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Blockspace: AI & Bitcoin
Bitcoin is Already Quantum Resistant?! Plus, Inside Iran’s $3B BTC Economy, and U.S. States Are Banning AI Data Centers
01:23:04
A new proposal for Bitcoin Quantum Computing resistance dropped this week, and we have an update on state-by-state data center moratoriums.
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- [00:00]
A
Foreign.
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B
What's going on, y'? All? Welcome back to Block Space live. We are here to cap off another tumultuous week in crypto and bitcoin and we will start off with a new quantum computing resistance proposal for bitcoin that we can implement without a soft fork, but it's going to cost you a couple hundred bucks a pop to migrate your coins to a quantum vulnerable or quantum invulnerable wallet. We also have Luxor's Khan Farahani joining us to discuss bitcoin mining in March and looking back at the most volatile quarter for bitcoin mining since the China mining ban in Q1. Following Khan, we have Neha Nerula of MIT Media Lab on to talk about what else but quantum resistance and bitcoin, the only thing anyone seems to care about right now. We are going to lean in hard. And for news stories today we have Gemini Exchange reportedly looking for a buyer for its now defunct businesses in the UK and the eu. And Nakamoto is trying to do a reverse stock split, a pretty hefty one as its stock price languishes under a dollar and it attempts to evade a NASDAQ delisting. And finally, we also have a data moratorium, a data center moratorium map. And we're going to show you the states that want to impede data center progress and the ones that want to speed digital serfdom. And we'll close with a little bit of a note on Iran. If you were confused as to why Iran would accept bitcoin for oil tolls, we've got some answers at the end of the show.
- [01:38]
C
Block Space goes live Monday, Wednesday, Friday at noon Eastern featuring quick hits in the latest in bitcoin mining, AI and emerging tech. Make sure to like and subscribe. If you're on YouTube, hit the notification button. This is also a podcast Shortly after we wrap up here, this goes live on all the podcast platforms. And if you like what you hear in the live stream, you'll love what we have on the newsletter comes out on Friday's deep dives, such as the Iran topic that Colin, our editor in chief, wrote. Go to newsletter.blackspacemedia.com for that. Lastly, it's under a week. You can still book that flight to New York for April 16th. That's Thursday for our technical and investor conference at the Times Center. Yes, the New York Times center. Head to opnext.dev that's opnext.dev for info and tickets. This show is brought to you by CleanSpark NASDAQ ticker CLSK. Let's kick it off. Colin. I think we should go to the hash rate index probably.
- [02:42]
B
Yes sir. We will start off with our hash rate index update from our friends at Luxor. Taking a look at bitcoin mining metrics and actually a few bright spots on this dreary Friday for me at least. Looks like hash price has perked up to $33 per PETA hash per day. We are not feasting, friends, but we are doing a little better. We're not on emergency rations anymore and this obviously has much to do with the fact that bitcoin's price has perked up above 70k. We're at about 72,000 at the time of recording the previous difficulty adjustment though working against hash price was almost plus 4%. We're 50% of the way through the current epoch and it looks like we are due for 4.5 negative percent difficulty adjustment and we will see if that sticks. As anyone who has watched the show recently knows, these difficulty adjustments have been all over the place. We won't talk about that too much right now because we have Khan coming on in about 10 minutes or so and he's going to touch on the wild swings in difficulty we saw not just throughout March, but also throughout Q1. And if we look at Bitcoin's hash rate, we can see just how these oscillations have been forming because it's just been whipsaw after whipsaw after whipsaw. If we look at the last three months, we're under where we entered 2026 at this point, you know, hashtag rate has tried its best to recover towards that all time high that we set in October, but it's just been falling flat and right now we're at roughly 966extra hashes on the seven day average. So interesting to see us below a zeta hash. Not that surprising though given the current dynamics.
- [04:27]
C
Yeah, not a lot of hash rate growth but the price is up so given us a little win behind our sales. Yeah. Shout out to hashrate index.com for logging all this and a bunch of other metrics that if you were to click around, you should check those out. I think maybe we go on to the first story, Colin, which is yet another quantum bitcoin story. Now this is kind of I. Okay, where do I begin? Okay, so obviously we've been trying to cover Quantum on this, on this stream a lot and we've had, you know, a couple guests and we'll have Neha on later today. Director of the MIT Media Lab. Again, going to talk about it, but let's zoom back. Like, there's been a lot of hand wringing and concern about like the quantum problem on bitcoin. Is it even a problem? And I guess what happened is everybody got the memo to just start throwing out quantum mitigation proposals. And I even tweeted out this past week, guys, cool it without cool it with these mitigation proposals. Because we had I think three or four drop in the past week. And even as we were prepping for this live show, I found I saw two more hit the timeline and I haven't been able to like review these. And there's a lot of really good ones. We'll have a couple of them at OP next our conference next week. But the one I want to focus on is really interesting and probably the most prominent of the proposals this week from a researcher at starkware Avihu who dropped a proposal called Quantum Safe Bitcoin Transactions without Soft Forks. So this is really interesting because this is a proposal that would not. All the other proposals I'm aware would require some form of change to bitcoin. This is a proposal which allows people to secure their bitcoin from quantum computers without changing bitcoin. But there is a catch and the short version is you have to jump through a lot of hoops. It's very clunky. And like, this is not really like most people would say that this is not an actual permanent solution. This is kind of like a stopgap to show that, well, we do have an option that exists today. So let me try to explain what this is. And this is very, very technical and I haven't tried to give a non technical explanation yet. So here I'm going to try. So this is a proposal that builds off of Robin Linus's bino hash idea. What is binohash? It stands for binomial coefficient hash, which basically at the short version, when you write it, when you build a bitcoin transaction, you have to have a bitcoin script and it has to succeed as a valid script at the end due to weird stuff in bitcoin script. Sometimes there are edge cases and sometimes these scripts and hashes can collide and clash. And it's a very, very, very rare scenario. But when they do, you can sometimes intentionally collide them so that they produce certain deterministic outputs. We can simulate covenants, but in order to do that, you basically have to run a GPU or a computer for a really long time to just grind through all these options, like we have to use stuff that was obviously not intended, like envisioned being intended being used this way. And we have to use a lot of compute time to find these collisions. Well, what Avihue's proposal is is basically building on that idea to then create, I believe, if I'm not misspeaking here, Lamport signatures on Bitcoin. Lamport signatures are these really big clunky quantum proof signatures so that a quantum computer can't steal your private key. So if we basically, here's the numbers, here's the math. If you don't really care about how it works, the math is it will take roughly maybe six hours of compute time, 150, call it a couple hundred bucks per transaction, like compute cost to do it. And it's this giant transaction. So it'd be very inefficient and costly in addition to costly to produce. So what's interesting is that because this would work today, I believe theoretically it would work today, we do have a solution that would work to quantum proof certain bitcoin address types and transactions. The question is it worth it? This allows the market to signal if like you're a big custodian, a big holder, and you got a lot of bitcoin and you're worried about it, you could, you know, it would probably very be very worthwhile to you to go through the hoops, jump through the hoops and produce these, these quantum safe bitcoin transactions. Like you could secure your Bitcoin. It'd be expensive, be costly, but you could do it. So it's interesting because in my first pass through of this is that there's a lot of these claims that investors are concerned. There's all those millions of bitcoin at stake. And that's true. And this would allow a lot of that bitcoin to migrate to safety. So then that would all allow us to see how material are the investors concerns. Now I'm oversimplifying it. This is really new. This is 24 hours old. So there's not been as much back and forth. I haven't had time to dive into it as much as I would like. Perhaps I misspoke on a certain thing describing it. But that's the tldr and this is one of I think now five proposals in the past week that I have seen. So we, it really mobilized a lot of people, start working on it, like working on these quantum mitigation proposals. And it's really cool to see what can be turned around in like a couple months. To me, this just said this just reveals how much design space there is and how much legwork there needs to be done further on this topic because if it is an existential risk for Bitcoin, it seems to me that we should have a lot more eyeballs on this topic and a lot more conversation. So I'm.
