B (4:10)

It got what I'm telling. That's what I'm telling myself. Look, bitcoin's up, oil's up. I guess technically digital oil might be up. I don't look at that chart too often. I also don't really care about it. You love to see bitcoin go up when everything else crashes. It does. It feels good.

C (4:28)

Good.

B (4:29)

I think we should talk about the hash rate index. We do hash rate index review at the top of every episode here. Yeah.

C (4:47)

This is Luxor's data platform. If you've never used it before, if you're a bitcoin miner, you should be using it. If you're not a bitcoin miner but you're interested in what's going on with the bitcoin network vis a vis mining metrics there, there isn't any better resource out there. And as you can see, Charlie's got the hash rate chart pulled up and it's kind of been the same thing week in and week out. Charlie. I mean, hash rate is really just flat. It's basically been flat. I mean, I mean there's zoom in enough.

B (5:17)

You know, every in bitcoin is Telling you to zoom out. Let's zoom in. Yeah.

C (5:21)

If you smooth out the volatility, it is unchanged since September of last year. Which isn't that surprising because mining revenue, that is hash price is just above an all time low. I believe the all time low was $27 and few odd cents per PETA hash per day. So that means if you have a PETA hash of mining equipment, which is like roughly, which is like 5s 21s a newish model, you're making 27 bucks a day. For context. And this always blows my mind. At the peak of the hash rate or the hash price bull market in 2021 after trying to ban bitcoin mining, miners were making like $400 per PETA hash per day.

B (6:06)

Yeah. And that's not even. And we didn't measure it by PETA hash at the time. That was a Terra hash price. And Asics were on a what, 9 month to 12 month delivery timeline if you wanted to get new batches. Very chaotic time.

C (6:20)

It's kind of like super expensive.

B (6:22)

Yeah. It's also kind of like trying to buy H2 hundreds right now if you're in AIHPC. A lot of analogies there. We've actually in previous episodes riffed on this topic with other Luxor folks. But before we bring on Alex B. From ARC Labs, let's take a look at, I think one of the most disappointing things on Bitcoin. This might actually tee up a fun context. Context for Alex, which is the average Bitcoin, the transactions on the bitcoin network. Now if you're not like if you're in mining, you probably care about the hash price, but hash price eventually will be more driven by this transaction chart here, which is down pretty significantly in terms of gross number of transactions per day and then transaction revenue per day. There's not a lot of light at the end of the tunnel here for

A (7:22)

just

B (7:25)

gross activity on bitcoin.

C (7:28)

It's also an incredibly damning fact that the most transaction volume that we've had in bitcoin in recent years is from gambling on monkey pictures. Like the ordinals and inscriptions crowd.

B (7:43)

To be clear, we're gambling on tokens related to monkey pictures. Sure. But yes, it is.

C (7:49)

Yeah, I mean, runes, whatever. It's just the fact that the Bitcoin NFT and then fungible token universe that was sparked with ordinals being introduced in 2023 was the primary driver for transaction fees. I mean you could even go back and say it's the largest source of transaction fees. Since 2017, basically, since before Segwit became standard for wallet formats.

B (8:20)

Yeah. And there's going to be a bunch of different ways to skin this cat and describe the nature of transaction fees and their origination. But yeah, we're going to have to figure out what the next major stepping stone for bitcoin users is. And I think that's where our next guest probably comes in. Colin. I think let's go talk to our first.

C (8:44)

Well, let's get the, let's get the news, let's get the headline up and then so people can know what we're doing here.

B (8:52)

Yeah, let's intro the story first.

C (8:53)

Perhaps one of the more exciting fundraises.

B (8:56)

Yeah, a wild fundraiser 5.2 million seed round for ARC Labs led by Tether, the stablecoin giant to build quote programmable finance on bitcoin. They put out a press release. This, not, not, not just Tether, but this, you know, we've had Draper Associates, Folger, Axiom, Ego Death, big Bitcoin vc, Epoch or Epoch, Sats Ventures, Anchorage and some notable angels. Yeah, big story this week. It's done a lot of numbers on socials, I think. Let's just bring up the man of the hour, Alex. Okay, Alex B. Welcome to Block Space Live. Big week for you guys.

A (9:41)

Big week. It's been a long time coming. I mean kudos to the rest of the team. Added a little small part to play in terms of communicating, you know, how it all went down. But really it was the work of, of Marco, our CEO and, and mostly really the work of our technical team who have been absolutely grinding in the background and it really serves as a validation of the I think technology direction that we took, I think a little more than a year ago now.

B (10:15)

So I've, I've tried out the Arcade app and one thing I think a lot of people actually get confused about is like the difference between ARC Labs, Arcade and then what is ARC in general. Do you have like a 1 minute pitch try to explain the difference here?

A (10:35)

Yeah, we'll try to make it quick. You know, ARC is kind of like the fundamental primitive that is being leveraged here. It is this new technology that was introduced talking about at least three years ago now and it, it is now being deployed by different teams in different ways. And I think the best way to go about, at least the way that we explain it is arc, fundamentally speaking is kind of like a batching protocol for on chain operations. Allows you to nest and compact a lot of off chain execution into taproot trees. And allow users to get a bit of a dynamic that, you know, people that have interacted with other applications and protocol across the pon in the webtree environment where you use roll up, you do your stuff off chain, you commit the finality of those operation on chain. And so Arcade is our implementation of the ARC protocol. Arcade is kind of like our commercial platform. And Arc Lab is initially what was more so a research company pushing forward development of the ARC protocol. But I think now we're turning into an infrastructure provider and we're also looking at avenues to actually create products ourselves on top of our own platform. Because we think, you know, we work closely with the protocol, we know exactly how to leverage it best. So the Arcade Wallet which you've used is our first iteration of this. It was kind of a bit of a throwaway prototype initially. But yeah, we, we are starting to have some interesting ambitions for a lot of that stuff.

C (12:23)

So with regards to you talking about like ark is the primitive behind this whole thing and then Arcade is Yalls Wallet, are you hoping other teams to build on top of this? Is that the, the roadmap and. Or is that in the roadmap? Is that part of the strategy?

A (12:36)

100%. I mean, we're already talking with a lot of partners. You know, we have people that are building on top of Arcade at the moment. One of them, the major one really being bolts. One of the gold standard in terms of cross chain, bitcoin, non custodial bridge really. And bolts came to us and we had an early relationship because obviously lightning is an important part of the stack that we're building. But we didn't want to build lightning in house and operate the service ourselves. And there's a lot of reason why you wouldn't want to do that. First off, we don't have the expertise to be doing this. And it was kind of obvious for us to go to a team like Bulls, who's really been spearheading a lot of that stuff early on. They're probably covering most of the existing liquid to Lightning swaps on chain to lightning swap across the entire industry. And so we know that they operate one of the biggest, most reliable nodes on the Lightning network. So why not partner with them? What this gives us also is I think it creates a bit of a separation of duties. You don't want to be running all of the rails going in and out of the ARC protocol because you want to remove any appearance of ability to censor people moving in and out. I think if you do that, you avoid creating this single point of failure where if we go down or if we get compromised for whatever reason at least bolts more likely than not is not compromised at the same time. So this gives stronger security properties for the users of the system. We also have people like Landisat and lendaswap that are building on top of Arcade. It's very much an ecosystem efforts that we're building here. But again obviously we want to lead the charge and we're looking to maybe set a bit of a pace in terms of what we think is really cool to build with the entire stack. And we're going to work organically bottom up and top down as well in terms of integrators.

