0:00

Welcome to galaxy brains. An amount

0:02

of cash, amount of cash your

0:04

host, Let me host system is

0:06

sound and resilient. system

0:08

is sound and resilient. Bitcoin

0:11

made a new all-time high.

0:13

If you're not long, if

0:15

you're not long, you're short.

0:17

Bitcoin is going to be erased. to come on

0:19

there. Laugh is the best crypto asset. Go

0:22

quiet. Hope Bitcoin is going

0:24

to zero. Welcome

0:26

back back to Brains. As always. I'm

0:28

your host Thorne, head of firm

0:30

wide research at Galaxy. We a great

0:32

episode for you today today. Paul Giordano,

0:34

VP of asset asset management at known

0:37

as known as marathon the world's world's

0:39

largest publicly Bitcoin miner. He's our guest

0:41

and with I'm gonna talk about Bitcoin

0:43

mining's future of the the potential impact

0:45

of tariffs and other things on

0:47

on hash rate growth in the United

0:50

States Marathon's capital market strategy. They've been

0:52

in the market buying buying for their

0:54

their treasury. And a bunch bunch of interesting Bitcoin,

0:56

native topics like L2's, Ordinals, Ruins, out of band

0:58

out -of -band payments, and

1:01

Bitcoin upgrades. week. Before I get is off

1:03

this week. to please Before I get to the show,

1:05

I need to remind you to please refer

1:07

to the link to and note the none notes and

1:09

note that none of the information this podcast investment

1:11

advice or an offer recommendation or solicitation by by

1:13

or any of its affiliates to buy or sell

1:15

any securities. Let's hop right hop right into

1:17

the show. into the show. All

1:20

right, like I said, Bimnet, a BB from Galaxy

1:22

Trading, is off this week, but I thought

1:24

I would just say a few words to

1:26

take stock of the monumental year the monumental

1:29

assets Bitcoin and digital assets had. the

1:31

year in the sort of

1:33

30 year, ,000 the year in the As

1:35

I say to on December

1:37

dollar range. is trading on triple

1:39

that at is trading We

1:42

got as high as $108 ,000.

1:44

high as Yes, in the past

1:46

few weeks, Bitcoin has crashed. crashed. to

1:48

the $90 ,000 area. I just have

1:50

to say that out loud. It's

1:52

It's been a wild ride

1:54

for a decade in for me and

1:56

me and the idea that

1:58

we're crashing into the. 90,000 dollar ,000

2:01

range, surreal to almost

2:03

surreal to even say. happened.

2:05

I a lot has happened. would say

2:07

to me the year is marked

2:09

primarily by two events, the launch of

2:11

the Bitcoin ETFs in January and then former

2:13

President Trump's re -election in

2:15

November, which has been

2:17

a huge uplift for Bitcoin and

2:19

markets given how positive

2:22

he and his campaign were

2:24

about Bitcoin and digital

2:26

assets. And then as we've

2:28

seen the seen the named personnel to

2:30

be be to to various

2:32

crucial economic and financial regulatory

2:34

roles. roles. Those names come

2:36

out of of them very

2:38

positive very positive Scott Scott

2:40

square group hedge fund guy

2:42

guy, you know has said

2:44

that crypto is about

2:46

freedom is about the fact that

2:48

it's getting young people

2:50

introduce getting young people in capital

2:53

markets again markets again Paul named

2:55

as the the SEC chair nominee very very

2:57

very pro digital assets and

2:59

CEO Potomac group a consultant that

3:01

many in financial the

3:03

financial world rely on rely

3:05

on for for work and many in

3:07

the digital assets. digital assets David

3:09

David named as named us the crypto and

3:11

AIs are a long time Bitcoin and crypto VC

3:14

also involved in a bunch

3:16

of other interesting stuff. Howard

3:18

stuff right, named as Commerce

3:20

Secretary. So all these folks,

3:22

let alone Elon Musk and

3:24

Vivek and Vivek Ramoswami charge of this

3:27

new. new Department of

3:29

of government efficiency the Doge, now

3:31

a formalized a formalized sort

3:33

of advisory group to the

3:35

you House and have of them,

3:37

you know own and have

3:40

praised So and digital that, all

3:42

of that those two events

3:44

the ETFs and and the

3:46

Trump I think marked the think marked actually

3:48

traded actually traded up

3:50

huge to a new high

3:53

high following the launch

3:55

of the and reached a

3:57

a new all -time high

3:59

in March of 2024,

4:02

Then then it traded

4:04

down in sideways for

4:06

237 days. until the morning after

4:08

the this year, they're only 19%

4:10

away from flipping the combined AUM

4:13

of all gold ETPs. So truly

4:15

an incredible run, the best launch

4:17

of an ETF category in history,

4:19

lots of institutional investors, all of

4:22

that stuff that we've talked about

4:24

that you know about. I think

4:26

other interesting areas have certainly been

4:28

the rise of stable coins, new

4:30

all-time highs in circulating supply and

4:33

stable coins. Resiliency of D-Fi has

4:35

been impressive, continues to impress, we're

4:37

watching the launch and maturation of

4:39

L-2s both on Ethereum but also

4:42

hopefully potentially on Bitcoin in 2025.

