Last week I finally started watching The Handmaid’s Tale, after reading the book a few years ago. I was blown away by the series, it’s one of the best series I have seen in recent years, both in terms of camera work and the story line. The drama series shows an alternate reality, in which a totalitarian regime based on fundamental religious views takes over the US. The story takes place around 2016, a few years after faked terrorist attacks allowed the government to radically change its laws and create a new country (Gilead) in which women are second-class citizens, who are not allowed to work or even read. A public security system with spies (‘Eyes’) was set up and people can get arrested for minor things and get publicly executed. The story goes much deeper, but this is the basic structure of society.

One reason the series is so good, is because I realize this is not just fiction but something that could happen in reality. In a way Gilead is an exaggerated version of Trump’s America. What Trump is doing with fake news is done in Gilead at a much bigger scale (season 2 makes that clear when June is hiding in the now closed offices of The Boston Globe). It’s not unthinkable that Trump and his GOP enablers would try to turn America into a kind of Gilead, the signs are there if you look for them (polarizing and dividing society (“us against them”), creating fear among the masses, mass surveillance). It has been done before, even in recent history: look at East Germany after WWII, China during the Cultural Revolution, North Korea right now (and Trump admires Kim Jong Un!), or what ISIS is trying to create in the name of religion.

The thing is, it seems most people don’t want to see. They live their lives as if it’s business as usual, just as in the Handmaid’s Tale. The series shows flashbacks in which you learn how the US changed within a short period from a normal society to a dystopian one. Just like frogs don’t realize they are slowly dying when you put them in water and slowly turn up the temperature, people in the Handmaid’s Tale don’t realize what is happening until it is too late. When they still had time to prepare (=flee) they did not do it. Women were suddenly not allowed to work anymore, but people still stayed around. The signs were all there but most people just lived live as if this would blow over. People were not prepared for what was going to happen.

Guess what? The same is happening right now in the world. To me it has been clear for years that the financial system is not sustainable. Fiat currencies are being debased by printing money and interest rates have dropped below zero in parts of the world so governments can finance their huge debts. We are living in a huge bubble, a bubble that pushes up stock prices (the printed money has to be invested somewhere) and that allows us to live our lives in luxury just a little bit longer.

But it won’t last, the bubble will eventually burst. And then we are in big trouble. People will lose their jobs, pensions and investments, and we will get into a huge recession. Governments could in theory stop this by going back to some kind of gold standard, but they are not doing that because they are addicted to printing money to finance their deficits. So you have to be prepared yourself, get out of fiat currency as much as possible and buy assets that will go up in value when the markets start to crash (gold, silver, and if you are smart of course cryptocurrency). Most people won’t do it, they don’t see that the water around them is starting to boil until they are caught in it and can’t get out anymore.

The climate crisis is another example where people keep on living life as if we are not heading for the end of a cliff. Over the past couple of months I have become much more pessimistic about how this is going to end (just like Jonathan Franzen in the New Yorker…). The world does not seem to wake up even though it is probably too late already. Yes, there will be a climate strike and yes there will be new IPCC goals, but it feels like too little too late. Maybe carbon sequestration or other new technologies can still save us, but time is running out fast. Most people don’t seem to be preparing for this while there is still time. Look at Grand Bahama, people are actually starting to rebuild there… Next year it will probably be business as usual there again – until the next big hurricane hits.

History repeats itself. Even though people know rationally that something bad will happen they will not be prepared for the consequences. People know it but don’t want to see it. Because their friends and neighbours are not doing anything they don’t do anything either. Until it’s too late.

Be prepared!

One of the biggest downsides of flying a lot is the constant jet lag. Even though I try to fly much less than I used to do (mainly because of climate change), I normally still have at least one intercontinental trip per month to either Europe or Asia. From Vancouver to Europe that means a 9 hour time difference and in China it’s 15 hours earlier than here. Over the years I have developed strategies to deal with that (such eating at specific times, doing sports before departure or upon arrival, alcohol or no alcohol on the plane, and the number of hours I sleep on the plane), but it remains a challenge to quickly get over jet lag.

Two weeks ago I watched the new documentary American Factory (美国工厂) on a long plane ride. I had read a few reviews but wasn’t sure if I would like it, but it turned out to be excellent. The film, distributed by Barack & Michelle Obama’s production company, tells the story of Chinese automotive glass company Fuyao buying a closed down GM factory in Dayton, Ohio and re-employing 2000 local workers – at half their former salaries… The local American workers are taught glassmaking skills by Chinese that are relocated to Ohio for 2 years.

