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[upbeat music] What's up, y'all? Welcome back to Blockspace Live, presented by CleanSpark. Charlie, it's happening. It's happening. Anthropic is going public.

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They filed a confidential prospectus right as we were prepping for this show, so we're gonna start, kick off the show with that.

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There's not much information to cover 'cause it is confidential, but we are gonna touch on it. Then we are gonna be moving to the GigaChad, doing what he said he would.

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That is Strategy selling a very small amount of Bitcoin, potentially to send a message.

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Following that, we have Francis Corvino of Lagos Finance on to talk about this sale, and also what's going on with Stretch vis-a-vis Strive's SATO, which is also a preferred stock, and how the competition between preferreds within the Bitcoin Treasury landscape is heating up.

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Following that, we have the DMG team on to talk about their new 60-megawatt AI deal in Canada. Looking forward to that one.

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We had, um, w-we, we, uh, had the Cathedral team on recently to talk about, now Sphere 3D, to talk about some of these, uh, opportunities for smaller AI sites, so I'm really interested to see what DMG has to say on this market.

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And then we will jump into Iron's new financing deal, multi-billion dollar financing for its GPU rollout, for its Microsoft contract.

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And then we will end with a little data center hate, or rather I should say guardrails.

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I shouldn't be too strict here, but Utah's governor just has is- issued an executive order to ensure responsible rollouts of data centers in the state.

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Obviously, this follows a few weeks of kerfuffle over a massive data center spearheaded by Kevin O'Leary in Box Elder County, Utah. Charlie. That's right. Blockspace goes live Monday, Wednesday, Friday at 1:00 p.m.

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Eastern, featuring quick hits on the latest in AI, emerging tech, a little bit of Bitcoin and Bitcoin mining, and markets. Make sure to like and subscribe. Hit the notification bell if you're on YouTube.

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Get that push notification to your phone while you are transiting back and forth from work as you race to the New York Stock Exchange, hit the big red button to buy that Anthropic IPO.

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And if you're still on CoinDesk, we are leaving CoinDesk very soon. Go over to the Blockspace feed.

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Yes, the Blockspace RSS or podcast feed, wherever you, you listen to podcasts, and subscribe there, because we're leaving CoinDesk soon. 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 some Anthropic news. This just dropped, so if you are listening later, like this was literally 15 minutes ago, pushed on Bloomberg Terminal.

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I saw it first where Joe Weisenthal, Bloomberg, uh, affiliated, Joe Wei- Weisenthal, you know, tweeted, "It's happening," and it is. Let me share this. Here we go.

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Here's the news. On Bloomberg, uh, "Anthropic files confidentially for IPO in race with OpenAI.

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Anthropic has confidentially submitted draft paperwork for a public listing as it races longtime rival, OpenAI, to make a Wall Street debut as soon as this fall. No details on pricing or number of shares." Uh,

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this is kind of-- This-- Anthropic is one of, like, the big three IPOs of Anthropic, OpenAI, and SpaceX, which are anticipated this summer and later through 2026.

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In recent Anthropic news, Anthropic recently raised $65 billion in funding round at a $965 billion valuation, which eclipsed OpenAI's value for the first time.

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So Anthropic on a rocket ship, not a SpaceX rocket ship, a market rocket ship, uh, surpassing OpenAI in valuation. So Anthropic's the first to confidentially file. It is kind of a race to the market, Colin.

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100%, and I wonder if part of that race is why they filed confidentially, right?

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It's not uncommon, but usually you-- I would assume you file confidentially if you're not totally thrilled about the financial metrics you would be reporting.

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I could be totally wrong here, but- But when do financial-- When do the financials matter? They, they don't matter anymore.

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Well, they, I think they matter with respect to if you file before OpenAI, and your numbers are worse than theirs, then that creates a competitive disadvantage for you when both of these things come to market.

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'Cause that's really their primary competitor, and that's-- people are going to weigh, "If I'm gonna pick one, which one am I gonna pick?" Right? And so perhaps that has something to do with it.

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That being said, we don't have solid revenue information because it's, uh, it's confidential.

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But Anthropic did report in May that a- the-- that its revenue run rate, and that's, that's ARR, so it's not the specific revenue they booked- Yeah...

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over a certain quarter, had ballooned to 47 billion, up from 10 billion the last time they reported. Yeah. And this shocked a lot of people, actually.

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They, they-- It, it-- There was a, just a huge surge in revenue, and people weren't expecting this because that's been one of the key criticisms of these LLMs is, like, are you actually going to be able to bring in the revenue to justify the spend on the compute?

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And Anthropic coming out and saying, "Well, actually, yeah, probably." But super exciting to see, and I think that now all eyes are on OpenAI, um, with regards to their own path to public markets.

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I mean, this is pretty amazing, right? We got the SpaceX IPO. Yeah. Now, and xAI is a division of SpaceX, correct? Right. It is. It is now, yeah. And so

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you've got the three, maybe we won't say the three leading, because Google's Gemini is probably used more than Grok.

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But, um, you know, xAI also has a deal with Anthropic, and, and they're kind of playing both- For the Colossus-1 data center. Right. Yeah.

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And so they're kind of playing a few sides of the, of the, of the, uh, game here, right? So, but, uh-You know, I have a, I have a couple charts here.

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One which is, this is from last February, from Epic AI, um, kind of tracking Anthropic's, uh, revenue rising much faster than OpenAI, and they anticipated that it would, that they would flip OpenAI's revenue in mid 2026.

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Which like, what a call, because that was, uh, pretty dead on.

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And then, um, while I was, while, uh, I was trying to get this, I was trying to find a chart to show, uh, the different revenues or the different valuations, uh, between OpenAI and SpaceX.

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So I had ChatGPT generate me a chart of [laughs] the two, uh, of the valuations, uh, showing that Anthropic did in fact flip this red line here, uh- It flipped OpenAI... OpenAI's- Yeah. Look at that hockey stick, man.

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Look at that. I mean, th- this, this chart really illustrates, I think, what a lot of people who use a m- a number of these tools have felt over the last year. I mean, I remember the first time...

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I always like defaulting to ChatGPT. The first time I used Claude, I was amazed.

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It was, it, it, it, it was s- much faster, the responses were cleaner, it was in more depth, and I just felt like it was a, there was almost like a, uh, overnight, you know, leap.

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Almost like the way that parents will talk about like, "Oh, my baby's face looks different today," or like, they grew an inch overnight. I mean, seriously, it's like there was this- Yeah...

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like, whoa, we just got a huge gain here seemingly- Yeah, there was-... out of nothing... there absolutely was a Claude moment last, last, um, winter around November when Opus 4.5 came out,

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and there was absolutely a Claude moment, and that's kind of when the, the users saw there like is a huge evolution change. But since then, like it has been a neck-and-neck race with OpenAI dropping 5- GPT 5.5.

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I think GPT 5.6 comes out this week is what's anticipated, and they, they've just kind of been taking, uh, you know, they've been trading places for who's got the best model, and it's obviously the hot discourse online.

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In addition to that, uh, I will just comment that I'm happy that there's two competitors, or two horses in this race for the, you know, most, for the leading frontier model.

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Um, and then there's multiple horses in the pack behind them. DeepSeek, Kimmy, you got some open source models coming behind them. Uh, so yeah, very exciting. I'm very glad it's not just one company.

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We don't have like a m- late '90s Microsoft situation- Right... on our hands rather. Um, yeah. Speaking of Micros. Yeah, speaking of Micros. [laughs] Um, formerly known as MicroStrategy.

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Strategy out here doing what they said could never be done. Affecting a little Tucker Carlson cadence there. But that aside,

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Strategy has sold some Bitcoin, and Charlie, it was a very small amount of Bitcoin, and we're gonna have Francis Corvino on here in a second to talk about this. But they made their first Bitcoin sale since 2022.

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I don't really recall that sale in 2022, but it makes sense considering Bitcoin was super stressed that year, right? Like 80% drawdown from all-time high, I think, after the FTX fallout.

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But they filed a f- an 8-K on June 1st disclosing they sold 32 Bitcoin worth $2.5 million during the week of May 26 through May 31st for an average price of $77,135 per coin.

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Now, the ironic and funny part about this is they bought like 20 something thousand odd worth of Bitcoin just like a week ago for $80,000. This is the average price.

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Um, if, if you think you're bad at timing tops, I, you, you know... Don't feel bad, guys. So even, even the pros with billions of dollars are doing it in strategy. Is Saylor a pro?

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'Cause it's, it's a meme now by how- It is a meme... how poorly he executes. Because think about it, like Bitcoin's down to 71.5 right now, so technically Saylor's sell wasn't even that great of a sell yet. Right. Right.

