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[upbeat music] What's up, y'all? Welcome back to Blockspace Live. Last live stream of the week. Friday, beautiful day. Summer is coming fast, and we've got a lot of stories coming at y'all fast this morning as well.

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We will be covering, 'cause of course we have to, SpaceX's IPO, which is gearing up to be potentially the most lucrative IPO, the largest in history, as SpaceX guns for a nearly $2 trillion valuation.

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After that, we have Steven Gladgold of KBW on to talk about some of his takes on the current AI and Bitcoin equities landscape.

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We also have Tom Massero of Sphere 3D now, um, or formerly Cathedral, now Sphere 3D after a business combination.

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We're gonna be talking to him about that business combination, as well as some of his takes, potentially hot, on how we can address some of the anti-data center FUD.

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After that, we have Zach Herbert of Foundation on to talk about their product suite and the current state of Bitcoin.

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And then we will move on to a very spicy story, in which case the US government, the Justice Department, scams the scammers while also kind of scamming normal people too.

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And to end the stream, unfortunately, gotta talk about the orange man and specifically Donald J. Trump media potentially selling some of its Bitcoin. That's right, the dream is fading fast there in the Oval Office.

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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 stories. Make sure to hit subscribe, get the notification bell.

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If you're watching on YouTube, get the push notification on mobile. This turns into a podcast right after we wrap up every day. You can find it where every podcasts are streamed, Spotify, RSS, Apple, et cetera.

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Deezer probably, if that's still around. And if you're listening on CoinDesk, make sure to subscribe to the actual Blockspace feed. Just search Blockspace in whatever application you're listening to right now.

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Do it right now. Pause it, go do it, then come back. Make sure to subscribe so you get, uh, so you stay on lock for all of our future episodes. This show is brought to you by CleanSpark, NASDAQ listed ticker CLSK.

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More on CleanSpark later on in the show. Let's kick it off with Friday hash rate index, brought to you by Luxor. We've got our hash rate index update here. Thank you, Charlie, for the intro.

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And I regret to inform you, ladies and gentlemen, that very little has changed. We are monitoring the situation, but it seems like it's the same limbo day in and day out.

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So hash rate is, you know, plodding along at 969 exahashes a second. We are coming off of a difficulty adjustment of roughly 3%, which actually hit last week as we were streaming, which was a first for us.

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And the upcoming difficulty adjustment is estimated at negative 73%. We're halfway through the current epoch. Blocks are coming in at 10 minutes and four seconds on average.

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And hash price is doing what it does best, disappointing. Uh, we're just above 34, $35 per peta hash per day.

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Uh, well above the lows that we saw earlier in the year, but still very, very skimpy revenue for Bitcoin miners.

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Uh, with Bitcoin at 76,000, uh, you know, uh, it's deteriorated over the last 24 hours or so over the last week. Um, actually quite a lot over the last week.

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[laughs] We're almost gunning for $40 per peta hash per day there. But overall, Charlie, same story as we covered last week. It is tough to be hashing right now. There's literally nothing happening, going on.

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Um, the only interesting thing, 'cause the only color I'll add, is that you may notice that the transactions per second are 7.4 transactions per second this epoch, this difficulty epoch, um, which actually near the maximum throughput that Bitcoin can s- can, uh, handle, and that is largely because of a lot of, you guessed it, Uncommon Goods runes mints.

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Okay, enough about- Wait, really? Yeah. Those are back? That's actually what's happening. Are we, are we back? No, they're not affecting the fee rates. They have zero competition, bro.

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[laughs] Um, speaking of competition, let's go to the most, uh, competitive frontier, space. Yeah, so this was honestly the only thing anyone wanted to talk about, I feel like yesterday, um, when, when the S-1 broke.

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Maybe it was on Wednesday. I think it was yesterday, though. But yeah, so SpaceX is going public.

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I mean, this has been expected for a while, but we finally have their S-1 registration, so we can get a glimpse into their financials. We'll cover some of those very quickly here.

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So in 2025, the company earned $18.67 billion in revenue at a 4.9-- with a $4.9 billion net loss. The IPO is expected on the NASDAQ, um, at, with the ticker SPCX. It'll also be trading on NASDAQ Texas Exchange.

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That's a- an interesting point, which we might return to later.

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Reuters says, uh, the road show is targeted for June 4th, share, uh, sa- uh, the share sales as early as June twel- 11th and trading as early as June twel- uh, 12th, 2026.

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And if successful, they're trying to raise $75 billion, um, potentially maybe a little bit more than that, depending on the appetite.

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This would put the valuation of the company between $1.75 trillion and $2 trillion, making it the largest IPO in history. It, uh, it could, uh, potentially eclipse records set by Saudi Aramco and Alibaba.

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So Charlie, are we buying SpaceX? Are we, are, are we buying the frontier- That's a g- that's a great question.

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The thing is, you should have bought SpaceX 10 years ago, because even though it was privatePeople were still able to get access. They're, you know, buying shares off, you know,

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off the, whatever those, like- Private markets and whatnot... non-public markets were. I mean, with a caveat, you probably had to be a certain level of accreditation, right?

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But- E- exactly, but, but the thing is, like, these shares are actually...

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The, the ownership of SpaceX is now pretty, like, uh, pretty disseminated given the fact they've been around for 20-plus years, and a lot of these folks are locked up. So this is really just retail's first opportunity.

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If you've been wanting to get a piece of SpaceX for a while and you've had money, you've probably been able to do it.

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So it, you know, that's an interesting dynamic here, which I don't-- which may cool a bit of the excitement. I will, um, show, uh, this, which is

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if SpaceX IPOs at $2 trillion, it immediately pops up as a top 10 largest company in the world. Mm-hmm. We're talking number... At $2 trillion even, it would be number seven behind TSMC and- And that- Yeah...

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that's just, that's just wild. And, and to be clear, the valuation is fully diluted valuation- Yeah... so where the market cap ends up shaking out, uh, it will be, uh, different.

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But it, it would still, I would assume, break into that top 10. And the multiple on the revenue is crazy, bro. Yeah. [chuckles] Like, the, the multiple on the revenue is insane.

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Yeah, I, I mean, I do ask, like, who else is gonna shoot all the rockets up into space? So, like, you know, they have- True... that market, and then again- But it's like-...

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but who's really just- They're really more of a data center company now, weirdly enough Yeah, yeah. That, that's a good point.

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And so I was about to say, like, you know, on the, on the space side of things, obviously, you know, it's like their primary customer is the US government. No one else is [chuckles] gonna be bankrolling that.

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But one of the more interesting parts of this whole reveal is that they are partnering with Anthropic for compute.

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Uh, and th-this was, this was really big news for all of us enmeshed in the AI landscape because anyone who's used Claude, I would say, what do you think, Charlie, within the last few weeks, has probably noticed a degradation in services.

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Yeah. I mean, I'm a Claude user. I'm a Claude code, dare I say, power user, and, uh, it's really flagged compared to the next competitor, Codex, from ChatGPT, OpenAI.

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Um, but, you know, everybody- And even the LLM portion of it, like just if you're- Yeah... if you're just talking to either, uh, ChatGPT, for me at least, has been more accurate recently.

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And- Yeah, and, and this is, and this is 'cause Anthropic is compute constrained. Like, this is no secret. They went from 4 billion a month or quarter to 44 billion a month or quarter. I forget what the time period was.

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Geez. But yeah, um, historic increase. We're talking like massive user onboarding.

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A lot of these are corporations and businesses, and so, like, that's gonna hit your compute constraint, and Anthropic was of the, of like the frontier, uh, comp- you know, model companies, the one which was not

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trying to get over their skis on compute. Well, now they wish they had, so they signed this deal with SpaceX for their comp- for their, uh, Colossus-1 data center. Yeah.

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So per the announcement, xAI will provide Anthropic access to Colossus-1 with 220,000-plus Nvidia GPUs, including H100s, H200s, and Blackwells.

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A- Axios also reported that it would use all, uh, that, it said that Anthropic would use all the capacity of Colossus-1 and gain access to 300-plus megawatts of capacity within the month. So

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this sh- uh, they're, they're rolling this out, I would assume right now, and if that Axios reporting is accurate, then that 300-plus megawatts will be Anthropic's at the end of the month for their compute.

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And going back to Charlie's capacity constraint point, um, per the, uh, per Axios' other reporting, uh, Dario Amodei said there is a, quote, "severe compute, uh, deficit," end quote.

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And then Anthropic saw 80% growth per year in revenue and usage in Q1 2026, despite planning for 10X, creating a usage limit plan for customers.

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So as Charlie said, they are-- the demand for Claude is just totally outstripping their access to compute, and this is a story really for the entire industry. Now, OpenAI's answer to this is Stargate.

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That's gonna be an insane, uh, you know, rollout. I believe it's somewhere in the ballpark of, like, nine gigawatts, 10 gigawatts. Yeah.

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And so it-- once that goes online, it's gonna take a long time to build out, but that will give them a massive f- uh, you know, m-massive cornerstone for their compute in the future.

