0:00

The reason this is actually different

0:02

is because there is actual proof of work, there is

0:04

demonstrable economic activity happening.

0:07

You're just giving up some of the yield

0:09

or some of the margin that you would produce from that

0:11

mining yield to somebody that

0:13

financed your operation. Hello

0:15

there from sunny Bedford how are you all

0:17

doing? Right before we get into the show

0:20

I just want to let you know that I released my latest

0:22

documentary yesterday Follow the Money

0:24

Part 4 Argentina's inflation crisis.

0:27

It's available on YouTube which also has Spanish

0:29

subtitles, Rumble and

0:32

also in its entirety on Twitter. Looking

0:34

forward to your feedback on that one. Anyway

0:37

welcome to the What Bitcoin Did podcast which

0:39

is brought to you by the absolute legends of Iris Energy,

0:42

the largest Nasdaq listed Bitcoin miner using 100%

0:44

renewable energy. I'm your host

0:46

Peter McCormack and today we have Nick Hanson

0:49

and Matt Williams on the podcast but before

0:51

we get into the details of the show I do

0:53

just want to say thank you to everyone who came out

0:55

to McMullen Park to rail Bedford this weekend

0:58

for our latest Bitcoin meetup. We actually

1:00

had a record crowd at the game of 471 people and

1:03

they saw us beat Stazda 2-0 which

1:05

was great but it was super surreal for me.

1:07

I had Jameson Lop there, Rob Hamilton and

1:09

CK all in Bedford all witnessing

1:12

what we're building here around Bitcoin and football

1:14

very very cool. Hopefully more of you will come

1:17

out soon. Alright on

1:19

to today's show so yes we have Nick Hanson

1:21

and Matt Williams from Luxel on the show and

1:23

whenever we get Nick on the show we want to talk about Bitcoin.

1:25

So we get into the cutthroat nature of Bitcoin

1:27

mining. We question where the hash

1:29

rate is going to continue to climb, what the

1:32

halving means for miners,

1:33

miner hedging tools and Luxel's

1:35

new hash derivative yield product which is a new

1:38

form of yield on Bitcoin which I definitely

1:40

want your feedback on. Let me know what you think about this. You

1:42

know how to get in touch is hello at whatbitcoindid.com.

1:48

Nick Hanson, Balls of Steel how are you?

1:51

Balls of Steel. What do you mean by that?

1:54

You're a bullseye guy man. That is true. I've been Bitcoin

1:56

mining since 2018. It's been a rough ride.

2:00

But

2:00

yeah, we're here. Here's your

2:02

friend. You're my friend. My friend

2:05

and the head of locks, of derivatives at Lockser,

2:07

Matthew Williams. I've been told to talk very softly.

2:11

I've heard you're the shit. I am the

2:13

shit. No, I'm kidding. Mr. Hanson

2:15

has been like, you just wait. You

2:18

won't have to say anything. You're gonna learn all about derivatives.

2:21

Yeah, because that's what everyone wants to learn about is

2:23

derivatives. Honestly, I woke up this morning.

2:26

I was like, Danny, you know what? You know, I need to name. We need

2:28

some derivatives. By

2:31

the way, we've been drinking gin since about 11. I

2:34

need some hash right derivatives

2:36

on my mind. I've

2:39

been on my mind for a long time. Well, I'm your

2:41

man then. I woke up this morning

2:43

and I was like, how do I make derivatives sexy?

2:46

Every time I go on a podcast, I'm trying to do that. I

2:48

haven't done it yet, but today's the day. Is

2:50

your Twitter handle the king of derivatives? Yeah.

2:54

No, you're close. You want to speak

2:56

Russian. It's much worse than that. What

2:58

is it? At trading

3:01

onions. Trading onions. Yeah, there's a whole backstory

3:03

to trading onions. Tell me. Let's

3:05

go. I want to know. I don't want to use it.

3:07

You never told me either. but back

3:09

in the 50s, you used to be able to trade onion futures.

3:12

Okay. And there was a couple of brothers

3:15

that cornered the onion market and just

3:17

basically drove it through the roof and made

3:19

millions of dollars, just kind of like squeezing

3:21

people out of their onion positions. And

3:24

so the regulators are like,

3:26

all right, that's it. No more trading onions. And

3:29

to this day, since I think 1955, you

3:32

can't trade onions anymore. Sounds

3:34

like that trading places. Yeah. Orange

3:37

futures. Yeah, orange futures. Same thing. So

3:40

we're fully exposed on our onion

3:42

prices. Yeah. We have no, there's no way to

3:44

reduce our volatile. You always want to be long

3:46

onions. Okay. Otherwise you'll cry.

3:48

Yeah. Yeah. Bob.

3:51

Don't go short on you. How you been, man?

3:54

So the last time I was here. Here.

3:58

You did? I did. I wore

4:01

a suit and people made fun of me. They said it's a cheap suit. Was

4:03

that in LA? That was weird. Yeah,

4:05

we had Emma with us. You didn't want to be the SBS

4:07

suit. I didn't want to be the SBS. I'm like, all right, we're going to clean

4:09

this up a little bit. We're going to try to look a little

4:11

more like a business guy.

4:15

And so I wore the suit and the jacket and people

4:17

were like, oh, this guy is just a guy

4:19

in a cheap suit talking about this stuff.

4:22

And I have to admit, it was a cheap

4:24

suit. I'm not a suit guy. I'm not a suit

4:26

person. But but yeah, so back

4:28

to normal. But I am wearing the first

4:31

shirt that I ever wore on this podcast

4:33

when you put me on in 2021

4:35

in the white room in the white room like

4:37

in the matrix where they go in and they get

4:40

all the guns and that what it was like that. It was

4:42

like that room. And it was and it was actually also in

4:44

LA and Bitcoin was at the

4:47

top of it. And

4:50

we were at 40 something. Well,

4:52

so now we use petahash to measure the value

4:55

of hash rate because it's gone down so much. It was at

4:57

four hundred and fifty dollars a petahash

5:00

around that time. And we were wondering we made

5:02

a bet whether it would go over a dollar. Sorry,

5:04

over a thousand per petahash. And

5:07

I lost. I made that bet. Yeah.

5:10

Hold on. I made that bet. I wouldn't have known what

5:12

I was then. What was the bet? You had no idea. It

5:14

felt very degenerate on your side because you had no idea

5:16

what you're betting on. You're like, sure, let's bet. But

5:19

I now owe you a million million. Is that

5:21

true? I owe you a million. Yeah. You owe me a million. Danny

5:24

owes me half a million. OK.

5:26

Danny is brilliant at

5:28

ping pong. OK. Like he's

5:30

got genuinely brilliant. We

5:33

played in Austin the first time we

5:35

turned up. We left for a month.

5:38

We played every day. Kick my ass every

5:40

single day. But did you get better? Yeah,

5:43

but he also got better. And

5:45

also he's tools. He could smash it. He's got like this

5:47

advantage. And every time

5:49

we book a place now, we're like, you know, we told you we

5:51

used to look for a table. Yes. A

5:54

ping pong table. That's

5:56

a sweet. That's a kick of us. Anyway, there's a ping

5:58

pong table. He's so bald,

6:00

he's like, if

6:03

I bet you, what was it? Was it a million sets?

6:05

Half a million sets. Half a million sets, you won't

6:07

beat me. He's like, I bet you half a million sets. You

6:09

wouldn't even want a game off me, let alone a match. Wow.

6:13

I won the first fucking game. I was rested,

6:15

I was rested. Do you know it's Danny's

6:17

birthday? Yeah, really? It is. Happy birthday, Danny. Happy

6:19

birthday, Danny. Happy birthday. Peace and wine

6:21

on your father's birthday. We went out for dinner last night and

6:23

he told the waiter, and they came over

6:26

with a cake and candles and everyone was singing. No,

6:28

just candles. Streams, glass blurs.

6:30

Like the bottle service people. Yeah,

6:33

everyone's singing happy birthday. I didn't say it's like Bitcoin,

6:35

everyone came and said, oh, happy birthday. Yeah. I

6:38

honestly thought it was your birthday. And

6:41

then Peter was like, it's not his actual birthday. He's

6:43

from fucking juvenile, but I don't care.

6:46

Oh, so I wanted that. I don't know the bet. Okay.

6:49

Yeah, we made a bet of whether hash

6:51

price would ever get over a thousand. Why

6:53

did it get a thousand bucks? I don't think it ever got

6:56

over 50, 500. Oh,

6:58

so I crushed that bet. Oh yeah, yeah, you crushed

7:00

it. But I was just being, you know, I haven't

7:02

even collected my debt. That is true. Have

7:04

you got it on your phone? Do you want to pay now? Do you want to

7:07

pay me in stats? Do you have to pay you with Lightning? I

7:09

don't care. Okay. I'll pay

7:11

you. You could have not, you could have not paid. I owe you big

7:14

thanks firstly. Thank you. You're a sponsor

7:16

of my football team. That

7:18

is true. Which is going very well. It has.

7:20

And our football team outside of

7:23

a good manager and hard work and the team and

7:25

Emma, who you know, she's amazing. It

7:28

needs three things. It needs people to come to the game.

7:31

Bitcoin is a by merch and sponsors and

7:34

we need all three or just doesn't work. The economics

7:36

don't work. And you

7:38

sponsored us last year and I asked you to come and do it again

7:40

this year and you've done it. And we've been

7:42

able to carry on. We're third in the league.

7:44

If we win our games in hand, we'll go top. And

7:47

our ladies are also top of the league on every game. So

7:49

I owe you a huge debt of gratitude. You are part of the

7:51

Bedford story. And thank you. On the way to Premier

7:54

League. Premier League, yeah. I don't know what you said. It's

7:56

gonna take a decade, but we'll get there. I said, I said 10

7:59

years. in 10 years. I said we wouldn't

8:01

miss it one year. I mean, it is

8:03

bold, but I like it. We'll

8:05

see. Football league, I take football. Thank you, man. It

8:07

means so much. Can't do without sponsors. I appreciate

8:10

you. And you'll always be a hero

8:12

of Bedford. Hero of Bedford. A hero

8:14

of Bedford. So we're

8:18

in a better market. It's, I say,

8:21

particularly brutal, but they all feel brutal. I

8:23

mean, this one is statistically longer so

8:26

far. And it doesn't really seem like

8:28

it's going to get there any faster.

8:30

Sorry. It doesn't seem like we're going to go. There's

8:32

no real bullish catalyst. Maybe the ETF. Definitely

8:36

ETF. I mean, Black Rock would be a game changer. Oh

8:38

yeah. That's a question of

8:40

when that is.

8:41

Yes.

8:43

And there's some rumors about that. Like April. Is that

8:45

what you've heard? Yeah. Well, I, my question

8:48

about it really is, is how

8:50

do you pick the first one? Cause you're picking a winner and

8:52

that's like bullshit. I

8:54

think they're going to give them all at once. Yep. Agreed. Off

8:57

to the races. Okay. In April. Yeah.

8:59

You think April. That's what I think.

9:01

With the halving. Yeah. Are we going to have the halving?

9:04

I don't think they're smart enough to equate

9:06

the two. I think it's just dumb luck, but I think

9:08

that's what's going to happen. If there's a halving and

9:11

a BlackRock ETF and all the others at

9:13

the same time, we're all

9:15

getting girlfriends. It's like

9:17

Christmas comes early. Our girlfriends might get girlfriends.

9:20

Yeah. Yeah. It's going to be an interesting

9:23

April, regardless. Well, the mining

9:25

industry kind of needs it. So

9:27

you talked about you early on, you were like,

9:29

what's head, what's derivatives? I've been waking up thinking

9:31

I need to derivative. Do we have to really get into

9:33

that yet? I

9:37

was going to say, I was going to say, there's a lot of, there's a

9:39

lot of miners today that don't exist

9:44

anymore that probably wished they

9:46

had Matt and his wonderful suite of products

9:48

to actually make it through some of this

9:50

stuff. They're actually your products. I just made them. That's

9:53

a good point. That is a good point. How many miners

9:55

have we lost in the last year? name

10:00

names but any significant

10:03

one. I mean Celsius mining actually was pretty large.

10:05

Like they had tens of thousands of machines

10:07

and are I think no longer. Course

10:10

I of course went bankrupt but it

10:12

sounds like they're going to probably emerge. There

10:16

was a big default that

10:19

NIDIG ended up holding that

10:22

I don't want to yeah. There's more like if you want

10:24

to say it we're not going to sense these. Well

10:27

I'm just yeah I mean that happened so Iris defaulted

10:29

on a big note to NIDIG and

10:32

so that's another you know effectively a default

10:34

of a subsidiary company kind of like a whole

10:36

co-op. It's not my area of expertise.

10:40

There's been quite a few that have gone under

10:43

and certainly the economics are as bad as they've ever

10:46

been. That's without a doubt. Yeah

10:50

I mean it's not all just because they weren't hedged. I

10:52

mean the truth is like they weren't

10:54

hedged in a lot of different areas right. We already talked

10:56

earlier about you know poor power

10:59

deals not hedging their treasury

11:01

not hedging you know hash price you

11:04

know through revenue but

11:05

a lot of them was just kind of got caught in the fervor

11:08

of the bull market and making bad deals.

11:10

So it's just a confluence

11:13

of bad decisions. Right okay.

