Between2Chains B2C012: Digital Assets through an Institutional Lens (w/ Matt Edwards)

Episode Summary

Mar 01 2021 . 65 MIN

B2C012: Digital Assets through an Institutional Lens (w/ Matt Edwards)

Matt Edwards, CEO and CIO of Dalpha Capital joins host Peter Hans for a deep-dive discussion about managing volatility in the digital assets space, what migration to the space can look like at scale, Dalpha’s differentiating approach to trading the asset class, and the opportunities he sees for digital assets going forward.

Visit to join the crypto revolution. You can reach out to Peter Hans on Twitter : @peterdhans82

Show Notes

Matt Edwards, CEO and CIO of Dalpha Capital joins host Peter Hans for a deep-dive discussion about managing volatility in the digital assets space, what migration to the space can look like at scale, Dalpha’s differentiating approach to trading the asset class, and the opportunities he sees for digital assets going forward.

In this Episode:

  1. Edwards shares his perspective as an institutional on-ramp into digital assets and walks listeners through the similarities between Dalpha and traditional hedge funds in the early 90s, as well as their role in figuring out institutional best practices.
  2. He talks about what has legitimized digital assets in his view, including the realization that as these markets mature and new instruments are being introduced, there’s a diversity of opportunity that makes it an investable asset class.
  3. He shares his thoughts about continuous versus binary investing and how the continuous approach can work in the space.
  4. He argues that institutional investors need to acknowledge that the world has changed and advocates for exploratory investing. He believes it is time for investors to think more creatively about solutions for their asset allocation programs.
  5. He talks about the problem of volatility in the digital asset space and explains how taking a diversified approach can help solve for that and provide strong risk-adjusted returns.
  6. He discusses the Bitcoin to the moon narrative, Bitcoin price action, and cognitive dissonance in the space.
  7. He wraps up the interview with his thoughts about evolving and adapting to capitalize on digital assets in a diversified fashion, the inevitably of generational replacement and how that will affect the space, and how the continued maturation of infrastructure will further legitimize the space, mitigate risk, and make it easier for people to engage.


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*Following transcript is generated using AI. Minor errors might be present.


Welcome to The Real vision Podcast Network.

Before we get going, we want to remind you that Peter Hans is ARCA fund's Managing Director. The commentary and opinions expressed in this podcast are solely those of the podcast participants and do not necessarily reflect the opinions of ARCA funds or its affiliates and are subject to change for any reason without notice. Any discussion of investments or investment strategies within this podcast are for informational purposes only, and not be construed as a recommendation to buy or sell any particular investment security, digital asset or strategy. Investing in digital assets involves a high degree of risk and volatility, including the risk of the total loss of principal. And now enjoy the show with your host, Peter Hans.


Hi, everyone, this is Peter Hans, welcome to this week's episode of between two chains. This week, I'm joined by Matt Edwards. He's the CEO and CIO of alpha capital. I met Matt pretty early on in my entree into the digital assets world, and was someone who I was immediately interested in getting in touch with and connecting with because Matt, you know, like myself comes from the traditional investment world was an allocator for many years across more traditional asset classes, and then made the migration to digital assets. So I have Matt on here really to talk about what this migration can look at at scale, and what some of the opportunities that he sees going forward. Matt, welcome.


Hi, Peter. Thanks for having me.


Yeah, absolutely. I'm very much looking forward to this conversation. You know, obviously, I know a little bit about you and your in your past, which is very impressive. But, you know, maybe for the benefit of the audience, why don't you share a little bit about, you know, your background pre jumping into the digital assets ocean, and also what you guys are doing at dolphin while you're doing it? 


