Preston Pysh (00:12:14):
That’s why you had to go off in a completely different direction in 2015.

Jason Williams (00:12:18):
Totally different direction.

Preston Pysh (00:12:19):
Wow.

Jason Williams (00:12:20):
I had some patents that I’ve written in robotics and synthetic polymer science, and I was really interested in doing some type of renewable energy thing, but I didn’t want to… I don’t know how this is going to come off. I didn’t want to do something that had any subsidies, that needed any type of government support to survive. It’s pure, free market capitalism. If I’m going to build something, I’m going to build it, so it’s profitable. [crosstalk 00:12:48].

Preston Pysh (00:12:48):
You were anti Elon Musk before it was popular.

Jason Williams (00:12:51):
Right. It was like Peter Drucker, right? My first social responsibility is to be profitable. After I’m profitable, then I can go give all my money away, but let’s deal with that first. Man, that’s where the idea for PRTI came up. Like, “Let’s take this massive worldwide problem of trashed tires. You can use an equation like one tire per year per person is disposed of around the world for the most part. Here in the United States, we dispose of about 350 million scrap tires a year.

Jason Williams (00:13:24):
That’s not counting the blemished tires that come out of the factories or heavy industrial tires. These are passenger tires or light truck tires, and 20% of them end up on the side of the road in water, ponds and lakes, in the woods. Then we don’t have a nice or good solution for them, and that’s where PRTI was born.

Preston Pysh (00:13:47):
Where in the world do you get this idea? Most people have maybe one brilliant idea, but then don’t have the means to execute it in their lifetimes, and here you are still very young, 2015, and you’re already on this second idea that you’re ready to kill it. How did you grasp this idea?

Jason Williams (00:14:06):
I was always interested in early stage, seed investing. I would tell you starting in 2012 to 2015, I had been looking at things that were interesting, and putting small amounts of capital $50,000 or $100,000 into things. I had arrived at some areas of interest for me, energy, robotics, medical applications, service offerings. I forgot some restaurants and stuff like that, but that is probably not as impressive, but that was really it. I had developed a bit of cognitive diversity in my own approach to things, and thought I had a good solution. I had looked at some patents that had made some claims on how they dealt with synthetic polymers and tires, and demanufacturing them.

Jason Williams (00:14:53):
I thought we could iterate on them, so I just hired a bunch of organic chemists. We sat in a room, and broke this thing down, and came up with something that I thought was viable on paper. Then I took a, I don’t know, 50-gallon barrel, cut a tire into a fourth, and insulated it. It looked like a satellite. He did it externally until we got the temperature around 300C internally, and I started to pull a vapor stream off of it, and condensed that into a really crappy oil. That was the beginning of it. I had that on the back of a pickup truck. Then we went to scale.

Jason Williams (00:15:33):
I put a bunch of money in, bought a 10 acres of land close to where I live, and lived in that field for a year, really lived in the field. I had a very small team of engineers, and we perfected the technology.

Preston Pysh (00:15:51):
I want to get back to this. But when I’m hearing this, my background coming up with this military background, it’s all about leadership. It’s all about being able to prioritize and separate which variables are important, and just being able to synthesize what’s important and what’s not important, and get to the point. You have this in spades at such an early age. I was formally trained on this for years, and I would argue still very lacking in many areas. But when I’m hearing this, this does not happen. All these things do not happen unless you just have this natural gift for leadership. Where did you learn that?

Jason Williams (00:16:26):
I don’t know, Preston. I can just tell you that looking back, if you were ever at a pickup game, pickup basketball game, I was the guy that people would pick like, “Hey, I want Jason on my team.” Then I would be the guy picking the teams as I started to get older, and that just naturally happened.

Preston Pysh (00:16:45):
You had a social sense.

Jason Williams (00:16:47):
Yeah, and my mode has been conflict resolution, focus on aligning goals, finding everyone’s unique motivation, and pushing hard in that direction. When you find someone’s unique motivation, you align goals, and you resolve conflict with absolute intensity. Those are fun people to be around, and if you share success along the way, and everyone understands what winning is, “Oh my goodness, you can build some amazing team.” Really, for me, I don’t need to be the smartest guy in the room. I just want to be a part of the team. Sometimes I’m the quarterback, and sometimes I’m just running the ball hard.

Preston Pysh (00:17:23):
Is that humility? Do you think that…

Jason Williams (00:17:28):
Part of it, but it’s all those things. It’s all those things, but I don’t know. Again, I’m not formally trained. My formal training’s in medicine and hard sciences. I’m not an engineer, but I built a very big waste management business at scale that eventually mine cryptocurrency, so we can go down that path. I’m as proud of PRTI as I am FastMed because it really… To your point, I got lucky that life-changing idea and realized it and monetized it. My second gig was PRTI, and right now, that company is valued at about $125 million, and is expanding. I’m very proud of that. We survived COVID, the shutdown, et cetera.

Preston Pysh (00:18:14):
Did you find that some of the medical training that you had that so much of it is deep critical thinking, a thirst for continuing to learn and knowledge in order to properly diagnose and treat people? Did some of that influence you in the way that you operate as an entrepreneur, or maybe something that you find very beneficial that you think maybe others don’t necessarily get access to because of that background?

Jason Williams (00:18:41):
I think there are some things that I can lean on. One of them is when you’re dealing with highly technical, highly sensitive situations, specifically around people’s health, you have to be able to deliver the message, and you have to be able to deliver that message to people who speak English, to people who this isn’t their primary language through an interpreter. I mean, you’ve been trained this way, so you understand what I’m talking about. For me, I think one of the things that I’m able to do is take complicated processes and systems, and speak very plainly. I write like I talk, and that, I think, is why people relate to the book.

Jason Williams (00:19:20):
I needed to write that book because it imprints in my brain these complex things, but I didn’t want to write it in a highly academic way, because that’s just not how I talk.

Preston Pysh (00:19:34):
Well, you are writing for your audience.

Jason Williams (00:19:37):
That’s right, and I wanted it to be even though it wasn’t in my voice. I wanted people who know me or have ever talked to me to say, “That’s him talking.” You can hear him saying that. I apply that same type of philosophy to engineering. It’s funny, only recently have I realized that’s kind of Elon Musk’s mode as well. He doesn’t let people use industry-specific nomenclature. It’s banned. If it needs to be big, use the word big. If it’s small, it’s small, light, heavy. That’s me. It’s funny, I wonder if that comes because Elon Musk is really out of discipline. You know what I’m saying?

Preston Pysh (00:20:16):
I think you’re right.

Jason Williams (00:20:17):
I’m at a discipline. I sit in a room with electrical engineers, welders, computer engineers, programmable logic coders. I’m totally out of discipline, but I’m like, “I need this to work in 13 steps. That step doesn’t make sense to me. Explain to me why we’re doing this. What does a vacuum pump do?” Then I’m like, “Draw that for me. Stop telling me.”

Preston Pysh (00:20:40):
You’re getting to the essence of why it’s working, within just trying to fundamentally understand like, “Don’t get all the fancy language here. It’s a pump, and it needs to pump this much this far.”

