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What you're telling me is that music is about to stop and we're going to be left holding the biggest bag of odorous excrement ever assembled in the history of darkness. 1974198792972000 and whatever we want to call this, it's all just the same thing over and over. We can't help ourselves. I say when we sell. Hey, OK. I say when we sell. All right, everyone, welcome back to the last trade. This week we have my Co host Michael Tanguma and Brian Cabela's and we're joined by Sam Roberts and Daniel Batten. Gentlemen, nice to see you all. How are you all doing today, Sam? Daniel, thanks for joining us. And welcome. Doing great. Good to be here. Excellent. Well, Daniel, Sam, how about the best place for us to start would just be to get the audience a little bit more familiar with both of your backgrounds. Sam, you have been on the show before, but it has been some time and and Daniel, this is a first time appearance for you. So Daniel, why don't I hand it over to you if you just want to share more about your background, what you're focusing on these days and and how you got into Bitcoin, and then Sam will let you do the same. I've been focusing mainly on the overlap between Bitcoin and ESG. So it's environmental and social benefits, ES benefits for the last two years. How I got into that was I was running a impact investment fund and then a climate tech investment fund, and the opportunity to look at Bitcoin came across my desk and I initially didn't think the person was serious, but I had a second look at it and end up doing due diligence. And that led to me to realize that she had some really positive ESG attributes and that's led to the work I do today. I came at it from a very different direction. So I came at it from a very much an institutional investment point of view, although I was first learning about Bitcoin some years before that on a personal level, because I just found it interesting. What is this strange Internet money? How does it work? And then it was about 2 1/2 years ago that with the confiscation of or freezing of Russia's assets, realised that actually that's a bit of an inflection point. And therefore institutions need to be more aware of Bitcoin and also potentially investing. And we'll get into some of this detail, I'm sure as we go. But it was, it's all very well saying the institutions should think more about buying Bitcoin, but how do they do it in practice? So that's, that's very much, yeah. That institutional side was where we came from. Excellent. Well, appreciate both of the backgrounds. And to your point, we certainly will be getting more in the weeds there. And maybe before we do, I'd be curious to hear from either Sam or you, Daniel, just how maybe how is your personal thinking evolved on Bitcoin since you first came across it and where you are today. I'm sure that will really shape the discussion around your professional work. But maybe what's most exciting to you today and how are things change for the two of you over the past couple years? When I first encountered Bitcoin, I honestly wasn't that interested in it. I didn't see how it solved any particular problems. I couldn't see its use or value and I think that's an affliction that a lot of people have coming from the West. When we have what looks like good banking rails, we don't tend to get de platformed. Although as Sam mentioned recently, what happened with the freezing of Russia assets? Now you can, but at the time that wasn't really a consideration to me. That freezing of Russian assets did open my mind considerably, but the more I researched it, the more I realized that Bitcoin solves some fairly fundamental problems in terms of freedom from hyperinflation, freedom from the ability for third parties to be able to freeze asset transactions, and freedom to be able to live in a country which may not have a set of rulers who play nice. In other words, if you say the wrong thing, do the wrong thing, the financial system can be weaponized against you. So I started to see how both in the West but also in the global S, how Bitcoin provided a form of freedom money that was extremely interesting to me. And then at the same time, Bitcoin mining, the more I researched, I could see that it solved a lot of energy problems as well, and particularly energy transition problems and grid stabilization problems. So I became fascinated both in Bitcoin mining first and then literally Bitcoin itself as an asset. Oh, this, this is great because we're coming at this from completely from directions. So I think it's very complementary. So my background was more coming through sort of learning about Austrian economics following the global financial crisis, which led me to gold and the benefits of the sound money on, well, actually the environment, but society generally. And that's what that's what I came through. And then when I first found Bitcoin, it was like, well, yeah, but it probably won't, won't survive or won't, won't work as well as it's intended. And so for me, the journey was, with some ebbing and flowing along the way, was to realise that Bitcoin is here to stay and to succeed, all it needs to do is to survive because everything else will then follow in its wake. So that was, yeah. So that's that's where it came from. Are you ready to secure your future with Bitcoin? At Onramp, we're revolutionizing how you can save for retirement. Onramp has just launched the industry's first Bitcoin IRA product with multi institution custody, designed to give you unparalleled security, transparency and Peace of Mind. With Onramp, you can verify your assets on chain and protect them with the support of three independent institutions, reducing risks and enhancing security. At Onramp, we believe that Bitcoin is the most important asset of the 21st century. The hard part is securing it right. There are shortcomings with keeping your coins on an exchange, but also with setting up your own self custody arrangement. Onramp solves for these concerns. Our multi institution custody solution maximizes security and minimizes counterparty risk, ensuring that your Bitcoin remains securely in your possession and provides built in inheritance planning to ensure your family is protected as well. On Ramp provides Peace of Mind for your Bitcoin journey, whether for your whole stack or for part of it, as a complement to your existing self custody setup. For more information about our services as well as our new Bitcoin IRA product. Check. Us out at on rampbitcoin.com. You bring up a good point, Sam, in that I think a lot of the reason and rationale why, you know, a lot of institutional allocators and even some high net worth, but just generally large pools of capital have have remained on the sidelines is because there is this element of Bitcoin. And, and you know, this has been said before, but it feels good too, too good to be true, right? When you first hear this, you know, digital sound money, hard capped, similar to gold, but improves upon gold in all these ways, there is this general sort of gut reaction to like that that can't be there. There's no way that this is going to work. So I'm curious, like when you had that first initial response, what were the next steps you needed to take to effectively, you know, codify and form a real thesis around the robustness of the network, why it will persist And just getting your arms around, you know, it, while it may seem too good to be true on the surface, there's all these fundamental dynamics which actually allow it to be, you know, this, this ultimate sort of network of trust in the sense that you don't have to trust any other entities that are using it, but you can trust that it's, it's sound and it's transparent. And we know the monetary policy that that is always a journey for everyone. But I'm curious what specific steps you took as an allocator to say OK, I, I I need to know more about this. I need to test me on conviction here and get up to speed. Well, the main thing was time, actually just spending time on it. And when there's, you know, a million things to do, it's difficult to know what to spend time on. And then at some point I realized, oh, I need to spend some time on this or, you know, got naturally drawn in. And then you find one thing and then another thing and then at least you another thing and you learn more and more. And I don't think this is a unique journey by any means, but you still get dragged in and suddenly find yourself, you know, however many hundreds of hours deep and realise that there is something to this. So I think that's what we see quite often in in my industry is where people just simply haven't spent the time to understand it. And if they did, then I think they'd be having similar thoughts, at least some of them. And it was probably, there's probably a couple of other things which which helped, which were probably, I mean, it's probably about three, 3 1/2 years ago now for me in my journey. And it was understanding in more detail why gold has failed us as a sound money and also understanding why cryptocurrencies generally are not some money and not the army. They're not money really, but they're why they're not the answer to these. And that. Then that then pulls in things like the benefits of using lots of energy to maintain the network, the benefits of proof of work, along with lots of other things, the benefits of it being permissionless. So both those things, when we think about them in the environmental and the social context, sort of I think get to the nub of why they're so useful. And then you start thinking of what it could be used in this area or that area or for this to help this problem or that problem. And and then you can get carried away and end up with a very long list. Yeah, this is to throw a couple things out there that were said. So part of this discussion and, and having Daniel and Sam join is then use of the first UK pensions allocating the Bitcoin that Sam Participator was a very heavily involved with, and then Daniel's interest in that area of the market. But we couldn't have scripted better your, your different journeys to come to this asset class, which are very emblematic of like effectively everyone that it's very multidisciplinary and we all have different frames of reference. And Sam, something you shared is, is after having thousands of conversations with individuals about Bitcoin and when they came in that reference of time in 2020 as