{ "episodeId": "SLP12", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "hass_mccook": { "name": "Hass McCook", "role": "guest", "tag": "HASS" } }, "segments": [ { "speaker": "stephan", "time": "00:02", "start": 1.98, "text": "Hey guys, welcome to the Stephan Livera podcast episode 12. My guest today is Hass McCook. Hey Hass, thanks for coming on the show." }, { "speaker": "hass_mccook", "time": "00:10", "start": 10.15, "text": "How's it going?" }, { "speaker": "stephan", "time": "00:11", "start": 11.21, "text": "Okay guys. So Hass is an engineer by training. He works as a project manager and he's done a lot of work on Bitcoin and energy usage, including some earlier work that a lot, many of you probably would have seen already, from 2014 and 2015, that I've actually, I've actually noticed many Bitcoiners sharing that work around on social media. Social media on Twitter and Reddit, you know, Bitcoin subreddit. Now, I actually first met Hass years ago back in a Sydney Bitcoin meetup, and, he has now just recently come back into the scene and he's written up a very detailed, meticulous research report on Bitcoin energy usage, and it's called The Cost and Sustainability of Bitcoin. So I thought it would be fantastic to get him on the show and just kind of talk through some of the analysis. So, Hass, let's start with your story in Bitcoin." }, { "speaker": "hass_mccook", "time": "01:03", "start": 63.17, "text": "So, as you, as you mentioned, I was a engineer by background, civil engineer. spent my early career building big things, highways, bridges, tunnels, all that good stuff. after, after that, I, went off to, to England, to Oxford to, to do an MBA, where my, where my eyes were opened to kind of the, the big social issues of the, of the day, and, And, you know, how to fix the world through social entrepreneurship. but I quickly realized, after, you know, diving in the economics books, that nothing can really be achieved, unless we change, the central banking model. So, so those other things, you know, all, all nice and good, but the, but the big, the big prize is, is sound money." }, { "speaker": "stephan", "time": "01:54", "start": 114.48, "text": "Great, great." }, { "speaker": "hass_mccook", "time": "01:56", "start": 116.0, "text": "So, so that's why, so that's why I got into Bitcoin." }, { "speaker": "stephan", "time": "01:59", "start": 118.84, "text": "Excellent, excellent, yeah. So, let's now, so you've released this report and it's, it's out in August and it's, the data is as at block five hundred and thirty-four thousand two hundred and forty, so basically the end of July. do you wanna give the listeners just an overview on the report and what your approach was?" }, { "speaker": "hass_mccook", "time": "02:22", "start": 141.9, "text": "So, so basically, the report aims to capture what a, a typical expenditure is on buying new mining hardware and, and paying the electricity bills for every, difficulty cycle and, dividing that by the amount of coins, mined and earned by fees, to determine a per coin cost. Now, with that said, the model is, is quite, multi-multi- variable. There's, six or seven variables that have to be looked at. Each one, extremely sensitive, you know, to your, to your assumptions and best guesses. However, the, the, the big portion of the, of the report is about the underlying economics, that feed the assumptions into the price model. So you really can't understand, environmental impact, without understanding economic impact first." }, { "speaker": "stephan", "time": "03:17", "start": 196.63, "text": "Sure. How about you, let's go into the economic impact?" }, { "speaker": "hass_mccook", "time": "03:22", "start": 202.2, "text": "Yeah. So, in terms of economic impact, it's not so much, economic, impact per se, it's just the, the economic cost or what you have to pay, to produce a Bitcoin. So, if you dig into the, the detailed economics of, of perfect competition, and the nature of competition in the Bitcoin market, the theory is that in, in times of low hype the cost of mining a Bitcoin, will be near about the price, to buy one." }, { "speaker": "stephan", "time": "03:54", "start": 233.8, "text": "Okay, interesting." }, { "speaker": "hass_mccook", "time": "03:55", "start": 234.88, "text": "So that's, that's basically the, the economic cost of, of Bitcoin. Sounds quite, over, oversimplified and interesting, on its face, but, once, you get into perfect competition, which, which we will soon enough. it, it kinda makes, a lot more sense." }, { "speaker": "stephan", "time": "04:13", "start": 252.79, "text": "Okay, sure, sure. yeah, look, overall, I think the report's really, meticulously researched and everything. I, one area where I am probably a little more skeptical is around the usage of the sort of perfect competition, you know, I, I suppose I'm, I sort of identify more with the Austrian school of economics, and I believe that, you know, from my point of view, it's almost like setting up this kind of caricature almost of what markets are when Sort of match up what, what people kind of draw up on a blackboard. However, I think it is useful to think about things in terms of what is the incentive of the miners, you know, and what is the response, let's say, if the hash rate rises based on, you know, or if the electricity price rises. And so I think that's, the way, you know, that you can analyze that. And I think, in your, to, to your credit, in your report, you've done a lot of that. So," }, { "speaker": "stephan", "time": "05:07", "start": 307.49, "text": "yeah but maybe it would be good to sort of go with a bit of a overview on what are some of the key Bitcoin mining metrics that you mentioned in your report? So for example, the, dollars per giga hash, watts per giga hash, and so on?" }, { "speaker": "hass_mccook", "time": "05:25", "start": 325.32, "text": "Those are, those are the big ones. Those are the, those are really the things that, that drive everything. what your, what your dollar per giga hash is on, on CapEx and, not only your watt per giga hash efficiency, it's also, the price that you can buy electricity for, that is a, a huge factor in, in the, in the cost to mine. but bear in mind, that the CapEx component of the, of the cost to mine a Bitcoin, is about two thirds with Electricity only being about one third, based on, based on the, electricity price assumptions. So I assume that the, the big miners, buy electricity for about two cents, and, most other miners on the network have access to a four cent, electricity." }, { "speaker": "stephan", "time": "06:14", "start": 373.67, "text": "Excellent, excellent, excellent work. Okay. And then how would, in your, you know, in your report, you talk about how some of the metrics have differed from two thousand and fifteen to today, in August two thousand and" }, { "speaker": "hass_mccook", "time": "06:28", "start": 387.56, "text": "Oh, the, the change has been, the change has been monumental. So, the, but, more interestingly, I'll, I'll give you the data for January 2015 up until, you know, the date of the report, which was, you know, literally two weeks ago to the day. So in the past five years, dollar, dollars per giga hash has dropped ninety-four percent, and, in the, in the next, month or so, it's about to drop another twenty. so, we have a, same thing with what per giga hash. So what per giga hash is down eighty-nine percent, and in a few weeks it's about to go down thirty. So there's a, the Avalon A9s coming out, the, the Shenma, M10 on the new seven nanocircuits. so, look for cost of mining to go down substantially, over the next, two or three or four weeks when these, rigs start to come online." }, { "speaker": "stephan", "time": "07:24", "start": 444.21, "text": "Wow, okay, very interesting. Okay, yeah, so, and, and the other point that I can see from your table is you've got there, the January 2015 network hash rate is two hundred and ninety-five petahash, and then what's the rate now?" }, { "speaker": "hass_mccook", "time": "07:40", "start": 459.7, "text": "So it's, i-it's, in June it was, thirty-six, thousand three hundred, per hashes, but I think today, it's