Jason Williams (00:20:52):
Right, and it doesn’t need to break. I need to be able to anticipate its failure. I know that failure mode analysis is a whole engineering discipline, but it’s nothing… I’m going to arrive at that instinctively. I’m going to say, “That pump keeps breaking. That’s a crappy pump. Find me another pump, and put some system in place so we can predict its failure because when it fails, I lose primary control of the whole system. We can’t let that thing fail.”

Preston Pysh (00:21:20):
Just put your team at ease too. When you’re talking like this, they don’t feel like they have to perform or be something different than what they are. The communication barriers open up, and then the flow of knowledge is being shared with the team. I love this.

Jason Williams (00:21:35):
Everyone can participate. There’s not some guy who’s a nuclear physicist sitting on top of everything, because I’ve had those guys come to PRTI. We’re just like, “That sounds interesting, but it’s not applicable, because you just don’t understand it that PRTI is a cool thing.”

Preston Pysh (00:21:55):
You said a 10-acre plot of land, you lived out there for a year testing.

Jason Williams (00:21:59):
That’s right.

Preston Pysh (00:22:00):
You were going through developmental testing to prove out that like, “This is something that I can actually move out on.”

Jason Williams (00:22:06):
This is a big scale endeavor, and no one has… This is 2014. No one has ever built something like this to scale and had it persist, so the waste management, waste industries, Republic, Goodyear, Bridgestone, all of these companies, they’ve always wanted some other solution to dispose of tires other than throwing them in a landfill or shredding these things. Here, I come making these claims, and they’re like, “We’ve heard it all before. You’ve got a magic machine, and you can put this in here and get that.” We built it, Preston, and we built it at scale. What you would see if you came to PRTI is I’ve got six 40-foot cylinders, and they rotate on an access point.

Jason Williams (00:22:50):
They’re all independent. One of the things that I didn’t like about massive industrial complexes is they’re all connected. You’ve got conveyor belts feeding this into that, and this and then it goes here, and then that has to go into here. But if any of those systems break, the whole plant goes down, so I wanted to make sure that we had something called a continuous batch system. That was modularized.

Preston Pysh (00:23:17):
Now, you’re getting into Lean Six Sigma type stuff.

Jason Williams (00:23:20):
You’re speaking a language I don’t know. I did the same thing with a hospital emergency room, right? I said, “This thing is big and inefficient. People are unhappy. Let’s make it small and tactically more replicable and usable.” We took these systems, these cylinders. Each one of them had its own programmable logic controller. It worked independently of the other systems, so there was some redundancy. You had this 40-foot chamber. You had an oil processing and containment system behind it. Then you have an emergency flare behind it. The cylinder rotates forward. You load it with about 300 whole tires.

Jason Williams (00:24:03):
That’s really novel because no one had ever produced one of these tire disposal systems where you had no preparation of the tire. You could just take a dirty tire, and throw it in my machine. You put 300 tires in the machine. The machine then gets back into a vertical position. It’s all done by computer, and then lid closes on top of it, and it forms a seal. We put a vacuum pump or some pressure, and we evacuate the atmosphere out of that vessel. All you have is tires, and we pulled out the atmosphere. I insert a torch into the bottom of this giant cylinder, and you’ve got all the tires randomly inside of it.

Jason Williams (00:24:51):
I blast it with this torch, and create a coke layer so it’s not on fire. I’m blasting those tires with this torch for 20 minutes, and creating coals like hot coals at the bottom. The bottom of the cylinder is actually… There’s thermal concrete and some other really cool technologies in it. But in essence, it’s just a green egg. After 20 minutes, I pull the torch out, close that port, and then I start to drag oxygen or atmosphere back over those hot coals. There are no additional fuels. There’s no catalyst. There’s no other energy. I’ve spent 20 minutes of some type of gas to create hot coals.

Jason Williams (00:25:34):
Now, I’m dragging atmosphere over that with vacuum pumps. That becomes super hot at the base. Imagine blowing on a coal. It gets red hot. A tire is 40% oil. It’s got carbon in it, steel, kevlar. It’s got a lot of things in it that are volatile in terms of this synthetic polymer. That heat is monitored with about 80 different sensors up the stack of tires and up this 40-foot container, so I’m measuring the temperature differences up the stack. Over a 11-hour process, moving those tires down to this hot spot, just using gravity, and turning them from a semi-solid to a gas. I’m not lighting them on fire. I’m heating them, and they turn into a gas.

Jason Williams (00:26:21):
Then I’m pulling that vapor stream off at a certain temperature. It’s around 350 to 400C. I’m pulling that vapor stream off, and collecting and cooling a fuel. That fuel is like bunker fuel. When I say bunker fuel, you’d use that in a… It’s a high sulfur fuel that you would use on a ship once it gets into international waters. The vapor stream that I can condense into oil is like syngas. It’s all the butanes, propane, methane. It’s got a lot of different combustible components. I can pull that, and scrub it and combust it in terms of energy as well. I’ve got liquid fuel.

Jason Williams (00:27:06):
I’ve got a gas stream. Then after 11 hours, I’m left with a carbon. That’s a mid-grade Appalachian coal. It’s a solid fuel, and then steel. There’s a fair amount of steel in a tire. I dumped that out after 11 hours. I shake off the carbon. I sell the steel. They just come pick it up, and give me scrap steel price. I use the solid fuels, or I sell them into the solid fuel market to create power. I use the oil, either sell it into the blended fuels market or use it for our own energy use, and the gaseous fuel, I use the vapor stream I use for power as well. All of those things, when I first endeavored to monetize them, I thought I would just produce power for the grid, but that led me to cryptocurrency mining.

Jason Williams (00:28:00):
There’s a whole nother track or discussion, but that’s the story of PRTI and its evolution to that point, where I had at scale taken care of 10% of all the waste tires in North Carolina. We have 12 million waste tires a year. We were taking care of 1.2 million of those tires ourselves. I had a replicatable model that could exist in certain environments that would allow us permitting.

Preston Pysh (00:28:28):
Wow, that is crazy. Let’s talk about the transition to the cryptocurrency piece. You’re doing all these things. You’re doing these things successfully. How did you come across cryptocurrency as being another opportunity to leverage with the energy?

Jason Williams (00:28:47):
I had said to you I was doing some early-stage investing. One of the investments I had done is in a technology that had made a claim. It was a nail polish that could detect date-rape drugs. It came out of NC State University.

Preston Pysh (00:29:01):
Wow.

Jason Williams (00:29:01):
The claim was that a young woman or man could put this nail polish on, dip it in their drink and detect six typical date-rape drugs. I had invested in that company early, and we’re working with the founders to perfect it. Mark Cuban had invested in that as well. A friend of mine, and I didn’t know at this point, friend of Anthony’s Pompliano had said, “Hey, this guy named Pomp is leaving Snapchat, and moving back to Raleigh. You need to meet with him. I think you guys would get along well.” He put us in contact. This is 2015, 2016, and we set up to meet in downtown Raleigh for 30 minutes. We ended up staying for two and a half hours. It’s like you meet someone, and you just have a-

Preston Pysh (00:29:48):
You just know.

