IREN’s $700M Executive Comp, Anthropic's AI Chip, NVDA’s Neocloud Revenue Share Model

Summary

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Blockspace: AI & Bitcoin

Episode: IREN’s $700M Executive Comp, Anthropic's AI Chip, NVDA’s Neocloud Revenue Share Model

Hosts: Charlie Spears (“A”), Colin Harper (“B”)
Guest: Jay Patel (“C”), Lygos Finance
Date: July 2, 2026

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Overview:

In this jam-packed episode of Blockspace Live, Charlie and Colin dive deep into three major stories at the intersection of AI, data centers, bitcoin, and emerging credit models:

1. The provocative $700M+ compensation package for IREN (Iron) co-CEOs, sparking debate over alignment and shareholder interests.
2. A technical breakdown of Anthropic’s vertical push into custom AI chips, eyeing manufacturing by Samsung.
3. Nvidia’s new revenue sharing model with AI cloud startups, a business model shift raising questions about true demand and sector sustainability.

Special guest Jay Patel joins for a frank look at stress building in private credit, especially as it relates to tech and the NeoCloud sector.

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Key Discussion Points and Insights

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1. IREN’s $700 Million Executive Compensation Package

[00:00–11:47]

The Story:

• IREN co-founders, brothers William and Dan Roberts, awarded a combined 18.2M RSUs (5% of total outstanding shares)—an equity grant valued at ~$800M.
• Stock fell sharply (+ sector-wide downside after Meta’s cloud business update).
• Executive compensation is time-based instead of performance-based, prompting debate about alignment with ordinary shareholders at what feels like a sector crossroads.

Detailed Breakdown:

• Terms: 4-year annual vest (25% each year), plus a 2-year post-vesting lockup. No further grants till 2031. Last tranches liquid 2033.
• Voting Structure: “Each Roberts brother holds ~21.8% of class B shares, 15:1 voting ratio—combined over 43% of voting shares.” (B, 03:08)
• Shareholder View: The comp “calls into question who is really being prioritized here… the shareholders or the insiders.” (B, 04:20)
• Controversy:
  • Optics of a stock/dilution grant when performance and growth are lagging.
  • High-profile, expensive “marketing” deals (Golden State Warriors jersey sponsorship, media company acquisition) have also raised eyebrows.

Notable Quotes:

• “I wake up and I’m like, I’m in the wrong business. I should have been issuing shares and then taking those shares.” (A, 01:37)
• “[Even] long-time iron bulls are kind of asking questions about who’s really being prioritized here, the shareholders or the insiders in iron…” (B, 04:05)
• “The problem is that it’s time-based rather than performance-based. And the size is not small.” (B, 05:19)

Market and Community Reaction:

• Iron’s stock recently flipped negative for the year—down after an earlier explosive run, fueling a sense of ‘rearward’ reward.
• “NeoClouds” sector—down 13.9% in five days, compounding negative headlines.
• Technical evaluation (“semi analysis”) places Iron (and peers) in an “underperforming, not recommended” tier for actual cloud service performance.
• “The people are kind of pissed.” (A, 09:27)

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2. Cracks in Private Credit: Spotlight on NeoCloud Lending

Guest: Jay Patel, Lygos Finance
[11:47–27:32]

Blue Owl Redemption Pressure:

• Blue Owl (major private credit fund) again capped redemptions at 5% for the second quarter; tech-focused funds even more stressed.
• “If instead of 20+% of the fund trying to redeem only 18%…it’s like half our house minus one room as if that’s a better situation.” (C, 13:18)
• 70% of Blue Owl’s credit funds now tech-exposed (per latest disclosures).

The NeoCloud Cycle:

• “Original sin” was overlending to software, leading funds to pivot to “data center (NeoCloud) financing”—now also showing cracks after Meta’s new strategy.
• CoreWeave’s bonds, the sector leader, fell 5–6% in a week; likely worse with thinner, less liquid names.

Lending and Demand Risk:

• Nvidia’s direct balance-sheet support of cloud startups (“financing the ecosystem”) has morphed into true circular financing.
• “If you’re one of these lenders…do you want to be lending to a NeoCloud who doesn’t have Nvidia as a backstop? …That seems like the worst spot to be in.” (C, 20:30)
• Concerns rising over sustainability and whether reported AI demand is truly robust.

Notable Quotes:

• “Blue Owl is effectively saying things are better because if instead of 20+ percent of the fund trying to redeem only 18 percent is trying to redeem.” (C, 13:12)
• “[NVIDIA] will backstop you with their balance sheet if you split your revenue with them. I don’t see how you can paint that as anything other than circular financing.” (C, 19:44)

Digital Credit Disruption: Strive SATA/Stretch

• Short interest soaring in Strive’s preferreds as the company toys with issued/target price, but common shareholders feel ignored and exposed.
• “It feels like they don’t give a shit about you or at least they don’t care about you as much as they should.” (C, 23:26)
• “These are really great bull market vehicles… but like you said in a bear market, what’s the real utility?” (C, 27:00)

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3. Anthropic’s Custom AI Chip—Early Details

[27:37–35:42]

The Scoop:

• Anthropic, the prominent AI research lab, is working with Samsung to develop a custom AI chip (targeting Samsung’s 2nm process)—mirroring OpenAI’s push into custom ASICs.
• No hard details yet; project is in very early stages.