the big moment that they really recognize what was happening here and took whatever was a small allocation and increased it to a material allocation. And it wasn't necessarily the function of the amount of capital that was printed. It was the fact that they had so much time off the rat race. Because to your point, everyone is so busy doing all these other things that they don't ever actually have the time to take a step back and look at this for what it is. And once you see it, you, it's like everything, you know, everyone that's come down this journey, you can't Unsee it. And so it's a real big component of where, you know, Brian has been so integral and coming from the private banking sector and then leading institutional research at Coinbase and taking leadership here of, of creating this research. Because at the end of the day, like nobody can get to the end state of our products or how do you allocate in the right way unless the research is there because the education is so asymmetric and there's, we're still so early in this monetization of Bitcoin that unless that is done for the in the right way, this is where the past 15 years have shown losses that have occurred because your counterparty is, is effectively where the outfit is right. And if you don't have the right counterparty, you basically might be holding A0 on a long enough time horizon. And nobody can get that coming from a traditional world unless they, they're educated properly. And that takes time. Yeah, one, one thing I'd add as well, Sam, to the points that you made and ties into what Michael just described as well is time is incredibly important in the investment management world, right? A track, having a track record of a strategy is ultimately how you build credibility and demonstrate your acumen at managing money in the space. And Bitcoin's a little bit different, right, Because we at On Ramp and with your work at Cartwright and how we view the market is Bitcoin is the market and the alpha is in the beta in the sense that you want to have exposure to Bitcoin. So it's a bit different in the sense that the way you can think about it as an allocator is you're measuring Bitcoin's track record as an asset versus measuring a manager's track record trying to invest in other Bitcoin and crypto assets, right? And as it relates to Bitcoin's track record, it's incredibly impressive. It's 15 years, about to be 16 years since the network first went live in 2009. And it's monetized from not having a price 16 years ago to be nearly a $2 trillion asset as of the all time highs last week. So I think that track record is really what investors should be paying attention to and should be asking the questions about why, why has this happened over the 15 years? Will it persist going forward and, and what might change, right. So that's that's how I at least think about it as it relates to time in the market is Bitcoin has almost two decades now of a track record and it is the best performing asset that we've ever seen. Yeah. And there's those things that we need to sort of explain and give training on to trustees that are interested. And you're right, some of that is to do with if it's gone up a lot in the past, does that mean it's going to go, you know, down or sideways in the future? And so it's thinking about things like the the fixed supply compared to the increasing supply of the number in which it's denominated, whether it's pounds sterling or whether it's dollars or whatever. So that's part of it. And other part is the total addressable market and understanding where it could have the the concepts of the black hole of Bitcoin sucking out the monetary premium from other asset classes. And guess what, pension schemes invest in equities and property and bonds and cash. And so those are the asset classes that are at risk from Bitcoin becoming a global money. So there in some senses you could say that from an institutional investment point of view, Bitcoin is a hedge against Bitcoin succeeding. But that and you don't need much. You know you need a small allocation to to enable that. It might be worth unpacking as well the idea of a monetary premium, right? Because at least in my case, before coming to Bitcoin and reading some, some work in the space, I think Parker Lewis being one, one person who's really explained this well, is what is the idea of a monetary premium? Because if you're sitting in the traditional investment world, you're allocating to asset classes and specifically in the Western world, right? If we focus on the, you know, North America, Europe, UK, etcetera, we've been fairly privileged as of the past 100 years or so with somewhat or fairly stable monetary policy when you compare it to other parts of the world. So I think in many senses we haven't had to go back to first principles as much as people who've been outside of the West. And there's this unspoken recognition as relates to capital allocation that you invest in assets, right, because you need to get a certain return. And the idea is why do you need to get a certain return? Well, it's because you need to outpace inflation. And so this idea of monetary premium, I think is often discussed but usually not explained at least fully in the sense that investors are. And this is how I understand it. Would be curious to hear any differences. But investors allocate capital to asset classes like equities or real estate and they assign a premium above the utility value. So for equities, you're looking at fundamental metrics related to cash flows of the business. And then likewise with real estate, you may be looking at where it's located, demographics, cash flows, etcetera. But then there's this market that exists above that utility value and that's effectively what the monetary premium is, where people are allocating capital into those markets because they don't want to have a reduction in their purchasing power over time. Is there anything that any of you would add to that? I think that's well said. Yeah. If you look at gold, for example, a lot of people say, well, gold has utility value and that's why it has a price. But the reality is that the industrial use case for gold, for gold drives very little of its actual value. And if gold no longer existed as a store of value, then the price of gold would crash to a fraction of what it is. And people have postulated that the utility value is roughly between 1/6 and 110th its current price. So that additional value which gold trades at is because of supply demand dynamics in the marketplace where there's so much supplied and inflates by roughly 2% every year. We don't know exactly how much because it's not fully transparent, but that's how much new gold is mined and sent into the gold network, if you will, every year. And then there's supply and those supply demand dynamics dictate how much it's worth. And it's the same with real estate as well. I know people who have, you know, upwards of 10 properties. They don't live in 10 properties. They live in two of them. But why do they own the additional eight? Well, it's because they need somewhere to store their money. And as you said, they need somewhere to outpace inflation. I would say not just inflation, but actually outpace the growth of new dollars that have been printed, which is it's a higher bar to have to rise above. So unless they invest in real estate or equities, they're not going to outpace that. So most of the value you see in the stock market or in the real estate market or in gold is because of the monetary premium, because people are looking for somewhere to store their value. And Sam made a really great point, which is that we've had this concept that Bitcoin is risky, so therefore I shouldn't invest. Well, it's actually flipped on its head now. It's high risk not to invest in Bitcoin because where's the money going to come from that pours into bitcoins? It's not going to come out of nowhere. It's going to come out of traditional instruments, It's going to come out of equities, it's going to come out of gold and it's going to come out of real estate and to a lesser extent from bonds. So all of those, as the monetary premium gets sucked out of those things, we can reasonably expect all other things being an equilibrium that although they'll have a downward impact on price of those assets. So if you're a pension fund or a sovereign fund and you hold predominantly equities, bonds, real estate, gold, then you're suddenly at risk. And so Sam said, it's a brilliant comment. I've never heard anyone say it before, but holding Bitcoin is actually a hedge against Bitcoin succeeding because it's a hedge against the value of all those other assets which you have invested in going down in value. Yeah. It's highly agree. Quick point now I was going to add Michael. So it was to do with we did some analysis on looking back over 100 a 150 years and we looked at the relative valuations of those key different asset classes compared to what might be considered their intrinsic value, so or their utility value, I should say. So, so for example, we were looking at the property real estate prices compared to a multiple of salary. We compared equities, we're looking at Cape ratios there. And if the Munchu premiums only built up over the past, let's say 50 years or so, then very approximately around half of those asset classes could be monthly premium. Now no one actually knows what the monthly premium is. All we have is the total price, but there's a chance that it's around 50%. And so if you add together equity markets, real estate markets, bond markets, gold and cash, you get to roughly $900 trillion equivalent. And if you take half of that, that's 450 trillion. So then you can do the maths on that to say, well, if, and it is an if because I don't expect all of these other things to go to 0 monetary premium anytime soon, then you can divide that 450 trillion by 21 million to see what Bitcoin price might be. Now we're a long way from there. So I'd want to be taking some pretty hefty margins off that number to be prudent. But it gives you an idea that there's a if Bitcoin succeeds, then we're a long, long way from the potential price it could reach. And of course, that's before any further devaluation of the dollar, the #, the euro, et cetera. Yeah, And there's one very visceral and tangible thing to call out where because a lot of times the numbers get very ephemeral and lofty when we talk about trillions and market caps. But to Daniel's