WBD590 Audio Transcription

Fighting the Bitcoin Mining FUD with Troy Cross

Release date: Wednesday 7th December

Note: the following is a transcription of my interview with Troy Cross. 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.

Troy Cross is a Professor of Philosopher and Fellow at the Bitcoin Policy Institute. In this interview, we discuss the changing narrative around Bitcoin mining: is it finding its real utility in a bear market as the ultimate auxiliary tool, and how early are we in discovering its range of uses as a tool?

“The story I want to be true about mining is that it strengthens grids, it lowers electrical rates for citizens for ordinary ratepayers, and it helps us green the grid, helps us mitigate methane…those stories were wrong during the bull run because everybody’s just plugging in, now those stories are coming true.”

— Troy Cross

Interview Transcription

Peter McCormack: Good to see you, Troy.  How are you, man?

Troy Cross: Man, I'm doing well, I'm doing well.

Peter McCormack: Your life has changed a lot.

Troy Cross: Yeah, you told me it would change.

Peter McCormack: I thought it would.  I think you're an exceptional character, and I knew after spending that first hour and a half with you I was like, "Yeah, your life's going to change a lot and you're going to be busy", and there I am in Amsterdam at a conference and there you are!  I was like, "What up, Troy?"

Troy Cross: I'll give you just a day in life kind of thing.  This is not a representative sample, but it is the last few days.  I was telling Danny and Jeremy, what was it, Wednesday, I gave a guest lecture at a journalism school class at USC.  That went really well, students stayed after class, prof cancelled his later class and replaced it with Bitcoin discussion with a seminar.  That was another two and a half hours.  The next day was Pacific Bitcoin Conference where I did a panel.  Then, the following day, more Pacific Bitcoin Conference but in the evening, I did a presentation for the Taiwan US Semiconductor Association, or High-Tech Forum, which was really cool, followed by a roundtable discussion with the founder of the largest and oldest exchange in Taiwan, who was classmates with Bobby Lee and was -- anyway, and now I'm here.

Peter McCormack: Phew, we still get mentioned!

Troy Cross: What a crazy -- that wasn't my life before coming on What Bitcoin Did and now it is.

Peter McCormack: Well listen, Troy, it's all deserved.  We had a massive amount of positive feedback when you first came on the show.  The show did exceptionally well for somebody who was a relatively unknown person within Bitcoin.  Usually, there's a correlation between your Twitter following and show performance, but it massively outperformed it; we had loads of good feedback.  So, I think it's all deserved and I'm guessing you're loving it?

Troy Cross: I am.  This is not a life that I would ever choose.

Peter McCormack: It chose you.

Troy Cross: It is thrilling.  It's thrilling, not because I like being a public figure; I don't like that.  That's why I stayed under the radar for a decade in Bitcoin, and have stayed pretty much under the radar as a philosopher too.  But I'm learning and ton and this rate of learning is greater than anything I've experienced since the first year of graduate school.  I've thought a lot about why I'm learning so much and it's I think because the community is helping me.

That show in particular, before then, but especially after that show, people reached out to me and shared ideas and knowledge with me.  Even going into that show, I got a lot of tutoring basically from experts.  I'm not an energy expert, I knew nothing about grids, I know nothing about different kinds of energy production, I knew nothing really about the mining industry, apart from having mined myself; but it was just people in the community that I talked to.  Now you've had a lot of these people on this show.

Peter McCormack: I know!

Troy Cross: Shaun Connell came on the show.  He gave everybody the spiel that he gave me and Margot, and watching the show has been surreal.  Many of these conversations are just versions of private conversations I had with let's say Adam Wright or Nate Harmon.  Nate sent me a DM before he had any followers really on Twitter, before he had any visibility, and it was like, "I have something to tell you about that famous Mora et al paper, about Bitcoin warming the planet more than 2°C".  I was like, "Okay, why don't you give me a call, here's my number".  I sat in my office and we had this two-hour phone conversation, where the first hour was about Mora et al and the second hour was about OTEC and I was like, "This is nuts!  The Bitcoin world has to hear about this".  This was two weeks before Miami last year.

So, we recorded our conversation again the next day.  I bought one of these mics --

Peter McCormack: Nice!

Troy Cross: -- and put it out there.  It got like 1,000 listens.  And then Level39 wrote a piece about it and then "Pow!"  And I realised, "Okay, I can do this for people", not be you, but I can act as some kind of synthesis of knowledge, learning myself but then sharing that knowledge and connecting people with each other, and that's kind of become my role in Bitcoin; not so much as a thinker but as a connector.

Peter McCormack: Well, it is a meritocracy within Bitcoin in that if you are doing something good, people want to hear from you, and it's fascinating to watch.  We take a lot of responsibility with the show.  If you just want downloads, we know who to invite on the show.  We'll do a show with Lyn on macroeconomics and then get Saylor on; it's very easy to get numbers.  But we also recognise there is an opportunity to elevate people up.  We don't take that responsibility lightly, so when we find someone who we think is super-smart, we want them on the show and we feel fortunate that we get to light this touchpaper and watch it happen.

These guests come in waves.  When we were making the show three years ago, it would have been very much a Saifedean, a Pierre Rochard, Jimmy Song, these old-school bitcoiners who've done so much for the industry.  Then we went through this kind of wave of macroeconomics, with your Lyn Aldens, your Luke Gromens, your Preston Pyshes, your Greg Fosses.  And now more recently, it's been this wave of more philosophical thinkers, which has been yourself, we've had Margot, Zell; I mean, I'm not sure he's a philosopher but he's part of the same group of people; Craig, Andrew Bailey, my God, we've got to talk about that.

Troy Cross: I told you!

Peter McCormack: I know!  Who have we got left?

Danny Knowles: We'll get Bradley on, Bradley Rettler.

Peter McCormack: Yeah, got to get Bradley on.  But you go through these waves and you suddenly get all these new interesting conversations, or new things to talk about, which is fascinating, that create these pools of discussion.

Troy Cross: The energy wave, you didn't even mention that.

Peter McCormack: The energy wave.

Troy Cross: Huge energy wave.

Peter McCormack: Well, you've got almost these subcultures of conversation.  So, you can have traditional Bitcoin thinking; you can have Bitcoin tech; you can have macroeconomics; you can have energy; you can have philosophy; we've got this whole progressive movement, people like Jason Maier, and all these different subcultures of conversation, which all add up to this secular Bitcoin disbursed nation state!

Troy Cross: Yeah, network state maybe.

Peter McCormack: Network state, yeah, that's what Balaji would say.  So, look, I think it's deserved, it's been fascinating to watch.  Are you essentially on a sabbatical?

Troy Cross: I've taken a semester of unpaid leave; that's what I'm on right now.  I'm still advising, I'm still doing a little bit of work here and there.  I have to write a lecture for the intro Humanities class, as soon as we're done with this, on Plato's Protagoras.  Why I agreed to this I don't know, they're not paying me!

Peter McCormack: Plato's Protagoras?

Troy Cross: Yeah, it's one of his dialogues.

Peter McCormack: What's that about?

Troy Cross: Well, Protagoras was a Sophist, one of the early people who were paid to teach you how to speak, from the Greeks, they were a democracy.

Peter McCormack: But Plato hated democracy, right?

Troy Cross: Yes, he did.

Peter McCormack: Don't be surprised; I do read!

Troy Cross: I was really surprised!

Peter McCormack: Yeah, I do read sometimes!

Troy Cross: Well, when people say Plato, it's very often in the context of, "The Greeks had it figured out, they're so great, and they're responsible for the democratic origins of the US", and they think of the Greeks as pro-democratic generally because they had a democracy.  But Plato, yeah, he was from an aristocratic family, of course the democracy killed his teacher, Socrates, so he tried to design a state in which his teacher would not be killed.

Peter McCormack: Didn't he want a group of elites that would be voted in to make the decisions?

Troy Cross: Well, not voted in.

Peter McCormack: Well, okay, decided amongst themselves.

Troy Cross: Yeah.

Peter McCormack: I'll tell you why I know this; so, sometimes I read books, and I've always been a proponent of democracy, even though at the moment I think it's under-challenged, especially here in the US, and also actually just across the world, and a lot of people have been critical of my support of democracy.  So, I just went down the rabbit hole of the history of democracy and I read, I can't remember the book; is it Plato on Democracy, or something?  He wrote a book about democracy, or there are papers that have been collected together, so I read it.

Troy Cross: Yeah, he's a famous critic of democracy, and the underlying criticism is great.  It's that, like most people, he says there are three parts to the soul: there's the rational part; there's the spirited part; there's the appetitive part.  The spirited part is like what's behind courage, but maybe also foolhardiness; and then there's the appetitive part.  That's food, sex, indulgence.

Peter McCormack: Love that bit!

Troy Cross: Yeah, right!  We all have all three parts, but they dominate in different people.  Most people are dominated by the appetitive part, he observes; still seems true.  So, do you really want those people in charge?  For him, democracy is direct democracy, all citizens voting, and they're voting on things like whether to kick someone off the island, ostracise them.

Peter McCormack: Well, they're also voting on things they don't understand, they don't have the experience or knowledge for.

Troy Cross: Yeah, and more importantly, even if they understood it, their priorities are dictated by their appetites.  So Plato was like, "Why would we put those people in charge?  Why not put the people who are best suited to rule in charge?"  Those are the people who are dominated by the reasoning part, but they also have the spirited part.  So, how do rulers get selected?  You have to serve in the military first, they're guardians.  And from the guardians, you get the philosopher kings.  They also study maths for a decade; he was big into mathematics!

Peter McCormack: He would have liked Bitcoin.

Troy Cross: He would have loved Bitcoin, yeah.  But it's very scary, it's a recipe for a totalitarian regime, it's absolutely top-down authoritarianism.  Basically he comes up with a system of lying to the populace that helps keep everybody mollified; the "noble lie", he calls it.  So, it's the opposite of the way we think of democracy as educating the citizenry, bringing them in on government.  No.  But he would look at our state today and be like, "Yeah, that's exactly why democracy sucks.  I warned you, I told you, it's governance by the mob, it's governance by the Twitter mob.  You would choose that as your form of state?"

Peter McCormack: Well, what else?  Everything is flawed.

Troy Cross: That's the problem.

Peter McCormack: One CPU, one vote.  Although that was a mistake by Satoshi!

Troy Cross: It was!

Peter McCormack: Well listen, like I say, it's been a pleasure to watch.  Every single person you've introduced and recommended, I've absolutely loved every single conversation, particularly my therapy session with Andrew Bailey, which just was incredible.  It's funny, afterwards we were like, "This show sucked, people are going to hate this".  People loved it!

Troy Cross: It was amazing.  What I loved about that show was first of all, I like both of you guys, so it was amazing.  I wanted that meeting to happen, so it was just satisfying on that level.  But also, Andrew was doing philosophy in a way that we don't do philosophy in the Academy.  This is not what philosophy looks like.  It's actually kind of a game, it's an intellectual game we play.  It feels a lot like chess.  It doesn't intersect real life and in some ways when people ask you questions as a philosopher, real questions about the real world, like we're experiencing epistemic crisis right now, undermining trust in authority, how do we deal with that?  You're kind of lost, because our field is playing these games that don't really connect with life.

But Andrew was on it.  These issues of time and money are real and that was kind of amazing to see, and I just don't want to give anyone false hope that that's what their philosophy class is going to look like, because it won't!

Peter McCormack: Well, listen, he kind of played me in that I realised as we got towards the end, I realised, "You've interviewed me".  I was interviewing him, but he kind of flipped it, he kind of interviewed me, and I had to be vulnerable in it, because I had to expose myself and answer his questions.  And I found myself wrestling with ideas during the conversation.  He was absolutely brilliant though when he got me with the Good Will Hunting!

Troy Cross: Good Will Hunting, yeah, "It's not your fault"!

Peter McCormack: I wanted to cry!

Troy Cross: I did too!  I was like, "What's happening?  Why do I feel moved at this moment?"  It was so surprising and weird.

Peter McCormack: So, that's one of my favourite films ever.  I've probably seen that film 20 or so times, and it's not perfect but it is a brilliant film.  And the way he did that, I was like, "Man, you sneaky fucker!"

Troy Cross: I know.  Well, now you know how it was for me.  I was telling Danny, Andrew's a big part of the reason that I popped my head up publicly; it wouldn't have happened without him.  The role that he played for you, he played for me.  I had to get up that courage and self-belief, and he gave it to me and also helped me think through my ideas.

Peter McCormack: We kind of want to get you all together.  I think what I want to do is when we do one of our little sprints, we'll pick somewhere, maybe it's Wyoming, maybe we'll all go out to Wyoming for a weekend, we'll rent an Airbnb and I want separate interviews with you all, but I want one with all of us round the table.  I want you, I want Craig, I want Bradley, I want Andrew; who have I missed?  Craig's brother?

Troy Cross: Oh, that would be great, wouldn't it?  And there's another person who I would love to have in this thing, but he's not out as a bitcoiner.  But I keep trying.  There's another friend of ours.  I can't really reveal anymore, but let's just say there's another really good thinker thinking about Bitcoin behind the scenes.

Peter McCormack: Well, have the conversation, see if they want to do it, because the philosophical side has now become the thing I care most about.

