Welcome to episode five of the Bitcoin Boomers. I'm Bob Burnett. I'm here with my buddies Gary Leland and Larry Lepard.
And this is our fifth episode, guys. And yeah, so we're starting to put together a little portfolio here.
And our first solo one, though. So we'll see if we can keep people entertained.
You know, there's a lot of things to talk about. We've got the Nancy Guthrie story, which Bitcoin has woven into.
We've got certainly the price to talk about. Gary's got his Bitcoin Bitbob Boom conference coming up soon that we'll all be at. And of course, some things happening in the mining world that are probably things that some people might want to hear about.
So anyway, maybe get started on the Nancy Guthrie thing. Anybody want to start there? Any interesting thoughts about Nancy?
This seems like – and this is a terrible situation, so don't get me wrong. I mean I would die at that in my mom if she was alive. But taken off on this, so much FOMO has been created about how Bitcoin is being used by criminals and the cartels.
And haven't we heard this like since Bitcoin was created, you know, and isn't it the most trackable thing there is?
I mean, when you really get down to it, I mean, I don't know where that's coming from.
I was watching a clip MailScent and it had these, I guess, experts on, I don't know, NBC, CNN or whatever.
And one of the experts said they asked me, said, well, I really don't know much about Bitcoin, but I think all cartels use it.
And I'm going, why would they have them on there if they're admitting they don't know much about Bitcoin as the export?
It seems like they're just pulling out all this stuff to make us scared for some reason without doing any research.
Am I alone in my feelings on that?
That this is the same old song and dance that we hear every three or four years about Bitcoin?
It's unclear.
I mean, whether it's a conspiracy or whether it's just stupidity on their part, it's kind of a toss-up, right?
it's unfortunate though i mean it you know it does it does you know revisit or revive the you
know bitcoin is used by criminals argument but you know guess what cash is used by criminals too
yeah but yeah they're shipping bricks of cash around and bricks of cocaine and all you know
i don't know to me it's it's what a tragic and unfortunate situation and and also unfortunate
that bitcoin gets mentioned on the other hand you could argue there's a streisand effect you know
Any publicity is good publicity.
You want to move a lot of money and you want to have something that everybody knows what it is these days.
Well, Bitcoin's actually beginning to qualify.
So I don't know.
The whole thing is just tragic.
Kind of like P.T. Bailey said, just say anything you want about me, but get my name right.
Spell my name right.
Exactly.
Well, Gary, you were talking about the interview that you saw.
And you said one of the quote unquote experts said something to the effect of I think.
And, you know, experts typically don't say I think, they say I know.
And so and I think that's, you know, one of the problems with Bitcoin is determining who the experts are is difficult, especially for somebody that's completely outside of it.
And, you know, we haven't established who those people are.
I just saw as well, in a similar note, Trump announced a new panel kind of overseeing crypto and like online prediction markets.
and they had people like the CEO of FanDuel on there,
which is predictable,
but there wasn't a single,
there was 25 people,
not a single Bitcoin person on there,
but we had the CEO of Ripple, Brad Garlinghouse,
and the head of the Solana Foundation,
the head of the Chainlink Group,
Brian Armstrong from Coinbase.
Now, some of those people,
obviously do know some things about bitcoin but they have a they all have an agenda yet
you basically though you have you have 25 people in this group and the most significant asset
doesn't have a representative um you know no match is on the list yeah but i mean the reason
i bring it up though is is just you know because of this like i don't even think the media knows
who to reach out to because like going way back to my PC days when when there were times when for
whatever reason the personal computer would would come into you know mainstream thought and you know
they would seek out CEOs and executives from Dell and Gateway and IBM and places like that and I'd
occasionally find myself on CNN or you know something like that if it if I was the best
person from the company but for bitcoin um we don't have a ceo uh we we don't have a pr department
uh and and maybe that's a problem sometimes um that's probably why companies like
that's probably why things like xrp have grown so fast you know they have a big advertising budget
i'm sure yeah it's it's unfortunate i mean shit coins have been a you know a bane of our existence
for a long, long time, and they continue to hang around the rim, right?
Well, you know, speaking on this, Bob, and the subject,
I was at the Dallas Bitcoin meetup last night, and I rarely go to meetups.
I think that's the second one I've been to since BitBlock boomed locally.
I just stopped going for some reason.
But I met a gal there who had sold her gold like three months ago
and bought Bitcoin at the high.
And she's going, God, what an idiot I am.
what an idiot and i'm you know just trying to give her a real reassurance saying you know while you
might feel like an idiot now in five years i'm sure you'll feel like a genius um but she was
going i don't know who to listen to i see all these shows that tell me everybody's saying
bitcoin scope was going to go to 180 because they got a lot of bitcoin i said well those particular
people probably have sold their bitcoin ends i have to worry about them and i was trying to tell
Or, and this is true, I guarantee both of you are going to agree with me, every time we see Bitcoin come out of bear market and go into a bull market, we see all these people on YouTube who are experts and we go, who the hell is that?
Because I feel like I know most people, not necessarily in person, but I know who they are.
I'm going, who is this export?
Like Ty or whatever a few years ago came on.
And then when Bitcoin goes in the toilet, all their shows are gone, you know, and they just disappear.
and then magically three years later, four years later,
well, here's all these new experts that no one knows.
I mean, am I wrong on that?
That sounds about right.
Yeah.
So if you're new and you come in when all those experts are on there,
you don't know who to listen to and you may listen to those experts,
so-called experts that are experts until Bitcoin drops in price.
Their numbers aren't there anymore for followers.
Yeah, I think, you know, classically, I think what happens to is I think a lot of media gravitates to people that have a financial angle, like they're used, they kind of categorize this in that space. And I've run into it a million times, you know, arguments in Twitter or in person with somebody who's a financial advisor or a wealth advisor and thinks that they are the classic
dunning kruger curve people you know standing on the top amount stupid uh you know thinking that
that they have i feel that i like that you know thinking they have a comprehensive view of
bitcoin and that it's a scam or it's a posi or it's a speculative asset and they throw this sort
of banter around without without really any true knowledge of you know what it is i don't know
anything about it but you're wrong right yes yeah well actually no no i i know everything there is
that's that's pertinent about it it's so wrong yeah and yeah when they don't really know everything
yeah no i mean we said they don't know anything about it yeah yeah and i still think this is the
use case i think yeah well there is no use case there is no intrinsic value there is no cash flow
there's like these are the things that they will uh you know because they spend it anywhere well
yeah and they don't they don't know how to evaluate it in measurement they don't have um
the technical chops to do it although i will say it's changing somewhat um that i i may have shared
this story before, sorry for repeating it, but I have a good friend who's an executive at Morgan
Stanley. And he, um, he reached out to me probably six, eight weeks ago now. And, and after five
years, you know, he came to me and said, Hey, we're all in now. And he, he said, he, he made
a request to me that, that I was kind of surprised by. He said, Hey, he, he oversees a really large
team. He said he's got like 300 people. And he said, I want you to create a Bitcoin
exam for me, a quiz for me. He said, I want five questions. He said, I don't want them super hard,
but I don't want them to be exactly layups either. And I want to give it to my team
so that they realize they're not ready and they have to pour in the work. So I did five questions
and a couple of them were harder than others,
but one of them was simple,
like, you know, what is the supply of Bitcoin?
But basically, nobody got...
Tell us the other four.
Tell us how five.
I can look it up as we talk.
I don't remember them all off the top of my head.
I just was curious.
So most of them didn't know the supply.
But, you know, they were getting like one of five right.
Like, nobody did well.
Yeah.
Yeah. And but but they I'm saying he speaks for Morgan Stanley in this case.
There's a recognition that they're behind, that they don't know and they have to know.
So that was the purpose of the of the quiz was to get them to to do that.
But it, you know, it's going to take time.
I think that, you know, on this Nancy Guthrie story, I guess kind of where we started to.
you should probably explain to people why this may not be a great strategy, right?
That, you know, if, let's say I send Gary $6 million of Bitcoin right now,
and we do it as a Bitcoin transaction,
well, nobody, well, I'm not doing a good job articulating this for some reason,
but anyway, I send the Bitcoin to Gary to his address,
Well, we can do an example. Send me some now.
Yeah, okay. Let's do it live.
I send Gary some Bitcoin.
Now, Gary wants to do something with it at some point.
So he buys something from Larry.
And let's even say it's still on the Bitcoin.
It's all purely Bitcoin transactions.
But now Larry and Gary are connected.
At some point, Larry does something with it.
Well, at some point it reaches somebody who maybe wants to be on an exchange and they want to turn it into dollars or something more tangible.
Well, they can start reversing that chain and start tracing back.
But they don't necessarily have to go that far, I can send it to Larry and maybe Larry has sent Bitcoin from his wallet to Coinbase.
Yeah.
And so now that wallet's basically Larry's wallet.