point, like a Bitcoin has been an emergent phenomenon from the retail sector. And to this point, there's ten, you know, his friend that has 10 properties. When we see real estate investors get in, the thing that they notion this is a proxy for everything downstream of it is Bitcoin doesn't call me at 2:00 AM on Saturday mornings with a leaky with a leaky pipe, right? And so it's this understanding of it, that monetary premium that taking out. That's what individuals at the very emergent side have been allocating from gold to equities all across the board because they look at a superior monetary properties. And now we're just naturally seeing that start to move up to larger pools of capital. But it's still to Sam's point, still very early. You have to not only be able to, it's not one person you're describing and has to get educated. Now committees have to get educated and large institutions have to move their ship. And so it takes time. But that's to that direct point that this has been happening at a micro level since Bitcoin's inception, and now it's just getting into larger pools of capital. And so as it relates to those larger pools of capital, maybe we should talk a bit about why institutions are adopting Bitcoin and should be adopting Bitcoin. And I would be keen to hear if you think there is a recognition, Sam, to your point and and Daniel, as you emphasize that Bitcoin is a hedge against Bitcoin succeeding. And do you think that some of the ideas that we've discussed in the past 20 minutes or so are in line with how institutions are thinking about Bitcoin? Or maybe should we take it, should we take a step back? And are there other ways that you're seeing just from your respective roles within the institutional space? Are you seeing other ways that endowments, foundations, pensions, family offices are approaching Bitcoin? So, so I start on that one. Do you want to come in after us, Daniel? So I think there's three key reasons why pension funds, endowments and charities are looking at. And in fact, you could include companies in there as well are looking at Bitcoin potentially. Now, it is still a relatively small percentage of those institutions that he's seriously looking at Bitcoin. It's a Bitcoin allocation, but you know, they are there and they are increasing. So those three reasons would be first of all diversification so that these, you know, that's following on for the munching premium and the black hole argument there. Inflation protection, you know, having a hard asset for the reasons that we all know can help to reasons a lot of people know because they use property and gold As for similar reasons, so protecting them against potential inflation in the future. And then thirdly, the asymmetric risk profile and return profile. So it's that ability to only have a small allocation. Typically, we might be talking about 2% to 4% of a portfolio, whereas it's got. So you're only going to lose 2 to 4%, but you could gain many multiples of that. So that's those are I think the key three key reasons. One factor that comes in on the asymmetric return profile is that that's all very well, but we warn everyone that it's going to be volatile in the meantime. So the way to mitigate that is to make sure you've got a long enough time horizon to bear that risk. And that means that Bitcoin is not appropriate for, well, in the UK, maybe half of the defined benefit pension schemes that we've got here, but that also means then it could be appropriate for the other half. Yeah, I think Sam's way of looking at this is really important because he's got a way of nuancing and saying upfront that Bitcoin is not right for every portfolio allocation. One of the points Sam made on another podcast was if you're a pension fund which has one year left to run, then you don't want to get Bitcoin because you might be in the wrong part of the market and it goes down. So Bitcoin is a great asset to hold, I would say for four years minimum, because if you've held it for four years minimum, if you look at the four year moving average, it's always going up and to the right. So that's a sort of the time frame. And with some of the conversations that I've been having have included family offices who have a multi generational time frame. So it's the perfect asset, for example, for family offices with a longer time horizon, which you're looking at. How do I be a custodian of intergenerational wealth? To give you an idea, I was in Amsterdam recently and I had a private meeting with the principals of 21 family offices and all of them were interested in investing in Bitcoin. But most of them believed they couldn't. And the reason they believed they couldn't was they had an impact investing mandate which said that we want to do things which are not only going to be financially sustainable, but also socially and environmentally sustainable. And they had some concerns that Bitcoin didn't tick those boxes. So my presentation was presenting the results of my due diligence as an investor, as a climate tech investor and as an impact investor, talking to other impact investors and saying, look, I can give you a reassurance that not only does it tick this box, but I have good reason to believe and the data backs us up, that it's going to be the most prudent ESG investment over the next 10 years. In fact, most of these funds have a challenge right now in that they don't have a lot of great options, which are both going to give them a healthy risk return profile, fit the asset allocation requirements of that fund. And at the same time, they're going to tick that ESG box really strongly. Now, half of them, they want to tick that box because they have genuine values that align to it. And others, it'll be frankly optics. They want to be seen to be doing the right thing. But in both cases, they need to have a reassurance that Bitcoin is going to be taking those boxes strongly. Long story short, at the end of that presentation, every single person, not only did they no longer have an ESG concern, but they could see that it was possibly the best performing ESG asset simply from an ESG point of view that they could possibly invest in. So there's a lot of reeducation to do as well. And this is fairly common. What happens when you have a nascent, because Bitcoin is not only an asset class, it's also a technology. So it's quite unique in that respect. My background is in tech entrepreneurship. So I look at it from a technology adoption lens and I look at how technologies get adopted over time and how you've never really had an asset or a technology where retail have been able to invest in it. And the institutions have actually been shut out for about 15 years. So this is quite unique. So it flips a lot of things in its head completely. And now finally, institutions are having a chance to be involved. Now the reality is that any nascent technology always has quite a lot of volatility to it on a given day because it's a reflection of the of the emotions of the marketplace. It's just that at a company such as Facebook or such as Google, it wasn't until it went public that you got to see the expression of that volatility. Now, Bitcoin is still relatively early on, so it has a lot more volatility in it, which is again why if you're looking at a longer term horizon, that volatility starts to iron out over the long term. If you look over that four year moving average, it's always up and to the right. Brian, maybe just throw you a little bit on the spot. Can you highlight a little more of the the notion that I think we all agree here that there's nothing probably more ESG than Bitcoin, but how you would describe it from your private banking and and research days that Coinbase is articulating to investors why that is? Yeah, I mean, it's a, it's a fascinating 1 because I think, you know, I was, I was trying to make this argument as you know, as early as 2-3 years ago when really the a lot of the FUD and and misinformation about Bitcoins energy usage was extremely prevalent, way more prevalent than it is today. And I think, you know, thanks to to folks like Daniel who have really been out and, and telling the truth and the real story here. I would also say Alex Gladstein has done a great job of this, but to, to break it down, you know, you could just go through the, the components of ESG, right, environmental, social and governance. The environmental 1, you know, is, is you have to look past effectively, OK, this thing is, is using a ton of energy. So maybe on on the surface of a, you know, very cursory understanding of what's happening, you could say, OK, use a lot of energy that's bad. But when you dig a little bit deeper into, you know, why and how it's using the energy it, for one, it's actually critical to the functioning of the network. And what Sam was alluding to earlier around this, this the mechanics of proof of work and how, you know, effectively, if you're going to create a new form of money, there should be some sort of tied to the physical realm of, you know, you need to expel energy in the physical reality in order to create new units of this thing. Very similar to, you know, if you just think of, of Bitcoin mining as a synthetic form of gold mining, very similar idea there, right? You have to pull the gold out of the earth. You have to expel energy via these Bitcoin mining ASIC machines in order to create new units. So that's, that's sort of the first stage of, of understanding here is like, OK, this is fundamental to the thing existing. And then you take a step further and say, well, how is it actually doing it? And and then it, it, you come to the realization that for the first time in human history, there's no such thing as stranded energy, IE we can now monetize energy in a location agnostic manner never before possible in human history. Pretty remarkable. And so then what you start to understand is, is overtime bitcoins just going to use more and more otherwise wasted or stranded energy? And you're already seeing that play out over the past several years because the, the, you know, the main input in terms of a, a Bitcoin miners balance sheet and profitability is their input cost. And that main, the main input cost cost to consider is the price of energy at which you're, you're mining. And so naturally what happens over time is, is you know, these miners will seek out lower and lower cost of energy. And in many cases, those are sources of energy that would have otherwise not been profitable or