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Blockspace: AI & Bitcoin
SpaceX’s $20B Bond, Trump’s Quantum Executive Order, CRWV and NBIS Join the Nasdaq 100
01:01:08
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- [00:00]
Alex Pruden
Foreign.
- [00:05]
Colin
What's up, y'?
- [00:06]
Alex Pruden
All?
- [00:06]
Colin
Welcome back to Blockspace Live, brought to you by CleanSpark. We are back after a short hiatus and news is popping. And by news, I mean SpaceX is popping now. SpaceX has fallen about 18% from its peak post IPO. It's popped up today about 5%. And we've got two big news items in addition to the stock price to cover. Number one, they have inked another AI deal with Reflections AI for additional capacity at one of the Colossus data centers in Memphis. And they're also going to issue their first bond even though they're flushed 100 billion with cash. It's not a cash raise story. It's about refinancing a bridge loan and making sure they can clean up their balance sheet. That's our first story for today. For our second story, it's the globalist versus ercot. And what I mean by that is there is a new data center pact, responsibility pact. I don't know what we should call this, but 40 mayors have signed on to this new pact about the right ways to roll out data centers in their respective localities. More on the pros and cons for that when we get to the segment. Some things that actually make a lot of sense. Other things that are kind of, I don't know, Sisyphean. You're really kind of just pushing the boulder up the hill. Maybe not the best thing to focus on. For our interview today, we have none other than Project 11's Alex Pruden on to talk about the latest executive order regarding quantum computing and resistance for governance systems, and I believe also private sector guidance as well. And we will wrap up with news of Corweave and Nebius joining the NASDAQ 100 as of yesterday.
- [01:47]
Charlie
That's right. Blockspace goes live and every weekday at 1pm Eastern featuring quick hits on the latest in AI data centers, Bitcoin, bitcoin mining and emerging tech. Make sure to like and hit subscribe. If you're watching on YouTube, get that notification. Bell Leave us a review. If you're streaming on a podcast platform, this is a live show. It turns into a podcast shortly after wherever podcasts are found. Again, leave us a review, preferably five stars. And if you like what you hear, you'll Love the newsletter. Newsletter.blackspace media.com it features summaries and quick hits even quicker than the quick hits discussed in the live stream straight to your inbox every single day. This show is brought to you by Clean Spark. NASDAQ listed Ticker clsk More on them later on in the show. Colin we took a four day break and in the meantime so SpaceX almost broke but guess what, it's back. Let's pull up the chart. SpaceX up 6% today and climbing 163 almost $164 per share yesterday showed signs of faltering and what I mean by
- [03:06]
Colin
that is on those gaps up and down man.
- [03:10]
Charlie
Yeah on Thursday because we. Because American markets not true. On Friday because of holiday on Thursday closed around I believe 180 something 182 and Monday yesterday crashed all the way to the high 140s thus wiping out. I saw a stat here, don't quote me on this. The majority like super majority of SpaceX buyers post IPO were at a loss. Now it's up today to 164 which is pretty significant. So the market there was some stuff announced but yeah, SpaceX again the stock everybody thinks and talks about. I hear people talking about the street, I hear, you know, neighbors and if I took an Uber this weekend I would have heard an Uber driver talk about it.
- [04:00]
Colin
So that's that stat or the wipeout makes sense to me at least on its face because if you got in pre IPO through your broker you, you got in at 135 bucks a share. It almost immediately started trading at like 160 though upon listing after you know the exchanges had the order book figured out because it'll start trading and they won't actually publish the live data until they can actually figure out what the legitimate bids and asks are and where the two meet. It was listed at like if you go to any stock chart it like starts trading at 160 so we're just above that right now. Not surprising I think to anyone. It had a very, very impressive run up following the IPO. And once more only like 5% of shares are trading right now. So the actual.
- [04:48]
Charlie
Yeah, it's very shallow. It's close to 4. It's like 4.6% of shares. The first unlocks kind, there's kind of a waterfall unlock of the remaining 96% of Class A shares over the next 360 some odd days. The first unlock comes I believe in, in early August I can, I will, I'll actually see if I can pull up the.
- [05:10]
Colin
Yeah, it comes, it comes 30 days after they drop their first 10Q so whenever they do that it will probably be August. Usually it takes these companies about a month, month and a half to get out their financials following the quarterly Close. So you would expect sometime in late August and early September to see those shares hit the market and potentially impact the stock price.
- [05:32]
Charlie
Yeah, I've got it here. The first shares targeted to unlock August 1st, 4th, and that's when the float of 4% circulating shares goes to 15% on that date, of which the majority of the unlocks will be from the institutional VC. So that's about 5.6% of the remaining unlocks that kickoff. And then it just happens every two or three weeks. I mean, then August 21, then September 13, then September 25. So you just unlock after unlock until Elon gets last, which is the IPO day plus one. So 366 days.
- [06:16]
Colin
Yeah. In fact, check on myself. Right, there it is. After the earnings report releases. There's, I don't believe there's actually a waiting period of 30 days after that. But like you said, it's tiered and it continues to rise up until Big Dog himself has his shoes shares open to the market, which, you know, he'll, you know, no doubt liquidate some of that. But I don't think that he's going to give up the majority of what he owns in this. I mean, he clearly, this is like SpaceX is probably Elon's biggest baby in the sense that he's always been about extraterrestrial exploration and this is like the stuff of science fiction. So he, I would imagine he's probably going to keep a lot of his bag because he thinks that it's probably going to be worth tens of trillions of dollars one day.
- [06:59]
Charlie
Yeah, look, if you're a trillionaire like he or maybe was then what else is there? You're now completing side quests and in game content, space being one of those. So there were some big announcements. Colin, I'll let you. I think let's start with the bond raise because even though SpaceX has a ton of money from the IPO, apparently there's even more money to be found.
