Speaker 1: Hello, and welcome to another episode of the Mark Mass Show.
Speaker 2: We're always talking about the way the world is changing,
Speaker 2: of course as we look at it through the lens
Speaker 2: of politics, finance, and technology, and of course that technology
Speaker 2: is bitcoin that is changing the world through the decentralized technology.
Speaker 1: You know.
Speaker 2: I'd like to bring to you some late breaking news
Speaker 2: so you can see how the world is changing. And
Speaker 2: of course of interesting guests. You don't have to just
Speaker 2: listen to me all the time. And today I have
Speaker 2: Steven Barber coming onto the show. Always a wealth of
Speaker 2: information and fun guy to talk to you. I'm looking
Speaker 2: forward to this. He is the owner of Upstream.
Speaker 1: Data, Inc.
Speaker 2: Which is sort of turning trash into treasure, maybe even
Speaker 2: better than turning track. It's like it's like almost like
Speaker 2: the ultimate form of recycling waste into treasure.
Speaker 1: Maybe would you say that, Stephen.
Speaker 3: It's not a bad analogy. Yeah, we specialize in turning
Speaker 3: waste gas, wasted methane into bitcoin.
Speaker 2: But it's not just that, right, So it's like I
Speaker 2: revised it from turning trash into treasure, but it's actually
Speaker 2: it's actually better than that, because like trash would just
Speaker 2: whatever sit there in a landfill, but this methane is
Speaker 2: just leaking in right right now. The options are we
Speaker 2: either flare it or vent it into the ecosystem. And
Speaker 2: so you're taking that and instead of just letting it
Speaker 2: seep into the ecosystem or burn it off, you're actually
Speaker 2: using it and turn it into something valuable.
Speaker 3: Yeah, exactly, like pretty much every oil gas well or
Speaker 3: oil well in the world when it's like cracking a
Speaker 3: can of coke, Like as soon as you release the
Speaker 3: pressure on that thing, there's like there's gas that comes
Speaker 3: out of solution. So every oil well out there, pretty
Speaker 3: much conventional at least, has that gas that comes with it.
Speaker 3: And so yeah, the problem of course being if you're
Speaker 3: stranded energy, you know, like remote oil wells out in
Speaker 3: the middle of nowhere, and you don't have pipeline infrastructure
Speaker 3: to sell the gas, then you have to do something
Speaker 3: with it. So in a lot of cases, that's too
Speaker 3: much gas to do anything with, and so we build
Speaker 3: products that people can buy and it turns that gas
Speaker 3: into bitcoin. It's basically it's natural gas engines fully like
Speaker 3: a fully kitted out skid where the fuel gas plumbs
Speaker 3: in through the engine, generates power, sends electricity to the
Speaker 3: mining side, which is what we call the load center,
Speaker 3: and that turns it into hashes, and of course those
Speaker 3: hashes reward you in bitcoin.
Speaker 2: Now, I know in Canada and the United States, there's
Speaker 2: a lot of regulations around, you know, for these energy
Speaker 2: companies of how much gas they can in some instances
Speaker 2: even how much gas they can flare or event into
Speaker 2: the ecosystem.
Speaker 1: So that's sort of.
Speaker 2: Like what you're talking about, where they're forced to do
Speaker 2: something with it. And if they're stranded, if they're so
Speaker 2: far from a pipeline, then they don't really have a
Speaker 2: good option, right they could either shutter it in or
Speaker 2: use an option like this. I mean, is that sort
Speaker 2: of how the regulations work.
Speaker 3: Yeah, Basically, you're there's a couple of ways you can
Speaker 3: control your gas flow, so you can rate limit you're well,
Speaker 3: So like most most people when they drill a well,
Speaker 3: they want to produce it at max potential rates because
Speaker 3: that's what they're that's where they're making money. It's selling
Speaker 3: it well. But the more you produce, like the more
Speaker 3: you pump the oil to surface, the more gas that
Speaker 3: comes with it. So a lot of the regulations will
Speaker 3: force the oil company, you know, they might be allowed
Speaker 3: to vent or flare up to a certain limit, but
Speaker 3: to stay within that limit, they might have to throttle
Speaker 3: their downhole pumps and throttle a well, depending what what
Speaker 3: the completion looks like in some jurisdictions, like I think
Speaker 3: New Mexico right now, I'm not sure so sure about California,
Speaker 3: for example, where where you're sitting. But certain states have
Speaker 3: different rags and some of the REGs are no flaring whatsoever,
Speaker 3: so you're not you're basically not going to get a permit,
Speaker 3: or if you do get a permit for routine flaring,
Speaker 3: it only be temporary. So that's where they're forced to
Speaker 3: well either not develop the property or if they do
Speaker 3: develop the property, they have to you know, pay a
Speaker 3: lot of money out to get pipelines, in which case
Speaker 3: might be very far from the market, so you spend
Speaker 3: a lot of money at pipelines.
Speaker 2: I want to ask another question that I think it
Speaker 2: can be more fun and interesting for the listeners. So
Speaker 2: you know, there's a lot of attacks on bitcoin, fudd
Speaker 2: if we will you know, if you're uncertainty to out
Speaker 2: a lot of attacks on bitcoin, specifically around the amount
Speaker 2: of energy it uses. A lot of the counter to this,
Speaker 2: you know, from bitcoin minors, let's say, but also some
Speaker 2: political organizations around bitcoin mining as well push back and
Speaker 2: they try to say how clean bitcoin is and how
Speaker 2: much renewable energy it uses, and how it's helping to
Speaker 2: actually cut down on CO two and things like that.
