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Ten31 Timestamp: Just Add a Zero · TFTC: A Bitcoin Podcast

0:00
John, we missed a week. Memorial Day really threw a wrench in our scheduling and we couldn't make it up Tuesday.
0:06
So we're back.
0:07
Yeah, it's a real shame. We brought shame on our households relative to your unbroken streak with Odell on RHR.
0:15
Maybe we'll start our streak today going forward.
0:19
Yeah, we had a Friday RHR last week. Matt's feeling a little bearish.
0:24
I feel like he's a little bearish right now, which is usually a good sign for the near-term prospects of the Bitcoin price.
0:31
Though we have drifted a bit lower since we've recorded on Friday, currently below $72,000.
0:37
But I think Bitcoin's in an interesting spot.
0:40
We're going to, I think, end this conversation on the fundamental value prop of Bitcoin and some developments that have happened in recent weeks.
0:48
But first, I think jumping right into it, just talking about the mimetic power of this administration.
0:54
And you wanted to start off this week's presentation with the juxtaposition of President Trump and Jerome Powell from last year's audit of the building of the new Federal Reserve building and Secretary of Assent presenting the $250 bill with President Trump on it.
1:12
Yeah, look, I mean, this guy, you know, much can be said about him, positive and negative.
1:19
And, you know, we don't have time to get into all that.
1:21
But I think the one thing that we all have to agree on is that Trump across his two administrations is responsible for some of the most iconic images of the storied history of this great country.
1:32
And, you know, the one on the right, the Besson image is what I led off the week with,
1:37
just because I think it so perfectly captures the moment and also the contrast between what
1:42
happened last year with his iconic image of Trump and Powell, which I think is probably
1:45
the number one image that Trump will ever produce.
1:48
I mean, I just I don't think you can get better than this.
1:50
But a strong number two is this one with Besson holding up his $250 bill.
1:55
You know, you've got larger currency denominations, right, with people struggling with price
2:01
inflation, that's always a good sign. You've got the Treasury secretary taking the diametric
2:05
opposite stance relative to his former counterpart of the Fed as it relates to Trump.
2:11
You know, clearly with this wonderful grin showing Trump's image on the currency,
2:18
you know, I think tells you a lot where we're going, tells you a lot about where the different
2:22
camps sit. And yeah, I just think this picture's worth a thousand words and I'll let it speak for
2:27
itself. Yeah, when it gets to, I mean, we just did some pre-show prep, more pre-show prep than we
2:32
typically do. And I think what I'm picking up is that the underlying theme of this discussion is
2:37
going to be the acceleration of the K-shaped economy and how we navigate that moving forward,
2:43
because it seems very clear that there is some dislocation between AI and the plays within AI
2:49
and everything else. And it's just really interesting times that we live in, but sticking
2:54
on geopolitics and the Trump administration. I think one thing that's become clear over the last
3:00
week that a lot of the price action that we've seen in oil markets is going below 100 and staying
3:06
in the mid 80s for the last few weeks has been manufactured price due to the fact that many
3:13
nations are draining their strategic petroleum reserve as an attempt to route around the supply
3:20
disruptions because of the closure of the straighter hermuz. Yeah. You know, and I think
3:24
this relates to the K-shaped economy as well, right? Where we're all, you know, those of us who
3:29
are, have the need to actually be aware of what, you know, gas prices are, you know, certainly have
3:33
felt in the last six months, the impact of all the disruptions in a way that perhaps the,
3:39
those at the top of the pyramid haven't quite as much, but it hasn't been, you know, completely
3:44
unbearable yet. And I think there's a decent amount of confusion as to, you know, why we haven't
3:48
blown out further. There's been speculation about this, and we've talked about it a little bit on
3:51
the show, but Rory Johnston, who's a great oil analyst that everyone should follow, had some
3:56
good data out highlighting that there's some incongruity in the Chinese data that they follow,
4:02
suggesting that you've had oil imports come way down, but also mobility indicators that they
4:08
follow are still strong. So you're not really seeing demand destruction. And he thinks that
4:12
the delta there is getting backfilled by the Chinese effectively just making massive withdrawals
4:19
from their petroleum reserve. He's kind of interpolating that. He doesn't have great data
4:23
to that point, but it stands to reason. And of course, they're certainly not alone. All the cool
4:28
kids are doing it and we're seeing it in the U.S. Last week, we just had our second highest
4:32
SPR draw on record, surpassing the ones from 2022. Highest was the prior week. And then Japan also
4:40
is running the same playbook here.