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One last thing to note on this before we move on, Charlie, and I toss it to you for a last take, uh, SpaceX is holding Bitcoin, and Bitcoiners obviously love to see this. We knew they were.

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We knew they, uh, owned some Bitcoin. Yeah. E-Elon had said a few times, "We still own the Bitcoin." Uh, the story, Colin, is they own more Bitcoin than everyone else thought.

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In fact, if I'm correct, I think they own double the amount of Bitcoin that was, like, speculated. Yeah. It's 18,712, which is about $1.43 billion worth at current market prices

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and, you know, just curious what the play is here.

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I mean, obviously there's the Bitcoiner rah-rah argum- argument that, you know, you wanna diversify your balance sheet and have that as a, you know, kind of supplement to your cash position.

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[sniffs] But, uh, that's a drop in the bucket for a company like this. It's still really interesting to see that a company associated with Elon Musk is still holding onto Bitcoin. So we'll see what happens with SpaceX.

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A lot of takes as to whether or not this is gonna be a good or bad buy. We won't get into that, but, uh, huge value. I, yeah, I don't know about, I don't know about the SpaceX stock.

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I feel like, you know, if they do send people to Mars, uh, you're probably gonna wanna own the stock.

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Um, maybe I'll, uh, call an audible and towards the end of this, uh, we'll, we'll talk a little bit more about the, the Bitcoin hook to the Mars story.Uh, featuring a famous, uh, Bitcoiner.

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But, uh, for now, I think we move on. We have our first guest of the stream, Stephen Glogola Senior analyst at KBW, coming at us fresh this morning. Bring him up here now. Welcome to the show, Stephen. Stephen.

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Hey, guys. Colin, Charlie. How you doing? Thank you. Doing great, man. Really appreciate you joining us.

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You know, it's obviously, uh, never a dull day in the markets and certainly not, uh, a dull day today or a dull week. And you've been covering a lot of the companies that we cover here, uh, at Blockspace.

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We, we can't touch on specific names, but we're gonna be talking mostly about general trends.

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And the first question that I had for you, it seems to me like the AI and the AI CapEx cycle, or the AI trade, AI CapEx cycle is sucking all the liquidity out and digital asset equities have either ripped if you're a Bitcoin miner in this regard or if you're another one, uh, uh, in, in any other indust- or any other sector within the industry or if you're Bitcoin, kind of just you're not feeling the love as much.

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So I'm curious, uh, do you see any mispriced opportunities right now? A-a-and do you think there's anything that the market's getting wrong about the digital asset, uh, equity space specifically? Yeah.

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Well, well, first, um, thanks for having me on. I'm an avid listener to the pod. You guys do a great job. Um, I would say, you know, on your question, look, like

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the nine miners I cover I think are up roughly like ninety-three percent on average from the start of April.

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So, you know, things have definitely, you know, they've absorbed more of their forward HPC or AI opportunity over the last two months, right? So valuations are more full than they were, um, that's for sure.

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I think, uh, against that backdrop, um, you know, uh, there, there has been some rotation I think in the last week or two to some of the laggard miners, the ones that haven't signed, you know, hyperscaler deals yet or leases.

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Um, amongst those names, the ones that haven't signed, I, I still like, you know, Riot, uh, you know, Core, Core Scientific, CleanSpark.

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I think consensus-wise, there's this view, you know, time to power, you know, I think is still, you know, the, the big talking point.

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But I would say I think the more emerging durable moat, uh, at least from the co-location side, is execution against hyperscaler standards and developing those relationships.

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Um, so in that area, you know, you have like Hut, Cipher, TeraWolf, who have done, you know, sort of been first movers on that, and they're developing this co-location flywheel, and I think that's underestimated by the market still today, um, to some extent.

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And, you know, when you have those relationships, it helps, you know, in forward due diligence on the next deal, right? The, the timeline might compress on the next deal and so forth.

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So, um, those are names I still f- you know, find attractive right now. Yeah. I've been keeping an eye on some of the miners here, uh, M-M-I and O-R in terms of the AI race.

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I mean, we've seen Keel move pretty aggressively, and you wonder if there's a deal in place there. And, you know, that's something we keep coming back to with a lot of investors are frustrated.

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They, they think that some of these miners should've moved earlier. But, you know, if this thing is as big as we think it is, you gotta be thinking on a much longer time horizon.

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Um, on that note, though, about these pivots, you know, what advantages do you see for companies that enter the space later versus ones that have entered earlier?

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I mean, there, there's gotta be a pros and cons here for either, right? Yeah. I mean, there it is. I mean, look, the time to power from the, you know, speed of market is still, you know, very covalent, right?

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Um, and, and, you know, these miners have capacity. And so, you know, there's an advantage just of that in and of itself.

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Um, I think the risk might go, you know, like I said, if it-- the longer you kind of go in this market as it, as it plays out and, and maybe, you know, the co-location market isn't as tight at, at some point, right.

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Right, right now it's very tight in North America, right? Absorptions are out of completions.

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You know, the vast majority of, you know, construction under, under construction using is pre-leased and, uh, you know, vacancy rates are at multi-year lows and so forth. So everything's very tight.

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But, you know, there could be a situation where that loosens up a bit, and I think in that scenario, you know, again, I point back to these, like, you know, if you're a first mover and you're developing these relationships, you're executing, right, we, we still don't know who's really, you know, a good operator yet, right?

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Like, most of these leases are still under construction. So [chuckles] you know, they still have to get them online, right?

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So we're still trying to figure out who that is, and I think we'll have a much better picture of that in six to twelve months.

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Um, but again, yeah, you know, like you have a company like, for example, TeraWolf and Cipher.

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TeraWolf goes out and buys a Kentucky site in February, and they're already going to getting the lease done here, you know, by the end of the quarter.

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Um, you have Cipher that goes and gets an Ohio site in December and, you know, they're probably gonna get a lease on Ulysses at some point here this year, uh, you know, I would estimate.

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So again, like, this goes back to sort of this flywheel effect, and I think you just, if the laggards, you know, uh, if you're later to the game on that, I think, you know, there's more risk that you're not able to replicate that and going forward.

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So that, that's what I would say. W-with regards to that future CapEx, Charlie, maybe this is a good, uh, chance for you to throw in that question 'cause I think- Yeah... it ties in nicely to that res- that response.

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Yeah. I'm always curious, like, everybody's wondering i- you know, how long does AI CapEx cycle last? Do we-- do you-- do you see it extending to twenty-twenty-eight? Does it slow down? Does it stop and start?

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I mean, does the twenty-twenty-eight CapEx boom cycle thesis hold up right now? Yeah, I mean, I think for the most part, I, you know, yes, but, you know, I'll caveat it here.

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Like, I think my cons- my, my area of caution is more on the demand side.

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So I think, like, what most analysts will, uh, you know, do at least on the sell side or what I've seen is they do some type of analysis like this.Um, NVIDIA produces X amount of, you know, GPUs, and that leads to Y data center demand.

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But very rarely do you see the analysis of, um, okay, NVIDIA produces X GPUs, Y data center.

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What, what is the Z, you know, uh, or, you know, essentially, like, end demand revenue from the enterprises and the AI in the top of the stack and, you know, is their profitability justifying the return on investment they're justifying all the spend at the bottom of the stack?

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And so you have a big delta right now between, you know, the trillions of dollars being spent on the bottom of the stack and the end revenue on the top of the stack.

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And, you know, most of it's coming from two companies, OpenAI and Anthropic, right? And, you know, you have to have to see that delta, you know, start, you know, narrowing over time or compressing over time.

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And I think, um, there will be a lot of scrutiny when, you know, OAI and Anthropic go public around the filings and their contractual obligations and so forth, and that could lead to some scrutiny around the CapEx spend potentially.

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Um, so that's something to be mindful of, um, at least I'm, I'm, I'm taking, you know, a closer look at.

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Well, it, it's, it's a, it's an interest-- it's a good thing to point out because, you know, there was this beautiful an- uh, I wouldn't say beautiful, but really funny Anthropic ad a while back where it's, like, this kind of robotic human personal trainer goes up to this guy doing pull-ups.

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It was actually a play on OpenAI's own ad of this skinny kid doing pull-ups, and OpenAI's, like, training him on how to get better at doing pull-ups.

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And he, uh, he's asking the trainer a question, and he gives this really wooden response, and then he hops into an ad because OpenAI has floated the idea of, like, okay, to supplement revenues for our subscriptions, we're gonna have to put ads in.

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And I just wonder at which point do we kinda have the, like, Uber and Airbnb rate hike moment?

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'Cause early on in both of those platforms, they were surviving on VC money, and they could kind of subsidize users by having much lower costs, and they weren't taking, uh, as big of, of a cut on the rents or on the, uh, on the rides and whatnot.

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And I, I really do wonder is, like, how, how much longer do we have until we see maybe a m- a, a repricing? Because to me, at least right now, $20 a month for Cloud Pro is super cheap. Um,

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y- you know, um, I mean, $100 for the, uh, Max plan might maybe not. But anyway, uh, o-on this note about the CapEx cycle, I'm curious, Steven,

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uh, US Treasuries have been surging in the wake of the Iran conflict, and we saw, we saw the thirty-year just pop up over, last I checked, it was like five point one two, might be more than that today.

