{ "episodeId": "SLP647", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "mason_jappa": { "name": "Mason Jappa", "role": "guest", "tag": "MASON" } }, "segments": [ { "speaker": "stephan", "time": "00:12", "start": 11.71, "text": "Hi everyone, welcome back to Stephan Livera podcast brought to you by Bold. For American listeners, you can buy Bitcoin over at getbold.io. Now, joining me on the show today is Mason Jappa. He is the CEO and founder of Blockware Solutions. So for people who don't know, they basically do hosted mining, they sell mining rigs, and they also have- We have a US-based mining pool, and I believe you guys also do have some, research reports as well. So we're gonna talk a little bit about all of that. So first off, welcome to the show, Mason." }, { "speaker": "mason_jappa", "time": "00:40", "start": 39.57, "text": "Hey, Stefan. Thanks for having me on. really been excited about getting on this podcast. I think we were last on, you know, several years ago, and it's always fun to talk to you." }, { "speaker": "stephan", "time": "00:50", "start": 50.27, "text": "Yeah, yeah. And so, yeah, I think there's some interesting stuff happening. Obviously, there's been a lot of developments in the" }, { "speaker": "stephan", "time": "01:00", "start": 60.04, "text": "I guess it's been kind of crazy how much the mining space has really evolved and grown in that time period. so yeah, maybe you just wanna give us a, just a bit of an overview. Here we are, it's March 2025. Give us a bit of an overview, what is the Bitcoin mining world looking like, and especially the US Bitcoin mining world?" }, { "speaker": "mason_jappa", "time": "01:21", "start": 81.07, "text": "Yeah, totally. So actually yesterday, the SEC released some extremely favorable mining coverage. So, that was awesome to see. basically they're not, going after pools, they're not going after miners, they're encouraging it, they're not going after self-miners, they're not going after retail miners. they gave complete political clarity over Bitcoin mining in general. so there was a lot of, you know, there was a, there was a whole cloud over Bitcoin mining, especially Actually, during the Biden administration, where we thought we'd have, you know, additional energy taxes put on us, we thought that we'd have to file all these additional paperwork and, and, and have, additional regulatory concerns. All of that was just put to bed yesterday, very secretly, got very little coverage. so from a regulatory standpoint, I'm feeling great, and I feel like for some reason that, you know, SEC announcement wasn't covered. as far as the general Bitcoin mining ecosystem You know, I would say that mining remains strong. So overall, you know, we, we saw last year it was a, it was a really marquee year. Bitcoin grew from, you know, thirty, forty K to a hundred K in December. the difficulty of the network grow, and the difficulty of the network continues to grow. in the first quarter, we kind of saw a taper back in Bitcoin pricing, but the network continued to grow. So what we actually created was a little bit of a hash Price fair market, and, and our hash price is below five cents, you know, that's back to twenty twenty-two levels, so that does raise some concern." }, { "speaker": "stephan", "time": "02:52", "start": 172.21, "text": "Yeah. So just for listeners, hash price is dollars per tera hash per day, yeah? And this is like a measure of how much fiat you're earning based on kind of how many miners you're plugging in, kind of loosely, right? Correct," }, { "speaker": "mason_jappa", "time": "03:06", "start": 185.94, "text": "exactly. Yeah, people usually measure on tera hash or peta hash, so you could say it's less than fifty dollars per day per peta hash or, or less than five cents per day per tera hash. so yeah, I mean, it's basically just the, the revenue of mining in general. So if you're looking at that, you know, it is a little lower, right? But the, but mining itself is, is such a living organism, right? And, and it usually course corrects. When you see hash price dip, you usually see Because what happens is inefficient micro-miners will unplug from the network. Now we have a constant stream of large public companies with planned deployments, with, un-unlimited access to capital, it's not ne-th-that they're necessarily profitable. So that's why I think we're just seeing a, a mis- a mis-um, connection right now between, you know, mining economics and network. Hash rate growth." }, { "speaker": "stephan", "time": "03:59", "start": 239.16, "text": "Yeah, right. And as you said, I mean, it's been growing, last I checked on my, my locally running mempool space, I think my fi- my dashboard was showing about seven fifty exa hash or seven forty exa hash, something in that range. and so there's been a bit of talk about that and saying, \"Is this gonna be the year of the zetta hash, the one thousand, exa hash?\"" }, { "speaker": "mason_jappa", "time": "04:22", "start": 262.42, "text": "I think it will be. I remain bullish, and I know we're gonna talk a little bit about our research. We have a full in-house research pro firm. you know, part of the reason when I launched Blockware, that I launched a research firm, was my goal was to actually bring mining to North America. And when I started Blockware, ninety-nine percent of mining was in China. I was like, \"Well, if I'm gonna do that-- \" Just refresh" }, { "speaker": "stephan", "time": "04:41", "start": 281.04, "text": "me, when did you start?" }, { "speaker": "mason_jappa", "time": "04:44", "start": 284.16, "text": "I started Blockware in 2017, I started mining in 2015, and I got into Bitcoin in 2012. So I feel like I've been, like, most of my living life, you know, where I'm out working or thinking, I've been in Bitcoin. I'm about 33, so, you know, I stumbled on it when I was 18 and just dedicated the rest of my life to mostly Bitcoin mining, but also Bitcoin." }, { "speaker": "stephan", "time": "05:04", "start": 304.01, "text": "Yeah, interesting. And as you mentioned, right, if you started," }, { "speaker": "stephan", "time": "05:10", "start": 309.65, "text": "you know, In China at that point, and then I think was it twenty twenty-one, the big sort of China mining ban, all so much of the hash rate shifted into North America and at that time Kazakhstan as well, and obviously now, I mean, it's, there's, the, we've seen the rise of the big public miners as well, that's been a thing, so- Yeah, I think there's a lot of different kind of aspects to sort of un-- you know, to sort of understand there. but, yeah, I, I think I also wanna touch on, you mentioned the SEC thing as well. So from my understanding There was maybe a bit of a cloud there of whether the mining and mining pools would be sort of dragged into the net as \"quote unquote\" brokers, and now they've come out and said, \"No, you're not, you're, you're clear.\" And I think part of this, I mean, maybe it seems, you know, Trump and the pro-crypto, you know, administration, say what you will about all the shit coins and scams and meme coins, but at least- It's gonna be permissive for Bitcoiners, and from that perspective, those of us who are, you know, focused on growing Bitcoin, we should be happy about that, and it's good for Bitcoin builders, Bitcoin miners, right?" }, { "speaker": "mason_jappa", "time": "06:17", "start": 377.28, "text": "Yeah, exactly. I mean, in short, miners aren't a security. We don't have to register our transactions, we don't have to register our participation. It is great news, and honestly, I was, you know, we're also a very large broker, and I was like, \"Wow, if I have to memorialize, you know, let's-- I mean, we've sold, you know, four hundred and fifty thousand servers since twenty seventeen, like we have mining operations across fifteen different data centers. It, it, it would just be such a nightmare just from, from our standpoint Everybody in the industry, and if anything, like it, it held some people back for a period of time on, on wanting to scale, and it certainly caused a big Bitcoin sell-off, like all the uncertainty, in the markets from twenty twenty through twenty twenty-four." }, { "speaker": "stephan", "time": "07:01", "start": 420.99, "text": "Interesting, yeah. And I guess one parallel the way I'm thinking about it is, is like, I mean, if you sell mining machines to people It's like, it would be like if you expected, you know, I don't know, Toshiba or Lenovo to kind of track every person they sell a laptop to. It's just kind of, it would be kind of insane, right? Or even if you, from the, on the hosted mining side, obviously you will host, you know, mining machines for people, it would be like, I don't know, if Amazon, AWS or Google Cloud had to KYC and, you know, check everything that was happening on their hosted servers, it would be ridiculous, right? But I think that- That was kind of the, the Biden administration being very anti-crypto, and obviously that turned out very badly for them. I think they, angered or pissed off a lot of, you know, Bitcoin people who had money and they were willing to put money in, and they supported, you know, Trump and the Republicans. So it's kind of, interesting to see that. I'm curious if you, if you think, okay, so this next, you know, what do you see