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- [00:01]
A
Welcome to Galaxy Brains.
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B
An infinite amount of cash.
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A
Cash. I'm your host, Alex Thorne. The US banking system is sound and resilient. Bitcoin made a new all time high. If you're not long. If you're not long, you're short. Satoshi is going to come on there,
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B
laugh hysterically, go quiet. All bitcoin's gonna be erased.
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C
Bitcoin.
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B
Bitcoin's the best crypto. Bitcoin is going to zero.
- [00:25]
A
Welcome back to Galaxy Brains. As always, I'm your host Alex Thorne, head of Firmwide research at Galaxy Bitcoin. Not zero. And we have a great episod for you this week. Will Foxley, co founder of Block Space Media, joins us. It's his third appearance on the show. We're talking with Will at length about bitcoin development in their upcoming conference. Up next, talking about bitcoin mining and the convergence with AI. Will's got deep knowledge of the public bitcoin miners in the U.S. we've been covering them a long time. It's very interesting. And we'll talk to him about the evolving bitcoin and crypto media landscape of which, of course, Block Space is a part of. We'll also check in with our good friend Bimnet AB to talk about Fed Day, the Fed holding rates steady, what that says about Fed independence. And we'll also talk with Bim that about chaos in the marketplace, how investors and traders are positioning in that environment. Before we get to the I need to remind you to please refer to link to the disclaimer in the podcast notes. And note that none of the information in this podcast constitutes investment advice or an offer recommendation or solicitation by Galaxy or any of its affiliates to buy or sell any securities. Phineas, we survived the great ice storm. We survived 2026. What was the name? Fran or Fern.
- [01:31]
D
I didn't know there was a name.
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A
Winter Storm Fern.
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D
It was worse than anticipated. Honestly, I thought it was going to be lighter. And it's. We're still digging ourselves out.
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A
I mean, you got a foot of
- [01:40]
D
snow in New York and now it's freezing cold. So it's all hardened.
- [01:44]
A
Yes, it's that terrible thing, you know, they plow the roads and. And then like, you can't. Like they create these snowbanks that then freeze. It's really awful. Yeah, but we've talked about this. I always complain about the cold to you and you're like, it's winter, Alex. It's normal. This is normal. Right? They make it seem like it's Some kind of crazy apocalyptic scenario. But, like, storms happen in the winter.
- [02:02]
C
Right.
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D
It's also part of the culture of being in New York to complain about things.
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A
Yeah.
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D
So it's like, it gets cold, we complain about it. It gets hot, we complain about it.
- [02:09]
A
Yeah. Speaking of which, I took the subway today, very upset with the service I got from the MTA. Waited for 15 minutes. My train came, blew right through the station. Oh, excuse me. I thought you were supposed to stop. No, that one wasn't stopping. So they're just honking, right? Then get on the train, go like two stops. They're like, actually got to get off the train, get away for the next train.
- [02:29]
B
I mean, what is this?
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A
The trains are underground. Why are they affected by snow on the ground level? They're underground.
- [02:37]
D
I took the subway, and it was. Today was lovely. Everything happened on time.
- [02:42]
A
I was quite annoyed because also I was drinking a Celsius and the caffeine hit before I got off the subway. So then I'm. Because I was on it for so long. So I'm all agitated.
- [02:49]
D
You're amped up. And the subway angry.
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A
I'm like, look, I took a picture of an ad. It said, you know, I'm making fun of the ad sending to a friend. Look how dumb this ad is. I was all gassed up, dude.
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D
Well, look, we survived the storm. Well, there's a lot of frustrations, but we survived the storm.
- [03:06]
A
It was. I do think that, like, is it social media? Like, what is creating this? Like, every big storm is like a big weather event.
- [03:13]
D
Well, they create a whole brand campaign around every storm. Now, there's a name, there's a. There's a number associated with.
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A
But you and I grew up in New England. Like, getting a big winter storm was, like, par for the course all the time. Like many of them.
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D
You are the. The facilities here are more affected. Yeah, definitely. Like in Vermont, where I grew up, it's like the roads plow, but nobody's parked on the side of the road. Like here, it's.
- [03:34]
A
Everything's very dense.
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D
It is more difficult.
- [03:37]
A
That's true, to be fair. Well, and of course, across the south and mid Atlantic states, they're not prepared. They're even worse.
- [03:43]
D
Much worse. Much worse.
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A
Ice storms. I saw shout out to my friends in Nashville. I know dealing with a big cleanup there. Tons of power lines and trees down.
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D
Even Texas. I wonder, you know, if anything was affected.
- [03:53]
A
Bitcoin mining, hash rate dropped off a lot because a lot of the hashes in Texas and Tennessee and areas that were affected and they curtail to give power back to the grid. So you can actually see that in the hash rate chart. We'll talk about that with Will and other things and you know, won't beleaguer the winter storm any further, but you know, still only January. So I think we gotta, let's, let's try not to talk too much more about the cold weather. You know, I think people know that sounds good. Let's get right into it with Bimnet ab. Let's go now to our friend Bimnet AB from Galaxy Trading. As always, Bimnet, welcome to Galaxy Brains.
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C
Thanks for having me.
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A
It's big day. Fed day.
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C
Fed day.
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A
Not quite a Super bowl, more like a divisional rivalry.
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C
This is lame duck period.
- [04:33]
A
Is for, for Jay, for J. Powell. Yeah. And we didn't get a cut or a hike. We got a pause. Correct. And did they signal like from the current Fed makeup that they are likely to continue pausing. What's the outlook now for cuts this year?
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C
There is not that much priced in in terms of like the rate cutting path. In fact, looking at pricing out to Jan. 2028, which includes the next Fed governor two years from now, Chairman Jan.
- [05:09]
A
Yes.
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C
Yeah, yeah. That is two years. Yeah. There's only like a little over like two more cuts baked into the front end of the US rate curve because, you know, we're pretty close to neutral. Right. The Fed funds range is three and a quarter at 350. Right. And so a 50 bip reduction from there gets you in like in the high twos.
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A
Which is close to two.
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C
Yeah, which is close to two. But essentially what's happening is the economy is doing just fine. The distortions we've seen from the government shutdown and the data has gotten better. Now we're getting consistent data that shows that the labor market isn't as unbalanced as we feared. And growth, I mean the last GDP figures we got were in the fours. And so we're going just fine. And you still have the fiscal impulse from the big beautiful bill. And so like there's no real reason to cut rates. In fact, you're still 100 basis points above the Fed's core PCE mandate or target. And so it looks like labor market's okay and inflation's still a little bit above. Inflation is 100 bips above. It's not, it's not a little bit like.
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A
Right.
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C
You know, but again, so you really matter.
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A
Are you suggesting possibly even a hike?
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C
No, I'm suggesting that like all the rhetoric around, oh, you know, rates are 100 basis points too high. Like we need to be cutting now. Like wait, like we still have an inflation and the other stuff mandate going. Ok, Technically speaking, we are at full employment. Right. And we know that the inflation genie, like, especially if it's demand driven inflation, like is really hard to put in, like to take back.
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A
Yeah. And so that warrants a continued slightly more restrictive rather than accommodative policy.
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C
But the way Powell characterized it is like, you know, you're on the, you're moderately restrictive, maybe a little restrictive, if not like on the upper end of neutral. So not too hot, not too cold, just. Right. Is kind of what we're currently seeing in the marketplace. And that's what the Fed is reacting to, I would say. It is interesting that Waller and Mirren both dissented.
- [07:40]
A
I was gonna ask you about this. Right. These are current Fed governors that are thought to be on the short list to replace Powell.
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C
Well, not Mirren, but, but Waller.