B (14:46)

So one of those super clear

A (14:51)

I

B (14:51)

say points you guys have shot out is stablecoins and settlement, especially with the tether lead. I guess talk a bit about the focus on stablecoins and potential co collaboration with tether. Like simple coins are kind of the holy grail of, of like big of this new financial Rails use case. What are your thoughts on this?

A (15:18)

They're definitely the, the, the hot. You know they're, they're definitely the hot topic at the moment and for good reason. You know you look at any chart in charts in crypto right now and a lot of the action is. Looks like things are stalling or whatnot. But if you look at this stablecoin issuance chart, it's up into the right uh, and it really climb because there's definitely this sort of, you know, there's progress from a regulatory perspective. I think that that was the break, big break, right. And the Clarity act and the, the, the other one which I forget. But anyways, you know you can feel that institutions are getting warming up to the idea and therefore it becomes very important. I think kind of, I mean you can't avoid having some sort of stablecoin infrastructure if you're building a platform for digital finance. And at the end of the day that's kind of like what we're building. We're not necessarily building. The way that we look at it is like we have bitcoin foundations but we don't necessarily have a bitcoin identity. Ultimately we're bitcoiners and we very much believe that bitcoin is the most important asset in the ecosystem and it's more likely than not going to be the form of money that everyone uses in the future. But from a pragmatic perspective we have a landscape where people are using stablecoin. People are using stablecoin for payments much more than probably they're using Bitcoin for payment. And so how do we, are we able to kind of create an ecosystem where people are able to move in and out of stable coins, use stable coins at their convenience, but always if they want to, you know, stay with their Bitcoin, be able to kind of like keep the properties that we, we appreciate from Bitcoin, which is self custody and all that stuff. So obviously tether becomes a major partner from that perspective. Now it's going to be a bit of a process for us to eventually hopefully see issuance on the arcade platform in terms of tether actually being minted there. And it's interesting because there are different ways that this is being played out now, especially because all of these siloed component of different chains are kind of being broken apart right now. If you look at the USDT0 protocol which allows cross chain and so where the tether is being issued nowadays doesn't matter too much because you're able to move it across chain in a very, very, very efficient way. And so something like USDT0 becomes interesting. And this is where we think we have a bit of a leg up because in order to be implementing those cross chain protocol, you need native programmability components. And this is what has been lacking, we believe when having conversations around payment is at the end of the day, payment is just not just sending money from A to B. There's a whole commercial realm where you know, you need different functions and you need different features to be able to really be able to process payments at scale.

B (18:24)

You. Yeah, you guys have this, you put out a great article this past week on stablecoins payment, the case against payment blockchains. Very spicy. Because all these payment blockchains, Tempo, they're, they're raising millions to just be a payments blockchain. Why programmable money, not platforms.

A (18:50)

Well, I mean, I think when you look at what exactly you're trying to do when you're sending payments and how the actual payment infrastructure and architecture operates in the real world today. You look at what stripe is as a business, what Visa is as a business. It is not a business of simply again moving dollars from one end to another. It's a business that handles fraud, that handles accounting, that handles chargebacks and all these kinds of things which are not going to disappear just because we're moving our payments from dollars in a bank account to dollars in a stable coin or Bitcoin. Right. So I mean there's an argument to be made that obviously if you're doing end to End payment, peer to peer payment. Maybe you don't need the fraud protection in certain circumstances, but I think there's clear value in those features and this is why those companies are so successful. So if you're thinking about, well, how have we thought about payments in the Bitcoin landscape so far? It really has been lightning and on chain and these things which are great because we say they achieve finality, the payment cannot be reversed. And we kind of proclaim that as a feature and it is to some extent, but there's a lot of scenarios where an instant finality of a payment can be a pain in the ass actually, if you need to handle disputes between buyers and sellers and things like this. And then why do we need programmable money rather than platforms? Well, really it's a perspective where you look at what Stripe is building with Tempo, which Stripe brings a lot of value in being this economic agent in the payment architecture, where yes, they're able to provide a trustworthy third party which is able to remediate relationship and commercial relationship between entities, but you don't want to be put in a place where the settlement layer, which actually orchestrates the settlement of whatever is the outcome of these commercial operation is also controlled by someone like Stripe by way of Tempo. Right? Because then you create sort of issues with regards to neutrality. Obviously they're going to create all of these bigger consortiums and say, listen, we have a bunch of very important institutions sitting on the board of Tempo and I'm not suggesting they're going to compromise people's money. But at the end of the day, if you want to build from a global perspective, Tempo could be very successful in the US but if someone in the global south is, someone in China, in Asia is going to trust Tempo's commercial payment infrastructure, we think that's unlikely. All of the features that these guys are busy delivering on, again, those payment blockchains, we think actually if you look at closely at the Bitcoin architecture and the way that Bitcoin UTXO function, you're able to replicate those, these guys. For example, Tempo just a couple of days ago pushed a feature, everyone was sharing it on X and it was basically, they were basically shilling as if they found out about deterministic wallets, the ability to create single addresses for deposit and then be able to sweep that in a single transaction without I think when we go back to first principles and see, okay, what are we able to build with the stack that we have and using Bitcoin, but extending Bitcoin via Arcade and the programmable component, we're able to go head to head with these platforms while maintaining a sense of neutrality for all actors that are participating.

C (22:46)

So Alex, zooming out a little bit, can you tell us what the ideal user profile is for ARK and Arcade and also give us a few examples of how people might be interacting with this?

A (23:00)

Sure. I mean, I mean you got to look at the bit of the timeline of how we're delivering products and services. So at the moment the main use cases that we've been putting the foundation for is very much transferring money. So you know, we had to create this A to B transfers, these lightning swaps in and out of the system to bring connectivity to Coinbase and all of the exchanges now that really support lightning. But then you look at escrow components. So what if you have kind of a, you know, a local market for to buy Bitcoin? You know, we forget about things like local bitcoins and platforms like this which normally would have used escrow systems. But the issue with escrow systems built on chain is they were kind of very inefficient and came with all of the issue of using Bitcoin. Bitcoin on chain. So, you know, there's for example, if you're familiar with Peach Bitcoin, which is a very, sort of very popular in Europe in terms of being able to intermediate these transactions between buyers and sellers. There are things like this, but ultimately we want to get into a position where payment processors, we want to get into a position where lending businesses are able to work with us. Because you're able to kind of get the clear transparent programmable assurance that you normally get out of Bitcoin, but make that work at scale with kind of the security that we've all come to expect out of Bitcoin. Most importantly, not having to bridge your money in and out of different systems with much lesser security guarantees. In the future, obviously, as we accelerate forward with the help of this fundraise as well, is we've got a crack team of engineering who's putting together a full stack sort of modern development experience for Bitcoin, which has never existed before. And it's going to be something where any developer that has been familiar with the Web3 environment, whether it's Solana or DVM, is finally going to be able to come to Bitcoin and, and be like, okay, look, I don't have to build OPCAD script directly on top with the stack and very, very hard and just unfamiliar type of development environment. No, we're going to Give them compilers, languages which they're familiar with. And with the beauty of AI now and the beauty of being able to deliver that through agent skills, this is going to be very interesting. Charlie might be put in a situation where he's going to be able to create his own lending and borrowing service or maybe create his own equivalent of a morpho vault to deposit whatever token he wants to play around with. So this is really the goal for us. I think the audience is developers, I think the audience is businesses and institutions. I really want to do more advanced things with their bitcoin than just again sending it from A to B. Yeah,

B (26:12)

I'm excited to vibe code some apps on Arcade. I guess to round this out, you're talking about some big ideas. Stablecoins, settlements, agent to agent, payments. What's like one of the curveball goofy things you think we might see on Arkansas? I'm certain you see lots of folks trying to throw stuff at the wall. I don't know what's.