11:16

I mean the mining business is ultra

11:18

competitive. We have

11:21

the ASIC manufacturers who

11:23

would love to flood the market

11:26

with ASICs and never

11:28

seem to have like a consistent pricing. They just

11:30

get as much money as they can and get

11:32

as many machines in the market as possible. I think

11:35

are they the only true winners in this market. So it's

11:37

kind of high beta to Bitcoin right. Yeah high

11:39

beta to Bitcoin in the mine like they specifically

11:42

they change their pricing every day based

11:44

on ROI. They have like an internal model for

11:47

what they think ROI's of these machines will be

11:49

based on a bunch of different parameters and then

11:51

they change pricing based on that. So

11:54

that's why pricing does seem to be sort

11:56

of out of nowhere but there

11:58

is an internal model and it's based on ROI. So

12:00

not based on cost to produce machines like

12:02

the cost to produce a machine is I

12:04

think in on the order of like a Couple

12:07

hundred dollars if that So

12:09

they crush. Yeah, the margins

12:11

are high, but you know, there is a ton of R&D

12:13

chip development is expensive It's

12:16

they do crush but there's you know

12:18

them and stable coins also seem to

12:20

do pretty well Well, it's also a good model to write because

12:23

everyone's incentivized to have the most efficient machine.

12:25

So it's just like that Yeah, it's like the iPhone right like

12:27

every year you come out with something a little bit better

12:30

And everybody wants it. So it's well, it's slightly

12:32

different I can survive without the next iPhone

12:34

and it doesn't mean like if I don't

12:36

have the latest iPhone doesn't mean I'd like Walk a bit

12:38

slower. No, but it's true.

12:41

But I mean you've got the second latest iPhone

12:47

Back checking, but you know the second latest iPhone

12:49

people are still mining with s9s right?

12:51

That's the iPhone 5 Mm-hmm. That's

12:54

iPhone 5. Yeah. Yeah, I

12:56

mean barely So if you had an s9

12:58

running at three cents, you make maybe

13:00

like ten cents a day But

13:04

you know you deploy enough of those and yeah,

13:06

but I mean The manufacturers

13:08

make money by making new machines and

13:10

incentivizing people to buy them But still

13:13

as a miner you kind of have to have the latest machines

13:15

to be especially if you're a public miner to compete Right.

13:17

I wouldn't say you have to be on your energy Yeah,

13:19

bifrms has a really interesting strategy right now where they're

13:21

really focused on the IRR of

13:24

their investment into machines So they don't

13:26

have the most performance

13:28

fleet meaning they don't have the best efficiency.

13:31

So their efficiency is quite a bit higher They

13:35

have poor Efficiency relative

13:37

to the rest of the market and we say their efficiency

13:39

is higher So it's you know They're probably somewhere in the

13:41

like the 30 joules per terahash range

13:43

where the most recent s21 that just came

13:46

out was in the 16 To 17 right joules

13:48

per terahash range, but they are

13:50

also buying machines that they think they can ROI

13:53

much much more quickly and thus You

13:56

know basically make a return on their investment

13:59

as opposed to thinking exclusively

14:01

about the Jules Brouterra hash and long-term

14:04

value prop of the investment they're making. And

14:07

that's part of their strategy that's included

14:09

in a lot of their public marketing

14:11

and stuff like that. They have a lot of cheap

14:14

energy too, right? They have a focus on renewables. Yeah,

14:17

they focus on areas outside of the US.

14:19

So they've been brave enough

14:22

to deploy into places like Argentina

14:24

and Paraguay, which have significantly

14:27

lower cost of energy here, but also Argentina,

14:30

you have potentially issues with rule

14:32

of law. Kind

14:34

of, yeah. It's

14:37

a very real possibility in

14:40

Argentina that somebody comes and nationalizes

14:42

your site where probably not, I

14:44

mean, there's almost a 0% chance that happens

14:47

in Texas. Yeah, I think

14:49

the bigger risk in Argentina right now is

14:51

if Javier Pele with the election,

14:53

which he's looking like he will, I mean, he won the primary,

14:56

he had 30% of the vote. I think

14:58

he will form a coalition and he will

15:00

win. I mean,

15:02

his policies are pretty clay. He's going to dollarize

15:05

the country, he's going to get rid of the

15:08

central bank. And if he dollarizes

15:10

that country, he's going to end subsidies on energy,

15:12

energy prices are going to go up in Argentina.

15:15

He's running on ending the central bank, there's a difference

15:17

in actually doing it. Yeah, but he

15:20

is a pure libertarian. And

15:22

if he dollarizes the country, they won't need a

15:24

central bank. What's

15:26

the role of the central bank? He wants more government, but

15:29

they have massive energy subsidies in that country.

15:31

And I do think that goes away. Well,

15:34

look, when you dollarize a country, what

15:36

you do is you hyperinflate away the currency.

15:40

I wouldn't know any reason for anyone

15:43

holding Argentina peso

15:45

right now. But if he wins the election

15:47

the next day, that currency is

15:49

pretty much dead. Because if you dollarize,

15:51

you're saying this currency is over. They went through

15:54

the same in El Salvador. What was the currency

15:56

called, the Quilo or something? I can't remember.

15:59

But But that's what happens. And

16:01

I think it's what the country needs. I

16:04

absolutely think they need it, but it's going to

16:07

be devastating for the poorest people in that country because

16:09

they're the ones who are in the peso economy. They

16:12

can't get into the dollar economy. The middle upper

16:14

class, they're in the dollar economy. They

16:16

hold US equities or they hold

16:18

Bitcoin or stablecoins, or they've got dollars

16:20

buried in a garden or in a safe. All

16:22

the poorest people haven't, and they're the ones surviving

16:24

on the subsidies and the handouts

16:27

of the peso. And so once

16:29

that's gone, they're going to have to adapt

16:31

to a dollar economy and everything's

16:33

going to get super expensive overnight.

16:36

My assumption that means energy is going to get

16:38

more expensive. That's my assumption.

16:41

But I don't actually know.

16:45

Paraguay's interest, these guys gave me a sticker today, Penguin.

16:48

Penguin. Yeah, they're in Paraguay. Good

16:50

buddies of Luxor. Yeah, they're in Paraguay. All

16:52

I know about Paraguay is they

16:55

have massive hydrodams, right? Well,

16:58

they have two really big ones, but the one everybody

17:00

talks about is called the ayatapu. And it's the one

17:02

between Brazil and Paraguay. And right now, they

17:04

sell almost all of that back to

17:06

Brazil for something

17:09

like a cent. So if miners

17:11

come in and say, we'll pay you three cents, that's

17:13

how Bitcoin mining started in

17:16

Eastern Washington. I

17:18

live in Washington. They were selling all that energy back to

17:20

California like a cent. Gigawatt

17:23

came in and said, we'll buy it for three and we'll

17:25

buy all of it. The locals were like, what?

17:29

OK, that sounds awesome. Thank you. Yeah.

17:32

And then I guess, of course, they overbuilt and then ended

17:34

up going BK and all that stuff because they ran out of cash.

17:37

But that's a story for another podcast.

17:40

I don't know,

17:43

but for another podcast, it's a pretty brief story.

17:45

They overextended themselves, went BK,

17:49

a tale as old as time for Bitcoin miners, unfortunately.

17:51

And the only other thing I know about Paraguay is they have the most interesting

17:54

goalkeeper in the history of football. Why? There's

17:57

a guy called Shilavet. Look him up. Look out for

17:59

Shilavet. that are banning certain i don't

18:01

trust me on this and this is wild

18:03

when i tell you the interesting thing about this guy's

18:05

a goalkeeper pay for the country

18:07

as well how many goals a

18:09

discourse his career as a goalkeeper

18:12

yeah forty six goals so

18:14

six hundred seventeen appearances for this is gold

18:16

he scored eight goals for his country spare

18:18

my most goalkeepers never school in their entire career

18:21

the my have like one so it's

18:23

that was the reason he took the penalties

18:25

that but you're such a pretext

18:27

passcode cause you to discover

18:29

see this guy is

18:32

fucking mad are also really he follows me on

18:34

twitter busy yes

18:36

a sexy going to go on you tube of the know on

18:38

the same or similar freak it so

18:40

cute authentic the free kicks and if he scored

18:43

his of the celebrate we didn't enough to run back into the curious

18:47

be the goalkeepers are these

18:49

of the most the same thing that goalkeeper scored

18:51

essentially one in every eleven games

18:56

since his assistant said he had sex

18:59

i made his mark now ah

19:01

i'm sorry i didn't

19:04

you know if a book i have a with you

19:06

a modern and every because most of whom i

19:08

wasn't even a we were brutal them from

19:10

a pair of i'm argus night

19:13

before that so farms but

19:15

is it seems like the model

19:17

or the market for minors or mining

19:19

is seems so a soldier competitive

19:22

that everyone's conceive finding a new edge the

19:24

at what is their age now what is the reds seth's

19:27

any things of course but it's

19:29

it's such an ultra competitive industry the

19:31

so much pressure on these companies companies us

19:33

look like they're worth billions of dollars or hundreds

19:35

of millions and then suddenly they disappear

19:38

to the one mistake one power contract

19:40

or yeah what is this pressure

19:42

is insisting nobel i get to eat only

19:44

i think it's only relevant because

19:46

it's such a nice and industry or if you look

19:48

at this in oil and gas or agriculture

19:51

medals or whatever i same shit

19:53

happens all the time re like the borgias

19:55

i don't know he told me our debts for sir like everything

19:57

celtic competitive everything site that you know how do

19:59

you lower your operational costs and how do you

20:02

increase cashflow and how do you get revenue certainty

20:04

and it's all a game of competition,

20:06

right? And so I think it's

20:09

just more interesting here because we're living

20:11

it because this is the space we're in. What

20:14

is it these companies should have done differently? Why should they

20:16

have had you on the phone? Matt? Well,

20:20

it's interesting because to be honest, you

20:22

know, even two years ago, there

20:24

wasn't a whole lot of hedging tools for miners,

20:27

you know, specifically around their revenue. If

20:30

they want to talk about their treasury, there is Bitcoin

20:32

derivatives and there's tons of those. Energy

20:35

is the same thing like energy contracts, every

20:37

derivative futures ETF

20:40

swaps forward, you name it, existed

20:43

for 100 years. But

20:46

they just weren't, you know, like, I

20:48

think it's twofold. When you were caught in,

20:51

you know, like a sporadic bull run mentality

20:54

and no one wants to hedge during a bull run, you probably

20:56

shouldn't be. But you need to hedge

20:58

for the future. And then the other thing is like, I

21:00

don't think a lot of these people, you

21:03

know, no offense to the industry, but I think a lot of people didn't

21:05

come from, you know, mature business

21:08

backgrounds and they just kind of had to learn on the fly.

21:10

Like, there was a lot of people that are interested

21:12

in the technology and kind of built businesses

21:15

around it but didn't have hedging

21:17

backgrounds or didn't have like, you

21:19

know, how to manage an operational business background.

21:22

And I think it's just evolving over time as

21:24

it naturally would. So you're basically

21:26

saying it's such a new industry, these

21:29

new players have essentially

21:31

tried to establish what the industry

21:33

is, but people with

21:35

a more traditional background in other

21:37

industries, they would have bought hedging strategies with

21:40

them and they've just not had this. But it's

21:42

happening now. I know it's happening now, right? Yeah, no,

21:44

it's definitely happening now. People are getting smarter.

21:46

I think they had to, right? The last 18 months were brutal.

21:50

And you know, if you don't learn your lessons and adapts,

21:52

you're going to be one of the people that we talk about

21:54

in the future that's no longer around. And

21:57

so if you want to remain solvent, you got to get more

21:59

mature. what

24:00

the Fed does and how it influenced

24:02

markets and how it makes some

24:04

people like picks winners and losers and it's usually

24:07

the poorest who loses the most Yeah, you know

24:09

riches the cantileans but also at the

24:11

same time He's like you you don't want these

24:13

banks go into the wall because of a liquidity crisis No,

24:16

and so I mean, I'm not gonna take a position. Well,

24:18

I mean the truth is the truth is and what I told Marty

24:21

is It doesn't matter what I think

24:23

or what Marty thinks is not happening. So that's

24:25

a different point. Yeah. Yes Yeah, that's a different point I

24:27

mean it can happen in places like Argentina

24:30

because they get rid of their sovereign currency and yeah

24:32

the Fed is a central bank At that point, but yeah,

24:34

I don't know I mean who knows if the US continues

24:36

on the path it's at wouldn't rule anything

24:38

out. Yeah, we'll have a curve will for you at the end Appreciate

24:41

that so these are so

24:44

if you have a new mining client who came in

24:47

who you know, they're doing a good job They've

24:49

got great access to power good price

24:51

good data sensors. They're doing everything right, but they're

24:54

not hedging Do you have like a whole suite

24:56

of things you bring to them? What is it? We're working

24:58

on building that sweet But yeah Like we're trying

25:00

it's not a one-size-fits-all and actually to that

25:02

point you just made like if they have all those things

25:05

you said in A healthy balance sheet like I would actually

25:07

advise them to hedge less than other people

25:10

You know hedging isn't You

25:13

don't hedge a hundred percent of your production and

25:15

everyone's got a different operating expense Ratio

25:18

and you just kind of like have to take on a case by

25:21

the case basis But the the metrics that

25:23

you just told me yeah, I mean

25:25

you have to think about well, you know What's their objective

25:27

both in the short term and long term and we're trying to build

25:30

that sweet But right now we effectively

25:32

have two different products. I would say

25:34

by the end of the year that might be four But

25:37

it's a goal to have something different

25:39

for each use case and and for that

25:42

example You know we have I

25:44

don't know if you want me to go into a product

25:46

detail. I'll do the quick The

25:49

quick sales pitch here I'm a

25:51

minor. You're a minor. Okay.