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A
Well, Mirren just was appointed by Trump, so possibly Trump intellectually aligned governors. And they both dissented. Correct. What? Saying that we should cut, we should
- [08:00]
C
cut another 25 bips, which is great because last time Mirren wanted 50 bips of cuts. So there's progress being made. But again, you just can't help but like my biggest takeaway, and it's like a little sobering, I've never seen Powell answer so many political questions. That is not what like the Fed chairman should be asked about.
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A
Right.
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C
Like he had to repeatedly say that we do not comment on this. We do not comment. I do not comment on this. Right. And you know, there is, there's not a, currently a credibility issue, but you can see the pathway for it developing over time.
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A
So you're talking about Fed independence and the President's insistence and repeated calls for lower rates. The Fed's mostly avoiding doing that. The one appointed by Trump cut a lot. Well, that's right. But like in, you know, somehow, at least according to Trump not being, not playing ball with what he wants. Correct. But the Trump appointed guy, which is
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C
to get elected to win midterms, but
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A
the Trump appointed guy, Mirin saying that he wants like in line with Trump, Governor Waller thought to be on the short list to replace Jay Powell also saying what Trump might want to hear. And that calls into question. And then by the way, I should also point out a grand jury subpoena. No indictment. Not an indictment, no.
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C
He got subpoenaed.
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A
Subpoenaed by the grand jury.
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C
We forgot about it because we had
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A
greenlit a DOJ grand jury subpoena for Jeff himself over this, the cost of building this building or renovating the historic building. So yeah, unprecedented political interference potentially with
- [09:49]
C
the, I mean, he got asked like why he attended Cook's Supreme Court hearing and how folks in the administration thought that that was incredibly political. But again, he went to go see like, like one of his board members, like defend herself in the Supreme Court. And there's precedent for it, which he highlighted because Paul Volcker also went to a Supreme Court case, you know, I think in 1985 or something like that. And yeah, I mean he thought like it would look awful if he didn't attend.
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A
Right.
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C
But again, people are trying as a
- [10:28]
A
colleague, it involves the institution he represents the U.S. supreme Court. Right.
- [10:34]
C
It's also not a far walk.
- [10:36]
A
Yeah, exactly.
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C
But it's so crazy to me. We live in such interesting and chaotic and tense times in the market and in the world. You had gold move 4% today. Higher fresh all time highs. Silver's also been mooning. You had Trump comment on the dollar yesterday. Sent it down a lot where he was like, yeah, I don't really care that much.
- [11:04]
A
It's fine if it's weaker. Correct.
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C
And Besant comes out today is like, oh no, we do maintain a strong dollar policy and you've got massive shifts in reserve policy happening underneath the surface. Tough unclear because the data is a little bit sketchy on who's doing what exactly.
- [11:26]
A
But it looks like. But you see DXY down a lot. You see Euro USD up a lot.
- [11:31]
C
Yeah, it was over 120 yesterday.
- [11:33]
A
People looking for non dollar denominated exposure. Right. And that's gotta be what is at least golden asset as big as gold. That's what's driving that, right?
- [11:42]
C
No, absolutely. I mean there's a little crypto relatedness to it as well. You know, tether's been buying a ton of gold.
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A
There's a big Bloomberg story today about this. I think it was, they said maybe like one to two tons a week. Yeah, crazy.
- [11:59]
C
They're buying a lot. And you know, a lot of crypto platforms are now embracing the run in commodities because they view it as, you know, another token.
- [12:06]
A
That's right. You can trade, you know, some form of stock exposure or commodity, you know, gold and silver on a lot of foreign crypto exchanges. Correct. In on chain exchanges, like hyper liquid.
- [12:18]
C
And I think what people miss here in the US is just how embedded it is culturally.
- [12:23]
A
Yeah.
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C
Abroad to have like gold and, and silver.
- [12:27]
A
Yeah.
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C
Sometimes in the form of jewelry. But like, you know, it is part of like people's cultures to save money in gold.
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A
Yeah. And now sometimes going back thousands of years. Correct. Yeah. I mean literally.
- [12:38]
C
Exactly. But yeah, it is the oldest money around.
- [12:42]
A
Like you know, it's not practical. We were talking about how impractical it was last night because let's say I have like in a golden eagle or silver eagle coin, which I think are normally the monetary standard, these eagle coins, you know, like golden eagle coin might. Let's say it's an ounce. Like it's got a five thousand dollar denominated like instrument in my hand. Trying to buy something with that is literally impossible. It's hard. I mean what am I gonna do? Cut off a piece of it?
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C
But you know, but also they're gold, right?
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A
Well that's the thing. Tokenized.
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C
Tokenized version. You can fractionalize that bad of an idea. Settle and sexy.
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A
That's a pretty good gold stable coin quote unquote. Correct. The other thing we were talking about is like buying and selling physical gold and silver which if you truly believe in the the highest form of the gold bug thesis, like you should be owning physical because you know, if in a doomsday scenario or whatever, you know, dystopia that a gold bug might worry about, you think you're going to be able to get your GLD shares like back to use in like a.
- [13:38]
C
No, I know but.
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A
But the, the spreads I've been reading that people are paying widening. Yeah. Because I read some anecdote and these are anecdotes, but a person was trying to sell silver in Florida and a dealer they've been using for years was quoting them like a 20% discount. And he's like why is it so big? And he's like, because there's no buyers. He's like, no one's buying physical. He's like, it depends on the market.
- [13:59]
C
There are all places where it's a premium.
- [14:02]
A
Well, I think this guy was saying too that like the demand he's seeing in America is financial. And that's where it's like. That also plays into the thesis of the non dollar denominated risk asset thesis where it's like it's not people that are saying what if the world ends, I need silver under my mattress. It's people saying, well I want to sell this like other one financial asset and just really easily in my brokerage account instead of the other. And I saw slv, I think, which the main silver etf Insane volume, more volume in one day this week than it, than its previous quarterly high watermark. I mean it's crazy amount of volume
- [14:37]
C
but again like I think what you're seeing in this market is just fear, right? Fear of is the world order changing, right? Like what's the US's place in it? How is it different fear in terms of AI, right? Like software has gotten beaten up in US markets and that's because people are so worried about like AI replacing software.
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A
You can literally vibe code your own tools now.
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C
Like you don't need to buy no subscription service, etc. Yeah, there's fears around like how much capex is going to get spent. Like there's, there are just so many like concerns out there in the marketplace and you know we're hyper financialized like Right. And you just see these crazy moves and you know in terms of like ultimately like what that means for bitcoin and the bitcoin thesis, right now it's really hard. You've gone as low as 86,000 this year. You've gone as high as 96 or 98 I think. And in that span alt have continued not to really trade well with the exception of a couple things like hyper liquid that are rebounding pretty aggressively. But it's tough to say. My guide thing post has been the charts and they still target the same move.
- [16:09]
A
I think you from a fundamental basis and we were talking about this with the impracticality of gold as an actual payment instrument. It seems like that multipolar geopolitical landscape, the chaos, the search for a non dollar denominated hedge that's sovereign, that bitcoin should eventually catch up and be part of that thesis for people. But it just the chart, you know, like it's. People are saying they may agree with that but they're like well you know, I think it might go lower though. I could get more bitcoin though. Yeah, still feels like that. And we got close to that 100k. I think this was last week, right? That 100k.
- [16:49]
C
You mean the 100 day moving?
- [16:50]
A
Well the 100 day moving average but also just 100k which is psychological. I know you think more about the 50 and the 100 than the actual level, but again pretty easily rejected off that.
- [17:03]
C
Yeah.
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A
And right back down to the same
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C
range where you had the kitchen sink thrown at it in terms of positivity. You had ETF introduction, pro regulation, you had pro crypto administration come into office, you had a ton of inflows, you had MSTR buying left and right, you had other debts Buying left and right and yet we still can't manage to be above 100. Yeah, and I think that is quite telling in terms of like where the attention has gone in financial markets. And, you know, a lot of people are not concerned with not owning enough bitcoin, but more concerned with not owning
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A
enough gold right now.
