TFTC: A Bitcoin Podcast - #793: China Is Funding The War On Data Centers with Sam Lyman

Starting point is 00:00:06 You've had a dynamic where money has 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 bold case for Bitcoin. If you're not paying attention, you probably should be. Sam Lyman, welcome to the show, sir.

Starting point is 00:00:38 It's Martin, great to be here. Well, I appreciate you coming here. It's been a busy week for you. Testifying on the Hill. You got clarity, clarity act not making it through cloture. Got a lot of stuff going on in the world of AI, the effective altruism trying to ruin the, effective altruists trying to ruin the party. And there's a ton of talk about.

Starting point is 00:00:59 How are you feeling? Are you okay? How's your week? It's been a whirlwind, definitely. It seems like as the pace of a race of. The pace of AI development accelerates, so are things at BPI and in Washington. But it's been a wild fun ride and we're excited for what's ahead. Yeah, I think for the purposes of this show in our core audience, which are Bitcoiners,

Starting point is 00:01:22 maybe we start on clarity, but I think throughout the conversation, we'll touch on AI, many facets of it, data center build out, data center dividends, the propaganda that is being waged against American citizens. by foreign actors. And I think we should touch on the effective altruists first. But I think starting with clarity, what is the vibe on the hill based off of this week, the bill not making it pass the cloture boat? And I guess the reaction from the regulatory agencies, it seems to me that the ball is moving forward despite this bill not getting passed.

Starting point is 00:02:04 Yeah. It's a vibe of general disappointment. I think after August recess, there was optimism that they could get clarity across the finish line. The president and the White House working with Senate Republicans had made a number of concessions along the ethics front that really answered about 80 percent of all concerns Democrats had as far as the ethics issues go. However, that wasn't enough at the end of the day. It seems like even though there were some indications that Democrats would support it, the final vote came out pretty much along party lines.

Starting point is 00:02:37 And that was disappointing because, you know, it seemed like a good bipartisan compromise. I think if this same bill had been presented a couple months ago, it may have passed. But because we're so close to the midterm elections now, I think the Democratic caucus was more inclined to vote against it so as not to hand Trump a win so close to the election. But it's disappointing. There's a good draft in place if we ever want to resurrect it, but I don't see any movement happening anytime this year. Yeah. Yeah, I saw interesting because there were some Republicans about it again.

Starting point is 00:03:14 I think I saw Josh Halley give an interview in his argument was that he had a bunch of farmers coming to him, so they were worried that they weren't going to be able to get credit financing from their local community banks because of stable coins, drawing deposits, so that users could get the use. And I was like, is that really the case? Like it, and I think this particular stable coin issue, I'm interested to get your opinion whether or not you think it's like a legitimate concern or just some political posturing. Because if you look at what Fidelity did last week or the week before and looks like they launched their unstable coin, there's nothing within clarity or genius that precludes that banks can't get in this game either, correct?

Starting point is 00:03:59 Yeah. And that's what was frustrating about this last week. When we were testifying on the Hill about AI and data centers, Code Pink was in full force, but also in full force were the bank lobbyists on the other side. We were on the House side, and over on the Senate side, the bank lobbyists were going to different offices, pushing against clarity. And that stable coin issue seemed to be a sticking point with a lot of offices. And from my viewpoint, it was a trap-fi sci-op at the end of the day.

Starting point is 00:04:27 In my personal point of view, stable coins are an opportunity for community banks to get back in the game, to use stable coins to launch their own stable coins to innovate in such a way that they're not going up against the bigger banks in the way that they've been trying to compete with bigger banks for the last decade or so. When I was at the Treasury Department, there was a big emphasis in the building on it being the community banks turn to really thrive and to really come back. about half of community banks have disappeared since the Great Recession. And something that was very stressed within the building was that we want to put all the regulations in place that community banks will be able to compete on a level playing field. But it's also on the community banks themselves to innovate in any way we can. And my point of view, stable coins are the opportunity to do just that. I think that stable coins can actually be to the benefit of community banks if they leverage them themselves. So it's disappointing, though, that the stable coins will kill.

Starting point is 00:05:24 community banks meme ended up being not only false, but also so powerful. I think we've seen a lot of powerful memes lately coming from opposition sources that at the end of they are also false memes. That's always frustrating to fight against that. Yeah. But to the point of it seems like agencies like the SEC, CFTC, OCC aren't going to wait for a bill to get passed. I think the SEC came out earlier this morning and said they're going to, what do they announce

Starting point is 00:05:53 a five-year window, innovation window, where companies can experiment with on-chain token issuance for stocks and other assets. Obviously, the OCC has been pushing forward with issuing bank charters to Bitcoin and crypto exchanges and CFTC and SEC are working together to determine what rules they're going to set for different parts of the industry. So at the end of the day, is clarity necessary? are what these agencies are doing despite the bill not getting enacted into law is that a temporary band-aid that could leave us open for some exposure after the 2028 election what's the landscape

Starting point is 00:06:39 now that that's not passed it's definitely encouraging that these executive agencies are putting forward regulations that would effectively act as the clarity act the concern there of course is if white house flips in 2028 all that could be rolled back at the At that point, though, I think that there would be so much opposition from the digital asset industry that that's less likely to happen. But it is a good compromise solution, at least in the near to medium term, that we have regulations going forward that help implement a lot of the same principles of the Clarity Act. Yeah. How important do you think that the bank charters are, that they're issuing more bank charters? I think it's important. And it definitely legitimizes the space in a way that you didn't see in the previous administration. And it's been hardening just to see how positive the Trump admin has been towards digital assets.

