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Blockspace: AI & Bitcoin
SpaceX Joins Nasdaq 100, Meta’s Neocloud Play, the State of Bitcoin’s Quantum Computing Response
00:52:25
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- [00:00]
A
What's going on, y'?
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B
All?
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A
Welcome back to Blockspace Live, brought to you by CleanSpark Charlie for today's lead story, it's rules for thee, but not for me. And what I mean by that is the SpaceX was just added to the NASDAQ 100 after the index changed its rules for adding new names to accommodate SpaceX. Now it's for accommodating any mega IPO, but the S&P 500 is not yielding on this front. But NASDAQ 100 is after the rule change. That for our lead story, followed up by Hive Chairman Frank Holmes. On for our first interview to talk about their AI builds in Bowden, Sweden, in Toronto and British Columbia. And we have Connor Deegan following Frank of Project 11, the CTO and co founder, on to talk about what else but quantum computing and Bitcoin? Little bitcoin angle on today's AI heavy show. And we will finish the show with discussion of why compute constraints are actually much more real than some might have thought given Meta's recent announcement that it will begin selling unused capacity to competitors.
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B
That's right, Block Space goes live weekdays at 1pm Eastern featuring quick hits on AI, data centers, Bitcoin, miners markets and emerging technology. If you like what you hear, you'll love the newsletter newsletter.blockspace media.com and if you missed the live stream, it turns into a podcast anywhere podcasts are found. This show is brought to you by CleanSpark. NASDAQ listed ticker CLSK more on CleanSpark later on in the show. Colin, let's talk about SpaceX again. SPCX, let me see where they are right now. Let's take a look at the stock.
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A
Obviously not looking good.
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B
Yeah, well you say that I forgot to share my screen again. And here we are. Stock down 5% on news that it'll be included in the NASDAQ 100.
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A
It is now officially below the quoted price on Google Finance, at least for when the exchanges and indexers started actually tracking the price post IPO. Now it IPO'd at 135. So anyone got in the and the IPO is still above water but I would imagine that a lot of people bought in since are underwater. And I agree with your observation there. I mean it's down almost 7% on the day even though just got added to the NASDAQ 100. The Creme de la creme of high growth techstops.
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B
Yeah, yeah, maybe not creme de la creme, but it's, it's, it's it's up there. It's not the s and P100, which we'll talk about.
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A
Well, specifically in the context of tech stocks. Right. Yeah, you're right. That in the sense of if you're looking at the overall basket for the American market, the S and P would be the better option here in terms of its legitimacy. But that's part of the reason why they actually, the S and P hasn't included it yet because it hasn't earned that distinction in their eyes. So rather than bury the lead, we'll go ahead and get into exactly what's going on here. Charlie's got the Kobese letter Tweet up where SpaceX was just added to the NASDAQ 100 before market opened today. That's 15. That's after 15 trading days. So it makes it one of, if
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B
not the fastest list, the fastest inclusion in NASDAQ 100.
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A
Yeah, the fastest inclusion in the NASDAQ 100 in all of history. And the reason for this is because NASDAQ actually changed the listing requirements. Now, people will say that they changed it obviously for any Mega cap or mega IPO, but SpaceX being the first one to enjoy this rule change, you know, is kind of circumspect, I would say. But starting on May 1, 2026, Nasdaq introduced a fast entry rule. A company whose market cap ranks, ranks it within the top 40 existing NASDAQ 100 members becomes eligible for inclusion after just 15 days of public trading. And at $2 trillion, SpaceX is one of the most valuable companies in the world. This changes the old rule where the old methodology stipulated that new public companies had to wait a minimum of three months and maintain at least 10% of shares in public hands before becoming index eligible. So that's really interesting to me because obviously SpaceX hasn't been trading for three months, but also they're not even at halfway for that 10% of shares trading in the public. They're roughly just under 5% or around 5%. The real number, I believe at IPO is like 4.2 to 4.3. There have been some, I think, unlocks for friends and family or something of that regard. Like those were rather the only shares that have not that didn't exist in the IPO that are able to be traded right now. But so we're firmly under about 5%.
- [05:21]
B
Yeah. Currently 4.2% of shares on SPX, on SpaceX are circulating and the unlock happens. It looks August 6th where we'll get up to, I believe, 15% so we're under half of the conventional historical 10% of shares circulating. And over the next year we've covered this a lot. The shares hit the market or can hit the market by December, early December, you have over half the shares, over 50% of the shares unlocked and then Elon's unlock June of 2027.
