Sazmining Podcast: Ethan Vera on Tools for Bitcoin Miners
Synopsis:
In this episode of The Sazmining Podcast, Will speaks with Ethan Vera, Co-Founder and COO of Luxor Mining. They discuss Bitcoin in El Salvador, the Chinese Invasion in Taiwan, tools for Bitcoin miners, and so much more.
Will Szamosszegi: Thank you for coming on to the podcast, man.
Ethan Vera: Thanks for having me. I've been excited for this one.
Will Szamosszegi: Yeah, we, uh, we ran into each other in Miami and that was a lot of fun and we're like, Hey, you know, you've been on before, we gotta get another episode going. So what's been new? What, what have you been up to with Luxer?
Ethan Vera: A lot of things. It's, it's hard to keep track of. Um, this is our third bear market we've been through and we always try and put our heads down, build product during these types of markets. And so we, we've been busy on a few different product launches. Uh, mainly hash rate derivatives, custom firmware, and an ASIC trading platform. Quite a few different product lines that were excited to to launch. Yeah.
Will Szamosszegi: Yeah. So I guess if, if we wanna start with the first one, how's the, um, how's the hash rate product coming along? I mean, I feel like there's still, it's still kind of like an open type of market in that arena. It's not like there's like a one go-to company that like everyone knows about yet. So yeah, I'd be curious as to like what it is you guys are focusing on, how you're approaching it, how that building's going.
Ethan Vera: Our, our view on this space is that hash rate itself will be treated as a commodity in the future. And so naturally that commodity will have things like a derivative market to support it. And so our, our thoughts are that they'll be lots of different companies and participants in this space offering variety of different derivative products. Something like a physically delivered forward contract to, you know, a cash it swap or, um, you know, based on the value of hash rate versus based on network difficulty. Yeah, a wide kind of menu for, for mins to choose from at different times and also for traders to kind of go in between these, the different platforms to arbitrage it as well as to offload certain risks on their, on their own trade. Um, so that's how we view the ecosystem developing moving forward. It, it's still very nascent. We've been saying the same thing for the past three, four years, but I, I think it has progressed a long way. Lots of companies looking at the space and uh, this past, uh, downturn in mining economics that we saw in the past six months has really highlighted the need for miners to be able to offload some of that risk onto other parties and really hedge their operations. So overall we're excited about this space, but I think it's gonna be a long journey here ahead of us.
Will Szamosszegi: Yeah, I mean, like what you're talking about right now just sounds like that next step evolution, right? Like back in 2018 or so, a lot of the infrastructure that you have today, just the abilities as a minor in terms of like borrowing lending, trying to hedge your risk, It's evolved, but it, I feel like the hash rate side of things is that next evolution that people are still looking at. So let's say that you're a minor and you wanna start utilizing some of these types of products. Is that, is this something that's live right now that customers can interact with or is this something that you know, is gonna be like launched at some point in the future for customers?
Ethan Vera: There's a few different products that exist in the, in the market already. None of them, as you kind of alluded to before, have kind of claimed the top spot as a very liquid and tradable asset. And so certainly there's not a lot of great products out there, but there is starting to be more including our, uh, new contract that's coming out. We're in beta mode right now, so we are trading it with a few different participants, both miners traders, family offices and, and those types of profiles. But as of now, there's no kind of liquid market that you see, you know, thousands of peta hash trading per day. And so that, that comes with some drawbacks, especially as a minor. Uh, right now, if there's not a lot of potential buyers in the space, that usually leads to a very expensive hedge for you. And miners typically choose no hedge versus an expensive hedge. And so figuring out that buy side and building up volume in these products is crucial to them becoming valuable for, for the miners as a, you know, risk mitigator.
Will Szamosszegi: Yeah, I I mean in the long term, how do you see this evolve? Like, cuz of course when you're building out this product testing it, you guys, it sounds like you're doing the right thing, you're going and you're testing it with a select group, making sure that it's working. So by the time that you actually announce it and launch it, then you've worked out all the kinks. So how do you kind of see this evolving, right? Because one of the things that, and I'm just kind of thinking through this with you right now, but one of the things that seems very difficult about creating a product like this is making sure that the hash rate is there and available for the exchange between both parties. Because at the end of the day, like running a mine and facility, it can be very difficult to make sure every machine's online.
Will Szamosszegi: And so it's like be becoming the market leader, getting on it early and creating that hash rate is like a huge competitive advantage. It puts you in a great spot and it's honestly something that if you wanna see the industry evolve it, it's needed, right? You need something like this to eventually get created and, and it will be created at if I to to fast forward in a number of years. So with all that said, like the way that you are looking at it, how do you see this type of liquid marketplace around hash rate evolving?
Ethan Vera: Th there that's certainly a challenge is how, how do you guarantee the delivery of hash rate? Maybe the grid has very high pricing and so that mining farm drops down to sell back power to the grid. Or maybe there's issues with machines, uh, as we know it's impossible to keep a hundred percent of your machines running a hundred percent of the time. One way to abstract away from that is to do cash settlement of these derivatives either in US dollar or Bitcoin in which you're just trading based on the value of that hatch rate rather than actually hash rate changing hands. So I think that's an easier path to market and you don't have to attack some of these big physical challenges like a hundred percent hash rate guarantee and basically having a hash rate clearing house to guarantee that level of, of hash rate.
Ethan Vera: That being said, I think in the future there'll be a myriad of different products, cash settled, physically delivered, and they both have their value on the physically delivered side. We, we do think that hash rate itself is a very unique commodity. It doesn't only represent the Bitcoin in which it can produce, it also represents governance on the Bitcoin network. As we saw with tap root in last November, it was miners who voted for this network upgrade and signaled for the activation of tap root. Tap root wasn't too controversial but you know, there, there will be more controversial network upgrades in the future, kind of like what we saw with seg. And so in the future we, we think commodity or hash rate is gonna be treated at a premium in certain cases to the Bitcoin that they can mine because that governance factor, companies like Coinbase or Kraken will want some form of hash rate so that they can have a say and a seat at the table when these big decisions come on the network that, you know, they derive the majority of their revenue from. So I'm going down a deep rabbit hole here, but long story short, I think there'll be a few different products that exist.
Will Szamosszegi: Oh, well one of the things that I actually don't think we've covered in on this podcast yet, if you want to talk a little bit of taproot and you know, what it is and, and why you think it might be important, that might be a, a good foundation to lay. But I think what you're saying regarding, you know, some of these other players getting involved and potentially using hash rate to get involved is really fascinating. But yeah, why don't I give it to you for, for tap root
Ethan Vera: <laugh>, Maybe I'll start with segway too. Uh, just cause it kind of leads into like this whole theme of network upgrades. SEG came about I think almost like a half decade now time's really flying here. But basically that was our first taste of a network upgrade that relied on minors kind of supporting what the bitcoin community, the bitcoin core developers and kinda general community wanted in terms of an upgrade. And there was a lot of debate around the activation of that upgrade, different like, you know, b a b nine, uh, basically signifying like how does a network upgrade get proposed and then actually put into to place. And some of those proposals were more minor focused, some of them were more user focused, would would be like the people who run Bitcoin nodes. Ultimately the minors kind of fumbled that. I think it was in 2016 Bitcoin minors weren't very active in contribution of the overall Bitcoin network.
Ethan Vera: And so a lot of people gained like a distrust for minor as viable partners to push forward new network upgrades or turn them down when necessary. That being said, you know, fast forward to 2021, Tap root was kind of the next major network upgrade included a lot of things around like privacy of Bitcoin and enabling new smart contracts, DLCs and Defi to be built on top of Bitcoin. It had been out for a few years in debate and really gained a lot of momentum in the Bitcoin community and there was, I would say like near perfect consensus that it was good for Bitcoin. There wasn't a lot of strong opponents left by summer of last year. And so it became clear that the mins needed to support this or else again, minors would be at odds with the general Bitcoin community. And so this time minors and mining pools really went, went forward with it.
Ethan Vera: There was a website called Tap root activation and basically mins were kind of signaling to the market through pools, you know, if they wanted to activate this or not. And there was a few pools that kind of didn't have their act together and took a while to figure out how to activate it. But overall, like it got done in November last year. And so miners have since regained the trust of the overall Bitcoin community and will probably be more active participants in governance moving forward, which is kind of relates to that point where, you know, minors are really important to the network for that reason and pass rate is the underlying commodity that supports that.
Will Szamosszegi: That's fascinating and and thank you for explaining that. So when we talk about what tap root allows, right, you, you talked about privacy defi on Bitcoin. I feel like a lot of people obviously know defi with things outside of Bitcoin, not necessarily like on things like any other chain really, like Defi and Bitcoin don't really seem to go hand in hand. So from your perspective or like based on what you've heard, what's being worked on was allowed from tap root or is there anything else that in regards to like privacy or defi Bitcoin that you're excited
Ethan Vera: About? When I first started hearing about discrete log contracts DLCs, uh, a couple years ago, my friends outta Toronto were building atomic finance and that they had, uh, smart contract based on the US election at the time, which is actually an really interesting Oracle because there was, you know, obviously some debate for some period of time of what took place there. But they, they built a smart contract on Bitcoin that basically settled on the Bitcoin network based on the elections and, and since that point, which was January I guess of 2021, so you know, coming up a year and a half plus now, I think the majority of, at least the uses I've seen have been on derivative side. Actually I spoke with a, a company today that's looking at creating derivatives on network, difficulty on gold real estate and some other commodities directly through DLCs.