feasible to get to a grid, get to a population or or city center. And so they are generally wasted or stranded. And so that is a amazing dynamic that, you know, most people, again, if you're just looking at it at the surface level, use a lot of energy bad. We'll know. Let's look a little bit deeper. How is it using the energy? It's doing it in a very unique way that actually can't be done with any other technology if you want to move to the the social side of things. This one is a little bit more straightforward in my mind. And I think, you know, kind of remarkable that this was ever a question whether or not big Bitcoin was good in terms of the social dynamics. But, you know, there are billions of people around the world who are entirely unbanked or under some level of financial repression. And if they have access to the Internet and a smartphone, they can access this open, permissionless network and they can protect themselves from hyperinflation or debasement of their local currency. So that one's pretty straightforward. This is good for humanity. It gives people a open monetary network that they otherwise wouldn't have had. And then on the governance governance side, it's sort of this just elegant understanding of, yeah, this is an open network with, you know, it's a set of rules without rulers. That's sort of the ultimate form of governance in the sense that you don't have to trust fallible humans in terms of maintaining this thing. It's math, it's code, and it's the shared distributed piece of software that is, that is really the ultimate form of governance. But I, I want to hand it to Daniel because he's done a fantastic job of articulating these points over the past couple years. And so, yeah. Anything you want to add to that? You said it well, in terms of the social side, there's been 19 documented use cases of Bitcoin and most of them impact people who are currently in the global S So again, it flips things on its head. Normally we're used to a technology such as mobile phone technology impacting the W 1st and then when we've sucked the profit premium out of it, and then we think about other parts of the world. Bitcoin has been adopted as a store of value in the West, absolutely, but it's been used as a method of transacting predominantly in the global S where previously you couldn't to get remittance payments to your family across borders without middle men in the middle. It's just phenomenal how it's been used on the environmental side. What's interesting is that the media has latched onto this. It uses a lot of energy, which is absolutely true. But the really important thing to recognize is that that does not mean it's bad for the environment. In fact, if you look at the consensus of the environmental movement, or maybe not the consensus, but I'd say 75%, you kind of have the split. And people often think that the environmental movement is degrowth. They want to use less energy. That's actually a false notion of the environmental movement. There are definitely some people in the environmental movement who believe we should use less energy, fewer resources. However, most of the environmental movement, the other 75% of pragmatists say people like Saw Griffiths who wrote the book Electrify, who said that there's no way we're going to have a green energy transition and create more supply of renewables on the grid if we don't have demand for it. So the worst thing you could possibly do is to try to limit our energy consumption because then there's no demand. Who's going to set up a new bakery business in a street where people are buying less bread? It's not going to happen. So similarly, people aren't going to set up more renewable. Generation of people are using less energy. So what becomes important there is the form of energy that they are using. And there's been a lot of peer reviewed research lately that's shown that because Bitcoin is incredibly flexible as an energy user, it's able to use renewable energy that otherwise would have been wasted, would have been spilled into the ground. Because it was produced in the middle of the day in the case of soul, when nobody wanted it. Or in the case of wind, it was produced in the middle of the night when no one wanted it. And Bitcoin can soak that up. And that means the renewable generator is more profitable. And what does any prudent business operator do when they get more profit and their business, which means more solar, more wind. So it has this flywheel effect. And then the other great thing about it is because it can very easily ramp up and ramp down. The biggest concern that grid operators have and why you get these huge interconnection queues, I believe in the UK, they're spanning out to you want to get new solar and wind on the grid. Sometimes you're given a date in the 2000 and 50s. And the reason for that is that these grid operators cannot handle more intermittent power sources. So if the sun goes behind a cloud, you've lost your power. Well, what happens if you've got peak demand at that time or if the wind stops blowing, as it has in Germany right now, and the grid operators are freaking out because they don't have enough power on the grid? You have to have consumers of energy. You have to have two things. Number one, you have to have what's called a gas peaker plant, which can fire up very fast and supply more power. Or you have to have consumers of energy, which can very quickly ramp down their energy consumption. And so the paradox has been as we've put more variable renewable onto the grid, we've also had to put more gas pica plants onto the grid as backup, which is generating fossil fuel. And they idle through the year, releasing carbon dioxide into the atmosphere just for those 10% of the year when there's peak demand. And they can counterbalance the variability of renewable energy. Well, now with Bitcoin mining, you don't have to do that. You don't need those gas pica plants anymore. In fact, in Texas, this is exactly what had happened. For three years, Berkshire Hathaway had been proposing 8 to $10 billion of new gas pika plants. But the grid operator discovered Bitcoin mining, which meant they could just ramp down the consumption of energy. They didn't need them. So it's been absolutely incredible. Once you look into the nuances beyond it uses too much energy, you start to see these amazing completely accidental ways that the cost. Bitcoin miners are the only people in the world who 80% of their budget, the operational budget is electricity. They are positively incentivized to cheat this cheapest sources of energy to seek the cheapest sources of energy in the world. And they are generally going to be renewable energy, which has been what's driving it to be the most renewable and most sustainable using energy user in the world today with more than 50% coming from sustainable sources and rising by 4% plus every year. Yeah, well. This is probably an episode on itself. Well, one last thing, just a reference on the, the, you know, ESG argument is it 1 discounts the utility of Bitcoin, meaning like there is no utility value, which fundamentally a sort of value and economic activity coordinated from it has some value. And we can make the case it could be all the value when you when you break it down, it ties into the monetary premium that we discussed here. And if you don't necessarily need to produce more houses because of that, well, then there's that side of the energy. But then there's also this thing that the one that's probably the most relevant here is nobody talks about AI and data center usage. They talk about Bitcoin usage. And what effectively happened is to Brian's point, because there's no such thing as straining energy. And Bitcoin miners and the data center operators of that recognize that they are this like Canary in the coal mine and energy markets to find the cheapest source of energy. We're now the AI data centers are effectively, I don't know, Co opting is the right word, but they're they're purchasing, they're Co locating and they're ultimately becoming the most more profitable or or they're switching off from mining to actually powering GP us, which now pushes the Bitcoin mining miners to go find another cheaper source of energy to the point that's renewable or to stranded gas and other sources of energy. So it's, it's the most perfect energy access point that the market hasn't restarting to like recognize. So that's, I think, a part that goes under score, yeah. The other, the other way I would describe it just at a very high level is like it, it just it makes us more efficient as a species in terms of how we're leveraging all the different sources of energy that we have available to us. If we can, you know, instantly monetize on location something a source of energy that otherwise would have been wasted or stranded and not profitable to get to a grid. So at a very high level, all else equal, like it makes us more efficient as humans and should over time be sort of deflationary in the sense of we're just getting better at using all of the available energy sources on Earth. Yeah. And Daniel, I believe you gave a presentation before about Bitcoin being the world's best ESG assets. So I'd encourage we can include that in the show notes, but I can encourage anyone who wants to take a deeper dive into the topic to check that out as well. Feel like Daniel and Brian, you both very much, very well articulated the point there and would encourage people to check out that presentation. And and Sam want to pivot back over to you as well to talk a little bit more about your decision making process at Cartwright because you had described 33 characteristics as why institutional investors are honing in on Bitcoin as an investable asset class. And the three were diversification, inflation protection and asymmetric return profile. So when you were starting to evaluate Bitcoin in your seat as a pension consultant, were any of these three characteristics more important than the others? Or were any three more urgent than the others as it related to helping your pension schemes navigate these changing investment landscape? And then from there, maybe we could talk a little bit more about the manager research process and the process that your team went through as it related to trying to seek out Bitcoin exposure for for your pension schemes. And maybe also maybe afterwards I could given Daniels on the call, I could touch briefly on how pension trustees in particular think