#763 What Is Going On With Bitcoin This Week? w/ Dylan LeClair

Dylan LeClair is the Senior Market Analyst at UTXO Management, a digital asset fund investing in the analog to digital transformation of money and the emergent financial system. In this conversation, we discuss bitcoin, on-chain metrics, market structure, and what to expect from the rest of the bitcoin bull market. ======================= Matrixport is Asia’s fastest-growing digital asset platform founded by crypto veterans Jihan Wu and John Ge. With $10 billion in assets under management and custody. Matrixport offers one-stop crypto-financial solutions including fixed income, Defi in 1-click, structured products, Cactus Custody™, spot OTC and lending. You can earn a high double-digit yield with the Dual Currency Product or opt for the lucrative potential of our new product, Range Sniper. If you hold crypto and are actively looking to do more with your precious asset, then this app is one you don’t want to miss. Download the Matrixport App and enjoy a welcome offer of 30% APY on Fixed Income for new users. Visit invest.matrixport.com/en today. ======================= Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days. =======================

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. Dylan Leclerc is the Senior Market Analyst at UTXO Management. He also writes a newsletter with Bitcoin Magazine. In this conversation, we talk about Bitcoin, on-chain metrics, we talk about Bitcoin's price, the market structure, and what to expect in the coming weeks. I really enjoyed this conversation with Dylan, 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 Matrix Port. Have you lost your way in this low-yield environment while searching for a better store of value to beat inflation? Look no further. Invest with Matrix Port to get more from your crypto, with the potential for high annualized yields on certain products.

• 0:47Anthony Pompliano?

  Matrix Port is Asia's fastest-growing digital asset platform founded by crypto veterans Ji-Han Wu and Zhang Ji. With $10 billion in assets under management and custody, Matrix Port offers one-stop crypto financial solutions, including fixed income, DeFi in one click, structured products, Cactus custody, spot OTC, and lending. You can earn a high double-digit yield with the dual currency product, or opt for the lucrative potential of their new product, Range Sniper. If you hold crypto and are actively looking to do more with your precious assets, then this app is one you don't want to miss. Download the Matrix Port app and enjoy a welcome offer of very high APY on fixed income for new users. Again, go either download the Matrix Port app, or go to matrixport.com today.

• 1:30Anthony Pompliano?

  Next up is Gemini. Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn Bitcoin, Ether, and over 40 other cryptocurrencies. They offer industry-leading security, insurance, and uptime. Gemini is the go-to trusted platform for beginner and sophisticated investors alike. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of Bitcoin after you trade $100 or more within 30 days. Open a free account today, under 3 minutes, at gemini.com/pomp and get $20 of Bitcoin if you trade $100 or more within 30 days. All right, let's get into this episode. Hope you guys enjoyed this one.

• 2:07Speaker 01

  Anthony Pompliano runs Pomp Investments.

• 2:10Speaker 01

  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.

• 2:30Anthony Pompliano?

  Dylan, what's up, man?

• 2:31Speaker 02

  Guys, how's it going?

• 2:32Anthony Pompliano?

  Doing fantastic. How are you?

• 2:34Speaker 02

  Living the dream like always, you know?

• 2:36Anthony Pompliano?

  That's, uh, that's all we want. All right. We got a whole bunch of stuff that we gotta go over. Let's start with, uh, first, just a general sentiment check. How are you feeling about the Bitcoin market, where we are coming into the end of the year? Has anything changed?

• 2:52Speaker 02

  Nothing's changed. Um, I mean, I think the timeline is a little bit delayed, like compared to what a lot of people thought in the fall, uh, at the beginning of Q4. Um, you know, a lot of people were kind of expecting to see, to see higher prices than, than today and for, you know, all time highs to be, excuse me, for all time highs to continue to be, to be made here. But in terms of the thesis, in terms of what Bitcoin is and, and, you know, where we're going with this whole thing, nothing has changed. I think, you know, that's what we're going to dig into a little bit today.