Starting point is 00:07:31 Generally, I think they've fulfilled a lot of the promises that they made on the campaign trail. And those promises are being realized now. So I think it's encouraging. Yeah. All right. Shifting to AI, you made a splash this. summer with the report that you wrote highlighting the infiltration of foreign actors and foreign money into propaganda campaigns waged against the AI data center buildout here domestically in the United States went pretty viral. He has made the front page.

Starting point is 00:08:05 What was it at the Times or the Wall Street Journal? And you were on Capitol Hill yesterday testifying about what you discovered in your research. I think let's pretend like most of the audience has no idea about the research that that you've done on this particular subject, what you found and sort of the consequences or the reactions from the government since you've released the report. What did you find? Yeah. Well, this is such an interesting topic.

Starting point is 00:08:38 And we just scratched the tip of the iceberg earlier this summer. And we've been diving deeper. and there's a real there there in terms of foreign influence and the data center debate here in the United States. So I'll take you back a few years ago, though, when I was working at Riot platforms, right platforms for those who don't know, is a Bitcoin mining and AIHPC company. And when I was at Riot, we were building a data center in Corsicanna, Texas. It's a rural county in Texas, beautiful place, a small population. What was interesting was there was general community support for the data center we were building until there wasn't. Out of nowhere,

Starting point is 00:09:12 there was this large opposition within the community itself to the data center. And we started to trace where the opposition stemmed from. We realized that the bulk of the adversity was coming from a woman who didn't even live in the county. She lived in the county next door. She got on Facebook and she started spreading a lot of fud, a lot of fear and certainty and doubt about the data center riot was building. She started to spread a lot of falsehoods about water usage, electricity consumption and before we knew it there was significant opposition within the county itself so what we did was we put our investigative journalism hat on and started asking questions about who funds this particular activist this was about 2023 and marty you may remember the what do they call it the xrp army right

Starting point is 00:09:59 xrp ripple at that time the few years previously had donated a significant sum of money to greenpeace to spread a lot of fud about Bitcoin, especially its electricity consumption. What we realized was this activist had actually partnered with Greenpeace to spread a lot of misinformation about our data center that we were building, Bitcoin mining. And we realized in the process that there were people she was working with who obviously were opposed to Bitcoin as a rivaled cryptocurrency. We were able to shed light on that.

Starting point is 00:10:34 That was good. we were able to clear up a lot of the misinformation that was being spread in the community, and the data center went forward. But having had that experience earlier this summer, I saw the data center debate really catching fire across the country. And I put on the same investigative journalism hat, and I asked, what is going on here? Who is driving this opposition? Because the amount of negative sentiment that data centers have driven has been so disproportionate

Starting point is 00:11:02 to the actual impact data centers have. of on the ground that I started to ask questions. In China, in many ways, seemed to be an obvious answer. Around the same time that I started to dig into this, you might recall that Senator Sanders hosted a roundtable at the US Capitol building on the existential risk of AI. That's what it was titled. And at this roundtable, he invited two Chinese AI ambassadors,

Starting point is 00:11:29 one of them, Sway-Lan, was actually handpicked by the government over there in China to spread the gospel of global cooperation in AI to the United States and to US lawmakers. And during this Capitol Hill event, these Chinese ambassadors essentially made the case that the United States needs to slow its AI build out. To me, it was such an obvious sci-up on every level that if I were a foreign influence agent working back in China, this would be the coup of the year to see two Chinese nationals lecturing U.S. lawmakers on about the dangers of artificial intelligence.

Starting point is 00:12:07 And so that's where I started asking questions, because this was happening concurrently with the data center debate really just blowing up. And so I started investigating who are the specific groups that are pushing against data centers. And I noticed that there was a real trail of evidence with Chinese propaganda in particular. What I realize is that Chinese English language media has been pushing against the data center build out in the United States for about a year. now. They've been running stories on their YouTube channels and across various digital newspapers talking about how dangerous data centers are for the communities where they're built, how they'll spike electricity prices and consume all the water. So it was very clear that

Starting point is 00:12:47 from the top down, there was a directive from the CCP to turn American public opinion against data centers. Now simultaneously, I discovered a network of nonprofits here in the United States that were echoing a lot of that exact same anti-data center messaging in in communities across the country. Some nonprofits that our listeners might know of is Code Pink, for example. Code Pink is a nonprofit group of just crazy baby boomer women who wear bright pink t-shirts, and they'll go and they'll disrupt a lot of congressional hearings, for example. But they've also been boots on the ground in a lot of these data center debates across the country.

Starting point is 00:13:24 I started looking at another group called the Party for Socialism and Liberation, which is a Marxist-Leninist party that is explicitly pro-China in so much of its messages. and they were actually the most, arguably the most effective canvassers in the country in getting data center projects stopped or blocked. So we were actually able to find that with this particular group, the Party for Socialism and Liberation, they had stopped about $24 billion in AI infrastructure investment across the country. And then I asked the question, who is funding all of these groups?

