winter so that they could save on their power bills that kind of stuff um so yeah that that's what's great about mining is that everybody is working towards the common goal of getting their cost of production down and there's a lot of different ways to skin that cat and that's that's really interesting for sure yeah totally and that's um what's i just gonna say uh i wanted to ask you like what are your thoughts on the foundries being in the chip chip fabs uh being so few and and located in one part of the world like do you do you envision uh america or north america or maybe even south america investing in a foundry a fab factory

that can produce asics if bitcoin hits a certain threshold of importance it's interesting right I can tell you my answer is no overall, but the reality is I think there's not private foundries. I think there's three. You've got Global. You've got SMEC. You've got TSMC. However, Intel runs their own stuff. Samsung runs their own stuff.

There's a few analog foundries too. I think Texas Instruments runs their own analog ASIC place. um and some of these companies have run bitcoin asics for themselves um it's interesting in the fact that a bitcoin chip in general is not hard to design compared to a graphics card or cpu and the amount of brain power that's out there designing gpus and cpus right now is really interesting because they could easily switch over to designing bitcoin a6 if the price shot through the roof problem is foundries the the the type of stuff that goes on in a foundry is so mind-boggling high tech that it's insane like the tsmc their foundry floor

is i think 12 or 13 orders of magnitude more clean than a surgery room than an operator i mean they're talking particle level filtration because the tiniest speck of dust on those wafers destroys it so the the amount of technology that is being developed and utilized in a foundry will blow your freaking mind and that that's not a simple thing to just be like oh bitcoin's a million dollars let's make a foundry it's not going to happen just because these people have decades of experience the technology is highly proprietary even if you have a foundry you have to have access to the process nodes so like if you wanted to make a five nanometer chip right now you got to have samsung's permission to do that and they got to provide you the way to do that

So there's a lot of IP issues at play. So I can feel very certain to tell you that over the next five to 10 years, if a Bitcoin explosion happened, you wouldn't see anybody making a foundry for that. You would see people paying Apple to delay their iPhone chip tape out. You'd see people paying to get on the schedule ahead of AMD, ahead of NVIDIA to be able to produce their chips faster. That's what I would see. interesting no and so that's you're alluding to sort of the way these foundries work right you rent space on their floor to build whatever you want to build particularly you rent space on the schedule right and there's a lot of chinese hedge funds that will like buy the schedule i know there's a chinese hedge fund trying to buy the samsung schedule to kind of thwart bitmain's new stuff coming out it's like a hedge fund and they'll resell parts of that out so it's really interesting kind of like plays there for scheduling yeah secondary markets it's fascinating man it's uh again and it's going back to like the ruthless capitalism that just proves it if people

are going to be able to pay apple and other chip makers to to move back in line it's pretty crazy yeah you know if it makes sense for apple then maybe they would do it but the amount of money that Apple makes on their new iPhone launch is so astronomical that the price would have to be insane for them to agree to do that. And they have preferential treatment at TSMC, as does AMD. So, I mean, if they don't want to do it,

they wouldn't do it. But that kind of stuff does happen. I'm not saying explicitly with Apple or AMD, but before somebody would go spin up a foundry and spend several dozens of billions of dollars doing that it's more likely that they would pay one of these big companies to jump the line yeah that's one thing i because again the sunk cost of getting one of these spun up and doing it correctly is so large that it is a huge risk and that's when i hear trump and the politicians are around infrastructure spending that's always

something that's popping out of my mind like yeah for sure i mean infrastructure here is like going to shit right so yeah yeah maybe yeah we live in weird times you were you're talking about leaving where you're uh where you're at why do you want to leave there uh you know it's just a culture thing i guess the first time i moved to boston i uh got smacked in the face by the culture here that's for sure when people come to Boston it's mostly to like you know work or be a part of something cool and new so people are mostly inward focused and so you know in Texas if somebody doesn't hold the door open for you when you're walking through like it's a big deal kind of thing I can still remember the first time

my dad came my dad is the most Texas Texan you've ever seen I took him to this really nice park and We were sitting there chatting, and a guy walked by in a shirt that he liked. And my dad said, hey, man, that's a cool shirt. And the guy just kind of nodded his head real gently. He didn't say anything, just kind of nodded and kept on walking. My dad almost jumped up and confronted the guy. And I was like, whoa, whoa, whoa. That's just how they are here, man.

