Bitcoin Is A Net Benefit To The Environment
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Transcript
[00:00:04] Q: What is up guys. Welcome back. P can you introduce our next guest?
[00:00:09] P: AB so fucking, absolutely Troy Cross is a fellow with the Bitcoin Policy Institute and professor of philosophy and humanities at Reed college, where he teaches courses on time, time, travel, philosophy of religion, color, and philosophy of mind, as well as lecturing in the humanities program.
Prior to going to read, he held positions at Yale and Merton college. Oxford crosses philosophical research centers on foundational issues in metaphysics and EPIs,
[00:00:34] Troy Cross: epidemiology epistemology. What epistemology? No, you got it.
[00:00:39] P: Epistemology. All right. Epistemology. You've also been involved in Bitcoin for over a decade.
You reminding Bitcoin like way the fuck back in the day you have. Blown a ton of Bitcoin buying socks, bit of alpacas. And you are an expert in the environmental aspect of Bitcoin and the considerations they're in.
[00:01:01] Troy Cross: Man. That is quite an intro. I sound like a Fiat academic I have to say with all that.
Yeah, I'm a philosophy professor. I'm on a leave right now just to do Bitcoin stuff and I'm really pleased to be here. Thank you so much for having me. I love talking about Bitcoin, especially with you guys.
[00:01:20] P: Amazing. Yeah, you and I have had many conversations over the months in Twitter spaces and I always am super impressed and enjoy your, your thoughts.
[00:01:31] Troy Cross: Thank you. Feel, feel the same way
[00:01:34] P: You you're too kind. Fun fact. I was accepted to Reed college and I was like this close to going there. And the reason I decided that I needed to go to Reed college was because it was one of the only, I think it was the only university in the United States that gave undergraduate access to a nuclear reactor.
And yeah, I went and I saw the I think it's the, is it the railway scattering from, from the blue glow coming out of this giant, like 30 foot deep pool. And I was like, I have to be here, obviously. am I interested in nuclear energy? Not particularly, but I will become interested.
[00:02:08] Troy Cross: yeah, the reactor is awesome.
It puts out. Such a tiny amount of energy. It's like minuscule, really. They just use it. They don't use it to power, anything. They use it to, you know, create materials for other experiments. But yeah, it's the only student run. It's, it's not just that students have access to it. It's that students actually run and operate the reactor and it's you have to get training for it.
And then you get certification. Like when you graduate, you're like a certified nuclear reactor operator. If you go through that program and you know, that, that That's how I know a little bit, that's gives me some insight into nuclear as a I guess as a energy source and, and, and a Bitcoin mining possibility because I always have students who are in that program and I get contacted by the federal government like twice a year with these vague and weirdly intrusive little notes.
Like, do you have any information that we should know about about so and so, and then they list my students who are working on the reactor and I'm like what exactly are you looking for? You know, and I, so anyway, I wrote the administration, like, what are they looking for? And they wrote the agency that oversees it and that agency.
Gave some information about what they're looking for. And it's also just like super open ended. It's basically, I'm a spy on my own students on behalf of the government. Like, are you, what are you doing with this information? And I, I realize that like, since we get visited by the, whatever it is, the atomic commission or whatever, and like yet all these notes that nuclear, I'm a huge fan of nuclear basically for its basic physical properties.
I think nuclear is, is, is the future. But I am somewhat troubled as a coiner by how in your, in your business, the regulators are for this tiny little reactor that can't even power a light bulb. And so the dream of like, you know, just all Bitcoin mining being done on nuclear reactors, there's some tension with it also being decentralized because I think it is the most heavily regulated and sped upon form of energy production that there is.
Okay. That was way more than you wanted to hear, but sorry.
[00:04:15] P: No, I like all of it.
[00:04:16] Q: My first question in the moment, I've never heard of Reed college having a nuclear reactor. This is news to me. You learn something new every day. That's the thing I learned today, what I genuinely wanted to ask is, so why doesn't the federal government reach out to the professors or the students there to understand more about nuclear energy?
