Rent Hash Power & Mine Bitcoin From Home with Unhosted Marcellus | BIS #199

0:00 Ghost of unhosted Marcellus, welcome to the Bitcoin Infinity show. Nice to have you here. Thank you. Thanks for having me. Yes. First of all, the name. What are you a ghost of? And why are you unhosted? Where does that come from? I think I picked this name based on the European regulations about hosted and unhosted wallets. That was something that made me laugh. And since I host all my Bitcoin infrastructure, I assume that I was unhosted Marcellos because it's my name.

0:40 And Ghost is because I already left Twitter once. So when I came back, I added the Ghost. Yeah, yeah, yeah. A lot of people use... That was a trend for some time that people called themselves Ghosts when they came back, right? But I mean, I remember Svetsky being banned like 20 times for saying stupid shit. Just one for me. Yeah. But I mean, I've been following you for a long time. I'm a longtime fan. You're a based pleb. And we're here to talk about a lot of things, BIP-110, and how you can rent hash power nowadays. And it's fascinating, fascinating topics indeed.

1:22 But first of all, a little about you. For those who don't know you, who are you? And I mean, you are normally a NIMH, so I'm very glad. At least I can see your face. We'll see what we do about that in post. Who are you and what do you do in the Bitcoin space? I basically post in the Bitcoin space. I don't really work in Bitcoin, but it's a topic that I've been following for a really long time and interests me because it intersects with the technical side. I have a computer science degree and I heard about it for the first time in university and back then already caught my eye even though I didn't understand the economic implications so to speak at the time but it's something that But I've been following for over a decade now and been really interested in.

2:21 And also, I think four years ago, I started meeting other Bitcoiners here in Barcelona, where I live and where I'm from. And we organize monthly meetups. We teach people how to use wallets, how to run their notes and try to create a circular economy, what a lot of people is doing in lots of places in the world. And in my case, I also like to shitpost, I guess, on the internet. I have a lot of fun with this. Yeah, shitposting is an art form. And I should really get my ass up to Barcelona one of these days. I mean, we're both residents of the same country, I guess.

3:04 And there's really no reason for me to not, other than Barcelona being quite far away. I think it's a five-hour drive or something from where I am. We would love to have you whenever you want. Yeah, and I love Barcelona. I've had a lot of fun there in my sailing days mostly. Oh, unhosted wallets, by the way. This is what the EU calls when you hold your own keys, which is really the only way to actually own Bitcoin. Or I would say that you can't really own Bitcoin. what you can do is act as if you own them because you cannot own information. The very nature of information is that it's unownable. And this is one of the things that make Bitcoin so different and so great is that instead of actually owning something, you can act as if you do because you think that it's very improbable that someone else holds the same key as you do.

3:59 and also you find it very improbable that the code will change to such an extent that it will destroy the value proposition of the token. Is this something you would agree with that framing? Yeah, I think how I like to think about it is like you have possession of it, but you don't have title. So you can have the keys of a car in your pocket and you can drive it, but you can also have a car in your name. And if it gets stolen, the state will help you retrieve it, depending on where you live. So you can have a card in your name, but the keys are exactly what make it useful. And in the case of Bitcoin, you only have the keys.

4:40 So you must be very careful about having those and not forgetting them and making sure that only you have them. Yeah, and just to double click on this point, because the thing that makes those laws trying to ban unhosted wallets are so absurd because what they're doing is they're making numbers and words illegal. Yeah, they are trying to regulate math. random numbers and random words as well, because you can derive a Bitcoin private key from a coin toss or from throwing a dice 99 times or toss a coin 256 times. Also, the 12 magic words that we hear about so often, they are not a representation or they are not a, you know, pin code or something to the keys. They are the keys.

5:35 They are the bitcoins. They are the ability to move the sets. So, you know, banning words is just so absurd when you really understand what they're trying to do. So, middle finger to the EU. I agree. Fuck the EU, but... Yes, we hope that is far enough into the pod to not get censored. And I think it is, or shadow banned, or I will have to be ghost of Knut Svanholm. But anyway, the uh where were we the unhosted no self-hosted is a very nice thing i mean it's the only thing in bitcoin that makes sense it's what makes bitcoin different from everything else and if you also run your own node and if you um you you can signal for bip 110 which is a uh soft fork a temporary soft fork proposal in bitcoin that tries to uh you know slap the the core devs a bit and tell them that you're on the wrong path uh we will not we will not comply we will uh try to fight spam in any way we can yeah we don't trust the expert basically it's what it says yeah exactly and it is a point that i i believe a lot of people doesn't understand they believe that this is in reaction to spam it is not it is in reaction of to core v30 uh it's in reaction to the change of mempool mempool policy and i believe it's a sad state of affairs but if there were

7:11 more than one implementation that was seen at least to have how to say this the same reputation as bitcoin core if we had like three or four to choose from like in the lightning network Trying to do this fork wouldn't even be necessary. I think people would just naturally migrate to other projects that haven't gone bananas. And that would be it. But since we are in a situation where we have a reference implementation that it still has 80% of the market share. So this is like the only way that users have to revert decisions during the project. And this is not even something that is particular to Bitcoin Core.

7:56 This is like a trend that we've been seeing in a lot of open source projects that interest try to use them to their advantage. We have seen this recently with SystemD, that it's like a part of Linux that is used in a lot of Linux distributions, where they forced putting the things that are necessary to track age. because in some jurisdictions in the world, they decided that operating systems should track the age of the users. So they decided to comply and they forced this through. And it was a situation that was really similar to what we saw in Bitcoin Core. We saw a pull request in GitHub.

