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- [00:00]
A
Y', all, welcome back to Block Space Live. Back at it for another week of beautiful news. Don't look at the market though. Everything's puking except for industrials and bitcoin. We will have ours. We will be vindicated. But we're not going to talk about prices. At the top of the show today we are going to lead with a story of Mara being sued for allegedly not paying its chief architect, a French national, and its Xion acquisition. And also there are questions, Charlie, as to whether or not they will try to invest more in the French energy giants data center firm. That's our first story. More on that in just a second. Following that we have Lygos Finance CEO Jay Patel on just to get a checkup on the market. Things are screwy. Google beat earnings last week, but then it fell 8%. No one really knows what's going on, but hopefully Jay can de obfuscate the landscape for us there a little bit. For our second and third stories, we have a note on Nvidia pledging $250 billion backstop 250 billion for a 10 gigawatt plan data center by OpenAI in Ohio with SB Energy, a division of SoftBank, as the developer. And then we will close on China's latest foray in dismantling the AI tech sector's momentum in the US and elsewhere with a memory company coming out of the shadows. The black swan you didn't know that you didn't want and no one really needs.
- [01:43]
B
We're going to have to argue about that last line, Colin, but I'll break that down towards the end of the show, so make sure you stay tuned. Blockspace goes live every weekday at 1pm Eastern featuring quick hits on the latest in AI data centers, emerging tech and markets. We are COMPUTE's Daily show every single weekday right around lunchtime. If you like what you hear, this live stream goes on to be a podcast shortly after we wrap up. And if you like the podcast or the live stream, you'll love the rest of our content. Make sure to head to our website blog, Blockspace Media to get the full suite of block space content. We do a lot of written stuff and news stories if you weren't aware. I don't usually call this out. We have a telegram channel. You can find a link to that on our website and social media. This show is brought to you by CleanSpark. Nasdaq listed ticker CLSK more on CleanSpark later on in the show. Colin this this first story about Mara is fun. It's Spicy. There's a lot of. We're going to use a lot of alleged allegedly here to cya, but what's. What's the TLDR here?
- [03:00]
A
Everything is alleged except for the lawsuit itself.
- [03:03]
B
Yeah.
- [03:03]
A
So we will hedge our bets accordingly.
- [03:05]
B
At the start, all statements are assumed to be allegedly from here on out, if we explicitly.
- [03:12]
A
If we don't hedge correctly. But the fact of the matter is, this is a very spicy lawsuit, Charlie. I'm going to throw it up. Our coverage from block space here. Headline reads, mara's former French advisory team sues Bitcoin miner for unpaid fees. Strategy Pivot. This is a legal dispute that stems from Mera's acquisition of Xion. So Mera purchased a controlling stake in Exion, which is the data center subsidiary of France's national grid operator, the edf. Untangle that. It's like, you know, my father's sister's boyfriend's cousin's nephew's company. There's. It's a very. It's a very tangled web of association here. That being said, though Mera closed on this controlling stake in Exion in February, it was rolled out with great fanfare as their entrance into the European data center market as a key pillar of their AI Pivot. Now, the chief advisor of this acquisition, Francois Garcin, not to be confused with garcon, which means boy, and three affiliate entities are suing Mera, alleging that they weren't paid what they were contractually obligated to be paid. And the funniest part about this is they're saying they allegedly weren't paid because there was a dispute about the VAT tax for the transaction. So for Americans who don't know what a VAT tax is, and maybe the single most vexing piece of Europe's ever burdensome regulatory and taxation environment, a value added tax is a flat tax that is added to a number of different transactions, depending on whether it's buying food and drinks or engaging in business transactions like this one. And in this case, it was 20% of what was being paid out to these advisors, which I cannot comprehend this, Charlie. My American mind cannot comprehend this, just like I can't comprehend why they don't have AC in Europe. But going through the list of accusations here really quickly. So Francois Garcin, the founder of Argenthal, his advisory firm and its affiliates sued Mara, alleging it concealed the true nature of its project during the Xion acquisition. And it's seeking 11.32 million euros in unpaid fees on a 2025 mandate to develop Mera's French data center interests. So the timeline here, Mara hired Garcon, according to the lawsuit, and his firm to spearhead the European expansion, specifically in France, including the politically sensitive acquisition of a majority stake in Exion. That's again the French AI HPC company that is a subsidiary of the edf, the state owned utility in France. Garcin in the lawsuit says he delivered. He built relationships with EDF, total energies in G&RTE, helped set up MERA, France and European entities for the company, and according to his recounting, navigated a fraught French regulatory political approval process. And if y' all recall, we covered this story pretty in depth earlier in the year and at the end of 2025, there was a kind of stop and start. There were, there's really good reporting from a French crypto firm called the Big Whale that came out saying that the project actually might be killed because there were sovereignty concerns from French officials. They didn't want an American company coming in and buying up