Ethan Vera: I would say there isn't widespread adoption yet. I, I don't understand that the technicality is too much in like the limitations there, but it's clear that the volume of defi and Bitcoin is very small relative to Ethereum. But that's also something that as minors we need to care about and really need to support with a decreasing block reward every four years, it's really crucial that transaction fees pick up the, the pace here from at least where they've been since the China ban of last year. And so getting more applications and products built on Bitcoin is a huge net positive for miners. We run an Ethereum mining pool, It's been fascinating to see how much of the mining revenue comes from transaction fees. Uh, me and tips there is like the board, a yacht club, whatever metaverse print earlier this summer and we hit an Ethereum block that had 200 Ethereum in it as part of tips and the block reward's only two E so it was a hundred x. That is crazy in, you know, transaction fees equivalent. And so that, that type of future I think is really important for Bitcoin. We need to fund and develop as many platforms being built on this as possible and it's gonna lead to higher transaction fees, which then leads to more security and network spend. People like you and I will go out, we'll spend more money to, to secure the network every day, buy more land, buy more infrastructure energy machines and you know, keep pushing forward. Bitcoin is the most secure network out there.
Will Szamosszegi: Yeah, that it's so crazy to think about. Cause I mean logically we know the last Bitcoin that's gonna be be mined in the year 2140 and the block reward at that time is going to be, uh, I mean you would know better than, was it gonna be like, like one Bitcoin for the entire year or or half a Bitcoin, something like that. Yeah, so, so almost nothing basically. And so you, you're, when you think about it logically you're like, okay, well how is the mining network going to be sustained? Obviously you're gonna need a much higher Bitcoin price, but you're gonna need it to be honestly long before have already achieved like global reserve status or just be that underlying layer one to the financial system. At least that's, that's my own prediction. Like one of the reasons why Bitcoin has so much value and can achieve everything that we will talk about when we say reserve currency status or decentralization is because of mining, right?
Will Szamosszegi: You have this economic actor that's involved in the consensus mechanism that makes Bitcoin function. So the mining network, there's a lot of economic value going into that. Now all of a sudden if you wipe out the mining part of Ethereum, you just wiped out a large economic actor that is supporting your ecosystem. And so, I mean, to get more granular and not as broad strokes, when you think about it, let's say that you're using any of these applications, you talk about, you know, all these valuable applications that are being used on top of Ethereum. If you wanna transact using the these applications, you need to have Ethereum to do so. And so if the transaction fees are really high, then you're paying a lot of money to acquire more Ethereum to continue using the applications that are built on top. And so how does that play out?
Will Szamosszegi: Well, it plays out with, if the transaction fees come way down, then yes, you can use all those applications that are built on top, but they might not be as secure because you just removed the mining network, the decentralization or tornado cash factor that we've seen play out recently. It's like how secure is the base layer and then on top of that, there's not as much demand that you have for buying actual Ethereum to utilize all the applications. And so what happens to the price of Ethereum, uh, the full proof of stake chain? And so these are all the things that I was thinking
Ethan Vera: Through. But that's a, that's a great point. Like, uh, a, a lot of the criticism of proof of work, false criticism is that it's not scalable. There, there really isn't like consensus that proof of work is less scalable than proof of stake. You can look at ADA and, and BSC as an example of that, or Bsv rather, you know, the transaction through what's higher. But as you highlighted, it's a trade off. You can have very high throughput and close to zero transaction fees, but you're sacrificing your security. Nothing in life is free. And so if you do want a secure network, you need to pay for it. And I think that's what Bitcoin's model is, is pretty good at right now is there's a lot of reward going out to Bitcoin miners and it encouraging people to travel across the world to buy land and plug into a electricity grid, buy machines, mortgage, you know, their house to go fund a new mining venture. Like every day we wake up to compete to add more security to the network. That's all I can think about is how do I get more hash rate. Yeah, I I that was a great point that you brought up there.
Will Szamosszegi: So that's interesting. I, I actually on the podcast haven't spoken with anyone who's been to El Salvador and utilize Bitcoin in transactions or the Lightning network. So I mean, maybe to start, do you want to talk about the approach that El Salvador has taken, how they're utilizing the Lightning network and then we can kind of dive into how it actually is functioning on the
Ethan Vera: Ground? My understanding with El Salvador is that they moved off their own currency some time ago to to use the US dollar, which a lot of countries have. You know, it, it's very hard to, uh, in, in some of these developing nations, run your own central bank, protect yourself from rampant inflation like we're seeing in Argentina. So sometimes moving to a US dollar is like, uh, bandaid I guess on, on some of the issues that you're running into. Those types of societies I think are easier to adopt Bitcoin because they already don't have a central bank that can print unlimited currency. They can't just print $10 million in US like US dollars, right? And so going to a Bitcoin standard is actually easier pill for them to swallow. The, the people in El Salvador, I would say, you know, it's an older generation of people and so there, it's not kind of what you see in like in Nigeria for example.
Ethan Vera: So it's not primed for technology adoption, but the government put in place some incentives for that to happen, including if they downloaded the government Bitcoin wallet, which includes a lightning wallet, you know, they'd get $15 equivalent in Bitcoin, which to a lot of the people there is a lot of money. And so that's kind of like taking a a page out of like PayPal and Venmo's book, right? PayPal just gave $20 free to everyone and now suddenly in everyone in the US has it, it's a really nice like bootstrapping mechanism for payment wallet. And so every vendor you see there, at least in San Salvador and Elante where we spent the most amount of time, has a Bitcoin wallet, restaurants, taxis, clothing stores, everything. And so yeah, the adoption of both Bitcoin and Lightning Network there was, was unbelievable to see.
Will Szamosszegi: Is there like an app that you would just use, Everyone has smartphones and then it's basically like a Stripe or like just a, a very simple normal digital checkout?
Ethan Vera: Yeah, you can use your own wallet, right? Doesn't need to be like anything compatible. We're all using the Lightning Network. I would say the majority of the folks that we saw there that were accepting Bitcoin and Lightning was using their country wallet, I think it's called Chabo, but also like Jack Wallers and some others have done a lot of work there. So there was some, some variety. But of course we go in with, you know, a variety of like Blue Wallet or, or others. Uh, so I would say like the majority of like locals use their government wallet there.
Will Szamosszegi: Okay, so that's fascinating. So there's the government wallet and then you can use any, any wallet to just interact with the government wallet like that app?
Ethan Vera: Yep, just use the Lightning network. I mean all you have to do is get their, their address simple as
Will Szamosszegi: That. That's incredible to see. Cuz a lot of times when you're talking about Bitcoin adoption, you'll speak with people and they'll say, hey, well you know, you can understand it and I can understand it, but the general population isn't gonna understand it. And what's crazy to me is like if your life's on the line or if your livelihood's on the line, you'll figure it out. Humans, you're, we're very adaptable animal. And then on top of that, it's not like everyone knows how the internet works, but everyone still has found a way to utilize the internet or find some sort of benefit from it. So I feel like you have those types of dynamics at play and it's not like every single person is gonna understand how to run a Bitcoin node, but people are gonna be able to, as proven by your trip, be able to figure out how to interact with these types of technologies.
Ethan Vera: And what what's encouraging too is not every vendor auto converts to us dollar or stable coin. And so you're making this payment to a side vendor for, you know, $1 equivalent worth of Bitcoin. They don't go and auto convert that, a lot of them are holding Bitcoin as treasury for their business or for their, for their personal stuff. So, so that, that was really awesome to see and encouraging.
Will Szamosszegi: So I, I also wanna talk about what we touched on earlier briefly is like tornado cash, right? And so with tornado cash you let, let's first talk about like what the protocol actually was and, and then the reaction by the governments to, to what it was being used for and, and kind of take it from there because it was one thing where when I was looking at it, I was, it's not like I was surprised by the outcome, but it was almost like, okay, well a line was just drawn, you know, like this seems like it was crossing a line and was something that could be stopped. And so it, it's crazy to see it playing out right in front of us
Ethan Vera: Here. I never used tornado cash and actually it was the first time I'd heard of it when it, it got bann. So that's
Will Szamosszegi: The first I heard of it too
Ethan Vera: On, I'll never have the chance to use it. But I mean it's, it's a mixer. So similar to like a, a mixer you'd see like, uh, you know, a so or whatever on Bitcoin, but based on Ethereum. And so basically it makes anyone who uses it much more anonymous, it kind of hides away some of the public tracking that can be done on, on public blockchain through addresses. And it's just, it makes overall it hard to track different wallets and who owns what wallet. And so there, there's a multitude of reasons why people would use this at this most simple case, people wanna remain private, they don't need the whole world to know exactly what they're doing in their personal life. And not all those people are criminals as much as the government sometimes wants to label privacy as all criminals, but there's a lot of folks, uh, normal people that just want privacy in their life.
Ethan Vera: Same reason why, you know, you have a, a closed door and you're buying your house. Like, it's not that you're cooking up meth in your house, it's just like, hey, I don't want the entire world seeing me. But there's, there's also other reasons, like, you know, you don't want people to front run your trades on defi applications. You know, they track, like if you're a fund, maybe let's use a funny example like TRIO'S capital and people are like trying to front run your trade, right? Like you, you don't want them to know every single address you have cuz you don't want every trade to be front run. And then of course there is the illicit aspect to it. It's like, it'd be foolish not to acknowledge that like there are obviously people doing illicit things deemed by certain governments on these blockchains. It just exists as it does with US dollar or other currencies too.
Ethan Vera: So they, yeah, there's a few different reasons, but obviously the, the US government doesn't like these things because programs like chain analysis have a really hard time tracking down criminals that use them, but now they're banning it from use from everyone. So basically they're targeting criminals, but now everyone's getting, you know, their privacy taken away from them. And what I see as like a fundamental right to be private in your financial transactions, but yeah, it's unfortunate the way it's gone here and I I don't think it'll be the last time we see infractions on privacy by various governments around the world.