for the next, let's say, three or four years of Trump's administration? Do you It's more" }, { "speaker": "mason_jappa", "time": "08:11", "start": 491.4, "text": "of the same pro crypto. Yeah, yeah, just touched on that, I totally agree. I mean, like, you know, Amazon and, and large entities get away with murder, right? They, they, they manipulate taxes. They weren't paying sales tax for such a long period of time, and, and, you know, all the mega billionaires, they never, you know, they don't have to pay much taxes because they just permanently loan against their equities, you know, there's, there's just all these manipulations in the systems, and then they go aggressively Currency, companies and, and put on regulations that they don't use to regulate, you know, some of the largest United States companies. So it's just, you know, we, we all just felt attacked. so looking at the future, yeah, I, I'm very bullish this cycle. And, we put out a research report and, and we do every year, we put out forecasting. so our twenty twenty four forecast was pretty spot on. we always do a bear base and a bull case. last year our base was a hundred K. So usually, like, our base is what we think will happen, and then we put out a bear and a bull. and, and most of the major analysts do the same. Like, you put up three scenarios, and, and we always like to say, you know, if our base is Okay. some of the things that could play into that for this year specifically, and then we can talk about this four-year cycle, if we, if, if Trump, you know, moves into more, some more po-positive energy-specific regulation, that would be very good. there are states that offer energy incentives for Bitcoin miners, one of those being Kentucky, and that's where Blockrate has a big, presence. You know, they subsidize our, our bills, they give us discounts, they give us economic development riders, and they, and give us tax benefits to So I think if Trump takes a national policy to encourage Bitcoin mining, any sometime in this cycle, we could see the United States start mining Bitcoin, and who knows, they may already be. and, and if they push out positive policies, well, you'll start to see more energy providers get involved. But I do think a lot, of a lot more public energy entities in the United States are mining Bitcoin than you think, and I know of a few, and I can't disclose that. I'm looking at The SBR, you know, we all talk about it. Some people are like, \"This is a joke,\" they don't like it. in the end, you know, I think what the United States is trying to do is, is put, rules around Bitcoin and rules around Bitcoin mining, and that does piss off a lot of Bitcoiners, right? Because we're, we're freedom technology. but in the end, you know, you look at it this way, like, you have the largest institutions in the world, that are bringing in Bitcoin and" }, { "speaker": "mason_jappa", "time": "10:51", "start": 651.36, "text": "And they're just trying to get regulatory clarity out there and set a good path for Bitcoin forward. I hope that there's nothing crazy put out there, but mostly I think we're gonna see positive policy. I'd love to see the United States add Bitcoin to their balance sheet outside of the Bitcoin they've already seized and having a policy that if there is any more cryptocurrency acquired in some way or form, it'll be kept. I really hope it's Bitcoin only, you know, the, the, we don't need all the other shitcoins out there on the United States. Balance sheet. the other thing I've seen in prior cycles, you know, we run a lot of research is Bitcoin price generally outpaces difficulty growth. The historic growth rate is Bitcoin price growing at five point one four percent, Bitcoin difficulty growing at three point five six percent. So that means on a running basis, historically, you can capture a one point five percent profit spread. So when you say five percent" }, { "speaker": "stephan", "time": "11:47", "start": 707.08, "text": "and three point five, is that what, is what is that based on?" }, { "speaker": "mason_jappa", "time": "11:50", "start": 710.42, "text": "That's just based on historic, measurements from a time place. I mean, you" }, { "speaker": "stephan", "time": "11:54", "start": 714.19, "text": "mean like per year, per month, or what are you saying?" }, { "speaker": "mason_jappa", "time": "11:56", "start": 716.35, "text": "per month, per month. It's monthly growth, yeah. Bitcoin price growing historically at five percent, network difficulty growing at three point six. And, and one thing, like, and we talk about this a lot, if I'm looking at the four-year cycle You simply, it, you simply cannot, let's say Bitcoin rips, we hit two fifty K, we hit five hundred K, we hit a million of token, you can't deploy that much energy infrastructure to have difficulty keep up. So there creates this really bullish case for miners specifically, where we simply can't keep up if Bitcoin price takes off. We can catch up over time, and that's why you, you know, if you look at historical graphs of Bitcoin network difficulty and Bitcoin price, few- You see those type of breakouts, difficulty will slowly be able to catch up over time, so that creates some really good windows if you're in the game as a miner, where you can capture some really solid spreads. And we've seen that, right? We saw, you mentioned the twenty twenty-one China ban, well, that's where we saw some awesome spreads, right? You saw network difficulty capitulate, Bitcoin price raise, it was the perfect storm, miners were rejoicing." }, { "speaker": "stephan", "time": "13:05", "start": 785.17, "text": "I see, yeah. And I guess the simple way I'm thinking about it is, you know, every four years, obviously we have the halving that, and because right now, at least right now, transaction fees are relatively low as a percentage of block reward, and so most of it is coming from subsidy, and because that's getting halved every four years, it's sort of like the bottom 50% of the miners almost get culled every four years, kind of loosely, obviously it's a bit, imprecise there. And then I see it like, if you're, you know, if you're already running and you're efficient, and you're-- especially if you're in that, let's say, top ten percent of miners, that's when you're really killing it, especially at that kind of, let's say, that favorable part of the cycle where the price is pumping harder than people can plug in new miners, right? That's kind of the, the sweet spot, let's say. But then, I guess- I mean, none of us knows, you know, the future. It has, it has historically followed this kind of three green, one red sort of pattern, right? We don't know if that's gonna keep happening. Maybe it does, maybe it doesn't. there's been a bit of talk about like, okay, maybe this is the time that stops. Who knows? I'm curious, what do you see? Are you, are you, just trying to project based on things like, I don't know, power law or just kind of other- Means of modeling things out from a mining perspective, how do you look at that?" }, { "speaker": "mason_jappa", "time": "14:28", "start": 867.94, "text": "Yeah, so we don't, we don't adapt, you know, power law, we don't adapt all these, you know, fancy modeling. We have our own internal systems where, and we, and we, we plug in events. We use a ton of data and analytics. We've spent the last, you know, we've been around for eight years, we have seven years worth of data, and we use that to project out our pricing. We, we layer on micro and macro events and their probabilities So we have just our own internal model that we built. Everyone has their own different playbooks, right? And then we, we are a mining specific company, so then we, we, we from there kind of project what we think can happen in the mining space. And mining Has cycles. Everyone's always like, \"Is there cycles in Bitcoin? should there be cycles? The cycles are dead.\" You know, we talked a lot about super cycles. There is always a cycle in Bitcoin mining. It is a four-year cycle. Now there's many micro-cycles in those four years, and those are tied around macro and micro events. We're in a new micro cycle, you know, the transition of, of presidency. There's political uncertainty, right? And now we're starting to get some regulatory clarity, and then we're gonna enter a new mini cycle, you know, hopefully a bull run. Bitcoin always runs in, you know, Q3, Q4. There's us, there's like, there's like four cycles a year, right? They're, they're always tied around some, some, some event that takes place. I'd love to see, and we always would love to see this, but I, I do think Bitcoin is, is kind of really tied to global markets right now. You know, you know, I'd love to see decoupling, against equities and the S&P and the markets, but it's, it's not the case right We also see sell-offs of Bitcoin, and there still is a ton of Bitcoin price manipulations. You know, you have massive, massive longs and shorts that take place, and, and some of the largest trading desks in the world, not just in the Bitcoin markets, but the largest trading desks in the world are secretly trading and market making, Bitcoin." }, { "speaker": "stephan", "time": "16:27", "start": 987.42, "text": "Interesting. And so, in terms of you, you're touching on mining cycles there as well, and a, are you speaking there like not just from the, the halving, the block subsidy halving, but are you talking about other aspects like, I don't know, mining technology, new mining rigs coming out or, you know, the energy game changing or maybe, some country being very pro, you know, like now the USA being very pro-crypto? Arguably it's gonna be very pro-mine, as you mentioned the, that SEC ruling about the broker thing, and it's gonna be in that sense. So is that what you mean when you're talking about mining cycles, or what do you mean there?" }, { "speaker": "mason_jappa", "time": "17:07", "start": 1027.15, "text": "Yeah, no, you're exactly right. I think there's, there's different type of mining cycles, right? one is tied to the technology itself. So in twenty-six, in the twenty-sixteen to twenty-twenty cycle, we saw the, the largest innovation in mining hardware because mining was really profitable and our, all of our technologists and manufacturers were like, \"Wait, you know, we're actually behind the curve on chip.