The Pomp Podcast - #256: Matt D'Souza on the Upcoming Bitcoin Halving, Miner Sell Pressure, and Why it's Important

Episode Date: March 31, 2020

Matt D'Souza is the CEO of Blockware Solutions, a blockchain infrastructure company specializing in Bitcoin mining hardware procurement, mining rig colocation, as well as professional Mining & Staking Pool operations. In this conversation, Anthony and Matt discuss Blockware's recent analysis of miner selling pressure, how profitable various miners are around the world, what to expect during the Bitcoin halving, and how hash rate should fluctuate over the next few months. =============================== UNSTOPPABLE DOMAINS-----Make your crypto currency payments simple and build censorship resistant websites. Visit unstoppabledomains.com and purchase your blockchain domains today! ~If you enjoyed this episode and want to stay updated on everything Bitcoin, tech, and finance. Check out my newsletter by visiting pomp.substack.com and join 35,000+ other investors currently subscribed to my daily investor letter.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Matt D'Souza is the CEO of Blockware Solutions, a blockchain infrastructure company specializing in Bitcoin mining hardware procurement, mining rig co-location, as well as professional mining and staking pool operations. In this conversation, we discussed Blockware's recent analysis of miner selling pressure, how profitable various miners are around the world, what to expect during the Bitcoin halving, and how hash rates should fluctuate over the next few months. I really enjoyed this conversation, and Matt was super informative. But before we get into this episode, I want to cover today's sponsor, Unstoppable Domains. You've probably heard me talking about Unstoppable Domains for a few months now.

Well, guess what? Blockchain domains now work inside of Opera Browser on Android. This means you can type in a .crypto domain just like a .com. I just relaunched a website for the Pomp Podcast at pomp.crypto. You can check out my decentralized website right now. It's a huge step toward protecting free speech around the world. Opera is the first browser to support the decentralized web, but I'm sure there's going to be many, many more.

Hey, Google Chrome, you better get on this. So to get your very own domain and build a decentralized website, go to unstoppabledomains.com right now. Again, UnstoppableDomains.com. Not only do they have a cool name and a cool URL, but they got an awesome product as well. So head on over to UnstoppableDomains.com. All right, now let's get into this episode with Matt. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek

Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Matt here with me. I feel like we are deep into the quarantine. Got the quarantine beards, no haircuts, just ready to rock and roll. Matt, I appreciate you jumping on and recording this on short notice. yeah absolutely thanks for having me pop for sure let's just jump right in uh let's go over your background um and then we can get into the recent report you guys uh cranked out

yeah so i you know i started getting involved in the digital currency space in 2015 uh with one of my partners i launched a digital currency hedge fund in 2017 called blockchain opportunity fund We still manage that. More liquid assets. And then in late 2017, my brother's college roommate saw an opportunity on the mining side. There was an arbitrage for mining rigs between the U.S. and China, and together we launched Blockware Solutions. we've now become one of the largest distributors of ASICs to the US market over the past year we've sold about 30,000 ASICs to the US market we place miners in co-location facilities we do research we've got a Bitcoin pool

and now we're really building out our research arm to educate the market in the US you know our goal is to have bring as much hash to the US because we need this decentralized network we can't have 65% of the hash in China So in January, with another partner, Mike Stolzner, we launched a Bitcoin fund called Blockware Mining, and we're mining Bitcoin in Kentucky. We'll have about 180 petahash by the end of the week. We've got 500 of those S17 pluses coming online. And what we're doing is we're offering a turnkey solution to U.S. miners so that they can get up and hashing immediately.

