WBD494 Audio Transcription

Bitcoin, The Greatest Money System with Darin Feinstein

Release date: Wednesday 27th April

Note: the following is a transcription of my interview with Darin Feinstein. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

Darin Feinstein, an early investor in Bitcoin, co-founded Core Scientific, one of the largest Bitcoin mining operations. In this interview, we discuss the revolution of triple-entry accounting, providing 8 billion people property rights and banking, combating FUD, and rapid advances in mining chips.

““The one thing that’s certain is it’s never going away because this is the best accounting technology, which is instrumental to run the world, that has ever been invented. And so the rest of it is just noise to me, it’s going to go up, it’s gonna go down, the daily price fluctuations are meaningless, we just keep building. ”

— Darin Feinstein

Interview Transcription

Darin Feinstein: So we're recording now?

Peter McCormack: Yeah, we're recording.

Darin Feinstein: We're going, we're live.

Peter McCormack: Your first in-person.

Darin Feinstein: Yeah, this is my first in-person podcast ever.

Peter McCormack: Okay.

Darin Feinstein: It's my third podcast; the other two were on Zoom with other people.  So, it's my first in-person and it's my first solo podcast.

Peter McCormack: You've been in Bitcoin since when?

Darin Feinstein: 2012.

Peter McCormack: 2012.

Darin Feinstein: 2012 -- 2011/2012.

Peter McCormack: So, in ten years --

Darin Feinstein: In a decade, yes.  Is that too far away?

Peter McCormack: Yeah, in a decade you've done three.

Darin Feinstein: Can't sit back.

Peter McCormack: The funny thing is, because I pestered you a little bit about this, because a handful of people recently have said, "Got to get you on".

Darin Feinstein: I appreciate it.  Listen, I wouldn't call it pestering; I wanted to come on.

Peter McCormack: But people are, "You've got to get Darin on, he's got stories, man".  Danny might chip in occasionally as well.  Normally when we do a podcast, I have a sheet of notes, all the things we're going to talk about.

Darin Feinstein: Right.

Peter McCormack: When Danny was, "How're we going to prep for this?" I was, "We don't need to prep.  This isn't one where we sit and we go, 'Tell us about your business'" etc.  This is one where we have no prep, we're just going to get you to unload stories on us.

Darin Feinstein: Now that we're part of a publicly-traded company, we have a compliance department and before I do something like this, which I haven't done many of, we have to get approval.  So, they said, "We need to see the talking points" and I said, "I haven't been provided any".  Even today, as I was coming here, they were like, "Are you going to provide us any of the topics that you're going to be on?"  I said, "Apparently we're not going to".

Peter McCormack: Are they going to have to listen to it before it goes out?

Darin Feinstein: No, no.  We'll be okay.

Peter McCormack: We'll be good.  All right, okay. 

Darin Feinstein: We'll just stay away from non-public information.

Peter McCormack: Non-public information, okay.  I think we should just go back to 2011 because most people now in Bitcoin they weren't around in 2011.  I first heard about it in 2012, bought a little bit in 2012/2013 just to use this website I discovered.

Darin Feinstein: Yeah, great story; I appreciate that one.

Peter McCormack: I read about it on Wired.  But then didn't spend any time looking at Bitcoin.  I purely did a few transactions on local Bitcoin and sent them to this website.  Properly got in around 2017, start of 2017 and then that's me.  Most people I know, there's a class of 2013, there's a class of 2017, there's a class now over the last couple of years, but there's very few class of 2011/2012.  So, it's quite interesting to go back with you.  Tell us your intro, how you got in.

Darin Feinstein: Yes, absolutely.  So, just a little bit of background before that is I was an accountant.  I was at firm called Kenneth Leventhal which was consumed later on by Ernst & Young.  I lasted a very short while as an accountant.  But that's my background and I look at everything as a finance-based transaction in terms of what's going on on the numbers.

So, I was an accountant and then I was a lawyer.  I went to law school and became a lawyer.  I was in-house counsel for an investment banking company and we did a lot of deals, mostly distressed.  So, I was in these distressed markets and the companies that I then got involved with when I started my own boutique investment banking firm, I don't know, 20-plus years ago, we would get involved in companies that were distressed.  They had litigation, receivership, foreclosure, some kind of problems within the corporation and we'd get involved in these messy situations and clean them up. 

I ended up with different assets in a variety of different businesses.  Some deals were good, some deals were bad; you just go through and it's a numbers game.  Sometimes you're investing in things that are wild and work out and sometimes you're investing in things that are wild and they don't work out.  It becomes a binary statistic.

In around 2011, I had a large entertainment company in Las Vegas where we produced shows.  I bought that out of a bankruptcy, so that was one of the businesses that my company ran.  That company controlled theatres, box office and production at casinos in Las Vegas.  Some of the shows that we were doing, that I've done historically over the years, we put up money, for instance, with Caesars for J.Lo and Lionel Ritchie and the Backstreet Boys.  We put up money with MGM for Lady Gaga and Aerosmith.

Peter McCormack: I've been to the Lionel show in Vegas.

Darin Feinstein: I appreciate it, thank you.  Yeah, I was a financial producer and what a great show.  He's such an amazing recording artist.  He does a story the whole time, so people really get into it.  Then we'd do smaller shows.  So, I owned some tribute shows in Las Vegas that I've had for over a decade also.  There's a Michael Jackson tribute show that I own right now to the Tropicana.  At the Tropicana, we do all the ticketing, box office and production for the casino.  All the shows were either partnering or they're my tenant, like the Laugh Factory in Las Vegas at the Tropicana.  They pay us rent and use my ticketing platform.

In 2011, there were messages boards that popped up across the world that told people how to get out of charges if they were on their credit card to see shows.  We saw the number of charge-backs on the show side skyrocket, so I started looking into alternative payment methods in 2011.  One of the technologies we looked at was Bitcoin.  I think my reaction in 2011, as an accountant and as a lawyer, mirrors the reaction of most people that have finance or legal backgrounds or representatives for a variety of governments across the world. 

When you googled it in 2011, the first thing you saw was that people used it to buy drugs on the internet.  The second thing you saw really made it sound like digital video game money to me.  So, initially my initial reaction was, "This sounds silly and I should probably stay away from this".  I have privileged licences; I have gaming licences and liquor licences and banking licences in the variety of businesses that I had.  It wasn't worthwhile to put that at risk. 

Over the next few months, because I was cognisant of this new technology, I saw an article that piqued my interest, which is the genesis for why I'm here in this industry and made this industry all I do, all I work on.  The genesis of that was an article that said that this new technology is an immutable ledger.  That really doesn't mean a lot to most people, but that's the most important thing almost in humanity for record-keeping. 

As an accountant, I geek out on getting to the granular level of the accounting, financial records that we're provided all the time, especially as my investment banking company, most everything we see is bullshit; they give us numbers that don't correlate to reality.  So, an immutable ledger sounded something made up, but I started researching it.  What I realised was that it was immutable and it was immutable for a variety of reasons that I spent months digesting. 

So, what I realised was, and I'm going to give you a little bit of my accounting talk because I do do an accounting talk to small groups.  I've only done it three or four times in small increments to other groups.  But what I realised was that the history of accounting -- and accounting runs the world.  You don't know what you own without a ledger.  You don't know where you are, you don't know anything that your government's doing, any business that you're associated with, what you have in the bank.  You need a ledger to tell you that.  So, ledgers run the world.

The history of accounting, which are these ledgers, is really, really simple.  The history of accounting has two innovations before Bitcoin.  10,000 years ago, the first innovation happened.  Humans in Mesopotamia or some country way back across the world, they went to a market and they bought five sheep.  They bought five sheep at this market, they took a clay tablet, they wrote down, "I have five sheep".  They baked it in the sun, so other humans couldn't change the books and records and that was it; that's the birth of single-entry accounting.  Over a period of time, you could look at that ledger and you could know how many sheep you have in 6 months, in 12 months, in 18 months.  So, you'd always know how many sheep you have.  That was accounting until the 1400s.

In the 1400s, they invented double-entry accounting.  "I bought five sheep.  I paid $5" okay.  That transaction, the "Bought five sheep, paid $5" is a debit and a credit.  When you add that up, you get every single financial statement, every balance sheet, every revenue statement you see on the planet Earth today.  Every single bank, every government, every corporation, they all use this antiquated system from the 1400s called double-entry accounting which is an analogue system; it's terrible.  It's terrible because the people that control the books and records, they can change the books and records; they're not immutable.

What happens when people that control the money can change their own books and records?  Well, we see what happens: you have devastating fraud for 700 years in every industry, in every government and every corporation on the planet Earth.  And it's really difficult to unwind or even realise the fraud's going on, because the books and records are private, they're privately-held.  So, in order to figure out that there's a fraud going on on these private records, you need other humans to conduct a physical human audit of other human records that are not kept well.

Peter McCormack: But we know those people are corruptible.

Darin Feinstein: Yes, right.  You go down the line and if there's a human element involved, you have a trust factor risk, right.  That's why you've seen large accounting firms implode.  During the Enron event, the accounting firm that was running Enron approved all of their books and records.  Then later on, after billions of dollars went missing, the accounting firm imploded.  You saw the same thing with Bernie Madoff.  He had financials that were audited every year for decades.  You end up with human trust elements in an analogue system. 

You have accounting that was created in the 1400s running the world, running everything.  The question is, if it's such a bad system, how come it was never innovated?  Why did nobody ever innovate this double-entry accounting system?  Well, it's really easy: no one's incentivised to fix it because a government gets to control all their books and records.  They get the money from the public and they don't have to disclose what they spend any money on, because the books and records for your government are held privately and you don't get to see them.  Same thing with corporations, same thing with institutions and individuals; it's all private.

So, nobody's been incentivised to change that at all and we have seen that last until today, until 2009 really when the Bitcoin Network was created.  What the Bitcoin Network did was it took this antiquated, double-entry system -- you have debits and credits -- and they came up with this genius methodology which became the consensus mechanism for approving the transactions between two parties.  I'm not going to go too deep into the Byzantine generals problem, but I know that you know what that is; I break it down like this.

In the history of humanity, forever, there's no way -- assume me and you don't know each other and we don't trust each other and we're over geographic space.  There's no way for Peter and Darin to conduct a transaction without a third party.  What that means is, if you're in Asia and I'm in Europe and we make a deal for you to send me some value, you send me the value but I didn't get it and I don't believe that you sent it.  I don't know you; you told me you sent it and I didn't get it.  I think you're a bad actor, I think you're not telling me the truth and you didn't send it.  Now if I say I didn't receive it and you sent it, you don't believe that I didn't receive it.  You think I got it and now I'm saying I didn't get it.  So, over time and space, over geographic space and over time, two parties cannot conduct a transaction; it's impossible. 

