Dec. 11, 2023

CD116: Home Bitcoin Mining with FutureBit and Bitaxe

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Citadel Dispatch

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BLOCK: 820743
PRICE: 2452 sats per dollar
TOPICS: home mining, small scale mining, censorship, pools, tradeoffs

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(00:00:49) Home Bitcoin mining, pirate mining, noninstitutional mining

(00:01:55) Futurebit's new product, the Apollo 2

(00:08:31) Mining pool centralization risks and the need for more options

(00:48:06) The need for tools for smaller miners

(00:50:11) The confusion around the Coinbase transaction

(00:57:12) The importance of self-custody and running Bitcoin at the base layer


00:49 - Home Bitcoin mining, pirate mining, noninstitutional mining

01:55 - Futurebit's new product, the Apollo 2

08:31 - Mining pool centralization risks and the need for more options

48:06 - The need for tools for smaller miners

50:11 - The confusion around the Coinbase transaction

57:12 - The importance of self-custody and running Bitcoin at the base layer


Happy Bitcoin Monday, freaks. It's your host, Odell, for another Citadel Dispatch,

the interactive live show

focused on actual Bitcoin and Freedom Tech discussion.

We have a timely

topic lined up for this week. I'm very excited about it. We will be talking about home Bitcoin mining, pirate mining, noninstitutional


and all that good stuff that comes with it. I have, I have John here, founder of Futurebit. How's it going, John?


Good. Great to be on. Like, really excited, about this episode


and talking about what we're up to. John, is this the first time this is not the first time you've been on dispatch. Right?

No. It has. We've been we've been trying to schedule this for the past year, I think. Well, I'm glad we made it happen. It's not the first time we've had a public conversation. We've done stage panels. Yeah. Yourself


before, though. Not that


Well, I'm glad we finally made it happen. And we have,

Scott here, lead maintainer of the BitX open source project. How's it going, Scott?


It's going pretty fantastic. Thanks for having me on here. Pretty pretty excited to be here, chat with you guys.



It's a pleasure to have you both on here. So I think a good place to start is,

well, actually, I I think a really interest I don't know. Let let's start with this. John, you have a new product coming out. Futurebit has a new product coming out. Why don't you tell us a little bit about the product?


Yeah. It's, it's been a while, 2 weeks for us. We just launched,

the Apollo 2, which

is kind of the

culmination of all our work at Futurebit for the past,

let's say,

8 years or so. This is a product that I've been trying to release,

for a long time,

and it's I'm really proud. The team pulled it off, and we're finally able to to get it out there.

It's pretty much the first time


mass consumer

home Bitcoin miner,

has caught up to

almost caught up to the late,

generation node.

So it's a 5 nanometer ASIC,

pretty pretty nice efficiencies on it.

And our big feature that we're kind of introducing with the product is,

our our revamped 2 point o OS on it.

So for those that don't know about Futurebit,

what we kinda do in our whole mission is to,

get as many nodes out there as possible. And how we do it is by combining

a full node and a miner in the easy to use,

box that's plug and play, and then anybody can get started in the 5 minutes.

So with this product, we're taking it a step further, and we're introducing

a way to

continue the decentralization of Bitcoin network. And we're


what we call a stratum solo pool on the device.

So anybody will be able to, you know, be as the device already runs a full node. Anybody will be able to launch their own stratum solo pool on the device

and be able to solo mine directly onto the device.

And the cool part of that is it's also stratum server, So you can actually point whatever other miner you have. So let's say you are, you know, a small time miner that has a petahash of of s nineteens, but you wanna solo mine to your own node.


you'll be able to do that with a a flick of a button on our device and, not only solo mine on the power itself,

but be able to point whatever other hash rate you have to it.


Okay. I It's so cool. That's so cool. This is a first.


Yeah. Yeah. This is, this is the first time,

something like this has has happened, and it's it's kind of

how I always talk about this in our product is we're we're trying to get back to where Bitcoin was

where the Bitcoin core software that Satoshi released

had the wallet functionality, had the full known functionality, and had the mining capability all in a single piece of software.

And that's what actually helps the decentralization in the early days. And what's happened in the past, you know, decade or or so is all those 3 services have kind of split apart


been centralized. So the wallets are on mostly on exchanges now. Mining is done mostly by huge server farms and corporations,


nodes are barely even being run by by regular peep

you know, our core users. So we're trying to change that and and bring the whole ecosystem back to to how it was in the beginning.


Well, look, John. That's that's badass. I feel like you got ahead of yourself a little bit.

What, like, what is the hardware?

Like, what are why should we be excited about this hardware? What does it mean to, like,

like, we should we could get to the pool stuff, and I think we should have, like, a long a a decently long conversation about the pool stuff and trade offs.

But, like, this the actual hardware. So, like, I'm I'm a consumer.

I'm buying this thing instead of buying, presumably, like, an s 9 or some other

well, like, s 9 is, like, 5 generations ago, but, like, are there some last generation minor? Maybe I'm, like, converting it into a heater or something and trying to do things.

You know, how is how is this different from that?

What am I buying?


So do you guys wanna see it, first of all? Yeah. That'd be great. Yes.


Can I make you big? Yes. I'm gonna make you big. Yeah.


Just so they get you can so it's an absolute

gorgeous. It's a production sample.


That's badass. Very clean. It's pretty much what everybody's gonna get.


You know? It's a little 6 exchange block.

So, yeah, what what you're getting is a plug and play, a 120 volt miner. Anybody can run-in their desk.

The issue

with Bitcoin mining in general and what,

Futurebit and Scott and others are trying to solve is how can we get more people involved,

in Bitcoin mining where most of the machines are 3

that you can't run-in your house. They're super loud. And even if you do run, most people shut off after 2 months when they find out their power bill's $500 a month.

