← Blockspace: AI & Bitcoin
Blockspace: AI & Bitcoin
Coinbase and CLARITY, OP_NET Raises $5M, Blockfills Goes Bankrupt, Drukenmiller Fades BTC
01:01:57
On today’s Blockspace Live, we address reports alleging that Coinbase is meddling in the CLARITY Act and break down Blockfill’s Chapter 11 bankruptcy.
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- [00:00]
Chad
Foreign.
- [00:05]
Charlie
Welcome back to Block Space Live. I'm Charlie and this is Colin. We have a banger show for you today. A big lineup of guests is Coinbase secretly fighting the de minimis tax in Washington. We dive into this conspiracy. It's TFTC versus Coinbase. We also have a new hot new meta protocol Launch on Bitcoin OpNet. We have both co founders Chad and Danny in the house and and the second segment, we've also got Val Russo going to talk about mining hash rate projections last year. He absolutely nailed it. And we're talking about Blockfield's bankruptcy and Stanley Druckenmiller fades Bitcoin Blockspace Live is a show at Monday, Wednesday and Friday at noon Eastern. We feature quick hits on the latest in bitcoin mining, AI and emerging tech. Make sure to hit subscribe if you're on YouTube, hit the bell to get notified when we go live. This is a podcast as well, so find that anywhere podcasts are acquired. And if you like what you hear, you'll Love our newsletter. Newsletter.blackspacemedia.com this show is brought to you by Cleanspark. Let's kick it off, Colin. So over the weekend, a non bitcoin founder went viral. Travis Kalanick, formerly with Uber, had a hot interview on TBPN as his new Adams company emerged from stealth. Did you catch this news?
- [01:42]
Colin
I caught some of the interview and he was kind of ranting about like if you're not working hard enough, you need to be working harder. Kind of typical rise and grind Silicon Valley entrepreneur slop. You know. That being said, the company that we're about to feature here, maybe you can go ahead and pull this up. I don't know how to feel about this because this is either, this is either the transhumanist take here is that we are going to be wealthy, bond our imaginations in the age of AI and no one's going to be poor and there's going to be abundance. But then there's the wef side of me who thinks this is the exact, exact company they have in mind when they say, you know, you will own nothing and you will be happy about it. But I don't really even know what this company is trying to do.
- [02:31]
Charlie
What is the company? So he put out a blog post. Now Travis has been pretty like low key for years since he was ousted from Uber. And he talks about this, his blog. He's been, it was oust from Uber, you know, maybe a decade ago, you know, really like a very popular C suite guy at Uber. And he announced this company named Adams and wrote a blog post about it. And the. Basically, it sounds like he's just trying to make, like, a robotics company. If I can be, like, really straightforward,
- [03:04]
Colin
but apply it to, like, everything. It's like almost like taking the Uber model of potentially renting out someone else's hardware or something for a specific purpose. Maybe that's not it, but the idea is to apply robotics to food production and supply chain, to mineral production and supply chain. And there's a third pillar. Right. What's the third one?
- [03:27]
Charlie
Oh, gosh, I don't know. It's in his blog. But basically. Oh, here we go.
- [03:33]
Colin
Adam's transport. Wheelbase for robots. Yeah, so it's like food mining, transportation. So it's like you're trying to basically apply robotics and AI for production of commodities and food and also for logistics of those things, is what it sounds like to me.
- [03:49]
Valentin Rousseau
Yeah.
- [03:49]
Charlie
You know, you remember back in the day when everybody was launching some app and it was like, it's. It's. It's like letterboxd, but for, you know, neighborhood communities. It's like doordash, but for townships. Well, this is Uber for robotics, basically. It sounds like. And it's packed with all sorts of optimistic, you know, abundance coded language about how we need to move.
- [04:18]
Colin
Yeah. Like that change isn't God's work. He's saying changing the environment. We live in human progress and is in service. Human human progress in service to the battle against entropy, dust, and civilization. Do some. Some unclear language and typos on this.
- [04:35]
Charlie
Yeah.
- [04:37]
Colin
Going back to my original point with this, and then we'll start moving on after you have final thoughts on this, Charlie, to the actual news items. What's interesting about this to me is if you listen to Lyft's founder, who actually, Lyft was the first app for this. Uber was the one who did it better. And so it got more market share at first. But I was listening to Lyft's founder on a podcast way back in the day. It might have been how I built this. And he was basically saying that the original idea for Lyft is that no one would have to own a car anymore, and you could just rent a car on demand. Needed it. And when I hear stuff like that and then I see people working in those service economies. Right. You know, these kind of rental and gig economy apps like Uber, when I see them establishing another company, I want to be optimistic and be like, yeah, AI and robotics for all this stuff. Makes total sense. That's awesome. But Also, like, the core function of some of these companies was trying to do more with less and basically obviate ownership over resources for people. So I'm a little hesitant to be like, this is going to be fantastic.
- [05:40]
Chad
I just.
- [05:41]
Colin
I don't know what the product's really going to be yet.
- [05:43]
Charlie
So, yeah, it's still ambiguous. It's got a very cool, hot name. And robotics is, you know, the investment place that if you're not. If you can't buy compute from the hyperscalers, then you can at least go make robots. So you'll own no robots and you'll be happy. Let's get into our first story. I, yeah,
- [06:07]
Colin
this really probably should have been on Friday's live show, but we're gonna do it on this one because we were a little slow on the draw last week, and that is. TFTC and Marty Bent are reporting that Coinbase is lobbying against the bitcoin de minimis tax exemption on Capitol Hill as Clarity goes through the rigmarole of approval as it tries to become a law. So, you know, cue your Schoolhouse Rock civics classes here from elementary school. But this is kind of a. You know, I would say there are two things kind of immediately for this. Number one, if this is true, it's not that surprising Coinbase has more to gain from stablecoins getting preferential treatment in this bill than Bitcoin. And two, the bitcoin de minimis tax exemption is something that has been fought for and chirped about for a long time.
- [07:07]
Charlie
What is the de minimis tax exemption?
