Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast.
Speaker 1: I'm Joe Wisenthal. Unfortunately, my colleague Tracy Alloway, she is
Speaker 1: off today and is particularly unfortunate because this is gonna
Speaker 1: be a big one. So, you know, like on this podcast,
Speaker 1: obviously we talk about chips a lot, and I think
Speaker 1: now we've done like eight different episodes on semiconductors and
Speaker 1: who makes them and the shortages and the challenges of
Speaker 1: building them and so forth. So Odd Lots listeners will
Speaker 1: know that we also do a fair number of episodes
Speaker 1: about cryptocurrencies, and of course that's for obvious reasons why
Speaker 1: cryptocracy has been going up a lot and it's a
Speaker 1: fascinating area. Well, this episode, I actually I'm gonna say
Speaker 1: it actually combines the two because it's slowly becoming or
Speaker 1: that you can't really talk about the semiconductor market right
Speaker 1: now without talking about cryptocurrencies because you need chips to
Speaker 1: mind them. And when they said, when the cryptocurrency market
Speaker 1: is booming, people want to acquire more chips to mind them,
Speaker 1: and it's becoming a sort of more significant source of demand.
Speaker 1: If you look in the video gamer community, there's a
Speaker 1: huge frustration about their inability to buy various graphics cards
Speaker 1: from the likes of Nvidia because etherory of miners snap
Speaker 1: them up. Recently, there have been stories out of Asia,
Speaker 1: China in particular, where people are are buying hard drives
Speaker 1: because they want to mind the new cryptocurrency Chia Bitcoin
Speaker 1: is mind using specialized chips, but ultimately that takes a
Speaker 1: chip production capacity to so really the stories are interlocked,
Speaker 1: I think in a way that I hadn't up until
Speaker 1: recently fully appreciated, and I not I would not say
Speaker 1: that cryptos main source of reason why there is a
Speaker 1: shortage or difficulty to get a semiconductors, but everything matters
Speaker 1: at the margin, and so we're going to explore this
Speaker 1: nexus today between what is going on in the world
Speaker 1: of semiconductors, the fight to acquire semiconductors between different players.
Speaker 1: Because you have the minors, you have the gamers, people
Speaker 1: use computers, you have data centers, which of course have
Speaker 1: tremendous chip needs, and they're all fighting it out for
Speaker 1: this semiconductor capacity and it all comes together and it's
Speaker 1: a really fascinating facet of all of these different stories
Speaker 1: brought together. I'm very excited about this episode. I am
Speaker 1: going to be speaking with Brian Venturo. He is the
Speaker 1: CTO and co founder of core Weave, which is uh
Speaker 1: it's a cloud computing company, and we'll get into the
Speaker 1: details of specifically what they do, but as a cloud
Speaker 1: computing company, of course, it's specifically has a lot of
Speaker 1: chip needs itself, and so he's gonna walk us through
Speaker 1: what the world looks like right now. He's also in
Speaker 1: the ethery of mining space, sees it from all the
Speaker 1: all the different angles. We're going to talk about that. So, Brian,
Speaker 1: thank you so much for coming on odd lots. Thank
Speaker 1: you so much for having me. This is a topic
Speaker 1: that I am near and unfortunately dear too, so I
Speaker 1: really excited to dig into it. So why don't you
Speaker 1: just get us started? I mean cloud computing. You know,
Speaker 1: people think of Amazon Aws, people think of Microsoft perhaps,
Speaker 1: but obviously they're not the only players. What is core
Speaker 1: Weave and how is it situated within the cloud computing ecosystem?
Speaker 1: We typically talk about ourselves as a specialized cloud right,
Speaker 1: so we're primarily providing highly scalable, highly paralyzable burst compute too.
Speaker 1: Companies that are in the VFX production and rendering space.
Speaker 1: That's VFX. That's video videographics correct, Like, so pretty much
Speaker 1: anything that you see that's episodic on a streaming channel,
Speaker 1: for that's being produced in long form content like that's
Speaker 1: being touched by a VFX artist somewhere, whether it's on
Speaker 1: the compositing layer or it is actually on the computer
Speaker 1: generated graphics layer. That stuff needs a significant amount of compute,
Speaker 1: and that's one of our focus areas as a business,
Speaker 1: so we're there for them. And then on in addition
Speaker 1: to that, it's AI machine learning, so it's model training
Speaker 1: and serving. There's one additional one that kind of sits
Speaker 1: between the media and entertainment space and the kind of
Speaker 1: batch processing space, which is called pixel streaming, which is
Speaker 1: serving real time experiences in your browser. Right, So if
Speaker 1: you ever go to configure a car online, they don't
Speaker 1: have seven million versions of that car render. They actually
Speaker 1: do it in real time on a GPU someone in
Speaker 1: the data. And then the last piece is kind of
Speaker 1: the legacy HPC, right, So it's highly parallelizable batch processing.
Speaker 1: It's people who are doing drug discovery, if they're doing
Speaker 1: cancer research, kind of everything under the sun. What makes
Speaker 1: us a little bit different is that we're not really
Speaker 1: competing for people to host their word press blugs. Right,
Speaker 1: So we're building for we're building scale compute for large
Speaker 1: customers of compute Um, and then we're kind of working
Speaker 1: with them all along the way to kind of meet
Speaker 1: their needs. And we do a lot of the spoke
Speaker 1: builds for people. So we're constantly in the in the
Speaker 1: chip market and in the component market. And just because
Speaker 1: every industry kind of has their own unique needs. So
Speaker 1: is there such a thing as a sort of a
Speaker 1: normal chip market? I mean right now, and we'll get
Speaker 1: we're going to get very deep into this, and right now,
Speaker 1: we know that there's incredible amount of demand for chips
Speaker 1: for cryptocurrency mining. But you know, go back, I don't know,
Speaker 1: it was a bear market for crypto There wasn't a
Speaker 1: lot of enthusiasm at the time. Talk to us about
Speaker 1: what a sort of normal chip market looks like and
Speaker 1: what your needs are as a company on a stay
Speaker 1: annual basis to acquire chips such that you can provide
Speaker 1: cloud services for your customers. Let's start with the normal
Speaker 1: world first. Yeah, So let's let's start off by framing
Speaker 1: the kind of ore and all needs perfect. We're probably
Speaker 1: buying between like let's call it seven and ten thousand
Speaker 1: servers a year. That's seven ten thousand servers is going
Speaker 1: to be built two different ways, right, One portion of that,
Speaker 1: we're going to build a house, which is typically like
Speaker 1: a really dense GPU compute, and then the second piece
Speaker 1: is going to be kind of more generic CPU builds
Speaker 1: that we buy for ancillary services and other things that
Speaker 1: may not be GPU focused, and that's typically from regular
Speaker 1: like O E m's like super Micro, HP, Dell, whoever
Speaker 1: that may be. What does the typical market look like? Well,
Speaker 1: you know, like sitting here today, I would I would
Speaker 1: die to go back to like six months ago. The
Speaker 1: typical market is a place where you can where things
Speaker 1: are in stock, and you may have trouble finding them,
Speaker 1: but it may take you a couple of hours and
Speaker 1: you can find the stock that you need and haven't
Speaker 1: delivered the next day. It's not really like that right now.
Speaker 1: I spend most of it's a little while that half
Speaker 1: my job here is really scouring the internet to try
Speaker 1: to find people that may have stocked. Like if I'm
Speaker 1: looking for a certain item, whether it's a CPU, whether
Speaker 1: it's RAM, whether it's a special motherboard that we're looking
Speaker 1: for you know, I go through a kind of our
Speaker 1: regular partner channels first, which is some of the large distributors,
Speaker 1: and then typically right now, I get told there's no
Speaker 1: chance to get that within sixteen weeks, and then I
Speaker 1: go to eBay, right and I don't go to eBay
Speaker 1: to buy the stuff. I go to eBay to just say, Okay,
Speaker 1: is there a supply out there? How do I source it?
