Sit down with your Host, Pierre Rochard, and Brian Morgenstern, Head of Public Policy at Riot, to unpack the EIA’s Emergency Survey on Bitcoin Miners. We tackle head-on the chilling notion of privacy invasion and dissect the shaky ground upon which the DOE claims grid stability concerns. Join us as we expose the potential for a darker agenda behind these actions, one that threatens the very fabric of the Bitcoin industry and whole digital currency realm.
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Sit down with your Host, Pierre Rochard, and Brian Morgenstern, Head of Public Policy at Riot, to unpack the EIA’s Emergency Survey on Bitcoin Miners. We tackle head-on the chilling notion of privacy invasion and dissect the shaky ground upon which the DOE claims grid stability concerns. Join us as we expose the potential for a darker agenda behind these actions, one that threatens the very fabric of the Bitcoin industry and whole digital currency realm.
Follow Blocktime on Twitter: https://twitter.com/BlocktimebyRiot
Follow Blocktime on YouTube: https://www.youtube.com/@RiotPlatforms/podcasts
Welcome to the Block Time podcast produced by Riot Platforms. This week's episode. We've got an emergency episode because there's an emergency. So we've got Brian Morgenstern joining us from Washington DC. Brian, how are you? I'm great, pierre. Thanks for having me on. Well, thanks for coming in such short notice given the circumstances. So, all joking aside, catch us up on what's going on with the Department of Energy and Bitcoin mining.
Speaker 2:Yes, this is a very important development that I hope all Bitcoin miners will pay attention to. In fact, any company that runs a data center should pay attention to this. A little watched part of the Department of Energy called the Energy Information Administration has, with the blessing of the White House Office of Management and Budget, put out an emergency survey to collect pretty invasive information from Bitcoin miners. They want to know about the location of their data centers, they want to know about their fleet of machines, they want to know about their power providers and how much of a percentage each provider is giving them, what percentage of their power is going towards Bitcoin mining and, according to the paperwork, it says they could publish all of this information on a company by company basis. Now, this, to my knowledge, is the first of its kind. The nature of this request the administration typically focuses, or this agency typically focuses, on power generation, transmission, things of that nature, and aggregated, anonymized data to assist policymakers, which you can imagine that making some good sense. This is materially different in a number of ways. Let me start with the process they're using. So they've declared that there is this emergency because the price of Bitcoin has gone up in recent months and there has been some cold weather, and so their reasoning is that there could be undue stress on the grid and you could cause instability if there is a rapid proliferation of Bitcoin miners popping up like dandelions who start mining Bitcoin all the time and then there's not enough power for heating homes and critical things of that nature. It is farcical the basis for this process. The reason they're doing it this way is because you can demand the information while simultaneously having the notice and comment period and going through the administrative procedure that they're required to do. If they were to do it the normal way and say, hey, we're thinking about doing this, here's a notice, proposed rulemaking, and let everybody write in the administrative record would be so overwhelmingly against this policy that it would be hard for them to move forward. So they're trying to steamroll over the administrative procedure quite purposefully and cleverly in that sense. But the emergency they're describing is farcical. It doesn't exist, because in January we saw a very cold weather in Texas and what happened was there were record drops in hash rate and we saw that with the supply demand levels in the ERCOT grid. It actually held up quite well, and one of the reasons that it held up quite well was that miners were going offline as the temperatures got colder and the energy demand was rising, and so miners were actually sort of one of the first arrows in the quiver to provide more stability, not less.
Speaker 2:And the unique part about miners is their flexibility in demand. Other types of data centers don't have that flexibility. If an Amazon data center goes down, a bunch of websites go offline. If a financial services data center goes down, what happens to people's bank accounts and things of that nature? They can't really be flexible.
Speaker 2:Bitcoin miners can, and so singling out Bitcoin miners and claiming it's an emergency, the facts just fly in the face of that. The other fact that really belies that the idea that this is an emergency is that they want to focus on the industrial scale Bitcoin miners. Well, those don't pop up like dandelions. They go through years-long investment processes raising the money. They go through an administrative process you have to connect, get your interconnect approved. They do load studies, things of that nature. You have to make sure your zoning is all squared away and you get your construction permits and the like. We're developing, of course, in Corsicana. It takes a long time to build a really excellent state of the art facility. It doesn't happen overnight, it takes years sometimes. And so the two bases that Bitcoin miners could cause strain on the grid and that there could be this rapid proliferation of miners those two facts just show how absurd it is to claim that there's this emergency.
