Hive’s Boden AI Deal / $100M Note and Galaxy Wins Approval for McGregor AI Site

Summary

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Blockspace: AI & Bitcoin – Episode Summary

Episode Title: Hive’s Boden AI Deal / $100M Note and Galaxy Wins Approval for McGregor AI Site
Date: June 25, 2026
Hosts: Charlie Spears (A), Colin Harper (B)
Notable Guests: Gordy Gort (C), Alejandro de la Torre (D)
Theme: Deep-dive into the evolving AI-data center & bitcoin landscapes—with focus on Hive’s AI pivot, data center buildout trends, miner business models, and a candid look at the challenges facing MicroStrategy and the broader crypto market.

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Episode Overview

This episode delivers a comprehensive snapshot of major industry news around bitcoin mining, AI/data centers, and shifting sentiment in the crypto ecosystem. Main topics include:

• Hive’s AI-center deal and $100M financing
• Galaxy’s community-first Texas site approval
• Shifting miner economics and decentralization (with Demand Pool’s innovations)
• Market anxiety around MicroStrategy, strategy stocks, and crypto’s existential challenges
• Cultural shifts: crypto degens fleeing to AI stocks, Ethereum’s internal shakeup, and gnawing questions over blockchain’s future

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Key Discussion Points & Insights

1. Hive’s Bowdoin AI Deal and $100M Convertible Note Offering

[04:58–10:42]

• Hive signed a non-binding LOI with an “investment-grade sovereign Swedish tech company” for a 10-year lease on its soon-to-be-acquired, 32MW Bowdoin, Sweden data center.
• The site will handle up to 10,000 GB300 GPUs (cutting-edge AI hardware), with direct-to-chip liquid and air cooling, set up for rapid market readiness.
• Acquisition price: $10.81M (105M SEK), still pending. The LOI depends on Hive finalizing the purchase (“Loi is just an LOI. There is no deal inked yet…” — B, 06:29).
• $100M of convertible notes (0% coupon, due 2031, with $15M upsize window)—to fund this AI-driven expansion.
• Sweden and Scandinavia are hotbeds for new data center construction (driven by hydro-powered energy, “90+% powered on hydro” — B, 08:18).
• Industry trend: Miners and cloud compute companies are “escaping” North American grid constraints and competitive pressures by targeting underutilized European energy infrastructure.
• Increasing “standard” for these builds is 32MW—likely due to zoning, density, and cluster optimization.

Notable quote:
“Everybody took a look at what was happening domestically with the power…said, well, let’s go find some power that fell off the back of the truck in Europe.” — A, 07:11

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2. Crypto Market & Cultural Malaise: Bear Sentiment, MicroStrategy Scrutiny

[12:05–38:26]

Guest: Gordy Gort (Crypto journalist and podcaster)

• Crypto Twitter in revolt: Michael Saylor (MicroStrategy) becomes scapegoat amid brutal bear market, exacerbated by the “Stretch” preferred share product (compared to a failing algorithmic stablecoin).

  • “There’s a lot of people turning on Saylor…thinking that he is sort of the bane of crypto’s existence.” — C, 13:56
  • Noted posts from major Twitter personalities (Light, Awawatt, Udi), openly criticizing Saylor’s financial engineering and risk exposure.
  • Bears allege Saylor’s increasingly complex capital structure (“added DeFi-level complexity”) raises systemic risk.
  • Discussion of rumors that deep-pocketed actors might try to “hunt” Saylor’s position: “Call it the Soros-ification…Trying to tank Bitcoin’s price so they can shake Saylor out entirely…” — B citing Travis Kling, 19:46

• Degens pivoting to AI stocks / TradFi:

  • “All my chats…my casual degen and trading chats…have all turned into stock chats.” — A, 21:43
  • Crypto volatility, liquidity, and “product market fit” have evaporated outside meme coins; professional traders exploit AI supply chain equities instead.
  • “Right, that’s what I was gonna say. Exactly. So I had that. Maybe I take that back…The stock market and like the whole AI trade has ripped. And it’s very…similar to…crypto.” — C, 22:53

• Ethereum Foundation downsizing:

  • Vitalik and the EF cut budget by 40% and staff by 20%. Guests characterize this as ongoing, slow-motion attrition, not sudden crisis.
  • “Every two weeks...EF is transitioning to a new mandate...You guys do this all the time.” — C, 28:34

• Big-picture, existential crypto doubts:

  • “Probably even stronger stance: the claim that everything’s coming on chain—that’s not obvious to me at all anymore…If I had to guess, the next 5-10 years will be use cases coming off chain, things…becoming centralized and integrated into TradFi…It will win products in spite of, not because of blockchains anymore.” — C, 30:59
  • “I would probably say there’s a reasonable chance that Bitcoin is the only use case for a blockchain specifically.” — C, 32:18

• Broader existential dread:

  • “This time is different…The infrastructure and a lot of the proposed internet of value ideas...I don’t think people are buying in the way they once did.” — C, 34:57
  • Loss of retail investment thesis; community “in the denial phase of grieving,” (B, 37:23).

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3. Demand Pool & Stratum V2 Innovation

[40:02–55:40]

Guest: Alejandro de la Torre (CEO, Demand Pool)

• First fully Stratum V2-compatible bitcoin block, in partnership with Go Mining—miners can now build and submit their own block templates, restoring greater miner autonomy and decentralization.
  • “My name is Alejandro...CEO of Demand…first V2 fully Stratum V2 pool...miners can build their own blocks with us, can add transactions into their own blocks with us…” — D, 40:39
• Why Stratum V2 took so long: multi-year open-source project, total protocol overhaul (improved encryption, binary communication, major efficiency gains).
• Comparison with Ocean Pool’s Datum (“built on top of Stratum V1, so still has all the issues of Stratum V1…Datum helps improve decentralization…but Stratum V2 is just better technology…” — D, 45:08)
• Mining pool business models evolving:
  • Movement away from legacy “fat cat” pools toward pools offering more dynamic, user-controlled configurations (FPPS, PPLNS, and hybrid models).
  • Growing miner sophistication: operators now splitting hash rate between pools to optimize cost and payout timing, no longer all-in on one payout model.
  • “Midsize miners are actually looking at ways to...cover the costs of my business, I need 50% FPPS payments...the other 50% is just profit, so I send that hash rate to PPLNS pool...” — D, 51:12
• Industry prediction: FPPS is likely to dominate for operational reasons, but alternative models (like PPLNS) will keep gaining share as decentralization and transaction fee volatility become more key.

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4. Galaxy Wins City Approval for Community-Focused McGregor, Texas Data Center

[57:54–64:38]

• Galaxy obtained approval from McGregor City Council to build a $400M data center (“Project Merlin”), bringing 30+ jobs (“average salary of $60K+ for rural Texas, pretty good” — A, 59:09), and committed to funding its own infrastructure upgrades and “closed-loop water cooling.”
• Community engagement was essential: Galaxy gave tours of existing facilities, addressed power and water usage transparently, and “addressed all our concerns,” according to councilmembers.
• Data center siting is now as much about winning minds as land or power: “One of the increasing bottlenecks is not even just power…It’s NIMBYism.” — B, 62:25
• Jane Street now a 5.1% beneficial owner of Galaxy (“not making too much of it…But it does show enough investor interest for Jane Street to up its stake…momentum is on their side with the data center segment.” — B, 64:38)

Notable quote:
“Hats off to the Galaxy team for really kind of taking the initiative here and…showing you how we actually do things so you don’t have to worry.” — B, 62:23

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5. MicroStrategy (‘Strategy’) and Stretch – A Bleak Balance Sheet

[65:02–73:39]

