The Canadian Bitcoiners Podcast - Bitcoin News With a Canadian Spin - The CBP - Bob Burnett, Barefoot Mining

Episode Date: April 4, 2024

FRIENDS AND ENEMIES This week we welcome back to the show, Bob Burnett, the Chairman and CEO at Barefoot Mining. Since Bob was last on the show, he has revealed his involvement with Ocean Mining. Ocean made waves (pun intended) after it released and many people are still very interested in the success of this new Bitcoin miner. Bob can be found on X at: https://twitter.com/boomer_btc From a couple of Canucks who like to talk about how Bitcoin will impact Canada. As always, none of the info is financial advice. Website: ⁠www.CanadianBitcoiners.com⁠Discord: ⁠ ⁠⁠https://discord.gg/ESRCZWpb ⁠⁠ A part of the CBP Media Network: ⁠www.twitter.com/CBPMediaNetwork This show is sponsored by: easyDNS - ⁠⁠⁠https://easydns.com/⁠⁠⁠EasyDNS is the best spot for Anycast DNS, domain name registrations, web and email services. They are fast, reliable and privacy focused. You can even pay for your services with Bitcoin! Apply coupon code 'CBPMEDIA' for 50% off initial purchase Bull Bitcoin - ⁠⁠⁠https://mission.bullbitcoin.com/cbp⁠⁠⁠The CBP recommends Bull Bitcoin for all your BTC needs. With their new kyc-free options, there's never been a quicker, simpler, more private and (most importantly) cheaper way to acquire private Bitcoin. Use the link above for $20 bones, and take advantage of all Bull Bitcoin has to offer.

The Canadian Bitcoiners podcast is just two guys and maybe a guest or two discussing Bitcoin, Bitcoin equities, and the related macroeconomic space. It's not meant to be financial advice, so please, if you're doing any investing, after listening to our program, do your own research, do your own due diligence, and understand that any money you invest can be lost. The show is meant for entertainment purposes only, and we hope you enjoy the program. Friends and enemies, welcome to yet another edition of the Canadian Bitcoiners podcast. I'm Len, and I'm still waiting for Bob to show up. So in the meantime, I have a couple of ad reads to do, and I'll try to dance around with the puck as much as possible and wait for the man of the hour to show up. Hopefully he shows up in the next little while. But before we go any further, we got a couple of ad reads, as I mentioned.

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want to migrate over, if you want to start a website, email hosting, you want to migrate or have your own email, such as Len at Canadian Bitcoiners.com. You could do that. Lots of different things you could do with EZDNS. Mark is a good friend of the show. He's been on our show before numerous times. On top of that, they've been in business EZDNS has for decades, that's plural, since the late 90s. Think about all the other companies that have come and gone, and they still remain. Second sponsor we have is Bull Bitcoin. And Bull Bitcoin, it's a great place to buy your Bitcoin.

It's a great place to sell your Bitcoin if you wanted to. Looking at the price right now, $66,000. Maybe some people want to sell it, your choice, but you could sell it on-chain. You could sell it with Lightning. So if fees are going higher, you could use lightning to skirt around those fees. Also, if you want to pay your bills, you could do so with with bull Bitcoin, you could use your Bitcoin to pay those bills. If you have electricity bill, if you have a car payment, whatever the heck you have, and you want to pay with it with your Bitcoin, you could use bull Bitcoin to facilitate that buy.

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If you do that, $21 will be added to your account once you provide all the necessary information and fund your account. Also, all referrals for the next little while are going to be going to Madex as a thank you for having him say F you to the people over at Bitcoin Magazine. So with that being said, I want to bring over the man of the hour. He looks like he's backstage, Bob Burnett. Let's bring him on. Let's talk about Bitcoin.

Bob, buddy, how are you? How you doing, Len? Living the dream, man. Living the dream. It's been a while you've been here. I'm not sure. I've been out a few times. I'm not quite sure when the last one was.

I've done my research, November. And there's a reason why I've done my research november and there's a reason why i've done my research and that and that date is very prominent but before i go into that i just want to talk about something else quickly because you're a cheese head let's talk about packer football really quick because my co-host joey who's really the host of the show i'm just here to keep him occupied and keep him entertained um he's asking because he's saying javon walker was he wasted instead of cutting donald driver because the pack kept donald driver and let walker at least put him on the back burner for the time for a little while so and it turned out walker was the better of the two receivers in his opinion so

did they make the right move by keeping donald driver as the a guy and walker not so wow man i'm not sure what you guys are smoking up there in canada that's his that's his donald driver not over jevon walker i mean my goodness i i don't know what to say i no no go on with it i mean i mean you think donald driver's gonna be uh in in to be in the Packer Hall of Fame. I mean, he's a top five all-time receiver probably in Packer history. You know, Mr. Consistency, great guy, great teammate. You know, Javon certainly had a lot of talent, but boy, he was kind of a flash in the pan in my opinion.

Awesome. This is going to make a great audio when we talk about this on Monday. I have no opinion of the two. I'm just in the middle here relaying messages. This is awesome. But I do have one more question for you. Dorsey Levins or Edgar Bennett? Who's your pick for running back? Wow.

Wow. I guess I'm going to go Dorsey Levins. But that's a tough one because, you know, Edgar was, you know, he's just kind of one of those great guys. It kind of reminds me of Aaron Jones. Like, I have this real problem just emotionally because, like, Aaron Jones, I think, is such a great guy, and he was so good to the Packers. And so I was really disappointed when he got let go. But I'm seeing on the comments some people talking about Sterling Sharp. Man, that guy was the man. That was the man.

Yeah. Yeah. I couldn't sing his praises enough. In fact, when Shannon Sharp went to the Hall of Fame, I mentioned this on our past Monday show, he first gave that ring, Shannon gave his Hall of Fame ring to Sterling, and he also mentioned in his speech that he's the only person in the Hall of Fame,

the Football Hall of Fame, that he's the second best player in the family. So he's saying that Sterling was the better player. And you know what? He's hard to argue with that. I mean, yeah. But very humble, Shannon Sharp is, that Sterling was the better player. And you know what? He's hard to argue with that. Very humble, Shannon Sharp is, and he was a great player, too, in his own right. Hall of Fame worthy, of course. He got in the Hall.

For sure. For sure. That's it for the sports talk. We may talk a little bit. But the reason why I brought up a date, November 2023, when you were last on the show. At that time, you were hinting that there was something brewing. And you didn't go into details because shortly thereafter, a week or so thereafter, ocean mining was spawned.

Right. And there's a connection between you and ocean mining because I'd love to know because I see your name associated with them. I've seen you on spaces talking about them, maybe not representing them. I'll let you discuss that. And I want to hear, what is your association with Ocean Mining? Because they made quite a splash, pun intended, once they became live. Yeah, okay. So, yeah, full disclosure.

So I am on the board of directors of Ocean. I have an investment in Ocean like block space scarcity and that for quite a while now. And I gave a speech last year at BitBlockBoom. And it just so happened that at that conference, Bitcoin Mechanic, who is, I don't know what his title is at Ocean, but he's one of the key guys, kind of the spokesman for the platform. Happened to be there as well as a guy named Mark Artemko, who is the president. Now, at that time, they had just formed the company. And the back history of that is that Luke Dash Jr., Luke Dasher, had run a mining pool called Allegis. It goes way back to the early days of Bitcoin. But he had done it really as a philanthropic thing. He just wanted to have a pool.

He wasn't making money on it. They won a gazillion blocks. I don't know off the top of my head the number of blocks. And mined something like 350,000 Bitcoin that were mined through the pool. So it was big. But around 2017, he wasn't making money. He and a guy named Jason, who we refer to him as WizKid, was also working on that. They just decided, hey, there really wasn't a way to make money on it. Back in those days, nobody was charging pool fees. And they didn't see a path out. And so they decided to just let it go. Fast forward to the current environment, and massive pool

consolidation, massive hash concentration. Luke is somewhat of a controversial figure within Bitcoin. Although I get along great with Luke, and I really respect and appreciate his technical know-how and his insight and the purity of his mission. Even if we don't agree, what I love about Luke is Luke is a purist. He believes what he believes and he's not going to be swayed by some, some monetary thing. Like his principles mean everything to him. And, and I respect that a lot. So he started to look to see what he could do about that. And he had the idea of, hey, should I restart the pool?