And they go, oh, Larry got some of that Bitcoin from the Guthrie's.
And they go visit Larry and go, who sent you this Bitcoin?
Yeah.
So I think the FBI and the CIA have stated they love Bitcoin because it's –
And even after years, remember – y'all remember that story about that – I can't remember the exact details.
That guy and his girlfriend, they stole a bunch of Bitcoin, millions of dollars worth of Bitcoin.
And then years later, six years, seven years later or something, they spent some and they nailed them, took all their Bitcoin and they went to prison.
You know, so, I mean, it's what they may wait a long time to do that.
Yeah. I think was that like a Canadian exchange or something like that?
Yes, I think so. I think so. Yeah.
Yeah. So it's a trail there they can follow of the Bitcoin and you have to get it out sooner or later.
you're going to spend or you just got six million dollars going i got six million dollars here i
can't spend any of it you know so somewhere it's going to come back to you but that's a terrible
situation for sure though but it's not this thing that um criminals you know also a thing i saw the
guy was uh me i saw this i can't remember what channel it was they were talking about the situation
and evidently they sent someone sent money to the wallet or bitcoin to the wallet like a few hundred
and they were talking on their show about these people that knew so much about Bitcoin,
how they thought that was some kind of test that the FBI did
because they have special tools that we don't know about
that by sending that $600, they can go ahead and probably find out who owned the wallet.
And as you and I, as we all know, if they're going to ask $6 million,
they probably got a wallet that's not connected to anything.
Unless they were just checking to see if they were stupid,
you know because it could always look up and they were just stupid you know so i thought that was
interesting how they they knew about these secret tools the fbi had for figuring out whose wallet
that was yeah well the records the records are immutable so that's that's one of the issues that
goes with it why don't we shift over to talking about the price um i don't know about you guys
but i've been getting a lot of nervous people that are newer in the space coming to me you know
looking at the price action and wondering if the thesis is broken or they've made a mistake or
and you get older ones like my wife yeah yeah all yeah all the above yeah i've had a little of that
too all the above and um i don't know you know i guess maybe because i've been around it since
13 or 14 and since i watched it go from 17 to 9 and then 3 or 4 and then you know we watched it go
from 65 to 15 and all this stuff.
I mean, I'm pretty sanguine about the price.
And it kind of reminds me, you know, it's, it's a, as you know,
Saylor says, it's digital capital.
It's a very volatile asset and you have to be willing to hold it off with 10
year timeframe. And I've always told people who are looking to get into it,
you know, they ask how much did I buy? I say, you gotta be,
no matter how much you buy, you gotta be willing to endure a 50% drawdown.
Actually probably a tad more than that. But, you know, as you,
as we both all know, they've had, you know, we've had 90, 80, 70, 70, you know, 60% drawdowns in the
past. This drawdown right now, we're kind of 50% down from the high in October. You know,
my sense is we could go 60% down. I don't think we're going to go 70 down. We'll talk about why
in a minute, but the, you know, to me, what's going on here is, is it's just classic, you know,
fear and greed investor behavior. That's as old as time. I mean, this is, this is Buffett's,
you know, you know, Mr. Market is, um, he's a manic depressive and, you know, at 125 people
chasing Bitcoin, it's going to 250 and at 67, you know, nobody wants it and it's going to zero.
And, uh, you know, there's a, there's a good study that I tried to get a copy of it, but it's
turns out it was pre-ChatGPT. ChatGPT refers to it, but they can't show me the original study,
but I remember they summarize it. And the study is back in the, um, in the seventies and eighties,
there was a guy named Peter Lynch who ran the Magellan Fund. From 1977 to 1990, Magellan had a
29% compound annual rate of return, which truly puts him in Buffett-like stock-picking categories.
It was a fabulous fund. I mean, anyone who put money in it early and hung on to it just made a
fortune. And Fidelity actually went back and studied all their customers and holders of the
Fidelity Magellan Fund, and they found that 50% of the people who at one point held the Magellan
Fund did not make any money. They made zero money. And the average return for the average person who
invested in the Magellan Fund was 7%. So let's just think about how that happened. The ones who
didn't make any money, they chased the Magellan Fund when it was doing well. They're like, this is
great. This is great. I got to buy it. And they were chasing the high. And then when it turned
down, they're like, oh my God, I made a mistake. I got to sell it. Right. And, and, and everybody,
it turns out did some, or not everybody on average, most people did some version of that,
because if you had bought it in the beginning and held it to the end, your, your compound IRR would
have been 29%. But you know, the average they found of all their customers over all those years
was 7%. And, and so I guess what I'm trying to say is that human nature, you know, almost wires
us to make investment mistakes, which is to say we chase price and we throw up on deep value.
And this is how great investing fortunes have been made for decades and centuries, which is
the blood is running in the streets. You buy deep value and you sell over valuation. I'm not
suggesting you ever sell Bitcoin, but I'm pointing out that there are these metrics that we use to
determine what is great value and what's not great value. And right now, Bitcoin is in that great
value zone. I retweeted it this morning. It's James Cech's work, and it fits with the Tipmeyer
multiple that right now, comparing the Bitcoin price to the 200-day moving average, we're at
either 6% or 10%, depending upon whose numbers you use. It's only been this cheap 6% to 10% of the
time. In other words, 90% of the time, it's been more expensive than it is right now. The other
model I use is I use this power law model, which Giovanni and Kruger have worked up, which shows
that they've drawn a curved line, log of time, log of price,
that shows the price of Bitcoin over its entire life.
And they've managed to fit this curve to the data, 96% R-squared,
which anyone who's familiar with statistics knows that's good correlation.
Having said that, it also varies a lot around the means.
It's a volatile asset.
And through all of its cycles, sometimes it trades at two standard deviations
above the power law number.
it's cheapest it goes to half one half a standard deviation below the power law number it's never
broken that right now the power law mean says it should be trading at about 120 130 somewhere in
there and a half of that half a standard deviation below that is 50 to 55 and so we're almost there
so you know on both those measures bitcoin is extraordinarily cheap i've been buying it i've
been selling gold and silver things to buy it and i've been buying microstrategy as well
in size, actually, in both of those buys, just because gold and silver have taken off.
And to me, what they're saying is, you know, the big print's coming.
The Fed's going to have to, you know, debase the currency.
And I think it's interesting they picked this guy Warsh.
He's a hawk.
I mean, it's a perfect, it's a brilliant political move.
Pick a hawk to do something really dovish.
I mean, they got him to buy in on he's going to have to be dovish.
But because he's a hawk, he'll be able to sell it, right?
And so that's coming and gold and silver smell it.
And Bitcoin's just on this lag program like it was in 2020.
You know, I've said this in another pause, I'll say it again.
I mean, in 2020, I remember very well, because I own both Bitcoin and a lot of gold and silver,
as most people know.
And in 2020 when Powell pivoted and then you know gold took off it went up 50 And from I don know I think it was 1 around 2 back at the time
And all this, and gold stocks went up a lot.
I thought it did well.
We were all feeling great.
And Bitcoin was just bumping along between five and nine, kind of averaging seven.
And then suddenly, and then all the liquidity hit.
You know, Powell grew the balance sheet from, you know, three trillion to something trillion to nine trillion.
It's just crazy.
and it all came flowing into the system that summer.
In October, Bitcoin went from 10 to 60 X.
You know, it took like six months.
It was really quick.
And that's the way this asset trades.
And so, you know, when this next big print hits,
that's what's going to happen again.
We're going to go from 50 or 60 or 70 to 240 or 300 or some big numbers.
But they're going to print a lot this year.
I mean.
Well, they're already starting.
Yeah, they started printing.
I mean, they pivoted, right?
They were tightening, then they stopped.
Now they've got this reserve management program, which I think is hilarious.
It's just rebranding QE.
They're saying, well, the banks need some reserves, so we're going to inject $40 billion a month then.
Of course, that's going to have to grow.
And that's just a mathematical fact.
That's not some opinion.
That's just mathematically proven that they will have to grow the money supply or the bank reserves.
Did you say $40 billion a month?
yeah they're doing 40 billion a month which is 480 a year which lynn has called the gradual print
playing off my book and i'm like yeah and i responded to her on tour i said yeah lynn but
gradual can become big and that's what i think is going to happen so so i don't know i guess the
point i'm trying to make is i think there are a lot of people i had a call yesterday from a really
good guy very smart investor but he's just kind of like jesus i'm really heavily into this bitcoin
and i'm getting scared and i was just kind of like no and but he's newer i mean he hasn't been around
it for 10 years. He's gone through a couple of these. Yeah. And I just said, I said, you got to
relax, man. It's all good. I mean, you know, I think for some people, Larry, the money in three
months, you're fine. I mean, it's, it's like, give it, give this thing some time. Right.
I think for some people, Larry, like my, I'm going to use my wife as an example. I use her
as an example a lot. She hates it when I do that, but it's, it's not the drawdown percentage.
because she's seen this but doesn't really remember it.
