1
00:00:00,000 --> 00:00:08,720
Bitcoin mining and AI are both technological waves that are running into like atoms problems.

2
00:00:09,220 --> 00:00:14,100
Bitcoin has always existed at the edges. It adapts to the new era and the new narrative

3
00:00:14,100 --> 00:00:19,880
and the new thing. What you have with Bitcoin is you have a liquid global permissionless asset

4
00:00:19,880 --> 00:00:25,820
that trades 24-7 that has upside optionality. You use that appreciating currency to borrow

5
00:00:25,820 --> 00:00:27,120
in a depreciating currency.

6
00:00:27,520 --> 00:00:28,960
You use that depreciating currency

7
00:00:28,960 --> 00:00:30,820
to go get assets that are going to appreciate.

8
00:00:31,120 --> 00:00:33,660
We've been through multiple liquidation cycles.

9
00:00:33,760 --> 00:00:35,380
We have institutional trading infrastructure.

10
00:00:35,720 --> 00:00:37,140
We have banks that are getting involved.

11
00:00:37,140 --> 00:00:38,580
The liquidity profile

12
00:00:38,580 --> 00:00:41,120
of the collateral liquidation mechanism

13
00:00:41,120 --> 00:00:44,320
is as close to seamless and lossless

14
00:00:44,320 --> 00:00:47,840
as we've ever seen any market for credit ever.

15
00:00:50,780 --> 00:00:51,720
We're back together.

16
00:00:51,860 --> 00:00:52,960
The band is back together.

17
00:00:53,320 --> 00:00:55,700
Rory, you've not been on What Bitcoin Did Before.

18
00:00:55,820 --> 00:00:56,620
I have not.

19
00:00:56,700 --> 00:00:57,920
It's my first time.

20
00:00:57,980 --> 00:00:58,880
I appreciate you having me.

21
00:00:59,000 --> 00:01:01,080
We did the Patreon in New York.

22
00:01:01,380 --> 00:01:03,020
That was pure gold.

23
00:01:04,000 --> 00:01:06,260
Still to this day, one of my favorite tapes.

24
00:01:06,740 --> 00:01:08,760
It's no longer available because we don't have a Patreon,

25
00:01:08,900 --> 00:01:10,980
but I think that might be one of the favorite things

26
00:01:10,980 --> 00:01:11,840
we've ever recorded.

27
00:01:12,180 --> 00:01:16,000
I mean, it was just four dudes just having a good time.

28
00:01:16,020 --> 00:01:16,300
Thigh to thigh.

29
00:01:16,680 --> 00:01:18,320
We were very much thigh to thigh.

30
00:01:18,340 --> 00:01:20,780
I need to dig that out and release it again.

31
00:01:21,560 --> 00:01:22,620
That is an option.

32
00:01:23,040 --> 00:01:23,780
I should do that.

33
00:01:23,780 --> 00:01:25,540
Not doing that is also an option.

34
00:01:25,820 --> 00:01:29,180
Rory, introduce yourself because people won't know exactly who you are.

35
00:01:29,360 --> 00:01:31,940
Yeah, again, thanks for having me on.

36
00:01:32,080 --> 00:01:34,220
I know that we've been kind of talking for years.

37
00:01:34,300 --> 00:01:40,500
We've been in the same spaces and I really appreciate what you've built and what you bring to the space.

38
00:01:40,740 --> 00:01:41,720
So I'm Rory Murray.

39
00:01:42,080 --> 00:01:44,600
I'm the VP of Digital Asset Management at CleanSpark.

40
00:01:45,120 --> 00:01:49,660
What that means is basically anything that touches the Bitcoin treasury is kind of in our mandate and our group.

41
00:01:49,660 --> 00:01:55,740
so you know we manage everything from kind of the custody relationships day-to-day movements

42
00:01:55,740 --> 00:02:01,660
any bitcoin payments that we make but it's also we we manage our spot sales program so obviously

43
00:02:01,660 --> 00:02:07,380
we have you know called 500 to 600 bitcoin a month that we produce we might sell some or all

44
00:02:07,380 --> 00:02:11,940
of that depending on what kind of our posture is on opex and capex needs we manage that we manage

45
00:02:11,940 --> 00:02:16,420
that we run a derivatives overlay on that we split across kind of two different strategies what we

46
00:02:16,420 --> 00:02:20,960
call our spot plus, which is meant to enhance the total returns on that spot sales program.

47
00:02:21,060 --> 00:02:25,240
And then the yield program, which is meant to generate what we expect to be reasonably

48
00:02:25,240 --> 00:02:31,780
durable ongoing yield from our hodl by taking advantage of volatility in the derivatives

49
00:02:31,780 --> 00:02:32,220
markets.

50
00:02:32,740 --> 00:02:36,680
And then kind of anything, if we do our Bitcoin back lines of credit, we tend to run the RFPs

51
00:02:36,680 --> 00:02:37,640
and manage that process.

52
00:02:37,740 --> 00:02:38,940
Obviously, that will go upstairs.

53
00:02:39,820 --> 00:02:41,960
And all of this stuff, to be clear, will go upstairs.

54
00:02:42,020 --> 00:02:44,100
But on the day-to-day side, that's kind of what we do.

55
00:02:44,100 --> 00:02:46,700
So I want to get into all of that like treasury management side.

56
00:02:46,800 --> 00:02:52,120
But before we do that, everyone I speak to now when mining comes up wants to know what's happening with AI.

57
00:02:52,440 --> 00:03:00,680
Because so many of the Bitcoin miners, the big public companies in this country, have moved either entirely to AI or at least making that part of their stack.

58
00:03:01,560 --> 00:03:04,800
Like maybe tell me from your perspective how you see the market changing.

59
00:03:04,960 --> 00:03:06,040
Maybe, Harry, you start.

60
00:03:06,040 --> 00:03:13,900
So the reason that you're seeing a proliferation of AI as part of the mining strategy is because

61
00:03:13,900 --> 00:03:17,160
there are actually megawatts that are better suited for AI compute workloads.

62
00:03:17,580 --> 00:03:20,300
And there are other megawatts that are better suited for mining.

63
00:03:20,680 --> 00:03:25,240
And there are a third category of megawatts that I think deserve to have a combination

64
00:03:25,240 --> 00:03:27,680
of both workloads installed against them.

65
00:03:27,880 --> 00:03:33,000
So that's from a very operational perspective, how I think the sector is thinking about it.

66
00:03:33,000 --> 00:03:48,060
The other is that from a durability of cash flow and therefore multiple expansion, the market is willing to value equities that have AI revenues at a significantly higher premium than mining revenues.

67
00:03:48,220 --> 00:03:51,400
And that's the most interesting part to me because we've seen what happens.

68
00:03:51,640 --> 00:03:53,760
Iron share price has gone crazy.

69
00:03:54,180 --> 00:03:56,780
And they have not even just added AI to their stack.

70
00:03:56,860 --> 00:03:58,360
They're trying to move entirely away from Bitcoin.

71
00:03:58,360 --> 00:04:07,600
And it's the first time that I remember in the last, like, I don't know, seven, eight, nine, ten years, however long, that Bitcoin mining hasn't been like the exciting new thing in energy.

72
00:04:08,240 --> 00:04:10,580
And does that have any impact on Bitcoin mining?

73
00:04:10,860 --> 00:04:11,920
Any negative impact?

74
00:04:13,060 --> 00:04:14,140
Well, I just think it's wrong.

75
00:04:14,400 --> 00:04:20,380
Like, I don't think AI is competing for the same energy story that Bitcoin mining is.

76
00:04:20,900 --> 00:04:21,840
I think that they rhyme.

77
00:04:21,840 --> 00:04:22,960
Even on a narrative basis?

78
00:04:22,960 --> 00:04:30,180
this? Well, the way I would characterize the AI energy story is that we are not generating

79
00:04:30,180 --> 00:04:34,800
enough power. The way that I would characterize the Bitcoin mining story is that we are not

80
00:04:34,800 --> 00:04:41,840
consuming power nearly as efficiently as we could be. And to me, those are similar in that they both

81
00:04:41,840 --> 00:04:48,720
represent a higher utilization and higher production of electrons. But the operationalization

82
00:04:48,720 --> 00:04:51,260
of each of those strategies looks quite different.

83
00:04:52,360 --> 00:04:56,700
But so there were people, like Bob Burnett is a perfect example, who is skeptical of

84
00:04:56,700 --> 00:05:01,040
the big public Bitcoin miners taking too much hash rate, centralizing hash rate.

85
00:05:01,200 --> 00:05:02,580
You're telling me that Bitcoiners are skeptical?

86
00:05:04,260 --> 00:05:05,860
Is this actually a really bullish thing?

87
00:05:05,960 --> 00:05:07,500
Is this going to help decentralize hash rate?

88
00:05:08,540 --> 00:05:09,960
Yeah, for sure.

89
00:05:09,960 --> 00:05:18,300
I think that the concentration of hash rate, forget what corporate structure it lives in,

90
00:05:18,300 --> 00:05:33,420
But the concentration of hash rate geographically will get decentralized because the large concentration of energy-backed compute is going to get pushed through an AI workload because it's the highest enterprise value activity for that megawatt concentration.

91
00:05:33,420 --> 00:05:40,920
And then there's very likely to be a squishy layer of Bitcoin mining attached to it to make it flexible and responsive.

92
00:05:40,920 --> 00:05:54,520
And then you're also going to see mining move deeper across the geographic frontier, the interruptible frontier, and the cost frontier, which in a lot of cases looks like jurisdictional arbitrage.

93
00:05:54,780 --> 00:05:58,000
But it also looks like geographical and runtime arbitrage as well.

94
00:05:58,140 --> 00:06:04,420
I mean, the entire history of Bitcoin is Bitcoin, quite frankly, being a honey badger or more succinctly, quite frankly, a cockroach.

95
00:06:04,420 --> 00:06:13,560
And I think that, if anything, this AI story is one of, one, I believe, continued American dominance across energy and financial and capital markets.

96
00:06:14,060 --> 00:06:19,320
And secondly, again, just to your point, is that they are two completely different spaces.

97
00:06:20,440 --> 00:06:23,860
Particularly for the training side, you want these big mega campuses.

98
00:06:24,380 --> 00:06:25,600
You're sucking down lots of power.

99
00:06:25,720 --> 00:06:28,760
You want to be 100 miles outside of an NFL city.

100
00:06:29,060 --> 00:06:30,800
You want that great transmission.

101
00:06:31,460 --> 00:06:33,620
Bitcoin has always existed at the edges.

102
00:06:33,620 --> 00:06:39,000
And I think the criticism of Bitcoin often has been, oh, the narrative changes and evolves.

103
00:06:39,160 --> 00:06:46,200
And that's been the transformational part of it over time is that it adapts to the new era and the new narrative and the new thing.

104
00:06:46,600 --> 00:06:49,840
And so now it's going to move back, I think, from a decentralization perspective.

105
00:06:50,360 --> 00:06:57,060
Whether it's public miners, I think we're finding some – we would call them smaller sites now as we're kind of scaling up.

106
00:06:57,180 --> 00:07:01,080
But to us five years ago, three years ago, they would have been midsize or kind of regular size sites.

107
00:07:01,080 --> 00:07:02,740
And so you're moving to this kind of hub.

108
00:07:02,820 --> 00:07:22,120
Not only do you have that squishy layer kind of around the mega campuses, but you're going to move to this hub and spoke model where smaller campuses in kind of less dense jurisdictions with less built out transmission necessarily into population centers are going to be fantastic places to continue to do Bitcoin mining because those are going to be competitive power prices.

109
00:07:22,540 --> 00:07:23,680
And then you're going to have this other part.

110
00:07:23,780 --> 00:07:27,660
So, again, I just think it's going to be a more is more story.

111
00:07:27,660 --> 00:07:36,440
And part of it is also like Bitcoin mining and AI are both technological waves that are running into like atoms problems.

112
00:07:36,700 --> 00:07:37,260
100%.

113
00:07:37,260 --> 00:07:44,060
And so when you live in the physical world, you just run into a different set of constraints than a software company would run into.

114
00:07:44,320 --> 00:07:52,700
So like you find a pocket of power that's really well developed, but it's going to take two to three years for fiber to get run out to it.

115
00:07:53,160 --> 00:07:57,120
We've run triple digit megawatts against a Starlink mining.

116
00:07:57,120 --> 00:08:01,660
very successfully. And so great. Because you need no bandwidth.

117
00:08:01,940 --> 00:08:05,520
You need so much less bandwidth than AI. Yeah. You know, when you think about it,

118
00:08:05,520 --> 00:08:11,740
you need multiple fiber runs, redundancies, all the spine and fabric that's required.

119
00:08:11,740 --> 00:08:17,460
Just talk about the inter data center networking and kind of all of the what's going on there,

120
00:08:17,500 --> 00:08:22,300
all the competition there. I mean, this is crazy, right? Versus this again, which is just you're

121
00:08:22,300 --> 00:08:25,040
out in the middle of North Dakota or Wyoming, you know?