\" Deployment. The chip's already existed, so we went from like 128 nano, like all the way down to 17 nano in just four years. You know, that's like a huge change. And then from 2020 through 2024, we went from 17 nano to 7 nano. And then this cycle will go from 7 nano probably to 1 to 3 max. And then the next cycle, you like, you can only go so far. So I think the huge technology changes on machines Won't happen as frequent and it, it'll be more so of a level playing field, So, so that's the technology cycle, and I, I think that, and I think that's good. When you kind of have some certainty on, on what technology exists, it allows you to speculate better and your models are better and you can have more convic- conviction when you're deploying into mining itself. Then the other things you said, of course, there's, you know, there's different policy, right? The policy that came out yesterday kind of put to bed all of our policy concerns of the last cycle. So that creates like a new policy cycle where I don't have to worry about Mining being a security, that is huge." }, { "speaker": "stephan", "time": "18:40", "start": 1120.35, "text": "Yeah." }, { "speaker": "mason_jappa", "time": "18:41", "start": 1120.63, "text": "I mean, that," }, { "speaker": "stephan", "time": "18:41", "start": 1121.27, "text": "yeah." }, { "speaker": "mason_jappa", "time": "18:43", "start": 1122.53, "text": "So," }, { "speaker": "stephan", "time": "18:44", "start": 1123.55, "text": "yeah, and I think at one point, I think the Biden administration was gonna do, was it like twenty or thirty percent tax on mining? Something, it was something crazy." }, { "speaker": "mason_jappa", "time": "18:51", "start": 1131.04, "text": "Insane. Yeah." }, { "speaker": "stephan", "time": "18:54", "start": 1133.69, "text": "And it's also" }, { "speaker": "mason_jappa", "time": "18:54", "start": 1134.49, "text": "state by state too, like, I mean, different states have different regulations and they can pass different policy. Texas, Kentucky, Georgia, Oklahoma, Wyoming. Those are generally, you know, positive Bitcoin and Bitcoin mining states. You know, i-i-in some states are adding Bitcoin treasury to, you know, or passing policy on the want to add Bitcoin treasury. So you as a miner also, you can, you know, choose your destiny. Why not go to a state where there's already positive policy and the energy is cheap? If I found cheap energy in a state that didn't have clear policy, I probably wouldn't deploy there. I, I can't, you're deploying billions and billions of dollars in infrastructure and hardware and presence, so you have to be extremely careful with where you go. That's why Blockward, we're, we're only in the United States. I haven't ventured off in, in, in my history. I've had lots of opportunity, you know, people are like, \"Hey, we have free power in South America, or we have two cent power in Norway, or we have one cent power in Moscow, Russia.\" I was always like, \"You know what? Like, I'm, Where I feel comfortable and, and I'm not taking risk, especially with, you know, we're client focused, right? We're, we don't really self mine. We are fully focused on making mining easy for everyone else, and we manage, you know, a huge hosted client portfolio." }, { "speaker": "stephan", "time": "20:14", "start": 1214.24, "text": "Back to the show in a moment. This show brought to you by CoinKites dot com, the creators of the best Bitcoin hardware security devices, such as the Coldcard Mark IV and the new Coldcard Q. Now, we use Bitcoin hardware security devices to keep our keys offline, our private- Keys offline. Now, the way these work is you can do that setup, write down your twelve or twenty-four words on those, the seed word cards, and keep that secure. Now, you can use this device to interact with the Bitcoin network using software such as Sparrow Wallet, Electrum, or Specter Desktop or Nunchuk, as a few examples. Now, you have a range of security features that you can use with these devices, such as passphrase, or you can use Seed X or, or my favorite is multi- Signature. Now, if you're starting in a basic way, just start with the device and the USB-C cable, plug it directly to the computer and use it that way, and then later improve your setup. But I believe these devices are great at helping secure your coins, especially as you start to migrate up into multi-signature security. But don't be disheartened or don't be, scared away. They are accessible, and I think you actually do learn about Bitcoin in the process. So to get yours, go to coinkite dot com, use code Livera to get a discount. Discount on your cold card. This episode brought to you by Galloy. They are building banking software for the Bitcoin age. So if you are with a bank, a fintech, or a startup looking to offer some kind of Bitcoin product, whether that is a Bitcoin collateralized loan, deposit accounts, or payments, Galloy can help you. Their latest product is called LANA. It is a loans management platform, and you can use this to come to market quickly and offer a loans or Bitcoin collateralized lending product for your customers. Now, Galloy have a lot A lot of experience in the space. They started with Blink Wallet in 2020, and they've since grown this to become a community favorite over time. And so they have a lot of experience making things work in a secure, reliable, and scalable way. So if you need assistance coming to market quickly with a Bitcoin banking product such as lending or deposits or payments, talk to the team at Galloy. You can email them, the email is biz at galloy dot io, or go to the website galloy dot io. And now back to the show. Yeah. And so then I guess one interesting question, and I'm sure listeners will have this question, is there's always gonna be that question of, should I just buy Bitcoin and just huddle, or should I try to engage in mining? Because for a lot of people, if you don't know what you're doing- And I'm sure you've probably seen this in your, you know, years in the space. And I've, I've definitely seen people sort of get enamored or first learn about Bitcoin, they think they need to do mining, and they do it unprofitably, right? As I'm sure you've seen probably thousands of times by now. And then they look back and think, \"Well, hang on, if I just bought Bitcoin and huddled, I would have been better off.\" So how do you answer that? Is it just a matter of having the right expertise, having, you know," }, { "speaker": "stephan", "time": "23:13", "start": 1393.05, "text": "I think" }, { "speaker": "mason_jappa", "time": "23:14", "start": 1394.03, "text": "everyone should do it. And, and my plays are different, let me explain why. we came out with like this new slogan, it's like, \"Let's say you were deploying eighty-five thousand, you could buy one Bitcoin, and maybe that's roughly the price right now. So our slogan is like, \"You have one Bitcoin today, or two Bitcoin tomorrow.