SpaceX’s $250B IPO Raise, KEEL’s $458M Convertible Note, Hut 8’s $4.25 Senior Note, OpenAI’s 10 GW Datacenter

Summary

Blockspace: AI & Bitcoin

Episode: SpaceX’s $250B IPO Raise, KEEL’s $458M Convertible Note, Hut 8’s $4.25B Senior Note, OpenAI’s 10 GW Datacenter

Hosts: Charlie Spears, Colin Harper
Date: June 10, 2026

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Episode Overview

This episode dives into a cross-section of the sizzling synergy between AI, Bitcoin, and datacenter infrastructure:

• The unprecedented hype around SpaceX’s pending IPO, with a historic $250B in demand
• An interview with Jamie McCavity (CEO, Cormant) unpacking the economics and shifting incentives in Bitcoin mining vs. AI datacenter builds
• Deep analysis on KEEL’s $458M convertible note and speculation on their rumored AWS-related expansion
• Details on Hut 8’s $4.25B senior secured note, reflecting a maturing capital market for miner-turned-AI firms
• Discussion of Crusoe’s Wyoming datacenter withdrawal and the accelerating NIMBY (Not In My Backyard) movement
• Exploration of OpenAI’s planned 10GW, $500B datacenter in Ohio, with commentary on the era-defining implications
• Ongoing commentary about tightening power markets, capital cycles, and the collision of compute, regulation, and community resistance

The tone is punchy, skeptical-but-inquisitive, and mixes real-time market chatter with big-picture strategic insights.

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Key Discussion Points & Insights

1. SpaceX’s IPO: Hype, Over-Subscription, and Pre-IPO Market Mania

[00:06–12:37]

• IPO Summary:
  • Demand for SpaceX shares is $250B+, over 3x the $75B the company seeks.
  • Largest IPO ever by far (to date, previous record: Saudi Aramco at $29.4B).
• Unprecedented Retail Participation:
  • 30% of shares allocated to retail; brokers like Fidelity dropped IPO buy-in minimums from $500K to $2K.
  • Market feels “frothy,” akin to Main Street, not just Wall Street.

    “The cashier at Home Depot just asked if I wanted to round up to support the SpaceX IPO.” (B, 04:13)

• Pre-IPO Secondary Markets:
  • Pre-IPO shares on platforms like HyperLiquid trading at a 15–16% premium over offering price ($135).
  • These “prediction markets” might signal post-IPO movement, but could be distorted by illiquidity or hype.
• Skepticism & Contrarian Signals:
  • Some concern this exuberance could mark a market top; institutions likely already have their piece—retail and new institutions appear to be driving the current surge.
  • Analogy to bubbles and meme-like enthusiasm, but the market so far shows little inclination to fade Musk-related ambition.

Memorable Quotes:

“Do you need another flashing signal that things are getting too heated?” (A, 03:09)
“Maybe these pre-IPO trading platforms are now the testing ground where the market is actually going to value these companies.” (A, 08:10)

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2. SpaceX as a “Space Data Center” Play

[08:10–14:46]

• Not Just Rockets:
  • SpaceX increasingly being pitched as a “data center in space” company—AI/HPC and connectivity will dwarf launch revenues.
• The Permitting Angle:
  • Musk pitch: Far easier to get permits for satellites and solar power in space than on NIMBY-ridden land.

    "Space is really a regulatory play. It’s harder to build on land than in space. ...You get five times the solar effectiveness in space, no batteries needed.” (Paraphrasing Musk, B, 10:10)

• Commentary on Timeline Realism:
  • Elon is great at raising capital on aggressive timelines, but doubts linger about delivery—5, 10, or 20 years out?
  • Nonetheless, data center permitting on earth is becoming an actual chokepoint, strengthening the blue-sky narrative.

Memorable Quotes:

“It’s always sunny in space!” (B, 10:55 – referencing Elon's shirt/slogan and solar efficiency)
“NIMBYism has to evolve into ‘Not in my Low Earth Orbit’.” (B, 08:53)

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3. Jamie McCavity (Cormant): On Bitcoin Mining vs. AI Datacenter Gold Rush

[15:34–37:05]

Interview Highlights

• Cormant’s Texas Expansion:
  • New 58MW site in Jim Wells County, Texas—first greenfield project, close to Corpus Christi and San Antonio, “just” outside the 50-mile coastal risk zone.
• Power, Permitting & Data Center Value:
  • Cormant’s play: Own land and grid connections in “remote” Texas—a “call option” on future data center demand. That thesis is proving out.
  • AI data center clients have far higher diligence and risk thresholds vs. miners (e.g., considering 500-year floodplains and Cat 5 hurricane scenarios).
• Shift in Revenue Models:
  • Bitcoin mining: $1M/MW/year is possible, but AI data centers can fetch up to $10M/MW in value.
  • AI tenants willing to sign long-term leases and finance with 80–90% debt, driving up valuations and shifting miner incentives.

“There’s not really a world where it makes sense, if you’re trying to value maximize, to keep mining Bitcoin once you can host AI.” (C, 22:46)

• Private vs. Public Miners:
  • Private miners have agility, avoid shareholder and disclosures headaches.
  • However, public miners can access cheaper, larger pools of capital. AI datacenter market still welcoming to private equity behemoths.

“Crusoe…has reached a $10B valuation as a private AI data center company.” (C, 25:04)

• Capex and Cycle Sustainability:
  • The “AI CapEx supercycle” could last another 2 years—driven by unprecedented productivity “commoditized digital labor."
  • Inevitable commoditization will eventually drive AI compute returns down to the marginal cost of (energy) production, mirroring Bitcoin’s hash economics.

“At some point it will return to the marginal cost …like Bitcoin mining. It’ll be about energy optimization, CapEx optimization, and being responsive to power prices.” (C, 29:48)

Tension & Outlook:

• Hashrate Volatility Era:
  • The “always-on, high-uptime” miner is dead. Cheap power is now intermittent—stranded solar, gas, wind.
  • This will produce more hash rate volatility and, ironically, may concentrate block confirmations around U.S. banking hours (when solar’s up).

“Bitcoin mining will continue to feed on that [stranded] power like the dumpster diving commodity industry that it is.” (C, 34:26)
“Hash rate volatility, mempool volatility, fee volatility…that’s the new era.” (C, 36:47)

Notable Moment:

Colin: “So, Jamie, what’s your hash rate outlook with prices and sentiment in the dumpster?”
Jamie: “It’s hard to see an environment where hash rate grows this year…We’ve exited the era of high-uptime, one-year payback mining. It’s over.” (34:26)

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4. Keel’s $458M Convertible Note & the AWS Data Center Rumor

[39:45–46:46]

• Deal Terms:
  • $458M convertible, capped to limit dilution ($7.41/share conversion, $11.86/share call cap, 25–100% premium to current price).
  • Cash used to develop Pennsylvania and Washington data centers (Panther Creek, Sharon, Moses Lake).
• Speculation and Market Chatter:
  • Rumor: AWS job post in Moses Lake, WA, suggests Keel may land a hyperscale tenant (Amazon).
  • Board member ties (Wayne Dusso, ex-AWS) and mysterious upsurge in stock add to intrigue.
• ESG Risk:
  • Colin wonders if Keel’s coal-power sites in PA invite ESG/nimbyism risk, limiting their tenant pool.

“Could you imagine if a big five leased a coal-fired data center and normies found out? There’d be pickets in the streets.” (A, 46:23)

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5. Hut 8’s $4.25B Senior Secured Bond: Investment Grade Signals

[49:05–53:21]

• Details:
  • $4.25B 6.129% senior secured, “triple B”—no longer considered junk. Non-recourse to Hut8 parent, project-level risk isolated to Beacon Point Data Center LLC.
  • 3.5 years interest-only, then amortization begins as site ramps.
• Significance:
  • Reflects the shift from “bitcoin miner = risky” to “AI datacenter builder = investment grade, stable cashflow.”