So what

our approach was, let's make

a a small enough miner where the power bill would be


be at the point where most people wouldn't see an impact on their power bill, wouldn't shut it off. So we want someone

to buy our product and be like, alright. I want

to participate in Bitcoin mining, participate

in decenters decentralizing

Bitcoin network,

be able to earn some sats for doing that and doing it in a way where it's cost effective where, you know,

a month, even if your power is not breakeven, let's say, in in FIA pricing, you'll still continue to run it and stack those sats. And over time, there hasn't been, you know, a period in his in Bitcoin's history where, you know, our users have not

earned more Bitcoin than what they've paid for the

over a, you know, longer long enough time span.

So that's that's kind of what we're trying to solve with our product is is get

the the people that, you know, have bought Bitcoin. They have Bitcoin on exchange,

have heard about mining, but have, you know, have dismissed it as something that they can't do.


we're motivating people to be like, alright. Here here's a product where you can put it on your desk, and you can start mining in 5 minutes and super quiet. Doesn't

cost a lot of money and won't, you know, heat up your house in the in the military.

And that's kind of our our our niche in what the future of it does.


Badass. I think that was a good explanation.

That's awesome. Yeah. So so

reducing heat, reducing noise, making it pretty. Just have to plug it into a regular outlet, don't have to call an electrician over,

and do that all in, like, a polished, easy to use user experience.





So early needed.

I look forward to getting my hands on one.

Okay. So with that said, you have this this pool concept that you've added, this idea of

each one of these can be their own solo miner,

without a pool. Right? So there's there's no pool involved in that, but then they can also direct other hash they have to that as if it was a solo pool. Right? Right. Yes.

Yeah. Go ahead. And the I mean, the trade off there is, like, the reason people don't solo mine

is the reason they pool mine is is they have expected rewards. They they

they don't have to

they know, like, okay. On every week, I'll get about this much Bitcoin.

But with solo mining, it's more of like a lottery type of situation where

you can mine for

a a year and get nothing, or maybe you hit a block and you get

a a a ton of Bitcoin. Right?


Right. So that that's how we we position,

the solo mining aspect.

It is a lottery miner. So there's a very small chance that, you know, with our device, that's 10 tera ash, you'll be able to hit a block.

But on the flip side of that, and kind of what our vision is long term is

that doesn't matter on the individual level. What we're trying to change is on on the whole network level. So when we have, you know,

one person with 1 node and and one device

solo mining, if you multiply that across, let's say, a 1000000

people across even different devices, not just future bit and other, you know, what Scott's doing and the other, solo miners out there, you get a network effect where people will start finding solo blocks

times a day, and that will expand to a quick percentage,

if, you know, what we do is successful in others.

And I think that's where we to,

to have free, uncensorable blocks on on the Bitcoin network even if it's a small percentage. Right? So, you know, we see what's going on,

in the last couple weeks with censorship on on big pools and and all of Luke's stuff, and

we need

a different solutions out there,

that really,

bring decentralization

forward in the way that it should be on the individual level where individuals hide what blocks our mind.

And at the very least,

you know that there's gonna be at least a couple free blocks out there where you know your

no matter where it is.

So that's that's kind of, like, our our long term,

vision with with the solo pool.

And and, again, this can be paired, you know,

with big miners as well. So let's say,

you know, you're

someone that has you're you're not a corporate miner, but someone that has a large amount of Hash rate but

skill to to run your own solo pool.

Here's a device where you can just plug in and point your hash to it, and then all of a sudden, your your own pool and mining directly to your own node, which is

sorely needed in this space.

It it it is actually one one of our biggest feature request we've had since we launched the the original Apollo, so we're really really excited for it.


Pretty fucking cool.

Scott, so, like, where does what what is the bidax project? Like, where does bidax fall into this whole macro environment?


Yeah. The the bidax is a


a a smaller miner. Right? It's a it's a a half terra hash. Right? So it's

it's a a 20th of what the, Apollo 2 is.

So So it's a it's a much smaller miner, but I guess on the on the flip side there, it uses significantly less power too, and it's it's very quiet and and, you know, very cheap too. So,

it's a, perhaps an even easier way to get people into mining who may have been turned off

from doing it, you know, some other way. Right? So we can we can get them we can get them in on this through several several different angles here, which I think is pretty awesome.


Is it also under, like is is the main use of it also this idea of,

like, a lottery miner?


Yeah. I mean, there's nothing about the the miner itself that says you have to do,

solo mining or lottery mining, you could you could join a pool.

It just uses a standard Stratum client

to to join any kind of pool. But,

you know, in my opinion, I think solo mining makes the most sense.

With these relatively

low hash power miners,

if you mine with a pool, you're you're essentially

committing to earn very little SATs

forever. You know, you you can't solve your own block when you're mining with a pool. So I think soul mining, lottery mining makes a lot of sense with these,

micro miners, these home miners.


And people are so, like, you can buy, like, a,

like, a preset up bidax, I guess, for, like, $95 or something like that I

saw. Yeah. Or, like, people are making them themselves. Is that what's going on?


Yeah. Yeah. That that's sort of the the concept with the BitX is that all the designs are published on on GitHub, you know, the hardware, the firmware,

the software. Everything is out there. So if you are

feeling crafty, you can, download that stuff and build it. I have some very rough

guides out there on how to do it.

Not gonna lie. It's very hard. It's it's really hard to build yourself.

