The Pomp Podcast - #892 Bitcoin & Climate Change w/ Chris Larsen

Episode Date: March 31, 2022

Chris Larsen is the Co-founder & Executive Chairman of Ripple. In this conversation, we talk about Chris's thoughts around Bitcoin, Climate Change and ESG after his recent Op-Ed. ======================= The Pomp Podcast is powered by BetOnline.ag, the world's largest sports betting, casino, poker and horse racing website that accepts cryptocurrency for wagering. BetOnline.ag gives you the ability to use Bitcoin and more than a dozen altcoins to make deposits and withdraw your winnings. There are no crypto transaction fees, and processing is instantaneous and secure. Visit https://promotions.betonline.ag/pomp and use PROMO CODE: POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline.ag is available in nearly every country around the world, making it the top global gaming destination for crypto users. ======================= Since 2018 Copper has been at the forefront of institutional digital asset development.   From award winning custody solutions, to creating the first truly off-exchange settlement function, Copper pioneers technology, products, and services, in lock-step with a rapidly changing world.    No other infrastructure provider covers as many assets, across as many exchanges, with the speed and security that Copper can offer. To learn how Copper helps the world’s largest institutional investors secure their digital assets, head over to copper.co   Copper - the unfair advantage. ======================= Bullish is a powerful new digital asset exchange built for institutions that delivers the innovations of DeFi in a regulated environment. The Bullish Hybrid Order Book pairs the high-performance of a traditional Central Limit Order Book with automated market making. Powered by deep Bullish Liquidity Pools, backed by the multi-billion dollar Bullish Treasury. So, you can trade with certainty and at scale across variable market conditions.   Learn more at Bullish.com or follow @Bullish on Twitter. Because the future belongs to the bullish.   *Not investment advice. Digital assets and cryptocurrencies are high risk products. Consult your professional advisor before dealing in them. Bullish’s services are available in select locations only and not to U.S persons.    Visit https://bullish.com/legal for important information and risk warnings =======================

what's up everyone this is anthony pompliano most of you know me as pomp you're listening to the pomp podcast simply the best podcast out there now let's kick this thing off chris larson is the co-founder and executive chairman at ripple in this conversation we talk about chris's thoughts on proof of work and on bitcoin obviously there are some things we agree on and other things that we disagree on i hope that you can listen to this conversation with an open mind and look at both points of view. Before we get into this episode, I want to quickly talk about our sponsors. Today's episode is brought to you by BetOnline.ag. BetOnline.ag is the top spot for all of your sports betting, casino, and poker needs. It's available on your computer, your tablet, or your

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for sports, casino games, horse racing, poker, and more. Sign up today at betonline.ag and double your deposit with our exclusive podcast promo code POMP100. go check them out at betonline.ag. Today's episode is brought to you by Copper. Since 2018, Copper has been at the forefront of institutional digital asset development. From award-winning custody solutions to creating the first truly off-exchange settlement function, Copper pioneers technology, products, and services in lockstep with a rapidly changing world. No other infrastructure provider covers as many assets across as many exchanges with the speed

and security that Copper can offer. To learn how Copper helps the world's largest institutional investors secure their digital assets, head over to copper.co. Again, copper, the unfair advantage. Check them out at copper.co today. This episode is brought to you by Bullish. Bullish is a powerful new digital asset exchange built for institutions that delivers the innovations of DeFi in a regulated environment. The Bullish hybrid order book pairs the high performance of a traditional central limit order book with the automated market making. Powered by deep Bullish liquidity pools backed by the multi-billion dollar bullish treasury so you can trade with certainty and at scale across variable market conditions you can learn more at bullish.com or follow bullish

on twitter because the future belongs to the bullish now this is not investment advice digital assets and cryptocurrencies are high risk products consult your professional advisor before dealing in them bullish services are available in select locations only and not to u.s persons visit bullish.com slash legal for important information and risk warnings. Go check them out at bullish.com or follow at bullish on Twitter. All right, let's get this episode. I hope you guys enjoyed this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular

investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys, bang, bang. I've got a super exciting episode for you. I've got Chris Larson here with me, the co-founder and executive chairman of Ripple. And then in a personal capacity, he is one of the participants in a brand new campaign called Change the Code, Not the Climate. Chris, thanks so much for coming on and spend some time talking. Thanks for having me. Appreciate it. For sure. So one of the areas is obviously, I don't think you or I are confused. This is a lot of people are paying attention. They want to understand what the hell does Chris think? What does Pomp think? Do they agree? Do they

disagree? And all the details. But I do think it's important to start off with across the industry. Every single community seems to have these, you know, kind of black and white sunglasses on. There is no common ground in any way. I think that both you and I have some areas where we vehemently agree on. And so would it be fair to say that, you know, you see a lot of problems and the legacy financial system. And generally, you think that crypto as an industry could create some of those solutions to solve those problems.

Is that like a fair middle ground where we probably agree greatly? Absolutely. And I'm glad you brought that up because I think by and large, look, people in crypto, we're trying to change the world in a very positive way. There's so much opportunity here.

