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[upbeat music] What is going on, y'all? Welcome back to Blockspace Live. We have got a fun lineup for you today.

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We've got three interviews, and, uh, venturing into, uh, some new sectors today because we're gonna be talking about Spirit Airlines with handle @houseofyogi.

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And if you're wondering why Spirit went bankrupt and why they weren't allowed to sell to another airline, that segment's for you.

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But we also have Lukasz Krejci of Brains on, the CTO of Brains, to talk about the new Straitum B2 working group that we covered last week at Blockspace. We also have PO Vincenzo on to talk about what else but strategy.

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Is it going to make you rich? We don't know, but PO has some opinions.

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For news today, Mara and ViaBTC are signaling for BIP 54, which is the great consensus cleanup, but they might be a little bit out of turn because we actually don't have any sort of activation client for this soft work yet.

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And finally, we will wrap up the show with some earnings updates from Mara and Nebius.

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Blockspace goes live Monday, Wednesday, Friday at noon Eastern, featuring quick hits on the latest in Bitcoin, mining, AI, and emerging tech, and apparently Spirit Airlines now.

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[laughs] Make sure to hit subscribe if you are watching on YouTube, hit that bell to get the notification pushed to your phone.

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And after we go live, this turns into a podcast on all of the places you get podcasts, Spotify, Apple, RSS. And if you like what you hear here, you will love our newsletter, newsletter.blockspacemedia.com.

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This show is brought to you by CleanSpark, ticker CLSK on Nasdaq. More on them later in the show. Let's kick it off. While people fill in, Colin, let's get a little technical.

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We're gonna bore you, and if you make it through this, you can finally get to the good stuff. Basically, Bitcoin may actually get an upgrade. That's the headline.

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And quietly in the background, things have been happening. What, Charlie, has been happening?

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Well, there is this proposal called the Great Consensus Cleanup, which I'll explain here in a second, and various mining pools have started not signaling, as you say, but rather producing compliant blocks for this proposal.

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What does that mean? I will not get too deep into it, but basically, how does an upgrade on Bitcoin happen? Well, often- Depends on who you ask, Charlie. Depends on who you ask. Nobody-- I mean, how does a baby get made?

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You're not old enough to know yet. So same thing with, with, with, with, with upgrade, changes to Bitcoin. So basically,

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um, what has, what has happened is there are developers who have a proposal, and they've got a client which implements the proposal, and it's very close to being done.

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And what has to happen, though, is now the network has to start enforcing it. So historically, um, we've seen that there is a way you can include a clear signal in the block if you're a miner.

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You can include a, a signal in the block that you produce that says, "We w- we want to enforce this new upgrade."

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This is how the network typically, like, everybody kinda, you know, uh, almost like, uh, a little b- little bit like playing chicken where enough people, you know, start driving on one side of the road, and you all know that, you know, we're all gonna do this together, and then you got it, and it turns on, it goes live.

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But, but basically that's not happening, so there's not this, like, clear signal happening. In the past two months, we've seen originally Me- Mara pool, um, produce BIP 54-compliant blocks.

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Well, in the past twenty-four hours, the next pool, ViaBTC, has started producing BIP 54-compliant blocks. What does that mean?

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Well, um, uh, instead of them saying, "We want to enforce this," they, uh, they want to demonstrate that they will not accidentally violate the new soft fork.

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So they are saying that we're gonna produce a block and show you that, um, in the blocks that we produce going forward, that if this soft fork were to activate, then our blocks would fit the mold.

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That's like the layperson analogy here. Um, I can explain what it does, but I might throw it to you to ask a question or try and manage it.

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Well, I mean, I just wanna highlight, this is really kind of, uh, I don't wanna say new because I'm not sure if there's a precedent for this, but typically the way that

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activation is handled, or rather we'll just use Taproot as an example. So Taproot was being, being pushed through, developers agreed on it.

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Uh, there was an activation client out, and they ended up using a modified version of BIP9, which is a way to show that a majority or r- a, a, you know, the lion's share, bulk, vast majority of Bitcoin miners are signaling for an upgrade.

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Usually, that threshold for BIP9 is ninety-five percent have to signal.

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They basically just add a s- they add a number into the block header, arbitrary data to show that they support it, and they, uh, modified it to ninety percent to make sure that there was no, you know, miner veto where miners can basically not signal for something and then the entire activation process is stalled.

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So typically you don't get this kind of support from mining pools until there's an actual buttoned-up soft fork out, or rather the, the s- the soft fork and the specs for the client have been, you know, looked over, combed over, and there's con- rough consensus on pushing that upgrade through.

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And I'm not gonna say Mara and ViaBTC are skipping the queue here 'cause like you said, Charlie, they're just showing that they are compliant with this Great Consensus Cleanup soft fork should it come to pass.

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But typically miners don't really make actions like this until the development community has basically said, "Here's what we wanna do."

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And so it's, it's very notable, and for me it's also interesting considering Mara-Is, I mean, they're, they're the largest public miner by hash rate. They have over 70 exahashes.

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But th- they're, they're gunning to go into AI and HPC services.

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And it's interesting 'cause we've seen this from them coming closely off the heels of them joining the Stratum V2 working group, which we'll be talking about in the next section with Lukas.

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So there's almost this one foot in the pool still with Bitcoin mining, even as they look for other forms of compute to monetize. Yep. A- exactly.

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And, um, so b- I would just say this: if I, if you kinda want my, like, temperature check, like is Bitcoin gonna get an upgrade at all?

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Um, this, my, my subjective evaluation right now is that it looks like we- this is the most material advancement we've seen towards any soft fork, any proposal, any upgrade, um, in like the modern era of Bitcoin.

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So this is, this, uh, you know, the, the stage is being set, um, the playbill has not yet been announced. It's that kinda thing.

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So I'll also emphasize, um, that the author or the person who's spearheading this, this proposal has said that they are not advocating, they're not asking, uh, for activation yet.

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But I could totally see a scenario, Colin, where enough mining pools and hash power, so this w- you know, Via and Mara bring us, like, 15%.

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Like, or I could totally see a scenario where enough pools are, like, doing this, and then the authors of the proposal, the developers can go, like, "Well, the, the pools, you know, they're not signaling for it, but they're clearly, like, you know, ready."

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They support it, yeah. So then it's nobody actually has to, like, say that they were the ones who started. I could totally see this be as a, be a thing where it's like, oh, it just kind of happened and, um, yeah.

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I mean, that's a good point, especially if Antpool or Foundry signal support, right? Yeah. 'Cause that's 25 to 30% of the hash rate either of them control on a given day.

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I think if either- So if you end up getting that- Yeah, if either of them-...

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that might, that might tip the scales If either of them do it, then I think just everybody just does it, because they're- everybody kinda looks to them.

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If one of the big boys does it, then, um- My, my biggest question is, though, why do they care so much? And, and you could probably answer that more as someone- Yeah...

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who understands what the Great Consistency Cleanup does, and I don't think we necessarily want to fully address that because we would need to actually ask someone from Era and ViaBTC.

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But miners are notorious for being kind of oblivious or, uh, how shall we say- Agnostic... happily ignorant of technical, um, pr- proposals and advancements- Yeah... right?

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Th- th- it's just not something they're thinking about all day. They're trying to figure out how they can procure the cheapest equipment and cheapest power. They're, they're not, usually not thinking about these things.

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Yeah.

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There's typically, like, maybe w- a handful of people at a mining pool, I would say, who are the technical ones who, like, follow this stuff, and then everybody else works on business development, performance, you know, deals with hashers, that kind of thing.

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Um, and then on top of that, um, we have a long history of miners really just not wanting to take, you know, rock the boat. But for this, why, you know, why would this proposal... Could I even talk about what it is?

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I won't, I won't really explain what it does. You can go to blockspace.- It basically-... dot- I'll give it a de- cliff notes. Yeah.

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It, it, it cleans up, Great Consistency Cleanup, it, it cleans up a lot of things that developers have wanted to tidy up for a while,

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and it'll make their lives easier and make Bitcoin run a little bit more smoothly on the- Yeah, there's some edge cases where Bitcoin has attack vectors.

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The, the podcasters who tell you that Bitcoin is perfect are wrong. They're lying to you. Bitcoin has some edge case attack vectors. This proposal cleans up the four big ones.

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Um, there's not really any real pushback to this proposal either. There's a couple really obscure arcane details which are disputed, but largely everyone kind of agrees, yeah, this is a no-brainer.

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We should fix this sometime. And so it's kinda like this is a, this is the one where it's like, okay, this might be it. Um, I think we probably wrap up there.

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If you want to learn more about exactly what this proposal does, I recommend everybody head to blockspace.media, click on Op Next, and there's a presentation by Antoine Ponsen,

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who, um, the guy who's spearheading this proposal, and I would recommend you go and watch that. I think we c- we go to our first guest call. Yeah, I think so.