“Triple B is two notches above junk…Hut8 moving up the ladder.” (A, 52:58)

• Trend:
  • Similar construction/financing style to Cipher, indicating wall street’s growing confidence in this new “compute landlord” asset class.

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6. Crusoe Pulls Out of Wyoming: NIMBYism and Scalability Clashes

[54:41–59:51]

• Headline:
  • Crusoe (ex-Bitcoin mining innovator) drops out of a planned 1.8–10GW datacenter in Cheyenne, WY. Customer demand not the issue.
• The Actual Chokepoint:
  • Local backlash and permitting difficulties (e.g., 5,600-bed “man camp” for construction workers rejected by officials).
• Tenant Speculation:
  • Meta and Microsoft have sites; Amazon or Google were likely customers.
• Market Analysis:
  • Not a sign of tech/AI infrastructure pullback; rather, a case study in how permitting bottlenecks now rival capital or generation in importance.

“You just can't get around the fact that we're building giant altars to Moloch coated in beige or gray." (B, 47:10)

• Scale Mind-Boggler:
  • Crusoe claims a pipeline of over 40GW—but sanity checks abound: is this pure bravado, or is ambition outpacing execution?

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7. OpenAI’s $500B, 10GW Ohio Datacenter: Peak AI Hysteria or Inevitable Scale?

[61:04–66:44]

• Project Details (per leaks):
  • 10GW “Stargate 2.0” datacenter on federal land in southern Ohio (Portsmouth, Pike County), ex-nuclear/uranium plant site.
  • Capex: $500B, up to 20 years lease, with phase 1 a “modest” 800MW in 2028.
  • Partners: OpenAI, Nvidia (potentially providing both hardware and financial guarantees), SoftBank’s SB Energy (energy transmission and build).
• Financing: Circularity & Concentration Risks
  • Nvidia providing both the chips and the credit backstop for tenants/landlords—market wonders if this creates systematic risk.
  • “Dizzying” figures—reminds hosts that, in contrast with money printing, you cannot print 10GW of power—it’s brick, steel, and years.

“When you see numbers so high that it shocks even people like us, there’s probably SoftBank involved.” (B, 63:40)

• Location Analysis:
  • Rust Belt revival: site sits on a Cold War uranium facility; local and federal collab underway.
• Energy Context:
  • 10GW = 1/6 of ERCOT’s typical production; “it’s hard to even visualize this scale.”
• Skepticism:
  • Still not officially announced, many details unclear (ownership, control, what Nvidia’s actual stake is).

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Notable Quotes & Memorable Moments

• Jamie McCavity (Cormant):

  "There's not really a world...where it makes sense to pursue bitcoin mining if you can host AI. The AI tenants pay top dollar." (22:46)
  "Bitcoin mining will continue to feed on that power like the dumpster diving commodity industry it is." (34:26)

• Hosts on SpaceX data center pitch:

  "NIMBYism has to evolve into Not in my Low Earth Orbit." (08:53)

• On the giant Oklahoma datacenter:

  "You go to these giant factories and power plants, and as much as you can imagine them spewing coal...they look pretty cool 150 years later. Data center builders, spend the extra money, make them look less like an IKEA." (B, 48:03)

• On financing:

  "At what point do these miners/AI factories just become banks themselves?" (B, 53:53)

• On the OpenAI/Nvidia deal:

  "It’s dizzying amounts of money, but this time it’s not just numbers on a screen—you can’t print 10 gigawatts." (A, 60:30)

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Timestamps for Key Segments

| Segment | Time | |------------------------------------- |-----------| | SpaceX IPO discussion | 00:06–12:37 | | Data centers in space & Musk’s vision | 08:10–14:46 | | Jamie McCavity interview (Cormant) | 15:34–37:05 | | Keel’s $458M note & AWS speculation | 39:45–46:46 | | Hut 8’s $4.25B bond, new credit era | 49:05–53:21 | | Crusoe pulls out in Wyoming, permitting | 54:41–59:51 | | OpenAI’s 10GW Ohio datacenter | 61:04–66:44 |

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Takeaways

• Extreme demand for hardware, sites, and datacenter infrastructure is kicking off multiple bubbles, and maybe new commodity cycles.
• Miners are increasingly pivoting to “AI landlord” models as economics of compute-based hosting vastly outstrip basic bitcoin mining.
• Regulation, permitting, and simple land are the real bottlenecks—outpacing even power procurement in some regions.
• Financial engineering, asset-backed credit, and even vendor guarantees (Nvidia) are restructuring how $10-100B projects get built.
• The sheer scale of today’s AI bets—the equivalent of nation-states—makes even recent cycles look quaint.
• Resilience, skepticism, and attention to on-the-ground (literally and figuratively) details are crucial to separating hype from substance.

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Overall Tone & Recommendations

The episode is lively yet grounded, blending sharp skepticism towards hype cycles with an underlying sense of excitement about the shifting ground between compute, capital markets, and real-world “permission to build.” It’s invaluable for anyone tracking the intersection of Bitcoin, AI, and infrastructure in today’s investment landscape.

Transcript

[A]

Foreign. What's up y'?

[B]

All?

[A]

Welcome back to Blockspace Live brought to you by Clean Spark. We have a fat lineup today Charlie. We're going to start with SpaceX's IPO being oversubscribed 3x because apparently my friend the market has learned you don't bet against Elon Musk even if the economics were might not make sense. After that we have Jamie McCavity of Corman on to talk about their new facility in Texas and just to get his, you know, his takes on current bitcoin mining, economics and opportunity and what we should expect over the next year's hash price craters towards all time lows once again and hash rate is following suit after that we have notes on Keel and Hut 8 senior secured notes the that they just announced the pricing of today and then we have a story on Crusoe pulling out of a massive data center in Wyoming. And then we will end with OpenAI planning a 10 gigawatt $500 billion data center in Ohio. If you thought that we have reached peak hysteria for NIMBY data centerism, you haven't seen anything yet.

[B]

Box Space goes live weekdays at 1pm Eastern featuring quick hits on data centers, data centers, data centers and data centers. Also some bitcoin, AI and emerging tech. If you like what you hear, this turns into a podcast anywhere podcasts are found if you are listening on the Coindesk feed. We are leaving Coindesk next week, so head over to the Blockspace feed, search Blockspace, your podcast listener of choice and subscribe there. We'll see you over there starting next week. Also check out our newsletter. If you missed the live stream, you can get the highlights from the newsletter. Newsletter blockspace media.com this show is brought to you by CleanSpark NASDAQ listed ticker CLSK. More on them later on the show. Let's kick it off. Rather, let's launch it off because we're going to talk about SpaceX, Colin. I mean the IPO is this Friday and boy is it going to be a heater. The news this week from Reuters is that SpaceX has drawn more than $250 billion of investor demand for what stands to be the largest ever IPO, dwarfing the 75 billion billion that the firm is seeking to raise. This means the SpaceX IPO is oversubscribed three to four times the planned offering size. Holy smokes.

[A]

Holy smokes indeed, dude. And for context, the largest IPO in history was Saudi Aramco at 29.4 billion.

[B]

So which is basically the entire economy of the leader of the OPEC countries. And then here we have SpaceX. Yeah.

[A]

And the 75 billion alone would be incredible compared for a new record setting if it's actually 250 billion. Charlie. I mean I don't want to, you know, I don't want to be that guy. But just to be a contrarian. Do you need another flashing signal that things are getting too heated?