This thing is just beginning. And I want nothing more than the industry to succeed because the system that we have is broken and it's old and antiquated and it's hurting people. So absolutely. And I think another area that is interesting to talk about because it usually enters into the political room, but if we kind of put politics aside,

it's this idea that like markets in general, we're talking about technology startups, we're talking about finance, talking about anything. Markets tend to be self-correcting in some form or fashion and they end up deciding who winners and losers are, which I think every entrepreneur and investor, which this isn't your first company, this isn't the first time that you found success

in technology or finance, But that seems to be a theme that most entrepreneurs kind of get behind. Is that another kind of fair point where we end up seeing eye to eye? Yeah, I think generally markets do determine what wins and what doesn't. I do, in my opinion, I do believe there's a lot of luck into it as well, right? We sometimes say, yeah, that person got hit by the lucky truck, right? So it's a combination of those things. Probability is a huge factor in life, but some people don't like to admit that.

So that's for sure. And then the other piece that I think actually we see eye to eye on, which is funny because it's a difference, is we're both highly biased, as is everyone else watching this and kind of participating in this market. Whenever there's money involved or assets, it seems like just naturally as humans, we tend to gravitate. If I own more Bitcoin, then, you know, I like Bitcoin. If I own more XRP or Ethereum or whatever, there's kind of this tribal element. And so, um, for me, I am, you know, 95% of my liquid net worth is in Bitcoin, uh, which obviously skews the way that I view things, whether that's good or bad, uh, for you, how do you think about your portfolio and like how much is in crypto versus, uh, if there's

any sort of, um, kind of breakdown across assets that you normally try to target? Yeah, boy, I don't know, like 75% is probably in crypto. And obviously the vast majority of that is, uh, you know, as you probably know, as an xrp um but you know yeah finance is a funny it's a funny place right it is super competitive um in a way that's almost fun right people people like the competition um and in crypto more so than any other place because it's it was built by libertarians libertarians uh probably don't do a good job of forming communities right so uh that's just the way it is um but when we're talking about climate though that's kind of a different beast so um that's what i spend most of my time

on that is not about my assets that's about you know that's about the planet i'm leaving for my kids and and that's a different beast got it and so obviously the reason why we're recording this and kind of uh over the last i don't know 48 72 hours whatever it's been uh there's lots of people who are paying attention to a brand new campaign uh my understanding is uh it's called not uh change the code not the climate and uh there's a number of different i'll call them uh esg or environmental groups, just as a blanket way to describe a number of these organizations. Some of them seem to be for profit, some are nonprofit, but they all have a general sense they care about the environment. They want to see positive impact on the environment.

And maybe just explain a little bit, what is the campaign? And then how do you think about your participation in the campaign as a private individual? Yeah, so the campaign is specifically around the issue of, you know, kind of Bitcoin's contribution to the climate crisis. And again, look, I'm going to start off by saying I am pro-Bitcoin. I want Bitcoin to succeed. Bitcoin's been the most, I think it's been the most successful financial asset of all time, right? Tens of millions of people own it.

It's important for the overall crypto community that Bitcoin continue to succeed. And I think it will. But it's important to people because it's held by so many folks. So I just want to say that right off the top. But the problem is, as Bitcoin gets more successful, the contribution to the climate crisis gets worse. And that is the heart of the problem. And we believe that can be solved with changing the code. Again, not easy to do.

And we're not advocating a certain type of change. We're not saying it has to do with Ethereum has done. That could be an outcome. But we're not advocating for that. We know it's a different community. um but come on i gotta believe all the smart people all the trillions of dollars floating around in this industry that can't we get to a place we can change the code so that as bitcoin gets successful it doesn't harm the climate you know at least neutral but maybe even massively

negative i believe you could do that we do all kinds of super hard stuff we can do that so we're going to get to some of the nuance of this in a second um i guess one of the big questions right And frankly, I think that the media loves a story like this, right? It's like, hey, we've got somebody who is incredibly successful in an industry who's saying, let's change something. And that change could frankly be all kinds of different things. They love to kind of gravitate towards it. We saw a whole bunch of articles.

And I think one of the main questions people had for me was like, hey, how does Chris think about his participation, right? So obviously, I think I read that there's about $5 million you're putting into the advertising. How does this group come together? Is this like, like some sort of, you know, quarterly meeting that these groups have? And this was one of the ideas that they came up with? Is it something where they think that there's economic benefit? Or just walk me through kind of how does this specific coalition come together in your mind? Yeah. Well, as you probably know, the climate issue around Bitcoin has been out there for some time. I've written about it now for, I guess, a year and a half. And now what's happening is because of all the mining that's coming to the U.S., 65% of it used to be in China. Now, most of it's in the U.S. You're seeing these small communities that are objecting to some of the practices. So Seneca Lake, for example, I think that's where it started, where, you know, a retired coal plant, now it's a gas plant being used for Bitcoin mining. Kentucky, you're seeing a ton of stuff going on there with fossil fuels and people upset about it at the local level.

Same in Pennsylvania. And then that's triggering some of the bigger organizations to get wind of this because these small groups are approaching them. Greenpeace, Environmental Working Group, for example, and the ex-head of the Sierra Club, Mike Bruin, who's actually running the campaign. They start getting aware of the issue. And, you know, we kind of came together because I spend most of my time on climate issues, all kinds of things, green hydrogen, trying to get Republicans and Democrats to work on climate together, all kinds of things. But this is one of them. I mean, it's in my own backyard, so can't ignore it. And so I just think it's a matter of time. This issue isn't going away. It's just going to get worse. This isn't going to be the first campaign. And the campaign is really good. Let's get awareness first.

