The first episode of TFTC’s new series shows how Bitcoin mining can balance grids, monetize stranded energy, and grow infrastructure.
The inaugural episode of TFTC’s mining-and-energy series explores the convergence of Bitcoin, energy production, and mining economics, covering the industry’s rapid maturation since 2018, the unique nature of Bitcoin’s power demand, its potential to solve real-world energy challenges, and key centralization risks. Bitcoin mining’s flexibility, being location agnostic, interruptible, purely economic, and globally aggregated, makes it an ideal grid-balancing tool, capable of monetizing stranded assets, absorbing excess generation, and supporting new power infrastructure. Examples range from colocating with nuclear plants to relieve overproduction to deploying at midstream gas facilities to curb flaring. Yet, risks remain in highly concentrated ASIC manufacturing (Bitmain and MicroBT) and mining pools, where a handful of entities control most hash rate. While switching pools is easy, potential censorship or collusion warrants solutions such as broader industry participation in pool operation. The episode underscores that Bitcoin mining’s long-term viability, and its value to energy markets, rests on preserving Bitcoin’s fixed supply and censorship resistance, the core drivers of sustained demand for hash power.
“The energy side of Bitcoin is as much of a rabbit hole as money is a rabbit hole.”
“Bitcoin mining is this demand source that is location agnostic and has the ability to be flexible… if a mining operation goes down, it doesn’t critically impair the Bitcoin network.”
“Bring the market to the molecule.”
“You can build a power facility, put a mining operation behind the meter, and have an immediate buyer before transmission is built out, or absorb excess when prices go negative.”
“It’s hyper-centralized, really two manufacturers dominate, and we’re reaching the physical limits of chip efficiency.”
“Pools are terrible businesses, but they’re necessary to the operation of Bitcoin mining.”
“If you own one Bitcoin, you own one 21 millionth of the network into perpetuity… that certainty is what ties all of this together.”
“Complacency and apathy will, if you’re a miner, ruin your business in the long run.”
“Whenever something threatens the sanctity of Bitcoin, economically incentivized individuals stand up and say, ‘No, you’re not doing this.’”
“We’re going to focus episodes on each different way that Bitcoin mining can solve a problem in an energy system.”
This episode kicks off a podcast aimed at bridging the knowledge gap between Bitcoin and energy, examining how the industry has matured since 2018, the flexibility of mining as a power consumer, its role in solving energy challenges across the supply chain, and the centralization risks in ASIC manufacturing and mining pools. At its core, Bitcoin’s fixed supply and censorship resistance underpin sustained hash power demand, making mining a reliable revenue source for energy producers and a valuable tool for modern energy systems. Future episodes will explore case studies like at-home waste-heat mining, midstream flare gas mitigation, and behind-the-meter nuclear integration, highlighting how mining is reshaping the way energy is produced, distributed, and monetized.
00:00 - Marty’s back in Austin
02:26 - Introducing Center of Hash
06:53 - Great American Mining
10:53 - Network Hashrate Growth and Energy Optimization
20:06 - Bitcoin Mining's Role in the Network
23:38 - Bitcoin's Unique Power Demand Characteristics
33:42 - Recent Difficulty Adjustment and Heat Wave Impact
39:04 - Solving Energy Problems: Midstream vs On-Grid
49:19 - Pioneer Species and Energy Infrastructure
53:42 - ASIC Manufacturing Centralization
01:07:29 - Mining Pool Centralization and Variance Risk
01:19:33 - Pool Economics and Capitalization Problems
01:31:57 - Decentralization Through At-Home Mining
01:37:56 - Sustainability of Bitcoin's Energy Demand
01:46:00 - Future Topics and Dream Guests
c(00:05) Welcome back to Austin. It's great to be back. Saw you walking down First Street yesterday or Congress heading over to Verarac Cruz like nothing had changed. Nothing had changed. I just I was coming coming up Congress. You were walking down uh you right where you were headed.
(00:24) I got a walking meeting in as I was describing to you earlier around Town Lake today. It was felt good to be back. I haven't been gone that long. It's been 2 weeks. Yeah. Feels like a you know like you were on vacation or something. Yeah. And I have been leaving for the summer. Yeah. You you do spend the summer on the shore. So Yeah.
(00:41) It does feel good to be back though. It is weird staying. We're going to need to find some way to have it be fairly regular. I think it's going to be fairly regular. Regular. How many times per day do you think you're going to eat Veraricuse while you're here? I'll probably have it tomorrow, too. I'm going to skip today.
(00:59) I'm going to go get lunch for Ryan Gentry after this. And I I think we may do something in the proximity of of the park. Got your steps in. Got 20,000 steps in already. We did the long route in Town Lake today, which I've never done before. I feel like missing the lake is probably going to be the biggest adjustment. You have the shore, but we had the beach.
(01:22) Been walking, doing push-ups and air squats on the beach every morning, which has been good. But once you get back to Philly proper, it's hard. We do have some parks around us, but going to try and keep the walking up. Dr. Jack Fruits is really in my mind. Get the sun lake at the steps. I was at the park.
(01:39) We were at the park on Sunday and we saw uh Katie and Mike and they were they were talking about Sunmax and just kind of happened to see them and that uh that's inspired me to start and I've been paying attention to Jack for quite a while now. But it's time to put that into action. It is the sun provider. She was wearing sunglasses like, "Hey, Uncle Jack says bad for your eyes." I felt good.
(02:01) Uh, yeah, cuz I didn't know sunglasses were bad until like two or three years ago. Bad for your eyes. But I naturally just discarded sunglasses like 10 years ago cuz I would either lose them or they' never stay on my face. And so I've been sunglassree for a decade. I have been. Yeah. All right. Back in the studio. back in your city. This is you're in the interview seat.
(02:25) Maybe what are we doing here? What are we doing here? Um starting a show as part of TFTC on mining and energy. Yeah. Not just mining, but an energy focused podcast, a cross-section of Bitcoin, Bitcoin mining and energy. And a lot of the inspiration of it has been um just me increasingly focused on fact that mining is consistently talked about as a point of centralization and it's a it's a really interesting subject on the energy side.
(03:06) I think that the energy side of Bitcoin is as much of a rabbit hole as money is a rabbit hole. And you know at Zapri working on Bitcoin payments it's not you know the my main goal of doing this is to help um for the the education around the convergence between Bitcoin and energy but also a lot of our customers at Zaprite and early adopters of Bitcoin payments are in the mining ecosystem naturally they have revenue that that's Bitcoin denominated and they have customers willing to to pay in Bitcoin but uh most importantly it is there are these knowledge gaps that exist around uh
(03:42) Bitcoiners not appreciating energy, Bitcoin miners really being sophisticated in energy and energy economics but maybe not being as familiar with the technical underpinnings of of Bitcoin. And then there are legacy energy professionals and legacy energy industry that have a lot to add to Bitcoin but don't understand it as well as regulators and legislators that specifically influence policy or grid operations.
(04:20) um that would benefit for a Bitcoin podcast that was focused around not just mining, but energy fundamentals and and how that converges. And um given the fact that the TFTC studio is here and that we're in the center of hash being uh Texas and everything that's happening around the state, it won't just be about and what's going on in Texas, but I thought uh we could leverage the infrastructure that's already here.
(04:42) We got the best studio in America, maybe the country, and probably the world actually. Yeah, definitely Austin. Um, so yeah. So, and you have a long history of working on mining, you know, from various different cross-sections of it. So, um, yeah, looking forward to diving into, you know, helping Bitcoiners understand the energy side, helping miners, um, further entrench themselves and and the working of the network and their role to play in it.
(05:10) Because I think one of my observations is while there are different aspects of Bitcoin mining that are uh centralized and potentially increasingly centralized, it's really to the detriment ironically to miners themselves and that the miners, you know, have a role to play in uh helping to solve that problem. Yeah, I agree. The energy rabbit hole, I've fallen down it twice. Once early in my career, I was working at a managed futures fund.
(05:39) We were trading commodities, energy, being part of that bucket of commodities. So, I learned a lot about macro influences on energy, but I didn't really fall far down the rabbit hole until Great American Mining. I joined them in 2018, and we went on that journey to mitigate flare gas in the Bacan using Bitcoin mining.
(06:05) And it is hilarious to me that you can spend years on Bitcoin re myself like understand the economic principles, the distributed protocol, how it works, and even really understand hash rate and the difficulty adjustment. But it wasn't until I joined Great American Mining and really was forced to do a deep dive on Bitcoin mining economics which forces you to understand energy systems that I I came to have like a full grasp of the industry.
(06:36) And even today, I won't admit to be the end- all beall expert on Bitcoin mining and the intersection of mining and energy, but I think I know enough to be dangerous and have learned a lot over the last seven years to have a pretty good perspective on where the market was in the past, where it is today, and where it may be going in the future. Yeah. Maybe talk a little bit about So, you joined Great American Mining in 2018.
(07:03) You've worn the hat of an operator. Um, you mine yourself, believe your 1031. 1031 invests in mining companies. You sit on a board a mining company. But from 2018 to today 2025 in your view how has not just like the industry changed but the sophistication around energy strategies maybe advanced I think it's an order of magnitude it's made an order of magnitude probably multiple orders of magnitude advancement in terms of the understanding because you have all these I think the 2021 Chinese mining ban like really forced operators in the United States to step up their game and really think about the power aspect um very very hard and I
(07:55) think we've seen that the products of that here in Urkott and to a lesser extent but pretty advanced as well up in the Tennessee Valley Authority in the TVA and there's that's the thing with mining and energy there's so many variable inputs that go into both industries.
(08:20) It's like trying to combine them is um you have to be very smart, but it's also like an art form. Uh you have timing the market on the energy side of things and timing the market on the Bitcoin side of things. I think when it comes to mining, when you go back to when I first got in, you had like the S17s coming out, you had the what's minor M20S's.