122
00:08:25,760 --> 00:08:31,760
And so what you find is that this power is a great utilization for revenue on a short

123
00:08:31,760 --> 00:08:35,320
to medium term basis while infrastructure catches up and, you know, it's going to take

124
00:08:35,320 --> 00:08:36,840
time to get that fiber laid out there.

125
00:08:36,840 --> 00:08:44,980
And so we as a miner who has significant AI ambition, but also mining prowess and appetite

126
00:08:44,980 --> 00:08:51,860
for growth or portfolio reconstruction, we are able to be the player that takes advantage

127
00:08:51,860 --> 00:08:57,880
of that time arbitrage on the physical infrastructure. So great. We're thrilled to

128
00:08:57,880 --> 00:09:03,360
run mining for X number of years while the catch up is happening. We'll run it against the Starlink.

129
00:09:03,460 --> 00:09:08,720
We put in modular deployments. We're able to put down and pick up and not cannibalize the

130
00:09:08,720 --> 00:09:13,580
electrical infrastructure because if it's great for mining, we have every opportunity to build AI

131
00:09:13,580 --> 00:09:19,500
behind it. And so we're able to take advantage of some of those build out waves that lets us

132
00:09:19,500 --> 00:09:22,980
lead with mining in the front and then slot into AI from the back.

133
00:09:23,640 --> 00:09:28,680
Do you want to pay less in taxes and stack more Bitcoin? Of course you do. Well, by mining Bitcoin

134
00:09:28,680 --> 00:09:34,300
with Blockware, you can. Under section 168k of the US tax code, Bitcoin mining servers qualify

135
00:09:34,300 --> 00:09:39,240
for 100% bonus depreciation. This means every dollar you spend on miners can directly offset

136
00:09:39,240 --> 00:09:43,500
your income in a single year. And that's true for both business owners and W2 earners.

137
00:09:43,920 --> 00:09:49,260
If you have $100,000 in ordinary income, you can purchase $100,000 in miners and potentially offset

138
00:09:49,260 --> 00:09:54,480
your tax liability entirely. Blockware's mining as a service does all the heavy lifting, they secure

139
00:09:54,480 --> 00:09:59,000
the rigs, they source the low-cost power and handle all the day-to-day maintenance. So you get to stack

140
00:09:59,000 --> 00:10:03,820
Bitcoin every single day while drastically shrinking your tax bill. Get started today at

141
00:10:03,820 --> 00:10:09,720
blockwaresolutions.com forward slash WBD and use code WBD for $100 off your first miner.

142
00:10:10,260 --> 00:10:16,680
That's blockwaresolutions.com forward slash WBD. Bitcoiners, as you know, with fiat money constantly

143
00:10:16,680 --> 00:10:21,700
debasing, wealth preservation isn't optional. That's why I recommend Swan Bitcoin, a team of

144
00:10:21,700 --> 00:10:26,400
dedicated Bitcoiners who work with families and businesses to build and secure generational wealth

145
00:10:26,400 --> 00:10:30,840
with Bitcoin. Strong relationships with clients are at the center of everything Swan does.

146
00:10:30,840 --> 00:10:35,760
A dedicated Swan private wealth representative, which is a real person that you can text and call,

147
00:10:36,060 --> 00:10:40,400
will help you build a Bitcoin wealth strategy using Swan's comprehensive platform of Bitcoin

148
00:10:40,400 --> 00:10:45,440
services, including tax-advantaged retirement accounts, advanced Bitcoin cold storage using

149
00:10:45,440 --> 00:10:50,620
collaborative self-custody, inheritance planning with both trust and entity accounts, tax loss

150
00:10:50,620 --> 00:10:56,040
harvesting, asset-backed loans, and more. SWAN have helped over 100,000 clients since 2020,

151
00:10:56,520 --> 00:10:59,780
and if you're serious about acquiring and securing Bitcoin, I recommend SWAN.

152
00:11:00,460 --> 00:11:07,280
Meet the team at swan.com forward slash WBD, which is swan.com forward slash WBD.

153
00:11:07,840 --> 00:11:11,040
If you hold Bitcoin, your phone number is one of your biggest vulnerabilities.

154
00:11:11,760 --> 00:11:15,000
SimSwap attacks are one of the most common attack vectors targeting Bitcoiners.

155
00:11:15,440 --> 00:11:20,360
Somebody socially engineers an employee at your carrier, moves your number to a new device, and they're into your account.

156
00:11:20,980 --> 00:11:26,100
It happens because traditional carriers put a human in control of your phone number, someone who can be bribed or tricked.

157
00:11:26,660 --> 00:11:31,520
But CAPE is a US mobile carrier built from the ground up with privacy and security at the core.

158
00:11:32,040 --> 00:11:34,780
They don't ask for your name or social security number when you sign up.

159
00:11:34,780 --> 00:11:38,920
They collect the minimum data required, delete it as fast as possible, and never sell it.

160
00:11:39,260 --> 00:11:42,780
When you sign up, you receive a 24-word passphrase, just like a Bitcoin wallet.

161
00:11:43,240 --> 00:11:44,740
That's the only way to move your number.

162
00:11:45,160 --> 00:11:48,120
Not a customer service rep, not even Cape's own staff can do it.

163
00:11:48,340 --> 00:11:50,140
You're the only person who controls your number.

164
00:11:50,640 --> 00:11:53,260
If you hold your own keys, you should hold your own phone number too.

165
00:11:53,580 --> 00:12:00,340
So head over to cape.co forward slash WBD and use code WBD at checkout for 33% off your first six months.

166
00:12:00,680 --> 00:12:04,980
That's cape.co forward slash WBD and use code WBD.

167
00:12:05,700 --> 00:12:09,300
So are the Bitcoin miners that have cropped up over the last five years or whatever,

168
00:12:09,400 --> 00:12:12,600
are they positioned in a way that they'll benefit the most from this AI?

169
00:12:12,780 --> 00:12:15,000
Because like, what I want to know is the differences.

170
00:12:15,240 --> 00:12:16,860
Because I think for Bitcoin mining,

171
00:12:16,980 --> 00:12:17,880
I'm going to bastardize this,

172
00:12:17,940 --> 00:12:19,560
but you can essentially just like throw a shed up

173
00:12:19,560 --> 00:12:21,620
and put a big fan in and turn it on.

174
00:12:21,780 --> 00:12:23,480
I would never tell any of our technology

175
00:12:23,480 --> 00:12:24,500
or operations people

176
00:12:24,500 --> 00:12:26,140
that that's how we would characterize it.

177
00:12:26,240 --> 00:12:27,120
But you get what I'm saying.

178
00:12:27,240 --> 00:12:28,640
Like, it's not that far off.

179
00:12:28,760 --> 00:12:30,580
Relative to AI, that is correct.

180
00:12:30,880 --> 00:12:33,280
So is there a challenge for you guys

181
00:12:33,280 --> 00:12:34,880
to build out an actual AI data center?

182
00:12:34,880 --> 00:12:37,280
Or is it like, can you reconfigure the sites

183
00:12:37,280 --> 00:12:39,040
you already have just to run AI if you want to?

184
00:12:39,600 --> 00:12:41,880
Yeah, so one of the things that we believe

185
00:12:41,880 --> 00:12:47,980
pretty strongly is that retrofitting a mining building for AI workloads is not the way to

186
00:12:47,980 --> 00:12:53,880
efficiently develop customer-centric solutions. So I would take us to Sandersville as a good case

187
00:12:53,880 --> 00:13:00,200
study for us on how we're thinking about this. Two plots of land, 50 acres where we've got 250

188
00:13:00,200 --> 00:13:06,840
megawatts of Bitcoin mining operational. We've got 122 acres right around next to it. That's

189
00:13:06,840 --> 00:13:11,820
going to be a greenfield AI development plot. And so when the time comes for that AI workload to

190
00:13:11,820 --> 00:13:17,100
be ready for service, we're going to cut the power over to that new plot and then be able to shift

191
00:13:17,100 --> 00:13:23,380
the power, the monetization, the utilization of that power contract over to what looks

192
00:13:23,380 --> 00:13:28,420
operationally like a greenfield development, even though it sits directly next to what would be

193
00:13:28,420 --> 00:13:30,760
mining infrastructure that's been fully deployed for years.

194
00:13:30,760 --> 00:13:34,460
So what is it that makes Bitcoin miners well positioned here? Because if you have to do a

195
00:13:34,460 --> 00:13:37,560
whole new refit, you have to, well, a whole new build out of the infrastructure, like,

196
00:13:37,820 --> 00:13:41,440
is it the power agreements that you already have? Like, what is it that gives you an advantage?

197
00:13:41,820 --> 00:13:46,900
So I think it's important to take a step back and understand what is the AI playbook, right?

198
00:13:46,940 --> 00:13:52,860
There's four steps that's required to be successful building, operating, monetizing power through an AI lens.

199
00:13:53,280 --> 00:13:55,980
The first step is the acquisition of power and land.

200
00:13:56,540 --> 00:13:58,260
It's what CleanSpark is phenomenal at.

201
00:13:58,360 --> 00:14:00,700
It's what the sector has been phenomenal at historically.

202
00:14:01,220 --> 00:14:03,060
The second is the leasing activity.

203
00:14:03,060 --> 00:14:11,060
So how do you come to a commercial agreement with somebody who wants to take advantage of that rack space and bring, you know, in our case, bring their own GPUs,

204
00:14:11,820 --> 00:14:15,880
but sign a lease for the infrastructure to be able to power that compute workload.

205
00:14:16,200 --> 00:14:21,980
The third is how do you pay for it? The capital intensity of AI data centers is dramatically higher

206
00:14:21,980 --> 00:14:27,820
than Bitcoin mining infrastructure build out. And so we're seeing a lot of activity in the debt

207
00:14:27,820 --> 00:14:32,160
markets. We're seeing a lot of activity in the capital markets more broadly because the how do

208
00:14:32,160 --> 00:14:36,300
you pay for it marries very directly into the lease. Because when you think about the

209
00:14:36,300 --> 00:14:41,260
collateralization of these projects, there's actually a few components to it. The first is

210
00:14:41,260 --> 00:14:46,260
the land and the power that gets contributed into the collateral package. The second is all of the

211
00:14:46,260 --> 00:14:51,640
CapEx spend that goes into the development of these much higher dollar value data center environments.

212
00:14:52,140 --> 00:14:57,020
And then the last is the revenue associated with it, which is the firm lease agreement with the

213
00:14:57,020 --> 00:15:02,660
tenant. And so you take those three pieces of collateral. Those are super underwritable because

214
00:15:02,660 --> 00:15:07,260
at the end of the day, what is the bond market betting? The bond market is taking the position

215
00:15:07,260 --> 00:15:11,580
that power and land is going to continue to be valuable. Well-built data centers are going to

216
00:15:11,580 --> 00:15:17,520
continue to be valuable. And grade A investment grade tenants are going to pay their bills on time.

217
00:15:17,920 --> 00:15:21,040
Let's double click on that just a little bit more though, because I think the other two,

218
00:15:21,140 --> 00:15:26,680
and not to like underplay them, but are somewhat more easy to understand. Okay, great. You got to

219
00:15:26,680 --> 00:15:31,700
go get the land and power. And one piece that I would put there is that one of the things grid did

220
00:15:31,700 --> 00:15:35,540
really well and CleanSpark has done really well is there's a social license that goes along with

221
00:15:35,540 --> 00:15:37,860
And that's a very, very important component of this.

222
00:15:38,040 --> 00:15:41,360
That's something that we have a muscle in that I think is a differentiating factor.

223
00:15:42,080 --> 00:15:50,200
But the how you pay for it, it's not just about the total dollars that you're able to throw at the project.

224
00:15:50,460 --> 00:15:51,920
It's all of those things.

225
00:15:51,980 --> 00:15:56,100
And I think this is super underappreciated is do you do it within an SPV?

226
00:15:56,420 --> 00:15:57,560
Who's underwriting it?

227
00:15:57,700 --> 00:16:01,000
Are there warrants that could potentially be dilutive on the other side of that?

228
00:16:01,220 --> 00:16:04,100
Is this going to be a bridge loan that's going to eventually be taken out?

229
00:16:04,100 --> 00:16:09,100
Is that bridge loan going to be refinanced with debt or you're going to expect to go back to the ATM market?

230
00:16:09,500 --> 00:16:12,200
What's been your dilution kind of story up to that point?

231
00:16:12,300 --> 00:16:15,520
And so, again, I'm obviously kind of the markets guy, so that's what I think.

232
00:16:15,720 --> 00:16:26,180
But I think there was three or four years ago, there was just a lot of criticism of the Bitcoin miners of, oh, we're going to diversify different business models.

233
00:16:26,420 --> 00:16:29,620
And I think it took the industry a while to get there.

