Intro Vocals 0:01
You’re watching the blockchain interviews hosted by Dan Weiskopf. Every episode options interviews with main trade consultants in order that viewers can have a deeper understanding of right now’s shortly evolving blockchain market.

Dan Weiskopf 0:21
Greg Foss, thanks a lot for becoming a member of us right now within the CEO blockchain interview sequence. You already know, all of us put on loads of hats, you’ve acquired a good variety of hats too, I don’t know if you wish to contemplate your self, CEO, however you’re actually an adviser to a good variety of CEOs and leaders in numerous industries. And by means of background, 35 years within the enterprise, proper monetary providers and portfolio administration, and also you had been a few completely different hats. Considered one of them is as a Bitcoin strategist, which I like the title by the best way. They name me the ETF professor and I’m proud to say I’m an ETF strategist, some folks have dropped that off. I’d like to know precisely what a Bitcoin strategist does, after which additionally like to hone in in your position at Validus power, that will be nice. So thanks once more for becoming a member of us.

Greg Foss 1:26
My pleasure.

Dan Weiskopf 1:26
Yeah, please broaden on that background.

Greg Foss 1:29
Okay, actually. Effectively, thanks for having me, Dan, and viewers. Dan and I’ve talked offline earlier than. So right here’s my historical past in a nutshell, began with buying and selling credit score with the primary LDC disaster, I moved from the Royal Financial institution to buying and selling at one other Canadian monetary establishment buying and selling excessive yield bonds. And I went by the following monetary disaster, which was long run capital, okay, long run capital, ingenious, ingenious Nobel Prize winners at long run capital that had been promoting volatility, ie promoting insurance coverage primarily based on six years of volatility information and leverage themselves 100 to at least one and their main purchasers had been Wall Avenue, it was ridiculous that it was the stupidest factor I’ve ever seen in my life, but it occurred.

Okay, in order that’s monetary disaster. Quantity two, alongside comes the Fed, they need to bail out the banking system once more. All proper. I finally moved from the promote facet of the road, to the purchase facet of the road in order that in 2006, seven and eight, I used to be sitting in a threat chair through the nice monetary disaster. Now, this was the third monetary disaster I’ve lived by and this was the true deal is you’re most likely sufficiently old to recollect the world was over full cease. Chairman Bernanke, who stated famously, the subprime mortgage disaster as properly contained two years later was consuming crow and bailing out the likes of you already know, what, what began the calamity was that financial institution Nasional Perry BNP, these hedge funds that had been mis marking their subprime mortgage loans, the market excetera triggered a contagion impression that resulted within the chapter of Lehman Brothers now, I’m sitting in Canada, however all of my buying and selling threat is with us primarily based establishments. Okay, excessive yield is traded out of New York, full cease. It doesn’t matter the place you reside on the planet. New York is the central buying and selling hub for top yield bonds. And principally, was I fortunate? Yeah, I had shorts on that aligned with the, you already know, that The Huge Quick Film and the genius I don’t truly assume he’s an awesome threat supervisor, however Michael Burry as a genius analyst. We had these trades on and you already know what, I wasn’t completely happy. We had been making tons of cash. However I noticed the world ending. I nonetheless bear in mind taking the prepare to work early 2009. So I’m speaking February, January, February, freezing chilly Canadian days, questioning, is that this the day that the monetary system truly implodes? And it’s no enjoyable if you’re earning money. And also you truly are questioning whether or not your children are going to have a life after this nice monetary implosion. So we made it by, we truly ended up reversing our positions into one of many best uneven trades to the upside I’ve ever seen, which was one thing referred to as restructured, asset backed business paper in Canada. That was I don’t need to get too granular right here, however once more, it was a credit score product that had been purchased by fool Canadian pension fund. mines at 100 cents on the greenback and so they bought all of it the best way all the way down to 25 cents on the greenback. The largest fund that did that by the way was a case that they pipe final month to Quebec the idiots that funded Celsius. Okay, so look, I see this shit going as to sorry to swear I see these things laying round round round round on a regular basis. However right here’s the purpose 2008 2009 It was over. The Fed needed to are available and so they wrote a verify basically for near 1 trillion bucks. Okay.

Full cease. After the nice monetary disaster, you learn the books by John Malden referred to as the top sport and the way the sovereign debt spiral can’t proceed as a result of all of the dangers within the monetary system had been kicked as much as the sovereign stage. However 11 years later, from 2008 name it to 2009 11 years later that nothing had ever been solved, the banks can or the central banks proceed to print cash as a result of any taper tantrum was met with falling fairness costs and the Fed put got here into play quantitative easing infinity, they didn’t pay again any of the debt. Now it’s too late since you hit the COVID disaster in 2020. And the checks that had been printed through the COVID disaster make the nice monetary disaster appear like a rounding error, proper? We’re speaking a number of trillions of {dollars} now. And that’s globally and central financial institution stability sheets that balloon. So I’ve lived by 4 credit score crises. The fiat system is a full blown Ponzi. I can’t say another means. And I wanted to get out. I ought to simply say in 2016 after this nice uneven commerce to the upside I stated I’m by no means going to have the ability to repeat this success there. So I had resigned I stated I’m gonna go and have enjoyable on the golf course and every thing like that. Effectively the fact is guys such as you and me sort A personalities you possibly can’t keep out of, you already know, you possibly can’t keep out of hassle too lengthy. That means you at all times love the markets, you’re keen on the sensation of competitors. So I left the skilled asset administration enterprise, however somebody launched me to Bitcoin. And this was 2016. And like everybody, I stated, Now bitcoins acquired to be a Ponzi, as a result of why? Effectively, I’d learn in The Wall Avenue Journal, it was a Ponzi. And I’d listened to knuckleheads like Peter Schiff, that it was a Ponzi. And a minimum of I did my homework. And I noticed, oh my god, this factor is totally technologically stunning. And no person controls it. Pure decentralization, no threat of getting conflicted shenanigans by homeowners of both the protocol or the system referred to as central bankers. So I stated, that is the answer I’ve been actually on the lookout for for 20 years. And I helped fund and also you’ll love this, an organization that introduced the primary closed and Bitcoin fund to Canada, we needed to take the Ontario Securities Fee to courtroom to get the approval of launching a closed and Bitcoin Fund, which was the precursor to the spot ETFs Bitcoin ETFs that exist in Canada that also don’t exist in the USA. So I helped fund that firm. That asset administration enterprise that I’m not concerned with, I did promote my shares and it has attracted loads of Canadian curiosity into the spot ETFs good, correct enterprise that permits buyers to diversify their portfolios.