• 3:19Anthony Pompliano?

  All right. So when we start looking at some of the charts that we have here, the first that we're going to pull up is this Bitcoin store value, medium of exchange or unit of account. And you just have, uh, what looks like the price pulled up in terms of, uh, uh, over the years. What, what exactly are you showing here?

• 3:37Speaker 02

  Yeah. So this is more of just like a kind of a title slide. I saw some, saw some of the Jack discourse last night. Um, and the next slide, it kind of, it was a question that says, do you think the, that Bitcoin will replace the US dollar? Um, and you know, there's definitely a lot of debate. Bitcoin is digital gold or Bitcoin is going to displace the dollar or Bitcoin, uh, to some people is a Ponzi scheme. Um, but really I think, uh, you know, we're going to use some, some metrics today and look at some charts and kind of break down what, what I believe. And I think what a lot of people that are Bitcoin proponents believe is that Bitcoin is actively becoming or is already all three. Um, and then the data kind of shows that.

• 4:15Anthony Pompliano?

  All right. So if we start with, uh, the first chart, we've got the issuance rate. rate and the circulating supply and market cap all overlaid on each other. What exactly is this showing?

• 4:24Speaker 02

  Yeah, so this is kind of supporting the store of value argument, right? So you hear a lot of people, increasingly over the last couple of years, this has been an accepted kind of proposition. Bitcoin is digital gold. It's a digital store of value. And while that was controversial for a long time, a lot of the skeptics, you know, besides a few, have come to accept that, you know, Bitcoin is a store of value. And, you know, in the 21st century, especially after the kind of COVID madness and all of the trillions of dollars of stimulus, Bitcoin is a store of value. And so, you know, it's the one thing we know that it has a hard cap is absolutely scarce in the world. This issuance rate or inflation rate is programmatically trending towards zero over time. The blue line, that's actually in log scale.

• 5:08Speaker 02

  So in linear, in linear scale, it looks like the issuance rate is already basically at zero. And the market, the market cap is really just a testament of people around the world allocating, you know, resources and capital to this asset class because of its monetary assurances. And so the store of value argument is stronger than ever. But, you know, I don't think it stops there. And that's when, you know, the discourse gets a little more interesting.

• 5:32Anthony Pompliano?

  Got it. And so really what this is showing is as that issuance rate goes down, or some people could think of that it almost as like an inflation rate, the circulating supply goes up, right? Because we're getting more and more Bitcoin just at a slower pace. But the market cap has continued to grow at the exact same time as well, which ends up being a kind of a, what you would expect if you've got a finite supply asset with a disinflationary monetary supply schedule and increasing demand as you're going to continue to get the price to go up, even though there's a little bit of Bitcoin still coming into the market, the demand outpaces that. And that's where you get market cap growth, right?

• 6:05Speaker 02

  Yeah, exactly. I mean, it's pretty simple. It's how many dollars are going to exist in 2030 or in 2100, right? No one knows. No one knows really for any other asset except Bitcoin. And you know this because you can run a full node on, you know, an old laptop, or you can verify the supply on your smartphone. And there's no other technology. Yes, there are other crypto assets that are somewhat transparent, but the thing is that none of the monetary policy Policies of these other assets or, you know, digital assets are basically as tried and tested as Bitcoin. And no one can change Bitcoin. And every protocol change that has occurred has been opt in voluntary. It's a soft fork. There's no hard forks or changes to the monetary policy of Bitcoin, you know,

• 6:49Speaker 02

  whereas other crypto protocols or assets or currencies, if you want to call them that, have done that plenty of times. So in terms of, in terms of absolute scarcity, nothing in the world has or can compete with Bitcoin.

• 7:01Anthony Pompliano?

  The next thing we've got is the hash rate, 70X since 2017, which is a bonkers number. Explain why you think this is so important.