It wasn't as big a deal.
She looks at the total dollar amounts.
And the dollar amount now is so high.
Yeah, it's a big number, right?
Yeah.
And she's like, oh my, I said, well, what are you going to do when it hits $350,000 and drops to $180,000?
And you know, it's going to be a lot bigger number, you know?
Well, that's the thing.
I mean, and obviously it's easy for us to say that because our average cost bases are much lower.
Although I was buying it at $65,000 and I even bought some at $100,000.
I didn't pay $125, but the point is that, yeah, I mean, look, it's higher highs and higher lows.
I mean, that's the pattern.
It's going to continue.
Yeah, I think if you, I have this chart somewhere.
If you look at the volatility, the volatility itself does appear to be dampening on a percentage basis.
So if we look at the big drawdowns like you referred to, Larry, the 90%, 80%, 70%, those were fairly early in Bitcoin's history.
The post-2020 era is all like 50-ish, give or take a few.
So we're starting to see that gap dampen.
Now, it's still big.
And as Gary pointed out, the dollar value difference can be shocking.
Oh, Bitcoin's down $8,000 today or something like that.
We've had a $10,000.
It only matters if you have to sell.
If you don't have to sell and you understand what you hold, it just doesn't matter.
You know, your your tale there reminds me, Larry, of that meme that's going around the cartoon and it shows two desks of people selling Bitcoin.
Yeah, right. And one desk has one hundred thirty five thousand and there's just people all around it in line to buy it.
And the next to the right shows sixty thousand and there's one guy, you know, in line buying Bitcoin.
Well, and that's, and that's, and it's just, it's crazy. It's human nature. You know, we're, I guess, you know, we're hardwired to herd, right? I mean, and there was, there's a reason for that. Probably back in the ancient days, you know, some animals come into each and it's like people start running. Everyone doesn't even know why they're running, but they're like, shit, they're running. I better run too.
Get on the track.
Yeah.
And so, you know, it's going crazy and, you know, greed takes over and, oh, my God, I got to, you know, I got to chase it.
Well, then the opposite emotion is, you know, it's going to zero and Bitcoin's dead.
And, you know, I mean, we've had we've heard a hundred times.
Yeah.
We've had no end to the FUD stories.
I mean, they've been terrible.
I mean, you know, in fact, there was a good pod.
I just listened to it.
You know, the quantum FUD.
Preston and some others were on.
I think Jeff Booth was on it.
the quantum FUD was just outrageous. I mean, I just, Bob, I'm sure you agree with me on that.
I mean, you know, every, I mean, there's a little bit more substance to the governance FUD,
you know, the, the op return stuff and the, and the core people not really understanding
that it's money. But actually I think we had a really good development this past week on that
where, or I guess it was last week when on the strategy call, Michael said, you know,
we're going to try and take a leadership role in, you know, the governance of core and, and
contributing to what the proper way is to evolve this protocol over time, because we've got such
a big stake in it. And, and frankly, it's going to take that it's going to take the black rocks
and the strategies of the world to say, Hey, this is a really important asset, we're going to protect
it. And so to the degree that changes are made in it on a go forward basis, we're going to weigh in
on it. And honestly, I, you know, strategies got more to lose than anybody else if it doesn't work.
So I'm willing, and Michael seems to be an honest actor and a very smart guy.
I think it's a huge positive that he's weighed in on this and said,
we're going to stand up and take a leadership role in this area.
There's a lot of people who are scared of that too, though.
I know they are, but they shouldn't be.
And I think he's a stand-up guy too.
Yeah, and to me, that was really the only, that's the one piece of FUD that I could see
central banks and sovereign wealth funds still being concerned about
who really governs this thing.
But I think that piece, just like every other piece
has been dealt with over time, I think that piece will be dealt with too.
Things we fear, block size stuff, all the other stuff.
There's been a lot of FUD along the way,
and it just kind of tends to get resolved.
Another thing on that, Larry, is I think Jimmy Buffett,
Warren Buffett, I saw Jimmy Buffett,
I saw Warren Buffett say one time, the hardest thing investors do, have trouble doing, is doing nothing.
Well, that's true, too.
And that's the hardest thing that they can do is nothing.
And they just can't do it.
Yeah.
Yeah, your emotions are your enemy in investing.
And the older you get, the more cycles you see, the more you realize that.
and that's where I us older bitcoiners can maybe provide some comfort and and uh just perspective
to some of these younger people who you know I get it they've got a lot in it they've really made
a bet on it they believe in it but they're looking at now they're saying hey hang on a second is this
broken and my answer is no not at all I mean it you know which is not to say by the way that it
couldn't dip down I think that the Mel and I were talking about this pre-show you know one of the
issues of where the price goes is the macro landscape. I mean, and so, you know, if we get
something that breaks and we get a correlation of one event like COVID marks one or, you know,
Lehman in 2008, you know, guess what? Everyone scrambles for cash and liquidity until the Fed
provides it. And everything goes down, you know, a lot. And so, you know, I don't know what the
bottom on Bitcoin in that event would be that there probably is no bottom. But my sense is,
I'd be very surprised if it went below 50. And so, you know, if you're looking at it today to
buy it at 67 with a downside of, you know, 50, there's an upside of, you know, kind of 250 to
400 next three, four years. It seems to me like an incredibly asymmetric bet.
I would, um, excuse me. Yeah. I, I think I want to come back to the,
the FUD and the
governance.
Yeah, that's your area.
Yeah, but before we do that, I want to
I think we should
flush out the price thing just
a little bit more.
One of the
things that I look
at, my optics are different than probably
a lot of people. I'm not a trader.
I'm not a speculator, but
what I am is a producer
because I run a mining company.
And I think
If you zoom out and you look at a longer term lens, one of the key factors in establishing price is cost.
That's true in most markets, right?
The cost of something dictates the price that related.
Bitcoin's at a weird point in its maturity where it's a commodity.
That's the first thing that I think probably people don't think about enough is the fact that Bitcoin is a commodity.
And the companies like mine that are mining companies, we are commodity producers.
I think it's, by the way, one of the reasons that the public mining companies have been grossly misvalued is they've been valued as tech and growth companies, not as commodity producers.
And then they've been evaluated as technology and growth companies instead of commodity producers, because commodity producers should be valued based on their efficiency, their productivity.
Like those those are their factors. Tech and growth tech companies are evaluated more on growth.
And so that's that's we could go into that rabbit hole a little deeper sometime.
So what happens is right now is we have an average cost of production, my models, but a few other people have similar ones, that would somewhere be in the mid-80s to high 80s.
So if you take all the mining in the world, that's what the average is.
The worst ones are in the low six figures.
And those tend to be the bigger public companies.
And by the way, one other thing, when I talk about cost, I am not talking about the cost of electricity.
There's a lot of people that think that that's all that it takes.
And so they constantly look at that.
But there's massive depreciation.
We have labor.
We have insurance.
We have facility costs.
We have all these other things that are part of that.
Now, so if we have the worst in the world, let's just call it in the low 100s, the average at 88, the best in the world,
are right in that $50,000 to $55,000 range per Bitcoin produced,
which interestingly is the same number that Larry just said,
you know, he views as the kind of the floor, right?
I mean, the power law was another half a standard deviation down,
and there are different ways at which you arrived at that number.
but i think i think it's a very important number to keep in mind that that uh and and larry you may
have some some perspective on this when you look at like gold and silver and and how it is whether
it is properly valued or not um but but that's the way i look at the world and i i view these
costs of production as kind of setting a floor in in the longer term on any given day i never
I have a question for you, Bob, too.
Have you observed, and well, you watch hash carefully,
and I was surprised to hear you say that people are 100, 120K to mine a coin.
Have you observed anybody taking stuff offline,
and has the growth in hash slowed as a result of what you're describing?
Yes.
Obviously, we can't know why hash comes offline.
Right.
Right. But I just looked at it yesterday. We we haven't moved. Global hash rate is where it was six months ago.
So we you know, it went up and it came down. But it's you know, we've essentially had no movement in global hash rate.
Prior to that, it was actually growing pretty consistently. Right.
Growing meteorically. And and, you know, I've said on what I've said and by the way, this has been for a couple of years.
it's been growing unnaturally.
I think a lot of people look at it,
oh, look at the growth of the hash rate
and isn't it great and the network's more secure.
So, well, not exactly.
There's on the surface, yes.
But what can happen
is because the public companies
have massive pocketbooks now
because they've been kind of following
a bit of the sailor strategy to a certain degree.
What they've learned was if they deploy $100 million
into new capital to expand operations,
they've been getting a market cap lift of,
let's just say, 200 to keep it simple.
And so even though they're bleeding cash operationally,
they've been able to sell shares,
show the Bitcoin balance sheet growing.
Right.
