← THE Bitcoin Podcast
THE Bitcoin Podcast
BITCOIN MINING: MISCONCEPTIONS, NATION STATES, CENTRALIZATION & QUANTUM RISK, & FREEDOM TO TRANSACT
01:19:29
Loading summary
Transcript84 lines
- [00:00]
Ken
The right to transact actually precedes all other rights. And I think when you don't have that sort of authentic ability to transact and have that freedom, I think it impinges on the rest of your freedoms. You know, it sort of shuts them down to a degree. I hope the bitcoin community engages in what I think is actually the most important fight that we could possibly wage, which is to get inserted into the Bill of Rights of freedom to transact. Because I think when the framers of our Constitution put our Constitution together, there is no technology by which you could even imagine that anybody could stop your ability to transact. I think had there been technology that they could see that that would be threatened. I absolutely think that would be in our Bill of Rights, the freedom to transact.
- [00:51]
Walker
Greetings and salutations, my fellow plugs. My name is Walker, and this is the bitcoin podcast. Bitcoin continues to create new blocks every 10 minutes, and the value of one bitcoin is still one bitco. If you are listening to this right now, remember, you are still early. Find me on noster@primal.net walker and this podcast@primal.netcoin on X, YouTube and Rumble. Just search at Walker America and find this podcast on X and Instagram at tidcoin Podcast. Head to the show notes for sponsor links. Head to substack.com to get episodes emailed to you, and head to bitcoin podcast.net for. For everything else, without further ado, let's get into this bitcoin talk.
- [01:48]
Nathan
All right, welcome. Happy, Happy Monday to you. How's it going?
- [01:53]
Ken
It's good, man. Happy Monday to you too.
- [01:56]
Nathan
Yeah, I'm. I'm. I'm stoked to be able to. To chat with you. And I. I just met Nathan Wright on your team, uh, marketing at the BPI Bitcoin Policy Summit. Always interesting to see bitcoiners. I felt like it was like bitcoiners out of their natural habitat to a certain extent in D.C. but then at the same time, the realization is like, oh, bitcoiners are everywhere. Like, bitcoin is a Trojan horse. But also bitcoiners are individual Trojan horses just infiltrating everything. Like, you never know where you're going to find bitcoiners. And I think that's a beautiful thing.
- [02:28]
Ken
Oh, it is. And yeah, bitcoiners and suits inside of suits themselves definitely does not come as a natural image in my head, but I was glad to be a sponsor of that event. Glad Nathan was there for us. And I'm glad that we're there influencing policy, because as much as we don't like politics, particularly the bitcoin community doesn't. Doesn't matter. The impacts of politics are going to affect us.
- [02:57]
Nathan
Yeah, it's like you don't care about politics. Politics cares about you, though. That cliche is very much true. I mean, and you see it today. I think there's the voting might be on the. Might be happening today. But there's. Cynthia Lumbas was talking about, like I just saw just before we hopped on here, getting rid of like this double taxation treatment for bitcoin miners, specifically where it's like right now the bitcoin miners are basically, you're taxed when you actually discover a block. Like, you're taxed when you mine the bitcoin, but then you're also taxed if you need to sell any of that bitcoin. So. Which is just kind of like, like insane. Like, I don't believe gold miners are getting taxed when they are pulling the gold out of the ground. And then also when they sell the gold, it just like, you know, people drilling for oil aren't getting taxed when they pull the oil out of the ground. It's like, no, it's when you, when you sell it. But I mean, I also think we should just get rid of all capital gains tax on bitcoin. But that's a. It's a different story. The de minimis. De minimis limit that the alumnus has also talked about is at least a decent start. But I'd like to see it all ripped out. And I'm curious if, as a miner, you have any additional insights on kind of that double taxation. That just seems ludicrous to me.
- [04:05]
Ken
It is ludicrous. And I think these sorts of policies only exist because bitcoin has been relatively unknown and a lack of education. So podcasts like this and just the whole podcasting arm and education arm of bitcoin, I think has been necessary to reach Capitol Hill, to get this across to people that, hey, this is a commodity and there's no reason to treat it like it's some. Something that you can just double tax. I mean, didn't. Didn't we have the Boston Tea harbor over double taxation or is that just me?
- [04:38]
Nathan
Right? Yeah, I mean, and to be fair, that was like a 2% tax on tea and look how far we've come. It's like, you know, starting a revolution over a 2% tax on tea. And now we're like, oh, you Want to take like 40 to 50% of the fruits of my labor? Yeah, go ahead, Daddy Government. Like, I won't revolt. I don't know.
- [04:54]
Ken
We're like, do it twice.
- [04:56]
Nathan
Yes, and do it twice. It reminds me like that, you know, that meme of like the. The wolf and then like the, you know, like a little pug or something. And it's like, you know, like, what are you, like the, you know, like you descended from me. This is just embarrassing. But, yeah, I think we're turning. Perhaps we're turning a corner. Perhaps things will get better.
- [05:14]
Ken
Well, I'd like to think so. And I'm glad that BPI exists to put on those types of events up on the Hill, because I think that's the only way that we get better with our current apparatus. I don't think that revolution is the right call today. And I would like to see a whole lot more of a intolerant minority from the voices of us in the bitcoin community to affect change. Because I don't know if you've heard Balaji's breakdown of the political tribes right now in the US But I think it's accurate from where I sit. And granted, I sit someplace outside the US So I'm sort of obsessed looking in at the. But I'm outside the glass, the fishbowl here. But you know, you've got red, blue, which is what everybody talks about all the times. But he also classifies the. The tech. The tech bros from Silicon Valley as the grays. And then the. The orange is. The is. Is the other community that is impacting change right now. And I actually, I've been talking about it for a little while now, a few years, and I think Team Orange is the intransient minor like Naseeb Talim talks about the vocal like 10% that can get massive polity change through. Just because we're in transigent, we just don't give up. We're just going to keep chanting the same thing over and over again and sort of forcing politics to go around us. And I think that there's nobody else that has a stronger belief in the political system than I think the bitcoin community does.
- [06:44]
Nathan
And we've certainly seen the bitcoin communities ability to like, materially affect politics in the US and around the world. Like, and I think it comes down to like, passion and obsession and just a, you know, a touch of autism as well, which allows for that relentless focus on these things. Because it's like most people, you realize, don't actually like they're, the amount that they care about an issue is pretty, like it's skin deep. Like you take even the really hot button issues. Like really, people don't care beyond the sound bites that they parrot, most of them. Like if you actually start having a conversation, asking them and trying to dig a little bit deeper, like why do you think that what fundamentally informs that view of yours? And most of the time they haven't actually thought about that. Bitcoiners have thought and talked and studied a lot in terms of why they believe that the things that they do, why they hold certain, certain opinions to like very, very, very strongly and will not compromise them. And I think having to, you know, to your point that that little minority, but that's incredibly vocal, incredibly driven and very importantly has an increasingly outsized economic impact. Like, that should not be like understated in this case. It's our purchasing power as bitcoiners is only growing and it is growing exponentially faster than the purchasing power of basically anyone else.
- [08:14]
Ken
Yeah, I, to that point, I, I, it was last cycle where I heard a really wild statistic, but it's, it stuck with me. It was something like. And so I think it should be research. Right? So don't, don't take what I'm saying with a grain of, with a, take it with a grain of salt. But directionally it's accurate and that's that When Bitcoin passes $200,000, the majority of billionaires on the planet will be bitcoiners. When you think about that, it's mind blank. So again, that number may be off, right? But there is a certain price point at which that will be true. And when that is true, you think about what are the values of this cohort that is suddenly making up the billionaire class, the dominant majority, the billionaire class, and what impact is that going to have on the entire political sociological system that we live within? I don't know. But I don't think that that's a bad change. No matter what ex it happens from that change.