• 7:10Speaker 02

  Yeah, so this is kind of on the store of value side of things as well. 70X in the last five years, just kind of understanding what that means, what hash rate actually means. You can, you know, for, for people that are more kind of visual and don't really understand what Bitcoin mining is, think of the, you know, gold miners going in with, with shovels and excavators and digging into the earth to find this monetary asset. Well, think about if that had increased 70 fold over the last five years, just the amount of expenditure and the amount of resources that are going into actually extracting, you know, that, that shiny rock out of the earth. Well, Bitcoin is that, but in the digital form, and it's doing it all over the world with sometimes nothing other than just a satellite signal

• 7:52Speaker 02

  and a wasted energy source where there is no economic value. And it's basically securing and being rewarded. It's securing the most powerful computer network in the world. And it's being, it's, they're being rewarded with the only absolutely scarce monetary asset. And so incentives are aligned. That's all Bitcoin is, is just economic incentives. It's completely voluntary. It's opt in and hash rate continues to grow at just mind boggling exponential pace.

• 8:18Anthony Pompliano?

  When we think about the entire network hash rate in 2013, that is equivalent to one S19J Pro. Is that true?

• 8:27Speaker 02

  Yeah. So the S19J Pro, it's top of the line, you know, new ASIC. But that basically spins off 110 terahash a day. I think it costs around $15,000, maybe $20,000. It's, it's extremely hard. Hard to get miners with all the kind of supply chains backed up and they're backordered from, you know, months or years. But yeah, one ASIC, one, one new top of line ASIC is equivalent to the entire network hash rate in 2013. And so it just kind of shows you Moore's Law is in play there with kind of semiconductors becoming more and more efficient. But that just shows you just like the, just absolutely insane growth and just amount of, of physical capital and resources, you know, backing this network. There is definitely a tangible aspect to it despite it

• 9:09Speaker 02

  being, you know, thin air or, you know, what a lot of people like to call it.

• 9:14Anthony Pompliano?

  Yeah, it's pretty incredible. When we look at the next chart, we've got Bitcoin is on pace to settle 45 trillion in 2021 totaling twice as much value as all of its previous years combined. That is an insane number.

• 9:27Speaker 02

  Yeah, so this is a chart from you seen at, at Arc, they put out great stuff. And this is just kind of, this is going into more of the medium of exchange aspect of it, right? So everyone gets store value. You can buy Bitcoin, you can, you can leave it on Coinbase, so you can send it to your cold storage and you can sit, sit there and watch it. And, and it's a pretty strong bet over time that it'll increase your purchasing power, just due to the absolute scarcity of it and due to the adoption curve and more and more people coming to this asset class because of those properties, right? But most people, or, you know, less than the amount of people that understand the store value side, don't really, you know, the, the medium of exchange or maybe the settlement aspect of Bitcoin is very underappreciated. So this network in a completely apolitical,

• 10:09Speaker 02

  sovereign way where there's, there's no CEO, there's no board, there's no, there's really, there's no off switch, right? China just picked up and, you know, 50% of the network was forced to, to shut off overnight and Bitcoin kept on chugging, right? So, you know, $45 trillion are on pace for that in, in 2021. It's a pretty insane number. And so, you know, you're, you're doubling or, I'm sorry, yeah, doubling Visa, I believe. And, and that's, you know, pretty different when you're looking at settlement assurances. But say the best comparison is Fedwire, well, that's, you know, we're already 6% of the way there compared to Fedwire. And so I wouldn't bet on this trend stopping anytime soon. And, you know, that kind of supports the more medium of exchange aspect to it. There's, you know, final settlement all over the world 24/7, 365.

• 10:55Anthony Pompliano?

  Yeah, it's pretty incredible. Bitcoin, the cumulative network transfer volume, 22.2, 22.6 trillion as of 1221, which is today.

