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Speaker 1: Well kind of trains. I'm Joel Weber and Alberic bel Tunis.

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Speaker 1: Sometimes in your life you have friends who are like,

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Speaker 1: I hit it, I made a ton of money on something,

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Speaker 1: or even just a little bit of money, And it

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Speaker 1: increasingly feels like that voice comes from crypto more than

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Speaker 1: anywhere else. And I had a friend like that, and

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Speaker 1: then I started telling you about this story and you're like, well,

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Speaker 1: wait a second, we can we can do that in trillions. Yeah. No,

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Speaker 1: we we like talking to the people. Um. So much

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Speaker 1: of the financial media is analysts and industry people talking

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Speaker 1: to each other, and so usually when we do those episodes,

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Speaker 1: it resonates a lot with people because they can relate

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Speaker 1: to an actual investor doing it themselves. Um. And because

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Speaker 1: you're listening to this, you're probably a do it yourself

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Speaker 1: investor or an advisor. So I think it's a really

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Speaker 1: good type of guess to have. And I agree with

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Speaker 1: you Crypto. I mean, what can you say. Everybody's very

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Speaker 1: aware of what crypto is. But I will say I

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Speaker 1: was at the kitty park the other day with my

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Speaker 1: youngest and this one guy was like, oh, yeah, see

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Speaker 1: that guy over there. He got into bitcoin or ether.

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Speaker 1: I forget which coin it was, but you know, he

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Speaker 1: was like, oh yeah, but back in like a you know,

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Speaker 1: he's like, it's just like it's like a stuff of

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Speaker 1: legends now if you got in early, and it's a

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Speaker 1: whole thing. So clearly this is a major area and

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Speaker 1: it's taking over a lot of the e t F

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Speaker 1: markets in other parts of the country, and soon it

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Speaker 1: will be a big deal in the US when they

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Speaker 1: approve a spot et F. But there's other ways to

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Speaker 1: get access, which will look at today. So my friend's

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Speaker 1: name is Shar Burger. I've known her since junior high.

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Speaker 1: We also went to high school, uh and college together.

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Speaker 1: We're from Oregon originally she's in California and very specifically

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Speaker 1: she's into bitcoin mining, which, um, there's a e t

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Speaker 1: F that we also found that I also found out

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Speaker 1: about through you and her, that we're also going to

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Speaker 1: have the guy behind that eat e F, the co

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Speaker 1: founder Ethan Vera at Pretty Funds, joined to talk about

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Speaker 1: that side of the business. Look, this is going to

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Speaker 1: be learning for both of us. We we know a

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Speaker 1: lot less than Ethan and a lot less than Schar. Yeah,

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Speaker 1: I mean Shar to be clear as fully disclosed that

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Speaker 1: she spends upwards of like eight hours a day researching

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Speaker 1: bitcoin miners. So in effect, we're gonna have you and

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Speaker 1: me and then Shar, who's basically the voice of a

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Speaker 1: retail investor, along with somebody who's brought not only an

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Speaker 1: e t F to market for bitcoin mining, but also

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Speaker 1: does a mining pool. So this will be an interesting

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Speaker 1: one because we've never had a retail investor out of

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Speaker 1: Mike with us doing some interviews. I'm going to learn

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Speaker 1: a ton about bitpoint mining because I know almost nothing.

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Speaker 1: I know I know Eric knows very little as well.

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Speaker 1: It'll be a fun one this time on trillions bitcoin

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Speaker 1: mining e t S Ethan Shar We can the trillions,

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Speaker 1: thanks triving us on. Thank you, Ethan. I want to

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Speaker 1: start with you because you've been into bitcoin mining longer

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Speaker 1: than I knew it existed, I think. So, so what

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Speaker 1: exactly do you do and talk to us about this

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Speaker 1: transition into the CTF. Yeah, so I'm not as o

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Speaker 1: g as Eric alluded to. I didn't join the class,

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Speaker 1: but I did start a bitcoin mining company in seventeen.

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Speaker 1: I was still going to college at the time and

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Speaker 1: basically spent the weekends flying down in Kansas City that

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Speaker 1: set up a mining farm. So coming from like a

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Speaker 1: finance software background, I wanted to get hands on and

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Speaker 1: actually learned that the process of what it takes to

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Speaker 1: set up one of these horns end up going terribly wrong.

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Speaker 1: I I often cite that there's two things you shouldn't

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Speaker 1: do in this world. One is an attack Russia in

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Speaker 1: the wintertime, and the second is launch of mining farm

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Speaker 1: in Kansas City in the summer. And I happened to

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Speaker 1: make that mistake. Um Shortly after that, I started focusing

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Speaker 1: on mining pool software and along with some co founders,

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Speaker 1: we we built lux Or mining Pool into one of

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Speaker 1: the largest mining pools globally. It's currently number two. It's

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Speaker 1: number ten in the world and number two in North America.

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Speaker 1: We also do things like basic brokerage, so we help

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Speaker 1: investors get access to buy machines. We launch other software products,

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Speaker 1: and then most recently in March of last year, we

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Speaker 1: launched a new company called Greedy Funds, which is as

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Speaker 1: a manager specifically focused on bitcoin miners, and launched the

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Speaker 1: first bitcoin mining e f from the New York Stock Exchange. Okay,

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Speaker 1: so let's just dig into mining for a minute. I

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Speaker 1: would when someone says bitcoin mining. This is what I mean.

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Speaker 1: This is I did learn a little more about it.

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Speaker 1: But when before I did, I just pictured a big

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Speaker 1: like a bunch of computers, and I, you know, I

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Speaker 1: actually thought that it was spitting out some kind of

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Speaker 1: equation that you had to solve, like the chalkboard and

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Speaker 1: goodwill hunting or something that like only a computer could do.

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Speaker 1: And then I found out it's not really that. UM.