And in my opinion, not giving financial aid,
people are kind of falling for it.
And they, you know, now they might get bailed out
out of, I would say, sheer luck
because those same companies are pivoting to AI.
Interesting.
And what they did build to their credit,
I'm not saying they didn't do anything of value.
Power centers have value, right?
Yeah, and now they've been able to redeploy the asset into something that may throw them a lifeline.
But I think what we're seeing, and anecdotally through my context, I think we're seeing a lot of energy that was directed toward mining as those machines are coming offline.
they're getting old and instead of replacing them with more mining equipment that energy is going to
ai and so i should point out usually we see stronger growth in the winter months than we do
in the summer months in hash rate and and we've had nothing this whole this whole winter so i think
we have we have had some weather issues that have forced some equipment offline we have had some
obviously this ai issue um and and people pivoting um
but i think this will be very healthy for bitcoin in the long run to see hash rate slow for quite a
while because if if we continued in the a world where the least efficient operators continued to
be those that survived eventually what that does is it forces out even the smaller private
efficient operators and and i think that would be bad for bitcoin you know that if in the end all
you had was a handful of really big companies that don't have any operational excellence that
lose money continually and that just seems like a house of cards to me
makes sense it's also a very centralizing force too that you know if only the big guys live
out of sheer size then that's that's very centralizing so that you know i'm excited about
that um i had asked you earlier larry though about kind of what what do you see in the gold
and silver world like you know cost of production and and is there are there any analogies or no
Well, there are. I mean, it's, um, and there were times, you know, that the big long cycles there and the cost of mine an ounce is always, you know, the cost of sell an ounce versus the cost of mine an ounce is obviously what determines the profitability.
And, you know, you saw back in the, you know, it went to 800 an ounce, you know, in the 70s when we had all that inflation.
And then it drained itself from 800 an ounce down to 250 to 300 an ounce in 2000.
So that was a 20-year decline, kind of a steady decline.
And, you know, at 800 an ounce, they were adding capacity like crazy because it made sense to.
And what you saw was just a general attrition of the higher cost mines through that 20-year period.
And now it's funny because I actually see companies going back and they're looking at companies and saying, well, this was a profitable company or profitable mine back in 1985.
But they had to shut down in 1990 when the price dropped to 300 bucks or something, right?
And, you know, the issue, and it's a little different than your industry, Bob, is that, you know, I mean, you can probably spin up a new Bitcoin miner in, you know, three, six months, certainly a year if it takes you the time to get the power.
You know, mining minerals is a, you know, three to ten year cycle to open up a new mine.
And so, you know, so they tend to not shut them down casually and reopening them is expensive, too.
So but what you're seeing going on right now, and it's interesting because a lot of the Bitcoiners say, well, gold price is high.
You know, we're going to get a huge supply of gold.
Well, yes, over two decades, the growth will occur.
But because it takes three to 10 years to spin up a new mine, it doesn't happen quickly.
and the thing that makes the reason the stocks have gone wild
and the reason it's a pretty attractive industry right now,
the average cost to pull an ounce of gold out of the ground is about $1,500,
which, you know, when gold was at $2,500, you know, $2,000, $2,500,
that was kind of normal times.
Well, as you all know, gold is now $5,000 an ounce.
And so when you can pull something out of the ground for $1,500
and sell it for $5,000, that's one hell of a profit margin.
And so these companies are really minting money.
And of course, they're going to try and grow the capacities too.
But the supply response, you know, first of all, the amount of gold we mine every year is less than 2% of the outstanding gold on the face of the planet.
And, you know, in general, over the last 30 years, production has not grown.
It's kind of been, well, it's grown a little, but more recently it's been declining.
Fed and, you know, one, but time is the biggest thing.
So Bitcoin is very interesting in that as a miner, for the most part, you can turn off instantly.
So if we woke up tomorrow morning and Bitcoin was at $25,000, we could see the network, half of it turn off in a day.
But on the other side, if we woke up tomorrow morning and Bitcoin's at $200,000, you would see almost no lift.
Hash rate would be the same.
Now, miners would become ungodly profitable very, very quickly because the operational costs don't change, but the cost to produce a Bitcoin would get dramatically cheaper.
Eventually, there would be a lift.
The question about was how long is the lag between, you know.
Yeah.
So to your point, in fact, Larry's part of the Bitcoin Opportunity Fund, which we've done a few partnerships together.
And once we did a small project, I think it was maybe about a half a megawatt project, if I remember right, in partnership with Larry Sermon.
And we did it in six weeks.
So at that scale, we find an advantageous situation.
We can pounce, like, and we can go quickly.
And at a few megawatts, it may be a six-month project.
But at 100 megawatts, it's an 18-month project, 12 to 18 months, let's say.
So it has some of the same probably not as dramatic as gold but it does to materially react to the price requires let say a year plus
And one of the problems is that by then the market could have changed dramatically, right?
And we've seen that.
That when we look at late 2021, early 2022, a lot of money went into mining.
new projects that didn't come online until late 2022.
And they invested during the peak of a bull
and came online in the middle of a deep bear.
Ouch. Yeah.
Yeah.
Which, by the way, also means there's a secondary effect
of a bull market typically,
which is the cost of equipment goes way up.
So not only are you, you kind of overpay for the servers and the transformers
and some of the key pieces of equipment.
So ironically, just like buying Bitcoin itself,
the time to invest capital into mining, not saying by mining stocks,
I'm saying invest capital in mining is in the middle of the bear.
Like you got to have the balls to go put the money up when everything looks coming.
Yeah, and then you'll be online when it happens.
Yeah.
Well, that's true with the gold mining too.
I mean, I was telling all these gold miners a couple of years ago to be buying deposits and growing.
And, of course, they were all scared out of their minds.
And so, because in 2003, 2023, you know, Paul had tightened and gold was going down.
And, you know, we weren't going to have any monetary inflation, which, of course, all turned out to be incorrect.
But, yeah, it's, I mean, it's interesting.
You know, you mentioned the commodity business earlier on, Bob.
I mean, there's a great guy up in Boston, Jeremy Grantham, who ran something called Grantham and Auto, which was one of the best value investment shops in the country for many, many years.
And as he always said, you know, there's more money made and lost in commodities than any other place in the investment world.
And you can literally make fortunes and commodities, but the average person doesn't do it because the cycles are long and it's so hard to hang on at the wrong part of the cycle.
In fact, it's a career killer, you know, because.
So, Bob, you mentioned earlier on, you know, that Bitcoin is a commodity.
And I think that's an important thing for people to understand, because investing in commodities is very, very hard.
And there have been great fortunes made in commodities.
You guys like Robert Friedland, you get in copper.
And there have been great fortunes lost in commodities, the Hunt Brothers and others, because they're very volatile.
And, you know, Jeremy Grantham ran Grantham Mayer von Otto, one of the best value investment shops in the world.
He said there's been, you know, the commodity is an area, commodity investing is an area where you can get incredibly rich.
But it's very, almost nobody can do it because you have to be willing to play five and 10 year cycles and be willing to hold through the cycle.
And there's enormous career risk for a professional money manager in doing that because you're evaluated on your annual performance.
and uh and that's why you know i've been managing gold stock funds since 08 and you know it's really
brutally hard i mean and when you're right you just look incredibly right i mean my fund was up
175 last year but you know full disclosure there were other years almost down 30 or 40 percent so
it's it's a very it's a very rough ride and that's that's the case with bitcoin too because it's
commodity it follows a commodity-like cycle and you know we all know i mean to me to me probably
the biggest thing that prevents Bitcoin from just becoming global money tomorrow is this volatility,
this early stage adoption volatility. And I know really smart monetary people who are like,
yeah, I get why it's better money than everything else. But until the volatility
dissipates, it's not going to be money. And there's some point of a point to that,
but it's emerging as money and the volatility, as you pointed out earlier, Bob, is going down.
And so, you know, it's both the cost and the opportunity of being where we are right now.
I mean, you know, literally, this is a once in a lifetime, once in a generation opportunity to build enormous wealth.
And those of us who deeply understand it, you know, feel that and are convicted about that in our bones, that we're going to end up with all the marbles and be incredibly rich.
It's going to be gross.
But, you know, in turn, you know, there's no free lunch in the world.
And so, you know, you want that reward, you know, you got to handle 50 to 70% drawdowns, right? And that's, you know, so it's just, it's a mindset you got to get your head around and the average TradFi investor just can't do that. They get a 50 to 70% drawdown and they're like, screw it, I'm out of here. You know, I'm not, I'm just not riding this wave, you know, and so that's, that's why it's such a tough thing for people to get their heads around.
And that's why, you know, there will be very few who will be able to hobble through it all.
But those of us who do, you know, we've been rewarded thus far and I think we'll continue to be rewarded.
And it's also why you're not too late.
I mean, I, you know, people say, well, you know, it's a hundred thousand.
You know, I was too late.
