Bitcoin bull run indicators, AI compute economics, and inflation pressures discussed by Digital Asset News
Rob and Jerry from Digital Asset News discuss Bitcoin cycle indicators, AI industry dynamics, and global inflation pressures.
Summary
Rob and Jerry cover four main areas: Bitcoin bull run indicators for the next cycle, the economics of AI compute and the open vs. closed model debate, real-world inflation driven by energy constraints, and the regulatory/insurance gaps that still limit crypto's utility as a banking alternative.
Rob presents three indicator systems — from Ben (risk levels), Ivan (Bull Mania / Tech the Money Line), and Wes (Smart Money Tracking bot) — noting that in the last cycle, virtually none of the standard bull market peak indicators fired at the top. He also walks through the Colin Talks Crypto Bitcoin Bull Run Index (CBBI), which came closest to calling the top (signalling around $118K in July 2025 at a reading of 93), and the altcoin season index, using it to compare current altcoin prices against December 2024 levels across ETH, XRP, SOL, BNB, and ADA — concluding that the expected altcoin season rotation largely failed to materialise. Rob's takeaway: anything above an 85 CBBI reading warrants starting to take profits, rather than waiting for a perfect signal.
Jerry shares his personal strategy of layering out of positions after a painful experience of watching a near-million-dollar portfolio decline through 2022. On AI, Jerry argues that tokens are to compute what electricity is to hardware, and that open-source, self-hosted models are simultaneously the cheapest and most data-sovereign option. The episode also covers the STABLE Act's failure to advance, Senator Josh Hawley's vote against it, and the argument that two missing pieces — FDIC-equivalent insurance for crypto holdings and non-margin-call Bitcoin-backed loans — are needed before crypto can displace traditional banking. The episode closes with observations on energy inflation, with Jerry reporting that fuel costs in Costa Rica have doubled in six months, and a discussion of the need for energy sovereignty at both the individual and national level.
Key Takeaways
FULL TRANSCRIPT
Introduction and the speculation-versus-utility framework
Rob: We're going to take a look at the big three for the next Bitcoin bull run. Now, that could have already started. We could have seen a low. We might see something in Q4, which I'm personally hoping for. We're going to talk about those big threes and how really none of them have been helping us as far as the last cycle — except for one. We'll talk about that. We're also going to talk about AI and the things that are going on. And then we're going to take a look at the macro for some massive inflation. Joining me is Jerry from Costa Rica. Jerry, how you doing?
Jerry: Hey, good, Rob. How is everyone? Hope you're having a great Sunday.
Rob: We tried to get this going early because Jerry has to watch football today, like a lot of us. He's got his own fantasy team to root for, so this is important. But right now he's giving us his full undivided attention and we'll go from there.
So this is the first thing, Jerry. This is what I think moves the price, and we can see it kind of coming forth. I think it's a three-part speculation, one part utility. And as time goes on, you're going to see a lot of this play out. However, there's going to be a shift. Before we get into Harmony — the crypto project — talk to us about your thoughts on the market being mostly speculation with a little bit of utility, and that's what moves the markets. Or is there something else?
Jerry: I can remember so vividly when I got into crypto at the end of 2017 — the speculation of what a project could do. This was the use case. This is what need it would fulfill in the universe, and its ability to do that would be based on adoption. But the price would be reacting to things like, for instance, is it going to get a Coinbase listing? The speculation of a token that was not on Coinbase in 2017 being added in 2018 could send that token price two, three, 400%. That speculation ratio was that at the end of the journey there would be the utility, and the macro factors that would help it get there were the speculation that we would be betting on in the meantime.
This little formula that you have is generally pretty true for everything in the life cycle of a project until it reaches an inflection point where it flips. What companies today had this going for them until that inflection point? Well, obviously during the internet boom, it was companies like Amazon and Microsoft. Now those very same companies that did have a 75-to-25 ratio like you see on the screen are now completely flipped. They're 75 to 80% utility, because of the adoption, and a very small segment based on speculation of what they may build tomorrow.
I think this is a really good thing for people to know: where we are in the crypto industry, we're still very much in the 75% speculation being compounded into a growing segment of the utility of that particular project. And not all projects are at the same stage of their lifespan as others. Our job is to distinguish where that is for each one of these things that we've invested our money into.