Speaker 1: Because it's really hard to kind of connect buyers and
Speaker 1: sellers in this market because there's so many people that
Speaker 1: provide services and our distributors and resellers. So it's really
Speaker 1: like okay, like get a feel for what's out there,
Speaker 1: and then go hunt it down. So it's it's pretty wild.
Speaker 1: Like last year, it would be no problem for me
Speaker 1: to go out and get ten terabytes of RAM right
Speaker 1: and like sixty four gig dems of ten of RAM
Speaker 1: and build up ten terabytes and get it overnight it
Speaker 1: to me if we needed it for a build. And like,
Speaker 1: I mean, there was a time late last year where
Speaker 1: we actually had somebody get on an airplane from California
Speaker 1: to Chicago because we needed something done in like three hours.
Speaker 1: That's just not possible today. Wait, did that person have
Speaker 1: a chip in or some sort of chip set in
Speaker 1: there that they just traveled. They just got on the
Speaker 1: plane and brought it to Yeah, we needed that. We
Speaker 1: had to deliver something for a client. It was a
Speaker 1: late late on a Friday night and we needed I
Speaker 1: think it may have been like twenty terabytes of ramp okay,
Speaker 1: and we found a supplier in California that was still open,
Speaker 1: that had it in stock, and we we paid them
Speaker 1: extra to put them on a plane. Wow. Right, So
Speaker 1: a lot of what we do is very much just
Speaker 1: in time. Yeah. Right, So we we've done dumb stuff
Speaker 1: like that before. But if I needed to do that today,
Speaker 1: like I don't even think I could source the ramp.
Speaker 1: So again, we'll get to the today. But I want
Speaker 1: to keep diving further into the normal market. When you
Speaker 1: talk about GPUs, CPUs, RAM, talk to us a little
Speaker 1: bit about the difference between the two GPU and CPU
Speaker 1: and how they serve different types of applications for your customers.
Speaker 1: Let's start with the VFX industry. Okay, right there, it's
Speaker 1: really usable there for two different things. The first is
Speaker 1: for virtual workstations where artists are actually now fully migrated
Speaker 1: to the cloud, and working in the cloud on a
Speaker 1: on a desktop that that we've helped them set up.
Speaker 1: So you know, we have hundreds and hundreds of artists
Speaker 1: doing that today. They connect to us via a low
Speaker 1: latency application from their laptop or from their desktop at
Speaker 1: home or whatever it may be, and then they're connected
Speaker 1: to a hardware accelerated desktop in our cloud. That's one
Speaker 1: use for the GPU, right, The GPU provides the hardware
Speaker 1: acceleration of the desktop as well as the graphics for
Speaker 1: what they're doing. And then the second piece for for
Speaker 1: GPU compute on the VFX side is for the actual
Speaker 1: rendering itself. For us, we actually spend kind of two
Speaker 1: different markets in the rendering side, Like one is for
Speaker 1: for large studios where they have people rendering every day,
Speaker 1: and then we also operate a director consumer render farm
Speaker 1: for small freelancers and artists that has like just over
Speaker 1: twenty users at this point. On both sides, though, the
Speaker 1: demand there is is is bursty and crazy, where hey,
Speaker 1: they need to get a shot done, um, they need
Speaker 1: it done in the next two hours to meet a deadline,
Speaker 1: and if they were to do it on our own
Speaker 1: computer in their own farm, and may take them forty
Speaker 1: days we really become the only option at that point
Speaker 1: for some folks. UM, and you know, it's my job
Speaker 1: here to make sure that I have the GPS, the
Speaker 1: scale of GPS available to be able to handle a
Speaker 1: large number of concurrent users like that. I'm looking at
Speaker 1: your website and you know, scrolling down, one of the
Speaker 1: thing is is the GPUs you need when you need them,
Speaker 1: And you say, we currently have over in video GPUs.
Speaker 1: And so when we talk about this battle for chips
Speaker 1: between gamers and miners, these and I don't know if
Speaker 1: they're precisely the same, but generally speaking, these chips that
Speaker 1: you have are like the chips that everyone covets. No,
Speaker 1: they're not, right, So they're very similar in nature, but
Speaker 1: they're similar. Right. So we're in video cloud services provider partner. Okay,
Speaker 1: so we're restricted from offering consumer based GPUs in our cloud,
Speaker 1: got it, got it right. So we're actually we're required
Speaker 1: to buy datas energy pus. So, but from a technological standpoint,
Speaker 1: we're they're talking, we're talking about roughly the same family
Speaker 1: type of technology. Yeah, you know, yes, it's okay. Like
Speaker 1: the data center GPUs typically have a little bit higher quality,
Speaker 1: like they may have error correcting RAM instead of just
Speaker 1: regular video RAM on them, and then typically the frame buffers,
Speaker 1: so the actual amount of video memory on the GPU
Speaker 1: is going to be higher for the data center cards.
Speaker 1: Got it. But technologically what people are lining up for
Speaker 1: in stores outside of video games supply stores and what
Speaker 1: you have a deck of for do you I have thousand?
Speaker 1: Probably more? By now? It's a it's the same kind
Speaker 1: of technology. And it's the artists that would the animation
Speaker 1: artists who probably worked for big studios or television shows
Speaker 1: on Netflix and so forth. They all want access to
Speaker 1: roughly that same technological capability. Yeah, it went from having
Speaker 1: the access to that in their office now that they
Speaker 1: may not have i T. Staff that's sophisticated enough to
Speaker 1: set it up for them, or their office may no
Speaker 1: longer exist. Right, And we've seen this huge rush to
Speaker 1: the cloud, the wild things we get on the on
Speaker 1: with studios and they're like by the end of the call,
Speaker 1: they're like, Okay, when can we start to be honest
Speaker 1: with you. The problem that we have as a company
Speaker 1: is we're actually limited in our ability to onboard, right,
Speaker 1: is there's just so much demand for this cloud migration. Yeah,
Speaker 1: and then when I look at that from a capacity
Speaker 1: planning perspective, it's like you're looking at this environment that
Speaker 1: we have today where the world is in this one
Speaker 1: big shortage of everything possible. Doing the capacity planning and
Speaker 1: scaling for that is this is kind of hard. You
Speaker 1: said something, you said birth capacity, and again I'm looking
Speaker 1: at your website. It says the GPS you need when
Speaker 1: you need them. And so what I take from this
Speaker 1: is that perhaps there are some you know, consumer startups
Speaker 1: or whatever, and they might use AWS cloud and they
Speaker 1: use a sort of predictable on a day to day
Speaker 1: basis roughly share of cloud capacity. Well you're offering, though,
Speaker 1: I guess part of your niche. It sounds like, is
Speaker 1: here's someone who doesn't normally need computational power, but when
Speaker 1: they need crazy computational power, a burst of it. It's
Speaker 1: not regular, you have huge, you have huge scaling ability
Speaker 1: for them. Yeah, you know that. That's the crazy thing.