234
00:16:29,620 --> 00:16:39,980
And you're now seeing under the surface just wildly divergent approaches, not just to power and land acquisition, not just to kind of lease negotiation, but to financing packages.

235
00:16:40,080 --> 00:16:44,140
And I think it's going to be really interesting to see that develop and people start to kind of understand that more.

236
00:16:44,520 --> 00:16:50,520
From like a financial perspective, when this started becoming, you know, it was clear that CleanSpark and all these other companies were going to move into AI.

237
00:16:50,980 --> 00:16:54,500
Were you like, thank God, because like Bitcoin mining is a brutal business.

238
00:16:54,500 --> 00:16:57,500
Like it's a race to zero, essentially.

239
00:16:57,500 --> 00:17:01,500
Were you very glad to see AI come into this picture?

240
00:17:01,500 --> 00:17:08,540
It's not like doing hard things at 10x the scale over 3x to 5x the timeline is necessarily

241
00:17:08,540 --> 00:17:11,740
that much easier, is what I would say.

242
00:17:11,740 --> 00:17:29,785
I don think you trip fall and land in Bitcoin mining energy and power asset generation all of these things I think you have to have a little bit of a mindset of wanting to be at the tip of the spear from capital digital asset technology and energy infrastructure in

243
00:17:29,785 --> 00:17:35,665
the US. I mean, I'm going to kick that back to you, I guess. But these are hard things at a larger

244
00:17:35,665 --> 00:17:42,325
scale. And so, yeah, I think what it does is that it's a potential opportunity to engage with a

245
00:17:42,325 --> 00:17:46,165
different segment in the market of more of this kind of investment grade. But to me, it's a

246
00:17:46,165 --> 00:17:50,945
maturation of who you're dealing with. And it's always where we were going to go as Bitcoin miners,

247
00:17:50,945 --> 00:17:59,825
because Bitcoin is going to be somewhere at the base layer of the settlement layer for monetary

248
00:17:59,825 --> 00:18:03,905
technology in the United States and globally. And that means that if it's going to be backed by

249
00:18:03,905 --> 00:18:07,585
energy, then you're going to expand into the energy market. So I just think it's a maturation.

250
00:18:07,585 --> 00:18:12,405
I mean, I'm eight years into mining professionally.

251
00:18:13,485 --> 00:18:14,685
You know how brutal it is.

252
00:18:15,505 --> 00:18:27,985
And my fun fact is that I've mined through three halving epochs at this point, which is brutally, brutally hard.

253
00:18:27,985 --> 00:18:38,285
The competitive environment that Bitcoin mining pushes up against corporate strategy is very, very intense.

254
00:18:38,565 --> 00:18:42,985
It requires a lot of discipline and long-range thinking.

255
00:18:43,265 --> 00:18:53,205
It also requires getting a lot of things right because each thing you can get wrong is disproportionately painful and punitive.

256
00:18:53,205 --> 00:19:15,225
So I think when you look at our story coming from Grid and then integrating into CleanSpark, when you look at CleanSpark's heritage of how we built our power portfolio and our mining business, it's required a tremendous amount of non-consensus viewpoints and counter-cyclical investment.

257
00:19:15,225 --> 00:19:28,965
And so that meant when Bitcoin went from 20 to 60, saying this is too rich and exiting some of the Bitcoin position in favor for more hash rate and more infrastructure.

258
00:19:29,305 --> 00:19:40,585
It also meant taking a view on having a more distributed portfolio of smaller sites in order to grow faster during that period of time.

259
00:19:40,585 --> 00:19:52,545
Then it also required the intellectual flexibility to say, OK, this smaller site profile is not as attractive to the AI client base as the larger concentrated site profile.

260
00:19:52,865 --> 00:19:54,945
So we reacted appropriately.

261
00:19:55,265 --> 00:19:57,905
We added a 285 megawatt site to the portfolio.

262
00:19:58,225 --> 00:20:02,485
We added a site with capacity up to 600 megawatts, 50 miles away from it.

263
00:20:02,485 --> 00:20:11,905
And so, you know, what you've seen from us and I think why we've been successful and had real durability is because we've had the appetite to invest counter cyclically.

264
00:20:12,265 --> 00:20:19,585
We've also had a tremendous amount of mental flexibility, which is that when you get new information, it's very appropriate to make new decisions.

265
00:20:19,585 --> 00:20:33,345
And so having that as a cultural touchstone for how we develop and enact strategy as a corporation is something that I think our shareholders and the industry at large has come to expect from us and really value about us.

266
00:20:33,345 --> 00:20:55,445
But there's, you know, not because we're here to show the company, but just because there's a tremendous amount of satisfaction that I get from working in an intellectually stimulating environment where the stakes are high, the dollars are big, and the impact that we get to have on the market broadly is very, very large.

267
00:20:55,445 --> 00:21:01,425
because if we are able to play a critical role in enabling some of these AI players to be

268
00:21:01,425 --> 00:21:06,865
successful, the American economy is going to thrive. And we as professionals and our shareholders

269
00:21:06,865 --> 00:21:10,745
that come along with us, our employees that come along with us, they're going to thrive along with

270
00:21:10,745 --> 00:21:16,485
us. And that is very, very motivating and very interesting. It lets all of the time and the hard

271
00:21:16,485 --> 00:21:22,905
work that's required to be successful. We have stamina to do it because of how exciting and

272
00:21:22,905 --> 00:21:28,005
valuable that work is. So I just want to address it head on a little bit as well, which is that

273
00:21:28,005 --> 00:21:34,725
you have not heard the words pivot from us. You've heard the words expansion. And that is very,

274
00:21:34,805 --> 00:21:41,385
very distinct, I think, in our business strategy, capital strategy, operating strategy,

275
00:21:41,385 --> 00:21:48,305
and approach to this market. So we were sitting in the basement of this resort, hotel and casino

276
00:21:48,305 --> 00:21:54,505
about two months ago at our executive leadership retreat.

277
00:21:55,325 --> 00:22:00,365
And we've made no bones about this expansion to AIHBC.

278
00:22:01,105 --> 00:22:06,365
And while my background is in Bitcoin, my passion is that, my role as Bitcoin treasury,

279
00:22:06,865 --> 00:22:13,165
I felt like it was my role to really, in that room, make sure to really challenge our priors

280
00:22:13,165 --> 00:22:18,805
and make sure that what we're doing, that just because we've done something in the past,

281
00:22:18,985 --> 00:22:22,865
doesn't mean we should carry that in the future, again, with that intellectual flexibility,

282
00:22:22,865 --> 00:22:27,625
if it's not going to serve the business, the shareholders, and ultimately, and we believe

283
00:22:27,625 --> 00:22:32,445
this, the stakeholders in the American economy. And so, you know, we challenge, okay, great.

284
00:22:33,305 --> 00:22:38,545
We've been Bitcoin miners. That's been our access to land and power. That's funded our business.

285
00:22:38,545 --> 00:22:41,105
That has driven shareholder value.

286
00:22:41,105 --> 00:22:46,525
That's created the opportunity set to continue to grow and expand into this kind of adjacent

287
00:22:46,525 --> 00:22:49,585
energy market that has this entirely new kind of profile.

288
00:22:49,825 --> 00:22:52,725
So why do we want to stay dedicated to Bitcoin?

289
00:22:52,865 --> 00:23:01,245
Well, one, it's that we've seen a lot of others that have wound down, perhaps maybe a little

290
00:23:01,245 --> 00:23:06,685
bit prematurely, their Bitcoin mining operations and are going to be in this very long middle

291
00:23:06,685 --> 00:23:11,785
where there's two or three years between when revenue starts to kind of come in from the AIHPC

292
00:23:11,785 --> 00:23:17,045
side. And so I can understand kind of bringing in capital ahead of time. And maybe your operations

293
00:23:17,045 --> 00:23:20,785
are not as profitable as you kind of paint them. And so you don't want that drag. And maybe it's

294
00:23:20,785 --> 00:23:27,065
management cycles, but fine. But they've wound that down. So we have a profitable scaled mining

295
00:23:27,065 --> 00:23:33,785
operation that can fund us during that expansion period, right? But the second piece is why hold

296
00:23:33,785 --> 00:23:38,865
Bitcoin on the balance sheet. Okay, great. So you hold USD on the balance sheet or you hold,

297
00:23:38,945 --> 00:23:43,025
you know, kind of classic kind of, you know, you look at the revenue lines, what's your current

298
00:23:43,025 --> 00:23:48,785
assets? What are your total assets on you pull up a 10k or 10q? Great. You can borrow against that,

299
00:23:48,865 --> 00:23:54,365
you can go tap the markets, etc. But particularly for people still in this kind of nascent space,

300
00:23:54,985 --> 00:24:00,585
the scaled access to those capital markets is not as mature as it's going to be once we kind

301
00:24:00,585 --> 00:24:04,525
of start to face off against some of these IG counterparties. And so what you have with Bitcoin

302
00:24:04,525 --> 00:24:13,085
is you have a liquid global permissionless asset that trades 24-7 that has upside optionality

303
00:24:13,085 --> 00:24:20,265
that you can borrow dollars against. So you take an asset that we agree maybe over one week or

304
00:24:20,265 --> 00:24:24,925
even a month or a year might have some volatility in it, but we believe is going to go up this kind

305
00:24:24,925 --> 00:24:30,465
of technology adoption curve. We think number goes up over time. So we think that that has

306
00:24:30,465 --> 00:24:35,865
upside optionality. It's an appreciating currency. You use that appreciating currency to borrow in a

307
00:24:35,865 --> 00:24:40,225
depreciating currency. You use that depreciating currency to go get assets that are going to

308
00:24:40,225 --> 00:24:43,445
appreciate. Those assets that are going to appreciate are going to bring revenues back

309
00:24:43,445 --> 00:24:48,685
back onto that balance sheet and kind of give you that flywheel. So one, it's upside optionality.

310
00:24:48,845 --> 00:24:54,025
It's the ability to borrow in an – use an appreciating asset, to borrow in a depreciating

311
00:24:54,025 --> 00:24:57,565
asset. And then it's kind of what we touched on originally, which is that the Bitcoin doesn't

312
00:24:57,565 --> 00:25:02,345
just come in and get immediately monetized into USD. What we're really pioneering here is how do

313
00:25:02,345 --> 00:25:08,925
we take that and drive incremental margin out of that Bitcoin, whether we're turning it into dollars

314
00:25:08,925 --> 00:25:12,545
or whether we're kind of turning it into additional Bitcoin on that balance sheet,

315
00:25:12,585 --> 00:25:17,865
again, to drive that flywheel. And I'm happy to get into the specifics of that. But this is a game

316
00:25:17,865 --> 00:25:23,885
of inches, right? And so, no, I'm not scared. I'm actually not. I'm happy about the expansion

317
00:25:23,885 --> 00:25:29,745
because we always had this view that energy is the critical underlying asset of the critical

318
00:25:29,745 --> 00:25:34,425
settlement asset of the greatest economy in the world. And I think we're seeing that really be

319
00:25:34,425 --> 00:25:39,745
realized. But what I think it is, is that the difficulty adjustment, if you're at the top of

320
00:25:39,745 --> 00:25:45,285
the difficulty adjustment, if you have the most efficient machines and globally competitive power

321
00:25:45,285 --> 00:25:49,885
prices, the rise in difficulty doesn't scare you because it's going to knock off kind of less

322
00:25:49,885 --> 00:25:54,145
efficient operators. And so to me, it's the same thing with what we're expanding into on the digital

323
00:25:54,145 --> 00:26:01,405
asset management side is that if we can drive five or 10% more revenue per Bitcoin per kilowatt

324
00:26:01,405 --> 00:26:06,845
hour out of that Bitcoin that we turn into, that's a competitive advantage that compounds in almost

325
00:26:06,845 --> 00:26:13,365
unfathomable ways over three or five years. And I would be curious if you think that's fair or

326
00:26:13,365 --> 00:26:19,185
you have anything to kind of expand or? Yeah. I mean, I think that it, it, the way that I would

327
00:26:19,185 --> 00:26:24,105
digest a lot of what you're saying, cause I agree with all of it is that we have a philosophy of

328
00:26:24,105 --> 00:26:30,645
organizational design around why we've built the business in a way that's able to realize

329
00:26:30,645 --> 00:26:35,905
full or, or the vast majority of that value, but also the value across the rest of the things that

330
00:26:35,905 --> 00:26:44,465
we do, which is that we didn't wake up as a big Bitcoin mining company. We have a strong and deep

331
00:26:44,465 --> 00:26:49,485
heritage across energy markets. We were building microgrids long before we ever realized what an

332
00:26:49,485 --> 00:26:56,105
ASIC was at CleanSpark. And so we spent a lot of time developing energy native expertise.

