BITCOIN MINING: MISCONCEPTIONS, NATION STATES, CENTRALIZATION & QUANTUM RISK, & FREEDOM TO TRANSACT

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
The right to transact actually precedes all other rights.

(00:03):
And I think when you don't have that sort of authentic ability to transact and have that freedom,
I think it impinges on the rest of your freedoms.
You know, it sort of shuts them down to a degree.
I hope the Bitcoin community engages in what I think is actually the most important fight that we could possibly wage,
which is to get inserted into the Bill of Rights of Freedom to Transact.

(00:25):
Because I think when the framers of our Constitution put our Constitution together,
There is no technology by which you could even imagine that anybody could stop your ability to transact.
I think had there been technology that they could see that that would be threatened, I absolutely think that would be in our Bill of Rights, the freedom to transact.

(00:50):
Greetings and salutations, my fellow plebs.
My name is Walker and this is The Bitcoin Podcast.
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(01:16):
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(01:37):
Without further ado, let's get into this Bitcoin talk.
All right.
Welcome.
Happy Monday to you.
How's it going?
It's good, man.
Happy Monday to you, too.
yeah i'm i'm stoked to be able to uh to chat with you and i i just uh met uh nathan right on your

(02:02):
team uh and marketing at the bpi bitcoin policy summit always interesting to see bitcoiners i felt
like it was like bitcoiners out of their natural habitat to a certain extent uh in dc but then at
the same time the realization is like oh bitcoiners are everywhere like bitcoin is a trojan horse but
also bitcoiners are individual trojan horses just infiltrating everything like you never know where

(02:24):
you're going to find Bitcoiners. And I think that's a beautiful thing.
Oh, it is. And yeah, Bitcoiners in suits, inside of suits themselves,
definitely does not come as a natural image in my head. But I was glad to be a sponsor of that
event. Glad Nathan was there for us. And I'm glad that we're there influencing policy because,

(02:45):
you know, as much as we don't like politics, particularly the Bitcoin community doesn't,
you know, it doesn't matter. The impacts of politics are going to affect us.
Yeah. It's like, you don't care about politics. Politics cares about you though. That cliche is
very much true. I mean, and you see it today. I think there's, the voting might be on the,

(03:06):
might be happening today, but there's, Cynthia Lummis was talking about, like I just saw just
before we hopped on here, getting rid of like this double taxation treatment for Bitcoin miners
specifically, where it's like right now the Bitcoin miners are basically, you're taxed when you
actually discover a block like you're taxed when you mine uh the the bitcoin but then you're also
taxed if you need to sell any of that bitcoin so which is just kind of like like insane like i

(03:30):
don't believe gold miners are getting taxed when they are pulling the gold out of the ground and
then also when they sell the gold it's just like you know uh people drilling for oil aren't getting
taxed when they pull the oil out of the ground it's like no it's when you when you sell it um
but i mean i also think we should just get rid of all capital gains tax on bitcoin but that's a
It's a different story. The de minimis limit that Cynthia Lemus has also talked about is at least a decent start, but I'd like to see it all ripped out.

(03:57):
And I'm curious if as a miner you have any additional insights on kind of that double taxation. That just seems ludicrous to me.
It is ludicrous and I think it's – these sorts of policies only exist because Bitcoin has been relatively unknown and a lack of education.
So, you know, like podcasts like this and just the whole, you know, podcasting arm and education arm of Bitcoin I think has been necessary to reach Capitol Hill to get this across to people that, hey, this is a commodity and there's no reason to treat it like it's something that you can just double tax.

(04:33):
I mean didn't we have the Boston Tea Harbor over double taxation or is that just me?
Right, yeah.
I mean that – and to be fair, that was like a 2 percent tax on tea.
And look how far we've come. It's like, you know, starting a revolution over a 2% tax on tea. And now we're like, oh, you want to take like 40 to 50% of the fruits of my labor? Yeah, go ahead, daddy government. Like, I won't revolt. I don't know. We're like-

(04:54):
Do it twice.
Yeah, seriously. And do it twice. It reminds me of that meme of like the wolf and then like a little pug or something. And it's like, what are you? Like you descended from me? This is just embarrassing.
But yeah, perhaps we're turning a corner. Perhaps things will get better.
Well, I'd like to think so. And I'm glad that BPI exists to put on those types of events up on the hill because I think that's the only way that we get better with our current apparatus.

(05:24):
apparatus. I don't think that revolution is the right call today. And I would like to see a whole
lot more of an intolerant minority from the voices of us in the Bitcoin community to affect change.
Because I don't know if you've heard Balaji's breakdown of the political tribes right now in
the US, but I think it's accurate from where I sit. Granted, I sit someplace outside the US,

(05:48):
so I'm sort of obsessed looking in, but I'm outside the fishbowl here. But you've got
Red Blue, which is what everybody talks about all the times, but he also classifies the tech bros from Silicon Valley as the grays.
And then the orange is the other community that is impacting change right now.

(06:11):
And actually, I've been talking about it for a little while now, a few years.
And I think Team Orange is the intransient minority that Nassib Talim talks about.
The vocal like 10% that can get massive policy change through just because we're in transit.
We just don't give up.
We're just going to keep chanting the same thing over and over again and sort of forcing politics to go around us.

(06:35):
And I think that there's nobody else that has a stronger belief in the political system than I think the Bitcoin community does.
I mean, and we've certainly seen the Bitcoin community's ability to like materially affect politics in the US and around the world.
And I think it comes down to like passion and obsession and just a touch of autism as well, which allows for that relentless focus on these things.

(07:05):
Because it's like most people you realize don't actually like their – the amount that they care about an issue is pretty – like it's skin deep.
Like you take even the really hot button issues.
Like really people don't care beyond the sound bites that they parrot, most of them.
Like if you actually start having a conversation, asking them and trying to dig a little bit deeper, like why do you think that?
Like what fundamentally informs that view of yours?

(07:29):
And most of the time it's they haven't actually thought about that.
Bitcoiners have thought and talked and studied a lot in terms of why they believe the things that they do, why they hold certain opinions like very, very, very strongly and will not compromise them.
And I think having to – to your point, that little minority but that's incredibly vocal, incredibly driven and very importantly has an increasingly outsized economic impact.

(08:00):
Like that should not be like understated in this case.
It's – our purchasing power as Bitcoiners is only growing and it is growing exponentially faster than the purchasing power of basically anyone else.
Yeah, to that point, it was last cycle where I heard a really wild statistic, but it stuck with me.
It was something like – and so I think it should be research, right?

(08:23):
So don't take what I'm saying with a grain of – take it with a grain of salt.
But directionally, it's accurate, and that's that when Bitcoin passes $200,000, the majority of billionaires on the planet will be Bitcoiners.
And when you think about that, it's mind-blowing.
So again, that number may be off, right?
But there is a certain price point at which that will be true.

(08:45):
And when that is true, you think about what are the values of this cohort that is suddenly making up the billionaire class, the dominant majority of the billionaire class, and what impact is that going to have on the entire political, sociological system that we live within?
I don't know, but I don't think that that's a bad change no matter what exactly happens from that change.

(09:11):
I agree. And American HODL put out a great AI generated video today, kind of like, I don't know if you saw it. He posted it on Noster. It's quite a banger. But it's basically the idea of, you know, it's talking about, it's making some jokes about Bitcoin treasury companies, you know, paper Bitcoin, that kind of thing.
But the ultimate point of the video is like who's Trojan horsing who here?

(09:32):
Like even when it comes to Wall Street, when it comes to the government, some people like bemoan the fact that these entities that we eschew, like the government, like Wall Street, they're getting involved with Bitcoin.
And it's like one, that was always going to happen if Bitcoin was going to be successful.
You don't have to like it, but it was always going to be a natural result of Bitcoin success.