8:39 We saw 80 thumbs down and it was forced through and it was locked down and there was no possibility to even discuss it. But as I said, it's not something that is just in Bitcoin. It's a general trend in open source. But well, here we are, I guess. Yeah, it's been infiltrated. Everything gets infiltrated over time, it feels. Especially when you have outside funding and it is not a hobby project anymore. It's become gross. I think this whole wokeness of core thing started in 2019. I have had many interesting guests on about this subject, including Hodlonaut and John Attack.

9:23 John Attack was in the middle of it, and Hodlonaut has written many articles about what actually happened there. I enjoyed the sports. Oh, thank you. I mean, yeah, I agree with you totally that BIP-110 is a reaction to what Core did. Some people may think it's harsh to try to implement a soft fork, as a reaction to a mempool policy change. But, yeah, this is a temporary soft fork, so it may not be as harsh of a measure as people think. So what would you say to that, to people who think that this ought to be done at the mempool level and that people can change their own policies locally and stuff?

10:10 What would you say to those people? I would agree. In general, in fact, for years I've been arguing that to fight spam, you have an advantage at the mempool level. So my opinion hasn't changed in that regard. But this is a way to really change the direction of the project. So all the experts agree that what is better for Bitcoin and for the health of the network is to make all the arbitrary data more easy to relay. And it's obviously not.

10:50 We can get more into detail on this later on and how everything agreed on that previously to 2023. but as I said this is not in relation to spam this is to change the direction of the Bitcoin network what this software gives us because as you said it's just temporary in fact this is one of the things that made me I didn't jump to support BIP110 right from the start it took me a few months to come around it and one of the reasons was that it is a self-expiring fork.

11:34 At first, I didn't understand how it worked. I thought that it would be a hard fork when it ceased to be enforced, but then I understood that it isn't. But I also believed, why do it temporarily? If we really don't want up returns, why not just do it permanent? But at the end of the day, as I said, what you can use to fight spam is mempool policy. And this basically gives us some time to work on a different mempool policy approach, so to speak, or more precisely to roll back to what we had previously to 2015, I believe, where we had.

12:18 What we have now, my opinion, is that it's too permissive and we should switch back from a blacklist model to a whitelist model. We want to allow all this and everything else has to prove that it's useful before we rely on it. Speaking of other implementations, I very recently had, the pod is not released yet when we're recording this, but I had Jimmy Song and Samson Malon to discuss their new project. I guess you heard of it. I mean, they've set up the entity that is going to try to fund this, but I guess it's still quite far off into the future before we get this new, more conservative implementation up and running.

13:07 But I guess that would be desirable to have that up and running when BIP110 expires. What do you think? Yeah, yeah, totally agree. It's just linked to what I said a moment ago that Bitcoin would be in a better place if there were several implementations to choose from that were seen as equally good. I think nodes is not so bad considering that the guy has been doing this exercise since over a decade ago. In fact, nodes exist because Luke was one of the first pool operators and he wanted to have more control of his mining node and he has been maintaining his own modifications of Bitcoin Core for a long time So I think it as good as it gets You will find someone more capable or with more expertise doing this But it's true that it's just one maintainer, even though there are also a few developers working there.

14:09 For me, what I would like to see is if Luke found a place where he feels welcome and productive. collaborating if he doesn't in core anymore so if he can do that in in this new project that would be great but so far we haven't seen anything besides announcements so we will see uh to me being conservative sounds great but what i really care about is sovereignty and user choices so to me a note implementation should be yeah should be conservative but should also let you do a lot of a lot of stuff without going outside the Bitcoin protocol.

14:55 So I don't know if this would classify as conservative, but I don't know. I guess we will see. I'm looking forward to what this is, honestly. So where do you draw the line? Because I know, like, I call myself a monetary maxi, and that's because I think Bitcoin ought to be money. And I think the question that developers should ask themselves before trying to implement something new is, does this make Bitcoin better money or not? And there are things that aren't, you know, just being conservative and keeping the rules the way they are that actually do make Bitcoin better money.

15:37 for instance segwit which led to the lightning network which is obviously very good for maybe first and foremost privacy but also for faster transactions so but but there are these other things there are people that want to build anchor stable coins to bitcoin they want to programmable stuff like a bit vm and and such what do you think like where do you draw the line where it's not money anymore but but spam like what what kind of things do you want but where would you draw the line like what what kind of things wouldn't you want to see on bitcoin maybe that's a better question i don't know because i haven't really looked in detail in all of these things in general i think that developers are quite misright they see that there's a narrative that bitcoin needs use cases because they are afraid that there won't be enough fees in the future to pay for the security of the network. So they have a tendency to think, look, I just found out about something new that we could do on Bitcoin transactions and this would pay fees. So this is good. So I think that this is completely misguided and misses the basic incentives of Bitcoin.

16:56 What I care about is to do on-chain transactions that, to be honest, they are not that expensive, especially since a year ago. And L2s, I guess I'm also in favor of them. Of course, I also use the Lightning Network. I think it's a great development. In fact, I used to see Bitcoin as a speculative thing. I mean, I understood the hard money angle, but at the same time, I understood that the space to transact was very limited. And when I first discovered the Lightning Network, and this wasn't really until four years ago for me, when I started meeting people in person here in Barcelona, they showed me a Lightning wallet for the first time.

17:43 And I was like, what the fuck is this? How is possible that you can send Bitcoin transactions without putting them in the blockchain? and it's supposedly as secure as normal transactions. When I really dug into this rabbit hole and understood how it works, I had an epiphany moment that said, well, with this, all the work could be pagging for lunch every day. Lightning also has their own limits, but in general, I'm supportive of L2s if they are sovereign. just like bitcoin i want the l1 to be to be as efficient and lean as as possible and i don't think i'm saying something new i mean almost everyone who is uh justifying spam today you can find quotes from before the the inscription exploit was discovered arguing that the chain has to be the lean as possible and we want to optimize as much space as we can.

