← Blockspace: AI & Bitcoin
Blockspace: AI & Bitcoin
Semiconductor Smugglers, Google’s 200 MW Solar Deal, Iran War’s Energy Market Impact, Debunking Data Center Water Myths
01:14:51
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- [00:00]
A
Foreign. What's up, y'?
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B
All?
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A
Happy Friday and welcome back to Block Space Live, brought to you by Clean Spark. Big stories today, Charlie. We're going to start off as we usually do on Fridays with our Hash rate index update. Do a little stock update. But then for our lead story, Taiwanese nationals are in custody for forging documents to smuggle Super Micron devices with Nvidia chips to China. China, interesting story. And the latest in smuggling attempts to try to get across or try to break through the restrictions for trading for these Nvidia chips with China. After that little treat for y' all today, we got Udi Wertheimer on to talk about the vibe shift in eth. And then we will have Luxor's Director of Energy, Haley Thompson on talk about energy markets and the 4cp that is coming up in Texas. Following that, what else but strategy we're going to be talking about specifically their preferred stretch and people asking some questions after it briefly lost its peg and fell below $100. Not the first time it's happened, but people are starting to ask, does the math really make sense here? Following that, we've got a story on a Solar Co. Committing 200 megawatts of solar to a Google data center in Oklahoma. Charlie's got some really good stuff here for us as a native Tulsa boy. And then we will wrap up with one more note on AI data center water usage, fun fact, almonds and golf courses. Big footprint, Very thirsty, Charlie.
- [01:41]
B
That's right. Block Space goes live weekdays at 1pm Eastern. That's a slight shift back from this week. Live Every weekday at 1pm we feature quick hits on the latest in Bitcoin, AI, emerging tech and mining. Still, make sure to like and subscribe. Hit that notification bell if you're watching on YouTube for the push notification on your phone. And for those of you who are listening on CoinDesk, that feed is ending soon. We are leaving the Coindesk network soon. So make sure you go over to the Blockspace feed and subscribe there. So if you're listening on Spotify or Apple or Coindesk, go to the respective feed on Blockspace. Just search blockspace one word and subscribe to that. So you keep getting our episodes. This show is brought to you by CleanSpark ticker CLSK on the NASDAQ. More on them later on in the show. Let's kick it off with some Taiwanese oh, hash rate index baby.
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A
Taiwanese hash rate. Who is mining Bitcoin in Taiwan right now technically. So anyway, a lot of the hatch
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B
rate is Taiwanese because it's tsmc.
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A
Yeah, exactly. So anyway, we've got our Hashra index up here. Update here, brought to you by Luxor. We just had an upward difficulty adjustment plus 1.72% literally just happened like this morning or last night. This comes as hash rate is peaking back up above 1 zeta hash 1000x a hashes a second. But as a result of that difficulty adjustment and the fact that bitcoin is now resting at about $73,074,000, hash price is $33.51. $0.51 per PETA hash per day. I think the notable thing here, Charlie, is we've seen hash rate rebound recently and it's just in time for 4 CP to kick off in Texas, which will no doubt see some notable curtailment. I wouldn't be surprised unless there are operators deploying outside of the US to see hash rate kind of stagnate once again. We're still pretty far from the all time high that we set at about 1200 exahashes bouncing around here. We can see it draw down during these winter storms and with bitcoin's price getting hammered in February, but we have recovered to just above 1 zeta hash. I would be really curious to see what Haley thinks when he comes on about where we're going to be headed over the next four months as we enter the hottest stretch of the year for the southwest and particularly Texas.
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B
Yeah, maybe this could be a 1, 2, 3, 4, 5, 6 punch to the hash rate decline over the past five months. So shout out hasher index for covering that. Let's go to chip smuggling. Colin, one more update before that. I keep trying to go to chat.
- [04:42]
A
I mean it's a, it's an interesting story. That's. I think that's why we want to get to it. But we just wanted to do a quick stock update because a lot of the bitcoin miners moving into AI have been ripping this week. The biggest gainer so far according to TradingView on the five day here is keel on up nearly 21% followed by hut 8 at 18.6%. Bit deer at about 17%. Bit deer coming back into the fold. They've had a pretty tough few months, tough year I would say. And they've really been left behind recently as a lot of their peers have outpaced them. But they are, ooh, wow. Ticking up to just over 17. These prices are moving in real time. We got Clean Spark at 13, Hive at 13. Every single stock that I have up here though is up the only laggard being Mara at 5%. Hard to call that a laggard, though. Still a green week. So a great week for bitcoin mining stocks. We've seen. You know, I think this trade kicking back up. There was a lull in Q1 for deals and for financing, but it's all back in the news now and everything is ripping except bitcoin. So if you needed. If you needed a reminder that if you're sidelined. I'm not gonna. No, I'm not gonna say that because this, you know, it's. It's getting pretty top heavy over there, man. This. This. I. Every time I think they can't go up any higher, they just continue to rip.
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B
So that's when you buy more. Because Colin.
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A
Short.
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B
Colin's getting calling.
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A
This is when you go to short data center stocks. I cover them for my job.
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B
It's actually why.
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A
It's. It's. I want to be impartial, Charlie. I can't. I don't want any exposure to this. Only the highest journalistic integrity here at Block Space.
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C
Yeah.
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B
Okay. We get to go to Taiwan. Taiwan.
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A
We get to go to Taiwan. All right, so this is. Oh, thank you. This is coming at us to from Bloomberg. Taiwan seeks to detain three in Nvidia smuggling crackdown. I'm going to try to be quick here because there is a lot to unpack. We'll try to be efficient. So Taiwan's Keelung District Prosecutor's office has detained three people. I didn't, by the way, I said they were Taiwanese. I actually don't know if that's confirmed, so I want to just go ahead and clear that. But the Taiwanese officials have detained these people only recognized or only disclosed with the surnames Yu, Wang and Chin, for allegedly forging export paperwork to ship super micro AI servers with Nvidia chips to China, Hong Kong and Macau. Now, some background here. There have been restrictions in place for. In the US for US companies specifically for shipping these next gen GPUs and AI chips to China since 2022. Since then, though, experts estimate roughly 140,000 advanced chips worth 5 to 7 billion dollars were smuggled into China in 2024. And the Taiwan case is now. This one is now the seventh of such prosecutions in the US And Asia. Now, the interesting part about this is that there aren't actually any laws on Taiwan's books against shipping ships to China. That's a U.S. law. So the article states that the prosecution here could rest on the fact that they forged paperwork which is illegal under Taiwanese law. And so that is, I would imagine, what the prosecutors will go after when they bring this case to court. And for the actual volume, it was somewhat smaller than you would expect. There were roughly 50 super micro AI servers valued at more than 15 billion. There were 12 locations that these officials searched. And the searches and the crackdown took place on May 21st through and 22nd. The other interesting part about this is that prosecutors suspect at least one shipment in Nvidia chip successfully reached China after being exported to Japan. So these smugglers are starting to rewrite the playbook. Usually they'll go through other Southeast Asian countries like Thailand, but now they are starting. Since there have been crackdowns with those shipping and smuggling routes, they're starting to look to other avenues, other surrogates to get these chips to China. Last point here. Super Micro, it's a US listed company, sits at the center of currently the largest chip smuggling prosecution in U.S. history. A DOJ indictment unsealed on March 19, 2026 charged Supermicro Co founder Yishuan Wally Liya. I'm sorry, guys. And two others with conspiring to route roughly $2.5 billion worth of Nvidia equipment to China through a Southeast Asian shell company between 2024 and 2025. Again, this is against US criminal code. It is not currently illegal in Taiwan to do this, which creates a kind of a legal gray area. And Jensen Huang of Nvidia was asked about this recently in Taipei. He said, look, we do business with Super Micro, but ultimately they have to comply with law too. We don't think they should be doing this, but we can't really do anything to stop it. Charlie, what's your take?
