TFTC: A Bitcoin Podcast - Fed Independence Under Fire as SBR Plans Continue | Bitcoin Alpha E010

Episode Date: August 22, 2025

Trump publicly humiliates Fed Chair Powell on live television, demanding lower interest rates while criticizing Federal Reserve building renovations. The administration continues consolidating Fed-Treasury power as Trump calls for Lisa Cook's resignation and nominates Stephen Myron to the Fed Board. Strategic Bitcoin Reserve plans remain uncertain despite Scott Bessent's conflicting statements about government Bitcoin holdings. Harvard Endowment reveals over $100 million Bitcoin ETF position, signaling major institutional adoption. Gold revaluation discussions emerge alongside potential Intel nationalization as wartime economy policies expand. Crypto IPOs from Bullish and Gemini show mixed results while Block unveils revolutionary Bitcoin mining hardware "The Rig" to challenge Bitmain's monopoly. The episode explores monetary policy theatrics, Bitcoin's growing institutional acceptance, and innovation breaking centralized control systems.

The following is for informational and entertainment purposes only and should not be construed as financial advice. This discussion is a presentation by 1031, the leading institutional investor focused on the Bitcoin ecosystem. 1031 has over 10 years of experience in Bitcoin and has deployed nearly $150 million into the leading opportunities in the space. To learn more, visit 1031.vc. And it looks like it's about $3.1 billion, one up a little bit. or a lot uh so the 2.7 is now 3.1 and i'm not aware of that yeah it just came out yeah i haven't heard that from anybody but it just came out i noticed that about 3.1 as well 3.1 3.2 this came from us yes

Yes, I don't know who does that. You're including the Martin renovation. You just added a third building, is what that is. That's a third building. It's a building that's being built. No, it was built five years ago. We finished Martin five years ago. It's part of the overall work.

So we're going to take a look. We're going to see what's happening. And it's got a long way. Do you expect any more additional post-op runs? Don't expect them. We're ready for them. But we have a little bit of a reserve that we may use. But no, we don't.

We expect to be finished in 2027. I must admit, I saw a bunch of the clips on X and other parts of the Internet. Never saw that part of the conversation. Didn't realize he was calling out line items of the renovation to him in person. yeah i i uh i gotta say some of the best whatever you think of trump um and there's a lot that can be said about trump the man has delivered some of the most iconic political moments of certainly this century and i think that's that's a top fiver for me without a doubt it's so entertaining i mean i've i said before uh that i would have paid to see

like a big brother white house or something like when joe biden was in the the white house just to like see what he was doing on a day-to-day basis but i would probably pay more to see like big brother of white house and just watch trump all day proud and tim scott is the muscle to be like no no it's 3.1 yeah right who by the way doesn't have a hard hat on like the hard hats really make the whole thing that they're standing there these hard hats and tim scott's right next to them with no hard hat what's the what's the wardrobe choices like i mean the the theatrics behind it is uh you know it's something to behold what was the setup for that like they're like okay we're gonna we're gonna put you on tv and just humiliate you in front of tv so like get ready here here it comes

and we skipped the part where he slaps his back at the end and says uh this guy's this guy's about to go lower interest rates um some some really you know some some middle school uh hallway bully power games uh going on here well it reminds me of the one there was one where he was in the was it was it the white house lawn where there was a lot of uh i think there were construction workers hanging around the background and uh they were going after pal again or was that a different was that someone else yeah we got uh i got lamb i think i talked about this i forget it was here rhr but i brought it up we had cold open with it on rhr and i made the uncouth statement of why is uh why is donald trump asking you know construction workers about interest rate policy

it's probably not their core focus and had a bunch of construction workers on the youtube comments saying hey i'm in construction and i understand interest rates but yeah that was a that was a scene as well the fact that the fact that we can't even fully remember all the details of all the different times trump has publicly uh limp-ass that or tried to humiliate or otherwise uh viciously critique the fed chair i think shows uh is a good indication of where we are right now with uh monetary policy in the u.s and its relationship to uh the rest of the government the charging department etc yeah it's a and just the news cycle right because like when was this this was it feels like forever ago yeah it was like three weeks ago yeah put out our

artisanal alpha you know once every few weeks or once every month or we'll just see but this seems like it was forever ago i know it was it occurred since the last time we did yeah it was like you know a few a few days or a week after the last episode of this and i remember um being very frustrated because i knew as soon as i saw it like that's the ultimate cold open and we just missed the chance to do it on the last one so uh here we are back again and uh even though it's a few weeks old i think it's still it stands the test of time it does and john i think you used the perfect word earlier theatrics uh and i think it's an incredible juxtaposition of the world that we operate in and why we operate in this world many don't realize the global monetary system

should not be beholden to the whims of the theatrics between a sitting president and sitting chairman of the federal reserve that is essentially what we just witnessed was bullying tactics for those who don't recall they were there as a construction site because the government was trying to find a roundabout way to fire pal um and i think at one point they were trying to pull the technicality of the federal reserve wasting money taxpayer money with that that renovation they were doing on the reserve building in dc uh theatrics it's been happening between powell and trump since before trump was even elected and we're in the middle or tail end of the summer doldrums i think this is like really the peak summer doldrums but it ends next week we've got

Jerome Powell and others in Jackson Hole, Wyoming for their annual event. There will be no interest rate policy decisions made this month outside of some very extreme market volatility, which doesn't look like it's going to materialize. But it's a pretty boring week. I think markets are down, Bitcoin's down. And I think it's just due to the overall uncertainty of the result of the theatrics that we've been seeing play out over the last 16 months. Yeah, I mean, it's the theatrics word, you know, to stick with that, I do think is relevant to just kind of consider, you know, the nature of where we are with the system. I think it's in some ways like instructive for – you could say Trump is violating norms, and many people have made that case both in this term and his prior term, and he's not respecting the system and the way it's set up. Um, but I think it's, it's interesting and notable that we, this pulls back the curtain a little bit on the fact that this is a system where, you know, I think we have a, it's easy to have a view, especially coming from say mainstream academia, from your college classroom, um, from working, whether it's on wall street or corporate America, a bunch of different kinds of white collar jobs.

it's, it's kind of very easy to imagine that the, the men behind the curtain have, uh, have it all figured out and, um, you know, they have all the dials properly calibrated and, um, you know, they're, they're sitting up there on, uh, you know, Mount, uh, whatever Mount Olympus or Mount Mariner Eccles building as the case may be in this, in this situation. And, you know, dispassionately evaluating every, all the data flow that they're getting, um, and just making the the right decision at all the time or as right as possible based on the data they have with no kind of personal dynamics getting in the way no politics nothing like that and uh it's it's helpful in some ways and instructive to have like the bull in the china shop of trump come in and

just show like this is a system that's you know based on a few people and their interpersonal dynamics making kind of flying by the seat of their pants and uh having to jockey for position and negotiate between many, many different dynamics, very few of which actually relate to being data dependent, um, and kind of dispassionately evaluating what's going on in the economy. Um, so the theatrics are, are new and different. We haven't seen them from a lot of presidents, but I think it, it probably should help people understand, um, some of the, Marty, as you referenced, the potential pitfalls and frailties and downfalls of a system that's governed by a few lawyers and bankers and politicians arguing with each other and trying

to intimidate each other and being reactive to many dynamics that are not actually directly related to what's happening in the lives of everyday Americans. I think it's instructive to see it kind of play out this way. Yeah. But be careful what you wish for. You may want to replace the interpersonal relationships and decision making that that is incumbent in the system right now of powell and his cronies with trump and whoever he decides uh will succeed powell i think it's meet the new boss same as the old boss different context and i mean that's what you have next on the list there was a an abrupt resigning from the federal reserve board of governors by adriana kugler last month and stephen mirren has been nominated by trump to

replace her and what i saw a bunch of tweets about stephen mirren specifically as it pertains to bitcoin apparently he has some tweets out there i think that bitcoin fixes this and he seemed positive but i couldn't tell tell if they were positive or if he was trolling bitcoiners i i I think so. I don't think he was explicitly trolling Bitcoiners. I think he may just be aware of the meme. I don't think, you know, his his if you look up Stephen Meyer and Bitcoin fixes this, you know, you'll find a couple of these examples where he's responded. But I think usually in situations where it's I can't remember the exact details of each one, but like Bitcoin presumably did not fix the thing that he was responding to. So it's a bit of a joke.

