BitDigital CEO: Ethereum Is The Best Trade Of The Decade

Transcript

If Ethereum and Bitcoin were was invented on the same day, people would never have heard of Bitcoin. >> Do you foresee any interplay between white fiber and Ethereum? Do you do you see White Fiber selling compute on Ethereum? Maybe you could just tell us a little bit more about White Fiber. And now you have a whole bunch of developers who are building on Ethereum with absolute freedom and not being worried that, you know, they'll be investigated by uh for for silly reasons uh by the SEC.

>> Welcome back to the rule. >> This is your home to learn from the biggest guests, the brightest minds at the tip of innovation. >> Our goal is to help spread the collective knowledge of everyone in our community. >> We are breaking crypto out of its echo chamber and taking it to the real world. Sit back, relax, and enjoy it. >> Welcome back to the rollup. We are here with Sam Tabar. Uh very excited for this conversation. There's been a ton of turbulence in the markets uh over the last week. Trump said the T-word. We heard the word tariff and all of a sudden everyone went into a tizzy. Um but really Bitcoin and ETH kind of held up quite nicely. So, we're going to be talking about ETH today and we're going to be talking about Bit Digital, which

is a digital asset treasury company, uh, publicly traded and ETH powered. Uh, Sam Tabar, you are the CEO of Bit Digital. Welcome to the show. >> Thanks for having me. And yes, uh, there's been a lot of price action in the markets lately. Last Friday was, uh, considered a very difficult day in the markets. And now it seems like a distant memory. Having said that, you know, our our stock performed remarkably well. I think one of the best debt performances on that very terrible day and there are reasons for that. We can get into that later today.

>> Yeah, happy to. Um before before we get into that particular day's occurrences, I I'd love a little bit of a broader thesis as to why um you chose to to use ETH as the primary asset in this vehicle. Um, first maybe we could get into your background uh and then we'll ultimately work our way into how you found Ethereum and then ended up leading Bit Digital. >> Yeah, very some brief words about my background. I I started my career as an attorney as a lawyer for a law firm called Scatterenarps in New York City. I moved on to uh help create um a Japanese hedge fund in Japan. Uh I did that for a number of years. That was a lot of fun.

uh worked out really well. Uh then Bank of America, Maril Lynch asked me to run their capitalist strategy uh which I did. Um and um after that I uh during that time I I read about uh bit Bitcoin. At that time Bitcoin was primarily used for um nefarious purposes. Silk Road was a thing and um and uh but it was a very interesting uh situation where people could use money that's not printed by the government and that was a very novel concept. But what moved me mostly was Ethereum because that had some technology that we can get into. But suffice to say, Ethereum had the ability

to rewrite the ent entire financial system >> and it's and it's doing that now. And when I read about Ethereum, I I was very excited and I I co-founded an Ethereum company uh called Fluidity. We created something called Air Swap. It was a decentralized exchange. Uh we also tokenized Manhattan real estate. that became a a study, a landmark study in the Harvard Business Review. And um I I had some pretty good backers like Michael Novagratz, who's the CEO of Galaxy. He backed my my my Ethereum company. So did Joe Luben, the co-founder of a of of Ethereum. He was also uh a massive shareholder of my company. Uh we did end up selling

Fluidity to Consensus. Consensus is the largest Ethereum software developer in the world. Uh and uh and Joe Luben heads that and he uh was very happy with that acquisition and all my shareholders made money which is saying a lot because in crypto u not everybody makes money. There are lots of winners and there are lots of losers and um there are not so many winners but there are a lot of losers. So uh I was really fortunate to make sure that all my shareholders made a handsome return. Um, and then I ended up joining um, Bit Digital as an executive. It was a Bitcoin mining company when I joined it.

It's a it's listed on uh, NASDAQ. The ticker is BTBT. And we were at the time about five years ago when we were Bitcoin miner, we noticed that all our our entire fleet was in in um in China. Uh, and we thought, you know what, that is a jurisdictional risk. as great as and as profitable as this business is at the time, this was five years ago, >> we should really move the entire fleet out of China and bring it to North America. >> And we did that and that was quite a feat because we did that during COVID and there were some um if you recall some very challenging u supply logistics going on

globally in in uh in the world. So when we, you know, we took tens and tens of thousands of machines and we airlifted them and put them on boats from China, uh, and they traveled around the world, uh, and, um, and we, we had them powered up in North America and Canada and the United States. And, uh, we did that for a while. And then I realized, you know, Bitcoin's great, but I realized that the business of Bitcoin mining is not a good business. It's a hamster wheel in many ways. You just have to constantly buy new machines. You have to dilute shareholders in order to raise capital to buy those machines. Taking on debt to

