#892 Bitcoin & Climate Change w/ Chris Larsen

Chris Larsen is the Co-founder & Executive Chairman of Ripple. In this conversation, we talk about Chris's thoughts around Bitcoin, Climate Change and ESG after his recent Op-Ed. ======================= The Pomp Podcast is powered by BetOnline.ag, the world's largest sports betting, casino, poker and horse racing website that accepts cryptocurrency for wagering. BetOnline.ag gives you the ability to use Bitcoin and more than a dozen altcoins to make deposits and withdraw your winnings. There are no crypto transaction fees, and processing is instantaneous and secure. Visit https://promotions.betonline.ag/pomp and use PROMO CODE: POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline.ag is available in nearly every country around the world, making it the top global gaming destination for crypto users. ======================= Since 2018 Copper has been at the forefront of institutional digital asset development. From award winning custody solutions, to creating the first truly off-exchange settlement function, Copper pioneers technology, products, and services, in lock-step with a rapidly changing world. No other infrastructure provider covers as many assets, across as many exchanges, with the speed and security that Copper can offer. To learn how Copper helps the world’s largest institutional investors secure their digital assets, head over to copper.co Copper - the unfair advantage. ======================= Bullish is a powerful new digital asset exchange built for institutions that delivers the innovations of DeFi in a regulated environment. The Bullish Hybrid Order Book pairs the high-performance of a traditional Central Limit Order Book with automated market making. Powered by deep Bullish Liquidity Pools, backed by the multi-billion dollar Bullish Treasury. So, you can trade with certainty and at scale across variable market conditions. Learn more at Bullish.com or follow @Bullish on Twitter. Because the future belongs to the bullish. *Not investment advice. Digital assets and cryptocurrencies are high risk products. Consult your professional advisor before dealing in them. Bullish’s services are available in select locations only and not to U. S persons. Visit https://bullish.com/legal for important information and risk warnings =======================

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. Chris Larson is the co-founder and executive chairman at Ripple. In this conversation, we talk about Chris's thoughts on proof of work and on Bitcoin. Obviously, there are some things we agree on and other things that we disagree on. I hope that you can listen to this conversation with an open mind and look at both points of view. Before we get into this episode, I want to quickly talk about our sponsors. Today's episode is brought to you by BetOnline.ag. BetOnline.ag is the top spot for all of your sports betting, casino, and poker needs. It's available on your computer,

• 0:43Anthony Pompliano?

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• 1:28Anthony Pompliano?

  Today's episode is brought to you by Copper. Since 2018, Copper has been at the forefront of institutional digital asset development. From award-winning custody solutions to creating the first truly off-exchange settlement function, Copper pioneers technology, products, and services in lockstep with a rapidly changing world. No other infrastructure provider covers as many assets across as many exchanges with the speed and security that Copper can offer. To learn how Copper helps the world's largest institutional investors secure their digital assets, head over to copper.co. Again, Copper, the unfair advantage. Check them out at copper.co today. This episode is brought to you by Bullish. Bullish is a powerful new digital asset

• 2:10Anthony Pompliano?

  Exchange built for institutions that delivers the innovations of DeFi in a regulated environment. The bullish hybrid order book pairs the high performance of a traditional central limit order book with the automated market making powered by deep bullish liquidity pools backed by the multi-billion dollar bullish treasury. So you can trade with certainty and at scale across variable market conditions. You can learn more at bullish.com or follow bullish on Twitter because the future belongs to the bullish. Now, this is not investment advice. Digital assets and cryptocurrencies are high risk products. Consult your professional advisor before dealing in them. Bullish's services are available in select locations only and not to you as persons. Visit bullish.com/ legal for important information and risk warnings. Go

• 2:52Anthony Pompliano?

  check them out at bullish.com or follow at bullish on Twitter. All right, let's get in this episode. I hope you guys enjoy this one.

• 2:58Speaker 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.

• 3:21Anthony Pompliano?

  All right, guys. Bang, bang. I've got a super exciting episode for you. I've got Chris Larson here with me, the co-founder and executive chairman of Ripple. And then in a personal capacity, he is one of the participants in a brand new campaign called Change the Code, Not the Climate. Chris, thanks so much for coming on and spending some time talking.

• 3:38Speaker 02

  Thanks for having me. Appreciate it.

• 3:40Anthony Pompliano?

  For sure. So one of the areas is obviously, I don't think you or I are confused. This is, a lot of people are paying attention. They want to understand what the hell does Chris think? What does Pomp think? Do they agree? Do they disagree? And all the details. But I do think it's important to start off with, across the industry, every single community seems to have these, you know, kind of black and white sunglasses on. There is no common ground in any way. I think that both you and I have some areas where we vehemently agree on. And so, would it be fair to say that, you know, you see a lot of problems in the legacy financial system? And generally, you think that crypto as an industry could create some of those solutions to solve those problems? Is that like a fair middle ground? Around where we probably agree greatly.

• 4:22Speaker 02

  Absolutely, and I'm glad you brought that up because I think by and large, look, people in crypto were trying to change the world in a very positive way. There's, there's so much opportunity here. This thing is just beginning, beginning. And I want nothing more than the industry to succeed because the system that we have is broken and old and antiquated and it's hurting people. So absolutely.

• 4:43Anthony Pompliano?

  And I think another area that is interesting to talk about because it usually enters into the political room. But if we kind of put politics aside, it's this idea that like markets in general, we're talking about technology startups. We're talking about finance, talking about anything, markets tend to be self-correcting in some form or fashion. And they end up deciding who winners and losers are, which I think every entrepreneur and investor, which, you know, this isn't your first company. This isn't the first time that you found success in technology or finance. But that seems to be a theme that most entrepreneurs kind of get behind. Is that another kind of fair point where we end up seeing eye to eye?

• 5:17Speaker 02

  Yeah, I think generally markets do determine what wins and what doesn't. I do, in my opinion, I do believe there's a lot of luck into it as well, right? We get so involved, we sometimes say, ah, yeah, that person got hit by the lucky truck, right? So it's a combination of those things.

• 5:32Anthony Pompliano?

