Bitcoin Nation State Adoption: Samson Mow's Vision (E7)

(logo whooshing) - I'm Phil Arvin. - I'm Douglas Borthwick. - And this is "Old Men, New Money." - And today we're delighted to bring on Samson Mow from Gen 3. Samson, how are you? - I'm good, thanks. And thanks for having me on your show. - I've known you Samson for, I think it's five years now and always respected your views. I think you're, after the HBO show, you're probably one of the three best known guys in Bitcoin. And you've been really working it over the last couple of years with Gen 3. Can you tell people what Gen 3 is at all or give us your background? - Sure, I guess my professional background originally was game development.

Not a lot of people know that, but I was a game developer and I still am a game developer. I'm building an MMO game called "Infinite Fleet." But yeah, I left Blockstream a couple of years now and I decided to start Gen 3. So while Blockstream is more focused on infrastructure, I wanted to focus more on nation-state adoption, getting more countries into the Bitcoin ecosystem and rolling up their Bitcoin strategies. And that's something that I think is very important given the state of the world today.

And I believe that the work we're doing at Gen 3 can help accelerate Bitcoin adoption and help us transition more gracefully into a Bitcoin standard globally. - Now, the way that I've been reading it or seeing it or understanding it is, Gen 3 can go to a country and say, you've got all this wasted energy, let's call it thermal energy, wind energy, water, whatever. Why don't you use that to create something of value like Bitcoin and then build a treasury with it? Is that pretty much the pitch? 'Cause I'm from Scotland and we've got a lot of wind. - Yeah, that's part of the pitch.

I would say it's broader than that and it's very bespoke tailored to different countries and what they can do or what they're interested in. So there are three broad strokes that you can take for a Bitcoin strategy. One is rolling out Bitcoin as legal tender like El Salvador did and shining Bitcoin's place as money in that country system. The second is mining Bitcoin and potentially issuing some sort of financial instrument on top of that, like a Bitcoin bond or a volcano bond, as you will. And I think the third one is simply adopting Bitcoin as a reserve asset.

So what you mentioned about tapping into energy, I think that would play into the second one. And the reason why financialization and Bitcoin mining are bundled together, at least in my approach, is because most of these countries, they don't have the energy, they don't have the money to tap into the energy. So it can be stranded, it could just be unused and historically, if you have a lot of excess energy and in many examples, geothermal or hydro, there's really not much you can do with it unless you have heavy industry which can be located at those sites.

For example, in Canada, a lot of hydro was used for smelting and doing heavy industry, things like that. But if those industries don't exist anymore, then you just shut down the hydro plant because it's not transportable. It's really hard to move electricity from point A to point B without a large chunk of cost in infrastructure and investment. So with this change that Bitcoin brings, bringing the new money to old men, that it lets you take energy that is typically waste and turn it into money. So you can be a poor country and a developing country, but actually have a lot of money at your disposal.

One example I like to give is the Middle East and oil. So with those countries, they didn't have much at the start, but they had oil. But you can take oil and put it into a barrel and ship it around the world and monetize it. But with geothermal and hydro or even wind, you can't really do that. Until the advent of Bitcoin and Bitcoin mining, it's largely wasted. But this change in money brings new opportunity, which is that it can now be monetized and you can take the stranded energy, turn it into an airport or a railway or hospitals or whatever you want. - Now we all know about El Salvador and Bhutan was in the news recently.

Are there other countries that you can tell us that are moving along the way? They developed, is it more of a story for developing countries right now? What's the land? - Sure, Bhutan is, as you mentioned, really well known for Bitcoin mining. They've been mining for four plus years now and they're getting close to a trillion dollars of Bitcoin in their reserves just from mining. So I think that is probably the biggest, at least current success story with Bitcoin mining at the nation state level. But I'm hearing that many countries are doing so or are beginning to do so at smaller scales.

But I think it's ultimately inevitable that countries will start to mine Bitcoin. And if they're capable of doing it without raising funds, then that's great. But I think many will need to resort to issuing debt instruments like a Bitcoin bond to finance tapping into those resources. But for me, Bitcoin mining and energy has always been the two sides of the same coin. And right now you still have sort of segments of industry of energy companies and then you have Bitcoin mining companies. But in the next couple of years, you'll just see a merger where it just becomes one thing.