333
00:26:56,585 --> 00:27:02,165
That meant building microgrids at military bases. It meant building the software that ran demand

334
00:27:02,165 --> 00:27:07,445
response protocols. It meant getting called out to Atlanta, Georgia, to a data center on a sales

335
00:27:07,445 --> 00:27:12,785
call. That was where we found our first Bitcoin mine, was a sales call to sell them a microgrid

336
00:27:12,785 --> 00:27:18,145
to help them drive down energy costs. We saw that opportunity. And rather than sell them our product,

337
00:27:18,245 --> 00:27:23,565
we bought their data center. And that started this cascade of scaling our Bitcoin mining,

338
00:27:23,785 --> 00:27:29,805
scaling our direct energy and land ownership profile. That was 2019, 2020. We bought that

339
00:27:29,805 --> 00:27:31,005
asset at the end of 2020.

340
00:27:31,005 --> 00:27:34,005
And that kicked off what was really a five-year hyper growth

341
00:27:34,005 --> 00:27:37,785
cycle to become the largest domestic producer of hash rate.

342
00:27:37,785 --> 00:27:41,425
And so over the course of that scaling journey,

343
00:27:41,425 --> 00:27:44,145
we became great at power and land acquisition, not just

344
00:27:44,145 --> 00:27:46,005
energy development and management.

345
00:27:46,005 --> 00:27:48,885
And over that period of time as we scaled,

346
00:27:48,885 --> 00:27:50,965
we also realized that the electron

347
00:27:50,965 --> 00:27:54,445
is going to have more utility across more types of compute

348
00:27:54,445 --> 00:27:58,125
than we'd anticipated 5, 6, 7, 10 years ago.

349
00:27:58,125 --> 00:28:01,305
That brought us directly to the crux of this opportunity

350
00:28:01,305 --> 00:28:04,125
to expand into a secondary form of compute

351
00:28:04,125 --> 00:28:06,565
that is likely to grow to be the majority of our business

352
00:28:06,565 --> 00:28:08,745
over time from a revenue perspective,

353
00:28:08,745 --> 00:28:10,665
but not from a strategic footprint.

354
00:28:10,665 --> 00:28:13,065
So talk about the organizational design.

355
00:28:13,065 --> 00:28:15,285
We think that we're going to be great at developing

356
00:28:15,285 --> 00:28:17,665
digital infrastructure for AI use cases.

357
00:28:17,665 --> 00:28:20,025
We think we're going to be great at integrating Bitcoin mining

358
00:28:20,025 --> 00:28:22,285
into energy systems, some of which are going to be

359
00:28:22,285 --> 00:28:23,865
in the data center, some of which are going

360
00:28:23,865 --> 00:28:25,365
to be at the utility level.

361
00:28:25,365 --> 00:28:32,005
We also think that interacting with energy more directly is going to be something that we're going to be good at into the future as well.

362
00:28:32,365 --> 00:28:34,005
Maybe that means behind the meter generation.

363
00:28:34,465 --> 00:28:38,425
Maybe that means more intelligent power sourcing on the power markets.

364
00:28:39,085 --> 00:28:48,285
We don't know what that's going to look like yet, but we know that we have a thesis about how energy management generation and consumption is an opportunity for us to drive shareholder value in the business.

365
00:28:48,285 --> 00:28:57,625
And then the last category, which is what Rory's covered a lot of, is CleanSpark Capital is a concept that we've been kicking around for many, many, many, many months.

366
00:28:57,685 --> 00:28:58,525
Are we soft rolling it?

367
00:28:58,605 --> 00:28:59,365
We soft rolling it?

368
00:29:00,065 --> 00:29:00,845
So very softly.

369
00:29:01,505 --> 00:29:07,885
And so the first step towards that is by taking a fundamentally differentiated view on treasury management.

370
00:29:08,185 --> 00:29:13,565
We are not a debt, but we hold a lot of Bitcoin and we do so in a variety of productive ways.

371
00:29:13,565 --> 00:29:35,185
What's really important about that productivity is it's not just about what are we able to extract from our holdings or our balance sheet. It's how does our capital activities integrate into a scaled operating business to make the operating business stronger and open the door to more types of opportunities across our balance sheet utilization and management profile.

372
00:29:35,185 --> 00:29:48,865
And so, you know, I think of companies like, you know, GE, where GE Capital was a huge component of what they did that had nothing to do with how they built turbines or washers and dryers or all these other types of hard asset activities.

373
00:29:48,865 --> 00:29:53,145
It had to do with the financialization layer of everything that they did as well.

374
00:29:53,145 --> 00:30:14,845
I also look back to things like Berkshire Hathaway, where they took a position where they bought out Geico and utilized the Geico insurance premium model to take front of the locomotive capital engine and drive the incremental float from those insurance products to be able to unlock a bunch of different operating businesses elsewhere across their portfolio.

375
00:30:14,845 --> 00:30:26,845
And so the marriage of operating business in the physical world and the financial business in the markets world marry together to create differentiated and huge, huge, hugely outsized outcomes.

376
00:30:27,045 --> 00:30:33,925
So that's like 100 IQ points higher than a take that I've had for a long time, which is on these treasury companies, like you need an operating business.

377
00:30:34,105 --> 00:30:34,845
Like 100%.

378
00:30:35,485 --> 00:30:39,145
I mean, I don't think it needs, you need, I don't think you don't need that much IQ.

379
00:30:39,205 --> 00:30:41,025
But the explanation was 100 IQ points.

380
00:30:41,025 --> 00:30:46,045
I just, and to me, this is the biggest, it's the biggest misnomer.

381
00:30:46,265 --> 00:30:50,965
It's we have, we're one of the top 10 corporate holders of Bitcoin in the world.

382
00:30:50,965 --> 00:30:54,085
We're one of the, we're the largest domestic hash rate producer.

383
00:30:54,665 --> 00:30:59,705
And it's been really hard to talk about that in certain ways because we are a company with

384
00:30:59,705 --> 00:31:05,645
13,500 Bitcoin on our, on our balance sheet, but we are not in our treasury, but we are

385
00:31:05,645 --> 00:31:07,105
not a Bitcoin treasury company.

386
00:31:07,105 --> 00:31:07,385
Right.

387
00:31:07,385 --> 00:31:16,145
And we generate yield on our Bitcoin, but we don't generate whatever the BTC yield metric is.

388
00:31:16,365 --> 00:31:17,285
Sats per share.

389
00:31:17,605 --> 00:31:19,205
That's not how we measure ourselves.

390
00:31:19,345 --> 00:31:21,305
We measure ourselves on shareholder return.

391
00:31:21,465 --> 00:31:23,665
We measure ourselves on stakeholder return.

392
00:31:23,965 --> 00:31:27,285
We measure ourselves on total capital assets that we drive over time.

393
00:31:27,745 --> 00:31:30,205
And so I just think it's exactly right.

394
00:31:30,285 --> 00:31:32,845
But yes, not to jump in too much again.

395
00:31:32,925 --> 00:31:33,965
No, I want to get into this.

396
00:31:33,965 --> 00:31:38,405
But just quickly before we do, with Bitcoin mining, it's like it's energy in, Bitcoin out.

397
00:31:38,605 --> 00:31:42,765
And as you move to AI, it's energy in like tokens out, I guess.

398
00:31:42,845 --> 00:31:44,585
And that's going to be paid to you in dollars.

399
00:31:45,085 --> 00:31:48,605
Will you be turning dollars into Bitcoin in this treasury?

400
00:31:48,865 --> 00:31:51,225
So this is a critical piece.

401
00:31:51,505 --> 00:32:01,265
We believe that our obligation is to take the productivity of our business lines and drive them into the highest growth, highest value return opportunity in front of us.

402
00:32:01,265 --> 00:32:06,845
So let's say that we were able to take a lot of dollars in from our first AI deployment.

403
00:32:07,845 --> 00:32:12,425
I think that right now, the biggest opportunity in front of us would be to plow those dollars

404
00:32:12,425 --> 00:32:13,705
into the next AI deployment.

405
00:32:14,285 --> 00:32:21,405
I think over time, as businesses move from their hyper growth phase into more of a cash

406
00:32:21,405 --> 00:32:27,405
flow and compounding phase, the opportunity to think more about the opportunity cost of

407
00:32:27,405 --> 00:32:33,805
each incremental net income dollar is going to get more competitive. But right now, it's about

408
00:32:33,805 --> 00:32:40,325
growing to become a significant player in the AI compute world in the same way that we had to grow

409
00:32:40,325 --> 00:32:43,965
very aggressively to become a significant player in the Bitcoin mining landscape.

410
00:32:44,525 --> 00:32:48,165
Do you wish you could access cash without selling your Bitcoin? Well,

411
00:32:48,165 --> 00:32:52,785
Ledder makes that possible. They're the global leader in Bitcoin-backed lending. And since 2018,

412
00:32:53,025 --> 00:32:57,265
they've issued over $9 billion in loans with a perfect record of protecting client assets.

413
00:32:57,405 --> 00:33:01,905
with Ledin you get full custody loans with no credit checks or monthly repayments

414
00:33:01,905 --> 00:33:05,305
just easy access to dollars without selling a single sat

415
00:33:05,305 --> 00:33:11,285
Ledin exclusively offer bitcoin-backed loans with all collateral held by Ledin directly or their funding partners

416
00:33:11,285 --> 00:33:13,685
your bitcoins never lent out to generate interest

417
00:33:13,685 --> 00:33:17,685
I recently took out a loan with Ledin the whole process was super easy

418
00:33:17,685 --> 00:33:22,525
the application took me less than 15 minutes and in a few hours I had the dollars in my account

419
00:33:22,525 --> 00:33:23,805
it was super smooth

420
00:33:23,805 --> 00:33:32,085
So if you need cash but you don't want to sell Bitcoin, head over to leden.io forward slash WBD and you'll get 0.25% off your first loan.

421
00:33:32,565 --> 00:33:36,245
That's L-E-D-N dot I-O forward slash WBD.

422
00:33:36,605 --> 00:33:40,125
If you already self-custody Bitcoin, you know the deal with hardware wallets.

423
00:33:40,545 --> 00:33:45,025
Complex setups, clumsy interfaces and a seed phrase that can be lost, stolen or forgotten.

424
00:33:45,805 --> 00:33:46,865
Well, BitKey fixes that.

425
00:33:47,405 --> 00:33:50,885
BitKey is a multi-sig hardware wallet built by the team behind Square and Cash App.

426
00:33:50,885 --> 00:33:58,345
It packs a cryptographic recovery system and built-in inheritance feature into an intuitive, easy-to-use wallet with no seed phrase to sweat over.

427
00:33:59,105 --> 00:34:02,025
It's simple, secure self-custody without the stress.

428
00:34:02,605 --> 00:34:05,205
And time named BitKey one of the best inventions of 2024.

429
00:34:06,125 --> 00:34:09,765
Get 20% off at bitkey.world when you use the code WBD.

430
00:34:10,325 --> 00:34:14,585
That's B-I-T-K-E-Y dot world and use the code WBD.

431
00:34:14,825 --> 00:34:18,945
The thing that keeps me up at night is the idea of a critical error with my Bitcoin cold storage.

432
00:34:18,945 --> 00:34:20,865
and this is where AnchorWatch comes in.

433
00:34:20,865 --> 00:34:24,505
With AnchorWatch, your Bitcoin is insured with your own A-plus rated

434
00:34:24,505 --> 00:34:26,385
Lloyds of London insurance policy.

435
00:34:26,385 --> 00:34:29,505
And all Bitcoin is held in their time-locked multi-sig vaults.

436
00:34:29,505 --> 00:34:31,865
So you have the peace of mind knowing your Bitcoin is insured

437
00:34:31,865 --> 00:34:33,505
while not giving up custody.

438
00:34:33,505 --> 00:34:35,625
So whether you're worried about inheritance planning,

439
00:34:35,625 --> 00:34:47,110
wrench attacks natural disasters or just your own silly mistakes you protected by Anchor Watch Rates for fully insured custody start as low as 0 and are available for individual and

440
00:34:47,110 --> 00:34:52,070
commercial customers located in the US. Speak to Anchor Watch for a quote and for more details

441
00:34:52,070 --> 00:34:58,210
about your security options and coverage, visit anchorwatch.com today. That's anchorwatch.com.