So be sure you're in for a a real project if you wanna do it. But,

several people have done it. I've been, you know, surprised. People have contacted me and been like, I've never soldered anything together before in my life. Can I build this? And I'm like,

I don't know. It's it's the thing with the harder, man. People don't realize how how hard it is. And it's the place you get into it. You're like, oh, man. Okay. Now now I get it. Now I get it. But I, you know, I've I've seen people come back and post pictures of what they've soldered, and some of them are just train wrecks. You're like, buddy, that's that's never gonna work. Start over. But then on the other hand, I've had people totally do it. One of our biggest contributors,

the first thing he ever soldered together was a BitX, and now he's manufactured them in the 100.

So, you know, it's just your your sort of,

aptitude for a

big project and and, you know, diving in and seeing if you wanna

try and figure it out.


Yeah. I mean, I think I think this is why it's interesting to have both of you guys on the show,

because I feel like you both see the same problem, and you've obviously coming at it from completely different


I, like, I wouldn't I I don't think these two projects are are competition in any way. I think they're largely complementary.

I mean, the Apollo 2 is almost it's like the it's like a Mac mini of home mining.

It's like this Yeah. Completely polished project, and then bid access is, you know, open source, do it yourself project at a much lower entry cost.

What is the Apollo 2 retailing at right now? It's 1100?


So just the, the minor part of it.

So we we have 2 versions. So USB minor,

which is just the hash unit. It's 800 for 10 terahash. And then if you want the full node,


mobility, it's,



Got it.


Yeah. So we're we're we're definitely on the higher end of things.

And going off your comment,


there should be

dozens of people like us and and dozens of companies doing what I'm doing and Scott is doing. The the the market is huge, and

we need to we need to get a lot more hash rate out there to the

and that can only be done by projects like this,

like Futurebit and and Scottbit.

And a lot more new and innovative projects that are coming out that I've I've seen,

which is really cool, and and I'm glad that, you know, what we started at Futurebit has has started to to branch out to other areas.

And people are starting to see the value of of Hope Mining and bringing hash power back to the people,

because going forward, especially if the BlackRock ETFs and everything else gets approved,

there's gonna be a lot of of more centralization going on in Bitcoin. And,

you know, whether

whether you see it as centralization or not,

whether you think it's just part of free market dynamics,

at the end of the day,

power is still getting concentrated.

And what, you know, what a lot of people don't understand is Bitcoin, the system itself.

It's it's not

not decentralized

just by itself. It's it's decentralized by the people that sorry. By the people that run it.

So if enough people are not running it,

that's how Fanny said, you know, You need to be running at the corporate level. Otherwise, it will not remain decentralized when there's only, you know, a dozen corporations

running nodes

and, you know, over 50% of the hash rate,

is controlled by them.


a lot more companies than just us to to get the hash rate into people's homes and to get it to the level where,

we're sure that Bitcoin can't be

manipulated and then taken control of by by,

centralized powers.



I yeah. I mean, I agree. I I would I would like to go deep on on mining pool centralization

risks and and and mining centralization risk in general and and, like, look at the big picture. But before we do, just real quick, one of the other issues we've seen

in, mining centralization

is is manufacturer

centralization in terms of actually,

creating the chips. Right. It's it's largely been dominated by Bitmain

and Whatsminer. I'm curious, like, what are you doing in terms of chips for the Apollo 2? I know the Apollo 1, they weren't,

they they they weren't, like, old s nines, which a lot of people thought they were. Like, what what is the deal with the chips in Apollo 2? Like, how does that work? No. So we we've had a a great relationship with a partner,


that we've been

kind of codeveloping the chips with, for the past 5 years.

So that relationship is ongoing,

and we're continuing to build new generation ASICs.

We actually buy our our ASICs direct from the fab.

Like, the actual chips direct from the fab? Yeah. So a lot of people don't know that, but we're we don't buy 3rd party a 6. The their our orders go direct to the fab, and that's what we receive. That's badass. That is badass.

And that's also why, you know, a lot of people, you know, and I see the comments on the x as well. It's like, why why is this stuff so expensive? It's,

you know, when when you're buying direct new silicon, it's expensive.

You know, people people don't realize that the stuff Bitmain is selling you, it's, first of all, it's already used by Bitmain themselves. The

it has a history of doing this. They they always sell you used stuff, and that's kind of how they they,

bring the prices down to tell when when you pick it up at the end of the day.

And and and there's been a a a market created where people say, oh, that's that's the price of new silicon. It's like, no. It's not.

You know, the the just the silicon that's in the Apollo 2 is $400.

So our margins are super low on on what we build, and that's kind of always been the philosophy of the company.

Price the product to where, you know, I can pay

our developers and then and our our our people working on it,

and make a little profit on top.

But building hardware, especially at the scale that we're doing it, is is super hard, super expensive.

And, you know, we also are made in the USA. So that, you know, obviously increases our cost, but, again, that's that's part

of the philosophy of the company. It's a I wanna bring more production here,

and and get away from reliance

on Chinese manufacturing.

But, yeah, on

on the ASIC side as well, it's we're starting to see that change as well.

So, obviously, Block is is creating their own 3 nanometer ASIC, which,

we'll we'll hopefully be partnering with.

And Intel was, like,


kind of a funny side story.

The the policy was supposed to use Intel's chips.

So they

we were working and had a prototype working with them,

and we're about to place a bulk order when

they decided to to bow out last second.

So that's kind of why the product is about 6 months late, as well. So we we had to pivot and switch back to our our old,

basic that we were using.


At least that happened before the order.


Yeah. Yeah. That that would have been bad if it happened, as as we announced and started production. But, yeah, that that was a big blow to

to the industry. We were talking with them, and and we were kind of trying to get them to be, like, you you know, you guys need to build

an ASIC like you did with the original,


Pentium Processor where, you know,

you you built a processor, and then you you gave it to everybody else to build


And, you know, dozens of companies spired up and built the the, you know, the whole

that happened because of that, and and it was because of Intel. And we were excited that Intel was going to do that for the Bitcoin space.