- [07:08]
Colin
Yeah, so I was about to get into that. So the de minimis tax exemption basically says if you make a small purchase with bitcoin, you will not have to report that purchase for your capital gains. So whenever you buy something with crypto, if you're doing things above board, you're doing, you're supposed to actually report that you bought something because you may have logged a capital gain on that sale. You buy bitcoin when it's $10,000, it goes up to $20,000. You buy something with that bitcoin, your purchasing power increased, and you're supposed to actually report that. Now, the interesting thing about this is not necessarily the fact that people are pushing for the de minimis exemption. In the original draft of the bill, I think it was like $200 was the de minimis. I believe Cynthia Lummis put an amendment in there to make it $300. So, you know, it's anywhere from 200 to $300 that you would be free from having to report that if your purchase was under that threshold. Obviously that would be good for bitcoiners. I think the more interesting and less intuitive thing here is whether or not this should apply to stablecoins. And people are probably thinking, why do stablecoins need de minimis? It's literally pegged to a dollar. Well, the fact of the matter is you still have to report it if you make a sale or if you buy something with stable coins, you have to report that you made a crypto transaction in your taxes. And the other thing too is that they're not always pegged to a dollar. Right. Stablecoins float. The way that the mechanism remains stable is there are buyers and sellers in this market acting on market information and arbitraging. When the stable coin goes a little bit above a dollar and a little bit below it, you know, they burn it if it goes below to get it back up to one. They buy more if it goes up above one to capture that delta. So with those fluctuations, there's the chance that you actually got like a fraction, you know, of a percentage gain when you buy something with tether or usdc. Right. And so apparently Coinbase wants stable coins to have this de minimis consideration before bitcoin. Now, this is very much a he said, she said story, because one of the first things that came out after Marty tweeted this, if I can get this up. Yeah, there we go. Was one Fariar Shirzad, he is the chief policy Officer at Coinbase, saying, this is a total lie. Marty meant, we have never and will never lobby against bitcoin, ever. This led to one of the great responses to this, that Marty is basically the Alex Jones of bitcoin. Totally clueless conspiracy monger from Nick Carter. And quick side note on that, Marty, actually, Marty retweeted this from Nick Carter with a gif of Alex Jones, showing that he actually does kind of see himself as the bitcoin Alex Jones, which, you know, is, I think, fair if,
- [10:07]
Charlie
you know, you know, it's. Yeah, you know, it's. They're not wrong. I mean, that's why it's so fun.
- [10:12]
Colin
No, yeah. Like, this was Marty's response to Nick's tweet and he's like, totally leaning into it. But, you know, of course Coinbase is going to say they didn't do that. We have some reporting that or we have some.
- [10:24]
Valentin Rousseau
We.
- [10:25]
Colin
We have some journalists coming out in defense of Marty's reporting, like Frank Corva saying, my sources on the matter have Also told me that one of the items and clarity that may be on the chopping block in exchange for Coinbase crypto industry getting interest on stable coins are the BRCA protections for developers deeply disturbing. So not quite the de minimis tax, but there is this idea that Coinbase is kind of trading and going, you know, going tit for tat with regulators saying, okay, you don't want to give us deposits, you don't want to give us interest on stablecoin deposits. Well, we will drop these other things or support dropping these other things if you give us that. That's the other really important piece here, not just about de minimis tax treatment for cryptocurrencies, but there is this, there is this provision in the Clarity act that says stablecoin holders can issue interest rate, can issue interest to depositors for their stable coins. So if you hold stable coins with Coinbase, those stablecoins are, you know, gaining or accruing interest, then Coinbase can pass that buck on to consumers. Banks really don't want this for obvious reasons because it would encourage capital flight away from the traditional financial system. But the exchanges, obviously to broker power, really do want this and it would help their businesses and would help them retain customers and also bring more liquidity into their platforms. So that's the other big part of this and the last piece of supporting evidence I want to bring up. Charlie, actually, before we get to Ryan Armstrong's response here is with regards to what Marty reported, Jack Shapiro of bpi, he's said, or I believe, yeah, he is a head of policy at the Bitcoin Policy Institute said that this is true, that what is going on with Coinbase trying to nuke the de minimis is for stable coins for their benefit. Zach Shapiro says that this is actually true. Whether or not it is true obviously is up for debate because if you go back to the original post, which we'll go ahead and get that up on your end, Charlie. Brian Armstrong, of course, saying this is false. You know, we love bitcoin. We're never going to do anything coin, yada, yada, yada.
- [12:43]
Charlie
It's rare that you get like a direct comment from Brian Armstrong about these types of things and that's why it's so notable. And Brian Armstrong denies this. They say, he says, we spend a lot of time lobbying for bitcoin's de minimis tax exemption and will continue to do so. We don't have definitive knowledge one way or the other. We have legitimate, legitimate people on both sides claiming that this is and Isn't true. So fascinating. Riddled with drama. Many last thoughts before we go to the op net, guys.
- [13:20]
Colin
Yeah, I think just to cap this whole thing is tied up in what is becoming an incredibly messy, you know, deliberation over what the Clarity bill will actually look like. Excuse me, if it's signed into law. And I do think the biggest, the, the biggest hang up for a lot of the traditional exchanges who are kind of involved in the conversations here, like Coinbase is this idea of the interest payments on stablecoin deposits that is huge for them and it's something they really want and to kind of put a cap on it. Like Charlie said, we don't know what is and isn't true from this. If I had to go with a gut feeling, it would make sense to me that Coinbase would want the favorable stablecoin regulation versus the favorable bitcoin regulation because they have more control over the stablecoin ecosystem and it directly benefits their core business more than something like a de minimis tax exemption for bitcoin, which really only helps Bitcoin holders now love to live in a world where I think Coinbase is going to do the altruistic thing for its users, but they're going to go with the business case. Right. And you know, I once asked someone from the BPI Institute, how is it that Coinbase has so much say in this? And I think that just goes to show how big of an organization it is. And at this point in the game, the largest stakeholders do have a seat at the table and they are going to have more of a, you know, more of a say over some of this legislation than others. But we'll leave it there and we'll go ahead and bring up the opnet guys.
