Fireside Chat: Ethereum, TradFi and Physical Infrastructure with Sam Tabar and Adam Wozney

Transcript

[applause] >> Well, hello and welcome. Thank you guys for being here today. Um, I guess having a great Eth Comp? All right, that's what I like to hear. Shout out to the Eth Global team. They're doing a really good job on this event. I'm really proud of those guys. I taught them everything I know. Not true. Um, my name is Adam Bozan, and as mentioned, I'm the senior director of global community at Circle. Um, really excited here to host today's conversation with Sam. Uh, we are tracking one of the most compelling convergences in modern technology. How's that for a setting the stage huh?

The intersection of institutional finance, decentralized networks, and massive computational scale. Our theme for today's conversation is state of Ethereum, how TradFi is entering the space, and how physical infrastructure is evolving to power it all. To unpack this, we're joined by someone uniquely positioned at the exact cross-section of these worlds. He's an Oxford and Columbia law graduate, a former attorney, and a veteran of the digital asset space. Today, he leads two companies that bridge the digital and physical worlds, scaling massive Ethereum staking operations, while simultaneously building out cutting-edge AI high-performance computing infrastructure. Pretty cool. Please welcome CEO of Bit Digital and White Fiber, Sam Tabar. Sam, how are you doing?

>> Thank you for having me. >> For sure. I I hope I got all that right. Was that really accurate? Okay, good. Um, I spent a lot of time on it, so I appreciate that. Um, but before we jump into the kind of state of Ethereum, data centers, AI infrastructure, um, all that fun stuff, I'd like to kick off with a question of a kind of like a get-to-know-you question. I feel like it's it's kind of fun to do those things, right? >> Let's do it. >> So, you grew up in Canada, eh? >> [laughter] >> Never heard I never heard that joke before. >> Yeah, yeah, I know. Everyone's like, "Boo, get him off stage." Um, you're a son of a car mechanic and a tarot card reader. That's pretty cool.

Is that accurate? >> My mother had a very spiritual side. She did do tarot card reading. My father was a car mechanic. That's right. >> Oh, excellent. Okay. My My My grandpa was a car mechanic. So, that's why I gelled with you backstage. We have that in our lineage. >> There you go. There you go. >> Studied law, we mentioned uh studied law at Oxford and Columbia. Go Lions. And now you run not one but two publicly traded digital asset and AI infrastructure companies. Impressive stuff. Looking back at that unique mix of logic and mechanics from your father and intuition or looking into the future from your mother, which side of that upbringing do you think influences your decision-making or leadership style more than navigate more than when you navigate complex fast-paced industries like AI or crypto?

>> I was not expecting that question. >> [laughter] >> I feel like you're uniquely positioned for this though. >> Yes. I mean I So, the question is my mother who has a lot of intuition and my father who was an old-school car mechanic. You're asking who had more of an influence on my outlook and how I navigate my professional career. I mean that's First of all, I've never been asked that question. That I think more and more um following your intuition is a um is is something that we should all do here in this room. Um Far too often we don't. And

And if what you're doing if there's a gap between that and your intuition most of the time it you end up failing. And so, uh you know, I I went to law school and that was not an intuition thing. That was more of a logical thing. And it turned out that I was actually a pretty shitty lawyer. And so, I stopped doing that and I followed my intuition. I went to I moved to Japan. I I joined a a small-cap company there that was investing in these various weird alternative investment strategies.

Anyway, long story short, ever since letting go of my legal career, I followed my intuition in my career and that served me quite well. So, thanks mom. >> Mom, give it up for the moms out there, am I right? We all love our moms. Well, thank you for hearing with that. I I'm glad I asked you that unique question. >> was that was great. >> Um so, diving right into the kind of core macro picture and specifically like state of Ethereum stuff. Um a lot of people do a lot of people in traditional finance treat ETH, you know, purely as a digital asset to be traded or they look at it through the lens of traditional currency.

But, you've pushed back on that. You've argued that the money frame was always the wrong one when it comes to Ethereum. So, if looking at Ethereum purely as money or store of value is missing the forest for the trees, what is the right frame? Um what are the actual metrics, the infrastructure developments, or use cases that you're watching right now to kind of help you judge, you know, true health and growth of the network? >> Well, taking a step back, Bitcoin is the mother coin and it has first mover advantage. That's why it's pretty well known.