Context:

• Moves echo sector trend: Google, Amazon, Meta, Microsoft all pursuing custom silicon for specialized cloud and AI workloads.
• “Nvidia’s market share is 74%…I wonder how much we will see that getting eaten into over the next few years as these AI ASIC inference chips become potentially more widespread.” (B, 29:43)
• CUDA’s software moat still looms large, but shift from model training to massive inference compute may favor new hardware entrants.

Notable Quotes:

• “Maybe the moat is in the relationship between the hardware and the model… If you’ve got a proprietary AI chip that just really works your model and you have IP… that’s a moat, like nobody’s business.” (A, 32:36)
• “Going to Samsung obviously carries risks… but if they really do pull this off, then for Anthropic, Samsung’s always probably going to give you priority if you help slingshot them into greater relevance within this arena.” (B, 34:16)

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4. Nvidia’s Revenue Share Model: Circular Financing or Brilliant Risk?

[36:58–42:21]

The Announcement:

• Nvidia launches a program where startups can swap AI compute (GPUs) for a slice of future revenue—offering direct access to full-stack Nvidia compute by sharing both product and cloud revenue back with Nvidia.
• Effectively, Nvidia is “guaranteeing a backstop for computers for GPUs that they sell…help match you with end users…and then have a rev share agreement…” (B, 38:30)

Implications:

• Nvidia steps into role of financier/backstop, taking on more ecosystem risk and potentially double-dipping in customer profits.
• “This is probably the clearest example of circular financing within the AI ecosystem.” (B, 39:12)
• Raises the question: Is demand for AI compute as robust as claimed, or is tighter credit/startup sustainability a growing issue?

Notable Quotes:

• “If the AI boom continues…Nvidia gets to cash in twice… but what happens if your customer doesn’t actually end up generating any revenue?” (B, 40:22)
• “They’re saying they’re doing this because some of these companies are having a hard time securing financing…” (B, 41:44)

Closing Thoughts:

• The sector is rapidly innovating—but the underpinnings (credit, moat, and true demand) are increasingly up for debate.
• Community invited to weigh in: “Let us know if you’ve got opinions, let us know in the comments.” (A, 42:21)

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Memorable Moments & Sharp One-Liners

• “I wake up and I’m like, I’m in the wrong business. I should have been issuing shares.” (A, 01:37)
• “If instead of 20+ percent of the fund trying to redeem only 18 percent is trying to redeem…that’s like, half our house isn’t on fire—it’s like, half our house minus one room.” (C, 13:18)
• “[Nvidia] will backstop you with their balance sheet if you split your revenue with them. I don’t see how you can paint that as anything other than circular financing.” (C, 19:44)
• “Maybe the moat is in the relationship between the hardware and the model.” (A, 32:36)
• “If you don’t have the Nvidia stamp of approval now…that seems like the worst spot to be in.” (C, 20:30)

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Structured Timestamps for Important Segments

| Timestamp | Topic | |-------------|------------------------------------------------------------| | 00:00–11:47 | IREN Compensation, “NeoCloud” sector stress, shareholder debate | | 11:47–27:32 | Jay Patel on private credit: Blue Owl, Tech stress, NeoCloud lending, Strive SATA preferreds, digital credit fragility | | 27:37–35:42 | Anthropic-Samsung custom AI chip—vertical integration, sector implications | | 36:58–42:21 | Nvidia’s rev-share financing model: double risk, market signal doubt |

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Tone and Language

True to the show’s candid, “markets-at-the-deep-end” style, hosts mix technical detail, sharp skepticism, and irreverent asides (“I should have started a bitcoin miner, then pivoted to AI…”). Special guest Jay Patel brings clarity—and some dark humor—on credit cracks, while Colin and Charlie never shy away from calling out hype, risk, and sector signals that just don’t add up.

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For Listeners Who Missed the Live Show

This episode is must-listen if you care about the nuts and bolts behind the hype—executive overreach, cracks in private credit, the real cost of vertical AI integration, and why Nvidia is betting big and backstopping at the sector’s bleeding edge.

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Transcript

[A]

Y'. All.

[B]

Welcome back to Blockspace Live presented by Clean Spark. For our lead story today, Iron co founders the Roberts brothers have just been awarded 5% of the outstanding stock in the form of RSUs and some iron shareholders. Have a few questions here Charlie about the alignment between founders and shareholders, especially considering that Aaron is taking a dump today along with other Neo clouds as the meta news we covered earlier has shaken up the sector. Following that we have Jay Patel of Lygos Finance on to talk about private credit potentially showing some more cracks specifically in the tech sector and also what's going on with Strive SATA and the digital credit ecosystem. Following that, we will cover Anthropic's reported deal striking with Samsung to develop its own custom AI chip and we will end on Nvidia's Rev share agreement with AI Cloud platforms, a pretty big new and breaking development that has us questioning the conventional wisdom for compute demand.