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A
Yeah, and the other thing that's interesting is they also didn't have to wait for an annual reconstitution of what is included into the index. I don't know if it seems to me under the old rules that that would have been also mandated but at the end of the day, NASDAQ clearly rolled out the red carpet here for, for SpaceX, you know, the largest IPO in history. But it's notable because the S and P is not giving it the same consideration that you know, the S and P has the bulk of retirement accounts and you know, or it is the index with the lion's share of retirement accounts in the US and it said the S and P board said that they're not going to include SpaceX because it doesn't meet any of the criteria. It doesn't meet the profitability test. It lost 4.28 billion in gap in under GAAP in 2025 and the earliest it might be included is mid-2027. But that assumes that it turns profitable and it very well could between then. But it won't be included anytime soon.
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B
Yeah, let me reiterate what you just said. In order for a company to be included in the s and P500, it has to be profitable according to GAAP accounting rules. GAAP accounting standards and the earliest pending, they don't change any rules that that could happen if SpaceX turns profitable and be included in S and P is mid-2027. So as Colin just said in the NASDAQ 100 now index funds and 401ks like retirement accounts automatically add SpaceX. So I believe now those, those funds and retirement accounts are going to start buying and including SpaceX in their index. So that's a, you know, influx of capital or influx of, of money. So you know, if SpaceX is now, I believe, top 10 largest companies by market cap, it's kind of wild that they're also not profitable or haven't had a profitable year and they're in the top 10 large companies by market cap. But like let's imagine that SpaceX can get S and P inclusion. That would be roughly based upon its waiting another $50 billion of forced buying from indexes that do include the S and P 500. So there's that. Would we call this a scheduled mechanical demand shock? Apparently the analysts can anticipate this like, you know, there's a buying wave come in whenever these, these tickers are included in these indices. So you know, if we do see movement on either SpaceX becoming a profitable company by GAAP accounting standards or perhaps the, the rules change so they can get included, then that would be, you know, bullish for SpaceX, at least for as far as inflows go. I don't know. I have no additional insight on this, but I will say that SpaceX is really the first of these insane giga IPOs of the year. So while the rules may be changed for SpaceX, we have on the horizon, near term horizon anthropic OpenAI maybe like you're like a couple like memory stocks now IPOing or a couple similar data center ones. So.
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A
And yeah, and on the topic of Anthropic and Google, I would imagine that they will have a positive year for earnings this year just based on the annualized run rate of its deals with both of those companies. So SpaceX has inked deals with Anthropic and Google for supplying Compute out of Colossus. That's 26 billion in annualized revenue.
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C
So
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A
it seems to me that they will probably clear that deficit over this year considering that they have billions coming in. I mean, each month anthropic pays 1.25 billion per month under the agreement.
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B
Yeah, and it's funny because I heard someone call SpaceX is really like an AI landlord really is effectively kind of what they are. So now Elon is enemy number one from both being a trillionaire and a landlord. So the, the, the Progress is really going to hate that. He's ultra wealthy and he's a landlord now by AI.
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C
Yeah.
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A
And you know, you can imagine a future where maybe Space X is included in The S&P 500 and activist investors shed their stake in the S and P because they don't want anything to do with Elon Musk. I'm joking, but it is kind of seems to be where we're at with the polarized political landscape.
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B
I mean, yeah, I would say like there's a lot of other companies in the S&P 500. There's no way all of them are led and spearheaded by wonderful, delightful people.
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A
Yeah, I think that's what's funny about that discussion always, you know, whenever I hear someone about Musk, it's like, I mean, do you own Microsoft do you think Bill Gates is a standup guy? I mean, do you think most of these guys are standup guys? But anyway, we won't go into that tangent too much. I just received an email that unfortunately Frank Holmes will not be able to attend today. He had an emergency meeting come up. So we will table that interview for now.
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B
We can, yeah, we can roll to the Meta neoclouds.
