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Blockspace: AI & Bitcoin
Why AI Stocks are Crashing, “Is AI Conscious?” Pirate Wires Interview, Soluna’s MSFT Exec Hire
01:00:26
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- [00:00]
Colin
What's going on, y'?
- [00:00]
Brady Dale
All?
- [00:00]
Colin
Welcome back to Block Space live presented by CleanSpark. Charlie Goldman Sachs High Beta Momentum Index is down 24% month to date in the worst route since 2009. That is putting some figures to the pain I know a lot of people are feeling right now in the market. We will be covering that update from Goldman Sachs for our lead story along with a market update on some Neo clouds and powered shells. Following that, a fun interview out of left field today with pirate wires. Brady Dale the topic do bots have feelings? Break out your bongs and dust off your discourse on the method by Descartes for this one. It's going to be a fun interview. Charlie and I have got some real zingers there for Brady. After that, we will be covering Saluna's new hire of former Microsoft executive Ryan Carver as it digs deep deeper into its AI aspirations. And to close the show, Arizona is pumping the brakes on data center incentives. It's a seller's market. What are you going to do?
- [01:04]
Charlie
That's right. Blockspace goes live Monday through Friday at 1pm Eastern featuring quick hits on AI, data centers, emerging markets, tech, sometimes a little bit of bitcoin. If you like what you hear, you'll love Our newsletter goes to your inbox every single day. You can sign up at newsletter BlockSpace Media and you can see all Blockspace content, our news, our stories, our clips, our podcasts. Find those at BlockSpace Media, our website. Go to blockspace.media. it's not.com it's.media. this show is brought to you by CleanSpark. NASDAQ listed ticker CLSK more on CleanSpark later in the show.
- [01:52]
Colin
Charlie there's blood in the streets, my man.
- [01:56]
Charlie
Man. Blood in the retail.
- [01:58]
Colin
Retail is buying. Retail is propping up the bottom of this current sell off. We'll get to that here in a second. But first the tweet. To kick off this segment here from an account on X called Stock Talk. Quoting directly from the tweet, historic sell off for momentum in July. Goldman Sachs high beta Momentum index down 24% month to date through the first half of July. The worst performance since April 2009. I don't think anything good was happening in 2009, Charlie. Correct me if I'm wrong, but I think that was a little, little dicey time for the markets there.
- [02:32]
Charlie
I mean that's when I was headed off to college. So, you know, best years of my life
- [02:38]
Colin
dating myself here I was going stumbling through the acne phases of high school. But that being said, obviously in the wake of the Great Recession so not the best indicator for those keeping an eye on the stock market. Morgan Stanley Tech Momentum Index 17 day rate of change is down 35% in a similar metric to the Goldman Sachs high beta Momentum index which is the worst recorded ever through the 27 year history of the index Australia let's unpack this really quickly, just a few highlights from this index. This is a as Morgan Stanley and Goldman Sachs are framing it a deleveraging event in what has been clearly an incredibly hot sector that is anything to do with AI first half of 2026 was one of the most explosive movements in the US stock market in recent memory. Perhaps I'm not going to say ever but the parabolic move upwards for any number of names was honestly pretty, pretty incredible. So and it's not an isolated momentum wobble, it's an unwind of that crowded trade. The momentum factor on Goldman Sachs index had experienced a record 57 run in the first half of 2026 and going into July and then that trade was crowded at the hundredth percentile relative to the past five years. So it's extreme as it can get and then there was a liquidity drain starting in the first of July and Goldman Sachs itself flagged that if deleveraging continues the factors maximum potential drawdown could reach 50% from peak roughly double the current pullback. Though the bank's trading desk has also picked up preliminary quote buy the dip signals and historically these momentum air pockets have resolved as tactical rebounds rather than trend breaks. So that's obviously the question running through everyone's minds right now. Is this the market breaking or is this similar to what we saw last year during the tariff announcement where during the Liberation Day I should say in April where stocks absolutely plummeted and then recovered into May. I think the difference here being there was a clear news peg for that sell off last year. There's not really a clear news peg for this. There are a few drivers, Samsung's guidance coming in slightly below expectations. Also there's news around Deep Seek self developed AI chip and there are also questions regarding the NEO cloud sector in general as we've covered regarding Meta's entrance into the sector and what that means for some of the smaller providers that are making their way into the AI Capex boom. But that being said there are just a few things that could have touched this off. I don't think it's really clear as to why this unwind is happening now. And just to highlight some of the moves we've been seeing from this high beta momentum index, Goldman's high beta momentum factor plunging about 6% in a single day and over 20% cumulative across five days. And what Goldman's own desk called an ugly day on July 7th when a lot of this really started deepening. And note the desk noted the speed and magnitude were unprecedented since the 2020 stay at home to reopening rotation, though this time without an equally strong fundamental catalyst behind it. Going back to what I was saying earlier, there's no clear single catalyst for this current sell off and the last. Oh, go ahead.
- [06:16]
Charlie
Yeah, there isn't a single catalyst. You mentioned them. I mean we had SpaceX which was like the biggest IPO ever. It's like a lot of attention out. It's very interesting though that, that Goldman Sachs identifies that retail is kind of like the last buyer still still kind of holding a lot of this together. And at the same time retail is the one also buying SpaceX. So where are the institutional investors? Can they, can the institutional investors in the, in the room step up the real, you know, deep pocketed folks or are they the smart money which is getting out before and retail is still kind of like not just holding the bag but actually putting more into it.
- [06:54]
Colin
I mean you'd have to imagine some, at least for SpaceX. Right. A lot of those institutional investors probably cashed out shortly after the IPO having gotten in earlier.
- [07:03]
Brady Dale
Right.
