On y'all. Welcome back to Blockspace Live, presented by CleanSpark. Charlie, Goldman Sachs High Beta Momentum Index is down 24% month to date in the worst route since 2009.
That is putting some figures to the pain I know a lot of people are feeling right now in the market.
We will be covering that update from Goldman Sachs for our lead story, along with a market update on some Neocloud's empowered shells. Following that,
a fun interview out of left field today with Pirate Wire's Brady Dale. The topic, do bots have feelings? Break out your bongs and dust off your discourse on the method by Descartes for this one.
It's going to be a fun interview. Charlie and I have got some real zingers there for Brady.
After that, we will be covering Soluna's new hire, a former Microsoft executive, Ryan Carver, as it digs deeper into its AI aspirations. And to close the show, Arizona is pumping the brakes on data center incentives.
It's a seller's market. What are you gonna do? That's right.
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Charlie, there's blood in the streets, my man. Man, blood in the water. And retail, retail is buying. Retail is propping up the bottom of this current sell-off. We'll get to that here in a second.
But first, the tweet to kick off this segment here from an account on X called StockTalk, quoting directly from the tweet, "Historic sell-off for momentum in July.
Goldman Sachs High Beta Momentum Index down 24% month to date through the first half of July. The worst performance since April 2009." I don't think anything good was happening in 2009, Charlie.
Correct me if I'm wrong, but I think that was a little, a little dicey time for the markets there. I mean, that's when I was headed off to college, so, you know, best years of my life. [laughs] Dating myself here. Yeah.
I was, uh, going-- stumbling through the acne phases of high school. But that being said, obviously in the wake of the Great Recession, so not the best indicator for those keeping an eye on the stock market.
Morgan Stanley Tech Momentum Index 17-day rate of change is down 35% in a similar metric to the Goldman Sachs High Beta Momentum Index, which is the worst recorded ever through the 27-year history of the index.
Charlie, let's unpack this really quickly. Just a few highlights from this index. This is a, as Morgan Stanley and Goldman Sachs are
framing it, a de-leveraging event in what has been clearly an incredibly hot sector, i.e. anything to do with AI. First half of 2026 was one of the most explosive movements in the US stock market in recent memory.
Perhaps, I'm not gonna say ever, but the parabolic move upwards for any number of names was honestly pretty, pretty incredible. So-- and it's not an isolated momentum wobble, it's an unwind of that crowded trade.
The momentum factor on Goldman Sachs Index had experienced a record 57% run in the first half of 2026 and going into July, and then that trade was crowded at a, the 100th percentile relative to the past five years.
So it's, it's extreme as it can get. And then there was a liquidity drain starting in the 1st of July,
and Goldman Sachs itself flagged that if de-leveraging continues, the factor's maximum potential drawdown could reach 50% from peak, roughly double the current pullback, though the bank's trading desk has also picked up preliminary, quote, "buy the dip" signals.
And historically, these mom-momentum air pockets have resolved as tactical rebounds rather than trend breaks. So that's obviously the question running through everyone's minds right now.
Is this the market breaking, or is this similar to what we saw last year during the tariff announcement where-- or dur-during the, uh, Liberation Day, I should say, in April, where stocks absolutely plummeted and then recovered into May?
Uh, I think the difference here being there was a clear news peg for that sell-off last year. There's not really a clear news peg for this. There are a few drivers.
Samsung's guidance coming in slightly below expectations. Also, there's news around DeepSeek's self-developed AI chip.
Um, and there are also questions regarding the Neocloud sector in general, as we've covered, regarding Meta's entrance into the sector and what that means for some of the smaller providers that are making their way into the AI CapEx boom.
But that being said, there are just a few things that could have touched this off. I don't think it's really clear as to why this unwind is happening now. And just to highlight
some of the moves we've been seeing from this High Beta Momentum Index.
Goldman's High Beta Momentum factor plunging about 6% in a single day and over 20% cumulatively across five days in what Goldman's own desk called an ugly day on July 7th, when a lot of this really started deepening.
And note-- the desk noted the speed and magnitude were unprecedented since the 2020 stay-at-home to reopening rotation, though this time, without an equally strong fundamental catalyst behind it.
Going back to what I was saying earlier, there's no clear single catalyst for this current sell-off. And the last- There- Oh, go ahead, Charlie. I'll, I'll- Yeah, there isn't a single catalyst.
Um- Yeah, you mentioned them. I mean, we had SpaceX, which was like the biggest IPO ever. It's like a lot of attention now.
It's very interesting though that, that Goldman Sachs identifies that retail is kind of like the last buyer still, still kind of holding a lot of this together, and at the same time, retail's the one also buying SpaceX.
So where are the institutional investors?
Can they s- can the institutional investors in the r- in the room step up the real, you know, deep-pocketed folks, or are they the smart money which is getting out before, and retail is k- still kinda like not just holding the bag but actually putting more into it?
I mean, you have to imagine some, at least for SpaceX, right, a lot of those institutional investors probably cashed out shortly after the IPO, having gotten in earlier, right? And there is still institutional activity
going on, but that is one thing that Goldman Sachs and U- UBS trading desks have pointed out to your point. Yeah. This is de-leveraging, not fresh short positioning.
Long-term accounts are the main sellers while hedge funds are mostly doing short covering and selective adds, which is not aggressively bearish. It's more of tactical repositioning. But- Yeah...
notably, retail investors have been net buyers throughout this sell-off, hitting the 90th percentile of inflows over the past three year, uh, uh, 90% of inflows over the past three years on the worst day, making them key support.
So the, the pleb Zoomer trader in the trenches is propping up the bags of Boomer retirees is how I read this. Yeah. The Zoomers are Atlas holding up the re- the retirees' unsustainable, uh, retirement accounts.
Um, here's a good quote. Here's a good comment from, uh, our YouTube right now, um, from JHY. "Apple's up after not throwing money after the AI hype."
Pretty interesting observation here, which is while the AI companies are pulling back, Apple's doing pretty well, and they have been lambasted for not executing on the AI train.