Sure, so let's see, I I grew up in the hedge fund space, mostly on the allocator side of the table. So I spent really the formative part of my career at a firm called Grosvenor Capital Management. Grosvenor is the oldest US based fund of hedge funds started back in 1971. I joined the firm back in 2001, when we were about two and a half billion in total am. I left 13 years later, when we were about 50 billion, at which point we were one of the largest kind of alternative asset management firms in the world out there alongside the Blackstone's and UBS is in black rocks. And over the course of my tenure at the firm, I was mostly focused on the investment side of the business and more specifically manager due diligence. And you as a as a kid from Garland, Texas, I was lucky enough to get a chance to head up our Asian investment business and kind of help build out the business more broadly for the firm. So I was kind of our x pack guinea pig back in those six got shipped out to Tokyo. It's been a few years there, reconnected with the mothership, and ended up moving back out to Asia in early 2013, to open the office in Hong Kong for the firm. So over the course of that career at Grosvenor, I led due diligence on a couple of dozen hedge funds that resulted in the deployment of somewhere on the order of two to 3 billion. I also, when I left, the firm was one of four portfolio managers globally, which allowed me to sort of help manage a number of multi manager multi strategy portfolios, mostly on behalf of larger institutional clients in APAC, also to the tune of 3 billion or so. So, you know, that was a great training ground for me a wonderful opportunity to sort of go out there and in and learn about the hedge fund business. I actually spent the first couple of years of my time at Grosvenor working for Dick elden, who was the founder of the firm, and sort of known as the godfather of fun to fund investing. So that was a really cool experience to sort of learn at the feet of one of the founders of really the space and got exposed to a lot of interesting parts and aspects of the business. So that was really again, the formative part of my career. I left Grosvenor to help start a hedge fund, you know, having been on the on the allocator side of the table, I suspect many can sort of sympathize with his view, I have developed a curiosity about the other side of the table and was quite keen to kind of learn how the sausage was really made. And so I joined a group called guard Capital Management, which was spearheaded by a gentleman who was a friend of the time and who is the Co-head of Asia macro trading at Goldman Sachs and he he grew up on the desk of Mike Novogratz started back in the day for Goldman and Tokyo and has produced some excellent macro trading talent over the years. My CIO Leland Leland Lim was his name was sort of next in line just kind of continue that lineage of macro trading success. So we launched guard back in August of 2014. In Hong Kong as global macro fund focused mostly on FX rates, we We launched with just shy of 50 million. And we were a billion dollars short 12 months later, which I believe to this day makes us the the fastest growing Asia based hedge fund startup ever. With no strategic no ankarana seed. So that was a phenomenal kind of opportunity, a great experience for me not just being on the on the business side and interacting with allocators. But also, you know, there was a first time in my career, I got to actually sit on a trading desk, and sat next to some great macro thinkers and traders. And that was just a really remarkable experience. And so we ended up running that for about three years, we had some, some really good success both on the business side as well as the investment side, particularly in the earlier days. And we ended up returning capital after three years, not due to anything catastrophic, but more because my CIO, Leland just wasn't really seeing enough in the way of opportunity to kind of deliver on the risk return expectations that he is sort of set for himself. And so he did the high integrity thing, which was returned capital, even though we had a perfectly good business and could have modeled along for another couple of years and squeezed that management fee, which I know, hedge funds are prone to do. So at that stage, you know, I'd spent probably the better part of 17, 18 years in hedge funds, and really became kind of disenchanted, disillusioned, you know, whatever the right word is for it, with this notion of sustainable alpha, in traditional kind of liquid capital markets. And having, you know, allocated to so many funds over the years and sat in investment committee meetings, and Grosvenor contemplating all the investments that we were making and firing managers and sort of decomposing what went wrong, what was to be learned, but then also, you know, my experience at guard, being surrounded by some incredibly thoughtful, intelligent and diligent, high integrity people, and just came to realize that look, you know, this notion of kind of edge in markets that are for the most part, in my estimation, at least at that point, largely efficient had and really kind of weighed on me a little bit. So I, so I left the space altogether, tried my hand at some consulting type work around talent assessment and leadership advisory, which was a curiosity of mine. And in the process of going down the crypto rabbit hole, because of a friend of mine, and this would have been the early part of 2017. You know, I'm not a technologist, by any stretch, I came at things more as an investor and allocator. And, and the thing that I was immediately struck by was the fact that we're not presented with a birthing of an entirely new asset class, you know, every day, right. And so, that immediately struck a chord with me, because the results and inefficiencies on offer were pretty obvious and apparent for everyone to see, you know, particularly for those of us who were kind of looking for it, and ended up around that time getting introduced to the guys at diginext, who were in the process of building, you know, really kind of the platform to sort of facilitate the institutionalization of the digital asset class, right. So they were more kind of picks and shovels, building an exchange and a custody solution and an advisory part of the business, and so forth. So, you know, that, to me, was a pretty interesting way to hook up with a group that we're, we're really kind of at the ground floor, and building out some of the infrastructure required to kind of move this space forward, and was helping out with a few things, at the top level, more from a strategy side. But I came to realize that an asset management piece of the business at the center of which they envisaged a fund of crypto hedge funds, and, you know, I was obviously given my background, kind of the obvious person to sort of take that over and start to build it out. And, you know, I had no idea that there were so many crypto hedge funds in the world. And it was a wonderful opportunity for me to sort of parachute in with our head of research at the time, who had already spent the better part of the year kind of surveying the space. So got to go around and start to learn a little bit about what was going on here. And eventually got to the point where I kind of realized I was building a startup within startup and thought better a bit, you know, I was at the point in my life where I was ready to take some entrepreneurial risks. So I decided to kind of build that startup on my own. So that brings us to kind of present day, you know, the head of research I mentioned, and I kind of left and set up alpha Capital Management going on probably the better part of about a year ago. And I spent the past few years sort of building out the business and building the team and getting registered and all that good stuff going through the fund formation process, which is always exciting, and are in the process of launching our flagship fund and, and really, you know, stated rather ambitiously, our objective here at alpha is to kind of do what Grosvenor did for traditional hedge funds back in the day, which was kind of provide an institutional on ramp into a space that, you know, can be a little bit opaque and scary. You know, there's a lot of regulatory uncertainty and cowboy behavior and operational deficiencies and volatility, return outcomes and so forth. But what's interesting is that was precisely how we would describe the traditional hedge fund space going back to the early to mid 90s. most sophisticated institutional asset allocation programs didn't really have hedge funds. As a common sort of piece of that puzzle, it was really veterans were kind of more of a backwater. They were more sort of high net worth and family office investors that were engaging here and there. And it wasn't really until Swenson I guess made his first allocation to Tom styer at Fairlawn, back in the late 80s. I think institutions sort of began to kind of take notice, but but the real kind of watershed event was, in the mid 90s, when a couple of Japanese financial institutions decided, hey, here's there's this really interesting risk return profile called hedge funds, that we don't know much about that, for all the reasons I just mentioned, are a little bit scary to approach. Why don't we hire an expert to go out and build us a portfolio of that. And so they, they gave Grosvenor billion dollars, and it was really off to the races. And so Grosvenor was kind of at the tip of the spear, when it pertains to kind of ushering in this era of institutional asset allocation within the hedge fund space. And really, I think kind of defining best practice as relates to operational due diligence and what have you. And so we see a similar opportunity here at alpha to kind of serve as an on ramp, but also perform what we kind of considered to be a social good for the space, which is to help these hedge funds, you know, kind of institutionalize themselves, you know, so again, going back to the early days of traditional hedge funds, they weren't always the kind of buttoned up blue chip shops that they are today, where they've got the answers to everything. And, you know, everything is nicely sorted. You know, it required a lot of coaching in terms of this is what institutional best practice should look like. And Grosvenor again, was, was really kind of leading the way there. And I see, I see history rhyming quite a bit, both on the asset allocation side, but also, in terms of us helping to kind of institutionalize this space by putting these funds within the crypto landscape towards what we consider to be best practice. So that's, that's kind of us in a nutshell, everything we do is through an institutional lens, you know, we're, we're really, again, trying to bring best practice from our old world into this brave new one.

PETER HANS 12:03  

Absolutely. And I, and I think in terms of operational infrastructure, and, you know, really bringing the institutionalization to this very young asset class is, you know, incredibly important, obviously, I think a lot of the way that you guys see the world and the way in which ARCA, you know, see sees the world and the opportunity is a line from that side, and I can certainly attest to, you know, the operational diligence that you guys are doing, being kind of a, you know, very analogous to what you would encounter in more traditional asset classes. And that, that's great, because I agree, I think that, you know, with someone with your background, or, you know, which is very similar to self and the others, that some of the others that are co right, you can probably count on, maybe one hand, but certainly two hands, the, you know, the number of people who have kind of true 15 plus years experience in traditional asset classes and institutional investing, and that are now in digital assets. It's just not something you see every day. But one of the things that you mentioned just now, that really struck me was, you know, you said kind of early 2017 was when you were, you know, first kind of alerted to the opportunity, and it's not every day that you see kind of a new, a new asset class, you know, so when did you realize that this is an actual asset class, because, you know, I was introduced to it hearing about Bitcoin and being largely dismissive of it started to become more familiar with etherium, and, you know, 2016, and started mining for it, but I didn't even then I, you know, I can't honestly look back and say, I knew this was going to be an asset class. And even now, you could, you could argue that there are many institutions that, I would say, almost all institutions don't necessarily know, to view this as an asset class yet. So what led you to come to that conclusion yourself?


