Making Nuclear Markets Work Onchain | Alex Dolesky, Uranium Digital

Transcript

yeah about three and a half years ago I started getting super bullish on uranium tried to express a trade like I would through any other metal or commodity on the futures or spot market and quickly came to learn um it didn't exist the options set for exposing a directional view on spot was either trade broken closed trust vehicles or trade the junior Miners and that was pretty much it today's episode is brought to you BYOD net discover how the Network's native token GE EOD is powering the next wave of the robotics Revolution by hitting the link in the description of today's episode all right everyone welcome back to Empire I have uh lost my voice a little bit so excuse the uh the naslin

here but we're uh Santi and I really excited for this episode we've got Alex deleski uh the founder of uranium digital on the Pod with us um so Alex yeah welcome to the show man oh always a pleasure guys nice to see you yeah nice to see you okay so here here's the context you guys probably haven't heard of uranium digital yet um one of the earlier companies that we've had on the show San and I both invested in them we're really excited about it I don't want to just turn this into like oh Santi and Yano invested in this thing so they're trying to show this it is a really one of the more interesting companies I think that I've invested in um over the last couple years here's I'm going to give my 20 second context and then I'll hand it over to Alex to

actually do the the Wonders here basically my take on this is that uranium is a super weird Market it's one of the most world's most important natural resources it fuels like 10% of the nuclear reactors right Global electricity through nuclear reactors and this is going to accelerate rapidly but the market is super super super archaic for Uranium um price I didn't actually know this until meeting Alex but price Discovery happens through these like weird private bilateral deals uh procurement is like long 10year contracts it's a super Antiquated Market but it's about to go parabolic because of the miners the utilities hyperscalers nuclear plants all of that um but it's really hard for retail to get exposure

so uranium digital is trying to fix that so Alex I would love to hear first off I think your background because I don't think just anybody could get into uranium and then I would love to hear just about the uranium markets I've got a million questions there but yeah first I think tell us about your background yeah so I got involved in um the defi in crypto space back in 2014 and I was doing my economics degree I was Trading a lot of traditional equities at the same time and I grew up in Canada where I went to school the reality of the Canadian Market um is it's primarily resource focused for financial markets so if you wanted to figure those markets out you're going to have to de facto learn a ton about resources so um right out of school I

joined a asset manager and then moved on to another traditional asset manager focusing on discretionary asset trading Commodities trading um investment banking things of this nature where I always had an affinity for trading more Niche Metals so relative to gold or copper that are pretty widely covered um things like tin is a good example of it you know over 50% of tin is used as solder and semiconductors and it's a relatively niche market doesn't really get followed widely lends itself to supply disruptions just from how it's um Geo geologically structured and geograph geographically structured throughout the world and um yeah about three and half years ago I started getting super

bullish on uranium tried to express a trade like I would through any other metal or commodity on the futures or Spa market and quickly came to learn um it didn't exist the options set for exposing a directional view on spot was either trade broken closed trust vehicles or trade the junior Miners and that was pretty much it so that led to me talking to the initial mentors I had the Commodities trading World figuring out why that was the case how that Market actually operates and then um about a year and a half ago or so putting a team together to build our own spot Market tell me about uranium as a market what what what is uranium used for where

is it mined who mins it who owns the market how is it traded let's walk through all of that yeah so funny enough uranium historically before uh nuclear energy was actually used um way back for different medical practices um like far far into the past the way uranium really works as a market structure is you have mining that is pretty much concentrated to a few main jurisdictions the largest of which is Kazakhstan behind that you've got Canada Australia Namibia and uranium is interesting in that the way it's usually mined these days is called Inu mining so it's relatively undisrupted to the ground relative to large scale open pit mining like you

would think with copper things of this nature but in any case uranium is extremely unique in its energy density um and by that I mean a usual measure for that as it relates to electricity generation is called the capacity factor which basically measures the power output relative to the maximum capacity um for nuclear that's about 93% for comparison winds about 35% the way to sort of think about that is that you know 400 megawatt hours of installed solar on um you know basically 25% of the time on average it'll be live the backup power used to be created by natural gas batteries things of this nature so its reliability and efficiency is massive at

the same time you know post Fukushima um in 2011 what you had was obviously that natural disaster a huge underinvestment cycle in nuclear lack of investor interest as any Niche commodity trades you know volatility a two Edge sorts the price got absolutely destroyed and Japan was winding down reactors the rest of the world Etc however since then um you you've had massive improvements both in safety efficiency and I think right now you're in a position where it's pretty widely covered the degree of correlation access to electricity has with economic well-being and GDP of a country or on a

perc capita basis and the world's kind of turned the page in a positive Sense on nuclear the last sort of 8 10 years the reality is to meet any sort of climate goals the Ia itself has said that the world needs to double capacity by 2050 um the reality is that already 31 countries have agreed to actually triple capacity for Nuclear by 2050 there's just I mean unbelievable numbers coming out for what the electrical demands of the world are going to be over the next few decades especially when you think about AI data centers um one of the reports also from the iea says that potentially by the end of