- [07:24]
Colin
Yeah, and this is like I said at the beginning of the show, this is largely a refinancing story more than anything else. This is coming from CNBC. SpaceX kicks off bond sale days after record IPO discloses over 100 billion cash pile. According to sources speaking to CNBC, SpaceX is seeking to raise 20 billion. We don't know whether or not that is the actual figure because if we look at the actual filings that SpaceX issued on Edgar for this, they have said that they are seeking to raise senior unsecured notes in a private sale, but none of the other details are public yet. A few notes about this as to why again they're doing this when they just are sitting on a fat cash pile following the IPO. Specifically, SpaceX has a bridge loan that they took on shortly before the ipo. And this bridge loan consolidated a bunch of debt that was rolled over from Twitter when Musk bought it. And XAI and all of the companies under the umbrella of X, this bridge loan is 420 billion. So it would stand to reason that SpaceX wants to raise that enough so that they can refinance that bridge loan under this new note issuance. And that loan carries a roughly 4.58% interest rate as of March 31, 2026. Space on sofa rates plus a few bips. And also we got credit ratings for SpaceX recently. S&P global rates, SpaceX credit at triple B, Moody's at triple B plus, Baa1 and Fitch ratings at BBB plus as well. And just again to highlight this, this will be refinancing a bridge loan which Musk used to consolidate all of the debt from Twitter and Xai leading up to the ipo so they could kind of clean house and get the balance sheet a little tidier before the company went public. So again, this is not a oh, they need cash. They're sitting on 100 billion. I will say in the world of data center development you probably can never have too much cash, but they'll specifically be looking to use this to refinance that bridge loan. And also I would be curious to see once they issue this unsecured note and once the company gets a little older, what it will do to their credit rating. Because right now they're at investment grade, but they really want to be getting up to that a credit rating with some of the other mag7. So that's the TLDR there. And this comes on the back of this bond issuance. I believe the news hit today. Yes, this was hit yesterday. This comes on the back of another big news for SpaceX, Charlie, which you have the notes on.
- [10:17]
Charlie
Yeah. First we got Anthropic signing a deal with with SpaceX to use Colossus 1 as inference. Then we had Google sign a deal with SpaceX to use their Colossus 1 as inference. And now we have Reflections AI signing a deal to use the GB300 chips at the Colossus 2 data center. This adds $150 million per month to SpaceX revenue from Reflections AI, which frankly I was not very familiar with as a company. The short version is they're kind of like the American open source model developer equivalent of a lot of the Chinese open source models, your Kimmies, your Deep seqs. And so Reflections AI also got that sweet, sweet inference, this time on the premier Nvidia chips, the GB3 hundreds, which are being installed at the Colossus 2 data centers. This would assume. And the deal terms are with Reflections is almost identical to that of Anthropic and Google. It's a 90 day termination clause. And give them agility. And this would bring about $6.3 billion in revenue through the duration of the contract, which is 2029. Reflections, for a little context, is not just some AI startup. It is also part of the kind of circular money wheel of Nvidia Money. So it was founded by Google DeepMind researchers and was backed by an $800 million investment from Nvidia. Again, as I said, it kind of positions itself as the American open source alternative to China's deep seq. And in this case Reflections has ties with the US government, specifically working with the Department of Energy's Genesis mission and select Pentagon AI programs. I don't know what that means. This is what they've said. They, they have done so. And then on top of that, so Nvidia invests in Reflections and then Reflections are going to be doing inference on the GB3 hundreds at Colossus 2 from SpaceX, which again is Nvidia hardware. So it is. I would almost like. This is the. To me, I see this as being interesting, like you need to know the name Reflections alongside Anthropic and OpenAI. I'll toss it to you, Colin. Yeah.
- [13:00]
Colin
So a few notes on Colossus 2. They're targeting 2 gigawatts of future capacity at the site, which is massive. Right now it's roughly 3 to 400 and I believe Colossus 1 is like 300. And I think the really notable thing here too, Charlie, that you hit on with Reflections AI, is this idea that they're trying to build an open source frontier model. I think that we're going to see increasingly the importance of having an open source model that can compete with the black box models that are coming out of OpenAI and Anthropic. For a number of reasons. We've seen kind of jitters over the government contract that Anthropic has and their drama with the US Government following reports that it was being used for military applications. But also just from the fact that you're going to want to have something that you can actually look into to see how the model is actually running so that you can know what it's filtering for. Right. And actually the capabilities that it has and the limitations that it has as well. But I think maybe one of the more interesting things here too is now that now XAI is hosting theoretically two competitors in the sense that XAI runs GROK and now they are hosting Reflections AI, I guess three competitors.
- [14:20]
Charlie
Yeah, no, they are the market now. Grok, which is like the based near frontier model, Anthropic and OpenAI two front runners, direct competitors, Reflections AI, the slightly more open, open source, open weighted, maybe you might say like government affiliated, you know, American counterpart to the Chinese deep sea. You've got, it is really the commons here, which is in Memphis, Tennessee. Colossus 1 and 2, everybody's doing their inference in the, in the heartland of the country.
- [14:48]
Colin
So just another note, don't sleep on the Southeast and the Midwest. Do not sleep on the heartland. But, but I think that that's worth, worth noting because they have the Google deal, they have the Reflections I deal and they have the Anthropic deal. All three of those companies are training their own models and releasing their own models. And you could almost read this as. I don't want to be too uncharitable, but XAI doesn't need that capacity for grok. Yeah, I mean they have been moving
- [15:17]
Charlie
it to, yeah, they've moved Grok to training and inference on Colossus 2 and they've handed off Colossus 1 to OpenAI and Anthropic. Almost like as, like second tier, second class in, you know, inference citizens here.
- [15:33]
Colin
Well, what's interesting about it to me is it's almost a. You could, if you wanted to read this uncharitably and if you were an Elon hater, you could say this is him capitulating that GROK is not a tier one model in the sense that like they don't, they don't need all the capacity. Now granted it's a lot of capacity, but why not rent that out to your competitors if they're going to pay you billions of dollars, I believe.
