The Economics of Bitcoin Mining with Bob Burnett - Bitcoin Infinity Show #139

0:40 Bob, welcome back to the Bitcoin Infinity Show. Thank you for joining us. Thank you guys. Great to see you. Uh, good to see you too, Bob. And, uh, we we're, we're just back, me and Luca just back from a mining conference in Maribo, Slovenia, that was put on by a mining company called Nice Hash. Uh, are you aware of them? Yes. Yes. We, uh, we have a little bit of Hashrate, uh, directed at NiceHash. I've worked with them for many, many years. Yep. Good, good guys there. Okay. Uh, uh, good to hear. . Even though, as I'm sure we'll talk about, you know, I am involved in, uh, with, with the ocean pool, but you know, the world needs lots of pools.

1:21 The world needs many different people approaching this from many different perspectives. And, and, uh, I'm glad the NiceHash people are there. Thank you. yeah, so are we. We could do a shout out here, Luke, to Nina and the team for treating us so well and putting on a very nice conference. We had a great time in Marbor. Anyway, what have you been up to since last we spoke? Well, I would, I would say there's three things. the first one is, uh, the creation of ocean. second one would be, I've done a whole bunch of work in developing products in the block space area. Done a lot of thinking about kind of the future of block space, where it's going, the geopolitical implications of block space, a lot of those sort of things.

2:09 And then, uh And then, of course, I have my actual business, which is creating mining companies, and we've been very active, uh, developing the mining sites, too. All right. And, uh, is the spam issue over in your, in your mind or, or is there still a problem there? Well, that's an interesting question. Uh, I, I would say the, the issue is not over, although I would, I would broaden it in two perspectives. The first one is that I think the debate about how block space is used, We'll continue on for quite a while. In other words, what even is spam?

2:50 I mean, there's clearly been divisions about, you know, is a JPEG on here spam, or what's the proper use of Opif and OpFalse, and like some of those sort of things, but There's still a lot out there, a lot of people thinking about and promoting non monetary uses of block space. And I don't think that's going to go away for quite a while until it's probably priced out. And, and there's always a risk though. That some of these alternative use cases really clutter up block space, they create false economic conditions within the block space, and they deter people from using Bitcoin as, at least I believe, it is.

3:49 Should be used. I completely agree with that particular case and I've done some back of the napkin math on this, is that, is that over the course of a human lifetime, roughly 70 years, if, if we, if we take that as a, as a starting point, There will be maybe room for 15 billion transactions in that time, and therefore, if we divide that by roughly 8 billion people, probably more than that, everyone gets less than two transactions ever, and that's just not enough, and the deterrence thing is something that I think is not talked about nearly as much. Much, as, as, uh, I would like, maybe, because, because I sort of brushed off to the side sometimes, right, that, that, oh no, but like, this isn't hurting adoption, no one cares about the, the price of bitcoin, but like, why do you think that this is a, a deterrent?

4:41 Well, first, I, you know, I support your math. So this is the way I look at it. There are 53, 000 blocks per year, give or take about 500. There's nothing we're going to really do to change that number. There are 4 million weight units. For those less technical, it translates to roughly 4, 000 transactions maximum per block. So that gives us 200 million transactions annually. And, and, and, So I'll look at it a little differently than you looked at in the span of a human lifetime. I'll look at it in terms of the global population. There's 8 billion people. There's 200 million base layer. Actually, I don't even like the word transaction.

5:21 Honestly, this may be a little I view it. I call it resolution because there are a lot of non economic purposes of the base layer. And now I'm not talking about spam. What I'm talking about is, hey, I'm doing a UTXO consolidation. For instance, that's to me, that's not really a transaction. That's why I use the word resolution sometimes. Because a coin joint or something like that, I don't really view those so much as a transaction. But anyway, if you look at, if you look at that 8 billion people, another way to look at it is if I wanted to send every person in the world, uh, 10, 000 sats, let's say, uh, and I didn't do it in a, in a, with a multi output.

6:06 So I'm, I'm, uh, oversimplifying a little bit. It would take 40 years of a hundred, a hundred percent of all of the block space. To get every person a little bit of Bitcoin, right, on the base layer. Or another way to look at it, is there are 330 million corporations in the world. And if, if we're expecting someday, for all companies to have at least some treasury, or to have some part of their economic flow in Bitcoin, Well, that's a problem too, right? That, that there's not, not even, we couldn't support every company doing one transaction a year even, so the base layer is, is just so precious and interacting at the base layer, I think should be considered a luxury.

7:03 Absolutely. Like my, my view on this is that Bitcoin, first of all, Bitcoin is not for, uh, everybody. It's for anybody. So, and if you compare it, if you compare it to real estate, like most people, uh, if they ever own a house in their lives, they, they, they make, Two of those transactions, maybe, or maybe between five and ten in extreme cases where they buy and sell property, because property has taken over what should really be a use case for money, which is the store of value, or as we prefer, medium of exchange over time. So, so the monetization of everything is like making, uh, making real estate become money in this sense.

7:48 And this, I, I think this is where Bitcoin's, uh, like superpowers come in and this is where Bitcoin's best functionality, uh, is and should be, uh, as a medium of exchange over time. Um, and, and like removing. Real estate and equities and stuff like that. And the government bonds as, as media of, of exchange over time when that function could be covered by Bitcoin. Um, so what are your thoughts on that? I completely support it. I, I like, I like your phrase a lot that Bitcoin's not for everybody. It's for anybody. I think that that's a wonderful way to encapsulate that situation.

8:34 I do think though the community has to come to terms with certain things. That, what I'll say is probably very controversial, but it's in line with what you just said, which is everybody can hold their own keys, but not everybody will hold their own keys, and mathematically, that's impossible, Because of the math we just went through. And I think we have to be careful about perpetuating certain schools of thought within the community. That, that deter people. In other words, if we fast forward X amount of time, we'll call that some, some number of years, right?

9:21 So I'm talking about kind of not the short term, but the long term, then, then if we've also said, you know, not your keys, not your coin. We've just removed a whole bunch of people from participating in the ecosystem. Um, so I think we have to be careful about that. I, I think one thing that the community generally gets wrong is it goes down to the word subsidy. Interestingly, that the subsidy, which again, for those less technical, but you know, the block reward, which is basically the miner's revenue stream, at least in today's terms.

10:01 I'll get to that in a second. Miner revenue today is really looked at as subsidy plus fees and, and the subsidy is, I think, thought of really exclusively as a reward for the miners. Thank you very much. But I think that's, that's a half truth, that the subsidy is also there for the users, and it was there for us through this initial period, that I believe we're at the end of, that says, hey, you get free and unlimited access To the base layer and, and it was part of this, like I said, I call it the introductory period of, of Bitcoin.

10:46 It's kind of like, um, we're coming up to the end of the year and every gym around the world, usually in January has some sort of a special, like, come, come to the gym for free in January, uh, and get in good, healthy habits, right? Get used to coming to the gym every day. But in February, you're going to start paying, uh, and I think that's where we are with Bitcoin, is January is about over and we're about to go into February. And so users of the base layer are going to have to start paying for access to the world's most secure, Most free digital network in the world.