- [14:55]
Charlie
We'll do the Oppnet guys right after a word from our sponsor, CleanSpark.
- [15:00]
Colin
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. We are setting the standard for what's next. Learn more about the intersection of energy and bitcoin@cleanspark.com
- [15:31]
Charlie
all right, we got the opnet co founders Chad and Danny Plainview. Welcome to the show, guys.
- [15:38]
Danny Plainview
Hello. Hello.
- [15:39]
Chad
Hey, thanks for having us.
- [15:41]
Charlie
Yeah, big week for you guys. You're launching Opponet goes live after many years, many trials and tribulations, a lot of noise on social media. So you guys announced, you guys formally announced the raise this recently. Tell me about that.
- [15:58]
Chad
Yeah, so we have we announced a $5 million fundraise on equity for infrastructure that we've built around the OPNET protocol. And so yeah, I mean we're really excited. We partnered with some of the, I think in our opinion, some of the most forward thinking and aligned with our vision funds. We were pretty careful and selective with who we raised money from and how we did so. And again, from our perspective, we have a really long tail vision and view for where we want to take our company and the products that we want to build. So aligning with, you know, funds that kind of supported that vision and had had a sort of shared vision with us that was really, really key for us.
- [16:43]
Charlie
Yeah, I had you guys, I had you on the, one of our podcasts like a year and a half ago, Chad, we talked down in Singapore and a lot's happened since then. You know, maybe run it back. I'll throw this to Danny. What is opnet in as simple a
- [17:01]
Danny Plainview
word as you can put it, Opnet is a smart contract protocol for Bitcoin layer one and Bitcoin layer one assets. So I know a lot of the audience here, probably it's Basically like ordinals BRC20 ruins the user experience, but smart contracts, so everything stays on bitcoin. Bitcoin is the gas token. There is no bridging, there is no other layers to this. But we have the same kind of smart contract environment that basically every single other blockchain has. So we're seeing people build out all sorts of Dapps, from DeFi to NFTs to actual business models all on Bitcoin layer one in a way that just simply wasn't possible before.
- [17:47]
Charlie
Yeah. And this, there's a lot going on. I mean we could recount some of the high points of the past, like year and a half. You guys blasting the test net, Was it both bitcoin test nets? I think I don't.
- [18:03]
Colin
That's right. Yeah.
- [18:05]
Charlie
You guys have been very noise on social media, but now you've actually got to ship something. And so here we are. I know, here we are, we're going live. I think the main thing that's most interesting to me is the amount of interest you've got both on social media. But then you had a big hack like hackathon project over the past month. Tell me about that and what this ecosystem looks like.
- [18:31]
Danny Plainview
Yeah. So about six, seven weeks ago, we started investing our time and dev resources into building out AI infrastructure. Now it's not just AI infrastructure for opnet related things, it is AI related infrastructure for bitcoin as a whole. And that really was just never possible before this. Simply because bitcoin, as I'm sure you maybe know, is horribly documented. There are no standards, A lot of things are totally unmaintained. Things are very old. The governance process for bitcoin tech is just totally a nightmare. Right. And so what we have taken time to do is to document those undocumented parts and, and then have a forward thinking mind of documenting with AI agents and these kind of structures in mind. So yeah, we launched something called Vibecode Finance just about three, four weeks ago. We had probably five to 10 serious builders in the opnet eco previous to this that have been stuck through the many changes we've done on testnet through the past year and a half. And since four weeks ago we started the Vibe Code Finance contest. There are over 400 Dapps that have been built. I would say just about 125 of them use actual smart contracts that work. And it's a totally everything from your favorite defi Ponzi to generative art that is like actually on chain. There's people building actual businesses, there's file storage structures, there's new ways of storing images in encrypted messaging, everything, everything you can think of. And this is all previous to it even being live on mainnet. So yeah, we're really excited to see. It seems like just that there was so much creativity and energy in the ordinals and BRC 20 early days before everyone kind of realized that you can't build anything past marketplaces with this stuff without requiring custody at least. And so it's really exciting to see that energy and that creativity kind of return back to the space. I think it's this bubble that most people are unaware of and that's why these, a lot of these, you know, bit 110 guys totally freaked out last week because they just found out about it.
- [20:52]
Charlie
Yeah, that might actually be the most fun thing to talk about because you know, we could, we could, we could, we could chat about opnet, the raise, whatever. The thing that like really caught my eye this week is that somehow you guys managed to incur the wrath and Irene of the bitcoin filter camp. The people behind the one pen filter proposal. Like what in the world happened?
- [21:20]
Danny Plainview
Okay, first of all, I was. Sorry, I will just say real quickly that we have talked back and forth with Luke Dasher from Ocean Mining, the guy who maintains knots multiple times over the past two years. Okay. We've had probably three, four multiple hour calls with him. We've had two IRL meetups where he came to our house and hung out here and we talked about off net with him. Right. So he's acting like totally, oh, I had no idea this was coming. No, this guy's known about this since basically day one.
- [21:47]
Chad
And yeah, by the way, we did so. We did so in order to let him know and consult him. Not on like a, oh, we hired him or anything like that, but just simply saying, look, we know you hate ordinals, we know you hate all this stuff that's happening on bdc, we know you hate spam, so we want to advance what you can do with ordinals. Why do we get excited about BRC20 or ordinals? Because in our minds there's a huge unlock with offering defi natively on BTC. That's why we were interested in ordinals and BRC 20s to begin with. That's why we started building within the space. So we told him, look, there is a market for this. There's a lot of people who are interested in doing this. If we were to build a protocol that allowed for this to happen, what is the one most bitcoin native way to do it? Two, the least offensive to you way to do it? I know you're going to hate it. So what protocol changes or designs could we implement that make it healthy for bitcoin or make sure that you hate it the least? And that was basically the basis of our conversation with him, is not like him signing off on what we were doing, but just giving us advice on how, how best to avoid hurting bitcoin. Because again, we designed our protocol to try and help BTC and try and be able to do more and offer us cool functionality with bitcoin. So that's why we were talking to him in the first place. And so, yeah, and, and by the way, his consultation resulted in a lot of really, I think, beneficial changes to bitcoin that we, you know, when we first designed the protocol, we didn't design it with this stuff in mind that inevitably, I think has built out a more robust protocol.