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C
Silver.
- [17:47]
A
Surely this plays out a little bit over the year. By the way, January has felt like a long month, has it not? My gosh, it's only still January.
- [17:56]
C
I mean, the amount of headlines we've had just to start the year. I thought it was crazy, like after the first, like 10 days of the year and this has been.
- [18:05]
A
Well, it is. I mean, it is starting to play out like we thought it has been in a number of ways. Bitcoin price has been within our expectations, as you've been saying for some time now. Also, I think our audience will recall that I declined, I've declined to put a price target on bitcoin with the primary reason being that the investing environment is too chaotic to predict. It is a chaotic January. It has been.
- [18:31]
C
I mean, absolutely.
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A
I mean, let's hope for our hearts and our, you know, our attention, our caffeine intake that it's not as the rest of the year, the rest of the year isn't as chaotic as this,
- [18:43]
C
but it will be. And I think, you know, what chaos represents to me is opportunity. Right? And these volatile periods are going to be great if you are able to move in and out of markets.
- [18:57]
B
Stay nimble, stay nimble.
- [18:59]
C
And I think what you're meant to do is really use these moves as liquidity opportunities. So if something rips 10% higher and you were looking to short it on a headline, that's a great opportunity to sell. Something dips like 5, 10% on some bullshit headline, like, that's a good opportunity to buy it. And so I think it is really like a proper trader's market this year. And again, like, it's almost like you shouldn't even like, look at what the headline is because it's, it's just going
- [19:30]
A
to go back and ping pong.
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C
A lot of ping pong, you know, Trump policy in particular is like, you know, Taco.
- [19:35]
A
Yeah, right.
- [19:36]
C
So the first move is always like an overreaction and you get some, always walks it back, walks it back, etc. And you land somewhere in between. And that's the classic negotiating tactic. And yeah, so it's interesting. The one thing I would also note though is like, you're in the prime of earnings season, right? Now, you had Microsoft Meta and Tesla Report today. Microsoft is down. The other two names are marginally higher. You know, the S and P and Nasdaq have traded well this year so far, but they're not really up that much. And so it feels like there's a little momentum exhaustion in that marketplace, but tough to tell.
- [20:22]
A
Yeah. Still early.
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C
Yeah.
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A
Bim Ndebbibi, my friend from Galaxy Trading, thank you so much.
- [20:27]
C
Thanks for having me.
- [20:30]
A
Let's go now to our guest, Will Foxley, co founder of Block Space Media. Will, welcome back to Galaxy Brains.
- [20:35]
B
Thanks, Alex.
- [20:36]
A
Third time's a charm. You've been on before, but you've been. It's worth it because you guys have been doing great things at Block Space. You've expanded your coverage beyond just bitcoin mining, but that still is a core foundation of your coverage. You've got other great shows. Charlie Spears, I know, does great content there. And Gwart, of course, the Gwart podcast, a great podcast. Guard you should probably have me on.
- [20:58]
B
Also on a note, it's like George Bush, promises made, promises kept. Over here, expanding coverage. I think last time we were on the show, first time I was on the show was like few months after I launched the project. Nice glimmer in my eye. You're a little skeptical. Year later or so, doing pretty well. We had expanded a bit and we're still in the expansion process. We were very much so a startup, but primarily we cover bitcoin industry news very much like Coindesk, the block decrypt, but I like to think we go a little bit deeper, cover compute. So it's mining and AI now, bitcoin markets trying to eke into. That one's pretty well covered by the larger firms that have tons of resources, which you guys do a good job with the reports on that. And then I think our specialty has been the tech side of things more recently with our Op Next conference series. Yeah, yeah, that's us.
- [21:51]
A
Yeah, it's very cool. Like a media operator, you start with podcast. A lot of them start with news. You start with the podcast. You've gone into news. You've all. You've broken some news. You've also. And then you expand, as many do, into the conference. I love what you've done, expanding. Instead of a broad big ten industry conference, which, like Bitcoin magazine has, like, very well, you know, defended. But the developer conference, like a saga in. In bitcoin, you know, you had adopting BTC like over the years, scaling bitcoin, scaling bitcoin, all these Things that became important meeting places, key bitcoin development questions like during the block size wars. Some of that goes on now still at places like Bitcoin park and Presidio and in Prague for Honey Badger and elsewhere. But it's an important thing to have on the calendar, right, to push forward bitcoin development.
- [22:45]
B
Yeah, totally. And we're doing this in New York this year, April 16th for those interested. Doing New York because you can actually get the investors in the same room. And that's the point I was making this morning with Charlie and we were on talking with a company. We're trying to get involved with the event, Bitcoin development. First eye look at it. You're like don't really know if I want to get involved with that topic because it's really dense and hard and nerd fights. But at the end of the day it's a $2 trillion asset. You're going to care about this. I don't know what's the market cap right now for Bitcoin?
- [23:17]
A
1.7 trillion, but pretty much roundup. That's right.
- [23:22]
B
2 trillion dollar market cap.
- [23:23]
A
And investors should care because they care about what people say at like an Apple board meeting or an investor call for a public company. Right. And like this is kind of the equivalent of that.
- [23:33]
B
Well this is the event that you go to once a year. Get your update on the important stuff. We do all the filtering for what does not matter. Not a knots pun there but we do all like the, the signal gathering in one location in New York. You do all the other meetings and
- [23:47]
A
you bring the principals right. Like the people that are doing the bips and the upgrades and the developers. So it's a good form for them but a good convergence between the developers and the investors.
- [23:57]
B
Yeah, it's top projects in bitcoin scaling. So your citras, your alpens, your bitcoin pipes is back apparently. So there's going to be more on that. I know not to get it too technical really quickly and then like top bips is another thing. We'll talk about transaction hash which was a bit that became popular last year. CTV is always there, cats always there's. So we bring those authors into the room and then the last part really is get those bitcoin wise investors in the room. And I think five years ago that was the missing ingredient for scaling bitcoin or adopting bitcoin. It was really hard to keep a conference series going because there wasn't someone dedicated at BlackRock to understanding Bitcoin. But as of yesterday. They're hiring five people for that position. So it's very different now from five years ago. We can find the person working on bitcoin at Morgan Stanley. We can find the person who works at bitcoin at Citibank. We can bring them to the conference. They know enough to be dangerous and keep up with the projects. And then also, obviously, there's tons of venture in the space that wants to know more. Galaxy has its own venture arm.
- [25:01]
A
That's right. I think it makes a lot of sense. Is this the third op? Next Third. So the first was at Fidelity.
- [25:07]
B
Fidelity.
- [25:10]
A
My old stomping grounds.
- [25:11]
B
Yeah.
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A
And then the second was in the D.C. area at MicroStrategy Strategies headquarters.
- [25:16]
B
Yeah. So that one was actually kind of interesting and we'll see who hears us. But that actually did not make a lot of people at Strategy happy.
- [25:25]
A
Interesting.
- [25:26]
B
I think it, like, went under the corporate calendar radar that there was on the books. And then when we had it, there was some kerfuffle that we were having it there and it was too late to back out.
- [25:39]
A
Oh. Because what they wanted to attend or there was conflicts with, like, the literal rooms and stuff.
- [25:44]
B
The purpose of the conference does not align with Sailor's vision of digital property. You know, Saylor has been very on the books over the years about we want bitcoin to be digital property. It's not going to change. He's not pro ossification, but he's not pro.
- [25:58]
A
He's very vocal about being super conservative. Yeah.
- [26:02]
B
He had a tweet about this last week.
- [26:03]
A
Right.
- [26:04]
B
10,000 likes, a million people underneath it calling him. Bunch of things I can't say on this podcast. It stirred a room up. We are the conference that talks about the things that in the comments, people are talking about. He hosted that conference last year for us. And I think that they're running a company. They got a lot of stuff going on. They're launching new Preferred every week, so they got to handle that. That caused some controversy last year. We're seeing if we can get that back in the room just to get their position on these things known.