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We will welcome Lukas Krecji to the stage to talk about the new Stratum V2 working group. Lukas, thank you for joining us. Hello, guys. How are you? How are you doing? Uh, well, how are you doing? Thanks- Doing great...

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for having me. Yeah. Thank you for joining, man. Really, really appreciate it. So I'm gonna go ahead and just start off by giving you a chance to explain to our listeners what this Stratum V2 working group is.

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If you could also include a brief explanation of Stratum V2 in that for those who might not be aware. We covered this news in Blockspace last week. I'll just kinda top of the line give a few bullet points for it.

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Basically, some of the largest pools in Bitcoin are joining this working group to help work on implementations of Stratum V2.

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So what exactly is this working group, and can you just give a quick explanation of Stratum V2 as well? Yeah.

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So first of all, I would like to highlight that, uh, the, the heavy lifting and the main push for Stratum V2 is, uh, now completely in the hands of, uh, like the independent open source community.

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Um, and, uh, I think this is a great way how to, uh, develop a specification for a protocol that aspires to be the next, next big thing in the Bitcoin mining, uh, communication.

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Uh, the, the working group is a collaboration, um, uh, or a collaborative effort, uh, across the whole mining, mining, uh, industry.

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So-In the group, as you said, uh, there are, uh, mining pools and firmware developers like us at Braiins.

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Uh, there are also the, uh, hardware manufacturers and, uh, the open source developers that are all working together. Um, and the overall goal, uh, of this working group is to, uh, pretty much, uh,

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help transitioning from the Stratum V1, which is like already a decade-old, uh, pr- mining protocol, um, uh, to a new modern, uh, standard of, uh, Stratum V2.

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Um, so, um, mm, pretty much historically, um, mm, the, the Stratum V2 was, uh, facing this chicken and egg problem to some extent in terms of adoption that the mining pools were, uh, waiting for the firmware, uh, developers to adopt the Stratum V2, and vice versa, uh, the, the,

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uh, firmware developers were waiting for a pool. And, uh, the group will break this, uh, I believe will break the cycle, and the current effort seems, uh, to be on a good way, uh, to do so. Uh, uh, it's like,

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uh, I, I haven't given the overview of the, of the what, what are the benefits of Stratum V2 yet. Uh, [laughs] I was saving that for the very last, very last bull- bullet point. Um, uh, so, uh,

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what, what is Stratum V2, uh, like in terms of what it, uh, brings to the table? Uh, so, so compared to Stratum V1, which is a plain text, uh, uh, unencrypted protocol, Stratum V2 is a binary protocol.

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So on that term, uh, we'll be seeing, uh, significant, uh, improvements in the network bandwidth, uh, consumption.

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Um, and, uh, Stratum V1 is completely, uh, unencrypted even though, uh, you can, uh, send it, uh, over a, a secure ch- channel. Uh, the Stratum V2 is encrypted by default.

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It is, it is enforcing the encryption so you will not be susceptible, uh, to, uh, man-in-the-middle attacks.

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And, uh, lastly, and the Holy Grail, uh, of, and ultimate goal is to give the power back to the miners through, uh, the miner-built, uh, templates,

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uh, compared to the DATUM protocol, uh, or similar to the DATUM protocol so that, uh, um, Bitcoin mining can be, uh, bit decentralized.

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Um, maybe, uh, um, I'd like to talk a bit about, uh, what do I see as a success, uh, of, of this working group. And from my perspective, there are two points that I'd like to mention.

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One is like the short-term success, which, uh, would look like that a miner, uh, using, uh, a miner running Braiins OS, uh, uh, will be capable of connecting to any major pool utilizing Stratum V2 without any hassle.

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So it's about, uh, the interoperability, uh, over the landscape.

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And in the, in the, what I would argue is like the long-term success of the whole effort is that the Stratum V2 pretty much becomes, uh, the, the default standard to the mining protocol.

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And just one point of clarity for our listeners who might be, uh, a little bit lost on the significance of this.

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[clears throat] So S- so Stratum V1 and Stratum V2, but specifically Stratum V1 because it's the standard right now, is the way that... I- is a protocol that Bitcoin miners use to communicate with pools, and it's...

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The reason that we have it is so that the pools can know which miners are actually contributing valid work to the pool so that they can get payouts proportionally.

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So it's a way for miners to communicate with the pool operators.

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And importantly to your point of one of the big differences about SV1 versus SV2, Stratum V1 does not allow miners to construct their own block templates, but Stratum V2 is built for this functionality.

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Most people don't realize, but when we talk about mi- Bitcoin miners, we're really talking about two different things, and I think most people when they talk about Bitcoin game theory are actually talking about pools now rather than actual miners because the pools construct block templates and choose the transactions for their miners, not the other way around.

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Stratum V2 breaks this mold. Uh, Charlie, you look like you were about to jump in with a question. Yeah. I- I'll let you go ahead...

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I have kind of a, I have kind of a question, which I feel like this goes a little under discussed. We've been talking about SV2 for, like, eight years, I forget.

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But, like, one of the challenges I see is that, and why, maybe why it's taken so long, is, like, there's not a lot of financial incentive for anybody to do SV2, unless I'm wrong, Lukas.

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Like, what are the incentives for pe- for miners and pools to, uh, to adopt SV2? That's a really good question. Uh, and the financial...

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I would, I would argue that financial, uh, incentives are limited per se, of course. Uh, however, security shouldn't be taken lightly. Uh, uh, so, so, uh, the, the whole encryption thing, uh, making, making, uh, the

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mining connection secure, uh, will actually lead to, uh, less hash rate stolen through man-in-the-middle attacks. Of course, that's, that's one thing.

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The other thing is if you're, uh, you are, of course, paying for your, uh, your ISP for your internet connection, and the more data you consume, uh, mm-Uh, the more you pay.

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So there is financial incentive on actually optimizing on how much data you consume.

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Of course, I wouldn't necessarily say that Stratum V2, uh, that's the main selling point because if you really want to save on your data and are willing to lose some of the granularity of the mining, you will use aggregate, uh, like a aggregating proxy for that.

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Um, pretty much turning a, a lot of miners virtually into, uh, uh, like, a small number of super powerful miners, uh, uh, from the, from the point of the pool.

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So those would be like the straight, uh, incentives for the miners why to adopt Stratum V2.

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So Lukas, I wanna turn our attention to some of the companies involved in this and exactly what they'll be doing as a part of this working group. So

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the working group was established in 2022 with Spiral, which is a division of Block. It's kind of their Bitcoin incubator. Uh, that's Jack Dorsey's Block, formerly Square.

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Now the full Block organization has joined on, and they are joined by the MERA Foundation, which is a kind of Bitcoin nonprofit arm.

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I don't know if it's nonprofit, but it's kind of like this, this, this kind of rah-rah Bitcoin arm of MERA. We've got Antpool, Foundry, F2pool, Spider Pool and Demand. I mean, between MERA, Antpool and Foundry and F2pool

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a- and Spider Pool, I haven't looked at the stats, but, but you're getting close to like 70% of Bitcoin's hash rate. Y- it's, so it's, it's quite a lot. And so I'm just curious, kind of a two-part question.

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Number one, how exactly will these teams coordinate when they are testing Stratum V2?

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And also, I wanna hit on this topic of fact that Stratum V2 is open source, and there's actually some wiggle room that these companies can have in how they modify it for their own use cases.

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And I'm curious if you have any input as to what some of those modifications could be, um, if you've seen anything from these companies for how they're tuning SV2 for their, uh, use cases.

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You know, w- what exactly do different implemen- implementations of SV2 look like in practice with this working group? Yeah.

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[clears throat] So, uh, when it comes to how the companies collaborate, uh, the whole point of the working group is to actually, um, come up with the specification that is, uh, that will be, uh, rigorous enough so that, uh, uh, different implementation of the Stratum V2 can be compatible, uh, a- among each other.

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Uh, the,

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uh, the community is organizing, uh, regular calls where, uh, all the participants can pretty much share, uh, their experience with, uh, with all the quirks, uh, and, uh, details they run into when, when pretty much, uh, implementing the Stratum V2.

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Uh, as, um, uh, and the open source community is, uh, taking this feedback and transforming it into improvements for the specification. So the whole collaboration pretty much, um,

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is, is linked to, to, uh, ultimately coming up with, uh, the ultimate specification, uh, that will enable, uh, all the participants to be interoperable, uh, along the way.

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Uh, when it comes to, when it comes to, uh, different differences in implementations, um, uh, there, there shouldn't be, at least in the mining part, there shouldn't be a lot of wiggle room.

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And that's the, that's the part, that's the, that's the thing with the current, uh, phase, uh, we're in.