4:43
And so this is keeping us, you know,
4:44
keeping a relative lid on oil prices.
4:47
You know, it hurts, but it's not destructive yet.
4:50
For many sectors of the economy,
4:52
it's not probably,
4:54
it's getting to be a voting issue in the US,
4:56
but it's not necessarily a rioting issue yet.
4:59
But, you know, the question is
5:01
that when you think about stocks and flows,
5:03
like these are all stocks, right?
5:04
And you deplete them without re-upping them.
5:08
You can only do that so many times.
5:09
and you can't even get them down to actually zero.
5:12
You need to keep some level of stock in
5:13
for the SPR to actually work chemically
5:15
in function of the way that it should.
5:17
So the question is,
5:18
how many more times can we run that playbook
5:20
before you start actually getting more meaningful,
5:23
getting in the street type impacts on the oil price?
5:27
Yeah, and I think last week was rather interesting
5:30
as it pertains to this particular theme
5:33
because you had the CEOs of Chevron and Exxon
5:35
come out and basically call BS saying,
5:37
hey, these prices are artificially manufactured.
5:41
What we're looking at looks like the prices should increase throughout the summer,
5:45
maybe getting back to the $150 to $160 per barrel range.
5:50
And I mean, I was following WTI this morning.
5:52
It looks like it popped above 91 from 85 over the weekend.
5:56
I wouldn't be surprised if that's the market digesting to CEOs
6:00
at two of the largest major oil producers in the world calling BS on this.
6:05
Yeah.
6:06
Yeah. The DJ in me looks at this chart and wants to call a lower high there.
6:10
But I won't I won't make any bets to that effect.
6:14
But yeah, look, this is obviously, you know, we talked about it for the last like three or four months.
6:17
Like this is kind of the the crux of the whole thing. Right.
6:20
is who blinks first, who can, you know, maintain enough stability in core input prices to their economies to not have to back off and to maintain leverage in this whole U.S. and China, you know, via Iran type of standoff that we're looking at.
6:37
And it's TBD, right?
6:38
The Achilles heel over in the U.S. is that this has, when this price gets out of hand,
6:44
that has direct and meaningful impacts, not just for voters who can ultimately in November
6:48
potentially constrain Trump's agenda, but also more significantly and more immediately for bond
6:53
yields, which flows through everything else. So in a hyper-financialized over-financialized
6:58
economy, we've seen a couple of times that it seems like 4-5, 4-6 on the 10-year is maybe the
7:03
place where you need to, where Treasury or somebody needs to step in and maybe Trump needs to fire off
7:08
a positive tweet to keep the move volatility index at bay. We'll see if we need another one
7:15
of those in a little while. But yeah, this is, without being able to make any clear calls,
7:19
this is obviously the crux that everybody's got to focus on here in the next couple months.
7:23
Yeah. I think what is more clear, at least to me, and it'd be interesting to get your
7:28
perspective on this, is where it's easier to tell the signals in the AI play right now. The numbers
7:34
coming out of this sector are absolutely mind-boggling.
7:38
And you have it highlighted here.
7:39
The Micron hit a trillion-dollar market cap for the first time.
7:42
As stock surges 19%, and then Dell stock skyrocketed 32%
7:46
for its best day ever as AI server revenue soars.
7:50
And then I think on top of that,
7:52
Dell released their first hydro-cooled GPU rack
7:57
in conjunction with CoreWeave.
7:59
And that was announced at the end of last week as well.
8:01
So it seems like the infrastructure build out is happening.
8:04
It's real.
8:05
I know we've been talking behind the scenes using the tools.
8:08
They're real.
8:09
They're an incredible productivity gain for teams that know how to utilize them.
8:14
And I think that's the most important thing to highlight here, that know how to utilize them, particularly in a cost efficient way.