Because the characteristics and attributes of Ocean are radically different from anything that is in existence today. He happened to be at a conference, I believe it was in June, a developer's conference, and Jack Dorsey happened to be there as well. And he and Jack got into a conversation. And essentially on the spot, Jack agreed to put seed money in to get Luke started. He said, let's restart this thing. We have to take control back. We have to decentralize this function before it goes further down this path. So on the spot, boom, the pool is reborn. So they start putting a team together, which then kind of Jason, who I referred to before, came back on the team. They found a mechanic, Mark Artemko, who's a close family friend and somebody that Luke relied on, came in. A guy named Ethan Northen, who is really a top attorney in this space.

And I know that may sound kind of weird, like, why do you want an attorney? But we can talk about that later. But, you know, how we navigate going forward is really important. So then they had to go start looking for additional money and, of course, for hash rate. And they made the phone calls, I won't say specifically, you would expect them to make two deaf ears over those first few weeks, completely deaf ears. But then they heard me speak at BitBlockBoom. They approached me. That conversation turned into a four-hour dinner. And by the end of the dinner, I committed, even though Barefoot's not a huge company, I committed on the spot to be the first company to put Hashrate onto the pool.

Now, it wasn't operating yet, but I said, the moment you turn on, I will be there. You will have Hashrate when you start. And at least enough to make a difference. I'm not saying it's not marathon kind of numbers, but it was a real number that I committed to to get them started. The more that we talked, they were very open to some of my thoughts and ideas. We certainly had great philosophical alignment. And so it turned into like, hey, I want to have a deeper part of this. In large part, because we can talk about more of it,

that it is paramount that as an industry, we get more points of block template creation. Paramount. There are essentially six today. For those that aren't familiar with block template creation, let me try to explain it real quickly. So as we sit here today, let's say there's 100,000 transactions sitting in the mempool. So they're unconfirmed, right? The only way to get confirmed is to be included in a block. Each of the mining pools, at the time a new block needs to be started, so we've just mined a block and we need to go after a new one, they're going to all go look

into that mempool and they're going to select some set of transactions to include in their block. Now, they can use whatever criteria they wish to do that. I'm sure we'll get into this later. They can pick whatever the hell they want. That's the privilege and the responsibility of being a block template creator. Today, there are essentially six. 90% of the hash rate is controlled by six pools. Luxor, Foundry, Antpool, Binance, F2Pool, and Antpool. Now, four of those are Chinese. Nothing against the Chinese, but we have no way to

know really what the hell is going on there. And there's a lot of reasons to suspect that those pools don't actually operate completely independently either that that at a minimum there is some i don't want to say collusion i'm struggling for a better word uh cooperation amongst them but this is all speculation at this point we have no confirmation to prove no confirmation yes i want to be very clear i'm not accusing anybody of anything but but at a minimum we what we can say is that possibility exists and i think as bitcoiners that's all we really need right all we have to do is say well shoot you know we've got this massive

amount of hash rate concentrated in these places. And that's very, very subject to capture or manipulation. Okay. So with only those six out there doing 90% of the blocks, that means there's only six places at which the block templates are created too so if they apply the same criteria to select the transactions that starts looking like a censored network or again i'm not accusing anybody of anything at this point i'm just saying like that's a distinct possibility and if it sits out there long enough, if Bitcoin gets big enough, if it threatens enough, then it's almost certain that at a minimum, you're going to have nation states try to create influence over them. So one of the basic tenets of Ocean, and I think, by the way, the number one tenet of Ocean,

is we need to diversify block template creation. The way to do that is by giving the hashers the ability to create the block templates. So I want to back up a little bit. If, because, in essence, everything outside of Ocean, every pool, is centralized in that function. Meaning, if you're Foundry and you have 30%, let's say, of the global hash rate, every single person that connects their hash rate to them is subservient to the choice that Foundry makes. By the way, they don't even know for sure that the work that Foundry is sending

them is Bitcoin. What do you mean? I mean this, that when you connect your miner to a pool, okay, especially to an FPPS pool that does not publish its block templates. You actually don't know when they send you work whether or not what they're sending you is Bitcoin. They are sending you something to do, but it could be Bitcoin Cash. It could be Bitcoin SV. It could be something unrelated to Bitcoin at all entirely. We can talk about that more later because that's a different project I'm working on.

But all you are doing is you are a hired gun. They are paying you the way the FPPS system works, which stands for full pay per share. They're basically saying we have a formula and every time the entire network mines a block, we have a formula by which we will pay you. And we may or may not

have sent you Bitcoin to work on. And you're going to have to trust us, by the way, that while you kind of can guess because of external metrics how big Foundry is, like in that case, roughly 30% of the global market, you have no idea, no freaking idea what percentage of their hash rate you are. So they're sending you some money on a regular basis. It feels good, right? You're basically getting money every block. You get this consistent cash flow. That's the lure of FPPS.

It's kind of like a stimulus check. It feels good. But is it really? You know, it's kind of like a stimulus check. It feels good, you know. But is it really? You know, are you addicted to the stimulus checks? Are you dependent on the stimulus checks? Is this the spirit of Bitcoin? Are you really a Bitcoiner?

Are you, you know, what are you? Because by the way, when you connect to them, you are not a miner. If you have a S-19 and you connect it to them, you are not a miner. You are a hired gun hasher. They are paying you for your hash. And so this is a paradigm shift, right? Or probably a shift in the way to think. But only if you're connected, at least in present terms, it's only if you are connecting your hash rate to Ocean that you know, number one, that you're actually mining Bitcoin. Number two, you know what percentage of the Ocean network you are, and you know when the block is won exactly what share percentage

you're going to get and all that is auditable so um uh maybe i've talked a lot there len maybe you know and this is fantastic i mean i i gotta just dive deep into what you were talking about so in ocean it so the goal is to provide options out there. So pool consolidation has been a real problem. So providing options, block diversifying the block creation, this is something that Ocean is trying to achieve. Now, in terms of how to incentivize hash rate to come on board,

what is the process here? Because if I'm looking at it if i have if i'm a mining farm a bitcoin mining farm and i have just the data center that is hashing away my goal is to maximize my profit i am probably less likely to look at what they're doing with the hash rate if they're using it for anything else besides bitcoin or as long as i get paid i'm happy i just want to meet my costs and beyond and my the people that invest in my company are going to be happy with that too so they don't get the ethos really doesn't matter well okay let's stop there okay because i think that that's that's an excellent question and i think it comes back to who are you you know so um do you not i'm not saying you

specifically right but we'll talk about this hypothetical person i'm playing devil's advocate organization yeah yeah okay um uh yes you're you're you should maximize your profit do you want to maximize your profit on the next block or do you want to maximize your profit on the next block? Or do you want to maximize your profit over the length of your company and the history of your company? Because I will submit that if you operate outside the ethos and you promote things that are harmful to Bitcoin and to the ethos of Bitcoin, your long-term profit will suffer. You might make more in the short term, but your long-term profit is going to suffer. I also think it is a complete misnomer and fallacy that in reality, even the big public miners are so profit motivated that they don't have some ethos.

For instance, look at who the largest supporters of Satoshi Action Fund, the Bitcoin Policy Institute, the Digital Chamber. Who's putting the money into those organizations? Little guys like me put little amounts in. Guys like Riot and Marathon, they put big amounts in. Now, if you're completely short-term profit focused, why would you ever put money into one of those organizations? Because what you're saying to me is you only care about short-term profits. I think it is, you know, if you are an investor in one of these organizations, then you are, certainly you care about short-term profitability and survival,

but are you, don't you also care about the long-term? I care about the long-term more than I care about the short-term. That's a fundamental principle of being a Bitcoiner is being a low time preference, not a high time preference person. So, you know, it seems imprudent to, at a minimum, have some balance there. And so anyway, I think those things are fundamental to ask. Now, I see within the community, even within the mining community, Ocean is also perceived as having been less profitable. That we're sacrificing something. I can tell you this. Because I can tell you this in reality. Because I study it.

So what I do. Is I have. I have a container. That's in South Dakota. The container is full. Of. S19J Pro Pluses. at 120 terahashes per second. Is this barefoot mining?

This is barefoot mining, yes. Yeah. Okay. I have in that container, I have every unit has the exact same firmware. It's connected to the same internet connection. As I said, same firmware. Everything is configured identically. I have 10 units, for instance, connected to Luxor.

I have another 10 connected to Brains. I have another 10 connected to Ocean, et cetera. I don't have every pool in the world, but I have most of them. Let's say an adequate representation of the world's pools. And I have been measuring, even before I was involved with the ocean, by the way, I did this. So I have statistics going back a long time to show me how are these different pools producing in reality? And here's something interesting. It was part of actually why I got involved with Ocean.

