← Blockspace: AI & Bitcoin
Blockspace: AI & Bitcoin
Pope Leo Calls AI the Tower of Babel, China is Funding Anti-AI FUD, TeraWulf’s 1 GW KY Data Center
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Foreign.
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What's going on y'?
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All?
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Welcome back to Block Space Live, a Tuesday show, because yesterday was Memorial Day. So we hope everyone had a great Memorial Day weekend. And shout out to all of the veterans and active service members for their sacrifices. For today's show, we have got a little bit of, how should we say, Catholic musings as we unpack Pope Leo's latest comments on AI. And in fact they are not as anti AI as you would think. The Pope doesn't think AI is a demon, but he does have some very strong thoughts on it. In fact a few 10,000 words of thoughts. After that we will have Jay Patel of Ligos Finance on to talk about what else but strategy and them retiring $1.5 billion in debt along with his current thoughts on on Bitcoin's market. We then have Sam Lyman of the Bitcoin Policy Institute on to talk about anti Data center fud, specifically how foreign actors may or may not be influencing the dialogue related to data centers here in the U.S. after that, we're going to touch on Terra Wolf's new gigawatt data center site in Kentucky. They announced an acquisition today for Land and Power and they are planning a gigawatt plus data center in the state, second of their data centers in the Great Bluegrass state of Kentucky. And to close we're going to be talking about strategies Most recent Bitcoin purchase and retiring their 2029 convert for 1.5
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billion block space goes live every weekday of the week starting next week. That's right. If you have a free lunch hour next week, any day during the week, you will be listening to Block Space Live. We feature quick hits on bitcoin, mining, AI and emerging tech. Make sure to like and subscribe. Subscribe Hit the notification button so you get the push notification on your phone for when we go live at currently noon Eastern. But next week when we do five days a week every weekday we'll be going on at 1pm Eastern and around the time of this transition we will be focusing just Block Space live on the Block Space stream. So if you're listening on Coindesk, make sure to search Blockspace in the podcast RSS feed that you're currently using and subscribe to that channel so you can remain continuity with the show. The show is brought to you by CleanSpark ticker CLSK listed on NASDAQ. More on CleanSpark later on in the show. Let's kick it off Colin. I was busy remembering the troops this weekend, but I should have actually been opening up My book of papal dictate. Because the Pope was on Twitter this weekend talking about what else? Artificial intelligence.
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It's kind of nice. It's a break from the, you know, other culture war issues. Now we have another culture war issue that actually interacts with the economic sphere. But my take from just cursory reading of this, Charlie, was it was more of a, like, cautionary statement. It was, it was very wishy washy on whether or not he's taking a stance for or against. At least it seemed that way to me.
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Yeah. So let's just show this. This was this weekend the Vatican published the encyclical letter of his holiest Leo the 14th, Magnifica Humanitas. That's Latin for something about the human person. And it's on AI. Yes, the Catholic Church is talking about AI, and Pope Leo XIV has been tweeting about this kind of Twitter threading. This longer piece. This letter, which I have up here on the screen, is thousands of words long.
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It's a David Foster Wallace novel.
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Exactly, except it's less rambling and it's more carefully crafted to appeal to the wide disparate Catholic Church around the world. So what is in this and what is the significance? I have a bunch of takes and I. Let me try to go top down. So first of all, this is a piece really in one line calling for the disarmament of AI, saying that AI poses a danger and a threat, but it is not inherently evil. Rather, AI should be disarmed. And this is in the context of the Catholic Church, you know, saying they have these values of, you know, path to salvation and humanity and humanity's role and dignity. But there are some very interesting analogies. For example, Pope Leo uses the analogy of the Tower of Babel. For those of you not familiar with stories in the Bible, you have humanity building this tower to the heavens to reach God. And so this is a story, or parable, if you will, in the Bible, where humanity's own pride leads to its temporary downfall. Pope Leo makes an analogy to AI. A lot of people say the Silicon Valley tech folks are building the machine God. And so I think that would be the analogy. But he also describes the patient, cautious rebuilding of Jerusalem under Nehemiah as the happy path forward to which he would love to see humanity build AI in a patient and responsible way. I think some interesting things here. So a lot of people may not know this, but Pope Leo is a Chicago boy, first American Pope, and he actually has a degree in mathematics and physics from the University of Villanova and this piece from the Catholic Church, Magnifica Humanitas, was written in conjunction with a lot of notable folks in AI, a lot of notable bishops and clergymen, and was read very notably in a very specific place in the Vatican, the Synod hall. For those of you who don't know, like, Catholic, you know, obscure Catholic terms, a synod spelled S Y N O D. Are these gatherings where the Catholic Church comes together and like, puts forward defining guidance and counsels on things that have happened over the centuries. Notably during the Industrial Revolution, there was a. What's called the Res novae, which was the Catholic Church's guidance on how humanity should navigate the inversion and power structures of the industrial revolution some 250 years ago. And this piece is actually specifically referencing though those writings during the Industrial Revolution, saying that the time of AI is as significant as the Industrial Revolution. So
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that's one of the most notable things about this to me, is the way in which the Pope is positioning this statement in the canon of Catholic literature. And by positioning it with the Industrial Revolution and the Catholic Church's comments on that, he's kind of appealing to this ethos of the Catholic Church's history of pointing out these huge technological shifts. Right. And I almost even think comparing it to the Industrial Revolution probably is underselling it to some point just because of how fundamental this will be in transforming almost everything about our lives. But, yeah, I thought that was. I thought that was an obvious choice for him to make, but also just incredibly fascinating because as you know, as a. As someone who comes from the Protestant tradition, we don't really have someone doing stuff like that on our side of the aisle.
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C
Right.