11:30 And, and so that's, I think, going to be a rude awakening. I think we, we almost see the bubblings of, you know, block size, worst are type discussions, right? You know, kind of brewing right now. You can kind of feel that these sort of things, like the whole thing about expanding access to block space and. Facilitating payments and all that. I can really feel that momentum starting again. Yeah. Uh, and, uh, here's something I'd love to pick your specific brain on, because I think this is, this is an area of Bitcoin, which is the most misunderstood because I've seen it many times described as, uh, you know, the.

12:14 Users pay the miners fees, and then the miners find the new bitcoin, so they find the subsidy. But that's not how it works. It's the users that pay the subsidy as well. Like, the miners find the blocks, and the users allow the miners to find extra bitcoins in the block. Uh, so that's all permissioned, like, by the users. The miners couldn't have found those new bitcoins if the users hadn't allowed them to. And they allowed them to because that's how the consensus rules are set up. That's how the issuing schedule is set up. But the miner is not digging for Bitcoin's the miners digging for blocks.

12:58 Uh, and this is, this is so misinterpreted and that's why, why all these debates are so skewed because they think the miners need more incentive. No, miners don't need any more incentive. Like miners, users don't care how the miners make money. They care if they secure the network or not. Like if they provide the service or not and find blocks. That is the function of a miner, and a miner is completely paid by the network to do that service for the network. Um, yes. First of all, I'd like to pick your brain on that, and then I'd like to follow up with this thesis that we heard in Maribor, because it's so fascinating.

13:38 Yeah, I agree with that. I think another way to look at it is, so I agree with what you've said. But I'll offer a different way of looking at it. I think that from, from actually the miner side though. So I think miners, every company produces something, right? Uh, kind of the nature of, of being in business. So you have to produce something. And I think the appropriate way to look at a miner is that a miner produces block space. So I'm restating what you've said from the opposite side. And, and, and I think unfortunately, though, the vast majority of the mining community, the people that are mining have not looked at it that way.

14:27 That I, I don't want to single out specific, uh, competitors is the wrong word, but other, other, other miners, right? I don't really compete with other companies, but I think the number of people that are actually active in the mining community that understand and What they're doing, uh, and, and their function within the ecosystem is quite small. I think there's a lot of, of folks that look at it from the, no, we produce Bitcoin perspective and they take this, um, digital energy. We're converting it, you know, energy to create these, This digital asset, I don't look at it that way.

15:12 I look at it from the block space perspective. And we'll get into a few things. I don't want to disrupt your chain of thought, but we'll come back to what does it mean when you start thinking in terms, as a miner, in terms of producing block space. No, go ahead, continue, you're, you're on a, you're on a track here, Yeah, I love it. Okay, so I think if you look at producing block space, then you realize that block space is the commodity, okay, so if you think of block space as a commodity, and, and then if you put on, let's say, the hat like a farmer would think, okay, so a farmer, a farmer looks not just at what he's he's producing today, but he, he has to kind of plan, right?

15:59 So if I'm, if I'm a wheat farmer in Nebraska in the U. S. and I'm growing wheat and I plant the crop in April or May, I'm going to have a harvest in October, okay? And I, I understand kind of over time what I'm going to produce, but I also look at it and say, Hey, I'm, I'm expending a certain amount of energy, um, um, it's costing me a certain amount to produce this wheat, and, and I know that in October, there's a certain result that's going to occur, but if I wait to sell all my wheat until October, I have a I have a lot of, I've taken on an inordinate amount of risk, right?

16:47 That, that market conditions in October may be up or down. So if, if I can start monetizing that earlier, that makes sense for me. So if I, I planted in April or May, and I may immediately go into the marketplace, And say, hey, uh, weed is selling for 4 a bushel. That's a fair price. So let me offer contracts worth 20 percent of my expected harvest today for delivery in October. Okay, so, so, and there's a whole marketplace, right, that comes out of, of that because now you have speculators and you know, but you also have a real consumer on the other side, right?

17:31 That's the key thing. So you have somebody on the other side, which is a baker, a large commercial baker who's saying, hey, I'm going to bake a lot of bread in October. So let me go buy this contract that allows me to lock in the price of wheat and control my costs. So we have a natural need for the producer to, to start. Moderating is revenue and the consumer to do it and speculators in the middle. Block space, I think, is exactly the same way. So I think what we're going to find is that block space in certain windows, especially, is going to become inordinately valuable and expensive.

18:15 So as an example, we're sitting here in, uh, it's November 12th, the day of this recording. The last week of December, my guess will be there will be huge demand for block space. So, let's say I have 1 percent of the world's hash rate. I know that in the last week of December, I'm going to produce about 10 blocks. So I could go out today and pre sell at a price that I feel comfortable with one of those blocks. To a consumer of block space, um, uh, Swan Bitcoin maybe knows, Hey, we're going to, we're going to do a lot of sales in the last week of December.

19:01 We're going to have a lot of people that want to move to cold storage. So we need to have access to that. space then, so they could go buy that block ahead of time. So, if you think about it, it mimics the exact same thing as the weed guy, right? I'm producing it, I know I have a certain forward production, and as my revenue stream, as measured in Bitcoin, becomes more fee based and less subsidy based, It also becomes more variable. So, so this allows me to, to lock in something ahead of time that I feel comfortable with.

19:41 so, miners are producers of block space, but there is only that, uh, there's only this sort of this specific number of block space that can be produced because of the rules of the network. And the miners are paid. By the users with fees and subsidies and allowance to find new cones in, in term, uh, in, in the form of a subsidy. But that subsidy is rapidly diminishing, um, because of the hings and the fee market will take over. So here we're going to, to, uh, uh, kenobi's, uh, thesis territory, which we, we talked with, uh, a strapping young lad called General Kenobi and, and, uh, Maribo about.

20:27 And that is that, uh, right now, most mining companies are fiat minded companies. So what they do is they immediately sell the Bitcoin and they pay their electrical bills with whatever revenue they, with the revenue from selling the Bitcoin. But going into the future, that will be harder and harder, uh, because while the fees will take over, still the, uh, that might not be enough, like that's dependent on. Demand for block space going up. So, so, so miners who value the SAT more than the, the thesis is basically this. I'm all over the place here, I know, but, uh, so miners who value the SAT, uh, higher than its current dollar price.

21:14 We'll have an advantage in the long term, which means that miners who also use their mining rigs for other purposes than just finding block space, that is heating a greenhouse, for instance. Or doing doing other things that you can do. You can use the excess heat from the miner, for instance, for other stuff. There are probably other byproducts than heat that you could use for other things as well. Don't know, like, I can't think of what that would be. now, but, but, but It's a lot of them. yeah, yeah. Like suspension mechanism for, for energy companies, as we've talked about many times with like how they could stabilize grids and so on and so forth.