But, you know, otherwise, I don't think he's had a lot of public opinions about Bitcoin specifically. So that he's even aware of that meme and felt it appropriate or humorous to kind of go out on Twitter and respond to random tweets with it for very little fanfare to me doesn't suggest that he's an outright Bitcoin hater, certainly, and maybe is paying attention to some extent to the culture. The more interesting thing about him, I think, is people may recognize his name as one of the authors or the co-authors of a Hudson Bay Capital paper that came out last year about, I think it's called a user's guide to re-architecting the global trade system or something to that effect. But basically, Myron's one of the chief kind of architects of many of

the policies that Trump appears to be following or trying to put into place with reordering global trade flows and capital flows. Myron's been an advocate of certain targeted tariffs. I think maybe not as much of a blunt instrument as Trump has kind of used them, not to the same degree, But targeted tariffs, targeted capital controls, basically making the rest of the world, in his view, kind of pay their fair share for the broader kind of defense umbrella burden that the U.S. has provided, pay for the privilege. You know, he's suggested a user fee on Treasury holdings to make people pay for the privilege of holding Treasuries as their reserve assets. Um, and notably at the end of that paper, uh, he did make one, one reference right at the end to a reordering of that system being a positive for neutral reserve assets like gold and in his words, cryptocurrency.

So he doesn't say Bitcoin, but, um, you know, Bitcoin is, I think is, as we all know, increasingly the only cryptocurrency quote unquote that really matters from a geopolitical perspective. Um, so interesting, notable that that's the guy that Trump, uh, appointed to replace, uh, Adriana Kugler, the fed governor who randomly, uh, resigned without any clear explanation a couple of weeks ago. Um, so another, yet another interesting piece in the overall Trump fed mosaic that continues to evolve and I think is taking us in, in one particular direction. yeah and building on the steam it seems like trump is really trying to clear house in the board of governors uh apparently i'm just being made aware of this due to the list that you put

together john but president donald trump on wednesday called on the top policymaker at the federal reserve to resign after one of his allies alleged that she committed mortgage fraud in a letter oh i did see this in a letter dated august 15 federal housing finance agency director bill pulte urged the justice department investigate a pair of mortgages taken out in recent years by fed governor lisa cook yeah um so yeah this is just to hit uh shortly before this episode uh a truth social tweet uh trump demands that lisa cook quote must resign now exclamation point exclamation point exclamation point in classic uh emphatic trump fashion um and it's similar to you know the what we referenced up on the top of the top of this

episode um trump's attack on powell for the the renovation of the mariner echoes building which is apparently over budget which you know very likely is over budget but in both cases like you know maybe that's over budget maybe lisa cook i have no opinion on this obviously this just came out and not don't know the facts of the case but maybe had some sort of like impropriety related to a mortgage she took out a few years ago, but in both cases, like clearly looking for any excuse at all to on the margin point to wrongdoing or something that, um, you know, you could use to, to get Powell or Lisa Cook or anybody else to, to resign, I think just, you know, shows you it's on the same theme of Trump's. I think this is going to be curious

to hear your thoughts, but it seems to me there are all sorts of, you know, in politics, you'd call them dirty tricks, right? And all sides, both sides always pull dirty tricks of different kinds. There are all sorts of dirty tricks and levers you can turn to kind of get the leverage that you want. And it seems like we're driving to a world where for better or worse, as Marty referenced, Trump's going to get his way on this, you know, one way or another, and he's going to get the the fed board that he that he wants and needs to pull off his agenda yeah i don't have much to add to that i mean it seems like the tactics are becoming like more out in the open than they have been in the past and they're escalating more than what we've seen like

first it was uh jabs with um you know competing press releases about trump calling for um actions from pal and then you know another press release that was sort of a response from pal and now they're just putting it on video of them in the same uh in the same place and trying to intimidate him that way and uh you know they're either way is this is just showing how political the system is um i think it's inevitable that uh that when you see these tactics that it has some type of influence one way or another it either influences the people who are charged with making these types of decisions to do so more in line with what trump is wanting or they're digging in their heels for their own political reasons and it's having an impact uh for that

reason i think it just highlights that like it's it's kind of insane that it comes down to politics in the end anyway that that that there should be someone or some group that can have influence or some group that can uh have the power to resist influence um you know it's a double-edged sword yeah it actually reminds me of a great conversation on the tucker carlson podcast funnily enough that i listened to yesterday with aaron mcintyre and i think it um it really highlights one of the key issues that he was pointing out during that conversation which is when in when you have a country a nation state whatever it may be like it only works at a certain scale um the american constitutional republic as it was designed was supposed to be extremely

distributed limit the federal government and states were were tasked to lead the way make their own decisions but as time has gone on 250 years have passed since the declaration of independence we've developed this massive empire and when you have empire history has taught us that the the only way to garner control and keep control is to consolidate power um and as it pertains to the trump administration and what they're trying to achieve with this economic reordering particularly using the treasury they have to consolidate power within the treasury and i think this is the theme we've been talking about the last few episodes it seems very clear It's moved from somewhat implicit to overtly explicit.

They're trying to merge the Fed and the Treasury to make sure that they can achieve their economic goals. And I think this is a very important fact to realize, just the scale of the U.S. federal government. And if it's going to continue operating at this scale, it needs to consolidate power more and more, not only on the financial side, but in the bureaucratic sort of administration side as well. I think that's the big question of our time is like, do we want to keep going down the path of empire or work backwards towards a more distributed, um, system that, that is probably advantageous for the average American at the end of the day? yeah i mean look like um i fully echo all that um and i think we're prepared to talk about a few topics today that may be more of a white pill on on that front and um certainly we're all here for uh the reason that uh we think we have found in in bitcoin and other distributed technologies the the ability to maybe help move, uh, the U S back more in that direction. Um, but yeah, I mean,

I would, I would just say too, it's like, you know, there was a, there was a great chart that was going around, um, this week on Marty Deer point and kind of fed treasury relationship of U S interest expense this year broke year to date, uh, a trillion dollars for, uh, the first time at this point in the fiscal year. We've got a couple of months left in the fiscal year, but even with the, you know, the surplus that we had in June, thanks to some tariff bump, you know, we're still tracking to $2 trillion deficit for the year. Interest expense is all-time high, you know, year after year after year. We are, I think, on a interest as a percentage of total receipts last month was like 130 percent, something in that range. And we've

been tracking 100 percent plus for many months. So, you know, at the end of the day, if we're in a situation where the fiscal backdrop is getting more and more stretched, more and more challenging, even with, you know, we're not in a recession, we're not in a declared war, an explicit war. um, unemployment nominally is reasonably low. Um, the economy is from, you know, the basic metrics that you would look at on a macro scale, reasonably healthy. Like this isn't a, you know, a crisis moment. And yet here we are with this massive and parabolically growing interest bill at the end of the day, it's going to get paid. Like the sovereign is, is going to fund itself like one way or the other and i think the market has not fully digested yet that reality that for

the last 50 plus years we haven't or really since world war ii we haven't had we've been able to have the fed treasury accord that we've had we've been effectively in economic peacetime you know most of the time between the fed and the treasury with a few blips you know you could argue maybe not so much in the 70s um but in general like certainly since the reagan era we've had this happy equilibrium where the Fed could kind of do its own independent monetary policy thing. Treasury could do what it was going to do. Debt to GDP was much lower and manageable. U.S. treasuries were the de facto reserve asset of the world.

