#993 Dylan LeClair On The Bitcoin Miner Bear Market

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. Dylan joins us every Tuesday on "The Best Business Show." To see the video with the corresponding charts that Dylan references throughout the interview, go to "The Best Business Show: LIVE" YouTube Channel ======================= Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. No extension required. Store, manage, and grow your portfolio, get NFT & multi-chain support, and more. Download the Brave privacy browser at brave.com/Pomp, and click the wallet icon to get started. ======================= 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. =======================

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. This episode is brought to you by FTX US. FTX.us is the safe, regulated way to buy and sell Bitcoin and other digital assets. You can trade crypto with up to 85% lower fees than

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• 1:26Anthony Pompliano?

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• 2:10Anthony Pompliano?

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• 2:53Anthony Pompliano?

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• 3:04Speaker 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.

• 3:28Anthony Pompliano?

  But first, my friend Dylan, how are you, buddy?

• 3:30Speaker 02

  Hi, POMP. How are you doing?

• 3:31Anthony Pompliano?

  I'm doing fantastic. Uh, let's just jump right in. It feels like, uh, every time Bitcoin goes over $30,000 price point, somebody on the internet is a smart ass and says Bitcoin is never going under 30K again. And then we just go right back under. Uh, how do you feel like kind of sentiment on the internet at the moment?

• 3:48Speaker 02

  Yeah, it's fine. I mean, I'm kind of just, uh, expecting some consolidation and chop, uh, for the, you know, rest of the month, maybe quarter, maybe even a year. I mean, that's what Bitcoin does. It was the same kind of meme around 10K. So I mean, I'm embracing it. I love it. Consolidation is, is, is honestly one of my favorite periods, although, uh, for like the industry, it obviously can get a little bit boring. You know, being a, being a kind of a market analyst and a researcher, sometimes it gets a little boring during these consolidation periods, but I'm enjoying it.

• 4:15Anthony Pompliano?

  All right. We've got the first chart here is the network hash rate, which just continues to. Go up and up and up. What was this showing us?

• 4:22Speaker 02

  Yeah, so I guess the, you know, the overall theme of this, of today's, my slides today is going to be kind of a public miner analysis. And just, we've covered this a little bit back and since then, these miners in USDA BTC terms have continued to fall. So I thought it'd be cool for the audience to kind of update, you know, this pretty simple and basic framework for how to evaluate publicly traded miners. Especially as, you know, Bitcoin, the asset continues to grow and, you know, these publicly traded miners continue to entrench themselves in the publicly traded markets. So here's the hash rate, you know, like you said, currently at 209 x a hash a second. I just thought I'd show the entire, you know, the chart since 2012 in log scale, just to get some context.

• 5:06Speaker 02

  So, you know, someone correct me in the comments if I'm wrong here, but one tera hash per second means a trillion hashes per second. A pet a hash per second means a quadrillion hashes per second and an x a hash is one quintillion. So just for some context, we're at 209 x a hash per second. And so just, it's mind boggling just how much computational power and how much actual physical hardware is maintaining, or not maintaining, but securing the Bitcoin network. And it's something that when a lot of people say, you know, Bitcoin is based in thin air, it's just internet money. They don't really understand the hardware aspect and the physical infrastructure that's actually built out.

• 5:43Anthony Pompliano?

  Yeah, it, it always shocks me. If I ask somebody like, what's the most valuable commodity in the world? They'll come up with whatever answer and I say, no, actually I think computing power is the most valuable commodity in the world. And Bitcoin is backed by computing power. And that is a weird idea. It's hard to wrap your head around it because it's new. But if you can kind of follow that logic of most valuable commodity is computing power. Bitcoin's backed by computing power. That means Bitcoin is backed by the most valuable commodity. And therefore it just furthers the thought process of Bitcoin being kind of this digital sound money. It makes a ton of sense. The next one you've got here is the Bitcoin mean hash rate, seven day average. What's this showing?