Yeah, you know, I suppose it's, it's hard to be scientific and the definition of what exactly constitutes an asset class, per se, I think, for me, you know, Bitcoin in, in an ethe, I guess, is sort of dominate the headlines. And and, of course, you know, there is a good reason for that, in terms of the overall, I guess, market cap dominance, so to speak, but, you know, the reality is, as you get, as you guys know, better than most, right, there's, there's quite a lot going on, if you peel the onion a little bit. And I think for me, it was less sort of the number of coins and different projects that were underway and so forth, and more the realization that there's more to do than just the directional pot. Right. And that's, that's what really struck me as as kind of interesting, right? Because they wanted to face if this is just sort of that directional punt, then it's not particularly interesting for For someone like me, because you can't really do much beyond that punt, right. But once you realize that, you know, as these markets mature, and liquidity improves and volumes pick up, and new instruments are being introduced by the day, you begin to realize that the sort of diversity of opportunity on offer, especially, you know, once I get away from that directional punt, and become a little bit more sophisticated in their approach, that's when it kind of opens it up to me as as being, I think, an investable asset class, so to speak, right. And so that's not to say that we're opposed to directionality philosophically, we certainly aren't. And there's folks that are a little bit more fundamental and orientation, which we're beginning to appreciate more and more folks like Arthur, for example. But I think just the ability to deploy different types of strategies, on top of this space that extend beyond just Bitcoin to the moon, I think that for me is what really kind of moved the needle and said, Hey, this could actually be a pretty interesting space to bring kind of my previous world into this one, if that makes sense.

PETER HANS 16:06  

It does make sense, it's actually a different perspective than I have looking at the investable universe because it's To me, it's all about breadth of exposure and say, blockchain as a as a technology and different industries that it could permeate to create more and more investable opportunities, which by definition will allow you have assets that are not tightly correlated, so that you can construct an interesting portfolio or strategy. Whereas I think yours is somewhat very similar, because you're looking for lack of correlation. But it stems really from how do you allocate numerous strategies to create something that's not just a pure access to data.


That's certainly part of it. But I think, you know, maybe stepping back and even in higher level, right, so if you go back to those early days of hedge funds, they could deliver on their original promise, which was to maximize absolute, as well as risk adjusted returns and relatively uncorrelated fashion. And back then, you know, the standard fee structure was two and 20, there wasn't much in the way of pushback there because they could deliver on that promise. And they could do so because they were employing strategies that for the most part, we're not very competitive, right. And, you know, I like to talk about in the early days of Citadel and Ken Griffin, and Paul singer, Elliott, you know, all they did for the first decade plus was convertible bond arbitrage. And that's because there just wasn't much in the way of competition. And the ability for them to generate highly attractive, absolute amoris, just returns in relatively uncorrelated fashion was, was obviously very strong. Right, and they could therefore justify that fee structure. And I think, you know, you fast forward to kind of today and where we are in the crypto lifecycle, I think it's oddly reminiscent of those early days, right, we are seeing certain strategies that can be deployed in the face of extremely limited, sophisticated competition, that enables these funds to deliver on that original promise of maximizing absolute damage just returns. So you know, I think about it more, from a broader asset allocation perspective, everything that is happening at Investment Committee, meetings all over the world, whether you're talking to sovereign wealth funds, or endowments, foundations, whatever it is, it's all a big sort of competition for capital, right? And I think about, okay, where could someone like alpha compete for that capital. And for me, it's against the hedge fund portfolios that all of these institutions have, we often get bucketed in the VC side of things, which we can talk about later, which is a total mistake. But we're competing for that hedge fund piece of capital, because, you know, hedge funds have really been mired in, you know, I was reading a study the other day about a lot the last decade, right? The, really the the post GFC period, where hedge funds have not really added much value. And there has been a host of reasons maybe that perhaps explain it. But the reality is, there's been a proliferation of competition and markets have grown increasingly efficient over time. And, and I think it's just harder for those funds outside of things like opportunities to credit where there's some structural inefficiencies on offer. I think it's just hard for hedge funds on balance to add the value they used to. And so we come in, and we say, look, you know, given the the inefficiencies on offer within the crypto space, the ability to deliver on that original promise of hedge funds has been presented a new, right. And that, to me is what is really compelling about this, you know, we're not really here to pitch Bitcoin to the moon or as digital gold. All of those conversations are interesting philosophically. And of course, if Bitcoin rallies, let's assume rising tide lifts all boats, and that's great, but we're really, you know, we view this simply as another asset class to trade and I think I think that is a little bit disarming for folks, but also differentiating in terms of how we're going about things.

PETER HANS 20:06  

Yeah, I think that's completely accurate. I share the view from a Well, I mean, I guess structurally, you know, an entity like ARCA, or the digital assets fund certainly is a hedge fund. And then there's there's many other hedge funds. But you're right, I think there's a, this stage in the game without, without kind of base at the asset classes. There's, you know, a lack of clarity from an alligator standpoint, in terms of how to bucket hedge funds. And maybe it's because a lot of the, you know, larger alligators certainly kind of lead with venture exposure to the space partially as a result of the brand names that we're launching, you know, crypto venture strategies, so they kind of fell into that bucket by nature, but as the asset class evolves, you know, it's clear, it's not a allocation strategy, you know, venture hedge funds, you know, that sort of thing, from a structural standpoint, but an actual asset class where you can have a hedge fund strategy, a venture strategist, just like healthcare would be a an allocation sector.


Yeah, I mean, that's certainly part of it. You know, I think it's hard to think about it, I guess, as an asset class in the traditional sense, where these investors are solving for asset class exposure per se, right. Like I, I doubt there's anyone that's sitting around, you know, an investment committee boardroom, saying, Hey, we need to move our forward looking investment targets to include 2%, allocation, digital assets, I don't think we're there yet. You know, so that's why it probably does get bucketed into sort of the venture bucket where, hey, here's an innovative new technology. Where does that go? That goes in our venture bucket. You know, that's where the budget comes from. And from an asset allocation standpoint, I can kind of understand the logic. I think it's also something where, you know, and we've written a little bit about this, we cite some of the work that cliff Asness has done in this space, where, you know, he talks about what's called the illiquidity premium around, maybe folks are allocating to private equity and venture capital because of the periodicity of the return reporting. And so it's sort of like a manufactured low vol approach to a space that has a significant amount of optionality because they're just not seeing the marks as much. And so there could be some of that, right. And we talked about this too, in one of our pieces around Richards, cows are, what he calls blame aversion. I think there's a lot of, there's a lot of incentive understanding and heuristics that play within institutional asset allocation programs, that sort of all of it conspires, I think, to sort of push everything into that venture bucket. And I can understand why. And we write about, you know, this notion of continuous versus binary investing. And a lot of it's been focused on that binary side of things, whether it's just that directional punt, or whether it's just going into venture capital. And that's more kind of binary and outcome things work or they don't, things go up or down. Whereas the continuous approach, which we advocate is much more around hedge funds, and in their purest form are designed to be all weather where they can perform in up or down markets, or at least are indifferent to directionality. And that's kind of a new conversation I think folks aren't really accustomed to having, but we're very happy to have that conversation.