something like, forty-three thousand or, or thirty, forty-three exahashes." }, { "speaker": "stephan", "time": "07:57", "start": 476.71, "text": "Yeah, so," }, { "speaker": "hass_mccook", "time": "07:58", "start": 477.99, "text": "quite a decent amount. And, and it grows, fairly consistently, so since two thousand and nine, it's averaged nine percent a fortnight, and, that's over several hundred fortnights." }, { "speaker": "stephan", "time": "08:12", "start": 492.06, "text": "Yeah, that's a, that's a really, very dramatic increase in the, difficulty. And," }, { "speaker": "hass_mccook", "time": "08:19", "start": 498.51, "text": "so if you have a, if you have a look at the rule of seventy-two, you know, every, every seven or eight fortnights the hash rate doubles." }, { "speaker": "stephan", "time": "08:27", "start": 506.84, "text": "Yeah, that's definitely a very steeply curving curve." }, { "speaker": "hass_mccook", "time": "08:31", "start": 510.74, "text": "So if we look at it again, you know, July 2021, it'll probably have grown again another twelve thousand percent from what it is now." }, { "speaker": "stephan", "time": "08:43", "start": 523.01, "text": "yeah, yeah. And I think the other thing is- The, what about that aspect of, kind of getting close to the edge of human kind of capability? You know, like the best nanometer chips and, and, and that? Would you be able to outline a little bit on that?" }, { "speaker": "hass_mccook", "time": "08:59", "start": 538.58, "text": "yeah, that's a, that's a, a big sort of philosophical discussion right there. So, there's a, there's a couple of scenarios at, at play in terms of, in terms of human capacity and, eventually You know, because I'm a, I'm a perfect mar- economist, perfect competition economist, I do believe that, that no barriers will be hit." }, { "speaker": "hass_mccook", "time": "09:27", "start": 566.89, "text": "I, I firmly believe that the, the market, demand is too strong, for a wall to be hit, a, a major dramatic wall, to be hit on, on these kinds of things. we've seen walls being broken for, you know, consistently for, for sixty years, and I'm, I'm quite confident it'll go that way. But if it doesn't then, then you'd hope, we start transitioning to, to much more efficient, environmentally friendly sources of energy, or there's gonna be, gonna be quite a energy concern with the, with the Bitcoin, energy use." }, { "speaker": "stephan", "time": "10:08", "start": 608.04, "text": "Right, right, okay. And the other aspect is, I, I, I like how you've got here a discussion here on the retail best miner. So you've got, you know, the Bitmain Ant Miner S5 back in January 2015, and as at June 2018, you've got the Ant Miner S9i." }, { "speaker": "hass_mccook", "time": "10:26", "start": 625.7, "text": "Yeah, so the, when I did the report, the S9, I was a, was a, was a bit cheaper, or quite a bit cheaper actually, than the, than its competitor, the, the Avalon. but the Avalon, they're about to release, some mining rigs very soon, and, they'll be blowing the, the S9J at least, out of the water in terms of, watts per giga hash but, you know, it'll only be a matter of time be-before Antminer releases their S10 and, and, you know, the world moves on as it's been moving on, for the past four years." }, { "speaker": "stephan", "time": "11:06", "start": 665.56, "text": "Yeah, sure. So for" }, { "speaker": "hass_mccook", "time": "11:07", "start": 666.64, "text": "example, when, when the, when the S9, first came out, it wasn't putting out fourteen and a half tera hash. So I think it was putting out, you know, twelve, twelve tera hash at, you know, thirteen fifty watts. or even less. And, at the date of the report, the, the S9I gave out fourteen tera hash, and now the S9J is giving out fourteen and a half, all on the, all on the same power supply. So there is room for hardware overclocking and all that, so the, the competitive momentum is, is so strong, like I said, an average of, you know, just, you know, over seven percent hash grow-- hash rate growth every fortnight, you know, unless these people are, are innovation leaders or, or cost leaders, They'll, they'll, they'll go bankrupt as, as companies. So no matter what happens, there, there has to be innovation in the space, because in terms of cost leadership, there's very few savings, that can still be made, in terms of hardware manufacturer costs and, and electricity prices, like you can't get much lower than two cents." }, { "speaker": "stephan", "time": "12:17", "start": 736.64, "text": "yeah, very interesting, yeah, I like that. And, so I think in, one of the other things that you discuss in your report is around kind of like a range of, you know, a dollar price range for Bitcoin mining profitability. And so you list that as, a range between five thousand four hundred and seven thousand five hundred. Do you wanna outline a little bit about what, what is driving those price ranges?" }, { "speaker": "hass_mccook", "time": "12:39", "start": 759.24, "text": "Yeah, so the seven, the seven thousand five hundred, that was like the maximum top that like my model will spit out, and that's like the most You know, unicorn fanciful assumptions. And the reason why I put that, you know, benchmark of seventy-five hundred, because the Bitcoin price was flying, so I'm like, it must be profitable, for some people. But the, but the lower, the lower estimate, so the estimate of fifty-four hundred, comes about if prices are even lower than, than two cents and four cents. So assuming the big guys are getting it, you know, for even cheaper, that can, that can Drive price down. the other one is, in the, in the CapEx, capital expenditure. So, at the, at the current, you know, average difficulty change, the, the cost to mine is, is sixty-two hundred, but if you assume that, difficulty increase is only gonna be, say, five percent, you don't need to buy that much new hardware to keep your share of the market, so the cost to mine drops all the way down to fifty-four hundred." }, { "speaker": "stephan", "time": "13:50", "start": 829.58, "text": "Yeah, now in a," }, { "speaker": "hass_mccook", "time": "13:51", "start": 830.7, "text": "now, now in a market with very depressed and deflated prices where you see, where you see difficulty start to drop, which is very, very, very rare, but we did see a difficulty drop a couple of difficulties ago when we, when we dipped down into the fifty-eight hundreds. at that point, the, the price becomes so, prohibitive that people switch off their, switch off their kits. And, back, during that week, the, my model was showing a cost to mine of about six grand So wasn't, wasn't too far off." }, { "speaker": "hass_mccook", "time": "14:28", "start": 867.97, "text": "So those are the, those are the drivers. So difficulty change, assumptions and, electricity price, they're the, they're the big movers. if you, if you go to the report and have a look at the sensitivity analysis, I've made that, that runs you through a, all of the different, scenarios of a, of a, of all the six main, drivers of the, of the cost." }, { "speaker": "stephan", "time": "14:52", "start": 891.94, "text": "Excellent, yeah, I like that. It's, it's a pretty cool way to s- you, you can see how each different, or the big fact, for these big factors, how the price shift or the, how the shift in that number drives a different change in the profitability or of, just of the cost to mine, which in turn drives the profitability. Okay. and I think another area that was quite interesting to look at is if you go to page seven in the document or twelve of the PDF, you've got a chart there just showing the breakdown of the- Bitcoin mining pools. Yeah. did you wanna just talk a little bit about how has the Bitcoin network hash rate distribution, what does it look like now, and how has it sort of evolved over time?" }, { "speaker": "hass_mccook", "time": "15:35", "start": 935.18, "text": "So if, so this is also out of date, the shares have jiggled around quite a bit, and, the reason for that, it's a short term reason, I think, until the whole Bitcoin and Bitcoin Cash thing is resolved and miners moving, hash