Bitcoin Mining vs. AI w/ Will Foxley

27:40Alex Thorn:Their coins will be frozen. That's I would not take that as inevitable. Like that's a very big part of the debate about quantum and Bitcoin. But I think we also had Ellie Ben Sasson from Starkware on the podcast last week. And he was very critical of Saylor on that point, saying that, you know, Y2K wasn't a problem because it wasn't a problem. because Bill Gates said, oh, it's not going to be a problem. Surely it'll get figured out. It wasn't a problem because Microsoft devoted a lot of work to make it not a problem. And he wants to hear something much more proactive out of a leader like Michael Saylor.

28:13I would just be interested in hearing a more positive take on why Saylor is doing what he's doing with Bitcoin. Consider what Jack Dorsey is doing. He's made so much money off Bitcoin, and he's donated so much back into the ecosystem. He essentially funds all the development shops for Bitcoin. Probably all of them. Basically all of it. Like the market cap of what he was donated is like significant. And Saylor is building like this digital credit thesis, which maybe long-term is larger than all those donations and gets more people involved with Bitcoin. But it's not like the most, it doesn't like really wake you up out of bed in the morning and be like, ah, sick, digital credit.

28:50Like I know I care about Bitcoin because Bitcoin does Bitcoin things. I don't really care about digital dollars that much or like getting 10 % and running away from inflation by 3 % every year. Yeah. So what does Saylor have to tell us that is different that Jack Dorsey is already doing such a good job with? Right.

29:09Alex Thorn:So Jack has obviously at Square blocks, I guess. Yeah. I still call it like you really should try never to change the name of your company. You know? But anyway, at Square, which I'm going to call it, obviously they've done a ton. They do Lightning and Bitcoin buys and sells and payments. they have spiral which is their sort of in-house development arm which is really great shout out to the spiral team and they also have enabled payments for 20 million merchants at their market leading point of sale let alone that's just at square that doesn't include any of the and there probably is more i'm forgetting at square so apologies but that doesn't even include oh they have the they have the bit key they think they're building a mining the miner so they're doing a lot at square doing a lot um and then you have all the charitable giving that jack has done to fund bitcoin development then you've got all this stuff in africa that jack has done to help the unbanked with bitcoin yep that's a lot it's a big portfolio there um yeah let me ask because he's satoshi will quantum be on the agenda at op next yeah so as of this week we have an institutional panel on quantum so blackrock and coinbase will be on that one it's coinbase an institution in your mind now i think they are because they're yeah you know sure they're in the i mean i think yeah i mean that's a good question what is an institutional i usually hear institutional investor i would not consider them to be well i mean they have a venture arm and stuff too but yeah that refers more to like high net worth family office pension endowment um they're a financial services firm so i think that that's fine blackrock is an asset manager so they are an institutional investor but yes big company panel the companies so we have the big boys they're going to do a quantum panel what is the institutional outlook if you will on quantum and then we're talking with a few teams including Project 11 to come in and do more of a focused conversation around that so that's as of now I think two to three topics on quantum it's so funny because some people don't want to hear about quantum at all and we've already got many techs that are like, complaining, don't do quantum.

31:14And we're like, okay, 20, 25 % of total programming can be around this. You don't want to hear it. Go to the hallway. Go talk. There's whiteboards.

31:23Alex Thorn:It's not a quantum conference. It's not a quantum. It's a development conference. Yep. It's the premier Bitcoin technical conference. So we have to have quantum in the room. 90 days out, so we'll have a lot more stuff kind of come in. There's a few people we're pitching that might even be listening to this podcast. So, like, we're getting some more quantum on the docket if they want it. Interesting. Yeah. I think it's a very interesting question in general. And I'd be interested. I will be interested to see that panel, the institutional panel, because I think a big fear that some have in the market is that this is creating, whether justified or not, fears about quantum are creating a future headwind for Bitcoin.

32:02Alex Thorn:Oh, totally. There might be rooms where investors are saying, you know, let's put a big chunk into Bitcoin. and somebody there is like, whoa, whoa, whoa, what about quantum? And, you know, I don't think Bitcoiners have, maybe they have some answers, but they haven't promulgated them well enough. Whereas those that are preaching urgency and about the issue are much louder. So it would be nice to coalesce. I do think of it like a multi-year effort similar to a scaling Bitcoin, where it's going to take a lot of these, and I think OpNexus distinguished itself as a very important node on that calendar.