World couldn't get enough of them as it was global, as we were globalizing, as China, et cetera, were growing. And I don't know that most people have yet considered what the world looks like when And when that's no longer the case, when you don't have that headroom and that flexibility for Treasury and Fed to kind of happily coexist and do do whatever they both want. And at the end of the day, I just don't think you end up with in this highly political monetary system that we're talking about. I don't think you can sustain independent monetary policy in a world where the sovereign is coming up on a funding crunch. Um, one, one of those two things is going to ultimately get sacrificed. And I just, you know, no, no government history has decided to lay down and let itself, uh, default or radically retrench its obligations, um, and get its fiscal house in order until it was absolutely, you know, essentially required to buy, you know, a change of, of the form of government or the change of state. um and so i don't think this time's gonna be any different uh the political system that we have i

think suggests um anyone who's still banking on independent monetary policy needs to uh ask themselves what time it is yeah the only true independent monetary policy in the world right that was bitcoin's monetary policy um yeah absolutely math physics um it certainly uh seems yeah what a time to be alive so what do we think is going to happen we've got trump calling for rates thinks they should be one percent scott percent a bit more uh a bit more hawkish saying He thinks they should come down 150, 175 bps, which would be, what, in a 175 to 225 range? Yeah, I think it'd be, what are we, like, sub three, like two and a half off of current FFR. So, like, call it 3%.

So, you know, comparatively restrictive versus Trump. but yeah i mean i think uh that's you know there are a lot of people who you know on on wall street or in corporate america that just based on um how long we've kind of been in this uh this goldilocks zone i think most people and myself included everyone on this call included um a lot of our listeners probably like, don't really remember a time when anything that I'm describing like prevailed, like you could have had a full career. Like if you came into the workforce and like the early eighties, like, you know, like a lot of our parents did, let's say, um, you know, you could have had a full career and be, maybe you're on the point of retirement now. And all

you've seen really in your working life is, is the, the Goldilocks zone that we've been in. And I still think there's a lot of, you know, um, uh, resistance to the idea that that's not something that, uh, it can last forever or is going to last forever. Um, but as you said, fortunately we have, uh, we have immutable monetary policy that can't be, that can't be pushed around, um, and can't be shoved in a, you know, a basement and forced to wear a hard hat and play the stooge on television. yeah i mean and just building on this theme moving from like the fiscal side and the fed treasury side to industrial policy like it seems like there is some desire to consolidate influence on the industrial side of things too i mean that was the headline earlier this week the u.s is considering up to a 10 stake in chip giant intel which has been uh how would i how do i say this as politely as possible it has not been

faring as well as it was when andy grove was alive and at the helm yeah it's uh it's it's been a rough one it's been a rough what 20 years pull up an intc chart um yeah it's it's not been super pretty uh there was a glimmer of hope maybe 10 years ago but uh Especially in the last, you know, five years with the ramping of competitors, AMD, and then Intel's kind of failure to participate in the massive kind of AI surge in the last few years. Certainly not a great situation for the company to be in. Got rid of the CEO last year. But, you know, whatever your view on the Intel as a stock, Intel as a company, you know, I feel like this headline is kind of like – You know, it's been on CNBC.

If you've watched, you know, it's been on, you know, The Wall Street Journal. There's some headlines about it. But I feel like from my perspective, like mainstream news is still kind of underrating what a notable shift this is and shift this would be. Like we talked last week about or last episode a month ago about the Pentagon becoming the largest shareholder in MP materials, which is the one of the leaders in kind of rare earth production in the US, given the constraints on the China rare earth side. And I think you could maybe brush that one under the rug and say, well, that's still kind of a small company like that's this one like niche area of the economy. yeah it's like it's this strategically important asset and especially with the the choke point of kind of chinese materials like yeah maybe there is some you know one-off case you could make the defense department should have more like a heavier hand and a company like that and securing the

supply lines like okay you know one one example of something doesn't make a trend um but intel's like you know it's it's a fallen angel but it's like one of the great american companies of the last 100 years. One of the, you know, exemplars of ostensibly, right, like, you know, free market capitalism, the free market system of, you know, the original effectively like Silicon Valley company. And, you know, despite its recent status, like a real industrial giant of this nation's history in the last 100 years. And the government is talking like fairly casually about taking a 10% stake in the company and becoming its biggest shareholder um you know again like that's that seems uh extremely noteworthy and i think is to our conversation on the prior topic like

you know a sign that you need to check what time it is um it this feels increasingly like you know the wartime economy playbook um is is alive and well and um we can talk all day about you know, whether that's a good thing or a bad thing and how the government's questionable track record, not just the U S government, but all governments questionable track record on, um, you know, running companies or being kind of, uh, having a hand in the direction of industrial capacity and the means of production. Um, but I think it's the, these, these two topics tied together to me to say like, uh, maybe we're, we're not really in Kansas anymore. Yeah, I mean, those are all really good points.

The one thing I've been thinking about, just like the interesting dichotomy between this situation and a topic I know we're going to get to in a second on the strategic Bitcoin reserve and is the U.S. government going to continue to pursue that? How might they fund acquisitions of Bitcoin? But the comparison that I think is really interesting is, you know, they can make these announcements about, you know, potential intentions to take a stake like this in Intel. And it doesn't necessarily have the same type of consequences as perhaps it does in the case of Bitcoin. I think with Bitcoin, they need to be very careful about what they say they're going to do, how they go about executing a purchase of Bitcoin, because it directly influences the price that they get. Whereas like with Intel, you know, they could make an announcement like this and sure, like the stock could run. Like I tried to look at the stock price and there was a bump at one point. And I don't know if it's come down since then.

But theoretically, right, there is a central party here and the White House could do whatever deal it wants to. They could even force a deal that maybe doesn't look economical for Intel shareholders just out of national interest. Compare that to Bitcoin, where they start making certain announcements or some of their plans start becoming public. They can't bully their way into a Bitcoin position. There's no Bitcoin CEO, there's no Bitcoin board to go talk to and say, you know what, well, the US government really needs this position and this is the price we're willing to pay. It's not going to work that way. They have to pay the market price that some seller is going to be willing to transact with them. So I just think that's kind of an interesting dichotomy between those two.

I know what Marty's thinking. Well, if we're going to be nationalizing the Fed industrial policy, there's a there's a company out there with a a large chunk of bitcoin on their balance sheet and if they were going to continue down the trend of nationalizing industries and they wanted to acquire a strategic reserve in a advantageous way that doesn't really lead the rest of global markets to understand that the u.s government has to accumulate bitcoin actively they could print a bunch of money and just nationalize micro strategy pay out shareholders pay out all their pref stock and say this 700 000 bitcoin is the u.s government's now wild theory but yeah if this

trend continues i mean they're showing the uh they are showing the willingness to be bold yeah i mean i think so to take the one side of the point i i think it's a very good point as it relates to like um one of the beautiful things about bitcoin is when you think about nationalization attempts or let's just you know if we're running back the fdr playbook in general with industrial policy in the wartime playbook you know a 6102 type order um it's fundamentally a lot easier to get that off with the you know analog gold the original gold and even in that case in the case of FDR's 6102 attempt, you know, outlawing and outlawing private gold ownership, confiscating private gold owners holdings. Even that didn't really work like that. Well, right. They didn't

get all the gold. They didn't really eliminate it from circulation. Even though, despite the fact that relative to Bitcoin, it's much harder to custody meaningful amounts of gold by yourself. You certainly can't distribute it geographically in a multi-sig quorum or using Miniscript or something to have different conditionality on its spending, right? So it's analog, it's physical, it's got to be somewhere. It's heavy, bulky, hard to transport. That tends towards centralization and thus much easier 6-102 type attacks. So I think it's a fair point. Bitcoin is in a much different position than gold or any other asset as it relates to individual holders being attacked in that way.

