That's it, hot summer. That's it, open.
The signal is here. This is Bloodshed Radio.
Welcome, gentle pioneers, to the lightning-laced airwaves.
Today is Friday the 27th of March, and it is 12.10pm on the east coast of the United States at the time of recording.
This is episode 157 of Pleb Chain Radio, and we have a fun one in store for you today.
Kent Halliburton, CEO of Saz Mining, joins me, and I'm looking forward to that conversation.
If you are hearing my voice right now on Spotify or Apple, thank you for listening, but also, welcome to the Legacy Feed.
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Over here on Fountain and Noster, the frequency is open.
This is a Valley for Value broadcast.
There are no corporate scripts and no algorithmic nudges here
because the producers of the show, that's you, fuel the engine.
If you want to move from passive listener to active participant,
come join the signal on the V4V side.
Now, let's set the table for the final word.
We have an executive producer for this episode.
as you will hear later in the show,
but the EP chair for next week is currently empty.
As always, the top booster secures the title
and the right to close out the show.
The rules of the board are simple.
Ratify or rectify.
In a few minutes, I'm going to lay out the sermon.
If the message resonates, boost in to ratify it.
Add your context and back it up.
If I miss the mark, boost in to rectify it and set the record straight.
The board is in session and the top supporter gets the mic.
Let's get into it.
Our sermon today is The Forgotten Forge.
We became a civilization of consumers so gradually that we mistook the slide for progress.
Our grandparents grew the grain that became the bread on their table.
They knew the animal by name before it became the meal
They understood the sky because their harvest depended on reading it correctly
The distance between effort and sustenance was measured in footsteps and calluses
We traded all of that for convenience
We outsourced our food to supply chains we cannot trace
Our shelter to developers
We'll never meet our health to institutions that profit from our confusion
Each transaction felt like an upgrade.
Each delegation felt like freedom.
And somewhere in the accumulation of all that comfort,
we forgot how to make the things that keep us alive.
And we did the same thing with our money.
In the earliest days of this network,
acquiring Bitcoin meant producing it.
You ran the software, you contributed energy,
and you received sets.
The act of participation and the act of acquisition were the same gesture.
Then it got easier to buy and harder to produce, and the community split in two.
The purchasers went one direction, the producers went another,
and slowly, almost imperceptibly, we handed the furnace to strangers
and wondered why the fires started burning in colors we didn't recognize.
There is a particular dignity in making the thing you depend on.
A farmer who eats what he grows carries a different posture than the one who orders from a screen.
A community that produces its own money holds a different kind of sovereignty than one that merely accumulates it.
Today, I want to explore what we lost when we stopped forging and what it might look like to reclaim the anvil.
And I'm joined by a man who might just have the map to get us there.
Kent Halliburton, welcome to Plep Chain Radio.
It's an honor to be here, and I really appreciate that monologue.
It's drafted off of, or the sermon, excuse me,
it's really drafted off of a message that I've been honing and crafting for several years now.
Yes, and that was very intentional.
Very intentional, Kent. I have been listening to that message and it absolutely resonated. So for folks wondering, yes, I wrote the sermon, but a lot of the ideas about the fracture, this dichotomy, early dichotomy that happened in Bitcoin is from Kent's thinking on the topic.
So Kent, you know, you did tell me before we started recording that you do have an NSEC and you are on NOSTA.
But, you know, since most of this episode's audience are NOSTA people, they might not be familiar with you.
Just because, you know, you are a busy man, you're a CEO of a large company, of a large mining company.
So you don't spend that much time on NOSTA.
perhaps you can give them a little bit of a background on you know what your story is and
how you ended up with ended up starting SAS mining yeah I'd love to so I came from the
energy sector before getting into mining so worked for about a decade in solar actually
is where I got my start and so I'm about 15 years in the energy sector now but took a break
did a bit of a walkabout, suffered from a bit of burnout.
And during that break, I discovered Bitcoin and having plenty of time and a background
as a computer engineer in networking and energy and having traveled extensively
and dealt with the difficulties of acquiring money on the road.
I just instantly glommed on to the value proposition of Bitcoin.
And this was, you know, circa late 2015.
And, you know, the mine fires just set in and I got obsessed about it.
So I wound up restarting my life.
I'm a U.S. citizen, you know, from the West Coast originally.
But on that walkabout, I also fell in love with a Portuguese woman.
So my life restarted in 2016 in Portugal and started an entrepreneurial journey that took me a few years to find my place in the mining side of things.
thanks to Jeff Booth's price at Tomorrow.
And, you know, the mission at SAS Mining
is to make sat-based acquisition through mining
accessible to the masses.
So that's how I got to where I am.
But basically I've been living on a Bitcoin standard
since then, you know, convert what I need into fiat.
And, you know, the approach that we're taking at SaaS Mining is on the Bitcoin side of the event horizon, because mining is a zero to win innovation in the same way that the blockchain being a decentralized ledger is a zero to one innovation.
And, you know, I think of it as the mining side is the hashpunk side of things, while the decentralized ledger is the cypherpunk side of things.
But, you know, as long as you've got electricity, hardware, and an internet connection, or the right hardware, I should say, you can generate your own sats and have a decentralized money printer working for you.
So there are quite a few things you said there, and I want to dig into all of them.
start with your
what 15 years in the solar
industry when was
this do you
do you know do you remember
yes I do remember
those years so I
worked this was roughly
2005
is when I got the industry in 2015
is when I left and had a couple years
off and then you know about
five years in the mining side now so that's the
the 15 years come from. But yeah, I worked across nine different states in the US. My last role
was running sales software and we were acquiring companies and I was responsible for integrating
them into the greater company after we'd acquire them. So, you know, had a lot of responsibility,
nine figure revenue targets and came with a lot of pressure working with the board.
and yeah I just suffered some burnout there towards the end with all the responsibility and
decided when they brought the board brought in a new CEO you know I didn't really like the cut of
the guy's jib and decided it's a good time to go fulfill another lifelong dream and go for a walk
about and see the planet so that's that's how that went about but I learned a ton about the energy
industry through that experience.
And the odd thing about solar is it's actually,
I think the only industry that's analogous to Bitcoin mining,
because when you solar is emergent,
decentralized,
disruptive,
your profits are constrained by an energy network.
Your primary good is being brought in from China.
So the parallels made it quite easy to understand that.
industry when I jumped into it.
You know, the reason I asked at the time was I was tangentially involved with the solar
industry more from the finance side, the securitization side, around the 2010-2011
period when I was out on the East Coast.
The New Jersey renewable energy, solar renewable energy credit market, the SRECs, were going
through quite a bit of a bubble phase.
I don't know if you remember that time
or if you're familiar with that.
I was actually,
that was my first role in the solar industry
was living on the Jersey Shore
and selling solar around the state.
NASRX were a big part of that value proposition.
So I can't say that I have a lot of love
for RECs in general after that experience.
It's a funny little incentive scheme.
I don't think it works the way people intended either.
No, and I was a lot younger, not a Bitcoin at that time.
So I was just doing whatever my boss told me.
And I was a quant, and I was like, hey, I can write some cool equations and do some cool stuff.
And the idea was we would package this massive bubble of SRECs in New Jersey into a vehicle and then tranche it and securitize it and sell those.
I mean, it fell apart because, I mean, it's a borderline Ponzi scheme.
Yeah.
So if not a full-blown Ponzi scheme, thankfully, it never saw the light of day.
But it was an interesting time in solar.
And in general, right, I did get to read, even though I was on the wrong side of solar, on the finance side,
where probably if you want to get into solar, don't do that.
is there is a seductive allure to the idea of solar energy.
Look, as you said, decentralized.
It's also, in theory, completely sovereign energy source, right?
Once you have the panels, and let's say you actually own them,
and you're basically generating your own energy,
harnessing the power of the sun.
and that's kind of cool
if you can actually do it in that clean, sovereign way
but I think what we see is there's like
seven or eight intermediaries
I don't know the number
but typically fiat number of intermediaries
between you, the panel
and then the energy that you actually are using
Why has that not become more of a thing though?
The true energy sovereignty with solar?
I actually think it is now, thanks to the declining costs of batteries.
