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[upbeat music] What's up, y'all? Happy Friday, and welcome back to Blockspace Live, brought to you by CleanSpark. Big stories today, Charlie.

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We're gonna start off, as we usually do on Fridays, with our hash rate index update, do a little stock update.

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But then for our lead story, Taiwanese nationals are in custody for forging documents to smuggle Super Micron devices with Nvidia chips to China. China.

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Interesting story, and a, the latest in smuggling attempts to try to get across or try to break through the restrictions for trading for these Nvidia chips with China. After that, a little treat for y'all today.

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We've got Udi Wertheimer on to talk about the vibe shift in ETH, and then we will have Luxur's Director of Energy, Haley Thompson, on to talk about energy markets and the 4CP that is coming up in Texas. Following that,

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what else but Strategy. We're gonna be talking about specifically their preferred stretch, and people asking some questions after it briefly lost its peg and fell below $100.

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Not the first time it's happened, but people are starting to ask, does the math really make sense here?

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Following that, we've got a story on a solar company committing 200 megawatts of solar to a Google data center in Oklahoma. Charlie's got some really good stuff here for us as a native Tulsa boy.

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And then we will wrap up with one more note on AI data center water usage. Fun fact, almonds and golf courses, [exhales] big footprint. Very thirsty, Charlie. That's right. Blockspace goes live weekdays at 1:00 p.m.

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Eastern. That's a slight shift back from this week. Live every weekday at 1:00 p.m. We feature quick hits on the latest in Bitcoin, AI, emerging tech, and mining still. Make sure to like and subscribe.

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Hit that notification bell if you're watching on YouTube for the push notification on your phone. And for those of you who are listening on Coindesk, that feed is ending soon.

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We are leaving the Coindesk network soon, so make sure you go over to the Blockspace feed and subscribe there. So if you're listening on Spotify or Apple or Coindesk, go to the respective feed on Blockspace.

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Just search Blockspace, one word, and subscribe to that so you keep getting our episodes. This show is brought to you by CleanSpark, ticker CLSK on the Nasdaq. More on them later on in the show.

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Let's kick it off with some Taiwanese... Oh. Hash rate index- Bird... baby. Taiwanese hash rate. [laughs] Taiwanese, uh, it's- Who is mining Bitcoin in Taiwan right now? Technically- So anyway, um-...

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a lot of hash rate is, is Taiwanese because it's TSMC. Yeah, exactly. Uh, so anyway, we've got our hash rate index up here- update here, brought to you by Luxur.

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We just had an upward, uh, difficulty adjustment, plus 1.72%. Literally just happened, like, this morning or last night. This comes as hash rate is peaking back up above one zeta hash, 1,000 exahashes a second.

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But as a result of that difficulty adjustment and the fact that Bitcoin is now resting at about $73,000, $74,000, hash price is $33.51 cent, uh, 51 cents per peta hash per day.

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I think the notable thing here, Charlie, is we've seen hash rate rebound recently, and it's just in time for 4CP to kick off in Texas, which will no doubt see some notable curtailment.

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I wouldn't be surprised, unless there are operators deploying outside of the US, to see hash rate kinda stagnate once again.

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We're still pretty far from the all-time high that we set at about 1,200 exahashes bouncing around here. We can see a, you know, drawdown during these winter storms, um,

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and with Bitcoin's price getting hammered in February. But we have recovered to just above one zeta hash.

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I would be really curious to see what Haley thinks when he comes on about where we're gonna be headed over the next four months as we enter the hottest stretch of the year for the Southwest and particularly Texas. Yeah.

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Maybe this could be a one, two, three, four, five, six punch to the hash rate decline over the past five months. So shout out to Hashrateindex for covering that. Let's go to chip smuggling, Colin.

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One more update before that. [laughs] I keep trying to go to chip. You d- I mean, it's a, it's an interesting story. That's, I think that's why we wanna get to it.

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But we just wanted to do a quick stock update because- Oh, yeah... a lot of the Bitcoin miners moving into AI have been ripping this week.

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The biggest gainer so far, according to TradingView on the five-day here, is Keele, up nearly 21%, followed by Hut 8 at 18.6%, Bitdeer at about 17%. Bitdeer coming back into the fold.

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They've had a pretty tough few months. Tough year, I would say. And, uh, they, they've really been left behind recently as a lot of their peers have outpaced them, but they are, ooh, wow, ticking up to just over 17.

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These prices are moving in real time. We got CleanSpark at 13, Hive at 13. Every single stock that I have up here, though, is up. The only laggard being Mara at 5%. Hard to call that a laggard, though.

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Still a green week. So a great week for Bitcoin mining stocks. We've seen, you know, I think this trade kicking back up.

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There was a lull in Q1 for deals and for financing, but it's all back in the news now, and [laughs] everything is ripping except Bitcoin. So [laughs] if you needed, if you needed a reminder that if you're sidelined...

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I'm not gonna, no, I'm not gonna say that 'cause this, you know, it's, it's getting pretty top-heavy over there, man. Uh, this, this... I... Every time I think they can't go up any higher, they just continue to rip, so.

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That's when you buy more 'cause Colin's short. Colin's getting- [laughs]... Colin's getting cold feetThis is when you go- I'm spiritually short data center stocks Yeah I cover them for my job.

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It's actually why, it's, it's, I wanna be impartial, Charlie. [laughs] I can't. Yeah. I don't want any exposure to this. Ah. Yeah. Only the highest journalistic integrity here at Block Space. [laughs] Yeah. All right.

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Okay, do we get to go to Taiwan? Taiwan chips coverage. We get to go to Taiwan. All right, so this is... Oh. Thank you. This is coming at us to, from Bloomberg. Taiwan seeks to detain three in Nvidia smuggling crackdown.

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I'm gonna try to be quick here, 'cause there is a lot to unpack. We'll try to be efficient. So Taiwan's Keelung District Prosecutor's Office has detained three people. I did...

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And oh, by the way, I said they were Taiwanese. I actually don't know if that's confirmed, so I wanna just go ahead and clear that.

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But the Taiwanese officials have detained these people, uh, only recognized or only disclosed with the surnames Yu, Wang, and Chen, for allegedly forging export paperwork to ship Supermicro AI servers with Nvidia chips to China, Hong Kong, and Macau.

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Now, some background here. There have been restrictions in place f- uh, for, in the US for US companies specifically for shipping these next gen GPUs and AI chips to China since 2022.

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Uh, since then, though, experts estimate roughly 140,000 advanced chips worth $5 to $7 billion were smuggled into China in 2024.

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And the Taiwan case is now this, this one is now the seventh of such prosecutions in the US and Asia.

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Now, the interesting part about this is that there aren't actually any laws on Taiwan's books against shipping chips to China. That's a US law.

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So the article states that the prosecution here could rest on the fact that they forged paperwork, which is illegal under Taiwanese law.

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And so that is, I would imagine, what the prosecutors will go after when they bring this case to court. And for the actual volume, it was somewhat smaller than you would expect.

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There were roughly 50 Supermicro AI servers valued at more than 15 billion. Um, there were 12 locations that these officials searched, and the searches and the crackdown took place on May 21st through, and 22nd.

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Um, the other interesting part about this is that prosecutors suspect at least one shipment of Nvidia chips successfully reached China after being exported to Japan.

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So these smugglers are starting to rewrite the playbook.

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Usually they'll go through other Southeast Asian countries like Thailand, but now they are starting, since there have been crackdowns with those shipping and smuggling routes, they're starting to look to other avenues, other surrogates to get these chips to China.

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Uh, last point here. Supermicro, it's a US-listed company, sits at the center of currently the largest chip smuggling prosecution in US history.

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A DOJ endowment, uh, indictment unsealed on March 19, 2026, charged Supermicro co-founder, Yixuan Wali, Liua, Liao, I'm sorry, guys, and two others [laughs] with conspiring to route roughly $2.5 billion worth of Nvidia equipment to China through a Southeast Asian shell company between 2024 and 2025.

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Again, this is against US criminal code. It is not currently illegal in Taiwan to do this, which creates a kind of a legal gray area.

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And, um, Jensen Huang of Nvidia was asked about this recently in Taipei, and he said, "Look, we do business with Supermicro, but ultimately they have to comply with law too.

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We don't think they should be doing this, but they, we can't really do anything to stop it." Charlie, what's your take here? Yeah. Uh, I have a few takes. Uh, I'll reiterate what you said.

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Uh, one of the re- so it's like, it's not like that Taiwan has a ban to China, it's the US export controls on Nvidia chips.