- [16:00]
Alex Pruden
What is it?
- [16:00]
Colin
It puts their monthly run rate for 2.3 billion.
- [16:04]
Charlie
Yeah, 2.3 billion if you combine anthropic, OpenAI and reflections. Look, GROK is not a frontier model, but it is one where it's the most based of the. You know, it has its uses for sure.
- [16:16]
Colin
And if you're trying to scrape, you know, obviously data and tweets from Twitter, it has its uses. But I Just find it interesting that Elon is, or SpaceX is willing to house these competitors because it's a, it's a, it's turning into a pretty massive field.
- [16:33]
Charlie
And just these deals alone, almost double SpaceX is 2025 revenue. Because SpaceX is a data center company. They've been very clear about this in the roadshow and like in their messaging sense we, we've covered this. I think we, we, we, I think we've probably kicked this cow this course a little bit too much. We need to go on to our next story.
- [16:55]
Colin
The data packed. Yeah, definitely. Let's move on. But I did just want to highlight that because at the end of the day, like you said, they're going to make a lot more money from renting these out. And Also now their AI revenue is set to outpace their Starlink revenue which was the breadwinner going into IPO. So yeah, let's run the CleanSpark ad and then we will move on to our next segment. We are CleanSpark, America's Bitcoin miner, A publicly traded company with the largest operating
- [17:26]
Alex Pruden
hash rate powered entirely by self operated infrastructure across four states.
- [17:35]
Colin
This is our proof of work and
- [17:38]
Alex Pruden
we are setting the standard for what's next. Learn more about the intersection of energy and bitcoin@cleanspark.com.
- [17:51]
Colin
If Bitcoin's actually the best money and it's the thing that people should accumulate and it's the best risk adjusted asset,
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Charlie
I lose zero sleep about whether or
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Colin
not that's gonna happen. I just ask the question of when is liberty matrix math that you're running
- [18:06]
Charlie
on large pieces of data.
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Alex Pruden
The bitcoin miners can absorb that energy
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Charlie
and in many ways this feels like
- [18:12]
Alex Pruden
a second bite at the apple to build a new intern foreign.
- [18:24]
Charlie
The globalists are at it again. They've signed another deal with no teeth. Or does it have teeth? Explain.
- [18:32]
Colin
That's the really good question.
- [18:33]
Charlie
That's the question. That's the whole. Yeah, the segment as, as you would
- [18:37]
Colin
say at first blush, I don't think that it does have teeth. In fact, I think it's actually going to neuter some of these cities in terms of their ability.
- [18:45]
Charlie
But, but what is it? Don't bury the lead. What is, what's the deal?
- [18:48]
Colin
Okay, I won't bury the lead. All right, here we go. So this is coming from a PDF from the Global Urban Data Centers Pact, which is a coalition of 40 cities that have released a four pillar pledge for how they are going to see about rolling out AI data centers in A more sustainable manner than the raving masses against these things would have you believe. Now I don't want to totally shellack this because there are some interesting points here that I think actually make some some decent sense even from just a dollars and cents perspective. So first of all, like I said, there are 40 cities on these things. You can probably guess which ones they are. We'll get that map up here in a second. But the four pillars of this pact include what they call strategically integrated integration or strategic integration into cities. This I think is probably the one that makes the most logical sense. They want to prioritize these mayors signing onto this brownfield adaptive reuse sites to avoid displacing communities and site facilities that are defunct in coordination with local governments to minimize public health burdens, air quality, noise, heat and align with city planning and climate goals. So one plot it before demerit on this one. This makes a lot of sense. We've seen this with a number of bitcoin miners who are moving into AI. The one certain companies like Terrawolf, also Bit farms have prioritized or excuse me, keel have prioritized, brownfielding certain sites, taking older sites that have a lot of the electrical equipment already on site, but they're not being used for industrial uses anymore and using those to retrofit them for AI compute loads. That just makes good sense if you can find those places. If they're not being used, the infrastructure is already there. There's no reason not to convert them as long as the economics make sense and as long as there are no zoning issues or you're not causing any sort of unrest with how that land is being used already. The one thing that I do take qualm with is the whole minimizing public health burdens, air quality, sure. Although with liquid cooled AI data centers that's not really going to be an issue. Or sorry, noise, that's not going to be an issue. But with air quality, that's a, that's not a data center thing. That's. That's. What is your grid made up of? What are the power plants spewing like that to me is a different question entirely, which they do touch on which in the sustainable and resource efficient mandate where they want to meet primary backup power needs without building, extending or reopening fossil fuel plants. They also want to exclude on site fossil fuel use, rip source, new and additional renewable generation or battery storage to match power demand and also hit best in class water use standards. The best in class water use standards piece. Fair enough. With A lot of the pushback that they've been getting for water use. Most of these data centers will probably converge on a liquid cooled model where they're not using evaporative cooling like the older data centers. That's partly, I think, a misconception of what these data centers are being built to do and how they're actually engineered now. But the fossil fuel one, I think going back to why this will neuter them or kneecap them, I don't see a world in which the fossil fuels don't play a stopgap in getting these data centers off the ground. We've covered this a lot in Texas. Backup generation and behind the meter generation is being used to speed up time to power before these large data centers can actually get interconnected into the grid. If you don't have that, I don't see a world in which you are going to have a meaningful data center footprint anyway. Hence why I said at the beginning globalist versus ercot. The last two are a little bit more of a kind of virtue signaling or 2. Virtue signaling pledges accountability and community focus, publish measurable sustainability and public health benchmark data, engage with local residents, prioritize local procurement and green job creation. They have all of the climate jargon in here and the climate verbiage. If you thought the climate movement was dead, I'm sorry to say that you're probably wrong. And an engine for cost security and shared prosperity. Data center operators directly fund needed infrastructure upgrades, energy, water network, fair share pricing tied to sustainability performance, yada yada yada. I'll actually contradict myself. That is is a virtue signaling thing. But I think this is where the, the industry is going to move anyway. We covered ERCOT on one of our previous livestreams a few weeks ago saying that they're having new rules where they're telling the data centers the utility is not going to be paying for the transmission lines and the upgrades for these data centers. You all need to front those costs. I think that makes a lot of sense. As you pointed out, Charlie, this is what the oil and gas industry has been doing for decades for investing in infrastructure, investing in roads in these far flung places in the Permian basin, et cetera. That to me that and the mandate specifically for brownfielding, it aligns with what we're already seeing in the industry. And I think economically that's going to make the most sense, particularly the latter one for making sure power prices don't spiral out of control as a result of this.