But, you know, when it comes to solar, that is the through line, the sovereignty between the two careers for me.
You know, I got involved with rooftop solar in Northern California primarily, which is where it started.
Right. Most people don't know that like the company I worked for is called Real Good Solar.
no longer exists but 1979 my my former boss at that company he sold the first
rooftop solar panel and the people that were paying the exorbitant prices for solar were the pop rowers basically because they were trying to they need a lot of electricity and they needed to be off grid And this was like the only thing
they could buy. And they had loads of cash to buy it with. So most people don't know that
sordid history, but that's where things started to scale. And if you go back to the early days of
solar, it was primarily driven by sovereignty, people wanting to be off the grid. And they were
doing that with lead acid batteries. And it was expensive and it was a bit clunky. But
fast forward to today. And, you know, when you look at the low cost of batteries,
I actually see in parts of like I saw friends in the industry, but in parts of California and
Colorado, people are actually looks like starting to fray off the grid where, hey, I'll just be
totally sovereign. I've got an electric vehicle with batteries. I've got, you know, a battery bank
at my house and I've got the smarts with the control system now to control the flows of
electricity from my solar panels on the roof. And, you know, for me, I think there's solar still
makes a ton of sense. Like most people don't know that the very first solar panel, solar cell,
excuse me, from the fifties will still produce electricity today. And it's the only way we know
how to make electricity without moving anything. So I still find it a very fascinating source of
electricity, but I find the politicization of it and the tribalism around it a bit dismaying,
even within our industry, because for me, as an engineer, it's all just about the right
application. So am I a big fan of taking up five acres per megawatt for solar, which is the last
time I looked at the ratio, how much space you need per megawatt with solar. Not really, but,
you know, if you've got a rooftop, why not, you know, use that real estate to generate your own
power, right? So it's still very application specific to me, but I do think the financialization
side of things and the big industrial scale solar plants and how they impact the grid,
you know, that to me is a different scale and scope and doesn't quite make as much sense,
especially when you get into all the incentives but you know energy in general is just fraught
with incentives and i've always thought you know just being more libertarian minded generally that
the right thing to do is just remove all the incentives from all the energy sources and let
them compete because then the market would just figure out the right applications for the right
the right energy uh generation applications for the right situations um instead of you know
force fit in certain things by malinvestment and permuting,
I'm not using the right word there, but, you know,
like what happened with the SRECs, right?
They really sort of created an odd bubble situation in New Jersey
and caused, I don't know if they caused more pain than gain,
but I know there's still a lot of solar left in New Jersey as a result of it.
Yeah, I mean, so the SREX came from the whole clean energy, renewable energy sort of push, right?
Which absolutely messed up the incentives more than anything else in this industry.
It's one thing having rooftop solar, which I think, or a small patch of land on your own property, right?
That's making you energy self-sufficient, right?
That's one thing.
It's another thing when you have these giant projects.
So I'll give an example, Kent. I live in upstate New York and in the wilderness. I'm in the mountains and it's beautiful here. Lots of, well, in the summer, winters are brutal, but let's just set that aside.
you know amazing nature birds trees greenery you name it right and so right my my property opens
into the forest which is owned by one of the colleges private colleges in around here and
what they two or three years ago they said you know it's like they own like five six hundred
acres of that entire mountain with the forest on it. And they said, you know what, we're
renewable energy, we're doing our civic duty, we're going to, you know, take about five acres
of that and make it completely solar. And they basically raised down, short of burning it to
the ground, this incredible patch of wilderness where you had these majestic birds, owls,
indigo buntings, hummingbirds, you name it, right?
It completely burnt it to the ground and installed these grotesque panels.
So it had a twofold negative environmental impact that completely outweighs anything positive
in my mind, which is the effect on wildlife.
And then second, the water table.
There's some weird stuff going on with the water table with what they've done.
So, like, the problem is that the incentives are completely warped
because of this renewable energy thing.
And it is so nakedly not about the environment or sustainability
because, like, look at this example.
And this is just one out of many, right, in these large-scale solar developments.
Yeah, I couldn't agree with you more.
I mean, you need trees to hold the water in the soil, right?
And so you take trees off and, yeah, you're going to have some water issues as a result.
And that is definitely not the sort of solar that I think is being utilized in the right application.
It only happens by, you know, the subsidization of energy.
And, you know, a lot of ways, like, it's very performative, right?
And like, it's greenwashing to then come in and say like, yeah, we're very green because we're producing the electricity this way.
It's like, yeah, anyway, I can't agree with you enough, Javi.
And at the same time, you know, there's lots of food applications for solar too.
And it's a tool like anything else can be used, right?
It can be used for ill, you know.
Another application that makes sense to me that isn't rooftop is car parks, right?
I mean, nobody likes to have their car sit there and bake on a hot summer day, so why not have solar roofs over that, right?
Like, those sorts of things make sense, but when we're talking about destroying the environment in order to put energy generation, I mean, it just takes up too much real estate.
It's not energy-dense enough to be used in an application like that.
Yeah.
Yeah, for sure.
So Kent, let's talk about, you mentioned Portugal, that your travels took you there, and you said you stayed there for a while, right?
Yeah, I'm actually a Portuguese citizen now.
Oh, wow.
So I married a Portuguese woman, and we lived there and kind of lived the American dream, but just in Portugal, which I came to think of as the original California, since it's the west coast of Europe.
Great surf, very similar landscape, excellent food.
But yeah, I very much fell in love with the Portuguese culture and speak a little bit of it, not nearly as fluently as I'd like, but it definitely is in my household.
So I consider myself a honorary citizen of Portugal as well here.
Yeah, you know, I've spent a few weeks in Lisbon.
I was actually on my way to Bitcoin Atlantis in Madeira.
When was that?
Two years ago, 20 to 24.
And decided to stop in Lisbon with family for a couple of weeks
and absolutely fell in love with everything.
As you said, the food, the people, the culture.
We traveled a bit around, went to Kishkesh, which is beautiful beaches,
just a lovely little coastal town.
I think I heard you on one of the podcasts you were on
say that you were in Sintra.
We went there as well, which is just such a fascinating place.
Did you live in Lisbon or was it in Sintra?
In Sintra, yeah.
So my wife is from the outside of Lisbon
along what they call the line,
which is what runs from Lisbon to Qashqai.
There's a train line there.
It's all south-facing, beautiful beaches.
But, yeah, we wound up buying a home in the central region.
So there's a little bit of distinction between central, the village, and central, the region.
It's kind of the green area.
And so we lived there.
And, yeah, it was a wonderful, wonderful experience.
And I'm looking forward to the next time I can get back.
I mean, we've got family and young kids.
So we have a family in Portugal and we've got a couple of young kids, so we'll always be going back to Portugal.
And the Madeira conference was phenomenal.
That was actually my first excuse to get out to Madeira.
But what a special place.
And yeah, I can't say enough good stuff about Portugal.
It really is a hidden gem.
For whatever reason, not that many people have flocked to it.
And I mean, the food is incredible.
The prices are so reasonable.
Like we were having Michelin star quality meals.
I mean, the restaurant didn't necessarily have a star, but the food was incredible.
Wine was incredible.
And paying basically one third of what you would in New York for a meal of that quality or maybe even one fourth.
Yeah.
Yeah, it's a culture that prides itself in its hospitality services.
You can really feel it when you're there.
You know, there's no tipping culture there.
And actually, it sort of changed my mentality about tipping from living there.
And yeah, you just find everywhere in Portugal that you go, it's just designed for human interaction.
There's always the creature comfort.
It's like you can't go more than a kilometer or two before running into another little cafe or a little bench to sit on that's perfectly positioned in the sun.
Or you sit down and, you know, you're waited on attentively without any nuisance, you know.
So there's a lot of pride for that in the culture.
And I think a lot of the reason why people haven't gone to Portugal so much is because, I mean, I went there for the first time in 2014.
and was blown away.
It was absolutely not discovered at all by any Americans.
That's changed quite a bit at this point.
But, you know, they're really, unless you were coming to Lisbon,
that was really the only draw.
And Lisbon wasn't seen as a destination city for Americans.