Speaker 2:And then, in terms of the underlying policy or what they're aimed at, I've said they claim it's about stability. I think another ancillary point they might say is you know, carbon emissions and the environment. But really you have to look at this in a tapestry of circumstances. You have to look at the whole picture, and the White House the current White House in September of 2022 put out a document where they asked for this type of data collection, and then they sort of said the quiet part out loud. They said what they want to do next, which is basically to find a way to limit or eliminate the Bitcoin mining industry, because there is a big bias by the current administration against Bitcoin and in favor of a central bank digital currency. So I kind of think of this as like the public private option debate in health care, but for money, they want to have only the US government putting out digital currency and they want to quash any other options, any private options, and so there have been a number of ways attack vectors, if you will where they've come after the industry.
Speaker 2:One was, you know, in the last year or so, banking was a big issue because banking regulators were leaning on banks, saying that digital asset related companies could cause safety and soundness problems, and so you saw a lot of banks dumping their miners and other digital asset companies, saying we have to close your account, we're not going to service you anymore. That was a big problem. There was tremendous pushback. The government sort of relented a little bit. The pressure was relieved.
Speaker 2:This is another attack like that, but instead of saying you can't have a bank account, my concern is that they could take this information and use it as a predicate for saying you're not allowed to use electricity or you can't use, or the federal government is going to be able to start telling people who can and can't use energy. That, in my opinion, is totally inconsistent with the values of a free society. And it's not just Bitcoin miners who should be concerned with this. Ai companies, anybody who runs a data center, anybody who needs a good amount of energy should be really concerned. So I think the path forward is we have to push back on this. I think members of Congress are likely to push back on this Industry. Participants are likely to engage in the legal process and hopefully be able to put a stop to this, and there are a number of grounds to do so. But I've talked for a while. Why don't I stop there? And we can address any or dive a little deeper on anything specific.
Speaker 1:No, that was great. I think we'll want to dive deeper on each point there. The previous time we heard about this survey was in the context of a congressional hearing with the Secretary of Energy and Senator Elizabeth Warren. It seemed like Elizabeth Warren was frustrated by the lack of development of gathering data. Do you want to describe that interaction and perhaps what the implications are here?
Speaker 2:Thank you, Sure. So my recollection of that interaction was you know, Senator Warren is a key driver of this. The agency, in fact, cited her letters to them as a justification for this policy, which you have to give them points for honesty.
Speaker 1:Yeah it somewhat violates the separation. Sure, yeah, I mean yeah, I don't know.
Speaker 2:Members of Congress are allowed to ask the administration to do things that they want them to do, but the fact that the agency basically said we're doing this because she asked us to, I think is telling, because this is a supposedly apolitical agency just gathering data, you know, like the Bureau of Labor Statistics or at the Commerce Department, something like that. It's not supposed to be subject to the whims of partisan politics. So the fact that they said, yeah, it's because this politician asked us to do it, I think is an interesting wrinkle here. But the interaction to my recollection was, you know, senator Warren expressing her frustration that a measure like this had not yet been done, and the response, I believe from the Secretary of Energy, was that they are going to look at data center energy consumption and that, you know, bitcoin miners could fall within the umbrella of data centers. They decided, based on what they've released here in the last week, they've decided not to look at data centers. They've decided to look at just Bitcoin miners.
Speaker 1:Which is surprising, because AI is growing faster than Bitcoin, arguably.
Speaker 2:And the data center ecosystem more broadly is like orders of magnitude larger than the Bitcoin mining industry, and so if your concern is the proliferation of data centers on the grid, then you'd think you'd start with the largest loads and the ones that aren't flexible right, but they haven't.
Speaker 2:They've actually started with the one industry that provides stabilizing benefits and flexibility, which is how you know that this is political and it's not really about data collection, it's not really about grid stability, and my fear here is that if they're able to collect the information where everyone has to publicly disclose their power providers and their energy partners that they're working with and what percentage of their operations are with each one and what percentage is exactly as Bitcoin mining and the like a lot of this pretty invasive information they can publish it and basically give some fringe political activists ammunition to then continue to politically attack us.
Speaker 2:And, like I said, they've already kind of said the quiet part out loud. The desire here is to limit or eliminate the industry for some people in the administration, and so this is in furtherance of that goal. It's troubling, but again I'll give them points for honesty for actually couching it just towards Bitcoin miners instead of data centers. It actually is very revealing in terms of how the purported justification for the policy actually has nothing to do with what they're doing or their true aims, and so it's actually almost creates a clear administrative record that'll make it hopefully feasible for us to challenge it in court.
