I don't necessarily think that the banks are staging this like covert attack on destroying
Bitcoin because they already understand they can't destroy Bitcoin. What they want at this point is
they want to own a stake in the companies that own the most Bitcoin. Saylor posts a picture of him
at some of the largest banks in the world. You can tell he's not there fighting with them about
why are you trying to take me down? He's there talking deals with them and how they can advance
their capital market operations and how he can issue more debt and more equity to get more Bitcoin.
The third piece of the puzzle that the U.S. does not have.
I think the whole four-year cycle narrative is going to get obliterated.
And you got the three green, one red candle, and we're on pace for two red candles in a row.
The United States is starting to realize that if they're in this AI arms race, almost versus China,
If Bitcoin at its core is a competitor to the dollar, then...
drop a video. All right, now let's get back into this great interview.
Bing bong, I am back with another edition of the State of Bitcoin podcast where I've got the man,
the myth, the legend, Billy of Simple Mining. But Billy, we were just talking a little bit
about this pre-show. There's a lot of interesting things going on, specifically with the big banks
and how they're looking at Bitcoin. Because the rumor is right now that these big banks,
JP Morgan and all of these guys, they're saying a lot of positive things about Bitcoin in the media
and doing all these different things. But behind the scenes, they're secretly attacking Bitcoin
and people like MicroStrategy and Michael Saylor. So I'm curious, what do you think of all of this
going on and these big giant players now starting to get into the Bitcoin space?
Yeah, I appreciate the exciting intro, Brandon. Thanks for having me on. Great showmanship.
Do I think that banks are attacking Bitcoin and I guess sailor and strategy? I don't necessarily
think that is the case. I think what banks want at the end of the day is you have the central
banking cartel that they want to control how money moves throughout the world and how money
is created and how people are using money and lending and debt, like the debt system,
fiat system that we live in. They want to have as much control over that as you possibly can.
And that's the same with JP Morgan, the financial services complex. They want to have as much
control as they possibly can. And they basically do. I mean, they're the financial backing for,
apart from the Federal Reserve, which they're deeply, they have deep connections with the
Federal Reserve. But apart from that, they want to own how money is created and how money is
multiplied throughout the economy. And so if Bitcoin at its core is a competitor to the dollar,
then, and I'm sure they figured out that they're not just going to be able to snap their fingers
and it's going to go away. I mean, it was on some obscure email forum to now being the eighth
largest asset in the world. It's clearly not going away. And there's enough support and there's
over 20,000 nodes all over the world. It's not just going to go away overnight. So at this point,
like what's the saying? First, they fight you, then they agree with you. And then I'm not sure
what the third part of it is, but it's the transition from going from hating this new
technology that's going to destroy anything. It was the same with like the internet where people
said, oh, it's going to take jobs, it's going to mess all this stuff up. So eventually you realize,
okay, this is something that's going to be around for a while. Maybe I should start to accept it.
And then you start building on it and expanding the adoption of that technology. And that I think
is the direction that things are going in is you had like Choke Point, Operation Choke Point 2.0
where it's like, no, Bakes should not be messing around Bitcoin at all. It's a tulip mania. It's a
Ponzi scheme. It's all these, all the mainstream media stuff that you heard about it. And then you
had like a bunch of pieces of regulation and you had like the Trump talking about it and you had
the staff accounting bulletin. I think it was one, the revision of 121, which was essentially
saying that banks can now be working with Bitcoin financial services. And so now it's going to the
point where it's like, first they fight you, then they join you. And so I don't necessarily think
that the banks are staging this like covert attack on destroying Bitcoin because they already
understand they can't destroy Bitcoin. What they want at this point is they want to own Bitcoin and
they want to own the rails of Bitcoin move on and they want to own and have a stake in the companies
that own the most Bitcoin. And like I just mentioned previously, Saylor posts a picture of him
at some of the largest banks in the world.
And he's there with the CEO and he's there in a suit.
And you can tell he's not there fighting with them
about why are you trying to take me down?
He's there talking deals with them
and how they can advance their capital market operations
and how he can issue more debt and more equity
to get more Bitcoin.
And maybe they somehow have a tie
to how much Bitcoin he has.
But at the end of the day, they're going to join Bitcoin.
They're going to try to own as much Bitcoin as they can.
And I think that goes to show that it is valuable to have Bitcoin take it off an exchange and take it into self-custody.
And actually, because that's the backdrop to why people like Bitcoin is it's a technology that you don't need a third party to use.
And the bank wants to be that third party.
And that's the direction that they're moving in.
And so, no, I don't think that they're attacking Bitcoin and sailor and strategy.
yeah i mean that's a good point and interesting you know that you're kind of lining it out that
way and i and i like the way that you put it but uh you know i i guess kind of parlaying onto that
now that we have these big money players coming in you know we've already seen blackrock their etf
is is nearing their two-year anniversary and it's been you know this most successful etf launch in
history i mean it seems like trad fi is just really desiring all of these products but when you
look at the amount of Bitcoin wallets that there are people holding in self custody,
it seems like people are kind of still desiring, at least maybe in the US, you know, these third
parties and these banks to come in and hold in custody their Bitcoin. So, you know, kind of,
I guess, leveling up on that, you know, as somebody that's working in a Bitcoin company,
how has been working with banks for you guys? Have you seen any struggles? Because I mean,
And of course, we've seen the headlines, you know, JP Morgan also debanking, you know, people like Jack Maulers.
I've heard it from Corey from Swan.