rates around, you'll see a bit of, need a bit of time to reach, equilibrium, and a market decision on that one, but basically speaking, in a, in a perfectly competitive environment or at least a, an, A monop- a monopolistically competitive environment, a, a mature market will tend to, have three or four big players, eating up about eighty percent of the market, and a whole bunch of niche little players, taking up the other twenty. You see this in all industries, you know, big banks, big pho- phone companies, you name, there's always a big four. So you as a, as a, as a, a big four banker, former big four accountant, you know all about the big four. So So, what you can see from the, from the, from the big hash rate is, it's not three or four, it's about six big mining pools taking up about eighty percent of the hash rate and, and a bunch of whole little niche ones. So, I'm having a look at one, for example, BitFury, they've got eight, one point eight percent, of the, of the market. Their niche is they build their own hardware and mine on their own hardware. And, you know, so on and so on and so forth." }, { "speaker": "stephan", "time": "17:04", "start": 1023.51, "text": "Yep. Okay. And, I, I think, you know, I agree with the point about it's like that whole Pareto principle, that sort of power law distribution. That's right. You're very likely to see, you know, that is a common occurrence, and we are likely to see that many, you know, occur in many different industries and in many different, you know, instances. So, yeah, I think that is a likely sort of outcome. do, do you have any thoughts on, You know, mining protocols, I'm not sure if you've, gone into that, into that sort of aspect of it, like comparison of, say, Stratum versus BetterHash and, you know, what other things that the miners are doing." }, { "speaker": "hass_mccook", "time": "17:40", "start": 1060.03, "text": "d- to be honest, I'm more of the, more of the philosophical, more, more of the poet than the quant when it comes to, sp-specific, technical things related to Bitcoin and Bitcoin mining. So I'm basically a, a, a perfect competition economist." }, { "speaker": "stephan", "time": "17:57", "start": 1077.45, "text": "Okay. Which is the easiest" }, { "speaker": "hass_mccook", "time": "17:59", "start": 1078.93, "text": "one to be, because, there's so many assumptions you can drop, when you're looking at things from a, from a perfect lens." }, { "speaker": "stephan", "time": "18:07", "start": 1087.31, "text": "Okay. Right. Yeah. I suppose that's, yeah, it, it, it does allow certain, ways of, analyzing. I think, it might be now a good time to go to that next page where we've got the, price to hash rate relationship matrix. I thought this was, an interesting one. it would might be good to sort of talk through each kind of cell and just understand what is happening at each level, for the miners and for the market in general. So let's start with, the top left. Let's start with the," }, { "speaker": "hass_mccook", "time": "18:37", "start": 1117.31, "text": "let's, do you wanna just start with actually what's happening right now, what the, what the" }, { "speaker": "stephan", "time": "18:44", "start": 1124.3, "text": "Yeah, sure, why not? So there's," }, { "speaker": "hass_mccook", "time": "18:46", "start": 1125.78, "text": "so there's six scenarios, one's a, a matrix, so, they all have, an option of whether they increase, decrease, or stay constant. So in the world of Bitcoin now, we are in a, we are in a bear market, and the price is decreasing. So, when you're in a bear market and the price is decreasing, but the hash rate is happening to increase, that means that, one, there are some miners that are, you know, still profitable and staying but a lot of inefficient miners are starting to exit, and miners can also start to kind of, prop up the price a little through their financial toolkit, options, hedges, all of that kind of stuff, and using their big, big cash reserves to, to buy coins instead of mine them, which can keep the, the, the price, somewhat tracking along with the cost to mine. Now, if the, if the price is still decreasing and the hash rate is decreasing along with it, that means that the hash rate will continue to decrease until a, an equilibrium point is found between the, the cost to mine and the price to mine and a little bit of, a little bit of margin, on top of that for the miners. So that's the-- those are the, those are the two scenarios in the case of a price decrease. Now, in the theoretical chance that the price is stable and, and constant, an increasing, a hash rate means that, profits decrease because your, your price is the same and it's getting harder to mine, mine coins, but your, but your cost and innov- innovation leaders will, tend to emerge and, capture, you know, more of the, more of the rewards. Now, if, if prices can-- is, is constant And there's a decrease in the hash rate, that means that, you know, there's only room for really short term profits and, and new, and sorry, and new miners can't enter the market, to cash in on the, on the extra profit since there's, since there's less hash rate on the, on the network." }, { "speaker": "stephan", "time": "20:56", "start": 1256.19, "text": "yeah, yeah." }, { "speaker": "hass_mccook", "time": "20:58", "start": 1257.89, "text": "lastly, when the, when the price is increasing and, the hash rate is decreasing, you know, that's completely irrational you know, with, the miners that exit make the, make the incumbents even, even richer, and, and new miners have an opportunity, to enter the floor to, to capture those increasing profits. And, and finally, if the, if the price is increasing and the, and the hash rate is increasing, everyone's kinda happy and, miners start to enter until, equilibrium is achieved between the price and cost. So- So it's basically those six scenarios are the, are the steps in the dance, of, cost and equilibrium." }, { "speaker": "stephan", "time": "21:44", "start": 1304.48, "text": "Yeah, great, great summary. I like, yeah. So," }, { "speaker": "hass_mccook", "time": "21:47", "start": 1307.09, "text": "so So they never ever, ever reach, so cost of Bitcoin will never be the price, but if price goes to twenty grand and the cost is still ten, like I'm, like either You know, the, the hash rate has gotta go up a hundred times so it can meet the price, or the price has gotta come back down to the cost to mine. you know, if cost to mine is ten grand and, and hash rate, and price goes down to eight, either the network's gonna get really slow or people like Bitmain that have made, two and a half billion in, profit last year can get themselves, you know, forty million dollars worth of Bitcoin and push the price back up, up to the cost to mine." }, { "speaker": "stephan", "time": "22:30", "start": 1349.93, "text": "but I suppose those sort of metrics, those sort of, attempts to just buy the coin to keep the price a little higher, they, they, they wouldn't really last in the long run, right? Like until, there would need to be enough other people in the market also buying at that higher price, yeah?" }, { "speaker": "hass_mccook", "time": "22:46", "start": 1366.45, "text": "Exactly right. But since it's such a, such a volatile market, sharp market moves can happen and lots of people get sort of, lots of traders and whatnot, get flushed out. so there's always, there's always an, an upward shift of the worm away from the, from the cost to mine. Cost to mine, goes up very slowly, 'cause even though hash rate goes up quite, quite quickly, watts per giga hash and dollars per giga hash Figure hash go down quite quickly as well. So you might find this time next year the hash rate has doubled and the cost to mine has gone up five percent." }, { "speaker": "stephan", "time": "23:25", "start": 1405.46, "text": "I see, yeah. So I guess in some senses, just," }, { "speaker": "hass_mccook", "time": "23:28", "start": 1407.74, "text": "just because next gen is getting thirty percent cheaper." }, { "speaker": "stephan", "time": "23:31", "start": 1410.82, "text": "Yeah. So it's, it's driven by very good technological