8:19
And again, going back to what we said earlier,
8:22
we're in this very interesting time
8:24
where you have this geopolitical strife,
8:26
you have this K-shaped economy,
8:27
and then you have this behemoth
8:29
of an emerging market theme
8:32
and what will be a part of human society moving forward,
8:36
which is this AI build out on the infrastructure side and then the utilization on the software side that is happening at an insane pace Yeah The funny thing here about all this is like you know
8:50
we had Intel, we had Cisco both, you know, up on a stick, blowout earnings, making new all-time
8:55
highs. Now you've got Micron, you've got Dell. Like we're running it back with like the late
9:00
90s stalwarts that really defined the original tech boom and tech bubble. The interesting thing
9:05
though, is like for, for anybody out there who wants to just make kind of a lazy comparison and
9:09
say, well, this is obviously just kind of running back, you know, that exact same trend and that
9:13
exact same set of themes, you know, go look at a, go look at a Cisco PE chart and in, into,
9:18
into 2000, right. From late 90s to 2000, like we're talking like 70, 80, ultimately up to,
9:24
I believe like 150 X earnings forward, forward earnings. So not even established earnings,
9:27
like looking forward, Wall Street consensus earnings, you know, Nvidia right now is trading
9:31
at like 21 times forward. And that's on numbers that are definitely like way too low. Now you can
9:35
argue like, yeah, maybe everyone knows that they're way too low and that's, that's priced in
9:38
to buy side consensus already. Okay, fine. But like we are, my point is like, we are in a very
9:43
different environment and it can get, it can get a lot sillier, right? Based on historical,
9:48
historical trends and precedents. And, but I think what you're seeing right now is you see this,
9:51
this chart on the bottom, like you are actually seeing like meaningful acceleration in reported
9:56
earnings. Now that's definitely a function of running it hot. It's like, you know, on an
10:00
inflation adjusted basis, is it as good as it looks like? No, probably not. But that's the game
10:04
right now to, to keep the, to keep the, the wheel spinning and to keep this working.
10:09
Um, you know, the administration really needs, uh, S and P earnings to, to rip.
10:14
And thus far, like you are seeing that.
10:16
So you could argue like, you know, there's been a popular meme on Fentwit in the last
10:19
few weeks, you know, it's not a bubble in the P it's a bubble in the E people are overestimating
10:24
the long-term, you know, earnings potential of these companies for various different reasons.
10:27
But for now, right.
10:29
It's not been primarily other than Intel Intel's definitely had, you know, it's trading like
10:33
120 X earnings.
10:33
Like a lot of these stalwarts right now are trading at, you know, justifiable, like theoretically, like squint.
10:40
And you can kind of see it multiples, at least on earnings that are like clearly accelerating. Right.
10:44
So this is a real story thus far. I think it's probably way too lazy to write it off as just circular financing entirely.
10:51
You know, as you said, like we're using the tools like we see at the utilities there in a way that definitely like the utilities there, the infrastructure is there in a way that it was not in 1999.
10:59
So for now, that analog doesn't really hold. And the question is like, can this continue and persist while oil sits where it is and while energy and input prices sit where they are? And can the U.S. leverage its relative strength on like the LNG side to continue this power build out that's necessary to maintain all this?
11:19
Or is this all going to get short-circuited by an ongoing strife in the Middle East?
11:25
And unclear, but this is clearly a very strong force pulling in one direction on the U.S. side.
11:31
You're on mute, Marty. Marty, you're on mute.
11:33
Sorry. I was saying even if the energy markets do perturb the infrastructure build out, I think it will be temporary.
11:39
Again, like you said, like I said, the utility of these tools is there.
11:45
It's very clear. And we're only in the warm-up stage of this. I mean, the eugentic economy just
11:51
became a thing at the beginning of this year. I mean, I think you have some charts that will
11:55
reference, but if you look at token usage growth, it's going hockey stick, and that will only
12:00
continue to go parabolic, especially if robotics actually come to market and become a thing,
12:06
which I think, I mean, you can make the argument that the robo-taxis and Teslas and Waymos are
12:12
already a form of that robotics and if you if you think about humanoid robots and robots that will
12:17
be used in manufacturing capacity like we're at the very early stages of token utilization and
12:23
consumption they're gonna they're gonna hit numbers that that we can't even fathom right now
12:28
and then on top of that i think to your point about valuation i think a lot of people were
12:33
throwing water on the spacex sort of valuation of 1.5 trillion looking at their their s1 and
12:40
actually just record an episode with john tinsman which should drop 20 minutes from now but i think
12:45
one thing that he highlighted that a lot of people are overlooking with the spacex numbers that were
12:50
that were disclosed is that deal with anthropic that they did for leasing out colossus which i
12:56
think took them anywhere from seven to ten billion dollars to to build and i think that's a uh sort
13:02
of a it might have been even cheaper than that and they're leasing out that compute for 1.6 or 1.9
13:09
billion a month to Anthropic for the next three years. The multiple in that Colossus build out
13:13
alone is going to be massive, and they're building Colossus II, which is going to be a gigawatt.