A (26:37)

Well, I mean, I think something that would be really fun is that maybe we're kind of able to shake a bit of the conversation in bitcoin around covenants and around all of this soft fork debate because we'll be in a position where, listen, you guys have been talking about covenants for the last five years. Why don't you come play around with covenants on arcade? We've had teams already approaching us wanting to build ZK verifiers on top of Arcade script and I think that's going to create an interesting again, curveball to the conversation because then people are going to realize that, well, you might be able to do that on chain. If we are able to wrangle all the descript component, we need to be able to do it on chain. But are you going to be able to replicate the, the experience that you get out of having this off chain execution? Right. And most likely it's not going to be the case. But I'm also very interested about this ability for people to get familiarized with covenants and this, you know, all of the FUD that has. Because at the end of the day, listen, if there's covenants that are coming on chain will be some of the biggest beneficiaries. So we're certainly not against them. But I think it's going to be interesting for people to build applications with it and certainly it's going to help kind of like probably fight a lot of the fudge that surrounds this conversation and say, listen, this is how it's playing out. You can test it, you can look at the code and this is what you're able to achieve. So maybe, you know, I don't know which way it's going to shake things up, but certainly that's going to be interesting.

C (28:17)

Alex, we're running up on time. So quick lightning question, no pun intended. Does ARC identify as an L2 and is that even a useful identifier anymore?

A (28:30)

Well, I mean, I don't answer it for ARC because I think there is no such thing as ARC anymore. I mean there is a bit of a spec of a protocol with again key technology pillar about how people are able to leverage it. But as I said early on, everything that's building on top of ARC now is taking quite a different technology direction from what the original proposal was. And therefore ARK itself, I don't consider a layer two ark. I consider a technology that enables people to be able to build what could be layer twos. But I think the bigger question is do people even want to hear about layer twos anymore? And I think we've come to the conclusion that that's just not the case. I think what you should be trying to do is just build on bitcoin. I think people are not trying to hear about lightning anymore. They just want products and services that leverage the best technology. But really most people don't care about technology. Suddenly you care about the security guarantees and that's for something. That's something for integrators and operators to discuss. But ultimately, you know, the getting bogged down into the layer two conversation, we've decided to completely move away from this because it's not very productive and it just a bit of a. It really is much more. It's nerd sniping more than anything it feels like.

B (29:55)

Alex, thank you so much for coming on Block Space today. We'll certainly have you back. As ARK continues to roll out cool stuff. ARC Labs continues to roll out arcade.

A (30:05)

Arcade.

B (30:06)

Arcade continues to roll out cool stuff. And you can correct me every time that I say it wrong. Cheers, thank you very much.

A (30:13)

Thank you so much. Have a good one.

C (30:15)

We are CleanSpark, America's Bitcoin miner. A publicly traded company company with the largest operating hash rate powered entirely by self operated infrastructure across four states. This is our proof of work. We are setting the standard for what's next. Learn more about the intersection of energy and bitcoin@cleanspark.com got our next segment coming up. We have Rory Murray of CleanSpark and Alex Bloom of 2 Prime. We're be talking about the market a little bit and how bitcoin management is changing for some of these public miners, and also what the lending landscape looks like as bitcoin is recovering off of a yearly low. So Rory and Alice, throw them up here.

B (31:08)

Here we go.

C (31:09)

Welcome to the stage, gentlemen. How we doing today?

D (31:14)

Hey, everybody.

E (31:15)

Doing well.

B (31:16)

How are you? Pretty good.

C (31:18)

You know, we were opening up this live stream, looking at bitcoin actually doing really well as the world is falling apart, it seems. And, you know, we pulled up this watcher guru tweet where the S and P and the rest of the market hemorrhaged about 1 trillion yesterday. But Bitcoin is up almost 10% over the last week. So, Alex and Rory, we'll start with you, Alex, then move on to you, Rory. What's your take about the action right now? Are you cautiously bullish about this? Is it too late, is it too early to say that bitcoin's actually acting as a safe haven asset during this conflict? What's your take?

E (31:57)

I would say it's definitely too early to say that. I mean, there's very limited, like, correlation right now and. Or, you know, Bitcoin's down 50%, so that if it's rebounded 10% off the lows, that doesn't really, like, compel me as a great store of value. Definitely gold has shined much better over

D (32:17)

this period than why did we invite this guy?

B (32:21)

Any more bullishness, Alex? I'm just kidding.

E (32:23)

Bitcoin's just. Just eat steak and buy bitcoin and everything is. Is solid, I promise you. And I think if you just look at, like a historical correlation study, there's just not enough data to say that this really means anything. I think there's kind of bitcoin specific factors maybe around ETF flows and stretch. Buying absurd amounts of bitcoin the last couple of days, that might be buoying the price, but we front ran the whole collapse of the market, and so it might front. Run a run back up. But I wouldn't say it's an amazing store value now that it's down, I don't know, 45% instead of 50% from the highest. Sorry.

C (33:05)

No, it's okay. We like pragmatism. Rory, give us some Hopium, though. No, I just tell me what you think.

D (33:11)