(09:55):
if bitcoin wasn't successful we wouldn't see that because it would be insignificant nobody would care
but two it's your point about like what does it start to look like when economic dominance
is uh is on the side of bitcoiners it's you know again to you know who's trojan horsing who
like bitcoin uh you know you don't change bitcoin bitcoin changes you whatever sort of

(10:18):
you know these uh these sayings we want to go with it's like bitcoin is powerful because it
is resistant to change and resistant to manipulation. Human beings are much more willing to change.
They are much more susceptible to manipulation. But if that manipulation, if that incentive
structure is a good one, is contributing to positive sum games, it's very exciting to think

(10:41):
what the world may look like and how some of these institutions may be changed fundamentally
for the better because they're forced to without even realizing it. To me, it's fascinating and
It's one of the things that gives me a lot of hope as we go into the future.
Well, it's interesting because as I think about it, I grew up on the West Coast in the US.
And I watched the hippies during my childhood become the man in my older age, right?

(11:12):
Not that I'm that old at this point.
But I wonder if history repeats in a similar way where the Bitcoin community is vocal in trying to tear down the existing institutions and rebuild them into something better.
I sort of wonder if the Bitcoiners are the institutions of the future or wind up the dominant majority within the institutions of the future.

(11:36):
I don't think that that's a bad thing, but I think that it is something that we have to watch out for as a community is I think there is a desire to sort of tear things down.
There's an impulse at least within our community.
And I don't think that's a wrong impulse.
I just think it needs to be carefully shielded and not turn into the negative because it's really hard to build things and it's very easy to tear them down.

(12:01):
And I do think that we need institutions to help us. As much as I love the anarchist dream, I just don't think that we're evolved enough as a species to all be able to maintain our own rulebook and manage ourselves all that effectively.
And so I think I'm glad to see the Bitcoin community getting involved with the political level.

(12:24):
And I think as long as we maintain control of our own coins, I really think it's that simple of a metric.
As long as we maintain control of our own coins, I don't see how the existing system co-ops us.
But that's my take at this point.
I mean an institution is not inherently bad.
Like an institution is not necessarily bad.

(12:45):
But it's just a collection of people who get together and agree to basically to centralize a little bit of thought or of economic power or, you know, mindshare, whatever you want to call it.
Now, incentives matter, right?
So institutions that get really, really, really big and really, really bloated, which is like what we have now, the incentives start to warp.

(13:06):
And we have a fundamentally warped system from its base layer because our money is fundamentally broken.
But like to your point, it's, you know, Bitcoiners have the opportunity to build better institutions, institutions that last and are built on a sounder, sounder money and a sounder set of incentives.
And I think that that is like I want Bitcoiners to build institutions.

(13:27):
You know, we don't have to we don't have to do things the same way.
And, you know, something is not necessarily just the idea of the idea of getting together to solve problems is not inherently bad just because the people that, you know, the boomers that did it before created more problems than they solved.
And I rag on boomers a lot, but there are so many amazing boomers out there, too.

(13:48):
So, like, shout out to them.
And you know who you are.
The Larry Lippards of the world, the Bob Burnett's, the George Bodine's, like so many incredible boomers I've met through Bitcoin.
I'm like, ah, see, not everyone is lost.
No matter what age you are, there's always hope.
But I'm curious, Kenton, I want to get into kind of your background a little bit because you mentioned you were in the US.

(14:13):
You are no longer in the US.
Can you just give like a little bit of background?
Who are you?
How did you get here today to be working on Bitcoin mining?
Yeah, I think everybody's got an interesting orange pill journey.
Mine is more circuitous than most, though.
So I worked for about a decade in rooftop solar on the West Coast, was operating a nine-figure sales software construction company competing, publicly traded, competing with the likes of Elon Musk's cousins.

(14:47):
And it was quite a driven sort of career.
and a new CEO was named by the board.
And I realized that I needed to fulfill
a lifelong dream of travel.
And so I had enough pennies in the piggy bank
that I took off, threw on a backpack
and traveled the world for a couple of years.
And on that two-year sabbatical,
I fell in love with the Portuguese woman and Bitcoin.

(15:09):
Both happened ironically in Peru where I now live,
but she was Portuguese.
And so I wound up in Portugal in 2016
and lived there until early 2023
when we moved to Peru for my wife's work.
But in 2021, after trying my hand,
so between 2016 when I got to Portugal and 2021,

(15:30):
I was trying my hand at all sorts of entrepreneurial ideas
while living in Portugal.
And the environment there was not as entrepreneurial as the U.S.,
we'll put it that way.
There's a lot more red tape and a lot less inertia,
a lot more difficult to get things off the ground.
So after trying my hand at a few different activities,
Of course, trading, mining from home, tried Bitcoin ATMs, was even trying to fund renewable energy projects with some blockchain technology.

(15:58):
But I realized I picked up a copy of Jeff Booth's The Price of Tomorrow, and it just hit me like a ton of bricks.
I was like, you idiot. You have this energy background. Why aren't you in mining?
So I discovered SaaS Mining through a mutual connection, the founder of it, and joined up with the founder.
We raised some pre-seed capital to go build a mining as a service platform.

(16:20):
So think SaaS, software as a service, but for mining.
And we started building.
This was mid-2021.
And we got operational, had our first data center January 2023.
And we've been growing like gangbusters.
So our first year over year, we had about 350% growth.
And we're expected to do the same this year.

(16:42):
and it's I didn't realize that what we set out to do was anything all that innovative it just
seemed obvious to me when I was trying to mine from home in Portugal that you know I just wanted
to be able to go buy a mining rig have somebody else plug it in manage that for me and I received
the bitcoin and I was happy to pay for that service and I didn't seem particularly complicated

(17:03):
but nobody had done that nobody just made that like web 2.0 product and so we set out to build
that. So in a nice, easy, simple way with a couple clicks, you buy a mining rig, you can look at the
specs of it. We get it deployed in one of our data centers of which we've got three, one in Wisconsin,
one in Paraguay, and one in Norway. And the sats go to your wallet. So they're all wild, the sats

(17:29):
that we generate. And we don't mark up the hardware or electricity. We're cost pass through on those
two items and instead we take a share of the block reward just 15% when the pool pays it out.
Can you explain that concept of wild in terms of the Bitcoin as opposed to?

(17:54):
As opposed to surveilled, right? So when you acquire your Bitcoin, you've basically got two
ways of doing it. Either you're going to buy them or you're going to earn them, right? And if you're
going to go buy your Bitcoin, that's where the surveillance state steps in. You're going to have
to give over everything but your firstborn child to be able to actually purchase those sats.
And what we've discovered is that when people purchase their sats and they pull them off the

(18:20):
exchange, it's like the surveillance camera sort of comes with them and sits on their shoulder.
And nobody really feels at liberty to use their sats, right? It's just like, uh-oh,
like if I use these, how do I manage the reporting? What are the tax consequences,
yada, yada. And what we see from our customer base is they're actually using their sats,
right? Because they've been generated, they're wild sats, right? Like Bitcoin mining is the only

(18:43):
way to generate Bitcoin. Like that seems like a very simple statement, but I found the more I
think about it, the more profound it is. And as a result of you generating your own Bitcoin,
you're getting them fresh off the network and they're wild and they don't have any history
related to them. So people just feel more liberty to utilize them as they see fit.

