TFTC: A Bitcoin Podcast - #231: Mining trends, bitcoin liquidity crunch, and money printer go brrr with Mason Jappa & Sam Chwarzynski

Episode Date: February 19, 2021

Join Marty as he sits down with Mason Jappa & Sam Chwarzynski from Blockware Solutions to discuss: - Mining trends - Hosting - Bitcoin as a messaging protocol - The bitcoin liquidity crunch - The macro factors lining up for bitcoin - Bitcoin the messaging network - Protecting against onerous regulations - much more 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 when you download the app.

What's up, freaks? It's your boy Marty Ben here to introduce this episode of Tales from the Crypt. Sat down with Mason Jappa and Sam Schwarzynski from the Blockware Solutions team. Talk about mining, the macro landscape, the liquidity crunch on the Bitcoin markets, and a bunch more. Enjoy this episode, freaks. This was brought to you by our good friends at the motherfucking cash app they're helping us pump it up we're gonna pump it up don't you know pump it up gotta pump it up cash apps helping us pump up that price floor by making it easy to stack sats you can stack sats send sats receive sats and sell sats if you so please via the cash app

i'm saying sats sats sats sats sats sats because you don't have to buy a whole bitcoin people don't know this there's 100 million sats or satoshis and one whole bitcoin you get 100 million sats you have one bitcoin and stack as little as one dollar worth of sats and currently one cuck buck is going to get you like 1863 we just hit a trillion dollar market cap as i'm reading this ad read let's go freaks let's go one trillion stacking sats on the cash app hell pushed us there what a day what a life what a time to be alive i love being here with you freaks

go download the cash app use the code stacking sats that's s-t-a-c-k-i-n-g-s-a-t-s you're gonna get ten dollars and ten dollars gonna go to al's lacrosse and yeah we had just hit one trilly enjoy you've had a dynamic where money's become freer than free when you talk about a fed just gone nuts all 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

what is up freaks welcome back to tales from the crypt it's your boy marty here snowing where i am it's a snowy thursday it's thursday thursday morning i have to shovel my my uh front steps from patio go to the food food store got a little chili cooking downstairs and we're here i got a fire next to me we're we're here to talk about mining with the blockware solutions team sitting down with mason japa and sam shwerinsky what's up guys so marty glad to be on no no better time to talk about mining you know waking up to a giant green candle so like it's it's the greatest thing to wake up to especially as a miner yeah that uh i've got my block clock menu downstairs tracking the fees per block over the last 2016 blocks that's approaching one bitcoin

So fees are going up as well. Revenue's going up. Very profitable to mine right now. If you've got the right rigs and the right cost of power production, let's jump into it. You guys have two things on top of my mind that I want to talk about that you've put out from a content perspective. First was a thread about a few weeks ago about mining as a good DCA strategy to sort of temper the volatility, the price volatility of Bitcoin. and then um a big research piece you guys uh published january 21st of this year uh about the 2021 bitcoin market outlook 40 000 is only the beginning and as we sit here at 47 000 that seems to have been a very uh very prescient uh title for this particular research paper so let's just jump into it um what's been going on with you guys uh let's start with the dca like uh describing mining as a good dca strategy why do you guys believe this is so or i think you guys have the data to back it up as well yeah i'll kick it off and sam can add some context so

kicking off with dollar cost averaging so miners receive you know daily mining rewards um you know for their for their hash contributions and depending on their pool structure will have different payouts so miners receive not only their block rewards for the contributions they contributed to mining blocks, but they also received transaction fees on TOPS, which you were alluding to. So today we're at an average block plus transaction fee of 7.6, which is amazing for mining. That's an important factor in this. So think about mining as the best way to dollar cost average, because you're buying into a heavily volatile asset like Bitcoin. Dollar cost averaging for any volatile asset or commodity is an excellent strategy to have over

time. It allows you to receive an allocation on a set daily basis, and you're mining at a cost that is less to buy on the free market. For miners, your cost of production is truly mostly correlated to your energy. We found that it's about 90% of your cost is energy, and then the remaining is allocated towards your OpEx, and typically you keep CapEx out of your cost reduction. So miners on a daily basis receive a set amount of bitcoin which is a combination of which is mapped to the hash rate that they mine for blocks plus the transaction fees and and their profit is the difference of their cost of production and the current price in bitcoin and what we've seen in historical bull cycles that we're seeing in this cycle is bitcoin price is outpacing difficulty

so miners you know are are in an extremely well position and are capturing you know excellent dollar cost averaging and and and your strategies as far as what you do with that bitcoin can you know hyper accelerate your return on investments you know if you're in a bullish sentiment and you hold on to that dollar costed bitcoin and pay for electricity out of pocket as much you can with usd fiat you can hyper accelerate with your returns you know that bitcoin that you've been mining in july is now worth 47 500 dollars right and then it was worth much less so that's important to take account i think another i think another thing that makes mining unique and is that it removes the the psychological factors associated with the price volatility right even in a sideways or

downward market if you bought bitcoin and holding you know you'd make no money or you're losing money whereas if you're mining even in a sideways or downwards market you're still generating return generating bitcoin below market value you know assuming you have efficient rigs and a decent energy right yeah it's uh it's a great way to dca and just working for great american mining and then just seeing seeing the daily sats rolling from from our hash rates feels good and it's mining has been a much maligned industry in the bitcoin space uh particularly up to this point in bitcoin's life right like it's always oh just buy bitcoin don't mine it like you'll be better off but again like you guys have alluded to if you can execute and get your your your all-in uh

cost of power production down low enough uh and execute from a plugging in the miners and making sure that they run as long as possible and uh have considerable uptime it's a pretty good strategy and i think the theory i've had for quite a while is that um there's going to be a tipping point at some point in the future when Bitcoin is widely accepted or the masses capitulate and say this is going to be here where a lot of the companies that have been naysaying mining are going to realize that they actually should probably have invested in and become miners to some degree because it's going to be the only way to access Bitcoin at some point in the future when you consider the amount of Bitcoin that are being taken off the market by these large institutions

and other big players i agree entirely and i mean it's already happened last week we we had to we we put on a conference a digital conference for for bank of america's energy desk uh where they were looking to leverage existing their existing portfolio of you know heavy electrical assets whether that's factories or steel mills operating at partial capacity to what they can or whether it's actual, quote unquote, behind the meter, like power generation assets. Everyone's starting to figure it out. And luckily, there's still a bit of a lag, but I think it's all trending to increased commoditization of Bitcoin mining specifically. We'll see more of it over the years just distilled down to these behind the meter type yeah i think um i think there's gonna

be a big wave of hash rate coming to to north america which is like your goal as a company correct yeah yeah i mean our our messaging is let's bring bitcoin and bitcoin hash rate into the hands of americans i mean it's a matter of national security we need to decentralize the network we need to position the states as being a leader in the sector and that's currently not the position we need to um we need to take control and and make moves here and we need institutional backing we need people to go in heavy and we need people going right now before they miss the wave um the wave's already you know partially been missed even we were we were telling everyone an excellent time to deploy was you know right at the that march timeline this time last