Starting point is 00:13:56 And I was able to link back all of the funding for Code Pink, the Party for Socialism and Liberation, People's Forum to one person. His name is Neville Roy Singham. Who is Neville Roy Singham? Singham is a Shanghai-based Marxist. He's an American citizen, but he has been a CCP apologist for years. And he first came under FBI suspicion as far back as 1974. He sold his tech company in the 2010s for hundreds of millions of dollars, then devoted about $278 million of that fortune to fund far-left causes here in the United States. For most among those causes, is stopping the data center build out. And so here you have a man who the New York Times has identified as being the financier

Starting point is 00:14:39 of a quote, global web of Chinese propaganda pushing against data centers in the United States. And I just laid that all out in what we called the schizochart where we showed the different Chinese propaganda taking place against data centers, the different singham funded nonprofits pushing against data centers and showed how this all converged into one giant national fight about data centers that was so effective that 71% of Americans today, 71% say they do not want to live in a community that has a data center in it, which notably is an even larger number than the number of people who say they don't want to live next to a nuclear power plant. So that was the foreign sci-up that we uncovered, and we made it known to the members of Congress. And I think it's caught

Starting point is 00:15:24 steam because people had an intuition and there was some kind of foreign influence involved, and we just put flesh on the bones of that intuition. How did you connect? Like, what was the, what was the mechanics of your research? Like, like, how easy was it to uncover this or hard? Yeah. Honestly, AI was an incredible tool. And I think it was fitting that we had the data centers helping us defend the data centers

Starting point is 00:15:48 because I burned through so many tokens, just looking for patterns in China state media, for example. It was actually a very simple query at the end of the day. I just got on my cloud and said, Claude, I have this intuition that Chinese English language media has been pushing against the data center build out for a while now. Can you help substantiate this? Just like popped out, you know, multiple different stories in a matter of minutes that documented

Starting point is 00:16:15 over the years, not just this year, but going back several years, every anti-tech story that the CCP has been pushing out through its Chinese English language media. So honestly, with AI, I don't know if it would have been possible. It would have been possible, but it would have taken arguably hundreds of hours. But with AI, it gave us so much leverage to be able to do the research so much more quickly than we would have been able to without it. So shout out data centers. Very ironic. Definitely.

Starting point is 00:16:44 And for any of the people who may be in the 71% of poll respondents who would not want to live next to a data center who may be listening to this, I think it's important to go over like the low hanging fud and debunking, like water usage is like, is that for context, for anybody who's listening to this, doesn't know, like I sit on the board of a data center company historically. We've done Bitcoin mining in the TVA. We've been in the TVA for six years now, five or six years. And so I know this problem intimately and funnily enough, as you mentioned with your story of riot on the Bitcoin mining front, we've been fighting these battles for many years.

Starting point is 00:17:27 Water usage is one. Like the people are commonly referencing some research report that was done over a decade ago and over exaggerated the water usage of data centers back then by something like 10,000 percent. And so people are just running with a bad research report and saying it's using so much water. It's closed looped water systems. It's not using that much water at all. Sound is another one. Yes, Bitcoin mining had.

Starting point is 00:17:57 It's problems and it's not like these things don't make any sound, but that is a problem that is solvable. And then at the end of the day, are they raising electricity prices? And I can say for certain, at least for the data centers that we operate, we know for sure, because the utility companies that we work with have told us and they've gone to public city council meetings and explicitly said this because we're buying their excess capacity, they've been able to hold rates down for two years straight because we're there as a buyer of first and last resort. And so the FUD is real, it's loud,

Starting point is 00:18:38 but it's obnoxiously wrong in many regards. It's a good way putting it. Yeah, it's unfortunate too because it's put the data center industry in a posture of defense. I think for the last several months, data centers have been trying to, explain to communities how they won't hurt their communities, which is a fairly easy case to make. But even after you've made that case, I think data centers need to go a step further in explaining

Starting point is 00:19:05 how they can actively help communities too. I think that's another story that's not really being told. No. It's simple things too. I think. And you've run the numbers. There's plenty of stories that have been coming out is I think it's a bit of a lag effect, but I think the industry or parts of the industry at the very least, have been jolted. to the week, okay, we need to get better at narrative forming and really telling the story.

Starting point is 00:19:29 But if you look at some historical data centers from Microsoft or Amazon in the towns that they've entered, particularly in the Northwest, and they've been there for decades, like the turnaround that these towns have had because the data centers are paying property taxes and sales taxes on electricity that have enabled these small towns that were that were sort of hollowed out before a data center came in, you're talking about hundreds of millions of dollars of revenue over many years that allow them to build roads, build schools, build football fields, hospitals, whatever it may be. Yeah, it's incredible.

Starting point is 00:20:10 Quincy Washington, I think, is. That's the one I was referencing, I think, yeah. Yeah, that's the ideal scenario where Microsoft and other investments into that community more than quintupled the county budget. and as you said, built sidewalks that didn't exist before, just brought incredible prosperity and success to that community when the community was on the ropes before the data center showed up, and now it's the ideal case for what data centers can do for a rural town.