• Breaking down MicroStrategy (‘Strategy’) debt stack:
  • $6.7bn in outstanding convertible debt, all strike prices dramatically above current share price ($87; converts run $183–$672).
  • If notes are put to MicroStrategy (rather than converted), company must pay cash—requiring huge Bitcoin sales (est. 111,000 BTC if forced to redeem all puts; 74,000 BTC for the most imminent).
  • “Really starting to seem like…legitimate crisis for this company, unlike the last bear market…The bill is going to be due here pretty soon and something needs to reverse course for the math to make sense.” — B, 73:12
• Bull and bear theses converge: If Bitcoin’s price rebounds, problems vanish. If not, preferred share structure and cash obligations create a doom loop.
• Meta-commentary: Saylor’s “degen” tactics echoed back by the same speculative crowd that once cheered him on, now questioning MicroStrategy’s solvency (“Saylor, please save us. Bitcoin still under 60k, we can’t be here too long or else everybody gets liquidated and bored.” — A, 73:39)

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Notable Quotes & Moments

• “If stretch can’t maintain the target on a dollar peg, at least strategy seems to be doing so.” — B, [04:32]
• “The only way for Saylor to show strength is to liquidate billions worth of bitcoin without dying. Anything else is weak. Sheepish.” — quoting Udi, [16:55]
• “If you take a step back and believe in…the first principles of bitcoin, this is…the worst stress test…for strategy. But bitcoin will get through this.” — C, [18:37]
• “Everyone’s a genius in a bull market.” — B, [25:31]
• “I would probably say there’s a reasonable chance that Bitcoin is the only use case for a blockchain specifically. I think…that’s likely where we’re going.” — C, [32:18]
• “I don’t know that going forward it’s going to be, you know, like it’s going to necessitate a blockchain.” — C, [33:08]

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Important Segment Timestamps

• Hive’s AI pivot & $100M note: [04:58–10:42]
• Crypto market malaise/Saylor as scapegoat: [12:05–19:44]
• Degens flocking to AI stocks/TradFi: [21:43–24:57]
• Ethereum Foundation shakeup/thoughts on Bitcoin: [25:57–33:36]
• Blockchain existential dread: [33:47–38:26]
• Demand Pool & Stratum V2: [40:02–55:40]
• Galaxy data center approval: [57:54–64:38]
• MicroStrategy bear thesis: [65:02–73:39]

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Final Takeaways

• Data center/mining economics are shifting: Euro hydro-power is a new global focus, and AI-driven demand is reshaping capex and asset allocation.
• The narrative and cultural sentiment in the crypto market is at its lowest in years—degeneration, existential crisis, and a retrenchment toward “real” use cases (if any).
• Bitcoin’s resilience is acknowledged, but even core true believers are reassessing the case for other crypto and DeFi projects.
• New mining pool models (e.g., Demand/Stratum V2) are restoring power to miners, eroding the old “fat cat” pools.
• Community engagement is now critical for data center expansion—as demonstrated by Galaxy’s Texas win.
• MicroStrategy faces a real liquidity risk if Bitcoin doesn’t recover quickly, with capital stack fragility now in the open.

Original, candid language and industry-insider commentary make this episode essential listening for anyone tracking the intertwined futures of bitcoin, AI infrastructure, and crypto culture.

Transcript

[A]

That's right, it wasn't the bottom sailor came back for more. Colin, what's on the docket?

[B]

Oh my gosh. Welcome back to Block Space Live everyone with an incredible cold intro from Friends of the show Psyop Anime. Yes, as you probably guessed from that cold intro, we will be talking about the dire state of strategy and its preferred stretch. That'll actually be at the end of the show. So if you're interested, stick around in that. We'll also have some clips on it later in social media. But to kick off the show, we have news from Hive. Two big press releases hit today. They signed a non binding LOI for a tenant for their Bowdoin Sweden data center, which they are in the process of acquiring. Concurrently with that, they're also issuing 100 million in convertible notes to fund their AI revamp. Following that, we have none other than podcaster extraordinaire and crypto degen beat reporter Gordy Gort on to talk about the dire state of the trenches. If you thought that that clip showed that it's really bad out there for the degens, it's even worse than you can imagine. After that, some good news coming out of the Galaxy Digital front. They are making headway for a new Data center in McGregor, Texas and have been working with the city Council in a way that could set the standard for how these data center companies do grassroots interaction to make sure that no nimbyism gets in the way of their plans. Following that, we have Demand Pool founder Alejandro de la Tour on to talk about Demand Mining, the first Stratum V2 compatible block ever. That's right, it didn't come from brains, it came from Demand Pool. And then following that we will get into the nitty gritty of microstrategy rather strategy and look at some of the numbers to paint a picture of why a lot of bears are asking some pretty tough questions about strategy's capital stack and the future of the company with Bitcoin treading water below 60K.

[A]

That's right, Block Space goes live every weekday at 1pm Eastern featuring quick hits on AI data centers, markets, some bitcoin and some bitcoin mining. Make sure to hit subscribe on YouTube and hit that notification bell to get the push notification to your phone. If you like the stream, it turns into a podcast. Anywhere podcasts are found, search blockspace in your RSS feed on Spotify or Apple. Leave us a review if you like what you hear, you'll Love our newsletter. Newsletter.blackspacemedia.com drops in your inbox every single day. Get some memes in your inbox and some the occasional hot take. This show is brought to you by CleanSpark. Nasdaq listed ticker CLSK. More on CleanSpark later on in the show. Oof. Colin. Stocks are up, but the majority of my bags are down. Stretch, which I don't own down. Bitcoin, which I do own down, but

[B]

Stretch was supposed to be your key to early retirement, Charlie. You're going to be sipping pina coladas on some nondescript Caribbean beach and there's going to be a gaggle of beautiful women who wonder how you made so much money. And you say, baby, digital credit.

[A]

Yeah, I wasn't. I was meant to live a comfortable life.

[B]

I'm retired and my entire 401k into a dubious would be junk rated, not investment grade, you know, preferred.

[A]

Oh my gosh, look at this chart. $75 per strc. I heard someone say 11 mstr equals 1 strc.

[B]

I mean, yeah, that was, you know, one of the funnier jokes I saw recently during all of this is, you know, if Stretch can't maintain the target on a dollar peg, at least strategy seems to be doing so. But lest we put the cart before the horse, we will return to this. We just had to highlight it because honestly, in terms of bitcoin stuff, it's the only thing that's populating our Twitter feeds right now. But we'll move on to our new beat and let's start off with a big deal.

[A]

Some GPUs, a few million dollars.

[B]

Start off with a little something a little nicer to cover and a little more bullish for the timeline. This just hit this morning and it's really two press releases that we bundled into one article here at blockspace. Headline reads, Hive signs LOI for Bowdoin. AI tenant launches $100 million convertible note offering. So Hive has signed a non binding letter of intent with an unnamed Swedish tech company that they say is investment grade for a 10 year lease of its 32 megawatt data center in Bowdoin, Sweden. This will equate to 25 megawatts of critical IT load, 32 megawatts gross. And Hive said it plans to retrofit the site to handle as many as 10,000 GB 300 GPUs with single rack density as high as 150kW using direct hybrid, direct to chip liquid cooling and air cooling. Kind of interesting to see both of those there. I imagine there's kind of a speed to Market equation going on when they're designing this. So, as I said, Hive described the tenant as an investment grade sovereign Swedish technology company. And Hive is actually in the process of purchasing this data center currently. We covered on the show a while back that they had received approval from the local Bowdoin Council to acquire the data center site, which the council valued at $10.81 million. That's about 105 million Swedish kroner. And this acquisition is still being finalized, so I think that's one thing to note. Just with regards to the timing on all of this, again, the LOI is just an loi. There is no deal inked yet, so we don't know how much the deal will be worth. And also, I would believe that the LOI, the LOI's fruition would be contingent on Hive closing this deal to acquire the data center. No indications that there will be any bumps in the road, but just that's important. To caveat one last news item with this, Hive also concurrently announced $100 million convertible note sale. With this release. Those notes would be due in 2031 with a 0% coupon, and there is an option to add an additional 15 million within 13 days of issuance.

