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Morning, y'all. Welcome back to Blockspace Live, presented by CleanSpark. For today's show, we have our hash rate index update at the top of the show, as usual, on Fridays.

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We will also be touching on TeraWulf CFO Patrick Flury saying that the company will likely tap both leverage loans and potentially notes for its $3.5 billion raise for the Anthropic deal in Hawesville, Kentucky.

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Following that, we've got three interviews lined up. We've got Kaan Farahani from Luxor to talk about their most recent look back series for the month of June. We've got the Big Digital Energy team, [lips smack]

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Phil Stanley and Josh Kilgore on to talk about their AI aspirations after Big Digital Energy took over Mawson in an activist investor takeover earlier this year.

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Following that, we have got Sado CEO Romain Nussenreith on to talk about their Buton deal and what exactly is concrete at this point, since it was an LOI and the details are going to be hammered out throughout the rest of the year.

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We will, we will finish the show with the latest market action for South Korean memory stocks, specifically SK Hynix and its American depository shares debut on the Nasdaq today.

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And a little cherry on top as we enter the weekend, Charlie. Financial Times reporting that OpenAI and Google are selling advanced AI models to Chinese tech giants blacklisted by the Pentagon. [lips smack] Uh-oh.

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That story is breaking, but this stream is staying on track. Blockspace goes live every weekday, 1:00 p.m. Eastern, featuring crickets on AI, data centers, markets, and emerging tech.

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Sometimes we throw a little Bitcoin in there. If you like what you hear, you'll love reading our newsletter at newsletter.blockspacemedia.com. And this live stream turns into a podcast shortly after we wrap up.

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You can find that wherever podcasts are found. This live show is brought to you by CleanSpark, Nasdaq listed, ticker CLSK. Colin, I think we have to do a hash rate index update. [lips smack] Yes.

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Let's go to the mines, Charlie. Yes. Let's see what- Let me, let me pull it- I cannot-... up here I'll pull it up. I'll pull it up here. Okay. I've got it up.

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We are gonna go to the mines and see what our friends in the Bitcoin mining world are up to, or rather what the Bitcoin network is up to. And Charlie, it's good news today. Bitcoin is at $64,000. I don't...

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I can't believe I'm saying that, but hey, uh, we're, uh, we're doing a little bit better than we were, uh, re- you know, when, when Bitcoin crumbled to 60K. I'm gonna swap here really quickly. Thank you, Charlie.

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It's looking like we are on track for an estimated 4.66% downward difficulty adjustment. We're 93%, 93% through the current epoch. This is coming off of the back of an upwards adjustment of 7.15%.

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And it's coming at a time with hash price just flirting with the $30 per peta hash per day level. [lips smack] And hash rates below 900 exahashes.

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I, I imagine we'll get into this with Kaan, but we're likely to see a lot of volatility on this front, not only with hash price being depressed, but also the fact that we're entering four CP season in Texas, kicked off last month.

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We'll continue through July. We, we're not entering it. We're in the middle of it- Yeah... right now.

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We, we are smack dab in the middle, and I imagine we'll see some pretty wild swings, especially considering heat waves are choking the South and West currently. Boy, do I know it.

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I'm in Oklahoma, which is like, it's like off-brand Texas, and it's so hot today. And so if I were a miner, I'd be turning my machines off. They're gonna catch fire. Oh, and maybe something about the electrical grid too.

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So if it's off-brand, does that mean Texas is the Bud Light and Oklahoma is the Keystone? Hey, hey, look, look. [chuckles] The joke is, what keeps Texas from falling into the Gulf of Mexico? Oklahoma sucks so much.

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[chuckles] So that's the only bad thing you'll hear from me about Oklahoma today. So. [chuckles] [lips smack] Well, I think that does it for the hash rate index update. Yeah. Kind of more of the same.

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We're just, we're in this limbo right now, and hash rate's really having a hard time recovering back above that one zeta hash mark.

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We'll be covering that though more with Kaan, and specifically what Luxor's derivative market might be telling us about the trajectory of hash rate for the rest of the year.

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But before we get to Kaan, Charlie, let's go ahead and get this Bloomberg report up about how TeraWulf is planning on financing this Hawesville, Kentucky build for Anthropic. Yeah. $3.5 billion for Anthropic leased

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data center. TeraWulf Inc. is preparing to raise about $3.5 billion in debt to build a data center campus in Kentucky, including its first-ever foray into the leveraged loan market, reports Bloomberg.

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Morgan Stanley to lead the financing effort, according to TeraWulf CEO Patrick Flury. The potential transaction would also include high-yield bonds.

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It sold $1.3 billion of such debt in December and $3.2 billion in October, making it the first Bitcoin miner to borrow in the junk bond market. Again, maybe these bonds will improve out of the junk bond category.

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So TeraWulf just pivot away from its crypto roots to focus on developing AI infrastructure.

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On Monday, signed a 20-year lease with Anthropic for its Kentucky facility, a deal expected to generate about $19 billion in revenue. CEO Patrick Flury says the agreement includes two five-year extension options.

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I'll tag you in, Colin. Going off. Yeah. I think the most notable thing here is, as Bloomberg pointed out, if they end up going with the leverage loan route, it'll be their first leverage loan.

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They've done senior secured notes up until this point. And I th- this would likely be a- Uh, this would likely be a secured leverage loan, probably backed by the Hawesville site, I would imagine.

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Typically, these leverage loans, which are outright loans, they're not notes. Notes are securities that can be tradable. This would be an outright loan,

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uh, to, uh, to, to a bank or some other, um, group of lenders, and it will probably be, like I said, backed by this Anthropic site. Um, these loans typically have shorter maturities, five to seven years.

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And another important part is that the-- it will have a floating interest rate probably. It'll be priced as a spread over the SOFR benchmark, plus maybe three hundred to four hundred basis points.

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And as the Bloomberg article said, they're looking at both notes and a leverage loan in conjunction with each other for this build-out.

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And I am just-- My questions are: what does this tell us about the current state of these companies' ability to access financing and capital?

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We've seen, as the Bloomberg article points out, hundreds of billions of dollars in debt taken out this year for these AI build-outs. I believe, what did they cite, Charlie?

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Three hundred and fifty billion so far this year with major players. So my question, top of mind, if I were gonna ask Patrick Flurry if we, we had him on the show.

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We'll have actually Nazair Khan on the show next week, of TeraWulf, so I'll, I'll ask him this.