[A]

Block Space goes live Monday, Tuesday, Wednesday, Thursday and Friday every weekdays at 1pm Eastern featuring quick hits on AI data centers, emerging tech, bitcoin and markets. If you like what you hear, you'll love the newsletter newsletter.blogspace media.com to sign up delivered to your inbox every single day. This live stream turns into a podcast anywhere podcasts are streamed. So if you miss it when we're live at 1pm Eastern, you can listen to it later on in the day or the next morning. This show is brought to you by CleanSpark. Nasdaq listed ticker CLSK. More on CleanSpark later on in the show. Call in Every single day I wake up and I'm like I'm in the wrong business. I'm a talking head. I should have been issuing shares and then taking those shares.

[B]

You should have co founded a bitcoin mining company and then pivoted to AI and fair enough. Great track record of execution. And then get yourself awarded roughly $400 million worth of stock grants. So we'll go ahead and share this. I hate to share noted. You know I also had this tweet pulled up.

[A]

I also had Jim Chanos pulled up. This is. This is the tweet.

[B]

So this is James Chanos's depiction of the news item here. He says, quote, so Iron just announced an $800 million stock grant, not options to its two CO CEOs. To put that into perspective, it is a 17% of the estimated cumulative adjusted net income of 4.7 billion over the term of the grant fiscal year 2027 to fiscal year 2430. So what specifically happens here? Was the Iron Board just approved CO CEOs William and Dan Roberts to receive roughly 9.1 million restricted stock units each for a combined 18.2 million restricted stock units across both accounts. This is roughly 5% dilution according to the most updated outstanding shares for Iron according to latest disclosures and also some estimates because they have an ATM open. So there have been some estimates backing out how much have been issued under that ATM and how much dilution that has equated to. We'll know the full number during their most recent or during their next quarterly updates. Some notes on this there's a four year annual vesting at 25% a year and there's a two year post vesting lockup before the CEOs can sell or transfer these shares. So the combined effect of that is six year total Runway from the grant of full liquidity with the last trance not fully tradable until their fiscal year 2033. In exchange no further equity grants to either co CEO until fiscal year 2031. And also so I would like to frame this with the CO CEOs voting power because they each hold roughly 21.8% of voting power with their class B shares which are rated at 15 to 1 compared to others. And so together these brothers have over 42%, 43.6% of the voting shares in the company. And the reason why I threw that in there is because with these RSUs you have even long time iron bulls kind of asking questions about who's really being prioritized here, the shareholders or the insiders in iron. Which granted have meant it some incredible generational wealth for early iron bulls. But he also states here this, this JP Insights guy on X who calls himself a former holder. He says this is an automatic implying

[A]

that he sold since then.

[B]

I mean, yeah, I mean I if the stock was up like a thousand X since I bought I would probably

[A]

would also be a form holder. But I don't know, like iron you kind of had to be in a little bit of like a true believer camp. So that implies you're still holding some.

[B]

Yeah, probably are. But he says this isn't automatically bad but I don't love it at first glance. The good part is the Runway. Six years total. It's important to point that out. This isn't something they can sell immediately. Four years of vesting and then a two year hold on top for a company where the Roberts brothers basically are the identity that locks them in. Not that I thought they were going anywhere anyway. The problem is that it's time based rather than performance based. And the size is not small. Call it around 5% dilution and something close to 1 billion. Now the counterpoint to that is they clearly want to do well. If they tank the company, the shares aren't going to be worth anything anyway and they're going to be selling into an illiquid market. But the other thing that this is framed against Charlie and then I'll toss it to you. They have this Golden State warriors sponsorship deal that a lot of iron you know Bulls were kind of even the bulls were scratching their heads at that's they were reportedly paid for $50 million $50 million per year to sponsor the Golden State warriors and have their logo on their jersey. So it leaves us with the question how much is iron really putting shareholders first? I would say that they've done probably a very good job of that considering the stock is the has been the most explosive vending the bitcoin miners pivoting towards AI that being said, at a time when your stock's at an all time high, you also have an ATM out to dilute because the stock's doing really well. I mean it's not at an all time high high now. It's actually down on the day. But I think the question for most people is okay, well are you really looking forward to the next phase of growth? Whether or not that's fair, we'll see in the months ahead.