22:00 And Bitcoin mining could be a part of a larger operation where it acts as, as a buyer of last resort of stranded energy. That's, that's one of the things. So, so his thesis is basically that over time, the more fiat minded, uh, miners will go out of business, and the more bitcoin minded miners will not. So the lower time preference you have as a miner, the more well off you are in the long run. And, like, sort of explains itself. Low time preference. Uh, you win in the long run, like, uh, it's aligned with all the other, um, theories around Bitcoin and why it's, uh, why it's so useful as a medium of exchange over time.

22:43 So, so this is what I'd like to pick your brain about. Is, is there a truth to that more Bitcoin minded, minded miners are, will, can and will win this game, uh, in the long run, uh, game theoretically? What, what do you think? It's a bit of a complicated question, I know, but. Yeah. It's a good one. So I'm going to both agree and disagree. So first on the agreement side, I think there is a niche. I don't think it is the end solution. I think there is a niche where we will continue to see that. I'm actually involved in one already. We have an operation in northern Florida with a greenhouse up there, a commercial greenhouse, and we have a mining operation set up along the perimeter of the greenhouse that Allows us to, uh, vent in.

23:33 So when he, he's in Northern Florida, so he's just far enough north growing tropical flowers that he sometimes has humidity issues or heat issues. And so the miners sit on the perimeter of the greenhouse and vent in whenever he needs it. So, um, we're doing that already. And I think there are other applications, um, whether that's residential heating, commercial heating, drying food products, for instance, um. Uh, there's a lot of, lot of different ways and, and those I think will emerge and they will be. Significant, but I don't think it's the majority of the story, but this is another way of saying what I will agree with Kenobi on is I think the concept of a mining company actually, I believe, goes away that, that I don't know if this was his end conclusion or the inclusion, but a mining company that just mines goes away, but there is a second type of miner Uh, that emerges in the future, and by the way, I don't necessarily like this one, so I am not proposing it, but this is, I think, the end game.

24:44 I think we're going to have those type of miners, co generation type stuff, we call that, right? The other parts are going to be parts of very large financial organizations and nation states. So if, if we look, I'll give you an example. So if, if you look at an organization like Citigroup, I believe that they will eventually have a mining function within Citigroup. And the reason they will do that is Citigroup will go to. Their customer base, who is becoming increasingly more Bitcoin dependent and say, hey, as part of doing your banking with Citigroup, will give you guaranteed base layer access at a fixed sats per vbyte number.

25:40 And they won't even care whether they're making, they could care less about the subsidy or the fees. What they care about is the relationship with their big customers. And I think an American Express. Even at the individual level could do the same thing. They'll say if you have an American Express black card, part of your feature is you get five base layer interactions a year. Um, on us for free. I would also say if I were, I don't like this, but I'm just telling you what, this is the way I think it plays out. That, and, and the other thing I would say is if I were, let me think of, uh, uh, if I was, where were you, Slovenia or Slovakia?

26:22 I forgot. I always forget where, uh, Nicehatch is. Slovenia. But, uh, Okay. So if I was the head of state of Slovenia right now, what I might do is say, hey, we are going to put an initiative together to have one quarter of 1 percent of the world's hash rate in our country. we'll control a little of that with, with machines owned and run by the government, but we'll put incentives in place also to attract other miners to our country with tax incentives, grants, um, those types of things.

27:05 However, to, in order to qualify for those incentives, uh, they must use the Slovenia pool, meaning the Slovenian government would control the template creation. So, I think what, what I'm ultimately saying, it goes back to our earlier point, is that it's control of block space, whether you're a big financial institution or a nation state, that really is going to drive things, and the control of the block space is going to drive things. won't be because they want the block reward, that that will be a consolation prize.

27:49 What they want is they want control of the network. this reminds me of an old, uh, Andreas Antonopoulos thing, uh, and that is that if, if miners and his thesis is on miner centralization in general, but I, I guess this would apply to this too, wouldn't we as users just throw those fuckers off the network? Like if there's ever a Slovenia pool, wouldn't we like, no, no, no, no, we don't want statism in Bitcoin and just reject blocks found, found by that pool. Sure, they can do it in more covert ways, but don't you think the game theory plays out so that we sort this so that we don't, don't get this, uh, in Bitcoin?

28:30 think it's hard to throw them out. if, if only the Slovenia pool pops up, then we can do that. What if 80 or 100 nation states all do the same thing? Uh, what if, know, Citigroup and American Express and Deutsche Bank and Mitsui and all these other financial institutions all pop up, and they're all controlling a small percentage of the hash rate. And then the other side is, like, right now, where we sit with the pools, like, who's going to kick them off? You know, we don't, we have, we are so far, we don't, like, I don't think Foundry is going to kick anybody off right now.

29:15 I don't think Luxor is going to kick anybody off. Ample is not going to kick anybody off. So we have to have a pretty radical, even to have a hope of what you've said, we'd have to have a pretty dramatic change in the way that the, the blocks are created, and who's creating the blocks.

31:05 Yeah, but here, but here, ocean is, is the counterexample. Like, the, the ocean is the network reacting to, uh, uh, skewed incentive structures, uh, in mining. The ocean is the, uh, uh, one, uh, right now I think it's the only one, but there are more pools that are more like ocean and less like ant pool. Coming online, and like, this is a force, and the hashrate is going up for like, this is a resilient system, and we've shown, we've shown the mining cartel that we can fight them before, during the block size wars, which is like, the example of why bitcoin is not run by miners.

31:51 And we can do so again, like, uh, or, or, or can't we? Well, first of all, uh, so, you know, part of the reason I, I wanna be clear too, I am not saying I like this. I just wanna be really clear. I I, that I'm not saying I like it. I am, I am here to fight it. And my , my, uh, we'll, we'll talk, we'll talk more about that maybe in a, in a bit, but I'm, I'm on the board of directors at Ocean. I was the first company in the world to direct hash rate to Ocean. I won the first block for Ocean. First company in the world to use the datum server with ocean. So I'm, I'm all in, right? So, um, that said, this is why we fight.

32:32 And I have this adage, war philosophy, that, you know, I, I think of Bitcoin as money for the next thousand years. And so I'm not thinking about Bitcoin from the perspective of next Tuesday or next year. I'm thinking about thinking about decades and centuries with what I'm saying. And so we're going to fight whether we're going to continually fight these kinds of, of initiatives, because anything this powerful, anything this valuable is going to be constantly subject to centralization forces.

33:13 There's just Just the way it is, right? Somebody's going to always want to control it and capture it the way it is. Ocean is a fight against it. Um, we have, we have found some momentum, especially recently. It's been a slog, you know, to get it. But at this point, we're still less than 1 percent of the world's hash rates directed at Ocean. And we do need a really big number directed at Ocean and, and, uh, and also others, as you've said, I, we, we started the show with me being complimentary of NiceHash. Well, I, I, I applaud them and support them for being out there and being independent, right?