about the ESG situation and how they incorporate that within their within their investments. So out of those 3, the most relevant 1 I think was the asymmetric return profile. And that's because you want to take an idea to a client that they can see the benefit. Now there's always risks with anything, but they can see that the reward is worth taking for the risk. And so accepting that there's some volatility in the price, but it's got this asymmetric return profile is then makes it very attractive. But then you need to sense check it. And that's where the diversification comes in because I think, you know, sometimes there is a concern, well, we don't want Bitcoin because it's too volatile. OK, Well, we're not talking about putting everything in Bitcoin. We're talking about putting a small percentage in Bitcoin. So let's not focus on, we don't focus on a particular equity you invested in and and worry about that volatility. We consider the portfolio as a whole. And so you, you reduce that analysis and of course, everything then makes a lot more sense and is more sensible. So, so that, that's probably that the you mentioned then I think Jackson, the, the process that we went through to which, which process did you mean? Did you mean the process to advise on the Bitcoin allocation or something else? Yeah. So the the process once once you understood and the team had decided that Bitcoin had a role within the pension portfolios, what was that process like for you to start evaluating managers and what were the most important characteristics and I guess selection criteria that you thought through as a team? Well, so it was. So we also do a lot of research and a lot of different asset classes and fund managers. And as I think Michael might have alluded to earlier, we spend, you know, if we take an equity manager, global equity manager, we spend a lot of time thinking about, you know, what's their, what's their worldview, what's their process, their philosophy of tube, when do they buy, when do they sell different, different equities? Is there a bias within the portfolio portfolio? You've got all these kind of things that you're thinking about and then there's a bit of a sense check at the end you're making sure. Well, are their custody arrangements OK? OK, yeah, they've got they've got good custody arrangement in place, that's fine. Whereas for researching on ramp it, we spent about the same amount of time doing it all. But of course most of the issues were not relevant at all. So we could put them to completely to one side and really deep dive on on the custody. And obviously that's extra important because it's an asset class which clients are not used to. So it's actually was really important that we went the extra mile or extra 100 miles on the custody side because we had to be, you know, we had to be ticking every box to give them the reassurance, reassurance for a new asset class. So that was, that was, you know, a fascinating process to go through. I think the other key aspects that was important to us was having a firm that was willing and keen to work with us. You know, it makes things so much easier. You know, there's always things that come up, aren't there, that you think, well, you know, could we do this? Could we do that? And maybe the answer's yes and maybe the answer's no sometimes. But the point is, it's about that working relationship and being able to pick up the phone and then have those conversations. That's incredibly important. Yeah. And maybe Sam to add to that. So the founding of the firm, we had experienced building infrastructure at this point now for close to half a decade. At the time it was you know called 2 1/2 three years and we looked at the market and generally in a newer market or existing market you see the leaders and you assume that they have it all figured out. And in 2022 we realized that wasn't the case and we looked at GBTC at the time this is pretty ETF's and we looked at this product that had over 600,000 bitcoins. So it was objectively providing product allocators exposure, but at the same time understanding the space, we looked at it as not the best product from some of the things that we were founded on that I think you can share more than my understanding you guys found valuable, which was the custody and the the counterparty risk, the in kind redemption. So Bitcoin is a unique asset that you can take delivery. And you've talked about previously, I think on our last podcast that we did about your experience with the GFC and the recognition that when they're when counterparty risk goes bid, that the fact that you want to be able to take delivery or hedge out those bets and and moving the asset. And then the education, which was a big component because historically allocators of all shapes and sizes have been exit liquidity in the space. They chase the momentum and then they go with asset managers. They don't really understand what's happening. And when that volatility inevitably ensues, you need somebody to be able to sit in the trenches with you to describe what's happening. And so that was how our firm was founded. And I think that was a lot of the things that we found were most valuable to you and was was really exciting because at the end of the day, you know, pensions consultants are the most sophisticated investors in the world. And we built this product and this firm for those investors with the market catching up. It's why we focus so heavily on education and this podcast as an example. Yeah, no, that's, that's brilliant. And I agree entirely. All those things were important. Two that particularly stood out from that list are the the counterparty risk and being Bitcoin only. So just to add a little bit more detail on each of those. So counterparty risk or exposure. So this is to do with, it's in many ways it comes back to the diversification point in that a big sort of part of that diversification associated with Bitcoin is that you can hold it without a bearer asset. As we know, you can hold it without counterparty risk. So why wouldn't you? It doesn't really make any sense to not do that. And that flows in some of you guys. Some great examples there, Michael, But you know, that leads to ruling out single points of failure. It comes down to, you know, working with someone who's not tempted. Well, if we lend it out, we can get a bit more yield or any of that nonsense. Well, it's got it's place, but it's not got it's place for institutional investment when all they want is an allocation to Bitcoin. So those that was important and the Bitcoin only was important as well because again, it's about ruling out distractions. So it's not getting distracted by trying to earn some yield by taking on some counterparty risk. It's not. It's ruling out distractions about other cryptocurrencies which are not moneytheyre.com companies or you know, technology companies or scams. So it just simplifies things dramatically and means you've got a nice clean allocation with no counterparty risk. And it just makes life so much easier when you're explaining it to to people on why they should invest in this way. Does your Bitcoin custody setup keep you up at night? Maybe you still have coins sitting on an exchange Worried about hackers? Or maybe you've set up your own self custody but don't feel safe with your Bitcoin savings stashed on a little plastic device in your desk drawer. Gain Peace of Mind with On Ramp and our multi institution custody solution. Here's how it works. On Ramp creates a dedicated multi sig vault just for you. 3 separate institutions each hold a key on ramp bit go and coin cover, but none can move funds unilaterally. Instead only you have control over your coins with on ramps multi institution custody. 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It's a critical thing to highlight even a bit further too in the sense that Bitcoin is about it maybe one point eight, $1.9 trillion asset today and it's about 60% of the broader digital asset market, which so that comes out to, I don't know, 3 1/2 trillion or so. But the point being that custody has been a pain point for the industry of it of it's entire existence. So for Bitcoins about 16 years and then since then over the past decade or so the proliferation of other digital assets. And in that time, there's been about $600 billion of losses of capital, permanent losses. And that's due to having a counterparty that is not acting in your best interest or may not have security that's up to snuff or has some some sort of single point of failure. And this is really important to highlight as we're speaking to institutional allocators, because when we think about custody and Sam, it ties into your point with if you're looking at, you know, an equity manager, right, you want to understand their alpha in the market as it relates to where they focus, you know, region wise, maybe sector specificity, what is their underlying strategy? Are they long only? Are they, you know, long, short market neutral, etcetera. If they're in the alternative space and none of that really matters in the Bitcoin space because you want to have exposure to the underlying assets. So then the question becomes then, well, what does matter? And I really wanted to emphasize the point on custody because with traditional assets, Sam, you kind of mentioned that custody, it's still important, but it's not a defining characteristic of the due diligence process, if I understand it correctly. I don't want to put words in your mouth. And the reason being is because these custody of other assets is effectively record keeping, right? You have records kept at the custodian. They're likely backed up in several different places and you lose the record, you, you haven't lost the asset. You know that that record is, is kept somewhere else. And it doesn't mean that the, the company no longer exists or the the piece of property is no longer there. Whereas with Bitcoin, the custody is critically important because if the keys are managed improperly, it's likely resulted in a permanent loss of capital. And it might have been before we hit record, but we were talking about the idea that if you are an institutional allocator, you can be wrong about an idea potentially and have, you know, a quarter percent or 1% of your portfolio go to 0 or, or experience a significant draw down. And you could be wrong about the investment thesis. But you what you don't want to be wrong about is the underlying custody or the