(08:46) And so uh on just a hardware side, we've had incredible advancements in the efficiency of the machines in terms of jewels per terahash, like how much they can produce much more hash with smaller amounts of energy. Um and at the same time, you've seen the proliferation of these publicly traded miners like Riot, Marathon, Clean Spark, Iron, and they've really industrialized mining, particularly on grid. But then you have this whole other aspect which is off-grid mining.
(09:14) And now with projects like the Bitax, you're getting at home mining. And so there's many different ways to skin the cat of a mining operation. And I think between even before 2018, I think between 2016 and within the last 2 or 3 years, the advancements on the hardware side were um were so quick and the way in which you acquired A6 was not how it's done today, which I think is much more efficient and better for the minor, but you had like pre-sales and pre-orders and the cost per Terraash got out of whack in 2021. one particularly, but I think we've settled down into a point in
(09:56) time where the operators are more professional. They're more methodical about their deployment of capital both on the hardware side and um the infrastructure side of locking down the power and building it out. And so as it stands today, I think the the mining industry has matured. I do think outside of Urkot and even within Urkott OT to a certain extent, energy producers really have not fully groed Bitcoin mining and hell can uh increase their efficiencies and their revenues and make their operations more secure in the long run, economically
(10:36) viable, sustainable as you like to say. Um, there definitely are some who get it and are early leaders, but I think the mining industry has matured to a point. I I do think the energy industry is is lagging a bit in terms of understanding the benefits mining can provide them in the long run. Yeah.
(10:57) And for a frame of reference and I want to go back a bit, but I believe in 2017 the network had approximately five hexa hashes and today it's 800 800 between 8 and 900 depending between 8 8 and 900. So the network hash rate and I want you know for given that this is the first podcast of of this series that we're doing under the TFTC umbrella want to do some basics to just ground people even even Bitcoiners and uh what certain things represent and are but that's from just as an order of magnitude hash rate in the Bitcoin network has increased by 160 times the
(11:41) past 8 years and that necessarily ly as mining becomes more competitive the you know and there might be you know various reasons that you know turning on a home miner and solo mining with a small h amount of hash rate doesn't need to be thought of the same way that a minor that is running a sophisticated operation might think about their own economics but over the past eight years it's shifted to if you are going to have a viable Bitcoin mining operation and you know whether it's people that own power generation start to look at Bitcoin mining that increasingly it
(12:22) seems like just out of the increase in the hash rate of the network that if you're not optimizing for an energy strategy or realizing that you're in the business of energy development and procuring cheap power and optimizing around that that you're not going to have a sustaining um operation. Do you where do you see us in that kind of process to the shift of big efficiency gains coming from the hardware side versus optimization around energy and cost of energy or um uptime downtime curtailment thinking about that I think we're definitely in a better
(13:01) spot but have a lot of room to grow there and I was actually in DC last week at the Bitcoin policy institute summit and I was talking with Ree Browning and Isaac Fithian and who were at Great American Mining with me and they're still in the industry and we were having this conversation.
(13:20) Our thesis even at Great American Mining was that ultimately due to the competitiveness of the mining market as you mentioned Bitcoin mining is the most competitive ruthlessly competitive market in the world. Anybody can buy an ASIC or excuse me an AS6 is not the right term can buy a mining machine with a bunch of AS6 on it.
(13:38) plug it in and boom, they're competing for they're producing hashes and competing for the production of blocks and the reward that is Bitcoin the subsidy plus the transactions uh associated with uh the fees associated with the transactions in that block that they may ultimately win. Um, and our thesis back at Great American Mining was that ultimately power companies are like it's either who's going to become who first? The miners going to become energy companies or the energy companies going to become miners? They're going to converge and just be one operation at some point. And so at
(14:13) Great America Mining, we were doing offgrid mining, we learned this lesson the hard way. We were doing flare mitigation in the Bakan on the well pad in harsh conditions in the middle of North Dakota and we learned the hard lessons of sort of gas quality uh flow quality depending on like if the if the pipe froze because it was -40° like that could prevent you from actually being able to run a generator. uh pipeline access right of way.
(14:47) Like we learned the hard lesson at one point in 2019 that we got an operation set up on the well pad. We were taking gas would otherwise been flared, but then midstream capacity opened up and so they were able to actually flow the gas into the pipeline to take it to midstream. So we had the gas taken away from us. And then on top of that, you have mineral rights owners.
(15:10) uh they're getting smarter about the fact that some of these operators are bringing in mining operations to mitigate flare and that's producing revenue in the form of Bitcoin that's being mined and they're getting involved in the conversations like hey you're using my minerals I'm supposed to have a 12% royalty on any revenue produced by this typically it's at the midstream but there are some intricacies like since it was happening on the well pad technically they didn't have to give them the royalties and so now you have like mineral rights owners is beginning
(15:38) to write uh like mining royalties on the well pad into their into their contracts. And on top of that, it's like logistically this off-grid mining model is logistically a nightmare because you drill a well, you get the oil, you have the steep decline curve and that gas that that that archetype of gas flared gas is not sustainable or reliable in the long run.
(16:08) And so we always had the idea at Great American Mining that eventually um so this is like it's not sustainable reliable because the the gas gas capacity is declining. Yeah. The amount of power that you can generate at that site is variable because of that but variable in a declining sense that you basically have a mining operation at a site that can't be operated reliably at full utilization. Exactly.
(16:33) And so the analog here like our our thesis was like ultimately what actually makes sense and so the analog would be like a mid-stream provider is like a power generator or utility on grid and I think this is beginning to happen where we always said like what ideally makes sense is you go to the midstream operators who are who are basically aggregating all the gas from upstream and processing it and then sending it to utilities to run power facilities.
(16:59) is it actually makes sense for mining operations to exist at the midstream and act as this sort of pressure release valve for pipeline capacity like next to a processing plant. Yes. And so I think I I've talked maybe maybe describe a little bit about that that there's pipelines from the well site going to the processing plant and then from the processing plant to the generators. Yes.
(17:24) And and so you you have this upstream, midstream, and downstream like the generators uh is the way I would describe it and understand it. And what actually makes sense is if you want to prevent flare upstream, what you really need is more pipeline capacity cuz that's typically not it's not every instance or some instance where you have to flare because they don't have access to a pipeline to send it in the first place, but there's a lot of situations where they're flaring because pipeline capacity doesn't exist.
(17:50) it's full and so you just have this excess gas you have to burn off. So, what actually makes sense is instead of logistically trying to plop down mining operations um at these different upstream well pads, what you do is you just put a big sort of base load at the midstream uh and you basically have this offset right at at the collocation or uh the aggregation site of the gas coming from upstream.
(18:19) And when you need more pipeline capacity, if they're drilling more wells uh upstream on on the well pad, you just simply divert some of the gas to the mining operation, you let the generators that are running, the miners consume the gas, open up capacity, and prevent flaring upstream.
(18:37) And so we would call that like sucking in flare for the midstream is how we would describe it. And so I think on the off-grid side, that's where I would like to see things go. And I have talked to some miners who have clued in on all that and some mid-stream providers who have recognized this and are beginning to implement that strategy.
(18:56) But that's similar to ongrid demand response and where I think ultimately it goes as the power generator basically a regul it's a it's a regulator of excess. Yes. And and so I want to I want to come back to this because I want to want to get the thoughts of like why sitting at the midstream versus more optimally at the point of generation for someone that is converting gas to power to then supplied to the grid of of whether it's a balance between both of those points.
(19:29) kind of essentially providing regulation at different points in the the power generation supply chain. But before that, I do want to just rewind on anchoring somebody that is less familiar the space to two things. How you describe the function of Bitcoin mining in terms of its what it is doing for the Bitcoin network. as well as the nature of power demand for the Bitcoin network and how it differs from all other sources of power demand.
(20:08) Yeah, this actually then I want to come back after I kind of anchoring in those concept I want to come back to the discussion on you know where power generation for Bitcoin mining might be most optimally set. This is very fitting because I was tweeting about it earlier, proof of work over everything and I was quote tweeting Elon Musk who was who tweeted out something about physics like you can't fake physics uh like nothing you can't you can't 51% attack physics if you will physics is the truth and so I guess that is the sort of reason that we use proof of
(20:39) work in Bitcoin mining like Bitcoin is this distributed monetary system uh and the whole reason for Bitcoin existing is because we want to separate state and money and we don't want central authority over the monetary system. We want a monetary system that anybody can audit, anybody can verify and everybody knows what's going to happen when in terms of how blocks are going to be produced and how much Bitcoin's going to exist on the market at any given point in time.
(21:11) And that's the function that mining plays is sort of regulating uh the distribution of bitcoin and then on top of that the uh facilitation of transactions on the network on a blocktob block basis. And so mining is sort of this melding of the physical and digital world using physics in the sense that it's taking um an energy source turning into electricity pushing it through these computers that produce these hashes uh and then those hashes basically create a market for uh block production.
(21:49) If you find a particular hash that is below the difficulty target, uh you present it to the network. Rest of the miners and the nodes say, "Yep, that's the hash that's below the target." You can add a block of transactions. They do that, you're rewarded in Bitcoin.
(22:05) So, there's a lot there, but describe like what like you just said block production. And if a bunch of people have no idea what that means, like it is enforcing the fixed supply of Bitcoin as well as validating all changes in state which are represented as people sending Bitcoin from one address to another, one address to another, people all over the world and um ensuring that only valid transactions be processed. Yes.
(22:35) And so that's the process. Why is mining important? Because to ensure that the system is is distributed, decentralized, you basically need this this process where anybody can contribute to block production by plugging in one of these computers that produce hashes. And that's the way we create a fair system.
(23:02) There's no central sort of authority who determines like, okay, these people are trying to make this transactions at this given point in time. Let's just aggregate them in a block and put it on the blockchain. Uh you don't want a central authority do it. You need distributed economically incentivized actors to do that. You can't fake a jewel. No.