- [24:03]
Charlie
Yeah, some of the things that these City leaders have committed to in this pact are aligned with existing industry trends, particular water use, which I've always been kind of hand wavy about. I don't think it's really issue, but if it makes the people feel better and we establish good precedent which is aligned with business activities, this is great. I'll note that of the C40 cities, which is the organization under the London meeting that kind of spawned this, here's this little map of the cities. They're all over the world. They're the premier cities around the world. You know, Bogota, Mexico, Austin, Chicago, Warsaw, Athens, Delhi, Dhaka, Wuhan, Yokohama. Like these are the global cities. Conspicuously from this commitment are 13 of the largest, most impactful Chinese cities. Shanghai, Shenzhen, Beijing, Guangzhou, Chengdu. So the Chinese are not signed up to this because it's funny, this mirrors a lot of the climate accord activity we've seen because if you commit to having no on site fossil fuels for data center operation, the Chinese are just not going to play ball. They're much more pragmatic about this. I really have a hard time saying, I have a hard time seeing that commitment actually work, especially given the fact that fossil fuels and fossil fuel gathering infrastructure tend to be near city or around city infrastructure. So we'll have to see about this. I'm going to make a case. Four of what I like to see here, they have committed to a fair share or revolving fund. And there's like pillar four of this agreement here. And they would, they would say each of these cities makes into a local ordinance a revolving fund mechanism where the operators and funders of these data centers directly fund infrastructure upgrades locally and regionally and put surplus funds, surplus flows into community funds. So I like to, I've been talking about this for a long time as to me, it seems like a viable way to address the wealth asymmetry effect that's creating here. Again, I keep going back to oil and gas. Like if a region of the world is developed by oil and gas, especially in the United States, the money tends to accrue, wealth tends to accrue in the region, whereas data centers not. So they do spin off tax revenue. But if we're talking, we're comparing that to like the amount of wealth they create, it's just a drop in the bucket. If it's a $2 billion data center, that's like 2 gigawatts and it sends what, 50 million a year in revenue to the county in like property taxes. That may seem like a lot, but it's not a lot in the grand Scheme of the overall data center.
- [27:15]
Colin
Yeah, a few things here before we move on to Alex, Charlie, I will play devil's advocate and push back a little bit. Depending on where you are. Million in local taxes is a lot.
- [27:27]
Charlie
It can be transformative.
- [27:28]
Colin
It can be transformative for some of these country towns with only a few thousand people in their populace where they have no industry and the only in and the only property taxes could be honestly negligible because a lot of those places have very, you know, very slim property tax rates. And so I will say, depending on the context, that's a lot of money. That being said, to agree with what you're saying and a lot of pro data center people would say that this is basically amounts to extortion. But if you want to get this monkey off of your back for people fighting and hating on data centers, one of the better things you can do is probably show community goodwill and say that you're willing to fund infrastructure in the areas in which that you are deploying these data centers. And I do think that is one of the stronger, that's one of the stronger olive branches that they can extend and say we understand that you're worried about these things. You know, release some educational resources to say why some of those fears may or may not be justified and then show that you are actually going to funnel some of that money back into the community in a way that won't just totally break the pocketbook.
- [28:38]
Charlie
Yeah. So we'll have to see if. So this again, it's a commitment. It doesn't technically have teeth, but it is notable that this is a global. These are cities all around the globe, with the exception of China, who are committing to this. We'll have to see.
- [28:56]
Colin
Last note on that with China, going back to what you're saying about fossil fuels. This is the newly installed and decommissioned coal firepower plants in China over the last 25 years according to Statista. And it hockey sticks up starting in 2024 and reached an 18 year high in 2025. They are building coal faster than any other generated. And in terms of net gigawatts produced, they are building more coal than anything else in China right now. And it's like you said, they're pragmatic about it. This is the most reliable baseload we have. Yes, it's dirty, yes, it's polluting. It has a very high carbon footprint. But China is not going to play ball with anything that says that they can't do this. Like you said with the climate, of course they never have And I do wonder why they're even included on this map in the first place. Especially when you consider the reports that they have been potentially funding an astroturfing anti data center discourse in the US it's totally duplicitous and detached from reality. So that was one.
- [29:59]
Charlie
Tell me how. You tell me how you really feel, Colin. Okay, we're gonna, we're gonna keep going. We have on deck Alex Pruden, CEO of Project 11. We're talking about Quantum and the latest White House executive order. Before we bring Alex on, let's hear a word from our sponsor, Luxor.
- [30:23]
Colin
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 automatic profitability engine that runs every five minutes to adjust your fleet's power settings to live energy and hash rate markets. ERCOT back test 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, roughly half the cost of competition. And you can try it free for 60 days if you're interested. So go to Luxor tech forward slash commander to learn more.
- [31:02]
Charlie
All right, let's talk quantum and maybe we'll actually say the word bitcoin on this show. Finally took us half an hour. I'm going to bring up Alex here. Alex, welcome back to the show.
- [31:15]
Alex Pruden
Thank you. It's a pleasure to be here to talk about the implications of Quantum on Bitcoin. Mentioned it. So now let me do the honors for you.