exposure that you've gotten access to that asset class, right? Meaning you wouldn't want to lose your Bitcoin because you picked the wrong counterparty, whereas you might be OK with losing 1/4 percentage of your portfolio on the underlying investment thesis. Is that how you think about it as well? And Daniel, I'd offer that up to you as you're just given conversations that you have, you've been having with family offices and other institutional allocators. Yeah, Sam, do you want to go first? Yeah. I mean, you're spot on, Jackson, right? So that having that counterparty risk removed is essential and also the transparency that can go along with it. So the Bitcoin address in which it is held. So I've given that address to the trustees in question, and they love the fact that it's transparent. In fact, it's more transparent than any other asset they've got. So it's that's one of the great things about Bitcoin. You think, well maybe if it's just as good as everything else and then suddenly it's 10 times better and you think, Oh well OK, really underlines that new technology really takes off when it's 10X better than what is already in place. Yeah. The thing I'll add, just bringing in the family offices is one of the big considerations they have is inheritance is transfer of intergenerational wealth. And so that's actually quite a messy process just even in the traditional Fiat system. And so if you can almost address 2 issues at once, you address the custody issue, but you also address the wealth transfer issue together at one time, it can turn a potential perceived problem with Bitcoin into an even better solution for a lot of people who are looking to answer that question and to whom that question is tremendously important. So I've seen family offices, they're very interested in the question of what happens with that intergenerational wealth transfer with the custody of the assets. So I think what you're creating together and when I found out about on ramp, I'm like this is actually an ideal solution for family offices as well. That's exactly right. We, we were just got back the team on this call, we were visiting Dallas family offices, institutions that we had historically met with since, you know, 2020-2021 that hadn't had allocations. And it kind of got in emboldened in the sense of, you know, we used to talk for very often about, well, why is the asset have value? Why isn't it going to 0? And I, I basically reframed it. So like, if we want to talk about value and, and you know, scarcity, like that's a conversation. We'll set up a different call. I want to explain why it's not $10 trillion and it's breaks down what we're both Sam and Daniel both have references. You have this notion of you know, Jackson said six, 600 billion. Our slide I can pull up has 400 billion just because of the the price of bitcoins appreciation recently. But the point being is from the very simple perspective, Daniel like a patriarch of a family office and we experienced this intimately. They cannot get their exposure of 50 to $100 million because they both, this is just a real example. They father, son fly together and what happens if they have to, they can't trust a third party because you can't put that amount of capital because they're managing their families wealth. And so if they mess up the custodian, well then they lost the asset. But then they can't manage these private keys because if they go down and like they can't tell anybody about the private keys from an inheritance perspective because well, then that defeats the purpose of setting up the the security model. So these are just small examples that have kept individuals out of this asset. And once you solve for that, you allow for its appreciation. And so just for anybody watching these, there's two really good slides here that describe what we're talking about. This is the old slide that has the the $400 billion that is now 600 billion given bitcoins, you know, close to $2 trillion market cap. And then what we're describing on custody and Daniel's referencing is really this notion of multi institution custody, which inserts techno is governance effectively into the protocol requiring multiple institutions to validate with the asset manager or the end client depending how it's constructed to move the asset. This has never really existed in Bitcoin. It's nothing that's technically changed. It's more of the legal governance that's built on top of it. And it's part of where cartridge working with us, I think Daniels been interested and where we're seeing so much traction in the market because as the price gets to six figures, you can't actually afford to be on the slide anymore. So people just will stay out of the market rather than put material allocations because the alternative has effectively been, you know end up on this slide. And so now you can start to get folks in. But the one of the key thoughts here is we're still so early that this is asymmetric information like that. The reality is most people will look at the ETFs and think of them as the most sophisticated products. In reality, over a course of, you know, 15 years, we've seen centralized custody has not, you know, boded well for the underlying holders. You know, we hope it'll be different, but we can't plan for that when it comes to, you know, an asset that is, you know, holding 2 trillion and eventually $10 trillion, if not greater. And so that's kind of why we structure these products in this way. Yeah, it's it's exactly right. And I think you're just going back to what that slide really demonstrates with those the losses is, you know, effectively the 1st 16 years of bitcoins history. You, you didn't mess it up via the thesis, right? The thesis Bitcoin as money continues to be validated. That's not how any investor has lost money in this, in this asset class. The only way people have screwed up is via custody. And that whole 400, now 600 billion are all a function of some version of a single point of failure. And so the reality is for the 1st 16 years, custodying Bitcoin without a single point of failure has been extraordinarily difficult, if not impossible. Whether you're doing self custody yourself, you, you yourself, the end client, then become the single point of failure or you're trusting a single entity that's a single point of failure. And really what we are just trying to pioneer and and sort of incept into the the market structure is there's a way to build fault tolerance and redundancy into the the protocol governance as as Michael alluded to. And so that is just objectively a better way forward in the sense that you can eliminate a single point of failure, which is again the only thing that has tripped people up in this asset class historically. And and that speaks to just the unique custodial nature of the asset in that you cannot afford to screw up the custody because it's just gone forever. It's finite and you can't recreate new Bitcoin. So, so it's just, it's very different than any other asset class. And for that reason you have to think about it differently. Sorry, boy, I was just going to say it's one of the thing that's tripped people up and that's their emotions and panic selling or particularly. And then that underlines going in with eyes open and making sure that decisions are made in a methodical way, which is what we can help with. That's exactly right. I think one thing that ties not that we have to go back to, but to the social side of the ESG is the democratizing nature that technology has, right? I think it's kind of a funny statement, but the presidential election posted, you saw Trump with like Elon and a few other people all holding this device that we all have, right? The most powerful, you know, influential people use the same device that we use in the same way where you think about sovereigns or pensions or large pools of capital would have had armed guards and all the things associated withholding hundreds of 1,000,000 billions of dollars in assets. This form of custody is is technology in the same way that a pension can leverage it is the same way as individuals like me and you can can leverage it. And there's this democratizing nature of sparking all your wealth and getting that like industrial grade security that you never saw for somebody to hold 1,000,000 of the same as 100 billion, if not a trillion dollars. So it's very powerful in that respect. And and to Daniel's point, market structure around inheritance tax advantage accounts and insurance have all been missing from this. And in an actual like way that makes sense. And these are things that multi institution solves for. Yeah, having people like Sam seems too modest to say this, but I'll say it on his behalf is tremendously important because if you extend out what it means, getting your emotions too involved, there's three big mistakes you can make. One is trying to time the market or panic sell. The second is that you think, oh, what's this call nascent altcoin slash NFT? Let me diversify into that. And you get wrecked. And then there's a third issue, which is you, you start trying to trade on leverage. I've made all three mistakes and a lot of people in Bitcoin have in their first cycle and they've lost money and then they've learnt that they're probably better off to do what some OG or some prudent advisor told them to do in the 1st place, which was to hold the asset and not sell it for a long period of time. And so it may sound like simple advice, but it's actually hard won advice. And it's tremendously important to have people like Sam who can say from experience this is the way to preserve wealth over a long period of time and to guide them through the processes because there are distractions. And in the media in particular, Bitcoin and crypto gets conflated all the time. Even within the Trump administration, it gets conflated and people think they're the same. They're absolutely diametrically opposed. The only thing that they have in common is they use the same technology base. But beyond that, the assets are different. The technology is different, the ESG profile is different. Everything is completely different about them. And so it's really important to understand those distinctions. That's a critical point, Daniel. And just to go a little bit further on it, it, I think there's an increasing recognition that Bitcoin is different from crypto. But I totally agree with you that there's still a lot of conflation and it ends up being detrimental