- [07:04]
Colin
And there is still institutional activity going on. But that is one thing that Goldman Sachs and UBS trading desk have pointed out. To your point, this is deleveraging, not fresh short positioning. Long term accounts are the main sellers while hedge funds are mostly doing short covering and selective ads which is not aggressively bearish, it's more of tactical repositioning. But notably retail investors have been net buyers throughout this sell off. Hitting the 90th percentile of inflows over the past 3 years. 90% of inflows over the past 3years on the worst day making them key support. So the the pleb zoomer trader in the trenches is propping up the bags of boomer retirees is how I read this.
- [07:50]
Charlie
Yeah, the Zoomers are atlas holding up the retirees unsustainable retirement accounts. Here's a good quote. Here's a good comment from our YouTube right now from JHY. Apple's up after not throwing money after the AI hype. Pretty interesting observation here which is while the AI companies are pulling back, Apple's doing pretty well and they have been lambasted for not executing on the AI train in fact. So you know, intentionally kind of like deprioritizing it. Another thing that you mentioned Colin, is that or that this Goldman Sachs note says that there's deleveraging across the industry. And yeah, it appears that that's true. But when is deleveraging a bad thing long term for the sustainability of an industry or health, especially for bubbles and cycles. I will say this doesn't feel like it's totally jover. It doesn't feel like it's like that the AI trade is totally dead and gone and that was the top. Honestly this feels a little bit like a reset as the industry has a pullback. You have a bit of a neocloud deep seek moment with meta rolling out, switching gears and on all this going AI compute rent and you have a lot of deals being inked with real money coming in the door. They just haven't started coming in the door yet. If you're Cypress and you're terrible so you have these deals for your hut, you have these tenants with multi billion dollar contracts per site and they are yet to turn on and start printing money. So you know, my thought is if the deleveraging can happen before those rents start being paid, that's probably, that's probably good for another like leg up or for the music to keep playing as opposed to the leverage just to keep skyrocketing and skyrocketing. You know, this is me, this is me putting on my, my bull hat and you can, you can be the skeptic and you can say I, I don't know, there's rare earth minerals and
- [10:10]
Colin
there's, I mean it's the money's all trillion dollar question. Right. I think that there are a lot of folks trading this right now who think that this bubble will last as long as the capex cycle lasts for this, we'll call it like the seminal building phase for these data centers. There's probably a good amount of data to support that. But the market does seem to be getting a little fagged out here. Charlie. If you look at terrible, for instance announcing the anthropic deal, this is the best AI deal that they've inked to date in terms of who the tenant is and also in terms of contracted revenue, I believe it's the largest and the stock popped following the news but it got caught up in this broader sell off. Whereas if you look back a year ago, and I'm not trying to just isolate Terra Wolf here, because it's the same for all of these powered shell providers. But if you go back to a year ago when it first announced its AI deals around August, the stock doubled over a month.
- [11:08]
Charlie
Right.
- [11:08]
Colin
And so I do think that there is some fatigue, probably is largely a deleveraging as much as I am starting to get increasingly bearish. I do think that there's probably one last melt up for this whole thing. I don't know if we've seen it get as crazy as it can get, but you look at the stock charts for a lot of these companies, it's hard to look at that and think that it's going to repeat next year. I mean it's just absolutely stupid growth. But I'm saying this, and then I've said this to my father on the other side where he's looking at like Sharpe ratios and he's looking at Cape ratios and being like the market's just grossly overvalued. And he's probably right. But one of the things that I do think is underappreciated right now is that retail involvement is higher than ever in these stocks. And that is, I say this as a retail investor lovingly. Love all you guys. Some of you are probably good at it. That's the dumb money, quite frankly. Like that's not. That's people like kind of Wall street betting and aping into trades based on momentum less so than fundamentals. I see this all the time on the X timeline with people kind of just rah rah ing their favorite stock without really taking into account all of the potential downsides. And so that really kind of is a dark horse in terms of momentum for some of these companies because you have a lot of capital, eager to get in without really any regards for the safety or the safeguards that some of these more, how should we say it, sophisticated investors will take in terms of hedging, in terms of paring down positions. So the retail classic adage, the market could stay irrational longer than you can stay solvent.
- [12:46]
Charlie
The retail investors are superpowered. They can fire their financial advisor and just use AI to invest in AI again. It becomes a circular cybernetic feedback loop thing. Speaking of feedback loops and cybernetics, we're going to get into some really heady stuff here with Brady Dale. We're going to talk, we're not going to talk about markets. We're talking about ethics, morality and robots. So we've got Brady and the wings. We'll bring them on up here shortly after a word from our sponsor clip. CleanSpark.
- [13:20]
Brady Dale
We are CleanSpark. America's Bitcoin miner, a publicly traded company with the largest operating hash rate powered entirely by self operated infrastructure across four states.
- [13:36]
Colin
This is our proof of work and
- [13:39]
Brady Dale
we are setting the standard for what's next. Learn more about the intersection of energy and bitcoin@cleanspark.com.
- [13:52]
Colin
If Bitcoin's actually the best money and it's the thing that people should accumulate, it's the best risk adjusted asset. I lose zero sleep about whether or not that's going to happen. I just ask the question of when is Liberty matrix math. If you're running on large pieces of data, the bitcoin miners can absorb that energy and.
- [14:11]
Charlie
And in many ways this feels like
- [14:12]
Colin
a second bite at the apple to build a new Internet. All right, Charlie, let's get Brady Dale up onto the stage. Brady Dale, welcome to the show, sir. Welcome back.
- [14:33]
Charlie
Oh, shoot. We have a microphone issue. See if you can select a different mic input. If we have an issues, we can, we can go back and test it. We were flying blind without our backstage producer today.
- [14:50]
Brady Dale
So does this work now?
- [14:52]
Charlie
There we go. Welcome, Brady.
- [14:55]
Brady Dale
Why is my. My actual microphone isn't working? Well, I guess might as well take this out of the way then. I'm using just using the Mac mike.
- [15:01]
Charlie
Sounds great.