I've heard it from Adam O'Brien at Bitcoin.
Well, like all of these CEOs have been debanked because seemingly because of their affiliation with Bitcoin.
But, you know, maybe the banks have other reasons.
They just haven't said anything.
So have you seen any, I guess, apprehension when working with banks because you guys are a Bitcoin company?
Yeah, I would say like initially and even still now to some extent, it's very difficult to use any sort of like traditional finance, like banking or payment processing solution.
Like we tried to use, like initially when we first started, we wanted to use like Shopify or Square or Stripe for processing payments.
Like when someone purchases a miner, we need to process that payment somehow.
And so none of the pretty much all of those companies, they do not work with crypto mining services.
It's a restricted vertical, which is kind of ridiculous because our business has some of the lowest chargeback rates, like almost nobody purchases a machine and tries to file a dispute and no refunds.
no refunds. Like it's one of the most reputable in terms of like the money that people are paying,
it's staying with the company they're paying. It's not getting a charge back. It's not going to be
an issue on the payment processors plate. So that has been like a thing since we started in like
2020. They don't like working with crypto mining services because there's just a lot of
bad information out there in terms of like, are we running a legitimate sustainable business?
That's what they're trying to figure out. And I think more and more that's coming to light. Like one of the ways that we're seeing that is the ability to offer financing to our clients, like favorable financing. It's been a very difficult thing because like we have to try to work with a local bank. Most of the local banks don't really want to like take the risk on that or provide the funding for that.
But now you're starting to see more companies coming out saying, okay, we're willing to work with something like that.
Like if you can show us the data and the payments history on like how exactly this works, then they're more open to it.
So I would say that from Simple Mining's perspective, banks are becoming, they're starting to like, their ears are perking up a little bit and starting to do their due diligence.
into like, are these legitimate businesses?
Are these legitimate companies?
Like is crypto mining an industry
that's gonna be around for a very long time?
And they're starting to do the research and say,
hey, yeah, these guys are legit.
They're starting to work more
with a lot of these high performance computing companies.
And you're seeing these big deals take place
between Google and Meta.
And they're starting,
data centers are like a very real thing
that almost every single company in the world needs.
Some acts, there's a data center
powering something that they're doing.
And so they're starting to turn a leaf
and sort of see that these are more legit.
I think that's only going to improve over time.
Like we're going to start seeing better financing rates
for purchasing miners
or purchasing high performance computing equipment.
And it's going to keep going in that direction.
And if anything, like I mentioned before,
like they're going to see that bitcoin's gonna is is around for the long run it's not going anywhere
and so they're going to figure out a way to integrate it into what they're doing yeah and
how big is i guess the influence of these big players coming in and partnering with these bitcoin
mining companies like a google like a like a meta i mean you know i was just looking it up google
has uh you know secured a 10-year 3 billion artificial intelligent hosting contract with
bitcoin miner cipher mining um so i mean what did you put up on that last part uh i said uh they
google secured a 10-year 3 billion dollar artificial intelligent hosting contract with
bitcoin miner cipher mining yeah so i mean yeah so like these big guys are coming in and making
these deals like you said for a lot of it's for ai but obviously they see the uh advantages of
bitcoin mining so you know i mean we've seen a lot of the treasury plays kind of come in but it seems
like nothing has been making i guess like huge substantial waves like if you look at a lot of
these treasury companies they come and buy you know bitcoin maybe once and then you know that
that's to pump their stock initially and then you know you don't really hear much about them
afterwards then following that you know we you see a lot of these bitcoin mining companies now
starting to come in with these ai companies what do you think i guess would have a bigger
impact here on just how uh these bitcoin uh or how bitcoin is viewed in in the trad fi world
yeah i i think there's a lot of different questions bundled into that but i think zooming out like
big picture, a lot of these Bitcoin mining companies, their original goal was to mine
as much Bitcoin at the cheapest cost possible when they originated. And now they're starting to see
they have a monetary incentive. If they can be a more profitable company by making one decision
versus another decision, then they're going to make the decision that's in the best interest
of their shareholders. And so if they have access to land and energy, because they were originally
using that to buy Bitcoin, and if now they can leverage that land and energy to make more money
by working with some of these Mag7 companies that need access to, I mean, they need access to compute,
But ultimately, to have compute, you need land and energy. And so that's sort of the decision I think that they're faced with is they're starting to see, hey, we could we could make either 2x our money trying to do this Bitcoin mining thing and have considerably more risk potentially.
or we could go with this deal that's come across our plate where we can make 5x our money.
And I mean, there's a lot of technicals to these deals in terms of like the debt that may be
involved in what the future of the company looks like. But it's ultimately bullish for those
companies. Like you're seeing Iron, which is a pure play Bitcoin mining company. And then they
turned, they started to make the pivot to focusing on high performance computing and the future of
the AI mania. And if it is a big of a thing as people think it's going to be,
and they're one of the best performing stocks this year. So ultimately, I think that comes back to,
I don't think that these Mag7 companies are necessarily, or like the banks or TradFi
is necessarily thinking about Bitcoin very much when they're securing these deals.
like it's not like improving Bitcoin in their eyes necessarily. I think it's more so everybody
is starting to recognize that even with Bitcoin, the base layer of what's going to be the most
valuable is going to be energy generation and access to the land and access to the grid hookups
and access to a sustainable power source. That's going to be something that's going to be necessary
for every company on the planet over, I mean, now and over the next 20 years, it's just going to
become more and more integrated into how every single business runs. And that's why they need
that. And right now, a lot of miners are starting to just make the obvious decision of, hey, this is
what the market wants. We have it. Let's just give them what they want. And now, ultimately,
I think that's going to be bullish for a lot of the existing miners on the network who are still
pure play and maybe they don't have big AI deals on their plate and so they don't even
have the option or they just choosing to remain a pure play mining company that thinking about it logically should be bullish for them because if all of these uh what used to represent hash rate is now pivoting and
not representing hash rate anymore that in effect should be i mean kind of the the block subsidy
is a fixed pie and so if they're no longer kind of eating a certain percentage of that pie then
And that remainder of that is going to go to the miners that are still online and mining Bitcoin.
