[00:03:28] Bitcoin Mechanic: And it means if there’s a tiny little instability, that you don’t have the thing you’re used to having and suddenly everything falls apart. This is a general thing that we do. It’s not even specific to Bitcoin, right? But it’s basically centralization at the cost of fragility. Taking the opposite model is decentralization where you can have robustness and anti fragility, where there’s no obvious target, nothing that you can take out at the kneecaps and then break the whole system because It’s ruthlessly inefficient, but it’s incredibly, there are redundancies everywhere.

[00:04:02] Bitcoin Mechanic: So you have to take out everything, right? Basically the current situation with mining pools is I want to be able to point my hasher at some entity that does nearly all of what the mining process is and pays me out as regularly as possible. So I don’t deal with any variance. Blocks are found somewhat on a random basis, but I don’t want to even care about that.

[00:04:24] Bitcoin Mechanic: I just want to get paid a regular income. From someone that’s doing as much of the regulatory compliance and as necessary to make the state get off my back. And basically that’s all I want to do as a Bitcoin miner. I don’t want to run a node. I don’t want to populate my own blocks. I don’t want to know what’s in blocks before they get found.

[00:04:44] Bitcoin Mechanic: I don’t want to care about when blocks do get found, etc, etc. And that’s a very efficient but very centralized approach to the whole thing. And what that creates is fragility within the system because you have, to take the biggest pools as an example right now, they are fully KYC’d, which means you have to know, the pool is obliged to know everything about who their miners are.

[00:05:08] Bitcoin Mechanic: And the fact that everyone’s basically okay with that says to me, we have boiling frog syndrome because that’s an accident waiting to happen. You’re standing on the rug and the regulators are holding it by the sides and you’re saying, well, they haven’t pulled it yet. Like, that’s, you don’t want to be in that position and that’s the position we’re in.

[00:05:26] Preston Pysh: You bring up the idea that, like, let’s say if I went out and spent 10, 000, 15, 000 on a mining rig and I plugged it in. And that was the only rig that I had. If I was not participating in a pool with that rig, it might take me 80 years to find a block based on the amount of hash rate that I’m supplying versus the amount that currently exists in the overall Bitcoin network.

[00:05:52] Preston Pysh: The reason nobody does that is because your rig is worthless after 10 years because of Moore’s law and just technical evolution and new rigs getting more powerful and more efficient. for listening. And so, you might not ever find a block, really, in practicality if you don’t participate in a pool. So, this idea that you have to participate in a pool to start at least getting back some of your principle on that investment, it naturally forces these pools to exist.

[00:06:25] Preston Pysh: And I think that that is a really important starting point for everybody to understand. Then it comes down to what you just described, which is what’s the best way to do this so that we sustain decentralization without capture and talk to us about creating block templates and how they happen today, what they are, why

they’re important.

[00:06:46] Bitcoin Mechanic: Let me reiterate some of what you said there because it’s completely accurate. Solar mining is unrealistic for 99 percent of people because the cash flow issues it presents. Even in theory, without taking into practice the fact that once in 80 years doesn’t mean once in 80 years, it means never. Once, the motivation to collectively mine together and split rewards is obvious to everyone, even very big players.

[00:07:11] Bitcoin Mechanic: There are people out there mining with foundry that could easily solo mine and they still don’t do it. So, pooled mining is a very practical approach to You know, it’s an obvious solution to this. We want to split rewards. I want to get rewarded every once a week rather than once every 80 years. And I just take an eight divide it appropriately.

[00:07:28] Bitcoin Mechanic: So totally, you know, viable. But how much does that central party, the coordinator, that figures out what the split is between all the miners mining with them, how much of a role do they play? And the goal is to disintermediate to the greatest extent you can. The less of a role that coordinator plays, the better.

[00:07:48] Bitcoin Mechanic: So, the holy grail with this whole thing, decentralization of block templates. Because the block template is, that is where the rubber meets the road. That’s where all the unconfirmed transactions, or whatever data you like, actually. Well, it’s a can of worms, we’ll get into that later. But, someone’s gotta decide what actually goes in the blocks.

[00:08:09] Bitcoin Mechanic: So, if you have 12 of these coordinates that are pooling all the hash rate together, and organizing splits, in reality, apart from Ocean, They’re just paying themselves and then they figure out later how to pay their hashes. These entities are the ones responsible for populating unsolved blocks. So, they’re taking the last block, they’re running the node, they’re validating everything, they’re creating a generation transaction.

[00:08:34] Bitcoin Mechanic: And then ultimately they’re saying, here are all the transactions that are going to go on this block, or here’s what makes sense for us to put in the block, and the assumption has always been this will align with the economic incentives and just generally the incentives of whoever it is that’s mining with us.

[00:08:50] Bitcoin Mechanic: Not necessarily a good assumption, but we’ve been a little naive in this regard anyway, and let’s just proceed with that assumption for now anyway. The pool says, alright, we’ve constructed the block template, now I need the hashes to go out and solve it, and actually figure out what the solution is to this block, or figure out a solution.

[00:09:07] Bitcoin Mechanic: Once they’ve done that, we broadcast it to the network, and then the network has a new block. It’s a very, very important role for someone to be playing, especially if you centralize the creation of those templates, because what that means is you create a bottleneck should you centralize that part of the mining process where, supposing there’s a new controversial transaction that the American government doesn’t like, any pool that’s, you know, regulated to the extreme in America is going to have to ultimately, at some point, say, all right, I’m not putting that in my block template, and that’s the end of it.

[00:09:41] Bitcoin Mechanic: The game theory that people will always point to here is that not every pool is in the US and another pool might agree to stick that transaction in a block template. But it’s a pool that does it, right? And this is not how Bitcoin was originally conceived of. It was anyone that wants to censor a transaction is just losing money versus another miner that might include it.

[00:10:02] Bitcoin Mechanic: But that’s talking about miners as individual entities. And people typically think of miners as the people doing the hashing. They don’t think of miners as the pools. And the pools are the ones that select what get in the template. So they’re actually what’s relevant here. So centralization of pools and block template construction means less robustness when it comes, when it comes to the time of considering what’s actually going to get into blocks or not.

[00:10:26] Bitcoin Mechanic: So right now, it’s up to 12 people what gets in the blockchain. Well, not 12 people, but 12 entities. And it’s also the case that all newly generated bitcoins and anything generated from transaction rewards, transaction fees or other, goes into the hands of those 12 entities. So you have extreme bottlenecks on either side of the distribution of hash rate.

[00:10:49] Bitcoin Mechanic: And hash rate is probably the least concern, right? But it’s also what everyone’s worried about. If all the mining was done in one big building, that would be scary. But instead, the hash rate is distributed all over the world, which is great, but they all use the same pools, and the pools don’t pay any of them out in the generation payouts.

[00:11:06] Bitcoin Mechanic: They pay themselves, and then they become custodians of the money. and so on.

[00:11:12] Preston Pysh: I love this. I’m just going to quickly summarize. So when you say 12 entities are controlling this, you’re referring to the 12 major pools that exist. And since they’re creating the block templates, what they’re effectively doing is they’re looking at the mempool, which is all the people that are trying to conduct a transaction.

[00:11:31] Preston Pysh: They’ve, they’ve already set up the terms and conditions of, of that transaction. They’re just waiting to make it into a block. Once one of these 12 pools finds the block, and let’s just say one of these 12 pools has, you could have thousands upon thousands of individuals that are supplying hash rate into these pools, so you have thousands of people that effectively could have a vote on what the next block is and which transactions go into that block.

[00:12:01] Preston Pysh: But it’s been all consolidated into one of these 12 entities to provide the block template, which is, these are the transactions that are going into the next block. All those people supplying the hash rate basically have no vote in what those transactions are that are going into the block, but those 12 entities that are running the pools are determining that.

[00:12:21] Preston Pysh: Whether the, the hashers like it or not, and then they basically mint the block. And so they can do, talk to us about like what these pool operators, cause there’s a very clear example where I think this was like six months ago, one of these pools put like one JPEG into the block. It took up like the entire space of the block and all the transactions that were paying higher fees didn’t get included in the block.

[00:12:47] Preston Pysh: Explain this situation so people kind of understand how extreme it is. And how far some of these pools can take it.

[00:12:54] Bitcoin Mechanic: This is one of the issues with decentralization of template construction. Block space is valuable. We learned that it’s at least as valuable as the scarcity of having only 21 million bitcoins in the first place.

[00:13:06] Bitcoin Mechanic: This was the nature of the block size war of 2016, 2017, was that we have to preserve the value of that space. Because if we don’t, no one’s ultimately going to have any motivation to mine in the first place. It needs to be a scarce resource getting stuff inside the limited space available inside blocks for a whole bunch of reasons that ties everything together.

[00:13:28] Bitcoin Mechanic: So the problem is when the merchants of that space are a tiny cartel, you have to deal with that tiny cartel and they have their own terms and conditions. And this is what I alluded to earlier where it doesn’t necessarily align with that of the people lending them their hash rate. So, in the case of Luxor, which, mind the block you’re talking about, they chose to abuse a bug that emerged after Taproot, where you could get around the existing limitations of, this is basically going to end up being a lot of what we talk about, and whatever angle we approach it from, it’s inevitable.

[00:14:08] Bitcoin Mechanic: We have this. We have a history of I’ll give some context here, which is going to be a little bit, hopefully I remember to come back to the original point here. You have this notion of, okay, Bitcoin is a financial network. The data that goes in the blockchain pertains to genuine economic activity that’s going on, people moving Bitcoin around.

[00:14:28] Bitcoin Mechanic: Any other use case will allegedly, in theory, be priced out. But there’s a problem with that model, which is that you can store arbitrary data in the Bitcoin by bloating the UTXO set, which is very undesirable. Basically, the UTXO set is unprunable. Every full node needs to know everything about every unspent transaction, and people can just use this as a very expensive means of storing data.

[00:14:55] Bitcoin Mechanic: The collective decision was sort of made, we need a way for people to store arbitrary data that can be pruned and discarded by full nodes that don’t care about it. And this was called op return, and you can put data in an op return, and full nodes can discard it, and that’s great. And you can put whatever spam you like in it.