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Pretty much we want to clarify all the edge cases so, uh, that we can have something, uh, to follow on, uh, like a really good, uh, public documentation of how to implement Stratum V2.

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Um, I'm not sure where I completely covered the question right now. [laughs] Uh, oh, you're, you're mute, Colin. Oh, sorry.

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I, that does answer the question 'cause I was wondering, you know, how much, uh, how many changes or, uh, how drastic of changes could these pools actually make to SV2? So I think you addressed it, but, um,

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J- Charlie's got a good finger to end- I've got, I've got a, I've got a, I've got a, the spiciest question yet. [laughs] Okay. All right. Ocean put out Datum. They've had it out for I guess a couple years now.

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Um, Datum is often like framed as like a better version of SV2, and frankly, I can't actually tell what the material difference is. Um,

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how do you describe, how do you explain what, what's different about SV2 and Datum? And then like, is there really that big of a difference?

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So first of all, I think it is awesome that there are, uh, right now at least two protocols that, uh, are sharing the same, the same goal of, uh, giving back the template construction, uh, to the hands of miners.

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That, that's, that's just awesome. Uh, but there are differences in between Stratum V2 and Datum, um, like the, the, the block template, the block template, uh, creation is the whole point of Datum.

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That, that is the single thing, uh, that, uh, or the main thing that, uh, the Datum protocol is trying to, uh, resolve.

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Uh, when it comes to communication in between the Datum gateway, which is, which is the part of, of the, uh, setup that you need to take, uh, the, the, um, the Datum is still, the Datum gateway is still communicating on top of SV1 with the miners itself.

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So it is not addressing the, the whole-Or all the issues that Stratum V2 is trying to address. It is trying to resolve, in really clever way, uh, I have to admit that, uh, the, the template, uh, creation problem.

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But when it comes to other problems like the, uh, enforced encryption, uh, or, um, uh, or uh, binary format, that is something that Stratum V2 is trying to resolve.

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It is not trying to just implement that particular, uh, feature, it is trying to build the, the new standard of the mining, uh, protocol from the ground up.

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Uh, you still, uh, even though, uh, uh, the- for example, when it comes to encryption, still the Datum gateway is communicating with the pool, uh, in, um, in encrypted way, so that definitely improves this particle, uh, particular, uh,

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uh, like, aspect of the communication, uh, well.

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Uh, but if someone will break into the private network and will- will- e- still there's room for m- man-in-the-middle attack in between Datum gateway and the miners itself.

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Uh, so that is not completely addressed, uh, yet. Uh, the other part is that Datum is, uh, developed by, by a company and has full control over it, whereas the Stratum V2 is developed by open source community.

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Uh, and I would say that one of the key difference is that, uh, as of now, uh, our Stratum V2 community is focusing on having the best possible documentation, a specification of the, of the protocol, uh, whereas, uh, to my knowledge, I believe that Datum specification, uh, is yet to come and yet to be released.

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That was a good breakdown, Lukas. Really appreciate it. Well, we're at time for your segment. Thank you for joining us, man, and, uh, best of luck with the working group. Okay. Really excited to see what they cook up.

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Yeah. Thanks for having me. Yeah. Thanks for joining us, Lukas. Thanks, Lukas. Okay. That concludes the more technical part of this stream.

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We're gonna start talking about markets and more cultural stuff here in a moment, right after a word from our sponsor, CleanSpark. [gentle music] We are CleanSpark,

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America's Bitcoin miner, a publicly traded company with the largest operating hash rate, powered entirely by self-operated infrastructure across four states. This is our proof of work.

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We are setting the standard for what's next. Learn more about the intersection of energy and Bitcoin at CleanSpark.com. All right.

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Coming up next, we got PO, a longtime Bitcoin bull, MicroStrategy bull, bull on a lot of things, but great market commentator. I'm gonna bring him up here. Let's do this. Welcome to the stream, PO. What's up, guys?

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Thanks for joining, man. Yeah. Um- That last technical conversation, that one's gonna go giga viral. Oh, man. [laughs] Look, we've got, we schedule, we, we, we have a pretty broad-

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Brother, it is a tough tightrope to walk, let me tell you. Y- you guys seem super into it. I mean, uh, yeah, that guy was obviously insanely knowledgeable.

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It's just, uh, it's almost like, i- it's just gonna get to a point with a lot of the Bitcoin stuff where it's like, it's the same thing as if we got on here and we started discussing, like, HTTP- Yeah...

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and like, you know, pr- internet protocols and stuff. It's like, I just don't know what the TAM is on that content, but yeah. [laughs] Exact- exactly.

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'Cause, like, you know, and, and maybe we can use this as the hook-in here, which is, uh,

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Michael Saylor's talk was the most attended talk at Bitcoin Vegas, and that's kinda why I had you on here, 'cause again, it's just whenever Saylor or Strategy says or does something, we gotta talk about it.

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You had some tweets. You're a MicroStrategy bull. I believe you said, I'm gonna pull this tweet up here. Look at this. Um, here, this one. "MicroStrategy is nearly at 200, still an 80% discount for a $1,000 stock."

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That's a banger tweet. Um, why are you bullish on Mike? Why is it a $1,000 stock, PO?

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I mean, it's, it's really higher than $1,000 stock, but it, it's almost like if when you fi- let's say you figured out what Bitcoin was when it was like 400 bucks or something, right?

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And then you said it's gonna be $100,000 or a million dollars, people would say that you're completely out of your mind. Like, like literally people would be like, "You are unwell. You're nuts," right?

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'Cause people just can't... It's so hard to see into the future. It's like the hardest thing to do, right?

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Otherwise, everyone would just be billionaires 'cause everyone would be able to predict the future, invest their money accordingly, be- you know, bet on the right careers, all this stuff, right?

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But once Bitcoin's $125,000, saying that it's gonna go to a million dollars suddenly is a, it's almost like a foregone conclusion, and people are like, "Yeah, but that's only a 10X. I look for 100X," right?

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So things just really change. So right now at $170, $180 MicroStrategy, the number to say is $1,000, 'cause people are like, "Yeah, I could see that."

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Actually, a lot of people don't even believe that, but w- you know, people could at least understand why you might say that number.

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But if I say $20,000 per share right now, everyone's gonna look at me like I have six heads.

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But the reality is, when you extrapolate over enough time and you have stock splits and everything like, like that, the, I do think it's gonna go to, like, 20, 30, $40,000 a share in my lifetime, you know, equivalent based on the share price now, uh, but it's just gonna take a really long time.

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And, and people think that when you make predictions, it's for, like, next week, but most of this stuff takes a really long time. I don't think $1,000 will take that long, but yeah.

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I mean, and you brought up the per share, which- Mm-hmm...

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if you've been paying attention, you can see that Michael Saylor and the strategy narrative has shifted from total raw Bitcoin accumulated to a Bitcoin per share-... uh, measuring stick.

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And you actually, again, I'll pull up another tweet here. Uh, you had a good- you had an interesting take on this because, like, you, you present this bull case.

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Again, this is just an idea, you just throwing stuff out, it's a tweet. Yep. Like, bull case for Bitcoin, um, doesn't even need to go up for strategy Stretch to, to power the increase in, uh, MicroStrategy per share.

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P- you know, explain this to me, uh, 'cause this is an interesting take, I think. Yeah, I like to play with, uh, the AI tools.

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Like, Claude and these AI tools are so good now that if you give them a really specific prompt that, you know, factors in... 'Cause this stuff's all math. It's not that hard. Like, I- you could do this by hand.

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It's actually not, you know, hard math.

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It's just looking at the accumulation rates of, you know, Bitcoin against, like, the volumes on Stretch, and extrapolating a little bit, and then factoring in, you know, for some anomalies, like slow months and things like that.

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But that's, that right there was just Claude spitting out projections for share price based on the dilution of the share price, which is obviously a huge factor, based on the volumes of, of Stretch, based on Bitcoin price, and based on historical Bitcoin accumulation data for MicroStrategy.

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I mean, the thing's gonna go up, right? It's really volatile, and when it goes down, 'cause it, it, volatility goes both ways. So it went from 540 to 107, and people just hate that. They hate it so much.

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And the whole time it's going down like that, the only argument against it, nothing changed with the company. Well, i- if anything, the only thing that changed is the preferred equities came out, which makes it better.

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So the company's getting actively better while it goes from 540 to 107, and people on Twitter just point to the 107, or point to the declining stock price, and they just tell you over and over again, "The price of the stock is going down."

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And it's like, yeah, I know. And that's what people are doing with, like, Opendoor right now. MicroStrategy's going up now. It's up, you know, 107 bucks to, like, 180 bucks in, like, a month and a half, right?

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So it's going up now, so we're back on the going up cycle. But obviously, there's gonna be a lot of volatility. But yeah, I mean, I just, I look at these companies from, like, a high level.