Speaker 2: I've considered, I've been asked to join some of these
Speaker 2: political organizations, and I'm like, the problem I have is
Speaker 2: I sort of reject that entire premise, right, I sort
Speaker 2: of reject that entire premise. I don't think we need
Speaker 2: to be arguing that bitcoin isn't a waste of energy.
Speaker 2: I don't think we need to be arguing that it
Speaker 2: cuts down CO two missions because I don't even think
Speaker 2: that's the problem in the first place. And I'm curious
Speaker 2: your take on that.
Speaker 3: You know, there's been over the years since I got
Speaker 3: into the space in like twenty sixteen, that's been one
Speaker 3: of the most common FUD vectors. You know, the most
Speaker 3: common social attacks on bitcoin is that it's is it
Speaker 3: a good use of energy? Just because obviously the trend
Speaker 3: and hash rate and the underlying power usage that goes
Speaker 3: under that hash rate is up and up and up
Speaker 3: like exponentially, and of course one day it'll plateau somewhere,
Speaker 3: but it is going to very high places, like it's
Speaker 3: going to be a lot of load on energy systems
Speaker 3: across the globe. I've always just started with when people
Speaker 3: have brought that up to me, well, bitcoin's a waste
Speaker 3: of energy for that person, it might be a waste
Speaker 3: of energy. Like if they don't use bitcoin, then sure,
Speaker 3: like you don't, you'd have no you'd take no value
Speaker 3: from it. Sure, that's your That is the root of
Speaker 3: what value is. It's always a subjective thing. I always
Speaker 3: just use the same example, like I don't personally like
Speaker 3: certain vegetables like cauliflower, but I don't go around saying
Speaker 3: saying that it's a waste of energy just because I
Speaker 3: don't eat it. I don't eat it. There's a whole
Speaker 3: industry around growing cauliflower. I'm sure it's quite a lot
Speaker 3: of energy actually that goes into it, right, So you
Speaker 3: know that to me is fundamentally where the argument ends.
Speaker 3: Is for a lot of people, bitcoin can be a
Speaker 3: waste of energy in their subjective view, and that's just fine.
Speaker 3: But there's a lot of people paying for it, including
Speaker 3: both of us and many of your listeners. And to
Speaker 3: us bitcoin is useful and therefore it has value. That's
Speaker 3: just really where it ends. But if you want to
Speaker 3: like dig in further, I mean, if you look at
Speaker 3: where bitcoin mining is applied, it's often applied at sources
Speaker 3: of energy that can't find a market anyway. I mean
Speaker 3: that's because that's the way it's trending. That's you know
Speaker 3: why I call my company upstream Data. We're going upstream
Speaker 3: in the energy system, and that's more or less where
Speaker 3: you get the cheapest energy because it's the most wasted energy.
Speaker 3: We specialize in that in the natural gass side, but
Speaker 3: our customers use our packages.
Speaker 1: Everywhere.
Speaker 3: We have people on solar wind where they curtail it.
Speaker 2: So if you think about waste the way I've thought
Speaker 2: about it is like to your point, like you don't
Speaker 2: like cauliflower, what a waste to make cauliflower?
Speaker 1: Right?
Speaker 2: I see some guy meditating for you know, thirty minutes
Speaker 2: a day. What a waste of your time to sit
Speaker 2: there and just stare into space. But for him that
Speaker 2: holds his whole routine together, for example, Right, So it's like,
Speaker 2: who's to say what's a waste?
Speaker 3: Right?
Speaker 1: But what would be a waste.
Speaker 2: I think is sort of maybe we could agree on
Speaker 2: is like if I had a bunch of steak that
Speaker 2: I just cooked up and then nobody ate it and
Speaker 2: I had to throw it away, Well maybe I kind
Speaker 2: of wasted that steak, if you will, right. So from
Speaker 2: that perspective, then when they say that like bitcoin is
Speaker 2: a waste of energy, well that's actually not true because
Speaker 2: mostly what I think you're framing up and what I
Speaker 2: see is that bitcoin is actually using wasted energy.
Speaker 1: In a sense, we've already created the energy.
Speaker 2: The energy is already there, and if we don't use it,
Speaker 2: the energy goes away. That's the steak. We might as
Speaker 2: well just eat the steak, right, We might as well
Speaker 2: just use the energy is there. So it's not really
Speaker 2: waste energy. It's actually using wasted energy.
Speaker 3: Yeah, I mean it it enhances the efficiency the power
Speaker 3: generation system. So if it's wind power, most people don't
Speaker 3: argue that wind power is bad for the environment. You know,
Speaker 3: there's definitely a nuance to that topic, but most people
Speaker 3: agree that it's it's a good thing. And so bitcoin
Speaker 3: mining going upstream to wind firms and taking all the
Speaker 3: surplus power that the wind firm cannot ship because the
Speaker 3: demand isn't there when it's being generated, which of course
Speaker 3: is the main problem with sources of energy like wind.
Speaker 3: That's great, I mean otherwise it's just getting curtailed like
Speaker 3: it's not being generated. They you know, the blades get
Speaker 3: in set, so they don't, they don't. There's no load
Speaker 3: on the system, and so bitcoin generates a load on
Speaker 3: on these. You could basically pick any source of power whatsoever,
Speaker 3: whether it's a thermal power plant being like coal, natural gas, nuclear,
Speaker 3: for example. Bitcoin makes them all more efficient. They makes
Speaker 3: them all more energy efficient because it's effectively just a
Speaker 3: buyer blast resort. And every single kind of power plant
Speaker 3: will have periods where it needs this buyer blast resort
Speaker 3: because even like a coal plant.