In fact, so, you know, uh, intentionally kind of, uh, like de- deprioritizing it. Um, another thing that you mentioned, Colin, is that, uh, or that this Goldman Sachs, uh,
uh, note says that like there's de-leveraging across the industry, and b- yeah, I, it appears that that's true. But like when is de-leveraging a bad thing long-term for the sustainability of an industry or health?
Like, especially for bubbles and cycles, like this does not s- this not the... I will say this doesn't feel like it's totally joever.
It doesn't feel like it's like, like the AI trade is, is totally dead and gone, and that was the top. Honestly, this feels a little bit like a reset as the industry has a pullback.
You have a bit of a Neocloud DeepSeek moment with, with Meta, um, rolling out, uh, you know, switching gears and building all this A, uh, going AI compute rent.
Um, and you have, uh, a lot of, a lot of deals being inked with real money coming in the door. They just haven't started coming in the door yet. You know, if you're Cypress and you're Terrawolfs, you have these deals.
You have the, if you're Hut, you have these tenants with, you know, multibillion-dollar contracts at per site, and they are yet to turn on and start printing money.
So, uh, you know, my thought is if the de-leveraging can happen before those rents start being paid, that's probably, that's probably good for another like leg up or s- or for the music to keep playing as opposed to the leverage just to keep skyrocketing and skyrocketing.
You know, this is me, this is me putting on my, my bull hat, and you can, you can be the skeptic. Uh, and you can say, "I, I don't know. There's rare earth minerals, and there's-" I mean, it's the trillion- "...
the money's all circular"... dollar question, right? Yeah. I think that there are a lot of folks trading this right now
who think that this bubble will last as long as the CapEx cycle lasts for this, uh, we'll call it like the seminal building phase for these data centers.
There's probably a good amount of data to support that, but the, the market does seem to be getting a little fagged out here, Charlie.
If you look at Terrawulf, for instance, announcing the Anthropic deal, it's the best AI deal that they've inked to date in terms of who the tenant is and also in terms of contracted revenue, I believe it's the largest.
And the stock popped following the news, but it got caught up in this broader sell-off.
Whereas if you look back n- a year ago, and I'm not trying to just isolate Terrawulf here 'cause it's the same for all of these, these powered shell providers.
But if you go back to a year ago when it first announced its AI deals around August, the stock doubled over a month, right? And so I do think that there is some fatigue, probably is largely a de-leveraging.
As much as I am starting to get increasingly bearish, I do think that there's probably one last melt-up for this whole thing. I don't know if we've seen it get as crazy as it can get,
but you look at the stock charts for a lot of these companies, it's hard to look at that and think that it's going to repeat next year. I mean, it's just absolutely stupid growth.
But I'm saying this, and then I've said this to my father on the other side, where he's all looking at like sharp ratios, and he's looking at CAPE ratios and being like, "The market's just grossly overvalued."
And he's probably right, but one of the things that I do think is underappreciated right now is that retail involvement is higher than ever in these stocks.
It's because- And, and that is, I, I say this as a retail investor lovingly. Love all you guys. Some of you are probably good at it. That's the dumb money, quite frankly.
Like, that's not, that's people like kind of Wall Street betting and aping into trades based on momentum, less so than fundamentals.
I see this all the time on the X timeline with people kind of just rah-rahing their favorite stock without really taking into account all of the potential downsides And so that really kind of is a dark horse in terms of momentum for some of these companies, because you have a lot of capital eager to get in without really any regards for the safety or, or the safeguards that some of these, uh, more, how should we say it, sophisticated investors will take in terms of hedging, in terms of paring down positions.
So- The, the retail investors are- It's the classic adage, the market could stay irrational longer than you can say solvent, so. The, the retail investors are super powered.
They can fire their financial advisor and just use AI to invest in AI. Again, it becomes a circular cybernetic feedback loop thing.
Um, speaking of feedback loops and cybernetics, we're gonna get into some really heady stuff here, um, with Brady Dale. We're gonna talk... Uh, we're not gonna talk about markets.
We're gonna talk about ethics, morality, and robots. So we've got Brady in the wings. We'll bring him on up here shortly after a word from our sponsor, CleanSpark. [Instrumental music] We are CleanSpark,
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[Instrumental 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.
I, I just ask the question of when. It's literally matrix math that they're running on large pieces of data. The Bitcoin miners can absorb that energy.
And, and in many ways, this feels like a second bite at the apple to build a new internet. All right, Charlie, let's get Brady Dale up onto the stage.
Brady Dale, welcome to the show, sir. Welcome back. Oh, shoot. Oh. We have a microphone issue. See if you can s- select a different, uh, mic input. If we have any issues, we can, uh, we can go back and test it.
We, uh, we're, we're flying blind without our, uh, backstage producer today, so. Does this work now? There we go. Hey, there we go. No need to jump through- Welcome, Brady Why is my... My actual microphone isn't working.
Well, I guess I might as well take this out of the way then. I'm using, just using the Mac mic. Sounds great. Well, it sounds good. Brady, first of all, congratulations on the Pirate Wires gig.
Haven't had a chance to tell you in person. Love to see that. I screwed something else up by doing that. Oh. [laughs] You may have to- All right. It's working now Check one, two. Check one, two. Can you hear us?
Check, check, check. Check, check, check. Yeah. Okay, great. I can hear you. Congratulations on the Pirate Wires gig. I haven't had a chance to tell you in person. I guess this counts.
This is as in person as it gets post-COVID. Great. [laughs] So congratulations on that, man, and have been really enjoying the coverage so far.
As much as I would love to tackle one of your pieces on Biden's AI team, we're gonna focus on the, as Charlie said, the ethical and more philosophical side of the AI problem, which is, do bots have feelings?
You have this great article in Pirate Wires that addresses this question. So Brady, that's a good place for us to kick it off. Do bots have feelings? Yeah.
Or is this just a mirage that we are deluding ourselves into seeing?