But, you know, unfortunately,

them being a huge corporate,

behemoth when they saw the the profits and margins weren't there. They just shut the program down, and and unfortunately, that was a


for the rest of the industry. But there's a lot there's a lot popping up in in their place. So Yeah. It's a classic air market casualty.


They'll come back they'll come back into the game.


I'm sure.


Scott, what do you guys do for chips? Like, what's the situation with BitX?


So the BitX actually uses Bitmain chips,

and not through any sort of,

partnership or even authorization at all.

The project started

with reverse engineering


ASIC, the chip in the s 9, and then,

kind of, like, there's no documentation. There's there's no,

you know, official data sheet or anything. So it's just sort of

figuring out how it works by trial and error,

and then

did the same thing with the chip out of the s 17

and then finally moved to the chip out of the s 19 XP, which is what we're currently using. But,

yeah, we we buy those chips from the repair market. So these are chips that are slated for,

ASIC, like, repair


and they're very expensive,

because they're,

you know, they're just not meant for building into miners. But,

they are sort of the most popular, the most abundant,


the most performant, I mean, at least for the time being. Like, John said, this this is changing fast. I've

I've, aware of several other upstarts that are kinda coming at bit, man.

But at least for the time being,

they're they're the best.

So, yeah, that that's what we're using. It's it's a little bit tenuous

of a real of a, situation there being dependent on,

another manufacturer that doesn't Yeah. Necessarily

well, I don't think they care, but they're they're certainly not on board.



Okay. Awesome.

So let's talk about, mining pools.

First, I think the first,

first place to start is, Scott, you were you had the privilege of being at the Ocean Mining Pool launch.

Me and John weren't able to make it.

Why don't you tell us a little bit about how that was,


what the vibes were like? It was it was really good vibes, to be honest.

I feel like there's several people there that I met,

in person for the first time, and,

they seem very edgy and,


online, but talking with them in person was fantastic. I don't know. I mean, that's Many such cases.


So some of the, more more infamous characters that you,

or your listeners maybe have read online were fantastic to talk to in person.


the you know, my my takeaway from it was they're they're very sincere


sincerely interested in what's best for Bitcoin.

It was a it was a really cool event,

in South Carolina,

and part of it was at a hydroelectric,

generation facility that has, like, you know, from, like, 18 or whenever that's been restored. 18 or whenever. I like that a little bit. It was old. I forget the exact date, but,

Bob Burnett and Barefoot Mining have have restored it, brought it back to life. It was kinda cool they were talking about, like, oh, you know, step 1 was to get a specialist in antique,


generators. So,

you know, find that guy wherever he is. And then, he got it working again. And and so we got to do a tour of that facility and see it. And it's it's it's beautiful, and it's,

you know, they actually

have these huge gates, and they they they redirect the water into the facility, and the whole thing spun up, and it it was really cool. And they have they have got a bunch of minders on-site.


you know, I I thought it was a fantastic event. It was it was very small.

You know, I got a chance to meet and talk to a bunch

of cool people, and and it seemed,

you know,

it seems,

it it seems very genuine to me.



So, I mean, the the guys at Ocean Pool, Mark and Luke, and their investors who supported them have have

have focused their attention on this concern,

that we we are in a situation right now


mining is hash rate is going through the roof. If you if you look at hash rate charts, it's incredibly impressive.

It's just growing at a almost nonstop pace.

And I like to I like to say that hash price has like hash rate is the price, it doesn't lead the price, it doesn't lag the price, it is the price because it's the freest market in the entire world. It's it's energy for Bitcoin.

So on the surface, it's incredibly bullish.

But what's happening is,

the way mining works is,

miners are are are contributing work to


to earn Bitcoin. Right?

And as a part of that, they are constructing blocks, and they're constructing blocks and choosing which transactions are in the blocks.


that role has been

essentially delegated to mining pool operators. If you are in a mining pool, if you're in one of these large mining pools like Foundry

or f 2 pool

or Ant Pool or even the smaller ones like brains or whatnot, what you're doing is you're contributing your work from your miner,

but, ultimately, the pool operator is deciding which transactions are being mined.

And this is a concern

because of this idea of protocol censorship risk, this idea that certain,

transactions might not be included in blocks. And if enough miners,

come together to to to not to to agree to not enough mining pools come together to agree to not mine those transactions,

then in effect,

those people cannot transact

or at a slightly

in a in a better scenario, they can still transact, but they have a degraded experience. It costs them a lot more money in transaction fees because, you know, maybe 10% of the hash rate or something will mine with them. So,

I think Luke and Mark, I I agree, I think,


well meaning intent.

And the idea is

the the perspective is is sound,

which is we need to give miners more options. And also, furthermore, the long term plan for ocean

is that the individual miners construct their blocks rather than the mining pool operator themselves, this idea that a single individual,

or, you know, maybe a group of individuals in a mining pool entity gets to dictate which blocks are mined,

is is fraught with centralization

risk. They can be pressured.

They can act maliciously.

But if we widen that net and make more allow more people to construct their blocks, we're in a better situation. Now they don't have that implemented yet.

They do have

this feature where you can see what transactions they plan to include in their block live on their website,

which is which is unheard of. This is the first time I've ever seen that.

And the idea is if you're a miner contributing hash, instead of waiting till after they might have blocked to leave them because they're that's that's the great check and balance. That's the one that everyone always says over and over again. Mining pool operators censoring transaction,

Miners will leave, but they can only leave after the censorship

has happened. Right?