year yeah everyone capitulated the institutions and large miners and those that had the lowest cost energy bought up and you know all the puked s9s for example that were you know 15 or 25 bucks those are those are shelling for between 200 and 250 dollars now and their break-even costs are insane i mean it's just it just proves that um you know another point that we don't talk about i think a lot of people miss their forecasting as well is that miners have a perfect positive correlation to the price of bitcoin so that that means that as bitcoin goes up in price these machines are to go up in price and we're seeing the heaviest supply constraints that we've ever seen in this marketplace and we're seeing a lot of other things that we've never seen in this marketplace right

this this parabolic uptrend so you know people that bought machines last year their machines may have two or three x in value by by now and and and they've been mining those machines or just receiving delivery and their mining profits and rewards are are also you know extrapolating so it's just it's a double exposure to bitcoin with the mining rig appreciation and with the mining uh dollar cost averaging yeah it's uh it's a beautiful time to be a miner especially again if you're able to plug them in at some point in 2020 it's uh again like you mentioned like the institutionalization of mining is beginning to happen we've seen a bunch of these public companies use uh equity funding to begin financing expansion um uh of their

operations i mean marathon and and riot particularly here in in united states uh are making some big splashes in the in the hardware market buying massive orders of bit main machines what are you guys seeing from this perspective uh like the like are the institutions is going to crowd out the little guy um are they gonna i think that's already happening right that's that's why that's why you can't get a new s19 until september 2021 um but the the beautiful thing is you know for for miners who are already currently mining or have access to rigs you know immediately is the one bright side of the supply constraint is you know difficulty can't keep up with with these price increases when we're just in price discovery mode ripping through highs right

so although price is is up however many you know whatever 2x since what january i think since the start of january difficulty has been a pretty slow and steady march higher just because these manufacturers can only deliver so many rigs yeah and then like i i have the question too like on the back side of that delivery uh what are some of the the companies that are making these big orders i know i know ride is is really good at executing but like other others in the space buying massive like is are they going to be able to execute when they when they buy these miners like seeing marathon buy a hundred million dollars worth of bitcoin last month after buying all those rigs had me start questioning like ah maybe maybe they're realizing they may not be able to plug in

70 000 miners but that's a great point yeah with merit uh you know we've been talking um with a lot you know the larger players and you know they partner with that coal plant but that that it's not ready and it's not ready to deploy 70,000 s19s right you think about how much the energy consumption of that but we're seeing a lot you know i'm also on the advisory board of rights and what they're doing you know they have a home for their machines and they're um like i'm going to shift towards you know vertical integration and um but we're seeing other companies you know taking large positions you know like bit farms and hud eight both did in canada both this just did some financing debt financing rounds and raise capital to buy machines they're they're

deploying and they're mainly you know how to you know end the bit fury ties but bit farms is deploying what's minor machines and at scale you have galaxy digital that's also taking and positioning where they they're they're they're specifically what's minor only and they will they purchase tranches machines they're mining tranches of machines and then they're offering financing on machines that they purchase but really the one that i wanted to highlight and i think one of the real enablers of all these large entities is foundry so you know which rolls up through grayscale so they've deployed 143 million dollars in capital towards mining in north america some of which and a lot of which is for their own self-mining equipment

We believe they have over 700 Penahash operating in North America. And then they're also offering companies, and many of these well documented, financing deals to buy future batches where they'll finance it, they'll take their interest, you pay X percent down now, you pay the rest over a cycle, let's say 12 or 18 months, and then you get your machines. And it's, you know, interesting with their messaging is they were very much well aware that they're better off just buying these S19s and holding it themselves, especially with the base, the backing of Grayscale, where it almost seems like they have an unlimited cash balance. So that, I mean, they're truly an enabler for North American mining and they share our message, like bring Bitcoin and bring Bitcoin hashrate to America. Yeah, GBTC could bankroll a lot. yeah limited cash flow and balance sheet or that's nice must be nice yeah they've uh they've taken advantage of that and uh that product very very aggressively and hey good for them they're raising a shit ton of money and the fact that foundry came out of nowhere with that mining pool too right i think the uh yeah the founder mindful just popped up here i guess well we have

what, 7% of hashrate or something like that, 5% to 7%. Yeah, I mean, most of it's their own self-mined and they have a long-term goal there. And I agree with them, right? You want to truly bring hashrate to North America, you have to mine on an American mining pool or a North American mining pool. If you're mining in North America

and you're pointing your hashrate to China, you're not bringing hashrate to America. that so that you know i like to correct people it doesn't matter where you're domiciled if you're pointing your hash rate to china or another country um which is okay i mean some are fine right but you know we need to decentralize the network and and i um you know blocker runs a pool we've got about 315 panahash on online and we operate on u.s nodes yeah no that's i mean we're relatively small right now to great american mining but we have ambitions of having like a a flared gas mining pool specifically and i think that the i mean you see all the mining

pools over in china i think there's gonna be a massive shift uh over here in the u.s as well i hope so it's the opportunity the opportunity right is is massive from from a cheap energy energy perspective in north america alone uh to bring hash rate here and then like hopefully like right now the asic supply chain is obviously very constrained uh and spread thin but uh and obviously as the price keeps going up and demand for mining keeps going up hopefully the supply chain will be able to to meet that demand and expand uh their um construction of these miners and then you have things like tsmc and samsung starting to build foundries uh in the southwest of the united states which is incredible to see i mean the news from samsung yesterday is massive

in my mind a 17 billion dollar fab in austin texas um and that should be done by 2023 so bitcoin miners probably bitcoin asics probably won't be prioritized on that particular foundry right away but it's not hard to imagine that you have asics being produced on u.s soil within the next five to seven years. I 100% agree. And that's the vision. We need to bring manufacturing also to North America. With trade wars with China, where most of the manufacturers are domiciled, you're exposed to a 25% tariff and 2.77% duty. If it doesn't add to how hard it is to get machines in the first place you know we're getting taxed on on those imports and and and you know that that creates an roi you know extension for us so we you know there is a secondary market and you

know that's something that blockware solutions does really well we we sell a lot of used machines we have access to and work with some of the largest mines that are you know upgrading so you can get some you know nice miners you know again 20s is used for a reasonable cost or like s17s or s17 pluses something that we offer through our other entity blockbord mining is the ability to get up and hashing within 48 hours which people love right we we have used machines they're running now they're fully testing we de-risk the ordering process we'll sell you a hosting contract and you can be up and hashing within 48 hours of that completion and we enable retail we brought up earlier but you know by partnering with hosting facilities that can offer you know fair hosting

rates and and such a service you know retail isn't necessarily checking out um over time and you know it'll be a race to the bottom of energy costs but during such a market that we're in you know paying a hosting rate of six and a half cents is totally feasible like and that's you know certainly supported yeah no it's it's like it's the question i have is is this the run is this the run where we don't have like an 80 drop after probably not just because i'm asking the goddamn question in the first place but i think if this like so let's jump into your most recent research piece like 40 000 is only the beginning where do you guys see this going from a price perspective and then what does that do for the dynamics of the mining industry particularly from a cost of

power production perspective like at what levels will mining be profitable during this bull run sam you want to kick us off i mean hell you can what's a break even on an s9 at six cents right now is still at 20k bitcoin i think right so i don't i i think all all the smart efficient miners who who were just scooping and storing those those 25 15 s9s pre-halving and in may and right after having all those are already plugged in all that old stuff that's that's why there's such a constraint on finding hosting for large-scale deployments that's that's why we're seeing such a marginal incremental increase in difficulty despite these price rips so all the old stuff's already being run and i it's i'm it's just just hyper bullish on on all front it continues