[00:15:14] Preston Pysh: And a good example of this would be just the Genesis block, where Chancellor on the Brink was basically inscripted into that first transaction. Is, is that a good example?

[00:15:26] Bitcoin Mechanic: It’s similar. It’s not, that’s not OPRETURN. OPRETURN didn’t exist yet. That’s just when a miner mines a block, they have a little field in which they can include some data, like about who they are or whatever.

[00:15:38] Bitcoin Mechanic: That’s what Satoshi used there. And that’s a, that’s a different thing. I don’t know if it’s pruneable in the same way, but it’s also a very small amount of bytes that’s actually available to you, but it needs to be there for whatever reason, and it’s not something I’m super knowledgeable on, so I’ll leave that topic, but I will say that what happened with regard to arbitrary data after that, which was creating OPRETURN and setting a sort of default policy limit at the time of 40, I think it was initially, and it moved around a bunch, and now in Bitcoin Core, it’s 80.

[00:16:12] Bitcoin Mechanic: With Bitcoin knots, which is another implementation. It’s lower than that. It’s a 42. And this is the cause of one of the controversies you’ve been sort of people have been yelling at you to ask me about. We’ll get into it. But the point is taproot came along. All this is to say taproot came along and suddenly you could bypass this limit on arbitrary data storage.

[00:16:32] Bitcoin Mechanic: And not only that, you could store it in a way that would encumber full nodes with having to store all of it forever, which is really undesirable and goes against the purposes of it. You know, the intentions of why OPRETURN was created in the first place. Basically, you could exploit, there are two opcodes, OPFALSE and OPIF.

[00:16:50] Bitcoin Mechanic: And you can stick a bunch of arbitrary data in something pretending to be a transaction and you can absolutely fill up a block to the absolute brim, which was a theoretical limit that was never supposed to happen. We were having, we had one megabyte blocks and after SegWit. We would there was something called the witness discount, where you would give a discount to witness data, and this was in an effort to shrink the UTXO set because you create incentives for people to spend multiple inputs rather than create multiple outputs.

[00:17:22] Bitcoin Mechanic: This is all, you know, I might be going too hard here, but all of that is to say, no one expected there to actually be four megabyte blocks as a result of doing this, because why would you only have witness data? Why would you have an enormous amount of witness data when you’re only spending one or two?

[00:17:38] Bitcoin Mechanic: You know, you’re spending one input, you’re sending to one output. It should be a tiny amount of data on chain. You’ve just filled up an entire block with this data that’s going to have to be stored on hundreds of thousands of nodes for the rest of eternity. How did you do that? Well, it was basically a bug in Taproot, where they said, we don’t need to use OpReturn anymore.

[00:17:55] Bitcoin Mechanic: We can abuse this bug instead. Great, that happened, and it’s clearly a bug, and, well, I mean, we should probably get into some of your other questions, because this is where the sort of contention has been around one of Ocean’s policies, which is to treat this as a bug. and say, this doesn’t belong in the blockchain, it goes against all the intentions of so much of the development that’s been happening over the last, since the beginning of Bitcoin’s development.

[00:18:24] Preston Pysh: For people that are listening to this, I think that that conversation can get pretty scary pretty fast for them who, who don’t understand technically what’s happened or anything, or mempool and they can’t see how many transactions are going through on a daily basis. There’s still a ton of Bitcoin transactions that are happening.

[00:18:45] Preston Pysh: If a person wants to move, call it 10,000 in Bitcoin, the fees to do it relative to the amount that they’re spending is very minimal if you’re comparing it to legacy costs of moving around 10, 000. I think those are very important highlights for people that heard that last conversation and might be kind of hair on fire saying, Oh my God, it’s failed.

[00:19:08] Preston Pysh: It’s, it’s not that these people that are paying to put all of this data onto the blockchain are paying up in very high fees to do it. But for people that are just trying to use Bitcoin for money and to settle their differences in what we think is the most immutable, free and open money on the planet, it makes it less efficient.

[00:19:32] Preston Pysh: Where we were going with that previous questions, and I think everything that we just highlight is important, but like, let’s come back to it maybe a little bit later in the conversation because I want to talk about this block template idea and why it’s so important to decentralize creating block templates by the people that are providing hashrate.

[00:19:53] Preston Pysh: Because, like we had said earlier, like, so much of this is being consolidated into the hands of, call it, 12 entities, and what Ocean is really kind of setting out to do is to decentralize the people that are able to say, no, this is what the block template is, My small amount of hash power that I’m providing actually just won that block, and as a result of my, my rig winning that block, or finding that block, I now get to determine me, not the pool operator, what that block template looks like.

[00:20:26] Preston Pysh: My understanding is you guys aren’t doing that today, but you completely intend on getting there, call it in a, within a year or whatever. So walk us through that idea, why that idea is powerful and kind of how that would actually be implemented in practice.

[00:20:43] Bitcoin Mechanic: Like I said, it’s definitely the holy grail of decentralizing and busting wide open one of the worst bottlenecks in Bitcoin around.

[00:20:50] Bitcoin Mechanic: The problems that I was trying to get to before and sort of lost my train of thought with having such a small group of people deciding what’s in block templates is there’s a lot of problems with it. So first off is soft fork upgrades. So soft fork upgrades to Bitcoin are always coordinated by miners because it’s the only practical way to do it.

[00:21:11] Bitcoin Mechanic: And the way that that’s done is by flipping version bits inside block templates. And this means again, to have things like SegWit or Taproot, then you need a tiny group of entities to say, okay, and we’ve had them troll us in the past. Like Wang Chun from FTPool turned on a version bit, I think for Taproot, and then turned it off again and just caused.

[00:21:32] Bitcoin Mechanic: Everyone to freak out on Twitter. And, you know, he was only joking, right? But the fact no one man should have all that power, right? It’s just insane that anyone would. So decentralized block template construction would be great for that, of course, because, well, for obvious reasons, but then you also have the point I was talking about before with the price of and scarcity of block space, If you have a cartel that control what goes in Blockspace, you have some horrible corruption creep in pretty quickly and it’s not necessarily just going to be, they’re not just going to, on behalf of their miners, sell it in the most transparent and lucrative way, they’re going to do other strange things with it, which Luxor’s block was a good example of that, I will say that the guy that paid for it, and gave the money to Luxor.

[00:22:19] Bitcoin Mechanic: Allegedly, it was all agreed that the money would then go on to the hashes and be distributed, but I have no proof of that, and I’ve never seen any proof of it. So, the blocks either side of it netted around 5, 000 in transaction fees, and the block in question only got around 200 worth of transaction fees.

[00:22:37] Bitcoin Mechanic: This is kind of a distraction, actually, because in either case, In both cases, you actually need the pool to be forthright and say, Hi, we actually earned this much money from the block template, and you can verify the payout split you got, and you’re not able to do that. So, the trouble is you can sell block space, essentially, and you can do it in a strange way, right?

[00:23:01] Bitcoin Mechanic: You can even, it can even be through a roundabout mechanism, i. e. a government coming to you and saying, You can’t use the block space for this and if you do, you no longer get a tax break or you’re no longer allowed to operate and these are, these are not direct financial incentives, they’re indirect, but there’s still an incentive for the pool to say, I’m going to make the template reflect what external pressure or external market forces are imposing on me that has nothing to do with the best interests of my miner.

[00:23:32] Bitcoin Mechanic: And even that’s before. You, you’re sort of burdened with being honest with the miner about what it is you actually got. So if you’re getting a tax breaker, you’re allowed to operate as a pool. How do you pass on that advantage you’re getting by being compliant with your block space usage to the miners who are mining with you?

[00:23:50] Bitcoin Mechanic: There’s no direct way for you really to do that. You can’t sort of say, and now I pass the benefit on to you, because what even is it? It’s just permission to operate. And, in theory, again, the economic disadvantage of doing so, ignoring real transactions, or just leaving money on the table in general, should mean that you just go out of business, but if every other pool, if there’s so few of them that every other pool can come under exactly the same kind of pressure, then that doesn’t work, right?

[00:24:17] Bitcoin Mechanic: And this is the real world talking. There are plenty of instances where businesses are doing things that their customers hate, but their customers just put up with it because every other business they could use operates in exactly the same way because it’s a cartel operating. So back to the point, decentralization of block template construction means that when you have things like Maripool stamping their blocks with OFAC compliance and things like that, Instead of that being something that is just disliked, that people really don’t approve of, that they stop doing because it’s a PR disaster, it becomes laughable instead.

[00:24:52] Bitcoin Mechanic: It becomes a complete joke that they would do such a thing, and that would obviously be a better and more resilient position for Bitcoin to be in.

[00:25:00] Preston Pysh: I want to talk about this comment that you made about signaling, using the hash rate to kind of signal soft forks. So I know with Taproot, you know, when Taproot rolled out, you had these mining pools that were signaling that they approve the, the soft fork and they’re representing this much exahash.

[00:25:22] Preston Pysh: And it really kind of came down to whatever those 12 entities thought, right? Cause I mean, if you’re providing hash rate to that pool and that pool has a different opinion than you have as an individual providing hash rate. It didn’t really matter what you thought as that individual. Once you guys are able to allow individuals to provide their block templates, what does that math look like for signaling soft fork updates?

[00:25:48] Preston Pysh: Because it seems like before it was just 12 people’s opinion. Does that still stay intact today? At what point in the future would that necessarily not be the case? Am I even understanding this correctly? I’m curious your thoughts.

[00:26:02] Bitcoin Mechanic: Well, yeah, I mean, it could go either way, funnily enough. If you have everyone making their own templates, you have a greater amount of people to coordinate to actually get the upgrade to even happen.

[00:26:12] Bitcoin Mechanic: So it might be harder in one sense, but in another sense, no one guy can take the whole network hostage because They would need to be over 5 percent of the templates to end up in the blockchain. So, I mean, you do have miners that are that big, actually, but it doesn’t really fix that problem exactly. It’s just an example of the fact that you need Antpool’s permission to get an upgrade in.