- This past US administration was whining all the time about how much energy is used by Bitcoin miners. Now they don't whine about it when it comes to AI, but with Bitcoin miners, certainly it's always been a problem. Now there's a new administration in town. This has got to be good news. - I would say so. The current and past administration soon has been very hostile to Bitcoin and to the broader cryptocurrency industry as a whole. And yeah, you're right. They've been very negative on mining for some reason.

And it's the state level administrations that seem to understand it and advocate for Bitcoin mining because they know that it helps them balance their grid. But it's just a trend, I think, that is missed by and large by a lot of politicians. And it's not really a complex topic. It's actually quite simple and straightforward if you understand how energy production works and the need for baseload energy. So I don't really know why it's been such a challenging thing to get through. But with the Trump administration coming in, I think things will change.

And Trump has said he wants Bitcoin to be mined in America and it's very encouraging on a whole. If you look at the demographics of how Trump won and how broadly it was across the board, you got to believe that Trump buying a burger for Bitcoin helped a great deal. I've always thought of the Bitcoin owners or crypto owners, sorry to say crypto, but folks that own any digital asset, it's been a ridiculously large voting block that's just completely underrepresented certainly by the Democrats. And yet you look at it in terms of the demographics and it's men, it's women, it's folks that are colored, it's Hispanics, it's white folks.

It's really across the gamut. And this is probably the first ever thing that everyone agrees on other than great health for children. And so I think that it's kind of had a great impact in terms of how Trump did. - Yeah, Trump has, his campaign was just masterful. He is actually a candidate that speaks to people. Whereas the Harris campaign was more about talking points, very scripted things that you say and you don't touch on if you don't want to talk about it. But it's just his campaign was masterful. He expanded his platform to bring in Robert Kennedy to talk about health.

And he expanded with Elon to talk about government efficiency and making things better. And I think this is part of it. Like he's able to expand and grow his campaign in the platform and embrace things like Bitcoin. And of course, like for hardcore Bitcoiners, he is doing a crypto project. But I think that we should not let perfect be the enemy of good. And like you said, he did go and pay for a burger with Bitcoin and he spoke at a Bitcoin conference. He's generally very pro Bitcoin and he is championing the creation of a strategic Bitcoin reserve in the US in partnership with Cynthia Lummis.

So while he did not say, we are gonna make a Bitcoin reserve, he hinted and then he brought Cynthia on stage after to present the plan. I think overall, it's a very positive development for the US. - Well, as the US leads as well, who's gonna sit there and say nowhere against it? That's an absolute watershed moment. - Yeah, exactly.

So at Gen 3, as we're doing these nation state engagements, this past year, we focused a bit more on Asia, but we've met with politicians and regulators in Japan, Korea, Taiwan, and Germany and Singapore recently, but the prevailing sentiment is that people think that they're too conservative to do something and they're largely waiting for signal. And you see this mirrored directly into ETFs. So Hong Kong and Australia came after the US ETF approvals, but they were just waiting for the US to sign off and say, okay, ETFs are okay. And then they follow.

And I think the reason why I'm excited about a Trump administration is it's going to signal to the world that Bitcoin and nation state reserves or strategic Bitcoin reserves are now an important part of geopolitical strategy, right? As a country, you need to have a Bitcoin reserve. And this changes the conversation yet again. So with the ETFs, I think it's green lit and approve Bitcoin as an asset class. Now, this is going to shift that even further and say you need Bitcoin. And well, we do have good conversations.

It's difficult, I think, for a lot of governments and politicians to really understand it, but they don't need to understand it when it's about competition, right? It's easier to say, okay, my neighbor's doing that now. My neighbor is watering his lawn. That's a good thing. So I'm going to do the same thing, right? They don't need to know why. - Are you getting in a position where you have to do a tremendous amount of educating or is it where it's literally, look, the competition model, your neighboring nations are doing this, you're going to miss out on an opportunity.

You don't want to be that person looking back and saying, I really wish I would have got on that first wave and been part of this. How is it being received? And what do those conversations look like when you're coming into these new nations? - I would say this year, the reception has been far more positive and we've actually had outreach from different governments and politicians seeking us out. The year before that, I think it's intertwined with Bitcoin price. So as Bitcoin price goes up and people get excited, it makes it easier and there's more interest. But when Bitcoin is flat or stagnant or down, then there's a lot less interest.