13:18
Obviously, again, going back to the robotics thing, hasn't really materialized in a way that makes it
13:23
obvious to people, but you can easily squint and see that becoming a real thing, and to the point
13:29
that you were making, justifying some of these valuations with SpaceX specifically, but we have
13:34
here next. I mean, staying on this theme, Anthropic just raised 65 bill Series H at a 965
13:42
billion post-money valuation. OpenAI is beginning to, their models are beginning to solve and
13:47
disprove central conjecture and discrete geometry. Again, the utilization, the productivity of these
13:54
models is being proven out. And then on top of this, I believe Anthropic had its first profitable
13:59
quarter earlier this year too. So the sort of meme of they're just spending money to win the race,
14:05
they're not going to make any money on the back end is beginning to dissipate as well.
14:09
Yeah. Look, I forgot to include that headline here, but I think that's a huge one too,
14:13
for, you know, just starting to see data points for proving out the economics. But I totally
14:18
agree with you. And I think, you know, even if there's a lot of talk about scaling laws and,
14:22
you know, how far can they go? And, you know, if you throw X amount of compute on a log log basis
14:26
at the problem? Like, do you get a commensurate increase on the curve that has been established
14:32
in capabilities and all these different metrics? And like, I think, you know, that's an important
14:37
conversation. And definitely like if suddenly scaling laws broke, like a lot of these stocks
14:40
would have a problem for a while. But the reality is like, if everything's stopped tomorrow in terms
14:46
of improvements and capabilities, like I think we're at like 0.01% of the actual utility that
14:53
can be unlocked from what we have today.
14:55
Like I look at my workflows and you know, everyone, anyone who follows you knows that
14:59
you've been kind of on the cutting edge of, of remaking your business and TFTC with a
15:03
lot of these tools.
15:04
And I think you would probably say like, you can think of like, you know, a hundred
15:08
things you'd like to do still better with them.
15:10
I'm like even farther behind you.
15:11
You know, I've really started in the last couple of months to, to ramp up more and
15:14
rethink my workflows.
15:16
But I can, you know, sitting here today, like I can imagine like another hundred things
15:20
that I need to build and that I could automate better.
15:22
And, you know, we don't even have like a massive business at 1031.
15:26
Like think through, like apply that to all of the corporations that are out there that
15:30
have a ton of inefficiency, but also a ton of creativity in a lot of their workforce.
15:34
Like if everything stopped today in terms of advancement, we still have yet to, we have
15:38
like multiple decades of unlocking actual utility and productivity, you know, beyond
15:43
what we have today out of the tools that we have just today.
15:45
So, you know, fully co-sign, like there's a big element of this that is like clearly
15:50
being proven out right now and that is definitively not fake.
15:52
And if at all, like if the curves stop tomorrow, like we've got a long way to go before we fully kind of harvest what's available today.
15:58
Yeah. Which brings us to the other side of the coin, which is you have all this incredible growth, productivity, efficiency being brought to market.
16:06
But then that is not being felt by everybody.
16:10
Again, leaning into the K-shaped economy meme for looking at delinquency rates, 90-plus day delinquency rates on credit cards, student loan debt, auto loans, mortgages, all beginning to creep up.
16:21
Credit cards getting to 2008 levels.
16:25
If you look at savings rates, collapsing right now, lowest since April 2008.
16:29
And so you have this, again, this juxtaposition of this incredible wave of productivity, sort of infrastructure investment now beginning to be profitability in the AI sector.
16:41
And then the common man doesn't seem to be able to capture that value and put it to work for themselves.
16:50
And they're obviously struggling as inflation begins to rear its head again.
16:55
And the prospect of the jobs market becomes a bit more tumultuous for your average person.
17:03
Yeah.
17:03
I mean, here's your case shape.