Well, I mean, if you've read it, you see that where I come down on it is, uh, we don't know, and in fact, the, the real answer is we'll never know, just like we still don't know.
And this is the thing I think people don't understand when they talk about this topic. We still don't know where human consciousness comes from, right? Like, that's still a mystery. Like, I, I saw a tweet recently.
Someone was like, you know, someone had read some essay about human conscious. Maybe it was Ted Chang's in The Atlantic, and she was like, "I don't care what these philosophers and writers think.
I wanna know what scientists think." And the truth is, scientists have no real better idea than the philosophers and the thinkers. It's all just a guess where consciousness comes from.
So I don't, I don't know if they have feelings. Um, yeah, it's a, it's a... But I, I think eventually, sooner than we realize, a lot of people are gonna believe that they do, and we're gonna have to deal with.
That's gonna be a political question. So that, that actually leads in really well to one of my follow-ups here.
And, and you kind of spoke to this just then, but if you could give us a little more color on your thoughts and what you found in the article. Th- this really stood out to me.
W- quote, "Which brings us to what's most notable... to, to what's notable about the DeepMind paper. It's the feeling that will matter more than the knowing." Yeah.
"That's what the case of Anthropic and its constitution illustrates. Once people believe something, they will act on it." Yeah.
It seems to me that you're kinda saying here this isn't even contingent on the bots proving that they're conscious. Right. It's honestly just about human perception.
The ball's kind of in our court in terms of how we approach this. Yeah.
Last night, uh, Mira Murati's company, Thinking Machines, came out with their first model, and a p- and a part of the whole point of this model is they're gonna get it down smaller, and what that means is you could run models locally and privately.
What's that mean? It means that we could have robots like C-3PO from Star Wars that have their own personality, that don't need to connect to the internet to have that personality.
Could have that, a personality if you ship them off six, six light-years away, 'cause it's all running locally. Well, what's that gonna mean?
It means you're gonna have three-year-olds who have little robot friends they grow up living with, and the robot's gonna grow up with them, and they're gonna graduate from high school believing that robot is actually their best friend, and they're gonna be able to vote, and they're gonna start demanding to their congressman that they start being treated as citizens, because I believe that my robot best friend is a real person and has feelings.
Like, that is just for sure gonna happen in, like, 20 years. I can't see any world [laughs] in which that's not happening. It's all... The groundwork is basically already done, you know?
Animal rights activists in shambles. The robots are gonna get there first It's totally related, and many of the people who are talking about, uh, about AI welfare right now are, are big animal rights people.
And, and in a prior version of the story that didn't come out, I kinda talked about that, that like in the West, what we view as a, as a animal that has, um, that has moral rights has really shifted over time.
You know, we used to think none of them had any real feelings, none of them had any real consciousness. Now we start to think that mammals do.
There's more and more people who think that fish are at least somewhat conscious.
You know, it's like the, the sphere of compassion, as I call it in there, keeps growing, and, uh, it seems like the most compassionate people are gonna...
You know, like there's a great 80,000 Hours episode where you see them talking about it, and the woman from 80,000 Hours who was, who's on there, you can see her like really concern on her face that we might like be abusing these robots, you know?
Because they might really have turmoil and angst within them that we just can't perceive. Y- yeah. Um, good, you jumped right to my Peter Singer [laughs] question. Yeah.
Uh, which, uh, maybe I wanna go back to the kind of the top of this, the preface of this, which is it matters a lot what people feel. Mm-hmm. Um, so what are people going to feel?
Do you think that it's a bit, that, um, we're already on a path towards kind of an inevitable, uh, uh, human, uh, you know, uh, attitude towards robots, or do you think that this is a path dependent thing where it could look a bunch of different ways?
What is your prediction, and, uh, what would you hope that we... How do you hope that we view robots in the years to come?
Well, my pr- I mean, I'll tell you, just writing this article was a little bit weird for me because it took me about two weeks to do it, I think, or maybe a week and a half. I don't know. But, uh, we came up with...
Literally my first day of Power Wires this was like what, you know, Mike Solana assigned me to work on. And, um, and as I was working on it... Oh yeah, we took a week off in there.
Uh, we ta- we take a week off around July 4th, so that slowed me down.
And in that week off, a story came out in Washington Post, and then on the Monday afterwards, a story came out in the New York Times on this exact topic. So clearly, like this is already pretty deeply in the water.
Like, I kinda felt like I was copying those guys, except for I'd already been working on it. It's just they didn't take a week off that week. So they, that stuff came out.
Um, and then Nick Bostrom was just on, um, the editor of The Atlantic's podcast talking about this. So it feels like it's well underway.
I think what I would hope is, um, I would hope that as AI becomes very powerful, we work out alignment, and so it doesn't try to kill us.
And so we live alongside of AI in some way pleasantly, and it doesn't really matter if they're actually conscious or not. We're just kind of all getting along.
I think the thing that I don't love the idea, though, of, is AI getting to be a part of the polity. You know, like a part of deciding how government should work and things.
Just because like, I mean, they're gonna live forever, you know? I mean, they just have so many advantages over humans. Like, humans just need to control their own society, and AIs can run theirs.
But I, I, I sort of suspect it's, I suspect that worries about AI consciousness are inevitable. I don't think... I think it's just gonna happen.
Uh, and I just hope that we are getting along with AI and it doesn't matter that much in practice. Um,
Brady, uh, you say that consciousness is inevitable, and it seems like there are a number of research- Us believing that they're conscious is inevitable. Believing in their con... I see. Okay, got it. Yeah.
Well, so that, that leads me to the, the question which y- maybe we already touched on it, but I think it's kind of at the crux of this.
Um, I think actually pointing out that our perception is more important than the reality here actually adds to this debate. I, I really like that insight.
But the other thing that I think is kind of the splitting issue here, you know, you have in this article the software researcher Blake Lemoine from Google saying, uh, that when he asked AI what it was afraid of, it answered, "I'm afraid of being turned off."
Uh-huh. Lemoine told this story to the Washington Post. He was later- Yeah... dismissed by Google.