But overall, there's a large amount of education that has to be done. Not everyone is very well versed in what Bitcoin is and why it's important. And I think this is not just about governments, but it's just for people in general. The problem of society as a whole is we don't really understand money on average. And this is why you have a lot of bad policies that get rolled out and bad things happening to the economy and inflation. But it starts with understanding money and then you understand Bitcoin, but it varies on a case-to-case basis.

But I think that the fact that we can just pull this and say, Trump is gonna do this, it just makes the conversation much easier, right? It's not about, is Bitcoin good? Is Bitcoin bad, is it 21 million capped? And is it hard, needs some money? Is it legitimate? I don't know, but they want it. So maybe you should think about wanting it too. - The Omega candle you talk about a lot and it's always an exciting story. The way I see it, what you're saying is when the U.S. does this, there's gotta be front running ahead of it. And the front running ahead of the U.S.

doing this Bitcoin reserve and other nations starting to build their own is I guess happening already, right? We're already up $10,000 on Bitcoin price since Trump got in. And that's really just the start of it. Is the Omega candle something that's gonna happen in a day? Is it a monthly candle? Is it a weekly candle? Or is it just gonna be a candle like that every single week? Because I think that obviously you get a sailor that's already said he's gonna do $42 billion. He's gonna start getting into more than he already has. Other corporations have to start catching up. If you have it, very good for you.

Everyone knows that the dollar's not exactly gonna start, but they're not gonna stop printing dollars anytime soon. Nothing's gonna be fixed there. You've got corporations buying individuals now learning about it for the first time in buying. Nation states actually buying. And there's a limited supply obviously. - Yeah, so the Omega candle is green candle on the daily. And it's a measuring stick that I put out there that when Bitcoin is going to start entering the hyper Bitcoinization phase, you'll see these 100K candles on the U.S. dollar chart. We see them on other fiat priced charts for Bitcoin like the Turkish Lira, Egyptian Pound.

Weaker fiat currencies already have these Omega candles. So it's just a matter of time for the U.S. But if you look at the entire macro landscape, you have increasingly large debt servicing payments, interest payments of a trillion dollars. You have large problems around the world in terms of population decline, which feeds into this sort of decline in the real estate market. And a lot of stock markets are also failing. A lot of fiat currencies are failing too. The U.S. dollar is very strong because it's the strongest of the weakest. - The cleanest of the dirty assurance. - Yeah, exactly.

So you can see all of these problems and you add to that what you just said, which is a company starting to compete for Bitcoin holdings. You've seen a number of micro strategy emulators as of late, Metoplanet, similar scientific, and probably more. Berkshire Hathaway is sitting on a lot of money, billions and billions of dollars. - Microsoft's not voting on it. - Microsoft is voting on it. Apple is also sitting on this massive stockpile. So the Omega candle will simply just appear because it'll happen all at once.

Like we're talking about earlier, many people will not understand Bitcoin, but they will try to copy their neighbor because they don't want to be left out or you can call it FOMO if you want. But imagine Berkshire Hathaway, Apple, Microsoft, all buying at the same time. Well, micro strategy is trying to spend $42 billion on Bitcoin. Well, the U.S. is trying to accumulate a million Bitcoin over a four year period. Well, public mining companies stop selling Bitcoin they mine because they can also run a micro strategy playbook and borrow. - Well, hodlers don't sell. - Well, hodlers don't sell. And your mind is just making this much a day.

- Well, countries also want to get into this with Bitcoin bonds and issuing sovereign debt to buy Bitcoin and mine Bitcoin. And countries that have excess geothermal or hydropower decide to mine Bitcoin at effectively zero cost because it's their energy. Omega is inevitable. - No, I, a thousand percent agree. And it's pretty darn exciting. And you constantly hear everyone saying it's only just begun. And the reality is it has only just begun, it hasn't. We're getting up to the starting line. And the starting line I think is really when the U.S. says this is it, we're getting into it. - Yeah, it seems to be that's always the case.

And while we're hopeful that countries can get in ahead of the U.S. because the U.S. has a massive advantage they can print the dollar to buy Bitcoin. I, it would be better if the holdings of Bitcoin were more distributed around the world but it seems to be like, it just won't be the case. Everyone's going to wait for the U.S. And there are gonna be very few instances of front running of the U.S. And then it's all gonna happen at once. And we're gonna shoot up to a million dollars a coin and five million and 10 million in a very short timeframe. - What are you hearing out of China? - China's very interesting.

