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- [00:07]
Michael Saylor
You've had a dynamic where money's become freer than free. If you talk about a Fed just gone nuts.
- [00:13]
Chris Burniske
All.
- [00:14]
Michael Saylor
All the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to
- [00:23]
Chris Burniske
devalue their currency, bitcoin wins. In the world of fiat currencies, Bitcoin is the victor.
- [00:29]
Michael Saylor
I mean, that's part of the bull case for bitcoin.
- [00:32]
Chris Burniske
If you're not paying attention, you probably should be. Probably should be.
- [00:35]
Michael Saylor
Probably should be.
- [00:37]
Chris Burniske
Jamie McCavity, welcome back to the show, sir.
- [00:41]
Michael Saylor
Thank you.
- [00:42]
Chris Burniske
Get hydrated, get caffeinated. We got a tight hour.
- [00:47]
Michael Saylor
Yeah, I just did a workout and I got a protein shake.
- [00:51]
Chris Burniske
A protein shake. What's your workout routine?
- [00:53]
Michael Saylor
So I will have my. I'll have my best takes for you.
- [00:59]
Chris Burniske
Well, freaks, we're sitting down with the most. The most profitable bitcoin miner in the world. Is that how you would define yourselves?
- [01:06]
Michael Saylor
I would say the lowest cost producer of hashes. Lowest cost producer of hashes.
- [01:14]
Chris Burniske
How does that feel?
- [01:18]
Michael Saylor
Do you want me to give my honest opinion?
- [01:21]
Chris Burniske
Yes.
- [01:22]
Michael Saylor
It feels like we have won a fencing competition. Feels like we won something that not many people really care about. Well, let me put it this way. There's a very unique dichotomy about being a bitcoin miner where people who love bitcoin and who have this big ideological alignment and feel a passion about it for one reason or another, distrust of the state, they're a sovereign individual that they have anti. Anti monetary debasement, whatever it is. Those kind of people are like, you're the best. You're the most badass person around. And high five. Almost like I'm a quasi celebrity and maybe two rooms three times a year. And that's nice. Like, it is nice. And I was that person before I built this business. And it's, you know, it's cool to realize your dreams. And then there's like, investors and, you know, employees and the mark, the general market. And the market does not care. The market didn't really care that much that we built an amazing bitcoin mining business. And that's. That's a little deflating because at the end of the day, you want to make money. And if you want to retain really, really smart people who helped you build a great business, they want to make money too. And they have a lot of opportunity.
- [02:57]
Chris Burniske
Yeah. Especially these days with the. The AI Boom. The gold rush that we're experiencing there. It's.
- [03:05]
Michael Saylor
Yeah, we actually had both kind of employees in the company. There's people who sort of would, would not want to be a part of the company if it weren't focused on bitcoin. And there's people who would probably leave the company if it's not focused on AI. So we're sort of caught in the middle a little bit.
- [03:22]
Chris Burniske
I feel like every bitcoin miner is these days. I mean, big theme last 12 months accelerating through the first two quarters of this year is this transition away from bitcoin mining towards GPU computer.
- [03:38]
Michael Saylor
Yeah. And to a certain extent the crowding of the bitcoin mining market accelerated the eventual transition to AI just because you had difficulty increase in a way that was unconstrained by economic reality for a long period of time. And so that just made the returns in the past performance that would be used to justify further investment and growth into bitcoin mining. It just made those economic cases look bleak. And there's an irony about it almost, which is that now that nobody is investing in bitcoin mining, of all the US pubcos for the most part, and the market is kind of weak and unsexy, it's the best, it's the best time to invest in bitcoin mining hands down of the last maybe five years.
- [04:39]
Chris Burniske
That's what I'm pulling up mempool space here. Looks like in 31 hours we're going to have a negative 10% difficulty adjustment.
- [04:46]
Michael Saylor
Yeah,
- [04:51]
Chris Burniske
That's the one thing I've been saying behind the scenes too, because if you think about it, especially for these miners that are transitioning to GPU compute, there's a relative lack of investment in bitcoin miners in general. But you're just thinking about the hardware that they're offloading. I have to imagine. All right, I mean you don't have to imagine. I think it's pretty clear that ASICS are going to be a good buy I think throughout the summer, maybe through the end of the year.
- [05:16]
Michael Saylor
Yep, definitely. And this is really what, what I think bitcoin mining should look like. I think this is, I've been beating the drum on this for a little while now. I think this is a healthy departure away from the previous economic paradigm, which would be you're upgrading your miners every two to three years, you're running them 95% of the time or more. There's a legitimate hosting industry that exists that should not exist at all, and the fee market is relatively stable in a 24 hour period. I mean all those things are, I think they're remnants of an era that has now ended. And the, what I expect the new paradigm will look like is you're running ASICS for a very long time. You are running them. If you are only one step removed at most from energy production, ideally co located, I think you're going to see more and more co located energy production and mining. The fee market will be very volatile because block times will be very volatile and you know, it's just going to be the kind of thing where the, the fee market will really materialize because there will just be a backlog of, of transactions and that will largely correspond to the cheapest energy input in the world, which is solar and, or maybe flare gas. But in flare gas you have to, you have to build and maintain a gen set and I think that's a little bit challenging. But with, with solar I do see a very cheap source of power and that's when there will be lots of abundant hashing going on and then block times will be slow when the sun is shining on a part of the planet where there isn't a lot of bitcoin mining. Yeah.