20126 just data centers are going to require more electricity than the entirety of Japan uh so you think about these numbers it's kind of astounding but from a market structure perspective the way uranium's kind of operated since Fukushima and even before that is sort of what the oil Market was like in the 50s 60s and 70s you know the first NX contract for oil wasn't until 1983 and that was after about 10 years of an OTC spot Market developing so today the majority of the uranium Market has traded OTC style directly between long-term contracts of mining companies and the actual utilities that are using

the uranium to feed reactors and enriching it with the price action of spot since um you know the mid 2010s or so we've had as well as the expansion of a lot of traditional commodity hedge funds and trading firms more interested in getting outright spot price exposure however today the way that market works is if you want to be long uranium you own uranium in a converter account a converter you can think about as analogous to an lme or CME Warehouse how are they're specialized for uranium and that they also do enrichment up the fuel cycle from spot yellow cake to uf6 uranium exf fluoride to eup enriched uranium product um so that's a quick

background on sort of what's happening today so it seems like it's a very I think the summary of that is uranium Powers nuclear nuclear is going parabolic right now uh the world needs nuclear people are trying to long this Market or just get access to to uranium as a as a commodity but the market is incredibly complicated what's incredibly complicated and opaque so today if you want to own spot uranium you need to open up a converter account what that means is that you need to go through kyc processes that are obviously extremely rigorous considering you know the uh Radioactive nature of

uranium and then basically you can be long uranium or you can sell some and be less long there's no way to express directional views with leverage um hedge effectively things of this nature like you could do with any commodity on any other spot market so when you think about uranium from a demand side of the world um the world today turns over about 190 million pounds of spot per year uh it only produces about 140 uh to 145 million pounds the rest of that Supply demand imbalance is actually made up right now of uh decommissioning of old warheads and things of this nature those stock Pils are dwindling massively and that turnover is without factoring

in the expansion of nuclear from frankly the entire world right now um I think as that market develops similar to any other commodity Market that develops through higher demand higher price action more investor interest they become financialized so when you think about something like natural gas that's you know good compared to uranium in its energy producing you know Basics the N gas cash settled Market is about 23 to 25 times the volume of its physically settled market so when you think about actually financializing a market like this what it does is increases price efficiency for individuals actually

trading the market they actually know what the market depth is they can put through and settle transactions immediately and at the same time if you think about it from the utility perspective relative to structuring bespoke long-term contracts with miners similar to what a battery producer might do on the copper Market you can hit a future Market or spot Market lock in your delivery and your pricing of an underlying asset for a set amount of time and really I think that sort of price stability liquidity and trade efficiency is what's necessary to help expand um nuclear energy and overall markets surrounding frankly the entire nuclear fuel cycle so that's what we are um what have been

building and what we built hey everyone just wanted to give a quick thanks to today's title sponsor geod net by setting up a base station you can get involved with this groundbreaking web 3 ecosystem learn more by heading over to geod net.com or just by hitting the link in the description of today's episode today's episode is brought to you by unich Chain an upcoming layer 2 that's purpose built for the next generation of defi applications with up to 95% lower fees than ethereum and 250 millisecond block times coming soon after launch uni chain is designing the future of cross-chain liquidity stay ahead of the launch by

visiting unich chain. org and giving uni chain a follow on X hey Alex let me ask you a question um you know and to reiterate for people like why hasn't there been a spot market for uranium and um in what are what have been the challenges that you've had to overcome as you think about you know building all of that um and I guess maybe even stepping back a bit when people want to get exposure to the industry for whatever narrative you know AI data centers nuclear Renaissance Ukraine war all this stuff what are they actually buying and how do they get exposure is it the miners is it something else like what what has been historically the

preferred route for the market to long this entire category yeah so I think you know again like the oil Market's an interesting analogy for Uranium but the way it developed was financialized from the 6070s to the 80s um and it's massive expansion since then I think with uranium you know po post fuk kushima um what we were talking about a minute ago that you had the price in flowed a huge lack of investor interest um and you think about uranium as a commodity and warehousing for other Commodities you can't store uranium next to Copper next to iron next to Steel like you could at other warehouses for other metals there really was an

incentive for this storage mechanism to exist for any commodity spot or Futures Market to operate healthy and function properly you need both cash and physical settlement it allows the cash side of the market trading to directly align with what the spot Market is doing on the physical settlement side I.E individuals institutions companies actually using the underlying commodity for whatever they're doing in their in their cycle um so with that you didn't really have an incentive economically for these warehouses to pay a premium and deal with all the security risks um all the other challenges they come with

storing Commodities when they already had a pseudo Monopoly on all the other Commodities in the world Additionally you really didn't have investor interest um I mean when a commodity gets whacked 70% and everybody is decommissioning plants it's really difficult to come up with a bull case for the underlying assets price so all that said and down what you had was you know the expansion of the three main converters today that service the West which is cico in Canada oron cycle in France and conine in Illinois and again these guys don't just do warehousing and storage they actually deal with enrichment up the fuel cycle so they're a little bit more integrated than how you think about a traditional commodity storage Warehouse so I think