Will Szamosszegi: Yeah, I mean when, so I I was just like you, I first heard about it like when it was getting banned and now you're looking at the developer, like the, I think the lead developer on it who's getting arrested because he was part of the project and you know, was being used by a legal actor. So you have this big debate where a lot of people who are very freedom oriented and saying, hey, like this is my right, like I want have privacy on my transactions. All of a sudden now they're being looped in because it was being used for some illicit activities. And I heard that there was like a wallet out there that was sending like small microtransactions to a bunch of like wallets of like famous like influencers like, like Shaq and, and Logan Paul and things like that, just almost making a mockery out of it, right?
Will Szamosszegi: Because like what are, all of a sudden now all those wallets that received a tra a little bit of e from the mixer band, like are those now also sanctioned wallets? It, it's kind of difficult because it's almost like freedom of speech, but instead of speech, it's like code, right? It's like, it's kind of hard to, to draw the analogy, but it's like how are you going to ban open source code or open source technology that anyone can plug into? It's like those people, the famous celebrities who have their wallets, like people know the address and were sent this Ethereum, it's not like they were any way involved with the mixer, right? But all of a sudden now their wallet holds some of that Ethereum. So it's kind of crazy. I don't know how it's gonna play out, but it it makes you think, right?
Will Szamosszegi: Because I almost view what's happening and, and outside of the Bitcoin ecosystem and in defi as a testing ground for what's eventually going to be built and implemented on Bitcoin. That's my own personal view. I could be completely wrong, but if you take that view then if you're in the Bitcoin community, you look at that and you're like, okay, well you know, what lesson can you learn? And when something like that gets supplemented on Bitcoin, what's the best way to do it? The good thing about Bitcoin is that you do have that secure base layer. I like to say it's like the most secure network in the entire world. Nowhere else has that type of incentive as the Bitcoin network.
Ethan Vera: Yeah, you, you raise good points, Sarah. I mean, uh, it won't end with tornado cash. Uh, there's a lot of mixers out there that are all targets now as well. Other areas of the stack too. And I, I think what's important for regulators, especially here in the US to realize is that you, you can ban your own people from interacting with these things, whether it's a ban of using tornado cash or even ban a mining, but you can't stop it. You can only stop it inside your own borders. And so as, as a government like the US government, you have a decision to make. Do you want to be an important part of a new global financial system like Bitcoin? Or do you wanna force all the miners to go to Kazakhstan, Iran, Latin America, Northern Europe and really kinda be out of your control?
Ethan Vera: And so I I think that the, when regulators step back and kind of really hear from domain experts on this and kind of listen to reason, they realize they should have a seat at the table. And so they should be encouraging the development of bitcoin mining and not forcing it overseas. And you know, there, there's certainly a, a slippery slope here that starts with tornado cash and goes all the way down into mining where transaction need to become KYC in order to add them to a block, in which case that would destroy the entire US mining industry. So yeah, I think, uh, this is gonna be an interesting battle for us on, on Capitol Hill and educating these regulators and helping them, you know, provide a good path forward for
Will Szamosszegi: Them. So I, I'm gonna ask you a question here, and it's gonna be like an educational type of question, like an educational piece. Let's say I give you a magic wand, right? And you wave that magic wand and you're in charge of the what happens, like how regulators approach the mining industry in the US taking everything that, you know, all the knowledge that, you know, no single like governmental official would really have the time to go and learn. If you were to go and give the prescription for what the regulators should do for the mining industry in the United States, what type of regulation would you put in place? Like what, what what would the industry look like? What type of rules would you try and
Ethan Vera: Implement there? There's two main ones that are top of mind. O obviously more than that too, but to two I'll focus on just given timing. So the, the first is around this idea of like censoring transactions, uh, within the Bitcoin block itself. I think this is kind of a fool's effort to, to ban and censor Bitcoin from happening within the United States. And so I would urge regulators, or if I was a regulator, I'd put this in place where transactions are fungible in the block, miners can mine whichever block they want and don't need to censor certain transactions being put into them, basically making transactions fungible within the Bitcoin blockchain. So I think that's the number one thing. And then number two is more round like energy, which I guess we're opening up another kind of worms here, but as you saw with the New York bill, it's still ongoing a proposal to target certain minors that use a certain energy source.
Ethan Vera: While I'm obviously supportive of efforts to fight climate change and build renewable energy, I do think it's dangerous for a government to target a certain form of compute power with a certain form of energy. So if, for example, if you're in New York and you plug in a machine that is producing video rendering for Netflix or you know, some other worst video site, that's okay. But if you plug in a computer that's performing the shot 2 56 algorithm, then that's not allowed. And so it sets a very dangerous president where leaders can come in, be lobbied by whichever political group they want, and then determine, okay, this form of compute power is banned, this form isn't. And you can see examples of how that breaks down in a lot of developing nations. You know, countries like Jordan have different electricity prices based on whether you're a pizza shop or kabob shop because the kabob shop lobby is, you know, more important in the government, it creates this multi-tiered system that breaks down into chaos. And so it's very crucial that miners treat all forms of compute power equal. If you're gonna put a ban on Bitcoin mining using fossil fuels, you should just put a ban on everyone using fossil fuels. And yeah, that, that is quite a dangerous president that New York is trying to set right now. And I think something that the US should definitely stay away from as kind of a developed and bureaucratic and hopefully a good rule of law
Will Szamosszegi: Country. That's another big piece. And, and you're right, it is another can of worms, but I I am really fascinated by it is this whole conversation around like energy use. I mean, for example, even I, I've already kind of noticed on like Twitter and these other areas, the conversation starting to pick up around energy use and mi mining it, which was already picking up, but now all of a sudden, like now that Ethereum is going off of proof of work and fully into proof of stake, now that just becomes a full nother attack vector I feel like on Bitcoin where let's say that you were part of the Ethereum community, and as much as we hate to say it, there is kind of like a religious aspect to it. It's like, okay, I'm into Ethereum, I'm into Bitcoin, whatever it may be. I, I feel like as soon as you take Ethereum off of that proof of work mechanism, there's just a whole nother large group of people that now have, like, who, who before couldn't have said, Hey, we're gonna attack Bitcoin for its energy use Now all of a sudden now that they're ethereum's not using it, I just feel like there, it's a conversation that's starting to pick up.
Will Szamosszegi: And you know, I I I really am curious, and I don't know the right answer here, but what ends up happening on this conversation around energy and bitcoin, bitcoin mining, I mean, I, what you mentioned happening in New York is, is crazy and it does set a crazy precedent and it really does put the US at a disadvantage. So, you know. Yeah. What what are your thoughts on, on all
Ethan Vera: That? It's, uh, yeah, it's an interesting topic to follow. Uh, Bitcoin has done a really good job at highlighting the positive impact of mining on renewable energy infrastructure and energy infrastructure in general as we, the world forgot that at the center of our universe is energy. Until like last year when, you know, energy prices started skyrocketing around the Russia, Ukraine prices, we've done a good job in the Bitcoin community pushing forward, this is what Bitcoin mining can do for renewable energy. We can do flared gas, we can reduce output and ultimately push for it our, our system. That that same type of research and marketing hasn't been done in Ethereum, but is is in some ways the exact same. Of course, it's a different system. 85, 90% of the Ethereum network is run by GPUs. So there's a much larger retail base, much more traditional, but it also has a very positive impact on energy and data center infrastructure, which is crucial to the security of a, of a country.
Ethan Vera: And so if you're a country that's trying to incentivize Google to come in and place a large data center with tens of thousands of GPUs, Google wants some level of comfort, or I'm just using them as example, but any, any cloud compute wants some level of comfort that they can sell the compute power in which they're installing. So you have 10,000 GPUs. You need to make sure that there's, you know, a dozen universities using you for ii testing. You need to make sure that local networks are hooked up to you. YouTube is gonna use you for video rendering, whatever it may be. Oftentimes it's impossible to get a hundred percent utilization of your data center. And so where do you turn to, Well, there's a buyer that's 24 7 of compute power, no questions asked. And that's Ethereum. At any point, anyone can turn on a GPU and start mining Ethereum utilizing their, their GPUs that are unused and start making return.
Ethan Vera: And so it encourages development of data centers to come in and build capacity and so that there's this positive in on mining an Ethereum that no one touches on. And so the community is kind of labeling this move to prove a stake is good for the environment. While I say the opposite, I, I think there's gonna be less investment in data center technology in, you know, countries and there's gonna be less, you know, use of, of renewable energies that can use a 24 7 flexible demand response form of compute. So, uh, that's my rant there. <laugh>,
Will Szamosszegi: No, that, that was incredible. I've, I've actually never heard the explanation on the Ethereum side, but that was really interesting to hear that cause yeah, I mean, uh, this whole conversation, it reminds me of what I, I spoke about with Brandon quit him on this podcast. He's one of our advisors and is, um, you know, helping grow swan Bitcoin. And what he's talking about in writing about is how Bitcoin miners are like the pioneer species. So you can kind of think about how the bitcoin miners will go and bootstrap energy assets in different locations where, you know, there wouldn't be that type of investment or commercialization to even bring that energy online. Suddenly now you have an energy source, you need people to work and make that energy source function and those people need like a community around them. So the incentive of bitcoin mining is incentivizing people to go and build out more energy sources where the Bitcoin miners will utilize that energy.