Because it's being tested and worked on, on a daily basis and low and behold, of course they do. They do. And of course, of course they ask the wrong questions.
[00:04:42] Troy Cross: You can see why they do it, right. Nuclear proliferation is identified by many people in government as the number one threat to the security, the safety of humanity and, and, you know, think about where we're coming from.
From the cold war. That was obviously top of mind for literally everyone. So when these regulations were first drafted, we were just concerned about nuclear proliferation. And, you know, we have a lot of students here from all over the world and the thought is, I mean, it's obvious you're gonna learn about nuclear energy and then you're gonna take it back to wherever you're from.
You're gonna build a bomb, you're gonna use it on us. And then post nine 11, things got amped up to another level. So, you know, I think I see exactly where it came from. It's like, basically like imagine a flight training school and the government's up in your business. And you're like after nine 11, I can see why they wanna know this stuff because it was a failure to, to keep tabs on that that looked utterly stupid afterwards.
But this is exactly how the surveillance and security state becomes a behemoth. Each one of these things is like a one way ratchet, you know, you, you have a security threat. You address that security threat. You don't want to be the bureaucrat who doesn't surveil hard enough and something slips through your grasp.
So you always overreach when you draw the legislation in response to that, and you basically like, look at what we have to go through at the airport now, you know, look at like how our lives are. So, guarded in these stupid and, and inefficient ways. And you're like, how did we get here? We got here because people brought knives onto a plane and hijacked hijacked it and flew into the world trade center.
That's how , you know, it's like, okay, I see it. So I, I, I'm not like I I'm nots apologize. I get it. Like, I totally get how it happened. It's just that here we are. And where we are now is really I think, you know, it, it, it really. It, it really sets us on a path and who's gonna undo it. Who's gonna be like, no, we should, we should stop checking in with read props about their students and asking whether they're decent people.
Like it's no one's gonna do that.
[00:06:46] P: No, it's never gonna happen. It's I think within our lifetimes, we're gonna have to strip entirely naked. Like cover ourselves in petroleum jelly and like slide through like an Organo mechanical, you know, Orus, that's like a G
[00:06:59] Q: You're telling me you don't do that when you go through TSA, you're as dark as I am.
Look, I'm part of the, the extracurricular program at the TSA. But you and I go through that, but most people dunno about that yet.
[00:07:10] Troy Cross: Actually, I think somebody actually did in port, in the Portland airport where I live, somebody did strip down, going through TSA in some kind of protest made local news.
[00:07:19] Q: So honestly,
I love it. Troy, there was something that you said though, that I think feeds into what my belief around a lot of this nuclear stuff is. And it's the idea that, you know, people of a certain age, U N P no offense, unlike me grew up in the cold war era, hearing about it and, and like really feeling this fear around a potential nuclear war.
You guys also were alive during Treno. I mean, P was an old man then just, you could see how long he is now. But like these are not events that necessarily feel very close to me. Like. Hate me all you want for saying it like this, but it didn't really click in my head until I was much older. That Cher noble was not very far removed from when I was born.
And I wonder if part of this hesitation to adopt or go and explore nuclear energy is because the leadership, the people who can make those decisions were in fact alive during that time and biased to a point of fear almost rather than. Through a viewpoint of opportunity or prosperity that this new technology could provide.
How much of that do you buy or am I just still a little high from the weekend?
[00:08:29] Troy Cross: I mean, first of all, Pete doesn't look half my age, but yeah, I did live through those things and I remember the Berlin wall coming down and my mother grew up in Washington DC. And when she was a little girl, like her big fear was the nuclear war, you know, that was the era of Dr.
Strange love and the Rand Institute. And I think of course that shaped us, but on nuclear safety, it's more than just the cold war. Shaping us it's on the one hand, the proliferation of, of nuclear weapons. I mean, I, I, I think it is a concern. Nuclear weapons are definitely a concern. I, I wouldn't say I'm concerned about that at all.
