The Bitcoin Arms Race, U.S. Strategic Advantage, and a Changing World Order with Matthew Pines

Jackson Mikalic (00:03.029) Alright, it's time for the last trade. We've broke the streak this week. We've had five people on the podcast for week after week. This week it's just four of us. So we have Michael Tanguma and Brian Cabellus here at OnRamp. And we're joined today by Matt Pines. Matt, you're only one person, but maybe we could say you have the brain of two people. So we do have five people on the podcast today. Really excited to be recording with you. You're the executive director at Bitcoin Policy Institute. Michael Tanguma (00:25.061) Ha! Jackson Mikalic (00:32.781) You've been full time there since when? February of this year? Nice. So you've been involved with them for a while. think I caught somewhere in your bio you were the, published the first white paper for them and then you've been involved for a number of years, I guess three years or so. So really excited to get a better grasp on what's happening, you know, with federal policy. But this conversation I think will span much more beyond that as well. Talk a lot about, you know, what's happening with state strategic Bitcoin reserves. Matt Pines (00:36.109) Yeah? Jackson Mikalic (01:01.335) Bitbonds, just budget neutral ways to accumulate Bitcoin, something we've been talking quite a bit about. But I think we'll go into way more detail and really just appreciative of you being on the show today. Thanks for joining us. Matt Pines (01:14.712) Thanks for having me. I've caught a number of your recent episodes. So you guys have some good rips. Thanks for letting me on. Michael Tanguma (01:20.505) Nice. Jackson Mikalic (01:21.623) We'll appreciate that. At least someone's listening. Makes it a little bit more rewarding. That's great. So Matt, why don't we start with what's going on in the Middle East this week? So there's the US-Saudi Investment Forum. You've had some takes online, and maybe before we get into the details of it, could you just kind of share a recap for the audience of what's going on in the Middle East this week? What have you been paying attention to? And then we'd love to... Brian Cubellis (01:23.999) Heh. Michael Tanguma (01:24.741) Ha! Matt Pines (01:26.254) At least one, at least one person, you know. Jackson Mikalic (01:50.337) dive into a bit more detail of what the broader implications are, you know, from a policy perspective or economics, geopolitics, et cetera. Matt Pines (01:59.446) Yes, so just like the facts, like a 10,000 foot level view, this was Donald Trump's first major overseas visit, was received by the Kingdom of Saudi Arabia, and he's doing a kind of four day tour of the Gulf countries. And the main event that kind of kicked everything off, was a US-Saudi investment forum where a number of strategic, both arms as well as technology and diplomatic kind of deals were announced. Kind of a whole bundle of initiatives relating to artificial intelligence, new energy investments, critical infrastructure investments, arms sales, and announcements on kind of a diplomatic reset potentially in the region. So. Each individually were quite significant as a package. They seem to indicate a strategic shift in how the US government is approaching lots of different policy domains as part of an integrated approach to statecraft. to pursue a different vision of America's role in the global order. So that's kind of my interpretation of the facts. And I think it's being motivated by a lot of different separate threads that all kind of come under this sort of rubric of a global reordering. That the administration and the senior officials were telegraphing even before the election their view of economic policy, of security policy, of technology policy as needing to go through a decisive phase shift under their under their leadership. And so that's what they're executing. You could say their implementation of that vision could be improved in various ways, but it's very clear they have an objective here, which is to reorder that sort of terms of the security arrangements, the terms of the trade system, even the monetary system to a certain extent, as well as to use America's strengths to a certain extent, like our technological leadership. Michael Tanguma (03:54.566) you Matt Pines (03:55.31) our military leadership, and to a certain extent our economic heft around the world to kind of re-demarcate the lines around which kind of America considers its zone of influence in what you have to sort of accept as a hierarchical system. The US views and lots of great powers throughout history, whether explicit or implicitly, view the global arrangement in a hierarchical fashion where they're at the core slash the top, and there are powers that exist within a certain set of relationships with that power. And there are deals, inducements, and coercion. So what we saw in Saudi is an example of this where we leverage the fact that we can control the supply chain for frontier. AI models and their semiconductor components to essentially grant access to Saudi Arabia to some chips that they had been cut off from under the Biden administration, combined with the fact that the Saudis and other Gulf countries control trillions of dollars of surplus capital. And so the upshot is to bring kind of the Gulf kingdoms into a tech tariff trade and security zone with the United States that helps underwrite this sort of techno industrial investment strategy that the US is pursuing to secure, you know, continued dominance in these frontier technologies, which will require access to large amounts of energy and large amounts of capital, while also sort of boxing out China from potentially doing the same play in the Middle East. their own objectives to sort of capture the techno-industrial frontier and they have certain advantages on the energy side and the of the command and capital economy side. So this is kind of great power technology, great power network competition playing out. We'll see what the counter moves are but yeah there was a lot kind of baked into that one day of announcements that kind of are as a prism by which you can kind of see all these different sort of threads coming together. Michael Tanguma (06:00.345) Yeah, it's really well said. think like there's an interesting component of, know, obviously like on the Bitcoin side, most people are just so busy in their day to day lives. It's my reason, personal, where it's hard for people to understand Bitcoin is because like you're on the rat race. So how can you take off to like just understand, you know, 21 million? Very similar to what you just broke down. Most people have no clue if this is happening because they're just so busy. And obviously like the traditional media is not telling you any of this. Curious like where would historically we sit if a different administration would have came in or what was happening before this, right? Cause it's obvious that this sounds like this is kind of a form fitting for a new administration geopolitical favor for the U S was like the administration before asleep at the wheel. And we're heading down the wrong tracks on this. think we all know that there was a lot of things that are asleep on the wheel. But like, was happening in this respect previously and what would have happened if it would have been a Kamala, you know, president. Matt Pines (06:55.468) Yeah. And it's kind of to pick apart each particular issue. The two, think, most important issues are among the more salient right now are on the AI sort of technology. So the geopoliticalization of a frontier technology, specifically AI, and our approach to conflicts in the world. I think it's fair to say that the Biden administration and likely the Kamala administration would have continued a policy of kind of escalation. right, in Europe and likely would not have been, you know, able to effectively diffuse conflicts in the Middle East for a variety of different reasons. I think there is a lot of institutional inertia and a certain contingent of kind of the national security wing of the Biden administration that kind of preferred calibrated conflicts for a wide variety of reasons because they felt like ultimately they would get the upper hand, that they'd be able to outlast Russia, that they'd be able to kind of rebalance the Middle East in a fashion that would secure their personal interests. China's a whole separate thing, but there was a policy that was in place to kind of act as if we were still kind of the hyper power of the 90s. Jake Solow, the National Security Advisor kind of came up in that era under the tutelage of Clinton and Blinken. And it's like a marathon runner who was like really fast in their 20s and then ages to their 40s, but still thinks they can run like they used to and conducts foreign policy in this case, like we still were the hyper power. And we sort of saw us running into constraints. We weren't all very adaptable. Matt Pines (08:48.398) I think we're seeing now it's sort of this uncomfortable recognition that we are constrained in various ways. We still have lots of reservoirs of strength, but we have to be prudent in how we deploy those to secure our interests in what is a multipolar, at least bipolar system here. I think there's been a begrudging acceptance that China is a peer competitor and that we can't just sanction them out of these supply chains. We can't just sort of try to isolate them diplomatically because they're the dominant trade partner for most of the countries in the world. And they have their own endogenous technological industrial system, which rivals our own, in fact, exceeds our own in many ways. And I think a lot of the sort of the blob heads in previous years that spanned both parties kind of view that this would just be the next, we could sort of take out the same bag of tricks essentially. And I think it's not working. And that's, it's very uncomfortable, right? For the kind of primacists in the national security state that believe that we. we sort of stand astride the world system and we can sort of give rules and not take rules. I think the uncomfortable part about Trump is he's kind of, he's a bluffer, he's an exaggerator, but fundamentally I think if you read between the lines of his speeches, he's recognizing that American power is fundamentally constrained and that we don't have the political mandate to do the same types of global policing and rule writing for the global order that we used to. And so there's this sort of calibrated re- restructuring of what sort Pax Americana means. Like what is the club and fence for that American system? It doesn't clearly expand to the whole world, right? And we're sort of now trying to find where those lines are that you wanna get into the club. This is what you have to sort of pay to get a ticket to the, to, you know, inside that, inside that sort of tech tariff and security zone. And so, but to do that, you kinda need to like squash the beef. Matt Pines (10:44.726) And so I think Trump's meta strategy for foreign policy is just to kind of get peace deals, right? Maybe