Troy Cross: It's been great to watch that happen too.  You're doing philosophy, man, you're doing it in a real way, the way that Andrew's doing it, outside the Academy, and I'm loving it.  I mean, I'm loving it.  I go to conferences; it's really high level intellectually, but I'm getting more substance and soul out of these interviews you're having than I am at the professional level.

Peter McCormack: Well, I've been pretty clear from the start, I'm not a technical person, I don't understand it.  It can be explained to me again and again, I'm not technically minded, I never have been, I never will be.  So, I almost feel like the technical stuff, that's in good hands; we have good people.

Troy Cross: We have amazing people.

Peter McCormack: Yeah, they're handling the tech, there are good people who can do the interviews.  Stephan Livera's fucking brilliant on it, he can do that, that's all being handled.  We have the kind of militant protection of Bitcoin, that's all being handled.  I care about people and I care about how people coordinate, I care about how people get the best out of life, that's where I have the most interest.  That's why I like personal stories.

So, now everybody knows about Bitcoin, everyone knows about it on the planet, pretty much.  I mean, there will be some people, but pretty much everyone is aware of it.  We're now at the point where it's materially affecting the world, for good and bad.  I mean, you can loop on what's happened with FTX this week.  That is morally one of the most terrible things I've seen happen.  We've had three Mt. Goxes in the space of six months; we've got to deal with that.  Yes, it could be explained as crypto, but the point being is it affects Bitcoin. 

Troy Cross: It does, and it's like come on, I was there in 2011.  I was there for the whole panics about Mt. Gox and then the real meltdown about Mt. Gox.  And how many other exchanges?  When I went back to see what was in -- to scrape empty wallets, or whatever, I went back to my password manager or whatever, in Google, and all the exchanges where I had at some point had an account, they were all 404; all of them!  It was like BTCE, or whatever, that I'd look up on Wikipedia like, "What happened to them?" 

So, it's not some surprise.  This has been happening all along, it's just amazing that with each cycle, the story remains the same, nothing gets learned; it's just we get more clever about it.  It's like, "Okay, we'll involve more people in government, we'll involve more people in the media, we'll get more famous athletes involved", but the story's the same.

Peter McCormack: Psychopaths and frauds.

Troy Cross: They're just scaling it up.  It's amazing that we haven't learned and, yeah, it's a huge ethical problem.  And I think the debate we're going to have ethically is regulation, of course.  Is this a case for more stringent regulations than we have, to protect consumers?  And that's not a straightforward question, I think.

Peter McCormack: Well, do you know what, we're going to come back to that, because I'm going to loop back.

Troy Cross: I don't have the answer to that question, by the way.

Peter McCormack: Well, I want to finish my train of thought though, is that Bitcoin materially affects people's lives.  I have to use Bitcoin for part of my life now, I have to; I literally have to use it for certain transactions and I'm using it as a wealth preservation.  But I'm not a great use case.  There are people who have to use it to survive.  But also, Bitcoin is becoming so big that it is changing parts of the world.  Let's just use the energy sector as a microcosm.  I see it as doing two things: one, it is changing grid infrastructure; but two, I think it is actually developing the debate around energy, the use of energy, the ethics of energy.

So, there's these big questions that need answering and they're not easy, and the reason you know they're not easy is I will always put out ideas and thoughts I have and I will see the agreement and the disagreement, whether that it climate change, whether that's diversity, all these big things that we have to wrestle with in life and people don't agree, and I love that because it's like, "How do we figure this shit out?" 

Therefore, having the philosophers come in, this wave of philosophers, I think it's happening at just the right time, because I think we're at that point where these big problems need solving.  They didn't need solving eight years ago or four years ago, it's now.  So, a wave of philosophers now is fucking great for Bitcoin.

Troy Cross: Well, I hope we provide value, you know.  I think philosophers don't have any kind of monopoly on insight at all, even on philosophical questions.  Somebody was asking me some ethical question the other day and I posted a picture of my grandpa and grandma and I was like, "I trust these two.  They're dead now, but I would trust their judgement more than any philosopher alive".  My grandpa landed on the beaches in Normandy, he raised a family, he ran a business with integrity, he was a generous neighbour, he knew how to have a relationship, he never ever fought with his wife; they settled things through talking.

I mean, I think about the philosophers I know, nobody stacks up to that.  So, we need philosophers, we need philosophical thinking and insight, but I like the open forum that Bitcoin is.  So it's like, "Philosophers, you think you've got answers?  Okay, toss them into the ring, let's discuss them".  You don't get a philosopher card where you get authority to speak on matters, you have to earn it.  This was the appeal of me coming into Bitcoin back in 2011 even. 

I came in anonymously, I had credibility and authority in the classroom, you try not to use it.  Students ask you what to believe; what is right, and stuff?  I'm always telling them, "Don't trust me, don't believe me, listen to my reasons".  But you can't help it, you just have cachet.  And you go into this anonymous forum in Bitcoin, you're nobody, you're just a nym; there, you have to earn your way. 

So, I'm glad philosophers are here, I'm glad we're having a debate.  I do think we have some more training, I do think that the traditions that we come from offer a lot of wisdom; you saw that with Andrew, we saw it with Craig.  But I also love that we have to earn it and we're not pulling rank.  I never want to pull rank.  I try not to do it in the classroom; I would never do it in Bitcoin.

Peter McCormack: But you can't, that's the other point.  And if you tried, it's like an elastic band is going to ping back at you.  But it's interesting because I think, without realising, Danny and I have a lot of philosophical conversations about what we're doing and who we talk to and where this goes; would you agree?  Without realising, we do.

Danny Knowles: I mean, I don't think they're very intellectual, but yes!

Peter McCormack: But we do.  People don't realise how much we think about this and how much we think about guests and why they should be on and what their purpose is, and we discuss it in detail.

Troy Cross: I realise it, I can see it in the programming.  I can backward-engineer your reasoning.

Peter McCormack: But the really interesting thing about Andrew Bailey, and I think about the philosophers, is that people hold quite strong views, there's a lot of people who hold very strong views in Bitcoin, but what's that saying, "Strong opinions loosely held"?

Danny Knowles: Yeah.

Peter McCormack: And I think that is a very -- I want to have more of that and talking to you or Andrew, I want to know where my blind spots are, where I'm wrong, what I should be questioning.  That to me is more important than anything because like I say, there is a real-world impact from this.  I've got massive questions.  My biggest question of all is, "If Bitcoin fundamentally changes the structure of society, reduces down or limits the size of the state, is this going to be a net negative or positive?"

It's very easy for somebody to turn round and say, "Well, the state's bullshit and all these wars, etc, it will be a lot better".  Sure, but how do we know?  Could we end up in a different dystopian nightmare?  That weighs on me really quite heavy.  So, I need people like you and Andrew and Bradley.

Troy Cross: Yeah, I'm right where you are on that one.  I want to step back to something you said introducing that, where you're constantly looking for your blind spots, you're constantly looking to challenge your beliefs, and earlier on I said, "I'm learning at a rate I've never learned before, and it's because of people".  My new method of learning is not, "Go to the library and think about it", or I don't actually read that much, even in philosophy; I mostly just think.  I read a couple of paragraphs, and then I just think for a long time.  But it's now a "who" thing; I just have a question and I'm like, "Who could help me with that question?"  There's somebody we haven't mentioned and it's somebody you should have on your show; Daniel Batten.

Danny Knowles: I've spoken to him a lot.

Peter McCormack: Is he the guy in Australia?

Danny Knowles: He's in New Zealand.

Peter McCormack: New Zealand, yeah.

Troy Cross: Daniel has completely taken over the methane debate, kind of like Harald but on the VC side; Harald Rauter.  That was incredible!

Peter McCormack: Oh my God!

Troy Cross: Holy crap, that was an incredible show!  You should have seen me at home watching that show, standing up at my office chair like, "What?  This is amazing!"  But Daniel has taken an incredible leadership role, incredible.  Anyway, I reach out to people.  What's the downside of this new way of knowing?  Blind spots that come with ideological stricture, and it is the mob again, right; it is the fear of blowback when you question one of these things that might not just be your blind spot, but blind spot within the community.  You're going to get punished for it, it's going to be seen as a sign of disloyalty when you question a truism within the community, and that's also true in the Academy, but it's somehow different and it can be less intense in the Academy.  As you know, it's very intense, because both of us have experienced this kind of blowback.

Peter McCormack: But it's very rewarding.  So, a couple of things I've experienced is, I think people fear admitting they were wrong about something, they fear it, "I can't admit I was wrong because maybe it's a weakness".  I've found when you own something that you were wrong about, that people trust you more.  And also, you actually get a lot of feedback.  There was a thing the other day where Zuby put out a tweet to do with COVID.  He said, "I'm glad I can stand proud that I didn't call for lockdowns and totalitarian…" and I just replied, "I can't say that and I regret it.  I made a mistake there, I made a judgement mistake".  Every reply was positive, and it kind of lifts the weight off your shoulders. 

I've historically always done this, like good at admitting my mistakes; but some people then say, "Oh, here's another self-own" or, "You're always fucking up".  No, everyone fucks up, most people just don't own them.

Troy Cross: And most people don't record them! 

Peter McCormack: Yeah, in front of half a million people!

Troy Cross: Yeah.  I'm really glad I wasn't on Twitter and had a big following, because my record of mistakes is shorter, I have to do less of that!  You're right, people like it when you own your ignorance.  I'm learning in public about all these issues, and that's gone pretty well for me.  People have responded pretty well, although I am blocked by a lot of people.  Environmentalists have blocked me for various things.

Peter McCormack: Any prominent ones?

Troy Cross: Yeah.

Peter McCormack: Katharine Hayhoe?

Troy Cross: No, I don't think she's blocked me.

Peter McCormack: She's pretty amazing.

Troy Cross: She's pretty cool.  But yeah, I have been blocked.  But it all comes down to my accusing people of defending porn!  My go-to when people say that Bitcoin mining needs to be banned is, "How do you feel about processing porn on servers?  Do you also want to ban that; and if not, why not, because then porn is more valuable than a non-debasable peer-to-peer monetary network that serves the entire world?" and then they're like, "Blocked!"  So, it keeps happening!

Peter McCormack: Maybe they like jacking off more than they like buying Bitcoin!

Troy Cross: Well, that's the tweet that gets me blocked repeatedly. 

Peter McCormack: But it's a good question.  I mean, that's what you want from a philosopher, because you have to think that through.  It's like, "Oh shit, yeah".

Troy Cross: But I think you're right that people acknowledge it, I think that's just the epistemic weakness in our community, is that you fear being public with ideas that might expose a blind spot.  And the epistemic strength is that people, just like Bitcoin is a coordination tool, a tool for social coordination that helps us act together, people share in the private world.  In other aspects of life, they would keep things to themselves, but they bring it out in public and share and that's how we, as a community, learn and do together.  Bitcoin is amazing as a tool of social coordination, but also epistemic coordination.  It's how we share knowledge and how we do things together.

So, I teach epistemology and I teach some of the social epistemology.  Social epistemology is how we know things as a group and I see Bitcoin as kind of a way of knowing as a group that's different from the institution of science, which is the other best way we have, the best way that humans have ever heard of knowing things collectively.  And then I see this blind spot, and the blind spot is not exclusive to us, but there's punishment for divergence from orthodoxy.

Peter McCormack: Maybe that punishment's a good thing, because that will expose the people with the most courage to stand against it.

Troy Cross: That's clever, yeah.

Peter McCormack: Because otherwise, how do you trust the opinion of -- if you just say anything at any time without any punishment, would you get anywhere?  If you had the strength and courage to stand up against something despite the punishment, you might then build a following that go, "Yeah, I agree", and that creates strength around an idea.

Troy Cross: That's kind of what's happened.

Peter McCormack: I'm guessing you get trolled a lot.

Troy Cross: I do, but a lot of my trolls have just blocked me at this point, so less so now!  It's so funny, the trolling in Bitcoin.  We're male-dominated and the trolling in Bitcoin, as you know, it all centres around masculinity.  There's trolling on the left and it also involves cancellation, but the cancellation that happens on the left is all about some relation to bigotry or insensitivity or not getting some part of how to be a decent person.  It's like, "You're a bad person"; that's how you get trolled on the left and, "You're a racist [or] a misogynist", or whatever.  Then in Bitcoin Twitter, it's just you're failing to live up to certain ideals of manhood that I have!

Peter McCormack: You're not a chad!

Troy Cross: You're not a chad; that's it!

Peter McCormack: Where's your beard and side-parting?

Troy Cross: What's weird is that you see ideas get glommed onto masculinity, that to me have nothing to do with manhood.  Like, what do petroleum products have to do with being a man?  I don't understand that connection, but for some reason -- look in my debates, energy sources, like electricity, is less masculine than burning coal or something; I really don't get that!

Peter McCormack: Well, that's why I put out the thing on diversity.  I think we need more women in Bitcoin.

Troy Cross: That triggered people so hard.

Peter McCormack: Of course, because people want everything to be a meritocracy, even though it isn't a meritocracy because you can't have a true meritocracy.  It's impossible to have a true meritocracy.  People are born with certain privileges, whether it's geographic, whether it's chronological, whether it's economic, people are born with privileges.  But I also don't think diversity should be mandated.  I don't think you should mandate diversity, because if you mandate it, you create reverse discrimination; I don't agree with that.