25:53

I'm everything's going well. Everything's going well

25:55

for you I think I've got nothing to worry about my

25:58

balance sheets. Okay. Okay Your

26:00

balance sheet's okay, and you're probably

26:02

looking to raise some capital, so you expand

26:04

your fleet. Yeah. Don't

26:06

end up having, you're trying to get more production out. Yeah, a little bit worried

26:09

about the halving. Yeah, and now the banks

26:11

are saying, or whoever you're trying to get capital

26:13

from, saying, sure, we'll give you capital, maybe,

26:15

because you're in good position,

26:18

but it's going to be 15% to 18%. Exactly.

26:21

And you're like, that's not great. Or you're like,

26:23

well, we can release some

26:26

equity, but now it's going to be dilutive. And

26:29

you're like, no, I don't want to do any of that. You

26:31

come to us, and you say, hey, we

26:33

say, look, you can hedge out your revenue.

26:36

And in this scenario, let's say you want

26:38

to hedge out 10 or 30 or 60% of your revenue, and

26:42

you do it over time, now you can show what

26:45

your cash flows are on a consistent basis.

26:48

It's predictable. You go back to those

26:50

financiers, and you say, look, I have predictable

26:53

cash flow. And they're like, all

26:55

right, great. We'll give you what we give to

26:57

metal producers. We'll give you 7%. And

27:00

we'll do it with collateralized on

27:02

your ASICs. And now you're off you go.

27:05

And that's one scenario. Another scenario

27:07

is we also are about to release

27:10

an instrument where we can provide

27:12

you Bitcoin up front, and the

27:14

basis that you sell your hash rate forward.

27:17

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which is shop.ledger.com Okay

29:22

let's go back a step the previous one. Okay

29:25

so in that scenario

29:27

you're saying the more

29:30

reliable balance sheet? Well

29:32

yeah I mean look at it. Cash flow forecast, you know

29:34

more reliable cash flow for the business therefore and

29:36

like how far ahead am I hedging that? Is that

29:38

like a year? Well I mean let's look at it from a financiers

29:41

perspective right? Like they're in the business of certainty

29:44

right? They're gonna give you money based

29:46

off of how predictable your cash flow is

29:49

like what your revenue you know what they think your

29:51

revenue is going to be in the future and six

29:53

months, 12 months, 36 months like they want

29:55

to look at that kind of you know projection. So

29:58

you're not you're not going to go to them and show like one

30:01

month of revenue, you're going to

30:03

show several months. And so, you

30:05

know, and they're going to get more comfortable with it because they're in the business

30:08

of making money on predictability. And

30:10

so and that's how you get lower interest rates on your

30:13

financing. But how do you guarantee that for

30:15

me? Well, because now all right, so now you're

30:17

a miner, right? And let's say you have, I don't

30:20

know how many pet hashed you have in your fleet? 100 100.

30:23

Yeah, you got 100 pet hash, right? And

30:25

then this scenario, let's say you use my instrument

30:27

or Nick's instrument, and you sell 60%.

30:30

So now you're selling 60 pet hash, you're

30:33

hedging 60 pet hash. So

30:36

for 60% of your fleet, you

30:38

know, 60 to 70%. Now you have revenue

30:41

certainty, the other 30% you can let ride, you

30:43

know, you want to participate in the upside great. But

30:46

that 60% over time, and let's say you do a six month

30:48

or 12 month contract, now you can go to the

30:50

financiers and say, look, I know exactly that I'm

30:52

going to make at least this much. And then

30:54

there's 30% upside on the balance. And

30:57

that's, you know, now they have

30:59

certainty and they can have something to model their projections

31:01

on and what you can. How you guarantee me that 60%?

31:04

Oh, you want to know that in the camera? Yeah. Okay,

31:07

so we have an instrument called hash price forward.

31:09

And it's in technical terms, and trad-fi,

31:11

it's called a non-deliverable forward. And

31:14

basically what that means, it's a cash settled instrument,

31:17

it's based off of Luxor's hash price

31:19

index. So everything revolves

31:21

around the concept of hash price. You

31:24

want me to go into details on hash price? Okay. So

31:28

there's two different ways you can look at hash price. There's

31:30

USD denominated hash price, and then there's

31:32

BTC denominated hash price. Basically

31:36

what hash price is, is it's the expected

31:39

value of one pet a

31:41

hash of hash rate. So if you have one pet

31:43

a hash, right now you're going to get

31:45

roughly $62 and one penny for one

31:48

pet a hash per day. That's

31:50

what your expected revenue is for

31:52

that. And it basically takes into account

31:55

Bitcoin price, difficulty,

31:57

transaction fees, and the block reward. So

32:01

it's a methodology. We have an index

32:03

that basically calculates that value in a 15 second

32:06

interval. And the instrument that

32:08

we have, it's just like, let's say the

32:10

S&P 500 or the Bitcoin futures,

32:13

they're all based off an index. So you build derivatives

32:15

around an index that's like the underlying value

32:18

of a derivative. So have

32:20

I gotten sexy yet?

32:22

Yeah, can you take it to like one year, Danny?

32:25

Yep.

32:26

It's not good.

32:28

No. I mean, so actually,

32:31

there's a great spike in there and we can tell

32:33

a story about that. Like,

32:36

this is where it gets really interesting. So

32:38

that's roughly like made.

32:41

So that's the BRC 20 ordinal

32:44

spike. So basically

32:46

everyone's competing for, you know, go

32:49

ahead. If you're on audio, it was $127 per petahash per day. Well,

32:53

and it went from where? We were

32:55

at? Almost

32:59

doubled. Yeah. So the block

33:01

reward went from six and a quarter

33:03

to 12 and a half overnight. Yes.

33:06

From transaction fees. From transaction fees alone.

33:08

So it was a 75. Like at one point,

33:10

it was a 75% jump just from

33:12

transaction fees. Now where it gets interesting from

33:14

a derivatives perspective. Can I just ask a really quick

33:17

question? Yes. Was that when you mined

33:19

a block with a single transaction? No, that was

33:21

quite a bit below before that. That was actually back in

33:23

March, but this

33:25

was sustained volume from hundreds,

33:28

if not millions of transactions by people all

33:30

over the world. Thanks, Udi.

33:33

Shout out, Udi. So there

33:36

were some smart people

33:38

during this period on both sides of this.

33:41

There's some people that kind

33:42

of

33:42

speculated this was coming and went

33:45

long hash price via our instrument

33:47

and did well. And then there were some

33:49

people that if you look at the chart, the

33:52

chart shows for people listening, a

33:55

very depressed hash price over a good amount

33:57

of time. And there's a lot of miners that are like, we

33:59

don't want to hedge. at these levels because we're basically locking in

34:01

on profitability. But there was a couple

34:03

of smart people during that spike that were like, I'm going

34:05

to take advantage of this. It's

34:08

frothy. There's some people that think in these transaction

34:11

fees are going to stay this way for a long time. But

34:13

some people locked in that hash price at

34:15

those prices. And we're doing great.

34:18

And now granted, it was only for like three months. But

34:20

if you can lock in plus 100 hash

34:24

price for that long, you're way ahead of the game. But

34:27

who's paying for that? Who's taking the downside? It

34:31

was somebody that thought that

34:33

dot transaction fees would stay high. They were the buyer.

34:36

They were thinking, oh, this is actually going to, you

34:38

know, these transaction fees are going to sustain or

34:41

increase. And I'm going to end up making

34:43

money from this. Well, and the truth is, it's hard to pinpoint

34:45

like who wins or loses in

34:47

that because people buy and sell and buy and sell. It's

34:49

not like one person bought and lost

34:52

money. So is there a marketplace

34:54

for this?

34:56

How does this work? Like, you know,

34:58

if somebody comes to you and says, I want to lock in this price. Oh,

35:00

yeah. So we operate what's called

35:02

an OTC market. So it's over the counter. It's

35:05

not on an exchange. It's not a centralized

35:07

order book. It basically, this

35:10

is very much how energy markets

35:12

used to and still work. You basically

35:15

have buyers that come in and sellers that come

35:17

in. And they were the central counterparty.

35:21

So we show people what the prices

35:23

are, where they can buy and sell. And then we match buyers

35:25

and sellers. And so and we operate

35:28

most of it off of Telegram

35:30

and Slack and other chat messengers. Soon,

35:32

we're going to migrate it to our front

35:35

end platform as well. But

35:37

basically, people come to Luxor for price transparency.

35:40

They say, Where can I buy this? Where can I sell it? And we

35:43

match people up. And so I'm a seller because

35:45

I have the ASICs. But the

35:47

buyers are what people who just think

35:49

they read in the market better and want

35:51

to essentially buy the upside

35:54

that they think exists. I mean, yes and no, like

35:56

we have what are called market makers in this,

35:58

we have people that provide two sided markets. markets,

36:00

like any robust derivatives market,

36:02

you know, in every asset class, will

36:05

have market makers and they'll be ones that are, you

36:08

know, below spot and above

36:10

spot. So they'll be trying to buy below and sell it above

36:12

and then they have different ways of, you

36:14

know, getting rid of that risk. And then, you

36:17

know, there are other natural buyers like hosting

36:19

facilities have upside exposures, they would

36:21

be long hedging, same

36:23

with cloud miners. And then

36:25

there's speculators. Most markets operate

36:28

really well because of speculators, like

36:30

a lot of volume liquidity comes from speculators.

36:32

So people that think there's going to be a short

36:34

term spike in transaction fees, if

36:37

you want to play against difficulty,

36:39

if you have an opinion on Bitcoin, links are all different ways

36:41

that people get in. And for every

36:43

win, is it a case for every winner that's a loser?

36:46

Is it like... No, not necessarily. So

36:48

in this example, you know, someone bought

36:52

before the spike and sold at some

36:54

point, right? And then they could have sold someone who

36:56

bought, you know, they could have sold early and

36:59

someone bought like it's not necessarily a winner

37:01

and loser scenario. You

37:03

can have two winners. But you

37:05

always win because you're just matching buyers and sellers.

37:08

Yeah, I mean, we essentially just get a brokerage fee

37:10

for matching buyers and sellers. We don't

37:12

really take an opinion, we're just

37:14

trying to facilitate the market. And

37:17

is it always a buyer? So like if I come to you and

37:19

I say, you know, I want certainty... At a price.

37:21

Oh, at a price is always a buyer. Yeah. Okay.

37:24

And so if I come to you, do I tell

37:26

you the price I want? Or you say this is a price I

37:28

think I can get you, you go out and they say, this

37:30

is a price I've got you, how does it work? It could be either.

37:33

So let's say, you know, right now, spot

37:35

price is $62. Okay. And you say

37:38

I want to sell it at $64. I would

37:40

tell you, well, the best... The

37:44

biggest, the highest bid right now is say $58.

37:47

So you could sell it right now at $58. Or

37:49

I could try and sell it to you at $64 and see if,

37:52

you know, someone wants to take it. Okay. So I can work

37:54

it for you or I can just tell you where you could do

37:56

it right away. Okay. And we do

37:58

both. Okay. And in some ways, if you're

38:01

operating in a good facility, if you're efficient,

38:05

you can essentially hedge out the whole amount

38:07

and go, at least I know for the next year, this is

38:09

how much money I'm going to make and I'm good. Oh, yeah, totally.

38:12

I keep going back to oil and gas. I think there's a lot of tangents

38:14

there. But there's businesses where they

38:17

just sell production as soon as it's done. And

38:20

there's Bitcoin models for that too. If you're

38:22

mining, you need to sell Bitcoin right off the bat. But

38:25

yeah, you could hedge out your entire revenue

38:28

if you like the level and

38:31

off you go. And so what's the market saying?

38:34

Do you know if I want to sell now and is it optimistic?

38:39

Well, the truth is, we're still

38:41

playing the education game with the mining space and they're

38:44

always optimistic that things are going to be higher. So

38:46

it's quite often that we don't want

38:49

to hedge these levels. And

38:51

I get that. But

38:54

our activity has grown exponentially. We

38:57

launched this in January. Volume

38:59

doubles almost every month. Actually

39:02

today

39:04

is the biggest trade we've ever had. And

39:07

so it's growing, but it's still very much

39:09

an education game. And what are you giving up usually about 10%?

39:12

It depends on duration. So let's

39:14

say if you're because

39:17

there's not a ton of natural buyers. So you have

39:19

to, there's a discount to spot that's

39:21

inherent in the market. If you're

39:24

just trying to sell forward one month, 3%, if

39:26

you get out to 12 months, you're in

39:30

the 12 to 15% range. So

39:32

Vincent, how long do you want to do it? But as the market matures,

39:35

there'll be more. Yeah,

39:37

for sure. And we're seeing that already. Like as we

39:39

get more and more market makers in the space, there's competition

39:42

for price. And it's like any new market. It'll

39:46

tighten. Okay. So essentially,

39:48

you can use it for multiple reasons.

39:51

But if you want to secure money for capital,

39:53

you can do that. But if you also just you

39:56

want a simple business, you want no stress, yeah,

39:58

you can do that. Yeah, I guess. Yeah, I mean, it's

40:01

like I said, it's not the sexiest thing in the world, but it's

40:03

it's part of a big boy business, right? Yeah, you

40:05

want to run a like a business. This is

40:07

a good tool We do have

40:09

other tools, you know, you asked me like what

40:12

what we have for for everyone if

40:14

you're a miner and you're looking to get Capital

40:17

to grow your fleet. We have another tool for

40:19

that as well where it's not just a hedging

40:21

instrument. Okay, it's interesting

40:24

So I showed I sent I sent Danny over

40:26

a copy of the September forward

40:28

hash price curve Which shows kind of how

40:30

what you were talking about in more of a graphical form How

40:34

the how price trades in the future? Yeah I

40:36

mean the the interesting thing about this

40:38

curve and for those that aren't

40:41

able to see it It's trading and what's called backward

40:43

ization, which means it's an expected

40:45

downward curve And

40:47

so what then the reason for that is because

40:49

difficulty I was gonna say this isn't this

40:52

isn't necessarily price Spot price

40:54

this is an increase in hash rate coming up Yeah,

40:56

exactly like so you can basically model

40:59

out a X percent to call it 2% hash

41:02

rate growth, right? On a regular

41:04

basis and so and if you treat

41:06

Bitcoin as flat price Hash

41:10

price goes down over time and and hash

41:12

rate Continues to grow massive

41:15

rate despite it being a tough

41:17

mark. It's crazy I was looking at this today because

41:19

I figured this would come up but in January

41:22

It was 260 What

41:26

do we have a for 115 for 15? Yeah,

41:28

it's doubled. Yeah. Well, that's

41:31

bad math, but To 60 to 260.