4:44

Companies launching their own L-2s, not

4:46

just the coin bases of the

4:48

world, but also was reported Deutsche

4:50

bank planning to launch in Ethereum.

4:53

a roll-up that rolls up to

4:55

Ethereum, an enormous amount of interesting

4:57

stuff happening in crypto this year

4:59

that I think will mark 24

5:02

as a real launch pad for

5:04

the future. We have a lot

5:06

to be excited about in 2025,

5:08

not the least of which is

5:10

the expected relaxation and reevaluation of

5:13

digital asset regulatory policy in America,

5:15

which could serve as a major

5:17

catalyst, not just supportive of asset

5:19

prices, but of innovation. The possibility,

5:22

perhaps that Public block chains may

5:24

actually integrate in some way with

5:26

traditional finance I think has a

5:28

lot of people excited And and

5:30

who knows it's been a wild

5:33

ride. Thank you to everyone for

5:35

listening this year We've had a

5:37

great year on galaxy brains. Thank

5:39

you to my friends Phineas and

5:42

Chris and Will from studio friends

5:44

and the team at Galaxy Marketing

5:46

for making this show possible. And

5:48

thank you everyone for joining us.

5:50

We have a great interview coming

5:53

up with Paul G. Orano, VP

5:55

of asset management at Mera, the

5:57

world's largest Bitcoin minor. We have

5:59

a bunch of great topics. So

6:01

let's hop right into it with

6:04

Paul. Let's go now to our

6:06

guest. Paul Giorano, VP of asset

6:08

management at Mera, formerly known as

6:10

Marathon Digital, the largest public minor.

6:13

Paul, thank you so much for

6:15

coming on Galaxy Brands. Thank you

6:17

for having me, Alex. It's wonderful

6:19

to be here. Truly exciting time

6:21

in Bitcoin world and in the

6:24

world of digital assets, not just

6:26

the launch of the Bitcoin ETFs,

6:28

which were the most performant launch

6:30

in the history of ETFs and

6:33

caused a huge uplift at the

6:35

beginning of the year, but obviously...

6:37

the re-election of former President Donald

6:39

Trump and all of his positive

6:41

statements around Bitcoin and Bitcoin mining.

6:44

I don't know, what's your sense

6:46

here? We're recording on December 23rd

6:48

right before Christmas and the end

6:50

of the year. What's your sort

6:53

of vibe of where we are

6:55

and help us take stock of

6:57

this moment? You know, the first

6:59

thing that pops into my head

7:01

is that whatever happens in the

7:04

next four years will be less

7:06

hostile to Bitcoin than the previous

7:08

four years. So, you know, there's

7:10

positive momentum from the regulatory front.

7:13

We definitely want some clarity on

7:15

a number of issues that I

7:17

think we're going to get. We've

7:19

got people coming into this next

7:21

administration on the regulatory side who

7:24

are advocates for Bitcoin and crypto

7:26

more broadly. And I think we've

7:28

got a lot of positive momentum

7:30

from that front because it's a

7:33

lot easier to run a business.

7:35

even under the strictest of regulations

7:37

than it is to run a

7:39

business without regulations and worrying about

7:41

getting a wells notice at any

7:44

time. You know, so I think,

7:46

you know, there's definitely going to

7:48

be, you know, positive momentum going

7:50

forward from the regulatory side. There's

7:53

positive momentum from the financial side.

7:55

As you mentioned, the ETFs have

7:57

been an unbelievable success. I mean,

7:59

mean, in nine

8:01

months, we've almost

8:04

eclipsed the gold ETF, which

8:06

took over almost 20 years. you

8:08

know, all mean, that, of that, those

8:10

are are. to pointed

8:12

to for Bitcoin, a for

8:15

Bitcoin, a supportive

8:17

environment. draft or drawdown. And, you know,

8:19

we're very excited of where we're very excited

8:22

of where we're headed. us,

8:24

But for us, is is a

8:26

means to an end, not

8:28

just necessarily, we're not in

8:30

business just to mind Bitcoin,

8:32

although we to do that,

8:34

we're the largest public obviously We

8:37

just eclipsed 45 ,000 Bitcoin

8:39

in our eclipsed 45,000 Bitcoin is a

8:41

way to learn about ancillary

8:43

services that we can provide.

