WEBVTT - When a Soccer Mom Tells You About Bitcoin Mining... 0:00:05.680 --> 0:00:08.360 Well kind of trains. I'm Joel Weber and Alberic bel Tunis. 0:00:13.440 --> 0:00:16.840 Sometimes in your life you have friends who are like, 0:00:17.040 --> 0:00:19.680 I hit it, I made a ton of money on something, 0:00:19.880 --> 0:00:22.480 or even just a little bit of money, And it 0:00:23.079 --> 0:00:26.440 increasingly feels like that voice comes from crypto more than 0:00:26.440 --> 0:00:29.560 anywhere else. And I had a friend like that, and 0:00:29.600 --> 0:00:32.279 then I started telling you about this story and you're like, well, 0:00:32.320 --> 0:00:36.680 wait a second, we can we can do that in trillions. Yeah. No, 0:00:36.840 --> 0:00:40.280 we we like talking to the people. Um. So much 0:00:40.280 --> 0:00:44.240 of the financial media is analysts and industry people talking 0:00:44.240 --> 0:00:47.599 to each other, and so usually when we do those episodes, 0:00:47.640 --> 0:00:49.520 it resonates a lot with people because they can relate 0:00:49.560 --> 0:00:54.040 to an actual investor doing it themselves. Um. And because 0:00:54.040 --> 0:00:55.960 you're listening to this, you're probably a do it yourself 0:00:56.000 --> 0:00:58.640 investor or an advisor. So I think it's a really 0:00:58.640 --> 0:01:01.280 good type of guess to have. And I agree with 0:01:01.320 --> 0:01:04.200 you Crypto. I mean, what can you say. Everybody's very 0:01:04.200 --> 0:01:05.679 aware of what crypto is. But I will say I 0:01:05.720 --> 0:01:07.920 was at the kitty park the other day with my 0:01:08.040 --> 0:01:10.440 youngest and this one guy was like, oh, yeah, see 0:01:10.480 --> 0:01:13.119 that guy over there. He got into bitcoin or ether. 0:01:13.200 --> 0:01:14.880 I forget which coin it was, but you know, he 0:01:14.959 --> 0:01:17.920 was like, oh yeah, but back in like a you know, 0:01:17.959 --> 0:01:19.880 he's like, it's just like it's like a stuff of 0:01:19.959 --> 0:01:21.840 legends now if you got in early, and it's a 0:01:21.840 --> 0:01:25.040 whole thing. So clearly this is a major area and 0:01:25.120 --> 0:01:27.880 it's taking over a lot of the e t F 0:01:27.920 --> 0:01:30.200 markets in other parts of the country, and soon it 0:01:30.240 --> 0:01:32.039 will be a big deal in the US when they 0:01:32.120 --> 0:01:33.840 approve a spot et F. But there's other ways to 0:01:33.880 --> 0:01:37.679 get access, which will look at today. So my friend's 0:01:37.720 --> 0:01:40.760 name is Shar Burger. I've known her since junior high. 0:01:41.040 --> 0:01:44.360 We also went to high school, uh and college together. 0:01:44.520 --> 0:01:48.600 We're from Oregon originally she's in California and very specifically 0:01:48.640 --> 0:01:52.320 she's into bitcoin mining, which, um, there's a e t 0:01:52.520 --> 0:01:54.360 F that we also found that I also found out 0:01:54.360 --> 0:01:58.200 about through you and her, that we're also going to 0:01:58.280 --> 0:02:00.920 have the guy behind that eat e F, the co 0:02:01.040 --> 0:02:05.680 founder Ethan Vera at Pretty Funds, joined to talk about 0:02:05.760 --> 0:02:08.040 that side of the business. Look, this is going to 0:02:08.120 --> 0:02:09.720 be learning for both of us. We we know a 0:02:09.720 --> 0:02:12.480 lot less than Ethan and a lot less than Schar. Yeah, 0:02:12.520 --> 0:02:15.239 I mean Shar to be clear as fully disclosed that 0:02:15.280 --> 0:02:17.880 she spends upwards of like eight hours a day researching 0:02:17.919 --> 0:02:21.160 bitcoin miners. So in effect, we're gonna have you and 0:02:21.240 --> 0:02:24.920 me and then Shar, who's basically the voice of a 0:02:24.960 --> 0:02:29.000 retail investor, along with somebody who's brought not only an 0:02:29.000 --> 0:02:32.040 e t F to market for bitcoin mining, but also 0:02:32.800 --> 0:02:35.480 does a mining pool. So this will be an interesting 0:02:35.480 --> 0:02:38.000 one because we've never had a retail investor out of 0:02:38.040 --> 0:02:41.040 Mike with us doing some interviews. I'm going to learn 0:02:41.040 --> 0:02:43.560 a ton about bitpoint mining because I know almost nothing. 