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And so that does, as you say, limit the actual, like, jurisdiction that could be applied, that, uh, the jurisdiction, like, laws that can be applied here, which is why they weren't found guilty of, like, circumventing export controls, but rather by, what was the exact- The forging documents...

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forging, yeah. So they basically said, "We're gonna be sending these somewhere else," I assume, and then they ended up sending them to Hong Kong, Macau- Ex-... China Exactly.

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And, uh, so I think this actually highlights something because as with all types of smuggling and fraud, whenever there's demand, they, they will figure out how to circumvent it.

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And so this is kinda, I can honestly, I almost, like, make analogy to, like, the drug trade and drug smuggling to the US where, like, if we close down the border, they'll get high-powered subs or planes to fly in.

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And I think, like, the American, like, legal arm being limited to just, you know, export controls withi- within our, our own borders, when those chips are manufactured outside of our own borders, uh, does mean that there's, it's probably gonna be more difficult to control these than a lot of people think.

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So it's not like we just shut this down temporarily. I think that this is probably just gonna, uh, continue, and that, what is it? Um, I think it's 4 to 5 billion

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in- Is that a total that you came up with, is how much has been smuggled all time? Yeah. That sounds about right. I'm sorry, 5 to 7 billion figure, um, of, like, cumulative smuggled, uh, chips.

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I think that's now a floor. So, uh, this number is just gonna get higher. It's gonna get bigger. Um- Yeah, and the Chinese are gonna find a way to do this probably, right? I mean, they are masters of,

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of getting, uh [laughs] sliding past the rules, so to speak.

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And we know about their, you know, kind of beltway programs in places like Africa where they, uh, where, where they, you know, offer these loans for infrastructure, then end up taking control of the infrastructure.

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All that being said, they're very crafty. And so they're going to find a way to get these chips.

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There's a national interest to do so.Um, that doesn't make it a good thing, but to your point, Charlie, it's kinda like drug smuggling. How do you put the cap on this?

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Especially when you consider a lot of these companies are publicly traded in the US, hence, uh, they are, [smacks lips] they are subject to US law. But like you said, all of this shit is made in Taiwan, and

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it creates a really interesting kind of conundrum here, where if you apprehend these people in Taiwan with Taiwanese officials, you have to find other ways to bring the boot down on them if you wanna squash this kind of act- activity.

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So- Yeah. I also- Ultimately... Go ahead. I also just think it's, like, kind of interesting because, um,

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like, Taiwan is right outside China, so it's in the South China Sea, and the f- and it's kind of interesting that America's on the entire other side of the world, and it's like we're trying to prevent smuggling of, or, you know, circumventing of our own export controls

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from a country outside of ours to another country further away from ours.

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J- the logistics are just not in our favor, I think, especially given that Taiwan is, like, this rising geopolitical, like, fi- uh, you know, like- A magnet? Magnet, yeah.

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And it's, and it, like, sits at the center of all g- all geopolitics.

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Um, you know, it's not like, it's not like the Amer- it's not, not like the American and Mexico, like, drug smuggling business had vast implications for, like, our, you know, uh, you know, military priorities.

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For our geopolitical positioning vis-à-vis technology- Yeah... right? Yeah. Doesn't re- doesn't really affect the price of oil very much. Whereas this is, like... I mean, it's, Taiwan is basically Arrakis.

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So this is basically- [laughs]... you know, the setting of Dune. [laughs] And we are, you know, the Padishah Empire trying to manage the export of the most precious commodity. Does that mean China are the Harkonnen?

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[laughs] Look- Like, like- You know they were crafty. Yeah, I mean, they are. Um, is that, like, Xi Jinping is sitting in, like, that oil bath? [laughs] Like, slowly rising.

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[laughs] Like, like, comes up and is like, "How many billions did we smuggle this year?" [laughs] You know? Oh, man. Yeah.

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So, uh- But, you know, just to put a cap on what you just said too, Charlie, Taiwan is emerging as, like you said, for a small island, it has immense amount of geopolitical significance.

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And the biggest question looming right now, especially after Trump's official visit to Beijing, how much is the US actually going to want to defend Taiwan in the case of Chinese aggression?

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And I think a lot of people are entering, especially with the war in Iran, and they, they're entering into the idea that there might not be any fight at all. So it, this, you know, th- this sits at...

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It, it's one, it's kinda like, you know, the, the elephant in the room with C4 strapped to its chest. Yeah.

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Everyone knows it's there, but they just kinda wanna ignore it, because the implications of it actually falling under Chinese hands are pretty dire- Yeah... especially in this, uh, AI shift.

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I will say, for the Dune fans out there, Gurney Halleck, who is, uh, Timothée Chalamet's, uh, weapons instructor, after the Harkonnen, uh, betrayal of the Atreides, did become a spice smuggler.

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So maybe there's a Gurney Halleck somewhere in Taiwan smuggling NVIDIA chips to China. That's my take. I think we actually get to the real news.

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Um, our character-driven story of the day is that David Hoffman sold his ETH, and no, we have nobody else more perfect to talk about this than our boy, Udi Wertheimer. I'm gonna bring him up on stage.

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Udi, welcome to the show. Hey. Hey. Uh. Wel- welcome. Uh, it's, uh... I did not realize this, but you guys actually launched- The, the resident David Hoffman, um, expert. Also, Udi- Yeah...

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do the orange glasses mean you're bullish Bitcoin here? Those are my, uh, FTX glasses. [laughs] Okay, so you're bear-ish Bitcoin. Everything's about to fall apart. I got it. [laughs] Mm, uh,

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this is not a forward-looking statement. [laughs] Uh, so first of all, uh, Udi, I s- you know, we scheduled you to, to rip on the, uh, Hoffman news, but actually, you guys, I'll let you throw a bone here.

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You guys just launched, made an announcement today. I'll let you do a little, uh, CTA to that. Yeah. Um, thank you. [laughs] To, we, we launched today, uh...

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It's funny, we announced it, like, many, many months ago, and finally we launched today. The team, like, did, in my opinion, a really great job.

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We launched the, uh, Wizard portal, which is a marketplace where you can buy and sell and trade, uh, specifically our collection, Separate Wizards and Quantum Cats. What's really interesting about this one

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is that you don't need to be an Ordinals expert, you don't need to have an Ordinals wallet, you don't need to interact with any of that at all. You can use whatever wallet you have.

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If you have Phantom wallet or MetaMask or whatever you have, you have ETH or SOL or USDC or whatever you happen to have in your wallet, you can use that. Um,

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so it was really built from the ground up to make it easy for people to just hit the ground running.

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If someone doesn't have a crypto wallet at all, or just not accessible on their phone or whatever, then they can also use Apple Pay. They don't need to install anything, they can just, uh, go and have fun.

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I s- I, I kind of wish we had that, like, two years ago [laughs] when Ordinals were [laughs] kind of just starting out, because it, it, I think it's actually the,

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I don't know, the nicest NFT experience I've ever seen on any chain, really.

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Just- So- Just works seamlessly Udi, s- speaking of that, I mean, with, with a vacuum left by Magic Eden shutting down their marketplace for Ordinals, I mean, are y'all gonna expand this to other collections?

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Is, is this kind of like a wait and see, feel it out, see what, where the demand is?Yeah, we, you know, I wanna see how the community reacts to this first, so this is really, like, the, the first stage is really something for our community.

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But if people like this, then, um, then, yeah, this, this was actually built kind of from the ground up to support any collection on any chain.

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It's really easy to, for us to curate and add any collection that we would want. So I can see that happening, yeah. So let's dunk on Eth. Well... [laughs] Look, I think, look- I like Eth. [laughs] Yeah.

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Obviously, we're gonna... It's easy to dunk, and so we're gonna, we're gonna do a little dunking. But I think a more interesting conversation is,

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uh, where is David Hoffman right, or, you know, what is your take on his takes? Um, but I think maybe- Well- Yeah. Just some context for that before we get into David Hoffman.

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For those who don't know, David Hoffman runs, like, the biggest Eth ecosystem podcast with, um, [ts] Ry- I'm sorry- Ryan?... I'm drawing a blank. Ryan. Yeah. Yeah, I don't know his last name though.

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Anyway, it's called Bankless. They were huge in the DeFi summer in 2020, 2021 when DeFi was popping off, and he's been a huge Ethereum bull.

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If you've ever heard these ultrasound money thesis, that came from David, and now he's completely liquidated his position. They're basically- He's full dunk...

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like the TFTC or, like, the hardcore Bitcoiners of Ethereum, if I make the comparison. Okay. So David just dropped this piece this week, quote, "Why I sold my Eth." David, I thought this was a joke, Udi.