The past weeks my research focus has mainly been on potential solutions for the climate crisis. I looked at many climate solutions that are feasible, but most are very hard to achieve. My favourite one is carbon capture, basically sucking CO2 out of the air, which is possible but extremely expensive. When we visited carbon capture company Carbon Engineering a couple of weeks ago I think they told us that one plant would cost about half a billion dollars to build. And if I remember correctly, in order to take out all the CO2 you would need to build 40,000 plants. That means trillions of dollars of investment capital…

I was impressed with what Carbon Engineering achieved though. They may be able to pull this off (there is a demonstration plant already), which is fantastic news, although it remains to be seen if the world is willing to pay for it. But I am optimistic and think there will be solutions for this. Carbon credits come to mind for example, but also the fact that currently the oil & gas sectors get annual global subsidies of over $5 trillion (!). So the money is there, it would just need to get redistributed.

There are many other solutions to go to a carbon neutral or carbon free world, but they all seem to come with their own set of problems. Personally I am in favour of quickly changing the world to nuclear power to solve the climate crisis. Current nuclear technology is light years ahead of where it was a few decades ago, and it is now even possible to build personal nuclear reactors. But the general public is afraid of nuclear power because of accidents in conventional nuclear reactors like Fukushima. That is understandable and I was afraid of it myself for a long time as well. But I know technology has come a long way and we can now build safe nuclear reactors that will not be able to blow up. Of course there is still the issue of nuclear waste, but if that’s the price to pay for stopping climate change I believe it’s worth it.

One thing I had missed so far is the potential of nuclear fusion, which is very different from nuclear fission (current nuclear reactors are all nuclear fission). I have been following companies like General Fusion (located just outside Vancouver), but I did not realize how far they have come until I read an article by my friend Wal van Lierop in Forbes this weekend. Wal is Dutch as well and like me he also lives in Vancouver. He is the founding partner and executive chairman of Chrysalix Venture Capital, which among others invested in General Fusion.

The article that Wal wrote about fusion energy was eye opening to me. It turns out we are only 5 years away from the first proof-of-concept fusion energy demonstration plant and 15 years from a commercial roll out. It could have been much faster but it has been very hard to raise money for fusion energy.

That’s partly because of the difficult technology, but the main reasons seem to be economic and political. As Wal puts it in his article:

Fusion is an existential threat to the existing energy industry. If fusion worked cost-effectively at scale, it would complement renewables and provide abundant, safe, affordable and clean energy for everyone on the planet. International relations and economics would be upended in ways that are hard to predict. Fossil fuel companies would be rendered obsolete. This could cause massive disruption on the world stock markets.

Just a few billion dollars would be needed to bring fusion from where it is today to being commercially viable, and to shorten the timelines to the availability of commercial fusion energy. To me it seems like a no-brainer, especially in the age of the rapidly developing climate crisis. The oil and gas industry has the money to do this, but it also has the power to slow it down because it is not in their best interest. They want to keep on burning fossil fuels, and that is why they fund companies like Carbon Engineering that will allow them to keep doing what they are doing. Don’t get me wrong, I am glad that they fund carbon capture technology because it has the potential to save the world, but it does not give them an incentive to stop mining for oil and gas.

The best thing about fusion energy is that it safe, simply because the process stops once the energy input stream stops, so there is no risk of overheating and blowing up. There is hardly any waste and the waste has a half live of just a few hundred years. And it’s very efficient, to quote the article:

It takes roughly 55,000 barrels of oil to heat 10,000 homes for one year. With fusion energy, it would take one liter of deuterium and tritium, extracted from water, to power those 10,000 homes. And whereas those 55,000 barrels of oil would release 23,500 tons of carbon dioxide, fusion produces no emissions.

To me investing in fusion energy seems like a huge opportunity that will pay off big time, especially once the climate crisis starts really hitting us. It’s something I am going to spend more research on.

I just came back from a short trip to Medicine Hat in Alberta, where Hut 8 Mining has its largest Bitcoin mining data center operations. I went on the trip with a Chinese investor, and my son Scott (now 11 years old) decided to join us as well. Scott had never seen Bitcoin mining data centers, despite already giving presentations at school about Bitcoin when he was 7 years old, so it was a great opportunity for him.

Hut 8 Mining operates Bitfury chips inside so called BlockBoxes and the facility in Medicine Hat is our biggest one. BlockBoxes are basically mobile shipping containers full of chips that can be deployed anywhere, which means that in theory you can move them to areas with cheaper power. In reality we invest heavily in the locations where we build our data centers and we negotiate long term power contracts, so in practice BlockBoxes will never be moved.

