The Economics of Bitcoin Mining with Bob Burnett

Transcript

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Bob, welcome back to the
Bitcoin Infinity Show.

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Thank you for joining us.

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Thank you guys.

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Great to see you.

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Uh, good to see you too, Bob.

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And, uh, we we're, we're just back, me and
Luca just back from a mining conference

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in Maribo, Slovenia, that was put on
by a mining company called Nice Hash.

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Uh, are you aware of them?

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Yes.

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Yes.

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We, uh, we have a little bit of
Hashrate, uh, directed at NiceHash.

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I've worked with them
for many, many years.

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Yep.

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Good, good guys there.

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Okay.

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Uh, uh, good to hear.

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.
Even though, as I'm sure we'll talk
about, you know, I am involved in,

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uh, with, with the ocean pool, but you
know, the world needs lots of pools.

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The world needs many different
people approaching this from

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many different perspectives.

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And, and, uh, I'm glad the
NiceHash people are there.

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Thank you.

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yeah, so are we.

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We could do a shout out here, Luke, to
Nina and the team for treating us so well

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and putting on a very nice conference.

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We had a great time in Marbor.

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Anyway, what have you been
up to since last we spoke?

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Well, I would, I would
say there's three things.

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the first one is, uh,
the creation of ocean.

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second one would be, I've done a
whole bunch of work in developing

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products in the block space area.

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Done a lot of thinking about kind of the
future of block space, where it's going,

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the geopolitical implications of block
space, a lot of those sort of things.

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And then, uh And then, of course,
I have my actual business, which

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is creating mining companies,
and we've been very active, uh,

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developing the mining sites, too.

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All right.

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And, uh, is the spam issue over
in your, in your mind or, or

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is there still a problem there?

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Well, that's an interesting question.

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Uh, I, I would say the, the issue
is not over, although I would, I

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would broaden it in two perspectives.

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The first one is that I think the
debate about how block space is used,

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We'll continue on for quite a while.

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In other words, what even is spam?

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I mean, there's clearly been divisions
about, you know, is a JPEG on here

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spam, or what's the proper use of Opif

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and OpFalse, and like some of those
sort of things, but There's still

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a lot out there, a lot of people
thinking about and promoting non

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monetary uses of block space.

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And I don't think that's going
to go away for quite a while

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until it's probably priced out.

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And, and there's always a risk though.

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That some of these alternative use cases
really clutter up block space, they create

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false economic conditions within the block
space, and they deter people from using

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Bitcoin as, at least I believe, it is.

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Should be used.

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I completely agree with that particular
case and I've done some back of the

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napkin math on this, is that, is that
over the course of a human lifetime,

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roughly 70 years, if, if we, if we
take that as a, as a starting point,

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There will be maybe room for 15 billion
transactions in that time, and therefore,

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if we divide that by roughly 8 billion
people, probably more than that, everyone

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gets less than two transactions ever,
and that's just not enough, and the

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deterrence thing is something that I
think is not talked about nearly as much.

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Much, as, as, uh, I would like, maybe,
because, because I sort of brushed off

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to the side sometimes, right, that,
that, oh no, but like, this isn't hurting

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adoption, no one cares about the, the
price of bitcoin, but like, why do

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you think that this is a, a deterrent?

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Well, first, I, you know,
I support your math.

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So this is the way I look at it.

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There are 53, 000 blocks per
year, give or take about 500.

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There's nothing we're going to
really do to change that number.

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There are 4 million weight units.

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For those less technical, it
translates to roughly 4, 000

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transactions maximum per block.

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So that gives us 200 million
transactions annually.

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And, and, and, So I'll look at it a
little differently than you looked

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at in the span of a human lifetime.

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I'll look at it in terms
of the global population.

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There's 8 billion people.

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There's 200 million base layer.

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Actually, I don't even
like the word transaction.

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Honestly, this may be a little I view it.

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I call it resolution because
there are a lot of non economic

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purposes of the base layer.

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And now I'm not talking about spam.

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What I'm talking about is, hey,
I'm doing a UTXO consolidation.

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For instance, that's to me,
that's not really a transaction.

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That's why I use the word
resolution sometimes.

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Because a coin joint or something
like that, I don't really view

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those so much as a transaction.

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But anyway, if you look at, if you look
at that 8 billion people, another way

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to look at it is if I wanted to send
every person in the world, uh, 10, 000

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sats, let's say, uh, and I didn't do
it in a, in a, with a multi output.

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So I'm, I'm, uh,
oversimplifying a little bit.

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It would take 40 years of a hundred, a
hundred percent of all of the block space.

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To get every person a little bit of
Bitcoin, right, on the base layer.

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Or another way to look at it, is there
are 330 million corporations in the world.

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And if, if we're expecting someday,
for all companies to have at least

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some treasury, or to have some part
of their economic flow in Bitcoin,

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Well, that's a problem too, right?

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That, that there's not, not even, we
couldn't support every company doing

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one transaction a year even, so the
base layer is, is just so precious

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and interacting at the base layer, I
think should be considered a luxury.

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Absolutely.

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Like my, my view on this is that
Bitcoin, first of all, Bitcoin

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is not for, uh, everybody.

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It's for anybody.

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So, and if you compare it, if you
compare it to real estate, like most

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people, uh, if they ever own a house
in their lives, they, they, they make,

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Two of those transactions, maybe, or
maybe between five and ten in extreme

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cases where they buy and sell property,
because property has taken over what

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should really be a use case for money,
which is the store of value, or as we

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prefer, medium of exchange over time.

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So, so the monetization of everything
is like making, uh, making real

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estate become money in this sense.

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And this, I, I think this is where
Bitcoin's, uh, like superpowers come

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in and this is where Bitcoin's best
functionality, uh, is and should be,

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uh, as a medium of exchange over time.

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Um, and, and like removing.

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Real estate and equities
and stuff like that.

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And the government bonds as, as media
of, of exchange over time when that

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function could be covered by Bitcoin.

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Um, so what are your thoughts on that?

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I completely support it.

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I, I like, I like your phrase a lot
that Bitcoin's not for everybody.

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It's for anybody.

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I think that that's a wonderful
way to encapsulate that situation.

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I do think though the community has
to come to terms with certain things.

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That, what I'll say is probably very
controversial, but it's in line with

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what you just said, which is everybody
can hold their own keys, but not

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everybody will hold their own keys,
and mathematically, that's impossible,

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Because of the math we just went through.

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And I think we have to be careful
about perpetuating certain schools

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of thought within the community.

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That, that deter people.

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In other words, if we fast forward
X amount of time, we'll call that

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some, some number of years, right?

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So I'm talking about kind of not
the short term, but the long term,

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then, then if we've also said, you
know, not your keys, not your coin.

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We've just removed a whole bunch of people
from participating in the ecosystem.

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Um, so I think we have
to be careful about that.

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I, I think one thing that the
community generally gets wrong is

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it goes down to the word subsidy.

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Interestingly, that the subsidy, which
again, for those less technical, but

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you know, the block reward, which
is basically the miner's revenue

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stream, at least in today's terms.

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I'll get to that in a second.

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Miner revenue today is really looked
at as subsidy plus fees and, and the

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subsidy is, I think, thought of really
exclusively as a reward for the miners.

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Thank you very much.

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But I think that's, that's a half truth,
that the subsidy is also there for the

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users, and it was there for us through
this initial period, that I believe

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we're at the end of, that says, hey,
you get free and unlimited access To

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the base layer and, and it was part
of this, like I said, I call it the

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introductory period of, of Bitcoin.

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It's kind of like, um, we're coming up
to the end of the year and every gym

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around the world, usually in January
has some sort of a special, like, come,

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come to the gym for free in January, uh,
and get in good, healthy habits, right?

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Get used to coming to the gym every day.

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But in February, you're going to start
paying, uh, and I think that's where we

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are with Bitcoin, is January is about
over and we're about to go into February.

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And so users of the base layer are
going to have to start paying for

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access to the world's most secure,
Most free digital network in the world.

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And, and so that's, I think,
going to be a rude awakening.

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I think we, we almost see the
bubblings of, you know, block size,

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worst are type discussions, right?

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You know, kind of brewing right now.

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You can kind of feel that these sort
of things, like the whole thing about

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expanding access to block space and.

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Facilitating payments and all that.

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I can really feel that
momentum starting again.

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Yeah.

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Uh, and, uh, here's something I'd
love to pick your specific brain on,

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because I think this is, this is an
area of Bitcoin, which is the most

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misunderstood because I've seen it many
times described as, uh, you know, the.

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Users pay the miners fees, and
then the miners find the new

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bitcoin, so they find the subsidy.

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But that's not how it works.

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It's the users that pay
the subsidy as well.

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Like, the miners find the blocks,
and the users allow the miners to

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find extra bitcoins in the block.

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Uh, so that's all permissioned,
like, by the users.

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The miners couldn't have found
those new bitcoins if the

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users hadn't allowed them to.

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And they allowed them to because that's
how the consensus rules are set up.

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That's how the issuing schedule is set up.

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But the miner is not digging for
Bitcoin's the miners digging for blocks.

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Uh, and this is, this is so misinterpreted
and that's why, why all these debates

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are so skewed because they think
the miners need more incentive.

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No, miners don't need any more incentive.

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Like miners, users don't care
how the miners make money.

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They care if they secure
the network or not.

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Like if they provide the
service or not and find blocks.

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That is the function of a miner, and a
miner is completely paid by the network

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to do that service for the network.

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Um, yes.

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First of all, I'd like to pick your brain
on that, and then I'd like to follow

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up with this thesis that we heard in
Maribor, because it's so fascinating.

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Yeah, I agree with that.

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I think another way to look at it
is, so I agree with what you've said.

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But I'll offer a different
way of looking at it.

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I think that from, from
actually the miner side though.

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So I think miners, every company
produces something, right?

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Uh, kind of the nature
of, of being in business.

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So you have to produce something.

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And I think the appropriate
way to look at a miner is that

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a miner produces block space.

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So I'm restating what you've
said from the opposite side.

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And, and, and I think unfortunately,
though, the vast majority of the

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mining community, the people that are
mining have not looked at it that way.

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That I, I don't want to single
out specific, uh, competitors

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is the wrong word, but other,
other, other miners, right?

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I don't really compete with other
companies, but I think the number of

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people that are actually active in the
mining community that understand and What

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they're doing, uh, and, and their function
within the ecosystem is quite small.

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I think there's a lot of, of folks
that look at it from the, no, we

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produce Bitcoin perspective and
they take this, um, digital energy.

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We're converting it, you know,
energy to create these, This digital

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asset, I don't look at it that way.

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I look at it from the
block space perspective.

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And we'll get into a few things.

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I don't want to disrupt your chain
of thought, but we'll come back to

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00:15:20,098 --> 00:15:22,978
what does it mean when you start
thinking in terms, as a miner, in

225
00:15:22,978 --> 00:15:24,618
terms of producing block space.

226
00:15:24,999 --> 00:15:28,149
No, go ahead, continue, you're,
you're on a, you're on a track here,

227
00:15:28,344 --> 00:15:29,284
Yeah, I love it.

228
00:15:29,656 --> 00:15:36,666
Okay, so I think if you look at producing
block space, then you realize that block

229
00:15:36,666 --> 00:15:42,376
space is the commodity, okay, so if you
think of block space as a commodity,

230
00:15:43,386 --> 00:15:48,856
and, and then if you put on, let's
say, the hat like a farmer would think,

231
00:15:50,616 --> 00:15:57,213
okay, so a farmer, a farmer looks not
just at what he's he's producing today,

232
00:15:57,243 --> 00:15:59,263
but he, he has to kind of plan, right?

233
00:15:59,283 --> 00:16:04,013
So if I'm, if I'm a wheat
farmer in Nebraska in the U.

234
00:16:04,013 --> 00:16:04,343
S.

235
00:16:04,373 --> 00:16:09,063
and I'm growing wheat and I plant
the crop in April or May, I'm going

236
00:16:09,063 --> 00:16:12,263
to have a harvest in October, okay?

237
00:16:12,333 --> 00:16:19,073
And I, I understand kind of over time
what I'm going to produce, but I also

238
00:16:19,073 --> 00:16:25,243
look at it and say, Hey, I'm, I'm
expending a certain amount of energy,

239
00:16:25,543 --> 00:16:33,403
um, um, it's costing me a certain amount
to produce this wheat, and, and I know

240
00:16:33,403 --> 00:16:40,513
that in October, there's a certain result
that's going to occur, but if I wait

241
00:16:40,553 --> 00:16:46,048
to sell all my wheat until October, I
have a I have a lot of, I've taken on

242
00:16:46,048 --> 00:16:47,648
an inordinate amount of risk, right?

243
00:16:47,698 --> 00:16:51,768
That, that market conditions
in October may be up or down.

244
00:16:51,798 --> 00:16:58,548
So if, if I can start monetizing that
earlier, that makes sense for me.

245
00:16:58,858 --> 00:17:03,968
So if I, I planted in April or
May, and I may immediately go into

246
00:17:03,968 --> 00:17:09,253
the marketplace, And say, hey, uh,
weed is selling for 4 a bushel.

247
00:17:09,993 --> 00:17:11,263
That's a fair price.

248
00:17:11,713 --> 00:17:15,953
So let me offer contracts worth
20 percent of my expected harvest

249
00:17:16,033 --> 00:17:19,683
today for delivery in October.

250
00:17:20,323 --> 00:17:25,013
Okay, so, so, and there's a whole
marketplace, right, that comes out of,

251
00:17:25,683 --> 00:17:30,233
of that because now you have speculators
and you know, but you also have a real

252
00:17:30,233 --> 00:17:31,803
consumer on the other side, right?

253
00:17:31,833 --> 00:17:32,833
That's the key thing.

254
00:17:32,833 --> 00:17:38,223
So you have somebody on the other side,
which is a baker, a large commercial

255
00:17:38,223 --> 00:17:41,893
baker who's saying, hey, I'm going
to bake a lot of bread in October.