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Speaker 1: And I know I'm probably get a lot of crap

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Speaker 1: for saying that, but that's the truth. That's what I thought,

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Speaker 1: And my colleague James educated me to a degree. But

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Speaker 1: can you just explain what are these computers doing and

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Speaker 1: how do they get bitcoin for doing it? Yeah, So

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Speaker 1: before I jump into the technology behind it and the calculation, um,

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Speaker 1: bitcoin mining is the backbone and bitcoin. It serves as

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Speaker 1: the consensus mechanism that allows for new transactions to be

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Speaker 1: added to the network and blocks to be secured. And

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Speaker 1: so there is no bitcoin without the mining process. It's

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Speaker 1: really pivotal to it in terms of what these machines

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Speaker 1: are doing. So the machines that are securing the network

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Speaker 1: are purpose built for one purpose only, which is mining

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Speaker 1: bitcoin and other shot to five six variants, and so

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Speaker 1: they're they're built what's called an application specific integrated circuit

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Speaker 1: and a stick for short, and they can only solve

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Speaker 1: this one type of equation. What the machines are doing

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Speaker 1: is they're running through a trapdoor function known as the

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Speaker 1: hashing algorithm and guests and checking brute force guests and

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Speaker 1: checking UH inputs in order to achieve an output that

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Speaker 1: would result in a valid block. And so a new

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Speaker 1: generation hardware can do a hundred and ten trillion guesses

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Speaker 1: per second you plug it in. It puts in a

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Speaker 1: hundred and ten trillion inputs and shoots out a trillion outputs,

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Speaker 1: and the goal is for one of those outputs to

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Speaker 1: be a valid block and add a new block to

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Speaker 1: the blockchain and older to add the new transactions and secure. Again,

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Speaker 1: it's more about guessing. And that's where I Joe, I,

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Speaker 1: I really didn't realize that. I thought I kept hearing

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Speaker 1: equation and solving, but it's really just guessing and just

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Speaker 1: how many numbers can you different order of the numbers,

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Speaker 1: and and I guess characters until you hit the exact match.

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Speaker 1: It almost seems like like again code breaking or something

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Speaker 1: out of a like trying to basically break upen a

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Speaker 1: safe or something correct. Yeah, and that's why the application

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Speaker 1: specific integrated circuitsy A six are so much more powerful

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Speaker 1: than GPUs or CPUs or any supercomputers for that matter,

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Speaker 1: because they're so specific to this one task. Um that

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Speaker 1: the hashing algorithm is a trapdoor function. So you know

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Speaker 1: what you want to receive on the output, but you

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Speaker 1: don't know which input would result in that, and so

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Speaker 1: you're the only way to get through it is to

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Speaker 1: root force. Okay, sure, I want to bring you in.

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Speaker 1: I've talked to you enough about this to know that

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Speaker 1: you haven't gone full crypto. But what was it about

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Speaker 1: bitcoin mining that made you go? You know, I can

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Speaker 1: do stocks, I can do whatever I want, but like,

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Speaker 1: I'm gonna I'm gonna double down on this bitcoin mining space.

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Speaker 1: What what drew you in as a as a retail investor.

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Speaker 1: So I was at the point in my portfolio where

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Speaker 1: I was looking for a little bit more risk. Um.

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Speaker 1: I was actually just looking for emerging markets, and I

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Speaker 1: went down, you know, the rabbit hole with genomics and

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Speaker 1: you know, electric cars, um, and I ultimately landed on

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Speaker 1: bitcoin mining and bitcoin At first, I you know, started

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Speaker 1: stacking stats if you will. And then I just became

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Speaker 1: completely fascinated with the economics and the emerging industry. There's

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Speaker 1: literally never a dull moment. Something new happens every day.

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Speaker 1: In addition to yes, it being a lucrative investment for me, um,

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Speaker 1: it's better than any stocker mom soap opera. You could

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Speaker 1: be sitting on the couch and ping laundry. I've made

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Speaker 1: so many good friends, and I've learned so much about bitcoin. Uh,

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Speaker 1: I just I don't even I can't even explain the

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Speaker 1: adventure I've been on in the last two and a

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Speaker 1: half years. And as that pertains to eat, Yes, there

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Speaker 1: really weren't any back that. You know. I had to

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Speaker 1: dig deep and figure out what miners were more efficient,

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Speaker 1: which ones had better management, which ones had lower electricity costs,

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Speaker 1: which one had newer miners. You know. Um, I have

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Speaker 1: like a million questions for Ethan because he's kind of

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Speaker 1: low key one of the probably most informed people on

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Speaker 1: bitcoin mining economics. Let's do this then, So you've invested

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Speaker 1: in one company in particular, HUT eight, right, and I

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Speaker 1: liken this to like the dilemma that in any investor

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Speaker 1: faces is like, Okay, do you do you go long

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Speaker 1: on on one company that you're especially fond of, or

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Speaker 1: do you diverse find an instrument that you can diversify with.

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Speaker 1: So you've got a ton of research on individual companies.

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Speaker 1: What do you want to know about an et F

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Speaker 1: for for Ethan? What kind of questions do you have

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Speaker 1: for him? I think for me is how well how

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Speaker 1: do you weight your basket? Right? So there's certainly some

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Speaker 1: economic factors you can look at when you're comparing these miners.

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Speaker 1: What we've seen so far is that Twitter has loved

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Speaker 1: the Halsh rate based metrics, So determining how much compute

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Speaker 1: power these each of them own, or their revenue or

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Speaker 1: the megawats deployed. What else is that you really want

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Speaker 1: to start looking at a little bit further down the

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Speaker 1: p m L, mostly because that really showcases two things. One,

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Speaker 1: the operational efficiency of the hardware that they're running. Miners

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Speaker 1: that are running latest gen equipment released in you know,

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Speaker 1: are are better suited than ones that are running twenty

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Speaker 1: seen hardware. And second, it shows their their cost of power,

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Speaker 1: which is a very important factor for these miners. And

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Speaker 1: so looking at kind of metrics that are further down

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Speaker 1: the p m L is quite important and not only

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Speaker 1: looking at pure compute power or revenue numbers. Um. There's

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Speaker 1: there's certainly other economic decisions that we look at when

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Speaker 1: when looking at determining the valuation of a miner and

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Speaker 1: which miners are good to allocate to. But there's also

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Speaker 1: a lot of qualitative factors. Right now, there is a

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Speaker 1: two different real school of thoughts between miners. One is

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Speaker 1: I want to own the entire stack and be vertically

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Speaker 1: integrated from the energy production, the infrastructure to the mining.

