#476: Mason Jappa on The State of Bitcoin and Mining

Mason Jappa is the cofounder and CEO of Blockware Solutions, a blockchain infrastructure company and network advisory firm. In this conversation, we discuss the latest Blockware research report on Bitcoin, including why $40,000 is just the beginning and how the network metrics suggest Bitcoin is stronger than ever. ======================= Exodus is an absolute game changer in the crypto wallet space, and we’ve teamed up to offer an exclusive discount for you, as listeners of the podcast. Sign up for Exodus today using my promo code Exodus.io/. This is a no brainer for both newcomers and crypto heavyweights - go sign up today. ======================= Diginex is the first company with a cryptocurrency exchange to be listed in the US. Their ticker is Nasdaq: EQOS, and they are the first crypto company that you can buy stock in. They also have a crypto exchange called EQUOS, which has been built to institutional standards, but is available to everyone. You can trade Bitcoin and Ethereum spot, as well as Bitcoin perpetuals, and get a 5% discount on all fees, by signing up using http://www.equos.com/pomp ======================= Money On Chain brings Bitcoin to mass adoption with solutions to meet the needs of different types of users: a fully bitcoin-collateralized stablecoin (DoC), a bitcoin on steroids (BPro), and a dizzying bitcoiner option for lovers of leveraged trading (BTCx). All this, without requiring the delivery of private keys. Money On Chain - Bringing bitcoin into the mainstream. Visit moneyonchain.com/pomp to learn more

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Mason Joppa is the co-founder and CEO of Blockware Solutions, a blockchain infrastructure company and network advisory firm. In this conversation, we discuss the latest Blockware research report on Bitcoin, including why $40,000 is just the beginning, and how the network metrics suggest Bitcoin is stronger than ever. I really enjoyed this conversation with Mason, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Exodus, E-X-O-D-U-S.io, Exodus.io.

• 0:42Anthony Pompliano?

  Exodus is one of the most popular cryptocurrency wallets, and has been around since 2015. It's supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies. Interactive Charts lets you view the price history of a specific asset or your portfolio's performance over time. And maybe the best part, Exodus is integrated with Treasurer Hardware Wallet, making advanced security easy for everyone. Visit Exodus.io for your free download, or search Exodus on the App Store or Play Store. Again, Exodus, one of the most popular cryptocurrency wallets, and it's been around since 2015. So go check

• 1:21Anthony Pompliano?

  them out. E-X-O-D-U-S.io, Exodus, where you should be using for your crypto wallet, Exodus. Next up is Digenex. They are the first company with a cryptocurrency exchange to be listed in the United States. Their ticker on the NASDAQ is EQOS. EQOS is the NASDAQ ticker. And they are the first company that is in crypto that you can buy stock in. They also have a crypto exchange called EQOS, E-Q-U-O-S, which has been built to institutional standards, but it is available to everyone. You can trade Bitcoin and Ethereum spot, as well as Bitcoin perpetuals, and get a 5% discount on all fees by signing up using equos.com/pomp.

• 2:05Anthony Pompliano?

  Again, equos.com/pomp. Digenex, the first

• 2:10Anthony Pompliano?

  With a crypto exchange to be listed in the United States, the ticker on NASDAQ is EQOS. And they have that EQOS crypto exchange built to institutional standards. Go check it out at EQOS, EQUOS.com/pomp. Lastly, is Money on Chain. They bring Bitcoin to mass adoption with solutions to meet the needs of different types of users. They have a fully Bitcoin collateralized stablecoin, DOC. They've got a Bitcoin on steroids, Bitcoin on steroids, B Pro, and a dizzying Bitcoiner option for lovers of leveraged trading, BTC X. All this without requiring the delivery of your private keys. Money on Chain, bringing Bitcoin into the mainstream.

• 2:52Anthony Pompliano?

  You can go visit them at moneyonchain.com/pomp. Who said DeFi is not for Bitcoiners? You can discover that B Pro, that Bitcoin on steroids, is a token created by Money on Chain that allows you to earn a rent on Bitcoin positions and gain free leverage. So yes, with a Bitcoin on steroids like B Pro, DeFi is definitely for Bitcoiners. Go check out more at moneyonchain.com/pomp. Again, moneyonchain.com/pomp. All right, let's get into this episode. I hope you guys enjoy this one with Mason.

• 3:25Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 3:51Anthony Pompliano?

  All right, guys. Bang, bang. I've got Mason here. Thank you so much for doing this, sir.

• 3:55Speaker 02

  Thanks for having me. I'm Pomp. Really excited to run through and jam on a million things that we have to talk about, all Bitcoin related, all hype fest. Really excited to be on with you today.

• 4:06Anthony Pompliano?

  All right, let's get after it. Let's just go through your background real quick. Where'd you grow up and what did you do before you got into Bitcoin?