256
00:17:42,383 --> 00:17:48,303
So let me go buy this contract
that allows me to lock in the price

257
00:17:48,303 --> 00:17:49,983
of wheat and control my costs.

258
00:17:50,503 --> 00:17:56,853
So we have a natural need for
the producer to, to start.

259
00:17:57,293 --> 00:18:01,293
Moderating is revenue and the consumer
to do it and speculators in the middle.

260
00:18:01,523 --> 00:18:03,603
Block space, I think,
is exactly the same way.

261
00:18:04,113 --> 00:18:09,163
So I think what we're going to find is
that block space in certain windows,

262
00:18:09,473 --> 00:18:14,473
especially, is going to become
inordinately valuable and expensive.

263
00:18:15,383 --> 00:18:21,003
So as an example, we're sitting
here in, uh, it's November

264
00:18:21,863 --> 00:18:23,073
12th, the day of this recording.

265
00:18:23,843 --> 00:18:27,183
The last week of December, my
guess will be there will be

266
00:18:27,193 --> 00:18:28,963
huge demand for block space.

267
00:18:29,823 --> 00:18:33,733
So, let's say I have 1 percent
of the world's hash rate.

268
00:18:34,363 --> 00:18:39,903
I know that in the last week of December,
I'm going to produce about 10 blocks.

269
00:18:40,633 --> 00:18:46,483
So I could go out today and
pre sell at a price that I feel

270
00:18:46,493 --> 00:18:48,953
comfortable with one of those blocks.

271
00:18:50,043 --> 00:18:57,913
To a consumer of block space, um, uh,
Swan Bitcoin maybe knows, Hey, we're

272
00:18:57,913 --> 00:19:01,453
going to, we're going to do a lot of
sales in the last week of December.

273
00:19:01,453 --> 00:19:03,853
We're going to have a lot of people
that want to move to cold storage.

274
00:19:04,483 --> 00:19:07,613
So we need to have access to that.

275
00:19:08,333 --> 00:19:13,343
space then, so they could go
buy that block ahead of time.

276
00:19:14,263 --> 00:19:18,623
So, if you think about it, it mimics the
exact same thing as the weed guy, right?

277
00:19:19,383 --> 00:19:24,963
I'm producing it, I know I have a
certain forward production, and as my

278
00:19:24,963 --> 00:19:29,183
revenue stream, as measured in Bitcoin,
becomes more fee based and less subsidy

279
00:19:29,183 --> 00:19:31,943
based, It also becomes more variable.

280
00:19:33,053 --> 00:19:38,853
So, so this allows me to, to
lock in something ahead of time

281
00:19:38,863 --> 00:19:40,273
that I feel comfortable with.

282
00:19:41,481 --> 00:19:47,666
so, miners are producers of block space,
but there is only that, uh, there's

283
00:19:47,666 --> 00:19:52,586
only this sort of this specific number
of block space that can be produced

284
00:19:52,596 --> 00:19:54,206
because of the rules of the network.

285
00:19:54,966 --> 00:19:56,296
And the miners are paid.

286
00:19:56,746 --> 00:20:03,526
By the users with fees and subsidies
and allowance to find new cones in, in

287
00:20:03,526 --> 00:20:07,196
term, uh, in, in the form of a subsidy.

288
00:20:07,286 --> 00:20:12,046
But that subsidy is rapidly
diminishing, um, because of the hings

289
00:20:12,376 --> 00:20:13,816
and the fee market will take over.

290
00:20:14,236 --> 00:20:19,986
So here we're going to, to, uh,
uh, kenobi's, uh, thesis territory,

291
00:20:20,016 --> 00:20:24,576
which we, we talked with, uh, a
strapping young lad called General

292
00:20:24,576 --> 00:20:26,826
Kenobi and, and, uh, Maribo about.

293
00:20:27,286 --> 00:20:31,636
And that is that, uh, right
now, most mining companies

294
00:20:31,646 --> 00:20:33,166
are fiat minded companies.

295
00:20:33,236 --> 00:20:38,386
So what they do is they immediately sell
the Bitcoin and they pay their electrical

296
00:20:38,386 --> 00:20:43,026
bills with whatever revenue they, with
the revenue from selling the Bitcoin.

297
00:20:43,586 --> 00:20:48,136
But going into the future, that will
be harder and harder, uh, because

298
00:20:48,206 --> 00:20:52,706
while the fees will take over,
still the, uh, that might not be

299
00:20:52,706 --> 00:20:55,066
enough, like that's dependent on.

300
00:20:55,771 --> 00:20:57,581
Demand for block space going up.

301
00:20:57,661 --> 00:21:04,161
So, so, so miners who value the SAT more
than the, the thesis is basically this.

302
00:21:04,161 --> 00:21:10,171
I'm all over the place here, I know,
but, uh, so miners who value the SAT,

303
00:21:10,501 --> 00:21:13,691
uh, higher than its current dollar price.

304
00:21:14,306 --> 00:21:19,996
We'll have an advantage in the long
term, which means that miners who also

305
00:21:19,996 --> 00:21:26,646
use their mining rigs for other purposes
than just finding block space, that

306
00:21:26,646 --> 00:21:30,526
is heating a greenhouse, for instance.

307
00:21:31,686 --> 00:21:34,776
Or doing doing other
things that you can do.

308
00:21:34,786 --> 00:21:39,086
You can use the excess heat from the
miner, for instance, for other stuff.

309
00:21:39,526 --> 00:21:42,886
There are probably other byproducts
than heat that you could use

310
00:21:42,886 --> 00:21:43,996
for other things as well.

311
00:21:44,806 --> 00:21:47,316
Don't know, like, I can't
think of what that would be.

312
00:21:49,756 --> 00:21:51,116
now, but, but, but

313
00:21:51,316 --> 00:21:52,036
It's a lot of them.

314
00:21:52,336 --> 00:21:52,946
yeah, yeah.

315
00:21:52,946 --> 00:21:57,246
Like suspension mechanism for, for
energy companies, as we've talked about

316
00:21:57,246 --> 00:22:00,986
many times with like how they could
stabilize grids and so on and so forth.

317
00:22:00,986 --> 00:22:06,756
And Bitcoin mining could be a part of a
larger operation where it acts as, as a

318
00:22:06,766 --> 00:22:09,326
buyer of last resort of stranded energy.

319
00:22:09,616 --> 00:22:11,046
That's, that's one of the things.

320
00:22:11,466 --> 00:22:17,256
So, so his thesis is basically that
over time, the more fiat minded, uh,

321
00:22:17,426 --> 00:22:23,026
miners will go out of business, and the
more bitcoin minded miners will not.

322
00:22:23,026 --> 00:22:26,936
So the lower time preference you
have as a miner, the more well

323
00:22:26,936 --> 00:22:28,446
off you are in the long run.

324
00:22:28,496 --> 00:22:30,856
And, like, sort of explains itself.

325
00:22:30,856 --> 00:22:32,056
Low time preference.

326
00:22:32,331 --> 00:22:36,351
Uh, you win in the long run, like,
uh, it's aligned with all the other,

327
00:22:36,871 --> 00:22:41,741
um, theories around Bitcoin and
why it's, uh, why it's so useful

328
00:22:41,741 --> 00:22:43,231
as a medium of exchange over time.

329
00:22:43,231 --> 00:22:46,021
So, so this is what I'd like
to pick your brain about.

330
00:22:46,071 --> 00:22:51,531
Is, is there a truth to that more
Bitcoin minded, minded miners are,

331
00:22:51,571 --> 00:22:57,461
will, can and will win this game, uh,
in the long run, uh, game theoretically?

332
00:22:57,461 --> 00:22:58,291
What, what do you think?

333
00:22:58,291 --> 00:23:00,211
It's a bit of a complicated
question, I know, but.

334
00:23:00,436 --> 00:23:00,796
Yeah.

335
00:23:00,826 --> 00:23:01,696
It's a good one.

336
00:23:02,656 --> 00:23:05,556
So I'm going to both agree and disagree.

337
00:23:06,294 --> 00:23:10,034
So first on the agreement
side, I think there is a niche.

338
00:23:10,944 --> 00:23:13,074
I don't think it is the end solution.

339
00:23:13,074 --> 00:23:16,804
I think there is a niche where
we will continue to see that.

340
00:23:16,804 --> 00:23:18,334
I'm actually involved in one already.

341
00:23:18,334 --> 00:23:24,224
We have an operation in northern Florida
with a greenhouse up there, a commercial

342
00:23:24,224 --> 00:23:28,694
greenhouse, and we have a mining operation
set up along the perimeter of the

343
00:23:28,694 --> 00:23:33,094
greenhouse that Allows us to, uh, vent in.

344
00:23:33,114 --> 00:23:37,334
So when he, he's in Northern Florida,
so he's just far enough north growing

345
00:23:37,334 --> 00:23:42,734
tropical flowers that he sometimes
has humidity issues or heat issues.

346
00:23:42,734 --> 00:23:46,564
And so the miners sit on the
perimeter of the greenhouse and

347
00:23:46,574 --> 00:23:48,214
vent in whenever he needs it.

348
00:23:48,244 --> 00:23:50,384
So, um, we're doing that already.

349
00:23:50,394 --> 00:23:54,434
And I think there are other applications,
um, whether that's residential

350
00:23:54,434 --> 00:23:59,434
heating, commercial heating, drying
food products, for instance, um.

351
00:24:00,079 --> 00:24:03,599
Uh, there's a lot of, lot of
different ways and, and those I

352
00:24:03,649 --> 00:24:07,749
think will emerge and they will be.

353
00:24:08,629 --> 00:24:13,949
Significant, but I don't think it's
the majority of the story, but this is

354
00:24:13,949 --> 00:24:18,669
another way of saying what I will agree
with Kenobi on is I think the concept

355
00:24:18,689 --> 00:24:26,279
of a mining company actually, I believe,
goes away that, that I don't know if this

356
00:24:26,279 --> 00:24:30,709
was his end conclusion or the inclusion,
but a mining company that just mines

357
00:24:30,749 --> 00:24:37,609
goes away, but there is a second type
of miner Uh, that emerges in the future,

358
00:24:37,999 --> 00:24:42,089
and by the way, I don't necessarily
like this one, so I am not proposing

359
00:24:42,089 --> 00:24:43,819
it, but this is, I think, the end game.

360
00:24:44,369 --> 00:24:47,849
I think we're going to have those
type of miners, co generation

361
00:24:47,899 --> 00:24:49,729
type stuff, we call that, right?

362
00:24:50,439 --> 00:24:56,027
The other parts are going to be
parts of very large financial

363
00:24:56,027 --> 00:24:58,087
organizations and nation states.

364
00:24:58,757 --> 00:25:02,377
So if, if we look, I'll
give you an example.

365
00:25:02,877 --> 00:25:10,207
So if, if you look at an organization
like Citigroup, I believe that

366
00:25:10,217 --> 00:25:15,567
they will eventually have a
mining function within Citigroup.

367
00:25:16,627 --> 00:25:20,657
And the reason they will do
that is Citigroup will go to.

368
00:25:21,377 --> 00:25:26,857
Their customer base, who is becoming
increasingly more Bitcoin dependent

369
00:25:27,547 --> 00:25:32,857
and say, hey, as part of doing your
banking with Citigroup, will give

370
00:25:32,857 --> 00:25:39,310
you guaranteed base layer access
at a fixed sats per vbyte number.

371
00:25:40,060 --> 00:25:42,490
And they won't even care whether
they're making, they could care

372
00:25:42,490 --> 00:25:44,630
less about the subsidy or the fees.

373
00:25:45,130 --> 00:25:48,860
What they care about is the
relationship with their big customers.

374
00:25:49,860 --> 00:25:52,290
And I think an American Express.

375
00:25:53,070 --> 00:25:55,500
Even at the individual level
could do the same thing.

376
00:25:55,520 --> 00:25:59,110
They'll say if you have an
American Express black card, part

377
00:25:59,120 --> 00:26:03,840
of your feature is you get five
base layer interactions a year.

378
00:26:04,340 --> 00:26:05,830
Um, on us for free.

379
00:26:06,795 --> 00:26:11,845
I would also say if I were, I don't like
this, but I'm just telling you what,

380
00:26:11,865 --> 00:26:13,365
this is the way I think it plays out.

381
00:26:13,815 --> 00:26:17,455
That, and, and the other thing
I would say is if I were, let me

382
00:26:17,455 --> 00:26:22,585
think of, uh, uh, if I was, where
were you, Slovenia or Slovakia?

383
00:26:22,585 --> 00:26:22,945
I forgot.

384
00:26:23,035 --> 00:26:24,930
I always forget where, uh, Nicehatch is.

385
00:26:25,380 --> 00:26:26,140
Slovenia.

386
00:26:26,280 --> 00:26:26,720
But, uh,

387
00:26:27,040 --> 00:26:27,210
Okay.

388
00:26:28,380 --> 00:26:35,984
So if I was the head of state of Slovenia
right now, what I might do is say, hey,

389
00:26:35,994 --> 00:26:43,534
we are going to put an initiative together
to have one quarter of 1 percent of

390
00:26:43,534 --> 00:26:45,944
the world's hash rate in our country.

391
00:26:47,704 --> 00:26:52,254
we'll control a little of that with,
with machines owned and run by the

392
00:26:52,254 --> 00:26:57,194
government, but we'll put incentives
in place also to attract other miners

393
00:26:57,724 --> 00:27:04,274
to our country with tax incentives,
grants, um, those types of things.

394
00:27:05,394 --> 00:27:14,166
However, to, in order to qualify for those
incentives, uh, they must use the Slovenia

395
00:27:14,166 --> 00:27:18,536
pool, meaning the Slovenian government
would control the template creation.

396
00:27:20,256 --> 00:27:25,376
So, I think what, what I'm ultimately
saying, it goes back to our earlier point,

397
00:27:26,016 --> 00:27:32,616
is that it's control of block space,
whether you're a big financial institution

398
00:27:32,616 --> 00:27:41,396
or a nation state, that really is going
to drive things, and the control of the

399
00:27:41,396 --> 00:27:42,556
block space is going to drive things.

