Mining as a Service and BIP-110 with Kent Halliburton | Bitcoin Infinity Show #214

0:00 Kent Halliburton, a warm welcome to the summer edition of the Bitcoin Infinity Show. Nice to have you here. Yeah, it's a pleasure to be on here, man. I've been looking forward to this for quite some time. Yeah, so have I. I've heard a lot about you, but I am embarrassed to say I don't know that much. I don't know your entire story. So I'd love for you to share it here. Like what's the TLDR on Kent Halliburton and SaaS mining? and what, who are you and what do you do? Jeez, TLDR I can do. Entire story, I don't even know. Still writing it. But yeah, gosh, where do I go with that broad opening here?

0:40 So I guess, you know, I think when I was younger, I didn't understand what drove me. And as I look back in the rear view mirror and can sort of place the events into some semblance of a pattern, it's pretty clear that I've been driven by sovereignty my whole life. That's the through line. So kind of the events that I think of that have made me who I am and have brought me to doing what I do, which I do find at this point to be more of a calling than anything, is started growing up on a farm on the Oregon coast. So my father was a cranberry farmer. Actually, before being a cranberry farmer, and I vaguely recall this, he was a sawyer, which actually is a real word. It's a man who saws logs. I guess it could be a woman too, but a sawyer is one who saws logs. So he did that for a while.

1:22 Was Tom Sawyer a guy who saw logs? There you go. Well, I mean, he had the name and I'm sure the name came like Smith was short for blacksmith and that sort of thing. So but yeah, so I grew up on a cranberry farm and I think that gave me a low time preference look at the world. I didn't realize it at the time. It's just what I what I knew growing up. And and then I kind of got hooked by the surfing bug. And so I knew I wanted to be someplace where I could surf and use that as an excuse to get an education. So I wound up in the central coast of California getting a computer engineering degree. Funny enough, the name Bob Burnett may be familiar to many of your listeners, but my high school graduation gift was a computer on which I got a computer engineering degree that Bob Burnett designed.

2:03 And now Bob Burnett is both a friend and an advisor to SAS mining. So pretty interesting to see how the world comes full circle. But I went through Cal Poly, got a computer engineering degree, promptly got out of that and decided I didn't want to grow up. And so I Peter Pan for a year by running a deli in San Luis Obispo, where the college was. And then from there, went on to get completely addicted by solar and thought the world needed to convert and realize that there's some nuance to that. And now I've got a more refined view of solar, but still think that there's very much an important application for it. But I was driven, again, by sovereignty there, right? So computer engineering was about sovereignty. I wanted to understand how this technology around me was working, shaping my life.

2:47 And so understanding clear down to the transistor level helped me make sense of things and make it not seem like just magic, how computers worked. And then going into rooftop solar gave me an understanding how grids worked and energy systems. And the ability for somebody to produce their own power was kind of a magical experience. You know, turning on somebody's inverter and watching their meter spin backwards is a pretty, pretty revelatory experience that I enjoyed. and then kind of at the top of my game there I was competing against Elon's cousins at a company called SolarCity we were a publicly traded company I had a big staff of like 100 people and nine figure revenue targets we were publicly traded and so there's just a grind and I just I got ground down by it and had a dream to see the world and threw on a backpack quit my job and and did a walkabout for a couple years and this was 2014 to 2016 and during that walkabout I fell in love with the Portuguese woman and Bitcoin, both of which happened in Peru, which is where I'm talking to you from now, Canute. And my life then shifted after that walkabout experience to a classic American dream, but in Portugal, which I've come to think of as the original West Coast since the age of discovery set out in the 1400s from their shores. And in a lot of ways is I think what California wishes it could be, you know, a very, very similar sort of geography, climate. And, But I'm sorry, California, I love you, but better food in Portugal, too.

4:12 And the next steps were, how do I get into Bitcoin? Because I'd fall in love with that, too. So living the American dream, I mean, family, marriage, house, entrepreneurship. And entrepreneurship, of course, had to be in Bitcoin. And I was trying to figure out my place and did a bunch of failed experiments. You know, of course, the shitcoin trading. I did try my hand in that. Tried mining from home, tried Bitcoin ATMs. And it wasn't until I pick up Jeff Booth's The Price of Tomorrow, I think circa 2020, read that, read Chapter 5, which is about the inevitable collision of solar and Bitcoin mining, that I realized that is where I fit in this ecosystem. So a friend, mutual contact, put me in touch with the founder of SaaS Mining. And I basically had a call with him and said, hey, can I get you coffee every morning just to be here and get started in mining?

4:57 And he said, sure. And so that led to a whole a whole new journey in in my life, figuring out how to build SaaS mining. And kind of the short story is we raised a million dollars to go self-mine and that wasn't enough to self-mine. You really do need like five to seven million dollars to get something off the ground if you want to be a self-miner. And so we pivoted to building a mining as a service platform instead, which is what we've continued to do and build on for about five years now. And I've been running the business the last three, and we operate now on three continents. We are the first to build a tech platform. So we really are a tech company that attached a user experience, not unlike like an Airbnb, if you will, that connects data centers with end users.

5:40 So like Airbnb connects, you know, rental units with people who want to rent them. We do something quite similar here at SAS Mining, and we only earn money the way that our clients to, which means we don't profit off of hardware electricity sales, but we take 15% of the Bitcoin that's mined from the mining pool directly. So we're non-custodial and receive that Bitcoin. And that's how we drive our growth. Awesome. I had a funny, you should say that about Jeff Booth, because I had a conversation with him yesterday about mining and other things. And one of the topics we talked about was how mining, how the block reward part of the block subsidy will be enough up until 2140 that fees are like not essential to mining yet.

6:31 I mean, we're supposed to transition into fees being the thing, but even when they are, the gist of it is that mining on the whole is not supposed to be profitable. It's like a zero-sum game. It's like one of the most bleeding-edge competition-driven markets in the world, right? So how do you view that? Can a Bitcoin mining company be profitable in fiat terms? And is it even something we should strive for? Or is mining more like, yeah, I'm sacrificing these dollars or euros or whatever they are so I can get sats and KYC free sats will be worth more than anything else.