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And I'm curious, at what point does the Treasury market kinda create headaches for the private bond market here as we see, um, those spreads get messed with? Well, I'm a, I'm a micro guy.

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I mean, I'm, I'm in the weeds, you know, with these companies, so I, I'm not the best for macro, like, interest rate advice. But I will say the interest rates are very important for, uh, valuation, right?

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These leases are long duration, income oriented, right, cash flow, right? So they are sensitive to the tenure, uh, the risk-free rate movement.

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And, um, you know, so if, if, if you see that increasing, that's definitely going to impact, uh, at least the valuations or the cap rates that investors are putting on these leases.

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Now, I use, and, a-and I think this is where the buy side consensus is,

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um, six point seven percent to eight percent cap rates on, uh, the colocation leases, which is essentially twelve and a half to fifteen times, uh, net operating income multiple, and I think that's where the consensus falls in.

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And, you know, if it's a-- I, I think those rates, those cap rates are still appropriate relative to, like, a four and a half percent, what are you, a four and a half, four point six, uh, tenure.

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Um, I think that's, you know, still, you know, solid spread.

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But, you know, if you start seeing the ten-year creeping up higher, um, yeah, I think then you, you, you will see some, uh, expansion to those, to that cap rate range potentially.

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And, you know, I would just mention too, you know, I'll use the fifteen times multiple or the lo- the lower cap rate for like a hyperscaler lease, and I'll use maybe the eight percent cap rate for, you know, the Core Scientific core week leases, for example.

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Um, I just think there's less knowledge of where Core Weave will be in ten or fifteen years versus an Amazon or Microsoft. I think we can reasonably say that. So I think that's mostly how investors are looking at it.

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All right, Steven, last question here, and then we'll get you to hop off. What does it take for the companies in your coverage to get a buy rating from you?

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What do you wanna see from these operators like that, that, that screams excellence to you where you think people should be, you know, thinking about these companies a little more seriously?

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Well, these management teams, look, I, I, I've have relationships with all of them. You know, I, I know they're all, you know, trying to execute here on their AI plans and pivots and, and, and so forth.

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Um, you know, and each have different degrees on that. I'd say for KBW, like, uh, it really comes down to expected relative, uh, performance over twelve-month time horizons. So that's how we look at it.

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Um, and there's no perfect, like, index for the miners to, to benchmark that on. So we really benchmark against like the market broadly or against the peer group that I cover.

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So, um, I really look at in that, that lens, like which ones I think are gonna be the relative out-performers, you know, plus ten percent plus of y- you know, over the, the peer group essentially.

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Um, and that, and that's how I kinda come to my basis of, of, you know, buy versus, you know, not buy.

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And, you know, I would say, I would just say, you know, there's a lot of talk about, you know, people use like heuristics like EV to megawatt and so forth to kinda benchmark this space.

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I, I would just say be careful with that [chuckles]. Um, you know, the-- you have to kinda go through each one bottom up. Um, each name has its nuances. You have to look at the pipeline and really scrutinize it.

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You know, some of the pipeline, you know, uh, what is actually realistic to come to fruition, what's not, you know, on what timeline.

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Um, so I just would be careful painting a broad brush, um, you know, on a simple heuristic like EV to megawatt or something across the space.

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Yeah, everything looks good on paper, and then you actually have to figure out how the dollars are gonna be generated, right? Yeah.Steven Glagola, thank you so much for joining, man. Really appreciate- Yeah...

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the insights. Uh, love the coverage. Keep up the good work, and we will, uh, hopefully see you around again sometime. But have a great weekend, man. Yeah. Thank you. You too. You guys have a great holiday weekend.

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Appreciate it. And like I said, love the show. Have a good one. Thanks, man. Appreciate it. We're gonna keep on rolling. Glad we got the KPW analyst on the show. He's a smart cookie.

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Let's talk to somebody who's on the other end of the data center deal structure. From analyst to builder, we have longtime friend of the show, Tom Masiero, coming up next.

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But first, we need to do a quick word- But first, a word from our-... from our needs sponsor... 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.

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This is our proof of work, and we are setting the standard for what's next. Learn more about the intersection of energy and Bitcoin at cleanspark.com. Now, we welcome to the stage Tom Masiero. Welcome, Tom.

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AI wizard. What's up, fellas? What's up, man? Hey, I- So- I, that's a, that's a tough one. I have to outdo Harry's just, like- [laughs]... just that voice is just so soothing, man. I now I gotta- Yeah...

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come in and just off the back of that, so. It's like butter rum, man. [laughs] It really is. Like, he's the- Greatest voice in Bitcoin... yeah. The, the, the, the Morgan Freeman of Bitcoin mining- Yeah.

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[laughs] For sure... perhaps. So we had to get you on because the Sp- Sphere 3D shareholders just approved this combination with Cathedral Bitcoin. I'm gonna get the news up here really quickly just so we can see that.

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And this was announced, I believe, in March, if that's correct, and we actually had you on at the time to discuss. And now it's going through.

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Just give our listeners a quick recap of this news and why this combination is a good fit for both companies. Yeah.

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Well, first, to start off, just to make sure I get all the disclosures out of the way, it's expected to close, uh, by June 1st, 2026.

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So the two shareholder votes, uh, took place, uh, this past, like, week and a half, so I think they were actually on the same day between both companies. And they both passed, uh, in the majority.

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And f- f- in fact, there was like 99%, uh, approved it. And so it's, it's very close to a merger of, of equals. Um, and we're, we're very excited.

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We, you know, a- announced in this, uh, press release that, um, you know, we're essentially evaluating our current assets.

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Um, you know, they're containerized, powered sites, already active, uh, in, in, in very good markets, uh, to basically be, um, you know, used for AI compute. And, and it's just in very, very...

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I, I don't even wanna, like... It's, it's pretty wild how fast that this side of things has come down to folks with assets that are, like, you know, say sub 50 megawatts.

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Um, you know, I've sort of just been waiting for this to happen. I didn't know when it was gonna happen, but, um, there definitely seems to be a lot of interest, demand.

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Um, you know, we're talking to folks where they're talking about this is the most underserved market in all of the data center, um, segment right now. So, um, yeah, we're very excited to get to work.

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Uh, we've been actively working on this.

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I mean, the deal with Sphere has gone back almost six months in terms of, like, the inception of when we first started talking and, um, w- we're really excited about what we're gonna be doing.

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Uh, so can you unpack that kinda last part for me in terms of these opportunities for smaller AI clusters in some of these modular sites or HPC?

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I mean, I think when most listeners think about the AI CapEx boom, they think of Stargate. They think of these $100 billion projects.

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They think, well, these data centers are gonna have to live in these massive data halls. But it's turning out that actually there can be a lot of flexibility here.

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Well, what opportunities exist for these smaller clusters in some of the sites that, like, y'all have and other competitors and whatnot? Yeah. Uh, well, I think it's twofold right now.

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You have, you have two pressures that are kinda pushing. One is the pushback on these mega data centers that are happening.

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So you have a lot of projects that are completely stalled out and aren't gonna be able to, um, to go through or at least, you know, they're paused for the indefinite period of time.

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And so there's still this demand side push on getting GPUs plugged in. And so customers at, on NVIDIA's levels are still pushing their customer- [laughs] or still trying to get GPUs plugged in.

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Uh, the s- you know, the second ish- uh, the, the other second push is just the mainstream adoption of these, uh, services.

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I mean, anth- I don't know if you guys have already talked about it, but, like, anth- Anthropic being reported as, um, you know, coming out as making money and being profitable and the run rate that they're on is w- in my opinion, way ahead of where I thought things were gonna be.

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And so, you know, that's more of, like, an inference play. I think there's just more practical uses that everyday people are gonna use. And so, um, uh, I, I, uh, I... There's those two factors.

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There's just, like, we can't do the bigger sites that we think, so we're gonna have to get a little bit more creative and nimble, which is similar to, uh, what happened in Bitcoin mining in 2020, '21, '22.

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When the big sites wanted to come out, it took a really long time to get those things live, and so there was still this demand of getting ASICs live. And so there's, you know, it's kinda complimentary. Yeah.

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Uh, go a little bit deeper into just the differences of these smaller, non-massive hundreds of megawatt sites, your sub 50 sites, because, like, when you got these giant sites, you can justify building out all the...

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'Cause you have a lot more infrastructure. You gotta make- Mm-hmm... your, if you're doing inference, you, sometimes you gotta build out all of your networking significantly more.

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You've got to be more selective out, you know, where in the US it is. But these smaller sites, the powers... little more scattered. Does it affect the capital to these sites? Does it affect site selection?

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Um, does it affect your counterparties? I'm kind of curious, like, the different, the, the strengths that you can have being- Yeah. Um, I, I- it's still like a, it's still sort of opaque, uh, honestly.

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We're still evaluating. We've talked to so many people, like, in the last, like, six weeks, different groups, different entities. There's all different folks up and down the value chain.