400
00:27:43,556 --> 00:27:47,926
won't be because they want
the block reward, that that

401
00:27:47,926 --> 00:27:49,906
will be a consolation prize.

402
00:27:49,906 --> 00:27:54,126
What they want is they want
control of the network.

403
00:27:54,888 --> 00:27:59,978
this reminds me of an old, uh, Andreas
Antonopoulos thing, uh, and that is

404
00:27:59,988 --> 00:28:04,628
that if, if miners and his thesis is
on miner centralization in general,

405
00:28:04,828 --> 00:28:09,198
but I, I guess this would apply to
this too, wouldn't we as users just

406
00:28:09,238 --> 00:28:11,118
throw those fuckers off the network?

407
00:28:11,358 --> 00:28:15,168
Like if there's ever a Slovenia pool,
wouldn't we like, no, no, no, no, we

408
00:28:15,168 --> 00:28:19,558
don't want statism in Bitcoin and just
reject blocks found, found by that pool.

409
00:28:20,113 --> 00:28:23,583
Sure, they can do it in more covert
ways, but don't you think the game theory

410
00:28:23,583 --> 00:28:28,993
plays out so that we sort this so that
we don't, don't get this, uh, in Bitcoin?

411
00:28:30,188 --> 00:28:31,688
think it's hard to throw them out.

412
00:28:32,152 --> 00:28:37,212
if, if only the Slovenia pool
pops up, then we can do that.

413
00:28:38,372 --> 00:28:42,202
What if 80 or 100 nation
states all do the same thing?

414
00:28:43,152 --> 00:28:49,932
Uh, what if, know, Citigroup and American
Express and Deutsche Bank and Mitsui and

415
00:28:50,082 --> 00:28:53,592
all these other financial institutions
all pop up, and they're all controlling

416
00:28:54,862 --> 00:28:57,072
a small percentage of the hash rate.

417
00:28:57,632 --> 00:29:04,570
And then the other side is, like,
right now, where we sit with the pools,

418
00:29:04,650 --> 00:29:06,100
like, who's going to kick them off?

419
00:29:08,020 --> 00:29:13,380
You know, we don't, we have, we are so
far, we don't, like, I don't think Foundry

420
00:29:13,380 --> 00:29:15,020
is going to kick anybody off right now.

421
00:29:15,020 --> 00:29:17,170
I don't think Luxor is
going to kick anybody off.

422
00:29:17,170 --> 00:29:18,880
Ample is not going to kick anybody off.

423
00:29:18,920 --> 00:29:23,360
So we have to have a pretty radical, even
to have a hope of what you've said, we'd

424
00:29:23,360 --> 00:29:27,520
have to have a pretty dramatic change
in the way that the, the blocks are

425
00:29:27,520 --> 00:29:30,570
created, and who's creating the blocks.

426
00:31:05,929 --> 00:31:10,639
Yeah, but here, but here, ocean
is, is the counterexample.

427
00:31:10,649 --> 00:31:15,919
Like, the, the ocean is the
network reacting to, uh, uh, skewed

428
00:31:15,919 --> 00:31:18,249
incentive structures, uh, in mining.

429
00:31:18,639 --> 00:31:24,039
The ocean is the, uh, uh, one, uh,
right now I think it's the only one,

430
00:31:24,039 --> 00:31:28,259
but there are more pools that are more
like ocean and less like ant pool.

431
00:31:28,849 --> 00:31:33,809
Coming online, and like, this is a force,
and the hashrate is going up for like,

432
00:31:33,829 --> 00:31:40,939
this is a resilient system, and we've
shown, we've shown the mining cartel that

433
00:31:40,939 --> 00:31:48,079
we can fight them before, during the block
size wars, which is like, the example

434
00:31:48,099 --> 00:31:50,809
of why bitcoin is not run by miners.

435
00:31:51,324 --> 00:31:55,874
And we can do so again, like,
uh, or, or, or can't we?

436
00:31:56,747 --> 00:32:00,737
Well, first of all, uh, so, you know,
part of the reason I, I wanna be clear

437
00:32:00,737 --> 00:32:03,377
too, I am not saying I like this.

438
00:32:03,377 --> 00:32:04,667
I just wanna be really clear.

439
00:32:04,952 --> 00:32:07,007
I I, that I'm not saying I like it.

440
00:32:07,007 --> 00:32:08,837
I am, I am here to fight it.

441
00:32:09,077 --> 00:32:13,877
And my , my, uh, we'll, we'll talk,
we'll talk more about that maybe

442
00:32:13,877 --> 00:32:16,667
in a, in a bit, but I'm, I'm on
the board of directors at Ocean.

443
00:32:16,667 --> 00:32:19,517
I was the first company in the
world to direct hash rate to Ocean.

444
00:32:19,517 --> 00:32:21,167
I won the first block for Ocean.

445
00:32:21,637 --> 00:32:24,197
First company in the world to
use the datum server with ocean.

446
00:32:24,487 --> 00:32:26,337
So I'm, I'm all in, right?

447
00:32:26,917 --> 00:32:32,347
So, um, that said, this is why we fight.

448
00:32:32,437 --> 00:32:38,987
And I have this adage, war philosophy,
that, you know, I, I think of Bitcoin

449
00:32:39,277 --> 00:32:41,047
as money for the next thousand years.

450
00:32:42,367 --> 00:32:47,237
And so I'm not thinking about
Bitcoin from the perspective

451
00:32:47,237 --> 00:32:48,897
of next Tuesday or next year.

452
00:32:48,897 --> 00:32:55,947
I'm thinking about thinking about decades
and centuries with what I'm saying.

453
00:32:55,947 --> 00:33:00,787
And so we're going to fight whether
we're going to continually fight these

454
00:33:00,807 --> 00:33:08,367
kinds of, of initiatives, because
anything this powerful, anything this

455
00:33:08,407 --> 00:33:13,227
valuable is going to be constantly
subject to centralization forces.

456
00:33:13,267 --> 00:33:16,122
There's just Just the way it is, right?

457
00:33:16,302 --> 00:33:20,462
Somebody's going to always want to
control it and capture it the way it is.

458
00:33:21,734 --> 00:33:23,224
Ocean is a fight against it.

459
00:33:24,394 --> 00:33:30,912
Um, we have, we have found some
momentum, especially recently.

460
00:33:31,473 --> 00:33:34,353
It's been a slog, you know, to get it.

461
00:33:34,353 --> 00:33:36,823
But at this point, we're still
less than 1 percent of the world's

462
00:33:36,853 --> 00:33:38,533
hash rates directed at Ocean.

463
00:33:39,278 --> 00:33:44,238
And we do need a really big number
directed at Ocean and, and, uh,

464
00:33:44,278 --> 00:33:47,338
and also others, as you've said,
I, we, we started the show with me

465
00:33:47,338 --> 00:33:49,098
being complimentary of NiceHash.

466
00:33:49,098 --> 00:33:54,483
Well, I, I, I applaud them and
support them for being out there

467
00:33:54,483 --> 00:33:55,943
and being independent, right?

468
00:33:56,023 --> 00:34:05,753
That, you know, the, the Chinese,
uh, oligopoly of pools, um, is,

469
00:34:06,023 --> 00:34:08,533
is a major, major issue, right?

470
00:34:08,533 --> 00:34:11,753
They have, they have over 50
percent of the hash rate right now.

471
00:34:12,378 --> 00:34:15,868
for all intents and purposes,
with a single leader, with a

472
00:34:15,868 --> 00:34:21,958
single, uh, entity able to direct
what happens within those pools.

473
00:34:26,278 --> 00:34:31,330
We have to look at, we're going
to fight, as nation states, we've

474
00:34:31,330 --> 00:34:35,220
seen it now, you know, this huge
momentum in the United States, right?

475
00:34:36,140 --> 00:34:40,800
Well, I just, I just saw before I
came on with you guys that President

476
00:34:40,810 --> 00:34:46,460
Trump said that he was going to
name a Bitcoin advisory panel.

477
00:34:47,440 --> 00:34:53,240
So he was going to create, I don't know
who's going to be on this panel, but I

478
00:34:53,240 --> 00:34:58,370
have some guesses and my guess is that
the people on the panel will not be.

479
00:34:58,865 --> 00:35:01,685
Looking at Bitcoin the same way
the three of us look at Bitcoin.

480
00:35:03,050 --> 00:35:07,160
No, uh, there, there might,
may or may not be some semi

481
00:35:07,160 --> 00:35:09,230
unfortunate names on that list.

482
00:35:09,310 --> 00:35:14,110
But, you know, there may also be
intelligent people on the list.

483
00:35:14,927 --> 00:35:15,567
I hope so.

484
00:35:15,667 --> 00:35:16,187
I hope so.

485
00:35:16,187 --> 00:35:24,067
I'm, I'm, I'm hopeful, but, but,
uh, but I said that I think that

486
00:35:24,855 --> 00:35:28,495
at the nation state level, and then
let's just even talk at that level.

487
00:35:30,453 --> 00:35:34,303
Bitcoin does, it's kind of a weird thing
though, too, because like I would say to

488
00:35:34,303 --> 00:35:40,755
the people of Slovenia, this is actually
maybe potentially very positive for them

489
00:35:40,755 --> 00:35:46,606
though, too, that, you know, their, the
sovereignty of their country could be

490
00:35:46,606 --> 00:35:55,456
improved by having access to Bitcoin, like
they, they, they, they can't be canceled

491
00:35:55,546 --> 00:36:04,016
by The Western powers or, or China that
they, they, as a, at a nation state level

492
00:36:04,016 --> 00:36:09,006
can have some way of interacting with the
rest of the world that they can ensure.

493
00:36:09,016 --> 00:36:12,826
So it's, it's a very complex issue.

494
00:36:13,492 --> 00:36:19,552
Yeah, uh, speaking of Trump, like, uh,
if, if he, if his advisors are, are, uh,

495
00:36:19,552 --> 00:36:25,238
uh, the, the thing his advisors should
tell him is what his other advisors

496
00:36:25,238 --> 00:36:30,198
are telling him on, on free speech, for
instance, like, and on, on whatever,

497
00:36:30,958 --> 00:36:36,368
uh, censoring the media and all of this,
uh, uh, corrupt academia, all of that.

498
00:36:36,768 --> 00:36:41,558
Like, he seems to be heading in the
direction of take the government out of

499
00:36:41,558 --> 00:36:46,088
the equation, and if we could do that for,
for this industry too, that's obviously

500
00:36:46,088 --> 00:36:51,158
the right way to go, and I hope his
advisors tell him to keep his hands off

501
00:36:51,198 --> 00:36:55,888
of, of Bitcoin mining, and like, uh, and
of Bitcoin in general, like just keep your

502
00:36:55,888 --> 00:37:00,928
hands off, and even of crypto, like let
people scam one another, I, I just keep

503
00:37:00,928 --> 00:37:04,278
the government away, From, uh, everything.

504
00:37:04,378 --> 00:37:04,838
That's it.

505
00:37:04,838 --> 00:37:06,038
Yeah, I agree with that.

506
00:37:06,038 --> 00:37:10,868
Yeah, like the last thing we
want is a subsidy or a tax

507
00:37:10,868 --> 00:37:12,848
incentive to the mining industry.

508
00:37:13,308 --> 00:37:13,428
We

509
00:37:13,478 --> 00:37:13,728
Like

510
00:37:13,998 --> 00:37:14,868
stay the fuck out.

511
00:37:15,468 --> 00:37:19,328
but, but I think that's
counterintuitive to a lot of people.

512
00:37:19,998 --> 00:37:23,118
I think, I think we're all of the
same mindset and we've, we've,

513
00:37:23,418 --> 00:37:25,868
we've thought through these sort
of things, but that's horrible.

514
00:37:26,268 --> 00:37:29,208
But I'm hopeful because, you know, he's
saying things like, hey, I'm going to

515
00:37:29,218 --> 00:37:31,178
kill all the electric car subsidies.

516
00:37:31,578 --> 00:37:33,258
So I'm hopefully, hopeful that.

517
00:37:33,828 --> 00:37:34,478
Exactly.

518
00:37:34,508 --> 00:37:39,358
And he's also said that he's going to
drop the, uh, he's hinted at that he's

519
00:37:39,358 --> 00:37:43,628
going to drop any capital gains tax on
Bitcoin because money, you should be

520
00:37:43,628 --> 00:37:45,948
able to use money, use terms like that.

521
00:37:46,148 --> 00:37:47,318
So, like, yeah.

522
00:37:47,428 --> 00:37:48,668
No capital gains tax.

523
00:37:49,078 --> 00:37:53,928
No other tax, no subsidies,
no VAT, no, no, no government

524
00:37:53,938 --> 00:37:55,198
basically, and you're fine.

525
00:37:55,238 --> 00:37:57,788
And yeah, at least it's
better than Kamala.

526
00:37:58,583 --> 00:37:58,823
Yes.

527
00:37:59,293 --> 00:38:00,403
Yes, absolutely.

528
00:38:01,437 --> 00:38:04,987
So maybe, maybe returning a little
bit to, uh, the, the ocean stuff that,

529
00:38:05,017 --> 00:38:07,107
that, uh, that we segwayed into here.

530
00:38:07,397 --> 00:38:12,377
Uh, can you go a little more into
the, the origin stories of, of ocean?

531
00:38:12,377 --> 00:38:17,427
Because our last conversation apparently
was just before ocean really came up.

532
00:38:17,697 --> 00:38:19,257
Uh, it's a, it's a big story.

533
00:38:19,307 --> 00:38:20,917
Uh, tell us everything.

534
00:38:21,967 --> 00:38:31,422
Well, in, uh, in June of, of 2023 is
when really the impetus To restart,

535
00:38:32,002 --> 00:38:37,512
um, started gelling, you know,
mainly, um, Luke Dasher starting

536
00:38:37,552 --> 00:38:40,862
to, to perceive what was going on.

537
00:38:41,212 --> 00:38:46,722
And I will say in parallel, uh, as I
mentioned, I come from the perspective of

538
00:38:46,722 --> 00:38:48,872
I'm a miner, I produce block space, right?