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Speaker 1: And then the other school of thought is my best

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Speaker 1: use of capital is deploying it only into miners. And

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Speaker 1: to give tangible examples, maybe a Marathon Digital is in

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Speaker 1: that camp where they allocate of their capital into basic machines,

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Speaker 1: where somebody like bid farms are Riot owns their own

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Speaker 1: farms and so they're investing capital into both infrastructure and

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Speaker 1: a six And so depending on your views in the

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Speaker 1: market and how it's going to play out, that will

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Speaker 1: determine whether you think strategy or shrg B is going

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Speaker 1: to be the better long suit to play. I don't

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Speaker 1: know if there is like a clear you know winner

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Speaker 1: here in the long run. I would say that if

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Speaker 1: you are allocating more capital to machines. You're going to

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Speaker 1: do very well in a bowl market, but you're going

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Speaker 1: to be less resilient when that bitcoin price fall. So

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Speaker 1: what are your thoughts on Iris and Iron and how

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Speaker 1: they are basically just you know, selling all of their

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Speaker 1: bitcoin to build infrastructure and so how that kind of

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Speaker 1: they have a completely different strategy than you know, where

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Speaker 1: Mara doesn't own the infrastructure, they just own the machines

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Speaker 1: and then they hoddle. And then you know, then there's

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Speaker 1: HUT eight and bit farms where they they own some

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Speaker 1: of the infrastructure and not all of it, and then

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Speaker 1: you know, they own their machines and then they hoddle

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Speaker 1: their bitcoin. What are your thoughts on those three different strategies.

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Speaker 1: And I feel the same, I don't really think there's

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Speaker 1: going to be a clear winner. Maybe there will be,

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Speaker 1: I don't know, um, but but I'm also seeing that

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Speaker 1: with the e t s where like you know, you

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Speaker 1: guys have the semi conductors as as the adjacent another

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Speaker 1: what is it the Valkyrie one is uh green energy,

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Speaker 1: and then the future of finance at gray scale is

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Speaker 1: the one that is more sort of like financial payment plans.

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Speaker 1: So what are your thoughts on that and how that

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Speaker 1: is going to evolve the different strategies. Yeah, so I

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Speaker 1: think each trategy has its own validity talking to the

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Speaker 1: first question, which is I was selling the bitcoin in

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Speaker 1: which they mind every day. If you if you look

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Speaker 1: at other commodity of producers, for example, gold producers, they

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Speaker 1: don't hold gold on their balance sheet. Their exposure to

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Speaker 1: gold is their ongoing revenue and then they sell that

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Speaker 1: to USD or Canadian every day. Um. And so there

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Speaker 1: there is an approach from some of the bitcoin miners

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Speaker 1: and bid farms was the early one where our exposure

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Speaker 1: to bitcoin is in our future revue new and the

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Speaker 1: machines on our balance sheet. We don't need to take

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Speaker 1: a third risk, which is also our treasury. And so

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Speaker 1: that tragedy is very useful in bear markets where the

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Speaker 1: bitcoin prices going down. But in bold markets like we

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Speaker 1: saw over the past, the companies that held more bitcoin

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Speaker 1: on their balance sheet ended up performing better because they

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Speaker 1: you know, uh, were benefited from that you know, accumulating

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Speaker 1: bitcoin and the appreciation of that asset. And so I

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Speaker 1: think each strategy has its own merits, but they will

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Speaker 1: perform differently in different markets. UM. One thing that people

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Speaker 1: don't really look at is the value of the machines

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Speaker 1: on the balance sheet. One the value of a machine

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Speaker 1: was forty dollars a tear hash. By the end of

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Speaker 1: the year's ninety it actually outperformed the price of bitcoin itself.

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Speaker 1: So here these miners are sitting with millions of dollars,

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Speaker 1: if not hundreds of millions in hardware that is very

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Speaker 1: closely tied to the price of bitcoin, and so that

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Speaker 1: does represent significant exposure as well there. UM. So that

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Speaker 1: kind of talks to like the points of like Marathon

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Speaker 1: and holding bitcoin and miners on their balance sheet. UM

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Speaker 1: in terms of the semiconductor exposure and riggs, E t

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Speaker 1: F so r R A t F invest in both

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Speaker 1: bitcoin miners as well as adjacent markets like the semiconductors. UM.

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Speaker 1: We did this for for two main reasons. One, ets

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Speaker 1: have very strict diversification rules. The amount of bitcoin miners

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Speaker 1: in the universe last year was not large enough to

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Speaker 1: launch a specific bitcoin mining e t F, and so

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Speaker 1: we had to include some bigger names in there for

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Speaker 1: the purpose of the e t F structure. But more

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Speaker 1: than anything, we think it does represent a big part

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Speaker 1: of the overall industry. Bitcoin mining is so fascinating because

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Speaker 1: it sits in what I see is like the two

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Speaker 1: most impactful and interesting markets of the next decade. On

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Speaker 1: one hand, you have semiconductor manufacturers, which has all these

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Speaker 1: like geopolitical implications with China and Taiwan. And then the

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Speaker 1: other side you have energy infrastructure build out with renewable energy,

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Speaker 1: pushed battery storage, everything and kind of proof of work.

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Speaker 1: Bitcoin mining sits like smack dab right in the middle

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Speaker 1: of those two. UM. So it's a it's a really

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Speaker 1: fascinating place for for bitcoin mind be a part of it.

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Speaker 1: That's kind of why we allocated a bit to semiconductors there.

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Speaker 1: I love it. I guess that kind of leads into

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Speaker 1: my another question I have UM in regards to supporting

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Speaker 1: bitcoin mining and support reporting the grid energy grid UM

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Speaker 1: like like we're seeing with your AIRCT in Texas. I

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Speaker 1: was telling Joel the other day, I think it's a

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Speaker 1: really going to be interesting like test example on how

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Speaker 1: how that can be done efficiently, And uh, I'm curious

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Speaker 1: to hear what your thoughts are, like what you see

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Speaker 1: moving forward with that maybe across the country in North

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Speaker 1: American general, Almost every miner that we work with in

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Speaker 1: North America is trying to participate in what we call

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Speaker 1: demand response, where they're not acting as a stable load

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Speaker 1: on the grid. They're acting instead as an optional load

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Speaker 1: on the grid. And so that means that when the

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Speaker 1: grid has excess energy, um, they can sell that to

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Speaker 1: the crypto minor. But when they have a lack of

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Speaker 1: supply and over over demand, then they can take away

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Speaker 1: from it. Um. Let me step in here. I want

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Speaker 1: to go back to just sort of day in the life.

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Speaker 1: If you're a minor and you have I mean, I

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Speaker 1: guess there's all kinds of miners. But let's just say

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Speaker 1: the company you have, what are you doing all day?