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Like, once you get past your top three neo clouds, there's a whole spectrum of neo clouds below that, that have sort of, like, been able to, to grow their companies just by putting, you know, uh, GPUs within traditional data centers.

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But now they're finding out as they wanna grow, um, that, that that's becoming a little bit more difficult, and so they're trying to get a little bit more creative with, "Well, wait a minute, how do we become more vertically integrated?"

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So you have customers like that. You have just, um, outbound requests from NVIDIA where they're saying, "Look, we have a, a large buy from a enterprise customer. We need it placed. Can you help us?"

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And so, uh, you know, and this isn't really news. I mean, NVIDIA has, uh, had programs that they've talked about in the past where they wanna make sure that there's this sub 50 megawatt category that is, um, filled.

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So I think, you know, there's always gonna be constraints with these smaller sites in more rural areas, and some sites are gonna be better than others, and some sites might have more redundancy than others.

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Um, but at the end of the day, these people want this compute online, and they're gonna have to, you know, potentially make some, um, you know, pullbacks on what their demands might be.

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But, um, you know, that, I think that's what's great for competition because, I mean, the, the market for these sub fig- 50 megawatt sites is massive.

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Um, and because the hyperscalers are all growing out west and not traditional areas, there's a lot of sites around them too. So the, the investors, the markets want these data centers. They're clamoring over each other.

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But yet, boots on the ground, when you leave Twitter and when you leave, like, financial news, and I go on Facebook, everybody hates- Everyone hates us [laughs]... everybody hates data centers. Yeah.

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And it, and it's cross-party too. It's n- Yeah... it's not just, like, progressives. It's, like, the rural, uh, you know... I mean, in Oklahoma, we're talking red counties in Oklahoma do not like data centers. Mm-hmm.

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What are they getting wrong? Oh. What's going on, Tom? I'm glad you teed that one up for me. Uh, I mean, the biggest thing is

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these people who live in these communities are not stupid, and they're not getting anything out of it. There's nothing of benefit that c- that, that they get.

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And so you have to have all- Okay, not even property taxes, though? Like, do you, do you- Nothing... just wave that one? I mean, the property tax thing, I mean, I've sat in on a, on a meeting at one of our sites, uh,

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in Kentucky where, you know, there was a outside developer wanting to come and do a big behind-the-meter deal, and that's what they were, you know, kind of espousing, was the ability for taxes, the property taxes to go down, and all of this, you know, additional tax revenue.

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And these people had all been fed this with casinos and other different kind of, like, schemes like this where they have these things that have been put in their communities, and really there has been negligible benefits for them.

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Um, and so, you know, that's the, that's the one thing. The amount of land that they're using is, is... And not just land. It's, like, virgin land.

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It's, like, good land that w- you know, you would want it to be used for agriculture or just, like, the pristine settings of, of where they're in. So there's that, like, uh, optics take, take on it.

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There's the water issue, which I think is overblown. However, um, because these guys are trying to rush to get things going, they're, they're asking for a lot of water.

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I think, you know, the containerized setups are, are, are much better. You can fit things in a much denser area. You can put them in industrial areas that, you know, already have existing infrastructure.

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And it's just, you know, there's, there's a path to do it, uh, right. That's, that's my take. And it's gonna take, it's gonna take operators to actually work hand-in-hand with the communities.

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That's what it's gonna take. Not be an extractor, which is what's happening. And, and, and do you, do you think that the industry just hasn't done a good job of that?

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Like, do you think there's still a layer- Terrible job. Yeah. Yeah. And I don't mean, like, terrible on all ends.

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Like, a lot of the guys who are into Bitcoin, there's a whole strand of guys who got into Bitcoin who are from oil and gas, you know, yourself included, Charlie.

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And, um, and then there, what I've noticed is there's a lot of folks in the AI and, like, the infrastructure side, a lot of oil and gas people.

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Oil and gas, for the most part, did a really good job of, like, understanding that dynamic. They would build parks, all kinds of, you know, um, you know, infrastructure deals that would be beneficial for the community.

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Bitcoin miners took that up early on. I remember Riot, uh, you know, with Rockdale, they did something. Keel just announced that they've got a, um, you know, they did a playground. Galaxy did a pool back in the day.

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It's, it's not, like, hard to do some of this stuff. And, you know, that's, that's all you gotta do, just be a good partner. And then at the...

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And then if you, if you take out the where things are going, right, how disruptive this thing is going, um, you know, you basically have the CEO of Cloudflare, you know, nuking 20% of his staff, and he's basically saying they're completely useless because of what we're doing with AI.

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There's an element of this, once compute becomes...

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If we really are trying to be the AI center of the world, we're gonna have to think long and hard about doing brave and bold things, like what the Alaska Permanent Fund has done.

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I know people are like, "Oh, it's communist," or whatever. It's not communist in Alaska. If you live in Alaska, you think that's a pretty good deal.

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And the amount of money that's gonna be generated from these AI computes and just the entire ecosystem is gonna be massive. So I think it's gonna take- I'm glad you mentioned that.

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S- sorry to cut in, but can you kind of unpack this? No, no, I'll be quick. You have this tweet here.

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You said, "Manifesting into existence," replying to rokon's, "We need to tax agentic AI more than workers," um, the Compute Permanent Fund. So, like, what, what, what, uh, how does this work?

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What exactly is the thought here? Uh-huh. And, and how do you think it will address the anti-data center FUD?I think it's more, like, I don't, I don't know how it would work.

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Like, honestly, like, it's more of, like, a caveman take of, like, getting the conversation started. 'Cause it's like, you know, that- that's where it's at with the, the politicians.

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It's like, oh, we'll just tax them more. Okay, great, tax it, and where does that money go? How does it actually benefit the people that are living around it? Whereas, like, that's actually something tangible.

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What, um, the f- the, the guy who actually set up the Alaska Permanent Fund, I mean, he, there should be, like, monuments built to him as far as, like, how they set that whole thing up.

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And, you know, it's basically taking a royalty or a percentage of revenue that comes in directly from, um, you know, computing revenue, goes into a pool, there's investment that goes on with it, it grows, and then it's distributed.

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Now, at a small local level, it makes a lot more sense for operators to, uh, you know, do the community projects of, like, what we're talking about.

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But, like, in aggregate with all these mega sites, and if we're building new generation and doing all kinds of stuff, um, you know, I, I think there's something tangible there.

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You had all these Silicon Valley guys, um, doing pilot projects of UBI back in the day. Well, this is like, this is exactly what it should've been, um, is something around this.

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But yet none of them are talking about it now. So it's sort of like, it's weird. I feel like the Bitcoin miners are gonna be, like, the plan B, um, cooperate, like, corporations, uh, of this whole thing.

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Like, they're, they're gonna try to push to, to do things right and better and, and, and slap around the Silicon Valley guys a little bit to, to say, "Look, you don't live in these areas.

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We've, we've, we've done business in these areas for a really long time, and, you know, we wanna continue to be good neighbors." Yeah. I, uh, I look at the, the, the public backlash.

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That is a point I bring up a lot, and I do make the analogy to oil and gas. Like, the, the locals, as far as I... uh, generally, as a general statement, the, the local communities are not enriched.

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Um, there's some tax revenue. But, like, look at oil and gas. Oil and gas develops a, a play, and everybody in that county gets rich. They're, they're getting royalties, uh, mineral rights. They're selling their land.

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It's going directly to families. You have generational wealth sp- spun out from people who owned ranches which were dying and then sold their, sold their minerals to, to oil and gas.

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But we don't really see that with, with data centers. Um, I'll kind of throw maybe a, a, a, a easy layup for you here, which is you're talking about smaller data centers, more agile.

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Do you think with these smaller sites you might have more ability to engage the community on these issues?

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Do you have, like, certain strengths, or, like, you can be more of a present face like, "I'm the guy building the data center. I'm at your local council meeting"? Yeah. What are your thoughts here?

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Yeah, I mean, absolutely. The opportunity's there. Obviously there's still gonna be a lot of, like, uh, I think, like, resistance to it. But, like, the things that we already have going for us is we're already there.

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We're- we've already been operating. We work, w- you know, hand-in-hand with the grid or, you know, with our utility providers by curtailing already, so we're already good partners. They like us.

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In that same meeting I was telling you about, I was watching it on Facebook, and, you know, people are like, "Oh, we don't want data centers here."

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And someone in the chat was like, "Oh, there's actually already a Bitcoin miner in town." And people were like, "What?" They couldn't believe it. And then they were like, "Yeah, it's been here for three years.

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It's not a big deal. It's, it's, you know, behind this building or whatever, and they're, it's in some cans. They don't..." You know?

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So, like, there's these elements, like, once you're already operating, especially in an area where there's already been manufacturing or some type of industrial base, a lot of that stigma is, like, you can work through that and you can b- you can build off of it.

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And then one thing that got brought up to me recently, I don't know if you guys have heard this take, but it, he was, he was basically riffing off this idea that, like, you know, Elon with the robot builds and, you know, the humanoids or whatever you wanna call them, you know, that stuff's coming.

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But he, but he was saying that, look, the, w- local communities should not completely block out data centers.