- [26:34]
A
Right.
- [26:34]
B
Because bitcoin development's not stopping. You know, every day there's people working on stuff.
- [26:38]
A
But it's valuable to have his perspective included.
- [26:41]
B
You would argue he's been on this podcast multiple times.
- [26:43]
A
Yeah. So we interviewed him. Phineas and I flew down there with Chris and our team just in December. And by the way, I asked him this point blank in the context of the Core Knots debate, and he reiterated what he's been reiterating that the most dangerous thing to bitcoin is a young developer who thinks he can fix it, basically. Right. And I'm sympathetic to that. I think most bitcoiners are, to be honest. But that doesn't mean there aren't still upgrades that we want or even might need. One of the ones I asked him about was quantum, the threat of a cryptographically relevant quantum computer. And he had an interesting argument. He was very complacent about it, I would say. I don't think he's totally wrong, but he basically said, come on, like, surely it's going to get fixed if it needs to get fixed. He had some other more interesting things like that. I'm not sure is how it will play out like that. You know, you don't have to worry about anyone who doesn't upgrade to a quantum safe address. Their coins will be frozen. That's. I would not take that as inevitable. Like, that's a very big part of the debate about quantum and bitcoin. But I think we also had Ellie Ben Sasson from starkware on the podcast last week, and he was very critical of Sailor on that point, saying that, you know, Y2K wasn't a problem because it wasn't a problem, because Bill Gates said, oh, it's not going to be a problem. Surely it'll get figured out. It wasn't a problem because Microsoft devoted a lot of work to make it not a problem. And he wants to hear something much more proactive out of a leader like Michael Saylor.
- [28:13]
B
I would just be interested in hearing a more positive take on why Saylor is doing what he's doing with bitcoin. Consider what Jack Dorsey is doing. He's made so much money off bitcoin and he's donated so much back into the ecosystem. He essentially funds all the development shops for bitcoin.
- [28:29]
A
Like probably all of them.
- [28:30]
B
Basically all of it. Like the, the, the market cap of what he was donated is like, significant. And Saylor is building like this digital credit thesis, which maybe long term is larger than all those donations and gets more people involved with bitcoin, but it's not like the most. It doesn't like, really wake you up out of bed in the morning and be like, ah, sick. Digital credit. Like, I know I care about bitcoin because bitcoin does bitcoin things. I don't really care about digital dollars that much or like getting 10% and running away from inflation by 3% every year. So what does saylor have to tell us that is different that Jack Dorsey is already doing such a good job with.
- [29:09]
A
Right. So Jack has obviously Square Blocks, I guess. Yeah, I still call it like you really should try never to change the name of your company, you know, like. But anyway, at Square, which I'm going to call it, obviously they've done a ton. They do lightning and bitcoin buys and sells and payments. They have Spiral, which is their sort of in house development arm, which is really great shout out to the Spiral team and they also have enabled payments for 20 million merchants at their market leading point of sale, let alone that's just at Square. That doesn't include any of the. And there probably is more I'm forgetting at Square. So apologies but that doesn't even include. Oh, they have the bitkey. I think they're building mining the miner. So they're doing a lot at Square.
- [29:51]
B
Doing a lot.
- [29:52]
A
And then you have all the charitable giving that Jack has done to fund bitcoin development. Then you've got all this stuff in Africa that Jack has done to help the unbanked with bitcoin. That's a lot. It's a big portfolio there.
- [30:04]
B
Let me ask Satoshi.
- [30:06]
A
Will Quantum be on the agenda at OP next?
- [30:09]
B
Yeah. So as of this week we have an institutional panel and Quantum. So BlackRock and Coinbase will be on that one. Is Coinbase an institution? Your mind now? I think they are because they're. Yeah, you know, sure. They're in the.
- [30:21]
A
I mean, I think. Yeah, I mean that's a good question. What is an institutional. You usually hear institutional investor. I would not consider them to be. Well, I mean they have a venture arm and stuff too. But that refers more to like high net worth, family office, pension endowment. They're a financial services firm. So I think that's fine. BlackRock is an asset manager, so they are an institutional investor. But yes, big company panel. The companies.
- [30:47]
B
So we have the big boys coming. They're going to do a Quantum panel. What is the institutional outlook, if you will, on Quantum. And then we're talking with a few teams including Project 11 to come in and do more of a focused conversation around that. So that's as of now I think two to three topics in Quantum. It's so funny because some people don't want to hear about Quantum at all. And we've already gotten many texts that are like complaining, don't do Quantum. And we're like, okay, 20, 25% of total programming can be around this. You don't want to hear It. Go to the hallway, go talk. There's a white.
- [31:23]
A
It's not a Quantum conference. Not a Quantum development conference.
- [31:26]
B
Yep. It's the premier bitcoin technical conference. So we have to have Quantum in the room 90 days out. So we'll have a lot more stuff kind of come in. There's a few people we're pitching that might even be listening to this podcast. So like we're getting some, some more Quantum on the docket if they want to.
- [31:44]
A
Interesting. Yeah, I think it's a very interesting question in general and I'd be interested, I will be interested to see that panel, the institutional panel, because I think a big fear that some have in the market is that this is creating, whether justified or not, fears about Quantum are creating a future headwind for bitcoin.
- [32:03]
B
Oh, totally.
- [32:03]
A
There might be rooms where investors are saying, you know, let's put a big chunk into bitcoin. And somebody there is like, whoa, whoa, whoa, what about Quantum? And you know, I don't think bitcoiners have. Maybe they have some answers, but they haven't promulgated them well enough. Whereas the. Those that are preaching urgency and about the issue are much louder. So it would be nice to get coalesce. I think. I do think of it like a multi year effort similar to a scaling bitcoin, where it's gonna take a lot of these. And I think opnext has distinguished itself as a very important note on that calendar for this discussion.
- [32:41]
B
I think it is gonna take years. And then there's also a need for a place for that conversation to happen. It can happen at Vegas too. Vegas is also.
- [32:48]
A
I think there will be a meeting on the side at Vegas as well. But that's important. They should be at both. It's good to have these physical meetups. I went to one last July. Really? I think it was the day before the genius act was signed into law.
- [33:02]
B
Yeah.
- [33:02]
A
So. Because I know, because I was in both San Francisco and D.C. in like a 24 hour period.
- [33:07]
B
Super fun for you.
- [33:08]
A
Yeah. But I went to a big conference at the Presidio. Bitcoin? Yeah, I think mostly put together by Steve Lee of Square or of Spiral, that was very well attended by bitcoin developers all about Quantum. So, like, this is my big criticism. It's not that there might not be a quantum threat, although I know many actually dispute that. But I would probably bet on humanity. Like we tend to figure out some stuff now if it turns out that's mathematically impossible, to be clear, I have no idea if that's true, way beyond my capacity as a technical researcher. But you know, I think if there's even a chance then bitcoiners should be working on it. But where I disagree with some is that I think they are working on it. I see it, I see it at, up next, I see it at the Presidio, I see it on the mailing list, I see it in, you know, in the dev meetings, I see it, I see it in, I occasionally dream about it. So I don't think that it's true that bitcoiners aren't taking it seriously. And so that's why I think, and I don't see that much evidence, although we're looking into this, that other ecosystems are actually taking it fundamentally more seriously. I do think it's easier to upgrade other blockchains than bitcoin. So that's true.
- [34:17]
B
Well, you have to think about it in a few different ways. The people who are working on bitcoin right now, they're, they're typically in a few different segments. Right? So it's like ibd, which is like initial block download or working on your node. How fast, if, if I want to get a node up right now, how fast am I going to do that?
- [34:31]
A
Yeah, optimizing that.