[A]

Yeah, so this is the second Swedish deal we've talked about in the past week. Core Weave just yesterday also announced a Swedish deal. It's interesting in that I wouldn't be surprised if these sites are really similar or kind of near each other because they're similarly sized, they're similarly protected in exactly what percentage of the overall deal belongs to the respective company. And this is also on the heels of what iron announcing 400 megawatt plus of power Runway in the Iberian Peninsula. And it's like everybody took a look at what was happening domestically with the power, with the megawatt crunch and competition said, well, let's go find some power that fell off the back of the truck in Europe. So that seems to be where a lot of the speed to power is. Is available. Yeah.

[B]

And if you're going to find abundant and cheap power in Europe, it's probably going to be in these Scandinavian countries. They are flush with hydro. I believe Norway and Sweden are both. I said this on the stream believe yesterday. 99%. It's at least 90 plus percent powered on hydro. And going back to the size of the data centers, the data center that Core Weave is renting capacity from is also 32 megawatts. Yeah, this reminds me.

[A]

The same data center.

[B]

I don't think so. Okay, okay. I don't think so, because the provider for that data center was not hive. That may have been old. That may have been who HIVE is purchasing it from. I don't believe that's the case.

[A]

Okay, disregard that speculation. But it is cool.

[B]

I mean, I thought the same thing. And what it reminds me of, I believe it was Cypher and Terra Wolf when they announced their Fluid Stack deals. It was for the same GROSS Megawatt figure, 168. And we had, and I believe Hut 8 as well with one of their deals. And I was asking, I believe, Asher Ganoud about this a while back or someone from one of those teams, and they basically said that figure is. You see that figure represented across some of these different deployments because of the density of the deployments. And so, I mean, I would imagine it's probably similar here in Sweden. I mean these data centers are much smaller. But perhaps there is a standard that has emerged where 32 megawatts is considered what they're zoned to build.

[C]

Right.

[B]

It's the maximum, but it's also just aligns, I think with the density that you need to be running these high performance computing.

[A]

Yeah. Flagging this, it could be like a GB300, like optimal cluster configuration. Could be a permitting thing. Who knows. Also, before we go to Gore, I think you also we've got hive issuing $100 million note also some rays here. I'll let you take that as well.

[B]

Oh yeah, no, we. I covered that.

[A]

It was quick.

[B]

There's not much there. There's still, you know, that note is they're, they're issuing it, they haven't closed on it yet. So we'll definitely revert to this story once this assuming this deal closes and there's an actual firm figure to report on. And also when the note is finalized, hoping to have HIVE president Aydin Kilik on the show either tomorrow or sometime next week to talk about this more in detail. So stay tuned for that if y' all are interested.

[A]

All right, we have Gwart Gordy Gort waiting in the wings backstage. We'll bring him on very shortly after a word from our sponsor, CleanSpark.

[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 [e-mail]. If Bitcoin's actually the best money and it's the Thing that people should accumulate as the best risk adjusted asset. I lose zero sleep about whether or not that's gonna happen. I just asked the question of when is Liberty matrix map that you're running

[A]

on large pieces of data.

[B]

The bitcoin miners can absorb that energy.

[A]

And in many ways, this feels like

[B]

a second bite at the apple to build a new Internet.

[A]

All right, we've got friend of the show Gwart in the wings. We're gonna bring him on up here. Here. Welcome to the show, Gart.

[C]

Hey, guys, can you hear me okay?

[A]

Yeah, you sound great.

[C]

I have my mic and everything prepared for this.

[A]

Yeah. Nice. Heck, yeah.

[D]

It's.

[A]

It's. It's a. It's like a live version of the Gort show. So we've got you here to help us have some difficult questions about the state of crypto. We need a friend of the show on. And it seems to me gwar right now like, that it seems like all of crypto Twitter just started rebelling against Sailor in the past few weeks. I don't know if I just wasn't paying attention before this, but I've got some tweets pulled up just from the timeline.

[C]

Are you.

[A]

Is. Are you getting the sense that the people are projecting onto Sailor, like the cause of this current pullback?

[C]

Yeah. So from the crypto Twitter side, yeah, I think this is something that also has been more of a recent revelation in the sense that there were maybe a few people who were following this a year ago, like when Stretch came out, and there was like a few people sort of mentioning that this looked or resembled somewhat of like a algorithmic stablecoin. And obviously as of late, really, like the past few months and especially the past few weeks, I would say it's been more apparent. So I think that people are, like, quickly trying to learn what's going on. Yeah, I don't know. It's very hard to gauge, like, whether or not all of this is a result of the. Just taking the financial engineering a bit too far. I will say, like, there's also a reasonable case we made that we're just in the depths of the bear and that Sailor will get out of this. I don't know. I don't have strong opinions. I'm very much fence straddling this one. If it goes to zero, I'll be like, yeah, I mean, obviously it was going to go to zero, Stretch specifically, but if it rebounds, I'll be like, yeah. I mean, he wriggles his way out of everything. Right. So I don't have strong opinions I've been following. It's not like I'm not such an expert on the mechanisms now at this point because he has so many of these different, you know, things out there. But it does seem like as of late, yes, there's a lot of people turning on Sailor specifically and, and thinking that he is sort of the bane of crypto's existence.

[A]

Yeah, I'm looking at this. We got a rare light crypto tweet which says, can we please tear sailors heart out and eat it with a lot of, like, support from folks in the space. Like, this is pretty notable. You know, I see someone like, Light talk about it and I don't know, Light seems like a really smart person. It's rare that they've spoken for a while. We also see, I believe this account Awawatt also saying, yes, I have abandoned Michael Saylor despite supporting him in the past. Yes, Michael Saylor has abandoned his users despite supporting him in the past. The idea of sitting around watching the MNAV and concocting purity tests is gross. Obviously it's kind of a shitpost, but like

[B]

it.

[A]

See, you know, to me, crypto Twitter was already in the depths of the bear market. Is this. I'll. I'll throw this kind of the same

[C]

question back to you.

[A]

Is this. Didn't. Just looking for a pariah, do you think? What are your. What's your take?

[B]

Also, I'll kind of frame it differently. Like, why are the degens specifically coming out of the woodwork now and criticizing him? Have they just run out of things to talk about and this is just the hot topic? It's just kind of funny to see. Yeah, Sailor is the ultimate degen, so they're kind of eating their own here.

[C]

Well, I think there's a portion of that. Yes, he's the next main character, but he's been the main character for quite some time. I think that it's not so. I think that one reasonable argument is that the original idea behind strategy was they were going to issue shares and buy Bitcoin. And now he's really added defi level complexity to this, maybe even, you know, because it touches the traditional financial system and because there's actually a lot more liquidity at stake here, maybe even worse. And I also think that people aren't really paying attention to altcoins and if they're paying attention to crypto at all, it's likely Bitcoin. And so that is like, that's a convergence of a few factors. Again, this is not like, I think Udi is somebody who we all know has been following this for quite some time and has had some. I think he was quite. I mean, Udi has some absurd takes. Obviously, this is something that he was quite early to. And I think he recognized that Stretch was going to enable the bid for that for, you know, six months there. And so I think he's been following this and I think he's quite concerned. So I don't know. Again, like, I don't. Wouldn't. Yeah. I don't have strong, like, beliefs one way or another, but it is kind of sketch. Right.