buy new machines is a bad idea because you cannot predict the future cash flow of the business. So you can't really service the debt responsibly. Bitcoin's all over the place and so you don't know how much money you're going to be making the next month when it comes to Bitcoin mining. So if you take on debt, that's a very risky proposition. Those who take on debt when it comes to Bitcoin mining, that really ends in tears. So you know, you in order to raise capital responsibly, you could only dilute existing shareholders, which also sucks. and you're just buying these machines that end up becoming very expensive paper weights after a few months >> and then there's something called a having in in Bitcoin and um and that that happens every four years and

essentially what ends up happening in the having in Bitcoin is that it it divides the profits of Bitcoin miners in half. So basically, it's a business where you're in the hamster wheel of just buying new machines, diluting shareholders, and the business profits just cut in half every four years. And politically, people don't like the fact that it takes so much energy. So, it just became uh a business that I didn't I was I was really disenchanted with. And I was the first one in the entire sector to say, "This business actually sucks. We're going to start putting Ethereum on the balance sheet and we're going to start positioning uh

to become the MSTR of um of of Ethereum. And when I did that, I I was throwing a lot of tomatoes um metaphorically speaking. Um a lot of people were Bitcoin maxis at the time. And if you mentioned the word Ethereum, it was um it was like a bad odor. You know, people just did not like that. they would just say, "Oh, that's a shitcoin. What are you doing?" And then I had dinner with uh Michael Sailor um and he said, "You know, Bitcoin mining is actually a really bad business." And I I said, "You know what? I totally agree and we're trying to get out of it." He goes, "Why don't you just do what we're doing, which is just buy Bitcoin, put it on your balance sheet, just be like a mini MSTR." And I said, "That's a great idea,

except I want to do it with Ethereum." And that um that was um that was not a good uh that was not a good uh conversation at that point. >> How did Michael Sailor react when you told him, "Oh, we want to be a mini MSTR, but we want to do it with Ethereum." >> He said he said, "U that's a bad idea. Ethereum is going to end up going to zero." Uh and the vibe just died in the room. and um and the conversation sort of uh went south and we um I I left the boardroom. Uh so he you know he he was but you know he ended up being wrong.

Ethereum did not go to zero. It actually ended up doing extremely well >> over the past couple of years and it's begun to outpace Bitcoin for good reason. >> And there are lots of reasons why bit um Ethereum is outpacing Bitcoin and there's a lot of reason why there's a lot of positive price action around Ethereum. We can get into that today. So now we become this um Ethereum DAT as they call it. But wait, there's more. We had a very successful AI business, one of our subsidiaries at Bitcoin uh at uh Bit Digital >> and we called that subsidiary White Fiber.

>> It was such a successful business that we decided to IPO it and we did that just about two months ago. And that was a very successful IPO. up well over 100 p% over the past couple of months. >> Congratulations. >> Thank you. And Bit Bit Digital owns 71% of White Fiber and that's an AI business. So, Bit Digital is now the only public company in the world that I'm aware of that has exposure to the two largest and most impactful story arcs of our time, which is digital assets, which is Ethereum, and artificial intelligence, which is white fiber for us. So now today, if you go on the Bit Digital website, you'll see on

the homepage that Bit Digital is just two line items. It's Ethereum on the balance sheet and the amount of white fiber that we own which is 71.5% and it's very easy to value. The market values Ethereum minute by minute, second by second and the market values White Fiber. It's a listed company on NASDAQ. So we're an extremely easy company to value. >> It's just two line items. And so um and so that I'm I'm very happy to be a part of um a company that had the foresight to um to have this double-pronged approach on on digital assets, namely Ethereum and artificial intelligence.

And by that I mean data centers that are built uh to power uh artificial intelligence, which is what white fiber does. So that's that's what Bit Digital is. And there's a reason why we've been outpacing um a lot of the digital asset treasuries uh recently from a market valuation perspective. It's because uh we have um a very creative approach when it comes to the capital structure. I can get into that in a moment. But also we own 71% of white fiber which is doing extraordinarily well. And so that has a cascade effect on the valuation of uh of Bit Digital. And we're the only ones

that actually own a real business. Uh if you look at the Ethereum DAT space, they're all shells. They were shells. Uh they were basically kind of frankly failed businesses and they were repurposed into buying a bunch of Ethereum and putting on on the balance sheet. That's very different for us. We have a very successful business. We own that business. We IPOed it and we have a whole bunch of Ethereum on the balance sheet. So that's that. >> Asset management redefined built on ERC7621. Standardize how you launch, manage, and trade onchain baskets. This is Alvara, the standard for onchain asset management. The wait is over. The Talis test net is live. Be part of the