539
00:38:48,972 --> 00:38:50,712
And I was very frustrated.

540
00:38:50,762 --> 00:38:52,682
I want to produce my own templates.

541
00:38:53,267 --> 00:38:58,637
I have, I have a, we had already seen
by June of 2023, some of these things

542
00:38:58,647 --> 00:39:06,257
happening, and I was frustrated that I was
being, uh, you know, I'm, I'm big enough

543
00:39:06,327 --> 00:39:10,777
to not be small, but I'm not, I'm not
big enough to be big, right, as a miner.

544
00:39:10,927 --> 00:39:12,687
That's kind of where our company sits.

545
00:39:13,317 --> 00:39:13,707
So

546
00:39:13,762 --> 00:39:17,222
You do find your own blocks,
but yeah, you, you need pools.

547
00:39:17,887 --> 00:39:18,817
I need a pool, right?

548
00:39:18,817 --> 00:39:21,657
I can't find enough blocks to say.

549
00:39:22,502 --> 00:39:23,782
I do have fiat needs.

550
00:39:24,012 --> 00:39:29,652
I do have to sell Bitcoin to cover
certain costs within my organization.

551
00:39:29,682 --> 00:39:30,942
So I have to have the cash flow.

552
00:39:30,972 --> 00:39:37,672
So I was very frustrated, but I, but
I felt like there was that realization

553
00:39:37,672 --> 00:39:41,032
that I've had really for a couple
of years that I'm just a mercenary.

554
00:39:41,052 --> 00:39:43,292
I'm a mercenary hasher is what I am.

555
00:39:43,542 --> 00:39:44,012
Right?

556
00:39:44,412 --> 00:39:49,017
And I'm Uh, I didn't like the people
I was performing the mercenary

557
00:39:49,017 --> 00:39:51,837
services for, for the most part.

558
00:39:52,127 --> 00:39:58,127
Um, didn't believe in the cause,
uh, and was, was very frustrated.

559
00:39:58,177 --> 00:40:00,387
So that was where my mindset was.

560
00:40:00,437 --> 00:40:06,737
So, so then, um, in June, Luke Dasher,
uh, had the idea of restarting.

561
00:40:06,827 --> 00:40:10,047
He, uh, was able to get
the ear of Jack Dorsey.

562
00:40:10,277 --> 00:40:16,416
Jack was very supportive and put
up the initial financial, inflow

563
00:40:16,676 --> 00:40:18,306
to kind of get the thing restarted.

564
00:40:19,156 --> 00:40:22,476
About six weeks later, I was at
a conference, uh, with Mechanic.

565
00:40:23,391 --> 00:40:29,021
Uh, I actually gave a speech, uh, at, on
Blockspace and the future of Blockspace

566
00:40:29,161 --> 00:40:32,781
at, at that particular conference and
said some of the same things we were just

567
00:40:32,821 --> 00:40:37,341
talking about earlier about how scarce
it is and the future of Blockspace.

568
00:40:39,071 --> 00:40:40,211
So a mechanic came up to me.

569
00:40:40,211 --> 00:40:42,961
I actually didn't know him until that
point, but he came up to me right

570
00:40:42,961 --> 00:40:44,671
after my talk and said, can we chat?

571
00:40:45,451 --> 00:40:46,421
I said, sure.

572
00:40:46,711 --> 00:40:50,791
Um, so I ended up going to
dinner with him and Mark Artemko,

573
00:40:51,461 --> 00:40:53,241
who's the president of Ocean.

574
00:40:53,281 --> 00:40:59,311
We had a four hour dinner, uh, realized
we were completely philosophically aligned

575
00:40:59,331 --> 00:41:07,586
about completely revamping the way pools,
worked, fight the centralization factors.

576
00:41:07,596 --> 00:41:12,416
So I committed on the spot,
uh, a certain percentage of my

577
00:41:12,416 --> 00:41:14,366
hash rate to their initiative.

578
00:41:15,246 --> 00:41:22,296
Uh, I then, knowing that this was so
important, I have a small Bitcoin fund

579
00:41:22,296 --> 00:41:27,966
that I run, so, um, I whipped up some
money, I think I'm the second largest,

580
00:41:27,976 --> 00:41:32,806
through my fund, I think I'm the second
largest investor in Ocean after Jack,

581
00:41:33,336 --> 00:41:42,542
um, so we put a, we put a pretty good
chunk of money into Ocean, uh, then in

582
00:41:42,742 --> 00:41:47,992
November, uh, we held the launch event
for Ocean at one of my facilities, a

583
00:41:48,702 --> 00:41:55,132
And I have a facility in South Carolina,
which is a hydroelectric facility.

584
00:41:55,162 --> 00:41:59,642
So we bought and rehabilitated a
hydroelectric facility, uh, about

585
00:41:59,642 --> 00:42:04,742
three and a half years ago, and, uh,
we do what we call wild mining there,

586
00:42:04,832 --> 00:42:10,422
meaning that I, well, the, uh, what
we did is we literally cut the cord.

587
00:42:10,422 --> 00:42:12,052
So it's a hydroelectric facility.

588
00:42:12,312 --> 00:42:13,372
It's relatively small.

589
00:42:13,372 --> 00:42:18,022
It peaks out about one megawatt,
but I cut the cord back to the grid.

590
00:42:18,782 --> 00:42:19,792
Said, I.

591
00:42:20,272 --> 00:42:25,562
I do not want to even be connected
to the grid because that is a

592
00:42:25,582 --> 00:42:31,852
mechanism by which I could be forced
to move my energy back to the grid.

593
00:42:32,567 --> 00:42:37,547
Right, I want to make sure that
I am completely permissionless

594
00:42:37,547 --> 00:42:41,727
or as close to permissionless
in this operation as possible.

595
00:42:42,347 --> 00:42:44,597
And so, um, so we held
the launch event there.

596
00:42:44,607 --> 00:42:46,477
It was a really great launch event.

597
00:42:47,557 --> 00:42:49,687
And then ironically, we
were very small at the time.

598
00:42:49,707 --> 00:42:53,077
I think we had like 300
petahash in the pool.

599
00:42:53,667 --> 00:42:57,537
And within the first 24 hours of launch,
found a block, and it was, uh, it was

600
00:42:57,537 --> 00:43:02,207
one of my systems, and that was just a
thrill, like in, in terms of, there's

601
00:43:02,207 --> 00:43:05,177
different moments of your life, okay,
you get married, you have your kids,

602
00:43:05,427 --> 00:43:08,277
you know, you have those sort of things,
but professionally, that was just one

603
00:43:08,277 --> 00:43:13,247
of the coolest things, was to find
the first ocean block, and one of the

604
00:43:13,247 --> 00:43:17,017
things you guys may not know, that the
general public may not know, is that

605
00:43:17,542 --> 00:43:23,842
When you're part of a pool, like Foundry
or Andpool, you get paid every day.

606
00:43:23,882 --> 00:43:27,522
You don't know whether your
machine won a block or not.

607
00:43:28,502 --> 00:43:31,752
Like, you don't, you don't
know if you contributed.

608
00:43:31,772 --> 00:43:36,192
At Ocean, we not only know that, that
it was Barefoot's Hashpower that did it,

609
00:43:36,452 --> 00:43:38,882
but I can identify the exact machine.

610
00:43:39,142 --> 00:43:39,702
That did it.

611
00:43:40,572 --> 00:43:42,612
Like, and so, um, as

612
00:43:42,797 --> 00:43:45,397
never seen a little bit of
extra love or something.

613
00:43:45,652 --> 00:43:46,482
Oh, yeah, yeah, yeah.

614
00:43:46,502 --> 00:43:47,922
Those are highly prized.

615
00:43:48,612 --> 00:43:48,992
Yeah.

616
00:43:49,042 --> 00:43:52,022
So we, we have stickers
that go on all the machines.

617
00:43:52,022 --> 00:43:57,132
So over time, we have a sticker that
goes on to that particular machine that

618
00:43:57,132 --> 00:44:02,432
records, you know, the block height and,
uh, you know, it gets, it gets some extra

619
00:44:02,432 --> 00:44:10,758
TLC, um, at the launch of ocean, I think
things we've talked about spam before.

620
00:44:11,393 --> 00:44:16,133
The world got a little sideways after
we had won a few blocks because they

621
00:44:16,133 --> 00:44:24,483
started to see that the templates
that we were using weren't following

622
00:44:24,543 --> 00:44:27,803
the quote unquote normal process.

623
00:44:28,343 --> 00:44:34,863
Um, which is, uh, the normal
process is for if you're a pool.

624
00:44:35,013 --> 00:44:37,353
This is the, this is
the algorithm of today.

625
00:44:37,863 --> 00:44:41,913
The algorithm of today is, does the
pool have any transactions it needs?

626
00:44:43,553 --> 00:44:47,533
For itself, it puts those in
the template first, right?

627
00:44:47,543 --> 00:44:52,423
So by template, what we're talking about
is if there are 200, 000 transactions.

628
00:44:53,128 --> 00:44:57,968
Kind of waiting for confirmation, and
you can only pick three or four thousand.

629
00:44:57,988 --> 00:45:01,168
What criteria will you
use to select those?

630
00:45:01,578 --> 00:45:03,488
Right, that's when we talk template.

631
00:45:03,488 --> 00:45:04,748
That's basically what we're saying.

632
00:45:05,838 --> 00:45:10,388
And so most pools work this way.

633
00:45:10,888 --> 00:45:12,898
Are any of those transactions mine?

634
00:45:12,918 --> 00:45:14,538
Yes, I'll put those in.

635
00:45:14,848 --> 00:45:20,258
And then I pick those that quote unquote
provide the highest financial reward.

636
00:45:21,178 --> 00:45:22,558
And fill up with those.

637
00:45:23,258 --> 00:45:26,118
And by the way, every few
seconds, that gets updated.

638
00:45:26,158 --> 00:45:30,461
So as new, transactions are presented
to the network for confirmation,

639
00:45:30,771 --> 00:45:32,261
you may kick them out, right?

640
00:45:32,731 --> 00:45:34,751
Um, until you, until you win the block.

641
00:45:35,831 --> 00:45:40,161
So Ocean didn't follow that
same, that same process.

642
00:45:41,356 --> 00:45:46,216
it, you know, what it basically does,
it says, in its, well actually it does,

643
00:45:46,406 --> 00:45:48,986
it does, but its mempool is different.

644
00:45:49,466 --> 00:45:50,346
I'll be technical about it.

645
00:45:50,396 --> 00:45:53,846
Its mempool is different
because its mempool doesn't

646
00:45:53,846 --> 00:45:55,886
recognize certain transactions.

647
00:45:55,896 --> 00:46:01,816
So if, for instance, the op return is,
got too much, too many characters in

648
00:46:01,816 --> 00:46:07,571
it, It ignores that transaction, so
it, it follows the same process, but

649
00:46:07,571 --> 00:46:08,891
its mempool is actually different.

650
00:46:09,688 --> 00:46:12,048
Yeah, there's no such
thing as THE mempool.

651
00:46:12,895 --> 00:46:13,235
Yeah.

652
00:46:13,445 --> 00:46:19,695
Every, every node has its own, um,
its own mempool, and it can decide

653
00:46:19,715 --> 00:46:23,075
what it wants to reside locally.

654
00:46:23,875 --> 00:46:28,085
So, um, so we took quite
a bit of flack for that.

655
00:46:28,115 --> 00:46:34,765
However, this was, I think, one of
the, the great misnomers, is that as

656
00:46:34,765 --> 00:46:39,795
much as I think pretty much uniformly
everybody directly associated

657
00:46:39,795 --> 00:46:42,835
with OCEAN does not like the spam.

658
00:46:43,705 --> 00:46:46,495
Um, I'm, I'm for instance,
very anti Ordinals.

659
00:46:46,495 --> 00:46:49,145
The Ordinals is the thing that
really bothers me the most.

660
00:46:50,219 --> 00:46:52,469
But we also believe in freedom and choice.

661
00:46:53,169 --> 00:46:57,989
And so we, we, we always
had this in the plan.

662
00:46:58,059 --> 00:47:02,649
We, but, but then we offered after a
few weeks four different templates.

663
00:47:02,769 --> 00:47:04,409
So it was the first time.

664
00:47:04,934 --> 00:47:13,054
And one of those templates was for, uh, I
guess best categorized as, you know, um,

665
00:47:14,794 --> 00:47:17,284
you know, anything goes template, right?

666
00:47:17,354 --> 00:47:21,404
So there's, there, there, if you
wished to participate in OCEAN,

667
00:47:21,404 --> 00:47:23,794
you could choose one of the four.

668
00:47:23,874 --> 00:47:27,734
But the key thing was as a miner,
you're starting to become a miner again.

669
00:47:27,734 --> 00:47:29,154
You're not a mercenary, right?

670
00:47:29,604 --> 00:47:33,374
You, you now get to pick and
voice your opinion about what

671
00:47:33,374 --> 00:47:36,684
you think was appropriate, but
that wasn't really the end game.

672
00:47:37,264 --> 00:47:40,624
And the end game was, I
shouldn't even say the end game

673
00:47:40,664 --> 00:47:41,854
because we're still innovating.

674
00:47:41,904 --> 00:47:43,094
We still have other things to do.

675
00:47:44,694 --> 00:47:48,324
But the big milestone point was
what we call now called Datum,

676
00:47:48,794 --> 00:47:54,219
which was allowing individual miners
to create their own template, but

677
00:47:54,219 --> 00:47:57,099
still have the attributes of a pool.

678
00:47:58,159 --> 00:48:04,399
And, uh, that was launched on September
29th, I believe I have the date right.

679
00:48:05,159 --> 00:48:10,959
Um, again, I was very proud as, as, uh,
part of Barefoot to be the first company

680
00:48:10,999 --> 00:48:12,699
to get a Datum server up and running.