  Probability is a huge factor in life, but some people don't like to admit that. So that's for sure. And then the other piece that I think actually we see eye to eye on, which is funny because it's a difference is we're both highly biased, as is everyone else watching this and kind of participating in this market. Whenever there's money involved or assets, it seems like just naturally as humans, we tend to gravitate. If I own more Bitcoin, then you know, I like Bitcoin. If I own more XRP or Ethereum or whatever, there's kind of this tribal element. And so for me, I am, you know, 95% of my liquid net worth is in Bitcoin, which obviously skews the way that I view things, whether that's good or bad.

• 6:13Anthony Pompliano?

  For you, how do you think about your portfolio and like how much is in crypto versus if there's any sort of kind of breakdown across assets that you normally try to target?

• 6:23Speaker 02

  Yeah, boy, I don't know, 75% is probably in crypto and obviously the vast majority of that is, you know, as you probably know, is in XRP. But, you know, yeah, finance is a funny, it's a funny place, right? It is super competitive in a way that's almost fun, right? People, people like the competition and in crypto more so than any, any other place because it's, it was built by libertarians. Libertarians probably don't do a good job of forming communities, right? So that's just the way it is. But when we're talking about climate, though, that's kind of a different beast. So that's what I spend most of my time on. That is not about my assets. That's about, you know, that's about the planet I'm leaving for my kids. And, and that's a different beast.

• 7:07Anthony Pompliano?

  Got it. And so obviously, the reason why we're recording this and kind of over the last, I don't know, 48, 72 hours, whatever it's been, there's lots of people who are paying attention to a brand new campaign. My understanding is it's called not, Change the Code, Not the Climate. And there's a number of different, I'll call them ESG or environmental groups, just as a blanket way to describe a number of these organizations. Some of them seem to be for profit, some are nonprofit, but they all have a general sense they care about the environment. They want to see positive impact on the environment. And maybe just explain a little bit, what is the campaign? And then how do you think about your participation in the campaign as a private individual?

• 7:46Speaker 02

  Yeah, so the campaign is specifically around the issue of, you know, kind of Bitcoin's contribution to the climate crisis. And again, look, and let me start off by saying, I am pro Bitcoin. I want Bitcoin to succeed. Bitcoin's been the most, I think it's been the most successful financial asset of all time, right? Tens of millions of people own it. It's important for the overall crypto community that Bitcoin continue to succeed, and I think it will. But it's, it's important to people because it's, it's held by so many folks. I just let me say that right off the top. But the problem is, as Bitcoin gets more successful, the contribution to the climate crisis gets worse. And, and that is the heart of the problem.

• 8:29Speaker 02

  And we believe that can be solved with change. Changing the code, yeah, not easy to do and we're not advocating a certain type of change. We're not saying it has to do with Ethereum has done. That could be an outcome, but we're not advocating for that. We know it's a different community. But come on, I gotta believe all the smart people, all the trillions of dollars floating around in this industry. That can't we get to a place we can change the code so that as Bitcoin gets successful, it doesn't harm the climate, you know, at least neutral, but maybe even massively negative. I believe you can do that. We do all kinds of super hard stuff. We can do that.

• 9:11Anthony Pompliano?

  So we're going to get to some of the nuance of this in a second. I guess one of the big questions, right? And frankly, I think that the media loves a story like this, right? It's like, hey, we've got somebody who is incredibly successful in an industry who's saying, let's change something. And that change could frankly be all kinds of different things. They love to kind of gravitate towards it. We saw a whole bunch of articles and I think one of the main questions people had for me was like, hey, how does Chris think about his participation, right? So obviously I think I read that there's about $5 million you're putting into the advertising. How does this group come together? Is this like, like some sort of, you know, quarterly meeting that these groups have? And this was one of the ideas that they came up with? Is it something where they think that there's economic benefit? Or just walk me through kind of how does this specific coalition come together in your mind?

• 9:57Speaker 02

  Yeah. Well, as you probably know, the climate issue around Bitcoin has been out there for some time. I've written about it now for, I guess, a year and a half. And now what's happening is there's the, because of all the mining that's coming to the US, you know, 65% of it used to be in China. Now most of it's in the US. You're seeing these small communities that are objecting to some of the practices. So Seneca Lake, for example, and this is where it started where, you know, a retired coal plant, now it's a gas plant being used for Bitcoin mining. Kentucky, you're seeing a ton of stuff going on there with fossil fuels and people upset about it at the local level. Same in Pennsylvania. And then that's triggering some of the bigger organizations to get wind of this because these small groups are approaching them. Greenpeace, Environmental Working Group, for example, and the ex head of the Sierra Club, Mike Bruin, who's actually running the campaign.

• 10:42Speaker 02

  They start getting aware of the issue and you know, we kind of came together because I spent most of my time on climate issues, all kinds of things, green hydrogen, trying to get Republicans and Democrats to work on climate together, all kinds of things. But this is one of them. And it's in my own backyard, so can't ignore it. And so I just think it's a matter of time. This this issue isn't going away. It's just going to get worse. This isn't going to be the first campaign and the campaign is really good. Let's get awareness first. There's some awareness, but there's also some misinformation. Let's get awareness that's a problem. Then hey, let's get people working on solutions. And then if there's a good solution, let's get people to see if they can adopt it, right? Simple as that. But I think my participation is probably healthy.

• 11:27Speaker 02

  I mean, it'd be better to have a crypto person in one of these campaigns than not. Plenty of climate billionaires out there. Many of them are anti crypto. Can you imagine if Warren Buffett was, you know, back in this? That wouldn't be good, right? Even Bill Gates, fairly anti crypto. I think it's better to have somebody that, look, I believe in it. And I say that on these press conferences, even if some of the other folks are not as enthusiastic. I think that's a, I think that's a plus.

• 11:53Anthony Pompliano?

  Got it. And so when these things come together, I frankly, this is probably the first one that I've actually looked at and tried to understand, you know, how they work. And it seems like your contribution has been the $5 million for the ad campaigns itself to kind of go buy advertising across the these various platforms. Is there money that changes hands with like the Greenpeace and the other organizations? Or how does that work? Like, what, why, other than the positive impact on the environment, are there other reasons why these groups do it together rather than do it separately? Or is it just their safety in numbers or kind of power in numbers?