that structurally is it led to these guys having a great rip on the actual storage and enrichment market and that lack of investor interest and Institutional Investor interest for the most part led to this Market emerging where only over the last sort of five 10 years have you had a lot of more expanding interest in nuclear and uranium I think a kind of funny thing I look at was I think it was probably three or four years ago only but um the band You2 went from being super anti-nuclear and uh protesting against it to flipping bullish nuclear which is um you know just kind of a hilarious indicator the traditional market today like to invest is retail and trade spot uranium relative to Gold that has

multiple different ETFs different wrappers structures for expressing a spot exposure outside of just trading the spot Market directly you really have one in North America that's the spra uranium trust in Europe you have yellow cake PLC these trade as closed and trusts similar to what gbtc was for Bitcoin the issue with this obviously is that without a Redemption function you don't have that physical settlement which allows a market to align on what the true price is so what that means is that most of the time they'll actually trade a discount to now I think spr it's probably six and a half percent right now yellow Cake's about 11 12% so it becomes difficult because as retail

you're paying 60 bucks for the privilege to underperform the nav of the actual commodity you want exposure to for institutions it's difficult because how do you underwrite a discount to nav that will kind of blow with the wind um and there doesn't seem to be any road map for that physical settlement function on the other side of the hand you have the junior miners which in trading Theory will give you levered exposure to the underlying commodity in practicality it doesn't usually work out that way so you know you kind of have a very concentrated amount of options through which to express an investment thesis on spot uranium today and more importantly you don't actually have a spot Market

which needs to exist to underly the emergence of more interesting traditional investment instruments built on top of that so that's really what we're trying to accomplish is that one build that actual spot market for Uranium trading which is Catered primarily to institutions for us as a platform I think the biggest the biggest hurtle we had the last year and a half two years is actually working with the institutions who operate in the uranium trading space traditionally and building for them exactly what they're telling us they want so it's kind of like we acknowledged a problem and the solution for who we building it is telling us

exactly what they want and see these are some of the largest uranium trading firms uh globally by SP B volume so I think what was interesting for us is sort of living Between Two Worlds and that these traditional firms you know they don't necessarily have the most glowing opinion of crypto as an industry to work with us is purely underwritten risk for them um and they need a lot of the experience of what crypto offers them abstracted away from their experience so they don't really want to exist on Shain they don't want to trade on Shain they don't want to learn what liquidity pools are they don't want to deal with a bunch of different wallets they need a everything from an account management system a user interface a

backend indexer for that management that they can trade this commodity similar to The Experience they would have trading other Commodities through other systems very inspired by the actual structure of traditional trading systems however all that trade and all that expression is on chain so for them when they when they deal with the experience it's one thing to build for them what they want um but what's being actually really amazing is to see like building on salana for example them understanding the actual speed of transactions the cost and how much efficiency they gain from their current operations to do so so to illustrate it for example today if Santi wanted to buy

a round lot of uranium the market typically trades in round lots of 100,000 at current spot that's about 7.4 million milon bucks a ticket so Santi we call a few Brokers get some price quotes decide where he wants it settled go through the transaction the paperwork and then a few days later to a week later the trade will you know sell um that carries with it a huge amount of time sunk of you know sunk time cost and actually dealing with that the whole time sounds he's doing that transaction he doesn't really know what the market depth is so he's not sure how much things are going to move if he wants to buy more he's got to kind of dip his foot in the water and test things um which is all laughably archaic relative

to hitting any market for any other commodity or energy um resource today so when they're kind of understanding and I think giving these institutions an experience of crypto of what its promise initially was in a lot of cases you know when they're doing orders of the size and they're paying um laughably small fees on chain to settle on salono it's being super cool to see how their mind kind of melts relative to what they're used to in that space so I think that's been the coolest thing about building this uh there's a lot there but I I guess structually like on the kyc side you're still G to have to do it right

and and can you just walk through all of like just that flow yeah so anybody wanting to do physical settlement or issuance has to kyc because we need to know that they actually have a converter account through which we can settle to so the way that works is that Santi would do traditional kyc he would provide his converter account name number a few other details the converter needs and we need to actually execute a settlement so if Santi wanted to and again the whole platform allows you to basically trade physically settle and issue tokens against your uranium Allin one interface so stti wanted to physically settle all he would do is let us know after his

account is open hey I want to take physical settlements to my account here here are my tokens um you have all the information all that happens in the background is we confirm with the converter facility that Santi does in fact have an account number they do the settlement on their site in the real world that's expressed on chain through the burning of the tokens and throughout that process we're working with actually chain link and their Auditors to update consistently the proof of reserve and um the audit of what's sitting in the converter account statement of for yeah yeah I'm looking at like historical spot prices so like I don't want to get too much into like Futures and spot like backwardation and contango but like I am curious about your view on like storage

prices because it feels like relative to any other commodity that can be quite High because of added physical security and whatnot do you have a sense for what that might compare relative to oil well what's interesting well it it's higher um ever that pricing is on a um per barrel unit so it's not a percentage but it's a dollar cost so effectively as the price increases the relative cost of that storage declines um you know a year or so ago it was about 25 cents per you know per um what that meant was basically when you're dealing with 100 pound spot or 110 pound spot like you were in uh January you're paying about 20 to 25