- [09:12]
Nathan
No, I agree. And American Hodl put out a great AI generated video today. Kind of like, I don't know if you saw it, he posted it on nostr. It's quite a banger. But it's basically the idea of, it's talking about, it's making some jokes about bitcoin, treasury companies, paper, bitcoin, that kind of thing. But the ultimate point of the video is like, who's Trojan horsing who here? Even when it comes to Wall street, when it comes to the government. Some people bemoan the fact that these entities that we eschew, like the government, like Wall street, they're getting involved with bitcoin. It's like one that was always going to happen if bitcoin was going to be successful. You don't have to like it, but it was always going to be a natural result of bitcoin's success. If bitcoin wasn't successful, we wouldn't see that because it would be insignificant. Nobody would care. But two to your point about what does it start to look like when economic dominance is on the side of bitcoiners? Again, who's Trojan Horsing? Who? Bitcoin. You don't change bitcoin. Bitcoin changes you. Whatever sort of these sayings we want to go with, it's like bitcoin is powerful because it is resistant to change and resistant to manipulation. Human beings are much more willing to change. They are much more susceptible to manipulation. But if that manipulation, if that incentive structure is a good one, is contributing to positive sum games. It's very exciting to think what the world may look like and how some of these institutions may be changed fundamentally for the better because they're forced to without even realizing it. To me, it's fascinating, and it's one of the things that gives me a lot of hope as we go into the future.
- [10:57]
Ken
Well, it's interesting because as I think about it, I grew up on the west coast in the US And I watched the hippies during my childhood become the man in my older age. Not that I'm that old at this point, but I wonder if history repeats in a similar way where the bitcoin community is vocal in trying to tear down the existing institutions and rebuild them into something better. I sort of wonder if the bitcoiners are the institutions of the future or wind up the dominant majority within the institutions of the future. I don't think that that's a bad thing, but I think that it is something that we have to watch out for as a community, is I think there is a desire to sort of tear things down. There's an impulse at least within our community, and I don't think that's a wrong impulse. I just think it needs to be carefully shielded and not turn into the negative because it's really hard to build and it's very easy to tear them down. And I do think that we need institutions to help us. You know, as much as I love the. The anarchist dream, I just don't think that we're evolved enough as a species to all be able to maintain our own rule book and manage ourselves all that effectively. And so I think I'm glad to see the bitcoin community getting involved with the political level. And I think as long as we maintain control of our own coins, I really think it's that simple of a metric. As long we maintain control of our own coins, I don't see how the existing system co ops us. But that's, that's my take at this point.
- [12:39]
Nathan
Yeah, I mean an institution is not inherently bad. Like an institution is not necessarily bad. It's just a collection of people who get together and agree to basically to centralize a little bit of thought or of economic power or you know, mind share, whatever you want to call it. Now, incentives matter, right? So institutions that get really, really, really big and really, really bloated, which is like what we have now, the incentives start to warp and we have a fundamentally warped system from its base layer because our money is fundamentally broken. But like to your point, it's, you know, bitcoiners have the opportunity to build better institutions, institutions that last and are built on a sounder money and a sounder set of incentives. And I think that that is like I want bitcoiners to build institutions. You know, we don't have to do things the same way. And you know, something is not necessarily just the idea of getting together to solve problems is not inherently bad just because the people that, you know, the boomers that did it before, created more problems than they solved. And I rag on boomers a lot. But there are so many amazing boomers out there too. So like shout out to them and you know who you are. The Larry Lippards of the world, the Bob Burnett's, the George Bodines. Like so many incredible boomers I met through bitcoin who I'm like, ah, see, you know, not everyone is lost. No matter what age you are, there's always hope. But you know, I'm curious, Ken, I want to get into kind of your, your background a little bit because you mentioned you were in the US you are no longer in the US can you just give like a little bit of background? Who are you? How did you get here today to be working on bitcoin mining?
- [14:23]
Ken
Yeah, I, I, I think everybody's got an interesting orange pill journey. Mine is more circuitous than most though. So I, I worked for about a decade in rooftop solar on the west coast, you know, was operating a nine figure sales software construction company, competing publicly Traded competing with the likes of Elon Musk, Cousins and you know, it was quite a, quite a, quite a driven sort of career. And a new CEO was named by the board and I realized that I needed to fulfill a lifelong dream of travel. And so I had enough pennies in the piggy bank that I took off, threw on a backpack and traveled the world for a couple years. And on that two year sabbatical I fell in love with a Portuguese woman and bitcoin. Both happened ironically in Peru where I now live. But she was Portuguese. And so I wound up in Portugal in 2016 and lived there until early 2023 when we moved to Peru for my wife's work. But in 2021 after trying my hand. So between 2016 when I got to Portugal and 2021 I was trying my hand at all sorts of entrepreneurial ideas while living in Portugal and the environment there was not as entrepreneurial as the, as the US will put it. That way there's a lot more red tape and a lot less inertia, a lot more difficult to get things off the ground. So after trying my hand at a few different activities, of course, trading, mining from home, tried Bitcoin ATMs, was even trying to fund renewable energy projects with some blockchain technology. But I realized I picked up a copy of Jeff Boost the Price of Tomorrow and it just hit me like a ton of bricks. I was like you idiot, like you have this energy background, like why aren't you in mining? So I discovered SaaS Mining through a mutual connection. The founder of it and joined up with the founder. We raised some pre seed capital to go build a mining as a service platform. So thanks SaaS Software as a service but for mining. And we started building that was mid-2021 and we got operational, had our first data center January 2023. And we've been growing like gangbusters. So our first year over year we had about 350% growth and we're expected to do the same this year. And I didn't realize that what we set out to do was anything all that innovative. It just seemed obvious to me when I was trying to mine from home in Portugal that I just wanted to be able to go buy a mining rig, have somebody else plug it in, manage that for me. And I received the bitcoin and I was happy to pay for that service. And I didn't it seem particularly complicated but nobody had done that, nobody had just made that like Web 2.0 product. And so we set out to Build that. So in a nice, easy, simple way, with a couple clicks, you buy a mining rig, you can look at the specs of it. We get it deployed in one of our data centers, of which we've got three, one in Wisconsin, one in Paraguay and one in Norway. And the sats go to your wallet. So they're all wild, the sats that we generate and we don't mark up the hardware or electricity or cost pass through on those two items and instead we take a share of the block reward, just 15% when the pool pays it out.
- [17:46]
Nathan
Can you explain that concept of wild in terms of the bitcoin, as opposed to.
- [17:55]
Ken
As opposed to surveilled, Right. So when you acquire your bitcoin, you've basically got two ways of doing it, either going to buy them or you're going to earn them, right? And if you're going to go buy your bitcoin, bitcoin, that's where the surveillance state steps in. You're going to have to give over everything but your firstborn child to be able to actually purchase those SATs. And what we've discovered is that when people purchase their SATs and they pull them off the exchange, it's like the surveillance camera sort of comes with them and sits on their shoulder and nobody really feels at liberty to use their sats, right? It's just like, oh, if I use these, how do I manage the reporting? What are the tax consequences, yada, yada. And, and what we see from our customer base is they're actually using their sats, right? Because they've been generated, they're wild sats, right? Like bitcoin mining is the only way to generate bitcoin. Like that seems like a very simple statement, but I found the more I think about it, the more profound it is. And as a result of you generating your own bitcoin, you're getting them fresh off the network and they're wild and they don't have any history related to them. So people just, just feel more at liberty to utilize them as they see fit. And for me, I actually see the more wild sats that we get out into the economy, the more the circular economy is going to naturally just develop because people don't have that psychological friction that comes with surveilled sats.
- [19:20]
Nathan
So there's no mandate on you guys. I'm not sure where you're domiciled in terms of the company itself, but there's no mandate on you guys to do any sort of, of ridiculous KYC or anything for your customers. They can actually get KYC free sats.