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B
Yeah, and to me it evinces the fact that the concern that devs aren't thinking or worrying about this is overblown in a way. Sure, you can say maybe Bitcoin core isn't taking it as seriously as they should. And I think there is a hard argument or a hard discussion to have there about how long it would take to get a soft fork for quantum resistance into the queue, spec'd and then published. So I'm not going to argue with that, but to what you were saying, Charlie. The fact that we've had so many quantum proposals released just in the last week alone, granted there's been a lot of dust kicked up about the issue, so people are starting to pay more attention to it. Perhaps the one question, I have a lot of questions for this actually. In terms of the cost, I wonder if you're renting GPU space, is it more expensive than if you're trying to run things locally? Are we going to see companies or a company spin up to try to offer this service and see if people will then use it to make their coins quantum resistant? And on that note, you know, maybe this will be a bellwether for how much the market is actually worried about quantum. If we see a lot of people start doing this and I don't think anyone's done it yet, obviously.
- [12:44]
C
No, no, I don't think there's implementation yet.
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B
But to your point, big holders might try to do this or they might even around with it and test it. I don't think that you're going to see Coinbase move all of their stack to this. Right. That's probably not realistic. But you might see a few companies play around and just try it out and see what it see how it works. The one I think pain point though is that it does seem like a very painstaking thing. I mean just for one transaction, it's a few like what, 150, 200 bucks and it'll take like six hours.
- [13:15]
C
So.
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B
And I imagine if that transaction has a bunch of inputs, it's just going to take longer. Right. So depending on how data heavy the transaction is, this is going to take much longer. But I do think that this will potentially be to your point it shows that we do have quantum resistance if we want it. It's like that quote, like, you have a republic if you can keep it. You have quantum resistance if you can keep it. And I think that we'll see whether or not people are taking this seriously or whether or not this is actually considered a good solution. Right, because that's the other part of the equation.
- [13:47]
C
Yeah, there's so many things like Robin Linus said when he talked about his purpose behind Binohash, the precursor to this quantum mitigation proposal is like, if we're going to get covenants at whatever cost. And I'll even quote Ellie, Ben Sasson of starkware, co founder, who said, we have opcat now. We are simply negotiating the cost. And I think that's a lot of the framework. If you're trying to understand, if you don't care about the technical details, it's kind of like the. It seems like that's the landscape now. Like, how enshrined do we want quantum resistance to be at the protocol layer? Okay, I don't want to belabor this point because we're going to go back to it with Neha in a bit.
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B
We'll leave that there. But for our next Segment, we welcome Mr. Khan Farahani from Luxor on to talk about their hash rate Look Back series for March. Khan. Welcome back to the show.
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C
How you doing?
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D
Colin and Charlie, thank you both for having me. I'm doing great.
- [14:49]
B
How are you doing? Pretty good, man. I mean, Bitcoin above 70K, got a little ceasefire going on. We might actually get a solution to Quantum. So I don't have to be, you know, I don't have to immiserate a progeny. And they can't look back at their father and say, hopefully not that you were a fool for investing in this magic Internet money, but we'll leave that aside for now and we'll go ahead and jump into this super meaty Luxor hash rate look back for March. This one is fat. Dude, this is a dense report.
- [15:23]
C
Your fingers are flying building this thing. A lot of words on this report.
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B
So one of the things that you noted in the brief that you sent to me is that when we look back at March and specifically at Q1, we see a lot of similarities with the China mining ban exodus post Exodus period in the summer of 2021. Can you unpack some of those similarities in what the data is saying about the quarter that we just had for bitcoin miners?
- [15:53]
D
Yes, indeed. Q1, 2026 turned out to be the most turbulent difficulty period we've seen since the Chinese mining ban back in 2021. But I think the data actually speaks to more differences than similarities, Colin. So let's check it out right now. Let's get into it. The comparison that we make in the report is really about the magnitude and the speed of swings in difficulty that we've seen over this past quarter. In Q1 2026, we had back to back top 10 difficulty drops. If you remember, back in February, we saw an 11.16% difficulty adjustment, which ranked as the seventh largest drop in the modern ASIC era, which we defined to be as the period since 2016. And this was driven by winter storms and power price impacts causing economic curtailment. Now, in March on the 20th, we saw a difficulty drop of 7.76%, which ranks as the 10th largest. So we have two consecutive epochs that are bringing in top 10 difficulty drops. And this only happened once since 2016, which was during the Chinese mining ban in mid 2021, when we had a 12.61% drop in May, followed by a second one which was 15.97 and and then the massive drop we saw in July which was 27.94%. So when it comes to similarities, this three epoch sequence which took place in 2021 is what directly compares to what we saw in Q1 of 2026. But now let's talk about the distinctions and the differences in the types of these shocks that we saw. Now, the Chinese mining ban was structural. We saw a sustained loss of hash rate. In other words, this was a secular shock. Machines went offline permanently and didn't come back quickly. It took months for block times and difficulty to fully recover. But what we're seeing in Q1 26 is a bit different. The drops are large, yes, but the recoveries are also fast. February's 11% drop was followed within two weeks by a 14.73% increase in difficulty. March's 7.76% drop was followed by a 3.87% increase in difficulty on 3 April. So what this is telling us is that block times actually undercuts the target immediately after both of these adjustments, which means that hash rate came back online rapidly after each drop. So this to us is a signature of curtailment rather than structural loss or capitulation in hash rate. So, in summary, the amplitude is similar to the Chinese mining ban, but the underlying cause appears to be very different. These aren't secular shocks, but more so transient episodes where we have surprise disruptions and also economic curtailments causing hash rate to move in and out of the network.
- [19:15]
B
Oh, sorry, got you out there for a second. So I like in this chart you have here, you have the context for all the difficulty drops and for the March 2026, the negative 7.76%. You have open question and you did just say that some of this is likely, most likely curtailment driven, which makes a lot of sense. As bitcoin mining has become increasingly industrialized and professionalized, those curtailment programs have become more common. As it's been concentrated in Texas, it's very easy for those miners to engage in those demand response programs. And also of course this is happening right now because hash price is so low that you're going to see more of that. But you do list open question for the context for the most recent 7% drop. So outside of curtailment, is there anything else that y' all observed in your research or postulated that could be explaining these wild swings and difficulty?
- [20:11]
D
This is a great question and I think this is the central theme of the month of March 2026. Yeah. So the question is what caused this? Right. And we believe it is still somewhat of an open question. But through our March look back we've been able to narrow the field. So let's talk about it. Oil prices are a hot topic right now, obviously given the conflict in the Middle east throughout March. Now oil price exposure is around 8 to 10% of global hash rate based on our hash rate index estimate concentrated around the Gulf State miners. So a crude price surge can't really explain a network wide event of this size on its own. However, conflict related physical disruptions might. So that's one point of evidence that we can look into now. The next is statistical variance or what we know to be luck. We can rule that out. And the reason is because we saw that 11 of the 15 days prior to the March 20th adjustment posted daily average block times above the 10 minute target. Which means that there was a structural slowdown in block discovery over that window. The most telling signal in our opinion is what happened immediately after the adjustment on the 20th. Because blocks didn't just revert back to the 10 minute target, they actually undercut the post adjustment. Block time average for the rest of March was under the 10 minute target. In fact, through March 25th to the 28th, we averaged 8 and a half minutes. On March 28th alone, block times came in at just under 8 minutes, which is 25% faster than the network defined 10 minute schedule. So these to us are signs of curtailed capacity coming back online after the adjustment. So the chain of causality runs as follows. Difficulty, dropped hash price popped around 8% overnight and this allowed marginal machines to turn back on and they moved back online and started hashing over the following 48 hours. And we see that pool level data actually supports this thesis as well. Based on our estimates derived from on chain block discovery, we saw major pools drop around 20 to 30 exahash mid month and then snap all the way back up after the week of the adjustment. So that speed and recovery is inconsistent with permanent infrastructure loss and it's more likely curtailment than capitulation. So to summarize, in our opinion, the most probable explanation, which would be consistent with the timing and the rapid recovery is a combination of geographically concentrated disruption in the Middle east coinciding with the conflict, alongside some marginal hash rate moves during hash price all time lows.