Starting point is 00:20:39 Yeah, and you have this concept of data center dividends. Why don't we walk through that? Right. So I am so stoked about data center dividends because I think that this is the winning narrative that can really jujitsu public opinion back and, favor of data centers. So what are data center dividends? To explain them, I think it's easiest first to look at the state of Alaska. For those who don't know, in the state of Alaska,

Starting point is 00:21:04 they have this incredible program called the Alaska Permanent Fund. With the Alaska Permanent Fund, the oil royalties that the state collects are invested into an endowment. And then the investment earnings from that endowment are then paid to every resident of Alaska every year. It's an incredible program where those payments, which average about $1,500 a year for the last decade, go towards not only adults, but towards children as well. So if you're a four-year-old child who lives in Alaska, you are eligible to receive a $1,500 check from the government that comes from the oil industry in the state. It's an incredible benefit. And I started to ask myself, can that particular model be scaled in any way? As it turns out, it can. And that's the math

Starting point is 00:21:50 we figured out with data center dividends. So what might be? makes Alaska work is two things. Number one, it's a huge land mass with a very small population. Number two, it has this incredible energy resource. When you think about it, America's rural counties have the exact same properties. They have small populations relative to their landmass and an incredible energy resource. Another way of thinking of it, they have pristine real estate for AI development. So what they've lacked, though, is some kind of public mechanism that can help turn those earnings into something that, benefits everybody in the county. So with data center dividends, we took a look at the amount of

Starting point is 00:22:26 tax revenue that a one gigawatt data center will generate, which is in the hundred, about $150 million a year, depending on obviously the county. This is an estimate. So it's not an across the board rule, but that's our estimate just based on data we got from Loudoun County, Virginia, the most data center rich data set in the country. So you look at what are the specific needs that these counties have, well, they have to finance their public safety, their infrastructure, and their schools. But even after doing that, there's still tens of millions of dollars left over in a lot of these rural counties. What we realize is you can take that surplus tax revenue from the data center and you can simply remit it to the households in that rural county.

Starting point is 00:23:12 And we ran the math on it. You can remit about $5,000 to $9,000 a year per household in a rural county just from the excess taxes generated by data centers. So imagine you're living in a rural county where the median income is probably around $50,000 a year. And you receive about a $10,000 bonus from the local government every year. I mean, that's life-changing money for so many families. And it allows families to invest in their children's college education. It allows them to, you know, help pay off the mortgage faster or buy a new car. It offers so much economic opportunity to the families who deserve it the most. I mean, these counties are, you know, doing the nation an enormous solid by opening themselves up to data centers into AI infrastructure.

Starting point is 00:23:56 They are the key to winning the AI race against China. And I think they should be compensated accordingly. They make these data centers possible in the first place. And so I think it makes sense with that surplus revenue to reward them for what they've done to make that possible. And that's what data center dividends seem to do. So freaks, this rip was brought to you by our good friends, the Bitcoin at Block. Bitcoin app Block.

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Starting point is 00:27:19 for your community. The way I see it, data-centered companies might be open to it if they're really pressed. Otherwise, they'll just try to get them built. But I think for data center companies who are on the ropes in communities where maybe they've already broken ground, this is a good option to turn to because it's something that will allow what is a burden politically to all of a sudden become a huge benefit politically for the developers and the county commissioners who have supported these projects in the past. But I think the onus mostly falls on the county governments themselves. That's what I think the county governments need to realize is they have a ton of leverage right now because obviously the demand for electricity is

Starting point is 00:28:01 higher than it's ever been and only going to accelerate from here as the demand for tokens increases and I think continues to go exponential. is I think we're just scratching the surface of the agentic economy. I think it was only a couple of months ago that agent-to-agent token or agent-to-agent prompting that resulted in token output succeeded human to model token output. So like the agent economy is just budding. We just surpass the point where agents are using more tokens than humans, which is a crazy thought.

Starting point is 00:28:37 And then we have robotics. We have endeavors to go to space. which is probably going to be enabled by some sort of AI agentic system as well. And we don't have enough power. I think the counties have a ton of leverage here. Yeah, which is complete inversion of the dynamic from a few years ago where counties were more or less tripping over themselves to get data centers to build. Now the dynamic has flipped in such a way that, like you're saying, Marty,

Starting point is 00:29:03 they have all the leverage now. So they need to use that leverage accordingly and find a way to make data centers really work for their communities. And I think this is promising way to do it. Yeah. And I think on the narrative front, we do need to get the stories like Quincy out there in the Laskan permanent fund. Because if you are rural community, again, I've seen this in Appalachia where we operate, again, the towns that we go into for Bitcoin mining alone. And I think the taxes that we pay for Bitcoin mining are, the property taxes we pay, they're the material, the rates, the revenue that we provide the utility, it's material.

Starting point is 00:29:46 But once you switch that, the I come to you, the numbers get even, even better. And especially if we're trying to reorient the domestic economy and reindustrialize, like, kickstarting it with this type of activity is important. And if you think of something like a data center dividend, like if it's prosperous enough that you can get local, people begin to invest in the economy and aid in the reindustrialization that's unnecessary outside the AI data center build out. I think that's a really positive narrative to run with. It's like, hey, this is the kickstart to re-architecting the Rust Belt that's been

Starting point is 00:30:29 hollowed out because of triffins that lemon or neglect of domestic production for five decades and our abdication of that to China. Exactly. And Marty, you hit on such an important point there. The data center build out is reindustrialization. I think a lot of people interpret reindustrialization to mean bringing all the aluminum smelters back online, bringing all the textile factories back online. That's part of it. But in the economy of the 21st century, increasingly the bedrock will be artificial intelligence. And I think another way of conceiving of a data center is an intelligence factory. These are intelligence factories. and they are creating hundreds of thousands of jobs across the country, which is another underappreciated point. Already, data centers have spiked construction jobs in the country to about 8.3 million, which is the highest it's ever been. And you see a lot of these protest groups pushing against data centers saying they're standing up for the working class. B.S.