So it's, I think of it a lot as it's kind of the,
Portugal being such a small country, you know,
it's about the size of New Jersey, I believe.
And it's just sitting on the edge of the Iberian Peninsula.
So it's kind of like this barnacle just stuck on the rock of Europe.
You really have to want to get there to experience it.
A lot of people would go through Spain, but not make their way to Portugal.
So, yeah, it stayed isolated.
And it's also, I don't know if you heard this when you're in Qashqai,
but Qashqai was the place that the Allied and Axis spies would meet
to kind of try to negotiate things during the World War.
So it also has a unique spot in sort of world history as well, not just for that, but the age of discovery.
You know, the Portuguese are the first sailors going from a Western perspective that went out and discovered most of the modern world for Europeans.
And they actually had the first global reserve currency, the Escudo.
So, yeah, they've really, when I look at Portugal, I think one of the things that struck me as an American is this is what a culture looks like after it goes through an empire period and is a couple hundred years past that.
And it sort of settles into itself.
And it's not a bad thing.
They do have Fado in Lisbon, which is the morning of the loss of the empire, right?
the musical, I guess, almost operatic musical thing that comes up in these restaurants,
which is interesting.
I found that really interesting.
Isn't that right, Kent, that Fado is really them mourning what was lost?
Well, I don't know where saudade comes from exactly.
You may be right.
I didn't research it far enough, but there's this concept.
The Portuguese have a word called sadad that is like nostalgia, but not quite the same.
It basically means to miss something that you can't actually touch.
It's the best translation I can come up with.
But that's like the emotional valence behind fado music, which is really deep, soulful.
And yes, it is somewhat operatic, but it's its own unique thing.
It not like Italian opera at all but it has that like kind of formfulness that you hear a bit in the in the the operas But yeah I kind of think of you know the Spaniards and the Portuguese as
twins on the Iberian Peninsula, which is, you know, that, that entire peninsula,
if you're not familiar with it, that hangs off the end of France, it's that Spain and Portugal
occupy. And it's like the Spaniards are the extroverted twin and the Portuguese are the
introverted twin. That's interesting. And were you a Bitcoiner when you lived in Portugal?
Yeah, absolutely. So I picked up Bitcoin 2015. Actually, let me take that back.
When the first couple of years of living in Portugal, I was going through my shitcoin phase.
Um, so this is got into Bitcoin, you know, late 2015 had that heroic rise, 2016, 2017 funded the transition of, of life to it being in Portugal.
And then, you know, started to get into all the various ways that I could try to make more Bitcoin or shit coins.
And yeah, it was not, not a good idea, but out of that eventually came my journey to get to Bitcoin mining.
But there was a Bitcoin community in Lisbon and I was a pretty frequent attendee to their events.
I don't know if it's even still around, but it was called The Block at that point in time, a cafe.
I think now Madeira has become sort of the focal point of Bitcoin building and culture and anything else in Portugal.
just with the sovereign engineering cohorts that are going through there,
Andre Loja, all the work that he's doing out there.
Although I'm sure Lisbon still has its own Bitcoin scene.
I think you're right. I think that's right.
I think a lot of what I see is that it's more crypto in Lisbon
and Madeira is where the Bitcoin ethos is.
so gant let's uh i guess we'll talk about mining now um and if i understand correctly
sas mining allows me to allows a user to i guess rent uh asics that you
uh that that sas mining keeps at various locations is that correct
uh own uh the async so we provide yeah ownership but otherwise yeah that's accurate so what coming
into this industry one of the things that i realized was that mining hadn't been made accessible
to the masses like i'd tried mining in portugal and didn't have a very good experience from home
and i was just sort of frustrated by the idea of why can't there be a web application i can go to
like any other web 2.0 service and purchase a mining rig and receive the Bitcoin from that
mining rig and manage it all in an easy to use way. And so that's, that became, that frustration
led to what we've now built at SAS Mining. So you show up on our website, we've got a traditional
e-commerce store that we've developed for selling mining rigs. You can see the value or the number
of sats they'll produce each month and how much it's going to cost to run that mining rig. You
purchase it and we get you deployed depending on the unit, either within 24 hours or three weeks,
if we have to buy and ship. And then you pay the electric bill, you keep 85% of the SAT and we keep
15%. And that's the only way we make money is through that management fee. So we pass through
the costs of the hardware and the electricity, but we don't mark up either of those for profit.
But we just keep the 15% of the Bitcoin that's mined in a sovereign way.
So we're non-custodial.
What we do is we instruct Ocean and Luxor to split the Bitcoin that's being paid out
so that we just receive 15% and you keep 85% so we never touch your Bitcoin.
What that means is we've aligned incentives with our customers.
So if we're not producing, helping our customers produce Bitcoin, then we're not getting paid either.
And, you know, mining revenue is a bit of a dark art for someone who isn't completely immersed in the industry, right?
There's all these payout models, FPPS, all of that stuff.
Ocean, I know because, I mean, I've had Mechanic on the show, it's been almost two years now,
But he was sort of walking me through the different models back then where with Ocean, you get what you put in, right?
It's not like the guaranteed revenue that you get from an FPPS style model.
I guess maybe unpack that for me
because I'm not immersed in this industry
but also for our listeners who might not be as well
what does the revenue model look like
if you buy enough hash rate
buy enough ASICs
are you guaranteed a constant stream of revenue
or is it based on whether
your specific batch of hash rate
was part of the winning block.
Yeah, let me kind of try to break that down, Avi,
because I think that there's...
First, we should talk a little bit about
what you produce with a mining rig or an ASIC.
So your output, let's use a single mining rig,
about 250 tera hash is what a single mining rig will produce.
and that hash rate gives you the opportunity to generate Bitcoin.
How much Bitcoin you generate is dictated by the difficulty on the network, right?
And you can track this by the hash value metric.
So last time I looked, which was last week,
you're generating about 43,000 sats per petahash per day.
so that doesn't quite translate to 250 terahash but just to just to give the idea basically right
so your your terahash produces sats that's almost guaranteed as long as your mining rig is plugged in
and pointed to a mining pool you will generate somewhere around there now the mining pool the
difference between fpps and ocean does create some variability in the exact amount of rewards
that are paid out. The simple way that I describe the difference between Ocean and FPPS is if you
want the risk of luck or not, that will create a difference in the price. So Ocean's recently
published some data, some long-term data that shows that over the long run, you do generate
about 4% more Bitcoin by pointing to them than an FPPS pool. That 4%, I think of as the price
of obscuring luck. And for a lot of miners, in fact, I would say the majority of the miners on
the Bitcoin network, they're more fiat minded. Genuinely, they're not there for Bitcoin acquisition.
They're there to acquire Bitcoin as a stepping stone to get more dollars. That is fundamentally
true. If you look at the publicly traded mining companies, for instance, they owe dollar
denominated returns to their investors, not Bitcoin denominated returns. So by definition,
They are using Bitcoin as a stepping stone to get more dollars.
But I'd say many, if not most of the miners in the community are doing the same as well.
And they're not sophisticated thinking things through from how do I get more sats?
They're thinking through how do I make my life easy and get to those dollars faster.
So although you can get more rewards, I've had conversations with the guys at Ocean and others.
even though you can get more rewards with ocean the hesitancy to deal with bearing the luck factor
causes many of them to still stay with fpps which is an interesting bit of user friction i guess
to to realize that but yeah we we offer the choice to our clients so we are a service provider we're
We're not a self-miner.
And as a result, we want to give our clients the choice.
So we offer Luxor and Ocean to our clients.
Luxor being an FPPS and well-reputed mining pool and then Ocean, which we've been talking about.
So we offer that to clients through a simple toggle.
Have you heard of this company called Wrigley?
I have heard of Wrigley, and we did look at utilizing them at one point for some hash rate contracts that we needed to purchase as an interim step for some of our clients.