Scott really liked seeing it and he loved the ‘sound of money’, the loud buzzing of all the computers running at full speed. If you go inside a BlockBox it is so loud that you need to wear ear protection. He also liked the fact that inside the BlockBox it’s quite cold, but when you stand outside it the heat gets blown out so it’s much warmer.

In Medicine Hat Hut 8 currently operates 56 BlockBoxes that have a total capacity of over 62 MW (as a comparison, a city like Oakland, California, uses about 10MW) and they can perform 515 PH/s (515 quadrillion calculations per second). Just our operation in Medicine Hat currently mines about 20 Bitcoin per day, so at current prices we create over $200,000 in revenue per day. In North America we also have operations in Drumheller, AB, and we are always looking for other strategic locations to deploy our BlockBoxes.

Hut 8 is doing extremely well, today the company announced its 2019 Q2 results and they were very good. In Q2 the company mined a record 2816 Bitcoins at an average cost of just $2757 per coin, so based on today’s Bitcoin price of $10,800 the company makes about $8000 per coin for the coins it mines (or about $240,000 in profit per day in Q2). I am very impressed with what Hut 8 achieved so far, despite going through a very deep bear market last year in which many of its competitors went bankrupt.

Hut 8 is outperforming all other publicly listed crypto mining companies, simply by focusing on efficient, low cost operations and by only mining Bitcoin. I believe the stock price is very much undervalued: earnings per share were $0.43 in Q2, with the stock price closing at $2.56 today (basically valuing the company at 1.5 times earnings). Of course I am biased as a founder and as a strong believer in Bitcoin, but I believe Hut 8 is a hidden gem and the best pure play exposure to Bitcoin via a public stock.

Note: As mentioned, I am a co-founder of Hut 8 and am a shareholder, so keep that in mind when you make investment decisions. This is not a recommendation to buy or sell securities.

Nobody knows who the mysterious creator of Bitcoin is. His pseudonym is Satoshi Nakamoto, but despite people trying to find him for years, nobody ever managed to do so. Some names have resurfaced several times (Nick Szabo for example) and others have suggested that Satoshi was a group of several people working together. I don’t think the real Satoshi will ever surface, he or she or they has/have too much to lose. But some people still try to pretend that they are Satoshi.

One of them is Craig Wright, an Australian who not only managed to fool the BBC and The Economist to believe he was Satoshi (by reusing a signature from an old Bitcoin translation signed by Satoshi Nakamoto), but who is now even suing people (using UK libel laws) who call him a fraud. The thing is that nobody who knows a thing or two about Bitcoin will believe you unless you sign a Genesis address or move some of Satoshi’s coins.

But that does not stop others from giving it a try. Today a most-likely-fake Satoshi Nakamoto started a chain of 3 daily blog posts in which he promises to reveal who he is. In ‘The Reveal’ he writes:

Please join me as I end my anonymity in a three-part daily series “My Reveal” that begins today, Aug. 18 – the 11th anniversary of my registration of the domain name bitcoin.org. In “My Reveal,” I will divulge such previously unknown facts as the origin of my iconic pseudonym, the status of my 980,000 bitcoins, and my real-life identity. I’ll also introduce Tabula Rasa, my clean-slate vision for the future of Bitcoin.

The first part today was not too impressive, there was nothing in there that others could not have written. But it is clear the author put some real effort in putting this together. For that reason it will be interesting to read part 2 and 3 that will come out on Monday and Tuesday. I don’t expect anything new to come to light. The real Satoshi would have never used this method and he would know that nobody would believe him just on writing blog posts.

Maybe it’s just a marketing trick from a new company? For sure these posts will get a ton of attention and millions of views over the next 3 days. Whatever it is, I look forward to reading the next 2 posts. You can read them here: https://satoshinrh.com/

On the plane this morning I was reading the latest National Geographic. The magazine was one of the first to acknowledge how dangerous the climate crisis is and to point out the consequences for humanity and our planet. The current issue mainly focuses on migration, from our ancestors’ move out of Africa to the current migration caused by climate change. Quite eye opening how many people have fled their home countries already and how many more will do so. Hundreds of millions of people will be forced to flee and try to find a new home over the next 3-4 decades. If you think climate refugees are a problem now already you’ll be in a for a surprise a few years from now.