revolution. Join now at testnet.talis.network. Habachi provable. Trade perks with speed and security. Earn rewards. Visit hibachi.xyz. Trading on fire. It It's really funny to see some of the uh the as you call them failed businesses uh that essentially got a way out of of a a business that was dropping as a means of of exiting to some crypto founders that were looking to just use the shell and the ticker that was on >> on you know uh publicly traded exchange. >> Not the case for you guys. very different case >> um given the history in Bitcoin mining and and allowing the infrastructure to then segue into AI and white fiber which

as you said is doing quite well. You guys have over 27 million shares. It's trading at about $34. Um and like you said 71% of that company is owned by Bit Digital. I I'm curious and I'd love to get into some of the things that you mentioned in there. There were some Easter eggs about why Ethereum is doing so well. what the capital structure is for Bit Digital with respect to Ethereum. But maybe I want to start just a little bit higher level. You you've got this AI company and then you've got Ethereum. These are the two line items. Ethereum is so broad. It's so diverse.

There's so many builders and different applications that are all being built with Ethereum. AI is one of them. And I'm I'm just curious, even if you're projecting out six months, a year, five years, do you foresee any interplay between White Fiber and Ethereum, do you do you see White Fiber selling compute on Ethereum? Maybe you could just tell us a little bit more about White Fiber and it'd be it'd be fun just to to think about what kind of interactions it could have with Ethereum. Yeah, I mean there are a lot of there's a lot of speculation on how AI and Ethereum will intersect. I imagine they will. There are lots of theories on how they can. The way they intersect

currently is that they're both expressed in a public vehicle called Bit Digital. There's no public vehicle that has that kind of expression. Um with respect to white fiber uh the AI company that we own on the balance sheet that is primarily a company that is finding is basically it builds data centers and it builds data centers in a very unique way data centers for and and it's basically bringing a bunch of HPC servicing cloud clients that are focused on um AI and what we do very differently is that we find these abandoned facilities ities that were left for dead

like manufacturing facilities, mattress factories and so on and we repurposed them into tier three data centers. Tier three is one of the top levels um uh when it comes to um building a data center. So for example uh we bought a mattress factory last February and uh we souped it up. Now it's a top tier data center. We just finished it uh very recently and we did that in record time in six months. Normally when you build a data center for AI it takes about two years but the way we do it it takes about six months.

>> Um and the reason for that is we have this retrofit model approach. We we have this skill set where we're able to retrofit a facility that's been left basically abandoned. We take the existing power in that facility. We use the we use that power. We leverage that power and we uh have this retrofit model where we build a a box within a box of that facility and we're able to uh have a top level data center to uh service AI clients. And so that's been really a a fun uh that's one of the reasons why White Fiber is doing very well. The market is realizing um that there's a real need to build data centers quickly

and we've been able to crack that formula and so that is our play in artificial intelligence. Um and uh and and that's one of the reasons why the stock is just doing extremely well and that again has a cascade effect on on Bit Digital. So that that's a little bit about white fiber and but your question about how Ethereum and artificial intelligence will intersect I mean I don't know where to begin. It's um the world is going to be very different uh in five years. Uh we will not really recognize it and I truly do believe that Ethereum will rewrite the financial system and I really do believe

that artificial intelligence will rewrite society. it's already happening >> and and um and and to to think that's not happening is really um I I bid you uh I good luck to you. Uh so it it it's it's a it's basically a world that we need to prepare for. Um it's a world that's arriving really quickly. I think it's already here and um and it's very difficult frankly to answer your question on how Ethereum and smart contracts could play a role in AI. One theory that's come up that Tom Lee actually I have to give him credit. It wasn't for me. He mentioned that perhaps

I don't want to mess it up, but he that he said that perhaps there could be a way for um AI agents to be um their identity to be validated on the Ethereum blockchain so that we know exactly who you're dealing with >> uh when it comes to AI agents and that be validated um on on a blockchain such as Ethereum. That makes sense. That's just one example of a I'm sure a ton of examples. I just want to mention it's such a difficult question to answer because if somebody asked me hey what do you think the internet is going to be looking like and they you asked me that question back in 1998 and I remember that year unfortunately I am I am a

little bit um I'm 52 now so I remember uh the internet when it was invented and and the whole process no one would have ever imagined Uber no one would have ever imagined you know dating apps like Tinder. No one would no one would have ever imagined the internet giving out these apps that you find today. Um, so it's just really difficult to know how Ethereum and AI is going to intersect. They're going to intersect and they're going to do it in ways that we can't even imagine today. Very similar to how the internet in the 90s, we couldn't imagine what it would produce. such as again apps like Uber and so on.