- [34:32]
B
Yeah, there's a node, there's the wallet guys. I'm working on my wallet, making sure like the bitcoin core wallet, the first wallet you download, when you download a node is actually going to be like super optimized for first users. And then there's like the mempool guys and then there's like all this fiber
- [34:45]
A
relay things, networking guys, to make sure that you know, with used to be like bloom filters and all this stuff to make like the propagation.
- [34:53]
B
Totally nowhere in that is a price guy who says like what can we do to make bitcoin's price go up in five? Like what tech can we add? And so if you go to Chaincode, you go to Brink, you go to any of the other shops out there, they don't have a price guy. They have someone working on the core protocol. They're a developer in house focused on how do we make bitcoin more usable for everyday users, how do we make it more robust against a nation state attack. Those are the questions that they're trying to think about. They're not trying to grok about how do I make the number go up. Solving the quantum thing would certainly help some institutional investor or some large whale. So for now I don't see an answer for the development shops until they are thinking this is an issue. We need to put a 250k check behind hiring a developer to focus on that.
- [35:43]
A
Interesting.
- [35:44]
B
Yeah. That's how I kind of think about it.
- [35:46]
A
Well, and thus maybe if that's the case, then the urgency that some are calling for might be justified to try to. Or that's where it's coming from. They're trying to get bitcoin developers to focus on it.
- [35:58]
B
You got to kick and cajole a little bit to get some attention. So that's certainly part of it. We saw that with the Knots crowd this last year. That didn't work out too well. In fact, that actually just did a service in terms of making everyone realize who to pay attention to and not. That was pretty clear. So that was helpful, I think, and a lot of clarity from that. But for the quantum perspective now going forward, hopefully this leads to, if it should be the case, someone getting hired at one of these positions to do full time.
- [36:28]
A
Let's just do some work on it. That's sort of my view. If there's a risk of it, it should be worked on.
- [36:32]
B
Yeah. And bip3060 team is focused on it. Like you said, procedure. Bitcoin had a whole conference on it.
- [36:36]
A
Yeah. And that. Well, that's my criticism is that I actually think it is being worked on.
- [36:39]
B
Yeah.
- [36:41]
A
But you know, everything. There's competing priorities. Totally.
- [36:43]
B
Totally.
- [36:44]
A
Let's shift gears. Let's talk about bitcoin mining. Sort of your original podcast love. At least I think you've. I don't know if it's your oldest love in the space, but it. But you've certainly distinguished yourself as a top analyst covering the bitcoin mining companies. And block space continues to as well. Obviously you mentioned before that you cover compute, both AI and asics. What does the landscape look to you now for the US Miners in particular?
- [37:14]
B
Oh, man.
- [37:14]
A
It's for the overlap, the convergence of bitcoin mining and AI.
- [37:18]
B
It is bleak for mining right now.
- [37:21]
A
Is it really?
- [37:21]
B
It's really bleak. But I think there's a lot of good off ramps and some people have already taken those. But I'm hearing of associations for bitcoin miners shutting down because there's really not enough interest anymore in working. That was a huge thing.
- [37:33]
A
Yeah.
- [37:34]
B
A lot of these small state associations, so that's happening. A lot of the smaller shops, they're competing over pennies now. The inexperienced middlemen are just drying up. They don't have any ability to run businesses anymore. Tons of consolidation. I Think a lot of the names that you might know if you're a bitcoiner on the private side, you're going to see combinations of some of those businesses, like merging together because everything's compressing into one and it's just not that novel anymore to be a bitcoin miner, which is fine. I think that's totally fine. That was the end goal for a lot of this. It's just going to be combined to other systems.
- [38:11]
A
Yeah. So it's consolidation. Part of that's driven by a very bleak hash price, which is a function primarily of the price of bitcoin, but also competition and all that. So there's been a lot of hash rate. We're well over a zeta hash for a bit there. Although looks like we're slightly below because of the storm.
- [38:28]
B
Yeah, we've been tumbling a little bit since October.
- [38:31]
A
But we did crack a zeta hash, which is just an incredible amount of compute. It's hard to even put that into. I don't. What is that? It's a. Whatever a zeta amount of hashes per second. It's something like, you know, it's an unfathomably high number of attempts to create a block.
- [38:45]
B
I don't know how many zeros that is.
- [38:47]
A
It's an enormous number. I don't know either.
- [38:49]
B
It's a lot. And there's like this question of like, how much hash rate is too much. How much I love. What do we need for the budget? And it's probably an answer question. You can't really answer it. Right.
- [39:00]
A
Because I have an answer. It's not an absolute number.
- [39:03]
B
I'll give you mine. It's like the way you can think about it is like if we have the sailor approach, this is digital energy and it's digital credit and all these digital things, we can have as much. The more the better. There is no limit on.
- [39:18]
A
I agree with. The more the better. Well, the more that's the most that's economical. And we know that there's a cap to that at least bitcoin prices.
- [39:24]
B
The real answer is what the market can handle and apparently with hash price.
- [39:28]
A
But how much do we need to be secure?
- [39:31]
B
I think it's whatever the market can handle at the moment.
- [39:34]
A
Well, there's one answer is that I like is bitcoiners will get the amount of security they pay for. Yeah, that's objectively true.
- [39:40]
B
Yeah. Very similar.
- [39:41]
A
The other. But there is one that I like and it's why. Why I was. I'm supportive of formerly GPU mineable Coins switching to proof of stake. Because the actual amount in my mind is that you need the majority of possible hash rate to be mining your algorithm. And so with Bitcoin, for example, you don't want a giant pile of extant potential hash rate.
- [40:03]
B
Yeah.
- [40:04]
A
Right. So like when the China ban in like 21 happened, you know, we, I remember we were calling around everyone we know, like, you know, this is this one shutting down. Like, please tell me those asics are getting on a plane. Yeah, to like America or ship, I guess probably cargo ship at that point. Because a lot of them. And not like locked in a CCP tech bunker because that could be used with difficulty, adjust down. Then a massive amount comes on. It could possibly do attacks. And this is why, like a GPU minable coin. Think about all the like PS5s, imagine ransomware that turns every GPU, now with all the AI stuff, turns every GPU into a. Yeah. Ethereum miner. You could overwhelm the Ethereum network. Right. And so to me, the amount that we need is just most. Most that exists needs to be mining your coin. It's one of the reasons why ASICs are positive, because it makes it. You need specialized hardware.
- [40:54]
B
You get to that answer really quickly.
- [40:56]
A
Yeah.
- [40:56]
B
That's how much you need.
- [40:57]
A
Took a while.
- [40:58]
B
Yeah, yeah.
- [40:59]
A
So, but on the convergence. So you said the pure Bitcoin. Bitcoin mining is a tough business.
- [41:03]
B
Yes.
- [41:04]
A
Bitcoin price is down, competition's up, you're seeing consolidation. You talked about some off ramps. Surely AI computing is a very big theme. Right.
- [41:14]
B
It's also a really fun theme. I think that was one thing that really kept me interested last year was just the emergence of some of these bitcoin miners as AI factories. Kind of what I like to call it, the parlance isn't quite there yet. Neocloud has been established as a word, but these aren't Neocloud.
- [41:34]
A
Most of them are really just like data center. Data centers.
- [41:37]
B
Yeah, their data center, which is not sexy or interesting. So we have to come up with a fun word.
- [41:41]
A
I think AI factory is a decent. Because it is. We are talking about giant physical infrastructure.
- [41:45]
B
Huge.
- [41:46]
A
Like if you look at it, Helio
- [41:47]
B
looks like quarter mile long.
- [41:48]
A
That's right.
- [41:49]
B
And it's not even done.
- [41:50]
A
Right. And so. And you're talking about Galaxy's AI data center, which was, until, I don't know, somewhat recently, a year or so ago, our big bitcoin mining business. And so, yes, we have switched entirely, well, almost entirely to being a data center provider for AI firms.