- [31:24]
Charlie
Yeah, yeah, yeah. Okay. So I want to have, I would love to have you give a top down explainer of this, but actually I got to pull up this clip because this clip that you guys posted the other day of Trump kind of stumbling through explaining what this is, is gold. Classic Trump. Here we go. It's 20 seconds play. And we're going to be investing in American quantum leadership like never before to stay ahead of the pack. We're way ahead right now.
- [31:50]
Alex Pruden
We'll keep it that way.
- [31:52]
Charlie
The second order I'm signing directs federal agency to transition to what is called quantum cryptography.
- [32:00]
Alex Pruden
Do you know what that is?
- [32:03]
Colin
You're gonna hear?
- [32:04]
Charlie
You're gonna find it interesting. Cryptography for their computer.
- [32:10]
Colin
I mean, just an incredible Trumpism there. Oh, I was telling Charlie, Alex. It reminds me of when Zuckerberg was getting grilled by the Senate a few years ago and one of the Senate members Just showed a complete ignorance for how they actually make money. And I don't know how you can be signing an executive order like this and not really understand the basics of what you're trying to guard against.
- [32:32]
Alex Pruden
Okay, a little embarrassing, but I'm sure he's not the first president to sign something he didn't understand. To be fair.
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Charlie
That's fair. Okay, so Alex, what is this? What did he sign? Give me an explainer because is the White House doing quantum. What's going on?
- [32:46]
Alex Pruden
Yeah, so there's two orders. Okay. So any man, he mentions it in the clip, there's one about quantum leadership generally and that's really about investing in generating quantum computing and quantum enabled technologies. So quantum sensors is like another application for quantum mechanics. It came up in the news recently because it was thought that potentially some experimental quantum sensor was used to help recover the down pilot in Iran. So stuff like that is part of quantum. And so they want to basically they've mandated that, that the US specifically the Department of Energy, invest more in basically developing quantum technologies internally as well as investing in building a workforce around quantum and also building a scientifically, I think they call it a scientifically relevant quantum computer. I can't remember the exact term in there, but it's not, it's not cryptographically relevant. It's a scientifically relevant. You know, you could read that a few different ways. My read is that this is, you know, they don't necessarily expect there to be this by 2031 is when they aim for that to be scientifically relevant, I would say is like a slightly less specific term than cryptographically relevant. But bottom line is, you know, they want the US to be a leader in building and to be a pioneer in quantum technologies. General, that's. And the first executive order which basically directs all these agencies to start planning for that. The second executive order is more relevant to Project 11 and probably to digital assets, although they're not mentioned specifically. It mandates that the federal government effectively adopt post quantum cryptography by 2031. And not only the federal government, but basically like any vendor that is serving the federal government, you know, or anyone the federal government is paying is through contract relationship or whatever. Also has to adopt PQC and specifically the FIPS standard PQC or the NIST standardized FIPS compliant pqc. So that's mldsa, slhcsa, it's not important what those are, but basically those are the standards that the government had previously specified. What's notable about this is previously the government guidance, such that it was was this kind of high level document from NIST from a couple years ago that basically said, hey, for any high value systems, we need to deprecate classical cryptography by 2030. And then really we should deprecate it everywhere by 2035. But it was very vague and, you know, a lot of people kind of looked at that and said, ah, you know, 2035, we can kind of kick the can. By the way, it actually that that original document didn't mention post quantum cryptography at all. Just said, hey, we have to deprecate the old cryptography. So this, this explicitly does two things I think that's they're important to know. One is it pulls forward the timeline from 2035 to 2031. Secondly, it said, it states directly, hey, these are the algorithms that you need to adopt. So what is the upshot here? The upshot here in my mind is that the federal government, specifically the White House, is recognizing that there is like, this is an opportunity. Quantum technologies are advancing faster than people possibly expected. There's a chance they're trying to position this as, you know, as an opportunity to gain American leadership in this up and coming field of technology. And they also recognize that as this technology proliferates, all of our systems are going to potentially be made insecure. I mean, as you guys know, there's already a whole bunch of panic going on around all these AI models that apparently there was news today that the reason that Mythos got export controlled or fable got export control is they apparently broke all of the NSA systems that they tested it on within a couple hours. Right. So there's already like, I think, a lot of hair on fire regarding cyber security. And so I think this is just, like I said, you know, an attempt by the White House to get ahead on this new trend.
- [36:30]
Colin
So one kind of cheeky observation going back to making sure that government contractors are quantumly secure, maybe we do just need to get a strategic bitcoin reserve so that we can get the ball rolling on a soft fork for this. But tongue in cheek aside, Alex, a quick question for you. The executive order to me reads as either one of two things. It reads as lip service is something that's important and has been on the government radar for a while and they've already been funding it. Or, and, or it is recognizing and acknowledging, like what you said, with the capabilities with Iran for rescuing that downed pilot. They're seeing the application of this and they're saying we need to go into overdrive. What do you think? Do you Think it's somewhere in the middle. Do you think it's both? I think it's.
- [37:15]
Alex Pruden
I think it's both. And it's important to note that actually this executive order is an unfunded mandate. They actually, in the latter half of the security one, they say, hey, we direct all these agencies to find cost savings. We via migrating to cloud computing, et cetera, to pay for this. They're not actually putting any more money towards this. They're directing that money through. Cost savings is actually supposed to be applied.
- [37:34]
Colin
So in that sense, it's a little
- [37:35]
Alex Pruden
bit weaker than it could have been. I mean, they could have said, hey, we're directing these agencies to find, you know, or we'll ask Congress to allocate more money to pursue these priorities. They didn't do that. Right. But, yeah, I think. I think they're both trying to position, you know. Yeah, it's kind of a. I think a little bit of both, I guess. To answer your question, one thing about
- [37:55]
Charlie
the executive order is that it looks like it mandates vulnerability disclosure in a more formalized way. This seems big to me because a lot of our game theory around how potential bitcoin quantum break would happen or other crypto assets revolves around how it's disclosed and who has the computer and that. Do you have any insight to this or any takes on this part of the executive order?
