← Blockspace: AI & Bitcoin
Blockspace: AI & Bitcoin
Meta’s $50B Data Center, Strategy’s $467M MSTR Raise, Native American Tribes are Split on Data Centers
00:56:32
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- [00:00]
A
What's going on y'?
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B
All?
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A
Welcome back to Blockspace live presented by CleanSpark. Hope everyone had a restful weekend because we are waking up to chaos in the markets. Maybe chaos is a little bit putting it too heavily, but as Charlie wrote in the tweet for this morning, who can drag the stock market down more, Korea or Trump? And that will be our lead segment today, a quick market update looking at how the market is seemingly going risk off as the Iran war intensifies and investors start asking questions about how top heavy the AI trade is. Following that, we have none other than Lygos CEO Jay Patel on to talk about SK Hynix and the memory market. Currently SK Hynix debuted on the Nasdaq last week and it is hemorrhaging value right now as investors reprice these memory stocks which are sky high. Plus we will talk about strategy raising 467 million with a Bitcoin or with its strategy common stock ATM, but it didn't buy any bitcoin with it. We're going to ask Jay what that signaled that sense to the market and how the market is reacting. Following that, we've got an update from Meta on its Richland Parish facility which is upscaling to 5 gigawatts. And we'll be doing a little overview of the impact on the community there and how this is a double edged sword in some cases for investment in the community and the cost of living in such a small rural area. And we will end with the mixed reactions we are getting from Native American tribes around the US as some try to court data centers to their tribal lands while others shun them entirely.
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B
Block Space goes live weekdays at 1pm Eastern featuring quick hits on AI data centers, Bitcoin miners, emerging markets and emerging. If you like what you hear, you'll love the newsletter. You can find that@newsletter.blockspacemedia.com and after we wrap up the stream it turned into a podcast Anywhere stream, anywhere podcasts are found Search Blockspace in the search bar and leave us a review, preferably five out of five stars. So Colin, you say the market's going risk off right now but but frankly I'm not really sure what a risk asset even is anymore because the 6040 portfolio is dead. Apparently the safe stocks were memory stocks really because they're basically the backbone of major first world countries economies. I don't know what we even mean by safe risk off anymore.
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A
I think it's a good point because whenever I'm scrolling X and I'll just see These investors or macro guys point out a new tech adjacent stock and say, I'm long this X, Y and Z. And it's like, oh, okay, maybe is there some alpha here? And then you look at the stock and it's up like a 500% over the last year. And it's you, you go down the list of the s and P500 and there are so many equities like that. And it's no wonder why the liquidity vacuum from AI has been hurting Bitcoin so much. But let's go ahead and just take a look at where some of the indices and leaders are right now. Charlie. So S and P down 0.6% on the day. I believe the Nasdaq has actually reversed course. It opened up in the red. Nope, nope, it's back down. Nasdaq is down 1.2% as tech and AI stocks lead the current sell off. And the Dow Jones was doing okay. Now it has slipped into the red. It was up immediately on market open, but it is down the least of the big three at 0.3%. And so I woke up this morning, Charlie, and I thought, why are everyone's portfolios on fire? I thought we were going to be winning so much we were going to get sick of it. But it seems to me, according to some of the smarter analysts and macro guys that I plug into, it's kind of like a double edge or a two sided whammy for markets currently. So for most people paying attention, you'll know that the Iran war in fact is not concluded. The peace deal has fallen apart and strikes are renewing in the region. Not just in Iran, but on US bases and within the countries in the Gulf states that are aligned with the US and Iran, crude oil has surged. As a result, it's up almost 6% on the day currently. It's up 5% over the last five days. And so investors are starting to look at this and as you kind of joke, Charlie, they've turned to a risk off appetite. But the question then becomes, what even is risk off anymore? Because gold's not reacting favorably to this either. It's treading just above $4,000 an ounce. Bitcoin in its secular way right now, not doing great under this, but not absolutely hemorrhaging like you might expect. And on top of this, the dollar is also rallying right now. Not too much, but it's above 100. It climbed to 101 earlier today. And if we look at the broad range of data center stocks that we typically cover Basically all of them except for EBS are down on the day we go to the five day it looks even bleaker. Nebus all also up, but a lot of the big names down double digit percentage points. And if we go and look at SK Hynix, which we'll cover with Jay here shortly, actually up on the day now, but it opened down like 9%. So you're just seeing absolutely wild volatility out there. And again, one of the explanations for this is the Iran war being back on. Investors are probably skittish thinking about potentially long term impact of inflation if oil surges again like it did earlier in the year. But I think you're also just seeing a broader questioning of how systemically important these AI and memory stocks and semiconductor stocks have become for the market. This is where all of the gains have been made over the last two years. And we could be seeing, as one analyst from KKM Financial, Jeff Kilberg noted, what he calls the great rotation of the these AI trades basically being rolled over into economy backbone stocks, the industrials that make up the Dow Jones things that are reliant on petrochemicals. As oil is going up, he sees this trend which has already started, he says, continuing into Q3. I think it's something to watch because I definitely feel over the last few months you've seen a shift in the sense that some of these data center deals that these companies are announcing have not beared the same amount of fruit as we've seen in the past. Terra Wolf's anthropic deal, for instance, it surged immediately on the news, but in the following days it actually dropped below the share price that it was at when the deal was announced. So the market seems to be getting somewhat fatigued or saying that the valuations for these stocks right now are high enough and to end up getting a higher multiple or to have your stock repriced, it's going to take a lot more than just your typical deal. And I do wonder if we're starting to see a rotation back into these kind of boring blue chip stocks that aren't as sexy as the AI trade right now, but investors might look at as more stable and having better downside protection in the case that the market turns sideways or falls from here.