• 11:08Speaker 02

  Yeah, so that's the first chart showed just total volume in this one. I should have labeled it a little better, shows change adjusted transfer volume. So the Bitcoin UTXO set when say you have one Bitcoin and you send 0.5, well, I send 0.5 to you, pomp, and 0.5 Bitcoin goes back to me. And that's a, that's a change, that's you like change for the UTXO. And so technically, change adjusted volume just filters out that 0.5 Bitcoin I sent back to, to myself. Just that's how Bitcoin transactions work. And so over the course of its history, Bitcoin is, has done 22.6 trillion dollars of change adjusted volume. And that's, you know, obviously hockey sticking up into the right. And so it just kind of shows you that, you know, this protocol is continuing to grow.

• 11:51Speaker 02

  And in terms of medium exchange, it's a lot bigger and does a lot more volume than people think.

• 11:56Anthony Pompliano?

  Which means that Bitcoin in 2021 has done over 10 trillion, right? So, you know, about 10 to 12 trillion of this, about half of it was done this year in 2021 compared to what it's done since its beginning of its life.

• 12:08Speaker 02

  Yep, correct. It's pretty insane.

• 12:10Anthony Pompliano?

  Yeah, absolutely nuts. And, and I don't know the exact Visa settlement number, but I do believe that Visa's annual transaction volume is now right around what Bitcoins is. Like they're, they're much closer than you would think, right? I think that Visa, if I remember correctly, is somewhere in the like 14 to 16 trillion number. And obviously Bitcoin being at, let's call it 12 or so, hasn't quite eclipsed it yet, but, but we're getting pretty damn close.

• 12:38Speaker 02

  Yeah, and I think a lot of people, it should be, should be said that, you know, comparing Visa to Bitcoin, it's definitely a cool kind of comparison and a milestone. But just in terms of settlement assurances and final, and you know, just, yeah, settlement finality, it's, it's a lot different, right? Swiping my card at Visa, basically they have an internal ledger and they just, they just debit someone and basically just change the ledger a little bit. But it can be changed pretty easily. There's, there's no final. settlement for sometimes, you know, weeks or months on end. And at the end of, at the end of whatever period that is, the bank and Visa will, you know, transfer over, you know, billions of dollars and kind of that's the final settlement.

• 13:18Speaker 02

  But when people are comparing, you say a 10 minute Bitcoin transaction or Bitcoin blocks to Visa, it's definitely the wrong comparison. And I think that next, this next chart that will show is more apples to apples.

• 13:29Anthony Pompliano?

  All right, now we've got the Lightning Network public channel capacity.

• 13:34Speaker 02

  Yeah, so this is in USD and it's in logarithmic scale. So the growth is a lot more impressive if you're looking at it in linear terms. But this is public channel Lightning Network capacity. So back in 2017, back when there was the scaling wars, Bitcoin can't scale was the narrative. The solutions were Bitcoin Cash or other altcoins. The payments narrative, despite not being dominant today, was, was pretty big back then. And there was a lot of questions about how could Bitcoin ever be this, you know, as some proponents would say, world reserve currency if, if it could only do, you know, seven transactions per second, which is completely the wrong way to look at it. So here comes the Lightning Network. And with the SegWit, Softfork in 2017, there was some upgrades that could allow for the Lightning Network to be built,

• 14:18Speaker 02

  which was just a concept conceived in 2016. So since then, you basically have this Lightning Network, which is just an application layer or a software layer above the Bitcoin network. And it's completely, it's completely open source. It's completely opt-in and, and basically it allows for Bitcoin payments to occur somewhat instantaneously and for basically no cost or little to no cost. And so we've seen that, that growth is exponential. And you're seeing a lot of companies like Strike and OpenNode and, and companies all over the world just basically opt into this open for basically not free, but, uh, you know, voluntary settlement layer on top of Bitcoin. And so this allows for micropayments.

• 15:01Speaker 02

  This allows, I can send you one Satoshi pop. And so that's something that was never possible with Bitcoin on the base layer. And it's just, this is basically how Bitcoin will scale to billions and billions of people. And it's, it's not appreciated nearly enough.

• 15:15Anthony Pompliano?