on terms that would not be favorable to a lot of people, you know, from the Biden administration, but he seems sort of like peace uberalist, like let's just get ceasefires in Ukraine. Let's get. ceasefires in Gaza, let's get the Abraham Accords signed, let's get a deal with Iran, let's effectively squash the beef with China over Taiwan. If that means kind of recalibrating policy on Taiwan, away from strategic ambiguity, that may be in the cards here. So if you can imagine this conflict zone around the Eurasian periphery, which is essentially this major dynamic that we've been facing for the past few years, is sort of Eurasian autocratic powers that control the marginal supply of commodities and increasingly like high value added goods between Russia and China and other parts of South Asia, sort of contesting a world order that's dominated by kind of liberal oceanic mercantilist capitalism that controls the dollar funding system, access to credit and global trade. And those systems were kind of in frenemy mode for most of the post 90s era. And we were kind of the hedge amount that secured that global system. But for wide-ranging sort of set of historical contingencies as mainly the rise of China sort of contested that system where it's fundamentally a cog in this larger machine that's run by the US. and to a certain extent Western Europe, they wanted to sort of reset the terms there. Like they're not just gonna be like a cog in the manufacturing sort of producing system, they want to create their own system. And that's led to these kind of Eurasian conflict areas, right? Like the sort of autocratic Eurasia going up against quote liberal Oceania. And I think that basic geoeconomic... Matt Pines (12:32.674) block, like that sort of spans all administrations. But I think the Trump administration's view of it is that's how you get World War III, right? If you don't navigate that competitive dynamic, especially given the fact that, well, one, our supply chains are dependent on China. China just flipped the switch on rare earths and everyone in the Defense Department freaks out. And inflation can whipsaw. in a matter of weeks, and we're just too interdependent to really put guns to each other's heads. And so we can't fight wars, or else we're going to go nuclear and we're going to destroy civilization. We can't even really fight economic wars, because within a matter of weeks, like ports get empty, and then tens of millions of Chinese urban workers go unemployed, and there start being protests, and the Shanghai clique tries to do a coup on Xi. So everyone realizes there's kind of mutual economic assured destruction. And I think they've kind of played that out now in this sort of iterative game, and they realize Michael Tanguma (13:06.137) Thanks. Thanks Michael Tanguma (13:16.142) So. Matt Pines (13:26.496) Okay, we just have to kind of like settle up, right? We have to come to some sort of grand bargain. And I think they had to kind of go through certain high stakes, bluffs and like, you know, scary maneuvers and the financial markets freaked out with liberation day. But I think the glide path we're on, it seems, again, there's lots of nonlinearities in this type of dynamic is that sort of grand bargains are being worked out in real time. And I think the sort of GCC visit is a critical kind of Michael Tanguma (13:53.382) you Matt Pines (13:56.006) stepping stone to these sorts of grand bargains that I don't think would have happened under a Kamala administration. I think it would have been essentially can we kind of extend and pretend and kind of maintain the current system of international, you know, there's a certain cohort of folks that manage these systems and that have gained a lot of status and wealth from the flows of, you know, overseas development money, military. sales, kind of the think tank, military foreign policy ecosystem that was kind of a self working, self licking ice cream cone. So there was a lot of grift in that system. There's going to be new grift in this new system, right? Like grift doesn't go away. This is a different type of grift and there's different people winning and different people losing. And I can say we've had gone through like maybe a kind of a quite like a cold civil war in the Western political economy, right? Kind of existing factions of of say institutionalists that have developed these bureaucratic control structures that allow them to kind of skim off the top of their societies. And you have kind of counter elites coming in that finally, you know, reject that system, but they're not necessarily coming in with like a, you know, a demos mandate. I think that's a bit more of like a mask that's worn ultimately, right? Political elites do what political elites do. They just want to get themselves access to, you know, those privileged positions. I... I'm in favor of kind the overall strategic approach that Trump is taking, but I'm not like, I'm also like a realist, right? I understand like the structures of power and human relations. And ultimately this is, we're going back to more like a 19th century style, kind of a court, court slash, you know, almost like pre-West family and style like state system where it's like very personalized. Like here's why Trump goes in and he has like, best friends with Mohammed bin Salman and. his personal relationships with these national leaders is like, basically what tips the scales. It's not, know, office floors full of PhDs writing white papers on foreign policy. It's like literally like, does Trump like the cut of your jib? And that's just where we are, right? So anyways, that was a of a rambling riff, but I think that's a funnily very different type of approach than you would have gotten under Kamala. Michael Tanguma (16:06.945) No. Michael Tanguma (16:11.717) That was, yeah, I mean, in summary, in my view, I look at it's like checkers versus or chess versus checkers in the sense of like, you're just having to think about counter positioning where you sit on that that board. And that hierarchical structure, it sounds like a very similar structure, except for they're more defined to your point, there's less like fat bureaucracy of how it's going to be managed checks. I don't know if you want to take it somewhere. Jackson Mikalic (16:34.762) Yeah, well, we'd love to stay on this topic, but shifted more into the monetary perspective. So Matt, you mentioned on Twitter, the Riyadh Accord. So there's this realignment of trade, tech, security, money. So how would you tie in what's happening in the Gulf now to the broader balance of power between China, Russia, BRICS countries, and the US in the fight for dollar dollarization or D dollarization. how does this all tie in from a monetary perspective from this global reordering? Matt Pines (17:07.042) Yeah, I mean to adapt a line from like Zoltan Pazar, who may have himself adapted it from Perry Merling, know, payment chains are supply chains in reverse. And you could say that like the AI supply chain is a capital flow chain in reverse, arms sale chains are capital flow chains. So all of these deals, whether it's AI, security arrangements, explicit access to our domestic markets behind tariff walls. They fundamentally flow through capital markets and the offshore dollar system, which has been the main vehicle for international commerce in this era of globalization. And the fundamental collateral of that global dollar system is US treasury security. And so there is a lot of stress being placed on that market and that set of balance sheets that intermediate. the flow of global commerce and collateral in a secured global dollar system that uses treasury securities as funding collateral. And we're printing a ton of treasury securities and we've been forced in the last few years to kind of print more at the short end because there wasn't seeming to as much endogenous demand on the long end and that was a form of liquidity expansion under Yellen called activist treasury issuance. And so we are in an era where we have a lot of strategic strengths. We also have a lot of strategic vulnerabilities. And I think the Treasury market, our fiscal position, our need to refinance our debt loads post-COVID at sustainable rates is an acute weakness right now. And we saw that as part of the Liberation Day reaction when the 30 years started hitting 5%. That was when basically Besant got the upper hand inside the kind of court politics around Trump and basically took control and steered things back to Michael Tanguma (18:53.881) So Matt Pines (18:55.116) of a forward guidance geopolitically tiered approach to tariffs as opposed to the Lutnick-Navarro punch everyone in the mouth, you know, and just collect trillions of dollars in revenue kind of idea, which blew up in their face. And this is where the monetary system is critical to these strategic dimensions because it's the fundamental boundary constraint on what they can do. I mean, the guy I really like, Marco Papich, he has this sort of quip. It's like, preferences are optional, constraints are not. And so politicians want to do lots of things. They want to be reelected, they want to be popular, they want everyone to be rich. But the world imposes material constraints. And ultimately, politicians, what they'll likely do is gonna be dictated to first order by what their constraints are. Michael Tanguma (19:26.789) you Matt Pines (19:41.58) And so the US government and our leadership, their fundamental constraint is the treasury system. And so they recognize that. And so it's constraining them. And so it's leading to a lot of these deals where the treasury market is a part of the deal. And on the other side of that deal are countries and national balance sheets that now recognize explicitly how constrained the US is by its debt position and by the instabilities associated with the treasury market. And so they're looking to see how they can both hedge as well as take advantage of that opportunity. And so I think you've seen remonetization of hard assets, recognizing that ultimately at the end game here, and this is old bromides from Luke Groman and Lin Alden for many years now, essentially is the end of day, like indebted hegemons, when you get past a certain point, you print. And or you do financial repression to force certain sort of capital pools to sort of eat those losses via financial repression. And then as a big political bargain, a geopolitical bargain, who's going to eat those losses? Is it going to be domestic bondholders, everyday American savers, pensioners, insurance companies, bank balance sheets? Or is it going to be overseas holders of those bonds? Is it going to be the foreign central banks, foreign sovereign wealth funds, foreign insurance and pension companies? And I think, you know. the order of operations for US government is to sort of first impose the losses on like our friends and allies who we have a lot of like. coercive ability to force, right? Like say Japan, Taiwan, South Korea, the UK, Australia, countries who want to rely on us for security intelligence protection and who have a