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B
Yeah, I mean we will get some inflation numbers I believe tomorrow from the cpi, so that's something to look out for.
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A
And then two important inflation reports is we got CPI and we've got PPI coming out this week. So consumer and producer price indexes updated
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B
and then we have fed interest rate I believe at the end of the month. So we, you know, could be a rough couple of weeks depending on how things go. Colin, you mentioned, let's see, you mentioned gold. Gold, you know we're talking about safe haven assets, right. Memories crashing right now. So the data center stocks are down. Trump is back charging a toll for the straight of four moves apparently gold down 3%. Explain this to me. Then we also have silver which we stopped talking about Colin, like three months ago and it's down 1825% from a year ago. But like really look at this like silver high of 114, $115. Now we're half of that. 58, down 50%. Like pretty nuts here. I just, I do just chuckle, Colin, because frankly SK Hynix to me was the company who buy, bought like Corsair, like PC gaming memory from back in the day and now somehow they're crashing like entire world economies or boosting entire world economies. I'm not really sure. It just depends on the day. So last to note is shout out to DI Metrics here. We've got a nice little dashboard. I'm looking at the past month, white fiber still up I believe 55%. And then the companies who we've had most of this, the the C suites on Mara Core weave iron all down on the month. So rough week if you're in the data center game. It's funny because Colin, I have both a green and a red market update banner to put at the bottom and I'm not really sure which one. So I'm just going to flip between them here for a second.
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A
You can just alternate between them in an epileptic fit.
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B
Exactly.
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A
Because depending on what segment of the market you're looking at, it could be green or red.
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B
Yep. And we're going to double tap on this with our guest Jay Patel who's in the audience. So we're going to, we're going to talk a bit, a bit more macro, touch on some strategy news with Jay here in just a moment. Before that, a word from our sponsor, CleanSpark.
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A
We are CleanSpark, America's Bitcoin miner. We are CleanSpark, america's Bitcoin miner. A publicly traded company with the largest operating hash rate powered entirely by self operated infrastructure across four states. This is our proof of work. We are setting the standard for what's next. Learn more about the intersection of energy and bitcoin@cleanspark.com
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C
if Bitcoin's actually the best money and it's the thing that people should accumulate and it's the best risk adjusted asset. I lose zero sleep about whether or
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A
not that's gonna happen.
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C
I just ask the question of when is literally matrix math that you're running on large pieces of paper.
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B
The bitcoin miners can absorb that energy. And in many ways this feels like
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C
a second bite at the apple to build a new Internet.
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B
All right, let's get Jay Patel on the screen bringing him up now. Jay, happy Monday.
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C
Happy Monday indeed. How are you guys?
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B
Fantastic. We're not sure what to make of what's going on in the markets. And you know, again, not financial advice. We're just riffing here on, on a podcast. But last time we talked, we riffed on SK Hynix and just the crypto Korean economy and the memory stocks and Samsung. SK Hynix is down today bad. Lowest, biggest drop it's had. I believe in the company's trading history. And the Koreans are levered. What is this, a do or die moment? I mean, how much insight do you have to this particular. What's going on right now?
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C
Yeah, so I'm not sure what the average leverage that retail investors there have is, but you got to remember that like just a week or two ago, there were news stories that there were brokerages there that had run out of cash because so many retail investors were taking out margin loans. So you have to imagine that Even like a 10, 15% drop could mean some sort of recursive liquidations occurring, at least on the domestic side. One of the interesting things though that I saw, and in hindsight, I think maybe the market should have anticipated this a little, is that SK Hynix had the NASDAQ listing, which obviously there was probably some portion of capital that was in the sole listed shares that moved over to the NASDAQ listed shares because they traded at a premium. There's more capital in the US that's been trying to get into this trade, but it's almost, you know, it'd be especially unfortunate if a bunch of Korean retail traders got liquidated because people were literally just moving from one version of SK Hynix shares to another.