there's some awareness but there's also some misinformation it's good awareness that's a problem then hey let's get people working on solutions and then if there's a good solution let's get people to see if they can adopt it right simple as that um but i think my participation is probably healthy i mean it'd be better to have a crypto person in one of these campaigns than not it's plenty of climate billionaires out there many of them are anti-crypto can you imagine if Warren Buffett was, you know, back in this, that wouldn't be good, right? Even Bill Gates, fairly anti-crypto. I think it's better to have somebody that, look, I believe in it. And I say that on these press conferences, even if some of the other folks are not as enthusiastic, I think

that's a plus. Got it. And so when these things come together, I frankly, this is probably the first one that I've actually looked at and tried to understand, you know, how they work. And it seems like your contribution has been the $5 million for the ad campaigns itself to kind of go buy advertising across these various platforms. Is there money that changes hands with like the Greenpeace and the other organizations? Or how does that work? Like what other than the positive impact on the environment? Are there other reasons why these groups do it together rather than do it separately? Or is it just their safety in numbers or kind of power numbers? Well, yeah, it's a great point. They all do some things a little bit differently. So some of them

might be more policy based, some of them are going to be more grassroots roots based like Greenpeace, for example, 3 million members. That's what they're really, really strong at. A person like Mike Bruin used to run the Sierra Club, just great at building coalitions. And by the way, that's coalitions like reaching out to owners of coal plants, right? People that run energy companies. This is not just, you know, kind of monochromatic, you know, environmentalists, right? You've got to get everybody together working on this. That's a big part of this campaign too. We've got to reach out to the people that are deeply involved in Bitcoin and, you know, look at it religiously even right that's that's going to be important so it's not anti anything

this is about hey there here's a problem the problem the way it's going it's going to get worse climate's getting worse we had a million and a half acres of forest burn last year in california all-time record you can barely get insurance in many places in california this is bad right things are getting worse um so that's the nature of the campaign you try to get a good coalition with different skills. Um, the more folks you have, the better I think in any campaign like this. Um, I think it's off to a good start. There'll be other campaigns that I'm, you know, I have no idea about, but you know,

this is just ramping up in my opinion. Got it. So I've got about 10 questions or so, uh, as I was telling you before we started to record, uh, I put out a tweet and, uh, I thought I would just get some tweets back. I figured you and I, we would probably laugh at most of them. Uh, and all of a sudden I got emails, I got text messages, I got a phone call. There was multiple people who were very interested and they sent me all kinds of things. What I've tried to do is take all of those different inquiries, if you will, and put

them into major themes into these 10 questions. And so I'm just going to go through one by one, almost rapid fire. You know, you take your time to respond, but I think it's fair to give you a chance to kind of respond to these. So the first one is, do you agree that a decentralized digital currency, regardless of which one it is, is a net positive for the world and could be a potential solution to many of the legacy finance issues? Oh, 100%. Yeah, absolutely. I don't think these things replace fiat because every country wants to have their own currency, of course. But they serve a fundamentally different purpose in the world, right? They lubricate the world's economy, right? A thing of value without a counterparty or issuer is extremely valuable. And that's what

we're seeing this that's why these things are worth trillions of dollars and look i think i think bitcoin will continue especially when it fixes this issue it will be a little more valuable than gold right it will get there for sure but i think it has to fix this issue but the market has spoken right there's no question and everybody that poo-pooed it warren buffett right jamie diamond like you name it charlie munger they're wrong right the price continues to go up the use cases continue to go up these things are incredibly important to the world so i think this is a layup but uh there was a whole bunch of other questions around like do you think that the digital currency that ends up being used globally has to be secure as well and then as a kind of you know question

number two related to that what do you think is the most secure consensus mechanism in the world if you had to just forget all of the other impacts or potential trade-offs if it was just optimizing for security one do you think it has to be secure and then two what do you think is the most secure mechanism to reach consensus in a blockchain? Well, it absolutely has to be, uh, has to be secure. And, and, and, you know, like I take it, I saw your, your tweet about, Hey, we're never going to change proof of work. Okay. Look, if, if that means we're never going to change how secure, uh, Bitcoin is and proof of work is today. I agree with that. Don't give up on the secure. It has to be absolutely secure. I think my point is, can't we, can't we replicate that security?

but do it in a way that is not contributing to climate or making maybe even helping solve climate i think you can do that right i don't know how to do it but i have faith that the world can figure that out right but you're right you can't give up on security absolutely critically important as far as which one's most secure well look i think the market is speaking um if you look at non-proof of work a trillion dollars there i guess uh over 10 years the market has basically said yeah we believe in it we believe that's secure enough and we're putting money where our mouth is so i don't know i haven't seen any data that would quantify one over the other but i get it this is super valuable within the bitcoin community so like don't go to proof of stake fine

but could you can you rethink proof of work so you get rid of this problem where the price goes up climate gets worse the price went up and climate got better this would be the definition of a carbon coin it's the only and by the way it's the only one who can do that because it's got the mining infrastructure. Nobody else has that. Mining infrastructure is going in the wrong direction right now. No fault of miners are being incented to do that. Could you change the code and make that go the other way? Everybody in the world would want to own that. I'm telling you, this is the thing I don't get why the Bitcoin community doesn't see that. So I think what I heard is right now, Bitcoin is the most secure, but if there was a security mechanism that came along

that was more secure or didn't hurt the environment, if you had both of those, if you could be secure and not hurt the environment according to whatever analysis, then that would be the ideal scenario. But right now we basically have the most secure and your concern isn't so much, it's not secure, it is secure.