8:45

we can provide to to

8:48

the grid, grid, to the Bitcoin network

8:50

general. So that's the way the way that

8:52

we see the business. Yeah,

8:54

it it is an exciting time

8:56

and you mentioned that gold that gold

8:58

ETF. I think it just produced

9:00

a chart about this this morning a

9:02

combined this this morning. The the U .S.

9:04

are only 24 billion in the US are only

9:07

24 billion or 19 percent

9:09

combined gold the in

9:11

the US. ETPs in the US. actually just

9:13

a crazy chart It's an insane chart.

9:15

It's pretty incredible. Yeah, I

9:17

know and it's also And it's

9:19

know you know, largest asset by

9:21

market cap Cap. as well. you

9:23

know to me, know

9:25

to me use cases People are

9:27

finding use cases either as

9:29

an inflation hedge tool a

9:31

treasury tool of the usage else in

9:34

the case of the usage

9:36

of the blockchain for real

9:38

world tokens or other types

9:40

of upgrades. There's a lot

9:42

going on on the Bitcoin

9:44

side. to be positioned very

9:46

happy to be positioned where we are. some

9:48

of Yeah, we'll get into some of those things

9:50

going on. I wanted to ask you you mention... ancillary

9:53

services, you said said hyperscalers

9:55

seen I've seen some Bitcoin

9:57

mining firms, which are. by

9:59

by definition. operate massive data centers

10:01

have access to enormous amounts of electricity.

10:03

There is a new industry that is

10:05

a relatively new industry that also demands

10:08

a large amount of electricity and that's

10:10

high-performance compute artificial intelligence. I've seen some

10:12

minors announce or enter into agreements with

10:15

these firms that provide data centers data

10:17

centers for those use cases. How is

10:19

Mara thinking about that? Yeah, well, I

10:22

mean, you know, we... look at the

10:24

stack from A6 design to cloud integration

10:26

all the way, you know, to the

10:29

tech stack to help, you know, the

10:31

hyperscalers. So, you know, we're building the

10:33

tools that allow them to position themselves

10:36

better, but the drain on the grid

10:38

from AI is going to be significant.

10:40

I mean, it takes, it's ten times,

10:42

uses ten times more electricity to do

10:45

a chat GPT search than it does

10:47

to do a Google search. And that's

10:49

where we're headed, but the problem is.

10:52

that the hyperscalers are demanding electricity in

10:54

a spiked measure. They need five-nines availability

10:56

all the time, but they're not using

10:59

all of that electricity and all of

11:01

that capacity. So where we can deploy,

11:03

we can bring our mining equipment, which

11:06

are very modular, to the source of

11:08

the energy. And we can help stabilize

11:10

that demand and be the buyer of

11:13

electricity when it's not being needed by

11:15

the grid. We can shut off, you

11:17

know, 100 megawatts of electricity in two

11:19

to five minutes. So, you know, and

11:22

give that electricity back to the grid

11:24

when they need it for hyperscalers or

11:26

just from weather related demand. So, you

11:29

know, we're helping, you know, these big

11:31

grids as well as, you know, a

11:33

lot of this. hyperscaler demand is moving

11:36

to the edge of the internet. It

11:38

seems like the entire internet is moving

11:40

to the edge. And it's very difficult

11:43

to tap the grid from the edge,

11:45

but we can, you know, deploy some

11:47

of our equipment to help, you know,

11:50

reduce the... the cost for you know

11:52

the hyperscalers and building out there electricity

11:54

demand. Yeah very interesting the the fact

11:56

that for a year is this this

11:59

sort of fringe niche Bitcoin industry was

12:01

the one building out all this power

12:03

supply and and now there's the this

12:06

other new trend of an industry that's

12:08

demanding of it. I hear a lot

12:10

about the sort of crypto and AI

12:13

overlap, right? In sort of crypto world,

12:15

you've got these AI agents launching meme

12:17

coins. You've got, I know people trading

12:20

with AI. People have talked about time

12:22

stamping and proving the provenance of data

12:24

that may be deep faked or fake

12:27

created by AI, but really this like

12:29

underlying infrastructure layer of Bitcoin mining, perhaps

12:31

serving as the data center and electrical

12:33

foundation for AI. That seems like it's

12:36

guaranteed to happen. I agree with you,

12:38

and I mean it's happening, and not

12:40

just for hyperscalers and for AI, it's

12:43

also happening for sovereigns around the world.