No, no, seriously. And this is why, look, when we're talking about doing this, this is. I think it's great to get. You know, we certainly don't. And, you know, obviously we're talking to Two of the best in the business here. But there's not necessarily a dearth of bitcoin podcast content out there. What I do think that there is a dearth of is real market practitioner talk. People that are really in the, in the weeds every day making markets, kind of, you know, trading between things, managing Deltas and Gamma and kind of all that, all that kind of thing. So I'm really happy to get on, hear a little bit more talk about it from our side, from the buy side and then Alex is kind of in between. But also, you know, obviously with two prime is, is kind of surfacing a lot of clients there too. And so I, I think it's, it's great to hear those, those takes. I appreciate the pragmatism. I, I'm with you like philosophically on the, you know, it's, I was looking at the Arthur Hayes tweet last night and it's, you know, BTC up 7% gold down 2%, NASDAQ down 50 basis points since the US Iran war started on February 28th. Now I saw another tweet that's basically been saying that we've been pricing in, in bitcoin the closer of closer closure of the Strait of Hermuts since September. So, you know, so there's definitely that aspect of things as well. Like let's be very, let's be very frank and, and honest about it. That being said, you know, I think all the, I think all the things you're talking about, Alex, are, are absolutely contributing to it. It definitely feels like there's a stretch bid in the market in the last couple days. You know, I'm, I'm not following the story tick for tick and, and, and not super in the weeds on the technicalities, but I'm seeing a lot of kind of, you know, news flow on, on Twitter about they're seeing this amount of volume. They kind of the read through generally the correlation is that generally means that sailors in the market, if they're getting this amount of volume in the, in the underlyer, that means that he's able to be selling this amount and you're likely to see kind of some future flows into bitcoin that is outstrapped, that is outstripping, you know, minor supply right now. I also just think we've got, we've reached, but I also think it's like everything in bitcoin we've reached a point of exhaustion to some degree. I think my goodness, let's hope in kind of the OG coin selling. I think that There we've reached a point of, if not exhaustion, at least a place of pause where I think some of the, the weaker btc, tcs and DAT cos have kind of slowly started to see themselves out in certain ways. I think the ones that have more staying power, like I, I really have always been a big fan of, of Meta planet and Dylan McLaren, what those guys are doing over there. They announced some really interesting things the other day. You know, I've, I, you know, continue to believe that Sailor has, has, has, has, has resolved in a way that I don't think that people necessarily fully kind of price in. You can, we can debate kind of the, the merits of. What I see is, is I think that bitcoin often leads things because it's a tip of the spear asset. It often leads things to the downside, it often leads us to the upside. The price action I've been seeing is it feels like we are. The sell offs are coming due to macro conditions and getting caught in with kind of the daily sell offs or risk or kind of risk management people not wanting to belong into the weekend. But it feels a little bit like a beach ball right here where it keeps kind of trying to pop up and then some more macro stuff kind of comes up and then there' more flows on the other side. And bitcoin's always been a, been a, been a stock and a flow asset where the stock kind of constricts to the point where, you know, sailors buying up X percent of it, you take less kind of supply off with the OGs and then you kind of have a lower float asset and then you just get a little bit of that flow in there and you get these kind of up, you kind of get these outsized moves to the upside or the downside. So I, I actually am, I wouldn't even just say I'm cautiously optimistic. I'm fully into the optimistic category, not, not painfully optimistic. But I would say I'm, I'm optimistic with the price action that I've seen over the last couple of weeks and, and some of the developments in the market.

B (37:24)

Yeah, thanks for that, that bullishness. Rory, I'm gonna throw a question to Alex here, which is, so Bitcoin drew down 50% over the past several months. How did your loan book fair? And then what are you seeing as far as like borrower behavior? What are they doing right now in these 60 and $70,000 Bitcoin?

E (37:46)

Yeah, well, I should say for us, the minimum loan size we do is $10 million. So it's much more on the institutional side. I think our average loan size is

D (37:55)

something like 60 million.

E (37:57)

And so I think you see a lot more of these liquidations occur on the retail side of things.

D (38:04)

However, actually for the first time in

E (38:06)

our history, we actually did have to actually liquidate a client and sell off a couple $10 million of Bitcoin. We saw other clients that weren't liquidated in the sense of a default, but they said, hey, we want to sell our bitcoin and get out of this loan and pay off the debt. And so that was new for us. But it's much more orderly than like a retail lending book. And I think in proportional smaller scale than you would see. I believe like lead in, they did this ABS securitized loan book right in the midst of the market crash in February. And I believe 25% of that $188 million loan book was liquidated while they were trying to sell it. Which one hand shows, oh, we can do orderly liquidations and protect principal, which is a good thing. But at the same time, 25% of the book got blown out. And I think that was comprised of 5,000 loans. We have single loans greater than 188 million. So it's just a completely different market. That being said, you know, I would say lending in general is pretty highly correlated to the price of bitcoin. You see more lending activity when the price has gone up and you see less when the price is down. There are some groups that are like, we've done like $50 million of loans this month and there are groups taking advantage and, or they just have to, they need to pay for things and they don't get to choose when they take out the loan. And so some groups like that, but it definitely slows down. I think the other thing that worries me about the lending market is a lot of funds in defi are in like there's nothing to do in defi right now. And the rates are very low. And so you have people willing to allocate to lending protocols at 3 to 5%. And then so it's reduced the rates of lending all across the board. Where institutions are now like, oh, I'm getting offers at 5, 6%. However, the money in defi is open term floating rate money, which means it could be called back sometimes one day, seven day notice. And the rate can change depending upon supply and demand dynamics. So what you can have is if bitcoin goes up to 80k, 90k and the DeFi market comes back alive, you get A huge rush on all these money being pulled out of these protocols or the rate goes up to 20% or something. But these lenders in the middle, defi lenders are lending out fixed term, fixed rate loans. So they're in a year long loan with some institution or bitcoin miner. And on the other side their money is actually leaving the door. And I think there's a potential for that to cause real harm in the market. And I think some institutional borrowers don't even know the end source of their money are these defi pools. And so they don't even know that they're exposing themselves to this risk. We of course don't do any of that stuff. And that's why I'm obviously biased towards not doing that. But I think that could really have a problem on the market. Right when the market picks back up, you might see people trying to move loans out of defi stuff into more stable sources, but not being able to make the leap in time. And you could see major problems.

C (41:07)

And one of the other maybe not unspoken, but underappreciated aspects of the defi ecosystem is you're interacting with a smart contract that may have been poorly audited. I mean, I'm sure some of these shops do their due diligence, right? No doubt. But we've seen headline after headline of

B (41:21)

these places having vulnerabilities and AI is exploiting them too. But that's another topic.

C (41:28)

Rory, kicking a similar question to you. How does this volatility change how you manage CleanSpark's Bitcoin stack? I mean this has got to be. Are you thriving in this? Are you in your lane and flourishing? Or does this have you kind of on the edge of your seat as

D (41:43)

we talked about back in. I think, was it, when were we in Nashville talking about, yeah, January, how every day is. Is. Is kind of a bad day in, in. In digital asset management because your, your job is to be on the other side of everything, essentially. So, you know, we talked about, you know, the, the long term big picture is, is we are definitely thriving. You know, the day to day is, is we are, you know, we are, we definitely benefit from the volatility we talked about. I think, I think quarter when we threw up those. What I thought, what I personally felt like were some, some really nice numbers. We did about $13.2 million in revenues for the last quarter. We definitely benefited from that volatility and were able to harvest that. I think this quarter it's a little bit more mixed. You know, I think that we are still benefiting on kind of the call rewriting side. We're benefiting from some of the higher overall volatility. We have run a two way book and so there have been some things where the other side of the book has, has kind of worked against us, which we would expect in, in a period, particularly in a period of, of. Of. Of high, of, of extreme volatility. You know, we saw the third worst kind of drawdown day in, in, in bitcoin history. And the other ones were kind of in very different eras. You know, that definitely we weren't, we weren't, you know, it's not like that was completely outside or we were totally unimpacted by that. But again, that's why we have the way that we do things, which is that we have two sides of the book. We benefit from the call from, right from rolling the calls down, both as volatility goes up and then kind of being able to double, triple dip. We like to kind of, you know, we like to sell high and buy low and we like to do that structurally there will be periods where that will be that might not mark the absolute best or kind of look the best, but we believe that over a cycle that puts us in a strong position to accumulate dollars, accumulate coin and benefit from volatility over time. And what I say is that we haven't, you know, we've been in constant, constant communication with our investment committee and our management team about kind of how things have been unfolding. There was a little bit of risk management just because one of the things I learned kind of early on in my career is that, you know, it's like anybody with, you know, any pod shop, any value at risk, as that volatility goes up, sometimes you do have to take some exposures down. So that we did. There was a little bit of that kind of in, in early February where we just said to ourselves, hey, you know, the, the outlook is a little bit more unclear. The volatility is high and we're getting these really, really outsized moves. So I would rather trade smaller and lower for longer rather than try to be a hero and really kind of end up in, in a big hole. And so, you know, sometimes you got to take down your exposures and then you got to kind of start hitting singles and doubles rather than kind of go for those triples and home runs which we've been really doing at the end of last quarter because we had that kind of, we had that, that margin that we were able to play with and So I just think we're in singles and I think we're in singles and doubles territory. You know, we're continuing to benefit. I've taken the overall size of the trading down. If we were doing kind of 100x at a time, we're doing 50 to kind of 25. I even just over the last couple days, I think we're starting to get, or last week or so I would say I'm starting to see that margin come back. I'm starting to see kind of my, the signals that we like to follow and watch are kind of giving me some, some comfort in, in starting to get, to get back out there. And so I think that we' comfortable that at least through, you know, I think January was a very good month. I think that, you know, February was, was very volatile and we kind of felt that. And I think March, we're kind of back into that singles and doubles territory and feeling really good about this quarter, but really just about the overall strategy for, for the rest of the year.