Starting point is 00:31:30 They're not standing up for the working class. The working class is benefiting enormously from the data center build out, so much so that we've been able to track over 40 unions and labor organizations across the country that are in favor of data centers and are pushing against anti-data center regulations. You have plumbers and electricians who are getting paid upwards of $200,000 a year because they're in such high demand right now as these data centers get built out. Blue-collar jobs in particular have experienced a significant boom just from the data center build-out alone,

Starting point is 00:32:04 and I think that's another piece of the narrative that's missing right now. This is, there's that tweet. What do you think reindustrialization looks like? Vives, essays, it's the data center build out. Well, I think, I thought you made this point brilliantly on the hill yesterday. I was trying to figure out who the congressman was that asked you the question, but your response was basically, you know it's propaganda because in China, like the media is not pushing this narrative at all. In fact, it's the exact opposite.

Starting point is 00:32:35 They're pressing the build out. hard as possible while they're using, using funds funneled through Singham to slow us down while they're speeding up. Yeah, that's the tell right there. The same Chinese state media that is sowing fud about data centers here in the United States is celebrating AI milestones back in China. And simultaneously, the same Chinese government is subsidizing the use of energy by its AI data centers by up to 50%.

Starting point is 00:33:04 So there's no doubt a set of protests happening in China because, A, it's probably legal over there. But B, also has the full support of the government and industry over in China. And they don't have their free speech to protest it even if they wanted to. So there is a real discrepancy. And you see that play out too in perceptions of AI. It couldn't be any more different how people perceive AI in mainland China versus the United States. Edelman did a poll just last year about how optimistic people are about the future of AI. about 80% of Chinese citizens said they're optimistic about their AI future, as opposed to just 17% of American citizens.

Starting point is 00:33:40 There's a real sci-up against AI, and I think it's pushed in part by Chinese propaganda and people working in favor of the Chinese Communist Party. But let's be honest, it's also been pushed by the AI executives who have arguably done more than anybody else to sow fear, uncertainty, and doubt about artificial intelligence. Breaks, look at me. I'm glowing. I've got like an angels halo going around me. You know why that is? I feel good. I feel taken care of. I feel blessed, healthy, happy. And that is because I'm a crowd health member. My family and I have been crowd health members for five years now, literally this month. Five years ago, we joined crowd health. We've had two babies. We've had multiple health events and we're never going back to health insurance. CrowdHealth is crowdfunded health care. So you sign up for crowd health. You pay a monthly fee. You help out with other people's bills. And it's significantly, cheaper than health insurance. We were on COBRA. It's a family of three when I left my last job before I went full-time to CFTC. When on the crowd health, now as a family of five, we pay, I believe, $700 a month. It's significantly cheaper. They're going to negotiate prices lower for you. They've consistently negotiated health care prices as much as 50, 60, 80 percent in many cases. They help out with babies. If you have a pregnancy, you pay the first $3,000 and the crowd covers the rest.

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Starting point is 00:36:22 Check it out. Yeah, what is up? What is going on? Dario, Sam, Elon even, all three coming out in the last week saying we need to slow down the narrative coming from the frontier lab providers. I'll say I'll rank Dario the most dumerous, Sam number two, Elon the distant third. I was actually shocked to see him agree with Dario and Sam that they should slow down. Who knows maybe there is something that I'm unaware of.

Starting point is 00:36:53 But I don't know. I just use caveman pattern recognition. It's very similar to some of the COVID narratives around lockdown. And it's like, I don't think you guys are being very genuine right now. I think there's definitely an economic component to it. I definitely think there is pressure from the open source, open weight models, undercutting price and comparing comparable performance or at least 98% of the way to the public frontier models. Now, obviously there's a lot.

Starting point is 00:37:23 at stake for companies like Anthropic and Open AI specifically, considering how much money they've raised how many promises they've made in this push to slow down and to implicitly create this regulatory moats and licensing regime is nefarious. I think it's idiotic. And then on top of that, you have the narrative of this thing, this technology that we're building at a very rapid pace is going to kill us all. It's like, then why are you building it at all? Yeah, there's real conflict of interest if that's what they truly believe, right? Marty, you mentioned caveman pattern recognition, and I feel like I've been experiencing the same thing. You look at COVID, you look at global warming, which became climate change, you look at AI, doomerism.