They have a great site with exceptional technologists managing the site. So with that, we deeply understand the Bitcoin network. We've got a large, we've visited sites in Chengdu, China, the Pacific Northwest, upstate New York, and that allows us to deeply understand the network. what electricity rates are at all around the world, who's mining, and what mining rigs are they running. Are they running old-gen technology or new-gen? And what that does is that allows us to understand the break-even prices of all these different miners across the globe. Locker Solutions, I mean, we service people in China, Russia, Mongolia. We have either partners or other service providers all over Europe, even South America, Mexico, North America. So that gives us, communicating with all them gives us a very good deal of what electricity

rates are and what type of technology miners are running. And through that, we can estimate and understand what different miners' break-even prices are. Now, many analysts have said that the cost of production for a miner is price support. When you read our research report, you'll see that it's not price support for Bitcoin. It actually accelerates sell-offs in the price of Bitcoin. The key expense or variable for miners is their electricity. About 95% of their operational expenditure is electricity. So if you're at an electricity rate of $0.06 and you're running 100 machines and someone

has an electricity rate of $0.04 and they're running 100 machines, you're running at a 50% greater breakeven than the individual with $0.04. So when the miners at $0.06, they start approaching, when Bitcoin starts approaching the breakeven price of a miner at $0.06, their margins become compressed. Their net profitability decreases, and they have to sell more of that Bitcoin. Their revenue is coming in as Bitcoin. And as that margin compression happens, they have to sell more Bitcoin. So now when a miner goes under their break-even price, now they have to pull Bitcoin from their treasury and sell that to fund their electricity. Every month, you have to pay for that electricity. And that's what's creating

salt pressure on the network. There's really three participants in the Bitcoin network. There's the investment funds, there's the hodlers, and there's the miners. All three, for the most part, are very bullish. Most funds, most hodlers, they're long only. But miners, they're truly the most bullish because they're buying mining rigs and they're building out facilities, assets with three to five-year life cycles. Or if you're a fund, you can risk manage. I mean, you can buy 5 million, 10 million worth of Bitcoin and be bullish, but tomorrow you can sell out of it, right? Miners are stuck. They are the ultimate call option. So they're mining their Bitcoin and they have to fund their electricity bill.

every day, there's about 1,800 Bitcoin released. Every month, it's 54,000 Bitcoin. When Bitcoin was at 10,000, that was a half a billion of new Bitcoin released onto the market every month to miners that has potential sell pressure. Now, they're not selling at all. But when Bitcoin starts to sell off and these inefficient miners have to sell their Bitcoin to support their electricity bill, that exacerbates sell-offs in Bitcoin. So, you know, we saw that BitMEX, the BitMEX blow up where Bitcoin, you know, it went down from, you know, about 7,800 all the way to maybe 3,800. There was only strong hands left, right? Anyone else who was holding the Bitcoin, that's a lot of strong hands. But we've had difficulty rallying. I mean, I think overall,

the overarching theme is the US equity market and the global macro. But overall, yes, a lot of holders blew out, but we still have the sell pressure from miners. And I think that's creating price drag right now, because these miners still have to fund electricity. They have to do some type of treasury management. So they're selling their Bitcoin every day to have cash so that they can fund their electricity bill. Now, these things are, this is how, this is just how the Bitcoin network works. And it's, it's healthy. It's, it's a self-correcting mechanism. As, as, as these inefficient miners blow out, you know, we, we modeled the network in eight layers. Layer one being miners with two and a half cent electricity or lower. Layer two being three cents, four cents,

five, 5.5, six cents, six and a half, and then seven cents or above. So that's the layers. And then we broke that down further into who's running old gen versus who's running next gen. Now, this is what's really interesting. We've had this hardware upgrade cycle in 2019. It main released all these seven nanometer chips. So miners who are running at seven cents and bought the new technology, since the machines are so efficient, their break-even price is lower than a miner at $0.03 running the old gen. So about 45%, about probably 35% to 40% of the network is still old gen. And now, because of the hardware upgrade cycle we had in 2019 and still occurring,

about 60%, 65% is next gen. These miners at $0.07, which is quite high, running next-gen equipment have a lower break-even price than these miners in China with $0.03 running old-gen equipment. And that has changed up the game, and that's going to keep more cell pressure on the network for what we believe to be another three to four months. I'll go into our later thesis of what we think is going to happen. And it's very bullish, but, you know, we're going to go through a cycle of of minor, you know, minor capitulation. And and that's ultimately going to position us for our next leg up, because once you get these inefficient miners out of the network who are creating the cell pressure, that's how you position to rally next. So we just got a taste of it. You know, last week we had one of the largest difficulty adjustments in Bitcoin's history, and we were monitoring the pools.