What happened, because we know transactions have been occurring for tens of thousands of years, how did people do transactions?  Well, a third-party confirmation system popped up.  Me and Peter are doing a transaction, a third-party confirmation system pops up to verify the transaction.  You send your value to this third party; I send my value to the third party.  They say, "Yes, we confirmed Peter sent his value, Darin sent his value, transaction culminated" okay.  That's how all transactions had to be partaken over the last thousands of years up until 2009.  There was no way to conduct a peer-to-peer transaction over geographic space or over the internet; you still need a third-party verification system to approve the transaction between two parties.

Well, thousands of years ago, this third-party confirmation system, what did that turn into?  A bank.  So, the very first business line of banks were confirmation of transactions between two parties and they took a fee.  Now you have this third-party verification system.  It conducts the approvals for the transaction and takes a fee.  What's the next thing that a bank does?  It custodians money.  So, if I sent $1 million to the custodian, to this verification system, you don't want them to send that to your house.  You say, "You custodian that money", and that's what banks do; they confirm between two parties the transactions, they verify the transactions and then they custodian your money. 

Everything else that a bank does in the world today is legislatively fabricated; they just come up with other business lines that they're able to do.  So, the banks now have your $1 million.  Well, in America they can borrow from the Fed and then lend that money out to create another product line within their purview, in their tool shed of products in the bank.  Now there's banks lending out all this money from the deposits.  That business of lending money out is now the majority of money that banks made and it's all predicated on two things: banks having your money in there to custodian and the other one is confirming a transaction between two parties. 

So, we've never had this ability to conduct a peer-to-peer transaction ever, because the ledger system didn't work, it didn't work.  It was analogue, so you had to physically do it and you didn't trust the parties involved.  What the Bitcoin Network did was you took two parties, party A and party B, conducting a transaction over a geographic time and space digitally and the consensus mechanism is the innovation of Bitcoin.  This entire innovation talk gets lost sometimes because this is so complicated; you really have to understand accounting and ledgers and the history of transactions between two parties and what's happened globally.

Peter McCormack: I've had people explain to me that Bitcoin is triple-entry record-keeping.  You mentioned it to me when we hung out a couple of months back, a few months back.  I was, "Do you know what, I still actually don't know what --" have you heard ever, and did you know what it means?

Danny Knowles: Only because I've got a friend who's an accountant who's explained it to me.

Peter McCormack: Yeah, but I've never actually had it explained to me in that way.  Now I'm like, "Okay, that's great, I get it now".  Also what you've done in that, you've identified all the risks around the double-entry accounting system with a third party.

Darin Feinstein: Right, because you had this digital node server system that confirms every transaction to its inception.  This is the most important part: it self-audits every transaction to the inception of the Bitcoin; and then after it's self-audited, it writes it to the triple-entry, to this third entry.  The word "blockchain" is really a stupid word, a silly word.  It's technical jargon for an accounting ledger; it's just an accounting ledger.  Blockchain is a digital accounting ledger and digital accounting ledgers have existed forever, because if you have a computer and you're keeping records, that's a blockchain. 

The innovation here is not blockchain; it's not an accounting ledger.  The innovation here is the methodology to audit the transaction to its inception.  The audit factor is what changes this.  You now have no human risk between two parties and you can't rescind the transaction.  So, you have this immutable transaction that can never be undone.  Once it's audited, it gets written to the blockchain, to the Bitcoin blockchain.  This new technology eliminates, and this is why there's so much upheaval globally, it eliminates all the legacy systems that have been put in place for thousands of years to confirm a two-party transaction.  For thousands of years, legacy banking systems have all predicated on the fact that we can't do business with each other because there's a trust risk.  This network eliminates that.  

On an accounting side, you have the most important accounting innovation in human history.  It's the first time you've ever had immutable ledger, it's the first time you have a self-audited system.  So, when I looked at this -- and I went down the rabbit hole, obviously, very deep in 2011 and then bled into 2012 a little bit -- I was shocked at the value of this network.  I thought, and I was wrong, I realised the Bitcoin Network, capital B, the Bitcoin Network is the accounting innovation of what I've just explained; it's this consensus mechanism, fully-audited, every ten-minute transaction written to a blockchain.  This party A to party B transaction through this new accounting innovation, that is the Bitcoin Network. 

Bitcoin, lower case b, is different.  Bitcoin, lower case b, is the digital asset that lives on those rails.  Bitcoin the digital asset, which trades as a commodity, is the best monetary technology on the planet Earth only because it lives on the best accounting technology that's ever been created.  And so, you can't really understand what Bitcoin is without understanding the rails that it runs on.  The rails that it runs is the most important accounting innovation that changes humanity, how they conduct business, forever. 

I thought wrongly that this accounting technology would take off.  I said, "Everybody's going to demand that the companies they invest in and the governments that run their money utilise something to this effect that has to be immutable".  I didn't even think it was possible to do that.  On an accounting level, I was massively intrigued.  I realised also, and I hate the word "miner", the miners I realised, and I don't know who picked this word, the miners are just computer servers that are the accountants of the network.  So, the miners are the accountants that make the money getting in the middle of these transactions between two parties.

Because I was so intrigued by this, I said, "You know, as a hobby, I'm going to partake in this network.  I want to help protect this network and be a part of the confirmation of transactions".  So, I started in 2012, maybe closer to the end of 2012, and I think it took a year trying to really grasp this.  One other thing before I start, when you get deep enough into it, you realise it's real.  This technology is real, it's important; it's an innovation for the world and it changes the world, so you know it has value.  Everybody in 2012 that I told I was about to participate in this network, they instantly thought that I was participating in the drug trade or some kind of illicit activity.  I'm like, "No, this is just an accounting innovation". 

So, I spent years talking to people that I was in different business deals about Bitcoin, listening to all of the questions that they would ask me.  So, I've had almost every question you could possibly have from very smart, very sophisticated financial people and I have just been unwillingly practising advocating for this system for a decade now.  In 2012/2013 probably, I started mining.  Back then I think we were GPU's, first generation ASICs.  I bought everything you could buy and most of it didn't work, some of it didn't show up.  We had every problem you could probably imagine that we would have that early. 

I did it as a hobby until about 2015 and in 2016, I looked at the way the world was going, and I decided that I wanted to only do this; I only wanted to build infrastructure and really defend and try to build the infrastructure network in America.  At that time, I probably had by myself equipment in four or five different locations and I had massive problems.  The equipment would disappear, they wouldn't work, it wouldn't go on, it would go off.  The people running it would be very inefficient with how they kept the equipment on.  Then I realised that there was no commercial enterprise-grade level facilities in America to host blockchain equipment. 

So, I looked around the world and end of 2016, maybe early 2017, I started a new company; I stopped the other ones.  That company looked for a location in America where I could build out, on an enterprise-grade level in a high-volume commercial setting, an infrastructure project that would be somewhat to the extent of what the data centre business is now to servers.  I tried to build a better infrastructure facility, a better -- I hate saying "better mousetrap", I had to stop myself, but there you go.  I wanted to build a better infrastructure facility and so I looked at hundreds of sites. 

Eventually, we settled on a location in North Carolina and at the time I was living in Las Vegas.  I found a location in North Carolina in the Appalachian Mountains in a small town called Marble; Marble, North Carolina.  The reason I picked the Appalachian Mountains and this small town, the United States government in the 1940s built critical infrastructure to power the Manhattan Project, so the Manhattan Project was up there in the Appalachian Mountains.  It needed a massive amount of energy, so they dammed up the Appalachian Mountains and they created a massive amount of hydroelectric power, 100% renewable, very plentiful hydroelectric power up in the Appalachian Mountains. 

After that Manhattan Project was over in the 1950s and 1960s, American manufacturing industries moved up into those mountains, because there's a massive amount of renewable energy that's stranded.  You can only transport renewable energy a certain number of miles before it degrades or dissipates into nothing.  So, these manufacturing facilities populated the area including Levi Strauss, American Threads, and one of the buildings I looked at was an American Threads facility, I believe, that provided the stitching to Levi Strauss.  It was a 230,000 square foot building on 70 acres in Marble, North Carolina. 

During the time of the heyday of the manufacturing up in the Appalachian Mountains, there were probably 50,000 to 100,000, 200,000 people living in that region that were working at these manufacturing facilities.  In 2000, the United States enacted NAFTA, North America Free Trade Agreement, which encouraged manufacturing facilities in America unfortunately to close down and move to Mexico.  So, all of the surrounding factories, including the one that I eventually purchased, were shuttered and the towns dwindled to nothing.  You saw legislation during the Obama Administration that labelled them opportunity zones to encourage development of these blighted communities that were gutted during NAFTA. 

When I got to Marble, North Carolina, which was this hotbed of manufacturing facilities, it had a population of 500 people; there were 500 people living there when I got there.  I found this amazing facility in a very remote location with very little population and I said, "This is where we're going to go".  We talked to the power company obviously.  We had two substations on site; we had Duke and TVA.  So, we had plentiful power and we're in the middle of these hydroelectric plants that could only send their power so far.  It was an excellent spot for us.

The next step for me was to meet with the mayor of this small town, to tell him what I was going to do to make sure that they wanted us there.  I had hosting facilities in upstate Washington before this and the town turned on those developments, the mining developments in upstate Washington.  The people that we had sent our equipment to failed and we had to pull our equipment out of there.  So, I already had known that we needed to make sure it was a friendly jurisdiction that wanted us in there.

Peter McCormack: Why did they turn on it?

Darin Feinstein: In Washington State?  It was really early and I think a lot of the people that were popping up, that were involved in this community early on, were not well-funded or had other problems.  So, I think what happened in Washington State was that people made promises to the electrical grid providers that they would be utilising X amount of power and then the infrastructure had to be built towards those buildings.  As they didn't fulfil their promises, I think they realised that this is a dangerous industry for us to be spending taxpayer money on.  So that was really probably one of several items that happened but I think a lot of the early projects failed; I think they failed.

They also failed not just because of enough money or from the people running it, the technology was new.  And so, putting these buildings together to dissipate the heat was difficult.  You needed to have sophisticated air -- you had to understand thermodynamics.  You needed to air-cool these rooms and that math to air-cool these rooms did not exist, because the footprint for the ASIC equipment, the heat that goes in -- so, it takes electricity and then hot air comes out; you have to dissipate that hot air.  You can either chill it in the room or you have to get it out of the building.  If you don't, it could all burn down. 