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So all that being said, kind of interesting, and I just wanted to bring up a few, um, a few notes here from the Twitter sphere.

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This is Kyle Reidhead, one of the owners of Milk Road, saying, "This man bought 100, 850,000 BTC over the last six years." True. "He spent more than $60 billion buying this Bitcoin."

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Also true, give or take a few billion maybe. "He decides to sell 32 of those Bitcoin for 2.5 million to remove some risk." Now, I think that, and to be fair, he kind of, um, elucidates what he means here.

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I don't know how much of this actually reduces risk and is more of a test drive, right? Which maybe is the same thing. Well- But obviously-

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Yeah, but also like he, he, he very clearly said, quote, "Maybe we will sell some to inoculate the market." Like, to me, this is exactly what he said he was going to do- But-... without explicitly saying it. R- right.

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I guess, though, my question is it's a matter of scale, I would say, is why I bring this up, because like obviously shedding 2.5 bi- million does nothing for your balance sheet risk here.

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That's, that's not even a drop in the bucket. That's like barely, barely spittle, right?

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But, you know, to your point, Charlie, maybe there's an argument to be made though like, "Oh, hey, we did it and we can do it again."

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But there's a much di- there's a bigger difference between Strategy selling 2.5 million versus 25 million versus 250 million, right?

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Like if they start moving up, and maybe it's kind of like, you know, um, building up your tolerance or something, or microdosing, it's like maybe they'll get to the point where they, they're just like slowly moving up to those higher numbers to get the market ready for it.

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But I don't even know if 2.5 million sends a message other than we did this, right? Yeah. There's not really... No one's gonna freak out about that. But 250 million

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plu- you know, a, a larger number might be, might spook some people.I would say that anyone who would have been freaked out about Saylor selling Bitcoin already freaked out two weeks ago when he all but explicitly said he was going to do this.

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So this is just, um, the most gentle way of him just following through and saying, "Okay, and here's the sale." Um, I, I don't expect this to really change much.

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Uh, I don't anticipate Saylor selling, like, a significant material amount unless forced to. The- we've already done, we've already f- had a few takes on, like, why this was, like, a pretty intuitive idea.

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This makes sense. We get it. Um, you know, this- Yeah... you know, this could be a smart play. Uh, it's, it is a break. Saylor unquestioningly

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said never do this, and that they would never do this, and he is doing this. So I almost imagine, you know, one of those- Mm-hmm... like, almost, like, 4chan Reddit memes where it's like, "Never sell Bitcoin."

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You know, another side bracket which is like, "Okay, we're gonna sell a little Bitcoin."

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And then another, you know, line, "Okay, we're selling a medium amount of Bitcoin, but it's not, like, gonna actually hurt us," and then full capitulation.

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You know, like, I can imagine these memes in my head already, and that is, I think, what, uh, you know, could scare people is i- I then seeing the trajectory of, like, rolling back statements.

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So now when Saylor says, "We will never do something," do you believe him? Yeah, probably not. I mean, do as I say, not as I do, right?

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And I think that anyone who believed, like, never s- uh, like, they're never gonna sell their Bitcoin was probably a little delusional anyway because, like, why would you ever... Why...

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This is the bu- like, this is the bulk of your balance sheet. Like, not, and saying it's the bulk isn't even, like, doing it justice. It is your balance sheet, and so they're going to leverage it at some point.

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It makes sense. And, uh, I think that anyone who was looking at especially the preferreds knew that this was gonna happen eventually. We have a few more takes here on, on Twitter.

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Uh, Blockstream CEO Adam Back says in response to why would he do this. A tweet from George Gammon says, "Tax loss harvesting." I mean, no. Like, $2.5 million lo- you know what I mean?

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Like, that's not- Dude, I think, oh my God, Adam, this is the, this is such a dumb take. Nobody [laughs] can imagine tax loss- Yeah... harvesting on.001% of your stack.

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Yeah, and, and maybe to be fair to him, he's talking about, like, selling in larger volume, right? And then Lyn Alden- Yeah...

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chimes in here, says, "Yeah, I believe on a recent learners call he said he was gonna sell," um, maybe something you can do to service liabilities and such.

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But again, this does not, this, this, this is not a meaningful enough amount to actually do much with it. I mean, you know, you can put that 2.5 million to the, to the preferreds, but that's, like, what?

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Like, a, not even a day's worth of having to pay out what they need to pay out for these preferreds. Yeah. Right?

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So, uh, u- ultimately, it's, it's really just, uh, an extremely small amount, and maybe it was just a test drive just to be like, "Okay, here we, here's the process. We did this."

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And like s- like you were saying- Yeah... signaling to the market that they can do it. There, look at that take underneath from account Cure8standing5033, quote, "Who tax loss harvests in June?"

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[laughs] I mean, I don't know what I can, I don't know what to tell you, Cure8.

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Like, you could tax loss harvest at any point, and maybe Bitcoin is hopefully ripping by J- November or December and you don't have the opportunity. Yeah. What about tax gain harvest?

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But even then, Nathan had buys up to, like, 120,000, so like they probably- Yeah. Yeah, I know... a lot of room here. All right. Yeah.

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Well, we'll table that and then- I, I'm looking forward to being able to tax gain harvest, you know what I'm saying? [laughs] We're all waiting for it, brother. Okay. All right.

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But with that out of the way, we have Francis Corvino of Lygos on to unpack this news and also talk a little bit about the preferred landscape with Stretch trading under $100 again this week. Bring him on up. Francis.

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Francis, welcome back to the show. Hey, guys. How are you? Fantastic. Awesome. Awesome. All right, Francis. So square, square a circle for us here.

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Everyone's talking about, you know, Saylor doing this for liability, Saylor doing this to, like, show the market's not gonna get spooked. It was 2.5 million. I mean, what do you take for why it was so small this time?

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Do you actually think it has the effect that the market can see they can do this and no one will get freaked out, or do you think this is just, you know, like the Joker from The Dark Knight, it's not about making money, it's about sending a message?

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Oh, no. I mean, I think it's definitely about, like, sending a message, right?

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He has levers ultimately at the end of the day in terms of, um, how he manages his treasury versus the Bitcoin that he has and increasing his USD treasury. Um, and, like, we would expect him to use them.

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So I don't think this is surprising at all. I think it would be, like, way, way more concerning if Michael Saylor was unwilling to do this.

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Um, if Saylor is willing to slowly s- sell his Bitcoin, there is sort of this unfortunate reverse reflexivity here where he used to be able to issue Bitcoin, the share price would go up.

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Or sorry, he used to be able to issue equity, um, he'd buy more Bitcoin, and the share price would go up. Now it's sort of the opposite, right?

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Where Michael Saylor sells Bitcoin, his share price goes down more than the price of Bitcoin goes down, uh, and he, um, pushes the price of Bitcoin down even more as a result of selling the Bitcoin.

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So being a market mover has its advantages and its disadvantages, but I think in this case, um, Saylor's kind of learning some of the downsides of the reverse reflexivity of,

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of, uh, being able to use your equity in such a way.

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Ju- just to double tap that question though, Francis, 'cause one of the things I wonder, it's like clearly it's selling a message, but in terms of showing how the market will really truly react to this, feel like 2.5 million is much different than if you were selling multiples more than that.Like, what would we be seeing right now if it's 250?

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Is this like, I used in the segment the analogy of, like, microdosing? Is it, like, trying to build the market's tolerance to larger sales, maybe start with a small one? Um, I, I, I don't think so.

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I think ultimately he's just trying to show that he is not too stubborn, uh, to sell a portion of his Bitcoin so that the wider market can, like, believe in him.

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Um, he's using, you know, a very small percentage of his overall, overall treasury that he's selling here. So I don't think, um, I don't think it's worth being too concerned at this stage.

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Like, it just seems like a normal, a normal... Honestly, the market is, like, beating this to death, right?

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Like, and that's why he's doing it because ultimately Saylor is not great from a PR standpoint in many capacities, right? He posts these, like, really shitty AI videos. I'm really tired of seeing those AI videos.

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I think most people in the industry are. He sells, like, a little, it's fucking 21 Bitcoin. Excuse me. He sells 21 Bitcoin and, like, we all have to hear about it for a long period of time.

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I- if I were him, I would be tired of, like, that level of scrutiny.

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Um, the, ultimately, what it comes down to I think is something just, like, much larger and more philosophical in that, like, Bitcoin has completely lost all of the people that it looks to in order to fill the news cycles, right?

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Um, there was a period of time where you had Trace Mayer, who was, you know, the digital, digital gold guy. He was a foundation of what people looked to as a Bitcoin financial mind, right?

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And we could look at him and we could look at the cycles and we could move things forward. Now we're in an era where we really, really just predominantly have Michael Saylor.