[B]

No. I mean, no, I, you know, or you could just be wrong. Colin. So let's dive a little bit into the, the deal some more. So just to review the SpaceX plans to sell 555.6 million Class A shares. The meme number 555 at $135 each. It raised 75 billion and value the business a little over 1.7. More like 1.8 trillion. And 30% roughly of those shares are allocated to, to retail investors. You may have seen stories about. I think it's like Morgan Stanley or Fidelity lowering the threshold for their retail clients to be able to buy in. And that's where we get this tweet that I've got pulled up from Luke Cannon who tweets sardonically. The cashier at Home Depot just asked if I wanted to round up to support the SpaceX IPO. I mean that's kind of how it is. This is very much, this is like Main Street IPO almost than it is a Wall street ipo.

[A]

I think you're curious about that though, because when you see that 250 billion, when I look at that, it's like what institutions here are piling in at this point and which ones have been

[B]

left out of the private race, They've already piled in. That's the thing. SpaceX has been a private company for 25 plus years, right? But everybody who wants a piece, who's already one of these qualified invest, you know, institutional investors has already gotten a piece.

[A]

But my, my point is saying that is 250 billion is not just retail though, right? That's a lot of money. So like there are institutions piling in now. And that is the one thing that I think I would love to see the actual allocation. How much of that is coming from retail? How much of that is coming from brokerage accounts like through Fidelity where they'd lowered their minimum to invest in an IPO to 2000 from 500,000. Pretty insane. But I think this will give people. There are two ways to read this. I think this is either going to give people massive confidence in the IPOs, immediate success after listing or it's going to get people screaming for the exit because this thing is massively oversubscribed.

[B]

I think this indicates, given that we're 48 hours away, that the IPO is probably, probably gonna go up after launch and it'll be a very, very long weekend where you can't trade stonks except if you go to Hyper Liquid which I've got pulled up here. So you have the Hyper Liquid Pre IPO SpaceX shares which launched in mid May at like 215 bucks and it kind of was flat and went down the first week of June. And so here's the rough math is that a week ago these pre IPO shares were trading about 40% plus over like spot of the $135 per share. Now they've dropped to $162 which means that they're only like 15, 16% over IPO pricing, which interestingly enough Colin actually matches that of where the pre IPO of Anthropic currently sits. So it's almost like if you want to trade 247 and if you want to get access to pre IPO shares on one of these gray area market platforms like Hyper Liquid, maybe the premium is 15% over spot. So it's kind of interesting phenomenon we're seeing here.

[A]

I agree with that. And I wonder if what we're seeing is almost the same role that prediction markets play for political outcomes that this will be, I mean nothing like Hyper Liquid has existed for equities and for specifically the pre IPO landscape. Right. And so with, with SpaceX and with Anthropic and I would assume also eventually OpenAI, you'll get an interesting glimpse into investors mindsets in terms of whether or not a company is overvalued or undervalued based on those premiums or discounts. Maybe, or maybe that's just the premium to carry exposure to this stock on these liquid synthetic markets. Do you see what I'm saying? It's like will this actually prove to be. These are testing grounds right now for where the market's actually going to value these companies. And I think it's going to be very telling once the IPO actually comes out as to whether or not these are legitimate proxies or actually good forecasts for where the stock is going to.

[B]

Yeah, I want to switch gears a bit on this SpaceX thing and I want to talk about the space part of the data center deal. So as we know, and if you've been listening to our content for the past week, SpaceX is not a rocket company. It's a rocket company that shoots data centers into space where the majority of the revenue is going to be data center and AIHPC related. And so until about 48 hours ago, when SpaceX put out their actual more specs on the satellites that we featured yesterday on how they're going to put this computer into space, a lot of people were like, space data centers don't work, yada yada yada. And I found this clip from Elon being interviewed on Dwarkesh Patel and drinking beer, a couple Guinness with Dwarfache where Elon actually talks about one of the reasons he likes space. And it actually is the literally the most boring thing ever. It's because it's easy to get permits to build a data center in space in the same way that there's always sun in space. You don't have any neighbors in space. So I think like, you know, the NIMBYISM has to evolve into not in my low earth orbit, but here's Elon talking about this. I think it's pretty hard to cover installed panels. You have to get try getting the permits for that. Space is really a regulatory play. It's harder to build on land than it is in space. It's harder to scale on ground than it is to scale in space. But also you're going to get about five times the effectiveness of solar panels in space versus the ground. And you don't need batteries. I almost wore my other shirt which says it's always sunny in space, which it is. So because you don't have a day, night cycle or seasonality clouds or, or an atmosphere in space because the atmosphere alone results in about a 30% loss of energy. So any given solar panels can do about five times more powering space than on the ground and you avoid the cost of having batteries to carry you through the night. So this is really interesting because we'll come back to this point that Elon made and this was like last February that he made, which is, and he actually seems unbelievably prescient here because right now the top stories are about local and community pushback to data centers. And that is actually right now probably a bigger constraint and execution risk factor than like procuring power generation maybe power generation is not as scarce as permitted land and permitted power. So if you're an investor and you're seeing this change, then you might buy into Elon's pie in the sky quite literally pitch that space is blue ocean.

[A]

Figuratively, to me it's just A matter of timelines. Right. As a lot of people have pointed out, Elon is very good at selling the future on an economy aggressively accelerated timeline that quite often his companies do not meet. So he's saying what, like 20, what are you saying? 20, 28, 2030, when they'll start launching these things. It's like he's basically signaling a few years out. Right. And if they do hit that, then to keep using corny space puns, the. The star is literally the limit in some cases.

[B]

For what? And the stars align. You're metaphoring up your mixes.

[A]

So to me it seems like a foregone conclusion that we will eventually do this with enough technological progress. But there's a lot of healthy skepticism right now, I think rightfully so, over whether or not this is a 5 year out, 10 year out or 20 year out endeavor.

[C]

Yeah.

[B]

While we're kind of waiting for Our guest Jamie McCavity From Cormant to come on, I'll bring up some criticism to Elon's timeline that I've seen. I saw a tweet. Dang it, I wish I had it ready to go. But it was something along the lines of this. If we look back at Elon's big ambitious projects, the hyperloop, various boring companies, robotic, entirely robotic, like Tesla manufacturing facility, none of these really came to fruition. A couple have gotten a little bit there. But it's, it's been a, it's been a while since we've seen like one of these giant big visions of Elon's like come to fruition. I'll acknowledge that I'm going to sound a lot like an Elon bull. I'm going to sound like a huge like Elon simp here. And I am, you know, to some degree. But consider that like I like who's paying, like what's the economic incentive for to build a hyperloop? What's the economic incentive to like build a giant like tunnel underneath LA or Las Vegas that. That Elon was planning on doing.

[C]

Yeah.

[A]

Or Nashville boring through bedrock, which is what they're currently trying to do.

[B]

Exactly. Like, it makes a lot more sense to me that you have a client and you have infinite money pouring into space and more so data centers. So it's like you have abundant clients and capital waiting for you to go build that thing. Maybe this is act. Maybe the, the problem was not really an engineering one, but rather a markets and demand one.

[A]

So you saying infinite money reminds me of the hats they were passing out at Bitcoin 2025 during the treasury company craze that said infinite money and if you needed any top signal then that was that. Anyway, side note.

[B]

Yeah, but yeah, maybe there will be something like that. We need, there's an abundance of merch and shirts and if SpaceX can't fulfill the IPO launch demands, then I'm certain they have a bunch of memes they can put on shirts.

[A]

Yeah, they can sell those it's always sunny in space shirts. People love that.

[B]

Yeah. All right, we're going to come back down to earth. We've got in the wings, we've got Jamie McCavity of Cormant waiting to come on and we'll have him on here right after a word from our sponsor, CleanSpark.