So, the thermodynamics on this airflow dissipation did not exist for this equipment.  A lot of people hired engineers that were good at airflow dynamics from MIT that had PhDs, that worked at NASA and Google.  Then when you put them inside of a Bitcoin mining facility with all different equipment, with different shapes, what I found happen was every time I would talk to these engineers, when I'd bring them to my building for instance in Marble, North Carolina, I said, "I need to build this out". 

The first three of them that I interviewed said the same thing; they said, "We can't do anything in this facility.  This needs to look more like a Google Box because that's what we learned at MIT, how to dissipate air in a Google Box.  What we learned really quickly was you needed to find engineers that could do this on their own, that could be more creative.  So anyway, I'm jumping forward; I ended up going to meet with the mayor in Marble, North Carolina to see if he was friendly to our industry and that he would want us to be there, create jobs and bring more people up there. 

When I met with the mayor, it was a comical situation because we met at the steak house up there.  Population's 400, so everybody knew I was up there.  I sat down with the mayor and I said, "I'm going to open a Bitcoin mining facility up here".  He looked at me and he said, "How do you know that Bitcoin are here in the ground?  How did you realise they're up in Marble, North Carolina?"  By the way, that's not an outrageous response when you talk about mining.  We run into that problem all the time, because mining is just a really silly word and whoever picked that should not be a marketing person.

Peter McCormack: What would you call it?

Darin Feinstein: We've gone and back forth between mining, minting, producing.  It's such a hot topic because people are so passionate about it.

Peter McCormack: Yeah.

Darin Feinstein: I think the word "mining" was on a Bitcoin forum in 2010 and "mining" and "minting" and that just stuck.  I think so far I'm partial to "producing" but I don't know, I'm not the marketing guy.  I just know that the word "mining" has a bad connotation.  It sounds dirty, it doesn't designate that these are just computer servers in a building, which is a data centre.  So people are, "Oh, you're mining".  It's, "No, I have a computer server that's plugged into the electrical grid that is an accountant of this new network.  That's all we are".

Peter McCormack: Yeah.

Darin Feinstein: It does feed into the narrative and I could talk about that for hours, the energy narrative which we deal with all the time.

Peter McCormack: Of course.

Darin Feinstein: So now, the mayor tells us that he is happy with us coming up here, they're looking to attract business and anything he could do to help us get open, great.  I sat down with the local people that were involved in TVA and the Duke substations that fortunately were on site for us.  In 2017, I rented a cabin.  I have kids and my wife, and we moved to the Appalachian Mountains, so I moved up into the mountains there.  I hired and staffed this place out.  We had obviously some staff turnover and I had to learn all of this on my own. 

So, I'm running this company and I have to learn thermodynamics.  We have this classroom that was in the manufacturing facility, we would bring up engineers and we'd go through the thermodynamics and how it works inside these facilities.  We had to really come up with our own way to do it.  The initial people that we would hire, if they were working for a third party -- so there's third-party engineering companies that you can hire, third-party construction companies that you can hire -- what we realised is if we hired any third parties it was a disaster, so we had to bring all these people in-house. 

I needed construction people in-house, we needed the electrical people in-house and we needed the engineers in-house.  I found myself populating this small town, Marble, North Carolina, with no hotels -- there's one hotel ten miles away.  We had to rent, keep renting these cabins and I had people living in, people that were employees, in the basement of my place; it was wild.  And we did it, we built out the first enterprise-grade level infrastructure facility. 

Before that run-up, Bitcoin was at $300 or $400.  It shot up to $1,000 in late 2016, early 2017, and it went to $3,000 or $4,000.  It was wild watching everybody jump into this industry.  At the end of 2017, when it went up to $10,000 and $18,000 or whatever it hit, everybody showed up and said, "We're going to build a competitor to you.  We're going to build an infrastructure facility like what Core is building".  So, as these new companies started sprouting up all across the US, I would get their decks and we would see the names of the engineers that didn't work out for us at these other companies and we'd be, "Oh, that's too bad.  We know it's not going to work".

So, in 2017 we started that, we hit the crypto winter in 2018 and 2019.  The one thing that we pride ourselves on is that we never stopped building.  The chairman of my company, of our company, my co-founder, Mike Levitt, who was the chairman in 2017 when I started the company and moved up there, he was the CEO of a publicly-traded company at the time and was very helpful on the capital market side, raising -- he had a different style and fashion that I did and really was ingratiated into this business over the last five years.

In 2018 and 2019, even though it was crypto winter, we just kept building.  We expanded from North Carolina to Georgia, where we have facilities currently.  We're also in Kentucky.  We have an Ameristeel plant that was shuttered there, that we have mining activity at.  We're in North Dakota, we're in Texas.  We didn't announce it, but I think the people in Oklahoma announced it, so it's public, we're also in Oklahoma.  So, I think we've announced six states that we operate in currently and we just keep going.

That's this genesis story of where we are.  Just to clarify my role, I'm obviously co-founder of this company with Mike Levitt and a very big advocate of the company in the space.  I'm no longer involved in operations.  My job title is Chief Vision Officer and if you can tell me what that means, I'd appreciate it.  But I go around really and try to advocate and educate the people that don't really understand what this innovation is or why it's important or why it's different than proof-of-stake, "What's the big deal?  Why can't we just do it some other way?" 

I think people really don't understand that if you get rid of the innovation, which is the proof-of-work consensus accounting technology, you get rid of the entire innovation.  You go back to the old way where the people that control the books and records, if you have all the coins, if you control the network, you can change the network.  So, the innovation is this new server system which has this distributed consensus mechanism and really, this self-audit ability of the network and it self-audits every ten minutes.  That's my account, a good chunk of it, but that's really what it was. 

We're all really involved in this industry; you speak all the time on it and you guys do an amazing job.

Peter McCormack: Thank you.

Darin Feinstein: But at the end of the day, what we're protecting and what we're developing and what we're encouraging is our people to attach themselves to a new method to conduct all civilised activity, which is a new immutable accounting ledger, which changes everything in the entire world.

Peter McCormack: Yeah, a lot to unpack there!  You're right, I speak to a lot of people, I have a lot of conversations, whether it's on the podcast or on Twitter.  Almost never do people come from the point of triple accounting, triple book-keeping.  Did you call it triple?

Darin Feinstein: It's triple-entry accounting.

Peter McCormack: Triple-entry accounting, yeah.

Darin Feinstein: You have single-entry, double-entry and triple-entry accounting.

Peter McCormack: The only other time I've heard somebody really talk about this is I had a coffee with John Pfeffer in London and he told me his genesis.  He said, "Wences to me money is a ledger and the Bitcoin ledger is the best ledger that's ever existed". 

A lot of people come to Bitcoin for freedom or they come to Bitcoin because they think the tech is cool, the ability to send money easily around the world without any third party.  But we were with Jeff Booth recently and he was spending a lot of time talking about misinformation of money and what the impact of misinformation on money is.  I think he's saying the same thing as you, is that this gets rid of the misinformation of money.  But not many people come from this angle and talk about this; we don't really hear it.

Danny Knowles:  I used to hear it a bit more but it seems to have dropped off that little bit.

Peter McCormack: In some ways, it's not the sexiest way of explaining Bitcoin.  Also, whilst it's a great innovation and it's a great way of improving accounting, removing this misinformation of money, it is a threat to many people.  That's why the banks hate it, why maybe governments are against it, but this innovation is a threat.

Darin Feinstein: The innovation is a threat to bad people.

Peter McCormack: Yeah.

Darin Feinstein: If you want to hide your books and records forever and conduct business in secrecy, then you don't like this network.  If you are pro-disclosure and pro-information and pro anti-misinformation -- because any of us can look at the ledger of Bitcoin 24 hours a day and see what took place.  We can't do that with any other system and know that it's 100% accurate.  So, I think you bring up a good point about why people get into it. 

It would be like a big heavy car, like a Hummer or something, that's what this is.  You might like the Hummer and you might like to drive around in the Hummer, but you don't know how the engine works.  What I explain is how this engine works and why the Hummer is a better car than whatever the predecessor car was inside the engine.  Once you're in this car, it does do a lot of amazing things.  I think you bring up the most important one, which is it provides freedom.  The only reason that it provides freedom is because of the consensus-distributed mechanism that is the self-auditing accounting technology, which is the innovation.  It provides freedom because of this: because you have hundreds and thousands or more nodes located, distributed around the globe.

So, if you picture the globe and that triple-entry accounting, you have a triangle of accounting and then you have a globe.  Around the globe are nodes and servers, those are the miners and the nodes.  Those keep a complete record of every transaction that has ever taken place on the Bitcoin Network.  You have every single transaction in the nodes and the nodes talk to each other.  When a transaction comes through, they audit it to its inception.  If it's a bad transaction, it's discarded by the system.

In order to hack this system, you have to hack all the nodes simultaneously.  What they've created was the first unhackable network in human history.  We have the first immutable network in human history for a ledger technology, but we also have the first unhackable, decentralised network in human history.  What that means that it's unhackable is nobody can hack it.  The hackers can't hack it and the government can't hack it.  If you have a Bitcoin on your wallet, nobody can take it from you, nobody can take it from you. 

What does that mean?  Well, in America not much, parts of Europe too.  We have private property protection, sort of, until they don't like your viewpoint and then they seize your stuff now, which hopefully goes away.  But generally, in the history of America, they protect your private property; we have private property rights that are pretty engrained in our institutions and judicial branch.  The rest of the world, and I love that Alex Gladstein stat: 87% of the population on the planet Earth, they live in autocratic, authoritarian regimes.

Peter McCormack: Is it 87%?

Darin Feinstein: 87% and double- or triple-digit inflation, it's a combination of those four things.  So, they go to sleep at night -- or did you hear it differently?

Peter McCormack: I hadn't heard the number, but I thought it was half the world live under authoritarianism.

Darin Feinstein: Okay.  Plus double- or triple-digit inflation.

Peter McCormack: One of the two.

Darin Feinstein: Yeah, any of those.  So, it's authoritarian or dictators, double or triple-digit inflation.  I'm assuming Gladstein -- and I'm reciting it because maybe I have it off, but let's say it's right.  87% of the population live in autocratic, authoritarian regimes with double- or triple-digit inflation or half the population live in authoritarian regimes.  Those people have no private property rights.  The government can seize and confiscate everything from those people at any time they want, because they have no protection under whatever constitution they're living under.  So, 4 billion to 7 billion people on the planet Earth have no private property rights.