32:39for this discussion i think like it is going to take years and then there's also like a need for like a place for that conversation to happen it's gonna happen at vegas too like vegas i think there

32:48Alex Thorn:will be uh like a meeting on the side at vegas as well but like that's important they should be at both yep it's good to have these physical meetups like i went to one uh last july uh really i think it was like the day before the genius act was signed into law yeah so because i know because i was in both san francisco and dc in like a 24-hour period super fun for you yeah um but i I went to a big conference at the Presidio Bitcoin. Yeah. I think mostly put together by Steve Lee of Square or of Spiral that was very well attended by Bitcoin developers all about quantum. So, like, this is my big criticism.

33:23Alex Thorn:It's not that there might not be a quantum threat, although I know many actually dispute that. But I would probably bet on humanity. Like, we tend to figure out some stuff. Now, if it turns out that it's mathematically impossible, to be clear, I have no idea if that's true. It's way beyond my capacity as a technical researcher. But I think if there's even a chance, then Bitcoiners should be working on it. But where I disagree with some is that I think they are working on it. I see it. I see it at UpNext. I see it at the Presidio. I see it on the mailing list. I see it in the dev meetings. I see it.

33:57Alex Thorn:I see it in BIPs. I occasionally dream about it. So I don't think that it's true that Bitcoiners aren't taking it seriously. And so that's why I think, you know, and I don't see that much evidence, although we're looking into this, that other ecosystems are actually taking it fundamentally more seriously. Yeah. I do think it's easier to upgrade other blockchains than Bitcoin. So that's true. Well, you have to think about it in a few different ways. The people who are working on Bitcoin right now, they're typically in a few different segments, right? So it's like IBD, which is like initial block download or working on your node.

34:27How fast, if I want to get a node up right now, how fast am I going to do that? Yeah, optimizing that. yeah there's a node there's the wallet guys i'm working on my wallet making sure like the bitcoin core wallet the first wallet you download when you download a node is actually going to be like super optimized for first users and then there's like the mempool guys and then there's like all

34:44Alex Thorn:this fiber relay guys to make sure that you know with what used to be like bloom filters and all this stuff to make like the propagation better totally nowhere in that is a price guy who says is what can we do to make Bitcoin's price go up in five? What tech can we add? And so if you go to Chaincode, you go to Brink, you go to any of the other shops out there, they don't have a price guy. They have someone working on the core protocol. They're a developer in-house focused on how do we make Bitcoin more usable for every users? How do we make it more robust against a nation-state attack? Those are the questions that they're trying to think about.

35:18They're not trying to grok about how to make the number go up. But solving the quantum thing would certainly help some institutional investor or some large whale purchase more. Yeah. So for now, I don't see an answer for the development shops until they are thinking, you know, this is an issue. And we need to put a$250K check behind hiring a developer to focus on that.

35:43Alex Thorn:Interesting. Yeah. That's how I kind of think about it. well and thus the maybe if that's the case then the urgency that some are calling for might be justified to try to that's or that's where it's coming from they're trying to get bitcoin developers to focus on it you gotta kick and cajole a little bit to get some attention so that's certainly part of it you know we saw with the knots crowd this last year that didn't work out too well in fact that actually just did a disservice in terms of making everyone realize who to pay attention to and not like that that was pretty clear so that was helpful i think and a lot of clarity from that but for the quantum perspective now going forward like hopefully this leads to if it should be the case someone getting hired at one of these positions to do full-time let's just do some work on it you know that's sort of my view if there's a risk of it it should be worked on yeah and bip 360 team is focused on it like you said presidio bitcoin had a whole conference yeah Well, that's my criticism is that I actually think it is being worked on.

36:39Alex Thorn:Yeah. But, you know, everything, there's competing priorities. Totally. Let's shift gears. Let's talk about Bitcoin mining, sort of your original podcast love, at least. I don't know if it's your oldest love in the space, but you certainly distinguish yourself as a top analyst covering the Bitcoin mining companies. And BlockSpace continues to as well. obviously you mentioned before that you cover compute both ai and asics um what does the landscape look to you now for the u.s miners in particular oh man it's for the overlap the convergence of bitcoin mining and ai it is bleak for mining right now is it really it's really bleak but i think there's a lot of good off-ramps and some people have already taken those but i'm I'm hearing of associations for Bitcoin miners shutting down because there's just not enough interest anymore.