Rob: Yeah, and it's not easy. The reason I bring it up is because don't feel bad if you miss something, because there's going to be a lot of pumps and a lot of dumps. You have to just take a look at what is really moving the price. Right now it's mostly speculation with parts of utility. Jerry's right — as time goes on there'll be an inflection point and we will switch the whole thing. It'll be three parts utility and one part speculation. But this is what is happening, and it made me want to talk about this today before we get to the big three.
Harmony ONE as a live example of pure speculation
Rob: Harmony. This is a crypto project that came out years and years ago, and just in the last 24 hours it's up 63%. Over seven days it is up 517%. Fourteen days, a little bit less than that. But you have to ask yourself — this thing has been around since roughly 2019, and the all-time high was 30 cents. Now it's at a fraction of a penny. Why did it go up 517% in seven days?
Is it because there was some new utility? Is it because there was something being adopted by sovereign nations? No. This was just on September 7th: "Harmony cites AI threats and proposed blockchain shutdown." The team wants to move Harmony ONE to Ethereum — just transfer everything over — and enter the AI video business, urging users to exit smart contracts before September 10th.
Why is that? It comes down to this: there's a migration, there's an ETH listing, so there's new token speculation. They said they want to get into the AI video business — that's an AI narrative. Check. And then there's a very tiny market cap, which means it doesn't take a lot to move the markets. The cap itself was $59 million, volume $190 million. People are talking about a short squeeze. Check, check, check. Migration, AI narrative, tiny cap — really big move. This is just about speculation. And again, it's 99% off from the 2021 all-time high.
So when you take a look at things pumping like this, you're like, "Damn, it's probably because it has some kind of great utility." No, it doesn't. It's all speculation. So the next question is: what happens in the next bull run? How do we position ourselves?
The big three indicators for the next bull run
Rob: Here are the big three, and I hinted at this yesterday. In my first bull run in 2021, I just pretty much used fractals. I said, "Cardano did from this to this, so I think it's going to be a little bit diminished and go from that to that. Bitcoin went from a thousand to 20,000, so I'm going to think it's going to come down to 100,000 in 2021." Didn't do that, but I was able to get some profits. And in 2025, I wanted to look at all these different indicators — and guess what? None of them fired. None of them fired.
So I'm going to take a look at what Ben's got going on, Ivan on Tech the Money Line, and Wes from Smart Money Tracking. Before I get into the why and talk about how essentially nothing fired in the bull market peak indicators, Jerry, what were you using this cycle to kind of get out? Was it just setting some targets, or was it one of those things where you're like, "I'm going to hold forever"?
Jerry: I have a very individualized process, and it's money in versus money out. If I put in a dollar and I put it into an L1 that has some form of compounding — like a staking yield that I can keep in there that compounds the number of assets that I own — then what I'll do is say, "Okay, if I put a dollar in, I want to be able to take a dollar out and still have 50 cents of that asset sitting there doing that thing." Whatever that thing is. And hopefully it's compounding because of a yield, then adding a compounding element with appreciation. So I want two forms of compounding to happen within a wallet of a particular project.
That's my personalized deal. And that came from learning the very painful lesson of having a monster portfolio built off of a relatively small starting capital — 23 grand, built to almost a million in crypto. And I did not take advantage of that. I got greedy. I let it ride and I watched it decline over the course of 2022. I have vowed to never let that happen again.
Rob: Yeah, I agree. Sounds like Danny Glover from Lethal Weapon. But yeah, that's essentially what we're talking about today.
Ben's risk levels
Rob: I always took a look at the bull market peak indicators from CoinGlass, and it was pretty good. It had everything you want — Bitcoin AHR 999, PI Cycle Top, MVRV to Bitcoin ratio — 30 different indicators. Not one of them fired to say, "Hey, we're at the top or close to the top," except for one, and we'll get to that in a second.
One of the things I'm using right now is Ben's risk levels. Right now we're at 0.47, which corresponds to around 81K. As the price goes down, that's when I put in more money to Bitcoin. So as it goes below 0.4 to 0.39, if I was spending a hundred bucks a week on Monday via the Cash App, I would then spend $200 per week. These are just examples. I double up. If it goes below that, we quadruple. Below that, we 8x. I'm going to stop accumulating at the 0.6 level, which is around 111K. Those will fluctuate as time goes on.