681
00:48:12,889 --> 00:48:17,779
Um, we unfortunately didn't win the first
Datum block, but, um, but although, you

682
00:48:17,779 --> 00:48:20,884
know, what's the interesting thing about
Datum For those who are a little more

683
00:48:20,884 --> 00:48:28,044
technical, is that we have the option
of putting in, whether or not, um, our

684
00:48:28,044 --> 00:48:32,234
name, or, or, or, uh, how can I say this?

685
00:48:32,444 --> 00:48:38,284
Like, you can be identified, you can
identify yourself as the winner or not.

686
00:48:38,794 --> 00:48:43,254
And so we, we have this, we're going
to vassal, I'll just tell them,

687
00:48:43,264 --> 00:48:46,384
we'll vacillate, we'll occasionally
announce ourselves as the winner

688
00:48:46,384 --> 00:48:48,244
of a block, but we primarily won't.

689
00:48:49,154 --> 00:48:54,444
Um, the reason is that I don't like,
I'm very open with just about everything

690
00:48:54,444 --> 00:48:58,194
that goes on, but I don't like
announcing how much hash power I have.

691
00:48:59,014 --> 00:49:03,134
So if I announce every block I
win, I essentially am telling the

692
00:49:03,134 --> 00:49:04,859
world how much hash power I have.

693
00:49:05,409 --> 00:49:09,799
And that's, uh, to me that's, that's
the equivalent of, you know, Bitcoiners

694
00:49:09,819 --> 00:49:13,919
don't ask other Bitcoiners how much
Bitcoin they have, and I think, um,

695
00:49:14,499 --> 00:49:18,059
miners shouldn't, you shouldn't ask
miners how much hash power they have.

696
00:49:18,059 --> 00:49:18,369
Yeah,

697
00:50:48,753 --> 00:50:51,413
This whole, this whole story
is, uh, is, is fascinating.

698
00:50:51,413 --> 00:50:55,963
And I mean, yeah, like having just
this first step of, of anyone, uh,

699
00:50:56,023 --> 00:51:01,253
being able to now be a decentralized
miner, a self sovereign miner, we, we

700
00:51:01,253 --> 00:51:05,183
sort of sometimes say, I mean, and I
mean, I, I don't, I'm not sure you're

701
00:51:05,183 --> 00:51:08,273
aware of this, but, but we, we've
had Mechanicon a couple of times.

702
00:51:08,273 --> 00:51:09,343
We talk about Ocean a lot.

703
00:51:09,343 --> 00:51:10,513
We're, we're big fans.

704
00:51:10,513 --> 00:51:15,283
We're completely aligned on the not
being fans of, of spam side of it.

705
00:51:16,048 --> 00:51:21,618
Um, you got into a couple of things that
I think are related to this, and this

706
00:51:21,618 --> 00:51:23,938
is sort of the payout method of Ocean.

707
00:51:23,938 --> 00:51:27,958
This is one of the parts that
appears innovative in the space.

708
00:51:28,948 --> 00:51:31,618
And I think we touched on this
a little bit last time, FPPS

709
00:51:32,888 --> 00:51:36,248
versus other payment methods.

710
00:51:36,468 --> 00:51:38,698
But Ocean basically just, it pays out.

711
00:51:39,128 --> 00:51:44,368
What it receives in a block to the people
who contributed hash power prior in that

712
00:51:44,588 --> 00:51:51,578
block, and I mean, that seems smart,
uh, but FPPS is the is the typical,

713
00:51:51,908 --> 00:51:53,968
uh, payout method at the at the moment.

714
00:51:55,207 --> 00:51:57,527
Again, with Kenobi, we did a
pod in Slovenia with him and

715
00:51:57,527 --> 00:51:58,797
then I was on a panel with him.

716
00:51:59,207 --> 00:52:03,427
One of the things he said
was that FPPS is dying.

717
00:52:03,597 --> 00:52:08,737
That basically the existence of Ocean and
he's working with Demand Pool now, they're

718
00:52:08,967 --> 00:52:10,987
going to be a Strategy 2 pool next year.

719
00:52:11,317 --> 00:52:13,367
Um, also good, I think.

720
00:52:13,737 --> 00:52:14,397
Um,

721
00:52:14,572 --> 00:52:15,172
go for it.

722
00:52:15,347 --> 00:52:16,077
yeah, yeah,

723
00:52:16,310 --> 00:52:22,260
And so, and so, yeah, FPPS is dying
was the, was the, or FPPS is going to

724
00:52:22,260 --> 00:52:26,890
die that, that basically the oceans
of the world and, and those that pay

725
00:52:26,890 --> 00:52:30,940
out on a model that isn't FPPS are
going to outcompete, uh, eventually.

726
00:52:31,310 --> 00:52:32,640
Do you have, do you have
any thoughts on that?

727
00:52:32,650 --> 00:52:36,410
Like, I know you basically ran
this, uh, kind of test that,

728
00:52:36,420 --> 00:52:41,610
that did you actually get better
results on FPPS pools or, or ocean?

729
00:52:41,820 --> 00:52:42,810
Can you get, get into that?

730
00:52:43,835 --> 00:52:49,085
Yeah, so what I started doing, it's, it's
interesting, it goes back to before Ocean.

731
00:52:49,750 --> 00:52:58,566
So I started suspecting that my results
from different pools were inconsistent.

732
00:52:58,706 --> 00:53:02,996
Like, I was wondering why, this
goes back like two years, why is

733
00:53:02,996 --> 00:53:09,286
it that if I, if I'm attached to
different FPPS pools, I'm seemingly

734
00:53:09,286 --> 00:53:11,546
getting different revenue streams?

735
00:53:11,556 --> 00:53:12,406
It bothered me.

736
00:53:12,956 --> 00:53:15,376
So I said, well, I'm,
I'm an engineer, right?

737
00:53:15,416 --> 00:53:18,226
So I said, okay, well, I, I need.

738
00:53:18,591 --> 00:53:20,301
to really understand what's going on.

739
00:53:21,051 --> 00:53:28,061
So what I did is I took a container, the
exact same container, um, exactly the same

740
00:53:28,391 --> 00:53:31,381
mining rig, exactly every other thing.

741
00:53:31,581 --> 00:53:34,091
So they're in the same container,
they're connected to the internet the

742
00:53:34,091 --> 00:53:37,431
same way, through the same firewall,
all that sort of stuff, right?

743
00:53:38,701 --> 00:53:42,991
So I took ten units, connected
them to four different pools.

744
00:53:43,996 --> 00:53:48,226
And I just said, what really
matters is how much I get paid.

745
00:53:48,606 --> 00:53:53,246
So I started running the study, just kept
the same machines running and recording

746
00:53:53,266 --> 00:53:58,126
every single day, what the payout was,
and sort of building this case history.

747
00:53:58,796 --> 00:54:02,396
And then when Ocean came along,
I added them to the, to the test.

748
00:54:04,066 --> 00:54:09,426
Well, first, before even OCEAN came,
I started seeing radical differences.

749
00:54:09,696 --> 00:54:14,506
And by radical, at that time it was
maybe like 3 5 percent variance over

750
00:54:14,506 --> 00:54:17,546
even extended periods in FPPS pools.

751
00:54:17,786 --> 00:54:22,422
So while something is amiss, there really
shouldn't be that sort of variance.

752
00:54:24,360 --> 00:54:27,870
Then I connected OCEAN into
the same control group.

753
00:54:28,690 --> 00:54:30,570
And I now have a year of history.

754
00:54:31,990 --> 00:54:34,810
Okay, so because, well, give
or take a few weeks, right?

755
00:54:34,860 --> 00:54:35,540
I don't have a year.

756
00:54:35,740 --> 00:54:41,160
I actually just provided it, uh, the data
again to Mechanic, um, earlier this week.

757
00:54:41,930 --> 00:54:47,200
So we will publish it through Ocean,
but what you're going to see is that

758
00:54:47,620 --> 00:54:52,240
If you look at the one year, the 30
day, the 60 day, and the 90 day, all

759
00:54:52,240 --> 00:54:54,970
those four different looks at it.

760
00:54:55,710 --> 00:55:01,870
Ocean has dramatically outperformed the
other three pools in the control study.

761
00:55:02,620 --> 00:55:06,040
I don't, I don't name the other
three pools because I'm not here to

762
00:55:06,040 --> 00:55:11,040
bash them, but what we are, we're
here to promote Ocean and let the

763
00:55:11,040 --> 00:55:13,650
world know that FPPS is flawed.

764
00:55:15,150 --> 00:55:20,870
And it's um, you know, I, I've used
that term mercenary hasher before.

765
00:55:22,110 --> 00:55:29,300
And there have been times that I've
been attacked personally, and even I've

766
00:55:29,300 --> 00:55:34,000
had people go to some of my investors,
because I have investors within my group,

767
00:55:34,000 --> 00:55:39,260
and say, Hey, Bob is not performing
his fiduciary responsibility to you.

768
00:55:39,270 --> 00:55:42,930
He's working with Ocean, and they're
not picking the fattest blocks.

769
00:55:44,255 --> 00:55:52,105
And said, well, I have hard proof for you
for you that I am performing my fiduciary

770
00:55:52,105 --> 00:55:56,555
responsibility and that you're the one not
performing your fiduciary responsibility

771
00:55:56,595 --> 00:56:00,295
because you're using the other pools
that are not producing the highest

772
00:56:00,295 --> 00:56:02,405
amount of revenue for your investors.

773
00:56:03,655 --> 00:56:09,155
So, and, and, you know, just to be clear
on this, like it is a dramatic difference.

774
00:56:09,165 --> 00:56:14,455
Like the one year study is
going to be on the order of 15%.

775
00:56:16,225 --> 00:56:16,865
Difference?

776
00:56:17,485 --> 00:56:19,265
whoa, that's way higher than I thought.

777
00:56:19,305 --> 00:56:19,825
Whoa.

778
00:56:21,183 --> 00:56:21,503
Yeah.

779
00:56:23,018 --> 00:56:28,608
Well, and, and from our understanding
of this, uh, was, was basically this 15

780
00:56:28,668 --> 00:56:33,448
comes from that the pools advertise a
certain spread, but they don't include,

781
00:56:33,448 --> 00:56:37,188
uh, Uh, certain other things that they
include in their FPPS calculations,

782
00:56:37,188 --> 00:56:42,828
like, for example, not, not taking the
highest, uh, variance blocks, like the,

783
00:56:42,838 --> 00:56:46,838
the lowest 10 percent and the highest
10%, and just doing other things that lets

784
00:56:46,838 --> 00:56:49,008
them keep a larger share of the, the pie.

785
00:56:49,008 --> 00:56:51,298
And if 15 percent is what
we're talking about, I mean,

786
00:56:51,813 --> 00:56:53,473
Yeah, that's, that's massive.

787
00:56:53,503 --> 00:56:58,563
And, uh, I, I mean, how long is this
going to be able to go on where, where

788
00:56:58,613 --> 00:57:03,193
pools just aren't transparent and
the expected value to miners is so

789
00:57:03,193 --> 00:57:06,113
much lower than oceans at this point?

790
00:57:06,293 --> 00:57:09,933
Not to mention all the briefcases full
of dollars that they get on the side

791
00:57:09,953 --> 00:57:11,703
for, for putting shit in the blocks.

792
00:57:12,223 --> 00:57:18,769
Yes, that's a great point, Knut, and
well, I think that briefcase on the side

793
00:57:18,769 --> 00:57:20,699
is where the 15 percent went, right?

794
00:57:20,759 --> 00:57:26,699
You know, that, that a whole bunch of it,
but I, you know, I, I don't want to repeat

795
00:57:26,709 --> 00:57:31,489
things that are covered in other shows,
but you know, when you look at the FPPS

796
00:57:32,039 --> 00:57:39,984
calculation, the general formula is Look
back in the last, uh, 144 blocks, which

797
00:57:39,984 --> 00:57:46,464
is on 10 minute blocks, one day of blocks,
throw out the three lowest and the three

798
00:57:46,464 --> 00:57:50,285
highest, and then average the remaining,
which would be, what would that be?

799
00:57:50,325 --> 00:57:54,135
The remaining 136, um, would
be, what would the average be?

800
00:57:54,585 --> 00:57:59,355
But the problem, I think, in the last
year that we've faced, is that there's

801
00:57:59,355 --> 00:58:02,995
not much variance on the low end, but
there's a lot of variance on the high end.

802
00:58:03,795 --> 00:58:07,985
So, they're not throwing
out equals, right?

803
00:58:09,205 --> 00:58:13,965
So, so, they're, you know, they're,
you know, that's one issue.

804
00:58:14,905 --> 00:58:22,575
Um, another issue that I can only be
suspicious of is that with OCEAN, I know

805
00:58:22,575 --> 00:58:28,290
at all points and times What percentage
of that pool's hash rate I am and what

806
00:58:28,300 --> 00:58:29,990
percentage of the shares I have earned.

807
00:58:30,470 --> 00:58:32,340
I know that in real time at all times.

808
00:58:33,600 --> 00:58:40,380
When I'm connected to another pool,
I have no idea what percentage of

809
00:58:40,380 --> 00:58:44,500
the hash rate I am or what percentage
of the shares I have earned.

810
00:58:45,320 --> 00:58:49,680
It's a 100 percent trusted
model, which I find fascinating.

811
00:58:50,480 --> 00:58:54,070
It tells me that most miners are
not real Bitcoiners, by the way.

812
00:58:54,580 --> 00:59:02,130
Because they, they, the, um,
DontTrustVerify is completely

813
00:59:02,130 --> 00:59:06,290
thrown out the window in that
model, like in the FPPS model.

814
00:59:06,990 --> 00:59:09,430
And, that is their bitcoin, right?

815
00:59:09,730 --> 00:59:16,370
So it, it, it, it, like for us, with
Ocean, I know, I know all those things.

816
00:59:16,370 --> 00:59:19,300
Plus, I get paid directly
from the Coinbase.

817
00:59:20,260 --> 00:59:21,170
All the time too.

818
00:59:21,610 --> 00:59:27,750
So my, my Bitcoin has never been
routed through somebody else.

819
00:59:27,750 --> 00:59:28,870
It's not filtered.