18:51 And now we see that a lot of these people are justifying that it's perfectly fine to embed four megabyte pictures in blocks because they pay for fees. It doesn't make any sense. No, I think one of the biggest misconceptions about Bitcoin that people have is that miners find Bitcoins, which is not really true. They find block space and we pay them in Bitcoin. We allow them to pay themselves in Bitcoin. I think we pay them to confirm our transactions. And they are implicitly supposed to be monetary transactions is what the system was built for, not as cloud storage. No, and this is why the whole notion of spam, why it's such an issue for us.

19:35 Because we understand that the internal payment mechanism of the network is totally dependent on there not being spam there. Because then people will stop paying for the service and having their transactions go through. Basically, you cannot compete with spam. This is something that is said all the time. But to someone who wants to inscribe data, not only will this transaction take a lot of space, But if you look in detail in these transactions, they pay like all the sats that they are moving, like 95, 99% of it, it's fees. So they are paying like five.

20:16 And if you want to compete with that, you won't do it unless you are moving thousands of dollars of value. You will not be moving five dollars because you will only pay a cent in fees if you want to move a dollar. So this really displays a lot of economic activity for this effect. because they are really taking a lot of space. And this really undoes all the engineering effort that has been done in Bitcoin since it started. If you look at the oldest transactions in the blockchain, in the first blobs, you will see that the public keys were huge. So then we discovered that we could make them half as big and then we could compress them even more by using hashes. And everything that we've been doing at the protocol level is to be able to fit more monetary transactions in there.

21:05 And even Tabroot was sold as this. Before it was activated, it was sold as a privacy upgrade and as an efficiency upgrade. And because of a mistake, we got just the opposite. All the 15 years of previous engineering effort has been undone because at first people didn't know what to make of this and then they normalized it. And now they say, yeah, it's fine because it's paging fees, but all the engineering effort that we did for 15 years trying to make the block space more efficient has been thrown down the board. This is where we are. Yeah, exactly. I mean, it is an exploit. There's no doubt about it because Taproot, it's not at all being used as it was intended or at least advertised.

21:55 Yeah, so getting back to mining, I couldn't care less how miners make their money. The thing is, this is what everyone talking about this, that we have to think about the security budget and all that crap, misses. And that is that the difficulty adjustment works both ways. So should miners start dropping off en masse, then mining becomes profitable again. So it's always an equilibrium. And we're doing like 900, what is it, exahashes per second, which is like... Yeah, 1,000 exahashes, but it's one setahash.

22:36 Yeah, which is one followed by 21 zeros or something like that, right? Yeah. Which is an insane number. When you think about what that actually is, these are computers around the world just guessing a number. Mining 101 here. right now and for those listeners who don't know this mining is mostly done by pools i think all my listeners know that but uh what what what people are really doing when they're selling their hashing power to a pool is that they're they're not they cannot really call themselves miners they they are hash mongers or hashers and uh yeah this is one thing i didn't know until a mining conference I went to, and that is like, how do you actually prove how much hashing power you send to someone? And that is that they have a lower difficulty target for the next block. And then they send those, not the real block, but just those proving that I actually have the hash power.

23:34 I say that I have kind of blocks to the pool. And then the pool can verify that you have this and that much hashing power. Therefore, we're going to pay you this and that much. And the most common model of payouts for hashers, hashmongers is something called FPPS, full pay per share. Exactly. So the mining pool owner, which is the real miner, by the way, because they are the ones that decide on what block template to mine on or what block to mine on. And they pay regardless of if they find that block or not.

24:14 But the new one is Ocean and a small handful of other miners that allow the hash mongers to actually be miners and submit their own block templates. And whoever finds the block decides what block was mined on, and the pool doesn't decide that. But you have figured out a way to hack this, or at least popularize the way. I don't know if you're the one that came up with it. I think you had a finger in that at least, that you can actually rent hash from a bigger pool, meaning that you are actually doing... Not a bigger pool, but hashers. Yeah, yeah, from hashers.

24:54 Yeah. Yeah. So you're basically acting, a pleb can act as a mining pool in a way, because we can do what they do, which is buy hash power from hashers, and then direct it to Ocean and Signal for BIP-110. And we can do this renting the hash power by doing it this way since Ocean doesn't use FPPS. Ocean pays out whenever they find a block and they pay you accordingly. So some weeks this is a winning business model and some weeks it's not. But you should get 95% of what you paid or above.

25:35 And what you get back more importantly is KYC free sats, right? Am I getting this whole thing right? What's your version? Yeah. I don't know if I'm the one who came up with this. At any rate, Hashtag Markets has been around for a lot of time, but they didn't make a lot of sense until the Datum Gateway was released one and a year and a half ago. And I only realized this like a few, like a couple months ago. I've been mining with my Datum Gateway with a couple bit access for more than a year. And it wasn't until recently they said, hey, I can expose this settlement point of the gateway to the internet and get as many hash rate as I want because it's really cheap.

26:22 Maybe it would be useful to explain how Potion works because it's very different to any other pool that is in existence. And I think it will take the others a bit of time to catch up or offer something similar. When you run your own Datum Gateway, you are basically a pool operator. So let that sink in. You have like 90% of the power that a pool like Foundry or Antpool or any of this has because you are running the Stratum pool software and hashes are pointed at the software and the software is the one that is connected to Bitcoin now that is deciding what to work on.