But yeah, share with me what you think of their approach.
so i've it's been a while but we i had evan and nico the founders of wrigley on the show
seven eight maybe even a year ago now um and i think it's it's fascinating at least in theory
right you know you bear as a it's i it's on the other side of the equation right so what you're
talking about is someone who says look i don't want to have an asic in my house i want to own
one. I want to participate in the network. I just don't want to deal with the headache of having it
in my house. And I'd also rather have it close to an energy source that's more efficient than,
like if you're in New York City, for example, you don't have the space, like electricity is,
you're paying through the nose for it. So you're like, you know what, I'm going to outsource that
part of it to sales mining. But then there's the other type of person who also wants to participate
in the network. I think, you know, I don't even want to deal with the hardware. I just want to
buy the hash rate that that hardware is producing, either via auction or direct sale that I don't,
I think the direct sales are not, I don't think they're as beneficial, or, you know, you're not
going to profit as much of the direct sales, as you will if you buy the hash rate in an auction.
and I
from what you're describing there
these two seem pretty
complimentary to me right like for example
I could be so you could have a user
saying yep I want to buy
this device that produces the
hash rate and keep it in a
location that's most optimal
which is in SaaS
mining because you have facilities
right next to these
energy efficient
sources
and then there's folks who are saying,
yeah, now I want to produce the output.
I want to buy the output of those machines
and participate in the network that way.
So to me, it seems, at least in theory,
very, very complementary approaches.
Is that fair?
I think so.
I think they both serve a role
and an important function in the industry.
You know, if you purchase in a hash rate contract, in some ways it is a derivative of owning a miner, right?
Because somebody else is agreeing to supply that hash rate, right?
And they're being paid a premium as to what the network could generate for them.
So it is a derivative product by definition.
however um there is a place for that where a lot of people want to have uh time constrained um
you know mining for themselves they don't want to just have a mining rig
plowing along for you know two to three years which is what most people figure when they get
into a mining rig um and it's a good way it's a good way to uh create some insurance uh around
another mining operation, you know, backstop things.
So there's a lot of good quality applications that come from it.
So, yeah, I have no issue with hash rate contracts.
I think the one thing that I am cautious of is turning that into cloud mining,
as long as people are very clear of what that is,
because cloud mining has a bit of a sordid history,
and that's burnt a lot of people.
Well, if the provenance of the hash rate is clean, right, doesn't that address the issues that led up to that sort of history?
i i think it's i think the market's more educated now so i think it's less of an an issue but i you
know if you were taking and not clear that you don't actually have title to the mining rig that
is generating that hash rate and you package it up and say hey you're buying a mining rig that's
where the problem came from yeah and then there was various almost like rehypopulation games that
we're going along with that, right?
Where it's like, oh shoot, your cloud miner's down.
Well, maybe you've just taken that hash rate
and decided to dilute it and sell it to two people
at the same time And you kind of just shift it back and forth And now nobody totally happy because they not getting what they paid for right there um yeah anyway there just games and
i don't even know what all of those were because it came a bit before my time getting into mining
but i've heard enough of the negative reputation that as long as we're clear that hey you buy the
cash rate contract um and this is not truly mining it's you're buying the output of mining
then you're clear on what you're buying
and I have no issue with the product.
You're buying the output of mining for a fixed period of time
not in perpetuity either.
That's true. I think that clarification is important and I believe from what I've seen
Wrigley does that. So let's talk about
the locations. I believe you have one in Paraguay
one somewhere in Africa.
And actually, yeah, why don't you tell me
what the locations are for these ASICs?
Yeah, we've, so focus in, you know,
we're a tech company first and foremost,
and we have mining operations.
And as a result of building this interface
between users and their mining operations,
it's allowed us to be a lot more scalable.
We're not tied to infrastructure
in the same way that a lot of folks are.
And we've been able to launch in several different locations.
So what we look for is, where is there a good price of electricity?
Is there somebody there that we can trust to work with us?
And then, you know, what is the actual mining operation look like?
So do that fundamental diligence on the ground.
you put all that together and we layer our software in there and it's allowed us to scale
so we started off in the u.s um right now we're in south dakota uh then we went to paraguay
uh norway and now ethiopia we're just getting going there so we're across four continents at
this point and just think the term sheet will bring to market here in another couple weeks
for another location in the u.s so um we've designed ourselves to be incredibly scalable
and kind of unique in the mining space
because A, we're a service provider, we're not a self-miner,
and B, as far as I can tell, we're the only company
that's offering this type of a service that is living on a Bitcoin standard.
And so it leads to unique decisions that are being made
that traditional hosts don't typically take.
Paraguay is hydroelectric
because of the Itaipu Dam
I would think Norway would be geothermal
correct?
Actually almost all of our sites are hydro
that's not true, South Dakota is not
South Dakota, there's a lot of wind
it's 80% carbon free energy
so we have a carbon free mandate
being 20% better than the network.
You know, I am personally aligned with that.
But more importantly, when we made that decision for our brand,
when there was a lot of energy fudging,
we wanted to give our clients cover to feel good about their decision
and be able to talk about it with friends and family without getting chastised.
And that's played out fairly well for us.
But South Dakota is about 80% carbon-free.
They do buy RECs, back to our previous conversation, to make that particular grid 100% carbon-free.
But I question that 20% part, as I'm sure you do as well, Avi.
And then, yeah, talk Paraguay.
Ethiopia is the GERD dam.
Massive, massive infrastructure project in Ethiopia that's hydro.
And Norway is almost all up in the Arctic Circle there.
And it's almost all hydro as well.
In fact, we had a bit of a price spike this winter when it got colder than normal and froze a bunch of hydro dams up there.
So, yeah, it's kind of interesting.
Just because hydro is a steady producer of power doesn't mean that there's not still some aberrations that come up even with hydro.
I mean, these rivers could dry up, right?
especially if they're glacier-sourced rivers,
maybe not as much,
but if their rainfall,
if their primary source of water is rainfall,
that could be an issue, for example,
if the rainy season isn't as planned, right?
But I don't think any of these are...
Well, actually, what about the Itaipu Dam?
how is that river uh what is the source of water for that river
uh it is gosh i don't know the name of the river off the top of my head or i've forgotten it um
it's a massive massive river um there is not a measurable change even with uh rain flow uh too
because it's such a big river i mean we're talking about something the equivalent of like
Mississippi, right? It's just incredibly massive. But we did have that experience actually in
Wisconsin. So that was our first data center in the US. And we closed it down, actually,
at the end of this year. And it was, when we went in there, we analyzed five years of data
to see, okay, what's the likelihood that we have any power related issues, you know,
we're just mining a single megawatt there. And over five years, there was like one period of
time for like two months where it was like okay we might be curtailed a little bit um and then it
turned out our last year there like the water flows just simply weren't there um and we had
really heavy curtailment and so when the contract came up there we said yeah this is a good time for
us to to move on um so yes you are absolutely right um if you are in mining on hydro in areas
that are dependent just on rainwater, it can be an issue.
Which was the first facility outside of the U.S.?
Paraguay was our first facility, then Norway.
Ethiopia has been our latest.
Did you spend any time in Paraguay?
yeah i mean i i physically live in south america um so um yeah i speak spanish and portuguese so
it's not so hard to do business throughout the americas if you know those three languages
um but uh yeah i've spent time in paraguay a unique culture um and semi-tropical uh you know
there is a heat season. The grid is a bit unique. You know, if you're used to Western reality,
getting used to places that don't have the same grid infrastructure, take a little bit of
get your head wrapped around. Like the idea of illegal mining was something that caused a bit
of a kerfuffle for the Bitcoin community. And it was which was kind of funny to watch. I just to
comment on that for a minute. So it was like 18 months ago, I think there was a crackdown on
illegal mining. A lot of folks in the Bitcoin community got up in arms about it, but quite
literally it was the theft of electricity. You know, in Latin America, you can see where people
just throw jackpot cables on electric lines and use power, right? And if that's not metered,
then it's literally being stolen. And there was a lot of that that was going on in Paraguay.
And so they cracked down on a bunch of farms and seized the equipment. And now, the last few weeks,
the state is actually looking to deploy that equipment and start mining on it themselves.
So I think that's actually a wonderful thing because they'll come to understand mining a lot better
and make the entire industry a bit more secure in the country.
And I was asking because I was at Accelerating Bitcoin in Asuncion in September of last year,
a really good conference.
And they actually had a trip out for some of the speakers to the Itaipu Dam.
I couldn't imagine sitting in a bus for four and a half hours and then coming back four and a half hours all the way to the Brazilian border.