I was starting to see fairly large variances beyond statistical norms. Now, I'm fortunate enough I have enough that I can perform these studies. But I was seeing sometimes windows where you could see upper single digit percentage variance, 6, 8, 10% variance. That's significant. And commonly a couple percent, 2, 3%. So that, like, again, I'm not accusing anybody of anything. I don't think it's appropriate for me to say which one is better or worse. But I will say they are material. There are material differences between them.

Even when they're all using FPPS, for instance. So, something's going on, right? Something is going on that's different. It could be there are maybe slight differences in the FPPS formula, although that's a published formula. If you go on, for instance, the Luxor website, you can see how that number is calculated. It should be very consistent, but it's not. Maybe certain pools aren't giving us full credit for the hash power that we're allocating. Maybe some of them just suck.

Maybe because I've gone beyond luck. Like, so maybe there's something in some of these algorithms that's not quite optimal. I don't know. But what I can tell you is they're not the same. So it is so anyway, it's not a given that they're all the same. Now, given that I have this going back to the launch of Ocean

and I now have how many months of data so six not quite right i have approaching so we'll call it five to six i have five to six months of data which by the i don't think is enough so i'm gonna let me say this with a caveat i think i need a little more data for it to be statistically valid but But I have made more money on Ocean than all of them thus far. Could any of that be attributed to the fact that Ocean's mining fees are drastically reduced

during the onboarding phase? And so even stripping that out of the equation. That's part of it. There was a, yeah. So taking that out of the equation still, you would see that like i said yeah you know but again but luck over five months it gets wiped out over one day i i'm not there yet and like i said i'm i'm obviously not invested i i do not want to tell people ocean is economically

better yet but i do want to say that thus far i have out you know a every terror hash i directed at ocean outperformed a terror hash i directed at anything else over that time period so yeah boom dust is asking the mining things aren't that high right i mean it's single digit percentage but if you're talking into variance between um you know well i yeah i mean i get like i said i'm not the biggest i mean again i won't solve but specific deals i pay between like one and one and a half percent on all the pools out there yeah that's that's my normal fee so yeah and on ocean i'm not paying any i'm ocean i'm paying zero with respect i will say that the the amount that i'm up on ocean is significantly more than the difference of just

that right that fee right so what part of this is luck like we did and to be honest like i don't know if you know this but we hit hit a block right out the gate. We did this announcement. You talked about it late in November. We hit a block a couple of days later with 250 petahashes in the network. And let's just say I was an appreciable percentage of that 250. And so that was like, oh, my goodness. That was hallelujah.

That was a good one. So that's why I said, I want. That was hallelujah. That was a good one. So that, you know, that's why I said I want to run this for, you know, a couple more months and then it'll start to start to take some of that stuff out. We've had a couple stretches of eight, nine, 10 days without a block to even when we had like an exahash. So and those those things happen statistically and those scare away some people, right? And I get it. I know that some people, because there's two things. There is what makes you the most money, but also what provides and matches well with your cash flow. So FPPS, like I said, that's why I kind of caught

like these stimulus checks or these welfare checks. I was like, well, hey, I'm going to take this sure thing that I know I have that consistency for. But ironically, that should matter more, especially to smaller miners, than it does to big miners. But the big miners, I mean, we can tell. We sit on like an exahash-ish of total hash power in the network right now. So clearly, we don't have big miners with us, right? We have, I can't speak specifically sure let's just see there may be a few dabbling but obviously nobody's moved any appreciable amount of hash rate to us at this point

and i don't i mean if that were to happen um you know people aren't going to mess around right now before the halving and we can also talk about some of the barriers that the big guys have to moving to somebody like ocean because i yeah i'd love to know about that is what's what's stopping them from doing that you're you're presenting a lot of data here to show that it is a good idea to at least explore with a little bit of hash rate and maybe ramp it up to a higher degree of hash rate if you could see that going with ocean mining is indeed more profitable potentially more profitable than going with another pool so then if that's the case what is preventing them from doing this what are the hurdles from them doing such a thing yeah okay so imagine you're a public miner.

You're with Foundry, as an example. Okay? Well, when you attach yourself to Foundry, you're attaching yourself to Foundry for several different reasons. One reason might be this known, this known FPPS cash flow thing, right? That's one reason. Second reason, plausible deniability. Some of these companies, I don't want to say all, but let's just say a vast majority, they actually don't want to be block template creators. They view that as risk, that if OFAC or some organization comes after them, they want to just say, hey, no, it was Foundry that put that transaction in the block. I don't want that. It's a very non-Bitcoin thing. I'll just say these are organizations where these people essentially get castrated, I think, and being real Bitcoiners. Because there are some real big, I know people within these, some friends and acquaintances within some of the public miners, people that I personally really like, but I think that the structure that they're in

castrates them. And, and, and this is part of it. That's why I don't, one of the reasons I don't like public miners. Have we ever talked about that before? No, but if you want to rip into them, you'd be my guest. Oh yeah. Well, we'll get there. We'll get there. I don't want to get too all over the place. Okay. So, like I said, consistent cash flow, plausible deniability. Here's a big one, though. Auditing. The regulators and auditors in the public companies force certain reporting and compliance. They have a certain way in which the rewards are on the public company to follow these rules and regulations. Okay. So that's another reason. So here's the scary thing. Okay.

There's always this thought. I've heard it. Like nobody should ever worry about a 51% attack, which I don't. I'm not talking about a loose sleep. But here's the thing. As different pools get bigger, we have to worry about them. We especially have to worry about them colluding because now you take almost any two of the top six and put them together and you start getting in the 51% range. You put any three together and you have it, right? Now you say, oh, well, if that ever happened and they start being bad actors, everybody will move their hash

rate. No, everybody won't move their hash rate. Why? Because of the reasons I just told you. The public guys, and by the way, they often have contracts as well. They have hardbound commitments to these things. And by the way, they get really cheap fees. It's not uncommon for a large public miner to get a quarter of a percent or half a percent or even free for certain periods or even negative actually i've heard of negative they get paid to connect so that at least for periods of time so that the pool can market having a certain hash rate as an attribute okay so so let's assume bad shit starts happening well the the folks within the public miner might even want to move, but it may take them months to get through the regulators, big public miners, he said, Bob, it's so bad, I cannot even attach one machine in my lab to Ocean to test it. Oh.

Because my compliance people will be all over me. I can't do it. Oh. Okay, that's... I didn't realize how challenging that is for some of these companies. That applies to the big mining companies out there. And I assume even...

I'm going to go a little bit into the weeds here. It would even apply to, to say an oil and gas company that is starting to explore monetizing previously stranded energy wasted energy and now they're combusting the methane using that to power bitcoin miners and doing this on math because they have significant amount of wells that they could tap into to do this. They too would also be subjected to these types of contracts and audits. And so they, it seems like everybody that's large enough is going to be captured by one of these big mining pools and sucked into their services for a significant amount of time. Right.

Am I correct that every big, they're just vying just to get the next big company out there that's, that's mining and just get them within their sphere and keep them there for a long period of time. So really then ocean is going to be stuck left to getting the rest of the, the garage miners or small miners. The ones that are just not as, yeah, sorry?

Yeah, certainly that's part of what we have. I mean, we haven't given up on being able to work with some of the bigger miners in the world, or hashers in the world, probably the better way to put it. In the long run, though, I mean, we're hopeful that there are some bigger guys. And by that, there's some bigger private guys. So not everybody that's big is public, but a lot of them are.

But there are some bigger private guys that hopefully they can come along. Hopefully this issue of block template creation, which, again, we'll go deeper into that here. But hopefully this issue of block template creation and wanting to create their own templates will be a motivation. And also somebody asked a question about derivatives, which I'm happy to talk about. Yes, please.

We'll talk about not just hash rate derivatives, but block space derivatives. And I think some of those things may ultimately appeal and get them kind of sucked in. So, but, but it's, it's not a cut and dried case. You know, it's a, it's a tough market and, you know, I hope, you know, I guess I would say in the short term, I would appeal to the individual, the rabbits as I call them, and the other horses like Barefoot that are out there to give Ocean a chance. And even if it's just a percentage of your hash rate, throw 10% at it. If you've got 30 machines, throw 3 at Ocean and throw 27 at somebody else.

But throw a disproportionate amount of the global hash at it that will help because right so so you know right now ocean is like 0.2 percent of the global hash rate or something on that order so you know if if if you threw 10 if everybody person out there threw 10 at it it, you know, maybe we get to one or two. And by the way, when we get to one or two, it changes it dramatically, because if we have one percent of the world's hash rate. Then with with roughly 150 blocks per day process, we're going to win one and a half and we might have a day or two, we don't win any, but the cash flow consistency will be there. So that wide variability will go away.