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B
Yeah, I have a few takes. I'll reiterate what you said. One of the. So it's like it's not like that Taiwan has a ban to China is the US export controls on Nvidia chips. And so that does, as you say, limit the actual like jurisdiction that can be applied that the jurisdiction like laws that can be applied here. Which is why they weren't found guilty of like circumventing export controls, but rather
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A
by what was the exact forging documents. So they basically said we're going to be sending these somewhere else, I assume. And then they ended up sending them to Hong Kong, Macau.
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B
Exactly. And so I think this actually highlights something because as with all types of smuggling and fraud, whenever there's demand that they will figure out how to circumvent it. And this is kind of I can Almost like make analogy to like the drug trade and drug smuggling to the US where like if we close down the border they'll get high powered subs or planes to fly in. And I think like the American like legal arm being limited to just, you know, export controls within our own borders, when those chips are manufactured outside of our own borders does mean that there's, it's probably going to be more difficult to control these than a lot of people think. So it's not like we just shut this down temporarily. I think that this is probably just going to continue in that. What is it? I think it's 4 to 5 billion.
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A
Is that a total that you came up with is how much has been smuggled all time?
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B
Yeah.
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A
Right.
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B
I'm sorry, 5 to 7 billion figure of like cumulative smuggled chips. I think that's now a floor. So this number is just going to get higher, it's going to get bigger.
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D
Yeah.
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A
And the Chinese are going to find a way to do this probably. Right. I mean they are masters of, of getting sliding past the rules, so to speak. And we know about their, you know, kind of beltway programs in places like Africa where they, where they, you know, offer these loans for infrastructure, then end up taking control of the infrastructure. All that being said, they're very crafty and so they're going to find a way to get these chips. There's a national interest to do. So that doesn't make it a good thing. But to your point, Charlie, it's kind of like drug smuggling. How do you put the cap on this? Especially when you consider a lot of these companies are publicly traded in the US Hence they are, they are subject to US law. But like you said, all of this is made in Taiwan and it creates a really interesting kind of conundrum here where if you apprehend these people in Taiwan with Taiwanese officials, you have to find other ways to bring the boot down on them if you want to squash this kind of activity. So yeah, ultimately go ahead.
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B
I also just think it's like kind of interesting because like Taiwan is right outside China, so it's in the South China Sea. And it's kind of interesting that the America is on the entire other side of the world. And it's like we're trying to prevent smuggling of or circumventing of our own export controls from a country outside of ours to another country further away from ours. The logistics are just not in our favor, I think especially given that Taiwan is like this rising geopolitical like, you know, like magnet, magnet yeah, and it's, and it like sits at the center of all, all geopolitics. You know, it's not like, it's not like the, it's not like the American and Mexico, like, drug smuggling business had vast implications for like our, you know,
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A
you know, for our geopolitical positioning vis a vis technology. Right.
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B
Doesn't really affect the price of oil very much. Whereas this is like, I mean, it's. Taiwan is basically Arrakis. So this is basically, you know, the setting of Dune and we are, you know, the Padishah empire, trying to manage the export of the most.
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A
Does that mean China or the Harkonnen
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B
look like, like you said they were crafty.
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A
I mean, they are like Xi Jinping is sitting in like that oil bath, like slowly rising, like, like comes up. It's like how many billions did we smuggle this year? You know?
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B
Oh, man. Yeah. So.
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A
But you know, just to put a cap on what you just said too, Charlie, Taiwan is emerging as like you said, for a small island, it has immense amount of geopolitical significance. And the biggest question looming right now, especially after Trump's official visit to Beijing, how much is the US Actually going to want to defend Taiwan in the case of Chinese aggression? And I think a lot of people are entering, especially with the war in Iran, and they're entering into the idea that there might not be any fight at all. So it. This, you know, this sits. It's one. It's kind of like, you know, the elephant in the room with C4 strapped to its chest.
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B
Yeah.
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A
Everyone knows it's there, but they just kind of want to ignore it because the implications of it actually falling under Chinese hands are pretty dire, especially in this AI shift.
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B
I will say for the Dune fans out there, Gurney Halleck, who is Timothy Chalamet's weapons instructor after the Harkonnen betrayal of the tradies, did become a spice smuggler. So maybe there's a Gurney Halleck somewhere in Taiwan smuggling Nvidia chips to China. That's my take. I think we actually get to the real news. Our character driven story of the day is that David Hoffman sold his eth and we have no. Nobody else more perfect to talk about this than our boy Udi Wertimer. I'm gonna bring him up on stage. Udi, welcome to the show. Hey. Hey. Well, welcome. It's. I did not realize this, but you
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D
guys actually the resident David Hoffman expert also.
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A
Do the orange glasses mean you're bullish? Bitcoin here.
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D
Those are my ftx Classes.
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A
Okay, so you're bearish Bitcoin. Everything's about to fall apart. I got it.
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D
This is not a forward looking statement.
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B
So first of all, udi, you know, we scheduled you to rip on the Hoffman news, but actually, you guys, I'll let you throw a bone here. You guys just launched me an announcement today. I'll let you do a little CTA to that.
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D
Yeah, thank you. We launched today. It's funny, we announced it like many, many months ago. And finally we launched today. The team did, in my opinion, a really great job. We launched the Wizard Portal, which is a marketplace where you can buy and sell and trade, specifically our collection, Separate Wizards and Quantum Cats. What's really interesting about this one is that you don't need to be an orno's expert, you don't need to have an Orno's wallet, You don't need to interact with any of that at all. You can use whatever wallet you have. If you have Phantom wallet or MetaMask or whatever you have, you have ETH or SOL or USDC or whatever you happen to have in your wallet, you can use that. So it was really built from the ground up to make it easy for people to just hit the ground running. If someone doesn't have a crypto wallet at all or just not accessible on their phone or whatever, then they can also use Apple Pay. They don't need to install anything. They can just go and have fun. I kind of wish we had that like two years ago when ornos were kind of just starting out, because I think it's actually, I don't know, the nicest NFT experience I've ever seen on any chain, really.