But one of the things you can't depend on is one indicator. Here are the risk levels throughout time. You can see the risk level of 0.8 to 0.9 fired beautifully in roughly 2013 and 2014, getting up there to the top. In 2017, it fired beautifully — 0.8 to 0.9. In 2021, it fired again — 0.8 to 0.9. So you're like, "This is awesome. This thing is great." Well, guess what? It didn't work that great this cycle, because the price levels peaked at 0.5 to 0.6, and that was October 6th, 2025, when we hit an all-time high of roughly 126,000. So you can't depend on one indicator, especially for the tops. You have to use multiple, and you have to use a little bit more common sense — which I got to tell you, sometimes isn't very common for me. But common sense is a factor: if my mechanic just asked me about Bitcoin, it's time to take some profits.
As a reminder, these bull market indicators — they didn't fire. Not even one. Zero for tops.
Ivan's Bull Mania (Tech the Money Line)
Rob: I also want to take a look at Ivan's Bull Mania from Tech the Money Line. The reason why is because I've been back-testing these for quite some time. I've had Ivan on the show many times. He was on for my Christmas episode and donated a bunch of access to his Bull Mania. He was also on my 20-hour live stream, and he's the one that donated $10,000 to the animal shelter — love him for that.
Take a look at this. It's not perfect — nothing's perfect — but I want to back-test this and show you. This is January 2023. You can see where it starts to turn bearish after December 2021, turned bearish and went all the way down. Now, there were some times when things went up, but look at this — beautiful, coming all the way down. So maybe you accumulate like I did, or you can just let it go all the way down, and then once it turns bullish — which was January 2023 when Bitcoin was at a price of $21,647 — guess what? It stayed bullish all the way to here. It stopped being bullish between 107K and 92K. That is a weekly candle. That is brutal. You could have gotten it at 107 or 92, but you probably hit it around 99K. Not too bad. And now we've been bearish the entire time.
This is just Bitcoin. This is just what he's teaching. There are other things if you want to learn scalping and getting in and out of trades, but this one is pretty good.
Jerry, what's your thought on this one before we go on to Wes's?
Jerry: I have intentionally stayed away from a lot of technical analysis elements for the crypto industry because crypto has always been such a fledgling new volatile sector. Technical analysis requires a ton of data to work.
Rob: Right.
Jerry: I think we're starting to get to the point where there's a maturity in this space, and therefore certain elements of technical analysis can be very valuable. Because I'm not an expert in it, what you're doing today — showing a few people who have become experts in this — I think it's a good idea to follow, learn, and try to understand, because it will become more and more relevant the further and deeper we get into the maturation process of this sector. And it's good that you've identified some folks and been back-testing. Important word: back-testing. That whole "verify before trust" element. Good job. I'm learning.
Rob: And what's great about this one is that with the TA, you don't have to know, "Oh, this is a head and shoulders, this is a Bart Simpson pattern." I don't know those. I'm not that smart. For those things, I just want to make it easy. If you want to do it yourself, this one is pretty easy: you buy here, you sell here. But what I want you to do is take a look at this, use your own common sense, look at this, and say, "I want to take these multiple aggregates and then put them into what I believe is actually going to work." I got to tell you, the next time this one flips bearish, I will probably be selling between 10 and 25%.
If I layered in, I need to layer out. Was it perfect? No. Didn't hit the top at all. But anything around that 100K level — I'm sure there are some people out there going, "Yeah, it would have been nice to sell a little bit at 100K and then watch it go down to 58K, and then it turned bullish again, and then buying around 60K." Not a bad deal.
Wes's Smart Money Tracking bot
Rob: Now we'll take a look at Wes from Smart Money Tracking, and his one did an even better job of calling the top — but there's a catch.
With his, I like it here because we're at the 27th of October 2025. See that "sell" right there? That is telling you: everything's green here, you can accumulate whatever you want to do, sit on it. But once this flips at 116K or 107K — you probably hit around 113K — that's when it was telling you and flashing to sell.
But the catch is this: if we go back, what are all these other sell signals? Well, he's saying buy at this one. This is just a bot. This one came out — I think Wes put this together with his developers — and I think this is the start, so it was kind of erratic. They had you buy in March 2022, which wasn't really the bottom. March 2022 was kind of a lower point, and then we had a sell there that doesn't make too much sense.
Jerry: March 2022 was not a low. The entire year of 2022 was a descending.