Speaker 1: When we hired a director of sales last year, I
Speaker 1: had known him for like ten years, and I was like, dude,
Speaker 1: like like every customer we talked to tells us they
Speaker 1: just cannot get the capacity they need at the big
Speaker 1: clouds and he's like, yeah, okay, like that's a bunch
Speaker 1: of b s whatever. Okay, you're being like hyperbolic. And
Speaker 1: then he joined us. In the first like fifty meetings,
Speaker 1: he did every one in the exact same thing. So
Speaker 1: I think that the industry really struggles with that access
Speaker 1: to scale. Yeah, right, And the reason for that is
Speaker 1: just I don't like a w S g C P
Speaker 1: ANDAGE or are building these. They're kind of hyper scale
Speaker 1: data center regions two handle every single use case under
Speaker 1: the sun, right, right, So they've got X number of
Speaker 1: types of CPU compute, they've got all different types of
Speaker 1: optimized compute, and you know, at the end of the day,
Speaker 1: there's only a certain portion that's available for the GPU stuff, right,
Speaker 1: And when that's our entire business, like, we can really
Speaker 1: approach it very differently. You know. What we want people
Speaker 1: to do is to come in and say, hey, I
Speaker 1: need to get two thousand GPUs. I need them for
Speaker 1: three hours. If they were to do that at AWUS
Speaker 1: like one, it may not even be possible for them
Speaker 1: if they don't have a good relationship. And then too,
Speaker 1: they probably have to do a lot of like manual
Speaker 1: engineering and reservation planning to get there, we have people
Speaker 1: come in all the time that they they'll burst the
Speaker 1: like to three four or five tho GPUs for like
Speaker 1: six hours and then we won't hear from again for
Speaker 1: three weeks. My commitment to them is that I want
Speaker 1: them to have that capacity without having to talk to me.
Speaker 1: So one thing that and I guess I kind of
Speaker 1: intuitively knew this before, but one thing that's making this
Speaker 1: clear is that cloud computing. You know, you think of
Speaker 1: a cloud like a literal clouds at the cloud up there,
Speaker 1: but cloud computing it's just not a commodity, both in
Speaker 1: terms of the specific types of applications, but also in
Speaker 1: UH scaling and the difference between sort of like standard
Speaker 1: run time consistent demand versus cloud that can be turned
Speaker 1: on at high scale for a client at a moment's notice.
Speaker 1: That's a really good point. I like to think that
Speaker 1: our scale helps us break the commodity label. Yeah, but
Speaker 1: for anybody who goes in then needs like one virtual
Speaker 1: machine with like four CPU corps and sixteen RAM like,
Speaker 1: all right, go get in the cheapest place, right, same same,
Speaker 1: But that's not even the people that we go after
Speaker 1: or talk to, right, I can't help them. I can't
Speaker 1: help them there, right, Why is RAM hard to come by? Okay,
Speaker 1: so let's go, let's go to crypto money, all right,
Speaker 1: I guess where I was. I was trying to like
Speaker 1: hold off the crypto part for as long as we could,
Speaker 1: but I knew eventually I would ask you a question
Speaker 1: and we'd stumble into the crypto parts. So let's I
Speaker 1: guess we're there now. Yeah, so that there's a lot
Speaker 1: of supply chain stuff here is going to be driven back,
Speaker 1: it's going to be kind of linked back to crypto. Well, actually,
Speaker 1: then in that case, let me so before then, you
Speaker 1: mentioned how you would love to go back like six
Speaker 1: months ago because your job was really easy. So when
Speaker 1: did you notice that things were starting to change and
Speaker 1: that sourcing compute, whether it's GPUs, CPUs or RAM, that
Speaker 1: was suddenly starting to get tighter. You know, every February
Speaker 1: it gets pretty rough because of Chinese New Year. Okay, Right,
Speaker 1: so you kind of rushed to get all your orders
Speaker 1: in before the end of because this is where it's
Speaker 1: all being manufactured. Yeah, before before the middle of January, right,
Speaker 1: and then if you get it in before the middle
Speaker 1: of January, they're gonna do everything they can to shift
Speaker 1: it out for the start of their holiday. If you
Speaker 1: sent it by air, you'll have it early February, sent
Speaker 1: it by boat end of February, but like if you wait,
Speaker 1: there's there's nothing that gets processed in February in China. Okay,
Speaker 1: So that was kind of like normal operating conditions in
Speaker 1: middle of January, and you know, Crypto was kind of
Speaker 1: doing his thing and it was kind of ripping the
Speaker 1: roof off and you saw it coming right, But a
Speaker 1: lot of that was, you know, that was really in
Speaker 1: the consumer side, and so consumer GPUs are really tight,
Speaker 1: didn't really impact us. And then starting in March, orders
Speaker 1: that we have placed in January that we're supposed to
Speaker 1: be in stock in the us UM and we're supposed
Speaker 1: to be delivered the next day, they didn't show up right.
Speaker 1: And this is like, let's call it medium quality server
Speaker 1: grade CPUs, so like a md epic rome platform, and
Speaker 1: we had maybe five hundred or seven fifty at least
Speaker 1: things on order, and it was like, okay, fine, like
Speaker 1: the other components that we need to do our bills
Speaker 1: aren't here yet, Like they arrived in early March, and
Speaker 1: we were actually waiting a GPUs at the time, and
Speaker 1: I kind of wasn't really pressing about it. And then
Speaker 1: the middle of March came and I'm like, where's my stuff?
Speaker 1: And you reach out and they go, oh, we didn't
Speaker 1: first see the semi conductor short. I'm like, what are
Speaker 1: you talking about? You told me these were in stock
Speaker 1: inventor warehouse yesterday like that. It was fine. And this
Speaker 1: is kind of what you start to see when the
Speaker 1: market gets stretched like this, is you have conversations like
Speaker 1: that and people just flat out lie to you in
Speaker 1: the supply chain. That was the first real telltale sign.
Speaker 1: The second one was when I went to buy I
Speaker 1: think it was like eight d sticks of sixty d
Speaker 1: d R four you know for that, like for for
Speaker 1: d d R four what d d R four it's
Speaker 1: System Ram okay, right, so it's the it's the most
Speaker 1: recent commodity system rahm um. There's new versions coming out,
Speaker 1: but this is really what's used today. You reached around
Speaker 1: for System Ram because a lot of that stuff comes
Speaker 1: out of liquidation, right, so you can get it for
Speaker 1: this particular component for Ram, you typically buy it used.
Speaker 1: You're not going to go out and spend sixty premium
Speaker 1: on this stuff. Just because you know, that doesn't really
Speaker 1: wear down. So I reached out to to one of
Speaker 1: our main suppliers and I said, hey, man, like I
Speaker 1: need eight hundred sticks and he's like, dude, I got nothing,
Speaker 1: Like what are you talking about? Like what do you
Speaker 1: mean you give nothing? He's like, China? But when was that? What?
Speaker 1: What month? This was in March? Middle of March? Yeah,
Speaker 1: and he goes he goes, dude, like I had some
Speaker 1: guy in China buy all of it last night, Like
Speaker 1: what do you mean all of it? And he's like, yeah,
Speaker 1: he bought like ten thousand sticks. Stupid question and stupid question.
Speaker 1: I don't know if this is you know, proprietary sticks,
Speaker 1: Like what are we talking about from a dollar amount
Speaker 1: two and a half maybe I think it's maybe two
Speaker 1: and a half million bucks? Okay, okay, right, but ten
Speaker 1: thousand six a ram is not really a small order,
Speaker 1: right you don't just like buy them and throw it
Speaker 1: in the closet for rainy day. Well I guess maybe
Speaker 1: this year you do. And I said, okay, like what's
Speaker 1: going on and then said that's he was like, you know,
Speaker 1: some one buyer came in from China and bought it
Speaker 1: all and and you know, I kind of give him
Speaker 1: the the expletive late and you gotta be kidding me.