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What exactly does that tell us about TeraWulf's access to capital or the capital flows that are going into the space currently, if you're looking at these hybrid instruments?

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And why go with the leverage loan versus an, a, a senior secured note like they have in the past?

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You know, as I understand it, this leverage loan like might actually carry a sh- a, a small, a sh- a sh- uh, sorry, excuse me, a smaller interest rate.

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Um, and it sits up higher up the capital stack, so the lender is more secured against any sort of, uh, you know, bankruptcy or financial distress.

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But, you know, we haven't seen any signs of capital really slowing down and TeraWulf looking at every lever that they can pull for this site.

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I mean, three point five billion obviously almost seems like a drop in the bucket, but it is, it is quite a lot of money.

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And I would imagine that the Anthropic bid for this Hawesville site will allow them to access some pretty competitive rates for this loan.

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So we'll keep an eye on that and update y'all accordingly once more news comes through. Yep, doozy of a deal.

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We're gonna go back to Bitcoin and hash rate here with Con from Luxor after a word from our sponsor, CleanSpark.

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[gentle music] We are CleanSpark, America's Bitcoin miner, a publicly traded company with the largest operating hash rate, powered entirely by self-operated infrastructure across four states.

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This is our proof of work. We are setting the standard for what's next. Learn more about the intersection of energy and Bitcoin at cleanspark.com.

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[upbeat music] If Bitcoin's actually the best money, and it's the thing that people should accumulate, and it's the best risk-adjusted asset, I lose zero sleep about whether or not that's gonna happen.

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I, I just ask the question of when. It's literally a matrix map that you're running on large pieces of data. The Bitcoin miners can absorb that energy.

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And, and in, and in many ways, this feels like a second bite at the apple to build a new internet. All right, let's get Con up here.

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Con, welcome back to the show. Charlie and Colin, GM. Good to be back. GM. Great to have you, man. And a lot to talk about with this most recent June look back.

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Charlie, if you could throw that on the screen here really quickly for visual- Yeah, let me get it on up. Let's- As we dive in here. There we go. Con,

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I guess before we get into some of our more detailed questions, can you give us a quick breakdown of your key findings for this June look back series? Definitely, yeah.

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June was, uh, an action-packed month, and if I were to summarize it in a single TLDR sentence, I would say that it was all about capitulation.

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For two reasons, um, driven by curtailment, but, um, from two different perspectives.

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One from a mining economics perspective, and the second coming from industrial operations avoiding peak load intervals, uh, during the four CP season in Texas.

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So we'll get into the details behind both, but safe to say that June was a month where network hash rate went and then came back.

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So you call it a capitulation event, but I believe you also noted in the report that we saw the highest hash price since August of last year, which is kinda crazy that that's even a...

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Yeah, I mean, that's, that's pretty brutal. Um, w- w- how can both be true here, if it's a capitulation event but we're seeing hash price actually improve over the month of June?

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It's a good question, and the detail there is that that's Bitcoin-denominated hash price. And of course, uh, miners will understand why this is the case, right?

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Um, from a Bitcoin price perspective, we've seen that June was a pretty brutal month, right?

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Uh, what happens in terms of mining economics, dollar-denominated hash price set a new all-time low, both on a daily and a monthly basis.

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We saw that daily, uh, hash price hit a new low of twenty-seven seventy-four per petahash per second per day in early June during the first week, and the previous all-time low was back in February of this year, which was twenty-seven dollars eighty-nine cents.

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On a monthly basis, the new record low is thirty dollars thirty-seven cents.

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This is a seventeen percent decline month over month, and this compares to the prior all-time low, which was set back in March at thirty-one dollars twenty-seven.

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We're gonna get into this, but the Bitcoin-denominated hash price picture looks like the exact opposite, right? And that's because of difficulty trends that have been, um, taking place.

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We know that difficulty has been on a decline generally over the past six months or so. So yeah, that's what, uh, hash price is looking like. Um, Bitcoin price was down bad.

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On an average basis, we saw a 19% decline in Bitcoin price throughout the month, and it was quite heavy on the first half. During the first week of June, we saw a 16% pullback in Bitcoin price.

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We started around, uh, the low 70s and fell all the way down to the low 60s, and this was part of the reason why we saw, um, economic curtailment, really marginal miners moving out of the network as, uh, mining economics worsened and hash price fell down to below that $30

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level. Are those miners completely sidelined now? Like, do you get a feel for... How to put it? Did something break for some miners over the last month or two where they're just not coming back?

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Obviously, there are the AI pivots to, to account for, but how much of the curtailment we're seeing on the network or the drop-off in hash rate is miners not coming back at all versus ones that are just sidelined for now until conditions improve?

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That's a good question. Yeah.

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So throughout the month, we saw, especially in the first, um, half of the month, around over 150 exahashes went out of the network, and by the end of the month, most of it, a meaningful proportion, came back.

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So the question there is, to what extent was it permanent capitulation versus just a swing based on peak avoidance behavior?

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To us, it seems that most of the hash rate came back, a meaningful percentage, and we can also see this in the difficulty adjustments as well.

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We saw one difficulty adjustment come in on the 14th of June, which was over a 10% decline.

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This actually ranks as the eighth-largest difficulty drop since 2016, which we define to be the steady state modern ASIC era of Bitcoin mining.

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And then the following adjustment, which hit on the 27th of June, was an upward adjustment of just over 7%. So we fell down 10% and then came back up seven.

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That difference, the delta in between of around 3%, is where the marginal hash rate, um, essentially was shed out of the network due to mining economics.

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So on the one hand, we have a lot of hash rate that moved and came back.

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Uh, this was mostly driven by industrial operations avoiding those peak intervals, but then we saw a little bit drop off as well, and that remains to be an open question. How is that marginal hash rate gonna move?

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It all depends on where hash price goes. Let's talk, uh, Texas 4CP and contango. Mm-hmm.

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A couple months ago, I think you were mentioning that hash price was trading in contango, and this is because of anticipated, uh, curtailment from 4CP. What's the update on that? What's the latest on that?

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What do we, what do we see happen in June? Good question. Yes.

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So back in May, we saw that the forward curve priced in a front-end contango, which means that front-month contracts offered higher hash prices than spot hash price at the time.

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The intuition behind this was that the industry, as we go into the 4CP season spanning from June through to September, expects curtailment, which means less hash rate, which means more value for the hash rate that exists, so they can, um, demand a higher hash price for selling their hash rate forward.