And certainly, I think with the administration that we have right now, I don't think that's super likely and would undoubtedly alienate a meaningful voting bloc that arguably kind of got this administration into the position they're in. So I think that those are all great points. But yeah, Marty, the flip side is the much, much easier thing to do as it relates to not pissing anyone off nearly as much, many of your voters, not creating a true like, you know, constitutional nightmare and not creating a massive like enforcement nightmare of having to go knock down doors of every person in the world to see if they have, you know, 24 words written down on a piece of paper. um, the much easier path, if you wanted to do something like that is, you know, walk down the road, not, not, not too far outside of DC and, uh, you know, knock on the door and see if, uh, you know, the, the company is interested in selling, um, at a, at a nice premium to the underlying, by the way, you know, the shareholders, if they got, if they got paid out, right. If you woke up on your Vanguard and fidelity accounts, you know, you had a cash settled, um, you know,

swap for your, your MSTR shares, you know, you'd be, you'd be up right now today relative to the underlying Bitcoin that the government would be getting. Right. So you could even make an argument that, uh, the, the eminent domain would, um, you know, end up, uh, in a positive result for those who are on the receiving end of it, which is usually not the case. Um, but these are just wild conspiracy theories that, you know, I, I don't think have any, uh, merit to, to consider, but it's a it's it's certainly an interesting scenario if you're looking at a government that's getting a lot more um uh handsy with uh company property yeah no it's just a theory it's just a theory not even it's just a theory it's not even a conspiracy theory i'm not saying

that there's any conspiring going on i'm just saying if you wanted to do it the painless way you just print the money pay out the shareholders they'd be happy the the meme this is mine now and uh and boom us i don't know that they would be happy but and i don't know that it would be a good outcome john to your point it depends yeah depends in that in that theoretical scenario in the theoretical scenario yeah i uh in the theoretical scenario i'm just making the argument that someone on the other side of writing that order to make that happen might make the argument that if you're getting bought out at a premium underlying you should be quote-unquote happy well yeah but that's i mean you're already assuming that

in this theoretical scenario they would be getting bought out at a premium to underlying yeah maybe they would not maybe it would be at a discount uh maybe it would be at a discount to mnav yes that's certainly possible that's another discussion we can we can maybe go there too or we can stop the uh we can stop the inflammatory mstr discussion here yeah this isn't a tftc we can get back on track but intel to tie the knot there it just doesn't make like it seems like it would be a bad investment by the government like why go make buy a 10 stake in a beleaguered sort of dying institution like i mean i think this is an important conversation for us to have too like just the life cycle of businesses generally generational businesses too

at that like intel crushed it 70s 80s 90s early 2000s but have not been able to compete with amd tsmc samsung it's pretty obvious um that they they got complacent lazy and i don't think a 10 percent equity injection um from the government and some sort of quasi arm's length control over the direction that intel goes in in the future by the federal government is going to make it a better company yeah i mean it's an interesting question right like and i like your point about the life cycle of companies we should talk about that more but and i think with the intel deal you know everything's very vague and tbd like what how it actually look i think uh commerce secretary howard lutnick has suggested that if the way it would work would be the chips act funding that

they've gotten would be basically like that would convert to equity versus like some incremental cash infusion though who knows how it would ultimately shape up um but it's a fair point that like if if the government's going to get more heavy-handed they don't really need like a you know they don't need to be like the top shareholder on the cap table or on the owner on the shareholder register right like they can kind of you know the there's a lot of intel industrial capacity here the executives live here employees live here a lot of assets live here um i don't know that they need equity in the business to you know dramatically control kind of its direction if they wanted to get a lot more heavy-handed so that's that's fair um but yeah i mean it's it's

It's definitely an interesting point on the long-term life cycle of companies and how we as investors think about the innovator's dilemma and the inherent headwinds that exist for incumbents after some amount of time, whether it's because of what Buffett called the institutional imperative or many other factors. But it does, uh, entails you a case study and, um, perhaps, you know, the businesses that ultimately kind of reach their, their natural end point. Um, and you know, that history is littered with, with examples of those and examples of companies then kind of coming in smaller, you know, more nimble, intrepid companies kind of coming in to, um, backfill the market opportunity that was left behind. certainly we see a lot of those in our portfolio but um yeah a lot of interesting themes there broadly um across these different situations yeah i'm just looking up the data now intel has total cash including short-term investments on their balance sheet 21.21 billion interesting um you go to apple they're sitting on how much cash including marketable securities 55.37 billion so you have these large incumbents

i'm picking on apple too because i think with the ai trend um really taking hold in apple really not participating in any meaningful degree up to this point series a terrible product compared to chat gpt and claude and others and you would think that apple being the innovative consumer focus company that has been for for decades would would lead they seem to be on the sidelines deciding to buy back stock instead of leaning into research and development that could catapult them to a category leader in the world of ai and i think that's another company that many would suspect considering that um half the world has some of their devices i'm using two of them right now um like are they in an innovator's limit too like are we are we watching sort of the

the back end of apple's life cycle yeah i don't know it's it's tough i mean i i'm still not ready to fully write off apple and google um the two kind of laggards in in the mag 7 that you would think would have had, um, some opening to, to benefit, um, much more from, um, the, you know, dramatic wave of new AI products over the last 24 years and kind of be, be leading that charge. Um, so I'm not, I'm not ready to call it on either of those, either of those yet. Certainly, I don't think either of them are in anything like Intel's position. And I'm not even ready to say that they're, you know, headed there in the next five, 10 years. Um, I could see that I can see the bear case, uh, to, to some extent. Um, but definitely, uh, I'm not ready to put them in the

same camp yet, but certainly there are a lot of companies, uh, you know, every, a lot of older companies every, every year, every decade that are going to fall ultimately into that bucket. Um, but that's one of the reasons that we're, you know, so bullish on, you know, what we're focusing on here and why we do what we do to, um, catch the next generation, uh, of companies that we think can come and backfill some of the some of those gaps yeah yeah it's very very uh again interesting times may all your times be interesting just as interesting as the times that we find ourselves in now um but moving on from the nationalization of different industries and the wartime economy playbook that seems to be

taking hold here in the united states sbr we got some news between the last time recorded and our recording today uh scott percent i believe he was on cnbc last week um i think gave the first sort of official recognition of an amount of bitcoin that the u.s government has uh i believe he said it was between 125 and 150 billion which would put the amount of bitcoin between uh 150 to 160 000 bitcoin that they're holding i think that's right i don't have the headline in front of me i'm going to take your word for it in that case um it was a really broad interview with a lot of topics covered i'd have to go back and find the exact headline but it's it's something to that effect hold up this decrypt article uh current bitcoin hold oh between 15