Jason Williams (00:29:48):
It’s like us talking right now. It’s easy. We immediately said, “We got to do something together.” What we did was we developed the concept for Full Tilt Capital, which was going to professionalize friends and family investing. We raised, I don’t know, about three and a half million dollars to go into early stage stuff. We input it into 60 different companies. Then we had another maybe 15 million bucks that we put into late stage pre-IPO stuff, SpaceX, Reddit, Airbnb, Lyft, a lot of cool stuff. Man, we were deploying capital. We were local heroes in terms of the early stage venture stuff, getting to know each other, and then recognize that there was a lot of talent going into blockchain, and a lot of pro money moving in that space.

Jason Williams (00:30:39):
We had started to think about, “Could we raise another fund, and focus it directly in this space?” Another thing happened that was really interesting, Pomp and I were driving to Charlotte to buy a McDonald’s to turn it into a coin laundry mat. He had met JP Baric, who owns the mining store. JP was mining Ethereum in his dorm room at NC State when he was in college. He and Anthony had started to tinker with GPU Mining. On that car ride to Charlotte, Pomp’s telling me about GPU Mining and Ethereum. I’m sitting on a plant that generates six megawatts of free power as a waste stream here in North America.

Jason Williams (00:31:27):
I’m like hitting a wall because I’m like, “They’re only going to pay me three cents a kilowatt hour for this power. I’m trying to drive the best economics I possibly can on this business as the startup.” Pomp’s like, “Well, why don’t you mine cryptocurrency at PRTI?”

Preston Pysh (00:31:45):
What return was that at the time? You said three cents per kilowatt hour.

Jason Williams (00:31:51):
I could have been paid three cents a kilowatt hour, but they’re paying me a certain amount of money per pound for the tires as a waste stream on the front end of the business. That is material. It’s a waste management business on the front end. They’re paying me for the fuel. I have some Opex in the middle, but the waste stream of the demanufacturing process are all of these rich fuels, so when I started mining, so Pomp, myself, JP Baric, we all built the first mine, and you see it. There was an article that was in Decrypt, I think, and it was like, “Oh gee, bitcoiners show their initial mines.”

Jason Williams (00:32:30):
It shows Pomp and I’s first mine at PRTI there. We were mining Ethereum at 40 bucks, 45 bucks. That was the price of it, and it was nearly free for me to mine it, I mean, after I made the CapEx investment. Right now, just to give you a sense, I think we mine Ethereum still. It costs me about 285 bucks.

Preston Pysh (00:32:54):
Wow.

Jason Williams (00:32:54):
Let’s call one-tenth a cost. I’m not going to tell people the Bitcoin one, but I’ll tell you the Ethereum one.

Preston Pysh (00:33:02):
Everyone’s going to want to know this as they hear that you have an Ethereum piece. Are you selling the Ethereum?

Jason Williams (00:33:09):
Just like we trade the solid fuels and liquid fuels, we do the same thing with our crypto. That was the whole adventure, right? Pomp and I returned from Charlotte. We get the McDonald’s, turn it into a coin laundromat, and then we start building this cryptocurrency mine, and learn about custody and taxation and what’s Ethereum, and what’s proof of work mining, and what’s Bitcoin and Satoshis white paper? Oh my goodness, this Bitcoin thing has this programmatic monetary policy, and no, it’s got a supply cap of 21. We go through the whole thing, and him and I are just going crazy. Pomp’s capacity for work is off the chain.

Jason Williams (00:33:48):
He’s unbelievable savage. He just dives in and never comes back. I’m chasing him as fast as I can, so the two of us are just going absolute crazy. I have a little bit of money, and I’ve got this crazy science experiment that we can plug all this stuff in. When people are doing things in a crate, Preston, I’m doing things on acres, and so it’s different. It’s just different levels. Then you have Palahniuk’s, and you’ve got the birth of Gemini. We’re there for everything.

Preston Pysh (00:34:23):
It’s exploding. They’re still paying you to take the tires as fuel.

Jason Williams (00:34:27):
Still payment, right? We’ve been pressed, and I’ve been continuously mining, nonstop through COVID, everything. We just haven’t stopped. The cool thing that happened once we got through the application of the mine, getting it to scale, proving that we can understand control and navigate this complex regulatory environment that continues today. That’s when we were like, “Let’s raise some money. Let’s put a $25 million fund together, and just focus it all on blockchain technologies and cryptocurrency. ” That’s when Mark Yusko contacted Pomp. Mark’s in Chapel Hill. It was just crazy. I really just came out of Twitter.

Jason Williams (00:35:10):
I think Mark was following Pomp, and Pomp was following Mark, and Mark, the story goes, was reading Pomp’s tweets, and being like, “Hey, that’s pretty smart. That’s something I would say.” I think they just went and had breakfast together, and then that relationship evolved. Pomp’s like, “You got to meet Mark.” Then I roll up big beard reflective vest. Mark’s like, “Who is this maniac that [crosstalk 00:35:39].”

Preston Pysh (00:35:39):
Mark’s like, “I like him already.”

Jason Williams (00:35:43):
Then the rest is history. I mean-

Preston Pysh (00:35:44):
Wow.

Jason Williams (00:35:45):
I think you’re a fan of Mark as well, right?

Preston Pysh (00:35:48):
Oh yeah. In fact, it was the first time I got to meet Mark face to face down in Miami, so it was really nice to just get off to the side, and the two of us were able to finally meet face to face because we’ve been talking for years. He’s just nice. He’s such a great guy.

Jason Williams (00:36:01):
He’s a great guy.

Preston Pysh (00:36:02):
One of the things I wanted to ask you, because you posted this recently, and I know you said one-tenth for the Ethereum, but I saw a post recently where you said if you’ve got a mining rig, you need to turn it on right now. For people that are listening to this, most of our listeners are from the future. If you’re listening to this, we’re talking about a period of time where the Chinese have banned mining. They’re forcing the rigs to come over here. We’re seeing it right in the middle of a big bull market, and we’re seeing a negative 15% difficulty adjustment after a negative five difficulty adjustment, nothing like a previous bull cycle that we’ve seen.

Preston Pysh (00:36:40):
The price has been punished over 50% from the previous high through this bull run. You had the tweet, “If you’ve got a mining rig, turn it on.” Talk to us about more of a current event situation right now where it appears like it’s very profitable if you do have a mining setup, and you’re taking advantage of cheap energy cost.

Jason Williams (00:37:02):
I was running a number of mental models. If you’ll allow me to be a bit all over the place, because my initial read was wrong, but I have lots of contacts in China. It’s where we source our equipment. I was reaching out to them and saying, “What’s the story? Is this real? Is this China ban real?” The initial stuff I was getting was this is like 2017. The guys who are mining off of coal and stuff, there’s a bit of a crackdown and a reorg going on, but people are moving to the provinces that have hydro, so it’s more of a shuffling of the deck inside China. My initial read was that, and I said, “The real indicator will be, “Are there thousands and thousands of used mining rigs coming online for sale?”