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David actually sold his Eth. Um, what was your first reaction reading this? I, yeah, I, I, I assumed it was a troll, I guess, in the beginning. Um,

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but after assuming there was troll, I, I think my next reaction was just, y- you know, you guys mentioned how, um,

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uh, David and Ryan were huge during the DeFi summer, and that's true, but the truth is they've been there before.

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And I, I actually think n- most people didn't notice because it was the crypto winter, but, but I actually think they played a really important part of energizing the Ethereum community during its previous,

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uh, ruthless bear cycle, and that's how they kind of, you know, be- launched themselves into being, like, the gurus of the DeFi summer. And I think they deserve some credit for that.

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Honestly, like, I think, uh, it's easy to think about just the,

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the way things happened during exuberant bull periods, but honestly, I think they, they played a really important part for the Ethereum community, and it makes sense that,

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you know, the community will need some new faces. That's, it's just the way it is. So d- do you think the community needs new faces or that Eth needs a facelift? I mean, both.

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I, I think me, I think me and Charlie talked about this a few times, right? Like, the, it, it seems like Ethereum is playing out the same, the same kind of thing that Bitcoin went through in maybe 2021-ish, um, where

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a lot of... You know, there's just a lot of these influencers who are, I don't know, super maxi, [laughs] ultra podcasting, not much else going on other than, than podcasting in Ethereum right now. Um,

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and, uh, it just, it points to, like... It's not the podcaster's fault. It's not their fault that there's nothing to podcast about. Like, it's just there's nothing going on.

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And yeah, so I think things need to shake up quite a bit, and it's just this, it just... It, the same thing happened in Bitcoin too. If they can, if they can move,

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if they can smooth over that period somehow, then maybe, maybe the future could be promising. But yeah, right now it looks pretty grim. But it is... Y- I mean, I mean, you know, okay, so what?

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We've got the Ethereum Foundation saying everybody's leaving. We've got podcasters, like, rage quitting. But it's, you know...

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Those are things that need to happen, so, like, the fact that it happens is not necessarily bad, I guess. The question is what happens next.

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You know, uh, one of the things David was talking about was that, um, there was, it's almost like he implies that there was, like, a path to success, but they weren't able to execute on it.

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Like, it's a coordination problem. And I'm kinda curious- I think that's cope. Yeah. Do, like, do you agree- [laughs]... that there was a path to success that they weren't able to execute on? How do you qualify this?

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I don't know. Like, what, what are your thoughts here? Yeah. F- I, I don't, I don't buy that. Um, I personally think that's cope. I, I understand why. He kind of, I think he kind of feels like he needs to say that.

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I don't know. I personally think that the best way, in my opinion, to handle those things is, like, just, like, you know, just log on and say, "Hey, I was retarded."

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[laughs] Like, "I was wrong, and now I know why I was wrong, and, um, let's move on." [laughs] You know? And people like that. And I think there's, like...

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I don't, I'm not personally a fan of, like, "Oh, I was right about everything, but the ecosystem fucked up." [laughs] Just be like, "Okay. Uh, all right. I mean, fine." I, I think it's cope.

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[laughs] Uh, yeah, and it kind of runs afoul to me of, like, one of his other theses here. And sorry if I'm getting ahead of some of your questions, Charlie, but like his whole- No...

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point is this idea that the value doesn't accrue to Eth itself. It accrues to everything built on top of Eth, which to me, that was always the plan to build things on Eth. So you...

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I t- I don't know how you can say both of those things at once, that we had a roadmap and didn't execute properly, but by the way, the roadmap was to build things, and oops- [laughs]...

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everything accrues to the top layer instead of the bottom layer. Yeah, they really, you know, specifically David and Ryan really championed this idea of ultrasound money and how it...

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That was all about how the monetary policy of Ethereum would be-Basically retooled to capture value on the Ethereum s- uh, system. And [laughs] I got to see that.

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For everybody listening, I have the David Hoffman, "ETH is ultrasound money," with a screenshot of the ultrasound money, uh, like dashboard with Udi replying, "In 2022, by the way. Day after FTX." Glasses wearing.

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David, "My man, not now." And David replies to Udi, "Udi, my man, when have I ever listened to you?" [laughs] It's a good reply. Yeah. Um, it- yeah. They, they had this ultra... That's a good pickup.

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I was exactly just talking about it. The- they, they had this, like, uh, ultrasound money meme that was, I guess, all about how ETH would capture the value that is created on the Ethereum chain.

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And I mean, me and David has, like, so many threads, and I, I, you know, I went on his podcast back then and started, like... I always said, like, "Look, I just don't see how this is gonna work."

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You guys have, like, conflicting things. Like, on one end, you're saying, "We're gonna capture, gonna capture the value because the fees are gonna go up. And when the fees go up, we burn ETH, and we burn ETH.

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That increases the price of ETH." But, uh, on the other end, they're saying, "We're doing all those L2s, and all the, all of the value will hap- like, all, all of the activity will happen there."

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So if all the activity is on L2s, how are the fees on L1 going to go up? Like, which one is it? And, uh, [laughs] anyways- The ir- the irony is- At the end, it was neither. Yeah. But, but, like [laughs]

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The irony, Udi, is that Ethereum has triple the fees of Bitcoin right now, and then the next two- Yeah... protocols are actually, we're talking,

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um, 80% of the top 10, uh, chains, bigger quotes, by revenue are all on ETH. And- This, this looks, um, outdated though. Oh, it might be outdated.

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Not, not the numbers, but, like, I mean, I think it doesn't include a lot of the newer apps. Okay. You know, like Polygon- Okay, it might be outdated... and, you know, like... Yeah.

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It might be outdated, but, like, directionally, like, Bitcoin fees are dwindling. Oh, yeah. Ethereum, yeah. Yeah, yeah. It, it's definitely doing better on fees than Bitcoin is. Yeah.

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But, but yeah, why would that accrue to ETH? And also, doing better than Bitcoin is not exactly [laughs] n- I, it's nothing to write home about- Yeah... in terms of fees. Um, so yeah.

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I, I think that, that just didn't play out. Um, and, and some of it, some of it you can say is because of the, I don't know, the, the policy of the Ethereum Foundation or whatever.

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But, like, some of it is also it just doesn't make sense that this would happen.

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Um- You, you mentioned the Ethereum Foundation, Udi, and unless Charlie has a f- closing question, I think that might be a good place to finish it.

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I mean, there's been a lot of griping about the kind of moralessness and the directionlessness of the Ethereum Foundation recently.

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I mean, how much of that is fair, and how much of that is, like you said, just cope for people not being able to rationalize why their preferred asset hasn't done what it was advertised to do?

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I actually think in the Ethereum community, probably most people's criticism towards the EF would be that it's too kind of moralistic.

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Not that it's lacking morals, but it was r- like, too idealistic, kind of, um, is probably how people would describe it. Like, I've seen a lot of people

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throwing the C word, uh, communism, [laughs] uh, when it, when it relates [laughs] to the Ethereum Foundation. Um, y- I, I, I think those criticisms are true, pretty much all of them.

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But also, like, I don't know if this has to do w- i- it, it has anything to do with it. I think... I think there is, like... If, if we zoom out, it's not really just an Ethereum thing.

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Like, Solana is not exactly doing great either. I think that the idea of the general purpose, you know, smart contract platform does not seem appealing to anyone right now. Um,

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there's value that seems to accrue maybe to applications if, if they're good. We have, like, maybe in crypto right now, like, two or three of those, and then that's it. [laughs] Um, I think that makes

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some amount of sense. Um, and there's, there's just not, uh... I don't think anyone feels like it's very promising that there's gonna be some new exciting...

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You know, like, maybe, like, someone will come up with one new primitive or two that'll become very popular, but I don't think anyone feels like there's gonna be this explosion of 500 new apps on Ethereum or Solana.

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So that's probably part of why there isn't a lot of forward-looking excitement o- o- on those as a platform. They just didn't prove themselves as platforms.

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There's a few apps, but nobody thinks of Ethereum as the platform of the future. They just... Or Solana, or anything for that matter. It really does feel existential. DeFi is, is, like, all-time sentiment low for...

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And that I've seen it, a lot of things hitting at the same time. I wanna tie this back to Bitcoin in some way. Um, so

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David, I do, I do think David is interesting and has an interesting and compelling perspective calling, identifying the coordination problem. This is a thing all blockchains have. Mm.

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Bitcoin is the prime example of this. Bitcoin has a coordination problem, depending- Mm... on who you talk to.