7:14 So in the long run, like the more low time preference miner wins. How do you view the whole ecosystem? There's a big question. I realize that. But how do you view the whole ecosystem and the narratives around mining, minor fees and security budgets and all of this crap I hear? I'm biased, of course, but I personally don't think that a Bitcoiner should care about how miners make money. Like if the system works, they will make enough money to secure my to find me block space and secure my transactions. Another friend you mentioned there is Bob Burnett. I think he has a very clear view of this, that as a miner, you search for block space to sell to your consumers. That's really the thing. And your consumers pay you in the block subsidy, the block reward and the fees. That's their payment to you. And it's not miners don't really find Bitcoin, find Bitcoins. They find blocks, they find block space. And securing the network is sort of a byproduct of that.

8:13 And I agree with that view. Like, what's your view on mining in general and your role as a miner? You asked me a pretty broad question there. And I think the right way to answer it is actually to talk philosophical first. Because here's the truth is, I don't think that we describe Bitcoin correctly. I know that's a bold statement. But why I say that is because to me Bitcoin is two innovations that is more akin to heads and tails on the same coin And what I mean by that is one side of the coin for Bitcoin is the decentralized ledger And we spend a lot of time talking about its attributes and properties and glorious, wonderful, you know, uncensorable value transactions.

8:58 You know, you can send value in an uncensorable way anywhere, you know, hard cap limit 21 million. The other side of the coin, though, is in essence a decentralized money printer. And I know that can be triggering to call it a money printer, but it is. I mean, it is, you know, on one side of the coin, we've got cypherpunks. I think the other side of the coin, though, is hashpunks live there because you need hardware, electricity, internet connection and profitability aside. You can print your own Bitcoin, right? Anybody can with those three things. And so I look at that and I sit back and think to myself, you know, in 2013, the timeline for how we acquired Bitcoin split.

9:40 And that split, I think, has led to an othering between the two communities. They live on the same on that same coin. And what I mean by that is 2013, the advent of the ASIC came about as well as Coinbase opened its doors. So that kind of two magnets with opposite polarity, it drove people away from mining and into buying. And I think that that division has had long consequences. In fact, I would argue clear downstream of those consequences for how we as Bitcoiners choose to acquire Bitcoin lives even BIP 110. And that conversation had all of us in the Bitcoin community said, no, how we get our Bitcoin is by producing it or mining it. I don't think we would be living as we do today and having the arguments that we do today.

10:24 So I do think it matters how you get your Bitcoin. And as far as, yes, it can be outsourced to somebody else that's mining. But at the end of the day, if the people that are mining are using mining as a stepping stone to get more dollars, I think some of the far reaching consequences are some of the centralization that we've experienced. And that is a cause and effect situation. Nobody did it intentionally, but it is the cost of choosing to buy rather than produce your own Bitcoin. So I think it's what we're seeing right now is potentially a bringing together of those two entities. It's one of the main things that I really enjoy about doing what we're doing is because we're not a miner.

11:05 We're not a miner. And that confuses a lot of people. We're a service provider. So we help people get Bitcoin in the same way that, you know, in exchange is not producing Bitcoin either. It's just selling it. In essence, what we see is we're competition for exchanges. In fact, we've analyzed our client conversations and almost never do we get talked about in terms of traditional hosting providers. We're always being compared to, is it cheaper for me to buy than to mine? Our competition is truly the exchange. And Satoshi designed the Bitcoin network for you to get your Bitcoin through mining and not through buying it. And so I think it's incumbent on everybody in Bitcoin to actually just, you know, diversify their acquisition strategy to get some through mining. That way you understand it. Because it's a different thing to think objectively about it than to be subjectively experiencing mining.

11:56 And it changes the outcome. Just like, you know, you can go buy your eggs at the store, but they sure taste a lot better when you raise the chickens and make them yourself. And you use them differently as well. Not the chickens or the eggs, but the sats that you mine, you do use those differently. So as far as do I think that we have any sort of security issue, I don't. I have a different framing on that. The framing that I think of, though, is that it has more to do with adoption curves and that we are still proving out the store value adoption curve. And so necessarily that's that incurs more holding than spending. And I think that's dominated by Gresham's law. And there will become a flip. There'll be a flip at some point to where we want to use Bitcoin.

12:39 And then block space will be filled, as Bob Burnett talks about. And there'll be a scarcity situation. there's block space and fees will spike and people will run to try to get an allocation of the network so that they can ensure that their transactions can be included in blocks. So I think all that plays out, but I think it's a function of time and we're just going through a necessary process at the moment. I love this. I can already tell that we can have a long, deep discussion about this. And I agree with all of what you're saying, but I need to do something that I hate doing, which is devil's advocate, the exchanges, because I don't like exchanges, but in effect, isn't just an exchange like what we want people to do other than mine and and get acquire the bitcoins that way is by selling their goods and services for Bitcoin.

13:27 Right. We want people to use Bitcoin as money. And in a way, isn't an exchange just that this is the devil's advocate part. If you're trading, there's nothing inherently wrong with trading, and we should encourage people to trade their dollars for Bitcoin, of course. So what's the problem with exchanges? Why are exchanges necessarily a bad thing? I don't think that exchanges are a bad thing, and I don't think I stated that. I just think it's the wrong way if you're a Bitcoiner to get your Bitcoin and you're ceding the security of the network to other people. And most of those people. So, for instance, up until I would say about 18 months ago, Ocean coming on the street scene is starting to change this.

14:13 But if you would go to a mining conference two years ago, Kanute, you not find a Bitcoiner there or very few. If you go to a Bitcoin conference, you will find very few miners at the Bitcoin conference. There was just a clear divide. And that, I think, is the issue is because there was the ability to other the two communities, even though they're inseparable from one another. And so I think it's the lack of understanding of mining by those that sit on on just the ledger and use just the ledger that has led to a lot of the downstream consequences. So are exchanges useful and serve a purpose? Absolutely. I'm all about the free market, you know, like people should use that. However, I think that that's actually worse Bitcoin. And I'm going to use look at the rabbit quotes. I'm not getting into the fungibility argument here. I'm just saying that I think it is a worse Bitcoin experience to buy it than it is to mine it. So you can choose to trade your dollars for Bitcoin. You can also choose to trade your dollars for hardware and produce Bitcoin from that hardware and hardware and electricity. Right. You need both.