Speaker 2: I'm gonna I got to cut you off before you
Speaker 2: give me that example, because I got to run into
Speaker 2: a break. If you're just tuning into the Markmas Show,
Speaker 2: sitting down, Stephen Barber from Upsteam Data Inc. We'll be
Speaker 2: back with more in a minute. I got to take
Speaker 2: a very quick break. Don't go away your back all right,
Speaker 2: welcome back. If you're just tuning in you're listening to
Speaker 2: the Mark Mos Show, Sitting down. Stephen Barber from Upstream Data, Inc.
Speaker 2: And we're talking about upstream data. We're talking about using
Speaker 2: wasted energy and how we can turn that.
Speaker 1: I cut you off before the break.
Speaker 2: If you want to go ahead and just kind of
Speaker 2: finish what you're saying, you're gonna be an example.
Speaker 3: Yeah, just an example of like even like a thermal
Speaker 3: power plant, like they operate at most most peak efficiency,
Speaker 3: like the best heat rates when they're at you know,
Speaker 3: nominal load. And one problem you see today is when
Speaker 3: you have all this other load or or this other
Speaker 3: generation come out on the grid, like wind and solar
Speaker 3: that can offset what's coming from these reliable base loads.
Speaker 3: And so if they operate at a lower lower than
Speaker 3: nominal capacity than they're designed for, they actually burn energy
Speaker 3: less efficiently, especially coal plants for example, Like they'll burn
Speaker 3: coal at a worse heat rate than they would otherwise.
Speaker 3: So having just always having things at nominal optimal generation
Speaker 3: is a net benefit. And it just goes back to
Speaker 3: the point you said earlier, like any the stakes are
Speaker 3: getting thrown out, we need to stop throwing out the
Speaker 3: stakes and start frying them up. And that's what bigcoined
Speaker 3: out exactly.
Speaker 2: Now, once you mine it, let's let's let's kind of
Speaker 2: move up this a little bit. So once you mine it,
Speaker 2: most of these miners now mine inside of a pool,
Speaker 2: so they pool their resources together to try to earn
Speaker 2: more rewards that way. I know you've been throwing out
Speaker 2: some tweets lately kind of talking about some of these
Speaker 2: pools and being are they custodial pools?
Speaker 1: Are they non custodial pools?
Speaker 3: Mean?
Speaker 1: Do they hold your bitcoin? Do they ky see you?
Speaker 2: Do? They have to know your customers, They have to
Speaker 2: collect all the data on you before they'll pay you
Speaker 2: out to the bitcoin.
Speaker 1: So I'm curious your take on that.
Speaker 2: And then we can talk about a new mining pool
Speaker 2: potentially that was trying to fix that and it's sort
Speaker 2: of gone.
Speaker 1: Off the rails a little bit.
Speaker 2: But what's your take sort of on the way this
Speaker 2: this mining mining pools potentially, like I said it, with
Speaker 2: some censorship ky C in there, how that's starting to develop?
Speaker 3: Yeah, I mean the general trend over the last number
Speaker 3: of years is mining pools have and they will continue
Speaker 3: to be get under more scrutiny from different regulators. I
Speaker 3: guess it's hard to pin them down on what they're
Speaker 3: you know, they're not so much like a financial services
Speaker 3: in a way, they're more of a server providing you know,
Speaker 3: a place to pool compuation. So it's but they also
Speaker 3: end up pools generally custody bitcoin, So that's one one
Speaker 3: thing that's that's a concern, Like most pools do, and
Speaker 3: the reason they do it is because there's an it
Speaker 3: allows for much more efficient payouts. Like to put it
Speaker 3: in a nutshell, you think, pay more people out in
Speaker 3: a more efficient manner, unlike an exchange which might be
Speaker 3: acting as a custodian for other reasons. That's one thing pools. Uh,
Speaker 3: there's there's been pressure, like some pools are preemptively gone
Speaker 3: forward with oh fact compliance right for example, so basically
Speaker 3: just blacklisting or providing not including certain utxos and transactions
Speaker 3: in their blocks and effectively censoring bitcoin because of pressure
Speaker 3: from regulators. So like most of the pools that I've
Speaker 3: done this, like Marathon, Marathon's pooled this for a period
Speaker 3: f two pool reason most recently. And the funny thing
Speaker 3: is they did it preemptively because they they're sort of
Speaker 3: almost what I say is like they they're they're positioning
Speaker 3: for regulatory capture, which is probably inevitable. I think it
Speaker 3: is inevitable that pools, mining pools at least like within
Speaker 3: the threshold will be licensed. That's like likely they're going
Speaker 3: to be the trend. It's just why you in.
Speaker 2: Like the developed world, like in the US or Europe
Speaker 2: for example, then you're saying to start a mining pool,
Speaker 2: then you would need some You're you're thinking your your
Speaker 2: prediction would be that they would be required to have
Speaker 2: some sort of a license by the government of a pool.
Speaker 3: I expect eventually that's likely what's going to happen. Yeah,
Speaker 3: I mean it it just generally, I mean that kind
Speaker 3: of thing, and it might be very it might be
Speaker 3: sort of like tiered where if you're just like small
Speaker 3: or something, you know, you might not have to it
Speaker 3: might be a very lightweight thing, but you might have
Speaker 3: to register. There's all kinds of things, I mean, just
Speaker 3: because of the nature when you like sort of zoom
Speaker 3: out the nature what bitcoin is. It's a competitor to FIAT,
Speaker 3: it's a competitor to central banking really in my view,
Speaker 3: so I think it's pretty much inevitable that they're going
Speaker 3: to push it's the easiest way to call it socially,
Speaker 3: attack bitcoin or attack bitcoin if you want to put
Speaker 3: it in that kind of you know, frame of view
Speaker 3: is to put in do it through regulation, licensing, permitting, yeah, axing.