12:45

I mean, you know, in Austria and

12:47

Germany, they are about 65% renewable energy,

12:50

and they need to be able to

12:52

find a load stabilizer, which Bitcoin mining

12:54

can produce. I mean, additionally, you know,

12:57

countries are going to need to figure

12:59

out a way to hedge their dollar

13:01

reserves. and it'll probably be Bitcoin, you

13:04

know, the sooner the better for me,

13:06

but you know, it'll happen eventually down

13:08

the road because they're going to need

13:10

access to the Bitcoin network for transactions.

13:13

So they're going to, the only way

13:15

that they can get in is by

13:17

mining Bitcoin themselves. So there's a lot

13:20

of use cases that are growing out

13:22

of the stabilizing effect of curtailment from

13:24

Bitcoin miners. Yeah, it's super interesting. I

13:27

think you're going to see that you're

13:29

starting to see it as you said.

13:31

Alright, let's pivot a little bit. Let's

13:34

talk about, you mentioned the amount of

13:36

Bitcoin that Mara holds in its treasury.

13:38

I've seen in the news that it's

13:41

been reported that Mara has been acquired.

13:43

Bitcoin the open market.

13:45

Can you talk

13:47

a little bit about

13:50

the strategy bit about the

13:52

the capital markets

13:54

activity the capital the long

13:57

-term goals are for

13:59

and doing that? long-term goals

14:01

of course. There

14:04

are three things that

14:06

course. need to solve

14:08

for that need to technology

14:11

company. And company, of

14:13

what we call

14:15

the sort of which are

14:18

call the three C's, which are compute,

14:20

capital, and capacity. you

14:22

know, how do we look we look

14:24

about at capital to do, you

14:26

know, these types of types of And,

14:28

And, you You know, the convertible

14:30

bond market has been very

14:32

responsive to our offerings. We

14:35

have a lot of volatility in

14:37

our underlying equity, our which convertible

14:39

bond investors really like. So

14:41

we feel like that's the cheapest

14:43

way for us to build

14:45

out the the piece of our out

14:47

the Also, we, three

14:50

C's. We look at at the time

14:52

lag between. raising raising capital, buying

14:55

the deploying the miners. like there

14:57

was an felt like there

14:59

was an opportunity to use

15:02

capital to immediately. because of near-term

15:04

catalysts, of although it's

15:07

cheaper than to mind

15:09

it's cheaper. it is Over time, the

15:11

to mind Bitcoin then is to buy in

15:13

the market, there's a timing aspect. So

15:15

we're balancing all of those opportunities to

15:17

try to enhance shareholder value the best way

15:19

we can. way we can. that makes

15:21

a lot of sense. I think

15:23

the timing, I think lead time on time on

15:25

A6. How how long is the lead

15:27

time? If you guys wake up tomorrow

15:30

and say, we want purchase you know, a ASICs,

15:32

like brand new ones new ones from a

15:34

manufacturer, long how long until you get

15:36

those typically, historically? It's a number a number

15:38

of months. don't know I know exactly and

15:40

it really depends on, you know, the capacity

15:42

that the that the, uh... that the manufacturer has

15:44

has shipping and you know also fears of

15:46

tariffs going forward and how

15:48

we're going to how we're going to navigate you

15:50

know that new environment but we

15:52

don't know it until we see

15:54

it. until we see it really depends on

15:56

the type of the basics that you

15:58

want to purchase. and the lead

16:01

time for delivery and weigh that against

16:03

what you're, you know, you think Bitcoin

16:05

will do over that next period of

16:07

time. We've done very well in these

16:10

purchases. You know, Bitcoin has had quite

16:12

a run in the last fourth, in

16:14

the fourth quarter of this year, and

16:17

that's when we did most of our

16:19

capital markets work. So we're very happy

16:21

that we were able to return shareholder

16:24

value in the very near term based

16:26

on, you know, the buys that we

16:28

made in the fourth quarter. Does the

16:31

Bitcoin mining industry in the United States

16:33

have to worry about tariffs? I mean,

16:35

I think we already have some tariffs

16:37

on, for example, China, but I mean,

16:40

is that, how are you guys thinking

16:42

about that from a sort of political

16:44

trade risk? It depends on the extent

16:47

of the tariffs. I mean, yeah, we

16:49

do have tariffs and they've been there

16:51

for a while and we've navigated our

16:54

purchases around that, but there's really a

16:56

large unknown going forward. So we're just

16:58

going to take that data as it

17:01

comes in and decide what's our best

17:03

use of shareholder capital. Is it going

17:05

straight to the Bitcoin spot market or

17:08

is it to deploy more machines? Yeah,

17:10

it's interesting because tariffs in general like

17:12

many types of... corporate taxes, you know,

17:14

are likely to get the cost of

17:17

them is likely to get pushed down

17:19

to consumers. You know, if you buy