0:02:43.880 --> 0:02:47.080 I know I know Eric knows very little as well. 0:02:47.200 --> 0:02:52.880 It'll be a fun one this time on trillions bitcoin 0:02:52.960 --> 0:02:57.440 mining e t S Ethan Shar We can the trillions, 0:02:58.200 --> 0:03:03.000 thanks triving us on. Thank you, Ethan. I want to 0:03:03.040 --> 0:03:07.800 start with you because you've been into bitcoin mining longer 0:03:07.840 --> 0:03:10.280 than I knew it existed, I think. So, so what 0:03:10.360 --> 0:03:14.640 exactly do you do and talk to us about this 0:03:14.960 --> 0:03:18.639 transition into the CTF. Yeah, so I'm not as o 0:03:18.760 --> 0:03:21.640 g as Eric alluded to. I didn't join the class, 0:03:21.720 --> 0:03:25.119 but I did start a bitcoin mining company in seventeen. 0:03:25.520 --> 0:03:27.240 I was still going to college at the time and 0:03:27.280 --> 0:03:29.720 basically spent the weekends flying down in Kansas City that 0:03:29.800 --> 0:03:32.800 set up a mining farm. So coming from like a 0:03:32.880 --> 0:03:35.240 finance software background, I wanted to get hands on and 0:03:35.280 --> 0:03:37.480 actually learned that the process of what it takes to 0:03:37.480 --> 0:03:40.160 set up one of these horns end up going terribly wrong. 0:03:40.640 --> 0:03:43.040 I I often cite that there's two things you shouldn't 0:03:43.040 --> 0:03:45.520 do in this world. One is an attack Russia in 0:03:45.560 --> 0:03:47.640 the wintertime, and the second is launch of mining farm 0:03:47.720 --> 0:03:49.680 in Kansas City in the summer. And I happened to 0:03:49.720 --> 0:03:53.480 make that mistake. Um Shortly after that, I started focusing 0:03:53.480 --> 0:03:56.720 on mining pool software and along with some co founders, 0:03:56.760 --> 0:03:59.080 we we built lux Or mining Pool into one of 0:03:59.080 --> 0:04:02.120 the largest mining pools globally. It's currently number two. It's 0:04:02.200 --> 0:04:04.800 number ten in the world and number two in North America. 0:04:05.320 --> 0:04:07.440 We also do things like basic brokerage, so we help 0:04:07.440 --> 0:04:11.320 investors get access to buy machines. We launch other software products, 0:04:11.320 --> 0:04:14.200 and then most recently in March of last year, we 0:04:14.280 --> 0:04:17.520 launched a new company called Greedy Funds, which is as 0:04:17.520 --> 0:04:20.640 a manager specifically focused on bitcoin miners, and launched the 0:04:20.640 --> 0:04:24.240 first bitcoin mining e f from the New York Stock Exchange. Okay, 0:04:24.279 --> 0:04:27.440 so let's just dig into mining for a minute. I 0:04:27.440 --> 0:04:30.480 would when someone says bitcoin mining. This is what I mean. 0:04:30.520 --> 0:04:32.880 This is I did learn a little more about it. 0:04:32.920 --> 0:04:35.839 But when before I did, I just pictured a big 0:04:35.920 --> 0:04:39.600 like a bunch of computers, and I, you know, I 0:04:39.640 --> 0:04:42.760 actually thought that it was spitting out some kind of 0:04:43.120 --> 0:04:46.440 equation that you had to solve, like the chalkboard and 0:04:46.440 --> 0:04:49.279 goodwill hunting or something that like only a computer could do. 0:04:49.279 --> 0:04:51.520 And then I found out it's not really that. UM. 0:04:51.600 --> 0:04:53.039 And I know I'm probably get a lot of crap 0:04:53.120 --> 0:04:54.960 for saying that, but that's the truth. That's what I thought, 0:04:55.360 --> 0:04:57.640 And my colleague James educated me to a degree. But 0:04:57.680 --> 0:05:00.479 can you just explain what are these computers doing and 0:05:00.600 --> 0:05:04.800 how do they get bitcoin for doing it? Yeah, So 0:05:05.120 --> 0:05:09.320 before I jump into the technology behind it and the calculation, um, 0:05:09.440 --> 0:05:12.560 bitcoin mining is the backbone and bitcoin. It serves as 0:05:12.560 --> 0:05:16.039 the consensus mechanism that allows for new transactions to be 0:05:16.040 --> 0:05:18.560 added to the network and blocks to be secured. And 0:05:18.640 --> 0:05:21.200 