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If I could hope for but one thing for you, so you'd be curious in all that you do.

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Cause love like a flower just wants to grow.

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Oh, and knowledge like your heart just wants to be known.

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If you like, please subscribe. This is Bitcoin Study Sessions.

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America's Future in the Age of the Electron. It's an essay taken from this anthology, National

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Security in the Digital Age. Bitcoin is a Tool for Modern Statecraft. We've already talked about

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two essays from this collection. It's incredibly fascinating. This anthology is just very well put

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together, and all of the essays are peer edited by the other members of the anthology because

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they cross-reference each other and it's all of the highest quality. So this particular essay,

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Securing America's Future in the Age of the Electron, I'll give a kind of quick summary of

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the essay and then Lucas and I will jump into discussion on it. This one's by James McGinnis.

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He is the CEO of David Energy and a founder and leader of the DER task force and he's big

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into the DER world. DER, Distributed Energy Resources. That's something I had not heard

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about before this, but it's basically like consumers having small-scale energy production

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capacities on their own premises, like a solar panel on the roof, small-scale wind turbine,

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integrating those types of clean renewables into kind of your own homestead, small-scale

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commercial endeavors.

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Really cool thing that they do.

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He's on a podcast, the DER task force as well.

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Very high information density, a great podcast to listen to, a great sub-stack associated

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with that.

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So again, this essay, though, Securing America's Future in the Age of the Electron, is about, well, first of all, the age of the electron, this concept of what it will mean for us to enter into a decarbonized age.

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an age that will be marked by cheap and abundant electricity, primarily from solar and wind,

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in which the lithium battery will be the motor driver of that progress,

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a sort of new steam engine, a new internal combustion engine.

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This essay is about how to manage America's shift into this new age

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and away from the age that we are currently in, which is the age of oil.

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So there's going to be four primary theses in this essay.

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on the age of the electron. The first is the U.S. dollar as global reserve currency is undermining

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the U.S. by preventing the domestic reshoring of industry. That's the first thesis. The second

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thesis is that the age of the electron will make energy cheap to produce but expensive to transport,

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which will be a deglobalizing force leading to the reshoring of industry. The third thesis is

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here and here Bitcoin comes in. Bitcoin is well situated to be the new global reserve currency

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in the age of the electron and Bitcoin mining will end up setting a floor price for productive

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use of energy of electricity. And the fourth and final thesis, China is dominant in the

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infrastructure for the age of the electron. So the US needs to strategically consider how to

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enter into the age of electron in a way that's going to enable us to compete with China.

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The first thesis then regarding entering the age of the electron is that our current monetary system

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is preventing industry from locating in the United States and has caused industry to flee, in fact.

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So to better understand this, we consider the age that we are currently in right now

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and the monetary trap that that age is laying for us.

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So we are currently in the age of oil.

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We could, I think, define that as like a period of rapid globalization after World War II

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that was fueled by fossil fuels.

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So in short, this is a story of the petrodollar system,

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A story we've told and talked about a couple of times in our conversation, but it bears repeating because that's the framework we're in right now.

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And here McGinnis has also framed it in a very interesting way.

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So the petrodollar system as the monetary system of the age of oil is based on the following arrangement.

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The U.S. will ensure protection of Saudi Arabia and the trade routes for oil and will secure a world order that allows the distribution of that oil around the world.

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In exchange, Saudi Arabia and the rest of OPEC will sell their oil exclusively in U.S. dollars to other countries, which would then cause other countries to have to stack dollars and save in U.S. treasuries.

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because other countries could only get their oil through U.S. dollars.

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This agreement preserved the U.S. dollar as the global reserve currency

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after the U.S. went off the gold standard.

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So in the age of oil, oil is the blood of global commerce,

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and the dollar backed by the U.S. military is the beating heart

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and the infrastructure of veins that allows for that global flow of oil around the world

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and all the countries need to stack dollars to get it.

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So it's the, again, all of the circulatory system is the petrodollar system.

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The beating heart is the U.S. dollar that moves the blood of oil around the world.

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We can look at it that way.

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But in this way, the dollar is a global reserve currency

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in a very specific sense in the petrodollar system.

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In the age of oil, we have a petrodollar,

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a form of currency that is essentially backed by or based in oil, which is the most important

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global commodity. So the petrodollar system, as we have it in the age of oil, is currently

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unraveling. Even outside of this essay, we can see Treasury Secretary Scott Bessette talking about

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a global economic reordering. We can see all the problems. Here, McGinnis thinks that our

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monetary system will change as we move from the age of oil to the age of the electron,

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from a petrodollar system based in oil to an electrodollar system based in electricity.

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So the unraveling of the petrodollar system as we exit the age of oil is not necessarily a bad

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thing for the U.S. Under the petrodollar system, the U.S. has suffered from what is called the

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Triffin dilemma. We've also talked about this in the past, a dilemma that impacts or affects any

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global reserve currency issuer. We talked about this in the context of Lynn Alden's broken money.

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She talks about it. Also, Matthew Pine's essay, Great Power Network Competition in Bitcoin,

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he talked about it. But this is just an immensely important concept with huge implications.

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You will not understand what is happening in global commerce in the next 10 to 20 years

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if you do not understand the Triffin dilemma and how the U.S. is trying to unwind it.

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So I'll give it again here in kind of McGinnis' specific formulation

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because he embeds the petrodollar system in this explanation of the Triffin dilemma

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in a way that I think gives it a slightly different nuanced description.

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So the Triffin dilemma embedded in the petrodollar system is this.

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The world needs dollars to buy oil, which is an absolutely necessary commodity.

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The U.S. is the issuer of dollars and so must provide the world with sufficient dollars to buy oil to fuel all of this global commerce, to be the beating heart that keeps it all going.

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That means more dollars need to be leaving the U.S. than are coming into the United States.

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That is a structural deficit.

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More money goes out than comes in.

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We buy more goods than we export.

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This is the dilemma.

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As the printed dollar flows out, cheap products flow in.

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U.S. domestic manufacturers then of products cannot compete with that, so they relocate abroad where labor is cheap.

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We get cheap goods, but the middle class loses job opportunities, even as the financial and upper classes accumulate assets and become very rich.

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That is where we currently are in the age of oil, where the global reserve currency is the U.S. dollar backed by oil, which is causing the United States deindustrialization.

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That brings us to the second thesis.

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That first thesis kind of sets the stage for how the age of the electron is going to change things.

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The second thesis is the age of the electron will make energy cheap to produce but expensive to transport,

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which will be a deglobalizing force leading to the reshoring of industry.

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So what that means then, in the age of oil, energy comes in the form of extracted fossil fuels.

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This energy is overall expensive to produce and everything, but it's easy to transport as barrels of oil around the world.

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Domestic deindustrialization occurs in the United States in the age of oil, in part because energy is so expensive to produce but so cheap to transport.

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Therefore, it's cheaper to move industry to an area where there's a lot of cheap labor you can exploit because it's easy to also move the energy there.

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You go to where the labor is cheap.

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That's the variable that you want to plug in to decrease the cost of manufacturing.

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And so under the Triffin Dilemma, there will always be cheaper labor outside the United States because the dollar is very strong, because the world is hungry for dollars to fuel global commerce.

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And so that's where industry will go because it's easy to transport energy.

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So if energy was more expensive to transport, but far less expensive to produce, that would cause the reshoring of energy intensive industrial processes closer to the sources of power production and make labor cost less of a factor.

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That is electrical energy under the age of the electron.

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electricity is expensive to transmit through the power grid but very very cheap at the source in

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the form of abundant wind and solar energy mcginnis summarizes it in this way quote this is a

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meaningful difference from the petro-industrial complex where we went to where oil was cheapest

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extracted it and then sent it where we create goods we can do this because shipping oil was

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comparatively cheap. In cheap energy networks, Bitcoin mines will move in first and industrial

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centers will not be far behind. That is, cheap labor pools may not have access to cheap power,

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disrupting the globalized dynamic that exists today. So cheap energy and the Asia Electron

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can help us reshore domestic industry. That's the second thesis, essentially. The third thesis is

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that it will also allow us to transition to a new global reserve currency that is not issued by the

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united states that is a neutral reserve asset backed by electricity so perhaps this is the

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thesis bitcoin a currency backed by electricity we could call it an electro dollar can become

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the new heart and vein circulatory system of global commerce what does it mean to consider

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Bitcoin an electro dollar? Or to put it another way, we often hear this, what would it mean to

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say that Bitcoin is a currency backed by electricity? So first to understand that,

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we can recall that in the age of oil, the dollar currently is essentially backed by oil,

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because that is the most essential commodity, the lifeblood of global commerce.

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and there's explicit and there's arrangements to again price things in oil to encourage dollar

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usage in the age of the electron electricity from renewable sources is now the most valuable

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commodity not oil and so it will in some way take over the role of backing the um global reserve

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currency and fueling a de-globalized yet international commerce. Bitcoin is the lead

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contender to play in that role because its production is directly tied to energy consumption.

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There's a lot that can be said about the technology of Bitcoin. We're not going to talk about all that

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right here. Here we will consider what McGinnis calls, quote, the most interesting property,

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unquote of Bitcoin in that it incentivizes productive use of energy by always acting

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as a buyer of energy below a certain price level.

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This is either like a, for me, it's, I find it quite complex.

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And if it's that made sense on the first saying, it's probably deceptively sense-making.

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So we're going to break it down here to hopefully make it make sense and also see the complexity

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of it at the same time.

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Basically, the idea is that the profitability of Bitcoin mining is tied directly to the

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cost of electricity. Electricity is the major operational input to Bitcoin production and

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Bitcoin mining, and its output is a type of commodity, Bitcoin, which is currently volatile,

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but still has a market price that's set. So to give an example, if a Bitcoin miner gets $100

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per megawatt hour in Bitcoin for that amount of energy expended, it will always be willing

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to buy energy at that cost or slightly below that cost because that energy is less expensive

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than the $100 they're getting worth of Bitcoin for that amount of energy expended.

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If other users are willing to spend more than that, say $110 per megawatt hour, but the

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Bitcoin miner can only get $100 worth of Bitcoin out of it, the miners can't compete and they just

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turn off. Bitcoin has a commodity price, so Bitcoin miners can put a specific kind of maximum amount

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on how much they are willing to pay for electricity. All energy uses that are willing to pay more for

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electricity than a Bitcoin miner then are, under this framework, by definition, more productive

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than the base level activity of Bitcoin mining. McGinnis summarizes it this way, quote,

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If you can create more economic profit using power to mine the currency that enables trade, then you can create by producing a good to trade for that currency, and you probably shouldn't be using power to produce whatever good that is.

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That is, Bitcoin mining acts as a filter by disincentivizing economic activity that will not lead to actual growth and productive surplus.

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This is unlike the fiat currencies we have today that, through cheap debt and targeting 2% annual inflation, drive us towards spending, mindless consumption, and creating companies that are oblivious to true value creation.

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Again, I find this a deceptively simple and complex idea, so maybe we'll talk about it more in conversation.

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But even taking that for what it is that Bitcoin might set a price at which things are to be considered productive uses of electricity, some might have the concern that this means valuable uses of electricity will be driven away by Bitcoin mining because mining will set that floor price too high.

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That is that what if the Bitcoin price skyrockets and mining is just immensely profitable?

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Won't that cause it to rob energy from other quote unquote productive uses?

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So McGinnis thinks that this ignores an important dynamic of Bitcoin mining and that a higher price for Bitcoin incentivizes more miners to enter the market.

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more miners in the market means more energy must be expended to receive the same amount of bitcoin

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because the amount of bitcoin rewarded to the miners does not go up so now if bitcoin miners

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were earning a hundred dollar megawatt hour previously they might now be earning fifty

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dollars megawatt hour as more miners enter the market so the marginal cost is driven down

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to give an analogy i think this is an okay analogy even in a gold rush scenario it's sometimes more

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profitable to sell pickaxes to gold miners than to go mine the gold yourself. There's a cost at

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which it's not profitable to go mine that currency. It becomes more profitable to give, you know,

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haircuts to miners instead of risking it and going and doing it yourself.

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We see this dynamic, Beginner says, already beginning to play out in Texas. It's not playing

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out globally. The network is not yet mature enough to where it is setting that kind of

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floor price for productive energy usage.

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But in Texas, we've seen miners shut down when the price of power exceeds the marginal

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cost to a Bitcoin miner producing more Bitcoin.

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So to summarize this again, because I find it a little bit complex, McGinnis notes, quote,

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only those goods that can be traded for more Bitcoin than the equivalent value of electricity

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needed to produce them will be produced.

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so that is a summary of how bitcoin could be considered an electro dollar backed by electricity

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by setting a floor price essentially on energy use to quote mcginnis again um as electricity

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now fast becomes the most important commodity in the world it makes sense to explicitly tie our

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money to its production that's the electro dollar in the age of the electron just as we have the

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petrodollar in the age of oil. That brings us to the final thesis. So to recap, first we saw how it

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is problematic that the US dollar is the global reserve currency and that it leads to the United

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States de-industrializing domestically. Second, we saw how cheap renewable energy that is expensive

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to transport can de-globalize industry in a sense by causing industry to reshore to where the energy

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sources are rather than going to where labor is cheap. Third, we saw how Bitcoin is the logical

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choice for a new neutral global reserve asset in the age of the electron in the way that it sets a

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floor price and in the way that it's directly tied to energy consumption and how it produces Bitcoin.