[A]

We are CleanSpark, America's Bitcoin miner. A publicly traded company with the largest

[C]

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[A]

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[C]

We are setting the standard for what's next.

[A]

Learn more about the intersection of energy and [e-mail]

[B]

all right, we've got our boy Jamie in the wing is going to talk about Corman in Texas. Let me bring him on up here. Jamie, welcome to the show.

[C]

What's up boys? Good to see you.

[B]

Howdy.

[A]

You too man. Thank you for joining.

[C]

Thank you for having me.

[B]

So you guys just announced a big deal, I see it on LinkedIn. 58 megawatts, Jim Wells county in Texas. Am I correct that this thing is supposed to energize in October, August is what this, what you guys say? Tell me about this.

[C]

Yeah, yeah, thereabouts. August, between August and Thanksgiving is what we're projecting. But it's, it's our first greenfield start to finish site. Our, our existing site in Fort Stockton was a, a brownfield call it, I don't know of any other one that's like it. We actually decoup. We were part of a, a transaction that saw the decommissioning of a wind farm and we repurposed the transmission infrastructure to become a load for bitcoin money.

[B]

So I'm kind of curious, I don't know how much you can talk about this deal. I love to know a little bit more because you kind of have, I would say anchored the private world of Texas bitcoin mining for many years. Incredibly low cost of power, some incredible execution feats. This is a different type of data center, different requirements. Can you tell me about how you put this deal together and what you look for when doing this?

[C]

Yeah, I mean our operating Premise over the last four years, five years, was you have to be the lowest cost. You have to focus on electricity and commodity optimization for bitcoin mining, that is. And then you have to focus on infrastructure deployments, deploying them fast, deploying them at a low cost. And we got very good at that. And we executed historically very well in bitcoin mining. And as a side part of our thesis, we said we're accumulating land and interconnections in the somewhat remote parts of Texas. It is possible that one day demand for data centers could grow, that these locations right now, which don't carry the same valuation AS Premium Tier 1 data center locations like Northern Virginia or Dallas or proximity to major metro area data centers, that one day this land portfolio could act like a call option on that. And I think we have seen that come true. The demand for data center capacity is now huge. So while we are currently still mining bitcoin and that is a skill set that we have and we're very good at it, we're bringing this site out to the market to see what else is out there in terms of offers, where it's plausible that the best economic use of this land that we've been developing would be not to be a bitcoin mining data center.

[A]

So going back to that call option, Jamie, what makes it specifically potentially interesting for that? Because it's close to corporate Christie, because there is not a lot of competition in the area because there's still abundant power. Like, why would this site specifically be optimal if you decide to go that route?

[C]

Well, yeah, it's, I mean this is way closer to a major city than our Fort Stockton site. It's, it's close to San Antonio and Corpus. It's 51 miles from the coast. So I think that for major data centers, anything within 50 miles and in of the coast is kind of a, considered to be riskier. But this was 51, so we're just one mile outside of that.

[A]

Risky because of hurricane threats.

[C]

Yeah, just the amount of scrutiny in citing and designing AI data centers is a lot higher than it is in bitcoin mining where bitcoin miners just like, yeah, let's throw a few containers out there and see what happens. You've seen some bitcoin mining sites, I'm sure in your days that they aren't even built up to the standard of the electrical code. Whereas with an AI data center, they're looking at a 500 year floodplain. They're looking at what happens if a Cat 5 storm directly hits the data center and takes out all of the roads and they can't get in there to refuel diesel generators on day four, after all your diesel is run out. They are really game planning for the worst possible implausible scenarios imaginable. So 50 miles and in is where those scenarios start to become a little bit worse.

[A]

So, Jamie, kind of hitting on this note of the tension and the tug of war between bitcoin mining and AI right now that we're seeing. What opportunities do you see for miners right now? As someone who just signed this deal and is getting y' all second day to center up, where can miners actually still source power? And what does that mean, considering we're in a historically low hash price environment as well?

[C]

Well, you know, it's funny. I was listening to a Howard Marks podcast this morning and he was. He's kind of putting it very succinctly. When everybody else is looking in one direction, that's the right time to look in the other direction. With bitcoin mining, it's probably never been a better environment to deploy capital and operate. Difficulty is flat year over year. In a reasonable bear market. I mean, 50% bear market, I wouldn't call that a scorched earth bear market. Certainly we've all seen much worse. But difficulty is flat over a year. That's incredible. That hasn't happened since 2020. And I think the last time that did happen was in the Chinese mining band. So I would call that kind of a black swan event. And then prior to that, it was 2018, where there was a 95% drawdown in Bitcoin's price. So great environment to get into mining. Great environment to buy containers, to buy used asics, or to buy new asics, because all the customers are focused on AI. And I mean they're focused on AI for good reason. Because from a dollars per megawatt hour perspective, let's just break it down into how we think about bitcoin mining, profitability and revenue. In bitcoin mining, you have to build a data center and then you have to operate it, and you're effectively making the operating spread between your input electricity cost and your revenue denominated in a megawatt hour or kilowatt hour equivalent. So for people who scrape the bottom of the barrel, like Corman and mining equipment, we're making like 20, 30 bucks a megawatt hour. If you buy shiny new kit like a lot of the public companies do, maybe you're making 50 to $100amegawatt hour. So if you extrapolate that out into a year that will you still have to pay for all this equipment. And at $100amegawatt hour, you're making approximately a million dollars per megawatt per year on a bitcoin mining deployment. With AI data centers, you can see just in the market right now and this will be, we'll see where the valuations eventually flesh out to and how things trade once they're fully stabilized and maybe we exit this euphoria period that we're currently in. Bitcoin mining stocks that have made a transition from mining as their core business to AI, they trade closer to $10 million a megawatt just when they sign a lease and then they're able to finance those leases and the construction of those data centers using is 80% debt, sometimes 90% debt. So the AI data center group, they really do pay top dollar. And if you have an on grid site and you own land, there's not really a world where it makes sense if you're trying to value maximize, where it still makes sense to pursue bitcoin mining. So sad times I would say for the mining industry, maybe for people who are excited about the US having 30 to 40% market share, but also if you are an opportunistic bitcoin miner, it's a great time to be deploying hashrate.

[B]

So obviously there's dollars which are incentivize everyone to pivot to AI who's been bitcoin mining. But we mostly talk to the public companies and those are the ones where the numbers are public. We can see the market react to their decisions and stock price and valuations. We don't get a lot of insight to the private markets a lot for good reason. I'm curious about your insight to what are the strengths or weaknesses of the private market in the bitcoin to AI pivot. Are there barriers? Do private operators have an edge? I'm curious your insights here.

[C]

Yeah, I think private operators have an edge over public operators in every category. And it's the same in this where you don't have your employees fixated on share price. You know, there's no mark to market if you have a setback or you know, let's say in this case if there's a delayed energization of a project or some legal action or something like that, all that stuff isn't going to affect your stock price because it's not publicly traded. So avoiding the all, all of the extra scrutiny, the administrative burden, the compliance, the regulatory requirements, the Constant lawsuits and everything that comes along with being public is the main advantage of being private. The reason why people make the jump is because in public markets you can access a lot more capital and you can access it at a much lower cost of capital. In AI data centers though, we are still seeing an enormous private sector push where very large private equity firms are deploying. I mean, I don't know a single private equity firm that's a like a big player that is not doing something related to AI data centers. Crusoe, historically one of the larger, more innovative private Bitcoin miners, has reached a 10 billion dollar valuation as a private AI development company. AI data center development company. So if you can raise capital and stay private and you're comfortable going down that path, then it certainly still works. But there are definitely strong incentives to going public.