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B
But yeah, yeah, because SK Hynix is trading at a premium in Korea because it didn't have access to American capital markets. Or that's perhaps what we tell ourselves. I'll just double tap on this again. We see other memory stocks. There's Micron, there's SanDisk, Western Digital, the Philadelphia Semiconductor Index also all down. Are you following this story about free cash flow have you seen this? There's the hyperscalers whose free cash flows plummeted whereas free cash flow for memory stocks seems to be skyrocketing. Explain you know what's going on here.
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C
Yeah, so I, I guess one way, one way to think of this is that like the, the net beneficiary of all of the CapEx that's going into the AI build out is really the, the, the, the memory manufacturers and chip makers. So you know, if you think about the fact that like meta Microsoft Alphabet to some extent even you know now we're talking like Nvidia had the bond sale, right? Everyone is basically borrowing as much as they can or at least using all the cash that they have on the balance sheet to build out these data centers. And an increasing portion of the data center cost is just the chips. It's interesting if you look at the free cash flow chart though one of the fears and I think maybe the market is starting to price this in is that if you can go, you know, the stat we talked about yet last week was I think was it Samsung 40, you know, generating 40 times its historic, you know, annual profits in one year. Theoretically if you can go from almost nothing compared to the hyperscalers, that massive amount of free cash flow like that, that trade could probably reverse pretty quickly. But it is interesting because honestly to me it seems like a temporary inefficiency in the market. But obviously all of the experts say that it takes two years to ramp up production for memory. It's just like what level of
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B
cost
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C
are the hyperscalers willing to bear? At some point if the build out for a new data center, if the incremental dollar is almost completely being spent on SK Hynix, Micron, Samsung, is that really worth it? Not too sure.
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A
It's the classic picks and shovels play, right? And it's more than even just the memory and semiconductor stocks. If you look at Caterpillar stock for instance, right. A small amount of that I'm assuming is construction equipment but they're selling generators to these data center companies and the stock is up just like an eye watering amount. And you know, to me it stands to reason that the companies that financing these massive capex builds are actually incredibly cash strapped right now or all the material suppliers are just rolling in it. And I wonder, you know, what are we going to see, you know, SK Hynix and the memory stocks start investing in the structure in data centers. Are they going to be some of the buyers when blood hits the streets?
- [16:59]
C
If that happens then Charlie's definitely right that this is getting even more circular in the circular financing. I do think that in these data center buildouts there is somewhat of cost disease. But just within the data centers where there's certain portions of the data center build out that don't really benefit, that don't have an increase in efficiency over time. I think if you think about Caterpillar, the actual building of the data center is one of those, the memory that goes into these chips. It's almost like data center costs whatever efficiencies Nvidia gets by improving the flops that they get on Vera Rubin or from Blackwell and onwards in other generations. It almost feels like all of that incremental efficiency savings just gets shoveled into other parts of the build out that don't benefit from efficiency and get more expensive like generators and memory and you know, heavy machinery from Caterpillar to actually build the sites. I don't know how long that lasts for, but it is kind of, kind of amusing.
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B
So let's go to again another news of the day which is Trump in Iran. We'll talk about strategy in a moment. Let's go to Iran really quick. Not just in conversation actually go to Iran. Okay. The Trump's closed supposedly the Strait of Hormuz again and this time I believe he says they we will be reimbursed or Trump said he will demand a 20% reimbursement on all other cargo shipped through the waterway. Going to be the straight up Hormuz's quote guardian. And I'm not the markets are crashing but I don't really at this point, I don't really know. Like obviously oil responds to this very quickly. It's hard for me to determine to what degree this impacts other markets. What's the economic and financial story here with the latest Iran news? Jay?
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C
Yeah, so I'd say in some sense if you're, if you're someone trying to make a macro trade, I don't know how much you can read into the news of the day on Iran from the administration because just a week ago we were ceasefire and everything was good and then it was ceasefires in the Middle east work a little differently than ceasefires back home. But it's still a ceasefire. And now it seems to be us charging the tolls on the straight, which I guess is a little better than Iran charging the tolls, but not significantly better. You know, I don't know what portion of shipping traffic will go through the strait if Iran is actively trying to, you know, strike it with drones. But the US is providing safe passage for 20%. The one, the one thing I, you know, I guess looking back to the previous story, right, the, the most impacted economies, at least from the oil shock were the East Asian economies. And so if this does have, you know, if we do see oil go back towards $100 a barrel, I think that'll probably spell even more trouble for domestic stuff in South Korea, Japan, Taiwan, places like that. Back home though, I'm not as sold that there will be much of a policy response, you know, from the Fed or otherwise based on what's happening in Iran. I think the market has kind of priced in this like the situation will remain as it is and what it is is really just in flux. And as long as it stays like that, I don' I don't foresee much changing. The one thing I'll say is like obviously if this drags into midterms, you know, maybe you see Trump capitulate somewhat somewhere to get things resolved, but I don't see this having a significant effect. If you look at oil prices, they're actually still surprisingly low given, you know, what meaning did like a ceasefire really have. You know, if we're at $75 a barrel relative to a lot of the forecasts that we heard last year where we were going to go towards $200 a barrel, it seems like things never got as bad as we thought they would. And I don't really see us getting back above 100 anytime soon.