15:13 And to me, that's actually a better outcome because on one side, you're able to get Bitcoin at cost. So on an energy cost basis, so forget the mining hardware, because that actually is where most of the confusion on evaluating Bitcoin mining comes in. If you just look strictly down the down the shoot, how much do I pay for electricity each month and how many sats do I get? Let me give you accurate numbers. $164 per month will run you a 270 terahash machine in Texas with us right now. And that will generate about 350,000 sats, plus or minus that changes per difficulty adjustment. And if you simply do mathematical division between those two, you will get a cost per Bitcoin. That cost per Bitcoin is $47,000 right now.

15:56 So your energy cost averaging into a Bitcoin position for $47,000 as opposed to what's today's price? $65,000, somewhere around that. 65 something like that yeah yeah so okay you've got a 19 oh not quite 18 000 discount per per unit of bitcoin that you're mining right and that savings helps to justify the hardware investment and generally speaking that is a one to two year value proposition so what do you get when you produce your own bitcoin well first of all you're getting bitcoin directly off the network so therefore you're outside of the banking surveillance system that has benefits for a lot of people um Two, you skip the whole custody is an issue issue because with an exchange, you buy it and you necessarily have to have it there on an exchange before you remove it.

16:44 You can't do that with mining. With mining, you have to decide where the address is, where your Bitcoin is being sent to, and you have to deal with custody. So there's no, oh my gosh, I bought Bitcoin and left it on exchange. Three, was this three or four? I might have lost count, Canute. But point being, continue to go by a little bullet point list here. The other thing that this does, and this is, I think the biggest miss by the Bitcoin community is we don't address unit bias enough. I do think for normies out there in normie land, unit bias keeps people away from Bitcoin. They think it's too expensive. like I would rather go buy a fancy car than buy one That sort of idea crops into people heads Well guess what Like right now I can tell you and this is not a sales pitch This is just the honest to God truth.

17:29 For about three grand, I can get you into a 270 terahash machine. $3,000 versus $65,000. What do you think we can sell more easily, right? Like we should have people stacking mining rigs, not trying to stack Bitcoin, because by having them stack mining rigs, they're going to get better Bitcoin out the other end. They're not going to get trapped on an exchange. They're going to be outside the banking surveillance system and they're going to learn exactly how the network works and not have this confusion that I think our community does. And I say this specifically because if you actually go back and you talk to OGs from the 2009 to 2013 era, almost all of them got their Bitcoin through mining it because they're running their Bitcoin software and they hit that little toggle that allows you to mine your own Bitcoin. And that's where most of their Bitcoin came from.

18:11 And so almost every OG you talk to from 2009 to 2013 has a different perspective about Bitcoin mining than people that onboarded to Bitcoin after that and only bought instead of mined. Yeah, there's a lot to unpack there. I mean, this whole hash renting movement is catching on. It started catching on this spring, I guess, with a lot of it was people wanting to put their Satoshis to work in order to signal for BIP110. I think that was most of it, to be honest. So the thing that for those who don't know, when you rent hash, you can do that for dollars or for sats and you get almost back to par you may get maybe 95 of what you put in back if you do it over a long period of time you can't get to 100 back unless you're very lucky but you can actually rent someone else's mining rig and and point it to whatever mining pool you want i guess preferably ocean since it's the only really really the only game in town now if you want to use your own block templates.

19:20 So what are your thoughts on that trend? Like, is this the direction we're going? And what do you think about Ocean to begin with? And all of this, the ecosystem, how it's evolving, like observations and thoughts around it? So I think Ocean actually is the beginning of a very healthy movement and conversation. It is bringing the Bitcoin community back to mining in a more fundamental way. I think the hash punk or the heat punk movement also, the open source protocol and desire to create hash rate heaters is also a part of that. But there's definitely efforts to get the Bitcoin community back into mining and I applaud those.

20:03 As far as the hash rate rental market, I don't know. It may be our equivalent of a ordinal moment from the Bitcoin community after Bit.1.10. Does it just disappear? I don't know. And that remains to be seen for me. And it's also why I have not participated in figuring out a product offering to the market. I think there's some value there for some people, but I scratch my head and look at that and say, well, why would you do that when you can't do the exact same thing and generate Bitcoin at a fraction of the cost rather than just having the ability to signal? The economics don't make sense to me long term, although I get that it's more accessible because you can size it in units that are maybe less than the cost of a mining rig.

20:46 But in the bigger scope of things economically, it doesn't make a lot of sense to me. That said, there might be other reasons and it has long term staying power and we'll go compete in that market as well and allow maybe our clients even to rent out their hash rate directly to others. That would be kind of a cool feature if this has staying power. But as far as the ecosystem is concerned, you're right. If you want to signal for Bit.10, you pretty much have to do it through Ocean. And the hashrate rental market is a quick way to be able to offer some signaling potential. It also has the ability to convert dollars into Bitcoin at a loss. Maybe as Bitcoin's price rises, you would get that back.

21:27 But if you're paying Bitcoin in versus Bitcoin out, you're probably not going to have the same Bitcoin as you started with. But in fiat terms, I think you could wind up okay over the long-term hold. Yeah, I don't know if you have more questions or more specific points that you want to ask about that. But I think we're trending in a more positive direction than we have been before Ocean was on the scene, is what I see. So let's dig into how SaaS mining works. You buy your rigs via SaaS mining, or how does it work under the hood? Like, what do I get if I open an account with you and start mining via SaaS mining? SaaS, SaaS mining. In Italian, it comes off as SaaS, which is kind of ironic, but not why it was named that.

22:10 So we have an e-com store, like a typical Web2 product is how we're designed. So you go on, you can purchase your hardware. We'll make it quite simple. How much do you pay for electricity each month and how many SaaS would you expect to receive? Check out. ZapRite is our payment orchestrator. So we have all the payment rails. If you want to spend in fiat, great. If you want to pay in Bitcoin or stable coins, they give you a 5% discount for doing that, which is good savings and encourages people to use those rails instead. And then you have to set yourself up to mine, which is basically tell us what mining pool you want to use, Ocean or Luxor, the two pools that we have. Give us your Bitcoin address for payouts and then tell us how you're going to pay your electric bill, what payment method.

22:53 And once those three things are done, you're hashing on your mining rig. We have, it's manual right now because for BIP-110, we do have signaling. You just have to tell us that and we point your hash power through a BIP-110 signaling node. But it's all taken care of. You get a watch on the dashboard, your payouts, you know, how much they were in dollar terms. You can download that in a spreadsheet. You can see all your invoices for your electric bills. You can see your rig performance. So one of the things that we do a bit proud of is we've actually got a guarantee for performance. And if we don't meet that, then we give you credits off your service fees on a monthly basis. And yeah, we've got data centers in Norway, Paraguay, and the United States right now.