I was getting this six months ago.
Oh, it's a hundred thousand.
You bought it cheaper.
I can't buy it.
Well, I finally convinced them to buy it.
And now it's at 60.
And instead of looking at it and saying, hey, it's a 40% off sale, they're like, oh, shit, it's broken.
I can't buy it now.
like well which you know do you want you can't have it both ways right i mean
you know okay um you want it to feel great you know 100 120 you can buy it and buy it high and
you know but but uh it's you know eventually eventually enough people are going to come to
realize that this is really a case of you buy the dip on this asset and you know and it gives you
you know if you're wrong about it at any given point in time it gives you an opportunity to
quote unquote, get right about it on the next dip.
But Larry, on that same note, those same, not those same people,
but a lot of people will tell you that it's too high
and they'll say things like it's 69 or whatever.
I had several friends saying, oh, I think it's going to get down under 20
and I'm going to buy then.
Well, that's right.
And it gets down to 17.
And then I see them months later when it's gone back up and say,
well, did you get in it?
You know, because it got down to 17.
They go, no, I didn't do it.
No, nobody ever does it.
That's right.
And that's why, but unfortunately with 17 years of data now and a couple of really good models emerging, like this power law model with a, you know, 96% R squared, you know, you can actually kind of come to understand how the assets going to behave.
And, you know, as a financial investor, what I've always looked at is you want pattern recognition.
And in my book, I laid it out, you know, you can see these drawdowns, you know what they are, you know how large they're going to be, you know that they're coming, you know, and then you can look at the power law.
I mean, I highly recommend people buy Fred Kruger's book, you know, Bitcoin one million.
It lays it out clear as day, you know, and all the supporting arguments are brilliant.
And, you know, what you can see, I mean, what I'm what I'm kind of modeled towards is in
2032, which is admittedly six years away.
You know, the mean on this thing is about a million bucks a coin.
So, you know, if I get if I buy a coin for 100 grand, it's going to be 10 a 10 bagger
in six years.
That works for me.
And hey, it's even better if I buy it for 67 grand.
and it's going to be a million in 10 years, you know, six years, that works for me too.
So, you know, I think, and this is the argument for dollar-crossed averaging
because we just never know where it's going.
And I've also always been a proponent of that.
So, look, it's a tough asset for people to get their heads around.
But once you get your head around it, you know, you'll develop the conviction that I have
and that you guys have and that Saylor has and that others have.
And I think, you know, it's, what is it that people say?
It's time in the asset, not timing the purchase of the asset.
You know, I mean, this thing's going to be worth a million in six or seven years.
It's going to be worth 10 million in 20 years.
And so, you know, if you buy a coin today, you're going to be really glad you did that, in my opinion.
You know, but you've got to wait in 20 years is a long time.
Gary, you were at a meetup yesterday, I think you said, right?
Yeah, last night.
So I was buying that book.
I'm sorry.
I was buying that Bitcoin 1 million.
Okay.
That's okay.
What was the sentiment there?
it was a smaller crowd than normal um i can tell you that because usually i go there and there's like
60 70 people there and there were maybe 35 um so the crowd was down and they were surprised
at the crowd being down but everybody there except for one or two new people i met who just
got in at the high no one was worried you know they were going oh we've seen this several times
you know so it's talking like us they're a seasoned group so yeah which could be indicative
of a 35 right yeah half of the normal audience the other 30 were back at home crying that's what
i said i said i said their wives wouldn't let them come yeah their wives wouldn't let them come get
out of that shit and they're embarrassed to come say i'm out of it now you know but actually most
of the people there and now that i'm now that i'm thinking about from that aspect that i knew almost
everybody there you know so it was definitely seasoned people i think there were like four new
people five new people that i met you know that i didn't know already so i don't know if that's a
good indicator you know of anything on that group there well i i just actually i have it's one of
three data points that i wanted to kind of gather and and and i think that's an interesting one
Another one, Larry and I are part of a group here in Naples, Florida, which I don't know.
It's a bunch of older, primarily business executive leaders from the past.
People like one of the guys, the ex-CEO of Union Pacific and guys from J.I.
Case and former guy from the CIA, NSA, like that sort of group.
And Larry and I got several questions yesterday from the group.
I don't think anybody was like super negative, but they were kind of questioning, right?
I'm not sure how you would categorize that sentiment, Larry.
Yeah, I think that's right.
I mean, it's very easy.
I mean, they're doing what most people doing is, you know, oh, gosh, it's not working.
You said it was going to keep going higher and it's not going higher.
And I said, yes, it will.
But with volatility, you know, as a part of that journey.
and so there's nothing fundamental about the thesis that's changed they're still debasing
the currency this is still digital gold it's better than gold in a million ways you can move
it faster store it cheap verify it more completely but you know it's it's going to take time and i
think that's one of the hard things bitcoiners have had a hard time dealing with it's just how
well gold is done my view is that you know that's that's just a function of the fact that gold's
been around longer and when people you know come to the debasement trade conclusion which i think
more and more of the world is coming to they go to the the old tried and true and central banks buy
gold and they're not buying bitcoin yet but again you know you can look at that as a negative and be
bothered by that or you can look at it as a positive hey gold is signaling that our stuff's
about to work and furthermore because isn't this amazing the market's giving us an opportunity if
We don't have enough to buy some more at 40% off or 50% off actually from the
highs.
Yeah.
People don't really don't get that at all.
No,
they just don't.
If they're new.
I mean,
you don't get that.
All you know is you paid 134 and you're down half,
you know,
and that's a lot,
as you said,
maybe because it's a commodity instead of a stock.
But it is.
It's a volatile asset.
And that's why it goes up a lot because it's a volatile asset.
Yeah,
exactly.
I mean,
yeah.
So it is what it is.
And, um, I, you know, I think the only way you can get to where we are is by time in
it and understanding of what it is.
And, you know, there are a lot of good books on it.
You know, I've got one, Safe's got one, Lynn's got one, Kruger's got one.
I mean, there are ways you can educate yourself about it and you'll come to the conclusion
I think we've come to, which is, you know, this is as good a place or probably the best
place to store long-term wealth, um, in a monetary and base monetary debasement environment.
Yeah, what are you going to do?
Keep it, put it in fiat and take it out.
Yeah, right?
I mean, yeah, that's the other thing.
You're going to sell it.
Where are you going to go?
You know?
Where are you going to go?
Well, you know what I, one of the reasons I brought up this group that Larry and I went to yesterday was,
I think you had to leave a little earlier than I did, Larry.
Yeah.
Is at the end, I hung around probably till like two, Larry, just by the way.
And there were three or four guys.
so there are three people coming out of that meeting these are these are very high net worth
people let's just say general right very high net worth people i'm quite convinced that today
three of those people are buying their first bitcoin interesting and uh now i think two of
them are buying an etf and one of the guys probably going to coinbase so you know those those out there
who are a bitcoin maxi's and purist don't get upset but these are these are new people entering
the ecosystem with deep pockets.
And, you know, they're probably going to,
they're probably going to enter with,
you know, maybe a couple hundred thousand dollar
kind of investment would be my guess.
Like that would be how they would,
they would enter.
But the thing about these folks,
and remember these are very successful folks
and they're older, they've seen the cycles.
They view this downturn
just like we were kind of talking about.
like hey this this maybe is the time this is my chance because i've been in this group for like
six years and been telling them to buy and they never bought they never bought they never about
like oh now i got a 50 drawdown maybe now is the time so i i found actually the new member that i
bought uh brought to the meeting bob um will mention his name he actually said to me he said
you know i'm gonna buy some and he's read my book he knows that he believes in all that kind of
stuff. He was one of the, you know, God, 100, 125, God, you got it cheaper. I'm not going to chase it.
And, you know, we were riding in the car on the way home and he kind of said, you know,
gosh, if I want to get some of this, now is probably the time to do it, right?
You know, it's 50% off the all-time high. And I said, yeah, I think it's going,
you know, the long-term thesis hasn't changed. You know, because of all this FUD, it's down 50%.
And it's like you say, I mean, he's got a huge net worth and he's not going to spend
a ton of money on it,
but he's going to buy, you know,
buy probably a hundred grand or, you know,
buy something on it and get started.
And then, you know, then he'll start watching it.
And he'll, you know, I mean, it's like,
and another Bitcoiner is born.
Yes.
You mentioned, Bob,
one of them was going to buy Bitcoin at Coinbase
and the other two were probably going to do ETFs.
And my question to you that brought up is,
do you think part of our drop this time
has been due to people buying ETFs
and they feel like they're buying stocks and they don't even know what they have.
They have no idea what they have.
They just know they own the ETF and they see the price dropping
and they just sell so easy online.
You know, just so I'm getting out of that stock.
You know, just like they would a stock.
I can only, yeah, I mean, I'd just be speculating, but probably.
I think people viewing it as a stock, yes, I think that that's true.