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So the final thesis then, this is why this is in national security in the digital age.

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All of the essays we've read so far have essentially said, how does this impact

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kind of our inevitable confrontation with China or something like that.

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So now we'll see how China presents a threat in the U.S. transition to the age of the electron

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and what can be done about that, essentially.

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So basically, the threat is that China dominates in the production of lithium batteries,

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solar panels, and other such tech.

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We can overcome this by an Ouroboros, I think I'm pronouncing that strategy,

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a snake-eating-its-tail type strategy, where we can import clean energy tech,

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which will result in more industry returning home,

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which will allow us to begin producing more tech on our own,

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or a boros because we can use our position as the global reserve currency issuer

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to buy the technology, which allows us to produce the cheap energy.

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The cheap energy then allows the industry to come back home.

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that is the old system the age of oil will eat itself and become the new system the age of the

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electron this will be difficult and so we and we need to acknowledge the difficulty of this dynamic

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mcginnis notes that the more clean energy tech we import import the more our dependence on fossil

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fuels declines which could bring down the petrodollar system that is allowing us to fuel

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our adoption of the age of the electron system,

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thus diminishing, again,

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our ability to finance the clean energy tech.

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So to conclude, I'll quote McGinnis.

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So if there's one thing to take away from this piece,

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it is this.

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The structure of the U.S. dollar as reserve currency

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prevents us from making anything at home.

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There is no keeping the system as is

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and also bringing home manufacturing.

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You are for or against.

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we must transition to a neutral reserve asset world and prepare ourselves for the inevitable

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decline of the petro-industrial complex and again mcginnis thinks we do that by

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consciously navigating how we're going to enter the age of the electron which he believes is the

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next age that we're going to enter so that's a quick summary there's four theses here so

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we could kind of go through them, Lucas, and talk about the significance of each one.

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The first thesis is something we've talked about a lot in the past. The U.S. dollar,

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as a global reserve currency, has a lot of problems when you're the issuer of the global

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reserve currencies, most specifically kind of de-industrialization. But do you have thoughts

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on that, about whether being the global reserve currency issuer is a good or a bad thing?

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what I have is

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as you were talking

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kind of an analogy

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or metaphor

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a story popped into mind

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which is

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how I'm trying to

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explain this to myself

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and

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explain

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explain what

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like the whole idea

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or just this one idea

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of the US dollars

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gold reserve currency

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basically like the

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Triffin dilemma

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because it's

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it's not

241
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it's not necessarily

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intuitive

243
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no yeah you know so the what i'm thinking of is think about like an elementary school bully

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who finds somebody and says look i'll beat you up unless you give me your homework

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and that works until something changes like the petrodollar works until there is an increase in

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the availability and a decrease in the cost of alternative forms of energy, solar, nuclear,

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wind, etc.

248
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So it works until something changes.

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So you're the elementary school bully from fourth grade until sixth grade.

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You don't do any of your homework.

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You just threaten to beat up the other guy, which is what the United States does.

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We basically say, we'll keep you safe if you give us your production.

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And if you don't, then, you know, bad things will probably happen to you or we'll just rearrange the order.

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But then something changes.

255
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In the real world, it's the technology that changes.

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It's the battery storage capacity and the cheapness of solar panels and the ability to produce things just generally cheaper due to automation.

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In this instance, maybe it's like puberty.

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Like you go through and all of a sudden now you're not the biggest, scariest guy.

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And you're a seventh grader now.

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and where are you in the terms of things is that you haven't grown physically,

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but you also haven't grown mentally.

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You haven't grown academically.

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You haven't put a moat, basically like a moat of intelligence around yourself

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that you can use to navigate the world.

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You know, if you, let's say you miss out on a couple years of academics

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and you're a fourth grader competing against seventh graders, eighth graders, ninth graders,

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you know, what then happens?

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What happens is that in a lot of cases you're kind of too far behind to catch up.

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And this dovetails into a lot of things that we've talked about before.

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one of the things that

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it makes me think of is the network state

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that we're talking about concurrently

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which is that we

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we grow to, we basically grow to understand

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that

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we can't change things once they start to go bad

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in order to make them the new better thing.

278
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So I gave the analogy to my sister last night

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when I was telling her about this idea

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that something new must arise.

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You can't fix the old thing.

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And it's not that you can't,

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it's just that it is too,

284
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it's not cost effective.

285
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It's not efficient.

286
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It just doesn't work.

287
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And I gave the example of like,

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Imagine that you had a car and you drove this car for 50 years And then all of a sudden there new technology that allows for the making of jets and um changing things in like to try and change the current order

289
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in order to uh accommodate that would be like trying to change your car into a jet it's just

290
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not going to work very well. What you should probably do is build a jet from scratch and, um,

291
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that will work much more efficiently. So, um, so we're presented really with this idea of, um,

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the, the global economic order is changing and it's changing because energy is becoming so much

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cheaper at the source and it's becoming cheaper at the source because technology has advanced to

294
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make it cheaper at the source to capture the solar to capture the wind which is always there

295
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possibly nuclear he does he does go into that a little bit but you also have

296
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another factor which is a decrease in the cost of labor so as we automate as we put in put in

297
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machines to do human processes, you no longer, as he mentioned, you no longer have to go to the area

298
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of labor. You can have the power there. And since the power is so much cheaper and the power is what

299
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is what feeds the labor in terms of feeding a machine that's powered by electricity or something

300
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like that, then you have two forces that are coming together and meeting that are having

301
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a massive effect on the current system, really undermining this idea that we are going to

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take power from here in the form of a barrel of oil and move it to here where labor is

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cheap.

304
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And we're going to bring it there.

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we're going to use that to power the factory that is run by the cheap workers.

306
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And now we're flipping that all on its head and we're saying,

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actually what we're going to do now is we have the technology to have the power right here.

308
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And because we have the power right here and an abundance of it,

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we can use it to power replacement for human workers in the form of machines.

310
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And also we have another option, and that option is whenever it's more profitable

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for us to mine Bitcoin than it is to make something,

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then we can just transition and flip.

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No one's ever had that option before.

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You couldn't be a baker and power your bakery by solar

315
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and run your oven by solar and use the excess

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and put it into batteries and save it.

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And then at night when you leave and go home,

318
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just flip it over to mining Bitcoin.

319
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and make money during the night.

320
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You couldn't do that.

321
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It just wasn't available.

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And so this is another case of how technology,

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an advancement of technology,

324
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fundamentally changes the face of the entire world

325
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so that it's just not recognizable anymore.

326
00:29:01,355 --> 00:29:01,515
Yeah.

327
00:29:02,235 --> 00:29:05,475
I kind of ranted a little bit there

328
00:29:05,475 --> 00:29:08,695
because I wanted to get out my junior high.

329
00:29:09,115 --> 00:29:11,195
Well, I think that's, yeah, I like that analogy

330
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because again, I think the Triffin Dilemma is a very complex thing.

331
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And I think you're right that it's not intuitive.

332
00:29:18,955 --> 00:29:22,555
I think metaphors can help us understand aspects of the dilemma.

333
00:29:23,115 --> 00:29:30,475
And one aspect of it is like that bully who depends upon their already existing strength

334
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rather than developing a new capacity allows them to be parasitical.

335
00:29:34,855 --> 00:29:40,575
And that parasitism is part of the system and that they're providing protection to support the system.

336
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But that's not good in the long run for the bully because they don't develop the industrial capacity.

337
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They don't develop talents or whatever.

338
00:29:48,115 --> 00:29:52,935
And, you know, any transition is inherently painful.

339
00:29:54,315 --> 00:29:56,735
You know, you mentioned puberty just offhand.

340
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Adolescence, I think etymologically you see dol, D-O-L, dolore, pain.

341
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Like adolescence is a stage of pain.

342
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Transitionary stages are painful because the old is dying and the new is yet to arise.

343
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and this process is our concurrent.

344
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We have a transition from the age of oil to the age of the electron.

345
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Before that, we had the age of wood to the age of coal to the age of oil.

346
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So we've had these energy transitions in the past where the primary source of fuel changed to a new type,

347
00:30:30,035 --> 00:30:37,615
and that requires new technologies, new productive capacity, new institutions, really.

348
00:30:37,615 --> 00:30:50,855
And that's a big part of this essay. McGinnis is like, once we go to the age of the electron, it's not just a technical endeavor. We need to have new institutions that enable that and that deal with its consequences.

349
00:30:50,855 --> 00:31:08,055
One of those being, again, if the U.S. dollar is now backed by oil in the sense where it's tied through the petrodollar system to the Saudis and OPEC, you know, requiring, denominating their oil in dollars, requiring dollars to buy that oil.

350
00:31:08,055 --> 00:31:36,395
If that is, in a sense, what backs the dollar, once that backing is really gone and needs the electron, what happens? We need new institutions and the United States needs to be very conscious about how this transition is done, both so that the U.S. currency doesn't just hyperinflate and once it loses its backing in oil, but also so that we don't become another global reserve currency in the future based on electricity or something.

351
00:31:36,395 --> 00:31:38,675
that it's not good to be the global reserve currency.

352
00:31:39,115 --> 00:31:41,495
This is both a terrible thing

353
00:31:41,495 --> 00:31:42,715
because the old system is dying,

354
00:31:42,815 --> 00:31:44,395
but also a huge opportunity

355
00:31:44,395 --> 00:31:47,715
to allow us to throw off the yoke of this system

356
00:31:47,715 --> 00:31:50,675
that has really led to huge,

357
00:31:51,455 --> 00:31:53,255
like vast income inequality,

358
00:31:53,875 --> 00:31:57,795
the loss of the blue collar working class

359
00:31:57,795 --> 00:32:01,355
as a really formidable economic class

360
00:32:01,355 --> 00:32:02,255
in the United States

361
00:32:02,255 --> 00:32:04,335
and the deaths of people, honestly,

362
00:32:04,335 --> 00:32:06,475
through depression, despair, and all of that.

363
00:32:07,375 --> 00:32:07,595
Yeah.

364
00:32:08,215 --> 00:32:10,895
When we're looking at the United States

365
00:32:10,895 --> 00:32:12,815
and seeing where we're going as a country,

366
00:32:13,795 --> 00:32:18,415
we do appear to be in both the best and the worst position.

367
00:32:18,675 --> 00:32:19,575
We're in the best position.

368
00:32:20,135 --> 00:32:22,155
We are currently that global leader,

369
00:32:22,155 --> 00:32:30,715
but it's like we are in a race,

370
00:32:30,715 --> 00:32:40,755
and the race is, say, you're just running and we're leading that race.

371
00:32:42,015 --> 00:32:46,615
But the race is about to change to, say, flying.

372
00:32:47,195 --> 00:32:53,275
And all of a sudden, you know, like your lead doesn't matter as much,

373
00:32:53,595 --> 00:32:56,855
but we can utilize it.

374
00:32:56,855 --> 00:33:03,195
So this goes, it speaks, I think, directly to this sunk cost fallacy.

375
00:33:03,195 --> 00:33:15,955
We have a massive economy based around oil, based around drilling oil, transporting oil, storing oil, refining oil.

376
00:33:17,335 --> 00:33:18,915
Protecting oil providers.

377
00:33:18,915 --> 00:33:28,615
Yeah. I mean, if you think about, you think about like vehicles, like the seats are made of oil derivatives.

378
00:33:28,615 --> 00:33:38,475
The dash is made of an oil derivative, the tires, you know, like petroleum is in shockingly nearly every single thing that we have.

379
00:33:38,475 --> 00:33:48,895
It is incredibly difficult to find something that you have that doesn't have some sort of petroleum influence into it.

380
00:33:48,895 --> 00:34:08,435
And so we have a massive amount of infrastructure dedicated to it that is not particularly helpful in transitioning to, say, Bitcoin, a Bitcoin centric system that is based on solar, that's based on wind.

381
00:34:08,435 --> 00:34:19,395
And however, because we have that big lead, because we have that industrial capability, we are able to utilize that.

382
00:34:19,755 --> 00:34:22,995
But it's just really hard to do that, right?

383
00:34:22,995 --> 00:34:29,155
It's really hard to be the creator of something.

384
00:34:29,935 --> 00:34:31,715
You know, we created this petrodollar.

385
00:34:31,895 --> 00:34:33,415
We created this U.S. dollar.

386
00:34:33,415 --> 00:34:39,195
and it's really hard to admit that it is failing

387
00:34:39,195 --> 00:34:44,595
and then use that in order to subsidize

388
00:34:44,595 --> 00:34:49,715
and to pave the way for the replacement of that thing.

389
00:34:50,075 --> 00:34:54,095
You know, like, it's just, there's pride involved in it.

390
00:34:54,235 --> 00:34:56,415
There's sunk cost fallacy involved in it.

391
00:34:56,495 --> 00:34:57,815
There's the logistics of it.

392
00:34:58,855 --> 00:34:59,595
And there's the fear.

393
00:34:59,735 --> 00:35:02,195
Are we, like, are we paving the road to our own...

394
00:35:02,755 --> 00:35:03,275
Demonstrates.