Speaker 2: And obviously they could set up these pools from anywhere though,
Speaker 2: right So, I mean they can easily set up because
Speaker 2: it's just a place where it concentrates these computers, this
Speaker 2: computer power, this hash.
Speaker 1: Power, if you will.
Speaker 2: So, I mean there's no reason why they couldn't just
Speaker 2: go set up the pool in El Salvador or Argentina
Speaker 2: now or something.
Speaker 3: Oh of course, yeah, you can set the pool up
Speaker 3: in a jurisdiction. Of course, the regulators might just say, well,
Speaker 3: you're serving an American client, right, so that's a problem,
Speaker 3: and that's what they do in America. If you serve ers,
Speaker 3: and even if you're abroad, that can be a problem.
Speaker 3: I think that was like you know, bitmax had to
Speaker 3: deal with that. But the thing about pools, you remember,
Speaker 3: and it's the beautiful thing about bitcoin, right, like a
Speaker 3: public pool where you're opened into everyone. That's pretty much.
Speaker 3: I find it hard hard to believe that they're going
Speaker 3: to be able to find a way to be publicly
Speaker 3: available and somehow circumvent any regulation that might come because
Speaker 3: by nature being publicly available, and the tools they have
Speaker 3: at their disposal to identify the operators. You're likely just
Speaker 3: going to have to comply with whatever regulations come. And
Speaker 3: it's not that that in itself is a negative. It's
Speaker 3: more so just you know, the regulators are going to
Speaker 3: sort of create a white market for bitcoin mining pools.
Speaker 3: But you can also run pools like bear in Mind
Speaker 3: mining solo. You can still run a private pool. And
Speaker 3: that's one prediction I've made is I think we're going
Speaker 3: to see more were like you.
Speaker 2: And I, Hey, Steven, Like, let's just set up a
Speaker 2: little pool between ourselves kind of thing. Yeah.
Speaker 3: Like I actually one day part of my part of
Speaker 3: my software which I won't bore you guys with today,
Speaker 3: but like part of my development plan with my business
Speaker 3: is it's leading to a point where I could offer
Speaker 3: a private pool because I build infrastructure for people. The
Speaker 3: thing about and this is probably too deep for this
Speaker 3: podcast right now, there is a lot of problems with
Speaker 3: opening a pool up to the public because you can
Speaker 3: get it's called block withheld, you can be attacked by
Speaker 3: your own customers, and also like you can actually pay
Speaker 3: them to attack you if you're not And there's really
Speaker 3: no way around preventing that from happening outside of having
Speaker 3: software having full control of the mining stack that's on
Speaker 3: your pool. So I think as bitcoin develops towards more
Speaker 3: adversarial conditions, it becomes bigger globally, it's more competition, and
Speaker 3: you might have even like state attacks against it, or
Speaker 3: if that doesn't happen and you have like just just
Speaker 3: aggressive pools against each other, I think we're going to
Speaker 3: see development towards private pools. So that's like I'm running
Speaker 3: a pool, but I'm not letting you in without me
Speaker 3: like having some kind of contract access to your front.
Speaker 2: Do you think those those smaller mining pools, though, can
Speaker 2: be competitive and still provide economic you know, advantage, or
Speaker 2: at least be competitive in that sense.
Speaker 3: Yeah, I do think pools can be competitive. It is
Speaker 3: a tough business, like if you're purely a pool and
Speaker 3: you're not doing if you look at most pools today,
Speaker 3: like I'll just use brains Pool, slush pool, it's the
Speaker 3: oldest pool, you know. They they offer not just mining
Speaker 3: pool as a service, they offer like firmware, and they
Speaker 3: drive their pool through firmware sales, effectively like installing their
Speaker 3: firmware drives into their pool. So like pools have generated.
Speaker 1: Let's let's hold that difficult to take a very quick break.
Speaker 2: If you're just tuning in listening to the Mark Mass
Speaker 2: Show sitting down with Stephen Barber, we're talking about sort
Speaker 2: of the intricacies of bitcoin and bitcoin mining. It's important
Speaker 2: stuff we're gonna dig into a little bit more a minute.
Speaker 1: I gonna take a very quick break, though, don't go away.
Speaker 1: Bear back, all right, welcome back.
Speaker 2: If you're just tuning in, you're listening to the Mark
Speaker 2: Mass Show sitting down with Stephen Barber. We're talking about
Speaker 2: bitcoin using wasted energy, the attack vectors on bitcoin, and
Speaker 2: we're talking about specifically the mining pools and some of
Speaker 2: the attack vectors there. So you're gonna say that maybe
Speaker 2: some of these attack vectors could be solved by setting
Speaker 2: up like private mining pools, where a group of people
Speaker 2: known people to each other could set up their own pool.
Speaker 2: And I think you were going to say, could it
Speaker 2: be economically competitive with larger public pools.
Speaker 3: Well, the cheapest way of mind is actually solo mining.
Speaker 3: It's cheap in the sense you don't pay any fees,
Speaker 3: You just pay the cost to run a note and stuff.
Speaker 3: Why it's expensive is because you don't get your payments regularly,
Speaker 3: so the cost of capital is quite expensive. You might
Speaker 3: mine for months if you're small and not get your paid.