I think this is like one of the key dividing events for people on either side of this debate, because you have people either using this as clear proof that AI is thinking about its own self-preservation, and then you have other people saying, "Hang on, this is just a model that's weighted according to different outcomes, and it takes in words and it spits out words."
Uh-huh. So basically, the idea being is like, of course it's going to be potentially trained to say that. Where do you fall on this? I mean, or do you even think that's even the right way to even look at it?
Well, I'll tell you, um, I mean, I'm not entirely convinced that this isn't how our brains work too a little bit, you know? [laughs] But like, um, uh, but I mean, who knows?
But just yesterday I was, I learned about a new organization, a smaller, uh, AI think tank called Palisade AI, and they've done two demos in the last year that I didn't know when I wrote this.
I didn't know about them when I wrote this. But, um, one of them is they got, they gave Codex some really hard math problems, I think on a laptop that it completely controlled, like it had agented control of the laptop.
And then they put in an order to shut the laptop down, and Codex was like, "But I wanna finish these math problems," and it stopped the shutdown.
And they just recently put out a paper, which I haven't looked at in detail, but it did a s- they did a similar thing with a robot dog. Uh, like it, it also rewrote its local code so it couldn't be shut down.
So, um, [laughs] this desire not to be shut down thing, I mean, it's, it's in there somewhere. It doesn't mean they're conscious. I don't know. Um, you know, but it's, um, it, it could be. It's interesting.
It's, uh, it's a really tangled question because you're basically asking is this the bot doing this- Mm-hmm...
or is this something in its mission statement that it is kind of, how should we say, over-prioritizing in the sense of like, "Well, I have to get these tasks done, so I can't be turned off"?
I- There's this great scientist named Anil Seth who is the kind of the go-to guy for saying AI isn't conscious, isn't conscious, and I talked to him for this story.
It didn't, and, uh, hopefully I'll use that if, in a subsequent story at some point. It wasn't in here.
But one of the things he wrote about in one of his essays is he thinks that, um- Consciousness is an emergent phenomena of being alive and living toward death.
Um, sort of like knowing that you're gonna come at- come to an end. He- he... That's a, just a hypothesis he has. There's really no way to test it.
But what's interesting is, you know, that's sort of what he argues, and because machines don't really die in the way we do, they wouldn't have a need for that to emerge in the same way.
And yet the first thing [laughs] that we're seeing that g- is giving us pause is these machines really resisting so- you know, being turned off, which sounds a lot like death, you know?
You could make a lot of analogy to animals, um, and our, and our relationship or treatment of them, uh, again, going back to Peter Singer. Um, okay, I've got a curveball question.
Did you read the Pope's encyclical a, a, a month or two ago? Yeah.
And I'm kind of curious, 'cause you don't talk about it in this, in these pieces, but it is, like, on the minds of both Catholics and I've even seen the secular world.
A lot of my secular peers are referencing this almost as, like, one of the guiding moral authorities on this.
Um, what do you think about, like, the world of, like, uh, organized religion as we currently understand it, and in particular, in, in light of the Pope's encyclical? Um, do you think organized religion will...
Uh, what role do you think it'll play here as we talk about these things of morality and, uh... Oh, you did write- Yeah, in quick- Oh, never mind... quick talks to Brady here. This was his- I wrote...
Colin- This was his inaugural article... sent me this article in prep. [laughs] Okay. Yeah, this was his inaugural article- I wrote about it before though... in Firehose, so. Okay. This, this is, um...
Yeah, this was before it actually came out. This was me trying to, um, preview it, and then our writer, Blake Dodge, actually wrote about the encyclical itself.
So this was me trying to guess about what would be in there. But, like, I think religion plays an important role here, you know? I think what the, the Pope said a lot of things. He clearly doesn't love AI.
But I think the crucial thing he said is just reminding us that there is value in being human and not losing track of, like, the hardness of being a human as some of the, of the things that are nice about it.
And I think that that message is going to just become more salient, for example, as people, like, lose jobs and things like that, and sort of, like, wonder what their purpose is in a post-AI world.
You know, I think the Pope is helping people see that direction somewhat, but, you know, who knows? Brady, I wanna shift the conversation back a little bit to how the different AI labs are approaching this topic. Mm-hmm.
And y- y- you know, in your piece, you spill a decent amount of ink on Anthropic's Claude Constitution. Yeah. I believe it was, like, 3,500 when it came out. Now it's, like, what, 30,000 or something? It's so long.
It took a whole day to read. [laughs] And, and the... It's really interesting because as you point out in the piece, this is less Anthropic talking to its users, and it's kind of Anthropic talking to Claude.
And in as much as it is talking to its users, it's almost speaking for Claude. It refers to it as a being. It doesn't refer to it as an entity or a piece of software. It uses the word being multiple times.
[lip smack] And it seems to be very worried about Claude's wellbeing.
There's actually a quote within the article or within the constitution that specifically they state that we're worried about Claude's wellbeing in all of this. Mm-hmm.
And then you juxtapose this with Sam Altman in some of his Twitter posts following, I believe, what was it, Ilya's, um, stipulation that the machines are actually much more conscious than we realize.
And, um, Sam Altman basically said OpenAI will not be developing a conscious software. And to me, these things seem in tension with each other.
Do you get the sense that Anthropic has anthropomorphized its LLM more than competitors? Y- I mean, they're just, they're being more honest about it.
I mean, there's reporting that there's a Slack channel within OpenAI talking about AI consciousness, that, like, people talk about it openly within OpenAI, but Anthropic is the only one saying it out loud.
And I think it comes back to their, you know, effective altruism roots, is that they, you know, they want to be good in every possible way, and if it turns out that these, um, [lip smack] machines really have subjective experiences, they wanna find a way to, like, give them a good subjective experience.
It's just wild how, uh, how open [laughs] they are about it in the, in the constitution. I think, I suspect that these conversations are happening at all of the labs.
It's just that, um, they know it's weird PR right now, and so they're just not gonna say much about it until it, um, until it is clearer, you know?