- [42:09]
B
Yes.
- [42:10]
A
Are others doing that? In whole, are some doing it? In part, yeah.
- [42:15]
B
It's become a bridge now. So Sega Cypher, for example, Cypher has. Well, they have six to 10 sites at this point, which is kind of crazy. They've been really effective with their power strategy, just gobbling up sites. But if you look at their focus sites like Black Pearl, it's probably the one that most people know about. They've used bitcoin mining as a bridge. Deploy the bitcoin miners into the energy sinkhole that you have and then use that revenue to be able to retrofit, get yourself up to that status where a Google or Amazon is going to walk in and be like, you know, this isn't perfect, but it'll do. We can drop a few million into every megawatt and retrofit this facility. And that has really worked out on a business strategy standpoint because if you look at the books on the other side, which is really what matters, right? You have to have a mass amount of cash, you have to have project financing or you have to have nice equity position to be able to pull something like this off. Because it is between 6 to 12 million a megawatt to redo the infrastructure, depending on who you are. Or you can lie and say it's 3 million like some people are talking about, but it's really in that, you know, six to $12 million a megawatt, depending where you're at. That cash was not available for bitcoin miners unless they had scale large bitcoin hodl or they were able to convert a portion of their equity or a portion of their proceeds into financing for the project. So we saw a very similar method for this across the board, like Terawulf cipher that gave equity to Google and then Google backstopped the deal. Anthropic came in, started building it out. You guys did some project financing for Helios, which is obviously looking super successful because you have a tenant come in and is purchasing out tons of megawatts Hut's done something very similar. Somehow they got away from selling off their equity, which is really impressive. They've had one of the most impressive deals so far. But for me, I really like the finance side of it where it's like, how do these bitcoin miners go from a high beta play on bitcoin into being re rated as data centers with a higher multiple? That's a very interesting story. And for us at Block Space, we'll just be covering that. I think we see this shifting where they're Almost not mining bitcoin at all. Or maybe that are using their preexisting bitcoin fleets on new data centers that will then become AI factories again.
- [44:37]
A
Right to front load, bootstrap that bridge capital in a sense, until we retrofit. We'll retrofit. We'll collect the revenue from the bitcoin network.
- [44:47]
B
Yeah. I think the last thing on the bitcoin mining side is where does all the hash rate go? We are hearing rumors of it going overseas. The biggest player for that would be Russia or China. I do expect to see Russia's hash rate grow and I do wonder how much hash rate from the US is going to end up in Russia.
- [45:08]
A
And it can't directly go there. Right. But the asics, you know, a guy, you sell them to some international broker and they happen to sell them to Russia. I suppose. Do you think that could become like a geopolitical issue? I mean, totally. Certainly with the strategic bitcoin reserve, you know, you know, tepid though its launch has been like, you know, the United States government strategically holds bitcoin.
- [45:33]
B
There's always a congressman in Iowa who wants to talk about something with geopolitics. It's a great one. Right. Why is this company selling asics to Russia?
- [45:42]
A
Right.
- [45:43]
B
And they're not. They're selling it to a broker who knows a broker who knows broker. But if it still ends up with Putin's hands and.
- [45:49]
A
Well, because it's actually a really good way for any person or business or country to acquire non sovereign money.
- [45:58]
B
Totally.
- [45:58]
A
Which is, I feel like this is one of the things that's been, I think disappointing about bitcoin's performance, price performance the last several months is that we're in a materially degrading investing environment and geopolitical environment. I don't even mean necessarily as a subjective analysis, but more just in an empirical one. Like the global order is fracturing in new ways and in that space and you just got to look at the gold chart to see that people are looking for a non dollar denominated.
- [46:28]
B
Oh, totally.
- [46:28]
A
Well, surely bitcoin would play a good role there. So why is it like now it is again languishing at 90k. You know, it's not like it's do something. Yeah.
- [46:37]
B
What is Bimnet's take on silver gold?
- [46:40]
A
That it's a big sign of like a want to diversify away, not just from the US government, but from all governments.
- [46:46]
B
Yeah.
- [46:46]
A
And I think we both agree, Bimnet and I, that bitcoin fundamentally should play a Strong role there. You know, a lot of what he argues, it's really just technical, like for bitcoin, meaning like technical price action and thus in the medium term it will reverse. But it seems like bitcoin mining too. I know, like for example, El Salvador has mined bitcoin. Bhutan, other nations we know of.
- [47:13]
B
Right.
- [47:14]
A
I mean probably some of the old caucus countries or the Kazakhstans and whomever are mining. Makes sense.
- [47:21]
B
Yeah, they'll still be doing it. And I think with the rise and fall of the US hash rate industry, with all the 20 plus public companies that really grew the last five years, huge, you know, 30, 35% of the total hash rate. Expect that to fall the next five years if we continue to see multiple, a higher multiple for data center company versus a bitcoin miner. And you're going to chase the multiple. Chase the thing that's the most liquid and in the best capital market in the world, which is the us don't chase necessarily just mining bitcoin because you love it.
- [47:58]
A
Yeah. I mean also if you're public, you got a duty to maximize profit for your shareholders. And if AI, whether it's the hyperscaler intermediary or the application itself is paying more per megawatt than bitcoin, you've got a duty to see if you can use your power for that. Not all of them are convertible to AI. Right. What are the factors that make a bitcoin mining site good for AI?
- [48:24]
B
That's like an open question. Not to cut you off there. Sorry. I'm just thinking like what do the smaller guys do? There's still a need for these smaller clusters and I think this is a route marathon's kind of taking Mara as they also rebranded, but pretty close. Mara is taking this inference approach. They have pretty big sites, but it seems like they're going to do these smaller clusters in certain locations. So say you're a salesforce and you want your own cluster to run with your own training on it, and that's already baked into the system. You don't want to go to OpenAI, you don't want to go to Microsoft, you don't want to go to Google. You want to run it yourself. Like you have it trained on your stuff, on whatever open source model you purchased, has all your information and then you contract out to Mara to run the inference, run the site. I think that's going to be an approach for some of these smaller guys that have a little bit more cash and a little bit more savvy. So there's a Few of the smaller bitcoin miners I'm seeing like hey, are they going to deploy a 10 to 20 megawatt cluster across maybe a few sites in key areas and try to sell it on a B2B basis? Might be too hard to be able to do that at this point. And you might just have to keep looking for the big customers. But you start big and then you eat away at the chunks and get a little smaller.
- [49:42]
A
Interesting.
- [49:42]
B
One other thought on the silver thing really quick because I want to get more thoughts from you. So silver is like the old man's trade, right? Like the silver bug thing.
- [49:49]
A
Yeah.
- [49:50]
B
But it's oddly connected with AI because all these components need silver. And it's all mined in China as well. And processed in China.
- [49:58]
A
Yeah.
- [49:58]
B
So I'm curious, how much does Bimnet or you see the gold and silver trade being singularly about? People want to have non sovereign money
- [50:10]
A
versus what like components for chips?
- [50:12]
B
Yeah. Because gold obviously is like I want to own gold, I don't want to own.
- [50:16]
A
It's not nearly as widely used for industrial purposes gold as like Peter Schiff would have you believe.
- [50:21]
C
Yeah.
- [50:21]
A
Although he'll admit the real number which is like I don't know, 5% or less of the above ground supply. It is used gold plated like you know, conductive metals is a thing. Silver is too. We. I don't, I don't know. I don't. I think it's really playing the litecoin to bitcoin. It's more about like a lower cap thing that can run harder as a financial investment in the light of the gold trade. I think is dominating it. But no, I mean both gold and silver will have implicate. Well, even low though the portion of their market caps that is industrial low though that it is. I think it will impact. I mean we've taught, we've seen this and not just that, but all the metals have been running. Copper is important. Platinum gets.