[A]

Right now, Udi just tweeted, the only way for Sailor to show strength is to liquidate billions worth of bitcoin without dying. Anything else is weak. Sheepish. And he advocates for selling bitcoin, which, to be fair, the other takes, I've seen probably other smart people, Ludy notwithstanding, but maybe a Nick Carter or a Matt Walsh have been like, he's got to sell some bitcoin. He floated this. He inoculated the market the other week. If you saw that

[B]

he might sell some. I mean, Matt's. We'll pull up Matt's tweet towards the end of the show here when we kind of go into the numbers. The idea is basically he may need to sell as much as, like, 111,000 Bitcoin to just cover the puts on the converts. And this, I think, kind of demonstrates the bind that Saylor finds himself in. So Stretch is trading way below par. Strategy is getting absolutely nuked right now. Apparently he can still sell some strategy into the market. Like, they raised, I believe, 300 million recently through their ATM. But if Saylor sells a meaningful amount of bitcoin with strategies priced so low, then he spits in the face of the M Nav narrative because the M Nav is going to tank. And so I don't understand how you get out of this unless bitcoin rebounds. And this, to me, seems like the most significant stress test the entire ecosystem for strategy has ever seen.

[A]

Yeah. Gore, what happens when Salem stops buying?

[B]

Gort, you there?

[C]

Yeah, yeah, I didn't have any. Good. I didn't have a good response, I think. Okay, so, like, this is the last thing I'll say on this. I think the market probably slightly over indexes on Saylor being the only bid. If we take a step back and still believe in the, I don't know, first principles of bitcoin, I think that in the long run, this is most certainly the worst stress test, if you will, for strategy. And we'll see how they come out the other side. But bitcoin will get through this. I don't know if that means it goes to 25k or whatever, where that appears to be the number where people are saying that he could be hunted, whatever that means in this context, because it's certainly not like a perp position. But I do think that the powers that be see a liquidation point. I'm doing this with quotation marks here, whatever that means in practice. Yeah, I mean, he could get wrecked. I don't know. It'll be interesting to observe. I'm not going to be exposed to any of it and I'll just ride down bitcoin spot and if we die, we die. You know what I mean? It is what it is.

[A]

Okay, I'll stop asking you about.

[B]

I actually. Sorry, Charlie. I have one question because I just want Gort's take on how schizo this is or isn't. This is coming from Travis Kling of Ike Guy. I don't know if you saw this. He just said you said hunted there, Gort. And it made me think of this tweet. He says, quote, it makes intuitive sense to me that there would be a group of sophisticated deep pocketed bitcoin bulls that are currently trying to figure out how to collapse strategies, cap structure by any means necessary so as to force a puke of the bitcoin currently held. Call it the Soros ification, quote, unquote of strategy. Basically the idea that the powers that be are trying to tank bitcoin's price so that they can. Thank you, Charlie. Trying to take bitcoin's price so that they can shake Sailor out entirely. Set new lows before we rip. How paranoid and schizo is that? Or how. Ooh, that might be a peek behind the curtain in your view.

[C]

I mean, I know the market dynamics of that level. I'm not slinging around billions of bitcoin a day of bitcoin. Right. So when people say that there's like this cabal or even just sophisticated traders would try to hunt again. By the way, we're talking this word hunt. It's very much not like a perp dex, where your levels are exposed or whatever. He has all of this financial engineering and there's numbers at which bitcoin could hit where it starts to mess with the mnav and it has positive or negative downward reflexivity. So I don't know what this looks like in practice. It does seem slightly conspiratorial because from my angle, nobody's really paying attention to this anyways. Like, I still think we're largely siloed off. I mean I can tell you that like blackrock's not sitting there with like I bit like how can we, you know, how can we take out Sailor before we, you know, onboard the next billion users? I think it's so. I don't know. But if there are numbers that are, you know, clearly bad, I don't know, maybe we hit them. But again, I don't, I don't have much insight into like the, the people who are the, the Illuminati here.

[A]

Okay. So maybe just so I'm, I'm curious about like the, the profile and of, of the like the crypto traders who dominated the timeline five years ago. And it's like all of my chats, my, the, my casual degen and trading chats, like they've all turned into stock chats. Everybody's moved to the stock market. Like, are you seeing this in your experience? It's like, it's as if everybody found the siren song of tradfi and is like, is gambling on AI stocks right now. I'm kind of curious because like crypto Twitter is silent. Have they just all moved to their alt like stock accounts lately?

[C]

I mean it does appear that way. So I think from the professional side, like from the people that I talk to that were like real traders, not, not just degenerates but like maybe worked their shop or something, a lot of the volatility has been stripped out and like that's where the money is made, right? Like this, like sort of. In fact you could make some argument that stretch and Saylor and I like obviously ibit contributed to this, right? Stripping this just like you know, up and down in these markets and that's where, that's where a lot of professionals do well, right? And so when, when that doesn't exist in size, right, we're not Talking about like 10 million dollar meme coins right now. We're talking about like actual size. I think it obviously makes sense that you would, you would pivot elsewhere from a more ideological or a more like actual, you know, how the, how the industry is structured point of view. I think that there was obviously a lot of demand to use crypto stuff when you could gamble on meme coins, you could gamble on defi tokens, you gamble on governance tokens. And most of that is just put to the wayside. And even the last bull market was not particularly appealing for those quote unquote, real projects, right? Like meme Coins are really what did it. Most of these altel ones defi tokens that people expected to rip in conjunction with bitcoin ripping didn't really rip. Right. And a lot of these did not make all time highs or barely made all time highs. That is, you know, clearly people, like, I think there's just that that marinates and after a while, like, people lose interest. Right. So when there's not the ability to make really asymmetric gains, like, you're going to see people go elsewhere. So, yeah, I've obviously seen a lot of people go into stocks and stuff. I don't know how much of an edge they have there. Like, I'm not. It's not immediately clear to me that meme coin trading, you know, translates into semiconductor trading. But with that said, it does seem like. Right, that's what I was gonna say. Exactly. Right. Like, so I had that. Yeah. So maybe I take that back. I was of the opinion that like, this skill set is not going to translate. And then the stock market and like the whole AI trade has ripped. And it's very, very similar to the like narratives within crypto. So I guess perhaps it has. And if you're a relatively intelligent person, I suppose you could have done well there. I didn't really gamble much in stocks. I don't think that's where my edge is. But yeah, I think that it does appear that there's very little interest in on chain coins.

[B]

I mean, to be candid, Gort, you're saying that the strategy ported well to equities. And it makes total sense to me that that's where the volatility and the upside is right now. So the entirety of the crypto ecosystem that's not still twiddling their thumbs or waiting around has gone into that if they think they can make money. But I mean, just part of the reason why that strategy ported so well is like, everyone's a genius in a bear market. I mean, I look at stocks that I've never even freaking heard of and they're doing. They're up like 100% every.

[A]

Everyone's in using a bull market. Mean.

[B]

Did I say bear market? Excuse me? Yeah, everyone's a genius in a bull market.

[C]

Yeah, I think that's what it is. I mean, I do think people were. I mean, I definitely saw some people who seem like they understood the various bottlenecks or whatever you want to call them right along the AI supply chain. And we're eating into that and doing well. But yes, I don't have much edge there. So that's not really my domain.

[A]

Okay, well then let's take a. I think your domain is like broader crypto. You spent a long time, you've been a good Ethereum bellwether, even though you're like a bitcoin guy. And we haven't covered really anything about bitcoin on this show in crypto. And here we have Vitalik's recent post on the EF. The Ethereum foundation decreasing its budget by 40% I believe it's like about 20% of the EF contributors or folks on salary have left and basically there's an exodus. And I know Ethereum is not the EF or whatever, but it absolutely is the hegemon. Vitalik himself is like the face of the network. What's going on here, Gore? I know Ethereum's been on the downtrend relative. Bitcoin vibes are lower relative to bitcoin somehow. What is going on with Vitalik and the ef?