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A
So I think, yeah, I think that's the best play. Hopefully we'll get him rescheduled sometime soon over the next week or so, but we will move on to Meta after a word from our sponsor, CleanSpark. We are CleanSpark, America's Bitcoin miner. A publicly traded company with the largest operating hash rate powered entirely by self operated infrastructure across four states. This is our proof of work and we are setting the standard for what's next. Learn more about the intersection of energy and bitcoin@cleanspark.com
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B
if Bitcoin's actually the best money and it's the thing that people should accumulate and it's the best risk adjusted asset, I lose zero sleep about whether or not that's gonna happen. I just ask the question of when
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C
it's Liberty Matrix map that you're running
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B
on large pieces, the Bitcoin miners can absorb that energy and in many ways this feels like a second bite at the apple to build a new Internet. All right, so we're bumping up the Meta GPU story. So if you haven't been paying attention to the markets, neoclouds dropped collapsed after Meta announced they were getting into the neocloud game. A lot of people. This led a lot of folks Twitter investor memos all to come to the conclusion that Compute Everywhere was overpriced, that we're not into compute crunch. Well, Semianalysis says otherwise. This is Shanu Matthew Great follow on Twitter, highly recommend Semianalysis says quote Meta's COMPUTE build out is accelerating, not slowing and the market's neo cloud fear is misread. Basically you're all wrong. The market's wrong. We're in a compute crunch. Basically the TLDR on this is that a lot of people saw reports of Meta signing big external deals. The $27 billion NEBS contract, 21 billion Core Weave expansion, 1.6 gigawatts with Crusoe plus their 125 to 145 capex budget as they described earlier this year. And they assume, investors assume that COMPUTE is flooding the market. This is true. Compute is flooding the market coming online. However, Semi analysis who I'll say has been very very dead on for a couple years. One of the most accurate forward looking predictions that I've seen and been tracking. Simone Ellis says that Meta's build out is accelerating, not decelerating. So in the first half of 2026 alone they contract over 5 gigawatts of new cloud and colocation capacity on top of 10 gigawatts and third party deals. So basically they had 10 gigawatts already in the pipeline and they contracted an additional 5 gigawatts over what they already started they already budgeted earlier this year. And so the bet is from Meta that they're a little agnostic to specifically which of these types of AI bets is going to be their moat and is going to be the cash cow. So they're diversifying among four different verticals. One Frontier Training that's the Meta Superintelligence Labs MSL to be short recommendation systems, basically scaling up that a ton and Bedrock style hosting which is basically what AWS does. Meta wants to do the same thing selling tokens as a service and rumors are is that they are pursuing a private Claude access hosting deal and then the proven cash cow which is the SpaceX AI landlord deal. SpaceX signing deals with what is it, Google Anthropic and reflection AI. Meta wants to do that too. That's a proven cash cow. So Meta is actually going significantly above their anticipated capex that they said earlier this year and they're diversifying. Colin takes comments, thoughts, reactions yeah, I
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A
think that Shanu put it really well in his tweet where he says here quote and you more or less summarize this optionality as the point. Rexis targeting a 10x compute scale up and the SpaceX bedrock tracks are framed as capacity that can be clawed back to the MSL which is Meta's Frontier Lab training if Frontier Training needs it. So the build out isn't a bet against msl, it's a hedge around it and that makes a lot of sense to me. And and as I understand it Rexis is their basically consumer facing AI where it is tuned to make recommendations for goods, content, et cetera based on your consumption habits on social media. So they have that pillar for their AI business. As you said Charlie, the SpaceX and Bedrock tracks are capacity that can be flexed in and out of third party use or in house use for Meta. And I think the wild card here is Meta's msl. This this Meta Superintelligence Lab that's their internal AI research group and as Far as I know. And Charlie, you can correct me if I'm wrong here. It's not really necessarily in the conversation for producing a Frontier model.
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C
Right.
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B
It's really not Meta's kind of. They've. They've floundered here, very conspicuous how. How far behind they are both from like usage and just like competitive frontier model. So that said, and, and this is a classic Zuck move. A little late to the party, but betting the farm on it, they're moving into the neocloud model and, and they retain optionality to like, if these things aren't working, they can roll it back into their, they can roll it back into their, their Meta superintelligence frontier model. So they're going to lease it out, they're going to pursue these, but they can always go back and take a second crack at that superintelligence initiative.
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A
It makes a lot of sense to me. If you're looking at where Anthropic and OpenAI sit in the race, you're not starting a leg back. Like you haven't even gotten your shoes on yet to get to the track. It almost seems like. And I think that Zuckerberg has always been really good about cutting losses. Lest we forget the Metaverse, right?
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B
Well, we can't forget it's literally the name of the company.
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A
So, yeah, I mean, they did an entire rebrand about it, but as I understand, they've completely scrapped any efforts to build that out right now because that's obviously like, who cares about that? I don't, I don't want to put on AR goggles and go have a fake glass of wine underneath.