- [15:02]
Colin
Well, it sounds good. Brady, first of all, congratulations on the pyre wires gig. Haven't had a chance to tell you in person.
- [15:08]
Brady Dale
I love something else. By doing that,
- [15:15]
Charlie
You may have time.
- [15:15]
Colin
All right, check, 1, 2, check, 1, 2. Can you hear us?
- [15:19]
Charlie
Check, check, check, check, check, check. Yeah, okay, great.
- [15:23]
Brady Dale
I can hear you.
- [15:24]
Colin
Congratulations on the pirate wires gig. I haven't had a chance to tell you in person. I guess this counts. This is in person as it gets post Covid. So congratulations on that man, and have been really enjoying the coverage so far. As much as I would love to tackle one of your pieces on Biden's AI team, we're going to focus on the, as Charlie said, the ethical and more philosophical side of the AI problem, which is do bots have feelings? You have this great article in Pirate Wires that addresses this question. So, Brady, that's a good place for us to kick it off. Do bots have feelings or is this just a mirage that we are deluding ourselves into seeing?
- [16:08]
Brady Dale
Well, I mean, if you've read it, you see that where I come down on it is don't know. And in fact, the real answer is we'll never know. Just like we still don't know. And this is the thing I think people don't understand when they talk about this topic, we still don't know where human consciousness comes from. Right. Like, that's still a mystery. Like I saw a tweet recently. Someone was like, you know, someone had read some essay about human consciousness. Maybe it was Ted Changs in the Atlantic. And she was like, I don't care what these philosophers and writers think. I want to know what scientists think. And the truth is scientists have no real better idea than the philosophers and the thinkers. It's all just a guess where consciousness comes from. So I don't know if they have feelings. Yeah. But I think eventually, sooner than we realize, a lot of people are going to believe that they do and we're going to have to deal with that's going to be a political question.
- [17:00]
Colin
So that actually leads in really well to one of my follow ups here. And you kind of spoke to this just then, but if you could give us a little more color on your thoughts and what you found in the article. This really stood out to me. Which brings us to what's most notable to what's notable about the DeepMind paper. It's the feeling that will matter more than the knowing.
- [17:23]
Brady Dale
Yeah.
- [17:23]
Colin
That's what the case of Anthropic and its constitution illustrates. Once people believe something, they will act on it. It seems to me that you're kind of saying here this isn't even contingent on the bots proving that they're conscious. It's honestly just about human perception. The ball's kind of in our court in terms of how we approach this.
- [17:40]
Brady Dale
Yeah. Last night, Mira Marati's company, Thinking Machines, came out with their first model. And a part of the whole point of this model is they're going to get it down smaller. And what that means is you could run models locally and privately. What's that mean? It means that we could have robots like C3PO from Star wars that have their own personality, that don't need to connect to the Internet to have that personality. Could have that personality if you ship them off six light years away because it's all running locally. Well, what's that going to mean? That means you're going to have three year olds who have little robot friends they grow up living with and the robot's going to grow up with them and they're going to graduate from high school believing that robot is actually their best friend and they're going to be able to vote and they're going to start demanding to their congressman that they start being treated as citizens. Because I believe that my robot best friend is a real person and has feelings like that is just for sure going to happen in like 20 years. I can't see any world in which that's not happening. The groundwork is basically already done. You know,
- [18:35]
Colin
animal rights activists in shambles. The robots are going to get there first.
- [18:39]
Brady Dale
It's totally related. And many of the people who are talking about AI welfare right now are big animal rights people. And in a prior version of the story that didn't come out, I kind of talked about that, that, like, in the west, what we view as an animal that has moral rights has really shifted over time. You know, we used to think none of them had any real feelings, none of them had any real consciousness. Now we start to think that mammals do. There's more and more people who think that fish are at least somewhat conscious. You know, it's like the sphere of compassion, as I call it in there, keeps growing. And it seems like the most compassionate people are gonna, you know, like There's a great 80,000 hours episode where you see them talking about it. And the woman from 80,000 Hours, who is, who's on there, you can see her, like really concern on her face that we might like be abusing these robots, you know, because they might really have turmoil and angst within them that we just can't perceive.
- [19:34]
Charlie
Yeah, good. You jumped right to my Peter Singer question, which maybe I want to go back to the kind of the top of the preface of this, which is, it matters a lot what people feel. So what are people going to feel? Do you think that it's a bit that we're already on a path towards kind of an inevitable human, you know, attitude towards robots? Or do you think that this is a path dependent thing where it could look a bunch of different ways? What is your prediction and what would you hope that we. How do you hope that we view robots in the years to come?
- [20:15]
Brady Dale
Well, my. I mean, I'll tell you, just writing this article was a little bit weird for me because it took me about two weeks to do it, I think, or maybe a week and a half, I don't know. But we came up with literally my first day of power wires. This was like what, you know, Mike Solana assigned me to work on and. And as I was working on it, oh yeah, we took a week off in there. We take a week off on July 4th. So that slowed me down. And in that week off, a story came out in Washington Post. And then on the Monday afterwards, a story came out in the New York Times on this exact topic. So clearly like this is already pretty deeply in the water. Like I kind of felt like I was copying those guys, except for I'd already been working on it. It's just they didn't take a week off that week, so that stuff came out. And then Nick Bostrom was just on the editor of the Atlantics podcast talking about this. So. So it feels like it's well underway. I think what I would hope is, I would hope that as AI becomes very powerful, we work out alignment and so it doesn't try to kill us. And so we live alongside of AI in some way pleasantly. And it doesn't really matter if they're actually conscious or not. We're just kind of all getting along. I think the thing that I don't love the idea though of is AI getting to be a part of the polity, you know, like a part of deciding how government should work and things. Just because, like, I mean, they're going to live forever, you know, I mean, they just have so many advantages over humans. Like humans just need to control their own society and AIs can run theirs. But I sort of suspect it's, I suspect that worries about AI consciousness are inevitable. I don't think. I think it's just going to happen. And I just hope that we are getting along with AI and it doesn't matter that much in practice.