17:21

a good that's made abroad at a

17:24

store in the United States, right, the

17:26

good may go up in price as

17:28

the manufacturer and the I guess the

17:31

supplier distributor has to pay more to

17:33

import it. But that's not, if you're

17:35

buying machines to create commodities like Bitcoin,

17:38

right, you can't like demand a higher

17:40

price. from Bitcoin so I could I

17:42

could see I mean we don't have

17:44

a lot of clarity to be clear

17:47

I know well and I don't know

17:49

we really have no idea exactly what

17:51

may or may not happen on this

17:54

spot but it's interesting like domestic commodity

17:56

producers that require foreign made and manufactured

17:58

devices whether it's literally like you know

18:01

a uranium mine or any other type

18:03

of mine that needs like that's an

18:05

interesting one where the price elasticity doesn't

18:08

can't can't be you know sucked back

18:10

from the consumer in the same way?

18:12

Yeah, you're absolutely right. And the secondary

18:14

market for machines is not what it

18:17

is in other things too. So there's

18:19

not a, you know, you can't substitute

18:21

an older machine at a much much

18:24

lower price in the secondary market than

18:26

you could necessarily in the newer. If

18:28

you want to maintain your, you know,

18:31

your global hash rate percentage, you need

18:33

to be competitive and you need to

18:35

grow with the best equipment. you know

18:38

we do have we do have a

18:40

couple of of initiatives where for example

18:42

we just bought a wind farm and

18:45

you know that is almost near zero

18:47

cost electricity and we can we can

18:49

deploy you know less efficient machines there

18:51

and and still be you know at

18:54

a positive revenue capacity so it really

18:56

depends on where we're buying the electricity

18:58

the goal is to push for zero

19:01

cost electricity and basically to to capture

19:03

any electrons that are floating out there

19:05

that are not being used by the

19:08

grid or you know any of the

19:10

other demand drivers of electricity. Yeah I

19:12

think that makes sense. I think It's

19:15

just an interesting industry. There's a lot

19:17

up in the air for what could

19:19

happen. You know, do you guys have

19:21

any stated long-term hash rate, either projection

19:24

for the network or for Mara or

19:26

your goals for growing or maintaining hash

19:28

rate? Like how do you think about

19:31

that? Yeah, well, we have not announced

19:33

any goals going forward, but we did

19:35

double our hash rate capacity in the

19:38

past year. We're at 50 Exahash now.

19:40

I know that we will want to

19:42

grow. We'll make a public statement when

19:45

we're ready to do that. There are

19:47

a lot of moving pieces, as you

19:49

mentioned, you know, manufacturing and capacity for

19:52

capital and, you know, compute power. So

19:54

we'll put that all together and when

19:56

we're ready to come up with a

19:58

new goal, we'll make it available to

20:01

the market. to ask you Paul about

20:03

some of the sort of a little

20:05

bit more Bitcoin native topics I think

20:08

one maybe we'll stick with which is

20:10

very close to you guys is is

20:12

out of band transactions in February of

20:15

this year so gosh almost a year

20:17

ago marathon Mara announced slip stream which

20:19

is a service to provide direct inclusion

20:22

block inclusion for transactions through through your

20:24

blocks. Can you tell us what slipstream

20:26

is first before I dig into this

20:28

little? Yeah, for sure. So one thing,

20:31

there is a misnomer out there that

20:33

we operate the largest pool for Bitcoin

20:35

mining. That's not actually accurate because it's

20:38

not a pool because it's just us.

20:40

We don't allow anybody else to join

20:42

our pool. We wanted to have our

20:45

own pool, you know, for a lot

20:47

of reasons. For a regulatory point of

20:49

view, we can isolate our transactions. Our

20:52

auditors love that. That makes life a

20:54

lot easier. We don't want to be

20:56

an aggregator of hash rate. But we

20:59

want to give someone the ability, if

21:01

they have a unique transaction, to get

21:03

on the blockchain. Because if you're doing

21:05

a transaction or an ordinal or a

21:08

ruins with thousands of endpoints, you have

21:10

to make sure that all of them

21:12

get on the blockchain. So with us,

21:15

it's a reservation system where you can

21:17

make sure you get block space. And

21:19

our goal is to increase fees. from

21:22

Bitcoin mining and we're going to need

21:24

to be creative and come up with

21:26

these ancillary services, slipstream being one of

21:29

them, that's been quite popular, you know,

21:31

over the past since February when we

21:33

launched it. Yeah, I think it's, there's

21:35

definitely going to be more of these

21:38

types of transactions, you know, strange, irregular,

21:40

or just urgent, is another way of

21:42

thinking about it. We're needing some guarantee

21:45

as to what finality could occur. Yes.