Yeah, so it seems like it's almost a battle for obtaining energy at this point,
whether it's cheap, renewable, whatever.
Just being able to obtain as much energy as possible and make as much profit off of that seems to be the play.
Is that kind of what you're lining out here?
Yeah, I mean, I would say that's definitely like the direction that things are going in. And I think even like the United States is starting to realize that like if they're in this AI arms race, almost versus China, then that is the main constraint for them is they want to reshore power grids, energy generation, rare earth metals, copper and silver data center, skilled labor.
and so like ai isn't something that you can just print something and be able to grow the industry
it's running on electricity and the u.s has massively underbuilt its real infrastructure
for decades and so that is something that like i think a lot more attention and capital and
investment is going to go into those real resource constraints over the next year the next 10 years
because that's what everything is running on.
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Yeah, and it definitely seems like I guess it's trending in that direction.
But something that is really interesting is, you know, we've seen China have been very apprehensive to Bitcoin mining.
They recently just tried to ban it again.
Last time, I think we saw it maybe a couple years ago.
I don't remember the exact year now at this point.
But we essentially saw a flood of Bitcoin miners go from China to Kazakhstan.
And we've seen Russia seize Bitcoin miners.
And then we haven't really heard much about it.
They might be secretly mining.
So it seems like a lot of these countries are mining.
But China seems to be apprehensive against it.
what do you take of all of that with the AI I guess arms race that the US is somewhat in do you
think that this is almost a media play or do you think that they're actually apprehensive towards
Bitcoin mining yeah I think China has a little bit more control I think than people realize
A lot of people think or they saw the whatever it was, 1.3 gigawatt facility that recently got shut down.
And you have to ask yourself the question of like, what are they trying to do?
I mean, they stood up their grid, basically stood up the entire capacity of the U.S. grid in 10 years.
So instead of like focusing on strong currency and being the U.S. World Reserve currency, they focus more on their grid and they've massively outpaced what the U.S. is capable of.
And so in terms of them banning Bitcoin mining, I don't think that that will necessarily happen again.
I think that there's going to be, and maybe they already realized this.
I'm not sure to what extent like Bitmain is tied in with the Chinese government, but eventually
it's going to get to the point where you have gold becoming the new world reserve asset.
It's not, it's no longer U.S. treasuries.
Like it's recently been surpassed by like central banks are buying foreign central banks
outside of the U.S. are buying record amounts of gold.
And they are forecasted to like Goldman Sachs recently published a report where they're like this year you thought was a lot.
They're going to purchase just as much or more next year.
And so if gold is starting to become the reserve asset and it's foreign nations trying to move away from the U.S. debt, then it's going to raise a question of like, okay, well, can the U.S. play on sort of the currency battlefield of competing with like gold as a reserve asset?
Well, they don't really like to do that because for one, they may not even have all the gold that they say they have in Fort Knox.
And so that could potentially be an issue for them where everybody thinks they have all this gold, but maybe they don't have all of this gold.
And so then like what advantage are they going to have if they don't have trust in their currency?
Nobody wants to buy U.S. Treasuries.
Nobody wants to buy U.S. debt.
then that's kind of the entire business model for the United States is,
is everybody needing like the petrodollar needing dollars to buy valuable stuff.
And so if that goes away, then what advantage is the U S going to have?
Well, they have more hash rate than any other country in the world. They have estimated
Luxor published a report this year, estimating the United States at 37% of market hash rate.
I think it could potentially be more. It could be upwards of 50%. But if 37% is the baseline,
that's really good because that's the physical hash rate that if a pool, which I guess there's
multiple levels to it. There's the hash rate where the machines are physically located,
generating the hashes. And usually those are getting pushed to a pool, which brings us to
China. The advantage that China has is they basically have, I mean, right now you could
pull up a chart on mempool.space and pull up their,
the mining pools.
And you can see that, okay, Foundry has 30% of,
in terms of the blocks that are being won
by a particular pool.
And then you can see Ant pool, via BTC, F2 pool,
spider pool, the list goes down.
I mean, those are making up basically 50% or more, 60%.
There's a couple others, like Binance pool,
that's obviously a China pool.
Luxor is allegedly a China pool.
There's a lot of like other smaller pools,
but like if you kind of aggregated all those together
and kind of traced them back
to who's actually backing these pools,
who actually runs these pools,
they're all going back down to Ant Pool,
which is basically Bitmain.
So Bitmain, they have 67% of blocks
are essentially being won by Bitmain.
Now that gives them, they could ban mining
and still have that sort of control over the network,
just the fact that they're winning the blocks.
And so kind of big picture, what I'm talking about is like a new Bitcoin standard. And there's three pieces that you would need to secure yourself as like the strongest monetary power in the world in terms of having the most, like you want to have the most Bitcoin. You don't have the companies that have the most Bitcoin, which is like Ibit MicroStrategy right there. You have, what is that? Like 4% of the supply or something.