a stake in one of their national companies. And they were worried that the American company was going to come in and loot or whatever, you know, pillage the French system, the, you know, the world renowned French system for building businesses. And they weren't going to have control over what could be critical infrastructure for the age of AI. So there were all these sovereignty concerns. There was a formal government investigation and there were even criminal referrals to prosecutors over the dealers. Garcin allegedly helped smooth that over. The deal was pushed through. It was finalized February 20, 2026. Now here's the interesting part. According to the lawsuit, Garcin and his affiliates were contractually obligated to receive €200,000 per month in a payment plan for a total of 2.4 million euros euros for an advisory fee. They also were subject to a 4% closing fee, 4% of the entire acquisition cost of Xion, which currently that's called the success fee. And when you take all of those together, there is 11.32 million in total payments that they are saying they did not receive in that's exclusive of the interest and exclusive of any interest and the VAT tax. And they are also asking for $600,000 in legal fees. The other thing that's really interesting here, if Mera decides to exercise another transfer of investment into exion, another 110 million euros, the total consideration could exceed 16 million euros. A few more notes here, Charlie, before I toss it to you for second take. What's interesting about this to me is according to the lawsuit, Mara paid about 1.4 million in those service fees to Garcin and his affiliates, which included VAT tax with the invoices that he sent. So Garcin added the VAT tax into the invoices on top of it, and they made about seven payments, according to the lawsuit, without disputing the VAT tax at all. But in January 2026, according to the lawsuit, their accountant John Ellis raised doubts claiming other EU service providers didn't add VAT tax. And later, their CFO Merris CFO Salman Khan asked Garcia for proof that they were actually dispersing the VAT tax to French authorities. The other interesting part about this is, is that in November 26, November 26, 2025, MER's own investment bank Stifle, told one of their executive members that they also had to charge a 20% VAT tax on the Xion deal. And this executive's response, one Duncan Dickerson, who does corporate development, said, quote, you need to pay a 20% VAT on top of banking fees, end quote. Allegedly showing that Mara was aware that, was kind of unaware that VAT tax applied generally to any of this. So that's the VAT tax is at the core of this. From my reading of it, from what is alleged in the lawsuit, it's almost like Mera didn't quite understand that this was going to be a consideration and that once the bill was paid, they allegedly were like, well, screw that, I don't want to pay these taxes. We got the deal through. This is crazy.
- [10:32]
B
Yeah, a 20% tax that you didn't account for on what could be a substantial amount of the project. Like, I mean, I know these projects are ballooning in cost, but holy smokes, you know, there are some gems in the filing here and I'm going to share them. We didn't include them in their article because they're not really like good like, you know, to lead with an article in, but they are fun fodder to pull up and chat about. I've got one here in section B of this lawsuit. Again, this is alleged, but the lawsuit says Thiel led Garcin to believe that Mara was retaining him and the advisor entities to pivot towards a transatlantic pro France, pro European strategy and personally endorsed the vision of a France centered partnership between Mara and France's leading energy companies. Thiel, again, allegedly, according to the lawsuit, directed Garcia to close the door with, quote, a very loud bang on others seeking to partner with France and to convince Macron, President Macron, other French stakeholders that an American company like Mara's entry into France was not a Trojan horse, but represented a strategic advantage. I'll also remark that maybe, I think Mara might be the easiest company name to pronounce. Of all the different, different neoclouds, another one in here is a lot of people are going to control f and find that Garcin confirmed that Thiel had already arranged his private jet for the trip. So we do have confirmation that there's private jet flying around on Mara's behalf. And then the last one, which I think Colin, is one of our favorites here at the bottom of page 25 in A. In a reference here again, allegedly, despite the America first corporate culture at Mara, Thiel criticized the Trump administration in conversations with Garcin after this meeting, accusing it of having a bitcoin agenda that prioritized the Trump family. In addition to these accusations of purported self dealing, Thiel also expressed a low opinion of Eric Trump in derogatory terms, often using the term quote, quote, dumb when referring to him. I will not offer my own comments or opinion, but spicy, spicy, spicy.
- [12:57]
A
If true, spicy. I mean, but that doesn't stop, you know, the likes of Thiel and other executives from bending the knee to Trump when it serves their interest right. All of these bitcoin mining executives were throwing themselves at the feat of that ticket because, quite frankly, they didn't have a good viable option. The other party was actively trying to dismantle their industry.
- [13:22]
B
Yeah, I'm not gonna lie. I'm also gonna stand this a little bit too, because in as much as it looks in retrospect, pretty bad, like, very sycophantic. Again, Trump's. Trump and his family have enriched themselves very, like, extractively.
- [13:37]
A
So much so that the new draft of the Clarity act has a provision that bars public officials from engaging in promot putting or issuing cryptocurrencies.