If they downloaded digital wallet and they have a Bitcoin, or any number of satoshis on their digital wallet, they have, despite what the government wants or whatever the decrees are, they have private property because nobody could take it from them.  So, the Bitcoin Network provides private property right to all 8 billion humans on the planet Earth.  As a network, that's insane; nothing else has ever done that before.  Now you have private property rights and you see this freedom and why foundations like the Oslo Foundation and Alex Gladstein and other really good people are out there trying to educate people that you could have private property. 

The other big problem, and this stat is about half the world, maybe slightly over, they're unbanked, they have no banking; they are outside of traditional financial -- they don't qualify to be banked.  In America, we consider ourselves pretty financially fortunate.  I think the number is almost 10 million people are unbanked and something like to 50 million to 60 million people they call underbanked, so they're underserviced on the banking sector.

So, you have this 4 billion-plus person problem of banking.  Well, if you have a Bitcoin and you have a digital asset that is unconfiscatable sitting in your wallet, you can store value.  What else does a bank do?  A bank does store of value, remit of payments, payment processing.  If you have a Bitcoin, you can store value, I can payment process, I can send the Bitcoin somewhere else, and I can remit money somewhere else.  So, this new network that was just created solves an accounting technology problem that's existed for 700 years.  It solves the ledger problem, it solves private property problem and it also solves the banking problem.

Now you can bank 8 billion people, so you can provide private property to 8 billion people, you can provide banking to 8 billion people all because of the distributed network, consensus-level network that audits every transaction.  Because it's distributed and decentralised, it can't be hacked.  So, that's the next level once you understand the accounting technology, you understand the proof-of-work technology, then you can start layering on all the applications that work on top of it.  So, you'll see people promoting all of the benefits you get from this new accounting technology, which takes away literally all of the fraud; there is no more human fraud.

Peter McCormack: There is some fraud by tricking people, but there's no direct hacking fraud.

Darin Feinstein: You don't have to worry that the transaction records are fraudulent.

Peter McCormack: Yes.

Darin Feinstein: Listen, in humanity there will always be unfortunate human fraud, but that's not a risk within the network.

Peter McCormack: Yeah.

Darin Feinstein: Within the network, the numbers that you see are the numbers that they are.  That's unique, there's no fraud in that.  You know that the final outcome ledger is immutable and unchangeable and that's what it is.  If you take your digital asset and send it to some country and some guy that sent you an email, you're going to have a problem.  If you open an email up that's asking for your personal information and they hack you, you'll have a problem.  There's dangerous people out there, but now they're outside of the direct books and records and ledgers of this system.  Yeah, thanks for clarifying.

Peter McCormack: In 2008, we saw how some of the bad people got away with essentially forms of fraud and nobody faced jail.

Darin Feinstein: I don't know about nobody.

Peter McCormack: One person.  Danny will look it up; one person went to jail for that.  But what's super-interesting about this is you've outlined all the different benefits and use cases, but it also makes you realise how very, very early we still are with this because it takes time for people to adopt the system for different parts of what it benefits.  Where's the demand for triple-entry accounting?  There isn't a huge amount of actual direct demand right now, but you can think of examples.  Exchanges, there's been a push to prove that they have the Bitcoin they say they have.  Is every Bitcoin exchange solvent?  Nic Carter's done some work to try and help the exchanges prove that, by just exposing an address or addresses which show they have the Bitcoin that is claimed. 

So, when we've had this scenario, many scenarios where exchanges have gone into administration or exchanges have gone bust, whether it's Quadriga, whether it's Mt. Gox, by using the triple-entry accounting, you can see.  Whether it's El Salvador, where previously I think it was 70% unbanked, maybe more, everyone within that country now with a mobile phone and access to the internet can now be banked.  They're even being given a small amount of Bitcoin, so they're being onboarded to the network.  When we talk about censorship resistance, we can look at what happened in Belarus or Nigeria or even now in Ukraine, we have the ability to be able to send money that nobody can stop.  What we're seeing is these pockets of all these use cases that you're talking about.  I'm fully on board, Danny's fully on board, you're fully on board.  We've just got a lot more people to educate about this. 

This is why this conversation is super-interesting, because I think too much of the conversation's gone towards freedom, which I'm not saying isn't important, but not enough has gone into this, which is explaining to people why this technology is so important, why it works.  I think we've started to leapfrog that.

Darin Feinstein: Yeah, this is step one.  You have to understand this and the regulators have to understand this and Washington has to understand it, that the innovation is the consensus network.  If you get rid of this proof-of-work consensus network, the innovation's gone.  All of the stuff we've just talked about doesn't exist anymore.

Peter McCormack: Maybe that suits them though.

Darin Feinstein: The established legacy people, but not the people that are up and coming in any of the environments.  Right now in America, 45 to 50 million people own Bitcoin; that's a lot of voters.  You're starting to see and I'm starting to see groundswells take place, especially after this Infrastructure Bill, people realise that they need to be talking to their legislators and representatives.  I think the question I get asked a lot is, "Why not just get rid of proof-of-work and do proof-of-stake, why do you need this energy use?"

Peter McCormack: Which they're voting on in Europe right now, the EU.

Darin Feinstein: This EU thing is a travesty really.  They use so little energy towards proof-of-work networks that it's an inconsequential number in the EU.  I think it's something of a fraction of a fraction of a percentage, somewhere about.  If you look at all the energy that Europe generates and then you look at the proof-of-work networks within Europe, it's something like 0.00018 of the energy utilised within the borders of that country.  If you turn it all of it means nothing. 

China used the same excuse.  China said, "We're turning this network off because of the carbon footprint".  The actuality is, China uses somewhere in the lines of 25,000 TWh a year of coal energy and they turned off -- let's say they had half of the Bitcoin Network at the time, it would be 100 TWh of energy.  So, they're burning 25,000 TWh of coal and they turned off 100.  It's an inconsequential number.

Peter McCormack: They didn't just turn it off; they moved it to another part of the world.

Darin Feinstein: Well, they forced the people that were the early adopters that built these facilities out there to relocate.  The overall effect of China, a major authoritarian powerhouse in the world, couldn't affect the network.  If they could have hacked it, they would have; if they could have turned the entire network off, they would have.  They're not a fan of people having private property or banking outside of their ability to disrupt it.  They've passed Bitcoin bans since I've been in this space in 2013 and 2017, and 2021 was the mining ban. 

The infrastructure just moved to regions around the world with greater geographic freedom and the network amazingly, because it's so robust, had no downtime, there were no protests, no lawsuits; people just moved their infrastructure and the Bitcoin blocks just keep hitting every ten minutes.  So, you've never seen somewhere between 50% or 60% of the infrastructure turn off of a network and have no problems, no hiccups at all.  By the way, when they turned the network off, the hashrate fell into the 60s and now we're up to over 220, 230.  The Network's three or four times stronger than when that turned off.

I think that's a good casebook example of what you don't want to do if you're a government around the world and you have the newest, most important accounting and financial technology that's ever been invented for humanity; it's to turn it off within your borders because, guess what?  It just goes somewhere else and then those other countries, they get all the technologists, they get the smartest people in the world building out the network there, which is going to bring the value there.  What's different about this network to any other financial system is that your market isn't the 250 million people in America; it's 8 billion people; you can do business with everybody. 

To shut that network off, and we'll see this play out, is a massive bad decision, bad governance decision.  It really was a $1 trillion present to the United States, because it all came here, mostly.  You saw some of it go to different parts of the world and I think the people that moved some of their equipment, unfortunately they had problems, because not every nation respects the private property of individuals or corporations within their borders.  What you don't want to do is send $100 million-worth of equipment and infrastructure to a region that doesn't have those same protections and one day your stuff goes offline and you call up and they're, "What stuff?  What servers?  We don't have any servers here".  That happens, that does happen. 

So, we saw a lot of it come to America fortunately and now we have to embrace that; we have to embrace it, and you brought it up that we really have to make sure that the 50 million people that own Bitcoin are very active and vocal.  We need to make sure our representatives understand what the technology is and the benefits that it brings, and also how it helps America keep its institutions strong and its technological advantage that it has over the world in certain industries.  A lot of these big companies that were birthed in America are the industry leaders.  So, our representatives need to know that this makes us stronger, it makes us stronger having this technology grow within our borders. 

If we expel it or if we over-regulate it and chill the technology within our borders, what happens to the technology is nothing, it doesn't care; it will just move to other regions that have greater freedoms.  You see El Salvador is a great example that you brought up.  I believe in the last 40 years in El Salvador with their traditional banking system, they banked 2 million people, 2 million out of 7 million or 8 million in El Salvador, but I'm not sure what the total number is; but I do know the number was 2 million banked. In the first 90 days, 3 million wallets were downloaded.  They increased the banked individuals in their country by 50%.  50% more people were banked in 90 days and their traditional legacy systems took 40 years for that.

Peter McCormack: It's such an interesting time with the regulatory environment, because certainly going back a couple of years, two or three years, I was always, "Oh, when's the US going to ban this?  When are they going to ban it?  They're going to ban it at some point".  This feels both a very American idea and a very un-American federal idea, so I always expect it.  But what we started to see, this growth of people in Congress in Senate who have taken an interest.  It's people like Ted Cruz who waxes lyrical about Bitcoin in a super-intelligent way; I don't know who orange pilled him.  We have people like Senator Lummis. 

We've also got the new people coming through.  We do have the risk of someone like Eric Adams, who came out as a bitcoiner and then said some stupid shit about proof of work, but generally speaking what it is, is people like Coin Center or the Bitcoin Policy Institute or the Texas Blockchain Council with Lee Bratcher, these people are getting out, they're educating people and they're actually realising this is great technology for America, it's a great defence against Chinese authoritarianism, especially at a time where the dollar is under threat, self-imposed by removing the risk-free status of Treasury Bills recently. 

I think this is actually just a huge opportunity for the US, but I think we're getting way beyond that idea of it being -- I certainly don't see it being banned.  There might be some onerous regulations which are painful, but for you, I, Danny, anybody else, we just see this as primarily all opportunity.

Darin Feinstein: 100% and you brought up a lot of really good people and a lot of good industries and centres and think tanks and lobbyists that have really jumped into the fray.  Lee Bratcher and the Texas Blockchain…

Peter McCormack: Council.

Darin Feinstein: Council, yeah, they do an amazing job.  I worked with Lee on the Coin Center and guys like Jerry Brito; all these guys do an amazing job of educating everybody on everything.  People get into, "Are people one side or the other side?"  I find that it's not binary; there's going to be people that get in front of people that really teach them that value exists on both sides.  So, I've watched and I've talked to these guys for a long time and the ladies that are involved.