Troy Cross: I'm at a small, liberal arts college, so of course I have seen the extremes and absurdities that come with diversity thinking and I'll give you one.  It's that committees are formed with an eye to diversity; you always need a representative sample on committees.  But of course, the faculty are not representative in their composition, certainly within certain fields, they're imbalanced.  So, you end up assigning people from under-represented minorities to an outsize number of committees, because there's only so many of them to go around, but every committee has to be diverse.

You end up pushing all this work onto the very people that you want to be represented.  And then when it comes time to evaluate their tenure case, they've maybe produced less work because they've done so much service, they've produced less publications, fewer publications.  So, it's like a slavishness to diversity thinking is absurd and I've seen the absurdities that result.  But also, the basic underlying rationale for diversity, it's epistemology actually, although different ones, but the one I see is epistemic. 

We all have different views on the world, we have different perspectives, different ways of thinking.  You want a variety of ways of thinking so that you're more likely to get to the truth, just like you want different sets of eyes on the same parts of reality.  You want to know how people will react to a certain action.  So, to know the world, you want a sampling of human beings to help you and to act in the world, you want a sampling of human beings to help you.  The Bitcoin community's going to have blind spots because of its makeup, unless it's diverse.  I mean, I think the Bitcoin community, broadly speaking, is very diverse.  But if we were just bros, we would have blind spots.

Peter McCormack: I mean, look, I think it's tough to argue there's a diversity, a gender diversity in Bitcoin.  I mean, we get the stats from Spotify; it's 98% male, or something.  But like I say, I don't think it should be mandated.

Troy Cross: I agree.

Peter McCormack: I'm not saying, "We should have a certain amount of core developers that are female or from minority groups", I think it's just using intelligence.  We had it.  When I had my advertising agency, our board was four men, and we used to go to our board meetings and the first half an hour, us dicking about and making jokes and hanging out.  And then I ended up bringing one of the female account directors onto the board, not because through meritocracy she'd earned it; she'd earned it because she was the best-performing female in the company.  But we had no female perspective in the business.

Bringing her into the room did two things.  Firstly, we became a bit more professional; but there were considerations to the operations of the business for women that we had not thought about.

Troy Cross: There you go.

Peter McCormack: For example, I'll give you a couple of examples, in terms of looking after the bathrooms, men are kind of disgusting, we hadn't considered the things that ladies need.  This is a more important one, actually this has got a deep side to it.  We used to have nights out after work, we'd go for drinks, go to karaoke, go for dinner.  We became considerate of how women have to get home from those events.  Men just don't think about it, they just go get a taxi or walk to the station.  There is a more dangerous element for females in considering how to get home.  So then from that, we used to provide taxis.

It's really strange because after that, one of the girls who worked at the company was murdered, which was fucking shocking.  That happened not while she was at the company, it was two, three years after it.  Her name was Sarah Everard, she was murdered during COVID, and she was one of the people at the company at the time.  So, having that woman on the board made us think about things like that, considerations for women that weren't there.  You don't have to be a meritocracy to do that, you just have to use common sense.

If I bring that into Bitcoin, people are like, "No, people on your podcast should be a meritocracy".  Well, if I did that, you wouldn't have got on there, because you hadn't earned your place.  You would have the same 20 people.

Troy Cross: It's your show.  I think what you just said is absolutely common sense.

Peter McCormack: Yeah, it's common sense.

Troy Cross: I don't think there's any part of that that's ideological.  Just to say that having some women on your show is good for both understanding the state of the world out there and how Bitcoin is being perceived, and also for reaching half of the world who are women, I don't think that is ideological.  What does that have to do with politics?

Peter McCormack: Listen, I had a friend over my house, this girl, and she was asking me about the podcast and I got it up on YouTube, and I was trying to find her a show to show her it and she's like, "It's all just white guys", and I was like, "Does it matter?"  She was like, "Yeah, I don't want to hear about men about money"!  That was her point of view.  She was just saying she would naturally be more drawn to hear a woman talk to her about money and that's cool, there's no issue with providing that.

Here we go: 93.8% of our listeners are male.  Look, I get what's going on here.  The people who are triggered by it, what they've seen is a world where diversity and inclusion has been mandated and gone made, and they reject that world of creating this, and therefore anything that encroaches upon that then triggers then.  But we don't have to swing the pendulum from one end to the other, we can walk the middle line and just say, "Look, is there an intelligent reason to do this; and does it benefit everyone in Bitcoin?"  Yes, it does.

Troy Cross: Bitcoin is for everyone, so how would we organise what we do if we really believed that.  I always feel this tension in Bitcoin between -- we have a cultural niche and a political niche too, and then there's our goal.  Our goal is everybody using Bitcoin in some -- I don't know when we get there, but everybody uses Bitcoin as part of their lives, maybe they don't even realise they're using it, maybe they just call it money.  But where we are and where we want to be, how do we get there?  We can't get there by merely doubling down and hyper-concentrating, hyper-distilling the identity that we have. 

You can't, by definition, get to the whole -- the whole word is diverse; that's a triggering word for a lot of people, but I just mean it descriptively.  The world does not look like that stat you showed.  And if you want the world to adopt Bitcoin, you have to build a bridge between where we are and where we're going, and that bridge is going to look like the parts that we don't have, rather than just the parts we do.

Peter McCormack: But diversity isn't just the colour of your skin or your gender, diversity is your life experiences, it's the country you've grown up in, it's the economic climate you've grown up in, whether you've grown up with one or two parents.  It's a diversity of experiences that you want, experience of thought.  I think people immediately think it's that one thing.

Troy Cross: They just go demographics.

Peter McCormack: Yeah.  I mean, look, that was partly my fault because I did focus in on that, but at the same time --

Troy Cross: I know what you're saying.  The obsession with demographics can be grating.  But it's more like we have to build bridges to the parts of the world we don't resonate with.  I talked to somebody and they were like, "I'm not one of the kind of people who uses Bitcoin" or, "I see the people who use Bitcoin and I'm not one of them", so they're seeing it as an identity marker.  It's like a fashion statement.  It's like, "Am I one of the kinds of people who would participate in that?" and then they look at the groups, some of the demographics, some of the ideology and they're like, "I'm not one of them".

That's, we know, a stupid reason not to Bitcoin, because it's not about us, it's not about the group we're in; it's ultimately a very useful tool and it can bring about a better and more just and more efficient world, an abundant world.  So, they're being blocked by their own perception of their misfit with our community, and what you're doing by diversifying your show, if I can use that triggering word, is you're removing that block for them, you're allowing them to see what Bitcoin already is: peer-to-peer money that's non-debasable, that allows anyone to store value, allows anyone to transfer value to anyone else.  That's the pure, abstract conception of it and you're just letting them see that when they have something in the way.

Peter McCormack: Well, this is why I am so excited about Jason Maier's book.  I hope, I really hope it's going to be a high-quality book.  I've not read anything that he's written, so I'm putting a lot of trust in it, and I would say to anybody who is politically right and into Bitcoin, this is the most important book that has been written for them, for you, not because you need to be convinced of left-wing politics or ideas, because what you don't want is Bitcoin being held back by left-wing politicians or media.  So, if they are being influenced, policymakers or media are being influenced by this, you are not going to convince that person to become -- well, you're going to struggle to convince a large swath of the population to come to the right wing.

Troy Cross: Exactly.

Peter McCormack: But what you do want is you want Jason Maier talking to Elizabeth Warren or AOC and saying, "No, this is where you're wrong.  You care about the environment, look what Bitcoin can do for the environment.  You care about the wealth gap, look what Bitcoin can do for the wealth gap.  All these issues that you care about…" and they'll listen to Jason and they'll listen to Margot, but they're not going to listen to Saifedean Ammous and they're not going to listen to Pierre Rochard, and that's no discredit to those people.  They're brilliant people who've done brilliant things, but you have to speak to people in their language, and that's why that book is important, because you want Bitcoin adoption, you have to accept that it's going to be a secular Bitcoin world.

Troy Cross: Yeah.  I'm thinking about A Few Good Men and, "You want me on that wall"!  You want Jason on that wall.  Let me push back a little bit because we're in this hyperpolarised political environment.

Peter McCormack: In America.

Troy Cross: In America.  Right, good call.

Danny Knowles: I think it's polarised everywhere else, it's just worse here.

Peter McCormack: It's nothing like this in the UK.  In the UK, we wouldn't politicise charging $8 to use Twitter.

Danny Knowles: That's definitely true.

Peter McCormack: Every single issue is politicised.  It's like, "Here is the current thing.  Are you against it or are you for it?" and that's what it is here.  It's not like that in the UK.  COVID was not politicised; the environment isn't politicised; this doesn't happen and it's less fight, fight.  And I know why.  It's because we don't have two-party politics, we have multiple parties, and we don't have mainstream media channels aligned to those parties, whose interests are based on those parties.

Troy Cross: As I recall, you kind of do.

Peter McCormack: Not entirely.  It's very different.  We don't go, "BBC is the Labour Party and Sky News is Conservatives", it just isn't.  They will criticise each party.  The mainstream media here is essentially entertainment op-ed channels for the political parties; we don't have that.

Troy Cross: Right, but here's the thought though, it's the same challenge facing any politician.  You can play to the base and get your base out, or you can reach across the aisle, and Bitcoin has that choice.  And in this political environment, if you're just thinking about the reproductive rate of Bitcoin, its memetic success, there's a case for reaching across the aisle that's kind of been my perspective the whole time.  But there's also a case for hard identifying this thing, Bitcoin, with a particular ideology that has a lot of energy and adherence behind it. 

So, I can understand people who want to wed the Bitcoin identity with this strong political identity, because that's got energy behind it, so I get it.  And for me, it's just more a matter of, yeah, I think that ultimately doesn't reflect the truth of Bitcoin.  It's not so much strategy as Bitcoin itself, it's just that code and the set of practices we have around updating and maintaining that code and running it.  And that itself has far more possibilities, a far bigger frame and it's going to change our world in a more expansive way than this narrow ideology into which we're fitting it.

I understand strategically why you might want to double down on a political identity in this environment, because lukewarm politically is not a good place to be, you need to pick a side and run with it for memetic success.  But the true and underlying deep nature of Bitcoin I feel is bigger than our current political divide, certainly bigger than any ideology within it, and it's ultimately a tool for improving the world in ways that we'll look back on and an identification with a particular party or particular point of view would just seem absurd.

Peter McCormack: Yeah.  Not if you're a Bitcoin podcast host; you want to be lukewarm politically!

Troy Cross: Okay!

Peter McCormack: Because you want to be able to talk to everyone and understand where they come from.  Look, there are always inherent biases, that will naturally exist.  But if you want to speak to as many people as possible, you've got to be as lukewarm as possible.  That isn't by design, it's just what I am.

Troy Cross: It's just what you are, yeah.

Peter McCormack: But the interesting thing about the politics now is that I actually don't believe that Conservative politicians are really Conservatives and I don't believe Democratic politicians are political traditional Democrats.  I think what these people are are now grifters.  They have found a cheat code to the system and the system incentives are designed in a way where they actually don't serve the people who elect them; they serve self-interests, they serve lobbyists, people who pay them.

So, if Bitcoin will break that down, it will break it down anyway.  If Bitcoin breaks that system because the money's so good, it's going to break it down, so meet them where they are; let's meet the politicians where they are and I think it will naturally bring people across the aisle.  We saw that with Gillibrand and Lummis and we need more of that, because the incentives will change.  Once you get rid of these financial incentives, this lobbying, who pays you, because you have better money, then you will have to serve the majority of the people; you won't be able to manipulate them, I hope!

Troy Cross: I hope you're right.  I think we're seeing the polarisation in Bitcoin on the Hill and some politicians will answer your calls and others won't, or emails, and that's getting more and more partisan in its divide; it's not entirely partisan.  We see fundraising letters, for instance.  I read a fundraising letter from Jared Huffman, one of the people who wrote one of the letters to the EPA asking for more regulation; a fundraising letter, "We're fighting Bitcoin mining, this threat to the environment". 

Once you start writing fundraising letters on an issue, Elizabeth Warren, I don't know if she's fundraising on it but she's certainly vocal about it, then it makes it hard for your fellow party members not to fall in line and step up because, look, you're creating a moral panic basically, and then you're raising money on that moral panic; instil fear and then use that fear to raise money.  We haven't seen that done on the Republican side and we have seen it done on the Democratic side.  So, I think we're still in the zone where we can put the brakes on because there's still a chance to educate. 

Actually, the OSTP report, I won't rehash what you did with Nic, I thought Nic was awesome on that; but I was much more optimistic than Nic actually in my reading.  I agree with him on all the facts, but I disagree with him on the interpretation of where we're at.  That report was a call for better studies.  Yes, they cited de Vries; yes, they cited Mora in a survey; they were clear that none of this was good science, and that's why we need to gather data directly from miners, we need good work on what the emissions profile of Bitcoin is.  And their little thread of, "If we can't get this thing in line with our goals, we're going to have to do something, either at the legislative level or at the executive level", that thread was one sentence in the report.  But it didn't have a timeframe on it and basically it was like, "Come talk to us"; that's what I saw it as, "Come show us how your trajectory as an institution, as an industry, is compatible with our Administration's climate goals, getting to a net neutral".