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A
Speaking of that, I mean, with a vacuum left by Magic Eden shutting down their marketplace for ordinals, I mean, are y' all going to expand this to other collections? Is this kind of like a wait and see, feel it out, see where the demand is?
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D
Yeah, we, you know, I want to see how the community reacts to this first. So this is really like, the first stage is really something for our community. But if people like this then, then yeah, this was actually built kind of from the ground up to support any collection on any chain. It's really easy for us to curate and add any collection that we would want. So I can see that happening. Yeah.
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A
So let's dunk on eth.
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B
Well, look, I think, yeah, obviously we're gonna, it's easy to dunk, so we're gonna, we're gonna do a little dunking. But I think a More interesting conversation is where is David Hoffman, right? Or, you know, what is your take on his takes?
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A
But I think just some context for that before we get into David Hoffman. For those who don't know, David Hoffman runs like the biggest ethics ecosystem podcast with
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D
Ryan.
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A
Ryan? Yeah, I don't know his last name though. Anyway, it's called Bankless. They were huge in the D5 summer in 2020, 2021 when DeFi was popping off. And he's been a huge Ethereum bull. If you've ever heard these Ultrasound money thesis that came from David. And now he's completely liquidated his position.
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B
They're basically like the TFTC or like the hardcore bitcoiners of Ethereum, if I make the comparison. Okay, so David just dropped this piece this week. Quote, why I sold my eth. David, I thought this was a joke. Udi, David actually sold his eth. What was your first reaction reading this?
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D
I assumed it was a troll, I guess, in the beginning, but after assuming there was troll, I think my next reaction was just, you know, you guys mentioned how David and Ryan were huge during the Defi summer, and that's true, but the truth is they've been there before. And I, I actually think most people didn't notice because it was the crypto winter, but. But I actually think they played a really important part of energizing the Ethereum community during its previous ruthless bear cycle. And that's how they kind of, you know, be launch themselves into being like the gurus of the Defi summer. And I think they deserve some credit for that, honestly. Like, I think it's easy to think about just the, the way things happen during exuberant bull periods, but honestly, I think they, they played a really important part for the Ethereum community and it makes sense that the community will need some new faces. That's just the way it is.
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A
Do you think the community needs new faces or that ETH needs a facelift?
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D
I mean, both. I think me and Charlie talked about this a few times. Right. It seems like Ethereum is playing out the same kind of thing that Bitcoin went through in maybe 2021ish, where a lot of, you know, there's just a lot of this influencers who are,
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A
I
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D
don't know, super maxi ultra podcasting. Not much else going on other than podcasting in Ethereum right now. And it just, it points to, like, it's not the podcaster's fault. It's not their fault that there's nothing to podcast about. Like, it's just there's nothing going on. And. Yeah. So I think things need to shake up quite a bit. And it's just this. It's just the same thing happened in Bitcoin, too. If they can smooth over that period somehow, then maybe the future could be promising. But, yeah, right now, it looks pretty grim, but it is. Okay, so what, We've got the Ethereum foundation thing. Everybody's leaving. We've got podcasters like Rage quitting, but it's, you know, those are things that need to happen. So, like, the fact that it happens is not necessarily bad. I guess the question is, what happens next?
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B
You know, one of the things David was talking about was that there was. It's almost like he implies that there was, like, a path to success, but they weren't able to execute on it. Like, it's a coordination problem. And I'm kind of curious. Yeah. Like, do you agree that there was a path to success they weren't able to execute on? How do you qualify this? I don't know. Like, what. What are your thoughts here?
- [22:57]
D
Yeah, I. I don't. I don't buy that. I personally think that's cope. I. I understand why he kind of. I think he kind of feels like he needs to say that. I don't know. I personally think that the best way, in my opinion, to handle those things is, like, just, like, you know, just log on and say, hey, I was retarded. Like, I was wrong, and now I know why I was wrong and let's move on, and people like that. And I think there's, like, I'm not personally a fan of, like, oh, I was right about everything, but the ecosystem fucked up. Like, okay, all right. I mean, fine. I think it's scope.
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A
Yeah. And it kind of runs afoul to me of, like, one of his other theses here. And sorry if I'm getting ahead of some of your questions, Charlie, but, like, point is this idea that the value doesn't accrue to ETH itself, it accrues to everything built on top of eth, which, to me, that was always the plan to build things on eth. So I don't know how you can say both of those things at once. That we had a roadmap and didn't execute properly. But by the way, the roadmap was to build things and everything accrues to the top layer instead of the bottom layer.
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D
Yeah, they really, you know, specifically, David and Ryan really championed this idea of ultrasound money and how that was all about how the monetary policy of Ethereum would be basically retooled to capture value in the Ethereum system. And
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B
I got there to see that. Everybody listening. I have the David Hoffman eat his ultrasound money with a screenshot of the Ultrasound money dashboard with UDI replying in 2022, by the way, day after FTX glasses wearing, David, my man, not now. And David replies to udi, udi, my
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D
man, when have I ever listened to you? It's a good reply.
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B
Yeah,
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D
yeah, they had this ultra. That's a good pick. I was exactly just talking about it. They had this ultrasound money meme that was, I guess, all about how ETH would capture the value that is created on Ethereum chain. And I mean, me and David had like so many threads and I went on his podcast back then and stuff, like I always said, like, look, I just don't see how this is going to work. You guys have like, conflicting things. Like on one end you're saying we're going to capture it. We're going to capture the value because the fees are going to go up. And when the fees go up, we burn eth and we burn eth. That increases the price of Ethan. But on the other end, they're saying we're doing all those L2s and all the, all of the value will happen. Like all the activity will happen there. So if all the activities on L2s, how are the fees on L1 going to go up? Which one is it?
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B
The irony at the end, it was neither. The irony, udi, is that Ethereum has triple the fees of Bitcoin right now. And then the next two protocols are actually, we're talking 80% of the top 10 chains. Finger quotes by Revenue are all on ETH.
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D
And this, this looks outdated, though. Not, not the numbers, but like, I mean, I think it doesn't include a lot of the newer apps.
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B
Okay. Liquid. And yeah, it might be outdated, but directionally, bitcoin fees are dwindling.
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D
It's definitely doing better on fees than Bitcoin is. But, yeah, why would that accrue to eth? And also doing better than Bitcoin is not exactly. It's nothing to write home about in terms of fees. So, yeah, I think that that just didn't play out. And some of it you can say is because of the, I don't know, the policy of the Ethereum foundation or whatever. But some of it is also. It just doesn't make sense that this would happen.
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A
You mentioned the Ethereum foundation, udi, and unless Charlie has a closing question, I think that might be a good place to finish it. I mean there's been a lot of griping about the kind of morelessness and the directionlessness of the Ethereum foundation recently. I mean how much of that is fair and how much of that is, like you said, just cope for people not being able to rationalize why their preferred asset hasn't done what it was advertised to do?