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B
Speak for yourself. Look, you can say Meta means different. Few different things, not just Metaverse. It could mean strategy. If you're a gamer like me, you have different metas. This is Meta's current meta, which is pursuing the NeoCloud model, a proven revenue driver. You have Anthropic and OpenAI. And then Elon basically bought a seed that bought a seat at the table and pretty surprisingly successfully was able to do it. While Grok isn't really Frontier candidate right now, it's close behind, I think is what a lot of people consider it. He's. He's in the running. We'll have to see where this goes again. This is, you know, if Meta is going to be like in current talks to provide private Claude inference on their own, on their own sites, then like this. This industry does get even more circular. The snake eating its own tail. It's very. You have some like Nvidia financing deal or like SpaceX hosting anthropic and Google and reflection AI all on the same colossal.
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A
It's getting a little incestuous, isn't it? Yeah, all the same actors are swimming in the same pool. And the last thing I'll say about it, this is probably not the best analog, but you know, Meta and Zuckerberg kind of capitulating here and shifting gears also somewhat reminds me of the Instagram acquisition to where you realize that you're losing a competitive edge. So instead of trying to supercharge the core product, you reach out and try to find something else that can supplement it and potentially take it to new heights. And Instagram's. The acquisition of Instagram ended up probably being more of a boon for them.
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B
It was one of the most successful acquisitions of all time. And at the time I believe they paid like $2 billion for it. In the early 2010s it was lambasted by everybody, considered a terrible decision, way overpaying. And it's Meta's like best at the time, Facebook's best acquisition, best product growth line. And they also do WhatsApp at the same time.
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C
So
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B
we'll see. I'm agnostic.
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A
I don't know, I just think it's interesting to see a company like Facebook or Meta, excuse me, really think about what is going to end up being the killer app here. And like, what, what. How does AI actually serve our internal interests and the interest of the company in the best way? Because you've seen mostly specialization up until probably, I would say SpaceX signing anthropic and Google. Now you're seeing diversification not just from that company, but from Meta as well. So definitely a story to keep an eye on.
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B
Look, AI is probably the theme of the next decade. How do you bet on it when you're unclear? You can diversify, especially if you have cash out the wazoo like Meta has. So they have tons of cash, you know, the cash cow in advertising. Now they just have to figure out what their product is.
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A
Yeah, and you know, going back to the hedge narrative, last thing I'll say, they're going to actually put down 145 billion in capex this year. You better believe that they're going to probe every single avenue for making money on this thing. That's, you know, it's the numbers stop making sense at a certain point. That's just a stupid amount of money.
- [23:06]
B
They stopped making sense years ago to me. So basically semianalysis again says you're wrong, you're dumb, for selling off the Neo clouds, there is a compute crunch. You just are taking a little while to realize this. I would recommend anyone go listen to our interview with Kush, Bavaria of Ornament AI from last week. He makes a good case for this. All right, we're going to switch and stop talking about AI. We're going to talk about Quantum here in a moment we've got Project 11 co founder Connor Deegan in the wings and we'll bring him on up here to talk about Quantum Bitcoin after a word from our sponsor, Luxor.
- [23:53]
A
This episode of Blockspace Live is brought to you by Luxor's Commander Bitcoin miner management software for enterprise operations. Luxor's Commander gives you real time fleet monitoring, bulk remote commands across your fleet and intelligent miner, that's an automated profitability engine that runs every five minutes and tests your fleet's power settings against live energy and hash rate markets. Ercot backtests show 10% improved profitability with intelligent mining versus binary mining. Commander Pro is a hundred dollars per megawatt or a 25 basis point pool fee adder. But you can also try it for free for 60 days. So if you'd like to learn more, go to Luxor Tech forward slash commander.
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B
All right, let's have our token Bitcoin conversation for the day. We got Connor. I'm going to bring him on up here. Connor, welcome to the show.
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C
Thanks for having me. What's going on?
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B
What's going on is your mic works great. Perfectly.
- [24:48]
C
Fantastic.
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B
Yeah. So we're dry run. Okay, so co founder CTO of Project 11. I assume you're more technical than Alex, who we've had on a couple times. So given that we're going to try to find the sweet spot of technical and non technical conversation here, we assume people have already heard maybe a few things about Quantum. One question I think you wanted to talk about is why is it so difficult to migrate to a post quantum Bitcoin or post quantum anything but this. Particularly bitcoin.