27:07 You can also decide where to send the hash rate if you want to send, let's say, 10% of your hash rate to a mining address and the rest to another for whatever reason. You can do this sort of thing. And then Ocean is really like a coordinator. You can think of Ocean as a federation of mining pools. Every user is a mining pool with their own And then the role of Ocean is making sure that it keeps track of all the shares that are being found by everyone and make sure that no one cheats Because just a moment ago you said that Ocean pays based on the blocks that they are found And this is not exactly how it works The way it works is that every miner in the pool, every pool of this variation of pools, pays the rest when a block is found.

28:01 Because it's their own software stack that finds the block. And then the role of Ocean is making sure that the Coinbase transaction, that is the first one that you have in every Bitcoin block, is paying all the participants in the pool, at least the bigger ones, the ones that should be getting a reward for the next block. And so really, you can think of Ocean, like the same role that Robosatz or BISC or HODL has. It's just a trusted third party that is making sure that the participants in the federation of pools in this case are not cheating each other.

28:43 But really, each participant has a lot of power, like almost equivalent to a pool operator because it's running this stack end-to-end. And once you realize that, you can decide to be a pool operator and rent hashrate just as, as you said, the FPPS pools do. I mean, all the large players that are playing based on the FPPS model, they are basically the miners and they are renting the hashes to work for them because they are paying for every share that is found. But as you said, these shares are not enough to find a block. They are useless, but they prove that they are working on the job that the pool has given them.

29:23 So it's basically the same approach what so far only four or five pools could do because you needed a lot of size to be a Bitcoin mining pool. you now can be a very small pool, do this and get rewards on a regular basis. This is the game changer of Datum. Because before Datum, you could also run something like public pool or CK pool. But if you do this, you would be forced to find blocks. If you didn't find any blocks, you wouldn't make up for all the money that you have spent on rented hash rate. But once Datum is in the picture, you can pay whatever you want every day, $30, $60, whatever, and make most of it back in blocks.

30:10 On average, push and find right now for the hazard, it has one, two blocks per day. Sometimes one, sometimes nothing. If you are mining continuously, in the long run, it's like almost a break-even. You lose a few percent, and then you can scale this up and down as much as you want. And it's similar to mining with Habitax. Everyone who's mining with Habitax at home understands that they won't even break even with the investment on the machine. And it's just generating sales. Or they can lot of mine and they will never find a block, usually.

30:50 This is the same. You can scale your hash rate higher, but without expecting a return. Just because you want to control a chunk of the total hash rate. there's a lot of reasons you might want to do this. You said one of them, you're exchanging your UTXOs from the Coinbase transaction that don't have history, but there are many more. Right now, the high-rate markets are not redeveloped because, as I said, they didn't make a lot of sense until now. But I think it's just a matter of time that someone will offer, hey, swipe your credit card and you can get computing power, Bitcoin computing power, And then you would be able to pay to stack sats, basically, without going on an exchange.

31:36 You can exchange fiat for computing power that you can consume yourself. Yeah, I think it opens up interesting possibilities. Yeah, to explain this a little further to those listeners who aren't that technical, The Coinbase transaction is the transaction that contains the block reward and the block subsidy, to be more specific. What is it nowadays? 3.175? 3.175, yeah. Bitcoin. and those get divided proportionally to how much hash power you gave to your personal pool gave to Ocean to find the block.

32:26 Exactly. So two things here. You get almost all your sats back on average if you do this. And the longer you do this, the higher the likelihood that it stabilizes over time, right? Because it's probabilities. So if you just do it for a short time, it's more of a lottery. The longer you do it, the less of a lottery it is. And you get to signal for BIP-110 if you want, and you get KYC-free sets, which is, I mean, to my knowledge, Ocean does not KYC at all. They don't care who owns the UTXO that they are paying out to.

33:06 They're just paying to UTXOs and not to people. which is excellent. Ocean knows that they sent money to a certain address, but they don't know who owns the address. And they don't care where the Bitcoin goes after that. So it's a wonderful way to actually use Bitcoin more as it was originally intended, which is as money and as private money on the internet. So I encourage anyone listening to this to look into this. To my knowledge, it's only brains that are doing this right now, right? There are a couple other hash rate markets that I know about.

33:49 The most known, I guess, is one that is called NiceHash. I don't talk a lot about them because they require KYC. And to me, KYC is very dangerous. So my recommendation is whenever someone is asking for your personal information, You should stop what you're doing and get out. So I don't really recommend doing that. But if someone doesn't care, I believe this is one of the more stable. They have been doing this for out of time. And they have more and more hash rate available that brains that is still in beta. And they started a couple months ago.

34:31 And then there's also another market that I haven't tried yet. because so far brains has been working for me, more or less. They also have a bit of inconveniences. They are not as cypherpunk as they could be, but at the end of the day, they are a regulated company in Europe and they have to jam through several hoops. But for people who find this intolerable, there is a website that is called Mining Rig Rentals that is completely cypherpunk. Anyone can post, any hasher can offer their hash there and they don't require KYC at all.

35:12 And I think that the website also does scroll, make sure that the hash rate is being delivered. And even for each hasher, you can see the history of deliveries and if they are reliable or not. The problem with this website is that it's much more expensive. In there, we are not talking like 1-2% of loss. We are talking more like 10. But again, several flavors for different folks. If you find the inconveniences of brains intolerable, you can look into this and combine all these three markets and report that they have like 5% of total hash rate.