\" And what I mean by that is, it's all-- first off, let me go through before I give you the answer. You need to partner with the right counterparties. Yeah. We've been in the game for eight years. There's many, many, many hosting companies. Come and fail, you know, go with somebody that has the tech, they have the operations, they have the expertise, be extremely careful with your partners, because you need uptime, you need good, decent energy costs, and you need someone that you can trust. So if you don't have those three things, then just buy the Bitcoin and, you know, sleep all night. But if you do have those things, then mining is actually, it, you know, works and, and makes a lot of sense, especially, you know, in this particular cycle. So if you deployed one- Bitcoin worth and bought, new mining rigs from Blockware, and we'll help-- we always point our clients in the right direction. We don't always chase the best, the latest and greatest 'cause, many times that's, that's mispriced. We know pricing really well. We've lived in the trading markets. We're one of the largest secondary traders of machines in the world, so we go to deals that are good and gives our clients, you know, the highest IRR. As a miner, your returns are Bitcoin-denominated, which is beautiful. So most of our client base, you know, on when they deploy with us now are at a thirty to sixty percent IRR, right? It depends on the deal, depends on the machine. There's different reasons. The thirty percent could be good, you know, 'cause it's a newer machine, the sixty percent could be older, so you have, you know, different breakeven windows. But basically, if you deployed that eighty-five thousand now into mining and you mined over this, the rest of the cycle, roughly, years, you end up with two Bitcoin instead of one. Now, there's another thing to play into this as well. This was something that I think, you know, we helped solve. You need to have liquidity on your mining assets. I really think there's a sweet spot where you need to upgrade and change machines every two years unless you're in a ripping bull market. So we created a marketplace, space in exch-exchange, and allows you to trade your hosted miner. Instantly to somebody else. It's decentralized, so sellers set price, buyers can come in and buy. we invented that technology, we started building it in twenty twenty one, we went live in late twenty twenty three. we have over twenty thousand users now, right? So it's, it's a full trading desk. We have, we process over a million trades, a million dollars worth of trades per month, and it's growing, which has kind of been linear. So you also need to have liquidity, and that's something interesting you have with us. So you could mine Right? the perfect situation we saw happen, you know, last cycle, you know, the S nineteen Pro release, it was seventeen hundred dollars in June twenty twenty, in November twenty twenty-one, that machine was fifteen thousand dollars. So what if you could have sold it at that price, you'd take your exit, you end up with more Bitcoin. The, the why you mine is you're arbing energy and you wanna end up with more Bitcoin. And if you don't end up with more Bitcoin, then you probably bought machines that are too expensive, or you partnered with the wrong counterpart, and you didn't have proper uptime, you didn't have liquidity, or something else went wrong." }, { "speaker": "stephan", "time": "26:36", "start": 1595.81, "text": "Interesting. Okay, so, I mean, there's a few things, like you've got to factor in things like, you know, risk of the factory or, sorry, not the factory, but the, the data center that you have your mining machine, you know, getting rubbed on you or this kind of thing, and of course I, I guess as you, as you said, it, it matters when you come in, right? Because if you bought those miners at the fifteen thousand dollar price, you got kinda, you got kinda rinsed on it, right? I guess, I mean, we can talk about a few of those things, but I'm curious then, when you talk about the liquidity aspect, as you mentioned, the kind of the two year roughly changeover of o-old mining machine to a new mining machine that's a bit more efficient and so on. Who's the buyer of those machines? Is it maybe just somebody who has access to really cheap power? Like, aren't you just-- Like, doesn't that rely on there being some other bagholder who's gonna, like, maybe they're not a bagholder, maybe for them it makes sense because they've got extremely low power cost? Can you elaborate a bit there?" }, { "speaker": "mason_jappa", "time": "27:32", "start": 1652.32, "text": "Our marketplace actually, like, the machines don't move, right? And so when, when you're trading in and out, yes, someone else is taking on the risk, but it's decentralized, right? You're not-- no one has a gun held to their head saying they have to buy this deal. There's just buyers and sellers. It's like, and, and, and the trade's just processed and it's built on Bitcoin, and it's all memorialized on chain, and you're paid instantly. You could be mining Bitcoin with us in just three clicks. You could buy and" }, { "speaker": "mason_jappa", "time": "28:01", "start": 1681.38, "text": "The buyer and the seller. There's, there's speculators, right? People buy during distress markets, they sell during bull markets, they buy during bull markets, they sell during distress markets. There's human psychology involved, right? So there is somebody on the other side. And sometimes, you know, the sellers in distress markets are being bought by well-capitalized institutions, and vice versa, right? so we're just creating a free market, and the more user base that we have, the more liquidity that exists in the marketplace, there's always somebody on the other side of the trade Now what we do allow too is you can swap out your machine, so, you have to take the slot. So like, you know, if, if you wanna upgrade, we'll help you upgrade, and we can take the machine offline and sell it OTC. We do a lot of, you know, OTC transactions where it ships from our data center somewhere else. but to your point, there's, there is somebody on the other side of the trade, and it's, it's all about speculation." }, { "speaker": "stephan", "time": "28:53", "start": 1733.39, "text": "Yeah, I see. So I guess in that sense, it's not kind of an everyone wins scenario, it's that it's more like when you kind of got in and out really depend-- like that will really drive whether you make a good profit on this or whether you make a loss on that. And sadly, for a lot of people when they're new to Bitcoin Oftentimes the time that they come in is they're buying close to the top, right? Whether they're buying Bitcoin or whether they're buying mining rigs close to the top. And then, so I guess that's, that's one thing, like don't be a noob getting wrecked buying at the wrong time. You have to sort of-- So there is an element of like I don't wanna say timing the cycle, but yeah, I guess you are effectively timing the cycle, right? Yeah, exactly. And," }, { "speaker": "mason_jappa", "time": "29:33", "start": 1773.0, "text": "and we try to be extremely transparent. We have a, in our, we, in our marketplace, it's like software, and we have an app coming out soon. We have a whole block for learn center. There's a fifteen hours of material with, with videos that te- teach you everything. on the miner itself, you can see how long it's run, it gives you a lens into the data center, you can see its three month trailing performance We'd show you which facility it's at. We're partnered, we have twelve different hosting centers, two of them we own and operate. The other are all world-class companies, you know, there's three public companies and then, seven very well put together and funded private companies. We spent a ton of time in diligence. You know, you hear of all these rugs and X, Y, and Z, like it just, it happened, you know, one time to us, you know, early on in this cycle, our, one of our large, you know, early Nobody else, and we had to move. We were like, \"Holy smoke.\" So everything we set up, we, you know, we've, we've been through it all. And so all of our contracts and all of our partnerships are very well selected, and everything is set up in, you know, a way that we're, we're ultimately trying to protect our clients. Now, There is a, you know, there's a Bitcoin breakeven price, it's displayed on the, you know, the machine when you buy it. You know, our average, our average clients' breakeven price is, Bitcoin price between forty and fifty-five thousand, right? So let's say it's forty-seven, five hundred. All of them are do pretty well, and a, and a lot of our clients have like the newest generation machines, they have good enough energy costs, so, so they're quite profitable, and, and I know we can We go through all, all their filings, we check out all their future deployments, it gives us a lens into projecting difficulty, which gives us a lens into projecting Bitcoin price. most of the public mining companies actually lose money. The breakeven costs are Bitcoin one hundred to one hundred and fifty thousand. You know, Merolost six hundred million last year and I think five hundred million the year before. There's very few actual profitable Bitcoin miners, and that's why unfortunately you see a lot of their stocks, you know, and they're also diluting, right? They're taking They can't pay on tons of debt. Their admin expenses are off the charts. When Coresign tipped went bankrupt, eighty percent of their revenue was at GNA admin. That is the, like, you will, I've never seen, like, in a public company, if you see eighty percent of their, your, any company's revenue is admin, you're just like, stay away from that, you'll run away. They, they restructured, now they're doing great now, they got new leadership. You want, you know, ideally you want your admin to be like, you know, less than ten percent or five percent, right? So there's just-- But I'm just saying, like, you know, look at the numbers. All these companies are actually, and they always advertise it, they're like, \"Oh yeah, we have two cent power, we have three cent power, we have four cent power.