395
00:35:03,275 --> 00:35:19,415
Yeah, absolescence. One way is to say, no, let's not acknowledge that the age of oil is over and let's resist. Historically, resisting the future has not been a good strategy, but it's also difficult to tell what the future is going to be. And so people can present it as a viable thing.

396
00:35:19,415 --> 00:35:24,515
like, no, you know, oil has these uses and we don't need to change our institutions.

397
00:35:24,595 --> 00:35:28,975
Even if we do use more electricity, we can just keep on gliding along as the way things

398
00:35:28,975 --> 00:35:29,195
are.

399
00:35:29,335 --> 00:35:33,815
We're pretty, you know, as the global reserve currency issuer, we at least have a lot of

400
00:35:33,815 --> 00:35:36,095
wealth coming into the United States, a lot of goods and stuff.

401
00:35:36,195 --> 00:35:36,795
So why worry?

402
00:35:36,895 --> 00:35:38,435
Why rock the boat, you know?

403
00:35:39,155 --> 00:35:39,355
Yeah.

404
00:35:39,835 --> 00:35:40,175
Yeah.

405
00:35:40,175 --> 00:35:51,315
I think that is the attitude that people who are in the top 5% have, right?

406
00:35:52,275 --> 00:35:59,195
The fire, the financial insurance and real estate, that's how I think Pines framed it as the classes that benefit.

407
00:35:59,895 --> 00:36:00,495
Right, yeah.

408
00:36:00,575 --> 00:36:01,435
So asset holders.

409
00:36:01,595 --> 00:36:01,875
Yeah.

410
00:36:02,295 --> 00:36:02,495
Right?

411
00:36:02,795 --> 00:36:07,495
Those who hold assets effectively, I guess insurance is a little different.

412
00:36:07,995 --> 00:36:09,175
They insure the assets, right?

413
00:36:10,075 --> 00:36:10,955
Yeah, exactly.

414
00:36:11,135 --> 00:36:12,215
They insure the assets.

415
00:36:12,355 --> 00:36:18,095
And if you insure the asset and the asset has been monetized, meaning that the value of it is driven up,

416
00:36:18,495 --> 00:36:22,795
then that means that the premium in order to insure that asset also goes up.

417
00:36:23,555 --> 00:36:26,395
By the way, this is, I think, kind of one of the fascinating.

418
00:36:26,535 --> 00:36:31,175
We're going to deviate just a little bit here, but we're going to talk about the fires that recently occurred.

419
00:36:31,275 --> 00:36:32,235
I was just in L.A.

420
00:36:32,875 --> 00:36:35,715
And I tried to go to Pacific Palisades.

421
00:36:35,835 --> 00:36:36,555
I was turned away.

422
00:36:36,735 --> 00:36:37,955
I wasn't allowed to go in.

423
00:36:37,955 --> 00:36:41,715
Turned away, but like, there's like a roadblock or like how it's military.

424
00:36:41,715 --> 00:36:44,035
I assume National Guard.

425
00:36:44,295 --> 00:36:44,435
Yeah.

426
00:36:45,295 --> 00:36:51,835
But yeah, I tried to go in and, but anyway, so one of the things that I learned listening

427
00:36:51,835 --> 00:36:58,835
to, listening to the All In podcast was that what had happened.

428
00:36:59,655 --> 00:37:06,835
So the average house price was like $9 million, you know, like houses ranged up to like 50,

429
00:37:06,835 --> 00:37:16,815
$60 million, but the average house price was like $9 million. And the inflationary effect on those

430
00:37:16,815 --> 00:37:23,115
housing prices, obviously you're going to have the inflationary effect of this is monetized real

431
00:37:23,115 --> 00:37:27,795
estate. It's close to the ocean. It's a prime real estate. Therefore, people are going to want it.

432
00:37:27,795 --> 00:37:33,915
Michael Saylor talks about this with his example of the house in Miami, right, that was originally

433
00:37:33,915 --> 00:37:38,935
$100,000 and now it's $30 million. But one of the other things that happened was that the state of

434
00:37:38,935 --> 00:37:47,915
California told insurance companies that they had to cap their insurance rates, that they weren't

435
00:37:47,915 --> 00:37:56,755
allowed to charge over a certain amount. And so if that happens, then that has another inflationary

436
00:37:56,755 --> 00:38:04,395
effect on the value of the real estate, right? So if you have a $10 million home and a $30 million

437
00:38:04,395 --> 00:38:12,375
home, and they put a cap on the insurance so that insuring the $30 million home costs the same as

438
00:38:12,375 --> 00:38:17,715
the $10 million home, then you're more incentivized to buy the $30 million home. If you're more

439
00:38:17,715 --> 00:38:22,675
incentivized to buy the $30 million home, that means there's more people who want it. If there's

440
00:38:22,675 --> 00:38:27,595
more people that want it, that means that the price goes up. And so it's the, it's a circle

441
00:38:27,595 --> 00:38:33,215
where it drives the price up continuously. Um, and so that anyways, that there's just kind of

442
00:38:33,215 --> 00:38:39,795
like a, a little side side note onto that. But, um, it's another example, I guess, of how meddling

443
00:38:39,795 --> 00:38:46,695
in markets, uh, sends a bad signal that ends up being very disruptive. Anytime you, anytime you

444
00:38:46,695 --> 00:38:54,375
meddle in some sort of market, you disrupt the pricing signal, and that leads to bubbles and

445
00:38:54,375 --> 00:39:01,315
collapses. So anyways, that was just something I wanted to talk about because I thought it was

446
00:39:01,315 --> 00:39:11,575
interesting. But if you're looking at where we are in the United States today, and what can we do

447
00:39:11,575 --> 00:39:15,715
in order to compete in the future,

448
00:39:16,155 --> 00:39:18,355
we are in a very difficult position

449
00:39:18,355 --> 00:39:20,975
because these are kind of like vectors

450
00:39:20,975 --> 00:39:25,035
and it's as though we are going this way

451
00:39:25,035 --> 00:39:27,655
and we're leading everybody going this way.

452
00:39:28,355 --> 00:39:32,335
But we look over here and we know that in order to compete,

453
00:39:32,335 --> 00:39:34,615
we have to drastically alter vectors.

454
00:39:35,255 --> 00:39:37,235
And the further we go along this path,

455
00:39:37,355 --> 00:39:39,855
the farther we get from the other one.

456
00:39:40,175 --> 00:39:40,215
Yeah.

457
00:39:40,215 --> 00:39:51,375
So, yeah, we are in a very difficult position that I think, yes.

458
00:39:51,855 --> 00:40:00,015
So hollowing out the middle class, but not just hollowing out the middle class, hollowing out the hard sciences class, the academics.

459
00:40:00,015 --> 00:40:01,475
And so I want to share this.

460
00:40:01,475 --> 00:40:13,075
This is from the website WTF happened in 1971, which the author, I believe, pulls a couple charts from.

461
00:40:14,055 --> 00:40:20,415
So I'm going to, because you've got a law degree, I was in law school for a very brief time.

462
00:40:21,495 --> 00:40:23,755
This is one thing that is interesting.

463
00:40:24,455 --> 00:40:28,515
In 1971, here's 1971, we go off the gold standard.

464
00:40:28,515 --> 00:40:33,875
and what happens is the number of lawyers shoots up.

465
00:40:34,775 --> 00:40:37,375
Not only does the number of lawyers shoot up,

466
00:40:37,855 --> 00:40:43,795
the number of physics PhDs by U.S. citizens drops drastically.

467
00:40:44,055 --> 00:40:46,275
It has started to come back a little bit.

468
00:40:46,715 --> 00:40:49,475
There's another one down here that I wanted to show.

469
00:40:49,475 --> 00:40:54,035
it was

470
00:40:54,035 --> 00:40:59,115
growth of physicians and administrators

471
00:40:59,115 --> 00:41:01,875
so this is

472
00:41:01,875 --> 00:41:07,075
the brown or reddish whatever

473
00:41:07,075 --> 00:41:09,935
tome is the physicians

474
00:41:09,935 --> 00:41:13,435
the yellow is the administrators so we have

475
00:41:13,435 --> 00:41:17,615
basically since 1971 we have

476
00:41:17,615 --> 00:41:24,455
increased basically like the ratio of administrators to physicians has gone from like

477
00:41:24,455 --> 00:41:32,775
whatever it's increased by a factor of like 25 to 1 or something like that um you had mentioned um

478
00:41:32,775 --> 00:41:42,535
kind of this extractive economy and that's um you know the legal system does great things but it is

479
00:41:42,535 --> 00:41:51,755
at its core extractive. It is not producing a good. Administrators do a good job of doing what

480
00:41:51,755 --> 00:41:58,795
they do. They're needed, but they are at the core extractive. They are not producing a good.

481
00:41:59,355 --> 00:42:09,715
And so we've developed all of these extractive economies built on top of where our hard sciences

482
00:42:09,715 --> 00:42:19,135
used to be and i think there there may be a saving grace the saving grace may be that ai makes it so

483
00:42:19,135 --> 00:42:27,135
that it can do all of the hard sciences stuff and we just need to be able to know how to prompt it

484
00:42:27,135 --> 00:42:36,295
we just need to be able to be creative and be able to um be able to imagine um you know if you

485
00:42:36,295 --> 00:42:43,355
live in this world where anything that you imagine AI can help you create, then I think that

486
00:42:43,355 --> 00:42:49,375
that puts us in a great position. That puts us in a great position because we do have the

487
00:42:49,375 --> 00:42:57,595
strength of being that imaginative country, that, you know, that bright spark, that light,

488
00:42:58,255 --> 00:43:04,995
that creative kind of, you know, like the United States has always been a very creative place.

489
00:43:04,995 --> 00:43:12,975
because it is populated by all of the chaotic rebels.

490
00:43:12,975 --> 00:43:16,155
And therefore, I think we're in a good position there.

491
00:43:16,375 --> 00:43:25,995
But yeah, things don't look great in terms of where we sit in our ability to reshore that production.

492
00:43:25,995 --> 00:43:46,715
He talks about stranded assets, like literally trillions of dollars worth of factories and refineries and equipment that is in other countries that we put there in order to move production to the source of cheap labor.

493
00:43:46,715 --> 00:44:04,995
Right. And now now that's flipped. So we don't have the cheap labor. The cheap labor is not the the driving factor anymore, not the forcing factor. It's the cheap energy. So in the future, we will go or well, actually not the future right now. We go to where the cheap energy is and we bring the production there.

494
00:44:04,995 --> 00:44:25,375
Yeah. And like the United States has the capacity for a lot of cheap renewable energy. But in addition, McGinnis mentions a phrase that I had not heard before that I really like. There is like there is reshoring of an industry. There's also friendly shoring. So it's not necessary that we have to reshor everything from China that went there.

495
00:44:25,375 --> 00:44:32,955
if we have an antagonistic relationship with China, we can friendly shore it to countries that we have really good diplomatic relationships with.

496
00:44:33,715 --> 00:44:39,595
And that's kind of the last essay we read was about how Africa might be that new place.

497
00:44:39,595 --> 00:44:46,495
They have a lot, they have abundant cheap energy resources, and it could be a lot more friendly to the United States

498
00:44:46,495 --> 00:44:54,295
in that the people there seem to incline towards a liberal, small-l liberal, freedom-oriented vision of the future,

499
00:44:54,295 --> 00:45:00,995
that they would be more inclined to opt out of China's techno-authoritarian stack if there was an alternative.

500
00:45:03,455 --> 00:45:10,455
Could you share your screen and go to that Google document on the two causal chains?

501
00:45:11,315 --> 00:45:17,295
So I think this was a good way to explain also...

502
00:45:17,295 --> 00:45:25,215
another way to explain so it makes sense um why the age of the electron is going to

503
00:45:25,215 --> 00:45:33,095
lead to a different outcome structurally than the age of oil so this is these are two charts from

504
00:45:33,095 --> 00:45:40,555
the essay that mcginnis made to kind of explain his thesis first we see the age of oil so i'll

505
00:45:40,555 --> 00:45:45,195
try to explain this um i i think i understand this we'll see if my understanding falters halfway

506
00:45:45,195 --> 00:45:51,635
through. So the first square in the causal chain, we see a structural increase in global energy

507
00:45:51,635 --> 00:45:59,175
pricing. That is just because oil becomes more expensive over time as more and more countries

508
00:45:59,175 --> 00:46:06,955
begin to use it and it fuels global commerce. Yeah, demand increases. So the increase in demand

509
00:46:06,955 --> 00:46:15,035
because energy has such a multiplying effect.

510
00:46:15,175 --> 00:46:18,475
The increase in demand outpaces the increase in supply,

511
00:46:18,735 --> 00:46:22,375
and therefore the pricing goes up in real terms.

512
00:46:22,495 --> 00:46:23,215
Right on, yeah.

513
00:46:23,375 --> 00:46:25,815
So there's that structural increase in energy prices.

514
00:46:26,475 --> 00:46:33,055
That leads causally, he says, to the emergence of the petrodollar in a few ways.

515
00:46:33,055 --> 00:46:46,035
I think most generally you can just say that the most expensive commodity logically is going to serve in some way to back the global reserve currency.

516
00:46:46,535 --> 00:46:51,215
When gold was that, the gold backed the currency when gold was the most valuable thing.

517
00:46:51,935 --> 00:46:55,055
And now oil is the most valuable commodity.