- [38:28]
Alex Pruden
I don't think. Yeah, I don't necessarily see this disclosure requirement affecting the game theory of how potentially a quantum attack on bitcoin would happen. I think it specifically is directing this vulnerability assessment. And there's a whole bunch of parts of this. It's like there's a cryptographic bill of materials they're asking for for all these agencies. Effectively what they're doing is in more specific terms, adding requirements that, you know, these agencies are going to be expected to tell the White House, hey, this is exactly where we're vulnerable today. Right. And so these disclosures and these assessments are basically just, I think, aimed at the heads of these agencies. And they're, in effect, the message is, hey, we're telling you, you need to get serious right now. They're not like, again, like, because they're not funding it, it's like not as strong of a, you need to get serious as it could have been. But I think it's really mainly dedicated to these agencies. Now, interestingly, I was actually, I'm getting ready to ship a quick X thread on this, but it's like, I'm kind of curious on, like, how the DOJ or the Department of Treasury is going to handle this disclosures because the DOJ has seized all this bitcoin. Right. And now the Department of Treasury, I think technically is supposed to be. That's supposed to form the core of the bitcoin Treasury. So how is that going to be disclosed to the white. Because right. The US Government obviously can't mandate or force through a change to bitcoin, as we all know. And so I think it'll be kind of interesting to watch to see how that gets handled. Because. And that's. And that's really as far as digital assets concerned are concerned. You know, you have to kind of read between the lines and see what is implied by this. I think the only other major thing that's implied by this is, you know, again, like to the extent that anything that is built on a blockchain could ever become critical national infrastructure, whether that's through a strategic bitcoin reserve or whether it's stable coins, you know, that probably is ultimately going to fall under some relatively strict cybersecurity guidance that the rest of the government and much of, you know, critical industry has to already come under. So I think, you know, this, you guys know I've been beating this drum for a long time. I think this just adds more fuel to fire and I think takes away the arguments as for why it's okay to keep procrastinating and thinking about this.
- [40:30]
Charlie
So part of this is the. Is that it now it now there's like actual post quantum cryptography that is specified that you need to start integrating. My cursory review is that none of these are algorithms that have been proposed for Bitcoin because Bitcoin has a kind of more unique challenges. I'm curious your thoughts on the landscape of the specific cryptograph post quantum cryptographic schemes. Does bitcoin look at these and see any of them as interesting or promising or is it just something that's happening in parallel to the existing discussion of what it might look like to do these on Bitcoin?
- [41:23]
Alex Pruden
Yeah. So I'd say the scheme on Bitcoin that's received the most attention is the scheme from Blockstream called Shrinks. I think that's probably the one that most people have focused on that is. It's a variant of a NIST standard for that's a stateful signature scheme called xmss. So technically I like that's. They don't. Yeah, the. That's not mentioned in this executive order. And so I guess what I'm saying is like you Got to kind of really squeeze, you got to stretch rather your definition of what is compliant and standard in the text of this order. And you'd have to really be quite flexible near definition to say that the leading candidate for a bitcoin post quantum signature fits there. But that said, it's important to remember none of the cryptography used in Bitcoin or at least none of the signature, the curve that the signatures currently are built around are standardized. In fact famously Satoshi picked the non standard curve for it's a NIST standardized algorithm but using a non standard curve explicitly because it was a government made standard and then no one trusted it. And so you know, like at the end of the day I think it's, it's Bitcoin doesn't have to adopt these standards. I think the question is though, if we want, you know, what is the government going to do or how is the government going to view this asset class if they don't, are they just going to be like ah, whatever this is just makeup made up fake money. We don't care about this, we're not going to ever integrate it or make an effort to integrate this in the about our financial system or are they just going to like kind of give it a pass? Like ah, they tried to be compliant, they sort of modified the standard and that's fine. I don't know, it's hard to say.
- [43:03]
Charlie
You mentioned the cryptographic bill of materials. I don't know how interesting of a topic that is. I don't really know what that is or means when what is what what is that?
- [43:14]
Alex Pruden
It's basically just the simple version of it is like look, there's like an analogous concept is the software bill of material. So if like you know the government has a, you know, a vendor that basically like they build, built a, I don't know, like a website, say the VA website, you know, the software bill materials is basically like hey, here's like our actual code of our implementation. But also here's all the dependencies. Say we have like, you know, we're building on like next JS or something. There's a whole list of these dependencies. And this is important from a cybersecurity standpoint because you know again the way software development happens is you're, you know typically one person is not building everything, right? There's some libraries that relying on from various parties and oftentimes this is where vulnerabilities, things get hacked is because someone somewhere down the line of dependencies never bothered to update their schemes. So this is really what these crypto, like this bill of materials or cryptographic inventories it's also called, comes into play. So I don't think there's really anything maybe worth noting on the part of this executive order for these government agencies other than it's good practice for them to ask for this as a starting point. I think actually, though, the interesting part, maybe for the broader industry and blockchain is, you know, this is going to have to be step one for basically think about a company like Coinbase, a cryptographic bill of materials for a company like Coinbase that integrates, I don't know, a thousand different blockchains, all of which use different versions of various cryptography and all of which are considering different versions of postpartum cryptography is going to be an enormous undertaking. And, you know, and again, in this case, we're not talking about necessarily information being exposed, talking about value being lost. Right. And so this is, this is again, like, I think for a lot of these infrastructure companies that are touching blockchains and digital assets, specifically this effort for a cryptographic bill of materials. If you think it's going to be hard for the government, I think it'll be at least as hard for any infrastructure provider in crypto.
- [45:02]
Colin
Alex, can you give us a checkup on where you feel like the discourse for quantum proofing Bitcoin is at this point? It seems like Blockstream has really taken the torch here in terms of developing a standard that most people think will be leading. I think that in some cases it's quenched some criticisms that developers aren't doing anything. Where do you think we're at in terms of this discussion? Because a year ago or earlier this year, we kind of reached fever peak mania in the sense that people were scared about it or saying there was nothing wrong, there's nothing to do here. And the conversation seems to have died down. But what are you seeing on the ground in terms of actual development within the people who would drive this forward?