[A]

Jamie, as a closing question, since we're talking about funding and the CapEx cycle in general, the biggest question everyone has right now obviously is how much farther does this thing have to run? We talked to Mike Alford a few weeks ago. He says that he thinks over the next two years you're going to see the bull run continue because it's just going to follow the progression of this current capex cycle before these initial investments are through and the banks and investors get exhausted. What are your thoughts on the current capex cycle and how much longer you actually think we have to run? Because we were talking on the show yesterday things already seem pretty hot. If you looked at factsets earnings insights for S&P 500 companies it was like 50 plus percent or the technology sector had 50 plus percent earnings growth. That doesn't seem sustainable to me from where I'm standing. But I'm curious your thoughts.

[C]

I think what you'll probably see happen is profits will shift and valuation and market cap will shift from from where it is today to and it could shift materially to another place in the future. I don't think that there's any putting the genie back in the bottle in terms of price discovery and market product market fit discovery on the birth of a new commodity which is the commoditized digital labor. There's just so many applications of commoditized digital labor. It's getting better and better every day. They're breaching into new categories, how that is delivered to customers, what the model looks like, what moats are established open source frontier labs, which hardware is used to deliver that, whether it's something more like a TPU or continues to be Nvidia dominance, custom asics there's so much disruption that could happen within the category. But I don't think that the category is getting smaller, I think the category is getting bigger. And then one thing that I am certain will happen at some point in the future is like all commodities, this commodity will return to the marginal cost of production. Right now it's in price discovery and we're very far away from the marginal cost of production. And the market is subsidizing producers who are producing that commodity at a loss for user acquisition or market share gaining, things like that. But at some point it will return to the marginal cost. It'll be just like bitcoin mining. It's going to be about energy optimization, data center, CapEx optimization, and you'll need to be a little bit responsive to power prices every once in a while. I'm really confident it's going to end up like that. It could be decades from now when that happens. But that's my 2 cents on sort of what it'll all look like.

[A]

So to recap just a little bit, and forgive me if I'm kind of putting words into your mouth, it's almost like the new paradigm argument in the sense that it's hard to even say whether or not valuations are crazy right now because what is being built is unlike anything we've ever seen in the market. Because I kind of come back to that with my dad sometimes. We'll talk about how CAPE ratios, PE ratios, all of these economic indicators are approaching.com level, the.com levels. And I always, you kind of put it more eloquently than I have with him. Just kind of tell him, dad, we've never seen anything like this before. People don't know how to price this. And if you're looking at the productivity gains and the possibility of, like you said, an entirely new commodities landscape, who's to say that those old valuations even make sense?

[C]

Yeah, I think that's one way to look at it. And look, I'm not going to say we're in a bubble because I don't want to be in a bubble, but it's plausible to me that with the amount of leverage that's in the space and the amount of eye watering valuation that we're seeing based on growth that has recently happened, there could be a correction or more likely a series of corrections that could also lead to deleveraging. And people are going to get carried out, companies are going to get carried out from this industry for sure sometime within the next five years. I don't think that broadly the industry itself is overvalued. I think that that is, like I said, it's a birth of a new commodity. How that commodity is delivered, reductions in the marginal cost to produce it, all those things are going to create disruption to the existing incumbents and there's going to be some people who get carried out for sure. But the trend is, I think the trend is clear. And if you're disciplined and you stay focused on the core themes, which I think are power, power generation, utilities, supplementary computing equipment, and you find good entry points and try to buy on pullbacks, if you're sort of allocated to the sector, I think it's probably a great way to play it. However, buying the all time high across the basket of names that represent the space has been a winning trade for two straight years. So just keep doing that if that's your thing and good luck to you.

[B]

Before you go, I got one last question. This is coming in hot, sliding in my DMs from our, from Block Space founder Will Foxley. He wants to know what the cost of capital is for private AI builders. Because we've seen cost of capital go down, I think core size. What like in the single digits. Now are you able to reveal any insight here?

[C]

Yeah, I mean, I think it depends. It depends on who your counterparties are, it depends on what your pipeline looks like, what your track record is like. If, if, I mean Corman as an unrated entity, our cost of equity and debt would be significantly lower if we were to have a lease signed with someone like Amazon or any other hyperscaler versus if we did a deal with say a core weave or another NEO cloud where it just the, the cost of, of debt capital on those deals is higher. So then the equity capital becomes higher and you're looking at kind of a higher hurdle rate for those investors. What I will say Will, is that our cost of capital as potentially an emerging AI company, we haven't even done anything in AI, but just a sort of potentially emerging AI company is better than it ever was.

[B]

As a bitcoin miner, not surprising to me. It was very expensive to be a bitcoin miner for a while.

[C]

I wanted to answer one question that you guys asked though about what bitcoin mining is going to look like. And I know we might be over time here.

[A]

No, no, you're fine. That's a great closing question. And just one thing I wanted to add to that. You talked about hash rate. I'm looking at the chart right here at hash rate index and we're about to test the yearly low. And if I'm thinking about this going back to you saying difficulty is flat given that hash price is low and there's sentiment in the dumpster for bitcoin's price, it's hard to see an environment where hash rate grows this year, honestly. And so what is your outlook for the next year or so?

[C]

Well, we're in 4cp season in ERCOT, so you're going to see the seasonality of lower mining hash rate just from curtailment in ercot. Price being lower means more economic curtailment will happen if miners are being price sensitive. And the name of the trend here boys that we're going to see is hash rate volatility. We have exited the era of high uptime. Buy the newest day six one year payback bitcoin mining. That's the way it goes. We have exited that era. It is over. The new era is going to be where is the cheapest power? How can I get that? And the answer is the cheapest power is not available around the clock. The cheapest power happens when, it happens when there's low demand, high solar, stranded gas, stranded wind, it happens intermittently and it's not always available. And bitcoin mining will continue to feed on that power like the dumpster diving commodity industry that it is. And what, what I think that will look like is block time volatility, hash rate volatility. And we're, we have now entered the new era of bitcoin mining which means that you might need to pay more fees to get into a block. If you send a transaction at the wrong time of the evening with the amount of solar, that's excess stranded solar that exists in the United States. If there's a lot of bitcoin mining that's co located with solar or nearby to solar, you could see the bitcoin network confirm transactions most reliably during banking hours, which would be somewhat ironic for the D bank money. And I think that trend could continue where, where there is a coincidence of solar collocations with bitcoin mining. That's when you see lots of quick confirmations and you know power will effectively be free. If you get into the period where it's an overnight or the sun is over, call it the Pacific before it rises in Asia, presuming that there's still some mining in Asia, you could see really slow confirmations and fees could get very large during that period. So I think hash rate volatility, mempool volatility, fee volatility that's the new era. We've just entered it.

[B]

Like I say, the best traders of hash rate futures and perhaps fee rates are going to be meteorologists and weather wonks. So once again, Oklahoma meteorologist, armchair enthusiasts on top. Jamie, thank you so much for coming on the show. Appreciate your time.

[C]

Thank you, boys. Thanks for having me.

[A]

Charlie wanted to be a meteorologist when he grew up.

[B]

Yeah. Oh, man, you're super doxy. I did. There was a career day in preschool and my mom has a picture of me, like, with like a rain gauge pretending to be a meteorologist. So it was also the longest word I could say at the time.

[A]

So also one takeaway from that, that somewhat jokingly, but and somewhat seriously, a PE getting interested in AI should terrify everyone. If you think your models are degraded right now, just wait until PE firms come and then they strip everything out except the nuts and bolts. You thought the nursing homes were bad, but what about the models? Everyone? I'm partly joking, but not.