- [27:47]
D
I actually think in the Ethereum community probably most people's criticism towards the EF would be that it's too kind of moralistic, not that it's lacking morals. Like too idealistic kind of is probably how people would describe it. Like I've seen a lot of people throwing the C word communism when it, when it relates to the Ethereum Foundation. I think those criticisms are true, pretty much all of them. But also like, I don't know if this has to do, has anything to do with it. I think, I think there's like if we zoom out, it's not really just an Ethereum thing. Like Solana is not exactly doing great either. I think that the idea of the general purpose smart contract platform does not seem appealing to anyone right now. There's value that seems to accrue maybe to applications if they're good. We have maybe in crypto right now two or three of those and then that's it. I think that makes some amount of sense and there's just not. I don't think anyone feels like it's very promising that there's going to be some new exciting. Maybe someone will come up with one new primitive or two that have become very popular. But I don't think anyone feels like there's going to be this explosion of 500 new apps on Ethereum or Solana. So that's probably part of why there isn't a lot of forward looking excitement on those as a platform. They just didn't prove themselves as platforms. There's a few apps but nobody thinks of Ethereum as the platform of the future or Solana or anything for that matter.
- [29:37]
B
It really does feel like it's essential. Defi is like all time sentiment low that I've seen it a lot of things hitting at the same time. I want to tie this back to Bitcoin in some way. So David, I do think David is interesting and has an interesting and compelling perspective. Calling identifying a coordination problem. This is a thing all blockchains have. Bitcoin is the prime example of this. Bitcoin has a coordination problem depending on who you talk to. Do you think there are analogies or tiebacks or lessons bitcoin can learn from what's happening in Ethereum right now.
- [30:27]
D
I don't know if I would describe the situation in bitcoin as more dire, but I would describe it as. I think people just have accepted that there's no. On Ethereum. You can still complain about the Ethereum foundation with regards to Bitcoin. There's really no point complaining about anything. It's just like when it comes to coordination around any kind of policy or decision making that just doesn't exist at all. I think people are coming to terms with that.
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A
Maybe.
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D
I think maybe even bitcoin core themselves are kind of coming to terms with it. I don't know. But like, I don't know if it's good or bad. I guess it's. I think it's good if, if everyone knows what things are. I think that's a good thing. But. But it is what it is. Like you know, Michael Sailor been talking about it a lot. I don't like, I don't think, I don't think he's going to try to push for change and is. And if he doesn't, then I don't think anyone will. I mean I don't think. I don't know. It's. Yeah. I don't know if there's anything to learn from Ethereum in that sense. We're just like further along on that curve, I think.
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B
Yeah. Well, whatever they're doing to make the price go down, we need to do the opposite. So we need to get our best people on this booty. You got to get on this, figure out whatever they're doing and do the opposite. Make bitcoin price go up and when everybody and everything could be. And we get the happy path. The shining city.
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D
400k by the end of the year.
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B
Yeah, 400k by the end of the year.
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A
Didn't say which year.
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B
End of the year.
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D
Not this time.
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B
Thank you so much for coming to the pod. Really appreciate it.
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D
Thanks for having me.
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B
Best of luck with the marketplace. Don't sell those glasses. They will be in a museum someday. Cheers.
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A
See you.
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B
Gotta love udi. Man of a million takes. Let's go to Haley Thompson from Luxor right after a word from our sponsor CleanSpark.
- [32:38]
C
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.
- [32:54]
A
This is our proof of work and
- [32:57]
C
we are setting the stage standard for what's next. Learn more about the intersection of Energy and bitcoin@cleanspark.com.
- [33:10]
A
All right, let's get Mr. Thompson up here.
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B
Haley, welcome.
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A
Welcome back to the show. Hey, guys.
- [33:19]
C
Great to be on again.
- [33:20]
A
Yeah, thanks for joining, man. Very timely number of things we want to get through today. But first, I really want to kick it off with impacts of the Strait of Hormuz closure and the Iran war. Obviously, most Americans know that the price in the pump has skyrocketed since this took off. US Is now exporting more oil to allies in Europe and Southeast Asia. Curious outside of that, if there are any impacts you're seeing in energy markets right now that have some form of ramifications for bitcoin miners and data centers.
- [33:54]
C
You know, and I think it's more like, so the straight Hermes is like obviously the flashpoint or the focus, but, you know, actually think if you look at, you know, broader policy. So also kind of what's going on in Venezuela, you're, you're kind of seeing, you know, like a pushback against foreign oil or basically America just kind of take charge and become, you know, self supplier of their, of their own oil and also kind of limiting the supply to what you might call their adversaries or their rivals for, you know, for these other sources of oil, kind of dictator oil. So it's a, it's a big macroeconomic shift, big geopolitical shift. But I mean, what's really happening is, you know, America is basically securing, you know, securing their energy and they're making their domestic production more viable. Yeah. So we're seeing it at the pumps. But, you know, I would say I'm a big believer, as I've kind of talked before on the show, in the, in the power of the markets. And so when all of that goes up, then you're going to drill more and you're going to, you're going to increase the supply. You know, I think, I think US is already at record supply, but they have lots of oil. It actually makes some sources of oil, some reservoirs, more economic. So something that might not even be considered a reserve is suddenly a reserve. And so you could see the market adjust based on that supply. And then in terms of getting into bitcoin, electricity. It's interesting that when you drill oil, a lot of time you get gas, and that's not necessarily something you wanted. In certain areas, like Texas, in certain areas in Canada, that gas is considered a nuisance. And so you kind of get localized oversupply of gas because the people producing the gas aren't doing so intentionally. They are doing. It's a, it's a byproduct of oil production. So higher oil can. Can conversely lead to lower natural gas prices, which, you know, in theory can. Can actually put a. Can put like selling pressure, you know, can bring down electricity prices because gas is still the marginal unit.
- [36:01]
A
Yeah. And you know, oil has its own difficulty adjustment via the market, as you know, miners always like to. And going back to the natural gas element of that, that's a really good thing to point out that more drilling as these wells become economically viable means more gas. Also, as I understand it, a lot of the gas in West Texas and like the Permian Basin trades negatively a lot of the time because there's just no way to get it out. So counterintuitively, despite the rise in oil prices, the takeaway here for me, at least from what you're saying and from what I've looked at, is that this really is not impacting energy prices for bulk consumer residents at this point.
- [36:42]
C
Not at this point. I mean, I think if the USA wants to position themselves as an energy exporter and in gas, so if they start doing more export terminals, more compressed natural gas, that might have a big impact because then you take this oversupply. But it's not just the domestic demand. It's not just domestic demand, but you're actually exporting it, which means there's less supply domestically. But then of course, which I'm sure we're going there in this AI arms race, we're seeing the hyperscalers just kind of skip the grid in some instances, like Xai has, I think it's Georgia, but they have this massive data center and they're basically just tapped to gas pipeline and brought in the turbines and supplied themselves. So that could actually have a major impact where if this becomes a trend, which it is becoming a trend, then the demand for energy and this demand for moving very quickly could actually raise natural gas and which conversely will raise electricity. And I think that that is a much bigger impact on bitcoin mining economics and just on power prices in general than the geopolitical impacts.