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Yeah. There hasn't been an update to the Protestant biblical canon in a long time, whereas the Catholic Church does issue very clear statements from Vatican. So the Pope's been tweeting all weekend, kind of diving into some of the specifics of this Magnifica Humanitas. One of the notable things is that the Vatican is very concerned with, like, how the Catholic Church treats property. And in this letter, it designates patents, algorithms, digital platforms and data as property. And it specifically calls out and says we should be cautious about property being too concentrated into private corporate hands. What's interesting is there's very little. I think there's less. This, this letter is less about the geopolitical and StateCraft angle of AI and more about the corporatization and ownership of, like, you know, the future possible path of corporate overlords for AI. So Anthropic co founder Christopher Olaw was in the room, like literally in that special sign on room during the reading of this. And I think it's a very big, like public display. That Anthropic, which is the AI company with a conscience, you might say, is very proactive in engaging on this. There's probably more things we could talk about this. I would like to invite the Pope on the live stream if he wants. He'd love to, love to have him on and rip about AI because he's a smart guy, he speaks like four languages, Latin, he's a physicist and he's the Pope of the Catholic Church. Oh, last thing. A lot of people might not know this Pope Leo. They get to choose their own name, right? Popes. And the two Pope Leos ago was the Pope during the some of the most formative years of the industrial revolution. And the modern Pope Leo today chose his name in reference to that particular Pope. So yeah, it's if you know, exegesis and biblical scholars of hermeneutics are having a field day because finally they're relevant on AI Twitter.
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And it also gives Charlie a chance to flex his papal history skills.
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Oh, yeah, I did not know that
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we had those in the back pocket.
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I studied a lot of church history and I was like, when is this going to apply to bitcoin? Okay, we have our first guest up now, a regular on the show, our boy Jay Patel. Let's bring him up here. Jay Patel from Lygos. Welcome back to the show, Jay.
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C
How are you guys doing?
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B
Pretty good, man. Nice to have you back on. And I'm sorry to say we're going to be asking you about strategy again because strategies back in the news. Only reason why bitcoin is still above 75,000 according to some people. But we'll put that to the side and we're going to touch on the specific news item here in the news segments after we have our interviews. But the headline today was strategy purchased something like 26,000 Bitcoin roughly around that and retired 1.5 billion in debt. We had covered the debt portion of this. They had announced it a few weeks ago, but now they've actually retired it. It was this 2029 convert that had an incredibly high strike price for the actual shares. It's like just north of $600. Jay, good or bad move by strategy here? Why did they pay off this convert before the other ones?
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C
I'm not qualified to say whether it was a good or bad move for them because increasingly I'm kind of confused as to who the primary audience that strategy is making these decisions for is. So I thought it was interesting. I think it was Jeff park that pointed it out first that the converts that they decided to pay off were not the closest to maturing nor the furthest out. They weren't the highest interest rate or highest cash burden, but what they were was the furthest out of the money. Which seems kind of odd because if, you know, at least if you go by MicroStrategy, Twitter, you know, all of the shareholders are concerned about looming dilution from converts because, you know, I don't know, bitcoin moons. And then all of a sudden, you know, there's a bunch of new equity that's minted because converts, you know, basically exercise their conversion rights. So it's kind of odd that they paid down the debt with like a 600 plus strike price. In my mind, what that tells me is like, you know, there's, there's very little implied value in that call option for a 600 plus strike price on MSTR. And so those like dollar for dollar, like dollar of debt for how much cash it costs, MicroStrategy, were the cheapest bonds to pay down. So it seems to tell me that their priority is get as rid of as much of a debt overhang as possible rather than, you know, worry about the dynamics around MSTR, dilution and equity. And in my mind I'm like, you know, there's basically, you know, if you're thinking about MSTR shareholders, you want to limit dilution. That's why people hate the ms, you know, the common equity atm. And you want to reduce the overhang from these converts. If you're a STRC holder, you just want to make sure that the cash pile that they have can be as flexibly used for dividends as possible. And you don't really give a shit about the MSTR common holders. So I don't know, I guess in the near term, you know, Charlie, as you pointed out, they're increasingly relying on that STRC atm, so maybe they need to cater to that audience.
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I'm happy that you pointed out that tension because we'll get to that in a second. But yeah, you mentioned just a few notes here. You know, they have the 2028 converts that have a strike price of 183. The stock's at about 160 right now. I think like 160, last I checked, that's got a 625 bips coupon or six, sorry, 63 bit coupon. And the 2021 converts are zero percent. But the conversion price, 672 bucks. So it seems to me, just for them, I mean, to me that signals a. I mean, it could be one or two things. Like you said, they don't want any more dilution, but like, you know, that's 2029. We're three years out from that. My question is like, do they just feel like that's too high of a target for their stock? Do you think that's more the consideration, or do you think it is that they just want less dilution in the stock because that's something they've been criticized for.
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C
So my understanding, you know, a few weeks ago when they were like, oh, we might sell some bitcoin to pay down the debt, was very much what you're saying, which is, you know, it's actually kind of smart if they sell some BTC to buy debt that's trading at a discount, particularly debt like the 2028 maturity that you're pointing out, which $183 is not like that far from where we are right now. Presumably in the next year, MicroStrategy common stock could be above that price, and then you'd get a billion plus dollars of dilution. So I thought that was what they would be doing. Sell some btc, or say you're going to sell some BTC, but just don't buy more BTC and instead use the cash you're raising to pay down that debt. The fact that they're doing the $670 strike, it's less, in my mind. It's less of a. It's less of a commentary from the strategy team on where they think the stock is going. But it seems to tell me that they don't care too much about dilution, and what they care more about is maximizing the amount of debt you can reduce per dollar paid. Right? So, like, the, the 2028 bonds would actually be more expensive to pay down because the call option, the embedded call option, has more value, so you have to pay up more to retire those. Whereas, you know, the 2029 bonds, with that 670 strike, the market's basically saying, hey, the call option is worth nothing. We're just pricing it at whatever the, the, the bond is. But I mean, I guess then if you're a MSTR holder, like, are you back in that situation where you're constantly worried about getting diluted maybe not by the atm, but by the bonds?