billion to 20 billion which is uh between 130 and 1 175 i mixed it up there um yeah somewhere between 130 and 175 000 bitcoin that's holding which is less than what people were expecting if we're going with those rough numbers that percent said but during that same interview He mostly iterated that they don't plan on buying more Bitcoin and then a day later sort of walked it back. So it seems like the typical Trump admin strategy of sort of strategy via confusion and sort of testing the waters by saying something, in this case, not bombastic, but just saying one thing and then walking it back, seeing how the market reacts. I think this is what we were seeing here. yeah there are a lot of there are a lot of trial balloons in this administration there are a lot of like just kidding but maybe not really kind of uh moments um and yeah i don't

know it's anyone's guess whether so in the interview he said you know it was kind of like a series of comments about um the bitcoin strategic reserve as well as like the um whatever they're calling it the crypto stockpile and he said you know we have the bitcoin that we have now. We won't be buying that. Um, unclear if he just meant like, well, that, that doesn't need to be bought cause it already exists, um, or something else. But in any case, it definitely came off as, you know, the, there's no incremental addition coming to the, to the SBR. And then later that day tweeted that tweet that Logan put up. Um, and so you wonder if he got some frantic phone calls from, uh, big donors or, you know, relevant, um, policy people that want to keep the Bitcoiners

happy, but in any case, it seems like maybe, uh, budget neutral accumulation is, is still, is still back on the table. Um, so what, you know, we'll see, we also got, you know, the announcement that, um, Bo Hines, the special advisor for digital assets or something to that effect, his, his title in the white house is leaving and going to work at tether. Um, but on his way out said that the, uh, the SBR plans will quote, continue and accelerate in his absence. So, um, ultimately talk is cheap and Bitcoin is not. So we'll, we'll, we'll see what actually happens with that. Um, unclear if there's, you know, I think Grant, you referred to this earlier, but if I'm the government, I don't really know that I have any incentive at all to make it clear,

like what I'm doing until I'm fully sized in my position. Um, I don't really know how it helps me to tell anyone like, yes, over the next year I will be accumulating a hundred thousand Bitcoin. um because you're almost definitely gonna end up with materially worse prices and doing that so my sense is if if and when it happens i i do think like there's all the incentive in the world for the u.s to want to do it especially as it you know moves to this wartime economy um if there's any strategic value at all in bitcoin like they're going to want to be involved but there's also no incentive to to telegraph to bitcoin twitter you know what their what their plans are really yeah i don't read too much into it i mean i think he often is just sort of flying by the seat of his

pants and he's he's it doesn't look like he's rehearsed certain answers on tv so i think he he said some things uh he then later was told that he screwed it up and he quickly fixes that and i don't even take much in the like the comments around the amount of bitcoin because It sort of depends on, are they counting the Bitcoin that ultimately is due back to Tether? Because if Tether is going to get that Bitcoin back, which is over 100,000 Bitcoin, I think those two things can't both be true. Because what he said implies that they have a pretty significant amount of Bitcoin, but it wouldn't be possible based on what we know about. or what we've been told about the strategic Bitcoin reserve and what they have under their possession from prior seizures.

So I don't take it as any type of audit. I mean, once they reveal addresses and post a mempool.space website address where we can see it, I mean, I don't really believe what he said about the Bitcoin position. no no yeah it seems like it's all pandering to a base that that helped them get elected and they'll string along and as a bitcoin honestly i've said this i think we all believe this like a bitcoin strategic reserve at the federal level is a nice to have it's not a must-have for me as an individual for us as investors i think if you're looking at the fiscal crisis and the out

to control interest expense on the debt and you're trying to think strategically and creatively and boldly about solving that problem in the long term strategic bitcoin reserve i honestly and earnestly believe that it is a creative bold and um worthwhile endeavor to try to solve that if you actually want to solve that i think that's the bigger question is do they actually want to solve the debt problem or they just want to keep printing and just send this thing on turbo until the currency is completely debased maybe um but at the end of the day it really doesn't affect me as an individual bitcoin or us as investors looking at companies um building out infrastructure for individual bitcoiners like ourselves um that is a government decision and um i think

as long as the free market's able to operate businesses are able to set up and build what they need to build to facilitate bitcoin adoption at the individual level that's all that matters and it's certainly been more positive than it was in the biden administration but um yeah we shall see but there have been some interesting conversations around gold revaluation there was two events that happened almost simultaneously uh one was trump tariffing uh an unexpected tariff on swiss gold bars um there again another one of these what you call trial balloon instances where we sort of threw out we're gonna we're gonna tariff uh the one out swiss gold bars and then stepped it back and it's still unclear what's gonna happen there

exactly but around the same time the fed quietly released a memo that uh about the historical gold revaluations throughout the last century um which is signaling like hey maybe we'll do this again at some point in the near future yeah and i mean like you know it's it's one of those like just um you know we mentioned conspiracy theories and we mentioned kind of it's very easy to to dive down certain rabbit holes and artificially connect, uh, you know, different disparate events that are happening in the world and think that it, you know, you have the confirmation bias that it suits the thesis that you have about how things are going to play out. But, you know, it was certainly funny to, to see both of these things happen in quick succession like that, to be fair,

like this memo doesn't say like the fed is considering doing this or, or, you know, the fed and treasury, whatever the U S government, you know, there's no implication that this is coming um but it is the first ever you know official memo that they've put out kind of on this topic um there's a footnote at the bottom which i didn't realize at first but if you scroll on there's a footnote at the bottom that says like something like this is one way that uh has been floated by certain parties to um help the u.s uh accumulate bitcoin in a budget in the u.s the ideas come up in the context of helping to establish a strategic bitcoin reserve or sovereign wealth fund and the use of revaluation proceeds was proposed in a recent legislation by senator

lummis in belgium the press reported the governing coalition was considering financing additional spending partly through monetization of some of the national bank of belgium's gold reserves with the national bank of belgium commenting on the idea in a recent press release yeah exactly so it's the kind of thing where like does that mean it's happening any of this is like you know being planned um explicitly no does it mean that this is happening like tomorrow or next month no but it's it's interesting because like this is exactly what you would expect to see this kind of like slow subtle like dribs and drabs of like pieces of information or memos or think pieces right to kind of like directionally normalize an idea and like vaguely shift the overton window and

add some veneer of like academic prestige around it. Um, you know, that you would do that kind of a year in advance, right. You'd slowly like let this stuff leak out, um, to kind of test the waters and get people maybe a little more comfortable, um, circulated in certain circles. Um, so not that any of this means that it's definitely coming. Um, but I think if it were to be coming in like a year or something, two years, whatever, this is exactly the kind of stuff that you would expect to kind of see under the hood being uh slowly slowly leaked out to normalize it um you know and it's kind of predictive programming in some sense yeah or it's a classic case of nothing ever happens and it could be that too yeah just a info drip to get

people running down these speculative uh theory paths uh and then nothing will ever happen that's the base case until proven otherwise something is happening though there are things happening not at the government level nothing ever happens in the government meet the new boss same as the old boss gonna print, set it on turbo

but we in the private market as actors can do things Harvard an institution been under a lot of fire in recent years caught up in the woke debacle you know the people coming out their president uh there's some questions about whether or not

they're uh they're uh what do you what do you call it when you're there uh they're tax-exempt status tax-exempt status but when kids enroll their enrollment sort of procedures and uh the the preferences they may show the uh the illegal preferences they may show for certain demographics over others but nonetheless they have a large endowment and it disclosed its first bitcoin etf position a pretty material position of over 100 million dollars um which you're describing i'm looking at the show notes john you're describing it as a fairly seismic signaling shift for institutional asset managers and endowments seismic it seems seismic seismic to me you know um certainly there are other endowments that