It's more so just the negative impact on the environment in your opinion. Well, what I'm going to say is, is like the Bitcoin community believes that this is the most secure. I haven't seen data. What do you think? That's what they want to know.

They want to know what you think. No, I think the, my look at the market, The market is probably saying, look, of those top, you know, number, you know, whether it's proof of stake is the market saying it's secure. It's banking five hundred billion dollars on Ethereum alone as it switches. Right. So anyway, I think the market is speaking there. But look, I get it. You can make the case that proof of work the way it is now. That's the security that you want. Fine. And I agree with you. Don't give up on that. Never give up on that. But I don't get the and I don't think you were saying this correctly. Am I wrong?

i don't think you were saying never change what satoshi put in there in the first place right this climate thing wasn't really a problem way back then now it's a problem right and things have to innovate right um so like the idea of never change right i mean come on satoshi didn't say never right people told him never right elon never said he didn't say never right people told him never the silicon valley was built on never right miami was built on never new york vegas you know this is america right you change things because there's a problem and we know how to change that we know how to fix things so that's all i'm saying there but uh so i i think we kind of agree on that i i think curriculum the only thing i'll disagree with and we'll move on

because i know we got a whole bunch of stuff to talk about is when uh i agree that ethereum says they're going to move to proof of stake but i think the key piece is that bitcoin and ethereum since inception both have been proof of work they're the only two blockchains that have reached positions one and two and stayed there right everything else kind of has fallen to the way where the market thinks they're valuable at one point and they go away uh ethereum is saying that they're going to move to proof of stake right now they still are based on proof of work and we don't know if they transition and let's say with hindsight by uh benefit 20 years from now if all of a sudden ethereum fell out of the top you know coins because they made that transition we would

think one thing if they stay there we may think another and so unfortunately you i or the market doesn't have that hindsight benefit today but i think up until today it's been proof of work and there's a question mark if they transition what's going to happen bitcoiners obviously think that's bad i think the ethereum community thinks it's good and you know going back to this idea the market will be the referee i think we just got to see what happens in the market i think i probably agree with that yeah that's that's fair that's good all right i'm telling you we're gonna end up agreeing on here more than uh than we think uh all right so uh when you look at it. There's tons of studies out there around how much the Bitcoin network actually is consuming.

What is your, like what study or what data point do you use? If you had to measure it on like the global energy consumption, is there a number that you point to? I usually look at the number that is 0.1% of total global energy consumption. What do you use when thinking about this? Yeah, we use Cambridge University's numbers, which lays it out, but they come in about a half a percent and that's really importantly that's end user electricity right i think i'm correct if i'm wrong i'd be interested to know your denominator and your numerator um but i think if you're using base primary energy coming into a country that would be like the theoretical energy content of a barrel of oil you know you got to convert that to electricity or other things you

lose most of it in the conversion so the relevant number should be electricity that's usable by end users, right? And that's also really important in climate because the world has to electrify everything, right? That's the challenge here. It's incredibly hard. It's going to take a long time. And then so that total global number is going to be 23 petawatt hours, right? And Bitcoin is coming in at 130 terawatt hours. That's about half a percent. So when you think about this, one of the things that to me is fascinating is even if transaction fees exploded, which is part of the miners revenue, even if Bitcoin's price exploded. And so there was a bigger economic incentive for people to mine. And today, you know, there's $40 million or so miners are being paid

per day, globally, it's that exploded upwards, and it went to $200 billion, right in a given year that they were actually pulling in from a from an economic incentive standpoint. The thing that I always jumped to is like, even with that $200 billion of economic incentive, they couldn't buy more than 1% of the global energy, right? Just $200 billion as their revenue, if they went and spend every single dollar buying energy, and so they made no profit, it still would only get you about 0.9% based on the numbers I've looked at. So how do you think about, even with the revenue that they get, it ends up just being a limiting factor on how much energy they could purchase in the future? Well, I don't get where you're coming from with that. I mean, they could set up shop in

Saudi Arabia and basically, you know, be the number one customer, right? If the Saudis wanted do that look the the big problem that's a big number right now 130 trillion watt hours but that's up 10 action five years that's the alarming part here right and why is that because the price has gone up right you had two halvings in those five years by the way you go out another five years of that you're going to be using more electricity than in japan right you're going to be at one petawatt hour um that's four percent of the world's like use end user electricity right that's a problem that's a big problem you look at people fighting climate you can't ignore that right and again i would just say like if that happens like that's in five years worse climate

in five years it's going to be worse right because we're way behind the curve here there's just no way that companies and liquidity providers aren't going to be just they're going to be picketed they're going to be scared to death to be like what happened in russia here with all these you know it's not just sanctions but the companies move out and that's going to be devastating to the growth of bitcoin that's where you hit that wall right so that's why change the code and change the proof of work don't go to proof of stake change the proof of work flip the equation there right you got that mining infrastructure is that is nobody else has that imagine those things sucking carbon out of the if they were incented to suck carbon out or maybe produce

renewable energy it's not like i get it right right now you got a beautiful solution and you don't have to prove the work, the result proves the work, right? It's math. You got to figure out a different way if you're going to be counting CO2 sucked out or renewable energy pumped in for free to the grid. Imagine if you had that, right? But again, bottom line, if people can make money like they have been on Bitcoin and it's helping the climate, that's unstoppable. That's carbon coin. That's the mythical carbon coin right there. So to get to 4% energy consumption globally, it would cost about $800 billion. And the miners just don't have that money. I think that's where the Bitcoin community says, well, hold on a second, like, even if fees spiked, and Bitcoin