Will Szamosszegi: But eventually as that place gets more developed, you'll see the miners be economically competitive in that location anymore and go and pioneer a new asset or a new area to utilize energy. And um, I mean that's obviously a huge benefit, right? Because how do you improve people's standards of living? Well, it's not by getting rid of the electrification of the grid. It's not by getting rid of your access to energy, it's by going and harnessing energy in a better way. The Ethereum side of things I think is very interesting as well, where the proof of stake, you're killing that, you're killing that, that pioneer species in a way that's going and, you know, trying to push forth innovation and I guess the, the data center side of things. Yeah, that, that was really interesting to hear you talk through the Ethereum
Ethan Vera: Side. I think it's really important that the Bitcoin and Ethereum communities don't relentlessly attack each other. We've seen some obviously Bitcoin members trying to go after Ethereum for being labeled as a security and as it moves to prove stake, obviously it does look increasingly like a security. Um, and then obviously there's members of the Ethereum community going after Bitcoin for its energy consumption and perceived harm on the, on the environment. Either way, I think it's bad for the overall ecosystem. If Bitcoin attacks Ethereum and Ethereum goes down with regulators, the next in line is Bitcoin for some whatever reason, um, if it's theum attacks Bitcoin for energy use, Bitcoin goes down. So Ethereum, so in, in some of the capacity, like our efforts really should not be focused on attacking each other, um, regardless of, you know, philosophical beliefs of consensus mechanism, really like we should just be focused on building the best networks possible. And if you don't like the other network, just try to ignore them and build your
Will Szamosszegi: Own. Well, in terms of just the overall geopolitics that are involved, we've been talking about regulation, right? But there, there are certain things right now happening in the world that are just unbelievable. Like we're living in like a black swan era, it feels like, right? And so we, we mentioned like the Russia Ukraine conflict and one thing that I personally am not sure how it affects the mining industry, like what happens in x in this event then I'm about, I'm about ask you this question, but let's say you see China in day Taiwan, right? I mean you're looking at the hub for what is really just the backbone of not only the mining industry, but so many industries around the world, right? Um, with the, the semiconductors. And so if you see an invasion of China into Taiwan, I mean we've already been seeing supply chain constraints with c supply chain constraints with the conflict that's escalated with Russia, Ukraine. How do you think an invasion into Taiwan would end up playing out? And you could mention like how you think it plays out globally, but also like how do you, what do you think the ramifications on the mining network are in that type of a scenario? It's a very tough question. <laugh>.
Ethan Vera: It is there, there's so many angles. I could take this. One of the most interesting books I've read was on China by, uh, Kissinger who, who is part of like Nixon's government. Nixon sent him to China to improve relations with China in the US at a time where it was very hostile. So he was a very big China historian. There's a lot of takeaways from that book, but one thing is that China moves very slowly there. There're usually not a nation that is gonna send them to this vehicles and land on, you know, the beaches of Taiwan to take over. It would be more of like a political low takeover, somewhat what we've seen in Hong Kong. I mean, Hong Kong's supposed to be handed over in 2047. Obviously it's lowly becoming, you know, handed over to China before then. And so if there is kind of a takeover of Taiwan, I expect it to be political in nature slower and, and not by brute force.
Ethan Vera: It's usually not the, the Chinese method of, of expansion. And they're not always the most expansionary people too. Obviously Taiwan's a special case where it used to be unified Taiwanese people are ethnically Chinese. So it is, I guess a, a different example there. But I, I don't expect like a rapid takeover regardless having p smc, which is today one of the most advanced semiconductor foundries out there, they're heading into a three nanometer setup by end of this year base. There is key consideration for the United States. It's become clear that semiconductor production onshore is vital to national security if you're a big country. And so that's why it seems like the United States is rushing to get TSMC and Samsung to build foundries onshore in the United States and also encourage other semiconductor production in the United States too. To my last knowledge that's expected to start happening in 2024, probably like not set up until 2025.
Ethan Vera: And so I think the chances that the United States let, uh, China, uh, come into Taiwan in any kind of material capacity before then is, is limited just given that, you know, they need to protect their supply of chips. I mean, TSMC is the biggest supply of Apple chips out there. If suddenly China controls the chips going into Apple phones, that's a big security threat for the United States government. So I don't think they can let that happen for another few years at least. If it were to happen, let's say whether it's, you know, next year or 2030 or whatever, the mining industry I think will adapt. There's still kind of legacy Chinese foundries that go into chips that end up in on the American grid. For example. SM which is an OFAC sanctioned company now is a semiconductor company based on mainland China. They supply chips to canon, the Avalon units, which are bought by a lot of Americans and then put onto grids like Ercot. That hasn't been cracked down upon yet. But I think if things escalate with China, like certainly American regulators and government is not gonna likem chips operating on their electricity grids, which are the backbone of society, you know, situation escalates. I think they'll be a wide crackdown of any chips coming out of China, including if they took over Taiwan, the chips coming outta Taiwan. So it would have a huge impact on the relationship between many factors in China and US customers, which represent the lions share of their new
Will Szamosszegi: Purchases. Well, hearing you say that does make me feel a lot better, just <laugh> it's like, like a sigh of relief cuz Yeah, I I didn't realize that the background on, on Kissinger and uh, the way that China normally approaches these things as well as the incentive you mentioned with the us, like basically if it did come to that type of a conflict, having a huge vest at stake to not let that fall, that's good to know. And so I wanna move on to the, a little bit more policy driven or policy centered conversation on, uh, what's happened with the inflation reduction act and some of the incentives that are getting, getting put in place, like in, in all transparency, I haven't gone and dove into it that much, but I had a conversation with one of our advisors the other day who's in the solar industry talking about how there are a lot of ramifications coming from this for the US solar industry.
Will Szamosszegi: And so as quick context as we know, China has done a lot to help support their, their domestic solar industry and renewables. And, and that has given them an advantage over other countries internationally. And so to my understanding, what has just recently happened is that there's been this huge push within the government in the US to, to try and help support the, uh, solar industry here in the US and, and renewable energy. And that's pretty much the extent of my understanding of it as it stands right now. I was wondering if you had any thoughts on the act in total or the ramifications on renewable energy here in the
Ethan Vera: Us? So the inflation act, which really should be called the Climate Change Act, I mean mostly I think, what is it, like 75% of the spending or, or something like that is heading towards climate change initiatives rather than reducing inflation, which itself is kind of a weird thing to do, spending more money to reduce inflation, but okay, regardless, like focusing on the, the climate change aspect, I think this is a, a huge net positive for bitcoin miners specifically because it's gonna funnel a lot of money into renewable energy products, solar, like you mentioned, uh, other platforms like wind and geothermal. And so that's naturally a good thing for bitcoin mining because it's a symbiotic relationship. Renewable energy needs flexible load like Bitcoin mining to really monetize their asset. You go to West Texas right now for the majority of times in which wind is blowing, a lot of those windmills are shut off, the wind's blowing, but it's because there's no demand at that time in that rural area for that renewable energy.
Ethan Vera: And so it's really important that you get a flexible load close to your renewable energy site to, to offtake some of that energy and it makes the whole project that much more viable and way more economic. So renewable energy needs bitcoin mining and flexible load, and then bitcoin mining benefits from subsidies in renewable energy as those, you know, any other industry, there's a lot of money there to get in as investors or partner with, I think it's gonna be really good for bitcoin miners in the United States. And then it's gonna be good for Bitcoin elsewhere too, because I mean, this is kind of a pessimistic view. I I don't usually like to have pessimistic, but like this act does nothing for inflation. In fact, it might actually increase inflation. So it becomes increasingly clear why there needs to be an alternative global financial system that's not dictated by, you know, a handful of people in Capitol Hill to determine how everyone else is gonna live their lives and, you know, save with their currency. And so it's gonna be a net positive for bitcoin mining. It's gonna be a net positive for Bitcoin in my
Will Szamosszegi: View. Yeah, that, and it's, when you were just talking through that there, it reminded me of this, this thought I had the other day, which was when, when you think about a Bitcoin, it's not like there's a marketing department, it's not like there's a individual CEO or a company pushing it forward. It's, it's almost like it's, it's open source code, but it's like an idea that goes and it wins the hearts and minds of people. And more and more people learn about all the aspects involved and, and realize, hey, this is a huge technology solution to a lot of problems that you see today. And whenever you see something like inflation or these types of acts that are passed that involve a lot of money printing and, and supporting certain industries, but also really in a weird way, having an aspect of theft of the everyday person who's holding dollars.
Will Szamosszegi: It's like a big marketing campaign for Bitcoin, right? It's, it's like the more that people see this happening, it's like these dollars are almost like the marketing campaign behind Bitcoin. It's like it forces people to say, Wait, what's going on here? Like, where's this money coming from? Like how does, how does this whole system works work? And, and when you really understand how everything works, it, it puts forth a, a good case for, for Bitcoin and, and the, it shows the value of bitcoin mining. You're not just looking at Bitcoin mining when you understand all this as just a wasted energy source, wasting energy using the same amount of energy as certain countries. You're realizing, wait, this is the foundation to, in a big way improve the world in many different ways to improve the way that the financial system works to improve the actual custody of assets, right? There's so many, many different, different things that are behind Bitcoin that people end up learning because of things like this getting passed and <laugh> in a weird way as we were talking through it, it makes me think, wow, this was almost like a huge, like a, a huge win for the, the bitcoin community even, even though Bitcoin isn't necessarily directly stated anywhere in, in the bill.
Ethan Vera: It is, yeah. Yeah. The corporate taxes obviously I think increase under this bill. So for companies operating in, in the us you know, that that might hurt, but overall, like in my view, a huge net
Will Szamosszegi: Positive, this was an awesome conversation. Um, you, you brought up so many things that I like so many new ideas that I ha that I've never heard before, but that all make complete sense. So I, I appreciate you, you know, going and, and bringing all those to the, the table here and yeah man, we'll, we'll have to run it back again soon and uh, hopefully we run into each other at another conference again soon.
Ethan Vera: Yeah, thanks for having me on. That was a fun conversation.
Will Szamosszegi: Yeah, for sure man.