so there is no bitcoin without the mining process. It's 0:05:21.200 --> 0:05:24.000 really pivotal to it in terms of what these machines 0:05:24.040 --> 0:05:26.800 are doing. So the machines that are securing the network 0:05:26.839 --> 0:05:29.800 are purpose built for one purpose only, which is mining 0:05:29.800 --> 0:05:33.080 bitcoin and other shot to five six variants, and so 0:05:33.720 --> 0:05:37.560 they're they're built what's called an application specific integrated circuit 0:05:37.720 --> 0:05:40.039 and a stick for short, and they can only solve 0:05:40.080 --> 0:05:42.960 this one type of equation. What the machines are doing 0:05:43.040 --> 0:05:46.000 is they're running through a trapdoor function known as the 0:05:46.040 --> 0:05:49.000 hashing algorithm and guests and checking brute force guests and 0:05:49.080 --> 0:05:52.200 checking UH inputs in order to achieve an output that 0:05:52.240 --> 0:05:54.800 would result in a valid block. And so a new 0:05:54.839 --> 0:05:58.799 generation hardware can do a hundred and ten trillion guesses 0:05:58.839 --> 0:06:01.479 per second you plug it in. It puts in a 0:06:01.520 --> 0:06:05.880 hundred and ten trillion inputs and shoots out a trillion outputs, 0:06:06.279 --> 0:06:08.839 and the goal is for one of those outputs to 0:06:08.920 --> 0:06:10.919 be a valid block and add a new block to 0:06:10.920 --> 0:06:14.680 the blockchain and older to add the new transactions and secure. Again, 0:06:15.120 --> 0:06:18.960 it's more about guessing. And that's where I Joe, I, 0:06:18.960 --> 0:06:20.760 I really didn't realize that. I thought I kept hearing 0:06:20.800 --> 0:06:24.400 equation and solving, but it's really just guessing and just 0:06:24.440 --> 0:06:27.479 how many numbers can you different order of the numbers, 0:06:27.480 --> 0:06:30.760 and and I guess characters until you hit the exact match. 0:06:31.040 --> 0:06:34.240 It almost seems like like again code breaking or something 0:06:34.240 --> 0:06:37.080 out of a like trying to basically break upen a 0:06:37.120 --> 0:06:40.520 safe or something correct. Yeah, and that's why the application 0:06:40.760 --> 0:06:43.920 specific integrated circuitsy A six are so much more powerful 0:06:43.920 --> 0:06:46.919 than GPUs or CPUs or any supercomputers for that matter, 0:06:47.279 --> 0:06:50.800 because they're so specific to this one task. Um that 0:06:50.839 --> 0:06:53.520 the hashing algorithm is a trapdoor function. So you know 0:06:53.560 --> 0:06:55.200 what you want to receive on the output, but you 0:06:55.240 --> 0:06:57.680 don't know which input would result in that, and so 0:06:57.760 --> 0:06:59.240 you're the only way to get through it is to 0:06:59.400 --> 0:07:02.840 root force. Okay, sure, I want to bring you in. 0:07:03.720 --> 0:07:05.800 I've talked to you enough about this to know that 0:07:05.839 --> 0:07:09.600 you haven't gone full crypto. But what was it about 0:07:09.800 --> 0:07:13.560 bitcoin mining that made you go? You know, I can 0:07:13.600 --> 0:07:16.800 do stocks, I can do whatever I want, but like, 0:07:17.120 --> 0:07:20.320 I'm gonna I'm gonna double down on this bitcoin mining space. 0:07:20.400 --> 0:07:22.679 What what drew you in as a as a retail investor. 0:07:24.520 --> 0:07:27.120 So I was at the point in my portfolio where 0:07:27.160 --> 0:07:29.960 I was looking for a little bit more risk. Um. 0:07:29.960 --> 0:07:32.400 I was actually just looking for emerging markets, and I 0:07:32.440 --> 0:07:35.640 went down, you know, the rabbit hole with genomics and 0:07:36.120 --> 0:07:40.480 you know, electric cars, um, and I ultimately landed on 0:07:40.680 --> 0:07:44.720 bitcoin mining and bitcoin At first, I you know, started 0:07:45.280 --> 0:07:48.720 stacking stats if you will. And then I just became 0:07:49.080 --> 0:07:55.600 completely fascinated with the economics and the emerging industry. There's 0:07:55.720 --> 0:07:59.360 literally never a dull moment. Something new happens every day. 0:07:59.800 --> 0:08:06.840 In addition to yes, it being a