Rob: It was pretty awful. And then everything turns bearish — sell, get out. And then buy right here around 19K. Okay, not too bad, almost the same as Ivan's. But then you had a sell at 30K and then another buy at 25K. That's something I'm not going to do. But you'll see these sell patterns — they're kind of spaced out as it kind of realizes, "Hey, this probably isn't right." They back-test themselves. They want you to sell at 65K here, but then bye-bye-bye you go.
Again, none of these are perfect. There are problems. But they do give you an indicator of where things are potentially going, and you can say, "Hey, maybe I should take a look at that."
The Colin Talks Crypto Bitcoin Bull Run Index (CBBI)
Rob: That would lead me to a bonus. If you're like, "I don't want to deal with that, Rob — give me some indicators I can just do right now, take a nice easy glance, and be aware of it." Remember when I said that zero fired as far as the CoinGlass 30 different indicators? Well, there was one that came really, really close. And there was another one that I think we should all be looking at because it's been pretty roughly accurate for this thing called altcoin season.
So, CoinGlass — these were all the indicators, 1 through 30 — and out of those, number 22 is called the Crypto Bitcoin Bull Run Index. Have you ever heard of this one, Jerry?
Jerry: Only here on this channel.
Rob: I didn't hear about it either. So this was one to watch. What is it? It's actually from a friend of the show, Colin Talks Crypto. He was the one that was always talking about the M2 money supply — the M2 money supply goes up, then obviously Bitcoin would go up. Figured out there was a liquidity issue there, but it didn't really plan out. But Colin Talks Crypto's Bitcoin Bull Run Index was pretty accurate.
How it does this — I like this one. It's designed to evaluate the stage of Bitcoin's market cycle for your cycles, right? Analyzing multiple on-chain and technical metrics in real time. It generates a confidence score, and it's supposed to tell you the Bitcoin bull run peak — which it does a good job of — or the bear market bottom, where it doesn't really do as good a job. It combines nine metrics, and five of them are listed: Bitcoin price trends, MVRV ratio, RHODL ratio, NUPL, and reserve risk. You can check it out because I linked these in the description.
Look at this. The Bitcoin price is in yellow and the CBBI is in green. It did a pretty good job back in the day. This is 2013 — top, 29th of November. Nailed it. And now for this one, it didn't hit the absolute top. It actually called for — what is the absolute top here? 18th of February, $55,000. Jerry, would you be okay taking some profits at $55,000 as opposed to $66,000?
Jerry: A trader would.
Rob: Yeah. And this is where I see it — if you're going to layer in, why couldn't you layer out? So if you're here and you're hitting these high levels, you're like, "Maybe I'll just layer a little bit here." At the 12th of April, it was almost $64K. And then the high of the cycle was roughly in November. You can see it didn't hit that, but still — April was pretty close to the all-time high. Then we did a massive dip of 40%, and then we went right back up to 67K, but the indicator didn't hit. And the last one for October — it didn't hit that either, but it got the 23rd of July at $118,000. That was its top, and the level was 93.
So as I'm looking at this, I see that 93 number and I'm thinking to myself: what if I just play it safe and say, "You know what, anything above 85, I'm going to start taking profits"? That would be like prices of 115, 118. Over here it was 96, 94, 102, and so on.
Jerry, thoughts about that one before we go on to the altcoin season index?
Jerry: The one thought I have doesn't apply to my generation, but definitely to my sons. The one thought I have around something like this — a way to maximize your return — is to have a system, use information, but also think about where you're going to use it. For instance, I would not use this in my Coinbase account, and I'll tell you why. When you trade an asset and you capture a gain, if you're a US citizen doing this, there are taxes to be paid. You pay taxes on gains. Unless — and here is the magic — unless you're trading within your Roth IRA account. You can have that with ITRT Capital. You can literally apply a trading strategy within your structured account, capture these gains, and capture 100% of the gains. You give none of it to the government for taxes.
If I was in my 20s or 30s, that's exactly how I would be applying this information. Now, those gains don't go into your checking account — you're not going to go buy Starbucks tomorrow on them — but you will have them for when you get to your retirement threshold within the account. And you can get a higher ROI than your normal IRA contributions. This is how it becomes powerful. It's like adding steroids to your process.