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Um, do you think there are analogies or tie-backs or lessons Bitcoin can learn from, uh, what's happening in Ethereum right now? Um, I, I don't know

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if-I don't know if I would describe the situation in Bitcoin as more dire, but I would describe it as, uh,

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m- I think people just have accept- accepted that there's no, you know, on E- on Ethereum you can still complain about the Ethereum Foundation.

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W- with regards to Bitcoin, there's really no point complaining about anything. It's just, like, when, when it comes to, um, coordination around any kind of policy or decision-making, that just doesn't exist at all.

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And I think people [laughs] are coming to terms with that maybe. Um, I think maybe even Bitcoin Core themselves are kind of coming to terms with it. I, I don't know. But, like, um, I don't know if it's good or bad.

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I guess it's... I think it's good. If, if everyone knows what things are, I think that's a good thing. Um, but, but it is what it is. Like, you know, M- Michael Saylor had been talking about it a lot.

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Uh, I don't, like, I don't think, I don't think he's gonna try to push for change in his... And if he doesn't, then I don't think anyone will. Uh, l- I mean, I don't think, I don't know. It's, yeah.

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I, I don't know if there's anything to learn, [laughs] uh, from Ethereum in that sense. Uh, we're just, like, further along- [laughs]... on that curve, I think. Yeah.

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Well, whatever they're doing to make the price go down, we need to do the opposite. [laughs] So we need to get our best people on this. Udi, you gotta get on this. Figure out whatever they're doing and do the opposite.

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Right. Make Bitcoin price go up, and when everybody, and everything will be h- And we get the happy path, the shining city- 400K by the end of the year. Yeah. 400K by the end of the year. [laughs] Didn't say which year.

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[laughs] End of a year. Not this time. [laughs] Udi, thank you so much for coming on the pod. I really appreciate it. Yeah, thanks for having me. Best of luck with the marketplace. Don't sell those glasses.

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They will be in a museum someday. [laughs] Cheers. See you. See you. Gotta love Udi, man of a million takes.

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Let's go to, uh, Haley Thompson from Luxor right after a word from our sponsor, CleanSpark. [gentle music] We are CleanSpark, America's Bitcoin miner, a publicly traded company with the largest operating hash rate,

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powered entirely by self-operated infrastructure across four states. This is our proof of work, and we are setting the standard for what's next.

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Learn more about the intersection of energy and Bitcoin at CleanSpark.com. All right. Let's get Mr. Thompson up here. Haley. Haley. Welcome back to the show.

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Hey, guys. Great to be on again. Yeah, thanks for joining, man. Very timely.

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Number of things we wanna get through today, but first I really wanna kick it off with impacts of the Strait of Hormuz closure and the Iran war.

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You know, obviously most Americans know that the price in the pump has skyrocketed since this took off. US is now exporting more oil to allies in Europe and Southeast Asia.

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Curious, outside of that, if there are any impacts you're seeing in energy markets right now that have some f- form of ramifications for Bitcoin miners and data centers. You know,

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uh, a- and I think it's more, like, so the Strait of Ho- Hormuz is, like, obviously the, the flashpoint or, or the focus, but, you know, you actually think if you look at, you know, broader policy, so also what, kind of what's going on in Venezuela, you're, you're, you're kinda seeing, um, you know, uh,

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like a, a pushback against foreign oil, or basically America just kinda take charge and become, you know, self-supplier of their, of their own oil.

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Um, and also kind of limit- limiting the supply to what you might call their adversaries or their rivals, uh, for, you know, for th- these other sources of oil, um, kind of dictator oil.

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So it's a, it's a big, um, macroeconomic shift, a g- big geopolitical shift.

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But, I mean, what's really happening is, you know, America is, is basically b- securing, you know, securing their energy, and they're making their d- domestic production more viable.

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Um, yeah, so we're seeing it at the pumps, but, you know, I would say I'm a big believer, as I've kind of talked before on the show, in the, in the, in the power of the markets.

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And so when all of that goes up, then you're gonna drill more and you're gonna, you're gonna increase the supply. You know, I think, I think US is a- already at record supply, but they, they have lots of oil.

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It actually makes some sources of oil, some reservoirs more economic. So something that might have not even been considered a reserve is suddenly a reserve.

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And, um, and, and so you, you could see, um, y- you could see the market a- adjust based on that supply.

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And then in terms of, you know, getting into Bitcoin electricity, um, you know, it, it's, it's interesting that, you know, when you, when you drill oil, a lot of the time you get gas, and that's not necessarily something you wanted.

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Um, it c- you know, in certain areas like Texas, um, in certain areas in, in, in Canada, that gas is considered a, a nuisance, and so you kinda get localized oversupply of gas because the people producing the gas aren't doing so intentionally.

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Um, they are doing... It's a, it's a byproduct of, of oil production.

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So higher oil, uh, can, can conversely lead to lower natural gas prices, which, you know, in theory can, can actually put a, um, can put s- like selling pressure, you know, can bring down electricity prices because gas is still the marginal unit.

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Yeah, and oi- [clears throat] you know, oil has its own difficulty adjustment via the market as, as, you know, miners always like to point out.

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And, and going back to the natural gas element of that, that's a really good thing to point out, that more drilling, as these wells become economically viable, means more gas.

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Also, as I understand it, a lot of the gas in West Texas and like the Permian Basin trades negatively a lot of the time because there's just no way to get it out.

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So counterintuitively, despite the rise in oil prices, the takeaway here for me, at least from what you're saying and from what I've looked at, is that-This really is not impacting energy prices for bulk consumer or residents at this point.

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N- not, yeah, not, not at this point. I mean, I think, you know, as, as energy-- if, uh, if the USA wants to position themselves as an energy exporter, um, y- you know, a- and in gas.

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So if they start doing more, um, export terminals, more compressed natural gas, that might have a big impact because then you, you take this over supply, but you're-- it's not just, it's not just the domestic demand.

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Um, it's not just domestic demand, but you're actually exporting it, which means there's, there's less supply domestically.

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But then, um, of course, you know, which I'm, I'm sure we're going there, you know, in this, in this AI arms race we're, we're seeing, um, we're seeing the hyperscalers just kinda skip the grid in some, in some instances.

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Uh, like, uh, xAI has a, um, you know, has-- I think it's, it's Georgia, but they have this massive data center and it's-- they basically just tapped a gas, um, pipeline and brought, brought in the turbines and, um, and, and supplied themselves.

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So, so that could actually have a major impact, where if, if that-- if this becomes a trend, which it is becoming a trend, then, um, then this, the de- demand for energy and this demand for moving very quickly could, could actually ra- raise natural gas.

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And I-- and which, you know, conversely will, will raise electricity.

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Um, and I think that that, uh, will, um, is a much bigger impact on Bitcoin mining economics and just on, on, uh, p- power prices in general than, than this, the geopolitical, um, geopolitical impacts.

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So Haley, one more question from me before I toss it to Charlie. Y- you were talking during the hash rate index segment at the top of the show, four CPs upon us in Texas.

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Um, hash rate just peaked above one zeta hash again, I believe for the first time. I mean, this, the last-- over the last few weeks, it's been up there for the first time in, in a minute.

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And there have been some proposed changes to the way ERCOT does things with the four CP program. Uh, are any of these in place for this season?

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What some of the proposed changes and will we see-- so we won't see any changes this season? No, we- Is it business as usual? Yeah. Th- this, this season's business is business as usual.

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You know, we are seeing, uh, jockeying for how this program, um, you know, uh, basically, you know, has-- is the twenty twenty-six version, does it kind of match intent?

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And so, uh, you know, so if we roll back and like what is, you know, what is four CP? It-- so the, the grid is a very, you know, very expensive, right?

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The, the grid is, you know, billions of dollars, hundreds of billions of dollars. Texas is a, you know, top ten world economy by itself. And, and somebody ultimately needs to pay for the grid.

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And so the design, which is around for decades, is essentially, you know, who should pay for the grid?

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And of course, there's, you know, there's always gonna be a little bit of jockeying, lobbying, you know, um, but the, the, the idea, the intent of w- this, this program, and, uh, uh, it's not even a program, it's just kind of market dynamics, is that the people who should pay for the grid are the people who are using the grid.

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And then, uh, you know, the, the-- and then how do you measure that?

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And so traditionally, they kind of said, "Well, let's look, let's look at who's using it at its capacity, p- at its peak capacity," 'cause the grid is built for the peak.

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You know, it's, it's-- it-- most of the time it's, it's fine, but the grid has to be designed, um, for reliability, so it has to be designed for these, th- these kind of extreme events.