(19:04):
And for me, I actually see the more wild sats that we get out into the economy, the more the
circular economy is going to naturally just develop because people don't have that psychological
friction that comes with surveilled sats. So there's no mandate on you guys. I'm not sure
where you're domiciled in terms of the company itself, but there's no mandate on you guys to do

(19:26):
any sort of ridiculous KYC or anything for your customers, they can actually get KYC free
SATs?
Well, as of right now, I don't like to say that exactly because I don't want to draw
unwarranted attention to myself.
But if you think about what we do, we sell hardware and we maintain hardware.
If anything we much more akin to a property management company right And so do you know a property management company that really has to KYC you I mean they may but that sort of optional right Like we not

(20:00):
doing any money transmitting. We're not, you know, people don't give me dollars and I give them
Bitcoin, right? They give me dollars and I get them a mining rig with that and then it's their
Bitcoin. So we're able to just sort of work around like all the issues that force exchanges into the
regulatory apparatus. And it's not because we're trying to do anything shady. We're just able to

(20:23):
take advantage of, you know, standard business regulations that are out there and we're a
property management service, not an exchange. And I mean, technically, even in the US,
the IRS classifies Bitcoin as property. So there you go. I'm curious too. I mean, I'd love to just
kind of touch for a second on that KYC element, because I think it's actually really important

(20:47):
for folks to understand. We've seen so many different data breaches like this Coinbase one
recently was quite high profile. I think KYC AML is fundamentally just an absolutely misguided and
ridiculous kind of regulatory framework. Like one, it doesn't work because if it did work,
it would work like it would stop money laundering, you know, but it doesn't.

(21:09):
It's like summary.
It's like less than 1% of, you know, laundered money is actually identified or
and like 99 point something percent of the money laundered in the world is done
through the, you know, traditional fiat systems.
So like it doesn't work and it just creates these massive, massive honey pots.
I mean, like, do you think, I mean, I don't know about you, but I don't think

(21:31):
the average person probably thinks twice about it.
I know Bitcoiners do, but I feel like most people are just kind of like, well, it's just, this is just what you have to do now.
Like, it's kind of sad that we got to that point where people are just resigned to the fact that, yep, I guess I've just got to, you know, give up, you know, my firstborn child basically to be able to do basic financial services.

(21:51):
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(23:51):
It is.
And I, you know, the conspiracist, the conspiracy theorist in me wants to wants to go to, hey, this is by design, right?
But I try not to go there.
I just feel like it is sort of death by a thousand paper cuts though, right?
It's like we've been slowly lulled into this sense that there is no privacy.

(24:15):
And just to back up for a minute about SaaS mining, so we don't require anything other than to be able to contact you, our customer.
So whatever you want to call yourself for first name, but we need to need a phone number.
We need an email address.
So that is what we collect, but that's just more I need to be able to communicate with you.
We tried actually not having phone numbers, and then we realized we couldn't actually reach our customers, and that was problematic.

(24:38):
So then we sort of forced – like you have to give me a phone number because I need to contact you when I need to contact you.
And so to be fair, if somebody came to me, I would have those records, right, and they could get those records from me.
But it's very different than where you do the face scan and the whole bit that's typical of KYC exchanges now.

(24:58):
And I do. It just feels somewhat diabolical to have to have that level of invasion. I hate it personally. And the one that really goads me is when people always say like, hey, I have nothing to hide. Why should I care? And I'm just like, well, why do you have bathroom doors or blinds? I'll take those for free off you and resell them and make a buck if you don't mind.

(25:20):
But so I think as Bitcoiners, we do need to drive back that privacy is important because actually the way I really – the metaphor, the analogy I like to use most often is almost all of us have walked into a room and not noticed that there's a surveillance camera in it, right?
And then out of the corner of your eye, you notice there's a surveillance camera, and every time you do, your body changes.

(25:46):
Like as soon as you know you're being watched, your behavior changes.
And just that simple experience I think goes to show why privacy is important.
It's not that anybody has anything to hide.
It's just we know when we're being watched, we behave differently and we don't behave as our authentic selves.
And I think it's important that we are able to behave as our authentic selves.

(26:10):
I mean there's like – there's countless studies.
I'm forgetting the big one or like the famous one now.
but it's literally been proven that the presence of an observer materially
changes the behavior of the observed. Like this is, this is just a fact,
whether, whether or not you think that you're doing like you are,
you're changing your behavior.
And I think that's actually a fascinating way to look at it that, you know,
you're even if you don't realize that you are when it comes to Bitcoin,

(26:33):
like you are doing things differently than you would if you knew no one was
watching. And not that you're going to do bad. Again, it's like,
it's not like you're going to do bad things for some reason. You know,
we've got the idea of innocent until proven guilty in our legal systems.
And yet when it comes to anytime you want to touch your money,
it's guilty until proven innocent.
And also not just guilty,

(26:53):
but we're classifying you and treating you the same as we do drug dealers and
terrorists and like child traffickers.
Like that's insane that a normal person who has probably never,
you know,
never been arrested and never doesn't have any marks on their record is
somehow treated the same as the worst criminals.
And guess what?
They don't even catch the worst criminals.
Like that's the other thing.
It just makes the lives of ordinary people way worse, way more cumbersome and, again, creates these honeypots where actual criminals then can go and take advantage of you.

(27:24):
Like it's just – it screws the law-abiding citizen on so many levels.
And I mean, yeah, I would love to see that regime abolished.
Sadly, I don't think we're getting there anytime soon, but at least there are ways for us to act a little bit more freely thanks to Bitcoin.
Yeah, I agree.
And I think listening to RFK Jr. when he was campaigning for president last year, he said something that really struck with me, that the right to transact actually precedes all other rights.

(27:54):
And I think when you don't have that sort of authentic ability to transact and have that freedom, I think it impinges on the rest of your freedoms.
It sort of shuts them down to a degree.
And so I actually think one of the – I hope the Bitcoin community engages in what I think is actually the most important fight that we could possibly wage, which is to get inserted into the Bill of Rights of Freedom to Transact.

(28:22):
Because I think when the framers of our constitution put our constitution together, there is no technology by which you could even imagine that anybody could stop your ability to transact.
I think had there been technology that they could see that that would be threatened, I absolutely think that would be in our Bill of Rights, the freedom to transact.
But because that couldn't even be conceptualized at that point, it's not included in our Constitution.

(28:47):
And to me, as soon as I heard RFK Jr. say that, I was like – well, he didn't advocate for a new amendment to the Bill of Rights.
I'm saying that, but he didn't mention that.
And it was like, yeah, if you don't have the right to transact, how are you going to go buy the sign to go demonstrate with?
How are you going to go buy the gun to show your Second Amendment rights?

(29:07):
How are you going to do all these things to actually protest if you can't actually buy anything?
And so I actually think that that's probably the most important hill for us as a Bitcoin community to die on because the US enshrines so many of the property rights that are important for the entire planet.
And because we don't have that one, the government is able to constantly push in on it. And I think that threatens all of our long-term liberty without having something substantially and legislatively put in place to protect our right to transact.

(29:39):
I would certainly support that amendment. And it's one of those things where you can very easily prove that this right is kind of primary in the sense that what's the first thing that any dictator does or any leader of Canada, let's say, when they want to shut down a peaceful protest of truckers, what do they do?

(30:00):
they cut you off from the financial system.
They cut off your ability to transact freely.
That's the first thing they do.
Like it's the first,
first,
you know,
thing that a dictator,
an autocrat,
you know,
Fidel Castro's son will turn to is,
is that cutting off the freedom to transact.
And so,
yeah,
I,
I would love to see,
I don't know if we're there yet in terms of that as a constitutional amendment,

(30:23):
but I hope that we're,
I think we're on the right track at least.
Like we're,
we're moving in the right direction.
I hope countries implementing CBP,
CBDCs, probably less so.
But it looks like for now we'll just maybe get some private CBDCs, not Fed-issued ones.
So let's see.
But switching gears a little bit, one of the things I wanted to talk to you about was misconceptions around mining.

(30:47):
Because I think there's misconceptions on, let's say, the normie, the pre-coiner side.
Of course, they've been fed bad information for a while.
But I think there's also probably misconceptions on the side of Bitcoiners.
So maybe wherever side of that you'd like to start on, can we walk through just some of those misconceptions?
What are the things people get wrong about Bitcoin mining?