Speaker 1: A couple of days later he called me and he
Speaker 1: was like, hey, I got like four hundred sticks, Like
Speaker 1: do you want him? And I said, yeah, I'll take
Speaker 1: everything you have. So that that was kind of my
Speaker 1: reaction to that first one. Then a week later on
Speaker 1: the fact of the same guy and said, hey, I've
Speaker 1: got to I've got a need for like Intel's on
Speaker 1: V four, which is chips that probably stopped production like ten,
Speaker 1: Like what do you got? And he's like, dude, like,
Speaker 1: are you gonna kill me if I tell you that
Speaker 1: I sold them all to China last night? Like okay.
Speaker 1: So this is at the point when when final coin
Speaker 1: was going from like bucks. So just for so just
Speaker 1: for listeners that don't know, and why do you explain
Speaker 1: it further? But file coin is a new cryptocurrency is
Speaker 1: actually I think first conceived of back in like seventeen.
Speaker 1: It only recently launched, but the idea is essentially cloud files,
Speaker 1: distributed file storage in the cloud. Rather than hosting your
Speaker 1: documents with a company like dropbox or box, you hosted
Speaker 1: on a network of a decentralized blockchain network of computers
Speaker 1: all around the world. Yeah, and all around the world.
Speaker 1: There is a little bit disingenuous at this point. I'd
Speaker 1: say it's centralized in China, okay, but the the ecosystem
Speaker 1: in China is they are insane for this project, okay. Interesting,
Speaker 1: And the demand for this project spans it spans every
Speaker 1: component in the supply chain, right, So you you need
Speaker 1: GPUs for the actual computation of proofs, you need CPUs
Speaker 1: because you need high high core clocks for some of
Speaker 1: the processing. You need RAM because because of the storage operations,
Speaker 1: and actually putting stuff in cash. So they're kind of
Speaker 1: buying across the board. And like if you if you
Speaker 1: search real quickly, you'll find mentions in the news of
Speaker 1: people putting one point three billion dollars into file coin mining.
Speaker 1: And I mean there's real moneyed over there. So that
Speaker 1: this file coin driven demand has kind of sucked up
Speaker 1: beyond what the typical component demand. And crypto bubble or
Speaker 1: crypto bubble or crypto expansionary times, it's called that instead
Speaker 1: of a bubble, it's going to drive, right. So it
Speaker 1: went from you know, two thousand eighteen or two thousand
Speaker 1: late two thousand seventeen early two eighteen, where the demand
Speaker 1: was only for GPUs two. Now you have Ethereum driving
Speaker 1: demand for GPUs, you have file Coin driving demand for
Speaker 1: everything under the sun. And the amounts of capital that
Speaker 1: are being thrown at this in China is just draining
Speaker 1: the supply chain across the world. Wow. Right, So that
Speaker 1: was really when I was like, okay, like my life
Speaker 1: just changed, and we have a risk here where we
Speaker 1: may actually be governed in our ability to grow by
Speaker 1: access to the components. I just want to point out,
Speaker 1: like I'm looking at a price chart right now of
Speaker 1: file coin, the coin even as recently in January, like
Speaker 1: say January one, one coin, one file coin was trading
Speaker 1: at twenty two dollars. Fast forward to March thirty one,
Speaker 1: a file coin coin to chart I'm looking at, was
Speaker 1: at So that's almost like a ten bagger in the
Speaker 1: price a file coin over the span of about three months,
Speaker 1: which really, it seems to me then just makes the
Speaker 1: demand to acquire all of these chips even that much more.
Speaker 1: If if acquiring one coin is worth ten times more,
Speaker 1: then what you're going to be willing to pay for
Speaker 1: the compute to mind a file coin that just went
Speaker 1: up a lot. Yeah, you know, And one of the
Speaker 1: things that is unique or weird about file coin is
Speaker 1: the staking requirements, right, so you know, a lot of
Speaker 1: the cost of actually building the storage isn't in the
Speaker 1: storage for file coin, h it's the amount of coin
Speaker 1: you actually have the stake to be able to provide
Speaker 1: your storage to the network. And at the time, like
Speaker 1: when it was like a hundred nine bucks, like, we
Speaker 1: had a lot of internal conversations about this, like why
Speaker 1: aren't we going crazy on this, and why aren't we
Speaker 1: doing this? For us to provide a one Paeder bid
Speaker 1: of storage, which isn't a ton of storage to the network,
Speaker 1: we would have had to stake a million dollars with
Speaker 1: a file coin, okay, right, it costs me maybe like
Speaker 1: a d k to build up one pad of storage,
Speaker 1: so ten times the hardware value I have to put
Speaker 1: up in staking risk and a coin that just went
Speaker 1: up like ten x. I think at the time, like
Speaker 1: it was this this positive feedback loop. People were going
Speaker 1: into it because they want the prices going up, but
Speaker 1: to get into it, they had to buy more. So
Speaker 1: you buy wait, see, you buy hardware to mind file client.
Speaker 1: But then to actually be able to plug your hardware
Speaker 1: into the network and actually you know, use it, you
Speaker 1: also have to buy the coin itself. So, as you say,
Speaker 1: there's like this like weird like positive feedback loop that emerges.
Speaker 1: Are you make this capital investment in semi in chips,
Speaker 1: but then to use the chip to acquire coin, but
Speaker 1: then to actually make the chips worthwhile you have to
Speaker 1: buy the coin itself. And so do you get this
Speaker 1: like crazy network effects? Yeah, you know, it's so like
Speaker 1: I'm not gonna throw the P word out there, but okay,
Speaker 1: in terms of schemes, it's a pretty good one. It's
Speaker 1: a project that I think that internally like we're we
Speaker 1: still look at as you know, it fits our infrastructure
Speaker 1: really well. But right now it's just so hard to
Speaker 1: get into it because you have to really have access
Speaker 1: capacity for it, and getting access to that access capacity
Speaker 1: is just so hard. Like kind of bringing us back
Speaker 1: to the broader conversation here and now another now I
Speaker 1: want to get into some of the other sort of
Speaker 1: coins that are driving this dynamic. You and I had
Speaker 1: a chat like on the phone like two or three
Speaker 1: weeks ago before we did the podcast, and now and
Speaker 1: I hadn't like sort of seen any articles about it.
Speaker 1: But then there's this other coin, Chia that's in the mix,
Speaker 1: So what's happening with that? Yeah, so that one is
Speaker 1: is pretty crazy too. Okay, this is a I guess
Speaker 1: a different take on proof of work, right, so I
Speaker 1: guess they're calling it proof of space time. And effectively,
Speaker 1: what you do is you use CPU compute to create
Speaker 1: what they call plots, and then once a plot is created,
Speaker 1: it's like a a couple hundred gigabyte space on a
Speaker 1: hard drive. You can move that you can move at
Speaker 1: the cold storage, and then for up to five years
Speaker 1: you can use that as a as a mining mechanism
Speaker 1: to gain to gain rewards on the network. That's another
Speaker 1: one that I didn't really see coming. And like we
Speaker 1: build large like multi petal bite level storage clusters in
Speaker 1: each of our data centers and they're STEFF based, so
Speaker 1: it's a software defined storage technology. And one of the
Speaker 1: things that we do there is we we build them
Speaker 1: to have triple replication. Right, so for every one pet
Speaker 1: of it of storage usable for my clients, I have
Speaker 1: to have three petabytes like on the ground that installed.
Speaker 1: That makes me a pretty big buyer of hard drives.