• 6:23Speaker 02

  Yeah, same chart. Just wanted to zoom in a little bit and also just kind of show the rate of change. This is in linear terms, linear scale and. Just kind of shows that China mined a ban. And so we're still, we're still actually, I think, twenty, twenty-five, thirty percent above the peak before that China mined a ban. So, you know, we've, we've highlighted this kind of V-shaped recovery a lot, but it's just, it's pretty remarkable, given, you know, for the longest time, I don't know if people remember, you know, everybody's kind of, thoughts are so, you know, it, it, everyone kind of, the narrative changes so much on crypto Twitter and, and around Bitcoin in general, but for the longest time, it was China controls Bitcoin.

• 6:59Anthony Pompliano?

  Yes.

• 6:59Speaker 02

  Bitcoin mining is centralized in China, and now that's seemingly gone away, right? Everyone just kind of wrote that off. And Bitcoin didn't die, and we're still chugging along. So, you know, I think it's just interesting to see this, and I kind of expect this hash rate to continue to chug up regardless of what the Bitcoin price does for the rest of the year.

• 7:17Anthony Pompliano?

  We've got miner revenue per terahash here. What's this showing?

• 7:20Speaker 02

  Yeah, so this is kind of the basis of, again, it's an oversimplified framework for how to evaluate Bitcoin miners. But essentially, if you look at a lot of these mining, mining charts, and especially, you know, these publicly traded miner evaluations in Bitcoin terms, like we're going to do here in a second, what you see is that a lot, a lot of the charts in Bitcoin terms look very, very similar to, to this hash price chart.

• 7:42Speaker 02

  Hash price, miner revenue per terahash is just miner revenue, and you can do that in USD terms or BTC terms, divided by the hash rate, right? So because of Bitcoin's difficulty adjustment, and because of its incentives that, you know, that mining offers, right? You can plug in a computer anywhere in the world, or an ASIC, you know, mining rig, and anything with just a satellite signal, you can basically, you know, get digital sound money, kind of a synthetic commodity in exchange for your energy and computational power, right?

• 8:13Speaker 02

  So we know this, but a lot of people don't understand that the difficulty adjustment is kind of this, the secret sauce here, right? With any other commodity, the more that you chase it, the more that you try to produce it, the more that you will produce. Or, you know, with, with things like gold, right? You can, you know, there's a supply transfer at two percent a year. If the oil price goes up like it has, a lot of more, a lot more operations are going to try to, try to produce oil, right? And the same with any commodity. But with Bitcoin, the difficulty adjustment. Limits the actual supply, so it's supply inelastic relative to demand. And so this is why evaluating these miners and looking at hash prices is very, very interesting. So we kind of are in a hash price bear market, meaning that miner margins are going down. And I think it'll be really interesting to kind of look at the miner performance relative to Bitcoin itself,

• 8:59Speaker 02

  relative to these hash price bull and bear markets.

• 9:01Anthony Pompliano?

  Got it. And then if we take a look at the next chart you have here of Bitcoin and public miner stocks, obviously Bitcoin continuing to outperform all of these. I think at one point, we had discussed that the miners were actually outperforming on the way up. Is this what your expectation would be, is that Bitcoin would perform on the way down?

• 9:20Speaker 02

  Yeah, so I mean, essentially, a lot of these miners are levered bets on Bitcoin, right? They may have debt on their balance sheet and just how publicly traded, just how these public markets work. They're valued at a multiple of their current or trailing earnings, right? So when the Bitcoin price goes down, especially in USD terms, the expected earnings go down and the prices fall. Iris Energy is actually the only, is actually the only outlier here in that outperform Bitcoin. And funny enough is that they just immediately sell their Bitcoin. So in a bear market, they're doing quite well. But what's interesting here is this is since the all time high. So most of these miners are down 80%. This is also coincidentally, well, not coincidentally, just because of the data, this is during the hash price bear market, right?

• 10:04Speaker 02

  So hash price has gone from about 40 cents to currently around 12 cents per terahash per second per day. So we're going to look at now, we're going to look at the bull and bear markets in hash price. So when price is actually outperforming hash rate. And then we're going to look at these publicly traded miners in Bitcoin terms, right? Because Bitcoin is what we actually want. USD is great, but if we're investing in Bitcoin miners, we want to actually outperform Bitcoin itself. And so I think that's important to keep in mind.