to be this this rally continues to be disproportionately driven by institutions every dip gets bought sooner and sooner and every and every time it's it's like all right here comes and here comes the good 50 correction you know on the way to the top on the way on the way to the top and it gets bought up immediately what was what were we working with i think nine or ten corrections averaging like 35 or 33 in the last cycle i don't think we've cracked i don't think we've cracked 35 yet no i think it's been like 20 i think i think 29 and change was was the largest percentage correction so far and i'm talking from the march lows but yeah no i mean people trying to talk i remember uh in january people go it's going to going to 27 didn't get

there i think uh this last little correction this week people go it's going to go back back down to 35 30 it didn't quite get there maybe the uh the combination of these institutions coming in and then on top of that you have like a liquidity crunch on exchanges like you have in your research paper like the the glass node data of people pulling off off their bitcoin off exchange you took the words out of my mouth exactly that's i think that's one of the most bullish indicators as well as is seeing like and it truly hammers home the point you know the digital gold narrative obviously we had you know the fed and every other central banker's massive overreaction to covid and the money supply set to increase by four you know 40 in the last two years

after this most recent round of stimulus sorry airpod airpod down um you just i as in whether it's an inflation head or just a pure alternative store of value really seeing the original you know digital gold narrative take hold more and more yeah and whether it's elon or or anyone else or mass mutual or you have like a number of factors right so like from the macro perspective here in the u.s specifically 1.9 trillion stimmy appetizer yeah pal appetizer yeah pal come out earlier this week and basically allude that that unemployment numbers were actually being undercounted like he said uh it says like surprise right he says like ah it's like reported at 6.4 percent so that means it's actually 10 percent so that like you have them sort of back not backtracking but uh trying

to save face prime yeah priming yeah priming for for like uh an antipasta after the appetizer before you even get to the main course and dessert it's going to be insane and thank god we have bitcoin i'll tell you what this is one of this is one of the things that initially drove me to to bitcoin and ether back in 2015 i was out of college i was a prop trader at a firm called gelber group in chicago mostly spot fx a little bit of futures equities commodities etc but for the longest time when i first started which was like late 2014 you were you know you'd wait for a data point dollar positive you buy dollars against whatever was weak set time dollar negative it was it was a monkey could do it i was like oh wow i'm gonna be i'm gonna be rich super

quick and then the first fed meeting comes and they removed the term they removed the phrase like data dependence they removed patients and a couple other things and then that data trade was gone so for like a week after that those data points i'm like what why isn't this working anymore it's like oh well the fed removed that sentence from their statement like what do you what do you mean like that that all that ruined this whole trait and it you know you go down the rabbit hole and you start realizing that it central bank monetary policy has been the driver for every single asset for the at least last 20 years probably longer um and people like so i was actually in chicago working on a managed futures fund at the same time as an analyst and i mean

like 20 2013 2014 fucking markets were trading based off of what color jacket janet yellen was wearing like to a meeting like oh my god she's wearing purple it's regal she's she's she's dovish exactly it's uh and then like it's like in the manner like i worked at a fund of funds like like the people at the top like the chief investment officers some of these ctas they're completely like oblivious to to the fed's influence on the markets like as an analyst i'd have to ask some questions like so like what do you think about the fed's policy is it affecting markets at all like no not at all it's there's been this shift in understanding of the fed's influence over the markets

understanding has probably been there but most people just didn't want to admit it but it's gotten to the point that it's it's impossible to ignore if you want if you want to really hammer that point home all you got to do is pull up a any chart cover the access cover the asset what what asset what asset it is from march through the end of 2020 and they all look like the same to varying magnitudes just straight line and there's a and it's to the day they all happen to bottom you know right and it's because a lot of that was qe driven but now these fiscal stimulus for your airdropping into people's bank accounts and into social programs or infrastructure programs that's going to be you've seen this asset price inflation but do we see

like consumer inflation i mean they've already been saying they want cpi to be uh like over what their typical two percent target is are they going to be successful in in inciting that i think they may be yeah i mean this this qe infinity charade is is going to end very badly eventually it could be another two decades from now i don't know but like you said thank god for bitcoin and thank god for thank god for for the growing the decentralized digital ecosystem yeah but it seems like so that's the other thing like it's weird everybody knows it going on the fed but like then like the the other side of wall street the other side of the fed's window all these banks are starting to

wake up again in your um in your research paper you have a list of of institutions that have that have talked at least somewhat positively to neutral about bitcoin city bank morgan stanley guggenheim jp morgan goldman sachs stanley drunkard miller ptj obviously mass mutual this morning we had bny mellon yeah i think bny mellon came out like i mean we did i think mastercard as well yesterday this morning or last night or something yeah then you have square paypal twitter rumors of apple like and it's funny you know many of these banks were naysayers and then they changed their positioning maybe they were naysayers so they can accumulate and buy the dips right i would not be surprised not not in the least bit look at look at all the

the criminal activity that's taken place with these banks over the years i mean you could it's it's eye-opening and and you think bitcoin has you know negative sentiment around it like look at the active and proven crimes that have been committed um and the fines that have been paid up and the admittance around that and then the brush off um it's it's insane yeah and that's like it's just banks have been known to like manipulate markets particularly like precious metals jp morgan specifically um live or scandal a couple couple years ago live or gold fixing yeah just meet me in gchat we'll fix this market um it's how it used to go but like be interesting to see how they how they adapt uh considering the nature of bitcoin the asset right and that's

pristine collateral that is is sitting on a public ledger um do they adapt their businesses and their models to to this asset as they adopt it um that's like another theory i'd love to jump into with you guys like so i think what we're doing in the mining industry again like i said mining has been much maligned up to this point in the bitcoin industry like just buy bitcoin don't mind but i have this theory and like if bitcoin plays out the way we think it is i don't i think it's a pretty sound theory you're gonna have the a transition of the financial stack moving from the fed window where there's the base of the financial stack now the fed in conjunction with the treasury controls the production and distribution of money to the primary dealers

via its window that's going to shift from the fed window to like the mining level the mining pool level specifically i think you're gonna have this fine new financial stack emanate from from a mining pool base and you're gonna have derivatives and financial services being built from from that base up and it's not going to be, you're not gonna be playing the Fed window game anymore. And I wonder if, if these institutions are ready for that transition. I see. I don't know that the, that like the, the dollar, the U S dollar, the Fed's ever going to be purely displaced. I, I think a system like the one you just described is, is, is definitely being built out and will be built out kind of in parallel as we see this traditional central

banker, you know, the war on cash is, as it's been called for, for decades continue. I mean, central bank digital currencies make sense right it gives them even more strict control over their money supply issuance everything so i think that's an inevitability at this point it's ken rodolph's wet dream right i mean i think it just comes down to are they going to use that as a say you know as a as a rationale to say it you while you have our digital currencies you don't need bitcoin and try to ban you know self-custody or are they going to embrace bitcoin as like you know the first native digital currency that it is and you know build on top of adjacent to it i think unfortunately you know well i mean i don't want to speculate but i think that potential you know