We saw a lot of the Asian pools lose more hash than some of the American pools. So to us, that's a signal of, you know, miners in the East that are running old-gen technology. They're probably the ones that were shutting off, and that's a really healthy thing for the network. When we go through halving, halving is very bullish because ultimately half the potential sell pressure gets removed and these inefficient miners are going to have to shut off. Now, when they shut off, difficulty adjusts. I think one of the least understood and under-respected attributes of the Bitcoin network is difficulty. I just don't understand how Satoshi did it in 2009

or 2010 because it's a self-correcting mechanism. Right now in the world, we have this monetary policy where central bankers can just print and manipulate. In the Bitcoin network, everything is controlled by code. The monetary policy is controlled by code. And when people become inefficient, they shut off and difficulty adjusts. And the rewards that the people that shut off, the miners that shut off, their Bitcoin starts getting allocated to whoever lasts. And their margins, the miners that last, their margins improve because they're getting more Bitcoin and they're able to secure the network. It's like a gravity. Difficulty is like a gravity. If too many miners come online, then Bitcoin is getting distributed to several miners and

everyone has miner compression. These inefficient miners at the higher layers, they blow out, difficulty adjusts and Bitcoin starts getting allocated to the miners that still survive and then their margins normalize and it goes the other way. So it's a very interesting mechanism and it's self-correcting. There isn't manipulation. And that kind of goes into our later thesis, which we can talk about, which I think is going to be very attractive for people, especially with what's going on in the global macro. Yeah, so one of the things I want to touch on is this whole idea of there's tons of miners who are mining,

but they don't sell 100% of the Bitcoin to pay for electricity. Do you have any sense of the percentages that certain miners are having to sell and then how that changes with price fluctuations as well? Are there certain kind of in those tiers you described, some that have to sell 100% to fund operations and then some that are maybe selling only 10%. And then if you kind of back into the larger miners

probably have lower cost power, you can really start to understand how much of the cell pressure on a daily basis is coming from miners or is that just too many unknown variables and therefore difficult to come up with right now? No, that's a great question. In our report, we model all that out.

We have these large tables in the research report, these Excel tables, and that's exactly what we're doing. We understand how much electricity is being consumed by each layer based on their margins. So if you're running NAS17 at $0.06, you might be consuming $80 worth of electricity per month, and you may be making $120 in revenue. So you know that you have to sell $80 of your $120, which is at least 75%, no, 66%, right? So their margins are 33%, and they have to sell 66% of their electricity if they're at, for example, $0.06. And then if they're at $0.05, maybe they only have to sell 50%. And if they're at $0.03, they only have to sell 30%.

And that's what's key. You brought that up, and that's what's so helpful for the network. When these miners who are operating almost at break-even and have to sell 80% to 100% of their Bitcoin blow out, and now their Bitcoin is getting allocated to these efficient miners who only have to sell 30%, well, they're holding more Bitcoin. Sell pressure comes off the network. A lot of people think that Bitcoin trades a couple billion a day. That's what's important. That's inaccurate. A majority of that is fake Asian trading.

it's algos, it's day trading. That just creates short-term volatility. What moves the price of an asset is net fiat in and net fiat out. And we're interested in the intermediate to long-term, right? So I'm interested in what's net money in, net money out. Miners are bringing net money out because they're getting their Bitcoin and they're selling it to fund electricity. Now, demand and positive sentiment is what brings funds and hodlers to bring new cash in. And we think, and that counterbalances miner's sell pressure. Now, that miner's sell pressure will get reduced when inefficient miners are operating at their break-even or below break-even. They have to shut off, and now their Bitcoin is going to the miners who only have to sell 10% or 20% of their Bitcoin to fund electricity.