have either publicly or you know non-publicly taken bitcoin positions um and so you know may not it's it's it's not the first uh endowment we've seen brown and um a few others kind of publicly uh file their their ibet positions so not the first but you know harvard is say what you want about Harvard and different things that have happened in higher education in the last 20 years. Um, you know, probably the most respected kind of educational brand in the world. So right now it's, you know, Harvard, MIT, Yale, you know, Stanford maybe. Um, and even more than that, uh, Harvard and Yale have been, um, you know, pioneers in the endowment investing space. And there are a few other big endowments that, um, have been kind of significant in moving like

the, the quote unquote endowment model forward as well. Um, but you know, this is undoubtedly, you know, one of the top, like few, uh, that have that pioneered, like all of the strategies that go into, you know, what we now think of as the endowment model, which I think frankly has gotten, you know, is now very diverse and can mean a lot of different things. But all that is to say, um, you know, this is something like, uh, I think within the endowment world, and I don't want to speak for them too much given that i'm not uh fully in that world but um having uh an actor like that take a position like this and granted it's you know it's a tiny piece of the total endowment but it's also a massive slug and makes them one of the bigger holders of ivet to have

them move in that direction is i think you know comparable to blackrock giving the imprimatur to bitcoin that you know we're we're the the leading um you know etf uh administrator in the world with leading etf provider and yes we're going to say that a spot bitcoin etf is worth fighting for and pushing through and getting through the regulators and and then marketing aggressively and saying this is something that you should have in your portfolios adding it to our model portfolios all that the kind of brand cachet that blackrock brings kind of on the general like asset management etf side i think is you know analogous to what harvard brings to kind of the endowment investing world Right. So for them to take this position, I think, is quite significant, particularly given there are still, I think, are a lot of in academia, even probably more so than Wall Street, a lot of legacy biases against Bitcoin for various reasons, many of which relate to energy expenditure.

and famously Harvard economist Ken Rogoff said that Bitcoin was more likely to go to 100 than 100,000 and has now had to kind of walk that back and talk about all the reasons why that didn't play out. But I think he's emblematic of the type of viewpoint that you still see a lot in higher education. And so against all that tide for Harvard to put its reputation to some degree in endowment investing behind bitcoin yeah i i'd i'd call that fairly seismic i gotta think that's a a pretty significant perimeter to have uh for bitcoin yeah ken rogoff very butthurt i don't know if this tweet was a response to the endowment of the school that he's the professor at uh taking material position in bitcoin but i uh i had the pleasure of watching safe adina moose

debate Ken Rogoff at the Soho Forum, I believe in 2018 or 2019, and it was on the legitimacy of negative interest rate policy, which Ken Rogoff is a very big advocate of. He actually wrote, I think, the official paper on negative interest rate policy and how to implement it. And it's just an incredibly stark juxtaposition of academic economists, how they think money works and the economy works and they're cock and any ideas um basically we should have negative interest rate policy bailing governments and institutions in um versus just letting the free market create the hurdle rate and solve things by adopting a bitcoin standard um the other interesting thing i i thought about this announcement was i mean

And as John said, it's a tiny piece of the overall endowment, right? And we don't really know the rationale behind why they did it. We can make some assumptions on why they might be dipping their toes in, particularly given that they also did so with the gold ETF. But I thought it was interesting that they actually took a bigger position in the Bitcoin ETF or in one of the Bitcoin ETFs than the gold ETF. You would think in a legacy, traditional-minded capital allocators, particularly based on just market cap, like market cap of gold versus market cap of Bitcoin, you might see an allocation suggested that's less than 50% to Bitcoin relative to gold. But this is a greater allocation to Bitcoin than gold, which I just think is an interesting directional perspective, given where Bitcoin is relative to gold overall today.

Yeah, and it actually ties into the newsletter I wrote on Monday. This report from Bank of America came out last week. Zero Hedge wrote an article on it on Sunday, sat down and read it. But I think, to your point, Grant, Bank of America sent out a survey to fund managers, and 75% of the respondents responded that they have a zero allocation to cryptocurrency. We'll just use that as a proxy for Bitcoin. and here's the stats, the survey revealed that just 9% of fund managers have exposure to crypto with a weighted average allocation of 0.3% of AUM

48% of those same respondents have exposure to gold and there is a 2.2% weighted average allocation of gold across the managers that responded to that Bank of America survey and to your point too, I wrote this in the newsletter, I think Like, if you're an institution weighing the opportunity cost of allocating one hard asset or another, particularly between Bitcoin and gold, depending on your risk appetite, I think an overweighting towards Bitcoin makes sense. If you're like risk on, it just makes sense. Gold's been monetized over the course of millennia. Bitcoin is still in the very early stages of its monetization phase.

And if you want to ride some relatively high upside, you've got to ride the Bitcoin horse, not gold. Yeah, for sure. I think it's a great point, Grant, just the relative weightings there. And the caveat that I'll throw in here is you never really know what different investment managers are thinking or doing and what plans they have for their allocations. So, you know, would it surprise me? Like we've seen in the past, like I think, uh, Wisconsin's biggest state pension fund, you know, took a big I bet position. And then a couple of quarters later, I think they, they sold out of all of it. I can't remember if they, you know, likely sold out at a loss or a gain, but in any case, um, you would have, I think it would have been fair to say

like, Oh, a pension funds taking, you know, making this bet, making this allocation. That's very likely, you know, chunky capital that they'll, uh, add to over time. And, you know, they have a kind of a long-term view on it, but you know, they were out within, you know, a couple of quarters. So, um, not trying to, not trying to suggest that, uh, Harvard is about to become, you know, the, the biggest Bitcoin bull in the world on a sustained basis. You never really know what anyone's thinking, but yeah, collectively, I think all those, those points are relevant and it's, it's even more notable against the backdrop that like, if you, if you Google this, like if you Google like Harvard endowment, Bitcoin, um, you're not going to find like a lot

of mainstream coverage of this like um you know there's an article in pensions and investments there's like you know the article that we had linked in the harvard crimson and maybe one or two others but um it it seems much more meaningful even if it's not even if there's low duration to it even if it's only a few quarters that they hold it much more meaningful than i think the coverage that it's gotten in mainstream press um so definitely definitely one worth watching yeah and i know we've got a call at the top of the hour so we're going to jump around the list to what i think is probably the most interesting thing especially as it pertains to what we're doing here um to the crypto ipos that we've seen there's been some s1s

that have been released um in the last couple of weeks uh bullish which is a large institutional exchange announced that they were going public, and I believe they did IPO last week on the NYSE, and then Gemini filed an S-1. Looks like they're prepping the sales to go public, which is much expected. They've been around for 12 years now at this point, so it makes sense that they would be getting ready to go public, but Grant, you are our resident S-1 sleuth. What did you find that

that stuck out to you um a couple things well uh you know the bullish well first of all the blsh as a ticker i think is is great for memes because you know they're crypto uh you know shitcoin business and their ticker is bullshit um but uh you know they i wasn't very familiar with their business i'd seen them at conferences um big sponsor of the conferences like large square footage on the floor so clearly we're throwing a lot of money around trying to build their brand but it turns out they do quite a bit of institutional volume i think it was rivaling close to a trillion dollars worth of institutional trading and they were claiming that they do around 30 percent of spot bitcoin spot eth like they trade all the like the the shitcoin

pairs. Um, but they do have quite a sizable Bitcoin position, I think 24,000 Bitcoin on their treasury. Um, and some of that I think probably was, was, um, associated with some of their founders and who seeded the capital initially. Um, but they have built a business that generates about 50 million of adjusted EBITDA. So it's, you know, it's, it throws off real profits in cash flow. But interestingly, the stock just went wild right after it listed. I mean, I think this was last week. It traded up a couple hundred percent, I think. Now it's trading around a $9 or $10 billion market cap, which even if you give them some premium to the Bitcoin treasury, it's about $3 billion worth of Bitcoin on their balance sheet. So even if you

assume there's a premium to that, it's still implying quite a significant value to this operating business. And I just think, given what we've seen over the last couple of months with the Circle IPO, that it's not just a reflection that the IPO window is open and that the public markets are perhaps more open for business than they've been historically, but also that there's an interest in just let's call it the broader crypto story um given how circle is traded and given how you know where bullish or bullshit is positioned itself um so i think that's an interesting dynamic uh at play um and then on the gemini side what i found most interesting about that i mean we know they've had their issues in the past with um the hypothecation

of Bitcoin and going underwater on lots of these loans to the DGN market makers. And I think they still have quite a bit of outstanding debt that they're trying to deal with in this IPO. I think the IPO they're targeting around $400 million raise, and some of that may be to pay off debt. I don't know when the listing is expected. I would assume sometime next month. So there hasn't been any chatter about where this business will price and what the valuation will be.