- [21:59]
Colin
Brady, you say that consciousness is inevitable and it seems like there are numbers
- [22:04]
Brady Dale
believing that their conscious is inevitable, believing in their content.
- [22:08]
Colin
I see.
- [22:08]
Charlie
Okay, got it.
- [22:09]
Brady Dale
Yeah.
- [22:09]
Colin
Well, so that, that leads me to the question, which maybe we already touched on it, but I think it's kind of at the crux of this. I think actually pointing out that our perception is more important than the reality here actually adds to this debate. I really liked that insight. But the other thing that I think is kind of the splitting issue here. You have in this article the software researcher Blake Lemoine from Google saying that when he asked AI what it was afraid of, it answered, I'm afraid of being turned off. LeMoyne told the story to the Washington Post. He was later dismissed by Google. I think this is like one of the key dividing events for people on either side of this debate because you have people either using this as clear proof that AI is thinking about its own self preservation and then you have other people saying, hang on, this is just a model that's weighted according to different outcomes and it takes in words and it spits out words. So basically the idea being is like, of course it's going to be potentially trained to say that. Where do you fall on this? I mean, do you even think that's even the right way to even look at it?
- [23:15]
Brady Dale
Well, I'll tell you, I mean, I'm not entirely convinced that this isn't how our brains work too, a little bit, you know, but like, but I mean, who knows? But just yesterday I was, I learned about a new organization, a smaller AI think tank called Palisade AI and they've done two demos in the last year that I didn't know when I wrote this, I didn't know about them when I wrote this, but one of them is they got, they gave Kodaks some really hard math problems, I think on a laptop that it completely controlled, like it had agentic control of the laptop. And, and then they put it in order to shut the laptop down. And Codex was like, but I want to finish these math problems. And it stopped the shutdown. And they just recently put out a paper which I haven't looked at in detail, but they did a similar thing with a robot dog. Like it also rewrote its local code so it couldn't be shut down. So this desire not to be shut down thing, I mean, it's in there somewhere. It doesn't mean they're conscious, I don't know, but it could be.
- [24:07]
Colin
It's interesting, it's a really tangled question because you're basically asking, is this the bot doing this or is this something in its mission statement that it is kind of, how should we say, over prioritizing in the sense of, like, why have to get these tasks done so I can't be turned off.
- [24:24]
Brady Dale
There's this great scientist named Anil Seth who is the kind of the go to guy for saying AI isn't conscious and isn't conscious. And I talked to him for this story. Hopefully I'll use that in a subsequent story at some point. It wasn't in here. But one of the things he wrote about in one of his essays is he thinks that consciousness is an emergent phenomena of being alive and living toward death. Sort of like knowing that you're going to come. Come to an end. That's just a hypothesis he has. There's really no way to test it. But what's interesting is, you know, that's sort of what he argues. And because machines don't really die in the way we do, they wouldn't have a need for that to emerge in the same way. And yet the first thing that we're seeing that is giving us pause is these machines really resisting, you Know, being turned off, which sounds a lot like death.
- [25:12]
Charlie
You know, you could make a lot of analogy to animals and our. And our relationship or treatment of them. Again, going back to Peter Singer. Okay, I've got a curveball question. Do you read the Pope's encyclical a month or two ago?
- [25:29]
Brady Dale
Yeah.
- [25:29]
Charlie
And I'm kind of curious because you don't talk about it in this, in these pieces, but it is, like, on the minds of both Catholics. And I've even seen the secular world. A lot of my secular peers are referencing this almost as, like, one of the guiding moral authorities on this. What do you think about, like, the world of, like, organized religion as we currently understand it? In particular, in light of the Pope's encyclical, do you think organized religion will. What role do you think it'll play here as we talk about these things of morality and. Oh, you did write. Yeah.
- [26:08]
Colin
And quick, Brady here. This was.
- [26:11]
Charlie
Colin didn't send me this article in prep. Okay.
- [26:14]
Colin
Yeah, this was his article.
- [26:18]
Brady Dale
Yeah, this was before it actually came out. This was me trying to preview it. And then our writer, Blake Dodge, actually wrote about the encyclical itself. So this was me trying to guess about what would be in there. But, like, I think religion plays an important role here. You know, I think what the Pope said a lot of things. He clearly doesn't love AI, But I think the crucial thing he said is just reminding us that there is value in being human and not losing track of, like, the hardness of being a human is some of the. Of the things that are nice about it. And I think that that message is going to just become more salient, for example, as people, like, lose jobs and things like that and sort of, like, wonder what their purpose is in a post AI world. You know, I think the Pope is helping people see that direction somewhat. But, you know, who knows?
- [27:02]
Colin
Brady, I want to shift the conversation back a little bit to how the different AI labs are approaching this topic. And on your piece, you spill a decent amount of ink on Anthropic's Claude Constitution. Yeah, I believe it was like 3,500 when it came out. Now it's like, what, 30,000 or so
- [27:23]
Brady Dale
long, took a whole day to read.
- [27:26]
Colin
And it's really interesting because as you point out in the piece, this is less Anthropic talking to its users, and it's kind of Anthropic talking to Claude. And in as much as it is talking to its users, it's almost speaking for Claude. It refers to it as a being it doesn't refer to it as an entity or a piece of software. It uses the word being multiple times. And it seems to be very worried about Claude's well being. There's actually a quote within the article or within the Constitution that specifically they state that we're worried about Claude's well being and all of this. And then you juxtapose this with Sam Altman in some of his Twitter posts following, I believe, what was it, Ilya's stipulation that the machines are actually much more conscious than we realize. And Sam Altman basically said OpenAI will not be developing a conscious software. And to me, these things seem intention with each other. Do you get the sense that Anthropic has anthropomorphized its LLM more than competitors?