went up 100x, they literally wouldn't have enough money to buy 4% of global energy. And so I think that when I look at this, the other key piece of this is that the legacy finance system, I think you and I both would agree on this is pretty non controversial. The more users, the more transactions, the more transaction volume, the more energy consumption, there's very linear relationship, right? You need more ATMs, you need more banks, you need more data centers, all this type of stuff to support more users. With Bitcoin, one of the interesting things is that the layer one, a single line or single transaction in that block could represent me sending you one Bitcoin, so two party transaction, a single transaction, or it

could represent billions of dollars of economic value and hundreds of transactions on the layer two, like in the Lightning Network. And so if we scale out the Lightning Network at the layer two, now all of a sudden there is not a linear relationship to support more users or more transactions we don't actually need to consume more power how do you think about that as one of the bitcoiners arguments in terms of why there isn't this linear relationship between more users and more energy consumption well first of all i disagree with your first calculation there look if the price is or if the energy uses up 10x that's if it's four percent yeah you can you can buy that energy you can afford it it's it's proportional to what you're seeing today right

the same equation they're going to spend up to you know some profit margin and and that's the driver um as far as you know kind of if it's one transaction look you're still securing the network there's still this race to solve that uh that puzzle and people are going to spend up until the point where they make a they make a decent return the thing is like yeah you're right the legacy systems use energy but they need to be working and many of them are to reduce it as much as they can and the only point here is so does so does the bitcoin protocol and again it's in there it's in the interest of the bitcoin community to do that right and if you can invent a better form of proof of work for example uh that either gets to neutral or gets to negative

it's the holy grail right um then do it right why aren't we doing that that's the thing i don't get the trillions of dollars in this industry right the billions of dollars the miners were why aren't, why is there a crack team here that's supported by the Bitcoin mining association? That's all they're doing is they're working on a new breakthrough code base that would solve this problem. Well, there's so much money, there's so much talent. We can do this, right? But I think the, why are we doing it? Yeah. I think the big thing is, so using your example, without any halvings, if there were still 900 Bitcoin per day coming in and price was up 10X, so the minor revenue was up 10x, it would still only be $146 billion. And so if miners went and

spent every single dollar on energy, they still couldn't buy 1% of the global energy. So 10x increase in price, $146 billion of total minor revenue globally in a given year, they couldn't spend all $146 billion and buy 1%. And I think that's where one of the big questions is, you know maybe energy costs come down some way but i just it's hard for me to see them getting their hands on 800 billion dollars spending 100 of it and buying four percent of the energy production you're using a different denominator you're using that primary incoming you know theoretical energy in a barrel of oil for example the relevant number in my opinion should be you know cambridge university number which is the electricity use that's again 23 peta watt hours whatever it is

Also, by the way, if it goes up 10x, the price is probably more than that. You've got a halving in there. But again, track record is 10x in five years. Continue that out. And look, I believe anybody who said price isn't going to continue, I don't buy it. I think it will. The track record is there. We have to assume the problem gets bigger and bigger and bigger and bigger.

And they can't afford it because the money's there. So if we look, I think that the data you use, let's use your data. You said that the energy consumption is up 10x in the last five years, right? the price is up 4,373 percent so as the price explodes upwards if price only goes up 10x the increase in energy consumption will be minuscule compared to the price increase at least what we've seen over the last five years if it repeats moving forward so let's keep going because i know there's there's other things here uh and i don't think we're going to agree on everything which is okay right uh but but let's keep going fair enough um all right so one of the

big things that uh i saw people all day pretty much on twitter uh when you guys announced the campaign they were like look maybe chris is right maybe they're not who knows but why don't they just fork the bitcoin code and allow the market to decide what was the thought process in terms of running the campaign uh versus just going and forking the code making any changes that you thought uh or the rest of the group thought would be applicable and then allowing the market to decide what was valuable well first of all i'm not that smart and i don't have that much energy anymore so and nobody would trust me to do something like that so uh no this is about one awareness let's get awareness of the problem the climate problem the contribution here and then

yeah like can you inspire like come on let's make a code change and again a code change consistent with the values of bitcoin community but come on i gotta believe whether it's the core developers who come up with this whether it's a miners association hey a smart teenager in cambodia right a math teacher in the in ukraine i mean the world can do this right they can figure this out but we got to start working on it that's the only point we're trying to make i can't do that but there's brilliant people out there and everybody's dialed into crypto right now the whole world is so we can come up with something better okay now there was a uh a line in a bloomberg article that i read uh and the line was the campaign believes that about 50 key miners crypto exchanges and core

developers have the power to change Bitcoin's code. Now, as you can imagine, this was probably the one thing in all of the articles that I saw people getting the most worked up about. I saw everything from like, who are the 50 people, right? To how do you not include node operators after we saw the block size wars, et cetera. Just maybe to kind of make this valuable for folks who are listening, how do you think the code would be changed? Do you agree with the statement that there's 50 miners and exchanges and people that could do this do you think that maybe that was a overstatement or just walk me through kind of that the process of actually changing it if there was a change that you thought was applicable yeah fair question i mean go back to you know