just you know displacement of the underlying currency of the financial system is is probably multiple decades off um yeah yeah i do but but i do what i but i do i do think that we're going to see more and more emphasis put on the mining perspective because there's there's already people building up like there's a mark you know banks institutions people building large treasuries of bitcoin there is a there is a market for you know quote unquote virgin tokens that can be track you know from genesis from the time they were mined to the wallet um and i would imagine that type of market grows and you know those bitcoin continue to trade for a slight premium just uh that's uh such like uh an interesting interesting one too like yeah is it true like

is there really demand for these virgin coins and are they truly virgin untainted because again you have the fees and the block reward too but that's sort of yeah how do you separate it um the version tog token thesis is interesting it hasn't played out yet but you know in the future it may um especially when you're dealing with like corporations as holding treasury and um but you know well i mean even even things like even things like green like green bitcoin right bitcoin that you could prove you've mined with 100 renewable only resources you know to you know counteract the quote-unquote carbon footprint issues that are being caused by mining which are just not true but obviously but yeah so do we lean into that foot and like change the dynamics of the

network because of some poor thinking and mental frameworks from from the incumbent political system i think that's that's where i would not right absolutely not i hope not but it's that i mean they're going to want to do it they're going to want to do it the question is whether or not we should bend the knee and and succumb to to their their wants especially considering the fact that we mentioned that the traditional system is is the uh avenue through which most of the uh crimes that these politicians and and bankers cry about uh facilitate like facilitated hsbc working with the mexican drug cartels with their warm fitted window teller uh for briefcases full of cash like that's um yeah and that's it's like the whole blocks here like ofac compliant

mining pool and stuff sort of starts to scare me because you start to bifurcate the network to it to a certain degree and um i want the the mining industry to be as free market as possible again like the at the end of the day like what i think we need to start pushing forward as an industry as a mining industry specifically is like hey bitcoin is just simply a messaging protocol You don't hinder AT&T because terrorists use their cell phone networks to coordinate conversations over the phone like that. You're not going to hinder AT&T from doing any of their business because they're able to coordinate like that. And Bitcoin is a messaging system just like these telecommunications networks to a certain degree. Why should it be singled out and sort of put in a corner and handcuffed when compared to these other things that arguably aren't subjected to the same type of scrutiny?

That's a great analogy. Yeah, 100% agree. I mean, back to that other point, I think, you know, Bitcoin, there's a lot of fud that goes in the market about the amount of energy consumption that's aligned to Bitcoin and Bitcoin being bad for the global environment and being a bad use of energy. And, you know, we argue the reverse, right? Bitcoin, you know, many people use, I mean, Bitcoin as an energy consumption that can actually stabilize a grid and network, right? There's off-peak arrangements that many large mines have that are domiciled outside of cities that help stabilize the energy rates. They agree to shut off their energy at set times to stabilize peak hours that are hit for city and consumption during certain timelines and timeframes. We're helping out the people.

We're averaging and lowering your energy costs. You know, it's been studied and speculated that a large portion of Bitcoin mining is on renewables and is moving in that direction. We know it's a race to the bottom. There's a couple of projects I've been talking to recently that, you know, have invented proprietary systems that can convert landfill to energy and then energy. And then you build a Bitcoin mine right on a landfill. And, you know, waste disposal is a huge issue globally. Right. And you actually get paid for disposing of that waste. If you build a mine off of the landfill, you're getting paid for the waste disposal, and you're receiving your mining income, and you're helping a greater good in cause. Miners are some of the most creative people in the world that get no credit. There's just FUD getting pumped out on mediums with ridiculous conclusions, and it's just not backed, and it's quite the opposite.

yeah it's very uh very lazy uh uneducated criticisms that that lack critical thinking like what we're doing like people point to what we're doing at great american mine like oh my god you're using methane to mine bitcoin but like the way it changes the dynamics of the oil and gas industry for producers specifically it's pretty massive The secondary and tertiary externalities are such that right now, these oil and gas producers are IPing wells, many wells, to get as much oil to market to make up for the depressed price relative to where it was 12 years ago when they took out a bunch of loans that said, hey, we're going to pay back this loan and our target price per barrel is like $80 and it's nowhere near that. So they're trying to make up for that lack of price appreciation with volume, getting it to market. So that means more pipelines, more wells, which means more wells,

more pipelines, more flares, more LNG units, which is a lot of infrastructure and a lot of waste from a gas perspective and a misallocation of capital, arguably. Now that you can plug in these Bitcoin miners alongside your oil and gas revenues, you have a separate revenue stream that's driven by completely different demand structures than the oil and gas market. You have a revenue stream driven by a service that's demanded 24-7, 365 as well, which is adding blocks to the Bitcoin blockchain. and now that you have that supplementary revenue stream you don't have to build as many pipelines

you don't have to drill as many wells so like even though the bitcoin miners that we we set in the field they're consuming methane but again they're consuming methane they would otherwise be wasted and then i don't think people think about the second and third order effects down the line where you may not drill as many wells you may not make as many pipelines and that has profound positive effects on the environment and the climate debate exactly i and that's and you hit the you hit the nail on the head these bitcoin miners are are seeking the cheapest election or electricity and by virtue of it being cheap it's cheap it's because it's not wanted it's it's it would be going to waste if if not otherwise consumed if there was if if they

were consuming a fuck ton of energy that was needed for another important purpose there that electricity would be charged for a premium you know and sold off back to the grid or back to the consumer so we're we're alleviating a lot of spillover and inefficient and waste as your point with this with the methane and excuse me bless you and then uh i forgot my point now well i'll hop in here like i know you guys were just unnoted right like i think pierre had a great great tweet last night that really highlights the hypocrisy of people coming at bitcoin mining's energy consumption is that like bitcoin miners use electricity just like tesla cars do it's like the moralization uh and like the ethical debate that's trying to be thrust on the mining industry

because of the energy sources that are used to produce the electricity just like a complete double standard it's not applied to anything else like in the world yeah i mean bitcoin miners optimize the energy network in truth like that that is that is a fact and i mean if you think about energy in general like depending on if you're pulling from the grid or what your source is energy isn't you know extremely transferable like i can't transfer energy that i have in you know in upstate new york where i have hydro power to new york city i i have no way of creating a chain that transfers it that far with advances in technology i mean that's why you see a lot of miners in upstate New York. They're harnessing, you know, that excess hydro and putting it to use

and making it more efficient and helping, you know, regions that are just wasting excess energy or not producing as much as they can, right? And with improvements in technology, you know, solar in the future, you know, a big issue with solar is, you know, having that 24-hour ability of mining tied to solar. But with the battery improvements that are coming, you know, you mine, you consume the amount of solar that you have you build out excess and then the excess solar that you harness during the daylight you can store in a battery to power your miners overnight it just creates an efficient system and mechanism i mean i argue that miners are the most creative and forward thinkers in the energy space and they're they're improving the efficiency and they're