- [07:14]
Chris Burniske
And that's actually the main reason I reached out to bring you on obviously an update on the state of bitcoin mining, your perspective on where we are in the cycle. But I think more importantly the last time we talked it was over a year ago now at this point talking about the generation mix and the state of the grid, particularly in Texas and where it's going across the United States. And obviously since then the AI narrative has really taken hold and it's become abundantly clear that there is not enough generation to supply the demand that we have for compute right now and arguably for the foreseeable future. So I wanted to get your perspective on how this has evolved since we last spoke and where you see it going because it seems like it is being deemed a national security initiative now at this point.
- [08:10]
Michael Saylor
Yeah, I think we chatted in 2024 or 2023. I still had really long hair. I cut my hair to a more medium length in, in May of 2024. That was like an end, a little bit of an end of an era. And we were still in the Biden administration then. The renewables above everything else push was still going strong. You and I were talking about our power grids are weakened by too much renewable energy without an inertia presence like a rotating turbine that can absorb changes in grid demand and supply very quickly and just generally demonizing the renewable group. Think I'm surprised by how much of a 180 we've seen now with a pro nuclear, pro natural gas and grow the grid at all cost, top down statement. And I'm also surprised to see, I guess I shouldn't be surprised, but it's a little bit wild to see such strong and baseless opposition to this stuff. Whether it be growing our energy base, fixing our grids. The same misinformation about AI data centers as we saw with bitcoin mining. Like they're going to use all the water, it's going to drive up your electricity costs. It's just like so uninformed bullshit. And people are buying it. I just, I'm saying like anytime I see, I'm like, that's Chinese propaganda. They are trying to slow down our data center expansion because they want us to buy all the AI tokens from them in the future. Because no matter what, even the protesters, they're going to buy AI tokens too. Everybody is going to be buying and using AI tokens all the time. You cannot put the genie back in the model. They're even making protest flyers using ChatGPT. It's the most ironic thing in the world. And don't you want this to be built here? Don't you want America the leader of the free world where we still have some rights and civil liberties? I mean you could still push back against the state to a slight degree and have these great freedoms. Don't you want that to be the place that has the best AI instead of this authoritarian complete surveillance state where they could just squelch out any opposition? I mean it just is so half baked. But what do you expect, ma'?
- [10:47]
Chris Burniske
Am?
- [10:47]
Michael Saylor
It gets votes.
- [10:49]
Chris Burniske
It does. Well, I mean let's, let's tackle one misconception because if you do look at the, the chart, I forget if Fred puts it out, whoever puts it out, but the average price of electricity in the United States has gone up. I believe price per kilowatt hour in city centers is drifting up towards like 20 cents per kilowatt hour.
- [11:11]
Michael Saylor
But how much of that is transmission?
- [11:14]
Chris Burniske
Well, exactly, I mean this is again getting, getting to the core of the problem. Like what is the problem is a lack of investment years ago in transmission and other stuff.
- [11:26]
Michael Saylor
Well, I think it's transmission now goes towards building out new renewable generation in places that want to do ESG stuff. And new renewable generation doesn't actually increase the overall capacity factor of a grid to meet peak demand because it's, it might not be there when you need it and then you have a disincentive to actually Build reliable thermal generation, nuclear generation, coal generation because all of those generators run close to around the clock and, and don't ramp down. And so when, when those generators have to endure long periods of low pricing from excess renewables it kind of corrodes their economic return. So it's. Look, I'm not going to say that if we increase electricity demand by 5x that it's not going to drive up prices. Sure that it makes sense but the places that have the highest power prices have the worst transmission planning and modeling and investment case like California, Texas has the lowest prices and we have the fastest growing renewable sector and an excellent market based power economy. So it's, you can have growth, you can grow your transmission base, you can have cheap energy. It all kind of works together.
- [12:51]
Chris Burniske
Yeah, I think ercot, I mean is the shining example that everybody should try to follow. I think I read in the headline, correct me if I'm wrong but they're spinning up a 453 megawatt nat gas plant outside of Houston too.
- [13:02]
Michael Saylor
There's going to, there's so much going on there. It's testing the limits of Texas business friendly policy. You know it's just everyone's a data center developer now. Everyone's got a behind the meter power plant. There's 350 gigawatts of power in the queue on an 85 gigawatt system. And yeah, I mean it's madness but people are eating man, the state is eating. Tax revenue is going to go up. A lot of that data center investment is going to go right to school district budgets. You know, property tax goes make like 90 cents on, let's see, 90 basis points of our property tax goes to the school district. So it is. And if you're an electric cooperative your adder on your power as a data center goes directly back as a rebate to all the residential customers. So there are a bunch of really good models in Texas, specifically in rural Texas that are going to be like home runs for these communities just because they have power and kind of a can do attitude.
- [14:11]
Chris Burniske
Yeah, what like because I've obviously sit on the board of a minor exploring AI confutes, I've been sort of behind the scenes ear close to the ground watching this AI data center build out happen.
- [14:30]
Sponsor Host 1
And
- [14:33]
Chris Burniske
like you mentioned, there's 350 gigawatts of people in the queue for a grid that has 85 gigawatts on it. And it's just. Are you seeing what I'm observing? It seems like a lot of what was happening in 21 and 22 on Bitcoin mining where people saw this gold rush that was incited by the Chinese mining ban and everybody and their mother said, okay, all this hash rate is going to have to move. Let's land it in the United States. And many people who had nothing to do with mining at the time, their eyes lit up and they became power and infrastructure experts overnight. And it seems like, I think in the AI space that is happening and arguably on a level that may be an order of magnitude larger than what we experienced in the bitcoin mining space.