So you want the companies to have the most, you want to have like the actual coins, but you also
want to have the hash rate, which is producing those coins, which the US has. But if you think
of the third piece of the puzzle that the US does not have is the mining pool side, which is not as
much of a risk, I think, as people make it out to be because we have the physical hash rate.
But then you have the actual machines that are generating the hashes, which is ultimately 80%
of the network is Bitmain and all the chips are coming from TSMC in Taiwan. So if they overnight
snapped their fingers and said, we're shutting this down, we're not sending you anything, which
I really don't think that would happen, but then how the heck are we going to start creating
competitive mining machines? Like there's Proto, which blocks Jack Dorsey's new venture to try to
to re-shore ASIC manufacturing fabrication
within the United States
at a competitive level of two nanometer chips,
is that, I mean, when is their go to market?
They had this really cool promo event
with Core Scientific earlier over the summer
or into the fall, and it looked really good.
And it was like, hey, we're bringing the,
we're kind of bringing that third piece of the puzzle
back to the United States.
Is that going to happen?
I don't know. I haven't seen anything like we've contacted their sales team and it's it sounded really cool, but nothing has really come out past that.
So I think that would be like if the U.S. gets that side of things figured out, then it could be really interesting in terms of like that would be kind of the wild card that we would pull to reinstate like dollar hegemony for the next hundred years would be.
we have the best bitcoin everything so we're just gonna instead of the petro dollar agreement we'll
just make basically peg the dollar like the dollar now has authority because we have all the bitcoin
power but yeah and i i i think that that you know it's very interesting too because i mean there's
there's also the the thought you know a lot of these countries are secretly mining um and you
know you brought up china's gold purchases i mean uh an analyst from goldman basically came out and
said that he thinks that they're, you know, secretly buying and they're buying a lot more
than they're actually reporting. So do you think that, you know, as somebody that's looking at a
lot of the hash rate, do you think that there is a chance that there's a lot of countries already
secretly mining and there's, you know, a lot of countries out there stacking that haven't
necessarily come out and, and said it just yet? I think that it's possible. Like a lot of,
I think especially if like a country understands the importance of having hash rate for the future of transacting, because you look at what happened with like Russia in 2022, where they got all of their assets denominated in U.S. debt were basically overnight worth zero.
Then other countries had to have seen that.
And I think this is like a lot of them are moving to gold.
They're thinking that gold is going to be the solution to that.
which ultimately they're going to figure out that gold,
if we're living in an increasingly digital world,
then gold is really not going to be a solution.
Like what, are you going to have a vault that's going to store all of it,
get raided by a country bigger than you, you lose it all,
which I suppose could happen if you have a bunch of physical hash rate
located in your country.
But right now they're moving towards gold.
But if they move towards hash rate,
then that's going to secure their future
and the ability to add a transaction to a block.
So if they wanted to send without the US government
or some neighboring nation
that doesn't want them to transact,
if they have their own in-house hash rate
that could hit a block in a reasonable period of time,
we'll just say like over the span of a month,
they could hit one block,
then they would secure their space
on a financial network to be able to move money forever
as long as they can keep their probability
of winning a block to once per month. And that is, I think what, like, maybe that's, I think
that's very sophisticated. Like, I really don't think the leaders of these countries are, or many
of them are thinking that, like thinking like, hey, if the dollar is starting, the faith in the
dollar is starting to crumble, a lot of central banks are moving to gold, but hey, maybe we should
start to kind of hedge ourselves in this scenario where we need to be able to move money anywhere
in the world in a reasonable period of time without some third party or some third party
government getting in the way and preventing us from doing that, then we're going to need to start
building our hash rate infrastructure. And like, yeah, that could be the case as to why we're
seeing a lot of these smaller countries like the UAE is starting to grow, Paragra is starting to
grow. Russia is obviously in Kazakhstan, you mentioned Ethiopia, Indonesia, like all these
countries are starting to increase their hash rate. Like, are they thinking that? Maybe,
I don't know. I mean, it's kind of, you got to go down the rabbit hole to see that's potentially
what the future will look like. And I think even like to tie it back into banks, like maybe banks
are starting to think that way, where if they want to be some of the biggest financial intermediaries
in the world, then they're going to need to have some exposure and some control over hash rate,
or at least like a pool to some extent to where they can have confidence in being able to include
or exclude certain transactions and blocks and move them to other financial intermediaries.
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All right, enough from me.
Let's get back to the show.
It is an interesting game theory here because, I mean, you know, there's been rumors already that like Russia was using Bitcoin and, you know, crypto to transact just internationally during our international trade to avoid sanctions already.
So, I mean, like I said, it is all rumors.
So who knows at this point?
But, you know, when you see these big players kind of talking to the people like a Michael Saylor, you know, you see Saylor going around the world and talking to all these influential leaders.
You got to think that, you know, I mean, Samson Mao as well.
A lot of these guys, they're getting through to him maybe eventually.
eventually. And it seems like, you know, Eric Trump with him going around and kind of touting
Bitcoin all over the place, seems like, you know, these big players, they're getting, they're
getting told about Bitcoin in big rooms at least at this point in time So I don think it out of the realm of possibilities But you know I also do think that governments move very slow So I would a hundred percent agree with that And I think one way that we would start to see almost like a signpost as to Hey there
a lot of government starting to nationalize mining would potentially be like a new mix
of blocks and mempool.space.