Speaker 1: This is another piece that kind of showed up in
Speaker 1: in January that I didn't really understand yet, is we
Speaker 1: we were trying to get access to I guess a
Speaker 1: quasie non public EXCU and it's it's one that really
Speaker 1: meant for data centers. It would reduce our latency in
Speaker 1: our storage access pattern. You sk you just mean a product? Yeah, yeah, okay, no, no, no,
Speaker 1: it's fine, just making sure so we we we went
Speaker 1: through this process of kind of qualifying with the with
Speaker 1: the manufacturer, and they were asking me all these questions
Speaker 1: like what are they being used for? But I'm like, dude,
Speaker 1: they're hard drives. What do you want be selling them
Speaker 1: to me or not? Like if you want to increase
Speaker 1: the price, increase the price, I'll blind, I don't care.
Speaker 1: And it wasn't until March when like this, when she
Speaker 1: launched that I was like, oh, like these guys had
Speaker 1: a run on their stock and they weren't able to
Speaker 1: provide like product to their real customers. So the demand
Speaker 1: for Chia for hard drives with Chia, it's twofold, right.
Speaker 1: So the first is you really need like high speed
Speaker 1: NV and ME or SSD discs that are local to
Speaker 1: your CPU compute to run the plotting, and then once
Speaker 1: the plotting is done, you can push it off to
Speaker 1: whatever cold storage device, whether it's like spinning rust like
Speaker 1: hard drives or or whatever it may be. But then
Speaker 1: it just sits there and the access pattern is pretty
Speaker 1: low in that data. So this is another or thing
Speaker 1: where I have conversations say hey, like what have you
Speaker 1: gotten in like SASK and hard drives, and they're like,
Speaker 1: would you believe that somebody bought all of these last night?
Speaker 1: I didn't expect to be getting dragged into she in, Yeah,
Speaker 1: And I was only really dragged into it by the
Speaker 1: problems I was have acquiring I was having acquiring things,
Speaker 1: and like you know, every once in a while, like
Speaker 1: the bells go off, like you know, AD eight go
Speaker 1: look at this, Like what is this thing? Yeah, so
Speaker 1: now we've got a pretty large she of mining operation.
Speaker 1: So this is something that I want to get into.
Speaker 1: And it's actually pretty interesting in the way you're set
Speaker 1: up Core. We've prior to like you know, all this
Speaker 1: like crypto going nuts over the last over the last
Speaker 1: several months, so particularly it seems like soon as January
Speaker 1: in March, when all these all condit just started going bananas.
Speaker 1: Your clients were people who actually had what most normal
Speaker 1: humans considered to be real world in need. So like
Speaker 1: animating a TV show or animating a movie. They're actually
Speaker 1: making things, actually actually making things. And so you are
Speaker 1: your go out into the market and buy chips and
Speaker 1: it wasn't that hard. Now you're also involved in the mining,
Speaker 1: but you do it in such a way that it
Speaker 1: doesn't it compliments the service you provide to your clients
Speaker 1: as opposed to compete with them. I guess, So, can
Speaker 1: you explain a little bit about how you use cryptocurrency
Speaker 1: mining yourself. At core, we've to compliment your business, compliment
Speaker 1: your existing business model. The permissionless revenue from cryptocurrency mining
Speaker 1: has really been what's allowed us to build to the
Speaker 1: scale where we can provide these first compute services. Right
Speaker 1: like with without crypto, especially over the last like six months,
Speaker 1: we would have had to raise significant, significant amounts of
Speaker 1: money to do it. To run this business. I think
Speaker 1: that like life, to date, we've probably sold like we
Speaker 1: may maybe raise like six or seven million bucks in
Speaker 1: this whole thing. Yeah, every time that we're looking for
Speaker 1: capital or capital, we have capital requirements like we're always
Speaker 1: trying to protect ourselves. I guess founders like you don't
Speaker 1: want to dilute it, especially don't want to dilute to
Speaker 1: buy a depreciating asset. So we've been able to get
Speaker 1: pretty creative, and some of that's been from the crypto side,
Speaker 1: some of it's been kind of from from just founder
Speaker 1: and partner commitment to fund things internally, what crypto does
Speaker 1: for us, Like, say that our clusters at a steady
Speaker 1: state or steady state and we've got let's call it GPS,
Speaker 1: and that cluster are available for clients if we only
Speaker 1: have like three thousand GPUs of baseload demand in that cluster, Yeah, right,
Speaker 1: what are we doing with the other seventeen? And if
Speaker 1: I don't have to talk to a client, and I
Speaker 1: don't have to do anything besides start a minor on
Speaker 1: those things, and I can make six of the revenue
Speaker 1: to make from my cloud clients, like that seems pretty good.
Speaker 1: So we we mind on everything everything possible when we
Speaker 1: don't have higher end workload running. So this is this
Speaker 1: is actually this part is super fascinating to me. So
Speaker 1: if you want to have the ability to offer your
Speaker 1: clients burst computers, first compute. Then by definition at any
Speaker 1: given time you have to have significantly more capacity then
Speaker 1: is you're sort of like normal baseload. And the way
Speaker 1: then from your perspective, to make the investment in that
Speaker 1: capacity worthwhile so that you can go out and buy
Speaker 1: chips that you only expect to offer to your clients
Speaker 1: that maybe you know normal state capacity to utilization is
Speaker 1: if during those times the other seventy percent are earning
Speaker 1: revenue for you from cryptocurrency mining. Yeah, you know, I
Speaker 1: think that the payback calculations is a little bit different. Sure,
Speaker 1: that's se with crypto mining is what allows me to
Speaker 1: aggressively expand my business that pays the bills, m right.
Speaker 1: It allows me to kind of operate. But the grand
Speaker 1: plans over here is really to kind of just continuously
Speaker 1: grow this this compute fleet. You know, we have customers
Speaker 1: that come in all the time that are I can't
Speaker 1: get what I need, I can't get this, I can't
Speaker 1: get that, like a can you promise me that I
Speaker 1: can get a hunter to the GPUs? And like dude,
Speaker 1: it's fine, I don't like whatever. You don't have to
Speaker 1: talk to me. So another way to think about it
Speaker 1: is like if all these people are playing the game
Speaker 1: of buying all different kinds of chips. To mind your
Speaker 1: essentially forced to play the game too. Yeah, you know what,
Speaker 1: we try to operate in different segments, right, So typically
Speaker 1: when mining like etherory and mining rings are being built,
Speaker 1: they're being built for the lowest cost possible. Right, So
Speaker 1: the GPUs are really the only expensive thing in the setup,
Speaker 1: like the host of ICE may have, whether it's somebody
Speaker 1: building it out of like an egg carton or an
Speaker 1: like an eggshell burton from in their garage, or putting
Speaker 1: it on an open air rack, or putting it on
Speaker 1: a wood frame, or actually putting in like in a
Speaker 1: closed chassis with forced airflow. The motherboard there is gonna
Speaker 1: be super cheap. It's gonna have a really like low
Speaker 1: end CPU. Um, it's gonna have like four gig a
Speaker 1: RAM that these aren't the types of systems that we're
Speaker 1: I'm competing to build, right, which is why it's without
Speaker 1: the last five months here, like it's always been kind
Speaker 1: of reasonable, right. I never had to compete for high
Speaker 1: end CPUs before. I never had to compete for server
Speaker 1: chastis before, never had to compete for like network cards
Speaker 1: and stuff. And this is where file coin really throws
Speaker 1: things into the into a loop. But on the mining side,
Speaker 1: you know, everybody talks about how miners and gamers are
Speaker 1: opposed to each other, and you know, I think there's
Speaker 1: been some vilification of some of the larger mining operations
Speaker 1: around the world that they're taking all these GPUs, And
Speaker 1: I'll tell you that even on our mining stuff, when
Speaker 1: the nvideo thirty eight came out, we looked at it
Speaker 1: and was like, oh my god, this thing is a
Speaker 1: three slot, Like we can't like, we can't deploy that.