- [15:27]
Michael Saylor
So I don't disagree about the your general characterization that it's a frenzy. And I think a gold rush is a great way to put it.
- [15:38]
Chris Burniske
And
- [15:41]
Michael Saylor
I have no disagreement there. And surely that will die down. So let's break out. Let's start by sort of comparing mining to mining activity and mining investment to AI data center activity investment. You know, in mining. When the Chinese mining ban happened, Bitcoin was in the midst of a big bull run. I think the price of bitcoin was around 60k and it had rallied significantly from 5 to 7,000 in 2020 to to 70,000 in early 2021. Then China banned mining. So you had 12x price expansion and then 50% of the network dropped off. So mining economics were 24x within a 12 month period. If you were mining at scale, your profitability looked incredible. Its commodity production, high prices are the cure for high prices. And then what we saw thereafter was a massive expansion in hash rate and a deployment in capital that was underwritten. Based on that, does that period of economics culminating in 12 to 18 months later, FTX went bankrupt and Bitcoin was trading 17,000. And there were bankruptcies throughout the mining industry. So the economics of bitcoin mining can change so quickly via price and difficulty that that capital was not prudent underwriting. In AI data centers. You're signing a 10 to 15 year lease with an investment grade entity that is a very solid lease such that you can finance it with 80% debt. You have that dynamic, which is totally different because you're locking in the economics for 15 years, which is fantastic. Separately, you have this birth of a new commodity. The commodity is digital labor. And digital labor can be used to replace or complement human labor in an explosive number of use cases. Digital labor is in price discovery right now. Digital labor is not commoditized. A token of compute in an anthropic model is not the same as a token of compute in a. In a deep SEQ model or a GROK model, it's all different. So it's, there's no fungibility in the commodity yet and many of the producers of, of that digital labor commodity are, are producing at a loss and they're producing at a loss to acquire users and market share or perhaps they want more, more data from users to improve their models. They want more direct user feedback. There could be a world where they value that. I don't know for sure how they're making decisions. And so this new commodity is being born. We're in price discovery on it. We are in a commodification phase where eventually some standards will emerge and at some point in the next 10 years it probably will trade close to its marginal cost of production and there will be bankruptcies from over levered players. Maybe some of these leases will get broken and it will be litigation and for sure there will be a correction. But I do think that due to the nature of the leasing activity and the fact that you can lock in these, these revenues for long periods of time and the fundamental demand structure on this commoditized digital labor tokens, as long as you sail through this volatility somewhat prudently and you're mindful of who your counterparties are on some of these long term contracts, I think generally speaking, people who are rushing in right now have a better chance to end up in a good spot.
- [19:47]
Chris Burniske
I would agree there.
- [19:48]
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- [19:51]
Michael Saylor
Guys.
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Chris Burniske
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Chris Burniske
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Chris Burniske
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- [21:21]
Chris Burniske
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- [22:00]
Chris Burniske
consider where we are just on the demand curve. Like the agentic economy just launched what five months ago, six months ago maybe. Depending on who you talk to. Some will say October of last year with Opus 4:5 and probably less than 0.5% of the population is even aware and less than that is probably even tried to implement this. And then you think we haven't even got to robotics yet. Robotics is going to need insane amount of compute. It looks like the regulatory barriers for full self driving with Tesla, Robotaxi, Waymo, they're beginning to. They're about to be unleashed. If you think of the demand for these tokens, I can't even fathom what it's going to look like five years from now. And so you're going to have consistent demand. I guess the big question is how much more efficient do we become with the different types of tokens. To your point there about the commodification of tokens, I actually had a really interesting conversation with Haley from Luxor when we were in Austin for the bitcoin takeover last month. And I think the conclusion that we came to is that right now the computer like different grades of crude oil, like sweet, sour, light, heavy and data centers catering to particular types of computer like the refineries we were running with that analogy. Interesting to hear your thoughts on that. If you think that's directionally correct.
- [23:42]
Michael Saylor
It's not a bad analogy at all. And I would say I actually think that, you know, that ASICS are almost a better analogy, but even so, it's incomplete. The thing that it reminds me of is some early days of GPU mining, some of these GPU mined shitcoins like Grin, where.
- [24:12]
Chris Burniske
Sorry to hear that.
- [24:14]
Michael Saylor
Yeah, yeah, Corement launched as a GPU miner. We were in upstate New York, we didn't have competitive electricity costs so we had to be a GPU proof of work miner. And we mined this coin called grin in 2019 and you mined it with a GPU. And the reason why I think it's analogous is because this token launched and there was price discovery in the token. So you had a fluctuating token price. Then you had difficulty increasing from people who were adding new compute to the network generally to pursue mining of the token and to hash towards it. And then you had a third dynamic which was the software that was mining this new, this new algorithm, this new proof of work algorithm was improving in such a way that existing compute was able to get you a better product, more hashes without doing anything to your hardware. And so during that time you just didn't want to be caught short difficulty in any way. And in the case of right now with these frontier labs, whoever has the best model, which has the, the highest quality pre training and, and parameter size and all the variables that make a new model better and more performant, they release that model and they're able to acquire all these new users. There's a separate dynamic of sort of are you going to keep those users once you get them into your ecosystem, what's their long term value? And if you give them a bunch of compute at a loss, how do you think about your customer acquisition costs there? But it's, I don't hate the, the crude oil grade analogy. I just think it's, it's actually more complex than that because the with, with crude oil grades, you just need to have a refinery set up to, to handle a specific type of crude. It's basically useless if you have the wrong kind of crude going into a specific type of refinery. With this AI compute. I mean these, the quality difference between even models a year ago and today is so different that it's so different and it's changing so fast that I think some people are rightly calling it to question the investment strategy of the Frontier Labs. Like, what's your plan here? Are you just going to keep spending tons and tons of money on training data centers to build a bigger model? And is the new massive training model worth the expense of acquiring those users? And we'll know the answer in a few years, but I think it's still a big open question at the moment.