[A]

Yeah, they did the the Golden State warriors sponsorship deal kind of on the heels of the last I believe the last quarterly update. Dan Roberts was saying basically why do we need a marketing budget? Here we are. He said something to that effect which is like well the stocks like the market marketing budget and then they purchased

[B]

a media company to immediately go that

[A]

plus the Golden State Warriors. And then I mean here's a tweet that I have from X Capital Management reaction to Iron Co CEO comp package would have been night and day different had they simply tied it to Nvidia investing conditions full package vest based on a 70 higher than $70 price per share and 600k GPU is generating revenue. That's all they had to do bars high for revenue to offset. I don't know if I agree with that specific claim but like I do think that you would see a materially different reaction on at least the Twitter places that we monitor had it been more tied to performance in the when we talk about performance using DI metrics our favorite weekly haunt here, performance in Neoclouds as a sector is down While the S and P is up on the past five days 1.7% NEO clouds have gotten absolutely routed following the meta cloud news. Iron down 13.9% in the past five days. NIBIA's down 11.7%. White fiber also. But yeah, so NeoCloud's not having a good time the same time that the comp package is announced. And it also you got to think in context, the semi analysis. Here's the semianalysis like rankings of the quality of different neoclouds with core weave at the top in the S tier. Semi analysis. They're obviously the most like some of the more technical folks in the space as Iron at an underperforming, not recommended tier down here with a bunch of other companies that I haven't heard of. White fiber obviously. But D stack.

[B]

Is white fiber also in that red tier?

[A]

Yeah, white fiber is also in this red tier down here but so it doesn't even make like a bronze or silver tier. So and for listeners here, like they

[B]

actually have tested these. This is what this is based on. This isn't based on assumptions or secondhand accounts. Semianalysis will actually rent out GPUs from these companies and run them and have them perform various tasks and that's how they arrive at these rankings.

[A]

Yeah. So just not looking very good overall for iron. I'd say the optics. The irony being that they are spending a lot on marketing right now. Whether or not how this plays out in the market and share price, I'm not qualified to say or really even predict. But I will say the people are kind of pissed.

[B]

The people are kind of pissed. And one last thing I'll just say about this with regards to the performance angle, this is largely based on. I mean you can almost argue this is like rear looking rear view performance awards because they're almost being awarded this based on the fact that over the past ooh. Actually Iron not looking as hot as it was.

[A]

Iron flipped negative on the year. I believe we even had a tweet out about it yesterday where technically they're down in 2026 to date.

[B]

Yeah and there was a.

[A]

You forget that the iron run happened like a year and a half ago and it's just been kind of like roughly not really trending one way or the other since then.

[B]

The stock peaked at 7641 in November of 2025 and it's currently still up 143% to date. But it was up much, much more than that when when it was at its peak over the year. And if we look at the five year it's only up. If you had bought iron in the last bull run with Bitcoin five years ago today, you would, or this is post IPO, you would only be up 53, 54% anyway.

[A]

But you know, compared to being compared

[B]

to what we've seen.

[C]

Right.

[B]

Well, Charlie, we'll leave that there. And we have Jay Patel on next. But first, a word from our sponsor, CleanSpark. 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].

[C]

If bitcoin's actually the best money and it's the thing that people should accumulate is the best risk adjusted asset, I lose zero sleep about whether or not

[B]

that's going to happen.

[C]

I just ask the question of when

[B]

is liberty matrix math that you're running

[C]

on large pieces of beer.

[B]

The bitcoin miners can absorb that energy

[A]

and in many ways this feels like

[B]

a second bite at the apple to

[C]

build a new Internet.

[A]

All right, we got Jay Patel in the wings. Going to bring him up and talk private credit. Jay, welcome back to the show.

[C]

How you guys doing?

[A]

Good man.

[B]

Great to see you. Very timely. Because news just hit today that Blue Owl had to cap its redemptions at 5%, I believe for the second quarter in a row. Now redemption requests were down in Q2 versus Q1. Q1 was 5.4 billion, Q2 was 4.7 billion. Still a lot. And they're seeing the most redemption requests of any of these big private credit funds. So that leads me to ask the question, is there any reason to believe, Jay, that this is a wider problem and is it specifically tech focused with these demands for redemptions Now?

[C]

I'd say, I'd say twofold. I don't think it's a Blue Owl specific problem. So we've seen a bunch of departures from BlackRock funds in terms of executives leaving, you know, continued downward performance of their public BDCs. So I don't think it's like a specific Blue Owl problem. I will say it was interesting their phrasing that, oh, things are better. Remember most of these funds we talked about a quarter or two ago that they have a 5% redemption gate. And so Blue Owl is effectively saying things are better because if instead of 20 plus percent of the fund trying to redeem only 18% is trying to redeem. In my mind, that's like, oh, half our house isn't on fire. It's like half our house minus one room. As if that's a better situation to be in. But I guess, you know, they're attempting to spin it in a positive light. However they might. I think they do have a separate tech focused vehicle which is doing even worse. I think it's like 30 plus percent redemption requests. So I don't think it's tech specific, but I do think that, you know, if we go back to what we were talking about last quarter, like the software loans were really where the pain originated and I think the market is still honing in on that. But obviously all of these funds have dropped. The Gates, Apollo, Blackstone, Blue Owl, even some of the Goldman funds. So I think it's an industry wide thing. But if you think about 5% gate every quarter, it could take years to play out. Yeah.