• 12:24Speaker 02

  Well, yeah, it's a great point. They all do some things a little bit differently. So some of them might be more policy based, some of them are going to be more grassroots roots based, like Greenpeace, for example, three million members. That's what they're really, really strong at. A person like Mike Bruin used to run the Sierra Club, just great at building coalitions. And by the way, that's coalitions, like reaching out to owners of coal plants, right? People that run energy companies. It's not just, you know, kind of. Monochromatic, you know, environmentalists, right? You've got to get everybody together working on this. That's a big part of this campaign, too. We've got to reach out to the people that are deeply involved in Bitcoin and, you know, look at it religiously even, right? That's, that's going to be important. So it's not anti anything.

• 13:09Speaker 02

  This is about, hey, here's a problem. The problem, the way it's going, it's going to get worse. Climate's getting worse. We had a million and a half acres of forests burned last year in California, all time record. You can barely get insurance in many places in California. This is bad, right? Things are getting worse. So that's the nature of the campaign. You try to get a good coalition with different skills. The more folks you have, the better, I think, in any campaign like this. I think it's off to a good start. There'll be other campaigns that I'm, you know, I have no idea about, but, you know, this is just ramping up, in my opinion.

• 13:46Anthony Pompliano?

  Got it. So I've got about 10 questions or so. As I was telling you before we started to record, I put out a tweet and I thought I would just get some tweets back. I figured you and I, we would probably laugh at most of them. And all of a sudden I got emails, I got text messages, I got a phone call. There was multiple people who were very interested and they sent me all kinds of things. What I've tried to do is take all of those different inquiries, if you will, and put them into major themes into these 10 questions. And so I'm just going to go through one by one, almost even at rapid fire. You know, you take your time to respond, but I think it's fair to give you a chance to kind of respond to these. So the first one is, do you agree that a decentralized digital currency, regardless of which one it is, is a net positive for the world and could be a potential solution

• 14:31Anthony Pompliano?

  to many of the legacy finance issues?

• 14:35Speaker 02

  Oh, 100%. Yeah, absolutely. I don't think these things replace fiat because every country wants to have their own currency, of course, but they serve a fundamentally different purpose in the world, right? They lubricate the world's economy, right? Something, a thing of value without a counterparty or issuer is extremely valuable. And that's what we're seeing. That's why these things are worth trillions of dollars and. Look, I think Bitcoin will, especially when it fixes this issue, it will be a little more valuable than gold, right? It will get there for sure, but I think it has to fix this issue. But the market has spoken, right? There's no question. And everybody that poo-pooed it, Warren Buffett, right? Jamie Dimon, like you name it, Charlie Munger, they're wrong, right?

• 15:19Speaker 02

  The price continues to go up. The use cases continue to go up. These things are incredibly important to the world.

• 15:26Anthony Pompliano?

  So I think this is a layup, but there was a whole bunch of other questions around like, do you think that the digital currency that ends up being used globally has to be secure as well? And then as a kind of, you know, question number two related to that, what do you think is the most secure consensus mechanism in the world? If you had to just forget all of the other impacts or potential trade offs, if it was just optimizing for security, one, do you think it has to be secure? And then two, what do you think is the most secure mechanism to reach consensus in a blockchain?

• 15:54Speaker 02

  Well, it absolutely has to be, has to be secure. And, and, and, you know, like I take it, I saw your tweet about, hey, we're never going to change proof of work. Okay, look, if that means we're never going to change how secure Bitcoin is and proof of work is today, I agree with that. Don't give up on the secure. It has to be absolutely secure. I think my point is, can't we, can't we replicate that security? But do it in a way that is not contributing to climate or making, maybe even helping solve climate? I think you can do that, right? I don't know how to do it, but I have faith that the world can figure that out, right? But you're right, you can't give up on security. Absolutely critically important. As far as which one's most secure, well, look, I think the market is speaking.

• 16:38Speaker 02

  If you look at non proof of work, a trillion dollars there, I guess. Over 10 years, the market has basically said, yeah, we believe in it. We believe that's secure enough and we're putting our money where our mouth is. So I don't know, I haven't seen any data that would quantify one over the other, but I get it. This is super valuable within the Bitcoin community. So like, don't go to proof of stake, fine, but could you, can you rethink proof of work? So you get rid of this problem where the price goes up, climate gets worse. Price went up and climate got better. This would be the definition of a carbon coin. It's the only, and by the way, it's the only one who can do that because it's got the mining infrastructure. Nobody else has that. Mining infrastructure is going in the wrong direction right now. No fault of miners are just being incented to do that.

• 17:22Speaker 02

  Could you change the code and make that go the other way? Everybody in the world would want to own that. I'm telling you, this, this is the thing I don't get. Why the Bitcoin community doesn't see that?

• 17:33Anthony Pompliano?

  So I, I think what I heard is, uh, right now Bitcoin is the most secure. But if there was a security mechanism that came along that was more secure, or didn't hurt the environment, or if you had both of those, if you could be secure and not hurt the environment, uh, according to whatever analysis, then that would be the ideal scenario. But right now, we basically have the most secure. And your concern isn't so much it's not secure, it is secure. It's more so just the negative impact on the environment in your opinion.

• 18:02Speaker 02

  Well, what I'm going to say is, is like the Bitcoin community believes that this is the most secure. I haven't seen data that would

• 18:07Anthony Pompliano?

  What do you think? That's what they want to know. They want to know what you think.

• 18:09Speaker 02

  No, I think the, my look at the market, the market is probably is saying, look, of, of those top, you know, the number, you know, where there's proof of stake is the market saying it's secure. It's banking $500 billion on Ethereum's alone as it switches, right? So anyway, I think the market is speaking there. But look, I get it. Uh, you can make the case, the proof of work, the way it is now. That's the security that you want. Fine, and I agree with you. Don't give up on that, never give up on that. But I don't get the, and I don't think you were saying this correctly, am I wrong? I don't think you were saying never change what Satoshi put in there in the first place, right? Because climate thing wasn't really a problem way back then. Now it's a problem, right? And things have to innovate, right? Um, so like the idea of never change, right?