Speaker 1:And if this is an emergency, basically anything is an emergency right, Because it's a priority and they want to do it.
Speaker 2:And in some of the documents they actually said that because in order to couch this as an emergency, there has to be public harm. That would result from doing it the normal way, and one of the comments in there in justifying this emergency is they feel like there would be public harm. So if someone feels like it, that is not, in my experience, a factual predicate for declaring an emergency someone's feelings. So the fact that that is in the administrative record is pretty shocking to me.
Speaker 1:What is it about the normal administrative process that increases the amount of, maybe representation or voice that the people have in it?
Speaker 2:So in a normal process typically you know they call it notice and comment an agency would have to put out a proposed rule or proposed policy and then there would be some opportunity 30 days, 60 days, 90 days, some amount of time for people to respond. And typically if you intend to challenge it, then you want to give them your legal arguments as to why maybe they're not supposed to do what they're doing, Because you have to exhaust your administrative remedies before you can challenge something in court. And so a notice and comment period would give us the opportunity to write a letter and say the way you're trying to do this survey is not proper, it is not in furtherance of the goals that you say. And then there would be this administrative record that would show A. Our industry is already radically transparent, and I mean the agency themselves produced a map with bubbles on it where you can see where all the mining is happening. You can look at, you know, the hash rate index that showed during the January cold snap, hash rate going down when it was cold and then coming back as conditions improved. So you know there's already radical transparency that exists. They don't need to do this survey and that would come out in the administrative record, we would prove that this is no emergency, that we were the ones actually helping to stabilize the grid, not causing problems, and so the wheels would fall off the bus during the administrative process and they wouldn't have a record to support the policy.
Speaker 2:Doing it this way, where they're having the notice and comment period and the data collection happens simultaneously by declaring this emergency, means that, regardless of what the administrative record says, they want the data and they want to publish it, and so, basically, you know, declaring the emergency is their way of running an end around the administrative process. And, let's face it, you know, if they get all this very detailed, private, sensitive business information, even for one month, you've got the power providers, you've got the percentages, you've got the locations, you've really got all the information they want if they want to harm these companies. So that's why it's we're on a short timeframe here. I think they they aim to start collecting data by the end of this month, and so it'll be important to band together as an industry, make our voice heard, get allies in the US Congress to voice their concerns about this and, you know, potentially challenge it in court and stop the enforcement of this.
Speaker 1:And, in a way, they've had a very long time to do this survey following the normal procedures. They've been talking about Bitcoin mining in the United States for several years now, so ever since the China ban. I think that would have been the right time if they there was an actual policy issue here that they would have started collecting data. But the other part of it, as you mentioned, the Bitcoin mining industry is more transparent, arguably, than any other industry out there because of the blockchain.
Speaker 2:Correct, correct. And I would add that you know the first administration statement that I'm aware of that was a precursor to this quote. Emergency, you know, was almost two years ago. One of the events they cite as cause for emergency was in 2018, six years ago so and now they are trying to collect monthly data until July and look backwards at a time. So during the summer, they're going to look at an emergency that was taking place in the winter, that was somehow like both six years ago and also now, but wouldn't be at least within six months before they actually look at it Like. All of these facts just make this emergency idea completely farcical, utterly farcical.
Speaker 1:I think if they had asked me what they should do, I would have said you need to have an emergency and say that Bitcoin mining saved the Texas grid during the cold snap, and we need to figure out how to get more Bitcoin mining in the United States quickly, and so that's why we need to collect all this data. You wouldn't get any pushback from the industry and you'd get what you wanted, but I guess that's more 3D chess.
Speaker 2:Exactly, or all these hostile foreign powers are mining Bitcoin and we need that value to be captured by law abiding Americans. This is an emergency. We need more Bitcoin mining in America. We've got to keep it out of the hands of North Korea and Russia and China. To the extent they're still mining Iran, we need to make sure that there's no Bitcoin left for them to mine. We have to do it all here in America.
Speaker 1:That's a very positive emergency. Yes, but that wouldn't cater to the constituencies that seem to be behind this move.