• 4:12Speaker 02

  Yeah, and a lot of that will actually lead, you know, how I got into it. So I grew up actually in St. Louis, Missouri. My family came from a wood manufacturing background. So my grandfather founded a wood manufacturing called JMC Wood in the 1970s. My father runs that company today. It's in Bridge, Missouri. And that actually led me to Bitcoin mining. So in 2016, we had warehouses and machinery. We had some excess power and just space, you know, and what you see within the mining space is lean and mean operations. So I was just thinking like, what can I do with this energy and space? And that led me to the Bitcoin mining rabbit hole. In 2016, the S9 was just released. So I just started filling and building racks in my dad's warehouse. These workers and employees were looking at me like I was an alien.

• 4:57Speaker 02

  And we just started hashing. And then from there, I saw, you know, a lot of opportunity, right? Fragmentation in the market, you know, US miners struggling to order machines. The value of like the S9s I bought in early 2017, like ten folding. And it really just led to the formation of Blockware Solutions, which I co-founded with my late and great business partner, Matthew DeSousa, who you had on your podcast last year, you know, rest in peace, God bless. What an amazing person. And then Sam Scherzinski, who's our current CFO. And we're still vertically integrating and doing a lot of really nice things today. I went to the Kelly School of Business at IU, had a BS in finance and a master's degree in information systems.

• 5:43Speaker 02

  Prior to just going full-time blockchain, I'd worked in management consulting and I was a lead solution engineer at a risk management software company.

• 5:52Anthony Pompliano?

  Awesome. So when you start mining Bitcoin, how do you get from that to Blockware?

• 5:58Speaker 02

  So great points. So what Blockware is, is it's a vertically integrated Bitcoin mining and you know, general blockchain oriented company. So just to give a background on Blockware and what it is, first and foremost, we're a wholesaler and large distributor of ASICs. And you know, just, just a fun throw out, you know, what does ASIC stand for? I get this all the time. Application-specific integration, integrated circuits. So think of an ASIC like a high-powered server that, you know, runs 24/7 and just its goal is to generate and mine Bitcoin and validate the network and validate the communication that happens between nodes. So Blockware has actually sold over 200,000 Bitcoin mining machines or ASICs since inception in 2017.

• 6:42Speaker 02

  So that's one of our key offerings. With that, you know, as, as a, as a client, you may ask, you know, where do I put these machines? Right? So we host the machines. Blockware has placed over 45 megawatts of, of hosting equipment across different co-location facilities. And, and over time, with our vertical integration, we actually co-partnered and started and desired to operate our own facilities. So we're a part of a facility in Kentucky that currently has about 20 megawatts running. And as I go into Blockware Mining as an entity as well, my second entity, we actually just got a financing and sale and leaseback to build our second site in Kentucky, which will, which will start out at 25 megawatts and scale to 100. And if you're following Kentucky news, there was actually a really interesting bill that was

• 7:27Speaker 02

  just passed that is incentivizing Bitcoin miners to come to Kentucky. And they're, and which is, you know, amazing and great, great news. So really excited. We were already in Kentucky, this bill comes out and our second, our second load's coming and then, and it was just like the perfect time, perfect place for that. And then just to finish the Blockware blurb, we write industry-leading research. So I'm going to cover some of our research today. I think we were writing a really nice piece and it'll be research and available on our website. The title is Bitcoin market outlook in 2021, 40,000 is only the beginning and and pop between me and you, we've got an amazing top track to run through there. And then also, we all we operate a Bitcoin mining pool.

• 8:11Speaker 02

  A lot of my messaging is and key messaging that that you'll hear me say, and I'm sure you resonate with as well is, hey, guys, we need to get Bitcoin in the hands of Americans, and we need to get Bitcoin hash rate in the hands of Americans. It's a it's a global race right now. Let's not lose this race. Let's get the messaging out, get Bitcoins in our hands. We we need to make moves now. The time is now.

• 8:33Anthony Pompliano?

  Absolutely. So let's get into the research report because I think that that's such like a bold statement. Maybe not for somebody talking to me, but for most people to hear, 40,000 is only just the beginning. And you've basically broken this report out into eight different sections. And I figured maybe we could kind of go through each section and you can give us a little overview of of exactly what you guys talk in there and and help people go and and download it. But the first section is all about mining rigs and kind of record demand. Elaborate on that a little bit.

• 9:02Speaker 02

  Yeah. And and real quickly before we do that, I did want to touch on my second entity. My other business partner, Michael Stolzner, he's has 30 years of derivative trading. It's Blocker Mining. It's actually our investment vehicle. So I do I did want to, you know, highlight that we are a self miner ourselves. So we'll have within Blocker Mining, we'll have 300 Penta Hash of hash that will be online by mid February. We have over 200 hosted clients. That's our investment vehicle, and that's how we raise capital. It's our sister company to Blockware Solutions. And that's that's the entity that truly is, you know, going to have ownership of these hosting facilities and co partnerships. But I agree with you. Let's jump right into the meat and potatoes of the research report.