PETER HANS 23:18  

Yeah, that's, that that's actually really interesting in terms of how, how that continuous approach could could work in the space. And also I want to touch upon as you've mentioned, your, your writing, which I think is great, and is a huge asset, especially institutional investors look to get more educated on on this asset class. I know it's something that Jeff Dorman at ARCA does extremely well, and on a consistent basis, and as often will appreciate it. And, and I know, it's something that, you know, you guys put a lot of effort into as well, and you specifically So, you know, maybe let's let's touch upon that because, you know, before we even met, you know, I read kind of your first official D'alva kind of manifesto for the space, which was, you know, digital alpha for a digital world. And, you know, maybe we touched upon a little bit of that thus far. But I would love to kind of hear, you know, how you would summarize that for listeners right now. And if there's any changes you would have made to it, knowing what you know, now, when you originally wrote it?


Yeah. So at a high level, one of the arguments that we're making there, and it's the that first piece obviously serves as a little bit of a manifesto for us, and then it kind of sets forth. Why we think this space is interesting. And we've already touched upon some of that around kind of the inefficiencies and on offer, given the fragmented microstructure and the preponderance retail flow and the lack of sophisticated kind of competition broadly defined. So that's part of it. But then there's also, you know, there's also sort of an acknowledgement that look, you know, the world is changed a bit, you know, really post GFC and there's nothing sacred about the status quo and kind of what got you here won't get you there. Type thinking, right. And so we kind of advocate for this notion of exploratory investing where maybe investors should think a little bit more creatively about solutions for their asset allocation programs, you know, just given, you know, given where valuations are, and given where spreads are in sort of forward looking expectations across myriad asset classes, but also just the the difficulties within, you know, traditional alternative asset allocation programs, all of that conspires to suggest that, hey, perhaps we should think a little bit differently about things. And so I mentioned this gentleman, Richards Hauser, he's a, he's an economist at Harvard. And he wrote a piece a while back called investing in the unknown and unknowable, and you kind of peel the onion there. And it sort of seemed like he was speaking specifically to crypto in defining the unknown as obviously, you don't know what the future holds. And the unknowable is, there's no historical precedent available to assign probability weighted outcomes to what the future might look like. And then he assigned a third view, which was unique in the sense that because it's unknown and unknowable, there aren't many people doing it. And he talks about how Buffett and some other famous investors have really capitalized on this notion of u u u investing and, and that really, that really resonated with me. And really, crypto in my estimation is kind of the quintessence of that type of investing. But he also pointed to this notion of blame aversion, which will hold people back from entertaining exposures to use situations, which obviously is counterintuitive in the broader sense in terms of if you want to maximize the risk return available to you as an investor. But you know, there are a lot of disincentives and traditional kind of institutional asset allocation sort of constructs that make it difficult for folks to think about things. So we proceed through the piece to kind of one of my favorite thinkers is Charlie Munger. And, you know, he has a saying invert, always invert, and I know a lot of the folks that advocate for exposure to crypto are really doing it with that kind of one way directionality sort of that that binary thinking, which is, here's why you should have exposure to crypto because, you know, bitcoins going to go to the moon and there's so much asymmetry on offer, then why not have exposure? And there's a most of the effort in time is spent making that that bull case and telling people why they should invest where it was we came at it thinking, Well, why aren't they investing? Right? And there has been, I think, studies that have shown, I think fidelity, conducted a survey where the the primary gating mechanism for these institutional investors is volatility, right? There's other issues around regulatory uncertainty and what have you, but it's really volatility, I think it remains volatility. And we realized that taking a diversified multi strategy approach to a space that involves traders and arbitrage errs, as well as some fundamental guys will pick up some directionality. But taking that diversified approach could solve for that volatility aspect of things. And that's, that really is kind of what we're here for. Alpha is not just to solve for volatility, per se, I mean, we're not market neutral by construct, but to appreciate what it is that's informing larger institutional investors as they contemplate exposure to this space. And that's kind of, I guess, a relatively long winded way of kind of summarizing that manifesto approach. And in laying out Look, here's, here's where we are, we understand kind of what you're up against, in terms of decision making structures. And here's our proposal to sort of solve for them.


You are listening to our show Between2chains with your host, Peter Hans.

PETER HANS 28:51  

I said how, and this is just something that I've, you know, we've talked about a little bit internally, you know, because I think most of the, you know, active management in this space, from a hedge fund standpoint tends to kind of gravitate towards quant or, or just kind of pure beta exposure and actively trading, you know, the Bitcoin and eath and maybe, you know, one or two other really large cap cap tokens. And, and a true kind of market neutral strategy. And this if I think about kind of long, short equity, hedge funds and aiming to be market neutral, is extremely difficult because the asset class is so young that, you know, you can't put on pair trades, you can't look at prior correlations between assets within the asset class and have any faith that those correlations are going to maintain on on a go forward basis. So, you know, I think you can certainly work to mitigate your volatility, but there's always going to be directional exposure, at least at any sort of scale. So you know, how do you guys You guys think about the end? I'm not even sure that that's inappropriate, right? Because if you do want to have exposure to digital assets, I mean, there's going to be, you know, at least you want the upside volatility, right. So, so and maybe that's just the opinion of a specific manager who has a specific strategy. But how do you how do you think about the scalability of something that's more market neutral?