- [13:47]
B
Oh, and you could, you know, they just be like, okay, we've already profited. You could put that in there. Maybe that's why Clarity is taking so long. Well, anyway, but, you know, those of us who've been in this be like, well, you know, there was a time when we would do just about anything to at least be able to have bank accounts and do business. So, you know, as much as I like to, in a little way, like, mock it and joke about this, like, this was the reality. Like, we kind of had our backs up against the wall,
- [14:16]
A
we had our backups against the wall, and then we levied the president to be. To help us get off the wall. And he did that, and then he peed on the wall by issuing a meme coin like that.
- [14:28]
B
Like the Calvin. Yeah.
- [14:30]
A
Yeah, exactly. One last really important thing to note here, Charlie, before we sign off and have Jay on, or sign off on this topic and have Jay on, firstly, kind of a fun aside, according to the lawsuit, you know, Garcin's trying to build this case that they're only a pro America culture. And the lawsuit alleges internal messages show in America first culture at Mara, including a Make Mara Great again WhatsApp message from Thiel's chief of staff.
- [14:58]
B
Not gonna like. Good. That's a good title for a group text. Yeah.
- [15:01]
A
I mean, you know what? Out of all of the derivatives of Make America Great Again, of course, Course they're going to do that.
- [15:07]
B
Yeah.
- [15:08]
A
And who they can sell Mara, you
- [15:09]
B
know, Mara Maga, whatever. Hats. I don't know.
- [15:11]
A
Also, like, yeah, an American company built in America by Americans is America First. I. I mean, color me shocked, Mr. Garcia. I think you got taken for a ride there, if you're surprised by this. But the last thing that I find really, really interesting about this is on February 7, 2026, according to the lawsuit, again, this. They're alleging this Thiel sent a message to Duncan Dickerson, the guy in corporate development we covered earlier, and Zabi Nuayd, general counsel and corporate secretary, stating, quote, between the cost of advisors, the various members of the management team who are all asking for pieces of this business, and the complexities of doing deals in France, I think it may be time for us to pack up our tent and focus on other areas. Salman Khan, the CFO of Mara, then seized on this, encouraging Thiel to abandon the Exion Traffic transaction altogether. Quote, the best deals are the ones we don't do. I wholeheartedly agree with this assessment. End quote. That was. That was 13 days before the transaction closed. Now, clearly, they didn't back out. They ended up spending 120 million euros and then an additional 33 million for 64% stake. But I do think this kind of casts into doubt if those texts are true, whether or not they will exercise a third transaction for another $120 million investment into Exion. And that would include at 110 million, a 4.4 million euro fee, plus VAT to Garcia and his affiliates for the success fee, according to the original contract. You know, if they were thinking about pulling out of this thing back then, I do question whether or not they will continue to push forward, especially when you consider. I was asking Claude about some specifics with Xion. Reportedly they only had like 5 million euro in revenue last year. I mean, what are we doing?
- [17:04]
B
I don't know if maybe for a European company that's. That's huge. I. Heck if I know.
- [17:10]
A
That goes entirely for a European company. That's enough to take eight weeks off. And you have aperol spritzes on the coast of France and San Tropez or something like that. Yeah, but, you know, I. So all that being said, the whole thing is really messy. I think the Xion acquisition was really a head scratcher for a lot of us when we were covering it. And I'll just editorialize here a little bit. When all of your peers are building these massive data centers, inking deals with Mag7 clients or with clients that are associated with Mag7 companies, why are you doing this acquisition in Europe to begin with? It's not a friendly regulatory environment. Clearly, the taxation was so much so that Marrow is allegedly blindsided by that. And they just don't have a culture of building over there in the same way we do here. And it's amazing.
- [18:04]
B
Nuclear power. I mean, they do have a bunch
- [18:06]
A
of nuclear power, and that is the strongest angle for this. France actually is the dominant nuclear power in Europe. On an energy standpoint, I believe it's like 75 to 80% of their energy comes from nuclear, so much so that they're a net exporter of it. And that was part of the sovereignty concerns with this. They want to find ways to actually capitalize that on that at home. And so that's. That's fine. And perhaps Mera takes Xion and builds a very lucrative AI business out of it. It just seemed like they felt like they needed to do something to get their foot in the door and they
- [18:39]
B
decided they put their foot in their mouth. I don't know. I'm just. I'm surgical.
- [18:43]
A
No, I. That's a good point. I think overall, though, there's a chance that we look back at this and say, why did they ever think this was a good idea in the first place? Because, you know, all these other companies that you're competing with are doing deals in the US and clearly there's a premium on that, because this didn't really do very much for Maris stock at the time. Last thing, sorry that you just joined L El E LZ x 9G lawsuit. TLDR is one of chief partners for this Xion acquisition, is suing them because they alleged they were not paid. We will have a clip on this up on YouTube after the show. You can also rewind the live stream to hear this. So if you'd like to learn more about it in depth, please do so.
- [19:27]
B
More dramatic than an episode of Love Island. Call it Love Iberian Peninsula. Let's roll an ad from our sponsor CleanSpark and then we'll go to Jay Patel.