Jason Williams (00:37:50):
I hadn’t seen that yet. I totally misread it, Preston. This is, I think, a real country wide ban. They’re even shutting down the hydroelectric plant stuff. Here it goes. We’ve lost significant hashing in the Bitcoin network. Does hash lead price, or does price lead hash? I don’t know. I was having this discussion with a number of people on Clubhouse recently, but all I know is that hash is falling off a cliff, because those miners are shutting down. There was a significant number of miners in China. I believe the difficulty adjustment, it happens about every two weeks. It can only adjust at maximum 25%, so it will only drop 25%.

Jason Williams (00:38:37):
The max is 25%, but we’re coming close to a maximum difficulty adjustment down to 25%. There’s some real pain going on with the displacement of these Chinese miners. They’re going to do a few things. They’re going to move to friendly neighbors outside of China that allow for this. A lot of people are talking about a migration to Kazakhstan. But remember, if you go into Kazakhstan, there has to be infrastructure in place for you to set these rigs up. You can’t just take massive amounts of these power hungry miners. There has to be something to plug them in, and that could take 12 months, 18 months or longer to set up.

Jason Williams (00:39:21):
If that’s not there, then those guys go away. There’s going to be a segment of Chinese miners that go away. There’s going to be a segment of really smart Chinese miners that have moved to favorable, close proximity countries, and there’s going to be some that are coming to the United States without a doubt. That’s probably the migration, but we’re seeing the difficulty drop. Hashing is dropping, so it allows for S9s, which are a prior generation of miner to be profitable again. That’s when I said, “Look, if you’ve got a miner, plug it in right now because you’re going to participate in capturing some of the mining reward. The 900 Bitcoin a day that come out, go get it.”

Jason Williams (00:40:06):
There’s a cool thing about it. Regardless of the Bitcoin network losing China, Bitcoin network really doesn’t care. It’s still going to put out it’s 900 Bitcoin a day, which is a fantastic thing. When you think about the programmatic monetary policy of Bitcoin, and I hate using these kind of buzzwords, but it is a fantastic innovation. The supply cap and the difficulty to me are the things that are so-

Preston Pysh (00:40:31):
So dynamic.

Jason Williams (00:40:33):
Yes, so mind blowing to me. Massive opportunity for miners who have infrastructure in place right now, have technology, have systems that control Opex and CapEx. They’re going to be huge winners. The price is affected. China fad. There’s more draconian messages coming out. That sword of Damocles is still hanging over Bitcoin’s head right now, but Bitcoin will survive this. I think it comes out better. This feels like bullish news to me.

Preston Pysh (00:41:06):
I’m with you. The price action in the short term, I’m sure somebody who got into this in the last three months or whatever, and was chasing the big run is hearing this right now just rolling their eyes at us, but I’m right there with you. This, for me, is insanely bullish to watch this amount of disruption to the hardware that’s securing this network. It’s rerouting itself geographically so that we even have more decentralization geographically, which I think is a huge win fundamentally. It’s doing it with zero downtime. Sure, the blocks got a little slower, not much, and it’s going off without a hitch, and it’s doing in this completely decentralized way where nobody’s managing. Her leading anything is just naturally happening.

Preston Pysh (00:41:52):
Like you, I see this as being extremely bullish. It’s going to be really… I think the interesting thing right now is how long and how much pain is actually going to materialize out of this, because I just can’t imagine the costs, especially to all these miners in China, because, honestly, Jason, I think they were just as shocked and confused as you were, as I was, as everybody else in getting mixed signals as to how the government was going to regulate this, and not regulate it was really their opinion. It’s nothing of the sort as it appears right now. If you just think of it from an expense standpoint, from a business owner standpoint, if you just got notification for an extraordinary expense that you were not expecting to shut down, relocate maybe into a completely different country, the cost associated with that is huge.

Preston Pysh (00:42:45):
If you’re a mining company that’s been denominating your retained earnings in Bitcoin for all these years, you have to sell some of your Bitcoin to pay for these massive expenses to relocate a significant portion of the hashing for the entire network. When I watched the price action, at first, I was like, “50% is not anything I expected on the cycle, because the biggest we saw on the last cycle was 30%.” We’re seeing 50%. Then there was this dragon, and it was hanging out, and I’m saying, “Man, something is different. This is way off.” Then we’re starting to see the videos come out of China of these rigs, just massive, massive companies and entities over there that had these rigs, and they’re all coming offline.

Preston Pysh (00:43:32):
They’re shipping them, and I was just like, “Finally, it’s starting to make sense to me, at least, as to why we’re seeing what we’re seeing.”

Jason Williams (00:43:39):
Preston, I mean, you know this world better than I, but it would be naive of me to not think that these miners had short positions on Bitcoin going into this event as well. They denominate their treasury in Bitcoin, so there’s huge sell pressure if they probably had short positions on as well, which continues it. I call this a black swan event, because China constantly does this, but this is what’s super interesting to me. This is a really important time. You have this El Salvador move to make Bitcoin legal tender. You’ve got the discussion in major developed nations around central bank digital currencies, and you have China trying to institute their digital currency right now as a premium control mechanism to surveil, extract, control, et cetera.

Jason Williams (00:44:35):
Bitcoin threatens that, right? Obviously, you have to take out Bitcoin, and put in this thing.

Preston Pysh (00:44:43):
I was making a joke. I was just saying it surveils some more. I mean, you’re exactly right. I think for them, they are watching the price go, and they were like, “We’re at the event horizon here.” This is getting to the point where we’re going to lose control if we don’t do something right now.

Jason Williams (00:44:59):
Again, more bullish news. I’m not here pumping my bags, but it feels bullish to me. I have concerns. I’m worried about Maxine Waters at the end of this month talking this event, and suggesting similar type control mechanisms here in the United States. I don’t know how that’s going to all go down. We’ll see. I think they’re still… We’re range-bound. I think that we still have some potential moves down coming off of that meeting, but I still am hugely bullish on a six-figure Bitcoin this year.

Preston Pysh (00:45:40):
I like you raising the concern. If I was going to push back and say, “Hey, there’s others, like Loomis, who are very bullish and that have positions in…” I think that’s the beauty in the United States is it’s not like one person is going to be able to influence this. It’s going to be the collective and the interest of all those representatives that are going to have to hear both sides of this. What’s great is there are so many people that have substantial positions in this that I think are going to weigh in and try to influence the elected officials to not make it such a big concern. Maybe that’s just me being hopeful, but I like the fact that you raised that concern.

Jason Williams (00:46:22):
I try to be very sober and realistic when Pomp and myself and Mark are looking at the market managing our investments. I know those guys do too, and I think you have to look at both sides of this thing. I don’t want to just be here like, “Oh, everything’s going to be fine. They’re banning all mining in China. Oh, it’s fine.” It’s not great.

Preston Pysh (00:46:44):
The other thing that I find fascinating is in the same month, you have the biggest country, population wise, in the world that’s banning the mining process, maybe banning the exchanges and whatnot. Then you have for simplicity, we’ll just say El Salvador’s one of the smallest nations on the planet that just made it legal tender. That irony is not lost on me. I think that it perfectly encapsulates what this is all about. This is all about freedom. This is all about giving power to the person that doesn’t have access to banking, and the whole Jack Mahler’s thing was incredible, so what a time to be alive, man. That’s all I can say.