- [27:18]
Chris Burniske
Yeah, I mean I was watching the Brad Gerstner conversation with Gavin Baker that dropped yesterday. And I think Gavin brought up, I think Gnome Bloom, Gnome Brown, excuse me, from OpenAI, put out this thought experiment like we like to your point, like we don't even know how smart these models actually are because we've never run 1 like 4.8. Nobody's ever run it for a year straight. Like I've done a Gentec run for a year straight with that to see how smart it actually is because you're they got out Fable 5 and arguably they're going to move straight to Mythos if they figure out how to get comfortable with unleashing the full power of that model. And so if you're continually trying to progress the models and get smarter models, you actually don't know how smart the previous model can actually be.
- [28:11]
Michael Saylor
Yeah, I think that's a great point. And also I do think that there is a part of this that is divorced from economic reality almost in a religious way, where the richest and most powerful companies and the people who lead those companies in the richest and most powerful state America are chasing this godlike divine intelligence moment. And they're all competing with each other. The way that they talk about it is almost like a gospel in especially, you know, if you read Dario Amodei's blog posts and books, he speaks about it as if it has divine characteristics and hopes that it has a divine benevolence. Hopefully it's a New Testament God, not an Old Testament God. And I think that it there's almost this awe of, well, of course we have to spend all of our money on compute and who cares? We have it. This is the last thing there's egos caught up in it. There's this divinity aspect and now there are some profits. Thankfully Anthropic finally is generating what looks like a healthy positive gross margin and that will underwrite in the next couple trillion dollars that are spent in this this thing. We are in a unique moment in time for sure.
- [29:48]
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- [29:50]
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- [30:06]
Chris Burniske
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- [31:15]
Chris Burniske
Yeah, a couple things there. One, it was interesting that Anthropic felt compelled to go visit the Pope. And I was actually having a conversation off the record with a buddy a couple weeks ago and we were talking about how injecting the Bible or bible verses into post training has a way to push the models to be more benevolent. To your point.
- [31:42]
Michael Saylor
Yeah, yeah. And then you had. I can't remember, some aggrieved Silicon Valley VC was quoting Dario's the last couple of paragraphs of Dario's Machines of Loving Grace essay. And I think it was Bill Gurley. And he was specifically pointing out some language where it's like, we hope that the AI that we build happens to value a certain kind of human, and it is a machine of loving grace, yada, yada, yada. Which I appreciate his directness. I think he's. He's trying his best, Dario is, and trying to translate what he's seeing into an appropriate level of cautionary guidance for the species. You have to recognize he's in an impossible position. And no matter what, if you're doing something that significant at that scale and making so much money at the same time, probably 50% of the population at least is going to hate you. And that's just kind of what comes with the territory of that role. Yeah, for him, I guess.
- [33:01]
Chris Burniske
Yeah. I'm a bit worried about his association with the effective altruism movement.
- [33:08]
Michael Saylor
Yeah, rightfully so. Rightfully so. And hopefully that group has learned from some of the flawed thought experiments of their previous celebrated members. But, yeah, I think there's a lot of, you know, there's good reason to be worried. I'm just an optimist. I think it's all going to be okay. I would prefer this technology gets built in America. I don't think there's any way you can put the genie back in the bottle here and stop people from using this. This technology. And, you know, it's your job as a young person who has a family to support or a company that depends on him or her to just try to get as. As close to the front of the tip of the spear of knowledge in this industry, so. So that you can make the best. The best decisions possible or avoid bad decisions. And you could put your head in the sand and be a hater and be a Luddite, or you can. You could do that. And I think the. The former path is oriented around protecting your ego, potentially. And the latter path is the path of humility, the path of. Of greater understanding and learning. And that's the path that I want to take. Just like when I discovered Bitcoin had to do the same thing. You have to get right to the front of this thing and try to understand it as best you can.
- [34:30]
Chris Burniske
Yeah. I tweeted out this morning, I've never been more bullish on humanity. I don't buy the permanent underclass meme to your point, I've done my best to be on the tip of the spear in terms of interacting with this technology. And we've been building, we've been building like a company brain at TFTC using agentic flows. So much fun. And you can see, you see, touch, feel. It's like, oh, this is real. And it makes it much easier to completely discard the Luddites or the haters who say there's nothing here. It's like, well, have you actually touched it? Have you seen it? Have you experienced its power?