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Right?
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Well, let's talk about that, because concurrent with this announcement, Strategy announced that it purchased a lot of bitcoin so it wasn't 26,000, 24,869 BTC for about 2 billion. And the majority of the fundraising for this actually came from stretch. 95% of the cash that they sold into the market was from stretch. The other 5% was from the common stock strategy shares. And you just mentioned, Jay, you're kind of at this point almost a little bit confused as to who the company is being marketed to. And if I could just spend a second unpacking this. The way I understand it, Stretch as we covered, I believe, with Francis on one of our segments recently, your co founder at Lygos. Stretch is really a retail play. These preferreds are for retail. Institutions are not going to touch them for the ones that are, it's a very small percentage of their exposure to a company like this. And you could also argue obviously that the common stock is marketed towards retail as well. But the, the other side of the common stock are these convertible notes, right, which that's all institutional exposure.
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C
Right.
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With these investment banks, you know, selling exposure to strategy through these converts and that gives the holders exposure to the stock in some way as well. But largely this is a retail phenomenon. And to me it would make sense that they're selling more aggressively into Stretch right now. One, because there is this kind of demand for digital credit, apparently, as they call it. And then also you don't really want to dilute right now because it's a weak market for strategy. So you're going to be selling into weakness. You don't want to do that when you're already looking at having a somewhat long road ahead of you. If you want to meet some of these conversion prices on these other notes, also just make sure you don't want to dilute the holder base too much. So that's a long winded way of asking you, Jay, does that kind of create a tension for strategy here? Like you could see a scenario in which when Bitcoin's ripping, they might not be able to sell those. This is me forecasting this. I could be wrong, but would the preferreds even be as attractive if Bitcoin's ripping, you get 11% on these converts. Retail wants them right now because bitcoin's not doing anything. But what happens when bitcoin's rips? Like, does that, does that create a tension in your mind between these two products, the common stock and the preferreds?
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Yeah, I think that's spot on. My guess is that right now volume is really low. Bitcoin's been range bound for A long time and the market's pretty depressed. So there's just no appetite for MSTR atm. So right now they're catering towards Stretch. And I think if the market starts ripping, it's way cheaper to raise cash by issuing equity than it is to issue these perpetual preferreds where you have to pay them interest forever. Right. Or you can suspend the dividend, but that means you kind of kill the golden goose. But I think right now they kind of have to cater towards strc because if they have this after this announcement today, they have around six and a half billion dollars of remaining converts maturing through 2032. Presumably they're not going to be able to raise that cash by selling mstr. So they have two options, which is sell more stretch or sell bitcoin. I think for all Saylor saying he wants to inoculate the market by selling bitcoin, I don't think he's going to sell $6 billion of Bitcoin. Like he might sell a couple hundred million or something just to prove he did it. But if MicroStrategy starts selling multiple billions of dollars of bitcoin, I think that does more harm to their balance sheet in terms of spooking the market and potentially bringing down the price of bitcoin than good. So I think they kind of have to cater towards Stretch right now. Right. Like they have to kind of put the MSTR equity to the side because they're not going to raise capital from that and say, what can we do to continue raising more capital via stretch? And I guess part of that is reduce this cash outlay that they're going to have for these bonds in the future so that they can kind of hold on to more of the cash to do dividends for STRC holders.
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Yeah, I mean, it kind of. Yeah, go ahead, Charlie. I was just going to say, I. It just seems like a, you know, there's someone doing a lot of financial juggling over there, but seems like if you can't issue the common stock to raise cash, continuing to issue the preferreds creates another headache down the road in terms of your obligations. But anyway, go ahead, Charlie.
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Jay, in light of this strategy. Strategy, strategy. I've seen a couple notable analysts like Checkmatey kind of call the bottom, saying that 62k might have been it. You also retweeted, of all people, Fred Krueger recently talking about patience. And what's your thoughts on the current bitcoin market sentiment? Is it just sideways for now? Was that the worst of it? Probably 62k the longer we don't go below, the less likely is that we go below. What are your thoughts?
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C
My, you know, I think there's two possibilities, but I'm kind of in that camp where it's just like we're in this lull and people are getting very, very tired of bitcoin price trading sideways. But those are the kind of the perfect setups for, you know, a rip upwards. And it seems like, you know, we've, we've held supports, you know, like price comes down, but it's not like we're breaking, you know, below 70k anymore. And then the other thing that I'm thinking about here is essentially like, you know, bitcoin Vol. Overall is the lowest it's been in almost 10 months. And generally when bitcoin Vol is this low, like, you know, you, you're, you're primed eventually to have an episode of volatility. And it seems like that volatility might be a sudden price move upwards. So I think, I hate to say it, but I'm going to call that we already hit the lows, but it could go either way. I think people are frustrated that bitcoin price is not moving up into the right, especially because you think all the geopolitical tensions and interest rates and budget deficits going up and things of that sort and bitcoin correlation to global liquidity breaking down. But at the end of the day, I feel like the more tired the market gets and the more people are frustrated and less belief in the thesis that bitcoin can go up is usually when it goes up. I feel like bitcoin has a tendency to do the thing that hurts the most. Weak hands. And so in this case, I think that we might have seen the lows and I definitely would not be short here, here.