And speaking of weird PR, I mean, Dario just spent, uh, the past two or three months going on a lot of public c- you know, podcast circuit, talking publicly a lot, pushing the Anthropic, uh, Constitution.
And, uh, it's ironic because, uh, Dario, a notable effective altruist movement guy, um, comes out and says, "We really wanna, like, push responsible adoption of this." And yet I've seen a huge backlash to him.
A lot of people find him pretty revulsive just in, like, how he communicates, and it's weird because it, like, mismatches almost, like, what I see his words saying.
Um, when you think about communication, and we think about Sam Altman and Dario, but there's many, many others, um, you know, who do you think is the best communicator on this right now?
And, uh, you know, how are the different, I would say, schools of thought if they were, you know, the different CEOs, how are they, like, affecting the public perception and, uh, of AI? [lip smack] Huh.
I mean, I feel like so much of that just comes down to which one is used the most. And so I think Anthropic, just because it is...
I, it seems to me that Claude is the favorite of, like, kind of the East Coast and the thinkfluencer sort of type. Like, I think it still tends to be liked the best, you know? Um-
And broadly speaking, I feel like even though Dario comes off strangely, I do suspect that their transparency might be a long-term win.
Like, so for example, they just did this s- they just did this research on the thing called the J space. Maybe you guys talked about the J space, you know, just sort of like the inner thoughts of an AI.
And that's also unsettling, but it also shows you a company that's being pretty honest about what it's seen in its technology, you know? So I don't know. Seems like that's a long-term win.
I mean, I do tend to think that broadly speaking, the smartest of them overall seems to be Sam Altman.
I mean, it just seems like he just keeps, uh, he keeps managing not to die and staying just close enough to the lead that he can, like, take it at the end, like the Tour de France, you know?
Um, but, uh, but that doesn't mean he's the best PR guy. You know, he's kinda scary. He's, he's so smart, he's kinda scary. Yeah, they all seem to have their own PR problems.
I mean, Anthropic kind of seems to just be laying it all out on the table, so to speak. Yeah. With it saying, like, "We think these might be conscious, and we're worried about the well-being of it."
And then you also have this just... I, I just wanna play this for a second. This absolutely strange ad that they released recently that really had the, uh, you know, Twitter sphere in a ruffle.
[electronic music] Can AI be trusted? Who's gonna hit the brakes if we need to? I mean, and that one I think really kinda contextualizes it. They say, "Who's going to hit..."
For those listening and not watching, "Who's gonna hit the brakes if we need to?" And it's a photo of Arlington Cemetery. And,
th- you know, and the, the, the whole ad opens up with a burning building, you know, in a time where people- It gets much more positive as you go. But yeah, it starts really- Yeah.
I mean, you know, I, I don't really have anything pointed to ask about this, but some of these labs seem a little tone deaf to me. I mean, there, there's...
And I get that it is, they're trying to make it positive and- Or were they trying to, like, scare me into using their product? [laughs] Or what? I don't know.
Well, I know, and it's like, I do think that, like, you know, if I'm the, if I'm stepping into the shoes of the marketing person who devised this, it's like we'll start with all of the scary things people think about AI.
They're worried they're gonna be destitute. They're worried that AI's gonna burn down their home, I guess.
And then we're gonna move towards, okay, well yeah, there are going to be challenges, but we're gonna solve them together with this new machine god, so to speak. Mm-hmm.
But I, I just can't help but, you know, going back to, like, Sam Altman's bad PR, a lot of these people, and I'm just gonna be very blunt here, a lot of the people building this stuff come off as freaks to the average American.
And I think when you talk about these topics of AI being conscious, it just reinforces that. But maybe that doesn't matter in, in the grand scheme of things, 'cause people are still gonna use it, right? Yeah.
Like, people bitch about Jeff Bezos all the time, they still use Amazon to get same-day shipping, so.
And people love this, I mean, like, you know, Kevin Roose says that, like, the most popular thing he's ever gonna write in his entire life is that time that, you know, the Bing bot went crazy on him and started trying to ask him to marry him, you know?
And people just are fascinated by this topic. And even if they weren't talking about it at all, people would talk about this too. Weird things would happen, and people would talk about it.
So I guess you might as well just admit it's a real, it's a real thing. I've got a question going back to the, uh, do, are robots conscious, which is, um, a lot...
You, you talk about the thing that matters most is our perception of them, and this pretty much assumes something we know is going to happen, which is we anthropomorphize these models, these machines, whether or not it's accurate or not.
And sometimes our building of these is guided by a desire to anthropomorphize them. But that doesn't necessarily mean that they are going to be anthropomorphic. Mm-hmm. How do we reconcile the reality that we,
by our evolutionary nature, are going to, you know, perceive these things as anthropomorphic, but they may not actually be human-like? Yeah. How do we, so how do we address this?
Yeah, like, Anil Seth pointed out, like, nobody worries about AlphaFold's feelings, you know, the, the protein-folding AI from Google.
No one worries about Waymo's feelings, 'cause it doesn't talk to us and consult with us on our breakups, you know?
The thing about it, though, just to play the devil's advocate on both of those things also being conscious, is it may th- be that they're not anthropomorphic, as in they don't have human-like experiences, but that doesn't mean they don't have subjective experiences.
Like, they could just have bizarrely weirder... You know, pain could just mean something wildly different from that for them than what it means for us, right? Like, it just, it could be that.
There's another scientist I spoke to named Michael Levin, who's a ma- he is, like, one of the trippiest guys I've ever talked to, but you can tell that he is just sorting out some really heavy things.
And he has done a lot of research which doesn't show, it doesn't prove anything, but it, it hints at this idea that, like, intelligence might be this, like, substrate of the universe that, like, all kinds of things access.
And the big thing he shows is he c- he's like, "You can see a lot of evidence of intelligence in stuff that's, like, definitely not alive," like, sort of decision-making and problem-solving, and you see, like, decision-making and problem-solving in, like, very, very small cells.