Speaker 2:Right, of course, and so if it's you know Senator Warren attached to it, you can bet that somewhere in there the fingerprints of you know, greenpeace or Earthjustice or some other groups that have been very opposed to Bitcoin. I think the environmental arguments have frequently been papering over the reality of the desires, which is that they don't want to decentralize network. The idea that you can have power be diffuse and you can have a trustless network is very troubling, and so they come after it from all these different vectors. But I think fundamentally it is a dislike of Bitcoin and they just express that in various ways. I think they conceal their true intentions by doing that, but we've seen a lot of it.
Speaker 1:Because there was only that last, not last month, but last year, let's call it. They were declaring that there was a national security emergency because of all of this terrorism funding coming through Bitcoin. That turned out to be fabricated. That it's not there, correct?
Speaker 2:So and through some very good reporting we've seen from our friends Sam Lyman and others who have been great on this. Nick Carter has been great on this. It showed that, for example, when there was concern about Hamas. Well, in April of last year, hamas actually issued a press release asking their supporters to stop giving them Bitcoin and one of the reasons was that, because of the transparency of the blockchain, the American and Israeli governments were able to piece together the forensic details and track a lot of those donations and identify those people and in some cases they're able to actually kind of take over the accounts and start collecting the donations that people were trying to send to Hamas and they actually ended up going to the US government and the Israeli government, which are now sort of cooperating to dismantle Hamas. So they ended up sort of funding their own demise.
Speaker 2:But it's that transparency that is a feature, not a bug. It is a fundamental principle of the Bitcoin community and that's why we are so radically transparent and we talk about our energy consumption. So I go back to that fact, because I think the next line of argument in this from the people who want this policy is they'll say the industry is opposing this policy because they have something to hide, and that's not true. In fact, there's tons of data that's available. We're glad it's available.
Speaker 2:Like I said, transparency is a fundamental value of our industry, and what that transparency shows is that there's no emergency and that we help to stabilize grids. But what they're asking for now is actually quite sensitive competitive information that they want to use for political purposes, not for data gathering or the public good or formulating sound policy. It's just not true, and you can look at the documents and the things that they've said and infer that it's not. But we're not. They haven't even really hidden the ball very well, so we kind of know what they're doing, and that's why I think we have a good, good basis for challenging.
Speaker 1:Yeah, that's right, and, as a public company, raya is very transparent with regards to SEC filings and all that. We go even beyond that. We do a monthly update that gets into all the information that is relevant in this conversation. And then, furthermore, if we look at what the New York Times reported, they were able to identify all these Bitcoin mining facilities without having the heavy handed you know, hand of government.
Speaker 2:Yeah, and I think that's a really important point because there's a lot of really good information out there to there's a lot of great information that can assist policymakers in making sound policy and good decisions.
Speaker 2:They are now essentially, in my opinion, creating criminal law out of thin air without the author, without the authorization of Congress, saying you're going to be subject to criminal penalties and thousands of dollars in fines per day if you don't give up this private information to us so that we can publish it. I mean that is overreach, that is a threat to really any industry If the government can just say we're going to throw you in jail unless you tell me everything about your business, including sensitive competitive information, that we cannot have that in a free society, in our system of government. So it's really troublesome. But I would expect the next piece of this to say oh, they don't want to give us this information because they're shady and they have something to hide. I think it's important that we get out front of that, in front of that, and say, no, we are radically transparent and our transparency is the reason why this policy doesn't make any sense.
Speaker 1:That's right, and I think there were items missing from their survey as well. They didn't ask how many jobs are you creating? How much are you paying in taxes to local, state and federal? There's so many benefits from Bitcoin mining and it seems like their entire focus is on one getting the longitude and latitudes, which troubled me, given they could easily pass that targeting list over to the Pentagon. But the second is that they're just going to try to bully the energy providers into not having economic partnerships that are great for the industries of both energy and Bitcoin mining. They're going to try to burn those bridges, like they've done with Chokepoint 2.0.
Speaker 2:That's my concern and because we've already seen a pattern like that in other contexts, where the regulators of the financial services industry leaned on the participants to stop working with companies in the digital asset space with perfectly legal, legitimate businesses, and saying you can't have a bank account.
Speaker 2:I mean, that's a pretty radical thing to do, but if the administration's already done that, then who's to say they wouldn't publish this information, with the idea being that then some outside groups or political actors or the regulators are going to go to the highly regulated energy companies and say hey, we don't think you should be working with that industry Because it's already happened in the banking context.