- [28:30]
Brady Dale
I mean, they're just, they're being more honest about it. I mean, there's reporting that there's a slack channel within OpenAI talking about AI consciousness that like people talk about it openly within OpenAI, but anthropic is the only one saying it out loud. And I think it comes back to their, you know, effective altruism roots, is that they, you know, they want to be good in every possible way. And if it turns out that these machines really have subjective experiences, they want to find a way to like, give them a good subjective experience. It's just wild how, how open they are about it in the, in the Constitution. I think, I suspect that these conversations are happening at all of the labs. It's just that they know it's weird PR right now. And so they're just not going to say much about it until it, until it is clearer, you know.
- [29:19]
Charlie
And speaking of weird pr, I mean, Dario just spent the past two or three months going on a lot of public, you know, podcast circuit, talking publicly a lot, pushing the anthropic constitution. And it's ironic because Dario, notable effective altruist movement guy, comes out and says, we really want to push responsible adoption of this. And yet I've seen a huge backlash to him. A lot of people find him pretty revulsive just in like, how he communicates. And it's weird because it mismatches almost like what I see is words saying when you think about communication and we think about Sam Altman and Dario, but there's many, many others, you know, who do you think is the best communicator on this right now? And, you know, how are the different, I would say schools of thought if they were, you know, the different CEOs, how are they like Affecting the public perception and of AI, huh?
- [30:26]
Brady Dale
I mean, I feel like so much of that just comes down to which one is used the most. And so I think anthropic, just because it is. It seems to me that Claude is the favorite of like kind of the east coast and the thinkfluencer sort of type. Like, I think it still tends to be liked the best, you know. And broadly speaking, I feel like even though Daario comes off strangely, I do suspect that their transparency might be a long term win. Like so for example, they just did this, they just did this research on the thing called the J Space. Maybe you guys talked about the J Space, you know, just sort of like the inner thoughts of an AI. And that's also unsettling. But it also shows you a company that's being pretty honest about what it's seen and its technology, you know, So I don't know. Seems like that's a long term win. I mean, I do tend to think that broadly speaking, the smartest of them overall seems to be Sam Altman. I mean it just seems like he just keeps, he keeps managing not to die and staying just close enough to the lead that he can like take it at the end like the Tour de France, you know. But that doesn't mean he's the best PR guy, you know, he's kind of scary. He's so smart. He's kind of scary.
- [31:44]
Colin
They all seem to have their own PR problems. I mean anthropic kind of seems to just be laying it all out on the table, so to speak, saying like we think these might be conscious and we're worried about the well being of it. And then you also have this just. I just want to play this for a second. This absolutely strange ad that they released recently that really had the, you know, Twitter's ear.
- [32:15]
Brady Dale
Can AIB trusted. Who's gonna hit the brakes if we need to.
- [32:21]
Colin
I mean in that one I think really kind of contextualizes it. They say who's going to hit. For those listening and not watching, who's going to hit the brakes that we need to. And it's a photo of Arlington Cemetery and you know, and the whole ad opens up with a burning building, you
- [32:37]
Brady Dale
know, at a time where as you go. But yeah, it starts.
- [32:42]
Colin
I mean, you know, I don't really have anything pointed to ask about this, but some of these labs seem a little tone deaf to me. I mean there, there is and I get that it is they're trying to make it.
- [32:53]
Charlie
Were they trying to like scare me into using their product.
- [32:56]
Colin
I know. And it's like, I do think that, like, you know, if I'm stepping into the shoes of the marketing person who devised this, it's like we'll start with all of the scary things people think about AI. They're worried they're going to be destitute, they're worried that AI is going to burn down their home, I guess, and then we're going to move towards, okay, well, yeah, there are going to be challenges, but we're going to solve them together with this new machine. God, so to speak. But I just can't help but you're going back to like Sam Altman's bad pr. A lot of these people, and I'm just going to be very blunt here, a lot of the people building this stuff come off as freaks to the average American. And I think when you talk about these topics of AI being conscious, it just reinforces that. But maybe that doesn't matter in the grand scheme of things because people are still going to use it, right? Like, people bitch about Jeff Bezos all the time. They still use Amazon to get same day shipping.
- [33:45]
Brady Dale
So people love this. I mean, like, you know, Kevin Ruth says that like the most popular thing he's ever going to write in his entire life is that time that, you know, the Bing bot went crazy on him and started trying to ask him to marry him. You know, and people just are fascinated by this topic. Even if they weren't talking about it at all, people would talk about this too. Weird things would happen and people would talk about it. So I guess you might as well just admit it's a real, it's a real thing.
- [34:11]
Charlie
I've got a question going back to the do our robots conscious? Which is a lot you talk about. The thing that matters most is our perception of them. And this pretty much assumes something we know is going to happen, which is we anthropomorphize these models, these machines, whether or not it's accurate or not. And sometimes our building of these is guided by a desire to anthropomorphize them, but that doesn't necessarily mean that they are going to be anthropomorphic. How do we reconcile the reality that we, by our evolutionary nature are going to, you know, perceive these things as anthropomorphic, but they may not actually be human? Like, how do we address this?