Anyway, you guys nonetheless don’t have them? Effectively, candidate has had them for a few years now, due to the corporate that I helped to fund. Then although, I left that and I’m now a Bitcoin strategist. And also you say, what’s that? And I say, I’m a man that sat in a threat chair for over 30 years. I perceive monetary markets. I’m a part of an power firm that mines Bitcoin, and hosts Bitcoin miners, together with one which we’ve talked about prior to now, I gained’t deliver it up until you need to, that we host bitcoin mining, and the important thing factor is, Why am I a Bitcoin strategist?Effectively, as a result of many of the world doesn’t perceive Bitcoin, before everything, nevertheless it’s my opinion, that Bitcoin finally turns into the reserve asset of the world. Why? Effectively, as a result of fi it’s the Ponzi folks, and that Ponzi can proceed till it doesn’t having spent my life within the tread within the credit score buying and selling chairs, you already know, that threat occurs quick. And slowly, then immediately, the system breaks. And I’m beneath the opinion that since there’s a probability because the international response to COVID was so excessive silly when it comes to the cash printing that came about. The following disaster may very well be the final disaster, okay? Since you simply begin doing orders of magnitude greater within the math and also you notice It’s not possible for the USA to flee the debt spiral that they’ve inserted themselves in. However it’s not simply the USA, it’s each single different nation on the planet has adopted the identical sport plan, and complete debt to GDP numbers are unsustainable now. So there’s some ugly outcomes, and also you higher defend your self. And in my view, Bitcoin may very well be the very best hedge towards Fiat shenanigans I’ve ever seen in my life. Sorry for the lengthy winded reply.

Dan Weiskopf 10:32
Yeah, that’s tremendous. That’s tremendous. I completely get your perspective. And that’s why I introduced you on the present. So so. However having stated all that, let’s discuss by a few issues. I get that I get that you simply’re, you’re clearly going to be extra bearish right now about markets, and also you had been a few years in the past.

Greg Foss 10:54
Sure, sir.

Dan Weiskopf 10:55
Um, however however, you already know, we get loads of suggestions about bitcoin’s narrative being damaged too however you don’t you don’t see it that means. Um,

Greg Foss 11:06
I’ve by no means been extra excited as a result of it’s a must to have a look at the varied initially, there’s two methods to take a look at it, you possibly can have a look at it as a know-how and subsequently worth it on a on adoption foundation, very like Constancy has despatched out a report that values Bitcoin, primarily based on adoption of competing know-how will not be competing applied sciences, however new applied sciences, like cell telephones, for instance, or the web. And so they say that the adoption of Bitcoin is extra progressive and quicker than these applied sciences. And by the way, they’ve a value goal by the 12 months 2030 of Bitcoin of over US greenback, 1 million utilizing that mannequin. That’s okay. That’s one mannequin. Right here’s what I do know. Okay, credit score, runs the world. And since I spent my life in credit score markets, that’s what considerations me probably the most, the narrative just isn’t truly damaged in any respect. It’s simply that the fool algo merchants on Wall Avenue are buying and selling Bitcoin as a know-how inventory, when actually, Bitcoin must be traded as insurance coverage towards the Fiat Ponzi. So I worth Bitcoin utilizing credit score default swaps on sovereign nations. And I exploit that methodology to provide you with an intrinsic worth of Bitcoin that satisfies my sense of valuation, and I’m by no means one to exit and inform Wall Avenue, whether or not they’re proper or improper, as a result of a value is a value. It’s honesty, it’s not manipulated, as a result of that’s a superb factor. It’s not manipulated, typically, the you already know, rates of interest are manipulated as of late, however the value of Bitcoin just isn’t manipulated. At that time, although, when does Wall Avenue notice that it’s truly insurance coverage and in my view, it takes time, however there are progress factors that the credit score dies are beginning to get it okay. The those that personal 30 12 months treasury bonds proper now, ought to perceive that the debasing that’s going to happen of their principal worth of their time zero funding in a 30 12 months treasury bond, they may by no means make their return on a pure IRR, in the event that they embrace the debasement of the forex that’s 100% Sure, as a result of the Fed has no alternative however to proceed printing cash. And that is the place the circularity of the complete argument goes. So within the brief run, the narrative of Bitcoin is damaged, as a result of most of Wall Avenue is simply too silly to peel a layer of the onion again and notice the establishments that they work for are those which can be the Ponzi, once more, the fellows which can be buying and selling Bitcoin at these business banks on the on the proprietary buying and selling desks of those business banks. They’re the fools, however they’ve extra money than all of the Bitcoiners have they got extra capital to deploy? And so they commerce it as a threat asset? I imagine that’ll change over time however fairly actually, I don’t care. As a result of proper now the world wants Bitcoin and the truth that the worth is in a number of, many instances greater than it’s proper now’s a present for the those that want it most, the folks and international locations that have to undertake Bitcoin at an inexpensive value. So that you simply, you already know, I often say let’s discuss in 20 years, I’m not gonna fear in regards to the brief run, Bitcoin won’t ever die. Why? I simply know that for positive. Why will the worth go up and down 100%? It would. So that you play it like a an odds maker, does as a threat supervisor does. And whereas I often say yeah, look $10,000 and decrease is actually in play. However so is 2 million in right now’s {dollars}. Okay, that’s the asymmetry of the commerce probably the most thrilling alternative I’ve Ever seen in 35 years of managing threat? May I be improper?Completely. I may very well be improper, however the odds are with me. And the fact is the Fiat Ponzi can’t proceed. As a result of why? As a result of it’s pure arithmetic. And arithmetic is the bottom layer of data and the bottom layer of language. You need to compete towards that you simply’re going to lose. So you possibly can faux there’s not an issue. However guess what, slowly, then immediately, finally, the Ponzi blows up.