In fact what's weird is that we were a lot safer in the cold war, I think, than we are now on the nuclear Warfront because we just, it was just in the hands of two superpowers, both of whom had a lot to lose. Whereas now it's in the hands of a lot of rogue actors and it's a little less secure, but on the, on the part of nuclear energy, there was of course, a huge movement that kind of coincided with the cold war that wasn't so much about.
It wasn't so much about geopolitics as it was about meltdowns, like Cher, noble the plant in New York, It was these little accidents and it was also about what do we do with FCI material spent material and not having a really good place to store it and having a long half life. And of course you do remember Fukushima.
I hope you know, that that's an ongoing disaster. I made, I made some money on that in the prediction markets. I made good money on Fukushima. Oh yeah. I'm detail. Tell us how well it was on this prediction market in Ireland, which has now been closed. And you could bet on basically the scope of the disaster.
Like how big was it and how much, how large would the disaster area be declared and at what level. I made two calculations. First of all, I calculate the government was lying and it was worse than it was. And that was true. And then my second calculation was just looking at the rings of devastation possible that some of those larger rings, geographically encompassed large population centers.
And I knew they would not evacuate those population centers. Like I just knew it like basically no matter what, because it would just be too much of a paint. So I bet that this, that the circle would be bigger than they were initially saying and smaller than these outlying ones. And I bet, like I bought up the whole market.
I mean, it's not a big market, so I just like bought up every available trade. And you know, I felt weird about profiting on nuclear disaster, information, you know, the market is there to get information. I wanted to get people information . Absolutely. Yeah. That was pre Bitcoin by the way, I think, I think, no, I can't remember.
No. When was Fukushima? What was I already trading Bitcoin? Yeah, maybe I was okay. All right, whatever
[00:11:18] Q: Fukishima was 2011, but by the way, none of this is financial advice.
[00:11:22] Troy Cross: None of this is financial advice. Do not bet on anyway, the site is shut down. You know, it's like a gambling thing, like anything centralized, right?
It's it's free market and it gets gonna get shut down. So, but, but anyway, back to the question, like I think these disasters and the problem of long term storage, you know, it galvanized a movement that went together with the no nukes movement for war. And that was like, not my generation really, but like my parents' generation, they weren't really part of that.
But, you know, that was the no nukes thing. And what's weird is to see how the long tail on that movement. And we've got much better safety in reactors now in their design, in their fundamental design, but also in their placement in their regulation, like basically we have addressed the safety problems in nuclears by far the safest form of power production now, and that's hard to stomach, but it's true.
You know, just like the air pollution. A coal plant kills more than nuclear ever, ever has by causing lung issues and stuff. So I, I think nuclear and, and, and of course, I mean, this point's been made all over Bitcoin, Twitter and all over energy, Twitter, but basically decommissioning nuclear fleets around the world is what is keeping coal plants online.
And for Bitcoin's critics who point at Bitcoin, which is less than a billion dollars a month in total revenue. And, you know, probably you know, $200 a month in, in, in energy spend to fossil fuels. If that like maximum, maybe a hundred million dollars a month is the total global spend on fossil fuel energy worldwide to say coal plants are staying open because of Bitcoin.
Meanwhile, we are shutting down nuclear plants. That produce you know, orders of magnitude, more power around the world, you know, it's happening like that New York state legislation, there's a plant being closed down in New York at the same time that that legislation is being forwarded and discussed.
There's a plant in Michigan that just got shut down. There's a gas plant across the street that is of course taking up the slack. So like, basically shutting down the nuclear fleet is eating up all of the gains that are being made by adding green energy and keeping fossil fuels around when they otherwise wouldn't be, nuclear has amazing features as a producer of power has this incredible capacity factor.