820
00:59:28,880 --> 00:59:33,650
It's not like, so, um, I don't, I
don't want to go too deep on this.

821
00:59:33,670 --> 00:59:39,290
Probably not a topic you guys want to
dive deep on, but I, I, I am continually

822
00:59:39,290 --> 00:59:42,420
amazed that FPPS has lasted this long.

823
00:59:43,090 --> 00:59:51,320
And I can only say that it just points
to me how far away from the ethos a

824
00:59:51,320 --> 00:59:53,430
lot of the mining community really is.

825
00:59:54,125 --> 00:59:58,075
Yeah, it's fuck around and find
out is the, it's the flip side

826
00:59:58,095 --> 01:00:00,365
of don't trust verify, basically.

827
01:00:01,645 --> 01:00:01,845
Yeah.

828
01:00:02,595 --> 01:00:03,205
Yeah.

829
01:00:03,415 --> 01:00:08,185
And they're about to find out when they
see that, uh, yeah, this 15 percent

830
01:00:09,025 --> 01:00:11,944
uh, missing money from what they do.

831
01:00:12,644 --> 01:00:18,034
Uh, yeah, so, uh, from one thing
to another here, almost, uh,

832
01:00:18,044 --> 01:00:19,724
this is still, still tangent.

833
01:00:21,179 --> 01:00:26,639
And I don't know if you know this, but
we couldn't get a, I couldn't really get

834
01:00:26,659 --> 01:00:31,639
what I was looking for from Kenobi, so
do you know the differences, the crucial

835
01:00:31,639 --> 01:00:35,219
differences between Datum and Stratum V2?

836
01:00:35,924 --> 01:00:36,244
Okay.

837
01:00:36,744 --> 01:00:43,986
Um, so Stratum V2 is a
much bigger, Project.

838
01:00:44,216 --> 01:00:44,576
Okay.

839
01:00:44,666 --> 01:00:49,256
So it's, it's, uh, somewhat
of a boil the ocean protocol.

840
01:00:49,566 --> 01:00:51,236
I'm not against it by any means.

841
01:00:51,236 --> 01:00:53,876
It just didn't fit what
Ocean was trying to do.

842
01:00:54,366 --> 01:00:58,886
And, and, and it was, and it includes
things like encrypted communication

843
01:00:58,886 --> 01:01:02,576
and things like that, that I think
are very valuable and still may

844
01:01:03,056 --> 01:01:07,346
even for Ocean at some point become
something that has some value.

845
01:01:08,736 --> 01:01:15,281
Um, What they're trying to do, though,
is work with, essentially, these

846
01:01:15,651 --> 01:01:21,971
centralized pools and their methodology
to create the block template creation,

847
01:01:22,371 --> 01:01:25,021
and it gets extremely complicated.

848
01:01:25,667 --> 01:01:27,807
and how that interaction occurs.

849
01:01:28,437 --> 01:01:30,767
Datum is very, very simple.

850
01:01:31,647 --> 01:01:39,447
Datum is set up to really only do one
thing, and that's to sit on the side and

851
01:01:39,507 --> 01:01:47,842
interface between the pool telling What
the appropriate share information is.

852
01:01:48,232 --> 01:01:52,592
So, you know, in other words, here
are the members of the pool and how

853
01:01:52,592 --> 01:01:56,082
much their current share data is.

854
01:01:57,082 --> 01:02:03,657
And it ensures that those creating
templates Abide by that shared data.

855
01:02:04,727 --> 01:02:06,737
That's really all it's
trying to accomplish.

856
01:02:07,627 --> 01:02:13,007
So that makes it much, much
easier to, um, to administrate,

857
01:02:13,357 --> 01:02:15,967
um, much more transparent.

858
01:02:16,447 --> 01:02:20,717
And by the way, it's also set up
so that it's open to the world.

859
01:02:20,717 --> 01:02:25,777
It's an open source
project and other pools.

860
01:02:26,732 --> 01:02:28,122
Could use it if they wanted.

861
01:02:29,002 --> 01:02:33,102
It's not, it doesn't have to
be just OCEAN, or you could

862
01:02:33,102 --> 01:02:34,502
solo mine with it as well.

863
01:02:35,235 --> 01:02:41,115
It's just that if you, the moment a
datum server doesn't use the appropriate

864
01:02:41,115 --> 01:02:48,665
share information from OCEAN, Ocean says,
well, you're not part of my, my network.

865
01:02:48,765 --> 01:02:49,055
Right?

866
01:02:49,175 --> 01:02:51,125
So I'm going to, I'm going to ignore you.

867
01:02:52,294 --> 01:02:57,564
Alright, yeah, that explains it, that
was more of what I was looking for.

868
01:02:58,474 --> 01:03:02,854
Yeah, good, uh, Bob, I, I, we,
we've, we've gone a few places here,

869
01:03:02,884 --> 01:03:06,709
uh, and I think even, Since going
back to the start, what you, what

870
01:03:06,709 --> 01:03:10,529
you mentioned, uh, basically we've,
we've talked a fair bit about Ocean.

871
01:03:10,879 --> 01:03:14,969
The, the block space commodity thing
is, is still interesting to me.

872
01:03:14,969 --> 01:03:18,839
And I'm not sure I actually, I'm not sure
I actually picked up on your, uh, what

873
01:03:18,839 --> 01:03:22,229
you were getting at with this, with, with
sort of a paying for, paying for futures.

874
01:03:22,239 --> 01:03:26,649
What do you see as the, as the practical
effect for users of the Bitcoin network?

875
01:03:26,649 --> 01:03:31,609
If, if people are going to be, uh,
if miners and other users are going

876
01:03:31,609 --> 01:03:33,219
to be thinking of things that way.

877
01:03:33,219 --> 01:03:33,389
Yeah.

878
01:03:33,604 --> 01:03:34,284
Practically, what do

879
01:03:34,293 --> 01:03:38,693
Okay, so yeah, uh, yeah, that,
that probably is worthy of,

880
01:03:38,703 --> 01:03:41,243
um, clarifying some Luke.

881
01:03:42,133 --> 01:03:46,983
Okay, so today, here's what we know
about the Bitcoin marketplace, right?

882
01:03:47,003 --> 01:03:51,093
We can, we can, if 1 of us wants
to initiate a transaction to the

883
01:03:51,103 --> 01:03:55,243
other, we can go out and there
are tools, whether that's it.

884
01:03:55,943 --> 01:04:00,253
Mempool or through your wallet that
will estimate what the appropriate

885
01:04:00,253 --> 01:04:03,603
sat per vbyte could be and help
you pick your urgency, right?

886
01:04:04,073 --> 01:04:06,983
But it's all real time, right?

887
01:04:07,393 --> 01:04:13,613
So, if you know that you have a
transaction or group of transactions that

888
01:04:13,613 --> 01:04:20,306
you want to initiate month, you have no
idea what you're going to face, right?

889
01:04:21,270 --> 01:04:22,550
Any, anything could happen.

890
01:04:23,541 --> 01:04:26,997
given that, what I'm, what
I'm creating, and I should be

891
01:04:26,997 --> 01:04:31,077
specific too, I am specifically
creating this as a product, okay?

892
01:04:31,187 --> 01:04:36,807
So the idea is this, As a miner, if you
control a certain percentage of the hash

893
01:04:36,807 --> 01:04:42,647
rate, you can make predictions about
your, um, Block production or block space

894
01:04:42,687 --> 01:04:45,427
production in a certain window of time.

895
01:04:46,905 --> 01:04:54,705
and in a world where subsidy
disappears and fees dictate

896
01:04:54,705 --> 01:04:56,665
your, your revenue stream.

897
01:04:57,670 --> 01:05:06,138
There can be a desire to want to pre sell
access into that ahead of time, right?

898
01:05:07,638 --> 01:05:13,378
To lock in and know that you're
going to have a minimum threshold.

899
01:05:14,386 --> 01:05:19,116
So, what will happen is, we have
built, I'm working with a company

900
01:05:19,116 --> 01:05:21,586
called Block Spaces out of Tampa.

901
01:05:21,866 --> 01:05:23,656
We are developing a platform.

902
01:05:24,391 --> 01:05:30,681
Um, which will be a marketplace for block
space, but it's, it's not a, it's not just

903
01:05:30,681 --> 01:05:35,851
a derivative marketplace, like speculating
on hash rate going up or down or hedging.

904
01:05:35,891 --> 01:05:42,021
It's a fulfilled commodity
marketplace, meaning, I'll give,

905
01:05:42,071 --> 01:05:43,711
I'll use that example I gave before.

906
01:05:44,321 --> 01:05:45,371
These are the mechanics.

907
01:05:46,281 --> 01:05:51,911
Barefoot Mining offers access to a
block in the last week of December,

908
01:05:53,341 --> 01:06:00,941
okay, and we throw it out there at,
we offer a contract at 15 just use

909
01:06:00,941 --> 01:06:05,351
that number, okay, 15 sats per vbyte,
4 million weight units are offered.

910
01:06:06,141 --> 01:06:07,121
Into a marketplace.

911
01:06:08,161 --> 01:06:11,911
I, by the way, collateralize that
with a certain amount of Bitcoin,

912
01:06:12,831 --> 01:06:15,341
meaning I must fulfill that contract.

913
01:06:15,351 --> 01:06:18,201
If I do not, lose my Bitcoin.

914
01:06:20,361 --> 01:06:25,211
On the other side, are
consumers of block space.

915
01:06:25,321 --> 01:06:31,881
Somebody says, I, I would like a million
weight units in the last week of December

916
01:06:31,931 --> 01:06:37,041
and 15 sats per vbyte to guarantee
that I'm in a block in the last week

917
01:06:37,041 --> 01:06:39,051
of December is a fair price for me.

918
01:06:39,491 --> 01:06:45,974
So they they buy that contract
and they transfer that, um, that

919
01:06:45,974 --> 01:06:47,534
money into an escrow account.

920
01:06:47,634 --> 01:06:50,764
So my collateral is sitting in
escrow and they're, and by the

921
01:06:50,774 --> 01:06:53,254
way, all of this is done in smart
contracts sitting in Lightning.

922
01:06:53,834 --> 01:06:54,794
So we built all this.

923
01:06:55,454 --> 01:06:58,094
Um, in a smart contract
platform sitting on lightning.

924
01:06:58,714 --> 01:07:03,974
So both the consumer and the
buyer, um, have these locked in.

925
01:07:04,064 --> 01:07:11,664
Now when we, we get to midnight on
December 24th, they must present to

926
01:07:11,674 --> 01:07:15,279
me, Whatever transactions they want.

927
01:07:16,479 --> 01:07:21,849
Okay, and that gives me seven
days to fulfill that contract.

928
01:07:22,849 --> 01:07:29,709
If, if I do, I get my, the
collateralized Bitcoin back, and I

929
01:07:29,719 --> 01:07:33,519
get the fees that they provided to me.

930
01:07:34,209 --> 01:07:37,069
Um, if I don't, I lose all
the collateral to them.

931
01:07:38,119 --> 01:07:42,959
now in the middle, people can
speculate, like, so you could

932
01:07:43,009 --> 01:07:44,559
trade, you could be a trader.

933
01:07:45,259 --> 01:07:49,779
But what I'm excited about for the
user, which was I think really the, even

934
01:07:49,779 --> 01:07:53,969
the average user, even the people that
don't want to use this marketplace, is

935
01:07:53,979 --> 01:08:00,209
you will now be able to see, over time,
a projection of where fees will be.

936
01:08:01,354 --> 01:08:06,524
Because you'll, you'll, even if you're
just a guy wanting to do one transaction,

937
01:08:06,854 --> 01:08:12,324
you'll be able to see where, where things
are more expensive and less expensive.

938
01:08:12,324 --> 01:08:14,694
And so you could, you
could plan ahead of time.

939
01:08:14,704 --> 01:08:17,124
Let's say you're trying
to do UTXO consolidation.

940
01:08:17,544 --> 01:08:22,242
You're trying to see a period of
time in which the future price of

941
01:08:22,242 --> 01:08:24,472
block space is going to be lower.

942
01:08:24,492 --> 01:08:26,352
You, you will now have access to that.

943
01:08:27,342 --> 01:08:29,812
Okay, I have a practical question here.

944
01:08:29,992 --> 01:08:33,142
Uh, again, I'm kind of, I'm kind of
about the practicalities of this.

945
01:08:33,162 --> 01:08:33,832
This is interesting.

946
01:08:33,832 --> 01:08:37,482
It's, it's like, um, yeah,
futures, futures market for

947
01:08:37,542 --> 01:08:38,922
Bitcoin block space as a commodity.

948
01:08:38,922 --> 01:08:41,802
Very great way to, to put it.

949
01:08:42,012 --> 01:08:46,317
Uh, I, I think there's definitely,
Things to dig into there, but my

950
01:08:46,317 --> 01:08:51,617
first question on this is, what
about, so if some entity is presenting

951
01:08:51,817 --> 01:08:56,007
transactions, of course, they can
decide whatever they want, I suppose,

952
01:08:56,027 --> 01:09:01,147
but I sort of have a, what if they
don't have a big block of transactions?

953
01:09:01,147 --> 01:09:06,267
I guess they would be going to find
transactions to buy something like

954
01:09:06,267 --> 01:09:11,107
this, and on the flip side, like,
what about for You Individual users

955
01:09:11,107 --> 01:09:16,027
who would typically just broadcast a
transaction and it goes in the mempool.

956
01:09:16,027 --> 01:09:17,787
Does this sort of bypass all that?

957
01:09:17,787 --> 01:09:21,017
I know it's sort of a two pronged
question, but it's all related.

958
01:09:21,327 --> 01:09:25,427
How does this thing work in
practice is really the question.

959
01:09:26,034 --> 01:09:31,864
Well, when I, when I create my own
templates, um, I, so I think this

960
01:09:31,874 --> 01:09:34,844
is the, if I missed your question,
we can, we can hit it back.

961
01:09:34,844 --> 01:09:39,564
So, so I, I am still the block template
creator, and as we talked about

962
01:09:39,564 --> 01:09:41,494
before, I have my mempool, right?