C (45:24)

Well, Rory and Alex to put a cap on it. I want to believe in the beach ball, I really do. But I, I think Alex has got, got a point here that you know, maybe drawing down 50% and then acting a little, then acting good during this, you know, this conflict is maybe not what we want to see.

E (45:41)

But anyway, I would just say, you know, on the flip side, things have been so bad, we've wiped out so much leverage. When we touch 60k, we saw a huge blowout of implied volatility, went up to 100, funding rates went down to negative like 20%. Like this is what a bottom would look like statistically at least a local bottom. It could be just a local one and not a cycle bottom. But we definitely hit some very extreme moments there in February. And so I'm hopeful the worst is behind us. But I just wouldn't argue this is an amazing inflation hedge at the moment.

C (46:16)

Yeah. And I think just to close out the worry that I have and I think a lot of people who are looking at the macro environment has like, if bitcoin did that while stocks are still close to their all time high, what happens when we get a real market downturn?

B (46:28)

Right.

C (46:29)

And so hopefully we pop up a little bit. Nice to see 80, 90, 100k again so we have a little more cushion if the sky falls through. But Alex and Rory, thank you all so much for joining, really appreciate it. Great commentary and we hope you all have a great weekend.

D (46:43)

Thanks everyone. Appreciate you having me.

B (46:45)

Thanks, guys. All righty, next. Now we have the Luxur folks. Specifically we got Jamie Gill who slings Asics over there at Luxor. Let's bring him up on stage. James, welcome.

C (47:04)

Thanks so much.

F (47:04)

Thanks for having me. Stoked to be here.

C (47:06)

Yeah, good to see you man. And you're, you're closing out the guest segments for today and you know we, we started on a bit of a high note with Ark and then we're kind of, kind of receding into the more bearish news as, as kind of we talked about at the hash rate index segment. The mining market is brutal now you know, we published a synopsis of Luxor's look back series for February. Really great. Go check out our Twitter page if you're interested in some data on how February shook out for miners because it was the most volatile month since the summer of 2021 after the China mining ban in terms of difficulty swings, bitcoin price and all of these metrics. But you know Jamie, as we were discussing on the segment at the top of the show, hash price is super compressed right now. It's just above its all time low. And you also have this AI pivot for miners where they're selling machines into the secondary market. So I'm curious from Yalls end, when you look at the ASIC trading desk, who is buying machines right now and what regions are actually active in the market?

F (48:11)

Yeah, it's a great question. And the bear market doesn't always need to be so bleak. It can be a time for action, it can be a time for consolidation and an opportunity to set yourself up for success, to be able to accelerate when that bull market comes back. And that's what we're seeing. The most sophisticated operators have set themselves up for this. They've been through multiple cycles, they're ready for these bear markets and they've enabled themselves to be buying when there's blood in the streets, as the saying goes. And compressed hash price and all time low hash price brings with it cycle low ASIC pricing. And as we know ASIC prices do track hash price pretty closely. So we are still seeing meaningful demand in our, on our ASIC brokerage desk. And for reference this quarter alone we've transacted over $35 million worth of brokerage revenue and a large majority of that is on the secondary market. About 85% of that is used machines. So yeah, the demand is largely concentrated on those operators with access to low cost of power of course. And you know these operators that are still buying right now, they're using this to their advantage. And it's mainly ASIC fleet refreshes. So those miners, there's still a ton of mid generation machines out there that aren't their break even hash cost and they're feeling the pain, feeling the pressure. And now is really the time where even if you're optimized, you're using Lux os, you've made sure that you're running as profitably as possible right now. Now's the time where you get pushed to either, you know, refresh, continue on this hamster wheel or pivot. And to your point, yes, in some cases a pivot to AI HPC does make sense for some of the larger operators with more access to capital. But there is still a large market segment that maybe don't have the, we'll say like expertise or access to capital to make that pivot. And mining still is the most profitable way to monetize that access to energy. So this is the strong push needed to move into that fleet refresh. And those miners at this point generally targeting like a sub 15 joules per terahash kind of model, moving away from the 25 to 30 joules per terahash models like the J Pros and the M 30s coming up, aiming for those 21 series which right now are at you know, cycle low prices of like sub 21xps going. We've got a batch right now going for less than $9 a terahash which is crazy to think just a few months ago you know, those were at like 16 a terahash. JPro is now trading under a dollar a terra hash.

C (51:10)

It's J Pro is looking like the S9 brother. I mean, you know what I mean?

B (51:16)

Yeah, you'll be paying us to come pick him up in a truck like it's and I just over summer 2020

C (51:23)

and just a highlight for those who are not, you know, bitcoin mining Data Hogs. The S19 at the peak of the 2021 bull market was going for like 10 to $12,000 and now they're going for like 500, 800.

F (51:40)

Not even $80. No $80 man ad at 100, 100 terra hash average for the J Pro and you can get them for for $80 with DOA cleaned and tested from our repair partners and but there's still a market for those to be used because with with Luxos on a J Pro you move it from 29.5 joules per terahash which is stock nameplate, you bring it down, you can get like 22, 23 Joules of Terrahash which moves it entirely from an old gen machine to a mid gen machine. It makes it viable at 5 cent. Well in current hash price environments, let's say 4 cent power but. But expecting a rebound. It does make it viable for some operators, but it is flirting with scrap value like S19 vanillas, the 95T, that's over 30 joules of terrahash, that's pretty much at scrap value which is what we're seeing right now. With the market rebound those 19 vanillas might come back. So those scrapping it may kick themselves later down the line. But assuming sustained compressed hash price like this, then yeah, we're definitely flirting with scrap. Getting close to scrap value for a lot of those older gen miners.

B (52:51)

Yeah and this is pretty interesting because aftermarket firmware is really only started like really changing the game in the past few years. I know firmware may not be necessarily your specialty but like do you think that going forwards like firmware, especially for the secondary market is going to keep the is like maybe the deciding factor for a lot of those older rigs.