- [23:14]
Colin
So these conversations with Luke were basically, hey, how do we make this in a way that won't piss you off and is the closest that you're going to get for a, you know, filter purist in terms of having this protocol in bitcoin? My next question is, what? You know, just kind of, you know, you know, some Page six stuff here and spilling the tea. But was he amiable during these conversations? Was he hostile to work with him
- [23:40]
Danny Plainview
we had dinner with him for like four hours. Like, like, like this multiple times. I'm telling you. Like this is, this is expected of course because I, I know everyone has to do the Twitter show but it is totally hilarious that this camp is acting like they have. No, actually the first call we had with them was with the entire ocean mining team which what is that guy? Mechanic? Yeah, yeah, he was on that call. Swear to God. Like it just, just totally hilarious. And again sorry, just to bring it back to what they said is his advice from the first couple times we talked about on how do you do this in the most non offensive way was one look into merge mining as a concept that like totally cool that that was like a six month thing where we were keeping that in mind. This was before fractal bitcoin launched as well. So merge mining started to kind of be talked about and two was if you're going to do it on layer one, you have to do it in a way that doesn't bloat the UTXO set. And that is literally what we have done with opnet. Like OPNET txns, when you make a smart contract interaction, there is not this tiny UTXO that is bloating the UTXO set like ordinals, runes, BRC20 etc.
- [24:42]
Chad
Like your node is not data storage for this technology.
- [24:45]
Danny Plainview
I don't know what they're mad about other than it's just pure narrative. Like it is totally hilarious. The politics of.
- [24:50]
Chad
And I'll explain for. Because I. It seems to me that a lot of people don't understand the. The crux of the spam debate is not as much of a philosophical conversation of how should you use Bitcoin? But a lot of the, a lot, especially the more technical people who are against spam. It's that the way that people are putting data onto bitcoin with like ordinals, for example, actually damages bitcoin long term because it bloats the UTXO set. Every new ordinal that's created is a permanent UTXO which you do store on your node which creates this increase in size of the requirement of sorry, hardware that you need to actually run a node. Which the long term argument is that that decreases the decentralization of the network because it's more expensive to run a bitcoin node. I'm with you 100 on that. That's. That's bad for Bitcoin for sure. And that is why a lot of the people who don't like spam on Bitcoin even refer to it as spam because you're spamming the chain and created, making it bigger and bigger and bigger. When it comes to this, we completely mitigated that. So we are not spamming the bitcoin blockchain, we are not increasing the size of the bitcoin blockchain, and we are not asking you to use your node as permanent data storage. So, again, a lot of the pieces of this spam debate kind of fall apart when we're thinking about. Then it becomes a philosophical argument. Is lending or stablecoins a monetary use case for bitcoin or not? I would argue that using money is not just, I pay for a banana, but I can buy stocks and take loans out. Like, there are a lot of financial tools that you use money as money that aren't just I use it for payments. And so that's sort of, I think, the. Hopefully where the question, the conversation evolves towards, which is, we are still using bitcoin as money. Bitcoin does not change as money with this protocol. It just evolves to be able to be able to use this money in new ways.
- [26:37]
Valentin Rousseau
Yeah.
- [26:38]
Charlie
So I guess. And it's funny because you see, I sent this tweet to you guys this morning, us time. Like, we are seeing a crazy amount of these types of, like, conspiracy tweets from the filter camp. This is a tweet that says, quote, I'm putting a lot of work into building a nice opnet dossier. It's quite revealing. I mean, like, this. You guys have managed to draw out some true, true mania from these folks.
- [27:07]
Colin
And it's like, it's like, it's funny
- [27:09]
Charlie
because I will read a tweet, there'll be people who say, like, these people are attacking bitcoin. Their OPNET launches, you know, like March 18th or something, whatever. They're like, literally do your CTAs for you. Literally seems like a campaign.
- [27:28]
Danny Plainview
It's like, it's like telling the. It's like telling the super religious people hundreds of years ago that like, evolution is a thing or that the earth is round. And they're just like, you're going against everything that I believe. And this is sacrilegious. It's like totally hilarious.
- [27:45]
Colin
And it's almost like the Streisand effect in the sense that the more they try to get people to not pay attention to this or try to, like to discredit it, then more people are interested in it.
- [27:54]
Chad
It's a pure effect, actually, because, okay, dude, we have all gone up Significant. Oppnet has gone up significantly in terms of follower count. The conversation around opnet has increased 100x since they started freaking out about this. And the amount of people who are genuinely interested in technology and have actually looked into everything. Because our documentation is open source, our githubs are all open source, you can very easily educate yourself about the cool core design of the protocol and what it will enable. The amount of genuine interest that we've had from people, builders, bitcoin enthusiasts across the board has gone up significantly, so drowning out some of the more schizophrenic noise that's out there about this. It's really been like a huge boon to the protocol hype, especially leading into launch. I couldn't have really asked for a better thing to happen.
- [28:44]
Charlie
Yeah. Oh, sorry.
- [28:47]
Colin
I just have one more question, Charlie, before we close out. So you, you mentioned the most interesting. One of the more interesting parts of. One of your answers here was that they, they wanted the Ocean team and Luke suggested doing merged mining for this.
- [29:01]
Chad
Yes.
- [29:02]
Danny Plainview
So yeah.
- [29:02]
Colin
Are you doing merged mining? Is that on the roadmap?
- [29:05]
Chad
No, we're not.
- [29:08]
Colin
Why did you decide against that? I also find it interesting that they would suggest that it actually would help Ocean pool business wise. Maybe that's why they're pitching it. But why did you decide against that as a design choice?
- [29:20]
Chad
We asked. The context of this question was. We asked him, okay, in your perfect world. Because our conversation wasn't just purely about optne, we're just picking this guy's brain because he's a smart guy, experienced bitcoin depth. We just asked him, if you had full control over bitcoin, how would you change bitcoin, what would be the bip? If you could make any BIP for bitcoin right now, what would it be, Danny?