So they show the get blocked. They show the block template ahead of time.


has historical,

concerns with certain types of transactions in terms of how much data are are included in those transactions.

And his block templates are are are not including those. And so we know about that ahead of time before the my before the blocks are even mined. And so as a result, there's almost like a preemptive controversy even though they have a small amount of hash rate that transactions aren't being included.

Before I push it to you guys, I just wanna say, last but not least,

regardless of your ideological views on spam,

Bitcoin has a brilliant spam,

mitigation mechanism, which is the transaction fee market. The whole reason transaction fees exist in the first place is because

block space is scarce.

Space on Bitcoin's ledger, this ledger that will last for

if we're right way past our own lifetimes will last forever, or if not nearly forever, I don't want to speak in fully absolutes,

has a has a scarce amount of space to it. And as a result, we have this pure free market

with with demand and supply,

where transaction fees are dictated. So this idea that


the main concept comes down to if someone wants to spam the network,

they will spend a ton of money that will go to miners, it'll improve Bitcoin mining infrastructure,

and eventually, they will run out of money.

That is the simple spam mitigation technique that Bitcoin has.

So with all that said,

I guess I'll push it to John.

Like, John, I mean, you have very strong views on mining centralization

risk. Right. How do you view this? You know, what did I did I get anything wrong? Is your perspective different than mine?

How do you view the whole ocean controversy?


Yada yada yada. No. No. No. I mean, you you pretty much hit the nail on the head. At the end of the day, you you're either

I mean, listen. It's it's it's a hard topic


you you can argue both ways

that and all of that was never meant to be part of Bitcoin

snuck in there,

which is essentially what did happen. But at the end of the day, there there's many mechanisms where they can still use

block speed to to push short notes whether it's through the current,

bit that they're using it, or not. There there's a lot of ways. So and like you said, people people that wanna spam are gonna spam their Bitcoin, and and they have in the past as well. So they've they've spammed,

transactions in the past where it it was called a dust spam attack back in the day.

But, again, it's like you can do that for so long before you run out of money as you said. And I I don't wanna get into the the

the point of

the arbiter of of what is or is not allowed on on the blockchain.

People should be deciding that.

If people come to consensus that it should not be happening, then that's there should be a new

Bitcoin core push that and people should start running that, and that's what happens to the network.

And that's kind of the philosophy,

we'll be taking with the solo stratum pool. We're we're gonna allow our users to, you know obviously, the latest core is what's gonna be preinstalled on the system, but there's gonna be an option where

people can

you know, if there's certain flags that are part of, let's say, user activated soft work, users will be able to check or uncheck that flag easily.

They'll be able to run their own version,

of whatever

core software they want or even if it's,


So, you know, it it should come down to to the individual, and and that's where

decentralization and and such resistance happens.

And and, again, for that to be,

effective across the whole Bitcoin network, there needs to be enough people doing this, which they're not currently.

So, you know, that's that's what I wanna hit, hammer home. And and and what I'm doing and why I founded the company is we need to get a lot more people running notes.

People need to understand that,

yeah, at the individual level,

it might seem

that you don't have much power over it. But when there's millions

of coming together and and coming to a consensus,

that that's

and that's where the true power of the Bitcoin network is. And,

you know, we need a lot more education around that fact and and making sure people understand this.

And that's kind of, you know, my stance on the whole thing.


And John's not being hyperbolic marketing terms when he says millions of people. How many Apollo ones did you sell?


Yeah. We we had about a 100,000.


That's insane, dude. I don't think anyone realizes

that you sold that many units.


That's why I repeat it all the time. That is insane. I did not know that. This that's incredibly inspiring.



That's really cool. We might have oh, you're still here. Go on. Alright.

Scott, hit us.


One of the things I wanted to bring up and about the the ocean pool, and this is what,


and Luke and I were talking about

before the event.

I think this this detail about the pool has kind of been lost in all the,

excitement around their


ordinal disrespecting, I guess. Anyways, they,

it's a, noncustodial,

pool so that they have this kind of interesting technique by which they pay the miners directly from the Coinbase of the mine block. So,

they don't

in except for in the cases of of, you know, very small amounts, like very small miners. For the for the larger miners, they pay them directly from the block. So,

the miners are getting the coins created,

from in the coinbase from the block they solve, and

it also


of puts that that decision, you know, should we refund? Remember, there's this drama that recently happened with the someone

accidentally paid, you know, an insane fee, and then the the pool refunded it. Right? It it's just I think it's not really an option because it's just,

you know, they get paid a percentage of,


all the fees that are in a block that they solve, which is It was up to the miners. It's up to the individual miners if they want to,

return it rather than up to the pool operator, basically.


Yeah. Yeah. And, I mean, they're you know,

it's unlikely that any one miner is gonna even have it all. So,

it's a pretty interesting concept,


I think

it actually has some implications and and maybe some applications


home mining because,

you know, we we sort of are stuck in this,

We're not stuck in it, but we we we're sort of in this,

solar mining

paradigm for home miners because it makes the most financial sense. But, you know, if we were to kind of create these



pools where, you know, groups of home miners could could band together to maybe,

make for somewhat more regular payouts,

then a a strategy like this where we sort of automate the,

you know, the the splitting up of the of the block. I don't know. It's it's a pretty interesting idea.


Yeah. Can you guys hear me?




Yeah. So there's actually a cool proposal.

I don't know if you guys know,

Bob McGrath,

but he's he's working on, Bob Bob from where?

Bob, the


Oh, Micklereth.


Mickle Rath. Yeah. Gotcha.

He's he's working on he actually we've been working with him to for him to be our next,

grantee for for future bid also does grants.

So Nice.

Our our first grant, that we gave out, and he's the one that helped us helped us build the the functionality.