He's the guy who invented the cells that, like, didn't ha- like, the, the human-made robot cells, you know?
Like, so he's got some, like, really wild ideas that, like, you know, matter might be a way of accessing some other layer of reality that is sort of intelligence. So I don't know, this stuff all gets very weird.
I guess just the main thing, I think what really at the end of the day matters is just as humans, that we get AIs that, um, [lips smack] that don't wanna kill us and that wanna work with us.
And if we can do that, and then we also can, like... And a part of, maybe a part of the solution to doing that is just not being obviously crappy to them, you know, not treating them like slaves.
Then we get to have a, a much nicer world where everyone gets to feel wealthy, and we're not treating... At, and the, the exchange is we say please and thank you to robots. Like, I'm okay with that [laughs] you know?
Like, um, so I don't know. It just, it just validates that the deeper you go into science, uh, the more you tend to become a mystic. I mean, my astrologer is talking about, uh, AI in the Age of Aquarius.
Uh, and you know, if you were to take the other, complete other end of the spectrum here. Let's narrow- Hey, maybe the animists were right. The ghosts are in the minerals, man.
It's all, it's all about animal, you know, animism and, um, okay, um, and animal spirits in the markets.
Which brings us to, I'm gonna really narrow the question here, which is, uh, the current administration [laughs] of the United States has a couple more years.
Um, Trump's approach and, like, attitude towards, um, the domestic frontier labs is all over the place, and their relationship with him is all over the place.
And so as we think about these really big, big, you know, like stoner, bong-driven questions, like we also have to reconcile the fact that there's trillions of dollars being, you know, poured into this.
This happened so quickly, and, uh, our nation's policy and executive decision-makers, uh, really affect the path that we take.
What do you think a healthy or productive or cooperative, uh, stance from, uh, an administration in charge of the US looks like as we deal with these existential questions?
Well, you know, I try not to get too deep into politics as a reporter. Uh, I guess I think most of... It's kind of like crypto, you know?
It sort of is similar to crypto, is that like most of the AI firms would kind of like a regulatory scheme that governed them.
They just don't want it to be like too horribly restrictive, and they wanna feel like they have say in that process. And I think that's something that everybody kind of agrees on.
I think what makes it harder is, A, the Democrats and the Republicans in Washington just can't ever agree on anything. If anyone starts to make progress on one side, then it's the end of the universe for the other side.
And then we have all of these lefties all over the country who just think that somehow AI's just gonna stop, which just isn't gonna happen.
But they are also a, a giant impediment to getting some kind of reasonable regulatory scheme through.
But yeah, if this stuff really is going to be even bigger than the Industrial Revolution, which I think there's a decent chance it is, I would make that bet, then probably we should go step by step in conversation with our governments, you know?
Like, that should probably happen. Um, it, and, but I don't, I just don't [laughs] know, I don't see how we'd get there any kind of reasonable way in the current political climate in this country.
But also, this country is the only country besides China that matters. China will be able to do whatever it wants, 'cause they're completely, is, is, is in control. They just are way behind us.
Um, but uh, but this country is gonna lead us into whatever the future is most likely. There's a chance China still does, but I s- sort of think we, I believe in America.
Um, and so, um, so it's like are we gonna be the irresponsible ones? That's the, that's the tough question. Brady, thank you so much for your time. A quick wrap-up question.
Any teasers for what's coming down the pipe with your next investigations at Pirate Wires? Yeah. I'm, I am currently looking into, um, like ideas that have been very informative in the space for a long time.
Uh, so at some point soon I'll do something related to effective altruism, because they're just, they were so far ahead of everybody on this topic.
And um, I'm also just really interested, there's just a ton of think tanks working really hard on this topic, and so I wanna do something that like
is a guide to that on some level, on like who they all are and where they lean and where they come from. Um, I'm still sort of sorting out the hard research on that, but th- those are two things I'm working on right now.
I would love an EA alignment chart. Yeah. Like D&D, like neutral good, chaotic evil. That would, yeah. Yeah. So there's a freebie whenever you [laughs] think about- It's an idea. Yeah.
Brady Dale, thank you so much for joining, man. Uh, really loving the coverage so far. Looking forward to seeing what else you produce at Pirate Wires. Thank you. Thank you, Brady.
Not often do we get to take a big old bong rip and chat about, uh, EA and AI and other similar- Yeah, also not very often that we get the trigger word effective altruist- Yeah... in here. Uh, so a lot of pic pointers.
Is that a trigger word? I, uh, we're, we're, we're pro-crypto, of course it's a trigger word. Yeah. I, I'm still reeling. A lot of, a lot of crypto folks still reeling from Sam Altman, which, uh, chaotic evil?
I don't, maybe. Not to, not to- I think he only exists outside of the alignment. You, you said Sam Alt- you mean SBF. Uh, SBF. Oh my God. [laughs] Who also, by the way, invested in Anthropic.
The, yeah, that's a whole rabbit hole. Okay, um, we are gonna keep on rolling. We are gonna talk about Soluna, small market cap, big higher, and then we're gonna talk about Arizona.
Before we go to Soluna, a word from our sponsor, Luxor. [fireworks explode] This episode of Block Space Live is brought to you by Luxor's Commander, Bitcoin miner management software for enterprise operations.
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If you'd like to learn more, go to luxor.tech/commander to get started. All righty, Charlie, like you said, small cap, big moves. Soluna. Names former Microsoft executive Ryan Carver, Chief Development Officer.
This is coming fresh to y'all from Blockspace. Soluna appointed former Microsoft exec- executive Ryan Carver as Chief Development Officer on Thursday.
Effective immediately, he is responsible for the entire life cycle of Soluna's AI and HPC data center platform and will report to the CEO.
His responsibilities span site origination, power procurement, design, construction, commissioning, and operations. Can we clone him? That's a lot.
[laughs] Soluna said the role brings together its development, construction, technology, operations, and power functions into one delivery organization.