[00:26:34] Bitcoin Mechanic: That’s it. Rather than you need the miners that are mining with Antpool’s permission. And the miners incentives are presumably closer to that of a genuine, normal Bitcoin user. then a mining pool, because a mining pool is a very different thing to a sort of Bitcoin native business in my estimation. But like I say, I wouldn’t, I wouldn’t want to pretend that decentralized template construction suddenly means all upgrades go in, because if that was the case, That would be dangerous because malicious upgrades are an existential threat to Bitcoin and they need to not be possible and thankfully they wouldn’t be with that either, but that does translate to me essentially saying there isn’t really a magic solution there, unfortunately, like if we have a good upgrade that everyone likes, whether you have pools able to block it on an individual basis, you also have miners able to block it on an individual basis.

[00:27:26] Bitcoin Mechanic: It’s just, I would think that they would be less incentivized to do so.

[00:27:30] Preston Pysh: It seems to me that you would just get the information, the signal coming out of it, would be much more raw and noticeable if you’re able to kind of peer into that, the individual hasher’s point of view of what they’re signaling versus that basically being controlled by maybe a cartel of 12 entities.

[00:27:48] Preston Pysh: Would you agree with that, I guess, framing?

[00:27:50] Bitcoin Mechanic: Yeah, I think you remove a proxy. So you’re definitely, you’re actually becoming more efficient in that sense. But at the same time, you’re dealing with a greater amount of people. So you’re becoming less efficient at the same time. It’s a mixed bag, that. It’s something I point out, not because it’s like we have a solution to this, because it’s not really a problem that you want to solve, it’s more just the fact that people talk about miners activating soft forks when it isn’t miners, it’s pools, and that means pools are actually becoming responsible for a large aspect of what mining is about.

[00:28:21] Bitcoin Mechanic: And maybe I’ll walk back my criticism there, or my usage of that reality as an indictment of the space. rather, or just use it to the extent that I’m saying, the fact that it’s a pool activated soft fork rather than a miner activated soft fork shows that we’re using the words wrong. And that betrays that there’s generally been a bastardization of the concept of what mining is, given that pools are doing a large part of what people consider miner activation.

[00:28:47] Bitcoin Mechanic: So that’s kind of the point I’m making here, just to clarify.

[00:28:51] Preston Pysh: Talk to us about the fees that pool operators collect. And how transparent that is to the individuals providing the hash rate into the pool as to what their payout is.

[00:29:04] Bitcoin Mechanic: FPPS as a payout model stands for full paper share, and it’s basically the only game in town at the moment.

[00:29:11] Bitcoin Mechanic: Ocean obviously doesn’t work that way. Full paper share basically means I’m a solo miner, as a pool I exist as a solo miner, and I’m merely renting hash rate. And that hash rate doesn’t want to care about what happens on the Bitcoin network at all. I will just pay them for whatever it is they mine. It doesn’t even need to be Bitcoin.

[00:29:31] Bitcoin Mechanic: Whatever hash it is they throw to my pool, I will publish an expected reward for that hash rate and I will pay them for that. And I’m going to have a process by which I sort of tally up transaction fees which are unpredictable and I will pay them a cut of that too. There’s a lot of trust involved in this model.

[00:29:49] Bitcoin Mechanic: It’s basically trivial for any pool that operates this way to skim off the top one or two or three percent of the transaction fees. If they do it too much, it becomes noticeable, but at the same time, impossible to verify that you’re getting what you’re supposed to be getting with regard to a split of the transaction fees.

[00:30:08] Bitcoin Mechanic: And this is a problem that’s going to get worse and highlight the need for Ocean more and more as The fresh Bitcoin subsidy halves every four years because the maths was a lot more predictable back when you got 50 Bitcoins every 10 minutes. It was really easy to know what your hash rate should be getting you from any pooling scenario.

[00:30:26] Bitcoin Mechanic: Because the amount was entirely predictable. Then it halved in 2012 to 25 bitcoins every 10 minutes. And it remained roughly the same because you still didn’t have much of a transaction fee market. People were still putting in 0 sat per byte transactions all over the place and miners would just fill up the block with completely free transactions.

[00:30:45] Bitcoin Mechanic: Wasn’t even mempool policy yet to filter these things out yet. But the point is, the calculators could be ruthlessly accurate, you could say I have exactly this much hash rate, the network difficulty is exactly this, the payout is exactly twelve and a half bitcoins every ten minutes, except it’s every nine point whatever on average because hash rate’s building and we’re finding blocks slightly too fast, so you could, the point is you could calculate it very quickly and it would be very obvious if a pool wasn’t paying you correctly.

[00:31:11] Bitcoin Mechanic: But now the calculators must take into account something akin to what technical analysts do looking at charts. They have to predict the price of Bitcoin in the future. But in this case, you’re predicting the income from transaction fee revenue, which is unknowable in advance. You can make sort of mathematical averages and go.

[00:31:28] Bitcoin Mechanic: On average, we get 0. 33 bitcoins per block. So over this, you know, in transaction fee revenue. So over a six month period, it should equal about this, but this is very approximate by comparison. And that is the model we’re shifting towards. Every halving a miner’s income is much more about what the transaction fee revenue is than about freshly mined bitcoin that are very predictable and have an exact amount.

[00:31:52] Bitcoin Mechanic: What that means is, the trust you’re having to place in the pool goes up and up and up, so long as they remain opaque about their calculations and what it is they’re doing. And, you sort of get these curveballs as well, where occasionally someone will make a massive mistake, or fat finger a transaction fee, and end up paying something like five million dollars in a transaction fee, that should have only cost them, you know, six dollars, or something like that.

[00:32:16] Bitcoin Mechanic: And then the pool in two circumstances now one being F2Pool and the other being AntPool will just come out and say, All right, well, this was a mistake and we’re going to give it back to the miner. Sorry, we’re going to give it back to the person that made the transaction. And the fact that they’re in that position should tell, regardless of your moral take on it, like, I don’t have a problem with giving someone back money that they didn’t mean to pay.

[00:32:40] Bitcoin Mechanic: Like, I don’t have an issue with that. I do have an issue with the fact that it’s being done on my behalf. When I’m the one that actually did the work and contributed the hash to finding the block, I would much rather that was my decision to make than the pool and it sort of sets a precedent, right? It’s not a pool’s job to decide what was a real transaction fee and what wasn’t.

[00:33:01] Bitcoin Mechanic: At least in that sense, I know people are going to sort of call me a hypocrite for that, for some stuff we’re going to get into too, with regard to how Ocean templates, but I have a very good reason for differentiating these two things, but the point is Ocean is currently in the unpleasant position of constructing its own block templates, because we haven’t got decentralization of block templates figured out yet, And ironically, the fact that so many people are annoyed by the way we’ve chosen to construct our templates demonstrates the problem better than any sort of theoretical argument ever could.

[00:33:32] Bitcoin Mechanic: But yeah, I mean, I, I digress.

[00:33:35] Preston Pysh: I think a lot of people that are highlighting this and basically throwing mud at you guys over this particular topic. I think most are not familiar with what your roadmap is and where you’re trying to take this, which is that we’re not even going to be in the business of constructing block templates.

[00:33:53] Preston Pysh: We’re going to push that down to the people supplying the hash rate. And I think that’s a really, really important point for people that are listening to this to understand. In the meantime, let’s just talk about your point of view from Ocean’s perspective as to why There’s transactions that are paying higher fees that aren’t being included into, and you guys have mined two blocks.

[00:34:16] Preston Pysh: I think this is a very big deal considering you guys right now are at 426 petahash. The overall Bitcoin network is at about 523 exahash per second. Globally, that’s about 0. 1 percent of the overall hash rate in the Bitcoin network. And you guys have found two blocks based on that amount. This is about 8.

[00:34:39] Preston Pysh: 7 blocks per day that you guys should probably be finding based on the amount of hash rate that you’ve currently doesn’t seem like you agree with that number right now. What do you, what do you think the number is?

[00:34:52] Bitcoin Mechanic: 1 percent I mean, 1 percent is around a block and a half a day, so 1 percent would be a tenth of that, so a block and a half every 10 days, so a block once a week, roughly.

[00:35:05] Preston Pysh: Okay, so around that ballpark, so this is, I think that’s a lot of hash rate for a pool that launched, what, 2 3 weeks ago? Like, you guys just launched this.

[00:35:16] Bitcoin Mechanic: Yes, especially one with a sort of very unpopular policy. Yes, yes. This kind of separates the weak from the chaff though, because the people that mine with us are doing so because they absolutely are grateful that they have the, an option of mining blocks that aren’t actively harmful to Bitcoin because they have a lower time preference.

[00:35:38] Bitcoin Mechanic: I need to be careful how I explain this stuff, because so many people are just absolutely outraged by what it is we’re doing, and obviously it’s a difficult decision to have made as a business, so there must be a good reason for it, and I definitely would ask people to suspend their judgement, and say, let’s hear them out, why are they doing this, because it’s not helping their business, I’m sure some people are just like, no, we get that you’re well intentioned, but you’re definitely misguided, and I’d argue that we’re not misguided either, But I can get into it.

[00:36:07] Bitcoin Mechanic: And hopefully this is sort of as we’re about to do to explain what it is we’re doing. I already touched on the op false exploitation thing, right? When you have code, when you have a code betrays an intention of the people that wrote it, right? Bitcoin has a way that it has been developed and we created this op return thing and we said, all right, We have to sandbox the arbitrary data because people are going to damage Bitcoin if we don’t allow them a little sandbox in which to store arbitrary data, they’re going to hurt us by bloating the UTXO set.

[00:36:38] Bitcoin Mechanic: So here’s our intention. We’re going to allow this much arbitrary data, and if you want to go outside that, it needs to be ruinously difficult and expensive for you because we want it to be so, because it hurts Bitcoiners trying to run full nodes if you can do it any other way. And then. Witness discount comes along, taproot comes along, and suddenly you can store an insane amount of data and it’s not super expensive for you to do because you get to store that data four times more cheaply.