17:05
And I could have picked a bunch of other charts that would have kind of shown the same thing.
17:08
And it's a really interesting time because we've highlighted this on prior episodes and in prior newsletters.
17:13
But there like a there kind of a damned if you do damned if you don impact here or a dynamic here where it like you know what if what if we wrong about what if what if the U S is wrong and you know the AGI pill people are wrong about where this is all going and there all this you know massive capital expenditure and increasingly debt being taken out
17:32
Not a massive amount yet, but you can see that increasing and, you know, resources being pumped into the data center build out and the AI build out on the assumption that this is going to be this is the future of the economy.
17:42
And if for some reason that, you know, we're off by an order of magnitude and a lot of that goes goes belly up or goes upside down, you're going to have a major problem.
17:50
like immediately, right? In tax receipts from bottoming out equity valuations, you'll have
17:57
public markets collapsing, you'll have issues in the credit complex. Like that's a really bad
18:02
scenario already. And it's going to get worse if more and more resources get pumped into this thing
18:07
over the next few years, which is going to happen, right? So if you're wrong, that's not good as the
18:10
U.S. What if you're right, right? Like what if the AGI-pilled people, the Darios and the Sams of
18:16
the world, which by the way, some free advice guys, if you're listening, you're definitely not,
18:20
if you're listening, please stop going on podcasts, like, or get a PR person who can
18:24
help you in some way, massage this narrative better. But in any case, like what if that
18:27
narrative is right? And you know, work is work is going away. We're going to like 30% unemployment
18:31
before we finally get to, you know, AI utopia where everything's abundant and we have the
18:34
star Trek future. And you've already got a huge amount of the economy looking like this, right?
18:39
You've got people with delinquent student loans and increasingly auto loans and big credit card
18:43
debt, you know, highest since 08. Mortgages are okay now, but like what happens when like 20%
18:49
of the white collar workforce, you know, in middle management, like it's laid off, like our mortgage
18:52
is going to look great in that case, like, you know, probably not. So if you're right, where does
18:56
that leave us in terms of the social reaction function to all of this? And this is increasingly
19:02
getting discussed on various sides that we can talk about. But, you know, this is a big cognitive
19:09
dissonance and tension that is going to bear monitoring, I think, over the coming year.
19:13
Yeah. To your point about the narrative side of things, they really need to figure this out. And it is, I mean, we'll just keep going down the chart here because I think what, I mean, I'll skip this for now unless you want to talk about it because I think the Mamdani stuff is probably more pertinent to this particular point of conversation.
19:36
but I mean, you highlighted this juxtaposition.
19:39
And I think to your point,
19:40
I think Brad Gertzner recognizes this narrative problem.
19:44
And he was on TBPN last week,
19:46
beginning to sort of try to counteract
19:49
the negative PR wins that are coming AI's way
19:52
due to the energy usage,
19:55
the specter of mass job losses because of the technology.
19:59
And he's thinking about ways to work
20:01
with the Trump administration to create an initiative
20:05
that would, quote-unquote, deliver a very tangible, profound dividend
20:09
to communities where they're building data centers.
20:11
And then that's juxtaposed to news from last week of Mayor Mamdani
20:16
from New York City pledging an aggressive crackdown on bad landlords,
20:20
saying that New York City will work to transfer ownership of tenants.
20:23
So talking about overt private property seizure in New York
20:27
coming after the bad landlords.
20:31
and you can see if that's becoming popular in the largest city in the United States,
20:38
the financial hub of the world, it's very easy to project that forward
20:42
and have people begin to demand similar actions against AI hyperscalers
20:48
and anybody building out that infrastructure.
20:51
Yeah, for sure.
20:51
Look, the Mamdani thing, it's not obviously directly about AI,
20:55
but people hate landlords in general,
20:59
And like that feeling can can be and often is like weaponized by leftists and communists to to get certain outcomes.
21:06
But like people really not not not just like, you know, you're like tie dye hair, like liberal arts grad who came out of like Barnard or something.
21:14
You know, the not to not to over stereotype, but you're you're you're you're mom, Donnie base.
21:19
Right. That you would expect. Like, obviously, a lot of emotions can be weaponized in that base.
21:25
But like everyone hates data centers basically right now.
21:28
And you can argue, like, I think there's interesting evidence that that's largely like an astroturf campaign that's being encouraged by certain foreign actors.