F (53:14)

Firmware is and has been for some time a deciding factor for those operators on even new gen. So we're not even just going to keep it on focused on mid gen, those operators on new generation machines. We're talking like on an S21 XP Lux OS default still at 270 terahash we can increase efficiency by 10%. So right off the bat you get those machines, you plug them in, you put Luxos on there, you got 10% less power consumption, 10% increase in efficiency. So like it is a differentiating factor for operators. And using Lux OS is, is a key, a key factor especially in times of compressed hash price or when the bull market's happening. You got to be maximizing and you want the freedom to be able to adjust that clock speed. But yeah, now is the time. Unfortunately a lot of operators, they go into a hole, they don't want it. It's the bolt, it's the bear market, it's winter, you know, it's time to. But what really should be happening is it's time to accelerate. It's time to get aggressive and step on, step on the gas. And like our ecosystem as a whole is built for times like this for the bear markets as well as the bull. It's built for people to be able to sell forward their hash rate, receive that upfront capital, execute, buy hardware now and then reap the benefits when that bull market does come back.

C (54:38)

Go ahead Charlie.

B (54:40)

Well I just got another question on the secondary market because like I don't know if you get this question before or how we haven't had a whole like we haven't had, I'll say water cooled rigs in the market at scale for a long time. I'm kind of curious what you're seeing on the secondary market for those, if there is a secondary market because a lot of those have to be built like into a whole like closed loop system and it's not like it's not the same as kind of like rack and stack as the air cooled. I don't know, like are you seeing differences in how the secondary market, if there is one for these water or direct to chip cooled rigs?

F (55:19)

Absolutely. And this time next year I think we're going to have a very different conversation and there's going to be a different answer for that question. Manufacturers are pushing hydro as we know, operators are moving towards hydro because that gives them, you know, a more efficient footprint. Of course it also potentially down the line leads to some optionality for AI swap outs because of the footprint, the form factor being in some cases, you know, compatible with some AI build outs. So that takes time because it takes time for hydro build outs. It takes time for operators to feel comfortable with this pivot from air cooled. It's happening and there are, there is a small market for these used hydros but it's not something we're transacting frequently. We are moving new gen or excuse me, like new hydro models and increasingly more so but from a secondary market side we're not seeing as much volume there.

C (56:17)

Jamie, as a closing question here, we wrote about the conflict in Iran and the close of the Strait of Hormuz. For today's newsletter I contacted Lauren Lynn of, of Luxor, head of software and hardware about this question. Just want to kick it to you. What are the immediate knock on effects of this war as it relates to logistics for bitcoin mining, Asics and for trading them, shipping them. And how do you think this will affect Capex regarding shipping costs over the next year or so?

F (56:48)

Yeah, I think there's a lot of factors and even if there's a ceasefire signed like today, I don't think these factors rebound or come back to normal immediately.

A (56:59)

So.

F (56:59)

So like obviously shipping lines just totally rerouted away from the Strait of Hormuz and the increasing fuel costs in general, this increases lead time, increases costs. The Middle east region obviously is going to be the most immediately and directly affected but the Asia to US route is still One that feels the, the pain of this. And yeah, that could be attributed to the factors we just talked about there. Longer lead times, lower capacity, increased fuel costs and it's, it's something that will, will likely persist. There's also the consideration of like war risk insurance that the cost of that increasing and that probably not coming down after a ceasefire right away either. If the conflict persists here then the, it's only going to get worse, it's only going to get more expensive. So in terms of Capex coming from Asia then it's, it's going to continue to increase. Now new generation machines coming out of Asia, the manufacturers have sort of, there's been a pivot from the primary market as a whole and volume has decreased there and that pivot can include like manufacturers turning and looking for capacity to build out to start mining themselves in an increased way right now, which helps with optionality and it helps monetize as well as decrease available supply. So yeah, it's really just moving, moving to what makes sense. So if those shipping rates get too high I could definitely see a continued decrease in volume out of Asia into the US and then that obviously puts a premium on US landed stock.

C (58:40)

Yeah, I think that's one of the more interesting things for me at least kind of trying to game this out is that if you're a miner in the US you already have the secondary market flush with machines. So in terms of the shipping costs you're probably not that worried about what's going on right now unless you're trying to buy new equipment. But if you're in the US and you're trying to build out or refresh your fleet and you're okay with older equipment because you have or even not that old like the S21 series, like you said, you have a lot of options to choose from.

F (59:09)

Yeah. And to quickly touch on your point of some of these larger miners moving away from, and these pubcos moving away from bitcoin mining and into AI hpc, it does create some more liquidity for new generation used hardware in the states and we've seen a ton of that volume and that's really what operators should be looking to execute on. In these times of compressed hash price. It's not necessarily grabbing a JJ Pro for 80 bucks which maybe makes sense if you're like, you know, your power is like super, super cheap but for most operators it's trying to grab the most efficient air cooled model on the market at that lowest possible Capex and, and really try to reduce that time To ROI and yeah, look forward to. To when the the bull market comes back.

C (59:57)

Jamie Gill, thank you so much for joining, man. I really appreciate the insights and always love having the Luxor team on here. We will.

B (60:04)

Thanks for bringing the energy, Jamie.

F (60:06)

Yeah, no problem.

C (60:07)

Happy to be here. He's a Miami man. He's got to bring the energy.

B (60:10)

Oh, yeah.

C (60:11)

We will see you you in May for consensus. Looking forward to that. I hope you have a good weekend, brother.

F (60:16)

Can't wait. Stoked to have you guys here in my backyard. We'll see you soon.

B (60:19)

See ya. We still got news on the table.

C (60:24)

We still got news on the table. Yeah, we've got. The last three segments are actually super fun here. I mean, well, this, this next one isn't actually, and I'll let you take the lead on this, but the IRS sending out a crazy form to track all of the places that you have sold or traded cryptocurrencies or bought them. Charlie, what's going on with this?

B (60:46)

Yeah, this story comes from probably a number of sources. I saw it first on tftc and it goes as such, the IRS just created a new crypto audit form designated designed to make you incriminate yourself. It's form 1099 DA and it's a historical digital asset form that makes. That lists a bunch of exchanges and wallets. And you basically go through and you check yes or no if you've used them and you sign it under penalty of perjury, as are all IRS documents. And at first blush, if you're not in crypto or bitcoin, you might be like, well, yeah, of course, just check the boxes, obviously. But if.

C (61:36)

Just log the trade, bro.

B (61:38)

Yeah, just log the trade. That's not how it works. These, if you, you know, the services, it's like very few wallets and even exchanges have full tax reporting integrations. It's only recently that they've kind of like helped handhold you in like the filing process for some of the leading ones. And the average bitcoin and crypto user touches a bunch of these platforms and so much so that you probably do not remember everything that you've done. And so this form, quite frankly, is being received very poorly and negatively because it's really a way to either damn you if you do or damn you if you don't. Did you accidentally check a box that you may have forgotten in previous ones? Well, maybe they're gonna come in and claw that back based upon the new knowledge that's kind of giving them a breadcrumbs Knowing where to look and vice versa. If you missed something, technically that's a mark against you. So they could also use that against you. So the ending statement from TFTC on this, it says if you get this form, do not fill it out with a tax attorney. This is the kind of overreach that pushes people towards self custody and privacy for preserving tools like Bitcoin. The government doesn't send forms like this to help you, they send it to help build a case. We have a tweet as well from a one of kind of like the more I would say tax fluencers, I'm going to coin that term. An accounter, an accounting guy named Andrew Gordon saying he's it's a perjury trap. The IRS demands you to list the date first use and usernames and emails. If you get it wrong, you could be committing perjury. If you forgot something, IRS could say it's fraud. If you list everything. Now they know where to go.