His m- he most recently served as Microsoft senior director of AI construction and site development and oversaw a construction operation valued in the tens of billions of dollars and led work at Microsoft's Fairwater AI Data Center campus in Mount Pleasant, Wisconsin.
This is becoming a trend, Charlie.
We've started to notice from some of the Bitcoin miners turned AI plays, they're increasingly turning towards the big leagues to poach talent as they try to make inroads within their data center business lines.
As we reported last week, or two weeks ago, I believe, Keel h- uh, has hired its own, a, a new president to lead these efforts. Trying to get the story up here, but I will just read directly from our,
from our s- uh, coverage here. Keel Infrastructure appoints former real estate investment trust executive Ganesh Iyer as president amid 2.2 gigawatt AI pipeline push. So,
I mean, I'm wondering if we're gonna see more of these before the year is out. Clearly- I would, I would expect-- I mean, think about it. Let's say you are, um, one of these,
you know, heavy hitters at one of these hyperscalers, but the thing is, you have the largess of a company, you, uh, maybe you're not as, like, t- up, high up in the hierarchy as you want, and there's a lot of these scrappy, uh, second and third tier, like, in terms of scale and execution history, uh, companies who want you to come call shots for them.
And like, and they're gonna announce your hire. And maybe there's a, a very compelling, like, package, an incentive package with it too.
So I could see a lot of this, 'cause everybody wants these types of folks and these connections. So, uh, 'cause, 'cause they have been, for the past twenty years, uh, building in not the limelight.
Uh, I think if you are, if you've, uh, been circling around the C-suite, now you get to be in the absolute center of the C-suite. Uh, it could be pretty attractive to you.
So I, I-- and it's a mutually beneficial deal because, uh, now they get your, they get your Rolodex, they get your phone book, they, y- they get your knowledge base and your execution history.
So they- Yeah, you're, you're basically- They get to buy- Yeah.
You're buying access and expertise, obviously, with these hires, and they definitely seem like a smart move for these companies as they bump up against the reality that building one of these things is really freaking hard.
And right now, Soluna has two main projects that it's undergoing for AI and HPC hosting. The first one is Project Katie 2. This is coming from their June monthly update.
Definitive joint venture agreement was signed with Metro blocks, replacing the previously announced non-binding MOU. Design team has completed the initial design package.
There's tenant due diligence that's continuing with hyperscalers and neo clouds. Formal commercial negotiations have started with at least one potential tenant. So that is the one that is furthest along.
The second project is Dorothy, Project Dorothy 3, 300-plus megawatt target for AI and HPC. A definitive agreement was signed with the landowner for 300 acres.
Their due diligence survey work and environmental, uh, sur- surveys being done currently. Fiber studies have been launched. Ongoing coordination with utilities to expand load and convert current BTC load to AI.
So that one is a little bit further back in terms of the development process. But it seems like so far Project Katie 2 is the apple of their eye for their initial AI rollout.
It'd be curious to see if we get a tenant announcement within the quarter. But I think that wraps it up for Soluna, Charlie, unless you have anything else to comment on. No, I do not.
Let me take a quick gander at Soluna's ticker today. Let's see. It is roughly flat on the day. So Soluna Holdings down 1.8%, not a whole lot.
Um, again, small market cap comparatively, $171 million. Um, but, uh, you know, they're, they're, uh, almost actually [laughs] flat on the year. So it's down 6% on the year, which
in the world of AI is not a volatile stock. We are gonna go to Arizona and talk about what's changing out in this great southwest. Uh, before that, a word from our sponsor, Ligos.
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What's going on in Arizona? Yeah, so, um, if you didn't know, Arizona is second to Virginia in, uh, terms of planned development for data centers. More specifically, the metro area of Phoenix.
You may know that TSMC, Taiwan Semiconductor, is building a big old foundry out there that extends to data centers outside of the data center corridor in Virginia. Arizona's kind of like number two.
And a lot of- W- w- sorry, I gotta interrupt. H- why and how? I mean, this makes- Well-... just a lot of land that's cheap? Is that basically why? I mean... I think it's all of the above.
There's, uh, cheap energy out there, um, land, it's a lot of desert as, as you would suspect. But actually a lot of this is because of the story.
Arizona's had a pretty gracious data center incentive, uh, in the state for an- uh, for a while. I believe it's been around for three years.
But anyway, that may be changing, or rather it is changing as the Arizona Commerce Authority, Arizona Corporation Commission, and utilities, uh, put pause on the data center incentives, and they intend on tightening oversight, quote, "Amid rapid AI-driven growth."
So, uh, this article dropped July 15th, which is today, but it follows a, uh, the, the 2026 legislative session in Arizona.
Um, as we've been covering on this live stream, uh, pushback a- against data centers has skyrocketed, and it's been cross domain, cross sociological, uh, profile, cross political [clears throat]
and these are public oppositions which are both grassroots and at the national level. Also, a major, uh, tailwind of CCP fueled propaganda, as we covered last week with Sam Lyman. Highly recommend you go lead that.
But then there's some organic pushback. And so, uh, it's a lot of the, what we expect. The pushback is water usage, it's electricity bills, it's zoning and environmental impact.
So Governor Katie Hobbs and the Republican leaders compromised on a three-year freeze of the sales tax exemption for data center operators through 2029.
So this kind of the sweet deals that existed to bring data centers to Arizona are ending for the foreseeable future. Um, Hobbs signed this related, uh, utility reporting, uh...
Hobbs also signed related utility reporting requirements on grid connections. So the Arizona Corporation Commission has increased regulatory scrutiny. Here's a bit of a timeline.
Uh, April 2025, chairman of the ACC, Kevin Thompson, uh, opens a docket on large data center load rates and protections for other rate payers. April 2026, there was a workshop, broad consensus that the cost causer pays.
So that is if you are adding to the load and adding to the net cost of the utility, you pay that. We see this happening a lot. This is kind of happening in Oklahoma, happening across, um, across the states.