Rob: Yeah. This is how Peter Thiel did it. He took his PayPal stocks, stuck them in a Roth IRA all those years ago and just didn't touch it. PayPal back then wasn't worth much. Now of course it's a top company — billions of dollars. That guy has, I think, three or four billion dollars in non-taxable retirement income he's able to take out. And that's only because there's a yearly limit — you can only put in so much. Back then it might have been $5,000, now it's around $8,000 — correct me in the comment section. So he just put all his PayPal stocks, which weren't worth anything. It's the same thing right now if you do it with Bitcoin or any kind of altcoin, or now they have ETFs and stocks — you can put them in there and there's no capital gains. Which is quite nice, because I don't think the government knows what it's doing with our tax dollars. I'm just going to throw that out there.
The altcoin season index
Rob: Now let's take a look at this altcoin season index. This one was the most interesting to me. Again, links are in the description — I linked this entire presentation. If you're looking for the links for these things, they'll be right there.
This altcoin season index — I know people are like, "Why are we talking about altcoins? Let's just talk about Bitcoin all the time." Which is fine, but there's going to be some outsized gains. I think we all know it. The altcoin season index is simply based on some factors: relative performance, the performance of Bitcoin versus other altcoins. If Bitcoin isn't performing as well, we say it's altcoin season — which we did. We got a really horrible one in 2025. And there's also the market cap ratio, which is Bitcoin dominance. When everybody here hears Bitcoin dominance, they think of Ben.
This one I found interesting because it didn't hit the top on this cycle either. Its top — first of all, it topped out in 2022, which was of course when Bitcoin ran and then the altcoins ran. It topped out in May of 2021 — so not the greatest. And then this one over here, where it gets above this threshold of 75, it did it once. The date is between the 11th of September 2025 somewhere down here.
But before we do that, take a look at this one. 2024 was even higher. And I think this is where people got mistaken, because they thought, "Okay, well, this is how it has to be. Bitcoin has to run first, so we're going to wait for that, and then it's going to flow into altcoins." That didn't happen.
2024, third of December — let's take a look at those prices. Here's the 1st of December, so a couple of days off. But here's what we have as of this week: Bitcoin's at 80K, Ethereum $2,400, BNB $716, XRP $1.34. Back in 2024 — roughly a year or so beforehand — Bitcoin was roughly $100K, Ethereum was $3,700, XRP was $2.32, Solana was $237.
Let me compare that again. Solana roughly this week is less than $100 — it's a little bit above. XRP $1.34, back then XRP $2.30. Solana $237. BNB was $655 over here, $716 now — take it, that's not too bad actually. So BNB didn't really hit that threshold. Cardano was $1.15 over here.
Jerry: Number 15, Cardano.
Rob: Cardano. Thank you. 20 cents.
Jerry: 20 cents.
Rob: So if we take a look at this index itself, we can see that it actually did a pretty good job, and it didn't do a bad job over here in November 2025 either. So these are the things that I look at, and I'm going to move forward. The big three — which would be Ben, Ivan, and Wes — I'm going to take a look at these two indicators moving forward and I'm going to start to layer out instead of just trying to think, "Ah, I'll get close to the top and just get it." This has to be the plan.
Jerry, thoughts before we go on to the AI discussion?
Jerry: I think you covered a lot of really important ground, and the viewers have access to that entire presentation with the links to these indicators. It's up to us to decide how we're going to use them. Do they fit with our investment thesis or not? All you can do as an educator is provide the info.
AI industry dynamics: open vs. closed models, and Anthropic's contradictions
Rob: Speaking of info, this is a good one. We know that in midterm years, just like four-year cycles, midterms are every four years, and we usually have a downward trajectory in the traditional markets as well as our markets. But this year didn't work out like that. I think it was because of a big factor, which is AI. Because of AI, it propped a lot of different things up, because people were thinking this is a generational opportunity. I need to get into this beforehand and really start to look at Anthropic, OpenAI, SpaceX, Grok — those types of things — because they're the ones that are going to really take off.
I see some problems. Take a look at this. Anthropic is reportedly planning to release a new AI model just days after CEO Dario called for the whole industry to slow down. If you're not aware, there was the big three — you had Elon Musk, Sam Altman, and Dario here from Anthropic. They all got together and said, "We need to slow things down because AI is going to kill every single person on the planet." Okay, they didn't say that last part, but they did something like that. They called for people to just slow down in the industry because they were going too fast. I brought this up on NFA Live and a lot of you in the comments were like, "That's BS. We don't think that's actually going to happen." And you know what? You're probably right.
The thing is, they're calling for everything to slow down, yet in the background they're releasing a new AI model — more powerful, getting it in the hands of people, and really hyperdrivng what they're doing right now. It doesn't sound like somebody who really wants to slow things down if they're making new models, better models, faster models.