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B
Yeah, I've seen a lot of rage quitting on the timeline recently. Yeah, A lot of people saying they're fed up, a lot of people saying they're done with dcaing, bro.
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A
We pivoted to AI. So like, I mean, all we do is talk about AI Data center stock. So if bitcoin does something, please let it do it. Let it go up or down. And, and then we can start talking about it more because, yeah, it's, I
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C
mean, look, and as bad as it is at bitcoin land, you see like the bankless news,
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those guys got wrecked. Holy smokes. Do you believe that? Like, I have trouble believing that, Jay.
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C
I actually. Okay, so this is kind of controversial. I think David Hoffman got a lot of Hate from bitcoiners who are probably less principled than he is. You know, as much as people like to hate on the bankless folks for being ETH shills and like they've historically had the stance that they believe in ETH as the network and the whole crops and censorship, resistance and everything else, but they felt that the Ethereum foundation didn't prioritize ETH the asset. I actually think, you know, like from their perspective, you know, the problem with ETH is that it doesn't accrue a lot of the value and it doesn't have the same monetary characteristics as bitcoin. But the bankless folks did have a consistent stance that ETH should be this kind of neutral network that folks can transact on. And I don't think that they're saying that didn't happen. They're just saying that ETH isn't going to accrue a lot of value from that. It was just entertaining to me that particularly the bitcoiners who traded in their bitcoin for treasury stocks and ETFs and whatever other financial instruments were the ones shitting on them. When he was just saying it how it was, which was like, hey, we believed in the network and we thought the asset would be worth more alongside the network, it seems like not a lot of value has accrued to the asset. And he even said he believes in Bitcoin as a good trade over the next, I don't know, however long. But in my mind that almost reinforces the thesis that maybe all these bitcoin roll ups and bringing a lot of this activity back to bitcoin, where it all started, has a lot of value because there's a lot of folks in the Ethereum community that seem not to care too much about ETH asset. It's just eth, the censorship resistant network on which to transact. And I feel like maybe bitcoin actually is better suited there.
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B
We're still waiting for the L2 bull run. Maybe it's around the corner. Jay Patel, thank you so much for joining, man. Appreciate it. Hope you have a good week and we'll see you all again next week.
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Thanks, Jay.
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C
All right, take care, guys.
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A
I'm excited for Ethereum to become a Bitcoin L2 someday. And imagine the bankless bo being long Bitcoin, but like being an Ethereum focused podcast. Can you imagine, you know, the future, right?
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B
It's a. It's gonna. Maybe it's still Ethereum focused, but David Hoffman's all in on zcash. Hype and Bitcoin now.
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A
Oh, he's a zcash guy now. Well, he should come on and explain
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B
why we should buy VC bags. Anyway, on that note, we've got Sam lyman Coming next. BP Policy Institute to talk about foreign interference in AI. But first, a word from our sponsor, CleanSpark. We are CleanSpark, America's Bitcoin miner, a publicly traded company with the largest operating hash rate powered entirely by self operated infrastructure across four states.
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- [27:20]
C
we are setting the standard for what's next.
- [27:24]
B
Learn more about the intersection of energy and bitcoin@cleanspark.com all righty.
- [27:35]
A
All right, we have Sam Lyman of the Bitcoin Policy Institute waiting in the wings and we're going to talk about NGO conspiracies. Let's bring him, let's bring him on. Sam, welcome to the show.
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D
Thanks guys. Great to be with you all.
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B
Yeah, appreciate you joining, man. A little bit last minute. Appreciate you answering the call. And look, he's just, he's all ready for Charlie. He's making us look like a bunch of hobos over here.
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A
Yeah, I know. He's got a suit on. He looks like he's ready to actually go talk in dc.
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B
Yeah. And this and this background too. This is the. Any other guest listening? This is the standard that we expect from here on.
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A
Yeah, blue background. You can't tell if he's Republican or Democrat because he's a bitcoiner.
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B
So Sam, to set the stage here, so y' all put out this really good report along with a press release with an executive summary about foreign actors exerting influence on the AI debate here in the US to get our listeners up to speed. Can you give us a quick spark, notes of key findings and some of the key actors and NGOs here that fell under the scope of YALLS investigation for sure.
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D
Great to be with you guys and thank you again for having me on. So we discovered throughout our research that there are particularly three vectors of foreign influence. So I'll go through them one by one. The first, no surprise, is China State Media. China has an English language propaganda arm that for years has been directly targeting AI data centers and AI build out. The sketchy thing here is that China State Media has been working directly with a think tank network and a nonprofit network here in the United States called the Singham Network. So this is where you guys mentioned conspiracies at first. Honestly, I would say conspiracies oftentimes have a lot of big facts. But we plot out every single data point here as to how these things are related. Singham is an American who I like to describe as the O.J. simpson of Foreign influence in the sense that his fingerprints are all over, but nothing has been done to take any legal action against him. So CM has been building out a nonprofit network here in the United States. And here's our schizo flowchart that we put together. And these founders and these presidents of these nonprofits have been doing sit down interviews with China state media media, they've been doing podcasts and they've been working directly with them to amplify the same talking points coming directly from the ccp. Really disturbing stuff. So that's the second vector and the third vector of foreign influence is what you see there, the foreign billionaire trail. So that's composed of different billionaires from Europe who are actively funding money into the United States through dark money groups. And from there those that money goes to non profits that signed a coalition letter that later precipitated the Data Center Moratorium act signed by AOC and Bernie Sanders. So there's a lot of different moving parts here, but they're all connected in different ways, as we've shown throughout our research.