I feel like the report was FUD-laden and I will agree with all the line-by-line critiques, but actually saw it as, first of all we got several shoutouts to things that we never have before from a Democrat, never have before.  We now have the Office of Science and Technology Policy saying that mining on landfill methane is more likely to help than hurt our climate goals; we have them saying that we need the large flexible loads in grids.  We never had this kind of admission before.  We had them dismantling Alex de Vries' Carbon Emissions Per Transaction stat; they dismantled that in the OSTP.  No environmental group, no politician is ever allowed to say that again, because we say the Biden Administration debunked that shit.  That's a huge advance.

Anyway, we've got an in.  We've got a moment here.  The Office of Science and Technology Policy has opened the door for us to show things.  And the study that Harald Rauter is doing with Margot, with Marisa is exactly what we need, an LCA on methane mining.  We need rigorous work on the claims that our industry is making about grid balancing, about flexibility, decarbonising, about using waste heat; we need rigorous analysis that we can bring them, and we need our own projections of where Bitcoin use is going.  Then I think we can keep the two sides together, we can keep Bitcoin from becoming just another casualty of the politicisation of everything, the polarisation of everything.

Peter McCormack: In this time since we've done that first interview, when was it, six months ago?

Danny Knowles: In February, we were just talking about it.

Peter McCormack: February, what's that, fucking ten months?

Danny Knowles: Yeah, isn't that crazy?

Troy Cross: Actually, it feels like ten years!

Peter McCormack: Damn!  In that time, how has your understanding of Bitcoin changed; what has evolved in your thinking?

Troy Cross: Oh my God, I mean so much.

Peter McCormack: I mean, I'm a philosophy teacher, so I learnt from you!

Troy Cross: I mean so much, there's no way I can boil it down.  I can tell you what's changed in the way I think about mining.

Peter McCormack: Please do, yeah.

Troy Cross: I think that we were in a moment, we were in a particular moment that was unrepresentative of what mining is in its essence, and that moment was characterised by really three things: low electricity prices; an incredible run-up in Bitcoin prices themselves from whatever it was, $3,000, to $69,000; and the China ban, China banning mining, which made mining ungodly profitable.  And in the middle of this bull run, there was a panic to get hold of ASICs, because they essentially printed money for very cheap.

That led to a migration of mining to the US and Kazakhstan, but mostly in the US because that's where we have deep capital markets.  Deep capital markets; what does that mean?  That means that people could borrow a shit ton of money and get out over their skis, which is what happened, right.

Peter McCormack: At very low interest rates.

Troy Cross: At very low interest rates.  I mean, why not borrow fiat and then buy a money printer and then plug it in somewhere?  And then the US also has all this kind of aging infrastructure.  It doesn't have a lot of buyers of power, aging industrial infrastructure, ironically because the industrial manufacturing had fled to China.  So, we fed them our industrial manufacturing and emptied out factories, leaving behind substations and transformers and access to hydro and stuff like that.  Then they banned mining and then the miners come over and plug into the hollowed-out solution.

Peter McCormack: It's fucking amazing, isn't it?!

Troy Cross: Yeah, exactly.  But those were mostly fossil, right, some places coal plants, other places natural gas plants.  It's where we had available places to plug in, and you just plugged in, whatever.  So, we saw all of these miners looking for places.  And then this freaks out the Sierra Club, because they are looking at these aging powerplants and they see, "Oh no, it's not shutting down on schedule because Bitcoin miners are moving in".  Then they see the number of applicants, so the potential interest, and they're like, "We're going to blow through all of our climate goals because we're going to keep these fossil fuel plants open".

They never think, "This is a unique moment in Bitcoin's history.  We just lost half the hashrate from China, making it twice as profitable to mine in the short run.  We don't have enough ASICs to go round, so the profitability of a particular ASIC is insanely high.  Of course, that is a supply chain issue that will essentially ease.  But also, because of COVID, the supply chain issues are bad across the board for chips", so we were in this perfect storm moment that led to mining just being about finding power, not cheap power, and we see what happened with the contracts that were signed in that period.  You sign a power contract; when you are desperate to plug in machines, you don't have the leverage to necessarily hedge against the possibility that power price goes up.

Then, what do we see?  That's when we get reports that are based on that moment in time as the essence of Bitcoin, "It's just going to grow, grow, grow", and a lot of bitcoiners too echo that, because they're insanely bullish.  You get the tweet that, "Bitcoin's going to $500,000 or $1 million a Bitcoin", in which case the ASIC supply still won't be able to catch up, it will still be profitable to plug in mining anywhere.  So, the blind spot here for bitcoiners is not thinking, "We have bubbles, they pop".  You see it now in bankruptcies throughout the mining industry.  I'm thinking about the meme, the handshake meme, between bitcoiners and the environmental critics, they both agree that mining is going to blow up 20-fold and use all the electricity in the world, they're both unified in that agreement, and they were both wrong.  Their blind spot is not seeing how anomalous and different that particular moment in history was, and instead projecting out that trend in the future. 

It's the same thing that the World Economic Forum and Newsweek did back in December 2017 when they said we would use all the power in the world by 2020; same fricking mistake again.  Just like the way exchanges keep collapsing and people keep leaving their Bitcoin on exchanges and then losing it, and they never learn the lesson seemingly that, "Not your keys, not your coin".  Also, the critics of Bitcoin seem never to realise that during a bull run, that is not representative of Bitcoin's path, it's not all going to be like that, and they just project it out.

So, what have I learned about Bitcoin since then?  I mean, I saw this before the collapse and I've been saying this for a long time; I used the dung beetle metaphor last time I was on your show, "It's going to go into the crevices of price, it's going to be extremely price-sensitive".  All the price-sensitive kinds of mining are pro-social.  That means it can use waste energy, whether that's on landfills, whether that's flared gas, whether that's stranded solar and wind.  The cheapest forms of energy are forms of energy that are the best for the environment, and the best for the grid.

Peter McCormack: Amazing.

Troy Cross: Isn't that incredible?

Peter McCormack: It's incredible.

Troy Cross: So, I've been saying that for a long time, but it wasn't really true because of that moment in Bitcoin history.  What mattered is that you found a place to plug in and everybody was saying to me, "We'll never mine on solar, it's intermittent, it's unreliable".  We've got a lot of solar haters in the Bitcoin community.  But I was like, "Yeah, but we'll be able to tolerate some downtime", and they were all like, "No, you have to mine with 100% uptime or it's not profitable".  They were right for the particular moment we were in.  Because there was a constraint on the ASICs available, each ASIC is worth a ton.  It's printing money and there's only so many to go around, so there's a lot of depreciation there that you have to cover when your ASIC is $15,000.  You've got to get $15,000 before it's phased out.

But ultimately we know that the cost of an ASIC is going to trend towards the cost of production, otherwise more people will just keep producing ASICs.  It doesn't cost that much to produce an ASIC, and we know that there are going to be more and more old models in the fleet left around, I guess; S9s are basically junk now, but not completely.

Peter McCormack: Not completely.

Troy Cross: Because they're still printing money.  And if you have excess power, why not plug in an S9 rather than not plug it in?  And if that's only six hours a day where it's negatively priced, or 1 cent a kWh, why not do it rather than not do it?  So, the uptime requirements, I got pushback on that from the Sierra Club from the environmental side, "You need 100% uptime, you can't play this flexible role".  I got the same pushback from the Bitcoin community, "We'll never be able to mine on solar, we need 100% uptime".  What happens?  The CapEx requirements for mining plummeting; the ASIC supply chain easing; the difficulty skyrocketing, I called this one.  People were like, "Difficulty can't keep going up, we're dying", and I was like, "No, it will keep going up, because have you seen how many machines are on order?  Those machines are going to be plugged in rather than not plugged in if we can find cheap power for them".

So, what I've learned about Bitcoin mining is how peculiar that particular moment is in time, that run-up, and how different it is from Bitcoin's I would say true nature over time, which is the dung beetle.  It is extremely price-sensitive and it is extremely pro-social, pro-environmental.  And then it will be false again, all those things I just said, if we have another crazy bull run.

Peter McCormack: That's the way it is.

Troy Cross: That's the way it is and that's kind of what you're buying when you're buying an ASIC; you're kind of buying a hedge for a fast run-up in price, and you're betting that the supply chain for ASICs won't be able to supply ASICs at the rate that they need to so that you will be able to mine profitably on even expensive power at that time.

Peter McCormack: On that pro-social side, how far away do you think we are from being at a point where Bitcoin mining is a net negative for the environment?  When I say net negative, net negative with emissions, because we have so many interesting projects.  We have Bitcoin miners being part of the grid and part of the grid being supplied by renewables; we have the work being done by Adam Wright with regards to landfill sites.  Are we trending towards the point where we would actually be able to say, "There is a net negative; mining is a positive for the environment?"  Once we knock that one down, Elizabeth Warren's fucked there, she's going to have to come up with something else.

Troy Cross: We really need good academic work.  The truth is, I can't answer that question with any kind of authority.  But let me give you some considerations.

Peter McCormack: Tell me about the journey where we're already at.

Troy Cross: Let me tell you about the journey, okay.  So, one resource here I got I have to shout out is Daniel Batten's stuff, because he thinks it's two years.  He thinks in two years alone, we will be in net carbon equivalent neutral to negative.

Peter McCormack: Not everyone agrees with him, I've seen it challenged.

Troy Cross: Exactly.  So, I think the only way to settle this is with a true, deep study of all the inputs to methane mining on landfills.  Those machines are huge that treat the gas that spin the turbines to generate electricity with the gas, and then the miners themselves.  You have to look at the inputs to that entire setup.  And then, what is their lifetime; how fast do they break down or need maintenance?  And then you have to amortise that for their carbon footprint, or whatever, over the lifetime of the operation.  So, that's a rigorous analysis.  I'm meeting somebody from the University of Texas, who does this for methane flared gas mining, or flaring, I should say, already does this LCA stuff at UT Austin, but he doesn't know anything about mining.  Actually, someone from the White House put me in touch with him.

Danny Knowles: Flex!

Troy Cross: Flex, yeah!

Peter McCormack: All right, big-time Charlie!

Troy Cross: I'm just one of the many people, I think, that the White House reached out to to talk to.  But this is just an academic who works for the White House who puts me in touch with somebody else.  But that's what we need; we don't have an answer.  But let me give you some of the other open questions that help towards that.

So, we have this paper written by Josh Rhodes, who is a legit energy expert, scholar, for Lancium through his shop, IdeaSmiths.

Peter McCormack: Who's Josh?

Troy Cross: Josh Rhodes?

Danny Knowles: Don't know him.

Troy Cross: Should look him up.

Peter McCormack: Should we have him on?

Troy Cross: Quite possibly.  He's not a bitcoiner.

Peter McCormack: Doesn't need to be.

Troy Cross: He trashes Bitcoin a lot on Bitcoin Twitter.

Peter McCormack: Let's get him on then.

Troy Cross: He wrote a paper for Shuan and the others at Lancium, and recently he reiterated on a panel -- you know Spencer at Asana Systems?

Peter McCormack: No.

Troy Cross: Okay, there's another possible guest.  But he repeated this on a panel with Spencer and a couple of others recently, so I think the conclusion, at least Josh still thinks it holds.  The conclusion is, "How much flexibility do we need in a data centre in ERCOT in order for it to be net carbon negative?"  So, flexibility is the amount of downtime that could be called upon by the grid.  The more flexible the load, the more the grid benefits because it can shut them down when it has peak demand so they're not adding to peak.  But it gets more revenue from the times when there's not as much demand, and that revenue allows them to build out new generation.  And the generation that they're building out is largely renewable in that grid; they're adding wind and solar at an epic rate.

So, if you can give more revenue to the system to build out renewable, then you are adding load on the system, critical load on the system, then you'll be net negative.

Peter McCormack: Well, has the work been done to look at the inputs for the creation of the renewables, because that's one of the criticisms that comes from people who think the renewables stuff is a myth, in that what you require to build wind turbines, to build solar panels, you need coal from solar panels, then you have to ship them from China to the UK; have the inputs been included in that work?

Troy Cross: I'm not sure if it's in Josh's work, if it's in this number that I'm about to give you.  That's something maybe to ask Josh.

Peter McCormack: That's an important question.

Troy Cross: Yeah, of course.

Peter McCormack: Because, I don't have an answer for that.  When somebody says --

Troy Cross: Well, okay, since our previous show when you kind of asked me this question and I was like, "I don't know", I did look up a ton of sources on what the inputs are, and what's interesting is, there's a range.  It depends on how and where things are made.  The materials are changing, the methods are changing, whether the recycle is changing; everything is changing.  You even mentioned coal from China for solar; well, we can make solar panels here in the US and we do.  So, basically everything is up for grabs.  What I want to do is, I really want you to interview Nick Morley, I don't know if you can.

Peter McCormack: Why do I know his name?

Troy Cross: Nick is awesome.  He's one of my tutors.  So, long-time solar guy from Australia, solar engineer, but now he's working for a bank in Singapore.

Peter McCormack: Where's he based?

Troy Cross: Now in Singapore, he just moved to Singapore.

Peter McCormack: There's more and more reason to go to Singapore at the moment, Danny.