- [19:38]
A
We are CleanSpark, America's Bitcoin miner, a publicly traded company with the largest operations hash rate powered entirely by self operated infrastructure across four states. This is our proof of work. We are setting the standard for what's next. Learn more about the intersection of energy and bitcoin@cleanspark.com.
- [20:10]
B
All right, we've got Lygos Finance CEO Jay Patel in the wings. Let's it put bring him on up here. Jay, welcome back to the show.
- [20:20]
C
How you guys doing?
- [20:22]
B
Great. Let's get a quick temperature like market temperature check because it's we've seen a little bit of pullback today. It's just Monday. Nothing major happened over the weekend that I could tell something better ran. But again, how much does that matter anymore? Drop us in hot. Jay, what do you think about the markets right now?
- [20:42]
C
Honestly, I'm and I don't want to spend too much time on the microstrategy piece, but I actually think the market, bitcoin at least is in a pretty good spot. I think it's probably not too much you can read into Iran because the war is simultaneously over and ongoing at all times.
- [20:59]
A
There is no war with East Asia. We are always at war with East Asia.
- [21:03]
B
We were always at war with Persia.
- [21:05]
C
The fact that there's still kind of, I wouldn't say strong performance in bitcoin but you know, it's been fairly decent knowing that Sailor is not going to be buying now or probably anytime soon. And you know, for everyone who was like, oh, the only reason bitcoin's still above 55k is because sailor was buying for so long. Like clearly there's room for us to rally without him. And so I don't know from that perspective it makes me a little more confident. I'm also, I don't know if it's me personally tired or just the market tired of it, but it's like I think we might be able to move on to the next part of this cycle with or without this whole STRC thing resolved. And if we can do that, that's even better. But I don't think it's the overhang where the doomers were like Sailor is going to bring bitcoin down with him.
- [21:54]
A
I Agree.
- [21:55]
C
Not even him.
- [21:56]
A
I'm really tired of Saylor being the main character. I mean, when your main character is posting AI slot videos of some babe in a bikini sipping a pina colada on the, you know, pool bar because
- [22:07]
B
she bought Stretch, you deserve to live comfortably.
- [22:10]
A
Yeah, I mean, you know, you deserve to live comfortably. You know, I take on all the risk, you get all the reward. I mean, I'm just, I'm tired of it. I want him, I want him to go away. So we won't spend too much time on strategy here then, Jay, But I do want to ask you one of the more puzzling features of last week. There was a generally a big route in tech stocks. Tesla fell like 15 or somewhere between 10 and 15% on a single trading day. Just absolutely hemorrhaging. But one of the more puzzling ones is Alphabet also had a horrible week last week. It was down almost 9% on the week and this was after it beat earnings and it, it beat, it beat revenue expectations. But two things worth noting is while the earnings per share came in at $9.11, the actual adjusted earnings per share when you took out paper gains from its investments in anthropic and SpaceX were about $2.85 versus an estimate of $2.89. Couple this with the fact that they up they Revised upwards their 2026 CAPEX guidance from 180 to 190 billion to 195 and 205 billion seemed like people were just investors were not really happy with that quarter despite the fact that their cloud revenue was up 82% year over year square. This for me. What are investors saying about where we are in the current AI capex cycle given what was presented during Google's call and the fact that the stock tanked afterwards?
- [23:42]
C
Yeah, I think. Well, I'll say two things. I'll say one, we're kind of in this like it seems like the last 12 months we've went into this kind of hyper accelerated AI bearishness to bullishness kind of oscillation. Even though I'll say the overlying, the underlying theme is definitely that market is bullish on AI. You know, there's still a bunch of capex and financing going into the space. But you know, if you think back to when Deep Sea V3 and R1 dropped, there was the, the come down and then you know, a few months later I think there was that Goldman paper about like will there actually be an ROI on AI? And all the stocks dropped again. And it seems like we go between that and there will be infinite returns kind of like every few months. And so maybe we're just on that trough. The one thing I will say on the Alphabet side of things though is, well, I'll say two points. One is obviously it's hard to really ascribe too much value to the whole SpaceX and anthropic investments in the sense that these were investments they made a long time ago. I don't think investors are going to give them additional credit for making them a long time ago. On the, on the revenue side of things, I think one thing is very clear, like these businesses went from generating a ton of free cash flow to almost all being kind of flat or cash flow negative and we can get into the hyperscaler cash flow story. The other though is that if you think about GCP cloud revenue, I and look, I think these are impressive businesses. You'll hear all of these like venture investors be like, oh my God, here's a multi hundred billion dollar market that can still grow 40% plus year over year. We have like infinite TAM. I think one thing that you have to remember with GCP though is that GCP growth used to be very low marginal cost in terms of the marginal revenue that they brought in. Right. If you're providing on demand CPU and storage, that's not very expensive. I think a lot of the new hyperscaler demand and revenue is around GPUs which is obviously much more expensive and there's a bunch of build out. I think one thing that's interesting though if you think about this is, you know, in my head I'm almost thinking like it's clear that the market doesn't believe that GPU demand is going away because like if you look at H100 or B200 prices, they're still in contango, like people are paying a significant premium to lock up demand for the future. So I believe that there's something else that the market is pricing in, which is why they're not giving Alphabet and others the full credit for this expected future revenue. And my mental model for that is basically if you have all this contracted revenue in the future, the risk from Alphabet's perspective is basically if you're looking at a GPU deal, it's whatever your expected realized GPU price is times utilization, let's assume utilization is high because all of us are going to be generating memes on GROK and you know, doing whatever we do. There's, there's power, which I think power is expensive, but there's a bunch of folks coming online providing new potentially diversified sources of power. There's operations. You know, let's assume that the hyperscalers have good OPEX cost because if they don't then I'm guessing all the Neo clouds are probably in a tough spot too. Depreciation I think, you know, if H1 hundreds are still kicking around, I don't think depreciation is a very big risk. And then I think the last is the financing costs. So maybe financing cost is what the market's clinging onto which is like they burn through their free cash, their cash pile. If they're going to go cash flow negative and have to start borrowing a lot, what is the rate they're going to be able to borrow at the 10 years? Basically making new highs last week. So maybe that's part of the story. There is like even if GPU demand is there, how expensive is it going to be for them to continue the build out?