37:31And, you know, that was a huge thing. Yeah. A lot of like these small state associations. So that's happening. A lot of the smaller shops, you know, they're competing over pennies now. The inexperienced middlemen are just drying up. They don't have any ability to run businesses anymore. Tons of consolidation. I think a lot of the names that you might know, if you're a Bitcoiner, on the private side, you're going to see combinations of some of those businesses like merging together. because everything is compressing into one. And it's just not that novel anymore to be a Bitcoin miner, which is fine.

38:05I think that's totally fine. Like that was like the end goal for a lot of this. It's just going to be combined to other systems. Yeah, so it's consolidation.

38:12Alex Thorn:Part of that's driven by, you know, a very bleak hash price, right, which is a function primarily of the price of Bitcoin, but also competition and all that. So there's been a lot of hash rate. We're well over a Zeta hash for a bit there, although it looks like we're slightly below because of the storm. Yeah, we've been tumbling a little bit since October. But we did crack a zeta hash, which is just an incredible amount of compute. It's hard to even put that into – I don't know. What is that? It's whatever a zeta amount of hashes per second. It's something like, you know, it's an unfathomably high number of attempts to create a block.

38:45I don't know how many zeros that is. It's an enormous number. I don't know either. It's a lot. And there's, like, this question of, like, how much hash rate is too much? How much security do we need for the budget? And it's probably an answer. What's your answer? You can't really answer it, right? I have an answer. It's not an absolute number, to be clear. I'll give you mine. It's like the way you can think about it is like if we have the sailor approach, this is digital energy and it's digital credit and all these digital things, we can have as much. The more, the better. There is no limit. I agree with the more, the better.

39:19Alex Thorn:Well, the most that's economical. and we know that there's a cap to that at least these bitcoin prices the real answer is what the market can handle and apparently with hash price but how much do we need to be secure i think it's whatever the market can handle at the moment well there's a one answer is that i like is uh bitcoiners will get the amount of security they pay for yeah that's objectively true yeah very similar um the other but there is one that i like and it's why i why i was i'm supportive of formerly gpu mineable coins switching to proof of stake because uh the actual amount in my mind is that you need the majority of possible hash rate to be mining your algorithm and so with bitcoin for example you don't want a giant pile of extant potential hash rate yeah right so like when um the china ban in like 21 happened um you know we i remember we were calling around everyone we know like you know this is this one shutting down like please tell me those asics are getting on a plane to like America or a ship, I guess, probably a cargo ship at that point because it's a lot of them.

40:19Alex Thorn:And not like locked in a CCP tech bunker because that could be used when difficulty adjusts down, then a massive amount comes on. It could possibly do attacks. And this is why like a GPU mineable coin, think about all the like PS5s. Imagine ransomware that turns every GPU, now with all the AI stuff, turns every GPU into a Ethereum miner. You could overwhelm the Ethereum network, right? And so to me, the amount that we need is just most. Most that exists needs to be mining your coin. It's one of the reasons why ASICs are positive, because you need specialized hardware. You get to that answer really quickly, how much you need.

40:56It took a while. Yeah.

40:59Alex Thorn:But on the convergence, so you said Bitcoin mining is a tough business. Yes. Bitcoin price is down, competition's up, you're seeing consolidation. You talked about some off-ramps. surely AI compute is a very big theme, right? It's also a really fun theme. I think that was one thing that really kept me interested last year was just the emergence of some of these Bitcoin miners as AI factories, kind of what I like to call it. The parlance isn't quite there yet. Neocloud has been established as a word, but these aren't Neoclods. Most of them are really just data centers. Yeah, they're data centers, which is not sexy or interesting.

41:39So we have to come up with a fun market. I think AI factory is a decent because it is.

41:43Alex Thorn:We are talking about giant physical infrastructure. They're huge. Like if you look at it. Helios is a quarter mile long. That's right. And it's not even done. Right. And you're talking about Galaxy's AI data center, which was until, I don't know, somewhat recently, a year or so ago, our big Bitcoin mining business. And so, yes, we have switched entirely, well, almost entirely to being a data center provider for AI firms. Yes. are others doing that in whole? Are some doing it in part? Yeah, it's become a bridge now. So let's take Cypher, for example. Cypher has, well, they have six to 10 sites at this point, which is kind of crazy.