I will say, by the way, April was like a banger of a month for Ocean. We won 11 blocks, and let's just say it was really good. So if you're in the mining business with April, you had a hell of a month. I got a strange question really quick to ask. Where is Ocean Mining Headquarter located? Could you divulge that information? Or is it secret? The people are spread out.

So there is no head. We are a Wyoming company. Perfect, okay. We're incorporated in Wyoming, but people are all over. Yeah. I was just curious where. I couldn't find it. I did a quick Google search.

Couldn't find the answer. I guess now it's... The company name is Mummolin, which we're public on this, so it's Mummolin. There we go. Okay, that's why I couldn't... Okay. So I think now is a good time more than ever to talk about boom dust is question when he's talking about derivative instruments built on hash

rate. It's a shit corner or a useful product. Well, somewhere in between, you know, I think here's the problem with hash rate derivatives, okay? So they can be useful in select situations, but I believe only to miners. So in a traditional commodity, let's pick corn as an example, okay?

Corn's a commodity. If I'm a farmer of corn and I plant a field in May and I have an expected October harvest and June comes along and I see that October futures are going at a certain price that would be profitable for me, I might go take 25% of my field, my expected yield, and sell that contract, right? Now, I'm hopeful that it's maybe going to lift. And if it does, in July, maybe I sell a little more. And as I get closer, I maybe have sold the whole thing by then. It's very good for the farmer. But it's also good on the other side, because if you have a bakery, let's say, tortilla factory that uses a lot of corn as an example, there's somebody on the other side going, hey, I need, in October,

I need a whole shitload of corn. So I'm going to start, this farmer keeps offering these contracts, and I'm locking them in so that my cost of production of tortillas is good. Now, in the middle, we have some speculators, or just traders. They're buying and selling these futures as well. But the key point is there is somebody producing the corn and there's somebody using the corn. So in my mind, that makes it a great commodity market. Hash rate is a little bit funkier

because certainly as a miner, there is appeal to me selling my production, essentially. It's one way to look at the hash rate, right? I'm selling my production. But on the other side of it, there really isn't anything other than a speculator. There's not an equivalent of the tortilla guy. There's just kind of people out there that

think they might do better buying this contract. I mean, that's really it. They think they'll make money. They're willing to risk losing money, and that's it. So there's no guarantee that you're going to have a seller and a buyer in this particular,

I mean, at least, seller? Yeah, the seller is the miner. The buyer would be whoever's on the other side. There's no guarantee that there would be a buyer in this particular scenario. Yeah. There's nobody really counting on it. There's nobody that says, I have, like, you know, there's nobody afraid of being locked out of future hash rate because they have to make the tortillas.

Okay. So I'm not saying it's bad. It serves a function. I see somebody in here says pools are buyers of hash, though. Ocean certainly isn't. I'm not sure why a pool would buy hash other than it's really cheap. I mean, the only thing they would do is they'd go, well, if the hash rate is super cheap and they know they could make money at it, but they're not really using the hash.

I guess that's the point. It's not that equivalent. Okay. Let's contrast that with block space. Okay. Because this is something I've also been working on. Blocks, I think somebody even said it. Block space is a commodity.

But it's a commodity in more the sense that the corn is a commodity. Okay. So, miners, as long as they control the block template, produce block space. This is, by the way, a really radical shift in thinking. What do miners do, especially going forward? They produce block space. You can explore that. So if I own 1% of the world's hash rate, and I create block templates,

I control 1% of the block templates I will be the chooser and arbitrator of 1% of all the transactions in the world okay mm-hmm so if I don't we've done this math in the past but about 200 million transactions is the capacity of the Bitcoin network at the base layer. Okay. And there are 200, so 200 million base layer resolutions per year. I like the word resolution, not transaction. I don't know.

That's probably too far gone, but part of, I can talk about this later. I'm writing right now some testimony to present to the European Commission who's trying to ban proof of work. And I'll tell you why some of these semantics are very important later. Okay. So if I am controlling that block space, okay, that's a really important production. That is my production. But think about a world now, especially post-halving, where instead of the fees being 3% or 5% of my revenue stream, imagine, bear with me a little bit, but X amount of time in the future, but not that far, maybe they're 50%, 30%, 50%, 60% of my revenue. Now, when that becomes variable as measured in Bitcoin, that becomes a problem for me as a miner. So how, when my revenue stream could be up or down, I don't know what block I'm going

to win, right? I don't know if I'm going to win the block at 2 a.m. that has the low fees or the one at 2 a.m. on Saturday morning that has low fees, or I win the one on Monday morning that has high fees. So I want to normalize that. How do I do that? I sell the block space future. I sell a block space future to somebody who needs block space in the future. Who needs block space in the future? We'll use a company like Fold.

Do you have Fold in Canada? We don't. I have to use a VPN to get it so I could take advantage of the spindle wheel. Okay. Well, Fold is a Bitcoin rewards program for those that aren't familiar with it. Basically, you go and you buy things and you get

Bitcoin rewards. Well, at some point, Fold has to send those rewards to their users, right? So if they need, just as an example, they need 100 base layer resolutions every day. Well, if they go look out in October and they see the opportunity to lock in a fair price, meaning fees, they're going to do it, right? But hey, I know, number one, I'm going to get block space. It may be obscenely rare. So one, I lock in and I get it. And number two, I get going to get block space. It may be obscenely rare.

So one, I lock in and I get it. And number two, I get it at a fixed price. So it starts looking like the corn producer and the tortilla guy. Okay. It has that same feel. And of course, there still will be speculators. So I've been working on a project for about a year now to provide this. So we're getting close to bringing this into the market where miners, including myself, but others can come into a marketplace that runs on top of the Lightning Network, by the way, where you come in, you establish a contract. I offer it's actually measured in weight units. So block space really, right? It's measured

in millions of weight units. So you've got a million, a million weight unit contract in the first two weeks of June, let's say. Okay. So we can't tell you an exact day, but we can give you a window with the probability that is essentially certain that we can provide the block space in that window. And then there's a mechanism for somebody to buy that contract. And then when the time is right to send us the transactions, which we will include in the block. Now, what's really important, though, too, is this will be 100% transparent. So when I talked about this to some people, they said, oh, you're sending all this stuff into a private marketplace and blah, blah, blah, and you're going to ruin the fee market

because people won't have visibility. And I believe the exact opposite. Now we're going to give visibility to people to what the future price of actions will be. So if you want to, if you're a pleb and you're out there and you want to do, for instance, UTXO consolidation, you could look forward. It'll be about a six month window that will offer the contracts. So you'll be able to look forward and you'll be able to see the pricing and all these different time windows and you could go oh even if you don't want to buy a con you could buy a contract but you could also even just see where demand for block space is in the future because obviously um if if you see that hey the third week of august looks really cheap well okay well then then um start planning to do your utxo consolidation or coin joins or whatever you want to do out in that same time period.

And I think it will create more stabilization of the fee marketplace, ultimately. So anyway, that's a very long-winded way of answering the question. I have nothing against hash rate derivatives. I think they have limited value, primarily to miners. And I'm not opposed to using them in select situations myself. But in the long run, I think they will evaporate, and the block space derivative will be the one that really... This is really good news to you're making use of lightning and lightning although i've talked about it in the past the scalability issues with lightning right now we're not even close to

being at the the limits of it so there's lots that can be done with it right now and plus it could be channel factories and other things that can make it more scalable in the future. So I love it. I'm a big fan of lightning because of the fact that I hold the keys. When I open a channel, I can just simply close it if I wanted to pay the fees and then it's mine. So it's, I don't like dealing with anything else that's not called Bitcoin and I don't want them to say their names. I like lightning because it's as close to Bitcoin, which it is because just simply opening a channel, it's a two-of-two multi-sig that's pre-signed. So it just makes sense to me. I'm a big fan of it.

But I want to talk about the upcoming halving, because we're, I don't know, three weeks away, two weeks away. Two weeks and change away. We're really, really close. I can't believe it. What are your thoughts on how the halving is going to impact mining pools out there? Is there going to be any measurable impact? Is it going to be just business as usual? Or is there going to be something that we're just going to notice mining pools out there? Is there going to be any measurable impact? Is it going to be just business as usual?