Jason Williams (00:47:25):
That’s incredible. I think the president of El Salvador said something really wonderful. I think it was maybe 2001 that they adopted the U.S. dollar in El Salvador. I may be wrong about that. I hope it is correct, 2001. They did it because of banking. He made the decision to make Bitcoin legal tender for the people. It hits right in the wheelhouse of what you’re saying. But again, I can’t ignore all of these events happening all at once. That, to me, is going to produce the coiling event that produces the escape velocity to do this big move, because people keep asking me like, “What’s going to change to get to $100,000 Bitcoin, Jason, or $200,000 Bitcoin by the end of this year?”

Jason Williams (00:48:12):
Well, it’s coming out of all this. It’s the resolution of the Chinese mining situation. We come out of the fog of war, and we’re like, “Hey, we’re alive. It’s okay.” I think we’re off to the races with new entrants into this legal tender discussion, because they are coming. More countries are coming.

Preston Pysh (00:48:31):
Talk to us about some of your opinions on that.

Jason Williams (00:48:33):
Well, I think you’ve seen some of the Central American countries, and even some South American countries start to talk about it. I think Mexico is on the table as well. This is big. Again, I don’t know if having a discussion here in the United States about Bitcoin being legal tender is the right one. I’ve got some views on that. I think we need to continue to clarify how we tax it. I’d love for it to be more accepted in regards to a currency, but the whole legal tender thing here in the United States probably is not the right direction to go right now.

Preston Pysh (00:49:15):
Well, I think what so many people are missing with the El Salvador piece that maybe haven’t listened to Jack Mahler’s is it’s not necessarily about Bitcoin, the store value. It’s about Bitcoin, the network and providing people that have been unbanked access to something that immediately clears without having to have the infrastructure in place. If you’re a person in El Salvador, and you want to still deal in dollars, and let’s say you want to collect dollars from people that are living in America, you can now do that instantaneously at no fee, and you can still receive the dollars without…

Preston Pysh (00:49:49):
Let’s say you’re concerned about the volatility of Bitcoin and storing that in your personal treasury. That’s not a concern. That’s not what I think El Salvador is Pushing. If people want to do that, well, fine. If you can handle that volatility in your personal treasury, well then handle it, but what it’s really providing is the remittance and just the evaporation of fee because you’re now using the Bitcoin rails, and it’s happening instantaneously from dollars, the lightning back to dollars again. I think people here in the States, they don’t have that problem, so it’s just completely lost on them.

Preston Pysh (00:50:25):
But when you start going to some of these other nation states, like what you’re saying, you think it’s going to go into some of these other countries, I think you’re right. I think it’s going to go there for Bitcoin, the network, not necessarily Bitcoin, the store value. That’s just going to be an added perk later on, right?

Jason Williams (00:50:40):
That’s such a great point. I think a really extraordinary example of what you’re talking about in regards to cross border remittance is Nigeria, what’s going on there. As I understand it, billions of dollars go across traditional cross border remittance rails, historically. What I think Nigeria saw was that fall off a cliff, because people were using Bitcoin to do that. I think they made it or tried to make it illegal to use, and it’s continued to persist. I think it’s not something that U.S. citizens or me really dealing with, but it’s a huge situation in second and third world applications. I’m an investor in Lightning, Strikes, Zap, Jack Mahler stuff. I just want to preface this.

Jason Williams (00:51:29):
The stuff he’s doing is so mind blowing and amazing. It’s incredible. Think about what you said. Someone can be agnostic to cryptocurrency. There’s no onboard. You don’t have to buy Bitcoin, understand Bitcoin or some other denominated cryptocurrencies, none of that. You can use your dollars, and send them anywhere in the world, and that person can receive whatever denomination of currency they want. Without the tax implications of buying and selling Bitcoin, it’s looked at as a commodity or property here, so there’s different tax laws. It’s not looked at as a currency. You’re not dealing with any of the volatility.

Jason Williams (00:52:06):
There’s no slippage associated with that transaction, and Jack and the companies resolve all of those issues, right? You can hold Bitcoin, and no fee.

Preston Pysh (00:52:16):
With no fee.

Jason Williams (00:52:16):
You can hold Bitcoin if you want at the end of that transaction, or you can just get your currency of choice, but that is absolutely fascinating, amazing, and it’s so disruptive. It’s so disruptive in so many ways that I understand his passion. I understand why everyone is so excited. I’m so excited for him, and I’m so excited for the application. This test case of a nation state is crazy.

Preston Pysh (00:52:42):
That’s nuts.

Jason Williams (00:52:42):
Think about this. It doesn’t make any sense.

Preston Pysh (00:52:46):
I think the thing that’s even crazier is how in the world is this guy 27 years old? You listen to him talk, and you’re like, “This guy has to be 40, 45 years old with the experience and the knowledge that he has.” It’s just…

Jason Williams (00:52:58):
I’m waiting for Walmart to say that they bought some Bitcoin, and Jack drops that El Salvador has made Bitcoin legal tender, and they’re using it over Zap and Strike over the Lightning Network. It’s amazing. If anyone’s ever used the Lightning Network, or if you run your own node and ever used… I have a node, and I use the Zap wallet, but it is instant transfer. There’s no 10-minute block time or 45-minute delay, anything. Instant transfer. It’s pretty amazing.

Preston Pysh (00:53:30):
It’s incredible.

Jason Williams (00:53:31):
It’s really fascinating. I always bring that up because anti-bitcoiners talk about the fact that you can’t move money over to Bitcoin now, or blah, blah, blah, blah, blah, blah, blah, but this is the beginning. I think Bitcoin is the end as well. It’s the beginning and the end.

Preston Pysh (00:53:49):
Somebody might be listening to this that just hears your story, and they’re motivated, and they’re saying, “I want to go out, and I want to be a miner.” Explain from your vantage point the challenges that a person like this faces, how realistic something like this is. Just, I guess, put the reality check into what this would be for a person like that.

Jason Williams (00:54:10):
If you want to do it at scale, this is an expensive endeavor, and there are a lot of technological hurdles, infrastructure hurdles that you’re going to have to overcome to do this. If you want to hook up a few rigs at your house, you can do that. You got to get an electrician, and you have to buy them from Amazon, and you can do that. It’ll cost you… If you buy some S19s, they’re about $8,000 each, so it’s expensive. You’ll make change every day. You’ll get dust in Bitcoin, right? But at scale, this is a big endeavor. Just to frame this, buying megawatts of power… If you went to a data center and you said, “I want one and a half megawatts of power,” they may charge you here in North America anywhere from six to 15 cents a kilowatt for that.

Jason Williams (00:55:04):
You’re talking about paying somewhere between 80,000 and $100,000 a month in a power bill. Again, just to do a megawatt, megawatt and a half of mining, your megawatt, you’ll be able to maybe stand up 200, 250 of those S19s, because they take about 3,000, give or take, watts to the wall. 200, 250 times $8,000, so there’s your capital expense for just the machines and the power supplies. Now, you need some racking system to set them all up, so that’s going to be more infrastructure. You’d then commit all of that to this environment, and then tie it to a mining pool. Pay the mining pool 1%, and off you go. Now you’re a miner. That’s probably oversimplified.