• 18:54Speaker 02

  I mean, come on. Satoshi didn't say never, right? People told him never, right? Elon never said, he, he didn't say never, right? People told him never. Uh, the Silicon Valley was built on never, right? Miami was built on never, New York, Vegas, you know? This is America, right? You change things because there's a problem and we know how to change it. We know how to fix things. So that's all I'm saying there, but, uh, so. I think we kind of agree on that. I think curriculum.

• 19:20Anthony Pompliano?

  The only thing I'll disagree with and we'll move on because I know we got a whole bunch of stuff to talk about is when I agree that Ethereum says they're going to move to proof of stake. But I think the key piece is that Bitcoin and Ethereum since inception both have been proof of work. They're the only two blockchains that have reached positions one and two and stayed there. Right. Everything else kind of has fallen to the way where the market thinks they're valuable at one point and they go away. Ethereum is saying that they're going to move to proof of stake. Right now they still are based on proof of work and we don't know if they transition. And let's say with hindsight by benefit 20 years from now, if all of a sudden Ethereum fell out of the top, you know, coins. Because they made that transition, we would think one thing, if they stay there, we may think another.

• 20:02Anthony Pompliano?

  And so unfortunately you, I, or the market doesn't have that hindsight benefit today. But I think up until today, it's been proof of work and there's a question mark. If they transition, what's going to happen? Bitcoiners obviously think that's bad. I think the Ethereum community thinks it's good. And you know, going back to this idea of the market will be the referee. I think we just got to see what happens at the market.

• 20:20Speaker 02

  I probably agree with that. Yeah, that's, that's fair. That's fair.

• 20:23Anthony Pompliano?

  All right. I'm telling you, we're going to end up agreeing on here more that than, than we think. All right. So when you look at it, there's tons of studies out there around how much the Bitcoin network actually is consuming. What is your like, what study or what data point do you use? If you had to measure it on like the global energy consumption, is there a number that you point to? I usually look at the number that is 0.1% of total global energy consumption. What do you use when, when thinking about this?

• 20:50Speaker 02

  Yeah, we use Cambridge University's numbers, which lays it out, but they come in about a half a percent. And that's really importantly, that's end user electricity, right? I think, correct me if I'm wrong, I'd be interested to know your denominator and your numerator. But I think if you're using base, primary energy coming into a country, that would be like the theoretical energy content of a barrel of oil. You know, you got to convert that to electricity or other things. You lose most of it in the conversion. So the relevant number should be electricity that's usable by end users, right? And that's also really important in climate because the world has to electrify everything, right? That's the, that's the challenge here. It's incredibly hard. It's going to take a long time.

• 21:34Speaker 02

  And then so that total global number is going to be 23 petawatt hours, right? And Bitcoin's coming in at 130 terawatt hours. That's about half a percent.

• 21:45Anthony Pompliano?

  So when you think about this, one of the things that to me is fascinating is even if transaction fees exploded, which is part of the miners' revenue, even if Bitcoin's price exploded, and so there was a bigger economic incentive for people to mine, and today, you know, there's $40 million or so miners are being paid per day globally. If that exploded upwards and it went to $200 billion, right, in a given year that they were actually pulling in from a, from an economic incentive standpoint. The thing that I always jump to is like, even with that $200 billion of economic incentive, they couldn't buy more than 1% of the global energy, right? Just $200 billion as their revenue, if they went and spent every single dollar buying

• 22:27Anthony Pompliano?

  energy, and so they made no profit, it still would only get you about 0.9%, based on the numbers I've looked at. So how do you think about, even with the revenue that they get, it ends up just being a limiting factor on how much energy they could purchase in the future?

• 22:41Speaker 02

  Well, I don't get where you're coming from with that. I mean, they could set up shop in Saudi Arabia and basically, you know, be the number one customer, right? If Saudis want to do that. Look, the big problem, that's a big number right now, 130 trillion watt-hours, but that's up 10x in five years. That's the alarming part here, right? And why is that? Because the price has gone up, right? You had two halvings in those five years, by the way. You go add another five years of that, you're going to be using more electricity than in Japan, right? You're going to be at one petawatt hour. That's 4% of the world's, like, end-user electricity, right? That's a problem. That's a big problem. If you look at people fighting climate, you can't ignore that, right? And again, I would just say, like, if that happens, like, that's in five years, worse

• 23:25Speaker 02

  climate in five years, it's going to be worse, right? Because we're way behind the curve here. There's just no way that companies and liquidity providers aren't going to be just, they're going to be picketted, they're going to be scared, it's going to be like what happened in Russia here, where all these, you know, it's not just sanctions, but the companies move out, and that's going to be devastating to the growth of Bitcoin. That's where you hit that wall, right? So that's why, change the code and change the proof of work, don't go to prove of sake, change the proof of work, flip the equation there, right? You got that. Mining infrastructure is, that is, nobody else has that. Imagine those things sucking carbon out of the, if they were incented to suck carbon out, or maybe produce renewable energies. Now, like, I get it, right? Right now, you got a beautiful solution and you don't have to prove the work.

• 24:10Speaker 02

  The result proves the work, right? It's math.

• 24:14Speaker 02

  You gotta figure out a different way if you're gonna be counting CO2 sucked out, or renewable energy pumped in for free to the grid. Imagine if you had that, right? But again, bottom line, if people can make money, like they have been on Bitcoin, and it's helping the climate, that's unstoppable. That's carbon coin. That's the mythical carbon coin right there.

• 24:33Anthony Pompliano?