• 10:30Anthony Pompliano?

  Yeah, one of the things that is interesting is the Federal Reserve, well, the St. Louis Fed recently published a piece that talks about buying eggs denominated in Bitcoin. And they thought they were trolling and kind of dunking on Bitcoin, saying it's volatile. But I think that your point there about denominating the stocks in Bitcoin, denominating the eggs in Bitcoin, like you can feel that it is changing. It's slow, incredibly slow.

• 10:55Anthony Pompliano?

  But if I told you five years ago that the St. Louis Fed was going to publish something talking about buying eggs in Bitcoin, you'd have laughed in my face. And now here we are. And if I tell you that they're going to write many articles five years from now about it, you'd laugh in my face. But let's see what happens, right?

• 11:11Speaker 02

  It's kind of a cell phone, too, because they they published the charts and the Y axis, or the X axis, I'm sorry, was from 2020. But the actual data went back to like 2012. So it was quite funny.

• 11:22Anthony Pompliano?

  Ridiculous. All right. So we also have hash price and public miner stocks. What's this showing us?

• 11:27Speaker 02

  Yeah, so here's, I believe this is the hash price bull market. And so here we see from, I think, 2020, if you want to pull it up, it's showing, it's showing hash price going from, I think the low was around seven cents to our 40 cents, right? And then we see the actual equity is priced in BTC terms, but the bottom pane shows the percentage. So these are the publicly traded miners. I believe it's off the top of my head, I chose Hut, Riot, and Marathon. Could be wrong, can't really see it too well. But what it's showing essentially is that these miners outperform Bitcoin by multiples when hash price was in a bull market. And so, so when the price of Bitcoin is actually outpacing the growth of hash rate, essentially, that's what it's showing you. And so, this is when

• 12:10Speaker 02

  you want to buy miners. And obviously, you need to, you need to bake in some assumptions, whether price is going to go up or down, or whether it's going to outperform hash rate. But if you can actually, you know, through a lot of data analysis, and you can, you know, a little bit of luck, let's be real, you can, these miners are a great way to significantly outperform Bitcoin because of the debt on its balance sheet, and because they're valued, especially by Wall Street, at multiples of their current earnings. And so when hash price is in a bull market, you know, mining stocks is a great, is a great place to be in with at least a percentage of your portfolio.

• 12:40Anthony Pompliano?

  Got it. And when you look, we've got another one that is the same kind of hash rate or hash price in public stocks, but it's going down. What's this showing us?

• 12:48Speaker 02

  Yeah, the same thing, you know, not to beat a dead horse, but this is, you know, basically, an interesting thing here is that hash price in BTC terms, right, we're looking at hash price throughout most of this slide deck today, in USD terms, hash price in BTC terms is actually Programmed for the most part to go down forever. And that sounds somewhat crazy, but because of the supply issuance of Bitcoin. And if you assume hash rate is going to continue to go upwards. The difficulty adjustment assures that the hash price will continue to trend downwards forever, that miner revenues will trend down forever. That the marginal production cost of a Satoshi will continue to go up forever as a kind of a digital commodity.

• 13:30Speaker 02

  And so for these publicly traded miners, that means that the revenues and margins are going to get squeezed for a long time. So it's very, very, very challenging for really any asset, but including these publicly traded miners with valuations, with public valuations to outperform Bitcoin over the long term. And so this is kind of what this is showing. And yeah, so I think we're still in this kind of hash price bear market. But I think some of these miners are getting pretty interesting as kind of a value buy as we, you know, kind of trend in this bear market and the valuation continue to get crushed.

• 14:02Anthony Pompliano?