• 9:44Speaker 02

  So so starting with the first section, talking about a record demand for rigs. So what what you're seeing in the space right now actually is institutional participation as it becomes to as as it relates to mining rigs. So if you look at an institution, and it's amazing what we're seeing right now, we view this this Bitcoin uptrend as being fully institutionally driven. So with that, as it relates to Mining rigs, you're seeing institutions that are investing hundreds of millions, if not billions of dollars on mining rigs and infrastructure. Um. So not only do you have to buy the Bitcoin mining rig, you have to spend, you know, billions or hundreds of millions on the infrastructure to host the mining.

• 10:24Speaker 02

  Um, and uh, the mining rigs. Um. So because the institutions have entered, um, it's caused nine plus plus month delays. Um, for, you know, a retail miner or for somebody that reaches out to his manufacturers to buy the machines. You see companies like Mara, like Riot, like Bitfarms, like Foundry. Um, these companies are buying up tens and of thousands of machines at a time and buying future batches. Um. So the, so right now you're seeing lead times of nine plus month because of the institutional participation. Um, and and that's fascinating. Um. So it's not only institutions, you know, driving and buying Bitcoin. It's institutions sucking up all the Bitcoin mining rigs, which creates re, uh, you know, lead times that are off the charts than what we have never seen before.

• 11:09Anthony Pompliano?

  They want a Bitcoin. They're gonna either buy it or they're gonna get their, uh, their mining rigs.

• 11:13Speaker 02

  Uh, exactly.

• 11:14Anthony Pompliano?

  The, the second section is all about, uh, Google searches. Talk a little bit about that.

• 11:19Speaker 02

  Yeah, totally. Um. So, so what, what we've seen that is really interesting, if you remember in the bull market of, of twenty seventeen. Um, Google searches were at an all time high. If, and, and there's, you know, this, we, we, we source Google trends. Um. So there was, you know, hundreds and thousands and millions of views. Um, as it related to, you know, just searching for Bitcoin or Bitcoin mining. Right now, what we found was fascinating was that we're at fifty percent of the levels that we were at in twenty seventeen. Um. So that just signals, signals to us that retail has yet to enter. Um, it's, it's, you know, it's an indicator that, um, you know, the retail frenzy has not begun. And you, if you, if you think about the cycle of Bitcoin and what happens in, you know, different commodities and equities, retail is the last to enter, right?

• 12:02Speaker 02

  Um, they jump in after all the smart money came in or the, the institutional investors came in. So, you know, that's an indicator that. Um, we have not seen retail participate as it relates, um, to this cycle. Um, and we expect that Google trends to uptick towards the end of the bull market cycle and that, that could indicate that, um, the bull cycle is over, right?

• 12:24Anthony Pompliano?

  Absolutely. The next section is all about Bitcoin exchange activity. Elaborate on that one.

• 12:29Speaker 02

  Yeah. So what we've done here is we've looked at and really honed in on three major exchanges, Bitfinex, Coinbase, and CME. And if you track over time, you know, from 2018 to 2020, Bitfinex, for example, you know, completely dominated across the board. We've seen them, you know, lose market share. Coinbase, you know, has, you know, stably, you know, held market share and, you know, has, you know, from Q1 2018 to Q4 2020, you know, very similar volumes. But the most fascinating thing of this is you'll see the CME volume. So CME from Q1 all the way up till Q1 2018 to Q1 2019, you know, was just about even with the others. In Q2 2019, you saw CME explode.

• 13:13Speaker 02

  And that what went and the reason why that's so important is because CME is driven by institutions. In order to trade us a Bitcoin futures contract on the CME, you have to put up five Bitcoins, which is, you know, $175,700 in today's day and age. And if you look at Q4 2020, CME leads the pack as far as the quantity of Bitcoin traded versus the other two.

• 13:40Anthony Pompliano?

  Got it. And then this whole idea of the institutions come in and they only buy Bitcoin. They don't buy altcoins. Explain this one.

• 13:48Speaker 02

  Yeah, this is a great one. And so if you look in 2017, what we saw was, you know, a reach out driven market. So at that time Bitcoin was actually at its lowest market dominance. And it was around that time that you really saw like that crazy ICO craze, right? And that caused Bitcoin's market dominance to fall, you know, to 35% compared to where it's at today. And then, you know, over time, as institutions take over and participate, we see, you know, the Bitcoin dominance research. And right, you know, right now, institutions really don't have a gateway into altcoins like they do with Bitcoin, right? Institutions can buy Bitcoin.