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Because in the future, if you have these data centers here, or compute centers, not data centers, compute centers, that's actually gonna draw a new type of manufacturing base that relies upon these models to do really high-end manufacturing.

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And, you know, I hadn't really had thought about that, but that is absolutely gonna be a thing. Localized compute. Um, Tom, thank you so much for joining, man.

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Hey, congratulations on the- Thanks for letting me, thanks for letting me rant. No, I, we love it, man. Congratulations on the pending combination, obviously. Thank you.

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You know, J- you said June's when we should see it, uh, you know, uh, solidify. But congratulations on the news, and, and thanks for hopping on. We'll have you on sometime soon, uh, later in the summer, so... Awesome.

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Thanks for the invite, guys. Appreciate it. Thanks, Tom. Thanks, Tom. We are gonna keep rolling. We got more stories. We got another guest, Zach Herbert, CEO of Foundation Devices, here.

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And we are gonna talk about Orange Man after that. But before we bring on Zach, a word from our sponsor, Luxor.

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Let's talk hardware and agents and security and the latest raise from Foundation. We've got Zach Herbert. I'll bring him up here. Zach, welcome to the show. Hey, guys. Thanks for having me.

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And I, I love the Luxor guys, by the way, so, uh, this is perfect, uh, transition. [laughs] Yeah. We do, too. Um-So you guys have been doing a lot.

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You sent out, uh, you've got your Passport Prime, which I've got here actually- Awesome... as a- Love it... visual demonstration. Um, you guys- Beautiful wallet, by the way. Yeah. Thank you. Yeah. Beautiful.

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Um, and you just announced a $6.4 million round led by Folger Ventures to build, quote, "human authority hardware." Now, that stuck out to me. Explain this.

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This doesn't, you know, I don't see the word wallet anywhere on this announcement. Exactly, yeah. So we're actually not using the term hardware wallet anymore.

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I look at a hardware wallet as, uh, one of the many features and capabilities of Passport Prime.

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But, uh, human authority hardware is- is basically the idea that we as humans need to remain in control of these powerful systems.

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So, uh, we wanna be the final reviewer and approver of everything, and it starts with those Bitcoin security principles, right?

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Like the hardware wallet, the idea that you don't wanna just keep your keys for your Bitcoin on your internet-connected computer or phone, right? You wanna have that offline, on dedicated hardware.

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And I think those principles perfectly map to the AI world, right? Where you don't wanna keep, uh, the keys for all the stuff that the AI is connected to with the AI, right?

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I mean, that's kind of what we do now early on with these tools, like Claude and, and GPT and everything. But ultimately, we need to get all that stuff out of the blast radius, right?

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Out of the AI-connected phones and computers, and in our opinion, onto dedicated hardware running a specialized operating system that's actually designed to do this.

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And so we were able to kinda map those parallels and bring our, you know, years of Bitcoin, uh, hardware and security over now to beyond just the Bitcoin world.

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And I wanna dive into more of what you were explaining there, 'cause- Yeah... um, you know, it's been a big problem in Bitcoin for a long time, how do you get your mom to secure her keys?

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How do you get anybody really to do that? And it's difficult. UX, UI is difficult. Um, how do you even explain the concept of a wallet or a hardware signer and all that stuff, but...

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So we collectively as an industry have been struggling to figure out how to communicate this, and it seems like we're- we crested, you know, we crested the hill recently.

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A lot of this became more, like, consumer-friendly. But now we have AI staring down, uh, and breathing down our necks. What is, what is different?

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Do the principles of Bitcoin custody apply to this brave new world of AI, of agentic interaction and, and keys and signing? What, like, what is different about a

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hardware Bitcoin signer versus kind of a more broad, like, uh, seed phrase and security, uh, like, platform? Well, I think the hardest part is... Well, take a step back. I think the principles are the same, right?

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So I think the idea that you wanna get the keys to your important stuff away from that, uh, internet-connected, potentially vulnerable phone or computer. Same principle, right?

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Problem is there's, like, orders of magnitude more stuff that needs to be built. You don't have, like, oh, a standardized transaction format, like, you know, PSBTs, partially signed Bitcoin transactions.

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Nothing's standardized. Everyone has their own stuff. I guess MCP is a standard, but now i- is MCP losing popularity? You know, we're using CLIs. We're in the, we're in, like, the early stages here.

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So our goal shifted a bit. Our goal is not that Foundation is gonna be the ones to build all of the integrations and tools ourselves.

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Our goal instead is to give you and give developers the hardware platform so that they can build the tools.

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So we're gonna be releasing stuff that's opinionated with some of these things that I mentioned, like MCP credential storage, um, you know, things that are, are a known kind of, uh, problem with, with a fixed protocol where, like, we can build for that.

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But we're also, and part of our announcement yesterday is we just released our SDK, our software development kit in beta.

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Uh, in several weeks we're gonna have an app store so that users of Passport Prime can browse and install apps.

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And so we're hoping that we're gonna be able to build an entire, you know, developer community and help bootstrap this right now, uh, so that anyone who wants to integrate anything that requires human authority, uh, onto Passport, so that the keys can stay on Passport, so that human approvals can take place on that dedicated hardware, can do so, and they don't even need to talk to us.

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You know, you don't even need to talk to us, and I think that open app ecosystem is, like, a key part of our vision there. Because up until now, there has been no open app ecosystem.

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The closest one is Ledger, and that's, like, a walled garden ecosystem that's specifically for crypto coins as apps, not for, like, any kinds of applications. And, uh, I think we're gonna, you know, have a...

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Well, we're, we're really the only ones that are saying, "No, you can come build anything to run on this hardware." And

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this against the backdrop of, it seems like every other, every other episode we do, we do some story on some major DeFi protocol hack on- Yeah... various crypto assets stolen.

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The, the pariah states of Iran and North Korea. North Korea, like- Yeah... the majority of their economy is now, like, stolen [laughs] crypto assets. It's wild. Yeah.

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Um, like, I wanna get your take on, like, the landscape of the changing threat model for the average person, because, like, Bitcoiners, crypto people understand, like, their, like, the threat model pretty well by now.

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We don't know if we're any better at defending against it, but we understand it. Mm-hmm.

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Like, how does this change-With the average person now, everybody interacting with AI and considering credentials and, you know, getting sent deepfakes, it's hard to even verify that you're talking to a person on the other end anymore.

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What is changing with the threat model? Well, I don't wanna, like, scare people. I don't, I... Like, it's not our style. And, like, we're, we're using all these tools at Foundation and as individuals.

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Like, we're using all these AI tools. But I think it's gonna be Whac-A-Mole tumultuous couple years.

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And by Whac-A-Mole, I mean that there's gonna be new vulnerabilities and zero-days every few weeks, and then they're gonna be patched. And then there's gonna be new ones, and then they're gonna be patched.

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And it's gonna be hard for the existing software and especially operating systems to keep up with this. And so you look at, uh, back in March, this was, uh, only, uh, I think less than two months ago, um, we had, uh,

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Dark Sword, which was an iOS zero-day that most people have already forgotten, and it affected 25% of all iOS devices. I mean, the, [laughs] it- it's an outrageous number of devices.

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And how it worked is that all you had to do was load a webs- webpage, and then it would go, and it would grab crypto wallet keys off of your phone.

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It would grab little thumbnails of all your photos, and if it sees anything worth grabbing, it'll come back and grab that, and it'll kinda methodically extract all the important data from your phone.

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There's nothing that any normal person can do about that except keep their iPhone up to date. What happens when there's new zero-days that are affecting more current, you know, versions of iOS?

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And, and then it brings up this, this more architectural problem that Foundation has known has been a problem for years but hasn't really been at a fore- at, like, the forefront, uh, for...

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or, like, hasn't been, you know, on top of mind for, for consumers and businesses, which is that we're, the entire hardware and operating system foundation for the current Internet is built on legacy closed-sourced OS models.

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Like, the Linux kernel has over 30 million lines of code.

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And so when you hear, oh, you know, security researchers are using Claude Mythos to try to identify new zero-days and, and exploits in Linux, well, they have this enormous attack surface, and that's one of the principles that we can bring from Bitcoin, right?

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Where Bitcoiners know you wanna minimize your attack surface. If you're building hardware, right, you wanna... I mean, how many times have you guys heard that? Like, smaller attack surface, more minimal attack surface.

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So KeyOS, which runs on here, it's like a full-featured operating system where you can have apps. It's touchscreen. You know, it's fast.

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Um, this thing has a microkernel, which means a really small kernel, about 9,000 lines of code. You can print it out. You can read it. You know, an engineer can read it in a day or two.

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Um, and so I think it is gonna be really difficult, and I do think it's gonna be tumultuous over the next couple years.

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And I think, like, there's been a lot of VCs and AI thought leaders talking about how we're gonna have to reinvent everything for AI, and they're typically not talking about the security or OS layer, and we unfortunately think that we're gonna have to do, do the same thing.

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So Zach, I'm curious with, like, you, you just out, uh, kinda gave the, the bull thesis for a product like this. Mm-hmm. What's the competitive landscape for something like y'all's hu- Human Authority hardware?