- [35:14]
Michael Saylor
How has your, how is your audience generally kind of, what's your view on where they land on this issue? Because those are, you know, you have a, a loyal and fierce group of acolytes,
- [35:34]
Chris Burniske
very receptive. We actually have data on this because we do a, a Typeform survey for anybody who signs up for the newsletter. Not everybody responds to it, but we've gotten thousands of responses in the last three months. We have sort of an open ended, like, what type of content would you like us to cover more of? And AI is I think 60% of people like AI content. And I think to your point about, you had that feeling around bitcoin. I think many bitcoiners, particularly if you've been in bitcoin for a certain period of time, are fine tuned to be more receptive to this type of disruptive technology. And so I actually think my audience, the TFTC audience is, is more attuned to being receptive to this stuff. And I think it shows out in the data and the survey data that we have.
- [36:27]
Michael Saylor
Yeah, that makes sense. I wanted to ask you at some point when we talk about Sailor. Yeah, yeah.
- [36:40]
Chris Burniske
What's your question about, Michael?
- [36:42]
Michael Saylor
Well, I'm, I've historically been a, I'm gonna call myself a defender and a. I wouldn't use the word fan, but I would say a defender and a hat tipper. Where I'd say, I think his actions have been rational, smart, defensible. And I'm a hat tipper in that. I'm like, good for you, man. You know, you accumulated a massive quantity of bitcoin in this entity. You can pay yourself a salary from that entity and you're able to add more bitcoin to your ownership per share in that entity. Like as a bitcoiner, I wish I thought of that. Like, and I've been a big, is sort of a supporter. Like, why are people hating on this guy? I'm a little concerned about what he's done over the last month or Two. And yeah, I would love to hear your take on it.
- [37:49]
Chris Burniske
I think I'm very, very aligned with your perspective on it, which is I've been a hat tipper. I mean, Michael has been on the show once and it was, I think, five or six years ago at this point when we were fighting. I mean, I think I have the most combative podcast episode Michael Saylor has ever been recorded because it was when he was pushing the Bitcoin Mining Council and I was very much in the camp of we don't need this, don't cater to the ESG crowd. And he was very much in the we should just appease them. And I was in a big don't appease them. And I still stand by that. Actually think my perspective and position actually played out to be the right one in the long run. But outside of that, historically, since strategies started accumulating, bitcoin, been a half tipper. Like, hey, you're doing it and you're utilizing this entity to acquire Bitcoin in a way that is accretive to shareholders. But to your point, with Stretch and all these preferreds and narrative switching and the forward guidance strategy, we'll give in an earnings call and then quickly. And it started last year. So my, my antennae peaked last year after their Q2 earnings call. I forget exactly what he said, but there was something about the mechanics of the ATM and the guardrails they were putting on themselves for when they would leverage the atm. And literally two weeks after that earnings call, they negged on that forward guide. I remember that. And I remember at that moment I was like, wait a second, this is a little weird. And then obviously you have these perpetuals that have come out, Strike and Stretch. And I'm not going to pretend to know how to dissect the financial engineering and pinpoint exactly where it could blow up. But the caveman in me is just like, this seems too good to be true. That's my perspective. If you want to invest in strategy, mstr, Stretch, strike, go for it. Not my cup of tea, though.
- [39:53]
Michael Saylor
Yeah, I think you're right to point out this call. It shareholder deception started a while ago and it's now reached a. I would say it is overlapping with another behavior that I think is concerning, which is I don't think he's making good choices right now. I think that the key thing he did wrong was he bought back those preferreds, that preferred convertible debt. I mean, he bought back the convertible debt and reduced his dividend Runway on all of the preferred instruments from I think 18 months to six months. And that was when the market started kind of freaking out a little bit and selling off.
- [40:41]
Chris Burniske
And
- [40:43]
Michael Saylor
then they came out with a slide deck that said, oh well, now we can sell bitcoin and buy USD as a, as a fifth pillar of our strategy. And he's always said, of course we're never going to sell bitcoin and we're always trying to increase sats per share. And so he, he's gone back on what he said he was not going to do. He made a misstep on managing their strategy and their financial position because really what he's done now is taken a time based concept where as long as bitcoin goes up more than the yield that they have to pay on the preferred, then it should be an accretive strategy. And I think there's some reflexivity to it where the more that he's able to buy, the more likely that that outcome becomes. But now that he's actively deceiving the shareholder base and he's made a financial misstep, I think it's the time for him to reflect. And I have a message for him. I would say, Michael, you need to channel through a quantum portal to your future self and recognize that you're in a precarious position right now. You've brilliantly financial engineered your way into a massive bitcoin position and you now need to figure out a way to create intrinsic value with that Bitcoin. The jig is up on the, the financial engineering. You can't sell the market. The more that you deceive people from here, here on out, the, the more that this will be the high watermark on your reputation. You need to figure out how to actually create cash flows or bitcoin denominated cash flows using your stack. That's my message to him.
- [42:40]
Chris Burniske
Yeah. And then that's always, I think the caveman intuition in me is like, you can only financial engineer to a certain extent, but you need cash flow if you're running a business.
- [42:51]
Michael Saylor
Well, he did, he did it. I mean it's like, hey man, you got 900,000 bitcoin, maybe you could start a, a financial services company. You could do hard work, you could do a hard thing. What you did was novel and you, you sold a bunch of people on this thing. Most people who bought your equity instead of bitcoin over the last couple of years have underperformed and now you have a financial structure that's fallible and your only option is to sell bitcoin or, or sell Common stock below your M Nav and that people are rightfully pointing out that the MNAB figure that he's using is somewhat deceptive. So he's gotta, I think, stop, take the summer off. Well, that's,
- [43:42]
Chris Burniske
that's the other question because he was very public about it starting last year that we're using AI to create these financial products. AI as we just described, it's very powerful. But I think if you're seeing touching feeling, you also know it's fallible to a certain degree too. Like right now it's at the functionality. I mean Fable 5 was a big jump, but 4.8. Actually when 4.8 came out, I diverted back to 4.6. I preferred 4.6, but long story short, they're just sophisticated calculators that can give you wrong answers and are a bit sycophantic. And so how much of the AI utilization to create these financial products is a machine being sycophantic to you to convince you that this is a good idea?