- [29:42]
Danny Plainview
And then he said, yeah, the answer to that question was directly he's written the BIP. It's the original BIP, I believe, that introduced Merge Mining like 2015, 2016. It was never finished, it was never pushed. And he was like, you guys should try and finish out this BIP and make like. He basically wants to make Merge mined like channels where you can take normal bitcoin and send it to these like side chains that don't emit new bitcoin. He wants to shrink the main size of the emission chain, basically. So you have the normal bitcoin blockchain that has like 300 kilobyte blocks. That is only for monetary transactions for mining new bitcoin. Right. And then you can have channels that you can move your bitcoin to that don't emit new bitcoin. And the market for that is just purely based on fees, which is actually a cool idea. That's why it was so interesting to us. But it's literally not possible. It's not a thing you can do with bitcoin right now.
- [30:34]
Chad
Right. It's actually a great scaling solution for btc. It's a great scaling solution for bitcoin for sure.
- [30:39]
Danny Plainview
But the problem with merge mining now and always has been that you're introducing some new shitcoin gas token to your chain. It's miners are just going to mine it all and then sell it. Look at fractal bitcoin. That's literally a straight down chart because the miners are just getting free money.
- [30:56]
Chad
It's not something that we would ever do ourselves in terms of. Look, our entire thing around opnet is that we want to bring a bunch of use cases to fill the gap in the market for everyone who's looking for yield on btc. Everyone's looking for the bitcoin to become more productive capital. We want to bring a solution for them today. Right? That works today. Stable coins on Bitcoin. Major stablecoin issuers can issue on BTC today. Get into a future with within one year you can trustlessly trade your bitcoin for MSTR or stretch natively on chain without having to leave the bitcoin blockchain. Without having to go to a traditional financial market in order to get a loan out against your BTC or get exposure to the stuff Michael Saylor is doing. Like I think in a lot of ways some of the emergent use cases that are going to come from this technology are going to appeal directly to the people who are super against it right now. Again, being able to take out a over collateralized loan against your bitcoin where you need to pay for something in real life, you can't pay for it with bitcoin and you have to get cash or a stable coin. How do you do it? Right now you have to sell your BTC or your. You have to engage with some sort of centralized lending party. If you don't have to do that, you don't have to leave bitcoin. You don't have to sell your btc. You can take a loan out against it or be the counterparty in that loan and earn a yield on your btc. Like is this not a financial use case for bitcoin? I think that still remains. Bitcoin is Money and I don't think that's spamming the bitcoin blockchain.
- [32:10]
Charlie
Last question before we play the music and play you guys off. Can I. We're going to run back own finance. We're going to be. Am I going to be able to three, three loop My, my, my.
- [32:19]
Danny Plainview
Sloan. Sloan literally. Sloan literally just did a Pre sale and 250k in under 24 hours. Like the first ohm fork on bitcoin. It's called Sloan. They've been building with us for two years since the first testnet launched in 2024. So yeah, we're super psyched for that.
- [32:36]
Chad
Yeah, it's already going to be here. It's already coming.
- [32:40]
Charlie
All right, Danny, Chad, thanks for having you guys on and yeah, excited for the launch. Best of luck. Onwards and upwards for the bitcoin fee market. Cheers.
- [32:51]
Colin
Cheers. Thanks for joining.
- [32:53]
Danny Plainview
He's out.
- [32:55]
Colin
All right, Charlie, that was interesting. A lot of kind of fun little tidbits there about interacting with the most notorious developer in bitcoin.
- [33:05]
Charlie
Easily some of the most fun people to talk to.
- [33:09]
Colin
We'll be keeping an eye on opnet, hopefully. Congrats to the team and then we'll kind of be monitoring the progress here on the pod as it will goes along. All right, now we've got a report to dissect with the author Valentin Rousseau, looking at the best and worst places to mine bitcoin. The best and the worst. The worst might not shock you. The mids will shock you a little bit and I think the best will also shock some people. So without further ado, let's get Valentin Rousseau up here. Valentin, welcome back to the podcast, man. How you doing?
- [33:46]
Valentin Rousseau
Doing great. What about you guys?
- [33:49]
Charlie
Fantastic.
- [33:50]
Colin
Hello. Good to see you. Doing great. Spring is in full swing here and no shortage of things to talk about on the news. Bitcoin is above 70k. That's always nice. And the last time we had you on here, we chopped it up about your hash rate predictions for 2025, which ended up being very good, by the way. If anyone's interested in that research, you can go find it on Blockspace Media keyword search, hash rate projections or hash rate prediction. Val did a really good report for us last year that nailed the hash rate growth within a few percentage points either direction. In terms of the area, it was
- [34:29]
Charlie
the most godlike prediction.
- [34:30]
Colin
It was very, very close. So hat tip to that and you're back with this new research from Hash Labs and y' all did a really interesting analysis of you picked up 18 sectors, 18 countries for mining bitcoin and you ascribed them a score on an index based on the best and worst places to mine. So I'm going to get the report up here in just a second. But as a way of introducing this, can you give us just a brief rundown of what you found to be some of the most favorable and then also some of the most disfavorable areas to mine bitcoin?