Or is there going to be something that we're just going to notice along the way? Because I'm curious, where you're standing, you know, based on your investment with ocean mining and how you stand versus me, I'm just, you know, some pleb and, you know, I know garage miners, we're very different ends of the spectrum here,

but we're all cheering for the same thing. I want to hear what your thoughts, what's going to happen with the having, if there's anything that's going to be significant happening within the mining space. Well, to perspective, you asked a very interesting question, which nobody's asked me, which was about the impact on the pools. So pools lose half their revenue too.

Oh yeah. I never thought you're right. Nobody had asked me that. So yeah, that that's that's a big deal for the pools their revenue stream just cut in half so it's a big freaking deal for the pools and you know those pools that have high overheads um are going to get absolutely whammied, right? So that's nothing they can do to really change that, other than they have to try to gain market share. But that's a tricky thing. I have found myself in some Twitter disputes. I don't know what the right...

You know how Twitter is, right? Sure. And you're very vocal and on twitter so you're more you know you're willing to engage let's go with that with that yeah i mean you have to right and and i i may be wrong on a on occasion it's um but but um but anyway one of the things i got into was you know some people were really attacking Ocean. You know, I don't really understand why someone would attack Ocean. And by the way, people from other pools. Like, why are you attacking Ocean?

Because we're just a small pool trying to decentralize. We're trying to bring the block template creation to miners. We're trying to force transparency on the industry. I will say we shook things up for a company that has 0.2% of the global hash rate. I'm pretty sure we've gotten more people talking about us than any other pool in the world for the last six months. That said, I've said this over the weekend i believe

ocean does not want to be the only pool our goal is to not dominate the pool landscape there's probably a maximum amount we would ever want to achieve um i don't want to speak for Ocean, but let's just say it's probably like you get up like 18, 20%. That's probably like as big as you really want anybody to get. Not just Ocean, but anybody. Fair enough. Because after that point, there's just too much that can happen, right? So I think Ocean would do something to mitigate that. I think in that range would be my guess, you know, that as a team,

that's what the decision would ultimately be to mitigate. It used to be, by the way, it was before I was really engaged, but I've studied a little of the history and guys like Mechanic have talked to me about it. It used to be that in the past, if a given pool got as big as like foundry did is now or or ant pool or some of those or f2 pool the industry would flee like one there was one the names escaping me at the moment one got up over 40 and was out of business in 12 months because basically they weren't ethocentric and they were pushing to try to get bigger. And the plebs realized it and they all fled. Because of the thing we talked about before, there's too much hash rate in the hands of, let's say, non-ethocentric people now.

I will name them. I'll name them. Marathon. Oh, marathons. Yeah, marathons. I will name them i'll name a marathon yeah i'll name them i don't want just in case you get in trouble they screw a marathon yeah well you know you've heard me talk about um you've heard me talk about core before too i think we have talked about you know what that's a sad story essentially what i mean they they made so many wrong so many bad decisions they just couldn't read the the lay of the land which the way finance the world of finance is going and oh well too bad so sad call them bad decisions is generous because i i i think they were corrupt. They were greedy. And for those who aren't familiar with it, Core was the biggest mining company in the world at the end of 2021. They went public in January of 2022. They raised $200 million. They were sitting on, I don't remember the exact

number, thousands and thousands of Bitcoin already in their treasury. 11 months later, they were bankrupt with a billion and a half dollars in debt. So, interestingly, we're talking about derivatives. So what they did is they started taking all the money from the IPO. They took anybody that would lend them money, which, by the way, included companies like BlockFi. They took these massive loans. They backed the loans up with their treasury and the value of the ASICs. They bought so many machines that they dried the market up for companies like mine.

Prices went through the roof. If you were trying to buy an S19 100 in early 2022, you were probably paying $10,000. 5x what you should have been paying. Because of core. They fucked you all. So remember that. They fucked you all. Anybody that bought one got fucked, and anybody that should have bought one

that was cheaper got fucked. So, by the way, sorry, I'm cussing. You can swear all that you want to fuck them um so you know and what they did then is they were betting that bitcoin was going to a hundred thousand yeah and they they didn't hedge it though though. This is what's amazing. They made that bet. They took all these loans.

They bought all this shit. And they didn't hedge it. And if you go read their financial statements, they say in the financial statements, so in the S-1 and in their 10Qs, which are their quarterly statements. They have statements like, we are not using any financial instruments to head your position. I guess I'll give them that. They disclosed it. They also say things in there like, our management team has no experience running a public company. Our financial systems and reporting systems may not be appropriate to run a public company. The signs were there.

The signs were there. But here's the thing. People don't do the work. People buying stocks in these companies do not do the work. I'm not telling you to own stocks or not own stocks, but I am telling you you should go research really thoroughly and decide, number one, is it a good investment? Do these guys know their shit? It's very common in industries at the maturity level of Bitcoin for companies to flame out very quickly because you get people who are not experienced and not ready to handle what's coming, number one.

You also get a lot of greed. Yes. A ton of that, right? Yes. So the other thing is, you know, with these public companies, go through the valuation. Because I'll tell you this, I just did it recently. I looked at, I write a newsletter for Financial Advisor Magazine, which goes to 400,000 wealth and financial advisors in the u.s it's actually kind of a cool project because i get to communicate with this group of people that that really needs to understand bitcoin and they're finally getting open to it right is this a paid subscription service like when you have to get this newsletter is it free um no but you have to be a you have to be a registered financial advisor gotcha so you

if you go to if you go to fa-mag you can fill out the survey and maybe you can qualify, answer the questions appropriately. You can probably guess. Then you'll get it. Okay. So, and I'll be publishing excerpts of this. I've done four issues already, but the last issue was all on mining and the public miners. And if you look at the last four years, take the big four miners, like Marathon, Core, CleanSpark. What was the other one I had in there? Iris or Iron, I think they call themselves now. It's Iris Energy. Iron is the ticker, I think.

Yeah. So if you look at them, look at the last four years of financial performance, and between the four companies, I believe there are two quarters where one of them was profitable. In other words, there were two years where they were profitable and just barely.

The losses across those companies are massive, just massive. And the only reason they're getting away with it is they keep doing stock share issuances that are funding this. So the people out there buying this stock are creating these zombie companies that have no business operating. They're essentially identical to the zombie companies that we make fun of in Wall Street and ridicule within the fiat system. Yet we've created this very beast in and ourselves. And they go hurt. I'm talking collectively the the guys like me trying to trying to do it the right way and trying to stay within the ethos now we we've been able to do it we're profitable but but it's

hard it's it's hard and they get away with it by being sloppy paying massive salaries go look at the executive compensation. Go get the 10 Qs and look at executive compensation of those and decide if that's really what you want to fund. If it is, God bless you. Good luck to you. I wish you well. I don't own any. I will never own any I will never own any Yeah, you make a great argument as to why one should A do your research and we're not talking just simply looking at half an hour, an hour but significant

amount of research before investing in something and B, why would you want to invest in something like that? If there's zombie companies which they're using the they're just simply selling equity to keep their lights on it just doesn't make sense and yeah it's just yeah because here's what here's what they've learned i mean they're you know they're they're not all full of stupid people but here's

what they've learned they've learned they announce they're going to issue some new shares to raise money to buy equipment. Company X is going to issue enough shares to raise $10 million. They're going to take the $10 million and they're going to use it to buy new equipment. The market historically has responded to that by rewarding them by increasing the value of their stock such that they get 2 to 3x market cap improvement from that. Okay, so even, you know, it would be one thing if they were doing something and then consistently producing positive results, but they're not. What they're doing is they're playing this game, issuing shares, but then not performing. But I think they have to be careful because, and I would say this, I said this in my newsletter, I'll say this to you folks here, be careful. Because I believe at least a major part of that comes from that until the ETFs, for especially U.S. investors, they were the only proxy available for Bitcoin.

So if you had a 401k or you had something like that, and you said, I got $5,000 sitting there. I want to get it in Bitcoin, but I can't buy Bitcoin. There's no ETF. What am I going to do? I'll buy Rai and I'll buy Marathon. I'll buy CleanSpark. Okay. Now it turns out that they're really not great proxies, that Bitcoin can do great and they can do shitty or vice versa. They're really not as correlated as you'd think. But now that the ETF is available and the ETF is directly correlated, the investors doing that don't need to do that. So I think they're going to have a hard time continuing to attract money.

I'm not wishing ill on them but i i will say this for those that are hearing me hype on this or harp on this for the first time um i i was part of a public company i was in the c-suite of a public company so i'm not coming at it from oh hey i hate public companies and all that what i was part of the management team that took gateway public in 1993 we became a 10 billion dollar company 25 000 employees i was a cto there i managed about 5 000 people i managed um a multi-billion dollar pnl i know that world this is something that a lot of people don't give you enough credit for or maybe just aren't aware. You were a very significant player in a very large company in the 90s, a gateway that was synonymous with computers back in the day.