21:36
We don't have to get into that.
21:37
But, you know, it's pretty clear, like, there's an increasing tide of everyone from your Barnard grad to, like, your, you know, blue collar mechanic to, like, your random white collar worker in, you know, random second tier city, right?
21:49
Like, everyone hates data centers increasingly.
21:52
And so I think it's interesting that you see Gershner kind of floating this idea that he's going to work with tech leaders in the White House to make sure everyone gets taken care of based on the growth of these data centers and pay a dividend.
22:04
You know, I love the capitalist framing of the equity based framing of this.
22:09
What is basically just like, you know, a welfare payment based on this.
22:13
You can see him trying to get out in front of it right with his own with his own spin.
22:17
And, you know, the question to me is like, if you're doing that, like what's going to be more popular?
22:21
Like, well, here's like a well-structured, you know, dividend plan based on the growth of data centers.
22:27
Or is it going to be more popular to have a demagogue who says like, you know what, we'll just take your stuff.
22:31
Right. Like, that's like that's increasingly in the Overton window now.
22:35
That's a conversation a lot more people are going to have and going to want to have.
22:38
And that has real implications for, as I said, like the social fabric and also the monetary and fiscal reaction function to potentially, you know,
22:46
if you have discontinuous and sudden like nonlinear jumps in unemployment,
22:50
again, with the K-shaped backdrop we already have,
22:53
like what's the response to that ultimately going to be?
22:56
Like there's a knee-jerk response, whether, regardless of like,
22:59
whether it's, you know, Trump in office or AOC,
23:02
whether it wears a MAGA hat or a Che Guevara t-shirt, right?
23:04
Like there's one kind of common reaction function,
23:07
which is in one way or another to print the money,
23:10
to write the checks, to write the stimmies.
23:12
Maybe you do that by monetizing excess,
23:14
excess surpluses that have been saved overseas by trade surplus countries that we're friendly with,
23:18
you know, as it seems like we're trying to do right now, whatever. But this kind of
23:23
rhetoric like leads ultimately in one direction if it gets really popular.
23:27
Yeah. And this is, it's funny. I've been talking to Tom Mazzaro from Cathedral about this because
23:33
we actually did some research on this as it pertains to Bitcoin mining back in the day when
23:38
we were having problems. But I think Bitcoin miners have done a good job of sort of figuring
23:41
out the narrative and how to position things and AI data center builders could learn a lot from
23:48
the hard work that we put in over the decade. But it was funny to see Gersner float this idea,
23:54
because Tom's actually been publicly talking about an Alaskan oil permanent fund structure for these
24:02
AI companies and local communities. If you have a data center come in, and to your point, it'd be
24:06
be very similar to a dividend. But if they are as profitable, like if you think of like Colossus
24:11
in Memphis and how profitable that's going to be alone, if you were to set up like a permanent fund
24:16
for the local county, maybe the state, the city, whatever it may be, and just throw some dividend
24:22
into that and you do that over time, I think that could be a good way to curb the blowback,
24:28
the narrative blowback that you get. And then on top of that, I think it's a lot of education
24:31
because I do think that all this is massively beneficial
24:36
for those who know how to utilize the tools on the back end.
24:40
But on the front end, I think the energy infrastructure build out
24:42
is completely necessary.
24:45
Take AI out of the equation.
24:47
Like our grid systems need a revamp and a bolstering,
24:50
whether or not AI was a thing.
24:53
And so I think reinvestment in this energy infrastructure
24:55
and hopefully investment to a point where we just have abundant,
25:00
rather cheap energy because the case for investing in generation assets and interconnection assets
25:06
and transmission assets is much easier to make because the revenue is much more reliable.
25:13
This is going to be overall good for humanity. And this is, again, going back to Dario and Sam,
25:19
like stop going on podcasts, like let people who can actually pitch a good vision of the world
25:24
to do the narrative crafting for you.
25:26
Because there is an actual, legitimate, good narrative
25:30
to be spun here from the energy generation side.
25:33
It's just the market and the average person
25:35
has no idea how these energy markets work in the first place.
25:38
Yeah, for sure.
25:39
I mean, it was, to your point, it was a narrative that worked,
25:41
a narrative pivot that I think worked well
25:42
for Bitcoin mining several years ago.