lucrative investment for me, um, 0:08:06.880 --> 0:08:09.520 it's better than any stocker mom soap opera. You could 0:08:09.560 --> 0:08:12.960 be sitting on the couch and ping laundry. I've made 0:08:13.000 --> 0:08:18.640 so many good friends, and I've learned so much about bitcoin. Uh, 0:08:18.920 --> 0:08:22.240 I just I don't even I can't even explain the 0:08:22.320 --> 0:08:24.200 adventure I've been on in the last two and a 0:08:24.200 --> 0:08:27.800 half years. And as that pertains to eat, Yes, there 0:08:27.840 --> 0:08:30.840 really weren't any back that. You know. I had to 0:08:30.920 --> 0:08:36.960 dig deep and figure out what miners were more efficient, 0:08:37.160 --> 0:08:41.960 which ones had better management, which ones had lower electricity costs, 0:08:42.280 --> 0:08:46.800 which one had newer miners. You know. Um, I have 0:08:46.920 --> 0:08:50.040 like a million questions for Ethan because he's kind of 0:08:50.280 --> 0:08:55.440 low key one of the probably most informed people on 0:08:57.000 --> 0:09:01.960 bitcoin mining economics. Let's do this then, So you've invested 0:09:02.000 --> 0:09:04.400 in one company in particular, HUT eight, right, and I 0:09:04.840 --> 0:09:07.960 liken this to like the dilemma that in any investor 0:09:08.080 --> 0:09:10.920 faces is like, Okay, do you do you go long 0:09:11.000 --> 0:09:14.680 on on one company that you're especially fond of, or 0:09:14.720 --> 0:09:17.240 do you diverse find an instrument that you can diversify with. 0:09:17.480 --> 0:09:20.960 So you've got a ton of research on individual companies. 0:09:21.160 --> 0:09:22.439 What do you want to know about an et F 0:09:22.559 --> 0:09:24.440 for for Ethan? What kind of questions do you have 0:09:24.520 --> 0:09:30.079 for him? I think for me is how well how 0:09:30.120 --> 0:09:34.280 do you weight your basket? Right? So there's certainly some 0:09:34.400 --> 0:09:37.280 economic factors you can look at when you're comparing these miners. 0:09:37.920 --> 0:09:40.280 What we've seen so far is that Twitter has loved 0:09:40.280 --> 0:09:42.920 the Halsh rate based metrics, So determining how much compute 0:09:42.920 --> 0:09:45.560 power these each of them own, or their revenue or 0:09:45.600 --> 0:09:48.880 the megawats deployed. What else is that you really want 0:09:48.880 --> 0:09:50.720 to start looking at a little bit further down the 0:09:50.760 --> 0:09:54.240 p m L, mostly because that really showcases two things. One, 0:09:54.280 --> 0:09:57.680 the operational efficiency of the hardware that they're running. Miners 0:09:57.720 --> 0:09:59.880 that are running latest gen equipment released in you know, 0:10:01.000 --> 0:10:03.320 are are better suited than ones that are running twenty 0:10:03.360 --> 0:10:06.480 seen hardware. And second, it shows their their cost of power, 0:10:06.600 --> 0:10:09.480 which is a very important factor for these miners. And 0:10:09.559 --> 0:10:11.959 so looking at kind of metrics that are further down 0:10:12.000 --> 0:10:13.959 the p m L is quite important and not only 0:10:13.960 --> 0:10:17.920 looking at pure compute power or revenue numbers. Um. There's 0:10:18.000 --> 0:10:20.840 there's certainly other economic decisions that we look at when 0:10:20.840 --> 0:10:23.320 when looking at determining the valuation of a miner and 0:10:23.400 --> 0:10:25.839 which miners are good to allocate to. But there's also 0:10:25.880 --> 0:10:28.599 a lot of qualitative factors. Right now, there is a 0:10:28.880 --> 0:10:32.160 two different real school of thoughts between miners. One is 0:10:32.280 --> 0:10:34.320 I want to own the entire stack and be vertically 0:10:34.320 --> 0:10:38.240 integrated from the energy production, the infrastructure to the mining. 