35:52 I'm saying this from the top of my head but I believe that Brains has two exahashes NiceHash has like 10 I believe and Mining Rentals reports 40 so like 50 more or less out of 1000 that would be 5% this is what they report not sure if they are real or not but in any case if people are interested in this i believe supply will be elastic to some degree we don't know how much but if people are interested in brains and brains cannot cannot supply everyone more hash rate will come there because it will be more profitable for hashes to to send their to resell their their hash rate than pointing it at an fpps pool so if there's interest it should grow by its own and i think it will because if you think about it this is like the the last step for a bitcoiner we always talk about the bitcoiner's journey you first need to hold your keys and then you need to run your note okay but then what happens with this note it's uh really useful what it's a lot of people don't don't bother but once you get the mining into the mix when you said yeah this machine is a log template machine it's used for mining you can use it for mining at any scale you want you can start with a bit tax on the chip to learn the roads and if you like it and you want to take a

37:23 bigger control of the total hash rate you can totally do it because it's not at least at the moment it's not it's not very expensive i think it's because people are not used to doing this and the market is underdeveloped but also because of the bitcoin price if bitcoin was still at 120k hash value would be twice as expensive. So you would be paying $60 per petahash instead of $30, where we are now. Yeah, and Bitcoin rewards those with a low time preference, as we know. So there are many hurdles to mining if you're mining the old-fashioned way.

38:05 First, you have to buy a mining rig of some kind. And this can be very expensive, by the way. Yeah, this can be very costly. Yes, and then you need to use electricity. And if you don't have access to very cheap electricity, in Europe it's becoming increasingly rare. Two, the home heater miner from 21 Energy. And I've been running that to heat my house all winter. And the mining was sort of a side thing that it did. It was good fun. But it is like mining is noisy. Mining is inconvenient in many ways.

38:47 So it's great that this new way of doing it, where you can just rent hashes from someone else who has a cheaper electricity bill than you have and whoever. And again, it's not new. And in fact, it didn't make much sense until now. But now that you can really give your mining jobs to any machine that you want, this is a game changer. It's now that you can act as a pool operator and still operate on the long term because you don't need to find blocks yourself if you are in a pool. This changes everything. This makes the market much more wide and potentially, I mean, I find very good what I'm doing. I believe that thousands of people will want to do the same.

39:31 And in fact, you don't need that many people to take over large portions of the total hash rate. That is what we really want. Right now, we have five mining nodes that are finding 90% of the blocks. We really want to decentralize this, and this is a way to do this. Maybe I could give some numbers how I think about the profitability, or not profitability of doing this, because this is one of the questions that I get the most. Absolutely. What I do, because first, it's impossible to have a long-term estimation of what this will cost because this depends on future difficulty, which you don't know.

40:13 If difficulty goes up, hash rate becomes more cheap and if it goes down, it becomes more expensive because the same hash rate gets you more such. So this is a variable that you don't control. You also don't control the price of Bitcoin. If price of Bitcoin goes up, then hash rate also becomes more expensive and vice versa. And then this is the big one. this depends on the actual revenue depends on the pool's lack so maybe one day Ocean could find 10 blocks in a day when it was expected to find 2 and this day you make bank and then maybe you can spend 3 days without finding a single block and you don't know how you don't know the look that the pool will have beforehand so the only thing that you can do is take a picture right now and see what it will cost for the current price on the market and what you are expected to earn at Ocean at this very moment.

41:16 And you at least can get a ballpark number. So if you wanted to do this, you can go to the Ocean dashboard and find any miner of any sites you want because all the information is public. But since the hash rate is sold by petahash per day, so you get the price. When we saying that a petahash is this means getting constant delivery of one petahash for 24 hours You could go to the Ocean dashboard search for a one petahash miner and see what is the expected revenue of this miner and you will get a number So then you go to the market and check what it will cost you to get one petahash per day.

41:59 and then you subtract one number to the other and it will be in the range of 1,000 sats. So we are talking less than a dollar. I think a dollar right now is 1,000 sats and 400, something like that. So basically the TLDR is that for one petahash, it costs you less than $1 a day and then you can scale up as much as you want. Or down, if you don't want to do this, you can do it with Bitaxis. But this is a way that for someone like us that don't have access to cheap electricity and we would never consider. I see this like Safe Dean says that what good is fiat for?

42:42 Because you have to earn money first and then you need to get a degree to keep your money. This is similar. It wouldn't make sense if you had to buy Bitcoin first and then you need to become a miner and buy thousands of machines. Let's just let the free market do this thing. If someone wants to specialize running these machines and they know what it costs them, I'm happy to offer them a cent more over their cost. And I will give them the mining jobs to work from my home. And I don't need to buy machines. I don't need to spend thousands of dollars on machines. I can start mining as soon as I want and I can stop mining as soon as I want.

43:24 That's it. I think people need to have a reference that mining with one petahash is less than $1 per day. Yeah, but it is a quadrillion guesses per second. That's what peta means. It's a lot. Yeah, it's a million billions of guesses. Yeah, it's several machines. I mean, if you see what one petahash is in person, it's not small. No, so it's really mind blowing when you actually try to wrap your head around what these numbers mean in Bitcoin, like, and the difficulty like you have, what is it now, like 18 zeros followed by some random number. And when you understand what that implies, that's just one of the real true mind fucks of how big this thing is and how secure it is and how ridiculous the word security budget becomes when you think about it in those terms.

44:19 Yeah, so we want to urge more people to do this. You mentioned a couple of websites. Is there a good explainer video? I think Matthew Cratter just posted something about this. I haven't watched that one yet because it just came out the minute before we started recording this. I haven't seen this yet. But there's a website that does a pretty good job that is called ransomhash.com. Ransomhash.com. It has explainers for all node distributions for Umbrell, for Start9, I believe. Yeah. I don't have a lot of experience with them because I'm an nerd and I use Linux directly. I have my node in a Linux box and do everything by hand and build the source myself. So when people come to me with tech support, I don't know how to help them with Start9.