making strides that wouldn't exist otherwise it's it's talk about an energy transition trade you know what i mean like that's been that's been a big thematic trade you hear them talk about it on on on msnbc and all this other nonsense and it's one of the big talk a lot of the questions we got during our bva conference circled around like how can mining absorb this glut of renewable energy that's coming on that is not going to have any buyers for the energy once these government subsidies run out they only these companies and these projects only spun up and developed because they're getting government subsidies which run out i think a lot of them this year and next year what are they going to do when they don't have anyone to sell power to and then no one to

transmit it to you just talk talk talk about a wasted environmental footprint because i mean these wind or solar whatever it is they're they're they're not small you know these aren't small endeavors they take up a lot of space and they take a lot of oil too they depend on the oil and gas industry pretty significantly so it would be a shame if the subsidized renewable industry just wasted all this fossil fuels to have it sit there and then that's the beauty of bitcoin money right it's like market driven you don't need these politicians to come in and subsidize anything we're figuring it out like just leave us alone exactly i mean look at look at what look at what you're just talking about with with the with the flare gas the waste

it's like wait you guys are just i'm burning that but but i have a methane generator i can i can hook it up to this this trailer rigs can i can i take it oh yeah sure go ahead save us on emissions you can have it for free just bring your own shit bring your equipment like i was telling you like we're in north dakota right now deploying containers and like we're focused on north dakota right now because they have this strict like producers are begging us to come like please We don't want to flare because we can't drill or actually pull oil out of our wells if we flare X amount. And this is going to start happening in Texas too, like the Texas Railroad Commission and the state Senate is talking about levying a 25% tax on flared gas. like say you're gonna have flaring x amount of mmbts per day or mcfd and you're just going to

look at the henry hub price or some other gas index price you have to pay 25 that flared gas so you're gonna have to make up for that somewhere else um whether that be in flows of oil um or or trying to build pipelines to get that gas to market so you're not flaring bitcoin solves this problem. Beautiful. Yeah, exactly. I mean, Canada has been a really good flaring use case to look at. I mean, the amount of flaring reduction emissions that they progressed as a country, I mean, just our neighbor, like, why aren't we enacting the same Bitcoin is a great, you know, use of countering flaring. Flaring is not good for the environment. And that's something that is a very valid point. And these natural gas producers are, you know, produce a certain,

you know, a finite amount of energy on a daily basis. A lot of that is not consumed. What are do the excess they light it on fire and which which creates a lot of downward spiral environmental issues and and other issues you know associated and you're literally lighting money on fire literally that's what our like so that's what we're doing as a bitcoin mining industry whether it be via um mining off of renewables or what we're doing off of gas will otherwise be flared or or wasted purely uh helping to decrease the energy intensity index right like so like we as a society we should drive we should strive to drive the energy intensity index down as low as possible and for any of you freaks at home and don't know what the energy intensity index is it

basically uh calculates the the amount of energy that we pull out and combust uh pull out the earth or produce on earth uh compared to gdp the value extracted from that energy So flare gas is a part of this index, but it doesn't produce anything to GDP. These renewable sources that are sitting in areas that don't have demand from a city, but that energy is still being produced and converted to energy, that contributes to it too. And it doesn't contribute to GDP. So if you're able to plug in these miners and create something that's positive EV for GDP, you can lower that index. And it's something we should be striving for. This is something like people should be lauding what we're doing in the Bitcoin mining industry.

100%. And it creates tax revenue that didn't exist in the past as well. like from from a state perspective i mean there's you know you look what happened with the cannabis industry and and the slow you know approval of cannabis you know that the states are seeing the the tax that dollars that have come in from the legalization you know new jersey legalized everyone in new york was not legalized so then new yorkers were just flocking over to jersey to buy all their legalized cannabis and then you know of course lo and behold very few months later new york's on that path i mean it's a state-by-state battle also with you know acceptance of

cryptocurrency miners um historically you've seen miners driven out of upstate new york moratoriums out of the dc area um issues in virginia issues in washington state like um kentucky's been where we're down the south and we have a new facility that we're building we're going to be building a 50 megawatt facility in paducah area and we have a 20 megawatt facility running in that same area right now, they've incentivized miners. They've taken the opposite. They're passing a bill that is going to incentivize cryptocurrency miners to come there because they see the opposite side of the spectrum. But every state has their own governing laws. So you'll see miners flock also politically to states that are supportive. Texas has been certainly one of those. And a lot

of people flock to Texas because it's an energy hub of the world. But in Texas, you deal with july and august uh peak peak hour rates you know mooning so what do you do what do you do in mining in july and august you know you shut off you know for partials you're not going to be able to run for 24 hours a day and and the texas energy commodity traders live for july and august that's where they make all their money um it's just it's really interesting to see you know who's you know who's going to win the state what battle and and naturally miners flock to where the cheap energy is that so you can't you know you have to have cheap energy in that state in the first place yeah this this jurisdictional arbitrage is beautiful to see budding like you got

oh yeah suarez and miami like trying to get bitcoiners like what's going on kentucky is incredible um north dakota isn't really incentivizing bitcoin miners per se but their flare their strict flaring regulations is forcing miners to flock there because they can help solve that problem and texas is an incredible case like once you crack that nut of of cheap cooling immersion systems um off-grid in texas it's going to be a mad dash down there in texas yeah for for well for for the energy source reasons and as well as the political certainty right i think those those are the the the abundance of renewable unique energy sources and you you're pretty confident the government in texas isn't going to come in and tell you you can't run a line here

you know as opposed to as opposed to you know potentially some other states the test is driving more of this hash power to the u.s is exactly that political certainty alone is worth the short-term premium that miners are paying now and then they see how the energy landscape in america particularly texas is evolving look at look at what look at what texas did to the price to produce about a barrel of oil once we got figured out shale like the only ones who produce oil lower than u.s shale is the saudis we're on par lower than every everyone else in opec it's it's america it's american ingenuity and just free markets baby well yeah that's what i was going to segue into there texas specifically like the the regulatory

certainty is compounded by like the actual free market energy market down there like the open grid system which is unique to texas alone like the rest of the country needs to adopt texas's model of how they run their grid like it's just a pure free market with no state actors i mean you have the texas railroad commission trying to play referee every once in a while but pretty pretty much a pure free market and in those regards talk about decentralization you got the rest of the country on one of two separate grids basically essentially and then you got texas on its own right like yeah yeah well we don't want to rely on you guys we'll take care of our stuff well did you see that uh did you see that like bill that was being considered in nevada

where like they're trying to incentivize large tech companies to domicile there and they and they're offering the ability to set up their own governing law like their own school systems their own courts their own like entire societies like in in nevada like i've read i mean you can read google it's just like i'm like what what is going on here and it's specifically targeted towards big tech companies coming to there like yeah and would i want to live in such a society i don't think so like controlled by like the tech company it's the technocrats uh making their own laws be careful what you said yeah well true i mean well didn't nevada didn't nevada turn blue this year they're not going to get any tech companies with that with that color i don't think

i think that the flight from california new york and some of these other hubs are it's texas i mean i hope texas can can stay red for as long as possible considering hey as long as they keep as long as they keep rejecting those dominion voting machines they should be all right right that and like yeah i mean they've got coming samsung coming to the foundry tesla tesla's coming down there like the the migration from silicon valley to texas migrated down there a while back from california from tarzana to texas i mean everyone's migrating to texas i mean actually isn't that where taiwan semi is opening their facility as well where's that yeah arizona they're in arizona they're in arizona samsung