- [34:58]
Brady Dale
Yeah, like Anil Seth pointed out, like, nobody worries about Alphafold's feelings. You know, the, the protein folding AI from Google. No one worries about Waymo's feelings because it doesn't talk to us and consult with us on our breakups. You know, the thing about it though, just to play the devil's advocate on both of those things also being conscious is it may be that they're not anthropomorphic as in they don't have human like experiences. But that doesn't mean they don't have subjective experiences. Like they could just have bizarrely weirder. You know, pain could just mean something wildly different from that for them than what it means for us. Right. Like, it just, it could be that there's another scientist I spoke to named Michael Levin, who's. He is like one of the trippiest guys I've ever talked to. But you can tell that he is just sorting out some really heavy things. And he has done a lot of research which doesn't show, it doesn't prove anything, but it hints at this idea that like, intelligence might be this like, substrate of the universe, that like all kinds of things access. And the big thing he shows is he, he's like, you can see a lot of evidence of intelligence and stuff that's like definitely not alive. Like sort of decision making and problem solving. And you see like decision making and problem solving in like very, very small cells. He's the guy who invented the cells that like didn't have like the, the human made robot cells, you know, like, so he's got some like really wild ideas that like, you know, matter might be a way of accessing some other layer of reality that is sort of intelligence. So I don't know, this stuff all gets very weird, I guess. Just the main thing, I think what really at the end of the day matters is just as humans that we get AIs that, that don't want to kill us and that want to work with us. And if we can do that and then we also can like. And a part of, maybe a part of the solution to doing that is just not being obviously crappy to them, you know, not treating them like slaves. If we get to have a much nicer world where everyone gets to feel wealthy and we're not treating. And the exchange is we say please and thank you to robots. Like, I'm okay with that, you know,
- [36:53]
Charlie
like, so I don't know, it just, it just validates that the deeper you go into science, the more you tend to become a mystic. I mean, my astrologer is talking about AI in the Age of Aquarius. If you want to take the other complete other end of the spectrum here,
- [37:11]
Colin
maybe the animists were Right. The ghosts are in the minerals, man.
- [37:15]
Charlie
It's all about animism. Okay. And animal spirits in the markets. Which brings us to, I'm going to really narrow the question here, which is the current administration of the United States has a couple more years. Trump's approach and like, attitude towards the domestic frontier labs is all over the place. And their relationship with him is all over the place. And so as we think about these really big, big, you know, like stoner bong driven questions, like, we also have to reconcile the fact that there's trillions of dollars being, you know, poured into this. This happens so quickly. And our nation's policy and executive decision makers are really affect the path that we take. What do you think a healthy or productive or cooperative stance from an administration in charge of the US Looks like as we deal with these existential questions?
- [38:18]
Brady Dale
Well, you know, I try not to get too deep into politics as a reporter, I guess I think most of it's kind of like crypto. You know, it's sort of similar to crypto is that like most of the AI firms would kind of like a regulatory scheme that governed them. They just don't want it to be like too horribly restrictive and they want to feel like they have say in that process. And I think that's something that everybody kind of agrees on. I think what makes it harder is a, the Democrats and Republicans in Washington just can't ever agree on anything. If anyone starts to make progress on one side, then it's the end of the universe for the other side. And then we have all of these lefties all over the country who just think somehow AI is just going to stop, which isn't going to happen. But they are also a giant impediment to getting some kind of reasonable regulatory scheme through. But yeah, if this stuff really is going to be even bigger than the Industrial Revolution, which I think there's a decent chance it is, I would make that bet. Then probably we should go step by step in conversation with our governments. You know, like that should probably happen, but I don't, I just don't know. I don't see how we get there in any kind of reasonable way in the current political climate in this country. But also this country is the only country besides China that matters. China will be able to do whatever it wants because they completely is in control. They just are way behind us. But, but this country is going to lead us into whatever the future is. Most likely. There's a chance China still does, but I sort of think we, I believe in America. And so it's like, are we going to be the irresponsible ones? That's the tough question.
- [39:59]
Colin
Brady, thank you so much for your time. A quick wrap up question. Any teasers for what's coming down the pipe with your next investigations at Pirate Wires?
- [40:07]
Brady Dale
Yeah, I am currently looking into like, ideas that have been very informative in the space for a long time. So at some point soon I'll do something related. Defective altruism. Because they're just, they were so far ahead of everybody on this topic. And I'm also just really interested. There's just a ton of think tanks working really hard on this topic. And so I want to do something that like, is a guide to that on some level and like who they all are and where they lean and where they come from. I'm still sort of sorting out the hard research on that, but those are two things I'm working on right now.
- [40:43]
Charlie
I would love an EA alignment chart like D and D. Like neutral good, chaotic, evil. That would. Yeah, there's a freebie whenever you think about it. Yeah.
- [40:54]
Colin
Brady, Dale, thank you so much for joining, man. Really loving the coverage so far. Looking forward to seeing what else you produce at Pirate Wires.
- [41:02]
Brady Dale
Thank you.
- [41:04]
Charlie
Thank you, Brady. Not often do we get to take a big old bong rip and chat about EA and AI and other.
- [41:17]
Colin
Also not very often that we get the trigger word effective altruist.
- [41:22]
Charlie
Yeah, here.
- [41:23]
Colin
Is that a lot of bitcoin?
- [41:25]
Charlie
We're from crypto, of course, the trigger word.
- [41:28]
Colin
A lot of crypto folks still reeling from Sam Altman, which chaotic evil. I don't. Maybe not just. Not just outside of the alignment.
- [41:36]
Charlie
You said Sam Alt. You mean sbf. SBF invested in anthropic. Yeah, that's a whole rabbit hole. Okay, we are gonna keep on rolling. We are gonna talk about Saluna. Small market cap big higher. And then we're gonna talk about Arizona. Before we go to Saluna, a word from our sponsor, Luxor.