21:47

And Bitcoin and the network is the

21:49

safest computer network in the world. So

21:52

the more and more people the more

21:54

important those transactions are they're going to

21:56

move away from. some of

21:59

the other networks and

22:01

are really really going to focus on

22:03

the Bitcoin network. do you think

22:06

there's like any kind of

22:08

long kind of either detriment or opportunity

22:10

positive or negative for you know know,

22:12

what I'm calling out of

22:14

ban transactions, right, these transactions are

22:16

being delivered to being delivered to inclusion

22:18

in a block, in a not being

22:20

broadcast to the public mem to the

22:22

public men does that have any

22:24

negative risk or risk or is it it good

22:26

inevitable? What is it? is it? I don't

22:28

think there's any negative risk,

22:30

but I mean, there are

22:32

people that are you know, there are people

22:34

that to four three to four make

22:36

sure that they can inscribe

22:38

something on a block, on a

22:41

someone inscribed a song song

22:43

on a block just to

22:45

show that they could, but

22:47

they paid excess fees to

22:49

do that that. And, us, which

22:51

was a very nice revenue

22:53

enhancement. So So I don't see

22:55

any major negatives to the

22:57

growth in of of these off

22:59

transactions getting the the blockchain. think it's going

23:01

to make life a lot easier for

23:03

people who are doing complex things. doing complex

23:05

things in Bitcoin. Some of those Some

23:08

of those complex things I think actually,

23:10

before I get into before I get into

23:12

this to the broader question, I I

23:14

would stick with with inscriptions, which you

23:16

mentioned, which you mentioned. Are you you guys agnostic

23:18

to this type of activity? I know

23:20

know there's people in the mining community,

23:22

I would say a small but vocal

23:24

minority. that are opposed to

23:26

and there are of there are, of course, people

23:28

across the Bitcoin community in general who are

23:30

are opposed to this sort of use

23:32

of Bitcoin as an arbitrary data store.

23:34

Do you guys take a position on

23:36

this one way or another? another? Well, Well,

23:38

there's always, there's going to be the

23:41

purists out there that, you know, the out

23:43

there that, you know, the Bitcoin to be used

23:45

as a store of value, and that's

23:47

it. as And of fine. mean, the that's fine. I

23:49

network has grown up with that type

23:51

of attitude. And we like the fact

23:53

that people feel that way. fact But,

23:55

you know, we're you know, to be a

23:57

little bit more creative little bit more the Bitcoin

23:59

network is used. For example, we launched

24:01

an initiative called Anduro earlier this

24:03

year, which is a real-world asset

24:05

tokenization platform. And we did our

24:07

first tokenization, which is going very

24:09

well. It's whiskey barrels that you

24:11

can buy a token for that

24:13

represents one barrel of whiskey that

24:15

is in its aging process. And

24:17

it allows people who are early

24:19

investors in this limited partnership. liquidity

24:21

access in and out and it

24:23

gives the producer another avenue for

24:25

raising capital so that's been very

24:27

very popular. There are going to

24:29

be others that are going to

24:31

be you know even more popular

24:33

going out there and I think

24:35

you know to me that it's

24:37

not really necessarily a Bitcoin-centric plan

24:39

but the more use cases in

24:41

the crypto world bring legitimacy and

24:43

I think that's a positive for everyone.

24:45

So this is a Bitcoin L2

24:47

that like ultimately settles on Bitcoin

24:49

where you can tokenize things on

24:51

the L2? That's exactly right. Yeah.

24:53

We think that people are going

24:55

to want to be on the

24:57

world's safest network. We think it

24:59

can compete with the Ethereum virtual

25:01

machine and you know we've seen

25:03

some good access and success already.