\" Well, they have massive capital, they have massive operating expenses, right? They have, depreciation of machines, they have executive compensations. All the Bitcoin mining CEOs are making" }, { "speaker": "stephan", "time": "32:36", "start": 1956.24, "text": "like I, I had no idea it was that high, but, yeah, I mean, with, I guess large public companies and stock options and things like this, but, that is one area that Yeah, is there is kind of that question of are equity investors in some of these companies not really getting a good deal? Are they kind of the ones who are-- I, I think especially, I mean, as I recall, in the twenty twenty-one cycle, like that was when public miners were going crazy, right? Because there was very much seen like a levered play on Bitcoin, and then as you said, like I think Core Scientific was probably the most, out there, and I think they bought like, they really overpaid for a lot of rigs, and as you said, Sgna cost, then they had to restructure, and I guess now there's been a bit of a, there's a lot of excitement going to the Bitcoin treasury companies, so I guess that's where a lot of the equity investors are sort of migrating, but there are still, you know, Riot and Mara and people like that who are doing, you know, this kind of issuing, you know, debt or these kinds of strategies to, get more Bitcoin as well, right? So I'm curious what your take is on that, like, does that- Help them or hurt them or is it kind of a red herring and equity investors are still not getting a good deal there or what do you see?" }, { "speaker": "mason_jappa", "time": "33:54", "start": 2034.01, "text": "I think it's, I mean, I thought it's kind of funny when you see a public miner taking a ton of debt to buy Bitcoin. You saw, and so actually there's a huge divide between the public miners. Half of them are like, \"Yeah, we wanna do that,\" and the other half are like, \"Well, we're Bitcoin miners. If we take on debt, we should buy more miners and mine more Bitcoin, you know," }, { "speaker": "mason_jappa", "time": "34:17", "start": 2057.01, "text": "there isn't, the, you know, it's kind of shocking when you see it, you're like, \"It doesn't make sense to me, right, that they're taking on, that they're taking on debt for Bitcoin treasury.\" But they, but they have an advantage because they have access to cheap debt. So that's, that's ultimately their play. I do think Bitcoin miners will be a proxy to Bitcoin, but that's during a bull market in the situations I described where, you create-- There's, there's gaps between difficulty and Bitcoin" }, { "speaker": "stephan", "time": "34:41", "start": 2081.23, "text": "price. In" }, { "speaker": "mason_jappa", "time": "34:43", "start": 2082.99, "text": "that" }, { "speaker": "stephan", "time": "34:46", "start": 2085.69, "text": "Well, but then the thing is, that f-- let's call it, I mean, you, you probably understand that better than I do, I mean, I'm sure you do, but that favorable part of the cycle might only be a short few months. It might be three months, it could be six months that you're getting that really crazy outperformance in terms of price versus how much new hash rate can get plugged in, right?" }, { "speaker": "mason_jappa", "time": "35:07", "start": 2107.39, "text": "Correct. Like you're talking, there's short windows, right? It all depends if Bitcoin, you know, it's at four hundred thousand this cycle, you might have several short windows. Yeah. We, we all know, like, when Bitcoin moves, like- Some of its biggest movement of the year happens over like a one to two day period, right? Like Bitcoin really moves a lot, like ten to fifteen days total in the entire year. It's all about catching those kind of ARBs. Like, you know, and Bitcoin miners have been smashed recently, and I'm not saying, you know, and a lot of these are my clients, I'm not necessarily trying to destroy them, but I think they should really focus on cutting their expenses, focus on mining, focus on their energy portfolios which have a ton of value. You see a lot of them moving into HBC as well, and 'cause they can make a lot of money there, but it's way more expensive to deploy one megawatt and, you know, and to build a tiered data center and have H10 Nvidia, it's fifty million dollars per megawatt. For Bitcoin mining, it's about two million per megawatt, so it takes twenty-five x more capital. But they're making, you know, their profit, so they can make if they're doing cloud, right? And they're selling or they're, they're contracting directly with consumers, not through like a marketplace like CoreWeave, they can make thirty, thirty-five cents per- kilowatt hour in profit, right? on mining, their pro- they could be at like ten to fifteen cents. So they're making, they're, they're spending twenty five more ex capital to make Two to three x more dollars. But while they're all doing it, I mean, look, look at the world right now, everyone's all in on HPC and AI, and it's good for their stock story and maybe they can get a stock pump, like if they transition into that place. overall, I do think it's like, it's interesting, and I do see, you know, a lot of growth in HPC and AI. I do think it's overweight right now. You know, CoreWeave also just like shaved, you know, twenty billion off their, 35 billion, and they're like, \"Wait, never mind, we're doing 25 billion.\" I mean, that's just a such a substantial swing in such a short period of time. So there is some, you know, shakiness in those markets." }, { "speaker": "stephan", "time": "37:20", "start": 2239.91, "text": "The lead sponsor of this show is Bold, the best place to buy, sell, and save Bitcoin. For listeners in the US, Bold lets you secure your financial future with complete peace of mind by integrating a low fee Bitcoin only brokerage with next gen multisig vaults. With Bold, you can smash buy Bitcoin or set a DCA plan for only zero point nine nine percent fees and seamlessly deposit the Bitcoin direct to your Bold Vault. The Bold Vault is a two or three collaborative multisig where you hold two keys and Bold holds one as a redundant backup. Back up, protecting against loss or theft. You can use Trezor, Ledger or cold card hardware wallets to spin up a Bold Vault in just a few minutes, and the Bold Vault is the only collaborative custody vault available with zero monthly fees. They're also offering zero fees on your first ten thousand dollars of Bitcoin buys and twenty five dollars of free Bitcoin when you buy a hundred dollars of Bitcoin or more. Try Bold today and upgrade your stacking experience over at getbold dot io. And now back to the show. Yeah, interesting. Real, yeah, really interesting comments there. And I guess we see a lot of discussion about, yeah, like things like what the breakeven price or what's the energy cost of that company. But then, I mean, you have to think of-- it's, it's a holistic picture that you need to think about because you also have to think about, well, what was the cost for them to get those mining rigs? Did they overpay for the mining rigs, or did they get a good deal on those mining rigs? You know, like, and, and, and, So these, aspects of it also." }, { "speaker": "mason_jappa", "time": "38:51", "start": 2330.55, "text": "And, and something I like to tell my clients which is true, and, and most of the public clients, nearly all of them are my client, they don't trade machines. So, like, when we see these cases where machines are covered, right now is a great time to deploy. I think machines are cheap. They're, they're really cheap. In fact, like the cha-- there's still massive Chinese resellers, they're coming to companies like us, they're selling for less than they paid. They're way over leveraged, so they're-- you can get really good deals on machines. And when machines are cheap, that means you're gonna have, you know, your, your cost basis is lower, so you have less risk on your machine losing value, and your IRRs are good because you get a good deal. Now, the public miners, when they buy, they just deploy and, and then they'll hold those machines, they'll run them usually for four years, and they'll upgrade four years later. Well, there's a whole game that you can play in between, where machines go up and down in value, and that's why I thought it was interesting to create a marketplace, so you don't actually have to really compete against the pubcos when machine prices change. You're kind of just-- that's why I think there's a lot of really interesting room there to play this game and arbitrage ASICs," }, { "speaker": "mason_jappa", "time": "40:02", "start": 2401.66, "text": "denominated rewards are four percent, five percent, depending, you know, on the markets. And then, you know, trade your ASIC around. You know, ASICs easily can double in price when Bitcoin runs." }, { "speaker": "stephan", "time": "40:12", "start": 2411.89, "text": "I see. You can also" }, { "speaker": "mason_jappa", "time": "40:12", "start": 2412.47, "text": "depreciate them, right? You can get tax advantages." }, { "speaker": "stephan", "time": "40:16", "start": 2415.69, "text": "Okay. So just to give people a rough kind of idea, you know, as we stand today, obviously these numbers will move around, but as of twenty-first of March, twenty twenty-five, can you give people like a rough idea? How much does it cost for a reasonably competitive Bitcoin mining machine, and what is, let's say, a competitive electricity rate, you know, that is reasonably achievable?" }, { "speaker": "mason_jappa", "time": "40:38", "start": 2437.8, "text": "Yeah, so I'd say like you can get, new gem machines, let's say like the S21 Plus is one of the best deals in the market right now. those are, let's say, they're two hundred and twenty-five