45:07 But in RansomHash, I think that there are some good guides and explainers to start looking into this. Yeah, I'm running a Start9. You can see the box here behind me. Yeah. I'm not sponsored by them, but I'm very super. So a little disclaimer there. Crater always says that Start9 is not paying him in any way and they're not paying me. But it's been fantastic so far. I absolutely love it. So go get a Start9 if you can, if you want to get into all of this and become even more self-sovereign. I mean, I'm a slow learner when it comes to these things, but I do enjoy it.

45:49 And I learned a lot from talking to people like you about how these things work. But the saying is Bitcoin is for everyone, but I think Bitcoin is for anyone is much more. Totally agree. Anyone willing to do the homework. And the more homework you are willing to do, the more magic Bitcoin becomes. That's the way I see it. Exactly. Yeah, it's a totally voluntary system. You don't need to hold your own keys if you don't want. You can let the exchanges hold them for you. And then you can get Mt. Gox or FTX. Same for the node. You can run your own start line or your own node directly, however you want to do it.

46:31 And if you don't want to do this, you need to use someone else's website that can track all your data and sell it to someone else. And the same for mining. I mean, we are used to believe that mining is, as Bitcoiners, we are used to believe that mining is something that is done by someone else. We enjoy this fantastic monetary system that has limited supply, doesn't need anything else that a private key works just with mats, doesn't have borders. But then we said, yeah, but we can't be bothered with mining.

47:11 We will let these people try to make a living mining it and we will never bother with it. I don't believe this is the correct way to see this mining at the end is the activity that secures the network. And since we are using it every day and we hold Bitcoin for the long term, we are the ones that are the most incentivized to pay for the security. And this is how I see it. Even though I'm not expecting to make any profit with my mining activity, I scale it to a level that I'm comfortable spending. And again, I'm also recycling my UTXOs into fresh ones.

47:53 I'm just having fun with this. You can use it to signal support for forks. You could use it to bootstrap pools. Starting a new pool is something that is very difficult, but as these markets get more mature and developed, it will be more realistic for someone to say, well, I want to start a new pool, and for that I need to rent five exahashes for three months. because if I don't even have this capacity, my board will never take off. This is something that I predict will be easier to do in the future than it is now. And there are a lot of pool designs that are just theoretical. There is code, but no one has a plan to put this in practice because that requires entrepreneurial effort and risk, sorry.

48:41 And very few people are willing to do this And this would be easier if these markets were more developed. And again, I predict that they will be because they are solving a useful problem for Bitcoiners. Yeah, I mean, let's try to go a little deeper here. I've had my thoughts, philosophical thoughts around what Bitcoin means long term. And one of the things I always talk about is how Bitcoiners are incentivized to help one another with practically everything. Because the sats live in our heads, because they're just information, and we all benefit from the value of Bitcoin going up.

49:25 And that is just another way of saying the value of the people in Bitcoin going up. So we are very directly incentivized to help one another. I mean, I'm better off if you succeed with whatever you do in your life. And this is just the free market on steroids. So not only do we get like perfect free market competition because everything is voluntary, but we're also incentivized to just be good to one another, except for miners. And I think this has to do with mining being sort of co-opted by the fiat mindset. Since we plebs gave away mining to more fiat-minded people, miners are incentivized to do all sorts of shit, especially if they have access to cheaper fiat loans.

50:14 And you get phenomena like Mara, for instance, who do shit all the time on the chain. And also, not to help other miners. They actually have an incentive to sneakily attack other miners the way it functions now. they are not at all in they're not playing the same game as we are where where everyone benefits from sats so what what you would want is miners that are actual bitcoiners at them that think in sats and that want sats to succeed long term and yeah maybe this is the path there maybe this is how we finally decentralize mining and make miners bitcoiners again i think this resonates with me key insights i think that the hashes and the the current pool operators are businessmen before bitcoiners and in fact i guess that a lot of hashes don't really understand bitcoin anything else that they heard okay i can do this investment and i can get a return on it and i will get my bitcoin directly on an exchange and i will sell it to pay for my electricity bills i'm 100 sure that a big chunk of the hash rate has people behind it, things like that.

51:28 And for a long time, we argued that we need to make hashers become miners again. But recently, well, since I started thinking about all this, I decided that it's the opposite. We have to lean into this. We can have these people be businessmen and we can hire them to work for us instead of for pools. because pools are also businessmen. They are trying to pay them as little as possible to earn their own commission. So you really need to offer a cent more than FPPS pools to incentivize the hashes to work for you. And regarding helping one another, I think this is really embedded even in the protocol itself.

52:13 When you are running your own node, it's not only you that is taking advantage of it. When you have your start line at home, You can browse your own private instance of the mempool without giving up your data. You can use it to broadcast Bitcoin transactions and you can use it to connect your wallets to it. And no one knows what you are doing. This is fantastic. But on top of that, your node is also sharing the full history of the blockchain to other nodes that are starting up, doing what is called EBD, initial block download. So in a way, running your own node is also paying forward to other people who are using the network or starting using it.

52:59 Same one, you expose your node to the internet and it becomes a listening node. When you do this, this strengthens the network a lot. And for mining, when people like us get involved, I think it's similar. When Bitcoiners become pool operators, they can use this power to activate soft forks. That makes sense. They can use this power to discard stupid spammy transactions and leave more space in blocks for people who are trying to use the system. And at the end of the day, attacks. I mean, not to get conspiratorial. I don't have any idea if this is a state-level attack, but I'm sure that if the states at some point decide to attack Bitcoin, they cannot do this head-on.

53:47 They won't say, OK, we are going to attack Bitcoin because they will fail. If they do this, it's something that cannot be stopped, but for sure it can be infiltrated and you can try to spread narratives, ideas that are not really beneficial to the system. and this has been happening a lot. Who is pushing this is difficult to know. But yeah, definitely, if you have screen in the game in Bitcoin, you want to be as much involved as it, as your screen in the game is in the system, I would say.