  Completely agree. Bitcoin price drawdown from all time high. When you see this, all of a sudden, maybe, uh, maybe we shouldn't be complaining so much because, uh, there were some epic, epic drawdowns over the years. But, uh, what, what is this showing?

• 15:28Speaker 02

  Yeah. So we, we covered store of value. We covered medium of exchange. What's the last one? Unit of account. Um, so how could Bitcoin ever be a unit of account if it's, if it's this volatile? Um, so obviously we're looking at a logarithmic scale of Bitcoin in the background there and the red is showing the drawdowns from all time high. Um, so really kind of what this is pointing at is, you know, the volatility is the price you pay for returns. And when, when something is growing in exponential fashion, um, you will see, uh, very standard double digit, uh, you know, 20, 30, 40, 50% drawdowns along the way. Um, and that's just basically more opportunity to accumulate, uh, and to, you know, just to get your hands on this pristine, absolutely scarce asset. So currently, you know, 31% down from all time highs. Uh, for anyone that's been in Bitcoin for

• 16:13Speaker 02

  more than a couple of months even, it's, it's really nothing. Uh, and it's, it's an opportunity to just continue to stack. So, you know, just some context and, and the next few charts here will break down why Bitcoin as a unit of account is, uh, quite superior.

• 16:26Anthony Pompliano?

  All right. Now we've got S and P 500, uh, as just the first chart. Uh, let's just do the, uh, the actual price chart itself.

• 16:34Speaker 02

  So stocks only go up, right? Or at least that's what

• 16:36Anthony Pompliano?

  Facts.

• 16:38Speaker 02

  That's what, uh, has, you know, we've been taught over the last 24 months or so, but why is that? Um, and a lot of people think they're getting rich, you know, especially asset holders. Um, you know, that everything's going up and to the right, but in reality, uh, it's more of a farce and, or maybe a facade. And actually it's just the money is debasing. So what happens if we standardize S and P 500 and we put it in, uh, M2 money supply terms? Uh, it looks a lot different. And so what we're looking at since 2020, uh, if you just, if you just standardize, uh, this chart in terms of M2 money stock, the S and P 500 is basically flat. Um, and so a lot of people that think they've gotten pretty rich over the last 18, 24 months, uh, in reality, it's just a function of monetary expansion.

• 17:25Speaker 02

  And so this kind of leads you to believe that the dollar over the short term, while I guess the Fed or other, you know, kind of public officials would call it stable. It's actually a melting ice cube, as some would like to say. And, and if you're valuing anything, whether it's assets, goods, services, you know, home prices, anything in big and in dollar terms, you're gonna, you're gonna, it's gonna kind of skew you to believe that things are getting more expensive when in reality, many things are getting less expensive. It's just the currency, the unit is devaluing. And so here we have a solution, which is Bitcoin.

• 18:04Anthony Pompliano?

  Got it. And so when you divide it by this M two doesn't look so hot. And my guess is that if you actually went ahead and you denominated this in Bitcoin, obviously it would be down significantly, which I think is your, oh yeah, it is your next one. Of course, you're two steps ahead of me. Go ahead.

• 18:21Speaker 02

  Yeah.

• 18:22Anthony Pompliano?

  It's like little breadcrumbs, right? Like you're just, this is like a little game. Go ahead.

• 18:27Speaker 02

  Yeah. So, I mean, volatility obviously is there. You see in March of 2020, that, that big green candle, but over the long term, Bitcoin is the best unit of account you can use. Nothing else is absolutely scarce. Like we've kind of covered. And so just denominating something as simple as S and P or even individual stocks in Bitcoin terms will lead you to be one of the best or most ahead of the game capital allocators out there. And I think this is kind of the strategy for savvy investors over the next decade. And it has been in the last decade, but increasingly I think it'll be become the standard is denominating your returns against Bitcoin.

• 19:03Anthony Pompliano?

  All right. And then lastly, you've got micro strategy, both against dollars and Bitcoin. How are we looking?