0:10:38.520 --> 0:10:40.920 And then the other school of thought is my best 0:10:41.000 --> 0:10:43.600 use of capital is deploying it only into miners. And 0:10:43.679 --> 0:10:46.840 to give tangible examples, maybe a Marathon Digital is in 0:10:46.880 --> 0:10:51.079 that camp where they allocate of their capital into basic machines, 0:10:51.440 --> 0:10:54.880 where somebody like bid farms are Riot owns their own 0:10:54.960 --> 0:10:58.280 farms and so they're investing capital into both infrastructure and 0:10:58.320 --> 0:11:00.600 a six And so depending on your views in the 0:11:00.600 --> 0:11:02.320 market and how it's going to play out, that will 0:11:02.360 --> 0:11:05.320 determine whether you think strategy or shrg B is going 0:11:05.400 --> 0:11:07.520 to be the better long suit to play. I don't 0:11:07.520 --> 0:11:09.720 know if there is like a clear you know winner 0:11:09.760 --> 0:11:11.760 here in the long run. I would say that if 0:11:11.800 --> 0:11:14.439 you are allocating more capital to machines. You're going to 0:11:14.520 --> 0:11:16.480 do very well in a bowl market, but you're going 0:11:16.520 --> 0:11:26.160 to be less resilient when that bitcoin price fall. So 0:11:26.280 --> 0:11:28.800 what are your thoughts on Iris and Iron and how 0:11:28.840 --> 0:11:32.680 they are basically just you know, selling all of their 0:11:32.720 --> 0:11:36.520 bitcoin to build infrastructure and so how that kind of 0:11:36.679 --> 0:11:40.280 they have a completely different strategy than you know, where 0:11:40.320 --> 0:11:43.400 Mara doesn't own the infrastructure, they just own the machines 0:11:43.480 --> 0:11:46.360 and then they hoddle. And then you know, then there's 0:11:46.559 --> 0:11:49.920 HUT eight and bit farms where they they own some 0:11:50.000 --> 0:11:52.240 of the infrastructure and not all of it, and then 0:11:52.880 --> 0:11:55.800 you know, they own their machines and then they hoddle 0:11:55.880 --> 0:11:59.319 their bitcoin. What are your thoughts on those three different strategies. 0:11:59.360 --> 0:12:01.920 And I feel the same, I don't really think there's 0:12:01.960 --> 0:12:04.400 going to be a clear winner. Maybe there will be, 0:12:04.480 --> 0:12:07.880 I don't know, um, but but I'm also seeing that 0:12:07.920 --> 0:12:09.840 with the e t s where like you know, you 0:12:09.840 --> 0:12:12.880 guys have the semi conductors as as the adjacent another 0:12:13.400 --> 0:12:17.440 what is it the Valkyrie one is uh green energy, 0:12:17.600 --> 0:12:20.920 and then the future of finance at gray scale is 0:12:20.960 --> 0:12:25.320 the one that is more sort of like financial payment plans. 0:12:25.320 --> 0:12:27.240 So what are your thoughts on that and how that 0:12:27.400 --> 0:12:31.720 is going to evolve the different strategies. Yeah, so I 0:12:31.760 --> 0:12:34.560 think each trategy has its own validity talking to the 0:12:34.600 --> 0:12:37.240 first question, which is I was selling the bitcoin in 0:12:37.240 --> 0:12:39.440 which they mind every day. If you if you look 0:12:39.440 --> 0:12:42.840 at other commodity of producers, for example, gold producers, they 0:12:42.840 --> 0:12:45.880 don't hold gold on their balance sheet. Their exposure to 0:12:45.920 --> 0:12:48.240 gold is their ongoing revenue and then they sell that 0:12:48.360 --> 0:12:51.640 to USD or Canadian every day. Um. And so there 0:12:51.640 --> 0:12:54.520 there is an approach from some of the bitcoin miners 0:12:54.520 --> 0:12:58.120 and bid farms was the early one where our exposure 0:12:58.160 --> 0:13:00.400 to bitcoin is in our future revue new and the 0:13:00.400 --> 0:13:02.360 machines on our balance sheet. We don't need to take 0:13:02.360 --> 0:13:05.160 a third risk, which is also our treasury. And so 0:13:05.480 --> 0:13:08.160 that tragedy is very useful in bear markets where the 0:13:08.160 --> 0:13:11.240 bitcoin prices going down. But in bold markets like we 0:13:11.280 --> 0:13:14.880 saw over the past, the companies that held more bitcoin 0:13:14.920 --> 0:13:17.600 on their balance sheet ended up performing better because they 0:13:17.880 --> 0:13:21.239 you know, uh, were benefited from that you know, accumulating 0:13:21.240 --> 0:13:24.640 bitcoin and the appreciation of that asset. And so I 0:13:24.679 --> 0:13:27.160 think each strategy has its own merits, but they will 0:13:27.160 --> 0:13:31.360 perform differently in different markets. UM. One thing that people 0:13:31.440 --> 0:13:33.680 don't really look at is the value of the machines 0:13:33.760 --> 0:13:36.920 on the balance sheet. One the value of a machine 0:13:36.960 --> 0:13:39.000 was forty dollars a tear hash. By the end of 0:13:39.000 --> 0:13:42.199 the year's ninety it actually outperformed the price of bitcoin itself. 