[B]

And I believe they have enough cash, something like 12 billion. So they have enough Runway if that 5% gate. They just keep that 5% gate up for at least a year. And for the tech focused fund, to your point, there were 1.1 billion in redemption requests, 38% of the fund. So just to your point earlier, and 70% of Blue Owl's private credit funds are tech exposed per their Q4 disclosures. So I wonder if that's why I wanted to ask the question about tech specifically, because if we are looking at tech broadly and Blue Owl seems to be one of the most concentrated of these business development companies, then

[C]

it would

[B]

make sense to me that the tech focused BDCs are the ones that are seeing the most stress and that Blue Owl will be under the most stress because of that.

[C]

I think the tech software focused BDCs are definitely the most exposed. But remember last quarter there were a bunch of reports that came out that even these highly concentrated funds were underreporting their exposures to tech because they were classifying, say, healthcare software as healthcare exposure rather than just tech or software exposure. So, you know, I think all of them have a material amount of software exposure, given that that's where the industry really grew so rapidly over the last couple of years, you know, 2021 to 2024. But you know, obviously the ones that have a higher concentration are probably in a even tougher spot.

[A]

So Jay, you have told the story a couple times on here that the private credit credit, like original sin, if you will, was like lending too heavily to software and then trying to kind of get it all back or repaint over this by lending to Neo Clouds. And then we have the Meta NEO Cloud announcement and neoclouds are down bad the past two days, basically perhaps like a deep seat moment or repricing of the sector. What does this do? Is this making the neocloud lending risk bigger?

[C]

Yeah. So remember a quarter ago, all of these executives switched up their tone of voice and they were like, you know, we're not doing software loans, we're doing loans against. They called it like the halo trade, low obsolescence, heavy assets, but it was really just data center financing or. And a quarter ago that seemed like the trade to be in. Right. Core Weave, Meta had a facility with Blue Owl. Basically every Neo cloud was raising debt capital. There's basically infinite demand for GPUs and it's not like that demand has waned significantly, but I think that's basically where they pivoted their focus. And now you've seen over the past week, with Meta's announcement, Core Weave bonds are trading down somewhere between 5 and 6% just this week. And Core Weave, that chart that you guys mentioned, they're probably the most well positioned of any of the Neo clouds. So you have to think that some of these private, more thinly traded bonds or private loans that these private credit funds have made to not just the Neo clouds, but everyone along the kind of stack in terms of building out data centers, whether it be infrastructure companies or otherwise, they've got to be in a tougher position than Core Weave. And if core weave is down 5, 6% for the week, I'm sure the others, if you actually mark to market, are down worse. Look, I don't know how that plays out longer term. Maybe this is a market overreaction to Meta's news, but obviously if this was the direction that these private credit funds are trying to pivot their focus to, it doesn't look too great in the long term to be able to tell your investors the story that hey, we're out of software loans and we're now into data center financing.

[B]

Yeah, yeah. And with regards to whether or not this is a blip or a kind of crack in the model moment, I can't help but think about the demand story alongside this because couched in what Meta Meta's announcement is like, yeah, now the Neo Clouds have to compete with Meta. They're already competing with Xai because XAI kind of front ran Nvidia with regards to pivoting their model to selling computer. But to me it kind of indicated that and to most people that maybe the demand story here isn't as robust as most people think it is. And we're going to cover this later on in the story too. In the show too. Nvidia's revenue share deal today. So a lot of people calling it an evolution of the business model. I can't help but look at it as deepening circular financing. That may indicate that demand is really not as robust as most of these tech giants would like us to think. What's your read on all of that?

[C]

I'm definitely on your side there. There's, there's one thing that you, you know, I think a year ago folks were, you know, shooting down the circular financing argument, saying, hey, it's just Nvidia supporting the ecosystem. They're making small equity investments in these companies. It's a small portion of the capital. We've basically gone to the far end now where Nvidia will backstop you with their balance sheet if you split your revenue with them. I don't see how you can paint that as anything other than circular financing. That's not to say that it isn't a good business decision, right? If there's sustained demand, maybe it works out. But if you're one of these lenders, you have to wonder what that means. If Nvidia's stepping into this position and willing to do this for some of the Neo clouds, does that tell you that they themselves anticipate that there might be some headwinds and that's why they're doing this, so that they're partners can get better financing terms on these GPUs. And then the flip side is, do you want to be lending to a NEO cloud who doesn't have Nvidia as a backstop? Like, that seems like the worst spot to be in. Like, right? You know what if you don't have the Nvidia stamp of approval now

[B]

and there's almost even a consideration to, well, if Nvidia is quasi financing these companies, you know, really what is the credit worthiness for any of these? You know what I mean? And if you see that Nvidia is now clear glued to the hip with some of these and also they're making money on the GPU sales, but now their balance sheet is tied to these folks. It's. I don't know, it makes me sweat a little bit. It makes me wonder if, if this is a kind of oh shit moment, it will be an oh shit moment in a year from now. But who knows?