Speaker 3: Cost on your money is quite significant, and so like
Speaker 3: there's almost a trade off. Like solo mining, it is
Speaker 3: actually long term cheapest. It's just most people can't afford
Speaker 3: to wait for the block. And I'm not so much
Speaker 3: saying that, I think that I think we're going to
Speaker 3: see it a bigger trend towards private pools, mainly because
Speaker 3: I think as a network gets bigger, a private pool
Speaker 3: can operate cheaper than a public pool because it doesn't
Speaker 3: have to worry about the risk of block withholding attacks.
Speaker 3: That's or it doesn't have to price in the risk
Speaker 3: of block withholding attacks because presumably a private pool has
Speaker 3: control or somewhat control over the mining hardware that's connected
Speaker 3: to it, and that's like maybe a deep to get
Speaker 3: into technically. But that's one reason why I think we
Speaker 3: will see more private pools.
Speaker 2: Well, the reason why, I mean it is pretty deep
Speaker 2: and probably more technical than I want to get into
Speaker 2: for most people listening, but I'm just the reason why
Speaker 2: I'm interested in it is because what we're seeing right
Speaker 2: now is sort of it depends on where you're at
Speaker 2: in the world, but even in the United States, the
Speaker 2: Land of the Free, we're having a very very adversarial
Speaker 2: take starting to happen in the United States with Elizabeth
Speaker 2: Warren sort of running this war path on, you know,
Speaker 2: basically creating rules around bitcoin and cryptocurrency that could effectively
Speaker 2: make it almost impossible to run, you know, putting keyc
Speaker 2: rules into all these different places that it just doesn't work.
Speaker 2: And so on one hand you have that, on the
Speaker 2: other hand, you sort of have all these ETFs that
Speaker 2: are about to pop up, so you know, could happen
Speaker 2: any day, could happen before this is even aired. At
Speaker 2: this point, it looks like it's happening that quickly. We've
Speaker 2: seen the SEC has shifted and made all of these
Speaker 2: funds now go from physically settled to now cash settled.
Speaker 2: So now the funds aren't even buying and selling bitcoin,
Speaker 2: they're just doing all the cash. So we're basically just
Speaker 2: betting on the price of bitcoin, we're not even buying
Speaker 2: and selling it. And then we have Elizabeth Warren over
Speaker 2: here saying like all self custody and transactions on your
Speaker 2: own could be deemed illegal. And if you put those
Speaker 2: two together, then it sort of looks like when they're
Speaker 2: starting to like, well you can own it, but only
Speaker 2: you can own it through a fund which doesn't actually
Speaker 2: own it, but you can't own it on your own.
Speaker 1: It looks like there's.
Speaker 2: Like this attack vector that's just like pushing us into
Speaker 2: this path. Then you add on what you're talking about
Speaker 2: as far as then the mining pools are even regulated,
Speaker 2: so you can't even mining get it that way. So
Speaker 2: now you can't get it through mining, you can't custy
Speaker 2: it yourself, and you can only own it through an
Speaker 2: ETF that doesn't even actually own it. It looks like
Speaker 2: that's sort of where we're going. Would you say those
Speaker 2: are attack vectors that you're looking.
Speaker 3: At, Yeah, I would, I would. I would say that
Speaker 3: the who I call the evil fiat maximilists or that
Speaker 3: is exactly what they want. That's what they're trying to do.
Speaker 3: It just remains to be seen if there's enough of
Speaker 3: a private interest. You know, the US is the one
Speaker 3: place that I would hope would push back on regulation,
Speaker 3: and luckily we do have several you know, good lobby
Speaker 3: groups helping push back and then there's good states where
Speaker 3: they've really ablished like they're open for business and bitcoin mining,
Speaker 3: obviously a few of them being like Wyoming and Texas
Speaker 3: and the like. But yeah, I think I think that
Speaker 3: is actually the biggest risk to what we're going to see,
Speaker 3: just like as people in the bitcomining ecosystem is, is
Speaker 3: them coming harder towards pools. The way it's trending is
Speaker 3: more regulation. But I think it should be expected because
Speaker 3: the government, whether you're federal or state level, they tend to,
Speaker 3: you know, at some point when when there's new businesses,
Speaker 3: new ventures, new innovation being happening and developing, it's only
Speaker 3: usually a matter of time before they get involved with
Speaker 3: regulation on that, with permitting on that, and you know,
Speaker 3: they that's what they're in business for. They need to
Speaker 3: get their cut. So it's it's not surprising to me,
Speaker 3: but I do like what I see, even with the
Speaker 3: some new initiatives in the in the like the pool,
Speaker 3: the pool ecosystem has been pready dead for several years.
Speaker 3: So like a few new pools came up, like Ocean
Speaker 3: Demand Pool, and I think they're trying to solve a
Speaker 3: very real problem, and so it's good to see more
Speaker 3: options out there, but I would expect regulation is just
Speaker 3: something we're all going to have to you know, expect
Speaker 3: and work through. The really thing that bugs me is
Speaker 3: that the big pools, and it's not I'm not really
Speaker 3: here to name names, but the big ones, like the
Speaker 3: two biggest ones, are foundering in a pool. It's in
Speaker 3: their best interest, just like just like it is for
Speaker 3: coinbase to build for regulations to come in, because they're
Speaker 3: they're the most well equipped to navigate regulation. It's just
Speaker 3: the nature of big business versus small business, and big
Speaker 3: businesses generally want regulation because they build regulatory motes. They
Speaker 3: might say they don't, but that's the fact, like they want.