lot of trojie securities, say sitting at the short end and we want them to swap those out for longer dated issuances. This is kind of the Zoltan-Pozar-Brighton Woods 2.0 thesis that will sort of force a series of swaps. Matt Pines (21:35.33) force them to sort of extend out our duration, maybe even give us some of their gold and give them 50 year bonds, century bonds, et cetera. So in that environment, which is effectively a combination of monetization, backdoor QE using foreign central banks balance sheets. I mean, I'm aware, for example, that the Japanese were sort of. requesting politely a backdoor dollar swap line to sort of fund long-term debt purchases, right? Essentially backdoor QE. So the Bank of Japan's balance sheet expands instead of the Fed's balance sheets. So this is the regime we're in. And the upshot is, know, central banks balance sheets are gonna have to expand. to finance the hegemon's military expansion to secure this new zone, this massive technological industrial reinvestment and reshoring objective. Bonds are going to have to eat it. The question is whose bonds eat it first. Anyone that can is going to flee into harder assets. You saw first in gold and I think you're going to see it in Bitcoin. So that's like a pretty simple macro thesis. And I think that's where it's very much a case by case. And I think it's also why you see maybe Japan getting almost the worst deal in China at the moment. Right. Because you would think, right, naively, well, Japan's like an old ally of ours. They're a friend of ours. Like they should get a better deal than China. right? But if you're from Trump's perspective, you're like, well, no, like, Japan is like, basically de facto colony. So of course, I can impose a lot more pain and I can like twist their arms a lot more than I can twist China's arms. So Matt Pines (23:13.622) you know, then the inference is, well, China's going to get a better deal than Japan. And that's a fundamentally different way of approaching this than I think the Kamala administration would have been, which is just like, well, they're our friends. We can't like insult them. We can't force them to like eat pain like they're our buddies. And I Trump's like, I have no permanent enemies. I have no permanent friends. I have only permanent interests. And if you put yourself in a national position of subservience with respect to me, because you rely on me for your security protection, you're embedded in my global trade system that I secure for your economy. Well, guess what? Now I've got you over a barrel. Trump is just a guy who's a bit sociopathic in that sense. He has no sense of know, obliged to these folks. Michael Tanguma (23:53.519) What? Michael Tanguma (23:57.168) And it makes sense from a rational perspective, like if you're in debt and you can pay your brother back slower or whoever is related to your family versus the guy that's gonna hit you in the kneecaps, like you kind of pay the guy in the kneecaps first. It's a rational like move. it makes complete sense where you would, again, it's all about positioning. It sounds like. Matt Pines (24:17.612) Yeah, exactly. Jackson Mikalic (24:17.802) Yeah, how does, how does, so there's $9 trillion of federal debt that's rolling over in the next 12 months. And so Matt, you laid out that the foreign central banks will probably have to, take a nice chomp of that, but I'm sure the federal reserve plays a part in monetizing or, or, you know, printing the money for some of that issuance, but the fed balance sheet, I guess, is only what six or 7 trillion today. I don't know how large the balance sheets are of the other global central banks, but nine trillion is kind of a large number of debt to be rolled over in the next year. So how do you think about the balance of central banks taking that down in terms of just the capacity to do so? In theory, guess capacity is unlimited because you could always create more currency, but with the constraints of the treasury market breaking and loss of faith in the U.S. treasuries, Matt Pines (25:02.734) Mm-hmm. Jackson Mikalic (25:10.794) versus maybe using hard assets to make some of this issuance more appealing. Do you think that's something that we'll see this year or is that something more so further down the road? Matt Pines (25:21.676) Yeah, mean, there's two different dimensions. One is the stock and one's the flow. So the refinancing is essentially the stock problem, which is we have a stock of debt, it's retiring, we need to refinance it. And so that doesn't necessarily expand the size of the balance sheets that have to take that up, but it now means that the US government has to pay a higher interest rate on the next tranche of what those tenors are that it's going to get. refinance. So maybe they issued it COVID at one, 2 % now they have to issue it at five, you know, four and a half, 5%. So that's like the, the marginal refinancing costs that takes a hit, you know, downstream on everything. You know, we're paying more than our defense department budget on interest costs, which just squeezes out fiscal capacity. That's a good federal government problem. The flow issue is just the deficit itself, right? The fact that think whatever the annualized run right now for our deficit is something like six and a half, 7 % of GDP, maybe one and a half, $2 trillion, just sort of ballpark numbers now. That's a lot. So that's the flow. That's like, okay, those are new, that's like net new treasuries that are gonna be pushed into the market, just from the federal government's sort of deficit issue. So question is, who's gonna absorb that balance sheet, right? Who's going to absorb that in their balance sheet? And so if it's all at three month tenors, well, there's probably a lot of buyers for that, right? Lots of people will take that as a money like instrument, not a whole lot of duration risk. But the US government, that's effectively your like payday lending, right? Like you're like, you're going to get the role like every three months. And you're much more, you know, much more exposed than necessarily Fed monetary policy decisions, right? And you rather not do that. the... government tries to target a certain sort of average duration and the last few years have been front-loaded because of this very issue. And Besson's now kind of stuck with it and so he wants to issue more at the long end but I think they know that they can't without either finding a non-market buyer, right? Like a such central bank that can be geopolitically coerced in order to buy it. Matt Pines (27:28.268) And I think we effectively have yield, we know we're going to have yield curve control somewhere above 5 % on the 30 year. That's about like the mark plus or minus. We're almost there as we speak. And so I think this is where the intensity of these deals gets more significant because, you know, it's hard to go, you can't really with rule of law domestically go to, you know, JP Morgan and say, we need you to buy more 30 year paper. especially after Silicon Valley Bank and SVB, where they realized, oh, our HTN portfolio, once we had to mark to market, zeroed out all of our capital, and then we got wound up by Elizabeth Warren's goons. And so it's like, gotta go overseas where there's no rules. There's just pure power. And maybe that's part of the Saudi Gulf deal there. What was interesting about that is like this, and this is a bit of a riff, but like, The traditional petrodollar system was all commodities, mainly oil and gas, are sold in dollars and then those countries accumulate dollars, surpluses, and then they redirect those, recycle those into our treasury asset. And that helps finance the security protection that then we provide and secure their one-party state regimes. That was a good deal. Now it's like they realize they have better leverage. And so they don't want debt positions now. The Saudis want equity positions. And so they're moving up the value stack because it's a new multipolar system. If we had all the juice, then we would just be forcing the Saudis to buy more 30-year paper. Instead, we have to this deal where we allow them to essentially invest $100 billion in our AI stack, get 18,000 Blackwell survey units, do co-investments in all sorts of breakthrough energy and biotech and AI, corporate financing deals and sovereign wealth funds going into our private equity venture capital markets. So that's a fundamentally different environment where they are able to acquire more valuable assets and equity essentially positions. And so the question for us is then, how does that, what's the mix of debt and equity there? OK, you get investment in US equity, right, strategic equity. But we also need you to help finance the fiscal balance sheet here. So I don't know, lot of stuff is not being made public, Like the flashy stuff, the sexy stuff. Matt Pines (29:53.918) billion dollars in AI and whatever that's public. How much of this is like, well you have to take down another 25 billion and 30-year paper every quarter? Like they're not going to announce that. But some Saudi balance sheet will show up there when the time comes for those auctions. So I think something like that's part of the deal here. I just don't think it's going to be made public. Michael Tanguma (30:15.789) Yet it makes complete sense. mean, this ties in to this. That also, as long as the landing can be stuck and there's not, you know, crazy world war or, you know, too large of a conflict, you can see how this is a, I don't know if equitable is the right word, but more productive society, right? Like once you actually have tie in, you hear like equity in certain aspects of our country. But you think about like the the relationship and building and just not being insular. you there's been a lot of, reference a grift in our existing, you Fiat or the dollar based system. But curious, like as much as you're comfortable in talking about where there's been a lot of things that have aligned and that don't necessarily look organic, but they don't feel organic. Like, right. When you go back to Tether's origins and where that sits and the amount of like demand for that, you can, this goes back to like DARPA and the internet, right. And the Amazons and Googles and Facebook's of like, the notion of public private partnerships and how they just naturally benefit. They've naturally like, like ended up working out for everyone. And so you go to like Bitcoin's origins and know, post-08 crisis and notion that this system is unsustainable. I see you smiling because this is like some of the fun stuff to potentially chat about that nobody gets to and the guys don't even know I'm going here with it. But so you have like these origins of Tether. But then like the one that nobody talks about is you, you referenced it on this last part was Shapiro about Matt Pines (31:21.858) going to Matt Pines (31:26.926) you Michael Tanguma (31:38.662) It's this easy math of, you know, US take it as roughly 10 % of all the gold, right? Where China has like 40%, I believe that was what the numbers you quoted, where it's kind of like the opposite, or