0:13:42.679 --> 0:13:45.320 So here these miners are sitting with millions of dollars, 0:13:45.320 --> 0:13:47.920 if not hundreds of millions in hardware that is very 0:13:47.960 --> 0:13:50.480 closely tied to the price of bitcoin, and so that 0:13:50.760 --> 0:13:55.560 does represent significant exposure as well there. UM. So that 0:13:55.640 --> 0:13:57.760 kind of talks to like the points of like Marathon 0:13:57.840 --> 0:14:00.920 and holding bitcoin and miners on their balance sheet. UM 0:14:01.000 --> 0:14:04.000 in terms of the semiconductor exposure and riggs, E t 0:14:04.160 --> 0:14:06.920 F so r R A t F invest in both 0:14:07.360 --> 0:14:11.480 bitcoin miners as well as adjacent markets like the semiconductors. UM. 0:14:11.520 --> 0:14:14.680 We did this for for two main reasons. One, ets 0:14:14.720 --> 0:14:19.040 have very strict diversification rules. The amount of bitcoin miners 0:14:19.080 --> 0:14:21.160 in the universe last year was not large enough to 0:14:21.320 --> 0:14:24.240 launch a specific bitcoin mining e t F, and so 0:14:24.280 --> 0:14:26.160 we had to include some bigger names in there for 0:14:26.200 --> 0:14:28.920 the purpose of the e t F structure. But more 0:14:28.960 --> 0:14:31.240 than anything, we think it does represent a big part 0:14:31.240 --> 0:14:34.800 of the overall industry. Bitcoin mining is so fascinating because 0:14:34.800 --> 0:14:36.480 it sits in what I see is like the two 0:14:36.480 --> 0:14:40.720 most impactful and interesting markets of the next decade. On 0:14:40.720 --> 0:14:43.880 one hand, you have semiconductor manufacturers, which has all these 0:14:43.880 --> 0:14:47.160 like geopolitical implications with China and Taiwan. And then the 0:14:47.160 --> 0:14:50.280 other side you have energy infrastructure build out with renewable energy, 0:14:50.320 --> 0:14:53.280 pushed battery storage, everything and kind of proof of work. 0:14:53.320 --> 0:14:55.840 Bitcoin mining sits like smack dab right in the middle 0:14:55.880 --> 0:14:58.040 of those two. UM. So it's a it's a really 0:14:58.080 --> 0:15:00.560 fascinating place for for bitcoin mind be a part of it. 0:15:00.920 --> 0:15:03.680 That's kind of why we allocated a bit to semiconductors there. 0:15:04.720 --> 0:15:06.760 I love it. I guess that kind of leads into 0:15:06.800 --> 0:15:10.840 my another question I have UM in regards to supporting 0:15:10.920 --> 0:15:14.920 bitcoin mining and support reporting the grid energy grid UM 0:15:14.960 --> 0:15:18.960 like like we're seeing with your AIRCT in Texas. I 0:15:19.040 --> 0:15:20.960 was telling Joel the other day, I think it's a 0:15:20.960 --> 0:15:25.000 really going to be interesting like test example on how 0:15:25.320 --> 0:15:30.280 how that can be done efficiently, And uh, I'm curious 0:15:30.280 --> 0:15:32.160 to hear what your thoughts are, like what you see 0:15:32.280 --> 0:15:35.800 moving forward with that maybe across the country in North 0:15:35.800 --> 0:15:39.760 American general, Almost every miner that we work with in 0:15:39.800 --> 0:15:42.360 North America is trying to participate in what we call 0:15:42.520 --> 0:15:46.200 demand response, where they're not acting as a stable load 0:15:46.240 --> 0:15:49.640 on the grid. They're acting instead as an optional load 0:15:49.640 --> 0:15:51.200 on the grid. And so that means that when the 0:15:51.240 --> 0:15:54.520 grid has excess energy, um, they can sell that to 0:15:54.520 --> 0:15:57.920 the crypto minor. But when they have a lack of 0:15:57.960 --> 0:16:01.200 supply and over over demand, then they can take away 0:16:01.200 --> 0:16:03.480 from it. Um. Let me step in here. I want 