54:28 Yeah, I mean, it is resistant. We are resistant, not the system itself. Yeah, exactly. The system is resistant because we are. Otherwise, if we are not vigilant here and if we're not acting the part, then it's not as resistant anymore. So that's what people miss. Like, who are you proving the work to? Like, what power do the plebs really have? And I guess we'll see here when BIP-110 finally launches in late July, early August. I think it is something like that, block height something something. I believe so.

55:08 How do you see that play out, the game theory and everything? It's been said that we need around 10% of the nodes for this to work. But yeah, I have my own theories, but I'd love to hear yours. I'll be honest, I don't really know what will happen. I think it's a volatile situation like it was in 2010. 17, people are saying, I think nowadays people are pretending to be very sure of what was supposed to happen back then. But when I was leaving it, I wasn't so sure at the time. And this feels similar.

55:50 I can see the argument that 10% is enough, and especially if it's a grassroots movement of people using their nodes mining because, as I said, it takes an incredibly low number of people renting hash rate to move the needle to 10%. For instance, I think Matt Cratter did some math in his video that I checked and it was correct. It was like 8,000 people mining at 12 beta hashes and this had an expected cost of $10 per day, which is like what half a lunch in most of the development world.

56:35 If at this stage we don't have 8,000 Bitcoiners, what the fuck are we doing anyway? So the only unknown to me is how elastic the supply of hash rate is because right now you cannot rent extra hashes in all these markets that I mentioned. But if more people go to them and they push the prices upward, why not? It could happen. And in fact, all the current pools, the FPPS pools, are in a good position to become high rate markets too. This is basically what Brains is doing. Brains is a pool that is about 20 exahashes.

57:17 And when they launched, they were renting 5% of their total hash rate. And then they doubled to 10%. So now it's up to. But if all this is lapped up, I guess they will keep adding hash rate and maybe they will even call someone to point more hash rate at them to rent it out because it's profitable. At the end, as I said, we can lean on the fact that hashers are businessmen and they are trying to maximize their investments on their machines. And pool operators are also businessmen trying to make money and we can outbid them for a cent, for a dollar. I mean, it's trivial.

57:57 Yeah. This is interesting. Sorry, one comment I want to say. This is interesting because it's the flip situation in the mempool. In the mempool, it's impossible for monetary transactions to outbid non-monetary transactions. But in the hazard markets, that is one level deeper. It's the opposite. Someone that is a shitcoiner that is trying to make money out of nothing will not have the patience to mine in the long term. But someone that is just paying for the security or for whatever other reason of the ones that we're discussing here, like stacking sats or getting clean OTFs, I think that on aggregate, these people will take over the market because they are, as you said, ideological miners.

58:46 miners and basically what this means it gives you an advantage over people who are trying to to mine sorry to mine at a at a profit if you are willing to spend even one dollar a day you will end up with delivery of this car rate and since you now have data to gateway that can give instructions to at least power you can really consume it in a way that was not really possible until a year ago. I mean, it basically has the same function as paying for a coin join, for instance. Yeah, exactly. Because you're getting KYC free sets. Maybe not as private, but almost. Let me give a disclaimer. It's not as private as a coin join because Brains has a lot of information, and it's possible to connect the dots looking at the order book and at the OSAN dashboard.

59:37 You can configure that to be quite private but even then I think it shouldn be marketed as a co alternative even though of course for someone who is just looking at the blockchain it impossible to link one thing for another But if you look at the right things, there's some things that could be done for privacy, to improve the privacy that we have right now. But again, this is all very new, and these things didn't get a lot of interest until now. So I think that they will improve over time. Yeah, let's hope it does. And it's beautiful what you said there about the demand for block space might be higher for non-monetary transactions than monetary transactions.

1:00:25 But at the deeper level, it flips for hash power. And that's just beautiful if that's the way things play out. Yeah, since I'm having you on, I have a theory about the, and this may dox my lack of technical skill here. No problem. Let's fix it up. So the way I understand it, and I might be completely wrong here, but after BIP-110 activates, you as a miner, you can still like mine compliant blocks by just adjusting your mempool policies, right? so you don't really need to signal for the fork. You can just adjust your mempool policies to only allow compliant transactions.

1:01:08 Am I right about that? Yeah, I mean, it's a soft fork. So if you don't update your node, it will keep accepting the fork chain. But if you don't adjust your mempool policy, your node will probably pick up transactions that are not compliant with all the rules. Yeah, but that's what I'm saying. This is my question to you. Can you just adjust the mempool policies instead of running the actual soft fork software? Can you just update your mempool settings, policy settings, so that you only get compliant transactions? Yes, yes, absolutely. Yes, because if miners do that instead of signaling for the fork for one reason or another, then you may get a scenario where you get compliant blocks for X amount of time, and then there's one non-compliant blocks.

1:02:01 And after the non-compliant block, this is really where the tricky part starts, because then the next miner will have to choose, am I going to build on top of the chain that is compliant or the chain that is now non-compliant? But my idea here is that even if that miner starts building on the block that's non-compliant and that becomes the dominant chain, there's no real reason for them to change the mempool settings again. So that he could just keep on. So I'm saying even if the fork fails, there are very few reasons to not just keep mining compliant blocks. What do you say to that? Is this just me being a retard?

1:02:42 Well, I mean, the first question, obviously, you could, for instance, turn blocks only one on your mining node and you would be mining empty blocks and they would be valid. So you are trivially respecting the new rules. In the end, I think that miners are really not interested, really, miners nor anyone, to have chain splits. And I don't know if the threshold is 10% or 20% or whatever to scare miners into compliance. But basically, if the rules are being enforced by a majority of the hash rate, it doesn't really make sense to include non-compliant transactions in any block.