Speaker 1: What does that mean? A three slot? So it takes
Speaker 1: up three slots on the motherboard, right, So it's just
Speaker 1: a different spacing than what they had done previously and
Speaker 1: typically kind of the mining GPUs and mining variants they
Speaker 1: had released in the past, where we're dual slots, so
Speaker 1: we take up two slots on the motherboard, then what
Speaker 1: these crazy things that were three and they're like, okay,
Speaker 1: like we can't deploy that a scale and our focus
Speaker 1: at the time was just so different that we didn't
Speaker 1: even buy any There are some distributors in the US
Speaker 1: that show like real time availability and real time and
Speaker 1: how many back orders they have in their queue and
Speaker 1: you see them and they have like we expect five
Speaker 1: video RTX on September one, and like pre orders, like
Speaker 1: I'll tell you, like the forty seven thousand pre orders.
Speaker 1: I don't think that's sophisticated mining operations. I think that's
Speaker 1: like like you and me personally going and doing and
Speaker 1: putting in our garage. Where do gamers fit into the mix?
Speaker 1: Because I mean like a discord group and I don't
Speaker 1: really understand half the jargon in it, but it's basically
Speaker 1: a group for gamers who are looking to acquire in
Speaker 1: video GPUs because they just want state of the art
Speaker 1: graphics for their systems. How do they even stand a
Speaker 1: chance in this world? And how does how does the
Speaker 1: industry think about sort of making sure that they can
Speaker 1: get access to this technology? There's two steps here that
Speaker 1: there's two pieces here that are really a problem. Okay, yes,
Speaker 1: the mining demand is a problem, but the mining demand
Speaker 1: is a problem because the economics warrant it, right. And
Speaker 1: you know, one of the crazy things about proof of
Speaker 1: war cryptocurrencies like Bitcoin and I guess ethereum and it's
Speaker 1: in its current life, is that the early on mining
Speaker 1: component of it is like the greatest user acquisition strategy
Speaker 1: in the history of the world. Right, It's like, hey,
Speaker 1: you have a computer. Your computer may already have this device.
Speaker 1: If you turn it on, we're gonna pay you ten
Speaker 1: dollars a day, right, And that ten dollars is now
Speaker 1: denominated in ethereum. And now you say, Okay, I've got
Speaker 1: all this ethereum, what do I do with it? And
Speaker 1: now you as the user, are now researching everything in
Speaker 1: ethereum because you now have this financial asset. The hundreds
Speaker 1: and hundreds of thousands of people that have gotten into
Speaker 1: cryptocurrency from mining, it's it's like, it's crazy, and I
Speaker 1: think it's one of the things that's like super underlooked
Speaker 1: or super overlooked. Excuse me. The mining economics definitely drive
Speaker 1: a lot of this, right, and and videos taking steps
Speaker 1: to put their hash rate limitters on and to to
Speaker 1: kind of enforce that in a certain in such a
Speaker 1: way for the ethereum mining to say, anybody who's going
Speaker 1: to buy this stuff in real size, like by the
Speaker 1: crypto mining focus g peeps. To me, the bigger problem
Speaker 1: is really the scalpers. It's the guys who are running
Speaker 1: bots on Amazon and they're buying the GPUs as soon
Speaker 1: as they list, and they're selling them money bay, right,
Speaker 1: is the supply isn't making it to the end user,
Speaker 1: and it's I think that that supply is probably artificially
Speaker 1: over priced right now. And you know, the crazy thing
Speaker 1: is that the ethere of mining economics kind of warranted.
Speaker 1: So maybe it's not artificial. But but for the gamers,
Speaker 1: they're going, what the heck? Like this thing is supposed
Speaker 1: to be six hundred bucks and it's twenty bucks between
Speaker 1: like retail and that the gamer is actually getting it.
Speaker 1: It's almost like there's there's two huge obstacles for them.
Speaker 1: I don't see a way to solve that. Well. I
Speaker 1: guess if the cryptocurrency, I mean the crypto market crashes
Speaker 1: every few years or but booms every few years. Hey
Speaker 1: it's different this time, man, Come on. But in theory
Speaker 1: it could crash. From your view, would that ease up
Speaker 1: capacity for all these things that we're talking about? Probably not?
Speaker 1: How come right? I think I think what you would
Speaker 1: see is you'd see a lot of GPUs that come
Speaker 1: back to market. Is kind of like the stressed assets, okay, right,
Speaker 1: But I don't think that those are going to go
Speaker 1: in large blocks. They're not gonna want to be piecemealed
Speaker 1: out to the end users. And you know there's some
Speaker 1: services and some companies in the US that actually do
Speaker 1: specifically that as they buy, like use crypto minds and
Speaker 1: they piecemeal them out. I guess one gp lots on eBay. Yeah,
Speaker 1: But what I meant aside the selling of views, I mean,
Speaker 1: there are new new chips of all these different stripes
Speaker 1: are always being manufactured. So theoretically, like in Vidia and
Speaker 1: dozens of other companies that make hard drives and so forth,
Speaker 1: if let's say we're in a crypto bear market, does
Speaker 1: that free up capacity or does that free up don't?
Speaker 1: I don't think so. I think this is this is
Speaker 1: where you have to look at the structural change that
Speaker 1: we're seeing in the compute market. Everything is more compute intensive,
Speaker 1: everyone's going to the cloud data center. Demand for GPUs
Speaker 1: just exploding, Okay, even if crypto were to disappear. Yeah,
Speaker 1: Like the demand the growth pattern of this of this
Speaker 1: market as well. It's kind of home gaming and everything.
Speaker 1: Like the global foundry space for STEMI conductors is just
Speaker 1: too small for all the industries that are relying are
Speaker 1: reliant upon it. For it's going to have to cancel
Speaker 1: how much like not deliver how many trucks this year
Speaker 1: because the semi conductor shortages like that, like wild and
Speaker 1: it's impacting everything. And when when you get kind of
Speaker 1: in that structural dislocation like this, yeah, like the whole
Speaker 1: like saying in commodity trading is like high high prices,
Speaker 1: cure high prices. Yeah, the timeline to cure these high
Speaker 1: prices maybe several liters. Interesting how many players? How many
Speaker 1: people are essentially in this game of I mean it's interesting,
Speaker 1: like I can go on stock x, like the sneaker
Speaker 1: website and they actually have a few categories of chips
Speaker 1: and you can buy buy in video chips on there
Speaker 1: and they sell like above M S r P and
Speaker 1: you can see the price chart. How many different players,
Speaker 1: whether they're sort of large brokers or individual scalpers, have
Speaker 1: essentially like gotten in this game of chip price arbitrage
Speaker 1: and trying to get themselves in the middle between in
Speaker 1: the middle between the chip manufacturers or the chip distributors
Speaker 1: or somewhere between Amazon and eBay and gotten in this
Speaker 1: game of sort of like chip reselling as if it's
Speaker 1: a commodity or a stock. Yeah, you know, it's not
Speaker 1: just the it's not just the scalpers soo either. What's
Speaker 1: unique about the GP supply chain within video in particulars
Speaker 1: and video that they make the GP chips and they
Speaker 1: actually they sell them too. I guess they call AD
Speaker 1: and board partners, right, And this is people like it's
Speaker 1: kicka Bite, it's m s I, it's e v g A,
Speaker 1: it's Zotec, which is like a PC partner's brand, And
Speaker 1: they actually take those boards, they fabricate them, they put
Speaker 1: the cooling devices on them, and they sell them to
Speaker 1: end users. And you know, I think that the ultimate
Speaker 1: pricing on that stuff is really controlled by the ai
Speaker 1: B s what's a I B stand for? Again, the
Speaker 1: added board partner, Right, So this is like the kind
Speaker 1: of fabricator or distributor at the end of the line there,
Speaker 1: and there're no dummies, right. They see crypto demand, they
Speaker 1: see where it is, and price definitely changes with where
Speaker 1: crypto is. Right, is that they know they have a
Speaker 1: limited supply. It's virtually unlimited demand. So it's like this
Speaker 1: is really just supply and demand, like in its most
Speaker 1: less a fair state. Yeah, and you know, I think
Speaker 1: that one of the things that the US had, Like
Speaker 1: one of the problems in the West here is that
Speaker 1: I don't think a lot of the stuff even gets
Speaker 1: out of China. What do you mean by that? Oh,
Speaker 1: if you know a guy at the AI B and
Speaker 1: shen Jen and your local and you want to come
Speaker 1: in and pick up a thousand GPUs um, that's a
Speaker 1: much easier transaction. And like in terms of like political capital,
Speaker 1: just on a personal basis, like I think it's a
Speaker 1: lot easier for them to do than it is for
Speaker 1: them to shift something to Brian Vinturo in the United States.