25:05

Yeah, very interesting. I think there are

25:08

a lot of Bitcoin L2s in

25:10

development. We've written about these extensively

25:12

at Galaxy. many that are sort

25:14

of I would say layered in

25:16

name only that they either they

25:18

even may have launched on Ethereum

25:20

but they sort of claim I

25:22

joke that that L2s are kind

25:24

of just other block chains that

25:26

you know pledge fealty to a

25:28

primary blockchain because sure there's so many

25:30

different types yeah yeah some of

25:32

them have more direct alignment than

25:34

others right like if you're a

25:36

roll up and you post your

25:38

proofs to the you know, parent

25:40

blockchain. But are you bullish long

25:42

term on this category of L2s

25:44

as a way to bring expressivity

25:46

to Bitcoin? I am. Yeah, I

25:48

think there's going to be I

25:50

think every Every limited

25:53

partnership is at

25:55

risk of being

25:57

converted into an

25:59

RWA. You know, it's just

26:01

makes just too

26:03

much sense. got the

26:05

got the visibility

26:07

into asset valuations

26:09

over the lifetime

26:11

of an investment. and

26:13

plus an on and off ramp if need

26:15

be by need be by investor. So I

26:18

think it's a think it's a fantastic

26:20

you know, the more business we bring to the more

26:22

business we bring to the

26:24

Bitcoin off it is the better off

26:26

it is for the mining community

26:28

and overall Bitcoin holders. holders. Do you

26:30

have any thoughts any thoughts on

26:32

the Bitcoin Strategic Reserve that has

26:34

been discussed? discussed? I I know okay

26:36

if not, I know people are,

26:38

they're sort of, I think, of I

26:40

think some vocal feelings on both

26:42

sides of this debate and also

26:45

debate and also a I mean,

26:47

I would count myself as a

26:49

somewhat ambivalent middle. a somewhat ambivalent

26:51

middle. to be redundant,

26:53

of course, right? of course,

26:55

right? Yeah, exactly. So I've been reading

26:57

I've been reading that

27:00

say say of chance of a

27:02

one strategic reserve. one of those know,

27:04

it's one of those things

27:06

that anyone who owns Bitcoin

27:08

would love to see because

27:10

it's it will definitely drive

27:13

prices higher drive prices you know,

27:15

I've over I've seen some state

27:17

legislatures putting out out for for you

27:19

know, having coin in their

27:21

reserve. it's I think it's

27:23

one of those things that

27:25

once there's a tipping point,

27:27

then most sovereigns are going

27:30

to need to own some to

27:32

own some to stay competitive. competitive. So

27:34

I you know, I think there's a high chance that

27:36

it will work. it will work. I think

27:38

it's just another reason to feel

27:40

comfortable being long Bitcoin. being long

27:42

And you know, it's an asset. know, it's an asset

27:44

that new. It's of like finding

27:46

a new precious metal precious It

27:49

makes sense to sense

27:51

it into the country's

27:53

treasury. treasury. and diversify its asset asset

27:55

risk that way. know, we You

27:57

know, a we have a lot of assets

27:59

in the government. gold assets, what strategic oil reserves,

28:01

you know, having a strategic Bitcoin reserve, I

28:04

think would fill out that portfolio nicely. Yeah,

28:06

I think there's some different ways that it

28:08

makes sense and I think some others that

28:10

people find very risky, but it is, to

28:13

me, I think of it pretty straightforward. I

28:15

mean, Bitcoin's historical performance is additive to a

28:17

portfolio of effectively any size. It doesn't matter.

28:19

I was just looking today, the top three.

28:22

looking at like major equities and fixed income

28:24

securities and indices and commodities year to date

28:26

as of December 20th which was you know

28:29

last close of trading on Friday in order

28:31

the best sharp ratio is micro strategy invidia

28:33

and then Bitcoin so and obviously the first

28:35

of those is a self-described Bitcoin treasury company

28:38

so It makes sense to me, like especially

28:40

if you have a foreign, if you're a

28:42

foreign nation that either has your own currency

28:44

or you're pegged to the dollar, but you

28:47

have a sovereign wealth fund or you need

28:49

to hedge your dollar exposure. I think the

28:51

way a US, I like that you mentioned

28:53

the strategic petroleum reserve because this seems like

28:56

a more, you know, sort of less risky

28:58

and more in line with American style for

29:00

something like this than, say, doing it at

29:03

the treasury or at the Fed, but. I

29:05

don't know. It's interesting. Yeah, I think it's

29:07

interesting and I think it sits better at

29:09

the Treasury than it does at the Fed.