It has a very small footprint, unlike solar, you know, it's, it's fantastic. It, it overruns its budgets all over the place. It's expensive right now. It's centralized, it's regulated but it is safe and it's steady and it, it it's you know, and it's carbon. It's, it's not considered renewable because it uses uranium, but it's sustainable.
It it's, it's a carbon free production of, of energy. So like, it, it, the, it's almost like the game with, with Bitcoin. It's like a distraction game. Like everybody look here at 0.001, 2% of global energy. Meanwhile, ignore the fact that we are shuttering the, the most innovative and forward looking and decarbonizing form of energy production that humanity has ever had.
It. It's almost like a, you know, I get conspiratorial at this point, like who's behind this, like, you know, who's behind this because it seems just too irrational for it to be organic, but then, you know, people are irrational. No, I mean,
[00:14:34] Q: I, I could not agree with you more. It is so disheartening to, to have so many people believing the lies that are constantly repeated.
About nuclear energy and honestly, so many other things, but specifically around nuclear energy and its effects on the environment and what it does for humanity. I mean, it's just lie after lie, after lie and the policy decisions that are made reflect those lies. It, it's
[00:15:05] Troy Cross: a really, really instructive thing for Bitcoiners because we're the anti-nuclear campaign of misinformation and the anti Bitcoin campaign bear a lot of resemblance, but it happened a long time ago with nuclear.
So we're looking into our own future. When we see the present, you know, we look at the president of nuclear, that's our future. Like where, where, where are these right now? Bitcoiners are like the nuclear advocates of. Seventies and eighties and, you know, look at the long tail of that misinformation, these a few key players, right, who have created the story around Bitcoin fashioned it and fed it to the media who lapped it up into politicians who also lapped it up, you know, Alex Dre, who I'm gonna, I'm going to a conference on Wednesday.
He's gonna be the keynote speaker there created this dig economist, the the central bank employee for the Netherlands created the site, dig economist, originally doge, economist, and spread just a, an incredible pile of FUD about Bitcoin. Like that person, Camila Mora professor at university of Hawaii wrote.
Or didn't really write, put his name on a paper that is repeated everywhere that says Bitcoin alone is gonna heat the globe more than two degrees. Like these two people and a few other key players at the very, very beginning of Bitcoin's life shaped a narrative that is not based in fact, but which will dog us for decades.
And it's it's because it's because there wasn't a counter narrative that caught on fast enough. And it's because it became an identity feature, right. Rather than just like, oh, how does this brand new technology work? Like the electricity or the internet? Let's figure it out. How it could be used to, to further human ends.
It was what kind of a person am I am. I, I know it's so, you know, am I am like, you know what I mean? And so that's the same with nuclear. It's like once you're a, a nos person and you've got, t-shirts saying that and you've protested it, how easy is it gonna be to change your mind? Very very freaking hard, which is why we just have to wait for the hippies to die for that narrative to die.
We're not gonna change their minds. Right. So we gotta wait, we gotta work on the next generation. And so those two in particular, but others are, you know, Elizabeth Warren, they are trying to do the same thing for Bitcoin, cement a narrative and, and intertwine it with an identity so that it cannot be shed at the pain of, at, at the cost of your own, your own ego.
That's admitting that you're, I, you, you, aren't the person that you say or you're one of those bad people, so we have to stop it before it gets to that phase, because we're just gonna be dealing with this FUD, like, like for decades.
[00:17:41] P: Yeah,
man, I, I have said similar things in, in a far, far less eloquent way that like the way I thought about it is when you're talking about, when you're talking with people about environmentalism specifically around ESG narratives, one of the, one of the experiences that I've had personally is that it is so difficult to.
To have a conversation based in fact or reason, because as you say, people's identities are wrapped up in this idea and I'd never thought about the idea, or I had never thought about it from the perspective of people trying to establish that identity around Bitcoin. And certainly not around the idea of nuclear energy, but you're absolutely right.
That's exactly the, the attack vector
against it.