- [21:25]
B
It's as if you like look at this, if you closed your eyes, you stop reading the news in late February and you just kind of turn the chart back on today and you didn't look at what happened in between. It was 66 back then and we're at 75 now. That's like a pretty normal casual trend for oil over a spring when energy is just getting tight as a, you know, across all markets as we build out, you know, data centers.
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C
Wild.
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B
Colin, you got anything on your Ron?
- [21:53]
A
I don't, I want to. Before we butt up on time, I want to plug Jay about strategy. So Jay, Strategy just sold 467 million and it's common stock through its at the market offering didn't buy any bitcoin and the stretch price which is directly addressing this didn't really rally on the news. The USD reserve they have now is at 3 billion for these dividend obligations and other debt if needed. And Strategy stock also obviously fell on news of the dilution. So kind of a two part question here for you, Jay. Why do you think that the market has not been or that. Why do you think Stretch has not? The market hasn't responded positively to this, considering the USD reserves are even more replenished than they were. And also is strategy backing itself into a corner here where they can't really buy any new Bitcoin until this gets resolved. Sold 215 million.
- [22:56]
C
Yeah, they sold some bitcoin. Honestly, this. This last cash reserve top up, If I'm a MicroStrategy shareholder, I was thinking to myself, would I almost have wished they sold Bitcoin instead of more Commons shares and diluted me even more? I don't know the answer to that, but it does. Again, it sucks to be an MSTR shareholder when it feels like, you know, Saylor doesn't care about you at all. On the STRC side, though, to me, this almost feels like, you know, the, the market on the STRC side is saying it's not enough for you to have the dividend reserve set aside for, you know, 18, 24 months. You almost have to start buying back the preferreds for the price to go up. And is that something that makes sense for MicroStrategy to do? I don't. I don't think so. I don't know how much room they have to maneuver to keep tapping the atm, especially if it's not even going to be to build the reserve, but rather to buy STRC at a. What is it, a 14% discount? I think they're in a tough spot, and I think they might have leaned too heavily into the we need to appease the STRC holders kind of side of things, especially when, like we've discussed in the past, it doesn't seem like they're going to be able to issue new preferreds anytime soon. And so what is their path to buying Bitcoin? Again,
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A
it's really interesting to build on what you're saying. The fact that the market seems inured to a $3 billion cash reserve for Stretch. So you're basically saying that the cash reserve isn't even maybe quelling the fears of some of these STRC holders. They seem to still be questioning whether or not strategy will be able to repay these obligations. So you're saying the only other thing for them to do is actually buy back shares of Stretch to try to quench this thing.
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C
The, the other, the flip side of it, though, is if you look at Strive, right, SATA is trading at some 97 cents on the dollar or thereabouts. And the only real material difference between the two, A, you know, MicroStrategy's got a longer track record and a much larger balance sheet, but strategy does have the converts that are kind of looming large over the next couple of years. And maybe this is the market saying you might have built this reserve for now, but we feel like you might need to use this reserve when it comes time. If bitcoin price doesn't rally and those puts get exercised, that's going to drain the cash reserves pretty quickly. And so in a weird way, it might be that you don't get credit for this incremental cash because the market feels like you're going to need it for something else.
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A
Charlie, you're muted.
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B
It's almost like Saylor invented and crafted the story of digital credit and Bitcoin treasuries and SATA might be the one to be able to execute through it. Just throwing that out there as an idea.
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A
And Jay, just to pluck on that last thread and to maybe spell it out clearly, is the idea here going back to what you were saying about strategy needing that cash for something else? Is the market basically pricing in the threat that they're going to have to resolve their converts with cash rather than in shares? I mean, that seems to be the overhang here, right? That's kind of the boogeyman looming in the closet right now.
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C
Yeah, I think that's basically, from what I can gather, that's basically the market signal, right? Is that even though that they're raising this incremental cash, it's not that the STRC shareholder holders are worried about next month's dividends or the month after. It's what happens in 24 or 12, 24 months when these converts have their kind of cliffs and you have to worry about the fact that if share price isn't high enough, you won't be able to just use equity. The other side of things is like that quickly gets resolved if we have a rally in bitcoin price. But I don't know how much you can bank on that if you're a microstrategy and you're trying to craft this elaborate capital structure. But obviously, as you said, Strive doesn't have that issue. Maybe they were right to wait for Sailor to lay out the game plan and then follow it with with only the parts that worked really well.