was texas yeah i'm extremely bullish on ship fabrication in the u.s over the next decade because we also found like a pretty large rare earth mineral deposit in new mexico so like we can probably source some of this the materials needed for the silicon right and right in the u.s too that's beautiful i i didn't see that but that's that's what exactly what i was going to ask you when when you said you were bullish on the ship foundries when when was that when was that published i didn't see anything on that in terms of um yeah look it up real quick um i think it was found at some point last year i know um i know of just through the grave find some deals that have been going on the pe space to start extracting this stuff um

yeah rare earth elements deposits in new mexico this is from let's see the news there's someone about it two days ago i gotta find the exact article i'll try to find that and link to it in the show notes but yeah it's been no that's cool i mean i mean that would be hell of the news i mean if we can if we can have all the sourcing needs and requirements you know domicile in the states you know build our own intellectual property here and and start manufacturing machines here that's that would be very fruitful right and it's bringing back industry to america yeah that's what i love that's what i love about mining and the physical nature

of mining what you guys are doing so again setting up all these these warehouses like there's a physical and we're actually building again on american soil not the miners yet but the infrastructure that the miners run on is being made in america yeah i mean miners in general of the most bullish people on Bitcoin in the world. They're investing billions of dollars in infrastructure. They're investing billions of dollars in machines, you know, ASIC high-powered servers that are not repurposeful. They have one job that's to mine Bitcoin. You know, that's how bullish they are on the network. And the infrastructure is repurposeable. I mean, we're creating jobs. We're creating tax revenue. We're creating power efficiency. We're creating

a counter against deflation and supporting that there's there's a greater good here miners are are driving the wave on top of you know everyone else that of course the bitcoin maximalists you can't forget about that are supportive of mining as well you know that are huddling and and supporting and and getting out the message right we just need positive messaging continued to pour amongst the space and around the world around this narrative and i think that's you know very important yeah lucky for us we have some of the smartest people i think i think that's becoming more evident i think it's just when it comes to actually debating from first principles using critical thinking to approach these these topics and these debates like at least from my observation

it seems that bitcoiners are winning the battle of ideas i mean it's you're fighting against very loud and strong narratives but when you when you actually are able to to sit somebody down have like a one-on-one conversation it's not even a competition in my mind it's not it's really not and and the crying and kicking and screaming on the other side doesn't counter our proven facts and data and and narratives and and our intelligence and our intellectual arguments we're we're willing to debate we're willing to to counter and we're willing to bring the truth you know forward arguing against the truth is is not you know with with tactics that don't make sense and fud you know is is prevalent but it's in the end it's it's the it's our intellectuals

that are going to win we're winning we're winning son yes pa and the global reserve currency into the world i mean we'll be we'll be handing down our our stats for for generations to come like that it's that's that's how it's gonna work right we're the pioneers that's why i think us particularly in the mining industry are very lucky i think the first mover advantage is going to be very strong um especially at this point i mean obviously we're 12 years in not first movers in The mining industry obviously has been around Bitcoin's whole life, but the North American mining industry, there's a big land grab to be had. And I think people getting in early are going to benefit immensely over the next few decades.

And I guess that's a good segue into another topic. How do you see these derivatives markets around the industry developing and hardening the ability for individual operations to hedge risk and expand their operations? Yeah, I think you have a good take on this and I can add. No, yeah. I mean, I think we're going to see it leveraged similar to how we see traditional oil producers, gold mining companies leverage their foreseen future production. Luckily for Bitcoin, it's a lot easier to project out your future Bitcoin revenue based on both price and expected new releases from manufacturers. It's a lot less volatile on the supply side, obviously, being the only perfectly scarce commodity I know of. but um yeah i think the more the more robust the derivatives market gets whether it's you know

strip you know selling hash rate futures or difficulty hedges or just outright packaging and selling hash rate i think the more robust gets the more inclined institutions are going to be to play you know yeah no that's like you mentioned the oil and gas industry that's like i'm sorry for spring great america mining it's this conversation where we get but like that's what excites me is getting these traditional commodities futures traders in the ong space on their their trading desks like into bitcoin because i think they could innovate like around these hash rate derivatives and these forward contracts and these hedging strategies it's uh it's going to be really cool to see like more minds come to that side of the market

yeah absolutely you also you also have like you know probably products that are rolling out like daily compounding of cryptocurrency right um block five i mean i just rolled out their their interest earning um you know obviously we're all in the camp of not your keys not your coin but if you if you have a trusted you know custody provider and you're getting compound interest on on your cryptocurrency why not another argument there too for for people that are conservative and want to hold the u.s dollar i mean you could get nine percent interest on usdc on on on block five like why am i keeping cash that's deflating in my bank account when i could be earning compound interest on it in in in in a product that i you know personally trust um and then you

of further into derivatives i mean there's new enterers on a daily basis that are allowing you to hedge and counter your bets financers are willing to finance and collateralize your machines we did one of block where mining did one of the first sale and lease back debt findings financing deals where we did a million dollar sale and lease back on tied peg to our machines you can collateralize your your miners um and and that's becoming more widely accepted you know all the financial tools and products that are coming to space you know look at what lightning labs is and then lightning network is enabling like that's a whole another ball game you can talk about like they're this they're smart contracts on bitcoin you know don't forget that this is this this is

being revolutionized and streamlined as we speak and every single day and um and once again back to your point i think we've got some of the smartest people in the world you know working on these type of products that are enablers and are creating such such abilities yeah i'm very excited about lightning pool and as a as a vehicle through which to get yield um for any bitcoin just sitting on your balance sheet whether it be corporate or personal we'll see how that develops so then like the continuation of development of this market is it's so fascinating because again the bitcoin native aspect of it is going to be like we can't even fathom what's going to happen like we have bitcoin which is a step function improvement on fiat currency

from an asset perspective and you have bitcoin the network um from a from a settlement network and then lightning on top of it as a payments network like step function improvements on the traditional system and these are being built on another exponential technology which is the internet so like when it comes to how fast is this going to happen i think it's going to happen faster than many people realize and then or think i don't think anybody realizes exactly how fast it's going to happen i think people think it's going to be an extended timeline but i think it's going to happen faster than most people but on top of that like the bitcoin native nature of these financial products like again like hash rate markets derivatives markets like right now some

of the products are very manual you have companies bringing family offices and miners to the table to sort of agree on on terms and durations and all that stuff but like if you think about the natural buyer of hash rate being a mining pool and them being best positioned to begin creating these markets uh i think i think that is is where the signal is in these derivatives markets particularly is the bitcoin native way of doing it um again and building that financial stack from from mining up i'm just rambling here but i'm no you're right i mean no i see it you can sell you can the pools can sell their hash rate and futures of their hash rate um and and lower their cost basis. And you're right. I think that system gets built from the mining layer

up. And for the history of Bitcoin, cycle after cycle, what are the two types of companies that consistently might make money when they're run well? Miners and exchanges. And now we got the Robinhood GameStop debacle highlighting the need for decentralized exchanges and self-custody. all snowballing into that perfect storm for Bitcoin. And starting at that base layer, that is the mining, offering derivatives, making it so traditional finance and institutions can draw those analogies. A lot of the tools that are being built,