there's a book i recently read the block size wars right and you look at kind of some of the the the battles or i don't know what you want to call it kind of family dispute in 2015 right i mean you know back then you know if you look some of the medium posts and kind of what we're support it's like 30 to 50 influence it's called influential people you're right they don't have the power to unilaterally do anything but they're influential right so they got behind something could they convince other people in the community that we should hey we got to do this right um you know how to segue you know come about right that kind of a thing so it's an influential thing certainly that can come internally and that would be a look like a

soft fork can come externally and it could be a hard fork who knows that's you know hopefully it doesn't go that way but um these things can be done you're right they're they're they're not you know it's it's uh kind of messy right but um but again if it's in the interest of the community these things can be done and change is a good thing sometimes right i get it concern being conservative is important when you talk about finance but these are cutting-edge technology where the very beginning is it's like 13 years in why are we stopping innovating right now doesn't make sense. It can be better. As a related point to this, how do you think about the importance of node operators, especially in a decentralized system like Bitcoin and having

the checks and balances between the developers, the miners, the node operators, like the role of the node operators, which obviously they played a crucial role in the outcome of what happened, the block size wars. How do you think about their importance in something like this? Is that the key group to go and convince to get a change pushed through or what? Yeah, I mean, it depends what their role is, right? Are they an exchange or just, you know, somebody with an interest in the network, right? So probably an exchange probably goes along

with their customers, right, of Fidelity, for example, say, look, we've got to get on this new code base because this improves the climate situation that might be influential to one validator. If it's just a validator, like say, we're just going to hold the line, we're never going to change. And that's a different, you know,

that's a different calculus, but it is very important, Right. Because they can reject, you know, something that might happen from that that core group. You have to convince them you have to influencing them and motivating them that this is a positive and not not something that's going backwards. One of the other themes was basically the conversation that you've had. Have you talked with exchange CEOs? Have you talked with the Black Rocks, the Fidelities, etc.? What has been their reaction? If you have spoken to them, any insights there? Yeah, I mean, I don't want to, you know, actually name names that wouldn't be appropriate, but we have spoken with a number of folks, including miners, and looks like miners are being really responsible. You know, you look at Argo and Riot and Gifon, they're doing the right thing with renewables.

The problem is the code doesn't say anything about renewables, right? The code just says, incense cheap energy, right? If Saudi said we're getting into mining tomorrow, all those Texas, you know, the mining going on in Texas, move over to Saudi Arabia, Saudi Arabia, and it'd be fossil fuels and it'd be super cheap. Right. So, I mean, some people get it. Right. And I've said that. But I get it. This is a controversial thing. It's a big step. But look, we're in uncharted waters here with climate crisis. And we got to be fighting this thing on every single front. And it's one of the fronts. When you think about renewables, according to the EIA, I was looking this up before and I didn't know what this data point was, but renewables in the United States in 2020, they estimated that 12.6% of total U.S. energy consumption came from renewables and 19.8% of electricity generation came from renewables. So I think, you know, if you get a 12 or 19 on a test in school, you get F. Right. And obviously we're trying to move higher and higher on that. But the Bitcoin Mining Council, which is the only data that I've really seen where people have kind of open kimono and said, hey, here's our energy mix. they report, the members of that, that about 66% of their energy consumption comes from renewables. So kind of 3x what the U.S. does. How do you think about that in terms of those members saying we are using renewables? We aren't having kind of this negative impact

compared to what maybe the standard is across the United States for energy consumption? I don't buy that number. I mean, look, the truth is you're seeing coal plants being repurposed in Kentucky, a lot of them, right? They're actually being incented. You're seeing waste coal being used in pennsylvania jesus christ i mean that's worse than regular coal so yeah there's a lot of bad stuff going on out there i don't buy that renewable number i actually moved from china look like the renewables went down because you lost all the hydro right um and again the code does not say anything about reusing renewables it says it incents cheapest energy right and look uh fossil fuels you'll always find cheap fossil fuels somewhere in the world they're going to be lower

costs. That's a problem. As far as the US, it depends on the state. California is higher. Hawaii is way higher, for example. People are moving in the right direction. But you raise a good point. I mean, we need to be getting on top of nuclear, way more nuclear. Not everybody in our coalition agrees with that, but that's fine. But we got to be stepping on this much more aggressively than we are as a world. We're in deep trouble here. So I'm cheating a little bit because I looked all this up beforehand. I don't expect you to be an energy expert. So bear with me for a second.

Beforehand, I Googled and figuring out we were gonna talk about renewables and said renewable energy cheaper than fossil fuels. And the three things that came up where there was a weforum.org that said nearly two thirds, 62% of renewables were cheaper than the cheapest new fossil fuels, according to the International Renewable Energy Agency.

There was an article, irena.org in 2021 in June, that said majority of new renewables undercut cheapest fossil fuel. And then Bloomberg had an article in June of 2021 that said building new renewables is cheaper than burning fossil fuels. And so take away for a second, Bitcoin mining and all of this, your work in the climate, is the idea that renewables are a major solution there? How do you think about renewables versus fossil fuel and the direction of progress, I guess, and the cost of doing this stuff in the technology. What are you seeing there? And is that a potential pathway where if all the Bitcoin miners got on renewables, you'd say, Hey, you know, great job guys. And

let's move on to the next challenge. Well, no, there's, there's, yeah, first of all, the Bitcoin thing was all renewables. And again, the code doesn't incent that, but look, we've got a shortage of renewables. We need that stuff for steel and concrete and transportation and every other use case here. Right. So if there's a use case where you can eliminate the energy use, you got to do that first. That's kind of gov 101 and climate um but uh renewables it's great to see the trends right they are especially in the u.s that's true right now put the renewables in there they're lower cost but that's not true everywhere in the world right uh like the saudi's variable cost of oil is like half a cent