Speaker 1: M ramping up here a little bit. You know, you've
Speaker 1: explained how your life kind of has changed in the
Speaker 1: last six months in terms of the difficulty of acquiring compute,
Speaker 1: whether it's GPUs, CPUs, RAM and so forth. What is
Speaker 1: it like now on a day to day basis, And
Speaker 1: how have you had to change your business strategy so
Speaker 1: that you can grow your cloud capacity alongside customer demand. Yeah,
Speaker 1: you know that it used to be that GPUs were
Speaker 1: the problem for us to get okay um and GPUs
Speaker 1: right now, like the data center cards, Like I've got
Speaker 1: shelves and shelves and shelves packed with data center cards
Speaker 1: waiting for builds and they're all blocked by CPUs and
Speaker 1: ram right CPUs in particular, I had a conversation with
Speaker 1: my CEO I've been I've been with for seventeen years
Speaker 1: now and in kind of different businesses, and I called
Speaker 1: on I said, hey, I just found a bunch of
Speaker 1: amd Epic Milan CPUs in stock ready for ship tomorrow.
Speaker 1: I bought a hundred of him and he was like,
Speaker 1: how many they have? And I was like, I don't
Speaker 1: know two. He's like, why didn't you buy the rest?
Speaker 1: And I'm like, well, I didn't really want to spend
Speaker 1: the money, like I didn't have a place to put
Speaker 1: him right now. He's like, dude, this is literally all
Speaker 1: you complain about every day is not getting access to stuff.
Speaker 1: Go back and buy the rest. So I went back
Speaker 1: to buy the rest, and in the fifteen minute period,
Speaker 1: the rest are going. So you know, this is a theme.
Speaker 1: It's not just chips, obviously, and we talked about this
Speaker 1: with lumber, we talked about this with industrial commodities. This
Speaker 1: idea that you buy more when there's a sort of
Speaker 1: sense of scarcity. And so I'm curious about, like how
Speaker 1: much of the tightness of the chip market is essentially
Speaker 1: it's like, well, I don't know where the next shipment
Speaker 1: is going to be available. I don't know what I'm
Speaker 1: gonna be able to buy these m D chips and
Speaker 1: the size. I don't know when whether I'm next time
Speaker 1: I'm going to buy RAM and size. So how much
Speaker 1: does that have the effect of causing people to then
Speaker 1: over order so that they can at least give get
Speaker 1: some assurance of the chips that they're going to need
Speaker 1: and then for which were then further exacerbates the shortage
Speaker 1: causing more over ordering. I can answer for us, like
Speaker 1: I mentioned earlier, that we're pretty just in time operation okay,
Speaker 1: on the inventory side, So when I'm talking about if
Speaker 1: I go out and by like two CPUs, like that
Speaker 1: gets me like one month of of supply, okay, you
Speaker 1: know the CPUs that I did buy that were delivered
Speaker 1: the next day, like which was even more of a surprise,
Speaker 1: Like they're already in systems, are already online that this
Speaker 1: is a couple of weeks ago. Where when I'm talking
Speaker 1: about buying things in stockpiling them, like my my usage
Speaker 1: time frame is much that there's no like there's no
Speaker 1: speculation on component values here, and it's like, hey, we're
Speaker 1: gonna need him in the next thirty days. I typically
Speaker 1: wouldn't buy it until I needed in the next seven
Speaker 1: but here we are. The world was on fire six
Speaker 1: months ago. You might not have made an order until
Speaker 1: seven days before you needed to build them out, but
Speaker 1: that is now lengthened out to more close to thirty days. Yeah.
Speaker 1: And on the O E M side, so we've got
Speaker 1: a bunch of stuff, that stuff that we're waiting on
Speaker 1: deliveries for right now. We've probably like high tens, maybe
Speaker 1: fifty million capex that that's out there kind of being fabricated. Yeah,
Speaker 1: and this is what O E M s. And you know,
Speaker 1: when we were doing the deals, it was, hey, we're
Speaker 1: committing to do this within four weeks, and now it's
Speaker 1: like out the twelve weeks. And and you go through
Speaker 1: the conversation with them and you're like, all right, like
Speaker 1: I get it, Like I know what's going on to
Speaker 1: you taking me to like I get the understand problem.
Speaker 1: All ability to plan in real time is like completely
Speaker 1: out the window. Huh wow. Yeah, that's the thing. I
Speaker 1: mean that seems to be the theme of so many
Speaker 1: different industries, whether we're talking about shipping, logistics, trucking, lumber,
Speaker 1: and so forth, everybody planning ability has kind of gotten obliterated. Yeah, yeah,
Speaker 1: I mean the shipping thing is crazy too, because like
Speaker 1: stuff that I would you like normally put on a
Speaker 1: boat and got three weeks four, I'm like, put it
Speaker 1: on an airplane. In the boat may ink, like may
Speaker 1: get stuck. I have no idea what's gonna happen, Like,
Speaker 1: get me my stuff. I just want to go back
Speaker 1: to one question because I still feel felt a little
Speaker 1: bit unsatisfied by the answer. Let's say cryptocurrency disappeared. I
Speaker 1: don't know how that would happen. Maybe the prices crash,
Speaker 1: Maybe somehow there's a coordinated national effort to ban it,
Speaker 1: or maybe financial institutions are banned from dealing with it.
Speaker 1: Somehow that industry, which is extremely big and growing and
Speaker 1: worth like two trillion dollars in market cap, and just
Speaker 1: say somehow it gets obliterated. Well, we can we can
Speaker 1: put a real scenario in this, like actually ship proof
Speaker 1: of steak, right right, Okay, right, So I mean that's
Speaker 1: what like, that's the biggest question that I get from
Speaker 1: investors is what about proof of steak. Yeah, it's a
Speaker 1: proof of steak for people who don't know it. Basically, currently,
Speaker 1: ethereum operates with the same security model as bitcoin mining,
Speaker 1: more or less, with a sort of high chip and
Speaker 1: electrical spend in order to secure the network and acquire coins.