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A
So I'm in Oklahoma, the reddest state in the union, and yet I go on, I get off Twitter, I go to all the other social media and everybody cross party is starting to push back against data centers. I'm talking my conservative aunt, my commie friend, my kind of progressive neighbor. So like all of these folks are hitting it is that seems to be organic and grassroots. But what you're describing here, it seems to be more of like a top down thing. How do I reconcile with what it seems to me to be an organic local pushback versus what you describe, which is a more coordinated like astroturfing campaign, if you will.
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D
It's important to be clear here. We're in no way saying that there's not organic pushback to data centers because exactly like you're describing there 100% is people have legitimate concerns about water use, about electricity prices, concerns that need to be heard. What we're noticing though, that simultaneously that you, as you see this organic pushback, you're also seeing an astroturf effort. And a lot of the organic concerns are being amplified by foreign influence, as we've seen throughout our research. And so you have two things going out of the at the same time and two things can be true at once. What we are hoping for is that as we have this data center debate as a country that we're able to filter out any foreign influence because this is a conversation that we need to have with Americans as Americans and we shouldn't have any foreign influence, much less our greatest foreign rival be a part of this conversation.
- [32:11]
B
So Sam, kind of to double click on what Charlie just said here, it seemed to me reading this report that the bulk of the efforts have been federally focused in terms of NGOs, kind of trying to push the conversation on the federal level. Is there evidence that this is being that this, these campaigns are disseminating amongst the local level? Are they just kind of trickling down in the national conversation in such a way where you kind of get this two birds with one stone? Or if you talk about it at the top level, it's going to filter down into discussions at the, at the local level. What's your read on how much of this is happening on the federal and the state level and local level?
- [32:51]
D
Yeah, unfortunately it's taking place across all levels of government, local, state and federal. And as you've seen there, I think have been about 54 total data center moratoria proposals throughout state and local levels, in addition to the AOC Bernie Sanders Federal Moratorium Act. So you're seeing a lot of pushback on the federal level. And what we've noticed in particular, here's a great example is Kevin o', Leary, poor guy, has really taken a beating with his data center that he's building out in Box Elder County, Utah. What's interesting though, and he talks about it in this exact clip on Twitter today, he actually mentions an organization that's directly implicated in our research. It's the People's Dispatch, which is part of that Singham network. The Singham network again appears to have really close ties with the ccp. That's the findings of different members of Congress and several House inquiries into Neville Singham. So what we're finding here is that People's Dispatch, which is one of these nonprofits that I mentioned, has been very active on the ground in pushing back against the box. Elder county build out in Utah, for example. We also know that Code Pink, another one of those nonprofits that have been implicated by our research, they've also been pushing back really heavily against data set and build outs, not only in places like Utah, but Louisiana as well. So we're seeing it take place across all levels of government. It's not just federal.
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A
So I'm curious what their talking points are because, you know, it's, it's, it's weird. To me, that the water usage is so resonant with people, when to me, that seems the most spurious and, like, weakest argument against data centers. But, like, what are their talking points? Power rates? Is it water?
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D
Water?
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A
Is it land usage, noise? Or is it all of the above?
- [34:36]
D
Yeah, it's all of the above. And their talking points are most oftentimes built on misinformation. They say that a lie can get halfway across the world before the truth has a chance to put its pants on. And you're definitely seeing that play out right now with the data center debate. You guys probably saw AOC went before Congress just last week, and she held up a dirty jar of water as if data centers themselves, as if the machines there were polluting the water, which isn't the case. There's construction going on. But construction of a data center is hardly any different than construction of any other kind of infrastructure being built out. So what's happening is you're seeing a lot of misinformation. For example, you mentioned water usage. They found out that the statistic going around about data center water usage actually overestimates data center water usage by a thousand x. And yet those are the kinds of talking points that these nonprofits are pushing out and that enemies of the United States are pushing out to get the American public to be against data centers. And so you see, the water usage is a good talking point for those who are opposed to data centers, even though a lot of what they're saying is based on misinformation. But electricity price is another one. We need to recognize, too, that with electricity prices, President Trump actually convened all the major AI companies in the United States and had them sign a ratepayer protection pledge in which the largest AI companies, whether it's Meta, Google or OpenAI or many others, they've all agreed to bring their own power and to do everything they can to prevent electricity prices from going up on American citizens. Because we need to win the AI race, but we need to do it in such a way that still puts American workers and communities first.
- [36:17]
B
I think that's one of the more legitimate concerns that I've seen. And it makes sense that if I were a total hypothetical here, of course, if I were a foreign actor trying to demonize this technology, it seems to me like the climate arguments are still there, but they're very much on the periphery of the argument. Whereas the focal point is, this is going to make your life more expensive. It's not just going to take your job, it's going to Raise electricity rates in conjunction with that and make you worse off. And do you get the sense that some of those climate change arguments are not as strong here? I know that like these dark money groups often are funding similar arguments against the climate, but do you think that features as prominently in these campaigns?
- [37:00]
D
There is a climate aspect to this to be sure. However, I think exactly what you mentioned, it's affordability that is the most resonant talking point. That's really powerful because Americans on the left and the right are hurting right now. The last thing they want is their electricity prices to go up. But as we've seen in many places, data centers have actually decreased the price of electricity. Governor Burgum, or I should say Secretary Burgum now, he was talking about build out of an AI data center in his state and how by bringing in a data center it actually lowered the price of electricity. And in addition to that it helped induce investment into the county where it was being built out. What was interesting about what Governor Burgum said, beyond just lowering the price of electricity in certain places in his own state, is that he himself corroborated our findings that there is a foreign influence effort here in the United States to turn the American public against data centers. He seemed to cite not necessarily our report, but it seemed like it was potentially some kind of intelligence information that he had access to. But I think that just goes to show that it's not just our findings. It seems to be the findings of independent sources within government that there is some kind of foreign activity involved here.