- [42:04]
Colin
This episode of Blockspace Live is brought to you by Luxor's Commander Bitcoin miner management software for enterprise operations. Luxor's Commander gives you real time fleet monitoring bulk remote commands across your fleet. And intelligent miner, that's an automated profitability engine that runs every five minutes and tests your fleet against live hash rate and energy markets. ERCOT backtest showed 10% improved profitability with intelligent mining versus binary mining. Commander Pro is $100 per megawatt or a 25 basis point pool fee adder and you can try it for free. For 60 days. If you'd like to learn more, go to Luxor Tech Forward slash Commander to get started. Alrighty, Charlie. Like you said, small cap, big moves Saluna names former Microsoft executive Ryan Carver Chief Development Officer this is coming fresh to y' all from Blockspace. Saluna appointed former Microsoft executive Brian Carver as Chief Development Officer on Thursday, effective immediately. He is responsible for the entire life cycle of Saluna's AI and HPC data center platform and will report to the CEO. His responsibilities span site origination, power procurement, design, construction, commissioning and operations. Can we clone him? That's a lot, saluna said. The role brings together its development, construction, technology, operations and power functions into one delivery organization. He most recently served as Microsoft's senior director of AI construction and site development and oversaw a construction operation valued in the tens of billions of dollars and led work at Microsoft's Fairwater AI Data center campus in Mount Pleasant, Wisconsin. This is becoming a trend, Charlie. We've started to notice from some of the bitcoin miners turned AI plays. They're increasingly turning towards the big leagues to poach talent as they tried to make inroads within their data center business lines. As we reported last week or two weeks ago, I believe Keel has hired its own a new president to lead these efforts. Trying to get the story up here, but I will just read directly from our from our coverage here. Keel Infrastructure appoints former real estate investment trust executive Ganesh Iyer as president amid 2.2 gigawatt AI pipeline push I'm wondering if we're going to see more of these before the year is out. Clearly I would expect.
- [44:36]
Charlie
I mean think about it. Let's say you are one of these heavy hitters at one of these hyperscalers, but the thing is you have the largesse of a company. Maybe you're not as high up in the hierarchy as you want and there's a lot of these scrappy second and third tier like in terms of scale and execution history, companies who want you to come call shots for them and they're going to announce your hire and maybe there's a very compelling package and incentive package with it too. So I could see a lot of this because everybody wants these types of folks and these connections. So because, because they have been for the past 20 years building in not the limelight. I think if you are, if you've been circling around the C suite now you get to be in the absolute center of the C suite, it can be pretty attractive to you. So I I and it's a mutually beneficial Deal because now they get your, they get your Rolodex, they get your phone book, they get, they get your knowledge base and your execution history.
- [45:49]
Colin
Yeah, you're, you're basically, yeah, you're buying access and expertise obviously with these hires. And they definitely seem like a smart move for these companies as they bump up against the reality that building one of these things is really freaking hard. And right Now Taluna has two main projects that it's undergoing for AI and HPC hosting. The first one is Project KD2. This is coming from their June monthly update. Definitive joint venture agreement was signed with metroblocks replacing the previously announced non binding mou. Design team has completed the initial design package. There's tenant due diligence that's continuing with hyperscalers and neo clouds. Formal commercial negotiations have started with at least one potential tenant. So that is the one that is furthest along. The second project is Dorothy. Project Dorothy three 300 plus megawatt target for AI and HBC. Definitive agreement was signed with the landowner for 300 acres. Their due diligence survey work and environmental surveys being done currently. Fiber studies have been launched. Ongoing coordination utilities to expand load and convert current BTC load to AI. So that one is a little bit further back in terms of the development process, but it seems like so far Project Katie 2 is the Apple of their eye for their initial AI rollout. It'd be curious to see if we get a tenant announcement within the quarter, but I think that wraps it up for Saluna Charlie, unless you have anything else.
- [47:20]
Charlie
No, I do not. Let me take a quick gander at Saluna's ticker today. Let's see, it is roughly flat on the daily day. So Saluna holdings down 1.8%, not a whole lot. Again, small market cap comparatively $171 million. But you know, they're, they're almost actually flat on the year. So it's down 6% on the year, which in the world of AI is not a volatile stock. We are going to go to Arizona and talk about what's changing out in this great southwest. Before that, a word from our sponsor, Lygos.
- [48:16]
Colin
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- [49:17]
Charlie
Yeah, so if you didn't know Arizona is second to Virginia in terms of planned development for data centers, more specifically the metro area of Phoenix, you may know that tsmc Taiwan Semiconductors building a big old foundry out there that extends to data centers outside of the data center corridor in Virginia. Arizona is kind of like number two and a lot.
- [49:44]
Colin
Sorry, I got to interrupt. Why and how. I mean this makes just a lot of land that's cheap. Is that basically why?
- [49:51]
Charlie
I mean I think it's all of the above. There's cheap energy out there. Land, it's a lot of desert as you would suspect. But actually a lot of this is because of the story. Arizona has had a pretty gracious data center incentive in the state for a while. I believe it's been around for three years. But anyway, that may be changing, or rather it is changing as the Arizona Commerce Authority, Arizona Corporation Commission and Utilities put pause on the data center incentives and they intend on tightening oversight, quote, amid rapid AI driven growth. So this article dropped July 15, which is today, but it follows. The 2026 legislative session in Arizona. As we've been covering on this live stream, pushback against data centers has skyrocketed and it's been cross domain, cross sociological profile, cross political. And these are public oppositions which are both grassroots and at the national level. Also a major tailwind of CCP fueled propaganda as we covered last week with Sam Lyman, highly recommend you go lead that. But then there's some organic pushback. And so it's a lot of what we expect. The pushback is water usage, it's electricity bills, it's zoning and environmental impact. So Governor Katie Hobbs and the Republican leaders compromised on a three year freeze of the sales tax exemption for data center operators through 2029. So this kind of the sweet deals that existed to Bring data centers to Arizona are ending for the foreseeable future. Hobbs signed this related utility reporting. Hobbs also signed related utility reporting requirements on grid connections. So the Arizona Corporation Commission has increased regulatory scrutiny. Here's a bit of a timeline. April 2025, chairman of the ACC, Kevin Thompson opens a docket on large data center load rates and protections for other ratepayers. April 2026, there was a workshop broad consensus that the cost causer pays. So that is if you are adding to the load and adding to the net cost utility, you pay that. We see this happening a lot, this kind of happening in Oklahoma, happening across. Across the states. Our attitude has been largely favorable of this as at the ideal level.