we're not reinventing the wheel. We're just applying it to Bitcoin type stuff and removing the third party intermediaries. and once once people kind of get over that that educate ignorance hump ignorance by a lack of education um well except i guess peter schiff i don't know what his excuse is but um what a great name to throw out there but uh too emotionally invested way too emotionally invested but i think i think that and that's what we're seeing right now right i mean bitcoin we're just starting to get going like bitcoin's still outperforming eth there's bitcoin there's ether and then there's

everything else in my opinion um and those are the two that were that you know ether futures just launched on the cma we're starting to see the most robust derivatives build out but that's why we're seeing these decentralized d5 platforms you know liquidity pools and particularly the decentralized exchanges you know outperforming ether and bitcoin so sizably this year is you know it it it's the lowest hanging fruit it's the lowest hanging flute fruit in the in the decentralized finance stack in my opinion you know we have bitcoin it looks like we pretty much have ether for for some you know for some things on the smart contract layer and then you know now now is where the fun stuff begins yeah i think eth has done some great r and d for for

bitcoin's future uh d5 space i the and then on top of that like the uh i feel like we're living in a simulation like you mentioned wall street bets and like robin hood and last year you had money printer go burr like right at the the the block reward having it's almost too perfect how these narratives are lining up with with bitcoin as it moves into the future it's like they're handing uh the the new financial system over to us on a platter with all their blunders like bitcoin reality is strange reality is stranger than fiction man you can't you could not write a better a better movie script if you wanted to right it's like in a simulation we have to it's partially it's like am i am i just am i just have i fully lost my mind am i hallucinating no all

did i did i manifest this or something what like i just like this is the shit that you see unfolding like years from now years from now and then you wake up to a headline holy shit elon musk bought 1.5 billion in bitcoin okay that just got real it's gonna offer it's like the oldest bank in the u.s what the hell is happening i mean they've already had a running blockchain AUM fund and run it already before that. I mean, it's crazy. I mean, BNY, Top10Bank of the world.

I mean, all these banks are going to start participating but I mean, you know, they're a little late to the game there. You know, we've already, we're, all of us, you know, we're established, you know. Miners can, you know, partially at your point can become, you know, distributors

of Bitcoin, especially the bulls, right? Yeah. That's like, that's banking of its own. Right. future making right yeah it's it's kind of it's happening it's just it is happening yeah it's it's but like all this like good good stuff happening i know we're all the same age it reminds me like starfox 64 the second the second level where where yippy or whatever his name is like it's quiet it's too quiet and i'm just like expecting an onslaught from from some angle at some point the news is too good right now but hey maybe it is just the natural uh the natural development of

how this plays out because the economic incentives and forces are just too strong and undeniable again the truth is just stronger than than anything else that's out there right now exactly yeah i mean and i mean the beautiful thing is the you know the true frothy mania hasn't hasn't really be gone i mean if google searches you know for bitcoin are any indication like it were we're not even at 2017 bubble levels yet and that's like we were i think we're 50 there when we published our report in uh in january so probably a little bit closer but i was shocked when i when i thought for sure we would have exploded through that and this it just underscores again that this rally you know from march through now has been and continues to be disproportionately

driven by by institutions deploying capital and that's on the mining side especially and then on the treasury side again highlighted by the flight of bitcoin off exchanges the number of whale wallets increasing you know every time i feel like every couple weeks i read a new article old you know quote unquote whale wall it's new all-time high um and it's it's just beautiful to see so then i've been hanging out on clubhouse a little bit the last like month it's crazy to see the amount of education going on there and the amount of like new people that are that are coming and asking really good questions learning about bitcoin the message is getting out there and again last year very acutely highlighted the need for an alternative like bitcoin i think

your average row is starting to realize that um so where do we go yeah no we should throw us a couple of bitcoin mining clubhouse sessions i've been i've been more of a spectator there i was on a couple of uh sessions that you were speaking on i was also going to say that i mean there's acceptance in bitcoin through if you look at like the the uh stocks and equities that are have bitcoin exposure and their performance i mean look at how well paypal has done you know square um right over here on silver gate on i mean the anyone that announces you know micro strategy um anyone that announces treasury you know if if twitter eventually does it like these this is people buying in in in a different way you know everyone likes to have

their own an exposure to bitcoin in their own way shape or form but there's there's you know boomers and and people have different you know not just in our our age range that are buying in in their way is buying these stocks and they're they're not on the sidelines they're they're there i mean mentioned you're like advising riot you have calipers buying riot stock it's fucking that is a big that's like yeah the california pension fund just scooped a ton of right stock and they because they had obligations they had to make i mean just wait you know we talk about institutional participation which way until the pension start dipping into bitcoin in some way shape or form And in some way, shape or form, they're doing that through buying stocks with exposure.

We had a couple are holding underlying Bitcoin. I think one of the state Virginia police or something or other had been purchased a couple of years ago. But, yeah, it's like you said, it's not even not even a fraction like MassMutual just casually through 100 million. They're an insurance company. If anyone knows how to assess and manage risk, it's them. and they're casually just threw a hundred million at bitcoin however it was a month month and a half ago and that was only 0.4 percent of their investable assets it's nothing it was a drop in the bucket when we see five percent allocations right and you think about their mandate as an insurance company like for them particularly to to throw an allocation at bitcoin i think that

means they're using it to protect their their clients assets and that's how they view it which is pretty insane like thank god the calipers is getting like calipers illinois and new jersey like need this more than anybody in the world right now they better be jumping in we had we i mean i think we were the first put this one out but we were just we always are researching and writing on different stuff but we uh we you know morgan stanley owns 10.9 of microstrategy so indirectly we met the amount of you know bitcoin that's microstrategy owned at the time which was on january 18th um and we you know you can come to a conclusion that Morgan Stanley has exposure or indirectly

owns 7,700 Bitcoin, you know, which at the time is worth $277 million. Like, like do these mappings, these companies have all the big financial institutions. Like if they're owning these equities, they have some type of exposure. Yeah. Morgan Stanley's been on top of it, right? Cause they have a XMS spin out of them. Those guys are doing some good work too. They feel like they understand it.

they do i agree and they're putting out forecasts um you know it's the those that you know it's from in that realm it seems like those that are not accepting or not participating in some way shape or form or you know missing the wave and and especially in that world like you don't want to miss that wave or a wave in general because that and like sam to go back to what you're saying i think about the scarce nature of this asset how much of the float is being pulled off the market the amount of capital to come in like i was saying last night like elon just threw 400 million more bitcoin or 400 million more dollars at bitcoin than michael saylor did and got about half as much bitcoin as he did and when you think about those numbers continuing with other big institutions

and less and less amount of bitcoin that each is going to get there there's only there's there's only ever going to be 21 million bitcoin right now there's about 46 million millionaires in the world if every millionaire wants a bitcoin too too fucking bad it can't happen it cannot happen and excuse my language you're gonna have that you're gonna have that in me out later but it it literally this podcast don't worry okay no fucking cursing but i mean it's it's it's surreal like you and if you're looking are you just even just the top 23 million millionaires if any of those guys want bitcoin they're not going to want just one you know like it's it's you know people with that kind of wealth are are go big or go home