  When you think about a lot of this, obviously the Fed's in control. They're tanking markets. We see stock prices coming down. The miners are not any more kind of safe, let's say, than than other stocks. Are they holding up better, though? Like, because Bitcoin has actually been holding at around $30,000. Is there a relationship between Bitcoin's resilience and the inability to kind of fall even further? Like, you know, Zoom's down 80, 90%. Some of these like really kind of high-flying growth stocks have fallen way more than Bitcoin's fallen. How do you think about the public miner stock price and its relationship to the Bitcoin price, but it's also its relationship, you know, to kind of the more macro environment?

• 14:46Speaker 02

  Yeah, I think in 2021, you know, there's a lot of talk about the everything bubble, right? You know, records, a bunch of liquidity, valuations went insane. You have monkey JPGs trading at, you know, for millions of dollars, right? There was kind of ridiculous, ridiculous valuations everywhere. And Bitcoin, no doubt, was part of that. Part of what I like to focus on, and I think, Pomp, you kind of have a similar framework as well, is what comes after, right? So Bitcoin's obviously trading, you know. Over fifty percent down from its all time high. For Bitcoin, that's nothing new. I mean, it's done that. It's done that, you know, five or six times throughout its history, probably, probably a lot more. It's inherently very, very volatile. But really, what I like to focus

• 15:29Speaker 02

  on is this unprecedented liquidity regime. And now, kind of with this liquidity tide pulling back, and I think, you know, eventually, we see some, you know, kind of a deflationary credit crunch. That's what it looks like we're we're kind of in the beginning stages of, despite the consumer price inflation, we're seeing asset deflation everywhere. What's on the other side of it? Right? You know, interest rates, we've been in this, you know, four decade downtrend in interest rates. Debt demographics, a lot of really, really smart people have raised a lot of concern about this. What comes next? And a lot of people have continued to kind of talk about the wealth inequality and the societal unrest. And so I'm kind of skirting around your original question about how are these publicly traded miners holding up? Well, I think the reality is, they're going to do quite well, because

• 16:14Speaker 02

  what comes on the other side of this, in my personal opinion, maybe not financial advice, but I certainly am putting my money where my mouth is, is I think Bitcoin, as a global monetary asset, with what we talked about as a digital commodity, synthetic commodity, with a production cost that's ever rising, and the only absolutely scarce thing in the world, is going to do quite well. Like, that's my thesis. I've said it almost, you know, every week on your show. And whether Bitcoin's a sixty K or thirty K, that's my fundamental belief. And so I think Bitcoin's holding up quite well. We're in definitely, you know, the kind of the pullback of the liquidity tide. And so can it go lower? Yeah, of course. Bitcoin could always get cut, you know, by fifty percent. But does that change long term thesis for me? No. And so I guess that's my long winded answer.

• 16:58Anthony Pompliano?

  The other thing that seems to be playing out right now is obviously the inflation story. Eight point five percent was the peak. Maybe it goes higher. Maybe we have peaked, remains to be seen. While we've been talking here, somebody tweeted out and said, damn, Snoop Dogg's got a personal blunt roller. Gets paid forty to fifty thousand dollars. And he quote tweeted, he said, inflation, the salary has gone up. And uh, forget for a second what that person does, but the fact that we have people like Snoop Dogg, right? Cardi B the other day tweeted out and said, you know, when are we going to announce that we're in a recession? When are they going to admit it? What is the importance of these folks in uh, kind of culture that are celebrities,

• 17:41Anthony Pompliano?

  musicians, you know, athletes, etc. Talking about inflation, talking about recessions like that. This seems not what people would have expected. So like, how do you read that?

• 17:51Speaker 02

  Yeah, I mean, it's certainly unprecedented, right? I mean, we had since the great financial crisis, we had a ton of monetary debasement, but it wasn't really felt in consumer price markets. It wasn't felt by the average, the average Joe. It just kind of nestled itself uh, in the bond market, in real estate markets, in the, in the equity markets. And so now it's showing up at the gas pump. It's showing out of the, in the shelves and the, and the grocery store. And people are really taking note and upset about it, right? So that's why there's kind of the political pressure on, on the establishment, on Jerome Powell to do something about it. And unfortunately, it's kind of interesting because monetary policy, you know, for shattered supply chains and uh, you know, for geopolitical tensions like Russia and the Ukraine conflict, it's really maybe not the best tools

• 18:34Speaker 02

  to kind of tighten monetary policy as we're going in, as we're plunging towards a global recession. And so, you know, it's definitely interesting to see kind of the cultural reaction uh, to, you know, inflation at four decades high. And I think, you know, even though Bitcoin is, is 50% off the highs, I think it, it educates, you know, people on the need for a sound monetary instrument. And, and that's why, you know, people like me and you are continuing to just kind of beat the drum on this and uh, kind of hold steady uh, with our tune, right?