- [19:35]
Ken
Well, as of right now, I don't like to say that exactly because I don't want to draw unwarranted attention to myself. But if you think about what we do, we sell hardware and we maintain hardware. If anything, we're much more akin to a property management company. Right. And so do you know a property management company that really has to kyc you? I mean, they may, but that's sort of optional, right? Like we're not, we're not doing any money transmitting. We're not, you know, people don't give, give me dollars and I give them bitcoin, right? They give me dollars and, and I get them a mining rig with that and then it's their bitcoin. So we're able to just sort of work around like all the issues that force exchanges into the regulatory apparatus. And it's not because we're trying to do anything shady. We're just, just able to take advantage of, you know, standard business regulations that are out there. And we're a property management service, not a, not an exchange.
- [20:34]
Nathan
And I mean, technically, even in the US the IRS classifies bitcoin as property. So there you go. I'm curious too. I mean, I'd love to just kind of touch for a second on that KYC element because I think it's actually really important for folks to understand we've seen so many different data breaches like this coinbase. One recently was quite high profile. I think KYC AML is fundamentally just an absolutely misguided and ridiculous kind of regulatory framework. One, it doesn't work because if it did work, it would work, it would stop money laundering. But it doesn't. It's like less than 1% of laundered money is actually identified and like 99 point something percent of the money laundered in the world is done through the traditional fiat systems. So it doesn't work and it just creates these massive, massive honey pots. I don't know about you, but I don't think the average person probably thinks twice about it. I know bitcoiners do, but I feel like most people are just kind of like, well, this is just what you.
- [21:40]
Walker
Have to do now.
- [21:41]
Nathan
It's kind of sad that we got to that point where people are just resigned to the fact that, yep, I guess I've just got to, you know, give up, you know, my firstborn child basically to be able to do basic financial services. Like it's, it's truly absurd if you've.
- [21:55]
Walker
Accepted that we're living through the fourth turning. Then it's time to get yourself some Bitcoin and then go to Bitbox Swiss Walker and use the promo code walker for 5% off the easy to use fully open Source Bitcoin only Bitbox 02 hardware wallet. Then get your Bitcoin off the exchange into your own self custody and prepare yourself for the chaos that is to come. The world is going pretty wild right now, but Bitcoin is ripping and your stack will soon be worth a heck of a lot more in fiat value than it is today as every currency around the world hyperinflates. So now is the perfect time to get your security locked down tight with Bitbox.
- [22:32]
Nathan
I really want to emphasize that the.
- [22:33]
Walker
Bitbox O2 is easy as hell to use. Whether you're brand new to bitcoin, it's your first time setting up a hardware wallet, or you are a well seasoned psychopath. It is Bitcoin only and fully open source. No need to trust me, you can head to their GitHub and verify that for yourself. When you go to Bitcoin Bitbox Swiss Walker and use the promo code walker, not only do you get 5% off, but you also help support this podcast. So thank you. If you're stuck spending dollars, at least stop earning dirty fiat rewards. Use Fold to earn Bitcoin on everyday purchases and regular expenses. Groceries, bills, travel, home improvement. I literally just earned 2203sats buying a $100Amazon gift card on fold. You don't even need to use the Fold card itself if you don't want to.
- [23:22]
Nathan
You can connect your favorite credit card.
- [23:24]
Walker
And double dip with Bitcoin rewards on merchant offers or go all in. Make Fold the center of your personal finances. Buy, earn, save and even get paid in Bitcoin with Fold. Head the link in the show notes to get started with the ultimate savings toolkit. Or go directly to use.foldapp.com r Walker and get yourself $10 in Bitcoin when you sign up.
- [23:51]
Ken
Up it is. And I, you know, the conspiracist, the conspiracy theorist in me wants to. Wants to go to hey, this is by design, right? But. But I, I try not to go there. I, I just feel like it's it. It is sort of death by a thousand paper cuts though, right? It's like we've been, we've been slowly lulled into this, this sense that there is no privacy and you know, just to back up for a minute about SaaS mining so we don't require anything other Than to be able to. So whatever you want to call yourself for first name. But we need a phone number. We need an email address. So that is what we collect. But that's just more. I need to be able to communicate with you. We tried actually not having phone numbers, and then we realized we couldn't actually reach our customers, and that was problematic. So then we sort of forced, like, you have to give me a phone number because I need to contact you when I need to contact you. And so to be fair, somebody came to me, I would have those records, right? And they could get those records from me. But it's very different than a, you know, where you do the face scan and the whole bit that's typical of KYC exchanges now. And I do. It just feels somewhat diabolical to have to have that. That level of invasion. I hate it personally. And the one that really goads me is when people always say, like, hey, like, I have nothing to hide. Why should I care? And I'm just like, well, why do you have bathroom doors or blinds? You know, let me. I'll take those for free off you and resell them and make a buck, if you don't mind, you know, but. So I. I think. I think as bitcoiners, we need to drive back that privacy is important. Because actually, the way I really. The metaphor or the analogy I like to use most often is almost all of us have walked into a room and not noticed that there's a surveillance camera in it, right? And then out of the corner of your eye, you notice there's a surveillance camera. And every time you do, your body changes. Like, as soon as you know you're being watched, your behavior changes. And just that simple experience, I think, goes to show why privacy is important. It's not that that anybody has anything to hide. It's just we know when we're being watched, we behave differently, and we don't behave as our authentic selves. And I think it's important that we are able to behave as our authentic selves.
- [26:10]
Nathan
I mean, there's countless studies. I'm forgetting the big one or the famous one now. But it's literally been proven that the presence of an observer materially changes the behavior of the observed. This is just a fact. Whether or not not you think that you're doing like you are, you are changing your behavior. And I think that's actually a fascinating way to look at it that, you know, you're. Even if you don't realize that you are. When it comes to bitcoin, like you are doing things differently than you would if you knew no one was watching.
- [26:39]
Ken
Yeah.
- [26:39]
Nathan
And not that you're going to do bad again, it's like, it's not like you're going to do bad things for some reason. You know, we've got the idea of innocent until proven guilty in our legal systems and yet when it comes to anytime you want to touch your money, me, it's guilty until proven innocent. And also not just guilty, but we're classifying you and treating you the same as we do drug dealers and terrorists and like child traffickers. Like that's insane that a normal person who has probably never, you know, never been arrested, never doesn't have any marks on their record, is somehow treated the same as the worst criminals. And guess what? They don't even catch the worst criminals. Like that's the other thing. Like they, it just makes the lives of ordinary people way worse, way more cumbersome and again creates these honeypots where actual criminals then can go and take advantage of you. Like it's just, it screws the law abiding citizen on so many levels. And I mean, yeah, I would love to see that that regime abolished. Sadly, I don't think we're getting there anytime soon. But at least there are ways for us to, to act a little bit more freely thanks to bitcoin.
- [27:42]
Ken
Yeah, I agree. And you know, I think listening to RFK Jr. When he was campaigning for president last year, he said something that really struck with me, that the right to transact actually precedes all other rights. And I think when you don't have that sort of authentic ability to transact and have that freedom, I think it impinges on the rest of your freedoms. It sort of shuts them down to a degree. And so I actually think one of the, I hope a, the, the, the, the bitcoin community engages in what I think is actually the most important fight that we could possibly wage, which is to get inserted into the Bill of Rights of freedom to transact. Because I think when the framers of our Constitution put our constitution together, there was no technology by which you could even imagine that anybody could stop your ability to transact. I think had there been technology that they could see that that would be threatened. I absolutely think that would be in our Bill of Rights. The freedom to transact couldn't even be conceptualized at that point. It's not included in our Constitution. And to me, as soon as I heard RFK Jr say that, I was like, well, he didn't Advocate for a new amendment to the Bill of Rights. I'm saying that, but he did mention that and it was like, yeah, if you don't have the right to transact, how are you going to go buy the sign to go demonstrate with? How are you going to go buy the gun to show your second amendment rights? How are you going to do all these things to actually protest if you can't actually buy anything? And so I actually think that that's, that's probably the most important hill for us as a bitcoin community to die on. Because the U.S. enshrined so many of the property rights that are important for the entire planet. And because we don't have that one, the government's able to constantly push in on it. And I think that threatens all of our long term liberty without having something substantially and legislatively put in place to protect our right to transaction.