• 19:08Speaker 02

  Yeah. So talking about going on a Bitcoin standard, valuing your, your company, valuing, you know, your assets in Bitcoin terms. Here's micro strategy. Since they've adopted a Bitcoin standard up 282%, obviously some pretty spectacular growth for, for a company that was, was kind of treading water for the last decade. And now if we denominate it Bitcoin terms, they're doing fantastic and they have 110,000 Bitcoin, but their unit. Their their share price in satoshis, their share price, you know, in Bitcoin terms, has basically surprisingly, or maybe not surprisingly, been flat, right? So so they have actually kept pace with the Bitcoin standard. And so few companies can say the same.

• 19:50Speaker 02

  And I think this will become kind of the way that, you know, savvy investors and increasingly everybody will have to value things in the 21st century. Bitcoin is the most superior unit of account. And if you're valuing things with Bitcoin, yes, there's there's short term volatility. But over the long term, you're definitely ahead of the game and you'll you'll get a step on on people who are not.

• 20:11Anthony Pompliano?

  How do you think about Bitcoin when it starts to become less volatile? So obviously, everything is kind of crashing against Bitcoin because Bitcoin's price is going up at a pretty insane rate compared to US dollars. If Bitcoin is to eventually reach price stability in US dollar terms, which may or may not happen, but if that was to occur, how do you think about it then being denominated all these other assets?

• 20:39Speaker 02

  Yeah, so I think if you look at a lot of things, there's a pretty fantastic chart out there that I that I don't have on me at the moment. But it's over the last 20 years, the price of everything, from like technology to education to healthcare, to consumer goods and, you know, the university education. And basically, everything that technology has touched is is way down. The price of the the price of a TV or a semiconductor or just an iPhone. Think about how much an iPhone gives you over the last 10 years. Well, maybe the price has gone up, but the value is is gone way, way up. So actually, technology, it's it's deflationary in the sense that you get more for less. And so when you when you don't have that expanding, you know, monetary unit, the dollar, the expanding money supply that's chasing

• 21:25Speaker 02

  everything that's becoming more expensive over the last decade or two, it's because more dollars are chasing that. University education subsidized, healthcare subsidized. All of these things that are becoming way, way more expensive is because essentially, the government or, you know, just the economy in general is chasing an increasing amount of throwing an increasing amount of dollars at it. And so that That's why you see these things becoming exponentially more expensive over time. I believe on a Bitcoin standard, on an absolutely scarce monetary standard, global monetary standard, things will gradually decrease in price over time as the money accrues value. Basically, as the world becomes more productive, your money accrues value in everything else.

• 22:06Speaker 02

  And so I think that's what the future holds and you won't see these exponential gains that we see over the last decade and I think over the coming decade. But I think you could expect with human productivity, your purchasing power would increase on to two, maybe 5% a year depending on a Bitcoin standard. And I think that's pretty exciting.

• 22:26Anthony Pompliano?

  When you start to think about how well people understand this, like what's your take on the Jack Dorsey Web 3 tweets versus

• 22:36Anthony Pompliano?

  kind of the Web 3 pro argument, if you will, what do you think?

• 22:40Speaker 02

  Yeah, I think I kind of agree with Jack here in the sense that I'm all for the free market and I'm all for people going and building things and trying things out 100%. But I think a lot of the incentives are skewed in a lot of these, if you want to call it Web 3 applications or ecosystems, whether it's with, and not that investing is bad in general, right? The argument for pre-mine is, well, every stock or company is pre-mined. And that's fair, but if we're talking about a company or a security versus an open protocol, I think it's a little bit different, or actually a lot different. And so Bitcoin crypto kind of gets all lumped into one. And I think it's quite different. We covered it a little bit last week, the differences between, say, Bitcoin and Ethereum.