518
00:46:55,455 --> 00:47:01,035
And there's, again, this kind of quid pro quo arrangement that arises.

519
00:47:01,035 --> 00:47:09,075
the U.S. smartly, intelligently understands that if we have this structural increase in

520
00:47:09,075 --> 00:47:12,735
global energy prices based on the rise in the price of oil, if we can tie the dollar

521
00:47:12,735 --> 00:47:16,695
to oil, then that's going to be quite a good system for the U.S. dollar.

522
00:47:16,695 --> 00:47:18,615
But that brings us to box three.

523
00:47:18,835 --> 00:47:23,695
It turns out maybe it was really good for the dollar and for the financial classes that

524
00:47:23,695 --> 00:47:25,375
benefit from a strong dollar.

525
00:47:25,375 --> 00:47:36,075
But the Triffin dilemma, the structural need for trade deficits, this led to us needing to supply the world with dollars to export less than we imported.

526
00:47:36,675 --> 00:47:42,195
And as we've been talking about, to kind of hollow out the industrial capacity of the United States, which leads.

527
00:47:42,195 --> 00:47:42,555
Let me pause you.

528
00:47:42,655 --> 00:47:44,215
Yeah, go ahead.

529
00:47:44,215 --> 00:47:58,635
So this is the structural need for trade deficits. So what we're talking about is that in order for this system to work, the rest of the world has to have dollars and we have to get those dollars to them somehow.

530
00:47:58,635 --> 00:48:24,335
And so how do we get those dollars to them? We get those dollars to them really by moving our manufacturing and industrial capacity to other countries and then buying those products that are made there so that ostensibly it looks as though we are moving money to those other countries so that they have dollars.

531
00:48:24,335 --> 00:48:29,915
And I just I wanted to pause you because I wanted to go up here and show right here.

532
00:48:30,035 --> 00:48:31,255
This is the balance of trade.

533
00:48:31,375 --> 00:48:35,335
So what we're talking about is the structural need for trade deficits.

534
00:48:36,235 --> 00:48:37,175
So trade deficit.

535
00:48:38,195 --> 00:48:38,855
So look up here.

536
00:48:38,855 --> 00:48:39,675
Yeah, it's a great chart here.

537
00:48:40,155 --> 00:48:42,195
United States balance of trade.

538
00:48:42,815 --> 00:48:50,335
So when the petrodollar system began in the mid-70s, so we had had effectively a trade.

539
00:48:51,355 --> 00:48:52,415
We were trade neutral.

540
00:48:52,415 --> 00:48:57,655
We didn't really have a surplus or a deficit leading up to that.

541
00:48:58,215 --> 00:49:01,195
You know, we vacillated just a little bit.

542
00:49:01,735 --> 00:49:17,315
But when we instituted this program, just to really hammer home, what happened is that you see that the trade deficit just goes straight down.

543
00:49:17,455 --> 00:49:17,795
Bonkers.

544
00:49:18,575 --> 00:49:20,975
Just, you know, absurd to the point.

545
00:49:20,975 --> 00:49:46,135
And all of this, by the way, so a way to think about all of this blue shaded area under the zero, a way to think about that is this is all of the value that was being, it was being created domestically, and now it's being created internationally and then imported.

546
00:49:46,135 --> 00:49:47,955
and so

547
00:49:47,955 --> 00:49:50,215
this is the true

548
00:49:50,215 --> 00:49:53,035
this is just the picture of the hollowing out

549
00:49:53,035 --> 00:49:54,255
of the middle class

550
00:49:54,255 --> 00:49:56,255
so I just wanted to highlight that

551
00:49:56,255 --> 00:49:57,955
that's a terrifying chart

552
00:49:57,955 --> 00:49:58,295
when you

553
00:49:58,295 --> 00:50:02,475
us dipping below zero into deficit territory

554
00:50:02,475 --> 00:50:03,455
and trade relations

555
00:50:03,455 --> 00:50:05,275
if you can't see the chart

556
00:50:05,275 --> 00:50:06,755
it's pretty phenomenal

557
00:50:06,755 --> 00:50:09,795
it's an immense amount of deficit action

558
00:50:09,795 --> 00:50:11,995
sinking like a stone

559
00:50:11,995 --> 00:50:12,955
so that brings us

560
00:50:12,955 --> 00:50:15,155
we're in this causal chain from an increase

561
00:50:15,155 --> 00:50:21,295
and energy prices, emergence of the petrodollar, which causes us to be subject to the Triffin

562
00:50:21,295 --> 00:50:24,395
dilemma, the structural need for trade deficits.

563
00:50:25,315 --> 00:50:30,195
Now we're on to the fourth link in this causal chain, the globalization of the industrial

564
00:50:30,195 --> 00:50:30,535
base.

565
00:50:30,575 --> 00:50:31,695
We've been talking about that.

566
00:50:31,695 --> 00:50:37,275
Again, now production is moving to cheap labor pools around the world.

567
00:50:37,435 --> 00:50:41,335
Our industry is going out to places where it's cheaper to manufacture.

568
00:50:41,655 --> 00:50:44,795
The dollar is very strong because the world wants it.

569
00:50:44,795 --> 00:50:55,555
And so paying people domestically to do the thing is much less cheap than sending it to a third world or another country to have them do the thing and having them receive their local currency.

570
00:50:56,035 --> 00:50:58,315
I'm going to jump in again real quick.

571
00:50:58,435 --> 00:51:06,935
So I think it's important to note that it is not the United States that is losing that industrial base.

572
00:51:06,935 --> 00:51:25,290
it is the bottom 99 of the United States Yeah The top 1 owns it So when is something that does feel very devious and just doesn feel

573
00:51:25,290 --> 00:51:29,410
good about this because we are losing

574
00:51:29,410 --> 00:51:33,290
this manufacturing capability to other countries. The industrial base is

575
00:51:33,290 --> 00:51:37,230
moving to other countries. We are doing that in order to feed those

576
00:51:37,230 --> 00:51:41,230
other countries with dollars. You would assume that

577
00:51:41,230 --> 00:51:44,990
those other countries are becoming more wealthy, but they are not.

578
00:51:44,990 --> 00:51:59,010
In fact, in terms of the wealth inequality, those countries are now sinking further and further and further into debt

579
00:51:59,010 --> 00:52:05,010
and having to hyperinflate their currency as well.

580
00:52:05,010 --> 00:52:15,590
And so it's like the top 1% of the United States plus the top 1% of whatever country that we're moving this to that benefits.

581
00:52:15,750 --> 00:52:20,030
It does not benefit the people as a whole in either country.

582
00:52:20,030 --> 00:52:41,610
And so I just thought, I think that's important to note because it's not, there is no, there is no like consolation prize of like, oh, the people in America can no longer afford to move out of their parents' home or buy a house or own a car or raise a child or pay off their student debt.

583
00:52:41,610 --> 00:52:48,890
But people in Mongolia, people in El Salvador, people wherever, they can now do this stuff.

584
00:52:49,130 --> 00:52:50,030
That's not the case.

585
00:52:50,430 --> 00:53:02,590
The case is that the top 1% of both of those countries has seen an outsized gain in their wealth while the bottom 99% has truly suffered.

586
00:53:02,590 --> 00:53:06,730
Yeah, now that's an excellent and a very, very important and subtle nuance.

587
00:53:06,910 --> 00:53:11,070
I'm glad you highlighted that because it's easy to talk over that point.

588
00:53:11,070 --> 00:53:15,310
I mean, the real, the two big...

589
00:53:15,310 --> 00:53:17,290
Globalization sounds good, right?

590
00:53:17,290 --> 00:53:17,490
Yes.

591
00:53:17,490 --> 00:53:20,070
It sounds like we're cooperating.

592
00:53:20,850 --> 00:53:22,330
It sounds like we're being friendly.

593
00:53:22,570 --> 00:53:26,990
It sounds like we are blurring borders between countries

594
00:53:26,990 --> 00:53:30,770
and we're becoming more a people of the world

595
00:53:30,770 --> 00:53:35,590
instead of people of X country or Y nation, etc.

596
00:53:35,590 --> 00:53:48,230
But the reality of it is that the wealth inequality in all countries involved all across the world is becoming worse and worse and worse over time under this situation.

597
00:53:48,230 --> 00:54:07,030
Yeah, no, and McGinnis points that out. The two problems with globalization are the huge amount of wealth inequality that's constantly being created, and also the risk to our supply chains that if we are locating our things in hostile powers territory, that's not good if we didn't go to war with them, of course.

598
00:54:07,710 --> 00:54:13,190
So that brings us to the final link in the chain, which I guess we've been talking about, domestic wealth inequality.

599
00:54:13,190 --> 00:54:19,550
Right. That's where we end up in the age of oil, beginning with a structural increase in global energy pricing.

600
00:54:19,770 --> 00:54:26,690
We end with domestic wealth inequality. So the causal chain for the age of the electron could look different.

601
00:54:26,930 --> 00:54:30,830
This is McGinnis's hopeful description of a new causal chain.

602
00:54:30,970 --> 00:54:36,270
So what if we begin with a structural decrease in the cost of energy production?

603
00:54:36,270 --> 00:54:52,030
And that's what we've been talking about. If specifically solar and wind energy, which are incredibly abundant, can be produced incredibly cheaply and really in dramatic fashion, lower the cost of energy, what are the effects of that?

604
00:54:52,030 --> 00:54:59,670
So the next link in the causal chain, McGinnis says, is a deflationary effect on local energy prices.

605
00:54:59,990 --> 00:55:09,890
These, again, the age of the electron is about renewable energies that are cheap to produce and abundant, but expensive to transport.

606
00:55:10,830 --> 00:55:16,710
So that has a deflationary effect on local energy prices where that energy production is occurring,

607
00:55:16,710 --> 00:55:21,890
which leads to the third chain in this causal chain the third link in the causal chain

608
00:55:21,890 --> 00:55:28,590
localization of the industrial base the thought is that now the industrial base doesn't move to

609
00:55:28,590 --> 00:55:36,530
the cheap labor pool it goes to where local energy prices are very very low which leads to the fourth

610
00:55:36,530 --> 00:55:44,210
link the re-emergence of opportunities for domestic labor you know the the most important input is the

611
00:55:44,210 --> 00:55:49,490
energy price. And if that is very, very cheap in a place, the domestic labor stands a chance of

612
00:55:49,490 --> 00:55:55,890
making a decent wage, which leads finally the final link in the chain, the electro dollar

613
00:55:55,890 --> 00:56:04,430
paradigm. And I take that to be the use of Bitcoin as a neutral reserve asset backed by electricity.

614
00:56:05,430 --> 00:56:08,170
Is that how you're interpreting that, Lucas, this causal chain here?

615
00:56:08,170 --> 00:56:21,990
Yeah, we're moving toward Henry Ford's vision of an electric currency that we discovered in Jason Lowry's software thesis, which is, I think, beautiful and brilliant.

616
00:56:21,990 --> 00:56:36,410
One of the things that I wanted to mention here is that localizing the industrial base, moving that production back.

617
00:56:36,410 --> 00:56:56,210
So I want to kind of hammer home the idea or the concept that may be hard to grasp, but we are, I would say, rapidly moving toward an era where everyone becomes their own power plant.

618
00:56:56,210 --> 00:57:03,690
where you're, you know, right now it's a very niche thing to be living off the grid.

619
00:57:03,690 --> 00:57:04,050
Yeah.

620
00:57:04,290 --> 00:57:12,650
To, you know, producing your own power and not be dependent upon an energy source

621
00:57:12,650 --> 00:57:17,730
in order to power your home, to turn your lights on, to run your microwave,

622
00:57:17,950 --> 00:57:18,970
to take a shower, etc.

623
00:57:18,970 --> 00:57:30,490
And the reason being is that the primary source of power is oil or nuclear.

624
00:57:32,090 --> 00:57:44,950
And having an oil refinery in your backyard is not feasible, nor is having a nuclear reactor in your garage feasible.

625
00:57:44,950 --> 00:57:53,550
However, the end result of both of those energy production methods is electricity.

626
00:57:54,430 --> 00:58:02,550
We refine the oil or the coal to burn in order to generate electricity.

627
00:58:03,090 --> 00:58:07,450
You don't heat your house with oil, you heat your house with electricity.

628
00:58:07,450 --> 00:58:22,250
You don't run your microwave on nuclear energy. You run your microwave on electricity created by steam that is heated by nuclear energy.

629
00:58:22,250 --> 00:58:28,470
And so the end result, the thing that takes us to the final is electric energy.

630
00:58:28,690 --> 00:58:30,770
So what is the gap?

631
00:58:31,110 --> 00:58:38,250
Like what is keeping us from having our own power plant in our backyard, in our garage, on the roof of our house?

632
00:58:38,470 --> 00:58:45,290
It's the refining of whatever that power source is into the final product of electricity.

633
00:58:45,290 --> 00:58:51,690
We haven't been able to do that because those methods just weren't feasible.

634
00:58:52,270 --> 00:59:02,710
But now we are seeing Moore's Law being applied to solar panels and also to battery storage.

635
00:59:02,710 --> 00:59:17,450
So we are seeing solar panels become much, much more efficient and able to extract more energy per photon, basically, light photon that hits it.

636
00:59:17,450 --> 00:59:34,170
And at the same time, we're also able to take that energy and store it in a smaller place, in a smaller battery, the same amount of energy being stored in it, or more energy being stored in the same size of a battery.