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Now, that turned out to be the case. That paid off, right? Throughout the month of June, we saw that hash rate did come down as curtailment increased, which bumped up both US and Bitcoin-denominated hash price levels.

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Looking forward, what is the market telling us now?

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As of the end of June, what we saw is that contracts generally repriced downwards but kept the same shape, which means that what the forward market is currently expecting to see through to November of 2026 is a bottom in hash rate around the 950, 960 exahash level.

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If you scroll down, Charlie, to the lower end of the blog post here, we'll see a few tables which shows exactly this. Yeah, keep going down, keep going down. We're getting up there.

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A little bit lower. Right here. Yes. Yeah, this is it. So this is, uh, difficulty in hash rate expectations if you... Yeah, right here.

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So what the forward market is telling us is now that we've entered curtailment season, we expect more curtailment, right, throughout the summer months.

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Um, a bottom around July to August and then a slight creep up towards September and back around to the one zeta hash level around October to November of the year. So forward-looking expectations, that's the base case.

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But we know that there are other factors that can get in the way of this, and I think June was a really good example, right? It's Bitcoin price. That's the big question. Where is Bitcoin price gonna go?

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Are we gonna go lower? Is there gonna be a recovery? That, I think, is gonna be a major determinant in whether this base case expectation actually turns out to play out.

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Yeah, I mean, h- how likely do you think that's, that that's gonna play out in the forward curve implying we're gonna get back to a zeta hash in Q4? Now, col- color me skeptical personally. I, I- Mm-hmm...

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I find it hard to see a rebound of that size unless Bitcoin really rips from here. I mean, outside of Bitcoin price, are there any things that you could see getting in the way of this hash rate recovery?

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Interesting question. Um, I think it's mostly gonna be related to Bitcoin price. And when we talk about Bitcoin price, there's a lot of factors that go into it, right?

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Um, June had a ton of action from macro pressures, um, and, uh, other types of macro indicators, which plays into the revenue side of the equation.

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Back in March, we talked about how oil shocks affect the Bitcoin network as well. And at the time, w- you know, the, the thoughts were around, well, costs are going up from a, from a power price perspective, right?

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That's probably gonna affect mining operations. But in reality, the major determinant is on the other side.

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So if Bitcoin price continues to go down and we see further deterioration in price action, that's really gonna cause, um, a rift in this base case expectation.

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Although, this base case expectation is coming from historical behavior.

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We know that historically, as we move out of the four CP season, the risk of curtailment decreases, and a lot of pent-up hash rate that's been previously sidelined now gets to come back into the network.

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So this picture is what we had seen historically, and it makes sense that the forward market is expecting to see it again, but the question is, what sort of factors are gonna come in?

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And it'll be around price action mostly. And another known unknown, for me at least, is the decommissioning of ASICs for AI and HPC specifically among the public miners.

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I, I would imagine that we would s- continue to see throughout the year a slow degradation of that hash rate, or there's the share of that, ha- their ha- the hash rate from public miners.

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But it does remain to be seen how quickly some of these facilities will come online.

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Also, I think the bulk of the pivots that we've seen from the leaders in this regard, Cipher, TeraWulf, Hut 8, and Iron, um, they've already really started moving in this direction.

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So, you know, I don't imagine you would see, let's say, Riot or Mara sign some sort of deal to retrofit one of their sites for a powered shell. Probably would be some time before we see that hash rate come offline.

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But it, it's totally up in the air because honestly, a lot of these companies are not publishing clear guidance for how they're going to phase out these Bitcoin mining farms for the AI pivots, so...

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And Colin, you touched on this aspect, which I think is important to highlight. It's actually counter intuitively a good time to be mining as a Bitcoin mining operator. And why is that?

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From a Bitcoin-denominated hash price perspective, hash price is improving. Uh, the past two months, April and May, were a month of recovery in terms of Bitcoin-denominated hash price.

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And like you say, the average hash price from a Bitcoin-denominated perspective, right now hovering around 48,000 Satoshis per peta hash per second per day, has been improving.

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So it's an opportune time for new entrants and also current incumbents who are maintaining, uh, competitive mining operations.

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You also touched on the fact that the hardware market is seeing a lot of interesting dynamics at play right now.

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Supply is changing, especially in secondhand markets, as data center companies move towards AI infrastructure pivots.

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At the same time, hash price all-time lows, um, cause hardware prices to cycle around all-time lows as well.

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So if you're a miner and you have attractive power, um, costs below four and a half cents per kilowatt hours, there's still a ton of opportunity to not only enter the space, but also to continue growing and capture more of that fixed size pie that other operators have, have left as they exited the network.

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I think maybe one last question I have for you is, uh, you've, you've got the, uh, different rolling hedge strategies here. Mm-hmm. Uh, kind of back testing.

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'Cause this is one of my big questions is like, okay, you're a miner. Hash price has been very volatile. If you've been hedging, what's, what would have your perform- performance have been?

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I've got, uh, a couple of the charts on here showing. Mm-hmm. Um, I don't know, just general commentary on like how miners have hedged over the years and back testing this. Definitely.

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These are some of my favorite images and visuals in Bitcoin mining simply because these pictures tell a thousand words. There's a ton of data and information embedded into these pictures.

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But the TLDR is we look at two different timeframes for rolling hedge strategies. First of all, the trailing 12 months, the past year, which is this image.

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And then since the halving, what does hedging look like since the most recent halving? TLDR is over the past year, it's generally made sense to hedge US dollar-denominated hash price. And the reason is clear, right?

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Volatile and uncertain Bitcoin price action. Anyone who was hedging against dollar-denominated hash price turned out to get paid over the past year.

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The story changes if we zoom out further and look back at all the way back to the most recent halving. Charlie, if you check out the second chart right under this one.

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Now here, the punchline is, well, it's actually made sense to hedge across the board, regardless of whether you're hedging Bitcoin hash price or dollar hash price, whether you're doing it one month out or five months out, it's generally made sense for sellers to sell their hash rate forward.

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And the reason is because throughout the first portion of the halving period, we saw secular growth in network difficulty far beyond expectations.

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And then since Q4 of 2025, we've seen unexpected, volatile, uncertain Bitcoin price action.

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So miners who are monitoring the forward market and engaging in these contracts by utilizing the forward curve stand to make significant gains.

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As we can see, um, five-month Bitcoin hash price hedgers since the halving have gained over nine percent additional Bitcoin in terms of their production.

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And only in the month of June, had you sold- Your dollar-denominated hash rate forward back in January, you would have locked in over 21% in additional revenue.