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B
Jay Patel, LIGO Finance. Thank you so much for your time today and your insight on the markets. Hopefully we get some clarity on all these topics. Otherwise, thank you so much for your time. Cheers.
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C
Thanks guys.
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A
See you, Jay.
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B
We're going to go to Meta next. And then we'll close out with a story of Native American tribes pushing back or embracing data centers. But before that, a word from our sponsor, Luxor.
- [28:04]
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 tests your fleet's power settings against live energy and hash rate markets. ERCOT back tests show 10% improved profitability with intelligent mining versus old fashioned binary mining. Commander Pro is a hundred dollars per megawatt or a 25 basis point pool fee adder, roughly half the cost of competition. And you can try it for free for 60 days. So if you'd like to learn more, go to Luxor Tech for Commander to get started. All right, Charlie, let's go down to the bayou, brother. We are talking Meta and it's now five gigawatt plans for Richland Parish in Louisiana. Thank you for getting that up for me.
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B
This is, as they say down there,
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A
a doozy of a deal. Do they say that down there?
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B
Well, I don't know. It's south of Oklahoma. So one big.
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A
Yeah, well, that being said, it is a doozy of a deal. So Metta announced Monday that its Hyperion Data center campus in Richland Parish, Louisiana will scale up to 5 gigawatts of compute capacity, which raises its planned regional investment to above 50 billion. And they're expecting the campus to be operational sometime around 2030. So big timeline on this. It's going to take a while to get 5 gigawatts online. And this is up from when it was estimated at $10 billion for roughly just more than 2 gigawatts. And the data center spans 4 million square feet on a 2,250 acre former farm between Rayville and Delhi. So Charlie, what I think is interesting about this is obviously the headline number is crazy. 5 gigawatts would make it the. I mean, maybe not by the time it's completed, but if it were completed today, it'd be the largest data center in the us the large data center in the world.
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B
By a couple multiples. It'd be by 2 to 3x actually. But again, this has to compete directly against SpaceX, which is kind of down the street, just few hundred miles west, so to speak.
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A
Yeah, exactly. And the only other that I'm aware of, 5 gigawatt data center that is actively in development in a serious way is the Project Stargate or Stargate Project in Abilene, Texas. So Meta clearly building out just insane amounts of compute. But what I find interesting about this is the local impact. So this could be used, I think, as a case study for the ways in which data centers can be beneficial to small communities like this. But it's also a case studies in some of the unintended consequences of the investment that they're making and the economic impact that they're having in a very small rural community. So some of the positives here. Teacher bonuses in the parish jumped from about 10,000 to more than 50,000 annually, funded by a local ordinance that sends 1% of sales tax receipts to educators. But it's important to note that these are not permanent raises. They're tied to just the construction phase activity. But still, while this thing is being built, some of that property tax will be funneled back to these teachers. Another interesting tidbit, a local restaurant owner reported that customer Traffic rose about 30, sales rose 30% with traffic going from 200, about 300 people. They're also struggling to find staff. So those are some of the positives. Another positive is Meta is putting more than 1 billion into local roads, water systems and wastewater facilities, plus a $5 million community college fund and the Inter Energy Louisiana, the local utility there. The CEO Phil May said that this 20 year agreement will save utility customers roughly 2 billion, with the new deal building on an earlier 650 million in projected savings for a combined 2.65 million. And that's because Meta is contractually obligated to fund all of the grid upgrades from battery storage at at the sites. About 240 miles of high voltage transmission infrastructure. Seven combined cycle nat gas plants with a total output exceeding 5,200 megawatts. And they're co financing up to 2,500 megawatts of solar. So those are all the benefits. Here are the unintended consequences though. The Paris tax assessor said that some homes that previously rented for 600 to $700 a month are now commanding as much as 2500 as workers flood into the area to build this data center. You know, you have a lot of high wage contractors for these construction companies coming in and they got to have a place to live. This is a very small area. I don't know if you've ever been to one of these, you know, rural towns in the deep south, but there ain't much going on. I mean, there's not really any industry there. And now with all of this investment, some good flowing into the community, but the data center itself is employing I would imagine hundreds of contractors with these high wages. I don't know if the article says actually how many are currently working on it, but it's clearly going to be a huge effort in man hours and hands on the site. So with that you have a lot of people who are earning probably a site more than what the average income is driving up costs for things like housing in the area.
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B
Yeah, you don't have many. You don't, there's not many towns, there's not many cities nearby. They're all, you know, there's a few hundred homes in some of these places. So only so much you can increase the supply. I mean and let's consider call. I think one interesting thing is people, you may have heard that Meta is building a big data center in Louisiana but they keep upsizing it. I think it might be fun to go back and look at the timeline from announcement back in 2024 to today. Originally announced in December of 2024 it was a $10 billion campus with quote more than 2 gigawatts of data center which is already massive, huge at the time, still huge. And then 2025, October, a $27.3 billion bond issued and then in mid-2026 they added another. They expanded to 4,000 acres from 2,200 acres and with the total projected costs north of $200 billion. And now don't quote me on that. $200 billion. I'm sorry, $20 billion. And now this 5 gigawatt campus is expected to be over $50 billion of regional investment Capex spend from Facebook. I mean this is huge. This is a basically a 5x from 10 to $50 billion in a year and a half, almost two years and basically over doubling of size of the campus. At this rate a year from now this is going to be a 10 gigawatt campus and $100 billion project if they keep going.