I'm old enough to remember that. We should not overlook what you have achieved back then. I just wanted to give you kudos. Well, thank you. I appreciate you saying that, Len. But I'm not trying to do that. I just want people to reality i know what it's like i know what it's like i know what it's like to sit there and here here's what happens when you're sitting there your world revolves around 90-day cycles your world revolves around what the analysts are going to think and how

shareholders are going to react to whatever news and results you present. And it's all in these 90-day windows. It's my belief that even the most principled people, the strongest Bitcoin advocates sitting within these companies, cannot consistently operate within the ethos because of that there's a reason barefoot mining is not a public company i could have done what what uh core did or and the all these other all these companies went public in like um 2000 and 2001 when back oh it was so fat well when the china mining ban happened so here's the here's a really interesting thing i mean i i know we're kind of down a rabbit hole but look at 2021

2020 and 2021 the china mining ban has happened if you're running a mining company you're making a shitload of money. You just got this manna from heaven. It's like the opposite of a halving occurred, right? A halving occurred. It literally was the opposite of a halving for a miner. Yeah. But when your revenue doubles, what's amazing for a miner is there is zero change in your operating cost. So if I was

at Gateway and we doubled our sales, well, I still have to service those people. I still have to build the computers. I still have the cogs. So yes, I maybe double my profit. When the miners, if a miner was, let's say, operating at a small profit at the point of the China mining ban, they probably went up 40 or 50x in profitability because their operating costs didn't move every additional dollar they got just went straight to the bottom line now with that in mind go back and look at the financial results of the public companies in that time frame they fucking lost money even in that environment yeah even in that environment they lost fucking money how did you lose money in like the greatest bonanza of all time i i i mean i would i would i would

recommend going and looking at executive compensation to start but but you know you you know but but um the key point is i don't think that being public and being a public mind and being a minor are consistent with the ethos by the way completely different for a company like microstrategy microstrategy is using Bitcoin as a treasury product, but their core business is not Bitcoin. It has nothing to do with the ethos of Bitcoin. So them doing their things, I don't think, puts them very often at odds with the Bitcoin ethos. But the miners, you know, I mean, to me, you know, being a miner is like, like, I've actually talked about this before, I proposed something like called the miners oath or the miners creed, like, you know, that, that in the essence of it is like, when you decide to be a miner, you're signing up to be the guardian of the network.

You should place the protection of the mothership at the pinnacle of what you do. You know, I'm sure anybody on my team will tell you that I say that frequently in our meetings, like we will make decisions based on what's best for Bitcoin and the belief that in the long run, it will be what's best for us. My guess is if there's a guy from the public mining side out there or from capital markets, they think I'm an idiot. And I'm okay with that at this point in my life. I've resigned to the fact that there will be plenty of people that think I'm an idiot. And as measured in fiat over the last few years, I promise you I could have made a shitload more money. I could have. I absolutely could have. I could have gone public in that heyday. And even as a small company, suddenly got this valuation of tens of millions

of dollars. And I could have started rolling that market cap into other shit and done exactly the same thing as these other guys do but you know i'd i'd be soulless i'd be i'd have no soul so okay i i have a question i'm going to feel from the audience now before i propose it to you i'm going to give you an opportunity to pass because this question you may not be able to answer because of a variety of reasons. So just be ready to say I pass. I can't answer it. So somebody's asking, I want to hear some of the juicy details of that for ASICs that you're

working on because I'm not familiar with this. Are you working on anything to do with ASICs behind the scenes? I'd love to know more about it. Yes. Are you able to disclose anything or do you want to just pass something i can't disclose everything but i can sure i'm just happy you're able to disclose something i i is i don't know how far you know i mean floor is yours man i want to

hear this all right well let me give you the background of this one so uh i believe in the long run, being a successful miner will require having sovereignty over several areas of what I call the miner stack. So the miner stack is this. Starts with energy. You got to have access to energy, right? Then you have to have access to a chip. When I say ASIC, we're talking about the chip itself, not the system. You've probably heard me talk about that before, the importance of only using the term ASIC to refer to the chip itself.

Then there's the servers. Well, if I have access to a chip, that's easy for me because that's my world. We can design the servers. Today, those two things are interlocked. We have Bitmain and MicroBT. They design the chips and they build the systems very unhealthy by the way very unhealthy way to go much better to be like the pc market is where you have chip makers like intel and amd competing with each other doing what they do and then having system vendors the dals and hps and etc taking those and designing systems it creates a much more competitive balance marketplace. So let's say you produce your own energy. You have access to your own ASIC.

You build your own systems. You're going to need operational excellence on facilities and managing that if you then control the block template and you are part of the pool that is the whole miner stack so as probably becomes obvious what I'm trying to do for barefoot even as small company, is get my fingers in every step of the stack. So last summer, roughly the same timeframe as the ocean thing was happening, though. I got connected to a group of really top-notch silicon designers. And they had already had this idea. I signed on as an advisor to the project.

The group is called M5ers. The company is led by a guy named Billy Kim. Billy Kim was essentially the godfather of the solid-state disk. He worked at Samsung. There are other members of the team from one guy was on the Intel team that brought us the 486 processor. Another guy was from Broadcom. Really, really top-notch people with not only fantastic capabilities in design and great ideas, but also the connections to the foundries, even as a small company, to pull the shit off because you've got to have both. So I connected with them.

I've become an advisor on the project. I can say this about the project thus far. First of all, it takes a long time. Yes. You won't see anything in 2024. Nothing's going to happen this year it'll be next year at the earliest before you see anything material we will just to give a taste though the chip that we're designing we have some really special things that we're doing. So if you have, let's say, an S19,

you will have maybe a couple hundred different ASICs in there, SHA-256 ASICs that are running the algorithm. Right? And those will accumulate, and you'll have 100 tera hashes or 150 tera hashes, whatever it is that you have. Okay. We are going to, we are designing for one chip to be 10 terror ashes.

So one chip will be 10 terror ashes. Wow. We would be putting together like 30 chip systems. So a single system will be like three petahashes or 3,000 terahashes. Yeah. Now, the power consumption

is going to be very high, though. The efficiency is going to be fantastic, but system power consumption, let's say it's going to be fantastic, but system power consumption, let's say it's going to be a five-digit number, like over 10,000 kilowatts. We're looking at the end. Excuse me, 10 kilowatts. So joules per terahash is really going to be the big driving number. It'll be low.

I don't want to say what we're doing. Yeah, of course. Obviously, we know where the world is today, and we're going to be significantly lower than where the world is today. Even after taking into account the S21 Pro that just came out, they're around a 15. Okay, I don't want to go too much further. Yeah, I can't go further than that. But, you know, that's what we're doing.

I think what we're working on in the first iteration will be, if you look what's happening in the AI market, the AI market is moving to super high-density systems, very professionally designed high-density systems. Okay? So, you know, what we have today are systems designed to run in a chicken coop. And I've always hated them. I'm coming from the perspective of a guy that spent 30 years designing computers. And they're shit.

But it's what we have. I don't have any other choice. I have to use them. When you go into any sort of Bitcoin mining operation, you see really kludgy shit. Go walk into an Amazon data center or something like that, and you see these beautiful high-tech things, right? We're moving more toward that direction at the enterprise side. Almost like happened when the PC market, but this, I don't want to come off as overly critical

a bit, Maine and MicroBT, because it's not really that different than the PC market. I mean, the PC market, go look at, and I was part of it, right? Go look at the PCs we designed in 1989 and you'll laugh. There was a time when a PC that came out in 1989 was $3,000. With a 10-megabyte MFM hard drive.

I remember those days. Wow, MFM, very good. I remember those days, yes. Yeah, so you won't see... I mean, you're going to see the same thing. There's a maturation. To think that the shoebox design and the current architecture of the systems is going to continue is ridiculous. Well, those don't change until you change the architecture of the chips.

So now we're going to do all kinds of really special things to crank additional performance out. We'll have some features that hopefully the pools and the block template creators will like. Things I can't talk about yet, so I have to speak in kind of high-level things. And by the way, I'm going to do everything I can to help them. We're actually raising money right now. We're doing what's called a pre-seed round. We're just starting to take investment for that. We're going to ultimately need tens of millions of dollars for this thing to work.