(23:21) And you can't fake a jewel and you can't fake a hash like the And that's what you mentioned the 180x increase in hash rate over the last seven years. like that is a product of more people sort of entering this this race of block production to hopefully produce Bitcoin uh at a cost that is cheaper than the market rate for which they could sell it right now.
(23:46) And so that's describing the function of of mining within Bitcoin and you uh but now I want you to describe a little bit in your own perspective of the nature of Bitcoin's demand for power and how it differs from all other sources of power in the market. And if you could, cuz one of the ways that as we're thinking about names for the podcast, which we're still working on settling on, is thinking about what is actually happening.
(24:18) And you and you you described it where basically there's energy in some stored state. It's transformed into electricity. That electricity is effectively converted to computation. computation which um releases heat. Um and through that process of essentially creating computer or hashes derived from computing power, Bitcoin network is enforcing its fixed supply validating currency transactions all over the world without a centralized third party and it's separating effectively ownership of the network from validation.
(24:59) Yes. in a way that anybody can participate in. But then if it's demanding some form of stored energy converting that into power now describe what makes the nature of Bitcoin's power demand you in the market because it is a fundamentally new source of power demand that prior to Bitcoin did not exist and realistically when Bitcoin was very small it demanded very little power and that as it as it grows, the more power it consumes, the more relevant it becomes to energy systems and the more it can potentially solve energy problems.
(25:43) Yeah. And so I guess the nature of the demand for power from Bitcoin miners at any given point in time is contingent on a couple of things. Number one, how expensive or cheap is that power? Number two, how expensive or how how much is Bitcoin worth at that given point in time and running the calculations of your energy costs, let's add infrastructure and operations and all that into that. Um, and the price of Bitcoin at any given point in time.
(26:18) You're you're basically going to consume power if you think you can produce a Bitcoin um for less than you could sell it at the market at any given point in time. So I think that dictates the demand for power from the Bitcoin network at any given point in time. Um with that being said, I I think the interesting thing that Bitcoin mining brings to the world is demand for power sources that previously had no demand.
(26:47) And so in the example Great American Mining, flare gas was something they were literally setting on fire um because nobody wanted that gas because there was no ability to monetize it um because it couldn't get to market, right? It was stranded energy like out in the middle of these oil fields. And that's the beauty of the Bitcoin mining network is that it brings a new form of demand to energy resources that for a very long time were simply just wasted because there's no way to monetize them.
(27:22) So I think Ross Stevens has written very eloquently about this and many others like Bitcoin mining is this pioneer species that Brandon Quiddam also wrote and Brandon Quidum um that can that can monetize energy sources that were previously unmonetizable and so it brings demand for that archetype of of energy that's that's existed for a long time but has never been able to monetize and this is uh this is possible because the Bitcoin network is distrib distributed.
(27:52) And so, uh, if you have the ability to generate, uh, electricity, the computers that produce the hashes that ultimately get you Bitcoin, um, and an internet connection, and it could be a cellular internet connection. That's the thing miners um, when they're sending their hashes to the network or a pool, uh, takes kilobytes of data.
(28:17) So you can use pretty low latency, significant amount of work at at the site, but very little data transmission. Yeah. When you're interacting with the network, you're selling kilobytes of data when you're sending your shares to a pool or to the network directly. Um and so that creates a beautiful thing where you can go and you can monetize these these previously unmonetizable energy sources on site.
(28:42) bring the market to the molecule is one of the things we would say at Great American Mining and the network isn't dependent on any one individual miner having 100% uptime anywhere in the world because it's distributed. Um, and so you can have explain that because I think that's a really important concept that it's functionally that miners are suppliers to the Bitcoin network and that the Bitcoin network is is the source of demand.
(29:13) It's basically aggregating demand all over the world and then distributed suppliers and just talk about like the the that as a concept um and and significance of it. Yes. So it's location agnostic and since Bitcoin is a distributed system the you can have disruptions to individual parts of the mining industry of individual mining operations without disrupting the distributed Bitcoin network.
(29:44) The extent of this disruption if it hits a critical or not a critical scale but a certain scale is just slower block production. And I think that's right. But like making that point, it's like if a hospital stops pulling on power. Yes. The operation of the hospital shuts down. Shuts down. Now if a Bitcoin miner shuts down, its operation shuts down, but the Bitcoin network continues to operate just slightly slower.
(30:10) And the actual operation that is generating the the is the source of demand is the Bitcoin network itself, which the the miner is supplying. It's kind of a it's a a part of the supply chain, but it's not the actual end demand. No, the end demand is the people looking to send Bitcoin from one place to another. Right. Yeah. And this is a beautiful thing.
(30:33) Hospital is one example. Amazon Web Services, cloud uh data centers, the AI compute particularly for uh model training like they cannot have disruptions. they need consistent power or in the case of Amazon if one of their data centers goes down like you have websites that will go down like critical business infrastructure that will literally go down um maybe they have some redundancies but I think it's safe to say that they need significant amount of uptime and uh reliability whereas the Bitcoin network an individual mining operation may want that uptime but it's
(31:11) not critical to the Bitcoin network being able to facilitate transaction there's another there's another piece of that which is that it's a and you mentioned this before but it's it's a functionally a purely economic source of demand. Mhm. And in some form or fashion but in a more derivative way every demand of for power is refining that power into some higher ordered good to ultimately have an economic incentive.
(31:46) But Bitcoin mining is essentially the least refined that has a direct monetization to money, not needing to refine it into something else to then deliver a good or service to trade it. And for that reason, it's this aggregated source of demand being the Bitcoin network as well as this purely dollars and cents, Bitcoin and SATs.
(32:11) Do I consume this power because all I'm using it for is to turn it directly into money, not some other good or service. Exactly. Yeah. And it's a beautiful thing, too, because Bitcoin trades 24/7 365. It's extremely risk without counterparty risk. Extremely liquid. With the pools, you have some counterparty risk. Yes.
(32:29) And I'm sure we'll get to it, but like the pools have created payout structures, which are a problem right now, but um where make it so you can get paid out every day. Uh and so yeah, you do have this stream of income or revenue that you can convert to dollars when when you need to immediately. And a lot of miners, I think, have really gotten smart about managing their their Bitcoin revenue and inventory um in ways that are advantageous for the long-term viability of their businesses.
(33:01) But yeah, long story short, Bitcoin mining is this demand source that is location agnostic um and has the ability to be flexible in the sense that uh if a mining operation goes down, it doesn't really critically impair the the Bitcoin network and the if it's more profitable for them to turn down because it might be more costly to continue to run, then they have a direct incentive to do that.
(33:26) Yeah, and we've seen that in the last we just had the largest difficulty downward difficulty adjustment in believe five years earlier this week and this is a pro product of the heat wave that's been going going thought that maybe this is good Iranian nuclear sites but uh I don't want to go down that no I think this is important though like where and going back to the first time I do dove down the Bitcoin rabbit hole and I think this is this is actually this this sort of theme that we're pulling on here is indicative of Bitcoin mining
(33:59) becoming like a truly industrialized commodity producing business where when I was working at the managed futures fund were following net gas markets WTI um power markets just generally like I found it fascinating because you could have geopolitical events or weather events in certain parts of the world really materially affect those markets and we're beginning to see that in Bitcoin particularly as more miners become engaged in demand response uh within grid systems. And so last week, like earlier this week, we had the
(34:35) largest downward difficulty adjustment we've had in many years. It was 7.7%. Um, and as you alluded to, there were many people that were pointing at uh the United States bombing Iran's nuclear enrichment sites and saying, "Oh my gosh, Iran was running these mining operations there. That's why hash rate fell.
(35:02) " And I think it's been very well known that Iran certainly does have a material amount of hash rate within its borders. But uh I think people were I think it's clear because you can look at the Urkott data specifically, but literally right around the same time that we were bombing Iran, the heat wave was starting to hit the United States and the Northeast and here in Texas and it was just a coincidence that we were bombing Iran while that was going on.
(35:28) And what was actually happening, number one, we we bombed nuclear enrichment sites which aren't power facilities. And so like it doesn't make any sense that if you're going to have something as high stakes as a nuclear enrichment site that you would colllocate a Bitcoin mining. It doesn't make any sense. They're not like actually producing power there.
(35:47) You if you are producing power there, you probably want to spend it all on the enrichment. And I'm not going to make any assumptions there. Um but we had the heat wave going on here. And so miners that were engaged in demand response, the pricing signals that they were getting were, "Oh, it's too expensive to mine Bitcoin.
(36:04) " and we're in this program that will pay us if we shut down and send our electricity back to the grid. And that's actually what has been happening over the last week. It's been It's crazy actually coming back down here. It's been hotter. The heat in Jersey has been more oppressive than it is here. It's actually relieving to be here this week. Yeah. Yeah.
(36:22) Last couple summers totally brutal. This summer more mild. You know, people get adjusted to. It is interesting that um because one of the things that I mentioned and when we're starting to see it, but I I expect it to grow is that when Bitcoin was very small, it's demand for power small and the larger that it's grown, it can actually impact.
(36:55) it needed a certain level of scale to be able to actually be relevant to an energy system. And thinking about something like Urkott and I want to use this to segue back to that question of kind of where optimally and my expectation is I want your thoughts is that Bitcoin mining will exist everywhere both geographically as well as at different places where there's underutilized energy assets.
(37:20) that um if Bitcoin can effectively solve an upstream problem in certain scenarios a mid-stream problem and then in the case of conversion power generation for the grid downstream problem. Um now my understanding is that that Bitcoin mining in Urk is like 3 to four gigawatts uh a functional base base load and that peak in the summer which I'm sure we're not all-time highs but either last summer or the summer before we had hit something around 90 gawatt of power that 4 gawatt taking that offline at peak demand is enough to provide not just as a service but relief to the grid itself. Um, so
(38:10) how do you think like in terms of actually being value additive that if you think about, you know, peak demand in Texas in the summer being between 80 to 90 gawatt, if you were only drawing 100 megawatts power terms of Bitcoin miners in Texas, it can't really solve material problems.