bips there is certain economies of scale with that um institutions who deal with you know storage in the scale of billions are probably paying between 50 to 20 bips um so you do have a storage cost but again that's purely a necessity of what kind of resource you're dealing with and the reality that these institutions um the converters deal with not just storage but also the enrichment and other fuel cycle actions that they need to do yeah I guess also the what I hadn't thought about was you were saying is the density of it right because it's like storing uranium is like more efficient from a space standpoint so like if you have a big warehouse and

there's just you can just fit more uranium than like oil right like barrels of oil so it well just yeah yeah so like one nuclear fuel pellet has the equivalent amount of energy density is about 149 gallons of oil um and 177,000 cubic feet of KN gas um one ton of coal as well so from an energy density perspective um it's incomparable to pretty much any energy metal today but um you know I think as well as the world as the world expands nuclear uranium interest you're just going to have increasing economies of scale on the storage side of the market but again until you really operate at a scale like

spra or some of the the massive institutions in the space do you don't really have much leverage um that just you know natural course of business when uh we first met Alex I wanted to get your take on what does this actually mean and unlock for the market um and you alluded to earlier like all the different derivatives and other products that once you have a robust spot Market you know other things can begin to happen um and you know comparing like hey how much how much does volume actually grow here what do you actually anticipate um so can you walk us through like your hypothesis around like once you have this operationally live and going what does

that do to the market and what type of other products uh do you see becoming available either enabled by by you guys or other you know financial institutions yeah so when you think about a commodity or an asset Market becoming financialized and by financialized I mean you have a functioning spot Market you have Futures you have derivatives you have places people can express use or trade the asset outside of just doing pure physical settlements um volume increases liquidity increases um volatility increases so again that gas is a comparable that market trade trades 23 to 25 times its size um paper settled not physically

settled the gold Market's about 200 times but obviously Gold's not necessarily a great comparison in this case so for building something like this what a lot of Institutions Express to us in the early days were basically Alex like if we get a need to physically settle we would love that you know physical settlement for trading this thing is a headache it takes time it's costly it's annoying however it's impossible to build Futures derivatives an entire Suite of financial products if you don't have a spot Market to inform what the price actually is and what it's clearing at so basically our road map consists of taking our spot Market data using that

to feed our own derivative Suite which is pretty much the only liquid place for what the spa price of uranium is doing um more st's going to be released in the next few weeks as our website comes out Etc but the goal of the spot Market is the first step in a road map that consists of building an entire Suite of derivatives fed by the data of our actual spot market so um building a spa Market's a lot of work and it's super frustrating and it takes a lot of time however the rest of a functioning financialized commodity Market's impossible without that so that's what we decided to do um and in hindsight you know it's probably the most work I've ever done to put a bloody

trade on because I still just want to be long spot uranium but uh here we are and in terms of um like drawing an analogy like to the oil or I guess what is like the is is oil the other Comm that maybe wind or something just what is the latest spot in terms of a commodity that that came online um I think there's I think one of the most recent ones was um carbon credit Futures actually so carbon credit spot markets through euron next um those were just like an interesting Market because again super opaque there was no uniform pricing geographically between

jurisdictions you had all sorts of marketting inefficiency Etc I think oil's a very interesting comparison because again it provides a ton of energy oil in the 60s and 70s um when you know the company that became glenor um was actually building a spot Market that was really dealing with an interesting Market structure similar to uranium and that it was primarily long-term contracts between the actual producers and governments um and the companies actually using the spot uranium it didn't really have a way to express directional views trading the price action and effect of the commodity itself and like I said

like not up until 1983 did you have the first NX contract for crud um and that led to a huge expansion in both the oil Market investor interest products one could trade on this and I think increasing that liquidity developing that market is also what precipitated the ease of access to oil which is obviously a critical energ resource um which flows down through more oil for people more economic expansion more overall well-being um things like this so I think oil is a good comparison for it yeah you know the um uranium market today you know it's more efficient than what the carbon credits Market was um that Market's crazy but um super interesting as well

so yeah I think like a lot of those energy medals are interesting coal Coal as well um you know coal went through a similar financialization like oil did like we believe uranium will um and the coal Market cash settled is usually between like six to 10 times the size of the spot but coal Market's very volatile especially in um sort of postco times or during Co um so I think another interesting point is the amount of volatility that is increased as volume increases and price transparency increas Ines and by that I mean if one looks at the Historical realized ball of spot uranium it looks relatively low um comparatively speaking

to all other Commodities but the reality with that is the current market structure is that once a day you have a spa price quote provided by uxc and on numer Co that quote isn't always where an actual bid and ask meet and a trade is executed it's pretty much indicative pricing so you don't really know what the actual spot price is and also it's quoted CE a day so if that's the structure obviously your realized historical vault is going to be lower than what it otherwise probably would be in a liquid and actively traded Market geod net is a first ofit kind dpin protocol that's revolutionizing satellite navigation Services they're