I guess it looks like they have a lot less Bitcoin on their balance sheet than bullshit. But what I found was most interesting is that they generate, I think it was around $130 million or $140 million of annualized revenue, but are operating at quite a significant loss. I think just based on headcount costs, they were spending $130 million just on compensating employees and were operating at something like $100 or $200 million loss. So I found that very fascinating since it goes really against the philosophy that we have at 1031 is backing teams that can build sustainable business models on top of Bitcoin, can actually generate profits, can operate lean and don't have to have bloated cost structures, whether it's through headcount or otherwise, and build Bitcoin on their balance sheet. in a sustainable way. And so, um, despite the fact that, uh, Jim and I is operating what seems

like very significant loss, I think it's going to be really interesting to see how, like, what is the interest in this business? Because to me, the, the bullish trading of, uh, or the, the positive trading dynamics of circle, how we've seen a bullish trade certainly to me would imply that There's quite a lot of value that investors will put on businesses that can actually operate profitably or are operating in the Bitcoin space and benefit from some of the same tailwinds that the market seems to associate with these businesses. Yeah, it's really astonishing that a lot of the incomments, I mean, that was when you brought the SG&A cost or just like the overall administrative costs in terms of salaries up in our group chat. It was astonishing to me because we see it in the mining industry, too. A lot of the mining companies have insane SG&A costs, and you'd think that people would recognize that this is something that is going to be a problem if you're looking to grow a profitable business. There's way too many publicly traded companies, particularly miners out there, with bloated SG&A lines on their financial statements.

And it's crazy to see that Gemini is spending this much on salaries and not yet profitable, having been 12 years old. And we were saying this, they're one of, I believe, three operators with a BitLicense in New York, which is one of the largest markets in the world, not only the U.S. And so they have somewhat of a competitive advantage and somewhat of a regulatory boat in one of the biggest markets. And they're about to go public and aren't profitable yet. And you juxtapose that to a company like Strike in our portfolio where Jack is very public, even though they're still private. He's been sharing some of their financials and it's a point to him. They've built the business that they have with around 75 employees. And their core focus as a business is how can we make as much money as quickly as possible, as efficiently as possible?

it seems like that management mentality is not not being yet widely adopted um not only across the space but broadly speaking i think when you compound the hurdle rate that is bitcoin with the productivity gains that are entering the market via ai if you are not sort of running a business profitably um and cutting costs as much as possible and being as efficient as possible on the expense side i think you're going to get start to get dinged materially in public markets yeah i mean i'd love to i'd love to say that i agree that the public markets will be irrational rational enough to eventually that will be enforced you know the market is a weighing machine in the long term voting machine in the short term right so but eventually that

will be enforced but yeah i think it's you know it speaks to in my view like grant you said it all really you guys both said it all really well um i think strike is a great example of kind of a counterpoint that you know we like to draw and that we like to lean into um at 1031 and you know jack's been um more public recently about some of the results um and so people can go kind of look that up but yeah i think it's it's very notable that when bitcoin is your north star and your goal is to accumulate as much bitcoin for yourself and your shareholders as possible and there's a fixed supply and there's demand is only going in one direction and every day that you're not accumulating bitcoin every day it gets harder to accumulate more bitcoin on the margin right

and so if you have that as your north star as as an entrepreneur as an individual an entrepreneur and then ultimately as a business it really just radically shifts your mentality about the way that you want to operate and how you want to allocate capital how you want to expend resources and you know, your interest in and emphasis on squeezing, you know, the max possible productivity out of any given employee, any given, you know, deployment of capital. And I think if you, you know, look at the way, for example, Strike has operated the way that other companies in our portfolio have operated, you get a very different picture, right? And you get a good sense of what it looks like when Bitcoin is, you know, truly your North Star. I think it's clear that, you know, whatever you

might say about Gemini, um, whatever you might say about bullish, you know, no, no strong opinion on, on either of them. Um, but certainly they are broader crypto companies, right? They they've catered to, um, the, the broader crypto ecosystem. They're not exclusively all in on Bitcoin focused on Bitcoin. And it's, it's interesting that you kind of, you see the divergence, right? In not just the marketing, not just the product launches, but even the operating results. Um, you know, it, it bleeds through every part of the organization and so yeah we'll continue to focus on the businesses that that make bitcoin their north star and uh you know not just for ideological reasons but because we want we want to accumulate more bitcoin and uh the leading businesses that that

feel the same way are going to be the best way to do that yeah i mean and this is a good segue to the final topic which is on the lesson this is probably one of the i mean during the sp500 now Block, I think, is one of the few in public markets outside of treasury companies, even though Block does have a Bitcoin treasury. I think they're an incredible example of a company that is focused on Bitcoin and Bitcoin alone. And that is expressed across their different business lines. Obviously, Square, they announced in Vegas earlier this year that they're going to be rolling out the ability for their merchants to accept Bitcoin payments and to funnel some of their revenues into Bitcoin directly on the back end using the Square stack, the banking stack there.

Cash app, obviously, a consumer app focused on getting Bitcoin into the hands of everyday retail consumers. Spiral, an open-source initiative to support open-source projects in the space, most notably LDK. um and now uh big key it was the hardware wallet to help foster self-custody and now this has been talked about and sort of teased for the better part of a couple years now and they had their big sort of unveiling last week which i was there for proto which is their mining division um and so they announced the rig which i think is a pretty massive moment for the bitcoin

mining industry you had a bunch of x apple square designers hardware designers specifically really dig into the problems that exist on the hardware side in the mining space and try to come up with a product to solve a lot of the pain points that miners have run into not just due to the fact that there's really been a duopoly trending more towards monopoly in the bitcoin mining hardware space with bitmain and micro bt being the the big gorillas in the room in that industry and notoriously both companies have had a mindset of hey we're going to build these things you take what you get and we don't really care about your feedback um this has been expressed with uh the inability to really tap into the firmware and sort of customize your

your setup they've made it extremely hard to do that um they don't really take feedback in terms of what the hardware should look like and how it should um be manifested in a physical sort of end product and sort of say hey take our shoebox and plug it in and uh you'll have to figure stuff out on the back end so looks like the proto team has noticed that there's an opportunity to step into the space and improve in these different areas and they came up with the rig which is extremely impressive so it's a modular sort of bitcoin mining device that is designed incredibly well you can take out the hash boards very easily you can replace fans and pps use very easily and so the launch of of the rig is really a statement by

proto like hey we're taking feedback from the mining industry you want to provide you with a product that will be durable modular and sort of enable you to easily run your your mining infrastructure in a way that you want to and need to depending on your particular setup so it's incredibly good to see so they have the rig which is a chassis again it's modular you can sort of put up to nine hash boards and a three chassis cube that they're selling take the fans off replace them very easily on top of that they have a software stack called fleet which allows you to easily manage um your your mining machines as they're running uh in your facilities uh and from a competitive perspective on performance it's not top of the line uh bit mains hydro units