per kilowatt hour the renewables are nowhere close to that and again here's another problem if the code incents the the use of the cheapest energy and we are successful in this decarbonization process all of those fossil fuels are going to be like no demand and price is super cheap variable cost will be the only thing that matters you can see that you know using bitcoin mining to mine it's monetized stranded fossil fuels that's a problem um so you know but back to your fossil fuel question that is my belief also in climate uh is can we get to a circular economy in some of the fossil fuels right can you turn gas into ammonia and capture all the the carbon right there, pump it down into the Saudi desert. That's a good thing. You create circular gasoline through

solar, combining that with green hydrogen, now comes gasoline, basically. We got to look at more of that kind of stuff. We can't be shy about that. And there's some controversy there. So I don't know if I'm agreeing with you there, but when you talk about renewables, fossil fuels can be renewable with CCS. I know that's controversial, but we got to be going down that path too, in my opinion. Just out of personal curiosity, what was your thoughts when you read ExxonMobil taking the flare gas and using that to mine Bitcoin with the partnership with those Caruso Energy

or maybe two or three months ago, Canoco Phillips, they admitted, hey, we're mining Bitcoin as well using some of these methods. Like what's your general thought about these large energy producers in the United States mining Bitcoin, but not doing it from what I would consider

kind of normal primary energy production, but rather using gas flare capture or something like that? Yeah, I think it's a problem, right? I mean, but one thing I think the flare, it's a relatively small, it looks like that's not as successful as some of the other things that are going on, like what Argo is doing, you know, in Texas with renewables, that looks like much more successful. So, I don't know, it's a little bit of a sidebar issue, I guess, but obviously, flaring gas or venting gas, you know, flaring is better than venting it, but better would be to have equipment installed that prevents both of those. uh, that's probably the path forward. Uh, it's negative. You're producing carbon. If you use either one of those. Got it. Uh, what percentage chance do you assign to the code actually getting

changed? That was like, one of the things was like a bunch of people were just asking me like, does Chris think he'll actually be successful? So like, maybe like, is there a percentage or probability that you say, Hey, I think this campaign could actually drive change? Well, I guess it's a timeline, right? I mean, this will be years, right? So first of all, the awareness second of all is can you you know get uh people inspired to take a crack and maybe improve and proof of work for it and i think that's the better process here right can you get it to be negative that's holy grail um it's years uh you know but look what i know though is this is an unsustainable path climate's getting worse and bitcoin because it's so successful is going to be

contributing more if there's a breaking point here right just think how bad climate could get People start, you know, millions of people start dying and look, there's the climate refugee problem is already bad. If this could get really bad and there will be no tolerance for anything that contributes to it from corporate America, from Wall Street, because people are going to be still up in arms. This is the biggest risk for Bitcoin to get straight. And that is fixed with a code change. When you see things like the US dollar, one of the memes in the Bitcoin community is they take a picture of the military industrial complex going down an ocean, and they're like, look at how bad this is for the environment in terms of protecting US dollar hegemony or whatever the meme of the day is. uh why not advocate for change in the legacy system given that it's such a larger consumer of energy it's obviously way less renewable etc why go to bitcoin which is you know estimated on your numbers half a percent of energy consumption my number is 0.1

why not fight the government is that what you're asking me no no no but anyway i don't think you're fighting bitcoin right i think what you're doing is you're advocating for change right i think that You've used those words. And so like, why not advocate for change in the way that the U.S. government and the U.S. dollar system with their energy consumption? Well, for the same reason I don't live in Washington, D.C. and I live here in Silicon Valley, right?

The future's coming out of, and like, I don't want to say it's just here in Silicon Valley, but that's Silicon Valley idea, right? Anything's possible. It's an optimistic future. That's not what you see in governments, right? And I think most Bitcoin people would agree with this, right? Change is going to come from innovation.

um it's going to come from people stepping up and doing crazy things like bitcoin's adventure right it's a crazy idea that's impossible that's why it worked right so that's just my belief that's where you're going to get change got it um another i got two more questions then we're done uh the first one was um given your concern with the climate and the environment etc what do you do personally to kind of change your behavior so there were suggestions you know obviously smart basses all the way to serious ones, everything from, does he not use a refrigerator or AC? Does he promise to never get on a private jet again? All the way to, are there certain things that you actually do do to kind of curb or think other people should do to curb energy consumption

from the climate problem? Yeah. I mean, I guess that's sort of important, but the bigger thing is being innovative, right? I mean, only like 15% of the problem is even here and the rest of the world isn't going to just do away with stuff. So the only solution there is innovation, right? it's it's not like everybody's going to go back to the stone age that's it personally though i buy about 300 uh tons of carbon removal removal from climbworks pay a lot of money for that 700 bucks a ton but i like that i don't i don't really trust a lot of the offset markets they're too cheap they're suspicious that i don't buy it um but removal like things like climbworks is awesome company um that's pretty cool we got to we got to get that way up right we got to get that to

gigatons uh and paying for that also helps them get the gigatons down the line 15 years from now right got it and just for people who don't know what that is like explain what uh that the removal actually is how does that work oh i'm sorry yes direct air capture right so what they're basically doing they're just they're sucking carbon out of the air uh climb works the swiss company uh they've got a big operation in iceland now where they're sucking out about uh four kilotons 40 kilotons right now i believe it is uh no i'm sorry it's it's only for going up to 40 and then i think it's 400 uh and then try to replicate thousands of those all over the world it's really exciting science fiction kind of stuff but man if you can scale that that's a huge part of the