- [45:45]
Alex Pruden
Yeah, I think you're right. I think Blockstream and Jonas Nick in particular have kind of taken the ball on this and they're pushing forward on, on this Shrinks proposal, which I think is positive, I think so. Whereas a year ago, I think, I think this is broadly, you know, broadly just viewed as like not in the Overton window at all, Quantum's fake, blah, blah, blah. Now I think it's like people are talking about it. Blockstream is doing something in terms of, I would say, research. I'm a little bit, I guess I Think one danger I see here is people are, I think, very quick to just reach for the. Oh, Blockstream is working on it. We're good. And I mean ultimately Blockstream working on it in form of research is good, but that's a very long way from like this algorithm has been implemented, it is being run in various testnets which by the way costs a lot of money to run rigorously. And by the way, you also need to integrate this into, I don't know, a ledger. Things like that, like all, all of those steps are very, are, are pretty far out there. And, and I, I would say there, there was a bunch of, I would say there's a burst of initial progress from this. Like in terms of describing the Shrinks algorithm. Blockstream and Jonas are now on a, basically a PR campaign to go talk about it everywhere. I, I haven't personally w a bip. There's no BIP around this. There's supposedly going to be one, but there is no BIP that's yet been authored. And you know, other than it being implemented on their own liquid side chain, there's not really anything else tangible that we can look at with regard to this proposal by the way. And there are other proposals that people have talked about and some folks have talked about isogenies which are very, it's very, I would say, exotic on the spectrum, but others have, you know, have talked about lattice based cryptography. Right. And that's exactly the type of cryptography that the EO is trying to standardize. And so, yeah, I think it's still pretty early and I guess my caution to the industry would be like, okay, just this is all of our system, like Blockstream does not own Bitcoin. We all are stakeholders and so we all need to continue to think about this and continue to invest time and effort into making this happen.
- [47:52]
Charlie
There's like five different things associated with the quantum discussion. There's the cryptography, there's what we do about old coins, what do we do about migration. You know, each of these is a potential almost certain like point of disagreement in the community and it almost seems like insurmountable whether we'll actually be able to, you know, have any kind of forward progress if we, if we do decide to soft work. Which of these do you think today, now that there's been a year, half a year's worth of quantum discussion, which of these do you think is the biggest tripwire for just the progress towards a post quantum Bitcoin?
- [48:44]
Alex Pruden
It's interesting, quite frankly. I think the biggest Tripwire. And the biggest impediment is apathy. So it's none of the things you mentioned. It's just people being like, oh, other people working on it. It's hard. But smart people are out there. There's some core devs out there. They're doing some black magic inside of a room. And I think that's just nonsense. And I think the apathy is ultimately, if we fail, it's because of this apathy that's pervaded everyone's mind on this front at least including very large stakeholders. I think the stakeholders, even ones I think, I would say, and I talked to a fair number of folks that have a lot of bitcoin. I think they understand there's a big risk, but I think there's a fear in provoking some of these emotions that exist within the community around these issues that you're talking about with satoshi's coins and blah, blah, blah. They don't want to be perceived as enemies. Right? And so I think that is encouraging this apathetic attitude. We're like, well, like, we don't want to weigh in because we don't want to get blamed. So I think, I think it's the apathy. I. And honestly, I think, I think the attitude that there are all these hard issues as you framed it is I also think a tripwire. Because I think, look, at the end of the day there's. I would, I would distinguish these into two categories of things. There's engineering problems, okay? There's like right now the thing can be like, you can reverse engineer a signature with quantum computer. Like, and you want to get a signature that doesn't allow that. So there's just a strict, like writing that code, putting it on a test net, migrating value into new UTXO type. Like. So there's just, there's that part that is hard to be clear and it's difficult. There are trade offs or block space, et cetera. But like, that is that. That is not. I wouldn't categorize that as like a philosophical issue. Like, people are like, okay, is the block size too good? But ultimately, like, there's hard work to be done that isn't like particularly controversial, I don't think. And then there's like all this, all these controversial topics. But look, I think there's. You can totally defer those, I think down the line. I mean, there's absolutely no reason why we shouldn't. We don't really. There's no good reason why there's not already a signet or a test net that is public. The post quantum signatures are running a various types.
- [50:42]
Charlie
Whatever.
- [50:42]
Alex Pruden
Forget shrimps. Just take one of the off the shelf nist ones. I mean, they're literally already implementations all over the place. There is zero good reason we don't have a test net already with this. Right. Part of the. Well, part. And the reason the. Not the good reason that we don't is because of apathy. Generally people are like, oh, everyone else got it. We don't have to worry about it. But I think, you know, like the Satoshi coins thing shouldn't be an excuse for why we don't want to tackle it. Right. And I think. I think that's kind of a takeaway for. I would encourage anyone who's listening to this. You know, I like. I think this. That is the tripwire is thinking there's a tripwire, right? Ultimately there's going to be. I mean, this is bitcoin. You guys have been around forever. Everything is political.
- [51:23]
Charlie
Everything's political.
- [51:25]
Alex Pruden
What color my hair is, you know, whatever. Right? Like people are all going to argue about it, whatever. It doesn't really matter. But ultimately the survival of the system depends on whether or not it is engineered and continues to evolve in a way that it can actually achieve the function that Satoshi described. That's what we should all focus on.
- [51:44]
Charlie
So I hear that if there's a will, there's a way.
- [51:47]
Alex Pruden
Absolutely.
- [51:49]
Charlie
Alex, thank you so much for coming on again. Great. Quick call. Thanks for hopping on. You know, if the President tweets about Quantum, we gotta talk about Quantum on this show. Thank you so much.