- [35:09]
Valentin Rousseau
Yeah, sure. So the global idea of the report was to assess the overall attractiveness from a regulatory but also operating condition perspective. But it's mostly about regulatory because we'll deep dive just after into the sections. The most or the least attractive states were countries I would say were Australia by far and then Sweden and also Democratic Republic of the Congo. So Australia is mainly about many things because you have the grid, the grid connection is quite long, but that's mostly also about the power cost. You have a minimum of 55 if not sixty dollar direct dollar per megawatt hour. You cannot mine under sixty dollar per megawatt hour or it's very complex and requires a lot of capex. And you have very stringent environmental rules, namely for zoning on operating data center or just on land availability when you want to develop your own data center. So zoning rules are mostly about emission heats and noise level that can apply on your data center. And to close on Australia, it's also about the tariffs. No, the tariffs are quite low, but you have a lot of issues with the customs that tend to delay your asics when they arrive. And there is also a bearish perspective regarding the legal framework there specifically against mining. You can also name Sweden because of the retroactive application of VAT and all the legal backlash against mining in the country. We know also that few years ago an electricity tax applied about $40 per megawatt. So even, even if it's very affordable to mine, excluding these poor costs, this power tax, it becomes quite a nightmare when you apply the tax onto the your poor cost on top of it. And finally I will conclude with Democratic Republic of the Congo here. It's mostly about mini grids off grid and it's quite hard to import Asics there. Why? Because you have about 180% tariff that apply on your ASIX and it's much better to have your proprietary supply chain when importing materials there. And about the best countries is UAE and Oman by far. Again it's very favorable legal and fiscal framework specifically because you have free zones, free economic zones that allows you to have VAT exemption, corporate tax also and Types, So it's. Yeah, that's a windfall for miners. And I will also add that you have very short grid connection lead time, about 6 to 12 months, whereas the average tend to be 12 to 18 months. And when you want to develop a site, when you want to assess your own profitability, such a rapid time frame to secure a grid connection is actually also a godsender. And you can also access cheap rates. For instance, oman is between 38 to $45 per megawatt hour.
- [38:53]
Colin
So I'm curious, Valentin, you know the US does not feature very highly on here and you specifically singled out Texas, which makes sense. Probably anywhere from 30% to maybe half of all hash rate in the US is in Texas, probably closer to that 30. But it is the beating heart of the mining industry in this country and it comes in at a 56 for the index score. What were some of the dings against the US and Texas specifically when you were weighting it?
- [39:25]
Valentin Rousseau
Aside from fiscal and legal framework, which are quite favorable there, the issue is the zoning regulation. Even if we know that miners are able to mitigate this issue, when you come to secure some permits, it will inevitably be a pain in the ass to face with the stringent zoning rules specifically that tend to mount with the AI HPC euphoria. And in addition to, I would say environmental rules, you have also the grid constraints that heavily impacts miners. Here it's about 6, 16 to 22. Yeah, 16 to 22 months to obtain a great connection. And we tend to be much faster by the past and which will inevitably become much more longer in the, in the near, if not the midterm with again the competition with AI, hpc. And obviously I would close with the types that have been much more important than in the past because today miners can be exposed to 10 to 30% types. It depends on the classification of your ASICs or the ways in which you can mitigate this, the type impact. And also you have the lead time on electrical equipment, ASICs that have impacted miners as well. For instance, on electrical equipment, it has been about four to six months delay before actually receiving the equipment.
- [41:16]
Colin
So looking at all of these different considerations, you all have the legal framework, cost for importing rigs, time to market in terms of getting sites approved. What was the methodology that went into refining these weightings and which ones do like, which ones have the most importance placed on them and which are not weighted as heavily when you're divining, when you're, you know, creating this index for each individual country, like which factors are the most important and which are not as important.
- [41:50]
Valentin Rousseau
So first of all it has been about 33 questions addressed to about 80, no 48 respondents. And the 33 equations were allocated in five sections. The five section were. And the most important energy and grid. So energy and grid covers the barriers to entry, the market, the power cost, but also if you. What is your status regarding to a traditional player in the grid. So the grid and the energy section were about 25%. Then you got fiscal framework, which is about 20 persons and after that legal at 17.5%. Same with permitting and licenses. So permitting and licensing is about the zoning rules, the time to get your construction permits, the environmental impact assessments and all the things related to that. And afterwards we closed with types and custom frameworks, 15% and operating conditions, which is only about 5% and which were excluded from the survey. No questions were addressed regarding this matter. It was more about an internal analysis on three main factors. The humidity, the urinal spread. So the temperature on the urinal spread within the day because it can impact your machines if it's very important and if you are hovering some extremes. And finally the. The summer and the winter temperatures.
- [43:35]
Charlie
I'll. I'll probably. I don't know if you have more. More questions.
- [43:39]
Colin
No, that's all for me. I was going to you for closure.
- [43:41]
Charlie
My. I guess to wrap up. Valentin, I see in dead last place the worst place to mine bitcoin that we know is Australia. Who in the world is mining bitcoin in Australia right now? Why is it scored so low?
- [44:00]
Valentin Rousseau
It's actually. It was very hard to find miners in Australia. So you have very, very small miners there that tend to be private. But so it's mostly about 1 to 5 megawatt installation. You tend to have them in south of Australia and also a bit in the West. So that's mostly about hydropower and solar plants. And we know that in Australia there are a boom in renewables developments, specifically wind and solar. But as of today, the economics are not so attractive. Still, some miners have been able to
- [44:44]
Colin
manage
- [44:46]
Valentin Rousseau
small installation some sites, but it remains very, very little.
- [44:54]
Charlie
Well, I don't plan on starting a mining business in Australia anytime soon and now I really don't plan on.
- [45:00]
Colin
Yeah, it looks like no one's going to. Valentin, thank you so much for coming on on short notice. Before you leave, can you give people a quick shout out to where they can find more of your work and more about what Hash Labs is doing as well?
- [45:15]
Valentin Rousseau
Yeah, sure. You can follow me on xadibpil and find all my research and also I plan to know covers miners and make projections on AIHPCR players. And I will drop an analysis on bidder soon. And you can find Ash Labs, which has been rebranded to E2C Partners.
- [45:40]
Colin
Fantastic. Thank you so much, Valentin. Have a great week, man.
- [45:43]
Charlie
Thanks, guy. Bye.
- [45:46]
Colin
So, Charlie, just a quick note before we go on to our next story. If you are curious about bitcoin mining in Australia, we actually did a show about this last year.
- [46:00]
Charlie
Of course we did. It's. We're like
- [46:04]
Colin
the days run like what water, as one of my friends from college used to say. Yeah. So this is our coverage of bitcoin mining in Australia. I interviewed Daniel Leslie, the CTO of Coinsafe Ltd. To discuss Bitcoin mining in Australia. He estimated there's only around 100 megawatts total in the country. It's a very renewable heavy grid. So per what we were saying at the end of that segment, there might be some chances for solar and wind mining, but the regulatory environment is just so onerous. And one last kind of interesting piece of trivia on this before we move on to the next story. Tasmania was one of the areas where bitcoin mining first kicked off in the region because it has a lot of hydropower. Tasmania is an island just on the southern tip of Australia. That was one of the original spots scouted for Swans Bitcoin mining Army when it was still working with Tether to roll that out for its clients.