Hopefully, we can get the support we need. We certainly have the team. We have the ideas. But ultimately, we're going to need some people with some deep pockets to support us. I don't want to get into specifics here. I just want to ask you a question. You could just do a very high-level answer if you want. Have you got in touch with the people at Intel?

Because I know about a year ago, maybe a year and a half ago or so, they announced that they wanted to start exploring the opportunity of creating their own Bitcoin mining rig, their own ASICs. But then shortly thereafter, a few months later or so, they decided that they just, they kiboshed that idea. And I don't know the reason why, but I think that if anybody would have the expertise and the manpower, the deep pockets and everything required to do it, an Intel would be it. But I'm curious if you were able to get in touch with them just to pick their brains as to what's the best way to approach this,

how to move forward. Because, yeah, they should have some very – Yeah. I'm bound by some NDAs. Okay, fair enough. I have – well, I'll just – but I can't answer part of the question. I want to answer it as best I can. And that's that prior to this project, I had many conversations with Intel.

And we actually have in our labs, we have a, well, it's actually running. It's still producing for us. We actually have one system based on an Intel chip that's even running in our labs but they've um they uh they haven't you know i don't think i don't think the bitcoin market and intel are ready for each other yet you know there's are you disappointed that they didn't go ahead with this that they decided to stop when they did? Yes. Okay.

Because I think it stopped. It's this thing I talked about before, which is the system market will not mature until it's competitive. And by that, I mean the competitiveness for the best designs won't take place, and we're going to continue to see pretty wild changes in the price of the systems. This is what's interesting. It's almost as though the rigs themselves, or I like to call them servers, but there's a specific reason for that, too. But I like to call them servers, but they are treated like a commodity today. So we talked about, like, why would a machine cost $10,000, an S19, you know, because there's no competition. There was a finite supply, one basic supplier, and different creators of the systems and maybe two, three, four different creators of the ASICs, well, now we're going to have a much fairer marketplace now i think there'll be plenty of margin for the people involved in those to do very well but there won't be any raping going on it almost mirrors the pc market remember

back in the day when cyrix first came into the scene and sure it was i designed with cyrix for a while so yeah for the 46 market there different options, different opportunities to get different ships. And that pushed the envelope because then Intel, I'm not sure if they rushed the Pentium, because I remember the first Pentium had some issues with the floating point unit, I think it did. But at least competition makes for a better result for the consumer. Lower prices, better, hopefully, better product that you can buy and so forth. So yeah, we definitely need it plus taking this out of the hands of the chinese having china manufacture develop and do everything along

the lines with uh with the asics equipment like and that just rubs me the wrong way i want to have somehow this move to north american or at least friendly jurisdictions i don't want them to take everything and i don't know there's there's something about that well we're probably stuck with the fabs for quite a while um austrian say chinese because um the koreans do and okay you know you know the koreans um samsung specifically um you know that it's a fight between... It's actually kind of the Chinese. So TSMC is Taiwan Semiconductor. And Samsung.

Those are the two leading foundries in the world for wafer fabs. Now TSMC, the Taiwanese company, but they have a whole bunch of chinese foundries so um and i i'm not sure where the next generation one is being built i'll have to look at that whether that's in taiwan or if that's in china and then samsung of course has primarily korean-based um fabs in production which you know i guess i have a little more confidence but you can't of course significantly more they're at least uh an ally uh yeah so i think we could yeah leave it at

that i guess we've been going almost an hour and a half thank you for your time but i just have to ask you i guess one more question before we start wrapping things up there's anything else you want to chat about that we haven't talked about? Anything that you wanted to bring forward? I want to make sure that you came here and you talked about everything that you wanted to pump. Just go ahead and just discuss.

My wife would say this is one of my faults, but I could probably talk for a really long time. So be careful. And I'm here to listen for a long time. But let me try to condense it. So I mentioned before about specificity in terminology. Why should we only use the word ASIC to refer to the chip and not the system, as an example?

I had a different one that I was referring to as well. But anyway, this specificity is very important. The reason it's very important is what does ASIC actually mean? ASIC means application specific. Those are the first two words, integrated circuit. But the first two words are very important. They're application specific. And that bothers me,

especially when people refer to something like an S-19 as an ASIC. That's wrong. Don't do that, please. The reason that's important, and not just some old guy yelling, is that it is an attack vector. People like Elizabeth Warren, people like the European Commission, are looking at Bitcoin specifically, and they are trying to find ways of attacking it. Both in Europe and within at least the U.S. administration right now, the Democratic administration within the U.S., they are going to do everything they can to make our life difficult, and if they can ban us, they will.

I started worrying about, I've been worried about this for a long time, but I got really worried about it a year ago when the Biden administration, when they submitted in 2023 the spring of 2023 they submitted the budget for 2024 and in that budget part of their proposal was the implementation of a specific tax on bitcoin mining it was going to go up to 30%. It would go 10% first year, 20% second year, 30% third year. It got defeated. But I could see it woke me up. I had had an idea brewing for a long time.

I'd been sitting on it. Okay, Bob, get your lazy ass going. You've got to do something about this. Because, by the way, similar taxes have been instituted in places like Kazakhstan and in a couple countries in Scandinavia, I believe Sweden. So this is a way. Now, how can they do that? They can do that by saying machines like the S19 are application-specific. If it can only be used for Bitcoin mining,

then they can infer that the use of electricity by that device must be for Bitcoin mining and therefore it must be taxed. Well, I've known for quite a while and I started working on a project a year ago that that's not true that these machines can be turned into something closer to a general purpose computer. Where there are numerous applications that have nothing to do with Bitcoin. So at the core of that is understanding that what the SHA-256 algorithm produces is entropy. So entropy, another word for chaos or randomness. They're not exactly the same. If you're a physicist out there, don't get mad at me.

I'm speaking in generalities. But basically, we can use these things to create randomness. And so I've been working for almost a year now on a Skunk Works project. I have a team that I've been funding. And we have developed, it already works, by the way, a system that allows us to take an S19 and it can create pure entropy. And so what we do with it, as an example, I will be launching a site, I kind of hope, like really soon, like a couple weeks away. Everything I'm going to show you, there's always some big announcement coming up.

I like that. There's a common theme here. Yeah. So it's called Chaos Engines. And the idea is, at the first blush for the general public, that you'll be able to go to this website and you can do a virtual coin toss, as an example. You'll be able to... Do you remember what the magic eight ball is?

Yeah, for sure. Okay. We have a virtual magic eight ball. We will cut a card from a 52 card deck. We will roll a dice. We'll do like these sort of activities for free. So if you're at a bar and you want to bet somebody, then you want to bet on a coin toss.

Well, what you can do is you can go to our website. You can click on the coin toss button, generate a coin toss, and we will flip a coin. And what will happen in the background is we will hit an S19. It will create a hash. It will translate that hash, in that case, into an odd or an even number, which will then translate to a coin toss. That's the very simple implementation. Now, on the surface, you might say, well, that's all well and great, but how important is the coin toss? That's not the point. The point is, we can generate truly random 256-bit numbers in massive supply, and we can do it using something similar to the Bitcoin blockchain. So for every random number, we can prove the randomness.

So we create an auditable and verifiable source of random numbers, meaning that if, for instance, you were playing online poker, we were using my platform to play online poker, I could prove to you that every single card, how it was generated, and that it was truly random, and that it was unmanipulated. So the first thing I want to do is I want to prove to the world that you cannot look at an S19 and assume that it's mining Bitcoin. And if you can't assume that it's mining Bitcoin, then the only way for you to tax it is to force that person to disclose the software they're running on their computer, which is analogous to the government saying, we are going to tax you whenever you run Excel, and whenever you run PowerPoint, we're not. But you're going to have to disclose to us what software you're running at all times. Now, if you want to live in a country that allows such a thing go for you but you know you're going to get that out of me over my dead body so this is a this is really important and so i'll i'll have more about this um like i said as

as time goes on but we're going to announce the the first version that allows people to go in and play we will also be allowing people to point their hash rate to it. Right now it will be uncompensated, but down the world we will provide some mechanisms for compensation. But if you want to support the project and give us more hash and also have plausible deniability with the authorities, we will give you a path for that i have some usb miners i'll just plug in and point to it because obviously i'm not going to use it to point to a pool a mining pool maybe i'll send it over to you and you could use the hash from that it's going to be minuscule but hey man i'll do my part yeah well you know it yeah i mean don't don't

like if you have if you have an old uh s9 and you get 15 terahashes per second, don't sneeze at that. That's a phenomenal amount of entropy. The ability to do 15 trillion hashes per second, that's pretty freaking useful. So, you know, and so I think it also provides a home for some of this old stuff, you know. Now, like I said, I don't want to paint it as, I don't know how much money we're going to be able to charge people for essentially the service. Therefore, I don't know how much I'll be able to send back to the people directing their hash at it. But there'll be something, and I think we'll be able to make it economically feasible to at least have this. And like I said, I'm excited about it.