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A
And just think about the capex spending on the new power plants that they are going to be building to
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C
to
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A
feed this massive data center. I mean you're building like what, 5, 5 plus gigawatts of power out in the town that has a population of roughly 20,000 according to the most recent census. That's enough power for you know what like 1 gigawatts enough for what? Like a 2 million, 2 million population metro area. One million maybe. I mean you're talking about building out gigawatts that could sustain this, this town, you know a hundred, 100 times over.
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B
Yeah. So.
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A
And there are real questions too, from some of the people who are pushing back against this, saying, what happens if Meta just leaves this area? Now, I would imagine that you could safely assume that. Assume that. That if they get this built, they're not just going to abandon it overnight.
- [36:57]
C
Right.
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A
This is $50 billion worth of capex for this place. But under a hypothetical scenario, if they did move out, the town would have no way of sustaining all of that generation and all of those plants would have to get shut down. Unless someone else moved in.
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B
Yeah, I have a hard time seeing that. I mean, you can't just pick up the data center, move out.
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A
Yeah, there's no way that they're going to do that. I mean, I guess, like risking catastrophic failure at Meta, but then someone would probably come in and buy that space. But I do think that it does present kind of an interesting tension in the sense that, yes, all of this transmission is being funded and all of these assets are being built, but they're really just for Meta, and the community has no way of actually leveraging them. But if they do materialize, reduced power costs for people in the community, I'm sure they'll draw some from that power plant.
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C
Right.
- [37:51]
A
Or at least the overflow from it or the fact that Meta doesn't have to tap their actual power plants for the area is going to be beneficial. Yeah, it's just, you know, it just, it, to me, it underscores how crazy it is that we have, you know, like a $50 billion investment coming into a community of like 20,000 people. I mean, there's just such an. There's such a mismatch in terms of where these data centers are finding homes versus the actual economic activity that goes on in these places.
- [38:19]
C
Yeah.
- [38:19]
B
I want to show one more thing, which is a lot of people are like, why Louisiana? And this gets into the US Pipeline infrastructure. Basically the Gulf coast from the Port of Houston through the lower part of Louisiana to kind of up to Mississippi, the entire Gulf coast, that corner there is just completely riddled with gas and pipeline infrastructure, a lot of natural gas processing plants. And because of that, you have these major pipelines which then from there kind of shoot out across the country, taking gas from up, you know, northern frontier states like South Dakota, North Dakota, the Permian Basin in Texas, Colorado, Utah. And because of that, you have some interesting. Here's a little visualization of all the pipelines in Louisiana. And you can see here, I don't know if my mouse comes up, but you can see up here kind of where one of the intersections are. This is nearby where Meta's massive 5 gigawatt plant is. So there's abundant gas. It's kind of always been like a distribution and transfer problem and generation problem.
- [39:41]
A
Yeah. And that's a really good thing to point out too with Louisiana because natural gas will be the backbone of most of these data centers.
- [39:49]
B
Yeah.
- [39:50]
A
It's the only generation that they can reliably build quickly enough that will serve as baseload. They can't do it with coal because you know the environmentalists would have a stroke. And you can't do a nuclear because it's going to take too long to get those up online.
- [40:05]
B
Yeah, I actually have this great visualization right here which is okay, so this dot Meta Hyperion data center, northeast Louisiana and then here in Richland on this in the northeast in Richland. This is where we have, this is where it is on the map and it's very close to all these cross sections, some of these big old like pipelines from Louisiana coast onwards. So pretty, pretty interesting to watch this play out. If you hear, you know, historians talk about how geography dictates like a lot of history. You could also map this onto like energy pipelines and not for just gas and oil and gas, rather just energy
- [40:52]
A
corridors are gas pipelines are the new waterways.
- [40:56]
B
Not, not too crazy of a thing to say. Okay, we are going to continue on with our last story about the Indian nations. The Native American tribes are pushing back or embracing data centers. Which ones are going which way? We'll talk about them afterward. From our sponsor Lygos.
- [41:25]
A
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- [42:27]
B
Let's go to Idaho first, because this is where the story kind of originated.