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Same thing with, like, an Opendoor, which obviously is not a Bitcoin company. Bitcoin companies like Iron, we- a Bitcoin miner, you know, stuff like that. I saw your, your sponsor, CLSK.

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I, I used to hold that stock, but I switched to Iron and Cipher. Um, I just look at these companies pretty simply, and I don't worry about the price action of the stock.

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Everyone that's bearish on Opendoor right now, just using it as a fresh example 'cause it's something I watch closely, uh, is panicking 'cause the price of the stock is going down.

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But I'm like, "The company's getting way better." It's like it's in the best place ever. It's doing so well. Who cares what the market is doing to the stock? And MicroStrategy's in a really, really cool place right now.

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This most recent earnings report was nuts. Today I learned that Opendoor is public. I had no idea. To your- Door Yeah, follow PO- Door... you'll learn more about Door.

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[laughs] Going back to Stretch, PO, and you mentioned, you know, th- these preferreds are making the company better. Yeah. Uh, I've, I've gotta throw a steel manning question.

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You can tell me why or why not this is a mid-curve concern. So obviously, the preferreds bring in income when they sell those shares. They don't have to dilute the common stock, which is great- Mm-hmm...

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for MSTR holders. It creates income, but it also creates a liability. These things are paying out 11.5%, right, annually. Uh, how do you square that with the bull case?

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When, especially when you consider that strategy's operating business doesn't generate nearly enough income to furnish these preferreds.

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Yeah, the operating business essentially pays for everybody's salary and pays for all the expenses of the business, which people never talk about and is a huge factor. You got a publicly traded company here.

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There are costs associated with all this action, IPO-ing these, uh, you know, preferred equities. There's a lot of costs there. I mean, every, you know, s- uh, strategy has to file these 8-Ks.

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There's just so much going on there. So the operating company is doing its job, which is it is profitable. It's not good enough to be Mag Seven, and that's, like, what Saylor struggled with for a really long time.

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But it's just a solid, profitable zombie company by S&P 500 standards, which means it's underperf- performing the S&P 500. This is before Bitcoin, blah, blah, blah.

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Just wanted to kinda, you know, put that out there before we talk about it. Now you're talking about the preferreds.

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So Stretch is the preferred that pays, right now, 11 and a half percent, and it is the strongest preferred of all of them.

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It, you know, b- both in terms of market demand and in terms of its, uh, you know, its benefit to strategy. He a- they kinda hinted at, um, they're gonna kinda retire some of the old strategies.

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Like, they tried, like, 20 different things to get to Stretch, right? They tried a lot of different stuff to get to Stretch, and now Stretch is clearly the best thing.

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So when you talk about, you know, the obligations of the dividends, I think the thing that people always forget about and don't totally grasp, or just don't have front, uh, you know, like, top of mind, is that Strategy owns 815,000, or however many, it's, it's now more than that, a little bit more than that, 815,000 Bitcoins, 85% outright, right?

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And Stretch has a different audience of buyer than MSTR. So for example, my business owns a lot of Stretch because I'm like, "Cool, we want to ge- you know, it's a business.

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I don't wanna absorb the volatility of MSTR in the same way." We have some MSTR 'cause I'm obsessed with it and I wanna be on, like, a quasi-Bitcoin standard. But with Stretch, my business is a big buyer of that.

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So Stretch targets a different audience, so it's a way to attract more capital.

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When you talk about paying the dividends, because of the Bitcoin stack, they can pay the dividends as it stands right now for, like, 70 years, right? And I think people forget that the Bitcoin is owned 85% outright.

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The only true leverage for the Bitcoin is the convertible debt, which was the first strategy that they implemented, like, five years ago now. And it was- And all of those converts are in the money, I would imagine. I...

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Right?Yes, some of them have outperformed Bitcoin, and some of them have actually 0%, like a 0% coupon, because the people in those markets wanted access to Bitcoin and couldn't get it any other way.

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No other issuer in the world was giving them access to that. But in this earnings call, very interesting, uh, Strategy hinted at the idea of buying back the outstanding bonds to just get rid of that completely.

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They're not gonna do it right now, but let's say Bitcoin's 180,000 bucks, MSTR's trading at, like, a 2.4x mNAV, you can ATM MSTR big time at that point, and then clear all of that legacy debt, and then you can point to the Bitcoin stack and be like, "We own that with zero leverage.

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Like, we owe dividends? Cool. Other companies owe dividends too. Uh, look at us."

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So you have to remember how much Bitcoin is owned outright when you think about the dividends, and I understand people are like, "Oh, he's paying this dividend with that dividend."

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That's an issue if you have nothing backing anything.

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If you have zero dollars on the balance sheet, if you're Bernie Madoff or a Ponzi scheme, taking money from one person and giving it to another person, yeah, for sure, that's a big issue.

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You've got 815,000 of the most liquid asset, one of the highest volume assets... Actually, I think it's the highest volume asset in the world. Um, you know, it's really, it's really something that he's built.

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And this is a good thing to bring up, too, because on that earnings call, Saylor said, "We will probably sell some Bitcoin to send the market a message."

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He was specifically saying, and he s- he said this outright in the earnings call, it was wild, "I want to rip the wings..."

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or, "I'm going to rip the wings off of short sellers if they think that I have to dilute to keep this train going." So it seems to me like, w- judging by your response just then, you think this is probably a good move.

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You're gonna wanna leverage the Bitcoin on that balance sheet at a s- at a certain point. But what are your thoughts on the idea of Strategy opening the door to potentially sell Bitcoin in the future?

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So they've sold Bitcoin before. That's a big thing that people don't talk about when they talk about this. They sold it in, I believe it was 2022, if I'm not mistaken. The big, the year that Bitcoin went way down.

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I think it was the FTX year. I'm pretty sure it was that year. It was either that year or the, or 2023.

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At the end of the year, they sold Bitcoin to essentially offs- like, for tax loss harvesting purposes because there's, there's no wash rule on, on spot Bitcoin.

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Uh, so they did that, and they bought more in the same announcement. So it's not like they announced that they sold Bitcoin and then the market panicked.

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They announced that they sold X amount of Bitcoin and bought, like, 3X as much Bitcoin in the same announcement. That's what I would expect.

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If he did do an announcement of just them selling Bitcoin, I think he would do it to, like, send shock waves through the market and have everybody spaz out, and then the next announcement would be, like, this colossal, ridiculous buy.

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He l- he does like confusing people that don't understand Strategy, and at this point it's just pretty funny.

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Um, I mean, like, uh, [chuckles] when he tweeted right after that announcement that everyone was talking about, he said, "Buy more Bitcoin than you sell."

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You know, 'cause he's, uh, he used to say, "Never sell your Bitcoin," then he said, "Buy more Bitcoin than you sell." I just thought that that was, like, the funniest thing. He is funny.

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I also, I said earlier on a different podcast, I think he would kill someone with his bare hands if they got in the way of Strategy succeeding. I actually think he would do that.

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Like, I think it's like There Will Be Blood, Daniel Day Lewis level where he'll just kill you with a bowling ball, uh, you know, over the business, you know? But I wanna show you guys something. Can I share my screen?

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Is that possible? Yeah, you can. I can add it, if you- Cool. So this is my guy Dan Hilary, who you, you guys should definitely reach out to and, and try to have on this show.

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And by the way, he's gonna be way better at explaining all things MicroStrategy than I am. I cannot even hold a candle to the way that this guy could explain it. This is a different animal, right?

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So, uh, I'm not f- as far down the, uh, the, the, the curve as this guy is when it comes to understanding markets and, and finance. I'm lucky that I understand what I understand. But this is...

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He shows this, uh, slide from the earnings call. This is the most interesting slide in the entire earnings call, in my opinion. There's a lot of interesting slides, but this is the most interesting one.

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Because this, Strategy puts it in writing that they use the term trades. So Strategy's becoming a super cool company right now. It's becoming, like, more hedge fund-like than ever before.

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The green text over there is new stuff that they're considering, so buying debt, you know, th- these kinda new approaches, right?

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And buy debt is what I was talking about, retiring the con- the convertible debt, you know, that, the legacy debt from, like, five years ago.

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And so they have, are basically demonstrating that they are just gonna do whatever they think is the best thing to do for MSTR common stock. It's always gonna involve accumulating Bitcoin.

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It's gonna involve issuing digital credit against the Bitcoin. But they're more open to do different things now. They're finding their groove. They tried a bunch of stuff before they found Stretch.

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Saylor also said in this earnings call, very interesting, if you start a Bitcoin treasury company today with a blank sheet, then you should just do the common equity, so, like, in his case it would be MSTR, and the monthly or twice a month, uh, paid out preferred equity, so Stretch.

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He's, uh, he was like, "The other, uh, preferred equities are interesting, I guess."

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Like, he's basically shitting on the e- the preferred equities that he put out there, but from the perspective of they're not that good for MSTR. They're good for investors.