41:33

Yeah to 415. I'm sorry. I think

41:35

it's a 216. Sorry. Just give me yeah Yeah,

41:39

but it's still up what like what's that 80 visits of

41:41

a lot? Yeah, it's out and it's gonna keep going so

41:44

for a while another point that's somewhat interesting from this

41:46

is how there's a difference between the BTC BTC

41:49

denominated hash price and the USD

41:52

denominated hash price now, do you want to explain

41:54

why we think that might exist why this the

41:57

general? Yeah, why does natural market phenomena

41:59

occurs? dollars inflated? It's

42:01

a fucking shit going. Well,

42:04

actually, it's funny you say that because I was thinking

42:06

about this recently. People asked me, so

42:08

we have, going back to Nick's

42:10

point, we have two instruments. We have for

42:12

hash price, we have USD

42:15

denominated, which was very popular in the

42:17

beginning. And then we have the BTC

42:20

denominated hash price, which I

42:22

don't know, maybe about three or four months ago, it switched

42:25

in terms of how much volume goes through. So we do a

42:27

lot more volume to the BTC denominated one.

42:30

And it's just because it's a

42:32

lot less volatile. I think people like to think in

42:34

native terms. And

42:38

I don't know where you're going with this

42:40

question. Yeah, it's just interesting to see. So what

42:42

this chart would tell me is that we

42:44

think that difficulty is going to increase faster

42:47

than, sorry, Bitcoin

42:50

difficulty is going to increase faster than USD price.

42:54

Yeah, well, the reason for that in the chart,

42:56

at least, is because we treat Bitcoin prices exogenous.

42:59

So it's just flat, right? It's like we're not making projections

43:01

on Bitcoin. So what you're reading

43:03

from this chart is that difficulty is going to

43:05

cause BTC denominated

43:07

hash price to go down. It's going to go down, yeah. It's

43:11

an unstoppable trade, the hash rate,

43:14

the way it keeps growing, the fucking growing.

43:16

I know come April next year, we may see

43:19

a large downside.

43:22

But at the moment, the chain will

43:24

stop, but it will start up again. So

43:26

we see, I think right now, well,

43:28

I don't think, I know that if the halving happened tomorrow,

43:31

we would be at $31 a pet-ash. And

43:35

there are a lot of miners that would not be able to

43:37

operate in those. So a literal halving. Yeah,

43:39

so tomorrow, if we just went from $62 a pet-ash

43:41

to $31, assuming Bitcoin stayed flat,

43:45

there would be a lot of miners that would not be able to operate

43:48

profitably in that environment. We

43:50

would see, I think over the next two weeks,

43:53

a pretty

43:55

large difficulty adjustment downward. No,

44:01

I mean I don't have one. Do you have one Matt? We

44:04

actually at the on

44:06

Monday. I will And

44:08

so you're gonna price in post halving a big

44:11

drop. Yeah, but you have to make some assumptions.

44:13

But yes Yeah, I mean what I think we're projecting

44:17

Post halving like 340 We're

44:20

gonna say that yeah, we're projecting that hash

44:23

rate will be like 450 come

44:25

April and then drop to like

44:28

340 not 20 25% Yeah,

44:30

and it won't half because what it's gonna be

44:32

a bloodbath a battle who's Well,

44:35

I mean it's a test of resilience. It

44:37

depends on how quickly It

44:41

depends how long it lasts I guess so we

44:43

can look at the last having and see that it

44:45

didn't go down by half The difficulty is not which means

44:47

that there are miners out there that are operating with

44:49

enough margin that they're willing to Yeah

44:52

operate in this new margin environment even though

44:54

it is half But there are miners that are not

44:56

going to continue to operate. They'll turn their machines

44:58

off And then there's also

45:00

miners that are like, okay I'll run unprofitably

45:03

for a little while and draw from my

45:05

bag to To pay

45:07

for this so we saw that in the last

45:09

halving over the summer of 2020 That

45:11

was the lowest hash price environment that we were

45:13

had ever seen up till now and

45:16

what and it was actually quite bearish on Bitcoin

45:18

price over that summer because Miners

45:20

at least the theory and I'm not sure if this

45:23

is confirmed or not But the theory was that miners

45:25

are capitulating their base or they're basically Living

45:29

on borrowed time selling out of their hodl selling

45:31

their you know, basically drawing from

45:34

their balance sheet to reduce You

45:36

know to basically try to get through this trough

45:40

and you know at the end some of them made it and some

45:42

of them Didn't what's the logic to run

45:44

machines are lost when you can literally just switch them

45:47

off Is it more expensive

45:49

to switch them off? Is you still gonna pave your energy? I have

45:51

a good question I've asked that many times and I don't

45:53

I don't know that there's like a one-size-fits-all

45:55

answer My assumption is like some of them.

45:57

It's even though the run-in loss is still

46:00

going to pay for the energy. And so it's more

46:02

of a loss. And the others, it's

46:04

like, we need to run to squeeze

46:06

out the competition who can't survive. I think

46:08

that's it. I think it's over the ladder, personally,

46:10

but I don't know. So

46:13

there Yeah, there are contracts called take or pay

46:15

electrical contracts for power, which

46:18

means you either take the energy or you're

46:20

paying for it regardless. So in that case, say

46:22

you have to take at $30. $30, and you're

46:25

able to sell, you know, you're

46:29

only able to sell at 25. You're basically taking

46:31

a $5 loss. But if you weren't mining, you

46:33

would be taking a $30 loss. Yeah, I mean,

46:35

yeah, I mean, it's like, you're running

46:38

at a loss, but it'd be worse than the loss. Yeah, it's a

46:40

lossier loss. It's a lossier

46:42

loss. The lossier loss. That's the answer, right? It's

46:44

fucking brutal. Yeah, miners are

46:47

miners are savages, man. Shout out to all the miners

46:49

out there, by the way, there are savages. It is a tough

46:51

business. You guys are amazing. Do you guys

46:53

do any kind of thought

46:56

or analysis into what does drive

46:58

the Bitcoin price? Why

47:00

every kind of four years we have had

47:02

a bull run? Is it any shenanigans

47:05

within the miners themselves? You

47:07

know, are they a large miners who know they can play

47:09

this and squeeze people out and take their

47:11

foot off the sea at the right time? The last time

47:13

we chatted, it was right after the China

47:16

ban, right? And it was the best

47:19

time to mine ever, basically. And

47:21

we what

47:23

we saw, there was actually something that was really interesting.

47:25

There was this thought there had been a

47:27

lot of people thinking that maybe there was some collusion

47:30

amongst the Chinese mining pools, because there

47:32

had been sustained high transaction fees.

47:35

And the more like, okay, what, you know, who's using

47:37

the chain? And then as soon as the Bitcoin

47:39

miners in China turned off, those transaction

47:41

fees pretty much dried up. And so in that way,

47:43

maybe there was some collusion. But right

47:46

now, I don't think there is a collusion have an

47:49

impact on Bitcoin price. That was your question,

47:51

right? Well, in terms of

47:53

having some control on the liquid

47:55

supply. Yeah, I don't see it.

47:58

I don't understand how a miner I

48:00

would be curious what the theories are, but I don't understand how

48:02

a group of miners could have control over a Bitcoin

48:05

price. What influence, let's say. I

48:07

mean, all they're doing is releasing float, right? So

48:10

I don't see how that would have an impact.

48:13

I don't know. I don't see how they could have an impact on price.

48:16

I think maybe the fact

48:18

that it's a bunch of hodlers and you

48:20

know, it's decreasing what's available

48:22

to the open market, maybe. Like if

48:25

no one's selling their Bitcoin. But

48:27

it's a bit weird out. Every four years it's

48:29

the same. And I don't know if that if it's just

48:32

that the design Satoshi has come

48:34

up with here is a natural

48:36

test of human instincts or fear

48:39

and greed. And it works in a perfect

48:41

four year cycle. I don't know. I don't know

48:43

if it's related to election

48:45

cycles. I don't know if it's got I just I don't

48:47

know, but it seems every four years. It's usually

48:50

after having, is it not? Yeah, but I don't

48:52

think it's got anything to do with the

48:54

supply of the halving itself. Not anymore. I

48:56

think earlier maybe. Yeah. So

48:59

and like I said, over the course of the summer of 2020, that

49:02

was a time when you could definitely convince me

49:04

that there was a price depression because

49:06

miners were capitulating a bag of

49:08

Bitcoin that they had held for a long time. And

49:10

that Bitcoin had not been in circulation for a long time.

49:13

And then they were selling it to keep

49:15

their operation afloat. And then as

49:18

those miners finally, the ones that

49:20

were at the marginal you know, I guess

49:22

at the you know, at the margin there were forced

49:25

out of the market that then turned

49:27

off that like, what do you call? I wouldn't

49:29

say artificial selling, but like that sell pressure that

49:31

comes from them liquidating their bag to

49:34

then, you know, kind of unleash the

49:36

bull market, I guess. I mean, you can

49:39

convince me that a little bit, but I don't know if it's enough.

49:41

I don't know. I don't know if miners control enough

49:43

Bitcoin for it to really have

49:45

that much of a fact, have that much of a factor, at least not

49:47

anymore. I think it's a lot easier

49:50

in this space to start a sustainable

49:52

market, just due to the fact that it's illiquid

49:54

and prone to irrational exuberance.

49:57

Do you think this is going to be a particularly brutal

50:00

halving or is it just always

50:02

a brutal halving? It was always

50:05

brutal. I mean, the 2020 was bad. Well, margins are a lot lower than they used

50:07

to be, so I think it'll be a bloodbath. 2020 was

50:11

bad. The thing that's different this time around

50:13

is that energy prices are significantly higher. They have

50:15

come down. The last time we chatted,

50:17

it was right after the Russia-Ukraine

50:20

conflict had occurred and prices

50:22

were at all times highs and that was what was causing,

50:24

you know, I get another huge

50:27

minor that had gone bankrupt was Compute North that

50:30

we didn't mention. But

50:32

that was, you know, those power prices directly

50:34

correlated to them going under. And

50:37

we're going to still see that sustained power

50:39

price is still out there. It's definitely not as

50:42

high as it was this time last year. And

50:44

maybe it continues to drop across the board. But

50:46

that is one big difference between this halving

50:49

and the last halving is, you know, power

50:51

prices are significantly higher across the board. Speaking

50:53

of energy prices, it's still a tangent, but

50:56

gas prices here in

50:57

Santa Monica are

50:59

insanity. How much is gas? It

51:02

was like $6.65. Last in English. $6.65, what?

51:04

A gallon. A gallon, yeah. Three and

51:07

a half leats in a gallon.

51:09

Huh? Three

51:12

and a half leats in a gallon. I don't know. Four

51:15

liters in a gallon, right? How many liters in a gallon? What's

51:18

your... We're going to do some math

51:20

for you. What do you guys measure, a gallon or

51:23

something? Yeah.

51:26

So what are you doing? You dividing? Well,

51:28

I don't know the pricing right now. Right. So

51:31

how much is it? It's $6.65 a gallon.

51:34

Okay. So divide that

51:36

by the three point. And what have

51:38

you got? So it's $1.75. A

51:40

litre. So put that in pounds. Do

51:46

you know why it might be closer than it used to be? I know. I

51:48

was thinking that. Yeah. Pound 40.

51:52

Pound 40. Now have a look

51:55

at the price of petrol in the UK.

51:57

Pounds and quid, is that interchangeable? Yeah. But

52:00

quit you know, it's not as by like a

52:02

pound 58 okay,

52:06

well just to put in perspective. It's less it's

52:08

sub $4 in Chicago. Okay Yeah,

52:10

but like we have a flat price across the

52:12

UK pretty much So you might pay a bit more in London or

52:15

on a motorway, but it's about one pound fifty

52:17

four So that's what about one dollar eighty but

52:19

like we've always been used to like

52:21

here in America's complain about the price of that You

52:24

got fucking no idea what we have to drive much

52:26

bigger inefficient cars than you do. Well,

52:28

no always always Yeah, so a quiz

52:32

is a single pound Quit

52:34

is a single pound. Yeah, it's like lenders

52:36

quit. It's like give us one pound. Got it. Okay.

52:39

We don't say can have Well, you

52:41

might say it's 10 quid, right? Yeah, but

52:43

we don't use quids quids Quit

52:46

is naturally plural Quids some

52:48

pounds are interchangeable, but like quit

52:51

is more of a term like lenders

52:53

acquit gives 10 quid. Gotcha Would you

52:55

do half a quit or is it just sitting

52:57

out? That's a hey pants, but it's 50 P. Yeah

53:03

Or 10a fire. Yeah, what's

53:06

a Nigel? It's a Nigel Ben So

53:08

we have nicknames from so a five is a bluey monkey.