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Speaker 1: Obviously these computers are doing this as you call blunt

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Speaker 1: force guesswork. Um, are you just making sure they stay on?

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Speaker 1: Are you looking at the actual results? And what's it

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Speaker 1: like when there's a hit, Like does everybody cheers like

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Speaker 1: a siren that goes off? It's one of those red

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Speaker 1: flashing lights like you're in a hockey, yeah, or like

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Speaker 1: a Ghostbusters when they found a ghost or something, and

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Speaker 1: like or I guess a fire a firehouse. Yeah. No,

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Speaker 1: it's a really good question. So the companies that don't

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Speaker 1: own their own infrastructure run relatively lean teams. There's companies

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Speaker 1: out there with a few billion dollar market caps with

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Speaker 1: less than ten people and their entire staff. What those

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Speaker 1: people mostly were where they're raising money in capital markets,

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Speaker 1: talking to investors, legal work, making allocation decisions of which

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Speaker 1: machines to buy. So it's a very low input business.

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Speaker 1: If you're purely running your machines on somebody else's infrastructure,

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Speaker 1: you'll make the decision, Okay, I want to buy ten

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Speaker 1: thousand machines from bit Maine. I'm going to send them

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Speaker 1: to this farm in Texas. These guys are going to

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Speaker 1: run them for me. Whereas if you own your own infrastructure,

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Speaker 1: now you have this other layer of complexity where you

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Speaker 1: need construction teams, you need on the ground operations teams

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Speaker 1: that are monitoring the machines UM and and and of

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Speaker 1: course the capital markets and legal side as well, and

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Speaker 1: so those types of companies will employ more people. UM.

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Speaker 1: The machines, UH, the new generation machines are relatively stable.

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Speaker 1: So if you plug in top of the line bit

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Speaker 1: Maine machine and a good facility, you're not expecting that

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Speaker 1: to go down immediately, but you can expect like a

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Speaker 1: one percent failure rate across the year on these machines

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Speaker 1: in which you need to start an r M A process,

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Speaker 1: send it back to the manufacturer for warranty, replace the fans,

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Speaker 1: whatever it may be. Um, so there is some amount

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Speaker 1: of babysitting to do it. Our our company isn't a

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Speaker 1: minor per se because we run the software. But we

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Speaker 1: do own six machines right now and we have one

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Speaker 1: person that monitors all six d So, um, it doesn't

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Speaker 1: require a ton of human capital, but it does require

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Speaker 1: you know, a little bit. And then just back to

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Speaker 1: the question, Um, if there is a hit and how

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Speaker 1: often does it hit and how excited do people get?

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Speaker 1: Like we just can you just take us into that moment? Yeah,

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Speaker 1: this is a rabbit hole for us to go down. Uh,

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Speaker 1: well we want do we want to talk about the

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Speaker 1: mining pool or do we want to go down that direction? Well,

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Speaker 1: here we go, so go halfway down, halfway down. We

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Speaker 1: don't want to go all the way. My my company, Luxur,

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Speaker 1: runs what's called the mining pool. What we do is

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Speaker 1: we aggregate hash rate from multiple miners across the world

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Speaker 1: so that the chances of a hitting block increases the

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Speaker 1: chance of anyone singularly hitting a block by themselves is

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Speaker 1: very low because there's only add four blocks per day,

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Speaker 1: and so the four of us would pull together are

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Speaker 1: each of our computers, and the chances we hit a

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Speaker 1: block improves, and then we we dish out the reward

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Speaker 1: equally between us um Now, to add one step of

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Speaker 1: complexity on top of that, what Luxury does as a

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Speaker 1: minding pools we stabilize those earnings. So what we do

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Speaker 1: is we pay you out based on the expected earnings

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Speaker 1: rather than the actual. The simplest analogy I can do

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Speaker 1: is a lottery. Imagine that you have one lottery ticket

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Speaker 1: out of ten lottery tickets, and the total lotteries worth

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Speaker 1: ten dollars. The expected value of your ticket is one dollar. Right,

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Speaker 1: in reality, it'll be where's zero dollars nine times out

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Speaker 1: of ten, and then ten one time out of ten? Likely,

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Speaker 1: But what Luxura will do is we'll buy that ticket

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Speaker 1: from you right off the bat. We'll say, hey, we'll

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Speaker 1: come to you. We'll buy that for ninety eight cents.

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Speaker 1: So we take that two cents expected value and you

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Speaker 1: get paid out regardless. That diminishes the excitement. Yeah, I

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Speaker 1: wanted something. I wanted people jumping up and down, hugging

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Speaker 1: each other. I guess you've ruined it with this system,

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Speaker 1: but it makes sense. I guess, well, now we're going

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Speaker 1: to do that all internally, so we just we stole

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Speaker 1: all the fun or or when the China. So this happened,

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Speaker 1: all of our North American miners had a better statistical

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Speaker 1: chance of winning the block, and so all of them

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Speaker 1: made a lot of money. And now we're seeing all

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Speaker 1: that hash come back on. It's kind of like wall wall,

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Speaker 1: But yeah, that was exciting. Yeah, mining economics still improved, Ethan,

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Speaker 1: I want I want to just ask, like, when you

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Speaker 1: talk to somebody who's not got exposure to to bitcoin

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Speaker 1: or even bitcoin mining, how do you explain it to

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Speaker 1: them that this is something that they should be maybe

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Speaker 1: more aware of. How do you how do you how

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Speaker 1: do you speak to the non crypto universe. Yeah, so

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Speaker 1: when it comes to like talking to people about bitcoin,

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Speaker 1: I get very philosophical. Um, you know, I'm talking to

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Speaker 1: them about independence when it comes to the financial system inclusion, Uh,

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Speaker 1: it's really like the Internet but for the financial system.

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Speaker 1: And are starting to see that play out across like

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Speaker 1: various events like the go fund me and the truckers

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Speaker 1: and Canada and whatnot. So people are starting to really

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Speaker 1: get it, even in the West where historically we haven't

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Speaker 1: had a large distress for our government like they do

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Speaker 1: in places like South America and some other parts of

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Speaker 1: the world. Um So, I think that's the part that

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Speaker 1: I really hit on with with investors into bitcoin is

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Speaker 1: this is an entirely new financial system that isn't governed

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Speaker 1: by any single individual or corporation, and that is extremely

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Speaker 1: powerful to have as a backup to our existing system.