1:03:37 I don't know. Maybe I didn't understand the question about it, but how I see it is that the fork either activates or not. And if it activates, the majority of the hash rate is enforcing the rules. And that's about it. Haven talked much more deep than that in tricky cases Do you want to expand a bit on this scenario Yeah of course you can set your mempool policies to not accept anything but that not what I meant I meant like if you as a miner choose to do these settings as like the game theory of this is like there's no risk at all to mine compliant blocks, right?

1:04:20 The only risk is when you start mining non-compliant blocks. So if you're a compliant miner, And the fork fails. So there's a non-compliant block somewhere down the line. And there simply aren't enough people doing this. So the smaller chain gets discarded quickly. I'm claiming that. So my question is, would miners still be incentivized to mine compliant blocks anyway? just because they already have their nodes, their node settings that way, and that way they won't piss off people. So I guess the question is, is there a reason to keep mining compliant blocks even if the fork fails at some point?

1:05:12 Okay, for me failing is that it never manages in overtaking the pre-fork chain. If this never happens, there's no incentive, I believe, to stay in this chain. It doesn't happen in, I don't know, years. But if this chain exists, I mean, if we go to late July, early August, when the new rules are starting to be enforced, if there are absolutely no blocks at all and there is no fork, obviously it's failed completely. but let's say that you have 10% of hash rate by then on that fork. This fork will have a very low difficulty compared to the other one.

1:05:58 So you will get a lot more sats for the same hash rate there. So I guess some people will be incentivized to do this just on a monetary perspective to get more sats. And in doing so, they are increasing the hash rate of the fork and making the other fork less secure as more people defect to the soft fork. The other can be wiped out. And the one that is stayed for the longest time on the pre-fork chain loses everything that has been mined since the moment that there was a split. and I don't know, maybe if you throw random people into the mix taking up extra hashes of hashrate, maybe the needle can move but anyway, everything that we've been talking about, rating hashrate and such, it's something that even if BIP-1110 wasn't in the picture, would be a good development for Bitcoin to decentralize mining. It's something that I believe needs to needs to happen to strengthen the network.

1:07:09 Yeah, absolutely. I think it's even more important really than BIP-110. At least in the long run, miner centralization is the bigger risk, always was. In fact, this is happening because of mining centralization. Yeah, yeah, yeah. The fork is just a symptom of people reacting to mining being centralized or the bigger problem, which is also the core is now seemingly giving up and uh starting to working for the ripples basically yeah so no uh super interesting and uh i urge anyone and everyone to go deeper into these things and actually to start uh i i think i'm gonna take whatever whatever uh uh yeah i i can find here on brains and and um direct it to Ocean and start mining and signaling for BIP 110 that way and not only through my very non node at the moment This is also a way to convert your node in an economic node because if you are getting mining payouts every few days of course, you are verifying incoming transactions all the time.

1:08:27 Exactly. So then Stefan Levera can't call me a virtue signaler at the next conference, and that would be nice, of course. but i can still call him a suit coiner so that's uh i'm fine definitely yeah okay uh marcel's any any more anything else that we haven't discussed yet that you want to bring up uh i'm not sure i we talk about bp 110 we talk about the renting hash rate how that one works i don't know can't think of anything else right now how about you uh no i think this is a a good point to round it out wait is there anywhere on the internet where you want to send people like resources except for the things we have already maybe repeat the things we've already said what was that hash for yeah the the three websites where you can uh run hash rate uh as i ranked them anyway would be brains. All things considered is the easiest way to do this.

1:09:34 Brains, then there's mining rentals and finally there's nice hash that requires KYC. You can check them out depending on what you want. If you want a guide, there's a ransom hash. What else have we been talking about? You can find me on Twitter if you search for and hosted Marcelus. And I also run a local Bitcoin-only meetup in Barcelona. We gather every month to talk about one topic at a time. It's called Barcelona Bitcoin Only. You can search on the Internet also if you are in Barcelona and want to reach out.

1:10:18 And also, next month, we will be doing a larger conference that will be two days long in late May. and it will be called the Barcelona Ciphers Conference. You can also look this up if you want to come. We will talk about not just Bitcoin, but sovereignty in general, like permaculture and a lot of topics. It will be the second edition of this conference. Will there be shitcoinery? No, no, no, absolutely not. Okay, good to hear that. Not allowed. And which of the 69 languages that you speak up in that region will these things be in?

1:10:59 The Spanish and English, basically. Spanish and English, okay. We also speak Catalan, but we don't have any talks in Catalan, I think so. So yeah, feel free to come. In the first edition, we had a lot of people from abroad. And I think everyone else was happy about it. We had a lot of fun. Do me a favor, Willio, and keep me updated on all these things and the dates and stuff. And I'll try to come up one of the dates and see how we can make that work. So it's brains with two eyes in it? Yes, it has power brains.

1:11:39 because they are a pool, but this is a separate series that it's called HashPower. Yeah, so if you go to brains.com, you'll find under products, you'll find Brains HashPower, which is in beta right now, but that's where you find it. Yeah, so it looks cool. And I'll see what I can do here. It's going to be fun to fiddle around with this. I'm just going to have to find the time somehow. Yes. Anyway, Ghost of Unhosted Marcellus, thank you very much for coming on to my show. And I hope to see you in real life soon and keep fighting the good fight on Twitter.

1:12:19 Thank you. Thanks for having me. Had a blast. Good to hear. This has been the Bitcoin Infinity Show. Don't forget to brush your teeth. Over and out. Bye-bye.