maybe it's not that China is 40 % of the US has about 40 % of the BTC. And so in this hard money repricing world, it's in our best interest. And the natural version is well, then the version that everyone knows is well, You know, you got these loud Bitcoiners, had money, Kamala didn't take the money, Trump did. And maybe that, you know, there's a portion, obviously that's true. And then Basant's like, I need other tools and Bitcoin's the tool. But then you go back and it's like, this game has actually already been working for five years because Saylor came in out of nowhere and he's been effectively, I like to joke, he's like the white hat, white hat SPF. Matt Pines (32:25.784) Mm-hmm. Michael Tanguma (32:25.795) because while SBF was here to like work on behalf of these other parties, this guy's here evangelizing BTC and bringing it into the corporate structure and onshore and effectively Bitcoin to the US that nobody talks about. And then 23 happens with the ETFs and Grom is the only person that's picked up on this. And the reason why I've been thinking about is because I've been having conversations with institutions since back then where nobody wanted to face Coinbase, right? No institution wanted a web two, web three company, i.e. FTX, BlockFi. And then on a dime, everyone pivoted and were like, and they would reference GBTC and the lawsuit, but it never sat right. And Groen will cite that we knew we were going to onshore and have a natural inflation environment. So individuals and citizens needed assets to preserve their wealth so they can actually buy things in that environment. So it feels like some of these things have already been like layering in from the corporate treasury to the ETF exposure. And then this just like helped push it forward. But I'm curious, like, how do you think about that? as it relates to the past call it six to 12 months versus past basically five years. Matt Pines (33:24.898) Yes, yeah, so first I'll say like there's a, a strategic perspective, there's a kind of a set of simple if-thans, right? Like if you're going to reorder the global security trade and monetary system, and you're going to impose financial oppression, essentially those who you can impose it on, well that means that like the natural buyer of a US treasury security is gonna have to be like geopolitically conditioned. So the folks that are inside that zone, they're gonna be sort of forced to buy your debt, but the people outside that zone that you can't force to buy your debt, they're not gonna be your marginal buyers anymore. And so you should expect in that type of system that harder assets are gonna remonetize. And that's kind of this kind of gilded Bretton Woods concept from Zoltan that I know has been in the Moran. know, best in orbit for a year plus now. And in that world, essentially, you have a dollar treasury zone, right? The dollar treasury sort of standard like constricts from a global standard to like a more securitized zone, you know, with, you know, our friends and allies and some of the Middle East as well. And then the rest of the world, you know, essentially needs some neutral reserve asset to settle the payments and trade between East and West, essentially. And then this simple minded system, it's gold. Gold gets remodetized. You have, as Luke would say, the Shanghai Gold Exchange. There's now gold exchanges popping up, a cash-sheddle futures exchange now looking to open up in Singapore. You've got obviously Dubai is a major entrepôt. You've had a lot of gold moving at pace in the three months before the election. They sort of did this of tariff scare. to sort of create that arbitrage in the futures market to actually force physical settlement back at New York away from gold and sort of emptied the London gold vault. So there's a lot of strategic movement of monetary metals, gold specifically, you know, in the last six, 12 months, accelerating the last three months. So in that world, it's all about remonetizing gold, right? That's like the sort of baseline central bank kind of normie BIS play. To your point, if that's your play, then if you also are at the same time have Bitcoin in the mix, Matt Pines (35:25.94) And if you are going to be a pro Bitcoin administration, well, then what would you do and why would you do it? Right. Well, Bitcoin, we happen to have through a variety of historical narratives that you could tell that you just laid out. We have developed a pretty dominant position, just the physical ownership of Bitcoin. And I did that math on the podcast. think, you know, it's a guesstimate. But if you add up apples to apples. the Bitcoin and gold held by individuals, say, CUSSY to ETFs and on government balance sheets, we have about 8 to 10 % of the above ground gold stock in the US collective ownership, and about 35 to 40 % of all the Bitcoin that's available. And so if you're going to run this play where scarce assets, hard assets are going to be remonetized, they're going to take more of an official position in the global monetary and trade system, Well, you have at least a four to one advantage by allowing Bitcoin to monetize relative to gold. And we know Bitcoin moved much faster than gold in such an environment. So you could probably get a massive multiple on that. So this reaching upside to you is much more like asymmetric there. And OK, like this is where you put on your conspiracy hat. Like, did they see this coming? Like, how far down the line did they see this coming? And was this all kind of like a sophisticated plan? I mean, I was writing about it for a number of years. Am I the only person that thought that this could happen? Like, it seems a bit hubristic. I don't know, though, if they were like as... I don't know if you could say how could you forecast that Trump would win. Right, because if Trump didn't win, then this play may not work as well. Elizabeth Warren's army comes out and, know, sailor sailor gets hit with all sorts of investigations and and whatnot. So I think like like all things, there's competing power structures in our in our U.S. political economy. There's not one set of sort of high table master planner that's, you know, running the show. There are. But I believe there are. And there have been a contingent of folks, quote, in the deep state, you could say. Matt Pines (37:24.878) that we're watching these dynamics play out over many years, right? Our dependencies on China for our military industrial supply chain, hollowing out of our defense industrial capacity, kind of the enrichment of Wall Street at the expense of Main Street and the rise of China that was sort of facilitated by Wall Street. And so there's a schism, right? Between you could say, DoD and Wall Street. And Bitcoin, to a extent, aligned more with the DoD elements than the Wall Street elements. Michael Tanguma (37:53.254) Thank you. Matt Pines (37:53.846) And I think you're seeing that now play out along with a lot of other realignments here. Where Bitcoin is just, I think it's like Chekhov's gun, right? It's like it's on the table there and you kind of know it's going to be fired. Like someone put the gun on the table, right? And it wasn't quite sure where it would play a role in the plot, right? But the story's playing out. A lot of things are happening and it's just sitting there. and people that are like autistically obsessed with that gun are just staring at the gun. That's us. And they're like, when is he gonna pick it up? Is he gonna pick it up now? And he's, oh, no, no, he came in, left the room. Okay. Yeah, so, but then you just wait, but you just know the gun's gonna get picked off the table at some point. Michael Tanguma (38:21.548) Haha Michael Tanguma (38:29.123) Yeah, it. Michael Tanguma (38:33.539) And there's a few things you share here. And then on the other pod, which I encourage people to listen to is the thing that makes a lot of this like ephemeral and hard is that there's no they, there's no concrete like individual doing anything. So there's different factions within different countries that are always competing. And so to your point, it's like nobody knew Trump would win, but you had these different things happening in parallel. And then this is one of the routes. And one thing to call out, I think, as a mental model, because it existed was like, BitMEX and then FTX they were effectively the same thing and it always was weird in my own head that like BitMEX was villainized back in the day while FTX was the same thing and it was like allotted and you had Clinton all the stuff and it was always like a weird notion and this ties into the your referencing on how you can lean on certain parties that need you And so Tether probably started organically, like somewhat organically, but it's the notion of nobody ever talks about back in the day that when you're putting that much capital through the banking system, you literally have to be working in behalf of like the banking system to make sure that capital flow. And this was when I was getting into the space professionally was in 18 when NYDFS sued them or late 18, 19. I might get the dates wrong, but it was basically where they started looking at the capital flows and they seized the 500 million, I think in Latin America. And that's when they launched Leo. But point being is like that could be a line of demarcation where it's like, well, wait, you actually this we need to work this out together because this is to your point that demand for treasuries. And it's interesting because they talk about it now where they're like reference point of the that nobody can compete with them is that they're close to the dollars like or like physical fiat in the countries. And it never hit me until listening to that pod you're referencing that there's always existed these like black markets for capital that are funding other things or knows a different pod that you reference on the Matt Pines (40:18.658) Yeah. Michael Tanguma (40:19.139) the Carlisle stuff, but it was like, it started to all like wrap around where you could see all these like capitals flowing into the system and nobody knows where it comes from. And it's doing these things and you need mechanisms that can be leaned on by the US government to make sure it affects their, how they want to express their view of the. Matt Pines (40:34.614) Yeah, and the Defense Department now explicitly has an office of strategic capital. I know some of the folks that help run that office. And they have sort of venture capital funds and private equity companies that sort of are officially deputized by them. And this is above, there's some stuff that's covert and clandestine, some stuff is just, you know, normal stuff. But you can imagine... You know, the, the, the, battlefield, the strategic competition is not just about building carrier groups and, you know, setting up military facilities and, you know, strategic deterrents. It's who controls ports, who controls airfields, who controls strategic mineral deposits and refining supply chains. And those are economic entities, right? Those are privately owned, incorporated, you know, LLCs