Yeah. So a couple of things are actually, if I can touch upon that the last comment you made, which is, if you want exposure to digital assets, I think again, here for us, we want the positioning to be less around, you should have exposure to digital assets, right? And more, hey, do you want to maximize a risk return within your your absolute return bucket? Right. And so we try to divorce the conversation away from the asset class. Now, of course, it's impossible to do so. Because at the end of the day, it just kind of is what it is. But we're not necessarily advocating for exposure to the space per se, because most of those conversations again, tend to be a little bit more binary. Right, in their in their thinking. So that's that's part of it. But But the other part is, you know, we do attempt to solve for that expectation around some degree of capture that upside optionality, right? Because notwithstanding our efforts to sort of get people to focus simply on the risk return profile, they are, of course, going to do a look through and understand, okay, what is the actual exposure, and we get it, and they want to manage their, their their risk and understand what that looks like. And that's fine. In our latest piece, we we kind of talked about, you know, what's called Beyond Bitcoin beta. And we try to advocate for a broader digital asset strategy, right, that includes some directionality, but also includes more actively managed exposures, like through hedge funds. And, you know, what we've demonstrated, Now, of course, the typical caveats apply around back testing and the deficiencies associated with with using index returns for hedge funds. But we didn't arrive at proof, at least on a backward looking basis, using the past four years that you can arrive effectively at the same place, as an outright Bitcoin play with a diversified actively managed program that includes some Bitcoin, you can arrive at the same place was substantially less in the way of downside volatility, right. So most of the value experiences to the upside. And that, to me is really the perfect scenario, particularly for institutional investors who are interested in this space wants some degree of exposure to the upside capture, but are scared away by the volatility, you know, it's hard for anyone to own notwithstanding the fact that Bitcoin can be up 300% a year, it could still be down 75% in a year, and it's hard for anyone to own that sort of face ripping volatility in the context of blame aversion, right, which we talked about earlier. So that's what we think is just kind of the brilliance of this approach. Now, again, there's caveats there that apply. And past performance is not indicative, all the usual disclaimers. But, you know, academically at least, it's interesting. And it's possible to arrive at a similar place without necessarily taking on that volatility, downside volatility, at least. And that's what that to us is academically speaking, kind of why we're here. And what kind of moves the needle for us sort of intellectually as a firm, and I think is what, you know, can resonate with folks as they think about allocating to the space in a in a in a more risk adjusted manner. Right. Now, to your question about, you know, is it possible to run market neutral, fully appreciate the difficulties associated with that, again, we're not market neutral by construct, we're not allocating to folks that are market neutral by construct, but being market neutral versus being less sensitive to directionality, right, those are two different things. And, you know, allocating to, you know, traders who are either, you know, discretionary, systematic, taking that experience from their previous lives and applying it to this one. It's, in many ways even more effective, right? Because, again, the markets are so much less efficient than they are in the traditional space, but also, behavioral dynamics associated with what motivates retail traders versus internos is often a little bit easier to predict, right. And a trend is a trend to break out to breakout. And so, you know, they run with markets as they run up, and they they reduce that risk on the way down. But there's also arbitrage opportunities that are evolving by the day, you know, the the cross exchange arbitrage was obviously the big one in the early days. That's kind of the Convert ARB back in the days of Ken Griffin trading at his dorm room. You know, that's been argued way a bit. It still comes back episodically In fact, we've seen it here over the past couple of days. But there's other types of our you know, even you know, Jeff wrote about in his letter this week around kind of the basis trade that's still there, and is still highly compelling, that isn't really reliant upon directionality, right. And so you can lock in some of these spreads pretty, pretty better. Pretty chunky. And even idiosyncratic ARB like with a grayscale trade, right? Sure, there are all sorts of different things. And on top of all that, you have a developing futures marketplace as well as, as options, right. And as more and more of that stuff comes online, it just creates more and more opportunity for folks who take some pretty interesting positions that aren't necessarily reliant upon, again, Bitcoin to the moon

PETER HANS 35:23  

100%. I mean, the whole Bitcoin to the moon narrative, is, it's a narrative and, frankly, a somewhat sophomore narrative at that, you know, you made a point earlier that, you know, you can't, you're not going to convince someone by showing more evidence. And that tends to be kind of what you see from, you know, at least I guess that the talking heads in this in this asset class. And it just flies in the face of every social psychological study where, you know, the more you try to convince someone of something, regardless of the evidence that you put in front of them, the more they just push back, right, people need to come up with it on their own. And, you know, so so that's, it's just, it's a very different set of institutional players in this space. And by set I mean, it's miniscule, right. And that's part of the attraction for me and why I got involved in why I you know, why I joined Jeff now for our for our third company together is that, you know, you could find these incredibly interesting opportunities, whether they be, you know, a structural ARB trade or, or even just kind of a fundamental play of a incredibly high growth protocol or company trading at a depressed valuation, but you don't have, you know, the competition and hedge fund hotels that you have in, you know, the more traditional equity and credit funds, and at least part of that, to me, and then probably a major part of it, is the operational infrastructure required to get involved in this space, there are different counterparties, these assets can't be traded at your prime broker, they can't be custody at broker dealers, right. So it's a completely new set of counterparties that require a lot of operational due diligence. So if you're going to talk about, you know, a, you know, any hedge fund of any significance, taking the time and capital to go through that process, for an asset class, that right now is so small, on a relative basis, that they're still not going to affect the bottom line of a $10 billion $20 billion fund. So it creates these opportunities, you know, for certain managers that can manage a huge amount where that is meaningful, you know, and over time, I think that closes, but there's probably a long structural way to go.


Yeah, you totally right. To me, this is this, this notion of kind of existential, I guess, risk, so to speak, that would come in the form of encroaching competition from the traditional hedge fund world. That's something that we think about a fair amount. And, you know, eventually this space will become big enough and will become, I think, developed enough, you know, by way of some of the counterparty risk that you correctly highlight, where, you know, the the citadels and millenniums of the world will, will engage in earnest, right. And some of these inefficiencies that we're so excited about today will be wiped away. And, you know, and that's what happens. And I think one of the things that we attempt to sort of solve for there in some respect is that we you as we go out to meet with managers and decide on on allocation decisions is we we do have a preference for folks that we feel like can adapt to an evolving marketplace. And my kind of expectation is that, you know, beyond some of the fundamental folks like ARCA other folks that are a little bit more kind of ARB in nature, you know, they will have to morph into sort of a multistrada over time. And, and maybe, you know, maybe even even the archives of the world will start to, to look a little bit like that. And I think the ability to sort of skate to where the puck is going and adapt to a changing market environment, particularly in the face of increasing competition from the old world, I think is a critical piece of the puzzle. But I do feel like to your point, I feel like the runway is here for us, you know, maybe it's the windows three to five years or whatever that looks like to go out there and and capitalize on what is an extremely exciting opportunity in an extremely inefficient space that exhibits extraordinary amounts of volatility, but volatility, you know, there used to be a saying in hedge funds, that volatility was a good thing. And the opportunities that sort of come off on the back of that were there for the taking and for the trading. And the same thing applies here. Right. And so, you know, it's on folks like you guys and us to go out there and, and kind of capitalize on that, as they say, well, the getting's good,