53:11

Yeah monkey is 50. Yeah, I think

53:13

so No monkeys monkeys monkey 20. Yeah, I'm

53:16

on keys 500 There's

53:18

a name for that kind of language. What's it? It's company rhyme

53:20

is like yeah, yeah, yeah, bluey's

53:22

the Fiverr Nigel's a ten ask is Nigel

53:24

Ben 10 the term the box It's

53:27

a score for 20. Yeah

53:30

balls over 50 I don't know what

53:32

hundred is a monkey 500 already

53:35

bag of sand already 50 as well Is it

53:37

you have a thousand you have a thousand dollar bill? No,

53:39

but it's like it's Thousand thousand

53:41

quids I guess and

53:43

we have a I'm

53:46

saying quid now every time I meet you from England

53:49

a few of them get used Go for a gypsy's

53:51

let's go to the just go for a week the

53:53

gypsies kiss is a piss If

53:56

you call somebody a Burke, you're calling them the seawater. It's

53:58

perfectly hunt. Okay I got it. Wow.

54:02

Just dropping a lot of knowledge here. I feel a whole podcast about it. If

54:04

you run a whistle as a suit. Okay. Whistle

54:06

and flute suit. I had a cheap whistle last time I was here. You did? The

54:09

YouTube commenter told me about it. Yeah, but now you've not got it on. I think

54:11

your business might be screwed. I don't know. See, come

54:13

on, actually. Never read YouTube comments. I saw S.B.F.

54:15

in a suit. It was not good. I was like, yeah, that's

54:17

a bad idea. Bad strat. Bad strat. He's

54:20

going to end up with a Nobel Prize. Geez.

54:24

So, yeah, I guess the FTX stuff was happening around the

54:27

last time all this. Miners

54:29

were kind of unraveling this time last year. It was around. FTX

54:32

was kind of rough here last year. I wonder

54:34

if there was no FTX, no BlockFi, no

54:37

sales here, no Luna, no three hours capital. Any

54:42

of us have missed? There's a lot of down with that. I wonder how we would

54:44

have done. I think Genesis just stopped. Yeah, Genesis. My

54:47

first day on this job was the Luna Company. I think it was a lot of money. I think

54:49

it was a lot of money. I think it was a lot of money. I

54:51

think it was a lot of money. I think it was a lot of money. I think that was

54:53

the Luna crash. I wonder... My

54:56

only assumption is that we would have gone higher,

54:59

still come down, but come down to a higher

55:01

point because we came down from higher. Wait, you think we would

55:03

have gone higher? I think we would. No,

55:06

that leverage definitely drove... That

55:08

leverage definitely drove price up. Even

55:10

though they didn't own any Bitcoin, they weren't actually buying any Bitcoin. I think

55:12

that drove... I think that drove... I think the froth

55:14

in the market drove that up. Yep. Hm,

55:17

interesting. But you had to be a catalyst. But

55:19

we would have definitely seen a higher floor

55:22

probably if there was not that much leverage. But

55:24

that's just the way the world works. That's how humanity

55:27

has operated since for 5,000

55:29

years. Well, I mean, you

55:31

can't have a chart that looks like a hockey stick and

55:33

expect it to continue. To

55:35

continue. Unless it's LuxOS firmware installs. Exactly.

55:40

So what's your feelings on actually that? Well,

55:43

I'm kind of in line with a lot of... A lot of the PubCo

55:46

miners right now have been pretty avid. They've

55:48

been pretty adamant about it being a very bearish

55:51

year. Very tough year. Very tough

55:53

year for miners. And I share that. I

55:55

share that. But I do think there are glimmers

55:58

of hope. I think there are definitely places where... They're

56:00

miners that are thinking now, putting

56:02

together these types of hedging strategies, squeezing

56:05

out the extra efficiency. Like LuxOS

56:07

is something that we've been pushing a lot recently. Grilling

56:11

smartly too. What is LuxOS? It's

56:13

a firmware that goes on the mining machine. So that's basically

56:16

the software that goes on the device, kind of like jailbreaking

56:18

your iPhone. Okay. It

56:20

unlocks a bunch of features and can improve performance and

56:22

things like that, that you don't get with stock

56:24

firmware. And so we've been spending a lot of time developing

56:26

that and that has been going gangbusters. I

56:28

was actually just checking my phone. One

56:30

of the co-founders, Guzman, is

56:33

in Prague and he's been installing for like the last

56:35

12 hours for customers. So are

56:37

you like bear market resistant then? We

56:40

always, I mean, we have been. We've made it through the, we

56:42

were built during the first bear market, sorry,

56:44

the previous bear market. You know, we kind

56:46

of, we were founded in August of 2017,

56:50

which is kind of the beginning of the run.

56:53

Yeah. What were you about 4,000 at that

56:55

point? Even lower maybe. Maybe lower.

56:58

We were founded around that time. I

57:01

thought 2018. Yeah, August 2017. But at

57:03

that time it was just, you know, just me and Eddie kind of building

57:05

an altcoin pool as a hobby. And

57:08

so we got to watch 2018 effectively

57:10

from the sidelines because we weren't really a company at that

57:12

time. And then we're like, wow, we should

57:14

really build this thing into a company and then got to basically

57:16

ride that thing all the way down to 2020. When

57:20

we started, you know, we started, we hired our first people

57:22

in the end of 2020 outside of the founders.

57:25

How many people are you now? What's

57:28

that? That's based on

57:30

the org. There are people we don't put on there. I've been... They're

57:33

secret. They're our secret weapons. They don't go

57:35

on. So we have a... That's impressive.

57:37

Our org chart is public. You can just

57:39

go to the org.com and look at LuxorTech's

57:42

org chart. But there are a few people that we don't put on there, but...

57:45

Did you get the price? Well,

57:47

for the whole of August, it was between two and a half and four

57:49

and a half. So we were both right.

57:51

There you go. Nailed it. Should

57:54

have bet again. You had a million

57:56

sats to run. I know

57:58

that year very well. for the first

58:00

probably year. As a broadcaster?

58:02

No, the podcast. Oh, no, you were a minor

58:05

first. That was a great story. All those S9s?

58:07

Yeah, no, not really. That's a great story. And

58:10

five. Yeah, there it is. And

58:12

my dragon mints. Oh, yeah, those dragon

58:14

mints. So, no, you were saying, how

58:16

do I view the next year? So

58:20

folks that are hedging

58:22

properly have the right strategy in place, not just hash

58:24

price, but I think hedging, being

58:27

aware of energy markets,

58:30

I think right now, general consensus among miners is to

58:32

run unhedged on the energy prices. But I think

58:36

that may go away eventually. And the reason

58:38

being is that prices have been coming down. Well,

58:41

and if prices are coming down, now it's time to act

58:44

for energy at least. We mean locking in

58:46

PPAs or like hedging doesn't have to be. Yeah.

58:49

Locking in PPAs is really expensive though. You have to

58:52

provide a lot of capital. Marketers don't have capital

58:54

right now, so they're like, f it, not

58:56

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1:02:09

each other. But they can use Bitcoin

1:02:12

as the facilitator to sit

1:02:14

between the both nations and there's like high

1:02:16

liquidity in Bitcoin. So many tools

1:02:18

like that are being built. And then you just have

1:02:22

to look at what's going on with the

1:02:24

state of various central banks and

1:02:27

look in the UK, you know, the

1:02:29

levels of debt we have and that's only increasing.

1:02:32

Like I'm so bullish. What I'm

1:02:34

not bullish on is why people are missing

1:02:36

it. Like that

1:02:39

gap between what we know, and then

1:02:41

other people have heard of Bitcoin and they won't

1:02:43

accept it. I was thinking about this today, actually,

1:02:45

I think part of the gap is

1:02:48

it's not always intuitive.

1:02:51

It's kind of a barrier entry from an educational

1:02:54

standpoint on understanding Bitcoin. It's

1:02:56

got negative media attention

1:02:58

when people are just blasted

1:03:01

with media constantly. And depending on what your medium

1:03:04

is, watching the wrong media, you're

1:03:09

going to be influenced negatively.

1:03:11

And then to me,

1:03:13

I don't know, I think there's not enough effort

1:03:15

to educate the masses on

1:03:18

Bitcoin. I think Bitcoiners love Bitcoin

1:03:20

and talking about Bitcoin to other Bitcoiners is great.

1:03:23

But the general masses aren't getting

1:03:25

the education. Even people that own

1:03:28

Bitcoin, you know, there's a lot of people that own Bitcoin just because they

1:03:30

think it's going to go up and it's an investment tool, but they don't understand

1:03:33

at all how it works. And I just

1:03:35

don't think there's enough people talking about how it works and why

1:03:37

it's a career. I'm having this kind of like

1:03:40

back and forth moment with BlackRock. I don't say BlackRock

1:03:42

because really they'll lead the ETF game, right? Yeah. I

1:03:45

know fundamentally, it's

1:03:47

not the right move for, I don't want

1:03:50

to say Bitcoin, but Bitcoiners, the people who will

1:03:52

buy who really should just be buying spot Bitcoin and holding

1:03:54

it, right? Oh, ideally, it's not the right

1:03:57

thing. I also know like we can't really trust. BlackRock.

1:04:00

But I also wonder if that is the game changer

1:04:02

that is it's like the signal that

1:04:04

gives Bitcoin

1:04:07

it like validates Bitcoin across so

1:04:09

many different markets and then it's like it's

1:04:11

that thing that sets us off to the races And

1:04:14

I wonder I wonder if that's what we need is that

1:04:16

that becomes the signal It is the risk

1:04:18

that it validates it as just purely a

1:04:20

investment vehicle and nothing else That's that

1:04:23

as well that as well But I just think

1:04:25

if a black rock thing happens it

1:04:27

drives up the price it drives up awareness

1:04:30

It causes some liquidity shocks. We

1:04:32

will get there will be a lot of media

1:04:34

coverage We know yeah, then there'll be people

1:04:37

searching about Bitcoin that all your friends who you told

1:04:39

them by four years ago We'll be calling you up but

1:04:42

I Think there's

1:04:44

been a shift in the the media coverage you say

1:04:46

the negative media I've actually started to notice

1:04:49

upon its positive media the last year

1:04:51

like some really good stuff. What are you watching

1:04:53

them? I mean it's different places, but I

1:04:55

mean we had the coverage of Forbes Forbes have been pretty

1:04:57

good over the last year We've definitely seen a

1:04:59

switch in some of the coverage in the mining Yeah,

1:05:01

yes, G. The ESG narrative seems to have cooled down

1:05:04

a bit recently. Yeah, and so I just it's

1:05:06

a slow shift It's not a massive shift, but the shift

1:05:09

is there. Yeah, and I Don't

1:05:12

know. I just feel like maybe it's the signal

1:05:14

we need. It's a weird one I kind of I don't

1:05:16

want it personally just for the number go up I want it

1:05:18

personally because I want this technology

1:05:21

is available to many people as possible Yeah,

1:05:23

well a number go up draws attention anyway,

1:05:25

but I know it's 27 is 27,000 a good price I

1:05:28

feel like it's a pretty good price. I'm not you know,

1:05:30

it's not terrible. I mean miners probably think that

1:05:33

it's bad But you know, it seems

1:05:35

like pretty good. I think relative to float. It's

1:05:37

below fair value Relative

1:05:39

to float. It's below fair value. You're gonna

1:05:41

have to explain that for us non derivatives trader

1:05:44

people I Think

1:05:46

projections based off of how much Bitcoin actually

1:05:48

exists right now versus what's gonna be available

1:05:51

later Make the dollar value

1:05:53

of Bitcoin lower it's operating

1:05:55

lower than it should be Where do you think it should be and it's

1:05:57

supposed to be in like the mid 30s maybe a low 40s

1:05:59

Huh.

1:06:00

Me, but that comes. So there is one big

1:06:03

difference between the

1:06:05

price that we have right now and the price action that we

1:06:07

see and the overall, the macro

1:06:09

event than we've ever had before, which is

1:06:11

there's now a real return on cash, which has never really

1:06:14

existed for the whole life of Bitcoin. You

1:06:17

can park your cash and T-bills

1:06:19

and get paid 5%, 5.5%. That's

1:06:22

a pretty damn good return. And

1:06:25

now, like Bitcoin and all, I mean, all

1:06:27

assets, not just Bitcoin. You can pick up Apple

1:06:29

and Amazon and ETH

1:06:31

and everything has to compete with. There's now a real

1:06:34

return on cash. And so there's a lot of people

1:06:36

that are like, I'll take 5.5%. That's pretty good.

1:06:38

It's below my mortgage rate. I'm basically making

1:06:41

money, you know, arbing that. And I'm

1:06:44

just going to run with that. I'm not going to invest in other stuff.

1:06:46

Yeah, it's interesting. So I was thinking

1:06:49

about this today. Again, I think about

1:06:51

a lot of things, apparently. Trading

1:06:54

onions. You

1:06:56

say 5.5%, like a lot of people are comfortable

1:06:59

with 5.5%. We actually

1:07:01

we have a product we're going to market with where we're

1:07:04

trying to get, make it

1:07:06

so people that hold Bitcoin can get yield

1:07:08

on their Bitcoin in a legitimate fashion

1:07:11

at like 10%. And

1:07:14

so 10 to 13%. And

1:07:18

we're going on, we're kind of like testing this with

1:07:21

product market fit, talking to people, does this make sense?

1:07:24

Hey, hey, hey. Should

1:07:27

we have had a trigger warning? Yeah, you

1:07:29

should have. Oh, you don't like this

1:07:31

idea? Oh, I love the idea. I'm 10%

1:07:33

yield on my Bitcoin. But hey, hey, hey.