- [27:19]
A
That's a really good point. I mean rates have been getting blown out recently. If you look actually at the curve, shorter term rates have been moving more violently because investors are pricing in short term or near term inflation vis a vis the Iran war and more oil disruptions. WTI is back up at 90 I think or thereabouts. And so the spreads for a lot of these bonds are actually getting blown out as well for these corporate bonds for the data center capex. And my unsophisticated take on it is I'm starting to get really anxious when I just look at how much is being financed or committed and my thought is where the hell is all of this liquidity going to come from? It's all fine and good to say. The Mag 7 is going to spend just south of a trillion dollars in capex in 2026. That's great, but do we even have enough plumbing in the system for that as it stands without something either seriously breaking or someone getting seriously overextended?
- [28:20]
C
Yeah, I think that's probably the right way to think about it. I hate dumbing it down to such a simple model because it's obviously much more complex. But if you think about there's some fixed supply of dollars that's willing to lend into this market and both the US government is probably borrowing at all time highs. All of the hyperscalers are tapping the market. Even Nvidia which is like the furthest along this chain printing cash are, you know, they're doing bond issuances. So you know, clearly there's immense demand for capital. I think you have to think like, okay, maybe we can satisfy this year's but like, are we going to be able to do this plus 20 next year and the year after and the year after? Like it seems hard. And then on the other side, I'm thinking from these hyperscalers, like, yes, this contracted revenue is great, but a GPU is not going to get more than 100% utilization, right? So you kind of have a cap in terms of like how much can you monetize a single gpu? You can't like sell more than the capacity of the GPU that you have. But you could get screwed on financing costs and I think you could still also get screwed on power and build out costs for everything outside of the gpu. Like we talked about it a few weeks ago, there's almost like all of the less efficient components in standing up these data centers might inflate the cost. And then you get kind of hammered on both sides where it's more expensive to finance all of this, it's more expensive to build it out. And if you've contracted, if you have contracted compute obligations in the future, it's not like OpenAI or anthropic or whoever else is going to be paying up more, I guess, you know, they're going to keep contracting into the future and maybe you can charge them further out, but you know, that is a risk,
- [30:02]
B
you know. Again, triple tapping on free cash flow. Epoch AI put out this article last month kind of showing operating cash flow, showing that the inflection point for the hyperscalers happens this year. And you've touched on this previously. We talked about the memory stocks, Samsung, sk, Hynix, but is there a free cash flow trend maybe short term in other sectors? In the AI market that are not say the MAG7 or hyperscalers, do you see the market priority that wants free cash flow to go other places? Where do you see that?
- [30:46]
C
I'm skeptical of a broad based market rotation into chips or even energy infrastructure for that matter. Because I think it's a completely different business to underwrite if you were historically an investor in the mag 7. It's not just that they were free cash flow positive, high margin businesses, it's that they had what you at one point thought were immense moats, right? Meta basically had captive audience of customers. Google the same. I think maybe Apple's the only one left that's really like that, right? I think if you think about the memory manufacturers, I think the reason that they trade at such low multiples, granted the stocks have rallied like Crazy because they're just printing money but they trade at low multiples to earnings is because I think the market knows that SK Hynix and Samsung are not going to keep printing tens, hundreds of billions of dollars a year for very long. Someone will come in and compete. There's cxmt, I'm sure there's others and so I don't think that's as defensible and so I don't think you'll see a rotation there. In a weird world, do you see a capital rotation where now the memory manufacturers are investing their excess profits back into the other end of the supply chain and you really get the circular financing going? I don't know but I don't see rotation out of mag 7 straight into chip stocks or anything like that.
- [32:13]
A
Do you see rotation back into bitcoin? At what point do we go full circle with this or are we just going to be stuck in limbo for the next year?