Dan Weiskopf 15:30
So your view on the US greenback is that it has to start out coming down?

Greg Foss 15:36
No, under no circumstances. No as a result of look, the DXY. So relative to what I ought to say, So relative to different fiets, the DXY is doing precisely what it ought to do proper now, on a macro foundation.

Dan Weiskopf 15:50

Greg Foss 15:50
I typically say this payment it, sorry, properly, initially, the US greenback is like the very best crack home on a crack Avenue, okay, like, look, they’re all melting ice cubes, proper? They’re all simply melting a distinct debt, completely different relative charges of decay. So you already know, one other Wall Avenue, I did sheets, the very best wanting horse at a glue manufacturing facility like cheese, don’t you guys perceive that in the event that they commerce relative to at least one one other, however you examine it to one thing like your own home. Now, your own home didn’t ever truly go up in worth folks, I’m afraid to let you know it simply went up in value as a result of the unit of account, it’s used to measure the worth of your own home referred to as the US greenback went down in worth. So if you begin measuring the US greenback towards different non fiets, you’ll see why the US greenback has been debasing, since its inception, within the final 100 years, the US greenback has misplaced 85% of its buying energy. Why? As a result of they hold creating extra of them, diluting the availability of US {dollars}. Should you guys can’t determine this out, I don’t have time that will help you. You shouldn’t be sitting in a threat chair, it’s worthwhile to return and be taught grade 11 Arithmetic of provide and demand. So sure, the DXY is the very best horse, the very best wanting horse at a glue manufacturing facility. Ought to it go up in worth? Yeah, as a result of each relative to different issues are even worse than the US greenback as a result of different international locations have US greenback obligations that they should pay. So they should promote their very own forex to purchase US {dollars} to pay the obligations. It’s all round. I imply, that is so easy. And but folks attempt to make it prefer it’s some type of, you already know, once more, we’re attempting to return to that alchemy of the subprime mortgage disaster and all that it’s not at the same time as tough because the subprime mortgage disaster, for gosh sakes. However folks lose context. They assume, oh, the US greenback. Yeah, yeah, I get it. It’s the strongest of a failing concern of a bunch of failing fiat currencies Make no mistake, the US {Dollars} debt, complete debt to GDP, together with unfunded obligations. So off stability sheet obligations, like Medicare and Medicaid, make it mathematically not possible that the US greenback will ever not debase. Okay, it’s written in arithmetic that the worth of the US greenback will proceed to say no eternally. If that isn’t true, it’s a must to rewrite the foundations of arithmetic.

Dan Weiskopf 18:36
So is it honest to say what’s taking place, the rationale why Bitcoin has pulled again is we’ve acquired a liquidity disaster greater than the rest. It’s throughout all markets, and Bitcoin is being held hostage.

Greg Foss 18:55
it’s right, as a result of proper now it’s being traded as a threat asset. My thesis is that if the world ever understands that it’s insurance coverage, then you ought to be working to it in instances like this as a result of it ensures towards the acceleration of the debt spiral, however I’m not a large enough voice to go on the market and educate all of the wizards on Wall Avenue who by the way, it’s programmed by 24 12 months outdated Ivy League -, that don’t have any clue how the world truly works, however they know the best way to program algos and I can say that as a result of I’m an Ivy League -, okay. The fact is if you graduate from college, you already know, candy FA and so they put you in a chair to program these algos and also you correlate these algos and you already know what, so long as the algos hold earning money or the correlation stands out, nothing’s going to vary till a Blackrock or a constancy takes on these algos and says, You already know what bought to me so to me, so to me, Oh yeah, I’m lastly as much as my 1percentholding of Bitcoin, like I would like it to be since you fool algo merchants are shorting Bitcoin to me at a time after I want Bitcoin greater than I I’ve by no means wanted it in my life. And these are how issues break which means correlation fashions break. So, look, I’m not saying when it’s going to occur, and I can’t promise you it’ll ever occur. I’m simply telling you, I imagine the chances to be the best uneven alternative I’ve ever seen full cease. And I assume I’ll say this. Sorry, I talked loads, you already know, after I acquired concerned in Bitcoin in 2016, at a value of beneath $1,000 us for Bitcoin. I actually imagine the worth of Bitcoin right now. It’s a greater threat adjusted alternative right now, at 20 instances the worth than it was 4 years in the past. Why? As a result of a lot or six years in the past, quite, a lot has occurred on the planet to make sure that there isn’t any escape from the US debt spiral full cease.

Dan Weiskopf 20:50
I imply, hear, I hear the place you’re coming from. I used to be amazed by the information of Blackrock, with their collaboration with Coinbase and that it didn’t rally Bitcoin.