You could look at Hong Kong as a proxy for the sentiment in China. And it seems to be opening up because Hong Kong would not get the ability to approve ETFs without some sort of nod of approval from Beijing. And if you look at some of the problems that China's facing now which is the economy is not doing that well, the stock market is flailing and real estate is tanking. And you also have that same problem in the population which feeds into the real estate problem. Then you really need something to stimulate growth, right?

And while I think a lot of people are hopeful that AI and new technologies can be that growth stimulus, it's really only Bitcoin that can effectively change the equation because if the world is rebasing to Bitcoin as the underlying currency, then you can get a jumpstart by making a first move into Bitcoin and rebasing first or abandoning your fiat currency and going into Bitcoin first. So I think that will be the engine of growth, transforming economies so that they are Bitcoin based. And there's a lot of opportunity to be done there. You can basically just re-engineer the entire financial system.

So equities won't settle against the RMB or the dollar. They'll settle against Bitcoin. This opportunity is there for tokenization on blockchains like Liquid to enable 24/7 trading which is also another way for growth and stimulus of the economy. Then you have changing the payment system, right? Changing that all so you can pay with Bitcoin over lightning and revolutionizing. - And Trump's talked about that, right? Trump talks about how he sees it as being money. Why, if you're buying a cup of coffee, should you pay tax? - Yeah, I've seen that. I don't know where that source from, but this- - It was one of his speeches.

He said, I had a friend that uses Bitcoin to buy things or says it can be used. He says it's money. If it's money, then why on earth is it getting taxed? - Yeah, so this is the very interesting question. Yeah, there's this treatment of Bitcoin, either it's an asset or it's money, but you can't have it as both things. So El Salvador has said Bitcoin is money. And I think in other places like the US, I think it's still up for debate. Is it a commodity? Is it an asset? Is it property or is it money? And you have some people on one side like Saylor who believes it's property. And then you have others like me that say Bitcoin is money.

I believe this has to be resolved in the next few years because the treatment of Bitcoin will be very different based off of what it actually is in the eyes of the government. - Do you think some of that comes from the volatility where if someone's looking at you in the beginning, you always hear the story that somebody bought pizza for 15 Bitcoin. And if we are gonna have such hyper growth that maybe folks don't want to purchase with their Bitcoin or maybe they just wanna lend against it and have their continue to pay in dollars, where do you see this, Kyle?

Is there something when it eventually stabilizes or will it ever really stabilize that it is gonna be used for a transaction or how does that work? - So I think we'll probably stabilize somewhere in the $10 million coin range, right? You'll start to see a lot less volatility. And up until that point, it's going to be- - You gotta have balls of steel to hold it when it gets to 10 million. - The question is really, this is the fundamental question. Is the dollar going to exist when Bitcoin is at, you know, a nominal $10 million or a nominal $100 million, right? Nobody has the German paper marks right now. They don't exist.

And I think it's gonna be the same for the dollar. And again, this is another kind of soul searching question, which I don't think we have a good consensus on because Saylor has said before that you can monetize Bitcoin. You can borrow against it and it's basically risk-free. You can earn yield on your Bitcoin. And that is based on the presumption that the dollar still exists and you're gonna earn your yield in dollars, not on Bitcoin itself. So that's another thing. So there's a few things that have to be worked out over the next couple of years, which is one, is Bitcoin money or is it a currency or is it an asset?

Is it taxed or is it not taxed? Is the dollar going to exist in five years or will it not exist in five years? Because I don't think it can exist. Once these seismic shifts in money happen, they just go really fast. And we've had many examples in history of these rapid changes. Like the German mark didn't fail over 20 years. It was like a year, less than a year that it just evaporated. - Well, you gotta figure as Bitcoin jumps in price anyway, you're gonna find that like high-end real estate starts jumping as well.

And the prices of things in the United States, high-end things, luxury goods are gonna start jumping 'cause people will be selling some of their Bitcoin to buy these high-end goods. And that essentially creates this huge inflation problem that the dollar just hold onto. - Yes and no, I think real estate is perhaps overvalued right now because real estate is used to store value and it's not really a good vehicle for storing value. Like buildings crumble over time. Like it's wood and drywall and things that break. - Rotting wood and stones. - Yeah. The question is, really get repriced. Yeah, but you also have to maintain it, right?