- [32:24]
C
So for bitcoin I'd say maybe one of the near term catalysts is like the US economy is incredibly, incredibly tied to AI now and I don't think we can afford to let this flywheel slow down. So if at some point it's can the US government print a little bit more money to keep this wheel going? I think that might be the catalyst for Bitcoin. Obviously there's the short term inflation fears with Iran and supply chain stuff but I think you might get that inflation either way because you don't want the kind of build out and Capex to slow down, especially when that's like most of the economic growth. I'll say. One interesting thing though is like you would think, I guess one counter to this thesis is like you would think that the companies in the kind of energy supply chain, the ones that own the power, maybe even to some extent some of the bitcoin miners would be doing better because at least if you're a hyperscaler that becomes more attractive for you to hedge out one of the components. Right. You know, you've got depreciation under control, ops under control. Let's say you assume that you can like, you know, manage your financing costs. If you can make sure that you have reliable access to power at a good cost, like maybe that should be even at more premium. But I think even most of those stocks have just gotten dragged down with the market. Although maybe it's also, you know, the market doesn't love their other businesses. But yeah,
- [33:47]
B
we will see. We could, yeah, let's try to avoid a snake financing Its own tail scenario. And what? Whatever we can construct, which is a future bullish scenario for Bitcoin. I'm here for Jay.
- [34:00]
C
Thank you. You thought Nvidia investing in the labs was circular? Imagine SK Hynix financing Nvidia's debt.
- [34:09]
B
Oh, man. Okay, Jay, thank you so much for your insights. Appreciate it. And yeah, the markets are always interesting. AI is super fun to talk about. We'll have you back on soon.
- [34:21]
C
All right, see you guys.
- [34:22]
A
Thank you. It's like a human centipede of circular finance.
- [34:30]
B
We want the show to get big. We gotta avoid spicy references like that. Okay, we're gonna keep on rolling. We're gonna talk again. Financing Nvidia backstopping OpenAI for a casual quarter trillion. And then we're going to go to memory again. CXMT becomes the largest publicly traded company in mainland China. Before that, a word from our sponsor, Luxor.
- [35:04]
A
This episode of Blockspace Live is brought to you by Luxor's Commander. Bitcoin miner management software for enterprise operations. Luxor's 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 and adjusts your fleet's power settings to live hash rate and energy markets. ERCOT back tests show 10% improved profitability with intelligent mining over binary mining. Commander Pro is a hundred dollars per megawatt or a 25 basis point pool fee adder. But you could also try it for free for 60 days. So if you'd like to learn more, go to Luxor Tech Commander. Yeah, speaking of circular financing, Charlie, we're going to go ahead and hop on over to Nvidia. Nvidia, excuse me. And talk about their reported $250 billion backstop for OpenAI's plan. 10 gigawatt data center in Ohio. Now, this is coming to us by way of Data Center Dynamics, which is reporting from Wall Street Journal, who I believe had the inside scoop on this. But the TLDR is as such, Nvidia. Nvidia plans. There's in talks to provide a 250 billion, yes, B billion financial backstop for a massive OpenAI slash SoftBank data center plan in southern Ohio. We actually covered this on the June 11 live stream. This is a proposed 10 gigawatt data center on Department of Energy land which used to be a uranium enrichment site. The first phase is a much smaller chunk of that 10 gigawatts, 800 megawatts. And the developer is SB Energy, which is a division of SoftBank. SoftBank has been one of the biggest movers with regards to AI in the US from a foreign actor. The the bank was reportedly a part of the project Stargate initiative, which has somewhat stalled. But the Japanese multinational company is one of the foremost companies involved in the development, specifically some of these data centers and the energy pipelines for them. The total cost estimate, Charlie, is 500 billion for this site. I'm not sure if that's inclusive of GPUs. I assume not, which is kind of crazy. But the first phase is expected in 2028 at around 800 megawatts. Like I said earlier, the project was first announced in March and again, SB Energy is developing it. This will include 10 gigawatts of new power generation to feed the site, including 9.2 gigawatts of natural gas generation. That is a lot of methane, my guy. That is huge.
- [37:55]
B
Huge.
- [37:56]
A
Japan, the country itself has agreed to invest 33 billion in the natural gas power project as part of its broader trade deal with the United States. The US Government will reportedly pay SB Energy to operate the project. There will be a revenue split until Japan recoups this $33 billion investment, after which point the US will get 90% of the revenue. Now, as for what Nvidia's backstop actually does, the details are still under negotiation. Seems like this is still in the early phase. But the idea is that Nvidia would guarantee financial financing vehicles behind the project specifically for the data center build out and lease, not for the GPUs themselves. That's an important distinction. OpenAI will be operating those GPUs. SB Energy will be owning the data center, the powered shell and Nvidia will. Nvidia will supply the financing or the backstop for the financing and the GPUs. Now, importantly, just to untangle some of OpenAI and Nvidia's financial relationships to date, this is separate from Nvidia and OpenAI's $30 billion investment, or Nvidia's investment into OpenAI for $30 billion and is also separate from talks to finance up to 350 billion in chip sales to the company. So if this comes to pass, you're talking about from Nvidia a total of $600 billion worth of either direct financing or promises for backstops for these AI data centers. Once again, Charlie, I keep saying it. The numbers kind of stop making sense at a certain point. You can't even really begin to fathom how much money is sloshing around in this CapEx cycle.