  So, to get to 4% energy consumption globally, it would cost about $800 billion. And the miners just don't have that money. I think that's where the Bitcoin community says, well, hold on a second. Like, even if fees spiked and Bitcoin went up 100X, they literally wouldn't have enough money to buy 4% of global energy. And so I think that when I look at this, the other key piece of this is that the legacy finance system, I think you and I both would agree on this, is pretty non-controversial. The more users, the more transactions, the more transaction volume, the more energy consumption. There's a very linear relationship, right? You need more ATMs, you need more banks, you need more data centers, all this type of stuff to support more users. With Bitcoin, one of the interesting things is that the layer one, a single line or a single transaction in that block

• 25:18Anthony Pompliano?

  could represent me sending you one Bitcoin, so two-party transaction, a single transaction, or it could represent billions of dollars of economic value and hundreds of transactions on the layer two, like in the Lightning Network. And so if we scale out the Lightning Network at the layer two, now all of a sudden, there is not a linear relationship. To support more users or more transactions, we don't actually need to consume more power. How do you think about that as one of the Bitcoiners' arguments in terms of why there isn't this linear relationship between more users and more energy consumption?

• 25:50Speaker 02

  First of all, I disagree with your first calculation there. Look, if the prices or if the energy uses up 10x, if it's 4%, you can buy that energy, you can afford it. It's proportional to what you're seeing today, right? It's the same equation. They're going to spend up to, you know, some profit margin and that's the driver. As far as, you know, kind of if it's one transaction, look, you're still securing the network. There's still this race to solve that puzzle and people are going to spend up until the point where they make a decent return. The thing is, like, yeah, you're right. The legacy systems use energy, but they need to be working and many of them are to reduce it as much as they can. And the only point here is, so does the Bitcoin protocol. Again, it's in

• 26:35Speaker 02

  the interest of the Bitcoin community to do that, right? And if you can invent a better form of proof of work, for example, that either gets to NUTROL or gets to negative is the holy grail, right? Then do it, right? Why aren't we doing that? That's the thing I don't get. The trillions of dollars in this industry, right? The billions of dollars the miners were. Why aren't, why isn't there a crack team here that's supported by the Bitcoin Mining Association? That's all they're doing is they're working on a new breakthrough codebase that would solve this problem. There's so much money, there's so much talent. We can do this, right? Why are we doing it?

• 27:15Anthony Pompliano?

  Yeah, I think the big thing, so using your example, without any havings, if there were still 900 Bitcoin per day coming in and price was up 10x, so the miner revenue was up 10x, it would still only be $146 billion. And so if miners went and spent every single dollar on energy, they still couldn't buy 1% of the global energy. So 10x increase in price, $146 billion of total miner revenue globally in a given year, they couldn't spend all $146 billion and buy 1%. And I think that's where one of the big questions is, you know, maybe energy costs come down some way, but I just, it's hard for me to see them getting their hands on $800 billion, spending 100% of it and buying 4% of the energy production.

• 28:00Speaker 02

  You're using a different denominator. You're using that primary incoming, you know, theoretical energy in a barrel of oil, for example. The relevant number, in my opinion, should be, you know, Cambridge University number, which is the electricity use. That's, again, 23 petawatt hours, whatever it is. Also, by the way, if it goes up 10x, the price is probably more than that. You got a halving in there. But again, track record is 10x in five years. Continue that out. And look, I believe, anybody who said price isn't going to continue it up, I don't buy it. I think it will. Like, the track record is there. We have to assume the problem gets bigger, and bigger, and bigger, and bigger. And they can't afford it because the money's there.

• 28:39Anthony Pompliano?

  So if we look, I think that the data you use, let's use your data. You said that the energy consumption's up 10x in the last five years, right? The price is up 4,373%. So as the price explodes upwards, if price only goes up 10x, the increase in energy consumption will be miniscule compared to the price increase, at least what we've seen over the last five years, if it repeats moving forward. So let's keep going, because I know there's other things here. And I don't think we're going to agree on everything, which is okay, right? But let's keep going.

• 29:11Speaker 02

  Fair enough.

• 29:12Anthony Pompliano?

  All right. So one of the big things that I saw people all day, pretty much on Twitter, when you guys announced the campaign, they were like, "Look, maybe Chris is right, maybe they're not, who knows? But why don't they just fork the Bitcoin code and allow the market to decide?" What was the thought process in terms of running the campaign versus just going and forking the code, making any changes that you thought, or the rest of the group thought would be applicable, and then allowing the market to decide what was valuable?

• 29:38Speaker 02

  Well, first of all, I'm not that smart, and I don't have that much energy anymore. So, and nobody would trust me to do something like that. So, no, this is about, one, awareness. Let's get awareness of the problem, the climate problem, the contribution here. And then, yeah, like, can you inspire, like, come on, let's make a code change. And again, a code change consistent with the values of Bitcoin community. But, come on, I gotta believe, whether it's the core developers who've come up with this, whether it's the miners association, a smart teenager in Cambodia, right, a math teacher in Ukraine. I mean, the world can do this, right? They can figure this out. But we gotta start working on it. That's the only point we're trying to make. I can't do that. But there's brilliant people out there. And everybody's dialed into crypto

• 30:21Speaker 02

  right now. The whole world is. So we can come up with something better.

• 30:26Anthony Pompliano?

  Okay, now, there was a line in a Bloomberg article that I read, and the line was, "The campaign believes that about 50 key miners, crypto exchanges, and core developers have the power to change Bitcoin's code." Now, as you can imagine, this was probably the one thing in all of the articles that I saw people getting the most worked up about. I saw everything from like, "Who are the 50 people?", right? To, "How do you not include node operators?", after we saw the block size wars, etc. Just, maybe to kind of make this valuable for folks who are listening, how do you think the code would be changed? Do you agree with the statement that there's 50 miners and exchanges and people that could do this? Do you think that maybe that was an overstatement?

• 31:08Anthony Pompliano?

  Or just walk me through kind of the process of actually changing it if there was a change that you thought was applicable?

• 31:14Speaker 02

  Yeah, fair question. I mean, go back to, you know, there's a book I recently read, "The Block Size Wars", right? And you look at kind of some of the battles, I don't know what you would call it, kind of family dispute in 2015, right? I mean, you know, back then, if you look at some of the Medium posts and kind of what we're supporting, it's like 30 to 50 influential people. You're right, they don't have the power to unilaterally do anything, but they're influential, right? So they got behind something. Could they convince other people in the community that, "Hey, we gotta do this", right? You know, how it come about, right? That kind of a thing. So it's an influential thing. Certainly, that can come internally, and that'd be a, that'd look like a soft fork. It can come externally, and it could be a hard fork, who knows?