1:07:36

Well, do you remember who used

1:07:39

to sponsor this podcast? Oh, yeah. Well,

1:07:41

look at that. Well, we're not sponsoring. We're

1:07:43

actually doing that yet. So there's a

1:07:46

reason why. Hold

1:07:49

on. Hold on. Just I

1:07:51

want to close up the point real quick. We've

1:07:54

been talking to some people about it. And for some reason,

1:07:56

people that are on the Bitcoin

1:07:58

side that are trying to get yield on it are all fixated on 10%.

1:08:00

Everyone's like, I need 10%. It has to

1:08:02

be double digits. You just said, you know, a lot of people

1:08:05

are comfortable with five and a half percent. And

1:08:07

you know, I hear like we can do these industry trades where

1:08:09

it's like 17%. And I just don't understand, like,

1:08:12

would you not be comfortable with 7% or 8%

1:08:15

yield on your Bitcoin? Why is it 10? So

1:08:18

when you say yield on your Bitcoin, what you're, what

1:08:20

everybody that's listening to this podcast right now

1:08:22

is thinking, block five, all my money's

1:08:24

gone. I'm poor. We know how this plays out.

1:08:28

You offer yield on the Bitcoin. You sponsor my

1:08:30

podcast 12 months later, your boss, and everyone

1:08:32

blames me. And so here's what happened. So here's the reason.

1:08:34

And this, the reason this is

1:08:36

actually different is because there is

1:08:39

actual proof of work. There is demonstrable

1:08:41

economic activity happening. You can monitor

1:08:43

that there's actual like mining rewards

1:08:46

being produced. You're just giving up

1:08:48

some of the yield or some of the margin that you

1:08:50

would produce from that mining yield to

1:08:52

somebody that financed your operation. Walk us through

1:08:55

it. Explain that. Pete,

1:09:00

yeah, step by step. I will. It's

1:09:03

a good time to coin. It's quite simple, actually.

1:09:05

So you have 10 bit. I'm giving you

1:09:07

my 10 bit coin. Yeah, I want

1:09:09

to, okay. So you have 10 Bitcoin and you

1:09:11

want to put it to work. I want that point seven Bitcoin

1:09:14

back. Right. You're tired of it just sitting there in cold

1:09:16

storage and it's doing nothing. Right. Okay.

1:09:19

On the, so that's what you have. And you want

1:09:21

to get, let's say you want to get 10%. Yeah. Okay.

1:09:23

On the other side, there's a miner and

1:09:26

he has, let's say in

1:09:28

this scenario, he has 30 petash

1:09:31

and he wants to sell that forward, right?

1:09:33

He wants to get Bitcoin upfront for

1:09:35

future production on his mining operation.

1:09:38

And the reason he wants to do that is because he doesn't want 15

1:09:40

to 18% from a finance year. He

1:09:42

doesn't want to issue equity to be

1:09:44

deluded. He just wants Bitcoin

1:09:47

upfront so he can buy more machines

1:09:49

and he wants to grow his operation in a non-dilutive

1:09:52

way. Why did he want the Bitcoin, not the dollars? Or did

1:09:54

he not care? He doesn't care. Like, you

1:09:56

know, he maybe has to convert the Bitcoin

1:09:58

to dollars or maybe. He can

1:10:00

fund his A6 deals with Bitcoin. I don't know,

1:10:03

like it doesn't matter. Okay. Bitcoin

1:10:05

dollars doesn't matter. But in this scenario, you have Bitcoin.

1:10:09

So you give the Bitcoin upfront. And

1:10:11

what you're doing is you're getting his future

1:10:13

production of hash rate starting day one. And

1:10:16

let's say it's a 180 day contract. Okay,

1:10:19

so every day you're getting his production. But

1:10:22

what you're doing is he's selling it at

1:10:24

a discount. So he's locking in a discounted

1:10:26

hash price at 10%. And

1:10:29

you're buying it cheaper. And then

1:10:32

what you do, this is where it gets a little complicated.

1:10:34

You use our cash settle instrument and you sell

1:10:37

that hash price to hedge it. And you lock

1:10:39

in that yield. So now you've bought it at a

1:10:41

low price and sold it at a higher

1:10:43

price that's 10% higher. And now you

1:10:45

get 10% yield on your Bitcoin

1:10:48

for 180 days. Annualized.

1:10:51

Guaranteed? Yeah, guaranteed. Well,

1:10:54

the risk is that Luxor goes under.

1:10:57

The risk is that Luxor goes under, but the reason Luxor

1:10:59

would go under is because the miner stops producing

1:11:01

hash rate. Yeah, so there's collateralization

1:11:03

requirements for how

1:11:06

much a miner is able to sell, that sort of thing.

1:11:08

Yeah, actually this is an important piece. I shouldn't have

1:11:10

glossed over this. So the risk is

1:11:12

with the miner, right? You're not the risk, because

1:11:14

you already gave me the Bitcoin, you're already fully collateralized.

1:11:17

Fully collateralized. The miner, however,

1:11:20

they have to deliver the hash rate. They

1:11:22

have to do as much as they said they did. And then they

1:11:24

have to weather all the operational

1:11:26

risks that they have. Plus

1:11:29

there's also the flight risk. They could just pick up and point their hash rate elsewhere,

1:11:31

not be on Luxor pool. And then

1:11:34

we're left holding the bag. But Luxor's

1:11:36

job in this scenario is to derisk

1:11:38

the situation. So we'll pick margin from

1:11:41

the miner. We could do liens on their ASICS.

1:11:43

We could have them over

1:11:45

commit hash rate and put it into escrow. There's

1:11:48

a number of different ways we could

1:11:50

do it. We could do it trad-fi ways. And

1:11:52

you do due diligence on them as well. Oh, that's

1:11:54

where it starts. We have very

1:11:57

good information on the miners through the pool. So

1:11:59

we know how much. Hashrate how long they've been with

1:12:01

us what their uptime is what their energy costs

1:12:03

are with KYC them So we

1:12:06

have all the background and we only deal

1:12:08

with you know A-rated

1:12:10

miners in this scenario that we're very comfortable

1:12:12

with in much photography. What's that? Is

1:12:15

it like us? You are facing actually that's another

1:12:17

good point like you From a credit

1:12:20

or a risk profile. You don't want someone that's

1:12:22

who's whole fleet is in one space, right?

1:12:24

I can let us operational risk. I mean you can do

1:12:26

it, but it adds risk ideally

1:12:29

they have Geographical

1:12:31

dispersion and redundancy, but

1:12:33

that all goes into this risk modeling and how

1:12:35

we handle it and Word

1:12:37

could my loan be dispersed and distributed

1:12:39

amongst a bunch of different miners. Yeah, he

1:12:41

risks it for sure. Okay It

1:12:44

absolutely should be yeah. Well, so we've

1:12:47

been we've been working on this we've done Four

1:12:50

or five test trades on it. We're trying

1:12:52

to go to market with it by the end of the month Okay,

1:12:55

so it looks it does look like a loan but it

1:12:57

is it is the product is actually

1:12:59

a buy and sell agreement It's a purchase

1:13:01

and sale agreement It's a it's

1:13:03

what's called a spot transaction. We're having full

1:13:06

regulatory and legal review right now It's like in

1:13:08

for you with that but it is

1:13:11

On the it's definitely on the up and up and it's

1:13:14

just so it's you see this in

1:13:16

in every commodity It's just a forward

1:13:19

sale and all you're doing is getting

1:13:22

you're putting up Bitcoin You're getting future production

1:13:24

from the miner and it just comes at a 10% And

1:13:27

the reason it's at 10% is because it's better

1:13:29

than borrowing because if they go out

1:13:31

and try and borrow in 15 to 18% yeah,

1:13:34

it's better for everyone. Yeah

1:13:36

in 10% like it's not I don't want to over promise

1:13:39

It's not always gonna be 10% it's gonna be based on

1:13:41

what the market market Yeah, but if they

1:13:44

so if the miner stops mining, what

1:13:46

do you do? you call them up and say what the fuck you doing

1:13:48

or do you You gonna

1:13:50

take control of the a6 and sell

1:13:53

them off it depends on the use case right

1:13:55

like if they're Typically

1:13:57

what we'll do is we'll withhold up certain

1:14:00

of the upfront fee. If you

1:14:02

can 10 Bitcoin, we'll actually just give them seven. Then

1:14:05

we'll use that three in case of interruptions.

1:14:07

We can just step in if they're down

1:14:09

because of a fire or weather

1:14:12

or whatever. We use that 30%

1:14:15

to keep making you whole and getting you your

1:14:17

payments. If shit hits the fan,

1:14:20

we step in and we're the one that

1:14:22

guarantees it. I mean, if you

1:14:25

can make this work and it does work, what you're

1:14:27

going to have is an oversupply of

1:14:31

people willing to loan Bitcoin. It's exactly

1:14:33

what happened with BlockFi,

1:14:35

Celsius. There was a massive oversupply

1:14:38

of people with Bitcoin, Saturn, cold wallets

1:14:41

who wanted to get an upside. In the end,

1:14:43

there wasn't enough borrowers.

1:14:46

That's why the price has got forced down so much.

1:14:48

I think that's good for the mining space because

1:14:50

they're going to get much better. I

1:14:53

mean, you're right. There's going to be competition for this 100%. My

1:14:56

thing is, how risky is this product

1:14:58

for Luxor as a fucking

1:15:00

solid business? The

1:15:03

big blowups in the last cycle

1:15:05

with folks that took big mining

1:15:08

loans, they were taking

1:15:10

loans to buy future machines.

1:15:13

All of the miners that went bankrupt

1:15:16

or had any sort of, I

1:15:20

guess, missteps along the way, taking

1:15:23

on debt to buy machines in the future, that's

1:15:25

incredibly risky because you're taking on a bit, not

1:15:27

just operational risk, you're

1:15:29

now taking delivery risk too. In

1:15:33

mining, you'll know that hash rate that's online

1:15:35

is much more valuable than hash rate that's going to come

1:15:37

online because hash rate that's going to come online still

1:15:40

needs to be manufactured, shipped from China,

1:15:42

delivered on the right time, plugged

1:15:44

in. You need to have all your power and transformers,

1:15:46

all of that stuff has to line up, which is significantly

1:15:49

more complex. In this case, we're going to

1:15:51

miners that have already overcome

1:15:54

all of that complexity and have machines

1:15:56

up and running already. Once you have the machines

1:15:59

up and running, the risk risk is much, much lower.

1:16:01

Well, that's actually a really good point. Typically,

1:16:04

going back to how we evaluate the miners, so

1:16:07

the miners that we're dealing with, not always,

1:16:09

but 99% of the time will be

1:16:11

people that already have hash rate online. We can see how

1:16:13

it's performing and see what their uptime percentage is

1:16:15

over time. So if they're selling 100 petahash

1:16:18

for, the expectation is they already have 100 or 200

1:16:24

or 300. And

1:16:26

so, absolutely, we're just helping

1:16:28

them grow. Is it one of those things that works

1:16:31

in a bear market and then there's

1:16:33

potential over exuberance during a bull

1:16:36

market? Because it feels like there's this one year period

1:16:38

that everyone blows up because it's like, oh, this

1:16:40

bull market is different. Price is going

1:16:42

here. I can do this. And

1:16:44

people just get over leverage every single

1:16:47

fucking time. Your

1:16:49

product, as

1:16:51

great as it might be, is going to introduce

1:16:53

some leverage into the market. And

1:16:57

lots of miners are suddenly thinking, the price

1:16:59

is good. Let's go and borrow. And then

1:17:02

the bull market isn't as big as everyone else.

1:17:04

It doesn't last as long. We get some blow ups that you guys

1:17:06

are left on in the back. Especially if you're taking some

1:17:08

collateral and ASICs, which has clearly not

1:17:10

worked in the long cycle. No. And

1:17:13

to be honest, we want to avoid that as much

1:17:15

as possible. I

1:17:18

think in scenarios, you'll put liens on the

1:17:20

ASICs or take ASICs as collateral.

1:17:22

But yes, you're right. It's a shitty way of

1:17:24

modeling it out. And also, it's a shitty

1:17:27

way because the prices of

1:17:29

ASICs is volatile. Totally. It's 19

1:17:32

pros. It's worth $11,000 now. It's only worth $1,500. $1,500, yeah.

1:17:35

Yeah. I mean, if you can do it. And

1:17:37

no one wants to fucking buy them. Right.

1:17:40

If you can do it. No, they do, actually. We're

1:17:42

selling a lot of them. If you can do it right, there's

1:17:45

a lot of... The reason it's hard with the ASICs

1:17:48

is you have to go through the default

1:17:51

and getting those and then getting them plugged

1:17:53

in and all that kind of stuff is a pain in the ass.

1:17:56

But if you... To

1:17:58

do it right, you actually... had

1:18:00

a dealer on your own hosting facility

1:18:02

and you were in charge of where the A6 are, it

1:18:04

would become much easier to do. Even less

1:18:07

risky, right? Yeah. Yeah. I

1:18:09

mean, taking out the delivery portion, which is what caused

1:18:11

a lot of the turmoil in the mining, it's

1:18:14

called MyFi, the financing market in 2021,

1:18:17

taking out the delivery component

1:18:20

is a really big factor because you

1:18:22

write these contracts. So here's

1:18:24

an example. The biggest mining manufacturer

1:18:27

is Bitmain. They would say, oh yeah, we're

1:18:29

going to ship in December. And so you would write

1:18:31

contracts where the loans would start

1:18:33

in December. They would issue the payments. And

1:18:37

then they would say, okay, we're going to

1:18:39

have the machines online

1:18:41

by March. And in March,

1:18:44

you start your first payment. To

1:18:46

pay back the loan. Well, Bitmain

1:18:49

or whoever, I shouldn't call it just Bitmain,

1:18:51

but whoever has production issues or things

1:18:54

are delayed or for whatever reason, the machines

1:18:56

don't show up until March. Now it

1:18:58

takes you three months to get online fully. And

1:19:01

you're now what, six months behind on payments?