- [38:08]
A
You know, the AOC dirty water jar is very resembling my family long history in oil and gas. We've seen this before with hydraulic fracturing. I almost identical like you know, imagery of holding up dirty water. Now there is some like merit to these claims, but it, they're, they're imprecise. They're used to largely like mislead the public. But zooming out, what are the stakes here like geopolitically, freedom versus censorship? Is this America versus the ccp? Is this the free world versus the censored world? Opine on this. Like what's at stake here when we're talking about who builds the future of AI.
- [38:56]
D
I'm so glad you asked that question because I think that's something as a bitcoin and AI community that we're not explaining sufficiently is exactly what are the stakes with the AI race. We constantly hear we need to beat China, but the American people, much less people in the AI industry, often don't understand or articulate at least what exactly that means. So the stakes are huge here. And that's simply for the reason that the way we build our AI in the United States is remarkably different than the way they go about pursuing AI in China. Here in the United States, we want our AI models to be built on the principle of freedom of expression. We want our AIs to the best extent possible, to pursue the truth. That's not how they're training AI models in China. They're actively censoring all of their AI models. You can download Deep Seq today and you can ask Deep Seq what happened to Tiananmen Square in 1989. It won't give you an answer. It will either say, I cannot respond or it will give you a vague response and then quickly try to change the subject. This is critical because AI will be the information layer of the global economy. And we need that information layer to be free, to be open, to be uncensored. And if China wins the AI race, I can guarantee you that the information layer of the global economy will be anything but free, open and uncensored. It will be the most censored information layer that we've seen. And I think as a small taste of what a world dominated by Chinese AI would look like, is actually TikTok when it was under full Chinese ownership. You all might remember that when TikTok was essentially controlled by the CCP, they effectively had a knob on American public opinion, at least amongst a significant portion of the electorate, where they could amplify certain issues by juicing the algorithm to push out certain things that would really agitate voters. And so we saw what happened with full Chinese ownership of TikTok, then multiply that by 100. That's the world. If China wins the AI race, which is why it's so critical that we win.
- [40:53]
A
So I guess I'll double tap a bit more on this. You know, I think the American narrative is one of like pro economy economic growth, like capitalist endeavor. But it seems to me that there's only kind of a narrow portion of the AI folks talking about the adversarial nature of the US versus China. Do you think that the United States does not think adversarially enough? Do you think that we should be thinking more as a. We need to be wary and directly competitive with China about AI from infrastructure ideal ideology? I'm curious your thoughts on if we're, if we are adversarially minded enough and
- [41:46]
B
sorry, just to interject before you answer that, Sam, this, to me, this is a good question. And it's increasingly relevant. Considering Trump's recent trip to Beijing with Elon Musk and other tech, he seemed
- [41:58]
A
to be getting pretty friendly. So
- [42:02]
D
I think that's a great question, and I don't think we're thinking adversarially enough. China is really adept at presenting themselves one way to the world and then acting a completely different way internally. And so to the world, they present as if they just want peace and comedy with the United States. However, we know that they are intent on beating the United States in the AI race. It's their stated policy, going all the way back to 2018, that they see AI quote, as a handhold that they can use to essentially leapfrog the United States in technology and scientific research. So they see this as a generational opportunity to beat us at our own game. And because of that, it's clear that China's thinking adversarially, and we need to think adversarially as well. I didn't even touch on the military applications of AI, but that's just another reason why we need to win the AI race. Because if China beats us to something like super intelligence, then it's game over. It's game over for American hegemony and the land of the free and the brave. We need. If superintelligence is attainable in any way, it needs to be the United States first. It needs to be us setting the rules. And the only way we can set the rules is if we win that race over the long term.
- [43:19]
A
So I guess to wrap this up, you published what we call the Schizo chart, but it's a great chart, great report. Recommend everybody go to head to btcpolicy.org, read that article, you put it out and you've been. I've been on a, you know, bit of a talking tour about it since, but I feel like it doesn't stop there. Are you. Is there ongoing work for follow up? Are you. Are more things being revealed to you as you kind of become a focal point for this talk? Yeah, I'm curious, like, what's next?
- [43:55]
D
Yeah, this was just the tip of the iceberg, and that's what's most revealing about our efforts here. So, just as an anecdote, I. I think many people are familiar with the leftist streamer. Hassan Piker, he's actually being investigated by treasury right now for a trip that he made to Cuba last night. On his Life live stream, he actually mentioned Singham, who is the very top of Vector 2 there, the Singham network, and he describes Singham. As someone who has pushed a lot of political movements here in the United States, Hasan Piker has said he thinks that treasury is targeting him as a means to get to Singham. And so I think what will happen over the next few months here is that everything in this chart will be vindicated. We'll see just how deep the rabbit hole goes. And we're actually continuing to build out more information as it comes to light on a website that we're developing where people can view our chart in three dimensional format. They can double click on different things and get a deeper background dive on who is Jody Evans. What is, for example, the 350.org organization that signed this coalition letter that became later the Moratorium Act. So there's definitely a lot more work to be done here. We're just glad that we could get the conversation going with this because it's a conversation that needs to be had. I think a lot of people had this vague notion that China was involved in some way, but through our research, we've made that a concrete and irrefutable fact that China is actively working to put its thumb on the scales of this conversation.
- [45:22]
B
It's almost like you could come up with like an axiom, xi's Law. If it's consequential, China is meddling in it somehow. You know, also with the Hassan thing, just a good reminder, all your favorite streamers who are political are astroturfed in some way. We're the only ones who aren't astro.
- [45:38]
A
Yeah, we're the only ones who are.
- [45:39]
B
We're the only real.
- [45:40]
A
By the way, Hassan. Come on. The pod. We'd love. I would love to talk.