- [38:08]
A
So, Haley, one more question for me before I toss it to Charlie. You were talking during the hash rate index segment at the top of the show. 4 cps upon us in Texas. Hash Rate just peaked above 1 zeta hash Again, I believe for the first time over the last few weeks. It's been up there for the first time in a minute and there have been some proposed changes to the way ERCOT does things with the 4CP program. Are any of these in place for this season, what some of the proposed changes and will we see. So we won't see any changes this season. Business as usual.
- [38:44]
C
Yeah, this, this season's business, Business as usual. You know, we are seeing jockeying for how this program, you know, basically, you know, has, is the 2026 version. Does it kind of match intent? And so, you know, so if we roll back and like what is, you know, what is 4CP? So the, the grid is a very, you know, very expensive. Right. The, the grid is, you know, billions of dollars, hundreds of billions of dollars. Texas is a top 10 world economy by itself and somebody ultimately needs to pay for the grid. And so the design which is around for decades is essentially, you know, who should pay for the grid. And of course there's, you know, there's always going to be a little bit of jockeying, lobbying, you know, but the idea, the intent of this program, and it's not even a program, it's just kind of market dynamics, is that the people who should pay for the grid are the people who are using the grid. And then, you know, the, and then how do you measure that? And so traditionally they kind of said well let's look, let's look at who's using it at its capacity, at its peak capacity. Because the grid is built for the peak, you know, most of the time it's fine, but the grid has to be designed for reliability. So it has to be designed for these, these kind of extreme events. And so they, the, the idea of, and lots of other markets, not just ercot, have a version of this is they look, the, the idea was to look at who was using the grid when it was at its maximum usage. So when, and that's who should, that's who should basically effectively be paying for, for the grid and who should be paying these utilities for their infrastructure. And so they measure that, you know, in these four months of the summer. They basically measure, you know, the 15 minute window where effectively system wide usage was the highest. And that was, that was the intent, intent of the program. And as flexible load came along once the mechanisms and the incentives were well understood. Flexible load kind of said, well, we don't need to use the grid in these moments, we don't need to use the grid when it's stressed we can use our flexibility to not use power in these windows. And they're responding to the signals. And I actually view it as a very positive thing because it takes a lot of the wind out of the argument that Bitcoin is boiling the Oceans. But now a lot has changed. So Texas has an unbelievable amount of solar build out and the. Now, you know, so what. So part, there's a few reasons why they're looking at designing the program or redesigning the program. One is that, that you could argue that when the grid is the most stressed doesn't actually have anything to do with peak demand. It might have more to do with renewables or solar because that is, you know, that you get all this congestion. And so that one discussion is to shift it away from absolute peak, like just, just max load and start looking at net load. That's, that's one way of looking at it or one argument because saying that's actually when, when things are at their max. The other thing is we're seeing more and more. ERCOT is flipping more and more to a winter peaking market. So the idea that the summer months are, are the months which has traditionally been the case, we're actually seeing, we're actually seeing December, January. This is kind of when the grid is quite stressed. And you know, if you get, if you get these winter storms, if you get these polar vortexes. So the argument is it's not just the summer, it shouldn't be 4cp. And then finally I'd just say there is some politics going on where I think if, basically if a larger and larger segment of load can avoid getting charged, which is kind of what this whole, whole, you know, quote unquote game is about. For every megawatt you can curtail in those windows, you save about $50,000 on your energy bill the following year. So for 100 megawatt site, that's $5 million. Well that's, somebody else needs to pay that $5 million. So the firm loads, the non flexible loads are basically crying foul. And they want these data centers, they want these bitcoin miners to pay their fair share, so to speak. So a lot of it's lobbying and jockeying for, you know, if I don't want to pay the bitcoin miners bill. The counterargument to that is the bitcoin miner saying, well, we don't, we don't need to use, tell us when not to use, tell us like when you don't want us to consume power and we won't. Right? So like why should we be paying for something that we don't need to use, you know, in these critical windows?
- [43:23]
B
So Haley, you mentioned, sorry for putting on the spot. You mentioned there was, you know, study on foreseeable for proceeding for CP to talk like, identify which Sectors, which industries, which consumers of power are using it during these most stressed, highest percentage consumption moments, do you know which ones those are off the top of your head, do you like, do you recall which, which types of energy consumers were the most demanding during those times?
- [43:55]
C
So, I mean, traditional. So one amazing thing about bitcoin, I think I mentioned this on the show before, is that you basically get paid for every penny of work you do and then you can stop, right. There's no industrial process that is hard to pause. A steel mill, even a bakery, a chemical refinery. These kind of loads can't just pause right there. They grew in a batch, you know, so, so basically, so it's a lot of industrial loads don't have the ability to, to curtail on demand and to be as price responsive. And then honestly, you know, like it's Texas is very hot, the population is growing. People need to be running their air conditioners, especially in the middle of the day. There's a massive portion of this load that is just residential, like residential cooling demand. Office towers, you know, they, they can't be 100 degrees inside. So during the weekday they, you know, they're not going to turn off. There's, they're coming up with clever, like, more clever ways to kind of shave the peak. But, but so much of it is just, yeah, industrial loads and cooling demand, air conditioning.
- [45:05]
A
Well, it'll be interesting to see what happens this year, especially considering you were saying we're starting to see that shift more towards the winter months as batteries come online and obviously in the summer, you know, the solar. So we're going to rip. There's a lot there. But I'm really just interested to see what we get in terms of hash rate stagnation this year or, you know, if anything at all. But we'll, we'll leave it there. Haley, thank you so much for joining. Always appreciate the insights and you know, keep up the good work with all the energy stuff at Luxor, the energy dashboard, all the data is great. I know that it's not really your purview, but it's always a boon for researchers. So appreciate it.
- [45:44]
C
Well, thanks for having me, guys.
- [45:46]
A
Thanks.
- [45:50]
B
All right, we're going to keep rolling. We have stretch deeping and we also have solar in Oklahoma. But before that, a word from our sponsor, Luxor.
- [46:07]
A
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 power settings to live hash rate and energy markets. ERCOT back tests show 10% increased profitability with intelligent mining versus 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 to get started, go to Luxor, Tech forward slash Commander. It would not be a Newsweek Charlie without another strategy story.
- [46:53]
B
No, it's not a week, it's not a week, it's not a Friday, it's not, it's not a weekend without Michael Saylor doing something.
- [47:00]
A
Yeah, the Gigachad haunts your dreams. He's like the Babadook lurking in the attic, screaming about how you never sell your bitcoin even though he might sell some of his bitcoin.
- [47:11]
B
You don't tell you to sell your kidney his bitcoin.