Danny Knowles: It's a short trip for me!

Peter McCormack: Yeah!

Troy Cross: So, Nick is the one that sort of helped me, put me on to the sources analysing the inputs to all of these forms of renewable energy.  It's varied, but let me say that the critics of those inputs take the most ridiculous estimates.  The energy that's required for building solar panels is paid back very quickly, the energy for wind is paid back very quickly, the energy for batteries is paid back very quickly, and there's a lot of FUD around that question.  I think you should really talk to an expert on it, you should talk to Nick.

Peter McCormack: Okay.

Troy Cross: But let me get to the number that I'm getting from Josh, because since Josh isn't a Bitcoin fan, it's not about whether we buy this number, it's about whether the Elizabeth Warren's out there, she's just whatever, going down to Texas to figure out what we're doing, this is the number that he gives; 85%.  If we can hit 85% uptime or less, that's net decarbonising for the ERCOT grid.  So, I was just on a panel with Jason the other day and I looked at Riot's uptime for the recent months.  Three months ago, their uptime was 50%.  Remember when we had that grid crisis?

Peter McCormack: Yeah.

Troy Cross: They turned off for a lot of that.  Then the other months are like 60%, 70%, 80%.  All the recent months are under 85%, and that's Riot.  They're not the company you think of when you think about decarbonising the grid, but they provide a lot of downtime that is a huge benefit to the health of the grid, but also to the efforts to decarbonise the grid, whether they want it or not.  And they are hedged against that downtime with contracts, contracts that anyone could buy and that are sold to them by whatever, hedge funds, whatever's on the other side of that trade.  And Riot did really well during their low uptime month, not on the Bitcoin side, but on the hedge side.

Peter McCormack: I know.

Danny Knowles: I think it was about $10 million they made during that time just for being offline.

Troy Cross: It's crazy, but of course they got taken to task for that; even in the OSTP report, Washington freaked out, because it's kind of like they're selling shovels in a snowstorm, or something like that, at an exorbitant rate.  That's how it was perceived in DC.  But as far as I can tell, looking into it, they didn't take advantage of anything that anyone couldn't have taken advantage of, and their counterparty was not ratepayers, but hedge funds, or other institutions who were on the other side of that contract basically, betting that the power price would be low.  They basically bought an insurance product.  They bought flood insurance and then there was a flood.

Peter McCormack: Yeah, those bastards!

Troy Cross: We're going to need analysis of how much flexibility Bitcoin miners need to offer in order to be net neutral, in every distinct grid setting, because the ERCOT setting is different from the CAISO setting, it's different from any other grid around the world.  So, there isn't a magical number of how much flexibility you need in a grid to be net neutral.

Peter McCormack: But a case study that proves it can be done is a case study -- I mean, when I hear about what Adam Wright's doing, and then I look at the UK, which doesn't have a particularly pro-Bitcoin stance, the banks are shits about it; the government, you've got a few people virtue-signalling they're interested in cryptocurrencies, but there's nothing really happening.  But imagine I can just ship Adam Wright into the UK and say, "We can solve this issue you have with landfill sites"?

Troy Cross: Well, you've got Scilling Mining there.

Danny Knowles: Have you seen them, in Ireland?

Peter McCormack: Oh, they've reached out to me, yes.

Danny Knowles: I've spoken to them a little bit.

Peter McCormack: Yes.

Troy Cross: You should interview Mark.

Peter McCormack: Yes, we should.  But we need this, we need these case studies to go, "Okay, that's one of your criticisms?  Well, you're wrong.  This is what we do".

Troy Cross: Let me give you another one; it's heat, it's waste heat.  So, I'm talking to miners in Northern Europe and they're using grid mix.  Grid mix is pretty much renewable, but they sell their heat and they're using heat for district heating, lots of homes using the same heating system.  That low-grade heat actually helps their heat pumps to work in the winter.  So, it's not like they're not using heat pumps, but they're using resistance heating as a precursor. 

They're also using it for, I mean all of these things that you would ordinarily use heat for, so heating greenhouses to grow food; heating greenhouses to grow flowers; for drying wood; for distilling whiskey; for paper processing, paper mills use low-grade heat.  Basically, any industrial application of low-grade heat could have a miner in line.  100% of the energy that goes into a miner comes out as heat.  It goes in as electricity, it comes out as heat.

Now, if you ignore that, you'd be like, "Bitcoin has a carbon footprint".  But if the footprint already existed in the form of a resistance heater and you've simply substituted in a miner, you have carbon neutral mining, even though you are responsible for releasing carbon; carbon neutral relative to the heating without mining.  So, we have to quantify that and track that and that's tricky, that's not part of the accounting.

Cambridge's site, first of all Cambridge does not include off-grid mining, and now almost 3% of mining is off-grid.  Actually, I shouldn't say that; almost 3% of mining is, I think, on gas, on flared gas, mostly flared gas.  A much, much greater percentage is off-grid, meaning it's behind meter at a dam or at a windfarm or at a solar farm.  The way that Cambridge is calculating the number of Bitcoin's impact is looking at basically your zip code, like what region are you in power-wise, and what's the average mix of that region, and then how much power are you using.  They estimate which region you're in by looking at your IP address from the pool, which could also be wrong.  You could be using a VPN.  But also, are you an average consumer in your region?  Not if you're parked behind meter.  If you're parked behind meter at a hydro plant, your power is green while the grid is not.

So, there's a lot we have to do to address the question of what Bitcoin's carbon footprint is; and the truth is, and this is why I just said, "I don't know", to your question, I don't know what the footprint is and I don't know when we hit carbon neutral.  I think we need better accounting methods and we need case studies.  It's basically, we aren't built, our epistemic machine is not built to quantify the impact of Bitcoin, it's not built for that.  And then look at the substitution effects. 

We have money that goes into Bitcoin, I've said this on the show before, what does it not go into?  Where's the capital coming from?  If it's the S&P, we're already decarbonising, because the emissions impact is lower than it would have been.  Is it gold?  Well, I think our carbon emissions profile is probably greater than gold's per unit of value, but we don't have the other effects of gold mining, which are chemical pollution, all the tailings in pools.

Peter McCormack: And propping up dictators.

Troy Cross: Propping up dictators, right.  What are you substituting for?  Since Bitcoin is a record of the past, a monetary network, a store of value, it plays a lot of different roles.  To what extent are we replacing the petrodollar and the US Military; to what extent are we replacing the banks and Visa; what do we subtract out?  When you come up with an electric car, we come up with footprint pretty easily, because it's a kind of footprint.  We know what the impact of cars are and we know what the impact for an electric car is and it's like, "Okay, if the electric car uses less over its lifetime, which I think it does, we can just look at the difference and that's how much carbon you're saving.

But with Bitcoin, we don't have a set class of alternatives to compare so we can just subtract and see the difference.

Danny Knowles: But even an electric car though, you have to take into account the energy mix for that, right, because if you're charging it on a grid that's powered by coal, then…?

Troy Cross: Exactly.  So, the IEA analysis of electric vehicles has different components.  One component is the parts of the car that aren't the battery; then there's the battery part of the car, what emissions are required for that; and then there's how much emissions to charge it over its lifetime, given a certain grid mix, given a certain amount of miles you drive.  And then, for the gas car, the same thing minus the battery; how much did it cost to manufacture; how much emissions for its manufacture; how much emissions come from the gas and the supply chain to get the gas to you.  Then, that's also going to be dependent, do you live in Saudi Arabia; how far does the gas have to travel, etc? 

So, it's hard to generalise, but it looks like even including everything, if you drive more than 10,000 miles with the car, that's where you hit for a typical electric vehicle, you hit the flip-over point.  Before 10,000 miles, you have a bigger footprint with an electric car and after, you have a lower one.  So, the more you drive, the further you get ahead of the gas counterpart.

Danny Knowles: Got you.

Troy Cross: Anyway, you see the comparison?

Peter McCormack: I do, yeah.

Troy Cross: You have gas, you have electric; if Bitcoin is the electric vehicle, what is the gas vehicle?  And because Bitcoin is not like anything else, which is why it's bloody hard to explain this thing, then what do we compare it to to do our maths?  We're intellectual pioneers here in trying to find the comparison, trying to find the footprint, doing it rigorously, and all I can say is we're just at the beginning of that process, but it's extremely hopeful.

Peter McCormack: Well, it puts this other pressure on now that we need the Bitcoin price to grow, we need increased adoption, because adoption can increase the pace of change for integrating Bitcoin miners in landfill sites.  We need further adoption, we need the price to grow.  I don't think it's probably been particularly helpful that these scams and frauds that have crashed the Bitcoin price over the last year, they've not helped us.

Troy Cross: I disagree.

Peter McCormack: Okay, tell me.

Troy Cross: I think it's good.  The companies I'm advising are going to hate me for saying this, but I think it's great that the whole mining industry is in pain.  The pain isn't great, just like these consumers are suffering by being ripped off by FTX, I feel for them; but I'm glad that FTX crashed, otherwise it would have just crashed later.  And I think we're seeing a purification within crypto.  We're getting the dross off and we're seeing what's pure, and it looks more and more like that pure thing is Bitcoin.

Peter McCormack: Yeah, but are we laying an empty road for new scams?  That's what I worry about.  Give it four years and the same bullshit will happen, there will be a new SBF, a new psychopath, a new fraud.

Troy Cross: I'm not saying that won't happen, but I am saying that showing what is real and showing what is not real is worth it, because everybody basically ran an affinity scam on Bitcoin, "Oh, Bitcoin's great, so are we".  I mean, this is what scammers do.  They find something that's true and valuable and amazing and then they latch onto it and use it to take people's money.  So, watching this stuff crash down, yeah, it hurts and, yeah, maybe we need to think really hard about how to stop it from happening again because it will.

Peter McCormack: That takes us full circle back to regulation!

Troy Cross: Takes us back to regulation, it's an uncomfortable topic.  But it's a good thing to see the water drop and see who's swimming naked; that's good.  Okay, the same with mining, except even better.  As the price of Bitcoin comes down and the power price is up and hashrate is up, only the strongest are surviving in the mining space.  But also, I mentioned this earlier, the forms of mining that are lowest margin and the most flexible are the most pro-social.

So, the story that I want to tell, but also the story that I want to be true about mining, is that it strengthens grids, it lowers electrical rates for citizens, for ordinary ratepayers, and it helps us green the grid, it helps us mitigate methane.  Those are the stories that I want to tell.  Those stories were wrong during the bull run, because everybody was just plugging in.  Now, those stories are coming true.

Here's what I want.  It's not that I don't want Bitcoin to grow in price, I do and it needs to grow in price in order to be big enough to help us make the transition actually; it needs to be bigger in order for us to mitigate enough methane to make a meaningful difference; but in order for it to grow, we have to see that narrative be true and mining migrate into all these pro-social forms.  Then it can grow and I hope to God, it grows slowly and organically, because if it grows slowly, it's like we keep adding to the kind of mining that we know will survive in a downturn. 

If it spikes up again, and Shaun Connell said this on your show and it's absolutely right; if we go through another 20X in Bitcoin's price, local grids will be stressed, ASICs won't keep up, local ratepayers might pay more as they did in Prattsville, New York, or whatever, and we're going to get all the blowback again.  Then, all the work I'm doing, the BPI work, laying the foundation for how Bitcoin can be pro-social is all going to be put on hold again and I have to go through another cycle of, "Wait, wait, Bitcoin is going to be pro-social again, just wait for the price to crash!"

Peter McCormack: Well, maybe of every four-year cycle, it's pro-social for three years and it's not for a year, but it's net pro-social.  Look, I know you want that.  I would love Bitcoin just to have steady, constant growth.

Troy Cross: It's not going to happen.

Peter McCormack: It's not going to happen.

Troy Cross: It's not how psychology works.

Peter McCormack: Yeah, it's not how human incentives work.  It's greed and fear, and I think we will keep seeing that.  Perhaps that needs writing into the contracts with the grids.

Troy Cross: Exactly.  So this is where, if I were a regulator -- bitcoiners are going to hate me for this; if I were a regulator, I would look to protect the grid against sudden new loads, and actually losing sudden old loads.  The grid needs Bitcoin, in a way.  You can hurt a grid by just shutting off a huge operation when they come to rely on it for ancillary services.  So, I would be very careful in structuring contracts, first of all; but if I were a regulator too, I might guard against a sudden influx of massive load that would really destabilise a grid and push up rates.  So, I might put caps, or percentages of new load that are allowed.

I think that's not ridiculous for a local community to think about.  I would do that if I were a mayor or something.

Peter McCormack: Let's have the difficult conversation on regulation.  I am pro some regulation; some.  My issue with regulation is that we've seen in the last few weeks, with everything to do with FTX, it is corrupt itself and can be co-opted by people with money.  But I think the fundamental ideas behind certain regulations are good.  For example, I think regulation with regards to weapons are good, to an extent.  Here in the US, you like your guns; in the UK, we don't, and I'm okay with both.  But I don't think anyone here should be able to own a missile launcher or a tank or a nuclear weapon.

Troy Cross: Statist!

Peter McCormack: Yeah, I'm just okay with the idea of getting on a plane and not worrying that there's some fucking idiot with a missile launcher wanting to take you down; I'm just okay with that, right!  I'm okay with regulations with regards to the buildout of nuclear powerplants.  They're probably a bit too regulated and it makes it difficult to roll them out, but again certain things to do with --

Troy Cross: You don't want the backyard SMR?