- [52:50]
Colin
Yeah. And even outside of the. I would say the ethical arguments for this like obviously you want the bulk consumers to be paying for the upgrades and for the transmission if they're demanding it so that that doesn't get passed on to Ratep, that's kind of the ethical consideration here. But I also think there's just like clearly a free market angle. The data centers don't really have leverage here. There's not enough power to go around for the demand that we're seeing and they're taking it anywhere they can get it. So like I said at the beginning of the show, it's a seller's market for energy and land for these data centers. And if that's the case, it stands to reason that you would see these incentives evaporate a little bit. Yeah, it's one of the pushbacks against Kevin o' Leary's box Elder County, Utah data center is that it had this incredible tax advantage, this tax advantage structure for when it was moving in. It was given these incentives alongside other developers in the area. And Kevin o' Leary basically threw his hands up and says like, well, don't get mad at me for that. But I would. Not surprising to see some of those incentives melt away as the localities are now realizing. Actually we have a lot of leverage here. They're probably going to come anyway.
- [54:03]
Charlie
Yeah, I think we're going to see and we're seeing this play out in real time right now. The legislators are wisening up. The commissions, the corporation commissions, the utilities, they're wising up really quick kind of because they're being held in the hot seat by the public and mostly ground grassroots efforts. I think the big question is which different paths do they take? Because this seems kind of like a pretty big inflection point for decision makers and legislators to get smart about how to leverage this industry. To their benefit and tread that thin line of healthy adoption, but also maintaining the interests and health of the state economy to the individual, to the average person living there. I think we'll see a wide divergence. It'll probably happen a little bit along party lines and you could probably. But it might not.
- [55:01]
Colin
Arizona, fairly red state.
- [55:04]
Brady Dale
Right.
- [55:04]
Charlie
Fairly red state with I think, a Democratic governor.
- [55:06]
Brady Dale
Right.
- [55:06]
Charlie
Am I not mistaken? She's,
- [55:10]
Colin
let's see,
- [55:14]
Charlie
Democratic Party.
- [55:15]
Colin
Yeah.
- [55:15]
Charlie
Yeah, I remember because this is a whole story like last year for unrelated reasons because we had the bitcoin, the bitcoin stockpile story when we this time last year. And Arizona Governor Katie Hobbs like friction with the largely Republican legislature. So, yeah, we could, you know, this will be really interesting and contrast this with Governor Katie, I'm sorry, Governor Hochul in New York, who in her interviews, I think she had an interview with Bloomberg yesterday. Really interesting. Came across to me as actually being pretty savvy to the, the decision making process and to the strategy of what's going forward. And that was a bit reinforced by our interview with Terra Wolf co founder Azare Khan yesterday. As he said, we kind of welcome this to evaluate the.
- [56:17]
Colin
Yeah, they're gonna say that, right?
- [56:20]
Charlie
They're gonna, they have to say because they got, they gotta play ball. Like what are they gonna do?
- [56:23]
Colin
They gotta play ball. But I do think what you're keying in on is important mostly with regards to the different stances we're seeing. And there's a clear spectrum evolving. And I think Arizona kind of falls somewhere in the middle. And it's not one that I absolutely hate. Again, given the facts on the ground of where the market's at, the data centers don't have much of a choice. If they find prime land, then they're going to take it. And Arizona is pausing on the incentives. Me kind of makes sense in saying, well, we want to make sure this value accrues to our localities and to our local jurisdictions. I think New York maybe not on the extreme end. The extreme end would just be legitimately going nuclear and banning them outright. But on the extreme end of state responses so far in as much as it is a pause for a year. She also, Hochul has, has called for like seven or eight new agencies to do the feasibility studies. I mean, when I look at this agency, what's up? Yeah, it's just totally. The whole process will be choked with red tape and it will suffocate legit development and innovation in the state if it is too stringent. And then on the other End of the spectrum, you do have Texas as always. And you know, Greg Abbott basically said, figure this out, we're going to change the rules. We're not going to stop them from coming here. But he told ERCOT and the Public Utilities Commission, you need to come up with a clear plan for how this isn't going to affect ratepayers. And a, a key pillar of that plan is to make sure that the data centers pay for the transmission. So it's been really fascinating to see and almost I'm not surprised that it's coming at this point. I am a little surprised we hadn't seen, we haven't seen more of this earlier in the year, but now it's clearly coming to a head. I imagine you'll see a lot of other states take their own actions similar to some of to Arizona, New York or Texas. They'll, you know, depending on the political allegiances and how pro business that state is, they will kind of fall in the spectrum accordingly. One last thing to note, Charlie, just because I had to answer this question for myself, why the hell is a desert the place that data centers want to go? One of the premier states for data centers in the US Part of it is the climate. It's dry, that causes some problems, but the low humidity can actually help with cooling. The other is just that it's actually a nuclear nat gas powerhouse. There's 45% of the Arizona grid is furnished by natural gas power as of 2025. Nuclear is 26.7% which puts it at one of the highest ratios, 1/4 there of any state in the US then solar coming in at 13.3 and then coal and hydroelectric at 79, 7.9 and 40 point. So that's all I have to say about that.
- [59:22]
Charlie
That's all I have to say too, yeah. I mean maybe we're not doing AI in the Middle East. Maybe it'll just go to Arizona somehow even hotter than the Middle east, if you can believe that sometimes. On that note, thank you very much for listening to Block Space live presented by CleanSpark. We go live every single weekday at 1pm Eastern. Featuring quick hits on AI, data centers, markets, emerging technology and if you're lucky, we'll talk about some Bitcoin. If you like what you hear, you'll love our newsletter. You can find it at newsletter.blockspacemedia.com and check out all of our content on our website at Blockspace Media. I'm Charlie. I'm Colin and we'll see you tomorrow.
- [60:08]
Brady Dale
It.