Like if you scroll through mempool.space, you can see the majority, it's like Foundry
USA and a bunch of amp pool proxies.
that's like all of the blocks that are being behind but if you have a government trying to
nationalize mining they're not going to choose china pool they're going to have an unknown pool
or some obscure pool that they're like okay we want to secure our own block space then you would
start to see a lot more unknown block like there's several blocks you can see in mempool.space
unknown they don't know who found it or it's some pool that you've never heard of you'd start to see
more of those. So if you saw, like, and maybe they have hash rate, but they're pointing it to China
pool, which wouldn't make any sense in my opinion. Like why, why would they do that? I mean, unless
they're just trying to do it to make money, but like they have really low cost of power and they're
just purely in it from the monetary perspective and the profit perspective. But if they're in it
for like the future of securing their, their livelihood of transacting, then you'll start to
see some blocks pop up in on the chain that aren't like the the normal ones that you the normal
companies finding them that you would see yeah i gotcha so you think that it's it would be i guess
the goal of a country kind of coming in would be to more of secure the network opposed to you know
just uh i i guess um you know i for profit in a sense yeah i mean it's not even necessarily like
maybe their best interest is securing Bitcoin and adding compute to it. So it's just even more of a
reinforced network, but also just like a block. If you think about what is in a block, you have
transactions, but let's just say Kazakhstan, for example, they wanted to send a transaction on
Bitcoin. And so they're going to broadcast that transaction. It's going to go through basically
foundry or one of the China pools. And let's say both the United States and China don't like
Kazakhstan, they've banned them from being able to send transactions on Bitcoin, then they're cooked.
They can't send it because they could just exclude it from those blocks. Whereas if Kazakhstan was
like, well, that could potentially be a future reality. So we need to start building enough
hash rates where we can win our own blocks. Then if they win a block, they can put whatever the
heck they want in it. What do you mean by that? What do you mean put whatever the heck they want
in it? Like if they wanted to obviously include their own transaction, then nobody can stop them
from doing that because the nodes are going to say, okay, this was a legitimate block. They found
they got a number below the correct difficulty level. And this is a valid block, like regardless
of political adversaries. So we can add it to the chain. And so that way they can send, like if they
wanted to move Bitcoin from point A to point B to someone else, some other country, whatever,
They can do that without the United States or China filtering them out.
Because right now, if the two major pools is Foundry, which is a US pool, and all the China pools,
then if those two entities that are constructing those block templates did not like Kazakhstan,
they could filter Kazakhstan transactions out of getting added to those blocks.
Assuming they knew that that's where that transaction was coming from, which wouldn't be that difficult to find out.
But if Kazakhstan wanted to send, like if they wanted to prevent that from getting sanctioned from Bitcoin, because that's a way to sanction on Bitcoin is filter.
You could filter transactions out of block.
It's like slipstream, Marathon's thing.
If you want priority and you want to end up in a block before anybody else, then you can pay them more and they'll put your transaction.
They'll basically cherry pick it and put it in their block for you.
Or if you want to create a meme out of like the size of your training, like what they did with Trump and what they did with like a couple other things that Marathon has done is basically cherry picking and constructing a block exactly how they want to.
And if they can do that, they can prevent a country from sending Bitcoin to somebody else.
They could do whatever they want.
So if you have enough hash rate, that's what they could do.
And maybe they'll start to realize like the strategic future of being able to move money digitally is going to be constructing your own blocks and be having control over what's actually in it.
Ah, interesting.
So essentially, like if a country got enough hash rate, they could, you know, theoretically just control the network to a sense where, you know, they are not a, they're like eliminating transactions from a certain country, thus keeping control of this financial network.
Yeah, I think there's also to be distinguished between like the physical hash rate, which is much more difficult to like amass a large percentage of because you actually need a grid and you need to plug in the machines and you need to keep them running.
And you need to continue to like improve your fleet efficiency so they don't become obsolete.
So that's like much harder to amass a serious amount of hash rate through.
But what we're seeing now is you can obviously amass a much higher hash rate at the pool level.
And that's really what matters because right now, that's basically what a physical hardware machine is, is basically just a hasher.
It's just a number generator.
And it doesn't have really any control over the actual template of what is inside a Bitcoin block.
There's some technologies that are changing that.
For example, there are some things that I do and I don't like about it, but Ocean, for example, and Stratum v2, I suppose, would be giving the ability of constructing a block template back to the hasher or the person that's running the hasher.
So instead of pointing to China pool or foundry pool, they can basically construct their own.
They can construct their own. Anybody that's mining on ocean, they can construct like maybe they want to filter out JPEGs or they want to they're part of that that school of thought where they want to filter out anything that's that's non-monetary data.
And they only want monetary transactions. However, they're going to do that. But like people are already doing that at like an individual level.
Like we have clients that are doing that. They set up their own data server and they want a certain like filter preset in terms of what they do and don't allow inside of Bitcoin blocks.
And they're constructing that template. So if they do win a block, then they basically constructed what was inside of that block.
Damn, that's pretty wild to think. Yeah. And so, I mean, I guess this is the whole debate here going on, right?
Should Bitcoin allow the filters and should it not, right?
Yeah.
We don't need to get into that conversation.
There's already, I don't know about that stuff on my timeline.
I'm just like, this is so redundant and ridiculous.