Why would they do this? It's because there are open models and there are closed models. Closed models — the ones we just took a look at: Anthropic, OpenAI. Open models are the ones you hear about from China, doing all these great things, but it's an open model — they can do whatever they want instead of having everything in a walled garden. That's why I think open's going to win. But because there's so much open AI trajectory moving forward in that direction, we're seeing that a lot of these companies are like, "Oh, shoot. Maybe this moat that we thought we had around our business, and the tokens that are being used, and the amount of money we can actually get — maybe it isn't as big as we thought." So let's call a spade a spade and say, "Let's slow everything down. Let's subsidize this with the government." These are just the thoughts that I have, and I think there are some other people with those same thoughts.
Jerry, you're in the AI business. Take us home, then we'll get into the Q&A.
The economics of AI compute: tokens, electricity, and sovereignty
Jerry: I'm actually in the compute business, and AI is the industry that is using the most compute. One of the things I think it's important for people to understand is that tokens are the fuel. Like watts are the fuel for powering my computer — my computer needs X amount of watts, I'm getting those watts from a hydroelectric plant 80 miles down the road, and I'm paying for that electricity to go into my machine. The tokens are that same type of commodity in the compute world.
What you're seeing is the use of these platforms — whether they be open-source AI or closed — they use tokens. With an open-source deal, I'm not paying the programmer who created the open-source model for the tokens. I'm only paying the electricity and the hosting. So electricity running through a chip, whether it's in my home or down the street, generates tokens. If you add a closed model onto that, you add a third layer of payment. That's why an OpenAI model token cost is going to be higher than a cloud provider open-source model token cost. And then the very lowest part of that is: I host the model on my own hardware. Those tokens literally equal the cost of the electricity.
So there are these plateaus of cost for tokens. Not all tokens have the same value when it equates to dollars. And that's the hierarchy: I host the model myself — lowest token cost. I go to an open-source model in a cloud provider — maybe an AWS server, a Digital Ocean, or somebody like that that has a cost structure. And then if I'm getting it directly from OpenAI, Anthropic, or xAI, I'm going to be paying the highest token price, because I'm paying for the electricity, I'm paying for the cloud, and I'm paying for their proprietary model.
One of the interesting elements we're seeing in this space as it pertains to compute — i.e., the use of tokens — is there is the cost of the token, and then there is the sovereignty or ownership of the data. And so this is a really interesting dichotomy in this whole AI space: the cheapest and safest use of a model is if you're hosting it on your own machine. Not only does it cost the least amount of money to operate, but it's also the most sovereign way to interact with data.
Rob: It's really backwards.
Jerry: It's really backwards and interesting. And so as this industry matures, you'll see a lot of that going that way. Unfortunately, that lowest-cost operating method is the hardest, because you have to know what kind of machine you need, you have to be able to maintain the machine, and you have to be able to understand the interaction — how do you harness that model? What is hardest is the cheapest. What is easiest is the most expensive.
Rob: That's well said. And let's just let it all play out. I'm not going to go further into this one. I just don't believe that AI is here to wipe everything out and take everybody's job. I think the people that understand AI and use AI will flourish, and the ones that don't will be left by the wayside. I know there are going to be some jobs taken away — like a typewriter repairman, there's no need for that anywhere. But you could cross-train that person to maybe get into IT back in the big boom days of the internet and they would have been well needed. A lot of the jobs we think are going aren't, as long as people just realize that we can move forward.
But actually, there's one more point. The reason I brought it up was because if we see this problem with Anthropic and OpenAI and SpaceX, then people would think, "Oh well, now the AI industry is going to collapse, which means the big AI run's going to collapse, and then we're going to see a problem with the traditional markets, which will carry over into our crypto markets."
But as I was talking with Jerry offline — Jerry, what do we need for AI to make it go and actually be profitable? What is the underlying source?
Jerry: Electricity.
Rob: Do we have to build —
Jerry: Electricity will always be the fundamental element for which the entire cost structure is built upon. Because without electricity running through that processing chip, there is no AI. AI is literally software. And software doesn't operate unless it's got electricity running through a processing chip — whether it be a CPU, GPU, LPU, NPU, doesn't matter. It's got to be processed, and it requires electricity to process. It's like having a vehicle. If you have a car in your driveway and there's no gas, that car only has value as a paperweight or a scrap of metal. There is no real utility with that car until you put the fuel in it.