- [29:41]
Nathan
I would certainly support that amendment. And it's one of those things where you can very easily prove that this right is kind of primary in the sense that what's the first thing that any dictator does or any leader of Canada, let's say, when they want to shut down a peaceful protest of truckers, what do they do? They cut you off from the financial system. They cut off your ability to transact freely. That's the first thing they do. It's the first, first thing that a dictator, an autocrat, Fidel Castro's son will turn to is that cutting off the freedom to transact. And so yeah, I would love to see, I don't know if we're there yet in terms of that as a constitutional amendment, but I hope that I think we're on the right track. At least we're moving in the right direction. I Hope countries implementing CBDCs, probably less so, but it looks like for now we're, we'll just maybe get some private CBDCs, not fed issued ones. So let's see. But switching gears a little bit, one of the things I wanted to talk to you about was misconceptions around mining because I think there's misconceptions on let's say the normie, the precoiner side. Of course they've been fed bad information for a while, but there's also probably misconceptions on the side of bitcoiners. So maybe wherever side of that you'd like to start on. Can we walk through just like some of those misconceptions? What are the things people get wrong about bitcoin mining?
- [31:11]
Ken
Yeah, this is probably my Favorite soapbox to get on Walker. So you're going to have to bear with me here for a minute.
- [31:16]
Nathan
I'm ready.
- [31:17]
Ken
So I think first let me give some history that I think is not talked about enough within the bitcoin community. So if you go back to OGs up until like 2012, most of them acquired their bitcoin through mining. Mining, right. And that was how bitcoin was designed by Satoshi to distribute bitcoin, was you mine it to acquire your bitcoin. Then Coinbase was the first to open their door as an easy user experience. And most of the bitcoin community chose to use Coinbase. And we've since gone on from Coinbase to all sorts of other exchange based acquisition approaches. But I would actually argue that our bitcoin community has moved for convenience to exchanges to acquire their bitcoin. And in the long run there's been a big question mark that's out there right now about exchange based liquidity. There may come at a point in time, not saying it will, but I personally think it will happen because of how we behave with money and how we tend to hoard the good and spend the bad. But I believe that there will come a point in time where you're going to have to earn your bitcoin. And the easiest way to earn bitcoin in a predictive manner is through mining. So I think the way that we've acquired our bitcoin over time we went from mining to exchanges. And I believe the arc of history is going to bring us back to mining. And the misconception that I have seen about mining, the primary one is it's been driven by the mining industry as a whole. We've confused the bejeebus out of people. And what I mean by that is we have people that are looking for a fiat return and we have people that are looking to acquire bitcoin. And if you conflate both of those, it equals confusion for the masses. And that's in essence what the mining community has done. So very simply put, if you're a bitcoiner, mining is the only way that you can generate bitcoin. Right. And as a result, from an acquisition standpoint, the right approach to evaluate a bitcoin mining opportunity is not an ROI based opportunity. Right. ROI means return on investment. I put dollars in. How long does it take to get dollars out? You by default, having that conception about a mining opportunity means that you're looking at it from a fiat mindset. Dollars in, dollars out, the right way to look at it as a bitcoiner is are the chats sats I'm acquiring by mining, are they equal or lesser in value to an exchange where I could go buy those and I have the upside benefit that I get wild sats as well. Now, now one of the things that I want to mention about us as a bitcoin community having decided to go to exchanges to acquire our Bitcoin is a very important downstream consequence has now arisen and that is that we've ceded the network itself to fiat hashing. Right? Most of the hash rate that is on the network is there primarily to acquire fiat and it's using bitcoin as a proxy to do so. And as a result if you are a fiat hasher, you're not necessarily aligned with the long term incentives of the network. You may be, but you also may not be. And I'd argue most of the mining centralization issues that we worry and fret and hand ring about are all because we as a community have decided to go to exchanges to acquire Bitcoin instead of dominating the bitcoin network, with that being our primary way to acquire bitcoin. And so I think that as much as Ocean is working to decentralize the mining pools which we love, we're about ready to release that to the public for all of our customers to be able to mine with Ocean through our platform. I think that we actually have a moral incentive as a community to actually take back the network. And I think we see the first impulses with that right now with the Bitax community where people are getting hands on, it's a terra hash, but they have it on their desk and they're having this good experience and feeling like a connection with the network itself. The issue though is a bit access one terrahash, right? The average bitcoin miner on the industrial level is 250 times that, right? So it's going to take a God awful lot of bit access to get out there. And so that's where a company like ours like steps in and it's like hey, you can get an industrial sized mining rig because we're aggregating client purchasing power to get rack space at a low enough energy price that we can get you sats at a cheaper price than buying them off an exchange. So not only do you get more SATs for your dollar, but you also help to change the equilibrium between fiat hashers and bitcoin acquisition hashers.
- [36:10]
Nathan
Let me just touch on one of those points there. You said, so the economics actually work out with you guys, where it is cheaper for folks to acquire bitcoin via this hosting them with you, for example, than it would be for them to just take their fiat to an exchange, buy it like you, you actually have low enough energy costs with where your data centers are that you're able to achieve that. Is that correct?
- [36:33]
Ken
Yeah. Yeah. So, so one of the things that I realized is that analysis, how do you evaluate your cost per bitcoin has horribly confused people as well. So the, the way I looked at it was how do I get this as simple as possible. So you can go to our website and you can see we've got a, a little calculator there and it shows you, okay, based on the mining rigs we offer, how much does it cost for you to run it at day? How many SATs will you generate? Right, because if you know how much hash rate you've got, well, you know how much of the network you're mining. So statistically, this is how many SATs you should receive. If you know those two numbers, you can divide those and see what your price per bitcoin is. Now that's a very, very simple analysis. People like to make it much more complicated than that, but that's the core of it. And right now, if you look at that, we call that your daily cost to mine a bitcoin. We can get people bitcoin for about $45,000 on our platform. What that doesn't take into account and be very clear, and there's not trying to be any hand wavy here is you have to buy a mining rig and when you're done using that mining rig, you can sell the mining rig. And that piece is what's confused people is because the price of the mining rig, it fluctuates. And the price, when you can sell that mining rig, it also fluctuates. And how you decide to play that game is up for debate. But what's not up for debate is when you're plugged in and mining, this is what it costs and this is how much bitcoin it'll generate. I can tell you that right now. So if you strip all the noise away and just look at that. I've been showing this at different conferences I go to, to different bitcoiners. I'm like, hey, do you know this is the daily cost of mining bitcoin? And almost without fail, every single one of them's like, are you kidding me? I didn't know that. You know, it's just that very simple idea of comparing to the Price on the exchange is not being done by our community and I think as a result we're sort of missing the forest for the trees about what mining is, which is an opportunity to acquire bitcoin, which is how Satoshi designed the network. So to me it's kind of like we've had this big exodus away from mining and I think we have to come back to it to actually resolve some of the problems that we've seen on the network.
- [38:47]
Nathan
So with regard to like, okay, I get that the, your daily like cost to mine bitcoin is, you know, you're saying it's like 45,000 versus whatever Bitcoin's at right now. 107, 108. Like that sounds great. You mentioned obviously that's not taking into account the actual purchase of the rig. So like, and grant people can sell these rigs at a later time. But what's the. Do you have any stats on the average amount of time it takes like the payoff time for one of these rigs? So how far until you're in the black? Basically, given that there is an initial capex.