tera hash, they cost twenty dollars per tera hash, it's roughly forty-five hundred dollars for the miner, right?" }, { "speaker": "stephan", "time": "40:54", "start": 2453.81, "text": "Yeah." }, { "speaker": "mason_jappa", "time": "40:55", "start": 2454.61, "text": "a good hosted, you know, I, I don't recommend home mining's fine if you're doing bit axes, you're kind of playing the lotto, but if you've got, you know Or seven to eight cents with quality providers. And if you plug that machine in, let's say you have a seven and a half cent hosting rate, your Bitcoin breakeven cost is like Bitcoin, you know, fifty thousand. So it's, it's great, you know, you've got a nice, you know, thirty-five K buffer right there, you hit, you know, a thirty, forty percent IRR return. And, And yeah, so, and I'll just say, like, here's a comparative machine, right? The S1 Pro, it came out last year, it started selling for eighteen dollars a tee, it actually went up in value. it was selling for twenty-two to twenty-five, you know, in Jan, Feb, and now it's like kind of back down to twenty, twenty-one. So there was a game you could play, right? Where you, you, you bought it, you, you pocketed all the mining profits, you sold it for, you know, thirty percent I would say, you know, don't necessarily chase like the newest and the latest and greatest, you know, buy the-- the S1000 Plus is just, you know, just came out, but it's just like a, it's, it's, it's in the mid to upper tier of being new. And look at dollar per T and efficiency, those are the two most important metrics. If you find like a nice marriage of those where it's, it's cheap from dollar per T and has good efficiency, you know, go for that deal." }, { "speaker": "stephan", "time": "42:20", "start": 2539.66, "text": "I see. Yeah. So, yeah, I mean, for me, I just see it like I don't have an edge in this, but I certainly, I, I'm sure, you know, if you, if you are the kind of person who has an edge in sort of understanding these nuances of like, okay, this is a good deal, now's a good time, whereas, you know, now's a good time to sell, like, let's say Okay, hypothetical, let's say Bitcoin later this year hits like two hundred K or whatever, and maybe at that point, you know, you've got a pretty big profit margin, assuming you have, as you said, you know, you bought that machine for four, four and a half thousand, and the, your hosting rate is seven and a half cents, you know, now at this point, you've got a pretty good profit margin, and maybe at that point would be the time to sell the machine, right? I guess that would be hypothetically what you might do if you were trying to I'm curious to hear how, how you see that or how you would talk, how you would think through that." }, { "speaker": "mason_jappa", "time": "43:14", "start": 2593.87, "text": "Yeah, totally. I mean, listen, like, you could just play the game where, like, hey, I buy a new machine, and usually these machines will last, and, and they're getting better and better. Like, if you're doing like hydro machines, those things will last six, eight years, if the, if the market allows you, right? If they're profitable. air cooled, you know, four years is a good window, right? So buy a For $1,700. You just plugged it in, mined it for four years. It remained profitable the whole time, by the way, at the seven and a half cent window, you actually would hit a, six hundred percent return. On the amount of Bitcoin that you mined and the amount you paid. And then at the end, the S-19 Pro in 2024, it was worth about a thousand dollars. So you could have just, you saw at the end, and that makes your return, you know, adds another fifty percent to your return, so you get like a six hundred and fifty percent. That's why you mined Bitcoin. What happened during that cycle? What was the price in, you know, twenty twenty around the halving? Was it, you know, fifty K? Remember that was like" }, { "speaker": "stephan", "time": "44:22", "start": 2661.82, "text": "Now, yeah. Yeah, and then it, and" }, { "speaker": "mason_jappa", "time": "44:23", "start": 2663.08, "text": "then it ended at, like, you know, let's say, what was it at in, March twenty twenty-four? We were at like seventy-three. So probably like fifty," }, { "speaker": "stephan", "time": "44:32", "start": 2671.81, "text": "maybe, yeah, sixty, sixty. Maybe we topped it, we hit like seventy-three, then we were kind of fifty, sixty-ish range. Yeah, so would" }, { "speaker": "mason_jappa", "time": "44:38", "start": 2678.23, "text": "you hit like a three, two, three x there? Let's say you hit a three x. So mine actually won, you know, you doubled your returns. I think you can do" }, { "speaker": "mason_jappa", "time": "44:52", "start": 2691.74, "text": "Everyone recommends DCA, if you're, if you're just buying Bitcoin, just dollar cost average it. You know, not everyone's a, a specialist and they can't time markets perfectly. I'm not a trader, I don't, I lost too much money trading in the prior cycles on leverage, I'll never do it again, right? so you can DCA your RB energy, so you're, you're just minting new Bitcoin, non-KYC by the way, like when you do host it, it's, you're KYCs, you're, you're not KYC I like hosted mining a lot, and I run a business in this space obviously, and I've been doing this for ten years, running my business for eight years. For the next twelve years, hosted mining is pretty clear to me. Like, we're, we're, you know, ninety-three percent of Bitcoin's mined roughly, so, about six percent of Bitcoin will be released over the next twelve years. You know, we have one last nice jump where there's a lot of subsidy to chase, and transaction fees can kind of move here and there, and there's different things that can increase or These trees, transaction fees. But from the year of, you know, like twenty-one forty onwards, we're gonna be chasing one percent of Bitcoin supply for, You know, a hundred years. so, so you mean twenty thirty-five or so? Yeah, yeah, yeah, yeah. Yeah, to, to twenty-one forty, that's the number, right? All Bitcoin will be mined in twenty-one forty. So that, like, Bitcoin needs to be at a really good level for mining to be continually, you know, interesting, right? Otherwise, it may just become too centralized, right, where it's just like governmental or energy companies are just mining because there's just really little to no spreads. but hopefully, Bitcoin's, you know," }, { "speaker": "stephan", "time": "46:32", "start": 2792.17, "text": "Yeah, well, I mean, it kinda depends like if, if the fiat price doubles every four years, and maybe not forever, but just like at least for the You know, for the next few decades at least, then that kind of, I guess you could argue that helps over time for it to kind of decentralize out over that time. And then after that, I mean, who knows? Hopefully by then there's lots of transactions and then there's maybe transaction fees are sort of picking up from, subsidy at that point. I mean, who knows? But I guess that's the-- that's probably the optimistic, you know, the case, wouldn't it be?" }, { "speaker": "mason_jappa", "time": "47:09", "start": 2829.01, "text": "Yeah, totally. The other interesting thing you can do, let's say, let's say this way, like, let's say you had a nice Bitcoin stack, you could go, get a loan against your Bitcoin. And there's actually ways, there's, there's certain companies that where you can still maintain the keys of your Bitcoin and get a loan on it, let's say you get five or ten percent, and let's say you're mining, you, you then you put that into mining, right? And you just have to pay back your loan. there's a Using your current Bitcoin, if you enter that into mining, which vastly will beat, beat out the yield or the interest that you have to pay on the loan itself. So there's, there's all these different creative things that people are doing, and I think mining, one of the holy grails in Bitcoin, you see all these companies chasing it, is, is Bitcoin yield. Like, if someone, you know, and, and a lot of times, if someone says they have Bitcoin yield, it's, they really don't, right? And that's where you're, you're majorly" }, { "speaker": "stephan", "time": "48:06", "start": 2885.55, "text": "exposed. You know, there's risk somewhere, right? And I think that's probably the point that a lot of people thought, you know, in the, the blockfights of the world, that they were getting whatever six percent interest, when really, once you account for risk, maybe they should have been paying like fifty percent interest or I don't know, whatever. But the point is, there's, there was kind of an unstated risk Question or un-risk component there that a lot of people were ignoring. And that's, I mean, that's why it has been safe, you know, the safe play is, you know, get it on your, on your cold card and hodl it there and don't worry about yield and just, you know, just hodl. so I, I think that's an approach that's worked. But as you, as you said, I guess if you, you know, if you knew what you were doing and you had, you know, you didn't fall into the pitfalls, then okay You knew what you were doing, you, you could probably make more Bitcoin, but it's, it's always a question of what risk are you taking and so on." }, { "speaker": "mason_jappa", "time": "49:05", "start": 