Peter McCormack: Yeah, I just think you can have sensible conversations around regulations.  Okay, what do we think of regulations with regard to Bitcoin and crypto; what do we think of the SEC having jurisdiction over securities; what do we think about the CFTC having jurisdiction over commodities?  I don't know, I empathise with both sides of the argument, I empathise with people who are anti-regulation because it can be corrupted, but I empathise with people who are pro-regulation because they don't want to live in the Wild West; I get both sides of the argument.

I think personally, a certain amount of sensible regulation is okay, I think a certain amount of consumer protection is okay.  I think we need to do a much better job though at prosecuting criminals who fraudulently destroy people's lives.  That I think absolutely we require.  Now, I don't know the full answer to this, I don't know what regulation would have stopped FTX happening.

Troy Cross: It was in the Bahamas for one.  It wasn't the FTX US so it's a hard question.  I think first of all, we will get big-time regulation.  I think what just happened was like the stock market in 1929.  All the regulation we have now is as a result of that moment in securities, and we just had our version of it, I think it's that big, right.

Peter McCormack: Well, I think you can do a good comparison to 2008 with those mortgage-back securities, and we nearly collapsed the global economy; well, we did collapse the global economy and it pushed the world in -- I mean, millions of people lost their homes, had their lives destroyed, because the banks were reckless.  The banks now have stress tests they have to follow.  Now, some would say they're too stringent.  Fine, I'm open to that argument.  But those regulations were put in place for a reason, to stop the banks overleveraging themselves and destroying the economy.  Is that a bad thing; I don't know?

Troy Cross: I'm not sure.  It's outside of my expertise and I'm in the same position you are and I'm just not going to answer that.  But I will say, what we have to keep in mind is that Bitcoin ultimately will threaten institutions of power.  I'm with the pro-dollar people, I don't think it threatens the dollar for decades; but ultimately it does threaten the ability of people to spy and censor on transactions.  So, whatever the answer to that question is, what I'm wary of is that rationale that protects consumers being a back door to the state doing what it wants to do, which is preserving power for itself against a threat, which is Bitcoin.  And I'm on the side of Bitcoin in that one, right.

Peter McCormack: With you 100%.

Troy Cross: I'm just watching out for that angle, because you know it will be there.  Here's what's going to happen, we know this will happen.  Consumers are hurt, there's a lot of pain.  Actually, there's just so much pain, people just want to lash out and hurt back at this point and protect people, they just want to hurt people.  People are not going to distinguish Bitcoin from crypto, as much as we try to do that, as much as we need to seize this moment and do exactly that, and the Swan Conference was amazing in doing speaker after speaker telling that story.  But as much as we want to do that, realistically no.  The public has been hurt, they do not make the distinction, they're going to come after us with ridiculous regulation.

What we're going to have to do is figure out where the limits are.  We're not going to let unhosted wallets be regulated, we don't want reporting requirements for individual citizens.  We don't want something like Fedi eliminated from being legal.  We have to guard this regulation from being sweeping and we have to make it targeted.  Look at what actually happened and how people got ripped off.  Is it securities masquerading as tokens and assets, something they're not, as non-securities?  Well then, close that loophole; you've got to treat securities alike.  Is it exchanges not have proof of reserves?  Okay, regulate exchanges, but don't try to kill a new and rising technology that threatens powerful institutions, banks, governments, simply because people got hurt in a retail investment setting.  That would be a huge, huge mistake.

Peter McCormack: Well, it was more than a retail investment setting.

Troy Cross: Yeah, it's institutions as well, yeah.

Peter McCormack: Institutions got hurt.  I mean, some of them you have to blame them for their own due diligence.

Troy Cross: Sequoia, oh my God!

Peter McCormack: Yeah, I mean fucking idiots there, honestly.

Troy Cross: Following Sequoia in like lemmings!

Peter McCormack: Oh my God.  But also actually, a bunch of people lost their jobs, have lost their jobs, and they're not at fault for this.

Troy Cross: Not at all.

Peter McCormack: I don't want the individual retail Bitcoin user to be regulated and surveilled.  But should an exchange be regulated in having proof that it has the reserves to back the Bitcoin that it's allowed to trade?  I don't know, is that a bad idea; is that a good idea?

Troy Cross: You have to think at the system level.  So, we already have quite a lot of regulation around finance in the US, and so when people see a site that looks just like one of their other financial sites, they just assume it's regulated in the same way.  We're not in a vacuum, we're not thinking about this from the ground up, we have consumers who have expectations of protection.  So, that's the problem.  Like Dave Portnoy's saying, "Where's my Bitcoin that I had on FTX?  How do I get it?"  There's an expectation!

Peter McCormack: It's with your SafeMoon, Mr Portnoy!

Troy Cross: Exactly.  There's an expectation that your money is there, not that it's been rehypothecated a billion times and people are just gambling with it.  You just have an IOU and you have nothing.  Well, that expectation is the problem.  And, where does that expectation come from?  Would people have had it in 1920?  No, they actually didn't have that expectation because we didn't have the regulation in the traditional financial system.

This is why it's tricky, because you want to think in this kind of clean-sheet way, philosophically, "How should be build out the best system?"  But you can't because we're already in a world that's shaped by existing regulation and the question is not, "What would the ideal system be?" it's like, "How do we best integrate this financial system into the traditional one?"

Peter McCormack: My thing here isn't about protecting the individual.  There is enough education out there how to protect your Bitcoin at an individual level.  It is systemic failure of Bitcoin caused by frauds, criminals and liars; that is what I worry about.  There's a systemic destruction of Bitcoin because of -- we may see others.  There are rumours around Jump, rumours about Crypto.com, there's rumours about Huobi.  If we keep seeing these exchanges fail, what is the systemic destruction that happens to Bitcoin?

Troy Cross: I can't go with this though because, look, Chancellor on the brink, this is how we got started in Bitcoin.

Peter McCormack: But I'm not talking about a bailout here, I'm talking about --

Troy Cross: So, you imagine Satoshi's like, "Okay, I don't want bailouts, but I do want regulations so that this sort of thing never happens"?  No, he wouldn't like that either.

Peter McCormack: But maybe it isn't regulation, maybe it is just doing a better job of enforcement of prosecuting criminals.

Troy Cross: I'm all for that.

Peter McCormack: We have multiple people involved in Three Arrows Capital, LUNA's a tricky one.  Obviously, it was fucking dumb, but I don't know if he knew how dumb it was.  I don't know if it was stupidity or a crime, I don't know the full details.  Some people just say, "Yeah, it's a scam because everything's a scam".  But Three Arrows Capital and all the people involved at FTX at the highest level and Alameda, who understood what was going on, all need to go to jail.  And I say that without any shame at all.

Troy Cross: No objection given.

Peter McCormack: They need to be behind bars.  Bernie Madoff got 150 years in jail because he ruined the lives of multiple people.  People committed suicide, funds were destroyed, retirements were destroyed, operations that were meant to happen didn't happen.  The social contagion to people's lives with that was terrible, and for him to spend the rest of his life and die in jail, he kind of earned that, he knew what he was doing.  I think if we see enforcement where people fail serious jail time, that is going to create at least a fear for other people to commit the same crimes.

Troy Cross: I honestly agree with you entirely, but I don't agree with the last thing you said.  I think that the ultimate urge to take people's money in the way that -- and to become a billionaire on a Ponzi setup is just too great.  And even if the precedent is out there for going to jail, people are going to continue to do it.  Maybe it will reduce the rate at which they do it, but these are psychopaths, man, these are psychopaths.

Peter McCormack: What about the people giving them the money and enabling them; should they face any consequences?  Should Sequoia face consequences for enabling a crime by not performing the correct due diligence?  Look, I know people listening will be like, "What the fuck are you on about?" but I'm just putting all those ideas on the table to say, "What is the answer?"  Maybe the answer is Wild West; right, fuck it.

Danny Knowles: But is their punishment not losing $200 million?

Peter McCormack: Yeah, but they don't lose.  These people are so fucking rich, they make so much money, that is just one failed investment.  And they know eight out of ten will fail and they'll hit the jackpot with one.

Troy Cross: It's a good question to think about; I haven't really thought about that.  I mean, 2008 is what motivated me.  The leadup to 2008, seeing all my students going to Wall Street and then seeing the collapse and reading about it, I read When Genius Failed about long-term capital management.

Peter McCormack: That's the Enron one that came up yesterday.

Troy Cross: I haven't read the Enron book.

Peter McCormack: Okay, because I raised the Enron one, the Smartest Guys in the Room, and somebody said, "You need to see When Genius Fails".

Troy Cross: It's so good.

Peter McCormack: I thought that was about Enron as well.

Troy Cross: No, it's about long-term capital management, multiple Nobel prize-winning economists who start a hedge fund and get over their skis, and then they have to be rescued by the Fed.

Peter McCormack: They thought they had a system?

Troy Cross: Yeah, they had a risk model.

Peter McCormack: Yeah.

Troy Cross: Basically, when you get a risk model -- this is kind of an insight I owe to the book in thinking about it, but also from Nassim Taleb; whenever you have a risk model and that justifies a certain amount of leverage, I think it was like 30:1 in long-term capital management, or whatever, but whenever you justify a certain amount of leverage as still within a band of risk, your model has to take itself into account.  The fact that you are now dumping tens of millions of dollars into a strategy changes the risk of that strategy, and that's kind of what wasn't self-including.  Sorry, I'm outside of this --

Peter McCormack: No, that's fine.  I mean, leverage seems to be one of the main issues here, this leverage that's just causing a lot of the fucking problems.  It's the unwind of the leverage.

Troy Cross: So, this is why I say I do kind of want the Wild West, because this is what leverage does.  We have a fiat-created problem here; the problem isn't created by Bitcoin.  Bitcoin is suffering the fallout because it's a reserve asset within the crypto world.  So, when people get in trouble, they dump their Bitcoin, so then the price of Bitcoin falls.

So weirdly, the fact that Bitcoin is dropping in this environment is evidence of the functional role that it plays in the crypto world as money, as a reserve currency.  And I expect it to keep falling, if I had to guess, because I think the unwind hasn't finished.  But I kind of want it to all go to shit.  I don't want to save this system again, because leverage needs to wipe out.  The whole system is corrupt and it needs to blow up.  What's the alternative?  It's saving everything again, like is CZ putting together a fund to rescue --

Peter McCormack: Again, that's not what I'm talking about.  I saw what he said.  That to me seemed like a bit of a self-own, it's like, "Hold on, why do you --"

Troy Cross: You have to rescue the thing you just destroyed?  It's like, can someone give him CPR?!

Peter McCormack: Yeah, is that a signal?  Have you got issues there over at Binance, CZ?  I don't know.

Troy Cross: Oh, man!

Peter McCormack: Whatever.  I'm not talking about bailouts.  I don't not want bailouts, I want people prosecuted.

Troy Cross: Fraud is fraud, it needs to be punished, it needs to be well-defined.

Peter McCormack: Is there any regulation that would make the system better?  If there's none, fine, I'm sold.

Danny Knowles: But how can you have any faith that the regulation would be good for us?  That's the thing where I really struggle.  You can say "pro regulation", that's cool, but I've got zero faith that it would be good regulation.

Peter McCormack: Well, that's why I'm just asking the question, is there anything?  I'm not saying, "Let's have regulation", I'm saying, "Is there anything?"  For example, exchanges have KYC AML rules.  I think that is bad regulation, I think that harms us all.  So, I'm not saying I'm pro what the regulation is now, I'm not saying I'm confident in people, I'm just asking the question, "Is there anything that could stop these psychopaths?" and maybe there's not.

Troy Cross: I mean, if I was Gary Gensler, I would be really ashamed right now.  He's got his little victories of charging like Kim Kardashian; that's who he went after.  He didn't go after the actual fraudsters, he went after an influencer, and then that super-polished video that he put out, which was so hard to watch.  That was the hardest thing to watch since the We're All Going to Make It video.

Peter McCormack: Was that Mark Zuckerberg's sister?

Troy Cross: Mark Zuckerberg's sister; the next cringiest thing.

Peter McCormack: Have you seen that?

Danny Knowles: I don't think I have.

Peter McCormack: Have you not seen it?

Troy Cross: Don't look!

Peter McCormack: Oh, come on, do it!

Troy Cross: I'm here; I can't bear it, I can't actually bear to watch it!

Peter McCormack: Have you seen this, Jeremy?  This is the worst thing.

Troy Cross: Actually, watching it after this collapse is going to be --

Danny Knowles: Is this like a music video?

Troy Cross: It's a music video.

Peter McCormack: Yeah.  So, this also points towards another British football team, called Crawley Town, who were bought by a group and they've called their group We're All Going To Make It.  They've bought Crawley Town, who are a league football team.

Troy Cross: Oh, I saw a story on that recently, saw a big story on it.

Peter McCormack: Yeah, fucking New York Times covers that; they don't cover us!

Troy Cross: They didn't even mention you.  I looked through the whole thing for Bedford and didn't see it!

Peter McCormack: Yeah, but to me it's the perfect mirror of Bitcoin and crypto.  We are the Bitcoin team, we're top of the league, we're smashing it.  When I looked, they were bottom of the league, all their fans hate them.