33:56 That, you know, the, the Chinese, uh, oligopoly of pools, um, is, is a major, major issue, right? They have, they have over 50 percent of the hash rate right now. for all intents and purposes, with a single leader, with a single, uh, entity able to direct what happens within those pools. We have to look at, we're going to fight, as nation states, we've seen it now, you know, this huge momentum in the United States, right?

34:36 Well, I just, I just saw before I came on with you guys that President Trump said that he was going to name a Bitcoin advisory panel. So he was going to create, I don't know who's going to be on this panel, but I have some guesses and my guess is that the people on the panel will not be. Looking at Bitcoin the same way the three of us look at Bitcoin. No, uh, there, there might, may or may not be some semi unfortunate names on that list. But, you know, there may also be intelligent people on the list. I hope so. I hope so.

35:16 I'm, I'm, I'm hopeful, but, but, uh, but I said that I think that at the nation state level, and then let's just even talk at that level. Bitcoin does, it's kind of a weird thing though, too, because like I would say to the people of Slovenia, this is actually maybe potentially very positive for them though, too, that, you know, their, the sovereignty of their country could be improved by having access to Bitcoin, like they, they, they, they can't be canceled by The Western powers or, or China that they, they, as a, at a nation state level can have some way of interacting with the rest of the world that they can ensure.

36:09 So it's, it's a very complex issue. Yeah, uh, speaking of Trump, like, uh, if, if he, if his advisors are, are, uh, uh, the, the thing his advisors should tell him is what his other advisors are telling him on, on free speech, for instance, like, and on, on whatever, uh, censoring the media and all of this, uh, uh, corrupt academia, all of that. Like, he seems to be heading in the direction of take the government out of the equation, and if we could do that for, for this industry too, that's obviously the right way to go, and I hope his advisors tell him to keep his hands off of, of Bitcoin mining, and like, uh, and of Bitcoin in general, like just keep your hands off, and even of crypto, like let people scam one another, I, I just keep the government away, From, uh, everything.

37:04 That's it. Yeah, I agree with that. Yeah, like the last thing we want is a subsidy or a tax incentive to the mining industry. We Like stay the fuck out. but, but I think that's counterintuitive to a lot of people. I think, I think we're all of the same mindset and we've, we've, we've thought through these sort of things, but that's horrible. But I'm hopeful because, you know, he's saying things like, hey, I'm going to kill all the electric car subsidies. So I'm hopefully, hopeful that. Exactly. And he's also said that he's going to drop the, uh, he's hinted at that he's going to drop any capital gains tax on Bitcoin because money, you should be able to use money, use terms like that.

37:46 So, like, yeah. No capital gains tax. No other tax, no subsidies, no VAT, no, no, no government basically, and you're fine. And yeah, at least it's better than Kamala. Yes. Yes, absolutely. So maybe, maybe returning a little bit to, uh, the, the ocean stuff that, that, uh, that we segwayed into here. Uh, can you go a little more into the, the origin stories of, of ocean? Because our last conversation apparently was just before ocean really came up. Uh, it's a, it's a big story. Uh, tell us everything. Well, in, uh, in June of, of 2023 is when really the impetus To restart, um, started gelling, you know, mainly, um, Luke Dasher starting to, to perceive what was going on.

38:41 And I will say in parallel, uh, as I mentioned, I come from the perspective of I'm a miner, I produce block space, right? And I was very frustrated. I want to produce my own templates. I have, I have a, we had already seen by June of 2023, some of these things happening, and I was frustrated that I was being, uh, you know, I'm, I'm big enough to not be small, but I'm not, I'm not big enough to be big, right, as a miner. That's kind of where our company sits. So You do find your own blocks, but yeah, you, you need pools. I need a pool, right? I can't find enough blocks to say.

39:22 I do have fiat needs. I do have to sell Bitcoin to cover certain costs within my organization. So I have to have the cash flow. So I was very frustrated, but I, but I felt like there was that realization that I've had really for a couple of years that I'm just a mercenary. I'm a mercenary hasher is what I am. Right? And I'm Uh, I didn't like the people I was performing the mercenary services for, for the most part. Um, didn't believe in the cause, uh, and was, was very frustrated. So that was where my mindset was. So, so then, um, in June, Luke Dasher, uh, had the idea of restarting.

40:06 He, uh, was able to get the ear of Jack Dorsey. Jack was very supportive and put up the initial financial, inflow to kind of get the thing restarted. About six weeks later, I was at a conference, uh, with Mechanic. Uh, I actually gave a speech, uh, at, on Blockspace and the future of Blockspace at, at that particular conference and said some of the same things we were just talking about earlier about how scarce it is and the future of Blockspace. So a mechanic came up to me. I actually didn't know him until that point, but he came up to me right after my talk and said, can we chat? I said, sure. Um, so I ended up going to dinner with him and Mark Artemko, who's the president of Ocean.

40:53 We had a four hour dinner, uh, realized we were completely philosophically aligned about completely revamping the way pools, worked, fight the centralization factors. So I committed on the spot, uh, a certain percentage of my hash rate to their initiative. Uh, I then, knowing that this was so important, I have a small Bitcoin fund that I run, so, um, I whipped up some money, I think I'm the second largest, through my fund, I think I'm the second largest investor in Ocean after Jack, um, so we put a, we put a pretty good chunk of money into Ocean, uh, then in November, uh, we held the launch event for Ocean at one of my facilities, a And I have a facility in South Carolina, which is a hydroelectric facility.

41:55 So we bought and rehabilitated a hydroelectric facility, uh, about three and a half years ago, and, uh, we do what we call wild mining there, meaning that I, well, the, uh, what we did is we literally cut the cord. So it's a hydroelectric facility. It's relatively small. It peaks out about one megawatt, but I cut the cord back to the grid. Said, I. I do not want to even be connected to the grid because that is a mechanism by which I could be forced to move my energy back to the grid. Right, I want to make sure that I am completely permissionless or as close to permissionless in this operation as possible.

42:42 And so, um, so we held the launch event there. It was a really great launch event. And then ironically, we were very small at the time. I think we had like 300 petahash in the pool. And within the first 24 hours of launch, found a block, and it was, uh, it was one of my systems, and that was just a thrill, like in, in terms of, there's different moments of your life, okay, you get married, you have your kids, you know, you have those sort of things, but professionally, that was just one of the coolest things, was to find the first ocean block, and one of the things you guys may not know, that the general public may not know, is that When you're part of a pool, like Foundry or Andpool, you get paid every day.

43:23 You don't know whether your machine won a block or not. Like, you don't, you don't know if you contributed. At Ocean, we not only know that, that it was Barefoot's Hashpower that did it, but I can identify the exact machine. That did it. Like, and so, um, as never seen a little bit of extra love or something. Oh, yeah, yeah, yeah. Those are highly prized. Yeah. So we, we have stickers that go on all the machines. So over time, we have a sticker that goes on to that particular machine that records, you know, the block height and, uh, you know, it gets, it gets some extra TLC, um, at the launch of ocean, I think things we've talked about spam before.