[00:18:24] Troy Cross: And, and, and when I talk to people and I'm not very good at this, no one is, you know, but you of have to work with the identity you already have. , you know, you're not gonna be able to tell people like you identity sucks, who you are sucks, be a different kind of person.
It doesn't work that way. People don't work that way. So you have to try to get inside their. Figure out what they value and how, you know, Bitcoin can connect with what they already value and who they really are. The deeper values, like, okay, you've got the t-shirt that says no nukes, but what are you really afraid of?
You're really afraid of, you know, thermonuclear war you know, meltdowns at plants. And what you're, what you're afraid of is a kind of techno pessimistic vision of the future. An I radiated landscape a hellscape postapocalyptic, that's what you're afraid of. So if I can then show you that you are actually creating that hellscape, that the technology has advanced in the past decades, but you.
Where you're you are keeping coal plants alive, and those coal plants actually have radiation and admit radiation more of it than escapes nuclear plants famously. Right. So do bananas. A lot of things have radiation, if I could show you that, that you're creating a world that is worse than the one than the one that you're trying to prevent with your actions and do it with empathy, you know, maybe, maybe we get in, but like I said, the hippies have to die, you know, I say this with affection.
I mean, I met Reed college. It's basically like F you know what I mean? It was like hippy central, I think, 30 years ago. Oh my God.
[00:20:01] P: Yeah. It's yeah. So I'd love to hear more your thoughts around how you combat those narratives. And I guess also taking a step back sort of, what is your position on kind of ESG narratives in Bitcoin and how we can.
[00:20:18] Q: Can I, I'm gonna cut you off P cause I, I, I want to go down the ESG rabbit hole, but I want to go a different way because Troy, what you said, I agree with, however, then you look at something like ESG, where at its court is essentially just telling people, Hey, what, what you've done for all these years is bad and stupid and you have to change it.
And this is what you have to do differently going forward. And for whatever reason, a lot of people bought into this narrative. A lot of it was pulling on the heartstring of finding what these people valued. Like, Hey, your kid is probably not gonna have the same planet that you have. Like that was like the advertisement running when I was a child, somehow that is still the advertisement and I'm kids.
My age are now having children now. So did it actually work or not remains to be seen, but why was ESG such an effective way of changing people's minds about their consumption happens to what they were doing and changing it into the mess. See now.
[00:21:19] Troy Cross: Yeah. It's interesting to use the word ESG because it's a fairly new acronym.
You know, people didn't use the word ESG even five years ago. I'd never heard that phrase. And it really came out of the investing world. ESG stands for environmental, social and governance, and those are sort of three criteria for ethical investing. But I would say ESG grew out of the ethical investing Mo movement.
And then with people trying to sort of break down what ethical investing meant. So, you know, there's environmentalism as a movement, which is, I think of it simply as having a low time preference. I think of the heart of environmentalism as just caring about, like you said, your kids, I, I don't think that's a Fiat thing.
I think that's a human thing. Thinking about Thinking about using resources and building a world that where our grandkids are better off than we are. And you know, that means not just like dumping pollution everywhere, for instance. And it, it means generally building a better world. I think it it's just identical with having a, a, a load time preference, letting your grandkids happiness be as important to you as your happiness.
If we had that. And if Bitcoin can achieve that, then environmentalism wins. That just is environmentalism in my book. Now what exactly that consists of something different. Now, what happened with ESG is you know, people had this thought like, Hey, I'm just throwing money into the market. And this, this is more Fiat thinking, right?
What happened was you cannot save anymore without investing. I think, you know, you go back a hundred years ago. We didn't have a, a sophisticated stock market. You, you, you go another 20 years, we start to get a sophisticated stock market, but not everybody participates in it. It's and it's speculative, but sometime in the eighties or whatever, everybody's retirement gets hooked up into investments.