[C]

The one defense that I've Seen that I think you know the an argument that actually has some pretty decent credibility is obviously like from Nvidia's perspective putting aside the ability to reduce the cost of capital for their partners to buy GPUs and build data centers, obviously they have an incentive for more of the build out to be Nvidia GPU focus and the news that Google is going to start selling TPUs obviously OpenAI and I believe Anthropic have their own kind of inference chip efforts cerebras but maybe this is more just them trying to reduce the cost of financing Nvidia GPUs versus other inference chips rather than trying to backstop the whole industry. But either way I don't think it's a great look and obviously Nvidia probably understands that. So for them to take this step makes me think that they might see some cracks in demand behind the scenes.

[A]

We're gonna switch topics for a quick hit with you Jay on the stretch drive. SATA preferreds this is a big, this is all a Twitter on Twitter right now and this tweet is a bit, it's a little bit cold now, it's two or three days old now. But this is Matt Cole, CEO of Strive talking about the preferreds asking for market feedback. Targeting $100 per se to remains the objective but some investors appear to believe Strive will always issue new SATA shares at 100 create an effective cap. And while short interest climbs on this, what's your take on the landscape of the two preferred stretch and SATA right now?

[C]

I'll say I think they've been better able to navigate the situation than I thought they would. I think they're both still trading at pretty deep discounts but you know, the commons recovered a little. I'll say one thing, I think it sucks to be a common shareholder in either of these companies because it feels like they don't give a shit about you or at least they don't care about you as much as they should. And I think specifically for Strive, like look, I think you know, it's mostly a confidence game and I guess, you know, Saylor on the stretch side has done a decent job of bringing back some level of confidence in the capital structure. But the preferreds only exist so far as they can benefit the common. Right. Like micro strategy and you know, Strive, you know, quickly thereafter only issued these preferred so that they could raise capital on extremely favorable terms and buy bitcoin to increase the bitcoin holdings for the common shareholders. If you can't do that like, you know, MicroStrategy and Strive are not some public utility that are going to provide bitcoiners with stable 12% yields so that we can all bask in retirement. Right. Like that's not the purpose of these vehicles. And so I don't know, from, from my perspective, the STRIVE announcement seems kind of odd because if you're saying that you're not going to issue out 100, what's the, you know, why even step in and raise the rate or you know, defend the peg to. Or you know, I know they don't prefer to use the term peg. Prefer, you know, defend par or whatever you want to say.

[A]

Target price.

[C]

Yeah, yeah. Why defend the target price? If you're saying you're not gonna, you're not gonna issue at a hundred dollars, if you're not gonna issue out $100, then this instrument doesn't really have that much utility for you because you're not going to be able to raise more cap. You're saying you're. If I'm not going to raise more capital using these preferreds, then as a common shareholder I'd be like, okay, them, like, let's excuse my language, like let's, you know, put them aside if we're not going to use it to raise more capital. If they're happy with 70 cents on the $80, I don't care. I want more bitcoin per share. So I don't know, it seems odd, but his logic is I guess, sound in that if you're saying you're going to get rid of that hundred dollar ceiling, maybe that creates more pressure on the shorts, lifts some short interest and then brings the price up. There's some recursive logic there, but I can kind of see it going back

[B]

to what you were saying about these companies signaling that they don't really care about the common stockholders currently. It kind of reminds me of the Abraham Lincoln quote, a house divided event against itself can't stand. I do just wonder specifically in a bear market how sustainable this model actually is. Clearly this is the biggest crisis for them since and it seems like STRIVE is weathering it a little bit better than strategy. SATA is almost back to par and STRETCH is still below 85, below 90.

[C]

So yeah, I think, I mean, part of stretch, I don't know how big a portion of the cell pressure the last couple of days has been, but obviously there's the unwind of the tokenized stretch back stablecoins that we've seen on chain where they're basically forced Sellers of stretch continuously to meet redemptions. I do think that kind of gets to another piece of this though, which is like these are really great bull market vehicles where when people are throwing money at you hand over fist, they don't care about the terms or covenants. And you can tell them this is digital credit, but it has none of the protections of credit and it's just digital. Then yeah, they're great. You can buy a lot of bitcoin. But like you said in a bear market, I mean, what's the real utility like? It's not like they're going to be able to issue a lot more stretch right now. Strive has definitely navigated it a little bit better. I think, you know, the one advantage they also had was that they had moved to that daily dividend model a lot earlier which, you know, maybe helped them from just a public appearance perspective in terms of being more preferred shareholder friendly.

[B]

But yeah,

[A]

J appreciate your insights. You, you do way better than me fumbling around through Claude to try to understand a lot of these arcane finance topics. So appreciate your time and insight.

[C]

Of course, no problem.

[A]

Cheers.

[B]

Thank you, Jay.