0:16:03.480 --> 0:16:06.000 to go back to just sort of day in the life. 0:16:06.080 --> 0:16:09.120 If you're a minor and you have I mean, I 0:16:09.160 --> 0:16:11.080 guess there's all kinds of miners. But let's just say 0:16:11.120 --> 0:16:14.080 the company you have, what are you doing all day? 0:16:14.080 --> 0:16:16.920 Obviously these computers are doing this as you call blunt 0:16:16.920 --> 0:16:20.920 force guesswork. Um, are you just making sure they stay on? 0:16:21.200 --> 0:16:25.120 Are you looking at the actual results? And what's it 0:16:25.160 --> 0:16:27.560 like when there's a hit, Like does everybody cheers like 0:16:27.560 --> 0:16:31.120 a siren that goes off? It's one of those red 0:16:31.160 --> 0:16:33.680 flashing lights like you're in a hockey, yeah, or like 0:16:33.680 --> 0:16:35.880 a Ghostbusters when they found a ghost or something, and 0:16:36.440 --> 0:16:39.440 like or I guess a fire a firehouse. Yeah. No, 0:16:39.480 --> 0:16:42.240 it's a really good question. So the companies that don't 0:16:42.240 --> 0:16:46.280 own their own infrastructure run relatively lean teams. There's companies 0:16:46.320 --> 0:16:48.280 out there with a few billion dollar market caps with 0:16:48.400 --> 0:16:51.200 less than ten people and their entire staff. What those 0:16:51.240 --> 0:16:54.640 people mostly were where they're raising money in capital markets, 0:16:54.680 --> 0:16:58.680 talking to investors, legal work, making allocation decisions of which 0:16:58.760 --> 0:17:02.960 machines to buy. So it's a very low input business. 0:17:02.960 --> 0:17:06.320 If you're purely running your machines on somebody else's infrastructure, 0:17:07.080 --> 0:17:08.920 you'll make the decision, Okay, I want to buy ten 0:17:08.920 --> 0:17:11.160 thousand machines from bit Maine. I'm going to send them 0:17:11.160 --> 0:17:13.240 to this farm in Texas. These guys are going to 0:17:13.320 --> 0:17:15.919 run them for me. Whereas if you own your own infrastructure, 0:17:16.000 --> 0:17:18.119 now you have this other layer of complexity where you 0:17:18.160 --> 0:17:21.480 need construction teams, you need on the ground operations teams 0:17:21.480 --> 0:17:25.159 that are monitoring the machines UM and and and of 0:17:25.200 --> 0:17:27.679 course the capital markets and legal side as well, and 0:17:27.760 --> 0:17:31.120 so those types of companies will employ more people. UM. 0:17:31.160 --> 0:17:34.760 The machines, UH, the new generation machines are relatively stable. 0:17:34.760 --> 0:17:37.320 So if you plug in top of the line bit 0:17:37.359 --> 0:17:40.399 Maine machine and a good facility, you're not expecting that 0:17:40.480 --> 0:17:43.000 to go down immediately, but you can expect like a 0:17:43.080 --> 0:17:45.880 one percent failure rate across the year on these machines 0:17:45.920 --> 0:17:47.840 in which you need to start an r M A process, 0:17:48.119 --> 0:17:50.800 send it back to the manufacturer for warranty, replace the fans, 0:17:50.880 --> 0:17:53.679 whatever it may be. Um, so there is some amount 0:17:53.680 --> 0:17:56.760 of babysitting to do it. Our our company isn't a 0:17:56.840 --> 0:17:59.280 minor per se because we run the software. But we 0:17:59.320 --> 0:18:01.600 do own six machines right now and we have one 0:18:01.640 --> 0:18:05.160 person that monitors all six d So, um, it doesn't 0:18:05.160 --> 0:18:07.280 require a ton of human capital, but it does require 0:18:07.359 --> 0:18:09.720 you know, a little bit. And then just back to 0:18:09.800 --> 0:18:13.320 the question, Um, if there is a hit and how 0:18:13.320 --> 0:18:15.920 often does it hit and how excited do people get? 0:18:15.960 --> 0:18:19.280 Like we just can you just take us into that moment? Yeah, 0:18:19.440 --> 0:18:21.639 this is a rabbit hole for us to go down. Uh, 0:18:23.280 --> 0:18:26.560 well we want do we want to talk about the 0:18:26.600 --> 0:18:29.920 mining pool or do we want to go down that direction? Well, 0:18:29.920 --> 0:18:32.119 here we go, so go halfway down, halfway down. We 0:18:32.160 --> 0:18:35.399 don't want to go all the way. My my company, Luxur, 0:18:35.520 --> 0:18:37.960 runs what's called the mining pool. What we do is 0:18:37.960 --> 0:18:41.400 we aggregate hash rate from multiple miners across the world 0:18:41.760 --> 0:18:44.679 so that the chances of a hitting block increases the 0:18:44.760 --> 0:18:47.639 chance of anyone singularly hitting a block by themselves is 0:18:47.720 --> 0:18:50.480 very low because there's only add four blocks per day, 0:18:50.760 --> 0:18:53.040 and so the four of us would pull together are 0:18:53.119 --> 0:18:55.240 each of our computers, and the chances we hit a 0:18:55.280 --> 0:18:57.920 block improves, and then we we dish out the reward 0:18:58.560 --> 0:19:01.760 equally between us um Now, to add one step of 0:19:01.800 --> 0:19:04.119 complexity on top of that, what Luxury does as a 0:19:04.160 --> 0:19:07.480 minding pools we stabilize those earnings. So what we do 0:19:07.560 --> 0:19:09.560 is we pay you out based on the expected earnings 0:19:09.640 --> 0:19:12.359 rather than the actual. The simplest analogy I can do 0:19:12.520 --> 0:19:15.280 is a lottery. Imagine that you have one lottery ticket 0:19:15.280 --> 0:19:18.280 out of ten lottery tickets, and the total lotteries worth 0:19:18.320 --> 0:19:22.200 ten dollars. The expected value of your ticket is one dollar. Right, 0:19:22.720 --> 0:19:25.479 in reality, it'll be where's zero dollars nine times out 0:19:25.520 --> 0:19:27.680 of ten, and then ten one time out of ten? Likely, 0:19:28.080 --> 0:19:29.920 But what Luxura will do is we'll buy that ticket 0:19:29.960 --> 0:19:31.960 from you right off the bat. We'll say, hey, we'll 0:19:31.960 --> 0:19:33.720 come to you. We'll buy that for ninety eight cents. 0:19:34.600 --> 0:19:37.119 So we take that two cents expected value and you 0:19:37.119 --> 0:19:44.760 get paid out regardless. That diminishes the excitement. Yeah, I 0:19:44.800 --> 0:19:48.119 wanted something. I wanted people jumping up and down, hugging 0:19:48.160 --> 0:19:50.840 each other. I guess you've ruined it with this system, 0:19:50.840 --> 0:19:53.080 but it makes sense. I guess, well, now we're going 0:19:53.119 --> 0:19:56.440 to do that all internally, so we just we stole 0:19:56.440 --> 0:20:01.080 all the fun or or when the China. So this happened, 0:20:01.119 --> 0:20:04.680 all of our North American miners had a better statistical 0:20:05.040 --> 0:20:08.280 chance of winning the block, and so all of them 0:20:08.520 --> 0:20:10.960 made a lot of money. And now we're seeing all 0:20:11.000 --> 0:20:13.800 that hash come back on. It's kind of like wall wall, 0:20:14.560 --> 0:20:22.240 But yeah, that was exciting. Yeah, mining economics still improved, Ethan, 0:20:22.280 --> 0:20:24.719 I want I want to just ask, like, when you 0:20:25.080 --> 0:20:30.080 talk to somebody who's not got exposure to to bitcoin 0:20:30.240 --> 0:20:33.879 or even bitcoin mining, how do you explain it to 0:20:33.920 --> 0:20:37.720 them that this is something that they should be maybe 0:20:37.720 --> 0:20:40.160 more aware of. How do you how do you how 0:20:40.160 --> 0:20:45.280 do you speak to the non crypto universe. Yeah, so 0:20:45.960 --> 0:20:47.840 when it comes to like talking to people about bitcoin, 0:20:47.880 --> 0:20:50.760 I get very philosophical. Um, you know, I'm talking to 0:20:50.800 --> 0:20:56.240 them about independence when it comes to the financial system inclusion, Uh, 0:20:56.280 --> 0:20:59.520 it's really like the Internet but for the financial system. 0:20:59.640 --> 0:21:01.520 And are starting to see that play out across like 0:21:01.640 --> 0:21:04.560 various events like the go fund me and the truckers 0:21:04.560 --> 0:21:07.480 and Canada and whatnot. So people are starting to really 0:21:07.480 --> 0:21:10.600 get it, even in the West where historically we haven't 0:21:10.600 --> 0:21:12.679 had a large distress for our government like they do 0:21:12.720 --> 0:21:15.919 in places like South America and some other parts of 0:21:15.920 --> 0:21:18.960