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He is the largest fixture of Bitcoin, and he's the thing, he's the person where something's happening. You know, Jack Dorsey is still a big deal in the Bitcoin community.

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He's still active, he's still doing stuff, but he's not making headlines every two weeks like Michael Saylor is.

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So we're sort of forced to really, really pay attention to Michael Saylor, and he is not a person that even obviously likes to be in this position, you know?

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Um, so I, I think that this is probably just a way for him to alleviate a little bit of the scrutiny of this, and also to take advantage of the, the market cycle because, uh, people are talking about it, right?

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Like, this is a bit of a nothing burger in some senses, but people are talking. Y- yeah, that's kinda part of my point is I feel like this, you know, doesn't even...

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Like, if the point is to show that you're, like, okay with reducing risk, you're showing that you're selling it, but, like, it's such a small amount that it doesn't matter.

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And so I don't even know if it's like when people are saying, like, "Oh, this is sending a signal," you know, like, this is, uh, you know, the, the market might react poorly to this. It's like it's peanuts in comparison.

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But- And you can, you can look at how his competition is sort of, like, beginning to position themselves as well, right? There's a, a couple different ways, um, in which I think Jeff Walton is trying to

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position himself as the anti-Michael Saylor, right?

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Um, I, I personally think that Michael Saylor is a diligent, practiced risk manager who's run a public company for a very long time, um, and is actually more of the traditional finance world than the Bitcoin world.

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But at the same time, he projects forward, again, this, like, AI slop, buy Bitcoin, cyber hornets mentality, and that's what the, the public sees.

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And I, I think Jeff Walton has seen this as an opportunity to, like, you know, go be good at social media. Not AI slop videos.

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He goes on one of the largest sort of financial investigation podc- uh, YouTube channels in the world in Coffeezilla, and he makes a strong, principled argument about, um, sort of like, you know, comparing this type of, um, instrument to the insurance industry and just taking a very principled risk first approach.

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He's very likable. Um, he looks, uh, like a sort of normal guy that you could go have a beer with. Michael Saylor doesn't present himself well as the type of guy that you could go have a beer with.

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George Bush won a presidency off this, right? Mm-hmm. So I do think that we're starting to see for the first time Michael Saylor have a little bit of competition in terms of, like, who is the focal point because, again,

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w- we, we have a, we have a growth here and I, it would be really exciting to see, you know, um, someone compete with microstrategy in a big way, and I think that that's a bigger story than just the 21 Bitcoin. Yeah.

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I can't imagine, um, you know, what's the, the, the only Saylor reference in the Epstein files is where he, uh, he's, like, just talking about his yacht and going to Cannes and being- Ah, yes...

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like a total boring dude at a party. [laughs] Yes, exactly. Exactly.

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Like, there is a lack of relatability there, and he's still been able to create this just massive character in the Bitcoin community with these, like, very corny cyber hornets quotes. Um- Right...

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he literally is described in a leaked document as being so insufferable that a person who is paid to improve your lifestyle- And creepy... could not possibly, possibly- And he, like-... improve your lifestyle. Yeah.

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Epstein called Saylor creepy. [laughs] No, no, it wasn't Epstein, it was one of Epstein's publishers. Well, I don't, like, I don't even know. Not even one of his publishers, but a publisher who was close to him.

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This woman was saying like- Okay, yeah... "Saylor's been following me around this gala all day. He's a creep. He sponsored it." Anyway, brutal. We won't go into that, but I wa- I wanna double tap on Jeff for a second.

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So he's, he's, uh, he, he's at Strive. He, um, what is, what's his, uh, title? Chief Risk Officer at Strive. And so I wanted to kinda tie this back into Strive and their preferred SADA. Mm-hmm.

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'Cause there's this, there are rumblings that maybe SADA is sucking market share away from Stretch, 'cause Stretch has had kinda trouble maintaining its peg. Do you think that's valid? Do you think that we're...

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You talked about it on a few segments back when we had you on about the digital credit landscape, as they call it- Mm-hmm... is really starting to heat up.

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With now you have, you know, the front runner in Stretch, but this SADA preferred has, has become very attractive to some of the retail holders who, who love these instruments for the income.

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So do you think there's some merit to the fact that maybe SADA is giving Stretch a run for its money right now? I mean, we're, we're talking, like, peanuts to elephants right now in the grand scheme of size here.

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Um, I think SADA's treasury is, like, 500 million, and then, uh, Saylor's had, like, close to eight, eight bill.

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So we're not in the same ballpark quite yet, but in terms of, like, real innovative competition, absolutely. Um, I think that there's really four key components here.

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Um, one is you have, uh, again, like, don't wanna too much beat this one to death, but, like, there's theBackwards reflexivity, where the market is used to Michael Saylor being able to issue, uh, equity to buy Bitcoin, which is cheaper than his equity, which pushes the price of Bitcoin up, which pushes the price of his equity up even more, so he can just keep this cycle going.

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Now, Michael Saylor is, is faced with the conundrum of being on the downside of that again, where he has to sell Bitcoin because the Bitcoin is, is valued at more than the equity that he owns.

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So he has to sort of do the worst... the, the opposite thing, where he has to sell his Bitcoin, which pushes the value of his equity down more than the price of Bitcoin.

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Um, so getting him, you know, farther away from being able to take advantage of the cycle in the right direction. So I think Saylor's sort of lost the tides of the market to some extent.

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The capital stack, uh, is also much more complicated when working with Stretch than with Sata. Uh, there is no debt that is senior to you at Sata. It is just Sata. That's all that's there.

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Uh, if there was ever a sort of catastrophe, 'cause ultimately these things work like catastrophe bom- uh, bonds, right?

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Like, if Bitcoin is unable to increase in value, um, at I think, like, 13.85% or so per year for Sata, and, uh, like, 11% for, uh, for Stretch, then the overall value of the equity will diminish to zero because it can't keep up with payments, and it'll go to zero.

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But our expectation, right, is that, you know, Bitcoin is going to appreciate at a greater than that rate, and the, um, dividend that are being paid by s- uh, Stretch and being paid by Sata are equal payment for the risk of Bitcoin not appreciating that amount on average over the next, you know, eight to 10 years or so.

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So these are catastrophe bo- uh, bonds, and I would rather have a simple catastrophe bond that pays me every single day, and, um, has a very simple debt structure to it, and has a person at the head of it whose decision-making I can put myself in the shoes of, versus a just much more complicated, um, complicated instrument in Stretch with, uh, distributions which happen, you know, 14 times less frequently, uh, has a significantly more, uh, complicated cap table, um, and has not advertised the type of risk management that I may want in a catastrophe bond-like product.

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So do... Sorry, Charlie, I've got a clo- unless you have a, do, do you... I have a closing question. Well, I, I was just- Oh. Uh, this might be a little bit of a... I don't know. Do you... C- 15 seconds, Francis.

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Have you seen this, uh, how do we resolve the polymarket conversation around Strategy selling Bitcoin? No. Okay. Maybe I'll, maybe this is another...

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We'll, we'll circle back on this later, but I think it's a- But apparently, like, the oracle for it's messed up. Like, they sold, and the, the market hasn't resolved- Yeah, so the market needs to-...

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for the May 31st or ADA contracts... the market could be challenged. Yeah, it's, like, within the challenge window for the polymarket. Anyway, this is another thing. We probably, we could circle back on that.

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Yeah, so the oracle problem is, is truly kind of unbelievable because ultimately every single financial product that has ever existed has had to elect back to someone reporting an event.

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There is literally no way around that. Um, so yeah, the oracle problem will show its face no matter what kind of financial contract it is. There's always going to be an oracle problem. That's my take on that.

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[laughs] Um, Francis, one last question here. I wanna get this up. We had a segment last week where we covered, um, this tweet from Jeff Dorman of Arca, basically making the argument that, you know, the wheels...

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not the wheels are falling off, but he says here, uh, that Strategy story's gotten out of hand. And he makes the argument here that Saylor should've just stuck with issuing common stock,

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issuing converts, buying Bitcoin, and not get into all of this preferred nonsense.

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He kind of mentioned that Strategy seems to be losing some of its foothold with, with a competitor, like Strive obviously stole the sh- the lion's share of the market. But d- what do you make of this?

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Do you agree with what, uh, Jeff is saying here? Do you think Strategy kind of over-engineered this thing, or...? I mean, it's definitely, it's definitely fancy, right?

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Like, I think for every additional percent that, um, Stretch has to, uh, increase the dividend by, it's, like, $100 million per year, uh, in payments. Like, that's, that's, uh, that's significant.

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Yeah, and, and when you start to have sort of all of these reflexive instruments around that, uh, a- as an investor, you're unclear how he... Like, w- it's a bit surprising, right?