that own and operate this infrastructure and these resource supply chains, which are, you know, between us and China now, like. That's the battlefield, right? And so if you do nothing, China's gonna just own all those ports and facilities and rare earths. Is the US government, US government doesn't really have state-owned enterprises that operate in the same sort of like state-controlled, like go and just buy this on behalf of the US government, right? But we do have aligned capital, right? That if given financing incentives and, you know, patriotic encouragement, we'll go do those things. And so there's that dimension of this, which is just strategic competition. How do we ensure the U.S. government's interests and equities are manifested through the financial system? And then there's the more dark side, right? Which we've seen manifestations of that go wrong, right? Where you have covert activities that you need to finance themselves and they don't want to ask Congress for money. And so, you know, you need to compromise a hedge fund guy or you give a hedge fund guy access to non-public information and he trades on it. It makes a ton of money. And the deal is he gives you 80 % of it. That's a pretty simple way of financing covert operations. I can tell you like multiple intelligence services in multiple countries do exactly that. That was actually one of the guys that we did a prisoner swap with for Russia was a guy that was doing that for the Russian insider trading fed information from the SVR. And, know, the deal was he would route those profits back to them. So, you know, financial markets, global capital markets are not just like, you know, the, the idealization of it's all, you know, private sector competing agents here doing arbitrage. There are. Michael Tanguma (42:44.421) Thank Matt Pines (42:50.24) all sorts of multi-level games being played to exploit those systems. And you can go back to like BCCI, the Bank of Commercial, whatever, Commerce and Credit International, which was, yeah, essentially a CIE front group. And it's very connected to like Dell Tech Bank at the time. know, you know, what Dell Tech's connections into the crypto space were early on. And so, yeah, it's like, doesn't take, you don't need to be like Charlie with the red yarn to like come up with like a pretty plausible hypothesis here that the US government is not dumb. Right? Like, like they know about this stuff, right? The question is, okay, what's the, how much of this is a long-term play versus how much of it is just taking advantage of the balance sheets and the capital flows, you know, and the mechanisms that are available to you at that moment. I think it's more likely the latter, right? Like most bureaucrats just want to find, know, like, like, like water, water finds its level, right? And so if you're like, I need to do a thing, what's around here that I can use to do that thing. And if, you know, stable coins exist, I'm going to use that thing to do a certain thing. I think now it's more recent, the strategic element has come into play where when Tether is $5, $10 billion, it's useful for covert operations. It's not useful for strategic things. Now when it goes from 100 to 200 billion to a trillion dollars, now it's much more useful as a strategic tool for US dollar dominance and sort of expansion of demand for debt, then some pass through for some covert operation. Michael Tanguma (43:58.662) you Matt Pines (44:17.038) But at end of the day, this is the give and take between the security state, which is always amorphous and driven by people and people change, and those people become Bitcoiners, right? This is the other thing that I've noticed is like, when I first got involved with BPI, I wrote this white paper, Bitcoin, US National Security, like an initial assessment, and I learned it had been circulated inside the CIA. And actually two of those individuals that read the paper, I don't know if I was the single tipping point for them, but. They both left the agency. Actually, one was a ground branch kind of tier one special operator guy who did some work with the agency. There was a case officer and they retired and they started Bitcoin mining companies and started working in Bitcoin. And they're just like, it wasn't like an op. It was just like, this is more interesting and more compelling and more rewarding to me. And I have certain skills and I can apply those to my business wherever it might be. But like, Michael Tanguma (44:43.077) Thank you. Matt Pines (45:08.162) people are people, Bitcoin is compelling to a lot of different sort of personality types. know, our Director of Government Affairs is one of these guys. He was a career CIA officer. He was like deputy in their cyber division. And, you know, he was going to Bitcoin meetups and just like, you know, and then retired and then wanted to get involved in Bitcoin. But his skillset, like the closest he could get was for a blockchain analytics company, which he really didn't like, right? Because you're, you know, it's not really the same thing. So the first opportunity, we're like, hey, man, we would love to like... And he came to all our BPI stuff and he's just like, I died in a little bit corner. Now you're saying, oh, is he just like playing the part? he doing it? And you know, we had to put him through some tests, right? It was like, stick your hand in the thing, right? Brian Cubellis (45:48.906) Haha. Michael Tanguma (45:52.346) Well, the beauty of that is all the incentives are always aligned. It's where your story really resonated because we see this at folks we hire and I mentioned the investment fund we operate and it's called early riders because it's literally built on it's the early riders are going to rebuild the world that are forced out of the sector that they're in because the bureaucrats won't listen to them. They've just tried as much with the carrot and now it's the stick time and the stick is, hey, I'm just going to rebuild this faster, more nimble with a better unit. And so that's, yeah, ultimately, if he's holding a Bitcoin bag, it's his interest to actually make sure it works with you guys or he's kind of like self-defeating in a sense. Brian Cubellis (46:31.329) Yeah, I was just going to say I wanted to go back to the the analogy of the gun on the table. I love that. And like, I'm curious in your mind, what is the tipping point to someone picking up the gun? And because I think to the layperson, perhaps the United States creating a strategic Bitcoin reserve was like nudging their hand towards the gun. But there hasn't been, you know, to be fair, like a ton of follow through on that idea. We still haven't gotten the audit of how much Bitcoin we own. Matt Pines (46:31.49) Yeah, go ahead, jump in. Brian Cubellis (46:59.893) which was promised I think 30 days out and now it's two months past that. So curious your thoughts on the follow through on the strategic Bitcoin reserve one and then also like what is that tipping point for picking up the proverbial gun on the table? Matt Pines (47:13.036) Yes, and that's where we go from this sort of more abstract discussion of like the brass tacks here. Because yes, the executive order, the history of the street report is a fascinating kind of case study here. So, you know, some of this is not entirely public, but so back in August in Nashville, you know, Trump gave a speech. BPI was asked, you know, if we had policy suggestions to send to the speech writing team. We had some ideas, threw them down. One of them was the SPR and we were pushed back. This is like, there's been nothing written about the SBR. This is like, this is like a meme. Like somebody just made this up. It's not a real thing. And so I wrote like a little memo. I was like, no, no, it's a serious thing. Like, this is the reason why it should, you know, was like a strategic element of our Bitcoin policy and our approach to statecraft. And I got it in speech. Michael Tanguma (47:51.462) you Matt Pines (48:00.594) And, you know, so first Domino, right? And then, OK, well, then he has to get elected and then do the thing. And then it's OK, we have to draft up a bunch of white papers now to, like, reinforce that idea. Like, is this a serious thing? And then draft up, like, a notional executive order. Like, if he gets if he gets elected, well, here's a way you could do it. Right. Like, you know, using existing funds, existing legal authorities. There you go. Now, we didn't ghostwrite the executive order, but we put ideas on the table. Executive order gets signed, establishes SBR. declares Bitcoin a strategic asset, digital gold, 21st century, important for us US to lead. And then specific instructions are given to the Commerce Department and the Treasury Department to identify budget neutral ways of acquiring additional Bitcoin for the SBR at no marginal cost to the taxpayer. And that has been given as instructions. We are waiting from the public's perspective to hear back, well, what are those ideas? Because what does budget neutral mean? right? Like there's no like technical definition. It's a matter of interpretation. And therefore, it's on as a matter of interpretation, depending on the bureaucrats and the senior officials that are now given this White House mandate to follow through. And that's where it requires kind of in the trenches, you know, analysis and advocacy to sort of tilt, you know, this machine of state in the more bullish direction relative to the more conservative direction, because a more conservative bureaucrat who gets that mandate could say, well, Budget neutral? Well, almost nothing is budget neutral, right? Because I could always take any available set of assets, liquid or illiquid, and I can always use it for some other thing on my government's program of record. So anything is, by definition, like an opportunity cost for the government's budget. And so I should spend almost nothing on Bitcoin, right? An alternative interpretation is that budget neutral means, well, I can't take existing, like, congressionally appropriated funds for my FY25 budget and use it for Bitcoin. But that leaves a lot of other sources of funds to acquire Bitcoin. Tariffs, oil and gas royalties, spectrum auctions, existing assets that are held on the government's balance sheet that are non-Bitcoin that could be liquidated for Bitcoin, whether it's federal land, leases for federal buildings or ownership of federal buildings, existing non-Bitcoin digital assets, all the way up to revaluing gold certificates. And so the span of interpretation bureaucratically goes from buying almost no Bitcoin to buying like Matt Pines (50:24.43) a massive slug of Bitcoin. Right? And so the executive order doesn't really tell you where they're going to land. And the White House themselves didn't say where they're going to land. And this is now like a person by person issue inside the White House, like who wants to lean in which direction or the other. This is why there's different camps, right? Some more conservative, some more aggressive. And the way the Trump policy apparatus works, this isn't like there's