[00:37:05] Bitcoin Mechanic: I think I have that correct, but it’s, it’s in that ballpark. So the fact that you can do this means these People, I mean, I’m not even going to get into the nature of what this arbitrary data is all about. It’s just in service of scams and ridiculous, like, graffiti nonsense, basically, but that’s kind of a distraction.

[00:37:24] Bitcoin Mechanic: It’s just arbitrary data or not. Do we want it? And yes, we do want to allow it inside Opera terms because that’s the practical solution. And the fact that Taproot allowed it to be done in a way that causes additional burden on nodes means it’s unequivocally bad for the network. Okay. It’s just a lot of people to quote Ben Carman think it’s a cure worse than the disease trying to do what Ocean is doing by trying to say we don’t accept this, but I don’t really agree with that.

[00:37:51] Bitcoin Mechanic: I mean, there’s a lot of points here. It’s really hard not to keep going off on tangents here, but I’ll do so anyway. Ben’s main concern is that the mempool ultimately dies, which is the transparent, rough consensus on what is about to end up in a block. Or, not exactly, but here’s all the unconfirmed transactions.

[00:38:10] Bitcoin Mechanic: We all have a similar picture ish of what might end up in the next block. And this helps people do things like estimate what their transaction fees should be to end up in the next block. And there are very, for reasons I was talking about earlier, where you have a cartel deciding what, how the block space ultimately gets used, means the mempool becomes a lot less accurate as a picture, because who knows what foundry are going to stick in the next block.

[00:38:35] Bitcoin Mechanic: If someone comes and pays them a million bucks, or Luxor, for example, with the block you referred to, No one expected that block to show up, which was just a giant JPEG that didn’t have any real transactions in it at all, when there were plenty of real transactions available for them to choose. You don’t know what’s going on there, because you, but a pool can only make a guarantee to someone that would out, make an out of band purchase of block template space, if they are in a position to say, hey, I can get your block in, in the next couple of hours.

[00:39:04] Bitcoin Mechanic: If you have decentralized block template construction and some bad actor is trying to purchase block space to the chagrin of every single mi honest Bitcoin participant out there, they can’t make the same guarantees, right? So you at the moment, you can go to a guy who has 30% of their network cash rate, give them a million bucks and say, do this with your block.

[00:39:24] Bitcoin Mechanic: And they can do it even if they choose to be open about it and share that million bucks with the people mining like Luxor allegedly did. Okay, fine, but the point is, look at the position they’re in, whereas, if you have decentralized template construction, whoever it is with that million bucks that wants to go and corrupt, you know, and root around the mempool, so to speak, whoever that person is, has to then go and deal with lots of people at once, because If everyone is producing their own templates, but all of them only have a couple of percent of the network, if you want your stuff in the chain pretty with any sort of expediency, you need to deal with a large group of people at once, which makes the whole mempool v2 concept come around, where it’s like, whatever this is, even if people are rooting around the mempool, It’s a lot more transparent than it would have been if there’s one entity with 30 percent of the hash rate that can say I’ll get your block in, don’t worry.

[00:40:18] Bitcoin Mechanic: Yeah. That thing won’t exist anymore. It’s like, okay, I have to deal with like 40 guys here to get my, you know, whatever’s in my block template in there. Or at least 5 or 6 guys and that just busts it open again because Yes, the mempool kind of died and the mempool is great, but it seems to be dying whether we like it or not.

[00:40:36] Bitcoin Mechanic: You have services like, ironically, mempool. space, a great block visualizer that block explorer online is pretty much everyone’s favorite. They have an accelerator now, which what that means is if you make a transaction and the fee is too low, You can get them to pay out of band to a bunch of mining pools.

[00:40:54] Bitcoin Mechanic: Hey, include this transaction in the next block. So if you ever see a one sat per byte transaction ending up in a block, it was either in the pool’s interest for whatever reason to add it selfishly, or they got paid by some out of band service like this to say, please include this block. The guy didn’t pay a proper fee.

[00:41:12] Bitcoin Mechanic: The wallet doesn’t allow him to easily use RBF or something like that. Here’s a hundred bucks paid via credit card. Just put it in the block, please. And there you go. And by the way, share that with your miners, if you want, like, you’re not obliged to tell them even that we had this arrangement, right? So the fact that that’s so opaque is definitely not good.

[00:41:30] Bitcoin Mechanic: If it becomes more transparent because there are just too many people making templates. That’s just definitely good. So definitely digress from whatever the original question was here.

[00:41:39] Preston Pysh: This idea is really important and I like on the mempool space website how you can visually see what the block was expected to be just sheerly based off of fee.

[00:41:52] Preston Pysh: This was the highest paying outcome, the template that miners could have used that we anticipated before the block was found. And then they show which transactions actually made it into the block. And then they show the difference in the fee between what was expected and what was actually produced. And kind of tinkering around and just looking at various blocks, like I’ve seen some as high as eight, an 8 percent difference to percent difference from what was expected to what was actually mined when it, when it was actually found.

[00:42:23] Preston Pysh: I think that the fact that we’re seeing such a diversion in what the template just based off of pure economics. would suggest versus what, what has been found that this is something that people want to see. Just further emphasizes the point that you’re making, which is this has become way too centralized by pool operators.

[00:42:45] Preston Pysh: And we’re seeing larger and larger divergence from what should be economic incentives versus what people are doing behind the scenes to put things And I’m calling, I’m calling them things in the block templates that are mine.

[00:43:00] Bitcoin Mechanic: Well, if you could remark on that stuff, actually. So this is, yeah, this is a metric offered by mempool.

[00:43:05] Bitcoin Mechanic: space. And they’re saying, here’s what our node is running. It’s running core with default policies. So what that will do is it will basically let in all the spam that’s rooting around the op return limit or the data carrier size limit taproot. And they’re saying. An expected block will include all of this, so it will maximize fee revenue, but it also won’t have any out of band payments that we don’t know about.

[00:43:30] Bitcoin Mechanic: Typically, miners get pretty close to 100 percent of the expected, or pools will construct a template that gets pretty close to the expected 100 percent value that mempool is offering, because they’ll use similar policies on their node. There are exceptions, common ones too, so F2Pool pretty regularly pays out the people mining with it by including the payout transaction in its own block, and it doesn’t pay itself a transaction fee because it doesn’t see the point, and I kind of understand that, I mean, we don’t do that, Ocean has to make payouts too, because not everything can fit in the Coinbase payout, But when we do that, we just do a regular transaction and let everyone mine it.

[00:44:06] Bitcoin Mechanic: So we actually pay a fee, but regardless, you’ll see a massive lump in any F2P block or not any, but a lot of them that has zero sats per byte. And that’s just them putting their own payout transaction in their own block. So miners are essentially paying for their own payout because they don’t get a split of a fee that could have been included in a block because it doesn’t, there’s no room for it because it’s been sort of abandoned and the space has been earmarked by F2P themselves to use their miner’s own hash rate to pay themselves. Then you have another example of like a block looking unhealthy, so to speak, which is according to Mempool stat, which is via BTC, who just seem to take a heck of a lot of out of band payments. So you’ll see a lot of illogical looking transactions in their blocks and you don’t really know why they’re there.

[00:44:51] Bitcoin Mechanic: You don’t know what backhand deals they’re doing, but there they are and whatever. There’s nothing you really do about it. Ocean, candidly, has far the worst look when it comes to expected revenue versus what our templates look like that are public, by the way, before the block gets found, they, they can be way lower than what you get from those expected versus reality things.

[00:45:14] Bitcoin Mechanic: And that’s because we are filtering out the OP return span, which, as you’ve mentioned, can be extremely lucrative. But I won’t lie, it looks ugly. It looks extremely bad, but that is not because it is. But we can sort of get into that sort of topic of what happens financially for people mining with Ocean.

[00:45:32] Bitcoin Mechanic: Do we just lose a bunch of inscription revenue? And that’s it. I mean, if you only take that dimension into the, into consideration, sure. But there are just way more factors than that. And it’s unkind and sort of inaccurate, I’ll say as well, to ignore all the other factors.

[00:45:50] Preston Pysh: I want to focus in on this term, a bug, and I just want to tell you my point of view, and I think I have, like you guys, I have a very unpopular point of view when talking about this being a bug in Bitcoin.

[00:46:05] Preston Pysh: I view Bitcoin as the new global settlement layer. It’s the thing that is going to be the bedrock of all finance. And I think that when I look at a fee of call it five dollars in today’s buying power to move a hundred million or even a billion in buying power to anywhere else on the planet without censorship.

[00:46:30] Preston Pysh: I think that 5 is such a pittance of a cost to move such buying power that will be preserved and not debased into perpetuity that it’s borderline laughable when you compare it to the existing bedrock, which is the treasury market of all these fiat currencies. When I see people getting upset that JPEGs should have some type of space in this network, I’m with them.

[00:47:00] Preston Pysh: I think that they’re worthless. I think that relatively speaking to this new financial bedrock, that they’re very pointless and people that are fighting for it are missing the way bigger picture here. But that’s me. That’s my point of view. There’s plenty. And I would say there’s an abundance of people that do not see the value prop the same way that I see it.

[00:47:26] Preston Pysh: And I would assume you see it the same way that I see it as well, which is that this is, this is massive. So You’re calling it a bug. I would also call it a bug, but I know that if I called it a bug, I’m going to really trigger a lot of people by saying that, but I’ll still say it anyway, because it doesn’t change my point of view.

[00:47:43] Preston Pysh: Explain why they’re triggered. Okay. If you had to go into their point of view, they, they want their JPEGs on, on the blockchain. They on the Bitcoin blockchain, because they know it’s immutable and they know that I’m storing all these stupid things on my node, but that doesn’t take away their point of view.

[00:48:01] Bitcoin Mechanic: To steel man their position and I hope I do a good job of it because of course I understand it. I’m not talking about the people that want their spam on chain because they’re trying to scam people and they’re trying to move Ethereum style nonsense over into Bitcoin and claim the mutability of interpretation of arbitrary data just because the arbitrary data is in Bitcoin and The interpretation isn’t, which is the essence of the scam and the oracle problem that people always talk about and that’s my favorite example of this is just you can upload the statement two plus two equals five into the Bitcoin blockchain.