And I think we saw maybe the start of the fall down,
uh not the latest drop but the the drop from the high in october some profit taking
mentality that kind of started that when we were in the 120s some people that had had done really
well and are used to saying oh well i i just made 40 in the year so i'm gonna take some i'm happy
with 10 10 would be fantastic and i just made 40 yeah yeah there's no doubt that there will be
those who chase it and then sell it and trade it. The thing that's tricky, and there's a very high
profile analyst who, you know, looked at the technicals and suggested this call, and he made
a good call. It was going to go down. You know, the thing that's tricky with all that is it's a
short-term gain. You've got to pay tax on it. And when are you going to get back in? You know, I mean,
it's okay. So you sold great. You're a genius. You sold it for 95 or 100, or maybe you sold for 120.
you know are you going to have the guts to get back in at 67 or are you going to hold out for 40
and never get it get any more of it you know what i mean yeah because it's it's it's like it's you
know you the the part about selling it when that when it runs is you got to think to yourself okay
fine what what am i going to use when am i going to buy it back how cheap does that have to get to
buy it back and will i buy it back or will i be left behind i mean i i had an investor in my fund
who sold it at 90-something,
and then it went to 125,
and he was experiencing regret.
Now, he didn't go and buy it at 125,
and I'm trying to get him to now buy it at 67,
and I'm not sure if he will or not.
I'd probably wait until it starts to turn,
but it's also a levered asset with really rapid flows,
and one of the things you'll learn
if you read that Bitcoin One Million book, Gary,
is that from 2018 to 2024,
It went up like 6x, okay, something like that.
These are round numbers from memory, so I'm perfectly right, but the idea is right.
And if you miss like the best 20 days of that period, you're flat.
So, you know, this is the God candle phenomena, right?
I mean, it's a very volatile asset, and when it really runs, it runs hard.
And so think about that.
I mean, in a six-year period where it multiplied in value by 6X, if you missed the top days, you didn't get it.
And so for that reason, you know, that's why I just don't trade it.
I don't think you're smart enough to know what it's going to do next.
And if you're not there when it goes on a tear, you know, you missed it.
And so it's hard to buy when it gets up again and you missed it.
Well, that's exactly right.
That's exactly right.
You know, you sell it at a hundred.
You're hoping it goes to 60.
Well, what happens if it's suddenly, you know, worse comes in and they do a big QE program and the next thing you know, it's at 140, you know, and now you sold it 100.
You felt like a genius because it went to 70, but are you going to chase it at 140?
I mean, it's.
And I know a lot of people who've done that in the past lower dollar amounts, of course.
Yeah.
But they said, oh, I'm getting out of this.
I'm genius.
And then all of a sudden it goes up to 135 and I sold five of them at 10.
Yeah.
It's so volatile and it trades like a wild animal.
My view is just, you know that it's going up and to the right over four to, you know, as Salish says, if your time frame is four to 10 years, it's going up and to the right.
So just buy it and sit on it, you know, just hodl it.
I mean, it's not, you know, that's, it's not that hard to do.
I mean, it is hard if you're, you know, if you're a trader to sit there and watch it go up and down.
But if you're not, I mean, I just, I don't want, you know, I don't care what it does any given day.
Yeah.
Yeah. Well, yeah, there's a anybody that's bought and held for four years hasn't lost money. That's that's still a true statement as of today.
I think that'll continue to be a true statement.
Yeah. And I think that by the way, that doesn't mean there's a there's this whole thing about four year cycles. I think the four year cycle is dead. Actually, I don't think it ever existed, to my opinion.
Well, I'm not so sure, Bob. I used to say I thought it was dead.
Looks like on paper it's there.
yeah i i used to think it was dead but now i know i'm not so sure because you know kind of
look at the top last you know 125 whatever i mean look there's a there are cycles and to me they're
actually more just stand and they're not really they don't have to do with the having anymore
because the reward is not what's driving the demand the reward is trivial compared to the
demand from etfs and everything else that's not the issue but i i think like any financial asset
that there will be cycles where just standard fear and greed, you know,
people will chase it and buy it and lever up and get way too far out over their
skis. It'll get way ahead of the model price. And guess what? You know,
some people will sell and it'll get cleaned out and it'll get way below the
model price. And that's where we are right now. And that,
I can buy, I can buy that there's a cycle, I guess a cycle based on that.
Yes. To the point that you, I mean, you said it like,
It has nothing to do with the halving.
Right.
And I think that the fervor that has come around the last couple halvings it kind of fun I guess in a way But it not so fun if you a miner when the next halving comes up that like six months leading into the halving it going to start going up
because everybody well it's going to be cut in half it's going to we're going to have this giant
thing people are going to start buying it forcing the price up well here's the only thing i can say
the cost of production doubles overnight so so if you look at it if you look at it from what does it
due to the supply, it's meaningless.
And it has been meaningless for several halvings, right?
It really doesn't affect the amount of Bitcoin
getting in the market.
What it does do is it doubles the cost
of production overnight.
So that is a true statement.
And it can hit the miners in a big way, obviously, right?
Yeah, yeah.
So, you know, we care a lot about it.
Um, we, I should point out, it only doubles the cost of production in a world where the
fees are really low and which is they are abysmally low right now.
Um, and this is like, we were talking about FUD before and, um, I, I spend a lot of time
and effort over the last few years talking about block space scarcity.
And I still hold everything I've said about that to be true, that I think ultimately we will find that block space itself is phenomenally scarce and there will be fierce competition just for access to the base layer.
That said, people aren't using the network right now.
And that's not good for Bitcoin.
you know it needs metcalf's law is you know the the value of a network is equal to the square of
the number of users of the network but people aren't using the network and we talked about the
ets well that kind of takes people off of the network right you know the the new people coming
in aren't running nodes they're not running base layer transactions themselves like these sort of
things. And that is concerning. That does hurt. Probably don't want to go too deep into it,
but maybe we can do it in a different episode about governance and things like that. But
while Bitcoin adoption has gone way up over the last several years, and we have a couple hundred
million people with wallets and all that sort of stuff, there's like 25,000 listening nodes,
like what I would call active nodes on the network.
That's it.
And that's not good.
And when we are faced, by the way,
with junctures in the protocol and the governance,
which you were talking about, Larry,
the nodes play an important part in that.
And the only people that essentially get a vote,
I'll put it that way,
the only people that get a vote in those sort of things
are those with nodes.
You know, they can signal for protocol changes. And if there happens to be what's called a competing chain, they get to pick which of the chains they're going to follow. Those are important.
Now, maybe a good time to just real quickly hit a couple of the things from earlier before, like quantum.
I think the two things that are kind of prevalent in the industry right now are quantum FUD and kind of governance.
And I would say, you know, one has legs and one has a reason for concern and one has no reason for concern.
The one that has no reason for concern is quantum.
contrary to I think what a lot of people especially outside experts outside of Bitcoin
Bitcoin doesn't even use really encryption that's not the way that it works first of all
quantum theoretically could have an impact on certain
certain Bitcoin addresses but we already even in today's world of today's implementation of Bitcoin
we can, that Bitcoin can be made safe right now. Like you, you, you, you just move it to a new
address that's never had its public address exposed and you're safe. Okay. So now, and,
and there are very active groups. There's several of them working on protocol upstate grades to
create even better quantum resistant addresses. Nothing to worry about. That doesn't mean work
isn't required, but the work is happening and we're fine. Probably the thing that's
probably more concerning is, you know, governance. And this is what Saylor, like you said, Larry,
you know, Saylor has basically said, hey, I'm going to get involved and he should.
how the protocol evolves, who has a say in it,
the pace of the change, what are the priorities of the changes.
These are big, big deals.
And there's something called BIP-110 right now,
which is probably not worthy of a deep dive here,
but it's caused a controversy.
there's somewhere around seven eight percent of the nodes are now signaling that they want this
change the potential change would come in late september if it were to come it's created within
the technical community a lot of um butting heads um and some of it gets kind of i would say vocally
violent at this point or, you know, very contentious. It's my opinion that we have to evolve
the way that we make changes. And I think Sailor is kind of saying the same thing, like, hey,
the system that's been used and the group of people that have been driving it will certainly
a lot of technical competency, but they're very insular. They don't communicate well.