im-improvements, which, you know, are kind of also why the hash rate is rising so much." }, { "speaker": "hass_mccook", "time": "23:42", "start": 1422.09, "text": "Yeah. So we could hit a wall in about four or five years, you know, when we're another couple, like I think when we've hit our, our nanometer limit, but who knows where Bitcoin's gonna be in five or ten years? Yeah. the energy use could be very well justified." }, { "speaker": "stephan", "time": "24:01", "start": 1441.1, "text": "Yeah, actually, do you wanna, talk a little bit more about the nanometer limit?" }, { "speaker": "hass_mccook", "time": "24:07", "start": 1447.21, "text": "I'm not, I'm not sure about, I'm not sure about where that is, exactly, but from, from what I've read, the, the next gen of, of Bitcoin ASICs might even be as small as, they may even be as small as seven nanometers." }, { "speaker": "stephan", "time": "24:24", "start": 1464.22, "text": "Right, and that's already pretty close to what- So I'm" }, { "speaker": "hass_mccook", "time": "24:26", "start": 1466.39, "text": "having, so I'm having a look here, and I can, I can retweet that a, a little later so that, so the S9 is on a, is on a 16 nano architecture? the inner silicon, is on a ten-mill, nano structure, and that's, a lot more, efficient in terms of, watt per, per tera hash than the, than the S nine. the Shenma is on a sixteen nano, and that's That's almost half the watts per, per tera hash of the S9, and, the Avalon A9 will be running on a seven nano, and, that's even less watts per tera hash." }, { "speaker": "stephan", "time": "25:06", "start": 1505.5, "text": "okay, yep, yep." }, { "speaker": "hass_mccook", "time": "25:07", "start": 1506.76, "text": "So the S9 is doing about 95, watts per tera hash as of the S9J, date of my report, it was doing about 98, so that's improved a little over the past two weeks, but the Avalon will be 60." }, { "speaker": "stephan", "time": "25:22", "start": 1522.08, "text": "Okay." }, { "speaker": "hass_mccook", "time": "25:23", "start": 1523.22, "text": "So off the bat, you've got a forty percent reduction in, in your electricity costs effectively." }, { "speaker": "stephan", "time": "25:29", "start": 1529.23, "text": "Yeah, I see. Okay." }, { "speaker": "hass_mccook", "time": "25:32", "start": 1531.71, "text": "And you, and you'll probably be matched With the, with the dollar per giga hash, discount as well. But with that said, once all these rigs ship, you're probably gonna see the hash rate go up by fifty or sixty percent." }, { "speaker": "stephan", "time": "25:45", "start": 1544.68, "text": "Yeah. And that will then, again, you know, if" }, { "speaker": "hass_mccook", "time": "25:46", "start": 1546.34, "text": "it's ten percent a fortnight, in eight weeks, that's fifty percent. So cost to mine goes up really slowly. So if you're looking at it from a markets point of view, go onto your one week view and look at the hundred, the hundred day or the hundred, period EMA. And, and like, look how, look how low, like, look how slowly that rises, and have a look at where price is right now. It's coming down to meet that, that hundred, the hundred, period EMA." }, { "speaker": "stephan", "time": "26:17", "start": 1577.26, "text": "okay." }, { "speaker": "hass_mccook", "time": "26:18", "start": 1578.5, "text": "I can, I can do a screenshot and, screenshot of that and, and tweet it as well. Sure," }, { "speaker": "stephan", "time": "26:22", "start": 1582.26, "text": "sure. Okay, that's great. yeah, I, I think that's a interesting way to sort of think about the way, the mining kind of works, i-interacting with the price and the c-upcoming, mining technology. let's s-go on. And," }, { "speaker": "hass_mccook", "time": "26:37", "start": 1596.99, "text": "and look, the, the reason, and look, the reason I say this is 'cause we've got sort of, real world proxies for it. you Versus the cost of a barrel of oil. So when the barrel of oil was at, you know, eighty, ninety dollars, everyone was happy, the gas fields in America were going strong, the tar sands in Canada, and then we saw the, the barrel plummet to forty bucks, and then only the Saudis you know, could, could mine oil at a profit in the short term, but eventually, based on the forces of supply and demand, market speculation, all that kind of stuff, the barrel of oil finds its, right, or, you know, its market price and just like in the Bitcoin world, there's a lot of information asymmetry in the, in the oil and broader commodity worlds. so I think it's, it's a great, they're great proxies to use. yeah, no, that's a thing. BHP wouldn't mine gold if it, if it costed them two thousand bucks an ounce to get it out of the ground. Oh," }, { "speaker": "stephan", "time": "27:40", "start": 1659.7, "text": "exactly, precisely. Yeah, yeah, definitely. And the only" }, { "speaker": "hass_mccook", "time": "27:43", "start": 1663.15, "text": "problem is if, if, BHP wants to switch on a mine, it They wanna switch off of mine, it'll also take 'em about three years and a lot of money. So, traditional commodities have very, very high barriers to entry. And how would you compare that with" }, { "speaker": "stephan", "time": "28:01", "start": 1680.73, "text": "Bitcoin mining?" }, { "speaker": "hass_mccook", "time": "28:04", "start": 1684.27, "text": "if you, you turn the switch on, you turn the switch off. So if it becomes, if, you know, price goes to a point, let's say price tomorrow flew for some reason, someone put down fifty million bucks, 'cause that's all you need to, to wreck the price. Put fifty million down on, on fifty x le-leverage, ca-caused the margin cascade up to fifteen thousand bucks. Everyone that's turned off their miners in the past three months, we'll just click the miner on. And it's profitable again." }, { "speaker": "stephan", "time": "28:38", "start": 1717.68, "text": "yeah, yeah. I, I suppose most-- I think, has most of your analysis-- And then when" }, { "speaker": "hass_mccook", "time": "28:44", "start": 1723.8, "text": "the price crashes back down, they can, turn the, turn their rigs back off. Yeah," }, { "speaker": "stephan", "time": "28:48", "start": 1727.91, "text": "yeah, right. And I suppose that's kind of at the, you know, just the cost of having the machine and the electricity, but then I suppose, you know, you've got things like space, labor, heat, you know, and kind of the scale considerations and potentially some of the- The, the software considerations as well, right? Right? Like so, my understanding is that some of the big, big guys will really try and work hard to sort of optimize their software to make sure that, you know, the block propagation and all those other things are optimized for them to kind of get, you know, the best bang for buck. but, yeah, really interesting stuff. Like, to be honest, I'm not a, you know, I'm not an expert in this area, but, thought, yeah, thought it'd be" }, { "speaker": "hass_mccook", "time": "29:34", "start": 1774.36, "text": "I'd, I'd say with the, I'd say with software, considering the amount of money, so for example, so the amount of, money spent on ASICs every fortnight at the current moment in time is over a hundred million bucks a fortnight" }, { "speaker": "hass_mccook", "time": "29:52", "start": 1792.42, "text": "so there's a lot of money spent, spent on hardware. So if you're, if, you know, software fine-tuning, You know, you'd probably be looking at, you know, maximum, a couple of hundred grand, a fortnight to a million a fortnight, for every, you know, big mining house to have a, have a team of in-house full-time, software guys, but yeah, that software tweaking is, where competitive advantage is formed as well. Software and hardware tweaking. Engineering's always, in-investment in engineering always has a good return." }, { "speaker": "stephan", "time": "30:28", "start": 1828.5, "text": "Yeah, yeah. Okay. so let's- Let's move into, yeah, so we've, we've touched on some of these topics before, but it might be good to go into them. So on page eleven of the report, you've got around, you've got the discussion on economic cost inputs and drivers. So, y-y-yet maybe if you