2945.41, "text": "Yeah, no, there's a lot of things. Like one interesting one I look at too is WBTC, right? Like, you're getting a yield there, but forty percent of WBTC is controlled by one person, Justin Sun. It's like, where is this? You know, that's just another fun example. But actually, you know, like, there's, there's also other benefits to mining. So if Like I'd say thirty percent of our clients are business owners. You, and you buy the machines, right? They're classified as machinery, and Trump's actually bringing back a hundred percent accelerated depreciation, at least he said he would, but it was eighty percent for a while. You could do accelerated depreci-depreciation on your servers, take a write-off. And use that as a tax advantage. Yeah. It's a tax-- so as we see Q4 is weirdly it's always Bitcoin's best performance month, but if I'm looking at Blockware financials, like Q4 is always our best year, and a lot of time it's because we have all these business owners and institutions and funds and family offices, and they're, they're buying a bunch of servers, they're doing accelerated depreciation and writing them off and taking that out against their gains. So there's a, there's a whole system of tax play as well, and then you can, And long term, you know, accrue long term capital gains. there's a whole tax game that people play here too." }, { "speaker": "stephan", "time": "50:22", "start": 3021.79, "text": "I say, yeah, yeah, interesting. And I guess that, that of course, depends what, you know, what country you're in, what tax situation you're, you're in as well. but, yeah, certainly if you're in a, a company, so So I guess give me-- just to, just coming back to some of those examples, what kind of, if you were gonna think of it like BTC yield or, IRR, like you said, what, what would a typical IRR have been if somebody just did like a typical thing, like you said, like one of the maybe not top, top of the line machines, but like a reasonable machine and, let's say, seven and a half cents, and they mined for a full four years and they sold the rig at the end of the cycle? Like, do you have a rough number" }, { "speaker": "mason_jappa", "time": "51:04", "start": 3064.28, "text": "Yeah, so it's the, it's the one Bitcoin now or two Bitcoin tomorrow, right? That, that's the exact like, that's the model, right? So you end up with one more Bitcoin than you have, so it's a hundred percent return. And that's if, you know, you just mined, you sat there, things kind of went in a way, a normal type of way. And there's people that think about the world in two ways, right? They think about fiat And pricing Bitcoin in fiat, or they think about Bitcoin and just accumulating more Bitcoin. In both ways, it kind of, you know, answers that, right? You know, simple, it's like you can have one Bitcoin now or two Bitcoin tomorrow. That's for this cycle, and i-in the next cycle, it'll be like, oh, like you can have one Bitcoin now or X Bitcoin tomorrow, right? And what I mean is just like mining now through the end of the, the cycle when subsidy cuts in half, and then you sell off and maybe you get a bonus. But you can also You know, you get lucky, your machine doubles in value along the way, you accelerate your, your returns." }, { "speaker": "stephan", "time": "52:02", "start": 3121.84, "text": "I see, because at that point, you could sell the machine and at that point, there might be a noob who's buying in and they don't understand that it's the top of the cycle, they're not meant to be buying at this time, or maybe they're a speculator for whatever reason, they have some reason for it, but I guess the other question, that, I mean, something I'm thinking about more nowadays is just kind of related to" }, { "speaker": "stephan", "time": "52:26", "start": 3146.18, "text": "Diminishing returns and diminishing volatility, and I think it's statistically, objectively, if you look back over the fifteen, sixteen years of Bitcoin's price history, that's what we've seen. So we should expect that going forward, or at least that is-- that makes more sense to assume that the same thing will carry on, and so that may change some of these numbers over time, right? Like it may not be one Bitcoin is two Bitcoin, maybe it'll be one and a half or it'll be one point three or one point one, like over time, I, I see it sort But what, what do you see?" }, { "speaker": "mason_jappa", "time": "52:59", "start": 3179.14, "text": "I agree. Like, and like, and that goes back to my exact thesis, like, this cycle I feel pretty comfortable about, and most analysts you talk to are bullish. All the largest analysts are, you know, many of them forecasted a one fifty to like two fifty, that seemed to be like the base case of most people, and that's just for this year, and I'm like, that's pretty good. So, and, and machine prices are cheap, so I feel good about it. But your point, like, from, from the," }, { "speaker": "mason_jappa", "time": "53:26", "start": 3205.68, "text": "let One, it could be one Bitcoin at the beginning of cycle and you end up with one point three. but, but hey, maybe fiat-denominated, that point three Bitcoin is worth four hundred thousand times point three, and then if you're looking in fiat terms, you're like, \"Hey, I'm still making the same money I made last cycle.\" That can kind of be the system, but a hundred percent, you're not gonna continually, you know, be in a, in a situation where you can end up with two Bitcoin for the price of one over a, a four-year cycle, For right now, yeah, two and a half, three years. And of course," }, { "speaker": "stephan", "time": "53:57", "start": 3236.77, "text": "there's, there's risk with all these things too, right? it's fair to, you know, for people to understand that, because, you know, yeah, I mean, maybe right now it's Trump and it's pro crypto, but maybe the next time around it's, more hostile administration and, you know, all these things could change, and so then that could really- You know, change things for the industry. Maybe it would-- maybe it becomes, more popular in some other country or, I, I don't know. I, I think it's-- but it's probably fair to say over this next, you know, the rest of Trump's term at least, that there's a good amount of time for this industry to grow and the network effects, you know, the hodlers, the users, the, you know, mining, everything, developers, builders, that network is gonna grow a lot in that next three or four years," }, { "speaker": "stephan", "time": "54:44", "start": 3284.46, "text": "Administration, let's say it's Gavin Newsom in, you know, in twenty twenty eight or whatever, you know, maybe he won't be able to do that much damage because by then the industry has grown, who knows, right?" }, { "speaker": "mason_jappa", "time": "54:58", "start": 3297.55, "text": "Yeah, I mean, the, the goal is to have Bitcoin be bipartisan, obviously. And I do like, there aren't, and a lot of strong Bitcoiners like lobby to both parties. You, you know, take out politics, like There could be changes of hand, right? And it sucks we live-- like just the United States, we live in like a two-party system. And so you don't, you don't want, like, let's say the Democrats won in twenty twenty-eight, then just rip out all of the work that we did in, from, you know, the, these last four years. So I do, you know, I'd love for Bitcoin to be bipartisan, but there, there's always risk in politics." }, { "speaker": "stephan", "time": "55:34", "start": 3334.47, "text": "Yeah, I see. so, yeah, I guess any other-- so, yeah, I mean, you've got the, you said the bear case was one fifty, the base case is two twenty-five, and your bull case is four hundred. So let's just talk a little bit about some of those, different cases, and I guess some of the events that you might be predicting. I guess, well, one thing is the SBR thing sort of came through, right? Because on, I think on your bear case, you had Trump doesn't follow through on SBR" }, { "speaker": "stephan", "time": "56:05", "start": 3364.77, "text": "and then the question now is more like, how aggressively do they stack, and how aggressively do other nation states and other corporates and big holders, how aggressively do they stack?" }, { "speaker": "mason_jappa", "time": "56:17", "start": 3376.54, "text": "Yeah, exactly. Yeah, bear case, so we have an SBR, we checked the box, so hopefully bear doesn't hit and bear at one fifty is great. rates are important, right? You know, Powell g-gave us-- he's always, you know, he's a master at communicating nothing, right?" }, { "speaker": "stephan", "time": "56:34", "start": 3393.92, "text": "So" }, { "speaker": "mason_jappa", "time": "56:35", "start": 3394.74, "text": "it's always interesting. But yeah, if rate, you know, if we don't see significant rate cuts, you know, that's certainly- A bullish case for Bitcoin, right? When, when we see rate adjustments in our favor. And then, right now, you know, Bitcoin, you know, in our base case, we, we, we talk about this, but Bitcoin, you know, like sixty to seventy percent of Bitcoin's in long-term holders. That's fantastic. And, and, and seeing a diminishing exchange flood is fantastic, right? This is a supply and demand economy. so long-term holders staying, you know, holding onto their coin, is