#895 Takeaways From My Conversation With Chris Larsen, Co-Founder of Ripple

This episode is a little different than the usual podcast format. There is no guest. Instead, I will share a couple of thoughts I have around a specific topic. Today I give my thoughts about my recent interview with Chris Larsen and his recently announced "Change The Code, Not The Climate" campaign. We had a lot a things we agreed with and a lot of things we disagreed with. I wanted to take the time to clarify my thoughts around the podcast episode and this controversial topic. ======================= Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. 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 straight from your wallet. Interactive charts let you view an asset’s price history and your portfolio’s performance over time. And maybe the best part, Exodus is integrated with the Trezor hardware wallet - making advanced security easy for everyone. Visit exodus.com/pomp for your free download or search Exodus on the App Store or Playstore. ======================= Today’s episode is sponsored by Abra. Based in California and backed by top VC firms, Abra is an all-in-one simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral and earn interest with up to 14% APY on stablecoins and 8.15% APY on Bitcoin. Join nearly 2 million users by downloading Abra from the Google Play or Apple App store. If you download the app today, you will get $15 in free crypto once you fund your account. You came, you invested — now conquer. ======================= DeFi Technologies represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, through a single stock purchase on a regulated exchange. Currently listed on U. S. (OTC: DEFTF) and Canadian (NEO:DEFI) exchanges. For more information or to subscribe to receive company updates and financial information, visit our website at http://defi.tech =======================

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

• 0:02Anthony 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. Now let's kick this thing off. Today's episode is a summary of my takeaways from my recent podcast conversation with Chris Larson, the co-founder and executive chairman of Ripple. In that conversation, we discussed his brand-new campaign, "Change the Code, Not the Climate." My takeaways from what we agree on and also what we disagree on. I really hope that you enjoy this conversation, but before we get into it, I first want to talk about our sponsors. Today's episode is brought to you by Exodus, the world's leading desktop, mobile, and hardware crypto wallet. They offer beautiful, user-friendly blockchain products that sync

• 0:42Anthony Pompliano?

  across all of your devices, making it easier to send, receive, and exchange over 150 or more crypto assets in one place. And with world-class customer service available to you 24/7, Exodus always has your back. But the fun doesn't stop with staking and trading. They recently launched a new NFT marketplace where you can buy and sell your favorite NFTs on the Solana network. By partnering with the popular NFT platform, Magic Eden, they're offering the Full Monte Unverified Collection with more added every single day. Ready to check it out for yourself? Run, don't walk. Over to exodus.com/pomp for your free download today. Again, if you want the world's leading desktop, mobile, and hardware crypto wallet, go to exodus.com/pomp today.

• 1:25Anthony Pompliano?

  Today's episode is sponsored by Abra. They're based in California and they're backed by top VC firms. Abra is an all-in-one, simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral, and earn interest with up to 13% APY on stable coins and 7.15% APY on Bitcoin. You can join nearly 2 million users by downloading Abra from the Google Play or Apple App Store. If you download the app today, you will get $15 in free crypto once you fund your account. You came, you invested, now conquer. Abra, conquer crypto. Go check it out today. This episode is brought to you by DeFi Technologies. DeFi Technologies represents what's next in the digital economy. They're providing simplified

• 2:10Anthony Pompliano?

  Trusted access to crypto, decentralized finance and web three investment opportunities. Institutions and investors can gain diversified, secure, compliant and easily tradable access to a diversified set of industry-leading equity products and protocols through a single stock purchase on a regulated exchange. DeFi Technologies is currently listed on the US exchange at DEF T F stock ticker and the Canadian Neo exchange at D E F I. For more information or to subscribe to receive company updates and financial information, visit their website at DeFi.Tech. I'm really excited about what these guys are doing. I've become an advisor to the business and I highly suggest you go check them out. Go to their website at DeFi.Tech today. All right, let's get in this episode. I hope you guys enjoy this one.

• 2:56Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:19Anthony Pompliano?

  Good morning, everyone. Bang, bang. There was a new E S G campaign launched earlier this week called Change the Code, Not the Climate. The goal was to bring awareness to Bitcoin's proof of work consensus mechanism, along with a perceived negative environmental impact from the perspective of the campaign creators. As part of the awareness effort, Ripple co-founder and executive chairman Chris Larsen provided $5 million to run campaign advertising across various media outlets. It should be no surprise to anyone reading this that I disagree with the conclusion of this E S G campaign, but I felt it would be important to have a conversation with Chris. While we may disagree on his perspective of Bitcoin and proof of work, there are plenty of things that we agree on as well. You can listen to the podcast episode on this exact RSS feed by simply navigating to that conversation. But I want to spend the rest of our time today discussing

• 4:04Anthony Pompliano?

  my takeaways from the conversation. To start, this was the first time that I've spoken to Chris Larsen. He seems like a nice guy who genuinely cares about the environment. You have to respect the fact that Chris was willing to come on the podcast to discuss controversial topics with me, especially since it is clear that we vehemently Disagree. Second, both Chris and I have major skin in the game. He has majority of his net worth in crypto with almost all of it being in XRP. And I have the majority of mine in Bitcoin. Chris has also spent nearly a hundred million dollars on climate related issues in the last few years. Some people will say that we are both biased, which could be a fair critique, but the counterargument is that we both believe deeply in our perspective. Next, there are two major themes that Chris and I agree on. The first is that a decentralized digital currency is highly valuable to the world