And we've been with Bob and talking to Bob about what he's doing. So it's kind of what he talked about,

Scott, where

it's essentially,

an updated version of the old

p two p pool that existed,

in the early days of Bitcoin. So it was


where there was no centralized

pool operator,

but, essentially,

people would join the pool, and then they would get paid out.

The header would be constructed in a way where they would be paid out based on the contribution of Hash rate, to to the block that was found,

which was a cool concept, but it kind of failed because,

big miners could take advantage of that and essentially

were in a greater advantage than than smaller miners.

So what Bob is trying to do is kind of fix the issues with that and launch,

it's kind of like a a a lightning side chain,

that works off a second layer mechanism of Bitcoin


there's no centralized entity,

that's in control of of the coins that are mined.

But people can join the pool. They get paid out a percentage based on their hash rate,

and this is all done automatically on chain.

And it's it's a really cool concept. That is a really cool concept.


Like, all these mechanisms,

like, this is how pools were like, this idea of getting paid directly from the Coinbase is how pools were in beginning.

Right. The problem is is that small miners,

they get paid dust or they don't get paid at all. Right? Like, there's they're, like, the default mechanism in Ocean

is basically,

like, if you're a small miner,

like, you get, hopefully, you'll get paid out in, like, a year or something, and it just because it's it, like, reaches a certain threshold where it's not, like, dust to get sent the transaction. And it's important to realize that a lot of people will say, oh, but the Coinbase transaction does not have any transaction fees because it's mine it's included by the miner. Yes. But the next transaction after that does.

Right. And as a result, if you get paid out a bunch of small small on chain transactions,

you get hit with a overwrought overwhelming

transaction fee burden.

So that's why we've seen like this one of the reasons we've seen the birth of this idea of custodial pools.

Also a bunch, especially the larger miners,

like all these different value added services that can be added on in terms of like fiat

conversion and stuff like that

loans, you know, a bunch of different like regular regulated financial products that they like to have on there. And then last but not least,

it gives mining pools the ability to offer




So actually, what you were mentioning earlier,

a lot of mining pools, the way they're set up, aren't obligated to give any of that fee when they get a large accidental fee to their miners. They're they're choosing because of a business decision that they don't want miners to leave them potentially for someone else.

But, technically,

they're they're a lot of these mining pools are based on this formula that just uses the the average

rewards that happened over a certain amount of time. So and miners usually like that because they get predictability.

So like, these are all it. At the end of the day, when you talk about most of the stuff, there's no perfect solutions. There's trade offs all the way around. And, like, the idea is to try and give as much options and diversity on the market as possible so that it's not just all one monoculture.

But these are these are things to keep in mind. Now with Ocean,

they have a plan to integrate lightning,

in a non custodial way.


don't know what's public and what's not. And I do have

some private information there, so I'm not gonna go further into that.

But but the the plan is to have some kind of lightning mechanism

where small miners get paid out via lightning.

That is not launched yet. I don't know how much like I said, I don't know how much details are out there.

But that is the core of all of this. Right? The core of all this to me is

the pirate miners, the home miners, the small hash miners

are the more

the the most likely to be, first of all, ideologically

minded, and also profit out all costs. Like, they're not necessarily,

hamstrung by, like, large legal departments and regulatory stuff and all this other stuff. So the small miners

tend to be when you start to think about a big picture tend to be our last line of defense. Right? If

if a large portion of the hash rate is complying with US government financial regulation or another country's financial regulation,

that that small subset of of homeowners and pirate miners will probably still include your transaction, and they act as this bullwalk

that because they they they exist there, the larger miners probably won't make that move because they'll just get really hurt financially and it's it's against their incentive. But the problem is

is providing a censorship


way for them to do that short of solo mining. Like, we could have them solo mine, and then they're doing lottery.

Right? But if there if there could be a middle ground where they could participate in pool mining and as a result, lower their variance and not have to wait a year or 2 years or 4 years or never get paid out,

in in your head, you'd be like, oh, it'd be more likely that we'd get those kind of small hash miners. Right? And so that's the holy grail. The holy grail is some kind of mining pool that does that. Now I would add

I don't know. This is one of the reasons I wanted Steve Barber on the pool, the conversation.

But I don't know how familiar people are with with Steve's mother pool idea that he's been teasing out there. And I do wonder

if we've done the typical Bitcoin thing. And we've we've over

technologize the argument that we're like trying to like, that's not a word technologize, but that we're trying to

just do it through code and through technology, right, like stratum v 2 is really fucking cool.

A rehash improved ptp2

pool is really cool.

Braid pool is a really cool concept.

Fetti pools, very cool concept. These are all heavily technical things that are in development and have their own set of trade offs. But what if we had a pool,

that he's calling mother pool? What if we had a pool that was strictly a nonprofit in the United States that charged 0% fees

and didn't have a human controlling the block templates. It was simply whatever the highest fee transactions are, they're included in the block.

And then other


smaller pools

could then connect into there and batch their hash rate for the smaller miners. So the smaller miners could be served by a collection of smaller miners that are then getting paid out from the Coinbase. So instead of trying to solve the small dust Coinbase UTXO problem, you just push that off to another layer. There could be

multiple competing

custodial entities that are batching hash rate on a local environment. And, yeah, like, the US government could just shut down that top level nonprofit mother pool entity, but we don't know if that's necessarily,

like, maybe maybe that's enough. Like, maybe

from a regulation point of view, that's enough. And if that's enough, then why not just do that? That's just a way easier,



Yeah. That that would be the easiest way to do it. But, again, you're you're still you're still someone has to run that server, and Someone has to run that software.