42:24They've been really effective with their power strategy, just gobbling up sites. But if you look at their focus sites, like Black Pearl, it's probably the one that most people know about. They've used Bitcoin mining as a bridge. Deploy the Bitcoin miners into the energy sinkhole that you have. and then use that revenue to be able to retrofit, get yourself up to that status where Google or Amazon is going to walk in and be like, you know, this isn't perfect, but it'll do. We can drop a few million into every megawatt and retrofit this facility. And that has really worked out on a business strategy standpoint, because if you look at the books on the other side, which is really what matters, right?

43:00You have to have a mass amount of cash. You have to have project financing, or you have to have like a nice equity position to be able to pull something like this off, because it is between$6 million to$12 million a megawatt to redo the infrastructure, depending on who you are. Or you can lie and say it's$3 million, like some people are talking about. It's really in that$6 million to$12 million a megawatt, depending where you're at. That cash was not available for Bitcoin miners unless they had scale, large Bitcoin hodl, or they were able to convert a portion of their equity or a portion of their proceeds into financing for the project.

43:38So we saw a very similar method for this across the board. Like Terawolf, Cypher, they gave equity to Google, and then Google backstopped the deal. Anthropik came in, started building it out. You guys did some project financing for Helios, which is obviously looking super successful because you have a tenant come in and is purchasing out tons of megawatts. HOT's done something very similar. Somehow they got away from selling off their equity, which is really impressive. They've had one of the most impressive deals so far. But for me, I really like the finance side of it where it's like, how do these Bitcoin miners go from high beta play on Bitcoin into being re-rated as data centers with a higher multiple?

44:21That's a very interesting story. And for us at BlockSpace, we'll just be covering that. I think we see this shifting where they're almost not mining Bitcoin at all or maybe that are using their pre-existing Bitcoin fleets on new data centers that will then become AI factories again.

44:37Alex Thorn:Right to front load, bootstrap. That bridge capital, in a sense. Until we retrofit, we'll collect the revenue from the Bitcoin network. Yeah. I think the last thing on the Bitcoin mining side is, where does all the hash rate go? We are hearing rumors of it going overseas. The biggest player of that would be Russia or China. China I do expect to see Russia's hash rate grow and I do wonder how much hash rate from the U.S. is going to end up in Russia and like it can't directly go there yeah right but the a6 you know a guy you know their way you sell them to some international broker and yeah they happen to sell them to Russia I suppose yeah do you think that could become like a geopolitical issue I mean totally certainly with the strategic Bitcoin Reserve you know you know tepid though its launch has been like you know the united states government strategically holds bitcoin there's always a congressman in iowa who wants to talk about something with geopolitics it's a great one right why is this company selling asics to russia right and they're not there's only to a broker who knows a broker who knows broker but if it still ends up with putin's hands and well because it's actually a really good way for any person or business or country yeah to acquire non-sovereign money totally which is i i feel like this is one of the things that's been i think disappointing about bitcoin's performance price performance the last several months is that we're in a materially degrading investing environment and geopolitical environment i don't even mean necessarily as a subjective uh analysis but more just in a empirical one like the global order is fracturing in new ways and like in that space and you just gotta look at the gold chart to see that people are looking for a non-dollar denominated.

46:27Oh, totally.

46:28Alex Thorn:Well, surely Bitcoin would play a good role there. So why is it laying? Now, it is, again, languishing at 90K. You know, it's not like it's... Do something. Yeah. What is Bimnet's take on silver gold? That it's a big sign of like a want to diversify away, not just from the US government, but from all governments. Yeah. And I think we both agree, Bimnet and I, that Bitcoin fundamentally should play a strong role there. You know, a lot of what he argues, it's really just technical. like for bitcoin meaning like technical price uh action and and thus in the in the medium term it will it will reverse but um it seems like bitcoin mining too i know like for example el salvador has mined bitcoin uh boutan um other nations we know of right i mean it's probably some of the old caucus countries or you know the kazakhstans and whomever are mining makes sense yeah those will be doing it and I think with the rise and fall of the US hash rate industry with all the 20 plus public companies that really grew the last five years, huge 30-35 % of the total hash rate expect that to fall the next five years if we continue to see multiple, a higher multiple for a data center company versus a Bitcoin miner and you're going to chase the multiple chase the thing that's the most liquid and in the best capital market in the world, which is the US.

47:54Don't chase necessarily just mining Bitcoin because you love it.