They're just kind of cold people. He's not trying to be mean to you or whatever. That's just how people are. He was like, that's rude, man. If I give you a compliment, you're supposed to say thank you. and i was like okay i know but that's not how they work here so it's uh i can tell you that i've worked harder in boston than anywhere else but um i also like the people in texas and the food too is really great in texas so i'm ready to get back to my nice fat people i said i'm gonna

say texas barbecue is uh i'm trying to think it's better than dunkin donuts which is a boston staple food um yeah i'm from philadelphia and uh so i i understand i know that's a happy i'm there yeah it was still a brace of northeast people in philadelphia but i actually uh you know when i was like 10 my family moved to charleston south carolina and that was a culture shock for me having to say yes ma'am yes sir that's right going to cotillion learning how to eat properly and have good manners was uh i was um i was uh sort of apprehensive and rebelled against it at first but eventually after living there for four years you succumb to the culture and you end up saying yes ma'am and yes sir and i'm actually very happy uh that i spent

that time down there i think it's paid off dividends in the long run being polite is hold the door we say that on this podcast a lot actually just hold the door be a good person That's right. Yeah, that's probably what I'm looking forward to most for sure. All right, dude. We're like an hour and five minutes in. I don't want to take up too much of your time on this quarantine afternoon on this Thursday. Let's end it on like what are you most excited about in the mining industry right now?

I'm excited for the halving, man. I'll tell you, I think a lot of people are going to get wrecked. and we are well positioned to take advantage of what i hope is an upcoming difficulty drop we had a big difficulty drop a couple weeks ago and i was super excited and we mined i mean that boosted our production by 20 something like that and i'm hoping that the price continues to stay low and after having a ton of people had to turn off and they sell and they have to push the price lower which means even more people have to turn off and because my cost of production right now so low i feel very confident that we're one of the lowest producers which makes me well positioned

to take advantage of a huge difficulty drop so that's what i'm most forward looking to for sure yeah well good that's i'm fucking happy for you man because uh we're gonna see we're gonna see all these s9s fall off oh finally right god well maybe yeah if you don't mind answering this question too like what is the like how close are we to like commodified a6 like s9 has been running for what almost six years now i mean a lot of them fell off man i do know that you can buy there was a an offer on secondary market last week 11 000 s9s for 40 bucks each that's crazy right crazy crazy i think they're coming off now man but like how long do the s17s the m20s is the m30s is like do you see them having a longer life cycle than the s9s well yeah because the

problem is you can't go much lower i mean bitmain's having trouble with their five nanometer stuff cheetah miners having trouble with their five nanometer stuff five nanometer samsung process now it's super painful it's not like the early days right you go from you could take the same design from 65 nanometer to 24 and you have almost tripled your efficiency that's not the case anymore so we are smack dab up against moore's law at this point and you know what we're doing is we we have all custom firmware that we've developed to try to push things a little bit further um we do some some special unique things but uh i think that the the life cycle of gear that's coming out now will be longer than any before just because there's no more room to go

down on process node and and the kind of tricks you can pull on the silicon level are few and far between now so um you know i don't think there's a lot a lot of room to develop something that's just so much better that it would warrant me to expend that amount of capex so do you think this makes mining more competitive going forward hell yeah so now power is going to be way more important going forward because you you just can't like change your cost production by upgrading anymore yeah yeah oh and customized firmware for sure i'm gonna know you with like another like how does this change like energy markets right like it's just gonna drive crazy innovations and well i mean it depends what country right i mean

let's say sweden for example sweden is its own grid it doesn't connect to the rest of the eu and they have issues right because sweden nobody lives there there's a crap load of power there so i mean energy trading isn't super liquid because they're not all connected all the markets aren't connected so you just can't like do that super easily so i mean the the i don't think it changes the dynamic of energy markets as much as it changes where infrastructure gets placed i mean there's a big op being built right now in the middle of nowhere kazakhstan and that's going to help people be employed that's going to build infrastructure around that place you know streets roads uh you know hotels this kind of stuff i think that's what you'll start to see these these

new kind of places that were severely underserved hopefully getting served by a new mining ops taking advantage of lower pricing so yeah that's the uh the mining ops create little local hub economies around the world thesis it seems like it's coming coming true yeah it'd be super cool yeah well marshall i really appreciate your time this afternoon i know we both got to get back to daddy daycare um i hope you i hope you uh keep your sanity uh with the gaming and stuff like that i know i know it's a struggle these days i'm trying to do it myself um so i really appreciate you're taking some time to do this and um good luck at the having man pump hey thanks so much man thanks for having me on and uh we'll talk soon all right sounds good man peace and love freaks