- [47:14]
A
Yeah, he's telling you to sell your kidney, to sell your children into indentured servitude so that you can accumulate bitcoin or you can accumulate his stretch preferred shares. So anyway, all that aside, we have an article here from block space. ARCA's Jeff Dorman says Strategies capital structure has, quote, gotten out of hand. Now, what could Jeff possibly mean by this? I thought we were meant to be plan trusters. If you don't understand strategy, you are mid curve or subhuman. No jokes aside, though, he, Jeff Dorman tweeted a, you know, not super long, but a kind of thesis here about why he thinks that strategy is kind of cornered itself with these preferreds. The basic argument here that he has is, you know, strategy kind of could have just spent the next few years sitting on its common stock, accumulating bitcoin, diluting or taking on debt to accumulate more bitcoin. But instead it started issuing these preferreds, this digital credit, right? They have, I believe, five outstanding right now, but four, I think are really, really stretches. The one that's the most popular, but there are, there are a few others that have also gained some market traction. And now that he has those, as we've talked about on the show before, strategy has a fat dividend obligation each year. As it stands Currently, there is 1.5, roughly 1.5 billion in total obligations. Really, like 1.6 of that stretch accounts for 1.2 billion in dividends annually. Strike 112 million, stride 140 million, and Stryfe, 128 million. And 1 of the questions that Jeff has here is, okay, you have all of these dividends that you have to pay off. You have to get the cash from somewhere. You ended up raising $2 billion to give yourself a cash cushion so that you had Runway to pay these dividends. And then you go and rebuy convertible debt. He's very confused by this. I want to steel man. This. We had Jay Patel on earlier in the week on Monday, or sorry, Tuesday to talk about this buy. Jay was mentioning that it's kind of a good deal for strategy because at this time, that convert was way out of the money. The way these converts work to get, they get issued and the holder of the note can either redeem the convert at a time in the future for shares, or they can redeem it for cash. The strike price for the shares for this convert was like $670 per share strategy, last I checked. And I'll double check this here. Yeah, it's at 160 right now. It's actually up on the day. Wow. It surged. It's. It's up 5% on the day, but so there's a long way to go until you get to that point. And so right now the notes are trading at a discount. They were able to buy them back for 8% discount, roughly like $1.3 million.
- [50:20]
B
The preferred.
- [50:21]
A
This convertible note is the outstanding principle is 1.5 billion. Jeff says, you know, it's 0% coupon. Why would you do this? Part of the reason why you do this is because if that matures or if the holders require repurchase as early as June 1, 2028, per the contract, they would have to pay the full 1.5 billion. If they're settling it in cash now, you could say they paid 1.38 billion. It's 120 million. You know, Saylor could probably raise that in a day or in a week. You know, he could probably raise that in his sleep. The way that people have been pouring money into this ecosystem that he's been building. But at the end of the day, if you're looking at this from a pure, you know, if you're looking at this from pure dollars and cents, what they did does make sense. But it did dwindle their cash position. Now they only have 871 million. So the steel man for this is. It was a good. It made dollars and cents. The steel man for why this was a bad thing is maybe you would want to hold onto that cash and then pay down the dividends and then kind of kick that can down the road. Maybe you can refinance it or maybe even it gets even further out of the money and you can have a steeper discount on that convert. All that being said, Jeff caps off his post here. Quote, the only bull case is that underestimating Sailors capital markets chicanery has been a losing proposition for years. Maybe there was a plan. That plan may just be selling bitcoin, which we will have to do eventually. But if he does this while bitcoin is in a death spiral, it's going to crush bitcoin and microstrategy or strategy again. Why buy back the debt now and force your hand sooner than you have to? Maybe he's going to refinance those converts with new longer dated converts. He has sworn off converts, so I doubt it. But tldr, this is the first time that strategy, the common stock, mstr, BTC and preferred holders are really in a bind. Someone is going to lose badly here and it will happen in the next four months. I'm not really going to comment too much on whether or not I think that his forecast is right here. I think you can't say necessarily though that this is going to come to a head in the next four months because quite frankly, you don't know what bitcoin is going to do in the next four months. If bitcoin tanks over the next four months, then yes, this could be a very difficult position for anyone holding these preferreds and for strategy shareholders. But to me, I have to say this is a little dire. You know what I mean? And the one good criticism I think he does have is a lot of strategy is predicated on people kind of buying into the narrative and continuing to give Saylor money, right? But he's shown himself incredibly adept at playing capital markets. That's the one thing that strategy has always had compared to the other bitcoin treasury plays is they really licked the capital market game early and they played it to their favor. So if you think Sailor still has a rabbit in his bag of tricks, this was probably overblown. If you think that, you know, there's actually some sort of existential wavering of confidence in strategy, maybe you can say in four months out, but that that seems really too extreme to me. I don't think that we've seen weakening. And last thing I'll say about this, I think he partly posted this because stretch DE pegged from $100. You know, it's supposed to float around $100 per share, but it only went down like $3 and now it's back up. I mean we saw it back in, I believe it was November of last year. Dipped to like almost $90 a share. So we've been here before and the sky didn't fall down.
- [53:50]
B
You know what this feels like? It's really weird, but it's hard for me to exactly say why. But this feels a lot like tether truthers in that. Yeah, tether depegged sometimes, but you would not have wanted to bet against it. And it feels a little bit like sailors in a similar situation where, yeah, there may be some dicey gray, you know, areas and moments as this financial leviathan, which he produces does get spinning, spinning up. But you just don't want to bet against sailor right now. There's much better bets if you want to go long or short other things in the crypto adjacent ecosystem. There's so many much better things to try to bet on than Saylor going bust. Yeah, that's my take.
- [54:35]
A
I think that's a good take. It does kind of sound a little tethered truth to an extent. But to be fair to what Jeff's saying, if the math stops making sense, it could be very bad for this
- [54:48]
B
whole digital credit ecosystem, you know, Obviously, obviously. Like, yeah, there are some. It could go bust. Just feels like it's.
- [54:59]
A
But to say that people. But to like kind of intimate that the system is losing complete confidence and strategy, I think is not totally accurate for where we're at right now. Yeah, you know, maybe some yellow lights flashing, but no red light saying, hey, we're about to fall off a couple cliff. I could be totally wrong here. And if, if bitcoin gets cut in half, things start to get really dicey.
- [55:24]
B
It's not just sailor, it's not just sailing. It's like everybody.
- [55:27]
A
So anyway, yeah, yeah, we'll. We'll leave that there. Just some, some things to chew over. If anyone wants to come on and refute what Jeff said, we'd love to have you. Jeff Walton, if you're listening, come tell us why we're retarded for not aping into strategy where it's at right now.