Troy Cross: Fake New York Times story!  Media covers them as darlings, right!

Peter McCormack: Motherfuckers!

Troy Cross: It was amazing, totally ignores Bedford!

Peter McCormack: Is this it?

Danny Knowles: I don't know.

Troy Cross: This is not it.

Peter McCormack: This is not it, no.  Search for Zuckerberg WAGMI.

Troy Cross: I can't believe you're making me do this.

Peter McCormack: I'm going to ruin your day.  You'll be traumatised.  This is it!

Troy Cross: That's it!

Danny Knowles: Oh, go fuck yourself, can we turn this off?

Peter McCormack: No, you've got to watch a bit more, it's so bad!

Danny Knowles: Oh my God, I can't do it!

Troy Cross: The Gensler video is a close second to that.

Peter McCormack: Yeah.  I was traumatised for a little while, but they can self-own with that.

Danny Knowles: If we put that in the video, you know they get the copyright to this whole show?

Peter McCormack: Do they?  Oh, fuck it, they can have it, I don't care.

Troy Cross: No, but you're asking good questions.  I will say that this is exactly the kind of question that the Bitcoin Policy Institute is designed to answer, it's just that I'm not the person to do it.  But we have legal econ policy people who can weigh into the weeds and look at alternatives and say what's healthy and what would threaten Bitcoin's functionality and potential.  So, I think that's part really why we're built, not just to educate, but to evaluate policy proposals and think them through.

Peter McCormack: Well, that's why people need to support them, fund them and help them.

Troy Cross: I hope so.

Peter McCormack: I think the Bitcoin Policy Institute's fantastic.  I kind of hope they end up doing something in Europe as well, because we need a little bit of support over there.

Troy Cross: We've been talking.

Peter McCormack: Did you speak to my brother?

Troy Cross: Not about this one, but I have talked to some bitcoiner academics in Europe about it.

Peter McCormack: Yeah, we're being left behind, we need to do a little bit more there.

Troy Cross: Yeah, and the question is something like, "What does that look like?  Do we just work together on an informal basis, or do we have BPI US, BPI Europe and a big umbrella organisation, like Greenpeace US.

Peter McCormack: Fucking Greenpeace!

Troy Cross: That's an organisational decision that I haven't really thought through, I'm just contacting European bitcoiners who are academics and being like, "Hey, would you like to work on stuff together, just pro bono?"

Peter McCormack: Yeah.  How are you going to go back to your old job?  You're not going to be able to do it.

Danny Knowles: No, he's not.

Peter McCormack: You're not going to be able to.

Troy Cross: Well, I teach a class in the spring.

Peter McCormack: In the spring.  But the real question is, how do you fund doing this full time?

Troy Cross: Yeah, I don't know.  So far, it's been out of my stack mostly, so I don't have that big a stack, I wore the socks again.  The socks would have funded me easily!

Peter McCormack: How much were those socks again?

Troy Cross: 5 Bitcoin a piece and I got a drawer full of them, so a couple of dozen pairs.  And that was just one of the many things I spent on, you know.  It's weird to be having these discussions!

Peter McCormack: Oh, dude!

Troy Cross: Yeah, I'm not sure how that's going to go.  I'm advising companies.

Peter McCormack: That's a good start.

Troy Cross: What I said earlier is, people contacting me, some of them on your show, like Nima was on your show; I'm super-excited about what Optimize is doing.  I mean, Optimize is integrating Bitcoin mining with solar in this super-cool way.  You know how Google has this 24/7/365 procurement agreement?  They're basically committed to buying renewable energy in the local market at the time they use it.  So, buying from wind, solar, hydro, wherever they set up an operation, that makes them the darlings of the Sierra Club, who point to Bitcoin miners and say, "You're not doing that".

Actually, Bitcoin plays potentially this super-powerful role of making that possible, because when you have that commitment, like Google has that commitment, they have to constantly buy in a local market with renewable.  But that means there's this constant demand for renewable when renewable is intermittent in the local market, which means that the renewable producers are going to have waste and under-priced power at other times of day.

Peter McCormack: We know some people who want to buy that!

Troy Cross: We know some people who can do that.  So, now we have a company that sets up with machine-learning intelligence based on the local grid, the local weather that sizes a Bitcoin mining operation and integrates it into the solar, so that they can serve Google's constant demand and still make the most of their solar panels, or their turbines, or whatever.

Oh, gosh, I hope I get this right.  Ultimately, we can 10X the entire Bitcoin Network on new solar alone, using a small percentage of that new solar to mine Bitcoin with Optimize's software and hardware.  It's a ridiculous company, what they're doing.  The Adam show, it was another one where I was just standing up and cheering.

Peter McCormack: Were you literally standing up and cheering?

Troy Cross: I literally was!  I literally stood up at my desk, I couldn't sit down.

Peter McCormack: That's What Bitcoin Did; gets you exercising!

Troy Cross: Gets you up, yeah.  I mean, some of it was you guys were mentioning me a lot of the show so it was like, "Oh, I'm on this show!"

Peter McCormack: Oh, so you really just stood up when we said your name!

Troy Cross: No, I'm thrilled that people get to see what Bitcoin is doing for mitigating methane.  I'm advising companies that are largely aligned with my vision, the vision that I articulated in my first appearance on your show.  I have one particular product idea, but also a vision for -- you were the one who articulated it; I said I articulated it.  You articulated it back to me.

Peter McCormack: Did I?

Troy Cross: It was to do with this virtuous cycle of people investing in Bitcoin itself and people investing in hashrate and that driving the demand for green Bitcoin mining, that driving up the price of Bitcoin and there just being this virtuous cycle, that both greens the grid and greens Bitcoin and expands Bitcoin into institutional adoption all at the same time.  That was your vision.  So basically, companies that in some way advance that vision are the ones that I'm advising.

Peter McCormack: Right, so we need to get you about ten of those.

Troy Cross: I'm pretty close, but who knows how many will survive!

Peter McCormack: Well then I suspect you're not charging enough.

Troy Cross: I'm getting paid in equity, so -- anyway, yeah.

Peter McCormack: We've got to get you there.  I love this, I love what's going on, I love seeing this.  Danny said to me before the show, "You're not going to look at the notes", and I've scanned down a couple of times.  I didn't need the notes for today, man.  There's so much we didn't talk about.

Troy Cross: I've got to tell you about a couple of pills because I promised the Twitter following that I would.

Peter McCormack: Go on, let's do it.

Troy Cross: Okay, there's two innovations that I want to talk about, but I want to frame it first.  So, I'm a philosopher, I'm not an energy expert, I'm not an engineer, but I analyse dialectical situations or argumentative situations, and of course I always start talking to people about Bitcoin's energy use, where they're at, and they're always giving me some de Vries stat about how much Bitcoin destroys the environment or how much energy it uses.  Then, as many, many bitcoiners have pointed out, we usually move beyond that discussion, once we correct that FUD, "Oh, Bitcoin actually only uses 0.15% of all energy; it is only responsible for 0.1% of emissions, and that's using Cambridge's numbers, which are probably high".

So, why the big kerfuffle about something so small, right?  That's stage one.  That never works, people are never like, "Oh, okay, well then I'm okay with Bitcoin".  Have I ever got that response?  I don't think I've ever gotten it.

Peter McCormack: Of course not.

Troy Cross: No, because that was never the issue in the first place.  They didn't understand Bitcoin's value, so they didn't see any reason for it to consume any energy, or to create any emissions; they don't get the value case.

Peter McCormack: Or they heard about it early, didn't buy any, feel shit because they've seen other people get rich.

Troy Cross: Yeah, the Saltiness Index!

Peter McCormack: Yeah, thank you, Craig.

Troy Cross: Thank you, Craig.  So, right, it could just be salt, but it's oftentimes they don't get the value proposition.  They think it's just gambling, it's just a waste, they think it's bad people who have it.  So then we end up talking about the value of Bitcoin itself.  But there are bigger frames than just that.

I think the bigger conversational frame than just that is, "Is Bitcoin valuable?" because some people are convinced, some people are not convinced, it's like, okay so we have disagreements about how valuable Bitcoin is or what its value consists of.  We're not going to settle all those disagreements.  What do we do when we disagree about the value of something, in terms of something that uses energy, something that has a footprint; how do we handle that disagreement?  Here, we have a supposition underlying a lot of critics of Bitcoin, that the people in charge get to make that decision.  They get to decide what's valuable and how people get access to energy.  That's what politicians should do for us, or regulators.  Whereas my view is, "No, they have no business deciding that".

Every user has a right to access energy if they pay for it.  We let markets decide how energy is distributed, we don't decide that on the basis of some politician's judgement of value.  That's a bigger frame.  Then it's like, "If there are externalities associated with the production of energy, like emissions, pollution, etc, regulate that".  So, if you have a problem with coal, regulate coal, not Bitcoin mining.  Then that regulation will equally cover Bitcoin mining and every other user of electricity, whether you're plugging in your electric car, whether you're surfing porn, or whatever; you're affected equally.  So philosophically, that's the bigger frame.

Then there's another frame.  I don't know if it's even bigger or it's just parallel, and that's Jeff Booth's frame, of the problem with Bitcoin's environmental impact is really tiny compared to the problem of our environmental impact as a species that's grounded on the brokenness of money.  It's because we have an artificially enhanced money supply, an out-of-control money supply, that people are forced to spend rather than save, and that means upfront consumption that doesn't need to happen.  Also, that excess in money supply leads to malinvestment.  You've had a lot of people on your show talk about this, I won't rehash it, but I think Steven Lubka did it really well.

Money is a signalling device, it's a measuring tool and what we have here is a distorting dynamic, real-time distorting measuring tool of everything.  I think of it in physics terms, like we're measuring things from not an inertial reference frame, but an accelerating reference frame, and that creates malinvestment.  That malinvestment means that lots of energy is being expended, resources being consumed that otherwise wouldn't in a rational, properly measured system, and that's huge, that effect is huge.  So, fix the money, fix the malinvestment, fix the undue forwarded consumption. 

In Saifedean-style terms, this would be time preference, "Does Bitcoin lower time preference?" and that means different things.  I don't know whether bitcoiners really develop low time preferences as a psychological matter effect; I kind of think they do, because I experienced it myself, but I don't feel comfortable putting that out there because it's an empirical proposition actually that needs to be tested.  That's my view.  Anyway, that's a big frame.

One more frame and I think this is the biggest one, for how to talk about Bitcoin, energy and the environment, and that is, and I really came to see this fully in conversation with a local Portland friend, Colin Brown, Bitcoin is a tool, is a tool that is so basic that we don't know where it's going to go, we don't even have a clue.  You asked me, "What's its impact and when do we hit carbon neutral?"  Not only do I not know, I think nobody knows and nobody could know, because it's such a basic building block of our future as a species.

I want to backup to things we've already talked about in this show.  Look at the innovations on Bitcoin, and mining in particular, Bitcoin and Bitcoin mining, that Satoshi did not anticipate, that nobody in 2011 anticipated, or 2015, or even six months ago didn't anticipate.  But think about just the people who've been on your show.  You've just had Austin Mitchell on.  That's kind of foreseeable, but do we really foresee how instant payment could improve the efficiency of the power world, paying for power?  Did we really see that; and are we thinking about all the ways in which instant payment can do better than credit, and fractionally splitting revenue among people who need to be paid, rather than paying them serially, stepwise?

Peter McCormack: Well, the unknown unknowns, it's the most exciting part of Bitcoin.  Absolutely, four years ago, I paid little to no attention to mining, beyond bought a few ASICs and plugged them in.  And to me, ASICs were network security, block creation.

Troy Cross: Which they are.

Peter McCormack: Yeah, but to me they were never what the fuck we've been talking about today, and that's where we've come in four years.  In four years' time, what is the next -- has Bitcoin itself disrupted another industry?  Is it going to disrupt multiple industries?  It's disrupted banking, it's disrupted cross-border payments, it's disrupted authoritarian control.

Troy Cross: Yeah, nice.

Peter McCormack: It's disrupted a little bit of censorship, depending on your skills in doing that.

Troy Cross: And it's disrupted some journalistic groups that are disrupting censorship.

Peter McCormack: Yeah, it's disrupted podcasting, it's disrupted football!  All right, sorry, I'm just kidding here.  But it's disrupted the energy infrastructure industry.

Troy Cross: I'll give you a case of one of these companies I'm advising, Vespene.  They are proposing something that would achieve 20% of the EPA's goals in methane reduction.  One-fifth would be achieved by one company in Bitcoin, just by capturing and burning landfill for gas; it would achieve one-fifth of the EPA's goals.  Did Hal see that coming?  I doubt it.

Peter McCormack: Dude, it's the ultimate disruption technology.  I mean, I used to talk about this book on the show a long time ago.  There's a book I read years ago, my friend recommended it, called Engines That Move Markets.  Can you bring that book up, see if you can find the index?  It was about the innovations that fundamentally changed the world.  Obviously the internet's in there, electricity I think is one of them, I think the railroads.  It was like what this invention suddenly changed.

Troy Cross: The telegraph.

Peter McCormack: The telegraph, yeah.  And I know this book has to get rewritten with a new chapter in it, which is Bitcoin, and it's not there yet.