- [39:44]
B
So maybe instead of looking at the money. Let's kind of look at the actual physical footprint. This is kind of where I'm going to try to add a little bit of color outside of the normal dollar or figure for things. Where is this, why is this being built in Ohio? Well, because like Neel Kashkari said about the Federal Reserve, the United States has effectively infinite natural gas. And a lot of the natural gas is in what's called the Appalachian Basin, which goes right over the eastern half of Ohio. And there's two plays, shale plays there, the Utica and Marcellus. They're at kind of different depths along the strata created by different geological events. And these are very mature oil and gas fields. They're actually primarily, there are almost more gas fields than they are oil. And so they've been developed for a long time. And due to very path dependent nature of geography and regulations and the market, a lot of that gas does not have abundant transportation to markets and refining facilities. So if you'd go to the middle of Appalachian Basin, you can have infinite gas basically and it trades often at a negative price even to that of Henry Hub, which is the regional pricing metric of West Texas. And because of this, it's if you, because of actually like transport rules and like certain like cross state taxes. I was looking into this. You could build say a 10 gigawatt plant in Ohio and you have some actual structural like regulatory advantages regarding to like how you, where you can consume and transport the gas. How much gas we talking about calling 1.5 billion cubic feet per day of natural gas, which is roughly 5% of current total US production. So that would be basically how much natural gas it takes to run through a 10 gigawatt, you know, 10 gigawatts of turbines and generation to a data center.
- [42:00]
A
Wait, wait, wait. So that, that's not how much gas is in the Appalachian Basin?
- [42:05]
B
No, that's how much it would, that's how much to power 10 gigawatt site. That's how much a 10 gigawatt site running solely off natural gas at the standard turbine efficiency and standard like you
- [42:16]
A
know, 5% of the current daily production
- [42:19]
B
capacity of the entire year of the entire United States. Now the United States, I'll emphasize this really, really dynamic production. So if there's demand, we can get it and we can transport and we can refine it, that demand can be met very quickly. If you were to basically cut through all the red tape, we could ramp up production really, really quickly. So I think that's not as indicative of like, I don't Think that's as indicative of what the real constraint is here. That's just giving you a reference point for how much natural gas this site would consume. There's another dimension to this, I've said this a few times already, which is turbines. And this is where I think maybe one of the other real moats is besides the financing, besides the money, besides the region. And that is SB Energy, the power. The energy side of this equation has already placed a while ago a $10 billion order for nearly 170 gas turbines from GE. And the first of those is expected within a year and the rest anticipated to come online within a decade or sorry, by the end of the decade. So by 2030, the large manufacturers of these turbines, GE, Siemens and Mitsubishi, are sold out years in the future. So this actually gets into the behind the meter trend going on because in order to go behind the meter in any state, Oklahoma, my, my neck of the woods notwithstanding, you're basically going to have to acquire gas turbines and they are sold out, and they're especially sold out right now. So a $10 billion 170 turbine like
- [44:04]
A
order
- [44:06]
B
basically means that SB Energy has cornered a little chunk of this market here. So you could argue that this is actually more of a moat than, more of a competitive moat than an Nvidia financing deal. Again, I'm going to be more biased because I think I understand gas a little bit more than dollars. But yeah, really interesting kind of dimension to this, which is where's all the gas coming from? Where's the energy coming from? How are they going to turn it on? And the answer is American shale, American gas.
- [44:43]
A
And you could see this being maybe much smaller in reality than what's being put on paper now. 10 gigawatts would make it the largest data center in the world several times over if they got it off the ground. Yeah, 800 megawatts itself is big enough.
- [44:59]
C
Right.
- [44:59]
A
That's a huge undertaking, especially if you're having to bring your own energy. And I do think it's interesting and notable that the United States government is taking a stake in this in the sense that they are helping broker the investment from Japan. Get part of the NAT gas, I
- [45:17]
B
mean at this scale, part of the
- [45:18]
A
NAT gas offline or on the, you know, the plant online.
- [45:23]
B
Yeah. At this scale, like this is a nation state project, even though the money is private, like it's. So it becomes so critical to like the overall energy production that it may as well it, you know, probably should have some state involvement.
- [45:40]
C
Right.
- [45:40]
A
It's like the Manhattan Project. Except private companies are leading it and the government's kind of taking a backseat and doing a little backseat driving saying hey, actually don't do that, go here.