Ethan Vera: I think this is kind of a fool's effort to then and censor Bitcoin from happening within the
Will Szamosszegi: United States. At the end of the day, like running a mining facility, it can be very difficult to make sure every machine's
Ethan Vera: Online minors have since regained the trust of the overall Bitcoin community.
Will Szamosszegi: How is the mining network going to be sustained?
Ethan Vera: It becomes increasingly clear why there needs to be an alternative global financial system that's not dictated by handful of people in Capitol Hill.
Will Szamosszegi: Thank you for coming on to the podcast, man.
Ethan Vera: Thanks for having me. I've been excited for this one.
Will Szamosszegi: Yeah, we, uh, we ran into each other in Miami and that was a lot of fun and we're like, Hey, you know, you've been on before, we gotta get another episode going. So what's been new? What, what have you been up to with Luxer?
Ethan Vera: A lot of things. It's, it's hard to keep track of. Um, this is our third bear market we've been through and we always try and put our heads down, build product during these types of markets. And so we, we've been busy on a few different product launches. Uh, mainly hash rate derivatives, custom firmware, and an ASIC trading platform. Quite a few different product lines that were excited to to launch. Yeah.
Will Szamosszegi: Yeah. So I guess if, if we wanna start with the first one, how's the, um, how's the hash rate product coming along? I mean, I feel like there's still, it's still kind of like an open type of market in that arena. It's not like there's like a one go-to company that like everyone knows about yet. So yeah, I'd be curious as to like what it is you guys are focusing on, how you're approaching it, how that building's going.
Ethan Vera: Our, our view on this space is that hash rate itself will be treated as a commodity in the future. And so naturally that commodity will have things like a derivative market to support it. And so our, our thoughts are that they'll be lots of different companies and participants in this space offering variety of different derivative products. Something like a physically delivered forward contract to, you know, a cash it swap or, um, you know, based on the value of hash rate versus based on network difficulty. Yeah, a wide kind of menu for, for mins to choose from at different times and also for traders to kind of go in between these, the different platforms to arbitrage it as well as to offload certain risks on their, on their own trade. Um, so that's how we view the ecosystem developing moving forward. It, it's still very nascent. We've been saying the same thing for the past three, four years, but I, I think it has progressed a long way. Lots of companies looking at the space and uh, this past, uh, downturn in mining economics that we saw in the past six months has really highlighted the need for miners to be able to offload some of that risk onto other parties and really hedge their operations. So overall we're excited about this space, but I think it's gonna be a long journey here ahead of us.
Will Szamosszegi: Yeah, I mean, like what you're talking about right now just sounds like that next step evolution, right? Like back in 2018 or so, a lot of the infrastructure that you have today, just the abilities as a minor in terms of like borrowing lending, trying to hedge your risk, It's evolved, but it, I feel like the hash rate side of things is that next evolution that people are still looking at. So let's say that you're a minor and you wanna start utilizing some of these types of products. Is that, is this something that's live right now that customers can interact with or is this something that you know, is gonna be like launched at some point in the future for customers?
Ethan Vera: There's a few different products that exist in the, in the market already. None of them, as you kind of alluded to before, have kind of claimed the top spot as a very liquid and tradable asset. And so certainly there's not a lot of great products out there, but there is starting to be more including our, uh, new contract that's coming out. We're in beta mode right now, so we are trading it with a few different participants, both miners traders, family offices and, and those types of profiles. But as of now, there's no kind of liquid market that you see, you know, thousands of peta hash trading per day. And so that, that comes with some drawbacks, especially as a minor. Uh, right now, if there's not a lot of potential buyers in the space, that usually leads to a very expensive hedge for you. And miners typically choose no hedge versus an expensive hedge. And so figuring out that buy side and building up volume in these products is crucial to them becoming valuable for, for the miners as a, you know, risk mitigator.
Will Szamosszegi: Yeah, I I mean in the long term, how do you see this evolve? Like, cuz of course when you're building out this product testing it, you guys, it sounds like you're doing the right thing, you're going and you're testing it with a select group, making sure that it's working. So by the time that you actually announce it and launch it, then you've worked out all the kinks. So how do you kind of see this evolving, right? Because one of the things that, and I'm just kind of thinking through this with you right now, but one of the things that seems very difficult about creating a product like this is making sure that the hash rate is there and available for the exchange between both parties. Because at the end of the day, like running a mine and facility, it can be very difficult to make sure every machine's online.
Will Szamosszegi: And so it's like be becoming the market leader, getting on it early and creating that hash rate is like a huge competitive advantage. It puts you in a great spot and it's honestly something that if you wanna see the industry evolve it, it's needed, right? You need something like this to eventually get created and, and it will be created at if I to to fast forward in a number of years. So with all that said, like the way that you are looking at it, how do you see this type of liquid marketplace around hash rate evolving?
Ethan Vera: Th there that's certainly a challenge is how, how do you guarantee the delivery of hash rate? Maybe the grid has very high pricing and so that mining farm drops down to sell back power to the grid. Or maybe there's issues with machines, uh, as we know it's impossible to keep a hundred percent of your machines running a hundred percent of the time. One way to abstract away from that is to do cash settlement of these derivatives either in US dollar or Bitcoin in which you're just trading based on the value of that hatch rate rather than actually hash rate changing hands. So I think that's an easier path to market and you don't have to attack some of these big physical challenges like a hundred percent hash rate guarantee and basically having a hash rate clearing house to guarantee that level of, of hash rate.
Ethan Vera: That being said, I think in the future there'll be a myriad of different products, cash settled, physically delivered, and they both have their value on the physically delivered side. We, we do think that hash rate itself is a very unique commodity. It doesn't only represent the Bitcoin in which it can produce, it also represents governance on the Bitcoin network. As we saw with tap root in last November, it was miners who voted for this network upgrade and signaled for the activation of tap root. Tap root wasn't too controversial but you know, there, there will be more controversial network upgrades in the future, kind of like what we saw with seg. And so in the future we, we think commodity or hash rate is gonna be treated at a premium in certain cases to the Bitcoin that they can mine because that governance factor, companies like Coinbase or Kraken will want some form of hash rate so that they can have a say and a seat at the table when these big decisions come on the network that, you know, they derive the majority of their revenue from. So I'm going down a deep rabbit hole here, but long story short, I think there'll be a few different products that exist.
Will Szamosszegi: Oh, well one of the things that I actually don't think we've covered in on this podcast yet, if you want to talk a little bit of taproot and you know, what it is and, and why you think it might be important, that might be a, a good foundation to lay. But I think what you're saying regarding, you know, some of these other players getting involved and potentially using hash rate to get involved is really fascinating. But yeah, why don't I give it to you for, for tap root
Ethan Vera: <laugh>, Maybe I'll start with segway too. Uh, just cause it kind of leads into like this whole theme of network upgrades. SEG came about I think almost like a half decade now time's really flying here. But basically that was our first taste of a network upgrade that relied on minors kind of supporting what the bitcoin community, the bitcoin core developers and kinda general community wanted in terms of an upgrade. And there was a lot of debate around the activation of that upgrade, different like, you know, b a b nine, uh, basically signifying like how does a network upgrade get proposed and then actually put into to place. And some of those proposals were more minor focused, some of them were more user focused, would would be like the people who run Bitcoin nodes. Ultimately the minors kind of fumbled that. I think it was in 2016 Bitcoin minors weren't very active in contribution of the overall Bitcoin network.
Ethan Vera: And so a lot of people gained like a distrust for minor as viable partners to push forward new network upgrades or turn them down when necessary. That being said, you know, fast forward to 2021, Tap root was kind of the next major network upgrade included a lot of things around like privacy of Bitcoin and enabling new smart contracts, DLCs and Defi to be built on top of Bitcoin. It had been out for a few years in debate and really gained a lot of momentum in the Bitcoin community and there was, I would say like near perfect consensus that it was good for Bitcoin. There wasn't a lot of strong opponents left by summer of last year. And so it became clear that the mins needed to support this or else again, minors would be at odds with the general Bitcoin community. And so this time minors and mining pools really went, went forward with it.
Ethan Vera: There was a website called Tap root activation and basically mins were kind of signaling to the market through pools, you know, if they wanted to activate this or not. And there was a few pools that kind of didn't have their act together and took a while to figure out how to activate it. But overall, like it got done in November last year. And so miners have since regained the trust of the overall Bitcoin community and will probably be more active participants in governance moving forward, which is kind of relates to that point where, you know, minors are really important to the network for that reason and pass rate is the underlying commodity that supports that.
Will Szamosszegi: That's fascinating and and thank you for explaining that. So when we talk about what tap root allows, right, you, you talked about privacy defi on Bitcoin. I feel like a lot of people obviously know defi with things outside of Bitcoin, not necessarily like on things like any other chain really, like Defi and Bitcoin don't really seem to go hand in hand. So from your perspective or like based on what you've heard, what's being worked on was allowed from tap root or is there anything else that in regards to like privacy or defi Bitcoin that you're excited
Ethan Vera: About? When I first started hearing about discrete log contracts DLCs, uh, a couple years ago, my friends outta Toronto were building atomic finance and that they had, uh, smart contract based on the US election at the time, which is actually an really interesting Oracle because there was, you know, obviously some debate for some period of time of what took place there. But they, they built a smart contract on Bitcoin that basically settled on the Bitcoin network based on the elections and, and since that point, which was January I guess of 2021, so you know, coming up a year and a half plus now, I think the majority of, at least the uses I've seen have been on derivative side. Actually I spoke with a, a company today that's looking at creating derivatives on network, difficulty on gold real estate and some other commodities directly through DLCs.