- [44:32]
Michael Saylor
Yeah, totally. You got to read the room a little bit I think. And yeah, something has changed recently
- [44:47]
Sponsor Host 2
to
- [44:47]
Chris Burniske
your point about mnav. Like Maller's asked him the question, I guess in Prague a couple days ago about it and he gave a 10 minute long winded answer that was sort of a non answer. And then today he gave us an excluded strike from the slide of emerging bitcoin companies which was I think a bit pedantic.
- [45:08]
Michael Saylor
Yeah. And looked at the. Jack's always been call it like a bitcoin vanguard. And I think he's saying what the market is feeling. He's got a platform that breaches that barrier there, which is like generally speaking, Saylor was supported and there's an immune response within bitcoin that we're not going to allow a, a deceptive person in our midst to go uncalled out. And he's now actively deceiving on, on all of his platforms in a variety of ways. And he's making financial missteps and that, you know, he is, he has too much, he's too big to fail almost. And that should be the narrative. The narrative should be you're fucking up and your ego is, is in the driver's seat and you're deceiving people and you need to take a break, you need to reflect.
- [46:15]
Chris Burniske
I, I would agree. I am. We are in alignment there and then. Yeah, because I mean now it's getting to the point too where you have like derivatives of the strategy strategy with like Strive and SATA and like you're beginning to, to build layers on top of this and if you're deceiving and
- [46:31]
Michael Saylor
there are stable coins that are backed
- [46:33]
Chris Burniske
by it out there defi.
- [46:35]
Michael Saylor
Yeah, yeah. It's crazy.
- [46:39]
Chris Burniske
Ah, it's awesome.
- [46:41]
Michael Saylor
Good to hear. Good to hear. We are aligned on so many things. What do you suppose we are not aligned on?
- [46:48]
Chris Burniske
That's a great question. I mean, I think you've definitely pulled me more in your. I mean we've, we've known each other for what, almost a decade now. Yeah, you were first mad we were not aligned on the ordinal stuff, but I think. Was I proven right there? Where do you think there's a.
- [47:08]
Michael Saylor
I will say that ordinals is obviously was not a persisting phenomenon and I was, I don't know that I ever went on record saying that, but I did say I enjoy the incremental fee revenues being paid to miners. And I do think that that is a problem. Although I've moderated my views on this a little bit, which is that I think the fee market will materialize when there is more volatility in block times. And it'll be interesting to see how bitcoin works in that era. I mean, imagine if you had to pay a big transaction fee if you wanted to get your transaction confirmed in three or four hours. Do you think you would do that?
- [47:56]
Chris Burniske
Yeah,
- [47:58]
Michael Saylor
yeah, I think so too, but yeah, I mean I'll give you, I'll give you that one. I'm not sure what the exact nature of our disagreement was, but.
- [48:08]
Chris Burniske
Well, I think it was around the fee market so it was a layer above the core discussion which was are you worried about long term security budget?
- [48:17]
Michael Saylor
I am worried about it and my concerns have moderated a little bit, but I am definitely worried about it in that I do think people will pay high fees if this phenomenon emerges. But I wonder what the market's receptivity will be to tolerating a long term high fee regime and if that will persist. I worry that people will try to find ways to innovate around paying high fees. And then what will the nature of the relationship between protocol and the revenue that's generated from blocks and bitcoin miners be? What is that going to look like?
- [49:05]
Chris Burniske
Maybe this is naive. I've always been under the we don't know what the future state is going to be. I think keeping an open mind in terms of the ability of creative new use cases of bitcoin to emerge that we can't even fathom. And I just, I just Always have this. Maybe it's blind confidence and naivety, but that we're going to find a way. Or it's not like find a way to. You don't go in with the intention to increase fee revenue for miners via transaction fees just to do that. It's that Bitcoin will be so useful that like, I don't think you can try to engineer increased fee revenue for miners intentionally out of the box. I think the goal should be to make bitcoin so useful on every different layer protocol layer layers above it. That's demand for the UTXOs. I mean the conversation of Jevons Paradox for compute is very, very front and center right now. It's funny watching everybody learn what Jevons Paradox is in the outside world, outside of bitcoin. Bitcoin. Because I feel like bitcoiner's been talking about it for a while. But I do still operate under the belief that you can apply Jeffin's Paradox to utxos too. And so the more that we can make UTXO usage more efficient and increase the optionality of use cases with individual UTXOs, I feel like it's going to drive demand for them in the long run. That's my intuition.
- [50:46]
Michael Saylor
What is your view on quantum. Maybe we're not aligned there.
- [50:52]
Chris Burniske
I am personally skeptical that it will arrive on the timelines that are being put out there, if at all. However, I have become thoroughly convinced that regardless of whether or not quantum manifest, we should be preparing for new signature schemes anyway. And yeah, a lot of those just so happen to be quantum resistant too. I feel like the work's being done. I guess many people would argue about whether or not the urgency with which it's being done is. Is urgent. Is sufficiently urgent. I'm under the impression that it's sufficient enough for me at this point. What's your thoughts?