- [52:01]
Alex Pruden
No problem. I'm bummed we didn't get a chance to go through some of the really great. We got the Trump quote. We didn't get a lot of the AI slop. Yeah, really good ones. My personal favorite, the Department of War one, which was.
- [52:13]
Charlie
Oh, I've actually got here. I gotta put. Well, while you're here. Here, I gotta pull it up. This one, there's that my.
- [52:19]
Alex Pruden
The quad. The Department of War had one as well. Where we go one, we go Quantum, which is my personal favorite. That one out too. Anyway, thanks, guys. I appreciate being here.
- [52:29]
Charlie
Cool. Thanks, Alex.
- [52:33]
Colin
That's right, folks. QAnon is out. Q dominance is in.
- [52:38]
Charlie
That's a good banger. Yeah. Gotta leave it to Trump. Even something as arcane as Quantum, he will be able to make entertaining just by virtue of his personality.
- [52:54]
Colin
That's true. And the interns running the X accounts will find some way to make it cringe.
- [52:59]
Charlie
He's like, is it cringe or is it base? Okay, we gotta move on. We gotta, we. Okay, we gotta talk stocks. We're gonna talk. Debbie. It's in. Corey. We were talking about the stock market. I know that's what everyone even listens to the show for. So we'll get there after a word from our sponsor, Lygos.
- [53:23]
Colin
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- [55:25]
Charlie
From.
- [55:26]
Colin
From Nvidia. Yeah. Actually now that I'm looking at this, I realize that this is outdated. I think the news was just highlighted when this came out. But I guess it's worth noting just because we've talked a lot about how Nvidia you've mentioned the circular round of financing or the circular financial nature of some of these deals. But this is mostly important just to highlight Nebius's aspirations. They want to deploy more than 5 gigawatts by the end of 2030. And this Nvidia investment will go part of the way to help that happen. But that's going to require a lot of capital.
- [56:03]
Charlie
And so is that in addition to Nvidia and iron's 5 gigawatts, because iron, it's coincidental that Iron also is trying to secure 5 gigawatts of power pipeline, of which a lot will go to Nvidia.
- [56:19]
Colin
I assume that it is because Nevius would have their own deployments, whereas Iron, they're trying to do fully vertically integrated NEO cloud rollouts where they will own the data center and the GPUs. That's at least the model currently. I'd be curious to see if they pivot towards a lighter model where they're actually going to just deploy at powered shells as well. But I mean between the two of them, 10 gigawatts, it's massive. a certain point the numbers really are just aspirational. These are roadmap numbers, but who knows if they'll actually hit them. There's too many unknowns in terms of securing this capacity, irrespective of the demand question. Maybe we build all this out and we still are short capacity. Maybe we build all this out and actually GPU prices crater because there's just way too much supply to meet demand. But not too much more to say there, Charlie, but a congrats to the Nebbyus and Core Weave team bumping up into the Nasdaq 100 Neo clouds are having a moment. People are starting to wonder if they are overvalued. Brother, is the entire sector overvalued? That is the question I think that we will continue to answer.
- [57:33]
Charlie
Is it overvalued or are you under allocated?
- [57:36]
Colin
So I mean you would have thought it was overvalued at the end of last year and a lot of these stocks are up another 100 to 200% is getting pretty frothy. It seems like at least, if not a popping moment, a correction would be necessary over the coming months.
- [57:50]
Charlie
But calling the bear he doesn't. He thinks that because it went up 100x over the past few years, it can't go up another 100x. He's just shunned the non believer.
- [58:00]
Colin
Call me a boomer, but when you look at the. When you look at these ratios, it's hard to not think, ooh, this is getting a little top heavy. But I've also argued the opposite with my dad to where what we're looking at is the most transformative technology in human history and maybe investors are just going to bet whether or not you think it's irrationally on the promise of
- [58:25]
Charlie
that, I'll just say this, I'm glad. No longer are we betting on which SaaS sales application is worth owning over the next 30 years and rather it's more human flourishing. Like you know, make the machine God or put the machine God in space type investments that we're making. Way more fun than like whatever the heck Salesforce does.
- [58:52]
Alex Pruden
Right?
- [58:53]
Colin
And I, you know, and on that note, not SaaS, but I was just thinking about this with relation to Elon buying Twitter and then taking it private before integrating it into X, AI and then specifically SpaceX. Now when you think about the,
- [59:11]
Alex Pruden
how
- [59:11]
Colin
do you put it, the actual utility of a social media company and the actual lucrative nature of it, why would that ever be public to begin with? The only reason Meta is worth anything is it's not Facebook. I mean they do make a decent amount of money from data harvesting, but it's the data center play now and at the end of the day that is one of the bull cases for these AI plays. Land grab going on right now and there is a market share grab going on. And if you're looking at the trajectory of these technologies then yeah, why wouldn't you want to try to be over allocated towards them or rush into this trade? Because yeah, you can feel kind of painfully short sometimes, even if you look at these multiples or you're saying they don't really make sense. Value investing is dead is another way to put it. We're all just trying to hyper gamble our way out of the future underclass.
- [60:03]
Charlie
Yeah, you can't just buy bitcoin anymore. You actually have to gamble to get out of the permanent underclass. Anyway, on that note, we're going to wrap this up. Thank you so much for listening to Blockspace Live reminder. We go live every single weekday at 1pm Eastern. Run a little over an hour featuring quick hits on AI, data centers, emerging tech and sometimes we still talk about Bitcoin. If you like the show, you'll Love the newsletter. Newsletter.blockspace media.com comes in to come. We slide in your inbox every every
- [60:41]
Colin
or stumble into your inbox.
- [60:43]
Charlie
Oh boy. I. I've been offline too long, man. Yeah, and if you like the the live stream, it turns into podcast shortly after anywhere podcasts are found. I'm Charlie.
- [60:55]
Colin
I'm Colin, and this show is brought
- [60:57]
Charlie
to you by CleanSpark. Nasdaq listed ticker CLSK. See you all tomorrow.