Greg Foss 21:02
I feel it did within the brief run, however once more, now you then get again to so let’s speak about different issues which can be holding the worth of Bitcoin down. Apart from the opposite macro, I’ll say, digital asset macro system, issues which have occurred to Bitcoin, this Luna Terra factor was an absolute calamity. Anyone that owns Luna and promoted Luna was a part of the Fiat Ponzi. I’m calling you out. You guys know who you’re Novo and rug, Paul, okay. On the finish of the day, you guys promoted a Ponzi. It’s okay. However that $60 billion of token worth or digital asset worth that was destroyed due to Luna and Terra. That’s the identical dimension because the Lehman Brothers disaster. Now, that’s solely the fairness facet of Lehman Brothers that didn’t embrace the $900 billion of Lehman Brothers counterparty threat that was on the market. The purpose could be very easy, although. Bitcoin value fell due to that bitcoin value fell due to the Celsius shenanigans fraud, all the opposite bullshit that occurs within the digital token group that Bitcoin has weathered, and now we’re weathering the merge the Ethereum merge, which is a dumpster hearth, as a result of once more, it’s simply recreated the Fiat Ponzi, however there’s correlation merchants on Wall Avenue, they may commerce Bitcoin in correlation with Aetherium. And as Aetherium, value goes down, and so they’re lengthy Aetherium, they don’t need to crystallize the loss on their principle. And they also brief Bitcoin, as this hedge. And that is the humorous factor, having sat within the pits with all of those so referred to as actually good merchants, there’s not that many good merchants on Wall Avenue, I can guarantee you of that. Or I’ll say, of if there’s good ones, there’s much more very common and really poor merchants on Wall Avenue. So that is the world we reside in. I’m not sweating it. Yeah, once more, Bitcoin may go beneath 10 grand, it may additionally go over 2 million grant a $2 million US per Bitcoin in a short time, when the world realizes the Fed not exists as a result of the Fed is powerless. So I like to think about Bitcoin as a placed on the Fed put, and all of these items can occur in a short time, then, and I’m not going on the market to inform your purchasers, it’s worthwhile to personal 100% Bitcoin, I’m simply saying, look, a present horse within the eyes and be grateful you should purchase the very best type of insurance coverage I’ve ever seen in my life. No counterparty threat gamma, placed on the Fed put, and many others, and many others. And also you’re getting it at a really small portion of its intrinsic worth. Should you personal zero Bitcoin, you’re mathematically challenged. That’s tremendous. As a result of there’s a lot of mathematically challenged folks on Wall Avenue. I may name them out by title, however I gained’t. The fact is Wall Avenue is what Wall Avenue is.

Dan Weiskopf 23:59
Can I problem you somewhat bit on the entire analogy of insurance coverage? As a result of yeah, you purchase insurance coverage, as a result of it’s been confirmed mathematically, and it’s been confirmed as a hedge.

Greg Foss 24:14
Sure, sir.

Dan Weiskopf 24:16
However with Bitcoin, you don’t have sufficient historical past to make that declare.

Greg Foss 24:21
So that is the best factor. You’re proper. And that’s why I’m calling it insurance coverage. However the world hasn’t embraced that as but. However right here’s the important thing factor. I’ll simply throw it again at you. What’s the different? Gold doesn’t work since you can’t audit the availability of gold. And another centralized mechanism is susceptible to the identical shenanigans that any centralized firm or group is susceptible to one particular person making the improper choice on the expense of all their capital contributors or all their followers. The gorgeous factor about Bitcoin And I feel that is what lots of people don’t perceive is the decentralized nature of it. There is no such thing as a CEO, there isn’t any proprietor, there isn’t any advertising division, there may be solely a community. And there may be solely the power to mathematically recreate a distributed ledger to make sure the programmatic provide of Bitcoin at 21 million Bitcoin without end for the entire world to combat over, if you’ll. Now, folks will say, properly have a look at gold. And I’ll simply say, Yeah, that’s tremendous. What’s the true provide of gold? What’s the development charge of gold and no person is aware of. It’s not algorithmic, or excuse me, it’s not professional. It’s not written within the probe protocol. And I play this little sport that like I type of like gold, I personal somewhat bit. However gold, if the worth of gold had been to double in a single day, let’s simply say to $5,000 US per ounce, do you assume the availability of gold would keep at about 2% yearly? Not in your life? However the stunning factor about Bitcoin? Is that this agnostic to the worth? Sorry, go forward.

Dan Weiskopf 26:12
No, in order that’s excellent, excellent transition there. So two issues, you already know in regards to the mining area?Sure. Be at liberty to discuss Hut 8, there’s no drawback about that’s from my vantage level, Jamie has been on this sequence, by the best way. And if bitcoin goes all the way down to 10,000, hypothetically, yeah. What does that do? To loads of miners?

Greg Foss 26:37
Increase, gone. See yah, it’s over. Bitcoin mining as a standalone enterprise is a horrible enterprise. I’m sorry, I can’t say it another means. Since you don’t management your enter prices, which is power. And also you don’t management your output value, which is Bitcoin. That’s a horrible enterprise.

Dan Weiskopf 26:57
So what occurs, to the system then with out the miners?

Greg Foss 27:01
You get distressed consumers who’re power corporations which can be lapping up distressed Bitcoin miners, ASICs, and all the availability and so they’re mining Bitcoin with their very own power that prices them 00. Okay, and that is the important thing to Bitcoin mining is controlling your power prices. If you don’t management your power prices, you may have a horrible enterprise mannequin. Okay, full cease. I can’t consider designing a worse enterprise mannequin than any person who doesn’t management their output income and doesn’t management their enter prices. You’re a sucker? Effectively, there’s a lot of suckers that acquired introduced public to the market, as a result of they didn’t need folks to purchase Bitcoin at $10,000 a Bitcoin, however shopping for a $2 fairness was so enticing due to value bias. Proper. So I’ll simply let you know that. Look, I’ve by no means been bullish on the miners. Okay, I don’t assume I’ve ever made a bullish touch upon Bitcoin mining ever from a valuation foundation, what I do know is the enterprise will come to be dominated by power corporations, power corporations whose marginal value of power is basically zero. And actually, in the event you’re in flare gasoline, the place you’re venting methane, and you may accumulate carbon credit, or you possibly can accumulate ESG factors, if you’ll, then it turns into much more useful to mine Bitcoin. So simply perceive that it is a world in transition, there was a time when mining Bitcoin at your private home was so worthwhile, as a result of the problem adjustment allowed you to do it on a graphics processing card proper now, it’s not like that anymore. These are specialised ASICs, miners, there’s going to be a fireplace sale, there can be extra bankruptcies within the Bitcoin mining area. I’m fairly enthusiastic about that, as a result of that’s the place I’ve spent my whole life is in distressed and excessive yield credit score. And also you simply watch for this to return alongside. And guess what, that’s the best way capitalism works inventive destruction, it doesn’t take away from the chance in Bitcoin the coin, I’m simply, I simply need to ensure that folks perceive the dangers they’ve taken in Bitcoin mining shares, there’s a value for every thing, I hope that Bitcoin doesn’t go to 10,000 bucks, but when it does, with Bitcoin at 10,000 bucks and the problem adjustment in any respect time highs, one thing’s gonna break and also you higher have some spare money round to purchase ASICs at cents on the greenback and to purchase, you already know, Bitcoin mining shares that the you already know, a few of them would possibly survive, and I hope all of them survive, however

Dan Weiskopf 29:44
Greg, I imply, I’m gonna have to chop you off on that, and that’s good dialogue, however, you already know, however Capital Entry helps these corporations they’ll in the event that they’re mining Bitcoin in unprofitable means, they’ll pull again. The problem stage will come down. Proper? Yeah, that’s my imaginative and prescient of that.