44:11 The world got a little sideways after we had won a few blocks because they started to see that the templates that we were using weren't following the quote unquote normal process. Um, which is, uh, the normal process is for if you're a pool. This is the, this is the algorithm of today. The algorithm of today is, does the pool have any transactions it needs? For itself, it puts those in the template first, right? So by template, what we're talking about is if there are 200, 000 transactions.

44:53 Kind of waiting for confirmation, and you can only pick three or four thousand. What criteria will you use to select those? Right, that's when we talk template. That's basically what we're saying. And so most pools work this way. Are any of those transactions mine? Yes, I'll put those in. And then I pick those that quote unquote provide the highest financial reward. And fill up with those. And by the way, every few seconds, that gets updated. So as new, transactions are presented to the network for confirmation, you may kick them out, right? Um, until you, until you win the block.

45:35 So Ocean didn't follow that same, that same process. it, you know, what it basically does, it says, in its, well actually it does, it does, but its mempool is different. I'll be technical about it. Its mempool is different because its mempool doesn't recognize certain transactions. So if, for instance, the op return is, got too much, too many characters in it, It ignores that transaction, so it, it follows the same process, but its mempool is actually different. Yeah, there's no such thing as THE mempool. Yeah. Every, every node has its own, um, its own mempool, and it can decide what it wants to reside locally.

46:23 So, um, so we took quite a bit of flack for that. However, this was, I think, one of the, the great misnomers, is that as much as I think pretty much uniformly everybody directly associated with OCEAN does not like the spam. Um, I'm, I'm for instance, very anti Ordinals. The Ordinals is the thing that really bothers me the most. But we also believe in freedom and choice. And so we, we, we always had this in the plan. We, but, but then we offered after a few weeks four different templates. So it was the first time.

47:04 And one of those templates was for, uh, I guess best categorized as, you know, um, you know, anything goes template, right? So there's, there, there, if you wished to participate in OCEAN, you could choose one of the four. But the key thing was as a miner, you're starting to become a miner again. You're not a mercenary, right? You, you now get to pick and voice your opinion about what you think was appropriate, but that wasn't really the end game. And the end game was, I shouldn't even say the end game because we're still innovating. We still have other things to do. But the big milestone point was what we call now called Datum, which was allowing individual miners to create their own template, but still have the attributes of a pool.

47:58 And, uh, that was launched on September 29th, I believe I have the date right. Um, again, I was very proud as, as, uh, part of Barefoot to be the first company to get a Datum server up and running. Um, we unfortunately didn't win the first Datum block, but, um, but although, you know, what's the interesting thing about Datum For those who are a little more technical, is that we have the option of putting in, whether or not, um, our name, or, or, or, uh, how can I say this? Like, you can be identified, you can identify yourself as the winner or not.

48:38 And so we, we have this, we're going to vassal, I'll just tell them, we'll vacillate, we'll occasionally announce ourselves as the winner of a block, but we primarily won't. Um, the reason is that I don't like, I'm very open with just about everything that goes on, but I don't like announcing how much hash power I have. So if I announce every block I win, I essentially am telling the world how much hash power I have. And that's, uh, to me that's, that's the equivalent of, you know, Bitcoiners don't ask other Bitcoiners how much Bitcoin they have, and I think, um, miners shouldn't, you shouldn't ask miners how much hash power they have. Yeah,

50:48 This whole, this whole story is, uh, is, is fascinating. And I mean, yeah, like having just this first step of, of anyone, uh, being able to now be a decentralized miner, a self sovereign miner, we, we sort of sometimes say, I mean, and I mean, I, I don't, I'm not sure you're aware of this, but, but we, we've had Mechanicon a couple of times. We talk about Ocean a lot. We're, we're big fans. We're completely aligned on the not being fans of, of spam side of it. Um, you got into a couple of things that I think are related to this, and this is sort of the payout method of Ocean. This is one of the parts that appears innovative in the space.

51:28 And I think we touched on this a little bit last time, FPPS versus other payment methods. But Ocean basically just, it pays out. What it receives in a block to the people who contributed hash power prior in that block, and I mean, that seems smart, uh, but FPPS is the is the typical, uh, payout method at the at the moment. Again, with Kenobi, we did a pod in Slovenia with him and then I was on a panel with him. One of the things he said was that FPPS is dying. That basically the existence of Ocean and he's working with Demand Pool now, they're going to be a Strategy 2 pool next year.

52:11 Um, also good, I think. Um, go for it. yeah, yeah, And so, and so, yeah, FPPS is dying was the, was the, or FPPS is going to die that, that basically the oceans of the world and, and those that pay out on a model that isn't FPPS are going to outcompete, uh, eventually. Do you have, do you have any thoughts on that? Like, I know you basically ran this, uh, kind of test that, that did you actually get better results on FPPS pools or, or ocean? Can you get, get into that? Yeah, so what I started doing, it's, it's interesting, it goes back to before Ocean. So I started suspecting that my results from different pools were inconsistent.

52:58 Like, I was wondering why, this goes back like two years, why is it that if I, if I'm attached to different FPPS pools, I'm seemingly getting different revenue streams? It bothered me. So I said, well, I'm, I'm an engineer, right? So I said, okay, well, I, I need. to really understand what's going on. So what I did is I took a container, the exact same container, um, exactly the same mining rig, exactly every other thing. So they're in the same container, they're connected to the internet the same way, through the same firewall, all that sort of stuff, right? So I took ten units, connected them to four different pools.

53:43 And I just said, what really matters is how much I get paid. So I started running the study, just kept the same machines running and recording every single day, what the payout was, and sort of building this case history. And then when Ocean came along, I added them to the, to the test. Well, first, before even OCEAN came, I started seeing radical differences. And by radical, at that time it was maybe like 3 5 percent variance over even extended periods in FPPS pools. So while something is amiss, there really shouldn't be that sort of variance.

54:24 Then I connected OCEAN into the same control group. And I now have a year of history. Okay, so because, well, give or take a few weeks, right? I don't have a year. I actually just provided it, uh, the data again to Mechanic, um, earlier this week. So we will publish it through Ocean, but what you're going to see is that If you look at the one year, the 30 day, the 60 day, and the 90 day, all those four different looks at it. Ocean has dramatically outperformed the other three pools in the control study. I don't, I don't name the other three pools because I'm not here to bash them, but what we are, we're here to promote Ocean and let the world know that FPPS is flawed.

55:15 And it's um, you know, I, I've used that term mercenary hasher before. And there have been times that I've been attacked personally, and even I've had people go to some of my investors, because I have investors within my group, and say, Hey, Bob is not performing his fiduciary responsibility to you. He's working with Ocean, and they're not picking the fattest blocks. And said, well, I have hard proof for you for you that I am performing my fiduciary responsibility and that you're the one not performing your fiduciary responsibility because you're using the other pools that are not producing the highest amount of revenue for your investors.