Speaker 2:I think it's very realistic to think it would happen in the energy context and I would argue, viewing all of the context and more, what I've described here and more, I think it's highly likely that that is the goal. In fact, to publish this information. You dox where all the Bitcoin miners are located, who they are, their companies, their business models, the percentage of energy they get from each of the energy companies, and then you get the energy regulators to go and lean on their market participants, just like the banks, and say, hey, you're causing grid stability issues In banking, it's safety and soundness In energy, it's stability, and say, oh, these clients of yours are causing stability problems. You should stop working with them to give them energy. And then, once you have a situation where the government can tell people who can and cannot use electricity, it does game over. I mean you control everything at that point.
Speaker 1:Yeah, we are already seeing people say that AI doesn't create any real value and so it shouldn't be consuming so much electricity or so much water or whatever metric they want.
Speaker 2:That's right. Yeah, Once you start going down this road and I think you and I have seen it many times look, we are very efficient. We're getting some of the most efficient, state-of-the-art machines on the market. The immersion cooling that we're using in Corsicana is revolutionary. It's fantastic. You're going to have longer life on the machines. They're going to be more efficient. We're going to use a fraction of the amount of water that a typical data center would use. We have our own retention pond and recycling process.
Speaker 2:So you can say all these great things. You can talk about how Bitcoin mining supports renewable sources of energy and actually makes them economical when they wouldn't otherwise be. And you talk about these things. You would think an environmentalist would be saying wow, that's really great. You're creating water efficiencies, you are helping to create a cleaner energy ecosystem. But what frequently happens is these facts are not satisfying to them because, like you said, they don't see value in Bitcoin. Well, I'm not a fan of ballet dancing, but I don't think it should be banned, and I don't go around saying that the marquee of a theater that hosts the ballet uses a lot of electricity. They shouldn't be allowed to do that. Or Ticketmaster selling the tickets uses a lot of electricity. They shouldn't be allowed to do that. But when you think about it, that's kind of where we're at with some bad faith actors. They're saying I don't like Bitcoin, I don't think Bitcoin has value, Therefore you shouldn't be allowed to use electricity. That is a radical idea and, like I said, inconsistent with the values of a free society.
Speaker 1:I had a sarcastic tweet throughout about golf, saying it consumes too much water. It doesn't really have any utility. It's not a real sport. People need to stop playing it. There was outrage immediately and justifiably. So Right, I mean, obviously it was tongue in cheek, but the pushback, I think, was what the pushback ought to be on Bitcoin mining and electricity.
Speaker 2:Yes, and the fact is, whether they see the value or not, some of our opponents, they have certain bad faith actors. The fact is that it's maintaining a global financial network that takes electricity. In our opinion, it fosters human freedom and flourishing. It provides a hedge against runaway inflation due to excessive debt-fueled public spending. It gives a lifeline to people in countries experiencing hyperinflation. I think it's the future of payments. I mean transmitting value around the world, aside from Bitcoin and maybe a few other options, if you're going through the traditional systems that we're used to, it takes multiple days, it takes exorbitant fees, it takes multiple institutions on either end. It's arduous. This is the future. It's faster, it's peer-to-peer, it's secure. It takes out many points of failure. It is absolutely where things are headed. Some people don't like it, but they don't have to own Bitcoin. How about that, if you?
Speaker 1:don't like it.
Speaker 2:You don't have to own it. They want to force everyone to hold CBDCs.
Speaker 1:You mentioned CBDCs earlier, so I'd love to hear the contrast.
Speaker 2:Yes, You've said and I've said Bitcoin is anti-CBDC technology. It's the opposite of it. It is the private option versus the public option. It is people being allowed to be their own bank, hold their own value, transmit it directly with the counterparty, A CBDC at the retail level and there are a couple different levels but if you're talking about the consumer level, then in that instance the person essentially has their bank account held by the federal government. The government is giving you your benefits or whatever it may be, holding your money. It's also programmable.
Speaker 2:What we're seeing with this experiment in China, with their digital currency, is the Chinese Communist Party and the bureaucrats in their government are able to tell people which supermarket they have to go to. They can only go to the one within a couple of miles where they live. They'll tell them they can buy only this much meat. You can or cannot buy a firearm, or you can't buy more gas for your car, whatever it may be In the United States. That's something that I think is very anti-American the idea that the government's going to be able to track and control your spending. It's wildly unpopular to the extent that it's been polled as a topic.