442
00:34:59,270 --> 00:35:03,330
Okay, so let's talk about how you actually deal with the treasury and you're gonna have to keep

443
00:35:03,330 --> 00:35:08,470
this a little bit simple for me. Like you said, you're generating yield. Like let's start with

444
00:35:08,470 --> 00:35:12,430
the easy one. Where does the yield come from? Yeah. Uh, if you don't know where the yield comes

445
00:35:12,430 --> 00:35:20,510
from, you are the yield. Um, no. And, and let's be very clear. And this has been a, a point of

446
00:35:20,510 --> 00:35:25,470
frustration for me because, and again, I'm not, not, not here to wear my arm out, patting ourselves

447
00:35:25,470 --> 00:35:31,450
on, on the back necessarily, but you know, we, we take it very seriously to be very transparent

448
00:35:31,450 --> 00:35:38,570
about our strategies and what we do, be very specific about what is possible, what isn't

449
00:35:38,570 --> 00:35:46,810
possible, what are the risks and possibilities there, and to take diligence and analytical rigor

450
00:35:46,810 --> 00:35:51,890
to everything that we do. So where does the yield come from? Well, we talked about, let's just,

451
00:35:51,890 --> 00:35:58,870
you know, first and foremost is you can't generate sustainable, yield is just return on

452
00:35:58,870 --> 00:36:05,470
capital. You can't generate sustainable return on capital unless you have some type of operating

453
00:36:05,470 --> 00:36:08,990
business. And maybe that operating business is an investment business, but that would mean you

454
00:36:08,990 --> 00:36:14,550
have to have a process. You have to have controls. You have to have a view. You have to have risk

455
00:36:14,550 --> 00:36:22,910
management. So the return on capital that we generate starts with thinking about what is the

456
00:36:22,910 --> 00:36:28,010
operating profile of our core business? And our core businesses has been Bitcoin mining.

457
00:36:28,010 --> 00:36:37,710
Traditionally, obviously, we're going to be expanding into, we'll talk about how we're kind of driving capital from the digital asset management side into the AI HPC kind of an energy expansion side.

458
00:36:37,710 --> 00:37:00,670
But the first thing that we did in December of 2024 was start with a 60 to 90 day process to really decompose our entire business across what are the drivers, what are the risks, where are the expenses, where's the cost of capital, where's the cost of power, what is the timing of those cash flows?

459
00:37:00,670 --> 00:37:07,190
because this is a really underappreciated point, is that you might be doing something that makes a

460
00:37:07,190 --> 00:37:11,770
lot of sense in the aggregate, but it doesn't make a lot of sense when you get upside down

461
00:37:11,770 --> 00:37:17,990
versus timing and asset liability mismatches. So that took us maybe 30 to 60 days to kind of get

462
00:37:17,990 --> 00:37:22,550
settled and kind of really think through that. It took us another 30 to 60 days to really kind of

463
00:37:22,550 --> 00:37:27,250
design the philosophy around that. And what we came to was essentially a two-pronged approach.

464
00:37:27,690 --> 00:37:32,530
So the first approach is that we're generating around 600 Bitcoin a month right now.

465
00:37:32,990 --> 00:37:37,550
That can go up and down kind of depending on difficulty, operational hash rate, you know, kind of what we're doing.

466
00:37:37,610 --> 00:37:39,730
But let's call it kind of 500 to 600 Bitcoin a month.

467
00:37:40,130 --> 00:37:44,730
So, you know, we know what our OPEX component of that is going to be.

468
00:37:45,110 --> 00:37:49,070
And the other thing that you can do is you can start to think about what are going to be your CAPEX needs.

469
00:37:49,070 --> 00:37:59,550
So you can look out to September or December of this year or into next year and go, OK, well, I need 35% of that right now.

470
00:37:59,670 --> 00:38:10,690
For every dollar adjusted Bitcoin that comes in that's worth a USD, maybe 35% of that could go to OPEX kind of on an ongoing basis.

471
00:38:10,690 --> 00:38:22,110
And maybe somewhere between another 35% to the other kind of 65% of it might go into these CapEx opportunities right now, quite frankly, because there's so much opportunity to build out in this space.

472
00:38:22,410 --> 00:38:23,970
So that's on a monthly basis.

473
00:38:23,970 --> 00:38:26,170
And the second part is that we have the Bitcoin.

474
00:38:26,710 --> 00:38:29,410
And look, I really do give Saylor a lot of credit in this.

475
00:38:29,530 --> 00:38:40,470
Like volatility is vitality in the sense that you are taking an asset that the other thing is that yield on any asset comes from moving it around.

476
00:38:40,690 --> 00:39:08,730
Right. Moving it into hands where it's going to be, it might be inert on your balance sheet, but at, you know, it might be at rest on your balance sheet, but at movement on somebody else's, maybe they will pay you for the opportunity to do that. That's what interest rates are. They go, okay, I've accrued some capital. You know, Vanya has a great opportunity to build out a new AIHPC data center. He thinks he's going to get a 9% return on equity. He'll pay me 5% for the opportunity of using my capital in the meantime.

477
00:39:08,730 --> 00:39:12,770
that's a good risk adjusted return for me. I underwrite him and he gets his return. And

478
00:39:12,770 --> 00:39:20,530
that's what yield is, right? It's not this like thing in the ethereal kind of out there that just

479
00:39:20,530 --> 00:39:28,250
comes from diluting down your business with no cash flows coming in and pushing that back onto

480
00:39:28,250 --> 00:39:34,330
a capital stack that doesn't have kind of a self-reinforcing engine, right? So going back to

481
00:39:34,330 --> 00:39:39,490
how we split it, we have the spot plus program, which is what we can do is we can take, because

482
00:39:39,490 --> 00:39:44,170
we have 500 to 600 Bitcoin coming in a month, because that is our core operating business,

483
00:39:44,250 --> 00:39:48,630
because it maps onto our exact needs and we need to monetize some portion of that. Look,

484
00:39:48,710 --> 00:39:52,170
we want to hodl as much Bitcoin as possible, but at the end of the day, we still have to pay

485
00:39:52,170 --> 00:39:59,210
salaries and insurance and power bills, all of these kinds of things. So some version of that

486
00:39:59,210 --> 00:40:03,610
is going to get converted into dollars. So I could do that in the spot market. We could go to the

487
00:40:03,610 --> 00:40:07,950
spot market and we can either do a market order or a limit order. Right. And I'm not trying to like,

488
00:40:08,610 --> 00:40:13,870
I'll be simplistic in a certain way. But I don't want to speak down to anybody who kind of

489
00:40:13,870 --> 00:40:18,650
understands these concepts at a core. No, please do. But essentially, you can just sell it market,

490
00:40:18,850 --> 00:40:22,590
which just says, hey, I'm going to go take whatever the price is right now. I got 100

491
00:40:22,590 --> 00:40:26,850
Bitcoin to sell. It's going to go down in the centralized limit order book, probably down about

492
00:40:26,850 --> 00:40:30,570
two levels. And I'm going to get, you know, an average price of I'm going to I'm going to get

493
00:40:30,570 --> 00:40:35,310
done within a couple cents or a couple cents, right? You could do a limit order. You say, hey,

494
00:40:35,670 --> 00:40:39,250
I'm going to sit here. I think that the natural volatility, what we've done is we've looked at

495
00:40:39,250 --> 00:40:44,990
kind of Bitcoin vol on a daily basis. It moves up or down. It might go up 1.5% and down 1.5%

496
00:40:44,990 --> 00:40:48,990
a day. That means you're going to have kind of a 3% range. I'm just going to set kind of

497
00:40:48,990 --> 00:40:54,890
consistent limit orders up 1.25% because eventually kind of on a daily basis, it's going to pop up

498
00:40:54,890 --> 00:40:58,610
and I'm going to get taken out. That's one way to kind of try to outperform spot, right? And it's

499
00:40:58,610 --> 00:41:02,730
a very simple kind of way to do it. Obviously, the risks are if you're in a downtrending market,

500
00:41:02,730 --> 00:41:07,210
if it doesn't do that, if volatility compresses. So let's be clear eyed about what that is. But

501
00:41:07,210 --> 00:41:09,790
that's one way to kind of think about how to manage some of the risk on the book.

502
00:41:10,370 --> 00:41:15,870
The other way is to go to the derivatives market and go, okay, so it's kind of like when I go to

503
00:41:15,870 --> 00:41:22,690
Delta, and I click on flexible dates, right? We don't really, we know that we have to meet salaries.

504
00:41:22,990 --> 00:41:27,990
And we talk about understanding the timing of cash flows. Salaries are on the 7th and the 22nd,

505
00:41:27,990 --> 00:41:34,470
Right. So somewhere between that. So I have, you know, 14 days in between that to come up with the dollars to do that.

506
00:41:34,470 --> 00:41:38,390
So I go, I don't really care if I sell Tuesday, Wednesday, Thursday or next Monday.

507
00:41:38,550 --> 00:41:43,630
But what I can do is I can get paid for that optionality by the market.

508
00:41:43,790 --> 00:41:46,950
So there's there is volatility within Bitcoin.

509
00:41:47,070 --> 00:41:49,990
Bitcoin is it is is does not have an organic interest rate.

510
00:41:50,230 --> 00:41:57,870
But what you can find is that you can find that people will either, you know, want to take it on their balance sheet for trade financing or to do or to collateralization.

511
00:41:57,990 --> 00:42:02,790
or to borrow or just for kind of any of these other uses.

512
00:42:03,010 --> 00:42:05,410
So there's a natural volatility in that market.

513
00:42:05,830 --> 00:42:07,910
So we'll sell basically short-dated covered calls.

514
00:42:08,030 --> 00:42:10,110
Again, simple, not easy.

515
00:42:10,290 --> 00:42:11,170
And that's our whole philosophy.

516
00:42:11,310 --> 00:42:13,090
This should be extremely simple to understand.

517
00:42:13,430 --> 00:42:14,690
It should not be that complicated.

518
00:42:15,510 --> 00:42:18,510
The risk should be completely decomposed and understood.

519
00:42:18,750 --> 00:42:22,110
But it's hard to do it because of the institutional risk management

520
00:42:22,110 --> 00:42:26,590
and the kind of consistency and the way that it maps onto operating business.

521
00:42:26,590 --> 00:42:28,370
So we just sell short-dated covered calls, right?

522
00:42:28,410 --> 00:42:42,410
And so what's interesting about short-dated covered calls is, yeah, even as volatility has compressed, the kind of total all-in cash-on-cash or sats-on-stats return you're getting is incredibly attractive, right?

523
00:42:42,550 --> 00:42:49,910
And so what we found is that by managing this in the way – and I can't give away kind of the whole kit and caboodle on kind of how we do it specifically.

524
00:42:49,910 --> 00:42:54,170
but we have a strategy where we go out X amount of days

525
00:42:54,170 --> 00:42:56,750
kind of knowing that we're going to have to meet these obligations.

526
00:42:57,090 --> 00:43:01,330
As we get closer to that, we will increase what's known as our delta exposure.

527
00:43:01,910 --> 00:43:04,190
And that delta exposure means, you can think of delta ads.

528
00:43:04,250 --> 00:43:07,110
If I'm selling a 20 delta call, that means one out of five times,

529
00:43:07,150 --> 00:43:10,130
about 20% of the time, on average, you can expect to get taken out.

530
00:43:10,130 --> 00:43:14,630
Now, there's going to be a lot of derivative heads listening to this

531
00:43:14,630 --> 00:43:18,370
who are going to talk about, you know, can you really take,

532
00:43:18,370 --> 00:43:24,710
a standard, you know, kind of a standard kind of curve on that. And what are the real stochastic

533
00:43:24,710 --> 00:43:28,790
returns? And should we use a jump diffusion index instead of a Black Skulls Merton model,

534
00:43:29,010 --> 00:43:33,290
kind of all that. But like, long story short, you can essentially think that if you're selling

535
00:43:33,290 --> 00:43:37,770
a 20 Delta option, about 20% of the time, you expect to get called on that. What that means is

536
00:43:37,770 --> 00:43:44,010
I'm selling a covered call that says that I have committed to selling you Bitcoin at $100,000 in

537
00:43:44,010 --> 00:43:50,610
seven days. If Bitcoin goes to $107,000, you pay me $100,000. But you're paying me $1,000 in the

538
00:43:50,610 --> 00:43:55,910
meantime for the right, but not the obligation to buy that from me. Bitcoin goes to $107,000. Great.

539
00:43:56,030 --> 00:44:01,250
You're in the money. You buy the Bitcoin from me at $100,000. You go sell back at $7,000. You're

540
00:44:01,250 --> 00:44:07,490
net up $6,000 in that $1,000 you paid me. All good. For me- Can I ask you a question? So in the

541
00:44:07,490 --> 00:44:11,810
80% of the time that that works, great. In the 20%, it doesn't. Does that cause any issues for

542
00:44:11,810 --> 00:44:17,890
the business. Well, and so it's hard to know what you want, right? Because the 80% of the time it

543
00:44:17,890 --> 00:44:21,990
works, we keep the money. But that also means Bitcoin didn't get to that level that maybe we

544
00:44:21,990 --> 00:44:26,970
wanted to sell it at. So you have this entire non-stationary thing. And so this is what we've

545
00:44:26,970 --> 00:44:32,070
been titrating and really kind of, really kind of, quite frankly, innovating on, right? And so

546
00:44:32,070 --> 00:44:38,710
we've innovated on how far out we go, what deltas we use, how often we will essentially rewrite those

547
00:44:38,710 --> 00:44:43,090
deltas. So most people that, that in most of, most of the kind of other people in the space,

548
00:44:43,090 --> 00:44:47,090
they'll come in and they'll say, Hey, I want to generate yield on my Bitcoin. I'm going to sell

549
00:44:47,090 --> 00:44:52,690
a thousand calls six months out. And they're basically really, really in the money or really

550
00:44:52,690 --> 00:44:56,330
out of the money. And what we do is we build what's known as kind of an option tree, right?