Greg Foss 30:10
I need to see right here, right here’s what you say we now have to play chances. Okay. And I’m simply saying if it goes to 10,000, I’m not saying it’s sure to go there. Let’s play the opposite facet of the equation. What if it goes to 2 million? What if in a single day, one thing occurs within the system and Bitcoin gaps as much as all time highs? Is Bitcoin mining an awesome enterprise once more? Sure. Effectively, I imply, it doesn’t imply you management that down. I’m not telling those that anybody who owns a bitcoin miner isn’t uncovered to the identical Asym asymmetry to the upside. I’m simply telling you, although, that the asymmetry to the draw back is worse for the miners attributable to this loopy factor. Look, if bitcoin value had been solely set due to the problem adjustment, and also you’d see Bitcoin costs far greater proper now, nevertheless it’s been impacted by different issues out there, which I discussed the Celsius chapter, the unraveling of Luna Tara, the truth that algos on Wall Avenue are buying and selling Bitcoin as a threat asset. After which maybe most significantly, recently, I don’t assume anyone has calculated what the impression of the eth merge may very well be on Bitcoin if eath you already know, begins buying and selling at at 500 bucks US per coin versus the present value. Actually a threat folks want to know it. I do know you and I’ve talked about Bitcoin miners and there are loads of cool alternatives amongst Bitcoin miners, together with among the topics we talked about prior to now Bitcoin miners being good sufficient to exit and purchase their very own energy belongings. In order that they’re not held hostage by any utility, they’ll flip them on and off they’ll set tax them at will all of these things goes away if you management your individual energy belongings. And that’s you already know, once more it’s it’s it’s a push pull relationship, one thing that modifications over 14 years. Why as a result of that’s all it Bitcoin spin round.

Dan Weiskopf 32:08
So inform us about your position at Validus by the best way. Simply put in context,

Greg Foss 32:13
Are you able to think about if I’m the man at Validus, that understands sufficient about power as a result of I’ve an engineering diploma clearly, and I finding out turbo equipment and that’s what we’re we’re pure gasoline turbine producing peaker crops, however our peaker crops are on standby to permit for any extra demand on the grid in Ontario however we’re capable of promote our provide when in that we now have to off takers like scorching eight and that’s a superb enterprise for us. And when scorching eight can lock of their value of power at a value it’s enticing for them then they go alongside and so they earn cash on mining Bitcoin however the issue is that if they lock in that energy value and the worth of Bitcoin declines, it’s not as enticing as earlier than that’s all I’m attempting to say okay, and probably the most enticing value for power as you’d think about is zero. Okay? If for instance we owned and we do personal gear that permits us to mine Bitcoin utilizing flare gasoline and if we went right into a Permian Basin discipline and the price of methane was basically zero when actually, if we took that methane and captured it and burned it and ran it to, you already know, cleansed it and ran it by generators that allowed us to mined Bitcoin, the corporate that was flaring, it’d say, Wow, I acquired an additional income stream and even higher, I’m serving to to wash the setting. So you possibly can see how all of this works. And all this comes. However I have to stress with you once more, I’m not knocking anyone that invested in Bitcoin mining, I’m simply saying there’s a higher enterprise mannequin that can evolve in my view over time, why extra folks get educated they see the dangers of the enterprise, if it was purely primarily based on mining of Bitcoin within the absence of different let’s name it the digital ecosystem belongings or Wall Avenue algos, buying and selling it as a tech inventory, it’d be a a lot easier enterprise. So I feel it’s thrilling that there can be alternatives to consolidate actually the trade. So what’s Validus energy? We now have about 1000 megawatts of pure gasoline peaker capability, and it’s throughout 4 completely different crops in northern Ontario. And we now have the you already know, we now have enlargement plans utilizing cellular generators, steam turbines, all of the stuff that that make Bitcoin mining thrilling, or you already know, energy thrilling as a result of the province of Ontario is in a tough scenario, as a result of they’re within the means of closing down considered one of their nuclear reactors and the province can be at a deficit of energy to the tune of a few a few gigawatts. Okay, like simply a few gigawatts, that is unhealthy for the economic system, it’s unhealthy for maintaining trade in Ontario. So these are issues that you simply at all times have to think about inside the context of power as an entire, the Bitcoin mining area as a, an off taker, and it’s thrilling, as a result of, you already know, Bitcoin, in my view helps to stability the grid, it helps helps to stabilize the grid, and it truly creates income streams for power corporations that in any other case wouldn’t have entry to these income streams.

Dan Weiskopf 35:40
See, we’re on the low finish of of our historic allocation, the minors so okay, I get the challenges and I’ll be sincere with you, I most likely underestimated the complexity of the enterprise, whether or not it’s regulation power and value bitcoin value truly executing on constructing out a facility getting all scorching, alright, straightforward. It’s actually tough. So is Bitcoin mining cyclical? Or a development enterprise?