56:03 So, and, and, you know, just to be clear on this, like it is a dramatic difference. Like the one year study is going to be on the order of 15%. Difference? whoa, that's way higher than I thought. Whoa. Yeah. Well, and, and from our understanding of this, uh, was, was basically this 15 comes from that the pools advertise a certain spread, but they don't include, uh, Uh, certain other things that they include in their FPPS calculations, like, for example, not, not taking the highest, uh, variance blocks, like the, the lowest 10 percent and the highest 10%, and just doing other things that lets them keep a larger share of the, the pie.

56:49 And if 15 percent is what we're talking about, I mean, Yeah, that's, that's massive. And, uh, I, I mean, how long is this going to be able to go on where, where pools just aren't transparent and the expected value to miners is so much lower than oceans at this point? Not to mention all the briefcases full of dollars that they get on the side for, for putting shit in the blocks. Yes, that's a great point, Knut, and well, I think that briefcase on the side is where the 15 percent went, right? You know, that, that a whole bunch of it, but I, you know, I, I don't want to repeat things that are covered in other shows, but you know, when you look at the FPPS calculation, the general formula is Look back in the last, uh, 144 blocks, which is on 10 minute blocks, one day of blocks, throw out the three lowest and the three highest, and then average the remaining, which would be, what would that be?

57:50 The remaining 136, um, would be, what would the average be? But the problem, I think, in the last year that we've faced, is that there's not much variance on the low end, but there's a lot of variance on the high end. So, they're not throwing out equals, right? So, so, they're, you know, they're, you know, that's one issue. Um, another issue that I can only be suspicious of is that with OCEAN, I know at all points and times What percentage of that pool's hash rate I am and what percentage of the shares I have earned.

58:30 I know that in real time at all times. When I'm connected to another pool, I have no idea what percentage of the hash rate I am or what percentage of the shares I have earned. It's a 100 percent trusted model, which I find fascinating. It tells me that most miners are not real Bitcoiners, by the way. Because they, they, the, um, DontTrustVerify is completely thrown out the window in that model, like in the FPPS model. And, that is their bitcoin, right? So it, it, it, it, like for us, with Ocean, I know, I know all those things.

59:16 Plus, I get paid directly from the Coinbase. All the time too. So my, my Bitcoin has never been routed through somebody else. It's not filtered. It's not like, so, um, I don't, I don't want to go too deep on this. Probably not a topic you guys want to dive deep on, but I, I, I am continually amazed that FPPS has lasted this long. And I can only say that it just points to me how far away from the ethos a lot of the mining community really is. Yeah, it's fuck around and find out is the, it's the flip side of don't trust verify, basically.

1:00:01 Yeah. Yeah. And they're about to find out when they see that, uh, yeah, this 15 percent uh, missing money from what they do. Uh, yeah, so, uh, from one thing to another here, almost, uh, this is still, still tangent. And I don't know if you know this, but we couldn't get a, I couldn't really get what I was looking for from Kenobi, so do you know the differences, the crucial differences between Datum and Stratum V2? Okay. Um, so Stratum V2 is a much bigger, Project.

1:00:44 Okay. So it's, it's, uh, somewhat of a boil the ocean protocol. I'm not against it by any means. It just didn't fit what Ocean was trying to do. And, and, and it was, and it includes things like encrypted communication and things like that, that I think are very valuable and still may even for Ocean at some point become something that has some value. Um, What they're trying to do, though, is work with, essentially, these centralized pools and their methodology to create the block template creation, and it gets extremely complicated.

1:01:25 and how that interaction occurs. Datum is very, very simple. Datum is set up to really only do one thing, and that's to sit on the side and interface between the pool telling What the appropriate share information is. So, you know, in other words, here are the members of the pool and how much their current share data is. And it ensures that those creating templates Abide by that shared data. That's really all it's trying to accomplish.

1:02:07 So that makes it much, much easier to, um, to administrate, um, much more transparent. And by the way, it's also set up so that it's open to the world. It's an open source project and other pools. Could use it if they wanted. It's not, it doesn't have to be just OCEAN, or you could solo mine with it as well. It's just that if you, the moment a datum server doesn't use the appropriate share information from OCEAN, Ocean says, well, you're not part of my, my network.

1:02:48 Right? So I'm going to, I'm going to ignore you. Alright, yeah, that explains it, that was more of what I was looking for. Yeah, good, uh, Bob, I, I, we, we've, we've gone a few places here, uh, and I think even, Since going back to the start, what you, what you mentioned, uh, basically we've, we've talked a fair bit about Ocean. The, the block space commodity thing is, is still interesting to me. And I'm not sure I actually, I'm not sure I actually picked up on your, uh, what you were getting at with this, with, with sort of a paying for, paying for futures. What do you see as the, as the practical effect for users of the Bitcoin network? If, if people are going to be, uh, if miners and other users are going to be thinking of things that way.

1:03:33 Yeah. Practically, what do Okay, so yeah, uh, yeah, that, that probably is worthy of, um, clarifying some Luke. Okay, so today, here's what we know about the Bitcoin marketplace, right? We can, we can, if 1 of us wants to initiate a transaction to the other, we can go out and there are tools, whether that's it. Mempool or through your wallet that will estimate what the appropriate sat per vbyte could be and help you pick your urgency, right? But it's all real time, right? So, if you know that you have a transaction or group of transactions that you want to initiate month, you have no idea what you're going to face, right?

1:04:21 Any, anything could happen. given that, what I'm, what I'm creating, and I should be specific too, I am specifically creating this as a product, okay? So the idea is this, As a miner, if you control a certain percentage of the hash rate, you can make predictions about your, um, Block production or block space production in a certain window of time. and in a world where subsidy disappears and fees dictate your, your revenue stream. There can be a desire to want to pre sell access into that ahead of time, right?

1:05:07 To lock in and know that you're going to have a minimum threshold. So, what will happen is, we have built, I'm working with a company called Block Spaces out of Tampa. We are developing a platform. Um, which will be a marketplace for block space, but it's, it's not a, it's not just a derivative marketplace, like speculating on hash rate going up or down or hedging. It's a fulfilled commodity marketplace, meaning, I'll give, I'll use that example I gave before. These are the mechanics. Barefoot Mining offers access to a block in the last week of December, okay, and we throw it out there at, we offer a contract at 15 just use that number, okay, 15 sats per vbyte, 4 million weight units are offered.

1:06:06 Into a marketplace. I, by the way, collateralize that with a certain amount of Bitcoin, meaning I must fulfill that contract. If I do not, lose my Bitcoin. On the other side, are consumers of block space. Somebody says, I, I would like a million weight units in the last week of December and 15 sats per vbyte to guarantee that I'm in a block in the last week of December is a fair price for me. So they they buy that contract and they transfer that, um, that money into an escrow account.

1:06:47 So my collateral is sitting in escrow and they're, and by the way, all of this is done in smart contracts sitting in Lightning. So we built all this. Um, in a smart contract platform sitting on lightning. So both the consumer and the buyer, um, have these locked in. Now when we, we get to midnight on December 24th, they must present to me, Whatever transactions they want. Okay, and that gives me seven days to fulfill that contract. If, if I do, I get my, the collateralized Bitcoin back, and I get the fees that they provided to me.