like a, you know, a whole bunch of like hierarchical set of studies. right, where there's like committees upon committees upon committees. And then there's a bunch of just coas. They have the president's working group of digital assets chaired by David Sachs. But Bo Heinz is running it as the crypto advisor. And he's trying to like essentially quarterback this. And so he's critical to this. He's taken these ideas. But then he has to kind of work by consensus from my committee, you know, because ultimately it has to be recommendations from the Treasury Secretary and the Commerce Secretary, Lutnick and Besson. And they're doing lots of other stuff, right? Post-Liberation Day chaos, Middle Eastern trillion dollar deals. And so Bitcoin is just not at the top of their paper stack, right? And so I don't think it's for lack of a, it's like, again, we're the autistic people paying attention to the Chekhov's gun, but there's like five other people in the room and they're having fist fights and there's a fire in the corner and there's like, someone's like, there's other things happening, but we're just like, no, pick up the gun guys. Yes. Michael Tanguma (51:39.525) The thing where the guy's smoking the ball while they're fighting, they're just like... Matt Pines (51:42.254) So I think it's less this like, we're now at the point where it's less this geopolitical, exogenous sort of monetary game. It's much more like the inside the court of Trump and these very specific number of finite people that have certain authorities to make decisions, you know, in the next few weeks. And that's harder to predict, right? Like it's easier to model like state relations to a certain extent than like these five people. and like where they stand in this particular question, you have to get inside their heads. And even if you talk to them and they say, I'm going to do X, that's like not necessarily like a strong predictor of what that person will literally do the next week. Right. So there's lots of people who get who get told by some of these people, oh, no, no, X is definitely not going to happen. And then X happens a week later. Right. And so there's, know, I have enough hubris. I have enough humility, I would say. Sorry. Say like, I've been told various things again, like grapevine that like Yeah, yeah, yeah. Like this is going to happen. And I just go, OK, like, we'll be great. Right. But like, I don't know how how much of a leg to stand on there. I would say just like finger in the air. The vibes of going full vibes, capital management here, like the vibes are tilting like a month ago post Liberation Day would have been more bearish. I would have said they're distracted. Five long fire. Bitcoin's not on their agenda. They've got other things to do. You know, we are one voice in this like hurricane trying to like advocate for this thing. And we're being drowned out by stable coin bills, know, shenanigans with the Dems on market structure and all this other stuff that the most of the crypto lobbies are obsessed with because that's what they've told their bosses that they're going to get done this year. There's not much of a natural constituency prioritizing Bitcoin and SBR really except for us. And so, you know, we're, we're scrappy, but like we have, we don't have a megaphone. So I was a bit more bearish, I'd say, a month ago. like, you know, they might just like throw us a bone here. But I become increasingly more optimistic. Again, more vibes per se than anything like definitive because you have to like, you know, put a large discount factor on all sorts of the rumor mill. I don't know, but I'm increasingly of the opinion that they're going to buy a significant amount of Bitcoin. Michael Tanguma (54:00.877) But Trump and Lutnick are like just pure vibes, capital like co-founders, right? Like where Trump literally just wants to own all the bitcoins and then Lutnick has been talking about Bitcoin's price and obviously Cantor and what's going on there that he had to make a bet. It's just the incentives also align. Or it's like, why don't we just own all the Bitcoin in the US? Let's figure it out. And Trump leans in a direction that way. Matt Pines (54:05.699) Yes. Matt Pines (54:21.582) And this is where there's two ways of interpreting silence. You can interpret silence as they're ignoring us, it's off their radar screen, it's not a priority. That's the Barrett's interpretation. There's an interpretation which is like, it's so serious, they're like, shut the fuck up. We're gonna go hard, but you better not even smirk at the direction of a mic. This is high stakes, this is for real. This is not a little... you know, side thing anymore. Like the big boys are now involved and when that happens it gets serious. And you just shut your mouth and you maybe even lie about what your plans are. Right? So there's two ways of interpreting, you know, what's going on here. I'd say. Michael Tanguma (55:04.965) The alternative is MicroStrategy could end up just being the US government's coins at a certain point. And then they already had a big stockpile, but that's different topic for this. Matt Pines (55:12.206) I mean, I know that's kind of like, yeah, I that wouldn't be at the top of my list. Like, I I'm going to acquire Bitcoin from other pools without, you know, hitting domestic balance sheets. Like, I'll just put an example, right? The Fentanyl gangs and you know, Tren Du Agua and other South American and transnational criminal organizations were designated as terrorists. Officially, by executive order. When you designate those entities and those leaders as terrorists. There's a whole bunch of national authorities and national capabilities that you can now point at those people. they're using a lot of crypto. So wouldn't it be nice if we could just go after these fence-able gangs and these cartels and fill America's SBR with no marginal cost to the taxpayer. So there's other ways that you could go after that without, you know, I think... Sailor has lots of lawyers and we still live in a rule of law country. if we're in a situation where the government is seizing Michael Sailor's Bitcoin stack, like a lot of things have gone horribly wrong in America. And, you know, we are in those lots of other things that you should be worried about at the same time. And so you should be your contingency plan. There is less money, more more your citadel and your guns and your self-protection. So I know we like to plan for lots of worst case scenarios, but that's not the top of my list. I think there's other. Michael Tanguma (56:25.273) Yeah. Matt Pines (56:34.957) The government wants to buy some Bitcoin. It can go buy some Bitcoin. It's got the money printer. you know, path of resistance always, right? Like constraints determine action. Brian Cubellis (56:46.465) But how do you square or balance the perception of if they went full just like, we're going to print money and buy Bitcoin. I think there would be a natural tendency to then question the dollar system more granularly. And so I think that's part of the dance too is they can't get too aggressive and really forcefully grab the gun. They kind of have to do this quasi dance and not be too overt in what they're doing. Would you agree with that? Matt Pines (57:16.942) 100%. Yeah, I mean, all fiat currencies stand in a superposition of positive value and zero value. And there's nothing in between. And so you as a hedgemond who issues fiat paper claims to your future tax revenues, would not want to undermine the confidence in the global markets, you know, sense of the value of that fiat claim. And so you have to, you know, essentially, it's calibration, it's communication, it's forward guidance, it's proportionality. So if they were literally saying and executing on a plan of acquiring as much Bitcoin as they could by printing money, well then everyone's just going to sell what they're not buying and buying what they're buying. And then you're a Bitcoin, know, hybrid Bitcoinization overnight. I don't think that's in the cards. I don't think that's in the cards anytime soon until, you know, we're literally, you know, on the precipice. And so, you know, but I think I'm going to buy in in a budgetary fashion, a few hundred thousand Bitcoin for, you know, we're talking from the government's balance sheet perspective, you know. like less than $100 billion of anything is like, it's like kind of, you know, it's like, it's in the rounding of the national GDP. So, but it's also a signal, right, overall. I mean, my argument has been with the Bitbond's idea is that if you're gonna do a pro-Bitcoin strategy, like one way you can mitigate that risk essentially is synthetically graphed on that hard asset that you're monetizing into your debt issuance. Brian Cubellis (58:24.299) Right. Matt Pines (58:44.342) So this is maybe not phase one, but maybe phase two, phase three, if we're going down this particular road here, is bit bonds, which is basically that, and gives exposure to kind of a volatility-controlled security that has relationship to Bitcoin and actual Bitcoin payouts. And the government gets to essentially take proceeds from that debt issuance, fill up the SBR, and they can potentially issue that bond at a lower coupon. And so they get to borrow. cheaply relative to what they otherwise could. And so I think there are clever mechanisms the government could go about in terms of acquiring Bitcoin while still servicing its debts, while still maintaining confidence in its debt markets. At the end of the day, like sort of recapitalizing itself over time, right, with hard assets, which is, people speak about this in monetary economics like very casually when it comes to gold, because that's been the thing that we've done before with gold. Like we've gone on and off gold standards. as different countries over different times. So it's not like a conceptual, you know, like a new thing for that to happen. It's new to think about it with Bitcoin, whether we, I don't think we would go on a Bitcoin standard anytime soon, but diversifying your national balance sheet, acquiring a hard asset that you can asymmetrically monetize relative to say Chinese gold and use that to also help fund these strategic techno-industrial investment projects. Say you use some of the SBR to act as seed capital for sovereign wealth fund. Michael Tanguma (59:56.838) Okay. Matt Pines (01:00:13.294) and do energy and AI build out. Instead of relying on Saudi and Gulf money, Like, if I had to like pick, know, coa A, coa B, hey, let's like go and kind of like buddy up with a bunch of Gulf Kings to like beg for their, you know, trillions of dollars of capital to flow into our AI. And therefore we have to give them access to frontier AI models. And maybe even AGI gets born in the desert of Saudi Arabia or the Emirates. Like, wouldn't it be nice if we could actually... Capitalize those investments without having to go to these autocratic regimes. Can we just you know, put some high-powered Digital gold in the cyber wealth fund run that up turbo turn 50 billion into 500 billion in a few years and then