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That, that maybe he cleared away all the convertibles, uh, which were at 0%, while still having outstanding debt that he has to pay monthly at, you know, around, like, 11%.

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So I, yeah, I do find it, as an investor, you sometimes do value simplicity, particularly on a, on a product which is supposed to, you know, again, act like a catastrophe bond for a worst-case scenario.

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I wanna understand what the worst-case scenario looks like. Um, if there are all these levers that are available to

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the person who I'm entrusting, uh, with the potential downside risk here, it, it becomes very challenging to, um, to wanna put a lot of my money into that if I can't understand it.

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Yeah, maybe a little more simplicity and fewer slideshows with rocket boosters about the, uh, Strategy capital stack. How is Bitcoin supposed to go up if you don't put rocket boosters on the slides, Colin?

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SpaceX IPO's around the corner. Like- Well, I...

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If I c- if I could just say with the last thing, and I, I really wanna just harp on this Jeff Walton guy, 'cause I'm so impressed, and I'm so excited to see just, like, a new face in the Bitcoin community.

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And I really hope that Jeff Walton will come on this show, 'cause I think he, he would be great here. Uh, Jeff, I saw that you have, um, a Chambers Bay, uh, a little poster in the back of your room.

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We'll take you to Chambers Bay on Lagos if you come on this, uh, on Block Space. Um, but yeah, I'm really excited. He's a new face.

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He went on Coffeezilla, which is just a massive agency, or a ma- a massive YouTube channel that goes far beyond just the Bitcoin and cryptocurrency communities, that will actually, like, grow and show a, a, showThe sort of non-Bitcoin world that we continue to be serious, right?

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And I, I'm, I'm really excited to see that rather than sort of these like rocket AI baloney. Um- It would be really, really nice to have some more mature discussion around what can be a really crazy topic.

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Yeah, he made CoffeeZilla look dumb. I'm excited to get a Jeff Walton. Maybe, you know, if you want to know some old Jeff Walton lore, maybe you could commit to becoming a Lazy Lion.

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[laughs] Uh, his OG NFT collection that everybody totally forgot about, that I'm still keeping the receipts for. So Francis, thank- Producer, we're cutting that. Yeah. Okay? [laughs] I know.

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Anyway, I'm a huge fan, Francis. Uh, Francis, thanks for coming on the show. Uh, we'll see you again very soon. See you, guys. Bye. Bye. See you, Francis. All right.

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We have next Sheldon and Steve from DMG Blockchain, CEO and COO, talking about the big, uh, deal they just announced. But before that, a word from our sponsor, CleanSpark. [gentle music] We are CleanSpark,

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

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We are setting the standard for what's next. Learn more about the intersection of energy and Bitcoin at cleanspark.com. All right, before we bring on Sheldon and Steve, quick Spark notes for this deal.

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50 megawatts of critical IT load for DMG for an AI data center colocation service to a single tenant at its Christina Lake site in British Columbia, Canada. 12-year contract deal.

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First phase targeted by the end of the year. Sprinting into the contract. Ooh. Love to hear more about that. Let's get the fellas up on the stage and talk about another AI deal. All right. Bringing you guys up here.

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Sheldon, Steve, welcome to the show. Well, thank you for having us. Thank you. Yeah, thanks so much for coming on last minute. Really appreciate it. You know, this hit the wire for us this morning. Y'all made time.

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Really appreciate y'all coming on to talk about it. So set the stage for our listeners. Can you just give us a little more background about this deal and how y'all landed it? Yeah.

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Well, I don't know if there's any magic to landing it. Um, it's just a lot of work. Uh, you know, DMG for your viewers, if, if you haven't heard from us, we are a Canadian company.

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Uh, one of the first Bitcoin mining companies. Um, we've been operating, uh, almost close to a decade. Uh, it's our 10-year anniversary, uh, as a, as a company.

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Um, but on this, this site, Christina Lake, it's about 500 meters, uh, from the US border, uh, about two and a half hours, uh, north of Spokane. Um, and we've been operating a Bitcoin mine there for eight years or so.

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Um, obviously with what's going on with AI, uh, started taking a look about a year ago at converting, uh, the site into an AI data center. Um, going from tier nothing to tier three [laughs] is a lot of work to do.

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But, um, we were approached by a party, uh, that, uh, took a look at our design for Bitcoin mining and turned around and said, "You know, a lot of your design works well, um, the way we originally put it in for Bitcoin mining, with our design of how we would run our AI compute from a power point of view."

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And there's still cooling and, and, and networking. Uh, which is why we sort of looked at it and said, "You know what? We might be able to get a portion of this 50 megawatts up and running this calendar year."

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Uh, which is part of what we're working towards. Um, to get the chicken and the egg, right, first we have to get the definitive agreement.

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[laughs] But, but, but, uh, you know, we've already started working on the definitive agreement, so it's really just about how fast can we engineer, procure, and install. So y- Oh, go ahead.

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Can I just add to that- Go ahead, Steve... just, yeah, I mean, w- w- we announced i- in December timeframe that we were gonna start on this journey, and here we are six months later.

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So this, i- in terms of the amount of time, as Sheldon was saying, it, it, it wasn't magic. It didn't just necessarily appear. We did a lot of work. We've done a lot of prep and a lot of outreach.

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Uh, outreach to potential clients, outreach to the supply chain, really lining things up so we have the possibility of being able to do this deal.

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And as you know, there are specific windows that the, uh, the offtake, call it the offtake community, neo clouds, hyperscalers are targeting. Uh, we are able to fit

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into this window that they're looking for. So i- in this case, the stars aligned for us to be able to get this deal. So Sheldon, you mentioned a lot goes into going from tier one to tier three for a data center.

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And end of year 2026 seems like a very aggressive timeline for the phase one. I mean, I don't know how many megawatts that is, right? It's obviously not the whole site.

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But I'm just curious, um, y'all are s- you know, sprinting into that phase one. Uh, it's, did, was it just like you said, kind of ready-made and it was a good fit already?

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Did y'all already have the groundwork laid for making this transition? How are you going to- Yeah... ensure the speed to market for this?

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So our existing infrastructure, um, it's around 35-ish megawatts of power infrastructure that can essentially s- stay the same. You know, in the building we have to change it around.

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We have to add in the UPS as we have to put in the busbar, you know, things that you need for GPUs instead of, uh, ASIC miners.

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Um, we already have, um, 12 megawatts of cooling that we had previously purchased for, uh, hydrocooling that we haven't turned on, so it's just sitting there.

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So we have equipment that, you know, the lead out time for those can be quite long.

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Um, so we were just lucky that we had the stuff, you know, originally for Bitcoin mining, but it can be quickly repurposed into, uh, servicing GPUs.Um, we had already, we already have a fiber line.

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We had already started, uh, a while ago, a second fiber line discussion, uh, and timelines for that. So, you know, two, two fiber lines are, are very important to have.

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Uh, the timelines to get those in are, are sort of, and upgrade them to the speeds we need are, are coming in around the end of this year. So those kind of line up. Um, so we have cooling available.

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We have power available. Our fiber upgrades seem to be on track. Um, but the redundant power side isn't there. So we don't have a way to do redundant power, or we can just rely on UPSs we add, until we add in our,

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um, own self-generation on natural gas. We actually have a large transmission line of natural gas there.

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Uh, we've been working with a utility to get access to that, uh, which, which they've been telling us we can have that access.

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And so we're able, and we won't have this done by, by the end of this year, but we're able to add on, um, around fifty megawatts of natural gas generation as our backup power.

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Um, and, and to do that with our, our fifty megawatts, uh, of power we have with our utility, we actually have seventy-five megawatts with our utility, to be able to add on fifty megawatts of, of natural gas, uh, for backup, um, makes this site really interesting.

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Um, our offtaker, we, we obviously disclose that we won't have the natural gas up, but they're willing to work on the fact that with UPSs and the fact that our transmission line is rarely ever, you know, down for some type of emergency, um, the statistics are very good on our transmission line.

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Um, they're willing to wait until we can get that gas generation up for the, uh, the backup power.

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So I think when a lot of listeners and just people watching this space, when they imagine these AI data centers, their immediate mind goes to some of these like, like an open, like this Project Stargate, for example, right?

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These massive hundreds of megawatts, gigawatt scale.

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But we had Thomas Arrow on of Sphere 3D a while back, and he was saying, you got to watch this space because the smaller modular AI data centers are going to have a huge chunk of this market because there just straight up is not enough infrastructure to go around.

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You kind of mentioned that, Steve, these neo clouds are really just to make sure that they can meet their obligations. They're trying to make sure that they can get every single megawatt they can find.