Ethan Vera: I would say there isn't widespread adoption yet. I, I don't understand that the technicality is too much in like the limitations there, but it's clear that the volume of defi and Bitcoin is very small relative to Ethereum. But that's also something that as minors we need to care about and really need to support with a decreasing block reward every four years, it's really crucial that transaction fees pick up the, the pace here from at least where they've been since the China ban of last year. And so getting more applications and products built on Bitcoin is a huge net positive for miners. We run an Ethereum mining pool, It's been fascinating to see how much of the mining revenue comes from transaction fees. Uh, me and tips there is like the board, a yacht club, whatever metaverse print earlier this summer and we hit an Ethereum block that had 200 Ethereum in it as part of tips and the block reward's only two E so it was a hundred x. That is crazy in, you know, transaction fees equivalent. And so that, that type of future I think is really important for Bitcoin. We need to fund and develop as many platforms being built on this as possible and it's gonna lead to higher transaction fees, which then leads to more security and network spend. People like you and I will go out, we'll spend more money to, to secure the network every day, buy more land, buy more infrastructure energy machines and you know, keep pushing forward. Bitcoin is the most secure network out there.
Will Szamosszegi: Yeah, that it's so crazy to think about. Cause I mean logically we know the last Bitcoin that's gonna be be mined in the year 2140 and the block reward at that time is going to be, uh, I mean you would know better than, was it gonna be like, like one Bitcoin for the entire year or or half a Bitcoin, something like that. Yeah, so, so almost nothing basically. And so you, you're, when you think about it logically you're like, okay, well how is the mining network going to be sustained? Obviously you're gonna need a much higher Bitcoin price, but you're gonna need it to be honestly long before have already achieved like global reserve status or just be that underlying layer one to the financial system. At least that's, that's my own prediction. Like one of the reasons why Bitcoin has so much value and can achieve everything that we will talk about when we say reserve currency status or decentralization is because of mining, right?
Will Szamosszegi: You have this economic actor that's involved in the consensus mechanism that makes Bitcoin function. So the mining network, there's a lot of economic value going into that. Now all of a sudden if you wipe out the mining part of Ethereum, you just wiped out a large economic actor that is supporting your ecosystem. And so, I mean, to get more granular and not as broad strokes, when you think about it, let's say that you're using any of these applications, you talk about, you know, all these valuable applications that are being used on top of Ethereum. If you wanna transact using the these applications, you need to have Ethereum to do so. And so if the transaction fees are really high, then you're paying a lot of money to acquire more Ethereum to continue using the applications that are built on top. And so how does that play out?
Will Szamosszegi: Well, it plays out with, if the transaction fees come way down, then yes, you can use all those applications that are built on top, but they might not be as secure because you just removed the mining network, the decentralization or tornado cash factor that we've seen play out recently. It's like how secure is the base layer and then on top of that, there's not as much demand that you have for buying actual Ethereum to utilize all the applications. And so what happens to the price of Ethereum, uh, the full proof of stake chain? And so these are all the things that I was thinking
Ethan Vera: Through. But that's a, that's a great point. Like, uh, a, a lot of the criticism of proof of work, false criticism is that it's not scalable. There, there really isn't like consensus that proof of work is less scalable than proof of stake. You can look at ADA and, and BSC as an example of that, or Bsv rather, you know, the transaction through what's higher. But as you highlighted, it's a trade off. You can have very high throughput and close to zero transaction fees, but you're sacrificing your security. Nothing in life is free. And so if you do want a secure network, you need to pay for it. And I think that's what Bitcoin's model is, is pretty good at right now is there's a lot of reward going out to Bitcoin miners and it encouraging people to travel across the world to buy land and plug into a electricity grid, buy machines, mortgage, you know, their house to go fund a new mining venture. Like every day we wake up to compete to add more security to the network. That's all I can think about is how do I get more hash rate. Yeah, I I that was a great point that you brought up there.
Will Szamosszegi: So that's interesting. I, I actually on the podcast haven't spoken with anyone who's been to El Salvador and utilize Bitcoin in transactions or the Lightning network. So I mean, maybe to start, do you want to talk about the approach that El Salvador has taken, how they're utilizing the Lightning network and then we can kind of dive into how it actually is functioning on the
Ethan Vera: Ground? My understanding with El Salvador is that they moved off their own currency some time ago to to use the US dollar, which a lot of countries have. You know, it, it's very hard to, uh, in, in some of these developing nations, run your own central bank, protect yourself from rampant inflation like we're seeing in Argentina. So sometimes moving to a US dollar is like, uh, bandaid I guess on, on some of the issues that you're running into. Those types of societies I think are easier to adopt Bitcoin because they already don't have a central bank that can print unlimited currency. They can't just print $10 million in US like US dollars, right? And so going to a Bitcoin standard is actually easier pill for them to swallow. The, the people in El Salvador, I would say, you know, it's an older generation of people and so there, it's not kind of what you see in like in Nigeria for example.
Ethan Vera: So it's not primed for technology adoption, but the government put in place some incentives for that to happen, including if they downloaded the government Bitcoin wallet, which includes a lightning wallet, you know, they'd get $15 equivalent in Bitcoin, which to a lot of the people there is a lot of money. And so that's kind of like taking a a page out of like PayPal and Venmo's book, right? PayPal just gave $20 free to everyone and now suddenly in everyone in the US has it, it's a really nice like bootstrapping mechanism for payment wallet. And so every vendor you see there, at least in San Salvador and Elante where we spent the most amount of time, has a Bitcoin wallet, restaurants, taxis, clothing stores, everything. And so yeah, the adoption of both Bitcoin and Lightning Network there was, was unbelievable to see.
Will Szamosszegi: Is there like an app that you would just use, Everyone has smartphones and then it's basically like a Stripe or like just a, a very simple normal digital checkout?
Ethan Vera: Yeah, you can use your own wallet, right? Doesn't need to be like anything compatible. We're all using the Lightning Network. I would say the majority of the folks that we saw there that were accepting Bitcoin and Lightning was using their country wallet, I think it's called Chabo, but also like Jack Wallers and some others have done a lot of work there. So there was some, some variety. But of course we go in with, you know, a variety of like Blue Wallet or, or others. Uh, so I would say like the majority of like locals use their government wallet there.
Will Szamosszegi: Okay, so that's fascinating. So there's the government wallet and then you can use any, any wallet to just interact with the government wallet like that app?
Ethan Vera: Yep, just use the Lightning network. I mean all you have to do is get their, their address simple as
Will Szamosszegi: That. That's incredible to see. Cuz a lot of times when you're talking about Bitcoin adoption, you'll speak with people and they'll say, hey, well you know, you can understand it and I can understand it, but the general population isn't gonna understand it. And what's crazy to me is like if your life's on the line or if your livelihood's on the line, you'll figure it out. Humans, you're, we're very adaptable animal. And then on top of that, it's not like everyone knows how the internet works, but everyone still has found a way to utilize the internet or find some sort of benefit from it. So I feel like you have those types of dynamics at play and it's not like every single person is gonna understand how to run a Bitcoin node, but people are gonna be able to, as proven by your trip, be able to figure out how to interact with these types of technologies.
Ethan Vera: And what what's encouraging too is not every vendor auto converts to us dollar or stable coin. And so you're making this payment to a side vendor for, you know, $1 equivalent worth of Bitcoin. They don't go and auto convert that, a lot of them are holding Bitcoin as treasury for their business or for their, for their personal stuff. So, so that, that was really awesome to see and encouraging.
Will Szamosszegi: So I, I also wanna talk about what we touched on earlier briefly is like tornado cash, right? And so with tornado cash you let, let's first talk about like what the protocol actually was and, and then the reaction by the governments to, to what it was being used for and, and kind of take it from there because it was one thing where when I was looking at it, I was, it's not like I was surprised by the outcome, but it was almost like, okay, well a line was just drawn, you know, like this seems like it was crossing a line and was something that could be stopped. And so it, it's crazy to see it playing out right in front of us
Ethan Vera: Here. I never used tornado cash and actually it was the first time I'd heard of it when it, it got bann. So that's
Will Szamosszegi: The first I heard of it too
Ethan Vera: On, I'll never have the chance to use it. But I mean it's, it's a mixer. So similar to like a, a mixer you'd see like, uh, you know, a so or whatever on Bitcoin, but based on Ethereum. And so basically it makes anyone who uses it much more anonymous, it kind of hides away some of the public tracking that can be done on, on public blockchain through addresses. And it's just, it makes overall it hard to track different wallets and who owns what wallet. And so there, there's a multitude of reasons why people would use this at this most simple case, people wanna remain private, they don't need the whole world to know exactly what they're doing in their personal life. And not all those people are criminals as much as the government sometimes wants to label privacy as all criminals, but there's a lot of folks, uh, normal people that just want privacy in their life.
Ethan Vera: Same reason why, you know, you have a, a closed door and you're buying your house. Like, it's not that you're cooking up meth in your house, it's just like, hey, I don't want the entire world seeing me. But there's, there's also other reasons, like, you know, you don't want people to front run your trades on defi applications. You know, they track, like if you're a fund, maybe let's use a funny example like TRIO'S capital and people are like trying to front run your trade, right? Like you, you don't want them to know every single address you have cuz you don't want every trade to be front run. And then of course there is the illicit aspect to it. It's like, it'd be foolish not to acknowledge that like there are obviously people doing illicit things deemed by certain governments on these blockchains. It just exists as it does with US dollar or other currencies too.
Ethan Vera: So they, yeah, there's a few different reasons, but obviously the, the US government doesn't like these things because programs like chain analysis have a really hard time tracking down criminals that use them, but now they're banning it from use from everyone. So basically they're targeting criminals, but now everyone's getting, you know, their privacy taken away from them. And what I see as like a fundamental right to be private in your financial transactions, but yeah, it's unfortunate the way it's gone here and I I don't think it'll be the last time we see infractions on privacy by various governments around the world.