• 31:58Speaker 02

  That's, you know, hopefully that doesn't go that way. But these things can be done. You're right, they're not, you know, it's kind of messy, right? But, but again, if it's in the interest of the community, these things can be done. And change is a good thing sometimes, right? I get it, being conservative is important when you're talking about finance, but these are cutting-edge technology. We're at the very beginning, this is like 13 years in. Why are we stopping innovating right now? Doesn't make sense. It could be better.

• 32:31Anthony Pompliano?

  As a related point to this, how do you think about the importance of node operators, especially in a decentralized system like Bitcoin and having the checks and balances between the developers, the miners, the node operators, like the role of the node operators, which obviously they played a crucial role in the outcome of what happened, the block size wars. How do you think about their importance in something like this? Is that the key group to go and convince to get a change pushed through or what?

• 32:56Speaker 02

  Yeah, I mean, it depends what their role is, right? Are they an exchange or just, you know, somebody with an interest in the network, right? So probably the exchange probably goes along with their customers, right? Of fidelity, for example, say, look, we've got to get on this new code base because this improves the climate situation. That might be influential to one validator. If it's just a validator, like say, we're just going to hold the line, we're never going to change. And that's a different, you know, that's a different calculus. But it is very important, right? Because they can reject, you know, something that might happen from that core group. You have to convince them, you have to influencing them and motivating them that this is a positive and not something that's going backwards.

• 33:41Anthony Pompliano?

  One of the other themes was basically the conversation that you've had. Have you talked with exchange CEOs? Have you talked with the Black Rocks, the Fidelities, et cetera? What has been their reaction? If you have spoken to them, any insights there?

• 33:55Speaker 02

  Yeah, I mean, I don't want to, you know, actually name names that wouldn't be appropriate, but we have spoken with a number of folks, including miners. And what some miners are doing are being really responsible. You know, you look at Orgo and Riot and Gifon, they're doing the right thing with renewables. The problem is the code doesn't say anything about renewables, right? Code just says incense, cheap energy, right? If Saudis say we're getting into mining tomorrow, all those Texas, you know, the mining going on in Texas, move over to Saudi Arabia. Saudi Arabia, it'd be fossil fuels and it'd be super cheap, right? So, I mean, some people get it, right? And have said that. But I get it. This is a controversial thing. It's a big step.

• 34:38Speaker 02

  But look, we're in uncharted waters here with climate crisis and we gotta be fighting this thing on every single front and it's one of the fronts.

• 34:45Anthony Pompliano?

  When you think about renewables, according to the EIA, I was looking this up before and I didn't know what this data point was, but renewables in the United States in 2020, they estimated that 12.6% of total US energy consumption came from renewables and 19.8% of electricity generation came from renewables. So I think, you know, if you get a 12 or a 19 on a test in school, you get an F, right? And obviously, we're trying to move higher and higher on that. But the Bitcoin Mining Council, which is the only data that I've really seen where people have kind of opened kimono and said, hey, here's our energy mix, they report the members of that, that about 66% of their energy consumption comes from

• 35:26Anthony Pompliano?

  renewables. So kind of 3X what the US does. How do you think about that in terms of those members saying, we are using renewables. We aren't having kind of this negative impact compared to what maybe the standard is across the United States for energy consumption?

• 35:41Speaker 02

  I don't buy that number. I mean, look, the truth is, you're seeing coal plants being repurposed in Kentucky, a lot of them, right? They're actually being incented. You're seeing waste coal being used in Pennsylvania. Jesus Christ. I mean, that's worse than regular coal. So yeah, there's a lot of bad stuff going on out there. I don't buy that renewable number. You actually move from China, look like the renewables went down because you lost all the hydro, right? And again, the code does not say anything about using renewables. It says it incents cheapest energy, right? And look, fossil fuels, you'll always find cheap fossil fuels somewhere in the world. They're going to be lower cost than the real. That's a problem. As far as the US, depends on the state, California is higher, Hawaii's way higher, for example. People are moving in the right direction. But you raise a good

• 36:26Speaker 02

  point. I mean, we need to be getting on top of nuclear and way more nuclear. Not everybody in our coalition agrees with that, but that's fine. But, you know, we gotta, we gotta be stepping on this much more aggressively than we are as a world. We're in deep trouble here.

• 36:41Anthony Pompliano?

  So I'm cheating a little bit because I looked all this up beforehand. I don't expect you to be an energy expert. So bear with me for a second. I beforehand, I Googled and figuring out, we're going to talk about renewables and said renewable energy cheaper than fossil fuels. And the three things that came up where there was a weforum.org that said nearly two thirds, 62% of renewables were cheaper than the cheapest new fossil fuels, according to the International Renewable Energy Agency. There was an article, irena.org in 2021 in June, that said majority of new renewables undercut cheapest fossil fuel. And then Bloomberg had an article in June of 2021 that said building new renewables is cheaper than burning fossil

• 37:21Anthony Pompliano?

  fuels. And so take away for a second Bitcoin mining and all of this, your work in the climate, is the idea that renewables are a major solution there? Like, how do you think about renewables versus fossil fuel and like the direction, kind of of progress, I guess, in the cost of doing this stuff and the technology? What are you seeing there? And is that a potential pathway where if all the Bitcoin miners got on renewables, you'd say, hey, you know, great job, guys, and let's move on to the next challenge?