PETER HANS 39:58  

Totally agree and they frankly, I think that's a great point about how hedge funds kind of used to view volatility when there were these inefficiencies. And that I would say lasted for a long period of time where you could you could take advantage of those those inefficiencies, and they're and they're repeatable. Because that's, frankly, what I see here. And it's, it's so funny, cuz it probably took me a good six months, you know, starting at ARCA where I would just, you know, every almost three times a week, I'd be messaging Jeff, like, why is this down? 20%? or What news is out there and be like, there's nothing, you know, this is just the way the market trades. And it was just such a foreign concept to me, that I couldn't wrap my head around like 20-30% moves with zero news, zero change in fundamentals, you know, like, like, just on the whims and, you know, sometimes you can look at it as like, especially with Bitcoin, you know, those are more explainable might be like minor selling, or it might be, you know, options expirations. Or it could be a host of different things, but, you know, some of these other, you know, more fundamental names in the book that just kind of trade the way they do. And it's just if you have a solid foundation of risk mitigation strategies in terms of, you know, kind of how you position size your book, you know, not unlike running a, you know, distressed credit book, right, then there are huge, just massive swings to just kind of take advantage of, and even if the hedging opportunities or just kind of effectively managing your cash position, and when to deploy, and, and when to, you know, realize gains, it's a dream for somebody who knows what they're doing. And not to say, you won't be wrong sometimes, but you're going to be right, a hell of a lot more than you're, you're wrong. I feel like when the market is this inefficient? 


Yeah, look you know, I find it, you know, to your point, I find it pretty funny, when people do try to assign some explanation for for price action, I think it's the same for traditional markets, you know, when you see a Bloomberg headline, markets are selling off, because Boeing was, you know, fined or something, you know, like that. And even a more, I guess, macro level, if that's the right way to think about it, is people attempt to kind of assign a narrative to even bitcoin price action over the past 12 to 18 months, you know, and increasingly, this notion of the narrative that seems to have taken hold as around Bitcoin as an emerging store of value and a potential inflation hedge, and I even find that kind of funny, you know, where we really don't know, right? How Bitcoin would perform in an inflationary environment, because it simply hasn't, you know, going back to the unknowable, we don't have any precedent to assign a probability weighted outcome. You know, Bitcoin has not performed in an inflationary environment, because it hasn't seen one, right. And so all of that, I mean, I understand sort of the academic case around why that may exist. And of course, you know, it's caused folks like Paul Tudor Jones, who get involved in as a potential inflation hedge, but it's, I just find it fascinating that people speak with such certainty that bitcoin price action is informed, because of all the money printing, and therefore the inflation that will arrive with certainty. And Bitcoin will certainly perform. I just find all of that kind of, you know, it's all it's all a narrative game. Yeah, I know, you had Ben hunt.

PETER HANS 43:12  

Yeah, on exactly what I was gonna say.


Yeah. on your on your podcast, you know, and, and Ben, I love his stuff. By the way, I like to take a little bit of credit for the path that Ben has been on with epsilon theory and his writing, because I met him back in his hedge fund days when I was at Grosvenor. And I remember reading his stuff at the time. And it probably informed my own thinking around how important content is as a means of communication with investors, existing and prospective alike. And I remember giving him feedback at the time when he was at his hedge fund that he writes great letters. And so I like to think that I put him on his path, not just my feedback, obviously, but some chorus of feedback that I enjoy. And because this stuff is great, I really enjoy his his appearances in his writing, but it's to the point, you know, it's all one big narrative. And I think it's fascinating to observe.

PETER HANS 44:03  

Yeah, I mean, so there's two things, two things there in my mind. One is, there's a there's just a massive amount of cognitive dissonance in this in this space, right? Because, you know, the the narrative in Bitcoin and electricity use Bitcoin, you know, right, for this purposes, can change substantially like at first it was in originally designed to be something that, you know, you use every day as a currency in place of, say, the dollar. And that narrative is now largely dismissed. And it's all about kind of this store of value. And there's to your point, there's no way to, to prove it. I'm not sure there's any real way to prove anything because, you know, everything can can eventually change. Right news does, you know, we have a massive history on gold and how that performs. But, you know, we're also about to transfer what you know, $70 trillion from Rumors to, you know, I don't even know what generation now Gen Z, and we'll see how they view gold and silver versus Bitcoin. That's kind of the, I won't even say narrative, I'll say rationalization. I give myself it, you know, and I'm hardly kind of a Bitcoin idealist. But I'm just like, Look, if you're over the age of 40, you probably don't own a lot of Bitcoin, if you're under the age of 40, you probably don't own a lot of gold, you know, and then and that's just kind of what I what I what I tell myself that that narrative makes sense. And narratives are kind of self fulfilling prophecies, right? Because if that's what all you need for Bitcoin is, if people believe it, then they kind of have to have exposure to it. And is that just kind of grows and grows? It becomes the truth, I guess until it no longer is. So is he it from a psychology standpoint, it's fascinating just seeing how, you know, these people talk about it. Like, it's like, it's inevitable, you know, and I love the arguments of like, well, the market decides the winners, and it's like, Okay, well, what timeframe Are you looking at for the market? You know, because, because the market could decide something totally different over the next five years. And it will just be really interesting to see how the kind of, you know, different cognitive dissonance or rationalizations show their faces. One thing I want to ask you about, Matt, that you mentioned earlier, is when you talked about kind of, you know, you kind of kind of proved, you know, I suppose, mathematically over the last four years that you can have really strong risk adjusted returns in the asset class. And that, to me is, is really interesting, because, you know, as I just look at, say, ARCA, and and our ability to, to execute on our strategy, the asset class has evolved so much in the past 18 months, in terms of investable opportunities, ability to do fundamental work, how to value these that that, you know, when we look at our overall correlations, massively dropping versus kind of larger cap cryptocurrencies, like like Bitcoin, you know, and actually looking more like, you know, high growth, tech investing, although in this in this kind of different, you know, structure of a digital asset. So, how do you think about how the asset class is evolving in terms of what's investable and how to value these different tokens, versus looking back something like four years or four years ago, the space looks totally different than it looks right now.