• 14:33Speaker 02

  Through proven retail and exchanges and CME, they can they can they can trust the custody custody providers like Coinbase, like Gemini, BlackFi is building some really interesting things in that market. You just don't see that same type of custody and availability. I will note that Ethereum futures contracts will start trading on the CME in in early February. So that could change the script and it's not like we're necessarily saying that institutions never will buy into altcoins, but they're certainly Bitcoin focused and and you know, that is fact. And and one a little a little bit further, what we'll cover is, you know, some of the the highlights in news that took place with with these public companies that have entered the market.

• 15:16Anthony Pompliano?

  Absolutely. And central bank monetary policy seems to be everyone's favorite topic right now.

• 15:22Speaker 02

  Yeah.

• 15:22Anthony Pompliano?

  Uh, cover that one.

• 15:24Speaker 02

  That's a good one. And and we're kind of jumping across the board here. Um, so what what I love about Bitcoin and and you know what many people love about Bitcoin is is the monetary policy of Bitcoin is driven by code. Right now, central banks and or central entities control the monetary policy, which which is, you know, highly discouraging. Um, so if you look just from a from a perspective of of US dollar supply, um, in 2020, we saw circulation increase by over 24% in the course of one year. And now let's backdate, 75% of all USD that that is that is is present today did not exist.

• 16:07Speaker 02

  Um, so that is an oh, my God factor that I'm sitting here thinking hyperinflation, hyperinflation. Um, 2020 proved once again, you know, that central bank monetary po policy is a dominant is a dominating force behind equity markets. And and really what's happening is the government's, you know, pumping stimulus and pumping treasury bonds and buying, you know, buying, you know, through treasury bonds into corporations. And and every asset that seems to be not USD-debited has moved. Um, I was I was laughing to myself the other day, you know, all of us collected baseball cards in like the 90s, like baseball card. Values have like vastly appreciated in 2020. Everything is going up. When you when you factor

• 16:49Speaker 02

  that in as well, you know, this kind of also created the perfect storm for Bitcoin. So you saw that march bottom of, you know, 3800. People started to perk up and say, you know, what's my best counter against inflation? And that and the answer is becoming Bitcoin. And that's and that's why and why we believe a lot of the participation is taking place, kind of created the perfect storm. You know, infinite QE, negative instant rates, you know, all of this are creating a lot of skepticism against, you know, on the US dollar in the future. And this is just, you know, not just backed up by data, but you know, you see the legendary moneymakers, billion dollar corporations, even insurance companies, you know, like Mass

• 17:31Speaker 02

  Mutual just recently entered. They're also, you know, proving that this is true. They believe that Bitcoin, you know, is a true hedge against inflation and and the digital gold narrative exists.

• 17:42Anthony Pompliano?

  Absolutely. And what's so interesting to me about this one, I think, is most of the other things that you've talked about are reactive, right? In terms of like, hey, we can look at this and and measure progress based on what people are doing. This one is really kind of

• 17:57Anthony Pompliano?

  proactive, right? In the sense that this is driving action. This is forcing people to go and move assets. Is that kind of how you look at it as well?

• 18:06Speaker 02

  Oh, I completely resonate with you. It's a total reactive. And just to highlight, you know, some of the few things that are the reactive is Citibank putting out a report saying, called 21st Century Gold. They speculated Bitcoin would be at 318K by the end of 2021. Morgan Stanley owns and acquires 10.9% of MicroStrategy. I put out an interesting tweet today that, you know, essentially proves out that they actually own like indirectly by owning MicroStrategy like over 7,000 Bitcoin, which is fascinating is that, you know, Guggenheim releasing that they believe Bitcoin is going to hit 400,000. JP Morgan Chase, you know, Who in the past was definitely anti Bitcoin, you know, put out their speculation that Bitcoin

• 18:51Speaker 02

  will hit 146,000. Recent news Goldman Sachs is thinking about offering custody service. You have Danny Druckenmiller, Paul Tudor Jones entering. You have Mass Mutual, Square Cash App, PayPal. I'm really excited to see what PayPal reports for their next quarter earnings, which are on February 3rd. It'll be interesting to see the volumes and their talk track around that. And then, you know, one of the ultimate evangelists that, you know, we can't miss here is Michael Saylor. You know, he's been the guy on Twitter and he's truly, you know, been an evangelist for Bitcoin.

• 19:26Anthony Pompliano?

  Absolutely. Bitcoin market today in 2021 versus the historical cycle in 2017. There's a whole section in the paper on this. What stuck out to you here?

• 19:39Speaker 02

  Yeah, so if we're looking at historical cycles and as it relates to where we're at today, you can see that we're in the early stages. So if you look at, you know, prior Bitcoin runs, the average volatility or downtrend during these bull cycles is about 30.53%. We saw that 27% drop, you know, happen, you know, a couple of weeks ago, which is really, you know, nominal compared to some of the prior runs that took place. And what's really important to put out is, and I'm aligned to, is the halving cycles, right? If you look at all the prior halvings, so there's been three halvings since Bitcoin was inceptioned, right?