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So can you speak to some of the opportunities for one of these sub 100 megawatt sites and why specifically, you know, these tenants might be looking at some of these smaller sites rather than going out and trying to get a big chunk like with Project Stargate or something like that?

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Sure. Well, when you look at kind of what the market wants, the large hyperscalers are going to want just huge amounts of power for these large training models, for these frontier models.

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For a lot of what the neo clouds are looking towards is somewhat different applications. The applications are evolving.

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And this 50 to 75 megawatt range that our site falls in is really everything that we've learned about the market is the sweet spot for what these neo clouds are looking for. Ultimately, as the

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market evolves, you're going to have more inference. You're going to have the desire to have more sites spread out with smaller amounts of power that have low latency to those regions.

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If you take out things like high-frequency trading where you want it essentially right near the actual trading site, we fit in nicely being, let's say, sub five milliseconds of latency to a large region in the Pacific Northwest.

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And so we think this is how the market is going to evolve, one of the tracks that it's going to evolve. And so we think this site and other sites we're looking to develop,

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this is really going to fulfill a need where the market is going. So you guys, so the current tenant is under NDA, so you can't disclose it.

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So rather than press you guys about that, I invite you to kind of like talk broadly about this trend in the industry, because I'm seeing this a lot.

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A lot of announcements we have with, you know, hyperscaler or tenant can't disclose who they are. This is happening more and more. And to me, it signifies like this is an incredibly competitive landscape.

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Can you speak to just this trend in the industry overall and like why we're seeing it and yeah. Yeah, I think it is very competitive.

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When you look at the amount of power needed for what people are saying, you know, is needed in US, Canada, Europe, it doesn't matter where you look. And you look at the infrastructure,

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you know, it's obviously natural that Bitcoin miners are moving to AI because we have large amounts of power. We also moved to AI because the return on that is better than Bitcoin.

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And this is a guy doing Bitcoin for 15 years saying that. And we've never said we're going to stop Bitcoin. We're just going to prioritize AI. But competitive wise, yes.

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I mean, there are companies much bigger than us still trying to get AI deals done, whether they're LOIs or definitive agreements. I really think that it's hard to turn a Bitcoin mining operation into an AI operation.

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And there are so many parts that we had to go through in our company and see if we could tick these boxes. You know, nobody thinks about, you know, earthquakes.

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Nobody thinks about, you knowUh, floodplains, nobody thinks about, uh, the redundancy like we have to have.

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Um, when you, when you're a Bitcoin miner and, and you lose power, you lose the opportunity to make m- money for 10 minutes. And then, you know, when your power's back on, it's, it comes back.

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But you're only losing 10 minutes of potential revenue. Um, and so when you think about it that way, this is why we're so great to curtail, but we're horrible at AI. We can't be curtailed.

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We can't give up, uh, 10 minutes of operations when we're, uh, working with a third party that has, uh, a service level agreement with us. And so when we got into it, just

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we found on the fiber side, like our ISPs don't even have the backbone required for where we need to be. So we're- Mm-hmm...

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paying, you know, what will be a, a very large sum, just to upgrade their backbone so that they can take this traffic, uh, the way that we need to.

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So a lot of communities out there that may have legacy power that can become an AI site, it doesn't mean they have the other parts. And, and that's a really big problem, is trying to find all the other parts. Mm-hmm.

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Power is so important, but your redundancy of power is even as important as the primary power. Uh, and then all the fiber and interconnection is super important. Um, and then you get into the whole workforce part.

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Um, you know, we're in a remote area. Getting 60 or 80 electricians, this is not a trivial thing to do. It's, it's, there's a lot of work to do that. We've spent the time to find the companies that can do that.

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We're lucky there's a lot of industrial work in the area. But, um, I don't think that any Bitcoin miner moving to AI is gonna say this is easy. Um- Yeah...

248
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and I think it's really how prepared are you to going into these conversations with an offtaker? Because it's a different conversation than Bitcoin mining, where it's a very simple conversation.

249
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Becomes a very complex conversation about a lot of stuff we've never even heard or thought about before. Yeah. It's incredible.

250
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I was gonna use the analogy where you almost have to get like a hat trick or a grand slam for the right, uh, site, but it seems like, you know, you can even go up from three, four to like five, six, seven, eight, nine, 10 things that you have to make sure are right.

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I mean, you just listed a bunch of them there, and I think it's a lot. It's easy to be an onlooker and see these deals and just think, like, uh, you were kinda saying, Steve, this doesn't just magically happen, right?

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Like, there's all this background work that has to be done.

253
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Um, whereas, you know, you just read the press release and it's like, oh, there's another deal, but the, uh, scope and scale is just massive compared to Bitcoin mining. Um, Charlie, I'll toss it to you.

254
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Sorry, I just kinda- Yeah. Speaking of press releases, as Colin said, I'm gonna throw a curve ball to you guys. Anthropic just filed for a confidential IPO.

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I don't know if you saw this, but I was wondering if I could get your guys' takes on Anthropic- [laughs]... the makers of Claude, going public. What does this mean for the industry? What are your takes?

256
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I would say this is, this is great for the industry, that I think what's even more significant is Anthropic is, is forecasting profitability, which really shows, it kind of has,

257
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the naysayers said there's no profit to be made. People are just gonna be, uh, building all this infrastructure and not be able to generate enough revenue. We're seeing, well, maybe that's not necessarily the case.

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Of course, the amount of capital raising is significant.

259
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But as we look going forward, we have just kind of seen the beginning with Claude Code and the need for, which essentially mirrors what the OpenAI moment we had a few years ago.

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I think we'll see more of these, where all of a sudden work that was done in one way is gonna be transformed. And it just says that there's probably

261
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a, a good bit of tailwind to this, what, what is happening in the market for a while.

262
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I mean, everyone says this is a bubble, or I shouldn't say everyone, but there's o- obviously talk and concern about that when we look at kind of where things are at. And just, it just still seems early.

263
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Obviously, predictions are really hard, especially about the future, as Yogi Berra once said. And, uh, so don't [laughs] we're just, like, trying to pred- predict the price of Bitcoin.

264
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Sheldon and I gave that up a long time ago.

265
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But it just feels that there's a lot going on here and a lot of just good stuff that's gonna happen over the next few years with the market really constraining in terms of power availability, and of course, lead times on a lot of the equipment to build these data centers as well.

266
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So, uh, we just think this is, it's a good sign with the Anthropic IPO, and it's just kinda, I, I, I think there's still some tailwind here. The profitability angle is really, really key here, I think too.

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You know, as you said, Sheldon, or Steve, excuse me, that's been one of the key criticisms against, um, these, these LLMs, is that there aren't enough customers yet and the cost of the compute is too high, and Anthropic proving that, you know, maybe not.

268
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But something to keep an eye on, and we'll also be looking out for OpenAI's run at a public market here as well. Uh, Sheldon, Steve, thank y'all so much for coming on.

269
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We'll no doubt have to get y'all back on for an update as this site comes to be closer online. But best of luck, and I hope you all have a good week. Thanks for having us. Thank you. Our pleasure. Thank you, gentlemen.

270
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Thank you. Thanks, guys. All right. Always love to talk to the people who are actually building stuff. God- Yeah. And just to highlight-... I mean, yeah... you know, DMG's been around for a long time. Yeah.

271
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I believe they were one of, I could be wrong about this, but they were one of the first publicly traded Bitcoin miners- Yeah... as well. So they- I mean, 15, yeah, 10, 15 years.

272
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That'sThat's like five, five, uh, tenures basically for this industry And also a reminder that before there was the great Chinese, uh, hash rate migration following the China mining ban, Canada was the foremost Bitcoin mining mecca in North America.

273
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Um, roots go back deep in, in our- Some might say it still is. Anyway, uh- All right. We're gonna keep rolling. We're gonna go to Eiron after this, and then the Utah governor executive order.

274
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275
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276
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277
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278
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279
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All right. Back in, back in the AI news, we're, uh... Yeah, I- I'll get this one up here, Charlie. Yeah. Yet another, uh, one, another public miner putting Bitcoin to the side. Maybe not totally, but moving into AI.

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Eiron closes a $3.65 billion GPU financing round to back its Microsoft AI cloud contract. There are a lot of details in this one, a lot of financial games going on, and the, the TLDR for the deal is this.

281
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The financing comprises of $2.10 billion in a U...

282
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in a private placement with a fixed rate plus, uh, at a fixed rate of 2.3 plus SOFR, and then another 1.55 billion delayed draw term loan at, uh, the floating rate of SOFR plus 225.

283
00:51:01.632 --> 00:51:13.832
So Eiron is also hedging that second one, the delayed draw term loan, which is like a loan, as I understand it, uh, paid in installments rather than lump sum. But they're hedging that with an interest rate swap.