- [47:03]
Charlie
That's some lore. Didn't also. Am I mistaken? Didn't at the time Iris Now Iron Energy. Didn't they come out of Australia as well?
- [47:11]
Colin
They. They're. Yeah, they're. They're based in Australia. I don't know if they ever actually had operations there. I think maybe in the early days a very small footprint, but I can't speak to that because I'm not totally sure. But yes, the team is out of Australia. Companies from there, they actually recently changed their accounting, I think from the Australians do this weird fiscal year that ends in the middle of the year.
- [47:34]
Charlie
So, like after Q, they do accounting upside down. Okay, okay, let's. Let's switch gears. We got. We got to get to the block.
- [47:42]
Colin
Yeah, we've.
- [47:43]
Charlie
We've.
- [47:43]
Colin
Yeah. So we've got two more stories today. One's the cry corner, but this is our last lead story, and that is block. Phil's going bankrupt, y'.
- [47:52]
Charlie
All.
- [47:52]
Colin
Okay. So block fills. Filed for Chapter 11 bankruptcy. I believe this was filed today. I have the court filing, which I'll Pull up in a second here. We're pulling from the minor mag here or formerly minor mag, now energy mag. This Chapter 11 bankruptcy from Block fills lists their liabilities and assets between 100 million and 500 million. So for those who have never gone down the wonderful, you know, yellow yellow brick road that is Chapter 11 bankruptcy filings. When a company files for Chapter 11 it's a restructuring bankruptcy which means they hope to get out on the other end. Most famously with this for bitcoin mining at least was core scientific. They filed for, they filed for chapter 11 believe at the end of 2022 they came out the other side of it and in 2024, the beginning of that year and then they went and turned around and signed the first big AI deal for a bitcoin miner. So legendary comeback. That's not the focus of this though. But the point is these Chapter 11 bankruptcies are designed to make sure that the company can liquidate assets, pay off creditors and hopefully get back on their feet afterwards. So this doesn't mean that block fills is done. That being said, it could be sold, it could be divvied up and basically cannibalized to the point of where it's not really worth reviving. There are a number of different routes that this could take. Another good example of that, Compute north went bankrupt in 2022. That used to be one of the largest bitcoin mining hosts a private company in the US it ended up having all of its assets basically sold off and the company no longer exists.
- [49:37]
Charlie
Go ahead. So I'll interject here. So there could be a lot going on here and this is kind of an interesting time for a company like Blockfills to file for, for bankruptcy. It was suspected that maybe Blockpills was one of the quote bodies floating to the surface after the 1010 crashes. And maybe somehow they're like they are indicative of leverage in the system. But it's, you know that again that's speculation. It's not really clear how related that is.
- [50:09]
Colin
It's not clear. It's worth pointing out though because they are a kind of crypto financial services company. So they do lending, they do bitcoin backed and crypto lending. They have, so they have their own loan book, they do trading services. So clearly there is a chance that they could have been caught in some collateral damage in another fund blowing up or just bitcoin's price tanking. Maybe they were over their skis. We don't really know why they went bankrupt. Well, yeah, well
- [50:39]
Charlie
you very well explained the story. I think the most interesting things are some of the details you've uncovered.
- [50:47]
Colin
Yeah.
- [50:48]
Charlie
Who has stake in this? This is Wilder LP lists I've ever seen.
- [50:57]
Colin
This is, this is what I love about, I don't like a company going bankrupt, but whenever something like this happens you can go into pacer, find the court filings and then you have all this juicy open source information about who is involved in these things. So when a company like this files for chapter 11, they have to list their largest unsecured creditors. And the reason why the energy mag covered this is there are a lot of bitcoin miners who have floated to the surface with block fills in this. Now I don't even want to be that strong about it because these are unsecured claims. So they might get paid out, but since they're unsecured, they're on the lowest rung of the ladder in terms of getting a payout. Secured creditors will go first in a chapter 11. Things are liquidated, they're covered and then whatever's left over, you'll get some, the unsecured creditors get some. Obviously people who've got blown up in FTX understand this, right? Customers ended up getting some money back, but it wasn't the same value that they had, you know, in crypto terms when FTX went under. So all that being said, some of the names that have surfaced from this and I'll go over the mining ones first before getting some, some really interesting ones. Simple Mining has an unsecured claim for $3.73 million. Simple mining is a cryptocurrency mining services company out of Iowa. And you know, they have popped up in this. So you know the, what's going on with that? A lot of bitcoin miners will use these crypto lending services to leverage the bitcoin on their balance sheet. Who knows if that's what this was, but that's the most likely case for anyone who's listed on this. They had some sort of crypto loan that was locked up with block fills. I can't, I don't, can't say that for sure because I don't have a look into the books. But that's the most likely scenario for why anyone would be showing up here. Another really interesting one is one of Bit Farm subsidiaries, backbone hosting solutions are on the hook for 4.2 million. And there is another bitcoin mining name in here that some people, folks might recognize. That is Ashton Soniat. His Dorado family holdings is on the hook for 5.65 million. And Ashton Soniat is the co founder of the bitcoin mining form firm Coin Mint. Now those are like kind of the names that people will know, the normal
- [53:20]
Charlie
names you'd expect to see.