• 20:23Speaker 02

  In 2012, in 2016, in 2020, Bitcoin dictated by code has a halving every four years, right? That's where the Bitcoin rewards are cut in half. Therefore, you know, the reward next year will go from 6.25 and be cut in half in 2024. If you look at Bitcoin's performance in the halving year, the average return in the year of the halving is 206%. If you look at the average return year after the halving, it's 3,400%. So with that being said, and, you know, don't quote me on this, but we're looking at analytics and doing some comparisons,

• 21:03Speaker 02

  Bitcoin at the end of 2021, if we're looking at a 3,400% gain, that would put it at $700,000 by the end of 2021.

• 21:14Anthony Pompliano?

  Do you think that's where it's going?

• 21:17Speaker 02

  My honest take is, you know, I'm definitely conservative. I would not be surprised if Bitcoin crosses 100K. This is simply looking at where the prior halving cycles are at and, and just like you, you know, I, it's so hard to forecast, but you can look at data to try to help you.

• 21:34Anthony Pompliano?

  What was it from January 2017 to December 2017? It was like 20X, like a thousand to 20,000?

• 21:41Speaker 02

  Yes. Yeah, exactly. That, it was insane. I remember it was like, it was from Thanksgiving until December 31st, where we literally went from like a thousand to 18,000.

• 21:52Anthony Pompliano?

  I mean, if that happened, uh, what do we start the year at? 40,000? So it would be like, you know, you start.

• 21:58Speaker 02

  700,000 call. That, I mean, it's, it's exactly that 34, 100% return and it's fascinating and each, I mean, it's crazy. And, and that's the year after the halving year, which is this year. Um, and, and I love it. And if you look at the 2020 halving year, Bitcoin hit 304% if you look at, um, you know, the return rate of that year.

• 22:23Anthony Pompliano?

  Can I quote you as saying you think it's going to 700,000 this year?

• 22:27Speaker 02

  No, you cannot, but you, but, but when my research report is, is, is out and we have all of our data and facts inside of there. For all those that want to, you know, find this research report, go to blockresolutions.com, uh, research and publications, it's in there. And if it goes to 700K, um, you know, I'll expect you to send me a nice little bottle of champagne on December 31st. We can drink it together.

• 22:50Anthony Pompliano?

  I'll make you a deal. If Bitcoin goes to $700,000 this year, which I do not expect it to do at all. But if that happens, not only one, will I come back and pull this up, uh, and I will tweet it out and say that you were right. But two is in New York, I'll get dinner with you once we're allowed to, and, uh, and we'll go laugh about it. That is, that is a, a wild thing, but data's data, right? And if, uh, if that's what the average returns are, then, uh, your, your math makes sense. It's just a question of does, uh, prior, uh, or previous, you know, history actually predict the future well?

• 23:25Speaker 02

  Exactly, and you know, you know, that's something, you know, if you, you know, I took APUS history, what, what, what is something you learned? You know, history repeats itself. So it's, it's always good to study the past to try to understand the future. Um, I'll take you up on that. We'll see if it happens. You know, obviously, everyone will be a happy man if it happens. It's me, you, and, and the whole Bitcoin band camp.

• 23:47Anthony Pompliano?

  Absolutely amazing. All right. So when you kind of look at this, uh, institutions, when they come in, what are they doing? Are they buying Bitcoin? Or are they buying mining equipment? Is it like 8020, one or the other? What are you guys seeing right now?

• 24:00Speaker 02

  So, um, what I'm seeing right now is some fascinating inflows. Um, I, I believe that, you're, you have public participants like, you know, Square, like, um, you know, some of these hedge funds that are taking percentages of, you know, um, purchases and micro strategy that are buying, um, you know, Bitcoin, um, you know, usually OTC and, you know, the hundreds of millions of amount. Um, I wouldn't be surprised in Q1 of 2021, if we've had inflows of, you know, between 100 million to billion dollar tranches that are private and, and public institutions that have made purchases. So I wouldn't be surprised if we see a lot of releases of information that show that, um, this company purchased this amount and it's, and it'll show up on their asset books. They may have not reported it now. Um, then,

• 24:45Speaker 02

  then, then you take a look at these, you know, public mining companies and what they're doing. Um, so really, I'd say it's skewed right now towards, uh, most of the money is, is flowing into purchases of Bitcoin. Um, but, but what you're seeing with these public companies is they're in, you know, and, and, you know, Foundry being, you know, a part of Digital Currency Group, which, which, you know, everyone knows of grayscale. They're capturing a ton of the, of the accumulation that's taking place. And we have a whole nice chart and a research report that shows that. Um, so that also documents, you know, that this is institutionally driven. But if you look at, you know, what some of the public companies are doing and, you know, how they've performed in the market, you know, they're, they're putting all their eggs into the Bitcoin mining basket, right? Um, they're investing the, the hundreds of billions, hundreds of millions and, and billions of

• 25:29Speaker 02

  dollars into mining rigs and infrastructure, um, with, with the expectation, um, that...