• 19:03Anthony Pompliano?

  When you start to think about um, the legislation that's being put forward by Senator Lummis and Senator Gilderbrand, is this important because they're talking about it? Or do you think that it'll actually have an impact if we can get, you know, a very clear regulatory framework? We know exactly who oversees it. Um, like what, what is your thought process on like how this uh, impacts the market? If it actually comes to fruition?

• 19:27Speaker 02

  Yeah, I haven't, I haven't actually dug too far deep into the, into the legislation. I know it kind of got leaked last night. Um, but I think for the longest time, I mean Bitcoin's been regulated for, for, you know, since basically Mt. Gox, like they've had, uh, some, some kind of, uh, oversight over, over the kind of industry, but it's, you know, there's been some confusion about whether, you know, Bitcoin's a commodity or it's a security, is it the CFTC or the SEC? Like what regulatory bodies is overlooking this industry and, and really it's just kind of been a bunch of regulatory agencies winging it and not really knowing. And so I think oversight's good. Um, I mean, I'm certainly not in favor of anything that's, that's too harsh. Uh, or you know, to kind of, I don't want anyone to stamp down on, on innovation.

• 20:10Speaker 02

  Uh, but certainly, you know, oversight and kind of, uh, just some more clarity would, would I think probably be good, especially, you know, uh, following the craziness that we've seen over the last couple of months. Um, it certainly wouldn't be, uh, too bad to get some more clarity.

• 20:24Anthony Pompliano?

  Yeah.

• 20:24Speaker 02

  From Washington.

• 20:25Anthony Pompliano?

  I, uh, I, I definitely agree with that. Um, when you start to think through, uh, also I guess that regulatory clarity should, I'll, I'll say should, uh, we'll, we'll see. Um, should allow more institutions to allocate. Does that flip us back into an environment though where the macro, uh, economy plays more of a role because we have people who treat Bitcoin as a risk on asset? And now we're susceptible, uh, to interest rates and, and kind of Fed policies and things like that? Um, and like, how do you think about that dynamic? Cause it seems like a lot of those individual organizations that, uh, purchased Bitcoin in 2020, 2021, risk off environment, they all dump Bitcoin, Bitcoin drops, uh, correlation to NASDAQ goes, you know, through the roof.

• 21:10Anthony Pompliano?

  Now there's a little bit of a decoupling, a little less of a correlation. And we may be going back towards more of like an individual or a pleb led, uh, you know, dollar cost averaging of Bitcoin. Like, how do you think about the relationship between the institutions and Bitcoin? If there is regulatory clarity?

• 21:26Speaker 02

  Yeah, this is why I kind of am really in favor of these kind of long consolidation periods, or not in favor of them, but I don't, I don't mind them at all. You know, Bitcoin just kind of consolidated around 10,000 for a couple of years. And everyone, and everyone that wasn't, you know, passionate about it, that wasn't kind of in the industry, forgot about it, you know, thought it was dead. And all of a sudden Bitcoin's revived and it's trading on 60K and everyone loves it again, and at 30,000 it's dead again. And so certainly that NASDAQ correlation, that risk on factor is, is still at play. If, if the equity markets drop 10% next week, I think Bitcoin's not insulated, that's for sure. But I think that's kind of a natural progression of it.