Rob: So look at the picks and shovels then, right?
Jerry: And if you look at the way the world is set up right now — and this is everywhere, this is not exclusive to the US — there is no infrastructure anywhere on the planet that can meet the upcoming demand for electricity. There's no country that has a grid sufficient to take us where we need to go. Every country needs to upgrade their grid. Power needs to be upgraded. And this is the great opportunity for all of us. Can you get to a place where you can actually create electricity? Can you put solar panels on your roof? Can you harness the power of the river next to your house with hydroelectric? Do you have a geyser in your backyard that you can harness for geothermal energy? If you can, now all of a sudden you can create a commodity that has ongoing value.
Rob: I think with the average person, solar and hydro would be a good one. Anyhow, Jerry, well said. Thank you for the insights.
Q&A: nuclear power, energy sovereignty, and AI infrastructure
Rob: Let's go into a little Q&A and we'll get Jerry out of here so he can watch those games.
Andes says: USA needs more nuclear power plants, period — more than they have in France. France and America, for some reason, we got away from nuclear power plants. I think we were worried about Three Mile Island and Fukushima — that catastrophe that happened, the lives that were lost. But there's been a lot of information put out about how we now understand how we should be dealing with nuclear waste and we actually have it all figured out. The problem is moving forward with it, because in the minds of the people, they don't want it in their backyard. They don't want to build it. They don't want to do anything with it. And it's a big problem. I think if we would have gone that route, we would have been better. As far as nuclear power, I'm all for it. We're going to need a lot of it. Jerry, your thoughts?
Jerry: I think nuclear as an industry got a really bad rap in that every historically bad outcome from a nuclear perspective happened in one particular industry — large-scale national-type facilities. When you look at the US military or any country's military, look at all of the nuclear submarines and aircraft carriers — never once a problem in the last 60 years. Not one single problem out of the hundreds of vessels that are being powered through nuclear reaction. Not one problem. Which means we have an entire blueprint to build smaller-scale, more localized, safe nuclear power generation options. They're faster to build — in other words, get the energy online faster. They have a better track record of maintenance and success without problems. I think you're going to see the nuclear industry go from these monster Three Mile Island-type things to more county-regional, smaller-scale elements, and there'll just be more of them.
Rob: This was me and Ben talking about this, because there was a documentary on Nikola Tesla and his whole idea was the same thing you just described. It wasn't to have one big centralized electrical component run by the state or the government. It was small electrical posts in each neighborhood that could bring out the electricity that was needed. And now it's the same thing. Ben talks about these small modular units for nuclear power. It's the same thing — just in smaller units, all the way throughout the whole city. I thought, well, that's pretty good, because actually creating the big huge ones is a big problem. The big thing — and they'll figure it out — is all about the cooling and making sure the radiation is contained. But that's way beyond the scope of this channel.
Someone says: Wes seems like a nice guy, but when I think of him, I think of Avantis and Aster — two of his big plays that he thought were going to do pretty well. Didn't work out the best.
Jerry: Find me someone who's been right 100% of the time. Very difficult to do. Everybody's fallible. Everybody will make mistakes. Everybody will make a bad call. Every one of us will put money into a project that doesn't go anywhere. Guaranteed.
Rob: Avantis — down 71%. Yeah, I would not want to be in that. I actually got into Aster for a little bit.
Global energy inflation and its impact on crypto markets
Rob: Hey, damn it — we forgot to talk about the inflation. Jerry, what's going on over there in Costa Rica?
Jerry: So I've been kind of raging a little bit around the whole corporate global greed around the Iran war and the oil and energy shortages coming out of that region of the world and how it's affecting the rest of the world. For instance, the US, who does not import that fuel — gas prices in the US have gone up. In Costa Rica, they doubled. It went from the equivalent of about $1.10 per liter of fuel here in Costa Rica to $2.25 a liter. Double in the last six months. Inflation for certain things is going absolutely bonkers.