Speaker 2:I think it's so interesting in the public policy debate, because banks, of course, are not lovers of Bitcoin, because if Bitcoin is really successful, then it obviously takes away a lot of the bank's power and relevance. If a CBDC is in place, that is, I would argue, way worse, because it totally takes the banks out of pretty much everything. You can either have the private option, Bitcoin, where people can really control their own money, or you have the public option, the CBDC, where the government controls your money, Similar to what I was saying. If they can control who's allowed to use electricity and who's not, they can really control everything. If they control the money solely, then again they can basically control everything. Control is at the root of all of this, and America was really founded on the ideal of individual freedom, liberty, responsibility. When you start taking away an individual's right to thrive and vesting all the power with the federal bureaucracy, you're really heading into dangerous territory.
Speaker 1:I would also add that maybe somebody likes a CBDC if they're the one in control, but they have to keep in mind that we have turnover in a democracy and so they're not always going to be in control. Sometimes their adversary or their opponent is going to be in control.
Speaker 2:I think it's a hugely important point. Bitcoin is not really a partisan issue. I think it's more generational, but frequently the opponents of it tend to be, I think, on the far left of the Democratic Party these days. It's just a trend that I've noticed. If you ask people who fit into that bucket for example, if Donald Trump gets elected president in 2024, would you be comfortable with him telling you that you're not allowed to plug in your Tesla? Or him, his government telling you you're not allowed to spend money or donate your money to Planned Parenthood or Greenpeace or whatever your preferred cause is? I think that would send chills up their spine. Your point is really important that you should.
Speaker 2:This is not about partisan politics. This is about preserving liberty and freedom, and people should really keep that in mind that their preferred candidate doesn't win all the time. You need to bear that in mind. If the person that you don't prefer wins, but you've supported this policy now, they're the ones wielding the power later. We need to keep that in mind, also because this shouldn't really be a partisan issue. This is about innovation. It's about American leadership. There are wonderful Republicans and Democrats who are supportive, but unfortunately, we're still dealing with these certain opponents for now.
Speaker 1:Yes, I've heard Bitcoin be described as a neutral money. Whereas other monies are politicized or specific to a certain geography, this is a neutral money native to the internet.
Speaker 2:That's right. We've seen around the world. Right now the US is in a bit of trouble. Here we're at $34 trillion in debt. Our debt service payments are outpacing the defense budget. This could really be a troubling spiral in short order if fiscal policy makers don't get their head wrapped around this. The chairman of the Federal Reserve said as much in his recent interview that fiscal policy really needs to catch up here. We can't be spending this much money. We're fortunate in the United States in that, relative to other countries, we're not as bad. But where we've seen hyperinflation, bitcoin has been really beneficial for that populace and given them more buying power when their currency the bottom is falling out from underneath it. It's been the neutral internet money, as I think you rightly called. It has really been a wonderful influence in a number of countries around the world. I would argue it could be very useful in the United States as a counterweight, a hedge, against when the government is spending out of control. You have this neutral money, a commodity that is also money.
Speaker 2:Multiple candidates recently have talked about going back to some kind of backed currency. We were on the gold standard until the 70s. I've heard a number of economists talk about the virtues of a basket of commodities. Maybe gold is in there, maybe some consumer things related to consumer necessities. What if we had oil or wheat or beef, or it could be other metals it could be silver or titanium and maybe have Bitcoin in that basket and that could create more sound money, rather than the kind of floating fiat currency that we currently have, where we have the Federal Reserve reading data from the past to put its finger in the air and try to predict the future with an interest rate. If you instead tied the money to the price of commodities that people need, you might have a money that actually reflects reality a little bit more for the populace. That would give them more stable and strong purchasing power over time, in my opinion. I'm not an economist, but there are very smart economists who, I think, would agree with that assessment.
Speaker 1:A smart economist I know once told me that if the Fed could predict the future, they would be trading stocks. Then we recently found out that they have been trading stocks. There was a bit of an ethics problem there.
Speaker 2:That's right. Congress was looking into that. Several members are looking into that.
Speaker 1:It is an interesting contrast of transparency that the Federal Reserve is pretty closed. It's got proprietary software you can't just go look at and see what the code says that the Federal Reserve network is operating on. Yet Bitcoin gets accused of lacking transparency when it's fully open source. You can see every line of code. You can see every transaction. It's all there. I've even heard researchers say there's too much data. They're trying to sort through it, they're trying to compile it.