1:19:04

And so that causes a lot of disruption. Yeah. I

1:19:07

mean, the difference here is like you have to have

1:19:09

the hash rate already. And

1:19:12

you have to make payments starting day one. And your payments

1:19:14

are coming from the hash rate. By

1:19:17

the pool. By the pool. Through

1:19:20

the pool, but from your ASICs. So

1:19:26

it's not a zero percent risk. Anything

1:19:29

that generates yield has some inherent risk. But the truth is-

1:19:32

We're obviously trying to reduce that risk, but there

1:19:34

is still risk, certainly. I think what separates this

1:19:36

product is the ability to hedge your

1:19:38

revenue risk from the miner. So

1:19:40

you could be, if you're a miner selling your hash rate forward,

1:19:42

you could use our cash settled instrument and

1:19:45

de-risk yourself from a revenue

1:19:47

perspective. And de-risk your exposure to difficulty

1:19:50

and transaction fees. And that

1:19:52

makes, I mean, nothing's perfect, right? But it's

1:19:54

a lot less risky than what we've seen previously. It's

1:19:57

very interesting. It's going to be a

1:19:59

very interesting- The next

1:20:01

year is going to be really, really interesting. There's a bunch of products

1:20:04

that Matt hasn't mentioned and is not able to, I don't

1:20:06

know if one of them you can't mention, but coming

1:20:09

up in 2024, which are going to be super exciting.

1:20:11

And I think it's going to be 23. Yeah.

1:20:13

Well, we have more than 23. I don't know if you want to get

1:20:16

into the energy hedging structured projects,

1:20:18

products or anything like that. That's, I find that

1:20:20

to be probably one of the most interesting things, especially

1:20:22

for scaled miners is where you build a

1:20:26

full hedging strategy for somebody

1:20:29

that includes hedging hodl. Somebody

1:20:31

say it has 10,000 Bitcoin on their balance sheet. They

1:20:33

buy energy and erkot and

1:20:35

they produce 10X a hash. Build

1:20:39

them a hedging strategy that comes together

1:20:42

over the course of, say, two

1:20:44

years and implement

1:20:46

that. And basically that's all of your

1:20:48

hedging, all of your inputs, energy costs, all of

1:20:50

your outputs, which is your hash price,

1:20:53

and then also everything that you make in between,

1:20:55

which is your hodl, your balance sheet. Yeah.

1:21:00

I mean, what miners think is a one-stop shop

1:21:03

to hedge out all the risk. You have your treasury

1:21:06

risk, your energy risk, and your revenue risk. And

1:21:08

right now, there's limited tools

1:21:11

for your revenue risk. We're one of the few.

1:21:14

Although, I think that market's growing. It certainly

1:21:16

is. Yeah. And then energy

1:21:19

is tricky, right? Because it's

1:21:22

on a use case basis, like where

1:21:24

your region is, what your energy source

1:21:26

is, that sort of stuff. I

1:21:28

just don't think people have the expertise. And

1:21:31

they're either hiring it or they're outsourcing it. And I think

1:21:33

Luxor would be one of the outsourced

1:21:36

components of that. So everything's just

1:21:38

really maturing, then? Yeah, as it

1:21:40

should. Yeah. Yeah. To

1:21:43

hopefully a longer term, more stable market.

1:21:45

Yeah. Which we all want. Yeah.

1:21:48

But I mean, you have to remember, when did the

1:21:50

mining space really start? What

1:21:53

does this spend? When do we have our first? Seven

1:21:55

years? Or maybe our first PubCo would

1:21:58

have been? Yeah. 2009 right

1:22:01

it's 2014. Yeah 14 or 15

1:22:04

when we started, you know, I think met large deployments

1:22:06

of s9 Maybe it was maybe one of the first. Yeah,

1:22:08

it's nine years. This is a nine-year-old industry I

1:22:10

like it and it's grown rapidly It's

1:22:13

got a few more steps to make but to your point,

1:22:16

I think it's it's headed in the right direction It's

1:22:18

a lot of opportunity for you guys. I think

1:22:20

so. How much competition do you actually have in

1:22:22

this market? Well before we jump into

1:22:24

that I'm just thinking again about the yield

1:22:27

product and how I know that as soon as you say the word yield

1:22:29

Bitcoiners the Bitcoiner in me is like nope not happening

1:22:32

not happening. I have a friend personal friend

1:22:34

who lent money to cred Cred

1:22:37

led one of the one of the lenders just like block by but

1:22:39

smaller one and they tried to claw

1:22:41

back a payment that They got from him or that

1:22:44

he his loan was over They caught

1:22:46

it they tried to claw it back because they said after

1:22:48

they went bankrupt that he got preferential liquidation

1:22:52

So like I'm very familiar and it was a

1:22:54

lot. It was a lot of Bitcoin. It was like his net worth of Bitcoin

1:22:57

and so anyway the The

1:23:00

the reason I'm calling out that yield yield

1:23:03

is a thing, but it doesn't

1:23:05

have to be such a bad word It is a bad word in

1:23:07

our space because it blew up so many things But

1:23:10

yield exists out in the world yield exists on Treasury

1:23:13

bills. You don't think you can't get away from

1:23:15

this right? I don't know. Yeah, I

1:23:17

mean, you're not gonna get away from the yield exists. It's it's

1:23:19

the it's the value of money It's not a scary

1:23:22

thing like this is a it's a time-tested

1:23:25

instrument not ours but like generating

1:23:27

yield on an asset is not novel

1:23:29

people have made interest payments or it's

1:23:31

just painful in this industry because of recent

1:23:35

event and people doing stupid fucking shit

1:23:37

like Million based

1:23:39

on ftt tokens as collateral Like

1:23:42

a real difference. So this is a completely fine asset.

1:23:44

Is there any other this? I was

1:23:47

finalized Bitcoin No, so

1:23:49

does that not like add an element of risk? Why

1:23:52

would that add an element of risk because there's no

1:23:54

increasing supply so that you can like pull forward?

1:23:57

Oh, I mean what that's

1:23:58

well It's

1:24:00

a good point. So you get analog gold. We're

1:24:03

a long way away from that point, right? In

1:24:06

what sense? Well, I mean, you're saying

1:24:08

it's finite in that there's only 21 million Bitcoin?

1:24:10

Yeah. I

1:24:13

don't think that, I mean, money changes

1:24:15

hands, right? Even if it's a finite amount. And

1:24:18

so yield is yield, like it's not like we're

1:24:20

not producing more Bitcoin, we're just getting yield for

1:24:23

the person that has the Bitcoin. I think the most interesting

1:24:25

part of this is, if you

1:24:28

create this product, and the risk exists

1:24:30

between the borrower and lender, and

1:24:32

it can't take you guys under. The

1:24:34

things that happen with BlockFi and Celsus is

1:24:36

the decisions they made where they made massive multi-hundred

1:24:40

million dollar loans that

1:24:43

went south and it took down the whole company.

1:24:47

If you connect me with a borrower

1:24:50

and they screw up and it's my

1:24:53

loss and it has zero action company,

1:24:55

I feel more reassured by that. But

1:24:57

if you're in that middle position where you can

1:24:59

get taken down by one bad decision,

1:25:02

that's the shit that scares me. No, and it should.

1:25:04

And that's where you as

1:25:07

the person who's trying to get yield has

1:25:09

to do your due diligence on us and what

1:25:11

techniques that we're using to de-risk the

1:25:13

seller. Nick's my boy. So

1:25:15

here's this. So we talked

1:25:17

about all the different methodologies that we have for reducing

1:25:19

risk from the seller, the seller being the miner, doing

1:25:22

diligence on the site, taking a lean on the

1:25:24

machines, having them on the pool, having

1:25:26

some sort of history where we can go see like, yes,

1:25:29

this person has produced a hundred petahash for three

1:25:31

years or whatever. Whatever the criteria

1:25:33

happens to be, there's another thing that we can introduce,

1:25:35

which is basically a, we can have somebody

1:25:38

come in and underwrite and basically write

1:25:40

a performance bond, which takes the risk off

1:25:42

of us and puts it on somebody else that has a relationship.

1:25:45

So say there's some miner that we don't have

1:25:47

a relationship with, but somebody's

1:25:50

lent the money in the past and they've done well with the

1:25:52

loan and they made them whole and they

1:25:54

held up their end of the bargain and they're like, yep, I will

1:25:57

write a performance bond for that miner. They

1:25:59

probably make a lot of money. they make some money from the miner

1:26:01

for doing so, but then they take the

1:26:03

risk off of us and that goes

1:26:05

then on to the underwriter

1:26:07

of that performance bond. And that would be

1:26:09

the way that we like ultimately we won't be

1:26:12

the ones on the hook for

1:26:14

the whole portfolio. Yeah, that's exactly right.

1:26:16

And that's how you do it at scale. And this exists

1:26:19

in the energy world

1:26:21

already. PPAs are backed

1:26:24

by performance bonds. Miners should be very

1:26:26

familiar with performance on. So to your point,

1:26:28

like if you're doing it at scale to the size that

1:26:30

would take down a company, you absolutely

1:26:33

would want to do something like a performance bond.

1:26:35

I like it. Take my Bitcoin. I'm not sure

1:26:37

about that. I did think more about your question though.

1:26:40

I think I misspoke.

1:26:43

I think you're saying, we

1:26:45

do actually produce Bitcoin through this because

1:26:47

the miners producing Bitcoin through their hash

1:26:49

rate that they're selling forward. So I think eventually

1:26:51

it would become unprofitable

1:26:53

for them as the havings keep occurring, but

1:26:56

that's pretty far away. So and then

1:26:58

you're going to say, well, what happens in 2140?

1:27:01

And then I'm going to be on a beach. And

1:27:03

then we talked about transaction.

1:27:08

We talked about transaction fees at that point

1:27:10

should have taken up the slack for the Coinbase subsidy.

1:27:12

And if they haven't, then when does that happen? 2140. That's when transaction

1:27:17

fees to overtake. That's when Coinbase reward

1:27:20

goes to zero. We go from one Satoshi

1:27:22

per block to zero. We're all very dead

1:27:24

at that point. When

1:27:26

do transaction fees become more than the... Well,

1:27:29

there you go. May of 2023. I think that's the first

1:27:31

time that's ever happened. Is

1:27:35

there a chart where we can see

1:27:38

the percentage? Yeah, we

1:27:40

have it down there a little further down. That

1:27:43

one was a big one. Yeah,

1:27:46

percent. So then you can go to one year here. Yeah,

1:27:49

click us over to a year. I want

1:27:51

to see who. So we didn't actually

1:27:53

even make it quite to 100%. I

1:27:57

think all the only other time that we got close was 2017. You

1:28:00

remember that that winter of 27 yeah $50.

1:28:03

I thought we got one block reward where it was

1:28:05

twelve and a half Yeah, that was but I think this is

1:28:08

the daily average. This is the day.

1:28:10

We're going to get a year. Yeah Great

1:28:13

in fantasy feels fun about bug

1:28:15

testing and products almost fairly consist

1:28:18

I look like it might might be slightly

1:28:20

on the floor is higher. The floor is

1:28:23

certainly higher and that's due to Ordinals,

1:28:26

which I don't know if we have time to even

1:28:28

talk about but yeah You've tried to ordinal pill

1:28:30

me for a while. I never got my wizard Do

1:28:34

you want to get into that right now? They're all gone

1:28:36

all the wizards were gone We

1:28:38

know wizard council can come in I Want

1:28:42

my wizard without giving support for

1:28:44

ordinals. I just

1:28:47

want He

1:28:51

said my wizard will make me rich what

1:28:54

I said something about your net worth would be 100% wizard yeah

1:29:00

I think we'll save ordinals for another time.

1:29:02

Yeah, I Think I mean I

1:29:05

can tease out some of the things we're thinking about if you'd

1:29:07

like why if you're ready Yeah, I

1:29:09

mean there's some logical next steps for us.

1:29:11

So we've launched this Cash

1:29:14

shuttle instrument both USD and BTC.

1:29:17

We're working on this yield instrument

1:29:21

Which honestly we're very excited about

1:29:24

why when will that be ready? I would say

1:29:26

ended this month. Oh shit soon soon We

1:29:28

have a few a few items left

1:29:30

to button up or we're pretty close And

1:29:32

how deep is the market for that? and

1:29:35

on which side Both but

1:29:38

that mean more the bar. I mean to your you're

1:29:40

not you're gonna have enough lenders I mean, it's

1:29:43

in the exit hash conversation on the sell

1:29:45

side and there's hundreds of millions

1:29:48

on the buy side I'm telling

1:29:50

you notional I'm

1:29:52

telling you that Whilst there'll

1:29:54

be some PTSD in the market People

1:29:57

want yield they just still want yield. Yeah, I

1:29:59

mean it's the

1:29:59

Yeah, it's what you didn't take it right?