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For a 1 exahash miner, that's an additional $200,000 in dollar-denominated revenues. So there are significant opportunities in the forward market, in addition to other aspects as well, hardware, firmware.

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Um, basically, it's a good time to be building and to participate in mining. Yeah, Dave- Well, there's blood in the streets, baby. And as you said, with Bitcoin-denominated hash price, a good time to be mining.

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Just hoping that Bitcoin price turns around so that we can capture some of those sweet, sweet fiat gains. Khan Ferhani, thank you so much for joining, man. Really appreciate it.

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We will see you next month with a July look back. Who knows?

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Maybe we'll see a little more carnage on the difficulty and hash rate front, get this, uh, diff- get this Bitcoin-denominated hash price up even a little bit more. Likewise. Thanks so much, guys. See you next time.

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Thanks, Khan. Thank you, Khan. All right, we're gonna keep on rolling. We have Phil Stanley and Josh Kilgore in the wings with big digital energy ready to come up and chat.

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And then we're also talking about the SK Hynix US listing, so we'll talk some memory stocks. But before we bring up Phil and Josh, a word from our sponsor, Luxor.

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So if you'd like to learn more, go to luxor.tech/commander to get started. All righty. All right. We have Josh and Phil in the audience.

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We haven't had a chance to do a mic check, but we're gonna bring them on up here and we'll see how it goes live. Josh. Hey, guys. How we doing? Howdy. Phil. Hey, fellas. How are you? Great. Doing great, gentlemen.

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Thank you all so much for joining us. Long time coming. Uh, we've been wanting to get y'all on since the rebranding.

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And I think to start off our conversation, if you could give our listeners a quick rundown of the big digital energy s- story, uh, specifically the rationale for the Mawson takeover bid, the rebrand, and, uh, also the company's relationship with Endeavor.

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Sure. I'll have to let Josh do a little bit more of the speaking on Endeavor in particular. That is his personal entity for his LLC.

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But, um, it's a little bit of a long story, uh, and I'll try to skip some of the, the more boring parts. Um, I think where it makes the most sense is to talk about

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myself and Cody and Josh, um, were privately working in the digital asset space specific to Bitcoin mining, and we'd acquired a, a number of assets across Iowa, Kansas, Oklahoma, and Texas.

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And independently, we've worked really hard, you know, developing those assets over, uh, the last year or two. And then, uh, around November, December timeframe of last year, uh, we were looking at the Nasdaq.

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And, you know, we're, we're day-to-day traders, um, in the marketplace, and we were looking at what are some of the most undervalued mark- uh, mining groups in the Nasdaq as it stands.

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Uh, we identified Mawson Infrastructure. We'd had a little bit of background research on them, uh, from years prior. We had looked at them as a possible, like, investment opportunity.

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Uh, we approached their board and, uh, their management team about trying to do some kind of JV or partnership agreement where we would bring some of our assets to bear and maybe some liquidity to help, uh, boost the share price.

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Um, through that process, it went on that, um, you know, we didn't quite see eye to eye on what the future outlook of the company would be.

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Um, there was a little bit of litigation involved, which we ended up winning, uh, pretty summarily, um, in a pretty fast fashion.

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To which, you know, it looked like, at that point, that we thought we could come in and, uh, provide a little bit better management and operating know-how.

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So we, uh, engaged an activist law firm and, uh, worked with our partners and inside attorneys to effectuate some change.

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And then, uh, throughout that process, you know, I became CEO, Josh became executive chairman, and Cody became, uh, COO of the company.

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And I think at, at this point, we're in the office, uh, about 92 days, uh, since inception when we took over, and the share price has increased pretty substantially since then.

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Um, we're bringing a lot of new assets to bear and new technology that, uh, we're trying to implement. So that's good background. Josh, do you wanna sp- speak about Endeavor a little bit?

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Uh, y- you know, just briefly that, as Phil indicated, Endeavor's my personal investment vehicle within the, the, the digital space. And so, you know, we kind of got tagged as the Endeavor Group.

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Um, originally when Phil and Cody and I came together last year, uh, based off of a couple liquidity events we each personally were experiencing, uh, we created then what was Big Digital Energy LLC.

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Um, today that, that same entity we still hold, uh, in our, in our private holdings and renamed it 630 AI, uh, LLC. Uh, once we rebranded the pub co from Mawson to, to Big Digital Energy Inc.

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So I'll, I'll leave that there. So going forward into one of the more recent news items, uh, y'all just raised 15 million, uh, um, in Series D, in a Series D round, um-

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These, these shares were sold to six thirty AI, uh, and there are a bunch of, of specifics about it.

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I don't really wanna get into necessarily the structure of it, but rather I would love to hear from y'all about what is the goal with this raise and what, what will you be targeting, uh, deploying that capital for?

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Is this specifically for Bitcoin mining? Where, where will this money be put to work for Big Digital Energy? Sure.

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Um, just to address that directly, you know, when we raised the capital, one, we needed to shore up the balance sheet to make sure that we had plenty of liquidity to meet our short-term needs and also stay NASDAQ compliant.

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Um, we filed an eight K, uh, this Monday outlining a new acquisition that we're trying to take down in Cleburne, Texas.

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That Cleburne, Texas asset is roughly fifty acres of land, and that site itself has a large, uh, industrial footprint. This site was previously a nitrogen processing plant.

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Um, so there's some existing megawatts, around seventeen megawatts, uh, to be specific, that we have the ability and a load study created so that we can scale that up to roughly around seventy-four megawatts in fairly short order within this calendar year.

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Um, what makes this site unique is that it has two twelve-inch natural gas pipelines that run directly onto the property that are still f- still flowing.

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And I think our overall goal there would be to take those assets, uh, bring in a Coriolis meter, and then, um, create some of our own generation on the site itself so that we'd have a dual serv- served power feed on the site, um, with double redundant power and ability to build that out for, you know, the highest and best use, whether it's for Bitcoin mining or for an AI HPC offtake client.

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And forgive me, Phil, this is-- Is this separate or the same as the, uh, the Hood County site? Is this, this what you're referring to? It's the same. That is the same site. Okay. So- Hood County.

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The Cleburne, Texas, to be specific for the site. Okay. And so th- th- there's this... Y'all have this LOI, um, for this site with-- in a JV with Ten Net Zero. Um, so- Yes, sir...

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the, so the path to scale is three hundred and eleven megawatts. Seems with the gas element a prime for AI. Is, is it- We agree.