- [51:09]
B
Does this suck? It's good to be a metals guy right now.
- [51:10]
A
I know, it's like a broken clock though. Like these guys have been these gold bugs. Okay. They're finally right. I guess the real question I have though is like how durable. I mean honestly, if what I'm saying is a degrading macro and geopolitical environment, I don't think of this right now. I mean I'm not an expert, not financial advice but as like a parabolic blow off top that's gonna. I think it's being materially rerated higher. Dang and that doesn't mean there's not. I mean if you look at some of these charts like for silver, you have to assume it's like it can't like just go up for like there's some parabolic stuff. Yeah. But like it does the world really. You know Bimnet talks about this. An interesting aspect about the April 2025 market sell off, you know, widely called the tariff tantrum. Right. And it was like the first of the prior 12 times of the prior 13, including that times when the S and P sold off more than 10%. That was the only one, the first one where DXY the dollar actually depreciated, not appreciated. Meaning that not only were people selling risk assets, they were buying non dollars with them. And so the dollar wasn't the hedge to the risk off movement. Instead it was things like gold. And that's an incredible statement that shows the world is looking to.
- [52:29]
B
It's not a great statement for us.
- [52:31]
A
It's not a great statement for the dollar. No, it's one thing that I'm bullish on for the genius act is like I think the Treasury Department at least is aware of this. And so they're looking to make the dollar, I don't want to say stronger in a price sense but in a fundamental sense like make the dollar even better. Like easier to use, faster to send, new ways to hold it should just buy Tether. Tether could just do they. I saw a story today. Tether is buying 1 to 2 tons of gold per week.
- [53:02]
B
Yeah.
- [53:02]
A
You saw that?
- [53:03]
B
Yeah. That Bloomberg story is really nice.
- [53:04]
A
I mean they are well known to be one of the largest owners of gold but I think now it's Bloomberg is saying that they are unequivocally the largest non sovereign holder of gold in the world.
- [53:14]
B
Yeah. And they're going to compete with a few of the larger banks like JP Morgan.
- [53:17]
A
As I said they now they're going to start a gold desk.
- [53:19]
B
Yeah. Which is cool to see that like you know, for as much as you can say, crypto hasn't done anything.
- [53:24]
A
I mean Tether is one of the most fascinating companies and biggest companies in the world.
- [53:29]
B
Yeah.
- [53:30]
A
And they are a bitcoin and crypto
- [53:33]
B
company at their core build AI factories.
- [53:36]
A
What's the other thing? They have AI, they have pharmaceutical and agricultural concerns. Rumble big investors in Rumble video. They now have a New York Stock Exchange listed equity company and they build
- [53:49]
B
a lot of bitcoin applications.
- [53:51]
A
They do, they have an sd.
- [53:52]
B
Yeah.
- [53:53]
A
Yeah. It's quite, quite a fascinating company.
- [53:55]
B
Yeah.
- [53:55]
A
We'll have to do a big episode on Tether sometime.
- [53:57]
B
Yeah, I get Paulo in here.
- [53:58]
A
I know I do. He's Paulo. You've been on Castle Islands podcast, sir,
- [54:02]
B
on the mining pod.
- [54:03]
A
And that's one of my favorite podcasts. He's been on your pod?
- [54:05]
B
Yeah.
- [54:06]
C
Yeah.
- [54:07]
A
I shouldn't act so surprised.
- [54:08]
B
Sorry. We have Poll.
- [54:10]
A
They have a huge bitcoin mining business as well.
- [54:12]
B
I mean, if anyone had a big mining business, they wanted to come on the show. So that was kind of nice. Seeds sold themselves there.
- [54:18]
A
It's such an interesting space, the mining space. Let's talk a little bit about media and crypto, because block space, I think that's one. You guys broke the big story about Swan and Tether and their dispute. You've broken other news, but you're not quite. Do you have journalists on staff? You're not quite a news business at the moment. And that's one thing. I think it's actually a trend. Right? I mean, blockwork, stepping out of news CoinDesk and the Block, like, not the news shops they once were. Bloomberg being probably the best pure journalism. Now most of the other media landscape has shifted to media research, visual and audio media, podcasts. Like, how do you view the state of bitcoin and crypto media today?
- [55:08]
B
You have to go back to the economics of media itself, and I think that sets the foundation for understanding what's happening. I think a lot of the smarter executives in the room for the CoinDesk block, et cetera, knew this was going to happen in 2020, 2021. It was going to take Bloomberg, Reuters, et cetera, a little bit of time to speed up. They were going to hire the wrong people, they were going to hire the wrong editors. They were going to make a lot of mistakes. They weren't going to be able to cover the space well, but eventually they were going to do it. We are there now. Bloomberg has an excellent team that does a very good job at consistently covering crypto. Well, they don't get every story right. They don't have every story. They do a good job. Reuters does a really good job at the international scene, I'd say, because they have correspondence in all these different countries and you're getting the headlines you want between those two publications pretty much all the time. Especially for someone who has terminal, you're getting all that information and with AI coming in, it's very difficult to be even faster than anything else. So you've also seen the fall of some of these fast trading desks. There's The Walter Bloomberg of the world, if you've seen that guy on Twitter. But there was a bunch of the crypto versions of that as well, and I don't see those too often. There's like Zoomer is one that still breaks a few things. But you're seeing a lot of the business models that were popular over the last six years change. And our thesis has always been you need to sell something valuable to your advertiser, otherwise you can't make news. Because at the end of the day, you are another funnel for marketing business. So if you go to sell your. You're selling like Alex, widgets, whatever you want to be like Bitcoin, wallet, Galaxy hat. Right. You're going to go to Google, you're going to set up a little campaign, you're going to say, try to sell my stuff. Yeah, you're going to see how much should I do? You just have another funnel on Twitter. Can do that. Gonna do one on YouTube. Then you're gonna try to do like local stuff, try to sell it. Your fifth option might be media. I'm gonna give Will a thousand dollars for podcast ads for this month and see how many I sell.
- [57:05]
A
We'll also appear on the show or.
- [57:07]
B
Yeah, and there's like other benefits you get out of that, like personality, brand appreciation, things like that. But at the end of the day, you wanna sell your widget. It's very apparent that a lot of these news desks were not very good at that. And over the last few years, that meant that the CPM on their ads was compressing very tightly, had to lay off people.
- [57:28]
A
What is CPM cost per mil?
- [57:30]
B
Cost per milli. So essentially means like, how much am I going to sell an advertisement to a thousand people?
- [57:35]
A
Yeah.
- [57:36]
B
And so for crypto, it's had a very high CPM. You could traditionally sell 100, 150, $200 some shops.
- [57:43]
A
And this is like why, like CoinDesk and others, they would have a story on a bunch of crypto prices just every day.
- [57:49]
B
Oh, yeah.
- [57:49]
A
So because they would just get good like SEO and thus capture that cpm.
- [57:54]
B
And the CPM was very justified because you had an engaged audience. I would buy an asset. And the best thing to purchase from an advertisement standpoint is an asset because it goes in someone's pocket. Typically doesn't leave if you're selling a hat, whatever. Like, the CPMs on that are pretty terrible for podcasting. So, like, if you guys ran ads on this show, I don't think you need to.
- [58:13]
A
We don't.
- [58:13]
B
You Got a great studio. Yeah, everyone seems pretty happy here.
- [58:16]
A
Thanks Mike Novogratz, for paying for the pod.