In 2012 and 2013, I think 50% of the questions I had to deal with were, "This is going to be banned".  So, you see the FUD has changed over the years.  The ban questions I never get asked anymore, the Chinese controller network, and, "This is a psyop" and, "You're a sucker" and "You're just Chinese stooge", I don't hear that anymore.  So, the narrative is changing in terms of what we have to answer all the time. 

But what you just brought up, the banning, that was so many questions that we would get asked all the time.  Then we saw this Executive Order.  Even though there may be some onerous regulations, regulations are temporary, they're administrative.  People get voted in and out of office, regulations change.  This network's not going anywhere and we've all lasted through multiple administrations.  Bitcoin is going to outlast every government and every administration decision.  An outright ban would be terrible because people would have to leave the country to go work on this technology somewhere else.  To work in the regulatory environment, I don't see regulation as all bad; I think we can work that out.

Really, the EO, the Executive Order that just came out, talked about protecting this technology.  It's innovation; they want it to grow in America and there's enough legislators, regulators, CEOs of companies, think tanks, lobbyists that are in front of people every day.  I do think there's almost a tsunami of activity in the space that didn't exist at all before; there was none of this.  It's been amazing to watch it and watch it flourish.

Peter McCormack: Some of the timing of how everything's worked out is also unbelievable.  Let's think back to 2013 when we had something like the Silk Road.  If that happened now, that would seem a much more considerable threat to the network.  But it happened at a time where Bitcoin seemed so small, you could almost ignore it.  It seems like when Bitcoin grows, the growth rate happens at a rate whereby it creates all these other protections around it.  It's not just a few nerds and a few people who want to buy some weed who've got a bit of Bitcoin.  There are now politicians who own Bitcoin, there are companies that own Bitcoin, Tesla's invested in Bitcoin.

Some of the timings of the way the network has grown and what's happened around it almost seems perfect by design.  I know some of it is just luck.

Darin Feinstein: It's a very robust network; it's a Hummer, it's going to go through everything.  It's not a Lamborghini, it's not going to derail off the side of the road.  So, whatever is thrown at it, I think it just barrels through it; it will outlast it.  I think if Silk Road happened today, I think they'd catch these guys immediately; they don't last as long as they last because you're putting digital assets on and off the highway.  You're off-ramping them every day to different locations around the globe. The way they caught the people that were involved didn't seem to be overly sophisticated.

I think the only time you could have had a multiyear operation was early; they just weren't paying attention and they didn't see the -- it takes years for Washington and the regulators to catch up to people doing bad things in a new way.  I'd almost say they didn't get lucky but they lasted longer than they would now.  Silk Roads have probably popped up a lot; we don't hear about them anymore because they nab these guys right away.  It is the worst network, since we're talking about illicit activity --

Peter McCormack: It's the worst for committing illicit activity.

Darin Feinstein: You have an immutable ledger that audits itself every ten minutes and you can track and trace every single digital asset on it forever.  That's the absolute worst way to commit a crime.  You don't want an asset that's tracked and traceable for the rest of your existence.  If it's ever off-ramped, they know where to go and they can track these things forever.

So, the historical way people commit a crime is with cash.  If you hand somebody fiat cash currency, there's no way to track it.  I think the UN estimates there's $2 trillion of money laundered every year using cash and the traditional banking system.  If you look at the fines over the last ten years of all crypto currencies, it's a few billion dollars, so we're not even in the same hemisphere.  It's magnitudes worse on the traditional financial system and yet all the headlines look towards Bitcoin as providing this avenue for illicit activity.  It's by far and away the worst possible way you can commit a crime. 

You see people commit crimes and then they get arrested like the Pipeline ransomware deal, where these guys asked for Bitcoin, which was a big mistake, and then they took their Bitcoin and sent it to a centralised exchange.  Then the FBI subpoenas in seconds, because they know where it's going.  There's really smart ex-technicians at companies like Chainalysis and they're tracking the entire network ever minute.  They know what's there and then they go seize the stolen Bitcoin.  So, you don't want to utilise this network to commit a crime; it would be a big mistake.  If I'm an intelligence  agency, I'd prefer criminals to use this network; I wouldn't tell them it was bad.  "Go commit crime on Bitcoin, that's fine.  And then we'll come and get you!" 

There's a lot of, "Oh, this enables illicit activity"; it really doesn't.  You don't want to commit an illegal act on an immutable ledger that's going to track you forever; that's really a bad idea.  You really end up with one of the biggest FUDs, the biggest being energy use.  The energy used in this network is the largest disinformation campaign so far, but second right now would be the illicit activity.

Peter McCormack: Let's talk about the energy FUD.  Excuse the term, but you're at the coalface of this; you are.  Are you the largest miner in North America?

Darin Feinstein: This is where it gets to what I'm allowed to say and what I'm not allowed to say.  In February, we reported our results and we mined somewhere around 35 Bitcoin per day, Core Scientific.  We also have a large hosting facility.  I don't remember the numbers but we host a lot of other third-party equipment also.  So, we're a large miner and in February I think we reported mining more coins than any other publicly-traded company.  They just don't like me to say the word "largest".

Peter McCormack: Okay.  But that's about just over 3% of the Bitcoin every day.

Darin Feinstein: Yeah, so every day, there's 900 plus some transactional on-trades, so let's call it 1,000.

Peter McCormack: 900, yeah.

Darin Feinstein: Yeah, a little over 3%, right.

Peter McCormack: Yeah, it's pretty fucking big.

Darin Feinstein: I remember when I was happy when we would get 0.001.

Peter McCormack: I've spent most of this year mining with my five S19s.  I'm getting closer to a Bitcoin.

Darin Feinstein: That's great.

Peter McCormack: But you're pretty fucking big.  You've built up data centres, you have to source power.  We are at a time where there are people who are concerned about what's happening with the climate and energy usage.  Bitcoin as a total contributor to carbon in the atmosphere, it's not huge but it does have a lens on it at a time when people are considering this.  What is the main FUD, but also — no, I'll come back to my next question.  What is the main FUD for you?

Darin Feinstein: I'll talk about this; let me give you some perspective, because I looked a lot in terms of the history of analogue systems becoming digital systems.  The very first thing that you see from an analogue system becoming a digital system are the legacy players, they get disrupted and they get pretty angry. 

Historically, if you look way back, I think my favourite example is Ptolemy said the solar system revolved around the planet Earth and all religious dogma at the time said that we were at the centre of the universe.  Copernicus realised that the Earth revolved around the sun.  What did he do with that information?  Nothing, because he knew what was going to happen to him if he did.  On his death bed, he released a paper that said, "You guys are wrong.  The sun's the centre of this universe and we're revolving around the sun". 

Galileo found his paper and said, "Wow, this guy's right".  He wrote non-stop about how the Earth was not the centre of the universe and we revolved around the sun.  Guess what they did to Galileo?  They stuck him in a mental institution and beat him to death.  Then they dissected his body parts and dropped them all over the countryside.  After 200 years, they realised that he was right and then they tried to go find him and give him a proper burial.  That's what happens to you when you disrupt the legacy system, what happened to Galileo.

The same thing happened, coincidentally to this guy -- and I always say his name wrong -- but it's Ignaz Semmelweis.  Do you know what his crime was?  He said all of these women that are having babies, in certain hospitals they were dying at a pace that was very unusually bad.  So, this guy looks into it and he says, "There's germs.  They're not using any cloth, they're not washing their hands, they're not using gloves".  He says, "There's germs on your hands.  You need to wash your hands before you perform an operation".  Guess what they did to this guy?  Same thing they did to Galileo.  They stuck him in an institution and they killed him because he said doctors aren't clean.

You see this happening non-stop.  If you're going to disrupt the legacy industry, you'd better be prepared for the legacy industry people to come after you.  Those two guys -- and that's just 2 of 100 stories of people faced the consequences of disrupting big-time institutions.

Peter McCormack: Could we say Julian Assange is a perfect example of that?  I can.

Darin Feinstein: Without getting political, I think you're seeing this play out over and over again. During humanity there are legacy system people that do not want to go away.  You saw with email, which was the funniest one.  Email came out and guess what the United States Government and the Postmaster General said?  To literally quote, "The most efficient, the most secure way to deliver information between two parties is the US mail, not email.  Email" guess what, "needs servers that use a lot of energy and it's going to destroy the planet and we need to stop emails". 

So, the US Postmaster General went to Congress in the United States and said, "We need to stop these emails from proliferating because if you send ten emails, you're burning a pound of coal" or whatever the narrative they used.  They actually voted on implementing an email stamp tax in America; imagine that.  They lost fortunately, but you still had lots of people on both sides arguing to stop the email. 

You saw the same thing with the internet.  The people that had monopolies basically on information, they didn't like to see people have access to information, so they tried to stop the internet.  Guess how they tried to stop the internet?  "It uses too much energy.  You need servers to run the internet".  Guess what they said?  They said, "Every 5 MB of information burned a pound of coal" or whatever it was.  It equals about 100 tweets today what they said burned a pound of coal.  So, they tried to shut off the internet because of the energy argument; they tried to stop email because of the energy argument. 

This is not a new argument.  Any time you see an analogue system go to a digital system, you see a non-quantifiable amount of energy running an analogue system to a very quantifiable amount of energy running a digital system and it is really easy to say, "Oh, you need servers.  That's terrible".  Well, how much energy did you need to send post, to send an actual letter from one place to another?  You need trucks, you need security, you need buildings, you need CEOs.

Peter McCormack: Airplanes.

Darin Feinstein: Airplanes.  Look at traditional analogue money.  To make coins, you need to mine the metal which is terrible for the environment; it releases chemicals.  You need to transport the metal to a factory; you need to turn the metal into a coin; you need the trucks and security to transport it to the bank.  You need to hand it out; you need tellers; you need bankers; you need CEOs; you need regulatory bodies; you need government. 

Then you need to use the money.  The money goes back to the bank, you need security again.  Then guess what?  They destroy it every ten years and mine more.  If it's paper, they have to cut down more trees or use whatever chemicals they are to make it.  You get these terribly invasive technologies that have been decimating the planet for all these years and they're like, "No, that uses a server.  That uses a server and we need to shut it off".  So, we see that with Bitcoin.  The first thing to say is, "This is not a new way to argue against a digital technology".  This is always the first argument the legacy people use because you can say, "Oh, there's a server over there.  This is terrible".  That's the first one. 