- [45:50]
B
Yeah, we're building like several Hoover dams worth of stuff. It's, it's like these type that scale of civilizational scale build. So yeah, wild story. We are going to keep on rolling. We are going to go to Chinese memory technologies Chungxin Memory Technologies and their record breaking Chinese ipo. After a word from our sponsor Lygos.
- [46:25]
A
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- [47:22]
B
All right, so Chinese memory fact memory manufacturer CXMT IPO in Shanghai this morning China time companies named Chungxin Memory Technologies. Apologies if I technically mispronounce that. And overnight it became the largest publicly traded company in mainland China. Now this is not nearly approach the scale of publicly traded companies. In the United States the best place for capital markets. But in China this quickly overnight jumped ahead of China's largest bank to be roughly half a trillion dollar market cap. Specifically 460 billion. The company CXMT IPO'd after raising $8.5 billion the largest chip IPO in Chinese history and then went up 466%. Wait, what? Yeah, so talk about. Yeah it. Remember when SpaceX went up?
- [48:32]
A
You know could you imagine being the guy who was pre IPO and sold at the bell?
- [48:37]
B
Yeah, yeah. So wild stuff here and why you know what it. You know you probably even if you started getting into memory stocks recently, you might not have heard of CXMT because this stuff happens so quickly. They are a Chinese memory Manufacturer that now plays an important role alongside Samsung, SK, Hynix, etc. They make DRAM so a little bit different than the high bandwidth memory HBM that is in such demand for AI compute. DRAM is basically lower on the stack. It's a less high throughput type of memory and that typically goes in like chips for phones, computers like gaming computers, DDR4, DDR5, Vera gaming computer manufacturer and Cxmt is the world's fourth largest DRAM manufacturer after Samsung, SK, Hynix and Micron. They had roughly 7.7 of the global DRAM market in 2025 per the IPO prospectus. One interesting thing here which is CXMT does not make high bandwidth memory. They make the basic, the component to high bandwidth memory which is dram. HBM or high bandwidth memory basically takes DRAM and stacks all on top each other interlaces it. And so that is what makes, that's, that's what makes it high bandwidth. And one of the reasons here is because HBM is so constrained right now, the market and the attention and like the bottlenecks are now moving lower down the stack, not to the end product. The, you might almost consider it like more refined memory to the lower like base unit commodity of memory which is dram, which goes into high bandwidth memory. And that's why this Chinese company kind of out of nowhere is so important. Why can't they make high bandwidth memory? Largely because they're locked out because of Chinese export controls. You need those fancy machines from, you know, the Netherlands, you need those, I forget what they're called, lithography machines that you can't get. And there's also certain like IP and Chinese export controls. But I'm gonna toss it to you Colin for any comments you have before I get into a few different takes and insights.
- [51:17]
A
I don't really have too much to say on this other than it just seems like with each week trying to chips away a little bit more at the west and the non Chinese East Asian countries, competitive advantage with regards to AI and adjacent industries. You had deep seek, you know, a year and a half ago, Kimmy K3 two weeks ago. Now you have this and it seems like there's almost this deliberate rollout of all of the key components for building an AI industry stack that are like slowly creeping out of China and coming out of the shadows.
- [51:59]
B
Yeah. So an interesting thing here is that CXMT is apparently adding more wafers than everyone else combined. That is CXMT will add 85,000 wafer starts per month. This year versus 60k at SK Hynix, 30k at Micron and 15k at Samsung as per semi analysis. So that means that the Chinese upstart is adding more DRAM capacity than the three incumbents combined and that does not ameliorate the memory crunch. Additionally, as I mentioned before, because they have to manufacture the lowly, lowly DRAM and can't produce high bandwidth memory, the reason that they're in this position is because rather I'm saying they're actually benefiting from this scenario of being locked out because all the other memory manufacturers basically rotated their entire operations to focus on building this high bandwidth memory and because of that did not expand their lower level memory manufacturing whereas CXMT has only been ramping that up. So it's like in a way they have a precursor to the more final product which is ultimately in demand. So pretty interesting here. I think if you are a normal person who just wants consumer end consumer products, the new phone, the new smartphone, a new gaming computer, probably any piece of technology, you are just going to get caught up in this because DRAM is now DRAM which would go into your other normal non AI HPC tech is now getting crunched even though supply is ramping up like crazy. So we have a structural shortage of memory for a while now and it's being reflected in the markets. It's reflected in this supposedly no name Chinese company becoming the most valuable public company in China. Wild story. Yeah, that's all I got for this one.
- [54:16]
A
I think we can wrap it up there.
- [54:18]
B
We're gonna wrap it up here. Thank you so much for listening and tuning in. Block Space goes live Monday, Tuesday, Wednesday, Thursday, Friday at 1pm Eastern. Featuring quick hits and in AI data centers and other compute related markets. If you like what you hear, you can see everything we produce at our website blockspace Media. This show is brought to you by cleanspark. NASDAQ listed ticker clsk. Thanks for tuning in, I'm Charlie. I'm Colin and we'll see you tomorrow. It.