- [39:17]
Ken
There is, there is capex. And what I see is. So part of what I want to do is to get bitcoin backed loans to sort of work around that particular argument. But if you look at, if you look at it, it's okay to take that and break it down. How do you calculate that? Right. Are you going. And this is where the complexity comes in because there's no agreed upon way to calculate that. So yeah, you're going to put dollars up front. About 5,000 is kind of a typical number to get a bitcoin mining rig. So let's say you put 5,000 up front. Well, you're going to be sell that at the end. And there's been moments where you can sell that for multiples, but also kind of more standard if you're not hitting that timing right is to sell it for a fraction. Right. And so you have that capex that has been spent. Now how do you calculate your return on that from a dollar standpoint? And the answer is it depends, right? It depends on how you choose to manage the bitcoin when you acquire it. Are you going to just sit on the bitcoin or are you going to sell enough of your bitcoin to pay your electric bill? Or are you going to sell only all the bitcoin to pay your electricity bill? Right. There's sort of kind of three gradations there. And depending on that determines how long it takes to pay for the mining rig. That's why for me, I try not to get into that argument. It's there. Absolutely it is there. But what I find is just the very core value proposition of hey, this is your daily cost to mine of bitcoin is just not even understood in our community. And so I'm just trying to get that idea across and we'll add, we'll stack on more layers of, of explanation along the way. So you're right, there is a capex and I just want to get the core message out before I get too involved with that part of the conversation.
- [41:02]
Nathan
Not trying to have a gotcha at all. Just genuinely curious. As somebody who's interested in this myself, I need to hook it up. Shout out to average Gary, who I bought this bit axe from in DC, paid in SATs of course. And yeah, Gary was nice enough to bring one to D.C. for me, so that was nice of him. But you know, I'm curious about this because obviously like realistically I'm not going to get an industrial grade miner and plug it in where I live. First of all, the, the electricity costs are prohibitive where I am and so it just, it wouldn't make any sense like if I was, you know, that's unless I just really wanted completely KYC free sats and I was willing to really burn, burn a lot of of my excess value to do so. Which like there's an argument to be made for that as well. Well but on this side. So you know, through like you mentioned reselling these after. I'm just curious at like the mechanism of that. Do you guys actually facilitate that for your customers? Like is that something that's easy or is it like you have to take possession of it and resell it later like you know, like when you're done hosting it. What's the, and what's the actual like what is the shelf life on one of like the, you know, modern kind of, you know, these $5,000 miners that you're talking about. Like what. How long can they typically run if well maintained?
- [42:18]
Ken
Yeah. So there's. How do I end? So useful life of a mining rig is not actually what you think. When we think of the useful life of a dishwasher, we think when is my dishwasher going to stop working and I need to go buy a new one. Right. When you think useful life of a mining rig, it's actually less about when it stops working and when and more about when is it not competitive enough for me to generate enough sats and that time frame, it's a bit dicey to say we use a conservative number sort of industry average that I've heard is about four years. We like to use three in our analysis just to be a bit more conservative. But yeah, you're going to get at least three years of life is what we say out of a mining rig. And during that time, you know, our approach, again just trying to be very simple and make very simple approaches to the entire thing is cycle your fiat through your electric bill into a bitcoin position. Hold your bitcoin because if you're a bitcoiner, you know, over the course of the next four years you're not going to have anything but upside in that. Now as far as what you're going, why you wouldn't want to mine at home. Yeah, it's probably my. So you've got electricity issues, right? Like most people don't realize that the high end mining rigs these days are about the equivalent of plugging in about five microwaves. Most people need to rewire their houses to be able to handle that sort of electrical consumption in a single device. You've got the noise, which we know is an issue, but probably the biggest issue is, and it's a kind of a result of the first two is the disputes that happen between couples when couples try to mine from home. Genuinely that has been the biggest thing that I've heard a lot of people that are mining with us that used to mine from home will tell us is hey man, I just had too many arguments with the missus trying to mine out in my garage.
- [44:07]
Nathan
Yeah, the garage gets a little bit deafening, I'm guessing unless you're running some immersion ones which I suppose you need a little bit more technical chops to be able to keep running, but.
- [44:20]
Ken
Okay, that's right.
- [44:21]
Nathan
And I, I appreciate, you know, you walking through this and again, not trying to have any gotcha, just trying to like understand better for myself as somebody who's interested in doing this. Are I guess from your side like are there any other big misconceptions on the side of bitcoiners specifically about mining, you know, or I mean maybe about like, does some of it come down to like the kind of the dangers of centralization or I feel like, like people are starting to get better or bitcoiners are starting to get better educated about mining pool centralization risks. But I feel like it's still not even. Of all the things that are debated within bitcoin, this is one that really should be debated A lot and talked about a lot and still gets hit on the back burner a little bit. I don't know if that's your feeling as well.
- [45:05]
Ken
Yeah, I think the more we get the bitcoin community mining, the healthier the entire community will be. Because if you look at it, the mining community has basically been separate from the rest of the bitcoin community. Those two groups largely don't talk. I think like SaaS Mining, I think Ocean. I think we're two of the first entities that really exist that are trying to create a bridge between those two communities. And I think that what we see is because there's been a lot of sort of fiat hashers or fiat service providers in the industry. They've not always treated the bitcoin community the way they should be. Right. I'm trying to be nice and dance around some of the negatives that have occurred, but as a result, it's sort of left a pockmark on anybody that is trying to help people mine bitcoin. And what I saw when I got into this, so I had about a decade of experience helping to construct rooftop solar systems, which I cut back to it. But there's a lot of analogies between solar and bitcoin mining that are surprising. But what I realized is that, that nobody was coming in and looking at this properly from the standpoint of, okay, Walker, I'm. I'm going to hold on to and manage a piece of property that you own. There is no way for that relationship to be anything other than high trust. Therefore, if I do not optimize around that being a high trust relationship, I'm going to lose like just straight up. So that's why when we came to the market, we came out the gate and said the only way to build this trust is if we fully align incentives with our client. And that's why we chose not to mark up electricity prices, not mark up the hardware, and instead just pass through our costs on those and instead we'll take our cut on the back end the same way that our clients do. Because if our clients aren't generating bitcoin, we're not generating revenue either. So we're going to share the pain and the gain together. And in doing so, like I can optimize trust.
- [47:01]
Nathan
Trust. No, that. That makes sense. Am I. I'm remembering correctly. There have been like, there have been some other, let's say, like hosted mining services. Right. And there was. I'm forgetting which one it was exactly. That may have, like, there were some issues with it. In the past and I'm not trying to, you know, dump on, on anyone here, but like there have been problems with these kind of services because, and again, like everything comes down to incentives, right? So I mean it's, it's, it's, it's good to hear. I think that like the model that you guys have probably makes the most sense for this just in terms of like, yeah, you guys are providing a service, people pay for that service. You're not like making your, you're not making your margin on, you know, kind of opaque markups of elements of the, the service you're providing. It's just, it's the service itself. Like to me that's, that's a, it's an honest way to run like any business, you know, like, because if it's anything that's like free, like generally isn't actually free and you're somehow getting screwed even more on the backside. So at least that's my general experience.