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Speaker 1: Maybe our existing system works, maybe it doesn't, but having

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Speaker 1: a backup is valuable, um in case it fails. And

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Speaker 1: what do you get with the mining exposure? Like what

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Speaker 1: why why double down on rigs instead of something else

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Speaker 1: that's crypto adjacent. So there's a few different ways to

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Speaker 1: get exposure to bitcoin mining. There's buying a machine yourself,

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Speaker 1: plugging it in, there's buying hash rate contracts, hash rate tokens,

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Speaker 1: and then there's investing in the publicly listed minors. The

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Speaker 1: first three are more like dividend plays. So you buy

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Speaker 1: a machine and you're earning bitcoin on day one that's

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Speaker 1: flowing into your wallet, and so it's a very different

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Speaker 1: investment profile than investing in the equity of a company,

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Speaker 1: specifically on the equity of a company. I think it's

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Speaker 1: valuable for a few reasons. One, it can be tax efficient,

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Speaker 1: so you can put it in your four one K

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Speaker 1: and these tax free savings accounts, and then to its

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Speaker 1: access is actually a high leveled play on bitcoin itself.

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Speaker 1: What we've seen over the past a few years is

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Speaker 1: that the public equities have some torque on the underlying commodity,

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Speaker 1: much like senior gold producers do on gold um. And

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Speaker 1: so if if bitcoin goes up, you know, two percent,

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Speaker 1: we'll see the miners go up some multiple time, which

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Speaker 1: is also true on the way down, by the way too,

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Speaker 1: So it can be quite painful. And to that end,

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Speaker 1: like I just want to talk about, you know, the

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Speaker 1: past few weeks have been I'm sure your stomach, you know,

432
00:22:44,680 --> 00:22:47,280
Speaker 1: the roller coaster has gone down. You know, your your

433
00:22:47,320 --> 00:22:50,280
Speaker 1: price in November was up close to fifty five it's

434
00:22:50,320 --> 00:22:53,600
Speaker 1: now about you know, less than half that, And I'm

435
00:22:53,720 --> 00:22:55,679
Speaker 1: just curious, like what's it like to take that, right?

436
00:22:55,720 --> 00:22:57,879
Speaker 1: I mean, you've had this etf for for less than

437
00:22:57,920 --> 00:23:00,640
Speaker 1: a year even, right, and you've you've sperience to high

438
00:23:00,640 --> 00:23:03,159
Speaker 1: and now you're down to the low, Like, what's that like,

439
00:23:04,640 --> 00:23:07,119
Speaker 1: It's tough. We've done it over the past four and

440
00:23:07,160 --> 00:23:10,120
Speaker 1: a half years. I remember in March bitcoin hit three

441
00:23:10,119 --> 00:23:12,119
Speaker 1: and a half k I was in the gym just

442
00:23:12,200 --> 00:23:13,919
Speaker 1: like looking at my phone. I called my co founder.

443
00:23:13,960 --> 00:23:16,560
Speaker 1: I was like, is this all over? Like the past

444
00:23:16,560 --> 00:23:18,159
Speaker 1: two and a half years, Like it's coming to an

445
00:23:18,240 --> 00:23:21,320
Speaker 1: end here. So it's definitely not for the faint of heart.

446
00:23:21,320 --> 00:23:23,879
Speaker 1: There's a lot of volatility now. The asset class is

447
00:23:23,920 --> 00:23:26,840
Speaker 1: still very nascent. It's a small market cap, So I

448
00:23:26,880 --> 00:23:28,879
Speaker 1: would just caution investors that there's going to be a

449
00:23:28,920 --> 00:23:31,480
Speaker 1: lot of volatility and sometimes it doesn't work out in

450
00:23:31,480 --> 00:23:33,720
Speaker 1: your favor. But if you're a long term believer in

451
00:23:33,760 --> 00:23:36,239
Speaker 1: the in this space, then you should start allocating it.

452
00:23:37,600 --> 00:23:40,439
Speaker 1: So this is fascinating, this volatility. You know, we we

453
00:23:40,440 --> 00:23:44,560
Speaker 1: would consider a bitcoin mining et f hot sauce, and

454
00:23:44,600 --> 00:23:47,199
Speaker 1: typically it is applied on top of the very boring

455
00:23:47,440 --> 00:23:51,879
Speaker 1: vanilla buy and hold portfolio in small portions. Therefore, you

456
00:23:51,920 --> 00:23:55,480
Speaker 1: can stomach the heat because it's not your main thing.

457
00:23:55,520 --> 00:23:57,159
Speaker 1: And I guess I'll go back to shar on this.

458
00:23:57,680 --> 00:24:01,639
Speaker 1: Obviously very into this, but this isn't your whole, like

459
00:24:01,720 --> 00:24:04,440
Speaker 1: retirement savings, right, or is this a is this hot

460
00:24:04,440 --> 00:24:07,480
Speaker 1: sauce for you? Or like what, I guess how much

461
00:24:07,520 --> 00:24:13,520
Speaker 1: are you applying here? It's definitely UM my high risk portfolio,

462
00:24:13,640 --> 00:24:17,040
Speaker 1: which is a very small percentage of my networth. That

463
00:24:17,080 --> 00:24:21,840
Speaker 1: being said, I really do believe in in the industry,

464
00:24:21,920 --> 00:24:24,520
Speaker 1: and I think that is it's more bitcoin. Is there

465
00:24:24,760 --> 00:24:29,399
Speaker 1: more mass adoption of bitcoin that it will become less volatile.

466
00:24:29,520 --> 00:24:32,440
Speaker 1: I was listening I can't remember what podcast. I think

467
00:24:32,480 --> 00:24:34,800
Speaker 1: it might have been the Fidelity one with Urine, and

468
00:24:34,840 --> 00:24:39,640
Speaker 1: he said that the that it was just as uh

469
00:24:39,920 --> 00:24:42,439
Speaker 1: was the sharp ratio was the same as a sixty

470
00:24:42,560 --> 00:24:46,840
Speaker 1: forty because of the increase in value of bitcoin over

471
00:24:46,920 --> 00:24:51,159
Speaker 1: time versus the volatility, it's actually the same, which I

472
00:24:51,200 --> 00:24:55,960
Speaker 1: found fascinating. UM. And so I think like for me

473
00:24:56,040 --> 00:24:58,840
Speaker 1: with the miners, I started buying them two and a

474
00:24:58,880 --> 00:25:01,679
Speaker 1: half years ago, so I've argo for less than a

475
00:25:01,760 --> 00:25:06,600
Speaker 1: dollar that had like a huge like up ticket brought

476
00:25:06,640 --> 00:25:11,520
Speaker 1: my net worth up a ton, and then I rebalanced. UM.