Preston Pysh (00:56:02):
I absolutely love this, because as we’re thinking about this price section right now, and we’re thinking about the CapEx associated with doing this type of business, and the capital outlay that’s required to do this type of business upfront, and then the loan that’s maybe borrowed against because that is super cheap right now, if you’re borrowing, and so now you’ve got to continue to make those payments. Now, you basically have been told, “Shut it all down. Move or sell it all.” That’s really expensive, super expensive. If you’ve been collecting Bitcoin, and holding it in your treasury, you now got to sell it.

Jason Williams (00:56:40):
I just painted the picture for one megawatt.

Preston Pysh (00:56:42):
The one megawatt.

Jason Williams (00:56:42):
These mines that we’re talking about are 500 megawatts, 1,000 megawatts, 3,000 megawatt mine. Take everything I said, and just multiply it.

Preston Pysh (00:56:54):
Unreal.

Jason Williams (00:56:54):
It’s simple math. This is a heartbreaking scenario for people who this was their escape from poverty. This was their holy grail moment, and it’s been taken from them because of a government’s initiatives and then tensions and…

Preston Pysh (00:57:12):
Bitcoin loves freedom, and it’s going to naturally migrate to where freedom is.

Jason Williams (00:57:18):
That’s so true.

Preston Pysh (00:57:20):
A couple last questions here, because man, that hour went really fast. The first thing I want to tell you… I’m down in Florida on vacation. I go into a sunglass shop because my sunglasses broke, and there’s a kid in front of me, and he’s asking the guy, “Hey, do you have Pit Vipers here?” I was like, “Whoa, so this isn’t just a Jason Williams thing. This is really popular.” I asked the kid. I was like, “Hey, Pit Viper is so…” I immediately asked him, I said, “Are you a Bitcoiner?” He goes, “No, man.” He’s looked at me like, “What kind of question is that? I just want to get some sunglasses.”

Preston Pysh (00:57:56):
I said, “Are these really popular?” He goes, “Oh, yeah. These are the most popular sunglasses for my generation.” He’s obviously a younger guy, and he’s just like, “This is the most popular sunglasses for my generation.” I was like, “I know the guy who’s behind some of this.” Were you an investor? Did you stand this up? I know this is an off-the-wall question, but this just happened to me.

Jason Williams (00:58:17):
I was not an investor, but I will say this to you that I stumbled upon the website, which was like a 1980 ask video game website. It’s really… It’s done by intention. I just said those are the most ridiculous Randy, Macho Man, glasses ever. I want to get a pair. I do think sometimes just to decompress and… I like to have fun. I would wear them around, and they were ridiculous. I’d be at the beach drinking a Natty light, and I’ve got these sunglasses on, and people are just cracking up. But no, I will take credit for starting the Pit Vipers the whole launch.

Jason Williams (00:59:03):
Yeah, man, that’s me. I definitely will take that one, Preston. I have Pit Vipers everywhere. My kids wear them. Everybody rocks the Pit Vipers.

Preston Pysh (00:59:14):
This naturally goes into my next question. Dave Portnoy, when he goes on his rants, he’s always talking about the parabolic guy with his ugly sunglasses. He’s playing the whole thing. My question for you is what kind of salad dressing does Dave actually like with his salad?

Jason Williams (00:59:34):
He puts weak sauce on his salad, which is something that you may not see but they produce it at bars tool specifically for Dave, so that’s what he uses. They actually pour it for him because he drops it a lot.

Preston Pysh (00:59:49):
I think that’s all we’ve got. All right, on a serious note… That was fun. On a serious note, you are a guy who’s extremely successful at what you’ve done in your life. What is some advice… People are hearing this. People look up to you. What’s some of the best advice that you can give them, and just things that maybe they can really internalize or maybe take away from the conversation that can carry them through the rest of their life?

Jason Williams (01:00:16):
We’re at an amazing moment. When I was in college, the internet was born. The internet was there, and I had no resources, but I realized it would be a big thing. You and I are sitting here. We’re talking about something that I would expect, Preston, it’s overwhelmed your life. It’s everything to you. You’re not thinking about, “I need to go buy a mall.” That’s not something that you’re out like hunting for the next piece of real estate. I just can’t imagine you’re doing that. My single best advice right now beyond belief in yourself and all those cliche things, it’s really buy bitcoin.

Jason Williams (01:00:54):
This is an amazing moment right now, and you’re not priced out. It seems expensive right now. Soon, people will be. I mean, $35,000 Bitcoin is probably an enormous hurdle for people. Bitcoin’s divided into 100 million Satoshis. You can own some of this, and owning some of it is critical. I just can’t emphasize that enough. I could spend another hour talking about self help and how to be motivated and going after life and all the rest of it just like you can, but I don’t want to miss this point. Buy bitcoin. Own Bitcoin. Learn how to self custody Bitcoin.

Preston Pysh (01:01:30):
What would you say for a person who hears that, and they’re saying, “Well, I’m not there yet?” Is it something that you have to have just an intense amount of knowledge and hard work to really understand it, so you have the conviction like you obviously have?

Jason Williams (01:01:46):
This is where I break from a lot of fundamental principles, and get into some moral hazard where people will block me or think that I’m being irresponsible. I don’t think you have to have a total comprehensive understanding of Bitcoin before you participate, because it’s really difficult. I’m saying buy a little bit of Bitcoin, and learn along the way. Build this airplane while you’re flying it, because I’ve been around since… I first heard of Bitcoin in 2012. I really started learning and studying in 2015. I still don’t know it all. I’m learning every day. If I waited to buy Bitcoin until I understood it in totality, I’d never own it. I’d never own it.

Preston Pysh (01:02:27):
Well, it goes back to you starting your first company. It’s very similar to what you were saying earlier in the discussion.

Jason Williams (01:02:35):
The best way to learn about Bitcoin is to buy Bitcoin. The best way to learn about Bitcoin is to custody Bitcoin, deal with an exchange, connect your bank account to an exchange, move some Sats from an exchange to some cold storage device, think about how to protect your seed phrase. That’s how you learn. It’s really through doing. This is a little scary right now. I know if you bought Bitcoin at the top at 60 some 1,000, 64,000, I just want you to know I did the same thing. I did the exact same thing. I bought the top of Bitcoin every time there’s a top, and I do it with intention, so I’m right there with you.

Jason Williams (01:03:13):
I don’t ever want to be a guy that like, “Oh, he’s saying this, but doing that.” I bought the top. I bought every top of Bitcoin. I’m not worried about it. Just hold this asset. Never sell it. The thing we are all thinking about is how do we live off of Bitcoin without ever selling our Bitcoin? That’s the discussions I want to have with people. Like, what are the strategies in the future so that I don’t have to sell my Bitcoin, but I can somehow monetize it, borrow against it safely, really deal with multi SIG? Is there a trusted third party that’s an intermediary in this, but I still hold my keys?