[00:48:34] Bitcoin Mechanic: It doesn’t suddenly become true. Bitcoin doesn’t make the laws of the universal math change. So If you can say you own this monkey JPEG and put it in Bitcoin’s blockchain, it doesn’t matter if someone steals it. There’s nothing that can be done about it. Bitcoin can only enforce rules that are relevant to itself.

[00:48:50] Bitcoin Mechanic: It’s all in service of a grift. I’m not going to steel man that position because you literally can’t. It’s just people are stupid and will buy stupid stuff and no thanks.

[00:48:59] Preston Pysh: Let me, let me put it this way. It’s an environmental setting right now that is universal. Luke, yourself, they might say that this is a bug, but for the person who’s exploiting it, they’re saying, no, this is how the code is currently written that everybody’s using.

[00:49:18] Preston Pysh: And so it’s, you might call it a bug tech with your, with your definition.

[00:49:23] Bitcoin Mechanic: Yeah, I do, but I mean, this, this is ultimately just has to be considered naive. Like this has happened before when we had an accidental fork in 2013. And there was the idealistic position versus, again, Luke’s position. Luke was, let’s fix it, and Gavin’s position, who took the sort of idealistic and brainless position, was, just leave it and let the free market figure it out.

[00:49:48] Bitcoin Mechanic: The free market does not fix everything. And, well, to the extent to which the free market fixes everything, is also matched, needs to be matched by the extent to which developers can make Bitcoin absolutely perfect, and they cannot, which means occasionally things have to be fixed, and, like, the game theory is only solid in a watertight system, so the risk of sounding obtuse There was a bug before where someone made billions of bitcoins, and the network didn’t say, Hey, it’s a free market, let us sort it out.

[00:50:20] Bitcoin Mechanic: Yeah. Or this is the rules. This is the code. We just said, this is a mistake. We have to fix it. And we fixed it. And there wasn’t, you know, it was a practical solution. And that does set weird precedences and things like that. But ultimately we have to be grownups and admit that accidents happen. And sometimes you have to fix things.

[00:50:38] Bitcoin Mechanic: And that’s all there is to it. Like, we didn’t leave those billions of bitcoins lying around because it just would have broken everything. And at the same time, by the same token, if you’re going to make it trivial for people to stash arbitrary data inside Bitcoin, this is, I didn’t get around to steel manning the real position of people that are against the choices we’ve made.

[00:50:57] Bitcoin Mechanic: Because I started by saying, you know, the people actually exploiting the bug, that’s indefensible because they’re only doing it to scam. that I’m saying, the people that say we don’t like what Ocean’s doing are either saying you’re doing it because there’s a couple of reasons they’re giving. One is you’re playing a game of whack a mole.

[00:51:14] Bitcoin Mechanic: You’ll never be able to get rid of arbitrary data completely. There’s this thing a few people keep reposting that says if you have any, the theory, the information theory says that if you can store any data at all, you can store JPEGs and that’s the end of it. And there’s no stopping it. I agree with this, but again, I think it’s just an appeal to an ideological absurdity that doesn’t take into account any of the practical circumstances in which Bitcoin finds itself.

[00:51:42] Bitcoin Mechanic: What you were saying a minute ago about the fact that this is a global settlement layer, the fact that it might cost you a hundred bucks to do, to take advantage of this immutable settlement layer that is, you know, final, is stunning and it’s justified that it might cost a lot of money to do it. But my point is just that we’re not there yet with Bitcoin being practical to use off chain in a, in a semi non custodial way, or at least with some transparency and some trustlessness.

[00:52:11] Bitcoin Mechanic: The reality of the fact that the reality of our current situation is that if people are priced out of using Bitcoin on the main chain at an accelerated pace because the chain is being used for stuff that we never intended on or never accounted for in the game theory, it’s going to entrench a bunch of bad habits where people just use custodial Bitcoin.

[00:52:31] Bitcoin Mechanic: And this is already present in the pools because If you’re mining with a pool and you’re accruing a balance with a pool and you just leave your Bitcoin in the pool because you’re priced out of the main chain and you’re a tiny miner and you don’t have enough sats to even justify transaction fees, what happens there is the pool just functions as a custodian and if you have a small group of custodians of everyone’s Bitcoin, You’re just doing gold again.

[00:52:55] Bitcoin Mechanic: That’s all that’s happening. The whole point of Bitcoin is, were you at unconfiscatable just now Tom Vase? No. So, he calls it unconfiscatable and he coined a great word with that because the minute your Bitcoin becomes confiscatable because you’re storing it with a third party, you’ve basically lost the entire benefit of the system.

[00:53:14] Bitcoin Mechanic: You don’t know if there’s 21 million anymore. You don’t know if it’s If what’s in that bank account that you have is reflective of something real, i. e. are they running a fractional reserve, you need their permission to spend it, or move it around, all of this stuff, and it just becomes gold again, and 6102s become possible again.

[00:53:31] Bitcoin Mechanic: So the whole point is, it needs to, until we have solutions where people can retain some sort of custody, and it becomes practical as a medium of exchange via other mechanisms, like lightning, or liquid, or any of these things, until that actually becomes practical, The main chain actually needs to remain relatively usable, and there’s several sort of lines of thinking on this.

[00:53:54] Bitcoin Mechanic: One is, if you have the spammers filling up the chain with nonsense, it accelerates the development of things like Lightning and Liquid, which is really good. I guess I appreciate it, but on the other hand, it’s more likely that people will just say, I can’t use Bitcoin on chain, the fees are too expensive.

[00:54:10] Bitcoin Mechanic: So I’m just going to leave it with a third party and move everything around inside a central ledger and all the exchanges in which we’ve been fighting for years to try and get people to withdraw their bitcoins from become a much more practical, centralized, efficient solution. And essentially, you just have Coinbase and Gemini and all of the exchanges in the U. S. that people use, they just store their bitcoins with them and they just become PayPal, but the native currency is Bitcoin rather than the dollar. But there’s essentially no difference. The fact that the dollar can be inflated and you robbed of your purchasing power, the guarantee against that happening in Bitcoin has been severely compromised at that point.

[00:54:49] Bitcoin Mechanic: So, what do you do? Like, how do you solve this issue on a practical level? Ultimately, you need pools to come around and miners to come around that care about the long term health of Bitcoin and say, We have to, as a practical matter, rather than as an issue of ideology, it’s a practical matter. If real transactions have no way of finding their way into the Bitcoin blockchain because they’re priced out by an incredibly lucrative, by an incredibly large amount of money that’s being offered to miners to ignore real transactions in order to include spam, you have a problem in the structure of the incentives of Bitcoin. It’s, it’s really difficult. Like you can appeal to miners. self interest in the model we’re making.

[00:55:35] Bitcoin Mechanic: People are saying, why are you going down the altruistic mining path? But I disagree that it’s altruistic. I just think it’s low time preference. I think any miner that says, If we fill up the blockchain with spam instead of real transactions, it’s going to make Bitcoin, in a practical sense, too expensive and unusable before we have any of the Layer 2 solutions really figured out.

[00:55:55] Bitcoin Mechanic: That’s going to entrench bad habits, that’s going to mean, ultimately, that Bitcoin gets captured, and that it is a shell of what it could have been. I think that’s a reasonable position to take. I don’t think it’s an ideological position. I think it’s a practical position. And there’s also the argument they’re making that, you know, it sets a precedent of arbitrary censorship on the parts of the pools.

[00:56:18] Bitcoin Mechanic: And that’s something I profoundly disagree with. I won’t go into the definition of censorship because Giacomo already did a great job on this at the Unconfiscatable Conference. He just said, what is censorship? And we’re talking about mempool policy here. And to anyone that’s calling what we’re doing censorship, I would suggest that if you’re running a Bitcoin core node, you’re also censoring.

[00:56:39] Bitcoin Mechanic: If you’re going to use that definition of it, you’re engaging in it too. Why can’t you fit a 300 byte op return? Why are you going to reject that from your mempool? Because that’s just how Bitcoin works, and it’s set up to reject everything in lieu of stuff that fits within the rules of what the network is designed to accommodate.

[00:56:58] Bitcoin Mechanic: Occasionally something gets around that, and if you block it, that doesn’t mean you’re censoring, it just means you’re trying to keep the network consistent. and congruent with how it’s always operated. So there was the controversy with Samurai, where to our surprise, we found out that not their coin joins, but the premix transactions wouldn’t get included in our templates.

[00:57:20] Bitcoin Mechanic: This was a policy set in 2014 in Bitcoin Nots, which is four years before Samurai even existed and they came out guns blazing, as they always do, saying, you know, you’ve, Ocean have enacted a policy to exclude our transactions from their blocks and we were like, huh? We haven’t enacted anything. I mean, you’re referring to a policy from nine years ago, but this, to be clear, though, it’s not desirable.

[00:57:46] Bitcoin Mechanic: We don’t want to exclude Samurai’s transactions from what we do. Yeah, loads of stuff there. Brain dump on what’s going on with our policy. I definitely find anyone that’s making the claim that what we’re doing is censorship, is being disingenuous, or is just misguided. The point of transaction fees in the first place is that miners are allowed to choose what goes in their blocks and you want to incentivize them to choose what is going in your block by offering them money.

[00:58:14] Bitcoin Mechanic: They’re not morally obliged to include stuff in your block. However, If that gets taken to the extreme of we’re going to put stuff in the block that’s actively harmful, or we’re going to exclude genuine transactions because we’re being given a greater amount of money elsewhere that has nothing to do with people doing Bitcoin transactions, that represents a corruption and a perversion of the whole system.

[00:58:38] Bitcoin Mechanic: And if miners are going to comply with it, I mean, I just think the whole framing is wrong. I really do. Jordan Bush wrote a great tweet saying, if you’re people don’t discuss the money they lost by not engaging in some immoral activities. Like he is pimping out your wife. He’s like, you don’t sit there and go, Oh, I lost a bunch of money.