• 25:36Speaker 02

  These machines they buy will last three to five years. They're buying an asset that, you know, they're not going to, you know, spot trade or doesn't have liquidity, right? There certainly is a secondary market, but these companies aren't buying these machines to just, you know, capture an appreciation, flip them and sell them. They're buying to mine them, you know, hold the Bitcoin and they're, and they're buying them because they're hyper bullish on Bitcoin, you know, going forward. So seeing, seeing really, you know, the emergence of these public companies like Mara, like Riot, who I'm a part of on the advisory board, like Bitfarms, and a few other names, you know, putting their eggs in this basket is fascinating. And I will not be surprised if there's a lot more public companies that are, you know, that will start

• 26:16Speaker 02

  doing the same. There's certainly others like Hive OS, Hut8, which actually Fidelity owns 11% of. So it's fascinating to see that.

• 26:27Anthony Pompliano?

  When you think about corporations and them coming into the market, which I've talked a lot about institutions, kind of the financial service companies, when the institutions come, or when the corporations come in, are they putting Bitcoin on the balance sheet?

• 26:39Speaker 02

  Yeah, they're putting, they're putting it on as treasury, right? You know, it's exactly what MicroStrategy is. It's, it's shown on the balance, on the balance sheet. Man, I love looking at MicroStrategy's balance sheet with, with what they've done and the timing they made their Bitcoin investment. And, and if you look at how much their stock's been appreciated, it's, it's really interesting. But yes, Bitcoin's going in treasury, it's on the balance sheet, they're, they're capturing, you know, their quarterly revenue. You know, there's, there's certainly tax implications as to, you know, when they sell or how long they hold. So, you know, strategically, it makes sense for them to at least hold that for a year. These companies, I don't believe, they're not buying to just buy Bitcoin and sell at the tax. I think they're buying with a long-term vision

• 27:19Speaker 02

  that extends, you know, five, 10, you know, 20, maybe 100-year cycles. And it's to counter inflation, yeah.

• 27:27Anthony Pompliano?

  It is absolutely wild to watch corporations considering this, but I got to imagine a lot of boardrooms around the country, publicly traded and privately traded companies are all considering, you know, should we go put 1% of our assets or 5% of our assets into Bitcoin? And then you've got people like Michael Saylor, who's, you know, was he 85, 90%, maybe 95% of his balance sheets in Bitcoin and seems to be working out pretty well for him.

• 27:52Speaker 02

  Oh yeah. And I mean, he also purchased personally like 177,000 Bitcoin himself as a side trade. I think, I think what really will trigger like a massive run is when we start tapping into pension funds. And I've seen you write about this as well. Like imagine capturing like between 1% and 5% of pension funds. I mean, this, this is, you're talking 1% to 5% of trillions of dollars. I mean, that would be the boom. A stat that you can look at too is, you know, and this is what everyone talks about and everyone, you know, Peter Schiff's like a hilarious person to follow. And on the side, you know, he's like, he brings awareness to Bitcoin more, more so than his, his down talk does. And he has a whole cult following of people that troll every one of his

• 28:35Speaker 02

  posts. But if, if Bitcoin doubles gold's market cap, Bitcoin value per coin will be a million dollars. So as we slowly take on and consume Bitcoins, gold's market cap with Bitcoin as a digital gold narrative, you're just going to see that price appreciation and you know, it's already taking place. You know, there's websites that are just tracking by the minute, you know, Bitcoins at this level. And yeah, and there's those tweets go out, which I love to see.

• 29:03Anthony Pompliano?

  Foregone conclusion, in my opinion. I absolutely think that's, that's what's going to happen here. But hey, what do I know? I'm just a guy on the internet who, who happens to have a lot of conviction and basically risked his entire net worth on all of it and is right so far. But nobody's, nobody's keeping track of any of that. What's the thing that you're looking for from a milestone basis in 2021 that would surprise people? Like what's the thing that you're paying attention to that maybe other people aren't?