Jason Williams (01:03:48):
Those are the discussions that we’re going to have in the future because we’re talking about owning New York real estate.

Preston Pysh (01:03:55):
I saw some questions that people had posted as far as how you think about receiving an interest rate on deposits. I think BlockFi sent you a belt for receiving so much interest in a year.

Jason Williams (01:04:11):
That’s right.

Preston Pysh (01:04:11):
Talk us through how you think about this from a risk standpoint, because if there’s one thing that’ll get people on Twitter emotionally responding, it’s typically around this conversation as far as custody. What’s a responsible level of deposits with a third party versus holding it yourself? What are some of your thoughts on this, Jason?

Jason Williams (01:04:34):
This is my opinion, and this is what I was doing. For me, I want to be known as someone who was pioneering in trying to create yield on his Bitcoin and digital currencies. When I say digital currencies, I’m talking about stable coins at first, because I’m retired. Even though I’m building companies, I was building PRTI since 2014 after I left FastMed, I don’t get a salary. I had an exit. I still have young kids and a wife who goes to the tennis courts and all the rest of the stuff. I still like watches and cars, so I want to continue to create more wealth, not tap into my principal, and have a certain lifestyle.

Jason Williams (01:05:20):
I got out of the stock market. I’m managing my own family trust, and I’m looking at the fact that I have an increasing position in Bitcoin, but there’s no real mechanism to drive yield on it. Really, it’s just you buy the asset, and you hold it. You get it off in exchange. You put it in cold storage, and that’s that. BlockFi comes around, and they have… At the beginning, they’re paying 6% APY on Bitcoin, 8.6% on stable coins, yada, yada, yada. There’s a number of companies out there, Voyager, Celsius, et cetera, so I’m not pumping any individual one, but I immediately said, “Look, let’s test how stable this is.”

Jason Williams (01:05:56):
I took $2.5 million dollars cash. Turned it into GUSD, which is Gemini USD. It’s a stable coin that the Winklevoss twins produced out of Gemini. It was domiciled at BlockFi. They paid me 8.6% APY in Bitcoin, so generated $215,000 of Bitcoin a year, something like that. That’s material. In my mind, I’m like, “Okay, data point. I can fiat mine Bitcoin with cash. I don’t have to buy mining equipment. I don’t have to buy $2.5 million worth of mining equipment. I can buy this interest.” There’s some risks. You’ve got, “How is BlockFi paying me 8.6%.” They have a whole world of mechanisms and rehypothecation strategies and lending mechanisms. They’ve done a pretty good job of that, and I’m an investor through Morgan Creek Digital in that company.

Jason Williams (01:06:52):
I took it to another level. I said, “Look, compounding is one of the most powerful forces in the universe. Let’s drive some yield on Bitcoin as well.” I had a stack of Bitcoin in there getting 6% paying me in Bitcoin. I had the cash. I started putting all of my cash. I don’t know if you keep three months, six months of cash reserves, blah, blah, blah. I took it all, so I was 99% digital currencies. Then I had my Bitcoin asset shoved in a significant amount of it in a strategy to earn interest as well. Not popular, right? I don’t know my private keys, so from a Bitcoin maximalist situation, a Bitcoin risk assessment, people just thought I lost my mind.

Jason Williams (01:07:42):
It’s not popular. I didn’t have any loss of my principal. BlockFi did an excellent job of protecting that asset. It was always available to me, and it paid a lot of yield. Is turning over your private keys to CFi the right mechanism? Probably not. It probably isn’t the right way to go. I think Unchained Capital, they’ve developed a multi SIG situation where they own a key, you own a key, and then a third party, and I don’t know who the trusted third party is that has the key, but that’s a little interesting as well. That can work. I think Sovereign has developed a mechanism.

Jason Williams (01:08:26):
I’d love to hear your thoughts as well on this. I’m someone who tolerates extraordinary risk. That’s where I get the rewards. Knock on wood, I’ve been lucky that it turned out okay for me. It could have turned out terribly.

Preston Pysh (01:08:39):
My concern, especially with the CFi entities, is they’re achieving a lot of their yield, because part of their books are to institutional clients that aren’t overcollateralized. If you and I go to BlockFi, we open an account, and we are overcollateralizing if we’re borrowing money, and if we’re making a deposit, it’s not necessarily overcollateralized, because they got the institutional side that’s then borrowing. I think for me, that’s the crux of the issue. The thing that I keep bringing up with BlockFi or any other platform, we could be talking about Celsius as well, is I think they need to manage some of their retail clients separately, firewall them from the institutional clients through corporate governance, basically break it into two different companies, and then have a parent company at the top so that it forces the two entities beneath it to protect the retail investors that are overcollateralizing, that it’s just completely overcollateralized at all times, and then obviously settles in a 24/7 marketplace.

Preston Pysh (01:09:44):
I think that as you look at that whole industry moving forward, I would like to see that being more transparent, where they’re breaking the institutional books away from the retail books. I think, my concern Jason is if we get into a really strong bull market, if we saw the price of Bitcoin run 200,000, 300,000, and at the same time, we see traditional markets selling off heart, I would have a lot of concerns of the institutional under collateralized portions of their books spilling over and producing risk for the retail clients. That’s where I think that there’s risk. Personally, if I had money in these platforms, if I saw the price really start to run, not to the downside, but to the upside, I would start pulling everything out of there, personally.

Jason Williams (01:10:34):
I think you’re onto something, because those are the conversations that I’ve had internally not with BlockFi, but with my group of friends and people who I check things out with. My concern is the upward volatility of Bitcoin as well. I’ve invested unsuccessfully to date in a number of companies that are trying to provide insurance. What I want is a one-to-one Bitcoin insurance program so that in the event of a loss, not of my doing, but if I had my Bitcoin in CFi product, I put 10 Bitcoin there, and they screwed the pooch on it. I had an insurance product that gave me 10 Bitcoin back. I would pay even if it was five Bitcoin.

Jason Williams (01:11:24):
You know what I’m saying? I don’t want to necessarily be paid some fiat, because I’m concerned about that.

Preston Pysh (01:11:30):
The delay of getting that back.

Jason Williams (01:11:30):
I would love, though, to get some percentage of my Bitcoin back. That would be interesting. I just don’t know how to do it, and I’m looking for some company to provide me some type of insurance policy that I can pay with the application of my Bitcoin into these environments. If I go into CFi, I want some type of insurance. I don’t know why it doesn’t exist and why BlockFi, Celsius, they don’t offer it. I think Celsius may be working on something like that, but it’s not something that is a leading edge of their marketing campaign. That’s what I would do. If I was the CEO of one of these companies, I would be offering an insurance program that’s better than the next guys every day.

Preston Pysh (01:12:11):
At a lower yield, and I think people would sign up to that.

Jason Williams (01:12:14):
Figure it out.

Preston Pysh (01:12:16):
At the end of the day, I think if we warped ourselves five, 10 years into the future, I really think that the market is going to view the Unchained Capital model where you have one of three keys is actually being lower risk than something that has a black box to it.

Jason Williams (01:12:34):
I agree.