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So if investors actually want, like, alpha, buying, for example, Strike, I think is a really good call right now. Strike's at, like, 70-something dollars. Its par value is $100.

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He might buy it at par value in the future, at 100 bucks, and you're gonna get a dividend the whole time, $2 a quarter for every share that you have the whole time, fixed dividend.

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It's actually towards the same percentage as Stretch right now. Uh, but it's every quarter instead of every month. So super interesting for him to hear that.

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There's a company called Strive, ticker A-S-S-T, referred to as AST, that is that exact setup, which is... So that's, like, basically a major cosign of that company. He's been cosigning that company left and right.

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But there's a lot of interesting stuff happening with the m- maturity of these companies and digital credit developing as, uh, you know, a real instrument in finance. It's super cool. So PO, super bullish on Strategy.

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You gave us a whirlwind tour of why you're bullish. Makes a lot of sense.Um, I guess my, you know, just to wrap this up, um, give me your fun takes on, uh, Saylor's social media strategy.

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I'm mainly thinking about the, uh, the AI tweets. How are we feeling about those? [laughs] I love it. It's great. I mean, like, uh, I think it's so funny, and people react to it every time.

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Like, he's doing it on pur- He, he's pretty goofy. Like, knowing who he really is, it's surprising to me how goofy he is, 'cause he's like a serious dude. I haven't met him. I'm scared to meet him.

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I would be absolutely terrified to meet him. I don't think I'd be able to process being able to meet him. I'd be so starstruck. But, and he's just so intense and everything.

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I've heard about these meetings with him, uh, where he just bugs people out. But, uh, yeah, I just, I... It's so funny. I actually don't understand how he's... He's just wicked funny with this stuff. I don't know.

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I love it. It's w- super funny. Gets a lot of views. It works. Yeah. Michael Saylor says, "No more bears." PO, thank you so much for coming on the show. Uh, yeah, fantastic takes. Love your time.

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Thanks for, uh, thanks for hopping the show. We'll see you some other time. My pleasure, guys. Thank you. See you. Peace. All right.

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From Stratum V2 [laughs] to strategy V3 or 4, whatever it is, um, we're, we got a, we are still rolling hot. We've got another guest, Yogi, but not before a word from our sponsor, Luxor.

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All right. We have our next guest, Yogi, my man over at Thesis and Mesa. We're gonna talk about our favorite boogeyman, Elizabeth Warren. Let me bring Yogi up here. Yogi, welcome to the show.

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Thanks for having me, dude. How's it going? Fantastic. I'm glad we could put you on right after PO, 'cause this is a good one-two punch here. Um, you are like- Dude, I don't know if I can follow his energy. Yeah.

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He had some passionate energy there. I know. Y- you've, you've, uh... I was looking at your Twitter over the past, I mean, 2026. You've been absolutely blowing up.

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In fact, you got to be main character, I think, over the past weekend on the Spirit Airlines thing, which, uh, not crypto related, but we're gonna talk about it anyway. Can you- Hopefully. Yeah. Okay.

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So you had this massive tweet. I'm gonna put it up here. You had this massive tweet, "Spirit Airlines died tonight at the hands of socialist crusader Elizabeth Warren." I'm not gonna read the tweet.

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I'm gonna have you explain to me, what's this angle you lay out here? Why is it so resonant on X? Yeah. I think, um, there's a lot of... F- f- I think, first, with X, it just, it's funny how stuff randomly goes viral.

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I think people look at things way too black and white these days.

259
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E- everything is extremely polarized, but no one actually realizes that everything, there are so many nuances to decisions we make, and they have a lot of rippling ramifications. So with the, with the

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phrasing of, you know, Elizabeth Warren, you know, she is a socialist crusader in my opinion. Like, all of her policies are very anti-capitalism.

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Government should not get involved with free enterprise, i- in my opinion, broadly. Um, that also means that we shouldn't bail out companies. So I just, like, people are like, "Oh, you're..."

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People were misunderstanding that tweet.

263
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I think the thing that happened with Spirit is that most airlines in the US, right, you have Alaska, Delta, American, United, all of them have faced bankruptcy crises at some point in their last 100 years.

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Uh, Delta bought Northwest in 2008. Alaska bought Hawaiian Air or Virgin, I forget. I'm, I'm, I may mix up the airlines, but they all bought some- I think it was Hawaiian. Hawaiian. Yeah. Okay. And so- Okay...

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all of these airlines have had difficulties. We won't get into the difficulties, 'cause that's probably, like, a, you know, a Harry Potter novel on the regulations of US airspace and how outdated our tech is.

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But what was interesting about this one specifically is that everyone cheered the blocker of this m- the blocking of this merger in 2024, and what was interesting is how people were phrasing it back in 2024 and how they phrased it in 2026.

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So in 2024, it was, "We are saving the consumer $1 billion."

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So, you know, a government got involved in two private enterprises trying to save each other and said, "Hey, we're gonna block this deal because you're bad for the people."

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And then if you look at any of the data from that period, Spirit has filed two Chapter 11 bankruptcies since that, uh, merger was blocked. Um, and since then they've ended routes from a lot of airports.

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They were still operating prior to them, like, having that last flight on May 3rd, I believe, and rate, uh, fares have already gone up.

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So there was this argument that, oh, we're gonna save people, you know, cheaper, uh, cheaper flights by not letting them c- collude, or collude or, you know, combine.

272
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The second argument was that, hey, the Iran war actually caused this company to go bankrupt.

273
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[laughs] And so it was interesting for me to see that rhetoric really get pushed, and I was like, if I'm a plane with a blown door already about to crash and the sun sets, do you blame the moon for coming out when this plane is like 2,000 feet off the ground literally about to-You know, hit the ground.

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So it was interesting to see that, and then she blamed the judge. So then it was like, hey, wait a minute, the judge made this ruling. But guess what, Warren?

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You went to the Department of Justice and the Department of Transportation. There's actually a tweet by Thomas Massie, who's probably one of the more objective politicians these days, and I, I...

276
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You can probably find it. I can send it to you afterwards.

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But he basically goes and says there was an unprecedented level of coordination between this senator, the Department of Justice, and the Department of Transportation to build a case to then sue.

278
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So yes, the judge made the decision, but that's like saying that you fire a gun and then you blame the gun for someone dying. So anyways- But I, I also love the for what it's worth.

279
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It's almost like the Eric Andre meme where he's shooting the dude in the chair. He's like, "Who did this?" Yeah. [laughs] Exactly. So it just...

280
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And I, and I wanted to use the socialist phrasing of this, 'cause it's not all sides. It's, there's a specific group of people who believe that there is some big, bad villain in a closet trying to hurt everyone, and

281
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then there's all these unintended consequences, and people don't understand that. And so with the Spirit Airlines bankruptcy, there's three big consequences: A, less flights for small airports.

282
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Yeah, if you're New York or, you know, LA, it doesn't really matter to you, but if you live in, like, I don't know, Fort Lauderdale, Tucson are- like, just random cities, you are impacted.

283
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B, any area where Spirit is no longer operating, they already said, like, I think Oakland and New York fares went up, like, 50 bucks.

284
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Yes, that may not matter to the average person, but, like, people that live on minimum wage, definitely hurts them. But the people- And- Sorry to interrupt.

285
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The people who fly Spirit, that matters a lot to, and you kinda make this point in your tweets, right? It's, like, it's a budget airline, so these people- Yeah... don't really have many places to go now.

286
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So and then there is this, uh, this positioning that, like, hey, we're trying to not let airlines monopolize. Well, you shoulda done that, like, 20 years ago.

287
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You know, four airlines control 80% of the airspace in the United States. JetBlue and Spirit merging would have supposedly reached 9% market share. I don't believe anyone...

288
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If you know math, I, I don't think 9%'s a large number when other guys have 20-plus. I don't know. That just may be me. Yeah, that's a really good point. Sorry, Charlie, I just wanted to highlight one thing, too.

289
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One of the things that blew my mind about this, kind of playing into the,

290
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uh, anachronisms and weird historical revisionism of saying, like, the Iran war caused this or it was the final nail in the coffin, a lot of people were saying, and I think Warren actually tweeted this, Spirit doesn't deserve a bailout.

291
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And I, I have a really hard time squaring that. It, it, it... Did 2008 just break everyone's understanding of how,

292
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you know, uh, how companies can go through bankruptcy or whether or not the government has to step in to bail them out?

293
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Like, do people fundamentally not understand the difference between acquiring a distressed company and the government giving that distressed company money so they don't die? Maybe.

294
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[laughs] Like- I don't think people read anymore, dude. I think the problem is people have a, a two-second attention span,

295
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and there were people literally in my tweet saying, "We shouldn't bail them out," and I was like, "I did not write that we should bail them out. I said that Spirit should've been able to sell themselves to JetBlue."