- [53:21]
Colin
But then there's some really weird stuff in here. Like for instance, a Christian radio station out of Franklin, Tennessee called Loam Media on the hook for 4.7 million. My favorite though is the Chicago Blackhawks hockey team. This is real for 1.26 million. And the address that is listed on the form is for the United center arena in Chicago. So United Airlines owns the arena that the Blackhawks plays in. I also think it's what the one of the basketball team plays there as well. And so I saw that one, I had to do a double take. I was like, wait, is this someone pretending to be the Chicago Blackhawks or is this actually their organization? And so far it looks like it is actually their organization. One of the more consequential ones is Nexo, which is another crypto financial services and lending firm is on the hook for 4.75 million. And one of the most wild ones. And then I'll shut up Charlie. Is another miner called Energy Conversion Group. Seems like a totally anodyne name. Like oh, they must do mining stuff. They have Lorem Ipsum on their website. Well, I've never heard of them, but they are listed here as having, let's see. Yeah, four point or. Sorry, excuse me. They're listed here as having $1.88 million wrapped up in this thing. Apparently they're a bitcoin mining hosting company but they don't have any real text on most of their website. What's that about? That's kind of odd.
- [55:08]
Charlie
Look, you don't have to have a website to get a loan, Colin.
- [55:11]
Colin
It, I mean clearly not, but what? I don't know. I'm not going to say anything because I don't want to get sued, but what's going on with that company? You just taking money from customers and then you just loan it out and then I don't know, who knows. All that being said, there should be more to divine from this Blockfield's bankruptcy. So far we only have the declaration, the voluntary petition to file for the bankruptcy which was filed yesterday. And it will take I think a few days, maybe a week or so before we get actual documents with more evidence about like why this happened, who else is involved. So there will be a big meaty court document that follows this. So far we just have the voluntary petition. Some interesting names coming out of it nonetheless.
- [55:58]
Charlie
Yeah. So anyway, shout out to everybody caught up in that. You know, we, you know, as always, we've always got maybe one degree of separation from a few people named in because you know, our boys in mining, the simple mining guys, you, you, you know, bummer to see that. Bummer to see that for sure. Last story. This is the cry corner and for those of you don't know the cry corners, just we pick we a bummer story and try to close with that. Today's bummer story is that once heralded champion of bitcoin, pro bitcoin investing, Stanley Druckenmiller in an interview recently as Pete Rizzo, the bitcoin historian says that Stanley Drunkenmiller says, quote, bitcoin is a solution looking to a problem. I am sad it ever happened and it wasn't needed as a store of value. Whoa. Like where did this pivot come from? Druckenmiller was one of the people to buy bitcoin publicly. Talk about it with conviction, like at the very cusp of the big institutional entrance. Prior to Michael Saylor, I believe.
- [57:16]
Colin
I don't know if it was prior to Michael Saylor this concurrent, but it was roughly November 2020. He was one of the first big tradfi guys. Granted he runs a hedge fund. I think that's really important to remember with this to come out as a Super Bowl. And he said, quote, if the gold bet works, the bitcoin bet will probably work better because it's thinner, more liquid and has a lot more beta to it. And he was right. Gold was climbing post Covid stimulus, but bitcoin climbed even more so and blew its returns out of the water. You know, bitcoin ran from, I think the bottom in March of 2020 was roughly $4,000 during the flash crash where everything in the S and P everything got decimated. Then at the end of the 2021 cycle, at the peak it was roughly 65,000, somewhere between 60 and 70,000. So he's 100% right about that having more beta. And I think that's part of the reason why he's probably reneged on this now is gold has destroyed bitcoin over the last three years. And he's probably looking at it and saying, well, clearly this has run its course. And if I'm being as charitable as possible to his view, I could see that as a hedge fund manager you're bullish gold because of debasement, inflation, et cetera, a global realigning of the fiat currency system. And so you're looking at gold blowing bitcoin out of the water, doing the thing that bitcoiners have screamed bitcoin would do under these macro scenarios. And you're looking at this thing and you say, no, I'm going to take the pet rock, the physical pet rock, and I'm going to leave behind the digital pet rock. That to me seems to be probably where he's coming at. And again, he's a hedge fund manager. That's what they do. They are not long things just to belong them for a generational bid. They're trying to make money year in, year out.
- [59:10]
Charlie
Yeah, well, we, you know, I will, you know, Stanley Druckenmiller was heralded by a lot of bitcoiners as being like the guy who finally got it. You know, he's the big boy. He's somewhat of a contrarian. He's got a long story successful history. He made a bet with conviction at the right time and then was proven right again and multiple times doubled down on it or at least indicated that he strongly believed in it still. And now here he is saying, quote, I'm sad it ever happened.
- [59:38]
Colin
That is wild. That's a kind of crazy thing. What do you mean you're sad it ever happened? You probably made a lot of money when you, when you traded it. I don't, that's that part I don't understand.
- [59:47]
Charlie
But you may. He made a lot of fiat calling and dash, I guess, and then he
- [59:51]
Colin
rolled out and then probably made a lot of money on that gold. You know, he's one of the most legendary hedge fund managers ever. So this is kind of sucks to see, but someone will put it in a bitcoin obituary. You'll have the bitcoin maxis of the world who are perpetually bullish, like bit pain, basically saying how this is dumb and bitcoin's gonna pump, but I don't know. A lot of people really, I mean, this really does. If you were going to mark conviction lows, this does seem to be the last few months, particularly after the February sell off. There have been a lot of people rage quitting or saying like it's absolutely over. And I'm not going to say that it's over one way or the other. I'm not going to say that I'm uber bullish right now. But I have to say bitcoin being above 70k when all the other assets are shitting the bed feels kind of sweet. Feels kind of sweet.
- [60:44]
Charlie
Hey, I'll also point out in the interview here. I don't believe he said that he sold bitcoin. So I don't think he said that it's changed his position. Although these investor guys, they don't have to say everything. I don't have to disclose everything. So yeah, Cry Corner closed this week.
- [61:06]
Colin
So congratulations, you're all poor again. Just kidding.
- [61:10]
Charlie
Congratulations. 73,000 actually, Bitcoin's up, you know, Bitcoin 74k right now, which is compared higher than last episode. Anyway, wrapping this up, if you're a listener, make sure to like and subscribe. Subscribe to YouTube, make sure you're following on X and check out our newsletter at Blockspace Media and hope to see you in New York City on April 16 for the op next conference. Bitcoin's technical conference featuring discussions from the brightest minds in bitcoin development and investors. So op next.dev we'll catch you all later. See you Wednesday at noon Eastern. Peace.