1:07:34 Um, if I don't, I lose all the collateral to them. now in the middle, people can speculate, like, so you could trade, you could be a trader. But what I'm excited about for the user, which was I think really the, even the average user, even the people that don't want to use this marketplace, is you will now be able to see, over time, a projection of where fees will be. Because you'll, you'll, even if you're just a guy wanting to do one transaction, you'll be able to see where, where things are more expensive and less expensive. And so you could, you could plan ahead of time.

1:08:14 Let's say you're trying to do UTXO consolidation. You're trying to see a period of time in which the future price of block space is going to be lower. You, you will now have access to that. Okay, I have a practical question here. Uh, again, I'm kind of, I'm kind of about the practicalities of this. This is interesting. It's, it's like, um, yeah, futures, futures market for Bitcoin block space as a commodity. Very great way to, to put it. Uh, I, I think there's definitely, Things to dig into there, but my first question on this is, what about, so if some entity is presenting transactions, of course, they can decide whatever they want, I suppose, but I sort of have a, what if they don't have a big block of transactions?

1:09:01 I guess they would be going to find transactions to buy something like this, and on the flip side, like, what about for You Individual users who would typically just broadcast a transaction and it goes in the mempool. Does this sort of bypass all that? I know it's sort of a two pronged question, but it's all related. How does this thing work in practice is really the question. Well, when I, when I create my own templates, um, I, so I think this is the, if I missed your question, we can, we can hit it back. So, so I, I am still the block template creator, and as we talked about before, I have my mempool, right?

1:09:42 So, these transactions, so when it comes time to fulfill, Like I said, I've sold a contract for one block at midnight on the 24th, okay, so I'm going to have until midnight on the to fulfill that contract. So, on that day, I must be, the users must notify me of their particular transactions. So here, transaction ID, X, Y, and Z are mine. And, um, you know, they need to be prioritized by Barefoot.

1:10:26 So I will see that in my mempool and I will, I will know what I have to do to fulfill that contract. Um, and I'm going to obviously prioritize them but everything else because I, I got a couple Bitcoin on the line if I, if I don't do it right. Is that your question? Or? Sort of. Okay, let's maybe play through this. Like, if they're doing this entirely out of band, uh, If they are just putting their transactions in the mempool, like, what if some other miner is the one that actually mines their transactions? Do you care about that? It's as long Oh, well, they, yeah, they, they are, they aren't going to broadcast them to the world. They'll broadcast them to me. Right. Okay.

1:11:07 Okay. Uh, and, and then, and then, uh, I guess another, another point to, to this then is that, uh, would someone need to, need to, uh, this is sort of a mechanism bypassing the, the broadcast everywhere, uh, for transactions generally, right? Like, uh, this wouldn't really apply to someone who's just broadcasting any transaction, or they could, or they could decide to go to this marketplace and, Uh, do it It's open, yeah, it's open to the whole world. It's just, you know, today, uh, yeah, I mean, it'll, it'll all be transparent, you know, the world will see how many contracts are offered, in what period of, for which period of time, and what the sats per vbyte are.

1:11:54 So, in my mind, it gives the world glimpse beyond the present, you know, into the future. And, and I think that, you know, at least for me, I think that's important that, you know, we get a glimpse of what, is the man out there, you know, in the future? Because as people start planning their lives and planning their businesses more around Bitcoin, I think you need to see around the corner. You need to see a little bit more into the future than we can today. Yeah, and maybe I'm a little hung up on that. It's not likely that these contracts are always going to be one block at a time, right? Like, uh, it's, it's Oh, no, no, no, no, no, no. That's why I said it's a weight unit. So that it, I might offer one block, 4 million weight units, but you know, you can buy it in, a thousand weight unit increments.

1:12:46 You know, you could just buy part of that block. And if I don't sell the whole block, it's okay. Like, I could, I could, let's say, let's say I offer one, a 4 million, Uh, weight units, but people only buy 500, 000. That's okay. I will, I will fulfill the 500, 000 and I'll, I'll use the, I'll just go into the general marketplace and pull the rest. Okay, my questions are pretty satisfied here. I'm interested to see what this looks like in practice, but yeah, like creating a futures marketplace. And I mean, this is entirely permissionless based on these decentralization mechanisms anyway.

1:13:26 And, and Uh, mining pools may already be doing essentially a similar thing, uh, right? But, but this, this allows. it's yeah, but there's no transparency, right? I think this was like, like, uh, Knut was saying, like, you know, people carrying away a bag of cash. Well, everybody's going to know exactly what we're doing. And if we're part of the pool, you know, we probably will be when we fulfill these. There'll be a mechanism by which we. You know, share the appropriate amount with the other members of the pool, so we're not going to, you know, now if we, if we solo mine one, then okay, you know, we can do that, but, but if we're part of the pool, then we will have to share appropriately with the other pool members.

1:14:10 Okay, uh, sounds fascinating. I mean, the concept of block space scarcity in general, I think, is going to be a bigger and bigger topic, like you're saying. And so, uh, yeah, interesting to see how this is going to play out in the future. Bob, I think we've, we've, we've tackled a couple of really big topics today. And so, uh, uh, I think, I think, uh, from, from my side, uh, was there anything else you wanted to discuss today that we haven't covered yet? Well, I'll just let you know, like, you know, my, my main business, we're continuing to go hard. Um, we've got a couple of really interesting projects.

1:14:50 Um. And I can't remember if we covered it last time, but basically my, my philosophy is I believe in what I call horse class mining. I believe it's the most important part of the infrastructure, which is small to medium sized commercial mines. you know, a megawatt here, half a megawatt there, 2 megawatts there. My goal is to build as many of those as I can. I'm not trying to be small. I just, I just don't want any big ones. uh, I don't want to, I don't really desire a single hundred megawatt facility. I think that that's, um, it's probably not the best thing for me, and I don't think it's the best thing for Bitcoin.

1:15:35 but we're starting to get a lot more, um, diverse in what we're doing within those. So I mentioned earlier, we have a hydroelectric facility in South Carolina that we run. We're bringing up one in Indiana right now, which is based on anaerobic digestion, which is using, um, Uh, uh, cow shit, basically, from a dairy farm. So, we're, we're doing anaerobic digestion there, that'll be a couple foot megawatt facility. we just bought, uh, some natural gas wells in Pennsylvania. These are all what I call wild mining, too, which is permissionless. We don't need anybody's approval.

1:16:17 Nobody else has to produce the energy and decide to send it to us. We do it all ourselves. And I think these are really important parts of the infrastructure. I hope, I hope there are others and I hope there continue to be others trying to pursue the same thing, just like you've mentioned with the Kenobi thing. I think the stuff with cogeneration is also really, really important. And the combination of those two is actually the ideal one, right? Where you I think that's it. You produce the energy and then you use the heat and now you have something like really, really cool. Um, and, and, uh, people have had these visions for quite a while, but they are becoming reality.