637
00:59:35,950 --> 00:59:45,130
And so we are on the cusp of being able to be our own power plant.

638
00:59:45,130 --> 01:00:09,670
So what does that mean if you can be your own power plant? That means that you are now in the position to join together with other people who have their own power plants to create a local grid that can service industry with the excess electricity that you create.

639
01:00:09,670 --> 01:00:19,690
And so if you're able to do that, then you can create this, as we see, reemergence of opportunities for domestic labor.

640
01:00:20,410 --> 01:00:27,030
Right now, that's not feasible because the cost of labor is too great.

641
01:00:27,990 --> 01:00:34,390
But if we are able to have this deflationary effect on local energy prices, then we can move into that.

642
01:00:34,390 --> 01:01:01,670
And so, yeah, we rapidly, I think, move into an electro-dollar paradigm. I personally think that it will be led by other countries. I think it will be led by countries in Africa that are leapfrogging and moving from literally having no electricity at all to having an electro-dollar paradigm where they are their own power source.

643
01:01:01,670 --> 01:01:22,330
I think about this because I think about like, if you look at cities that are in the Midwest, the cities in the Midwest that get the same type of infrastructure that was originally put in in the big cities in the East and the big cities in the West.

644
01:01:22,330 --> 01:01:31,930
you know, a subway system or a rail car system or high speed internet, things like that.

645
01:01:33,110 --> 01:01:38,870
Those cities in the Midwest are able to leapfrog to go from nothing to being the best.

646
01:01:38,870 --> 01:01:51,030
Kansas City went from just a little place in the Midwest to a almost global tech hub because Google Fiber chose that location

647
01:01:51,030 --> 01:01:53,290
to put the world's fastest internet into.

648
01:01:54,630 --> 01:01:59,250
And so you see that you're able to leapfrog with less infrastructure.

649
01:02:00,030 --> 01:02:04,450
Now you'll be able to leapfrog with Starlink,

650
01:02:04,610 --> 01:02:06,810
having the fastest internet in the world,

651
01:02:07,370 --> 01:02:10,430
and you don't have to build any infrastructure for that.

652
01:02:10,550 --> 01:02:11,910
You just have to plug it in.

653
01:02:13,190 --> 01:02:15,690
So, yeah, I think it's really fascinating

654
01:02:15,690 --> 01:02:21,190
because it gives us a path for where the United States can go,

655
01:02:21,650 --> 01:02:28,670
but it also really highlights how much of a head start it actually is to be behind,

656
01:02:29,370 --> 01:02:32,270
to be in the position that has none of this infrastructure,

657
01:02:32,530 --> 01:02:34,030
has none of this sunk cost,

658
01:02:34,510 --> 01:02:38,890
has none of this administrative, extractive economy built around

659
01:02:38,890 --> 01:02:43,050
that has legal protections and trade unions.

660
01:02:43,070 --> 01:02:43,950
Yeah, lobbyists.

661
01:02:43,950 --> 01:02:52,250
right lobbyist exactly so um it's a it's a fascinating position to be in yeah um yeah no

662
01:02:52,250 --> 01:02:57,930
this is a common theme that we talk about when we talk about bitcoin and the societal changes around

663
01:02:57,930 --> 01:03:04,730
it is the decentralizing impact that it and the constellation of technologies accompanying it

664
01:03:04,730 --> 01:03:08,430
will have and i think you're very right to emphasize that and talking about the

665
01:03:08,430 --> 01:03:15,770
electro dollar paradigm and just to plug for one our last conversation about um bitcoin in africa

666
01:03:15,770 --> 01:03:25,390
but two um for james mcginnis's podcast der task force that's distributed energy resources a topic

667
01:03:25,390 --> 01:03:30,030
that i had not really read about much at all prior to reading this essay and there's a whole

668
01:03:30,030 --> 01:03:36,910
sub community based around again as you know lucas like we can't have a nuclear reactor in

669
01:03:36,910 --> 01:03:41,530
our basement, but we can't have a solar panel on the roof. And these like, it sounds like both

670
01:03:41,530 --> 01:03:47,690
enthusiastic hobbyists, but also people who are starting their own companies around energy

671
01:03:47,690 --> 01:03:52,870
production and doing very exciting things because it's such a nascent industry. And it's so

672
01:03:52,870 --> 01:03:58,290
decentralized, distributed that it's viable to start that company from your basement. Yeah,

673
01:03:58,290 --> 01:04:01,490
you got the website there, they have a sub stack that's very interesting. And again,

674
01:04:01,490 --> 01:04:04,590
And it looks like a whole community around this.

675
01:04:04,650 --> 01:04:07,310
And that's kind of the mission of the DER task force.

676
01:04:07,690 --> 01:04:10,050
Very Bitcoin adjacent, I would say.

677
01:04:10,150 --> 01:04:11,370
I've listened to a couple of them.

678
01:04:12,170 --> 01:04:14,990
I listened to one on Bitcoin, one of their podcasts on Bitcoin.

679
01:04:14,990 --> 01:04:19,510
It was very interesting because one of the hosts was for it.

680
01:04:19,530 --> 01:04:20,470
I think that was McGinnis.

681
01:04:20,670 --> 01:04:23,070
One was kind of, yeah, I'm kind of for it.

682
01:04:23,090 --> 01:04:24,990
And one was kind of vaguely against it.

683
01:04:25,170 --> 01:04:28,530
But all of them had, they were good faith in their positions.

684
01:04:28,530 --> 01:04:31,470
It wasn't just a retread of the same bad arguments.

685
01:04:31,470 --> 01:04:40,830
Even the people that were kind of vaguely, you know, not against it, but kind of vaguely negative opinions, they had a deep understanding of Bitcoin.

686
01:04:40,970 --> 01:04:44,510
So, yeah, I just I would definitely check them out if you want to go deeper down this rabbit hole.

687
01:04:45,230 --> 01:04:46,390
One thing I'll go ahead.

688
01:04:47,510 --> 01:04:54,330
So one what are what were some of the arguments, if you remember, like, do you remember any of these?

689
01:04:54,330 --> 01:04:56,830
if it is a well thought out argument

690
01:04:56,830 --> 01:05:01,090
there's Nassim Taleb

691
01:05:01,090 --> 01:05:02,830
who's a very intelligent person

692
01:05:02,830 --> 01:05:05,170
who does not support Bitcoin

693
01:05:05,170 --> 01:05:07,150
there's another guy named Mike

694
01:05:07,150 --> 01:05:08,930
I think his name is Mike Green

695
01:05:08,930 --> 01:05:11,610
he's a really talented macroeconomist

696
01:05:11,610 --> 01:05:14,330
who also doesn't support Bitcoin

697
01:05:14,330 --> 01:05:15,550
but those are the only two

698
01:05:15,550 --> 01:05:17,950
I would say smart people

699
01:05:17,950 --> 01:05:19,630
who I think have looked at it

700
01:05:19,630 --> 01:05:22,590
that either don't get it

701
01:05:22,590 --> 01:05:23,610
or don't support it

702
01:05:23,610 --> 01:05:27,150
because I'm always interested to hear, obviously, and you and I both,

703
01:05:27,390 --> 01:05:34,510
we're invested in this thing, and therefore we more than anyone are interested in knowing how it doesn't work.

704
01:05:35,110 --> 01:05:38,170
Do you remember any of those reasons that they gave?

705
01:05:38,190 --> 01:05:43,390
This podcast was mainly centered around Bitcoin's effect in stabilizing energy grids,

706
01:05:43,570 --> 01:05:45,770
so not necessarily like, is it a good currency?

707
01:05:45,910 --> 01:05:48,890
Will it be a good global reserve asset or whatever?

708
01:05:48,890 --> 01:05:50,530
and I think

709
01:05:50,530 --> 01:05:54,970
yeah no I wouldn't want to say

710
01:05:54,970 --> 01:05:57,270
I wouldn't be able to restate the argument

711
01:05:57,270 --> 01:05:58,890
for or against right here

712
01:05:58,890 --> 01:06:00,510
but it was some that just didn't think that

713
01:06:00,510 --> 01:06:03,370
in that specific role it was going to play

714
01:06:03,370 --> 01:06:06,370
as maybe an emphatic role

715
01:06:06,370 --> 01:06:09,170
as a lot of Bitcoin oriented people

716
01:06:09,170 --> 01:06:11,870
think that it will play in stabilizing energy grids

717
01:06:11,870 --> 01:06:14,090
we do have one critique that

718
01:06:14,090 --> 01:06:17,030
McGinnis notes in this essay

719
01:06:17,030 --> 01:06:18,470
I'll read it

720
01:06:18,470 --> 01:06:24,770
It's on that Google Doc on page 5.

721
01:06:25,750 --> 01:06:31,170
So I'll read what McGinnis writes, and we can see what we think of this as an argument.

722
01:06:31,170 --> 01:06:31,670
He says,

723
01:06:31,670 --> 01:06:40,170
The counterpoint, however, is that fixed money supply, as Bitcoin has, introduces a new tyranny.

724
01:06:40,170 --> 01:06:49,810
The price of money will continue to rise against other goods and commodities, essentially turning savers into a landed aristocracy.

725
01:06:50,290 --> 01:06:57,830
As Bitcoin gets more expensive against other goods, it will be impossible to invest Bitcoin to create more Bitcoin given its fixed supply.

726
01:06:58,930 --> 01:07:06,510
It effectively says that savers do not need to reinvest their savings into the economy to continue receiving gain.

727
01:07:07,070 --> 01:07:12,490
If Bitcoin becomes too expensive against other goods and its price cannot be lowered through new supply,

728
01:07:12,490 --> 01:07:17,390
it will not be an effective medium for trade and market participants will turn away from it.

729
01:07:17,830 --> 01:07:23,170
This is a bit of a moot point as it is not an actionable perspective for decades as its transition takes place.

730
01:07:24,010 --> 01:07:31,130
Bitcoin functions as a deflationary force against the inflationary regime for now and is not yet a medium of exchange and trade.

731
01:07:31,130 --> 01:07:33,810
if Bitcoin doesn't course correct

732
01:07:33,810 --> 01:07:37,610
as it begins to be used for trade

733
01:07:37,610 --> 01:07:39,530
it will simply get too expensive

734
01:07:39,530 --> 01:07:42,710
so what do you think of that argument

735
01:07:42,710 --> 01:07:45,110
that there's a limited amount of it

736
01:07:45,110 --> 01:07:48,350
people save it, the value is going to keep on going up and up and up

737
01:07:48,350 --> 01:07:51,490
that maybe in any balance

738
01:07:51,490 --> 01:07:54,970
there's a balance between savers and lenders

739
01:07:54,970 --> 01:07:58,190
and that Bitcoin goes too far in the direction of saving

740
01:07:58,190 --> 01:08:03,810
because the cap, this thing you're saving is limited,

741
01:08:04,090 --> 01:08:06,850
and so it's going to keep on going up in value as more people want it.

742
01:08:07,730 --> 01:08:11,190
I think if you replace the words fixed money supply

743
01:08:11,190 --> 01:08:17,670
with some other asset like real estate or Google stock or whatever,

744
01:08:18,350 --> 01:08:24,270
then you can kind of take a look at this from a market dynamic perspective,

745
01:08:24,270 --> 01:08:43,630
which is simply to say that whenever an asset becomes too expensive for – whenever the asset's price exceeds its value, then the market corrects.

746
01:08:43,630 --> 01:08:55,010
And I think that this is, my critique of this critique is simply that it lacks a fundamental understanding of markets.

747
01:08:56,830 --> 01:09:01,390
I think that we see this in real estate.

748
01:09:01,390 --> 01:09:17,890
We see this in certain monetized assets because those monetized assets are very much controlled by the asset class, by the landed aristocracy.

749
01:09:17,890 --> 01:09:41,350
Bitcoin can't really be controlled in that manner to really corral the same plurality of a global asset,

750
01:09:41,350 --> 01:09:48,730
such as BlackRock has been able to do with real estate or financialized assets.

751
01:09:50,110 --> 01:09:52,890
It would be very difficult.

752
01:09:52,890 --> 01:09:55,870
What I'm just saying is, he says,

753
01:09:56,050 --> 01:09:58,350
if Bitcoin becomes too expensive against all other goods

754
01:09:58,350 --> 01:10:00,690
and its price cannot be lowered through new supply,

755
01:10:01,490 --> 01:10:04,550
well, if it comes too expensive against other goods,

756
01:10:04,650 --> 01:10:07,390
its price doesn't need to be lowered through new supply.

757
01:10:07,390 --> 01:10:14,010
its price gets lowered because those other goods then gain relative value for it.

758
01:10:16,070 --> 01:10:19,310
It's not like you're still going to eat.

759
01:10:19,790 --> 01:10:21,790
You're still going to watch a movie.

760
01:10:22,270 --> 01:10:24,270
You're still going to buy a pair of shoes.

761
01:10:26,030 --> 01:10:28,710
I think what this argument says is that,

762
01:10:28,970 --> 01:10:34,550
oh, Bitcoin is so valuable that I can't afford to buy a banana with it

763
01:10:34,550 --> 01:10:41,370
because the value that I get from the banana is not equivalent to the value that I'm trading for it.

764
01:10:42,210 --> 01:10:43,290
That's not true.