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And so they-- the, the idea of, and lots of other, uh, markets, not just ERCOT, have a version of this, is they look-- the, the, the idea was to look at who's using the grid when it was at, at its maximum usage.

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So when-- and that's who should, that's who should basically effectively be paying, um, for, for the grid and who should be paying these utilities, uh, for their infrastructure.

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And so they measure that, you know, in, in these four months of the summer. They, they basically measure, you know, the fifteen-minute window where effectively system-wide usage was the highest.

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And that was, that was the intent of, intent of the program.

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And as flexible load came along, fle- uh, once, once the mechanisms and the incentives were well understood, flexible load kind of said, "Well, you know, we, we don't need to use the grid in these moments.

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You know, we don't need to use the grid when it, when it's stressed. Um, we can use our flexibility to not use, not use power in these windows."

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And, and they're responding to the signals and, you know, I actually view it as a, as a very positive thing because, you know, it takes, uh, it, it takes a lot of the window, the argument that, you know, Bitcoin is boiling the oceans.

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But now a lot has changed. So Texas has an abs-- unbelievable amount of solar build-out.

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And the-- now, you know, so what-- so part-- there's a few reasons why they're looking at designing, uh, the program or redesigning the program.

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One is that, um, that y- you could argue that the-- when the grid is the most stressed, it d- doesn't actually have anything to do with peak demand.

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It might have more to do with renewables or solar because that is, you know, that-- you get all this congestion.

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And so the one discussion is to shift it away from absolute peak, like just, just max load, and to start looking at net load.

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Um, that's, that's one way of looking at it or, or one argument, because saying that's actually when, when things are at their max.

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Um, the other thing is we're, we're seeing more and more, um, ERCOT is flipping more and more to a winter peaking market.

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So the idea that the summer months are, are the months, which has traditionally been the case, we're actually seeing, um, we're actually seeing December, January.

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This is kind of when the grid is quite stressed and, you know, if you get, if you get these winter storms, if you get these polar vortexes. So the argument is it's not just the summer, it shouldn't be four CP.

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Um, and then, uh, finally, I'd just say there is some politics going on where the-- there-- I think if basically, if a, if a larger and larger segment of load can avoid getting charged, which is kind of what this whole, whole, you know, quote unquote, "game" is about, for every megawatt you can curtail in those windows, you save about fifty thousand dollars on your energy bill the following year.So for, for a 100 megawatt site, that's $5 million.

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Well, that's... Somebody else needs to pay that $5 million.

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So the non-f- the firm loads, the non-flexible loads are basically crying foul and, and they want these data centers, they want these Bitcoin miners to pay their fair share, so to speak.

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So, so a lot of it's lobbying and jockeying for, you know, if I don't wanna pay the Bitcoin miners' bill. Um, the counterargument to that is the Bitcoin miners saying, "Well, we don't, we don't need to use...

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Tell us when not to use... Tell us when not, like, when you don't want us to consume power, and we won't," right?

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So, uh, like, why should we be paying for something that we don't need to use, you know, in these critical windows? So [clears throat] Haley, you mentioned... Sorry for putting you on the spot here.

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You mentioned there was a, you know, study on 4C, f- for, uh, proceeding 4CP to ta- like, identify which sectors, which industries, which consumers of power are using it during these most stressed, highest percentage consumption moments.

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Do you know which ones those are off the top of your head? Do you, like, do you recall which, uh, which, uh, types of energy consumers were the most, uh, demanding during those times? So, I mean, traditional...

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So one a- amazing thing about Bitcoin, I think I've, um, I've mentioned this on, um, on this show before, is that you basically get paid for e- every penny of work you do, um, and then you can stop, right?

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There's no, um, there's no industrial process that is hard to pause. A, a steel mill, even a bakery, um, a, a chemical refinery, these, these kind of loads can't just pause, right? They're, they run a batch, you know?

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So, so basically, so it's a lot of industrial loads don't have the ability to, to curtail on demand and to be as price responsive. And then honestly, you know, like, it's, Texas is very hot, the population's growing.

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People need to be running their air conditioners, especially in the middle of the day. There- there's a massive portion of this load that is just residential, like residential, uh, cooling demand.

248
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Office towers, you know, they, they, they, they can't be 100 degrees inside. Um, so during the weekday, they, you know, they're not gonna turn off. There's...

249
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They're, they're coming up with clever, like, more clever ways to kinda shave the peak. But, um, uh, but so much of it is just, uh, yeah, industrial loads and cooling demand, um, air conditioning.

250
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Well, it'll be interesting to see what happens this year, especially considering you were saying we're starting to see that shift more towards the winter months as batteries come online.

251
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And obviously in the summer, you know, the solar going to rip. There's a lot there. But w- I'm really just interested to see what we get in terms of hash rate stagnation this year if, or, you know, if anything at all.

252
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But we'll, we'll leave it there. Haley, thank you so much for joining. Always appreciate the insights. And, um- Awesome... you know, keep up the good work with all the energy stuff at Luxur.

253
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Uh, the d- energy dashboard, all the data is great. I know that it's not really your purview, but, um, it's always a boon for researchers, so appreciate it. Well, thanks for having me, guys. Thanks, Haley.

254
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Thank you for having me, too. All right, we're gonna keep rolling. We have Stretch de-pegging, and we also have solar in Oklahoma. But before that, a word from our sponsor, Luxur.

255
00:46:03.212 --> 00:46:12.772
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256
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257
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258
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259
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260
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It would not be a Newsweek, Charlie, without another strategy story. No, it's not a week. The Giga Chad- It's not a week. It's not a Friday. It's not, it's not a weekend without Michael Saylor doing something. Yeah.

261
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The Giga Chad haunts your dreams. He's like the Babadook lurking in the attic- [laughs]... screaming about how you never sell your Bitcoin, even though he might sell some of his Bitcoin. Yeah.

262
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You don't sell your Bitcoin. He's telling you to sell your kidney. He still owns his Bitcoin. [laughs] Yeah.

263
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He's telling you to sell your kidney, um, to sell your children into indentured servitude so that you can accumulate Bitcoin, or you can accumulate his Stretch preferred, uh, shares.

264
00:47:27.832 --> 00:47:39.991
So anyway, all that aside, we have a article here from Blockspace. Arca's Jeff Dorman says Strategy's capital structure has, quote, "gotten out of hand." Now, what could Jeff possibly mean by this?

265
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Uh, I thought we were meant to be plan trusters. If you don't understand strategy, you are mid-curve or subhuman.

266
00:47:48.072 --> 00:48:00.652
No, jokes aside, though, he, Jeff Dorman tweeted a, you know, not super long, but a kind of thesis here about why he thinks that Strategy's kind of cornered itself with these preferreds.

267
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The basic argument here that he has is, you know, Strategy kind of could have just spent the next few years sitting on its common stock, accumulating Bitcoin, diluting or taking on debt to accumulate more Bitcoin.

268
00:48:17.212 --> 00:48:24.722
But instead, it started issuing these preferreds, this digital credit, right? They have, I believe, five outstanding right now, but four I think are really...

269
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Really, Stretch is the one that's the most popular, but there are f- there are a few others that have also gained some market traction.

270
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And now that he has those, as we've talked about on the show before, Strategy has a fat dividend obligation each year. As it stands currently-There is 1.5, roughly 1.5 billion in total obligations, really like 1.6.

271
00:48:49.384 --> 00:49:00.984
Of that, Stretch accounts for 1.2 billion in dividends annually, Strike 112 million, Stride 140 million, and Strife 128 million.

272
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And one of the questions that Jeff has here is, okay, you have all of these dividends that you have to pay off. You, you have to get the cash from somewhere.

273
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You ended up raising $2 billion to give yourself a cash cushion so that you had runway to pay these dividends, and then you go and rebuy convertible debt. He's very confused by this. I wanna steel man this.

274
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We had Jay Patel on earlier in the week on Monday, or sorry, Tuesday, to talk about this buy. Jay was mentioning that it's kind of a good deal for strategy because at this time, that convert was way out of the money.

275
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The way these converts work, they get, they get issued, and the holder of the note can either redeem the convert at a time in the future for shares, or they can redeem it for cash.

276
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The strike price for the shares for this convert was like $670 per share. Strategy, last I checked, and I'll ch- double-check this here. Yeah, it's at 160 right now. It's actually up on the day. Um, wow, b- it surged.

277
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It's, it's up, uh, f- uh, 5% on the day. But, uh, so there's a long way to go until you get to that point. And r- so right now, the notes are trading at a discount.