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We-- So, so what, what-- Take us through the s- next steps that y'all are looking at in terms of getting that from LOI to, you know, steel in the ground and getting a tenant lined up for this.

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What are y'all thinking in terms of game planning for turning that into the highest value compute? Yeah. So right now we've got the LOI.

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Uh, we feel like we'll be closing on that site on or before the fifteenth of this month. Ten Net Zero has been a, a really good partner to us in the past.

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Uh, they're a known good quantity, um, counterparty that we've worked with specific to assets that involve natural gas and generation.

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They've got a really deep background in that space, so that's part of the reason why we selected them, and we've worked with them on two different projects in the past on a, uh, privately.

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Um, where we go from here, we've been engaged with, you know, and I think we can-- we can't say exactly who, and it's non-public information, but we can say that we have been engaging with third-party offtake clients to discuss what that would look like, uh, if they were to come in and use those megawatts to bring in some of their generation equipment as well as, you know, AI compute software and hardware.

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I, I think that's as much as I can probably say. Yeah. No, I, I appreciate it. I understand there's a lot that you can't say as a public company without having to file an eight K, and so you wanna be careful.

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So that, that gives us a good breakdown. Correct.

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So quick question with regards to AI and with Bitcoin mining in terms of the future of the company, and, and f- correct me if I'm wrong about the sites under your portfolio right now, but it seems like the, the biggest one is this Midland, Pennsylvania one, roughly a hundred and twenty megawatts.

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Is that correct? Yes, sir. That is correct. As far as the, the PubCo goes, it is the largest individual site that the PubCo owns and... or not owns, but it leases and controls. Okay.

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So i- is-- Are there any plans for, uh, this m- m-- for any of these other sites under the PubCo's control to move them towards AI, a powered shell model or something similar, or will Big Digital Energy be looking specifically for acquisitions like the Hood County in terms of trying to build out this additional business line?

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No, I think we're absolutely entertaining all offers and opportunities to transition things to a higher and better use of the megawatts as they become available.

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But as you know, um, these transition stories, while they ve- make a lot of splashy news, they take a lot of extra work. There's a lot of, uh, negotiations in the background.

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And just because you have, you know, headline megawatts, it doesn't mean the convertibility factor is, you know, uh, plug and play all the time.

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And additional work and environmental regulations, uh, planning and zoning, city council, things of that nature all have to be considered when, uh, conversion happens.

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And I always make the analogy, it's like, uh, you know, being a captain of a, of a ship. You can turn the wheel all the way one direction, but it takes a while for the ship to actually make the turn.

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And, uh, I can tell you, you know, confidentially that we are making heavy strides every single day of the week is, uh, trying to push us in the right direction.

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And I think that's probably as far as I can go as the answer on that question. I'll jump in. I see, uh, six thirty AI, y- three hundred megawatt LOI in Oklahoma. It's the pipeline. I'm in Oklahoma.

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Done, done some Bitcoin mining myself here over the years. Um, our state just passed, uh, like a behind the meter bill, I believe.

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And but we're seeing like a lot of the states and counties kind of different approaches to how dealing with these large loads, the data centers.

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There's kind of a data center pushback on the ground How are you guys seeing this affect your deal flow? How do you respond to it?

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Uh, yeah, what's your sense of just, like, the, I'd say, the regulatory and bureaucratic and, like, community, uh, uh, uh, response to the deals you guys are trying to get done? Yeah, that's a really good question.

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And I think a really direct answer is, is everything that is being debated right now, whether it's in Texas or Oklahoma or... is very... And just 'cause,

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uh, push through any one... into fruition and that it end up, you know, impacting us. I can say some of our sites, specifically to Oklahoma, that we have already...

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that are getting us- Phil, we're, we're losing you in a, in a- Are you guys actually hearing me? Phil, we're loo- Can you hear us? We're losing you. Can you hear us? Yeah, I got you loud and clear. Okay. Okay.

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Sorry, you just... A, a little bit of a break up there. Um- Yeah. Could you roll back, like, 20 seconds? Sorry, sorry. Cutting out a bit. Yeah. Uh, what I was just trying to say is,

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you know, just because the regulatory environment doesn't always look favorable does not necessarily mean that it's going to stay that way.

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There's a lot of push and pull within the legal frameworks, and I would say that our current megawatts that we have are already entitled.

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We already have our contracts with people like PSO, and those are already inked, and the, uh, irrevocable letters of credit that provide us that power are already paid for. Understood.

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Phil and Josh, uh, we're at the top of our segment here. Thank you all so much for hopping on. We will be keeping an eye on developments for Hood County and all of the...

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or for the Hood site, and for all of the other assets under y'all's management. Have to have you all back on again sometime. And, uh, best of luck with the rest of the year. Look forward to it. Thanks so much, guys.

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Really appreciate it. Thank you. Thank you, gentlemen. Thank you, guys. Great interview. I'm really excited. I wanna find out where the Oklahoma site is so I can, uh,

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drive by it and see the, the trucks and the transformers. That's always a fun sight to watch as, as these big old data centers get built. We're gonna keep on going. We have another guest.

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We got Romain with SATO in the audience, who we'll bring up. We'll talk about their deal with Bhutan. Before that, a word from our sponsor, Ligos.

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We're gonna talk about Bhutan. We're gonna talk about Asia here. Let's bring him on up here. We haven't been able to do a mic check, so we'll see how this goes. Romain. All right, Charlie, Colin. Good to see you.

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Welcome. So I'm sorry you won't be able to take your truck, Charlie, to, uh, go see the site in Bhutan. Unfortunately, no. Last time I checked, I have to take a plane and- [laughs] Yeah.

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We're, we're just holding off on another few 10Xs so that we can get a private jet out there, Romain. Yeah. Wonderful. I'd love to visit Bhutan. I've heard it's beaut- uh, uh, Bhutan. I've heard it's beautiful.

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I heard the same thing too. All right, so, um, SATO just signed an LOI to do, to build a site in Bhutan. What's an overview of this deal? Give me the, give me the skinny, Romain. Sure.

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So SATO Technology, as you know, is a Bitcoin miner, started in 2017. And like every Bitcoin miners in the world, moving full speed into the AI factory play.

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Uh, we are doing it in Quebec, uh, with first, the first 20 megawatt sites that we have, and we hope with more energy soon.