[00:58:57] Bitcoin Mechanic: Not pimping out my wife. It’s not how you normally psychologically categorize things, right? There are things everyone doesn’t do that are lucrative. But they don’t sit there torturing themselves about the money they lost because they’re not prepared to engage in the activity in the first place. So, no one’s losing any money by us not mining inscriptions because it’s not even an option.

[00:59:17] Bitcoin Mechanic: Like, it’s just so normalized that people think, Oh, well, I could mine more here, and I could mine and get more money here, and I could mine here and get less money. Which, by the way, is not a foregone conclusion with Ocean. But, regardless, if that’s your assumption that I’ll make less money mining with Ocean, You have to consider what the source of the money is and whether it’s damaging Bitcoin as a whole and if the source of the extra money is damaging Bitcoin as a whole, what’s your long term strategy here?

[00:59:42] Bitcoin Mechanic: Because if you care about your Bitcoins, you need to care about Bitcoin as well. If you don’t care about Bitcoin itself, then ultimately your bitcoins might become worthless and the system is not that robust that you can just completely disregard it and focus only on profit because that can be dangerous.

[01:00:01] Bitcoin Mechanic: Like, the most extreme example I can think of that I’ve sort of alluded to a few times thanks for this brain dump by the way, I know I’m going all over the place. The most extreme example I can think of is government just comes to a big pool and says, I’ll give you billions of dollars, mine empty blocks.

[01:00:16] Bitcoin Mechanic: That’s an obvious attack and no one would accept it. For some reason, it gets imperceptible to 90 percent of Bitcoin is if you say, Here’s a bunch of money, fill up the blocks with spam instead. Then everyone goes, they’re legitimate transactions, how dare you not include them? And I’m saying, okay, I’ll take your position.

[01:00:35] Bitcoin Mechanic: If it really is impossible to know what’s spam and what’s a real transaction, I agree, the definition is subjective. then fair enough. And you can do an attack like that. But in this case, it’s very obvious what the spam is. It’s anything that’s sticking a bunch of arbitrary data after alt false. We can see exactly what it is.

[01:00:55] Bitcoin Mechanic: And we didn’t take into account that stuff like this would be possible, you know, when we were thinking about making a witness discount. So it just becomes, this is unhealthy for the network. Yes, we’re being offered a lot of money to include it, because why would we harm the network for free? We’re not going to do that, but we will harm it for money.

[01:01:13] Bitcoin Mechanic: I don’t think that’s sustainable. I genuinely think that’s going to create a problem. And the usual cope with people who I’m generally in agreement with on everything, who I finally just disagree with on this and our approach, is they say, just don’t do anything, because they will eventually run out of money, because ultimately it is costing them money.

[01:01:33] Bitcoin Mechanic: And my retort to that is, we do not live on a Bitcoin standard, so they don’t need to run out of Bitcoin, they need to run out of fiat, and you can make fiat forever, we’re not about to have the money printers disappear, we’re not about to have the US dollar collapse, that’s a long way off, and until it is, these attacks can be financed forever.

[01:01:51] Bitcoin Mechanic: Ultimately, the spammers are raising money from venture capitalists. Venture capitalists benefiting from the Cantillon effect. Ultimately, you just have to take that into account. And it’s, I made that meme yesterday, you know, the, the 5 wrench attack meme. It’s like we got the whole conception of what censorship would look like in Bitcoin wrong.

[01:02:11] Bitcoin Mechanic: We thought they would put pressure on pools to mine empty blocks or to exclude transactions. And the theory always was. There’ll be another pool or another miner that does include the transactions, and they make more money, so the pool that’s agreeing to censor will go out of business. Simple as that, right?

[01:02:28] Bitcoin Mechanic: But that’s the theory, and in practice, it just, it slides right on by if you just pay them to fill up blocks with nonsense instead. And at that point, you make Bitcoin just, it’s a practical censorship attack. It’s not an ideological one that you can thwart. And it takes advantage of that one thing that everyone always forgets to take into account Bitcoin, which is how silly people can be.

[01:02:51] Bitcoin Mechanic: People really will buy dick butts. and think they own them because the data is in the blockchain and there’s some sort of pointer in there that says this is owned by this guy. People are actually that silly and people can remain, actually it is well understood that people can remain retarded longer than you can remain solvent, right?

[01:03:09] Preston Pysh: So. Well, if you go for, if, if you go far enough upstream, like what looks like human stupidity, is maybe just a veil of, of a very deep attack by a sovereign entity or you name it, right? Maybe there, maybe there’s a whole lot more upstream of what, like, you’re kind of seeing with the JPEGs being included.

[01:03:33] Preston Pysh: And I have no idea. I’m just saying like, trying to rationalize why you would be seeing something like this, even though on the face of it, it looks just like total stupidity.

[01:03:41] Bitcoin Mechanic: I think, I think I wouldn’t want to like explicitly say it’s a state level attack. Because then people are going to write me off as a conspiracy theorist, but I will say it looks the same and it doesn’t really matter whether it is that, or if it can just be unintentional.

[01:03:55] Bitcoin Mechanic: It can be a genuine market for people that dumb enough to think they can buy JPEGs and have. do it on Bitcoin rather than Ethereum, which means suddenly it’s all more solid. I mean, another knock on effect you have from this that I really hate that I expect to happen is that just like crypto muddied the water with Bitcoin and it made everyone think it’s all scams and rug pulls, even though it’s completely not in Bitcoin.

[01:04:17] Bitcoin Mechanic: You have another muddying of the water now, which is tokens and things like, well, BRC 20 tokens and inscriptions and things like that, where you can get rugged, ordinals where you can get rugged, because the interpretation of all this data happens in some, like, centralized scheme that’s designed by a small group of people just going off of some data in the chain, but they interpret the data their own private way. They can rug everyone in five minutes. They already changed ordinal theory once, right? And we can even mess with it if we wanted to give it the credit of being a real thing. We can mess with their ordinal theory by changing what we do with this unique SAT that they pretend is unique, even though at the network level there is no such thing as a Satoshi or a Bitcoin.

[01:04:59] Bitcoin Mechanic: They don’t exist. It’s just UTXOs. But the point is. They’re going to muddy the water now to the point where people think Bitcoin, the actual currency, is as ruggable as any token that sits on top of the Bitcoin network. Now this is silly, but I know now how silly people can be. People are going to say, well if they can steal all my BRC20 tokens, why can’t they steal all my Bitcoin too?

[01:05:23] Bitcoin Mechanic: Do you know how difficult that’s going to be to explain to people to create a line in the sand? It’s going to be even more difficult than it was saying, I know Ethereum is similar and it has a blockchain and all that stuff, but it’s the polar opposite to Bitcoin. Like, do you know how hard it was to fight that battle against the marketing machine of Ethereum?

[01:05:43] Bitcoin Mechanic: We all know it’s a scam, but we are less than 1 percent of the world. Most people are still, you meet them, hello, how are you doing? I’m into Bitcoin. Oh, that’s all a scam. I know someone that lost loads of money with that. Dig a bit. What did they, what did the person they know buy? Dogecoin, Ripple, whatever.

[01:05:59] Bitcoin Mechanic: It’s And you’re saying there’s nothing to do with Bitcoin, but they don’t get it. Now imagine how difficult it’s going to be when it’s all, everyone got rugged on Bitcoin because of tokens on Bitcoin that weren’t actual Bitcoins. They were like Bitcoin Plus or whatever that was just a BRC20 token mint that happened on the Bitcoin blockchain.

[01:06:18] Bitcoin Mechanic: How difficult is it going to be explaining the Oracle problem to all these people? It’s just going to set us back years and it’s going to be incredibly tiring and just, it’s a waste of time and energy. This is, this is the worst part of the attack in my opinion, but it’s not, this is tangential to what it is we’re doing by excluding them in the first place, by excluding their transactions in options template.

[01:06:39] Bitcoin Mechanic: What we’re really doing is just saying Bitcoin’s blockchain needs to be used for what’s arguably, or at least, I don’t know how to put that, but what goes in Bitcoin’s blockchain can’t obviously be not real transactions, because we can’t, we can’t get rid of all arbitrary data. You’re always going to find a way to put it in there.

[01:06:58] Bitcoin Mechanic: We even created OpReturn for you to use to your heart’s content. But ultimately, if Taproot comes along, or any soft fork upgrade comes along, where you can suddenly abuse the witness discount, and there’s an opcode in there that you can use to sandwich an unbelievable amount of data in there, and you’re obviously exploiting a bug, and there’s an obvious fix for it, that can be applied at the mempool policy level, It definitely makes sense to apply that, and it’s very, it’s very misguided for people to think you should just let the free market do what it wants to do there, because according to that notion, you don’t have men pool policies, you could just get rid of everything, and actually some people are arguing for that, but it doesn’t make sense.

[01:07:37] Bitcoin Mechanic: You need to restrict what goes in there, not just, miners will make selections about what goes in blocks, and they don’t just use how lucrative the transaction is as a metric for it, it’s the main one they use, but there are other reasons you might make choices as a miner, and you do actually need to care about Bitcoin as a whole.

[01:07:57] Preston Pysh: It sounds to me, so like whenever I see how Ocean’s responding to this and how they’re I mean, you’re still able to get 426 petahash per second. Even using this more restrictive, lower fee block template that is, in your opinion, doing the right moral thing. When I look at like what a real solution would be to this, it would be a fork.

[01:08:21] Preston Pysh: Is that kind of what Luke is championing in a much longer time? And, and I’m not saying that that’s necessarily what I want, I’m, I guess what I’m saying is it, it seems to me like that would be the next logical thing that Luke would then be championing and, and maybe different, you know, other folks from, from Ocean and maybe the people supplying the, the hash rate to Ocean are looking for a fork.

[01:08:44] Preston Pysh: Are they looking for a Bitcoin fork, whether it’s soft or hard, what, what are they looking for?

[01:08:50] Bitcoin Mechanic: I don’t believe so. That’s a nuclear option at this point, which given how much a fork really should just happen if there’s consensus on the network, and that’s very different from one pool voluntarily saying we’re not going to actively harm the blockchain.