278
00:50:14.164 --> 00:50:27.804
They were able to buy them back for 8%, uh, discount, roughly like $1.3 million. The preferred, this con- oh, convertible note is, uh, the outstanding principal is 1.5 billion. Jeff says, you know, "It's 0% coupon.

279
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Why would you do this?"

280
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Part of the reason why you do this is because if that matures, um, or if the holders require repurchase as early as June 1st, 2028, per the contract, they would have to pay the full 1.5 billion if they're settling it in cash.

281
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Now, you could say they paid 1.38 billion. It's 120 million. You know, Saylor could probably raise that in a day or in a week.

282
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You know, he could probably raise that in his sleep the way that people have been pouring money into this ecosystem that he's been building. But at the end of the day, if you're looking at this from a pure, you know...

283
00:51:02.944 --> 00:51:10.184
If you're looking at this from pure dollars and cents, what they did does make sense, but it did dwindle their cash position. Now they only have 871 million.

284
00:51:11.024 --> 00:51:15.233
So the steel man for this is it was a good, it made dollars and cents.

285
00:51:15.733 --> 00:51:23.684
The steel man for why this was a bad thing is maybe you would wanna hold onto that cash and then pay down the dividends, and then kinda kick that can down the road.

286
00:51:23.744 --> 00:51:28.984
Maybe you can refinance it, or maybe even it gets even further out of the money, and you can have a steeper discount on that convert.

287
00:51:29.804 --> 00:51:41.803
All that being said, Jeff caps off his post here, uh, quote, "The only bull case is that underestimating Saylor's capital markets [chuckles] chicanery has been a losing proposition for years. Maybe there was a plan.

288
00:51:42.224 --> 00:51:50.524
That plan may just be selling Bitcoin, which he will have to do eventually. But if he does this while Bitcoin is in a death spiral, it's going to crush Bitcoin and m- and microstrategy, or strategy.

289
00:51:50.584 --> 00:51:59.704
Again, why buy back the debt now and force your hand sooner than you have to? Maybe he's going to refinance those converts with new longer-dated converts. He has sworn off converts, so I doubt it.

290
00:52:00.064 --> 00:52:12.524
But TLDR, this is the first time that Strategy, the common stock MSTR, BTC, and preferred holders are really in a bind. Someone is going to lose badly here, and it will happen in the next four months."

291
00:52:12.654 --> 00:52:17.924
I, I'm not really going to comment too much on whether or not I think that his forecast is right here.

292
00:52:18.704 --> 00:52:26.644
I think v- you can't say necessarily, though, that this is going to come to a head in the next four months because, quite frankly, you don't know what Bitcoin's going to do in the next four months.

293
00:52:27.064 --> 00:52:38.584
If Bitcoin tanks over the next four months, then yes, th- this could be a very difficult position for anyone holding these preferreds and for Strategy shareholders. But to me, I, I have to say, this is a little dire.

294
00:52:39.284 --> 00:52:52.214
You know what I mean? And, and the, uh, the one good criticism I think he does have is a lot of strategy is predicated on people kind of buying into the narrative and continuing to give Saylor money, right?

295
00:52:53.024 --> 00:52:58.244
But he's shown himself incredibly adept at m- at, at playing capital markets.

296
00:52:58.324 --> 00:53:09.184
That's the one thing that Strategy has always had compared to the other Bitcoin Treasury plays, is they really licked the capital market game early, and they played it to their favor.

297
00:53:09.244 --> 00:53:14.904
So if you think Saylor still has a rabbit in his bag of tricks, this was probably overblown.

298
00:53:15.424 --> 00:53:25.484
If you think that a- you know, there's actually some sort of existential wavering of confidence in Strategy, th- th- then maybe you can say in four months out. But that, that seems really too extreme to me.

299
00:53:25.584 --> 00:53:32.624
I don't think that we've seen weakening. And, and I-- Well, last thing I'll say about this, I think he partly posted this because Stretch depegged from $100.

300
00:53:32.664 --> 00:53:45.244
You know, it's supposed to float around $100 per share, but it only went down like $3, and now it's back up. I mean, we saw it back in, I believe it was November of last year, dip to, like, almost $90 a share.

301
00:53:45.724 --> 00:53:51.184
So we've been here before, and the sky didn't fall down. You know what this feels like?

302
00:53:51.244 --> 00:54:03.124
It, it, it's really weird, but it's hard for me to exactly say why, but this feels a lot like Tether truthers, um, in that, yeah, Tether depegged sometimes, um, but you would not have wanted to bet against it.

303
00:54:03.274 --> 00:54:19.994
And it feels a little bit like Saylor's in a similar situation where, yeah, there may be some dicey gray, you know, areas and moments as this financial leviathan which he produces does get spinning, spinning up, but you just don't wanna bet against Saylor right now.

304
00:54:20.024 --> 00:54:33.544
There's much better bets. If you wanna go long or short other things in the crypto-adjacent ecosystem, there's so many much better things to try to bet on than, uh, than Saylor going bust. Um- Yeah.

305
00:54:33.584 --> 00:54:38.964
That-- Yeah, that's my take. Uh, I think that's a good take. It does kinda sound a little Tether truthery to an extent.

306
00:54:39.604 --> 00:54:50.674
Uh, uh, but to be fair to what Jeff's saying-If the math stops making sense, it could be very bad- Yeah, I mean-... for this whole digital credit ecosystem. You know?

307
00:54:50.674 --> 00:54:56.134
This, you know, obviously, obviously like yeah, there are some... It, it, it could go bust. Um,

308
00:54:57.044 --> 00:55:08.514
it just feels like it's, uh- But to say that people, but to like kind of intimate that the system is losing complete confidence in Strategy I think is not totally accurate for where we're at right now. Yeah, yeah.

309
00:55:08.604 --> 00:55:20.484
Um, you know, maybe some yellow lights flashing, but no red lights saying, "Hey, we're about to fall off a cliff." I could be totally wrong here and if- Yeah, you could be totally wrong. If Bitcoin gets cut in half,

310
00:55:21.444 --> 00:55:32.324
things start to get really dicey. Well, yeah, but it's, it's not just Sailor, it's not just Sailor, it's like everybody. Yeah, yeah. So anyway. Okay. L- look- Yeah. Yeah. The, we'll, we'll leave that there.

311
00:55:32.414 --> 00:55:38.264
Uh, just some, some things to chew over. If anyone would, wants to come on and refute what Jeff said, we'd love to have you.

312
00:55:38.424 --> 00:55:49.014
Jeff Walton, if you're listening, come tell us why we're retarded for not aping into Strategy at- Yeah... where it's at right now. Also, good, uh, good hang with Coffeezilla. That was a banger.

313
00:55:49.164 --> 00:56:05.364
Okay, let's go to the next story, which is solar in Oklahoma. This is my neck of the woods, and researching this story was pretty interesting, uh, very eye-opening. Enlightening, you might say.

314
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So the, the headline is, "Enlight signs 200 megawatt AC solar power purchase agreement with Google to support data center operations in Oklahoma."

315
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This would be down in the eastern but middle of the state here, kind of around the Muskogee area, where a lot of other, these big data centers are being built.

316
00:56:26.844 --> 00:56:32.964
Core Scientific has a big site down there, and the details of the story are as follows.

317
00:56:33.904 --> 00:56:50.904
Enlight Renewable Energy, through its subs- US subsidiary Clenera, signed a 15-year fixed price physical PPA with Google for 200 megawatt AC, rather alternating current, of megawatts of solar generation in Oklahoma delivered to the Southwest Power Pool market.

318
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The power comes from Solstice, a 250 megawatt DC solar facility in Le Flore County, Oklahoma.

319
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The project has completed the impact study and is, is respect, ex- expected to receive full interconnection approval later this year. Construction slated to begin 2028. Commercial operations targeted for 2029.

320
00:57:10.744 --> 00:57:26.484
A later phase would add 800 megawatt hours of battery energ- energy s- or of battery energy storage capacity. Um, so a couple things here. One, solar produces DC, and the deal is for purchasing AC.

321
00:57:26.544 --> 00:57:42.284
So now we have to convert a bit. The rough math is that 200 megawatts, uh, AC of a solar plant is equivalent to roughly 50, 50 plus megawatts of average annual power, not like a 200 megawatt, uh, uh, 24/7 load.

322
00:57:43.204 --> 00:57:51.564
Um, I'm kinda curious how- That's, that's crazy to me. I mean, that's like what? 25% efficiency? Yeah, that's- I know that's not the right way to put it.

323
00:57:51.764 --> 00:58:04.104
I, I, I realize there's someone who's gonna, gonna point out, like, "That's not how that works," but- Yeah... you get, basically you get net 50 megawatts of actual usable electricity from a 200 megawatt system. Yeah.