- [45:44]
B
I would, I would. I would like it, I think for maybe a different reason. Anyway, Sam, thank you so much for joining, man. Great work on this and we look forward to any additional findings. We'll have to have you back on if another bombshell drops.
- [45:58]
D
Sounds great. Thanks for having me on, guys.
- [45:59]
B
Thanks.
- [46:00]
A
Thank you.
- [46:00]
B
Sam, should we, before we do our ad, read here, Charlie, should we go ahead and throw that Kevin o' Leary video up? Really?
- [46:06]
A
Oh, yeah, let's throw it up. Yeah. Because he referenced it. This is. This is useful and interesting. Let me pull this up.
- [46:17]
B
So before Charlie hits play here, the context here, per what Sam was saying, Kevin o' Leary is getting interviewed here and he's basically saying, you know, he has like 12 million followers across all of these different accounts on social media, including ones he's affiliated with, aren't his official accounts. And he said that one of his engineers noted a like 10,000% increase in DMS to those accounts over a few day period. And this is him describing what they found.
- [46:41]
A
Yeah, I actually think I got the timestamp of the section. Sam reference. Here we go.
- [46:47]
B
The content itself was coming from two batches. Two like the actual pixels. The images were from the Party for Socialism and Liberation. And the People's Dispatch, I'd never heard of them before. You do a search on them, you'll find them under investigation by multiple branches of Congress. Most of the within the IP addresses in Utah were coming from two IP addresses, Alliance for Better Utah and one called Elevate. So we found out that alliance for Better Utah was actually a tax filer. And we went to the IRS Form 990s, which are public, and we started to drill down into what the filings were and lo and behold, multiple filings through multiple entities all over the world, all going back to something called Arabella Neville Singham under investigation, multiple branches of the government.
- [47:46]
A
Oh, I didn't realize he showed the. The bpi. Oh my God. Amazing. So, wow. Shout out.
- [47:52]
B
Yeah, shout out to bpi. And we, we won't play the rest of the clip, but I just like learning more about the ways in which these webs of dark money are spun. And I will say to like what Sam was saying about, you know, I feel like there's like was this intuitive feeling that people were. Knew that there was something going on. I mean, I just assumed even before a lot of this stuff started breaking that like obviously some of our adversaries like China are paying people or disseminating money to try to wage a narrative war on this issue. They've done it with basically everything. They do it with a lot of identity politics stuff. They have historically, they've done it with climate. And once you start seeing it, you can't unsee it. And like I don't have any evidence to back this up, but like an AOC's tweet or the clip of AOC with the dirty water from a Georgia data center. Right. If you go to some of the tweets about that, there are people who were taking pictures of filthy water and posting it. Right. Maybe this is a Flint, Michigan all over again. A Flint, Michigan debacle all over again. But I will say the claim on its face makes no sense because that's a water treatment issue that has nothing to do with the data center. And so when I saw those tweets about these people like, you know, publicizing their problems with their water, it does make me wonder. It's like, is this just Astroturf? And there are many things like that on, on Elon Musk's Twitter, by the way. That was supposed to get rid of all the bots.
- [49:22]
A
Yeah, but, and you know, before I get totally dragged for being one sided, both sides do this. It's just important to, to call a spade a spade.
- [49:34]
B
And I do want to double dab on that with the streamer comment. Like it's not just the left wing stringers streamers, y'. All. I'm not Uncle Colin putting on his tinfoil hat.
- [49:43]
A
But like no, you don't have to go, go on, go on kick or whatever and be like, oh yeah, these people. That dude does not actually believe the things he's. Anyway, so enough about that. If you're a streamer and you're hyper political, come on the show. You can't say as many swear words but we'd love to chat with you about AI. Enough about that. We, we still got, we got, we still got some news. We're going to talk about terrible in just a moment, but before that, a word from our sponsor, Luxor.
- [50:20]
B
This episode is brought to you by Luxor's Commander Bitcoin miner management software for enterprise operations. Commander gives you real time fleet monitoring bulk remote commands across your fleet and intelligent miner that's an automated profitability engine that runs every five minutes and adjusts your power settings to ERCOT mark or to energy markets and live hash rate markets. ERCOT back tests show 10 improved profitability with intelligent mining over binary mining. Commander is 100 per megawatt or a 25 basis point pool fee adder. Roughly half the price of competition. And you can try it for free for 60 days. Go to Luxor Tech forward slash Commander to learn more. All right. Out of politics and into finance. Charlie, we're done being political talking heads on today's show. We've actually got some updates from Terra Wolf and the AI and HPC market. Terra Wolf is signed or has signed a deal for a roughly 100 or 1 gigawatt data center in Kentucky. Shares prices of Wolf jumped 11% after the announcement. So this is kind of, you know, straightforward little expansion announcement here. There is no tenant on this site. This is still very much in the early phases. But what Wolf did here is they acquired the acreage and they also have the power agreements in place for this site. So again it is more than 1 gigawatt planned. It's called, they're calling it the Muskie Data Center. 500 megawatt ramp up is slated to start in the second half of 2028 with an additional 500 megawatts in the second half of 2030. It comes with a power delivery pathway. Like I said, Kentucky Power is building a substation and that will be tied into an existing transmission network. And the service agreements were executed alongside the acquisition of the site. Charlie, second take before I show where this stacks up in Terra Wolf's current
- [52:20]
A
data center portfolio, I don't have too much of a take, except that Leopold Aschenbroenner Situational Awareness increased their terrible share.
- [52:32]
B
So was that in the most recent 13F that they did? Yeah.
- [52:37]
A
So they, they bought Wolf and. Yeah. So not surprised.