So I skipped that.
But if there was a simpler way of getting there, I probably would have.
But it is fascinating.
culture. There's an amazing Bitcoin scene there.
Another hidden gem, by the way, right?
Asuncion especially, the people doing remarkable work, both on the Bitcoin and Nost aside.
Although Kent, I don't know how familiar you are with this.
I've been hearing some rumblings that in the last few weeks, maybe month,
that the government, the Paraguayan government is sort of,
it had taken a fairly lax attitude to, you know,
Bitcoin and Bitcoin-related things, investments,
earning in Bitcoin, so on and so forth.
But I think they're sort of scrutinizing that a little more,
or at least there's a regulation out that proposes that.
Are you familiar with that?
yeah actually we had to dig into it because we are mining there and see okay does this impact us
um so just back to etapu for one minute in that tour because i think um you know there's certain
places i'm sure you've been i think niagara falls is one of these where you go and you just
you experience it you're like wow this is a force of nature this is worth seeing
i would classify etapu dam as and the etapa waterfalls is in that same category um i don't
know that I've ever seen a bigger infrastructure project than the Atapu Dam. I mean, it's unbelievably
big. I mean, from start to finish, I think it's like five kilometers long. So it's quite a thing
to witness. I can't say it's worth, you know, nine hours on a bus for a return trip. But the,
you know, when it comes to Paraguay, to shift back to that question you were asking,
They came out a couple weeks ago with what seems like a very unthought-out approach to wanting to track who their crypto users are in the country.
So anybody that is making that has an RUC, which is a basically a tax residency in Paraguay, which is fairly easy to acquire.
They are mandated to report their crypto assets on a form.
And pretty much everybody in the community, Bitcoin and crypto alike, is look at this and turn their head sideways and said, yeah, no.
You know, it's pretty invasive, so it's self-reported.
How are they going to know if you don't?
And the bigger fear is, aren't you just collecting and creating a massive honeypot that nefarious actors can use?
I mean, we've heard about Brazilian gangs that come across the border into Paraguay,
and so there is threats of violence in this area.
and it just seems like most people that I've spoke to
are simply planning to ignore it.
And that's not a recommendation.
I mean, you have to make your own decisions about what to do.
I do not have a tax residency there.
It doesn't impact SaaS mining.
We dug into it with legal.
However, it does seem like quite an invasive
and poorly thought out approach
to trying to track crypto assets in the country.
Mm hmm. So dead on arrival then?
I don't know that it's dead on arrival. We will see how things play out. But, you know, in a lot of places, the state is just not used to dealing with something that they can't control. And I think that kind of comes as a shock when they realize this just about, you know, encryption, private key management.
So I think it'll take a while for them to get educated on this. And we've seen steps in Paraguay where the politicians have proposed legislation only to decide to pull it back after an uproar happened. Hopefully that happens here, but that hasn't happened yet.
yeah hopefully you know the one interesting thing i found that was one of the many interesting
things i found in my visit to asuncion which is actually my first visit south of the equator
last year it's amazing that it's taken me this long to stray south of the equator but
the money in Paraguay, the currency is called Guarani,
which is the name of the tribe, right?
Of the native tribe of Paraguay.
And I thought that was super interesting.
It's rare that the currency's name is so deeply tied
to something historically meaningful, right?
most of the other places.
not just in South America, right, which is peso or some derivative of that word peso,
or anywhere else in the world.
Money has some kind of like, it almost means shells or something like that, right?
But it's rare to see a country that's calling their money something so deep from their history.
Yeah, it is.
And I think it points to something that is fundamentally unique about South America.
You know, I live in Peru, not Paraguay.
And there are something like 26 indigenous tribes in Peru.
You know, there's a separate language like Paraguay.
Quechua is what it's called here.
The people, more of the mountain tribes are very proud of and continue to speak and are taught in schools.
and you know that it wasn't like the the colonizing forces that came in were kind
to tribal cultures and they also didn't take the tribal cultures and and and put them on
parcels of land and say this is your new home and as a result these tribal cultures have have
integrated into western society and and in fact here in Peru anybody that kind of has that heritage
and westernized, they call them mestizo, which basically means mixed.
Sorry, this is the language here.
I'm not trying to be racist with my language.
It's just how things are described.
But there is more pride and connection to that heritage
within the entire culture as a result.
So I'm not totally surprised.
And I don't know if that's unique to Paraguay that they tied the name of their currency to the indigenous culture there.
What is it in Peru?
It's called the Sole.
And I was just actually typing into an LLM here to see what the etymology of that is, because you got me curious with this question, if there is any connection.
And I do know in, I don't know about Paraguay, how stable it is in there, but I know that the exchange rate in Peru has been incredibly stable, actually, about the 12 years that I've been coming to Peru.
Exchange rate really hasn't changed much.
So, and it's also one of the reasons with that stability why there's not a tremendous amount of Bitcoin adopting here.
so there was a
I don't know if these were just
viral videos
I mean when I say viral I mean
within the Bitcoin world
which is a few thousand views
as opposed to millions
of
motive Peru
right there was this non-profit
group
supposedly funded by
a secret Bitcoin whale
who was working with the local population
and might not have been in the capital city, Lima,
but maybe elsewhere,
and just getting them orange-billed on a Bitcoin standard.
Did you see any evidence of that?
Yeah, there's actually a circular economy
that I've gone to that's near where I live.
And there is, I mean,
And I actually wish that more of the Bitcoin community knew about motive, because as far as I can tell, there's no organization that has generated more circular economies that continue to function for several years now.
I'm friends with Vale, the principal operator of that nonprofit.
Last I looked, 16 were running and is looking to add more.
so they've very much figured out a blueprint that works um sponsoring surf competitions in peru
i mean it's very cool and peru is a unique country i have to say uh from the standpoint that
you know for most americans it took me a while to realize this but when you go south of the
the mexico u.s border most of latin america is sort of painted with a mexico paintbrush
and it's not true, but it's sort of, it's what you know, uh, coming from a U S perspective.
I used to do it too. And so it gets applied all the way down. But Peru is one of the few countries
where you mentioned Peruda people and they don't look askance at you. They, they say, Oh, cool.
You know, it's got, got a good reputation. I think it's mainly from Machu Picchu, frankly.
Um, but it is a very baddington bear, baddington bear. Thank you. Yes. Which is one of my daughter's
favorites um it it's uh yeah it's got a very like cool reputation you know there's all this stuff
with ancient civilizations that makes it somewhat mystical um and so it has a different place i think
for most americans than the rest of latin america but you know it's the simple way that i describe
peru is imagine what mexico would be like if it didn't border the u.s right because that entire
relationship has just changed the culture. It's got a similar set of geographies. So whether that's
the coastal region, it's like Baja, California, whether it's the mountain region, that is what
most people think of when they think of Peru, or whether it's the jungle region, which is the area
where I live, the Amazon region, you know, very distinct cultures, very distinct foods, language
differences. So yeah, quite similar to Mexico
for me. But the food is incredible in Peru. In fact, a couple
years ago, the number one Michelin star rated restaurant in the world
was in Lima.
Yeah, I've seen the Bourdain episode.
Episodes, I think you might have been there twice. Absolutely
fascinating stuff. And obviously you do get ceviche in New York,
but I'm sure that's nothing compared to authentic
Peruvian food.
Kent, we're at the one hour mark,
so maybe it's a good time to pause
and switch and listen to our Value for Value
music segment for the day.
So I've picked out a song by an Australian band.
They're called Social Hijack.
And the name of the song is Enough.
guitar solo
I'm tired of you
I'm tired of this
I've had enough
But you will never break me
Getting afraid
Cannot pretend
You're at it again
Is it something you have from?
Maybe you
And I see, and I see it's you
And I see, and I see the truth
And I see, I see her soul
And I will always know what you do
I'm tired of you, I'm tired of this
I would enough
But you will never break me
Getting afraid
Cannot pretend
You're at it again
Is it something you hide from me?
Let me you
And I see
And I see it's you
And I see, and I see the truth
And I see, I see her slow
And I will always know what you do
guitar solo
Let me know.
And I see, and I see it's you.