324
00:58:04.784 --> 00:58:15.704
Um, so here's some things I had not really been keeping tabs on until recently studying f- uh, re- prepping for this. Um, so the really interesting thing is that this is not a behind the meter deal.

325
00:58:15.764 --> 00:58:27.114
So this is not a data center being co-located at the, you know, solar plant. This is purchased through the Southwest Power Pool, which is a regional transmission organization.

326
00:58:27.193 --> 00:58:36.864
So basically the people, you know, there's a handful of these RTOs out there, and they have the long transmission lines, and they're kind of like delivering the power across the regions of the country.

327
00:58:37.444 --> 00:58:47.954
And so this i- this, uh, the thing is, is that the Southwest Power Pool and other power pools are constrained for growth and transmission.

328
00:58:48.684 --> 00:59:04.053
And, uh, the numbers on the SPP here, according to both the press release and some other studies, is that, um, the SPP is res- is projected to retire over 5.7 gigawatts of fossil fuel generation resources by 2029.

329
00:59:04.744 --> 00:59:14.734
At the same time that the SPP peak load is expected to increase by five gigawatts during the same time period. So we have a net negative, uh,

330
00:59:15.844 --> 00:59:22.803
10, roughly 10 gigawatts, which has to be filled with, um, new energy sources, a lot of which are intermittent renewables.

331
00:59:23.364 --> 00:59:38.744
By the way, the SPP is, like, the best, uh, grid for wind because it sits in the center of the country. God bless the wind, um, blowing down, you know, uh, the plain. And God forbid an F5 come through those farms.

332
00:59:38.904 --> 00:59:48.924
Bro, if we could just hook a windmill up to those tornadoes, man, I'm just telling you. Could you, could you just imagine it's like some, you know, crazy final boss in, like, Final Fantasy.

333
00:59:48.964 --> 00:59:52.944
It's a tornado with a bunch of wind turbines spinning around it. Anyway. Yeah.

334
00:59:53.584 --> 01:00:06.804
And so there's another dimension here, which is that in Oklahoma there's a bill actually getting close to passing if it goes through the Senate requiring data centers to be behind the meter, or basically generate their own power.

335
01:00:07.184 --> 01:00:16.174
I'm hand waving. That's a, that's kind of a TLDR on that. But- Is that related to the moratorium that's being discussed? No. That- Those are local... county level moratoriums in Tulsa- Okay...

336
01:00:16.184 --> 01:00:23.184
and soon to be Oklahoma City. But- This would be a statewide, this would be a statewide requirement... every data center has to be behind the meter? It doesn't...

337
01:00:23.374 --> 01:00:27.634
So the language is not behind the meter, but rather it's more specifically must generate their own power. Okay.

338
01:00:27.644 --> 01:00:36.364
Which is effectively behind the meter, but it's- But, but is that, like, 100% of the power that they produce has to be behind the meter? Or is it- I-... like you have to supplement?

339
01:00:36.904 --> 01:00:44.164
This, this is something I'll have to come back to you on. 'Cause it, I think actually gets, it gets k- uh, kinda complicated when you get into the specific language.

340
01:00:44.704 --> 01:00:56.654
So the interesting thing is, is that, um, 'cause you and I were going back and forth saying, "When does it make sense to have a data centerPowering primarily off solar energy.

341
01:00:56.714 --> 01:01:07.474
Like, of all the different energy mixes, energy types, ener- du- you know, solar has the duck curve. Um, so it's, it's... We kinda know when it typically shows up, but it's still pretty unreliable.

342
01:01:07.554 --> 01:01:24.924
Not ideal for data centers or an auxiliary power source. But when we look at it from the perspective of this, this is, this is Google buying the m- the, the power through the SPP from, uh, this, this, uh, solar plant.

343
01:01:25.373 --> 01:01:40.114
This is Google basically locking up 50-plus megawatts of power to themselves to basically call dibs on future, uh, growth and capacity in the SPP, which makes a lot of sense.

344
01:01:40.334 --> 01:01:54.274
I do wonder how this gets plugged into a data center, though. Yeah, I mean, you know, to me, what this story really signifies is power wherever you can get it, baby. You know, it doesn't matter if it's renewables.

345
01:01:54.394 --> 01:02:05.134
It doesn't matter if it's gas. It doesn't matter if it's coal. These data centers are coming for every megawatt they can find that is not already allocated. And I did a little searching before we came on here.

346
01:02:05.194 --> 01:02:13.334
Oklahoma ranks 40th in the US for solar. Um- And so just kind of a s- side note here. Ooh, yeah, but there's, there's a couple things here.

347
01:02:13.894 --> 01:02:24.114
So according to studies from, like, solar organizations, Oklahoma is actually tied for the sixth best for potential solar, which is interesting.

348
01:02:25.034 --> 01:02:35.364
Um, but in, in terms of actual energy makeup as percentage of our grid, it's in the bottom, uh, you know, quintile. Where is the ideal place for that?

349
01:02:35.414 --> 01:02:42.494
In the panhandle or in, like, the southern, the south, uh, western s- part of the state? 'Cause I would- That's a good, that's a good question.

350
01:02:42.514 --> 01:02:53.174
I would imagine western Oklahoma because that's basically north and northwest Texas. Right. Which is, if you remember, that's where The Grapes of Wrath happened. It's empty. It's a, it's where the Dust Bowl happened.

351
01:02:53.254 --> 01:03:10.574
It's just, it may as well be Mars 'cause once you get over to, uh, whatever, Sprague, Oklahoma, it's just empty wasteland. Uh, so, uh, that is to say, again, Oklahoma and SPP broadly, uh,

352
01:03:11.774 --> 01:03:23.674
huge wind makeup, like 30%. Um, there's, uh, I think one more thing I wanted to have, I wanted to t- have take on here, which is that, um,

353
01:03:25.334 --> 01:03:32.954
I do kinda wonder, like, what, uh, I, I was wondering, like, what Google was thinking with, um, like, like trying to do a deal with a solar plant.

354
01:03:33.334 --> 01:03:38.194
But then I, but then you look into it, and Google's not fronting the cost for the build out of the solar plant.

355
01:03:38.254 --> 01:03:53.394
So that is, that is Enlight who is figuring out how to make the financials work with the federal tax credits and, like, the, like, remittances or the RTEs, I think, for, you know, the- Well, most of those ta- those tax credits are gone now.

356
01:03:54.054 --> 01:04:01.934
Yeah. Well, well- Right... they're almost gone. The, the thing is, um- Oh, that's right. For industrial it phases out slower than residential.

357
01:04:01.954 --> 01:04:06.574
It fades out, and there's actually, apparently, this is another, this is probably, we need to have someone who knows solar come on here.

358
01:04:07.054 --> 01:04:12.234
Apparently, there's a race to, like, break ground because the tax credits cut off- Right... a certain date. Right.

359
01:04:12.334 --> 01:04:20.834
Like, very soon, really, and so it's kinda like you gotta get your stuff online, you gotta get the project ground broken or certain milestones hit to get these tax credits.

360
01:04:20.854 --> 01:04:36.814
And so, um, there could be a looming crisis of people who raised a bunch of money, who can't break ground, who will not get the tax credits, who will now be faced with 30 to 40% higher project costs, which blows it all out of the water, so interesting story.

361
01:04:36.854 --> 01:04:43.034
We can come back to it. Um, I learned a little bit more about Oklahoma and Oklahoma's solar potential.

362
01:04:44.774 --> 01:05:01.564
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363
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367
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368
01:05:55.474 --> 01:06:05.534
This is coming at y'all fresh, early this morning from the Blockspace newsletter. How, the, how, uh, how much water do AI data centers actually use?

369
01:06:05.594 --> 01:06:17.434
Now, this has been obviously floating around the Twitter sphere for some- Uh, up- update your, uh, which tab you're sharing real quick. Oh, thank you. This has been floating around the Twitter sphere.

370
01:06:17.514 --> 01:06:30.614
Obviously, many of you have probably seen the comparisons to almonds, and so we ended up unpacking this in the newsletter this morning. And not too much to comment on here other than the data that I found.

371
01:06:30.674 --> 01:06:43.564
Now, according to most policy institutes citing EPA data, that's the Environmental Protection Agency, for 2023, US data centers consumed 17.3 billion gallons of water,

372
01:06:44.494 --> 01:06:56.806
and most extrapolates this number, uh, to be anywhere from 38 to 73 billion gallons by 2028I understand the knee-jerk reactions. That's a lot of water, right?