• 37:47Speaker 02

  Well, no, there's, yeah, first of all, the Bitcoin thing was all renewables. Again, the code doesn't incent that. But look, we've got a shortage of renewables. We need that stuff for steel and concrete and transportation, every other use case here, right? So if there's a use case where you can eliminate the energy use, you gotta do that first. That's kind of God one in one in climate. But renewables, it's great to see the trends, right? They are, especially in the US, that's true right now. But the renewables in there, they're lower cost. But that's not true everywhere in the world, right? Like the Saudis, variable cost of oil is like half a cent per kilowatt hour. The renewables are nowhere close to that. And again, here's another problem. If the code incents the use of the cheapest energy, and

• 38:31Speaker 02

  we are successful in this decarbonization process, all of those fossil fuels are going to be like no demand and prices super cheap, variable costs are the only thing that matters. You know, using Bitcoin mining to monetize stranded fossil fuels, that's a problem. So, you know, but back to your fossil fuel question, that is my belief also in climate is can we get to a circular economy in some of the fossil fuels, right? Can you turn gas into ammonia and capture all the the carbon right there, pump it down into the Saudi desert? That's a good thing. Can you create circular gasoline through solar, combining that with green hydrogen? Now comes, you know, gasoline, basically. We got to look at more of that kind of stuff. We can't be shy about that.

• 39:14Speaker 02

  And there's some controversy there. So I don't know if I'm agreeing with you there, but when you talk about renewables, fossil fuels can be renewable with CCS. I know that's controversial, but we got to be going down that path too, in my opinion.

• 39:26Anthony Pompliano?

  Well, just out of personal curiosity, what was your thoughts when you read ExxonMobil taking the the flare gas and using that to mine Bitcoin with the partnership with those Caruso Energy? Or maybe two or three months ago, Canoco Phillips, they admitted, hey, we're mining Bitcoin as well, using some of these methods. Like, what's your general thought about these large energy producers in the United States mining Bitcoin? But not doing it from what I would consider kind of normal primary energy production, but rather using gas flare capture or something like that?

• 39:56Speaker 02

  Yeah, I think it's a problem. Right. I mean, but one thing I think the the flare, it's a relatively small, looks like that's not as successful as some of the other things that are going on. Like what Argo is doing, you know, in Texas with renewables, that looks like much more successful. So I don't know, it's a little bit of a sidebar issue, I guess, but obviously flaring gas or venting gas. You know, flaring is better than venting it, but better would be to have equipment installed that prevents both of those. That's probably the path forward. It's negative if you're producing carbon if you use either one of those.

• 40:30Anthony Pompliano?

  Got it. What percentage chance do you assign to the code actually getting changed? That was like one of the things was like, a bunch of people were just asking me like, does Chris think he'll actually be successful? So like, maybe like, is there a percentage or probability that you say, hey, I think this campaign could actually drive change?

• 40:46Speaker 02

  Well, I guess it's a timeline, right? I mean, this will be years, right? So first of all, it's the awareness. Second of all is can you, you know, get people inspired to take a crack at maybe improve and prove of work. And I think that's the better process here, right? Can you get it to be negative? My ass, holy grail. It's years, you know? But look, what I know, though, is this is an unsustainable path. Climate's getting worse and Bitcoin, because it's so successful, is going to be contributing more. There's a breaking point here, right? Just think how bad climate could get. People start, you know, like millions of people start dying and look, there's the climate refugee problem is already bad. Like this could get really bad and there will be no tolerance for anything that contributes

• 41:29Speaker 02

  to it from corporate America, from Wall Street, because people are going to be still up in arms. This is the biggest risk for Bitcoin to get straight and that is fixed with a code change.

• 41:38Anthony Pompliano?

  When you see things like the US dollar, they're one of the memes in the Bitcoin community is, you know, they take a picture of like the military industrial complex going down a ocean and they're like, look at how bad this is for the environment in terms of protecting US dollar hegemony or whatever the meme of the day is. Why not advocate for change in the legacy system, given that it's such a larger consumer of energy? It's obviously way less renewable, et cetera. Why go to Bitcoin, which is, you know, estimated on your numbers, half a percent of energy consumption? My number's 0.1%.

• 42:11Speaker 02

  You mean, why not fight the government? Is that what you're asking?

• 42:13Anthony Pompliano?

  No, no.

• 42:14Speaker 02

  Never gonna that somewhere else, but anyway.

• 42:16Anthony Pompliano?

  I don't think you're fighting Bitcoin, right? I think what you're doing is you're advocating for change, right? I think that you use those words. And so like, why not advocate for change in the way that the US government and the US dollar system with their energy consumption?

• 42:30Speaker 02

  Well, for the same reason I don't live in Washington DC and I live here in Silicon Valley, right? The future's coming out of, and like, I don't want to say it's just here in Silicon Valley, but that's Silicon Valley idea, right? Anything's possible. It's an optimistic future. That's not what you see in governments, right? And I think most Bitcoin people would agree with this, right? Change is going to come from innovation. It's going to come from people stepping up and doing crazy things like. Bitcoin's adventure, right? It's a crazy idea. It's impossible. That's why it worked. Right? So that's just my belief. That's where you're going to get change.

• 43:02Anthony Pompliano?

  Got it. Another, I got two more questions, then we're done. The first one was, given your concern with the climate and the environment, etc., what do you do personally to kind of change your behavior? So there were suggestions, you know, obviously smart asses, all the way to serious ones, everything from, does he not use a refrigerator or AC? Does he promise to never get on a private jet again, all the way to are there certain things that you actually do do to kind of curb? Or think other people should do to curb energy consumption from the the climate problem?

• 43:32Speaker 02

  Yeah, I mean, I guess that's sort of important, but

• 43:36Speaker 02

  the bigger thing is being innovative, right? I mean, only like 15% of the problem is even here and the rest of the world isn't going to just do away with stuff. So the only solution there is innovation, right? It's not like everybody's going to go back to the Stone Age. That's it. Personally, though, I buy about 300 tons of carbon removal removal from Climeworks, pay a lot of money for that, 700 bucks a ton. But I like that. I don't really trust a lot of the offset markets. They're too cheap. They're suspicious that I don't buy it. But removal, like I think like Climeworks is awesome company. That's pretty cool. We gotta, we gotta get that way up, right? We gotta get that to gigatons. And paying for that also helps them get the gigatons down the line 15 years from now, right?

• 44:18Anthony Pompliano?

  Got it. And just for people who don't know what that is, like, explain what the the removal actually is. How does that work?