23:38 And how does that work legally? Like since they're in different jurisdictions, how do I know that I actually own my mining rig? Like in comparison to like owning a gold bar in a vault somewhere, How do I know that my mining rig is not going to get 6102 in Norway or something? Like, well, I mean, you're talking about jurisdictional risk and it's inescapable, which is also part of the reasons why we have a diversified footprint. And most of our customers that have been with us long term have diversified over that footprint for that reason, because the laws and regulations of Norway today may not be the same as they are five years from now. And, you know, a lot of U.S. miners are sort of surprised when I say like the area where we had the biggest issue last year was actually the U.S.

24:23 The tariffs actually stopped the flow of hardware into the U.S. And so thankfully, we had opportunities to deploy hardware into Paraguay at that point in time. So it didn't slow down our business. But there is no place that's risk free when it comes to jurisdictions. As far as how you know that you've got ownership of the hardware, give serial numbers. You can plug those serial numbers into the manufacturer's website and see, you know, the born on date, T-Link, all that sort of stuff. So we've built our ecosystem, our software ecosystem around the individual mining rig serial number is the way that we prove provenance for all the hardware that our clients own. And of course, you have contracts with all the clients.

25:06 Of course, yeah. You're beholden to them, I guess. I mean, Norway, I think, had a horrible suggestion a couple of years back. The Norwegian government wanted to outright ban Bitcoin mining in the form of, or they wanted to tax it differently than other computing, which is basically, we're going to control how you use your electricity. And I think that didn't pass, if I remember it correctly. And for all you Trump fans out there in the US, tariffs are retarded. They are a tax and we should fight against them. They do not make your country richer. They make your country poorer by limiting your options.

25:49 It's retarded. And I'm so tired of people trying to rationalize them as a free market thing and this protectionism being good for America somehow I just don see it because I read too much Rothbard or something But anyway since we like dancing around the topic of BIP here why don we get into that? So what's your view on BIP-110 and how do you see this playing out? Boy, yeah, let me comment one thing on Norway because I think it's important that people know that and then jump into BIP-110. So the regulation you were talking about, it was coming down the pike and the the way that we sidestep that was we have a it's it's a data center that also provides heating uh for a building and we knew that if we were we had a heat contract that would largely be protected because that becomes a municipal issue more so than the state of norway issue so that's that's why we felt comfortable with that sort of risk in norway and going there is the heat reuse so we're in the arctic circle and it's it's a really cool project but as far as bit 110 is concern canoe. I spent a long time thinking about this and I'm a proud fence sitter and I don't say that lightly because I knew it was going to come up on the show and at the end of the day we're a service provider we're not a miner so it's our client's choice as to what they do and I will tell you of our hash rate we've got you know we're just over or just close to an exahash total that

27:20 we're contributing to the network at this point and about 15 of our customers have chosen to signal and we've been very clear about that so it's it's not unlike the polymarket odds that i've last seen which is which is somewhat surprising to see the mirror there and as a service provider i think it's incumbent on us as a company to be neutral and it's your hash rate it's your choice it ultimately is the people that own the hash rate that have to make the decision in my opinion and my take from a cultural standpoint is, and you might, you might likely disagree with it, but I see BIP-110 as a battle and a bigger war. I do not see it as existential. I think that it is a natural reaction to something that I agree with, which is that core can't be trusted right now. I think it could be in the past, but I think that there has been either ego-driven reasons or statecraft that has entered core. And I think that the communities, the social layer of the Bitcoin network is reacting to that and BIP-110 is a reaction to that. And so in some ways, analogous to I've never met, and you could tell me that I'm full of shit when I say this, but I've never met really an avowed atheist that was actually anti-God so much as anti-religion. I kind of find BIP-110 in general to be people that are anti-core and are expressing a political vote with BIP-110 more so than I think it's a minority of the BIP-110ers right now that are truly in the camp to think

28:52 that this is an existential issue. And I think that the knowledge that is gained from BIP-110, I hope it's successful to some degree. I have no problem with it being successful, so I'm not anti-BIP-110, and I'll go that direction if that's the way the network goes. But I think that if BIP-110 does not succeed, and that's my pragmatic just engineering perspective on it, I don't see it succeeding. That if it does not succeed, I think the information gained will allow us to focus on how we actually win the war and take information from this battle that's been fought. And to me, the long term approach to winning this particular issue is actually alternative implementations of Bitcoin.

29:36 the alternatives to core to limit their influence on the network. So that's my take. So speaking of the smaller battle and the bigger war here, isn't there a risk that if BIP-110 should fail for some odd reason that you will lose the Vanguard, like you lose some of the most battled hardened soldiers that Bitcoin needs for the next war? Should there be a fork? Like regardless of if you think the core side is forking off from the real Bitcoin or vice versa. So given a situation where there's a fork and all the people on the BIP-110 side are no longer in Bitcoin, isn't the risk, the long-term risk bigger then?

30:17 Do we even have the power to fight the next battle if we don't have these warriors on the front lines? Can we fight the next battle without Hodlonauts and without Mechanic and without the BIP-110 people? i i don't believe that framing i think that there will be some the most vocal people could likely fork themselves off if they're not successful here but i think the contingent of people that have observed core's actions and no longer trust core is actually much larger than the bip 110 movement and so i think that that the bip 110ers here that are have positioned themselves selves for an existential ego death if they're not successful they may they may not be here and that's sad and genuinely because some of those people i like and care about uh and i want to continue to wage the the battle with them into the future and i think that spam is a never-ending battle but i don't think that it is i question that they've been low time preference enough if if it's really become existential at this point and i think that being low time preference you You know, we may become a guerrilla war movement is what we need to be to win the war.

31:29 But you look at I think time has a strong lasting power. Like look at Afghanistan and the U.S., right? Like the Afghan people were just like, we just need to outweigh you guys and you guys are going to leave. And that's exactly what happened, right? The Afghan people have their have their country back. Now, I can't say that that's great for Afghanistan. I don't think I want to really compare the Bitcoin 10 community to the Taliban or anything like that. I don't mean to when I suggest this, that guerrilla, but think on a bigger picture, I think that we're seeing a societal reorganization around networks. I do buy into Balaji's perspective on the network state. And I think that that's what we're seeing here is kind of a turf war for who owns the territory of the Bitcoin network.