[B]

Not with the new meat. Those model. Get rid of all your. Your analysts and your quants. My quant is a data center in Memphis, Tennessee that Elon owns is trying to sell to the public markets to unsuspecting retail investors. Okay, we are going to keep going. We've got a couple of data center stories. We got keel, we have Hut eight. But before we go to keel, let's hear a word from our sponsor, Luxor Foreign.

[A]

This episode is brought to you by Luxors Commander Bitcoin miner management software for enterprise operations. Commander gives you real time fleet monitoring, bulk remote commands across your fleet. And intelligent Miner, that's an automated profitability engine that runs every five minutes and tests your power settings against live energy markets and hash rate markets. ERCOT back tests show 10% improved profitability with intelligent mining versus binary mining. Commander is $100 per megawatt or a 25 bip pool fee adder, which is roughly half the price of competition. And you can try it for 60 days for free. So if you want to get started, go to Luxor Tech Forward slash Commander to learn more. All right, Charlie, let's get back into data centers. Data centers. Data center. Shout out to Jamie for a fun little quasi bitcoin mining data center segment.

[B]

Yeah, that was the most bitcoin we'll do on the show today.

[A]

Yeah, and I do think that what he said makes sense. You know, Buy. What is this saying is like, buy when the streets are running red. Like buy when there's blood in the streets. And right now, capex for Bitcoin mining I would guess is probably the lowest it's been in a long time.

[B]

Yeah. Is there such thing as negative capex?

[A]

Because people are. We'll pay you to take the ASIC so that we don't have to pay for the inventory.

[B]

Yeah.

[A]

Anyway, we'll, we'll get on with our next story. And that's a note on keel closing a $458 million convertible note deal for its data center build outs. So deals for 458 million gross for a 1.25% convertible senior note due 2031. The deal was upsized twice initially it was launched for 350 million on June 4, priced at 400 million the same day. And then there were initial exercise options to buy 58 million additionally bringing the total value then up to 458 million. But the net cash injection for Keel will land around 400 million after closing cost and a capped call consideration. Keel went into a capped call to protect against dilution on this for roughly 41.7 million. And that capped call goes up to 11.$86 per share which is was 100% premium over the June 4th stock price that that capped call was priced on. So there will be no dilution with that capped call or with the converts unless Keel stock goes above that price. The conversion price for this note is $7.41 per share, 25% premium over that June 4 close. And like I said, it will be due 2032. So a few interesting parts about this. Keel really kind of beat its chest in the press release for this saying quote, the existing liquidity expected on their balance sheet is expected to be sufficient to develop Panther Creek Sharon and its Moses Lakes sites through leasing. So to recap, Panther Creek and Sharon are in Pennsylvania. It's Keels coal fired plants that they purchased and data centers that they purchased from from Stronghold Digital. And Moses Lake is in Washington and they said quote, the opportunistic capital raise is expected to improve flexibility to make value added investments across their current developments. So they're kind of, they're phrasing this as an offensive rather than like a necessity driven capital raise. Basically saying we're just trying to pad the balance sheet for what comes our way for when we need it. Charlie, any thoughts before I throw a little teaser for what might be going on at Moses Lake?

[B]

I don't have a ton of thoughts. Ben Gagion executing incredibly well, raised a bunch of money, great cash deal. I'm super impressed. I mean this is a kid who went and built Bitcoin mines in China in the 2010s so a little bit of lore there for those of you who don't know.

[A]

Yeah, and cool to see in the way that he's risen through the ranks of formerly bit farms. Now Keel. Now the question for this Charlie is, you know, they're saying they have cash on hand for their current data center build outs, that they're going to move into AI. As we've noted on the show recently, Keel has been surging this year. Leopold Ashen Brenner. I messed up his last name. No, that's good.

[B]

It's good enough.

[A]

Anyway, Leopold. Situational awareness is, has taken a stake. They're bullish Keel and we've raised the question what do the insiders or not insiders in Keel, but insiders with the knowledge of what's going on and investors know about Keel that, that we don't. Thank you for pulling up the chart there. Yeah, it's, it's been, it's been doing super well. It started really moving up in Q4 of last year and it's really taken off this year specifically after the rebrand, you know, and then they, after the rebrand, they're now domiciled. The people like, people like.

[B]

Yeah, the people like boats instead of bits. I mean, the look, everybody's been trying to sell their bitcoin to buy a boat. So name your company after a boat.

[A]

Yeah, and I think the biggest thing here too is now that they're on the nasdaq, there's just much more capital for them to. I mean, rather there, there's much greater investor access. But I wanted to get up this from a, this finding from a pleb on Twitter.

[C]

This is one.

[B]

This is. Yeah. So if you remember for context, the Keel deal with AWS was sleuthed out from the job posting.

[A]

Well, we don't know. Here's what I'll say is we don't know. We don't know that there's a deal yet.

[B]

This sleuthing happened and speculation occurred that Keel may have AWS as the tenant. That's right.

[A]

The line and the reason for this is per this note, there is an AWS job post to manage a data center in Moses Lake, Washington. And the listing says the facility is, quote, still under development. Another note, Wayne Dusso is one of the board of directors for Keel and he spent I believe like 12 or 15 years at AWS. So there's something of a connection here. But here's the job posting, job details and why Washington, Moses Lake operations. It and support engineering. You'll join a diverse team of software, hardware and networking engineers, supply chain specialists, security experts, operation managers and other vital roles. Blah blah, blah blah blah. So that's been my biggest question with this Keel run up, is it? To me it reminds me of when HUD8 was running up before they signed their first deal. We've seen this with a number of the other stocks. When there's a deal in the works, there's, there's enough people who know outside of the company who are going to try to capitalize on that or they're reading the tea leaves, they're looking, they're sleuthing for things like this. So I'd be curious to see if we're actually going to see something come to fruition here. And the other question I have too with Moses Lake, what I find really interesting about that is on the surface you'd think that the Pennsylvania sites would be much more interesting because the power is on site and is fully owned by Keel. But I do wonder if the coal fired power plants still carry a little bit of ESG risk. I don't really have much to base that on other than vibes and the fact that, you know, coal has been demonized for the last few decades we've been replacing coal and that gas on the grid for cleaner generation. I wonder if a Hyperscaler or a Mag 7 company may not still feel comfortable with tapping that power. I could be totally off base about that, but that's just a question that I have.

[B]

Colin, you're living in 2021, back in the before times, you know, back when people still cared about those things.

[A]

But I think they still do with the NIMBYism man.

[C]

Right?

[A]

I mean we've seen people freak out about the Utah data center. We've seen disinformation about water use for these data centers. Could you imagine if one of the big five ended up leasing a coal fired data center and the normies found out about it? They would be picketing that, that they would be picketing out in the streets.

[B]

I mean insofar as G governance in the ESG relates to like civic unrest or civic rejection. I don't know man. Because I really do struggle to see that this water criticism of data centers as having a long term sustainable legs just because it is so misguided and so misleading. I think the real criticism is going to be energy prices, capital extraction and just how ugly data centers are. You just can't get around the fact that we're building a giant alter to moloch coated in beige or gray and it's, and it, it's just this giant wall of, of concrete.

[A]

You know, you could imagine like driving to Scion national park or something in Utah and then on your way you just.

[B]

You know what would go great here?

[A]

So we need to be, we need to build them like cathedrals being bring back stone masonry. Asher Ganute of Hut 8 has a great comments on this in an interview we did with him recently. By the way, he thinks that's actually to your point, Charlie. One of the things that they need to do better at is actually making them aesthet.

[B]

One of the things the industrial revolution actually did kind of cool is the buildings looked really cool. You go to these giant factories and power plants and as much as you can imagine them spewing coal and stuff into the sky, into the residential areas around, they look pretty cool even 150 years later. So data center builders spend that extra money, make your data centers look a little bit more like a satisfactory factory tour video than a, you know, suburban big box store. It's my, my request here.