- [25:28]
C
Yeah, great question. I'd hope I'm a bit more technical than Alex, but I'm sure he'd have something to say about that. Okay, so why is it difficult? So there's a lot of varying opinions on this. There's, there's good news. The good news is these algorithms exist. We have post quantum alternatives to the cryptography that we rely on in Bitcoin and in digital assets. You know, so elliptic curves are broken by quantum. We have the replacement. The replacements have existed for a while now. They're secure, they're even deployed, you know, on the Internet. Some of the conversation we're having right now is protected by these new post quantum algorithms. So that's not really the hard part. That part has been covered off by the smart people who create cryptographic algorithms. Really the tricky part is dropping one of these post quantum algorithms into something like Bitcoin isn't just a like for like replacement with elliptic curve cryptography, the current cryptography that runs the system. And the reason being is it's a whole kind of trade off space. The post quantum alternatives tend to be quite big, you know, larger signature sizes, which can lead to things like slower throughput, less transactions per second, node sync times can go up, block size issues, etc. Or maybe they're much slower, which for the high throughput chains means that maybe they have to drop their SLAs of how many transactions they're going to have per second or block finality time. Or the ones that tend to be in a sweet spot where they're both small and maybe a little bit faster, they're newer, we haven't trusted them as long in production systems. We don't have the same confidence to deploy them instantaneously. And that's just at the algorithmic layer, that's at the kind of raw scheme cryptography layer of what the actual protection systems are. But there's also this whole suite of features we've built in the digital asset ecosystem, such as custody stacks, wallets, the ability to have a seed phrase, be able to generate any number of addresses for your Bitcoin wallet. All of those features kind of disappear with post quantum cryptography if we just drop it in naively. So as a result we can't, you know, the cryptography might be, you know, quote unquote solved to some extent. The engineering hard problems are now. How do we maintain parity with the existing ecosystem? You know, you take a custodian or a wallet, they rely on all these different security properties or features and user experience. We have to rebuild all of that as soon as we migrate to post quantum cryptography. So yeah, a little bit of a challenge there from an engineering standpoint. And then I think the bigger one, you know, they're the technical problems. You know, I maintain the technical problems are about 1% of the total problems. You know, the rest is all the usual social problems is, you know, is quantum coming? When is it coming? Is it real? Thankfully, that question seems to have been answered and we've kind of got past that point. You know, which algorithm to check, you know, to choose all of those more social consensus and governance problems that we also need to get past before we can truly track of the engineering problems.
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B
I.
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A
Sorry, Charlie, I have a question on that. I can't help but think about some of those social consensus issues in context with bip110. I don't know if you've been paying attention to that at all. I mean, because it's easy to ignore because it's kind of this small minority screeching in the corner, you know, and most people are against it. But I'm wondering what your feelings are on the ability for the bitcoin community to actually and the technical community to actually come together and seriously talk about this problem with that BIP in context, considering that was so contentious, but it's gotten so much airtime, almost in a Stockholm syndrome esque way where you're fraud.
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B
We're sick of talking about it.
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A
Yeah, I know I was kind of reticent to bring this up, but I do think that given that that is has been one of the only technical changes being really pushed, albeit by a vocal minority, how do you view that in context with solving an actual problem like quantum?
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C
Yeah, the short answer is this is a much bigger problem to solve and it's technically harder problem to solve. So the current state of Bitcoin's ability to make decisions and come to consensus does not inspire much confidence for gathering the same level of scrutiny and discussion and open mindedness around a post quantum migration bip. There is some early bips for post quantum migration that exist and maybe we can get into those. But as I said at the beginning, this migration opens up a whole ton of cans of worms people don't want to think about, you know, are we going to what happens to block size transactions per second? Do we have to worry about nodes in time? Are we going to see more centralization because you know, hobbyist nodes come offline because it's just too much data to store. With these bigger signatures, there is going to be a ton of very, very sensitive questions to answer. And I think the current state of that community doesn't lend itself much confidence, at least in my eyes, for having that quantum conversation today. I think there's probably still a little bit of work to do, so a little bit of kind of rallying and maybe sidebar conversations to have until the community is ready to see a full proposal that says, hey, this is where bitcoin is today. This is where we need to get to in the next n number of years. Here's all of the engineering questions we need to answer and let's have an open, fruitful conversation about that. But I think right now it's not in probably the healthiest situation and place
- [30:53]
B
to have that conversation about these engineering questions. There's a number of migration paths which have been proposed. There's a handful of proposals. Some are more formalized into a bit. I think it's just, just bip 360 is a formal bip. There's others which are optimistic that they'll reach like a formal proposal stage. But of maybe the popular ones, like the top five, there's like Sphinx, there's a commit reveal scheme. Even Robin Lyon has put out a bino hash post quantum thing that I don't understand. What of these do you think are just survey the landscape for me. What are optimistic? What do you think are the most feasible? And then are the ones that are most feasible the ones that are the most optimal? So what do you think about this?