[01:09:05] Bitcoin Mechanic: We’re going to voluntarily not include this stuff. I think then all the miners that mine with us are also well aware of the fact that we’re doing this and they’re voluntarily participating in it. A fork is different. I think that’s, generally these things, if a contentious fork is proposed, that’s, I would even question that I would be in favor of it, as against as bad as I am.

[01:09:28] Bitcoin Mechanic: I don’t want to do something the majority of Bitcoiners don’t want, because that really does set a negative precedent. And this can be, this, you can filter out the inscription spam, at least the stuff that’s using the op false bug. You can soft fork that out. And soft forks are possible to do as an intolerant minority.

[01:09:45] Bitcoin Mechanic: We’ve, that’s indeed how they always end up happening. But at the same time, yeah, I’m not going to say I would support that necessarily because that, that is the nuclear option here. And it’s It can be done voluntarily anyway. It can just be the case that the rubber eventually meets the road, or we, we have the head on collision we’re supposed to have between the centralized and efficient, consistent pools that make life incredibly lucrative and easy for miners.

[01:10:10] Bitcoin Mechanic: Ultimately, there is a battle here that I think no one has really become aware of yet, which is, do you want efficiency and centralization knowing that it’s risky, or do you want decentralization and transparency, without the risk, but it’s not necessarily as lucrative. That ultimately is the battle here, because what’s lucrative in the long run, and what’s lucrative in the short run, are down to completely different factors.

[01:10:34] Bitcoin Mechanic: Yeah, this is a really important point to make, because I think what’s going to happen here is you have, you have decentralized block template construction, right? At the moment, people are realizing, hey, I really hate it the way Ocean are constructing their template. I want to make my own. But when you make your own in a pooled circumstance, you’re still sharing rewards with templates other people are constructing.

[01:10:56] Bitcoin Mechanic: It’s only your template that you get when it’s you that finds the block. But if you want to engage in pooled mining, you have to accept that you’re going to be dealing with other people’s templates. How much is Ocean going to curate that process? It remains to be seen, because we have to do some curation, because we can’t have trolls come along and just mine empty blocks all day with a big hash rate, because then everyone mining with Ocean, even if they jam pack their block templates full of transaction fees, some guy keeps mining empty blocks, and I have to split with him, because he’s the one defining what goes in his template, and he got lucky and found the last block.

[01:11:30] Bitcoin Mechanic: So are we going to allow that? People want to know what we’re going to allow, what we’re not going to allow. If none of this is acceptable, then you either have to go to the hyper efficient, centralized model, and they are going to transition. I’ll just, I’ll lay out Foundry’s future business model for them, if they haven’t even figured it out yet.

[01:11:46] Bitcoin Mechanic: It’s their saying. We are the centralized creators of block templates. We will ensure maximum fee revenue. We will extract revenue from everywhere possible. Decentralized template pool cannot make those same guarantees. So come and mine with us. And as a result, they’re going to become mega powerful, mega centralized, and they are going to get every single piece of state apparatus breathing down their neck.

[01:12:09] Bitcoin Mechanic: And then as a result, they’re going to be forced to do stuff that their miners hate. And eventually, miners are going to have to make a choice. Do I want to accept that I might be in a position where I’m mining templates with lower fees than can be guaranteed for me by a centralized, efficient solution?

[01:12:26] Bitcoin Mechanic: Or do I want to mine with a centralized and efficient solution, but then I’ve got to send off my passport every two weeks, and I won’t include half of the transactions that I think actually should be in there, not necessarily to my financial penalization? or detriment, but definitely to the detriment of Bitcoin’s censorship resistance.

[01:12:45] Bitcoin Mechanic: And that’s real censorship at that point, right? That’s government saying to a pool, you can’t include this transaction. That’s real censorship. And they’re going to have to say, Hmm, if I want maximum revenue and efficiency, I have to put up with this. If I don’t, if I want permissionless mining, then I have to accept templates created in a decentralized fashion, and they’re not always going to be the most lucrative, so the whole battle is kind of coming to a head, and I don’t think most people have realized where this ends up, because yes, Ocean is the centralized creator of our own template right now, yes, you have to accept the choices we make, and you might not like them, but but if everyone is, who’s being genuine in their concern, saying, don’t worry, in the future, they will have decentralized block template construction, and you know, at that point, we will all just use the most lucrative template, and no one will go crazy like Luke, and have nots policies, where we exclude certain very high paying, but obviously spam transactions, I’m saying, that’s going to be quite, that might not work out like everyone thinks, like people might start getting really annoyed because they’re mining with Ocean, they’re constructing their template locally, they’re filling it with lucrative transactions, but this troll keeps finding blocks and he only makes them 300 kilobytes, or he excludes everything except his own transactions.

[01:14:00] Bitcoin Mechanic: This guy considers everything spam. We don’t know why, but he won’t put anything in his template. And what do you want Ocean to do about it? Do you want us to kick him off the pool? Where’s the threshold? Because then we’re censoring again, right? Like, the whole mission is decentralized template construction.

[01:14:14] Preston Pysh: What about- I love this point because this isn’t something that I had thought about, is people that just failed to provide a block template to collect fees. Which I think today we literally had two blocks mined today that didn’t have a block template. And well, that’s something else.

[01:14:31] Bitcoin Mechanic: Yeah.

[01:14:31] Preston Pysh: I know. I know that’s, that’s different, but as far as the fees received, it’s exactly the same. So what about an idea of there’s like this minimum threshold? that if you’re not submitting a block template that produces this much fees, I mean, you could literally say that Ocean is using today could be a minimum threshold fee required block template.

[01:14:52] Preston Pysh: And if it’s not producing it, at least that much fee, then the template isn’t going to be put forth on behalf of that individual miner. Could you do something like that?

[01:15:03] Bitcoin Mechanic: Yeah, sure. But at some point we just become the centralized template constructor again, right?

[01:15:08] Preston Pysh: Like, well, not necessarily because the person could construct something just as long as it’s higher than like something that’s very basic.

[01:15:15] Bitcoin Mechanic: You’re absolutely right. But again, then we’re talking in terms of practicalities rather than ideologically, what is decentralized template construction? Decentralized template construction, you know, with clearly defined boundaries is quite, is quite credible, right? So if we say to the world. Here’s the decentralized template rules you’ve got to abide by.

[01:15:38] Bitcoin Mechanic: The reward split has to be correct. So, we’re not going to let you mine with us if you pay yourself the entire reward. You need to split it amongst the other participants in the pool. No one’s going to have a problem with us enforcing that rule, because otherwise Everyone loses except the guy mining. You can’t let a guy solo mine, but also enjoy the splits of everyone else’s work because they’re pretending to be a pool miner.

[01:15:59] Bitcoin Mechanic: Obviously we’re not going to allow that. That would be the obvious place to draw the line if you don’t sort of think any deeper into it. But when you start thinking deeper, what do you do about trolls? What do you do about ideologues? What do you do about people that think the way Luke does and say, we don’t want inscriptions?

[01:16:15] Bitcoin Mechanic: Because everyone’s assumption is basically When I start mining with Ocean, I’m going to, like, screw them right now, I’m going to mine with them when they bring along Stratum V2 and we’ve got decentralized template construction. When everyone, when it gets to that level, everyone thinks, haha, we’re all just going to mine with Core’s default policies and we’re going to max out the revenue.

[01:16:33] Bitcoin Mechanic: Great. Even then, even if that were true, you still can’t compete with a giant entity like Foundry or Antpool that can take out of band payments and channel them to their miners. You can’t compete with that. Because they have that efficiency. They have that centralization where one big entity like a government can just come to them and say, here’s a million dollars.

[01:16:54] Bitcoin Mechanic: Put this in your template. You can’t do that with Ocean. We are always going to have, we are always going to be fighting an uphill battle. So it’s the most basic dichotomy that everyone has to face. It’s fiat versus Bitcoin. Do you want centralization and efficiency, but the potential for a rug pull and a bunch of compromises of your civil liberties?

[01:17:14] Bitcoin Mechanic: Or, do you want sovereignty? Do you want freedom? Do you want the ability to decide for yourself, but at the cost of maybe some transaction fee revenue, of some additional responsibility, like, you know, having to learn how to keep your private keys safe rather than just reset the password on your bank account when you forget it, like that comedian was sort of saying, you know, banks work because I can reset my password.

[01:17:38] Bitcoin Mechanic: I can’t, I forgot my Bitcoin private keys and now they’re gone forever. Bitcoin’s broken, right? We’re saying, yes, you need to have some sort of responsibility to have the freedom of Bitcoin, right?

[01:17:49] Preston Pysh: One other thing that I want to hit on here because a person who’s listening to this conversation that really understands just incentives is going to look at this and say, all right, like, I don’t see this being able to compete just because of the lack of incentive and something that I personally learned about mining that I didn’t know before kind of digging into this is the large miners, the ones providing a ton of the hash rate, get enormous discounts from the pools on the fees that they pay.

[01:18:17] Preston Pysh: Whereas individual, if I have one rig here at my house and I plug it in and I’m participating in a pool, I’m the one paying the lion’s share of the fee. And so Ocean is providing a real balance to this incentive structure that has benefited the large miners and at the expense of the small miners. in the fee construction itself.

[01:18:39] Preston Pysh: So people that are hearing all this and they’re saying, well, why in the world, if I’m just trying to get my money back and I just want the highest fees possible, I’m economic. My incentive is to go to these other pools because I’m not having to deal with block template construction and all this other stuff.

[01:18:54] Preston Pysh: But I think people are missing that really key aspect where, no, you’re going to go to these like large pools, you’re going to pay really high fees because you’re just bringing a pittance of hash rate, whereas what you guys are offering is quite different than that, and I think that’s a really important point that we didn’t even discuss today that people should be also thinking about, which is bringing balance to what would be a massive battle currently taking place in the pool space.

[01:19:20] Bitcoin Mechanic: Yeah, I agree. I think it’s, I think that like the sort of dichotomy I’m drawing here is something I’ve only converged on in my thoughts over the last couple of days, really, I hadn’t understood most of the ramifications of what’s going on here. And so I, I wouldn’t credit the Bitcoin community or as having not credit.