551
00:44:56,350 --> 00:45:00,950
And so we build, we're basically DCA into these positions all the time that kind of reduces our

552
00:45:00,950 --> 00:45:07,090
kind of, it, it, it marries our, our, our, our, our, our outcomes are, are, are, are, are realized

553
00:45:07,090 --> 00:45:11,070
outcomes more to what you would be kind of an expected outcome in the market, just because you

554
00:45:11,070 --> 00:45:14,730
have more kind of data points to go through rather than kind of having these chunky.

555
00:45:16,230 --> 00:45:22,830
I just want to hit on one point as to why I'm not as worried about, because at the end of the day,

556
00:45:22,830 --> 00:45:27,670
you want to keep the Bitcoin on your balance sheet because the upside appreciation of the

557
00:45:27,670 --> 00:45:33,350
technology diffusion is where a lot of the value sits. So let's say that we are selling,

558
00:45:33,350 --> 00:45:39,210
I'm going to use round numbers, 500 Bitcoin a month in order to pay for our expenses and make

559
00:45:39,210 --> 00:45:44,110
investments in CapEx. And we've got laddered out across the big tree, a number of different

560
00:45:44,110 --> 00:45:47,730
durations, a number of different levels, et cetera, a thousand Bitcoin that are out there

561
00:45:47,730 --> 00:45:51,390
that could be called away. And Bitcoin goes parabolic, which it has done from time to time.

562
00:45:51,590 --> 00:45:56,430
And we get called away on all thousand. Typically, you'd say, oh, well, that's really challenging

563
00:45:56,430 --> 00:46:01,170
because now our treasury position has been reduced. Well, this is the beauty of having

564
00:46:01,170 --> 00:46:05,870
an operating business that prints revenue in Bitcoin. Because now we've got two months where

565
00:46:05,870 --> 00:46:10,510
we don't need to monetize any of that future production. We're able to replace it onto the

566
00:46:10,510 --> 00:46:16,490
balance sheet. So I love the- Oh no, I sold a thousand Bitcoin up 30% in a month. And now I

567
00:46:16,490 --> 00:46:20,190
just have to sit on my hands for two months and just pause our strategy and make it all back.

568
00:46:20,610 --> 00:46:24,170
And so- So does this only work when you're actually generating Bitcoin as a company?

569
00:46:24,510 --> 00:46:30,390
Exactly. The specific way we're doing this is- Yes. This is the key, which is that what we're

570
00:46:30,390 --> 00:46:36,090
not doing is selling equity or raising debt to go purchase Bitcoin to create our treasury position.

571
00:46:36,250 --> 00:46:43,350
We have an operating business that puts us in a treasury accretive position. And so because of

572
00:46:43,350 --> 00:46:49,010
that, the doors for what we are able to do open up. Okay, I need to go back a bit then. So with

573
00:46:49,010 --> 00:46:54,390
the expansion to AI that you're going to do, will there also be expansion in the Bitcoin side of the

574
00:46:54,390 --> 00:47:00,450
business alongside that? So what my vision and what our collective vision for the future looks

575
00:47:00,450 --> 00:47:04,670
like is that Bitcoin mining as a percentage of revenue is going to be dramatically smaller.

576
00:47:04,790 --> 00:47:09,390
Okay. And we could still see our Bitcoin mining revenue expand because our AI is just going to

577
00:47:09,390 --> 00:47:13,330
grow faster than our Bitcoin lag. So when you're set up, like, I understand now where you said

578
00:47:13,330 --> 00:47:16,770
clean spot capital, because this seems like a whole different business almost within the business.

579
00:47:17,010 --> 00:47:21,610
And the reason that it works is that we are in a high capital intensity business.

580
00:47:21,610 --> 00:47:29,370
And so having a tool and a flywheel that works this way becomes a funding mechanism for all of the growth that we want to engage in.

581
00:47:29,370 --> 00:47:42,510
I really want to emphasize that CleanSpark Capital or whatever that may or may not be over time and digital asset management in its current form is not meant to be some internal hedge fund or thing that sits off in the corner.

582
00:47:42,950 --> 00:47:44,550
And this is I've heard a lot of our –

583
00:47:44,550 --> 00:47:46,290
So what is it meant to be?

584
00:47:46,290 --> 00:48:08,270
It is meant to sit, and this is the whole point is that the risks, we are able to take risks that are outsized in a vacuum because they are hedged out by the operating business and they generate additional margins for the mining business and ultimately the operating business and ultimately the capital.

585
00:48:08,270 --> 00:48:12,810
So it's meant to feed and enhance the profitability of mining.

586
00:48:13,330 --> 00:48:15,030
It's meant to fund expansion.

587
00:48:15,110 --> 00:48:19,470
And it's meant to maximize the potential of the Bitcoin huddle.

588
00:48:19,810 --> 00:48:22,410
And so I've heard a lot of other people that try to do this.

589
00:48:22,490 --> 00:48:33,030
And it's, oh, you know, the most important part of this is that Gary Vecchiarelli, our CFO and president, had this idea for this trading desk four, five years ago.

590
00:48:33,030 --> 00:48:43,190
And, you know, when you have really mean this, you have to have a management team that is fully on board with what you're doing.

591
00:48:43,430 --> 00:48:48,890
You have to have a strategy and philosophy that maps directly onto your operating profile.

592
00:48:48,890 --> 00:48:58,730
And you have to have a team that can implement this in an institutional, rigorous and risk managed way.

593
00:48:58,730 --> 00:49:03,950
And so does that answer your questions or concerns?

594
00:49:04,050 --> 00:49:04,910
I mean, push back.

595
00:49:05,170 --> 00:49:06,570
I mean, it's not that I have concerns.

596
00:49:06,730 --> 00:49:12,770
It's just like, do you need the Bitcoin side of the business to continue to grow to allow this arm of the business to continue to grow?

597
00:49:12,770 --> 00:49:15,130
I mean, can I address some of the thoughts around that?

598
00:49:15,390 --> 00:49:23,050
I mean, I just think that there are, look, I don't want to shock you guys.

599
00:49:23,050 --> 00:49:30,890
but in about two years the bitcoin block subsidy is going to go down by 50 percent why do you know

600
00:49:30,890 --> 00:49:39,390
so in about a hundred years there's going to be no more bitcoin to mine no other than on the fees

601
00:49:39,390 --> 00:49:45,410
and transaction side there's no subsidy the block subsidies correct okay right so this is always a

602
00:49:45,410 --> 00:49:50,330
game of running as fast as you can to get as much bitcoin on the balance sheet as you can

603
00:49:50,330 --> 00:49:56,750
to ride that adoption curve up and then to diversify both your digital asset management

604
00:49:56,750 --> 00:50:01,530
side in order to figure out how to kind of drive incremental returns and to expand into,

605
00:50:01,670 --> 00:50:09,470
like we touched on some other Bitcoin-denominated revenue generating things, which we are exploring

606
00:50:09,470 --> 00:50:16,590
very, very deeply. So the idea is always going to be, hey, how do we maximize the value of every

607
00:50:16,590 --> 00:50:22,670
kilowatt hour that we're expending? How do we take other complementary Bitcoin-denominated

608
00:50:22,670 --> 00:50:27,010
businesses, because we believe that Bitcoin is going to be a core capital asset in the US economy,

609
00:50:27,190 --> 00:50:32,230
and how do we take the float that that generates, maximize the margin on that on the digital asset

610
00:50:32,230 --> 00:50:36,630
management side, and then turn that into an origination machine, which can then drive back

611
00:50:36,630 --> 00:50:41,230
into the float? And that origination machine might be kind of AIHBC revenues, it might be

612
00:50:41,230 --> 00:50:44,710
structured products, it might be a whole bunch of different stuff. And that's kind of, I think,

613
00:50:44,710 --> 00:50:49,350
kind of TBD, but things that we think very, very deeply and granularly about.

614
00:50:49,350 --> 00:50:54,430
And there's a fundamental piece in the data center side that I think is important to talk

615
00:50:54,430 --> 00:51:00,750
about in this context, which is that the data center deployment capital life cycle is incredibly

616
00:51:00,750 --> 00:51:06,430
intense. And so if you are able to drive down your cost of capital on your data center deployment,

617
00:51:06,970 --> 00:51:13,030
you're able to realize significant margin expansion across that profile because you're

618
00:51:13,030 --> 00:51:16,930
borrowing dollars to build a data center, you're getting paid dollars for access to that data

619
00:51:16,930 --> 00:51:21,870
center, and the spread between those two numbers ends up being really material to the business.

620
00:51:22,190 --> 00:51:26,810
And so if you're able to expand that spread, you're able to give a lot of shareholder value

621
00:51:26,810 --> 00:51:32,570
back because you're doing it in a way that other people who are running exactly the same type of

622
00:51:32,570 --> 00:51:37,850
data center strategy are not able to enact because we've got these other components to the business

623
00:51:37,850 --> 00:51:42,310
that makes us a differentiated player, even when we're engaging in a similar activity.

624
00:51:42,310 --> 00:51:47,190
So tell me a bit about how the market views Bitcoin in this, because like me as an all

625
00:51:47,190 --> 00:51:51,190
Bitcoiner, if I go out to a lead and try and get a loan, I'm going to be paying like high

626
00:51:51,190 --> 00:51:55,590
single figure, low double digits.

627
00:51:55,590 --> 00:52:06,735
Is that the same for you when you doing this at such large scale I mean like no I want to know though like how you see that maturing because we probably think

628
00:52:06,735 --> 00:52:07,495
or would all agree

629
00:52:07,495 --> 00:52:08,715
that Bitcoin is the best form of collateral.

630
00:52:09,115 --> 00:52:10,635
Like when will the market wake up to that?

631
00:52:10,715 --> 00:52:11,155
I mean, totally.

632
00:52:11,215 --> 00:52:12,855
And this has been my argument for a long time,

633
00:52:12,895 --> 00:52:14,135
which is that ironically,

634
00:52:14,135 --> 00:52:15,335
if you look back, you know,

635
00:52:15,395 --> 00:52:17,255
even a year, but definitely two years,

636
00:52:17,675 --> 00:52:20,195
you were, you're 200%

637
00:52:20,195 --> 00:52:22,195
kind of over collateralized on a loan.

638
00:52:22,335 --> 00:52:24,215
You're paying nine to 11,

639
00:52:24,415 --> 00:52:26,415
sometimes higher percentages than that.

640
00:52:26,455 --> 00:52:30,095
And, you know, it's just an upside down market.

641
00:52:30,255 --> 00:52:35,055
Like our view on this is the price of a Bitcoin secured loan

642
00:52:35,055 --> 00:52:38,975
should trade below the comparable,

643
00:52:39,335 --> 00:52:41,235
call it corporate credit market necessarily.

644
00:52:41,355 --> 00:52:42,515
I think you might say treasuries,

645
00:52:42,635 --> 00:52:43,975
but I would say corporate credit market.

646
00:52:44,635 --> 00:52:44,795
Yeah.

647
00:52:45,175 --> 00:52:48,115
With the idea being that if I'm giving you-

648
00:52:48,115 --> 00:52:48,695
What numbers are they?

649
00:52:49,255 --> 00:52:50,555
So-

650
00:52:50,555 --> 00:52:52,075
What are we in the market with?

651
00:52:52,195 --> 00:52:54,175
No, I don't necessarily mean you if you can't share that.

652
00:52:54,175 --> 00:53:01,175
We're in the market around software plus 3.55% is the most recent paper that we've printed.

653
00:53:01,735 --> 00:53:04,755
Spreads have come in another 150 basis points from there.

654
00:53:05,255 --> 00:53:13,815
So you're talking – we're seeing indications in the kind of 6% range at the institutional scale.

655
00:53:13,815 --> 00:53:22,855
I think depending on how you structure things for really kind of like really like overnight style paper where you're kind of doing trade finance,

656
00:53:22,855 --> 00:53:26,795
what looks kind of like traditional repo, you might even be able to improve a little bit from

657
00:53:26,795 --> 00:53:31,035
there. I think for term financing, you might be able to go a little bit up because the lender's

658
00:53:31,035 --> 00:53:35,115
taking a little bit more of kind of a, there's a little bit of a term premium that's built into

659
00:53:35,115 --> 00:53:38,935
that. But we're talking about compression of 500 basis points over about a year, right?

660
00:53:38,935 --> 00:53:44,475
So even though they are taking like a longer timeframe in that, there's no risk to them.

661
00:53:45,315 --> 00:53:52,575
Correct. So the reason that there's a premium on those dollars is because the price is not purely

662
00:53:52,575 --> 00:53:53,555
There's always risk, but yeah.