And uh and but it's just simply a store of value and Bitcoin really competes directly with the gold markets. The gold markets is about $16 trillion, I think, market cap globally. And and Bitcoin's a fraction of that. So, Bitcoin has a way to go to become a store of value. It's going to eventually eat the gold markets. And I and I realize that there is a lot of cyclical gyrations in in Bitcoin and Ethereum. But, structurally speaking, generationally, and I'll give you an example why I know that I believe structurally things will go up with respect to crypto.

Most of these institutional investors, the people who are decision makers in portfolio management, are boomers. They will die. The Gen X and millennials will take over that. They will control the of power when it comes to portfolio construction and this generation Gen X, millennials, Gen Z have completely normalized crypto and they're going to realize that this useless gold medal is a far inferior store of value than for example versus Bitcoin or Ethereum. I'll get into Ethereum in a moment. So eventually crypto will become part of the family office portfolio construction, will be part a responsible part of a way to to

hedge against inflation and realize that gold is actually an inferior way of doing that and that crypto and Bitcoin and Ethereum is a far more superior way. So Bitcoin competes with the gold markets. Ethereum as everybody here understands is programmable money. Bitcoin is not programmable. And so Ethereum competes with the financial system. The financial system is really just a bunch of middlemen. They make a lot of money through friction. They get in the way between you and I whenever I try to send you money, they take a little bit off the top and they take that friction. Ethereum through smart contracts removes that friction, removes

the middleman. I realize everybody knows this here. But it's very important just take a step back and understand that Ethereum I view it more as a utility settlement layer. That's the metric I look at. And so when you see stablecoins or real real world assets being tokenized, they're not being tokenized on Bitcoin. As I said earlier, Bitcoin had first mover advantage but Ethereum will eventually catch up and I believe eventually ETH will be seen as a superior store of value compared to Bitcoin because it is programmable, there is utility and so I just look at the settlement activity on that and that's the metric. And if you look at the data, regardless of how ETH is not doing so well right now.

The metrics, the the development activity and so on is actually quite favorable and there's a gap there and that's the opportunity. But remember I am in a way inflate conflating ETH with ETH. Like there's there's a difference between the price action and the settlement layer of Ethereum. There's a correlation as well, but I am I'm aware that I'm somewhat conflating the two. Just just being intellectually honest. >> No, I love that perspective and the realness of boomers are going to die. Quote that. >> It is important because they are they have actually been the resistance, the the bottleneck uh of of this becoming institutional from Elizabeth Warren to to uh Warren Buffett, you know, they

these these people have been unfortunately pretty hostile to crypto for a number of different reasons. That's beyond the purview of this discussion, but they will die and again we will take over and once that happens, you will see generationally that crypto will become a more much more institutional. It's already becoming that way. But time is our friend and so yeah. >> Um circle of life, am I right? Um so let's take that macro view of the network and look at how it translates into your corporate strategy.

Under your leadership, Bit Digital has undergone a massive transformation. You've moved money away from legacy Bit Bitcoin mining, built up a massive treasury of over I don't know if this number's accurate, 158,000 Ethereum, is that accurate? >> That's right. We were we actually uh sorry, we were done with the question? >> Oh, no, no, I was I was I was just prefacing it. I was like, I just want to make sure I had that number right. Um so that's the correct number uh and taken a major stake in White Fiber to scale AI data centers. Along with this, you stated that Bit Digital is no longer just a digital asset treasury company, but a strategic asset company. So for folks in the room including myself, how do you define the difference? You know, how is a strategic asset company fundamentally different to a digital asset treasury company?

>> Okay, I want Mints words about this. >> So, digital asset treasury companies are basically what they've done is they bought they got a shell and they sub they shoved a bunch of Ethereum on the balance sheet of that public shell and that's it. That's a beta play. There's not much strategy just buying ETH and holding it. It's not that's not a strategy. That's a that's a that's that's beta. And so, what we've done to be much more alpha positioned um and just taking a step back, we used to be a Bitcoin miner and I announced to the capital markets and the tens and tens of thousands of our shareholders, we are selling our Bitcoin and we're no longer that and we're going

all in on Ethereum. I'm not sure if you're familiar with the Bitcoin community, pretty these Bitcoin maxis are pretty toxic. So, I got a lot a lot of digital tomatoes thrown at me by the capital markets on Twitter or X, whatever you want to call it. Uh so, that took courage. We were first mover on that and then everybody else followed. And uh and so, that that worked out. Uh what was your question? >> Oh, uh the kind of just the difference, like how you define the difference between >> the difference between a strategic asset company and a a digital asset treasury company is that DATs are just buying ETH and putting on the balance sheet and that's what they do.