Yeah, I mean, I think at the end of the day, you know, when Bitcoin's price is kind of just crab walking like it is or we even get a downturn, I think Bitcoiners just, in a sense, get bored.
quantum computing when is quantum computing and destroy bitcoin yeah this rate i mean if quantum
computing yeah i mean we don't need to get into that that whole thing but i mean i think at the
end of the day you know because our money is just it's essentially digital now it's just numbers on
the screen you know if quantum computing or the internet goes down or some of these other fud
things uh that they always throw out about bitcoin we'd be in a lot bigger problems than just uh
you know is bitcoin not able to work i mean i think like everything would shut down at this
point so um you know that that would be i don't know who knows like if bitcoin was like so easily
made obsolete by some quantum computer then it wouldn't like someone would have already figured
that out and it wouldn't like satoshi was even talking about that like that was like a future
risk that it was going to have to upgrade to have like quantum resistant signatures
and so like the nice thing about bitcoin is it's not like a shiny rock which would have been really
good if it could have like adapted to the digital era like everybody is living their entire lives on
a screen it would have been good if it could have adapted for that but it can't because it's just a
shiny rock whereas bitcoin is not a shiny rock it's an adaptive technology that could recognize
okay this is like a threat and so i'm going to evolve to be reinforced and be able to defend
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the easiest way possible all right enough from me let's get back to the show yeah and i mean
obviously it'll it'll adapt and i have faith that you know people are working on it a lot smarter
than me and they'll figure it out as well. So, you know, I definitely think that, you know,
it's the honey badger, man. So even with, you know, we've got all this FUD going on right now
and Bitcoin hasn't had the year in 2025 that I think a lot of people came into it almost expecting,
myself included. So, you know, as somebody that's operating, you know, a Bitcoin mining company,
I think it's really interesting to be looking at the dynamics of, you know, what's going on with,
cost to mine a Bitcoin comparatively to the overall cost. So what are you, I guess,
looking at with this bear market coming from that lens?
Yeah, I think there's a lot of different variables that are involved in whether it is profitable to
be mining Bitcoin or not. I would say the number one variable that can determine if you can
profitably mine Bitcoin or not would just be your cost of energy. Because if your cost of energy
was effectively zero and you could scale as much as you want, then really, as long as you have the
capital requirements to be able to purchase the machines and plug them in and keep them running
and managing the heat and the noise, then you could profitably mine forever because your input
cost of doing business and running your machines is zero. And obviously, that's not the case.
of simple mining. We don't have zero cost of power, but that's like the baseline. So to understand
the cheapest possible mining conditions would be that. And then the least profitable,
like there's a certain rate at which depending on your machine, I suppose,
usually like I would say just like a good rule of thumb is like anything above 10 cents per kilowatt
hour is just probably not going to be profitable unless you have like a ridiculously efficient
machine that could somehow turn a small amount of energy into a ridiculous amount of hash rate,
which that doesn't exist and probably won't exist until there's some crazy technological
breakthrough. But I suppose like there's two kind of just to zoom out a little bit. There's two
sets of conditions that determine if you can properly mine Bitcoin or not. There's some that
you have more control over. It's more internally controlled, which would be your power cost,
the actual hash power of your machine, your efficiency, which would be how well you turn
the input of energy into a hash, and then the actual uptime, which is important and often
overlooked. Like, yeah, you can have great power cost, hash power efficiency, but if you only are
capable of keeping that running for 10% of the year, then not going to be good. You're not going
to get a return on the investment into the power cost, the hash power, and the efficiency of that
hash power if you only have 10% uptime. So those are like what people have a little bit more
control over. What people don't have control over is the difficulty level. Unless you're a massive
miner and you just want to unplug machines to give everybody a break on difficulty, then you can't
necessarily, or vice versa, plug in a million machines and no difficulty is going to rip.
And a lot of people are going to be priced out. Most people can't control the difficulty level,
which is just the aggregate of all of the miners on the network. If more people are mining,
that's just going to, the difficulty level is going to go up because you have to enforce the
10 minute block time. And then you have the Bitcoin price, which as we know, nobody can
control that and really has no idea where it's going because a lot of people were saying that
2025 is going to be the year it was going to hit all time high of 200K and Q4. October is the best
performing month for Bitcoin and everything got shattered. The four year cycle, it seems,
is going to be shattered. I mean, you got the three green, one red candle and we're on pace
for two red candles in a row. So yeah, I think the whole four-year cycle narrative, like after
this year of just negative, the price just not performing what people thought it was,
is going to get obliterated. And then the other thing would be the block subsidy that's going to
change. Like when the block subsidy was 25 or 12.5 Bitcoin, that's a lot different than right
now, which is 3.125. It's going to cut in half again in April of 2028. And then you have
somewhat of the wild card that you also can't control, which would be transaction fees.
And those fluctuate a lot. When they do kind of go through a short stint of transaction fee
bull market, a lot of people are bidding to move Bitcoin on chain, then that corresponds with very
profitable periods for miles. Yeah. So I guess, what do you, what do you take of the price action
or just, you know, I want to dive into more about this, this four year cycle narrative,
because I think, you know, I, I, I like how you put it, that the narrative is now obliterated.
Did you ever, I guess, why do you think that it's become this way? Is it because TradFi has come in?
Is it that, you know, the having has less of an impact on the price?
Why do you think that the four year cycle has gone away or why that narrative even started to begin with?