47:57Alex Thorn:Yeah, I mean, you've also, if you're public, you've got a duty to maximize profit for your shareholders. And if AI, whether it's the hyperscaler intermediary or the application itself is paying more per megawatt than Bitcoin, you've got a duty to see if you can use your power for that. Not all of them are convertible to AI, right? What are the factors that make a Bitcoin mining site good for AI? Some are smaller. That's an open question. Not to cut you off there, sorry. I'm just thinking, what do the smaller guys do? There's still a need for these smaller clusters. I think this is a route Marathon is kind of taking Mara, as they also rebranded, but pretty close.

48:39Mara is taking this inference approach. They have pretty big sites, but it seems like they're going to do these smaller clusters in certain locations. So say you're a Salesforce and you want your own cluster to run with your own training on it, and that's already baked into the system. You don't want to go to OpenAI. You don't want to go to Microsoft. You want to run it yourself. You have it trained on yourself on whatever open source model you purchased as all your information, and then you contract out to Mara to run the inference, run the site. I think that's going to be an approach for some of these smaller guys that have like a little bit more cash and a little bit more savvy so there's a few of the smaller bitcoin miners i'm seeing like hey are they going to deploy a 10 to 20 megawatt cluster across maybe a few sites in key areas and try to sell it on a b2b basis might be too hard to be able to do that at this point and you might just have to keep looking for like the big customers but you start big and then you eat away at the chunks gill is smaller interesting one other thought on the silver thing really quick because i want to get more of those reviews so silver is like the old man's trade right like the silver bug thing yeah but it's oddly connected with ai because all these components need silver and it's all mined in china as well and processed yeah yeah so i'm like curious like how much does bimnet or you see like the look like the gold and silver trade being singularly about people want to have non-sovereign money versus what like components for yeah chips Yeah, because gold obviously is like, I want to own gold.

50:14I don't want to own.

50:15Alex Thorn:It's not nearly as widely used for industrial purposes gold as like Peter Schiff would have you believe. Yeah. Although he'll admit the real number, which is like, I don't know, 5 % or less of the above ground supply. It is used gold plated like, you know, conductive metals as a thing. Silver is too. I don't know. I think it's really playing the like coin to Bitcoin. Okay. Right. It's more about like a lower cap thing that can run harder as a financial investment in the light of the gold trade, I think, is dominating it. But no, I mean, both gold and silver will have implicated, well, even low though the portion of their market caps that is industrial, low though it is, I think it will impact.

51:01Alex Thorn:I mean, we've seen this, and not just that, but all the metals have been running. Copper is important. platinum gets it's good to be a metals guy right now i know it's like a broken clock though like these guys have been these gold bugs okay they're finally right i guess the real question i have though is like how durable i mean honestly if what i'm saying is a degrading macro and geopolitical environment like you you could i don't think of this right now i mean you know i'm not an expert not financial advice but um as like a parabolic blow off top that's gonna i think it's being materially re-rated higher dang and that doesn't mean there's not i mean if you look at some of these charts like for silver you have to assume it's like it can't like just go up for it like there's some parabolic stuff forever laura yeah but like it does the world really you know bimnet talks about this uh an interesting aspect about the april uh 2025 market sell-off you know widely called the tariff tantrum right um and it was like the first of the prior 12 times it was the of the prior 13, including that times when the S &P sold off more than 10%, that was the only one, the first one, where DXY, the dollar, actually depreciated, not appreciated, meaning that not only were people selling risk assets, they were buying non-dollars with them.

52:19Alex Thorn:And so the dollar wasn't the hedge to the risk-off move. Instead, it was things like gold. And that's an incredible statement. That shows the world is looking to... It's not a great statement for us. It's not a great statement for the dollar, no. It's one thing that I'm bullish on for the Genius Act. It's like I think the Treasury Department at least is aware of this, and so they're looking to make the dollar, I don't want to say stronger in a price sense, but in a fundamental sense, like make the dollar even better, like easier to use, faster to send, new ways to hold it. You should just buy Tether.

52:53You should just buy the company.

52:54Alex Thorn:Tether could just be, dude, I saw a story today. hey, Tether is buying one to two tons of gold per week. Yeah. You saw that? Yeah, that Bloomberg story is really nice. I mean, they are well known to be one of the largest owners of gold, but I think now Bloomberg is saying that they are unequivocally the largest non-sovereign holder of gold in the world. Yeah, and they're going to compete with a few of the larger banks like JP Morgan. As I said, now they're going to start a gold desk. Yeah, which is cool to see that, like, for as much as you can say, crypto hasn't done anything. I mean, Tether is one of the most fascinating companies, and biggest companies in the world.