boom bring in public private investment leverage it up you've got two trillion dollars in in in dry powder to to fund your techno industrial domestic in Renaissance and you've got no foreign entanglements or obligations. I don't know Michael Tanguma (01:01:09.639) Yeah, I think, no, makes sense. think like from the capitalistic, opportunistic perspective, I think everything you said, it ties into this notion of the traditional 60-40 and how, you know, individuals all the way to sovereigns have preserved capital and equities and bonds is completely, everyone in the gold camp, as you alluded to, like known this. hardcore gold bugs, but there's never really been a viable path, but also kind of from the powers that be signaling it, meaning like gold and Bitcoin become money and everything else is a credit instrument. And that's a huge like still taboo to talk about today, even though gold sitting at whatever $3,000 a troy ounce and Bitcoin sits over a hundred K. And so as that repricing happens, there's just gonna be a lot of people left holding bags of kind of like, you know, they're gonna slowly migrate over, but they're gonna be left holding bags, real estate, you know, bonds, traditional equities. And so I think that's just like an overarching theme. The other aspect, and I know we're coming up, we've got about 20 minutes. I don't know, Jax, if you want to take it in different direction, the thought that Matt brought up is there's something interesting I think you've been talking about in this convergence of multiple like. or things that are just so kind of like wild that they're all coming together, which is the AI, AGI component. There's Bitcoin and then there's the natural like UAP conversation. And they all like kind of tie back to energy in my mind. I haven't thought deeply about this, but curious how you think about where Bitcoin's almost like this canary in the coal mine for finding the cheapest source of energy to mine. And then you're seeing like the existing miners or the compute going in like, you know, that up. But then even again, just limited knowledge on the UAP side, it's like a lot of these sightings or at least a big portion are around nuclear and around energy. How do you just think about like that world and where this like UAP conversation is coming up? And I know it's something that you're known for to talk about. And I think a lot of people aren't familiar with a lot of these concepts. So just maybe starting at the very high level will be good for people to. Matt Pines (01:03:09.166) Yeah, well, we'll sort of tiptoe in here. The water's warm. But to your point, well, one, like Bitcoin, I think, is a anti-fragile asset that has asymmetric option value relative to global disruption. And we've talked a lot about the disruptions coming from the geopolitical and monetary kind of fragilities and shakeups here. And we think Bitcoin has sort of asymmetric upside relative to those disruptions. So you want to own Bitcoin because you think, you know. indebted governments have to print their way out of it. fragmenting global system is going to inherently rely on decentralized cross-border trustless means of settlement. We're still a digital civilization, so we're going to want to settle in a digital reserve asset. It doesn't have all the physical and transactional and verification costs of gold. The typical bromides, bull case for Bitcoin, that gets Bitcoin to parity with gold. And I think that's probably going to happen in next three to five years. Michael Tanguma (01:03:49.03) you Matt Pines (01:04:08.216) bearish. But that's like, okay, the normal, like, again, kind of like most of what I focus on. There's other disruptions coming in, right? A lot of focus is on the accelerations coming out of these frontier AI model labs. And there's been lot now of the discourse inside the Bitcoin community on how that will intersect with Bitcoin, right? Whether an agent-based digital economy is gonna use Bitcoin as a, know, a medium of exchange, as a store value for their own economic activities, you know, that don't have bank, they don't have bank accounts, so they need to have a digitally native, you know, currency to hold and to transact, you know, through and in, which seems plausible to me. Obviously Sam Altman has his druthers, it'll all be world coin. So, you know, need to nip that in the bud. this is another convergence of kind of these accelerating technological disruptions that are going to have like cascading impacts on our monetary paradigm. So I think there's a strong positive loop between AI and Bitcoin in many ways. There's maybe other macro level questions about AI that are more about how it affects the social fabric and division of labor and where those surpluses are concentrated or diffused in society. Are those just hoarded by a bunch of techno oligarchs? Is there some UBI? How is that managed? There's a whole bunch of other questions and that might have spillover effects on how we think about Bitcoin over that three to five, 10 your time, Ryan. Matt Pines (01:05:36.718) You know, the way P question is another one of these questions. I think people don't pay as much attention to because it's been shrouded in a lot of historical taboo and stigma, intentionally so on the part of the relevant government interests at play. But it's, it will come in to the top to this discourse sort of shift. We saw Bitcoin go through like Overton window moved talking about Bitcoin seriously inside DC was like a fringe thing when we got started at BPI. And now we're hosting events. And I'll tell you the people that you're going to see at our policy summit on June 25th, which by the way, sign up, btpolicysummit.org. You can go to my Twitter account, it's my pin tweet. You can use Statecraft for a free ticket, so people listening, if you're paying attention, you Statecraft to get a free ticket. Michael Tanguma (01:06:18.063) Wow, there you go. Matt Pines (01:06:21.932) But you gotta sign up. might change that discount code in the next week or two. yeah, so sign up. Because I think the people you'll see at our Policy Summit will align with the topics we've talked about here. The level of people that are gonna talk about Bitcoin in its very serious fashion from a strategic standpoint will surprise people. I'll just say that. We haven't announced some of those people yet. So that's this track here. This Overton window shift can happen pretty quickly. And in our particular domain, it wasn't a surprise to us because we're like, of course Bitcoin is going to go to the moon. Of course it's going to be a strategic asset. Just the world doesn't recognize it yet. We're the in-group that shares a common set of sort shibboleths and sort of canonical lore and kind of a bit of religious belief system that there's going to be some future redeeming event, hyper Bitcoinization, where I'll be proven right. and the no corners will be proven wrong and the world will sort of bend to my vision of things. That may actually objectively happen with Bitcoin. But we think that's normal because we're in that in-group and we've seen that over to Windows shift in real time. AI, similarly, folks that are in that in-group have seen this move from Les Ronn blog posts talking about the AI superintelligence takeover existential risk, Nicholas Bostrom, know, Eliza Yarkowsky, all this sorts of stuff. I wrote a whole novel actually a number of years ago on quantum AI superintelligence takeoff scenarios. So I was in that in-group as well and I was like, this is a thing. And that's now moved to the center of the discourse. There are now lots of high-level policy conversations happening as we speak on the timelines for AGI and what that means for geopolitical competition. We're having these multi-hundred billion dollar deals done with Saudi Arabia, box out China. It's driving geopolitical decision making. UAPs, I've seen this play out and I've learned to sort of look around kind of the corners here and see those little moves on the tails of distribution to see those shifts. And this is coming in. Matt Pines (01:08:20.31) It's coming in faster, I think, than even some of those other ones did. There's a large, you know, that's a multi-other how our conversation like what's exactly coming in. But the basic premise is that, you know, we will have to accommodate ourselves to the fact of non-human intelligence, advanced technology. That's a product of that non-human intelligence. Israel is interacting with humanity as has been interacting with humanity for some time. And there are government programs that have been dedicated to this for many decades. So those are just facts people will have to accommodate themselves to. Some will accommodate themselves to those facts sooner or later. It'll be uncomfortable in various fashions. But then there's a lot of downstream implications of that, of accommodating yourself just to those bare facts. There's other facts associated with that that go in lots of different directions. The most relevant, you could say, for Bitcoin, is like a hedge, is technological disruptions to our physics paradigm, right? And a good thing about Bitcoin is the difficulty adjustment. Is that even if we have breakthroughs in energy production within two weeks, right, the hash rate will adjust. Now the question is more about security concentration of whatever that new production is, if it's dedicated to ASICs. Ultimately, know, concentration of energy goes through a concentration of compute. And so, you know, it's more a function of who gets, who has access both to the energy and to the compute. I think the upshot of the NHI UAP story is the technology component and the physics component will be far down the line of public discourse and disclosure for a lot of nonproliferation and existential risk concerns. There's a reason why they've kept that secret for so long. There's, you know, certain things you could pull out of the black ball of science that would be... Michael Tanguma (01:09:59.302) you Matt Pines (01:10:07.468) You know, we pulled out nuclear physics and those gave us nuclear weapons. And it was the fact that it's somewhat difficult to create high purity uranium and plutonium and then get the triggers right to make a nuclear weapon that keeps that risk somewhat constrained. If there was aspects of physics that were easier to weaponize, well, those would be dangerous things to spill into the public domain. I think that's part of the consideration. I think there's also lots of other things going on associated with the evolution of these programs over time. And it's part of the geopolitical bargaining that's taking place right now. Trump is alluding to breakthrough weapons systems that nobody understands how they work. And he is, you know, dangling that out there for a reason. There's, you know, a lot of reconfigurations happening behind the scenes associated with these historical conflicts that are being, you know, snuffed out quite quickly. Michael Tanguma (01:10:34.501) Okay. Matt Pines (01:11:03.822) At least that's what they're trying to do. And this looks like setting the stage