- [23:13]
B
I like the analysis of looking at how the oil market specifically could be impacting hash rate, especially in those Middle Eastern countries. And I'm pulling up y' all's wonderful global hash rate heat map, which is truly one of my favorite resources for bitcoin mining on the web. For those who don't know what this is, this is a complement to Cambridge's hash rate heat map and electricity consumption index. And whereas Cambridge surveyed pools and asked them for IP data for their users, which can be a little tricky because I could be running a bitcoin mine in Texas, but I live in Tennessee or New York and I'm going to have my IP logged for maybe an exahash in Tennessee or New York where really that exahash is in Texas. Well, what Luxor does here is they kind of do a more bottom up approach or. Sorry, they do. Well, I guess you could say a bottom up approach looking at what is the hash rate currently operated by publicly traded companies that they disclose all of these things right in their filings and then some Luxor business data to cobble together a rough estimate for hash rate around the globe. But if we look at the Middle east, we can see Oman has quite a lot of hash rate according to Luxor's estimates here at 32 exahashes and 3%. And the United Arab Emirates have 33 exahashes at about at 3% as well. And if I'm understanding correctly, Khan, you're saying that a lot some of these operations are dependent on electricity powered by oil essentially. Right, like they still have, which is not. That's not common in the US anymore. The Northeast has some, like New York has some petroleum based fuel for for electricity. But in the Middle east obviously they're drowning in it, so they have more of that. And so you're saying that we can kind of draw somewhat of a line between the disruption in those markets and what we're seeing with the difficulty drop?
- [25:21]
D
That's correct. And I would also clarify the fact that the oil price shock is not necessarily a significant factor. And the reason is because only 8 to 10% of the global network hash rate is somewhat exposed to oil prices from a cost side perspective. But when it comes to physical disruption caused by the conflict, obviously the Gulf State miners are directly impacted. So we believe that it's a combination of some sort of physical destruction plus some marginal hash rate moves as mining economics shifted downwards throughout March.
- [25:58]
B
That makes sense. So Con, where does this leave us for the rest of the year? What is Yalls outlook for the rest of 2026? It seems like we're in this limbo or waiting period where people are either waiting for the floor to drop out from under them or for them to break through the ceiling. What's Yalls read on what miners should expect for the rest of 2026?
- [26:21]
D
That's a good question and obviously I would love to have an answer. But the best we can do is explore potential trajectories at this stage. So I'll point out a few things. First is on network difficulty. What we're seeing throughout Q1 as we turn into Q2 is that the oscillation in difficulty adjustments is dampening. The sequence that we SAW was a 7.76% decline in March, then an increase on April 3rd which was 3.87%. And as you pointed out Colin, the next adjustment is estimated to be around a 4.5% drop which is expected to hit on April 17. So what this tells us is that the swings are getting smaller, which means that marginal miners are finding equilibrium at current mining economics. The machines that are economic at current hash price are online and the ones that aren't are offline. So we're settling into this range at current mining economics. Second, as you pointed out, there are developments around the Middle east conflict. We now have a ceasefire if the situation stabilizes, essentially we would be removing at least some, if not all geopolitical risk that's been weighing down on Bitcoin price, on the downside and some of the physical disruption risk that we just talked about when it comes to mining facilities and mining operations in the region. So that's a potential tailwind on both the revenue side from a bitcoin price action perspective and then on the supply side from a regional hash rate perspective. Thirdly, hash price is at an all time low. In March we saw that spot hash price settled at just under $32 per PETA/per second per day. This is the second consecutive month where we see a monthly all time low in hash price, which means that there are many opportunities for forward market participants to engage at this stage. For sellers, the case is quite obvious if you have a view that hash rate or hash price is going to go down even lower. Sell forward, lock in your revenues at this stage and turn this uncertainty into predictable cash flows. If you're a mining operator and you're looking to finance fleet upgrades, you can use the deliverable forward to sell forward, receive bitcoin denominated capital upfront, and utilize that capital for buying new machines and improving your mining economics. At this point, the forward curve is essentially allowing mining operations to buy hash rate at a cheaper rate than self mining with mid gen machines at 4.5 cents per kilowatt hour. So it's an attractive entry point for buyers looking to either reduce their hash costs, improve their fleet, or to simply expand without dealing with any sort of infrastructure headache by zooming out the big picture. It all depends on bitcoin price. Where we stand today in the cycle is an open question. If we look back at our October 2025 peak, Bitcoin was at 126k. Right now we're hovering around the 72, 73k range. So where we are remains to be unknown. But Q2 might just shape up to be a turning point for both bitcoin and the mining space.
- [29:54]
B
Well, say your prayers, make your ritual meme coin sacrifices and maybe be that guy who sells right before we rip so that we can actually get some positive price action going on. Khan, thank you so much for joining man. Appreciate the insights as always. And we will see you next month for April's look back.
- [30:11]
D
Thank you both. I'll see you up next.
- [30:13]
C
See you Con. We need to get Luxor to do that Citrini research thing, you know, where they send somebody out to the actual Gulf states. You know, go, go fly a drone over the mines, see if they're actually on or not. That would be good. The next level country map. But anyway, we are going to our next guest right after this ad from our sponsor, CleanSpark.
- [30:48]
B
We are CleanSpark, America's Bitcoin miner. A publicly traded company with the Largest operating hash rate powered entirely by self operated infrastructure across four states. This is our proof of work and we are setting the standard for what's next. Learn more about the intersection of energy and bitcoin@cleanspark.com
- [31:20]
C
all right, we have next on the show, the director of Digital currency at the MIT Media Lab, Neha. Let me bring her up here. Here. Welcome to the show, Neha. Thanks for hopping on.
- [31:33]
A
Hey guys. Good to be here.
- [31:36]
C
Yeah. So we kicked off the show with a bit of treatment on the, I mean, we've been talking about Quantum for the past two or three weeks on the show. You dropped a piece, I would say seminal piece on the topic. Just reasoning through how you thought about the problem. Let's go into it. Can I invite you to, if you can try to summarize the decision framework that you propose in this piece.