What we do is we have we sold all our Bitcoin. We were a proper operational company at the time. We sold all our Bitcoin, we bought ETH and then with with with respect to one of our subsidiaries, which uh which was an AI infrastructure company. So, when I first used ChatGPT a few years ago, it's been a couple years ago now, two and a half or something like that. I was in Singapore and I was like, holy this is everybody had the ChatGPT moment, right? It's a eureka moment. This is a technology that is wild. And I realized that you know, this is going to be the third catalyst in the industrial revolution.

The first catalyst is electricity. That transformed the industrial revolution. And the second catalyst is the internet that transformed everything. And now it's AI. So I asked my colleagues like how can we get involved in this? And we realized that what powers artificial intelligence, what powers chat GPT are data centers. And well, Bitcoin miners are pretty familiar with data centers. But building a data center for AI and building a data center for Bitcoin is like a Honda versus a Lamborghini. It's very, very different car. Uh we didn't know that at the time and so we were delusional in thinking that the skills trend sort of translated. Uh we closed the gap with that delusion by acquiring aqua-hiring certain types of

teams and companies and now uh we have these data centers that we built uh for uh very well-known companies like Cerebras and Nscale. We have billion-dollar contracts with our clients. And that company, that subsidiary became so successful that we decided to IPO that subsidiary. And we call that White Fiber. Uh and and just to give you the or the reasoning for White Fiber is that there is dark fiber that we have under our feet and we're basically lighting up that dark fiber into white fiber.

Anyway, so that we IPO'd that subsidiary. And now it's uh it it's way above its IPO uh uh um uh debut. And so Bit Digital owns 70% of White Fiber. The remaining 30% is on a public float. And so the way we've positioned ourselves compared to a that is that Bit Digital owns Ethereum. We stake it. We also own 70% of White Fiber, which is listed on the Nasdaq. And thirdly, we lend against our Ethereum to finance White Viper. So, for example, we lent $100 million to White Viper, so we could build and

accelerate data center development. And we did that by lending against Ethereum, so we continue we don't want to sell our Ethereum, so we lent against it, continue the exposure, and get an even better yield in staking by the lending interest to White Viper. So, this is the kind of like alpha posture you want to be in, and that's why we've outperformed the others by a lot. Go on your iPhones, you can look at BTBT on NASDAQ and compare it to ASBT and BM and R and did even Ethereum. So, that is that's something that we've done and it's so far so good.

>> I'm going to go off script cuz I'm just curious myself. I've never been able to attend one. What was it like for the NASDAQ launch day? Was it like just pomp and circumstance? Did they roll out the red carpet? What was the vibe? >> Honestly, that was the best day of my life. I I I Yeah, it it really was. Um I was my brother I was with my brother who's somewhere in the audience. And uh and uh it was there was some pomp and circumstance for sure, but you know, ringing that bell and just going through that the halls of like the whole thing and just creating a public company that will outlast me after I die and the company continues. It's it's a it's a it's a it's a feeling it's a it's a really nice feeling to build something that can continue beyond yourself. But,

you have you have a child, right? So, that's the same kind of thing. Yeah. >> That was that was a good vibe. We could talk about children all day, but um but no, I I guess my invite was lost in the mail for that. But, next company you launch, I want to be there. I get to Can I Can we get a promise on stage that you'll invite me to >> I I honestly I wouldn't recommend doing an IPO. It really takes some years off your life, so. >> Okay, fair fair. That's fair. Um so, we covered a lot of ground today. Um wrapping up some questions here. Um When you look out the horizon, um if we're sitting here, you know, ETHDenver 2027, 1 year from today, looking back on like the upcoming next 12 months, uh, what does the next stage of growth

and success look like for Ethereum in your perspective, you know, following up on that? Um, what does a home run year look like for Bit Digital and White Fiber? >> So, those are two questions. First is what what do I want if where do I want Ethereum to be next year and where do I want Bit Digital to be next year? Well, yeah, I mean, with respect to Ethereum, look, there's a lot of long-tail coins out there like Solana and others that, you know, they break down, Ethereum doesn't. I think the race of uh programmable money has already been won.