- [48:03]
Ken
Yeah, I concur. And if you look at, I mean you've basically, you've got only three ways to make money in this business. You can either mark up the hardware, mark up the electricity, or take a share of the bitcoin out the back end. And every business has got to be paid somehow, otherwise they can't give you the service. And if you look at the first two, if you're going to mark up hardware, does that mean that you're necessarily going to plug the mining machines in? And if that's where the most profit is coming from, are you going to care about how long it takes to plug in the mining machines or how they actually function? If your profit is coming from electricity, are you going to care if you are actually providing hash rate out the backend or are you just selling electricity, meaning that if it's broken but still drawn electricity, do you care? It's still getting your profit in. So it's only by the alignment of the third one, the block reward, that you can ensure that you are actually aligned with what your client wants. Which is why we actually offer a performance guarantee. So if, let's say you've got 200 terahash machine, right, that, that the computational power is 200 terahash, we actually guarantee in our, in our data centers that you will receive a certain percentage of that across the course of a year. And the reason we put that in place is because that's actually what care our customers care about. They don't care about the actual uptime, whether it's 100% or 90% they care that they're generating the bitcoin that their machine can generate and that's terahash. So we aligned a rig guarantee around that to try to also align our incentives even further. Because then it's like, okay, not only are we incentivized from this is where our revenue comes from, but now we're also going to promise it. And I don't know if you're not incentivized to generate your revenue the same way. If you would go down the path of then putting a rig performance guarantee in place, because why would you. But we're already there anyway, so why not just take the step that.
- [49:58]
Nathan
You think? So we talked a little bit about within the bitcoin community, but there's obviously a plethora of misconceptions outside of the community that's, you know, that's been driven by a lot of junk science and propaganda funded by the, you know, likes of Ripple, propagated by Greenpeace, mouthed off by Elizabeth Warren, the Alex Devries of the world. World. I can name many, many instances been fought by folks like, you know, Daniel Batten, Troy Cross, many, many others. Where do you think we're at right now with the biggest misconceptions about bitcoin from outside of the bitcoin industry? From the pre coiners? Where are we at with that? What are those biggest misconceptions right now in 2025?
- [50:46]
Ken
So where we are right now is, hmm, I think we lost a lot of those people. I think that what I see. So first of all, our product we market specifically to the bitcoin community. You need to be pretty far in your journey to be somebody that's looking to acquire bitcoin and use it as savings. Right. And there's a lot of people that are further up in the no coiner precoiner sort of funnel that they're not looking to acquire bitcoin and sit on it as savings. So I don't have as many conversations with those people as I probably should, but when I do the energy fud, unfortunately Daniel Batten, Troy Cross, you know, Bob Burnett, we've had a lot of very vocal people who've done a wonderful job of combating it and I think largely at the academic level we've done so. But I think it's going to take a very long time for that to filter down to the common man. Because unfortunately, just as a species, if you look at it, when there's something new and unknown, our deep default is to create a fear based story. About it and that's what happened to our community is we were unknown bitcoin mining bitcoin and as a result it was very easy for the incumbent that were disrupting the existing financial system to come out and say let's pray on this and let's put a lot of FUD out there. And that FUD has imprinted our culture to a large degree and I think it's going to take a long time for that to be disrupted. It is what it is. It's just sort of an entrenched fight. This, the conversations like you and I are having and we could go into how the incentives are there for bitcoin to be mining with clean energy and you know, it's becoming better over time. There's lots of data. But at the end of the day that narrative has planted itself with a lot of people and they'll come around eventually. But to me trying to the battle's been won and it's going to take a long time for people to come around to it. You're ever show.
- [52:50]
Nathan
I think that's fair. I mean just speaking from. As you know, I was in, in D.C. last week for the Bitcoin policy Summit and was talking to some staffers and they quite literally were raising the like the most cliched bitcoin mining FUD that you can imagine and another set of staffers raising like incredibly cliched AML KYC fudge. You know, also some of the. They're not say they're all bad. Many asked very good questions from a place of genuine curiosity and saying, look, I don't understand how like what this is or even like can you explain the difference between bitcoin and crypto? Because I honestly don't get it. Like that's great when you get honest questions where it's like someone's genuinely wanting to learn. But you can also see to your point how even though at the academic level it's becoming an untenable position position to say bitcoin mining wastes energy, right? Like that's if you're doing any sort of decent academic work, you just make yourself look like an idiot by saying that. But the average person, even the average staffer in D.C. or the average, you know, you know, senator or congressperson in dc, they're not even close to there yet. And the average citizen is still not close to that. And so it's like, man, it's tough because it's like we've won the battle on one side, but the other side doesn't even know that the battle has been won or they just don't even care about. You know, it's like, so. So I don't know if it, if it matters, but I would like to get in because one of the things I talked about in D.C. when some of these staffers were asking about or bringing up some of this mining fud was like, look. And they were like staffers of a democratic, you know, congressperson. And so I was like, okay, what angle do I hit him with? Well, obviously, look, you care about renewable energy, right? Well, bitcoin mining is the most renewably powered industry in the entire planet. Like by a long shot. Like, see, it's a good thing. It's not what you've heard. Where, where do you think we're. We're at with that? Or can you talk a little bit about how that that narrative has really proven. Can we talk about the incentives really, of. Does bitcoin mining facilitate this renewable build out, as many have posited?
- [55:03]
Ken
Yes, simple answer. And the reason why is because the incentives are there. Right. And so I think that's actually one of the secret superpowers of bitcoiners is we have the ability to follow incentives and see the likely outcome without fail. Almost every bitcoiner I know has that capability. And what you can see with mining is that it is no different. Right. Like bitcoin miners want the cheapest electricity they can find. What's the cheapest electricity you can find? It's the, the electricity that people don't want. And why do we produce electricity that. That nobody really wants? Well, it's because it's produced in the wrong time or the wrong location or combination of both. Right. And so. Okay, let's peel the onion, one more layer. What energy sources are doing that? Well, a lot of times hydro is not geographically located right next to the city that's going to consume it. Or you've got wind and solar. Right. So you look at those three energy sources and then off grid, flared gas, right. That one gets a little more complicated. But it's actually carbon negative. When you break down that argument and when you look at it across the board, there's just all this energy out there that's produced at the wrong time at the wrong place, and it's all carbon neutral to negative. And so naturally, bitcoin miners are going to gravitate to consuming that electricity because the network drives them to increase their profit margins by driving down their electricity costs. So it's not a surprise that the network is getting cleaner and cleaner it's actually a surprise that people are surprised that the network is as clean as it is.
- [56:51]
Nathan
Yeah, I mean, it's honestly like amazing. The stuff around, around either landfill, like landfill gas, methane, or just flared, flared gas broadly, I think is one of the most fascinating sides of things. Just because it's like once you learn about that, it's like it just. You look really silly for trying to be against something like that. And there's that. I forget who was the first person to say it may have been Gladstein, it could have been someone else. But the whole idea that if you're not mining bitcoin, you're wasting energy. One, it's true and two, it's really satisfying to see that thesis start to permeate a little more. You see, speaking of hydro, I think that's what the Kingdom of Bhutan has been using is hydropower to mine a shocking amount of bitcoin with energy that would otherwise have been wasted. At the same time, you've got the United Kingdom, which is curtailing like billions or at least over a billion dollars worth of energy per year and passing the cost of that curtailment onto the taxpayer who already has high energy bills. They have high, like they have high energy bills, but they're paying, they're paying people to shut down their energy production. That's just nuts. Like that is, that is so insane. Like your energy should be way, way, way cheaper. Your energy should be almost free at this point. But no, because you have a terribly managed system that apparently won't, won't come around to bitcoin mining. You're literally having people spend more money just to run energy into the ground like that, like that just blows my mind. I'm sure you as somebody in the industry that's like probably even more aggravating to, to you than it is to me.