373
01:06:57.066 --> 01:07:11.066
That, but when you really zoom out, the 2023 figure is equivalent to 160,000 American households. Now, this is where the kind of, you know, moralizing comes in. Well, of course they should get it, they're people.

374
01:07:11.686 --> 01:07:22.146
These are computers. And I understand that to a point, but you don't have any of this moral outrage for any of the other things that consume vast amounts of water.

375
01:07:22.186 --> 01:07:37.466
If we look at almond farms and applied water, that is, um, uh, that is water that actually ends up, you know, uh, uh, going on the crops, but some of it is reabsorbed through the groundwater.

376
01:07:38.326 --> 01:07:49.996
If we look at applied water versus consumption, we see that, uh, almond farms consume roughly 1.3 to 1.6 trillion gallons per year.

377
01:07:50.066 --> 01:07:55.946
Uh, that equates to one to 1.4 trillion gallons of actual consumption, which is water that's lost to the local source.

378
01:07:56.646 --> 01:08:05.566
Now, that's important because w- what we actually wanna look at is water that's lost, and that, the data center figure is con- pure consumption water that does not return to the source.

379
01:08:06.486 --> 01:08:18.286
And as I say here, but people eat almonds, you can't eat data. So true, King. So true, King. But I mean, t- I, I, I beg the point, that's turtles all the way down. Like, okay, then you could use...

380
01:08:18.326 --> 01:08:30.516
If you're gonna use that argument, you could eat a more, uh, protein efficient- Yeah... diet. Well, try, try this one on for size. AI can make our crops more productive, so- Whoa...

381
01:08:30.596 --> 01:08:39.196
inverts- There are a lot of ways we can go with this... you can make, you make a hectare produce, you know, 18% more if we have AI, so- And, and, you know-... the water matter...

382
01:08:39.206 --> 01:08:44.086
like, okay, if, you know, if you're getting all your calories from almonds, that's incredibly inefficient.

383
01:08:44.146 --> 01:09:05.255
You could also just eat beef, or if you wanna stay vegan with it, you could eat soybeans- Yeah, but, dude, but the thing is like, look, but one thing, while you harp on almonds in this, which is good 'cause it's the most egregious use of water ef- ef- ef- efficiency, agriculture as a whole, agriculture even like construction practices, residential like watering your grass- Yeah...

384
01:09:05.255 --> 01:09:19.206
taking your power, these things are incredibly, uh, water consumptive, and the average person sees a raw number for billions of b- of, you know, water bottles used, they think that's so terrible, it's because they don't have a proper, uh, comparison.

385
01:09:19.226 --> 01:09:29.386
They don't... It, it, it's very hard to, uh, understand how that fits into the broader, like full cycle use of water- 100%... in their consumption. Yeah. And even that's what I kinda get into this here.

386
01:09:29.546 --> 01:09:35.366
Even some of the comparisons are apples to oranges. You know, when you're reading a study, are you looking at applied water?

387
01:09:35.466 --> 01:09:43.226
Are you looking at, at, at gross withdrawal, which is the total amount drawn, but doesn't account for stuff that ends up back into the ecosystem?

388
01:09:43.286 --> 01:09:54.846
Or are you looking at actual consumption, which is water that is lost from that local ecosystem as a result of the practice? And that, that's why I kind of spent a l- a few too many words on that in the newsletter.

389
01:09:54.856 --> 01:10:03.846
The last thing though, if we wanna like, you know, obvious, like food, agriculture, we need to live, um, you have to have food. You don't necessarily have to have data centers, although it'd be nice if we had both.

390
01:10:04.346 --> 01:10:12.166
Okay, let's compare it to something completely trivial. Golf courses in the US alone use anywhere from 476 to 760 billion gallons of applied water annually.

391
01:10:12.746 --> 01:10:20.886
Another back of the napkin math with GPT, I went through ChatGPT and kind of said like, "Okay, let's see what, what this would translate to consumption with actual water lost."

392
01:10:20.926 --> 01:10:32.796
So roughly 300 to 600 billions of gallons a year. Both of those, several magnitudes more than data centers. And the thing that's interesting about the future of this debate, AI is actually changing data center habits.

393
01:10:33.096 --> 01:10:44.366
A lot of older data centers use a form of ev- evaporative open loop cooling. It's very energy efficient, but open loop sites, open loop sites are, are, uh, lead to much greater water loss.

394
01:10:44.446 --> 01:10:47.226
They're increasingly moving towards closed loop systems.

395
01:10:47.266 --> 01:10:55.206
At the expense of electricity, these are more expensive, so that's the trade-off here, and that will be a whole other dragon to tackle, I think, once we get to that in, in the, uh...

396
01:10:55.606 --> 01:10:58.466
Once, [laughs] once the, uh, once the normies figure that out.

397
01:10:59.126 --> 01:11:14.246
But an example of this is Microsoft, Microsoft is claiming that by, from late 2027, all of its new builds will be zero water cooling or near zero water cooling using dielectric fluid or other forms of immersion fluid for their closed loop systems.

398
01:11:14.726 --> 01:11:17.466
Take that with a grain of salt, obviously. It is Microsoft.

399
01:11:17.966 --> 01:11:29.736
But I wanted to unpack all of this because as I led the story with a, my favorite aphorism from my grandmother, uh, she said, "There's always three sides to every story, what one person said, what the other person said, and what's actually happening."

400
01:11:30.306 --> 01:11:35.226
And I do think that there is some truth to that, although the data is largely on the side of the data centers with this.

401
01:11:35.646 --> 01:11:49.786
The moral out- uh, the moral panic and outrage is bigger than anything I've seen, and I think a lot of it is also related to people's fears over AI, um, obviating them, making them obsolete, you know, taking their jobs.

402
01:11:50.066 --> 01:12:03.546
So... Yeah. Great research, Colin. This, the water topic is a very huge amount of misinformation. The, uh, the arguments really do, I think, favor the data centers in this case.

403
01:12:04.226 --> 01:12:15.506
Um, but that's not to say that there aren't good pushbacks against data centers. In fact, I think there are very good scathing criticisms of a lot of things happening with data centers.

404
01:12:15.566 --> 01:12:28.206
If we compare it to, as the Pope did, the Industrial Revolution and its consequences, [laughs] um, then there are s- definitely going to be some, some, some problematic side effects to this.

405
01:12:28.266 --> 01:12:43.395
And it could create a new era of abundance, but man, it's like it is not a simple black and white issue, um, because if we're gonna tie ourselves to this, uh, water criti- criticism, uh, narrative, then you will get videos like this, which w- I will close with.

406
01:12:44.006 --> 01:12:59.386
Here is the Rio Grande supposedly going dry, uh, because a, a data center sucked all the water up. Roll tape. I'm currently standing in the Rio Grande River right now. This is what it looks like right here, all dirt.

407
01:13:01.666 --> 01:13:13.806
All dirt. [gentle music] You're looking at an environmental catastrophe, what this is.

408
01:13:14.666 --> 01:13:24.346
The new meta data center in Los Lunas, New Mexico, takes 75 million gallons per year to cool down the data center.

409
01:13:25.086 --> 01:13:35.166
So that is a super mega viral video I've seen cross-posted across all different types of soc- socioeconomic and ideological, uh, worlds.

410
01:13:35.186 --> 01:13:50.396
We're talking conspiratorial, uh, pro-Trump MAGA rural folks to, um, woke leftist elite, coastal elite liberals. Like, we're talking about- It's the granolas, it's the, it's the yuppies, it's the bubbas. Yeah.

411
01:13:50.446 --> 01:14:00.406
A lot of people, and I cite a lot of data here. I mean, Gallup found that 73% of Americans that they polled were not in favor of a data center in their community. Yeah.

412
01:14:00.546 --> 01:14:14.006
This is the most cross, like cross aisle topic I think we've ever seen, and I'm amazed I don't see other like, uh, AI folks talking about this. This is a reckoning coming from the ground up, but we have to cut it there.

413
01:14:14.366 --> 01:14:27.706
We gotta wrap this up. Thank you so much for listening to Block Space Live, coming at you live every weekday starting next week at 1:00 PM Eastern Standard Time. I'm Charlie. I'm Colin.

414
01:14:28.426 --> 01:14:35.586
And if you are listening on Coinbase, go... I'm sorry, CoinDesk. [laughs] If you're listening on Coinbase, please screenshot and send it to us.

415
01:14:36.246 --> 01:14:49.446
[laughs] If you're listening on CoinDesk, go to the Block Space channels and sub there, 'cause the CoinDesk feeds will be ending soon. Otherwise, catch you all Monday. [upbeat music]