296
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And then th- someone else was like, "Oh, you're like..." And it's funny how people choose sides where it's like, guys, this is purely a free enterprise discussion on if two airlines should've been able to merge.

297
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And, and then they don't talk about the consequences. Like, if we talk about 2008 just for, like, a quick tangent, I guess, yes, bankers made really bad decisions.

298
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Yes, probably a lot of those companies should not have had golden parachutes and they probably should've failed.

299
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But the calculus the government did and Greenspan did at the time was probably, if we let these people fail, it's gonna hurt people even more, so we should step in. And that is another...

300
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Like, with Spirit, there was this report I read. One airline job basically supports three local jobs. So if, if Spirit Airlines laid off 14 to 17,000 people, whatever it is, over the past two years,

301
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that probably will impact about 40,000 other jobs that that has created, just because if an airline is servicing a place, you have Ubers, you have local coffee shops, you have hotels, everything is linked.

302
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Now, I agree that, you know, we should not jump in and save Spirit 'cause it was poorly run, and I w- I would also never sp- fly Spirit, but again, we're not [laughs] the customer for this.

303
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But on the same end, I think people keep forgetting what happened in '08, and I th- I don't think there's this television where people can see, like, may- what if we didn't bail anyone out? Where would we be today?

304
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And my gut is that we probably would be very... We would've had a really crappy, you know, 2010s. We would not have had this tech boom- Mm...

305
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because the entire faith of the financial ecosystem probably would've collapsed.

306
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So when you think about stuff that way, it's like, right, the government needs to step in here and there, which is why there is this, like, idea of, like, too big to fail.

307
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But then people just cherry-pick a handful of people getting golden parachutes, not realizing that bailing these people out probably saved millions of jobs and millions of people from getting foreclosed.

308
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Like, they, they get very nitpicky with, with things. So, you know, maybe, maybe Spirit Airline still has a chance.

309
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You know, you say people don't read anymore, um, they have attention spans of a few seconds, and here we are speaking of at- slow attention, short attention spans.

310
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We have the TikTok, a TikTok creator crowdfunding the campaign to buy Spirit Airlines for, pledged up to $335 billion. Yogi, do you think they're actually gonna be able to pull it off? What a- Not a chance...

311
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what do you think about this? I don't think. There's not a chance.Unless this guy has deep pockets, I think you have to meet certain requirements to buy an airline. Like, there's a lot of regulatory loopholes.

312
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I also think that people have already been laid off. It's one thing to help someone that still has a heartbeat. It's another thing to take a corpse and then make it into Frankenstein.

313
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And I was reading up on, like, the... Dude, like, when you look at a distressed asset, like, when it's alive and people are at the table, like when the, the merger was approved in, in 2024,

314
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the creditors were on board, the unions were on board, everyone was ready, everything was running. Now it's dead. People are out of jobs, probably have found other jobs.

315
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The creditors, 'cause Spirit actually leases most of their planes. Those planes are probably already being sold to, you know, people abroad. And any...

316
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They, they o- only own, like, 30 to 40 planes, which are quite old and very inefficient from a fuel perspective. Fuel continues to go up.

317
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So, like, now you can say fuel has probably an impact because this is an airline that's no longer operating. And then you have to think about the airports. Like, those gates are probably being given to other airlines.

318
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And getting- Oh, totally. Yeah. I mean, I, I've already...

319
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Sorry to jump in, Yogi, but, you know, I, I fly a lot for work, and I noticed on Delta and United they had notices the day that Spirit flew its last flight saying, "If you're a Spirit customer, like, and you had a fare for these dates, you can, you know, redeem them here with us."

320
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The, the sharks are already circling. Yeah. So I just think that it's a lot harder to rescue something when it's dead i- i- and, and, and sorts than...

321
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Like, maybe the- he'll be able to pull it off, but it's like you're now starting from scratch again. Yeah, you have Spirit's IP brand, probably their tech, but if people have already left or moved on, it's not the same.

322
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Also- Right... TikTok influencer buying, I think is... I, I, I don't know. I just don't believe it. [laughs] We'll see. It's a sign of the, it's a sign of the times, man.

323
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You know, a little bit of social media virality with Dunning-Kruger mixed in. Um, that being said- It's- You know, 300 million's a lot, but the original acquisition offer was 3.8 billion from JetBlue.

324
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But I don't think they have to have the money. Like, three... They just... This is pledged. This is people, like, pledging towards, like, a Kickstarter without actually, you know, doing money.

325
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So I, my, my take on it is- Right. My point is though, if they're actually serious, they've got a long way to go probably. Yeah. And you can get it maybe for cheaper.

326
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And per Yogi's point, like, the company's dissolved at this point. Y- y- you gonna get management back in? You gonna get all these people you just laid off?

327
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Yeah, it just, like, insane levels of disruption, and then it's the, uh, crap, what was I gonna say? It was... What the... Raising the money is one part. It's getting the entire thing to run.

328
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And I think, like, the only serious buyer from an influencer perspective I could see would have been MrBeast. Like, dude, think about M- Beast Airlines. I'm sure he could probably get a package together.

329
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[laughs] Like- Oh, my God. Oh. Beast, Beastables on the, the MrBeast- Yeah... airline. Dude, it would have been a great position. I, I want an airline. [laughs] Like, you guys, like, let's take a step back.

330
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All right, first of all, Charlie, you love mining. Yeah. So you could have had MrBeast come on, say, "Hey, we have 30 old planes. These barely fly. Those are gonna turn into mining rigs."

331
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MrBeast uses this as a cross-selling operation. Like, "All right, I got my food. I got my branded clothes. We could probably, like, hey, like, you know, fl- like, do this on a plane and get a free flight."

332
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Like, I don't know. Like, you can make it into a, a show, and you could probably then get the funding to get it. But the...

333
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On a serious note, the one last thing I wanted to mention on this is that some of the other arguments were that JetBlue is also failing, so why would two failings make a right? Right? Like, there was some...

334
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I think people argued that. Um, the reason why the Jet... Like, some random person coming in to save Spirit probably doesn't work, 'cause it was losing money for a reason, right?

335
00:58:20.800 --> 00:58:33.160
Maybe you can fix management and that helps itself. You need scale with airlines. So JetBlue and Spirit merging adds routes. They consolidate routes that they both operate in, and then you're able to make a profit.

336
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'Cause the biggest expense for the United Sta- like, people that operate in the US is b- is all generally regulatory, and the fact that all of our systems are built on, like, DOS and other old tech from the '60s.

337
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And so it doesn't matter how fast your plane is or how cheap the fuel is, there are just costs that these airlines can't afford. So I don't know.

338
00:58:58.060 --> 00:59:09.380
So Yogi, I think maybe to wrap up, you know, I, I don't think it's a, I don't think it's a coincidence that, um, a lot of the crypto people kind of piled in on this and pointed a finger to Elizabeth Warren.

339
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Like, we have been under her finger for years. There's a lot of pent-up frustration. I don't know.

340
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Did it feel a little good, a little schadenfreude to, like, put this, to throw this back at her [laughs] on this, given that- Oh, dude, it felt amazing. This is the woman who has said that tech is stupid,

341
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anything related to crypto is stupid, when the entire industry is supporting it. Like, I can understand a Ponzi scheme that works for a couple of years, but for 15, 17 years, the entire space is believing it.

342
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It's just, like, bad framing. So it felt really good to literally take her words and go back to her and say, "Hey, you wanted to save people a billion dollars. This will probably cost people four to five now.

343
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Like, congrats. Thanks for, thanks for winning, you know? Like, thanks for helping us win here." So... And thank you, Yogi, for hopping on the live stream. Really appreciate this. This'll be some banger clips later.

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Um, yeah, so everyone go follow Yogi. Uh, check out his absolutely exploding Twitter timeline these days. Thanks a ton. Yeah, thanks guys. Have a good one. Thanks, Yogi. See you around.

345
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Yeah, his Twitter timeline's a tour de force. Yeah. Dude's got analysis on the Spirit merger failing. He's got social commentary.Yeah. Yeah. Very, very, very good at engagement.

346
01:00:31.432 --> 01:00:43.532
Whatever, whatever ChatGPT model he's using, let me get... He- maybe he's got Am- maybe he's got the Mythos model or something. He's using YogiGPT. Yeah, YogiGPT. [chuckles] Okay. Uh, we are still gonna roll along.

347
01:00:43.592 --> 01:01:00.292
We're gonna talk about some miners, mining equities, and hyperscalers, but not before a word from our sponsor, Ligos. [static noise] Hedge funds are getting liquidated. Is your Bitcoin safe?