- [32:04]
A
Yeah, so usually I try not to write anything unless I have something new or interesting to say. And so that's why I actually kind of put this off for a long time. But my friend Ethan convinced me that I should write it because I was like, ethan, everything I'm saying is really obvious and most people know about it and so I don't really feel like I have anything new to add here. But he was like, no, I think actually it's important to say this. And I've been kind of surprised at the, at the response. I think it was. Sometimes you just got to say what something you think is obvious. So the point of this post was I felt like, okay, you know, there is a lot of uncertainty out there as to whether there is even ever going to be a quantum computer. Computer. We just don't know, right? I certainly don't know. Right. And you see so many people saying things like, well, there's probably not going to be a quantum computer, so why would we ever do anything with bitcoin? Or you know, oh, there's, there's definitely going to be one, or there's, you know, it's going to happen by this time. This is how we should think about it. And I just felt like people weren't really necessarily reasoning about probability and uncertainty properly. So I tried to present this framework of how I thought about it, right? And so the idea is like, okay, there are these two factors that I think are really important. Number one, how likely do you think that there's going to be a quantum computer? And by what date? And then second factor is, okay, what does that mean for Bitcoin? And what is bitcoin's ability to Upgrade by that date. Right. And so you fill in your values. Right. I'm not telling you what I think the value should be. I have my own numbers. But you fill in your numbers and then you multiply the two numbers together. And, and the existence of a quantum computer is so potentially existential for Bitcoin, if one exists. And, you know, you factor all of this in, what is the likelihood of this happening? What is the likelihood of this attack, you know, actually being executed? But the simple fact of the matter is, worst case, if such an attack were to happen, it's so existential that this should be sort of the way you think about, you know, Bitcoin not working anymore. And so this was. This is what I wanted to present in this post. And just reason through it. You fill in your numbers, it's fine. But I think something that kind of falls out of it is that you realize even if there's a really low chance of this happening, the potential risk is so high that it's probably better to just do something about it at this point. And so that's kind of the point that I was trying to get across. And then also I think another point that's really important to get across is, are there people working on it? Yes, but there's also a lot of unanswered questions. There's still questions that remain, and we got to answer those questions in order to say that we're addressing it. So those are. That was kind of like the summary of what I was writing about.
- [34:39]
C
Yeah, it. It reads to be kind of like, like a Pascal's Wager approach to, like, the existence of a quantum computer. And like, okay, if we think there is, and then, you know, what do we do? So, okay, I caught something you said there, which is you conspicuously in the piece. You don't say you have. You don't give your own estimates for a cryptographically relevant quantum computer. Computer appearing in the writing. But you said you've got your own. Do you. Are you willing to share what your gut sense is on, like, the, you know, the likelihood of one of these appearing? You don't have to say anything, but I, you know, and treat me on this.
- [35:20]
A
I am. But there's something I want to say about that first, which is, I am not a quantum computer expert. I don't understand this area at all. And I'm not going to understand this area. I think that there's this thing I've seen in Bitcoin which is kind of interesting, which is a lot of like, do your own research. So people are like, oh, you know, I can read the papers. I can, I can, I can figure out how likely it is a quantum computer is going to appear. And it's like, okay, maybe you can. I don't know, this stuff is actually pretty hard. And you know, I don't understand quantum computing, but there are some other, like, highly technical areas I do understand and I know how hard it is to really understand those areas and to work at the cutting edge. So, like, you shouldn't listen to my numbers, quite frankly, because I don't, I don't know how likely it is a quantum computer is going to appear. And, and I understand that. And I'm not going to read the papers. I'm not going to, you know, try to become a quantum computing expert. I rely on other experts. So I talk to people in the theory space who understand the algorithms. I talk to people in the hardware space who are actually building quantum computers. And obviously they're biased. And so you have these conversations, you try to put stuff together. But I lean on the experts. The experts that I've seen are saying there's a 10% chance by 2030. Okay, 10% chance by 2030 is too high for security. Okay, when you work in security, you want like a negligible chance of your cryptographic security function breaking. Usually we use 2 to the negative 32. There should not be higher than 2 to the negative 32 chance of this algorithm breaking. Of someone being able to like to break this algorithm. That is an extremely small number, way less than 1%. So when you tell me 10% chance by 2030, I hear, okay, we got to fix this. Yes, it's a low chance. I don't Even know if 10% is the right number. You guys are working in the quantum computing field. Maybe you're overestimating it, but too high. We're already like way too high. We got to fix it.
- [37:17]
C
So you made a couple interesting points which were maybe not the headline part of your write up. One stuck out to me. You said some cryptographers are already saying they won't bother working on non post quantum cryptography anymore. And you reference, I believe, Sharon Goldberg at Cloudflare. This is an interesting take to me because let's set aside whether or not a cryptographically relevant quantum computer happens. Like, it's pretty concerning if we have prominent cryptographers saying that they're not going to work on this due to this concern, because we want the smartest people working on this. Yeah, you got a lot of visibility as you know, in your position and director, you have a lot of visibility into, like, what, what the young kids and smart people are doing. And what's your thought on this trend?
- [38:09]
A
Yeah, I mean, I think, you know, if you look at what people who are in cryptography, but not cryptocurrency are saying, you know, I think it's. It's like, look at places like Google and Cloudflare. You see what they're saying. They're like, we're going to upgrade to post Quantum cryptography by 2029. That's our roadmap. And so I think you'll see very quickly almost everybody getting on board with that roadmap. Now, are there prominent cryptographers who are more skeptical? Yes. And it's super interesting to see the debate there. It's fascinating to watch people like Gil Kalai talk to people like Scott Aronson and debate whether this is even possible. And you know what? There's a chance that they're right. There's a chance we might never have a quantum computer. I'm totally admitting that that's entirely possible, but unfortunately, there's a chance we might have one. And it's just like, why don't we fix this? Why don't we get around this? And. And so in my mind, the way that the probabilities have stacked up is. I think it's time. Yeah, we got to work on it.
- [39:10]
B
Charlie, can I cut in? Because you just said something that I think gets to the heart of a lot of people's frustration with this neha, which is, why don't we fix this? Why don't we just move forward with something that would mitigate this or give people protection against it? Why do you think that's the case within the bitcoin community, or rather I should say within Bitcoin Core specifically, and within the developer community in Bitcoin. Why has it there been such a conservative approach to this problem, do you think?
- [39:36]
A
Oh, so such an interesting question. I think there's like, several different things going on here. Right. Okay. So first of all, you've gotten pushback from one part of the bitcoin community saying, you guys are too aggressive, you're changing too many things. We want to ossify. Right. We want to be more conservative. You see people who are saying they're going to create an alternative implementation that is even more conservative than what Bitcoin core is doing. So you've got that push from that side. Then I think you've got something which is very reasonable, which is in the way that the bitcoin development process works right now and the way it's incentivized is people want to work on stuff that's going to get used. They want to work on stuff that's current that's exciting. Maybe it's a little bit less exciting to work on this long term plan to shift bitcoin over to post quantum cryptography that might not even ever be needed. Right. Like, you know, it's a lot more exciting to say, oh, I'm going to work on something that's going to help lightning today or that's going to help the security of the network right now rather than work on this thing that might not happen for you know, 5, 10, 15, 20 years might never happen. Right. So it's also like the incentives in the community and I think something that maybe people don't quite understand is there's actually a lot of different stages and things phases to getting ready to quantum for quantum. Okay, so and we need to like map this timeline out. But I think there's sort of like a break glass in case of quantum computer phase. So it's sort of like, like right now there is no way to make your transactions resistant to a quantum computer just doesn't exist in big. You can't do it. Even if you think a quantum computer is going to appear tomorrow, there's not really much you can do. Okay, you can move your stuff behind pay to script hash or pay to pub key hash and that helps with long range versus short range attacks. But this is a limited time frame we've got here, so I can't talk about all of it. But you can't actually do anything right now to say if a quantum computer appears. I know, I'm good. Because bitcoin just doesn't support that. There's. Okay, maybe we should have something you can do, something you can do. And that's the idea behind things like fit360 which say let's introduce a new output type and people can move to it if they want to. And, and let's introduce a post quantum signature scheme and that will at least give people a way to move their money into something safe. Right. But then there's like many more phases after that. There's like, okay, that's the break glass in case of quantum computer way of doing it. But you know what, the schemes today all suck. They're really huge. This isn't like the way we want Bitcoin to operate for everyday transactions. What are we going to do for that? And maybe we've got a lot more time to figure that out. But maybe that's phase two, right. And then phase three is kind of, oh, man, there's a quantum computer out there. Only so much money has moved over. What do we do about the stuff that hasn't moved over? And that's like, that can be much closer to when a quantum computer actually appears. And I think maybe people are like, are mixing up all three of these phases, and so they're like, oh, we got to figure out, you know, if we're going to burn funds or we're going to freeze funds or what. And no, we don't have to figure out the answer to that right now. We can do phase one. And phase one is, like, very conservative and, like, you know, pretty easy, and we can give people some peace of mind. And so I think people are mixing it all together. They're like, we got to figure this all out. No, we can do it in pieces, but, you know, we got to actually, like, define that and do that.