Greg Foss 36:14
That’s an awesome query. For now. It’s cyclical. I imagine long run, it’s an enormous development enterprise. Very merely, why? Okay, the miners, the CEOs of most of the miners, let’s be sincere, they began of their mother and father basement, and so they grew to become an professional, as a result of, you already know, they did it of their mother and father basement. That doesn’t make for the CEO of a very good firm, as a result of they only don’t have the expertise of the best way to handle monetary threat working threat. Now, it’s to not say everybody’s in that basket. However there have been actually, you already know, that sort of much less skilled CEOs. After which secondly, any CEO that’s actually, actually good would have a look at the Bitcoin enterprise and say, Why would I threat my profession going into that on unsure setting, proper, like, I imply, I’ve made my profession and different massive trade, I’m not going to switch it as as up and coming trade and doubtlessly, you already know, tarnish my profession. So there may be the administration expertise facet, there’s the monetary threat facet. So that is how I match into the entire thing. Like I perceive power. However look, we’re an power firm first. And Bitcoin technique is considered one of our strengths to assist mitigate dangers on the opportune instances. And that is going to change into an enormous enterprise, although an enormous development enterprise as for instance, Duke Vitality, in some way weaves Bitcoin into their infrastructure, why to stabilize the grid, you already know, to make use of Bitcoin to eat energy after they don’t have any off takers or not or no demand after which flip off the Bitcoin miners as folks come dwelling from work, and so they energy up their air conditioners or their stoves and ovens and stuff like that, you already know, how the grid works. It’s all about baseload administration. So Bitcoin can pay play an especially vital position in baseload administration for utilities globally. One other factor I’m going to throw out and this simply was by the way, legitimate as energy is owned by an, you already know, majority owned by the indigenous in Canada, okay. The indigenous separation of state and cash resonates with them somewhat bit. Greater than it does with different, let’s say, parts or counterparties out there. So it was simply introduced that there’s an indigenous tribe in Quebec, it’s exploring mining, Bitcoin, all of these items are so thrilling. So Bitcoin mining development enterprise the place although not in your mother and father basement, not in a, you already know, I name it a funnel or an hourglass the place you don’t management your power, and also you don’t management your distribution, I’d find it irresistible to be a vertical slice the place from the molecule within the floor, you mined Bitcoin? And you then distribute it to the black rocks of the world which can be going to want Bitcoin for his or her ETF platforms, as a result of all of their purchasers are demanding publicity to Bitcoin.

Dan Weiskopf 39:04
However, I imply, I’m coming from the US perspective, which can be completely different than Canadian perspective. I don’t see power corporations popping out, together with Duke. Yeah, and shopping for up the minors as a enterprise as a result of from a regulatory standpoint, it could be a nightmare for that.

Greg Foss 39:24
It’s attention-grabbing. So you already know, non regulated areas, actually, I throw out Duke as a result of I do know they’ve studied it. Effectively, that I higher not, you already know, you possibly can retract that somewhat bit corporations like Duke, we’re in contact with these folks the entire time. Okay. A number of the greatest pleasure, in my view is inside nuclear corporations. Okay? As a result of if you assemble a nuclear reactor, you want a few 20 12 months timeframe. With the intention to receives a commission again over there capital funding at instances zero due to the expense of the Corps and all that, properly, in the event you can put nuclear, excuse me a Bitcoin mining as a part of a income stream, it vastly reduces the payoff time of your ROI. And right here’s somewhat story for you. Yeah, you reside within the US? Effectively, Canada’s considered one of Canada’s nuclear reactors that lives within the Bruce Peninsula in Ontario, there are occasions of day that we truly pay Individuals to take our electrical energy, I swear to god, okay. Not solely is the worth zero, we truly pay you guys to take our electrical energy. Effectively, you don’t need to be a rocket scientist to determine, it could be smarter to bind Bitcoin with that extra power than it could be to pay our mates south of the border to take our electrical energy. Okay. That is the place Bitcoin is available in. That is the joy. Yeah, it doesn’t require a strategist, properly, possibly it requires somebody who’s sat in a threat chair for 30 years to know that markets are cyclical that typically you may have a Fed President or chairman, Jerome Powell, who truly has by no means sat in his chair and this may very well be a subject of an incomplete different topic. He has no clue what he’s doing. Okay. And that’s the most important threat to the world proper now. All dangers, our belongings are balancing on the pinnacle of a pin. As a result of Jerome Powell is a lawyer who has truly by no means sat in a threat chair and handle threat. We’re in massive hassle due to the shenanigans of a fed. That was too free a coverage. Now they’re tightening right into a recession risking a worldwide melancholy. I don’t know the way else to say it.

Dan Weiskopf 41:40
Simply to place every thing into context would one contemplate you a maximalist?

Greg Foss 41:44
I’m a freedom maximalist. So I have a look at Bitcoin as being the one really decentralized digital asset on the market. So by that definition, I feel I most likely have somewhat little bit of a Bitcoin maximalist trace to me, nevertheless it’s tremendous. However right here’s the worst, the higher means for me to say it. Okay. I’m a match minimalist. Okay. Is the most important Ponzi I’ve ever seen in my life. I attempted to put that out. And so do I additionally personal gold? Yeah, I do. Do I personal silver? Yeah, I do. Do I personal actual property? Yeah, I do. Do I personal bonds?Now? I’m not that bullish on bonds. And I’ve been a 30 12 months bond dealer, as a result of for the primary time within the final 40 years, the bond market and the fairness markets are transferring down in lockstep. Why very just because rates of interest have lastly turned from being a 14% stage after I first began buying and selling dangers. They went all the way down to beneath 1%. I’m speaking the US 10 12 months and now they’re at three and a half p.c. And if the market is meant to imagine Jerome Powell, you already know, there’s one other two and a half a minimum of p.c. That is what Ray Dalio is asking for 4 and a half p.c on the US tenure will look even when charges stabilize at three and a half p.c within the US tenure. The humorous factor is, firstly, inflation continues to be twice that top. And the extra vital factor is you’re going to lose cash on a debasement of a forex foundation. us why? As a result of the one strategy to resolve the US debt spiral is to print extra money. Full cease, the USA just isn’t even overlaying its curiosity expense one time. And if he was a company rated bond, the USA could be rated Triple C. The one motive the USA maintains a excessive credit standing is the power to print cash. And sure, they may print cash, which suggests the cash that’s already on the market loses its buying energy prefer it has for the final 100 years. So proudly owning bonds with out contemplating the debasement of your principal over time is a mug’s sport. However each single pension plan that’s 6040 on the market owns bonds. Very attention-grabbing that sorry, I used to be simply gonna say very attention-grabbing that Mr. Dalio who made his profession on the danger parity on the danger parity spectrum has gone destructive on bonds. I feel he’s proper, by the best way, I’m not going to argue with him. However on the opposite facet is Jeffrey gunlock. Who thinks that bonds are a purchaser proper now? I’m not going to opine by hook or by crook. I identical to a commodity referred to as Bitcoin that I feel can go to $2 million a Bitcoin and the markets solely telling me I’ve a 1% probability of being proper. And that’s why I like Bitcoin.