• 22:06Speaker 02

  In a similar way that I think equity markets almost were monetized in a way, in the sense that, you know, savings, you know, savings in your bank account weren't safe. The bond market wasn't safe, negative real yield. So what did people do? They plowed money into tech stocks because it's, it's almost like treated like a savings account for them in 2020 and 2021. And so kind of the two, the two asset classes dropping in tandem, to me, kind of made sense. And so while I do think just because of the strength of the dollar and the network effect that the dollar actually has, kind of being entrenched around the world, it's a global reserve currency. And the fact that it's the denominator of BTC USD, you know, the exchange rate, there's certainly going to be, you know, Bitcoin's going to be impacted by interest rate hikes,

• 22:50Speaker 02

  interest rate cuts, quantitative easing, quantitative tightening. And that's completely natural. But I think, again, to kind of put the long, you know, the long-term end game view in mind, what's, you know, are they going to stop printing money? Are they going to stop debasing the dollar? Is it politically possible or feasible to stop monetary expansion? And I think everybody knows the answer to that. So for me, that's why I'm perfectly content with just kind of biding my time and playing the waiting game.

• 23:17Anthony Pompliano?

  Yeah. When, when you start to think about many of the companies in the space, we've seen Coinbase, we've seen Gemini, layoffs, hiring freezes, rescinding job offers, there's many others that, you know, haven't been publicly announced, et cetera. What's your read on that? Like, will the development stop? Will people stop moving into the industry? How do you think of it?

• 23:39Speaker 02

  Yeah, I think, you know, there's certainly kind of, there was some excess in terms of, I saw, you know, FTX today said, actually, we're not, we're not cutting back anybody and we're still in growth mode. And so, you know, it definitely varies by company or by exchange. But yeah, I think, you know, if you look at, say, the monthly trading volumes of a Coinbase, right, it's, it's far off from its 2021 highs. And I think that makes sense. So obviously, there's, there's some kind of, you know, individual decisions that had to be made by management. Uh, maybe there was some, you know, ill-advised moves that were made during the bull market, uh, that they now have to, you know, change that we're in a bear. Uh, I think it's, it's natural. Um, and obviously the volatility of, of the crypto market in general, kind of makes these ebbs and flows

• 24:24Speaker 02

  uh, of the actual prices, but also of, you know, these companies themselves and the valuations of these companies, uh, very volatile with it. And so I think, I think it's natural. It's obviously very tough to see people, you know, getting laid off. Uh, but I think honestly, this is for better or worse, this was actually the intent of the Fed and the intent of Jerome Powell was to, you know, you know, kind of cool down the business cycle and, and actually, you know, kind of reverse the wealth effect for better or worse. And so that's what's happening. It's not even crypto specific. Uh, we're seeing this across the tech industry. Um, and I think it's, you know, kind of trickling down to other industries as well. It's quite interesting.

• 24:59Anthony Pompliano?

  Yeah. Well, one other thing that I, I keep coming back to is this idea of lightning development. It feels like lightning is taking the long, uh, time horizon. Uh, and, you know, obviously there's no, uh, equivalent of yield farming or, uh, kind of, uh, I don't know, a balance sheet full of assets that can just be used to incentivize people. Like it's very much an organic growth story. Uh, where do you see us currently there, right? And do you see any changes because of price or because of macro environment or anything like that?

• 25:29Speaker 02

  Yeah, lightning is one of the most fascinating aspects of Bitcoin that seemingly no one talks about. Um, it's just kind of a bunch of like, a bunch of gritty developers under the surface, uh, just kind of like grinding in silence, just shipping product and shipping development, um, you know, kind of born, uh, born the depths of the bear market. Was actually released in twenty, uh, the beta was released in twenty sixteen. Seg would happen in, uh, twenty seventeen, which enabled the Lightning Network to exist. And then, uh, really, I think the growth, act, actual growth in the building of the, the, the, the public network was in twenty eighteen, twenty nineteen. So here we are, twenty twenty-two, and there's actually like, there's actually a ton of, uh, business applications that are being built on top of it, the strikes of the world, et cetera. Also kind of open source applications.