I'm happy to do it. It's a bit of a fuck you to all those people out there trying to do this to us in Europe and in the U.S. to say, you know, you can't, you cannot keep up with technology. You know, do not try. Like, I can't believe after all this time, you know, you think, you know, it's like, you know, the music industry trying to, to stop MP3s from moving around. Like, you know, it's, it's not going to happen. Like there is too much momentum. And, and by the way, had, imagine if they had done that this is the part that pisses me off too because when you have you have regulators protecting old businesses and old ways of thinking and you know today we have spotify and pandora and these services that i i think have

improved the quality of life for hundreds of millions of people around the world and had they forced us to still buy cds like you know we yeah i'd be going for my run with with one of those fucking uh the sony uh brisbee sized things you know yeah skipping all the time every step of the way right yeah so if that. If that's what you want, then join Elizabeth Warren. If you want progress, then hopefully you'll join me on this other one. The question

that I have for you, does it run Doom? Does everybody ask you that? It won't, but here's the thing. I think over time we can provide the entropy for games like that. By the way, Here's the thing. I think over time, we can provide the entropy for games like that. So and by the way, you're hitting on something like if we can get the right traction,

then this type of application for any of those games, I don't care what game you're playing, whether it's Doom or Halo or I mean, oh, you're playing a NASCAR game, you're playing whatever. There has to be a random element within those games, right? Yes. And here's the thing about randomness. I would expect very few people to have thought about this because I didn't really think about it a ton until the last year. It's very hard to produce, and it is impossible to verify. So if you're doing something dependent on randomness, obviously things like the lotto or whatever, they try that. But think about how often that's been manipulated.

Even like lotto with the ping pong balls. Yeah. Google it. Been manipulated. Um, two-factor authentication. If that, if that is not perfect in randomness, you know what that does? Like the exposure that provides. So if you can provide a source of randomness, that's truly random, that it can truly random, and it can produce randomness at a massive scale, and it can do it in a way that is auditable and verifiable, just like the Bitcoin blockchain is auditable and verifiable, that's a game changer so um like if you're if you're playing uh games um that have have an element like um let's see what would be nascar okay well they're out driving well there's some chance the wind's gonna blow a certain a certain way with a certain rate as a certain chance that, um, uh,

a, uh, rain is going to fall. There's a certain tire could blow or something. A tire is going to blow out. Like you have all these different random elements. Well, you know,

they're generated within the game. Um, but, but almost by definition, they're not really random. The algorithm that they're using in the technique is not really random. It has, but, but almost by definition, they're not really random. The algorithm that they're using in the technique is not really random. It has random like characteristics, but here's a, here's a fascinating thing. You want to know where the, the, the two greatest sources of randomness today are this one.

You can, if you Google like lava lamp, random random numbers here's what you'll see this is how like a lot of the um passwords and and and uh key generation and that sort of stuff is done there's this company they have a massive wall of lava lamps they have a high definition camera directed at the lava lamps and whenever they read need a random number, they take a photograph of the lava lamps, which are all these globs are moving around, right? So they get a pretty random picture. And I believe, I'm not positive, I'm pretty sure they hashed that to create a number, much like we do. But there are some problems. One is you can only take pictures so fast.

So if you need several million random numbers in a short window of time, you can't get enough of them. That's one problem the second is really difficult to audit and verify that somebody hasn't manipulated the photo that that like there's there are all these elements so that's one source the other source is you can buy these devices like at the commercial scale this is what like it guys would do they need to generate internal random numbers you can buy this quantum random number generator costs a hundred thousand plus dollars and um it's got like a inside it it's got like a detector that's looking at like paths of electrons or electrons hitting a plate. And it generates from that a random number, which it then outputs.

But again, very random. Does a good job. But impossible, very random, does a good job, but impossible to audit and verify. Right. Like, was the electron really where the detector said it was going to be, or did somebody manipulate that somehow or present a false one? So anyway, we're down a deep rabbit hole. I don't want to bore people.

But like I said, it's an important project. We are being attacked. We will continue to be attacked. We have to be vigilant against these attacks. And I'm trying my best to do what I can, but I think everybody can play a role in this and not let these people come for us. Because we're attacking them right at the heart of their power and wealth, and they don't like it.

Yeah. Now, Bob, it's good you're on our team because you're fighting the good fight. We're fortunate to have you on our team. And if there's anything we can do to help you out just let us know but i i have a question just one final question it's not a bitcoin related not major league the movie you've watched that i'm assuming yeah i i say it's the best baseball movie out there but that can be debated but why is it a great slash the best baseball movie out there is it

because of bob uker or the fact that they used milwaukee county stadium as the setting you know bob uker is a legend uh you know i i grew up just outside of milwaukee i listened to bob uker on a transistor radio and Probably the classic thing, right? My parents would send me to bed, and I'd have a little AM transistor radio. I'd sit under my covers in 1972 listening to Bad Brewer Teams under my covers, just quiet enough, sitting there like that and bob uker just made you know every single game whether they won or they lost and they usually lost it was still like you know like magical and the guy the guy's fantastic um so the answer is it's Bob Uecker. Fair enough.

I just saw he's 90 now, still out there doing play-by-play. And he's a guy. He's like Vin Scully. Yes, I was going to mention his name. That can do both the play-by-play and the color. And you don't miss anything. Don't miss anything. said somebody somebody said here robin you are paul molliter robin you know definitely is it because that young had his

whole career with the the brew crew or is there some other reason uh i think that's part of it um you know molliter i love molliter too mo Molitor went through an era where there was cocaine or something like that. A lot of cocaine and a lot of like shenanigans kind of going on. I remember that. So, you know, Yount stayed true. Here's an interesting stat, and we probably lost everybody at this point. It don't matter. It's about us now.

So this is trivia so um in the history of major league baseball there have been five the five youngest starting players on opening day okay um robin yount is two of them because he was he was the youngest guy ever to start a major league game at like 18 years and like 140 days. But he's also started the next year, too. So I had it like 19, you know, and what's his name? Robinson. There's a new guy on the Brewers.

Just got his first hit. Anyway, he's the fifth guy. So three of the top five are Brewers, by the way, too way too but it's only two two of them are the same guy he started as a shortstop right yeah he was he started as a shortstop um you know youngest guy to hit a home run in major league baseball for a long long time um he uh he then when when Molitor came up, they said they wanted Molitor to play short, and they wanted Yount to move to center field. And he balked. He was also a great motocross racer and a great golfer so he said hey if i don't get to play shortstop then i am gonna um i'm gonna become a professional golfer and so that held it off so for a few years

it was you know at short monitor at second but then um he hurt his shoulder if i remember right he had some arm issues and um so he moved to center field and then he but he what's interesting was he won an mvp as a shortstop and he won an mvp as a center fielder only guy to ever do that when mvp at two different positions teddy higuiguero, is he underrated? Oh, Teddy Higuero, we're deep now, man. Underrated at his peak, yes, I would say. He was really good.

Yeah. I was a... Yeah, then he had Pleasac come out of the pen and it was a... Oh, yeah. yeah yeah i remember those days but pop i i want to thank you so much for coming on the show talking about bitcoin mining pools asics not actually not asics we're talking equipment that uh hashes out for bitcoin and does other things and all asics are fine but that's just the chip. Sure.

I don't want to get on your bad side. Also, talking about Milwaukee Brewers. Oh, you also led off with Green Bay Packers. Packers too, yeah. A little bit of everything. I appreciate you coming on the show, Bob. Anytime you want to come back on, the floor is always open for you. We'll roll up the red

carpet. Thanks so much. If anybody wants to reach out to Bob, I'm going to have his in the show notes how to reach him on Twitter. And if you want to DM him or just send him a note, there's ways to do it. So Bob, thanks so much for coming on. Thank you, man. Good to see you, Len. Don't forget, everybody,

lots of other stuff on CBP Media Network, including Two Whites and a Blue. Me, Joey, my brother-in-law, everybody, lots of other stuff on CBP Media Network, including Two Whites in the Blue. Me, Joey, my brother-in-law, Mike, and our friend Will talk about all the problems millennials are having with finance, romance, and just getting by. If you like CBP, if you like the NHL 94 podcast, I guarantee you'll like that one.

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