Will Szamosszegi: Yeah, I mean when, so I I was just like you, I first heard about it like when it was getting banned and now you're looking at the developer, like the, I think the lead developer on it who's getting arrested because he was part of the project and you know, was being used by a legal actor. So you have this big debate where a lot of people who are very freedom oriented and saying, hey, like this is my right, like I want have privacy on my transactions. All of a sudden now they're being looped in because it was being used for some illicit activities. And I heard that there was like a wallet out there that was sending like small microtransactions to a bunch of like wallets of like famous like influencers like, like Shaq and, and Logan Paul and things like that, just almost making a mockery out of it, right?
Will Szamosszegi: Because like what are, all of a sudden now all those wallets that received a tra a little bit of e from the mixer band, like are those now also sanctioned wallets? It, it's kind of difficult because it's almost like freedom of speech, but instead of speech, it's like code, right? It's like, it's kind of hard to, to draw the analogy, but it's like how are you going to ban open source code or open source technology that anyone can plug into? It's like those people, the famous celebrities who have their wallets, like people know the address and were sent this Ethereum, it's not like they were any way involved with the mixer, right? But all of a sudden now their wallet holds some of that Ethereum. So it's kind of crazy. I don't know how it's gonna play out, but it it makes you think, right?
Will Szamosszegi: Because I almost view what's happening and, and outside of the Bitcoin ecosystem and in defi as a testing ground for what's eventually going to be built and implemented on Bitcoin. That's my own personal view. I could be completely wrong, but if you take that view then if you're in the Bitcoin community, you look at that and you're like, okay, well you know, what lesson can you learn? And when something like that gets supplemented on Bitcoin, what's the best way to do it? The good thing about Bitcoin is that you do have that secure base layer. I like to say it's like the most secure network in the entire world. Nowhere else has that type of incentive as the Bitcoin network.
Ethan Vera: Yeah, you, you raise good points, Sarah. I mean, uh, it won't end with tornado cash. Uh, there's a lot of mixers out there that are all targets now as well. Other areas of the stack too. And I, I think what's important for regulators, especially here in the US to realize is that you, you can ban your own people from interacting with these things, whether it's a ban of using tornado cash or even ban a mining, but you can't stop it. You can only stop it inside your own borders. And so as, as a government like the US government, you have a decision to make. Do you want to be an important part of a new global financial system like Bitcoin? Or do you wanna force all the miners to go to Kazakhstan, Iran, Latin America, Northern Europe and really kinda be out of your control?
Ethan Vera: And so I I think that the, when regulators step back and kind of really hear from domain experts on this and kind of listen to reason, they realize they should have a seat at the table. And so they should be encouraging the development of bitcoin mining and not forcing it overseas. And you know, there, there's certainly a, a slippery slope here that starts with tornado cash and goes all the way down into mining where transaction need to become KYC in order to add them to a block, in which case that would destroy the entire US mining industry. So yeah, I think, uh, this is gonna be an interesting battle for us on, on Capitol Hill and educating these regulators and helping them, you know, provide a good path forward for
Will Szamosszegi: Them. So I, I'm gonna ask you a question here, and it's gonna be like an educational type of question, like an educational piece. Let's say I give you a magic wand, right? And you wave that magic wand and you're in charge of the what happens, like how regulators approach the mining industry in the US taking everything that, you know, all the knowledge that, you know, no single like governmental official would really have the time to go and learn. If you were to go and give the prescription for what the regulators should do for the mining industry in the United States, what type of regulation would you put in place? Like what, what what would the industry look like? What type of rules would you try and
Ethan Vera: Implement there? There's two main ones that are top of mind. O obviously more than that too, but to two I'll focus on just given timing. So the, the first is around this idea of like censoring transactions, uh, within the Bitcoin block itself. I think this is kind of a fool's effort to, to ban and censor Bitcoin from happening within the United States. And so I would urge regulators, or if I was a regulator, I'd put this in place where transactions are fungible in the block, miners can mine whichever block they want and don't need to censor certain transactions being put into them, basically making transactions fungible within the Bitcoin blockchain. So I think that's the number one thing. And then number two is more round like energy, which I guess we're opening up another kind of worms here, but as you saw with the New York bill, it's still ongoing a proposal to target certain minors that use a certain energy source.
Ethan Vera: While I'm obviously supportive of efforts to fight climate change and build renewable energy, I do think it's dangerous for a government to target a certain form of compute power with a certain form of energy. So if, for example, if you're in New York and you plug in a machine that is producing video rendering for Netflix or you know, some other worst video site, that's okay. But if you plug in a computer that's performing the shot 2 56 algorithm, then that's not allowed. And so it sets a very dangerous president where leaders can come in, be lobbied by whichever political group they want, and then determine, okay, this form of compute power is banned, this form isn't. And you can see examples of how that breaks down in a lot of developing nations. You know, countries like Jordan have different electricity prices based on whether you're a pizza shop or kabob shop because the kabob shop lobby is, you know, more important in the government, it creates this multi-tiered system that breaks down into chaos. And so it's very crucial that miners treat all forms of compute power equal. If you're gonna put a ban on Bitcoin mining using fossil fuels, you should just put a ban on everyone using fossil fuels. And yeah, that, that is quite a dangerous president that New York is trying to set right now. And I think something that the US should definitely stay away from as kind of a developed and bureaucratic and hopefully a good rule of law
Will Szamosszegi: Country. That's another big piece. And, and you're right, it is another can of worms, but I I am really fascinated by it is this whole conversation around like energy use. I mean, for example, even I, I've already kind of noticed on like Twitter and these other areas, the conversation starting to pick up around energy use and mi mining it, which was already picking up, but now all of a sudden, like now that Ethereum is going off of proof of work and fully into proof of stake, now that just becomes a full nother attack vector I feel like on Bitcoin where let's say that you were part of the Ethereum community, and as much as we hate to say it, there is kind of like a religious aspect to it. It's like, okay, I'm into Ethereum, I'm into Bitcoin, whatever it may be. I, I feel like as soon as you take Ethereum off of that proof of work mechanism, there's just a whole nother large group of people that now have, like, who, who before couldn't have said, Hey, we're gonna attack Bitcoin for its energy use Now all of a sudden now that they're ethereum's not using it, I just feel like there, it's a conversation that's starting to pick up.
Will Szamosszegi: And you know, I I I really am curious, and I don't know the right answer here, but what ends up happening on this conversation around energy and bitcoin, bitcoin mining, I mean, I, what you mentioned happening in New York is, is crazy and it does set a crazy precedent and it really does put the US at a disadvantage. So, you know. Yeah. What what are your thoughts on, on all
Ethan Vera: That? It's, uh, yeah, it's an interesting topic to follow. Uh, Bitcoin has done a really good job at highlighting the positive impact of mining on renewable energy infrastructure and energy infrastructure in general as we, the world forgot that at the center of our universe is energy. Until like last year when, you know, energy prices started skyrocketing around the Russia, Ukraine prices, we've done a good job in the Bitcoin community pushing forward, this is what Bitcoin mining can do for renewable energy. We can do flared gas, we can reduce output and ultimately push for it our, our system. That that same type of research and marketing hasn't been done in Ethereum, but is is in some ways the exact same. Of course, it's a different system. 85, 90% of the Ethereum network is run by GPUs. So there's a much larger retail base, much more traditional, but it also has a very positive impact on energy and data center infrastructure, which is crucial to the security of a, of a country.
Ethan Vera: And so if you're a country that's trying to incentivize Google to come in and place a large data center with tens of thousands of GPUs, Google wants some level of comfort, or I'm just using them as example, but any, any cloud compute wants some level of comfort that they can sell the compute power in which they're installing. So you have 10,000 GPUs. You need to make sure that there's, you know, a dozen universities using you for ii testing. You need to make sure that local networks are hooked up to you. YouTube is gonna use you for video rendering, whatever it may be. Oftentimes it's impossible to get a hundred percent utilization of your data center. And so where do you turn to, Well, there's a buyer that's 24 7 of compute power, no questions asked. And that's Ethereum. At any point, anyone can turn on a GPU and start mining Ethereum utilizing their, their GPUs that are unused and start making return.
Ethan Vera: And so it encourages development of data centers to come in and build capacity and so that there's this positive in on mining an Ethereum that no one touches on. And so the community is kind of labeling this move to prove a stake is good for the environment. While I say the opposite, I, I think there's gonna be less investment in data center technology in, you know, countries and there's gonna be less, you know, use of, of renewable energies that can use a 24 7 flexible demand response form of compute. So, uh, that's my rant there. <laugh>,
Will Szamosszegi: No, that, that was incredible. I've, I've actually never heard the explanation on the Ethereum side, but that was really interesting to hear that cause yeah, I mean, uh, this whole conversation, it reminds me of what I, I spoke about with Brandon quit him on this podcast. He's one of our advisors and is, um, you know, helping grow swan Bitcoin. And what he's talking about in writing about is how Bitcoin miners are like the pioneer species. So you can kind of think about how the bitcoin miners will go and bootstrap energy assets in different locations where, you know, there wouldn't be that type of investment or commercialization to even bring that energy online. Suddenly now you have an energy source, you need people to work and make that energy source function and those people need like a community around them. So the incentive of bitcoin mining is incentivizing people to go and build out more energy sources where the Bitcoin miners will utilize that energy.