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C
How long do we have?
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B
Great, five minutes.
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C
Okay, let's do it. So the, as you said, the most formalized and progressed BIP to date is BIP360, better known as Pay to Merkel Roof. Very importantly, this, this bit doesn't select a post quantum algorithm, doesn't suggest which algorithm should be chosen, doesn't actually propose what post quantum bitcoin looks like. It merely kind of adds another output type that is a little bit more amenable to inserting a post quantum algorithm into it. So it almost does the easy part. And it's, that's not, you know, that's credit to the bit. It's the most progressed bit we have. But it doesn't answer a lot of these hard questions. And these hard questions are the ones that you just mentioned. Which post quantum algorithm is bitcoin going to choose? And that is really the first decision point we need to make. We're seeing some begin to be raised. We've seen the work from Jonas, Nick and colleagues around shrimps and shrinks. There's other people suggesting that we should go for something a little bit more standardized and not just custom to bitcoin. Bear in mind, shrinks and shrimps are kind of roll your own crypto. Which in the cryptography community, the one thing you try and do your best not to do is invent your own cryptography. You should steal from smarter people. So some advocates say, well, we should just be using the standards at the intern is going to use. So there's going to be a lot of debate around this process. I think your question around, are those schemes the most optimal? It's hard to tell. I mean shrimps and drinks have really nice properties for bitcoin. They're small, they have a huge footgun in that they largely require you to track state. That is every time you sign a message in your wallet or make a transaction, your wallet has to track that state. And that has a history of going terribly wrong in cryptography. So doing that securely and smoothly is extremely difficult and a hard engineer engineering problem. And then there's a kind of a clatter of I think less solutions in terms of a long term solution like these commit reveal schemes, but maybe things we could implement in the short term to buy us some time. And then importantly, none of them answered the other questions around what do we do with unmigrated coins? And that's obviously a whole kettle of fish. So there's just this myriad of questions that I think we don't have a very good current bit that is trying to outline all of these things at once. We're seeing bits and drip feeding information and the goal over the next couple of months is probably to begin to see all of those pieces ahead of us and then being able to kind of piece together the ideal solution.
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B
I haven't seen you guys actually, maybe I've been paying attention. I haven't seen you guys actually come out and support a specific thing is like we think this is the best one. Is there a reason for that or do you have a personal favorite that you think is the best? That's just your opinion. What do you think about this?
- [34:35]
C
Yeah. So From a Project 11 perspective you're right, we haven't at Project 11 we work directly with protocols, not just bitcoin, around education, implementing post quantum cryptography into chains. So yeah, it might seem strange that we haven't come out back to horse in the post quantum bitcoin race. Frankly, and this is my own personal opinion, I think keep it simple is usually my take on this. You've got schemes like mldsa, which is one of the post quantum signature schemes that is being used. You know, for instance, right now as we have this conversation, the Internet is, has largely picked that as its post quantum signature scheme. You know, I think something like this is probably a wise decision. I naturally have an aversion to rolling custom cryptography. I just think it's, it's quite spookier and a little bit harder to do. But this is the, this is what we're seeing now in the protocols. Each protocol is largely Picking their own cryptography. We've got Bitcoin rolling their own possible shrinks, shrimps concept. We've got Ethereum going with what they're calling Lean Ethereum, which is its own signature. We've got Solana currently looking at a signature scheme called Falcon. So we're just seeing this mass fragmentation now of all these different protocols going with different cryptography. That makes it much harder for the wallets, the custodians, the institutions, the key management providers. Because now each chain is almost a custom integration. There's custom key management, there's backup policies. All of these things kind of have to be reinvented now. So as a result of Project 11, we're kind of more focused now on what does that future look like for digital assets at a cryptographic layer and whether Bitcoin goes with something hand rolled or something standardized. I think there's going to be pros and cons in both and I'd like to see both be debated properly in the form of the Bitcoin mailing list, as we just spoke about.