• 44:23Speaker 02

  Oh, I'm sorry. Yes, direct air capture, right? So what they're basically doing, they're just sucking carbon out of the air. Climeworks, a Swiss company, they've got a big operation in Iceland now where they're sucking out about four kilotons, 40 kilotons right now, I believe it is. No, I'm sorry. It's only four, going up to 40, and then I think it's 400. And then try to replicate thousands of those all over the world. It's really exciting, science fiction kind of stuff, but man, if you can scale that, that's a huge part of the solution.

• 44:54Anthony Pompliano?

  Yeah, makes sense. The last question, and this is the one that frankly could be asked a million different ways. So I'm gonna leave it as open-ended as possible and you kind of talk through it as you want. But there's lots of people who essentially were accusatory, who outright were just like, hey, Ripple or its executives or the company, they're responsible for this entire anti Bitcoin mining narrative, etc. And I think the best way to kind of ask, so that you can really just elaborate on how you guys think about this, is does Ripple, the executives or anyone involved, take specific partnerships? Do you guys pay folks to kind of spread messages? Or like, how do you guys think about, when

• 45:39Anthony Pompliano?

  you actually have something that you care about, right? Obviously, you do other work outside of the Bitcoin mining advocating for the climate. How do you think about dispersing that message? And how much of it is just going and talking to people and educating them versus you guys are paying for some of this stuff, etc.?

• 45:53Speaker 02

  Yeah, well, first of all, this campaign is personal, right? So Ripple is not a part of this. But look, I get it. Like, again, we talked about at the beginning, this industry is tribal. I knew when I participated in this, it'd be seen as a tribal attack. It's not, you know, I want Bitcoin to succeed. The industry can't succeed if Bitcoin doesn't succeed, right? Period, right? These things kind of work, they all kind of run together. So, but, you know, the climate issue is real. And it is something I've advocated for, I've written about, I talk to people all the time. But I'm hoping I can do that in a constructive way. That's as a positive. I also talk about how important these things are to succeed.

• 46:38Speaker 02

  And again, Bitcoin's held by tens of millions of people. You can't, you can't go down a path where you're somehow going to hurt those people, right? Just can't do that. You know, so I think speaking out, I'm hoping people see that as, is consistent, that we can believe in it. I want it to succeed. But I'm also, you know, I think it's important for it to change.

• 46:59Anthony Pompliano?

  So, uh, yes or no, you guys actually pay folks to put this out, like in terms of some of the context. How do you think about, because here's what, this is me thinking if I'm sitting in your seat, if I was to pay the $5 million, I'm shocked that you said, hey, look, I'm the one who's providing the $5 million. Like, I was like, you know, look, you got a comfortable life, you've been successful, uh, you, you basically open yourself up to, uh, a lot of pushback and questions and critiques, etc. And so like, how do you think about when to participate financially versus not? And why put your name on it versus maybe not? And, uh, how do you think about that?

• 47:34Speaker 02

  Yeah, fair question. Um, I think you had to be transparent about that stuff, you know, it's much worse if it kind of comes out later or something. Ah, I see they were behind, you know, so that's like straight up, yeah, I was the initial funder for it. Um, these groups were going to be doing something anyway, though. But, you know, a lot of this is coming, it's bubbling up from like the Seneca Lake folks and the folks in Kentucky and the folks in Pennsylvania. People are angry because what they're seeing is seeing like, you know, private equity funds coming in and they're, they're starting up these plants and the, and the prices are going up and they're not getting any benefit, right? So they're pissed, right? So that's kind of where this is, is really bubbling up from. But then the big, the big folks come in and yeah, they need support if they're gonna, you know, make a campaign.

• 48:16Speaker 02

  These campaigns are actually, they're long, they're brutal. These guys got a lot of things on their plate already. So yeah, I do a lot of philanthropy. I've done 90 million in climate philanthropy over the last couple of years. So yeah, I'm gonna do that, makes sense. And I'm gonna, and I'm gonna be open about it.

• 48:32Anthony Pompliano?

  I, I wish that I could ask you to stop spending money on the, on the anti Bitcoin mining, because then Bitcoiners have to go spend money on the anti, anti Bitcoin mining, but I don't think we'll, we'll reach that, uh, that truce today.

• 48:44Speaker 02

  Well, you know, look, I, I, the miners are valuable. Like, I think that's a, that's one of the, that's the secret sauce in Bitcoin, actually. Nobody else has that. But can you turn it around, right? It goes the other way? Oh, my God. I mean, seriously. It's, that's, that's the holy grail. That's the, that's the carbon coin. Think about all those, the new generation coming up. I can make money, I can invest in my future, and I'm helping the climate while I'm doing that? That's unstoppable.

• 49:09Anthony Pompliano?

  Yeah.

• 49:10Speaker 02

  Unstoppable.

• 49:11Anthony Pompliano?

  I'm betting on you to find the solution. You identified the problem in your eyes. I need you to get a solution out there. All right. I'll give you the floor. Uh, you got, you know, 30 seconds or whatever. What do you want people to take away from this in terms of the campaign and, and kind of the position that, uh, that you're taking?

• 49:26Speaker 02

  Well, I guess I want to be optimistic about it. It's like, like I know all the stuff on Twitter that's bad for you, but look at, let's be excited about this. I'm optimistic. This can be solved. This absolutely can be solved. Let's roll up our sleeves. Let's get these groups going to work on new code. Keep it as proof of work. Keep the mining base, but, but fix it. So it's going the other way. That can be done. We can totally do this. And yeah, let's go for it.

• 49:53Anthony Pompliano?

  Awesome. Well, listen, thank you so much for, for taking the time. As I said to a friend earlier today, I said, look, regardless of what you think, he agreed to come on and have the conversation, which, which I respect greatly. And hopefully folks can take away from this that although you and I may disagree on some nuance here and there, there's definitely things that that we agree on as well. And so hopefully more and more folks can have conversations like this. And, you know, the market will be the, the ultimate referee and we'll see how it plays out. So thanks so much for, for taking the time and definitely have to do it again in the future.

• 50:26Speaker 02

  Well, thanks for being so kind and thoughtful and inviting me over here. I really do appreciate that.

• 50:31Anthony Pompliano?

  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, 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.