Yeah, I mean, look, we we've obviously come a long way in those four years. And in terms of the invest ability of all the different assets on offer, you know, obviously, that's improved at the margin, you know, the, the exposure that we're interested in, and that the folks with whom we engage tend to focus on is more, really more on the liquid side of the spectrum. And so there has been some turnover, of course, in those top 10 to 20 names, let's call it over time. But for the most part, it is more I guess, you sort of generically characterize as as kind of plain vanilla, in terms of that focus. But what's been more important is just the maturation of the infrastructure and the ability for these folks to to trade these, these assets and, and trade them in interesting. And again, unless I guess, directional ways, at a portfolio level. That to me is, is really where we've seen the dramatic improvement. Now, of course, we've come at this a little bit more skeptical. One of the things I certainly sympathize with, to the extent we receive pushback in the space is around, there's a common saying, we only invest in things we understand, or, you know, we we only invest in things that demonstrate fundamentals, right. And on the first topic, I always kind of chuckle a little bit at that, of course, you know, it should be axiomatic that you should understand what you're investing in. But I do find it funny, because I know there's plenty in their portfolios that they don't really understand, especially, you know, going back to the GFC, and ask anyone what a CDO is, or a CDO squared, you know, good luck having them explain it to you. But in any event, you know, the other topic on fundamentals. I appreciate, I appreciate that feedback. And I sympathize with that view, right. However, and we've come at it as as a total skeptic as it relates to assigning some degree of fundamental sort of valuation metrics in this space. But we've we've kind of softened a little bit there. And a lot of it's been because of the work that you guys have done at ARCA, which I feel like is really kind of pushed our own thinking forward around. Okay, there are some emerging sort of fundamental metrics in this space, typically around around, you know, defy, for example, where you're starting to see real value accrue to token holders in ways that would kind of mimic what you see in traditional world around adoption and so forth. And so that I think is is pretty interesting. And I see a an emerging kind of, I guess, fundamental use case there. And I think folks like you are are well positioned to kind of continue to carry that torch and push the space forward and unlock value. And other ways to I know you've had Jeff on your podcast and you guys were talking about some of the activist work, you know, there's, there's real value right associated with that as a celebrity. And so we see that, you know, we're not, we're not kind of fully subscribed to the notion of d phi is the future, or, you know, now everyone's talking about NFT's and so forth. One of my colleagues kind of described the two as, as sort of a bathtub science experiments for crypto. But nonetheless, I mean, if these things do take hold, and obviously defi is further along than what we're seeing on the NFT side, but like, if they take hold, I mean, the the the opportunity is extraordinary, right. And so we're certainly here for it. And I consider ourselves position flexible, we want to be opportunistic, and we want to be here to capitalize on that stuff as it does mature and as it does materialize.

PETER HANS 50:53  

It's a very astute viewpoint that you guys are taking, right, because you know, and it is different, I guess, when you're looking at it from the fund to funds and overall exposure methodology, as opposed to, you know, say, say, my journey with with ARCA, which is basically like, you know, I'm going all in on this asset class, because I believe in the, you know, underlying, you know, Bitcoin Maxis won't like this, but I believe in the underlying technology of blockchain and the opportunities that it can bring to really all industries and also as a trading mechanism and transfer agent for, you know, various assets, whether those be NFTs, or whether those be, you know, more traditional assets or anything from airline miles to loyalty rewards. And, you know, talking about Jeff a fair amount here, but I think Jeff has a pretty good analogy where he talks about the asset class, eventually looking more like the fixed income world where you have a very wide range of everything from credit risk, to return profiles to features in terms of, you know, calls and puts and conversion ratios and sinking funds and revenue bonds, and Gio is right, like there could be all of these sorts of types of different structures, but also, you know, return profiles, right, like if, you know, I read a headline about, you know, Amazon basically testing out a digital asset, I think they're launching it Mexico, it'll be pretty similar. It's, I think that they're basically like their Amazon cash. But if you have it kind of on blockchain, it's transferable, like, the return profile of an Amazon coin is going to be, you know, much more like a, you know, probably a, you know, a 30 year triple A bond than it is going to look like a, you know, $100 million distressed propane gas issue, right. And then that, that makes for a lot of different strategies and opportunities, and probably speaks a lot to, to what you guys might be able to do in terms of aggregating these different opportunities and creating different risk adjusted reward profiles for investors. Is that is that something you guys think about? Or or is it too, pie in the sky too early?


No, no, I mean, that's absolutely it, that's really what we're here for is that evolution of the opportunity set is the ability to kind of evolve with it and adapt with it. And, you know, having that somewhat of a historical perspective about how approaches and strategies have evolved in the space and, and how best to position ourselves so that we can capitalize in that diversified fashion, right? I mean, that's, and also serving as a jumbo guide to this space that is just changing and evolving so much. And you we placed a very high priority on this notion of education. And we're fully transparent. And we want to be an active communication with our investors and letting them know about kind of what's going on in the portfolio and being able to sort of aggregate risk for them and explain to them kind of where that where exposures live, but also, kind of where the space is going, where it's evolving. And what's exciting for us. As a business, as we think about things is the the fun to find approach can can evolve in, in all sorts of different ways. And our ability to to again, be flexible and opportunistic and respond to how that stuff is, is moving and changing i think is is again, kind of kind of why we're here. So we're super, we're super excited about the opportunities here. We're super excited about, you know, the maturation of the infrastructure, there's more talent flowing into the space. And, you know, to your point earlier around, changing people's minds, I was kind of joking about sort of the inflation narrative and whether or not that'll that'll prove true. One thing I do easily identify with which I think we may have kind of corresponded a little bit on over Twitter, you know, is this notion of generational replacement, right? Absolutely. And I think it was playing principle around, you know, it's not, it's not that you're changing anyone's mind. It's just that the old guard effectively dies off right in New Jersey

PETER HANS 54:52  

Exactly right,


Grows up, and he was speaking about it more in a scientific context. But I think the same applies here. And it's not Not just a change in mentality, but but as you mentioned, a significant transfer of wealth on the back of that. And so that, to me is massive, right in a macro and kind of geopolitical context. And we'll see whether or not inflation plays out. But that whole notion of generational replacement is inevitable, right? It just is what it is.

PETER HANS 55:20  

Yeah. And it's inevitable across everything. So not just kind of individuals investing, right, but the next CIO of, maybe not the next CIO, but a CIO of Texas teachers down the road is going to be someone who, you know, kind of grew up with Bitcoin and, and understand it and understands this digital infrastructure, and they're just gonna have a very different worldview than, you know, current CIOs that, you know, not gonna pick out any, any any one individual, because I haven't, frankly, had any negative conversations with any, you know, big pensions or institutional allocators. But the thing is exactly what you're saying, you know, it's turnover, it's human capital turnover at places that manage global wealth.


Yeah, absolutely. Absolutely. And then in the meantime, of course, it's it's engaging with folks that are open minded, right, to differentiate sources of risk return. And, you know, that's, that's, of course, the challenge, right. And it's a battle of attrition, because, you know, a lot of folks are just motivated by maintaining the status quo. And I understand why that is from a survivorship perspective. And, you know, it's, it's, it's gonna be hard to convince an analyst to kind of take to their investment committee, an idea like crypto at this moment in time, again, because of some of the gating mechanisms around uncertainty and volatility, right. But there are folks that are open minded, and willing to sort of entertain new ideas, and that you come across them every once in a while. And that's, that's the exciting part. You know, I think I was joking the other day and on Twitter, and I know, you've responded to it around, you know, you go to you go to the website, and they're talking about this, they're talking this big game about, differentiate his ideas, and, you know, off the run, you know, things that folks aren't really accessing, and what have you, and then and then you reach out to them. And they're like, yeah, it's too volatile. It lacks fundamentals. And he's like, Oh, geez, you know, he didn't even really take a proper look. Because, again, if they would have spent some time chatting with us, I think they would have realized, okay, well, you know, it is volatile on its face, but not every approach. Now comm needs to be volatile, per se, right?