could outline a little bit around, you know, CapEx, OpEx, you know, what, first of all, you know, for people who are a bit new, what is CapEx?" }, { "speaker": "hass_mccook", "time": "30:52", "start": 1851.77, "text": "Okay, so, so CapEx is, is basic-- well, it stands for capital expenditure, and it's, any expenditure on, capital assets. So your capital as- assets, you know, your, your ASIC hardware, so they go on your balance sheet. server racks if you buy them, data centers if you build them, if not, they're, they're operational expenses. and, you know, anything else you need to buy, cooling units, you name it. So anything that you buy and becomes an asset to your business is, is your capital expenditure. Yeah. So let's talk about, how much capital expenditure is, needs to be spent. So for example, let's, let's just use a nice round number. Say that there was, a hundred, exa hashes of hash power at, at this, difficulty level. Alright? And, just to use another round number, my, my mining pool has, ten percent of the pie. So I'm pr- I'm providing, ten, ten exa hashes. Yeah. Now I predict that, next difficulty cycle the difficulty is gonna increase by ten percent. So the network will need to become, so the network will become a hundred and ten exa hashes. Now, for me to maintain my ten percent slice of the pie, I've gotta have 11 exa hashes next week, so I need to bring on an exa hash of mining power if I'm to maintain 10%. Make sense? Yeah. So that's basically it. So if I've got to put an exa hash on, I have a look at what my dollars per, per exa hash are, and, that's my CapEx spend. So it's all about, managerial strategy and forecasting ability really to, to figure out, the right amount of, of hardware to bring on, in the cycle. So that's where a lot of, managerial economics comes into play." }, { "speaker": "stephan", "time": "33:00", "start": 1980.28, "text": "Yeah, great, great point. It's really they've got to just forecast and sort of think about how is their current hash rate compared to the overall pool. Oh yeah, and, and," }, { "speaker": "hass_mccook", "time": "33:10", "start": 1990.08, "text": "and, and you'll see in the sensitivity analysis, you know, at a assumption of five percent difficulty increase, the cost to mine is like five grand, and at a nine percent cost to increase is like, cost increases to like seven and a half grand, so Getting this right and wrong, the, you know, miners will live and die by it, but because the, the cycle is quite frequent, they've got, they've got quite, quite a lot of time, usually they've got a lot of chances rather, you know, to steady their course and, and adjust the hash power as needed." }, { "speaker": "stephan", "time": "33:44", "start": 2023.71, "text": "Right. Like, example, if you overshot one time, then maybe you can just slightly undershoot for the next round to kind of stay in the right level. Exactly." }, { "speaker": "hass_mccook", "time": "33:53", "start": 2033.23, "text": "But from a, you know, but from a discounted cash flow analysis and, opportunity cost, point of view, you, you probably would have been able to buy more efficient hardware had you waited for the next cycle. Because, because the, the mining rigs, becoming so efficient or so much more efficient so quickly that if you bought an S9I last week, the S9J that you, you buy this week is already heaps better than the S9I." }, { "speaker": "stephan", "time": "34:24", "start": 2063.74, "text": "Yeah, interesting point. And they'll probably," }, { "speaker": "hass_mccook", "time": "34:26", "start": 2066.32, "text": "and they'll probably be a S9K. So, the S9Js are shipping until like the end of August, and I'm telling ya, September 1st, the S9K will do 15 tera hash. And that'll ship throughout August, throughout, sorry, September, and then either I'll release something new in October. And yeah, if you, if you watch that, you know, Antminer shop or any of those other, you know, Minor online shops, you'll see that the, the amount of, of product they push through is unbelievable." }, { "speaker": "stephan", "time": "34:58", "start": 2097.88, "text": "okay. Alright, so that's CapEx. Let's go into OpEx now. So what is OpEx and what are the typical costs that are involved?" }, { "speaker": "hass_mccook", "time": "35:07", "start": 2106.94, "text": "So OpEx is, operational expenditure, and that's just, money to keep it, to keep the operation going. So, obviously keeping, keeping the miners powered up and cooled, which will probably be about ninety-nine percent of your OpEx, and the rest is, you know, keeping the lights on, keeping the, the fridge on for the, for the staff, the microwave, all that kind of stuff. But effectively, as far as Bitcoin mining is concerned, you've got, aircon And you've got, mining, and a lot of people, don't know this, but, aircon, typically, you know, averages about, between thirty to forty percent of overall energy consumption in a data center. but a lot of the new technologies, there's a couple of, very, well-known now, data centers that they're hitting the, the very low twenties, twenty percent efficiency. So, You know, because in the world of Bitcoin, innovation leadership is the way to go, I'd say in the, in the big miners, have quite efficient cooling systems, probably around the, you know, the twenty to twenty-five percent range." }, { "speaker": "stephan", "time": "36:14", "start": 2174.1, "text": "Very nice. Yeah, good explanation. Okay. and then, so yeah, I think we've kind of-- The next section there you've got is difficulty cycle, which I think we've, we've sort of covered already, where you basically have to sort of estimate. how about coins mined? What are the things that a miner has to think about from that point of view?" }, { "speaker": "hass_mccook", "time": "36:32", "start": 2191.97, "text": "Okay. So, so that's, that's a very deep economic discussion, because obviously the coins mined, it's fixed. It's twelve and a half every ten minutes. but The mining fees are extremely variable, and there's a lot of strategy which goes into, there's a lot of managerial strategy, that goes into determining, you know, you know, which, which blocks to process and which blocks to prioritize and all of that kind of stuff to, to, you know, do fee maximization. I take the very oversimplified approach because a lot of people can't, myself included, can't process the, the very dense, economics. And I just use the, the law of averages of, you know, bitcoins produced, every block and, you know, trailing averages for what the daily average minus fee was in aggregate, and then just, using that aggregate for my, per coin cost figures. So for example, now it's been pretty stable, you know, around forty, fifty bitcoins a day, but, you know, during the hype, you know, at the peak of the bubble, you, you know, over five hundred a day for two months straight." }, { "speaker": "stephan", "time": "37:44", "start": 2264.18, "text": "And that's just in the fees." }, { "speaker": "hass_mccook", "time": "37:46", "start": 2266.22, "text": "Just fees." }, { "speaker": "stephan", "time": "37:47", "start": 2267.44, "text": "Wow, yeah. And I think that's really fascinating as well, because what we're seeing now is more in, in terms of the Bitcoin ecosystem, we're seeing more and more companies try to do things like batching, such that they use the space more efficiently, and that has in turn led to the fees coming down." }, { "speaker": "hass_mccook", "time": "38:05", "start": 2284.93, "text": "Absolutely, and there's also a lot of work happening on the Schnorr signature front, which will add efficiency through signature consolidation. So plenty of things to look forward to if you don't focus too much on the price. And I think, once you figure out how to calculate mining costs, it'll bring you a lot more sobriety, about going to the moon. It's a, it's a slow and steady, it's a slow and steady marathon." }, { "speaker": "stephan", "time": "38:36", "start": 2315.73, "text": "Yeah, that's a good way to put it. Yeah, I think, you know, we're waiting on the Schnorr proposal to sort of finalize the review and eventually, you know, potentially