Some of it's supply-demand related. Compute Portal is into compute, right? So we're looking at ways and means that we can help provide compute to people, and one of those is through owning our own machines. One of these really cool little AI devices is called the Nvidia GB10 Grace Blackwell Spark. It's got a GB10 Grace Blackwell chip — great for running all kinds of different AI models. I've got a small open-source model running on it right now, a 120-billion-parameter model running. That machine in January cost me $3,200. I'm looking at maybe expanding a cluster of these — deploying a cluster for helping people onboard instantaneously and then moving them to their permanent provider later. That very same machine that in January I bought for $3,200 is now $7,900 — eight, nine months later. And that's just the devices. In the cloud world, cloud compute is going up at an almost exponential rate, and it's because electricity and building these data centers — the supply-demand ratio is skewing more and more. Demand is needed and the supply is not expanding to meet it. It's really getting crazy, and it's all caused by all these new companies needing and using these AI tools that require electricity and chips.
Rob: Yeah, we've got that issue. We've got the Iran issue. We've got two different choke points — the Strait of Hormuz being taken over by the Houthis, and then there was a big drone attack just this weekend on Russia, with millions of barrels of oil production getting shut down. So we've got a lot of bottlenecks for energy, and that's going to be an issue. Unfortunately, diesel — that's how all goods and services are run across all the nations to deliver. So expect some more inflation. This is why, of course, we own assets to deal with the inflation level.
Jerry: We talk a lot about financial sovereignty — having ownership and control over our value. There's been much talked about data sovereignty — own your intelligence, own your information. I don't think enough is said about energy sovereignty, whether it be from a municipality or from us individually. For instance, do I have the ability to power what I need powered if the outside world said, "Jerry, you shouldn't have this, or for some reason we're going to cut you off"? I think that will become more of a talking point and an investable category to be thinking about as we get further down the road. Energy sovereignty — whether it be for the individual, the municipality, or the nation state.
Rob: Energy, and also open-source LLMs.
Jerry: Open source, baby. Open source gives you the ability to own — again, back to that word sovereignty — to own your data, own your deal. And as we get closer and closer to a model that can recursively self-improve itself — recursive self-improvement, RSI, a new acronym that we should all learn — it's going to get really interesting.
Crypto exchange insurance, the STABLE Act, and the case for Bitcoin-backed loans
Rob: This is a good quote from Raoul: "Read the fine print on keeping crypto on exchanges. Coinbase and Kraken say they owe you nothing if your account gets hacked. You have to pay for protection and they only get back the level you pay up for."
I think when people take a look, they say, "Oh, well, it's insured." And there is FDIC insurance, I believe, through Coinbase and Kraken, but that's only for the dollars that you're putting there. That has nothing to do with stablecoins or any of the crypto that you have. So if they get hacked and that goes away, it's on you and you're the one responsible.
This was one of the things we talked about a couple of days ago, where we talked about the STABLE Act not really making it, but we didn't really need it. And there was a senator from Missouri, Josh Hawley, and he came out and said the reason he's Republican — the reason why he didn't vote for it to advance — was because he was worried about what his constituents told him, which was, "Hey, we're farmers and we need these local banks. If we don't have the local banks, they're going to take everything out and we can't get loans." So he said, "That's why I went against them."
And I was thinking to myself: banks are going to go by the wayside at some point. And all you really need is two things. We need some type of what would be considered like an FDIC insurance for your stables at least, and maybe your crypto. And the second thing would be loans — loans where you don't say, "Okay, Bitcoin's worth $100,000 today, and if it fluctuates, we'll give you a margin call." Not loans like that. Loans where it's like, "Bitcoin's worth $100,000 today. We're going to lock that in and you're going to get this percentage." Coinbase is doing it, but they're only doing it with down payments and the rates are between 9 and 11%. So have fun with that. Once those two things get in, I think we have much more of a foundation, and that will be real utility.
Jerry, what do you think?
Jerry: That topic will happen as this industry matures. I really like that Senator Josh that you talked about. Unfortunately, very misguided in this particular instance, because the banks that he is saying are giving loans to his constituents — the farmers — are gouging them no differently than the national oil companies are gouging US fuel consumers. A company like Kraken is much more likely to give a good deal. For instance, a farmer who has a surplus of cash can put it in Kraken in the form of a stablecoin and earn 4%. He cannot do that when he goes to the regional bank of Missouri — he'll get 0.05%. So if he really wanted to take care of his constituents, it would be to give the constituents what they need to do what they want to do. It was a clear bias for the banking industry, and I'm really disappointed in him because I love the way he goes after other scammers and corporate bad actors. I think in that particular case he got duped. But anyway, that's my little rant on that.
Rob: That's a great way to leave it right there. Perfect. Jerry, leave it right there — it's kickoff time in like seven minutes. We've got to get out of here.