25:44
And I think that one of the most powerful charts
25:46
people can see is like China's construction
25:48
of new megawatts of grid production relative to the US.
25:52
I think it's a very important thing to think about
25:54
the economy.
25:56
I think it's a very important thing to think about
25:58
the economy.
26:00
Ours has effectively flatlined for I don't even know how long,
26:02
20 years.
26:04
And China is up to the right constantly And I think people can see that intuitively grok that not sustainable And people can understand there no such thing as a rich And so you know moving more and more of the narrative to exactly that point I think would be very helpful and is not even just a narrative win like it is legitimately true but you know we see if
26:17
if that kind of framing can win out, you know, AI data centers, bad,
26:21
where we're going to move to seize the means of digital production.
26:25
New York will find out the hard way. Hopefully we can avoid it. I think,
26:28
I think the, I don't know,
26:31
the branding of communism and socialism is not very good right now.
26:35
I mean, you had Hassan, whatever, Piker get chased away from.
26:40
I think he was chased away by ice riders.
26:42
They're like, get out of here last night.
26:44
But I digress.
26:46
We're going to end it on this.
26:47
Again, I told you we would talk about Bitcoin fundamentals
26:50
from a narrative, or not a narrative, excuse me,
26:53
from a sort of value, fundamental value prop side,
26:56
and then on the technical side.
26:58
And again, I think we missed last week,
27:01
So we weren't able to talk about Hermu's safe.
27:03
And then on top of that, we've got incredible developments happening on the privacy and medium of exchange payments aspect of Bitcoin from Cali and the Cashew Protocol project.
27:14
Yeah.
27:14
I mean, I think this is, you know, we like to end on Bitcoin, but I thought it was a really poetic juxtaposition of headlines.
27:20
I think we hit Hermu's safe a little bit on the last episode when it like just dropped that morning when we talked about it.
27:25
But we won't have to belabor it again.
27:27
I'm sure people have heard of it at this point.
27:28
But you've got Iran floating this idea of an insurance operation for maritime cargo going through the Strait of Hormuz, administered by Iran with fees paid in Bitcoin, settled on Bitcoin blockchain.
27:41
This is one potential validation of the long-running Bitcoin thesis that it's money for enemies.
27:49
And you've got a heavily sanctioned country trying to launch what is really, frankly, like kind of a protection racket.
27:54
Like, I don't really expect it to get off the ground, but trying to launch this with direct integration to Bitcoin, because that's the only thing that's appropriate for this very adversarial payment situation for a sanctioned country, is a perfect validation that sovereigns care, sovereigns are paying attention.
28:10
You know, the biggest players in the world understand some of the key properties we've been talking about related to Bitcoin for a long time.
28:16
This is not an encouragement from TFTC or 1031 for anyone to go and use Bitcoin to avoid U.S. sanctions.
28:23
Just an observation of what that might mean.
28:26
And again, I don't expect it to actually get off the ground in any meaningful way because just using Bitcoin is not going to stop someone from being sanctioned and from feeling the pain of U.S. sanctions for participating with Iran.
28:37
But interesting data point on the sovereign side.
28:39
On the technical privacy kind of 100 sat scale, like the Hormuz safe is relevant for the 1,000 plus Bitcoin scale.
28:49
This is relevant for like the 100 sat scale, the average daily user.
28:52
Kali's been, if you're not familiar with him, you should follow him on Twitter, Nostra everywhere, a real monster in Bitcoin and Bitcoin oriented development.
29:01
And has been working for a while on using secure enclaves to facilitate cash amounts.
29:07
We probably don't have time to get deeply into Cashew on the show right now, but basically an implementation of Chami Necash that has potential promise to make Bitcoin much more tractable as a medium of exchange for small payments or even increasingly large payments as well.
29:25
Very simple, very dumb, easy to play with, easy to develop on, makes certain tradeoffs relative to using Bitcoin itself on the blockchain, but for potentially significant gains in speed, ease of integration, and various other benefits.
29:41
I'll hand it off to you to talk about this particular development, but the high-level theme that I think this highlights is if Valley's right and this is moving in a certain direction, you could have the potential here to solve one of the major trade-offs of using Chaminikash, which is the operator of a Mint can potentially inflate supply and effectively rug participants in the Mint without much pushback from the users or a way to govern that.