Uh Wall Street has already chosen Ethereum. I don't think that's been priced in by the world yet. All these other chains are basically speculative bets and they're not going to be institutional. Sorry, hype. So, I think that's that's something that I would like us to see next year where that finally that realization that Wall Street has already chosen its horse uh comes up and that's priced in. And with respect to Bit Digital, I just would like to make sure that what I say is true, which is that we can perform regardless of the direction of Ethereum. And so, uh the way we've positioned ourselves uh that uh we get the upside when when ETH goes up and when ETH is going sideways or down, we continue to do well because we have that 70%

ownership in White Fiber, which is building data centers for the third catalyst of the Industrial Revolution. >> I love that phrase, third catalyst of the Industrial Revolution. You're You got some good quotes. I hope you guys are tweeting this out right now. Or X'ing, you know, I don't know what they say anymore. Do you still say tweet? You just say X? >> they say post now. >> Uh, I I I prefer tweet. It's more of a There's more of a ring to it. >> Feels Yeah, it's like vintage. It's like, you know, buying some cool stuff at a flea market. Yeah, some vinyl, yeah. Um, all right, so I I we have enough time for a quick lightning round. You guys want a lightning round?

Uh-huh. >> [laughter] >> I heard yes. It's yes. All right, we'll do a lightning round. So, this is just like one word >> these questions in advance, so I'm just letting you know this not prepped for any of this. Go ahead. >> Yeah, yeah, yeah. So, it could go off the rails. We'll find out. And if you want to add some stuff, you can. We got a little time. But, um first one, I think we all know the answer. Bitcoin or Ethereum? >> Oh, come on. I won't even answer that question. >> [laughter] >> He's like, next. Where's the Can we get another moderator up here? Um all right, I think this one you'll actually like. Biggest threat from AI, job loss or government surveillance? >> Absolutely government surveillance. That's the one thing I really worry about because an algorithm never dies, fascists do. And so, with respect to AI

those that is that is something that actually keeps me up at night. I actually think about that sometimes just before I fall asleep that, um you know, I'm contributing towards something that I'm powering something that is potentially going to, uh enslave humanity. I worry about that. That's not one word. I'm sorry. >> No, no, that's that's fine. I'm like, I'm I'm glad I didn't end on that one cuz that's a dark note, but um but I hear you. I'm and I'm with you on that. Uh secure debt or unsecured debt?

>> Unsecured debt. If you do secure debt, that is a death warrant. Unsecured debt, absolutely. >> All right. Oxford or Columbia? >> Oxford. >> Oxford. Why why is that? >> Well, at Oxford, there are no classrooms. It's one-on-one. Yeah. And uh and I remember when I went to So, I did 4 years at Oxford. It was very Harry Potter, believe it or not. It's like actually have to wear like tuxes at night for dinner. And uh there are no classrooms. It's really one-on-one with your tutor. It's called a tutor instead of a professor. And you meet him or her twice a week. And you have a reading list. And you have to go through the reading list. And what you do for an hour and a half twice a week is that she or he, the professor, will just pepper you with questions and will

say, "Okay, what's your opinion on this? And I'll answer her and then she'll be like, okay, I want you to take the opposite opinion and argue it. So I was married to the first opinion, now she wants she's forcing my brain to go the other way. And so I would have to do that and it was very Socratic. She would be very argumentative about everything I said, but after 4 years of doing that you get used to being detached from your points of view and just arguing agnostically certain positions. >> Very cool. >> Yeah. >> Um all right, last one, we're at time.

Uh better future predictor, financial data or tarot cards? >> [laughter] >> I think that financial analysis is very very similar to horoscopes. You have like charts and so on, so you know. >> Same vein, same vein. >> Same vein. >> Well, thank you Sam. Thank you all for joining us. We're at time. You guys have a great rest of ETH Comp. >> [applause]