And that's how you get these better environments for Bitcoin to rally. We're going to experience that. We just got a taste. We just had that large difficulty adjustment. That was a bunch of old generation equipment getting wiped out. Once we go through the halving, revenue is going to get cut in half. All the old generation equipment, for the most part, is going to shut off. Um, you know, markets, most markets are supposed to be one of the most efficient price discounting

mechanisms, right? Future discounting mechanism. Um, I think equity markets, the larger the market, the more efficient, right? Crypto markets are probably one of the less efficient markets out there, but there's, there's still efficiencies. So we think, we think, um, we think a lot of the S nines are going to shut off, but some of them are going to flow to areas in the world that just have the cheapest power or subsidized power. It's like pouring a bottle of water at the top of a mountain. It's going to go

to the lowest point. That's how gravity and water works. These S9s are going to flow to areas like Venezuela. They're going to flow to areas like Iran, Kazakhstan, where there's subsidized power or near zero power, or they'll float areas where a utility has excess power and they'll be smart enough to get involved. We have clients capturing the natural gas and they're running at one cent power. That's going to be a boom in the US. The group that we're working with is a steel mill and some of their jobs are getting repurposed to Bitcoin mining. I mean, the revolution that's going to happen with Bitcoin mining is about power. That's the most important component. So those who have the cheapest power in the world are going to start getting involved in this. They

already are. And that just makes their network more credible and more secure because you have Bitcoin. Our belief is Bitcoin is a commodity in its infancy. And when you get a better release of the supply, you get less volatility and it becomes more usable, right? And Bitcoin is just, it's 10 years old. It's a commodity in its infancy. You look at oil, gold, soybeans, all the suppliers, they're the ones controlling the supply and they kind of influence price. Well, they hedge out 12 months, right? With their futures contracts and their forward, Cargill, Barrick Gold, Aramco, they all have 20-man trade desks hedging out the product. With Bitcoin mining, it's a Chinese farmer. It's some small farm in the US. And when Bitcoin starts

to sell off, they might puke their coin, and they're exacerbating the prices in Bitcoin. And they're the suppliers. So once this becomes more institutionalized, once we get better products, which is happening right in our face, right? CME has their future. Now we have options. We're witnessing Bitcoin becoming more mature. And when the supply gets released smoother and volatility gets sucked out more, it becomes a better store of value and it becomes a better digital gold. I mean, if oil was just fluctuating like crazy, it is. I mean, people don't realize commodities are some of the most volatile assets. So you want to point to Bitcoin and talk about volatility. I mean, oil was at $150 in 2009, 2010, and now it's at $20. So there you go. It's lost 85%, right?

So, we think there's a lot of things that are happening right now that just make us very bullish Bitcoin. The commodity thing is a bit of a tangent, but Bitcoin is 10 years old. It's a commodity in its infancy. The difference is no matter what the supply gets released, that's code. But the people that are going to influence the supply will become far more diligent about how it's released. We're going to have better exchanges. We're going to have derivative products. They're going to start using better schedules for treasury management.

Volatility will get sucked out, and it's going to be a more usable digital gold because volatility gets sucked out, and now people are going to use it more. And most importantly, it's all happening right in front of our face. The futures market is very robust with the CME options. Yep, go ahead. One of the things I want to ask about is using this thesis of kind of the mining cell pressure, walk us through what you expect to happen over the next, you know, call it 45 days before the halving, what happens at the moment of the halving, and then maybe what happens in the three months after the halving and then kind of 18 months out. So going into the halving,

at the halving, three months after, and then 18 months after that. yeah so we initially put this report out um to some to our investors and clients in january so we were kind of expecting this sell-off um and we think that bitcoin is probably in a trading range and it'll continue to stay in quite uh compressed margins for miners going into having now once we go through having the miners revenue is going to get slashed in half this is when we're going to experience what I call, I think it's going to be a healthy cleanse of the network. We're probably going to experience difficulty adjustments.