• 23:26Speaker 02

  And I'm fine, I'm all for the free market. I don't want regulators to come in and clamp down on these builders or engineers at all. But I think just in terms of, say, an open internet and so-called decentralization, a lot of it's more decentralization theater. And that's fine, I think just there's quite a difference between, say, Bitcoin versus what a lot of these other tokens, protocols, Web 3 applications are doing. And that's fine, right? You know, saying everything is going to be on a blockchain or creator economy and everyone's going to have their own personal token. I mean, it's ambitious and so we'll see what happens. But, you know, I think the biggest kind of idea in the room is, you know, what Jack thinks and

• 24:10Speaker 02

  that's sound money for the world. I think that's, that's the big idea here.

• 24:14Anthony Pompliano?

  John, what questions you got?

• 24:15Speaker 03

  Yeah, Dylan, thanks for joining us. So how have you thought about the hash rate? Is this kind of, it's up what 70% since 2017? What do you think it looks like moving forward?

• 24:26Speaker 02

  Yeah, 70x since, since 2017. And I think, and I think it continues to just kind of bend up into the right. It's, it's hard to see that, that sort of exponential growth as, as we kind of get closer and closer to, not the end of Moore's law, but as Moore's law kind of slows down a little bit, I'm not, I'm not calling an end to the, the efficiency of semiconductors and computing power. But you, you've started to see somewhat of a commodification of the, of ASICs, of Bitcoin miners. An S, an S9 has been around for, you know, I think four or five years and it's still spitting off a lot of, a lot of free cash flow, a lot of profit. And so, you know, I think that the new miners today, you'll be able to plug in for, for quite a long

• 25:08Speaker 02

  time and for them to, to be quite profitable. You know, whereas say the mining rigs or, you know, the USB sticks that you could plug into your laptop from 2012, aren't going to be profitable anymore. You can't mine Bitcoin with GPUs and be profitable. But I think a lot of these ASICs will be around for a long time. Despite the fact that Bitcoin hash rate, I would, I would think is going to probably 10 or 100x over the coming decade, just with, you know, the pure amount of incentives that, that will exist for, for people to, you know, plug these machines in. I think every energy producer is going to get involved and in a big way, but we're just starting to see that play out.

• 25:46Speaker 03

  How do you think about the consumer, like the retail consumer getting involved in mining? Versus those big guys.

• 25:54Speaker 02

  It's pretty exciting. I think we're going to see, I believe we're going to see especially in cold, cold regions or climates, you know, the rise of the home miner, you know, some very, very savvy kind of engineers or Bitcoiners, if you want to say, I've been doing this already. But the reality is, you know, these miners kick off a lot of excess heat. And so doing it somewhere that's pretty cold is actually, you know, you can kind of get a two for one where you're mining Bitcoin and you're producing a lot of excess energy and heat. And that byproduct can actually, you know, heat your home. So it's like almost two birds with one stone. And so it's something that actually I am exploring currently. But I think we'll see that a lot and it'll kind of just become, I think Square is working on that,

• 26:38Speaker 02

  right? They're working on building that out in their app as well as working on an ASIC. So that would be pretty exciting. And I think we're a little bit away from kind of that becoming the standard, but it would be awesome to see in, you know, coming five years or so.

• 26:52Speaker 03

  I agree.

• 26:53Anthony Pompliano?

  What I also think would be really interesting, I don't think I've seen one yet that seems viable and commercial, is when you start to get anything that plugs into some sort of electricity and it mines Bitcoin and it's off hours. So like, I'll use a super egregious, almost absurd example, but like you could see it happening, is somebody builds like a microwave. When it's plugged in, it's pulling a little bit of power, right? Because it's obviously able to display the time and that type of stuff. But is there a world where the microwave pays for itself by being able to mine Bitcoin, even though it's got very little computing power, right? So like, that's the egregious example. Like, okay, now walk it back into,

• 27:37Anthony Pompliano?

  well, what happens if all of a sudden you're able to take other things? Like the Tesla Power Wall may be a good example, right? If they were essentially able to say, hey, look, we're going to use renewable power that's stored in this battery and we're going to take that and then build kind of a mining component to it. And you can actually, hey, when you're not consuming the power, if you don't, if you're running out or of capacity or something, just go ahead and Burn it, but you're burning it by using it to drive some sort of monetary value and help secure the decentralized Bitcoin network.