being implemented, and then after that, then we'll have to look at, you know, if that-- assuming that does happen, then would Schnorr aggregation be put in and so on, and, you know, that's a whole cycle. So it might be another year or two before everything is kind of played out in, in that. So, and I think the other thing to think about with coins Every four years, we've got the halving, and so I suppose at an equilibrium level, we would be thinking in order for miners to kind of stay level, basically the price has to double every four years. Yes." }, { "speaker": "hass_mccook", "time": "39:20", "start": 2359.89, "text": "So what will, what will tend to happen is a lot of people will tell you from right now that it's already priced in. It isn't, because it's extremely difficult to forecast, to set a managerial, strategic forecast out two years. it's hard enough to do it on a fortnightly baseless le-basis, let alone two years. So we're just gonna have to see what happens between, now and, and leading up to the, to the halving. market will decide what it wants to do, and, the miners will follow Soot, they'll either turn off their rigs or the, or the price will fly and, you know, more people will join the, join the market or, or, you know Some, some, market activity, hedging activity and whatnot, could, could go into play, to ge- to give, miners, you know, temporary breathing room, 'cause a lot of these miners do have a bit of cash flow, you know, to cover, you know, a, a downturn for a month or two, but not too much more than that, and I, I do believe the, the equilibrium is, is pretty self-correcting within a difficulty cycle or two anyway." }, { "speaker": "stephan", "time": "40:30", "start": 2429.64, "text": "H Good points. How about power cost and emissions? Do you wanna outline a little bit about what you're saying in this section here?" }, { "speaker": "hass_mccook", "time": "40:38", "start": 2437.89, "text": "Yes. So unfortunately with emissions, there's no real way, way of knowing, because, you don't know where the miners are mining. A lot of people say, \"Yeah, China,\" a lot of people say, \"Yeah, Iceland,\" here, there, everywhere, but the only thing you can do in that case is to take, worldwide averages. So, on average, the world's power sources, spit out about six hundred grams, per kilowatt hour of energy. You know, the good stuff like, like hydro and, and solar and whatnot only does about twenty compared to the six hundred. Coal and oil are the big monsters, but since they hold the sixty percent share of world energy production, and most likely, the majority of miners mining in China will be mining on co-coal and oil, we're using that figure, to judge, Bitcoin's overall emissions. So it is, You know, a, a, a reasonable enough proxy. Now, in terms of electricity prices, and, you know, according, according to the, the market data, us being in Australia, we pay what, twenty-six, twenty-seven cents a kilowatt hour, so you don't have to really worry about mining in Australia. but, but typically, the, the, the world average, weighted low price is six cents, high price is twelve cents. you put those two prices Into my model, a six cent low price and a twelve cent high price, and you've got like a twelve thousand dollar Bitcoin cost. but with that said, there's heaps of, not only just anecdotal evidence, but good solid evidence of, you know, tech, tech towns in China, there's one in particular, Yunnan, they've, they're hosting Bitmain in their tech city, and, one of the incentives they've given Bitmain for, for housing There is two cent a kilowatt hour electricity." }, { "speaker": "stephan", "time": "42:43", "start": 2562.61, "text": "Wow, impressive," }, { "speaker": "hass_mccook", "time": "42:44", "start": 2564.17, "text": "there's a, there's a, yeah, there's a couple of, there's a data center in, Washington state in the US that's getting their hydro for one point seven cents." }, { "speaker": "stephan", "time": "42:55", "start": 2574.92, "text": "Yeah." }, { "speaker": "hass_mccook", "time": "42:56", "start": 2576.42, "text": "So, because of the sort of perfect factors of mobility, which is one of the, which is one of the, factors of being a, a towards perfect competition, is that you can just move to wherever the cheapest electricity is. and because of that, I'm, I'm assuming, you know, lowest, lowest absolute cost for everyone everywhere." }, { "speaker": "stephan", "time": "43:18", "start": 2598.34, "text": "yeah, yeah. Well, I suppose that's, that's the way you've got to think about it. So, yeah, I, I agree with that. okay. And then the next section you got here is, the mining mix, the network average miner. So you're talking about the two different types of miners?" }, { "speaker": "hass_mccook", "time": "43:33", "start": 2613.39, "text": "Yes. So this is where, you know, the big, the big, big difference is. So, there's two, there's two types of miners, The big ones and the little ones. So the big ones, let's call them the, the chip fabs. So the chip fabs are basically, they build the hardware, they mine on it for a while, and then they sell it to you. the little, the little miners, they, they basically buy the, buy the run-in hardware from the chip fabs, and, run it, run it at home either they can do that or they can, they can participate in, in the cloud mining phenomena if that, if that still exists. Now, just based on, on some market data for chip fabs and, you know, the, the rumored, practice of, of running in machines before shipping, regardless of whether they run in machines or not, a typical gross profit for a semiconductor business, you know, i-is in the area of forty-five percent. but the really good ones, make around sixty. So that's gross profit. so they're still, you know, the, their net profits are much lower. but the reason I'm using gross profits, here in, in the Bitcoin case, is that, their, their expenditure is built in to the OpEx portion of the model. I see. so you can take gross profit on CapEx." }, { "speaker": "stephan", "time": "45:06", "start": 2706.0, "text": "Okay, cool." }, { "speaker": "hass_mccook", "time": "45:07", "start": 2707.48, "text": "So, so, so when they're selling you something for a grand, they're probably it's only costing them about four hundred bucks. So their return is, their returns are, are huge, and, and they provide a lot of, a lot of the hash rate. So, you know, there's, there's a rumor that, that Bitmain could be controlling by itself, up to twenty percent of the hash rate just based on the size of Antpool and the BTC dot com pools. so you chuck in all of those other chip fabs that I talked about earlier, and you could see that, you know, chip fabs are about thirty-five percent of the market, everyone else makes up sixty-five. The chip fabs get all the big discounts, they get the cheap electricity, they don't pay tax And, the little guys still get pretty, pretty cheap electricity, four cents, and when I say little guy, I do mean, you know, someone with at least a garage full of ASICs." }, { "speaker": "hass_mccook", "time": "46:11", "start": 2771.32, "text": "You know, like a garage full of asics, you're still, you're still, you know, cracking out a good, you know, hundred fifty peta hashes, like you're putting out a, a decent amount of power, your, your, your monthly electricity bill will be in the tens of thousands. And, you'd probably consider that a little guy." }, { "speaker": "stephan", "time": "46:32", "start": 2791.57, "text": "That's funny how far it's come." }, { "speaker": "hass_mccook", "time": "46:35", "start": 2794.61, "text": "Yeah. Okay. So yeah, like I'm telling you, we're putting on five exahashes a fortnight at this point." }, { "speaker": "stephan", "time": "46:43", "start": 2803.04, "text": "yeah, yeah, okay. so let's go now into the discussion on comparative summary. So in your analysis, you go to, kind of comparing Bitcoin against gold, in terms of, oh, yeah, costs, for manufacture or in the case of gold, mining. yep. Do you wanna discuss a little bit, an overview on this section for the listeners?" }, { "speaker": "hass_mccook", "time": "47:09", "start": 