Speaker 1: They want to change the mall to something where there's
Speaker 1: less mining. Theoretically they'd be greener and so forth. But
Speaker 1: dr tell me what how you see proof of steake
Speaker 1: affecting things. I'm not going to talk about the probability
Speaker 1: of that happening, right, I mean they've shown like, well,
Speaker 1: I'm gonna give one comment on it, um, you know,
Speaker 1: starting in two thousand sixteen, proof of steake with shipping
Speaker 1: every three months. Yeah. Um. And here we are in
Speaker 1: the middle, And like, do I think they're eventually going
Speaker 1: to get there? Yes, I do, But like, look at
Speaker 1: the market, look at how much money has been spent
Speaker 1: on mining hardware and building mining operations. Like the miners
Speaker 1: are not going down without a fight, and without a fight,
Speaker 1: could be launching new coins. It could be contentious forks,
Speaker 1: it could be anything. But you know that this idea
Speaker 1: of GPU mining has been is going to die. It's
Speaker 1: been going on since the i'd been to GAP mining, Right,
Speaker 1: Like when Bitcoin went from GPUs to f p g
Speaker 1: a S, the GPU mining was dead, and then like
Speaker 1: six months later lightcoin showed up, right, So there's always
Speaker 1: going to be this this demand for security driven by
Speaker 1: GPU can pute. I think it goes back to that
Speaker 1: kind of like fair launches and the idea of getting
Speaker 1: coins out to the quote unquote to the people. Yeah, right,
Speaker 1: is that as as soon as Etherorium goes prof ofstake, like,
Speaker 1: that's gonna be rewarding the incumbents more so than new entrance. Right,
Speaker 1: You're not gonna have a hundred thousand people gonn plug
Speaker 1: in a GPU and learn what etherium is. I just
Speaker 1: think that the idea that when Ethereum goes pro the stake,
Speaker 1: the GPU mining dies is a little bit crazy. We
Speaker 1: don't necessarily know what it's going to be yet, but
Speaker 1: I'm pretty confident that there's going to be something. Now.
Speaker 1: Let's like in a price crash environment. You know, this
Speaker 1: is really where we built our whole business, is taking
Speaker 1: the contrarium bet in the binary outcome environment, which was
Speaker 1: really like January, like December of two thousand eighteen. January right,
Speaker 1: is like, I don't know, but Crypto is either going
Speaker 1: to zero or it's not. Like I think that in
Speaker 1: the mining space, like where you make real money is
Speaker 1: when you're in a position to take that contrary and
Speaker 1: distressed asset. What we look at that as a company
Speaker 1: is like, yeah, it would really suck if Crypto went
Speaker 1: to zero again, but look how awesome it worked last time.
Speaker 1: Right then. I don't think we're the only ones that
Speaker 1: think that way. But bottom line still, if I'm a
Speaker 1: gamer and Crypto goes to ten crypto crash, does it
Speaker 1: get easier for me to acquire GPUs so that I
Speaker 1: could play a game higher quality? Well, it'll get easier
Speaker 1: for you to acquire used GPUs play games, but I
Speaker 1: don't necessarily know if you're gonna want them. Why why
Speaker 1: not new? Why not? Why why not the new ones?
Speaker 1: Why wouldn't it be easier for me to then go
Speaker 1: on Amazon? Because I mean, and Videos one of the
Speaker 1: most valuable and forward thinking companies in the world for
Speaker 1: a reason. Yeah, right, that they understand market demand. Um,
Speaker 1: and if they see crypto crash, like they know that
Speaker 1: a portion of their demand is from Crypto. Right there,
Speaker 1: launching your crypto specific lines. They're going to book less
Speaker 1: foundary space, why not to shift some of that foundry
Speaker 1: space over to gamers. Now, well, I mean, but before
Speaker 1: we already like concluded that it's the same it's the
Speaker 1: same chip sets, right, right, They're just being packaged differently, right. So,
Speaker 1: And one of the things that people don't necessarily understand
Speaker 1: is that you know in a lot of the cards,
Speaker 1: whether it's like a thirty sixty or thirty sixty t
Speaker 1: I or thirty seventy, that that may be the same
Speaker 1: chip set with just features disabled, right or maybe bempacked
Speaker 1: differently because it has like the quality of the run
Speaker 1: was was worse for some portion of it. And video
Speaker 1: is not making all these decisions like hey, let's go
Speaker 1: build like fifty million thirty sixties. Right, They've got their
Speaker 1: their kind of foundry space and what that may be booked,
Speaker 1: and they know what their overall yield is going to
Speaker 1: be um and then it's they're just kind of optimizing
Speaker 1: what they bring to market, right. It's just in a
Speaker 1: down crypto year. I think that what they did with
Speaker 1: the Turing line where they're the r t X two
Speaker 1: thousand series, I think that the production of that line
Speaker 1: was was way lower than the g t X one
Speaker 1: thousand series, right, and that was kind of coming out
Speaker 1: of crypto winter, during crypto winter, and I don't think
Speaker 1: those gps are hard to find. Got it right? But
Speaker 1: you couldn't, but you also couldn't buy got it well,
Speaker 1: This is a fascinating discussion. Like I said, we've talked
Speaker 1: a lot about chips in the past, but we really
Speaker 1: haven't gotten into the actual fight to acquire them. Plenty
Speaker 1: more to dive into on this topic alone, I feel like,
Speaker 1: but Brian really appreciate you coming out on odd lots.
Speaker 1: Thanks for having me. I'd love to do it against
Speaker 1: some time. Yeah, for sure. Take care Bran Well. I
Speaker 1: would love to be able to talk about that episode
Speaker 1: with Tracy. Unfortunately should not hear. But I thought that
Speaker 1: was completely fascinating. You know, this idea so many parallels
Speaker 1: between everything else we're saying, like the inability to plan,
Speaker 1: the requirement to buy further out into the future, This
Speaker 1: idea that sort of just in time isn't working, And
Speaker 1: it really does seem like the rise of these new coins,
Speaker 1: file coin chio, like every every sort of like commoditized
Speaker 1: technological capacity that you could think of somebody. It feels
Speaker 1: like it's making a coin that can mine it. It's fascinating,
Speaker 1: and I thought it was fascinating. The core we've owned
Speaker 1: business model is kind of enabled, Like, on one hand
Speaker 1: they're competing with all these miners for chips, but on
Speaker 1: the other hand, their ability to use idle chips in
Speaker 1: order to mind currency and get revenue when they're not
Speaker 1: being used for the normal UH computing by their clients
Speaker 1: is super interesting. So I loved I loved everything about
Speaker 1: that chat. I loved the sort of I love the
Speaker 1: merging of the crypto and chip story, and I increasingly
Speaker 1: think that you can't talk about one without the other.
Speaker 1: So really appreciated Brian coming on and just making a
Speaker 1: plug here. By the way, if you haven't checked it
Speaker 1: out yet, you should definitely check out the odd Lots
Speaker 1: blog bloomberg dot com slash odd Lots. Tracy and I
Speaker 1: have been writing there, We've been listing transcripts there. I
Speaker 1: myself have been going back and reading transcripts because when
Speaker 1: I do, I learn a lot. Each time. I found
Speaker 1: it to be incredibly useful. Check it out. Go to
Speaker 1: Bloombergy dot com slash odd Lots and read our blog.
Speaker 1: So this has been another episode of the Odd Lots podcast.
Speaker 1: I'm Joe Wisntal. You can follow me on Twitter at
Speaker 1: the Stalwart, following my normal co host Tracy Alloway on
Speaker 1: Twitter at Tracy Alloway. Follow our producer Laura Carlson. She's
Speaker 1: at Laura M. Carlson. Follow the Bloomberg head of podcast,
Speaker 1: Francesco Levie at Francesca Today, and check out all of
Speaker 1: the Bloomberg podcasts on Twitter under the handle at podcasts.
Speaker 1: Thanks for listening, e