[A]

Less like an Ikea.

[B]

Yeah, yeah, actually IKEA's our step up too. Okay, we got to go to the next one. Speaking of Asher Ganut, Colin, I think we're going to roll over to the Hut 8 News. But before that, a word from our sponsor Lygos.

[A]

Bitcoin is back at 60k and hedge funds are getting liquidated again. Is your Bitcoin safe? With Bitcoin's price drying up and whales and lending desk going under, it is more important than ever to know who controls your Bitcoin. And with Lygos, that is always yourself. They are our preferred Bitcoin backed lender here at Block Space because they use Bitcoin native smart contracts to make sure you always hold the keys to your kingdom. No rehypothecation, no bridging, just pure self custody Bitcoin collateralized loans with smart contracts and competitive rates as low as 10% APR. So if you'd like to learn more, go to Lygos Finance. All right Charlie, we will hop on over here to hut 8. An A another senior secured note. We've had a number of these this week and this is a continuation of a thread we're starting to see where these Bitcoin miners turned AI companies are really starting to be seen by the market as legitimate credit worthy operators. As I'll note here, and we noted with cipher, the notes that they're issuing are no longer considered junk bonds. They're in A tier above that. Now they're not quite in the A tier yet, but they're in the triple B tier as with this one. And their interest rates are reflecting that. Their cost of capital going back to our segment with Jamie is significantly lower than when they were bitcoin miners and if they were private. So a few notes on this before we get into it, Charlie. This closed is for a $4.25 billion offering at 6.129% for senior secured notes secured by Hut8's Beacon Point Data Center LLC. They're due 2042 and the proceeds are going to fund development of a 352 megawatt AI data center in Nueches County, Texas. The deal is Hut 8 second investment grade construction bond and is non recourse to the parent company. And what that means is that if Beacon Point fails, the bondholders can seize the project and the equity pledge for the project from Beacon Point LLC. But. But they can't actually reach into Hut 8 itself. So a Hut 8 has gated itself the parent company from any sort of recourse from the lenders should Beacon Point fail. I think that's important. Something important to note. This is similar project level financing that we saw with Cipher for its Stingray and Black Pearl LLCs. Another really interesting point about this deal is that interest starts accruing in November, but principal amortization doesn't begin until May 2030. So about a 3.5% interest only Runway that lines up with the construction and lease ramp up before the loan starts paying down. So what this means is the Hut will only pay interest payments for three and a half years and once the site is online and cash flowing then they will start paying down principal. And at first glance that you might be scratching your head and thinking, well that seems like a worse deal in the sense that they're going to pay more interest over the lifetime of the loan than they would if they were paying immediately. But I mean this is a $4.25 billion loan. So unless they actually have the cash flow coming in from the site, they would have to find some other means of raising that capital to pay down the loan, pay down the principal immediately. So they're trading off the fact that they're going to have more interest to pay over the lifetime of the loan, but they will not have to cover the bulk of it with the principal payments immediately and they won't have to start paying that until the data center comes online. So another kind of important note and last point, Charlie, this notice for par issuance. And this goes back to the credit rating here. The principal is 100% of raised amount which signals clean investment grade demand. And like there's no book, there's no original origination discount to clear the book for this one. And this bond is triple B rated, which is two notches above junk. Hut 8's other investment grade bond for its River Bend campus was triple B minus. So they're moving up the ladder in terms of investment grade bond ratings here.

[B]

Yeah, investment grade gets better. I think the market is just figuring out how to price these and getting a little more confident. I think this is pretty exciting. I pulled up a picture of the Hut 8 render. Very, very good. Rendering was pretty, some shrubbery and external ornamentation.

[A]

Pretty sleek looking. Maybe not art nouveau, but art techno we might say.

[B]

Yeah. At what point do these miners HPC factories just become banks themselves? We saw this with cars. Car manufacturers see this with like airline and airline manufacturers. Just the scale of capital involved. You know, eventually these folks are going to build banks internally. Look at gm. So I wouldn't be surprised if we see long term that the financial, banking and computation businesses coalesce. So I think we've got a couple more stories. Colin.

[A]

Yep, we've got two more. I don't have anything else on Hut 8. So we can go dive into Crusoe.

[B]

Yeah, Crusoe. This one's a doozy. Not even. Not really a doozy. Here's the headline. Crusoe's project Jade up in I believe is it Wyoming planned to be 1.8 gigawatts, potentially scaling to 10 gigawatts. Data Center Campus, one of the largest in the U.S. crusoe announces, or the project has announced that it's paused. And then this morning I believe Crusoe announced that it's pulled out of the project entirely. Or at least that hit the wire. Why did it pause? At the request of the customer. So the project itself will continue, but this time it's Black Hills Corp. The utility providing power. Who's going to, who's going to continue working on this with the customer? So why did Crusoe pull out? That's the big question. What does this mean for the project? That's also the question. Let me pull up the tweets. So here's the tweet from Negligible Capital Quote, Crusoe is working on Blackstone Inc. Backed energy company Tallgrass to develop a 1.8 gigawatt campus in Cheyenne, Wyoming for an undisclosed tenant. So the customer is likely a Hyperscaler hitting the pause button. This poster says it may be attributed to the tech dump. But wait, Rittenhouse research, the third time we've referenced them on the show here this week, has this great take. Quote, if I had to guess, the Crusoe data center pause in Wyoming is much more likely to be attributable to the growing community backlash than a lack of demand for AI infrastructure. Wall Street Journal had a story yesterday on how the Laramie County Board of Commissioners pulled the approval for a proposed 5,600 bed man camp at the last minute, despite the planning commission having previously voted unanimously to advance the project. So again, what's hanging these up is permitting, because when you build one of these data centers, you basically have to truck in hundreds, now, thousands of people to go live in basically Winnebagos or modern quick fab like trailer longhouses, and there are just these giant camps. So Rittenhouse then speculates that on the possible tenant, who is undisclosed, Rittenhouse says Meta and Microsoft already have sites in the area, which suggests Crusoe's Project Jade campus will be leased either to Amazon or Google. And so Rittenhouse pushes back against the speculation that it's the tech pullback because both Amazon and Google are raising money, quote, hand over fist, to invest in AI infrastructure. Recall Google's $85 billion of equity last week. And so he says that the idea that either decided yesterday that they actually don't want or need more data center capacity is absurd. It's far more reasonable then to assume that the pause allows Crusoe and the tenant to address the backlash and work with local officials on a path forward. Now, this tweet was before, I think Crusoe backed out of the project entirely, but I wouldn't be surprised if, if this is a major factor, what is possible?

[A]

To me, yeah, I think it's a good reminder, though, that when you see one of these headlines, there's almost always more to the story than what's being portrayed. Because who knows if Cruz was actually totally pulling out. Yeah, right. They. They could just be waiting and seeing. I mean, if they are pulling out and that situation is dire, but that if this is a zoning issue and that means that they just need to press pause and wait for things to shake out. It makes a lot of sense to me, though, that it would maybe be more related to zoning than it would be related to the market pullback. I mean, if that's the case, then you would expect to see a lot of these being put on pause. Right. Because and we haven't even seen that aggressive of a pullback, to tell you the truth.

[B]

Yeah, I mean I'm just like spitballing here, but I'm looking at this and Crusoe's been an ambitious company. They come from the world of bitcoin mining, off grid and flare mitigation, if you recall, from many, many years ago. But this is from Bloomberg. Crusoe touts 5 gigawatts of data centers. And it says Crusoe's total project pipeline, including contracts and sites in discussion with tenants, is more than 40 gigawatts. Colin, you know, when I see. Look, I can imagine companies like OpenAI with a 10 gigawatt site in the pipeline. To hear that Crusoe, which is a relatively young startup, has more than 40 gigawatts, I wonder if it might just be biting off more than they could chew. But again, what do I know?