- [42:57]
B
That's a really salient point. The whole quantum problem gets wrapped up in a big bundle together. And I really like that framing. You can get the quantum invulnerable addresses out first. You don't have to even think about what you're going to do with all of the vulnerable coins and the dead coins.
- [43:14]
A
Yeah, I mean, I want to be a little bit careful there, because we probably need to at least, like, have some idea of what the options are. You know, you want to, like, you don't want to do phase one, and then it turns out you did something in phase one that, like, makes what you want to do in phase three really hard. Right. You got to think through it a little bit, but you don't actually have to make the decision. And so this is part of the work, right? This is part of the work. It's like, it's not just coming up with a new quantum proof signature scheme, which is important. We got to do that. But it's also, what are the pieces? What are the dependencies? What's the roadmap? That's what we got to do.
- [43:51]
C
So, I know, let's zoom out a little bit. And there's a lot of hand wringing about pointing fingers and saying, oh, you're not doing this, not prioritizing that. And if you are concerned about quantum, then people say, oh, you're. You're buying into the fud. But a lot of these topics are biased, more technical, like signature scheme. But there is a political dimension, the technicals a Little easier for me to evaluate because I know the experts are and you can invalidate certain arguments and stuff like that. But the political dimension is harder for me to get a sense on. What do you think the biggest political friction is? And do you think that this, that there's a way forward?
- [44:42]
A
Yeah. Okay, great question. I think there's actually like a few really large political frictions. Okay, so the obvious answer is what do you do with coins that don't move? Do you freeze? Do you burn? Do you reallocate them to as a mining reward? Do you? Or do you just let it play out? Right, because this is self sovereign money and you don't, you don't freeze people's money. That's like a core fundamental thing. So that's like the obvious one, right? That's the, that's the core political issue. But you know, I think for what it's worth, I'm not even sure we're ever going to have to answer this question because there's a chance there might never be a quantum computer. There probably will be a cryptographic break of some kind in Bitcoin's cryptography in the next like hundred or 200 years. So eventually something will have to answer this question, but it might not have to be any of us. But that's the question that's like the one that everybody gets all caught up with. But I think there's actually like at least a couple of other questions that are just as interesting and maybe don't get a lot of attention. Okay, so one of them is how do you think about this risk and how do you think about in bitcoin making changes to mitigate a future risk that might be uncertain versus the risk of even changing it all at all today. Right. So it's this like that I think is really the debate that we're all having right now is like everybody knows there's a risk of a quantum computer, but nobody we don't agree on. Like, okay, given what that risk is or what we might think it is, how aggressive should we be in trying to fix it today? Right. So that's that question of like how do you balance these risks? How do you think about that? How do you, how do you handle that trade off? And then there's another trade off I think which is okay, like when I think about the post quantum signature schemes, they all make trade offs with bitcoin today. Some of them are really big. So that means we're just going to be able to do fewer transactions per second on bitcoin unless we increase the block size. So how do we navigate that? Some of them take longer to verify. That means that if we were to use those signature schemes, then it affects the decentralization of the network. It's going to make validating a block harder and take longer. Some of them we don't, you know, require statefulness. So that means that there's certain cool things that we do today with wallets or with lightning that we might not be able to do with certain signature schemes. So how do we, how do we pick the trade offs between those? That's a political question as well. That's not just a technical question. Because if there were one that were better at everything, then we'd go with that. That's the technical answer. But when you got to actually make trade offs, that's a political question.
- [47:13]
C
Neha, we've got you and Elizabeth Stark next week in New York City at our conference. Up next, we're going to let you all riff on this more and I look forward to seeing you in person at our conference and so we can argue about these things in person with all the relevant people. Thank you so much for coming on our show. Really appreciate this and see you next week.
- [47:41]
A
Yeah, thanks for having me. This was fun. Good to talk to you guys.
- [47:43]
B
Thanks, Neha. See you soon. All right, and before we get to which states hate AI and which states love AI, a quick word from Luxor. This episode is brought to you by Luxor's Commander, a bitcoin miner management software built for enterprise operations. Commander gives you real time fleet monitoring, bulk remote commands across your fleet and Intelligent Miner, an automated profitability engine that runs every five minutes, adjusting power settings to live hash rated energy markets. ERCOT back tests show over 10% more profitability with Intelligent Mining versus Binary Mining. Commander Pro is $100 per megawatt or a 25 basis point pool fee adder, roughly half the cost of competitors. And there's a 60 day free trial. So try it and if you like it, you can keep it. Get started at Luxor Tech Commander. All right. And with that we will move on to our next segment. This is a really cool vibe coded website from one I believe I'm gonna butcher his last name. Will Manditis. I.
- [48:50]
C
We have to have Will. We have to have Will on the show to correct his last name.
- [48:54]
B
I'll pull up his Twitter profile once I get done monologuing here in a second.
- [48:58]
C
I think it's Manakis or Manicus.
- [49:00]
B
Yeah, so he posted this vibe coded site that shows visualizes states with data center moratoriums on the docket for legislative sessions. There are different tiers here, and as I understand it, the red means active bands or moratoriums. And I think that means that they're advancing through the Senate or the House because some of these states actually don't have totally active ones. I don't know if there's a threshold for local moratoriums because a lot of these states do have towns or counties that have levied moratoriums. And if there's like a certain threshold that would trigger you being a red state versus a green state. But orange means legislation has been introduced and is advancing, purple means under discussion, and green means favorable or there are incentives. Typically those incentives mean that they're just tax incentives. So I won't really cover those as much. But I did want to go over some of the. Some of the biggest offenders here. First up is Maine, which actually signed or is soon to sign a moratorium for data centers. There was a moratorium in that passed through both the House and the Senate. It's going to the governor's desk. And this would ban any Data center over 20 megawatts until November 2027. 20 megawatts is not that much. Now, granted, I'm sure that mains things
- [50:24]
C
you only say in the year 2026,
- [50:30]
B
but to put it into context, Maine isn't exactly an energy superpower within the US So it makes sense.
- [50:35]
C
There are a bunch of, they're a bunch of, you know, hippie liberals, bunch of crusty, you know, like salt of the earth people up there. They don't want data centers, a lot
- [50:45]
B
of blueberries, not a lot of megawatts. So Maine is one of the primary opponents here. Another interesting one is Michigan. They have a bill that is advancing through House committee.
- [50:59]
C
Currently.