663
00:53:53,755 --> 00:53:54,715
Yeah, there's always risk.

664
00:53:54,735 --> 00:53:55,115
There's always risk.

665
00:53:55,195 --> 00:53:55,655
Let me be clear.

666
00:53:55,795 --> 00:54:00,455
But the price of the dollars is not a function of the risk profile of the collateral.

667
00:54:00,735 --> 00:54:04,535
It's the competitiveness by which other people want those dollars as well.

668
00:54:04,635 --> 00:54:04,875
Okay.

669
00:54:05,075 --> 00:54:09,935
And so if all of us are saying, we all want to go buy a house, but our mortgage broker

670
00:54:09,935 --> 00:54:13,335
only has enough money for one house, they're going to have all of us bid on it.

671
00:54:13,335 --> 00:54:13,495
Yeah.

672
00:54:13,495 --> 00:54:17,355
Even though they're never going to lose money because the house is like super cheap or whatever.

673
00:54:17,535 --> 00:54:17,615
Yeah.

674
00:54:17,735 --> 00:54:19,955
But so there's two dynamics.

675
00:54:19,955 --> 00:54:22,915
One is how likely do they think they are to lose the money?

676
00:54:23,275 --> 00:54:26,975
The second is how competitive is the market to get those dollars?

677
00:54:27,055 --> 00:54:31,635
And what are we willing to bid it up to amongst the three of us as we go out to the housing market?

678
00:54:31,875 --> 00:54:34,675
Can you explain why you think the interest rate should be lower than treasuries?

679
00:54:34,755 --> 00:54:36,975
Because like when I hear that as a Bitcoin, I'm like, fuck yeah.

680
00:54:37,315 --> 00:54:39,195
But like, why do you actually think that?

681
00:54:39,275 --> 00:54:43,615
Yeah, because it's like not impossible to lose money on a over collateralized.

682
00:54:43,615 --> 00:54:45,415
It's always possible to lose money if you try hard enough.

683
00:54:45,415 --> 00:54:57,415
But on a relative basis, the likelihood that you lose money on a Bitcoin collateralized loan as the lender is about as low as you can possibly get.

684
00:54:57,535 --> 00:55:02,375
Because you're saying, you know, let's walk through the mechanics of what the lender is doing.

685
00:55:03,455 --> 00:55:04,435
I'm the borrower.

686
00:55:04,755 --> 00:55:08,395
I give the bank a million dollars of Bitcoin.

687
00:55:08,875 --> 00:55:12,075
The bank gives me $700,000 of dollars.

688
00:55:12,075 --> 00:55:18,735
the minute that the Bitcoin goes down to being worth $750,000, they have a $50,000 cushion still,

689
00:55:18,875 --> 00:55:24,275
they automatically liquidate that Bitcoin and extinguish the loan. Yeah. And Bitcoin trades

690
00:55:24,275 --> 00:55:29,855
between 40 and $80 billion a year, 24 seven. Yeah, you can do it on Friday night, you can do it on

691
00:55:29,855 --> 00:55:34,975
Sunday morning, you can do it on New Year's Eve, there is no limit to the market availability,

692
00:55:34,975 --> 00:55:38,455
because I think, you know, one of the risks is that, you know, you go to the overnight repo

693
00:55:38,455 --> 00:55:42,235
market, which Rory mentioned earlier, which is the relationship that banks have with the Fed.

694
00:55:42,775 --> 00:55:47,755
The reason they call it the overnight market is because you give them the dollars in the afternoon

695
00:55:47,755 --> 00:55:53,415
and you get the paper back the next morning. It's overnight because there's a gap in the trading

696
00:55:53,415 --> 00:56:00,595
window. And so Bitcoin doesn't have that time gap. And so because of that, the liquidity profile

697
00:56:00,595 --> 00:56:08,255
of the collateral liquidation mechanism is not seamless, not lossless, but as close to seamless

698
00:56:08,255 --> 00:56:12,575
and lossless as we've ever seen any market for credit ever.

699
00:56:12,795 --> 00:56:14,855
And look, I mean, this is still super underappreciated.

700
00:56:14,975 --> 00:56:15,875
Like Bitcoin's a teenager.

701
00:56:16,015 --> 00:56:17,375
It just got its driver's license, right?

702
00:56:17,415 --> 00:56:19,015
Like it's 16 years old, right?

703
00:56:19,075 --> 00:56:21,055
And it's a terror on the road sometimes.

704
00:56:22,755 --> 00:56:26,995
But like the point is we've been through multiple cycles,

705
00:56:27,255 --> 00:56:28,375
multiple liquidation cycles.

706
00:56:28,375 --> 00:56:30,115
We have institutional trading infrastructure.

707
00:56:30,615 --> 00:56:32,935
We have OTC deaths that can quote risk.

708
00:56:33,235 --> 00:56:34,735
We have credit facilities.

709
00:56:35,235 --> 00:56:36,555
We have banks that are getting involved.

710
00:56:36,555 --> 00:56:55,575
I mean, this is not untrodden territory anymore. And so the argument essentially for kind of why there's been that compression is one is that I think the people that were long dollars knew that they were getting paid more than they should on a risk adjusted basis to make these loans.

711
00:56:55,575 --> 00:57:02,535
And they're probably getting down to, we're getting within horseshoes and hand grenades territory of probably properly risk capital.

712
00:57:03,075 --> 00:57:23,275
But yeah, I mean, if you're going to ask for over collateralization in an asset that trades that is one of the most liquid assets in the world and one of the few assets that trades truly 24-7, then that to me commands a lower risk premium than kind of almost anything else.

713
00:57:23,275 --> 00:57:26,315
If Bitcoin is this turbocharger on your balance sheet,

714
00:57:26,435 --> 00:57:29,455
do you think other businesses will start doing similar things to you,

715
00:57:29,535 --> 00:57:31,335
even if they're outside of the Bitcoin space?

716
00:57:31,735 --> 00:57:34,115
I mean, and this is my point, is that I can sit here

717
00:57:34,115 --> 00:57:36,815
and I could literally open up our book.

718
00:57:36,975 --> 00:57:39,155
I could show you exactly what our positions are.

719
00:57:39,295 --> 00:57:41,055
I could tell you exactly how I think about it,

720
00:57:41,095 --> 00:57:44,475
and you still can't do it because you don't have our operating business.

721
00:57:44,575 --> 00:57:45,715
No, no, it's not about expertise.

722
00:57:45,855 --> 00:57:47,655
So let's say I pick you out of CleanSpark

723
00:57:47,655 --> 00:57:49,295
and I put you into just a regular company

724
00:57:49,295 --> 00:57:50,595
that's not doing anything in Bitcoin.

725
00:57:50,595 --> 00:57:52,335
Do you still think Bitcoin should be on their balance sheet

726
00:57:52,335 --> 00:57:53,015
so you can do this?

727
00:57:53,275 --> 00:57:57,975
this sort of thing? I mean, my argument would be yes, because I think that there, again,

728
00:57:58,235 --> 00:58:03,595
and I'm not saying it should be 100% necessarily. Again, I would do the same process that we ran

729
00:58:03,595 --> 00:58:09,595
through here. I would decompose what is our risk tolerances? What is our expertise? What is the

730
00:58:09,595 --> 00:58:15,755
timing of cash flows? What are our needs? What's our margins? What are our current assets? And I

731
00:58:15,755 --> 00:58:19,935
would think about this. But yeah, I mean, the argument is it should be some portion of this,

732
00:58:19,935 --> 00:58:25,855
because there is upside optionality on the asset. There's the ability to borrow against it while you

733
00:58:25,855 --> 00:58:30,795
hold on to that upside optionality. And there's the ability to drive incremental returns from it

734
00:58:30,795 --> 00:58:34,395
while you're doing that in the meantime. So, I mean, I just, to me, it's an obvious yes,

735
00:58:34,475 --> 00:58:40,175
but I understand why it's taken a long time. And what you're describing is that, you know,

736
00:58:40,475 --> 00:58:45,855
all of these businesses out there have a long lineage in traditional corporate treasury management,

737
00:58:45,855 --> 00:58:51,355
which is if you're running any version of a business, whether it's a very small mom and pop

738
00:58:51,355 --> 00:58:56,335
business or a very large conglomerate, is that you have cash on the balance sheet, you have timings

739
00:58:56,335 --> 00:59:02,935
of cash flow. And so how do you take the cash on your balance sheet and utilize it as constructively

740
00:59:02,935 --> 00:59:11,055
as possible for the operating business's needs in the interim? And I'll wind you up, which is that

741
00:59:11,055 --> 00:59:16,215
you're good at that. Like they're like they're you don't necessarily need to take Bitcoin exposure

742
00:59:16,215 --> 00:59:24,395
to utilize a Bitcoin treasury approach, which is like if you're and I'll pick someone who has a,

743
00:59:24,395 --> 00:59:30,015
you know, pick a pick a company that has a big cash position. Apple. Apple. Why isn't Apple just

744
00:59:30,015 --> 00:59:35,755
banging the Bitcoin basis trade? Well, the thing is, a lot of people have and that's why there's

745
00:59:35,755 --> 00:59:41,635
been compression in this space. So, um, and, and, and what we talked about is, and is part of our,

746
00:59:41,755 --> 00:59:45,195
kind of part of our original presentations, we showed this essentially flywheel and it showed

747
00:59:45,195 --> 00:59:49,715
kind of a, it showed kind of a flow chart of all the different things you start with, you know,

748
00:59:49,735 --> 00:59:53,615
it starts with a Bitcoin coming in. Then do you sell a covered call? You sell a covered call,

749
00:59:53,695 --> 00:59:57,975
you get, you get called away. It turns back into cash or turns into cash. That cash either goes in

750
00:59:57,975 --> 01:00:01,715
the operating business. You can write a put to get back, back into that Bitcoin. You could do,

751
01:00:01,775 --> 01:00:05,395
you could put a basis trade on and kind of, you look at all the different flows and how they all,

752
01:00:05,395 --> 01:00:09,955
how they all go into shows. So yeah, people banged the basis. I think that like the word got out,

753
01:00:10,035 --> 01:00:14,995
they got that. What is the basis trade? Basis trade is just the difference between the spot

754
01:00:14,995 --> 01:00:18,475
market and the futures market, the spot market and the forward market. And so there's a reason

755
01:00:18,475 --> 01:00:23,015
that the forward market kind of trades generally at a premium essentially. And so backwardation

756
01:00:23,015 --> 01:00:28,555
means that the price of the spot asset is lower, is higher than the price of the future asset.

757
01:00:28,875 --> 01:00:32,015
And the reason that you would be generally in backwardation, like let's say oil,

758
01:00:32,015 --> 01:00:35,955
maybe not in the last kind of 30, 60, 90 days,

759
01:00:36,015 --> 01:00:37,855
but oil tends to trade in backwardation.

760
01:00:38,815 --> 01:00:40,755
And the reason is that if you,

761
01:00:40,975 --> 01:00:43,275
you might need that barrel of oil now,

762
01:00:43,275 --> 01:00:45,615
but if you only need it in three months,

763
01:00:45,675 --> 01:00:47,295
well, you're going to have to pay storage costs.

764
01:00:47,355 --> 01:00:48,255
You have to do routing.

765
01:00:48,455 --> 01:00:49,115
There's kind of all these-

766
01:00:49,115 --> 01:00:50,035
This is like why it went negative

767
01:00:50,035 --> 01:00:51,395
and not like COVID time.

768
01:00:51,595 --> 01:00:53,235
Yeah, and so your point about the basis,

769
01:00:53,615 --> 01:00:55,715
I do think it will come back

770
01:00:55,715 --> 01:00:58,715
because I think that human psychology

771
01:00:58,715 --> 01:01:00,255
is one of the most things,

772
01:01:00,255 --> 01:01:03,095
that is one of the things you can bank on in financial markets.

773
01:01:03,275 --> 01:01:05,335
And the reason that the basis has been so persistent,

774
01:01:05,455 --> 01:01:07,935
it's down to about 3% right now.

775
01:01:07,975 --> 01:01:10,355
And so what you're at is it's basically been compressed

776
01:01:10,355 --> 01:01:13,775
to essentially the cost of institutional capital.

777
01:01:14,675 --> 01:01:16,375
We've been able to actually, quite frankly,

778
01:01:16,515 --> 01:01:19,075
to put on the basis trade at above market rates

779
01:01:19,075 --> 01:01:20,575
because of the relationships that we have

780
01:01:20,575 --> 01:01:21,555
with some of our counterparties.

781
01:01:21,815 --> 01:01:22,735
Some of the things we understand

782
01:01:22,735 --> 01:01:24,235
about some of their balance sheet needs,

783
01:01:24,315 --> 01:01:26,395
they might, and so they know that we have capital.

784
01:01:26,515 --> 01:01:28,775
And for a very small portion of kind of our balance sheet,

785
01:01:28,775 --> 01:01:31,375
We're willing to essentially put some Bitcoin on their balance sheet.