- [36:29]
B
So. Last week or maybe two weeks ago, Trump made an executive order on, like Quantum once. He wants the US to be like a leader in Quantum. I think it's ambiguous, but I think it's the first time he's done anything or the US has, like had the main guy, like formally declare this. Does this change anything? I'm curious, like, you know, does this accelerate something that's already happening? Or is this more just a formalization of, like, we care about this? What are your thoughts?
- [37:11]
C
Yeah, it's a tough one. I mean, I think as a cryptographer and as a security engineer, this was bound to happen. This needed to happen. We had to see a little bit more urgency injected into the timelines for migration to post Quantum. And this has already started to happen. Earlier this year we saw Google come out and Cloudflare come out. More recently, IBM and Microsoft come out and all decrease their migration timelines. They've been a little bit more aggressive even than the executive order. They're targeting 2029 for a full migration to post quantum cryptography. So largely the Latest from the US at that time was 2035 at the upper end. Quite frankly, that was just a stale date at that point, so it was only a matter of time until it was brought forward. Having said that, it's excellent to see it being brought forward and the executive order gave some clarity as well around what a migration looks like. Still a lot of outstanding questions it raises, but it does show there's a sense of urgency coming from the very top. And they have both the kind of assurances around migration to post quantum, but they also have massive investment in quantum hardware. So they're pushing both horses in the race. They want quantum to come sooner. Therefore, they obviously need migration to post quantum cryptography to happen as soon as possible. So I think it gives us that clarity that governments are agreeing that these timelines need to shorten. But I don't think from a security engineering perspective and someone who's been involved in post quantum cryptography for a while now now, you know, it was only really a matter of time, quite frankly.
- [38:49]
B
So I think I do want to hit another question, which is I was looking at, I think your, like Project 11 put out a report which moved up the Q day baseline to 2033. I think you said maybe as early as 2030. There's a lot of new research out which has. The theoretical improvements have happened now. It's the real practical engineering challenges. The last time I checked up on this is like two or three months ago. And this space was so fast. Any insights or movement on this? What feedback have you gotten? I see like that one company has raised $300 million. Series A. Like that's a lot. It seems like investors are interested in this. I'm curious what's going on in the world of science? This is a really big question.
- [39:47]
C
Obviously, end of March, we had the two big papers dropped. So we had Google release that paper around breaking elliptic curve cryptography. They specifically spoke about digital assets and the impact that would have on digital assets. They effectively specified that they could run Shora's algorithm, the algorithm which breaks public key cryptography. The cryptography bitcoin relies on or under half a million physical qubits. That same day we had a paper from R Atomic, who just announced their fundraising round this morning, saying they could do it on a different type of quantum computer, a neutral atom Quantum computer in 10 to 20,000 qubits. So much, much less. Now the difference there is the neutral atom quantum computers run a bit slower, so they might be able to break a bitcoin key and 5, 10 minutes, it might take them on the order of hours to a day. So yes, they might come a little bit sooner, they'll be a little bit slower and you can talk about what that means for how the attacks might play out. And then I think since then, the major difference between which has been really interesting is there was a company or a website that dropped, I think just maybe last month. I think it was around the start of June called ECDSA Fail which effectively became this open source. Anyone who access to Claude or Codex or OpenAI could effectively just try and optimize the Google result and make it even better. And what we've seen already, and as you can see there, they've already made such great progress and these are just people with keyboards and access to AI tokens and they're just using frontier models now at this point to drive the frontier of the, of breaking public view cryptography lower and lower. Now it's very important. This is still at the theoretical side. This is still at the, you know, can we make the, the algorithm run faster? It's, this does not solve the fact that you still need a quantum computer of a certain size to run the algorithm. So it's kind of two things to always think about do we have a quantum computer big enough to run it and then you know, how many qubits or how complex is the algorithm to run. So what this open research effort is doing is dropping how complex the algorithm is to run. But then you need all of the hardware, quantum hardware companies like Google and R Atomic to actually build the hardware itself, the actual quantum computer to run the algorithm on. So that's been the largest thing we've seen since those two papers came out and I think you mentioned it a few minutes ago. The kind of best guess at the moment is early 2000s is probably when we'll see those two things meet the requirements drop enough and the hardware gets good enough to this algorithm.
- [42:24]
B
Okay, last question. What should we look forward to? I say look forward to because it's a bit of a doomer prediction but I mean what should we be looking forward to over the course of this like next year in the quantum march forwards? Like I don't know, like who should I, who should I be paying attention to breakthroughs? I know it's hard to predict breakthroughs or just like what should I be have my eyes on?