- [51:00]
B
It has not. It has not passed the House, but it is in committee right now. And this would be a moratorium for one year until April 2027. And I would also point out that there are 23 active bands in Michigan and 12 out of 83 counties have banned them. So those, when I say 23 versus 12 there, that 23 also includes townships, cities, etc. And the counties themselves. Virginia also has two bills that are data center data at data center negative. The first one, or I guess you could count them as data center negative because the first one that actually did has passed and has been enacted, basically looks at data centers and asks the question, do we need to reevaluate how we classify these in the regulations for utilities for getting them approved. So it's basically taking a look and saying hey, maybe these AI data centers need their own classification and of themselves. I haven't looked into the details of the bill or the act. There could be some nefarious language in there that means that they are going to try to preclude more approvals than not. But that's the first one. The second one is an actual moratorium that has not passed. It's sitting currently in the legislature but they are punting on it until the next session. So it was introduced for the the most recent session. That legislative session has subsided. So they are punting until the next time the that Congress is in session. And then there's also Georgia. Georgia has a moratorium going through to committee right now in the House. And this would there's not really that much information on the moratorium. I didn't get a timeline for it, but it's just kind of a blank slate moratorium. Then one last one that's interesting to me and this is Indiana and I didn't quite put it in the worst bucket because it's a little bit nuanced. But in Indiana there is a legislative committee in the House that there's a bill that is currently in the committee in the House that would make data centers share 1% of sales tax exemptions with local governments. I would not necessarily. Again, I need to I haven't read the language of the bills. You know, we don't actually know it's going to come out in the act. That's the fun thing about the American legislative process. You actually don't know it's in it until it's passed. At least if you're a layperson I could see that as being a little more reasonable than some of these other ones. And that's part of the benefit. I mean, obviously these data centers are going to pay local taxes, they're going to pay property tax. So they're already going to have some of that money going into the community. But that's been one of the big benefits of these data centers or one of the promoted benefits of establishing these data centers in some of these rural areas is they will increase the tax revenues for those local governments, help schools, police departments, things like that. And like I said, I'm not really going to go into the favorable ones. You can go and check out this@datacenterbands.com Texas obviously favorable, but most of these ones in the green have tax incentives for the data centers. And for the ones in purple, most of it is you Know there's no statewide moratorium that is being pushed through, but there have been local moratoriums that have been either entertained or enacted. So interest. Really interesting vibe coding project. I was really excited to see this. And one last note, if you click on any of these states, you can actually see news items and news articles that are related to those specific states and their treatment of these AI data centers.
- [54:33]
C
Okay, I have some takes which I really haven't heard other people give and I have some insight into my own neck of the woods. So the first one is there is a major disconnect, I think in the legislator and average citizens understanding of
- [54:52]
B
the
- [54:52]
C
effect that these data centers have. Because you can be, you have an issue of where they are placed. Are they noisy, are they like, you know, is it causing regional issues like nearby with like maybe air quality or like traffic or whatever. That's one thing. And so you can like prevent those from being built in your backyard. But the thing is, and I think a lot of this really comes down to more of the power usage and effect on the power bill that most people see because that's the thing that really affects their pocketbook the most. And this is where the huge disconnect is banning these like at the county level or even like state level. Because you're talking about regional power rates which are not bound by county lines. We're talking about utilities that span counties, span states. And, and this is where like the way that the cost of building these new data centers is borne upon is borne by the utility and therefore the end user is really like the major disconnect here. And where like I think most people can't are like not equipped to understand like how to legislate these. If you don't want these, you don't want them affecting your power bill. This is not a county issue, probably this is a utility issue. This gets into like regulated or deregulated utilities. This gets into southwest power pool. You know, in my neck of the woods it's OGE and pso, aep. And so the funny thing is like it's kind of a tragedy of the common scenario where if you are worried about your citizens in your county getting a higher power bill and you ban it from your county, as far as I'm aware about how the majority of utilities work, that is not, that's not effective at all. All you really did was actually just possibly lock your county out of additional tax revenue that you could have already charged by a new large corporate investment in your area. That, you know, that's now you're going to have to go head to head with the utility because that's really where like, interconnect costs are like, you know, passed down and amortized across the whole system. So I will have my own little story here, which is in my neck of the woods in northeast Oklahoma. My, my county, Tulsa City county, passed just past the city council level, a moratorium on new data centers, and that is new data centers for the rest of the calendar year of 2026. And there's already a few data centers that are already in the works. Tomorrow or later today, Facebook is going to announce meta. They're going to announce that they're building one in East Tulsa, and there's already a couple Google ones in the area. And I think that can be fine because we have to update our zoning law really, for a lot of these, because they're classified as a light impact. And I think what we're going to do is bump up the zoning of these types of data centers, like a moderate impact and, you know, that'll like, affect like, standoff and like, decibel rates and, you know, that kind of thing. But, you know, that's just Tulsa city, that's Tulsa County. There's really not that many data centers that want to go inside Tulsa County. We have actually a higher tax rate for this type of stuff. So, you know, sales tax and bill, you know. So, like, I look at these moratoriums as they're going to be very popular because the data centers are going to cause a ton of issues that people don't understand. There's going to be a huge backlash. So what Will Manitis, I believe, says here, and it's one of his things he's talking about for a few months now, is that this will be one of the biggest populist opposition movements in our lifetimes. And I can see this happening, and I'm dismayed at. I think that we are not equipped at most levels to like, for the average person to effectively, like, push back against data centers if they want that. Because, like, that those are corporation commission roles.
- [59:06]
D
Those are.
- [59:06]
C
Those are like commissioners who regulate these entities. And these are often like, there's a lot of people who are not elected who, like, make these decisions. And this is not something really that like, I think applies to the municipal level or even like the state level. So there's a lot here, and it's really interesting. This. Yeah, I'll toss it back to you.
- [59:30]
B
That's a really good point that no one's. I've not heard Anyone articulate? I'm sure someone has, but I've just never seen it argued like that. And to your point about the fact that a lot of these power markets are, or rather a lot of these states are interconnected within these power markets, a lot of these localities are interconnected. Every utility is different, every single energy market is different in terms of all the players who are operating in it, the actual energy producing companies and where they are concentrated, which, you know, which cities, which counties have the most load and which ones have less load, which ones are kind of subsidizing production for others. Right. So it can get messy really quickly. And I think that's part of the reason, obviously, it's no surprise anyone. This is why Texas has been able to run away with the ball on a lot of this stuff because ERCOT is regional. I mean, a little bit of it spills over into Oklahoma, I believe, but not very much. And it's mostly just in Texas and it is deregulated to the point where it's really easy to get a hookup with a energy producer as long as you have your eyes dotted and your T's crossed. Going back to one last point about Will Manitis's article that I just pulled up, and then we'll move on to the next segment, I do think that there probably is something there because you have two concerns simultaneously with the data centers. I think the less pressing concern because it's just kind of fallen out of the zeitgeist, is the environmental stuff for a lot of progressives. They're going to look at this similarly to bitcoin mining. They're going to look at statistics or reports that say that they guzzle water. Even if the water is recycled back into the sources that it comes from, that's probably not going to matter. That nuance is going to be lost on a lot of these people because it's a very emotional reaction and then augmenting that emotional reaction. Oh, and the other part obviously is the energy footprint. Right. We're supposed to be consuming less energy, in case you didn't know, brought to you by the Bilderbergs and the, and the Davos class. But the second part of it is this will be a huge existential threat to a lot of, you know, you could say highly educated or at least moderately educated college graduates and, and university graduates at a time when they're already feeling like they're not getting very much for their degrees. And now computers coming, they no longer have to compete not only with their peers and potentially foreign labor, but now they also have to compete with a machine. And so when you put all those together, I do think we're staring down the barrel of some potential populous rancor against this. But we'll leave that where it is and we'll go ahead and pop on over to a quick news segment. We're going to do these, these last two news items pretty quickly because there's not too much to say about them. But this one I thought was really interesting. A scoop from CoinDesk here. Potential buyers are circling Winklevoss back to crypto exchange Gemini. I love the verbiage. And they're circling. It's like a bunch of sharks and sharks trying to get the silver tuna. Now if you read this though, you'd think that that means that they are looking at Gemini itself, the main exchange that is currently only operating in the US And Singapore. But what's actually happening, and I'm quoting directly from CoinDesk, potential buyers are exploring acquiring Gemini shuttered European and UK operations to secure regulatory licenses rather than pursuing a full takeover of the exchange. So some context for this. Gemini this year laid off 25% of its workforce and also shut down its exchange arms in Europe, the UK and Australia at that time. The CEO Marshall Baird, CFO Dan Chin and CLO Tyler Mead all left after those layoffs. And now, according to a source close to the matter, someone is trying to buy the shuttered exchanges in the UK and Europe. Now if you're wondering why they'd want to do that, the answer is in regulation and to avoid red tape, some would be requirers, quote, are interested in buying the company's now shuttered operations Europe and the UK to obtain regulatory licenses in these jurisdictions and are not interested in a full takeover of the NASDAQ listed company, the person said, who spoke on condition of anonymity. So this is similar to the corollary that I immediately latched onto is with Kalshi and with Poly Markets sucking up all of the gambling market share in the US you actually have crypto exchanges and other companies seeking to buy out companies that have CFTC broker dealers licenses. They might be defunct, they might have little volume or might not even be doing anything, but they do have the licensing. And so there's actually a kind of a mini M and a boom going on right now with some of those players to make sure that the exchanges or the potential prediction markets offerors are actually compliant so they don't have to go through the rigmarole of applying and getting approved. They just purchase a business that already has that approval. And for all of the regulation that we have in the us, I am sure that it is much worse across the pond in the Europe and the uk. So I could see this as being potential boon for whoever wants to buy Gemini because they could probably skip, I don't know, a year, maybe two years. I don't know how long it would take to get approved. Now, that being said, even after they purchase, they still have to get permission from the regulators that it's okay to make that purchase. But interesting little scoop and goes to show how quickly some of the landscape is changing in 2026. We're clearly in a bear market and some companies, as we've reported on already, are really feeling the heat. Like Gemini. Mayer laid off 15% of its workforce as we reported last week. So that's that, Charlie.