786
01:01:31,515 --> 01:01:33,335
They're willing to pay above market rates for that.

787
01:01:33,615 --> 01:01:35,235
They give that back to us on the basis.

788
01:01:35,375 --> 01:01:38,835
So that's kind of another one of the sort of side benefits of this institutional desk that we have.

789
01:01:39,355 --> 01:01:44,115
But the point being that why would the basis trade in Bitcoin trade higher, what's known as contango?

790
01:01:44,275 --> 01:01:48,375
So the future price of Bitcoin is higher than the spot price of Bitcoin.

791
01:01:48,495 --> 01:01:50,095
So Bitcoin is $100,000 today.

792
01:01:50,435 --> 01:01:54,115
In three months, it's three months, it's 103 based on kind of this forward curve.

793
01:01:55,075 --> 01:01:55,935
There's a couple of reasons.

794
01:01:56,095 --> 01:01:57,875
One is leverage, right?

795
01:01:57,875 --> 01:02:00,895
So you're a hedge fund, you're a retail trader, you're whatever.

796
01:02:01,835 --> 01:02:08,955
If you go put a forward on, you only have to put up $35 for every $100 of exposure that you get in Bitcoin.

797
01:02:09,295 --> 01:02:10,495
So there's a demand for that.

798
01:02:10,575 --> 01:02:11,115
That's an interest.

799
01:02:11,375 --> 01:02:12,875
That demand is everything.

800
01:02:14,115 --> 01:02:16,675
You know how everything computer, okay?

801
01:02:17,095 --> 01:02:18,655
Everything interest rates, right?

802
01:02:18,695 --> 01:02:20,195
It's always cost of capital.

803
01:02:20,595 --> 01:02:27,035
And so you're willing to pay a percentage on that because you think you're going to make 10% over three months

804
01:02:27,035 --> 01:02:30,335
and you're willing to pay 3% for that or whatever, right?

805
01:02:30,635 --> 01:02:32,175
And so that's kind of where that comes from.

806
01:02:32,255 --> 01:02:36,415
And so when you see Bitcoin go into a bull market,

807
01:02:36,415 --> 01:02:38,295
when you see kind of those outsized returns,

808
01:02:38,515 --> 01:02:40,155
and this is the other beauty of what we do, right?

809
01:02:40,515 --> 01:02:41,595
That's when, so we're getting,

810
01:02:41,775 --> 01:02:43,655
we might be getting called out of some of our coin.

811
01:02:44,255 --> 01:02:45,035
Now, what are we doing?

812
01:02:45,075 --> 01:02:46,255
We're holding dollars, okay?

813
01:02:46,675 --> 01:02:47,955
We're holding dollars at a time

814
01:02:47,955 --> 01:02:50,615
when demand for Bitcoin and the forwards

815
01:02:50,615 --> 01:02:53,715
and expressing that view via the forwards

816
01:02:53,715 --> 01:02:56,155
and the futures market has gone absolutely bananas.

817
01:02:56,155 --> 01:03:17,875
So we've seen these brief spikes, right? So even during this period of compression, we've seen these periods of brief spikes to kind of 9% to 12%. So now I've sold Bitcoin up 30% in a month. I'm holding dollars. And I can plow that back into Bitcoin basis trade in a delta neutral way at 9% to 12%. And so that's the flywheel that we're talking about.

818
01:03:17,875 --> 01:03:21,635
And so I think people – and again, I say simple, not easy.

819
01:03:22,035 --> 01:03:23,815
Yes, all we're doing is selling covered calls.

820
01:03:24,075 --> 01:03:25,395
All we're doing is banging the bases.

821
01:03:25,735 --> 01:03:26,795
All we're doing is doing this.

822
01:03:26,855 --> 01:03:27,775
All we're doing is doing that.

823
01:03:27,835 --> 01:03:29,675
But it's the way that we map it onto our business.

824
01:03:29,795 --> 01:03:38,435
It's the way that we've thought about this as it decomposes like across the kind of demand cycle that Bitcoin goes through.

825
01:03:38,435 --> 01:03:55,295
And it's about the way that we express those trades in institutional ways, manage them in a higher velocity than other people in the industry do, and quite frankly, build deep relationships that are personal and human with our counterparty.

826
01:03:55,295 --> 01:03:57,215
So, yes, they can check our credit report.

827
01:03:57,315 --> 01:04:00,375
They can read our SEC 10K or 10Q.

828
01:04:00,675 --> 01:04:01,895
We exchange financials.

829
01:04:01,935 --> 01:04:02,975
We do everything via ISDA.

830
01:04:03,035 --> 01:04:11,495
We have one of the kind of strongest kind of 360-degree views that we take to every relationship with just legal, internal controls, tax, accounting, risk, all of this stuff.

831
01:04:11,635 --> 01:04:16,655
But we also build deep personal relationships, which, quite frankly, Danny, is why we're sitting around this table, right?

832
01:04:16,715 --> 01:04:19,775
Like I've known Harry for many years now.

833
01:04:19,775 --> 01:04:29,775
We became friends because we sidled up to the same bar at Hill Country in NYC at an unchained pop-up on February 20th of 2020.

834
01:04:29,915 --> 01:04:36,855
I don't remember that just because it was right after Valentine's Day and I kind of love the guy.

835
01:04:37,215 --> 01:04:42,735
But I remember it because it was during a period where we were going into a very challenging period for Bitcoin.

836
01:04:43,095 --> 01:04:44,555
We became fast friends.

837
01:04:44,555 --> 01:04:50,355
We were ideologically and philosophically and temperamentally and psychologically and all of that kind of aligned.

838
01:04:50,495 --> 01:04:53,575
And we talked for years before he hired me.

839
01:04:53,915 --> 01:04:54,975
And then we went through Grid.

840
01:04:55,095 --> 01:04:57,735
And that was had its ups, had its downs, had its ups again.

841
01:04:57,915 --> 01:04:58,795
And now we're here.

842
01:04:58,855 --> 01:05:02,835
And so we've built these relationships in this space over cycles and over times.

843
01:05:02,875 --> 01:05:04,115
And we take that at CleanSpark.

844
01:05:04,175 --> 01:05:06,055
We take that view to our community relations.

845
01:05:06,375 --> 01:05:07,815
We take that to our counterparties.

846
01:05:07,915 --> 01:05:10,335
We take that to kind of the people we talk to in the space.

847
01:05:10,395 --> 01:05:13,235
And, yeah, we're not here to be kind of showbo baggins for CleanSpark.

848
01:05:13,235 --> 01:05:29,795
But what I think that we have here, and if I could just, if you'd mind, if I just, right, but is that you have to have, if you want to do great things, and this is one thing that I've quite frankly matured on, I think over the years, is that there's such an individualistic streak in this space.

849
01:05:29,835 --> 01:05:30,815
And I really believe in that.

850
01:05:31,095 --> 01:05:33,635
But if you want to do great things, you have to do it together.

851
01:05:33,855 --> 01:05:37,635
You have to have an organizing principle and an organization around that.

852
01:05:37,635 --> 01:05:53,375
And so I really do think that CleanSpark to me is the enunciation of that organizing principle. I think it's where our skill sets have been best matched over time. We've tried to figure out how to work best together over many years, and it feels like we're expressing it in this space.

853
01:05:53,375 --> 01:05:56,335
The people that we work with are very complimentary of that.

854
01:05:56,495 --> 01:06:02,115
Our management from Matt Schultz and Gary Vecchiarelli all the way down is very empowering of that.

855
01:06:02,195 --> 01:06:06,795
And the opportunity set in front of us is incredibly fertile.

856
01:06:07,295 --> 01:06:13,115
And the groundwork and foundation that we've laid is ready for that.

857
01:06:13,255 --> 01:06:13,795
And you know what?

858
01:06:13,835 --> 01:06:18,935
That only took about eight or ten years of really, really, really, really, really effing hard work, right?

859
01:06:19,295 --> 01:06:22,035
So I just – I believe in what we're doing.

860
01:06:22,035 --> 01:06:22,955
I really do.

861
01:06:23,375 --> 01:06:28,875
My only addition is that like all the value in any compounding environment happens in the out years.

862
01:06:29,055 --> 01:06:34,695
And so the trick in every overnight success is that it takes between 10 and 20 years to get there.

863
01:06:34,695 --> 01:06:44,775
So if you have the viewpoint and the temperament to figure out how to do something exciting and important,

864
01:06:45,295 --> 01:06:51,415
you've got to stick with it for a very long period of time before the more tangible value gets realized.

865
01:06:51,415 --> 01:06:56,115
but it's about having the mindset and approach

866
01:06:56,115 --> 01:07:00,195
that lets you get there before you,

867
01:07:00,335 --> 01:07:02,455
you're always gonna be tempted to dump out

868
01:07:02,455 --> 01:07:03,695
like 30 times along the way.

869
01:07:04,195 --> 01:07:04,595
Don't.

870
01:07:04,675 --> 01:07:05,055
That's all.

871
01:07:05,295 --> 01:07:05,915
Just keep going.

872
01:07:06,955 --> 01:07:07,815
You've got to go, right?

873
01:07:08,015 --> 01:07:08,495
I do, I do.

874
01:07:08,495 --> 01:07:09,735
Let me ask one more question to finish.

875
01:07:10,075 --> 01:07:10,715
This is obviously,

876
01:07:10,815 --> 01:07:11,675
you're doing like novel,

877
01:07:11,835 --> 01:07:13,375
interesting things with Bitcoin on the balance sheet.

878
01:07:13,835 --> 01:07:15,475
Do you think this is actually the start

879
01:07:15,475 --> 01:07:17,595
of a corporate finance revolution with Bitcoin?

880
01:07:18,835 --> 01:07:19,915
I really do.

881
01:07:20,235 --> 01:07:20,855
I really do.

882
01:07:20,855 --> 01:07:28,255
We sit in a really unique and interesting space where, again, it's not anything that I did individually.

883
01:07:28,615 --> 01:07:32,875
It is the DNA that CleanSpark built many years before I got there.

884
01:07:33,215 --> 01:07:38,555
It is the hard work of Bitcoiners from the cypherpunks on up that have set the stage for this.

885
01:07:38,895 --> 01:07:46,675
It is the people that have been willing to push things forward, like everybody at Square who's pushed things forward on kind of payments and infrastructure rails.

886
01:07:46,675 --> 01:07:53,455
But we are sitting in a seat where we are fortunate enough to see a lot of, let's call it deal flow opportunities.

887
01:07:53,595 --> 01:07:54,255
Thank you, Siri.

888
01:07:54,975 --> 01:07:57,575
Deal flow opportunities, things that are developing.

889
01:07:58,175 --> 01:08:10,775
We really do want to be on the tip of the sphere developing that because we believe that our approach to this is going to be the most institutional risk management, transparent, high integrity ways to do it that are going to be good for all of our stakeholders.

890
01:08:10,775 --> 01:08:12,495
But yes, we are seeing this across.

891
01:08:12,875 --> 01:08:16,495
I mean, it is truly a Cambrian explosion of products.

892
01:08:16,495 --> 01:08:22,755
And like I said, there's been a lot of criticism in the past of yield and credit.

893
01:08:23,295 --> 01:08:26,175
Yield is productive return on capital.

894
01:08:26,755 --> 01:08:32,875
Bitcoin forces you to find what the true cost of money is and allocate it in the most productive

895
01:08:32,875 --> 01:08:33,655
ways possible.

896
01:08:33,955 --> 01:08:39,315
That's not a bad word, particularly when it comes to digitally native, scarce, hard money.

897
01:08:39,655 --> 01:08:42,695
And the second thing is credit has traditionally been a really bad word.

898
01:08:42,875 --> 01:08:44,495
But again, that's the exact same idea.

899
01:08:44,495 --> 01:08:46,495
it's how do we allocate this credit

900
01:08:46,495 --> 01:08:47,755
in the most productive way

901
01:08:47,755 --> 01:08:49,455
and so I think we're seeing that happen right now

902
01:08:49,455 --> 01:08:51,895
and I mean it's truly the honor of my career

903
01:08:51,895 --> 01:08:53,155
I mean it's an actual

904
01:08:53,155 --> 01:08:53,895
I'm a total nerd

905
01:08:53,895 --> 01:08:55,035
but it's an actual dream

906
01:08:55,035 --> 01:08:57,715
to be at the forefront of an industry

907
01:08:57,715 --> 01:08:58,595
that's developing these

908
01:08:58,595 --> 01:08:59,535
that is awesome

909
01:08:59,535 --> 01:09:01,115
right we've got to go

910
01:09:01,115 --> 01:09:01,975
we've got stuff to do

911
01:09:01,975 --> 01:09:02,975
thank you so much guys

912
01:09:02,975 --> 01:09:03,495
this has been fun

913
01:09:03,495 --> 01:09:04,135
thank you Danny

914
01:09:14,495 --> 01:09:44,475
Thank you.