• 4:48Anthony Pompliano?

  and has the potential to solve a number of global issues. The second is that the free market will always be the referee on winners and losers, regardless of any of our personal opinions. These two themes are important to call out because they highlight that it is possible to agree with someone on high level ideas, but disagree on the nuance and details. Additionally, the market has deemed Bitcoin to be the world's most valuable digital currency and places a premium on the most popular proof of work consensus mechanism. Next, Chris's concerns around proof of work appear to be rooted in a lack of understanding about the energy consumption of Bitcoin is today. During our conversation, he cites the Cambridge study on Bitcoin mining numerous times. When I bring up that Cambridge and the Bitcoin Mining Council both estimate that approximately 66% or two thirds of Bitcoin mining energy consumption comes from renewables.

• 5:34Anthony Pompliano?

  He then says he doesn't believe that number. For comparison, the United States uses 20% or less renewables as part of the entire country's energy consumption. So the Bitcoin miners are 3X higher than the United States in terms of percentage coming from renewables. Along these lines, Chris appears to not understand that Bitcoin does not have a linear relationship between price and energy consumption. He kept mentioning that Bitcoin's energy consumption increased 10X in the last five years, but didn't want to acknowledge that Bitcoin's price appreciated 4,300% in the same timeframe. If we extrapolate this forward, Bitcoin's price would have to cross over $2 million for Bitcoin's energy consumption to increase 10X again. If this wasn't enough, Chris also claims that Bitcoin mining will consume 4% of global energy production in the future.

• 6:16Anthony Pompliano?

  It is estimated that it costs $200 billion to purchase approximately 0.9% of global energy production. This is at a 12.5 cents per kilowatt hour rate. This means that miners would have to receive $800 billion in revenue from the block reward and transaction fees, and then spend 100% of the money on power consumption, not to include the cost of their facilities or their machines, and then they could purchase 4% of global power production. For comparison, Bitcoin miners are making about $45 million per day right now, which comes out to a little less than 16.5 billion per year. This means that Bitcoin would have to increase in price to $2.3 million per Bitcoin without any halving to the block reward, and then Bitcoin miners would have enough money to purchase this amount of energy.

• 7:00Anthony Pompliano?

  In other words, the claim of 4% of global power consumption is either horrendous math or a disingenuous claim to create fear and outrage. Another interesting point from the conversation was when I asked Chris about the funding for Bitcoin mining critiques. Multiple times, I asked whether Chris, Ripple execs, or Ripple's corporate entity was funding or had funded these prior critiques. Chris wouldn't answer and kept dodging the question. I don't want to make assumptions, but if the answer was no, then I would think that it'd be easy to say that. The lack of transparency around Ripple, Chris, and other executives' funding of proof-of-work critiques is concerning. Next, I asked Chris why he wasn't advocating for the US dollar to become more green, especially since it had much more popularity and consumes much more energy than Bitcoin. He didn't seem to have a good answer here.

• 7:43Anthony Pompliano?

  Lastly, I asked Chris why he was spending money on an awareness campaign rather than simply forking the Bitcoin code and allowing the free market to decide the winning architecture. His answer was that he didn't know the right technical structure to create to solve his environmental concerns, which I believe is his genuine perspective. It is clear that I don't know the technical architecture that is better than proof-of-work either, so it feels like identifying a potential problem without a suggested solution is less than ideal. My motto of "compete, don't complain" is applicable here. A fork of the code would settle this debate in a fairly efficient manner. Now, I want to make something clear. Chris was kind, articulate, and intelligent. You don't get to his level of success without being a good entrepreneur. It was great to establish the common ground, especially the things that we agree on,

• 8:27Anthony Pompliano?

  but still have a straightforward conversation about the details that we disagree on. The world could use more nuanced conversation between people who disagree. With that said, I think that Chris and the rest of the change the code, not the climate campaign, know that there is a 0% chance that they will be successful. The entire campaign appears to be aimed at creating controversy and potential concerns, rather than actually putting forward potential solutions. Not only will the Bitcoin miners and developers not agree to any change, but the node operators will reject any change to the consensus mechanism as well. The market has deemed Bitcoin the single most valuable cryptocurrency in the world. It is the most decentralized and the most secure. Every cryptocurrency that received a level of popularity, but did not leverage proof of work, has eventually fallen behind in terms of market cap and/or coin market cap rankings.

• 9:11Anthony Pompliano?

  I appreciate Chris's appeal to innovators and entrepreneurs. Like him, I believe this group can solve global problems. Bitcoin is that solution, though. Proof of work is essential to the network's security, and any move away from this consensus mechanism would jeopardize security and value. But as Chris and I agreed on at the beginning of the conversation, the free market will be the ultimate judge. So far, Bitcoin is winning. Only time will tell what happens in the future. I want to extend a big thank you to Chris. He has my utmost respect for his willingness to engage in the conversation. Hope each of you has a great day, and I'll talk to you guys on the next episode. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry,

• 9:56Anthony Pompliano?

  we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more, and I'll meet you guys for the next episode.