- [52:46]
B
No. And it's. We're kind of entering a. There was a lull in deal flow and then summer's springing around and it seems like all of these companies are starting to announce new deals, new financing arrangements, things like that. We've had iron and hut 8 in the news recently as well, but. So this will be Terra Wolf's second data center in Kentucky. They announced their first data center in Kentucky, the Justified Data center in Hawesville. That one will be 480 megawatts gross. 384 megawatts critical it. The total pipelines 384 targeting second half of 2027 for release in that their other big data center they announced recently is in Maryland, the Morgantown Data Center, Chesapeake Data. The critical IT for that is 800 megawatts and 1 gigawatt gross. And I do not see a timeline on that in front of me for my notes currently. But outside of that they've got this Lake Hawkeye In New York, 400 megawatts gross, 320 critical it. And then they have their Abernathy site in Texas and their flagship Lake Mariner as well. So as of this update, Terra Wolf with six data centers in its portfolio and a huge power pipeline announced, obviously investors liked it, but that site will take some time to come online so. So we'll be keeping an eye on that and also see if Terra Wolf has any add on announcements regarding this site. So if you're interested in this, keep an eye on Blockspace. We'll be covering the news as it comes out. All right, Charlie, I think we can roll on to strategy.
- [54:25]
A
But first, strategy. But not before a word from our sponsor. Lygo.
- [54:37]
B
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- [55:34]
A
It's not a day in Bitcoin without Michael Saylor doing a thing. So we're going to talk about what Michael Saylor did.
- [55:41]
B
So we, we covered this obviously on Jay's segment. If you're just tuning in now and you would like to hear Jay unpack some of this news, that's Jay Patel from Lygos. Go ahead and head back to our first interview. At the 12:15 mark, IT Strategies repurchases 1.5 billion of 2029 convertibles at a discount and lifts Bitcoin holdings to 843, 738 Bitcoin. So the spark notes for this right here, from May 11th to 25th of this year, strategy repurchased it's 0% convertible senior note that was due in 2029 or senior notes due in 2029 paid 1.38 billion in cash for this. There's about an 8% discount to the 1.5 billion outstanding on those notes. This has reduced the company's debt load from 8.2 billion to 6.7 billion. And at the same time, or rather concurrently with this, strategy raised about 2 billion through an ATM. From May 11 through May 17, strategy sold 2 billion under this ATM and bought 24,869 Bitcoin as a result of this at the market offering. Now the interesting thing about this ATM as we covered on the J segment, 1.95 billion was issued through its preferred stretch and only 83.7 million through the actual common stock MSTR. So about 95% of this raise came from Stretch. And as we were talking about with Jay, this makes a lot of sense to me right now. If you look at retail investors who are bitcoin Fanatics who are starved for gains stretch is yielding what, 11.5% right now annually. So it's easier maybe for them to sell into that rather than sell into a weak market for its common stock, dilute it further and potentially tank the price even more than and it already has been hit from this bitcoin bear market at the end of this strategy used cash for the debt repurchase. So it has 871 million in reserve right now. It'd be curious to see how they replenish that right because all of this at the market issuance, it's going into bitcoin they've talked about. They floated the idea of selling some bitcoin just to own the shorters and prove that they could do it without destroying the market. We'll see if they sell some over the coming months to replenish some of that cash position. But that 870 million will be instrumental to paying back some of these preferreds. And as we talked about with Jay, their debt position now is in a better spot. The other converse they have Open is a 2028 convert 0.625% coupon maturity in 9-15-2028. The conversion rate is at 183. Then they have a 2032. 2030 converts 2031 and 2032. I won't get into the details but the largest strike price for those for the convert portion of the note is $433 per share. That's the one that's due 3-1-2030. So like I said, we had roughly 6.7 billion spread across these now. So ostensibly not going to need that cash for those right now unless something really goes south maybe for them with the stock price and they feel pressured but overall just really need to build that cash position to pay out these preferreds.
- [58:52]
A
Yeah. So yeah cat some cash out the door it looks like. You know I'm not again I'm kind
- [59:02]
D
of
- [59:04]
A
a squinty one eyed man like leading a, a group of blind people here. But it looks like they cleaned up some of the weaker debt.
- [59:12]
B
Yeah and that's. Sorry to, to, to point that out one more time Charlie. We talked about with Jay the strike price for the Debt of the 2029 Converse was $672. Biker Strategies stock price is $163 per share right now. So for those notes to convert to equity, you'd have to be at or above that price to make it worth it for the note holders. So they were almost. Unless a huge bull market comes before them, they were almost certainly going to have to pay this back in cash anyway.
- [59:38]
A
Yeah. I mean, Po Vincenzo on our stream last week, two weeks ago, said strategy is 1000 doll.
- [59:46]
B
His view.
- [59:47]
A
That's gonna happen.
- [59:48]
B
So we'll have to see what time frame, though, right?
- [59:52]
A
Oh, I don't know. You know, you know, I, I, I would say that in investing in comedy, the most important thing is
- [60:05]
B
timing. Timing that's not staying poor.
- [60:09]
C
Yeah.
- [60:11]
A
What, what's, what's the most important thing about comedy? Timing. That's a joke for my dad. Okay, thank you all so much for listening to Blockspace live. We are live starting next week, every single weekday, bumping the show back up from noon Eastern to 1pm Eastern, so you can catch us every weekday, Monday, Monday, Tuesday, Wednesday, Thursday, Friday, 1pm Eastern. Featuring quick hits on the latest in AI emerging tech, Bitcoin, in that order. And if you're listening on Coindesk, hit pause, go over to the block space feed and subscribe there so you can keep listening to our content. Otherwise, thank you for listening. I'm Charlie.
- [60:58]
B
I'm Colin.
- [61:00]
A
And we will see you on Wednesday.