- [42:29]
A
Yeah, yeah, I was going to say we'll lead with the story that we published in block space here. I'll get it up here. And then we will move on to your backyard to talk about how some of the nations in Oklahoma are embracing or pushing back against data centers. Here is the headline from Box space. Shoshone and Bannock Tribe pushes back on 100 megawatt AI data center appeal. This is coming from the Idaho State Journal tldr. Here is that the Shoshone Bannock tribes reaffirmed opposition to a proposed AI data center in their area ahead of a July 16th city council appeal hearing. This is a proposed 100 to 200 megawatt data center called Pocatello by Lex Developments. And the tribe is basically saying they have not seen sufficient evidence that this will not impact the environment. They also have not seen any clear evidence as to where the power will come from. And they say that we can't support this 100 to 200 megawatt facility. There will be a City Council review for the appeal at 6pm on Thursday, but it will not have active new evidence or it will not accept new evidence or testimony as a result. And Charlie, the reason we picked this to let you go into here in a second is that we're seeing a total mixed reaction from many of the Native American tribes around the US as to what to do with their land with regards to these data centers, if they have interest from hyperscalers or other developers. A few tribes leading in the Caddo Nation near Oklahoma City, its casino was closed in 2017. And some of the leaders see the data center boom as their best opportunity. As chair Bobby Gonzalez put it, we're not poor, we're broke. And they're in talks with the Colusa, among other tribes, to build power plants for a data center in Oklahoma by year end. And then there's also the Department of Energy's Office of Indian Energy, which has been actively courting tribes since January, framing data centers as an economic opportunity via land leases, energy sales, et cetera. And in New Mexico, the Navajo Nation is providing the blueprint for this with its Innova data center, which is active currently, and it is in their tribal lands in New Mexico, actively generating income for the community. There are a number of tribes pushing back, including the Seminole and the Muscogee in Oklahoma. So I'm going to let you take it away here, Charlie, with some background on exactly what the pushback is in your native state.
- [45:10]
B
Yeah. So I think maybe it would help to understand why are the. Why are Native American tribes being approached by data center builders or hyperscalers? And a lot of this is because, depending on the part of the country, but in particular Oklahoma, these tribes are recognized basically almost like as sovereign states within the United States. This has long, complicated, brutal, abusive history behind it dating back to like the Dawes act of the late 1800s and the relocating of these tribes to Oklahoma, formerly known as Indian Territory. But anyway, getting to present, data center operators and builders want speed to power. This is the term they want speed to power. They want lots of power. It's a permitting issue. And a lot of these tribes can offer on various lands. They have various types of jurisdictional control, like quick sovereign permitting. You have often a much smaller council to have to go through. They can kind of make a lot of their more own laws. In theory, it could be more agile decision making. Again, it just depends as these are effectively kind of mini countries, similar to how countries are different. The tribes operate differently. And then they also control a lot of different infrastructure components, namely like they'll have energy or power utility co ops that they own and operate and they'll own power generation sometimes in this case. So because Oklahoma specifically has a ton of what's called tribal jurisdiction. Here we go. Here's like a little visualization. Oklahoma, the page panhandle state here on the east, on the left side, you have the entire eastern half of Oklahoma covered in what is called, let me get this correct. This is the jurisdictional area where the five tribes or five of the primary notable tribes in Oklahoma have like legal jurisdiction for their members in these areas. And then as subsidiary of that, they'll own the actual land or various plots or areas. You'll have like allotment areas or even reservations within these areas. So these five tribes, again, there's a bunch of tribes in Oklahoma, but there's the five, what are called colloquially known as the civilized tribes, Cherokee, Creek, Choctaw, Muskogee, Chickasaw. And they are attractive if you want to build data centers. So there is some pushback as you've identified. And what's funny is like I didn't, I wasn't like tracking this until we were kind of like, like picking up on the story recently because I'd seen some of this on like Facebook and some of my Facebook wanderings and I hadn't paid super close attention to it. But really this spring, the past three months, you've seen these tribes put on their like council meeting dockets, like we're going to entertain a deal with the data center. Most notably, I believe was, I believe it was the Seminole who
- [48:39]
C
kind of
- [48:39]
B
quietly put a potential signing of an NDA with a hyperscaler on their council like agenda docket and it was met with significant tribal member opposition.
- [48:53]
C
Yeah.
- [48:54]
A
And then they voted unanimously after that for a permanent moratorium on hyperscale data centers.
- [49:01]
B
Yeah. And that's again that's only in the land that they control, which is not necessarily their jurisdiction. Jurisdictional area here, which is as I show this, this is the jurisdictional area where if a tribes member is arrested or does something in this area, they're typically, they have a different like court proceeding and judicial process. But those are good areas to like, I see where a lot of those, the actual like tribal land lies. Now I will actually kind of defend this a bit. These are not, this is not being regressive. Look at the story of the Osage nation in Oklahoma, which is, you know, Osage county starts three miles north of where I'm sitting right now. And if you've seen the movie or read the book Pillars of the Flower Moon, there's a long, long set century plus long history of abuse of land and people by industry very closely related to energy and manufacturing, well documented in the Osage County. But this extends, you know, and this is kind of a cultural artifact and belief across and understanding a lot of these tribes. So like it is a double edged sword. You have these basically micronations within the United States who can operate more leanly and can make pretty probably much more sweeping quick decisions. They own a lot of the components that are needed for these hyperscaler data centers. At the same time, deep seated mistrust against industrialists. And that's not even me speaking to issues of corruption and conflict at the administrative level in the tribes. But that sounds, that's not something I will talk about on this because I'm not an expert on.