2828.57, "text": "Yeah. So, so basically, again, it's hard to really capture the exact environmental impact of, of Bitcoin, but the proxy is, is whatever damage the global average electricity grid does to the planet Bitcoin does to the planet. So, you know, so it's, again, it's, it's never Bitcoin's choice of what anyone does to it. Bitcoin's neutral and doesn't care. If you wanna mine it on coal, you can. If you wanna mine it on solar, you can. the more people mine it on solar and hydro, the more clean it is. The more people mine it on coal, the more dirty it is. So that's basically, the long and short of it. so to calculate At overall emissions, we have that weighted average number that I was talking about a few minutes ago, six hundred grams, a kilowatt hour, and if you just multiply that by the kilowatt hours of the network You get the emissions, you factor in the energy needed to build assets, and, you get your overall figures of about a hundred terawatt hours a year or so. So with gold though, it's, it's a very, very involved process, and it's unfair to just judge, Bitcoin versus gold in terms of, CO2 emissions. So gold still emits, more CO2 than the Bitcoin network, but not by the end of the year. So Bitcoin will eclipse the CO2 emissions of gold by the end of the year. But there's other, there's other factors. So for example, freshwater ecotoxicity, eutrophication, carcinogens, respiratory inorganics, just a whole raft of other really, really, really bad things, for the environment, just, specifically because if you wanna get gold out of the ground, you gotta rip a massive hole into the, into the, into the ground. So look, I was actually, writing, preparing my, video for episode episode nine, which is Bitcoin versus gold. So, so check this out. So, for all the gold we mine every year, you can, you can fit into a, a six meter by six meter by six meter cube." }, { "speaker": "stephan", "time": "49:24", "start": 2964.21, "text": "Yeah." }, { "speaker": "hass_mccook", "time": "49:26", "start": 2965.53, "text": "That's how much gold we pull out of the ground every year. It's not a lot. So it's basically enough gold to fill up a small, a small flat. But the amount of waste rock that's produced is, if you imagine a, a, a cone with a, with a one kilometer diameter as tall as Mount Everest." }, { "speaker": "stephan", "time": "49:49", "start": 2989.37, "text": "Wow. Okay." }, { "speaker": "hass_mccook", "time": "49:53", "start": 2992.8, "text": "So it's a lot of rock. It's like over a hundred billion tonnes of waste rock. you've gotta, you've gotta soak this waste rock in about, I think it might have been something like ten billion liters of water. and then, and it's not only water, it's also a mix of four hundred thousand tons of cyanide in this water to leach the gold out of the, out of the gold" }, { "speaker": "stephan", "time": "50:19", "start": 3018.96, "text": "ore." }, { "speaker": "hass_mccook", "time": "50:22", "start": 3022.26, "text": "So it's not just, it's not just CO2, like there is a lot of toxicity and, and side, externalities. it's the same thing, it's the same thing with the, with electricity costs. So if you were to, to work out, you know It was one of the, the justifications for a carbon tax. I don't agree with carbon taxation. but, you can make the valid case that if you were to externalize the cost of coal power into its fair price of, say, thirty cents a kilowatt hour, cost to mine a Bitcoin will be up near twenty-five grand." }, { "speaker": "stephan", "time": "50:58", "start": 3058.31, "text": "right, right. Yeah, so now I think we could contend back on that p-particular point that I think, the kind of-- this concept of a, you know, quote-unquote social cost of carbon, it's-- there are a few, I think there are a few flaws in that concept, but it's probably not in the scope of, you know, this podcast to kind of go into that. Yeah, yeah." }, { "speaker": "hass_mccook", "time": "51:17", "start": 3077.33, "text": "and I think, I think as a libertarian, I'll agree with you on every single point" }, { "speaker": "stephan", "time": "51:24", "start": 3084.01, "text": "on that. Yeah, yeah. Yeah To another episode and talk into that. Yeah, yeah, sure. Yeah, sure, sure. But actually, from a-- I'm interested from an energy usage point of view as well. How would, you know, Bitcoin compare with gold in your analysis?" }, { "speaker": "hass_mccook", "time": "51:41", "start": 3100.51, "text": "So, so right now, users, users the same or a bit more energy than, than gold at the moment. but, you know, Bitcoin, you know, with every, with every spike in hash rate, we have a spike in energy use. So give it, by the end of the year, Bitcoin will be consuming more energy than gold. But, the point goes back to, to, to, the, the forward of my paper, but also the externalization of costs. If BHP had to externalize its costs gold would be worth like six grand an ounce." }, { "speaker": "stephan", "time": "52:16", "start": 3135.97, "text": "Right, right." }, { "speaker": "hass_mccook", "time": "52:17", "start": 3137.46, "text": "So that's why when you start talking about, energy use, so Bitcoin uses point zero zero six of the world's energy. Which is" }, { "speaker": "stephan", "time": "52:26", "start": 3146.02, "text": "quite small, really." }, { "speaker": "hass_mccook", "time": "52:27", "start": 3147.42, "text": "Right. So if you, yeah, so if you divide that market cap It's, it's, it's too small. So if you divide that market cap, the current market cap, by point o o six percent of, of global energy, you'll have a system that can effectively, you know, You know, let's say it was using up 100% of the world's electricity, it'd be, you know," }, { "speaker": "hass_mccook", "time": "52:54", "start": 3173.73, "text": "you know, worth, you know, a couple of hundred trillion. but if you were to give electricity a fair price, and assume that Bitcoin used a hundred percent of the world's energy, that's enough to, to sustain a multi-quadrillion dollar you know, world economy. And, if we can get our emissions down to zero, doesn't matter how many, how much electricity energy Bitcoin uses, it's given, it's given humanity sound money at last, solved so many problems. Exactly. So the only danger of Bitcoin getting bigger is, is societal benefit, not really environmental impact. Exactly. because the, the thing is, Bitcoin will get so big, that'll eventually drive innovation in the, in the energy sector. So, you know Energy's will, will, energy sector will see, you know, there's a good niche here. I've got, you know, ten, fifteen billion dollars worth of customers that are gonna be using energy twenty-four seven at a consistent rate. I can sell them, you know, energy at bulk prices, yada, yada, yada, and all over the world people will be vying for these companies, either, you know- But effectively based on, based on, on price and, and emissions rating, and as time goes on, you know, solar and hydro and, and all those other technologies are just gonna be able to blow, coal out of the water in terms of dollars per kilowatt." }, { "speaker": "stephan", "time": "54:15", "start": 3254.98, "text": "Yeah, no." }, { "speaker": "hass_mccook", "time": "54:16", "start": 3256.14, "text": "So I don't see it being a problem." }, { "speaker": "stephan", "time": "54:17", "start": 3257.16, "text": "Yeah, that's a great point. And I think the other thing that's in-important to consider here, and obviously it's fantastic to, you know, compare what is the real cost in terms of energy" }, { "speaker": "stephan", "time": "54:28", "start": 3268.17, "text": "But the real true cost of a monetary standard, i-i-in an economic sense, is the monetary standard that you have foregone, right? And if, you know, the easy money, fiat money of the world enables, like, warfare and all these other things, that is also a cost, you know? So it's, it's almost, you know, people have this kind of funny conception of the-- of, you know, as though the world is perfect, and, you know, like one, one analogy I've heard some people use is to say, \"Oh, well, you know," }, { "speaker": "stephan", "time": "54:58", "start": 