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net.com or just by hitting the link in the description of today's episode today's episode is brought to you by uni chain an upcoming layer 2 Solution that's changing defi forever it's built with a vision to be the home for cross-chain liquidity and defi Innovation as part of the optimism super chain uni chain brings you up to 95% cheaper transactions than ethereum's base layer as well as near instant finality with two 250 millisecond block times coming shortly after main net launch to make things even better seamless cross-chain transactions if you're a developer this means you can build defi applications that truly push the envelope of what's possible on chain

visit unich chain. org or follow unchain onx to stay updated on the launch upcoming features and getting started on building your dream applications I want to double click on somebody said and how you're building this and however much you want to share about who stands to benefit from this like obviously you know this is for more like institutions but um yeah like maybe a little bit more on the process by what you you buil it and the partners that got really excited maybe a little bit more of that because I think it's quite important to the story yeah I think you know for us to build a to build an rwa right or a commodity market like we're doing

I think when you think about tokenizing real world assets specifically Commodities um you know you have the retail side than the institutional side the reality is for Define crypto native um Commodities don't usually offer you the amount of volatility that you want in an asset and by that I mean if copper moves 10% in a week um Everybody in the Trad fly space will be super excited for crypto natives you know your net worth can move 10% um while you're taking a about break so you don't necessarily have the same amount of upside despite the fact they're interesting assets you might want exposure you might have a thesis Etc then the other side of the hand is you have the institutional side these

are the guys in the market that traded at size at scale um high volume High turnover Etc so we went about it initially talking with the institutional guys understanding what they actually wanted how it needed to be built how they had to interact with it how they get involved in this space because for the majority of them it's their first time like actually you know taking crypto seriously and again with 100,000 minimum laot order which is sort of what they're anchored to you're not trading small sides um so the thesis here was basically to build like again any other Comax um CME or lme spot market for an asset um an Avenue through which both

retail volume and institutional volume can converge I think the most important way to do that was to First build exactly what the institutions want to spec before you actually take it public and go to market you know I didn't see any point nor the team in building a product turning around and being like you know hey you guys should use this this is why you should use this the reality is for a lot of these folks they need a place with deep volume deep liquidity and tight spreads to actually trade the size they're you know trying to trade so for us it was building institutional Focus first however that being said this is still a product that retail can interact with but a lot of the crypto native world and Retail they're way more

familiar and comfortable trading through their Phantom wallet directly on chain like this is something where we have no restrictions for them to do that however the institutional guys needed everything in one place with that experience on chain abstracted away that they could both manage their account do physical settlements do issuance actually trade all from one place and at the same time those liquidity pools all converge in you know one one place so building institutional first was I me a strategic decision because again they're who move the market they're also who is the most interested and the reality is they are your largest proponent as you actually scale because

eventually the goal here is to build a platform with enough momentum pre-law such that not using us as an Institutional Trader becomes a competitive disadvantage you know you either kyc click your mouse a few times to execute trade settle transactions or you spend a week on the phone negotiating and then signing paperwork um so that's kind of the philosophy there uh question on who stands to benefit and maybe not benefit as much would you say that if you are a glenor and you have bargaining power because historically it's been as understand very negotiated process to buy would they um marginally not like this as much

because it's sort of a the lack of transparency in a market sometimes if if you have a lot of buying power like someone like glenor can just extract very lucrative terms but if you have a spot Market people just reference that like what you want is people say hey no listen like the spots at 82 you want 75 no it's just we're going to take spot in the contract so so most of those long-term contracts will actually deal with floors and ceilings so it's not like they'll be set at a certain price what they will have is a floor basically in effect the minimum price they will pay relative to whatever spot is that's kind of to protect the economics of the supplier but then a ceiling so whoever is taking

it isn't going to deal with um well they basically know the max they're going to pay so I think to your point like there are certain benefits and again the same way the oil Market evolves um there's certain factors where at a certain size for long-term contracts Market opacity is a benefit however I think the Counterpoint to that is what you're doing is expanding interest in the actual Market accessibility to it therefore liquidity for the first time and at the same time um yeah when price goes up everybody is happy and I think with the current Supply demand backdrop the fundamental thesis for spot uranium an Avenue through which that can be expressed directly in a liquid form um

the benefits of that counteract any um benefits derived bi opacity that some institutions currently have in the market yeah I know we've been spending a lot of time on on what you're building is it worth transitioning a bit more to just your overall take on uranium everything that's happening uh you know just that back backdrop and and kind of how you anticipate this Market maret evolving over the next couple years or is there anything else that you want to double click on as it relates to uranium digital I think um on the uranium digital front you know obviously we haven't put the site Fully live yet or the platform Fully live yet we're going to be live in uh Q2 so we've got some

things being released slowly over the next few weeks um however on the broader Market you know I think what's going to be extremely interesting to see is I guess when when one zooms out a little bit right like a core thesis that underlies what we're doing what the institutional Partners we have believe is that the uranium Market will undergo financialization inevitably one way or another like any other energy metal commodity agricultural commodity does over time um our goal is to do that on chain and how that entire Evolution occur um on chain so that being said I think what's the most interesting part of this