29:12

You know, I know that the Fed chairman

29:14

last week said that he doesn't see the

29:16

legality behind Bitcoin as a Fed asset, which

29:18

I'm totally comfortable with because I think it's

29:21

a Treasury asset. You know, that the Bitcoin,

29:23

now I'm sorry, the strategic oil reserve is

29:25

managed by the Department of Energy. It's not

29:28

managed by the Fed. You know, so a

29:30

Bitcoin strategic reserve being managed by the Treasury

29:32

is where it should sit and I've not

29:34

seen any news reports saying that that's not

29:37

legal. legally available to us. Yeah, I

29:39

to us. a I think

29:41

that was a pretty

29:43

diplomatic answer from Jay

29:46

Powell too. The The question

29:48

was what he thought he

29:50

thought about the the US

29:52

government should hold Bitcoin and

29:55

his answer was that

29:57

the Fed doesn't have

29:59

the statutory authority to,

30:02

so he'll leave that

30:04

up to Congress. that

30:06

I thought that was

30:08

actually quite diplomatic. thought His

30:11

job is busy enough

30:13

already. He doesn't need

30:15

something else to worry

30:17

about. Yeah, can you

30:20

imagine if he weighs

30:22

into that debate, like

30:24

worry he knows, he

30:27

knows you imagine enough, weighs into

30:29

not debate? He's a a plugged in

30:31

guy. He knows he would unleash a

30:33

wave of commentary and criticism that's not productive for

30:35

the for mandate, mandate, if if that.

30:37

that. Look, Paul, before we go, we before we

30:39

go, we talked about Bitcoin we

30:41

we talked about and and ordinals

30:43

a little bit, but broadly,

30:46

I know there's some momentum, I

30:48

would say, say. It's not not overwhelming

30:50

yet, but some momentum building

30:52

for another Bitcoin upgrade, the last

30:54

last, of an order going backwards,

30:57

we had tap root and added

30:59

to Bitcoin in to Bitcoin in

31:01

2021. then in in 2017, four

31:03

years before before that was when

31:05

Segwit was added to that's sort

31:07

of right around, right at at the

31:09

time when the block size wars are

31:11

sort of seen to have concluded.

31:13

It's been about another four

31:15

years as we 2025 and there's some

31:17

interesting proposals that in my view

31:19

in my view moderate and yet they're low risk but perhaps

31:21

high but perhaps high value, but not so

31:23

much that you might have a view if

31:25

if you do, please share. But if

31:27

you have a view on any of these

31:29

proposals, many of them related to covenants could

31:31

the quality of of L2 and bridging and

31:33

stuff like that. and stuff but also

31:36

But does just think about

31:38

the about the Bitcoin protocol? or any

31:40

advocacy around, know, know, whether it should or

31:42

when it should upgrade. This This has

31:44

been a big issue in the Bitcoin

31:46

community over, you know, it's decades now. now

31:49

with businesses having very strong views

31:51

some do now, but and

31:53

some did then know what I

31:55

don't know what are thoughts are from this.

31:57

on this. we don't have a have a public

31:59

opinion. of exactly how we feel about

32:02

this topic. You know, any kind

32:04

of upgrade that increases efficiency is

32:06

a positive, but you know, anything

32:08

new is also very scary. And

32:10

Bitcoin has performed very well. It's

32:13

done what it's supposed to do.

32:15

It's been safe. It's not been

32:17

hacked or attacked. So for me

32:19

personally... to get behind any kind

32:21

of upgrade, it would need to

32:24

be a significant efficiency and safety

32:26

upgrade that would get me interested.

32:28

Doing any kind of system upgrade

32:30

or protocol upgrade to make it

32:32

easier for L2s or like something

32:35

like our slip stream network, I

32:37

don't know if that's really necessary

32:39

or worth the risk of the

32:41

thing of something going wrong, but

32:43

that's just my opinion. Yeah, I

32:46

think it's reasonable. It's always kind

32:48

of reasonable to let's wait and

32:50

see and be conservative and evaluate

32:52

when it comes to Bitcoin Well,

32:54

well put well, yeah, there's a

32:57

lot of money at stake in

32:59

a 15-year track record to protect

33:01

so I get that right. Well,

33:03

this has been great Paul. Congratulations

33:05

on the great year and Paul

33:08

Giordano VP of asset management at

33:10

Mara. Thank you so much for

33:12

coming on Galaxy Brands. Thank you

33:14

Alex. I enjoyed it That's it

33:16

for this week's episode of Galaxy

33:19

Brains. Thanks to our guest Paul

33:21

Giordano, VP of asset management at

33:23

Mara, formerly known as Marathon Digital.

33:25

Bimnet again was off this week

33:27

and we're gonna take next week

33:30

off ourselves so we will catch

33:32

you the beginning of January. Everyone

33:34

have a safe and happy New

33:36

Year's. Enjoy yourself, your families and

33:39

your friends. We will see you

33:41

in 2025. Thanks

33:46

for listening to Galaxy Brains, the weekly

33:48

podcast from Galaxy Research. If you enjoy

33:50

the show, please like, rate, review, and

33:52

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34:07

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