type individuals when it comes to invest it's the flood the floodgates are creeping open but they have by no means fully opened yet and it's it's just very exciting yes furthering your point sam for marty jones back in if you i put out a tweet like on jan 24th like there's 7.7 billion people on this planet like if everyone wanted a piece of this scarce bitcoin it would come out to 0.0024 bitcoin per person which at the time was worth like 15 usd per person i mean that that if you talk about the scarcity of this asset if every person in the world was allocated an equal amount that's the amount they would get and that that's it you're only getting like 240 000 sets or whatever it hurt yeah two million if that like yeah exactly it's crazy ah what a time to be

alive gentlemen it's a pleasure to be on the front lines of you guys what a time to be mining bitcoin right right should we get back to mining then that's like what uh what do you guys see uh what are you looking at moving forward in 2021 particularly for the mining industry broadly and then in north america specifically what uh what are you excited for what in any theories ideas yeah i mean we're we're pushing the wave on pushing out a north american mining alliance that's the initiative we're working on i think we'll get some really nice traction i think we need to leverage and impact together on that front for the greater good i think we're going to see a lot more miners come to north america if you just simply track the supply

chain and you look at the orders that companies like Marathon, Core Scientific, Riot, even Blockware, we order, you know, thousands of machines, Blockware Mining, a lot of the supply is coming here. You know, we estimate that Maine can only produce like 30,000 S19s per month, you know, if they're taking the month of Feb off and you just track the supply chain, it's the hash rates coming here. Just if you just track what's being produced, you know, same for What's Miner. I mean, there's rumors that companies, certain companies have bought out like all of What's Miner's 2021 stock.

And I mean, they have spot production that comes in and it's all coming here. So, I mean, we see North America, you know, emerging as a large mining presence and, you know, helping to decentralize that network. You know, I see retail, I don't, you know, a lot of our conclusion of the report is retail hasn't entered yet in Bitcoin. so you know there's indicators you can track to track that and but you know retail still has a chance in mining you know don't don't feel like if you're a retail or small participant you know there's companies that enable you like blockware solutions for example you know we give you good energy rates and machines on hand and and you can you can participate and enter you know mining's an awesome thing to part to be a part of and sometimes you know we talk to our friends or

family that don't understand bitcoin let alone bitcoin mining and they think that we're aliens but it's bitcoin mining is not as complex as it it lays out to be it's it's a pretty um understandable system once you get the hang of it so i i just see yeah yeah and the the understanding of the market dynamics are becoming is becoming much greater right like leo zhang's recent piece on like the fair value of the miners compared to your your price per kilowatt hour i was extremely well done and like really helps individual mining companies try to to conceptualize the timing of all this and how they should be approaching the deployment of their capital i think i don't know i don't know if i've read that piece you're gonna have to

share that with us after we get off of here yeah i'll send you the link it's really really well done um uh yeah right like the industry is just getting wiser hopefully um smarter business decisions and more efficient business decisions and by extension uh more decentralized and robust bitcoin uh results from that so bullish yeah i mean definitely bullish in each each cycle just you know on from the mining perspective we see we see our become concentrated in the hands of more and more efficient miners who are in it for the long term uh it's it's it's kind of eerie how how how close bitcoin sticks to these four-year cycles you know that's right you know surrounding by surrounded these having events like i mean let's so the average percent return on bitcoin

for a halving year is 206 percent so that's if you look at 2012 2016 and 2020 2020 halving year we outperformed that average 304 to return 304 percent bitcoin price average the average return for bitcoin the year after having it's 3382 percent year year in and year out it outperforms year after having as opposed to the year and having like having is a good year and then the true supply shock of that having event and the fact that it's now only efficient miners that don't need to sell as much of their bitcoin to cover opex they can sit and accumulate while the narrative just continues to grow and in the broader and the broader macro environment central bank monetary fiscal stimulus and otherwise all continue to feed the story feed

the demand while the supply continues to get systematically reduced every four years and like clockwork 2021 is off to a great start now i again this halving year i'll perform previous halving years but i don't i don't necessarily i don't expect that this post halving year to meet that three thousand three hundred and eighty two percent average that would put bitcoin over 700k i think but uh why so bearish oh that's that's a 2022 goal but like that i mean 20 it's really not it's really not i mean with at these at these trajectories it's feasible by uh and again i'm looking at the chart in your most recent research piece of like the the amount of bitcoin coming off exchange and compared to previous halvings like go back to 2016 go back to 2012 like

you can't really see the 2012 levels but you want a little bitcoin there was but you want to look at the eerie similarity look at the comparison to bitcoin price versus hash rate charts how after having events you see the the brief minor capitulation which will you know the dip in hash rate and then just a steady march higher despite bitcoin trading downward or sideways and then once price catches up to hash rate and starts printing new highs hash rate can't keep up it just massively price rallies significantly faster than hash rate can and that's simply because of supply constraint on miners there's just not enough chips and rigs to go around but those times when bitcoin finally catches up and then starts to exceed that's the best time to be a miner and

that's 2020 looks very very similar to january 20 2021 january 2021 looks strikingly similar from a price to hash rate perspective to january 2017 right yeah it's going to be so interesting to see how it plays out this time around considering the type of money coming in the amount of money coming in and then the time frames associated with those type of investors like those guys aren't spending for five six month positions those are multi-year investments and then that and then you have like the the extension of the life cycle the hardware too which plays into this to a certain degree um absolutely as well you throw the inefficient stuff in immersion and in a cheap and electricity environment and you can run for a lot longer yeah it's uh

it's going to be exciting gentlemen i know i have you on the calendar until 1 30 it's 129 now i don't want to uh overextend my welcome with your with your calendar so um i guess what do you guys want to get out to the audience maybe listening to this any final thoughts words of wisdom places we can find what you're working on any information you want to point us towards yeah definitely go to blockersolutions.com the report we were discussing today um you can find top left in research and publications um check out some of our recent media mentions uh we're constantly getting quotes and um getting our messaging out there um i you know i'd keep strong hands right you know if you're a miner you know mine through this you

know there's going to be corrections as sam was alluding to there's like seven corrections in in 2017 um you know keep mining through that you know keep huddling your bitcoin you know keep keep your strong hands right um weak hands always fail um and historically we've seen that and uh we're really excited for what's to come we also have uh block room mining which are self-mining It's the on target to have over 300 Patahash in March. We're opening up the next capital raise around. So there's opportunities to invest if you want to get on the other side. And that, that company also owns the facilities and you'll,

so you'll have that data center land exposure. And for those that are interested in mining, reach out to us. We can, we can set you up. You can sell your machines with hosting contracts. You know, Kentucky is a great place to mine. We've been domiciled there for a long time and we have great techs and team in place um to support with technology so i'm happy that we were able to join you today marty and it was a great jam session sam anything else sad no it's a pleasure marty keep keep up the great content you're doing a great service for the space um if you're yeah follow us on twitter

too i think that's the only thing mason forgot yeah at box other than that other than that i I think, look, just enjoy the jam. So I was looking forward to another one soon. Yeah, we'll definitely have to do another one. I mean, yeah, I mean, people like you that make this content easy. So thank you. Thank you.

I hope you guys enjoy the rest of your day. Take care. That's all we got today, freaks. Peace and love. Love that noise.