3297.99, "text": "Lock our doors, and therefore the cost of locking our doors is, you know, waste. But that's the reality of our world is, you know, we do need to lock our doors, you know? So I think that's also an important comparative to lay as well to think about, well, if we didn't have sound money, then we would have, you know, an unsound money, and what, what does that enable, you know? So that's what people have to sort of also consider when it comes to this, yeah. But fascinating." }, { "speaker": "hass_mccook", "time": "55:26", "start": 3325.85, "text": "I'll tell you what unsound Turkey, Venezuela, Iran, and those are just examples from the past few months." }, { "speaker": "stephan", "time": "55:37", "start": 3337.01, "text": "Exactly, exactly." }, { "speaker": "hass_mccook", "time": "55:38", "start": 3338.33, "text": "So, we can see, we can see what's happening, with unsound money and, I think we might see this accelerate in the next, in the next three to five years, actually." }, { "speaker": "stephan", "time": "55:48", "start": 3347.86, "text": "Yeah, yeah. I think, I think we could. I mean, who, who knows, really? but, yeah, fascinating stuff. So let's now go into what you've got in your conclusion Couple of the points, some of the highlights that you hit here, you talk about how, okay, yeah, we're potentially using as much energy as Ireland, the Bitcoin cost per transaction- Oh, far more. Oh, more than?" }, { "speaker": "hass_mccook", "time": "56:10", "start": 3369.66, "text": "So if, Bitcoin was a, Bitcoin was a country, it'd be around twenty-six after, I think just after Kazakhstan." }, { "speaker": "stephan", "time": "56:18", "start": 3377.63, "text": "Oh wow, okay, 26." }, { "speaker": "hass_mccook", "time": "56:20", "start": 3379.91, "text": "Uses a lot of, oh yeah, uses a, uses a good amount of energy." }, { "speaker": "hass_mccook", "time": "56:27", "start": 3386.9, "text": "so, so yeah, Ireland's, ranked pretty low in the total, total energy usage. They're, they're only a small country. You gotta look at the, the big ones, your, your China, Brazil, you know, USA, India, Pakistan, that's, that's where the big, big power gets used." }, { "speaker": "stephan", "time": "56:46", "start": 3405.67, "text": "yeah, yeah. And then, yeah, so you also point, you also point out the potential, and I think you were touching on this" }, { "speaker": "stephan", "time": "56:55", "start": 3414.84, "text": "To vertically, vertically integrate up the stack. So I think that's a really good point. Yes." }, { "speaker": "hass_mccook", "time": "56:59", "start": 3419.46, "text": "Yes. I think, this is the evolution of a market, Stephan. You, you know it as well as I do. Eventually, that, that's, that's how you get your consolidation. That's how you get your, your big three or four. They end up, you know, going up and down their supply chain and side to side and, you know, create a, create a, a virtuous, virtuous ecosystem. So there, there will be mining companies that have a brokerage arm, that make a hardware wallet, you know, that have an exchange, you know, that have, you know, that's, that's, that's just what'll, that's just what'll end up happening. And, and they'll probably have their own power plants and data centers and all of that as well." }, { "speaker": "stephan", "time": "57:43", "start": 3463.45, "text": "yeah. And we've got to consider the size here, right? Like, if Bitcoin now is what, a hundred and thirty or a hundred and forty billion ish as a total I think probably a good proxy for global money would be around ninety trillion, in terms of, that's the US M3 broad money, US dollar kind of value of the world in terms of the money supply. You know, then you, you've got to think how much more this thing can grow." }, { "speaker": "hass_mccook", "time": "58:13", "start": 3493.31, "text": "Oh, yeah, so much more." }, { "speaker": "hass_mccook", "time": "58:17", "start": 3497.43, "text": "it's, but like I said, it's a, it's a, it's, it's a marathon. The, the, the hodlers know what I'm talking about. a year is a very, very short time in Bitcoin. I don't know how the, I don't know how the traders do it on the, on the hourly. I couldn't imagine, I couldn't imagine a harder life." }, { "speaker": "stephan", "time": "58:38", "start": 3517.97, "text": "Yeah, definitely, definitely gotta be, very kind of, yeah, yeah, I, yeah, I'm not really a trader myself, so I can't really comment. yeah, so," }, { "speaker": "hass_mccook", "time": "58:46", "start": 3526.4, "text": "so you can see just in two weeks the leaps and bounds, you know, things, things can happen, so yeah, there's a, there's a very long road ahead. I'm, I'm not sure we'll, we'll see McAfee numbers? so soon?" }, { "speaker": "stephan", "time": "59:02", "start": 3542.15, "text": "Yeah." }, { "speaker": "hass_mccook", "time": "59:03", "start": 3542.77, "text": "but I believe that we'll, we will see them." }, { "speaker": "stephan", "time": "59:06", "start": 3546.06, "text": "Sure, sure." }, { "speaker": "hass_mccook", "time": "59:07", "start": 3547.34, "text": "yeah, but yeah, maybe towards, a little later towards, John's lifetime." }, { "speaker": "stephan", "time": "59:15", "start": 3555.3, "text": "yeah, yeah, maybe another," }, { "speaker": "hass_mccook", "time": "59:17", "start": 3557.22, "text": "maybe another ten, maybe ten, fifteen years. Yeah, yeah, a little, little bit ambitious," }, { "speaker": "stephan", "time": "59:23", "start": 3562.85, "text": "yeah. Okay. Alright, well, I think we're sort of getting to the end of an hour, so I think it's probably time to start wrapping up. do you have any final comments, Hass?" }, { "speaker": "hass_mccook", "time": "59:34", "start": 3574.3, "text": "that's, that's about all, like, thanks, thanks for having us. there's a, there's a whole lot more content coming out over the next couple of months and, probably continue, continue doing something, regularly on a, on a weekly or fortnightly basis. So, do all the social media stuff. Like, subscribe, follow, all that kinda, all that kinda good stuff, and, and yeah, I suppose, we'll catch you on, we'll catch you next time." }, { "speaker": "stephan", "time": "01:00:02", "start": 3602.36, "text": "Yeah, sure. Okay, guys. So, guys, you can find Hass. Now, Hass's Twitter account is Hass McCook, spelled H A double S M C C O O K. And as Hass mentioned, he's got a, video series coming out, and he's got basically one video coming out per week and a accompanying blog post. With that video, but if you're impatient like, like I was, and I, you know, partly because I wanted to help present this early, you can go and get the full report. I will put the link to that in the show notes page. so is there anywhere else you would like the guys to find you on Line House or, or your LinkedIn? I'll put the link to that. Anywhere else?" }, { "speaker": "hass_mccook", "time": "01:00:41", "start": 3641.63, "text": "Yeah, yeah, sure. So, yeah, LinkedIn, LinkedIn, Twitter, YouTube, subscribe on YouTube just so you can," }, { "speaker": "hass_mccook", "time": "01:00:53", "start": 3653.28, "text": "I generally post at evening time on Sunday for the Aussies, so the, the Europeans get it in the afternoon and the Americans, when they wake up. So it's an easy Sunday viewing." }, { "speaker": "stephan", "time": "01:01:05", "start": 3665.19, "text": "Excellent, excellent stuff. Okay, guys, okay, thanks for that, Hass, and I'll speak soon." }, { "speaker": "hass_mccook", "time": "01:01:10", "start": 3670.44, "text": "No worries, thanks so much for having us, thanks for listening." }, { "speaker": "stephan", "time": "01:01:13", "start": 3673.42, "text": "Okay, guys, so that was my conversation with Hass. You can find the show notes on my website, stephanlivera dot com, search S L P twelve, this is episode twelve of my podcast. lastly, subscribe to the podcast, Stephan Livera podcast, on all the podcast directories like Apple, Stitcher, Spotify. If you got value out of this, please share it on your social media. And also come follow me and give me feedback on Twitter at stephan livera. That's it from me, and I'll speak to you guys soon." } ] }