Market is to see how volatility liquidity um how that will increase when you actually have a live quoted spot Market you know it's pretty difficult and in theory kind of easy to build products when you have a low volatility asset um that isn't really quoted the Counterpoint is again it's almost impossible to build reliable derivatives I think on the broader uranium market right the feedback we've gotten from a lot of Institutions that aren't Commodities based institutions is that they want spot uranium exposure they want to trade this commodity but they don't have a means to do it um so I think what's going to be great is to see

the onboarding of those institutions through a platform that they can interact with very simply to put on that exposure directly for I mean uranium itself as an asset I think what I'm really looking forward to is the expansion of SMR is so small modular reactors because basically in effect what those create is a dynamic in which you can use you know less uranium much smaller scale and I think with the new Administration coming in the time to completion for a lot of these projects will be much shorter you know to take a new mine online can take between 10 to 20 years from Discovery to actual production right now a huge part of the

actual building a reactor process is on the regulatory side um back in kind of the uh 70s and 80s when you had the first big nuclear Renaissance going on regulations were conducive to quicker build time so you could throw reactors up between sort of you know five to 10 years some of the shorter swans took four years today it's probably around 15 um with an SMR you can build one from a construction perspective in about one to three years um and I think with a reduced regulatory red tape situation that's going to become much easier and I think that expansion is

going to be I mean extremely valuable for the industry as a whole electricity generation you know broadly speaking but I think with that reduced red tape you're going to see a massive expansion of smrs um in all sorts of different jurisdictions one of the more important sort of bell weathers I think has been over the last 10 years or so to see Japan restarting reactors and things like this because they obviously you know Fukushima happened there um so to see them also regain the confidence in that asset that technology where they're restarting reactors I think is you know hugely powerful and at the end of the day if one wants you know easier

affordable higher uptime cleaner access to electricity like I think an expanding World both in terms of humans on it and Technology um something like nuclear is an inevitability in terms of its expansion so reduced red tape easier access to the inputs into actual reactors things of this nature are all hugely important for that space to develop um that that data centor electricity requirement being greater than Japan's electricity uh requirements by the end of 2026 is I mean that's a huge number but also that's like we're only in 2026 when you think about AI AGI data centers going out the next 5 10 15 20 years um I think the world's going to experience an electricity demand the

likes of which it's you know never seen before and ideally the technology to provide cleaner sources of that expands along with it which means creating more efficient markets to actually access the inputs hey everyone earlier in today's episode I mentioned Petra a top non-custodial wallet developed by Aptos labs they just launched NN a new feature to access defi with Just One Click N lets non us users deposit usdt directly into Aries markets lending pools to gain interest and rewards and manage it all directly from the Petra wallet Petra earn was designed to make defi more accessible for everyone you can manage your balance claim rewards and deposit

directly from the app this is of course not Financial advice participating in defi carries risks to learn more visit petra. apppp earn or by hitting the link in the description of today's episode hey everyone Jason here earlier in today's episode you heard me mention the weekly CIO Memo from bitwise in an industry as hectic fast and complex as ours it's incredibly hard to get an easy noons stream of what's actually moving crypto the memo comes from Matt Hogan bit wise's Chief investment officer he's been on the show before and he has this amazing ability to take the most complex topics and break them down with Clarity trust me on this one the bitwise weekly CIO memo is

really worth the five minutes of your time check it out at bitwise investments.com memoire or just hit the link in the description of today's episode to get started carefully consider the extreme risks associated with crypto before investing I'd like to spend like a couple minutes on just the the pro like the criticism that one hears about nuclear not not the safety side but more so like building right which is per megawatt hour is actually more expensive because there's huge overruns and then the counter to that is well ay there hasn't been enough investment in small module reactors smrs are much cheaper than like the massive like you know most people's view of a nuclear reactor is like this huge like

like what do you call like Co like um huge structure which takes years and years um but like for instance a lot of the reactors China is building Japan's building or developing countries are building like can you just walk us a little bit more into that criticism you constantly hear which is it's actually very expensive um per megawatt hour so the generation of like the building of a reactor is a lot of that again falls down to like regulatory permitting costs because you know obviously you have cost overruns when all of a sudden the permitting you thought was going to take two years takes five right um I think right now you know kind of an opinion I hear in the industry is that America's

planed nuclear Renaissance is sort of an idea and a plan right now China's been you know pedal to the floor on it for the last several years um and I think that becomes a great example of what happens when you have government alignment with a energy strategy for domestic production with industry that can actually meet that so that means you know again less regulat red tape um more clear permitting guidelines more unified permitting guidelines um like the us today doesn't have one commercially running SMR um there's quite a few that are sort of being tested being built but commercially feeding the grid n um China

is a whole different case so I think when you think about that cost per megawatt hour you think about the philosophy of the incoming Administration for domestic energy production and the actual expansion of SMR technology I think that cost comes way down and as it relates to uranium uh what's funny is that the price of spot uranium and uranium itself is actually very low proportionally to the costs of a reactor because that build cost is so expensive right now so I think that leads to you know an interesting PL price elasticity situation for spot

uranium where spot can increase massively before it becomes a marginally important cost in building a reactor additionally it's completely unsubstituted right you like reactors take uranium that's it you can't put any other commodity in place of that but I mean the SMR space and Josh Wolf I know just from my own reading um and listening to him you he's got a very interesting I think perspective and portfolio in the SMR space and at the same time I think smrs are an inevitability a lot of what makes that expand more quickly is I think a removal of red tape hurdles unified regulations basically just