If Bitcoin is still at 8,000 or lower going into halving, we're probably going to, this is when we're going to get extreme minor capitulation, probably 30, potentially 40% of the network shutting off. Anyone with power above two cents running old generation, equipment is going to blow out. Miners with mid-generation equipment like T2Ts, the NSL econ machines, those are going to blow out if you're at $0.04 or higher. And individuals running the newest equipment at $0.075, $0.07, high sixes, they're going to have

to shut off. So I basically just listed off about 40% of it. Now, that's in the report. We really lay all that out. Now, what is that? It's not a light switch. People can't just turn off their machines and they're not going to just turn off their machines. There's friction. People want to hope. People have utility contracts where they have to consume a certain amount of power. Otherwise, they lose their long-term contract. They might be in hosting facilities where if they default on their payments, then they lose their mining rigs. So if you just bought thousands of dollars worth of mining rigs, you're going to keep paying your bill for two or three months until you blow out. People are in facilities and they have to pay their lease payments.

They built out all this infrastructure. So they're still mining the rigs. And once they start defaulting on rent, which might take two or three months, then the facility kicks them out. So we think once having hits, we're going to experience this massive difficulty adjustment because inefficient miners are going to shut off, and we think it could take maybe May through potentially July of friction, of people shutting off, people wiping out, throwing in the towel, and completely shutting off, and that's when we're going to actually get difficulty kicks in and margins are going to get better. The efficient miner should not fear having, they should welcome it. Their margins, we've analyzed it, and we believe that margins

of miners at $0.06 and lower running the most efficient equipment, their margins are going to be about the same pre-having and post-having after all these miners shut off. And it's because they're going to get the Bitcoin that... So those miners who shut off about 40% of them, once they shut off, that Bitcoin's got to go somewhere. It's going to go to the people that last. Mining is about survivability. You just need to survive. If you survive, difficulty will adjust in the future, and it's going to improve your margins, because the people that are inefficient, their Bitcoin is going to go to you. So what that does is all these inefficient miners wipe out. They were operating where 80% of their mined Bitcoin needed to get sold

to fund electricity. They're gone. There's where only 50% or only 30% of their Bitcoin needs to get sold. Now you've removed, not only does halving remove 50% of the potential sell pressure, But now it's like – now the strongest hands are accumulating Bitcoin, and they have the best – a lot of cell pressure is going to get removed from the network, and that's how we position to have the next leg up. So it's going to be an exceptional improvement on the supply side. And we think that's going to, it'll take maybe May through July or early August for all that to kind of shuffle out. And we're really excited because we layer in the global macro into all this. We think, you know, with what's going on in the U.S., if we have this continued shutdown, if we have a lot of jobs lost, You know, the Fed, I think they, I forgot the exact number, it was either two or six

trillion. And people look at that and they think it's the end because the number is so big. It's not about the number. The Fed, they operate in cycles. You know, it's market cycles, it's economic cycles. When you're printing, it's cycles. It's a process. You don't just inject six trillion and everything's fixed.

Um, it's, it's going to be a process of many more injections. Um, and, and people aren't just going to, it's not going to be business as normal. Once we get back, once we eradicate this disease, people are going to be very cautious. Companies are going to be very cautious with spending. Um, and, and we think it's going to take, uh, you know, a longer recovery. So with that, This is what's interesting. Many market participants are not going to like that system of the Fed being able to just inject money whenever they'd like to. So when you get a scenario like that, you get market participants that start to look at other options. And we believe they're going to look at Bitcoin as this parallel financial system where I think a lot of people are going to go, our present system is broken.