- [51:45]
Michael Saylor
Yeah, it does feel like the the two sides of the debate are really around the nuance of it. And then maybe the more the nastier debate that is impending is the implementation forum where there will be a lot of nerd bloodshed at at. What is the actual final form of.
- [52:15]
Chris Burniske
I'm not going to give up. I'm not going to give up my perspective on this one. Yours first. Do we dump Satoshi's coins or do we freeze them?
- [52:26]
Michael Saylor
It's a great question. I think you can't touch them. Personally, I just think that it's like what are you talking about? I get it and it sucks. You hope that. My hope is that a benevolent Entity that controls the most powerful AI cracks it and burns them as a flex, like Google Quantum, because it is a crime maybe. And you can see right now, I think some of the more interesting things that you're seeing right now is people are setting the stage for legalizing that crime by claiming lost property on chain and then they'll steal it with Quantum and they'll be like, well, this was my property. Which is a very interesting little tactic.
- [53:26]
Chris Burniske
That's the question I have is like, are these people working on Quantum that are making these claims or is this somebody.
- [53:31]
Michael Saylor
I think they maybe are just imagining a time when, when the technology is widely available. They, they need to have legal title to it or somebody steals it and then goes to them and they have legal title and they're like, my fee is 5%. You know, like I will clean your money and you can launder it through US Bank Rails because I own title to this and you have stolen it. Maybe it works like that. But that would be. I think it'd be sick if Google was just like, we are so far ahead and we crack Satoshi's clients right to a burn wallet. Let's go boys. That'd be great.
- [54:10]
Chris Burniske
That would be sick. We're aligned here. I don't think you can touch Satoshi's coins. However, an interesting conversation this week in New York. I won't disclose with who, but he presented a third option which I think many people are completely overlooking, which is Satoshi is still alive and well and actually does want to move his coins at some point in the future. And his whole argument was like, in bitcoin we hold Satoshi up as this deity like figure and there's a lot of reverence for what he did by launching bitcoin and by walking away from it. And it's like he's almost this untouchable entity that, that everybody looks up to. And the argument he was making is that everybody is underappreciating him. Like, who's not to say that Satoshi has a long term plan, is waiting for the market cap to get to a certain point at which he can begin deploying his bitcoin to invest that he wants to see, which I did
- [55:15]
Michael Saylor
you watch that documentary, the one that came out recently?
- [55:19]
Chris Burniske
No, I haven't watched it.
- [55:21]
Michael Saylor
No. I feel like I've seen was a compelling case. I would say, yeah, I found it to be believable.
- [55:32]
Chris Burniske
A lot of them are believable. A lot of the theories are believable. You can, you can make the case for, for Many of them, some less believable than others.
- [55:42]
Michael Saylor
But you should watch the documentary and see what you think. I think that the. The approach they took to the research was more credible and methodical than previous approaches. And.
- [55:55]
Chris Burniske
But finding Satoshi, that's what it's called, right?
- [55:57]
Michael Saylor
I think so, yeah. You have to go buy it on their website. So they're sort of like, I'm not going through conventional distribution channels. You can come buy direct from me. Which is that kind of the way that you would do it if you release a documentary? I think so, yeah. You should give them a little props on that. Pay your 20 bucks.
- [56:15]
Chris Burniske
Little value for value, not against that. All right, maybe I'll. I'll rent it and watch it this weekend.
- [56:21]
Sponsor Host 1
Yeah.
- [56:23]
Michael Saylor
What else did the person who provided that theory had they watched this documentary?
- [56:30]
Chris Burniske
I don't know. I didn't ask them. I can't. I can't say.
- [56:33]
Michael Saylor
I'm curious about who this person is. Yeah,
- [56:40]
Chris Burniske
I mean, of course the typical bitcoin or fashion is like, I won't tell you who I think satoshi is because I would never want to draw that attention to them. But very confident. I just thought it was an interesting theory. I think many people are discounting that possibility that Satoshi is alive and wants to be a trillionaire philanthropist at some point in the future.
- [57:03]
Michael Saylor
Yeah. Many of our brightest minds are distracted by AI at the moment. Probably a good time to do stuff in bitcoin if you wanted a good development environment.
- [57:14]
Chris Burniske
I mean, I'm very happy with where the pace of development. And I do agree that many. I think there are a certain subs. There is a certain subsector of the bitcoin world that is distracted by it. But I think, I mean, a lot of the conversations I'm having is like people trying to figure out again, how to be on the cutting edge of this, to leverage it, to effectuate the proliferation of bitcoin technology. Because you'd be stupid not to leverage this stuff to try to build. There's so much more.
- [57:51]
Michael Saylor
Yep. And if you happen to own a bunch of powered land, you get a nice little gift dropped into your lap.
- [57:58]
Sponsor Host 2
How.
- [57:58]
Chris Burniske
How good are you feeling right now with everything that's going on for powered land developers?