53:29Alex Thorn:And they are a Bitcoin and crypto company at their core. And they build a ton of AI factories all over the place. They have AI. They have pharmaceutical and agricultural concerns. Rumble. There are big investors in Rumble Video. They now have a New York Stock Exchange listed equity company. And they build a lot of Bitcoin applications. They do. They have an SDK. Yeah, it's quite a fascinating company. We'll have to do a big episode on Tether sometime. You got to get Paulo in here. I know, I do. Paulo, you've been on Castle Island's podcast. He's been on the mining pod. And that's one of my favorite podcasts.

54:04Alex Thorn:He's been on your pod? Yeah. I shouldn't act so surprised. Sorry. We got Pol. They have a huge Bitcoin mining business as well. If anyone had a big mining business, they wanted to come on the show. So that was kind of nice. Seats hold themselves there. It's such an interesting space, the mining space. Let's talk a little bit about media and crypto. because BlockSpace, I think that's one. You guys broke the big story about Swan and Tether and their dispute. You've broken other news, but you're not quite – you have journalists on staff. You're not quite a news business at the moment, and that's one thing I think it's actually a trend, right?

54:41Alex Thorn:I mean, BlockWorks stepping out of news. You know, Coindesk and the Block, like not the news shops they once were. Yep. Bloomberg being probably the best pure journalism now. Most of the other media landscape has shifted to media research, visual and audio media, podcasts. How do you view the state of Bitcoin and crypto media today? You have to go back to the economics of media itself, and I think that sets the foundation for understanding what's happening. I think a lot of the smart executives in the room for CoinDesk, Block, etc., knew this was going to happen in 2020, 2021. It was going to take Bloomberg, Reuters, et cetera, a little bit of time to speed up.

55:25They were going to hire the wrong people. They were going to hire the wrong editors. They were going to make a lot of mistakes. They weren't going to be able to cover the space well. But eventually, they were going to do it. We are there now. Bloomberg has an excellent team that does a very good job at consistently covering crypto well. They don't get every story right. They don't have every story. They do a good job. Reuters does a really good job with the international scene, I'd say, because they have correspondence in all these different countries. And you're getting the headlines you want between those two publications pretty much all the time, especially for someone who has a terminal.

55:55You're getting all that information. And with AI coming in, it's very difficult to be even faster than anything else. So you've also seen the fall of some of these fast trading desks. You know, like there's the Walter Bloomberg of the world, if you've seen that guy on Twitter. But there was a bunch of the crypto versions of that as well. And I don't see those too often. And there's like Zoomer is one that still breaks a few things. But you're seeing like a lot of the business models that were popular over the last six years change. And our thesis has always been you need to sell something valuable to your advertiser.

56:32Otherwise, you can't make news. Because at the end of the day, you are another funnel for marketing business. So if you go to sell your – you're selling like Alex widgets, whatever you want to be. Like Bitcoin Wallet, Galaxy Hat, right? Like you're going to go to Google. You're going to set up a little campaign. You're going to say like, you know, try to sell my stuff. Yeah. You're going to see like how much did I do? You're going to set up another funnel on Twitter. You're going to do that. You're going to do one on YouTube. Then you're going to try to do like local stuff, try to sell it. Your fifth option might be media.

57:01I'm going to give Will$1 ,000 for podcast ads for this month and see how many I sell.

57:04Alex Thorn:Will also appear on the show. Yeah. Yeah. And there's like other benefits you get out of that, like personality, brand appreciation, things like that. But at the end of the day, you want to sell your widget. It's very apparent that a lot of these news desks were not very good at that. And over the last few years, that meant that the CPM on their ads was compressing very tightly. I had to lay off people. What is CPM? Cost per? Cost per milli. So it essentially means like how much am I going to sell an advertisement to 1 ,000 people? Yeah. And so for crypto, it's had a very high CPM. You could traditionally sell$100,$150,$200.