Dan Weiskopf 44:39
Commodity insurance coverage, know-how. So right here’s the query, proper? What’s the one factor that you simply, so I’m going again to my like wildcard questions right here. What’s the one factor persons are lacking right now about Bitcoin? That they’ll look again and say it was so apparent?

Greg Foss 45:01
Effectively, if I may run by the maths with you actual shortly, okay, as a brand new asset that I feel has an opportunity of changing into the worldwide reserve asset of the world, not forex, international reserve belongings supplanting US Treasuries, is that the worldwide complete international monetary belongings are US greenback $900 trillion, and that features 400 trillion of debt, okay. 300 trillion of actual property, about 100 trillion of equities, and one other 100 trillion of commodities currencies, included in there as gold, which is about 10 trillion, tremendous artwork, all of that stuff provides as much as 900 trillion US {dollars}. Okay. I feel Bitcoin, in the end, when it turns into international reserve asset, we’ll get 5% of that market, a minimum of, however we’ll begin with 5% 5% of 900 trillion, is 45,000,000,000,040 5 trillion divided by 21 million bitcoin is over $2 million per Bitcoin in right now’s {dollars}. Okay. So I’ve a goal, not a restrict a goal of two million bucks. And it’s presently buying and selling at $20,000. And persons are apprehensive it’s going to $10,000. In order that they’re not shopping for it right here. However even at $20,000, in the event you take 20,000 and also you divide it by 2 million, that’s 1%. I’m an odds man, I play chances, the market is telling me I’ve a 1percentchance of being proper for my goal. As a result of we’re measuring an insane right now’s {dollars}. And I’m like, Look, I’m not 100% sure I’m 100%, sure fiat cash can be primarily based, that’s solely math, I’m not 100% sure that Bitcoin attains a 5% share of world monetary belongings. However that being stated, I’m far more sure than 1%. Okay, so I really feel like I’ve gone and watched the horse prepare, and I do know the lay the chances that the horse observe is laying laying towards my pony. And I’m like, Dude, you haven’t watched this horse prepare? I feel I do know higher. And I feel the chances must be higher than 99 to at least one. And I’m simply saying, that’s why I personal Bitcoin as an uneven commerce alternative, however I don’t personal 100% in Bitcoin, that will be irresponsible. I’m telling each threat supervisor on the market although, in the event you personal zero Bitcoin, you’re taking extreme threat relative as to whether you may have relative to having a correct portfolio allocation, that portfolio allocation is as much as you. However let’s say it’s 5% Always remember that in the event you solely have 5% of in Bitcoin, you continue to have 95% in different belongings that it’s worthwhile to fear about far more than Bitcoin. And it’s like folks lose their thoughts proper? Then they’re like, oh my god, I can’t sleep at evening as a result of I’ve 5% in Bitcoin, cease it. You knuckleheads, you may have 95% in different stuff that’s balancing on the pinnacle of a pin as properly. And it’s arduous to coach folks to know this. You and I’ve completed this professionally. Managing cash is a horrible career. Horrible, horrible, horrible career. Congrats on doing it, as a result of I did it for 30 years and I couldn’t get out. You already know, I with out shedding my sanity. I assume I needed to get out. So right here’s what folks look again on. What are they lacking? The middle realization the primary time in historical past, you may have an auditable ledger that isn’t managed by anyone. So stunning. That’s the key.

Dan Weiskopf 48:34
Greg, you already know, I’m gonna push again on one thing. I’m with you on the decentralization.

Greg Foss 48:39
Sure, sir.

Dan Weiskopf 48:40
However the motive why, sooner or later, you already know, we’d pivot extra in the direction of the miners is that the enterprise that’s managed by the bigger miners, they’re survivors is moat like.

Greg Foss 48:53
Okay, no, I I’m sorry, if I got here throughout as as crapping on the Bitcoin mining enterprise, versus extra importantly, I’m attempting to crap on the meth heads, okay, this entire factor the place they recreated a fiat system beneath the guise of a metallic Vitalik Buterin as some boy genius, who in in historical past will look again on and saying he was no smarter than Jerome Powell, which isn’t saying a lot, okay, as a result of on the finish of the day, none of them are actually certified to sit down in that chair. I’ll simply say this although, the factor it’s a must to deal with is the decentralization. So everyone will get into digital belongings, after which they broaden and so they diversify past Bitcoin, which what I’m attempting to say is, in hindsight, deal with Bitcoin. It’s the one factor that solves the Fiat Ponzi, in my view, the one digital asset that solves the Fiat Ponzi and the entire different issues, recreate the Fiat Ponzi. So Luna, Terra was precisely the Fiat Ponzi recreated debt, and you then purchase again debt and all this factor value it. Professional, an algorithmic secure coin, what a bunch of malarkey but it was pitched by guys like Novogratz, and folks observe him into this commerce. And it’s only a actual disgrace that they don’t do their math, they don’t perceive that. The Concern Concern is the Ponzi and it’s worthwhile to hedge your self towards that actuality. And decentralization is vital. As quickly as you may have centralization, you may have the possibility that somebody may change the protocol and alter basically the foundations of the sport.

Dan Weiskopf 50:30
So Greg, the second wildcard query that I at all times ask in fact, is what industries are going to be most affected by the blockchain?