for, if you're going to be forced to accommodate humanity to a reconfiguration of its place in the universe, you want to kind of maintain, you want to kind get to a stable position as possible, as quickly as possible. I don't have a particular timeline. I think there's a lot of if-thans embedded in this. But we are. We are on a trajectory where, I mean, the sooner it's like with Bitcoin, it's like, you know, the sooner the better. You will comment yourself to what's what's happening. The more you'll be prepared for the change that's coming down the line. Michael Tanguma (01:11:44.024) Yeah, I appreciate you running through that and especially in that framing because I think for a lot of individuals, a lot of this stuff has never even been brought to the table. so helping through the lens of, well, Bitcoin was insane until it's not and AI is insane until it's not because we've heard since we grew up watching Terminator and stuff. And then ultimately just a little bit of a tease for individuals to go down. Personally, it's interesting because I've always thought about Bitcoin as incentive alignment is just too perfect that had to come and we don't have to go into here, but it's it's too perfect for it to be created by man. And to your point where I think you're kind of going is like, well, if it's naturally tied to energy and the reflexivity of the difficulty adjustment, keeps the constraints tied in effectively. And I remember when the AI stuff was picking up in 21, I had this, knew exactly where I was at when I was like, well, like Bitcoin actually protects us from AI because you have to plug in those systems and pay it with something to keep the energy. Like the energy has to come from a foundational, know, constraint of the society. So it's all fun and like, not even fun, it's just, It's constructive stuff to go down. So appreciate you running through it. I don't know Jackson, go ahead. Matt Pines (01:12:47.118) Yeah, I mean, yeah, I was gonna say like it's. It's hard to kind of bite off on which it's like trying to explain Bitcoin to someone the first time. It's like you're fucking crazy. Magic Internet money, cryptography, know, game theory, the history of money. Let me talk to you about cowry shells and da da da. And then people go, there's like a tiny percentage of the population that goes like, oh, that's interesting. And then then they go down the proverbial rabbit hole and they self-educate and they they come to some conclusion about the risk weighted probability of this Bitcoin thing being a serious thing. than making a life choice to invest substantial portions of capital. I think there's the same sort of epistemic and personal dynamic at play with this topic. There's a lot of initial rejection and taboo and kind of resistance to the a priori premise, right, that a lot of people just reject out of hand. And there's some people that go, oh, that's interesting. There might be something there. And they pay attention to what's happening in the government side and other areas. And they follow the thread. And they self-educate. Michael Tanguma (01:13:44.166) Yeah, and it's all objectively true. The crazy part is like, I think it might have been one of the pods he did with Danny, but it was something that was said it like, it ended in the most kind of like ominous, like, if this is true, it changes everything. It was something to that effect. And it was referencing the disclosure book. And so I went to go start listening to that. And there's just like all the accounts, like, it's just like, we can objectively say that the debt system is unsustainable. Most people will be like, no, it's fine. You're like, no, no, there's just like, there's like enough proof here. It's very similar to what you're describing. It's all out there. but I did want to give some more burn to BPI because I you touched on it. We don't have to, we can, you know, in the last kind of like seven to 10 minutes, incredible work you guys are doing. Like we deeply, not only respect, but have been in the space for awhile. and have seen how hard it is from like, you know, from the venture side and crypto coming in and just getting people to support altcoins and go out on the risk curve and just blow their businesses up all the way to the quote unquote lobbyists that are Matt Pines (01:14:18.936) Mm-hmm. Michael Tanguma (01:14:41.349) you know, have all the dollars to spend and you guys being in a, a, doing things the right way on the think tank side, but also having natural constraints. And so anything you want to share about that and where people can reach out or get involved or allocate capital to help kind of further the cause on what you're working on. think it's super exciting because you've been a leader speaking in the space outside of the space, from a, a, for your, you know, put food on the table. Now you get to do both, which is really exciting. because having your mind focused on this, think we'd all agree is super impactful for kind of furthering Bitcoin. Matt Pines (01:15:13.058) Yeah, know. mean, everyone at BPI, like there's like an implicit filter of self-selection. Like they have to kind of get the bit. Right. And they're, they're all finally there to like, you know, self-actualize, you could say, right? Like a lot of think tanks, they get set up in DC to kind of be self-looking ice cream cones. You know, they want to do the same summit every year, kind of the same panel discussions. They keep coming back to their donor base and be like, we need to do the thing. Like we're like here to kind of like supernova. It's like, start with a bang, expand as quickly as possible to like have the strategic in this relatively limited window we think we have to like decisively shift the future trajectory of the US and the global adoption of Bitcoin. And then potentially do something very different, right? Like it's like Bitcoin needs like maximal support like in the next, you know, 12 to 24 months, you would say, right? And it needs to be like an implementation tail. But we've kind of came out of kind of a glorified blog state three years ago. We now have eight full-time staff inside DC, a total of 10 full-time staff. We've got a bench of 23 fellows, national security experts, energy policy experts, philosophers, economists, former deputy governors of central banks. We've got a deep bench of people. But honestly, we're still, I would say, 10 % of the policy advocacy crypto community inside DC. you think about Bitcoin is maybe 65 % of the market, right? If you throw out a lot of explicit nonsense, we're like 90, 95%. So we're completely inverted relative. And I think you see that reflected in the outcomes inside DC. It's like why is stable coins the first priority, and then market structure, and then the SBR? If you were objective, you had no inside analysis of how much sunk costs there is from all the crypto-industrial complex there, you'd be like, of course, the SBR is the most important thing. Do that first. That's the foundational neutral reserve asset that floats everyone's boats and also aligns more explicitly with US national interests here. Matt Pines (01:17:15.862) and our values around the world isn't just like special carve outs for a certain crypto business model, but instead it's the inverted. And that's a direct function of just how things are apportioned inside the ecosystem. So yeah, we want to essentially scale proportionately to Bitcoin and Bitcoin's impact and try to make sure that at least the policy environment inside DC is at least market weighted. we're at least, I'd say, you know, six times away from that in terms of our current budget to where that would be market weighted. And so, yeah, we're aggressively looking for supporters and expansion. We're also looking for thought leaders, folks in the community that have insight and curiosity about, you know, intersection of Bitcoin, the energy system, Bitcoin and AI, Bitcoin and national security, Bitcoin geopolitics, Bitcoin in blank, right? Basically. And there's a lot of Bitcoin in blank things out there. And so we're always looking for folks to come in. with ideas, suggestions on white papers or events that they would like to help host, expertise that they'd like to add in. We bring on visiting fellows to support particular projects. So yeah, we want to act as an intellectual and cultural hub to a certain extent inside DC on Bitcoin and these larger questions. So yeah, we're gonna be opening up a full-time office in partnership with Pubkey downtown over the course of the summer. And that'll be like one of these third spaces to host these sorts of events. And we'd love, you know, once we're a full operating capability to have folks that are in DC, just like a spot to hang out, grab a burger and hang with the BPI crew. So yeah, so can go to btcpolicy.org to check us out. And you can email me pines at btcpolicy.org. Michael Tanguma (01:18:53.052) Yeah. Matt Pines (01:19:03.086) if you have any questions or you want to get involved. Michael Tanguma (01:19:05.881) But Starcraft in the subject. I would short-change yourself too much in the sense of Bitcoin is going to get the SBR. It's just a matter of when, not if, and nobody else is going to get that from the crypto side. And then also appreciate how much fun you guys are having. You see it on Twitter and it reminds me a lot of what we're building here in the sense that as long as you're on the right side of history and also you have the passion and energy, it doesn't matter how much capital somebody else has because you just are able to counter position. And that's kind of like how I think about us building this business. And it ties into the custody stuff where we're talking with you guys, I'm trying to help on just some of the multi-institution aspects of like, does an SBR actually look like? And this was from building self custody solutions for hardcore Bitcoiners and realizing like, holy crap, trillions of dollars are going to come into this space and it's all going to go to Coinbase or proxy Coinbases. And that's how gold failed. So we naturally need to leverage Bitcoin's properties from a decentralized perspective. And I think that's now starting to become mainstream where like bit bonds or any kind of sovereign exposure to the asset can't be held on plastic devices and desk drawers. And it's also can't sit at Coinbase because we know what happens when, you know, hard money centralizes. So you can just do things just like you wrote a paper and now Trump is doing stuff. Matt Pines (01:20:21.698) Yeah, exactly. Never underestimate the power of memes. An organization starts as a meme and it becomes a real political force. And you can just do things. So I would just go do things. Jackson Mikalic (01:20:35.444) I love the inspirational end to this show. Well, Matt, appreciate you joining. For those listening, check out btcpolicy.org and maybe join the event in June. Thanks again, Matt. Michael Tanguma (01:20:35.471) Love it. Brian Cubellis (01:20:39.542) Love it. Brian Cubellis (01:20:49.195) Thanks Matt, this was awesome. Matt Pines (01:20:49.442) Thanks for having me.