477
00:25:11,560 --> 00:25:14,880
Speaker 1: There are times when it's very frustrating because you're like, oh,

478
00:25:14,920 --> 00:25:18,359
Speaker 1: my portfolio was this and now it's that. UM. But

479
00:25:18,520 --> 00:25:22,320
Speaker 1: over time that it inevitably just continues to go up.

480
00:25:22,320 --> 00:25:24,400
Speaker 1: It's kind of like the same experience you have if

481
00:25:24,400 --> 00:25:28,439
Speaker 1: you've been invested in bitcoin for many years. It's like

482
00:25:28,480 --> 00:25:30,480
Speaker 1: you just get used to it and you don't really think.

483
00:25:30,520 --> 00:25:32,680
Speaker 1: I don't think in terms of what the share prices.

484
00:25:32,760 --> 00:25:35,000
Speaker 1: I think in terms of how many shares I have,

485
00:25:35,520 --> 00:25:38,919
Speaker 1: and then I've just disciplined myself to buy more on

486
00:25:39,000 --> 00:25:43,040
Speaker 1: red days versus buy into the momentum, and then I

487
00:25:43,119 --> 00:25:46,679
Speaker 1: just hold and if if something gets really overweighted. At

488
00:25:46,680 --> 00:25:50,120
Speaker 1: one point I had a lot of hut eight um,

489
00:25:50,160 --> 00:25:53,840
Speaker 1: I have trimmed those positions and opened a position and

490
00:25:53,920 --> 00:25:59,159
Speaker 1: core scientific Um, a position in Iris, a position in Marrow,

491
00:25:59,160 --> 00:26:01,680
Speaker 1: which I never did because when I started investing, Morrow

492
00:26:01,760 --> 00:26:04,680
Speaker 1: was a patentrol and they were involved in a lawsuit

493
00:26:04,760 --> 00:26:07,640
Speaker 1: and I just was not quite sure where they were

494
00:26:07,640 --> 00:26:10,399
Speaker 1: going or who their management was. And so well, so

495
00:26:10,480 --> 00:26:12,439
Speaker 1: this is a This is an interesting thing because you

496
00:26:12,840 --> 00:26:16,480
Speaker 1: effectively spread capital before an et F was available. You

497
00:26:16,520 --> 00:26:20,520
Speaker 1: were spreading your assets around a little bit right on

498
00:26:20,600 --> 00:26:24,440
Speaker 1: things that you could research. So what what would keep

499
00:26:24,480 --> 00:26:28,240
Speaker 1: you from from an e T F like Riggs as

500
00:26:28,240 --> 00:26:31,359
Speaker 1: a retail incestor well, I actually do own some rigs,

501
00:26:31,680 --> 00:26:35,120
Speaker 1: and as these e T s E T s has

502
00:26:35,280 --> 00:26:39,679
Speaker 1: UH started to emerge, I'll probably contribute more to RIGGS

503
00:26:39,840 --> 00:26:42,760
Speaker 1: and then as well. I really like the Great Scale

504
00:26:42,840 --> 00:26:46,720
Speaker 1: Future of Finance UM. And they both offer exposure to

505
00:26:46,880 --> 00:26:50,440
Speaker 1: different areas in the market. UM, because it's nice someone

506
00:26:50,440 --> 00:26:53,040
Speaker 1: else is doing the work for me. Finally I don't

507
00:26:53,080 --> 00:26:56,240
Speaker 1: have to do it myself UM. And then I couldn't

508
00:26:56,280 --> 00:27:06,120
Speaker 1: just learn more on Twitter. Sometimes, especially on financial Twitter,

509
00:27:06,160 --> 00:27:08,440
Speaker 1: there's people who just seem to get a lot out

510
00:27:08,440 --> 00:27:10,600
Speaker 1: of studying the markets, and some of the passive investors

511
00:27:10,640 --> 00:27:12,280
Speaker 1: are like, why would you do that? You're like, you

512
00:27:12,280 --> 00:27:14,720
Speaker 1: can have all this free time now that there is

513
00:27:14,720 --> 00:27:16,399
Speaker 1: an e t F for you found these ETFs that

514
00:27:16,560 --> 00:27:19,320
Speaker 1: satisfy you know, what you think are good and providing

515
00:27:19,320 --> 00:27:21,639
Speaker 1: a basket and obviously the diversification is good because some

516
00:27:21,680 --> 00:27:24,119
Speaker 1: will win, some will lose, and this way your your

517
00:27:24,160 --> 00:27:28,080
Speaker 1: volatility goes down and your risk goes down. Do you

518
00:27:28,440 --> 00:27:30,960
Speaker 1: enjoy it enough where you actually I would like to

519
00:27:31,040 --> 00:27:33,600
Speaker 1: keep doing it or does the eat or is the

520
00:27:33,600 --> 00:27:35,959
Speaker 1: e t F gonna make like I guess free up

521
00:27:35,960 --> 00:27:39,000
Speaker 1: your time and you're happy about that? Yeah, you get

522
00:27:39,040 --> 00:27:41,840
Speaker 1: eight hours a day back share. Yeah, that's a lot

523
00:27:41,880 --> 00:27:44,440
Speaker 1: of time. I think I'm going to do with yourself.

524
00:27:45,000 --> 00:27:49,040
Speaker 1: I have. I've managed our families finances and our in

525
00:27:49,080 --> 00:27:51,760
Speaker 1: our in our portfolio for fourteen years, and I've come

526
00:27:51,800 --> 00:27:54,879
Speaker 1: to the realization that I'm actually actively interviewing a family

527
00:27:54,920 --> 00:27:58,080
Speaker 1: office right now because I don't want to do all

528
00:27:58,840 --> 00:28:03,360
Speaker 1: the other stuff, um and because I actually just love

529
00:28:03,520 --> 00:28:07,359
Speaker 1: the bitcoin, bitcoin and bitcoin mining, and I spend so

530
00:28:07,440 --> 00:28:11,200
Speaker 1: much time learning about it that I find myself less

531
00:28:11,240 --> 00:28:14,399
Speaker 1: interested in like the day to day boring like money management.