Everybody's investing all the time and it's in a way it's 1971, right? We start printing money everywhere. You cannot save in, in money. Money is not a savings vehicle anymore. Everybody knows that you have to gamble in the market in order to even stay, even with inflation, you can't do that with cash anymore.
So everybody starts giving their money to, to the market. And then we also get the rise of these index funds rather than picking out stocks or having your broker pick out stocks. You just invested an index, you just brought buy the whole broad market, whether it's the Vanguard total market fund or whether it's just the S and P 500.
So now your savings vehicle, every, every day, a middle class Americans, their retirement vehicle and their savings vehicle, we've all become investors. We've all become speculators because the dollar has forced us to do that. And now people start thinking like, wait a minute, what am I kind of funding with my savings while I'm funding, basically the entire economy however, these fund managers decide to do it.
And that depends on, you know, what goes into the index that I'm investing in. Let's say it's all gonna be decided by the centralized operators. Maybe that stuff doesn't actually reflect my values rather than me investing in say my family business, my town, people, I know land that I know about.
I'm suddenly investing in this very detached way into just the broader economy in ways that certain central planners basically whoever's running these indexes and funds, whether that's BlackRock or fidelity or whether it's you know, the NASDAQ deciding who's listed those people are determining where my money goes.
So I think this is a very non Fiat thought underneath so-called ESG, which is like, I wanna decide how my money gets invested and I wanna make sure it reflects who I am and my vision of the future. I think that is just. I don't think that if that in any way as Fiat thinking, I don't think of that in any way as flawed thinking.
I think it's, it's free market. That is a free market where people want better control of their cap, their own capital. It's the capital they worked hard for and they wanna control it. So that's the good current underlying, you know, ESG. It's like, you want my money? Tell me what you're doing. And whether it aligns with my values.
Now the games begin once we have that general virtuous underpinning firms are like, oh, we can monetize that. Like you want information about companies so that you can invest in ways that are concordant with your own values. We will sell you a product. And our product will basically measure how well companies are doing on metrics of value that we establish.
Then we will rank about, we will rank those for you and we'll put funds together that just bundle them and we'll decide we'll, we'll basically do the hard work for you. And then you can just come along and see ESG fund and put your money there. So that's where, that's where the fraud begins. I mean, ESG is like, like full of fraud and misrepresentation and just stupid accounting.
As, you know, Elon Musk point pointed out when Exxon is an ESG company and Tesla is not, you know, the whole thing is a joke. What happened basically is ESG became bullshit metrics. Like the rest of the world we live in. And then people, companies like devote wings of administration and bureaucrats and middle managers to like maximizing those metrics, those ESG metrics.
In, in ways that will bump them up various scales. And that becomes a barrier to entry for small companies. It becomes emote around big companies. It becomes one more kind of like feather in the peacock tail where you're signaling fitness by doing all this bullshit that doesn't really add any value.
It, so I, I think the system of ESG is an investing system. It is seriously corrupt and fucked up now. And maybe I can link some sources on that afterwards. You know, the head ESG guy from BlackRock wrote an amazing, massive expose in medium about what it was like to be the ESG guy at BlackRock and how much bullshit it is and how it accomplishes nothing.
And I can simply forward that onto you, but there are many, many such critiques. And so in short, if I can step back I think the underlying impulse for ESG is noble. It is free market. It is bottom up. It is people wanting to control their capital in way, rather than give it to other people who invest it in ways that do not match their own desires and values.
And I can't imagine anybody fighting that unless you really want opacity and you want central central control. But then ESG is as a product is, is bullshit and fraud that has designed that is designed to part people from their money and basically greenwash stuff that pays to be greenwashed. And so that I Don think is horribly destructive and, and what, what I, what I don't like that sometimes Bitcoiners do some Bitcoiners do is just use this word, the ESG narrative, when it, for me, it covers both of those things, both the impulse to, you know, spend your money as UC fit's your freaking money.