to allocators because they're thinking about Bitcoin and the rest of the crypto space as these very speculative, not that speculative is inherently a bad thing, but they view them as speculative with no sort of value underlying it. And they view them all as the same thing, right? So naturally people gravitate toward maybe a top 10 weighted, you know, market cap weighted exposure to digital assets or they want to allocate to venture funds that are investing into Icos and and other things, right? And, and there's a difference there though that Bitcoin is and Sam, I want to and Daniel, I want to hear both of your takes on this. Bitcoin exists as its own monetary network. So if you think about the traditional financial system, you have equities and bonds, currencies, real estate, and they're all in some way tied more in some more than others, tied to this existing banking rails and Fiat currencies. And then you have this other technology that exists totally outside of that system. And it ties into Sam, your point about the great financial crisis and having the optionality to, you know, with gold particularly having the ability to take that bear instrument and then have access to a form of money or an asset or a form of capital outside of the banking system. And I think we're starting to get to a point now where there is that broader recognition within institutional circles and within investment committees where particularly after the 2022, the Russia sanction of assets and now these heightened geopolitical tensions that we've seen in 2022 three and 24. I do think that the, IT is becoming more clear to allocators, still not clear as it should be. But you know, we're getting to the point where folks are getting more educated in the space and they're starting to view Bitcoin as a more risk off strategic asset allocation where they're viewing the rest of the space to be more again, speculative or risk on or almost like a, you know, a lottery, a lottery ticket within a portfolio that's maybe 25 bits or a percentage of their portfolio. Any thoughts there? Yeah. I don't think we're there yet in terms of making that difference clear between Bitcoin and everything and everything else. I think we're getting there. But I mean, so for example, I was having various different debates or discussions on LinkedIn when we announced, when we announced what was it about 3 weeks ago that first allocation to a pension scheme. And there's still a lot of confusion there. And they said, well, what about this, that or the other? And they said, well, that's, I mean, that's not Bitcoin. So you're talking about a complete. So there's still this element of two people talking past each other, but every opportunity I get, and I'm sure every opportunity you get as well, it's always mentioning Bitcoin is not the same as crypto or some other similar phrase. And the message is slowly getting there, I think, but it's still going to take some time. There's still, well, it comes back to what I was saying earlier, a lot of people haven't spent much time on this topic. And therefore that's one of the first things that hopefully people couldn't. In fact, when I speak to someone for the first time, they say, oh, this is interesting about your crypto exposure. I say, no, it's not, it's not crypto, it's Bitcoin. And in fact, if they're just learning, so if they're engaged and they would look, so I want to learn more, I say, OK, well, the first thing is I'll give you a shortcut of two years and tell you that Bitcoin is not crypto and hopefully, hopefully take that on board and that they will then accelerate their learning process. But yeah, there will still be some casualties along the way, I'm sure. Yeah, I think that's, that's the, that's the first and sort of primary route that we get sort of this divergent in terms of understanding Bitcoin versus everything else. It's it's just literally people taking the time to dig a little bit deeper than their, you know, existing sort of cursory view. The other component I I've been thinking about is more just like the market's going to tell us over time. Part of that is like what Jackson referenced earlier, like Bitcoin dominance, you have slowly just grinding upwards at 60% of the market and growing. And then the other component too more recently is like, well, you know, the the corporate adoption and now sort of the nation state level adoption is occurring for a very specific asset, Bitcoin. You know, that sort of those upper tiers of these new forms of adoption is not occurring for the long tail of crypto assets. So that in and of itself is a market, you know, signal from the market in terms of new adoption that Bitcoin is fundamentally different than everything else and represents this sort of pristine collateral reserve type asset. Whereas if I'm being very generous about the rest of crypto, it's speculative tech plays more or less, which is is just fundamentally different than a long term sort of sound money reserve asset. And so I think that that, you know, while it's seems slow in real time like that, it is definitely shifting just in terms of the signals that we're getting from the market that these things are very different. There's a common theme that's come up three times so far, which has been investment of time and that's where the alpha is. The alpha doesn't exist by taking a very blunt view of an asset class, the alpha gets exposed when you get start to get an out of focus view and you bring it into sharp focus in the same way that we look at energy and we think, well that doesn't sound good. You put it into sharp focus. You realize that certain types of energy consumption are environmentally net positive. Similarly, you look at cryptocurrency and you think that includes Bitcoin. But when you look into it deeper and you go hang on a minute, Bitcoin has no founders. It had no ICO. It has a fixed cap supply of 21 million. It has the Lindy effect, which is working over 15 years. It has 60% market dominance. It's the only thing that nation States and corporate treasuries and family offices and pension funds and sovereign funds are looking at. That makes it fundamentally different, to give you another analogy. But what often happens is that things get conflated together before people get an intelligent understanding. So in another market, we saw this exact same thing play out as what happened in cryptocurrencies. So we have a fund right now that invests in Bitcoin mining companies who are using landfill gas as their energy source and we provide the infrastructure financing and we also get some juice on the top because we also in carbon credits because it's reducing carbon emissions because methane is 84 times more warming to the planet than carbon dioxide over a 20 year period. Now you may have heard that over the last couple of years the price of carbon on voluntary markets crashed. And there's a very specific reason that it crashed. And that's that a lot of people were behaving fraudulently. And what they were doing is they were registering these schemes in forest based carbon credit schemes. And they were saying that it was mitigating a certain amount of carbon emissions per year. And either the numbers were wildly overestimated or they were trying to claim projects which were not legitimate projects because they the projects were there anyway and they didn't need carbon credits in order to justify their existence. And there was a big expose of that. And what happened is the entire carbon market, voluntary markets crashed and then people looked a little bit more deeply and there was still a demand for carbon credits. And people said, well, hang on, there must be some other alternative. There must be a way for verifying whether these carbon credits are genuine, whether you can measure them or not. And people discovered, yes, there are, there are technology based credits as well. And that's things and that played into our hands because if you're looking at carbon credits that come from a landfill as opposed to from a forest, you can use telemetry to show exactly minute to minute exactly how many methane emissions that it's avoiding and therefore how many carbon equivalent emissions it's avoiding. So what happened to the markets then is then you've got this bifurcation where the forest based carbon credits are still trading low because people had lost faith in them as an instrument. But people's face rose in this particular type of carbon credit that was measurable up-to-the-minute and you could tell. So science based credits they called and they're now trading at a 50% premium. And the same thing happened with a couple of years ago with FTX collapsing and everything else collapsing. That brought down Bitcoin for the same reason that it was tarred with the same brush and people didn't understand it was different. And then people started to go hang on. FTX was nothing to do with Bitcoin. In fact, the founder of FTX, Sam Bachman Freed, hated Bitcoin and railed against it and funded politicians to speak against it. He didn't like, he said in the Financial Times two years ago, that Bitcoin has no future as a payments network, right? So this had nothing to do with Bitcoin. This had to do with the fraudulent behaviour of one person who is running an exchange. And as people started to understand that was not Bitcoin, then you saw Bitcoin start to rise, but the other forms of cryptocurrency did not rise. If you look at how Bitcoin is trading relative to Ethereum over the two year period, it's trading up and up and up and up. And I think that's because there's this increasing market sophistication which is starting to distinguish, but there is still more work to done to be done. And that really points to the importance of investing some time to understand these nuances because that's where you gain that offer. Yeah. What we've seen is everything that you guys just described that takes the time, but it also takes multiple people's time in these organizations. And these facts are objectively true. There's no shortage of research that if anybody spends the time, comes to the same conclusion. And what ends up happening is something that that I just like really felt viscerally. Is that 21 million is a very, very small number when you, when you really break down kind of the, the fact to Sam's point that nobody's really here yet from an institutional perspective, it's still so very early that they're still trying to figure out like the, through the fog