• 28:08Speaker 02

  It's pretty interesting. I think Bitcoin mining kind of will will almost like flatten out these disparities in energy prices across the world, right? You're seeing, you know, you're seeing a huge energy crisis in Europe, right? So Bitcoin miners in Europe currently, they're probably not going to be on full tilt, right? They're gonna, they're gonna instead sell their their energy to the grid, right? You're seeing a lot of like, you know, grid miners that like in Texas per se, that are that are establishing this baseload energy demand. And then when demand spikes, they turn off. And so you can see that kind of at a micro level, right? Or say, maybe not a microwave, but say a water heater, right? So a lot of these things are, you know, continuing to be built out. And there's engineers all over

• 28:52Speaker 02

  the world kind of working on this stuff. Bitcoin mining with immersion cooling, right? It's kind of like these, these ideas that are coming out of nowhere. And they're, you know, they're really fascinating. And I, I mean, we're just scratching the surface in terms of what can be done with kind of this, this newfound demand or ability to take energy from anywhere and turn it into sound money. And so I think the applications and the, you know, the engineering, you know, feats that will be built on top of this and around this network is something that I can't fathom. And I'll let other people figure that out.

• 29:24Anthony Pompliano?

  Last question I have for you is going into Christmas, you got any advice for folks in terms of how they can help orange pill their family?

• 29:31Speaker 02

  That's a good question. Yeah, I mean, I would just say, everyone, you know, it takes time and everyone will kind of come to Bitcoin when they're ready. But just planting the seed about what sound money and a low time preference does is important, kind of just, you know, distincting Bitcoin from a lot of, you know, speculative investments. And even Bitcoin itself on a, on a shorter timeframe is speculative, right? So maybe showing the four year DCA returns, which I don't know off the top of my head, but I know they're, they're pretty strong. And just kind of preaching a low time preference, maybe saying, why is everything getting more expensive in the world? Whether it's housing or food or energy or anything else, right?

• 30:12Speaker 02

  Kind of establishing that it's not a result of greedy corporations as maybe an Elizabeth Warren would say, but it's more so about an expanding money supply and just kind of planting the seed because ultimately everybody will will need Bitcoin. Everybody will own Bitcoin. And that may sound controversial today, but I think 10 years from now it won't be at all. And so just kind of, you know, planting the seed with people that you care about is is, you know, definitely a good gift to give, at least for their future self.

• 30:38Anthony Pompliano?

  I think that's a great way to to end it. If we do a quick follower check, 98.8, man, we're about across 100K. This, I think, I think we were talking, what, you were at 50K a couple of weeks ago?

• 30:51Speaker 02

  Yeah, I think the first time I came on, I was, I was a little bit under that. And so definitely, definitely getting close there.

• 30:58Anthony Pompliano?

  Making moves, John.

• 30:59Speaker 03

  Yeah.

• 31:00Anthony Pompliano?

  Where you at?

• 31:01Speaker 03

  I'm at right under 60. And Dylan, I just congratulations.

• 31:04Anthony Pompliano?

  Dylan was like, when you, when you provide good content, though, people, people go to it. So.

• 31:11Speaker 03

  That's how the world works.

• 31:13Anthony Pompliano?

  That's how the world works. All right, I'm gonna drop, drop his Twitter account in here. If you're not following Dylan, get with the program. Let's go. Got, we got things we got to get done. So Dylan, thank you so much for for doing this. Have a Merry Christmas, Happy Holidays, whatever the appropriate thing to say these days is, just enjoy the time with your family. And then I guess well, next Tuesday is the next show that we'll do. So Dylan will be back. The next time that you guys see us, you'll see Dylan, which will be be pretty good.

• 31:44Speaker 02

  Sweet. Happy holidays, guys. Thanks for having me on.

• 31:46Anthony Pompliano?

  All right, buddy. Sounds good. Thank you.