(31:10):
Yeah, this is probably my favorite soapbox to get on, Walker.
So you're going to have to bear with me here for a minute.
I'm ready.
So I think first, let me give some history that I think is not talked about enough within the Bitcoin community.
So if you go back to OGs up until like 2012, most of them acquired their Bitcoin through mining, right?

(31:31):
And that was how Bitcoin was designed by Satoshi to distribute Bitcoin was you mine it to acquire your Bitcoin.
Then Coinbase was the first to open their door as an easy user experience.
And most of the Bitcoin community chose to use Coinbase.
And we've since gone on from Coinbase to all sorts of other exchange-based acquisition approaches.

(31:55):
But I would actually argue that our Bitcoin community has moved for convenience to exchanges to acquire their Bitcoin.
And in the long run, there's been a big question mark that's out there right now about exchange-based liquidity.
there may come a point in time, not saying it will, but I personally think it will happen

(32:15):
because of how we behave with money and how we tend to hoard the good and spend the bad.
But I believe that there will come a point in time where you're going to have to earn your Bitcoin.
And the easiest way to earn Bitcoin in a predictive manner is through mining.
So I think the way that we've acquired our Bitcoin over time, we went from mining to exchanges,

(32:35):
and I believe the arc of history is going to bring us back to mining.
And the misconception that I have seen about mining, the primary one is it's been driven by the mining industry as a whole.
We've confused the bejeebus out of people, and what I mean by that is we have people that are looking for a fiat return, and we have people that are looking to acquire Bitcoin.

(33:03):
And if you conflate both of those, it equals confusion for the masses, and that's in essence what the mining community has done.
So very simply put, if you're a Bitcoiner, mining is the only way that you can generate Bitcoin, right?
And as a result, from an acquisition standpoint, the right approach to evaluate a Bitcoin mining opportunity is not an ROI-based opportunity, right?

(33:27):
ROI means return on investment.
I put dollars in.
How long does it take me to get dollars out?
You, by default, having that conception about a mining opportunity means that you're looking at it from a fiat mindset.
Dollars in, dollars out.
The right way to look at it as a Bitcoiner is, are the sats I'm acquiring by mining, are they equal or lesser in value to an exchange where I could go buy those?

(33:54):
And I have the upside benefit that I get wild sats as well.
Now, one of the things that I want to mention about us as a Bitcoin community having decided to go to exchanges to acquire our Bitcoin is a very important downstream consequence has now arisen, and that is that we've ceded the network itself to fiat hashing, right?

(34:16):
Most of the hash rate that is on the network is there primarily to acquire fiat, and it's using Bitcoin as a proxy to do so.
And as a result, if you're a fiat hasher, you're not necessarily aligned with the long-term incentives of the network.
You may be, but you also may not be.
And I'd argue most of the mining centralization issues that we worry and fret and hand-wring about are all because we as a community have decided to go to exchanges to acquire Bitcoin instead of dominating the Bitcoin network with that being our primary way to acquire Bitcoin.

(34:51):
And so I think that as much as Ocean is working to decentralize the mining pools, which we love, we're about ready to release that to the public for all of our customers to be able to mine with Ocean through our platform.
I think that we actually have a moral incentive as a community to actually take back the network.

(35:12):
And I think we see the first impulses with that right now with the BidAx community where people are getting hands on.
It's a terahash, but they have it on their desk and they're having this good experience and feeling like a connection with the network itself.
The issue though is a BidAx is one terahash, right?
The average Bitcoin miner on the industrial level is 250 times that, right?

(35:36):
So it's going to take a god-awful lot of bid access to get out there.
And so that's where a company like ours steps in and it's like, hey, you can get an industrial-sized mining rig because we're aggregating client purchasing power to get rack space at a low enough energy price that we can get you sats at a cheaper price than buying them off an exchange.
So not only do you get more sats for your dollar, but you also help to change the equilibrium between fiat hashers and Bitcoin acquisition hashers.

(36:09):
Let me just touch on one of those points there.
So the economics actually work out with you guys where it is cheaper for folks to acquire Bitcoin via this – hosting them with you, for example, than it would be for them to just take their fiat to an exchange, buy it.
Like you actually have low enough energy costs with where your data centers are that you're able to achieve that.

(36:31):
Is that correct?
Yeah.
Yeah.
So one of the things that I realized is that analysis, how do you evaluate your cost per Bitcoin, has horribly confused people as well.
So the way I looked at it was how do I get this as simple as possible?
So you can go to our website and you can see we've got a little calculator there.
And it shows you, okay, based on the mining rigs we offer, how much does it cost for you to run it a day?

(36:55):
How many sats will you generate, right?
Because if you know how much hash rate you've got, well, you know how much of the network
you're mining.
So statistically, this is how many sats you should receive.
If you know those two numbers, you can divide those and see what your price per Bitcoin
is.
Now, that's a very, very simple analysis.
People like to make it much more complicated than that.

(37:15):
But that's the core of it.
And right now, if you look at that, we call that your daily cost to mine a Bitcoin.
we can get people Bitcoin for about $45,000 on our platform.
What that doesn't take into account, and be very clear,
and there's not trying to be any hand wavy here,
is you have to buy a mining rig.
And when you're done using that mining rig, you can sell the mining rig.

(37:38):
And that piece is what's confused people,
is because the price of the mining rig, it fluctuates.
And the price when you can sell that mining rig, it also fluctuates.
and how you decide to play that game is up for debate.
But what's not up for debate is when you're plugged in and mining,
this is what it costs and this is how much Bitcoin it will generate.

(38:00):
I can tell you that right now.
So if you strip all the noise away and just look at that,
I've been showing this at different conferences I go to to different Bitcoiners.
I'm like, hey, do you know this is the daily cost to mine a Bitcoin?
And almost without fail, every single one of them is like, are you kidding me?
I didn't know that.
It's just that very simple idea of comparing to the price on the exchange is not being done by our community.

(38:23):
And I think as a result, we're sort of missing the forest for the trees about what mining is, which is an opportunity to acquire Bitcoin, which is how Satoshi designed the network.
So to me, it's kind of like we've had this big exodus away from mining, and I think we have to come back to it to actually resolve some of the problems that we've seen on the network.

(38:45):
So with regard to like, okay, I get that your daily cost to mine Bitcoin is, you're saying it's like 45,000 versus whatever Bitcoin's at right now, 107, 108.
Like that sounds great.
You mentioned obviously that's not taking into account the actual purchase of the rig.
So like, and grand people can sell these rigs at a later time, but what's the, do you have any stats on the average amount of time it takes, like the payoff time for one of these rigs?

(39:11):
So how far until you're in the black, basically, given that there is an initial capex?
There is.
There is capex.
And what I see is – so part of what I want to do is to get Bitcoin-backed loans to sort of work around that particular argument.
But if you look at it, it's – okay, to take that and break it down, how do you calculate that, right?

(39:32):
Are you going – and this is where the complexity comes in because there's no agreed-upon way to calculate that.
So yeah, you're going to put dollars up front.
About 5 is kind of a typical number to get a Bitcoin mining rig So let say you put 5 up front Well you going to be able to sell that at the end and there been moments where you can sell that for multiples

(39:52):
But also kind of more standard if you're not hitting that timing right is to sell it for a fraction, right?
And so you have that capex that has been spent.
Now, how do you calculate your return on that from a dollar standpoint?
And the answer is it depends, right?
It depends on how you choose to manage the Bitcoin when you acquire it.

(40:13):
Are you going to just sit on the Bitcoin?
Or are you going to sell enough of your Bitcoin to pay your electricity bill?
Or are you going to sell only all the Bitcoin to pay your electricity bill, right?
There's sort of kind of three gradations there.
And depending on that determines how long it takes to pay for the mining rig.
That's why for me, I try not to get into that argument.