They're very closed off to newcomers. And some changes need to be made there because we have a
$2 trillion asset now. People all over the world are using it and counting on it. And the old way
doesn't work. And, you know, I would say, by the way, I went through this in the personal computer
industry, the way in which we developed products and made changes in, let's say, the early to mid
80s is very different than the way we had to do it by the late 90s. And it was very difficult for
the developers to accept that because essentially they drove the bus in the early days and it was a
much wider committee or not committee much wider community that had a say in the later days and
the technical community really pushed back against it so i think we're seeing a lot of that it's kind
of a psychological thing well there you go that's interesting that is interesting look it's um you
know tick tock next block right it's just going to continue marching forward and um yeah you know
i feel sorry for people who aren't in it uh because you know there's no excuse for not being in it now
there's enough information out there there's enough time enough data um you know it's to me
it's just blindingly obvious where it's going what's happening um you know if you don't want
to do the work and take the time to understand it you know i i mean one thing i've been able to do
with a lot of my friends is just to get them and and i'm sure you guys do the same just to get them
to get started you know it's like um you know investing is all about asymmetry and so you know
if you can only lose one x what you put in you can make five to 20x what you put into something
you know well then you should take the and that's you really do believe the odds are favored
that it's going to work and you should take that back you know every time you know even if
occasionally you do lose the one x so um and i i don't think you're gonna lose the one x here but i
you know i do know that the asymmetry is really there so you know i just try and get everybody i
talk to to buy some bitcoin because that's how it starts you know you buy something you watch it then
you learn something about it that starts to work then you buy some more you know pretty soon you
end up doing podcasts for most of your life you know i found personally if you're if you're not
talking about high wealth
individuals necessarily.
But if you're talking to just regular
folks and they're interested in Bitcoin,
it's a lot easier to talk
them in to start dollar-cost averaging
a small amount.
And then, all of a sudden, within
a year, they get it and they go
buy some.
Because
most of those places do a good job of sending out
some information, a newsletter,
blah, blah, blah, and they've got money
in the game, even though it's not a lot.
Once you've got a little bit of skin in the game, it immediately forces you to pay more attention.
And then, of course, you start to learn and you realize what the difficulty adjustment is.
And, you know, and you're and it's just the evidence continues to build and build and build.
And you're like, Jesus, why do I only have so little of this?
I need to own more.
Yeah, I've had so many times a friend or something I've talked into doing a small amount monthly or weekly.
And then within six months, I hear from him.
They're going, oh, I just bought, you know, blah, blah, blah.
amount.
It's an easy sell
compared to, say, if they go on and buy
Bitcoin. Because then you've got to explain
they don't have to buy $135,000 worth
and all this stuff.
Actually, with the guy
I was with yesterday, Bob, he's like, well,
if I'm going to buy this, do I need to buy a whole one?
And I was like, no, of course you don't.
Did he ask you if you had one in your
pocket? I used to get asked that.
Do you have one on you?
I go, wow, I just explained it for 20 minutes
and you asked me if I have one.
I really did a shitty job, didn't I?
Well, you know, it's funny you say that, Gary, about doing a shitty job, because I had a little story I wanted to tell you guys.
And on Tuesday evening, I had been asked to go speak to a group here in Naples.
And it was about 75 people in the room.
I would say 80 percent boomers, by the way, but a few younger people in the room.
And they had asked me to come speak about Bitcoin and money. And so I, I'm not going to give you the whole presentation, but, you know, I started with some basics like, you know, what is money? What's broken in the system? Like these, these types of things before I got to Bitcoin.
And then I thought what I gave was a pretty good, compelling reason why Bitcoin was important and encouraged them, much like you're saying, Gary, to maybe dabble a little bit.
Basically, nobody in the room owned any, right?
super novice group and and told them to buy it with the expectation that they would hold it at
least four years before they evaluate it you know the whole thing and i should point out i went
through what i thought was a decent primer on bitcoin well um we opened it up for q a and one
of the first questions was from an older gentleman. And I would say he was almost angry at me.
And he said, paraphrasing, who's the head of Bitcoin? Who makes the decisions?
Until I know who that person is, I'm not going to trust anything. And how do I know that the
Russians aren't going to just hack this thing.
And obviously he hadn't listened very well,
or I did a very poor job of, you know, communicating.
And I tried, probably both of you guys,
I know you both do a fair amount of public speaking, you know,
so you get these kind of confrontational things
and trying to stay professional, you know, at the beginning.
And so I responded with,
hey, you have to get comfortable with decentralization.
and, you know, Bitcoin is about not having a trusted third party
and things I had actually covered, of course, you know,
earlier in the presentation.
And he came back, you know, same sort of thing.
Like, you know, basically, you know, it's a Ponzi scheme.
It's, you know, blah, blah, blah.
So what I said was I said, well, you know, sure,
you're obviously in the back nine of life.
So you were around in 71
when Nixon took us off the gold standard.
How do you feel about the fact
that your money's been devalued by 95% since 1971?
Are those the people that you want to trust?
Is that where you want to place your faith?
Great question.
Yeah.
And boy, he got really red.
He didn't,
And not that it was a debate or anything like that, but I find it.
It's funny because when you go to a show like that, there were 20 other questions.
They were great questions.
I'm pretty confident several people walked out of that room and bought Bitcoin.
But what's funny is it's always the one guy that sticks in your head, right?
That, you know, you wonder like what's going on in his head.
And, you know, the takeaway I had from it was that it's indicative of, I think, people in society that really want to be a slave, that they want there to be somebody else that's in charge, right?
And that's where their comfort comes.
And, you know, there's always going to be a group of those folks, probably, and just have to accept it.
I think that was a great question you asked them.
I mean, I'm going to put that in my back pocket, too, next time I have some kind of situation about trust.
Yeah, yeah, but the desire to trust people.
But I think that's where kind of the whole socialist movement comes from.
Like there's that the whole group of people, they want to trust the central planner.
They want to trust the authority.
And no matter how many examples they see a bad.
Yeah. Yeah. Because I said to him, I said a couple of things, you know, and I said to him, I said, sir, you know, history is not on your side.
Every every currency ever created by governments is essentially failed.
and, you know, I don't know why you want to trust it.
So, yeah.
Some people are more comfortable in that world.
I mean, the thing that I think we all have going for us
is that, you know, I mean,
now you literally week by week, hour by hour,
have examples of why none of these people
should be trusted.
I mean, we now know that, you know,
many of the leaders of our country
and other countries and so forth have compromised
in this Epstein thing.
And I mean, it's just one, you know,
outrageous example of broken trust after another.
You know what I mean?
Right.
How anybody can look at the system and go,
oh yeah, this is a good system.
We should just trust this.
I mean, give me a break.
You know, I mean.
Well, you know, people of low moral value
when they get into any kind of position of power
are going to stoop to the lowest they can with that power.
Many, many people, not all, but you're right.
Many of you, I agree with you.
Well, I'm saying people with low moral value.
Oh, yeah, yeah, yeah.
I'm not saying good people.
I believe you guys would be okay.
But, you know, if you have no mortals to begin with,
and you're given by your power.
You're going to do whatever, yeah.
Look, it's, to me, it's just as obvious as day.
It's interesting.
I mean, it does shake some people's worldview.
I mean, if you're a statist and you believe in the state
and you believe in government, you know,
And, I mean, you know, self-custody, for example, I mean, you know, freedom is uncomfortable.
I mean, you've got to take responsibility, you know, for yourself and for others.
And some people don't want that.
They actually want to believe that there's a nanny state that's going to take care of them.
You know, I think that has to do with kind of something Bob mentioned.
Maybe it's you, Bob.
Maybe it's Mel mentioned it before we started the show.
You know, a lot of people in today's society, we've had such a comfortable life here in the United States for so many years.
I mean, we're like, what, 200 years now, whatever, so, or however many years, that they don't have, they feel like they, that everything's great, that the United States is, I remember my wife, to change the example, told me back in 79, oh, the United States will be here forever.
This is the greatest country ever.
I go, really?
I'm going, you know, Rome was there 500 years and it disappeared.
You know, so people have that concept, you know, that slowly but surely that's breaking down.
But for the most part, older people have that concept because they've never seen anything happen.
It's not unrealistic. I mean, I don't think it's all going to devolve and fall apart tomorrow.
But, you know, we can see and I think we'll see radical, radical change.
I mean, I think that, you know, the next generation is not going to put up with this shit and they shouldn't.
You know, America will probably be here in some form, but it may not be the form that we're in right now.
this next generation is just not going to put up with this shit.
And, you know, there's this fourth turning is going to create some massive reform.
And it should, you know, because we all look at, you know, we watch what we see on the news every day.
We watch people testifying in front of Congress and we're like, you know, what the hell?
This is just not right.
Well, where do you think we're at in the fourth turning?
I mean, yeah, so I think we're just at the beginning or are we in the middle?
I know we're not at the end.
So my view is the beginning was 08.
That was when the fabric started to tear and that we're now deep into it.
I think most fourth turnings have lasted between 20 and 30 years.
So 20 years would take you to 2028.
30 years would take you to 2038.
I don't think it's going to take all the way to 2038, but it could.
I kind of tend to think that the culmination and the reset will occur in the early 2030s.
you know i think i think that i've said this in other pods to briefly recap it i think that
basically i think that you know um blue team or red team's gonna lose in 2028 um for a variety of
reasons i'm not gonna argue those but and then blue team's gonna win and blue team's gonna go
ubi you know debt forgiveness low interest rates print money and they're gonna trash the currency
We're going to have inflation like it's going to melt people's faces.