284
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So the way this works is Eiron goes to a bank, says that they're gonna pay a fixed rate for an in- for a fixed interest rate to the bank that is higher than the terms of the current loan, and this gives them protection on the downside.

285
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Now, if the floating rate for SOFR goes down, Eiron is obviously overpaying for this loan. But if it goes up, they're protected on the, uh, upside there so that they don't get scalped by a surge in interest rates.

286
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They said the all-in rate is roughly 6%. Um, so you know, I mean, if we like look back at ASIC financing deals, 'cause this is a GPU-backed finance deal, so this is equipment financing.

287
00:51:51.092 --> 00:52:03.132
If we look back at, at ASIC financing, you know, when interest rates were low, much lower than they are now, miners would be lucky to get in under 10%. And all of those loans blew up.

288
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Funnily enough, actually, um, uh, not, not to, not to throw, throw shade or anything, Eiron actually had one with bl- with a NIDIG back in 2022 that went belly up.

289
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And they survived to, to turn around and- They did survive it- Yeah... obv- I mean, obviously, right? Um, but you know, they took out this loan at like the market peak in 2021 when S19s were going for like $10,000 a rig.

290
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And the value of those S19s plummeted into the bear market, and NIDIG ended up, I believe, taking control of most of those rigs, um, as Eiron, uh, more or less defaulted on the loan there.

291
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But, uh, swimming in much different waters now.

292
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This just goes to show, going back to what we've said, uh, you know, on this show a number of times, you know, these, these miners are in the big boy leagues now in terms of how they're rated for their credit and how they're seen.

293
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And on that note, Eiron claims that this is the highest publicly rated investment-grade GPU financing announced and the first GPU financing in the US private placement market.

294
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I fact-checked that, and it seems mostly true, maybe with a few caveats. CoreWeave had a GPU financing deal, I think, that got down-rated to like B a while ago.

295
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But this has received an A from Finch and a low A from DBRS. So overall, uh, rating agencies seem to like it. And they also... One point of clarity before I toss it to you, Charlie.

296
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They mention in this, uh, in this release that like their all-in rate for financing this GPU off for, for Microsoft is like 3.31%.

297
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Now, what they're basically saying there is this debt facilities or these debt facilities are for $3.65 billion.

298
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They also have prepayments from Microsoft that will make up most of the rest of their r- uh, their cap expert in for these GPUs, and they're, they're saying that that's just basically 0% financing.

299
00:53:57.312 --> 00:54:05.082
So when you see that 3.31, we'll say, you know, obviously the prepayments from Microsoft are great, but that also means that they're not gonna see revenue from that- Mm...

300
00:54:05.082 --> 00:54:13.132
um, or a certain amount of revenue will be lost from them because it's prepaid. So the 3.31% is reflecting that. It's basically saying that's 0% financing.

301
00:54:13.572 --> 00:54:22.272
And they still have a few million dollars worth of equipment to buy before they can get the, um, full amount of GPUs that they need for this Microsoft build. Yeah.

302
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Um, to me, the most interesting part of this is maybe not that it's 3.36, 5, 6 million, but rather the f- the just the financing side of it, because this is the story that Bitcoin miners just could not...

303
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This is the nut we c- like Bitcoin miners could not crack. How to finance your rigs. Y- y- you didn't even have the trilemma. You just couldn't get a good rate.

304
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It was really difficult to get financing from anyone legitimate and reputable, and it was hard to do it in a way where it was timely. And, and, and yet, here we are with the AI HPC run, and lenders love this.

305
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OrLenders prefer it much more.

306
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And I think this, this particular deal, like this GPU collateral deal, uh, uh, if it, if, if I'm understanding it right, the fact that it's, like, US private placement gives it, like, a lot more legitimacy. Mm-hmm.

307
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And, and, uh, having Microsoft be kind of like Iron's, like, shadow bank, I think... I, I mean, I'm assuming that's probably the reason why it got an A rating. So- Well, yeah, one of the largest- Yeah...

308
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tech companies in the wor- world, hyperscaler scale. Like- Sometimes the biggest co- company in the world, depending on how you measure and depending on the time of day. So- Right. Yeah.

309
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So, like, to me, it's the fact that capital is just unlocked for this. Capital and financing is unlocked so the industry can really grow.

310
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I would wo- I really do wonder, Colin, what the Bitcoin mining run of the past five to six years would've looked like had we been able to have, like, reliable banking, reliable financing, and, like, reliable capital markets.

311
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I can tell you, it would've been worse. Hash price would've gotten crushed.

312
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'Cause, like, b- you know, my, my take on that is with the public miners especially coming to the US, you had, uh, I would call it almost, um, like, artificial hash rate growth.

313
00:56:15.104 --> 00:56:32.744
And what I mean by that is a lot of these public miners, there's one in particular I'm thinking about, and we won't just name them straight out, but they were able to just sell their equity into the open market and then use that to cover their operat- o- operating costs and their CapEx regardless of the actual profitability of those plans at the time.

314
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I mean, these miners were just like, you know...

315
00:56:34.764 --> 00:56:50.324
The, the, the big ones would lose millions of dollars a quarter, you know, millions of dollars every year, and their access to public markets and, and equity financing really, I think, was one of the large reasons why we saw hash rate just go absolutely ballistic following the China mining ban.

316
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Obviously, hash price was really high after the ban 'cause difficulty dropped. We had a hash price bull market amid the Bitcoin bull market.

317
00:56:57.774 --> 00:57:06.943
But these guys were expanding aggressively in the bear market, and the reason they could do that is they could kind of just ignore the actual dollars and cents of what they were doing 'cause they could always tap the public market.

318
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Now, not always, but if you looked at what they, uh, you know, their ATMs and things, they would sell hundreds of millions of dollars into them. So, um, I think it would've been- So the other... Yeah.

319
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The other take I wanna have here is, um, because, like, the story this weekend was NVIDIA, NVIDIA, however you pronounce it, um, from Jensen Huang's presentation over the weekend.

320
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There's a quote from Jensen Huang, um, where he says that AI data centers could cost, uh, quote, "80 billion to 100 billion per gigawatt in the future."

321
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So that would roughly map onto 60 to 100 million per megawatt. And if my vibe check on the industry right now is, like, at all in the right ballpark, I think 10 to 20 million per megawatt is, is, like, not too far off.

322
00:57:59.784 --> 00:58:07.224
It de- it depends on what you're measuring. It de- it depends what you're measuring. Or, like, are you just doing the build? Yeah. Because 10 to 15's probably right.

323
00:58:07.524 --> 00:58:17.233
If you're doing the GPUs and the build, it's sever- it's, it's much higher than that. It- It's probably somewhere between 30 and 50. Exactly. And this is just kind of how do you value power and land and assets?

324
00:58:17.334 --> 00:58:25.543
But basically, by whatever metric Jensen's referencing this, that would be, you know, a 10X from where we are currently, roughly.

325
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Um, which is significant, and I just think anyone in the game right now, uh, is incredibly well-positioned. Uh, you know?

326
00:58:34.904 --> 00:58:50.724
Um, so if, if you're Iron or, or any of these other new clouds or, uh, you know, AI factories, if you will, um- Can we, can we get... Can we, can we, like, m- make a petition- Standard nomenclature...

327
00:58:50.744 --> 00:59:05.264
Can w- can we just make a petition to just excise that term, like, AI factory? AI, uh, AI- I don't know why it bothers me so much. [laughs] Yeah. But, like, a factory assumes that you're building something.

328
00:59:05.364 --> 00:59:17.014
I get it, you're generating compute, but, like, I don't know. You have all of these buzzwords like compute as a commodity, AI, gigafactories. Like- See, Colin, this is why, this is why you'll never...

329
00:59:17.024 --> 00:59:24.194
This is why you won't raise, um, a, you know, a trillion dollars on a $100 trillion net worth from just a single slideshow. 'Cause you gotta talk in a different nomenclature.

330
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That's true, and I'm also why I'm a poor talking head and not making money- [laughs]... in PR because I refuse- No... to use these terms. You just gotta go giga along on compute, on Oren Futures and ICE. Uh, okay.

331
00:59:38.144 --> 00:59:50.344
I think, uh, we probably need to wrap up this story and go on to, um, I don't know if this is a cry corner or just your- A data center hate corner. Your daily- No, it's actually a, it's actually a, um,

332
00:59:51.584 --> 01:00:01.424
to reel myself in- Yeah... you would expect this if we're gonna have- Yeah... this massive shift, but we'll get to that. But first... But first, a word from our sponsor, Ligos.