[01:19:38] Bitcoin Mechanic: That’s the wrong word. I’m just trying to say most people haven’t figured out the ramifications of this. And I hadn’t until recently. And obviously all I do is think about this stuff because I’m part of the Ocean team. But I’m, I’m saying ultimately it’s about permission and sovereignty and these types of things which are not always the most lucrative.

[01:19:56] Bitcoin Mechanic: And again, why would you switch to Bitcoin? Sometimes it’s just because you couldn’t send money to Julian Assange any other way or you got kicked off PayPal or whatever it was. That wasn’t Bitcoin attracting you, it was you getting kicked out of the incumbent system and having nowhere else to go. So, ultimately Ocean can sit around and they can do these things that make people go, Oh, I’m not going to mind with Ocean, I’m going to earn 3 percent less in transaction fees, and I’m paying 2 percent less as a fee to the pool, so I’m still 1 percent down.

[01:20:30] Bitcoin Mechanic: But also, Ocean has transparent payouts and all that, so actually I might come out ahead. Sometimes our templates do come out more lucrative than whatever Mempool is saying in the next block is. There’s some strangeness there, it’s kind of frustrating when I’m sort of steelmanning the haters here, when I sort of accept the framing that Ocean always has lower fees or transaction fees is not always true.

[01:20:50] Bitcoin Mechanic: I’ll accept it like that anyway because I do think ultimately that is the fight we pay. You don’t come to Ocean to mine because it’s the most simple and you make the most money doing it and it’s permissionless and transparent and all that stuff. You come there because you get kicked out of everything else.

[01:21:08] Bitcoin Mechanic: I think that’s ultimately how we win. We just have to survive. Because people are like, well, I tried. I tried mining with Foundry and they literally just closed my account, like, or they just want an unacceptable amount of identity invasive stuff on my privacy. I’m not prepared to do that. It shouldn’t require permission to mine Bitcoin.

[01:21:25] Bitcoin Mechanic: That can be very much the thing, right? And then we have to sit there like the Bitcoin is in the fiat world saying, it’s all going to blow up in your face. Fiat’s going to collapse. You’re going to keep losing your purchasing power. But 99 percent of people think you’re nuts and they’re looking at you like, what are you doing?

[01:21:39] Bitcoin Mechanic: This is fine. Like, You want me to do what now? You want me to get a piece of metal and stamp 24 words into it, and if I lose this thing, then all of my money’s gone forever? Like, you’re nuts. I’m just going to literally have a bank account, like, go away. That is how still 99. 9 percent of the world treat us, because we look nuts.

[01:21:58] Bitcoin Mechanic: And that’s exactly the situation Ocean’s in. They’re like, why would I do this? I can point my miner at Foundry, Foundry will send me money. I don’t need to care about when blocks get found, I don’t need to do any of this. I don’t need to do any of that. And I’m like, well, you’re Bitcoiners, so you must have some predisposition to thinking, Hmm, something’s up here.

[01:22:15] Bitcoin Mechanic: Why do I have to keep sending off KYC documents? Why do they need a utility bill? Why can’t I take immediate custody of when they find blocks? Why aren’t they being transparent with what they’re about to put in their block templates? How do I know that they’re giving me an equal split of fees? None of this is verifiable, and none of this is None of this is conducive to a sort of transparent and permissionless mining process for people.

[01:22:39] Bitcoin Mechanic: So some can just be attracted by the sovereignty of the whole thing, which is great, and a lot of people have been. To get 400 and whatever petahash that we’ve got. Just based off the fact, the raw facts of how we operate versus current polls right now is an achievement as far as I can tell. It’s 0. 1 percent of the network.

[01:22:55] Bitcoin Mechanic: It’s not nothing. Obviously it was too much fanfare and to an extreme amount of controversy, which has been exhausting to deal with. But I think if we survive being frank with you, I think we become the default and only option for a lot of disenfranchised people that just can’t mine any other way. And my contention at the launch, which you intend, which you attended, was what do we expect other pools to do if Ocean’s such a good model?

[01:23:21] Bitcoin Mechanic: This was the question. If Ocean’s so good, why don’t all the other pools just copy you? And my contention at the time was they’re just going to double down on their approach. They’re going to become the super compliant, super custodial. Yeah, pools. The super opaque pools, they’re just going to double down on it, and indeed Brain’s already switched from PPLNS to FPPS.

[01:23:39] Bitcoin Mechanic: And, like, that was it. That was basically the last holdout pool that still offered PPLNS. They’ve switched to FPPS. I know that PPLNS is still offered by via BTC and that’s it, think and pool offer it, but then you don’t get a split of the fees at all. The fact that everyone is now FPPS except us means that miners, they’re basically saying, hey, miners, forget about Bitcoin.

[01:24:02] Bitcoin Mechanic: That is the message of mining pools. Forget about Bitcoin. Just come and mine for us. We are giant solar miners. We are the centralized guardians of what gets in block templates. We will deal with the authorities. We will comply as much as we possibly can. We will get every efficiency and squeeze it out of the system that we possibly can, and as a result, we will operate with the tightest margins, and this will be more lucrative than anything a decentralized, transparent architecture could ever offer you.

[01:24:30] Bitcoin Mechanic: Regardless of what you think of spam and inscriptions, this is the fight. Ultimately, Bitcoin is. Are you going to accept that you need permission to mine or not? It’s going to come down to that. If you cannot deal with the permission because you’re either ideologically committed to permissionlessness or you’ve been kicked out of the incumbent system, you’re going to end up in Ocean one way or the other.

[01:24:54] Bitcoin Mechanic: Or I’ve never seen an example of this kind of efficient centralized model, not eventually collapsing because it just, it’s a sore thumb. The state can get their arms around it. They already have their arms around Foundry and all of the, as Bob Burnett calls them, the elephant class miners. You know, you can be a wild rabbit or you can be a captive elephant.

[01:25:13] Bitcoin Mechanic: It’s very difficult for an elephant to stay invisible and, you know, for them to decentralize themselves because they’re so big and there’s one of them, right? So you say all of the elephants are completely captured, all of the big pools are completely captured. That means at some point that stops being an economy of scale and an efficiency.

[01:25:30] Bitcoin Mechanic: And it starts becoming a disadvantage. And at that point you have to go with a pool that’s structured everything from the ground up completely differently to the point where the pool is saying all the responsibility for as much as possible is on the minor side, not the pool side. So, as a pool, all we do is liaise stuff.

[01:25:48] Bitcoin Mechanic: We figure out the split in a verifiable and provable way. So if we ever do anything untoward, you can look at our payout system and go, Oh, Ocean’s not being honest, and then we’re dead in five minutes. You have no mechanism for doing that with anything else. So, Ocean comes along and it just says, We don’t do anything, right?

[01:26:05] Bitcoin Mechanic: We are like Bitcoin. We don’t decide on who the guy is mining with us. We don’t decide on who gets a bigger split and who doesn’t. We don’t kick people off. Like, there are people that were mining with us before the announcement that got really angry once it was established that we’re going to filter inscriptions.

[01:26:24] Bitcoin Mechanic: And I’m like, you know what? Like it got really ugly, really heated and all that. And I ultimately realized I can’t kick these guys off the pool, even though I don’t like them. I can’t because of the way it’s designed. There’s nothing I can do about it. If I was foundry and ant pool, I could just delete their account and get rid of them and just not let them have a new account.

[01:26:40] Bitcoin Mechanic: So I was like, wow, this is, Really, again, the rubber meeting the road. I love that, by the way.

[01:26:45] Preston Pysh: I love that.

[01:26:46] Bitcoin Mechanic: Thank you.

[01:26:47] Preston Pysh: Well, hey, this has been extremely informative, and on Twitter, when we get in these debates and we’re talking about the nuances of it, so much is lost because you just really can’t have a high bandwidth conversation.

[01:27:00] Preston Pysh: I’m sure there’s a ton of questions that I did not ask that. Many people listening to this are going to wish that I asked, and it’s just my lack of technical competence to be able to ask those questions a lot of the time, and hopefully what we discussed here really kind of adds a lot of context and a lot more depth to your point of view, to Luke Dasher’s point of view, and just really kind of shines some light on Ocean, which I think is a very new and exciting approach to pools.

[01:27:32] Preston Pysh: And I think it’s definitely worthy of people to kind of dig into more. And we didn’t get to this, but I know you guys have a lot of things on your future roadmap. All, all we really talked about was the potential to start doing block templates by the individual miners themselves, but there’s much more that you guys have on your future roadmap.

[01:27:49] Preston Pysh: I would highly encourage people to go to the Ocean.xyz. Website instead of com, it’s xyz to check it out. They have a lot of analytics that you can peer into on block templates and kind of like what’s emerging in, in the mem pool. So people check it out and see what you guys think. And thank you so much, Bitcoin Mechanic.

[01:28:12] Preston Pysh: I know you’re active on Twitter. Any, any other handles that you want to throw out? If people want to learn more about you or check things out.

[01:28:18] Bitcoin Mechanic: Yeah, Twitter is the main one, @GrassFedBitcoin. There’s also, I have a YouTube channel too. If you search for Bitcoin Mechanic as one word, usually you’ll see my account there.

[01:28:29] Bitcoin Mechanic: And yeah, ocean.xyz is the website and it makes sense to follow Luke as well. If you want to follow Ocean on Twitter, that’s Ocean underscore mining. I think it might be two underscores. I don’t know. Okay.

[01:28:41] Preston Pysh: Yeah. We’ll have a link to all of that in the show notes and can’t thank you enough for making time to come on. This was, I learned a ton here. This was really exciting and I enjoyed the chat. So thank you, Bitcoin Mechanic.

[01:28:55] Bitcoin Mechanic: Thanks for having me, man.

[01:28:57] Preston Pysh: If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for, We Study Billionaires. The Bitcoin specific shows come out every Wednesday, and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it’s something that helps others find the interview in the search algorithm.

[01:29:25] Preston Pysh: So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I’ll catch you again next week.

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