Greg Foss 50:39
And we lined it, we lined it proper now. Excuse me power, okay, power as a result of I assumed guys I’m the one I’m, I’m a fiat minimalist, and I’m a Bitcoin Maxy and I’ve misplaced cash, and I’ve made some cash on the altcoins. However I’m not targeted on these issues anymore, since you can’t management that rubbish Okay. Rightly so, you can’t management Bitcoin, however no person can management Bitcoin, whereas different folks can at all times management the rubbish referred to as hacks the rubbish referred to as XRP, the rubbish referred to as, in my unlucky expertise, maybe despatched the hate mail to Dan to not me, the Ethereum merge, okay, that factor is a dumpster hearth, since you simply recreated the fiat system, I can’t say out and in of the best way. So what’s going to be crucial factor that’s impacted? Vitality. Why? As a result of power is proof of labor. And bitcoin is proof of labor. And Ethereum is now proof of stake. And there may be the distinction.

Dan Weiskopf 51:45
This has been a lot enjoyable, Greg. And we’ve gone backwards and forwards, which I frankly don’t normally get an opportunity to do. However I loved that a part of our dialogue. I hope you probably did as properly.

Greg Foss 51:56
100%, sir, and I look, I do know you and I may sit down for eight hours and we may recreate eventualities. And by the way, there’s going to be enormous alternatives beneath the guise of what I name a Bitcoin Alternatives Fund. Okay, whether or not that’s shorting Western Union, as a result of Western Union is the blockbuster of the cost rail system proper now, or whether or not it’s taking strategic shorts and Visa and MasterCard as a result of Bitcoin and the Lightning Community will disintermediate these issues, or whether or not it’s about shopping for El Salvador debt, as a result of El Salvador debt is so silly low cost proper now. Below the guise of a Bitcoin Alternatives Fund, there must be a lot of cash there to purchase distressed ASICs, miners, there must be a lot of cash there to fund Bitcoin mining corporations on the proper time and on the proper value. I stay up for Wall Avenue growing these swimming pools of capital, as a result of Bitcoin is probably the most thrilling know-how I’ve ever seen. And most significantly, the very best uneven commerce alternative I’ve seen in over 35 years of managing threat. It’s that straightforward. Do anticipated values chance evaluation, don’t overthink issues. If one thing is buying and selling at 20,000 bucks and it must be buying and selling far greater. Don’t attempt to get fancy and purchase it down at 15,000 bucks. Simply greenback value common in each instructions we’ll discuss in 20 years.

Dan Weiskopf 53:25
Greg, thanks a lot earlier than I allow you to go, how can folks discover out extra about you and what you do and searching glass schooling

Greg Foss 53:35
Thanks for bringing that up. Yeah Trying Glass schooling, a free schooling platform that I’m concerned with to attempt to educate monetary literacy to those that in any other case don’t be taught it at school as a result of I by no means realized it at Cornell and Ivy League such a college not Ivy League establishment, I realized all in regards to the Latin American debt disaster. I simply didn’t be taught that the banks had been 25 instances levered to their fairness threat. And my finance professor Maureen O’Hara at Cornell couldn’t presumably have seemed me within the eyes and stated, A fosse I wouldn’t go to work for producers Hanover, they’re bankrupt. Like, you possibly can’t say that as a professor, proper? So we attempt to do that. So yeah, wanting glass Or at Trying Glass edu on Twitter, an awesome useful resource, however my Twitter deal with fairly merely, you possibly can ship hate mail, I’m good with it. I attempt to reply to, you already know, authentic authentic considerations. Excuse me, at Foss, Greg Foss. So F-O-S-S-G-R-E,-G-F-O–S-S, however my greatest factor is wanting glass schooling. I acquired 5 companions, we’re doing it free of charge. And the cool factor is, it’s been translated into over 10 languages proper now, together with into El Salvador, the place as you already know, El Salvador has adopted Bitcoin as authorized tender. So a lot of actually cool issues taking place. I’ve three children, Dan, I’m undecided what number of you may have. I’m not doing this for myself, you and I’ve most likely completed fairly properly on Wall Avenue, by you already know, working within the Fiat Ponzi. I’m attempting to truly give again now and make the world a greater place for my children than it was after I got here into the world. And we’re on the improper path with the Jerome powers of the world. You already know, Janet Yellen, who most likely know the maths, however they’re gaslighting us that, you already know, this Ponzi can proceed. I’m undecided how lengthy it is going to proceed for it. However sure, it might proceed. It’s simply going to worsen although. That’s the issue. So defend your self. Educate your children, I assume hug your children. That’s crucial factor. And you already know, I stay up for Yeah, let’s have them as a result of that’s what we’re doing this for. However look, I stay up for speaking to you. You’re a really good threat supervisor. You have got different folks in your corporations, they’ve opposing views. I’m good with it. I listened to opposing views. If the thesis modifications, I, Excuse me, if the data modifications, I promise you, I’ll change my thesis. However till then, I’m going with the quickest horse on the observe. And as Paul Tudor Jones says, Bitcoin is the quickest horse on the observe. You bought to take a look at it over the long run, although, and have a look at all of the issues it’s weathered and be fairly completely happy that it has weathered all of those storms, and tick tock subsequent block, each 10 minutes, a decentralized, stunning proof of proof of labor. Ledger is confirmed. I’ve by no means been extra excited, despite the fact that I’ve by no means been most likely extra apprehensive in regards to the monetary threat markets because the nice monetary disaster. We’re up towards it proper now. It’s ugly. Can’t say it another means.

Dan Weiskopf 56:41
Greg, thanks very a lot. We’ll hold the dialogue going.

Greg Foss 56:46
I actually respect you having me. And sorry, it took me so lengthy to get on right here. You’re a really gracious host, as a result of I actually wasn’t responding to your invitations as expeditiously as I ought to have. I’ve been on some journeys. I’m going to Europe although. Speaking on the Bitcoin conferences over there. I stay up for speaking to some massive asset managers, which I do frequently. However extra importantly, I’m speaking to governments, and that’s the thrilling factor. Should you ever get a authorities to embrace this, it’s their solely resolution to their very own Fiat Ponzi. That’s the thrilling factor. God bless America. Thanks a lot.

Dan Weiskopf 57:24
Thanks Greg, bye.

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