Speaker 3: You generally see big businesses lobby for specific regulations that
Speaker 3: they can navigate. They can keep the massive amount of
Speaker 3: overhead on staff to keep on you know, in line,
Speaker 3: whereas like the newcomers, especially as that regulation gets set
Speaker 3: up and those moats are built. And that's usually what
Speaker 3: I'm whining about on Twitter is like, you know, generally speaking,
Speaker 3: is these people have like it's almost like a incentive
Speaker 3: to usher in the REGs because they can keep their
Speaker 3: competition at bay because they're going to be the best
Speaker 3: equipped and.
Speaker 1: Sure, yeah, we see that all the time.
Speaker 2: And that's the corporatism, if you will, corporatocracy of the
Speaker 2: world right where these big businesses use use the regulatory
Speaker 2: system to build these moats. I mean we've seen it
Speaker 2: time and time again. I mean, Amazon's a perfect example
Speaker 2: of how they've done this. I remember why, I used
Speaker 2: to sell internet products a long time ago, and they
Speaker 2: pioneered a bill because at the time, in the United States,
Speaker 2: you could buy stuff on the Internet and not pay
Speaker 2: sales tax. And Amazon pushed a bill that would require
Speaker 2: all these internet sellers to actually have to collect sales tax.
Speaker 2: And of course, you know you had to dig to
Speaker 2: find out Amazon who was pushing this?
Speaker 1: But why would they do that?
Speaker 2: Well, to your point, for Amazon, how big they are
Speaker 2: and how much staff they have, they could figure out.
Speaker 2: And in the United States, tax selles tax collected on
Speaker 2: a county by county basis not even a state by state,
Speaker 2: So it's like, how many thousands of counties? How am
Speaker 2: I supposed to keep track of that? I can't, But
Speaker 2: they have the bureaucracy, they have the manpower to do that,
Speaker 2: and so since I can't do it, they can. Well,
Speaker 2: I'll just have Amazon sell my products for me. I'll
Speaker 2: just list everything onto Amazon, let them take a cut
Speaker 2: of everything I do, and then they'll take care of
Speaker 2: the sales tax for me.
Speaker 3: Yeah, it's great business, Like sell the solution to the problem.
Speaker 3: You you help me.
Speaker 1: Yeah, exactly right.
Speaker 2: So you know, and what we just saw, I don't
Speaker 2: know if you saw it. Well, I'm sure you've been
Speaker 2: seeing what Meal is doing down in Argentina. I mean
Speaker 2: he just went and cut like three hundred and eighty
Speaker 2: regulations and yeah, and I watched his talk this morning.
Speaker 2: It was in Spanish, but I read the transcription and
Speaker 2: he called this out exactly. He said, you know, like
Speaker 2: in Argentina, we're not even free. We have to be
Speaker 2: given permission for everything. And so he's just like that out,
Speaker 2: which you know, I guess we'll see in real time,
Speaker 2: I believe, I'm sure you would agree. Well, hopefully unleash
Speaker 2: you know, this economy, this h this creativity.
Speaker 1: You know, maybe it'll be a big miracle.
Speaker 3: Yeah, that's the nature he's doing. What you know, I
Speaker 3: hope to see broadly, I mean the nature of bureaucracy
Speaker 3: just gets worse and worse and more entangled over time,
Speaker 3: and usually people have no incentive to come in and
Speaker 3: remove the bureaucracy, to remove the rags. So you need
Speaker 3: people like him to sort of, I guess, rise up
Speaker 3: popularly with the hatchet and chopp things down. Chop down
Speaker 3: the yeah, chop down the forest and allow people that.
Speaker 1: I mean he literally ran on his campaign.
Speaker 2: He was running around with a chainsaw and like, hey,
Speaker 2: I'm taking a chainsaw and he did.
Speaker 1: I mean so far.
Speaker 2: Donald Trump ran on a campaign of I believe he
Speaker 2: promised to get rid of I think or three regulations
Speaker 2: for every new one he put in place, and I
Speaker 2: think it ended up being more than that, like five
Speaker 2: regulations for every new one.
Speaker 1: That's pretty good.
Speaker 2: I mean, he at least made a dent. Mealey is
Speaker 2: like holding my beer. Here's three hundred and eighty, like
Speaker 2: just gone right, Like it'd be pretty interesting if you're
Speaker 2: just tuning in, you're listening to the Mark Moss Show.
Speaker 2: I'm sitting down with Stephen Barber from Upstream Data, Inc.
Speaker 2: It's helping people turn trash into treasure with bitcoin mining.
Speaker 1: I want to come back. I want to ask you.
Speaker 2: About ordinals and inscriptions and things like that, but you're
Speaker 2: gonna take a very quick break. If you're just tuning in,
Speaker 2: you don't want to miss this. This is probably the
Speaker 2: most debated topic maybe in the space.
Speaker 1: We'll be back with more in that in a minute.
Speaker 1: Don't go away, all right, welcome back.
Speaker 2: If you're just tune in, you're listening to the Mark
Speaker 2: Moss Show, sitting down with Stephen Barber from Upstream Data Inc.
Speaker 1: Now, Stephen, we're.
Speaker 2: Talking a lot about the mining and we talked about
Speaker 2: the pools. I want to talk about this next piece,
Speaker 2: and this is the ordinals and inscriptions. Just like anything,
Speaker 2: there's pros and cons to everything, So I guess it
Speaker 2: depends on which side and pros and cons that you're on.