57:41Some shops are so able to do that. And this is why Coindesk and others,

57:44Alex Thorn:they would have a story on a bunch of crypto prices just every day. Oh, yeah. Because they would just get good SEO and thus capture that CPM. And the CPM was very justified because you had an engaged audience that would buy an asset. And the best thing to purchase from an advertisement standpoint is an asset because it goes in someone's pocket, typically doesn't leave. If you're selling a hat, whatever, the CPMs on that are pretty terrible. For podcasting, so if you guys ran ads on this show, I don't think you need to. We don't. You've got a great studio. Yeah. Everyone seems pretty happy here.

58:16Alex Thorn:Thanks, Mike Novogratz, for paying for the pod. Yeah. You can do, in traditional publications,$15 to$20 CPM, run four ads, get a few thousand downloads, and kind of pay for a mediocre salary. In crypto, we had Blockworks running five, 10 podcasts. Who knows how many each of those podcasted, but the CPM was so high, you'd keep people on staff. Can't do that anymore. Right. So we've seen them cut back on a lot of things here and they're just chasing the money now. And I think what like people got mad at Blockworks, but I'll defend them for a little bit. You know, they cut their news desk. There is an economic decision behind that.

58:57The reason you have news is because that's a very good way of getting people to your website, which is a very good way of getting people to click on advertisements. It's not apparent that running news is a good way of getting people to click on advertisements anymore. What is a good way of people clicking advertisements is, hey, I want to go to that site every day, look at the data, or I really like that podcast host, so I'm going to listen to them every day. Something that's more community-centric, and that's how you get back to that higher CPM. Someone's in my network, I can charge more for that.

59:26If it's just a passive person. So I think that's where you're going to see the difference between the Bloombergs of the world, they have such scale, they can charge$15,$20 CPM for, say, podcasting, websites lower. and they can dominate that. They can hire all the journalists for good salaries too. You're going to have a hard time doing that at the other sites, so you have to go deep. You have to have really good analytics about your average user, and you really have to get into that thin info. We'll just see compression. I think it actually could increase room for more publications in crypto. There's just going to be smaller shops that are more focused.

1:00:04You're going to have a stablecoin shop. Or for us, we're a Bitcoin mining and tech shop. Like that's kind of the thesis I see playing out. Yeah, there's a lot of words. It's quite interesting.

1:00:14Alex Thorn:I think, you know, one thing I'm hearing is take Bloomberg, right? And I don't know, but I believe the we all those who have the Bloomberg terminal don't typically have it for the Bloomberg written content, though it is good and has expanded. You have it for data, tons of market data. You do have it for headlines. They're famous for their flashing red headlines and they're fast to it. But they'll pull the headline from like the journal if that's who has it. It's not like they're an aggregator for news. But they and then I think, you know, then they layer in. Well, we're making all this money selling the data.

1:00:51Alex Thorn:Let's increase the quality of the content and hire better journalists. But it wasn't the like we're a newspaper that adds a data business. It was a data business similar to what you're pointing out about like CPM on data. And I think it, yeah, so it's more of a transition than a degradation of the news environment in crypto, right? It's transitioning more to the Journal and the Bloomberg and CNBC and Reuters than it used to be too niche for them. Even publications like Financial Times are covering crypto now full time. Everyone's doing it. For us at BlockSpace, the approach is hire really good freelancers to do pieces on 12 pieces a year.

1:01:33So we have a new guy, Tom Kleckner, who writes at RTO Insider. He covers data centers in two ISOs in the U.S. He's going to do a few pieces for us a year. Those are going to be pieces that people will pay for or give me an email for. And then you can use that information to go sell to an advertiser. and it all comes back to getting that advertiser in the room who cares about that certain piece of information. Because you can get eyeballs anywhere now. Google is so dominant at this. So you really have to think like three steps ahead in the strategy game and that's where it's going to be hard for some like these legacy crypto publications to survive because the game has changed so substantially.

1:02:14But in crisis, there's opportunity. And I think, like, we could see the block or CoinDesk or Decrypt change within that. Decrypt has, you know, they've, like, embraced the prediction markets, which has been pretty cool.

1:02:26Alex Thorn:Yeah. How do you guys embrace prediction markets in your coverage? Have you been using prediction markets? They don't cover anything we want. So I feel like there really is a Bitcoin mining hash rate prediction market, right? I haven't seen anything on a lot of the Bitcoin stuff. I really wanted some for, like, haircut ISO approvals. Yeah, like, when will approvals. That would be great. galaxy would have been cool one so the one i wanted was for iron because like they have their sweet water campuses that are huge it's like two gigs they're approved at this point so it doesn't matter but it'd be cool it's a very yes no decision right you get a very clear outcome yeah like it's yeah the letter from a regulator or whatever we call them their council and yeah i and by the way like that's one of the things i really like about prediction markets is not gambling not as a proxy for sports betting or what otherwise is pure speculation But although, I mean, that's fine.