And, you know, if it's a big pool, then

you still have that exposure,

up in risk of censorship

there no matter how good your intentions are.

And I think that's that's the issue with any centralized pool trying to do some sort of decentralized,

aspect of it.


But this isn't even decentralized. This is just a nonprofit entity that keeps breaking blocks and running the pool software.

Add 0% pay.



If if the people that are running it and are are ideologically motivated and, you know, they're just gonna run Bitcoin Core and whatever the block template that, stock Bitcoin Core

spits out, that's great.

As long as there's, you know and then, you know, if it gets big, there's no pressure,

in terms of

regulations or anything else,

that that would be great. But, again, it's

if it does get to the point where there are,

OFAC type regulations,

hammering down on these big miners and pools, you know, they're they're gonna be forced to comply. Otherwise, they're gonna get shut down.

That's the problem.


Yeah. I wonder if the nonprofit be shield I think the nonprofit might be shielded in that situation. It's just No. Yeah. I don't know. I don't know about this. It's not even making any profit off of it. It's a 0%

paying out via Coinbase.


But, yeah, the I mean, the like you said, the holy grail is

the lightning payments that you that you mentioned for all miners, that is a big thing. It's just so fucking complicated.


Like, it's easy it's such an easy thing to say. Oh, yeah. I love it. Oh, oh, we're just gonna use self custody lightning for small payments. Yeah. We're working on it. We've been we've been dabbling with it, in the back end, and it's it's super hard to


It's it you know, it's it almost seems like the complexity is is unnecessary. Maybe maybe it's necessary

for for large industrial miners. Right? These these guys,

they have to join a big pool. They have such a large investment in it. They have so many players, such crazy financial incentives

as to how

their operation works

that they they need these big pools with low variance and and whatnot. Right? But I think, you know, what

what I'm after, and I think what what John is after is we're gonna we're gonna arm, you know, potentially a bigger

a bigger

group with miners

to mine however it is they see fit. Right? And we're we're hoping for an explosion of tools in different ways to do this,

different ways to mine. Right? You can form you can solo mine. You can form small private pools with with whatever block templates you want,

and, you know, you can you can create pools for your friends and family.

I think

I think there's a lot of people who are interested in doing that,

And right now, I mean, president company excluded, right now, there's no tools for them. There there's, like,

there's no miners. Right? The the the miners that are out there, the the majority of the Hash rate miners that are out there are these big industrial machines that no one can practically run-in their house. And so

it's just a totally different operation,

mining with those


in those corporate structures

and in the pools that they want. I I think

we can we can keep it simple and and, you know,

get back to more fundamentally how Bitcoin works

and mine at home. And I don't think it's it's not an insignificant number of people, I think, that will want to do this.


No. It's it's definitely not. We all agree on that.


But yeah. So we're gonna we're gonna make some we're gonna make some tools for them so that,

you know, we can we can find all the people out there who are willing to do this. And mine, you know, maybe,

you know, maybe they don't they don't care necessarily what the hash price is. They're they're more resilient to to changes,

in the hash price, the Bitcoin price.

They they want to, you know, they want to secure Freedom money.


I just wanted to, really quickly,

to listeners that are confused. The Coinbase transaction has nothing to do with the exchange Coinbase. They named themselves after the term.

It's it's the transaction in every block where the miner pays themselves the rewards.

Just keep that in mind.

Can be confusing.


It is confusing stuff.


Yeah. No. I agree with all this. I like, let's empower

let's empower the smaller miners. This is a reason why me and John have had

a friendship for a decent amount of time because I love what he's been focused on over there.

And to the Citadel Dispatch listeners, I mean, this is probably like the 7th or 8th conversation on home mining. I will just say,

after life's last cycle,

you know, I the amount of times I if you go back to those episodes and I listen and you listen, and I was like,

like, just,

you know, stay humble about it.

You know, don't don't over leverage yourself. Don't, you know, get 1 or 2 minors, you know, maybe learn you learn how it works. Get your feet wet, you know, help contribute to the ecosystem, get some k yc free sets.

And then, like, 6 months later, 7 months later, I just hear about freaks who just, like, aped into, like, a warehouse full of minors and all this shit. I'm like, what the fuck, guy? Yeah. That's that's So just don't do that again, Freak.


We've heard so many stories of, you know It's so bad. Future It's tempting. A

gateway truck for for a lot of people. So, you know,

they get they get the little, itch, and then they go crazy.

But, yeah, it's like, this should be about sustaining

the network and and

make it if you can. But, you know, at the end of the day,

if you're mining at home,

most electricity prices,

no matter what you're running, you're not gonna be able to break even.

So you're you're doing this because, you know, you truly believe in Bitcoin. And what I what I say to everybody and what a lot of our customers are are coming from is they're people that own a little bit of Bitcoin.

They have it whether it's on Coinbase or or somewhere else, and they believe in what Bitcoin means for the future, and they wanna secure it.

And that's kind of the message we've we've we've,

gotten across to them. This is the way to do it. You have to run Bitcoin at at the base layer.

And, you know,

going back to, you know, even talking about the Coinbase, that that's the big issue that we have to overcome,


this technical

aspect of Bitcoin that's super hard to understand, but it's super important

for people to understand.

Otherwise, they won't get why,

you need to be running the system and and all the stuff,

everybody's doing around it.

And we need to get to a point where we're

first of all, the hardware and the software

is to a point where it's super easy to use, and and we're we're starting to get there with Futurebit.

But also getting it out there to to people that,

you know, there's there's a 100 100 of millions of people that own Bitcoin worldwide. Right?

So there's no reason why, let's say, 10

them wouldn't be code

or binding.

Right? There's no reason why 10,000,000 people in the future won't be doing this.