The second one is in 2017, coincidentally when I was building the first Core Scientific facility up in the Appalachian Mountains, two articles came out.  One was from Newsweek and one from our buddies at the World Economic Forum.  Again, coincidentally they said the same thing, and it was remarkable what they said.  They said that the Bitcoin Network is so energy-intensive, it's so bad for humanity, so bad for the world ecological condition that we need to turn it off right now and if we don't, by 2020 -- so it's 2017 -- by 2020, it will consume all of the world's energy; not a lot, it literally says the world "all".  The World Economic Forum, Newsweek, 2017.

I'm dealing with investors and building the first large-scale facility.  The mayor, all my investors, my board, everybody is calling me up every day saying, "What are we doing?  We can't do this.  You need to stop".  So, thousands of hours of dealing with the energy FUD early on.  Here we are today, by the way, and it's 2022.  Two years after this prediction from the World Economic Forum, two years after the prediction from Newsweek and the prediction was all the world's energy. 

So, we know already that's wrong, because our lights are on and we're in the middle of a podcast; we're not using all the energy.  But you would assume those two organisations would be pretty close to accurate on the amount of energy that's used by the Bitcoin Network.  So, that's the first thing.  You have these predictions of human annihilation associated with this.  When you tell people they're going to die, they generally listen to you.  So, they're stoking fear in people, stoking fear in people and the people are getting scared and they want to know what's going on and what you're doing. 

That answer of how much energy we're using, we know because they're servers in a data centre and you can measure it.  Guess what else we know?  We also know how much energy is generated globally on an annualised basis.  All of the energy producers provide that information; British Petroleum, Exxon, all the people that provide lots of energy, they acknowledge how much energy they produce or generate every year.  So, we have the number, we have the answer, we know how much energy's generated.

Before I tell you the number, the next stand -- I know you see this all the time too -- is they say, "The Bitcoin Network is so bad, it uses more energy than small countries like New Zealand".

Peter McCormack: Norway.

Darin Feinstein: Norway, New Zealand, The Netherlands.  Name a country and the Bitcoin Network is destroying the planet because it uses more energy than that.  That's the same article, that's the same idea, that's the same ridiculousness that the Newsweek and World Economic Forum is.  They're taking the global Bitcoin Network, that's servers, and they're comparing it to small countries, which is a global comparison.  You can't understand this comparison that these people are making without understanding what the numbers are globally. 

We have to understand the significance of the energy used by this network versus the global energy that's generated.  How much energy is generated globally and how much does this network use?  That's it.  We know the answers.  The answer is, approximately the world every year generates 160,000 TWh of energy; that's the number that's generated.  If you listen to Newsweek, the World Economic Forum or these other people that say the network uses more energy than a small country, you would think the Bitcoin Network uses a lot of that 160,000 TWh of energy.  Well, it doesn't.

Peter McCormack: Because, does it not consider what's wasted as well?

Darin Feinstein: That's a different -- I'll get into wasted energy.

Peter McCormack: All right.

Darin Feinstein: But we know the terawatt hours of energy of the Network.  So, of the Network, the Bitcoin mining Network uses 200 TW approximately of energy of 160,000.

Peter McCormack: Danny is quickly working out the percentage.

Danny Knowles: I'm not.  I was looking at climate…

Darin Feinstein: 000.2 approximately.  Sometimes you get anywhere from 0.00014, so 0.14% to 0.2% depending.

Peter McCormack: Negligible.

Darin Feinstein: It's inconsequential.  If you shut the whole network off, nothing happens.  Most large industries, they round off the amount of energy they use globally by 1% or 2%.  That makes the Bitcoin mining network less than a rounding error; it's a rounding error of any other major industry; it's an inconsequential amount.  So, a global basis, any of these people that scaremonger on a global energy basis are committing -- they're being intellectually dishonest.

Danny Knowles: Do you think it's scaremongering though?  We had Troy Cross in recently and he's been in Bitcoin since 2011.  He said he basically fell for the same thing, didn't he?  He did some calculations that end up obviously being wrong, but do you think that's scaremongering or do you think they're just not aware of the calculation they actually need to do?

Darin Feinstein: They know, they know what they're saying.

Peter McCormack: That's why you say a country, because if you say the percentage --

Darin Feinstein: These people are good at marketing.

Peter McCormack: You can say the percentage and put it next to how much BP uses or how much coal --

Darin Feinstein: You can compare it to Christmas lights.  You could pull up these analogies.  What you have is you have all these legacy systems, and they're joined together to stop this network.  They've been doing marketing, they're very well-funded.  They see what's happening and they have internal departments coming up with this; this isn't accidental.  This is a marketing plan against this new technology that's very well thought-out, and they do a very good job. 

Peter McCormack: That's why you'll go to the guardian and then the guardian will say, "This technology that's got a few small people rich, which is used by terrorists and drug dealers, is also using more energy than Norway or New Zealand".  When you start stacking the FUD on top of the FUD on top of the FUD --

Darin Feinstein: They get people.

Peter McCormack: You get people.  Rather than saying --

Darin Feinstein:  What are the facts?

Peter McCormack: Yeah, here's the best accounting system in the world which removes money misinformation, which stops corruption, which hopefully prevents banking collapses, which reduces inflation because governments can't print money, which also enables people under authoritarian regimes to have property rights.  We can stack our own stack, but we don't have to lie with our stack.

Darin Feinstein: Let's hear the truth.

Peter McCormack: Yeah.

Darin Feinstein: By the way, you bring up a perfect point.  The truth is actually our friend here.  All that matters is what's the truth.  What is the actual truth, because all of those stats are in our favour?  It's the misinformation, we're getting hit with misinformation in every angle, and we have been since the inception of this network.  I think one of the problems that we faced, as people that are involved in the Bitcoin Network, is that we found value in a decentralised and distributed network. 

So, what do we do?  Well, we all do our own thing to stop this decentralised use of misinformation.  What are we railing against?  Well, centralised monetary technologies that have corrupted, centralised accounting technologies that have corrupted.  So, we're all trying to stay decentralised.  You can't do that in a marketing war; we're in a marketing war and we're losing.  What you had was different people in the industry, including me, that would talk to a few people and never talk to anybody else, because I don't want to be in the middle of all of this personally, in front of all the maniacs coming after me every day.  Like you, which I don't know how you do it!

I think we saw the kickback the most that I've seen when Michael Saylor and I agreed to set up this Bitcoin Mining Council with a few other folks in the beginning.  I'd been protecting this network for a decade, very vested in its wellbeing.  They came after us, "You're bad guys, you think you're a council of miners and you're going to tell everybody what to think".  If they would have listened to us, the only purpose of what that is -- and you can see we haven't done anything except for put out educational materials and tell you how much energy is used by the Bitcoin Network; the purpose of that was this: they're united against us.  They're really, really good at putting out bad information that's false or misleading.  How do we combat that? 

Well, if one company puts out information and another company puts out information and another company, they're a little bit different and no one listens.  But if everybody puts it out together, they listen.  So, we needed to co-ordinate the effort in terms of the messaging coming out.  I think Michael Saylor, I'll give him credit for this quote, said it the best at one our first early talks.  He said, "We could be decentralised" which is what we all are, "but we don't need to be disorganised" which is what we were. 

So, we've in an organised manner collected information on energy statistics so we can counter this FUD that goes on a legislative level.  And it helps everybody because if American bans this technology, that's not good; that's not good for Americans.  Bitcoin doesn't care; you can't disrupt the code; the Bitcoin Network will move.

Peter McCormack: But it makes it easier for Europe to ban it, Australia to ban it.  It takes the wind out.

Darin Feinstein: Listen, if we could stop it, why not stop it?  By the way, if we can stop it by just providing the truth, well why not do that.  That's what we do; we just put out the actual numbers.  We don't need to spin it; we don't need to market it.  Here are the numbers; the numbers show that what you're being told is a lie.  It's intellectually dishonest what you've been told.  Anybody who compares this network to a small country is framing this on a global problem.  We just talked about what the numbers are; this is not a global problem, not even close. 

By the way, the carbon footprint is the same percentage, because we're using energy less the percent of energy, sustainable energy used by this industry over other industries.  So, the use of our energy for this network, it releases less carbon than this energy would have been used in other industries, because we use a majority of additional sustainable energy sources.

Peter McCormack: Yeah.

Darin Feinstein: I'll give you a good example.  You brought up waste, I wanted to address that and I'll let you ask whatever you want. 

Peter McCormack: Yeah.

Darin Feinstein: Sorry to cut you off again.  The waste energy, and this is the example I like to use: electricity and energy, people confuse them.  They're different.  Energy is used to create electricity.  Electricity is after it's created and then they push the heat through the lines and then you use it.  If it goes too far, it degrades into nothing.  You can only send -- I say 500 miles and then people are, "You can't say 500 miles".  You can send energy a certain amount of miles before you lose too much of it in transmission lines and heat loss. 

The United States, we take 10,600 TWh of energy every year to create all of the electricity on an electrical grid.  All of everything that we're plugged into in the United States is the result of 10,800 TWh of energy creating electricity.  Of that 10,800 TWh of energy, 6,800 TWh of that, over 60%, is wasted; poof, gone.  What that means is the Bitcoin Network, which uses 200 TWh a year, is a fraction of a fraction of a percent of the wasted energy in America.  It's 1% or 2% of the wasted energy, a little more than a fraction of a fraction of a percent, but 1% or 2% of the wasted energy in America.  So, you're seeing these campaigns that pop up that confuse the population that this energy use is destroying the planet.

Now, I'm assuming we all agree there's a lot of real environmental, horrific crimes committed every day all around the globe, massively terrible things.  They release poisons into the ground water, they're using pesticides that run off into the streams and the lakes.  They're doing terrible things to our ocean.  There's terrible, terrible things on an environmental front going on every day all over the world.  Disproportionately, you know who's harmed by that?  Poor people, the poor people who live in centralised conditional areas where there's lots and lots of environmental damage.

The environmental damage that occurs on a yearly basis, it's horrific.  It's not caused by Bitcoin; it's not caused by the small inconsequential amount of energy that's used by Bitcoin.  Yet, what's on the front cover of every article right now in every mainstream media outlet?  Bitcoin energy use.  Who's talking about all of this horrific stuff that's going on across the world?  So, we're really living in this dystopian environment where there's massive environmental crime being committed and they're focused on 0.00018 of the world's energy, which people like me are building in sustainable environments, the majority of the large companies. 

So, it's a nonsensical argument, the articles were nonsensical too.  It's really unfortunate to watch it play out over and over again.  I've had hour-long talks with lots of people and they're like, "The New York Times said this uses more energy than this country".

Peter McCormack: Thank you, New York Times.

Darin Feinstein: That's part of the energy talk and obviously, we could talk a lot about it.