And so that's from 2028 to 2032.
You know, it may be Weimar style or it may be just really high South American style.
But but in either case, everyone's just going to be like, do whatever it takes to stop this shit.
And I think in 2032, Michael Saylor is president.
I think he stands up and he says, I've got the receipts.
I'm an engineer. I know what went wrong.
The money is broken. I'm riches.
I'm the richest man in the world. Doesn't really matter.
I'm going to give it all away anyway.
And here's how we refine it.
We reset the system, guys.
We're going to go to a Bitcoin standard, and we're going to have a constitutional convention
so that the original vision of the founding fathers is reenacted in things like term limits
and the ability to fire judges and just a lot of...
There'll be massive reforms, and he will have the credibility to pull it off.
And everyone will be hurting so bad that they'll be begging him to do it.
So I've never had a president following me on Twitter.
So that'd be kind of cool.
Yeah, right.
Exactly.
So.
So, I mean, that's that's my dream case.
I don't know if that's really what will happen, but I I think the problems will get severe enough in the early 2030s that, you know, a solution will will will emerge.
you know i mean they'll be able at that point in time they'll also the boomers enough of the
boomers will have died off they'll be able to reform social security and medicare you know
they'll be able to balance the budget you know a lot of a lot of things will happen and and and
the next generation will be taken over and they're just not going to put up with any of this shit
that's going on right now so so i i think you know i think the bad news is it would probably be a
pretty rough six years i think the good news is you know on the other side of that six years you
You know, we're going to have, we're going to go back to first principles in America,
which, you know, is founded as a sound money country with gold and silver being the only forms of money
written in the Constitution.
You know, in this case, I think it'll be Bitcoin.
And in that respect, we'll leapfrog China because China's made a bet on gold, which is a mistake.
They're making the same mistake.
And they made a bet on silver one time before.
Exactly. And we screwed them as a result of it.
So, you know, that's kind of how I see it unfolding, Gary.
I don't know if that's really what will happen, but that's just a guess.
Yeah.
Obviously, we all have, you know, a murky crystal ball.
Right.
But what I would say that is interesting right now is if we zoom out globally, you know, we have a serious secession movement in Canada with Alberta.
We have an Iranian revolution on seemingly simmering.
We have Venezuela that may flip. Looks like Cuba. Cuba seems to be falling apart. Costa Rica just elected a woman as president, basically following the Bukele.
I didn't know that.
Yeah. And so there are these spots in the world where, you know, the revolt is coming. I think, you know, we see Italy and Japan like this, I think, is actually really cool.
super strong female heads of state who are pushing almost a, you know, a radical shift
against socialism, protecting national sovereignty. Poland's always been very strong about it.
So those are the things that give me hope, frankly. But on the other hand, we have
Mondami being elected in New York,
similar person in Seattle You have this sort of bullshit happening in the U And you know it may come back to it You know it interesting in Atlas Shrugged the U kind of falls first
And I think in their case, in the case in the book, it's more Europe that kind of went the right way.
I don't think Europe's going the right way.
They're even they're they're really bad.
They're way down the wrong path.
But these other areas of the world, people get it.
They're revolting against all these things.
It's all coming.
It's coming our way, but it's, you know, it's messy.
It's going to be messy.
That's for sure.
So, Gary, we have your conference coming up.
I think this show, by the way, is being recorded on February 13th,
probably released a week or so after that.
So as people are listening, Larry and I will be joining Gary in Texas for BitBlock Boom in early April.
And, you know, if you're looking to gather with other Bitcoiners, it's a great conference.
I've been there several years in a row now.
And I've always found it to be one of the better gatherings.
So if you're looking to connect.
It's a human scale conference with a lot of good speakers and I'll have books there for sale.
If you want to buy a hard, sign hardcover, I'll be able to sell you a book.
And we actually have several people signing books there.
We have Jimmy Song's there signing books.
We have Parker Lewis is there signing books.
Yeah, this will be, I'm kind of excited about this year's event.
This is our ninth event, you know, which makes us like the longest running Bitcoin conference around.
But we're doing it in Fort Worth in what's called Cowtown in the stockyards.
And if you've watched any of the shows by Sheridan, like the 1870s, when they go out west, they're in the stockyards.
They just bring dirt on the road and make it look like – because it looks like it did in the 1870s.
Landman, when they go to a restaurant at the Cattleman's Steakhouse, that's down there in the stockyards.
Interesting. I can't wait to go to that. I love Landman.
yeah so yeah Landman is is the hit we watch that every night but it's in that area so it's going to
be really cool and it's a cattle drive that'll come by Saturday every Saturday Longhorn Steers
they do a cattle drive it's more for a show than it is real it's probably the same cattle every
week but it kind of neat to see the Longhorn Steers come by and we in an old rustic place that has been there for years and years And because of where the event is at in the room we have it a big room and it got brick flooring and hard walls and the tables in the back
So we're doing something that we've never done at VetBlockRoom is when you check in, you're handed a set of headphones.
Now, like on Friday, when the workshops are going on or the sessions, three are running at the same time.
And with side by side is the way we're doing it.
And you could be sitting over here watching the mining sessions.
And you go, I wonder what these other ones are.
And you can switch the channels and listen to the other sessions and say, oh, wow, I really want to walk over there.
You can just walk over there and listen to the lightning sessions, sit down and watch it.
or if you have to go to the restroom, you don't have to wait for the break.
You still got your headphones on.
You still can go to the restroom.
And then Saturday, of course, there's one stage, so all the headphones and a BSL.
I think this is really cool, and I know several people who've been to conferences
with the headphones, and they really, really, people seem to like it a lot.
So I'm curious to see how this goes.
We're trying to do one of our parties at a rodeo, the Thursday night event,
which is going to be really cool.
and then we have um gosh it's just going to be you know this year i think everybody especially
people who come from like australia europe or even up north when they come to bit block boom
they're thinking they're going to be seeing cowboy stuff and they don't because it's been in austin
or in dallas and that could be in any town usa where this time they're going to see cowboys
walking around you know as soon as you walk out of the venue you go four feet and there's a cowboy
a hat store and there's a boot store so i think people are really going to get a good taste on
texas yeah it's awesome and also just want to mention if anyone is um interested in checking
out the site and decided to come we have a discount code i'll just give out mel's code it's mel 10
10 that'll give you 10 off but check it out uh we're going to have a good crowd it's a bitcoin
only crowd if you like bitcoin yeah i talked to someone last night was telling me they went to
archipelago and all these places in there in dallas i said so you go all these places and
you hadn't hit the block boom and it's been here like nine years i didn't know about it till tonight
you know so um yeah so we should have a good time thanks for bringing that up and like you said we
got a panel with the boomers on it um yep yeah we gonna have a buddy george our buddy george is gonna come in our first guest on this show and we do a panel with him so that be great it gonna be a good it gonna be a good show people will enjoy you guys will like it this year
yeah you really will you like everything's in walking distance the hotel is literally two
minutes we're using an outdoor venue a different venue not outdoors but it's outside of the hotel
but the hotel is two minutes from the venue and like everything the parties everything are in
walking distance pretty much you know instead of having to rent an uber or you know because i don't
know if you were there when we were in austin the second year to go to that city i rented it was a
45 minute drive you know yeah i was at that one yeah that was a good deal but it was a long drive
that was a hike it was but not many people rent a whole city like that too uh yeah no that was fun
it was well done yeah so yeah well i said i'm i'm i'm a big fan of your show gary i'm i'm going
to a lot less this year by the way i think larry and i have actually talked about larry's of the
same mindset we're probably not going to be as many places as we have in the past it just
there's there's a lot of shows um you know if you got one in your area i certainly encourage you to
go to it and gather with other bitcoiners but you know um it it can get draining and uh
you know because you can go to one almost every weekend there's some somewhere in the world or
every week, almost everywhere in the world.
And so I, uh, I frankly been to too many the last handful of years and I have
to a little more time with my family, a little more focus on my business, uh,
than, than previous years.
Looking forward to it though, Gary, it should be fun.
Yeah.
So we'll have a good time this year.
Yeah.
So I don't know if you guys have anything else, um, that we should cover today,
but, but, uh, I know next, next show we're planning to have Joe Kelly
from Unchained Capital,
and we'll talk about some security
and scams and custody
and stuff like that with Joe.
I love Joe.
He's a great guy.
And Unchained's been our platinum sponsor
for like seven years.
Yeah.
Yeah, great organization.
I do use them personally
and for some of my businesses.
So I'm a big fan.
That's an unpaid plug, by the way.
But just to be clear,
I really do use them and like them.
So look forward to having Joe.
All right, guys.
Well, I think that's about it.
Enjoyed it completely.
I'll see you guys next month.
Likewise.
See ya.