And. Also these games on wall street, which then also of course are looping in Washington. It's not just wall street, but it's Washington too. Now that the SCC is requiring ESG reporting, they're going to determine the metrics and values the S C ultimately it's gonna be the SCC in BlackRock, and then there's gonna be like tax stuff.
That's gonna be tied into this. I know it's so, and uh, you know, so, so it's, I oppose all of that. I oppose all of the top down impositions of of metrics on the economy. I think that is the quickest way to kill an economy and stifle innovation, you know, is to come, is to have a bunch of bureaucrats in DC.
Come up with arbitrary metrics of value, where we all have different values, you know, ESG is gonna be different for all of us. And they're gonna come up with bullshit metrics that reflect one set of values in which are gameable and then tie in a bunch of other bureaucracy with it on the tax and reporting front, and then reward people for maxing that out.
I mean, I see disaster lying in that direction, but I do want people to be able to invest in the way that they see fit. And that's a noble impulse and you know, I, I, I think I, I, I would like to further that end for people if I can. Yeah,
[00:29:53] P: absolutely. I guess one thing that's interesting to me is the, as you, I think what you're saying is ESG is just one flavor of a thing.
The, the, that it's one flavor of a thing that you could care about when you're investing your money. And I guess I'm curious why. There's the attachment to that specific term, because it feels like it's been it's I hear what you're saying. It feels like it's been completely co-opted at this point, right?
It, it, it, it stood for something reasonable and noble, which is like free markets. You should be able to do whatever the fuck you want with your money. And it has now been turned into this, this, like, it's like that you know, in forget which alien movie it was, but one of the last one with Ney Weaver, where she goes into the room and there's all the clones, you know, and she it's like, kill me and it's just like horrible Cronenberg monster.
So like, what is the attachment to the term ESG specifically for
[00:30:43] Troy Cross: you? If there is? Yeah, I mean, I hate the term. I don't like the term at all. You know, I, I, I think where it starts is like, we had problems that we identify with corporations and corporate basically business ethics. So we have externalities that are not internalized in price.
Those are failures of regulation, basically. We have those externalities can be. Harms to a group of people or they can be benefits. Externalities can be positive. And so they, those can be environmental or they can be in terms of what you're doing for, for society or they can be in terms of corporate governance.
There's a lot of attention in the two thousands to basically failures of corporate corporate governance structures, where insiders were enriched at the expense of shareholders. And so you can see people saying like, look, what are the ethical failings of business? They're environmental, they're social, they're in governance.
So what if we come up with a fund that rather than trying to fix those failures through regulation allows us to fix those failures through people, putting their money where their mouth is putting their money, where their values is. So that's how it happens. But as soon as you get farther than that, you say, okay, what kind of corporate governance structure is ethical?
What do you mean social? Uh, What do you mean environmental. Then it's completely up for grabs and then, and controversial. And I've talked to people who are in wall street about this, and, and they're saying, you know, like there's no agreement about what these things are, none at all. And so, and it's always gonna be different for every person.
Exactly. So there's, there's really no shortcut to doing your own due diligence or finding what's going to happen. What I predict is going to happen is that you're going to have, because the country has fractured socially and politically religiously. I mean, it's, we are on the verge of like some kind of social civil war.
And so you're going to have niche funds that reflect the values of people in the niche. And here's, what's happened with ESG. We've taken a certain niche of culture and we've made that we've called that ESG. But really it's like one flavor of ESG that reflects one cultural viewpoint. This is why, I guess I heard last week, there's like an anti ESG fund that like basically takes the, the, the stocks at the, that do worse on the ESG metrics.
And you can invest in those two and that's like, step one. But step two is, you know, your politics are gonna be aligned with your investments and you'll come up with a fund that just services those investments in a way, what we have is like we had the illusion that wall street and politics were independent.
It's like Reed college has this like de declaration of political neutrality. So we have a, we have a 800 billion endowment, something like that. And we claim to not be political about how we invest that fund. But if you think about a place like Reed that is hyper political, like how long will that political neutrality really hold up, given the hyper political nature of.