Peter McCormack: I just want to put something in there, because your answer there and the work the Bitcoin Mining Council's done is essentially defensive work, "This is what you've been told.  Here's the truth".  But I'm also really interested in the offensive work.  We had Margot Paez on the show recently from the Bitcoin Policy Institute and we're helping her get funded to run a project.  She is an environmentalist and she wants to do a project, she wants to write a paper studying what's happening here with ERCOT.  You've probably spent more time here than me, but was it two years ago that the grid collapsed because of something to do with the weather and the infrastructure? 

But also there's a need for a balanced load.  Not only on a policy level and an educational level can you go and defend the FUD with regards to how much energy is used; you can actually come back and say, "Not only is the energy use negligible, but if we place mining infrastructure here, we actually stabilise the grid".  So, you have both offensive and defensive arguments.

Darin Feinstein: Very good point, 100% right.  The Bitcoin Mining Council's more of a defensive educational platform.  Then on the offensive, people -- what was the name?

Peter McCormack: Margot Paez.

Darin Feinstein: Margot Paez.  I'd love to see what she's putting together, because that sounds super-interesting.

Peter McCormack: Yeah.

Darin Feinstein: But what you bring up is exactly right.  Here's the difference between the energy used by Bitcoin miners versus the energy used by, let's say, AWS, a big data centre company.  Like you say, if there was an emergency weather event and part of the grid, energy generational facilities collapsed or got turned off, or too many people turn on their power during non-peak hours when they didn't have enough electricity to send around, if there was an emergency event or a controlled load event where there's a load problem, companies like Core Scientific have contractually agreed to shut off in seconds all of the miners.  Why can we do that and why can't other industries do that? 

If we turn off our Bitcoin mining servers, nothing happens; they just stop doing calculations.  Nothing happens at all.  If AWS turns off their data centres --

Danny Knowles:  Ethereum stops running.

Darin Feinstein:  Yes, yes, but no one's going to die.

Peter McCormack: Danny's getting cocky now, he's got a mic!

Darin Feinstein: You'll see consequences that affect state networks that are on servers over there.  But you'll also see much more dire consequences, in that they're running the traffic lights in Austin and every other city in America, they're running the air traffic control towers; their servers are all cited at AWS.  So what happens if you turn off AWS?  People are going to die.  It's going to be terrible; the ramifications are going to be massive.  You cannot turn off traditional legacy industry systems, you just can't.  They have fail-safes for that, they have power redundancies built in, they have generators, they have all types of stuff that makes sure that they never go offline.  Bitcoin miners, we don't care if we go offline. 

So, what we're called is flexible load.  If there's an emergency, you can shut us off first; we'll give the power back that we were going to take; we just won't take it anymore.  So, we're the first line of defence in emergency situations.  What does that mean for an electrical grid on a regional or local level?  That means if you have a Bitcoin mining facility on your grid, your grid is stronger than any other grid that does not, because the first power to turn off is ours. 

Core Scientific, we issued a press release in the last few months on the total number of times we turn off, when we shut off power.  We tell how many times we down power a month and how many megawatts of power we send back to the grid, and it happens often.  They went over ten times last month, a number of times in January.  We'll curtail power, we'll turn it off right away and send it back to the grid.

Danny Knowles: Is that something you sign in the contract with the energy company?

Darin Feinstein: There's different types.  We are right now contractually obligated; most big energy utility companies, they require it and so for the large miners.  I'm assuming all other large miners have contractual obligations to curtail power during emergency events or controlled load events.  There's also economic events, like sometimes power prices shoot up.  We have the rights to shut off then. 

There's really three reasons to curtail power: economic, there's some kind of economic event which is not an emergency; emergency, a storm, something terrible happened in the community; or a controlled load event where the loads get disrupted.  Those are the three different types.

Peter McCormack: Is there a power-down process?  How long does it take?

Darin Feinstein: Seconds.

Peter McCormack: In seconds?

Darin Feinstein: Yes.

Peter McCormack: You can literally just turn them off?  No damage to equipment?

Darin Feinstein: Nothing.  Turn them back on 15 minutes later, 6 hours later; doesn't matter.

Peter McCormack: Amazing.

Darin Feinstein: Doesn't matter.  So, that ability to down power in an industry like that doesn't exist, except for this.  So, we provide that flexible load.  Now, why is flexible load so important?  Well, what are renewables?  Renewables are intermittent, they're not always on.  The wind doesn't always blow, the sun doesn't always shine, the waves get lower.  So, you have this intermittent renewable energy source which people want and the world wants to move more towards renewable energies. 

In order to get more renewable energies on your grid which are intermittent, so they come and go, you need flexible load so you can down power them as the intermittency hits in certain times on renewable energy.  This industry is not only making the grid stronger, we're really subsidising the growth of renewable energy globally.  We're the only private industry today that is subsidising the growth of renewable energies on a global basis.

Peter McCormack: Do you know this Troy Cross and do you know his thesis?

Darin Feinstein: No.

Peter McCormack: So, Troy Cross is a guy who came on the podcast.  He's been on twice now, once with Nic Carter.  He has a whole thesis about how -- he's identified exactly what you said, but actually this can be used to incentivise further investment in renewables.  I know not everyone agrees with this, but what he's saying is there's billions if not, I don't know what the number is, but say billions of dollars of ESG budgets out there that could be directed towards investment in renewables to support mining, to support these grids.

Darin Feinstein: He's 100% right.

Peter McCormack: Yeah.

Darin Feinstein: If you've had him on with Nic Carter, he's a smart guy, because Nic's a genius.  Nic knows way more of this than I do.

Peter McCormack: So, Nic pointed him to us, we did the show, massive amount of interest in it.  From that, we got the two together and from that, that's where we had Margot.  So, Margot's going to do the -- we basically said we'll help get her funded.  She wants to go and run the project.

Darin Feinstein: I'd love to talk to her.  I'll help fund her.

Peter McCormack: We'll set that up.

Darin Feinstein: If I get allowed.

Peter McCormack: She needs $30,000.  We need six people to give her $5,000.

Darin Feinstein: Put me in touch with Margot.

Peter McCormack: She's going to speak to Amanda Fabiano as well.  But she's going to produce a paper that explains exactly what's happened here with ERCOT.  That's going to be something that will not only be evidence for the market for the FUD, but actually you can then take to other parts of the grid and say, "By the way, you should be considering this".  I'll add in what Troy has said; that you can go out to -- his example was the Winklevosses.  What they did is, they made it public, they offset their energy usage. 

But what he said is, "You could offset by mining Bitcoin with renewables, because that drives investment in renewables".  So you've now got ESG budgets, which have been used -- ESG has been used to attack Bitcoin.  You can turn it 180 and say, "Actually, you can point your ESG budgets at infrastructure that builds out green mining and you get a Bitcoin return".

Darin Feinstein: Yeah.  Listen, this all has to come full circle.

Peter McCormack: Yeah.

Darin Feinstein: Because the truth of all of this is this is the most ESG-friendly technology that's ever existed, not just on an energy point, but also on a governance and social point.  It doesn't care anything about your demographics, it doesn't have anything to do with that.  It provides all humans on the planet with banking and private property.  So, not just on an energy basis does this tick ESG notches; it ticks them on every part of the ESG.  It's not just the "E", it's the "S" and the "G". 

So, at some point in the future, as people learn what this technology does, this will be a massive investment for these big ESG funds.  I like that you guys are going down that path.  I'm going to tell you something that's going to blow your mind for ERCOT, and Margot can look this up.

Peter McCormack: All right.

Darin Feinstein: We had a big call with the ERCOT people about this problem; this problem is going to blow your mind.  Because there's so many new renewable energy projects going up in Texas, guess what they're worried about?

Peter McCormack: Too much power?

Darin Feinstein: The price of power going to zero.  That's what they're worried about.  Guess what happens if the price of power goes to zero, the legacy systems that run the baseline energy that you need, so people don't die, they'll go out of business.  So, we're providing too much renewable energy which is going to endanger the legacy energy systems.  Those are the new problems.  So, all of those are complicated too, like how do you not lose your baseload energy because you have so much renewable energy, and you don't have the battery technology to contain it during X amount of cycles? 

Peter McCormack: Is that a bad risk, because you need that reliable baseload?

Darin Feinstein: You need a baseload of energy all the time.  At some point, maybe in 100 years, they'll know how to have energy stored.  Storing energy's very complicated.

Peter McCormack: Yeah, yeah.

Darin Feinstein: But right now you need baseload energy.  Yeah, if you're solely relying on intermittent energy, you're in a lot of trouble, so you need a baseload energy.  Because we're going to have so much renewable energy available most of the day, you still need to make sure the baseload energy's available for the times when you don't need it.  That's not for Bitcoin mining; that's for civilisation, everyone in the world.

Peter McCormack: Okay.  Talk to me about chips, because we're perfectly aware that during times of growth with Bitcoin, getting hold of ASICs can be challenging depending on who you are, and obviously you will have your relationships.  If there was a massive increase in the Bitcoin price, that will drive a massive increase in the demand for more mining facilities, but the ASICs can only be produced at a certain time.  I know that Intel are looking at producing chips, information's coming out about that.  Also, Jack Dorsey made an announcement that they're going to be looking into chips as well.  There's a risk with the primary foundry, I forget, is it TSMC?  Is that the name of it in Taiwan?  That's a geopolitical risk. 

You're probably much closer to all of this than I am, probably looking years ahead in the consideration of the ASICs that you want to purchase.  Where are we at with all this?  We had Matthew Pines here and he was talking about the second-order effects of Bitcoin mining on the energy industries is incredible.  He said it's going to have exactly the same impact on the market for chip production, in that there's a requirement for foundries to be built here to protect the mining industry.

Darin Feinstein: 100%.  Chips are a big problem globally to make sure you have a steady amount of ready-available chips, otherwise none of your electronics work.  I think one of the most interesting things is, do you know what chips are made of?

Peter McCormack: No idea.  Silicon?

Darin Feinstein: Silicon, they're made of silicon.

Peter McCormack: Yeah.

Darin Feinstein: There's always a shortage of chips all over the world, but they're made of silicon.  Do you know what silicon is?

Danny Knowles: Sand.

Darin Feinstein: Sand, sand.  It's the most abundant mineral on the planet Earth.  There's sand everywhere.  How come we're always running out of chips?  The process of taking the sand, the silicon, and perfecting it into a chip is very expensive.  What I'm told, because this made no sense to me when I went down the rabbit hole on this silicon; like you said, I looked at this for a while and I was trying to figure out why we were always running out of chips when they're made of silicon which is everywhere.  So, I started looking up chip companies; I couldn't find anything. 