765
01:10:43,690 --> 01:10:45,030
Like, you need that thing.

766
01:10:45,730 --> 01:10:52,370
And so I guess I would just say that this, it just fails to recognize that in a free market,

767
01:10:52,370 --> 01:10:57,250
you have market signals, and those market signals are used to dictate the price.

768
01:10:58,670 --> 01:11:01,610
You know, the clearing point between buyer and seller.

769
01:11:01,610 --> 01:11:13,210
And so this to me does not seem like a well thought out critique, but I understand kind of what the point is.

770
01:11:14,210 --> 01:11:16,530
So there are, I guess, two things to that.

771
01:11:16,750 --> 01:11:24,750
One, I think we shouldn't underestimate how different Bitcoin is than any other asset class in being capped.

772
01:11:24,750 --> 01:11:34,370
So when you started off your explanation, you said if we substitute in for cap supply, real estate or these other things that don't have a cap supply for real estate, you know, you could build new houses.

773
01:11:34,830 --> 01:11:39,990
I mean, there's only so much beachfront property, but there's still a lot of housing capacity to be built and to be had.

774
01:11:40,710 --> 01:11:41,990
Well, and you can make beachfronts.

775
01:11:41,990 --> 01:11:42,330
There we go.

776
01:11:42,450 --> 01:11:42,830
There we go.

777
01:11:42,910 --> 01:11:43,070
Right.

778
01:11:43,410 --> 01:11:47,050
I'm moving to a man-created beachfront, right?

779
01:11:47,090 --> 01:11:47,250
Yeah.

780
01:11:47,250 --> 01:11:51,610
So it's just like if the price is right, you can make more beachfront.

781
01:11:51,610 --> 01:11:51,870
Yeah.

782
01:11:51,870 --> 01:12:06,430
No, and so, you know, sometimes I think Bitcoiners have a tendency to look with rosy colored glasses at the cap supply and think that all consequences of this can only be good.

783
01:12:07,030 --> 01:12:12,750
And I'm of the opinion that most of them will be good and in any case they will be better than the current system.

784
01:12:12,750 --> 01:12:19,550
But I think I'm very curious as to what the potential negative consequences will be.

785
01:12:19,550 --> 01:12:24,470
and I think there's a very suggestive phrase here that savers will be turned into a landed

786
01:12:24,470 --> 01:12:32,070
aristocracy um in that I mean sailors compared bitcoin to real estate um and the thing about an

787
01:12:32,070 --> 01:12:36,930
aristocracy is they don't have to have a corner on the market like and prevent new entrants they

788
01:12:36,930 --> 01:12:43,990
just have to have the most of it at any given time to like constitute a new social class that's just

789
01:12:43,990 --> 01:12:49,610
kind of a dimension different than others just based on the amount that they have if some people

790
01:12:49,610 --> 01:12:56,790
have a whole bitcoin or 10 bitcoin and other people have 700 sats you know that's quite a

791
01:12:56,790 --> 01:13:03,110
an inequality and you know we live in a very in a unequal system right now so i'm not this is in a

792
01:13:03,110 --> 01:13:07,650
defense of the current system but i don't think you have to defend the current system to also say

793
01:13:07,650 --> 01:13:13,090
there might be some bad aspects of a new system based on a cap supply as well.

794
01:13:14,450 --> 01:13:19,190
I would say that the Pareto principle is going to play out everywhere.

795
01:13:19,550 --> 01:13:26,710
We see it play out everywhere that 20% of the players in the NBA make 80% of the salary,

796
01:13:27,250 --> 01:13:30,870
that 20% of the race car drivers win 80% of the races,

797
01:13:31,310 --> 01:13:34,270
that 20% of the people have 80% of the children,

798
01:13:34,270 --> 01:13:37,370
that 20% of the men sleep with 80% of the women.

799
01:13:37,650 --> 01:13:42,970
The Pareto principle plays out across effectively everything.

800
01:13:43,670 --> 01:13:49,430
And so I don't think that we're going to see anything that displaces that.

801
01:13:50,110 --> 01:14:05,550
But we have, because of the manipulation of the monetary supply and the cancel on effect of people that are close to it gaining disproportionately from the creation of new money, we have gone past that.

802
01:14:05,550 --> 01:14:11,390
So we've gone way past the 20% having 80%.

803
01:14:11,390 --> 01:14:15,550
Now it's 1%, right, has 80%.

804
01:14:15,550 --> 01:14:20,350
And I do, I can't pull them up right now,

805
01:14:21,110 --> 01:14:25,630
but there are people that have shown,

806
01:14:26,270 --> 01:14:27,990
I would say very conclusively,

807
01:14:28,250 --> 01:14:31,810
that the distribution of wealth in the Bitcoin ecosystem

808
01:14:31,810 --> 01:14:36,330
is far more democratic, meritocratic, whatever you want to say.

809
01:14:36,330 --> 01:14:46,970
It's far closer to the Pareto guidelines, the Pareto distribution than the fiat system.

810
01:14:48,810 --> 01:14:52,170
I wanted to take that to a different direction, though.

811
01:14:52,650 --> 01:14:57,890
But in that sense, aren't the Pareto people, the 20% that's getting 80% on the fiat system

812
01:14:57,890 --> 01:15:00,270
are people that are exploiting the system,

813
01:15:00,350 --> 01:15:02,950
but also people that are making bold moves

814
01:15:02,950 --> 01:15:04,150
to make a lot of money,

815
01:15:04,350 --> 01:15:06,610
like the Elon Musk, the Bezos, and whatever.

816
01:15:07,090 --> 01:15:08,930
Whereas what he's saying here...

817
01:15:08,930 --> 01:15:09,210
What's that?

818
01:15:09,950 --> 01:15:11,490
Or the people that are adopting Bitcoin.

819
01:15:11,650 --> 01:15:12,950
Yeah, right.

820
01:15:12,950 --> 01:15:14,290
But on the Bitcoins,

821
01:15:14,470 --> 01:15:16,730
if in a hyper-Bitcoinized system,

822
01:15:16,810 --> 01:15:18,470
where Bitcoin is the global reserve currency,

823
01:15:19,110 --> 01:15:21,410
savers then become the landed aristocracy.

824
01:15:21,570 --> 01:15:23,370
People that save rather than spend,

825
01:15:23,570 --> 01:15:24,890
rather than people that venture

826
01:15:24,890 --> 01:15:27,410
to try to gain something new.

827
01:15:27,410 --> 01:15:30,310
Does that make sense? Like maybe saying there's a switch?

828
01:15:30,590 --> 01:15:41,670
Yeah, and I think – I mean I don't think that I'll get much argument if I say that savers being valued more than spenders is probably a good thing.

829
01:15:42,330 --> 01:15:47,570
Yeah, and I think so, but that's my thought naively.

830
01:15:47,570 --> 01:15:56,810
And they're modern monetary theory people, and I disagree with most of their presuppositions, but I think that they think innovation is driven by lending.

831
01:15:57,390 --> 01:16:01,010
And maybe – I don't know. I need to read. We need to read a book on that, I guess.

832
01:16:01,010 --> 01:16:24,190
No, that's a really, that's actually, that's like, I think that is the best argument for modern monetary theory is that what you essentially do is you steal capital from the future and you bring it into the present and you make it cheap enough that instead of 10 people being able to try something, a billion people can try something.

833
01:16:24,190 --> 01:16:37,010
And if one of those billion people gets it figured out and there's an asymmetric benefit to whatever it is that they discover, whatever it is that they create, then everybody benefits.

834
01:16:37,450 --> 01:16:50,330
The counter argument to that, though, is that when you do that, when you steal that capital from the future and you bring it into the present, you create a cost of capital that has to be overcome in the present.

835
01:16:50,330 --> 01:17:03,105
So it depending on who you talk to between say 7 and 12 per year that is your minimum cost of capital that you have to get over just to be able to stay in the exact same position

836
01:17:03,765 --> 01:17:10,265
And so what that does is that forces people into a certain path.

837
01:17:10,265 --> 01:17:15,985
The path then diverges from innovation to growth.

838
01:17:16,605 --> 01:17:20,965
That instead of trying to innovate on something that is uncertain,

839
01:17:20,965 --> 01:17:50,945
We don't know how long it's going to take. We don't know how much capital it's going to take. We just know that if we get this thing figured out, we will have an asymmetric benefit. That becomes a much less palatable option for people to pursue than to say cost of capital is 12%. We are currently making 15%. If we expand, if we grow, if we scale, then we'll be able to take advantage of economies of scale and we will be able to make 18%.

840
01:17:50,965 --> 01:18:10,105
Yeah. Right. So you can. So if it goes into the idea of like everything in moderation, but if some is good, more is better. That's kind of like the new that's kind of like the fiat mindset of pursuing growth instead of pursuing innovation.

841
01:18:10,105 --> 01:18:24,665
Yeah. And so, yeah, I think I think that is a great argument. I think that MMT argument is a great argument that you reach into the future and pull capital and you can use it now in order to potentially benefit the future.

842
01:18:24,665 --> 01:18:43,785
The problem is in practice, what happens is that people, because you then create this short-term mindset where the short-term is that we just have to get over this 12% hurdle every single year, then you go for the safe option.

843
01:18:43,785 --> 01:18:48,245
you go for the easy way out

844
01:18:48,245 --> 01:18:51,785
because it's easy to build another factory

845
01:18:51,785 --> 01:18:55,845
and make another 5% profit margin.

846
01:18:56,805 --> 01:19:04,565
What it's not easy to do is create a rocket engine

847
01:19:04,565 --> 01:19:08,025
based on a new type of physics that hasn't been understood yet.

848
01:19:08,245 --> 01:19:09,465
So I understand.

849
01:19:10,705 --> 01:19:13,085
Well, you go ahead because I've got a question for you.

850
01:19:13,085 --> 01:19:14,145
I'm going to wrap it up on that point.

851
01:19:14,765 --> 01:19:16,705
No, I've got a question for you.

852
01:19:16,765 --> 01:19:37,665
My question for you was, so before we started recording, you talked about how you had this realization that, you know what, I'm not really a Bitcoiner per se because we've been talking to these like super hardcore Bitcoin people that are really, really, really in depth to every aspect of it.

853
01:19:37,665 --> 01:19:55,785
But I'm curious if like reading about, basically you said that, you know, what I really think that I'm just like interested in being a generalist and looking at all these advances in different areas and kind of coalescing and bringing together how they come together.

854
01:19:55,985 --> 01:20:03,365
I'm curious, was like reading about the DER task force, was that kind of like, did that sort of push you in that direction?

855
01:20:03,485 --> 01:20:07,105
Because that, for me, I find that infinitely fascinating.

856
01:20:07,665 --> 01:20:19,165
And like the idea that everybody's going to become their own power plant, that they're going to supply their own, maybe not every single person, but to a large group.

857
01:20:19,745 --> 01:20:26,325
Like, was that something that sort of like, you're like, oh, this is really, really interesting and it's not really Bitcoin.

858
01:20:26,465 --> 01:20:27,865
Yeah, no, it's that.

859
01:20:28,045 --> 01:20:30,985
But in all the readings we've done, there have been things like that.

860
01:20:30,985 --> 01:20:34,685
In learning about Bitcoin in Africa, you learn about the future of Africa.

861
01:20:34,685 --> 01:20:40,565
in learning about Bitcoin as a power competition

862
01:20:40,565 --> 01:20:42,425
through network adoption.

863
01:20:42,665 --> 01:20:43,625
In Matthew Pine's essay,

864
01:20:43,705 --> 01:20:47,405
you learn about the importance of networks as such

865
01:20:47,405 --> 01:20:50,405
and the importance of having freedom-oriented networks.

866
01:20:50,585 --> 01:20:52,485
And these are ideas that go beyond Bitcoin.

867
01:20:52,825 --> 01:20:55,425
Bitcoin is an instantiation of a lot of the best principles

868
01:20:55,425 --> 01:20:56,485
related to these things,

869
01:20:56,485 --> 01:20:58,725
but it's only one technology.

870
01:20:59,005 --> 01:21:03,725
And it's fun because it's a technology

871
01:21:03,725 --> 01:21:09,085
that deals with money, which is a very social technology that has lots of downstream consequences

872
01:21:09,085 --> 01:21:12,905
for how society is organized and human behavior.

873
01:21:13,085 --> 01:21:17,965
So it's fun to look at all of the necessary and interesting and all these things to look

874
01:21:17,965 --> 01:21:19,625
at all the consequences of Bitcoin.

875
01:21:20,445 --> 01:21:26,065
But yeah, no, I enjoy Bitcoin because it opens the door to a lot of other interesting things

876
01:21:26,065 --> 01:21:28,425
that you otherwise maybe would not have exposure to.