- [58:05]
Michael Saylor
Look, I feel lucky, I would say, in our marketing materials a couple of years ago, we would claim that part of the hypothesis of developing power land for bitcoin was that AI Compute could grow and demand for that power at scale, could make the assets that we were buying for relatively cheap look like a great Buy. In hindsight, I did not see this coming, you know, did not see that our company would have offers from trillion dollar companies to do deals. It's a little wild. It's also a little bit of a. It's a different skill set than I think you have as a bitcoiner. It's a different muscle. Where in bitcoin there's a sovereignty that extends also to the companies. There's a way we do business. There's just a, it's a very colloquial relationship. Can be high trust. Some of the norms of bitcoin and cryptocurrency would be shocking to people who come from Fortune 100 company world. So there's a part of it that is. You feel like a little bit of a sellout if you go down that road where there's so much diligence, so much compliance, so much lawyering, and then you just get a big fat check at the end and it's like, yeah, you're, you know, you're being paid a little bit to sell. Sell your soul. So it's, it's not all positive, but I would say overwhelmingly that the, the weight of the burden that you feel for your shareholders and your employees to deliver a positive result, and I mean, I take that very personally and it's a heavy burden for me. Where this is a, It's a blessing. We, we got lucky and we want to do our best to capitalize on it and overall just generally feel lucky.
- [60:23]
Chris Burniske
Well, I mean, luck is.
- [60:25]
Michael Saylor
What is it?
- [60:27]
Chris Burniske
Preparation and fate meeting.
- [60:29]
Michael Saylor
Opportunity meets preparation.
- [60:31]
Chris Burniske
Yes, opportunity meets preparation. There we go. And I think out of many people in the bitcoin mining space, your preparation was better than most, which is evident by the low cost mining and the ability to survive through multiple cycles that you've shown. One last question, though. I mean, building on what you just described about sort of interacting with these Fortune 100 companies, what can they learn from what we've done in bitcoin? And do you think we can pull them more towards our worldview via interacting with them more at this intersection of compute and power?
- [61:09]
Michael Saylor
I would say, directly speaking for mining, the way that we built mining data centers was you're building to extract the commodity out of the input commodity as cheaply as possible. You're building an electricity conversion machine where you're trying to convert electricity into bitcoins as cheaply as possible. You can build a Data center for $100,000amegawatt, including labor, including all materials and labor from a high voltage input source to the plug, you can do it and you can run a Data center for 2 cents a kilowatt hour. You could even run it for free. And the more that you embrace flexible operations and invite downtime into your design philosophy, the lower that your total cost of ownership will be. Fortune 100 companies and the style of data centers that they build were oriented around, I think as a core principle, we don't go down ever. And the reason why is because if AWS goes down or if, if Instagram goes down, the amount of revenue loss that they lose is probably thousands of dollars of megawatt hour equivalent. You know, it is, it is astronomical because they're, it's their reputation, it's commerce streams, it's frustrated users and all of those things. And so the data center design philosophy for those Fortune 100 companies reflects that. And we're in commodity production. This type of compute is different. You are producing commodities here. And when you're producing commodities, it's a marginal cost of production business. And so I think that bitcoin mining data center developers who were oriented around building and operating data centers at the lowest possible cost are going to be in a good position to innovate in the AI data center space where you have people coming from this sort of no downtime paradigm. And then you have these sort of garbage collector bitcoin miners who are like building these really low cost chicken wire data centers. And like there's a middle point there that's going to be we could end up in a good spot there as an industry. I mean we already have, the industry is landing this pivot very well.
- [63:45]
Chris Burniske
I agree. And I think, and on this, because I know you have a tight hour here, Colossus won. It was amazing watching how Elon and crew built that because they did it what in a hundred days. And when we finally got a look at how they did it was like, oh, they acted like a bitcoin miner. Daisy chaining gen sets, putting battery walls on the inside and just thought like a scrappy bitcoin miner.
- [64:13]
Michael Saylor
Yeah, it was remarkable. I mean I think that if you have all the stuff, you can build these data centers fast. If you have to buy it through the supply chain, there's parts of the supply chain that just take longer. We would build bitcoin mining. Our best bitcoin mining data center was like 110 days at $104,000amegawatt built. That was the best we ever did. But there, there are parts of that that you just can't control, like supply chain and Timing. And so I think that, like, Elon definitely nailed that. But if you need to order everything from scratch and you don't have it in inventory, 100 days is not possible due. Due to some supply chain timing. But, I mean, he's a badass. I'm a fan and definitely setting the pace as usual. I hope we're not competing with him. I see all this, like, SpaceX leasing, data center compute, and I'm like, I do not want to compete with Elon.
- [65:14]
Chris Burniske
Yeah, yeah, you do. Iron sharp sharpens iron.
- [65:17]
Michael Saylor
You know that's true. Yeah, that's true. And we are. We can hold our own. I mean, we're. We're scrappy, but you always want to
- [65:24]
Chris Burniske
compete with the best. It's not worth being in it if you're not. If you're not competing.
- [65:27]
Michael Saylor
I would rather compete with the worst. Hey, I just want to win. And competing against a person like Elon, who has so much more resource and so much more just like, raw, intellectual firepower in himself and around him, it's tough, man. It'd be daunting. But I think there's plenty of wood to chop out here. We need a lot of compute. West Texas is going to be a great place to do it, so we're excited.
- [65:59]
Chris Burniske
Well, I'm pumped for you, brother. Appreciate you taking some time to catch up today because I think this is a topic that many people are still trying to wrap their heads around, and I think you're one of the sharpest minds within bitcoin that's playing at this intersection, can actually articulate. So appreciate that.
- [66:20]
Michael Saylor
Yeah, let's do it again. This was fun. Thank you very much for having me.
- [66:24]
Chris Burniske
All right, Peace and love, freaks.
- [66:26]
Sponsor Host 1
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