(38:32) But it's 4 gawatt, it starts to solve a problem. If it becomes 10, it can solve problems more effectively. How do you think about how Bitcoin mining can solve problems? Coming back to what you were saying of maybe the most optimal location might be at a midstream processing plant, but thinking about it relative to um maybe that why do you think that might be most optimal, but how do you think Bitcoin mining could be distributed to in parallel or in tandem solve different types of energy problems? To be clear, I think the midstream application is optimal for
(39:14) upstream energy producers that have problems with gas that they can't get into a pipeline. Like I think it's it's optimal for solving that problem. Does that essentially increase the economics of a pipeline to allow for more pipelines? You can drill more oil and you can you can get more gas to market and then monetize that gas would otherwise be wasted.
(39:39) at least in the Bakan where they have strict flaring regulations and so if you flare a certain amount you have to shut down the well pad which means they really care about the oil at the end of the day I mean and gas is a byproduct but if you can create a better a more an actual economically sustainable path to offload gas then you can actually create more oil and then on top of that you can monetize the gas which wasn't possible before so you're getting like compounded efficiencies there but that's optimal for that specific problem on grid. There's many like I'm thinking of
(40:08) two things right now. I'm sure you've seen the charts of Chinese energy production over the last three decades versus energy production growth versus US energy production like flat and one's you know not necessarily hockey sticking but very linearly aggressively ramping. Yeah.
(40:31) like it needs we need to catch up with China in terms of generation expansion and capacity expansion just throughout the United States. Texas has done a very good job like I was going to say who's we here? Yeah. Well, still Texas like demand's only going to continue to rise in Texas. And I think at a pretty steady clip as it becomes this bastion for free markets and enterprises that want to escape hell holes like California in the Northeast and actually build down here. You have foundaries coming online um in Taylor.
(41:01) I believe you have Samsung building a foundry there. I think there's another one being built north of Houston and you're going to need a ton of energy for that. and you have Tesla, SpaceX, all these companies coming to Texas to build physical things. They're going to need a lot of energy.
(41:18) And then on top of that, you have the residential um sort of the exodus from some of these states that are oppressive from a tax perspective or civil liberties perspective and freedom-minded individuals flooding to Texas to to sort of reap the benefits of the government and law that exists here. So, I think demand's going to increase.
(41:42) But back to Bitcoin mining, like we need to increase generation and capacity. And I I think Bitcoin like a lot of the problem with doing that is like how can you make the economic case like it takes a ton of money, a ton of time and how can you reduce risk um while you're expanding generation at a fast clip and Bitcoin mining's a perfect a perfect solution, a perfect way to derisk uh energy generation because you have an immediate buyer of the energy.
(42:12) And so like I think one of the prime examples of Bitcoin being this pioneer species for energy production is the fact that you can build a power facility and then put a mining operation behind the meter. So before it hits transmission lines and consume energy there.
(42:30) And that's one of the problems that uh arises when you want to expand generation is you can build a power plant then you got to build transmission to actually connect it to the grid and then so that the electricity can flow to consumers at the end of the day and that there's a time dilation there um that that exists where you have your facility that could produce energy but isn't doing it because there's no transmission to get it to market.
(42:50) So, Bitcoin miners can sit behind the meter on site at the the place of generation and be that revenue producer for the the generation asset um before transmissions build out. That's one. And uh I I actually have a cousin who runs a nuclear facility in Nebraska. I've mentioned this to you, but we were talking about it two years ago.
(43:16) I need to call him again, but he was describing to me uh a problem that he has. They've overb built wind capacity uh in the region out there to the point where it drives his prices negative. Uh and it's very costly to shut down shut down. So you have to keep the nuclear facility running. Prices are negative. You just have to eat that that cost essentially.
(43:36) And this is due to an overp production uh of wind specifically. But Bitcoin mining helps in that case too where if you have a Bitcoin mining operation behind the meter um and wind starts overproducing and your nuclear power becomes economically uh non-competitive because the wind is cheaper for people to consume uh and or there's just too much of a supply of power in that particular grid system and you have to eat the cost of of running negative prices.
(44:06) Bitcoin mining operation behind the meter. Instead of eating those negative costs, you just energize the mining operation and make revenue from the mining. And so in terms of the importance of Bitcoin mining within the energy sector for producers specifically, I think in terms of expansion of generation and capacity, you have a buyer first resort that deisks the operation from a speed to revenue perspective.
(44:36) And then for generators that are already uh up and running and are running into these problems and negative pricing uh due to the variability of wind and solar production in um in their grid systems that you have this sort of economic load that you can divert your energy to to to monetize um on the go. you mentioned and I always I don't have a clear mind of what what it the right framing of it is whether Bitcoin's the buyer of first and last it's effectively Bitcoin miners should in theory be willing to pay the least for power but they're most capable of absorbing
(45:20) excess power or energy assets that are underutilized that could be generating more power. Yeah. So, and what I just described in the generation expansion, put it behind the meter before transmissions build out, that's first resort. The nuclear power facility that has to stomach negative pricing, that's last resort.
(45:44) It's like, nobody's going to buy this price are going negative because there's an over supply. I need a buyer of last resort to come in and soak this up. And so, that's that's when you have a mining operation behind the meter there on the back. When transmission's sufficiently build out and the ability to supply that particular market is robust uh to the point where prices are going negative, it's like all right, last resort. I'm just going to mine Bitcoin with this cuz otherwise I'm just eating cost.
(46:07) Yeah. Yeah. And and of course there's cost of the mine itself to as to whether or not it's economic and that might you know be or not might be that translates to whether a site or a solution is actually viable as well as what a Bitcoin miner would be willing to pay or not pay for power. Well, this is ultimately why I think generators become miners.
(46:31) Um because when it comes to like controlling the cost at the end of the day, it's a race to the bottom. And if you're playing this out over 5 10 15 years, power generators are going to have the most control over those costs. And right and I I think that maybe another way to say that I mean I I I tend to agree but I'm also on this this journey of trying to understand better myself and that's part of what this podcast is about is any any point further from where some energy resources are converted power electricity. The further you get from that point, the more cost
(47:11) that exists. And it doesn't necessarily mean that Bitcoin mining won't exist in places other than the the point of generation, but that you're optimizing for cheap power and that there would have to be some other economic reason where an asset could be monetized increasingly to justify it not being at the point of generation. Yeah.
(47:42) And that might be because there's a large substation that already exists and it can be an energy arbitrage and turn off and you know that there's there's a valuable you know there's a val there's a reason for an energy system for a Bitcoin mine to exist someplace. But if they're optimizing for cheap power that transmission lines are cost, right? And if you can help be a balancing to load closest to the source that there's a there's a very rational reason why why it will shift that way over time. Yeah, it's about identifying and taking advantage of all the different and that's the crazy thing as I've learned
(48:21) over the last seven years diving down the energy rabbit hole. so many different types of arbitrage opportunities like what we just described with the negative pricing and the expansion of generation before transmissions build out like upstream with the flare gas um there's so many different ways to skin the cat again of of arbing the the cheap energy so like at Cathedral what we're doing in the TVA it's a different form um we're not going straight to the power generator we're going to the utilities that own substations that have excess capacity
(48:54) that's not being utilized because uh they were built decades ago serving large manufacturing facilities that due to globalization have since moved out. So you built a 20 50 megawatt substation thinking that you're going to serve the steel factory um and you were in the beginning but ultimately the just the economics of steel production were so that you had to export that process somewhere else and that's a great like you you brought up the idea of the pioneer species that Ross Stevens has written about Brandon
(49:27) Quinn has written about others where it's like it's the first kind of demand and then it makes a place inhabitable and then other species come. That's the the idea of a of a pioneer species. This is what you just described kind of consistent with that where there was an energy asset. It was abandoned and then a Bitcoin miner can come in and absorb that and then over time maybe that industry comes back or or there's some higher value. Yeah.
(50:02) And they're willing to for the over bid for the energy and they come back. an example, you know, not exactly the same, but these Bitcoin miners aggregated large sources of of power with high density. They were running mining sites and then there's advancements in AI and then these sites are are perfect and and and the the AI companies are willing to pay more for power and then there's a higher better use than the Bitcoin mine and the Bitcoin miners go somewhere else.
(50:33) But I think this idea where there's all this energy infrastructure where say there might have been in the Midwest these 50,000 manufacturing plants are gone. Hopefully those you know that manufacturing comes back but Bitcoin miners can absorb that energy infrastructure which then allows them to be maintained rather than decayed and and have their value to go to zero.
(50:56) And so I think that that's, you know, another very interesting dynamic that's that fits into this idea of the pioneer species, but in a different way. And one of the things I want to do on the podcast is go like focus episodes on each different way that Bitcoin mining solves can solve a problem in an energy system.
(51:23) But one thing that you mentioned a little bit ago, you know, not talking about the specific subject, but you talked about, you know, Texas increasing in energy demand and about how Samsung was building a found um foundry to manufacture chips. Texas, I believe there's one out in uh in Arizona as well. But sh you know one of the things that we'll explore in more episodes of the podcast is each kind of those those sources of demand um as well as how Bitcoin mining can actually solve an energy problem or an inefficiency exists that that creates a problem.
(51:58) One of the problems and problem is a loose term and it's always a degree but um shifting the focus is talking about minor centralization. It seems to me, and I want to see if you agree with this, given the nature of where energy resources exist in the world, that the most decentralized and distributed part of the mining ecosystem is actually where hashes are produced.
(52:38) And then the more centralized are where the chips are manufactured as well as where hash rate's aggregated. the hash rate is aggregated. So talk a little bit about if we're shifting, you know, we'll be diving into all these subjects deeply, but trying to kind of set the table for the range of different things that we'll talk about through various different episodes.