963
01:09:42,274 --> 01:09:50,009
So, these transactions, so when it comes
time to fulfill, Like I said, I've sold

964
01:09:50,009 --> 01:09:57,969
a contract for one block at midnight on
the 24th, okay, so I'm going to have until

965
01:09:57,969 --> 01:10:02,189
midnight on the to fulfill that contract.

966
01:10:02,989 --> 01:10:13,999
So, on that day, I must be,
the users must notify me of

967
01:10:14,559 --> 01:10:16,339
their particular transactions.

968
01:10:16,509 --> 01:10:20,499
So here, transaction ID,
X, Y, and Z are mine.

969
01:10:21,899 --> 01:10:26,809
And, um, you know, they need
to be prioritized by Barefoot.

970
01:10:26,859 --> 01:10:31,409
So I will see that in my mempool
and I will, I will know what I have

971
01:10:31,409 --> 01:10:34,189
to do to fulfill that contract.

972
01:10:34,719 --> 01:10:38,079
Um, and I'm going to obviously
prioritize them but everything else

973
01:10:38,079 --> 01:10:42,039
because I, I got a couple Bitcoin on
the line if I, if I don't do it right.

974
01:10:42,768 --> 01:10:43,818
Is that your question?

975
01:10:44,038 --> 01:10:44,348
Or?

976
01:10:44,713 --> 01:10:45,203
Sort of.

977
01:10:45,453 --> 01:10:47,493
Okay, let's maybe play through this.

978
01:10:47,493 --> 01:10:53,459
Like, if they're doing this entirely out
of band, uh, If they are just putting

979
01:10:53,459 --> 01:10:56,759
their transactions in the mempool, like,
what if some other miner is the one

980
01:10:56,759 --> 01:10:58,269
that actually mines their transactions?

981
01:10:58,269 --> 01:10:59,379
Do you care about that?

982
01:10:59,609 --> 01:11:00,439
It's as long

983
01:11:00,514 --> 01:11:02,994
Oh, well, they, yeah, they,
they are, they aren't going to

984
01:11:02,994 --> 01:11:04,794
broadcast them to the world.

985
01:11:04,804 --> 01:11:06,034
They'll broadcast them to me.

986
01:11:06,279 --> 01:11:06,579
Right.

987
01:11:06,629 --> 01:11:06,939
Okay.

988
01:11:07,079 --> 01:11:07,409
Okay.

989
01:11:07,889 --> 01:11:13,469
Uh, and, and then, and then, uh, I guess
another, another point to, to this then

990
01:11:13,469 --> 01:11:21,869
is that, uh, would someone need to,
need to, uh, this is sort of a mechanism

991
01:11:21,869 --> 01:11:27,319
bypassing the, the broadcast everywhere,
uh, for transactions generally, right?

992
01:11:27,329 --> 01:11:30,959
Like, uh, this wouldn't really apply
to someone who's just broadcasting

993
01:11:30,969 --> 01:11:33,709
any transaction, or they could,
or they could decide to go to

994
01:11:33,709 --> 01:11:36,389
this marketplace and, Uh, do it

995
01:11:36,414 --> 01:11:39,044
It's open, yeah, it's
open to the whole world.

996
01:11:39,114 --> 01:11:43,704
It's just, you know, today, uh,
yeah, I mean, it'll, it'll all be

997
01:11:43,704 --> 01:11:48,984
transparent, you know, the world will
see how many contracts are offered,

998
01:11:49,434 --> 01:11:54,864
in what period of, for which period of
time, and what the sats per vbyte are.

999
01:11:54,914 --> 01:12:00,989
So, in my mind, it gives the
world glimpse beyond the present,

1000
01:12:01,179 --> 01:12:02,659
you know, into the future.

1001
01:12:02,759 --> 01:12:07,479
And, and I think that, you know, at least
for me, I think that's important that,

1002
01:12:07,529 --> 01:12:13,184
you know, we get a glimpse of what, is the
man out there, you know, in the future?

1003
01:12:13,254 --> 01:12:16,644
Because as people start planning their
lives and planning their businesses

1004
01:12:16,664 --> 01:12:19,994
more around Bitcoin, I think you
need to see around the corner.

1005
01:12:20,024 --> 01:12:23,534
You need to see a little bit more
into the future than we can today.

1006
01:12:23,854 --> 01:12:25,664
Yeah, and maybe I'm a
little hung up on that.

1007
01:12:25,964 --> 01:12:28,764
It's not likely that these
contracts are always going to

1008
01:12:28,774 --> 01:12:30,374
be one block at a time, right?

1009
01:12:30,374 --> 01:12:31,664
Like, uh, it's, it's

1010
01:12:32,024 --> 01:12:33,254
Oh, no, no, no, no, no, no.

1011
01:12:33,304 --> 01:12:34,704
That's why I said it's a weight unit.

1012
01:12:34,854 --> 01:12:40,474
So that it, I might offer one
block, 4 million weight units,

1013
01:12:40,504 --> 01:12:45,745
but you know, you can buy it in,
a thousand weight unit increments.

1014
01:12:46,235 --> 01:12:47,875
You know, you could just
buy part of that block.

1015
01:12:47,875 --> 01:12:49,575
And if I don't sell the
whole block, it's okay.

1016
01:12:50,915 --> 01:12:57,060
Like, I could, I could, let's say, let's
say I offer one, a 4 million, Uh, weight

1017
01:12:57,070 --> 01:13:01,020
units, but people only buy 500, 000.

1018
01:13:01,020 --> 01:13:01,570
That's okay.

1019
01:13:01,630 --> 01:13:08,400
I will, I will fulfill the 500, 000 and
I'll, I'll use the, I'll just go into the

1020
01:13:08,600 --> 01:13:11,520
general marketplace and pull the rest.

1021
01:13:12,521 --> 01:13:14,771
Okay, my questions are
pretty satisfied here.

1022
01:13:14,771 --> 01:13:17,681
I'm interested to see what this
looks like in practice, but yeah,

1023
01:13:17,681 --> 01:13:19,351
like creating a futures marketplace.

1024
01:13:19,351 --> 01:13:24,091
And I mean, this is entirely
permissionless based on these

1025
01:13:24,091 --> 01:13:26,321
decentralization mechanisms anyway.

1026
01:13:26,321 --> 01:13:30,041
And, and Uh, mining pools may
already be doing essentially

1027
01:13:30,041 --> 01:13:31,891
a similar thing, uh, right?

1028
01:13:31,931 --> 01:13:33,371
But, but this, this allows.

1029
01:13:33,546 --> 01:13:36,476
it's yeah, but there's
no transparency, right?

1030
01:13:36,516 --> 01:13:39,886
I think this was like, like, uh,
Knut was saying, like, you know,

1031
01:13:39,946 --> 01:13:41,856
people carrying away a bag of cash.

1032
01:13:41,856 --> 01:13:45,406
Well, everybody's going to
know exactly what we're doing.

1033
01:13:45,846 --> 01:13:50,726
And if we're part of the pool, you know,
we probably will be when we fulfill these.

1034
01:13:51,276 --> 01:13:53,316
There'll be a mechanism by which we.

1035
01:13:53,661 --> 01:14:00,341
You know, share the appropriate amount
with the other members of the pool, so

1036
01:14:00,371 --> 01:14:04,811
we're not going to, you know, now if we,
if we solo mine one, then okay, you know,

1037
01:14:04,811 --> 01:14:08,261
we can do that, but, but if we're part
of the pool, then we will have to share

1038
01:14:08,261 --> 01:14:09,991
appropriately with the other pool members.

1039
01:14:10,815 --> 01:14:12,825
Okay, uh, sounds fascinating.

1040
01:14:12,825 --> 01:14:16,465
I mean, the concept of block
space scarcity in general, I

1041
01:14:16,465 --> 01:14:20,965
think, is going to be a bigger and
bigger topic, like you're saying.

1042
01:14:20,965 --> 01:14:27,845
And so, uh, yeah, interesting to see how
this is going to play out in the future.

1043
01:14:29,165 --> 01:14:32,515
Bob, I think we've, we've, we've tackled
a couple of really big topics today.

1044
01:14:32,515 --> 01:14:37,635
And so, uh, uh, I think, I think,
uh, from, from my side, uh, was there

1045
01:14:37,635 --> 01:14:41,465
anything else you wanted to discuss
today that we haven't covered yet?

1046
01:14:42,117 --> 01:14:45,107
Well, I'll just let you know, like,
you know, my, my main business,

1047
01:14:45,107 --> 01:14:47,627
we're continuing to go hard.

1048
01:14:47,667 --> 01:14:50,827
Um, we've got a couple of
really interesting projects.

1049
01:14:50,907 --> 01:14:51,397
Um.

1050
01:14:52,647 --> 01:14:58,667
And I can't remember if we covered it last
time, but basically my, my philosophy is I

1051
01:14:58,667 --> 01:15:01,137
believe in what I call horse class mining.

1052
01:15:01,597 --> 01:15:07,437
I believe it's the most important part
of the infrastructure, which is small

1053
01:15:07,437 --> 01:15:08,927
to medium sized commercial mines.

1054
01:15:09,936 --> 01:15:13,726
you know, a megawatt here, half a
megawatt there, 2 megawatts there.

1055
01:15:14,456 --> 01:15:18,186
My goal is to build as
many of those as I can.

1056
01:15:18,586 --> 01:15:19,976
I'm not trying to be small.

1057
01:15:20,086 --> 01:15:22,296
I just, I just don't want any big ones.

1058
01:15:24,416 --> 01:15:29,336
uh, I don't want to, I don't really
desire a single hundred megawatt facility.

1059
01:15:29,336 --> 01:15:33,136
I think that that's, um, it's probably
not the best thing for me, and I don't

1060
01:15:33,136 --> 01:15:34,506
think it's the best thing for Bitcoin.

1061
01:15:35,341 --> 01:15:40,331
but we're starting to get a lot more, um,
diverse in what we're doing within those.

1062
01:15:40,351 --> 01:15:43,161
So I mentioned earlier, we
have a hydroelectric facility

1063
01:15:43,171 --> 01:15:44,751
in South Carolina that we run.

1064
01:15:45,561 --> 01:15:49,011
We're bringing up one in Indiana
right now, which is based on anaerobic

1065
01:15:49,041 --> 01:15:56,406
digestion, which is using, um, Uh, uh,
cow shit, basically, from a dairy farm.

1066
01:15:56,986 --> 01:16:00,166
So, we're, we're doing anaerobic
digestion there, that'll be a

1067
01:16:00,166 --> 01:16:01,816
couple foot megawatt facility.

1068
01:16:02,788 --> 01:16:07,888
we just bought, uh, some natural
gas wells in Pennsylvania.

1069
01:16:11,003 --> 01:16:15,153
These are all what I call wild
mining, too, which is permissionless.

1070
01:16:15,313 --> 01:16:17,133
We don't need anybody's approval.

1071
01:16:17,463 --> 01:16:23,243
Nobody else has to produce the
energy and decide to send it to us.

1072
01:16:23,283 --> 01:16:25,773
We do it all ourselves.

1073
01:16:25,833 --> 01:16:29,643
And I think these are really
important parts of the infrastructure.

1074
01:16:29,663 --> 01:16:33,743
I hope, I hope there are others and I
hope there continue to be others trying

1075
01:16:33,743 --> 01:16:37,273
to pursue the same thing, just like
you've mentioned with the Kenobi thing.

1076
01:16:37,283 --> 01:16:41,453
I think the stuff with cogeneration
is also really, really important.

1077
01:16:41,463 --> 01:16:44,293
And the combination of those two
is actually the ideal one, right?

1078
01:16:44,293 --> 01:16:45,393
Where you I think that's it.

1079
01:16:45,713 --> 01:16:49,053
You produce the energy and then
you use the heat and now you have

1080
01:16:49,053 --> 01:16:51,023
something like really, really cool.

1081
01:16:51,393 --> 01:16:56,843
Um, and, and, uh, people have had
these visions for quite a while,

1082
01:16:57,623 --> 01:16:59,363
but they are becoming reality.

1083
01:16:59,673 --> 01:17:03,863
And, and, and by the way,
the economics are phenomenal.

1084
01:17:04,553 --> 01:17:13,097
So, I will tell you that chasing energy
on grid At scale is not a winning game

1085
01:17:13,918 --> 01:17:19,058
I think that the whole thing about,
you know, Bitcoin providing base load

1086
01:17:19,058 --> 01:17:22,808
and curtailment and like all that
other stuff, there's a truth to it.

1087
01:17:22,838 --> 01:17:24,108
I'm not saying it's not.

1088
01:17:24,358 --> 01:17:25,098
It's not true.

1089
01:17:25,098 --> 01:17:28,738
It's not valuable, but I
think it gets oversold.

1090
01:17:29,548 --> 01:17:32,778
Bitcoin can't solve all
the world's grid problems.

1091
01:17:33,528 --> 01:17:41,198
Um, it, it can't use, like the economics
just don't work right to consume like.

1092
01:17:41,763 --> 01:17:45,453
All the, to balance the grid
and, and perform curtailment

1093
01:17:45,473 --> 01:17:46,683
all, all around the world.

1094
01:17:46,713 --> 01:17:49,143
I just, I don't think that ever happens.

1095
01:17:49,143 --> 01:17:51,793
I think there will be pockets
like there are in Texas where

1096
01:17:51,793 --> 01:17:53,373
it works and it's effective.

1097
01:17:54,293 --> 01:18:00,283
But, but the future of Bitcoin
mining and the economics of Bitcoin

1098
01:18:00,363 --> 01:18:03,923
mining are going to be much better
when you produce your own energy.

1099
01:18:04,393 --> 01:18:10,583
Like my, my cost of producing energy and
my off grid operations is way, way less.

1100
01:18:14,913 --> 01:18:22,403
And, uh, I think that as a mining
industry, the big guys are going to

1101
01:18:22,403 --> 01:18:25,913
get, are going to find it's, it's
harder and harder to participate.