[A]

Shout out Jay we are going to keep talking about anthropology. Ropic announced a new chip. Surprise. Everybody's going vertical. Then we are going to wrap this up again. A redux on Nvidia and the Rev Share program. Before we go to Anthropic, a word from our sponsors.

[B]

Luxor. This episode is brought to you by Luxor's 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 automated profitability engine that runs every five minutes against live hash rate markets and power markets. ERCOT back tests show. Excuse me. Ercot backtest show 10% improved profitability with intelligent mining versus binary mining. Commander Pro is $100 per megawatt or a 25 basis point pool fee adder and you can try it for free for 60 days. So if you're interested in learning more, go to Luxor Tech Forward slash Commander to get started.

[A]

All right, so I'll, I'll, I'll do a little intro on this and I'll throw it to you, Colin. So Anthropic has begun early stage work on a custom AI chip and has held talks with Samsung Electronics as a potential manufacturing partner. Per the information, it's early so we don't have a ton of info on this. No details on design or like how it's going to be manufactured has dropped and it's Also not guaranteed that the project will proceed. However it is Anthropic is reportedly looking specifically at Samsung's 2 nanometer process and its advanced packaging facilities. Colin, I'll tag you in to continue the story.

[B]

I would just want to know what they are going to call this. OpenAI is jalapeno. Is this going to be Habanero or they're going to try to one up the other frontier model? Yeah, the scoop is coming from the information. I believe it was just their scoop information by the way, really batting a high average with some very good inside scoops on a lot of these companies. So hats off to the team there. And this comes on the heels of Anthropic recently hiring Clive Chan, an early member of OpenAI's own custom chip team, as part of this engineering build out. And like we were just saying, this mirrors what OpenAI is already doing where they are building their own inference ASIC chip called Jalapeno. Google, Amazon, Meta and Microsoft have also built out proprietary silicon to cut their dependence on third party suppliers. Those are not AI chips as I understand that most of that of those build outs for proprietary chips are actually for, how should we call it, old fashioned data centers, antiquated Data centers, vintage 2001 data centers. But the interesting thing for me is what information estimated for Nvidia's market share at 74% of the AI market. And I wonder how much we will see that getting eaten into over the next few years as these AI ASIC inference chips become potentially more widespread. Now, as we covered Charlie on one of our prior broadcasts, the reason why we haven't seen AI take or ASIC chips take off for AI specifically has to do with combination of Nvidia's moat with their software stack. And as CUDA is the standard for training and building models, but also the fact that ASIC chips themselves may not be flexible enough for building a model, for training a model, but they could be just, they could be good or better for pumping out inference. And Nvidia itself, with the announcement that we're going to cover next, basically hinted at the fact that as training models kind of take a backseat in demand to inference, we're starting to see a shift in the landscape of what cloud providers are providing and what end users need. So I wonder how much the inference story taking over the larger market share for AI compute generally, how much that will shift the scales in favor of Anthropic and OpenAI here.

[A]

Yeah, there's really not a whole lot of information right now, so we can only have limited takes. I will kind of attempt at one which is, you know, as we cover this story of open models, open weights, Chinese, cheap Chinese models, really catching up to these frontier models, you have to wonder where does the moat come from? Where does the moat for these frontier models come from? Because how much of a moat can exist if you're only a few months ahead with, with the moat with the cutting edge frontier? Maybe the moat is in the relationship between the hardware and the model. And this is where CapEx comes in. This is where the chip integration comes in. If you've got a proprietary AI chip that you that just really works your model and you have IP and that deploy and you spent years building and rolling that out, that's a moat. That is a moat like nobody's business. So maybe the next move is the next step or shift in meta of the frontier model. Meta is just Frontier models are run on proprietary chips. That could be a thing I could see. And that is a pretty compelling moat thesis. Again, I'm kind of scrambling, kind of trying to imagine craft a narrative here, but it's very clear that Anthropic has been pretty agnostic to whose compute they're running on. Whether it be AWS, Google's TPUs there, it'll be Grox, Colossus. Colossus. I mean it's any compute that they can have because they're very compute constrained. This would be a deeper integration. So we'll have to see. That's kind of the only real take I have. I've tried to put some tweets about this but like there's really not that

[B]

there's not too much. The only other take I have is going to Samsung is interesting and there are probably multiple reasons for that. TSMC being the premier semiconductor manufacturer. But also if you're the king, then everyone's coming to you for favors. Samsung has much smaller market share. They are competitive in some ways. Micro BT for instance, uses Samsung chips and Micro BT may not be able to compete with Bitmain on efficiency for Bitcoin miners, but they're pretty darn close. And people love Micro BT machines specifically for durability. So going to Samsung obviously carries risks in the sense of maybe they don't deliver on the 2 nanometer spec and then this whole thing goes to waste. I would imagine that that is a risk. Obviously Anthropic is very privy to and they've done their research. But there's also an argument to be made that if you for Samsung, this is a huge boon for having a frontier model coming to you to build a chip like this. And it also offers an opportunity for these companies to grow together. And if they really do pull this off, then for anthropic, Samsung's always probably going to give you priority if you help slingshot them into greater relevance within this arena.