PETER HANS 57:28  

That's right. And then there's a difference between you know, which at which I've, you know, you can, you can come to realize it, you can manage it in this space, you know, your your downside beta, while trying to capture as much as possible of the of the upside, beta. And, you know, I've seen this firsthand, right, you know, being able to kind of capture by all traditional metrics, you know, sizeable upside at time as well, you know, doing a good job of avoiding the the blow ups, I mean, you do have to be able to stomach a bit of a draw down, you know, but I think over a period of time, kinda, I can't say look at it, because you never know what the future is gonna hold. But it's certainly a believer in it, obviously. So yeah, it's a, it's fascinating. So let me ask you one last question here, because I know we're probably occupying much of your day here. But from your seat, what do you guys thinking about internally, that you think will be a big trend in the in the asset class, and this can be from an investable side, or from even just an operational or infrastructure regulatory? Like, what's the next big kind of catalyst that you're thinking about that, that maybe others aren't?


Hmm, next big catalyst?

PETER HANS 58:43  

It's not necessarily a catalyst. But But yeah, I mean, what are you excited about? 


You know, I guess, something we're excited about that the I don't think is, by no means unique to us. But it is the continued maturation of that infrastructure. And, you know, the emergence of, you know, prime brokerage functionality, right, I think that's gonna really further sort of legitimize an active approach to this space. Now, of course, the risk there is it could also expedite the entrance of some of the more traditional guys into the space, right. But the notion that you could more easily access, you know, outright short exposure to the space via some of these prime brokerage relationships. I think it'd be really interesting. Of course, you can do that anyway, in some form or fashion. But the more that we see proliferation of those services, I think will really improve the ability for folks to take active approaches right to crypto. That to us is, is really fascinating, I think, I think you'll continue to see a bit of a brain drain from the traditional world into this one. And that's good for us because obviously that increases the pool of investable talent. And and really kind of The notion so when we think about the work that we conduct on our managers from a due diligence standpoint, I like to say probably 85% of it's the same as we used to do, right in our old world. What's different is around, obviously, that counterparty risk management and thinking about things like exchange risk and custody and understanding OTC understanding what all of that looks like, right? You I think, as the infrastructure continues to mature, a lot of those risks will continue to be mitigated right over time, which is just going to make it easier and easier for folks to engage. And for folks to not just sort of resonate with allocators like alpha, but also to be able to resonate on a standalone basis with the larger institutional investors.

Unknown Speaker 1:00:46  


MATT EDWARDS 1:00:47  

Our hope and expectation is that we'll be able to play a part in that, over time, that that broader kind of theme of maturation is what excites us. I don't, I don't need to have us unique. So I'm sorry. I'm sorry to say, there's nothing special about that view. But but that's really probably what's most exciting in my mind.

PETER HANS 1:01:04  

Now, I think i think i think that's great. And, you know, makes a lot of sense with your perspective. And it's well thought out and consistent. So can never complain about that.

MATT EDWARDS 1:01:12  

Well, thanks. Thanks for that. And, you know, thanks for having me. And,

PETER HANS 1:01:16  

you know, always anytime

MATT EDWARDS 1:01:17  

happy to wax philosophical on this stuff anytime. So,

PETER HANS 1:01:21  

Yeah, no, this is great. Yeah. I appreciate the time, Matt. And, you know, I'm glad we both been in Texas have our power back. And, and, you know, someone someone texted me yesterday asked if there was still snow on the ground, because I told him, I had to go to my daughter's softball practice, or I coach and I was like, no, it's, it's 68 and sunny now. So we went from 14 degrees to 70. And sunny in a matter of a few days. But yeah, we're, we both survived.

MATT EDWARDS 1:01:51  

It's truly remarkable. You know, I was sending photos to friends, yesterday of it, like you literally wouldn't know that we were in the midst of the snowpocalypse. Just, you know, three days ago. And and this is also why I'm quite bearish on on the idea that we'll learn anything from this fiasco. I think it's, it's now clearly in the rearview mirror. And and we'll never revisit it and say, Hey, you know, what can we learn from this? And in terms of the infrastructure and the power grid, and making sure this doesn't happen again, I'm pretty sure we'll just we'll assign it to a low probability Black Swan event and go back to ho hum.

PETER HANS 1:02:29  

Exactly. It is 100 year weather event that'll probably happen every five to seven years.

MATT EDWARDS 1:02:35  

Well, that's a that's the other thing is I find it interesting. I know, we're going off off topic here. People assign narratives to everything, and everything now is about, you know, some sort of political persuasion, one way or the other. And, you know, it's I was listening to someone on a podcast, who is, you know, not political about anything at all. And he was just like, obviously, they were planning for certain probabilities and outcomes, and Texas is not accustomed to winter weather like that. So it just from a cost benefit perspective. It didn't make sense in her eyes. And he was like, but he was like, and I'm not trying to get political here. But he's, he said, Well, maybe the climate is changing.

PETER HANS 1:03:13  


MATT EDWARDS 1:03:14  

Maybe this will happen with more frequency. And so I thought that was that was kind of a funny comment.

PETER HANS 1:03:20  

Yeah, I mean, it's just something that has to be considered right. Like whatever, you know, you have to weigh the economic cost of what happened diverse in you know, not to mention the societal costs versus the cost to weatherize some freakin wind turbines? I you know, I don't know.

MATT EDWARDS 1:03:36  

I don't know the answer. I know, it's all super complicated, but I just find it fascinating how people, you know, immediately take sides and they tend to sort of delineate them along political lines, which I just think is, it's really a shame and that sort of bias, or lack of, I guess partisanship is the right word. It sort of infects everything that we do now. I mean, you even see it. I've been in crypto land, right where 

PETER HANS 1:03:59  

Oh, my God, man, this is this is a whole nother podcast episode. Yeah. Yeah. This is a whole nother podcast episode. Too much velocity of information, but social.

MATT EDWARDS 1:04:07  

Yeah, yeah.

PETER HANS 1:04:09  

Well, good. Man. I absolutely appreciate the time. I always love talking to you. And you have to come back and do this against air.

MATT EDWARDS 1:04:17  

Thanks, man.

PETER HANS 1:04:17  

All right You got it, man. Take care. Bye.

REAL VISION 1:04:27  

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