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Uh, and recently, last Monday, we announced a new deal, an LOI [clears throat] that we signed for, uh, uh, the country of Bhutan, uh, for an allocation of 100 megawatts that could scale to 500 megawatts in order to develop an AI, uh, data center in order to serve the Indian market, which is one of the fastest-growing market for AI demand today in the world.

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Uh, the reason why we are there, it's because, uh, uh, uh, Bhutan in some ways is very similar to Quebec. Uh, uh, same hydro energy, stable energy, very good price.

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Uh, and a country nearby that is very interesting to reach out. Uh, uh, and we've been able and lucky enough to find the right people who are developing this kind of project, and wanted to develop this project.

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Because Bhutan originally is a big exporter of energy to India, and legitimately they wanted to export intelligence to India rather than just, uh, uh, energy. So that's, uh, that's what we've been working on so far.

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It's only an LOI. We still have lots, uh, lots to do before we can, uh, plug, uh, the first, uh, GTUs. Uh, but it's really exciting. Uh, it's, uh, uh, it's a new adventure.

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Uh, and we're really, uh, uh, we can't wait to, uh, uh, uh, uh, to really, like, turn it on.

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So following up on that last bit there about it just still being an LOI, what needs to happen over the next few months to take this from ink to execution in terms of getting a site off the ground, finance, et cetera?

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Well, as you know, uh, for all Bitcoin miners and everyone I would say in the industry, it's a trifecta of, uh, uh, aligning investors, uh, construction, and clients.

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Uh, and you kind of like need to do it at the same time, uh, but first you need to have a power allocation because this is the first thing that people will, uh, uh, will look at. And, and now what we...

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Now that this LOI is done, uh, of course we still need to ink all of the, uh, details and PPA and everything, but it's easier for us to go, uh, uh, convince clients, hyperscalers, NeoCloud, uh, and, uh, um, uh, financier and people who can finance, uh, this kind of like infrastructure either via debt or equity, uh, that we have a bankable site and a bankable market.

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Uh, in some ways it's also easier to do it with 100 megawatt going to 500 megawatt than only 20. Even so, this is something that has changed.

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Like, uh, six months ago if you don't, don't have like 500 megawatt, people would not talk to us.

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Now like 20 megawatt it is still, uh, something that has lots of interest from lots of people, inference, and different kind of, uh, of sites.

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Uh, uh, but it's really like assembling all of these things together and, and, and then of course, uh, the, uh, delivery of the, of the solution.

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But now, uh, uh, with the kind of like solutions that exist, uh, prefabs and different kind of solutions, it's easier and faster to, uh, to go to market.

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So, uh, in looking at this, I- if I'm not mistaken, it looks like you signed the LOI technically with Bhutan's, how do I say it, Gelephu Mindfulness City Authority. Yes.

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And, and I was looking at this and, and it, it appears this is like a special, like, administrative region, that it has its own, like, legal framework and it's, you know, within Bhutan. Um, can you speak to this at all?

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Any, like, context you can provide? This looks kind of an interesting, you know, structure to do this deal with.

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That's correct, and that's ex- indeed a very interesting angle because it's called a GMC, which is a Gelephu Mindfulness City, and it's a new administrative region that has been developed under the vision of the King of Bhutan, uh, His Majes- Majesty the King of Bhutan, uh, in order to develop a business area, uh, uh, with economic incentive, while at the same time developing it under a, uh, environmental and conscious, uh, uh, vision.

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And, and, and they have started to develop different kind of, uh, infrastructures from airports to, uh, uh, different kind of hospitals and schools and of course data centers and AI data centers.

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Uh, and that's, uh, that's, uh, uh, where we're going to be, uh, placed for the first, uh, uh, sites that we, uh, intend to develop, uh, in Bhutan.

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One of the beauty of this site is that it's like, uh, maybe one kilometer away from the, uh, Indian frontier, In- Indian border, I'm sorry.

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Uh, so it's, uh, it makes it, uh, even better to reach out, uh, the Indian market in order to be closer to, uh, the centers that needs AI.

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Uh, and, and in some ways just to, to, to finish, it's, it's developed with the idea I would say to... if I, if I make a parallel with Singapore, uh, back in the time.

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You know, like I was building a new city inside a country, uh, uh, with economic incentives and a conscious, uh, uh, vision. So... Oh, sorry. Go, go ahead, Charlie. If you- Tagging, no. Tagging you in, Colin.

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I, I'm just curious about, and you kind of touched on this but, you know, Bhutan is a hydro powerhouse. Mm-hmm. It exports, uh, you know, a good amount of this energy.

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W- why is the royal family or the regime over there com- not complacent and wanting to monetize this energy rather than just export it?

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Is the idea basically to leverage it for a higher value workload, which then you can export that and end up making more money than you would with just the raw power?

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That's exactly the idea with, um, deploying AI data center. Instead of selling energy or exporting energy, they want to export intelligence and developing the, uh, uh, AI data center.

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And as you probably know, Bhutan is already a huge country for mining Bitcoin. They are holding a single already 700 megawatt or more of Bitcoin mining.

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Uh, uh, and, uh, uh, they have this idea of using their energy not only for their people, but also to, uh, uh, bring more value to what they are producing, which is energy from hydro and from hydroelectricity.

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So, uh, I'm kind of... So Bhutan has-- This is not Bhutan's first, like, large scale data center. They've been working with Bitdeer for years. Mm-hmm. Bitdeer's had the sovereign Bitcoin mining arrangement with Bhutan.

259
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I believe Bhutan has, uh, sold off some of that Bitcoin as of late. Um- To finance, I'm sorry Charlie, to finance the GMC. Okay. To finance the GMC. Okay. Actually, I'm kind of curious.

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Um, uh, do you have any insight beyond just that statement, like to finance the GMC? Like I get- Not more than what you just said.

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They sold some of their Bitcoin or the Bitcoin treasuries that they were having in order to finance, uh, the cost of development of this new city. You can check online.

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It's really, uh, fantastical what they are, what they are developing in terms of, uh, architecture, design, vision. Uh, it's really exciting. It's very new. It started like I think in twenty-twenty-one.

263
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Uh, and it's building up, but, uh, of course you need to, uh, finance it with, uh, with lots of money and, and the Bitcoins that they mine, uh, is, uh, serving this purpose.

264
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So one, one more question regarding the specifics here. Is there a end customer in mind for this compute in India? H- how do you think about building out that business development pipeline?

265
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Will the government of Bhutan help with this? It's m- Is there a customer lined up or anyone just that you're thinking would be ideal for this?