532
00:28:14,520 --> 00:28:17,360
Speaker 1: So I'm going to take the majority of my net

533
00:28:17,400 --> 00:28:20,320
Speaker 1: worth and just take it off my shoulders, which is

534
00:28:20,359 --> 00:28:23,000
Speaker 1: really nice. And then as far as uh an e

535
00:28:23,160 --> 00:28:26,639
Speaker 1: t F, it'll just be nice to have in the

536
00:28:26,800 --> 00:28:29,600
Speaker 1: small amount of money that I my high risk portfolio

537
00:28:29,600 --> 00:28:32,240
Speaker 1: I want to keep under my management, and I want

538
00:28:32,240 --> 00:28:35,120
Speaker 1: to put chunks of that into the E t S

539
00:28:35,320 --> 00:28:40,040
Speaker 1: but continue to research because it's changing every day so fast,

540
00:28:40,880 --> 00:28:42,840
Speaker 1: so I think it will always be a mix for me,

541
00:28:42,880 --> 00:28:45,200
Speaker 1: and it's constantly evolving. And I think for me, like

542
00:28:45,520 --> 00:28:49,520
Speaker 1: for me to buy Mara with a huge deal, because

543
00:28:49,560 --> 00:28:52,480
Speaker 1: for so long I was like, no way, and then

544
00:28:52,600 --> 00:28:57,640
Speaker 1: I they've really proved themselves to to have their sort

545
00:28:57,680 --> 00:29:00,800
Speaker 1: of their strategy work for them and so I guess

546
00:29:00,840 --> 00:29:02,880
Speaker 1: I've kind of trusted them a little bit more over

547
00:29:02,920 --> 00:29:07,960
Speaker 1: time with my money. Um, so yeah, I know. Moving forward,

548
00:29:08,000 --> 00:29:09,920
Speaker 1: I just I think it gives me more time to

549
00:29:10,440 --> 00:29:13,840
Speaker 1: research the things that I want to research. Like I

550
00:29:13,960 --> 00:29:18,400
Speaker 1: have barely scratched the surface with mining pools because I've

551
00:29:18,440 --> 00:29:22,000
Speaker 1: just been wrapping my head around mining in general and

552
00:29:22,120 --> 00:29:26,480
Speaker 1: the economics behind you know, publicly traded companies. I feel

553
00:29:26,520 --> 00:29:28,360
Speaker 1: like I could I'm going to spend the next year

554
00:29:28,520 --> 00:29:33,120
Speaker 1: learning about that. Ethan real quick speaking of time, at

555
00:29:33,160 --> 00:29:36,040
Speaker 1: some point that all the bitcoin will be mined, correct,

556
00:29:36,800 --> 00:29:41,800
Speaker 1: and then what happens to these miners? Yeah, so there

557
00:29:41,840 --> 00:29:46,160
Speaker 1: will be no new block issuance, and so until then,

558
00:29:46,600 --> 00:29:49,040
Speaker 1: the mining revenue is subsidized by the network in the

559
00:29:49,080 --> 00:29:52,000
Speaker 1: form of newly minted coins. So that's in a hundred

560
00:29:52,000 --> 00:29:55,760
Speaker 1: and eighteen years, but it every four years it decreases significantly,

561
00:29:55,840 --> 00:29:57,960
Speaker 1: So in the next ten years it will be very small.

562
00:29:58,800 --> 00:30:02,520
Speaker 1: After the only amount of revenue going to the miners

563
00:30:02,560 --> 00:30:04,880
Speaker 1: will be through a transaction piece. If I send you

564
00:30:04,920 --> 00:30:07,040
Speaker 1: bitcoin right now, we'll include a little bit of bitcoin,

565
00:30:07,120 --> 00:30:09,200
Speaker 1: then it that will go to the miners. And so

566
00:30:09,320 --> 00:30:12,320
Speaker 1: in order for the network to continue the growth, that

567
00:30:12,360 --> 00:30:15,200
Speaker 1: it has in security of compute power. We need to

568
00:30:15,200 --> 00:30:17,520
Speaker 1: see an uptick in bitcoin price for for that to

569
00:30:17,600 --> 00:30:20,640
Speaker 1: continuously be secured at the level it is today. So

570
00:30:20,840 --> 00:30:22,840
Speaker 1: I want to bring it back to Riggs. Then, you know,

571
00:30:22,920 --> 00:30:24,760
Speaker 1: if if we had been talking to you a couple

572
00:30:24,760 --> 00:30:28,160
Speaker 1: of years ago, and you know, you could have forecast

573
00:30:28,200 --> 00:30:32,480
Speaker 1: what where you've where you've gone now, right, just you know,

574
00:30:32,600 --> 00:30:34,719
Speaker 1: imagine fast forwarding into the future. What what do you

575
00:30:34,760 --> 00:30:37,000
Speaker 1: think RIGGS is going to look like in you know,

576
00:30:37,520 --> 00:30:39,760
Speaker 1: give it three years. What's the space going to look like?

577
00:30:39,800 --> 00:30:43,400
Speaker 1: What are you gonna be investing in? So one of

578
00:30:43,400 --> 00:30:46,000
Speaker 1: the reasons we chose to go active management was for

579
00:30:46,040 --> 00:30:48,600
Speaker 1: that reason. We want a mandate to really react to

580
00:30:48,640 --> 00:30:52,160
Speaker 1: market cycles. And we hired West Fulford, who is the

581
00:30:52,160 --> 00:30:54,640
Speaker 1: old CEO of bit Farms, knows the mining industry like

582
00:30:54,720 --> 00:30:57,400
Speaker 1: pretty much no other and he is the portfolio manager

583
00:30:57,400 --> 00:31:00,000
Speaker 1: of the fund um so it really allows him flexive

584
00:31:00,000 --> 00:31:02,320
Speaker 1: ability to kind of attack some of these opportunities that

585
00:31:02,320 --> 00:31:04,840
Speaker 1: we see in the market moving forward. I guess three

586
00:31:04,880 --> 00:31:06,880
Speaker 1: years is hard to determine, but I think over the

587
00:31:06,920 --> 00:31:08,600
Speaker 1: next year you'll start to see a lot of new

588
00:31:08,720 --> 00:31:11,000
Speaker 1: entrants come in. There's a lot of SPACs and i

589
00:31:11,080 --> 00:31:13,400
Speaker 1: pos on their way um, as well as a lot

590
00:31:13,440 --> 00:31:16,080
Speaker 1: of the Chinese mining giants moving over to the US.