348
01:01:00.831 --> 01:01:09.412
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349
01:01:10.182 --> 01:01:22.192
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350
01:01:22.252 --> 01:01:32.451
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351
01:01:33.002 --> 01:01:46.952
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352
01:01:47.132 --> 01:01:57.522
I think we're talking, we're talking Mara, baby. Mara. It's earnings season, and everyone's crying because there are no deals. No, I'm just kidding. Just kidding.

353
01:01:57.952 --> 01:02:11.832
It is earnings season, though, and we've got some updates here from Mara. I will share my screen here in just a second once I can get this rolling. Here we go. So yeah, Mara is fresh off of its earnings call.

354
01:02:12.372 --> 01:02:19.982
Revenue fell eighteen percent in Q1, and they posted a one point two six billion net loss.

355
01:02:20.092 --> 01:02:32.012
Now, net losses in our industry are misleading because now Bitcoin miners can mark down the Bitcoin they have on their balance sheet. Mara has, I believe, something like thirty-two thousand Bitcoin.

356
01:02:32.512 --> 01:02:40.742
We'll cover that here in a second. Um, they've, they've trimmed their stack down quite a bit, though, as they look towards AI and HPC builds.

357
01:02:41.092 --> 01:02:53.332
But that net loss is almost entirely driven by depreciation on rigs and the change in the fair value of their Bitcoin. But a few financial highlights from this earnings season from Mara.

358
01:02:54.132 --> 01:03:05.592
Uh, Mara increased its hash rate despite its attention towards AI from sixty-six point four exahashes at year-end of twenty twenty-five to seventy-two point two exahashes at the end of Q1.

359
01:03:05.612 --> 01:03:18.311
That's a big jump, and that firmly puts them into the first public Bitcoin miner to operate seventy exahashes. Now, there, there are some, uh, private miners who might be getting close to that.

360
01:03:18.332 --> 01:03:28.312
We know that Electron manages, like, fifty exahashes for Tether. Tether, I think, has some hash rate outside of Electron's management, at least from what I'm told from their, uh, from Electron's team.

361
01:03:29.392 --> 01:03:40.832
But seventy exahashes is just absolutely massive. Kinda going back to our earlier segment, it does kinda raise questions about Mara keeping options open. They're getting involved in the Stratum V2 stuff.

362
01:03:41.632 --> 01:03:52.692
You know, um, they, uh, are launching this Mara Foundation for, for Bitcoin development. And, uh, and they're also signaling for the Great Consensus Cleanup, or saying they support the Great Consensus Cleanup.

363
01:03:54.252 --> 01:03:58.782
Revenue came in at a hundred and seventy-four point six million versus two hundred and thirteen point nine million.

364
01:03:58.852 --> 01:04:07.812
That's down eighteen point four percent year over year and missed the consensus estimate of a hundred and eighty-two point seven million. I won't bore you with some of the other stuff.

365
01:04:07.852 --> 01:04:17.572
Go take a look at their 10-Q and our coverage on Blockspace. You can look at profit. Um, two things I do wanna note, cost of sales [sniffs] and G&A expense went up.

366
01:04:17.592 --> 01:04:27.151
Uh, the cost of sales ballooned from one hundred and forty-five point four million versus twenty-four million, uh, a year ago. That's almost a five hundred percent increase.

367
01:04:27.192 --> 01:04:39.052
A lot of that has to do, I would assume, with expansion of, of, uh, Mara's hash rate. You know, they, they've, they've rolled out a lot of exahashes since twenty twenty-five, since Q1 twenty twenty-five.

368
01:04:39.492 --> 01:04:43.792
Obviously, their power rates are, or their, their power costs are gonna go up and operating costs are gonna go up.

369
01:04:43.872 --> 01:04:54.262
Uh, their G&A expenses also rose from thirty-nine, thirty-six point nine million a year ago to fifty-seven point seven million. I think a lot of that has to do with hiring out for these, uh, AI business lines.

370
01:04:54.282 --> 01:05:08.752
They're starting to hire talent to try to work on getting a tenant secured and revamp their facilities for A- AI and HPC. Speaking of that, there were a few qualitative updates about their AI business line.

371
01:05:08.802 --> 01:05:14.652
No deals signed yet, but Mara has this JV with Starwood, which is a data center developer.

372
01:05:14.712 --> 01:05:24.752
And it said that in Q1, or management said in Q1, Mara entered into active tenant discussions with multiple counterparties, including hyperscalers across ninety percent of its existing owned and operated sites.

373
01:05:25.312 --> 01:05:35.292
Management, uh, provided guidance, uh, saying that they expect to sign a tenant by the end of twenty twenty-six, with the initial build-out starting in twenty twenty-eight.

374
01:05:36.312 --> 01:05:43.752
Last thing to note, public miners are selling Bitcoin. Uh, no, no one cares about Bitcoin anymore, apparently. Makes sense.

375
01:05:44.012 --> 01:05:58.452
There is this massive pile of BTC on their balance sheet, and investors wanna see them using that Bitcoin towards furthering more lucrative business lines like AI and HPC.

376
01:05:58.532 --> 01:06:08.632
Uh, their holdings fell from fifty-three thousand eight hundred and twenty-two BTC at the end of twenty twenty-five to thirty-five thousand three hundred and three BTC at March thirty-first, as of March thirty-first, twenty twenty-six.

377
01:06:09.212 --> 01:06:13.032
Uh, that is a reduction of eighteen thousand five hundred and nineteen Bitcoin.

378
01:06:13.572 --> 01:06:24.352
That's worth roughly one point five billion dollars, and they used that to retire a old convertible note, nine hundred and twelve point eight million outstanding on that, and also paying down three hundred and fifty million on a credit line.

379
01:06:25.212 --> 01:06:28.952
So really starting to prep themselves for the AI stuff.

380
01:06:29.032 --> 01:06:39.260
Obviously, investors are really just waiting around, hoping to see if they have a deal coming in the doorAnd, you know, Mara stock not really doing much on the earnings news. I mean, it's, it's basically flat.

381
01:06:39.320 --> 01:06:47.020
It's down 1% over the last five days, down.4% today, negligible. So let me get this straight.

382
01:06:47.160 --> 01:07:00.180
Uh, Mara hit record all-time high hash rate both for themselves and the industry at large, and then also simultaneously, I believe, had their worst quarter in history. [laughs] I mean, this is, uh...

383
01:07:00.880 --> 01:07:11.580
I remember a year and a half ago, we were kinda wondering if the AI pivot would work, and now I think we're wondering why anyone isn't, why anyone was slow to it, because it's very obvious in retrospect.

384
01:07:12.240 --> 01:07:19.820
At this point, you know, if you're mining Bitcoin, you're just shoveling money into a big black hole at a faster rate. That's true.

385
01:07:19.860 --> 01:07:29.580
And one note on that about moving into AI sooner rather than later, I think a lot of investors have criticized some of the slower movers like Mara and even CleanSpark in this regard.

386
01:07:30.280 --> 01:07:46.160
And I, I just like to point out, and, you know, steel manning the business case for them a little bit, if AI is as revolutionary as everyone is saying it is, and to me as a daily user and seeing the advancements on models like Claude and ChatGPT, makes sense to me that it would be.

387
01:07:47.040 --> 01:07:57.660
You know, we're, we're still so, so much in the early innings. I mean, imagine, like, getting mad at a company for not getting into fiber when broadband came out or something. I, I don't know. You know?

388
01:07:57.720 --> 01:08:08.840
It's like there's still a lot of room to grow for this, and I, I actually think there's a good argument to be made that some of the late movers might be able to learn lessons from the early movers and construct better deals.

389
01:08:09.280 --> 01:08:13.440
Not saying any of the early movers have done anything to indicate that their deals suck.

390
01:08:13.460 --> 01:08:20.830
My point is, though, sometimes watching and waiting and then capitalizing later, uh, is best for a company depending on how it's structured, right? Yeah.

391
01:08:20.830 --> 01:08:33.900
I mean- So I think there's still plenty of opportunities, and if you were looking for companies to maybe dip your toes into if you missed the boat on some of the early ones, not financial advice, there are plenty of public miners out there that are pivoting to AI that are in active discussions with tenants.

392
01:08:34.540 --> 01:08:40.300
So I don't think the party's over yet. That being said, everything could tumble- Oh... tomorrow, right?

393
01:08:40.340 --> 01:08:50.580
[laughs] Yeah, I mean, I just, I say that because it's a good clip and because I try to, you know, elicit some critique from our viewers. Obviously, I think people should still be mining Bitcoin.

394
01:08:50.720 --> 01:09:01.980
That's the whole reason we're, you, we, you know, I'm even here. So, uh, but, you know, and maybe it, it, it also consider, like, the ch- changing landscape, highly iterative landscape of AI compute.