C (63:44)

So like yeah, this guy is a lawyer and cpa. So he's got the creds on both sides of the aisle for this issue. And he was the one that I saw first tweeting about this and he kind of drew out that damned if you do, damned if you don't. And that's what's so crazy about this. Because if you think like the onus is on the taxpayer, but you know, one of these forms had Ether Delta which is a I think now defunct decentralized exchange. It was one of the earlier ones on Ethereum. And I mean could you imagine just going through this for what you were saying, Charlie? Centralized or decentralized exchange, if you're not logging this information in a lot of ways cases, there's not a really good way to do it. Like imagine you used Binance before Binance off, before Binance pushed US users off and had them come on to Binance us. All of that information that you traded on Binance before it was changed to the Binance US entity is probably gone. So I don't even think that there is a good way to get some of this information. And just to double tap something that you said earlier, this isn't like using Charles Schwab or Fidelity or going to Edward Jones and talking to your certified financial advisor. They will handle that tax stuff for you. There are processes in place. Crypto very much was the car that was built as people were driving it. And a lot of the best practices for tax, for taxation reporting are still kind of being fleshed out and that's also because they keep moving the goalpost on what you're supposed to. How are you supposed to report? I believe last year was the first year that they really changed the rules for first in, first out accounting, which is the kind of standard for any investment. Basically, the first time you make a buy and then the first time you sell it, you know, that's that you have to log that gain. Right. I could be wrong on that front, but they've been changing the rules. And also the IRS landscape has been changing too. I think what's funny about this is maybe you wouldn't. Maybe this is a holdover from the Biden years, but you might expect the Trump administration's IRS to be a little less hawkish on crypto. I mean, Trump reduced the FIRs from about 100,000 over 100,000 employees down to 70,000 during the government employee cuts last year. There's an effort to reduce it even further at around 60,000. But you might think that the pro crypto president wouldn't be going after people for their crypto taxes. Now, of course, we don't actually know who's receiving these. They could be laundering money for all we know.

D (66:23)

Right.

C (66:24)

And that's why they're being audited. But the fact of the matter is it just seems like for most crypto users, the tax problem is, like you said, Charlie, a lose, lose situation, especially if you're getting one of these forms.

B (66:38)

So, yeah, I will say I'm looking at this form here and you know, OGs may notice names like CRYPC or Bittrex or BTCE. I believe all of these are defunct and have been years and years defunct. Some have closed shop under very bad negative stories like btce. And so, man, these are shout out to Bittrex.

C (67:10)

That was one of the class of 2017 shady offshore exchanges. There was a golden era right before crypto entered the overton window for policy and bureaucratic scrutiny where you had all of these exchanges that were God knows where based God knows where, and you could still access them as a US user before they started kicking people out.

B (67:34)

Yeah. Then you had to use a vpn and well, speaking of platforms, you had to use a VPN on. I think the next story is pretty interesting because it's around Binance founder Changpeng Zhao, otherwise known as cz, who totally mogged Bill Gates this past week, according to a Forbes like net worth estimation where CZ now leapfrogs Bill Gates in net worth. So Forbes estimates Zhao CZ holds under 10 billion in net worth compared to Bill Gates. Pithy 108 billion. CZ, according to Forbes had a net worth increase of 47 billion last year. That places him at number 17, richest person globally, top 20. He has a super majority stake in Binance, supposedly 90% stake. Two years ago this man was in federal prison in the United States. Quite a comeback.

C (68:48)

Yeah, 100. And I want to pull up before there, there's this kind of a two part story. But before we go over to the next part, what's funny about this is CZ himself pushed back against the Forbes article. I guess because, and I, I guess the reason he's pushing back is because he doesn't want more scrutiny on him in terms of his net worth. He just doesn't want to be in the news. And we'll get into why in a second. But in this tweet, I just thought this was funny. Didn't read the Forbes article, but if you just look at the little chart, you know it's wrong. Crypto prices dropped by more than 50% in 2026 already and my net worth went up. Wish they could apply some common sense and logic now. I think this discrepancy is easily resolved. If you, you think that Forbes was probably running the numbers on this at the peak of last year's bull market, they were probably looking at this in 20, in Q4 of last year when Bitcoin was at an all time high. And so of course you would see CZ having a higher net worth then. You know it's not all else being equal, he would be worth about 50% less than, than 40, 50% less than what he is now based on his 90% stake in Binance, which if that's true, if that's true, CZ holding 90% of Binance even today is wild, is absolutely wild. But why would CZ push back against this? Well, let's look at one of the other news items for today and that's that Binance is going after the Wall Street Journal for defamatory comments regarding a recent story they put out. I'm going to try to keep this brief because there's a lot to unpack here. But Binance is suing the Wall Street Journal. As the newspaper says U.S. department of justice is investigating Iran transactions. This is a headline from CoinDesk. Now this defamation lawsuit comes as the Wall Street Journal alleges that transactions that flowed through Binance ended up with Iranian entities and that the compliance team members who flagged these transactions were eventually fired by Binance. And Binance is pushing back on this. In a lawsuit filed in the Southern District of New York, the company said the newspaper published, quote, false and defamatory statements about its compliance practices and handling of Iran linked transactions in an article published on February 23. Now, a few kind of housekeeping items on this because there's a lot here. The basic argument from the Wall street journal is that $1.7 billion worth of funds flowed through Binance to Iranian entities, specifically using this kind of Hong Kong fiat to crypto platform. And Binance allegedly knew about this, according to the Wall Street Journal. And that that fiat to crypto converter is called blessed trust, which is just hilarious to me. And allegedly, like I was saying earlier, Binance knew about this and then someone brought it up and compliance official, compliance employees brought it up and then Binance allegedly fired them. Now Binance is pushing back against this and they are saying those, those compliance employees weren't fired because of this. They do acknowledge that they were fired, but they said it wasn't because they flagged these transactions. It says because they, they basically accessed files and databases at Binance that they weren't supposed to access. Who know, it's like a he said, she said, who knows what's actually true. The other thing that Binance is saying is wrong about this story is that no funds left Binance and went to the Iranian entities. And I think this is really important for understanding Binance's argument here and where maybe the Wall Street Journal has it wrong. I'm not saying they do. I'm just trying to give both cases here. Binance was saying that the funds flowed into Binance, but they did not leave and then go into the sanction addresses for Iranian entities. And these sanction addresses were tied to the Iranian Revolutionary Guard and also I believe the Houthis, the terrorist organization. Now what Binance is saying is they left Binance and went to another wallet that was not tied to Iran and then they went to the Iranian entities. Binance is also saying that once they saw these transactions flowing through their platform and then eventually ending up with the Iranian entities, they actually flagged them and then alerted law enforcement officials. Who knows if that's true? That's the defense they're going with. And they also make the case that Wall Street Journal just doesn't understand how blockchains work. So they thought that Binance. What's up?