>> Yeah. And you you mentioned the the capabilities here and and how these are both some of the most prominent emerging technologies in digital assets with respect to Ethereum, white white fibers pioneering AI and and data centers and and powering this movement. And you're right, there there's some some key tenants with Ethereum that could make AI a lot better and these could really start to work together. The censorship resistance is something that we think a lot about, we hear a lot about with Ethereum. Um, and ultimately it could really strengthen AI and make sure that the open source movement and the AI movement work together and these really work together

for the benefit of human humans in society and and it doesn't get closed off or or blackboxed or or just monopolized by you know a few a few big winners that ultimately take advantage of all the rest. Any >> Yeah, I couldn't agree with you more. I mean there's really a fight between light and dark right now when it comes to that particular issue. I'm very much against censorship of all kinds. >> Uh I'm in many ways a free speech absolutist and um and um if if if there is technologies where we can resist um the government's um posture to squash um freedoms uh particularly in relation to freedom of expression. I'm all for it.

>> Yeah. >> I'm I'm against rather I'm I'm against that and all right >> understood. Yeah. and and Ethereum's got this co code is law philosophy to it which is just is really really impressive. >> Um I I'd love to think and talk a little bit more about the capital structure that that you have. Um and maybe we can start from the beginning because you you mentioned a piece of your your lore your background that I wasn't too familiar with. It was Morgan Stanley Bank of America coming to you and and asking you to run their capital strategy. And so I'm just curious >> Lynch. Yeah.

>> Or excuse me, Maril Lynch. Um and and so I'm curious uh what what was it like running capital strategy there and then maybe the segue here is you know you heard about Ethereum what when you're when you're working in what we call traditional finance and and you're you know running one of the largest institutions in that world and then you hear about this alternative system this alternative money that feels so far away and and it was it was very very early and it was being used for nefarious purposes. Did you write it off completely or was there kind of a kernel in your mind? What generally how did you balance these two worlds when you when you were there?

>> There was certainly a kernel. So look, I was I was a lawyer and then I became a banker and I realized that the system is rigged. Um the the financial system thrives on friction, unnecessary friction. uh when whenever you try to whenever a person wants to transfer value to the other person, a lawyer and a banker gets involved. Uh you know, contracts, uh bank accounts, the fees to transfer it, uh and so on, escrow agents, just a whole bunch of middlemen.

And what Ethereum does is gets rid of all the middlemen. It solves for escrow. Like you said, code is law. You don't need lawyers. you have smart contracts, you don't need bank accounts. It goes from one wallet to the other. You don't need escro agents because you have uh something called an atomic swap which makes an automatic transfer uh when certain conditions are met which is one of the you know beautiful things about Ethereum. So these that kind of technology when I read about it I realized that my profession as a lawyer a lawyer and a banker is just going to be made redundant and you know I would strongly encourage people not to go into law school young people they should not be lawyers they should not be bankers

because all of that is going to be code and Ethereum is leading the pack on that. >> Wow. I I think that's also true of AI and and you mentioned that you know the people that are getting caught flatfooted, good luck to you. If you don't think AI is going to come in and innovate your industry, >> yeah, >> best of luck. Same thing with digital assets coming in like you said, lawyers, bankers, ultimately software is eating eating this world. And so you you s you realized this even early on and and therefore you were able to prepare and uh ultimately excel. Not only did I realize this, I co-founded an Ethereum company uh back in um 2017 16 or 17 um which were early days. A lot

of people are getting on the bandwagon of Ethereum now, but I I I I co-founded an Ethereum company and and uh we hired engineers and we and we built on the Ethereum blockchain. Um and that was a a successful company and I sold that company to the co-founder of Ethereum, Joe Luben. So um so yeah I I >> it was difficult to do back then in 2017. A lot of the infrastructure that we have today was not available. >> Oh absolutely was very difficult to do back then but you know it was you know where when it was a very difficult time for Ethereum when Gary Ginsler was the SEC chairman during that era. Um, as you may know, um, Mr. Gendler had this, um, uh, bee in his bonnet about Ethereum,

and he couldn't even decide or he made it unclear, I I I think it was on purpose, whether Ethereum was a security or commodity. He would not give any clarity on that. He would go after so many developers on the Ethereum ecosystem. He would investigate a whole bunch of projects. I had de developer friends who were afraid to write code on Ethereum because they didn't want to go to jail because Gary Gensler was just going after everybody. >> Yeah. >> On the Ethereum blockchain. That era is now over. Uh Gary Gensler has been put out to pasture. And now you see a very friendly SEC uh chairman, a very friendly political administration. And of course, there's nothing perfect about