You could print as much as you want, buying all types of assets. But this Bitcoin, what is this technology? It's dictated by code. The inflation rate is fixed and then it halves. No one could mess with that. And when you get speculators, when you get a disruptive technology like Bitcoin that's in its infancy, and now you layer in a bunch of speculators who start to imagine and envision the possibilities of this actually coming to fruition. I mean, that's what 2020 is doing. 2018, excuse me, 2008 spawned Bitcoin.

Bitcoin was invented by Satoshi because of 2008. 2020, I believe, is going to allow speculators to imagine and envision the possibilities of Bitcoin actually getting adopted. Bitcoin doesn't have to get adopted for there to be a bull market. Speculators just need a secondary market with liquidity, so the ability to speculate, and they need to envision the possibilities and imagine the possibilities. And I think that's what's going to happen. I think the supply side is going to be extremely well positioned for Bitcoin and Rayleigh because of extreme minor capitulation that's going to occur from halving. And I think that's going to play out between May through August. And all the sell pressure will get removed from the network because the miners are going to blow out.

And then I believe the fundamental of the story is just improving every day due to what's going on with the global macro, the printing, and I believe that's going to improve the fundamental story. It's going to allow people to say, look at this parallel financial system. We prefer that over Donald Trump pressuring Jerome Powell to print. And when you get speculators, when you get a technology in its infancy that's disruptive like Bitcoin, you get speculators starting to imagine and envision the possibilities of this technology come into fruition, and you get a secondary market with liquidity, that's how you get parabolic bull markets. And I think that's what's all brewing right now. All right. So Matt, one of the questions I have for you is, obviously, the oil prices have been

dropping very quickly over the last couple of weeks. And we're reaching a point now where we're going on multiple weeks of that oil price being below where most oil producers, especially in the United States are not profitable. Do you see a world where the folks who have this oil realize, hey, rather than just selling the barrels of oil, I can actually use that to generate power and I should be mining crypto at a much more profitable manner? Or even maybe some of the other excess power producers kind of going in as well and starting to realize this? Or do you think that we're still far away from what I'll call traditional industry or traditional energy producers um kind of crossing the chasm into uh bitcoin mining it's you know that's a great

question and it's it's uh very specific to the u.s um there's a group i mean there i i want to keep everyone's stuff confidential but there's a leader uh that we've done business with we respect him he's really intelligent and they're building this out um in in several states they're capturing the flare gas uh they're i'd say that the leaders in it um and and there's excess right now so they're going to these different oil drillers um and they're working with them they're capturing the flare gas they're using these natural gas generators and and uh the power is very cheap i have another client um we just had a call with them last week it's two two individuals um out west and and they are doing the same thing to a smaller scale but they're going to ramp up

because they've identified the opportunity and they're going to capture it um they are going they're in they're in texas and they're capturing the uh the flare gas they're connecting it with a natural gas generator and and they're burning that and they have one cent electricity um it's this is going to change mining it brings in it creates cost efficiencies for these oil uh you know the the the oil drillers don't have anything to do with the they they don't have anything to do with the natural gas so you either burn it um or you know it doesn't it doesn't store well so that's why they're utilizing it it's it's it's basically a byproduct that's being um leveraged um so yeah we see an opportunity there i'm not as proficient as explaining it

um because i'm not doing it but i i have clients that are and they're making exceptional money doing it one cent electricity um and mining bitcoin so there's going to be synergies where you could where you could bring bitcoin mining to these fields put down a container have the natural gas generators, capture the flare gas, burn it, or whatever mechanism it is. I'm guessing the national gas generator does that. And they're achieving one cent electricity. And that's funding the mining rigs. And that's, you know, it's being very efficient.