(40:36):
It's there.
Absolutely, it is there.
But what I find is just the very core value proposition of, hey, this is your daily cost of mine of Bitcoin is just not even understood in our community.
And so I'm just trying to get that idea across.
And we'll add – we'll stack on more layers of explanation along the way.
So you're right.
There is a capex.
And I just want to get the core message out before I get too involved with that part of the conversation.

(41:00):
Not trying to have a gotcha at all.
Just genuinely curious.
No.
As somebody who's interested in this myself, I have my – I need to hook it up.
I just – shout out to Average Gary who I bought this bid axe from in D.C., paid in sats, of course.
And yeah, Gary was nice enough to bring one to D.C. for me, so that was nice of him.

(41:22):
But I'm curious about this because obviously realistically I'm not going to get an industrial-grade miner and plug it in where I live.
first of all, the, uh, the electricity costs are prohibitive where I am. And so it just,
it wouldn't make any sense. Like if I was, you know, if it's, unless I just really wanted
completely KYC free sets and I was willing to really burn, uh, burn, burn a lot of, uh,

(41:45):
of my excess value to do so, which like, there's an argument to be made for that as well.
Uh, but on this side, so, you know, through, like you mentioned reselling these after,
I'm just curious that like the mechanism of that, uh, do you guys actually facilitate that for your
customers like is that something that's easy or is it like you have to take possession of it resell
it later like you know like when you're done hosting it what's the and what's the actual uh

(42:07):
like what is the shelf life on one of like the you know modern kind of you know uh these five
thousand dollar miners that you're talking about like what how long can they typically run if well
maintained yeah so there's how do i and so useful life of a mining rig is not actually what you
think when we think of the useful life of a dishwasher we think when is my dishwasher going

(42:29):
to stop working and I need to go buy a new one, right? When you think useful life of a mining rig,
it's actually less about when it stops working and more about when is it not competitive enough
for me to generate enough sats. And that timeframe, it's a bit dicey to say we use a conservative
number, sort of industry average that I've heard is about four years. We like to use three in our

(42:54):
analysis just to be a bit more conservative. But yeah, you're going to get at least three years of
life is what we say out of a mining rig. And during that time, you know, our approach, again,
just trying to be very simple and make very simple approaches to the entire thing is cycle your fiat
through your electric bill into a Bitcoin position, hold your Bitcoin, because if you're a
Bitcoin or, you know, over the course of the next four years, you're not going to have anything but

(43:18):
upside in that. Now, as far as what you're going, why you wouldn't want to mine at home. Yeah,
Yeah, it's probably my – so you've got electricity issues, right?
Like most people don't realize that the high-end mining rigs these days are about the equivalent of plugging in about five microwaves.
Most people need to rewire their houses to be able to handle that sort of electrical consumption in a single device.

(43:41):
You've got the noise, which we know is an issue.
But probably the biggest issue is – and it's kind of a result of the first two – is the disputes that happen between couples when couples try to mine from home.
Genuinely, that has been the biggest thing that I've heard a lot of people that are mining with us that used to mine from home will tell us is, hey, man, I just had too many arguments with the missus trying to mine out in my garage.

(44:07):
Yeah, the garage gets a little bit deafening, I'm guessing.
Yeah.
running some immersion ones, which I suppose you need a little bit more technical chops to be able
to keep running. But okay. And I appreciate, you know, you walking through this. And again,
not trying to have any gotcha, just trying to like understand better for myself as somebody
who's interested in doing this. I guess from your side, like, are there any other big misconceptions

(44:33):
on the side of Bitcoiners specifically about mining? You know, or I mean, maybe about like,
does some of it come down to like the kind of the dangers of centralization?
I feel like people are starting to get better or Bitcoiners are starting to get better educated about mining pool centralization risks.
But I feel like it's still not even of all the things that are debated within Bitcoin.

(44:56):
This is one that really should be debated a lot and talked about a lot and still gets hit on the back burner a little bit.
I don't know if that's your feeling.
I think the more we get the Bitcoin community mining, the healthier the entire community will be because if you look at it, the mining community has basically been separate from the rest of the Bitcoin community.

(45:16):
Those two groups largely don't talk. I think like SaaS mining, I think Ocean, I think we're two of the first entities that really exist that are trying to create a bridge between those two communities.
And I think that what we see is because there's been a lot of sort of fiat hashers or fiat service providers in the industry, they've not always treated the Bitcoin community the way they should be, right?

(45:44):
I'm trying to be nice and dance around some of the negatives that have occurred.
But as a result, it sort of left a pockmark on anybody that is trying to help people mine Bitcoin.
And what I saw when I got into this – so I had about a decade of experience helping to construct rooftop solar systems, which I'd cut back to, but there's a lot of analogies between solar and Bitcoin mining that are surprising.

(46:07):
But what I realized is that nobody was coming in and looking at this properly from the standpoint of, okay, Walker, I'm going to hold on to and manage a piece of property that you own.
There is no way for that relationship to be anything other than high trust.
Therefore, if I do not optimize around that being a high trust relationship, I'm going to lose, like just straight up.

(46:32):
So that's why when we came to the market, we came out the gate and said the only way to build this trust is if we fully align incentives with our client.
And that's why we chose not to mark up electricity prices, not mark up the hardware, and instead just pass through our costs on those.
And instead, we'll take our cut on the back end the same way that our clients do. Because if our clients aren't generating Bitcoin, we're not generating revenue either. So we're going to share the pain and the game together. And in doing so, I can optimize trust.

(47:01):
no that that makes sense am i i'm remembering correctly there have been uh like there have
been some other let's say like uh hosted mining services right and there was i'm forgetting which
one it was exactly that may have like there were some issues with it in the past and i'm not trying
to you know uh dump on on anyone here but like there have been problems with these kind of

(47:24):
services because and again like everything comes down to incentives right so i mean it's it's it's
it's good to hear. I think that like the model that you guys have probably makes the most sense
for this just in terms of like, yeah, you guys are providing a service. People pay for that service.
You're not like making your, you're not making your margin on a, you know, kind of opaque markups
of elements of the, uh, the service you're providing. It's just, it's the service itself.

(47:48):
Like to me, that's, that's a, it's an honest way to run like any business, you know, like,
cause if it's a, anything that's like free, um, like generally isn't actually free and you're
somehow getting screwed even more on the backside. So at least that's my general experience.
Yeah, I concur. And if you look at, I mean, you've basically, you've got only three ways to make
money in this business. You can either mark up the hardware, mark up the electricity, or take a

(48:12):
share of the Bitcoin out the back end. And every business has got to be paid somehow, otherwise
they can't give you the service. And if you look at the first two, if you're going to mark up
hardware, does that mean that you're necessarily going to plug the mining machines in? And if
that's where the most profit is coming from, are you going to care about how long it takes to plug
in the mining machines or how they actually function? If your profit is coming from electricity,

(48:34):
are you going to care if you are actually providing hash rate out the back end or are you just selling
electricity? Meaning that if it's broken but still drawn electricity, do you care? It's still
getting your profit in. So it's only by the alignment of the third one, the block reward,
that you can ensure that you are actually aligned with what your client wants, which is

(48:55):
why we actually offer a performance guarantee. So let's say you've got a 200 terahash machine,
right? The computational power is 200 terahash. We actually guarantee in our data centers that you
will receive a certain percentage of that across the course of a year. And the reason we put that
in place is because that's actually what our customers care about. They don't care about the

(49:17):
actual uptime, whether it's 100% or 90%. They care that they're generating the Bitcoin that
the machine can generate. And that's terahash. So we aligned a rig performance guarantee around that
to try to also align our incentives even further, because then it's like, okay,
not only are we incentivized from this is where our revenue comes from, but now we're also

(49:38):
going to promise it. And I don't know if you're not incentivized to generate your revenue the same
way, if you would go down the path of then putting a rig performance guarantee in place, because
why would you you know but we're already there anyway so why not just take the step
you think uh so we talked a little bit about within the bitcoin community uh but there's

(50:02):
obviously a plethora of uh misconceptions outside of the community uh that's you know
it's been driven by a lot of uh junk science and propaganda uh funded by the you know likes of ripple
propagated by Greenpeace, mouthed off by Elizabeth Warren, the Alex DeVries of the world.