• 29:28Speaker 02

  Man, what a great question. I'm really paying attention to a number of things. I'm trying to, I'm really paying attention and a lot of what our paper focus on is when retail is going to enter. And there's certain indicators that can, that will show that. If you look at the amount of active addresses in the 2017 bull run, they appreciated by 60%. Right now, we're at a 18% active at address appreciation. So I'm looking for active addresses to hit that level and that'll be like, for me, hey, here's an indicator that retails in. And with that, you know, it could be an indicator

• 30:07Speaker 02

  that Bitcoin booms. I'm also looking at, you know, the number of whale wallets, as I call them. These are addresses that have over five Bitcoin. If you look historically, the number of whale wallets are at its top near the, during accumulation phases, right? When we're, when we're, when we're on the up and run of a bull cycle. When you see the number of whale wallets decrease, that means that those participants are selling off to retail. And that leads to the active addresses increasing, right? Those, you know, one leads to the other. So that's something that I'm looking at and, and that can help you, you know, find the market top. You know, the best traders in the world and I, you know, we, I've had some amazing mentors like

• 30:52Speaker 02

  Michael Stolzner, who heads up Blocker Mining, you know, he's, he's run, he's been, he has 30 years in derivatives and runs a company called Futrex. In the 90s, he was the largest Euro USD clearinghouse, you know, out of the Chicago Board of Trade and was the Chicago Board of Trade pit boss. So he's taught me a lot of grit and mentality and, and also Jim Ropel, who was, you know, hedge fund manager and trader. But, but what they'll always tell you, and they'll say is, you're, you're never going to hit the bottom perfectly. You're never going to hit the top perfectly, but follow indicators along the way and, you know, catch, catch, catch the wave. Follow the trends, you know, don't go against the trends. Look for indicators and these are the type of indicators and things that I look at. I also look at

• 31:38Speaker 02

  You know, something, you know, I'm a Bitcoin mining company as well, which we've, you know, we haven't talked too much about, but my research paper is is not as Bitcoin mining focused as you may think from a company like Blocker Mining and Blockware Solutions, right? But one thing that I'm actually looking at as well is hash rate. So something that we're that we're seeing that other people may not be looking at is, you know, hash rate is typically a laggard during bull markets. Right now, and and we have charts in the report that show this, but hash rate is lagging behind Bitcoin price. So during all these historical cycles, the hash rate Bitcoin price outpaces difficulty. And for those that don't understand what difficulty is, difficulty is correlated to the total amount of hash on the market.

• 32:23Speaker 02

  And that's, you know, how difficult it is to mine a Bitcoin. So, you know, during bull cycles, I anticipate miners to do very well because price typically outpaces difficulty. Right now, hash rate's lagging. So that that shows me that we're in the early stages of this bull market. And I'm looking, I'm hyper focused on that. It, you know, there hasn't been to, you know, a major significant jump that, you know, would would make me think that we're we're there yet.

• 32:49Anthony Pompliano?

  So is it fair to say 40,000 in 2021 is just a start?

• 32:54Speaker 02

  It's just a start, and that's the title of the paper. And and and I will stand by that. We're just at the beginning. Man, what a frenzy it was. I'm sure your mailbox blew up from December, like 15th to like early January. I mean, I I'm still behind on like emails, just like you are catching up from, you know, this this market frenzy that took place, which is fascinating, and I love it. You know, the net capital inflows coming in institutions and and that causes, you know, a parabolic rise in Bitcoin price.

• 33:26Anthony Pompliano?

  It's absolutely incredible. Before I let you go, I got three questions, and then you get to ask me one question. The first question is, what's the most important book you've ever read?

• 33:36Speaker 02

  Oh my God, that is a great question. And, and, and this is kind of a coordinate answer. But the Lord of the Rings trilogy, like reading that, you know, in my early ages, I, I think like the, what you can learn from a book like that, from a master writer is, is a lot about morality, integrity, general philosophy, and, and, and just an amazing storyline that I really just resonated with. And it, you know, it, it's a fascinating, you know, series of books.

• 34:07Anthony Pompliano?

  I love it. Uh, second question is, uh, from a sponsor, uh, Eat Sleep. They basically do, uh, thermo regulation for, uh, for mattresses. Uh, it's by far the most comfortable mattress. And also basically, uh, now I'm rested all the time because I sleep on this thing. Uh, what is your sleep schedule? Like, what, like, do you use four hours or 10 hours? How are you from, as a sleeper?

• 34:30Speaker 02

  And it's funny enough, I, I follow your Twitter. I am a minimum eight hour sleeper and, and seriously, to be a high performer and to, and to, to have your hands in so many baskets and to be able to get there. I, I'm usually between the eight and 10 hours and that, you know, I try to go to bed early and I try to get up early, um, try to exercise. Um, I, I like, I like that. I like what, what's going on with that company and, and it totally resonates with me.

• 34:55Anthony Pompliano?

  Early to bed, early to rise, leaves a man healthy, wealthy and wise. That's what my dad used to say to me.

• 35:01Speaker 02

  Love it. Yeah. It looks into sort of family's background. It's, your dad is a fascinating guy.

• 35:06Anthony Pompliano?

  Absolutely. Uh, last question is a little bit more fun. Aliens, are you a believer or non-believer?