1:16:59 And, and, and by the way, the economics are phenomenal. So, I will tell you that chasing energy on grid At scale is not a winning game I think that the whole thing about, you know, Bitcoin providing base load and curtailment and like all that other stuff, there's a truth to it. I'm not saying it's not. It's not true. It's not valuable, but I think it gets oversold. Bitcoin can't solve all the world's grid problems. Um, it, it can't use, like the economics just don't work right to consume like.

1:17:41 All the, to balance the grid and, and perform curtailment all, all around the world. I just, I don't think that ever happens. I think there will be pockets like there are in Texas where it works and it's effective. But, but the future of Bitcoin mining and the economics of Bitcoin mining are going to be much better when you produce your own energy. Like my, my cost of producing energy and my off grid operations is way, way less. And, uh, I think that as a mining industry, the big guys are going to get, are going to find it's, it's harder and harder to participate.

1:18:26 I think most of them will actually end up pivoting away from Bitcoin and they'll go to HPC and AI stuff because if you think of all the world's energy, like it's on the grid, I think a good way to think about it is like, there's a bell curve, right? Right. So there's about a, um, 27, 000 terawatt hours of electricity produced annually. And it, and for the most part, it sits on kind of a bell curve with about 14 cents per kilowatt being the midpoint of that bell curve. And so we've already gone out. So, so the Bitcoin miners on the, you know, 3 standard, 4 standard deviations away from that midpoint.

1:19:11 We've already gone and found most of the on grid stuff that sits like way out on the fringe, and there's just not that much more that sits out there. And unlike three or four years ago, where we were the only ones trying to fight at that, you know, that far to the right of the, uh, of the median point of the bell curve, we're now competing, competing with the AI guys who have more money. And, uh, are willing to pay, they have more, they have more capital to spend and they also, uh, can exist at a higher operating cost. So anyway, I just, I think the future of Bitcoin is off grid, the future of Bitcoin mining is off grid, both because it's the energy that will be available and it is the energy that, um, is actually the cheapest.

1:20:01 and so. That will change dramatically who exists in mining and who survives. This is great, and I mean, it echoes exactly what we were talking about this past week here with the, that yeah, basically miners will no longer necessarily be only Bitcoin miners, it'll be attached to other things, I just love that we're hearing this thing over and over, the trends in Bitcoin mining appear to be that there's some consensus that actually This is the future. This, this method is the future. That these are the, the sources and the places where, where mining will happen. Even that decentralization is, is going to actually work here because the, the incentives are, are towards that with what you were talking about with the, uh, FPPS coming out so, so low.

1:20:47 So I mean, um, yeah. Great, great to hear. And, uh, uh, I, I mean it exciting to, to see this happening and obviously, uh. Um, well, I don't know, actually, hopefully Barefoot survived the post having, uh, crash in hash price terms, and now we're looking like clear skies, so hopefully good times ahead, right? Yeah, actually, that's a, I know we're kind of running long, but it's interesting. Obviously, we survived. Hopefully, we can continue to survive. But one of the, one of the problems in the industry is that most of the mining, well, I shouldn't say most of the mining, the public miners haven't been economically incentivized to improve their operations and run profitably.

1:21:41 And I view this as an infection of the fiat system into the mining community, It's not good, right? So, hash rate right now is unnaturally high. That's just the simple way to put it. The economics say that we shouldn't have this much hash rate. Now, a lot of people look at it as a good thing, right? Oh, the network's more secure, you know, blah, blah, blah. I mean, there is an element of truth to it, but, but what's happened is The, the public mining companies especially have had easy access to capital, very cheap capital, and they haven't largely deployed it responsibly.

1:22:30 they've continued to grow hash rate even when it wasn't profitable for them. And that puts pressure on companies like mine who do operate much more efficiently. but it prevents our growth. It makes it harder for us to grow. It's essentially taking profit out of our pocket and moving that, moving that money there. And so I would say to all those out there listening, if you are an investor in a public mining stock, I would say, ask yourself. If that company is really aligned with your ethos, I'm not telling you what to do, but is it aligned with your ethos?

1:23:17 Is it making Bitcoin better? Is making Bitcoin better really your priority or not? Um, you make those choices individually, but I, but I would say that, the, the public mining industry has created a lot of stress and strain on the small and medium sized miner who must operate profitably. We don't have a capital market that we can go draw on. We either are cashflow positive and profitable or we die. That's it. And, um, we talked a lot about incentives, right? You know, well, our incentives are, are properly aligned.

1:24:01 I think most of us that are like me are very, are real bitcoiners. We are very ethocentric. I said this before, I, I tell my team all the time, we, we make decisions that are best for Bitcoin, not the decisions that are best for barefoot. Because we believe by making the best decision for Bitcoin, that ultimately it is the best decision for barefoot. And, um, so I would just say, hey, if you're, if you're investing in some of these public mining companies, Decide what your philosophical approach is and then ask yourself whether or not those companies are aligned with you or not, or are you just chasing a fiat gain?

1:24:51 Up to you. I absolutely love that because that's, uh, a flaw of the fiat monetary system makes bitcoin mining worse. But, bitcoin mining produces bitcoin and therefore, oh no, users produce bitcoin, but bitcoin mining produces block space, which in turn, uh, turns the fiat into bitcoin. Which is then fixing the problem So, so while, while the fiat minded shit Bitcoiners of the world are out there putting, trying to put shit coins on the blockchain, people like Bob are, uh, and real bitcoin ethos minded people are turning actual shit into block space and, and fixing the problem.

1:25:32 I, I just love it. It's, uh, it's, it's absolutely great. So, uh, thank you again, Bob, for coming on to the show again, always love having a conversation with you. Uh, we, uh, we'd love to keep this going, like, and have at least a conversation a year with you, to see where you're going with all the things, because this is absolutely brilliant, and I think more people should hear about it, and how, Bitcoin fixes this, because Bitcoin fixes everything, as we know. Just might take a little time. Well, thank you, gentlemen. I love you guys. You guys keep fighting the good fight, too.

1:26:12 Thank you so much. Yeah, and go check out Barefoot Mining. Go check out ocean. xyz. Um, where, where can we find Barefoot? Where can people find more, more about Bob and Barefoot? Yeah, yeah. BarefootMining. com, you know, Twitter, uh, Boomer underscore BTC. And um, I have a little show that I do call Old Man Yells. Um, you can find it on YouTube and Spotify and all that. Just me on rants. So if you didn't get enough here, you can, you can get some more there. Oh, okay. So go check, check that out. And Luke, would you like to wrap this up please? Yep. Thanks. Thanks again, Bob. Just echoing everything Knut said. Loved having you on.

1:26:53 So thanks again. And you keep doing what you're doing. You're, you're doing great things for, for Bitcoin mining, Bitcoin in general. Uh, thanks having you here. Uh, looking forward to seeing you again in person. Hopefully it's not too far in the future. Awesome. Thanks again. And this has been the Bitcoin Infinity Show. Thank you for listening.