(50:23):
I can name many, many instances.
Been fought by folks like, you know, Daniel Batten, Troy Cross, many, many others.
Where do you think we're at right now with the biggest misconceptions about Bitcoin from
outside of the Bitcoin industry, from the pre-coiners?
Where are we at with that?
What are those biggest misconceptions right now in 2025?

(50:45):
So where we are right now is – I think we lost a lot of those people.
I think that what I see – so first of all, our product, we market specifically to the Bitcoin community.
You need to be pretty far on your journey to be somebody that's looking to acquire Bitcoin and use it as savings, right?

(51:08):
And that's – there's a lot of people that are further up in the no-coiner, pre-coiner sort of funnel that they're not looking to acquire Bitcoin and sit on it as savings.
So I don't have as many conversations with those people as I probably should.
But when I do, the energy FUD, unfortunately, Daniel Batten, Troy Cross, Bob Burnett, we've had a lot of very vocal people who've done a wonderful job of combating it.

(51:34):
And I think largely at the academic level, we've done so.
But I think it's going to take a very long time for that to filter down to the common man because unfortunately, just as a species, if you look at it, when there's something new and unknown, our default is to create a fear-based story about it.
And that's what happened to our community is we were unknown, Bitcoin mining, Bitcoin.

(52:00):
And as a result, it was very easy for the incumbent that were disrupting the existing financial system to come out and say, let's prey on this and let's put a lot of FUD out there.
And that FUD has imprinted our culture to a large degree.
And I think it's going to take a long time for that to be disrupted.
It is what it is.
It's just sort of an entrenched fight.

(52:21):
The conversations like you and I are having and we could go into how the incentives are there for Bitcoin to be mining with clean energy and it's becoming better over time.
There's lots of data.
But at the end of the day, that narrative has planted itself with a lot of people and they'll come around eventually.
But to me, trying to – the battle has been won and it's going to take a long time for people to come around to your average show.

(52:47):
I think that's fair. I mean, just speaking from, as you know, I was in D.C. last week for the Bitcoin Policy Summit and was talking to some staffers.
And they quite literally were raising the most cliched Bitcoin mining FUD that you can imagine.

(53:07):
And another set of staffers raising incredibly cliched AML KYC FUD.
And also some of the – not to say they're all bad.
Many asked very good questions from a place of genuine curiosity and saying, look, I don't understand how – like what this is.
Or even like can you explain the difference between Bitcoin and crypto because I honestly don't get it.
Like that's great when you get honest questions where it's like someone's genuinely wanting to learn.

(53:32):
But you can also see to your point how even though at the academic level, it's becoming an untenable position to say Bitcoin mining wastes energy, right?
Like that's – if you're doing any sort of decent academic work, you just make yourself look like an idiot by saying that.
But the average person, even the average staffer in D.C. or the average senator or congressperson in D.C., they're not even close to there yet.

(53:58):
And the average citizen is still not close to that.
And so it's like, man, it's tough because it's like we've won the battle on one side, but the other side doesn't even know that the battle has been won or they just don't even care about it.
You know, it's like, so I don't know if it, if it matters, but I would like to get in.

(54:20):
Cause one of the things I talked about in DC, when some of these staffers were asking about
or bring up some of this mining fund was like, look, and they were like staffers of a democratic,
you know, Congress person.
And so I was like, okay, what angle do I hit them with?
Well, obviously look, you care about renewable energy, right?
Well, Bitcoin mining is the most renewably powered industry in the entire planet.

(54:42):
like by a long shot, like, see, it's a good thing. It's not what you've heard.
Where do you think we're at with that? Or can you talk a little bit about how that
narrative has really proven? Can we talk about the incentives, really, of does Bitcoin mining
facilitate this renewable build out as many have posited?
Yes. Simple answer. And the reason why is because the incentives are there, right? And so I think

(55:10):
I think that's actually one of the secret superpowers of Bitcoiners is we have the ability to follow incentives and see the likely outcome.
Without fail, almost every Bitcoiner I know has that capability.
And what you can see with mining is that it is no different, right?
Bitcoin miners want the cheapest electricity they can find.

(55:32):
What's the cheapest electricity you can find?
It's the electricity that people don't want.
And why do we produce electricity that nobody really wants?
Well, it's because it's produced in the wrong time or the wrong location or a combination of both, right?
And it's okay.
Let's peel the onion one more layer.
What energy sources are doing that?

(55:54):
Well, it's a lot of times hydro is not geographically located right next to the city that's going to consume it.
Or you've got wind and solar, right?
So you look at those three energy sources and then off-grid flared gas, right?
That one gets a little more complicated, but it's actually carbon negative when you break down that argument.

(56:17):
And when you look at it across the board, there's just all this energy out there that's produced at the wrong time in the wrong place, and it's all carbon neutral to negative.
And so naturally, Bitcoin miners are going to gravitate to consuming that electricity because the network drives them to increase their profit margins by driving down their electricity costs.

(56:39):
So it's not a surprise that the network is getting cleaner and cleaner.
It's actually a surprise that people are surprised that the network is as clean as it is.
yeah i mean it's honestly like amazing the stuff around uh around either uh landfill like uh landfill
gas methane or just uh flared flared gas broadly i think is one of the most fascinating sides of

(57:03):
things uh just because it's like once you learn about that it's like it you it just you look really
silly for trying to be against something like that and there's that uh i forget who was the
first person to say it. It may have been Gladstein. It could have been someone else. But the whole
idea that if you're not mining Bitcoin, you're wasting energy. Like, one, it's true. And two,

(57:25):
it's like, it's really satisfying to see that thesis start to permeate a little more. You see,
like, speaking of hydro, that's what I think that's what the kingdom of Bhutan has been using,
right? Is hydropower to mine a shocking amount of Bitcoin with energy that would otherwise have
been wasted. At the same time, you've got the United Kingdom, which is curtailing like billions

(57:48):
or at least over a billion dollars worth of energy per year and passing the cost of that curtailment
onto the taxpayer who already has high energy bills. They have high energy bills, but they're
paying people to shut down their energy production. That's just nuts. That is so insane.

(58:09):
Like your energy should be way, way, way cheaper. Your energy should be almost free at this point. But no, because you have a terribly managed system that apparently won't come around to Bitcoin mining, you're literally having people spend more money just to run energy into the ground.
Like that just blows my mind. I'm sure you as somebody in the industry, that's like probably even more aggravating to you than it is to me.

(58:33):
Yes, and I think I've just developed a thicker skin around it or more patience around it because actually – so this is going to sound odd.
I learned this lesson in rooftop solar.
So I'll give you an anecdote that still to this day I find mind-boggling.
But I was selling rooftop solar and I had – these were house appointments I was going to and literally across the street from one another.

(58:56):
There were two homes.
It was a housing development complex, and so the homes were identical.
Just straight cookie-cutter homes.
I went into one house, and it had an electric bill, and this is circa 2010, right?
So I'm dating myself here, but I had like a $50-a-month electric bill in California.
I went into the house across the street.