Did you even buy into that early on Yeah I think that like the concept of like Bitcoin moving mechanically based on having cycle is somewhat ignorant of like the actual demand side like people and maybe you
could make the argument that like psychologically it's going to change around the having. But like
the demand for Bitcoin is not some like predictable thing. And especially like the
futures market of Bitcoin and the options market of Bitcoin. And like, that's not some predictable
thing that you can just be like, okay, every four years, it's going to follow this exact price
pattern because you don't know how people are going to behave. You don't know the policy
legislation that's going to come out. You don't know what governments are going to do. You don't
know what the future of gain like there's too many unknowns to like see a predictable pattern
so for example like even just like examining the adoption metrics of like now you have
governments having pro bitcoin poll you have probably the the greatest catalyst or kind of
the first kickoff to catalyst which was the etfs and now being able to practically get exposure to
Bitcoin through equity markets. And now you have like publicly traded companies that are issuing
fixed income instruments backed by Bitcoin collateral. You have all of these like new
things that are involved in the game. And to think that the game is still going to follow
the rules that it followed when all of those things didn't exist. And when it was a much
different holder base that was holding all of the coins that were realized.
And you had all the different players and exchanges and we had FTX exchange and you
have all this other stuff going on.
And the macro conditions, which are much different now than they were in previous cycles, that
it's just like you're, it's almost like you're condensing a bunch of information to try to
fit your trend.
And it's not, that's not, not the way that I believe things work.
yeah and and i'm kind of with you on that i mean i i always thought that it kind of uh just fit more
of like the four-year business cycle and like uh you know all of these different narratives now but
um you know you brought up uh kind of how and we've been talking about it how like you know
the trad fi world is starting to get into this um i have maybe i i don't know if i'll call it like a
doomsday but uh you know if you look at traditionally all these other assets once they
start to get financialized, they kind of, I guess, go haywire in a sense. If you look at real estate,
it's a prime example, right? Something that used to be your home, right? Something that people
would look at as a basic need now is super financialized. It caused the 2008 recession
because just banks and everybody just saw how much they could profit off of it.
gold in the silver and precious metals market kind of similar right I mean you see a lot of
you know banks JP Morgan has been caught for manipulating the precious metal market and
everything else is there a worry that you have of you know these trad fi as the trad fi bros
coming in and potentially I guess like ruin ruining Bitcoin or ruining any of these Bitcoin
businesses why would you ever hold generational wealth on a piece of paper it doesn't make sense
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Back to the show.
Yeah, I think maybe like you would need to define
what you think by ruining.
I mean, I guess like if there were a way to permanently suppress the price of Bitcoin, so let's just say it was stuck under 100K for the next four years, then like would that ruin Bitcoin?
I don't know. I guess it depends on like what you're if you're in Bitcoin for the price gains and like you want to get more in dollar terms, which at the end of the day, I think most people are like they want to like everybody talks about Bitcoin being the best performing asset ever and it being such a good store value.
And if it's not increasing your like everybody is paying for stuff on a day to day basis, you're paying for your rent or your mortgage, you're paying for your food. And most people if you live in the United States, you're paying for that in dollars. Now there's the small subset of people who are buying Bitcoin gift cards, and they claim they're living on a Bitcoin standard, but you're paying your taxes and dollars, you you're still living on a dollar standard.
Could I speculate on when we transition away from a fiat standard into a Bitcoin standard?
Sure.
Yeah, maybe that could happen.
And then you don't need to be evaluating things in dollar terms.
But I think for the near term and the foreseeable future, people are going to be thinking about it in dollar terms.
And so is Bitcoin a failure?
And has it been ruined if it no longer appreciates your purchasing power in dollar terms?
And could that happen?
I really hope not because a lot of like my investment in my future and I'm I'm definitely hedging my bets on the side of it doing well in dollar terms and appreciating my purchasing power over time.
But like, sure, somehow they could manipulate maybe somebody, some institution, some hedge funds, whoever is pulling the strings behind the scenes is somehow manipulating the price and suppressing the price of Bitcoin.
But it's like those narratives have always existed.
They were always around.
People came up with like conjured the doomest of doom scenarios and why Bitcoin is going to fail.
It's not going to work.
And every single time it destroyed people's expectations to the upside.
So like, well, does that happen again?
I would say yes, that probably will happen again,
where people will have all this FUD in their mind of all this price manipulation
and there's all this paper Bitcoin floating around
and quantum computing is too big of a risk.
And everyone's just, oh, so terrible.
And then it's going to rip your face off.
I mean, I agree with you.
I think once we get a lot of group think, Bitcoin just does the opposite.
So, you know, now that we have this quantum computing FUD, I mean, who knows, maybe 26 will be a crazy year just because, you know, everybody's kind of bearish now that we've had the opposite happen here in 25.
But I'm curious, do you have anything that you think, any predictions going into 2026, what we've got ahead?
Yeah, I think there's like a couple things to look at.
You have AI and automation, which I think is going to significantly lead deflation.
And we're entering somewhat of a resource crisis where we want to be able to reshore all of these AI projects.
We want to win this AI arms race, but we have a lot of hard physical restraints that cannot be solved.
I'm just thinking about it from, I suppose, the macro perspective.
A lot of the stuff that can't be solved by money printing alone.
And you already have like record amounts of debt and you have all this deflation.
You have prices going down in the same levered debt system that's going to cause some market turmoil without a doubt.
And then like we're starting to see, I think, I mean, the markets have done well.
Like Bitcoin is really one of the one outlier.
Like the S&P 500 has done well this year. The NASDAQ has done well this year. The only things that really haven't done well. I actually think that Bitcoin is underperforming bonds year to date. So that's almost like kind of crazy to think that how is how is Bitcoin underperforming government IOUs? Like that doesn't make any sense.