877
01:21:28,965 --> 01:21:32,865
And I hope that people listening to these conversations also have that, that these are

878
01:21:32,865 --> 01:21:40,645
not Bitcoin or conversations about the how amazing Bitcoin is, but about, you know, how

879
01:21:40,645 --> 01:21:47,625
people with a lot of very educated and diverse perspectives outside of Bitcoin are saying

880
01:21:47,625 --> 01:21:51,525
interesting things about Bitcoin and how if you're interested in Bitcoin, you can now

881
01:21:51,525 --> 01:21:57,285
learn about these other worlds that touch upon it because Bitcoin is going to, as emerging

882
01:21:57,285 --> 01:22:06,245
technologies do transform a lot, if not every existing industry or academic domain in some way

883
01:22:06,245 --> 01:22:10,825
have some sort of effect. And it's, it's all connected. And that's why it's very interesting

884
01:22:10,825 --> 01:22:16,705
to think about Bitcoin in the context of everything else. But yeah, my perspective is not as a

885
01:22:16,705 --> 01:22:22,205
Bitcoiner, but as somebody who is interested in Bitcoin, because they're generally interested in

886
01:22:22,205 --> 01:22:28,385
everything i guess yeah well the you know the the trope is that bitcoin fixes this but

887
01:22:28,385 --> 01:22:36,545
bitcoin doesn't fix this unless people fix this yeah right so it may be bitcoin enables somebody

888
01:22:36,545 --> 01:22:41,085
to do something different but you still have to do that thing you still have to move in that

889
01:22:41,085 --> 01:22:48,045
direction and so and the other thing about um being a bitliner um or being you know just

890
01:22:48,045 --> 01:22:52,565
it's so easy. All you have to do is buy Bitcoin and then you're done.

891
01:22:53,865 --> 01:22:57,345
There's no, you don't have to get a PhD. You don't have to build

892
01:22:57,345 --> 01:23:02,205
a solar generator in your home. You don't have to learn how to use

893
01:23:02,205 --> 01:23:06,605
AutoCAD or anything like that. You just buy Bitcoin and you're done. And to be honest,

894
01:23:06,605 --> 01:23:10,725
yeah, you're right. It opens

895
01:23:10,725 --> 01:23:14,845
the door to all of those things, but I think there are a lot of people that are standing,

896
01:23:14,845 --> 01:23:19,385
you know they open that door and they stand there and they just look in as opposed to walking in

897
01:23:19,385 --> 01:23:26,045
and going and taking a look at um not only what the future looks like but how does the future

898
01:23:26,045 --> 01:23:31,805
look in their mind that they want to create so i yeah i think that was a really perceptive thing

899
01:23:31,805 --> 01:23:42,325
to pull out um that we are we're just entering an era i think of higher agency uh that is enabled by

900
01:23:42,325 --> 01:23:53,865
this novel technology, Bitcoin, that removes the need for every person to be something and

901
01:23:53,865 --> 01:24:01,505
an asset manager, a teacher and an asset manager, a personal coach and an asset manager, where

902
01:24:01,845 --> 01:24:08,525
the decision is easy. You just buy this thing. It's the most valuable thing. It's the best thing.

903
01:24:08,525 --> 01:24:12,305
If it stops being the best thing, buy the thing that is the best thing.

904
01:24:13,325 --> 01:24:21,465
But right now, we live in this world where most of the world, you can't tell what the best.

905
01:24:21,505 --> 01:24:29,005
If you remove Bitcoin from the equation, you can't tell what the best thing is because the market signals are so muddied.

906
01:24:29,005 --> 01:24:40,285
They're so distorted by printing of money, by manipulation of markets, by price ceilings and price floors and lobbying and all kinds of things.

907
01:24:40,745 --> 01:24:43,525
It's difficult to find the best thing.

908
01:24:43,725 --> 01:24:46,625
And the truth is that there is not a clear best thing.

909
01:24:46,805 --> 01:24:50,885
There are things that are better at this time than they are at other times.

910
01:24:51,005 --> 01:24:56,685
And so you constantly have to be managing your own finances in order to just stay afloat.

911
01:24:56,685 --> 01:25:12,505
So if you remove that obligation from everybody, then you do allow them, I think, to flourish in whatever they're chosen, whatever their true perspective on life is and move forward into that.

912
01:25:12,505 --> 01:25:13,965
So, yeah, I think.

913
01:25:14,325 --> 01:25:21,805
No, on a related point that we don't know what in any given sphere of what the new technological paradigm is going to look like.

914
01:25:22,145 --> 01:25:35,245
I mean, that is an aspect of this essay, this essay where McGinnis is making a prediction that we're going to enter an electro dollar paradigm with plummeting costs of electricity driven by cheap renewable sources.

915
01:25:35,245 --> 01:25:37,345
So I made a note of this.

916
01:25:37,425 --> 01:25:41,865
I wanted to bring this up that he that McGinnis does.

917
01:25:41,865 --> 01:25:49,925
So a lot of people are really bullish on nuclear energy, and especially within Twitter circles that tend to be pro-Bitcoin.

918
01:25:50,425 --> 01:25:54,165
And so I wanted to read something that McGinnis wrote to kind of acknowledge this.

919
01:25:54,245 --> 01:26:00,925
He says, while we should be funding SMR and that small module reactor nuclear deployments,

920
01:26:01,405 --> 01:26:06,185
there is a strange phenomenon in the tech community that believes nuclear,

921
01:26:06,185 --> 01:26:10,045
which has only seen costs increase over the following decade,

922
01:26:10,445 --> 01:26:12,765
is somehow superior to solar, wind, and batteries,

923
01:26:12,765 --> 01:26:15,865
which has seen one of the most drastic reductions in costs

924
01:26:15,865 --> 01:26:18,345
that continues of any technology in modern history.

925
01:26:18,825 --> 01:26:21,645
The growth rate should make any tech investor's eyes pops,

926
01:26:22,305 --> 01:26:25,285
and it is discussed at length in Sung-Hoo's excellent piece,

927
01:26:25,325 --> 01:26:29,725
and that piece is the Clean Energy Transition Guide by Sung-Soo,

928
01:26:29,725 --> 01:26:32,405
T-S-U-N-G-X-U.

929
01:26:32,405 --> 01:26:37,865
at, he's got a, maybe we can have a link to this if you remember to do it, at a substack.

930
01:26:38,405 --> 01:26:43,905
And we have, I mean, maybe he doesn't, wouldn't repay the effort to do it, but I did have a

931
01:26:43,905 --> 01:26:48,985
couple of charts in that Google document. And what they just show is what McGinnis describes

932
01:26:48,985 --> 01:26:54,245
here, that solar and wind, the cost of solar and wind energy is declining. It doesn't really say

933
01:26:54,245 --> 01:26:58,765
anything about nuclear power, but that's what he's reporting here, that nuclear power energy

934
01:26:58,765 --> 01:27:00,705
has increased in cost.

935
01:27:01,345 --> 01:27:02,085
So this, I mean,

936
01:27:02,385 --> 01:27:03,825
I just want to note that asterisk.

937
01:27:03,945 --> 01:27:05,365
I think some people are strong proponents

938
01:27:05,365 --> 01:27:06,325
of nuclear energy.

939
01:27:06,605 --> 01:27:09,505
This piece does really go hard

940
01:27:09,505 --> 01:27:10,885
for solar and wind.

941
01:27:11,265 --> 01:27:12,085
If you're skeptical,

942
01:27:12,565 --> 01:27:15,445
I would read this piece and also read,

943
01:27:15,585 --> 01:27:17,605
I started reading that piece by Sung Tzu

944
01:27:17,605 --> 01:27:20,825
and he definitely does make a very strong,

945
01:27:20,825 --> 01:27:22,425
the most bullish case you can imagine

946
01:27:22,425 --> 01:27:24,705
for wind and solar energy,

947
01:27:25,225 --> 01:27:26,725
even acknowledging the strength

948
01:27:26,725 --> 01:27:28,565
of nuclear energy going into the future.

949
01:27:28,565 --> 01:27:30,485
So definitely worth a read if you're interested in that.

950
01:27:31,785 --> 01:27:32,245
Yeah, so here's the...

951
01:27:32,245 --> 01:27:32,905
There it is, yeah.

952
01:27:33,645 --> 01:27:44,005
So, tsungxu.com, and then you'll be able to find a guide to the energy transition.

953
01:27:46,445 --> 01:27:48,305
But you've got to...

954
01:27:48,305 --> 01:27:51,565
Yeah, I mean, it is fascinating to see that...

955
01:27:52,165 --> 01:27:55,285
This is something that I was actually very unaware of,

956
01:27:55,285 --> 01:28:02,405
was that the advancement of battery technology is progressing very fast.

957
01:28:03,685 --> 01:28:07,285
A close, fairly, fairly modeling Moore's law.

958
01:28:08,045 --> 01:28:14,185
And so, yeah, we are at this crossover point, at this tip over point,

959
01:28:14,185 --> 01:28:23,825
where the cost of building batteries to store electricity is equal to utilizing fossil fuels to power things.

960
01:28:23,825 --> 01:28:36,965
And it's only getting cheaper. And so, yeah, we're in this great crossover point where, you know, here, you know, cost fall and cost fall and performance improves.

961
01:28:37,105 --> 01:28:40,805
And so we deploy more and it just goes around and around and around and around.

962
01:28:40,925 --> 01:28:46,045
And that drives the cost down. It drives the deployment up and that drives the performance up.

963
01:28:46,125 --> 01:28:52,685
And so, yeah, it's a it's a self-reinforcing cycle that really has a dramatic effect.

964
01:28:52,685 --> 01:29:01,165
There's another part in that essay. He notes another part in that positive feedback loop where the deploy more and create more or whatever, or deploy more, cost drop.

965
01:29:01,285 --> 01:29:07,225
There's also deploy more. We develop new technologies in that loop too, and the new technologies cause the price to drop.

966
01:29:07,225 --> 01:29:20,545
But in any case, throughout the essay, he talks about that, that each energy transition revolution has led to the development of new technologies that were not foreseen when we went down the road of entering into that.

967
01:29:20,545 --> 01:29:39,425
Like with coal power, we got the steam engine because when we switched from wood to coal, we got the steam engine because they created this steam powered way to pump the water out of coal mines because people were drowning when they were trying to mine coal in these mines.

968
01:29:40,045 --> 01:29:44,785
And so the initial development of the steam engine was just to enable more coal mining.

969
01:29:44,785 --> 01:29:50,945
But then obviously it has this huge impact in transporting coal and then even beyond that and powering boats and things like that.

970
01:29:50,945 --> 01:29:58,845
And then becoming the dominant cheap transportation.

971
01:29:59,425 --> 01:30:03,785
It's like steam-powered trains and steam-powered ships.

972
01:30:04,585 --> 01:30:12,945
One of the things that I thought was interesting here was I had been probably very much leaning more towards the nuclear side

973
01:30:12,945 --> 01:30:18,265
just because of the returns of energy.

974
01:30:18,265 --> 01:30:27,545
you know you you get a lot for what you put in and mcginnis makes a you know he presents this

975
01:30:27,545 --> 01:30:35,425
argument that i'd never really considered which is that you know the wind and the solar have a lot

976
01:30:35,425 --> 01:30:44,205
of gains yet to come that will make it very competitive against nuclear and especially if

977
01:30:44,205 --> 01:30:50,845
you consider trade-offs now there you know there's obviously the other types of trade-offs where like

978
01:30:50,845 --> 01:30:57,865
um you know giant wind turbine generators terrible for the environment like we we know this now we're

979
01:30:57,865 --> 01:31:06,005
aware of this um they disrupt the local ecosystem um they uh you know they they've seen like off

980
01:31:06,005 --> 01:31:12,465
when they put them offshore whales for some reason start dying in the area if you have them on land

981
01:31:12,465 --> 01:31:17,985
And then at the base of the tower is just carcasses of dead birds everywhere.

982
01:31:19,365 --> 01:31:22,025
And it truly does change the ecosystem.

983
01:31:22,885 --> 01:31:27,645
Obviously, with solar panels, there are environmental concerns as well.

984
01:31:28,905 --> 01:31:33,645
And so nothing, you know, everything has a tradeoff.

985
01:31:33,645 --> 01:31:45,025
But this essay framed to me, it made wind and solar a much more competitive thought in my mind than they had been previously.

986
01:31:45,885 --> 01:32:00,825
And yeah, it's interesting to think about it that way, where the technology is right there for us to have a wind or a solar power generation plant at our home.

987
01:32:00,825 --> 01:32:05,085
it's not there yet to have a nuclear generation plant at our home.

988
01:32:05,865 --> 01:32:11,065
And yeah, that's, he brings up a really good point there that I think is,

989
01:32:11,165 --> 01:32:14,445
I think is something that you're right.

990
01:32:14,545 --> 01:32:18,025
Like a lot of people, I would say on the, on the X platform,

991
01:32:18,765 --> 01:32:24,085
they lean more towards, let's just put these small nuclear reactors everywhere

992
01:32:24,085 --> 01:32:27,185
and let's take care of everything.

993
01:32:27,185 --> 01:32:30,285
China is building like a hundred of them right now, I think.

994
01:32:30,825 --> 01:32:35,105
So, yeah, it just presents a new take on that.

995
01:32:36,185 --> 01:32:44,325
McGinnis has, he really does, he does a good job of presenting some novel thoughts, or maybe not novel to other people, but definitely novel to me.

996
01:32:44,325 --> 01:32:56,785
Maybe Bitcoiners, by ideology, if you are in Bitcoin because of the ideology, should incline towards solar and wind because it is decentralized in a way that nuclear reactors, again, that's the centralization of an energy resource.

997
01:32:57,145 --> 01:33:01,545
And energy is what powers the Bitcoin network and gives it its security.