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I- I- is this a burgeoning field? Um, are, are there many other actors moving in this direction? No. So there's components. So we set out on this journey back in end of 2022.

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We had read-- we had raised a, a seed round, uh, in summer of 2022. We started building KeyOS, which is, you know, our operating system, and Passport Prime, or, like, architecting it in the very end of 2022.

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We did not design this for AI, right? This... We, we didn't even know what that was back then.

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We had seen the landscape, and we knew that Ledger was obviously the market leader, and still is, in hardware wallets, and we suspected the reason that they were is 'cause they have this kind of quasi-walled garden app platform.

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So we set out to build this ideal hardware and operating system to enable third-party apps, uh, that don't need our permission, right? This open, flourishing app platform.

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And there was way too much that we had to build in order to accomplish that, and it took us, like, three years instead of two years, like we originally expected.

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So from a competitive landscape for Human Authority hardware, there's no single competitor to us. You have hardware wallets, which are a component of it, which are more single-purpose devices.

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You have, um, YubiKeys, right, is the big one, security keys. But those things have gotten expensive. They can be up to, like, $90 now if you want the one with the fingerprint reader on it.

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There's no way to back them up. There's no way to program them. You can't see what you're approving. So, like, I don't really understand, you know, why that has become the standard, especially across enterprise.

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And then there's also, like, hardware-encrypted flash drives, you know, those kinds of things. So I see, like, a fragmented hardware security market. And then also software security, password managers.

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People are using passkeys, but, like, sometimes they're on your, your i- like, your, uh, you know, iOS iCloud account. Sometimes they're on your one password. Sometimes they're in a YubiKey.

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So I think the problem is, is that the stuff is scattered all over the place, and we're trying to roll it all up into one programmable platform-type device as opposed to these, like, single-purpose widget-type devices.

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And as we do that, we hope that we can get the user experience so great that more people will actually use it and help secure their entire digital lives and then ultimately, with all the AI stuff, right, take some human authority back.

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So kinda last question. Um, it's just really hard to get people excited about security. They- Yeah... and you, you know this. Like, people aren't excited about security until they- Yeah...

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get pwned, and then they care about security. But then it, even then, it's, like, still difficult. Um, but I look at,

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you know, an app store-And there's probably more that you can build with an app, you know, there's probably more than just a security-focused app.

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I'm curious, uh, have you seen, uh, any interesting early versions of, uh, int- uh, fun things you can do, uh, through the App Store? Wonky ideas? Uh, I'm kinda, I'm kinda curious, uh, of what you see- A lot...

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possible there. One of our guys has Doom running on it. I don't know if that's, uh, [laughs] fun enough. But, um,

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I mean, it still is mostly focused on security for us, but I do think there's a couple cool things that, that get people interested. One is that we, with our app model, are focused on more of a horizontal integration.

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What I mean by that is, like Ledger with like a walled garden, they want you to use their software. They want you to be in their ecosystem. We wanna integrate with every single app and service.

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We want, you know, so Cake Wallet right now, right, is building, uh, an app for, for KOS to run on Passport Prime. Their logo is gonna be right on the, the screen.

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Their app, like the same way you build an iPhone app, an Android app, being able to bring that to the device.

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So as we have more apps integrated that provide the best-in-class experience for all these different like mobile apps and web apps and services, um, they're gonna tell their customers, you know, if you want the best kinda offline security cold storage experience, you're gonna wanna use a Passport.

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So I think it's a very different way of integrating, 'cause up until now, apps integrate with what the hardware wallets have available, and then you lose the entire customer journey when they get to the hardware wallet.

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This is like bring your own brand and experience and design onto Passport. So I think that's pretty exciting. Already though, we've vibe coded a lot of stuff internally.

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Um, we have like Nostr signing, where you can actually use Nostr and keep the keys on this thing, and have, and not have to worry about that, and have it automatically backed up.

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I have some like, uh, an app that does MCP credential stuff for AI. So, you know, I can keep that, those creds on the device, not have them on, on my computer. So there's tons of stuff that needs to be built.

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However, I do think it still is more like prosumer right now, right? I think that's really our target market. And for the first time ever, we, we launched a new website yesterday too, a whole, whole new website.

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Uh, we have an enterprise page, 'cause I think the enterprise stuff is gonna be more and more important. You know, some enterprises are giving employees YubiKeys. Some companies give employees, uh, phones, right?

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Like, that's very common.

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Um, we think more and more the right approach is gonna be to give employees a Passport, and have Passport, uh, with a combination of stock and custom KOS apps, uh, Passport act as like that authority device for the employee, right?

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So logins, code deployments, crypto, uh, custody-type stuff, all of that can be done on Passport.

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And I think it, it, we may end up, I mean, we will see in a couple years, but we might look back and see that, you know, a majority of the business ends up becoming enterprise because of that.

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At this point, I'm not sure. We've been very consumer-focused to now, so this is gonna be a really interesting, uh, time for us. Zach, thank you for coming on the show. Congrats on the raise and the product. It's fun.

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I like poking around this device. [laughs] Thanks, guys. Uh, yeah. We will see you later. Best of luck out in the trenches of AI agents and security. Peace. Thanks. Have a great weekend, man. All right.

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Everybody's skating to where the puck's going, man. Yeah. Everybody's skating where the puck's going. Lot, yeah.

340
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It, it's kinda funny, 'cause, you know, yeah, you, you, you don't start out building, uh, you know, a more broad like AI agent signing platform, but you think about it, the Bitcoin,

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Bitcoin hardware wallet has like direct, you know, has a direct development path in that direction. So we are still gonna go.

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All right, Charlie, what is going on in the Justice Department? We're scamming the scammers, and also scamming the innocents? Yeah. This is a crazy sting operation. Fill me in here. Yeah. So this is

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Operation Token Mirrors.

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[laughs] A sting operation from the FBI to basically lure in, uh, companies and individuals who are doing illegal things, namely like wash trading and spoofing token volumes.

352
01:00:26.080 --> 01:00:38.430
So everybody knew that this was happening, and it was widespread. What I didn't know, and maybe this is not as public knowledge, that the FBI had been running a sting operation and, and, and has to date nabbed,

353
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uh, over 18 individuals and entities with names that I've never heard of because I've never tried to, um, shill and scam, uh, people with fake wash trading for a crypto asset I launched.So, the thing is, this has been going on for a couple years, uh, now.

354
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I think the first arrests was maybe back in 2024. But, uh, they've, I guess they're now kind of more public about it, that they've, uh, they've done this.

355
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Um, the real f- the, the fun, the fun news here, Colin, is how they did it. So the, the Justice Department or the FBI set up [laughs]

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a fake ERC-20 token called Next, no, NexFundAI.

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Full website, branding, and they posed as representatives of this token to go and, uh, ask, um, firms like, quote, Gotbit, ZMQuant, CLS Global, MyTrade, and- All blue chips. All household names...

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household names. Everybody knows CLS Global. I don't know. Well, anyway, they went out, reached out to those people, and basically, you know, in DMs they're like, "Hey, bro, you want to fake volume?"

359
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And they're like, "Sure, I'll do it. Here's my price." And, um, then they do. It's basically like, "Hey, you, hey, kid, you should come buy some drugs from me." [laughs] And, uh, [laughs] and then the kid does.

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Like, "Ha, gotcha, you're in prison now." Although, uh, in this case, uh, these were people who were, were known, uh, actors, uh, in this space, I assume. So that's what's happened.

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There's a bunch of fun, goofy things that came along with this, some of which I just cannot believe that are knock-on effects. One of which, Colin, [laughs] is this thing, uh, from a thread, uh, on Twitter.

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Due to fake volume that NexFundAI had with these deals and, uh, through the sting, real people bought NexFundAI tokens, and they lost real money on the government-issued token.

363
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And then, when the FBI pulled liquidity to end the operation they had build, uh, they had to build a restitution portal. Sorry, the FBI pulled liquidity and had to build a restitution portal to pay the rugged users back.

364
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So the FBI literally rugged you. Uh, at one point.

365
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I just want to point out here that this, it, it, this, I mean, I know the FBI is, you know, supposed to be an independent agency or whatever, but this administration has now rugged people, uh, with Trump and Melania, and now with this as well.

366
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That being said, just, you know, just to kind of give the opposite, you know, position here, play stupid games, win stupid prizes.

367
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If you're chasing tokens like this, the chances that you're gonna lose your money, not from the FBI rug pulling you, is much higher than the FBI rug pulling you. I do- I'm not gonna defend it, though.

368
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At least they're, at least they're trying to remunerate people. Yeah. At least they did that, at least. I, I don't feel too bad that you got rugged for a shitter called NexFundAI. [laughs] Right?

369
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It's the government who's supposed to protect you, so- Yeah... um, they rugged you. But, so there's another detail in here, which is, um, within 24 hours of the DOJ announcement- [laughs]...

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someone cloned this exact smart contract the FBI launched, uh, had launched a copycat token and made 127K in one day using the exact same tactics that the FBI had, um- Can- Yeah. Can we call this Patel's Law?