Speaker 2:Right A heads-eye-wind tails you lose, I guess, is how that goes when you're talking about, again, the people who just don't see value in Bitcoin. And that is part of the beauty of it, just the innate transparency on the transaction level and how, like we talked about Hamas' fundraising efforts using Bitcoin, completely backfiring, and I think it's true. On the energy level, bitcoin miners aren't secretive. We talk about the energy we use in a way that still protects the integrity of a business and fiduciary duties to shareholders and other things of that nature. We are radically transparent. There's certain things.
Speaker 2:Well, the information they're trying to gather now, I think, is invasive Compared to the Fed. The Bitcoin network is a wide-open book on the monetary side. On the energy policy side, like I said, the idea here is to publish the location of every miner, the percentages they're devoting to mining versus other functions, the energy providers that are supplying them, to then be able to attack those linkages and weaken the businesses because they don't like Bitcoin. So it's very troubling. I'm hopeful that we're successful in some challenges that I think we're going to see soon and hopefully we'll restore some semblance of order, but it's of a peace with this administration that's just been so overtly hostile to our industry and it's a shame. I wish this were not happening. I don't think it's good for America, it's certainly not good for our companies, it's not good for the industry and, ultimately, it's not good for freedom.
Speaker 1:I agree. On a practical note, bitcoin miners in Texas already register with ERCOT and that bill was passed in the previous Texas legislature for large, flexible loads. So in a way, everyone who needs this information already has it and it's only the people who don't need it slash only need it to try to justify a ban or put pressure on energy participants that are desperately trying to force it out of Americans, which maybe raises a law school question why isn't this covered by the Fourth Amendment? You know the government can just go ask for information and it's kind of like a search.
Speaker 2:Well, it's an interesting question and I'm not sure if the Fourth Amendment is implicated here. One thing that I am I believe is implicated is actually a First Amendment issue of compelled speech and in the case law, you know you can have mandatory disclosure regimes in various contexts. We are an SEC registered company. You know we trade on the NASDAQ, so we do certain mandatory disclosures. However, the government's prerogative is not unlimited.
Speaker 2:There still has to satisfy a rational basis test, it has to be in the zone of reasonability. The ends and the means have to meet and in this case, this so-called emergency that you know you might have, a rapid proliferation of Bitcoin miners because sometimes it's cold outside it doesn't withstand any scrutiny, let alone rational basis or strict scrutiny or any other constitutional standard. Because, like I said, actually the grid held up quite well and one of the first errors in the quiver was Bitcoin miners and their flexibility, so it enhanced stability, which really kind of takes the wind out of the sails here. So I'm not sure about the Fourth Amendment. I haven't looked into it enough yet, but I think there's certainly a First Amendment problem along those lines, because the ends and the means just don't match up.
Speaker 1:So going forward, what kind of timeline do you see for this EIA process, or is there still some more clarity that we need from them?
Speaker 2:I believe they're trying to start collecting information on a monthly basis, beginning February, like the end of the month, and then they'd collect it on a monthly basis until July.
Speaker 2:And so I think and if you look at the forms, if they collect even one month, they've got the location of all the miners, their electricity percentages, they've got all their energy providers, they've got all that stuff that they said they want to publish. So, with that in mind, I think a challenge is going to have to take place very quickly, like this month, and try to get court intervention to stop them from enforcing this. So if there's going to be compliance with it, which I don't think anybody thinks they should I think there's pretty much universal outrage at this policy for our industry If there's going to be compliance, that would start like around the end of this month. And likewise, if there's going to be a challenge to say we don't think this is correct on the law and we don't have to comply and we want a court to enforce that order, then we need to challenge that this month as well. So it's going to be fast moving. The month of February is going to be busy on this.
Speaker 1:Well, we might need to have you come back on, brian and give us another emergency update.
Speaker 2:Yes, I think, and we'll have to keep calling it the emergency Always have to have air quotes around. Emergency in this instance.
Speaker 1:Big air quotes, because when we talk about a federal emergency, usually it's a hurricane or something significant.
Speaker 2:Right Usually declare an emergency over something that is clearly an emergency instead of a fabricated one.
Speaker 1:And I had somebody tell me oh, it's just a term of art, it's just the word they use, and I'm like well, choose a different word then, to say expedited.
Speaker 2:Right, exactly Well, and in this case the guidelines they're invoking the emergency has to be. You know, they can steamroll over their administrative procedure obligations and their obligations under the paperwork reduction act. If there's a public harm it would result from them going through the procedure. In this case, the public harm is one bureaucrats feelings, I think, is how it seems that they've justified it. If that's the case, if that withstands scrutiny, then everything and anything is an emergency, and then you've got a situation where an emergency is just in the eye of the beholder and then a legal framework just collapses on its own. It becomes a house of cards at that point. So I think there has to be some guardrails to this, and that, I believe, will be instrumental in our legal challenges and in any oversight challenges that come from the US Congress.
