Q2 Pump Update

Every passage, on the record.

1. 00:56Idea

   You think of moving dirt a thousand years ago, in the time of the Egyptians, and everybody's moving dirt their entire life, that's the whole point of life. Some genius says, what if we stick a piece of metal on the end of a big stick, then we don't have to bend down as much, we can use mechanical leverage, and that will allow us to dig more holes.

2. 02:11Claim

   This is way better, this is much more efficient with the energy I have to input into the system. I get out more energy, but I've also spent less, so I'm able to do something else with that energy, and that excess is just as important as the energy itself.

3. 02:44Analogy

   Imagine you were back in those pyramid days and you looked out over the landscape and saw millions of people slaving away trying to dig holes with shovels, and you've got an excavator that runs all by itself, autonomously, forever. All you have to do is feed it a little input, set it and forget it, and you're up on top of the pyramid getting fed grapes.

4. 03:27Quote

   You don't understand the tool.

5. 03:58Claim

   The whole point of life up until now has been converting disorder into order, right, that's what we're doing all of the time, that's why you generate knowledge in the first place, that's why you take information, or you take noise, and you turn it into information.

6. 03:58Analogy

   That's how I'm sitting down on this physical material that I call a chair. Somebody came up with this, and because it was a halfway decent idea, other people thought, let's not forget that idea, that arrangement of atoms in my head, let's remember that because it's going to be useful.

7. 04:33Quote

   You multiply that times many, many, many, many generations and ultimately you arrive at, it's probably better in the chair.

8. 05:12Claim

   You can't force-feed people and say my life is way better because I'm using this tool. Except you do have access to it, you just have chosen not to use it.

9. 05:12Analogy

   Imagine there's an enormous, gigantic excavator digging holes and still everyone around is just using the shovels, a sea of unwashed masses out there digging with the shovels, sweating.

10. 05:57Claim · condensed

    We're not digging holes, we're generating knowledge. I can only generate so much knowledge, more people are better at generating more knowledge because we're creative and we solve problems, everybody has different problems than me, that doesn't mean the solution to your problem won't make my life better.

11. 06:42Quote

    Forgetting is incredibly costly. It would be way better if we never forgot the useful shit.

12. 06:42Claim · condensed

    What if there's a machine that generates more knowledge, knowledge we couldn't forget? Put all of our energy into that machine and it will generate more knowledge, more exchange, more specialization; the more entities capable of generating knowledge, the more useful the tool becomes.

13. 07:58Quote

    The dipshits on the internet were actually right, and now I have to buy into this thing and I'm embarrassed.

14. 07:58Claim

    It's a tool that has maximum value because it creates the one thing that we actually need, which is knowledge. It takes a long ass time to get there though, doesn't it.

15. 08:33Reference

    You can generate a significantly more amount of transformations if you tap into the extended order and all the solutions that they've come up with to their problems.

16. 09:14Claim

    I'll stand on their shoulders and I'll just plug in one extra little bit. I can't do lots of different variables, but I can do one extra variable on every single good piece of knowledge, then I'll check what the results are if we now know something that super smart person didn't know.

17. 09:44Claim

    There's just super smart people doing all the smart work? No, no, they're not super smart people, they're dipshits who happened to specialize for a long time in one little area because information was incredibly difficult to share, coordination was super difficult.

18. 10:21Claim

    There were people working on the same scientific problems at the same time, doing double work, and if they had been able to coordinate it would have been much more efficient, there would have been much less noise.

19. 10:21Reference

    The theory of the mind is not a bucket theory, right, knowledge just doesn't get poured into your head, you have to do the work yourself every single time through conjecture and then through criticism, and you have to do that, no one else can do it for you.

20. 10:21Claim

    If I realize the people who thought they knew about money actually have no fucking idea, you can just educate yourself by doing all of this work, once you see behind the curtain and realize nobody has any idea what they're talking about, that makes you pause and wonder if this is the case in every other subject.

21. 11:35Quote

    It turns out that yes, almost everything, almost everybody's a dipshit, right?

22. 11:35Claim

    You can be significantly more powerful if you create one little tiny piece of knowledge by solving the problem, and then you start to fact-check, wait a second, is this thing right, how could I possibly be hosed when it comes to Bitcoin?

23. 12:49Claim · condensed

    Computation is physical, what does that even mean? Information is physical, information is the physical embodiment of order. All computation is physical, it works through physics.

24. 14:04Reference

    This is the analogy that safe Dean uses all the time, like it's not an option for you to adopt this technology. This technology is more efficient at generating knowledge, the societies that generate more knowledge and are able to remember that knowledge, and cannot deviate from that knowledge by decree or by fiat, those are the ones that win.

25. 14:04Analogy

    Why because they are more efficient, they will end up with more energy, if they have more energy their barn going into winter is full of more wheat, and if it's full of more wheat or hay, that's gonna outlast winters. You know what happens when winter comes, you're dead, guess who's not dead, those folks.

26. 15:04Claim

    Now I know I need to realize how can I get the maximum juice from the squeeze, what am I able to do to take all of the entropy that is in the fiat world, because there is such a lack of signal, there is nothing but noise.

27. 15:34Analogy

    I'm basically generating like a stone monument that cannot be chiseled away, cannot corrode or rust, information is better in that form. There's just a sea of chaos, how do I divert a little stream into this stuff that will never change?