So, and we have a lot of that in the U.S. The U.S. is the most energy abundant country in the world. I mean, you look at Texas, there's wind power, there's solar, there's natural gas, oil, they have it all. So we're going to leverage it, and it makes me very bullish for Bitcoin. Yeah, so in the U.S., I mean, people, I think, don't realize there's so much energy abundancy in the U.S. In Kentucky, we're using hydro. There's a lot of hydro in upstate New York, Pacific Northwest. Texas has wind, solar, oil, natural gas, just about everything.

So that's why, I mean, Bitmain, I don't know if people know this, Bitmain is mining in Texas. So the Chinese are coming here. You have all the stability in the U.S. with regulation. The municipalities just don't shut you down overnight. you don't have to negotiate with the politicians. If you're going to allocate millions of dollars to a mining operation, as a hedge fund manager, you want to ensure you can have a grasp of your risk. You don't want to deploy something in China or Russia, and overnight, someone shuts down your mine. In the US, you have that stability. And most importantly, you have redundancy.

The grid, when was the last time we had a blackout in the US? People are deploying stuff in Venezuela, Iran, I think 20% of the day they have blackouts. In the U.S., the bandwidth, the internet connectivity, these miners need to be connected at 100% uptimes, right? So in the U.S., you have 100% uptimes. In other countries, the internet might be down for 15, 20% during the year. So you couple in all these variables, the abundancy of energy, what these miners are doing with the natural gas, the exceptional internet connectivity, the regulation and stability. It's just a far healthier environment to be Bitcoin-minded. And the numbers show it. And that's why the acceleration, the growing market is North America. And that's exceptional for the

Bitcoin network because you want this decentralization. We want more hash in the US. us. We don't want all the ASIC manufacturers in China and 65% of the hash in China and the majority of the pools in China. So we want this decentralized network. It's a significant value add. It's part of the fundamentals of Bitcoin. So we're excited. We're glad that we're seeing the acceleration in North America as well. What, if anything, are you seeing on the central bank side or kind of the nation state side? Are you seeing any interest there from countries or governments themselves? Not yet. I think I've seen articles about like Belarus thinking about getting involved. I think it doesn't move the needle for them yet.

You know, a country is so large where for them to take on making $50 million a year or something like that, I think it doesn't move the needle for them yet. But in five or 10 years, if this truly gets commoditized, you got to think that utility companies are going to be the big players, potentially nation states. Anyone, right? It's a market. It's an efficiency. Whoever's got the cheap power, the subsidized power, the free power, the economics are best for them. So whether they partner with someone who's a service provider who brings the mining rigs

and run the operation, there's some of that going on. I know utilities who are starting to work with different advisory services who can build this out. So there's efficiencies like that getting created. And as Bitcoin continues to mature, people are going to feel more comfortable with it when fidelity is getting involved. You get better custody when you get better markets that you can rely on. We have miners who are publicly traded and they want to use an American mining pool who gets like a SOC report so that this publicly traded mining company is more comfortable with where they're getting their rewards from. So there's a lot of things that could really improve this industry and bring more participants in.

And when you remove that type of friction, the investment dollars come in too. Fund managers are more comfortable allocating capital. That's going to be on both sides. Here's the thing. The economy has gotten a bit rough, but we're seeing, and there's been disruption everywhere. I haven't seen a ton of disruption in the mining space. We're still selling mining rigs. Think about how bullish that is. You have miners in 40, 50 plus countries that are buying infrastructure dedicated just for Bitcoin. There's been billions of dollars allocated towards mining Bitcoin, securing the network, the infrastructure.

That's network effects. That's value. I mean, it's not just about Bitcoin. It's not just about the coin. It's about this network of miners all around the world. They're spending money on infrastructure. They have conviction. They're going to support the network.