[C]

I think this has been a very long, like gradual exodus by the way. I mean there was this whole shake up with Aya who is actually now out, and then Tomash, I forget all these people's names. But in any case, there's been a lot of changes and I think, I don't know, maybe you would know. I think their mandate initially was like at some point they are going to put themselves out of business, right? Like the network should be decentralized enough. The public goods will be built to the point where they no longer need to be very active. And I suppose you could look at this as some progression of that. This happens like every two weeks though, by the way. So I don't have much. Like there's a new ETH research. This is the new thing that's going to propel the network forward. There's this new ETH Labs thing, right, which is a bunch of people who defected from the ef. So it's like, okay, it's a lot of the, the same people joining new organizations. And again this is something that I think we've witnessed now for a couple years, if not more. Like really since last bear market there's been this kind of like ups and downs and people are upset with the Ethereum foundation and stuff. So I don't know what to make of this. Apart from this does seem to happen a lot. They cut, I will say they cut like 54 people, which was apparently 20, only 20% of the EF. So like certainly that begs the question, what are those other people?

[A]

What are they working on.

[C]

Yeah, it's like they're. Everyone's job is like find ways to sell eth. I have no idea what, what goes on internally there. That's like I, I don't, you know, I only see what you guys see. But I, I don't know there's much to read into this apart from like this just seems like a, an occurrence every two weeks there's a new EF is you know, transitioning to a new mandate or whatever. It's okay. You guys do this all the time. It doesn't seem like much changes, but maybe much. Maybe there's not a whole lot that needs to change. I don't know.

[A]

I mean the, my I, I'll say that it's felt like you're right that the EF originally was like we would like to put ourselves out of a job at a high level and but yet I don't see anyone talk about Ethereum as a network saying that well we're done. So it's like the job is I don't see any agreement that Ethereum is done being built. Moving forwards. It more feels like it's kind of started to stall or hit some roadblocks. Yeah. I'm not going to put you on the spot and ask you what you think ETH does, but where do you think bitcoin has almost like weathered the past 10 years of crypto tokens taking the limelight? Bitcoin remains still now 10 years later, almost 10 years to the year after the big ICO run which sucked all the air out of the room. I'm putting words in your mouth, but do you think bitcoin has some time in the sun again relative to the broader market? Crypto market Cap, what are your thoughts on this?

[C]

Yeah, I mean I'm still bullish bitcoin, but again I'm very acknowledging of if we die, we die. So this is something that I've held for long enough now that I'm understanding of the risk and I'm not allocated to a point where I mean if like by traditional portfolio management standards I'm very much over allocated but I'm not going to. My life's not ruined. So I'm willing to ride Bitcoin in perpetuity, not so much anything else. I think the market seems to realize this although bitcoin is going down as well. So it's hard to make some look at the outperformer here. And bitcoin is really separating itself. Obviously we may believe that, but it's hard Bitcoin's down 20%, everything else down 25%. Right. It's like, okay, it's not something you want to really exalt about. I do think, obviously, I mean, I take probably just to finish up, I take probably even stronger stance with regards to crypto writ large. Now, the claim that everything's coming on chain, that's not obvious to me at all anymore. In fact, if I had to guess, I think the next five to 10 years will be use cases coming off chain. Things that have shown product market fit on chain becoming increasingly centralized and integrated into traditional finance. We see this like Kalshi is very much a centralized regulated. It is not on chain. Prediction markets showed their product market fit in crypto perps now, right. I'll make a contentious statement. I wouldn't be surprised if Hyper Liquid dropped the blockchain aspect at some point or very much narrowed the scope of what the blockchain part does. And it's not to say that I don't think something like Hyper Liquid could win. It's just that it will win. Products will win in spite of, not because of blockchains anymore. I don't know that tokenization has anything to do with blockchains. I'm not even especially bullish stablecoins. For what it's worth, I'm bullish in the interim, maybe five to ten years. I don't. I'm constantly, you know, trying to reason as to why a stablecoin must be on a blockchain. It's not clear to me yet. The product market fit of dollars that can float and be transferred instantaneously across the world is clearly there. And again, coins on blockchains have shown that that does not necessitate a blockchain going forward, in my opinion. So I mean, this is kind of like an overarching bearish statement, but I'm really not sold that this 10 years of infrastructure we've built is going to be the infrastructure we use going forward. And I would probably say that there's a reasonable chance that Bitcoin is the only use case for a blockchain specifically. I think that is actually. It gets people very heated. It gets very contentious, but I think that's likely where we're going. So again, there's been a tremendous amount of PMF shown. There's obviously a lot of markets that are tapped and there's still a lot of interesting things that can be built. I don't know that going forward it's going to be, you know, like it's going to necessitate a blockchain Gord, I'm in total agreement.

[A]

I There's a lot of product market fit for things and applications and not a lot of product fit Market fit for blockchains is what I Or maybe

[B]

a closing question, kind of teasing out some of your comments there. Further, something you said that really just struck me. It's blockchain's will succeed or these use cases will succeed despite of despite crypto, not because of it. I'm wondering if you feel like the current bear market really reflects an existential crisis that the wider crypto believers or community, if we want to use that label, have never really confronted with every bear market. There are obviously people dropping out and there were people who were singing or kind of dancing on graves too early. But bitcoin success and the application of these blockchains for various financial purposes were kind of a foregone conclusion. I feel like that's starting to wane, especially when you look at for bitcoin, the primary use case for most people recently number go up, it's going to outperform things. It's just not happening right now and it's not true. Do you feel like this bear market is truly a kind of instilling existential dread within the wider ecosystem? And do you feel like it's different than bear markets in the past in terms of people's actual outlook on whether or not any of this will succeed?

[C]

Yeah, 100%. I absolutely believe that this time is different. With regards to what you were saying, the infrastructure and a lot of the proposed Internet of value ideas, I don't think think people are buying into the way that they once did. There was still something to believe in. And it's just like the number of use cases is obviously condensing, right? It's very hard to get honest feedback or to it's very hard to read between the lines with narratives. Like almost everybody has an angle and everybody who thinks that stablecoins are the future are deeply embedded in that being the case. And so all of the use cases that do seem like they have, I guess, the potential to endure in some capacity. A lot of what I see are a bunch of weird explanations that never really answer why it needs a blockchain in the underlying right. And maybe it uses a blockchain, but it will. I mean users I don't think will have any idea. I mean even stuff like tokenization. The problem is that these companies stay private longer. The answer is not that it has to be on a blockchain. The answer is that we just need some database that allows people to tokenize this stuff earlier. Right. Like all of these things are centralized. They all have massive dependencies, oracles, whatever it may be. When you bring real world assets on chain or whatever, it's always going to have layers of centralization. And to that end, I just think that blockchains are very, very inefficient databases. And if we are in agreement that they're useful because they are a database, well, we can make much more efficient databases. So anyways, that was like a little bit circumventing your question. I do think this is existential, but I don't think you're going to hear this. You're going to. Everybody is still deeply attached to their bags and even if they recognize that there's new use cases or whatever, they're going to assume that it's going to be on their fucking blockchain, their, you know, stablecoin rails. Like, you know, it's, you're never really going to get these like honest answers out of people. People are still deeply tied to like this becoming the case. Right.

[B]

We're in the denial phase of grieving.

[A]

The denial. But there's no recovery at the end. There's no, it's so back. It's just, it keeps going. Denial also.

[C]

Well, let me, let me say one, one last thing about this is like I, I think it to, to with regards to the sentiment on like crypto, Twitter and stuff, it's very obvious that even the, the viable, you know, the viable use cases, I don't see much of an investment thesis for retail anymore. Like, and it's not just to say that the incumbents are going to capture this. I think that's part of it. But it's just like these, these people are going to like Sequoia, they're going to traditional VCs, they're raising equity, they're, you know, creating fintech apps. They're not doing this tokenization yield farming. Like all of this stuff. It's just like from the retail angle, which was the appeal of, of, of crypto for so long, I just don't see the investment case being there. Maybe it's like overly bearish. Right. But I, I don't. There will still be a few going forward, I'm sure, but I don't know. I, I'm not like really looking at this like from an investment angle at this juncture.