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Whatever can be cloned will be cloned. Yeah. You know, it's like Murphy's Law, if it can go wrong, it will go wrong. I mean- Yeah. There's no- An easy attack vector, easy six-figure payday for whoever did that, right?

372
01:04:35.430 --> 01:04:51.780
Yeah. The, uh, the, uh, there's no moat around this particular product. Anyone can go launch, um, a coin like this. Um, I think another detail before we go onto the next one is... Oh, shoot, I wish I had

373
01:04:52.930 --> 01:04:57.130
the exact tweet pulled up. But basically, um, my favorite was the actual quote.

374
01:04:57.190 --> 01:05:13.470
Colin, back against the wall, um, what do you think, um, someone calls, uh, someone's, uh, price is to wash $20 million worth of your scam crypto token? How much do you think they would charge? For washing 20 million?

375
01:05:13.659 --> 01:05:20.890
Yeah. Are you getting paid in the token as well? Or are you getting paid in- I don't know, I'll just assume it's cash... like, Apple gift cards? I'll assume it's, yeah, I'll assume they're paying, you know, fiat money.

376
01:05:22.210 --> 01:05:37.860
5 mil? $200. [laughs] Yeah. That was an actual- What? That was an actual quote of, I think it was 24 million, you gotta spoof 24 million volume, you gotta make the chart go up and down, and, uh, the, the price was $200,

377
01:05:38.770 --> 01:05:46.850
uh, or- That's insane. Yeah. So are these, you know, I mean, that, that raises the question. These have to be, are these people in the US?

378
01:05:46.950 --> 01:05:59.450
Like, that, that to me sounds like someone coming from a very low-cost country willing to do something like that. Um- I mean, no, maybe you, uh, heck, I don't know. I, th- this, this is as far as I've dug into it.

379
01:05:59.710 --> 01:06:10.050
If this is a really interesting topic, maybe I can go deeper and give some more color, but, uh, yeah. That's just incredibly low. I mean, now- Tough times out there, man, in the trenches. It's tough.

380
01:06:10.640 --> 01:06:17.230
[laughs] It is tough times. I will say, that reflects, I, I do think it reflects kind of the ease of that practice, right? Like,

381
01:06:18.390 --> 01:06:29.090
your material costs are basically just getting the funds from the project, right, and then using those funds to wash trade. But, like, there's no other overhead for you, right?

382
01:06:29.330 --> 01:06:39.669
This isn't like laundering money in the real world, where it's like if you're paying someone to launder $20 million from your drug business through, like, a car wash or something, that actually requires material infrastructure and investment.

383
01:06:39.770 --> 01:06:55.970
Ooh. Right? Okay. I mixed up a couple numbers. It, but it's great. Gotbit, this, uh, offered a fake $1 million in trading volume. The, for, the price was $200. Okay. So, like- So even so, that's in- absurdly low. Yeah.

384
01:06:56.240 --> 01:07:06.852
Like, that's-That's crazy to me I feel, yeah, I feel like you're not selling yourself enough. [laughs] I mean- Don't undersell yourself, son Bro, the, the government can pay way- Scrape that pie.

385
01:07:06.852 --> 01:07:13.442
Tell them you are worth half of that. [laughs] The government can pay way higher than that. The $200 is a drop in the...

386
01:07:13.502 --> 01:07:27.042
That's a rounding error in- Also, you know, okay, so here, here's kind of the like, um, you know, cypherpunk, like, "Get out of my scams," take here Yeah You know, okay, there's a part of me that's like, oh, cool, the FBI's actually cracking down on wash trading.

387
01:07:27.102 --> 01:07:35.002
That's fun. But like, hey bro, North Korea has stolen hundreds of millions of dollars to billions of dollars in crypto over the last seven years.

388
01:07:35.942 --> 01:07:41.862
I know that you can't really do much about that because they're in North Korea, but there's almost a point to be made here.

389
01:07:41.902 --> 01:07:54.522
It's like, why are we hunting for shrimp when the orcas are just running through, you know, the school of fishes here and just eating up whatever they can get their hands on? I- Yeah... I mean, there's...

390
01:07:54.542 --> 01:07:55.632
You r- Do you know what I mean? Yeah.

391
01:07:55.642 --> 01:08:05.442
I mean, maybe that's not fair- If, if the FBI wants, if the FBI wants to help, they should be aud- they should be auditing, uh, the c- contract security of ERC-20 tokens and, uh, bridges.

392
01:08:05.962 --> 01:08:20.302
If they really wanted to help, um- Right So okay, let's, let's go on, um, f- we- Final story of the day and- Yeah, we gotta talk orange man, Donald J. Trump media We gotta, we gotta talk orange man.

393
01:08:20.342 --> 01:08:37.682
Charlie hates that I have to bring this up. Ugh. Um, [laughs] So yeah, uh, it appears as though potentially Trump Media, uh, ticker DJT, is selling their Bitcoin.

394
01:08:37.802 --> 01:08:47.762
Oh, we're stepping on each other here. There we go. This is coming from CoinDesk. Trump Media moves another 205 million in Bitcoin as losses on crypto bets swell to 455 million.

395
01:08:48.382 --> 01:09:02.482
So the checklist here of things to know, yeah, like I just said, they transferred 2,650 Bitcoin, worth around 205 million, to crypto.com. That's the other thing I love about this, like [laughs] they're using crypto.com.

396
01:09:02.942 --> 01:09:13.292
They're not using Coinbase, they're not using Kraken, they're not using- I'm imagining, imagine Donald Trump being like, "Okay, well, where do you trade crypto?" What's the best crypto? Crypto.com. Crypto.com? Yes.

397
01:09:13.302 --> 01:09:23.382
That's- That sounds like a-... seems good... let's go there Brand name, beautiful name, uh- Is it US-based? Okay, yeah, let's go to crypto.com They, they listed Trump coin, great guys Yeah. [laughs] Love the Russians.

398
01:09:23.442 --> 01:09:36.162
Anyway. Yes. Um, the, that transfer follows another 2,000 Bitcoin that the company sent to crypto.com or sent to an exchange at, valued at roughly $175 million.

399
01:09:36.222 --> 01:09:52.662
At the time, that was four months ago, that was when Bitcoin was at about 87,000. In total, Trump Media bought 11,542 Bitcoin [laughs] at an average price of $118,522.

400
01:09:53.562 --> 01:10:10.502
So if you're feeling bad about buying the top last year, one of the greatest grifters in history also bought the top, so y- you can't be feeling too bad, right? So now that's estimated to be down roughly $455 million.

401
01:10:10.602 --> 01:10:22.942
Uh, they're down $459 million on their holdings, of far below the purchase price, obviously with Bitcoin at 76,000. And here's the other kicker, Charlie, and then I'll toss it to you.

402
01:10:23.002 --> 01:10:34.392
You know, they're canning their plans for a spot Bitcoin ETF reportedly. That, that news came out at the end of last year. It made no sense at the time, it makes even less sense now.

403
01:10:34.502 --> 01:10:49.802
And their first quarter net loss was 405.9 million. Now, a lot of that is loss on the fair value of their Bitcoin, but [laughs] they had $871,200 in revenue, which leads me to think h- what, where, w- w- w- what is that?

404
01:10:49.842 --> 01:10:54.722
Is that like consulting fees? Where, where, where are they even generating this revenue to begin with?

405
01:10:55.162 --> 01:11:04.822
I mean, this is the, probably in terms of Bitcoin treasury companies, this is the most absurd one that came out, totally riding on the coattails of, coattails of the Trump name. Yeah.

406
01:11:04.842 --> 01:11:15.621
No plan, no revenue, just dumping Bitcoin after taking a huge loss on it. And you gotta wonder if they just unwind their whole position at this point, but then that kinda destroys the whole point of the company.

407
01:11:15.882 --> 01:11:29.682
I don't know. You, yeah, I'll say this is one Bitcoin treasury I'm glad is probably not gonna exist. Uh, our industry has tied itself very, very closely to the masts of Donald J.

408
01:11:29.862 --> 01:11:43.482
Trump, and if he's got an ETF too, like I don't, I don't know if I could take that. Like, um, I, I will, well, you know, we could absorb 400 million in Bitcoin sales.

409
01:11:43.562 --> 01:11:54.062
That's, Saylor will buy that up, you know, if he presses, you know, if, you know, on a, on a Wednesday morning. So I'm not too worried about this. It, it really is almost like, you know, choose your character.

410
01:11:54.071 --> 01:12:07.942
Bitcoin's digital energy- [laughs]... uh, protected by a swarm of cyber hornets or- Yeah... this Bitcoin thing, I thought no, no fraud at first, but then my son said, "Lot of money, lot of money in Bitcoin.

411
01:12:08.002 --> 01:12:15.792
We can make a lot of money." And I said, "Okay, let's launch the coins." Beautiful people- I'll take the first guy. [laughs] I'll, I'll take the first guy.

412
01:12:15.902 --> 01:12:25.462
You know, Saylor, um, I'd say, I, you know, I think Saylor's probably sent a Bitcoin transaction. Uh, whereas Trump- I don't know, dude.

