Climate change: flooding at the Annapolis Boat Show

Last week I spent a few days on the US east coast, among others visiting the Annapolis Boat Show. I had never been there, but because it is the largest sailboat show in North America I wanted to check out some of the new boats. It also gave me the chance to meet up with some of the round-the-world sailors that I have been following on YouTube and/or that I support on Patreon, such as SV Delos, Sailing Doodles, Sailing La Vagabonde and 59 North.

During the first day of the boat show I noticed that a water main had broken next to the Fleet Reserve Club and the Annapolis Waterfront Hotel, and that the road was partially flooded. When I came back a few hours later it seemed a lot worse, but because there were now police cars parked at the flooding I assumed they would be able to quickly solve the problem.

The next day I was at an event with among others Brian and Brady from SV Delos, when someone asked them a question about how climate change was changing ocean sailing and the sailing routes. The answer was interesting, it seems that the ocean sailing routes that have been used for over a century are suddenly not optimal anymore because currents and winds are changing. Sailors that still follow them take 50% more time to cross the Atlantic than others who create their own routes based on new weather and ocean current data. Then someone mentioned that the flooding in Annapolis was also related to climate change. I thought, flooding? And then I realized that what I had seen the day before was not caused by a broken water pipe but it was the Chesapeake Bay water that had risen.

I went back to the boat show and was surprised to see how far the water had come up in the mean time. Many exhibitors could not be reached, simply because of the water. I did a quick Google search and found that this was indeed partly related to climate change. One article mentioned that flooding on the east coast is up 50-75% since 2000, and that in 2017 there had been 63 days with flooding in Annapolis!

Click here for a link to the article

But most people seemed to dismiss it, saying the flooding was just due to a hurricane that passed by in combination with high tides. I am sure that was an important reason for the floods, but when I read some of the comments on sailor’s forums, people were saying that the extend of the flooding was unusual and that in the past this never used to happen. My take is that of course there were unusual circumstances, but that without climate change it would not have been this bad.

I talked to a number of people at the show but hardly anybody saw it as a serious issue. People did not seem to consider that it could be the beginning of something that will hit many more cities over the coming years and decades. And that is the scary thing, people are like frogs in a pot of water that slowly starts to boil. The frogs don’t realize it until it’s too late.

Flooding is not normal but soon it might be the new normal. Politicians are not doing enough to stop the climate crisis and grassroots movements do not have sufficient power to make a real change. We still have time to stop the climate catastrophe if we act now, but I am getting less confident every day that we will be in time to avoid the consequences. Be prepared…

Could the US be on the brink of a civil war?

The gap between the richest and the poorest in society has grown fast over the past decades. I remember traveling in the south of France in the early 2000s and when you would see a superyacht at anchor you would point it out. But when I was on the French Riviera last week I saw superyachts literally everywhere. And not just ’smaller’ ones of 30-40 meters, but also many with a length above 100 meters and a helicopters on deck. Maybe it was partially due to the Monaco Yacht Show, but to me this is a clear sign that the super rich have gotten a lot richer over the past decades, while incomes for the bottom 50% have only gone down in real terms.

This is a scary development that can’t continue like this. Why? When people need to have 2 jobs just to survive (unusual in Europe, but not uncommon in the US) and feel left behind, they will eventually revolt against this. That can take a long time because someone needs to take the lead in that revolution, but that person may actually be Trump.

For a long time my thinking was that if Trump would not get reelected in 2020 he would fight it, because he needs it to be reelected to stay out of jail. The most likely scenario would be that he would accuse the ‘deep state’ of rigging the election and then using Fox News and Twitter to stir the masses to fight for him. Trump would make his supporters feel wronged by the liberals, telling them they are trying to ‘take their freedoms away’ just like he is now already doing day in and day out on Twitter.

Many of the gun carriers in the US are Trump supporters and the situation could very quickly get out of hand. And if it would not get out of hand by itself, Trump’s enablers like Steve Bannon might not mind helping to get the situation to get out of control. Remember Steve Bannon and his obsession with the Fourth Turning? That’s not a coincidence of course. If Trump would not be reelected, this could literally go from a war of words to an emerging civil war in a matter of weeks.

The election is still over a year from now and a lot could happen in that time, so I did not give it too much thought so far. However, the fact that Trump might (finally) be impeached could accelerate these events. Trump is now already fighting it and using ‘his’ media to fight for him and accuse the Democrats of anything he can think of. And worse, he indicated on Twitter that if he gets impeached this could lead to a civil war. The fact that a sitting president says that is a very scary thing and it shows it is on his mind. Suddenly a potential civil war could be much closer than many believe.