[A]

Very similar thoughts. Gord, thank you so much for coming on the show, ripping on the markets with us. I know it's down. But someday bitcoin will go back up. Inshah. We can believe Wag me. I'm. I'm kidding. Gore, thank you so much for joining the show. Appreciate your time.

[C]

Yeah, thanks for having me, guys.

[B]

Yep, thanks, Gort.

[A]

Love Gort. Number one podcaster. That makes us two and three. We can fight over who's two and who's three. We have Alejandro de la Torre in the audience. We'll bring him up here in a moment. But before that, a word from our sponsor, Luxor.

[B]

This episode of Blockspace Live is brought to you by Luxors Commander. Bitcoin miner management software for enterprise operations. Commander gives you real time fleet monitoring, bulk remote commands across your fleet. And intelligent miner, that's an automatic profitability engine that runs every five minutes and tests your fleet against live power and hash rate markets. ERCOT back tests show 10% improved profitability with intelligent mining versus binary mining. Commander is $100 per megawatt or a 25 basis point pool fee adder, roughly half the cost of competition. And you can try it for free for 60 days. So if you'd like to learn more, go to Luxor tech forward slash Commander to get started.

[A]

All right, we are going to bring up Alejandro. We haven't done a mic test, so we're bringing them in hot. Let's see. Alejandro. Hey.

[D]

All right, good. Hey, thanks for having me.

[B]

Thanks for joining us, man. And congratulations on the first SV2 compatible block.

[A]

Look at that. There it is. Beautiful. Block block 955318.

[D]

The minor needs to be updated. Mempool space is on it.

[A]

Yeah, because this is a, this is a manual field that they enter here, right?

[D]

Yeah, yeah, yeah.

[C]

We.

[D]

Yeah, yeah. So it takes a little bit of

[B]

time, but they're so Alejandro, to set the stage here, can you just briefly explain to our listeners who you are, what Demand does and what is going on here on that mempool space URL?

[D]

Sure, sure. So my name is Alejandro de la Torre, the CEO of Demand. It is the first V2 fully stranded V2 pool, meaning miners can build their own blocks with us, can add their own transactions into their own blocks with us. And that's exactly what's happened today. We mined the very first stratum v2 block with the help or the hash rate, I should say, of go mining. Very large operator. And they actually are using Stratum v2 technology provided by us to add their own transactions into the block. These transactions that they're adding are from a open source payment system that they're, that they Released just a couple weeks ago called Go BTCPay.

[A]

So, yeah, diving in a little bit on into this now. I know people deep in the bitcoin world have heard about SV2 strand V2 for forever and there's been all these technical podcasts about it and the protocol has been developing. Why has it taken so long to get this specific block? What's the tldr and why it took years.

[D]

Years, yes. So that's a great question. And it's a question I get a lot. The Strand V2 is open source. Everything is specified. The development team is from around the world. It's open source developers. They've been working for many years on it. So these things naturally, open source technology naturally takes time. Obviously it's not from a business, so there's a different, let's say, speed to that. But more importantly, actually the real reason is that Stratum V2 is built. It's an improvement in everything in the Stratum protocol. It improves. Not only does it allow for the miner to build their own block, add their own transactions, like Goldmining just did with the gobtc payment transactions with us, but it also improves in encryption. So the hash rate cannot be hijacked. No other, let's say a government body or other corporation can see what's going on with your hash rate because it's encrypted, it's in binary, so it's much more efficient. So you see some very slight improvements on efficiency, which in the long term. And if it's a lot of hash rate really does add up, and there's a lot of other extra, very technical upgrades to stratum v2 in regards to stratum v1. So that's the reason why it's taking so long, aside from it being open source. And open source development is always kind of haphazard. There's always new guys coming in or ladies coming in and working on it and then leaving and whatever. But what, more importantly is that it's. It's very. It's a. It's a full upgrade. It's not just the minor block template that you can. It's not just that one feature, it's all the other stuff combined.

[B]

So Alejandro, and conCurrently with straight MV2, Ocean Pool has their own, how should we say, maybe SV2 knockoff, if I'm being uncharitable, called Datum. And it purports to do similar things in terms of giving miners a choice over their block template. And I believe Brains is also working on getting SV2 implemented to their mining pool, but they haven't done it yet.

[C]

What are.

[B]

Can you give us a breakdown of the differences between SV2 and Datum and specifically the kind of flexibility they give their miners?

[D]

Because

[B]

on the face of it, the marketing language is miners get to choose their own transactions, build their own templates, but when you actually dig into the details, how we actually get there and how much control the miners actually have is actually quite different from what is conveyed.

[D]

Correct. I wouldn't call it SV2 knockoff because it's like I said earlier with about how SV2 is much more of. It's a, it's. It's a beast essentially. It's got encryption, it's got binary, it's more efficient. Datum only has the only it's built on statum is stratum v1 number one. So it still has all the issues of stratum v1, all the inefficiencies, the spaghetti code, the non specification of SV1, all the problems that the SV1 has. It's very old code to SV1. Datum is built on top of that. Already you're working with a lesser let's say code base in that sense. Datum allows for blocks for miners to build their own block and I do own transactions. And in that case I think it's amazing. I mean my whole entire goal ever, ever since started working on Stratum V2 was to help improve decentralization and datum helps improve decentralization. So awesome. Great for them. But strand v2 is just the better technology than datum and also datum is not well specified. It's. It's kind of. It's not built by open source team, it's built by a business and there's no specifications. Even though they say they're gonna, they're gonna release more. More let's say information on all relies on basically ocean and ocean can change things and you're gonna have to follow what ocean does. So in that sense it's a. If you know, strategy two is more on the line of bitcoin ethos and that's one thing and then brains another. I'm another huge fan of. Right. Those guys are a great, great team. They're the first mining pool slush pool. So you know there's the respect is there of course but in my opinion it's kind of. It's kind of the reverse of ocean where ocean only took basically took out the minor block technology from SV2 and put it on SV1. Well, brains did the other way around they took all the encryption, the binary, all the other cool features, but forgot or didn't add the number one feature, which is the ability for miners to build their own block. So that's why I always say we are the first fully stratum v2 pool because we not only do we have encryption and binary etc. But we have the ability to build the own block and brains doesn't allow that.

[B]

Is that largely just a consequence of the fact they're full paper share now? I mean much more difficult for them to have to maybe deal with that if they weren't. Or do you think that's kind of a cop out?

[D]

I think in part it has to do with that. Yes.

[B]

Go ahead Charlie.

[A]

So if you think you al you've been in the game for forever, you're very well tenured in bitcoin mining. You've seen on the pool side and the block construction side many different payout models. The OG PP on s the rise of FPPS and like the foundry story. And it seems that now in what seems, you know, the depths of another bear market, we're having a bit of a renaissance in like the different types of different pool structures and payout models. You have niche community pools and a lot of it's like small, independent, enthusiast driven but you're having real, a real like diversification in different like pool structures and payout models. Do you. I just want to get you like your finger in the wind idea of what like the ratio maybe like a few years from now like FPP. FPPs is overwhelmingly the height, the supermajority of all payout pool pool models. But we're seeing an enthusiasm for these alternate implementations. Do you think that these will take a larger market share of the overall block production over the next five to

[D]

10 years in terms of payment systems,

[A]

in terms of just like different block production payout models. You've got SV2, you got FPPs, you've got PPLNs, you have like I look at my, you know the, the, the parasite pool which has like their kind of weird hybrid payout model. Like there seems to be demand to, to. To borrow the name for different, different types of pool configurations. Do you think this is an increasing tre share of blocks produced?