that political administration or any other political administration. But when it comes to crypto and Ethereum, this is a pretty friendly political administration. And so we live in a very different era. But there was there was a reason why Ethereum was not doing very well uh back then is because, you know, it was not classified as a commodity like Bitcoin was. And so when you when when it comes to a commodity, you're allowed legally to champion the commodity, talk about the price of the commodity, make predictions about the price of the commodity, there's a very different set of rules when it comes to commodity and Bitcoin was a commodity. Ethereum was not clear and Gary Gensler did not make

it clear on purpose. So there couldn't be anybody like there were no Michael Sailor types in the Ethereum ecosystem because we were not sure if Ethereum was going to be classified as a security. If you champion a security, if you make price predictions on a security, you can go to jail. And so that is why there was no positive price action on Ethereum. There are two reasons. There are no champions of Ethereum because you could not really talk about a security. And secondly, developers were afraid of writing code on Ethereum because Gary Gensler was investigating everybody on on the Ethereum blockchain for silly reasons. Those reasons are now gone. You see people like myself and Tom Lee and Joe Luben. Um we were just in Singapore

just a couple of weeks ago on a panel. Thousands of people showed up and we're all talking about, you know, Ethereum and and and why and why that is the blockchain of choice. We were not really able to do that during the days of Gary Gensler. And now you have a whole bunch of developers who are building on Ethereum with absolute freedom and not being worried that, you know, they'll be investigated by uh for for silly reasons uh by the SEC. >> Yeah. So, even though you uh Joe Luben and Tom Lee all have uh your own uh Ethereum digital asset treasury companies, I think you guys are all friends. You're you're up there. You're on panels together. Uh Joe Luben bought

your your company in the early days of Ethereum. Can can you just speak to the relationship that you have with these guys? Maybe, you know, do you have any funny stories that uh of your your interactions or your runins with with Tom or Joe? I do tip my hat to to Joe for helping start this movement. Um, when it comes to the public markets uh, and how to express the Ethereum aspiration, we all Tom has a different approach, Joe has a different approach, I have a different approach. Uh, my approach is to use the capital structure creatively. So for an example of that is that just a couple of weeks couple of weeks ago we did a

convert. Uh we raised money using a convert. Uh we had um some really great players like Kraken and so on that came and participated in our convert. And the reason why that's important is that it was an unsec it's unsecured debt. And no one else has done this in the Ethereum uh digital asset treasury ecosystem. Um SB hasn't done it. Um, uh, Tom Lee hasn't done it. We did it. Uh, and it's, and the reason why that's important is bec because when there is a crypto winter, and there will be, >> there always is. Um, the if you don't have if you have secured debt, you are

securing your Ethereum for that debt that you've raised money out of. Our debt is unsecured. So when Ethereum if and when Ethereum goes down what happens is that the people who participated in the convert it just it just converts into equity it does they don't they can't go after our Ethereum and so that is the beauty of an unsecured convert unsecured debt raising money that way is really responsible especially when there's a downturn if you're excuse me if you're raising money um using debt and it's secured when there's

a downturn uh you may go bankrupt because the creditors are going to go after your Ethereum. And so that is that's important. That's one of the things we've done on the capital structure to raise money without diluting shareholders and to raise it in a way where they can't come after our Ethereum should there be a crypto winter or a sudden crash like there was on Friday. >> Yeah. >> So that's important. So, so getting into that, I'd love just to unpack that further and this gets into the capital structure that you have with Bit Digital. You know, maybe you could just walk us through from from your perspective. Um, what happened on Friday and and how do we pick up the pieces and and move on?

>> Well, I think a lot of people are leveraged and um and there are some people who think that um Ethereum will just never go down. I believe that uh Ethereum has structural upside, but they're there's going to be a lot of cyclical girrations up and down. And if you're leveraged, you're not going to be positioned well when the cyclical girration goes down. >> And so, um I think it's, you know, unfortunately probably good for Ethereum that some of the leveraged has been washed out. Um and um I'm really hopeful that uh people have learned their lesson on not leveraging themselves too much.

Having said that, Friday does feel like a distant uh time. I mean people are already I feel a lot of people have have um are already starting to to move on from that. Um Ethereum will go up uh but it takes a while. Uh and it could happen quickly of course but you just don't know when. And uh there's good reason for Ethereum to go up. We can get into that. But there's going to be cyclical generations and if you're levered, you're going to be in trouble. Um, so yeah, it's what uh Warren Buffett um said, you know, stay away from uh what was it? Uh ladies, liquor and leverage.