32:11 And I think in the long tail, over the fullness of time, we're going to see the right thing surface. And I don't think that we're going to lose the whole community over this, but I think we may lose a few people over this. Yeah, in the news today, I just saw this like maybe 15 minutes before we started the show, that strategy announces that they're announcing the Bitcoin Security Consortium, a group of leading financial institutions and Bitcoin companies supporting the long term security of the Bitcoin network.

32:51 Big words there. Members have pledged $15 million toward this work over the next three years. And the security consortium consists of Anchorage Digital, ARK Invest, BlackRock, Block, Blockstream, Coinbase, Fidelity Digital Assets, Galaxy and Strategy. To me, this sounds like even more proof that there's something rotten in the state of not only Denmark, but in the state of core. I don't want my core developers to be funded by BlackRock. To me, that sounds like a Bitcoiner nightmare. And if they are in any way, shape or form in charge of Bitcoin's security, I mean, I can't think of a bigger red flag than that, really.

33:39 the sailor said in a famous interview like a year or two back that he wants bitcoin to be in the hands of institutions and regulated entities rather than paranoid crypto anarchists and at the time it felt like the bitcoin community just thought that he's just saying that to to appease his shareholders but apparently that's his that implies that he needs to do that and he needs to take that side. And I am absolutely 100% sure that without the paranoid crypto anarchists, there is no Bitcoin network. The nodes have to be in charge, otherwise this is the takeover attempt. What do you think when you hear those news? Not shocked. It seemed to me that it wasn't going to be inevitable part of Bitcoin's adoption is that corporate and or state interests were going to try to co-opt it because it's to their advantage to do so.

34:40 I mean, look, at the end of the day, senior age is the most powerful force on the planet, most powerful social force on the planet, right? And the genius of Satoshi is that he figured out how to harm his human self-interest to bootstrap the Bitcoin network. And I don't think that there's any more powerful countervailing force than human self-interest. So basically what we've got is the key match is about ready to play out here, is what I see between human self-interest and the ability to maintain control over seniorage and the money printer. And that's the battle royale of our generation. And we get to be frontside. And that's why I think that getting battle weary from BIP-110 instead of being focused on the big war, I think is a mistake. And I will say that straight up. I don't think that if you are going to go down with a ship on BIP-110, and I get it why people are really up in arms on it. I'm very sympathetic to Bit.10, but I think you're missing the bigger enemy that's coming in right now.

35:38 And this is what you just said is that. Now, I want to also point out one thing to just steel man the argument I'm making here, which is the development community has a garbage funding system, right? Our development community needs to be funded. And how are we going to get them funding, right? How do we pay for them to protect Bitcoin at the development level and to put food on the table for their families? And that's a problem that Bitcoin community, I don't think, has resolved. And I think that there is an attack vector through that coming in. There is an attack vector coming into the Bitcoin community because we've not resolved that. And so I think in the same way that coming up with alternative implementations to Bitcoin Core is necessary, I think we need alternative ways to figure out how to fund our Bitcoin development community.

36:25 the community. And I think that the only thing that I can see that's actually functioning is something like the patronage system of the Renaissance era. And right now, the only patron that we clearly have that fits that bill is Jack Dorsey. I'm sorry, we need more Jack Dorseys out there that are helping to fund the development ecosystem to mitigate that attack factor that is being exploited right now by the corporate entities. So it's okay for us to sit around and wag our fingers at these corporate entities that are coming in. And I agree, I have very negative reactions when I hear that as well, Kanute. But at the same time, we're leaving ourselves open to that because we've not figured out how to fund our developer.

37:08 So why didn't we need to fund them the first 10 years? Like the part of how I see this is that it was more pure when the Bitcoin developers, what was in them for them back then was that belief in the project and the Satoshis themselves made them rich over time. They managed to secure their stacks and understand Bitcoin properly. They got rewarded by the work itself. They got rewarded for securing Bitcoin by having their Bitcoin secure and seeing number go up. But yeah, Jack Dorsey is one guy. I mean, yeah, I think this is a tricky problem because there is no clean solution to it.

37:51 There is no, there can never be like outside economic incentives like that without the risk of corruption. It just comes with the outside funding. And especially like I know most Bitcoin developers get their grants in fiat and not in Bitcoin. As John Attack told me this, he had to insist on being paid in Bitcoin, which is to me totally backwards. And then again, some of these big Silicon Valley brains, they have the other job offers from the Googles and anthropics of the world that want to harness their talents for AI and stuff instead of Bitcoin. And there is definitely a problem there.

38:33 And I don't know how to solve that. But I think BIP-110 is a good sense, a clear signal to these people that this is not the way. And this has evolved into being one of the main reasons that I like the fork. It's this middle finger to the man that comes with it, that you're not in charge. You're not in control of this network. We are. We all are. And you just have to play ball. These takeover attempts will not go well with the community. And the immune system is, in my opinion, functioning exactly as it should be. And then that's the stance I have right now. And come August 8th and the period after, I will observe and see what happens and choose sides or whatever.

39:21 After that, I don't really care about outcome. I care about principles. So my stances are what they are right now for this situation. And I'll assess reality again after things have played out. And I think this is the correct way to do Bitcoin. Like if you don't, then you might as well use, then you're outsourcing trust to third parties again. It's always back to that. Like if you're not taking part, then you are outsourcing trust. I'm not anti-Bip 110. I want to make that clear. I'm a proud fence sitter here. And if Bip 110 shows that it's going to be the winning chain, like absolutely we'll move that direction as well as a business.

40:01 and we're not going to let our clients, you know, lose their economic power, their economic cash rate. You know, we'll see how things play out. But it is basically to insert like into the contracts, we'll do this fairly soon here, like a clause that basically says, hey, look, you have to realize in the event of some sort of fork opportunity that a few days before, a few days after, like things are going to be locked down and you have to subordinate your right on direction to SaaS mining. to play out. But, you know, we're planning on everybody that's signaling for BIP-110 to allow them to signal. It's not, we just want to make sure that after enough time, if it's become decisive, that we hop onto the winning side of the conversation. But I think the thing that you're saying there that makes the most sense to me is just recognizing that you have to assess reality now after an experience like that. There is a literal fork in the road, whether it's a soft fork, a hard fork, or however it plays out, you have to assess the reality of after that, that event has occurred. And I think it's important not to allow yourself to get spun out of the community as a result of that experience. You know, I went to TabConf last year and I'll say something that might be controversial here, but I walked away from TabConf last year with a firm conviction that we were headed more towards ossification than anything.