[D]

Yeah, yeah, I think, I think different payment models will continue to be created. But I FPPS is still the most sought after type of payment system specifically because it pays. It allows for the miners to forecast to pay their, you know, they FTPs pays them every single day for the shares they've sent and then they can take, take those even though it's, it's usually more expensive. No, it not usually it is more expensive for the miner, but at least the miner gets, you know, daily payout that they can then, you know, pay the, the, the lights, the power for their, for their equipment and for their, their team. So I don't, I don't think at the moment the FPPS is going away. How people ns is is the, let's say this is the better model if you want to get paid exactly what you're owed. So if you're, if you get the maximum amount of sats per your terrahash. So what I've seen is that larger entities, larger miners who have the ability to, let's say, wait until the block is hit and don't necessarily need to, you know, pay the bills tomorrow, you know, today they can, they can afford to wait until the block is hit. Those guys usually choose, you know, a pplns or if, if you're a hobbyist miner where you're just doing it for fun or for some sats here and there, then okay, pplns model works perfectly fine. But I think what we've been seeing is that midsize miners are actually looking at ways to, they pinpoint a percentage of their mining farm. Let's say, okay, I need to, in order for me to cover the costs of my business, I need 50% FPPs payments. So I send 50% on my hash rate to FPPS pool. However, the other 50% is just profit. So I send that, that hash rate to pplnspool in which I will know that I'm getting the maximum amount of sats per my terrahash. So I've been seeing that sort of strategy being played.

[A]

And this changes the game for like how mining farm operators decide who they point to. More optionality. Because as far as I'm aware, in all my experience, everyone just kind of mines to one pool which gives them maybe like the single best deal or they kind of, they don't really optimize for the pool. And you're saying that there is now a little more dynamism in the operator select pool selection?

[D]

Yeah, yeah, yeah. You know, I think, I think, I think pools have been legacy. I call them legacy pools like and pool all these old pools who that are just kind of. I call them like fat cats. They're just sitting around eating all day. They're not, they're not, they're not cognizant to all the, the, the serious, hard, serious work and development that let's say pool 2.0. Pools 2.0 like our pool, which are changing the game significantly. And this in turn, this demand is a totally new pool. Stratum V2. It's got different ways of approaching the problems that miners have had for many years. And miners are starting to become well educated and saying and are seeing, hey, wait a second, maybe I can point my hash rate to this new pool and earn more on my bitcoin and be able to build my own block, add my own transactions from my secondary business like Goldmining for example, with Go BTCPay where they have a second business that sends many bitcoin transactions. And for them it makes a lot of sense. They add those transactions into their own block and they get those transaction fees back. So right there, the, the door is open to a whole new game for bitcoin miners. Like a lot of bitcoin miners and pools are stuck in the old way of looking at things. And I know firsthand I was a fat cat. I was, I used to run BTC.com back in the day. It was number one pool we had, you know, and pooling back in the day too, which was like a top three pool. So I, I know how it feels to be a fat cat and you just get, you just get, you know, you just get complacent and. And I think all these legacy pools are going to have a rude awakening very soon.

[B]

It seems like now is a time that's ripe for it given that bitcoin depths of a bear market and hash rate is starting to stagnate. Well, Alejandro, thank you so much for joining, man. Really, really appreciate it. Congrats again. And we will be keeping an eye on demand pools growth as the years trudge on more demand blocks.

[A]

Demand blocks. Alejandro, thank you so much.

[C]

Cheers.

[D]

Thanks guys. Bye.

[A]

An OG.

[B]

An OG for the OGs.

[A]

Yeah,

[B]

sorry, I just have to say, just piggybacking on one of the comments there in questions does seem to me like the PPLNs or some variant of that model will probably win out in the future just by nature of transaction fee volatility. When the block subsidy drops low enough, you can't really see unless they're very well capitalized FPPs pools being able to stomach that volatility for their clients.

[A]

Yeah, we got to get some transaction fees though. So let's get on that. Where the ordinals go. Okay?

[B]

Everything. They're dead in the water with every other bitcoin narrative last year.

[A]

Oh my God. We got to figure that out. Okay. We're going to. We are going to. We have a couple more topics. We're going to talk about the Galaxy deal. We've held that for the end Galaxy news site. Some not just rumors, confirmation. And then we're gonna gang up and kick around Microstrategy a bit more. But before that, a word from our sponsor, Lygos.

[B]

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[A]

Charlie. Yeah, this is some fun news. This is Galaxy. So Galaxy's got a new site in Texas, specifically. Near McGregor City Council or in McGregor, Texas. This was scooped by none other than Rittenhouse. Research, I believe was one of the first to like really break this news.

[B]

The local news story is the one saying it was approved though.

[A]

Okay, okay, local news, but McGregor. But Rittenhouse found this. But basically the future of next data Center Alpha is going to be in local news stories. So shout out to channel 10, KWTX

[B]

and McGregor reporting from.

[A]

Okay, so here's the deal. The industrial park in McGregor is set to expand after the city council approved plans for a new data center. The company building the facility is Galaxy, which is entered into a contract with the City of McGregor for the project they are calling Project Merlin. The plan calls for several buildings on 500 acres northeast of the SpaceX facility in town. So linking our arm's length from Elon

[D]

Musk,

[A]

Drew Luna, a Galaxy representative, said at the council meeting, any infrastructure upgrades that we need for our power, it's on us. We pay that, it comes out of our pocket. Galaxy described the investment as a $400 million capital investment. 30 jobs. 30 plus jobs, average salary of 60k plus, which for rural taxes, pretty good closed loop cooling Recirculated water, minimal water. And again, on the water issue, as the Galaxy rep said, our residential usage is not going to be affected by this. 3,000 gallons a day. If the facility uses more than 3,000 gallons a day, then maybe some restaurants in town would also have to shut down because that's about how much a restaurant uses.

[B]

So Galaxy hitting on all of the concerns here, which is one of the reasons why we flagged this story. I'm going to get written houses tweet up here. Yeah, not that Rittenhouse. This is Rittenhouse research coming from X and as Charlie just noted, they're talking about investing in infrastructure. They're not the city nor the utility is going to front the infrastructure revamps that they need to deliver the power to the site. They're also quelling or quenching, I should say concerns over water use, explaining exactly how the system works. And as Rittenhouse points out here one of he has a slide from their from the presentation to the McGregor City Council provides quote here from Rittenhouse quote. It provides an in depth look at how Galaxy articulated the benefits they'll bring to McGregor and dispelled some of the prevailing false narratives around data centers. And interestingly they've so they've been in negotiation for this for over six months and have been addressing these concerns before the council. And to vet Galaxy, the council actually toured one of their data centers in Affton, Texas, I believe that's the Helios center, and spoke with members of the local community. A McGregor City Council member concluded the presentation with the following quote, thank you guys for working with our city leadership to make sure that all of our concerns because you know they're to make sure that all of our concerns, because we know they're the concerns of our citizens too, were met and put into this agreement. I think y' all would be a good partner for us to work with. As Rittenhouse points out here, one of the increasing bottlenecks is not even just power nor resources nor land. It's NIMBYism. We've covered here the moratoriums in various places. Charlie, you've been good about talking about them in your home state of Oklahoma. If you don't get these localities on your side, you are not going to be building. We just covered iron having one of their plans tabled for now for tabled in Oklahoma. And this to me is really setting a new standard for how these companies can do community outreach to address these concerns and make sure they are properly addressed and don't spiral into, you know, the realm of hysteria. Because it's fair enough to have these, to have skepticism of these things. Very few people understand what these data centers even are. And they're going on Facebook and they're seeing some boomer fied meme about how you're not going to have water rights and that the local river is going to dry up. So hats off to the Galaxy team for really kind of taking the initiative here and saying, here's what we're going to do, here's what we've already done. Come see our data center and we'll show you how we actually do things so you don't have to worry.