That's valuable. If you want to shut down the Bitcoin network, you got to go. If Donald Trump said, I'm shutting down the Bitcoin network. Well, he's got to go to China. He's got to go to Venezuela. He's got to go to Berlin. He's got to shut down every single little miner. Otherwise, the network keeps settling blocks, right? So, that's the value of decentralization right there. There's miners all around the world in different sovereign countries. That is very, very powerful. So, people always talk about network effects. I think the biggest network effect in Bitcoin is the miners and the billions of dollars They're spending towards facilities, power contracts, mining equipment, firmwares.

There's data centers that are traditional data centers that are bringing miners into their facilities. That's network effects. That is a healthy network. Yeah. Got it. Makes a ton of sense. Before we finish up, I always ask people, what's your favorite book? my favorite book um probably reminiscence of a stock operator

why that's that was when i um you know when i started getting into equities uh my partner who he's so when i i started getting mentored in the equity markets around 14 or 15 and that was the first book he referred to me uh to learn about equities and that's really what has kicked off my you know, my career in the financial services, you know, running money, thinking about human psychology, and really thinking about how markets affect each other, how people affect markets, right? When I discussed what I think the fundamentals of what's going on with QE, that's a human psychology trade. It's a bunch of speculators who are going to get involved. Imagine this disruptive technology getting adopted, and then human psychology just takes over.

That's how you get these bull markets. You layer in that liquid secondary market, and that's how these things happen. It's happened time after time in history. It repeats itself. Technology in its infancy, that's disruptive. Secondary liquid market. speculators being able to imagine the possibilities of it coming to fruition parabolic bull market for sure um before i let you ask me one question to finish up uh ask everyone about aliens believer

non-believer uh yeah i am a believer um i don't i don't know you know i can't prove it but i think um yeah i think it's out there the world's bigger than us right um maybe they deployed coronavirus on us i don't know but yeah i'm a believer you never know you never know uh what one question you have for me to uh to finish up here um what are you most excited about in the bitcoin space time i think that's the most important thing is uh it goes goes back to the bill gates quote for me um we overestimate what we can do in one year and underestimate what we can do in 10. And if you went back to 2009, 2010, and told people this is where Bitcoin would be today, I think they would have told you that you're crazy. But if you ask people, even this

year, what are we going to do in the next 12 months? I think that they'll be overly optimistic. And so for me, it's just the passing of time gives builders the ability to build. It gives investors the ability to be converted into holders. And it gives time for the infrastructure and market liquidity to be built out and then also the education to happen which i think is all really important for uh for the ecosystem um and so it's one of these things where if you can remain optimistic and kind of upbeat uh even through these long bear markets and kind of downward uh cycles then over long periods of time it ends up working out really well and so i think just time is uh and kind of the passage of time is the most exciting thing to me

absolutely i mean you're you're rarely you're rarely going to find a successful pessimist you got to stay optimistic um so i completely agree with you absolutely where can people find you and the company online um you can go to blockware solutions.com uh that's that's that's the company that we're uh really servicing the mining network um if you want to learn more reach out i could we could talk about our other companies as well. We've got a Bitcoin mining pool. We've got an exceptional firmware to get as much edge for the U.S. miners. We've got mining rigs on site and a co-location facility in the U.S. So miners can be up and hashing within 48 hours. So BlockWareSolutions.com,

reach out to us. I'm also on Twitter, MJDeSouza2. Reach out to us. Always happy to answer questions and put out the best information we can. Absolutely. Joe's got you hooked up there with the Twitter account. Listen, I really appreciate you doing this, Matt. I think that people are really going to enjoy hearing from you, especially around kind of the halving and a lot of the minor cell pressure, etc. So we'll have to do this again, maybe post-halving at some point later this year. But I really appreciate you taking the time to go over all this with us. absolutely guys and um you know i think i think everyone should stay positive with what's going on with the virus it's a great opportunity to spend time with our friends and family um i've had the pleasure of being able to have dinner with my family the past seven days and and i think those are the most important things so let's appreciate all that take care guys thank you got it man hey everyone pop here if you like this episode of off the

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