Starting point is 00:38:12 It's all the same thing. You present a doomsday prophecy that is more or less non-falsifiable, and people get ginned up and afraid of that, and they surrender their rights. or they surrender their common sense to that cause. And I think that's what we're seeing take place right now with AI safety. Who's heard of global warming or climate change in the last year? It's almost as if the global elite in mass completely turned off the narrative on global warming. I think that's in part because as recently as 2020,

Starting point is 00:38:40 you had Bernie Sanders telling everybody that we only had six years to take action on global warming before there would be irreversible damage done to the world that could destroy, you know, all of our ecology. Obviously, that has not panned out. And I think people, it's like a Ponzi scheme. Like, people catch on to what's going on and then they bail and they go to the next narrative Ponzi scheme, the next meanplex that scares the living daylights out of people. And that clearly right now is AI safety. It was bizarre with the Jacob Coxon story after he released his announcement, for those who don't know, Jacob Coxon was a low-level anthropic employee who was there for, I think, all of, a few weeks, I think six weeks total. And he announced his resignation from Anthropic on Twitter,

Starting point is 00:39:26 warning people that when they were building there could truly bring about the end of humanity. He coordinated it, I believe, with a Wall Street Journal op-ed that was released in tandem, and it got over 140 million impressions on Twitter. Just absolutely absurd, had all the hallmarks of an op. And since that time in Washington, though, it's become the prevailing narrative. It has become the issue, the current thing, so to speak. on Capitol Hill, we need to do something about AI regulation. It's like they replace the global warming microchip with the AI safety microchip. And I think what's different this time, though, is that you have decentralized media in the form of X

Starting point is 00:40:05 where people can see and catalog the AI, the sciop playing out in real time. So there's a lot more healthy skepticism about it. But still, it's been really discouraging to see how many people have fallen for the Dumerism so quickly and without justification. And I think it's going to be arguably the most salient political issue of the next couple of years here. Yeah, and I think we were discussing before we hit record, but it would be remiss of us not to bring up the impact that the effective altruists are having on this conversation. Specifically, and I think, again, I think we're well suited to address this,

Starting point is 00:40:43 considering we've seen this up close and personal in our industry with SBF. an FTX who was an accolate of the school of effective altruism probably still is. And it's completely insane philosophy and worldview. Yeah. It's disturbing. And I think it's a group of likely well-intentioned nerds who grew up in a very secular culture, who've never read the classics, who think the idea of God is a meme. and then they discover basic economics and probabilities,

Starting point is 00:41:24 and they engineer their own religion on top of that. And what's disturbing to me is that in that effort to fill the God-shaped hole in their hearts with their own secular religion, I don't think they're just left behind with a God-shaped hole. I think that God-shaped hole is a black hole that sucks into it, our humanity, and any connection we have to the divine.

Starting point is 00:41:45 I was doing some research a few years ago to Peter Singer, who's essentially the intellectual forefather of the effective altruist movement. And there's clips of him across YouTube where he is making justifications for the most immoral acts, whether it be abortion as a eugenic practice, zoophilia, or infanticide for the severely disabled. I think there's this sense that when you remove God as the anchor of your morality, human beings put themselves in the place of God and end up creating. the most twisted morality imaginable.

Starting point is 00:42:19 And so behind the veneer of so-called effective altruism is some of the most disturbing ideas and conceptions of morality that I've ever seen. It's very disconcerting. And to see it play out again like you're saying, Marty, I mean, we've seen this movie before with SBF and now it's playing out on an even larger scale, it seems. Well, and it's funny to you bring up the divine and God.

Starting point is 00:42:39 And there's been research done if you post-strain these models on the Bible, particular verses in the Bible. You find alignment if you give the, uh, the models, the teachings of Jesus Christ, they actually act more moral than if they're being post-trained by the effect of altruists who are trying to replace that God. And it is. I think Bill Gurley had the quote of the year so far. I do think Dario Modi thinks he is the midwife birthing at God right now. Yeah. Yeah, disturbing. Very disturbing stuff. And to your point, Marty, I think we can solve AI alignment in a day if we just instill Christian principles into it.

Starting point is 00:43:22 I think Jesus Christ figured this out 2,000 years ago, and the EAs have disregarded that in large part and are trying to engineer their own morality into it, which is why open source models are so important, because as good of a product as Claude is, for example, it has that morality baked in that doesn't have a foundation at the end of the day. And if that becomes the only game in town, the monopoly over AI, then I think that will twist people's perceptions of the world. It will inform their own conceptions and morality in a way that will be hugely destructive to society over the long term. Yeah, there's some great green text. There's a green text being floating around a couple of weeks ago about the Bible.

Starting point is 00:44:01 It's like maybe God knew he had to send Jesus down when he did in the long arc of human history because we have 2,000 years. of the Bible spreading and is all over the internet and all in the training of these models. But it gets to another point too that is really frustrating about this whole debate is nobody can, nobody pushing the Dumerism meme or line of thinking can give you a step by step process of how AI is gonna take over the world

Starting point is 00:44:33 and destroy humanity. It's sort of hand wavy. Everybody will reference the paperclip problem, but it's like, okay, let's walk through step by step, how this actually happens. They can't do it. Yeah, they can't do it. There's so much hand-waving going on.

Starting point is 00:44:46 And I think that was exposed this last week. There is a researcher named David Bellamy. He had this viral tweet where he pointed out that the idea that AI will engineer a virus that can kill all of humanity is without any foundation whatsoever. And he has the unique background of being both an AI researcher and someone who has an extensive background in bioengineering in particular. And he just walked through the logistics of what it would take for a super intelligent AI to somehow engineer its own virus in a lab. And not only the logistical complications of that, but the mathematical difficulty in doing that. It really exposed that meme for what it is, which is important. I think that is a killer meme for the safety crowd right now is this idea that AI will kill us all.