And I see, and I see the truth.
And I see, I see hope so.
And I will always know what you do
That was enough by Social Hijack.
I've got the 90% split set up in the chapter.
If you like that, if you want to support this great Australian band,
hit that rewind button and hit boost.
90% of all your streams and your boost during the song will go to the band.
Kent, are you plugged into the value-for-value music space at all?
I'm not.
Are you aware of what's happening with independent music?
I'm aware of the value-to-value idea generally.
I do listen to Rabbit Hole Recap and hear them champion that,
but I'm on NOSTER but not much of a participant.
Every once in a while I'll post something there.
What we found is most of our customer base is on Twitter and LinkedIn.
And so that's where I spend most of my time as a result.
Yeah.
So you raise an interesting point there, which I've been thinking about, Kent, which is, you know, you go to a Bitcoin conference.
And yeah, there is a mining presence there, right?
But it's not that much of a mining.
I mean, it depends on the conference, obviously.
But then you go to a mining conference and you don't see that many Bitcoiners there, or at least the type of Bitcoiners you would likely see at a Bitcoin conference.
It almost seems to me that these are two separate worlds, despite being part of the same broader ecosystem, which is Bitcoin, with really overlap points that are few and far between.
Do you think that's a fair assessment?
Yes, I do.
and I think it a problem for our community because it leading to two different conversations and divergent ideologies about the network right I mean if your incentive is to get fiat versus Bitcoin
which is most of the mining community, well, it doesn't necessarily mean your long-term
alignment is with the Bitcoin network versus the Bitcoin community. I do see that the mindset and
philosophy is. So it's one of the things that I am personally working to rectify, which is why
we cater specifically for folks looking to acquire Bitcoin, not generate passive income flows.
And we've found, frankly, that Bitcoiners make better customers for us anyway.
So I guess this goes back to the schism, which I was alluding to in the sermon, which is really
inspired by some of the things you've said in the past. So why don't you walk through that thesis,
Kent? What WTF happened in 2013? And philosophically, how are we here today? Or why are we here today?
Yeah, I call this hidden history for Bitcoin, because most people aren't aware of it. So
If you were running a node from Bitcoin's launch through 2013, you had a simple toggle to be mining your own sats.
And if you run into a Bitcoiner from that 2010 to 2013 era, almost all of them acquired their sats through mining.
And you see that they have a different attitude about mining as well as the current community does.
What happened in 2013 is two things.
that quickly created a fork in how we acquire Bitcoin.
The first was the ASIC came along.
So that made it more difficult to mine, right?
And that was starting,
that started to separate the node from mining
in the first place.
So more challenges to mine created some inconvenience
and then Coinbase opened their doors
and offered more convenience.
So the combination of those two things,
You know, we're humans as Bitcoiners, so we've gotten to the exchange at a convenience to buy rather than mine.
And as a result, that's left, that split the community into two different communities writ large.
And as you said, you know, probably one of the most ironic moments of my career was last year being on stage at adopting Bitcoin in El Salvador.
and the week before that, you know, I've been scheduled to do that presentation for a month or two.
And the week before that, I was invited to be at Mining Disrupt in Texas,
which is a mining only conference to speak.
And it was almost the exact same time, like just not possible to be in two places at once.
And, you know, I knew that there was very few Bitcoiners at Mining Disrupt,
while I also knew that there's very few miners at Adopting Bitcoin.
And so it was a bit of a surreal moment to live through that and be talking about it on stage in El Salvador.
Yeah, I can only imagine.
But wasn't the schism inevitable, Kent, given the nature of the difficulty adjustment?
I think specialization, it's a fair point.
I think specialization was going to lead to it to a degree.
And if you're interested, I'll be given a presentation on this at BitBlockBoom in a couple of weeks.
But I think that there's several reasons why it happened.
And I think one of the primary ones is the Bitcoin community just didn't think through the downstream consequences of not continuing to be the majority hash rate on the network.
um you know there wasn't a lot of a lot of folks that saw that coming uh second i also think the
mining community let down the bitcoin acquisition community um as well you know there's been a
glaring lack of trust that has uh permeated within the bitcoin community from the mining community
right because there's been frankly a lot of bad actors that have come along and not treated the
customer wealth. Nobody's gained the trust or created the user experience that's allowed
Bitcoiners to step in and acquire their Bitcoin the way that Satoshi designed it and with
convenience, right? And that's, I would say, probably the core mission at SaaS Mining is to
create that convenience and compete with the exchanges for Bitcoiners' business.
I just want to go back to the inevitability topic
the tragic inevitability of this in my mind
because again the difficulty adjustment
is that essentially what it means in this context is
if the network is going to grow
it means the difficulty is going to ramp upwards
which means you're going to need more hash rate
Which means you're going to need more specialized hardware, which means you're going to need capital, which means at some point it will start concentrating in hands that are able to raise more capital, which means at some point they will have to turn to the capital markets and go public.
which means that once they're publicly traded companies,
they are fiat companies, right?
The capital markets are 100% fiat.
So if Bitcoin has to grow, this kind of has to happen, no?
Or am I missing something here?
Yes, I think that the off-rent that's missed
and is part of the thesis we're playing out
is that it's lower cost to aggregate capital from lots of people rather than turn to the Wall
Street capital markets. And I say that because you can actually analyze the pubcos and see what
it costs for them to produce a Bitcoin. Not what they claim in their filings, but actually just
take how much Bitcoin did you produce and how much did you spend to do that. And if you do that over
a three-year time period, which is about the amortization of a mining ASIC, you will see
that they're producing Bitcoin at a much more expensive price than you can go to the secondary
market and purchase it for the exchanges. That leaves a lot of room for competition,
and part of what we are competing on is to be able to aggregate capital at a lower price than
Wall Street can. And to date, we have been doing that. We have been producing Bitcoin at lower cost
than the PubCos, which is great. And one of the points that I can make about that, because we are
running profitably, we are not driving dilution and issuing equity to be able to subsidize the
mining, which it does seem like many of the Pubcos are doing. As a result, you know, we're hyper
focused on efficiency and automation. And, you know, we started January 2023 with our first
mining rigs in the market after a year of building our software. And we are now three, we've finished
three years and working on our fourth year of mining. And we've gone from 11 staff when we
started to 14 at this moment and have nearly 4,000 mining rates under management. So I would
say we're going the right direction to be able to create a scalable model. And that just simply
has not existed in our space where you write, you either going to self-mine and you're going to need
to raise massive amounts of capital, or you're going to go the traditional hosting route, which
is marking up hardware and or electricity and not being in line with what your clients
are actually after, which is Bitcoin acquisition.
So we're finding what we believe is a third path here to be able to deliver what the market
actually wants while also reducing the cost of capital to scale.
And do you think that you'd be able to convince other players to adopt this approach?
I mean, the best way to convince someone is to show them that it's more profitable.
But right now it sounds like it's just SaaS mining that's doing it.
Because we would need this to scale across the industry to break this cycle of inevitability, right?
Correct.
And we are on a good trajectory to be able to prove that.
And I agree with your point that we have to prove that before anybody else adopts it.
The thing that makes it difficult is traditional hosting providers come from infrastructure.
They don't come from tech.
We're coming from tech into infrastructure.
And those are two different ways of seeing the world.
And so as a result, you have kind of how I think of Web 1.0 versus Web 2.0.
If you were around during the Web 1.0 days, it wasn't a very good user experience online.
It was basically brick and mortar trying to be recreated.
And it wasn't until Web 2 where we use Internet native ways to do commerce that adoption really picked up for the Internet.
I'd like to think that that's the similar analogy to traditional hosting versus what we're bringing in to the market with more of a Web 2 approach so we can unlock that scale and growth.
And the real challenge coming from the infrastructure side is you actually need software developers if you want to be able to do a rev share model.
There's just no other way to do that.
You need to be able to code and deal with APIs.
And that's not the skill set of most traditional hosting players.
Yeah.
So let's talk about a related term that sort of comes from this model.
I think I've heard you use the term wild sats in the context of the schism and just sort of trying to bring things back into order.
And it's a great term, right?
When I think of wild sats, it's foraged as opposed to packaged and given to you, fully KYC'd.