591
00:31:16,160 --> 00:31:19,560
Speaker 1: I think those represent really good opportunities because they typically

592
00:31:19,560 --> 00:31:22,440
Speaker 1: traded a discount to their American peers, mostly because of

593
00:31:22,480 --> 00:31:26,960
Speaker 1: their communication and another uh perceived notation of them. But

594
00:31:27,000 --> 00:31:29,440
Speaker 1: they're massive companies with a lot of access to capital

595
00:31:29,440 --> 00:31:31,840
Speaker 1: and expertise in building over the past five years. So

596
00:31:32,200 --> 00:31:33,880
Speaker 1: I think there's gonna be a lot of opportunity in

597
00:31:33,880 --> 00:31:36,080
Speaker 1: the next year or so to invest in the Chinese

598
00:31:36,160 --> 00:31:38,480
Speaker 1: names versus some of the American names are the ones

599
00:31:38,520 --> 00:31:40,400
Speaker 1: that we all know today as the Marathons and the

600
00:31:40,400 --> 00:31:44,360
Speaker 1: Core Size and the Riots of the world. Okay, I

601
00:31:44,440 --> 00:31:47,440
Speaker 1: have one last one though, Joel completely off topic, but

602
00:31:47,480 --> 00:31:48,959
Speaker 1: we got someone who went to high school with you,

603
00:31:49,000 --> 00:31:52,080
Speaker 1: so I gotta I can't let this go. Sure, um,

604
00:31:52,280 --> 00:31:54,480
Speaker 1: you know what was Joel like? Like, what group was

605
00:31:54,520 --> 00:31:56,840
Speaker 1: he in? And how much has he changed since high school?

606
00:31:57,760 --> 00:32:01,080
Speaker 1: You know, Joel can really get along with any of

607
00:32:01,200 --> 00:32:05,280
Speaker 1: the groups. He was definitely uh, the smart, the smart kid,

608
00:32:05,320 --> 00:32:10,080
Speaker 1: but he also played sports and you know he didn't

609
00:32:10,240 --> 00:32:14,760
Speaker 1: He was pretty straightlaced, but he in college could definitely rage.

610
00:32:15,040 --> 00:32:17,840
Speaker 1: We had some good time. So he like in other words,

611
00:32:17,880 --> 00:32:19,160
Speaker 1: he was he was one of those kids that was

612
00:32:19,160 --> 00:32:20,760
Speaker 1: like kind of pent up, and he hit college and

613
00:32:20,800 --> 00:32:24,360
Speaker 1: he went wild. Well from well from my point of view,

614
00:32:24,360 --> 00:32:26,440
Speaker 1: because I did my part. I did some partying in

615
00:32:26,520 --> 00:32:28,760
Speaker 1: high school and I remember seeing and at at it

616
00:32:29,280 --> 00:32:31,560
Speaker 1: he was in a fraternity. I remember seeing Metakager at

617
00:32:31,600 --> 00:32:33,960
Speaker 1: his fraternity and he was having a good time, and

618
00:32:34,000 --> 00:32:40,960
Speaker 1: I thought, wow, I got it. Okay, I've known guys

619
00:32:41,040 --> 00:32:44,680
Speaker 1: like that. I started like junior of high school, so

620
00:32:44,680 --> 00:32:48,320
Speaker 1: I kind of had a little head start into college,

621
00:32:48,360 --> 00:32:52,080
Speaker 1: but definitely colleges where I think most people start to

622
00:32:52,080 --> 00:32:56,239
Speaker 1: go a little wild. It was completely healthy though for

623
00:32:56,360 --> 00:33:04,160
Speaker 1: him he has always uh main pained h balance yeahs,

624
00:33:04,960 --> 00:33:08,640
Speaker 1: which is why I co host a podcast called Trillions

625
00:33:08,680 --> 00:33:12,320
Speaker 1: about E t F s. Okay, I want to I

626
00:33:12,320 --> 00:33:14,719
Speaker 1: want to eatan. I want to give you m the

627
00:33:14,800 --> 00:33:18,480
Speaker 1: final question. It's a question we often ask guests on

628
00:33:18,480 --> 00:33:21,680
Speaker 1: on Trillions, what's your favorite E t F ticker other

629
00:33:21,720 --> 00:33:28,200
Speaker 1: than your own favorite E t F ticker? UM, Maybe

630
00:33:28,240 --> 00:33:30,160
Speaker 1: not to give one of our competitors to shadow, but

631
00:33:31,600 --> 00:33:33,400
Speaker 1: w g M I is a is a nice one.

632
00:33:33,440 --> 00:33:35,720
Speaker 1: They got there and I love the like meme factor ones,

633
00:33:35,760 --> 00:33:38,400
Speaker 1: which really speaks to like how the market is is

634
00:33:38,440 --> 00:33:42,080
Speaker 1: looking these days. Um it's really easy for traditional investors

635
00:33:42,080 --> 00:33:45,920
Speaker 1: to like overlook how impactful memes can be, and that's

636
00:33:45,960 --> 00:33:49,120
Speaker 1: why we went with Riggs to um. So yeah, anyone

637
00:33:49,200 --> 00:33:53,240
Speaker 1: with the meme I'm a fan of Alright, sre Ethan,

638
00:33:53,480 --> 00:34:01,960
Speaker 1: thanks so much for joining us on Trillions. Thanks for

639
00:34:02,000 --> 00:34:04,600
Speaker 1: listening to Trillions until next time. You can find us

640
00:34:04,600 --> 00:34:08,640
Speaker 1: on the Bloomberg Terminal, Bloomberg dot com, Apple Podcast, Spotify,

641
00:34:08,920 --> 00:34:11,480
Speaker 1: and wherever else you like to listen. We'd love to

642
00:34:11,520 --> 00:34:14,680
Speaker 1: hear from you. We're on Twitter, I'm at Joel Webber Show.

643
00:34:14,840 --> 00:34:18,760
Speaker 1: He's at Eric Baltunas. This episode of Trillions was produced

644
00:34:18,760 --> 00:34:22,520
Speaker 1: by Magnus Hendrickson. Frincesca Levy is the head of Bloomberg Podcast.

645
00:34:23,040 --> 00:34:33,800
Speaker 1: Bye o