Will Szamosszegi: But eventually as that place gets more developed, you'll see the miners be economically competitive in that location anymore and go and pioneer a new asset or a new area to utilize energy. And um, I mean that's obviously a huge benefit, right? Because how do you improve people's standards of living? Well, it's not by getting rid of the electrification of the grid. It's not by getting rid of your access to energy, it's by going and harnessing energy in a better way. The Ethereum side of things I think is very interesting as well, where the proof of stake, you're killing that, you're killing that, that pioneer species in a way that's going and, you know, trying to push forth innovation and I guess the, the data center side of things. Yeah, that, that was really interesting to hear you talk through the Ethereum
Ethan Vera: Side. I think it's really important that the Bitcoin and Ethereum communities don't relentlessly attack each other. We've seen some obviously Bitcoin members trying to go after Ethereum for being labeled as a security and as it moves to prove stake, obviously it does look increasingly like a security. Um, and then obviously there's members of the Ethereum community going after Bitcoin for its energy consumption and perceived harm on the, on the environment. Either way, I think it's bad for the overall ecosystem. If Bitcoin attacks Ethereum and Ethereum goes down with regulators, the next in line is Bitcoin for some whatever reason, um, if it's theum attacks Bitcoin for energy use, Bitcoin goes down. So Ethereum, so in, in some of the capacity, like our efforts really should not be focused on attacking each other, um, regardless of, you know, philosophical beliefs of consensus mechanism, really like we should just be focused on building the best networks possible. And if you don't like the other network, just try to ignore them and build your
Will Szamosszegi: Own. Well, in terms of just the overall geopolitics that are involved, we've been talking about regulation, right? But there, there are certain things right now happening in the world that are just unbelievable. Like we're living in like a black swan era, it feels like, right? And so we, we mentioned like the Russia Ukraine conflict and one thing that I personally am not sure how it affects the mining industry, like what happens in x in this event then I'm about, I'm about ask you this question, but let's say you see China in day Taiwan, right? I mean you're looking at the hub for what is really just the backbone of not only the mining industry, but so many industries around the world, right? Um, with the, the semiconductors. And so if you see an invasion of China into Taiwan, I mean we've already been seeing supply chain constraints with c supply chain constraints with the conflict that's escalated with Russia, Ukraine. How do you think an invasion into Taiwan would end up playing out? And you could mention like how you think it plays out globally, but also like how do you, what do you think the ramifications on the mining network are in that type of a scenario? It's a very tough question. <laugh>.
Ethan Vera: It is there, there's so many angles. I could take this. One of the most interesting books I've read was on China by, uh, Kissinger who, who is part of like Nixon's government. Nixon sent him to China to improve relations with China in the US at a time where it was very hostile. So he was a very big China historian. There's a lot of takeaways from that book, but one thing is that China moves very slowly there. There're usually not a nation that is gonna send them to this vehicles and land on, you know, the beaches of Taiwan to take over. It would be more of like a political low takeover, somewhat what we've seen in Hong Kong. I mean, Hong Kong's supposed to be handed over in 2047. Obviously it's lowly becoming, you know, handed over to China before then. And so if there is kind of a takeover of Taiwan, I expect it to be political in nature slower and, and not by brute force.
Ethan Vera: It's usually not the, the Chinese method of, of expansion. And they're not always the most expansionary people too. Obviously Taiwan's a special case where it used to be unified Taiwanese people are ethnically Chinese. So it is, I guess a, a different example there. But I, I don't expect like a rapid takeover regardless having p smc, which is today one of the most advanced semiconductor foundries out there, they're heading into a three nanometer setup by end of this year base. There is key consideration for the United States. It's become clear that semiconductor production onshore is vital to national security if you're a big country. And so that's why it seems like the United States is rushing to get TSMC and Samsung to build foundries onshore in the United States and also encourage other semiconductor production in the United States too. To my last knowledge that's expected to start happening in 2024, probably like not set up until 2025.
Ethan Vera: And so I think the chances that the United States let, uh, China, uh, come into Taiwan in any kind of material capacity before then is, is limited just given that, you know, they need to protect their supply of chips. I mean, TSMC is the biggest supply of Apple chips out there. If suddenly China controls the chips going into Apple phones, that's a big security threat for the United States government. So I don't think they can let that happen for another few years at least. If it were to happen, let's say whether it's, you know, next year or 2030 or whatever, the mining industry I think will adapt. There's still kind of legacy Chinese foundries that go into chips that end up in on the American grid. For example. SM which is an OFAC sanctioned company now is a semiconductor company based on mainland China. They supply chips to canon, the Avalon units, which are bought by a lot of Americans and then put onto grids like Ercot. That hasn't been cracked down upon yet. But I think if things escalate with China, like certainly American regulators and government is not gonna likem chips operating on their electricity grids, which are the backbone of society, you know, situation escalates. I think they'll be a wide crackdown of any chips coming out of China, including if they took over Taiwan, the chips coming outta Taiwan. So it would have a huge impact on the relationship between many factors in China and US customers, which represent the lions share of their new
Will Szamosszegi: Purchases. Well, hearing you say that does make me feel a lot better, just <laugh> it's like, like a sigh of relief cuz Yeah, I I didn't realize that the background on, on Kissinger and uh, the way that China normally approaches these things as well as the incentive you mentioned with the us, like basically if it did come to that type of a conflict, having a huge vest at stake to not let that fall, that's good to know. And so I wanna move on to the, a little bit more policy driven or policy centered conversation on, uh, what's happened with the inflation reduction act and some of the incentives that are getting, getting put in place, like in, in all transparency, I haven't gone and dove into it that much, but I had a conversation with one of our advisors the other day who's in the solar industry talking about how there are a lot of ramifications coming from this for the US solar industry.
Will Szamosszegi: And so as quick context as we know, China has done a lot to help support their, their domestic solar industry and renewables. And, and that has given them an advantage over other countries internationally. And so to my understanding, what has just recently happened is that there's been this huge push within the government in the US to, to try and help support the, uh, solar industry here in the US and, and renewable energy. And that's pretty much the extent of my understanding of it as it stands right now. I was wondering if you had any thoughts on the act in total or the ramifications on renewable energy here in the
Ethan Vera: Us? So the inflation act, which really should be called the Climate Change Act, I mean mostly I think, what is it, like 75% of the spending or, or something like that is heading towards climate change initiatives rather than reducing inflation, which itself is kind of a weird thing to do, spending more money to reduce inflation, but okay, regardless, like focusing on the, the climate change aspect, I think this is a, a huge net positive for bitcoin miners specifically because it's gonna funnel a lot of money into renewable energy products, solar, like you mentioned, uh, other platforms like wind and geothermal. And so that's naturally a good thing for bitcoin mining because it's a symbiotic relationship. Renewable energy needs flexible load like Bitcoin mining to really monetize their asset. You go to West Texas right now for the majority of times in which wind is blowing, a lot of those windmills are shut off, the wind's blowing, but it's because there's no demand at that time in that rural area for that renewable energy.
Ethan Vera: And so it's really important that you get a flexible load close to your renewable energy site to, to offtake some of that energy and it makes the whole project that much more viable and way more economic. So renewable energy needs bitcoin mining and flexible load, and then bitcoin mining benefits from subsidies in renewable energy as those, you know, any other industry, there's a lot of money there to get in as investors or partner with, I think it's gonna be really good for bitcoin miners in the United States. And then it's gonna be good for Bitcoin elsewhere too, because I mean, this is kind of a pessimistic view. I I don't usually like to have pessimistic, but like this act does nothing for inflation. In fact, it might actually increase inflation. So it becomes increasingly clear why there needs to be an alternative global financial system that's not dictated by, you know, a handful of people in Capitol Hill to determine how everyone else is gonna live their lives and, you know, save with their currency. And so it's gonna be a net positive for bitcoin mining. It's gonna be a net positive for Bitcoin in my
Will Szamosszegi: View. Yeah, that, and it's, when you were just talking through that there, it reminded me of this, this thought I had the other day, which was when, when you think about a Bitcoin, it's not like there's a marketing department, it's not like there's a individual CEO or a company pushing it forward. It's, it's almost like it's, it's open source code, but it's like an idea that goes and it wins the hearts and minds of people. And more and more people learn about all the aspects involved and, and realize, hey, this is a huge technology solution to a lot of problems that you see today. And whenever you see something like inflation or these types of acts that are passed that involve a lot of money printing and, and supporting certain industries, but also really in a weird way, having an aspect of theft of the everyday person who's holding dollars.
Will Szamosszegi: It's like a big marketing campaign for Bitcoin, right? It's, it's like the more that people see this happening, it's like these dollars are almost like the marketing campaign behind Bitcoin. It's like it forces people to say, Wait, what's going on here? Like, where's this money coming from? Like how does, how does this whole system works work? And, and when you really understand how everything works, it, it puts forth a, a good case for, for Bitcoin and, and the, it shows the value of bitcoin mining. You're not just looking at Bitcoin mining when you understand all this as just a wasted energy source, wasting energy using the same amount of energy as certain countries. You're realizing, wait, this is the foundation to, in a big way improve the world in many different ways to improve the way that the financial system works to improve the actual custody of assets, right? There's so many, many different, different things that are behind Bitcoin that people end up learning because of things like this getting passed and <laugh> in a weird way as we were talking through it, it makes me think, wow, this was almost like a huge, like a, a huge win for the, the bitcoin community even, even though Bitcoin isn't necessarily directly stated anywhere in, in the bill.
Ethan Vera: It is, yeah. Yeah. The corporate taxes obviously I think increase under this bill. So for companies operating in, in the us you know, that that might hurt, but overall, like in my view, a huge net
Will Szamosszegi: Positive, this was an awesome conversation. Um, you, you brought up so many things that I like so many new ideas that I ha that I've never heard before, but that all make complete sense. So I, I appreciate you, you know, going and, and bringing all those to the, the table here and yeah man, we'll, we'll have to run it back again soon and uh, hopefully we run into each other at another conference again soon.
Ethan Vera: Yeah, thanks for having me on. That was a fun conversation.
Will Szamosszegi: Yeah, for sure man.
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