So for folks unfamiliar, talk about what you mean when you say wild sats.
I think you nailed it with that explanation.
It's really the difference between being hashpunk versus KYC'd up out there, right?
So when you mine, all you need is hardware, electricity, and an internet connection, and you'll be able to generate your own Bitcoin.
And it's distributed directly from the network.
So the banking surveillance state is not a part of that relationship with your SATs.
And so therefore, they're wild.
They're right off the network.
And interestingly, the second order consequence of that is that we see more of our customers actually using their SATs because they don't feel like there's a surveillance apparatus attached to them.
for the same reason if you walk into a room,
maybe you don't notice there's a camera in it,
and you feel pretty free, and then you look up in the corner,
and oh, there's a camera, and all of a sudden your body stature shifts
as you realize you're being observed.
I think the same applies to our SATs.
So when they're generated wild off the network,
the way you use them is different.
Oh, yeah.
and then you submarine swap them into lightning and then that yeah you can do all sorts of fun
stuff once you have that you don't even need to if they're wild right yeah yeah no it's uh we have
i mean what we tell our clients is look we don't um we need to be able to talk to you as a customer
right so whatever you give us for communication that's where if we were subpoenaed we'd have to
give over but we don care And we have a surprising number of people that call themselves none of your business That great So actually let me on the surveillance piece on and the wild sats can can
I mean, a transaction can be the sats that come out of the the Coinbase, right?
transaction, they can be tracked to the, obviously be tracked to the block, which means you're going
to know which mining pool won that block, but you're not necessarily going to know where the
hash rate came from. It could have come from anywhere, right? So if it's a block that Ocean
won, no one's going to know who got the reward, right?
there may be with ocean a way to tie that back uh to us i i can't see it um but ocean accounts
are defined by bitcoin addresses right so that is the account name is your bitcoin address so if
somehow that that could be associated with their platform then somebody the state could come to us
and say give me all the information about this account we'd have to uh but i think that's a hard
link to make. And then Luxor runs on more of a traditional FPPS sub-account. So yeah, we'd have
to give whatever information we have related to that sub-account. But it's a tenuous link to make.
And I don't see that it's all that likely to be done. Now that said, I mean, there could be
regulatory change that comes at some point and forces us to have to to kyc you know we just moved
our headquarters to wyoming and maybe we choose to incorporate there in the future i mean we're
very uh bitcoin or privacy focused and want to continue to drive that um that angle because we
know that acquiring sats discreetly is a massive benefit one of the primary drivers for why people
sign up to SAS mining in the first place.
Yeah.
So this mining
side of getting SAS,
the wild SAS, absolutely fascinating concept.
Topic I don't spend enough
time looking into.
Because I'm just, right now I'm thinking
I wonder if one of the
inadvertent side effects of FAPS
is that it acts as a custodial mixer
of sorts.
So maybe you won't even be able to
trace the hash rate
back to the ASIC that generated it,
or the set of ASICs that generated it.
Yeah, it's fascinating stuff.
Yeah, I mean, with Luxor,
we have no idea the mining rig
that is generating the blocks.
We just, we don't know.
With Ocean, we do.
And we share that with our clients.
You know, if they were the lucky miner,
we found eight blocks so far with Ocean,
which is pretty cool.
Every time we get one of those,
the entire team celebrates and it's nice to see our name in the MIM pool.
But it's, yeah, it's tenuous at best is how I currently look at it.
So let's talk about mining concentration, right?
And I'm talking specifically about pools now.
And I mean, that's a topic that keeps coming up.
Even if you're a Bitcoin who's not that plugged into the mining world,
this keeps coming up, right? Which is you have Antpool and you have all of these
pools that have, what is it? It's over 50% at this point, right? From a related
group of miners. How concerned are you about that? And what do you think SaaS mining is doing
to fix it? And what can just regular people do to address that?
man i wish i had a better solution uh to offer but i think it's proof of work is the simple
answer so while we were talking i just pulled it up and you know you can go to the learn.brains.com
and see exactly what the the market share is of each of the mining pools and foundry and ample
right now total 53 percent of all the hash rate on the network and that doesn't count all the
proxies that amp pool has out there uh so when you add that on boy we're we're on the point where
we've got uh two throats to choke and the bitcoin network could be forced to uh double spend
thankfully one's in the east and one's in the west right so that is nice um i think there's
two things that you can do as bitcoiners one um because most of the pubcos go through foundry
because of the KYC.
I think don't support the PubCos
if you're worried about that 35% market share
that Foundry has, right?
So vote with your dollars.
The other thing that can be done
is to participate with mining.
You know, every bit of hash rate
that you are generating,
I can promise you is not,
you're not going to choose
to go through AmpPool and Foundry, right?
So it's incremental,
but enough of us begins to sway things.
But past those two things, you know, I don't know really what more can be done at this point to help this situation.
I will say Antpool, if you don't know this, is a Bitmain subsidiary.
And Bitmain is the 900-pound gorilla in the mining room, right?
They produce 70-plus percent of all the hardware.
They self-mine if they can't sell.
You know, they've got all this hash rate that they're managing through AmpPool.
At some point, we have to figure out how to decentralize that.
I know the SHA-256 Foundation, you know, the open source mining community is really working hard at this.
So there's efforts underway.
However, it's very much a David versus Goliath situation to break up the current situation.
And this is where I think we're experiencing the consequences of going the easy route and buying instead of mining.
Because the simple argument I would make, and I don't have a counterfactual to share with people, but I would argue if the Bitcoin community chose to use mining as its primary vehicle for acquiring Bitcoin, we would not be in this situation.
So that's, I was kind of going to go there, Kent, because you're talking about the popcos just going to Foundry or just going to the easiest one, because maybe they like FVPS, right? Maybe they just, well, they're not cypherpunks. That's the fundamental problem, right? They're not, quote unquote, real Bitcoiners.
they're public
most of them
I mean
we're saying PopCost
they are publicly traded
so they're fiat companies
and I wonder
if you
through SaaS Mining
can prove to them
that your model
is more profitable
is better
then
if that would lead them
to
for the PopCost
to actually become Bitcoiners
as a result
right
move to a Bitcoin standard
stop thinking
in terms of fiat
and if they did, they would understand Bitcoin better.
And once they understand Bitcoin better,
there's no way they would,
I mean, they would protect themselves
by not centralizing to Foundry and Antpool
and all the proxies.
Is that, I mean, that could work, right?
Or is that too much of a sort of a fairytale outcome?
I think, unfortunately, it's the latter.
I like it.
I would like to tell you that that would work,
but I just don't see it.
The fundamental reason why is because they have, and you actually may know better than I coming from a quant background, but the pack they have with their investors is to return more dollars than they took for their investors.
Like that's why investors invest.
So unless they change their fundamental charter with investors to return Bitcoin, I don't see how that dynamic changes, even if it is more profitable, so to speak.
and I think the more likely outcome,
which is a good one for us,
is this pivot to AI and HPC
that we're seeing many of the hub goes to
because they see that they can get more dollars
that direction and they are.
I mean, geez, it was sort of shocking for me
to see the CEO of Biff Farms
just come straight out and say,
we are not a Bitcoin company, right?
any longer. So I just think the mask is off and they're making this pivot. I've got other thoughts
about that pivot. I question how well it'll go for them, but I think it presents a unique
opportunity. And I think a lot of us in the industry think that hash rate is going to be
different this year as a result of this pivot. I don't think that we're going to see the dramatic
hash rate increase that we have in the past. And that presents an opportunity for the Bitcoin
community to seize seize the wheel and and and take more ownership and i think we need to uh i
think you know we can't um it's it's time for uh the heat the the excuse me the hash punks to
show up and and push off the fiat hashers so we've been i've actually never thought about this
this week and with yet another reason why AI and Bitcoin are complementary for reasons no one would
expect or certainly I wouldn't expect which is inadvertently AI is because by being this
the new shiny object all of these fiat pubcos are directing their attention there which is
effectively opened the door
perhaps
once in a decade opportunity
for the hash punks, for the
cypher punks, for people who actually
give a crap and are not
distracted by
the treasury companies or whatever
the other shiny objects are
to say, you know what, let's take
back control.