Constituents of the institution. Right. And likewise, if you look at something like Liberty university or something on the right, on the right, how long are they gonna keep investing in like woke companies that, you know, go entirely contrary to their right wing values. So you're gonna see like a right wing kind of investment fund pop up that serves the Hillsdale colleges and the Liberty universities.
And you're gonna see left wing once pop up and, and that's fine. That's free market, but when you call one of them ESG, and then you intertwine it with policy, that's just not gonna survive because half the population will disagree. That that's what Accords with their values. They'll just say, that's what Accords with your values.
And then it'll all melt down. Said.
[00:34:31] Q: So. I want to, I want to keep going down this rabbit hole and Troy, if you don't want to, you're totally you're well, within your rights, cursing is loud and you can tell me to fuck right off. Like ESG to your point. Like, I really started paying attention to it in 2020 when I was starting to invest full-time and on one of the publications I followed, they would send out a weekly report of ESG companies.
How much did I don't wanna say? Like COVID necessarily, but the fact that during COVID people were at home, there was a big influx of traders. You can see it based on the volume of trades that was happening at 2020 versus what's happening today, or even just in 2021. That in fact, the traders were far more active ESG essentially was being shoved down people's throats to everyone's point here.
And this is my least favorite part about ESG is the G is governance. And ultimately any company can, if they ignore environmental, if they ignore social. We're governing the right way. Like Trump, you asked us to tell you if we're doing it right or wrong. We're doing it right. You trust us. Cool. So we're ESG positive social it's as simple as, oh, we hired head of diversity.
It's the only person of color in our entire business whatsoever. And she actually makes more than, or she makes less than every other executive at her level. But Hey, we checked that social box. I'm literally calling out my former employer paradigm who did exactly that laid off every single person of color and then hired a diversity specialist as their S for ESG.
Oh my God. Like why do things like social and governance have to get clumped into while I do believe we need to take care of our planet. We should look for ways to be more efficient. Everything that we're doing. That's not to say inefficiencies shouldn't exist, but we should strive to be better. So why the fuck are we clumping in these other two things that have nothing to do with environmental and how damaging is it to, I think just the idea or narrative of finding efficient energy sources under the landscape of
ESG?
[00:36:37] Troy Cross: Yeah, my, my answer is first of all, that's a great example of the, the, the metrics being gameable. And I, I have a, my problem goes more broadly of, I think we are completely taken with metrics and metrics are always gameable in my, in my book. They can be useful at times, but I think sort of as a middle, as a management philosophy, we're just taken with metrics and we're gonna all suffer for that.
But you know, I, I, my thinking on this is the person I was thinking of before, who was at BlackRock is Terre fancy, and it's shaped by Terre fan's writings. It, it, the reason why ESGs being pushed on your throat right now is money it's because it's the fastest growing segment in finance.
It's it's because the, the world of finance was like, okay, we did, like, we invented all these derivatives, what do we do now? We have this market. We're not serving very well. We, we deliver products for them. And then we, we profit, like we can charge a premium for the SG stuff. So, I think that's, what's driving it.
It's simple. They did the market research. And then of course, they're also creating the market with advertisement and then it becomes a thing. It becomes a thing, you know, like, are USG investing. It's basically a social virus that has caught on and they help to create that virus, but they're also riding it.
Everybody wants in on it. So it's like when, you know, in 2017, when and I guess it happened again, when people started doing blockchain stuff, you just put blockchain in front of the name of any company and suddenly the multiples just like explode. And it's the same right now. You just put ESG next to some fund and it just draws capital.
So I, I, I have a crude and simple explanation of what's going on here. I don't think it's a conspiracy, it's a convenient match between market possibility and a certain ideology. And it's like, okay, perfect. We can exploit this and whip it up further. And that, that whole thing grosses me. I have to say, and you know, your title is the SG and attack on Bitcoin.