1:03:17Alex Thorn:But I mean, more interesting is for real event hedging. And people have been using that, by the way, OTC. I don't think people know this. There are OTC trading firms that have been offering big companies like size in event market hedging for a long time. And that's one, as you can imagine, like whether or not an AI company gets a power approval could have enormous implications for their company, the regional electric grid, but also their stock. And you could imagine investors wanting to hedge in that way. I think it's super interesting. It's really cool. And I think there's a bunch of second-order effects you have to think about, too.

1:03:54How does that affect a stock price? So for like IRN, for example, if there was a liquid poly market, yes, no, are they going to get this? How could IRN use that to offset some risk in their stock price?

1:04:06Alex Thorn:Or could they? Institutional. Would they even be allowed to? I'm not sure. Yeah, how would you price that into their stock? Or would it like, and for the stock, would it enhance or dampen volatility in the stock? Like you could imagine it could have a dampening effect because it's allowing their investors to play it, to be less delta, to be more delta neutral. Which is, by the way, also efficiency. I mean, that's helpful, right? Investors want. I also like it because to put on, you know, hedging often requires like using a proxy, right? But these can be like pure binary, like will this person become president of this country or not?

1:04:45Alex Thorn:Right. Like and that's a very instead of being like, well, if they do, then this will do well. So we'll long that and short this as a proxy hedge by proxy. I like the very like clear event market is a very cool thing. I would love to do some around our company. To me, the listing process seems a little opaque. So you go to Discord and then you'd be like, we have to make this market. And they're like, no, we're doing sports. and then maybe they'll get to it at some point. Yeah, it's an interesting thing. I know mainstream journalists, I mean, I even saw during the Golden Globes, they were citing polymarket odds on winners.

1:05:16Alex Thorn:So it is penetrating into the market and into media. Yeah. It's an exciting thing. Well, before we wrap here, Will, I'll give you this time to say, what are you most excited for? I know you've got Opnex coming up, but for block space or for the market, what are you looking forward to in 2026? It's still early in the year. It is early. It's not even February yet, which this has felt like a long month. Has it been long for you? It seems long, yeah. It seems like it's been a very long month. I think enthusiasm for Bitcoin coming back. I think the DAT thing didn't go super well for a lot of people.

1:05:52And I think it sucked a lot of wind up or a lot of air for people. And I'd love to see some enthusiasm for Bitcoin again going into this year because it's going to rebound. You know that that's going to come back when a big green candle happens and everyone's face gets melted. that's going to be a great day. It'll happen at some point. So I hope that there's some of that this year. And then I think for BlockSpace, like Opnex is going to be awesome. We have some awesome reports that we're working on this year, kind of semi-analysis style. Kind of like we flew over Helios, but we're going to be doing that for some other places as well.

1:06:25Alex Thorn:Yeah, semi-analysis, great shop for covering the data center and the chip industry, right? Yeah, they're incredible. There's just a lot of opportunity in niche media. If you know your community, you know how to build it, and you know to deliver what people want, there's a lot of opportunity, and it's fun. You get to talk about the things that you care about. So that's mostly what I'm loving about this year so far. Well, there you go, Will Foxley, co-founder of BlockSpace Media. My friend, thank you so much. Thanks, Alex. That's it for this week's episode of Galaxy Brains. Thank you to our guest, Will Foxley from BlockSpace Media, and our friend, Bimnet Abibi from Galaxy Trading.

1:06:59Alex Thorn:Everyone have a safe and happy weekend, and we will see you next week.

1:07:26Alex Thorn:Thank you for listening to Galaxy Brains, the weekly podcast from Galaxy Research. I'm Alex Thorne, head of firm-wide research at Galaxy. Follow me on X at IntangibleCoins. Follow Galaxy Research on X at GLXYResearch. Read our written reports at Galaxy.com slash research. And don't forget, if you like Galaxy Brands, to like and subscribe on your favorite podcast platforms like YouTube, Spotify, Apple Podcasts, and more. We'll see you next time.