solution yeah it makes uh makes sense um the last question and this is the one that uh frankly could be asked a million different ways so i'm going to leave it as open-ended as possible and You kind of talk through it as you want. But there's lots of people who essentially were accusatory, who outright were just like, hey, Ripple or its executives or the company, they're responsible for this entire anti-Bitcoin mining narrative, etc. And I think the best way to kind of ask it so that you can really just elaborate on how you guys think about this is, does Ripple, the executives or anyone involved take specific partnerships? Do you guys pay folks to kind of spread messages or like how do you guys think about when you actually have something that you care about? Right. Obviously, you do other work outside of the Bitcoin mining advocating for the climate. How do you think about dispersing that message and how much of it is just

going and talking to people and educating them versus you guys are paying for some of this stuff, et cetera? Yeah. Well, first of all, this is, this campaign is personal, right? So ripple is not a part of this, but look, I get it. Like again, we talked about at the beginning of this industry is tribal. I knew when I participated in this and be seen as a tribal attack. It's not, you know, I want Bitcoin to succeed. The industry can't succeed if Bitcoin doesn't succeed. Right. Period.

right these things kind of work they all kind of run together so um but you know the the climate issue is real um and it is something i've advocated for um i've written about uh i talk to people all the time um but i'm i'm hoping i can do that in a constructive way that's a positive i also talk about how important these things are to succeed and again bitcoin's held by tens of millions of people you can't you can't go down a path where you're somehow going to hurt those people right just can't do that um you know so i think speaking out i'm hoping people see that as is consistent that we can believe in it i want it to succeed but i'm also you know i think it's important for it to change so uh yes or no you guys actually pay folks to put this out like in

terms of some of the content actually how do you think about because here's what this is me thinking if I'm sitting in your seat, if I was to pay the $5 million, I'm shocked that you said, Hey, look, I'm the one who's providing the $5 million. Like I was like, you know, look, you got a comfortable life. You've been successful. Uh, you, you basically open yourself up to a lot of pushback and questions and critiques, et cetera. And so like, how do you think about when to participate financially versus not and why put your name on it versus maybe not. And, and, uh, how do you think okay yeah fair question um i think you have to be transparent about that stuff you know it's much worse if it kind of comes out later or something ah i see they were behind you

know so that's like straight up yeah i was the initial funder for it um these groups were going to be doing something anyway though but you know a lot of this is coming it's bubbling up from like those seneca lake folks and the folks in kentucky and the folks in pennsylvania people are angry because what they're seeing is seeing like you know private equity funds coming in and they're they're starting up these plants and the, and the prices are going up and they're not getting any benefit. Right. So they're pissed. Right. So that's kind of where this is, is really bubbling up from, but then the big, the big folks come in and yeah,

they do need support if they're going to, you know, make a campaign. These campaigns are actually, they're long, they're brutal. These guys got a lot of things on their plate already. So yeah, I do a lot of philanthropy. I've done 90 million in climate philanthropy over the last couple of years. So yeah, I'm going to do that. It makes sense. And I'm going to be open about it. I wish that I could ask you to stop spending money

on the anti-Bitcoin mining because then Bitcoiners have to go spend money on the anti-anti-Bitcoin mining. But I don't think we'll reach that truce today. Well, you know, look, the miners are valuable. I think that's the secret sauce in Bitcoin, actually. Nobody else has that. But can you turn it around, right?

It goes the other way. Oh my God. I mean, seriously, that's the Holy Grail. that's the that's the carbon coin think about all this the new generation coming up i can make money i can invest in my future and i'm helping the climate while i'm doing that that's unstoppable yeah unstoppable i'm betting on you to find the solution you identified the problem in your eyes i need you to get a solution out there all right i'll give you the floor uh you got you know 30 seconds or whatever what do you want people to take away from this in terms of the campaign and

kind of the position that uh that you're taking well i guess i want to be optimistic about it it's like, uh, like I know all this stuff on Twitter is bad for you, but look at, um, let's be excited about this. I'm optimistic. This can be solved. This absolutely can be solved. Let's roll up our sleeves. Let's get these groups going to work on new code. Keep it as proof of work, keep the mining base, but, but fix it. So it's going the other way that can be done. We can totally do this and, um, yeah, um, let's go for it. Awesome. Well, listen, thank you so much for, uh, for taking the time. As I said to a, a friend, uh, earlier today, I said, look, regardless of what you think, he agreed to come on and, uh, and have the conversation, which, uh, which I respect

greatly. And, uh, hopefully folks can take away from this that, uh, although you and I may disagree on some nuance here and there, uh, there's definitely things that, uh, that we agree on as well. And so hopefully, uh, more and more folks can have conversations like this and, uh, you know, the market will be the, uh, the ultimate referee and, uh, we'll see how it plays out. So thanks so much for taking the time and we'll definitely have to do it again in the future. Well, thanks for being so kind and thoughtful and inviting me over here. I really do appreciate that. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to

try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to palmscryptocourse.com. We've developed a curriculum with the top teams across the industry. it's a three-week intensive training program with over 50 events packed into that three-week time period go to pompscryptocourse.com to learn more and i'll meet you guys for the next episode