And if you look at it today,


I think the last time I checked it, there's, like, 50,000 nodes out there,

which is insane. You know? Like, it's a super tiny fraction of of the Bitcoin's user base.


I'm so proud of 50,000.


I mean yeah. Listen. It's

it's better than than,

it could be much worse. But,

you know,

based on the number of people that own Bitcoin, it should be much higher.

There's no reason why, you know, there shouldn't be, you know, 100 of thousands of nodes, a 1000000 nodes out there right now, especially at this point in in Bitcoin cycle.


So that's that's kind of what we Well, how many people do you think self custody Bitcoin?


It's probably,

around the same amount,

I would say.


I mean, definitely not whatever number you said for total Bitcoiners. Would you say a 100,000,000 for total Bitcoiners?


It's, like, max 10,000,000 or something Yeah. That's right. For self custody?


Yes. Some some small amount of Bitcoin. I would say there's probably a 100 a 100000000.


But, like, self custody is probably, like Self custody is probably 100000000.


It's it's probably just oh, no. Not even. It's probably the same amount of people that are running notes. Well, we know the Ledger leak was a 1000000,


people. So we know at least a 1000000 people own Ledger hardware wallets.

But that's, like, my main that's my main stat on the bullish self custody side. That's that's that's some good stats then. Some of them might be shitcoin only and not only Bitcoin,

but still



Yes. Yeah. It's pretty impressive. I mean, it's still fairly obscure thing. So

the fact that there's that many is is definitely inspiring. I think,

you know, as there's more options, right, is there

they become easier to use. There's gonna be more people picking it up.


I saw one question in the comments, then we'll go to,

user donations, then we'll do final thoughts. John, there was a question in the comments for you.

Can people just buy the miner and not buy the node and just connect that to a pool themselves? Like, obviously, they need the node portion to do the solo mining.

Are they able to just buy the miner if they don't have the node part?


Yeah. So we have 2 versions. One's called the full node deal, and one's called standard, which is just, it's a

yeah. But it's just a little USB plug in the back that you can hook up to any computer or Raspberry Pi,

run our software, and then connect to any pool you want. So you you don't have to,

buy our full setup that comes with a node and the OS on it. You can just buy the miner. And if you have a let's say you have some or other

node or setup at home that you would wanna plug it into and add some hash power, that's that's kind of why we designed it that way.



Okay. So,

Cielo Dispatch has no ads or sponsors.

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All relevant links are at sill

The leaderboard is at sill

You can support through any podcasting 2 point o apps. As with every CIL dispatch episode, I will read the top 4

in terms of sats donated. From last episode, we have rider die freak eric 99 with 50,000 sats saying stay humble, stack sats. Great advice. We have at cumrocket with 12,069

sats saying enjoying primal so far. We have at nullifier with 5,000 sat saying, I don't like the narrow focus of nostril used by content creators.

I agree.

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all over the place.

And as always, huge shout out to the rider dive freaks who joined us in the interactive live chat at sill,

That uses Nostr. It's powered by,

so shout out, Kieran,

for maintaining that project. With all that said,

I'd like to wrap with some final thoughts. Scott, final thoughts.


Yeah. And this this has been pretty cool, John. I'm super stoked to

to, get to to talk to you and hear more about,

the Apollo and the Apollo 2. I Yeah. It's awesome. I'll meet you too. I,


you you had been you'd have been posting, you know, pictures,

sort of candid shots of your development process, your laboratory,

and everything. And, man, I eat that stuff up. I just

this is such a a cool, exciting field. I mean,

maybe I'm biased, but,

it it's it's been really cool to hear about it.

I wanna talk to you some more about this. This is really cool. I think Scott's asking if you're hiring.

Yeah. Yeah, man.

No pressure. We'll talk about it later.


No. That Final thoughts.

Would love to to get off and then talk. Yeah. I could talk hours.

I wish I had hours, but, you know, haven't slept in the past 2 weeks at all. But we'll find some time.

Okay. Cool, man. Chat back and forth. I always look yeah. And and the problem with with our space is there there's not a lot of people like us that that There's at least 5. Right? I mean, it's 4. There's there's a dozen. Yeah.

But there's, like, really Several.

Engineers that can just take,

you know, something from from concept to to to an actual product. You know, they're they're a dime a dozen. So I'm glad that there's more people involved in the space now. I think it's really cool.

And I I I'm really excited for for the future and

and what kind of cool products come out in this whole mining space.

You know, I just saw something on Twitter where,

forgot his name, but he's building, like, a pool heater.

So it's it's an automated pool heater. Just a plug and play pool heater where you just plug it in and Is it not coin heated?

Yeah. I think that's them.


Wait. Constellation or coin heated? Coin heated. I think it's coin heated. Coin heated is like the OG pool heater guy. He's like the guy who's like brag I forget where he's somewhere up north. It's like Minnesota. It's like the it's like 20 degrees outside, and his pool's steaming because he's got a run through the miners. That's right. Yes. The mine for he crew is He's a rider doctor. He's He's been on the show before. John, he was on the panel with us in Miami in 2022,

I believe. Right. Right.

I believe he was. Okay.

I don't know. It's been it feels like it was a decade ago.

Thank you guys thank you guys for joining us, and thank you guys for focusing on such an important part of Bitcoin. I really do appreciate it.


hopefully, we'll have a chat again sometime soon.

Huge shout out to the freaks who joined us. Thank you, guys. Appreciate you guys. I see someone in the comments saying they're looking forward to

3 hour plus little dispatch rips again.

Well, the caps have come out,

the ball has begun its run,

and maybe 3 hour dispatch episodes will start to happen again. We'll see. With all that said,

love you all. Stay humble, Stack Sats. Peace.