41:25 And I think Bit.10 is directionally that same way for the community as well. And the reason why I say that is because everybody I've spoke to that is in Bitcoin for Freedom Go Up acknowledges that Bitcoin to succeed at that level has to be a thousand year plus institution. And if you look at the human institutions that have lasted for a thousand plus years, there is some hallmarks that they have in common. And when I walked away from TabConf, I saw that, A, nobody's asking the question of what does it take to make a 1,000-year institution successful? And B, the members of that community that are currently empowered with the decisions that are going to make this 1,000-year-plus institution are very, very limited in their skill sets.

42:13 We just have a lot of subject matter experts that are not there. Like it's basically cybersecurity, math, computer science, folks that are that are protecting, you know, and building this. And so for me, what I see is as a result of there not being a clear value set, like if you look at the thousand year plus institutions that exist, one thing they all have in common is a very clear set of values that people that are part of those institutions adhere to. And I don't see that in our community. And that's not necessarily a bad thing. I mean, Satoshi built the network and dropped it off and, you know, the clock is running, right, and can continue to run. But I think outside of having like the community rallying around a set of values that they making decisions against the most likely thing is a fragmentation of various tribes and camps that are just going to battle each other and nothing moves forward as a result and so we are headed more for ossification than anything here outside of an existential threat right next essential threat is what brings the clans together but i think since that tabconf that i went to as last october you see the movement of knots has grown up core there's production ready is coming up so i just see like there's a movement of all these countervailing like implementations happening.

43:24 I think that's healthy. I want that right now. And I think that that just makes it more difficult to see anything developed on Bitcoin going forward. So yeah, I'm kind of in the camp that it's not that I want ossification necessarily, but I do think that that's more likely than not, given what I see out there in the ecosystem right now. Yeah, I have a couple of thoughts around ossification. The first one is that Bitcoin can't ossify. And for the simple reason that human beings are behind every node and every miner and every exchange and every wallet in Bitcoin, every private key has a human being behind it. Like it's governed by us.

44:06 And human beings can and do change their minds and we can change this. So theoretically, like there's no such thing as ossification. And how would we know that we've reached ossification even if we did? Like there's no way of proving that Bitcoin has ossified. So it's like trying to prove a negative. The other thing, the thing you said about values, I really like that. And to build a thousand year religion of Bitcoin, if you want, for lack of a better word, because these institutions are the ones that have the most longevity, right? So the thing I want to see ossified is something like that. So the notion that Bitcoin is money, I would like to see that ossified.

44:47 And this is also one of the reasons why I'm so pro this movement, because I don't want Bitcoin to accommodate other shit. I don't want NFTs or BRC20 tokens or any other Ponzi scheme built up on top of Bitcoin. I want Bitcoin to be money because I think since it's the internal revenue system of the system, then it needs to be money. Otherwise, it doesn't work. So the thing that I would like to ossify is Bitcoin is money. And first, would you agree with that? And if so, how do you ossify a set of values? I don't have an answer to the second, but the first question, yes, I agree.

45:29 Bitcoin is money. I think if the shelling point of values for our ecosystem, I believe, at least when I got in. So I got in mid-2015, got my first, I started studying Bitcoin mid-2015, got my first Bitcoin like December 2015 for context, right? And the shelling point for the value, the primary value that seemed to hold the community together when I joined, and it's still what brings me here, is a separation of money and state, right? So Bitcoin is money, fits that for me. So fully agree with that. And I think that that is the most profound opportunity that we have with Bitcoin is to separate money and state. That said, I think on your point about ossification, I want to be clear that what I'm saying is kind of not the letter of the law definition of ossification, but the spirit of the law sort of argument of ossification is just pragmatically.

46:17 I think you're right. Like things can change, but will they change is more what I'm pointing to. And I think it's less likely that they will. And it's going to be harder to bring anything together for consensus unless it's existential, unless it's going to mean like the demise of the network itself. I think that rallies people always. But outside of that, I think we're headed more towards ossification. But, yeah, I think having an ossified value set, I don't see any thousand year old institution that exists that doesn't have that. Like if we're going to if we're going to keep this thing around for a thousand plus years and it has to be driven by humans, like I think we have to do that. And I think that that is the big miss. And I also think, too, that we are a young movement, you know, 16 years in.

47:03 And I don't think if you look to like our biological elders, you know, we've been we're basically the same creatures we were for a quarter million years at this point, as far as we can tell. And you can look at the rhythms of what have defined a good social adhesion. They almost always form some sort of like tribe of elders. And I think that Bitcoin has not developed that yet. I think it's in the process of doing that. But I think that that's what you pointed out there is a task for the tribe of elders in the community to help define. But the struggle with that, though, is how do you avoid that becoming a governance system that then has control of Bitcoin? I don't know. I don't know how organically this comes about without without it turning into governance.

47:48 Well, we're both on our way to becoming those elders. We both have gray hairs in our beards, me more than you. But inevitably, the people who were early into this will become older. And people do look for authority figures to listen to. But the whole point of Bitcoin is that we're not Jesus of Nazareth. We're Brian of Nazareth telling his followers to think for themselves. You know, if you've seen Life of Brian, when he chants that we're all different and they chant back, we're all different. There's a bit of that going on. A couple of things came to mind. I made a video a couple of years back with Joni Appleberg where I compare Satoshi to Robert Oppenheimer.

48:34 Because I think they're very similar figures. Because I view the consensus mechanism of fiat money to be world wars. And whoever wins the world war gets the master money printer. And who won the last world war? Well, the U.S. did, in effect. So that's why they could do the 1971 thing. And now they can print greenbacks and trade them for real shit from other countries and thereby get richer than everyone else. So what Robert Oppenheimer did by constructing the most destructive thing humans have ever invented, the nuclear warhead or the atomic bomb, is he found a way to harness the power of physics to change human incentive structures.

49:16 And that's exactly what Satoshi did. He found a way to harness the power of physics to change human incentive structures. It's just that Satoshi did it in the most peaceful way possible. So he's changed from whoever has the biggest bomb wins and gets to dictate the rules for everyone else. Satoshi did the opposite. He said, like, no, the most peaceful actors win. The attacks are now much more costly. Defense is now less costly than attack, meaning world peace. Like, that's what the ultimate separation of money and state is. It's world peace. If there's no state, there is no war. Like, and it's to me, that's a very beautiful thing.