333
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01:00:54.144 --> 01:01:10.664
Our last story is, uh, sh- surprise, it's also about data centers, but this time it is that-The governor of Utah signed an executive order establishing a higher bar for data center development in Utah.

339
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This is Governor Cox, who says, "Utans deserve confidence that water resources, air quality, utility rates, wildlife will be protected. In Utah, environmental stewardship and economic opportunity go hand in hand."

340
01:01:27.464 --> 01:01:43.224
Now, for context, uh, this is following a lot of public backlash against the Stratos Project, Kevin O'Leary's, uh, data center, a massive, like, 40,000 acre

341
01:01:44.304 --> 01:01:56.204
AI HPC data center campus planned in Box Elder County. If you've been on Normie social media, you've probably heard about this because- Th- this has become the totem for AI hate, you know? Yeah.

342
01:01:56.304 --> 01:02:08.844
Like, it, it's, it's kind of become, uh... It reminds me a lot of when TeraWulf was under scrutiny for one of its Bitcoin mines in New York. It, it became this, like, huge thing. The coal plant one? Yeah. Yeah, yeah.

343
01:02:08.924 --> 01:02:17.944
Well, like, they were making this, you know, they were making these claims and these lawsuits that TeraWulf was, like, increasing the temperature, I believe, of Lake Mariner or some other lake up there.

344
01:02:18.024 --> 01:02:33.434
Just this total moral panic, and this AI data center in Utah has become the punching bag for a lot of people who are against building these things, for sure. So the... What does this executive order do? Well,

345
01:02:34.984 --> 01:02:38.294
I'll spoil it for you. It doesn't really do anything.

346
01:02:38.384 --> 01:02:56.844
It just says that there's a framework for executive agencies to follow, specifically pr- protect the Great Salt Lake, it's that big salty lake in Utah, and water resources- Specifically, yeah, it suspends or it reinforces the suspension of any new water appropriations in the Great Salt Lake basin.

347
01:02:57.664 --> 01:03:03.824
Yeah. Which, you know, fair, right? I mean, Utah's one of the most beautiful states ever.

348
01:03:03.864 --> 01:03:12.844
If I lived there, I really wouldn't want data centers drawing from the Gr- But also I wonder, it's like, I, I was, I was just in Arches National Park, and you know what I thought? You know what I thought?

349
01:03:12.884 --> 01:03:18.564
We need more data [laughs]. You could fit a big data center through some of those arches, you know?

350
01:03:19.564 --> 01:03:27.104
So, but my question with that, and I would love someone to answer this, like, can you even really use the Great Salt Lake? I mean, wouldn't you have to desalinate it to a certain point?

351
01:03:27.154 --> 01:03:34.564
The mineral content, or at least run it through fil- Like, the mineral content in the Great Salt Lake is super high. You're- Right?... thinking about this too much.

352
01:03:34.624 --> 01:03:36.364
Let me get, let me keep going with the other stuff it does.

353
01:03:36.424 --> 01:03:57.864
It says m- it mitigates wildlife impacts, uh, the framework executive agencies must follow, uh, should be that they should protect utility rate payers, they should ensure energy generation transmission, and then here's an ambiguous one, lead on pro-human AI development in Utah, and then be transparent

354
01:03:58.864 --> 01:04:00.924
about it all. So it's a guiding document.

355
01:04:00.984 --> 01:04:17.573
So y- the thing is, Colin, I, is that, um, this, this, the governor received a lot of backlash because people say that this is not specific enough, it's toothless, and it's too little too late, assuming that something bad has already happened.

356
01:04:18.204 --> 01:04:28.444
But it, it's because, like, the way this data center got approved is not really, like, a rubber stamp that the government or the executive agencies of the government put their stamp on.

357
01:04:29.124 --> 01:04:43.604
Specifically, um, uh, the, uh, the approval for this data center came through the Military Installation Development Authority, shortened to MIDA, which is a quasi-governmental entity,

358
01:04:44.504 --> 01:04:58.264
uh, and the county, uh, Bo- the Box Elder County, like, signed onto it. So this is not really, like, a state level issue, uh, at least insofar as how the data center got approved.

359
01:04:58.304 --> 01:05:09.154
There's another details that the executive order does kind of update some of the language. Like, it's small language. Um, like it, uh, changes, uh, what a large data center is now considered to be.

360
01:05:09.184 --> 01:05:20.384
This is a big change though, 'cause it goes from 50,000- Well-... square feet to 10,000. Well, I actually have some insight to this. I don't know exactly what the language is for Utah.

361
01:05:21.084 --> 01:05:32.584
Oklahoma did almost the exact same thing, and it's, uh, and it actually has less to do with, um, the specifics for s- square footage, and more so defining, um,

362
01:05:33.684 --> 01:05:44.054
uh, defining, like, what is, what can be counted in the square footage. So Oklahoma had a similar reduction where the square footage encompassed the entire site, whether or not- That's interesting...

363
01:05:44.054 --> 01:05:47.504
they basically just got a ton- So the acreage too- Yeah... and not just the site.

364
01:05:47.804 --> 01:05:57.964
Yeah, I mean, that was, like, a big thing with the Kevin O'Leary's is that people thought it was gonna be 40,000 acres when really it's just, like, that's the land that they had to acquire. Yeah.

365
01:05:58.004 --> 01:06:03.454
But for this one specifically, a large data center will now be considered 10,000 square feet rather than 50,000.

366
01:06:03.924 --> 01:06:12.784
Are you saying that the Us- Which is big, but that's, I mean, that actually narrows it a lot because some of the, I mean, I'm- It will encompass basically anything being built in the state at this point.

367
01:06:12.844 --> 01:06:20.624
Yeah, pretty much everything is a large data center now. Yeah. Yeah, I mean, anything that, that falls into that category will, will, will be considered that.

368
01:06:20.664 --> 01:06:24.044
You know, going back to what you were saying, Charlie, about the kind of like,

369
01:06:24.984 --> 01:06:37.624
the push and pull here of the state level government and local government, one of the things that I find interesting about this, there was a lot of pearl clutching and kvetching in the comments of anti-data center people saying this doesn't go far enough.

370
01:06:37.684 --> 01:06:49.484
Some of them were probably bots, who knows. But, um, you can't keep anyone happy apparently. But I do wonder, this is basically telling executive agencies, "Here are your mandates. Go follow them."

371
01:06:50.004 --> 01:06:52.554
And to me, this, uh, this

372
01:06:53.464 --> 01:07:06.988
reflects a kind of, I think, disease in the f- in the federal bureaucracy where we have moved so much of the legislative process to the executive branch via agencies which we don't vote for-Which- Yeah...

373
01:07:07.008 --> 01:07:15.867
we don't approve, and which can be expanded almost limitlessly unless there's some sort of, you know, court case that goes up to the Supreme Court to challenge their authority.

374
01:07:16.748 --> 01:07:32.387
So I, I do wonder, like, you, you, this, uh, on the surface, this doesn't do very much, but with the right interpretation and a strict interpretation against data centers, they could probably do a lot with this until they run afoul with the courts, and then that's another question I have.

375
01:07:33.648 --> 01:07:46.188
You know, um, will some of these mandates kind of butt up against each other for exist- for ex- example, there, there's one about protecting ratepayers by making sure data centers, uh, you know, don't su- cause a spike in electricity prices.

376
01:07:46.248 --> 01:07:59.057
One of the biggest concerns actually in, in the newsletter last week, there was a, there was a Gallup poll where the two biggest concerns on data center impact for localities were energy prices and resource use with water.

377
01:07:59.848 --> 01:08:07.868
So that, they, they were neck and neck. It's the water and energy problem are, like, the two biggest concerns in the minds of the average American when it comes to one of these things.

378
01:08:08.428 --> 01:08:17.608
But I wonder, okay, well, now you have to bring your own power. I believe they're doing that at the Utah Data Center. They're gonna bring their own generators, or turbines, excuse me, for nat gas.

379
01:08:18.928 --> 01:08:21.878
But does that run up against the mandate for air quality and wildlife?

380
01:08:22.348 --> 01:08:33.458
Like, could you interpret that as, oh, well, if you're burning nat gas on site, that's gonna impact the air quality of the surrounding area, so you can't do that. Y- do you see what I'm saying?

381
01:08:33.688 --> 01:08:45.308
I feel like there's- Yeah... it's, it's so broad that this could be interpreted as strictly or as loosely as the specific federal agency and the zeitgeist of that agency at the time wants to.

382
01:08:45.448 --> 01:09:02.528
So, um- America, this is what happens when you let the balance of powers, the checks and balances between the three branches of government get too heavy in favor of the executive branch because now the agencies are all appointed by one guy, uh, sometimes who you elect,

383
01:09:03.448 --> 01:09:11.688
into office. So, you know, this is, this is, this is a pretty difficult problem.