B (73:45)

Some things ever change?

C (73:47)

Well, you know, and that's one thing I will say about this. You know, I'm not going to stand for Binance. They've done a Lot of shady stuff in the past, and I've gotten a lot of tips throughout the years that I can never reliably chase down about them doing funky things with customer deposits. But that being said, like, mainstream media has had a terrible track record, terrible track record of actually being able to read blockchain data. I mean, wasn't it. Was it the Wall Street Journal a few years back that labeled like hundreds of millions of dollars going to Hamas through crypto rails, and it actually. The real number ended up being like ballpark, a million?

B (74:24)

Yeah.

C (74:24)

Senator Warren actually tweeted about this and talked about it, I believe, on the record in Congress. And the whole thing was wrong. Chain analysis came out and actually gave a breakdown of the real flow funds, and they said that it was completely erroneous the way that they were being tracked and attributed to Hamas fundraising. So, all that being said, it's hard to say who's in the right here and who's in the wrong. I could see it on both sides. I could see the Wall Street Journal misunderstanding something here. I could also see Binance maybe looking the other way at certain things.

B (75:00)

Right.

C (75:00)

Not saying they definitely did. I'm just saying that there is a chance that maybe Binance is, is maybe hiding something here. The last thing I'll say is the. Probably the reason why. Well, it's why CZ doesn't want to have any more press is, as Charlie said, CZ went to jail for about four months for alleged sanctions violations. Prosecutors alleged that Binance allowed more than 1.5 million crypto trades, totaling roughly 900 million, to flow to sanctioned addresses, including ones involving Hamas's, involving Hamas, Al Qaeda and Iran. Now, the flip side of this, from Binance's perspective is Zao was in the UAE at the time that he was served with charges for this. He ended up coming to the U.S. to actually stand trial. He ended up only getting four months when federal prosecutors asked for three years and guidelines really called for 12 or 18 months. And CZ's lawyer also said, look, you basically charged BitMex's founder Arthur Hayes with the same thing, and he got a slap on the wrist. He didn't end up going to jail. He ended up basically paying a fine and I think having some sort of probation.

B (76:12)

I think he's been pardoned too, or exonerated or something. He come to the U.S. now. He was, he was avoiding traveling to

C (76:18)

the U.S. arthur Hayes.

B (76:21)

Yeah.

C (76:22)

Trump pardoned CZ, which, depending on who you ask, is further evidence that they're. That the Trump administration is corrupt or just that they want to do business with cz, which may go hand in hand. But I mean, needless to say, CZ has a very troubled relationship with federal prosecutors and federal officials here in the US and with regards to the Wall Street Journal article, just to put a cap on it, who knows what's true. The fact of the matter is, though, crypto exchanges are often maligned unfairly, but they also probably get up to some stuff that may be, how should we say, gray area. Now, that's not to say that they ended up funding any terrorists. I don't think that's true at all. But the truth of this is probably somewhere in the middle.

B (77:11)

Yeah. And then again, it's if you are the wealthiest known bitcoiner in the world, you don't really want that to be a news story. And also, considering the origins, CZ comes out of China and Binance has, years ago, when they were starting out, kind of danced around the delicate nature of what it means to have to be a billionaire coming out of China. And so not surprising he lives in the uae.

C (77:48)

No, not at all. And before we move on, I think that kind of caps this. Charlie, before we move on to our next story, quick internal shill here from

B (77:57)

the oh yes, we got a shill, shill, shill.

C (78:00)

Up next is revving up. We are a month out from our bitcoin technical and investor conference in New York that we are hosting at the Time Center. And if you look at this neato little graphic from blockspace co founder Will Foxley, you will see that a bunch of companies are slated to be participating this year. We've got Citra, we've got Ledger, BlackRock, Chaincode, Coinbase, Luxor, Anchorage Digital, CoinKite, we've got the Human Rights foundation, we've got HC Wainwright, we've got NACA, and we've also got NYU and Columbia getting involved. Grayscale. Huge showing from a lot of big names in bitcoin and outside of bitcoin, if y' all are interested in attending the conference, which you should be, check out op next.dev for tickets and get them before prices increase. And also tell your friends because it is shaping up to be a really good lineup. Charlie has been crushing it with the speaker programming for this one and we're really excited for the third year of

B (78:56)

Up Next upnext.dev that's opnext.dev April 16th, New York City, the Time Center. That's, that's the New York Times Center. Very cool venue. It'll look like a TED Talk, so hope to see you there. The whole block space scene will be in the house as well as other notable people. Alloc in it. Project 11 FCAT. Everybody's in the house. I think we wrap up with a cry corner today, Colin. And it's not really a cry corner.

C (79:25)

We're decrying the shoddy standards and

B (79:32)

we weren't late to the story. We were just biding our time. So here is the news. This past week, the 20 millionth Bitcoin popped into existence. And really, I think the more interesting story is that it was not clear when that happened for a lot of people. And it's subject to a little bit of debate bait. So to review, every time bitcoin block is made, bitcoin is created with that block and paid to miners. So then, given that there's only 21 million Bitcoin, eventually we'll get to 20 million. And we hit that this week. But due to some very obscure things with how bitcoin works and specifically how that bitcoin is created in a block, some the. The expected supply of bitcoin is actually a little bit ahead of the truly issued supply of bitcoin. What do I mean by that? Basically, something can happen as follows. A bitcoin miner gets a bitcoin block. They normally get to pay themselves. 3.125 Bitcoin. However, sometimes due to intention or most likely error, a bitcoin miner can accidentally forget to pay themselves. That's happened a few times over the past 16 years. And because of that, while a lot of news outlets reported that we crossed 20 million circulating supply on Monday, it was actually the wee hours of the morning on Tuesday that we actually mined the 20 millionth Bitcoin. A lot of people. This might come as a surprise to a lot of people because we've literally put into our DNA of bitcoin there will only be 21 million bitcoin. But guess what, listener, that's not true. There will actually only ever be 20,999,000 something, something, something Bitcoin, because we've destroyed somewhere around 518 Bitcoin. Those don't exist. So because of this, we put out the story on Monday and other news outlets put it out Monday. Now, this is really not that big of a deal. It's just like sometimes, you know, it's

C (81:58)

a cute technicality and a fun piece of bitcoin trivia.

B (82:02)

Yeah. Put this in your local bitcoin meetup trivia box, because I think it might surprise a lot of people and it's a great way to try to understand some of the important knobs we can twist to understand how bitcoin works under the hood. I believe we've managed to get all the way through all the stories. Colin.

C (82:33)

Yeah, I think that does it, man. We are wrapping this up. Like Charlie said, we are going to start doing this three days a week, Monday, Wednesday, Friday, same time, 12pm ET, 9am PST for those left coasters. Worst time zone. Best coast, though. Worst time zone. And next week we've got some pretty fun guests lined up. We've got Leaden coming on and I also hope to get Valentin Rousseau who pinned a report on the best and worst places to mine bitcoin for hash labs. So if you're curious about where you should mine bitcoin if you're trying to deploy and where you shouldn't, we should have a segment on that next week. Otherwise, peace and love, everyone. Have a fantastic weekend. Thank you for tuning in with us and we'll see you all next time.

B (83:23)

Peace.