- [58:33]
Ken
Yes, yes. And I think I've just developed a thicker skin around it or more patience around it because I actually. So this is going to sound odd, I lear in rooftop solar. So I'll give you an anecdote that still to this day I find mind boggling, but I was selling rooftop solar and I had, you know, these were house appointments I was going to. And literally across the street from one another, two homes. It was a housing development complex and so the homes were identical, just straight cookie cutter homes. I went into one house and it was. Had an electric bill. And this is circa 2010, right. So I'm dating myself here, but had like a 50 dol month electric bill in California. I went into the house across the street. It was about $450. And that homeowner in this home sat there and scratched his head. He's like, I know my neighbor has a very low electric bill and I can't figure it out. The only thing I do are turn on these few switches each day. And, okay, what are the switches for? One powers my air conditioning. And I notice it's like a 95 degree day outside and it's 55 in his house. Okay, that's using a lot of electricity. What's the other one? Oh yeah, that runs my pool. Oh yeah. The other one is a tanning booth that I have back there. I like to tan, right? And this guy had no conception that the number of switches he was flipping does not correlate to the electricity he's consuming. And it occurred to me at that point, I was like, oh, when human beings can't see something, a lot of us can't understand it. Just straight up, we have no clue. And so when it comes to electricity, it fits in this box where it's like a mystical substance. I think for most people, and I think for a lot of us as bitcoiners that are so sort of like re tethered ourselves to reality. As we get hard money going in our lives and start extending our time horizons and thinking about saving for our families and for our futures, we're just getting grounded and back to reality. The Nixon gold shock, I think just untethered society. And the bitcoiners are the first one that are getting grounded. And we see this stuff and it just seems so dead obvious. But to most people that are just running around helter skelter, they're just judging their electricity consumption by how many switches they flip. They think electricity, electricity is stored and can't be wasted. I mean, just the basic fact that electricity, the grid is a circuit, you use it or you lose it. That is just how the grid works. There's no storage mechanism, right? So if they're pushing all this power in, it's not being used. The rest has got to go to ground somewhere in the system. So just like how the grid itself functions, how electricity functions, like all of this is absolutely just over most people's heads. And bitcoiners are coming to realize what this stuff is and be like, you guys are crazy. Like, you just don't understand and you're making the decisions on how the grid works. What electricity price? I mean, can we at least get back to the laws of physics for our reality?
- [61:29]
Nathan
I mean, I'm sorry, this. I just got to touch back on this guy because so he was legitimately thinking, like there's like a one to one relationship. Like every switch that I flip is just using the same. It doesn't matter what that switch turns on. It's just like that's just using my one unit of electricity. Like that's.
- [61:44]
Ken
That.
- [61:44]
Nathan
I mean. Wow.
- [61:45]
Ken
Yeah.
- [61:45]
Nathan
Yeah.
- [61:46]
Ken
Genuinely, the most surprising part was I managed not to laugh in his face because it was, it was. I was. It was rough. It was rough. I. I had to really snort that chuckle.
- [61:59]
Nathan
Dear Lord. I mean, that's like. It is, it is just indicative of the fact that most people don't. Again, they don't think that hard about most things. Things like even the things that really affect them and affect their, their bottom line on a. On a daily basis, they're not that curious about them. They just can't be bothered to care or to understand or maybe don't have the capacity to. To understand. But like, you don't have to have too much mental capacity to understand that, you know, a little tiny light bulb is going to use less electricity than heating your pool, for example. You know, like that. It just. That's mind blowing. So. Okay. A lot of people, granted, are still going to have strange, incorrect, preconceived notions about bitcoin mining for a very long time. Where do you think we're at from a nation, state or governmental level? I know you're not in the US anymore, but obviously you're still. You keep tabs on that closely. The world is a big place. We mentioned the kingdom of Bhutan earlier. There's other governments who are also mining bitcoin, whether, you know, in. In broad daylight or behind closed doors. Where do you think we're at from kind of a nation state mining perspective? Do you think this is something that's increasingly just becoming kind of a, like a necessity for countries to pay attention to? Or do you think that a lot of them are still kind of asleep at the wheel like the average person is? Because let's be honest, governments are mostly run by average people with higher levels of psychopathy than the general population. If to put it kindly.
- [63:30]
Ken
Yeah, to put it kindly. I think nation states are going to focus on a lot more than your average Joe, unfortunately. And this is. It saddens me to say this, to be completely frank with you, Walker, but I think the retail that is in now is one end of the barbell. And I think institutions and nation states are the other. And I think that that's going to absorb most of the supply. And I think all the retail that have not adjusted adopted bitcoin at this point or have started their stacking journey, I think they're not going to be starting until after it's socially accepted. And that's, that really is, is rough to sort of come to accept. But I've just seen in the, the conversations, I think the biggest inflection point for me was just watching how everybody in the community got excited about us crossing 100k for the first time. I think for so many of us we thought that was going to be a psychological tipping point for all of our friends and family to say, look Walker, you were, were right, I was wrong. I'm going to start stacking bitcoin now. And that didn't happen for any of us. And the fact that didn't happen for any of us is a sign that I just don't think that there's a number that that will happen. There's no capitulation point for retailers. I think a lot of us have, have, have imagined and wished for, but I do think that there is a capitulation point and it is occurring for nation states. And I think the, the, I think the money printer and the ownership of the dominant money printer is the equivalent of Game of Thrones for our species. And we've been fighting over that money printer for so bloody long that to see a new entrance in the ring at a nation state level has the leading contenders vying for it now. And I think it's a game that none of us are really going to understand until history books are written about it 100 years later. But I do believe that we're starting to see the nation state adoption curve playing itself out at this point. I don't understand exactly where it's going to go or what that means, but I think we've well moved past the retail period of accumulation.
- [65:42]
Nathan
So I mean, safe to say you're of the opinion that hash rate you would view as or countries will increasingly start to view as like a strategic geopolitical priority?
- [65:53]
Ken
I think so. So. And I don't think that, I mean, do you know many government programs that are run all that well?
- [66:05]
Nathan
Some military.
- [66:06]
Ken
Military is about it. Right. And so I, I'm thinking, okay, you know how to run military. Is mining all that close to military? Yeah, maybe. I don't know. I. So I don't know how it plays out, but I think it's going to be a long time before the mining industry gets subsumed by the Nation state mining and it's just for that simple reason. It takes, it takes like I could see being subcontracted, right, where maybe Trump goes to some of the pubcos and says hey boys, we want to contract you to go monetize all this, this electricity for us that we're subsidizing with our money printer and we want all the bitcoin for it. I could see that happening. But as far as propping it up and, and building their own like branch of the military for mining at this point I think we got some years ahead of us just given the pace at which government gets good at doing things.
- [67:02]
Nathan
Talk a little bit more about mining pool centralization because we touched on it a little bit earlier. You guys mentioned that you're going to start allowing redirect or people to direct their hash power to ocean. Can you talk about this just for folks who may not be super familiar with why this is is such an important thing because a lot of people just may not know about it. Maybe they haven't seen that chart showing. It's a pretty scary chart to look at when you see that what three entities control whatever high 70, 60, 70% of the hash rate. It's very centralized from a mining pool perspective. And to me I view this as a massive risk that should be paid attention to. I think there are also, also some solutions in place for alleviating some of that stress and you know, but the first step is like make people aware of the problem. So what should people know about pool centralization and its effects?