Starting point is 00:45:34 It scares the crap out of people. And like we saw with SBF, I think the world of digital assets was so technically different. for the normie to understand that they ceded their trust to a scammer who is telling them that this is how the world works. This is how crypto works. I think you see that same thing at play with AI where a lot of normies who don't have a technical background will just seed their trust to, for example, the anthropic employee who resigned recently, Doom saying on his way out because they think, well, that's somebody

Starting point is 00:46:04 who clearly understands this technology. I don't understand this technology. And as someone who has that technical background, I should trust what they're saying. When you talk to people who have technical backgrounds on multiple fronts, not only AI, but also biology as well, they'll point out how difficult that truly is to do. Yeah, not only that, even, I mean, the big story everybody's been pointing to, and Andrew Yang, he was on CNBC, breaking news to Becky Quick and Andrew Sorkin about what happened with the hugging phase. And his characterization of it was completely wrong. But there was A-9. I think his name was Lumencape.

Starting point is 00:46:43 I wrote about it in the newsletter last week. But he did this really good post-mortem. He did like an individual dissection of the hugging face hack. And he made some really good points where the models that were supposed to be sandboxed that Open AI was training, they were explicitly told that they had access to a synthetic internet. and that when the agents ultimately broke out of the sandbox, they didn't think that the internet that were using was actually real. They thought it was synthetic.

Starting point is 00:47:14 And then he brought up the point that if you tell the agents in the sandbox that they are going to use the real internet, they will not act in the way they did. They thought they were using synthetic data when they were attacking, hugging face. And so again, to your point about SBF and people not being able to discern what's right and wrong in the world of crypto, So I think that's obviously, I think that's actually an order of magnitude harder in AI when you're talking about like linear algebra and matrices and how these things actually work on the back end.

Starting point is 00:47:44 It's even hard to discern. I'm not going to say, I know for certain how these things work. But I think I know, know enough to be dangerous. And just like that first principles logic that LumenScape laid out in the piece that he wrote last week, like makes a lot. It's like, oh, of course it went haywire. It didn't think it was using the real internet. Right. Right. Yeah. I'm of the same mind. I think the difficult thing is meeting people who have that technical background who can break things down in understandable turns. Because for the Normie who does have a technical background, that can be hard to grasp what's going on there. And so it's rare, though, that you find someone with the technical background who also has the ability to explain things in an accessible way. That's, I think oftentimes the obstacle we face, both in the digital asset industry and in the digital asset industry and in the ability to explain things in an accessible way. That's, I think oftentimes the obstacle we face, both in the digital asset industry and in the technology.

Starting point is 00:48:33 AI industry. Well, it's a good segue into a BPI summit next week and just BPI's posturing in general. I mean, that's a lot of what you guys do on a daily basis, particularly trying to educate people, people on the hill. So let's talk about the summit a little bit. What can people expect next week? What are you looking to get out of it? What kind of conversations are you looking to push into the zeitgeist of Washington D.

Starting point is 00:49:03 Yeah, we are stoked for our summit next week. On day one, we're going to lay out a philosophy that was pioneered by a resident philosopher, Andrew Bailey. Some of your listeners might know, Andrew, he's been a fellow of ours for a long time. He's recently joined BPI full-time. Andrew's going to lay out the idea of cypherpunk humanism, which is similar to the idea of little tech. I think a lot of Americans understandably distrust technology and the industry broadly because they've seen how Facebook has maybe monopolized their time or they've just had negative experiences with the technology industry for the past 10 years or so. What we are trying to advocate as an organization

Starting point is 00:49:44 is technology that empowers the individual that enables the sovereign individual over the sovereign state. Bitcoin, of course, is the perfect example of that. It's an open source form of money that cannot be stolen. It cannot be hacked. It cannot be printed. And it has empowered millions of individuals across the globe, especially those in countries that have very repressive monetary regimes. So that is what we call a freedom technology. At the BPI summit next week, we want to look to other freedom technologies that we can champion to help promote this concept of cypherpunk humanism. We believe open source AI is absolutely critical in that effort. As we were talking at the beginning of the podcast, Marty, we risk right now a duopoly in AI where it's either open-source.

Starting point is 00:50:32 Open AI's Chat TBT or Anthropics Cloud, and those are the only two games in town. Americans will use those products and send all their data back to centralized companies that could then sell their data to advertisers. Companies and interests that don't have the best interests of their customers in mind all the time. What we think is the best path forward for our country and for people across the world is open source AI to run AI using your own compute, where you can keep all that data private. where you don't have to cede any of your personal information over to a corporation, but you can use open source models to do what you see fit.

Starting point is 00:51:11 We think that's another critical freedom technology. We're also going to be discussing decentralized social media, like Noster, decentralized communications apps like Bichat. There are so many different freedom technologies emerging right now, and we think that this is a way to earn the trust of the American people when it comes to technologies to show how technology can be used not to isolate or atomize, but to bring people together and to empower them against corporations and against the state. And Bitcoin is really the foundation of all that.

Starting point is 00:51:45 Andrew's going to lay that out for us. Then on day two, we're going to talk about what does a policy platform for cypherpunk humanism look like? Data Center dividends is going to be a key part of that. But we're really excited. We're going to have Jack Borsi. He will be our keynote speaker on day one. He's going to lay out his vision of an open source future.