around like nine joules per terahash they're air cooled units around 12 and a half out of the gate um the rig will be coming with up to 14.1 joules per terahash in efficiency which is good enough for certain parts of the market so i think it was a massive day for the bitcoin mining industry i've talked very publicly on this show and many others that i think one of the most centralized aspects of the bitcoin network is the mining layer both at the chip level and the pool level and so i think with square stepping in putting their design expertise to hardware expertise to work and launching the rig it was a great day for competition in the mining hardware space which is desperately needed yeah i mean it seemed it seemed massive um you know just from afar um

and you know massive as well to have just to bust up potentially like a you know decade plus you know duopoly um or there was even a monopoly going farther back um especially with you know with increasing geopolitical tensions with the uh the country that is the source of the existing supply line for miners to then have you know an option that's uh you know american-based um with american service um seems seems notable and meaningful um just from a competition perspective and from a, you know, geopolitical, uh, stability perspective. Um, I'm curious how you, how you and, um, people you talk to there would weigh the, you know, you mentioned the relative kind of efficiency trade-off against, so you have some smaller efficiency trade-off,

maybe it's like good enough for certain parts of the market. How, how much of a, um, uh, needle mover relative to that is the modularity and you know the ability to have say like let's say higher touch like you know american service that where like if you're operating in america at least at texas somewhere like you can get on the phone with you know potentially like let's see how it actually works out in practice but someone who is in your in your time zone like generally is you know operates with like american business standards relative to someone on the other side the world who may or may not um you know those kind of factors and the ability to potentially avoid um or at least minimize downtime um how do you how do you think miners will weigh those

those factors i think it'll be massive like and again let's just run with the assumption that it works as advertised he really literally won't know until we know and we won't know uh until these things have been plugged in and running for a certain period of time but if the chassis are really durable for up to 10 years and you really only have to replace fans and hash boards and the fact that you can replace individual hash boards and you don't have to unplug a whole machine and ship it either somewhere in the united states or there's still people shipping machines back to malaysia or china to get repaired with a two-month sort of round trip that's that's a lot of time that you're not plugged into mining so the time cost of capital has to be factored in

there um i think it really is going to be dependent the overall sort of cost benefit analysis is highly contingent on what the pricing turns out to be and i've heard anywhere from 16 18 dollars terahash to in the low 20s if they're able to really anchor to that lower dollar per terahash number i think they can be really competitive particularly in hotter climates because i think that's one thing that's pretty clear um for bitmain air-cooled units and hotter climates they're not optimal and their hash boards crap out and uh people with air-cooled operations in hotter climates tend to use micro bts because they're um juggernauts in that regard they're just beasts that's what i run in northern tennessee um so they can compete in hot climates

so they can compete on pricing i think the efficiency is good enough and if you can if they do truly the chassis do truly last for 10 years i think that they were marketing like it's going to save you 20 on having to refresh your fleet every five to six years which is material amount and so if that comes true i think it is a a legitimate contender to compete with micro bt and bitmain and i think it should be noted this this is only the first tape out another a6 there's no reason why um with the design team that they have that i would not be shocked if they come out with more efficient asics next year the year after they're really able to compete on efficiency at scale and so i think it's just i think there is going to be a 12 to 18 month period here where

they get their first orders and get them shipped out get them plugged in and people are validating and if they can get past that hump and reinvest in more efficient ASICs it could really set the stage for them to eat into a significant market share of Bitmain and MicroBT To me what I love about this is this meme that I feel like has really gotten some traction this year

which is you can just do things um like i i uh i posted this on noster but like you can just build a new bitcoin miner and the fact that there's a group out there you know spearheaded by dorsey but the stuff that block is doing overall for the space like i don't think you can understate it um you know they're they're truly um you know breathing new things into existence for the benefit of bitcoin things that um you know a lot of people could just sit and complain about and talk about how um you know there's problems with bitcoin there's things that we need to fix and that group out there is is is doing it all the things that you mentioned marty not just mining but

the big key the the open source work they do i mean the list goes on and on um cash app and integrating bitcoin recently uh paint on the payment side um so i just find i find it very inspiring to see groups like that that that don't just look at what others are doing and try to replicate something else that someone already is going after but they are trying to push the ecosystem forward um that to me is you know it's one of the greatest things to see about this um you know this release yeah especially with a group an organization with like a you know it's very well capitalized with real budget you know strategic vision that's a real organization um member of the s&p 500 or constituent of the s&p 500 um you know a large publicly traded u.s

company like you know we're invested in some fantastic you know smaller up-and-coming companies some of which are actually getting pretty big but you know they're they're private they're still in you know first second third inning of really becoming you know breakout successes um and i think we've invested a lot of companies that are similarly you know doing a lot to push bitcoin forward um both on the open source side and the product side and different verticals of you know the market and the economy um but yeah to see all of that happening at the scale that you know block can kind of bring to bear as a very large publicly traded company with you know real revenues real cash flow a huge cash balance um and just the resources of a public the resources and the

credibility of a public company i mean i think that's that's massive as well so yeah very uh very bullish to see um for on a variety of dimensions yeah very ambitious and it seems like they're executing um at a high level it was really i got to spend a lot of time with the proto team um and it's it's cool too because they have a lot of um sort of cross-pollinating on the different teams so a lot of the people that worked on the bit key also worked on proto in the rig and they are top-notch hardware engineers and designers and it's really cool to see that level of design expertise coming to bitcoin at the hardware level specifically it's desperately needed in mining every miner that i talked to there again we'll see what happens

with where the cost comes out for these machines and how efficient they are and how they actually run. But every miner was, I think at the very least, extremely relieved that it seems like there's a hardware manufacturer that is actually listening to them and taking design feedback and implementing it into what they're doing. And it's like an incredible edge that they could have

if they can execute because Bitmain and MicroPT simply don't listen. And I don't know if it's a West East communication issue or they just simply don't care. They're the only game in town. It's just like, all right, I mean, you need our machines. We don't care. We're going to make them the way we want. We make them and you're just going to have to buy them, which seems to be the case.

But I like that. I like that. We've you know, we started off with the government's going to nationalize every industry. Trump's going to appoint himself as Fed chair. Your dollar is going to hyperinflate in two years. um and they're going to take over intel they're going to take over all the strategically relevant companies and you know all the the potential you know doomer black pilling piece pieces of uh the episode we got out of the way early and we can we can wrap up here on uh something like

this about uh that shows that um that you indeed can't just do things even against that kind of backdrop and that bitcoin is uh you know increasingly uh intrepid intelligent well capitalized, motivated Bitcoiners are finding ways to make meaningful improvements to the ecosystem on the margins, kind of regardless of what the politicians and the Fed chairs decide to do. Yeah, I've noticed that you've been observing how Matt likes to design a list. You start with the the Doomer stuff and then you end on here's the actionable advice, the good stuff that's happening.

Never do that. You got to learn from the best. All right. We are officially 17 minutes late to this call, even though I saw we were pushing it in side messages here. So I think we should be respectful of the people we were about to meet. And that was the alpha of the week. I think we did a good job here, gentlemen. Yeah.

Another another batch of artisanal alpha successfully delivered. Yeah. We'll be back next time. See you next time. I bet we'll be around September Fed policy decision. It's probably a good time to bring some artisanal alpha to the table. new new fed chair appointed by the time we have the next episode yes or no no no no all right i'll say no too all right we'll see you guys then see ya