There's no cost to maintain Bitcoin in cold storage. And I think a lot of Bitcoiners have figured this out. Like Bitcoin is a superior asset. Why do I want to deploy capital and buy real estate and have it depreciate and pay taxes on it and have to deal with renters and being a landlord and all that stuff when I could just have Bitcoin in cold storage and sleep soundly. - Sailor calls it the apex predator. And the reality is that once you get into Bitcoin, when someone shows you an offering document to invest in something, as look, we'll make 13% a year, you look, I do something like this. Like why wouldn't I put that money into Bitcoin?

And it makes it really hard for people that are raising capital for anything other than Bitcoin to actually attract the funds. Now, we're not there yet, right? There's guys that are specialists in investing in real estate and leisure and this company or that type of company. But at some point, and I'm there, would you invest in this? And I say, no, I'd rather put it in Bitcoin. - Yeah, there's one exception to that rule, which is you should invest in companies that are building on Bitcoin because that makes Bitcoin more valuable and it increases adoption. So there is that-- - Is it better to invest in a miner or to invest in Bitcoin?

- I'm biased, but I think investing in a Bitcoin wallet company is more higher, it's higher ROI than in the mining company because-- - Are there any Bitcoin wallet companies you're thinking that come to mind? - Like Gen 3. - Like made. - Gen 3 and Aqua, but again, I'm biased. But our goal is to onboard the next billion people, right? We've been talking to some VCs lately and one of them actually had a really weird comment, which is we think wallets are not a high potential area for growth, but if you think about it, how else do you onboard a billion people to Bitcoin? It is with a wallet and you can monetize that.

There are many ways to monetize that. And it's like saying, launching a PayPal that anybody in the world could access is a bad business model or a Venmo that anybody in the world can access is a bad business model. It just makes zero sense to me, but I think that's a high return. If you can get a billion people into a Bitcoin standard and have them having their Bitcoin in self-custody, that's gonna be very impactful. Yeah, for sure. - I'll be a real estate guy, right? I think there's gonna be, the conversation is more just about diversification.

Obviously, when you see the potential growth and the growth that I think everyone on this call knows that's gonna happen, you can't compare for the type of ROI. But me being real estate, you can ensure it, you can touch it, you can feel it, people still need a place to lay their head. I think it's not a if or, it's an if and for me. - Yeah, it's not a bad thing to own property if you're actually using it. But if you're speculating, which I think a lot of real estate valuation is derived from right now, that is not a good thing because you actually do create issues with housing, right?

If you're buying it for appreciation of value or storing value, then someone can't live there or potentially can't live there if you're not renting it out. But I think Bitcoin will make real estate become reprised. And if you look at trends right now where everyone is remote and there are fewer companies that want to have a office space or bring people into a physical location, I think I would bet more on Bitcoin. And it's also a better thing too because you're going to make better use of the spaces if it's not just an office building that people come to for a couple hours a day. - Yeah, we stay away from that.

This outside of our existing holdings. - I agree. All right, this is great. Listen, Sampson, thank you very much for joining us. Really appreciate you coming on. I know you're probably really busy. Have you been down to Mar-a-Lago yet? - Not yet. Maybe I'll go for the Trump inauguration, we'll see. - Is there anything you'd like to leave the audience with? Is there any either predictions or calls to action that you would call upon folks that can help the cause of Bitcoin and adoption move forward? - Yeah, for Gen 3 and nation state adoption, we rely on people in different places to make introductions and connections.

So if you're connected to someone interesting, reach out to us. You can email us at [email protected]. And yeah, every nation state connection we made is through just normal Bitcoiners that are helping us out and willing to make that effort. In terms of general advice, I would say buy Bitcoin. It's gonna be very hard to buy Bitcoin in the coming years. And eventually you won't be able to buy Bitcoin with money. You'll have to buy it with your time, which is meaning you work for it. Like you just get paid in Bitcoin. So buy Bitcoin while you can. - Awesome, great advice. Thanks a lot, Samson, really appreciate it. - Thanks guys, it's been fun.

- Cheers.