49:58 That's just one thing that came to mind when we talked about these things. The other thing that came to mind is one of my favorite articles in Bitcoin ever written by Gigi about the map is not the territory thing. Because in everything else in science, in everything else that humans have ever studied, we can only at best come up with a map of reality, but not reality itself. Like the perfect model of the universe would have to be the universe itself. So we can only approximate. But in Bitcoin, it's the other way around. This is the TLDR of the article, as I remember. In Bitcoin, the map defines reality. So whatever happened in the blockchain or time chain, that's a record of what we now collectively or intersubjectively, is a better word, converged upon as this is now what we consider to be a big deal.

50:53 And I really like those viewpoints, if you will. It's so different from anything else humans have ever even tried to do. And if it works, then we've built something that we cannot tear apart again. Humans built something that humans cannot undo. And that in a way a scary thought but when you think about what it does it not a scary thought at all Because back to the Oppenheimer dilemma it can only lead to better things and not to worse things I mean, all the bad things, theoretically, it's because you do them to yourself. Like you lose your keys or whatever. But yeah, just some philosophical nuggets there that came to mind from this conversation.

51:40 I agree with you. It is a fundamental inversion of the money printer, you know, the decentralizing of it. You know, it's another case of software eating the world. And the ability for us to decentralize that largely helps us get past a struggle that we've had for 5,000 years. Like I would actually make the argument that the battle for the money printer has been the equivalent of like the Game of Thrones for humanity. Like if you if you're familiar with that, like the the actual Iron Throne, I think, is the equivalent of the money printer. Let's imagine Bitcoin is successful and it decentralizes money in state.

52:20 Think of how much human creativity comes back into humanity that is no longer trying to vie for the ability to print money. Right. Like how much collective energy is going right now to fund wars, to be able to have that economic power. If we take it out of human hands, yes, we're going to become more peaceful. I disagree with us becoming peaceful as a species because I think there's always battle lines and territorial battles. And part of that is informed by, you know, I live in the high Amazon region here in Peru and tribal existence is always marked by one tribe battling to maintain their tribal territory against another. And it's not totalitarian war like we've seen since the industrial age of the early 1900s.

53:06 And that's the major demarcation to me. And so it's not that violence disappears, but the world becomes a lot more peaceful and world war becomes a lot less likely. And so, you know, I've got kids and I want them to have a better existence and reality than I do. And so that's why, you know, I feel quite strongly about doing what I do to try to help the next generations. But I do think that you are correct that taking the power of the money printer away from humanity and putting it outside of our reaches is the only way that we can actually truly move forward as a species to see what we're capable of. because the best of us have been locked in a age-old battle of trying to vie for control of that and i think we're at its its absolute pinnacle right now so it's not surprising that bitcoin has showed up on the scene right when the whole world is on the precipice of of contagion for another world no i i to be clear here i'm speaking in metaphors and and uh not not in absolute terms i I don't believe true world peace for everyone is ever possible.

54:14 Violence is a part of our existence and it's not necessarily bad. I mean, defending yourself is not bad. What Bitcoin does is it makes aggression costlier. And that is clearly a good path into the future. Like it's one of the most profound things humanity has ever come up with because it's very hard to make aggression costlier. If you view the history of weaponry, like the spear and the sword and the knight in armor, that's one thing that made violence more costly is armor, right? Because it's harder and castle walls and stuff that sort of made aggression more costly. And then you have guns and bombs.

54:55 And now you have Bitcoin, which makes the attack itself less likely to yield profit for the attacker. And that's a way bigger innovation than it's getting credit for, I think. I agree. I think it's also because it's not physical. It lives in ID land that it's so hard for people. I think that you can see that by the people that have adopted it. So I've said that in other podcasts how I think the orange pill movement is largely over and we're moving on to the orange depository movement now Because I think the INTP and INTJ have personality types have already adopted Bitcoin because we are the ones that are willing to brace social ostracism.

55:41 I can't say it. We're the disagreeable types, right? And we're willing to follow truth to its natural conclusion, no matter the social consequence. And I think that the rest of humanity that has not adopted Bitcoin is not necessarily that way. So I think they're going to need to have a lot of experience, a lot of pain and realize that Bitcoin eases that pain to move into Bitcoin over time. And I think that will happen naturally. But I think that what you're talking about is you've probably read The Sovereign Individual that had a profound influence on my journey. And I think what you're describing is a is what they call a macro political force in that book. And I think there's been a few of them along the along the way in humanity's history.

56:22 So, you know, the printer, the ability to print books was one. Like it distributed knowledge, gunpowder distributed violence. You know, there's other of these. And I would actually say, so Bitcoin is a massive one because of its reinvention of money itself. But I also think that we're experiencing another that we've seen just this last year, which is drone technology is transforming warfare as we speak in real time. And I think the Strait of Hormuz this last year has been like a perfect example of it. Or the United States, which is the military superpower of the planet. Well, I don't know if we can say that any longer. Got put into a stalemate situation with Iran by basically ballistics and drones, right?

57:06 Nobody thought that was possible until this year. So I think we just have witnessed this year a redefining of warfare and violence itself at a nation state level. Now, I have no idea what that means for the future. I'm not that smart, but I think that it's the ability for us to change those and change the way that power can be wielded for violent means is healthy for humanity and leads to new outcomes. Yeah, absolutely. Are there any topics we haven't touched yet that you want to talk about? Anything on your mind?

57:47 jeez a lot of things on on my mind but i don't most of them are work related not not related to to philosophy and bitcoin at this particular moment i think the thing that i would just like to express the community or whoever watches this is this just to place bip 110 within the broader context of a never-ending war that we're waging to separate money and state and not to allow a loss in one particular battle to define the outcome of the war for you personally Now, there may be people that disagree and think that this is absolutely existential. And I don't if that's if that's your your your viewpoint, so be it. But I think that there's a much longer war that has to be waged here for Bitcoin to be successful. And I'm convinced it will be because Bitcoin is the only thing that I have ever seen that leverages human self-interest.