30:07
this could potentially be a solve for that. And it just pushes you one step closer to
30:10
maybe making this very viable at scale. And so I just think it's interesting that like,
30:15
as price, you know, as price flattens, flat lines, it's a crappy environment out there.
30:22
We, you know, everyone's bored, everyone's going away and buying AI bottleneck stocks.
30:26
You're seeing meaningful validation at both the sovereign level and the technical level
30:29
for what we've been talking about in Bitcoin. And the reasons that we're here in the first place,
30:35
Right. Like even as the bear market drags on, like you're seeing ongoing validation of everything that, you know, that we care about here.
30:42
Yeah, completely agree. Matt and I talked about it on Friday.
30:45
Not this specifically, but the fact that sentiment, I think I've been a Bitcoin since 2013.
30:49
I think this sentiment is the worst since 2015.
30:52
And historically, that is the best time to be allocating to Bitcoin, not financial advice.
30:58
Just highlighting some pattern recognition from my days in the trenches over the years.
31:03
but as it pertains to what Kali is referencing here
31:06
for the Cachew Protocol,
31:08
I think the trusted execution environments are slept on.
31:11
We have a company in the portfolio, Maple AI,
31:15
that we backed because of their utilization
31:17
of trusted execution environments.
31:19
And essentially for those who are unaware,
31:21
these environments allow you to run code in secure enclaves.
31:26
And so your phone, your iPhone, you're doing face ID.
31:30
Basically, people think that a lot of people just assume
31:32
that you're sending your biometric data to an iCloud server,
31:35
but no, your face is a private key
31:39
that's held on the secure enclave in your phone.
31:41
You can run software on that.
31:43
Not only that, but you can interact with secure enclaves
31:45
in the cloud as well.
31:47
And what these secure enclaves allow you to do
31:49
is to run compute in a way that the person
31:53
actually running the computer has no idea what's going on.
31:56
It is a trusted execution environment.
31:59
And what Callie is referencing here,
32:01
I'm not going to pretend to know exactly what he's built.
32:04
And I think he's been a bit sort of opaque about what's actually happening
32:09
and just sort of alluding to what they're doing.
32:11
But what I assume is that you were able to set up a Mint within a secure enclave
32:16
using one of these trusted execution environments.
32:19
And you can sign blinded messages for the Mint users,
32:26
or blinded signatures, excuse me, to facilitate payments.
32:29
And to John's point, if you can do like a reproducible build to prove that the operator of the Mint can actually control it at the end of the day, can inflate supply, can prevent people from spending, that is going to be massive.
32:45
And I think the progress that we've seen with TEE specifically is, again, slept on, but something that I would highlight for anybody listening to pay attention to moving forward.
32:59
particularly, I mean, we backed Maple originally, their Mutiny wallet pivoted to Maple, but we were
33:05
very comfortable with the pivot to Maple and the focus on AI over non-custodial Bitcoin Lightning
33:12
wallets using these trusted execution environments. Because I think as many people become more aware
33:18
of how much data you're going to be sharing with the hyperscalers, the demand for the ability to do
33:25
AI compute and execute a trusted execution environment that a hyperscaler doesn't have
33:31
access to the information, the prompts or the outputs that you're putting in and getting out.
33:37
The demand for products like that is going to increase significantly. I think actually it will
33:41
be mandated for certain applications like legal, health, whatever it may be. And so it's really
33:48
cool to see this being reintroduced to Bitcoin. Mutiny really led the way there many years ago
33:54
with the non-custodial Lightning Wallets using these secure enclaves.
33:57
And it looks like Cashew is leaning into it as well.
34:00
And so this is going to create a very secure and private Bitcoin infrastructure,
34:06
which is great to see.
34:07
Yep, absolutely.
34:08
It's a good time to be paying attention to what really matters in Bitcoin.
34:12
And it's exactly what you'd want to see.
34:14
When the price isn't going your way,
34:16
the question is what's happening under the hood with fundamentals.
34:19
And I think we're only getting positive fundamentals year on year here.
34:24
Yeah.
34:24
that's great hey wild times out there i'm going into summer i don't think there's going to be
34:29
summer doldrums this year i have a hard time to believe that it's going to be a very doldrum filled
34:34
summer i think things are just heating up proverbially pun intended john great rep as
34:40
always we'll be back next week