Speaker 1:Well, I think the silver lining here is that more people are going to learn about Bitcoin mining. They're going to see the positives of it, and that's a very important situation opportunity for us.
Speaker 2:I think that's right, and it's also a stark look at what can happen with government overreach and when industries don't defend themselves. So I think it's really important that we do defend ourselves and that we be, you know, respectfully firm in our opposition to something that is harmful, it's bad policy and we need to, you know, not be afraid to say that.
Speaker 1:I just say they're weaponizing the administrative state, but they're really weaponizing the emergency state Because they're foregoing the administrative part.
Speaker 2:Right, it is weaponizing the administrative state, but they're definitely weaponizing the word emergency, for sure, and yeah, and avoiding administrative process by doing so.
Speaker 1:Well, if any policymakers, legislators, want to come visit our facility, you have an open invitation. Reach out. We have had others come as well. We are radically transparent. If there's any information that we can provide on a non-emergency basis, we'd be happy to take a look at that.
Speaker 2:And without a proverbial gun to our heads saying you're going to go to jail unless you tell me this immediately. Not a good. Not a good look for an otherwise apolitical government agency.
Speaker 1:I think that's right. Okay, one last curveball question for you, Brian. We heard that the US Marshall service is going to be auctioning off some Bitcoin. Where was your reaction to that?
Speaker 2:That's a bad choice. Bitcoin has tremendous value. It is a commodity. The US government having a reserve of Bitcoin is a good idea, so I think it is a short-sighted and unwise policy choice, in my opinion.
Speaker 1:It also shows that Bitcoin is useful. You can use it to trade Bitcoin for dollars, which is how, and right now, they're using it by holding it right. Somebody at the US government has private keys. Hopefully they're running a node. So the US government is a user of Bitcoin. They're not criminals. They're not terrorists, unlike what others characterize Bitcoin users as.
Speaker 2:Right, exactly, and we've talked about this in the past. The government's gotten quite good at navigating the Bitcoin network. There was a couple that stole Bitcoin that were prosecuted and they're going to jail. They stole billions of dollars in Bitcoin and the government was able to recover that. There are great forensic firms out there that were able to track digital assets at stake in the colonial pipeline ransomware scheme and others, so it's obviously useful. As you say, the government is holding that value. They intend to auction it off and get US dollars in return, but the market for it dictates that it has hundreds of millions of dollars of value.
Speaker 1:And if they don't think it has value, they should just destroy it.
Speaker 2:Right, but that would be even dumber. So they won't do that. Yeah, it is a You're right. It sort of proves. It disproves what some of these arguments are based on just the US government's very actions. Look at their actions. Do as I say, not as I do, right.
Speaker 1:Right, all right. Was there anything else we want to cover? If we start getting into AML, then we've got another hour of content, right?
Speaker 2:Yeah, exactly Now.
Speaker 2:I think the key takeaways are that this subsection of the energy department and the White House's Office of Management and Budget have decided that there is an emergency because sometimes it gets cold and the price of Bitcoin might go up.
Speaker 2:That doesn't make sense, because we just had cold weather in January, which they are using as their very justification, and what we saw was that Bitcoin miners and the hash rate went down and that the grid was extremely resilient. So the basis for the emergency is a farce and therefore, I believe the basis for the policy is a farce. We should not submit to a first-of-its-kind doxing of private companies and their energy providers, because the transparency they seek already exists and disproves the basis for the policy. And if they can start doing this to our industry, they can do it to virtually any industry, and if the government can tell people who's allowed to use electricity and who is not, then we are not a free country anymore. So there's going to be strong pushback. It's going to have to happen this month and I think it's going to be a very interesting fight in the weeks ahead.
Speaker 1:Excellent. Well, I'm excited with the team we have that is addressing this issue. You, the Digital Chamber of Commerce, the Texas Blockchain Council and others are really taking the lead on this to represent the industry and show how radically transparent we are and how unlawful this quote-unquote emergency survey is. So thank you so much, brian. Thanks for joining us.
Speaker 2:Good to see you, Pierre. Thanks a lot.
Speaker 1:And to our viewers. We'll see you again next week. Cheers.