[A]

I mean that is an insane. That's absolutely insane.

[B]

Yeah.

[A]

That is so much freaking power. I have a hard time even with 10 gigawatts, man.

[C]

Right.

[A]

I mean, the biggest data centers in the US or what is it? Is it Colossus right now? And that's just one gigawatt, is that correct?

[B]

Oh, I think so. Colossus, two, 300 gigawatt sites, I think.

[A]

Well, yeah, I mean it's planned for one gigawatt though, is my point. 10x on that is crazy. Yeah, we've talked about this a lot. Between the billions that get thrown around and the trillions for Capex and yada, all this stuff and all of the gigawatts, the numbers stop meaning anything until you actually ground them in what that looks like.

[B]

You can see this with money too. Okay? I as a bitcoiner have been trained to accept surprising amounts of money being thrown into something. And I keep joking about normalizing the $300 billion slugs we threw in after the great financial crisis, which now seem trivial. So like, I'm used to money accelerating, but this is like actual physical infrastructure and 10 gigawatts is not something you can print, it's something that takes years. I think we should go into the OpenAI.

[A]

I think we should. I just want to cap this with just a quick Factoid. The average gigawatt production in ERCOT is like 60 gigawatts. Just. Just to contextualize where 10 and 40 falls within the scope of gigawatt or energy production in the US. All right, let's wrap it up with OpenAI's 10 gigawatt site planned in Ohio. I'll try to be quick with this, but it's mostly with this story. There's a lot that we still don't know because this hasn't been announced by OpenAI. This is based on reporting from the information and I believe also Reuters confirmed some parts of the reporting, but not all of it. OpenAI is eyeing a 10 gigawatt facility in Ohio, expecting it could cost half a trillion dollars. Now that's really just half a trillion. I mean that was Stargate, right? This is basically Stargate 2.0. Or maybe this is Stargate's rebranding at 500 billion, but that's an insane CAPEX burden. And the proposed 10 gigawatt data center is for a campus on federal land in southern Ohio in partnership with Nvidia. Nvidia is potentially backing the project, which is an important piece of information which we'll get to here in a second. Now, nothing. Again, I want to reiterate, nothing has been signed yet and this hasn't been announced by either of the counterparties or any of the counterparties in this reporting. It's also unclear who will own the GPUs. The article said that OpenAI will control them, but I don't know if that means that they have full ownership or they will just be utilizing and networking them or if Nvidia will own them.

[B]

And I think by 2020, by 2028, Bernie Sanders is going to own the GPU.

[A]

So a few more details for this. Total expected capacity 10 GW Phase 1 much more modest. A modest 800 megawatts. Modest 800 megawatt expected in 2028. Cost estimate 500 billion lease term 20 years. The developer. This is also interesting. SP Energy, a SoftBank backed energy infrastructure company that specifically deals with transmission and energy builds. It's unclear whether that means that they will actually be the powered shell operator for this site, or if they're just managing energy. There are a lot of question marks on what the ownership for this would look like. And assuming that OpenAI or Nvidia announces it sometime later this year into the future, we'll know a little bit more. It's, it's. Oh, sorry. Go ahead Charlie, you've got something.

[B]

Oh, I will say that whenever you see numbers which are so high that it shocks even like people like us, there's probably SoftBank involved. Masayoshi Son can't like not write an insane check, you know. So if it's one of these dizzying amounts of money, it's got to be him.

[A]

So a few More housekeeping items. It's Portsmouth site, Pike County, Ohio. And what's interesting about that is where

[B]

is that even I got to find this on a map?

[A]

Well, yeah, if you could pull it up, please. It's a former uranium enrichment facility that produced weapons grade material during the Cold War before ceasing operations in 2001. Now, the Department of Energy announced a public private partnership with SoftBank and AEP Ohio in March 2026 to redevelop that land. And that's part of why we're seeing it on federal land currently. And this includes 10 gigawatts of new power generation and a $4.2 billion transmission upgrade. And that's where SB Energy, I would assume, comes in, at least for the transmission upgrade. Again, we don't know if they will actually run the powered shell. The power mix is 2.9.2 gigawatts from natural gas, partially are funded by a $33.3 billion a Japanese capital injection that is tied to the US Japan Strategic Trade and Investment Agreement.

[B]

So it's there right on the Kentucky, Ohio border. Portsmouth, Ohio, right here on the Ohio River. Even if you will, I mean, this

[A]

goes back to what a lot of people were saying, including I believe, Andrew Burchell, which y' all had on while I was out. Ohio and the PJM market is a sleeper for a lot of the data center activity. As long as I would. I would say as long as, you know, red tape and bureaucracy stays out of the way.

[B]

It's where the backbone of the American industrial economy during the 20th century happened. So Rust Belt revival, baby. Revival baby.

[A]

Last note on this. According to the reporting, Nvidia is backstopping this build. So they will supply the hardware and potentially provide financial guarantees for OpenAI and SB Energy's financing. This plays into a criticism we've seen with the circular nature of the financing and the AI Capex boom where Nvidia is guaranteeing a financial backstop for the chip vendor, basically underwriting the credit of its own customers landlord. And I think this gets people a little uneasy in terms of the concentration risk of some of these builds. The fact that, you know, you almost have to in some, you know, the Piper has to get paid or you have to bend the knee to a king maker like Nvidia to get anything done. But that's just where we're at in the current AI landscape. All right, Charlie, that does it for me. I don't really have anything else to add.

[B]

I got a video I'm going to play as our as we go out. This is a clip from It's Always Sunny in Philadelphia that I feel may. May be a fun reference as we talk about the circular nature of money. Roll tape.

[A]

That's right. How much fresh cash did we make? Fresh cash? Well, zero. Zero. If you're talking about US Currency, People didn't really seem interested in spending any of that. That's okay. So when they run out of the booze, they'll come back in and they'll have to buy more Patty's dollars.

[B]

Right, Keeping it moving.

[A]

That is assuming, of course, that they

[C]

will come back here and drink.

[A]

They will. They will. Because we'll redistribute these to the shanties, thus ensuring them coming back in. Keeping the money moving? Well, no, but if we just redistribute

[C]

these, then people will continue to drink for free.

[B]

Okay, how does this work, Mac?

[A]

The money keeps moving in a circle, but we don't have any money. All we have is this.

[B]

How does this work?

[A]

I don't know. I thought you.

[C]

I thought you what?

[A]

I thought you were on top of this. You're the one that came up with the plan.

[C]

I can.

[A]

Did I come up with this last night? Dude.

[B]

Oh, with the DMV power card.

[A]

I blacked out that night.

[B]

Shit, Dude, I've been following your lead.

[A]

Oh, Jesus. Ah. Okay.

[B]

We have no money and no inventory.

[A]

There's still something we can do.

[B]

That's still a business somehow. Anyway.

[A]

Shame that it never won an Emmy. You know, they have a great bit in the show where every year they get passed up for the best Pub award.

[B]

Yeah.

[A]

Yeah, and it's. It's. It's an inside joke about how they've.

[B]

They.

[A]

They never won an Emmy.

[B]

Yeah. All right, thanks, y', all for listening. We do this every weekday, 1pm Eastern. Catch us live. Follow the podcast. We're leaving CoinDesk. Go search block space in your podcast listener of choice. Subscribe there. This ends on CoinDesk next week. Otherwise, newsletter. BlockSpace Media. I'm Charlie.

[A]

I'm Colin.

[B]

And we are Blocks Bay.