(59:16):
It was about $450.
And that homeowner in this home sat there and scratched his face.
I know my neighbor has a very low electric bill, and I can't figure it out.
The only thing I do are turn on these few switches each day.
And I okay what are the switches for One powers my air conditioning and I notice it like a 95 day outside and it 55 in his house Okay that using a lot of electricity

(59:42):
What's the other one?
Oh, yeah, that one's my pool.
Oh, yeah, the other one is a tanning booth that I have back there.
I like to tan, right?
And this guy had no conception that the number of switches he was flipping does not correlate to the electricity he's consuming.
And it occurred to me at that point, I was like, oh, when human beings can't see something, a lot of us can't understand it just straight up.

(01:00:05):
We have no clue.
And so when it comes to electricity, it fits in this box where it's like a mystical substance, I think, for most people.
And I think for a lot of us as Bitcoiners that are sort of like retethered ourselves to reality as we get hard money going in our lives and start extending our time horizons and thinking about saving for our families and for our futures.

(01:00:26):
Like we're just getting grounded and back to reality. The Nixon Goldshock, I think, just untethered society and the Bitcoiners are the first one that are getting grounded. And we see this stuff and it just seems so dead obvious. But to most people that are just running around helter skelter, they're just judging their electricity consumption by how many switches they flip.
They think electricity is stored and can't be wasted. I mean, just the basic fact that electricity, the grid is a circuit. You use it or you lose it. That is just how the grid works. There's no storage mechanism, right? So if they're pushing all this power in, it's not being used. The rest has got to go to ground somewhere in the system.

(01:01:06):
So just like how the grid itself functions, how electricity functions, like all of this is absolutely just over most people's heads and Bitcoiners are coming to realize what this stuff is and be like, you guys are crazy.
Like you just don't understand and you're making the decisions on how the grid works, what electricity price – I mean can we at least get back to the laws of physics for our reality?

(01:01:29):
I mean I'm sorry.
I just got to touch back on this guy because – so he was legitimately thinking like there's like a one-to-one relationship.
Like every switch that I flip is just using the same – it doesn't matter what that switch turns on.
It's just like that's just using my one unit of electricity.
I mean wow.
Yeah.
No, genuinely.
Mind-blowing.
The most surprising part was I managed not to laugh in his face because it was – it was rough.

(01:01:54):
It was rough.
I had to really snort that chuckle.
Dear Lord.
I mean, that's like it is just indicative of the fact that most people don't, again, they don't think that hard about most things.
Like even the things that really affect them and affect their bottom line on a daily basis, they're not that curious about them.

(01:02:17):
They just can't be bothered to care or to understand or maybe don't have the capacity to understand.
But like you don't have to have too much mental capacity to understand that, you know, a little tiny light bulb is going to use less electricity than heating your pool, for example.
You know, like that just that's mind blowing.
So, OK.

(01:02:38):
A lot of people, granted, are still going to strange, incorrect, preconceived notions about Bitcoin mining for a very long time.
Where do you think we're at from a nation state or governmental level?
I know you're not in the U.S. anymore, but obviously you're still – you keep tabs on that closely.
The world is a big place.
We mentioned the Kingdom of Bhutan earlier.

(01:02:58):
There's other governments who are also mining Bitcoin, whether in broad daylight or behind closed doors.
Where do you think we're at from kind of a nation-state mining perspective?
Do you think this is something that's increasingly just becoming kind of like a necessity for countries to pay attention to?
Or do you think that a lot of them are still kind of asleep at the wheel like the average person is?

(01:03:21):
Because let's be honest, governments are mostly run by average people with higher levels of psychopathy than the general population, to put it kindly.
Yeah, to put it kindly.
I think nation states are going to focus on a lot more than your average Joe.
Unfortunately, and this is – it saddens me to say this to be completely frank with you, Walker.

(01:03:42):
But I think the retail that is in now is one end of the barbell and I think institutions and nation states are the other.
And I think that that's going to absorb most of the supply. And I think all the retail that have not adopted Bitcoin at this point or have started their stacking journey, I think they're not going to be starting until after it's socially accepted.

(01:04:07):
And that really is rough to sort of come to accept. But I've just seen in the conversations, I think the biggest inflection point for me was just watching how everybody in the community got excited about us crossing 100K for the first time.
I think for so many of us, we thought that was going to be a psychological tipping point for all of our friends and family to say, look, Walker, you were right. I was wrong. I'm going to start stacking Bitcoin now. And that didn't happen for any of us.

(01:04:34):
And the fact that it happened for any of us is a sign that I just don't think that there's a number that that will happen. There's no capitulation point for retailers I think a lot of us have imagined and wished for. But I do think that there is a capitulation point and it is occurring for nation states.
And I think the money printer and the ownership of the dominant money printer is the equivalent of Game of Thrones for our species.

(01:05:04):
And we've been fighting over that money printer for so bloody long that to see a new entrance in the ring at a nation state level has the leading contenders vying for it now.
And I think it's a game that none of us are really going to understand until history books are written about it 100 years later.

(01:05:25):
But I do believe that we're starting to see the nation-state adoption curve playing itself out at this point.
I don't understand exactly where it's going to go or what that means, but I think we've well moved past the retail period of accumulation.
Aaron Ross Powell So, I mean, safe to say you're of the opinion that hash rate you would view as – or countries will increasingly start to view as like a strategic geopolitical priority.

(01:05:52):
Aaron Ross Powell I think so and I don't think that – I mean do you know many government programs that are run all that well?
Aaron Ross Powell Some military.
Military is about it, right? And so I'm thinking, okay, you know how to run military. Is mining all that close to military? Maybe. I don't know. So I don't know how it plays out, but I think it's going to be a long time before the mining industry gets subsumed by the nation state mining play.

(01:06:25):
And it's just for that simple reason. It takes – like I could see being subcontracted, right, where maybe Trump goes to some of the pubcos and says, hey, boys, we want to contract you to go monetize all this electricity for us that we're subsidizing with our money printer, and we want all the Bitcoin for it.
I could see that happening. But as far as propping it up and building their own branch of the military for mining at this point, I think we got some years ahead of us just given the pace at which government gets good at doing things.

(01:07:01):
Talk a little bit more about mining pool centralization because we touched on it a little bit earlier.
you guys mentioned that you're going to start allowing redirect or, you know,
to people to direct their hash power to ocean.
Can you talk about this just for folks who may not be super familiar with why
this is such an important thing? And maybe,

(01:07:22):
cause a lot of people just may not know about it. Maybe they haven't,
haven't seen that chart showing, you know, the,
it's a pretty scary chart to look at when you see that, you know, what,
like three entities control, you know, however, whatever high,
like 70, 60, 70% of the hash rate.
Like it's very centralized from a mining pool perspective.
And to me, I view this as like a massive risk

(01:07:44):
that should be paid attention to.
I think there are also some solutions in place
for alleviating some of that stress.
And, you know, but the first step is like,
make people aware of the problem.
So what should people know about pool centralization
and its effects?
Yeah, I think first of all, excuse me.
I think first of all, people should be aware
that Bitmain is the 900-pound gorilla in the room on the network, right?