- [58:19]
B
Yeah, you can do in traditional publications 15 to $20 CPM, run four ads, get a few thousand downloads. Can kind of pay for a mediocre salary in crypto. We had blockworks running five, 10 podcasts. Who knows how many each of those podcasted. But the CPM was so high you keep people on staff. Can't do that anymore. Right. So we've seen them cut back on a lot of things and they're just chasing the money now. And I think what like people got mad at Blockworks, but I'll defend them for a little bit. You know, they cut their news desk. There is an economic decision behind that. The reason you have news is because that's a very good way of getting people to your website, which is a very good way of getting people to click on advertisements. It's not apparent that running news is a good way of getting people to click on advertisements anymore. What is a good way of people click on advertisements is, hey, I want to go to that site every day, look at the data or I really like that podcast host. I'm going to listen to them every day. Something that's more community centric. And that's how you get back to that higher cpm. Someone's in my network. I can charge more for that if it's just a passive person. So I think that's where you're going to see the difference between the Bloombergs of the world. They have such scale. They can charge 15, $20 CPM for say podcasting websites. Lower and they can dominate that they can hire all the journalists for good salaries too. You're going to be have a hard time doing that at the other sites. So you have to go deep. You have to have really good analytics about your average user and you really have to get into that info and we'll just see compression. I think it actually could increase room for more publications in crypto. They're just going to be smaller shops that are more focused. You're going to have a stablecoin shop or for us we're a bitcoin mining and tech shop. That's kind of the thesis I see playing out. There's a lot of words.
- [60:14]
A
It's quite interesting, I think. You know, one thing I'm hearing is take Bloomberg, right? And I don't know, but I believe the those who have the Bloomberg terminal don't typically have it. For the Bloomberg written content though it is good and has expanded you have it for data, tons of market data. You do have it for headlines. They're famous for their flashing red headlines and, and they're fast to it, but they'll pull the headline from like the Journal if that's who has it. It's not like they're an aggregator for news, but. But they. And then I think, you know, then they layer in, well, we're making all this money selling the data. Let's increase the quality of the content and hire better journalists. But it wasn't the. Like, we're a newspaper that adds a data business. It was a data business similar to what you're pointing out about like CPM on data. And I think it. Yeah, it's so. So it's more of a transition than a degradation of the news environment in crypto. Right. It's transitioning more to the Journal and the Bloomberg and CNBC and Reuters than. Than it used to be too niche for them. Even publications like Financial Times are covering crypto now full time.
- [61:26]
B
Everyone's doing it for us at Blockspace. The approach is hire really good freelancers to do pieces on 12 pieces a year. So we have a new guy, Tom Kleckner, who writes at RTO Insider. He covers Data Centers and two ISOs in the US he's going to do a few pieces for us a year. Those are going to be pieces that people will pay for or give me an email for. And then you can use that information, go sell it to an advertiser. And it all comes back to getting that advertiser in the room who cares about that certain piece of information because you can get eyeballs anywhere. Now Google is so dominant at this, so you really have to think like three steps ahead in the strategy game. And that's where it's going to be hard for some like these legacy crypto publications to survive because the game has changed so substantially. But in crisis there's opportunity and I think like we could see the block or CoinDesk or decrypt change within that. Decrypt has. They've embraced the prediction markets, which are pretty cool.
- [62:27]
A
Yeah. Do you guys embrace prediction markets in your coverage? Have you been using prediction markets?
- [62:32]
B
They don't cover anything we want.
- [62:35]
A
There surely is a bitcoin mining hash rate prediction market.
- [62:38]
C
Right.
- [62:38]
B
I haven't seen anything on a lot of the bitcoin stuff. I really wanted some for ercot ISO.
- [62:44]
A
Yeah, like when will approvals. That would be great.
- [62:46]
B
Galaxy would have been cool one. So the one I wanted was for iron because like they have Their Sweetwater campuses that are huge. It's like two gigs. They're approved at this point, so it doesn't matter, but it'd be cool. It's a very. Yes no decision.
- [62:58]
A
Right. You get a very clear outcome. Yeah, like it's the letter from a regulator or whatever we call them the OR council. And yeah, I. And by the way, like that's one of the things I really like about prediction markets is not gambling. Not as a proxy for sports betting or what otherwise is pure speculation. But although, I mean that's fine, but I mean more interesting is for real event hedging. And people have been using that by the way, otc. I don't think people know this. There are OTC trading firms that have been offering big companies like size in event market hedging for a long time. And that's one. As you can imagine, whether or not AI company gets a power approval could have enormous implications for their company, the regional electric grid, but also their stock. And you could imagine investors wanting to hedge in that way. I think it's super interesting.
- [63:51]
B
It's really cool. And I think there's a bunch of second order effects you have to think about too. How does that affect a stock price? So for iron, for example, if there was a liquid poly market. Yes. No. Are they going to get this? How could iron use that to like offset some risk in their stock price or, or could institutional.
- [64:08]
A
Would they even be allowed to. I'm not sure.
- [64:10]
B
Yeah. How would it, how would you price that into their stock?
- [64:13]
A
Or would it like. And for the stock, would it enhance or dampen volatility in the stock? Like you could imagine it could have a dampening effect because it's allowing their investors to play it to, to be less delta and to be more delta neutral. It's. Which is by the way also efficiency. I mean that's, that's helpful. Right. Investors want. I also like it because to put on, you know, hedging often requires like using a proxy. Right. But these can be like pure binary, like will this person become president of this country or not? Right. Like, and that's a very. Instead of being like, well if they do, then this will do well. So we'll long that and short this as a proxy hedge by proxy. I like the very like clear event market is a very cool thing.
- [64:57]
B
I would love to do some around our company. To me the listing process seems a little opaque still. So you go to discord and then you'd be like will you guys make this market? And they're like, no, we're doing sports and then maybe they'll get to it at some point.
- [65:10]
A
Yeah, it's an interesting thing. I know journal mainstream journalists. I mean, I even saw during the Golden Globes they were citing poly market odds on winners. So it is. It is penetrating into the market and into media. Yeah, it's an exciting thing. Well, before we wrap here, Will, I'll give you this time to say, what are you most excited for? I know you've got OP next coming up, but for Block Space or for the market, what are you looking forward to in 2026? It's still early in the year.
- [65:36]
B
It is early. It's not even February yet, which is. This has felt like a long month. Has it been long for you?
- [65:41]
A
It seems long, yeah.
- [65:42]
B
It seems like it's been a very long month. I think enthusiasm for bitcoin coming back, I think the DAT thing didn't go super well for a lot of people and I think it sucked a lot of wind out or a lot of air for people. And I'd love to see some enthusiasm for bitcoin again going to this year because it's going to rebound. You know that that's going to come back when a big green candle happens and everyone's face gets melted. Like, that's going to be a great day. It'll happen at some point. So I hope that there's some of that this year. And then I think for block Space, like, opnext is going to be awesome. We have some awesome reports that we're working on this year. Kind of semianalysis style, kind of like we flew over Helios, but we're going to be doing that for some other places as well.
- [66:26]
A
Yeah, semianalysis. Great shop for covering the data center and chip industry, right?
- [66:30]
B
Yeah, they're incredible. There's just like a lot of opportunity in niche media. If you know your community, you know how to build it and you know to deliver what people want. It's a lot of opportunity and it's fun. You get to talk about the things that you care about. So that's mostly what I'm loving about this year so far.
- [66:47]
A
Well, there you go. Will Foxley, co founder of Block Space Media, My friend, thank you so much.
- [66:51]
B
Thanks, Alex.
- [66:52]
A
That's it for this week's episode of Galaxy Brains. Thank you to our guest, Will Foxley from Block Space Media and our friend Bim Nadibi from Galaxy Trading. Everyone have a safe and happy weekend and we will see you next week. Thank you for listening to Galaxy Brains, the weekly podcast from Galaxy Research. I'm Alex Thorne, head of Firmwide Research at Galaxy. Follow me on X at Intangible Coins. Follow Galaxy Research on X at GLXY Research. Read our written reports at Galaxy. Com Research. And don't forget if you like Galaxy Brains to like and subscribe on your favorite podcast platforms like YouTube, Spotify, Apple Podcasts and more. We'll see you next time.