smoother processes to get from point you know A to B which is initial financing designed to construction and actual commercial contribution to an electricity grid yeah the um the other criticism you hear is um like around nuclear waste um and just just for the I know kind of the answer to that but like just for the sake of listeners would you mind just walking through like for instance what is like 10 20 years of nuclear waste look like relative to like other energy sources oh there's there's a good graphic I should have sent to um Yano or something before this but it shows you um x amount of years of nuclear waste

production and it's laughably small like the size of a football field I think it's the amount of nuclear waste generated from the start of like time until today um it's like a football field right yeah exactly um but the other thing is it's I think it's not very holistic of the waste generation process to just think about what's generated post energy production one needs to think about what takes to get from mining an asset to Milling it to refining it to enriching it to reforming it to actually building either a windmill um a solar pad and then actually generating electricity from it so when you think about uranium it's one of the lowest environmental

impact um mining sources or mining mining means out there again a lot of that is inc2 leeching which means you inject a solution into the ground you pump the uranium to the surface and then you deal with the actual Milling process to get to yellow cake um if you think about open pit mining for copper for example or Cobalt that's when you have the sort of you know the pictures you probably know from mining of like the huge roads going down a massive open pit mine for example you have obviously throughout history bunch of different mining disasters because what you have is huge amount of tailings generated by this kind of mining um you're dealing with a lot of explosives and Blasting for example so from the

outset uranium as an asset is very low environmental impact relative to other Commodities or energy Metals um and the actual waste produced by it again is contained an extremely small amount um in terms of both volume and surface area so I think when you think about other Commodities and metals the waste thing has been very you know it's very easy from a hyperbole standpoint to get freaked out about radioactive waste Bas and things of this nature but the reality is today um how dense it is in what a small surface area that covers and how well it's contained in you know where we're

at today in terms of technology in the world relative to the 1950s or 60s it's not really comparable and when you think about the overall process of mining to enrichment to fuel pellets to fueling a reactor to then being you know offline um it's one of the most efficient energy sources end to endend that you know the world has what have been the greatest um unlocks from an innovation standpoint in terms of just nuclear as a whole over the last like 50 years and if you had a venture fund today or just an investment fund that you said Hey listen I want to invest not just have exposure to spot your Anum say I want to invest 100

million 200 million a billion into improving this technology or getting exp where would you invest it um I think two parts one of it is the overall nuclear fuel cycle so to go from spot yellow cake to what actually goes in reactor is a multi-level enrichment process before you get further up the curve to you know weapons grade uranium there's massive inefficiency in that enrichment cycle as well as it relates to enrichment schedules things of this nature so I think markets evolving off of the back of a yellow cake spot Market are in a very interesting place to be um secondarily is smrs I mean I think for

the first time in the world really commercially viable is the creation and construction of these smrs and that's something that I think is going to become a like a no- Grainer over the next several years um the reality is when you're dealing with way lower input costs a more efficient market for acquiring the underlying assets to feed your reactors versus the actual electricity generation it can contribute as a proportion of your grid it becomes an extraordinarily interesting you know Pawn to be investing in because the reality is the economics incentives you can structure with that are extremely diverse so I

think there's going to be some very unique structures popping up for financing smrs and I think at the same time if one takes the perspective that the world is going to have a net increasing demand for electricity um there's going to be some very interesting I think financing structures around that yeah like smrs already exist right you have like multiple universities in the US that actually have like these smrs at the size of a classroom and power the entire University and I'm curious like on the investment side are you saying let's um let's actually develop more technology um maybe combined with AI that makes it truly like foolproof like like in terms of like a um from a risk perspective or the design itself or uh is there

anything more specific that you can share around like what about smrs would you invest are they very in efficient today to build uh are there stuff that you just say look it's been grossly underinvested relative to wind solar all this stuff and if you put more money to that and fund more startups you could probably see more like disinflationary phenomenon on building smrs I think you'll see that disinflationary phenomenon but I think what's very interesting is when you think about um natural gas solar wind energy capacity factors relative to the 93% um nuclear offers that creates very interesting economics when you think jurisdiction to jurisdiction state by

state the way natural gas pricing works when you have surges and things like this um so I think that's one interesting side of it I think secondarily I think it's difficult to say like right now with any degree of confidence we're sharing because of the environment politically that's changing in the US and is likely going to very aggressively over the next several months so I think when the dust settles there um you're going to have a way clear regulatory landscape that's probably going to be unified for SMR creation I would be surprised to see some sort of federal incentive program for that in line with increasing demestic energy um but I think effectively when you have times of massive change you have massive opportunities so I think right now is

going to be specifically one of those times the nuclear and uranium space especially as it relates to domestic um production and what the US is doing for its own energy policy Alex who who ends up being the biggest buyers of of nuclear and uranium here is it the corporates who are buying it for the data centers or is it the governments who are buying it to fix the electri like to serve electricity to their citizens so right now it would be utilities for actually feeding the reactors um for electricity I think as the data centers expands um that demand for electricity is obviously going to be