- [50:56]
A
Reminds me a lot of the pipeline debates. You know the there for, you know, decades now there have been these fights on having oil and gas pipelines on native lands and there's been a lot of pushback when they were, when they were being built. Like what was the name of the one, that one massive pipeline.
- [51:17]
B
The Keystone XL pipeline. Yeah, yeah. I feel like that was like a red herring topic though because every other pipeline was being Built. And that was just like the wedge issue.
- [51:27]
A
Yeah, that was the one that just got the spotlight shown on it, as I'm sure some of these data centers.
- [51:32]
C
Right.
- [51:33]
A
There are hundreds of them being built around the US but media will sometimes just focus on one. But what's interesting about this is whereas the pipelines are shared infrastructure, or at least not shared infrastructure, excuse me, but infrastructure that will benefit the majority of the nation in the sense of getting gas to market. These are not necessarily the same. You could argue that the data will get to the market.
- [51:55]
C
Right.
- [51:55]
A
But this is specifically something that is contained within these lands. And I agree with your take that it's going to be a hard sell for a lot of these Native American tribes. I mean, they've been repeatedly repulsed out of new areas throughout U.S. history that they were relocated to. And then they're saying, actually, no, we need this now too, so we're going to relocate you here. I mean, the reason why Oklahoma has so many tries to begin with is Jay's back to the Trail of Tears under Andrew Jackson, which could you imagine even trying to explain this to him? So you're going to send them to Oklahoma, and then roughly 200 years from now, they're going to be debating whether or not to build a casino or a massive structure that has a ghost spirit in metal that animates computers. And there would be absolutely no. There would be no analog for these guys about what would eventually be the consequences of these actions. Right. It's really interesting to think about the fact that many tribes are now sitting at the center of a debate that some people believe will decide, you know, the US Is sovereignty or not in the age of AI and machines.
- [53:03]
B
Yeah. To get a little cosmic. I mean, it is. If you think about the big stories of the tribes and western industrialists, we relocated the tribes and then we extracted their natural resources on the. On the land which we moved them to. And now we're telling the story of building a machine God from their lands. Like, you know, you know, for. For. For. For. For an animus driven.
- [53:33]
A
I was just gonna say, like the, The. The animism was real. There were spirits in the rocks who just had to electrify them first.
- [53:40]
B
Yeah.
- [53:41]
A
I will say there is something very interesting about the autonomy that these nations have in terms of building these things. You know, ultimately the ball is 100% in their court as to whether or not they let them come in or not. And that's one thing I think has been very interesting about some of the media framing on this Like New York Times did an article that had the angle you would kind of expect. These data centers are coming in trying to exploit these peoples. It's like, well, they're going to have final say as to whether or not they want to build these and whether or not the value accrues to them is entirely contingent on the deals that they strike with these data center companies. If some will embrace it, others won't. And I do wonder if there will be significant opportunity cost for not building one of these. I understand wanting to protect land that has been consistently trodden upon, but the wealth effects from these data centers could potentially be game changing for some of these communities. If, if done right.
- [54:37]
B
Yeah, there's certainly a lot of opportunity here. There are some incredible deals that can be struck and they could benefit some of the tribes. Probably situational dependent. There's some huge, like huge benefits that that could happen. It's execution and then do your tribes people want it and yeah, you gotta figure those things out. I will, I will comment that, you know, some of the tribal medical care in this part of the country is often the best and most affordable in the region. So they've done some things very well. But they also make great big casinos.
- [55:17]
A
But yeah, I was going to say I think maybe the, you know, maybe. Color me a philistine, but I think maybe the data center a little better than the casino.
- [55:29]
B
Yeah, I imagine that they train. Yeah, he's training data for the casino from the, from the data center to, to make better caineas. Okay, that's, that's, that's the end for the stream today. Thank you so much for listening to Blockspace live. We go live every single weekday covering topics on AI, data centers, markets, emerging tech and sometimes if you're lucky, we'll talk about Bitcoin. Make sure to like and subscribe Newsletter Blockspace Media to get the newsletter, subscribe wherever the podcasts are streamed. They go out after the live stream wraps up. This show is brought to you by Clean Spark NASDAQ listed Ticker clsk. I'm Charlie.
- [56:11]
A
I'm Colin and we'll see you tomorrow.