266
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Well, about customers, um, are, are plenty for people who wants to reach India. India is very much in demand for AI load.

267
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Uh, the Indian grid is very, uh, uh, uh, difficult to work with and, and sometimes, uh, but in too much demand and not always ultra green. Uh, and I think this is where Bhutan has really a card to play.

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Uh, and in terms of, uh, type of clients, uh, hyperscalers, neo clouds, um, uh, Indian companies, large Indian companies, you know the name, uh, are all, uh, on our list, um, uh, to, uh, uh, uh, to contract with.

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Uh, obviously it will also depend on the type of business model we want to, to make. Uh, at some point we'd also like to be able to do a GPUs as a service, um, uh, ourselves, not only a co-location deal.

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Uh, so we'll see, uh, how it goes in the, um, uh, in the coming weeks and months. But I'm, I'm, I'm... How, how can I put it? I'm not worried. I'm not too much into the, the, the idea of build it and they will come.

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Uh, however, I'm s- I still believe that they will come.

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Uh, I guess last question is, um, when do you get to go visit Bhutan and, uh, go tour Bhutan and, uh, uh, spend a little more time in a very beautiful country- Yeah [laughs]... beautiful part of the world?

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Well, the, the project originally was, um, uh, originated by my brother, Matthew, who is also the co-founder of the company, he lives in the UK.

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Uh, he spent like already like a few weeks over there talking to different kind of bodies of the government and meeting different kind of players and, and, and, and contractors and, and all of the people that needs to, uh, uh, to, to, to work with us on this project.

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Uh, um, we have the, uh, uh, the, the luck also to work with a, a, a, a, um, a Buddhist, uh, uh, personality, someone who's very high ranked into the Buddhism, um, uh, religion. His name is Kelong Pushp, uh, Pushp.

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Uh, uh, and he's like very well connected also to, uh, he's not just to the king, but also to different kind of players over there.

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And Matthew, my brother again, uh, also co-founder and a board member or director, uh, is really the owner of this project. He's the one who has been there, planned to be there. Of course, I want to be there.

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As you said, it's not easy. Uh, I don't have a jet yet. Uh, so to go there from, uh, from where I am, it's probably three or four planes. Uh, you can go direct, but, uh, uh, I, I intend to, uh, to go there very quickly.

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I actually had a closing question that you just answered 'cause I was... We should have led with this, but how does a Canadian company make inroads with this, the tiny hydropower nation in Asia?

280
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But seems like your brother's on the ball there. Romain- Exactly... thank you so much for joining us. Best of luck with this project. Thank you.

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We'll definitely be following up with you as updates come in, and hopefully you can get over there to the paradise of Bhutan soon. And, uh, maybe we'll go together at some point. Thank you for having me.

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Hey, you know where to find us [laughs] Exactly. See you later. Thank you. Bye. Thank you, Romain. Maybe the, uh... You know how all the, the Chinese miners came to Texas in '22 and '21 and, like, wore cowboy hats?

283
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Maybe the next story is a bunch of Texans going to Bhutan and wearing the, like, the robes or whatever. Uh, you know? Yeah, in their search for Nirvana. And yeah, so, uh, we've all got involved.

284
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Gonna have a tough time with the... Most, most Buddhists are, are vegetarians, right? So they're gonna have a tough time with the diet, I would imagine. No barbecue.

285
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But that, you have to, you have to adopt the culture, so- [laughs]... that's, yeah. Um, yeah. Uh, we have, uh, a couple stories which are less in the data center deal flow world and more

286
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in the public markets. The first one, SK Hynix, Colin. This is a doozy. Um, I think maybe Americans might be familiar with the Samsung story. Memory stocks are hot.

287
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We've, we've covered this, uh, a bit earlier this week with Jay. The Korean economy, South Korean economy is, uh, ripping because of it, flush with cash.

288
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And SK Group, the other big man- memory manufacturer, uh, based in, uh, South Korea.

289
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This morning, US listing vastly oversubscribed and as of right now, before when I looked at the, the, the, the price this morning before we went live, it was ripping. So.

290
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Yeah, and to give our listeners an idea of how hot memory stocks are, this debut on the NASDAQ, which is not an IPO despite some of the framing, you could kind of call it that in the sense that it is for the American market.

291
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But they're already listed in Korea, so this is an American depository share debut on the NASDAQ. They raised $26.5 billion, Charlie. That's, that's more than, than Alibaba when it debuted in 2014.

292
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It's also more than what SpaceX raised. Yeah. A lot of people are... I feel like this is a little bit missing because, uh, uh, you know, the average American doesn't know SK Hynix. They all know SpaceX.

293
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But I feel like pretty soon here, people are gonna be like, "Oh, SpaceX, SK Hynix, Samsung." They're, uh, they're like another Samsung, so. Yeah, and they opened at $170 per share. Uh, they priced the debut at $149.

294
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And yeah, they raised $26.5 billion. The offering consists of roughly 17.79 million shares. And, um- Yeah.

295
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I mean, so coming here from my notes, the offering consists of 177.9 million ADS, each representing one-tenth of a common share. So that's where you get the roughly 18 million underlying.

296
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And memory stocks are, as you said, Charlie, super hot right now. And American investors, most American investors, particularly retail investors, haven't had a clear way to invest in some of these. Now they do.

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I don't really have much more to say about this other than there are reports that say that this demand for memory won't slow down until the end of the decade.

298
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A- as to whether or not that's true, fact, w- w- that remains to be seen. But the fact of the matter, uh, the fact of the matter is, per SK Hynix's SEC filing, it holds roughly 56.4% of the high bandwidth memory market.

299
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So this is an indisputable giant within that market. And just when you think that it can't get any frothier, Charlie, it continues to foam up. Yeah. Um,

300
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I think, uh, while memory stocks have been ripping, they have been like a lot of, uh... They've, they've enjoyed, uh, both retail and investor attention. Uh,

301
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the reality is, especially the high bandwidth memory, is very difficult to ramp up, is very difficult to, like, create more of really quickly.

302
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And because of that, and because the sector is so concentrated with just a, uh, few, um, in just a few coun- companies, uh, there's not a lot that, at least as I understand it, that the, uh,

303
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that, uh, that can be done to quickly solve the supply constraint. Yeah. And on that note, I, I really like this excerpt from CNBC here. Tae-Won, the, uh, I believe the C... Uh, or he's the chairman of, of SK Hynix.