- [55:45]
B
Also. Good, good. Hang with Coffee Zilla. That was a banger. Okay, let's go to the next story, which is solar in Oklahoma. This is my neck of the woods. And researching this story was pretty interesting. Very eye opening, enlightening, you might say. So the headline is and light signs 200 megawatt AC solar power purchase agreement with Google to support data center operations in Oklahoma. This would be down in the eastern middle of the state here. Kind of around the Muskogee area where a lot of other these big data centers are being built. Core Scientific has a big site down there and the details of the story are as follows. Enlightened renewable Energy through its US subsidiary Clenera signed a 15 year fixed price physical PPA with Google for 200 megawatt AC, rather alternating current of megawatts of solar generation in Oklahoma delivered to the Southwest power pool market. The power comes From Solstice, a 250 megawatt DC solar facility in Lafleur County, Oklahoma. The project has completed the impact study and is expected to receive full interconnection approval later this year. Construction slated to begin 2028 commercial operations targeted for 2029. A later phase would add 800 megawatt hours of battery energy energy of battery energy storage capacity. So a couple things here. One, solar produces DC and the deal is for purchasing ac. So now we have to convert a bit. The rough math is that 200 megawatts ac of a solar plant is equivalent to roughly 50, 50 plus megawatts of average annual power. Not like a 200 megawatt 24. 7 load. I'm kind of curious.
- [57:45]
A
That's crazy to me. I mean that's like what, 25 efficiency? Yeah, I know that's not the right way to put it. I, I realize there's someone who's gonna, gonna point out like that's not how that works, but yeah, you get basically you get net 50 megawatts of actual usable electricity from a 200 megawatt system.
- [58:04]
B
Yeah. So here's some things I had not really been keeping tabs on until recently, studying, prepping for this. So the really interesting thing is that this is not a behind the meter deal. So this is not a data center being co located at the solar plant. This is purchased through the Southwest Power Pool, which is a regional transmission organization. So basically the people, there's a handful of these RTOs out there and they have the long transmission lines and they're kind of like delivering the power across the regions of the country. And so the thing is that the Southwest Power Pool and other power pools are constrained for growth and transmission. And the numbers on the SPP here, according to both the press release and some other studies, is that the SVP is projected to retire over 5.7 gigawatts of fossil fuel generation resources by 2029 at the same time that the SPP peak load is expected to increase by 5 GW during the same time period. So we have a net negative, roughly 10 gigawatts which has to be filled with new energy sources, a lot of which are intermittent renewables. By the way, the SPP is like the best grid for wind because it sits in the center of the country. God bless the wind blowing down, you know, the plane.
- [59:36]
A
And God forbid an F5 come through those farms, bro.
- [59:39]
B
If we could just hook a windmill up to those tornadoes, man. I'm just telling you.
- [59:42]
A
Could you just imagine it's like some, you know, crazy final boss in like Final Fantasy, it's a tornado with a bunch of wind turbines spinning around it. Anyway.
- [59:53]
B
Yeah. And so there's another dimension here, which is that in Oklahoma there's a bill actually getting close to passing if it goes to the Senate, requiring data centers to be behind the meter or basically generate their own power. Hand waving. That's a, that's kind of a TLDR on that.
- [60:11]
A
But is that related to the moratorium that's being.
- [60:13]
B
No, those are local county level moratoriums in Tulsa and soon to be Oklahoma City. But this would be a statewide. This would be a statewide requirements.
- [60:20]
A
Every data center has to be behind the meter.
- [60:23]
B
It doesn't. The language is not behind the meter, but rather it's more specifically must generate their own power, which is behind the meter. But it's.
- [60:30]
A
But, but is that like a hundred percent of the power that they produce has to be behind the meter or is it like you have to supplement.
- [60:37]
B
This is something I'll have to come back to on because it I think actually gets. It gets kind of complicated when you get into the specific language. So the interesting thing is, is that because you and I were going back and forth saying when does it make sense to have a data center powering primarily off solar energy? Like of all the different energy mixes energy types, solar has the duck curve. So we kind of know when it typically shows up, but it's still pretty unreliable. Not ideal for data centers or an auxiliary power source. But when we look at it from the perspective of this is Google buying the power through the SPP from this solar plant. This is Google basically locking up 50 plus megawatts of power to themselves to basically call dibs on future growth and capacity in the sbp, which makes a lot of sense. I do wonder how this gets plugged into a data center though.
- [61:43]
A
Yeah, I mean, you know, to me what this story really signifies is power wherever you can get it, baby. You know, it doesn't matter if it's renewables, it doesn't matter if it's gas, it doesn't matter if it's coal. These data centers are coming for every megawatt that they can find that is not already allocated. And I did a little searching before we came on here. Oklahoma ranks 40th in the US for solar. And so just kind of a side note here.
- [62:11]
B
Yeah, but there's, there's a couple things here. So according to studies from, like solar organizations, Oklahoma is actually tied for the sixth best for potential solar, which is interesting, but in terms of actual energy makeup as percentage of our grid, it's in the bottom, you know, quintile.
- [62:34]
A
Where's the ideal place for that? In the panhandle or in like the southern, the south, western part of the state?
- [62:41]
B
That's a good. That's a good question. I would imagine western Oklahoma because that's basically north and northwest Texas, which is, if you remember, that's where the Grapes of Wrath happened. It's empty. It's a. It's where the dust bowl happened. It's just. It may as well be Mars because once you get over to whatever sprague, Oklahoma, it's just empty wasteland. So that is to say again, Oklahoma and SVP, broadly huge wind makeup, like 30%. There's, I think, one more thing I wanted to have. I wanted to have take on here, which is that I do kind of wonder like, what. I was wondering like, what Google is thinking with, like trying to do a deal with a solar plant. But then I. But then you look into it and Google's not fronting the cost for the build on the solar plant. So that is enlight who is figuring out how to make the financials work with the federal tax credits and the remittances or the RTEs. I think for most of those, those
- [63:52]
A
tax credits are gone now.
- [63:54]
B
Yeah, well. Well, they're almost gone. That the thing is.
- [63:59]
A
Oh, that's right. For industrial. It phases out slower than it phases out.
- [64:03]
B
And there's actually. Apparently this is another. Probably we need to have someone who knows solar come on here. Apparently it's a race to like, break ground because the tax credits cut off a certain day.
- [64:12]
A
Right.
- [64:12]
B
Like very soon, really. And just kind of like you got to get your stuff online, you got to get the project groundbroken or certain milestones hit to get these tax credits. And so there could be a looming crisis of people who raised a bunch of money. You can't break ground, who will not get the tax credits, who will now be faced with 30 to 40% higher project costs, which blows it all out of the water. So interesting story. We can come back to it. I learned a little bit more about Oklahoma and Oklahoma's solar potential. Before that we do have, before we go on to water data center water. We gotta give, we gotta hear from our sponsor Lygos.
- [65:00]
A
Hedge funds are getting liquidated. Is your Bitcoin safe? It's not just Bitcoin's price drying up. Hedge funds, trading desks, lenders are reeling after October 10th and February 5th liquidations over the last two or last year or so. Counterparty risk is rampant. So it's more important than ever to know who controls your Bitcoin. And with Lygos Finance, that is always yourself. They are Block Space's preferred Bitcoin lender. They use Bitcoin data smart contracts so that you can always remain in control of your keys when lending out with Lygos, taking out loans with Lygos. If you're working with another loan provider, do yourself a favor, switch to Lygos. Don't become the next Celsius or FTX victim. If you want to learn more and get competitive rates for as low as 10 APR, go to Lygos Finance to learn more. All right, Charlie, one last story today and then we will wrap up. This one will be quick. This is coming at y' all fresh early this morning from the Block Space newsletter. How much water do AI data centers actually use? Now this has been obviously floating around the Twitter sphere for some update your
- [66:10]
B
which tab you're sharing real quick.