- [65:23]
C
Yeah, Gemini. Funny. The Winklevi were some of the earliest to bitcoin. They took their Facebook settlement winnings, went and bought a bunch of bitcoin, launched an exchange. Gemini, the twins in astrology, named after the wing of the twins. Great name. Yeah. We'll see which shark gets the food. So.
- [65:44]
B
All right. And we've got a update on Naka. But first a word from our sponsor, Lygos. Speaking of companies having trouble, hedge funds are getting liquidated. Is your Bitcoin safe? It's not just Bitcoin's price drying up. Big whales, hedge funds and lending desk are reeling after the 10, 10 and 2, 5 liquidation events. Counterparty risk is rampant. So it's more, more important than ever to understand who actually controls your Bitcoin. And with Lygos, that is you, no one else. Don't be the next FTX or Celsius victim. If you are working with another loan provider, do yourself a favor and check out Lygos Finance. They are Block Space's preferred Bitcoin lender. Using Bitcoin native smart contracts to protect your stack and make sure you are always in control of your keys. With Lygos, you know where your Bitcoin is. You hold those keys. There's no wrapping, bridging or rehypothecation. Get competitive rates as low as 10% APR and visit Lygos Finance. That's L Y G O S dot F I N A N C E To learn more. All right, and our last news item for today because the closer is more of a. More of a reflection than anything. Nakamoto Naca, the bitcoin treasury company helmed by BTC Inc. CEO David Bailey, the parent company of Bitcoin magazine, Bitcoin Conference is seeking approval from shareholders for a reverse stock split. Now, I'm going to try to keep this as simple as possible, but if you have been following Nakamoto, you know that the company has been beleaguered for some time. Its stock price has been below a dollar for some months. That has triggered a delisting notice from Nasdaq, and they have until June to get the house in order to, or else they will be booted from NASDAQ's primary exchange. So in order to administer a salve to these wounds, Nakamoto is proposing a reverse stock split and asking shareholders to vote on it. They are proposing two different scenarios, and these are both pretty extreme in the realm of reverse stock splits. They are proposing a 20, a 1 for 20 reverse split or a 1 for 50 reverse split. Now, what this means, a reverse stock split, is you could actually call it more of a consolidation, because calling it a reverse split is a little bit kind of a misnomer because you're actually not splitting. You're consolidating. So with a stock split, what ends up happening is if a company's doing really well and they want to increase their liquidity and increase the avenues to hold their shares, they will do a stock split where they actually end up increasing the number of shares. It's a dilutive event. But usually companies will do that when their stock price is soaring. They're doing really well, and they think the market can absorb that dilution. A reverse stock splits the opposite. It's where you consolidate your shares. You're basically reducing the full number of shares in circulation in a bid to bump your stock price up. So if they go for the 1 and 20 or 1 for 20 reverse split, the stock price right now is just around 20 cents. Let's get a confirmation. It's 21 cents. Currently, they do the 1 for 20 split, then that scenario would, hypothetically, if all things being equal, would pop the stock price up to $4 and 40 cents per share and reduce the total number of shares that are in circulation and outstanding from 690 million down to 34.5 million. In the 1 for 50 scenario, these shares would be reduced to 13.8 million. And that would give NACA hypothetical share price of 11 per share. Now, the one thing that I did want to point out in this is that in this filing, there is nothing that changes the total authorized share count of the company, which, if you didn't know, is 10 billion. It's a lot of shares.
- [69:56]
C
There will only ever be 10 billion.
- [69:57]
B
There will only ever be 10 billion shares of NACA. Now, that doesn't mean, okay, like the authorized share count is how much, how many shares a company can issue. That doesn't mean that it is the number of shares that are issued at a given time. It just gives them higher ceiling to issue more shares into the market. So nothing about that is changing. The last thing I wanted to point out, and I don't actually know if this has been reported or has been disclosed in any of the other filings, but we can see the total number the shares of common stock beneficially owned by key personnel in NACA. David Bailey, the CEO, comes in at 119.36 million shares, which is 17.3% of the company. And his mother, Cali Bailey, comes in at 98.885 million at 14.33%. And I kind of wanted to include that last point because I'm gonna go to bat for David Bailey here for a second. When I say people always accused him of being malicious with this thing. I think he legitimately believed they were going to do be able to pull off the treasury pivot and that this would be an incredibly lucrative play because he got his own family and friends to invest in this thing. You know what I mean? And he's got a lot of his own capital tied up in this. So all that being said, clearly rooting. He's clearly rooting for this reverse stock split for shareholders to vote yes. If I had to guess, given how much of the stock is concentrated with NACA insiders, I would guess this is probably. And also just anyone who's holding shares, they're incentivized to say yes to this because otherwise the stock is going to get delisted, move to a minor NASDAQ exchange perhaps, or another exchange. There's going to be even less liquidity for it than there is now. This reverse stock split does not solve their problems, but it does buy them time. So hoping for the best for all the Naka shareholders and for the Naka team.
- [71:53]
C
Yeah, I'm on the David Bailey is a true believer train. So how do I say this politely? Do not ascribe to malevolence what could otherwise be explained
- [72:09]
B
with inexperience.
- [72:10]
C
Perhaps with inexperience.
- [72:12]
B
Because I do think that's like the thing to remember about this is thing I keep coming back to with the treasury plays. And we'll leave it at this. A bitcoin treasury company is a capital allocation vehicle and the most important person on your team it's probably either your CFO or someone who understands capital markets really, really well. If you don't understand how to leverage capital markets to your advantage, if you don't understand how to balance debt and equity to get the most for your dollar, to buy bitcoin in a way that is attractive to investors to show that you're not getting overburdened with debt or not diluting too much. That is a tightrope that not too many people I would imagine can walk very easily. And so I think a lot of these companies probably rushed in and thought it doesn't really matter. We're going to find ways to raise capital and deploy it into bitcoin. And they didn't take, they took for granted the fact that the market would actually look at the ways they were raising that money differently. It's kind of like the way that energy is created. Right? Not all energy sources are created equal. Some are more efficient than others.
- [73:15]
C
So anyway, and NACA followed through on their plan. We're going to merge and acquire BGC Inc. Utxo.