(53:02) talk about the points of Bitcoin mining that that are more centralized than less and how you see that changing or evolving and why. Yeah. So let's start with the AS6 the chips. So what do AS6 do? AS6 are these computer chips and it's same application specific integrated circuit. So it does one thing and it does one thing well.
(53:36) Bitcoin AS6 they do hash cache SHA 256 hashing like that's all they do is run that hashing algorithm you input some randomness it outputs a hash uh and that's all that these chips do and and not to to lose people for the purpose of forcing Bitcoin's fixed supply and validating currency transactions all over the world and so AS6 chips are like top of the line like to produce an AS6 chip is not easy it's high risk capital intensive like very specialized and there's only a few chip manufacturers in the world that can do it really two right now two TSMC and Samsung so I mean and really even between the two like really TSMC
(54:20) bit main is the monolith does Samsung produce a basic yeah the the what's minor they use oh what's minor does yeah what's minor This is Samsung's AS6 and the two largest manufacturers of Bitcoin miners which include AS6 are Bitain and MicroBT which produces the what's minor.
(54:47) Bit main produces the amp miners and Bit M uh sorry Bitain sources their chips from TSMC. Yes. And MicroBT sources theirs from Samsung predominantly from Bitain TSMC in Taiwan as it stands right now. MicroBT, Samsung and South Korea. That's where the chips are being produced. Taiwan and South Korea. Um, and it's hyper centralized, has been since AS6 came to market in 2013, 2014.
(55:16) Um, 2013, I believe, maybe late 2012. Uh, that's when Bitmain launched the S9. Uh, we've had a bunch of competitors come to market, but really Bitmain's the Goliath in the room. The micro BT is number two. And funnily enough, MicroBT was started by um Dr. Jeang, who was previously at Bitmain, and he designed the S9, which is considered the AK-47 of uh mining. Uh this is an S1.
(55:43) This one I think we have S9's outside. Yeah, there's some rusty S9's out there, but they were produced. Come by Bitcoin Park. You can pick one up. 2013 or maybe later than that. The S9 was like maybe 2016. Um and some some of those S9s are still running today profitably if you have zero cost energy.
(56:03) Um the it's hyper centralized but the physical nature of these AS6 like the chips were reaching the physical limits of how much electricity you can push through them to produce the hashes. And so that's this is something that has been talked about in Bitcoin mining.
(56:24) You just you said that but ultimately you want to be able to produce more hashes per unit of energy. Yes. That's the increase in efficiency. But you're saying that the ability there we're reaching the like right now you have three nanometer A6 people talking about 2nmter A6. Then you have one you can't go and and reducing the number of of nanometers basically increases the amount of hash hash the efficiency jewels per terahash. Um, it makes that go down.
(56:54) Um, and we're reaching the physical limits, I believe. Who knows if there's some order of magnitude improvement that could be made. I I'm not um it's out of my pay grade, but like I I'm pretty sure like the point being and also say we're we're in theory reaching the physical limits of what the best manufacturers in the world are capable of doing, which is a very difficult thing to do. Yes.
(57:17) And once you've reached that limit though, it's been talked about in Bitcoin mining for some time. We may hit a point where you get what what's referred to as ASIC commodification where that's the problem with competitors trying to enter the market is that Bitmade and MicroBT, they have access to top-of-the-line chips from a nanometer perspective, from the smaller the nanometer, the more efficient you can be.
(57:42) And so the risk of going out there and we saw this with Intel and trying to produce I believe they produced like a 5nanmter chip and it took them 18 months. By the time they got to market, Bitmain was out with a 3 nmter chip and you're just not competitive there.
(58:04) Like what what governs the amount of power that a Bitcoin miner can pull? Is it the number of AS6? And then each ASIC has a certain amount of like the heat rate that it can support or just explain that I don't um maybe but my pay grade too but like yeah we'll get we'll get an expert to come on talk about you have jewels per terash they can produce so you have I mean back at great American mining we could put I believe 200 it would be 200 M20S's microBT what's M20S's in a shipping container and that would pull like 700 kW of power from the generator.
(58:39) Do you have a rough order of magnitude of like say like a single ASIC? How much um power it would be capable? So this is a single ASIC on a board. This is I believe an S20 or an S19 or an S21. This is 5 volts. This one is running on 5V power right now. But but can you provide some like order of magnitude to help somebody understand like the density relative to say like a computer? And so well to the computer it's it's orders of magnitude higher but I think a better way to frame is like uh in 2017 I believe the jewels per terahash rate was literally over a thousand might have been like 1,200
(59:24) jewels per terahash on average across the Bitcoin network that the miners are pulling today it's like 15 so we've made top of line miners pulling like 15 and a half jewels per Parash I believe basically more hashes per unit of energy becoming massively more efficient. Yeah. Yeah. Now describe two things.
(59:49) why it's as centralized as as it is and what the current risks of that centralization are because MicroBT has increasingly taken share from Bitmain but Bitmain and MicroBT probably have in aggregate 95% of the market probably more than that. Yeah. Okay. But so what is preventing greater decentralization and then what the the present risk of that centralization is the bitcoin network I think it's access to foundry space right it's expensive it's again it's risk it's capital intensive and it takes time and and that is like effectively competing
(1:00:36) with somebody creating chips for GPUs for AI for AI, for Apple, for whoever. You're competing with everybody for space on the foundry floor to produce your chips. And if you're a large Bitcoin miner and you're planning a site, say a gigawatt site in Texas, you might not have reliable access to be able to get chips.
(1:01:01) Well, that's not your job. That's Bit Main Shop, right? Um Well, no. What I'm saying is if you're if you're a Bitcoin miner and you're playing the site, it's predicated on being able to actually get chips from Bitmain. Yeah. And that if Bitmain decides not to supply you because they're centralized to supply somebody else, like that's a source of Yeah.
(1:01:21) But I think like a layer down like why aren't there more chip manufacturers? cuz it's not easy to get on the foundry floor. And I think MicroBT and Bitmain have been in the game for a long time and have proven through the foundaries like if they come to me with a chip design like they're going to have the money, they're going to make a lot.
(1:01:41) And so like for example, Intel tried to make a chip, correct? Yeah. and they spent years didn't they actually delivered one but then shut down the program. Yeah. Because there because there are companies that have a lot of money that have a lot of and this is I mean this is where you this is where you begin to wander into the competition between the US and China specifically from a intellectual capital perspective like their chip design just wasn't as good as microbt and bitmains.
(1:02:14) So they were effectively bringing a chip to the foundry that wasn't they were using their own foundry. Intel has their own foundaries and um just didn't compare from a when they were actually taking it to market. The the Bitcoin miners were saying no we need something of either MicroBT or Yeah. Now you have like Arduine and Proto which is the block company. They're going after it.
(1:02:39) So, so there's effectively the the capability of the manufacturer and their design as well as access access to the foundry which is predicated on the capability of the foundry but then also the foundar's availability to availability and perspective as to whether you have the capability to actually execute if they get or if you're going to be a long-term customer like are they are they going to give a founder space to you knowing that you're going to come back year after year and there's going to be demand for your product. Like that's a risk the foundry takes. Is there something about Bitcoin and its
(1:03:19) um effectively simplicity in terms of its operation like what the ASIC needs to do that like there's less diversity because it's as it's homogeneous. I again above my pay grade but from what I understand no because any ASIC whether it's Bitcoin ASIC or some ASIC for some other application does one thing spec application specific so from my understanding AS6 no matter if they're Bitcoin miner or running some other type of computer just doing one thing and that's the whole point of producing an ASIC chip is just you want to be ultimately efficient at doing that one
(1:03:58) thing and Bitcoin mining is just producing the Ashcast shots if you decide there's no fundamental reason Why the develop of bit development of Bitcoin AS6 should be any more less centralized than develop of any other ASIC. Yeah. And again, these are subjects that we'll dive into deeper where we get the I'm not the ASIC expert as ASIC expert into to talk about these things at greater detail.
(1:04:30) Um but then the second question of of there's the risk to the the manufacturer but then to the to the m to the the Bitcoin network itself maybe describe risk or if it if there's less risk because of the function of basic manufacturers just what's your view of what risk does this piece of centralization the bitcoin mining ecosystem represent to the network I I think we have to uh go back in time to 2016 2017 when Greg Maxwell discovered that Bitmain had a back door in their AS6 called ample lead where they could remotely brick machines if they wanted to. And so when you talk about risk of
(1:05:16) uh I mean that's centralization both to the Bitcoin network but also to somebody like Urkot, you know, if if they had 4 GW of power drawing on um on the on on the Urkot grid and a Chinese manufacturer could say brick brick. Yeah.
(1:05:47) that four gigawatts comes down all at once. Yeah. But then to the to the Bitcoin ecosystem, if 80% of the installed base of machines that are hashing could also be shut down. Now, there's a there's a limit to what the um the actual difficulty adjustment can be in any one epic 75%. Um okay. So it's it's in line with you know say if somebody had 80% market share but how was that resolved uh called out and it was never was that was that like software firmware or like firmware I believe like the firmware was remotely like pinging back to central servers that and if the central server wanted to they could remotely shut down the
(1:06:32) machine is how I recall it. This was many years ago. That was like right before right as I was like getting interested in Bitcoin. Yeah. And then ASIC boost was like another thing. It wasn't necessarily a back door, but it became apparent that it seemed like just like an a marginal economic advantage may skew things over time but less critical to the actual operation.
(1:07:00) um aka Bitmain essentially who and also maybe to connect this idea for the for people that are less familiar with Bitcoin mining is that if 80% of the network came offline at one time and the network state was assuming there to be five times the amount of of Bitcoin hash rate that the Bitcoin network would take five times longer to validate transactions and would create a lot of congestion. Yeah. Um Okay. Yeah. So that's one of the risks.