great. You know, in the base case," }, { "speaker": "mason_jappa", "time": "57:10", "start": 3429.88, "text": "we we see a lowered, interest rate, which I think we'll get, and then we see, increasing, Bitcoin corporation adoption, which I'm seeing like we saw a ton of those in Q4 and Q3, and I, I think we'll continue to see that. Everyone's watching the Saylor playbook, and some people like Saylor, some people don't like what he's doing, but there are a ton of companies that are strong companies that don't need to completely lever in debt, that, that can easily turn, to a Bitcoin treasury, and So much sense, you know, you don't, not every company needs to go for this extremely levered play, and then in the bull case, you know, it's a factor of all the above, and we see a lot more, you know, company adoption, we see a lot more positive economic policy, which we're already getting, we see a lot more positive Bitcoin specific policy, and, and, and if the US ever announces that they're gonna actually buy Bitcoin 400K is easy, right? We, we could, we're gonna be in numbers well beyond that." }, { "speaker": "stephan", "time": "58:13", "start": 3492.84, "text": "Yeah, I, I, yeah, we'll have to see. I, I think 400 is probably, for me, I think it's unlikely. It's, maybe it's pos- it's possible, but it's unlikely. I think the sort of, at a guess, yeah, this kind of base case sort of feels more likely to me. but yeah, I mean, none of us, none of us knows or can predict that. And I guess, I guess other broader things happening in the world of Bitcoin mining, things like, I guess, new mining rigs, like one thing I've heard of as an example is like they're gonna start coming out with different types. Like, I guess historically it's been this kind of shoebox mining, or at least the, the, in the ASIC era, it was this shoebox mining, and then maybe now that it's kind of established that you set up a data center, maybe they'll make it more like server racks, things like that, or different kinds for different," }, { "speaker": "stephan", "time": "59:05", "start": 3545.48, "text": "different, setups like different, c-types of rack space, I guess. I'm curious if you have any thoughts on that, like is that gonna become a really big thing that they differentiate more?" }, { "speaker": "mason_jappa", "time": "59:16", "start": 3556.05, "text": "Yeah, no, totally. through twenty twenty, you know, it was all air cooled miners. so it's all, you know, you have environmental factors, you don't wanna play in hot and humid areas, you don't wanna play in next to water where there's salt corrosion. you have to keep, you know, positive airflow and, you know, things can come in the miner, bugs, dust, all that stuff. We're moving in an age where it's like hydro immersion. I think in the, in the second half of twenty twenties, it's like hydro It's, it's inner circulated water, so you don't have an outside filter that can, you know, have contaminants and then that ruins your, machines. immersion, right? immersing, the server into dielectric fluid and taking out external factors, you can then push the chips to, you know, clock higher, control their temperature, control their efficiency. the reason why we didn't see that as much is a, like tech, but b mostly cost. Like, hydro immersion tech existed, it was just so expensive. I remember like first hearing About it, you know, in like twenty eighteen, twenty nineteen, twenty twenty, people, it was like a million to two million dollars a megawatt just for the infrastructure. And, and then, or you could build out air for three hundred K per megawatt, so everyone's like, \"Alright, we're doing three hundred K.\" Now it's like hydro and immersion are not, you know, a little bit more than air. You know, a really good operation can build out air for one fifty, two hundred, two fifty K, and then hydro and immersion might be like two fifty, Hydrogen immersion, you get more terahash per, per slot, you get more efficiency, you get longevity. So that's why you're-- I think we're gonna see a shift into a lot more of hydrogen, immersion deployments" }, { "speaker": "stephan", "time": "01:00:58", "start": 3658.58, "text": "Interesting. So it's like, yeah, the cost has come down for hydro immersion and now, so I guess the point I get, as I'm reading you, it wasn't w- it wasn't really worth it in the early years, but now it's kind of becoming more and more worth it to do it, because of the overclocking, benefit and the extra hash that you're getting." }, { "speaker": "mason_jappa", "time": "01:01:17", "start": 3677.44, "text": "Exactly. And, and it was all a function of cost. And like for hydro example, and, and also you don't wanna be early on, like hydro used to-- they didn't have like enclosed hydro systems back then. So let's say you had like an outside water Feed, and that water gets contaminated, do you know what happens? All your miners are destroyed." }, { "speaker": "stephan", "time": "01:01:35", "start": 3695.36, "text": "Oh, wow, okay, yeah." }, { "speaker": "mason_jappa", "time": "01:01:36", "start": 3696.9, "text": "So that was the earthquake days, I bet you you read a lot of horror stories in Texas specifically with the water that's coming in. Hey, I mean, you have to not-- the water that goes in has to be filtered at certain pH levels, has to be at certain temperatures. It's, it's, it's very specific." }, { "speaker": "stephan", "time": "01:01:52", "start": 3712.64, "text": "I see, yeah. But I guess as the industry matures, professionalizes, there'll be more and more people who know how to do it, and it's kind of a standardized-- I guess it'll become more of a standardized thing, won't it?" }, { "speaker": "mason_jappa", "time": "01:02:03", "start": 3723.96, "text": "Yeah, a hundred percent. And I, and I think, it's, it's, it's, it, it's really come down to the infrastructure players, and there's a lot of third party many factors now of that infrastructure. So deploying immersion, deploying hydro is much easier, much more simple. you're seeing a lot, you know, the access to that technology at a good cost, you know, being much more prevalent." }, { "speaker": "stephan", "time": "01:02:25", "start": 3745.27, "text": "on the front of, I guess, manufacturers, are you seeing now that there'll be, you know, more other manufacturers of mining machines who are competitive or is, what are your thoughts on that?" }, { "speaker": "mason_jappa", "time": "01:02:40", "start": 3760.0, "text": "Yeah, I, and I'd love to see this, you know, Bitcoin has monopoly, they probably have eighty percent of, eighty-five percent of market share, then Microbit maybe is five to ten percent, and then the remaining five percent spread across, you know, like Canon and a few other small players. So it's just like one company that controls everything. now we have Block, you know, companies like Auradine are entering, you have other US entities, you know, I feel like I hear about a new US entity that's potentially entering the manufacturing space so it's, it's really a breath of fresh air to see more manufacturers and, and, and I'd really love to see Bitmo- Bitmain dominance come down, right? They have an absolute monopoly. they're act- they're massive miners too. they've run a huge poll, you know, it's all the centralization fears that you can think of, Bitmain has. And so-" }, { "speaker": "stephan", "time": "01:03:31", "start": 3811.44, "text": "Yeah. on the, you know, the pool side of it, do you see any, change there in terms of the pool centralization concern that people are having right now?" }, { "speaker": "mason_jappa", "time": "01:03:43", "start": 3823.54, "text": "I hope so. Listen, I think there's efficiencies to FPBS, right? It, it makes to, to have, consistent projected rewards and having your daily revenue mapped out. I think the days of FPBS, you know, could change and, and it's, and a lot of the FPS, PPS providers, there's, there's more cost than, than they can support. and you're seeing a lot of, you know, interesting pools come out like Ocean Pool and a new pool called Demand Pool that was just launched by one of my friends and, you know, Stratum v2. companies like Meror have their own pool, right? I think that's all positive too. I think ultimately, like in pools, you should have transparency, you don't really get that in FIPPS, but you, but you, but you, no, there's, there's a balance too, 'cause some people need like guaranteed rewards. so it's a, it's a really big debate in, in, in the ecosystem." }, { "speaker": "stephan", "time": "01:04:38", "start": 3878.14, "text": "Yeah." }, { "speaker": "mason_jappa", "time": "01:04:38", "start": 3878.34, "text": "And most of for our clients, like, you know, we're pool-agnostic, right? We let people kind of run in our pool and we give them good deals. If they really wanna go somewhere else, you know, we let them do that." }, { "speaker": "stephan", "time": "01:04:48", "start": 3888.88, "text": "Yeah, sure, sure. Okay, look, I understand, you've got to run, so, look, thanks for joining. listeners, check out, Mason and the team over at blockwaresolutions dot com. Mason, thanks for joining me." }, { "speaker": "mason_jappa", "time": "01:05:00", "start": 3900.22, "text": "Hey, Stephan, thanks for having me on. It was really a pleasure. Great talk." } ] }