998
01:33:01,925 --> 01:33:09,465
So, yeah, people may want to think about that, too, when they choose an ideological affiliation to a source of energy.

999
01:33:09,465 --> 01:33:15,565
yeah and that that sort of that that triffin dilemma type thing applies applies there too where

1000
01:33:15,565 --> 01:33:21,385
um you know on the surface it looks like we're getting cheap goods from other countries but the

1001
01:33:21,385 --> 01:33:28,265
true cost is the loss of our ability to be um anti-fragile of our ability to be resilient and

1002
01:33:28,265 --> 01:33:35,505
so um that may be the exact same argument that comes with nuclear where you could you could have

1003
01:33:35,505 --> 01:33:42,485
super super cheap energy but you're um still dependent upon somebody else and the cost of

1004
01:33:42,485 --> 01:33:49,445
being dependent upon somebody else is not known until that dependency is challenged yeah trusted

1005
01:33:49,445 --> 01:33:55,285
counterparties when can you not trust them so yeah yeah that brings us to the last thesis here

1006
01:33:55,285 --> 01:34:04,445
talking about um the importance of solar energy and who controls your energy supply that what is

1007
01:34:04,445 --> 01:34:06,525
the role of China as a

1008
01:34:06,525 --> 01:34:08,545
potential strategic threat

1009
01:34:08,545 --> 01:34:10,425
because it is dominant

1010
01:34:10,425 --> 01:34:12,285
in solar and battery supply chains

1011
01:34:12,285 --> 01:34:14,445
which could give a dominance in the age of the

1012
01:34:14,445 --> 01:34:16,385
electrons. So yeah, go down on that last

1013
01:34:16,385 --> 01:34:18,345
chart there. This is something

1014
01:34:18,345 --> 01:34:19,785
I knew nothing about. So

1015
01:34:19,785 --> 01:34:21,565
CATL

1016
01:34:21,565 --> 01:34:24,145
is a

1017
01:34:24,145 --> 01:34:26,085
Chinese company that produces

1018
01:34:26,085 --> 01:34:27,865
lithium ion

1019
01:34:27,865 --> 01:34:30,065
batteries and they

1020
01:34:30,065 --> 01:34:32,105
have had, according to, I'll just

1021
01:34:32,105 --> 01:34:34,285
read, Chinese

1022
01:34:34,285 --> 01:34:38,885
He's CATL, a battery manufacturer, dwarfs our tech giants in growth rates.

1023
01:34:39,425 --> 01:34:41,825
And so, Lucas, you're better at understanding graphs.

1024
01:34:41,925 --> 01:34:45,645
I just see numbers and lines, and things are bigger than other things.

1025
01:34:45,765 --> 01:34:47,065
Can you interpret this graph?

1026
01:34:48,565 --> 01:34:49,125
Okay.

1027
01:34:49,645 --> 01:34:54,925
The thing to draw out, I think, is, so take note of what he puts here,

1028
01:34:54,925 --> 01:35:01,965
is that CATL is likely the fastest-growing 10-year-old company ever at scale.

1029
01:35:01,965 --> 01:35:06,365
So at scale is going to be a subjective thing.

1030
01:35:07,325 --> 01:35:14,685
So what we're looking at is we are looking at annual revenue growth in the 10th year,

1031
01:35:15,265 --> 01:35:20,405
so the 10th year, and revenue during the 10th year.

1032
01:35:20,765 --> 01:35:29,365
So one of those things is going to be basically how much have you grown on average over those 10 years

1033
01:35:29,365 --> 01:35:42,185
And then how much are you currently growing? Because, you know, it's you're going to slow down like you're you're you're obviously going to slow down because you can't grow at 100 percent every year.

1034
01:35:42,625 --> 01:35:47,565
I mean, you can, but that's exponential and that becomes exponentially more difficult to do.

1035
01:35:47,565 --> 01:35:53,005
But the interesting thing here is that look at the comparison of these companies.

1036
01:35:53,225 --> 01:35:57,245
These are the world's most profitable, largest companies.

1037
01:35:57,405 --> 01:36:06,065
Google, Amazon, AWS, which is a branch of Amazon, Amazon Web Services, Facebook, now Meta, and then Stripe.

1038
01:36:06,205 --> 01:36:13,125
And so when we look at these over their first 10 years, what is their annual revenue growth?

1039
01:36:13,125 --> 01:36:25,025
So the annual revenue growth is – wait, what am I – yeah, I'm trying to decide.

1040
01:36:25,165 --> 01:36:29,985
So like CATL is at 125% annual revenue growth in its 10th year.

1041
01:36:29,985 --> 01:36:30,625
Annual, yeah.

1042
01:36:31,065 --> 01:36:31,625
And then –

1043
01:36:31,625 --> 01:36:36,885
Yeah, I was trying to determine what's the axis over here for.

1044
01:36:36,885 --> 01:36:39,365
That's for marking the revenue during their 10th year.

1045
01:36:39,645 --> 01:36:40,425
That's the total revenue.

1046
01:36:40,425 --> 01:36:47,825
Yeah, the revenue during their 10th year has those orange box, spades, or diamond structures.

1047
01:36:48,185 --> 01:36:52,425
And so you have both the annual revenue growth in green and the revenue during the 10th year.

1048
01:36:54,485 --> 01:36:56,605
So the green is relative.

1049
01:36:57,085 --> 01:36:58,425
That's the percentage.

1050
01:36:58,665 --> 01:37:00,085
The green is the relative growth.

1051
01:37:00,645 --> 01:37:07,685
And then the yellow diamond is the nominal growth or it's the objective.

1052
01:37:07,685 --> 01:37:09,565
The actual revenue, like the revenue during.

1053
01:37:09,565 --> 01:37:18,605
Yeah, so during the 10th year, the only company that has grown more during their 10th year would be Google.

1054
01:37:18,605 --> 01:37:20,605
But they haven't grown more. They had more revenue.

1055
01:37:21,305 --> 01:37:26,125
Sorry, they had more revenue. Yeah, you're right. They had more revenue. Exactly. They had more revenue.

1056
01:37:27,505 --> 01:37:29,025
But the revenue grows.

1057
01:37:29,025 --> 01:37:33,285
So Google is the only company that had more revenue than CATL in its 10th year of operation.

1058
01:37:33,285 --> 01:37:40,645
And CATL had more revenue than Stripe, Facebook, Amazon Web Services, and Amazon, a company I'd never heard about in my life.

1059
01:37:41,245 --> 01:37:42,185
Yeah, exactly.

1060
01:37:42,765 --> 01:37:45,065
Yeah, and the growth rate is absurd.

1061
01:37:45,585 --> 01:37:56,525
So, you know, if you look at this, the difference between CATL and Stripe is the growth rate difference is about a little over 50%.

1062
01:37:56,525 --> 01:38:02,525
So Stripe is like average annualized growth rate of, it looks like about 70%.

1063
01:38:03,225 --> 01:38:07,985
CATL is, for all means and purposes, about 125%.

1064
01:38:07,985 --> 01:38:12,025
So the difference between those two, the first and the second,

1065
01:38:12,425 --> 01:38:16,885
is greater than the difference between Stripe and Google.

1066
01:38:17,465 --> 01:38:20,305
Like the second and the sixth here.

1067
01:38:20,565 --> 01:38:24,605
So a massive, massive outperformer.

1068
01:38:24,605 --> 01:38:30,245
And this is a hardware company, right?

1069
01:38:30,345 --> 01:38:32,605
So this is something that they...

1070
01:38:33,365 --> 01:38:38,605
One of the things that I have found in looking at markets is that...

1071
01:38:38,605 --> 01:38:41,485
This is intuitive, I think.

1072
01:38:41,565 --> 01:38:42,945
It's not like a great revelation.

1073
01:38:43,505 --> 01:38:51,225
But if you're involved in hardware, you have a greater moat against your competitors than if you're a software company.

1074
01:38:51,225 --> 01:38:54,185
because you don't have to go through,

1075
01:38:54,305 --> 01:38:55,245
if you're a software company,

1076
01:38:55,345 --> 01:38:57,185
you don't have to go through the physical side

1077
01:38:57,185 --> 01:38:58,945
of mastering production.

1078
01:38:59,265 --> 01:39:02,305
You only have to go through the virtual side.

1079
01:39:02,305 --> 01:39:05,265
There is, though, with software that are like social networks.

1080
01:39:05,365 --> 01:39:07,465
You have the network effect, which is quite a moat.

1081
01:39:07,565 --> 01:39:07,745
Yes.

1082
01:39:08,065 --> 01:39:09,085
But I see what you're saying.

1083
01:39:09,185 --> 01:39:11,685
Like hardware is different than software

1084
01:39:11,685 --> 01:39:13,925
in that you have to have real-world infrastructure

1085
01:39:13,925 --> 01:39:15,905
to build these things, which is quite the moat.

1086
01:39:15,905 --> 01:39:17,425
Yeah, all the factories and stuff.

1087
01:39:18,725 --> 01:39:18,825
Yeah.

1088
01:39:19,025 --> 01:39:21,065
Yeah, that actually,

1089
01:39:21,225 --> 01:39:22,305
I didn't see that chart.

1090
01:39:22,585 --> 01:39:25,305
I missed that chart until you said this.

1091
01:39:25,305 --> 01:39:26,745
This was a really small one.

1092
01:39:27,945 --> 01:39:31,765
This is actually, Sing Su also had this in his essay.

1093
01:39:31,885 --> 01:39:34,205
So I had to go to his essay to pull out a high-quality one.

1094
01:39:34,365 --> 01:39:38,305
It's printed in the essay in the printed book, but it's very small and easy to miss.

1095
01:39:38,305 --> 01:39:50,305
So there's another one that shows, I think, that CATL essentially has like 35% to 39% of global lithium-ion battery production supply.

1096
01:39:50,305 --> 01:39:55,485
supply like it's that's it's how much it's producing and again like lithium-ion batteries

1097
01:39:55,485 --> 01:40:00,845
i also didn't hadn't reflected before on how immensely important this has been this is a

1098
01:40:00,845 --> 01:40:09,105
technology that is only like 30 years old and yet you know smartphones and which in and of itself

1099
01:40:09,105 --> 01:40:13,125
the fact that they're powering smartphones would be enough potentially but like these lithium-ion

1100
01:40:13,125 --> 01:40:18,125
batteries are in everything now that is like electrical that we use on a daily basis it seems

1101
01:40:18,125 --> 01:40:25,045
yeah it's it's enabling the electric car revolution and everything like you know everything that is

1102
01:40:25,045 --> 01:40:30,925
portable and electric basically um yeah massive effect power tools think about guys you know like

1103
01:40:30,925 --> 01:40:38,465
the difference nobody nobody ever had portable electric power tools until lithium batteries

1104
01:40:38,465 --> 01:40:44,325
came along and you you know then you didn't have to have you know if you wanted to be portable

1105
01:40:44,325 --> 01:40:49,305
before that you had to have a gas or a diesel powered generator and you had to have your cord

1106
01:40:49,305 --> 01:40:55,365
and plug into it and carry all that and now you just have just a little a little little battery

1107
01:40:55,365 --> 01:41:01,305
that you plug in so yeah it's um yeah those knock-on effects are insane like what what what

1108
01:41:01,305 --> 01:41:06,865
that does to the rest of the world yeah in terms of easier to navigate yeah and so the the again

1109
01:41:06,865 --> 01:41:11,285
the key point is that that's the lithium-ion battery is key to the age of the electron and

1110
01:41:11,285 --> 01:41:14,345
the production of that is predominantly taking place in China.

1111
01:41:14,505 --> 01:41:18,845
So if the United States wants to position itself well to enter the age of the

1112
01:41:18,845 --> 01:41:19,205
electron,

1113
01:41:19,765 --> 01:41:25,165
it needs to reshore or friendly shore that battery and solar panel production

1114
01:41:25,165 --> 01:41:25,805
capacity.

1115
01:41:26,805 --> 01:41:27,325
Yep.

1116
01:41:27,865 --> 01:41:28,265
Absolutely.

1117
01:41:28,985 --> 01:41:29,385
What do you think?

1118
01:41:29,385 --> 01:41:30,925
That's all I got.

1119
01:41:31,065 --> 01:41:33,985
I thought this was an incredibly fascinating essay for all the reasons we

1120
01:41:33,985 --> 01:41:34,665
previously mentioned,

1121
01:41:34,865 --> 01:41:35,265
but yeah,

1122
01:41:35,305 --> 01:41:36,085
it's really cool.

1123
01:41:36,245 --> 01:41:37,965
I encourage everybody to check this one out.

1124
01:41:37,965 --> 01:41:47,305
It's going to deepen your knowledge of not just Bitcoin, but of maybe a coming generational shift regarding the type of energy we use.

1125
01:41:48,505 --> 01:41:51,805
Yep. James McGinnis of the DER Task Force.

1126
01:41:53,165 --> 01:41:55,345
Just check him out. Looks very cool.

1127
01:41:55,345 --> 01:42:03,225
A different take, a more real world application.

1128
01:42:03,225 --> 01:42:11,625
These are people that are really, I would say, moving the needle when it comes to making positive change.

1129
01:42:11,925 --> 01:42:16,525
So, yeah, fantastic. Great talk. And we'll be back soon. Later.

1130
01:42:33,225 --> 01:42:35,425
again, which would be wonderful. Thanks.