58:39 And so the outcome of this battle is going to be waged by those self-interested people that are going to fight for the outcome that they want. As much a grassroots social movement as it ever has been. And one of the beautiful things of BIP-110 to me has been to actually see the community start to come together again. And, you know, the core roots and that drumbeat of, you know, separation of money and state is coming back into the community. I think the community largely got a bit lost with the ETF and the Bitcoin wrapper securitization products. And I think it'll be good when that's in the rearview mirror and we get back to focusing on separation of money and state again.

59:24 And I think we will. It's because of the self-interested nature of the people holding Bitcoin that we will. And so yeah anyway looking forward to continuing to be at it and continue to fight the battle with let see what reality looks like post august 8th maybe 9th 10th let see how it plays out but we in for a little bit of volatility here on the network and it'd be information gained no matter how it plays out yeah there's always information to be to be gained from from things like this this reminded me of a ronald reagan quote so i i looked it up here freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected and handed to them to do the same. Or one day we will spend our sunset years telling our children and our children's children what it was once like to live in the United States where men were free. And I think that's absolutely true for Bitcoin. We need to take part in these discussions. We need to run our nodes and mine. We should all be mining in some capacity if we can and make our voices heard because this is what at the end of the day what saves Bitcoin the every every node is a person yeah so where can people find more about you and more about SAS mining where do you want to send our listeners yeah I'd say SAS mining sasmining.com saz mining you know we've got you welcome to chat with all of our agents there so

1:00:58 actual people, not, not, not agent, AI agents. I realized saying agents is, is a loaded word at this point. And then as far as me, like you can reach me on X, Twitter at Kay Halliburton is the way you find me there. DMs are always open, happy to chat with people that want to continue the conversation. And I think you are, you're absolutely right about freedom you passed on. It's sort of a real, a dawning realization I've had in the last year at Canute is that, You know, I've been looking around and being like, oh, shoot, like if it's not me, then who else is going to say these things? You know, who else is going to move the conversation forward? And so there's a certain realization that I think if you've been in Bitcoin long enough that you have to go through, which is that you sort of have to pick up the shield and spear and participate.

1:01:44 You can't be a bystander in this conversation. Speaking up and participation is an obligation you have as a Bitcoiler. Now, it doesn't mean that you're going to get your way, but I think that you are obligated to participate because the outcome, you have no influence on the outcome if you're not participating. No, exactly. And Bitcoin teaches you all these things in steps, right? Because first you acquire a little and you think of it as a gimmicky thing. And the number goes up and then you realize, holy shit, I need to secure this stuff. And it just keeps on. You keep on learning and you keep on getting better at stuff, at understanding the stuff. And ultimately, you run a node and you make your voice heard.

1:02:24 and I'd say conversations like this is a part of that too. I mean, there's a lot of talk about economic nodes and the weighted nodes and this node matters more than the other. But what do you think has the biggest impact on the Bitcoin network as a whole? Bitcoin Mechanics start nine in his bookshelf or Bitcoin Mechanics videos talking about Bit.1.10 to other people? I think just viewing the hardware and software as the only thing that has any influence of the network is missing the more important part. And that is that conversation is what leads people to make decisions.

1:03:04 And that's ultimately what makes them buy the hardware and run the software. There's like no way around that. There's a deeper layer here. There's the incentive structure of human connection. And to me, that's the most beautiful part of it. It's not first and foremost about the technology. it's it's about human beings and human action are you trying to tell me social context matters is that what you're saying can you because i i i 100 agree with you if you try to objectively separate the human from the network you're wrong i'm just gonna say full on and so i think this is there's an information more at foot here right the battle of hearts and minds it's just a peaceful one that's not being waged with literal spears and shields but i think it is what is going on and and the argument over people's thoughts is is absolutely more important because people control their individual nodes mining rigs and so individual action in the aggregate is what makes the decisions that get played out on the network exactly the nowhere is the pen truly mightier than the sword than in Bitcoin land, or the keyboard mightier than the sword.

1:04:15 We're all keyboard warriors here. And this is the beauty of it. There's not a single drop of blood shed in these wars. They're all peaceful and they're all, they're power struggles, sure, but they're peaceful power struggles. And those are healthy. Those are not destructive. So long live Bitcoin, I guess, is the ending catchphrase here. Yeah, agreed. It has been an absolute pleasure talking to you. And I'd love to have you on again here at some point in a year or so and hope to see you at some of the... Are you going to any conferences, by the way, this year? Yeah, yeah, yeah. I try to get out, I mean, to about a conference a month.

1:04:58 So the next conference I have coming up is August Accelerando. Actually, I think I'll be over in your neck of the woods. I missed it last year. was it Baltic Honey Badger, but BTC Helsinki. And there's like a mining conference that's happening before that. And I wanted to participate. I mean, we do have a data center in Norway, so planning on coming over for that conference. It's a bit of a jaunt from the Proving Amazon, but I'm very much looking forward to it. We'll make sure it's worth it for you. You know, I'm part of that. I have a small finger in the BTC Health conference. Oh, cool. Luke is a bigger part of it We're in charge of the speakers and the schedule So we'll make sure You'll have a good time In Finland And Baltic Honey Badger is not happening This year I believe But it's probably happening next year Which would be their 10th anniversary So looking forward to that If that's happening Shout out to Anna and Max But see you in Finland I guess Any plans to go to Lugano after that In October no no i've got a past september it's it's a bit open territory what what fills in uh i've wanted to go to logano for the last couple of years so possibly but i've also been invited to the first bitcoin conference in india and i'm sort of convinced that india is a uh a late market about to explode because of their connection historical connection to gold i think when bitcoin takes off

1:06:30 in India, it's going to go like wildfire. Yeah, they have a great community over there. And I've been invited to go to this conference in Bangor twice, I think, but I haven't made it yet. So that's one that a box that I want to tick off before Logano. I'm also going to Bitcoin Historico in El Salvador in November. No, that's after Logano, by the way. It's in November. So that's another fun one. yeah anyway i i think i think we last crossed paths in el salvador now that you're saying that at bitcoin plant you know what was it what was the name of it adopting big adopting bitcoin yeah yeah yeah yeah that's that's yeah that's where we saw each other yeah i don't think it's happening this year either but i'd love to get back to el salvador uh if for no other reason than to grab some waves while i'm there but um historical maybe maybe i'll see you there as well yeah fantastic Anyway, looking forward to seeing you again Thanks for a wonderful conversation This has been the Bitcoin Infinity Show You should, you know Like, subscribe and brush your teeth and all of that And adios until next time Take care Thanks, Hino