413
01:12:25.542 --> 01:12:33.672
According to a lot of people, probably not, but anyway, we've got the stock- The only way I... Michael Saylor, please come on the show and, uh, dispute- Dispute...

414
01:12:33.672 --> 01:12:40.122
tell our audience you sent a, a, a Bitcoin transaction live on the show Ver- verbally abuse us for not getting- Yeah... your credentials correct.

415
01:12:40.562 --> 01:12:52.862
Yeah, but just having the stock chart up here of DJT down 67% over the last year, down almost fift- 42%, or 42% year to date. You know, market cap of 2 point...

416
01:12:53.182 --> 01:12:58.321
[laughs] Okay, market cap of 2.22 billion, not even a million dollars in revenue.

417
01:12:58.822 --> 01:13:10.498
Obviously, mNAV, whatever, Bitcoin per share, bro, who cares?You know, this is, I, I think you're right, Charlie, like good rid if this gets out of the Treasury- Get-... system entirely... get rid of this corporation.

418
01:13:10.678 --> 01:13:16.198
Sorry. So, um, that'll probably- Mr. President, please come on the show. [laughs] Yeah, please come on the show.

419
01:13:16.278 --> 01:13:35.138
[laughs] Um, okay, I do wanna, before we do this, I, I, you know, maybe we'll, we'll probably, uh, double tap on this story later, but, um, we didn't originally have this scheduled, but, like, um, so if you watch the SpaceX, like, stream, and the S1 filing yesterday, everybody's talking about SpaceX, and SpaceX is gonna send a person to Mars.

420
01:13:36.458 --> 01:13:51.038
Guess who that person is? You got it right. It's a Bitcoiner. It's, like, the Bitcoiner. It's Chun Wang, the founder of F2Pool, which is one of the, the O- one of the OG pools, controls 11% of Bitcoin hash rate.

421
01:13:51.058 --> 01:14:01.118
That's really 11% of all the blocks, and he's gonna be on the first SpaceX manned mission to Mars. It'll be a flyby of Mars, not landing on it.

422
01:14:01.138 --> 01:14:10.448
But if you haven't been aware, this is a man who, it's not like he just wants to go to Mars. He's- He's-... been everywhere else... already been to space. He's been everywhere else.

423
01:14:10.498 --> 01:14:20.638
And he's on it drinking, he's vibe coding while he's in space. Yeah. Chun Wang has spent the past several years going to every single country in the world.

424
01:14:20.678 --> 01:14:32.318
He's almost done, and now he's ticking off really obscure islands on his list, like this one island in the Pacific that no one's ever, you know, there's 10 people go to a year, that's obscure. This is Chun Wang.

425
01:14:32.358 --> 01:14:46.848
He was the, I believe the captain of that, um, Blue Origin flight with Katy Perry and Jeff Bezos's wife. What does captain here mean? Like, they had a crew of civilian astronauts, and he was, like, the ringleader.

426
01:14:47.058 --> 01:14:55.068
I don't know. He probably has a- Right, I'm just imagining-... a flight suit... they, like, give you, like, a fake joystick so you can be like [laughs] you're flying the rocket at Jeff Bezos.

427
01:14:55.068 --> 01:15:04.418
He gets a controller that is not plugged in. [laughs] No, but, but Chun, Chun would know how to plug a controller in because he really knows his stuff.

428
01:15:04.598 --> 01:15:12.938
Um, these, this is an article from Juan Galt on Bitcoin Magazine, highly recommend, The Amazing Life of Chun Wang, From OG Bitcoin Miner to Astronaut.

429
01:15:13.557 --> 01:15:30.097
Um, this guy, uh, loves traveling, and he's been mining, and basically a lot of the interesting stuff and stories in Bitcoin have happened, uh, with him as a part of it. So, uh, love to see Chun Wang.

430
01:15:30.198 --> 01:15:40.368
Here he is, uh, you know, traveling to that really obscure island, Bouvet Island. Has he been to Antarctica yet? Yeah, of course he's been to Antarctica, dude. Is that what you- That was like early-...

431
01:15:40.368 --> 01:15:47.268
that what you have up right here? Yeah, that was like- I don't know... early on. Okay. For- forgive me. Yeah, yeah, no. For- [laughs] No, that's a...

432
01:15:47.998 --> 01:16:01.738
He's going to, like, obscure places now, so, um- S- so here's my, here's my question. Um, i- there's no date for this Mars mission yet, right? Like, they haven't, th- there's not, like, a- Nah.

433
01:16:02.198 --> 01:16:17.898
So he- I mean- It, he, here's my question, and, like, obviously, you know, Elon is at the helm of this company, so he's obviously thought about this, his engineers and scientists have obviously thought about this, but it was always my understanding that part of the reason why we can't get to Mars is the radiation levels.

434
01:16:17.998 --> 01:16:26.668
Like, the, the, the atmosphere is so thin that it just gets blasted with cosmic radiation, like, every 30 minutes, and so I'm wondering, like, how do you even solve for that problem?

435
01:16:26.798 --> 01:16:32.407
Do you just have everyone get into a giant lead ball, and they can just, like, roll around on Mars or something?

436
01:16:32.578 --> 01:16:50.598
I mean, the, all of this seems incredibly cool to me, but I'm wondering, like, is this, like, a lot of the things Elon says where he's like, you know, re- o- on, on Rogan recently, Marc Andreessen was saying, you know, I want Westworld, and he was talking to Elon, and Elon's like, "Five years."

437
01:16:51.578 --> 01:16:58.918
And Marc Andreessen's like, "No, I don't think you understand. I'm asking for Westworld." He goes, "I know exactly what you're asking for. Five years." Like, he has these, like, totally aggressive timelines.

438
01:16:58.958 --> 01:17:12.998
I mean, the Mars mission thing to me seems like, I mean, bro, we're just getting back to the moon, right? Yeah, well, it's, it, it, all gradually and then suddenly, Colin. Look, I don't know about this radiation thing.

439
01:17:13.778 --> 01:17:26.518
Um- Yeah, these are more rhetoricals. Yeah. I'm just curious about what something like this would look like. Well, it's very, Elon's job is to sell the vision, and, uh, also in the SpaceX filing, he's well compensated.

440
01:17:26.558 --> 01:17:39.858
In, I think literally in the SpaceX filing it's like, filing it's like, um, if Elon builds a moon base by X date, he gets, like, good, like, stock options and, like, compensated for that.

441
01:17:39.958 --> 01:17:48.378
On that note, I actually wanted to touch on this with the SpaceX IPO, so if you've hung with us this long, congratulations, you get a little, uh, sweetener here at the end.

442
01:17:48.858 --> 01:18:00.638
But I was just, I was, I was asking ChatGPT, it's like, help me break down, like, the unlocks for this thing. So significant investors like Musk are locked up for 366 days following the IPO.

443
01:18:00.718 --> 01:18:06.478
Other pre-IPO investors have an, a 180-day lockup, but there are some early release mechanics.

444
01:18:06.498 --> 01:18:22.158
For instance, uh, for early release eligible shares, The Wall Street Journal reports that up to 20% can be sold shortly after SpaceX's first quarterly report, but another 10% can also be released in s- uh, if the stock holds a certain level before that first quarterly report comes out.

445
01:18:22.198 --> 01:18:26.658
And I assume, you know, I don't think they have to retroactively report for Q1.

446
01:18:26.698 --> 01:18:31.798
Like, you know, they're not gonna have to do, I mean, they're gonna have to do that in their Q2s, and they don't have to do that after they go, um, public.

447
01:18:31.838 --> 01:18:38.138
So I assume that first one will be their Q2 filing roughly probably around somewhere in July, I would imagine.

448
01:18:38.178 --> 01:18:44.958
So, um, I think that's the biggest question for the SpaceX IPO, just to go back to that, is like, does this thing just get giga dumped?

449
01:18:45.478 --> 01:18:57.718
Because there, there are a lot of investors on the inside of this thing, and, you know, retail is nothing if not fodder for the sharks, so. We will see.

450
01:18:57.878 --> 01:19:06.878
We're going to the moon, or the moon is gonna crash into the Earth, one or the other. You'll get what you want, and you'll own nothing, and you'll be happy.

451
01:19:07.218 --> 01:19:16.767
So on that note, thank you so much for listening to Blockspace Live, Monday, Wednesday, Friday. Make sure to like, follow, and subscribe. If you made it to the end and you're listening on CoinDesk, switch that feed.

452
01:19:16.778 --> 01:19:30.398
Follow the Blockspace feeds so you can main- remain continuity with the show. Otherwise, I'm Charlie. I'm Colin. And we are Blockspace. Happy Memorial Day, everyone. See you Monday. Tuesday. See you Tuesday.

453
01:19:30.478 --> 01:19:41.378
We're going live Tuesday. Fine. Yeah. We are skipping the stream on Monday. We're gonna go celebrate 'Merica- Yes... and remember all of the people who have defended this great nation. So we will see y'all Tuesday.

454
01:19:41.418 --> 01:19:48.558
Have a great long weekend, everyone. [upbeat music]