(01:08:08):
Not only do they have the lion's share of the hash rate that they're selling for hardware,
but they're also running AntPool that is a proxy for several other mining pools,
and that was just discovered recently, right?
So not only are they selling the hardware, not only are they mining,
but they're also controlling a lot of blocks and the block templates that are being made

(01:08:31):
and pushed out there, right?
And so to me, the fact that we have that level of centralization risk with one actor is the ultimate issue more than anything.
So yes, if you add up, I think it's Foundry plus Amp Pool plus there's one other sort of is the grouping that people worry about.
it it's it's less that particular grouping that i worry about and the impact that bitmain has across

(01:08:55):
the entire ecosystem because you know the ccp can come in at any time and say there's a throat to
choke at bitmain right that's that's what we always worry about at the within the bitcoin
community right and so because that that uh threat exists it could be utilized and i think that we
should be mitigating that and we should be mitigating it by having different mining hardware

(01:09:19):
that's available. And I'm the pop calling the kettle black, right? We sell a lot of Bitmain
equipment. So it's not that I'm anti Bitmain specifically as I am the undue size influence
that they have on the network. So to me, that's the biggest concern I have. And Bitdeer is coming
to market with new mining rigs. Arodyne is coming to market with new mining rigs. So those are all

(01:09:41):
wonderful things on the hardware level. On the mining pool level, you know, Ocean is the most
dominant hype or opportunity we've got to decentralize there. Demand is another mining
pool that's coming to market that's using Stratum V2. So Datum and Stratum V2 are two protocols by

(01:10:01):
which block templates are put back in the miner's hands to generate their own blocks. And if you're
not generating your own blocks, then in essence, you're seeding that right to somewhere else in the
mining pool. And I think what we're going to see as a Bitcoin community is that we're going to start
to see the mining pool turned into like a stack, right? Where we're going to start to see that you

(01:10:23):
generate hash rate, hash rate generates a certain number of shares that you're going to be rewarded
for when a mining pool finds a block. But that pool is going to be kind of an accounting function
and a distribution function.
And there may even be like a different layer.
There's going to be a different layer.
That's where Datum and Stratum v2 are
for where the block is being created

(01:10:44):
and then where the block actually gets propagated through.
Like I think it's going to get a lot more complicated
and that's actually a good thing for the entire network
because it'll de-risk the centralization impacts.
So I think to your point, Walker,
the fact that we're all so focused on it
and awareness is growing around this issue is the starting point.

(01:11:06):
There's not too many issues that we focus on as a Bitcoin community
that we don't see progress on.
This one is harder than a lot of others, though,
because it involves moving molecules around meat space, right?
It's not just software and code that can fix things.
It's like we actually have to move electricity around,
point hardware to a certain place and all that.
So it's going to happen.

(01:11:27):
The focus is there.
But yeah, for me, the two big risks that I see to the network
are mining centralization, of which I think SAS mining has some impact on it to change the
incentive set on why people are mining. But downstream of that, I also, quantum attacks
are the other one that concern me. And so, you know, as much as we've been arguing about things

(01:11:49):
like op return, which I think there's a legitimate, interesting debate there, I actually think that
it's the wrong debate and wrong use of our community's focus. I would much prefer to see
all of us working together to solve the mining centralization issues and like the quantum issues
that seem to be heading down the pike at us. So let's touch on the quantum thing for a sec then

(01:12:14):
because I mean the way I see it, it's like, okay, if we do get to that point, you know,
and I feel like this is often something that's used as like a gotcha for Bitcoin. Well, like,
well, what's going to happen to Bitcoin when, you know, a quantum computer can just crack it and,
And then all your little bitty coins will belong to the quantum computer.

(01:12:34):
It's like, okay, if that happens and if it can – if it's able to break that level of encryption, well, then that means it's breaking all the encryption everywhere in the world.
So like probably the bigger issue is that literally everything everywhere will shut down and we're going to descend into chaos.

(01:12:55):
and it won't matter if you have Bitcoin because the only currency that anyone will care about
is ammunition. But maybe I'm wrong. Maybe Bitcoin is uniquely vulnerable.
I don't know. I just, I see it as one of those things where like, yeah,
could this be a problem in the future? Absolutely. Am I also confident that we have ways in which to
protect from that quantum threat and that Bitcoiners are probably more aware of that

(01:13:18):
than folks in a lot of other industries also using strong encryption? Yes. So I'm curious
where you sit on that. How much of a threat do you realistically think that is? And is that threat
insurmountable? So I think that having a technology that's a store of value makes you uniquely
vulnerable, not from the technology itself, but from people's perceptions of that technology.

(01:13:42):
The fact that we hear it so much, I actually think limits our adoption because people's fear
of that, whether true or not, back to what we were talking about earlier, if there's something
they don't understand, then it becomes a boogeyman to get scared about, right? And I think that that's
probably playing itself out. So for me, I'm actually, I'm in your camp, actually, I'm not
that worried about it. For me, though, it's important that we as a community create a game

(01:14:06):
plan and know when to deploy that game plan. And the fact that we don't have an agreed upon
game plan at this point, and know when we plan to deploy it, that's my issue. And maybe it's just
because I did Boy Scouts as a kid and have it drilled into me to be prepared. But that seems to
me to be just an obvious, like, dumb thing. Like, we know quantum's coming. We know at some point,

(01:14:27):
it does pose a risk for us. Why don't we have an agreed game plan in place? And why don't we focus
on agreeing on that game plan as one of our priorities right now? Because we know it's an
actual risk when it occurs. A lot of these things like the op return debate, you know,
a lot of us just thrown around theoreticals on what if this happens and that happens.

(01:14:49):
And I think the great fear of the opportune debate was, well, miners are going to centralize
and we're going to have all sorts of problems in the future.
And it's like, yeah, maybe.
We don't really know.
There's no counterfactual to that.
It could happen.
It might not.
But we know as soon as quantum technology is at a certain point, whether people choose
to or not, it could be pointed at Bitcoin addresses and used to break those.

(01:15:12):
So that is just a hard fact, right? So let's just be prepared and get a game plan together we agreed to.
And if not, then we've got a quantum-resistant fork and a non-quantum-resistant fork and we'll see what happens there.

(01:15:33):
That's one thing that's clear. Consensus is rough and messy when it comes to Bitcoin.
but okay well can we've we've covered a lot today was there anything that we did not get a chance to
dive into anything you you wanted to go deeper on or anything we didn't get a chance to cover
that you want to take uh take a few minutes to go into hmm no man i think i think if i yeah my

(01:16:00):
instinct is to go to just shill what i'm doing with my project but i'm not going to anymore
We've already talked about it. I think if anything, I just say that if you've been shafted by hosting or if you have been very negative towards it in the past, I would say we're Bitcoiners building a Bitcoin project and we're Bitcoin only.

(01:16:27):
I'm pretty proud of the fact that we've got like very simple things but have been very hard to come by in our industry.
We've got like Apple Pay, Google Pay, Cash App, Lightning, Bitcoin, Tether, like all like the major rails we've got available.
We've done a lot of cool things that can only be done if you have a software forward approach to mining.

(01:16:50):
And I think you're going to be shocked with the experience if you give it a second look.
And I get why you've rejected it. And I know I'm speaking to the audience at large right here, but I get why so many Bitcoiners have rejected it because the trust has just been abused.
And we set out at SaaS Mining to restore that trust because fundamentally, we should be acquiring our Bitcoin.

(01:17:15):
And I know I'm being moralistic here, but we should be acquiring our Bitcoin the way Satoshi designed the network because it's a better acquisition method.
We should not be going to the exchange-based surveillance system to acquiring our Bitcoin.
And if we go back to the network, retake the network, so to speak, I think a lot of our problems are going to disappear.

(01:17:38):
I like that. I like that message, and I think it's a great note to end on.
Where do you want to send people?
So the website is sasmining.com.
You can find me on Twitter at K Halliburton, so two L's in Halliburton.
DMs are open
hit me up
and you are
getting back on
I am on Nostra too but I just don't know how to

(01:18:01):
I don't know how to share my Nostra
very successfully
that's okay
I'll blast it out to folks
once this episode goes live
so they can find it online
well Kent appreciate you sharing your
scarce time and
looking forward to talking to you
again soon. Likewise. Thank you.

(01:18:49):
x youtube and rumble just search at walker america and find this podcast on x and instagram
at tip coin podcast and in the show notes to grab sponsor links head to substack.com
slash at walker america to get episodes emailed to you and head to bitcoinpodcast.net for everything
else bitcoin is scarce but podcasts are abundant so thank you for spending your scarce time

(01:19:16):
listening to The Bitcoin Podcast.
Until next time, stay free.

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