>> So, you know, >> still holds true today. >> Still holds true. Before we get into um the the thesis for Ethereum going up, I I'm curious just to wrap up the you know what happened over the weekend. Did you guys buy more? Is that was that sort of the outcome of >> I can't I can't say I can't say unfortunately that's not public information yet. So >> Okay. Okay. But because you guys are public then I guess it will be released at some time when quarterly filings and such. So, we will we will find out soon enough. Uh, who who had the cash on hand and who is buying more. Um, and actually I I do want to ask just one question and I don't want to catch you off guard, but I I and then we'll get into the the

Ethereum bullc case here, but because you mentioned Gendler, there's this thing that's been circulating over just over the last couple days and it's this article about how SPF didn't do anything wrong. Gendler used him as a scapegoat and and the Biden administration used him as a scapegoat. And uh and now the the sentiment on Twitter is just to quote Anom, one of the the Twitter personalities here, uh is that Trump is going to pardon SBF? I already see the propaganda starting. From your perspective, is there anything else to be said about the Gendler SBF story, or do you think, "Look, he stole money.

He's in jail. Let him stay in jail." >> I I I do I I I'm not really a fan of of uh SM SPF, but um um so I don't want to like defend him or say that he didn't do anything wrong or right, but I do know one thing for sure, Mr. Garrett Gensler uh had an axe to grind uh with crypto and he did everything possible to um to split that movement and uh and and tear that movement apart. Um you know there I just just just as an example during of of how awful that time was even Bit

Digital was occasionally debanked. There are banks that called us during the Gary Gensler days and um they said you know the you know we're getting we're getting heat from uh the certain political officials and the administration to bank Bitcoin mining companies and um you know they weren't very clear about it but they they they made us like read between the lines and so you know we were told to bank elsewhere and they had to close down our our banks. I mean we don't have that issue anymore. It's quite the opposite. Uh but it was a it was a pretty bad time. We also received letters from Senator uh Elizabeth Warren telling us that we were destroying the

environment which is not true. We were using I think it was like 98% renewables. We're using hydro and all these renewable energies to to uh power Bitcoin. This is back a few years ago when we were a Bitcoin miner. >> This is incredible. I I just I think it's worth mentioning that a a company that is fueling all this investment into an energy source such as you know whether it's wind or solar or some kind of renewable energy is ultimately pushing that forward. You guys were actually and it may seem counterintuitive to someone that thinks, you know, you're using all of this energy, but you're the ones that are actively seeking out and and we're sorting after this energy source and pouring money into renewable energy

resources that forward. >> I'm glad you see the absurdity of it. It was a very absurd time. Um, it really it really it felt I don't the political administration back then with Biden and Gary Gensler was just very anti-crypto and it's they probably lost the election because of it. You know, there are 50 million uh crypto holders in the United States and and and the Democrats in many ways alienated that entire voting block which is very motivated a very motivated voting block and um and the Republicans took advantage of that. it was a really bad idea for the Democrats to politicize technology. Um, and um, that kind of blew up in their faces. I heard that

Elizabeth Warren still continues uh, to um, uh, to be against crypto for the silliest reasons, but I don't think uh, people listen to her anymore. >> Yeah, I don't think so either. I think she's she's about due for retirement. Um, >> okay, let's >> speak of retirement. Speaking of retirement, just just >> Sure. We we we do have too many old people in the government. Frankly, we we need we need younger people. I mean, the average age in the Senate is like I think in the 70s or something crazy like that. These people belong most of these people belong in nursing homes, not in Congress.

>> Yeah. And and the issue here is that young people see the absurdity of the job itself and don't wish to get into a career like this. >> And and Okay. Well, if you know the the the thought experience shows >> and and and and that's why young people are very disenchanted with the existing system and that's why they are gravitated towards Ethereum and crypto and trading uh and trading you know crypto because they feel the existing system is entrenched and rigged for this older uh class and um and it it they they and that's why you see young people just trying to figure out an alternative

system that's for them. And that's why crypto is a big deal because for younger people, they see that as a chance to sort of even out the playing field. Relay, low fees, lightning speed, and the power of multi-chain at your fingertips. Instant multi-chain payments. Choose any token on any chain. 75 plus networks supported. More than 5 million users. 8 billion plus volume processed, 70 million plus transactions, fast, reliable everywhere. Start swapping today only on Relay. Blockchain shortcuts, templates, and widgets launch without friction for builders by builders. Visit enso.build.

>> I think you're absolutely right. And I think the Democrats were subservient to this uh this ideology and the the older people that were there and they said they said to themselves, "Oh, crypto is for rich people. This is money. This is for rich people and this is going to get monopolized. So therefore, us as Democrats, we don't like this thing." But they fundamentally misunderstood the fact that crypto is the alternative to the current monetary system that has been monopolized by the elitists that they're trying to to prevent from getting and monopolizing power. That's correct. You're totally right.