(1:07:32) But then I try not to dwell on this risk too much cuz again going back to the fact it's become so What about dictating rules though? Dictating rules of consensus rules. Yeah. Did is there uh I mean you need to get miners on board I think to a certain extent. But does the concentration of manufacturing of of A6 No. No. I don't think so. Okay.
(1:07:57) Um Okay. Okay. So then let's shift because we want to be efficient. The other source of of primary centralization in Bitcoin mining is the pool side. describe quickly like somebody was five what a what a Bitcoin mining pool is and again anchoring everyone in this this idea that because it's easy to get lost in these rabbit holes which is Bitcoin miners producing hashes those hashes as a network forcing Bitcoin's fixed supply invalidating currency transactions where do pools fit in and and describe the state of centralization and in your
(1:08:33) view the risks that are created there. Yeah. And so I'm sure many of the people listening to this are aware of Bitcoin folklore of people plugging in their MacBooks in 20 2009, 2010, 2011, downloading the Bitcoin software, hitting mine and mining blocks themselves. Like you hear the stories of OGs who simply downloaded Bitcoin on their computers, mined and accumulated large amounts of Bitcoin and that was the case back then.
(1:09:06) It's not the case now. As we described, hash rate has gone up 180x over the last 7 years. And so what has been introduced in terms of a risk for individual miners is what we call variance risk. So as more mining nodes join the network that's more competition to produce blocks to get the reward that ensures that any individual miner uh their chances of mining a block goes down significantly. And so that means that your payout variance uh increases.
(1:09:40) So the the frequency with which you find a block and get rewarded for that block uh goes down significantly. And the way to solve that problem is to aggregate hash rate. You get a bunch of these smaller miners and now large miners as well. They basically aggregate their hash rate in what's known as a Bitcoin mining pool.
(1:10:04) And that mining pool is essentially tasked with aggregating the hash rate. And then you have all these individual actors within the pool producing hashes. one of those actors will find the hash that enables them to add a block to the ledger and get the reward. And the pool does the job of um basically accounting for who's pointing hash at their pool at what point in time, how much hash rate, and how much of the reward each individual minor gets based off of the amount of hash rate they're pointing at the pool. So pool exists to increase variance. And so when you hear
(1:10:44) of individual miners mining their own blocks and building a big Bitcoin stack in 2009, 2010, that doesn't happen anymore. It's a bunch of individual miners pointing at a pool. And even if your individual minor finds a hash, you're basically saying, I'm going to in lower my variance by pointing at this pool and I'm going to split the reward uh among all the miners pointing at that particular pool. Yeah.
(1:11:14) So say if I'm a minor and I represented a hundth of the network, I would solve a block a like one block a day. Yeah. But if I represented the thousands of the network, then it would take me several days to potentially find a block on my own. And if if you kind of go smaller and smaller, and as the Bitcoin network gets larger and larger, while there are exceptions, it becomes more difficult to be a large enough percentage on the network to reliably get paid out, get paid out.
(1:11:45) If you have expenses that you're paying out in the interim, it might require you to have more capitalization or working capital on hand and just creates a strain operationally. And so for that reason, rules began to emerge to allow people to effectively get paid out more regularly, reduce variance, kind of make it's difficult to capitalize mine as it is.
(1:12:14) uh reducing the working capital requirements potentially of a bitcoin mine. So now describe current state of centralization in mining pools and and why in your view it exists. So do this we have to go back in time as well. When pools first came out, uh the predominant payout scheme is called uh PLN LNS, uh pay per last N shares. And basically in that mining pool payout model, you would point your hash at a pool and then whenever that pool would find a block, you would get your commensurate amount of the reward and you get paid out when they found the block like when they
(1:13:00) would find a block and then you get paid out from that reward. Um, and as the network grew and more pools came to market, like the variance of individual pools began to to grow and extend as well. And so the the predominant model that has really taken over within Bitcoin mining pools, the payout model is FPS, full pay per share.
(1:13:26) And essentially what full pay per share pools have created is a system where they say point your hash rate at our pool. We'll do like a a moving average of how much hash rate, how much blocks we produced, and we'll pay you out uh a consistent amount every day. We'll pay you out once a day based off of that moving average.
(1:13:49) Um so you have more consistent revenue. You're not beholden to the variance. So functionally pools help reduce variance but then the FPS the fixed pay per share further reduces variance by giving a minor a predictable daily amount of revenue. Why has that caused centralization? So that's caused so you have two trade-offs the ppls what was predominant um in the early years of pooling.
(1:14:22) The trade-off there is you're going to as an individual miner, you're going to get, you know, you're going to get like the full reward of that block that's mined because as it's not as it's not as um uh it's not as relevant right now because there's not a lot of fees. But like if we're in a high fee environment and the variability of block rewards is is pretty high because fees are variable um from block to block like let's in a ppl model like if your pool mines a block with a very high fee like you want to get that whole reward and so like that's the trade-off you make in pns is
(1:15:01) like I'm going to get the whole reward of that block but I'm going to stomach more variance because it's not like that pool could have a string of bad luck where instead of finding three blocks a day, they find um they find three blocks over three days.
(1:15:21) And so you're you're getting less consistent payouts, but you're reaping the full reward of those individual payouts. F PPS, fixed pay per share. Um again, since it's the moving average of the individual block, let's say the pool mines a block with a fat fee, like they're just going to use the moving average in their calculations. you're going to get paid out and you're not going to get the full reward, but you're getting paid out every day.
(1:15:40) And this creates uh an accounting problem for the pools and a capital problem specifically. So for the FPS pools, the fixed pay per share pools to be able to do this, what they need is a big Bitcoin treasury that they can actually you essentially use as a credit risk. They're absorbing the variance risk as the pool.
(1:16:06) And so you need a big Bitcoin treasury to pull from to consistently pay out because as even as an FPS pool, you can have strings of bad luck where your variance increases and elongates. And if you're running an FPS pool where you have a pretty long string of bad luck, you could run out of Bitcoin in your reserves and you cannot pay out.
(1:16:29) And so that over the last two years it's become clear that that mechanism has become a very centralizing aspect of the Bitcoin mining pool industry because what we found is that last year Matt Careralo and others started ringing the alarm bell. it became clear and and a lot of onchain analysts like OXT um and Zero XT were basically observing that the block templates of different FPPS mining pools were exactly the same.
(1:16:58) And so essentially what was discovered is that you had a number of FPS pools run into that treasury problem where they didn't have enough Bitcoin to pay out and so they were forced to go hatinand to Antpool which is essentially a subsidiary of Bitcoin. basically mining pools that were attempting to deliver the product that they thought would allow them to acquire mining miners as customers being able to pay out a consistent amount each day were not well capitalized and they were absorbing the financial risk and then ultimately couldn't they got
(1:17:43) exposed whether they went belly up, they they they realized that they couldn't absorb that risk and they went up the food chain to companies that had larger balance sheets. Mhm. And then essentially it becomes a game that if you are not, you know, I don't know if irony is the term, but it's like the same risk exists with these larger guys that are just aggregating more hash rate.
(1:18:07) It's like they're bearing this financial risk and they they could be exposed as not being financially solvent should a stretch of bad luck emerge for an extended period of time. In the case of Ample, I think it would have to be a very very long like we'll go statistically impossible. Yeah. And and I'm going to spend time like digging into this like like the differences between a payer last and shares different forms of that fixed pay per share some of the economic incentives that might not be as well understood in terms of how you know you're basically trusting FPPS pool in
(1:18:43) terms of what the the pool is actually generating how fees are actually counted for or distributed. We'll go into that in in other episodes, but but just articulate what as a percentage basis does that ecosystem look like to not lose people in the in the weeds. The last time I saw like the so I think to describe it more thoroughly like ampool essentially a subsidiary of Bitmain and over the course of centralization is that these these entities are related. Yeah, they have a large Bitcoin war chest and
(1:19:20) and this is actually like when it comes to this pool problem, I don't think we're going to solve it here on this episode, but maybe we can do another one where I think when you look at pools are if you think Bitcoin mining like just like plugging in AS6 like and running them as an operation like locking down the energy is competitive.
(1:19:37) Pools are terrible businesses. So people say this pools are terrible businesses but they are necessary to the operation of of Bitcoin mining and so one of the questions that I have is it's like maybe it's just a cost center to a business but is it specialized enough to to merit being its own business and I don't think so. The switching cost is zero.
(1:20:03) Like that's like you don't I mean what I'm saying you don't it's a necessary like in order to mine you you essentially either have to be your own pool. Mhm. Or you have to join a pool. The pool function is critical. So how can the pool business be a bad business if it's it's crit if it's delivering both the service and being critical to the because you can mining I mean I think ample is a great extent.
(1:20:31) They can just they can just like set their costs such that you can't compete, right? Because they have this large and so this might because they're well capitalized. They're extremely well capitalized. Like they have a large Bitcoin treasury. They have the hardware business essentially. But that doesn't that doesn't say that being a a mining pool is a bad business.
(1:20:53) It just might say in order to be a good pool, you need to be very well capitalized. If FPPS is the right model, which I have I have questions about myself. is the right model. But I do think it Okay, go on. Yeah. Like I think looking at Bitmain and Ample and their relationship, I think that's something people should really pay attention to and try to internalize.
(1:21:17) It's like you have this behemoth of Bitmain and their hardware sales, which is an incredible business. Um, cash flows a lot like and are they anti-competitive? Bit man, just going back to the uh like are they actively in the background trying to prevent other I wouldn't be surprised. I mean, I don't know for sure, but just if they're economically rational actors, I wouldn't be surprised if they are preventing others from getting access to the foundaries that they work with. Yeah. All right.
(1:21:49) That was just an aside, but sorry, I didn't mean to distract from the No, I think like running a pool like you may need another like pools I think we need to rethink like how pools come to be and how they operate? Like is a pool a loss leader for somebody doing something like basic manufacturing or um the Bitcoin exchanges? Maybe they should like if maybe they should be running pools to some extent.