• 35:12Speaker 02

  A total believer. And I was laughing like during the last, uh, during the last COVID bill that was released, like, the, the, like, the, the, uh, request that all, like, alien information is, is released. I forgot the time when, um, I definitely believer. The universe is way too large of a place. Um, you know, every, like, I literally by the month, there's like more information that proves that, you know, there is life. Um, the problem is when you're looking, you know, deep into the galaxy, you're looking at years past. So it's like, if we look into it and find something, we're looking at like, uh, something that was from year, like millions of years past. It's like, is it there now? Like, what's going on? What about yourself?

• 35:49Anthony Pompliano?

  Uh, definitely believer. I don't know. I don't know if little green men have come to earth, but, uh, but, but for sure, there's something out there. It's just too big.

• 35:56Speaker 02

  Yeah, I agree.

• 35:58Anthony Pompliano?

  Um, all right. So you could ask me one question. What do you got for me?

• 36:02Speaker 02

  What are your thoughts on Bitcoin mining? Like, I, you know, I, I, I know Pomp and Pomp is, is a Bitcoin evangelist. Um, in general, like, what, what are your thoughts on Bitcoin mining? And, and, and, you know, where do you, and, you know, my second and transitional thought, you know, since you're, um, calling me out for my forecast, you know, where, where do you potentially see Bitcoin hitting?

• 36:25Anthony Pompliano?

  Uh, I just stick with the same price prediction that I've had.

• 36:28Speaker 02

  Yeah.

• 36:28Anthony Pompliano?

  Uh, I think since like 2019 was 100K in 2021. Uh, you know, that seems pretty reasonable to me. At the time, it wasn't so reasonable. People thought I was a little crazy. They're like, how the hell could that ever happen? Well, you know, we're on track. We'll see what happens. Uh, but the price stuff is like less exciting to me. Uh, when it comes to whether it's Bitcoin mining, um, or actually using, you know, the protocol or things of Lightning Network, uh, I just think that we're going through a paradigm shift. Right? And it's less about like me trying to convince people anymore. It's just like, hey, if you can't see what's happening, then like, you're just not looking. Like you're intentionally trying not to pay attention at this point. Um, and so, yes, there's institutional adoption happening. Corporations are going to do this eventually. Central banks will, uh, when it comes to mining, it's like anyone in the world's electricity can start to earn. That's a pretty powerful thing.

• 37:13Anthony Pompliano?

  Um, and so I think that's pretty cool. Uh, but same thing is true about now anyone with internet connection has a payment network and anyone can exchange value anywhere in the world with anybody else without any permission. Like that stuff is really, really impactful on a global basis. And I think a lot of people just discount it because they frankly don't understand it. So, uh, I got into, uh, Bitcoin and crypto with mining, actually. It was with, uh, GPUs and, uh, an ether. Uh, I didn't really know what the difference was. All I knew was I just plug a machine in and then like it was cash flow. And like, this is basically a data center on steroids. So this is pretty cool. Um, and, uh, and then as you kind of go down the rabbit hole, you're like, wait a minute, this Bitcoin thing is like literally, you know, once in a lifetime, uh, type opportunity and disruption.

• 37:57Anthony Pompliano?

  So I just naturally gravitate towards it.

• 38:00Speaker 02

  Oh, that's all. I didn't know that's what led you into the whole crypto space. Well, mining led me into crypto. And yeah, same thing for me. I like in my friend's basement, we had a bunch of GPU mining rigs plugged in. We were mining Ethereum in 2016. And it's cool to hear that you were a part of that, Han. And yeah, I think Bitcoin mining, you know, you know, is fundamental to the success of the network, right? Like, you'd have to turn off the entire world's power to shut down Bitcoin. And that would shut off all the nodes. I mean, that's that's a fascinating output of that.

• 38:28Anthony Pompliano?

  Absolutely. Where can we send people to read more of the report and to find more about both companies you have, Blockware Solutions and mining?

• 38:38Speaker 02

  Yeah, so blockwaresolutions.com has all information about us. Go to the research and publication section, front and center and top left, you'll see our new report that we just released, 2021 Bitcoin Market Outlook. $40,000 is only the beginning. You can see our historical research there as well. Blockware Mining, reach out to us, you know, from the website if you want more information there. That's an investment vehicle. We take on institutional and accredited investors. It did really well. It launched in December 2019. You know, we caught the early cycle. We're rapidly expanding and, you know, really excited about what Blockware Mining's potential, you know, with our goal of taking that public. We're already competitive at penthouse levels in public mining companies. So I'm really

• 39:23Speaker 02

  excited about Blockware Mining and shout out once again to Mike Stolzner and all his work there.

• 39:28Anthony Pompliano?

  Absolutely. All right, my friend. Thank you so much for doing this. We have to do it again when you guys write your next report.

• 39:34Speaker 02

  All right. Thanks, Tom. Take care and take care, everyone. Look forward to hearing from many of you after this is released.