It looked like it was out of our hands
because these pubcos are too big,
they control too much
of the hash rate,
or they're producing too much of the hash rate.
Let's just step in.
I don't know if it's going to be the Bitaxe army
that pulls together and does it.
Probably not.
But maybe something else.
Maybe it's this...
What about the Block miner that was...
I don't think they actually released a real thing, right?
It was more a prototype.
Do you see the thing that came out from Block?
Like, what is that, three, four months ago?
Yeah, I think the community is largely still holding their breath.
I understand that there's some of those proto miners in the field and being tested.
I don't know that it changes the dynamic completely because there's a couple dynamics, right?
There's the mining pool centralization and then there's the supply chain centralization.
I think that the proto-miner helps with the supply chain side, but not so much the mining pool centralization that's going on. And you were right, I don't see the BIDACs community as really going to be the ones that change the distribution of hash rate on the network.
I think that more likely is just the heat punk movement, if you're familiar with that, right?
The folks that are figuring out ways to utilize heat from their mining rigs, mining at home, to justify mining at home.
I think that that's one.
I think platforms like ours is another because it makes it accessible to people to deploy capital and get great valued Bitcoin.
Bitcoin below secondary market price.
But outside of those two yeah I don And just more Bitcoiners going into big scale mining themselves you know like the Bob Burnett of barefoot miners of the world you know the upstream
You know, there are Bitcoiners in mining, so it's not that there's none, but getting more of us into it.
And frankly, I think the biggest thing that's going to change all this, I'm convinced, Avi, that there's going to be an ending of the buy phase.
And that will then thrust us into the earn phase of the market for how we adopt and acquire Bitcoin.
And in that earn phase, there's a better way to earn your Bitcoin than to mine it.
And when that comes about, you know, hopefully SaaS mining is well positioned for that time.
But I think that's when we're in a bit of a different reality.
And I think the transition to blue-collar work will continue to pick up speed.
I mean, really, there are three ways of acquiring Bitcoin, right?
You convert energy into Bitcoin, mining.
You convert labor into Bitcoin, actually earning it.
And then you convert fiat into Bitcoin, which is the exchange stuff.
And I think it's fair to say the first two are far better methods of acquiring Bitcoin than the last one.
Yeah, I like that framing.
I might reutilize that, Avi.
Thank you.
Hey, you gave me the bifurcation.
I gave you my – I've been actually using this for a while.
I'm surprised no one else – you're the first one who said you're going to use it because I've been saying this for a while now.
um it's different forms of energy right it's uh if you're gonna convert your your labor then it's
your own physical energy uh versus if you're converting you know mining is direct energy
versus your energy through labor and then if you're talking about exchanging your dollars well it's
dollars have been uh one of the first exchange uh for energy that you made right that's your
effort to generate those dollars.
So it's almost like you're just
cutting out a step if you're using either your
energy or
an energy source to get
your Bitcoin. Sovereign energy
source, preferably.
There we go.
So is there
a risk here, Kent?
Because the way you've laid this
out,
I mean,
the model you've laid out, to me,
unambiguously means we need this type of sovereign mining.
Well, actually, sovereign is a bit of,
or at least the mining model that you've laid out is the right one.
But essentially, you become the AWS at that point.
You need to be, SaaS mining needs to be successful
so that we, this schism that we had,
maybe we come back, the two sides come back together.
but the risk there is
SaaS mining becomes Amazon
and at some point
you will have a tap on your shoulder
and some bureaucrat is going to say
you're voted off the board
and we're going to do what we do
because we're too big now
to leave the decision making
in the hands of just one person
one idealistic person
you're getting to what keeps me up at night i mean um because yes i think you're probably the
first person i've talked to that uh that has put that together because that that does worry me
um and how do i uh not necessarily decentralize the organization but how do i mitigate that i
don't have good answers uh what i do know though is that there's no way uh to scale mining for
the average person without somebody like SAS mining existing, because you need access to
low cost energy to make it, uh, to make the value proposition viable to scale in the first place,
which means that I actually look at our business, uh, not even as a minor or service provider,
so much as a rig custodian, um, if you will. And there's no way for me to have possession
of your equipment without that being a high trust relationship, which is why I focused on the
alignment of incentives and we continue to focus on better and better transparency.
But in the long run, how do I ensure that the governance of SaaS mining can't be co-opted?
And I don't know. I'm not at a scale or size where that's a real issue. And as I get closer
to that, I will be putting more energy and effort to trying to sort that out. Perhaps that's,
you know, just off the cuff, like different entities spun out in different jurisdictions,
making the entity distribution itself decentralized. I don't know. But certainly,
there's something to be said for the community I'm in that is smarter than me and can figure it
out, right? Here we are streaming on Noster. I'm certain that we'll find a solution when we get
there. Yeah. Let's hope so, Kent. Well, first of all, I hope you're wildly successful, continue to
be wildly successful with SaaS mining. And more importantly, I hope you figure out a way of
decentralizing that success somehow so that you don't become the guy who gets the tap on the
shoulder. And then it's the end of the story at that point. Yeah, you and me both. And
And I think there is a path.
I'm just not sure what it is, but where there's a will, there's a way.
And everything that we've done here at SAS Mining is to line up with the ethos of the Bitcoin network.
And we'll continue to do so, including the decentralization side.
Just not at a scale yet where we've got the ability to tackle it.
But give us a year or two.
We'll figure it out.
Great.
So, Kent, anything, you know, we've covered a lot of topics and I suspect I have actually have a few more questions that I jotted down, but that'll keep us going for another hour or two, which, you know, typically podcasts, the right length I found is somewhere between the one and a half hour mark and the two hour mark.
Probably it's closer to the one and a half than the two.
So I think we're there.
But any sort of last thing, anything we've missed that you think it's important for folks to hear from you?
Yeah, I think that we are at a critical cultural moment for Bitcoin.
What I mean by that is we're at an inflection point where the early Bitcoin community gelled and, you know, the last cycle, there's a very strong culture of like what Bitcoin is.
And I think we've got a risk of basically just turning into, as the Bitcoin community, a bunch of ledger squatters, for lack of a better word.
And I think if you look back at human history, you know, we're building a separate reality with Bitcoin, right?
If you move culture over to a different monetary standard, it's going to spring forth a different societal structure, I believe.
And this is a thousand-year project.
And I think our community is looking at it with fiat time horizons.
and that both saddens me and offers an opportunity for us to do better.
And one of the simple questions I've been asking myself,
and I'd love to hear more in the community ask,
is what are the human institutions that have lasted for 1,000 years,
and what should we be learning from them to make sure that Bitcoin lasts 1,000 years?
Yeah.
That is a great question indeed, Kent.
who are the Medici of our time in some sense,
who are going to think not in 10-year returns or 20-year returns,
but going to think about cultures enduring for centuries,
if not a millennia or more.
Agreed. This is a multi-generational project,
and I don't think that our community is putting the guardrails in place
to protect
Bitcoin
in a
multigenerational way.
Yeah.
Well, let's leave it at that,
Kent.
You've thrown down the gauntlet.
So folks, you heard it here.
What are you doing
to think multigenerationally?
Thank you for your time, Kent.
This has been great.
Learned a lot about
what you're building.
Learn some new things, actually.
New perspectives.
So I appreciate you sharing those.
Yeah, you're very welcome.
It's been a pleasure to be on here.
And, you know, I think just to leave it
on a slightly more optimistic note,
you know, the one thing that I do see
is that Bitcoiners as a community
are the most grounded in our society right now,
which is incredibly encouraging
for me having small children to know that, you know, the wisdom that we've accrued through the
generations will continue to be passed down by nobody else, but by our community. So I'm very
grateful to be part of this community and grateful to have you on here, Avi, and thank you for giving
me some new ways to language some of the ideas that I try to express. So great conversation and
wish you the best.
Of course, a much better reframing there, Kent. I like that. So thank you, Kent. And thank you to
our live stream audience for listening and for your zaps. If you are listening to the recording,
as always, notice what you didn't hear today. You didn't hear me shilling a mattress you don't need,
and you didn't hear me reading a script for a VPN that's probably logging your data anyway.
I don't do that here.
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