28. 16:51Open question

    I need to find a way to get more of the noise into the signal. I don't know if there's a way, I mean it could use leverage, that's kind of dangerous, there are huge volatility swings I don't want to be eaten up by, I don't know.

29. 17:29Reference

    Along comes somebody that has access to significantly more noise than you do, and that person is Michael Saylor, strategy.

30. 17:29Reference

    Let's think of the excavator as strategy, the company itself.

31. 17:29Analogy

    Everybody in the fields, once I see the excavator working, they're like, holy fuck, this excavator is gonna be super valuable because it's gonna dig a whole fuckload of holes, and we really want holes. Let's take our excess resources and buy a little portion of this excavator.

32. 18:40Claim

    He's in a very unique position to have the ability to tap into that much noise for that cheap. I guess you can't do it yourself, so what do you say if you're in the field? You say, I will just invest in the excavator.

33. 19:12Analogy

    Say you make a million dollars a year, half goes to taxes, now you're at five hundred. I could take all of that and put it into Bitcoin, anything in excess, but I also want to live my life. You just look back five years, look back ten years, and see how good your life is going to be in wealth terms.

34. 19:47Prediction

    You just look back five years and see what the price was, do that multiplication to the current price, and that's pretty much going to be it, but better, because we're getting more efficient, because we're generating more knowledge.

35. 20:22Claim

    Let's say you find a way to beat Bitcoin through strategy. They can get access to fiat money and turn it into Bitcoin faster than you are able to, so if you invest a dollar with them, you're getting more than a dollar in Bitcoin.

36. 20:22Claim

    Is it cold storage Bitcoin? No, not at all. Should you dabble in microstrategy without cold storage Bitcoin? Absolutely not, why, because microstrategy is not wealth.

37. 20:57Quote

    You know what's wealth, the ability to perform physical transformations in the world without asking permission from anyone else.

38. 20:57Reference

    You could have a hundred million dollars, you could be Elon Musk, if he has his dollars in Chase or JP Morgan, guess whose bitch he is, he's those guys, because his ability to perform physical transformations is living on someone else's ledger.

39. 20:57Event

    Just ask Russia, same thing happened to them. You think you live on some immutable ledger and all of a sudden a couple of keystrokes and it's gone, you don't have any wealth.

40. 21:35Claim

    MicroStrategy isn't wealth, you can think of it as a tool much like the excavator, a tool for generating real wealth. You take the gains you make from leveraging microstrategy and you have to turn it into Bitcoin; if you don't turn it into Bitcoin you are playing a very dangerous game, it's like musical chairs.

41. 22:46Claim

    Markets work on information, there's a whole sea of dipshits who have no idea how to price this stuff, or what the whole end goal of all the exchanges and specialization that happens in the extended order is.

42. 22:46Analogy

    Imagine playing a game where you didn't know the point of the game, you didn't know what the end state was supposed to be, who would be the winner at the end. Did you know the rules? Not really. Well don't you think you should learn them? Yeah, no time.

43. 25:34Event

    Bitcoin opened up at 85 [thousand] April 1st, in June 17th it was 106 [thousand], that's a 25.4 percent return. Microstrategy at a 20 percent return, 307 opened up at 369. The S&P is up 6.2 percent.

44. 28:51Quote

    I don't know, you tell me how long it's supposed to last until it's like, well, this thing actually works.

45. 28:51Analogy

    There's Saylor's analogy of seeing the big giant lake at the top of the mountain and seeing the waterfall. Do you think the water is gonna run out? Maybe, but then you figure out why it rains and why the thing fills up in the first place.

46. 29:29Prediction

    There's no limit to how good this thing works, because it's not like I have to buy another plant or there's a physical space that this thing occupies, it's just financial engineering.

47. 30:49Event · condensed

    The estimated daily volatility of Bitcoin for the quarter was 3.4 percent, for microstrategy 4 percent, for the S&P 500 0.9 percent, for the theta sync strategy 1.4 percent. That gives you a sharp ratio where microstrategy is at 1.2, Bitcoin at 0.8, and theta sync at 4.1.

48. 31:22Event

    The max drawdown in q2 for Bitcoin was 18 percent, for microstrategy twenty two point six percent, for the S&P 500 seven point one percent, for the theta sync strategy four point three percent.

49. 32:04Prediction

    You'd get basically 0.8 of a Bitcoin, three Bitcoin over the course of the year running this strategy on an initial investment of buying the business at a thousand shares, if this manages to happen continually through all four quarters and the results stay the same as the last two.

50. 34:19Prediction · condensed

    Annualized returns for if we annualize Q2 over the year: Bitcoin 112 percent, microstrategy 136 percent, theta sync 155 percent, S&P 27 percent. I guess if more people figure this out that will narrow.

51. 35:59Quote

    That's the ultimate KPI here is sat growth.

52. 35:59Claim

    It's really hard to find information on sharp ratios for hedge funds, the only thing I could find was the medallion fund from Jim Simon's, somewhere in the three to four area, and this is four on the conservative side and six the way I actually calculated it, with much less volatility and almost zero fee drag. It wasn't even the best macro environment to run the strategy in, because it managed to outperform over a rising Bitcoin price anyway.