- [73:25]
B
So yeah, they, they've got a revenue generating business now. And now Inc and NACA are glued at the hip. Hope it goes well for everyone involved.
- [73:35]
C
Yeah, those. It was the plan. They're executing on the plan.
- [73:40]
B
Speaking of executing on the plan and plan trusting, we published a newsletter today. I won't spend too much time on this because we're getting pretty late here late in the day on the live stre but y' all might recall from last our last live stream and from just if you're tuned into the news, there was kind of this bombshell scoop from the Financial Times where they reported that Iranian officials are going to let tankers pass through the Strait of Hormuz only if they pay a duty. If they pay a toll in bitcoin. I thought this was pretty but we're
- [74:15]
C
going to say bitcoin because ain't nobody
- [74:17]
B
paying with ain't nobody paying in Dogecoin or Solana Lana to, you know, run the straight of Hormuz. Yeah, I thought this was crazy though because in the looney Tunes year that we're having to see this come out if you. So for the average Joe who barely can put Iran on a map, having him mentally model why Iran would say sure, you can leave the straight but you have to pay us in bitcoin because he barely understands bitcoin anyway. And also isn't it a Ponzi because that's what his friend told him who's like totally right about everything. Just trying to link those two things together. The largest geopolitical event since COVID with this nation state that is under fire, saying that it will take Bitcoin to process ships through the Strait of Hormuz is almost like something out of a fever dream. If you had told me this a few years ago, I would have thought that's crazy. But the reason why this is happening is actually pretty easy to explain for anyone who's been paying attention to bitcoin adoption and Iran. Iran has been under sanctions by the US government, well, for, actually since like the 70s. There have been a number of round of sanctions, but the most recent round came in 2018 under the first Trump administration. And they have sent. It, sent the Iranian economy honestly into a spiral. The rial has lost like 90% of its value since then. And bitcoin has become a life raft not only for the average citizen of Iran, but also for the Iranian government. Chain analysis has estimated that last year alone, Iranian linked addresses, Iranian government linked addresses, and those linked to the Iranian or the Islamic Revolutionary Guard Corps processed something like $3 billion worth of cryptocurrency transactions. And that was just in the last year alone.
- [76:11]
C
Yeah, this is nation state adoption. Yeah.
- [76:16]
B
And that's part of the article that I make in the. That's part of the argument I make in the article. And if we, if we take that into consideration, you know, Iran I have right here written roughly 20. So if we think about like, let's play this scenario out where like all of the tankers actually do pay this toll. EIA data estimates that roughly 20% of the world's oil is shipped through the Strait of Hormuz, which would work out to about 17.3 billion barrels annually. So if they actually do end up enacting this, where every barrel of oil is taxed at a dollar paid In Bitcoin, that's $7.3 billion, which is 2% of the country's GDP. So then if we back that out further, you know, 3% of the, or 3 billion being processed through Iranian linked cryptocurrency wallets is, you know, almost 1% of the country's GDP. That's not a crazy amount, obviously, but it's not. It's. It's notable. Right? It's a full, It's a full basis point. Or, excuse me, it's a full point. Don't want to Matt Iglesias myself there. It's a full point. So if, if we think about this in context, first of all, they have to say pay in bitcoin because there's no other way that these international companies could actually send the money because Iran is currently blocked out of the entire Western financial system because of those sanctions. But this really plays into one of, again, a trend that has been blossoming in Iran for some time, that the Iranian government has used bitcoin and mines bitcoin as a way to get around these sanctions. They, there are reports that they have used bitcoin to fund or accept payment from some of their proxies in places like Yemen and Lebanon. You know, it's well known that Iran funds a lot of terrorist cells all throughout the Middle East. It's part of the reason why Israel wants to strike them. But they also have bitcoin mining operations. We don't know how much. This is a kind of point of obscurity because there's no way that we could know this, right? There's no sure way to measure it. But Luxor's hash rate index, their global heat map says that Iran constitutes 0.84% of Bitcoin's global hash rate, roughly 9 exahashes. If we assume S9s are older generation hardware, which almost certainly is because it's probably very difficult to import new hardware into Iran, that's roughly a gigawatt. If we assume newer hardware like S21 unlikely, it's about 160 megawatts. We had a Iranian bitcoin miner, Masi Alavi, on last year, he's the CEO of Veriminer, who said that there's as much as 2 gigawatts of illegal Bitcoin mining in Iran versus 5 megawatts of legal mining. Now the reason why that would be is because if you register to mine legally in Iran, you can't make use of the subsidized electricity tariff. Iran subsidizes its electricity and energy and energy infrastructure. It's like half a penny, or I think it's like six tenths of a penny per kilowatt hour to actually operate or for electricity prices in Iran, which is crazy. But so that means that if you're doing it legally, you don't actually get to access that rate. So most people just mine illegally in their basements. Mossey actually told me that one miner that he knew of was mining out of a jewelry store. It's a guy who owned a jewelry store and he had, you know, some old Asics baby. I know, I think that that's super funny to me and very interesting. But the Iranian government also mines quite a lot and in fact, an NCRI report, which is kind of a, you have to take someone to say with a grain of salt, because they are a counter. They're, they're a protest group against the Iranian regime, reported that Iranian officials counted for over 50% of the country's Bitcoin mining footprint in 2023. And there's one more estimate here that a Persian news outlet quoted a Tehran electricity official in November of last year saying that illegal bitcoin mining makes up about 1.4 gigawatts. So we can kind of contrast that with Masi's 2 gigawatt number. So all of that to say, why am I spending all my time talking about this? And Iran is actually, you know, by, by hazard of coincidences, one of the premier bitcoin countries in the world. You don't have to like the Iranian government. I mean, I'm certainly not going to sit up here and stand for them. I'm no fan of what they do. But the fact of the matter is between their bitcoin mining on the national level and the fact that they use bitcoin in commerce, and now that they are rewriting global trade rules or trying to rewrite global trade rules and demanding payment in bitcoin for an export duty, that's the most significant bitcoin adoption, I think you could argue the most significant bitcoin adoption on the nation state level that we've seen from any nation state. I mean, this makes what El Salvador did by accepting bitcoin as legal tender kind of look like a PR stunt, right? I mean, some people use it as legal tender. I mean, it was a PR stunt.
- [81:15]
C
Yeah.
- [81:16]
B
Calling a spade a spade, but. And again, sorry, just. I just want to drive this point home. I'm not saying this is a good thing, but bitcoin is money for enemies. And I think you do have to recognize these shifts that we're seeing in the geopolitical and economic landscape with something like this. It remains to be seen whether or not oil tankers and shipping companies will actually pay the fare. But the fact that you have a major nation state like Iran that's embroiled in a war, we're in a two week ceasefire, currently come out and say, yeah, we'll let you through this straight, that we control, but only if you pay in bitcoin, that seems like a pretty significant news item to me. That's a shift.
- [81:56]
C
You know how a lot of folks who talk about the future of bitcoin block space and how expensive transactions might be. I'd heard the phrase. In the future, sending a bitcoin transaction might be like chartering an oil tanker. Well, maybe Iran took that a little bit too literally. There's your mic drop moment. Okay, let's wrap this up. Thank you so much for watching Blockspace live live Monday, Wednesday, Friday, noon Eastern, everywhere podcasts and live streams are found. See you all next week in New York City, April 16th, Thursday at the Time center for our technical conference. Up next, op n ext.dev I'm Charlie, this is Colin and and one will
- [82:42]
B
sorry, one housekeeping item. As I love to say, we will not be live streaming Wednesday and Friday next week because we will be heads down at OP next. So we will have a show on Monday for you, but we will be taking a couple day break and we will see you back Monday after next for a full week of live streaming.