Troy Cross: Right, you got it.  In some ways, this is very common knowledge, "Oh, Troy's got a new idea, Bitcoin's a tool".  Yeah, everybody knows that.  But here's how I'm thinking about it.  It's the kind of tool that's basically like one of those.

Peter McCormack: Like fire.

Troy Cross: Yeah.  It's a really basic tool, not only for coordinating -- and this is where there's an idea here.  It's not only for coordinating human behaviour in ways that we couldn't before.  In a way, think about the internet allows peer-to-peer communication without the interference of an intermediary, so any content can go from anyone to anyone.

Peter McCormack: China, hold my beer!

Troy Cross: China, hold my beer, yeah!  It's still working, but obviously contingent on the underlying network devices.  In principle, it is a platform for communication in an uncensored way.  And the Bitcoin Network allows the transfer of value in the same way, from individual to individual.  So, just like social media and the internet spawned revolution, say Arab Spring, they were missing that value component.  Now got that value component to go with it.  Think about how that's going to affect the world.  Okay, big thought, and I don't have the answer to what that does, now that we can crowdfund wars, etc.

Peter McCormack: Well, hold on, we saw it in Belarus with Lukashenko.  I mean, it ultimately failed, but there was that moment in time where people wanted to protest against Lukashenko and they wanted state workers to strike, but the problem is if they're striking they're not getting paid.  So, people were able to send Bitcoin to them.  They were able to sell that Bitcoin on local markets and they were able to pay their rent and feed their family.  They were externally supported by the Bitcoin community in trying to bring down a dictator.  Yes, it failed, but there was an ember there that worked for a while.

Troy Cross: And there's something very similar that can happen in many places.  I was in Oslo, talking to these human rights activists.  Your ability to keep your street captains on the corner in a protest is do or die, it's make or break, because people are poor and when they protest, they're not making money.  That's where a protest fizzles out and if the dictator can outlast it, then they can stay in power; and if they can't outlast it, they lose power. 

This is very, very true and we're just figuring it out, but that's all on the Bitcoin side, the ability of humans to transfer value.  But on the mining side, Bitcoin is an equally basic innovation, equally basic and equally profound and unpredictable an innovation.  ASICs are not just money-printing machines.  What I've come to see them as is auxiliaries to other industrial processes.  I said earlier that when the price of Bitcoin fell, I was happy about that, because it drives down the margins of Bitcoin mining and it drives down the CapEx required for ASICs, and that allows Bitcoin to behave in more pro-social ways.  But I want to go through some of those.

One of those is, yeah, it's solar and wind, it's intermittent power, being able to use that.  But some of it is the heat thing too.  You don't always need heat and the question is, "What's dominant when Bitcoin pairs with another industry?"  When it pairs with heating, is the heating the dominant thing; is Bitcoin the dominant thing?  If Bitcoin has a low price, it's more flexibly integrated with other industries.  I promised people I would give two ideas of these kinds of mind-blowing possibilities for Bitcoin.

One of them is a company that I'm advising, and Margot too, that -- well, let me set it up this way.  They use the heat from Bitcoin miners and they heat up water.  The name of this company is FlowSolve.  The temperature on chips is not hot enough to boil water, but it is if you put that water under negative pressure, if you put it in a vacuum.  Drop the pressure on the water, you can boil it at a lower temperature.  So, that's what they do, custom heatsink between ASICs and water, boil water.  And when you boil water, you can --

Peter McCormack: Make cups of tea!

Troy Cross: Make cups of tea!

Peter McCormack: Hold on, you mean we're going to get ASICs in our kettles?  Sorry!

Troy Cross: Well, I don't know if you want your tea at a lower temperature.  We're boiling for the sake of boiling.  I don't know if it matters for tea, if there's the actual temperature you need.

Peter McCormack: I'm just fucking around, man. 

Troy Cross: I'm actually open to all crazy ideas, even crazy like that.  But no, here's what matters.  Once you can boil water, then you have steam and then you can condense that water again and that's a kind of purification.  So, that's distillation, distilling water.  So, we can distil water with Bitcoin miners.  Did you ever think of that?

Peter McCormack: No.

Troy Cross: Okay, what does this mean?  It means you have distillation that is basically subsidised by mining; or, you can think of mining as being subsidised by the distillation of water.  Anywhere you have water, however dirty it is, and you need pure water that's drinkable, it's usable in industrial processes, you can do that now more cheaply because of Bitcoin.  And we're headed for a water crisis; I think everybody agrees about this.

Peter McCormack: Yes.

Troy Cross: Humans need water, the most basic need.  It's most of our bodies.  You wouldn't think that Bitcoin mining can help to provide it, but it can, providing this idea works and scales.  Not only that, but there's a twist on it, that distilled water absorbs carbon, and you can actually use this distilled water to do carbon capture.  That's another story.

Okay, next idea, mind-blowing idea, is carbon capture.  So, carbon capture from the ambient air is very, very expensive.  Estimates range, whatever, $100 a ton, $200 a ton.  There are different technologies that do it, but we set up these large machines in the middle of nowhere, feed them tons of power, and they blow air across a medium or through an aqueous solution and get carbon distillates, which you then either push underground or you make things out of them.  You can make cement out of these distillates, for instance, or you can make fertiliser out of it.

We need these things, according to the IPCC, to meet our goal, especially for the latter half of the 21st century.  We are counting on large-scale carbon capture happening, not just carbon capture at the site of where we burn things, but ambient air.  This has always seemed to me absurd that we would build these large instillations, fire up these huge fan banks, to capture carbon out of the air, but we are counting on it to meet our goals for the latter half of this century.

Okay, 90% of the cost of these machines, the ones that use fans, is the fans themselves and running the fans.  What else can you think of?

Peter McCormack: That needs fans.

Troy Cross: That has large banks of fans!  ASICs.  So, this invention, this idea is, we use the fan banks for the cooling of ASICs and also we push air through an aqueous solution, we get distillates out, we get carbon out.  So, we do two things at the same time: mine and capture carbon from the air.  Then, Elizabeth Warren, put this in your pipe and smoke it, you know.  The thing that you think is destroying the environment cuts 90% of the cost out of direct air carbon capture.  Those are just two examples.

Peter McCormack: The unknown unknowns, dude.

Troy Cross: The unknown unknowns just loom out there, but Dhruv at Unchained, you know Dhruv Bansal, so he asked me this question, "What is it you think about --" I was giving him this pitch that I just gave you.  Bitcoin, it's heating greenhouses, it's distilling whiskey, it's moving into a phase where it's only going to be profitable when paired with some other activity.  If you're not selling your heat, if you're not using your fans for something else, if you're not taking free energy off the grid, you're not going to make it.

Peter McCormack: You're not going to be competitive, yeah.

Troy Cross: So, the way that mining looks now is not how it's going to look in ten years, because your main profit is going to come from the auxiliary activity.

Peter McCormack: Which solves one of the questions.  We get a lot of emails in, one that comes in regularly is, "What happens when the subsidies reduce?"

Troy Cross: Exactly.  So, this makes me feel a lot better about fee FUD and -- I mean reward FUD, block reward FUD, because this is a serious concern.  I think maybe the most serious concern about Bitcoin is the long-term security budget, because the halving is brutal, the halving is exponential.  Just like we can't think of exponential functions in the up direction, we can't think about them in the down direction either, we're just not built that way.  So, 20 years from now, the block reward is tiny.

But if Bitcoin is thoroughly integrated with other processes, like let's say you're distilling water and you spend on energy say 1 Bitcoin to mine 0.1 Bitcoin, but you're getting profit from the distillation that's over a Bitcoin; so, you end up spending more than 1 Bitcoin to mine 1 Bitcoin basically in your operation, but your profits are making up for that in your auxiliary function.  That's how I see all of Bitcoin mining going.  What does that mean?  It means that a very tiny security budget in Bitcoin buys a lot of hashrate, a lot, a lot of hashrate, as Bitcoin finds its most efficient auxiliary partners, its most profitable auxiliary partners.

Then, if you want to attack the network and, say, just set up a massive farm, just like Riot has, or Marathon, or whatever, that doesn't do anything else, it's not selling its ambient heat, it's not using its fans, it's not using excess energy because that's already taken, but you're just going to pay ordinary utility-level rates to set up a new operation that does nothing else --

Peter McCormack: The 51% attack is harder.

Troy Cross: The 51% attack is going to be basically impossible.  So, this is how I stopped worrying about the fee FUD and learned to embrace the halving.

Peter McCormack: Well, this is where we need to get all the philosophers around one table and hash this out and get into this.

Troy Cross: Oh, I want to say one more thing.

Peter McCormack: Yeah, do it.

Troy Cross: The question that Dhruv asked me was, "What is it about Bitcoin mining that makes it this ultimate auxiliary device; why aren't other technologies like this pairing up with everything; why is it that other things are more predictable?"  And I think it's the basic features of what Bitcoin is and what mining is.

Basically Bitcoin is a store of value and a payments system that's direct and that's what makes like Austin's business possible.  But it monetises stranded energy instantly anywhere in the world at the same rate, without any need for infrastructure.  So, if you want to collocate a mining business with another business, you don't have to worry about two sets of transport, two sets of whatever, trucking or piping or whatever, just the one, just the auxiliary business, because Bitcoin only needs power and internet.  So, it's suited to collocate with anything because of its location agnosticism; it's flexible because of its time agnosticism, that allows it to pair better with other things; and then, it produces heat. 

So basically, anything that uses low-grade heat could potentially pair with it.  Ultimately, that's maybe purification of water, or other things, but literally think anything we use heat for, and heating is a large percentage of the energy that humans use, could possibly pair with Bitcoin mining; also, cooling mechanisms like fans.  So, in its essence, the reason Bitcoin is a tool that we cannot foresee everything that can be done with it, and it's going to keep blowing our minds, is that it's the perfect pairing for any industrial process that uses heat, for instance, and it's also the perfect way to use stranded or waste energy; it's going to monetise energy anywhere, at any time, at the same exact rate, and that makes it just an enormously flexible and promising tool.

That's for me the biggest frame.  Once you start thinking about Bitcoin as pure potential for human ingenuity, because it's so basic and flexible, then when you talk about Bitcoin's energy use, you're talking about the energy use of, yeah, the telegraph or the wheel.  I imagine people sitting around with the first wheel, "How will this be used; is it good or is it bad; what's its impact on the environment?" and it would have been just pointless to have that conversation, utterly pointless.  No way two people sitting around back when the first wheel was invented could think about every application of the wheel, and we can't think about every application of Bitcoin and mining either.

Peter McCormack: They would not have thought it would be used for flying machines to land on runways.

Troy Cross: Exactly.  So, how should we think about Bitcoin?  To come back to the beginning, to Bob, the prof whose class I lectured in, I asked him, "What's your thought on the internet itself; is it a good thing, is it a bad thing?"  He's an older guy, I was like, "Were you right about where it would go?"  He was like, "I've given up even talking about whether the internet is good or bad, I can only say one thing about the internet.  It's powerful, it's changed our world", and I was like, "That's exactly the appropriate attitude for Bitcoin".

It's just powerful, we don't know what it's going to do, we don't.  So, what do we do as people and its regulators?  We watch out for the worst effects it could have, we think about them and try to guard against them; we take advantage of the best ones, but this is just a wild ride we're on called life and civilisation and the development of technology.  We've just got to enjoy the ride, you know what I mean?  We can't think we know it and we're on top of it.  The reaction that Warren and others have is a fearful way to approach life and human progress.  It's thinking you need to know what will happen with each technology before you allow it to develop, and that's the biggest frame.

Peter McCormack: All right, man.  That's a fucking great ending.  We need to do this again, regularly.

Troy Cross: Yeah, this was weird, we meandered all over the place and it felt like we were just getting started.

Peter McCormack: Dude, there's always so much to talk about.  We're doing a Canada trip at some point as well, so maybe we'll see you there, but look, we'll find some time.  You've got an open, permanent invite to come on this show, because there's always so much to talk about.  I mean, I need to go and process these myself.  All right, listen, do you have anywhere new you want to send people apart from your Twitter?

Troy Cross: It's just Twitter, yeah.  I mean, I'm a slave to that thing.  I'm trying to wean myself off of Twitter.

Peter McCormack: Well, so you make the mistake that I do, you feel like you need to answer everyone.  I do the same.  Danny's always telling me off for it.  You need to not do that.  I see you doing it and I'm like, "What are you doing?" and then I fucking do it myself.  But listen, we will share that in the show notes, keep doing what you're doing, I love how you're crushing it.

Troy Cross: Man, it's such an honour to be back.  I owe you guys --

Peter McCormack: You don't owe us shit.

Troy Cross: No, I do.  You gave me a platform and then more than that, you invited all of the people I love in Bitcoin and that are consonate with my vision; you invited them all on the show and I felt like, I was saying to Danny, I just don't even know what to say anymore, because every single area I touch, there's somebody who knows it better, and typically they've already been on your show!

Peter McCormack: That benefits us too.  Look, keep doing it.  Anything you need, you've got my details, you've got Danny's, reach out, we will help you.  But just keep doing it, man, you've crushed it.  I appreciate you as a bitcoiner, as a friend and as a guest on the show.

Troy Cross: Right back at you.