384
01:09:11.768 --> 01:09:25.408
I gotta switch gears and show you this tweet from More Perfect Union announcing that Bernie Sanders will introduce a bill to have the public take a 50% ownership stake in the country's biggest AI companies, and

385
01:09:26.388 --> 01:09:36.788
the American AI Sovereign Wealth Fund Act would have the government tax AI companies, take 50% of the stock, and put it under control.

386
01:09:36.888 --> 01:09:54.468
Um, this both seeks to, like, mitigate the supposedly runaway, like, uh, asymmetric wealth generation that's happening, as well as try to take control of AI from, like, an existential perspective.

387
01:09:54.728 --> 01:10:07.548
Is it risky? So, um, a lot of people, you know, what's funny is on the Blockspace internal Slack, we all had different takes on this, um, because- Yeah, get this communism out of this...

388
01:10:07.568 --> 01:10:17.388
yeah, I think a lot of people might, might find it, uh, might be surprised to s- uh, for me to say that I don't think this is a crazy idea.

389
01:10:17.828 --> 01:10:29.827
Before you crucify me, uh, I think it's crazy to do s- the specific things that Bernie suggests here in that, like, 50% public stake, uh, and, uh, like, public control of that.

390
01:10:30.468 --> 01:10:49.648
But this idea of, like, figuring out how to, uh, produce some kind of sovereign wealth fund from the AI boom does, uh, is, like, directionally into something that I've talked about on this stream before in that there needs to be a better way to generate public wealth from this industry.

391
01:10:49.898 --> 01:11:02.008
'Cause right now you pretty much have to be a shareholder of these companies, and you can't even buy the public stocks of these companies. So do you want to trade your way out of, you know, the permanent underclass? No.

392
01:11:02.048 --> 01:11:14.208
The average person can't possibly do that. Um, look at Nor- how Norway has, uh, structured their, you know, natural gas and oil and, oil and gas extraction and used that to build a trillion-dollar sovereign wealth fund.

393
01:11:14.808 --> 01:11:26.687
So directionally, like, I think this might make sense. Um- I would, yeah... the specific details of it, the specific details of it in classic Bernie fashion are insane. Well, 'cause he hasn't thought it through.

394
01:11:26.788 --> 01:11:34.238
You know? Like, all love to Bernie and his- Oh, he's thought it, he's thought it through. This is- Oh, yeah... platform, this is platform align. I, I mean, here's the thing.

395
01:11:34.468 --> 01:11:45.508
Uh, there's difference between thinking through the idea and, like, for public relations reasons and actually thinking through the ramifications 'cause, like, 50% stake is insane, right?

396
01:11:45.748 --> 01:11:53.508
Like, that's just, that's nationalizing all of these companies. It's like the, it's like the wealth tax in California, like, uh- But, but this is for, but this is not, like, a tax.

397
01:11:53.548 --> 01:12:02.628
This is 50% of the, like, of the outstanding shares of the company. Like, we, this is- Oh, oh, yeah. Oh, I totally agree. Yeah. But yeah, are these, are, is the public gonna elect board members to like- Right, right...

398
01:12:02.658 --> 01:12:11.848
sit on? And then so but who actually controls the voting shares? Like, probably the government, and this is concentrated at the federal level even though these data centers are scattered across the country.

399
01:12:11.888 --> 01:12:15.608
Like, this, like, Texas succeed- secedes if this goes through probably.

400
01:12:15.728 --> 01:12:25.148
I mean, like, this is wealth extraction to the federal level under the guise, and this is my opinion, under the guise of being owned by the public, but what does that even mean?

401
01:12:25.508 --> 01:12:35.708
You're gonna give everyone, like, a fraction of Iron stock? It's, it's like a DAO call, and everybody gets to vote. It's like, uh, you know, we're gonna do it on the blockchain, that kind of thing. I don't know.

402
01:12:35.848 --> 01:12:45.008
Yeah, I mean- I'm not, I'm making this up, but you know. I know you are. I know you are. An idealistic, it's this idealistic, like, everybody gets to participate in, you know- Right... the decision-making process.

403
01:12:45.408 --> 01:12:47.808
D- but just a few more notes on that. Like, that's my...

404
01:12:47.848 --> 01:12:54.448
And obviously, like you said, he hasn't fleshed this out at all, but, like, so what, the federal government takes a 50% stake in all these companies like they just took a 10% stake in Intel?

405
01:12:54.888 --> 01:12:58.588
That makes sense for national security reasons. This is just a

406
01:12:59.828 --> 01:13:11.108
because we can, and then I guess the idea then is that money, those shares are then somehow capitalized on, and that's rolled into a wealth fund that we can use to benefit the American people.

407
01:13:11.168 --> 01:13:19.118
In theory, that sounds great, but we're as a nation of 50 confederated states-And so who gets to decide where the money comes from?

408
01:13:19.618 --> 01:13:29.418
The majority of the revenue for these things probably comes from Texas, right, in terms of the shares that they're, they're, they're clawing from these companies. Do, do we then invest in Texas infrastructure?

409
01:13:29.518 --> 01:13:34.518
No, it goes to all these other states, depending on who's controlling the government at that time.

410
01:13:34.958 --> 01:13:47.028
You could see a scenario in which this gets really messy, where the Republicans or the Democrats just take this wealth fund and then decide to s- to distribute the spoils amongst their constituents- Okay...

411
01:13:47.028 --> 01:13:56.018
and amongst their states. Okay, counterpoint, counterpoint, Alaskan Sovereign Wealth Fund for the oil and gas. Right, but that's local. That's, that's- Yeah... a local thing, right? Yeah. So- You know. Yeah.

412
01:13:56.198 --> 01:14:06.628
Well, what I'm saying is directly there, there is a nut that has to be cracked here, or else we're going to actually create the permanent underclass scenario. I totally agree- Yeah...

413
01:14:06.628 --> 01:14:16.618
with that in the sense that I think if you're going to do this, two things. I would rather it be somewhat voluntary. Now, that's like a libertarian, idealistic BS take, 'cause, like- Yeah... that's not gonna happen.

414
01:14:17.098 --> 01:14:27.798
But I mean, if you're one of these AI companies, everyone hates you because they think you're killing babies with the diesel exhaust from your non-existent generators on site and poisoning the water supply. Like- Yeah...

415
01:14:27.858 --> 01:14:36.088
you should just go ahead and bootstrap something like that, get an industry coalition together, get the funds together, and maybe distribute it, uh, you know, locally how you see fit.

416
01:14:36.588 --> 01:14:43.698
The other thing is I do think that this doesn't make sense on a federal level. Again, these data centers are not accretive to the federal level, and that's part of the point.

417
01:14:43.748 --> 01:14:54.878
That's part of why I think the political class hates it. It's something that they can't totally control. Yeah, I, I don't want Washington telling, you know, me what my data center company can and can't do. Yeah, exactly.

418
01:14:54.998 --> 01:15:09.778
So doing something like the Alaska Wealth Fund for, like, oil and gas on the local level, state by state, I think makes a lot of sense as long as it is done in a cooperative manner and not an actively antagonistic manner with the companies.

419
01:15:09.838 --> 01:15:19.918
Because make no mistake, this is just antagonism. This is populist economic gobbledygoop that, like, no one's really thought through. And I don't disagree with you, Charlie.

420
01:15:19.978 --> 01:15:34.228
Like, ideally, there would be some sort of fund to make sure that the, uh, wealth created by these data centers does flow back to the community more than just through property taxes. Um, but

421
01:15:35.338 --> 01:15:48.758
keep that communism out of my data center- [laughs]... is, is my final take. Yeah. [laughs] Yeah. Uh, seize the means of compute. Uh, that's, that's absolutely gonna be a line, uh, sometime soon.

422
01:15:49.298 --> 01:15:56.358
I have no idea what that means. Okay. Yeah. Enough about this. Thanks for sticking with it to the end of the stream. Colin and I, you can find Colin and I on social media.

423
01:15:56.438 --> 01:16:12.538
We are doing this every weekday now, so make sure you tune in at 1:00 PM Eastern, runs a little over an hour, Block Space Live, covering AI, compute, some Bitcoin still, and other emerging tech stories, as well as markets.

424
01:16:13.078 --> 01:16:21.498
If you're listening on CoinDesk, make sure to subscribe to Block Space feeds. We are leaving CoinDesk very soon.

425
01:16:21.598 --> 01:16:32.998
Only on Block Space feeds can you find or search Block Space wherever you stream anything, and you can find us. Otherwise, thank you so much for listening. I'm Charlie. I'm Colin. And we will see you tomorrow.

426
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