- [66:12]
A
Oh, thank you. This has been floating around the Twitter sphere. Obviously many of you have probably seen the comparisons to almonds. And so we ended up unpacking this in the newsletter this morning and not too much to comment on here other than the data that I found. Now according to most policy institutes citing EPA data, that's the Environmental Protection Agency for 2023 US data centers consumed 17.3 billion gallons of water. And most extrapolates this number to be anywhere from 38 to 73 billion gallons by 2028. I understand the knee jerk reactions. That's a lot of water, right? But when you really zoom out, the 2023 figure is equivalent to 160,000American households. Now this is where the kind of, you know, moralizing comes in. Well, of course they should get it. They're people, these are computers. And I understand that to a point. But you don't have any of this moral outrage for any of the other things that consume vast amounts of water. If we look at almond farms and applied water, that is, that is water that actually ends up, you know, going on the crops. But some of it is reabsorbed through the groundwater. If we look at applied water versus consumption, we see that almond farms consume roughly 1.3 to 1.6 trillion gallons per year. That equates to 1 to 1.4 trillion gallons of actual consumption, which is water that's lost to the local source. Now that's important because what we actually want to look at is water that's lost and that the data center figure is pure consumption water that does not return to the source. And as I say here, but people eat almonds. You can't eat data. So true, king.
- [68:11]
B
So true king.
- [68:13]
A
I mean, I make the point that's turtles all the way down. Like, okay, then you could use, if you're gonna use that argument, you could eat a more protein efficient. Yeah. Diet.
- [68:25]
B
Try this one on for size. AI can make our crops more productive. So. Whoa, inverts.
- [68:31]
A
There are a lot of ways we
- [68:32]
B
can go with this. You make a hectare produce, you know, 18% more if we have AI. So.
- [68:38]
A
And you're like, okay, you know, if you're getting all your calories from almonds, that's incredibly inefficient. You could also just eat beef or if you want to stay vegan with it, you could eat soybeans.
- [68:47]
B
Yeah, but do. But the thing is, like, look, one thing while you harp on almonds in this, which is good because it's the most egregious use of water efficiency agriculture as a whole. Agriculture, even like construction practices, residential, like watering your grass, taking a shower. These things are incredibly water consumptive. And the average person sees a raw number for billions of water bottles used. I think that's so terrible. It's because they don't have a proper comparison. It's very hard to understand how that fits into the broader like full cycle use of water.
- [69:26]
A
100%.
- [69:27]
B
Yeah.
- [69:27]
A
And even that's what I kind of get into this here. Even some of the comparisons are apples to oranges. You know, when you're reading a study, are you looking at applied water? Are you looking at gross withdrawal, which is the total amount drawn, but doesn't account for stuff that ends up back into the ecosystem? Or are you looking at actual consumption, which is water that is lost from that local ecosystem as a result of the practice? And that's why I kind of spent a few too many words on that in the newsletter. The last thing though, if we want to like, you know, obviously like food agriculture, we need to live. You have to have food. You don't necessarily have to have data centers. Although It'd be nice if we had both. Okay, let's compare it to something completely trivial. Golf courses in the US alone use anywhere from 476,760 billion gallons of applied water annually. Another back of the NAC and math with GPT. I went through ChatGPT and kind of said like, okay, let's see what, what this would translate to. Consumption with actual water lost. So roughly 300 to 600 billions of gallons a year. Both of those several magnitudes more than data centers. And the thing that's interesting about the future of this debate, AI is actually changing data center habits. A lot of older data centers use a form of evaporative open loop cooling. It's very energy efficient. But open loot sites, open loop sites lead to much greater water loss. They're increasingly moving towards closed loop systems at the expense of electricity. These are more expensive. So that's the trade off here. And that will be a whole other dragon to tackle I think once we get to that, once the normies figure that out. But an example of this is Microsoft is claiming that from late 2027 all of its new builds will be zero water cooling or near zero water cooling using dielectric fluid or other forms of emergent fluid for their closed loop systems. Take that with a grain of salt. Obviously it is Microsoft. But I wanted to unpack all of this because as I led the story with a. My favorite aphorism from my grandmother, she said there's always three sides to every story. What one person said, what the other person said, and what's actually happening. And I do think that there is some truth to that. Although the data is largely on the side of the data centers. With this, the moral, the moral panic and outrage is bigger than anything I've seen. And I think a lot of it is also related to people's fears over AI obviating them, making them obsolete, you know, taking their jobs.
- [71:50]
B
So yeah, great research, Colin. This, the water topic is very huge amount of misinformation. The arguments really do, I think, favor the data centers in this case. But that's not to say that there aren't good pushbacks against data centers. In fact, I think there are very good scathing criticisms of a lot of things happening with data centers. If we compare it to, as the Pope did, the Industrial Revolution and its consequences, then there are definitely going to be some problematic side effects to this and it could create a new era of abundance. But man, it's like it is not a simple black and white issue because if we're going to tie ourselves to this water criticism narrative. Then you will get videos like this, which I will close with. Here is the Rio Grande supposedly going dry because a day center sucked all the water up. Roll tape. I'm currently standing in the Rio Grande river right now. This is what it looks like right here. All dirt. All dirt. You're looking at an environmental catastrophe.
- [73:13]
C
What?
- [73:13]
B
This is the new Meta Data center in Los Lunas, N.M. takes 75 million gallons per year to pull down the data center. So that is a super mega viral video I've seen cross posted across all different types of socioeconomic and ideological worlds. We're talking conspiratorial, pro Trump maga, rural folks to woke leftist elite, coastal elite, liberals. Like we're talking granolas.
- [73:47]
A
It's the, it's the yuppies, it's the bubbas. A lot of people, and I cite a lot of data here. I mean, Gallup found that 73% of Americans that they polled were not in favor of a data center in their community.
- [74:00]
B
Yeah, this is the most cross, like, cross aisle topic I think we've ever seen. And I'm amazed I don't see other like, AI folks talking about this. This is a reckoning coming from the ground up, but we have to cut it there. We got to wrap this up. Thank you so much for listening to Block Space Live. Coming at you live every weekday starting next week at 1:00pm Eastern Standard Time. I'm Charlie.
- [74:27]
A
I'm Colin.
- [74:28]
B
And if you are listening on Coinbase, go. I'm sorry, Coinbase. If you listen on Coinbase, please screenshot send it to us. You're listening on CoinDesk. Go to the Block Space channels and sub there because the CoinDesk feeds will be ending soon. Otherwise, catch you all Monday.