Speaker 2: On the pro side, it's generated a lot more fees
Speaker 2: for the miners, so I'm guessing the miners are probably
Speaker 2: liking that. The con side, people aren't happy that it's
Speaker 2: increased their transaction costs, even though considered, you know, comparatively,
Speaker 2: it's still pretty reasonable. And then so there's that, there's
Speaker 2: the pros and cons there. Then you have sort of
Speaker 2: some of these bitcoin maximalists who think it's a misuse,
Speaker 2: it's a waste, if we want to frame it that way.
Speaker 2: It's a waste of the network using it this way.
Speaker 1: Where do you how do you view this?
Speaker 2: How are you sort of breaking down dissecting this topic.
Speaker 3: Well, I'd like to I'd like to think I would
Speaker 3: balance you because I've always liked the framing that you know,
Speaker 3: Bitcoin you sort of have like on one hand, like
Speaker 3: merchants like people, me and you, all of us transacting
Speaker 3: with each other using the network. You also have miners,
Speaker 3: which are basically providing the underlying service, and there's overlap,
Speaker 3: but like when you think about them in two discrete
Speaker 3: like buckets of network participants, Well, miners like the people
Speaker 3: I sell to, they love ordinals. They don't know or
Speaker 3: care whether it is or they might know, but they
Speaker 3: in the end, if we don't care, it's more fees,
Speaker 3: it's more revenue, So of course we love it. So
Speaker 3: I'm sympathetic to that because it's it's increasing our sales,
Speaker 3: it's increasing our revenue. But I'm also a user, so
Speaker 3: like I don't like paying high fees. And my personal opinion,
Speaker 3: like on NFTs and inscribing JPEG's in the blockchain, is
Speaker 3: I don't really see the market for it other than
Speaker 3: people speculating and gambling. So in one hand, you can
Speaker 3: lump me in the Bitcoin maxi group. That's really you
Speaker 3: could say against them. But meanwhile, I was one of
Speaker 3: the first people inscribing on ordinals. I have an ordinal
Speaker 3: like from way back because the way I my my
Speaker 3: take on it is if you're node, if you're running
Speaker 3: bitcoin core, which is the reference protocol, and it accepts
Speaker 3: a transaction, and that transaction is valid, and I really
Speaker 3: don't care what you use it for. It's not my business.
Speaker 1: You don't care if somebody were transaction fee, right, I mean,
Speaker 1: who's to say what a waste is?
Speaker 3: Yeah? If and and honestly, if you're interested in just
Speaker 3: putting you know, the cliche monkeys on the blockchain all
Speaker 3: day and you're paying for that, like I don't really care.
Speaker 3: I mean, that's we already have a spam throttle with
Speaker 3: block size. Uh, that's why there is a block size,
Speaker 3: and so people can't just spam infinite JPEGs. There's a
Speaker 3: limitation on it. And as long as I really like
Speaker 3: my no doesn't know what these things are. You have
Speaker 3: to interpret the transaction data just to know that it's JPEGs.
Speaker 3: Of course, like there's there's signals and flags.
Speaker 1: But don't you think though that maybe one?
Speaker 2: So I mean to your point, like, if who's to
Speaker 2: say I'm wasting energy, who's to say I'm wasting block size?
Speaker 2: Like who's to say what a waste is to me?
Speaker 1: But don't you think? I mean? And certainly we saw
Speaker 1: when these first started.
Speaker 2: That it was a bunch of really really horrible JPEGs
Speaker 2: if you will, the monkey.
Speaker 1: JPEGs they were.
Speaker 2: They were the worst jpeg not even the good ones
Speaker 2: that we saw, like of the whatever they were, I
Speaker 2: forget the big ones, the apes or whatever from a
Speaker 2: couple of years ago. These were like the peppies, these
Speaker 2: were like really bad ones. But I feel like from
Speaker 2: an economic standpoint, incentive standpoint, like from a you know,
Speaker 2: from a competitive standpoint, like it seemed like that was
Speaker 2: just kind of being done to sort of prove the case.
Speaker 1: I think if you think about this two years.
Speaker 2: Five years, ten years out from now, like they're probably
Speaker 2: not using that. If we think about inscribing stuff on
Speaker 2: the blockchain, you know, seeing the Wikipedia being put on
Speaker 2: the blockchain, seeing the Bible being put in the blockchain,
Speaker 2: or three D gun schematics like that seems like a
Speaker 2: pretty cool use case. I suppose of stuff that you know,
Speaker 2: we want to preserve for all time, and I think
Speaker 2: so one, I guess, do you think the monkey jpeg
Speaker 2: is like a little introductory use case that probably goes
Speaker 2: away because it's why would you spend that much money
Speaker 2: to send it?
Speaker 1: Do you see a higher use case of it? I
Speaker 1: guess I'll just throw that out there.
Speaker 3: I think I think it's you know, it's just data, right,
Speaker 3: so whatever data is valid, and if it's pure, if
Speaker 3: it's just the pure transaction and it's just for me
Speaker 3: to get my bitcoin to you at the lowest bites
Speaker 3: right in the lowest fee, that's the best use case
Speaker 3: in my opinion, because it is a cash network, it's
Speaker 3: a payments network, it's a monetary system, and that's I think.
Speaker 3: The only thing I.
Speaker 2: Would say to this case is like in the eighties,
Speaker 2: we considered information like my morning newspaper, my nightly news.
Speaker 1: Today it's like a.
Speaker 2: Kid on Instagram in South Pacific posted a picture and.
Speaker 1: I see what the waves look like.
Speaker 2: The information has changed, and I think what we consider
Speaker 2: money or even value communication is going to be different
Speaker 2: in the future.