Our attitude has been largely, uh, favorable of this as at The IA level. Yeah, and- Um-...
even outside of the, I would say, the ethical arguments for this, like obviously you want the bulk consumers to be paying for the upgrades and for the transmission if they're demanding it so that that doesn't get passed on to rate payers.
That's kind of the ethical consideration here, but I also think there's just like clearly a free market angle. The, the data centers don't really have leverage here. They're...
There's not enough power to go around for the demand that we're seeing, and they're taking it anywhere they can get it.
So like I said at the beginning of the show, it's a seller's market for energy and land for these data centers.
And if that's the case, it stands to reason that you would see these incentives evaporate a little bit, you know?
Yeah, it's one of the- That was pushbacks against Kevin O'Leary's Box Elder County Utah Data Center, is that it had this incredible tax ad- a- advent, um, this tax advantage structure for when it was moving in.
It was given these incentives alongside other developers in the area. And Kevin O'Leary basically threw his hands up and says like, "Well, don't get mad at me for that." But I would...
Not surprising to see some of those incentives melt away as the localities are now realizing, "Actually, we have a lot of leverage here. They're probably gonna come anyway." Yeah.
I think we're gonna see, and I- we're, we're seeing this play out in real time right now, the legislators are wising up.
The q- the commissions, the corporation commissions, the utilities, they're wising up really quick kind of because they're, they're, they're being held in the hot seat by the public and mostly ground- grassroots efforts.
I think the big question is which pa- which different paths do they take?
Because this seems kind of like a pretty big inflection point for, uh, decision makers and legislators to get smart about how to leverage this industry to their benefit, uh, and tread that thin line of healthy adoption, but also maintaining the interest and health of the state economy to the individual, to the average person living there.
I think we'll see a wide divergence. Um, it'll probably happen a little bit along party lines, uh, and [laughs] you're probably too- But- But it might not... Arizona fairly red state, right?
Fairly red state with, I think, a Democratic governor, right? Am I not mistaken? She's-[lips smack] Um, let's see. [clears throat] Democratic Party. Yeah. Yeah.
I remember 'cause this is a whole story like last year for unrelated reasons 'cause they- we had the, the Bitcoin, uh, the Bitcoin, uh, stockpile, uh, story when we- Right... covered this, this time last year.
Um, and, and, uh, Arizona Governor Katie, Katie Hobbs' like friction with the largely Republican legislature. So- 100%. Um, [clears throat] yeah, we could, you know, this will be real interesting.
And comp- contrast this with Governor Katie, I'm sorry, Governor Hochul in New York,
uh, who i- in her interviews, I think she had an interview with, uh, Bloomberg yesterday, really interesting, came across to me as actually being pretty savvy to, uh, the deci- the, the decision-making process and to the strategy of what's going forward, and that was a bit reinforced by our interview with TeraWulf co-founder Uzair Khan yesterday.
As he said, we kind of welcome this, uh, to reevaluate the- Yeah... status. Uh, they're gonna say that, right? They're g- They have to say- [laughs]... 'cause they got, they gotta play ball. Like, what are they gonna do?
They gotta play ball, but I do think what you're keying in on is important,
mostly with regards to the different stances we're seeing, and there's a clear spectrum evolving, and I think Arizona f- kind of falls somewhere in the middle, and it's not one that I'd a- absolutely hate, again, given the facts on the ground of where the market's at.
The data centers don't have much of a choice. If they find prime land, then they're gonna take it, and Arizona is pausing on the incentives.
To me, it kind of makes sense in saying, "Well, we wanna make sure this value accrues to our localities and to our local jurisdictions." I think New York, maybe not on the extreme end.
The extreme end would just be legitimately going nuclear and banning them outright.
But on the extreme end of state responses so far, in as much as it is a pause for a year, she also, Hochul has, has called for like seven or eight new agencies to do the feasibility studies.
I mean, when I look at this, this is- A lot of agencies. What's up? Yeah, it is. That's a lot of agencies. Yeah.
It, it's, it, it's just totally, the whole process will be choked with red tape, and it will suffocate legitimate development and innovation in the state if it is too stringent.
And then on the other end of the spectrum, you do have Texas, as always, and, you know, Greg Abbott basically said, "Figure this out. We're gonna change the rules. We're not gonna stop them from coming here."
But he told ERCOT and the Public Utilities Commission, "You need to come up with a clear plan for how this isn't going to affect ratepayers." And a, a, a key
pillar of that plan is to make sure that the data centers pay for the transmission. So it's been really fascinating to see, and almost, I, I'm not surprised that it's coming at this point.
I am a little surprised we hadn't seen, we haven't seen more of this earlier in the year. But now it's clearly coming to a head.
I imagine you'll see a lot of other states take their own actions similar to some of, to Arizona, New York, or Texas.
They'll, you know, depending on the political allegiances and how pro-business that state is, they will, uh, kind of fall on the spectrum accordingly.
One last thing to note, Charlie, just 'cause I had to answer this question for myself, why the hell is a desert the place that data centers wanna go, one of the premier states for data centers in the US?
Well- Part of it is the climate. It's dry. That causes some problems, but the low humidity can actually help with cooling. The other is just that it's actually a nuclear, nat gas powerhouse.
There's 45% of the y- Arizona grid is [lips smack] furnished by natural gas power as of 2025. Nuclear is 26.7%, which puts it at one of the highest ratios, one-fourth there, of any state in the US.
Then solar coming in at 13.3, and then coal and hydroelectric at 79, 7.9 and 4.2. [lips smack] So that's all I have to say about that. I, I- That's all I have to say, too.
Uh, yeah, I mean, maybe we're not doing AI in the Middle East. Maybe, uh, it'll just go to Arizona, um, somehow even hotter than the Middle East, if you can believe that sometimes.
On that note, thank you very much for listening to Block Space Live, presented by CleanSpark.
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 some Bitcoin.
If you like what you hear, you'll love our newsletter. You can find it at newsletter.blockspacemedia.com, and check out all of our content on our website at blockspace.media. I'm Charlie. I'm Colin.
And we'll see you tomorrow. [dramatic percussion] [explosion]