- [67:58]
Ken
Yeah, I think first of all. Excuse me. I think first of all people should be aware that Bitmain is the 900 pound gorilla in the room on the network. Right. Not only do they have the lion's share of the hash rate that they're selling for hardware, but they're also running ant pool that is a proxy for several mining pools and that was just discovered recently. Right. So not only are they selling the hardware, not only they mining, but they're also controlling a lot of blocks and the block templates that are being made and pushed out there. Right. And so to me the fact that we have that level of centralization risk with one actor is the ultimate issue more than anything. So yes, if you add up, I think it's foundry plus Ampool plus there's one other sort of. Is the grouping that people worry about. It's less that particular grouping that I worry about and the impact that Bitmain has across the entire ecosystem because the CCP can come in at any time. And say there's a throat to choke at Bitmain, right? That's what we always worry about within the bitcoin community. And so because that threat exists, it could be utilized. And I think that we should be mitigating that. And we should be mitigating it by having different mining hardware that's available. And I'm the column kettle black, right? We sell a lot of bit main equipment. So it's not that I'm anti a bit main specifically as I am the, the undue size influence that they have on the network. So to me that's, that's the biggest concern I have. And you know, Bit Deer is coming to market with new mining rigs, Rodine is coming to market with new mining rigs. So those are all wonderful things on the hardware level, on the mining pool level, you know, Ocean is the, is the most dominant hype or opportunity we've got to decentralize there. Demand is another mining pool that's coming to market that's using Stratum V2. So Datum and Stratum V2 are two protocols by which block templates are put back in the miners hands to generate their own blocks. And if you're not generating your own blocks, then in essence you're seeding that right to somewhere else in the mining pool. And I think what we're going to see as a bitcoin community is that we're going to start to see the mining pool turned into like a stack, right? Where we're going to start to see that you generate hash rate. Hash rate generates a certain number of shares that you're going to be rewarded for when a mining pool finds a block. But that pool is going to be kind of an accounting function and a distribution function and there may even be like a different layer. There's going to be a different layer. That's where datum and stratum v2 are for where the block is being created and then where the, the block actually gets propagated through. Like I think it's going to get a lot more complic and that's actually a good thing for the entire network because it'll de risk the centralization impacts. So I think to your point Walker, the fact that we're all so focused on it and awareness is growing around this issue is the starting point. There's not too many issues that we focus on as a bitcoin community that we don't see progress on. This one is harder than a lot of others though because it involves moving molecules around meat Space. Right. It's not just software and code that can fix things. It's like we actually have to move electricity around to point hardware at a certain place and all that. So it's going to happen. The focus is there. But yeah, for me, the two big risks that I see to the network are mining centralization, of which I think SaaS Mining has some impact on it to. To change the incentive set on why people are mining. But. But downstream of that, I also. Quantum attacks are the other one that concern me. And so, you know, as much as we've been arguing about things like OPER turn, which I think there's a legitimate, interesting debate there, actually think that it's the wrong debate and wrong use of our community's focus, I would much prefer to see all of us working together to solve the mining centralization issues and the quantum issues that seem to be heading down the pike at us.
- [72:12]
Nathan
So let's touch on the quantum thing for a sec then. Because the way I see it, it's like, okay, if we do get to that point, and I feel like this is often something that's used as a gotcha for Bitcoin, well, what's going to happen to Bitco? And, you know, a quantum computer can just crack it and, you know, then all your little bitty coins will be, you know, will belong to the quantum computer. It's like, okay, like, if that happens and if it can, you know, if it's able to break that level of encryption, well, then that means it's breaking all the encryption everywhere in the world. Like, like everything. So, like, probably the bigger issue is that literally everything everywhere will shut down, like, and we're going to descend into chaos, and it won't matter if you have Bitcoin, because the only currency that anyone will care about is ammunition. But maybe I'm wrong. Maybe bitcoin is uniquely vulnerable. I don't know. I just. I see it as one of those things where, like, yeah, could this be a problem in the future? Absolutely. Am I also confident that we have ways in which to protect from that quantum threat and that Bitcoiners are probably more aware of that than folks in a lot of other industries also using strong, strong encryption? Yes. So I'm curious where you sit on that. How much of a threat do you realistically think that is? And is that threat insurmountable?
- [73:28]
Ken
So I think that having a technology that's a store of value makes you uniquely vulnerable, not from the technology itself, but from people's perceptions of that technology. The fact that we hear it so much, I actually think limits our adoption because people's fear of that, whether true or not, back to what we were talking about earlier, if there's something they don't understand, then it becomes a boogeyman to get scared about, right? And I think that that's probably playing itself out. So for me, I'm actually, I'm in your camp actually, I'm not that worried about it. For me though, it's important that we as a community create a game plan and know when to deploy that game plan. And the fact that we don't have an agreed upon game plan at this point and know when we plan to deploy it, that's my issue. And maybe it's just because I did boy Scouts as a kid and have it drilled into me to be prepared, but that seems to me to be just an obvious, like dumb. We know quantum's coming. We know at some point it does pose a risk for us. Why don't we have an agreed game plan in place and why don't we focus on agreeing on that game plan as one of our priorities right now? Because we know it's an actual risk when it occurs. A lot of these things, like the op return debate, a lot of it is just thrown around theoreticals on what if this happens and that happens. And I think the great fear around the opportunity debate was, well, miners are going to centralize and we're going to have all sorts of problems in the future. It's like, yeah, maybe we don't really know. There's no counterfactual to that. It could happen, it might not. But we know as soon as quantum technology is at a certain point, whether people choose to or not, it could be pointed at in Bitcoin addresses and used to break those. So like that is just a hard fact, right? So let's just be prepared and get a game plan together. We agree to.
- [75:25]
Nathan
And if not, then we've got a, you know, a quantum resistant fork and you know, non quantum resistant fork and, and, and we'll see what happens there. That's one thing that's clear. It's consensus is rough and messy when it comes to, to Bitcoin, but. Okay, well Ken, we've covered a lot today. Was there anything that we did not get a chance to dive into, anything you, you wanted to go deeper on or anything we didn't get a chance to cover that, take a few minutes to go into?
- [75:56]
Ken
H. No man, I think, I think if I, my instinct is to go to just shill what I'm doing with my project but I'm not going to anymore. Yeah, we've already, we've already talked about it. I think, I think if anything I just say that if you've been, if you've been shafted by hosting or if you have been very negative towards it in the past, I would say say, you know, we're bitcoiners building a bitcoin project and we're bitcoin only. I'm pretty proud of the fact that we've got like very simple things but have been very hard to come by in our industry. We've got like Apple Pay, Google Pay, Cash App Lightning, Bitcoin Tether, like all like the, the major Rails we've got available. We've done a lot of cool things that can only be done if you have a software forward approach to mining. And I think you're going to be shocked with the experience if you give it a second look. And I get why you've rejected it and I know I'm speaking to the audience at writ large right here but I get why so many bitcoiners have rejected it because the trust has just been abused and we set out at SaaS mining to restore that trust because fundamentally we should be acquiring our bitcoin and I know I'm being moralistic here but we should be acquiring our bitcoin the way Satoshi designed the network because it's a better acquisition method. We should not not be going to the exchange based surveillance system to acquiring our bitcoin. And if we go back to the network, you know, re retake the network so to speak, I think a lot of our problems are going to disappear.
- [77:40]
Nathan
I like that, I like that message and I think it's a great note to end on. Where do you want to send people?
- [77:45]
Ken
So website is sasmining.com you can find me on Twitter a Halliburton so two L's in Halliburton DMs are open and hit me up.
- [77:56]
Nathan
And, and you're you. You are getting back on on Noster.
- [77:59]
Ken
I am on. I am on Nostr 2 but I just don't know how to, I don't know how to share my nostr in pub very successfully.
- [78:07]
Nathan
That's, that's okay. I'll, I'll, I'll blast it out to folks once this episode goes live. Thank you live so they can, they can find it on mine. Well Kent, appreciate you sharing your scarce time and looking forward to, to talking to you again soon.
- [78:20]
Ken
Likewise. Thank you.
- [78:29]
Walker
And That's a wrap on this Bitcoin Talk episode of the Bitcoin Podcast. Remember to subscribe to this podcast whether you're watching or listening, and share it with your friends, family and strangers on the Internet. Find Beyond Noster@primal.net Walker and this podcast at primal.netcoin on X, YouTube and Rumble. Just search ad Walker America and find these podcast on X and Instagram at Tcoin Podcast.
- [78:58]
Nathan
Head in the show notes to grab.
- [79:00]
Walker
Sponsor links@the substack.com Walker America to get episodes emailed to you, and head to bitcoin podcast.net for everything else. Bitcoin is scarce, but podcasts are abundant. So thank you for spending your scarce time listening to the Bitcoin podcast. Until next time, stay free.