expanding massively so I think the AI centers the data centers like that's going to eat into the proportional demand of the utilities over the next couple of years um what's interesting about that though again is the cost of uranium and the spa price relative to the cost of building an SMR or a nuclear plant is marginal the reality is that when you have something like a nuclear reactor um you don't have any other commodity that's fungible with uranium right so again like they need uranium Point Blank there's nothing they can substitute in for it you it doesn't work um the AI and data center demand I think is going to

be aggressively eating into that probably more so than anybody really thinks um my opinion is you're likely going to have some sort of you know head-to-head between China and the US for both domestic energy policy as well as data centers and you know Frankly Speaking um data as gold so my guess is that you're going to have that sort of competition which is going to be very good for both the nuclear cycle um space broadly speaking as well as for the expansion of data centers and AI in uh you know North America so simply put I think it's going to eat into the utility demand but majority today is utilities uh Alex uh how um say that you're uh you know Microsoft Amazon

Google whatever you say Hey listen I want to I want to finance this what's the shortest time that you've seen from commitment to build of an SMR well again there's no commercially operating ones so it's difficult to say because in my mind the end state is commercially running I.E plugged into the public grid Etc right so financing and structuring something in like a Clos Loop environment of like a university or something like that is one thing but I think the first major thing is going to be commercially running in the US and that hasn't happened yet so it's difficult to say so Alex uh it's been a fascinating discussion um very much agree with you nuclear is is is in a

Renaissance mode mode seeing you build this um was a bit of a head scratcher for me it was like why hasn't no one actually built this and I always find that those are some of the best definitely are the the best investments that I've made it's like once you drop a key Insight it's like oh wow and and I think talking to you definitely sparked that so um there's a lot to cover uh maybe as a partying question walk us through what's in store for you guys over the next couple months I think a live demo is coming soon and also just your decision to where to build um and that Insight because there's a lot of builders that listen to the podcast and and and I think your your experience as to which chain you select why do it in this manner is is

instructive yeah um so to your point well um yeah maybe the next month or so we'll do a live stream and demo the actual platform um we will be live publicly Q2 but in terms of building an architecture I think we got a lot of push on um from the world as we were building this like we decided to build on salana for very simple reasons you know in my opinion you don't have a chain that's as performance um as reliable and as low cost as salana is the reality for me is that it really is a chain built for institutional purposes despite the fact it's got this kind of um you know different different vibe right now I

think a lot of folks were like why don't you build on eth for example it's got way more rwa projects it's got way more you know deeper lending pools things of this nature um and I think for us really it's being about again building a platform and a project that the institutional side of the market tells us they want and explains what they want how they want it and again most of them are anchored to 100,000 pound minimum lot when you're doing a 7.3 7.4 million at current spot price order um and Market's ripping eth is suggested they don't want to learn what gas fees are and at the same time if they you know if something like that happens it t it's taking minutes for a transaction to

settle they'll call me and if I tell them like oh just bridge to arbitrum or something they'll be like what are you talking about so abstracting that away and giving them the technology necessary to do what they want to do through a platform they understand I think should be and is being done by us on salana I think you're also talking about one of the most highly regulated most opaque institutional commodity markets on the world and additionally I mean Salon has got an extraordinarily helpful and resourceful developer Community additionally you're seeing that through a few other projects coming out like or Supply um Oro Gold Elements things like this so it's my expectation that over

the next little while you're going to see a huge shift in projects building on soul for I mean very obvious performance related reasons um not to mention a you know clear road map and I think a developer community and overall Community that's extraordinarily helpful um so I think that's going to be a huge shift in overall Salon of Vibes over the next year or two yeah I think next on the menu is uh tokenizing stocks and moving in that direction and I think I think you're the up the upside case is that you you can actually pave the way more in in that direction I memes are just stress testing the the infra and you know you

just saw over the weekend you know what was it y know 100 you know 100 billion uh traded over the span of two days and that's not jump change and it it you you start seeing a path towards true institutional um adoption and the frequency of trading that to's always emphasized since day one which is you know nasac on the blockchain and and I think that's that's encouraging I could see why why you made that decision so this great Alex really appreciate you coming on um and sharing your story we'll definitely have to have you on for the demo and uh for people that are interested in learning more about just the market you guys have a fantastic Twitter account it's become my go-to sours for news and all things nuclear so

we'll shink it we'll link it on the show notes whoever is running comms for you fantastic uh really resourceful and then where else can people other than Twitter is there any any other you know are you guys hiring or any other resources that people could follow um so the website uranium digital.com and then the Twitter obviously through the website you can contact the team um everyone's receptive everybody on the team can talk about duclair and uranium until you fall asleep so um never hesitate to reach out with any questions or um yeah we are expanding but um like I said everybody should feel free to reach out but the Twitter and the website are the uh most effective means to do so cool awesome appreciate you Alex likewise thanks so

much for coming on hey everyone just wanted to give a quick thanks to today's title sponsor geod net by setting up a base station you can get involved with this groundbreaking web3 ecosystem learn more by heading over to geod net.com or just by hitting the link in the description of today's episode [Music]