And a lot of it, like what you hear a lot of people say is it's, well, like liquidity is just being constrained from Bitcoin because it's acting like a risky tech stock and not a neutral reserve asset.
So I think at this point in time, just based on like the sentiment, and if you were to combine the understanding of Bitcoin of all of the people that have the most money to move the price of Bitcoin, then their understanding of Bitcoin is it's not a neutral reserve asset.
Gold is the neutral reserve asset.
And Bitcoin is just like a high beta tech play.
And so it's basically acting like that.
It's acting like a high beta tech play.
And that's somewhat of like price discovery before it's struggling.
And the only thing that I think will really change that would be like a crisis response.
Because if you had all of the prices going down, then that's going to lead to asset liquidation.
you're going to have policy panic which is going to lead to currency debasement and then eventually
that's when bitcoin will win it's not going to win right now when we're in a deflationary shock
so do you think ai and bitcoin are going to i guess as in a sense grow together in conjunction
like a lot of people believe like it's going to be the currency of the internet and ai is going to
help supercharge that yeah i don't know how much i could speak to ai actually using bitcoin
but I would like a lot of people think the AI is a bubble.
And just from my personal experience and the growth that I've seen in a lot of
AI technology, just in the last like three years,
I couldn't be bearish on it.
So it's just in the way that I use it in my day-to-day life and the tasks that
used to take me 20 hours.
Now I can do in four hours with the assistance of agents or using certain
LLMs or doing certain things.
then I don't know how you could be bearish on that because that's going to,
that's going to eat entire industries that are spending astronomical amounts of
time building things and condense it into like an hour.
We'll do the same thing in an hour.
So what that's going to lead to is like global competition.
It's going to push prices down.
I think ultimately that's going to lead to deflation,
which is going to need like,
you're going to have the labor,
the price of that going down.
And ultimately, that will lead to rates on the long end for U.S. debt going up.
And they can't survive that.
They can't survive rates on the long end going up.
And so they're going to have to either yield curve control via absorbing the demand for treasuries by the Federal Reserve quantitative easing, which is like everybody's been the rumor quantitative easing coming back.
But it is a real thing because like they're not going to default on their debt.
They're not going to let the interest expense just absolutely balloon and roll over at super high rates.
Like they're just not going to do that.
And the only way to fix it is buying them yourself because nobody wants them.
They want gold.
Yeah, 100%.
And I definitely think that, yeah, I mean, even though that's what everybody's kind of talking about,
there is, I mean, when you put liquidity in the market, it's just, I mean, you know, everything's going to, I guess, asset bubble is going to come.
When there's an absolute nuclear liquidity bomb, similar to what happened with COVID,
really, it would be hard to mess that up unless you're holding bonds.
That would be the way to really lose in that scenario.
But I've definitely been humbled this year in terms of like, at the beginning of the year,
I was having all these conversations with a lot of my in-laws who are bullish on gold.
They really like gold. They really like the precious metals. And I'm saying, no, Bitcoin's
going to outperform it all, blah, blah, blah. Like my spiel about Bitcoin so much better.
And like in my mind, like I know, and like looking at the fundamentals and the world that we live in,
like Bitcoin is a superior asset class, like in terms of money, if it's competing on the money
basis in which a lot of these central banks are using it for like a neutral reserve asset, it's
better. It's just technically better. The technicals are better. But the understanding
is not there. The information is not widely accepted that it is a better method. So gold
is going to do better in an inflationary situation, a deflationary situation, a sovereign stress
situation, a multipolar geopolitical situation. Gold is just going to win and it's going to keep
winning. And I think the only point at which, like I just posted something today about Trump
at 2024 Bitcoin Nashville saying that someday,
like it had just,
it was right when Bitcoin had just passed
the market cap of silver.
And he's making a comment about how someday
it probably will overtake the market cap of gold.
And in my mind,
the only way for Bitcoin to really do that
is when all of the capital
that's just deployed into gold right now
starts to realize that that capital would be better
in a better situation deployed into Bitcoin.
and like how does that edge like maybe it takes years maybe it takes 10 years i don't know at
what point that happens but for bitcoin to become a greater neutral reserve asset than gold it's
going to take a massive educational way for people to understand us better and maybe never maybe you
just have to tough luck you gotta you gotta work with the inferior technology yeah i mean it
definitely seems like there's that information asymmetry right now i mean you know michael saylor
said on interviews like a while ago that he had you know like woke up with like cold sweats that
somebody would figure it out and you know he's been buying bitcoin what since like 2020 and
now it seems like it's the craze but even then like you know sailors head and shoulders above
everybody else and we don't even have like you know we have mag 7 companies now coming in and
on the bitcoin mining side but bitcoin on the balance sheet still is i mean it's still kind of
like a fragment of the entire market. I know in the Bitcoin space, we get a lot of hype around them,
but seemingly there's not one of these big players that's going to move the needle just
yet coming in. So I think 26 is going to be really interesting and I'm really excited for
what's to come. But Billy, you've been very generous with your time. Why don't you tell
people where they can find out more about you and more about Simple Mining? Yeah, for sure. I'm
I'm pretty active on X, Billy Boone32.
You can find my profile there.
And then there's also Simple Mining.io.
That's our company account on X.
I'm also on LinkedIn.
We pretty much are on every single social.
And then I have my sub stack that I write on, which is the Bitcoin Mining Investor.
And that's where you can read more of my thoughts.
Awesome.
I'll put all that in the show notes.
And Billy, thanks so much.
All right.
Thanks, Brandon.
Appreciate it.
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