[A]

It really is the tale of two data center builders where Galaxy, again, we're not unbiased. We helped Galaxy produce a documentary about their, their, their, their site down in Texas and with a community focused angle, they build a pool. And so this is kind of learning from that and building this site with a huge priority on engaging the community first. And it looks like it's paying dividends because while everybody else is encountering snags in the roadmap that were not anticipated six months ago, Galaxy is able to move forward with this, not with just approval, but with in some cases explicit endorsement. So that's the part one of the Galaxy news we have. The other one is Jane Street.

[B]

Jane street, now a beneficial owner of Galaxy, a passive stake at 5.1%. I don't want to make too much of this because this is not akin to something like situational awareness or a large fund taking an active stake in Galaxy. But what it does show is that there is enough investor interest for Jane street to up its stake in Galaxy. Jane street is a quantitative trading firm and market maker. They now own 5.1% of Galaxy. People are slinging Galaxy shares. Really starting to seem like one of the, you know, their, their name is up there in terms of the bitcoin miners turn Neo cloud, obviously they have a lot of other crypto businesses. Lending desk. They have a bunch of things going on, but it seems like right now the momentum is on their side with the data center segment of their business specifically.

[A]

Yeah, so that's pretty significant. Fun to see Galaxy. We like to have the Galaxy analysts and Galaxy research team on the show. So always fun to see them get some attention from the big boys over at Jane Street. Colin, I think we moved to our last story where we, in which we gang up and we, in which we

[B]

punch up or maybe down considering where the stocks are. And there are a lot of ways that we can take this, I think first and foremost. Charlie.

[A]

Yeah.

[B]

Let's get the Matt Walsh tweet up here.

[A]

Matt Walsh of Castle Island Ventures. He and Nick Carter both have, like, I would say, you know, tweets on this, which are both pretty interesting.

[B]

Yeah, he gives a really good breakdown of strategies, debt obligations, specifically through the converts. Now, when we had Jesse Meyer on yesterday, the head of bitcoin strategy at the smarter Web company, he was giving the bull thesis for why we should see stretch gap back up and why this is probably fine. So we're going to give the bear thesis today. And one of the bear theses specifically that I think starting to rear its head is that strategy could be in trouble with these convertible notes. And the reason for that is a lot of the convertible notes, you could hand wave the obligations when Strategy was at $300 or even $200, but it's at. What is it now? It's at 100. Jamie, pull up the stock chart. It's at 86. 96. It's at $87 per share. It's down 7.7% today. So it has been absolutely puking. Year to date, it's down 45%. In one year, it's down 78%. So the stock is really starting to suffer. And when strategy is in a bull market, these converts make Michael Saylor look like a genius because his stock is way above the convert price, but with everything, it's always been contingent on bitcoin's price trajectory. With bitcoin crashing, strategy and its various preferreds are also suffering. But going back to these converts Specifically, strategy has $6.7 billion in notional value of these things outstanding. And the puts for some of these are coming up pretty quickly. Now, the put is different from the convert from the date where the convert can be exercised. The put is an option within these convertible notes where the note holder can say, I want out of this. You have to pay me back the value of the note that's outstanding. The convert date is when the note holder can say, okay, I would either like this in the actual shares that this note can convert to, or some combination of shares and cash. And as Matt here points out. I'm going to share my tab here, Charlie, and get Matt's thread that breaks us down here. The put schedule is the following. I did my best to fact check this. I didn't have that much time before we went live, but as far as I could tell, this is mostly correct. 1 billion coming September 2027. The ex the exercise price for the convert is $183 per share. $2 billion March 2028 $433 per share 1.5 billion June 2028 $672 per share 300 million September 2028150 per share 604 million September 2028 $233 per share 800 million June 2029 $204 per share the important thing is strategy is below all of those convert prices currently. So the one that is Most imminent is September 2027. We're obviously still a year out. But if Strategy is below 183 at the point, at that point when that put can be exercised, the note holder is going to want cash back. And the the most dangerous of the of all of These is the March 2028 and June 2028 where $433 and $672 is the strike price for converting the shares or converting the debt into shares. Currently, strategy is below all of these and if it had to pay them back it would need to sell, as Matt points out here, roughly 111,000 Bitcoin for all of these and 74,000 Bitcoin for the first three puts. Again, this is $6.7 billion outstanding and how much they owe on these converts. Strategy has $1.4 billion cash reserve, but that is basically for the preferreds at this point. There's 1.7 billion in annual preferred dividends as of its most recent issuance of stretch. When you really put these numbers to paper, it starts to look really freaking bad for strategy, man. Saving bitcoin, ripping it could get incredibly dicey for the company here over the next year. But who knows? Maybe Sailor pulls a rabbit out of his hat. Maybe the market saves him as it has in the past.

[A]

Yeah, all these go away if Bitcoin goes up, all the problems go away. If Bitcoin increases your your assets under management, huge, you get a lot more leeway. Also, I don't know what I don't know. Like the tradfi is very slippery and wily and if you have all these different levers you can pull, maybe there's things you could do to stave these off or change the node or change the bath.

[D]

But

[A]

those of us who have unfortunately over indexed on open networks are a little bit still kind of flummoxed by the inscrutable bureaucracy and levers that exist in the Trad5 financial system. Saylor survived before. Remember he was supposed to die in

[B]

2020 he has, I think, the big difference now, the preferreds really change the nature of the company.

[A]

Yeah.

[B]

Because now any cash flow that you do have from issuing new equity has to go into those preferreds if you're not buying bitcoin with it. Now, obviously what, what most strategy bulls will say, and this is fair enough, they've got 847,363 Bitcoin on their balance sheet. That's an insane amount of bitcoin.

[D]

Right.

[B]

You know, and, but, and the funny thing is, though, they bought it. The average price is 75,651. So if you're ever feeling bad about your cost basis, let me tell you all, it could be a lot worse. But they have like 50 billion roughly in bitcoin, so they can always sell that. But this does create a potential doom loop scenario where, I mean, if they have to shed about an eighth of the bitcoin that they hold just to settle this debt, then what does that do to the share price of strategy? What does that do to its M Nav, which is kind of the whole raison d' etre of it being valuable at all. You create a scenario in which the stock becomes very unattractive to people, and then you still don't solve for the fact that you also have $1.7 billion in preferred obligations and the preferred stock right now is suffering. So can you really sell more of that into the open market? And also your stock price is down 70% over the last year. Can you continue selling that into the open market? And now most of your bonds are underwater. Can you issue new ones? Because if you're looking at the fact that most of these are trading at a discount now from where they were issued, I would assume. I just don't have a view into that. I don't have a Bloomberg terminal. But can Saylor continue to pull these levers? It kind of tbd. And there's another tweet from Nick Carter up where he basically says the real rate for Stretch in terms of if you were an investor and you were going to be comfortable investing in it, should probably be closer to like 15 or 20% than the 11.5 it is currently. So if Saylor really wants to try to restore this peg, does he have to go even further out into the curve for the yield for that? There are just so many questions floating around right now. And it's obviously everyone dunk on Sailor Day because all of his stocks are just performing so poorly. But we really are seeing the first, I would say legitimate crisis for this company, unlike the last bear market where they sold some Bitcoin in 2022. But they weren't that stressed because these converts were way out into the future. The bill is going to be due here pretty soon and something needs to reverse course for the math to make sense.

[A]

Yeah, that's right. A lot of people think that strategy and stretch are going down because sailors been using poor AI tweets and maybe that has something to do with it. I like to say sailor might be the only person who needs to pivot out of AI right now. So on that note, Saylor, please save us. Bitcoin still under 60k. We can't be here too long or else everybody gets liquidated and bored. Thank you so much for listening to Blockspace Live. We do this every weekday, 1pm Eastern, featuring quick hits on AI data centers, Bitcoin mining, emerging tech assets and markets. If you like what you hear, you'll love the newsletter. Newsletter block space media.com this show is brought to you by Clean Spark NASDAQ listed Ticker clsk. See you all tomorrow.