1:30:02

Usually more is there than I am. Yeah, I

1:30:04

mean, there's no way I'd use it like too much

1:30:06

PTSD I mean, I've never used the

1:30:08

old product I'm gonna sell custom a Bitcoin and that's like

1:30:11

totally fine. I get it. There's gonna be people like that

1:30:13

for sure Yeah, it pussies everywhere You

1:30:20

have negative you're just betting me all

1:30:23

the time I Wouldn't I

1:30:25

what I said to you is accurate and I would advise us

1:30:27

anyone I don't don't take my word for

1:30:29

come do your due diligence on us and how

1:30:31

we de-risk this because you should do that

1:30:34

in any Anything that you're investing in Nick

1:30:36

this product cool. Yes. Yeah, my due diligence

1:30:38

is done. Okay What

1:30:43

I'm saying is I still think they will there

1:30:45

is PTSD. Yeah, of course But

1:30:48

at some point I think somebody's gonna solve

1:30:50

this somehow and I think there will

1:30:52

be a deep market

1:30:54

of lenders for this The

1:30:57

big I like to say the big fear is Companies

1:31:00

go into shit. That's the one you don't want. Well,

1:31:03

like loads go loads go south Well,

1:31:05

you know that there's a bad loan percentage

1:31:07

everywhere Yeah, like like and

1:31:09

if that is that's priced in that's fine But it's

1:31:12

it's the it's lending eight hundred

1:31:14

million against with FTT

1:31:16

is collateral That's

1:31:18

the kind of bullshit that took people down. Well, yeah,

1:31:21

and it comes down to how do you credit

1:31:23

profile? Do you manage risk

1:31:25

and how do you de-risk these opportunities

1:31:27

and that's where we're focused? So like for

1:31:29

us, we don't want to go under so, you

1:31:31

know Zach Prince

1:31:34

didn't want block fly to go out Like a lot of these deals

1:31:36

a lot of these reason these companies went under is because they made

1:31:38

stupid irrational decisions So we've learned

1:31:40

those lessons and we want to do it differently

1:31:42

and you know I would like to

1:31:44

keep this job and not make me yeah We

1:31:47

wonder and go to jail or whatever, but we have a lot

1:31:49

of them you might get a book made about you Who

1:31:51

that book is spicy? We

1:31:54

we also have other business lines, which is kind

1:31:56

of interesting, you know, we have like a diversified straight

1:31:58

like the derivative The derivatives right now is like a very

1:32:01

small fliver of the whole ecosystem at Luxor,

1:32:03

which is great. And

1:32:05

we want it to grow, but we have other business

1:32:08

lines that generate revenue. And

1:32:10

we're a diversified company at this point. We actually

1:32:12

have a great story around that just from today, that trade

1:32:14

I was talking about, the biggest one we did. So

1:32:16

it was one of these trades, the

1:32:19

yield instrument, where we basically were able

1:32:21

to give a miner

1:32:25

Bitcoin upfront to purchase ASICs through

1:32:27

us, through our brokerage team. And

1:32:29

then ideally, they're going to install

1:32:32

LuxOS, the firmware, and then join our mining pool.

1:32:35

So that one deal alone, touch derivatives,

1:32:37

ASIC brokerage, mining pool, and firmware.

1:32:40

Wow. And the quadfecta. The

1:32:42

quadfecta. We just need them to

1:32:45

do an ordinal hub mint or something, and they

1:32:47

get the whole thing out of a wizard. Yeah,

1:32:49

but for us, the rest of the year and

1:32:51

into next year, we look at other products. We

1:32:53

want to do BTC denominated energy

1:32:56

products. We want to look at. Oh,

1:32:58

that's wild. That's a, I mean, I know we're in two

1:33:00

hours at this point. You

1:33:03

know as long as you want. Honestly, you support

1:33:06

my football team. I'd give you. I mean,

1:33:08

we've got energy denominated Bitcoin denominated

1:33:10

energy products

1:33:12

is BTC. BTC

1:33:17

yield per megawatt hour. Yeah.

1:33:20

It's hard to even conceptualize, but maybe Matt,

1:33:22

I don't know if you can hit it, Matt. I can hit it.

1:33:25

I want to keep talking about the other stuff we're doing. Okay,

1:33:28

go. We want to do hash price futures. We want

1:33:30

to do hash price options. Like we want to hit

1:33:32

all of it to the question

1:33:34

you made earlier. We want to have tools for

1:33:37

everyone to either get exposure to the space,

1:33:40

to the hedge the risk or I mean, honestly,

1:33:43

to speculate on these markets as well. It's

1:33:46

impressive, man. Well done. It's

1:33:48

very cool. I understand a lot of it, but the

1:33:50

bits I understand seem very cool. You're

1:33:52

helping mature the market, flattening

1:33:54

the curve. Hopefully some people and taking risk out, which I

1:33:56

think is really good. Transferring

1:33:59

risk is. important. Being able to move

1:34:02

risk from one area to another, that's

1:34:04

basically what you do whenever you do any of these hedging

1:34:06

operations. You're moving risk from one

1:34:08

person to another. That helps

1:34:11

flatten the curve. Should we abolish the

1:34:13

Fed? Oh, here we go. I'm

1:34:17

gonna say yes, just because I'm

1:34:19

gonna change my answer this time. We should definitely

1:34:21

abolish the Fed. I'm going on record. All

1:34:23

right. Let's get rid of it. Let's get rid of it. We'll

1:34:26

tell Marty. Yeah, tell Marty. Luxor.tech, people. Check

1:34:28

out my boy Nick's website and his company

1:34:30

and anything else you want to

1:34:32

send people to? Luxor.tech,

1:34:35

hashradindex.com, which we've been looking at

1:34:37

the whole time, so appreciate that, Danny.

1:34:40

Ornalhub.com. Derivatives.

1:34:44

Follow us on Twitter, at LuxorTechTeam.

1:34:46

Impressive. Hash

1:34:49

underscore bender, at Trading Onions. At Trading

1:34:51

Onions. That's a great handle, though. It

1:34:53

took me forever to find you. Yeah, I'm not

1:34:56

as active on Twitter as I should be. Not as Twitter guy.

1:34:58

Yeah, I'm a bit quiet from Twitter. Well, thank you for having

1:35:01

me, by the way. Anytime, man. Thanks

1:35:03

a lot. Whenever. We seem to do annually, but you can come on

1:35:05

whenever. You've got storage service. Tell us we'll do it.

1:35:07

I cover November. April in Bedford.

1:35:10

You come into the cheat code? Hang

1:35:12

on. Hit me. What's this? So we got a conference

1:35:14

in Bedford. 12th and 13th

1:35:16

of April next year. So we ran

1:35:19

a small test last year. It worked. We're

1:35:21

going to go up to 1,000 people. We

1:35:23

are purposely creating content

1:35:25

that doesn't have Bitcoin in the title. So we're calling it

1:35:27

cheat code. My thing at the

1:35:29

moment, Bitcoin is a cheat code. If you adopt

1:35:31

that into your business, if you're a non-traditional business,

1:35:34

you've opened yourself up to an audience

1:35:36

of whatever, tens of millions around the world

1:35:39

or people locally with... I think trust you

1:35:41

a bit more because you're a Bitcoiner. And

1:35:43

so the football team used

1:35:46

the Bitcoin cheat code. And what? We won the

1:35:48

league last year in a cup double. We're going to win the league this year.

1:35:50

Our girls are on the division because we're a small

1:35:52

local team, but we have thousands

1:35:55

of fans around the world buying our merch, finding, coming to

1:35:57

the game. So the conference is called cheat code. First

1:36:00

day, normal conference, got

1:36:03

amazing speakers, I'll tell you afterwards. No,

1:36:05

this will go after we've announced. Ah, so like

1:36:07

our keynotes are Lynn Auden, Hannah's class

1:36:09

team, we've got Natalie Smolenski, hopefully Harry,

1:36:12

we're trying to get Harry in. Yeah. Obi,

1:36:14

Merkle Hodel, Jeff Booth,

1:36:18

Constantine Kessin, hopefully Majee

1:36:20

Nawaz. Like it's a good set. Tell

1:36:22

me where, hold on. Oh, sorry, I apologize. That's

1:36:25

day one. Day two, we

1:36:27

take everyone down to McMullen Park, we have a barbecue,

1:36:30

we have our last game of the season for our football team,

1:36:32

and then we have a massive piss up. And so

1:36:34

we're like, we're, because every conference

1:36:37

is the same, right? You turn up and it's two days of

1:36:39

talks, but the second day no one wants to go because

1:36:41

they get hammered the first night. So we're the same, we're

1:36:43

getting rid of that second day and we're having a football match instead. Everyone

1:36:46

come down and get drunk and eat burgers and watch football. American

1:36:48

Hodel's leaving America for the first time. Yeah. No

1:36:51

way. And so we did it last year, we had 150 people, it

1:36:54

totally worked, everyone had an amazing time, so

1:36:56

we expanded, and it's at the Bedford Corn Exchange.

1:37:00

Where they originally traded corn in Bedford. And

1:37:02

yeah, two days, come along. Well, you know

1:37:04

your comment now. Derivatives team building event. You

1:37:06

know your comment. It's gonna be awesome. Wait,

1:37:09

when is the derivative, or is that the

1:37:11

derivative? Having a, say it into

1:37:13

a current. April, it might

1:37:16

be, it might be. The 24th. Oh,

1:37:18

so it's gonna be after us. How quickly

1:37:20

could that, like, we were, is it possible to take 10 days

1:37:22

off that between now and April? I don't know if we

1:37:24

could do it now. It

1:37:26

would be tough, I think. If anything, the opposite?

1:37:30

No, I don't think we would. No. Okay,

1:37:32

it would fully depend on Bitcoin price. If Bitcoin ripped,

1:37:35

there would 100% be an acceleration

1:37:37

of that. I don't know, I still don't know if we'd get to 12. 10 days in

1:37:39

law. Yeah, but, especially if it shows a short period

1:37:41

of time. We'd need a BlackRock to get approved, or yeah. But

1:37:44

if we went to 10K, oh yeah, it would be like June.

1:37:47

You know you'll come into Bedford. I'm gonna come to

1:37:49

Bedford. I'm trying to think of where, like,

1:37:51

we have this, like, group of miners that

1:37:54

I am, I will not name any names,

1:37:56

but I have a group of miners who are, like, close, trusted

1:37:58

friends that I think about a lot. And we. We're trying to

1:38:00

figure out where's a good place

1:38:02

to have a having party for miners

1:38:05

Like this is like that in within the

1:38:07

blink of an eye all of our revenue is

1:38:09

going to go down by 50% And

1:38:11

we should be in one place Getting

1:38:14

drunk and doing it together. Where

1:38:16

should we be? So much eat all island islands.

1:38:19

You gotta go to fucking island Yeah, the island

1:38:21

is the best place to drink in

1:38:24

the world. It's right right now the Guinness no

1:38:27

Go away go away in Ireland. I'm telling you. There's

1:38:29

no you were gonna go away in Ireland, you

1:38:32

know you could You

1:38:35

could have the hash price half and then

1:38:37

the price crashed down to $2 a Bitcoin No

1:38:40

one buys it every government bans it and you're

1:38:42

still gonna have the best time ever best day ever Go

1:38:44

away. It's freaking amazing. We were thinking

1:38:47

something like the Bahamas because

1:38:49

the FTX which is kind of funny Of

1:38:51

course El Salvador is on the list But as

1:38:54

much as people try to tell me El Salvador safe, it

1:38:56

does not seem that safe Yeah, I

1:38:59

got this done in a gang zone. I was fine. Yeah, okay.

1:39:01

I mean you're really you're really selling it. Yeah

1:39:06

Can I ask a stupid question of course

1:39:08

there's no stupid geography perspective

1:39:11

where is Bedford so if you land in London

1:39:13

Yeah, you get on the train. It's 40 minutes north Okay,

1:39:16

or if you get up show them

1:39:18

or you can jump you can drive about an hour and a half

1:39:21

because of traffic It's easy close

1:39:23

to because I I lived in London for a short

1:39:25

period of time and I kept hearing about Bedford But

1:39:27

I didn't know where yeah, no, I don't know

1:39:29

if it's just cuz like the trains you might

1:39:31

have a Brad Oh, yeah, the train goes through Bedford.

1:39:34

So if you go fully out Danny so they

1:39:36

can like From mood.

1:39:38

Yeah Yeah,

1:39:41

Northampton I'm actually wearing a pair of

1:39:43

shoes called crown North Hamptons. They're made

1:39:45

right there in Northampton I used to skateboard there as a

1:39:48

kid at Redlands. Okay, and then

1:39:50

go to the Netto and get Things

1:39:52

that's 40 minutes. Yeah, it's 40 minutes on the train from London

1:39:54

to Bedford. Okay, you just fly in the loot Yeah,

1:39:56

he finds a losing it. Yeah, but you can't fly for the US

1:39:58

to lose it. No, you have to Fly to

1:40:00

somewhere in Europe, but you'd find a heath if

1:40:02

you came out just come pick you up But yeah, you'll have a

1:40:05

good time. It's okay. It's gonna be fun.

1:40:07

You had me at corn exchange Change

1:40:09

yeah Guys

1:40:11

well done. Thank you Appreciate

1:40:14

you

1:40:17

All right Would you make that did you enjoy

1:40:19

that? Okay, listen. I definitely want

1:40:21

your feedback on this new hash derivative

1:40:23

yield product that Lux are going to be launching

1:40:26

We know historically within the Bitcoin industry

1:40:28

yield type of product haven't

1:40:30

really worked So I definitely want your feedback

1:40:33

on this because they are approaching it in a new way

1:40:35

So well, you know how to get in touch, you know my emails

1:40:37

Hello at what Bitcoin did comm also, please

1:40:40

do go and check out my new film follow the money

1:40:42

part for Argentina's inflation crisis

1:40:45

It's available on YouTube which has Spanish subtitles

1:40:47

and it's also available on rumble and

1:40:50

on Twitter in its entirety Okay,

1:40:52

we've got a big week ahead on Saturday

1:40:54

we've got MK Irish for the third time this season We're

1:40:57

playing them in the FA VAR. Hopefully

1:40:59

some of you can come out to that game All right.

1:41:01

Have a great rest of your week and I will see you all

1:41:03

on Thursday You