395
01:09:02.160 --> 01:09:13.120
This is a very uncertain thing. You see Microsoft pausing the brakes on new build-outs because it's not clear what to build. You know that you want to- Right... build something, but it's not really clear. So maybe

396
01:09:14.380 --> 01:09:25.420
as the, maybe the early bird may get the worm, but perhaps the second mouse will get the cheese. [bangs table] I like that. That's pretty good. Okay, that's, and that's my, that's my, uh, that's my line.

397
01:09:25.460 --> 01:09:37.320
We gotta, we gotta wrap this up. We got one more story, I think. We're gonna go full hyperscaler AI HPC news now. Uh, actually, actually, this is a vertically integrated neo Cloud.

398
01:09:37.550 --> 01:09:49.280
[laughs] And I'll get into what that means in a second. Oh, my bad. My bad. My bad. [laughs] Yeah. [laughs] See the glossary in the show notes. [laughs] So Nebius also reported its Q1 earnings recently this week.

399
01:09:49.600 --> 01:09:55.980
Uh, their revenue jumped 684% as they beat earnings expectations. Now, we don't cover Nebius a lot on the pod.

400
01:09:56.000 --> 01:10:03.140
We're gonna start doing it a little bit more though, because they are emerging as one of the premier, if not the largest, vertically integrated neo Cloud.

401
01:10:03.200 --> 01:10:14.620
Now, what I mean by that, a neo Cloud, like CoreWeave, is a company that operates GPUs for high-performance computing workloads, but it doesn't necessarily mean that they own their infrastructure, right?

402
01:10:14.720 --> 01:10:26.160
CoreWeave has this partnership with Core Scientific. They also have one with Galaxy. They lease out data center space. Nebius owns the majority of its data centers and the GPU compute in them.

403
01:10:26.200 --> 01:10:38.920
They host some of their capacity in Europe at third-party data centers, but specifically for the US, they are building vert- fully vertically integrated, uh, data center AI service platforms.

404
01:10:39.100 --> 01:10:52.420
[lips smack] Uh, so to get into a few of the data points before I get into some qualitative stuff about their expansion plans, revenue up to 399 million for Q1 versus 50.9 million last year.

405
01:10:52.649 --> 01:10:58.709
Uh, just an insane leap, and we're really starting to see these AI deals really take off in terms of revenue for these companies.

406
01:10:58.760 --> 01:11:09.820
As we covered on the pod recently, Terawulf and Core Scientific, for example, recently crossed over the 50% threshold of revenue coming from AI versus Bitcoin mining. That, to me, is a crossing the Rubicon moment.

407
01:11:09.900 --> 01:11:16.920
Like, I don't think it's fair to call these companies Bitcoin miners anymore. They're data center operators, right? Like, they're, they're just in a completely different business line now.

408
01:11:16.960 --> 01:11:28.209
So we're really starting to see these incomes surge as these companies get these AI data centers o- up and running. Uh, net income was 621 million versus negative 104 last year.

409
01:11:28.780 --> 01:11:35.240
A lot of that is largely because of a 780 million non-cash gain from an equity stake it has in ClickHouse.

410
01:11:37.040 --> 01:11:46.420
[lips smack] Uh, and then there are a few other, you know, uh, boring notes about their, uh, you know, uh, their, their adjusted net loss, all these accounting games.

411
01:11:46.940 --> 01:11:52.600
Um, their adjusted EBITDA was 129.5 million versus negative 53.7 million a year ago.

412
01:11:52.700 --> 01:12:00.430
Uh, the cash from operations, 2.26 billion, [lips smack] um, driven by 3.12 million in, billion increase in deferred revenue from customer payments.

413
01:12:00.900 --> 01:12:10.440
Had nine-- Nebius has 9.3 billion at quarter end after raising 6.3 billion, 2 billion of which came from Nvidia. The other 4.3 billion came from convertible notes.

414
01:12:10.500 --> 01:12:16.900
And they are going to need every single penny they can get 'cause the CapEx guidance for Nebius is wild, man.

415
01:12:17.340 --> 01:12:31.760
They secured 1.2 gigawatts in Pennsylvania for a new owned AI factory, um, and they're targeting more than 3 gigawatts of contracted power by the end of 2026. But here's where it gets really interesting.

416
01:12:31.940 --> 01:12:42.776
They are looking to expand absolutely-Uh, like a crazy amount over the next few years. They've got the Pennsylvania fact- uh, AI factory.

417
01:12:43.016 --> 01:12:54.096
They've got a Kansas City, Missouri co-location that they are building out, and they also have an Independence, Missouri location as well, uh, that they are building out to two gigawatt plus.

418
01:12:54.836 --> 01:13:00.476
Uh, Charlie, I'll let you jump in if you have anything to add before I wrap up with the more core policy thing. I got, yeah, I got a few, I got a few takes.

419
01:13:00.716 --> 01:13:09.176
Um, what's funny is I'm pretty sur- I'm pretty sure I've heard about this Independence, Missouri, like one plus gigawatt power availability for years.

420
01:13:09.236 --> 01:13:18.616
I think it's been kind of a bit of a regional white whale in the Oklahoma tri-state area where like people are like, "I'm working on a big deal in Missouri," but it was never actually materialized.

421
01:13:18.696 --> 01:13:27.786
Sounds like Nebius got it, unless there's multiple gigawatts near Independence, Missouri, which is totally possible. Another one is- Possible but unlikely. Yeah. Yeah.

422
01:13:27.816 --> 01:13:44.096
Another one is, uh, uh, in kind of prep for this, I didn't realize that Nebius is kind of a Russian, um, like refugee company in a way, in that like post the Russia, you know, ban, uh, or the, the US-Russia tensions.

423
01:13:44.136 --> 01:13:57.376
Apparently, like they kinda like had to exodus there, and it's, it's kinda, it's pretty cool to see them, uh, really, uh, blowing up deal flow domestically. Yeah, and, and blowing up for sure.

424
01:13:57.456 --> 01:14:11.416
They, the stock responded very favorably to the earnings news. It's up almost 30% today. Oh. Market cap crested $50 billion at $53 billion currently. What are you doing trading meme coins?

425
01:14:11.476 --> 01:14:18.906
You should be out here trading stock tickers. Brother, what are we doing with any of the crypto stuff? I don't know, man. Equities have been the story for the last two years- Yeah...

426
01:14:18.916 --> 01:14:29.236
and we are all chumps for not apeing into the, the current thing. Last thing to note about Nebius, going back to the CapEx guidance.

427
01:14:30.916 --> 01:14:37.196
The CapEx guidance for 2026, the CFO on the call said, has been raised to 20 to 25 billion for this year.

428
01:14:37.716 --> 01:14:46.996
That is just an in- uh, you know, Matt came on the show a while back, was saying, you know, we kind of are just numb to these numbers. That's an insane, uh, that's an insane headline number.

429
01:14:47.066 --> 01:14:52.836
That's more than any of the Bitcoin miners that we cover are thinking about spending this year on their own CapEx.

430
01:14:53.456 --> 01:15:07.896
And what that will do is take them a little bit further with those data centers we just mentioned in Pennsylvania, um, and in Missouri, as well as, uh, a- as well as, uh, or the two in Missouri, excuse me, and Kansas City.

431
01:15:07.936 --> 01:15:16.736
The last thing to note in terms of just to get an idea of like who Nebius is swimming with, their key contracts include a 27 billion five-year deal with Meta,

432
01:15:17.676 --> 01:15:30.236
a for- 19.4 billion, up to 19.4 billion over five years agreement with Microsoft. Uh, a $2 billion equity investment from NVIDIA, um, as well as early access to next-gen hardware.

433
01:15:30.316 --> 01:15:33.556
They're targeting five gigawatts plus capacity by the end of 2030.

434
01:15:34.276 --> 01:15:46.076
So, uh, we're gonna try to be covering Nebius more on this show 'cause they are kind of emerging as one of the clear front runners in this burgeoning new sector of NeoClouds with AI compute.

435
01:15:47.236 --> 01:15:54.776
So tune in more for, uh, tune into future episodes of Blockspace Live for more of Nebius. If there are any other stocks you want us to cover, please let us know.

436
01:15:54.876 --> 01:16:04.876
Um, the Spirit Airlines thing is a little bit of exception. We won't be doing that very often, but it's just such an interesting, you know, case study for the failures of state intervention in private markets.

437
01:16:05.416 --> 01:16:16.756
I don't know. I enjoyed that story, and, uh, if we could just line up all of the, uh, Bitcoin and crypto enemies number one, two, and three and, uh, just dunk on them over the next few months, that'd be great.

438
01:16:17.246 --> 01:16:30.006
Although, uh, maybe we should dunk on them when the price is a bit higher. [laughs] Enough about that. Thank you so much for watching Blockspace Live, coming at you, uh, live at noon Eastern Monday, Wednesday, Friday.

439
01:16:30.336 --> 01:16:37.536
Check all our socials. See you all next week. [outro music]