1102
01:18:26,203 --> 01:18:28,933
I think most of them will actually
end up pivoting away from Bitcoin

1103
01:18:29,843 --> 01:18:36,170
and they'll go to HPC and AI stuff
because if you think of all the

1104
01:18:36,170 --> 01:18:40,320
world's energy, like it's on the grid,
I think a good way to think about it

1105
01:18:40,320 --> 01:18:41,780
is like, there's a bell curve, right?

1106
01:18:41,780 --> 01:18:41,840
Right.

1107
01:18:42,230 --> 01:18:49,180
So there's about a, um, 27, 000 terawatt
hours of electricity produced annually.

1108
01:18:50,120 --> 01:18:53,890
And it, and for the most part, it
sits on kind of a bell curve with

1109
01:18:53,890 --> 01:18:58,000
about 14 cents per kilowatt being
the midpoint of that bell curve.

1110
01:18:59,310 --> 01:19:02,840
And so we've already gone out.

1111
01:19:02,840 --> 01:19:08,380
So, so the Bitcoin miners on the,
you know, 3 standard, 4 standard

1112
01:19:08,400 --> 01:19:10,430
deviations away from that midpoint.

1113
01:19:11,340 --> 01:19:14,880
We've already gone and found most of
the on grid stuff that sits like way

1114
01:19:14,880 --> 01:19:18,510
out on the fringe, and there's just
not that much more that sits out there.

1115
01:19:19,410 --> 01:19:24,950
And unlike three or four years ago, where
we were the only ones trying to fight at

1116
01:19:24,980 --> 01:19:30,580
that, you know, that far to the right of
the, uh, of the median point of the bell

1117
01:19:30,580 --> 01:19:34,840
curve, we're now competing, competing
with the AI guys who have more money.

1118
01:19:35,675 --> 01:19:41,505
And, uh, are willing to pay, they
have more, they have more capital

1119
01:19:41,505 --> 01:19:46,605
to spend and they also, uh, can
exist at a higher operating cost.

1120
01:19:47,375 --> 01:19:51,485
So anyway, I just, I think the future
of Bitcoin is off grid, the future

1121
01:19:51,485 --> 01:19:54,905
of Bitcoin mining is off grid, both
because it's the energy that will

1122
01:19:54,915 --> 01:19:59,915
be available and it is the energy
that, um, is actually the cheapest.

1123
01:20:01,034 --> 01:20:01,794
and so.

1124
01:20:02,329 --> 01:20:07,749
That will change dramatically who
exists in mining and who survives.

1125
01:20:08,619 --> 01:20:12,529
This is great, and I mean, it echoes
exactly what we were talking about

1126
01:20:13,029 --> 01:20:18,509
this past week here with the, that
yeah, basically miners will no longer

1127
01:20:18,509 --> 01:20:22,139
necessarily be only Bitcoin miners,
it'll be attached to other things, I just

1128
01:20:22,139 --> 01:20:27,149
love that we're hearing this thing over
and over, the trends in Bitcoin mining

1129
01:20:27,559 --> 01:20:32,039
appear to be that there's some consensus
that actually This is the future.

1130
01:20:32,039 --> 01:20:33,449
This, this method is the future.

1131
01:20:33,449 --> 01:20:36,479
That these are the, the sources and the
places where, where mining will happen.

1132
01:20:36,599 --> 01:20:41,039
Even that decentralization is, is going
to actually work here because the,

1133
01:20:41,069 --> 01:20:44,249
the incentives are, are towards that
with what you were talking about with

1134
01:20:44,249 --> 01:20:47,239
the, uh, FPPS coming out so, so low.

1135
01:20:47,239 --> 01:20:49,009
So I mean, um, yeah.

1136
01:20:49,009 --> 01:20:50,029
Great, great to hear.

1137
01:20:50,029 --> 01:20:56,209
And, uh, uh, I, I mean it exciting to,
to see this happening and obviously, uh.

1138
01:20:56,609 --> 01:21:01,739
Um, well, I don't know, actually,
hopefully Barefoot survived the post

1139
01:21:01,749 --> 01:21:09,379
having, uh, crash in hash price terms,
and now we're looking like clear skies,

1140
01:21:09,419 --> 01:21:11,289
so hopefully good times ahead, right?

1141
01:21:12,694 --> 01:21:15,554
Yeah, actually, that's a, I
know we're kind of running

1142
01:21:15,554 --> 01:21:16,714
long, but it's interesting.

1143
01:21:16,804 --> 01:21:18,044
Obviously, we survived.

1144
01:21:18,504 --> 01:21:20,364
Hopefully, we can continue to survive.

1145
01:21:21,224 --> 01:21:28,784
But one of the, one of the problems
in the industry is that most of the

1146
01:21:28,784 --> 01:21:34,073
mining, well, I shouldn't say most of
the mining, the public miners haven't

1147
01:21:34,103 --> 01:21:40,075
been economically incentivized to improve
their operations and run profitably.

1148
01:21:41,595 --> 01:21:47,145
And I view this as an infection of the
fiat system into the mining community,

1149
01:21:50,560 --> 01:21:52,500
It's not good, right?

1150
01:21:52,970 --> 01:21:58,050
So, hash rate right now
is unnaturally high.

1151
01:21:58,730 --> 01:22:00,350
That's just the simple way to put it.

1152
01:22:00,900 --> 01:22:05,194
The economics say that we
shouldn't have this much hash rate.

1153
01:22:06,355 --> 01:22:08,805
Now, a lot of people look at
it as a good thing, right?

1154
01:22:08,805 --> 01:22:10,695
Oh, the network's more secure,
you know, blah, blah, blah.

1155
01:22:10,695 --> 01:22:14,475
I mean, there is an element of truth
to it, but, but what's happened is

1156
01:22:15,820 --> 01:22:22,050
The, the public mining companies
especially have had easy access to

1157
01:22:22,050 --> 01:22:28,780
capital, very cheap capital, and they
haven't largely deployed it responsibly.

1158
01:22:30,080 --> 01:22:34,210
they've continued to grow hash rate
even when it wasn't profitable for them.

1159
01:22:35,325 --> 01:22:40,345
And that puts pressure on companies like
mine who do operate much more efficiently.

1160
01:22:41,286 --> 01:22:42,656
but it prevents our growth.

1161
01:22:43,866 --> 01:22:46,396
It makes it harder for us to grow.

1162
01:22:46,586 --> 01:22:52,146
It's essentially taking profit
out of our pocket and moving

1163
01:22:52,146 --> 01:22:54,586
that, moving that money there.

1164
01:22:54,886 --> 01:23:00,726
And so I would say to all those
out there listening, if you are

1165
01:23:00,726 --> 01:23:07,796
an investor in a public mining
stock, I would say, ask yourself.

1166
01:23:08,681 --> 01:23:13,291
If that company is really aligned with
your ethos, I'm not telling you what to

1167
01:23:13,291 --> 01:23:15,741
do, but is it aligned with your ethos?

1168
01:23:17,141 --> 01:23:19,911
Is it making Bitcoin better?

1169
01:23:20,691 --> 01:23:23,931
Is making Bitcoin better
really your priority or not?

1170
01:23:25,481 --> 01:23:30,792
Um, you make those choices individually,
but I, but I would say that, the,

1171
01:23:30,872 --> 01:23:36,102
the public mining industry has
created a lot of stress and strain

1172
01:23:36,182 --> 01:23:41,402
on the small and medium sized
miner who must operate profitably.

1173
01:23:42,432 --> 01:23:46,232
We don't have a capital
market that we can go draw on.

1174
01:23:46,452 --> 01:23:49,542
We either are cashflow positive
and profitable or we die.

1175
01:23:49,692 --> 01:23:50,192
That's it.

1176
01:23:51,092 --> 01:23:55,452
And, um, we talked a lot
about incentives, right?

1177
01:23:55,452 --> 01:24:01,322
You know, well, our incentives
are, are properly aligned.

1178
01:24:01,572 --> 01:24:06,832
I think most of us that are like
me are very, are real bitcoiners.

1179
01:24:06,882 --> 01:24:09,152
We are very ethocentric.

1180
01:24:09,667 --> 01:24:16,297
I said this before, I, I tell my team
all the time, we, we make decisions

1181
01:24:16,297 --> 01:24:21,627
that are best for Bitcoin, not the
decisions that are best for barefoot.

1182
01:24:21,967 --> 01:24:26,787
Because we believe by making the best
decision for Bitcoin, that ultimately

1183
01:24:26,787 --> 01:24:28,757
it is the best decision for barefoot.

1184
01:24:29,777 --> 01:24:36,077
And, um, so I would just say, hey, if
you're, if you're investing in some of

1185
01:24:36,077 --> 01:24:41,332
these public mining companies, Decide
what your philosophical approach is and

1186
01:24:41,332 --> 01:24:47,122
then ask yourself whether or not those
companies are aligned with you or not,

1187
01:24:47,122 --> 01:24:50,192
or are you just chasing a fiat gain?

1188
01:24:51,374 --> 01:24:51,784
Up to you.

1189
01:24:52,384 --> 01:24:57,294
I absolutely love that because that's,
uh, a flaw of the fiat monetary

1190
01:24:57,294 --> 01:25:00,404
system makes bitcoin mining worse.

1191
01:25:00,804 --> 01:25:05,054
But, bitcoin mining produces
bitcoin and therefore, oh no, users

1192
01:25:05,064 --> 01:25:09,544
produce bitcoin, but bitcoin mining
produces block space, which in turn,

1193
01:25:09,854 --> 01:25:12,209
uh, turns the fiat into bitcoin.

1194
01:25:12,479 --> 01:25:14,129
Which is then fixing the problem

1195
01:25:14,959 --> 01:25:19,399
So, so while, while the fiat minded
shit Bitcoiners of the world are out

1196
01:25:19,399 --> 01:25:23,809
there putting, trying to put shit coins
on the blockchain, people like Bob

1197
01:25:24,019 --> 01:25:29,809
are, uh, and real bitcoin ethos minded
people are turning actual shit into

1198
01:25:29,809 --> 01:25:32,509
block space and, and fixing the problem.

1199
01:25:32,689 --> 01:25:33,859
I, I just love it.

1200
01:25:33,859 --> 01:25:36,499
It's, uh, it's, it's absolutely great.

1201
01:25:37,154 --> 01:25:40,794
So, uh, thank you again, Bob, for
coming on to the show again, always

1202
01:25:40,794 --> 01:25:42,744
love having a conversation with you.

1203
01:25:42,744 --> 01:25:49,854
Uh, we, uh, we'd love to keep this going,
like, and have at least a conversation

1204
01:25:50,154 --> 01:25:53,814
a year with you, to see where you're
going with all the things, because

1205
01:25:53,844 --> 01:25:57,354
this is absolutely brilliant, and I
think more people should hear about it,

1206
01:25:57,404 --> 01:26:03,939
and how, Bitcoin fixes this, because
Bitcoin fixes everything, as we know.

1207
01:26:04,539 --> 01:26:05,779
Just might take a little time.

1208
01:26:07,354 --> 01:26:08,314
Well, thank you, gentlemen.

1209
01:26:08,354 --> 01:26:09,264
I love you guys.

1210
01:26:09,574 --> 01:26:11,734
You guys keep fighting
the good fight, too.

1211
01:26:12,864 --> 01:26:13,659
Thank you so much.

1212
01:26:13,929 --> 01:26:15,889
Yeah, and go check out Barefoot Mining.

1213
01:26:15,899 --> 01:26:17,259
Go check out ocean.

1214
01:26:17,289 --> 01:26:17,439
xyz.

1215
01:26:18,429 --> 01:26:21,049
Um, where, where can we find Barefoot?

1216
01:26:21,269 --> 01:26:24,059
Where can people find more,
more about Bob and Barefoot?

1217
01:26:24,749 --> 01:26:25,399
Yeah, yeah.

1218
01:26:25,449 --> 01:26:26,109
BarefootMining.

1219
01:26:26,109 --> 01:26:30,689
com, you know, Twitter,
uh, Boomer underscore BTC.

1220
01:26:30,719 --> 01:26:34,169
And um, I have a little show
that I do call Old Man Yells.

1221
01:26:34,219 --> 01:26:37,479
Um, you can find it on YouTube
and Spotify and all that.

1222
01:26:37,509 --> 01:26:38,379
Just me on rants.

1223
01:26:38,519 --> 01:26:42,769
So if you didn't get enough here,
you can, you can get some more there.

1224
01:26:44,009 --> 01:26:44,809
Oh, okay.

1225
01:26:44,869 --> 01:26:46,719
So go check, check that out.

1226
01:26:46,779 --> 01:26:49,709
And Luke, would you like
to wrap this up please?

1227
01:26:49,769 --> 01:26:50,069
Yep.

1228
01:26:50,129 --> 01:26:50,499
Thanks.

1229
01:26:50,499 --> 01:26:51,219
Thanks again, Bob.

1230
01:26:51,219 --> 01:26:52,569
Just echoing everything Knut said.

1231
01:26:52,569 --> 01:26:53,409
Loved having you on.

1232
01:26:53,409 --> 01:26:54,969
So thanks again.

1233
01:26:54,989 --> 01:26:56,899
And you keep doing what you're doing.

1234
01:26:56,899 --> 01:27:00,939
You're, you're doing great things for,
for Bitcoin mining, Bitcoin in general.

1235
01:27:00,969 --> 01:27:02,659
Uh, thanks having you here.

1236
01:27:02,669 --> 01:27:04,799
Uh, looking forward to
seeing you again in person.

1237
01:27:04,799 --> 01:27:06,319
Hopefully it's not too far in the future.

1238
01:27:07,015 --> 01:27:07,165
Awesome.

1239
01:27:07,725 --> 01:27:08,175
Thanks again.

1240
01:27:08,195 --> 01:27:10,065
And this has been the
Bitcoin Infinity Show.

1241
01:27:10,185 --> 01:27:11,035
Thank you for listening.

The Economics of Bitcoin Mining with Bob Burnett - Bitcoin Infinity Show #139

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