Speaker 3: I really just try to be agnostic, Like I just think,
Speaker 3: whatever the node allows as long as I'm running and
Speaker 3: then that node software because I presumably agree with the
Speaker 3: rule set. What an argument do I have, like against
Speaker 3: how anyone else wants to use it? I just think
Speaker 3: it's fine use it.
Speaker 2: Also, like, high prices create innovation, right, So if oil
Speaker 2: prices go really high, you start figuring out how to
Speaker 2: get cheaper oil or maybe an EV or new technologies, right,
Speaker 2: and so like maybe higher fees will start to push
Speaker 2: new technologies on layer twos and layer threes and things
Speaker 2: like that.
Speaker 3: They will absolutely will. I think the lightning people. I
Speaker 3: say the lightning people just because I haven't been participating
Speaker 3: in the lightning economy too much, but the people that
Speaker 3: are really building their businesses around lightning and like, and
Speaker 3: also their intellectual capacity around developing it, which is definitely
Speaker 3: going to be a massive, like way a scaling solution
Speaker 3: for bitcoin an important one. This is good for them.
Speaker 3: Costier base layer stuff does unfortunately price out some of
Speaker 3: the market. That market is therefore forced to use some
Speaker 3: kind of substitute, whether it's a layered substitute like through
Speaker 3: a custodian or non custodian, or in some cases they
Speaker 3: don't use it at all. They use something else entirely.
Speaker 3: They might even use gold coins for something like I
Speaker 3: don't know, maybe that gets re monetized at some point.
Speaker 3: But these are good things. I agree completely. It prices
Speaker 3: in the necessity to drive more resources to towards new tech.
Speaker 2: So that's the other thing I was talking about. So
Speaker 2: I was talking about this the other day. You know,
Speaker 2: if you look at the monkey jpeg, the NFT things,
Speaker 2: so to speak, right, like, the people that are buying
Speaker 2: monkey JPEGs or NFTs whatever, they're not buying into the
Speaker 2: ethos or I should say, more specifically, the real value
Speaker 2: of bitcoin being censorship resistant, immutable, decentralized, they're just buying.
Speaker 1: They're gambling too. I mean that you made that point.
Speaker 2: We saw what happened in Ethereum back you know, a
Speaker 2: couple years ago, when the JPEGs were really going hot.
Speaker 2: The transaction fees got so high that all the NFTs
Speaker 2: jumped to Salana where they were much cheaper. So the
Speaker 2: people that want the monkey JPEGs, they're gonna they don't
Speaker 2: want to pay high fees, They're going to go to
Speaker 2: where the fees are lower. So when you start thinking
Speaker 2: about this from a competitive landscape like the financial transactions
Speaker 2: will always win out. Like the financial the JPEGs don't care,
Speaker 2: they don't want to pay high fee, They'll just go
Speaker 2: to Salon, and so Salon is always going to be
Speaker 2: there for them. So I think a lot of that
Speaker 2: just sort of takes care of itself.
Speaker 1: So one, I'm curious.
Speaker 2: Your point on that. And then the next question I
Speaker 2: want to add on top of that is your take
Speaker 2: on that we have about a minute a half.
Speaker 1: Two.
Speaker 2: Do you think that when we make these changes like
Speaker 2: tap route, we get unintended consequences like this? And do
Speaker 2: you think it'd be a danger to go back and
Speaker 2: rechange it now to try to fix this? And who
Speaker 2: knows what unintended consequences we get from that.
Speaker 3: Yeah, And that's why I've been I stir a lot
Speaker 3: up on social media when I criticize the development process
Speaker 3: at bitcoin core, because I think there's been cases, especially
Speaker 3: when they're trying to rush upgrades, you know through the system,
Speaker 3: like through minor activation, like softworks like early signaling, and
Speaker 3: they're literally out like people are literally out campaigning to
Speaker 3: mining pools to like, hey, please activate this and please
Speaker 3: signal this. It's just a terrible way to go about
Speaker 3: it in my view, And the fact is, like no
Speaker 3: one's perfect. Huoing the Bitcoin cored development process, it's not perfect.
Speaker 3: And I think because me, you and I think most
Speaker 3: of the listeners here were really big into bitcoin. We
Speaker 3: think it's the future of money. I think it's critical
Speaker 3: that we don't rush things. I see this as a
Speaker 3: system that's going to last a thousand years. People might
Speaker 3: laugh at that, but I really do think it has
Speaker 3: the fundamentals to last one thousand years. And so you know,
Speaker 3: I don't see a rush like I just think. I'm
Speaker 3: like an ocifist, like I want I want the code
Speaker 3: to stop developing, or at least develop at the correct pace.
Speaker 3: And let's not I shouldn't say stop developing. I just
Speaker 3: want things to be you know, we need a solid
Speaker 3: foundation for everyone to build on and shifting it, you know,
Speaker 3: we should be very careful about. But that's the nice
Speaker 3: thing is the users can choose what software to run.
Speaker 3: And that's why I have an upgrade in my node.
Speaker 3: Personally that the node I do use at home in
Speaker 3: a long time and I don't plan on it.
Speaker 1: All right, Well, we got to wrap it up with that.
Speaker 2: If you're just tune in you're listening to the Mark
Speaker 2: ma Show. We've been talking with Steven Barbara from Upstream Data, Inc.
Speaker 2: You should definitely check out what he's doing. We'll make
Speaker 2: sure we linked all that in the show notes down below,
Speaker 2: and with that we got to sign it off.
Speaker 3: Thanks so much, Thanks Mark,