>> I I think they they lost the election because of ignorance. Um >> it's true. >> Well, we'll see how this plays out in the midterms. Obviously, you know, there's this >> a political show, but sometimes, you know, um Okay, let's get into the Ethereum bullc case. I think you already set the scene. You know, we have this generational wealth transfer. money's flowing down and people and and frankly, you know, by and large in part as a result of the internet and the democratization and the and the open access to information, people learning about finance a lot younger. Saw a chart the other day, you know, most people that are are now in retirement age, they didn't learn about money until, you know, their 30s or their 40s and they they had a true career. Now, people are

learning about finance in adolescence. Um, how with with this being said and we we already framed the political environment, Ethereum as one of the emerging technologies, AI is an emerging technology. You know, Tom Lee's been famous for his, you know, price predictions of of Ethereum to to 20,000 and and more. I'm I'm curious from your perspective, um, feel free, you know, call out a number if you'd like, but you don't have to. What is the bullcase for Ethereum going up over the long term irrespective of of the shortterm girrations? You know, there there's a fundamental thesis here.

I'm I'm curious, you know, how how do you see the bullcase for Ethereum? >> Well, look, if Ethereum and Bitcoin were was invented on the same day, people would never have heard of Bitcoin. Um, and you know, Bitcoin just had some a great first mover advantage. And then when Ethereum came up, it had these this technology called smart contracts. Uh you could build DeFi applications on it. These are things you can't do with Bitcoin. Bitcoin is just basically a store of value. So what I'm trying to say here is now that the coast is clear on Ethereum and you're seeing you know very friendly congressional acts like the Genius Act and the Clarity Act

that's you know providing some clear rules around stable coins and you know the majority if not half or more than half of stable coins are built on Ethereum. Um, so you're going to see a lot of uh development activity on Ethereum, especially with these congressional acts coming out that are providing clarity particularly on stable coins that are built mostly on Ethereum. So you're seeing now Ethereum being unleashed uh because of the regulatory environment, the political environment and and Bitcoin is now taking sort of a back seat because it's just an inferior technology. Um, I'm very grateful for Bitcoin being the mother coin, but it it is it is it is um the the the it's not

the it's not the technology that's going to change the world. >> Um, it's Ethereum. Ethereum with its ability to rewrite um what already exists in the financial system. That is a technology that only Ethereum has um with no downtime as opposed to other blockchains including Bitcoin. >> Yeah, absolutely. Um and you guys have not only you know st this claim but you've also put your money where your mouth is. you transformed your your business, which at the time was profitable with Bitcoin mining, but that's right. Um, it >> we had we had we had a profitable Bitcoin mining business.

>> We had a profitable business. We transformed it and made it into an Ethereum treasury company and we IPOed our AI business and so we own a large part of that. So that's the position we're in now. But yeah, we we we knew what we knew the puck was going towards AI and Ethereum and we made moves to position for that and I would encourage everybody who's listening and your audience to make the similar to make similar moves. >> Ethereum and AI is going to eat up the world and it's just best to position for that.

>> Do you anticipate more Bitcoin mining companies following suit and doing the same thing you did? Um I thought I think I don't think any Bitcoin mining company's going to survive the next having which I think is in a couple of years >> I believe. >> Yeah. There's just there's almost like a 1% chance that there's going to be uh that many Bitcoin mining companies as there is today. Um you know Bitcoin mining companies were once really hot because they were Bitcoin proxies.

um they were Bitcoin proxies in the capital market. So instead of buying Bitcoin, you would buy a ticker of a Bitcoin mining company, but after a while you had like a whole like 20, 30, 40 Bitcoin mining companies. It made no sense. There was just too many proxies in the capital markets for Bitcoin. On top of that, it became a very difficult business. So um so I don't think Bitcoin mining is going to be a business in in the future. I forgot your question. And I apologize >> just it you answered it essentially if Bitcoin mining companies are going to uh start to turn off their machines um and quit mining because it is no longer profitable.

>> I I certainly think so. They're either going to go into the uh data center play like what White Fiber did or uh they'll be a treasury company. That's already happening by the way. That's happening in a very large way. Most Bitcoin companies have already announced their intention to pivot into AI or become a treasury company. >> Kudos to you. >> When I did when I when I I was the first we were the first ones to do that a couple years ago and that was not received well by the markets at the time.