(1:22:18) um just as a way to decentral like if you're an exchange and you're thinking about the long-term viability of your business and that sort of uh the prerequisite for that long-term success is Bitcoin being sufficiently decentralized and block production being decentralized like does it make sense for you to spin up a pool to give people an option to um you know I'm not saying this is the right answer but just like thinking through this like pools is a pure play business model I don't I think makes sense like you need another part of that business to sort of make sure
(1:22:53) it's well capitalized and historically we've seen this with Bitmain and Ampool via the AS6 sales and then other pools like Luxer and Brains with firmware that um makes the machines more efficient and they charge a cost for that and the cost is worth it because the efficiency gains are such that um you will pay a fee for it and you get revenue that way.
(1:23:19) Um or do we just need to completely rethink it and and how like what businesses should be spinning up pools um to to ensure that there's sufficient distribution of block creation between different actors. Does that make sense? Yeah, that that makes sense. And then but then to provide this the most summary level view, we have actually Antpool that's that's based in China, right? And they're functionally they're basically saying, "Hey, but I want to connect this for people that there are probably based on what you said about Matt Carell and others who realize how are we doing on time, Logan? We're good." that AMP pool is
(1:23:56) essentially a um proxy for 10 or so other pools such that you're looking at those other pools and and they look like individual pools but they're really a proxy for amp pool. They're really a proxy for ampool amp pools creating the templates but so if you add up amp pool and the other pools it's like 60 to 70%.
(1:24:22) And then boundary in the which is US based. Yeah. So it's not 60. It's probably like 50 to 60. Yeah. Yeah. 50 to 50 to 60 maybe like 50. Boundary is like 25 to 30%. Yeah. And then marathon which is a solo but a large scale minor. You have other which is around like 12. So, so three functional pools including you know one solo minor and I know that very other small miners use marathon's pool but functionally it's a pool of one that three pools represent about 90% of the hash rate what is the present risk to the Bitcoin
(1:25:05) network functioning that comes from that probably going to sound controversial, but I I think zero. Again, going back to No, no, but like Okay. Yeah. Describe why you view it as zero, but cuz the switching cost is But then make the other argument. Uh I think it's zero because the switching cost is zero.
(1:25:26) And if push comes to shove, we've seen this already in Bitcoin's history. In 2016, there was a pool called Gash that was ultimately a victim of its own success. It it aggregated as a single pool 55% of the network hash rate. People on bitcoin talk.org and Twitter were like, "Yo, Gash has 55%. This is a threat to the network. If they wanted to, 51% attack the network.
(1:25:58) " They could and within days it fell from 55% to 20% and over the course of 18 months after the alarm bells went off, Gash was out of business. Um, so miners, individual hash owners that are economically incentivized to ensure that their golden goose isn't killed by centralization reacted to those centralization pressures. Um, right.
(1:26:23) So I I get why, yeah, it's not in the interest of mining pools or miners to 51% attack Bitcoin network. That would be putting at risk their the thing that they exist. No, but the real risk is you could you could have censorship or they could try to reorg via 51% attack too.
(1:26:51) But what about the angle of the three minor three mining pools all being on the same page about consensus changes that are not hard forks? Um, see this is where we get into like this is where we get into like murky territory of like what actually is needed to like what actors are needed to actually get a software a change into Bitcoin and that's like block size wars. What was it? was a bit 91 was a bit 148 like but in that case that was actually a a nonbackward compatible change I'm talking about a in in the block wars increasing the block size to to two times would have you would have forked off the network Bitcoin Cash did right but and and so but that was that that presents a different
(1:27:43) dilemma versus a soft fork and if if all three of the large mining pools agree on what chain should be and they're not forking themselves off from the network. Then if you're a minor and you're hashing, you functionally can't switch between if there's collusion. And this gets like who dictates the rules, right? Because like if you're well, but like as an example, let me let me like throw a different scenario.
(1:28:14) Say Bitcoin Core um wants to merge a software and three mining pools agree. Is that a risk? Could be. But what if like economic can I say a risk to like a relatively few number of people? You need you would need buy in from other actors too like exchange like big economic actors that aren't mining like exchanges and people that are transacting lot on the Bitcoin network to download that node software like you could see a scenario where but they it would be backward compatible right and the miners would be enforcing the rules and that would be the longest chain.
(1:29:13) Anyways, we'll dive more into these in these topics. The I'm trying to think through this cuz uh again going back to like BIP 91, BIP 148, like what was the actual sort of forcing function for SegWit getting implemented into Bitcoin? I mean, is there a scenario It's backward compatible, but like let's say Coinbase says like I don't I don't like this or river strike combination of all those guys.
(1:29:57) You have like this battle between these large economic transactors and the miners like could I mean I think that they my understanding is they would they wouldn't have to change anything. they would be accepting all of the transactions that are on the more restricted as but even if it's backward compatible and nobody's running but if the mining pools are advancing the longest chain yeah but like if nobody still if it's back yeah maybe maybe there's not a functional there's nobody using it yeah that like that that would derisk it like hey if if nodes aren't transmitting transactions that can form but then that
(1:30:28) would kind that they just never download the version. Like and then then we get an all like sort of rough consensus dynamics. So like somebody's actually got to build um write the software that the miners want um where that core wants or core is like core is not some centralized entity. All right, I'll shift the question.
(1:30:54) This is where this is where like the beauty of of Bitcoin rough consensus comes in. Yeah. Well, and again, we're not going to solve all the, you know, knowledge base of of Bitcoin in a single episode, but um one last thing on this piece and then we'll wrap up, which is um it's not in the interest of Bitcoin miners, the ones that like if you think about the supply chain, it's some natural resource that that is storing energy, being converted to electricity, that's creating a hash that in aggregate is enforcing Bitcoin's fixed supply and validating all currency transactions. Those hashes are pointed at a pool
(1:31:32) and blocks are processed during the the fixed supply. Bitcoin network is is working going forward. It's not in the interest of the the miners actually producing the hashes that the pools are centralized. What in your mind changes the dynamic that would create a scenario for greater decentralization? I think stuff like this is great where you have sort of at home mining and as we've reached a commodification and the waste heat can be used for services like heating water in your house heating using the waste heat to heat your house
(1:32:20) itself that acts as like a natural but is that a view that you know if if Riot is working on a on a gigawatt site that that largecale Bitcoin mines aren't are ultimately long-term not as viable and that yeah like I think like RI like I love everybody at these companies but like at the end of the day like I'm just saying if this if this is how Bitcoin decentralizes it would it would or or you know decentraliz decentralizes from the point of centralization as it relates to pools then that would suggest that you know any any
(1:33:01) Bitcoin mine of scale becomes less competitive for some reason that I couldn't gather if the cheapest way to produce a um a unit of power is with large power plants. The say that again that the the cheapest unit of power is at scale with a either combined cycle turbine or a nuclear power plant or even something like a a large solar generator.
(1:33:42) Yeah, at scale they're going to be the cheapest, but you like in the waste heat example for like at home applications like you're us you're basically using Bitcoin mining to subsidize to lower your your month-to-month electricity bill and actually produce some revenue. Whether or not you're willing to stomach the variance is up to the individual.
(1:34:02) But I think what's most important is we can dive deep on the pool stuff and the industrialized miners, but I think what I care about most is the decentralization of hash rate ownership and as many like you're going to have obviously a spectrum of people owning one ASIC chip like one terraash to um multiple tens dozens of exahash.
(1:34:31) But as long as sort of distribution of individual owners across that spectrum is is robust, I think it'll be sufficient to ensure that mining is decentralized at the end of the day. And yeah, we'll have to explore this more because I I or explore this more because like that hash rate continues to to naturally decentralize because energy is distributed all through the world.
(1:34:53) It seems like there's a disinterest Or or there should be a disincentive of of all this very distributed hash rate pointing to a regulatory and otherwise censorship prone points of centralization being pools that there would there would need to there would almost again I want to explore it I don't know what it is a natural forcing function for miners to realize that there's an there's interest and an incentive for pools not to be nearly as centralized as they are today. And going back to what I was saying earlier, like maybe it's not even the mining industry that comes up with the solution. Maybe it's some other sort of
(1:35:41) actor with a ton of skin in the game that recognizes this as a risk and has a profitable business and decides to spin up a mining pool to counteract the centralizing factors. Like I I completely like I don't have the answers to this, but I do think I've identified at least one thing which is like we need to completely rethink how mining pools are like come to market and how they operate. Yeah.
(1:36:07) And I and we're getting a bit doomerish here. It's important to understand these risk and where the centralization lies, but ultimately at the end of the day, I think the incentives of Bitcoin as a project overall and and individual actors within a mining ecosystem are aligned to the point where the problem will be solved.
(1:36:33) I don't know exactly what the solution is, but I'm just confident in the economic incentives and as Bitcoin continues to increase in price, then those incentives only get stronger. So, right. And and and that's something that we're going to talk about as well on other episodes, like you said, the incentives of Bitcoin, you know, and I think that if we think about just this first episode and where we plan to take the this show, part of TFTC is exploring kind of the the entire value chain down to the molecules. from the molecules to the conversion of power.
(1:37:14) How Bitcoin intends not intends how Bitcoin solves real world energy problems. How that changes as Bitcoin's demand for energy scales, why or why it won't increase in energy demand over time or what what the drivers will be, how that will evolve. um points of centralization, how how Bitcoin mining works of you know past the point of natural resources being converted into electricity and the role of AS6, the role of pools.
(1:37:46) But what one of the things that I found legacy the legacy energy industry struggles with or someone like a grid operator or legislators or regulators is is all this power demand sustainable? Not and I'm not talking about from an environmental perspective. I'm talking about from a are people going to want a Bitcoin mine 10 years from now. Yes.