[A]

So yeah, as much as I do like tsmc, kind of a great narrative and story and crazy company culture over there and geopolitical significance, it's good to have a number two foundry out there.

[C]

It's.

[A]

This is a, in the, in a world where this is the one of the bottlenecked industries.

[B]

Yeah, maybe a world where it's the only foundry that the west has access to. Geopolitical event comes to pass.

[A]

Well, TSMC's got their, they built, they're building a foundry in in Arizona, which is kicking off to a rough but effective start. Okay, we are going to wrap up with the story and close out with the Nvidia Rev Share news coming to you right after a word from our sponsor. Lygos.

[B]

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[A]

All right, so kind of a doozy of a day for compute lending and compute markets which frankly is a lot to cover, a lot of news to try to follow up. So this story is again, once again the largest company in the world, Nvidia. Trillions of dollars large Nvidia offers startup customers chance to swap compute power for rev Share this story from cnbc Chip maker Nvidia says it's entering revenue sharing agreements with fast growing startups in a move that which will see customers swap access to compute power for a slice of future profits. Wait a second. These are very different types of investments. Compute versus future profits of Nvidia, the artificial intelligence ship leader announced Thursday this partnership program. Cloud based AI firms, model builders and other enterprises will share both product and cloud revenue with Nvidia, which is positioning itself as an intermediary, helping startups gain direct access to full stack computing power by Nvidia chips.

[B]

Yes, there's a lot to unpack here and I actually think that this story is kind of confusing if you don't know how all of the pieces are working together. So Nvidia is basically guaranteeing a backstop for computers for gpus that they sell to AI or NEO clouds and cloud cloud providers. And what they're saying is we are going to help match you with end users as well. We are going to give those end users token credits to use your compute, and then we are going to have a rev share agreement with you where you can pay us back with the profits that you earn from those end users, assuming that they materialize. So Nvidia is stepping firmly into a financier role with this in a way that has them double dipping if it goes well because the AI cloud platform is buying the compute or buying the computers and then they're selling it to end users, but then they also get to have the revenue share on top of that in exchange for the backstop that they're giving these companies. And like as we said with Jay, this is probably the clearest example of circular financing within the AI ecosystem. There's an argument to be made that having an equity investment in one of your customers happens in many industries. And isn't that terrible? Obviously some of that investment dollars, some of those investment dollars will come back to you as that company uses your services or in this case buys your GPUs. But this is Nvidia taking on the risk of these companies never actually materializing legitimate revenue. And I saw this framed as a revolutionary arrangement.

[A]

Yeah, the takes on Twitter are confusing, Colin, because I struggle to see what the big deal is.

[B]

Yeah, I mean, I think that the big deal is in the sense of like if the AI boom continues at the rate it has, Nvidia gets to cash in twice on their GPUs. So that in a bull scenario, this is great for Nvidia, but what happens if your customer doesn't actually end up, what happens if the cloud don't end up actually generating any revenue? And right now they have two companies that are piloting this with them, Sharon AI and a Singapore AI infrastructure company called Firmis. And so yeah, the question just becomes, then what happens if revenue never materializes and Nvidia takes a huge haircut on backstopping these. They're guaranteeing a backstop on these GPUs. If they don't end up generating revenue for these companies, they're going to compensate them. So yeah, I have a hard time seeing a world in which this is good for Nvidia in a bearish scenario, obviously. And as we talked about with Jay, this creates kind of dual risk for them because their revenue is tied to these companies and now their balance sheet, at least not in this sense because I don't believe they're taking equity. But when they do take equity in some of these companies, their balance sheet can be at risk. But they're saying they're doing this also. This is the other part of this. They're saying they're doing this because some of these companies are having a hard time securing financing that, you know, potentially credit is starting to tighten and get a little more prudent as we see some of these notes in the secondary market from these corporate bonds. Taking a haircut. So what does that say about access to credit in the future for these AI builds? And also what does that say for the actual demand story? Because if you read the meta news and this in concert with each other, you can paint a picture to where the tech companies aren't being totally honest about the level of demand. Or another way to put it is demand is not evenly distributed because there are so many different players within this ecosystem. Right.

[A]

Yeah. I don't have a whole lot of insight to this, but let us know if you've got opinions. Let us know in the comments. Otherwise, thank you for listening to Block Space Live. We do this every weekday except for holidays at 1pm Eastern featuring quick hits on AI, data centers, Bitcoin mining, emerging tech and markets. If you like what you hear, you'll love the newsletter. Newsletter black.com and it turns into a podcast shortly after we hit end on the live stream. This show is brought to you by CleanSpark NASDAQ listed ticker CLSK thank you Clean Spark. I'm Charlie.

[B]

I'm Colin and we'll see you on

[A]

Monday because tomorrow's all national holiday in the United States. Happy 250.