of war, what's happened in digital assets And how do I just get my bearings so I don't end up in this, you know, FTX situation. And it takes so much consensus, so much committees like sitting in these large pools of capital that we're still so amazingly early. And that 21,000,000 number is so very small, especially when again for we, we know this, but maybe new listeners or institutional listeners that like 4 to 5 million of those coins will never be seen again just by nature of losses. And most of the rest of the 20 million, no one wants to sell them. That's exactly right. So gentlemen, maybe as we're kind of coming up on the tail end of the conversation, be curious to hear any viewpoints on what could accelerate or what could potentially decelerate Bitcoin adoption for institutional investors, businesses, family offices, high net worths into 2025. Are there any specific catalysts that you could see either positive or negative? Are there certain catalysts that have happened in the past weeks or months that you think are worth emphasizing further? Just curious to hear outlook as it relates to the investment case for Bitcoin for these types of allocators. So, OK, so a couple of things that spring to mind. So, well, actually, I guess, I guess the first one maybe covers both, because the first one is we've talked about the human emotions around Bitcoin now the Bitcoin network, just, you know, the whole TikTok next block meme and the Bitcoin network just continues every 10 minutes or so to, to confirm those transactions. So nothing changes there. What changes? What impacts the price is the human emotions around whether it'll succeed, will it not succeed, how much will it succeed, etcetera. And that I think will be the key determinant of whether we see, you know, what the next year has in store in terms of in terms of the price. Do we see human beings be more receptive to to and institutions in particular to this as an asset class and are they going to be more willing to dip their toe in the water? So I mean, none of us know the answer to that. I mean, in our own way, we're all trying to to encourage that for the right reasons, but we don't really know. I think, I think there's, I think there's the other example I was going to just mention was that when I was last on your podcast, I think it was February this year from memory. So I think I said then, which is always a bit risky because you're trying to predict the future. But I think I said given what we're seeing in the market, and this is markets generally, not not Bitcoin specifically. And in terms of where we are thinking about things from an Austrian economics point of view, which tells you nothing about timing, does tell you that we're on shaky ground as far as the economy is concerned. Then maybe we'll be having a recession in 12 to 18 months. I remember saying that. So thankfully we're not yet at the 12 or 18 months because it hasn't happened yet. And of course things can change like the, you know, I don't know you, you'll know better than me what impact the Trump administration could potentially have next year. But I think, you know, we are still on rocky ground economically. And therefore if we do get a big hit to markets, I think that'll particularly after the COVID one in 2020, I think that will mean that people look around again and think, OK, what's worked, What hasn't worked. And what would be interesting is if we see Bitcoin as a risk on assets due to its lack of counterparty risk rather than a risk. So risk off asset rather than risk on asset as it has been in the past. But yes, there's a couple of examples there. I think the other thing that's really going to drive adoption amongst institutionals is exactly what you're doing already, and that is by solving these custody issues and by getting the first CAB off the ranks, the first ever pension fund in the world that's had a 3% asset allocation. There's been other pension funds, but it was much smaller. This is the largest percentage allocation ever. Then others are more willing to follow because one of the big hesitations has been looking around at your peers and going, well, no one else is doing it. And that's no longer an objection now. And so people are going to be leaning in. And I know Sam, you've had a lot of inquiries, right? And I'm sure they're only going to continue. So that's tremendously important. And for example, now three years ago, Micro Strategy was the only company in the world that had Bitcoin on its corporate treasury. Now there are more than 60 companies who have Bitcoin on its corporate treasury. So I see a very similar trajectory for pension funds, for sovereign funds, for family offices, where as soon as you have that first one who gets involved, others will follow. And unlike corporate treasury, it's actually easier to have Bitcoin on your corporate treasury with the board structures with public listed companies is pretty hard for institutional investors to get Bitcoin as an asset is relatively, it's not straightforward, but relative to the process of a pub Co going through getting Bitcoin on its corporate treasury is actually easier. So I think we'll see that follow much faster, particularly now that we've had the first one who is allocated a significant level and now we've got 3 pension funds in total around the world already just within six months who have allocated. That's what I quite like. About this is that historically Bitcoin has been a grassroots movement. It's been, you know, your your typical man on the street, woman on the street who was bought first, the retail investor rather than institutions. And there's something quite elegant about that. And interestingly, we're seeing the same thing with institutions. It is the smaller institutions that are more nimble and able to take these decisions quicker and understand the issues quicker that can take advantage of this before, you know, before the big firms come along. I. Think it's a great point, both Daniel and Sam that you made about the comparison between the work that you've done at Cartwright and recommending a 3% allocation, which is really a demonstration of again the time conviction and understanding of Bitcoin and it's difference against the broader digital asset space. And really viewing Bitcoin as, as you mentioned, an asymmetric return profile, a risk off investment within a portfolio versus some of the other larger institutional adoption that we've seen, particularly in the US, Just because that's what I would know better than other markets is typically see 10 basis point allocations or 50 basis point allocations. And I'd imagine those will grow over time as a percentage of portfolio. And we'll certainly see more people follow that lead. But I think that speaks to the leadership at Cartwright, right? And Sam, you and the team understanding Bitcoin very deeply and because of that able to understand the merits not only from a reward perspective, from the absolute performance that Bitcoin can generate, but also from a risk adjusted basis. There's a ton of data that you can back into now that demonstrates that a 135, even 10% allocation can enhance the risk adjusted return of a portfolio that's predominantly comprised of traditional assets. So I think we will see larger allocations. It is just a function of institutional investors, you know, starting to have a more gradual exposure. And it also is likely that maybe these pension plans don't have people who are as convicted on the investment thesis of Bitcoin and haven't done as much work and had it not as much time in the market as as the two of you have. Yeah. The other, the other thing I wanted to highlight is just zooming out a bit and reflecting on just how much sort of the Overton window has shifted within the past, call it two to four years. You know, Daniel, you sort of alluded to this. Nobody in the institutional world wants to to put themselves out there 1st and do something. So it was always going to be this sort of gradually then suddenly type adoption from these these different cohorts. But just just, you know, thinking where we're at today in terms of both at the federal and the state level, we have multiple proposals for, you know, the United States government to be accumulating Bitcoin as a reserve asset. Like, just think about that fact relative to where we were four years ago when a lot of the institutional crowds main sort of worry about Bitcoin was that the government was going to ban it. It's like, OK, well, what if the government's not buying it? Like how does that, how does that change your priors on this thing? So I think it is important, you know, to just zoom out and contextualize how far we've come in terms of literally just the narrative shift and really what that enables in terms of air cover for institutional allocators to actually, you know, make some moved into the space. It's just a totally different environment than it was even 2 four years ago. Well, gentlemen, appreciate the two of you carving out time. Daniel, first start with you. Do you want to give a hand off to folks where they can get in touch with you to learn more about the work you're doing? And then Sam will ask you to do the same. You have a newsletter which is called the Bitcoin ESG Forecast for obvious reasons. I substack newsletter. They can find me on Twitter slash X at DS Baton. Those are the best two places and my investment Bitcoin mining company infrastructure fund is Chapter 4 capital.com. So the best place, best place to get hold of me is either through our website cartwright.co.uk or I'm on LinkedIn so you'll be able to find me there. Excellent. Well, Daniel and Sam, thank you both for the time today. Really insightful conversation. We'll have to do it again soon. Thanks for joining us, guys. Thank you. Thank. You thanks for listening to this week's episode of the show. If you found the information valuable, please share the episode with a friend or leave a rating on your favorite podcast app. All the links we discussed in today's show will be in the show notes inside your podcast app. Before we finish, a quick reminder that On Rat Media is for informational and entertainment purposes only, and nothing should be construed as investment or legal advice. Regardless of where you are on your Bitcoin journey, we'd love to hear from you. Visit onrampbitcoin.com contact to schedule a consultation with one of our private client advisors.
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