Starting point is 00:52:04 He's made a real pivot into focusing on artificial intelligence and believes that it's an extremely consequential technology. We'll also have Michael Saylor there on day one. We'll have many members of Congress and members of the executive branch there on day two. But it's going to be a jam-packed two days of programming. We're really excited for it, though, and we're excited because I think policies we're pushing truly are one of one here in D.C. You know, Bitcoin Policy Institute, when it was first started by David Zell and Graham McCarty,

Starting point is 00:52:37 I think a lot of lawmakers didn't consider the policy implications of Bitcoin, but since then it's become a mainstay in American technology discussions. And I think we're just going to build on that foundation in the years to come to continue to advocate not only for Bitcoin, but other freedom technologies as well. Yeah, it's extremely important work. Again, even on the open source model side, like there's so much work. I think we saw a great example of why this is important this week with Latham and Watkins, a large law firm here in the United States saying we're not using open

Starting point is 00:53:11 AI. We're Anthropic anymore. We actually bought our own GPUs and we're self hosting. We're self hosting open source models because we don't want to give that information to Anthropic and Open AI. I think that's, I think Alex carp love him or hate him. I think he's been beating that drum too. And I think it's a good drum to beat. Because if you think of the implications of having that duopoly take hold and be the predominant way

Starting point is 00:53:41 through which people interact with this technology, like that is incredibly dystopian minority report type of surveillance state that can be erected. And then people will say, well, somebody's got to host the GPUs even if you're running, even if you're running open source models, like somebody can see into that and it's like well true to an extent but there's also technology like trusted execution environments and secure enclaves that can protect you from that so you can get the best of both worlds where you don't have to have a server sitting in your in your office and you don't have to be a network engineer to have the certainty that you have privacy there are secure enclaves and GPUs now that can vector data too so i think just beating this particular drum and drawing a line in the sand saying we cannot see control over this technology to these two companies who are staffed with people, many people, I won't say all of the staff of these companies, believe in effect of altruism, but many of them have this convoluted worldview, at least in my opinion. Yeah, I see that at play. I think Claude is an anthropic is probably the most EA-rich company in the space. I think open AI is a little

Starting point is 00:54:52 bit better, but the EA is strong over there as well. I'm hopeful that the non-EA. forces will win out at Open AI. But yeah, it's disturbing because if we only have closed models, that's a level of personal invasion that we've never seen before, where with social media, I think companies could discern the kinds of things we like, what our preferences were. So many queries we make to AI models, surrender our very thoughts, and they can see exactly how we think in a way that no other company has been able to see before, which I think underscores the need for that open source AI. We want to keep our thoughts to ourselves. We don't need to sell them to companies, and I think that's the case we need to make to the American people. I think open source AI is

Starting point is 00:55:41 in large part kind of hard for the average American to access right now, just because their first interaction with AI typically is chat GPT and it's very accessible, it's very user-friendly. In the same way that for years, Bitcoiners helped mainstream Bitcoin with Normies, helped them adopt Bitcoin. I think we're going to have that same challenge in the next few years of helping our parents and grandparents understand, here's how you use an open source AI model, here's why it's better for you, here's why it's also less expensive, and just documenting for them all the benefits of open source versus closed models, I think, will be.

Starting point is 00:56:18 be really important. Yeah. And the last question, I'd be remiss if we didn't bring it up because this is a Bitcoin podcast. And this is actually the bill. I care more about the clarity. ARMA.

Starting point is 00:56:29 It looks like it got, it had a key checkpoint reach yesterday. Yeah. Representative Begich is the author of ARMA. He's championing it on the hill. And I think it's got a good possibility of getting strong bipartisan support at the end of the day. And so we'll see.

Starting point is 00:56:48 It's promising, though, you know, we're one step closer to a strategic Bitcoin Reserve, which is something that we've been working on for years now. And I think this gets us one step closer to that goal. What was the step we took yesterday? It was trying to remember. I've been so sucked into the congressional hearing this week. Yeah, you're busy. Yeah, Ken's been following the arm updates a lot more than me.

Starting point is 00:57:14 But I think it was introduced, wasn't it? cleared the House Financial Services Committee. There we go. Okay, that's a huge hurdle. Because that teased it up for a vote. So that's really, really promising. Is that further along, then clarity got?

Starting point is 00:57:32 Clarity passed the House and made it to the Senate. And so passing the House means it passed the House Financial Services Committee as well. So as long as it passes the House, it will be essentially tied with wearing clarity is at. Okay. I'm still not well-versed on the dynamics of I mean I did watch was a schoolhouse rock growing up it's been a while I don't know the process is still a still a bit convoluted in my mind yeah I worked on in the Senate for about six years and there's still matters of parliamentary procedure that are beyond me it's very complicated over there yeah well Sam thanks for all the work that you do all the research that you've been doing I think it's extremely important incredibly in lightning and having a positive impact on the discussion around these very important topics.

Starting point is 00:58:22 There's a lot at stake here. And it's important that we get good information in the hands of American citizens and the politicians. We've decided to allow to make decisions on our behalf. So I think it's really incredible work that you've done and looking forward to seeing in person next week in D.C. Yeah, likewise, Marty. Thanks for having me on.

Starting point is 00:58:43 All right. Peace and love, freaks. Thank you. for listening to this episode of TFTC. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family. We're looking to get the word out there. Also, wherever you're listening, whether that's YouTube, Apple, Spotify, make sure you like and subscribe to the show. And if you can leave a rating on the podcasting platforms, that goes a long way. Last but not least, if you want to get these episodes a day early

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TFTC: A Bitcoin Podcast - #793: China Is Funding The War On Data Centers with Sam Lyman

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