One thing with migrants is that they can’t bring much with them on their dangerous journey. Most travel by foot and they are only able to bring things they can carry. Most have just a mobile phone, some clothes and maybe a few pictures, but that’s about it. Even carrying jewelry (if they have any to begin with) is dangerous because it might be stolen. Many had to leave everything they owned behind. Don’t make the common mistake to think that these people were all dirt poor: many of the Syrian refugees are university educated and lived at least middle class lives before fleeing their country.

Gold bugs often argue with me that in times of crisis owning gold will save you. Their argument is that if the Internet fails during a global crisis Bitcoin can’t be used anymore. My counter argument is often something like: the global Internet will never fail (it’s even more decentralized than Bitcoin) and even if parts fail they will come back online eventually. Next to that copies of the blockchain are even stored in outer space, so you can always get access to your coins in the future as long as you have your private keys. And if the global Internet would indeed ever fail we will have much bigger problems to worry about, then gold won’t save you either.

But if I look at the pictures of the migrants I realize that gold fanatics are missing an important point. Refugees can’t bring physical gold with them, not only is it too heavy (gold bars are much more heavy than most people think), but they are also at risk of losing it. Bitcoin would be much better: they could store it in the cloud while traveling and only take it out through their mobile phones once they are in a safe location. Nothing to worry about, you can even memorize your passphrase instead of carrying your private keys with you.

I do believe that once climate migration will really start, more people will begin storing their wealth on the blockchain. Especially once first world country citizens get hit by the effects of the climate crisis and become refugees themselves. Gold is nice if you live in one place and can safely store it in a bank vault, but not if you are forced to migrate. Nobody knows what will happen in 20 years from now, but I believe we all underestimate the combined effects of the climate crisis. Bitcoin can at least help you to safely store part of your wealth if sh*t hits the fan. Keep that in mind if you need to make a decision about investing in either gold or Bitcoin once the financial crisis hits.

Next month it is 15 years ago since I started blogging, only a few weeks before we started Tudou.com on October 15, 2004. Originally I used Radio Userland for my blog, but after a year I bought marc.cn and started posting there. The first post on marc.cn is this one in which I thanked Amy Gu to help set it up for me. She was a journalist at the South China Morning Post at the time, but went on to have an impressive career (she got her Stanford MBA, then among others ran Evernote in China, and is now a managing partner at a VC firm in Silicon Valley).

For years I blogged several times per week, but after moving to Canada blogging became more infrequent, partially because of more family obligations (no more nannies, drivers and ayis) and partially because I started to focus more on social media like Facebook and Twitter. Around 2017 my blogging frequency went down to about 1 post per month. I even stopped tracking my readers: I used to have about 50,000 unique readers on my blog, but I have no idea how many are currently reading it (I just installed Google Analytics again to see how many hits the domain still gets).

While sailing 2 weeks ago I started thinking more deeply about social media, centralization and the importance of owning your own data. Then it dawned on me that moving away from my own blog to social media had actually been the wrong move. Simply because you don’t own your data, and companies like Twitter or Facebook can shut your account down without any repercussions. My Facebook account was hacked once and it was shut down at least once because of impersonators (who managed to convince Facebook that I was impersonating myself). My Twitter account has been semi-blocked for almost 2 years, to the point where I even had to switch to another Twitter handle.

So a week ago I decided to get back to regular blogging. For the past week I put a blog post online every day, just to get back into the habit. I liked it because I enjoy writing and it does not feel like a chore at all. However, I feel that doing it daily might be too much of a time investment. It takes me between 30 minutes and an hour to write and edit a post. My time is valuable, but in theory I can make the time for that if I feel it is worth it (I’ll evaluate that in a few months). Or I can write shorter posts like other people who write daily posts like Fred Wilson (daily posts for 16 years) or Seth Godin (11 years), and only post longer essays every now and then. Not sure yet.

I do have enough topics to write about, that is not a problem. I have at least 7 topics in my head right now that I could write a post about. I am also not sure if I should mainly focus on my personal passions such as Bitcoin and the Climate Crisis, or if I should write more about my private life as well (like I did a lot in the early days of this blog). After being badly hacked early last year I learned my lesson that there can be a serious downside to oversharing. But a personal touch is important as well of course. I guess I need to find the style that I like best, I have not figured it out yet. I plan to start with posts a few times per week, but it could be that I will increase the frequency.

My email subscription still works, so if you want to read my posts regularly feel free to sign up (there is a sign up box on the left of this post). Although RSS is not so popular anymore after Google shut down Google Reader, you can still get all my new posts on other feedreaders such as Feedly.com as well (create a new feed and just input marc.cn in the content field). Thanks for reading!