(1:38:06) And and and what causes that and will will it be sustained? Because if you develop say as a grid operator an energy uh reliability strategy around 4 G gawatts of power growing to eight growing to 10 growing to 20 and there's the possibility it could all go away. That's a that's a source of risk.
(1:38:33) And what what you just described was you said if price continues to go up then all of these other things will follow more demand for power decentralization more entrance and I just want to connect for the audience and all the Bitcoiners know this but it's that that price increasing is a function of more people deciding to store their value in Bitcoin.
(1:39:03) And the thing that holds it all together is Bitcoin's fixed supply and its ability to operate in a way that is censorship resistant to censorship which is dependent on progressive decentralization at every layer of Bitcoin such that so long as those two things hold that Bitcoin's fixed supplies enforced and it remains permissionless and resistant to outside censorship all those things happen.
(1:39:31) And those are the things that we'll just discuss and explore in greater detail. Um, but knowing that it's all anchored to the monetary side because it's kind of a turtles all the way down problem and I want to kind of get your thoughts on this as kind of a concluding thought and I'll have one last question which is the thing that ties the demand for the hashes and the the demand for power comes back to Bitcoin and the incentives of the Bitcoin network.
(1:39:57) just talk about the incentives of the Bitcoin network itself and the fixed supply and its downstream impacts throughout the mining and power dynamics. Yeah. And going back to what I said in the beginning of the episode, Bitcoin is not even an attempt. It's successfully separated money from state.
(1:40:21) So, Bitcoin exists because Satoshi recognized that we keep running into these problems. um society because governments and central banks can print money at will and there needs to be a market response to the centralized control over money and that's what Bitcoin represents. And so there's a ton of value in being able to successfully separate the the function of money itself and um the control over the the units of that money that exist at any given point in time.
(1:41:01) And so that is what Bitcoin is is we finally figured out a way to get the central authorities out of money. They're not meddling with it anymore in Bitcoin, which is incredibly valuable. Um, there'll only ever be 21 million and people can have certainty that if they store their value in Bitcoin, their slice of the overall pie, um, even though it's very divisible, it doesn't mean you're producing more Bitcoin.
(1:41:33) Like, if you own one Bitcoin, you own one 21 millionth of the network into perpetuity. And there's a ton of value in having that certainty as an individual, as a company, as a government even. Um, and so that is essentially what ties all this together is having that certainty that if you store your value in Bitcoin, it's not going to be the base. And as more people recognize this, it just perpetuates the feedback loop that you just described.
(1:41:57) And that is worth preserving. And people who are storing their bit their value in Bitcoin will fight to ensure that those properties remain distributed so that the money cannot be meddled with in the future. Yeah. And so it's like when one for for episode one parting takeaway for if you were an energy professional who doesn't understand why there's 4 gawatts of power being drawn in Texas to mine Bitcoin and 30 gawatt globally and get lost in hashes and AS6 and and mining pools.
(1:42:39) the the reason for its existence and the reason why it will be sustained is Bitcoin delivers sound money fixed supply is the anchor of that it is solving the problem that every other form of money is dependent on trust and through this function of mining is how the Bitcoin network can credibly enforces fixed supply in a in a trustless way without reliance on that central third party but then for the Bitcoin miners and the people that are well immersed is that all that only works because of decentralization And that if there's complacency of points of centralization, even though there are economic incentives that will
(1:43:14) dictate progressive decentralization, that that only happens by individual actors within the network, responding to incentives that contemplate that idea that central points of centralization are not just risk to the network, but they are risk to the individual actor acting in their own self-interest. Yeah.
(1:43:42) And so that's complacency and apathy will if you're a minor ruin your business in the long run because you'll build up you'll invest in all this infrastructure and you'll put all this time and effort into it and if you get too complacent too apathetic and you just handwave like oh this is okay. Um, and Bitcoin becomes centralized and uh, people are easily able to push changes that increase the supply or do something that makes it harder to run Bitcoin distorts the economic incentives. Yeah.
(1:44:12) You're basically just setting your capital on fire because as an individual saving in Bitcoin, if that happens, I'm like, "Oh shit." Like back to gold. like the so and that's why like I'm sorry if it was like handwavy and a little bit um flippant earlier but like I I do believe the incentives are strong enough and people um will be forced to rec and that's what we we saw like in the block size war in 2017 when things are threatened people react and we saw it with ghash and 2015 like that like it we enter these period periods where you have relative peace
(1:44:50) time. But in my experience being in Bitcoin for 12 years, whenever something controversial or something a threat to the sanctity of Bitcoin, the protocol and how it operates has ever arisen, like the economically incentivized individuals leveraging Bitcoin or involved in Bitcoin, stand up and say, "No, like you're not doing this.
(1:45:10) " Yeah. the the the threat needs to present itself and in in a lot of cases for and it to be clear and present for a real immune response to kick in while at the same time everyone's acting in their own self-interest and there's a natural tiein to um d-risking yourself from other counterparties. Yep.
(1:45:36) Whether that's storing Bitcoin with an exchange and that might mean having other exchange options or having more self-custody options or whether you're tied into a certain vendor or on the mining side, you know, being tied into a pool or, you know, having limited options to shift around or who you who you are um sourcing from in terms of a supplier that throughout the the ecosystem, everyone has an incentive to be less reliant on potential points of failure. Yeah. All right. Last question.
(1:46:07) Two subjects related to energy or mining that you're most interested in us diving deeply in on this podcast and then give me your top five wish lists of guests. Okay. Um at home mining like ways to eat. I think people are sleeping on that trend. Tyler Stevens um and what they're trying to do.
(1:46:40) Like he wrote the the book with brains on waste heat. Like the stat he threw out earlier this year at the Nashville uh energy and mining summit was mind-blowing. If you take 2% of the HVAC market globally and you successfully convince 2% of that market running HVAC systems to incorporate Bitcoin mining, you would you would like double the hash rate overnight.
(1:47:05) just like that's that minute market share like we'll get Tyler on to so he'll be one of your top five though incorporating yes incorporating um mining into the home applications basically subsidize your energy cost by producing Bitcoin I think can be massively beneficial to decentralization of the network and really uh hash rate ownership overall and you can Think of like HVAC, like maybe individual HVAC companies run pools where their customers are pointing their hash at the HVAC pool that they're using and that's how you get mining pool decentralization. That's like at home sort of like home application of mining using the waste
(1:47:46) heat is something that I'm very excited about and I think we've reached a point of basic modification where you can begin to build um viable businesses around. Um so that's one. The other would be um the midstream problem. I think like getting a mid-stream operator on here. Hopefully one that actually understands uh Bitcoin mining and is like on top of it like how that actually works cuz there was thesis we had.
(1:48:23) I've talked to some people that are saying that that thesis is being validated and they're actually doing it and I think at scale that would be massive for the natural gas supply chain and Bitcoin mining overall. I've got some ideas of people that uh the Bitcoiners would have never heard of. So yeah. Um top five got Tyler on. Um Toby Rice from uh the EQT, the biggest natural gas producer.
(1:48:48) I had the uh pleasure of sitting out at dinner with him like two or three years ago and I don't know him. He's uh see uh where is he on the Bitcoin spectrum? He was uh it was this was like peak 21 craze so he was talking like she agmecoins and all I was like just focus on Bitcoin. Um that'd be a good one.
(1:49:13) Uh Chris Ray or excuse me Chris Wright. Is that an FBI? Chris Ray was the FBI. I always get them mixed up. Chris Wright, uh, Department of Energy. I've had him on my podcast a couple of times in the past. It' be great to catch up with him. Um, is he the secretary of the energy? I think he's Yeah. Yeah. Your secretary of the Department of Energy. Yeah. Uh, Elon, you got to get Elon.
(1:49:39) I mean, Jesse Pelton maybe maybe like one degree away from I want to do a I think I and I'll admit I want to do a a residency with Jesse on like the like on the physics of energy. Yeah. And then how that comes through Bitcoin. Jesse and then uh Nick Gates I think um Nick is priority power. Yeah, he's my he's my go he's within my handful of go-to people of as I'm trying to understand the grid and energy systems, energy markets. He's one of my go-tos.
(1:50:14) And then, you know, he always um he helps sharpen my my views of everything around Bitcoin. I I feel like I've helped him understand Bitcoin better. And I don't know their names, but one of the founders of an SMR company like Ollo, you have to give me another name, but I'll get I'll get that as a sub. So SMRs are small modular reactors on the nuclear side, but another name you you've given me.
(1:50:40) Oh, you give me five. Yeah. Tyler Stevens, Toby Rice, Chris Wright, Jessie Pel, and Nick Gates. Yeah. Okay. Start with some of those. Well, I'm I'm very excited for you. Consistency is key. Yeah, we're going to be recording in the podcast studio. Podcast production is is a is a grind. Okay, I'm going to be on top of this.
(1:51:01) I got strong team. It's one of the reasons why we're working with TFTC. Have beautiful studio here in Austin, Texas. Great team. We've got a mute infrastructure perspective, great feed. Yeah, we're going to we're going to, you know, rely on Logan's uh factecking us from time to time. He's don't gonna fact check.
(1:51:21) Thumbs up. Okay. That video that Logan did uh when he was What was the video you were selling uh some class? I I was like I didn't even know Logan Logan can act. He can act. He can dance, you know. Got some jokes the right way. Yes. Yeah. So, well, I'm happy for you. That's your sign off. That's a big thing. I'm not doing uh I don't know.
(1:51:46) Got to think about that. I'm just going to copy you with a final thought or we're going to zoom out from the center of hash. I don't know. We going center. That's all folks. No, that was Bugs Bunny. Or is it the pig? Porky the pig. I don't know. Think about it. We got to figure out the name first in the next few days before we release it. Hash found next block. I don't know.
(1:52:11) Yeah. All right. We'll just end it. Till next time.