Preston Pysh (01:12:35):
It’s huge. I think the reason I like personally talking about it so much is because I think that if this actually presents the case for what real risk free rates are, the repricing of everything on the planet, all equity-based instruments gets dramatically different than where we are today, where these risk free rates are just such a lie of epic proportions. If premiums are based off of a 6% return or higher, which is where I think this is going, I just can’t imagine what that does to equity premiums in the coming five to 10 years. It’s just going to be insane, to say the least.

Jason Williams (01:13:14):
I totally agree. What do you feel about… I know we’re closing out, but what do you feel about the Fiat mining strategy that I’m talking about?

Preston Pysh (01:13:23):
Well, I’d never thought of it through the lens of miners, so when you were describing that, I’m thinking, “Okay, so Jason’s looking at it like, “Hey, I just spent $2.5 million on hardware and CapEx to start a business, and I would produce this much Bitcoin in a year.” Here’s this thing. Every year, it’s doing the same thing without me having to manage all this hardware, and it’s liquid.

Jason Williams (01:13:44):
Right. At any moment, I can pull it back. I really want your listeners to think about a fiat mining strategy, where you take that three months or six months of emergency money. You lose your job. This is what… and put it in a stable coin mechanism, and allow it to compound in Bitcoin. Very powerful opportunity.

Preston Pysh (01:14:06):
This is why I’m really excited about what Caitlin Long is doing with Avanti. She is all about not rehypothecating anything, and really building those firewalls. If you have a paycheck, and you’re sending it to Avanti, she’s immediately turning it into a stable coin, and you’re receiving yields that are even close to what we’re seeing. I mean, is it just the total… It’s a total game changer. [crosstalk 01:14:30].

Jason Williams (01:14:30):
I’m an investor in Avanti too. I can geek out and smile, because I’m a huge fan. I agree with you 100%. It’s a totally different iteration of BlockFi and Celsius. This is a bank that’s not going to rehypothecate. She’s saying that that’s the danger. That’s an exploit.

Preston Pysh (01:14:50):
I think at the end of the day, when I’m looking at these two different worlds being constructed side by side, the legacy system and this whole Bitcoin economy, one is all about overcollateralization without rehypothecation, and the other one is the polar opposite. The traditional is the polar opposite of that, and they’re completely in congruent with each other. As the printing press is going strong, these two worlds can have overlap without there being issues or concerns. If we get into a really strong situation where it appears like the one world is starting to take over the other, Bitcoin starting to take over traditional markets, with this risk to the upside, and everything in the old traditional market getting repriced with these higher interest rates, I’m just concerned at how the two worlds can coexist simultaneously.

Preston Pysh (01:15:39):
You’re going to have one that’s melting down where everyone’s fending for themselves. I’m a little concerned when that happens, how it happens. It’s just made me take a much more conservative approach to doing that. In the meantime, I think you’re going to have a lot of signposts along the way that are suggesting that that event’s about to take place. In my opinion, we’re nowhere near that right now. You got a lot more time to react than what we’re seeing right now. But at the same time, I think that that’s the risk. That’s the thing that I’m concerned about when it’s here. Who knows if it happens. I don’t know.

Jason Williams (01:16:14):
We didn’t talk about DeFi, which is different than CFi. There’s huge regulatory issues coming up for DeFi. I think Mike Novogratz made a comment today about it. I’ve been concerned about it ever since. It’s why Pomp and I avoided the ICOs.

Preston Pysh (01:16:31):
Educate me on this because I’m not up to speed on some of this.

Jason Williams (01:16:34):
I just think there’s AML, KYC issues everywhere when it comes to DeFi. You’ve got taxation black hole event going on. I mean, you’ve got people taking Ethereum, converting it into a wrapped BTC product, putting it on Curve, putting it in Rens. Now, you’ve got a WBTC wrapped, Curve, Ren in a stake mechanism making 150% APY. Then you have to unwind it. There are all these fees associated with it getting back to Eth, no AML KYC. I mean, how are you allowing that to exist?

Preston Pysh (01:17:11):
Gensler, before he took the job at the SEC, was talking about specifically why he had many issues with a lot of this. Do you think that he’s going to be coming out in the coming year, and taking a much more aggressive stance because since he’s been there, nothing’s really come out of it?

Jason Williams (01:17:31):
My concern is it’s so nuanced, so complicated that it gets lumped into Bitcoin. That’s what sucks, and I try to stay neutral in my political perspectives when we do these interviews, but listening to Elizabeth Warren talk about energy fad, it scares me if then she turns her focus on CFi, DeFi Bitcoin. Her lack of understanding about the moralizing power thing that’s going on right now, it’s scary if you get in this complicated hot potato game of DeFi and the tax ramifications. The easiest thing to do is shut it down. Shut it down. Just say, “Look, this is an untracked dark pool of tax avoidance and money laundering.”

Preston Pysh (01:18:16):
I think you’re right, because if you’re not spending a lot of time to fully understand, and it takes a lot of time to fully understand a lot of this, it’s just too easy to just lump it all together. Luckily, Gensler has the background from teaching at MIT and some of his previous comments before he came into the job, where he has specifically said Bitcoin is not like these DeFi type projects and ICOs. He has a very distinct delineation between the two, at least in some of his previous comments, so hopefully, he’s the guy sitting at the head of the table shepherding a lot of these conversations, but as you well know, they can go astray and go in many different directions with short narratives attached to them.

Jason Williams (01:19:00):
Everything, though, is converging now. You’re going to have these discussions this year on DeFi, CFi, stablecoins, Central Bank digital currencies, Bitcoin. Is it a currency? Is it property? Because of the pressure that El Salvador is putting on the world now, what if I go to El Salvador? Am I selling them property, or am I using money? It’s money there, right? So why isn’t it money here? I’m confused.

Preston Pysh (01:19:27):
It’s getting crazy, but where there’s a lot of volatility and risk and not necessarily knowing the outcome is where your massive rewards are attached and tethered to, so wow.

Jason Williams (01:19:40):
I totally agree. That’s why I’m like, “You know what, get in the game. Buy bitcoin.” It’s the single best advice I can give you right now, because buying Bitcoin is an investment in yourself. When you buy bitcoin, and you’re a bitcoiner in front of me, I know you have your crap together. I really start to think about you differently. I really don’t have time for people who don’t own Bitcoin. At this point, I don’t want to talk about anything else. If you don’t own Bitcoin or are interested in it, you’re not going to be interested in me. Why would you talk to me? Because I look insane with my Pit Vipers and my Natty light and all the rest of it, right? Ferrari as Dave Portnoy said.

Preston Pysh (01:20:20):
Jason, thank you so much for making time. This was an amazing conversation. I thoroughly enjoyed this, and we definitely need to do it again.

Jason Williams (01:20:28):
My pleasure, man.

Preston Pysh (01:20:30):
Hey, so thanks for everybody listening to the show. If you enjoyed the conversation, be sure to subscribe to the show on whatever podcast app you’re using. We really appreciate that, and if you have time, leave us a review. Thanks for joining us this week, and we’ll catch you next Wednesday.

Outro (01:20:44):
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