The manufacturing silicon companies that make the chips, it's almost like they're invisible.  I didn't understand how they made the chips and I was trying to understand this; because, originally when we bought equipment, I bought a lot of equipment from the different various manufacturers.  In 2015 and 2016, and I went to China and I visited all of the different manufacturers of equipment and trying to figure it out.  I kept getting fucked; I'd buy machines and they wouldn't show up, before I started a bigger company. 

There were several reputable brands back then and one of them was Innosilicon.  Innosilicon's offices, you know where they were?  In Wuhan, they were in Wuhan, China.  So I was in Wuhan, China meeting with the Innosilicon people, and they in 2015, and this blew my mind, they had a blockchain museum, a big one, beautiful; this huge blockchain museum with all of the stuff on the triple-entry accounting and everything that had happened up until then.  So, they really understood the importance of this technology before it travelled.  It was created here, but the Chinese really adopted it quickly.  I think if you live in an authoritarian regime, that's what you'd want to do.

Anyway, we would buy chips, we would buy machines and we would order, back then it was 10 TH machines or 14 TH machines, whatever the number was.  The machines would come and they'd be 12 or they'd be 16 or they'd be 9; they were never the same.  So, I was curious why.  Is it the chips; is it the software; why are they all different?  One of the guys that worked at Canon, he explained how you make chips to me that I'll never forget, and I think it's interesting

You get the silicon and you don't just make a chip.  He says it's like a pizza and so all the chips are different when they come out of the other side.  You put all the toppings on this chip and they're really, really small and then they bake, then they come out and you have to test each chip individually to see how fast it goes.  Then they have grade A, grade B, grade C chips and the better ones go faster than the other ones.  That's why, when some of the manufacturers release a model, they say some of them are 110 TH and some of them are 100 and some of them are 90.  That's because the chips are better from one of the runs. 

That's also why you can have these companies that start up to create manufacturing chips and to build their own equipment, they'll do a tape-out which is the run.  If it's their early tape-outs, they can do a $50 million or $20 million -- I don't know how many tens of millions of dollars it costs now to do a tape-out; but they could fail and so all the chips can come out and not work.  That's why these companies failed because their tape-outs, they don't work and the chips didn't work.  So, the chip stuff's fascinating to me, probably not to anybody else.  The silicon that goes into it is widely available, the tape-outs are all distinct and certainly a company like Intel don't need any help on this stuff.  They know how to do this stuff really, really well.  So you have that.

The interesting part on the chips is really on an efficiency scale for Bitcoin mining.  You said the first chips that came out for ASICs, so ASICs I guess 2013, so eight years ago, you look at the efficiency of the equipment in joules per terahash, which is how much energy will create a terahash or one joule of energy creates how many terahashes.  So, the chips that were made from the first run, so the first ASICs that came out, and I think they were around 1 TH, to the chips that are coming out now and how fast they are, the new chips are 40,000% more efficient than the first run of chips eight years ago, and this goes to one of the points you said.  We have a 400 time increase in efficiency in the chips that are now running much faster with less energy. 

So, that second order, where it goes to the rest of the world in terms of other usability of these great efficiencies of these ASICs, that will play out in other industries as well.  So, they're creating new technology that is then going to power AI.  AI is just running computers, very much like a Bitcoin server, very, very fast.  The more computations you can make, the faster theoretically the machines learn. 

So, you have this very close relationship between Bitcoin mining machines and the facilities that they are in, the blockchain infrastructure facilities and how fast these machines have to go, to what's going to happen with AI, because they have to have similar types of equipment.  They have to go really fast and calculate algorithmically how many different consequences there are for each action.  But they're all inter-related and if I had to guess, you will see these things correlate into second-world effects or whatever the technological term is for that.

Peter McCormack: Your history in this is fascinating, because you've seen the industry mature, quite significantly.  You've mentioned today something else; there was GPU mining back in 2011 and then they had the first ASICs.

Darin Feinstein: I missed the CPU.  The CPU, GPU but I missed that one.

Peter McCormack: Then the first ASICs and then wanting to build out professional facilities, and then moving towards the integration with the grids.  Now, we have Intel wanting to produce ASICs and a large number of publicly-traded Bitcoin miners now in existence.  That transition from a nerdy tool, using CPUs and GPUs, to this Intel, how do you take that all in because it's some growth and some evolution of the industry?

Darin Feinstein: Yeah, listen it's a great question, it's surreal.  I was telling people that this is the best accounting technology and they're like, "You're an idiot" for a decade!  So now we have Executive Order, we have Intel in the space, we have publicly-traded companies, we have huge funds jumping in.  So it really is; it's surreal to watch this growth, and we are super, super early.  I think the best example is the internet itself.  I think the internet was utilised by civilians in the 1980s, early 1980s.  There's an article that came out, and I want to say The Guardian, but I don't remember who it was, in 1999, 15 years after the internet was utilised by civilians.  The article said this, "The internet is a passing fad, it's going to go away".

Peter McCormack: It wasn't by Paul Krugman, was it?

Darin Feinstein: I don't know, but if you look it up you'll see who wrote the article calling the internet a passing fad.  And it wasn't just one, it was multiple.  So, we're talking 15 years into the internet and it was a passing fad.  We're 13 years into the biggest, most revolutionary technological innovation, not just for accounting but for everything that touches accounting, like monetary technology.  It's going to take a long time; this is not going to happen overnight.

Peter McCormack: Danny, do you remember the time when there was no internet?

Danny Knowles: Not really, no.

Peter McCormack: Yeah, so I first used the internet in 1992.  I'll always remember, I was 14 years old and we got it at school.  There was one computer and we were all given ten minutes to just go on the internet, go onto Yahoo!.

Darin Feinstein: Listen, mate, I'm going to date myself.  When I was an accountant, the only job I ever lasted -- it was my first job and then I quit; it was in LA.  There was a fire at the LA public library and three-quarters -- I do not know if it was half or three-quarters -- of the books in the library burned.  As a young associate of the accounting firm, we were tasked with recording which books did not burn on a ledger without a computer; we didn't have computers.  So, we were doing it by hand, all the serial numbers of the books and that was my only ever audit assignment as an accountant.  Yeah, it's hard to remember a time.  Do you remember AOL?

Peter McCormack: Of course, I remember it; the disks on it.

Darin Feinstein: Yeah, you had to download it, then you had to plug it into the wall and it would go really slow and it was shitty.  You're like, "No one's ever going to use this.  I can't do anything".

Peter McCormack: And the image would load like that.

Darin Feinstein: That's where we are now.  This is like the AOL of -- we're at that early juncture where it works great and things have been built on it.

Peter McCormack: My dad was an aircraft engineer for 35 years, and whenever he had to prepare for an exam, he'd have his manuals and he'd have a book and he'd be writing things out.  He always wrote everything, even to the point where he would manage the accounts of the house, his finances with a book.  He essentially would write out his ledger of what he'd spent and what he'd got left.  He never went away from that and then we got our first computer and I started to use it.  I would never have done what he did; I always used the computer. 

Then my son, a bit like Danny is, never known no internet.  But my daughter's one step further; she's never really known no screens.  Essentially from the time she could use one, there's been an iPad or an iPhone.  There's things you don't realise, people don't realise, because of mobile phones.  Do you remember before mobile phones when you went to meet somebody?  Do you remember what you had to do?  You always had to be on time, because if you weren't on time, they wouldn't know where the fuck you were; you couldn't get hold of them.  Whereas now, you can be late as shit because you can phone them and say, "Oh, I'm going to be 10 minutes late, I'm going to be 20 minutes late", "Oh, let's meet here". 

You agreed a place -- I remember my first date, I went to the cinema with this girl, I went to see, I'm not going to tell you actually.  But we agreed a time and we met there, because you couldn't do anything about that.  But there's people going to be born now and in ten years' time and they're not going to have known a time where you couldn't send money instantly around the world to anyone permissionlessly.  These are the steps we're taking; this is where we are now.  I think it's always funny to look back at that.

Darin Feinstein: Yeah, those are really accurate depictions of what's about to happen and why the people in Washington need to start thinking like that; this is not going away, ever.  It's like saying the internet's going to go away; it's not.  The internet helps you move information around; this helps you move everything else around, all the ledgers.  Anything in the world that needs a ledger like money, this will move on that.  As you said, it's very pertinent that as the children grow into this technology and learn it, as they grow up, that's what their baseline is.  So, they're going to expect some degree of access and co-operation with the people that are running the country. 

I think the people that see that early and capitalise on that, especially in America, and you've seen a lot of candidates that are now out talking to different parts of these communities; this whole step operation, as you just said, from the beginning with GPUs and then moving through all of the different FUD articles, "It's going to be banned" and, "Silly to be involved in it" to, "The Chinese control it" to what it is now, and it will just keep changing.  But the one thing that's certain is it's never going away, because this is the best accounting technology, which is instrumental to run the world, that has ever been invented.  So, the rest of it is just noise to me; it's going to go up, it's going to go down.  The daily price fluctuations are meaningless and we'll just keep building.

Peter McCormack: How lucky we all are to be right at the front line of this?

Darin Feinstein: Yeah.  Listen, you've seized an opportunity with the knowledge that you have to be here.  Luck is made, to some degree, made by the person that you are and have become, and you have put yourself in the right circumstances.  Yeah, for this time period, we're extremely fortunate to be here during this revolution of technology.  It's like the people that were here with the internet and they created the first companies on the internet.  You'll see those same things happen here.

Peter McCormack: Yeah.  Listen, I'm glad you did this.

Darin Feinstein: I'm glad I came.

Peter McCormack: I've been promising Danny for a while.  I said, "Just wait.  Darin's fucking great, got to get him on".  We will definitely do this again sometime in the future when there'll be different things to talk about.  Look, I really appreciate it; it's been good to get to know you and know you're someone I can ask a favour from and just to talk to you, man.  Do you want to direct anyone listening to anything?

Darin Feinstein: No, I think we've touched on a lot of subjects.  I think right now today, the most important thing going on in our space is to make sure your representatives are pro-Bitcoin and pro-the space and pro-individual freedom.  I think everything fades away if you lose your individual freedom.  So, anything that you can do to make sure that the people that are in your regional or local elections really understand what's at stake here.  It's a shame to see what's happening in the EU, not for the technology because the technology doesn't care, but for the people within those jurisdictions.  So, that would be it, just try to be active.

Peter McCormack: Yeah, man.  All right, brilliant.  Thanks, man.

Darin Feinstein: Thanks for having me.

Peter McCormack: Appreciate it.

Darin Feinstein: Good to see you guys.