• 26:14Speaker 02

  So it's not, it's not going to steal the headlines, uh, compare it to a, a, you know, the, the total value locked of some DeFi protocol, right? That incentivizes you to use it with the native token itself, and it looks like it's a nothing bird. Uh, but is that, but it's actually, I think, one of the most important aspects, uh, in, in, in all of the industry, um, in, in terms of Bitcoin's development and ability for it to scale. Uh, it was Bitcoin is never going to scale in the base layer. And I think that's where the kind of the, the big blockers went astray in the four wars, thinking that all of, you know, the, the world's total transactions could scale in the base layer. Uh, that's just not really feasible. So the Lightning Network and stuff that's being built on top of the Lightning Network is super, super fascinating. And I think it's one of the most undercover kind of stories, uh, in this industry.

• 26:59Anthony Pompliano?

  Got it. And one last question I have for you before we let you go is, uh, you tweeted yesterday, the producer price index by commodity and it's all commodities. And, uh, it's high, newsflash. Uh, it's actually higher than where it was in two thousand eight, two thousand nine during the global financial crisis. How do you think of this, uh, and the importance of paying attention to it in the coming months?

• 27:22Speaker 02

  Yeah, I mean, this is obviously, uh, these stories, it's, it's, it's interlinked with, uh, the kind of the CPI inflation. Commodities are the story and after getting no love for, for decades on end, uh, they suddenly matter again. Uh, you know, energy, uh, raw materials, like that this goes into everything. And, and, um, I think really we're, we're going to just need to see the rate of change or kind of the, the year-over-year readings on this start to come down. Uh, I think it, it naturally will as the business cycle slows down. Uh, but this is, you know, this is the biggest story probably in finance is that inflation, CPI inflation says it's eight percent, right? But the producer price index or commodities inflation, it's saying inflation is not 8%, it's actually 15%, 20%, 25%.

• 28:07Speaker 02

  The same reading in Germany is 30%. And so this is, you know, every bond investor in particular, every fixed income investor should be looking at this. And we've talked a lot about bond yields and the negative real yield environment. And this just kind of highlights the craziness of our world today. And so, you know, one of the biggest stories, unchecked monetary debasement and inflation. And how it all ends is, is going to be quite interesting to see. I think we're living through historic times.

• 28:36Anthony Pompliano?

  Yeah, I am, uh, I don't know what's gonna happen. I don't think many people know what's gonna happen, but I think describing this as a historic time that will be covered in history books is probably the best way to put it. And one of my pieces of advice to people right now is pay attention, learn, take notes. Pay attention to what's happening because if you're young, you're likely to have many more boom and bust cycles in your life. If you're fortunate enough to, to kind of live long enough. And you can learn a lot right now because, uh, uh, some of the stuff we have not seen before and some of it is just a replay of history.

• 29:10Speaker 02

  That's a, that's a great way to say it. Yeah. I mean, I certainly, certainly don't have all the answers, just kind of learning with everyone else. But definitely historic times. And I think on the other side of this, we'll, we'll look back and say, uh, it was certainly unprecedented.

• 29:22Anthony Pompliano?

  Yeah. All right. Where can we send people to find you on the internet?

• 29:26Speaker 02

  Yeah, uh, just kind of today's slide deck was, uh, something we, we covered in, in last week's Bitcoin Magazine Pro newsletter. Uh, it's, it's kind of, uh, focusing on, on the Bitcoin mining industry, uh, macro backdrop derivatives, on chain metrics. We like to cover it all. Uh, you can, there's a free and paid tier. Uh, so give that a look. Uh, I'm hanging out on Twitter, uh, for the most part. Uh, and yeah, uh, that's where you can find me. Appreciate you having me on, Paul.

• 29:51Anthony Pompliano?

  Amazing. Thank you, buddy. I appreciate it. I enjoy talking to you every single week and, uh, uh, I know people learn a lot. So I appreciate you coming on and anyone who's not following Dylan on Twitter, what are you doing? Let's go, get on it. Uh, we'll talk next week, buddy.

• 30:05Speaker 02

  Cheers.

• 30:05Anthony Pompliano?

  All right, later. 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.