>> But now you guys are the ones with the first mover advantage >> in some ways. >> I I got another headline here just kind of fresh off the wire. Uh it's your friend Tom just said today that the DAT bubble has burst. I'm just curious if you know that if you agree with that first off and then and then if you do, you know what what does the future of of capital formation at an institutional scale for Ethereum? What does it look like if the DAT bubble has in fact burst? >> Well, you know, that's why I'm very comforted that we own a very real and thriving business. That's fairly important. And so we have a way of hedging ourselves to any uh any um bubble bursts. And that's why last

Friday when uh the markets uh crashed, feel free to look at our stock price did very well. Uh and so that is a a unique position that uh Bit Digital is in. I am not an ETH maxi. I'm a shareholder maxi. I look at the sharehold the the price more closely and what we can do to provide value to the share price as opposed to gathering uh Ethereum. Uh but you know I do think that Ethereum is going to be worth much more in the future than it is today and that's one of the reasons why we're buying Ethereum but we're doing it in a way that's responsible and maximizes shareholder value. And if you look at the share

price performance, um you'll find if you look at it past week, month, the past three months, I think, uh we've done pretty well, >> I'd say. So, um and I've got the dashboard up. This is this is a great dashboard. It's updating in real time as we're having this conversation. Um we started off today. Uh right now, NAV per share is 430. And I did check before our conversation started. It was at uh about an 11% discount. We're already closing that back up to eight. We're at an 8% discount now. So, I'm just I'm just curious about the capital structure here and kind of the mechanism. Um, when you do find that you're trading at a at a discount to NAV, are are you using cash to buy the shares or maybe you can just

talk about what what dominoes do you put into place to ultimately close that gap and and you know, let the market resurface? Well, one of the things we did was we did this convert where it converts to I think $416, which is a big premium >> to uh MNAV uh to where our share price was when we did the convert. So that is a that is one of the creative things that we've done with the capital structure to keep buying um to to position well the company when it comes to raising money uh and not um necessarily just using the one lever which many people use which is just diluting existing shareholders.

>> Got it. And uh I think I've only got maybe one or two more questions. This has been a really really insightful pod. um when when you're you know sitting on on the ETH that you've got and it's 150,000 Ethereum uh that I see on the dashboard here. It's uh upwards of $600 million. How are you deploying this capital to to compound some of this Ethereum? Are are you putting it into DeFi? Are you lending it? You know, are are you staking it? you know, h how are you how are you, you know, already compounding uh the Ethereum stack that you do have to again just maximize uh Ethereum per share further?

>> Yeah, we're just simply doing plain vanilla staking about 3% yield. Uh but we are staking about more than 80% of the Ethereum on our balance sheet is being staked. uh and that 3% is uh spitting off is enough enough to frankly cover the the GNA of the company. >> Um running running an Ethereum that is remarkably not expensive. It's a very uh inexpensive business to run which is one of the reasons why it's very attractive unlike Bitcoin mining that is a very very expensive business. Bitcoin mining has you got to get a data center. You

got to buy machines. You have to have power contracts. Your machines are outdated in months. You've got to buy new machines. You have to deal with Bitcoin going up and down and you making sure that everything is all connected. It's a very expensive and complicated business. The Ethereum DAT business, very simple. Buy Ethereum in the open market, stake it. You can't even stake Bitcoin. So, you're not getting a yield, right? So you could stake Ethereum and you could use that stake to cover your very um you know feather light expenses when it comes to buying when it comes to running an Ethereum DAT versus a Bitcoin mining company.

>> Incredible. Sam, we've only got a few minutes left here. Uh I'm just curious, you know, some takeaways from the Asia conference tour. Um you were up there, you know, with with the other big uh digital asset treasury companies um having the important conversations on on the main stage. what what were some of the takeaways? What what was the you know the sense in the room? Uh any anything that you pulled out that that stuck with you while you were out there? >> Well, first of all, there were 25,000 people at that conference. I was really surprised by the scale and volume of people and um when Tom and Joe and I spoke uh at the main stage, there were thousands of people that showed up and um there are people like camping out on

the aisles. I was very surprised by the reception, the excitement um of of what we do and you know I think that crypto has a very bright future uh that Singapore conference I think it's one of the largest if not the largest crypto conference in the world and um and it I was just um I was just very encouraged that and it just confirmed that I was on the right path uh and it it was just so great to see all this excitement uh from the media, from people, from uh just c people who are just getting into it, who are curious and are just disenchanted with the existing financial system and wanting uh a a shot at a

fairer system or a system that's being developed right now. Um that's that's that's found in in in um in in this movement. It's a counter uh it's a counterestablishment movement and I'm glad that I'm in it and I'm glad you guys are in it too. >> Yeah, we certainly are. Uh Sam, thank you so much for joining. It was an absolute pleasure and I think we we share a lot of the same philosophies especially when it comes to this movement. Um would would love to have you on again sometime soon. Thanks for having me.