- [42:50]
C
Yeah, I think the biggest on the quantum side, the obvious candidates are the likes of the Googles and the R Atomics. These are arguably the two leaders at this point in terms of making inroads into building one of these machines. And then I think what we're going to see, and hopefully see very soon is each protocol is going to have its post quantum roadmap. We're seeing some of these begin to come out. The Ethereum foundation is probably the most forward leaning with their public post quantum roadmap. We need to see this from each of the protocols and Then I think the exciting part after that is we then have to think about how we re architect all of the wallet infrastructure and key management infrastructure on top of that so that we can accommodate all these new algorithms. And really if that all goes well, this post quantum this Q day will just kind of happen and it'll just go past us. And that means we've done a good job. So if Q day ends up being just a small blip in 4, 5, 6, 7, 8 years time, it means we've probably done a good job as both a decentralized governance community, but also as infrastructure providers like Project 11 that everything just continued on working and there wasn't this big kind of doomsday event.
- [44:01]
B
Well, it's certainly exciting for builders and engineers who always need a new thing to work on. They spent a couple years wandering the desert making crazy looping defi protocols. Time to actually build some fun real ass engineering. Connor, thank you so much for coming on the show. Appreciate your time.
- [44:22]
C
Thanks guys. Appreciate it.
- [44:23]
A
Thanks Connor. Fun for them, terrifying for the rest of us.
- [44:29]
B
Yeah, my bags are scared. But at the same time, you know, I do love when the engineers get all worked up about something because it's more interesting when they do. So we're gonna, we're gonna switch from Bitcoin back to some markets to wrap up, we're gonna review, God bless it, some stocks if you will. But before we do that, a word from our sponsor. Lygos.
- [45:01]
A
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- [48:24]
B
There we go.
- [48:26]
A
The 30 year just peaked back up.
- [48:28]
B
Whoa. Yeah.
- [48:31]
A
And if we look at the last month, it bottomed on the monthly in June at about 4.85% and it is just up in a straight line ever since. Now we're still pretty far down from the all time or not all time high, excuse me, of the multi year high. It set in May, but it's looking like we're trending back up that way, Charlie. And the Dixie is also up today. So the dollar improving as bonds sell off and yields rise. And if you look at gold and silver and bitcoin they're all down on the day too. There seems to be this renewed fear in some cases of inflation with the aftershock of the Iran war. I mean, that's hopefully behind us now, but there still is some potential for a shockwave and inflation later in the year. And also a lot of folks are really kind of curious as to what Warsh's Fed will end up doing. Will they end up raising rates? Will they keep them steady? They're almost. You know, the consensus is that they won't cut this year, but even that is up in the air depending on which macro analyst you turn to. So went actually up, According to Google Finance, 14 basis points today.
- [49:54]
B
Yeah.
- [49:56]
A
But all that being said, it seems like risk is being. It seems like the market's moving towards a risk off posturing as we exit the first half of the year and enter the second half.
- [50:09]
B
Yeah, it's ironic that as Iran seems to chill, the Iran it seems to chill. The market's going risk off and they were risk on majority of the Iran war is kind of wild. Here's DI metrics. Powershells down 3.7%. NeoCloud's down 5.3%. Data Center REITs up 1.4. Hyperscalers flat. What else? We got other smaller subsectors which I won't get into, but that's on the month, on the day again, kind of mixed down 5, 6%. Stuff pulled back a bit. Crypto coin, market cap here. Bitcoin flat. Ethereum flat. Tether flat. Other. Not a lot of movement in the past 24 hours. Although the past week we've seen a lot of recovery. I'm gonna look at this. God bless it. Look at this. The zcash chart. Remember when zcash had the inflation bug which may or may not have happened? We're basically don't know. Yeah, we don't know how. We don't know. Well, it's almost for fully recovered, so it's as if it never happened. If an inflation bug happens in a shielded pool and nobody was around to hear it, did it happen at all? On that note, thank you for watching Block Space Live coming at you every weekday, 1pm Eastern. Featuring quick hits on AI data centers, Bitcoin mining, bitcoin markets and emerging technology. Newsletter Blockspace Media for the newsletter and it turns into a podcast wherever our podcasts are found. This show is brought to you by CleanSpark. NASDAQ listed ticker CLSK I'm Charlie.
- [52:03]
A
I'm Colin.
- [52:04]
B
We'll see you tomorrow.