You may think that everything is fine in your life, so it won’t affect you. You may go for a walk in the park, in the woods or just on a quiet street in your town and believe that a civil war would never happen where you live. But don’t underestimate how quickly things can change. Lots of people are fed up with the situation in the world and hope that chaos might be a good thing to give them a better life. Farfetched? Read this article about populism and you may change your opinion.

I see it on Twitter, the discussions seem to have become a lot more heated there. Not just about Trump, but also about climate change, and about the financial system (printing money to save the current system, bashing Bitcoin etc.). I personally feel things are getting out of hand and Trump is only pushing that. The USA seems to be more divisive than ever and I am genuinely worried that if an impeachment would be successful Trump would use his populist skills to start a civil war.

I hope I am wrong, but I just can’t imagine that Trump would quietly go away and risk ending up in jail after he left the Presidency. Maybe it can be avoided if he gets a non-prosecution deal, but I have my doubts. He and his enablers may have a lot more to gain from chaos than from keeping the status quo. Like I said in a recent post, be prepared.

Being prepared

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!

Melatonin and jet lag

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.

Over the years I heard a lot about melatonin as a solution for jet lag, but I never gave it a try. I always saw melatonin as a kind of sleeping pill and I just never want to take medicine when I am healthy. But about a year ago I was talking to a medical doctor about my travel schedule and he told me to take a closer look at melatonin instead of just dismissing it. Well, when a doctor recommends it I might as well give it a try I thought.

So I bought some at Vancouver airport at the start of my next trip and took 3 mg a few hours after take off to China. I did not really believe in it to be honest, but I was proven wrong quickly. I got sleepy about half an hour after taking a pill and then managed to sleep for about 4 hours, waking up feeling great. I worked a bit during the remaining few hours of the flight and did not feel drowsy at all. I still had a business dinner that night and felt tired of course, but managed to stay awake. When I got to my hotel I took another melatonin and again slept for about 3-4 hours. Perfect!

Since then I am taking melatonin after (and depending on the flight also during) every single long distance flight and it works well for me. Especially for eastbound flights, where you travel against the time so you will have to go to sleep while your body clock thinks it’s afternoon, it’s a great solution. Melatonin makes me sleepy and I get at least 3 hours of sleep after it. In case I wake up very early (say at 2 or 3 am) I sometimes take another melatonin to fall asleep again and that works for me.

I wish I had tried this before. I spent so many jet lagged nights reading books or doing emails, followed by daylight hours where I needed literally liters of coffee to stay awake. Melatonin is the answer to this! It’s a natural hormone that makes you feel sleepy, but that is not addictive (sleeping pills are). Just knowing that you’ll get a decent night of sleep helps a lot already.

For me the dose of melatonin that I take does not make much of a difference. I have played around with 3 mg, 5 mg and 10 mg pills, but the effect seems similar to me. I always sleep about 3-4 hours and even higher doses don’t make me feel sleepy after I wake up. I have tried different brands, but also there I don’t notice a difference.

Generally I am now over most of my jet lag in 2-3 days, even for 12 hour jet lags, instead of 5 or more days in the past. And during those 2-3 days I normally get a decent sleep as well, although it is generally shorter than it should have been. I am much more productive and generally feel a lot better after a long flight.

If you travel regularly across multiple time zones you should really give this a try. Maybe there is some placebo effect involved, but for me it has been a huge help. Most pharmacies in North America and Asia carry melatonin over the counter and you should be able to buy it on most airports as well.

American Factory

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.

As is to be expected in such a setting, the culture clashes start immediately. It becomes clear quickly that the Americans are very happy to have jobs again but that they only work for money. There is no pride in their work, in the company or in the products they make. The Chinese on the other hand will sacrifice everything for the business and can’t understand that the Americans are so lazy. The 2 groups try to integrate, but although a few superficial friendships develop that’s about it. For the Chinese the only thing that counts is good quality products and a higher output, even if that means working day and night to get it done.

Once the Chinese billionaire who founded and runs Fuyao comes to visit it is clear that he has a very different management style than the Americans are used to. He micromanages and he wants to decide everything, which is typical of self-made Chinese business men. But it’s something that’s difficult to understand and accept for the American workforce. Very recognizable to me after 13 years of working in China and now over 6 in North America.

Things get really interesting when workers want to unionize, something the Chinese can’t relate to and of course won’t tolerate. Lots of food for thought about the excesses of capitalism, the state of the economy in (rural) US, but also more generally about the meaning of life in different cultures. Work to live or live to work?

Highly recommended, also if you have never lived and worked in China. It shows an important reason why the US is on the decline and what you can expect when China will start to take over the world.

Watch the trailer here on YouTube or the full documentary here on Netflix.

Fusion energy – a solution for the climate crisis?

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.

Visiting Hut 8’s bitcoin mining operations in Medicine Hat with my son Scott

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.

Another Satoshi wannabe

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/

Refugees and Bitcoin

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.