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Tae-Won told CNBC that when he meets with customers and partners, everyone expects more chips. He said that even when SK Hynix announced it would double capacity within five years, customers said they still need more.

305
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All my customers said that, "Well, that's not enough, man," and, "Well, we need more." So maybe that's a good kicker for the segment. Yeah. We need more.

306
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More, more folks should give quotes like that, 'cause I don't wanna hear, yeah, the, the [laughs] the standard line. We love it. It's just blunt. It's in the v- It's, it's, it's in the, uh, vernacular. Yeah.

307
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It's no business vulgate. Just pure, we need more. Yeah. Bro, we, we have to file an 8-K. Give me some, give me some bros. Give me some yeahs, um, in the statements. Okay. Last.

308
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Uh, we are, we are pending this last story kind of last minute. Um, this- Yeah. I don't really have too much to say with regards to what's going on here. Yeah.

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So- Um, go a- you, you go ahead and give us a rundown here, Charlie. Yeah. So this is broken by the Financial Times this morning. I'm getting the free version from a site called The Next Web.

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OpenAI and Google both confirmed to the Financial Times they've been supplying advanced AI services to Singapore-based subsidiaries of Alibaba, Baidu, and Tencent, three Ch- Chinese tech giants on the Pentagon's list of firms it accuses of Chi- ties to Chinese military.

311
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That list is called the 1260 H list. Um, and here's the crazy twist. Apparently, this is legal.

312
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Apparently, because the US export controls target specific named entities and named places, mainland Chian- mainland China is restricted, whereas Singapore is not.

313
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So if I am understanding this right, and if this is being reported correctly, um, the subsidiary in, the subsidiaries incorporated in Singapore, uh, are allowed to sign contracts and not blacklisted. So what do we do?

314
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This, honestly, Colin, this has kind of been the story of, like, export controls for forever.

315
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My own little narrow window of the world is like, I remember you could, um,occasion- you could argue that you could avoid certain, like, Chinese tariffs by routing, you know, assembled pro- assembled machines and products through Malaysia and other Singapore-based entities.

316
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You see this a lot. Singapore, kinda like the Switzerland of, uh, Asia is, is kind of the, um, comparison here. So, uh,

317
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apparently selling AI services to subsidiaries of blacklisted Chinese companies is legal on paper. That's the story, uh- Yeah... yeah. Otherwise, they wouldn't be telling the Financial Times this. So this is- Yeah...

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original reporting from Financial Times from these, from OpenAI and Google, and it kinda reminds me of The Big Short meme. I don't get it. Why are they admitting? Or why are they confessing?

319
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And he goes, "They're not confessing. They're bragging."

320
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I mean, I don't think they're bragging here, but there's nothing illegal being done here, but it does really expose some of these loopholes where China can get around these export controls and get around some of these, you know, sanction-esque devices that the US government uses to try to geo-fence it from technology coming out of the West.

321
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Yeah.

322
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And it's not like, like, it's not like, it's not the same thing as, like, using a VPN, 'cause technically if you use a VPN to access service, you're still technically not allowed to use that service, and those people are still technically not allowed to service you.

323
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They just have plausible deniability. In this case, it's not even just plausible deniability. It's just outside of the specification of the Pentagon's 1260 H list of firms.

324
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So it is fully above board until the Pentagon either expands this rule set or something like that.

325
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That is as much as I can talk about this Uh, for now The only thing that I will say is if you're wondering how the Chinese models have caught up so quickly, there you go. There-- Well, certainly a factor.

326
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I mean, I, you know, maybe, maybe they've got the magic sauce, but it's, it's well known that, you know, the, the Chinese filch intellectual property from American companies all the time.

327
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And so the, the, the fact that they've been able to close the gap so quickly, obviously there's some ingenuity from their own companies going into it.

328
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But one of the, one of the things that was posited when DeepSeek came out is that part of the reason why it was bu- bu- was able to be rolled out so quickly and so cheaply is that it piggybacked on work that was already done by the most advanced models in the US.

329
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But at the same time, Colin, information theory, like it is very difficult to constrain information. It is a asymmetric losing battle.

330
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Y- you know, if you study the history of information, uh, over time, you will have cryptographic breakthroughs by Alan Turing.

331
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You'll have the n- you know, nuclear advancements and nuclear weapons and everything, um, you know, be spearheaded by a country, often America and the West.

332
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But, um, because it's simply just information, it is very easy to distribute that and, um, often can provide leading indicators to people who are not privy to the exact same information. It's very difficult.

333
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Information wants to be free. So, uh, a lot- The only way that I'll push back on this is it's kind of-- this is kind of different than information, though. These are- Yeah, yeah...

334
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you know, this is not like just telling them how to build a nuclear bomb. It's like giving them the nuclear bomb and letting them back engineer it and figure out how to build it for themselves.

335
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Because i- in the sense that they are selling the AI models themselves, right? And so that, that's giving them the whole thing. That's not even- Yeah... just telling them- Well, I mean, it comes down-...

336
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here's how we networked it, you know? Or, or designed it. Yeah, but this is like, you know, you have state secrets, which are like, who are your spies?

337
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How to build, uh, you know, uh, where is your, where are your nukes located or something. We're, we're talking like consumer products, stuff that's widely distributed. It's very difficult to like protect that.

338
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The products are widely distributed, for sure, but like how much of the actual inner workings are they getting access to? We don't really know based on this- Yeah... reporting.

339
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It's kind of, that, that's kind of my point with it, right? So. Yeah.

340
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But anyway, just an interesting story and one that continues to pluck the strings of how fraught relationships with China are currently in, in the US, so. Yep.

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My, my stance, the only way, uh, the only way, uh, the only position is, is to barrel through. So gotta run faster. Can't- Once more into the breach, gentlemen. Once more and infinitely more times into the breach.

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That's our show for today. That's our show for the week. Thank you for tuning in this week, Blockspace.

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We go live every single weekday at 1:00 PM Eastern, featuring quick hits on AI, data centers, markets, emerging technology, and if you're lucky, we'll talk about Bitcoin.

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This show is a newsletter every single day to your inbox, newsletter.blockspacemedia.com.

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And if you haven't subbed to the podcast yet, find that wherever fine podcasts are streamed, search Blockspace, and give us a review. This show is brought to you by CleanSpark, NASDAQ listed ticker CLSK.

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Thank you, CleanSpark. Thank you to our sponsors. I'm Charlie. I'm Colin. And we'll see you on Monday. [dramatic music]